CIVIL LAW PART II

SALES

I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE

A. DEFINITION

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125December 2, 1994

A contract of sale is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees.

B. CONTRACT OF OPTION NOT A CONTRACT OF SALE

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125December 2, 1994

Both the trial court and CA found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option and not perfected contract of sale.

C. CONTRACT OF CONDITIONAL SALE

OLIVAREZ REALTY CORPORATION and DR. PABLO R. OLIVAREZ v BENJAMIN CASTILLO, G.R No. 196251, July 9, 2014. J. LEONEN

In both contracts to sell and contracts of conditional sale, title to the property remains with the seller until the buyer fully pays the purchase price. Both contracts are subject to the positive suspensive condition of the buyer’s full payment of the purchase price. In a contract of conditional sale, the buyer automatically acquires title to the property upon full payment of the purchase price. This transfer of title is by operation of law without any further act having to be performed by the seller. In a contract to sell, transfer of title to the

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prospective buyer is not automatic. The prospective seller must convey title to the property through a deed of conditional sale.

In this case, Castillo reserved his title to the property and undertook to execute a deed of absolute sale upon Olivarez Realty Corporation’s full payment of the purchase price. Since Castillo still has to execute a deed of absolute sale to Olivarez RealtyCorporation upon full payment of the purchase price, the transfer of title is not automatic. The contract in this case is a contract to sell.

Since Olivarez Realty Corporation illegally withheld payments of the purchase price, Castillo is entitled to cancel his contract with petitioner corporation. However, we properly characterize the parties’ contract as a contract to sell, not a contract of conditional sale.

In both contracts to sell and contracts of conditional sale, title to the property remains with the seller until the buyer fully pays the purchase price. Both contracts are subject to the positive suspensive condition of the buyer’s full payment of the purchase price.

In a contract of conditional sale, the buyer automatically acquires title to the property upon full payment of the purchase price. This transfer of title is "by operation of law without any further act having to be performed by the seller." In a contract to sell, transfer of title to the prospective buyer is not automatic. The prospective seller must convey title to the property [through] a deed of conditional sale."

The distinction is important to determine the applicable laws and remedies in case a party does not fulfill his or her obligations under the contract. In contracts of conditional sale, our laws on sales under the Civil Code of the Philippines apply. On the other hand, contracts to sell are not governed by our law on sales but by the Civil Code provisions on conditional obligations.

Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal obligations does not apply to contracts to sell. Failure to fully pay the purchase price in contracts to sell is not the breach of contract under Article 1191.Failure to fully pay the purchase price is "merely an event which prevents the [seller’s] obligation to convey title from acquiring binding force. This is because "there can be no rescission of an obligation that is still nonexistent, the suspensive condition not having happened.

In this case, Castillo reserved his title to the property and undertook to execute a deed of absolute sale upon Olivarez Realty Corporation’s full payment of the purchase price.Since Castillo still has to execute a deed of absolute sale to Olivarez Realty Corporation upon full payment of the purchase price, the transfer of title is not automatic. The contract in this case is a contract to sell.

As this case involves a contract to sell, Article 1191 of the Civil Code of the Philippines does not apply. The contract to sell is instead cancelled, and the parties shall stand as if the obligation to sell never existed.

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HELEN E. CABLING, assisted by her husband ARIEL CABLING v JOSELIN TAN LUMAPAS, as represented by NORY ABELLANES, G.R No. 196950, June 18, 2014. J. BRION

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. However, where the basis of the third person’s possession is a conditional contract of sale, such possessor may still be ousted by the ex parte issuance of a writ of possession. The possession contemplated in Rule 39 Section 33 must be adverse in that she must prove a right independent of and even superior to that of 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 fulfilment of a positive suspensive condition which is normally the payment of the purchase price in the manner agreed upon.

SPOUSES JOSE C. ROQUE AND BEATRICE DELA CRUZ ROQUE, ET AL vs. MA. PAMELA AGUADO, ET AL., G.R. No. 193787, April 7, 2014, J. Perlas- Bernabe

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfilment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer .

SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE ET AL. VS. MA. PAMELA P. AGUADO, ET AL. G.R. No. 193787April 7, 2014, J. Perlas-Bernabe

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 fulfilment 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 not to pass to the vendee until full payment of the purchase price Spouses Roque have not paid the final installment of the purchase price. As such, the condition which would have triggered the parties’ obligation to

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enter into and thereby perfect a contract of sale in order to effectively transfer the ownership of the subject portion from the sellers to the buyers (Spouses Roque) cannot be deemed to have been fulfilled. Consequently, the latter cannot validly claim ownership over the subject portion even if they had made an initial payment and even took possession of the same.

It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person, as in the case at bench. In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfilment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-seller’s title per se, but the latter, of course, may be sued for damages by the intending buyer.

ART 1458

TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009

The Deed of Conditional Sale, as termed by the parties, states that "in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale". The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised, but where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell, even if it is denominated as a Deed of Conditional Sale.

D. CONTRACT TO SELL

JUAN P. CABRERA vs. HENRY YSAAC, G.R. No. 166790, November 19, 2014, J. Leonen

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.

At best, the agreement between Juan and Henry 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. Without the fulfillment of these suspensive conditions, the sale does not operate to determine the obligation of the seller to deliver the object.

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A co-owner could enter into a contract to sell a definite portion of the property. 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.

PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, March 17, 2000

Under the parties’ contract, the property will be transferred to petitioner only upon the latter's "complete compliance of his obligation provided in the contract" but because of petitioner’s failure to fully pay the purchase price, the obligation of private respondents to convey title to the property did not arise.

Petitioner's reliance on Article 1592 of the Civil Code is misplaced because what this provision contemplates is an absolute sale and not a contract to sell as in the present case.

ART 1478

CRISTOBAL vs. SALVADOR, SR., G.R. NO. 139365, September 11, 2008

The Seller executed three separate contracts on the same property with three different parties, wherein only the first two contracts contained a stipulation that "if the Vendee fails to pay the Vendor the sums stated within the period stipulated and after the grace period for each payment, this contract shall automatically be null and void and of no effect without the necessity of any demand, and the Vendor shall have the full and exclusive right to sell to any person. The first two contracts were both mere contracts to sell and did not transfer ownership to either of the buyers for failure to comply with the condition of full payment of the purchase price, hence, vendor can still validly convey the subject property to another buyer.

E. ELEMENTS OF A VALID CONTRACT OF SALEPEÑALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001

Respondent insist that the second deed is a complete nullity because a) the consideration stated in the deed was not paid; b)seller was not present when the deed was notarized; c) seller did not surrender a copy of the title; d)real estate taxes were not paid. The elements of a valid contract of sale are: (1) consent or meeting of the minds; (2) determinate subject matter; and (3)

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price certain in money or its equivalent which are present in the second Deed of Sale hence there is already a perfected contract of sale.

ART 1475HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO. 135634 May 31, 2000

Respondent alleged that there was no contract of sale to speak of, while petitioner as proof of the sale presented a receipt stating that Andres received from Rodriguez a sum representing an advance payment for a residential lot with the agreed price of 15php per square meter and that the payment of the full consideration after the survey shall be due and payable in 5 years from the execution of the formal deed of sale. All of the essential elements of a contract of sale are present, i.e., that there was a meeting of the minds between the parties, by virtue of which the late Andres undertook to transfer ownership of and to deliver a determinate thing for a price certain in money.

II. PARTIES TO A CONTRACT OF SALE

A. SELLER

SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ vs. ROBERTO S. SYLIANTENG and CAESAR S. SYLIANTENG, G.R. No. 205879, April 23, 2014, J. Peralta

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. 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.

ART 1459HEIRS OF ARTURO REYES vs SOCCO-BELTRAN, G.R. 176474 November 27, 2008

It was unmistakably stated in the Contract to Sell and made clear to both parties thereto that the vendor was not yet the owner of the subject property and was merely expecting to inherit the same. The law specifically requires that the vendor must have ownership of the property at the time of delivery hence, there was no valid sale from which ownership of the subject property could have been transferred.

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DACLAG vs. MACAHILIG et al., G.R. NO. 159578, February 18, 2009

Petitioners contend that the 10-year period for reconveyance is applicable if the action is based on an implied or a constructive trust. However, since respondents' action for reconveyance was based on fraud, the action must be filed within four years from the discovery of the fraud. Respondent's action for reconveyance was not even subject to prescription, since the deed of sale that was executed in favor of petitioners was null and void because the seller was not the owner of the land, nor has the authority when she sold it to petitioners, hence, being an absolute nullity, the deed is subject to attack anytime because an action to declare the inexistence of a void contract does not prescribe.

ART 1505NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997

Petitioners contend that they could repurchase the property that they "sold" to private respondents when they allowed the respondent to redeem the properties for them from DBP but DBP certified that the mortgagors' right of redemption was not exercised within the period. Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.", hence, petitioners "sold" nothing, it follows that they can also "repurchase" nothing.

B. BUYER

ART 1491DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998

The prohibition in Art. 1491 does not apply to the sale of a parcel of land, acquired by a client to satisfy a judgment in his favor to his counsel as long as the property was not the subject of the litigation.

ARCENIO vs. JUDGE PAGOROGON, A.M. NO. MTJ-89-270 July 5, 1993

OFFICE OF THE COURT ADMINISTRATOR vs. JUDGE PAGOROGON, A.M. NO. MTJ-92-637 July 5, 1993

The respondent judge engaged the services of a mechanic to tow the jeep in custodia legis and to place the jeep in good running condition, spending in the process her own money and also registered the same in her brother's

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name. The act of respondent judge is not unlike the prohibited acquisition by purchase described in Article 1491 of the New Civil code and is in fact, even worse when she did not acquire the said vehicle from it's owner but instead whimsically spent for its repairs and automatically appropriated the jeep for her own use and benefit.

VALENCIA vs. ATTY. CABANTING, A.M. Nos. 1302, 1391 and 1543 April 26, 1991

Paulino alleged that the trial court failed to provide a workable solution concerning his house and while the petition for certiorari was pending the trial court issued an order of execution stating that "the decision in this case has already become final and executory". While it is true that Atty. Cabanting purchased the lot after finality of judgment, there was still a pending certiorari proceeding, and a thing is said to be in litigation not only if there is some contest or litigation over it in court, but also from the moment that it becomes subject to the judicial action of the judge.

FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, G.R. NO. L-68838 March 11, 1991

After the court declared with finality that the petitioners are the lawful owners, they refused to comply when the respondent lawyer proceeded to implement the contract of services between him and the petitioners by taking possession and exercising rights of ownership over 40% of said properties which are the subject of litigation. A contract between a lawyer and his client stipulating a contingent fee is not covered by said prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not made during the pendency of the litigation but only after judgment has been rendered in the case handled by the lawyer.

MANANQUIL vs. ATTY. VILLEGAS, A.M. NO. 2430 August 30, 1990

Complainant alleges that for over a period of 20 years, respondent counsel allowed lease contracts to be executed between his client and a partnership of which respondent is one of the partners, covering parcels of land of the estate, but respondent claims that he is only acting as an agent. Even if the respondent signed merely as an agent, the lease contracts are covered by the prohibition against any acquisition or lease by a lawyer of properties involved in litigation in which he takes part.

BAUTISTA vs. ATTY. GONZALES, A.M. NO. 1625 February 12, 1990

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The Solicitor General found that respondent counsel transferred to himself one-half of the properties of his clients during the pendency of the case where the properties were involved. Persons mentioned in Art. 1491 of the Civil Code are prohibited from purchasing the property mentioned therein because of the existing fiduciary relationship with such property and rights, as well as with the client.

ART 1492IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA, B.M. NO. 793. July 30, 2004

Maquera was suspended from the practice of law in Guam for misconduct, as he acquired his client’s property by exercising the right of redemption previously assigned to him by the client in payment of his legal services, then sold it and as a consequence obtained an unreasonably high fee for handling his client’s case. The prohibition extends to sales in legal redemption and such prohibition is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client and unduly enrich himself at the expense of his client.

ART 1493PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115, FEBRUARY 19, 2008

The City of Cebu was no longer the owner of the lot when it ceded the same to petitioner under the compromise agreement and at that time, the city merely retained rights as an unpaid seller but had effectively transferred ownership of the lot to Morales. A successor-in-interest could only acquire rights that its predecessor had over the lo which include the right to seek rescission or fulfillment of the terms of the contract and the right to damages in either case.

III. SUBJECT MATTER

GENERAL MARIANO ALVAREZ SERVICES COOPERATIVE, INC. (GEMASCO), vs. NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL MARIANO ALVAREZ WATER DISTRICT (GMAWD), G.R. No. 175417/ GENERAL MARIANO ALVAREZ WATER DISTRICT (GMAWD), Petitioner, v. AMINA CATANGAY, ELESITA MIRANDA, ROSITA RICARTE, ROSA FETIZANAN, ABSALON AGA, ELPIDIO SARMIENTO, FRANCISCO RICARDE, ROMEO CATACUTAN, RASALIO LORENZO, ARTEMIO RAFAEL, MYRN CEA, AND NORMA ESTIL; NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL MARIANO ALVAREZ SERVICES COOPERATIVE, INC., REPRESENTED BY ERNESTO FLORES, G.R. No. 198923, February 09, 2015, J. Peralta

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Properties of public dominion, being for public use, are not subject to levy, encumbrance or disposition through public or private sale. Any encumbrance, levy on execution or auction sale of any property of public dominion is void for being contrary to public policy. Otherwise, essential public services would stop if properties of public dominion would be subject to encumbrances, foreclosures and auction sale. Since it is GEMASCO which is liable for the payment of the separation pay and backwages to its illegally dismissed employees, any contemplated sale must be confined only to those properties absolutely owned by it and the subject water tanks lent to it by the NHA must corollarily be excluded from the same.

A. SALE OF AN EXPECTED THING

ART 1461HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892 September 30, 1981

By the terms of the Deed of Sale itself, appellants declared themselves to be owners of one-half (1,2) interest thereof and contend that the deed of assignment of one-half (1,2) interest thereof executed by said Custodio in their favor is strictly personal between them. Notwithstanding the lack of any title to the said lot by appellants at the time of the execution of the deed of sale in favor of appellee, the said sale may be valid as there can be a sale of an expected thing.

B. SALE OF A MERE HOPE OR EXPECTANCY

JAVIER vs. COURT OF APPEALS, G.R. NO. L-48194 March 15, 1990

The efficacy of a deed of assignment is subject to the condition that the application of private respondent for an additional area for forest concession be approved by the Bureau of Forestry which was not obtained. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence, which did not happen, hence the agreement executed never became effective or enforceable.

C. BOUNDARIES OF THE SUBJECT MATTER

DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225, March 3,2010

The parties agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, but when the OCT was issued, the area was declared to be 14,475 sq m, with an excess of 10,475 sq m. Petititiomer, however, claims that respondents are, therefore, duty-bound to deliver the whole area within the boundaries stated, without any corresponding increase in the price. Article 1542 is not hard and fast and admits of an exception and

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the use of “more or less” or similar words in designating quantity covers only a reasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity.

SEMIRA vs. COURT OF APPEALS, G.R. NO. 76031 March 2, 1994

Private respondent sold Lot 4221 to his nephew by means of a "Kasulatan ng Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot, the former transferred not merely the 822.5 square meters stated in their document of sale but the entire area circumscribed within its boundaries.If besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.

IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP

ART 1462DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988

Respondent admits that she did not take physical possession of property but argues that symbolic delivery was effected through the notarized deed of sale. The thing is considered to be delivered when it is placed "in the hands and possession of the vendee," and in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold at the moment of the sale, but if there is no impediment to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient.

ART 1495CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003

Petitioner insists that he was ready to pay the balance of the purchase price but withheld payment because he required that the property be registered first in his name before he would turn over the check to the private respondent. The obligation of the seller is to transfer to the buyer ownership of the thing sold, but in the sale of a real property, the seller is not obligated to transfer in the name of the buyer a new certificate of title, but rather to transfer ownership of the real property, because as between the seller and buyer, ownership is transferred not by the issuance of a new certificate of

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title in the name of the buyer but by the execution of the instrument of sale in a public document.

ART 1496VISAYAN SAWMILL COMPANY, INC., vs. COURT OF APPEALS, G.R. NO. 83851. March 3, 1993.

The seller gave access to the buyer to enter his premises, manifesting no objection thereto but even sending people to start digging up the scrap iron. The seller has placed the goods in the control and possession of the vendee and such action or real delivery (traditio) transfered ownership.

ART 1497MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS, G.R. NO. L-31189 March 31, 1987

Respondent discovered that a parcel of land she owns is being used by Petitioner, Municipality of Victorias, as a cemetery for 29 years and when the Mayor replied that Petitioner bought the land from her grandmother, she asked to be shown the papers concerning the sale but petitioner refused to show the same. Where there is no express provision that title shall not pass until payment of the price, and the thing sold has been delivered, title passes from the moment the thing sold is placed in the possession and control of the buyer.

DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

Petitioner sold three parcels of land to respondent which were mortgaged to a bank, hence petitioner and respondent executed a notarized deed of absolute sale with assumption of mortgage, but petitioner some time thereafter paid the mortgage and sold the properties to another person. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer, and as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold.

ART 1523PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. March 22, 1993.

Petitioner argues that the sales contract does not include the contract of carriage which is a different contract entered into by the carrier with the cargo owners.

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As worded, the sales contract is comprehensive enough to include claims for damages arising from carriage and delivery of the goods. As a general rule, the seller has the obligation to transmit the goods to the buyer, and concomitant thereto, the contracting of a carrier to deliver the same. Art. 1523 of the Civil Code provides:

"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in article 1503, first, second and third paragraphs, or unless a contrary intent appear.

"Unless otherwise authorized by the buyer, the seller must take such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself,, or may hold the seller responsible in damages."

xxx xxx xxx

The disputed sales contact provides for conditions relative to the delivery of goods, such as date of shipment, demurrage, weight as determined by the bill of lading at load port.

ART 1477BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004

Petitioner sold the subject property to respondents as evidenced by a notarized Deed of Absolute Sale, but contends that the respondents have no right to material possession of the property since the respondents have not paid the property in full. Unless there is a stipulation to the contrary, when the sale is made through a public instrument, the execution thereof is equivalent to the delivery of the thing which is the object of the contract.

V. PRICE

A. G.R.OSS INADEQUACY OF THE PRICE

ART 1470

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SPOUSES BUENAVENTURA et al vs. COURT OF APPEALS, G.R. NO. 126376. November 20, 2003

Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their respondent father and assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid and gross inadequacy of price does not affect a contract of sale, except if there is a defect in the consent, or that the parties really intended a donation or some other contract.

ART 1471HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008

RTC considered that although the sales of the properties on the lot were simulated, it can be assumed that the intention of Ho in such transaction was to give and donate such properties to the respondent. The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that the simulated sales were a valid donation to the respondent is misplaced because its finding was based on a mere assumption when the law requires positive proof, which the respondent was unable to show.

B. FIXING OF THE PRICE

ART 1473HYATT ELEVATORS vs. CATHEDRAL HEIGHTS, G.R. NO. 173881 December 1, 2010

As revealed by the records, it was only Hyatt who determined the price, without the acceptance or conformity of CHBCAI. The fixing of the price can never be left to the decision of one of the contracting parties, but a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.

C. WHEN AND WHERE TO PAY THE PRICECHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9, 2003

On the agreed date, Chua refused to pay the balance of the purchase price as required by the contract to sell, the signed Deeds of Sale, and imposes another condition. The vendee is bound to accept delivery and to pay the price of the thing sold at the time and place stipulated in the contract.

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D. INTERESTART 1589FULE vs. COURT OF APPEALS, G.R. NO. 112212, March 2, 1998

While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and demandable.

Neither may such failure to pay the balance of the purchase price result in the payment of interest thereon. Article 1589 of the Civil Code prescribes the payment of interest by the vendee "for the period between the delivery of the thing and the payment of the price" in the following cases:

(1) Should it have been so stipulated;

(2) Should the thing sold and delivered produce fruits or income;

(3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.

E. SUSPENSION OF PAYMENT OF THE PRICE

ART 1590CENTRAL BANK OF THE PHILIPPINES vs. SPOUSES ALFONSO, G.R. NO. 131074, March 27, 2000

Respondents aver that they are entitled to cancel the obligation altogether in view of petitioner's failure to pay the purchase price when the same became due, while Petitioner claims that the respondent failed to comply with their contractual obligations hence it was entitled to withhold payment of the purchase price. Should the vendee be disturbed in the possession or ownership of the thing acquired, he may suspend the payment of the price until the vendor has cause the disturbance or danger to cease. This is not, however, the only justified cause for retention or withholding the payment of the agreed price, but also, if the vendor fails to perform any essential obligation of the contract.

ART 1592SOLIVA vs. The INTESTATE ESTATE of MARCELO M.VILLALBA, G.R. NO. 154017, December 8, 2003

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While petitioner is now barred from recovering the subject property due to laches, all is not lost for her since by respondent's own admission, a balance of P1,250 of the total purchase price remains unpaid. 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 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 extrajudicially or by a notarial act.

VI. FORMATION OF A CONTRACT OF SALE

A. STAGES TO THE CONTRACT OF SALE

SWEDISH MATCH vs. COURT OF APPEALS, G.R. NO. 128120 October 20, 2004

Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller, hence, there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents’ offer that consideration would be paid in Philippine pesos. In general, contracts undergo three distinct stages, to wit: (1) Negotiation - begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties; (2) Perfection or birth of the contract takes place when the parties aG.R.ee upon the essential elements of the contract; and (3) Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.

B. ACCEPTED UNILATERAL PROMISE

ART 1479 (Read together with ART 1324)

TUAZON vs. DEL ROSARIO-SUAREZ, G.R. NO. 168325, December 8, 2010

The lessor made an offer to sell to the lessee the property at a fixed price within a certain period, but the lessee failed to accept the offer or to purchase on time, hence, the lessor sold the said property to her daughter. An accepted unilateral promise can only have a binding effect if supported by a consideration separate and distinct from the purchase price. Hence, the option can still be withdrawn, even if accepted, if the same is not supported by any consideration.

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ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December 2, 1994

Both the trial court and CA found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all.

When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase price), the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force.

An imperfect promise (policitacion) is merely an offer and is not considered binding commitments, thus, at any time prior to the perfection of the contract, either negotiating party may stop the negotiation, and the offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal.

SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January 4, 1994

The court found the contract to be valid, but nonetheless ruled that the option to buy is unenforceable because it lacked a consideration distinct from the price and RCBC did not exercise its option within reasonable time. Article 1324 of the Civil Code provides that when an offeror has allowed the offeree a certain period to accept, the offer maybe withdrawn at anytime before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised; on the other hand, Article 1479 of the Code provides that an accepted unilateral promise to buy and sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price.

C. EARNEST MONEY

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 cliché, the carriage cannot be placed before the horse. Securitron’s sending of the February 4, 2005 letter to FORC which contains earnest money constitutes a mere reiteration of its original offer which was already rejected previously. FORC can never be

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made to push through a sale which they never agreed to in the first place. FIRST OPTIMA REALTY CORPORATION vs. SECURITRON SECURITY  SERVICES, INC., G.R. No. 199648, January 28, 2015, J. Del Castillo

ART 1482SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007

The lower court ruled that the receipt stating that the respondent made a partial payment and that the execution and final deed of sale would be signed upon payment of the balance, is a Contract of Sale and considered the partial payment as earnest money, which prompted the respondent to demand specific performance and damages when the herein petitioners cancelled the transaction. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the perfection of the contract, but the earnest money given in a contract to sell will form part of the consideration only if the sale is consummated upon full payment of the purchase price.

SAN MIGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES HUANG, G.R. NO. 137290. July 31, 2000

The appellate court held that all the requisites of a perfected contract of sale had been complied with upon acceptance of the petitioner of the earnest money tendered by respondents. It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale.

VII. TRANSFER OF OWNERSHIPNFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATED BROKERAGEAND/OR GERARDO TRINIDAD, G.R. No. 178169, January 12, 2015, J. Peralta

Under the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. The ownership of thing sold is considered acquired by the vendee once it is delivered to him. Thus, ownership does not pass by mere stipulation but only by delivery. 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."

NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATES BROKERAGE AND/OR GERARDO TRINIDAD, G.R. No. 178169. January 12, 2015, J. Peralta

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The seller has actually delivered the bulk bags to buyer-company, although the same was not delivered to the person named in the Purchase Order but to the representative of the general manager of buyer-company. By allowing seller’s employee to pass through the guard-on-duty, who allowed the entry of delivery into the buyer’s premises which is the designated delivery site, the buyer had effectively abandoned whatever infirmities may have attended the delivery of the bulk bags. Therefore, there was a valid delivery on the part of the seller which transferred ownership to the buyer and which would then give rise to an obligation to pay on the part of the buyer for the value of the bulk bags.

A. DEED OF SALE

ART 1498

DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008

Respondents question the notarized deed of absolute sale presented by the petitioner and refused to partition the property purportedly co-owned by them. Ownership of the thing sold is acquired only from the time of delivery thereof, either actual or constructive, and when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be inferred.

LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002

It is not disputed that petitioner neither had, nor demanded, material possession of the disputed lot as well as the transfer of title to his name notwithstanding the alleged execution of a deed of absolute sale and it was the respondents who have been in control and possession thereof in the concept of owners. The execution of the deed of sale is only a presumptive, not conclusive delivery which can be rebutted by evidence to the contrary, as when there is failure on the part of the vendee to take material possession of the land subject of the sale in the concept of a purchaser-owner.

SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK, INC. (now UNION BANK OF THE PHILIPPINES) et al., G.R. NO. 132709, September 4, 2001

Petitioners claims that, Ayala Corporation failed to "complete and perfect ownership and title" to the subject property since it was never in actual occupation, possession, control and enjoyment of said property due to the

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presence of illegal occupants. Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance in a public document which is equivalent to the delivery of the property.

B. CONSTRUCTIVE DELIVERY

ART 1499DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991

There is constructive delivery already upon the execution of the public instrument pursuant to Article 1498 and upon the consent or agreement of the parties when the thing sold cannot be immediately transferred to the possession of the vendee. (Art. 1499)

DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988

Although denominated a "Deed of Conditional Sale," a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon actual or constructive delivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ORION SAVINGS BANK VS. SHIGEKANE SUZUKI, G.R. No. 205487, November 12, 2014, J. Brion

Petitioner delivered the properties to respondent upon the execution of the notarized deed and handed over to respondent the keys to the properties, hence respondent took actual possession and exercised control over the property before he made the second sale. Should there be no inscription, ownership shall pertain to the person who in good faith was first in possession.

The petitioner asserts that it has a better right of ownership over the disputed property in the case at bar by virtue of a Dacion En Pago. The Supreme Court ruled 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.

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ART 1544DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

VIII. RISK OF LOSS

ART 1504 (2)AEROSPACE CHEMICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129 September 23, 1999

The petitioner contends that rental expenses of storing sulfuric acid should be at private respondent's account, as a seller, until ownership is transferred. The general rule that before delivery, the risk of loss is borne by the seller who is still the owner, is not applicable in this case because petitioner had incurred delay in the performance of its obligation.

IX. DOCUMENTS OF TITLE

A. TORRENS TITLE

VDA. DE MELENCION vs COURT OF APPEALS, G.R. NO. 148846, September 25, 2007

The subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file.

The fact that the certificate of title over the registered land is lost does not convert it into unregistered land.  After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein. T

Act 3344  provides for the system of recording of transactions or claims over unregistered real estate  without  prejudice to a third party with a better right.  But if the land is registered under the Land Registration Act (and therefore has a Torrens Title),  and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the term is used under Art. 1544 of the New Civil Code. Although it is obvious that Go Kim Chuan registered the sale in his favor

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under Act 496 while AZNAR did not, SC did not make an outright award of the subject property to the petitioners solely on that basis.  For the law is clear:  mere registration of title is not enough.  Good faith must accompany the registration.          Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no knowledge of the previous alienation of the property by the vendor to another.  Notably, what is important for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the second sale in good faith, meaning, he does so without knowledge of any defect in the title over the property sold.

B. FIRST TO REGISTER IN GOOD FAITH

DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September 21, 2007

Respondents caused the registration of the sale of the land in the Registry of the Deeds. Petitioners, on the other hand, failed to cause the registration of the sale to them. Where both parties claim to have purchased the same property, the one who registered the sale in his favor, in good faith, has a preferred right over the other who has not registered his title, even if the latter is in actual possession of the immovable property.

SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August 17, 2007

Article 1544 of the Civil Code contemplates a case of double sales or multiple sales by a single vendor. It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold.

Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21, 2004

Both petitioners Abrigo and respondent registered the sale of the property, but petitioners registered their sale under Act 3344, while respondent registered the transaction under the Torrens system.

Between two buyers of the same immovable property, the law gives ownership priority to (1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title.

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Since the property in dispute in the present case was already registered under the Torrens system, petitioners’ registration of the sale under Act 3344 was not effective for purposes of Article 1544 of the Civil Code.

SPOUSES OCCEÑA vs. MORALES OBSIANA, G.R. NO. 156973, June 4, 2004

The general rule is that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title.

However, this principle does not 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 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. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith.

ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES TOLENTINO-RIVERA, G.R. NO. 132677, October 20, 2000

Cortez filed a complaint-in-intervention claiming ownership over two parcels of land by virtue of a sale in 1988, alleging that the lots were included in the four-hectare land covered by a Torrens Title of petitioner Isabela Colleges.

Even assuming that Cortez was not guilty of bad faith when he bought the land in question, the fact remains that the Isabela Colleges was first in possession. Petitioner has been in possession of the land since 1949. Between petitioner and Cortez, therefore, the former had a better right for the latter only bought the property in 1988 when it was already purchased by and titled under the name of petitioner.

BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201. September 12, 2000

First buyer registered the sale under Act 3344, while second buyer registered the sale under PD 1529. The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second

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sale cannot defeat the first buyer’s rights except when the second buyer first registers in good faith the second sale, conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith.

BARICUATRO, JR., vs. COURT OF APPEALS, G.R. NO. 105902 February 9, 2000

Amores was in good faith when he bought the disputed lots. When he registered his title, however, he already had knowledge of the previous sale of the disputed lots to petitioner. Such knowledge tainted his registration with bad faith, and to merit protection under article 1544, the second buyer must act in good faith from the time of the sale until the registration of the same

X. REMEDIES OF AN UNPAID SELLER

ART 1484 , 1485PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE IMAGING, INC., G.R. NO. 142618, July 12, 2007

Petitioner having recovered thru (replevin) the personal property sought to be payable, leased on installments, still demanded the balance of the rent. In choosing, through replevin, to deprive the respondent of possession of the leased equipment, the petitioner waived its right to bring an action to recover unpaid rentals on the said leased items.

ART 1486

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 VICTOR C. SANCHEZ and FELISA GARCIA YAP, G.R. No. 179518, G.R. No. 179835, G.R. No. 179954, November 19, 2014, J. Velasco Jr.

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. Contrary to the contention of BPI, although the case was originally an action for rescission, it became a direct attack on the title, certainly there is no indication that when the Sanchezes filed their complaint with the RTC they already knew of the existence of TCT 383697.

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PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OF APPEALS, G.R. NO. 112733 October 24, 1997

When petitioner failed to abide by its obligation to pay the installments in accordance with the contract to sell, and provision in the contract automatically took effect, which provides that "(I)f the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract and any and all sums of money paid under this contract shall be considered and become rentals on the property. A stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.

GIL vs. HON. COURT OF APPEALS, G.R. NO. 127206, September 12, 2003

The consignation by the vendee of the purchase price of the property is sufficient to defeat the right of the petitioners to demand for a rescission of the said deed of absolute sale.

IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107, September 26, 2001

Petitioner contends that no rescission was effected simply by virtue of the letter sent by respondent stating that he considered the contract of sale rescinded. Petitioner asserts that a judicial or notarial act is necessary before one party can unilaterally effect a rescission.

Respondent, on the other hand, contends that the right to rescind is vested by law on the obligee and since petitioner did not oppose the intent to rescind the contract, petitioner in effect agreed to it and had the legal effect of a mutually agreed rescission.Article 1592 of the Civil Code is the applicable provision regarding the sale of an immovable property.

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 a notarial act. After the demand, the court may not grant him a new term.

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A judicial or notarial act is necessary before a valid rescission can take place, whether or not automatic rescission has been stipulated. It is to be noted that the law uses the phrase "even though" emphasizing that when no stipulation is found on automatic rescission, the judicial or notarial requirement still applies.

XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE & SURETY CORPORATION vs. IAC, G.R. NO. L-69450, November 22, 1988

The ordinary meaning of execution is not limited to the signing or concluding of a contract but includes as well the performance or implementation or accomplishment of the terms and conditions of such contract.

XII. WARRANTIES

A. EXPRESS WARRANTIES

ART 1502

INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES, INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140, January 21, 1993

Respondent alleges that it cannot be held liable for the 47,000 plastic bags which were not used for packing cement as originally intended invoking it's right of return. Article 1502 of the Civil Code, has no application at all to this case, since the provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken, clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval", which is absent in this case.

Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have done so at the time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the goods since this falls outside the normal intent of the parties in the "on approval" situation.

B. IMPLIED WARRANTIES

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ART 1628LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420 October 8, 2003

The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge.

ART 1546ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008

The seller, in declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale, is giving an implied warranty of title which prescribes six months after the delivery of the vehicle.

ART 1547PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION, G.R. NO. 173454, October 6, 2008

MEGA PRIME REALTY AND HOLDINGS CORPORATION vs. PNB, G.R. NO. 173456, October 6, 2008

In a contract of sale, unless a contrary intention appears, there is an implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall have a peaceful possession of the thing and it shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer.

ART 1548ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008

The seller, in pledging that he “will defend the same from all claims or any claim whatsoever [and] will save the vendee from any suit by the government of the Republic of the Philippines,” is giving a warranty against eviction. A breach of this warranty requires the concurrence of these four requisites:(1) The purchaser has been deprived of the whole or part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and (4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

ART 1561

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DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001

Petitioner admitted that he inspected the premises three or four times before signing the lease contract and during his inspection, he noticed the rotten plywood on the ceiling which in his opinion was caused by leaking water or "anay" (termites), yet he decided to go through with the lease agreement. The lessor is responsible for warranty against hidden defects, but he is not answerable for patent defects or those which are visible.

C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES

ART 1567ENGINEERING & MACHINERY CORPORATION vs. COURT OF APPEALS, G.R. NO. 52267, January 24, 1996

The original complaint is one for damages arising from breach of a written contract - and not a suit to enforce warranties against hidden defects. The remedy against violations of the warranty against hidden defects is either to withdraw from the contract (redhibitory action) or to demand a proportionate reduction of the price (accion quanti minoris), with damages in either case.

ART 1571DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001

Respondent made the last delivery of the vinyl products to petitioners on September 28, 1988 and the action to recover the purchase price of the goods petitioners returned to the respondent was filed on July 24, 1989, more than nine months from the date of last delivery. Actions arising from breach of warranty against hidden defects shall be barred after six months from the delivery of the thing sold.

XIII. BREACH OF CONTRACT

ART 1545LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000

A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell unto BUYER-LESSEE the property described within six (6) months from the execution date hereof, or upon issuance by the Court of a new owner's certificate of title and the execution of extrajudicial partition with sale of the estate of Francisco Laforteza, whichever is earlier;...". Petitioner contends

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that since the condition was not met, they no longer had an obligation to proceed with the sale of the house and lot. The petitioners fail to distinguish between a condition imposed upon the perfection of the contract and a condition imposed on the performance of an obligation, failure to comply with the first condition results in the failure of a contract, while the failure to comply with the second condition only gives the other party the option either to refuse to proceed with the sale or to waive the condition.

ART 1583INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS, G.R. NO. 115117, June 8, 2000

There is no dispute that the agreement provides for the delivery of printing paper on different dates and a separate price has been agreed upon for each delivery. When there is a contract of sale of goods to be delivered by stated installments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more installments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or whether the breach is severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken.

ART 1597VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OF APPEALS, G.R. NO. 83851. March 3, 1993.

The petitioner agreed to deliver the scrap iron only upon payment of the purchase price by means of an irrevocable and unconditional letter of credit, which the respondent failed to obtain, thus, there was no actual sale. Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract of sale, or has manifested his inability to perform his obligations, thereunder, or has committed a breach thereof, the seller may totally rescind the contract of sale by giving notice of his election to do to the buyer.

XIV. EXTINGUSHMENT OF THE SALE

EAGLE RIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I. OBEN vs. CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., G.R. No. 204700, November 24, 2014, J. Leonen

Cameron Grandville filed a motion for reconsideration for the April 10, 2013 decision of the Supreme Court. It argues that the right of Eagle Ridge Development to extinguish the

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obligation has already lapsed. However, the Court in resolving this case stated that under the circumstances of this case, the 30-day period under Article 1634 within which Eagle Ridge Developments could exercise their right to extinguish their debt should begin to run only from the time they were informed of the actual price paid by the assignee for the transfer of their debt.

JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen

Sale of a portion of the property is considered an alteration of the thing owned in common. Such disposition requires the unanimous consent of the other co-owners. However, the rules also allow a co-owner to alienate his or her part in the co-ownership.

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.

The undivided interestof a co-owner is also referred to as the "ideal or abstract 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.

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.

In this case, 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.

While the rules allow respondent to sell his undivided interest in the coownership, this was not the object of the sale between him and petitioner.

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.

Thus, 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.

The absence of a contract of sale means that there is no source of obligations for respondent, as seller, orpetitioner, 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.

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ROBERTO R. DAVID vs. EDUARDO C. DAVID, G.R. No. 162365, JANUARY 15, 2014, J. Bersamin

Eduardo and his brother Edwin sold their properties to Roberto with the agreement that they would be given the right to repurchase within three years from the execution of the deed of sale. Eduardo paid the repurchase price to Roberto by depositing the proceeds of the sale of the Baguio City lot in the latter’s account. The Supreme Court ruled such payment was an effective exercise of the right to repurchase. In a sale with right to repurchase, title and ownership of the property sold are immediately vested in the vendee, subject to the resolutory condition of repurchase by the vendor within the stipulated period. Accordingly, the ownership of the affected properties reverted to Eduardo once he complied with the condition for the repurchase, thereby entitling him to the possession of the other motor vehicle with trailer.

REDEMPTION

680 HOME APPLIANCES, INC. V THE HONORABLE COURT OF APPEALS, THE HONORABLE MARYANNE. CORPUS-MAÑALAC, in her capacity as the PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF MA.KATI CITY, BRANCH 141, ATTY. ENGRACIO ESCASINAS, JR., in his capacity as THE EX-OFFICIO SHERIFF/CLERK OF COURT VII, OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL COURT, MA.KATI CITY, FIRST SOVEREIGN ASSET MANAGEMENT (SPV-AMC), INC. and ALDANCO MERLMAR, INC. G.R No. 206599, September 29, 2014. J. BRION

Upon the lapse of the redemption period without the debtor exercising his right of redemption and the purchaser consolidates his title, it becomes unnecessary to require the purchaser to assume actual possession thereof before the debtor may contest it. Possession of the land becomes an absolute right of the purchaser, as this is merely an incident of his ownership. In fact, the issuance of the writ of possession at this point becomes ministerial for the court.

The debtor contesting the purchaser’s possession may no longer avail of the remedy under Section 8 of Act No. 3135, but should pursue a separate action e.g., action for recovery of ownership, for annulment of mortgage and/or annulment of foreclosure. FSAMI’s consolidation of ownership therefore makes the remedy under Section 8 of Act No. 3135 unavailable for 680 Home.

FE H. OKABE v ERNESTO A. SATURNINO, G.R No. 196040, August 26, 2014. J. PERALTA

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.

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GE MONEY BANK, INC. (FORMERLY KEPPEL BANK PHILIPPINES) vs. SPOUSES VICTORINO M. DIZON AND ROSALINA L. DIZON, G.R. No. 184301, March 23, 2015, J. Peralta

An insufficient sum was tendered by the Spouses Dizon during the redemption period. Whether the total redemption price is PhP 251,849.77 as stated in the Petition for Review, or PhP 232,904.60 as stated in the Bank’s Motion for Reconsideration of the CA Decision, or PhP 428,019.16 as stated in its Appellant’s Brief, is immaterial. What cannot be denied is that the amount of PhP 90,000.00 paid by the Spouses Dizon during the redemption period is less than half of PhP 181,956.72 paid by the Bank at the extrajudicial foreclosure sale... If only to prove their willingness and ability to pay, the Spouses Dizon could have tendered a redemption price that they believe as the correct amount or consigned the same. Seventeen long years passed since the filing of the complaint but they did not do either. Indeed, they manifestly failed to show good faith.

The Spouses Dizon’s own evidence show that, after payment of PhP 90,000.00, the earliest date they exerted a semblance of effort to re-acquire the subject property was on October 15, 1996. Apart from being way too late, the tender was not accompanied by the remaining balance of the redemption price. The same is true with respect to their letter dated February 27, 1998, wherein they were still making proposals to the Bank. The court’s intervention was resorted to only on April 3, 1998 after the redemption period expired on October 18, 1994, making it too obvious that such recourse was merely a delayed afterthought to recover a right already lost.

A. SALE WITH PACTO DE RETRO

ART 1601NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997

Petitioners contend that they could repurchase the property that they "sold" to private respondents when they allowed the respondent to redeem the properties for them from DBP. DBP, however, certified that the petitioner-mortgagors' right of redemption was not exercised within the period, hence DBP became the absolute owner of said parcels of land when it entered into a Deed of Conditional Sale involving the same parcels of land with Private Respondent as vendee. One "repurchases" only what one has previously sold since the right to repurchase presupposes a valid contract of sale between the same parties.

DIAMANTE vs. HON. COURT OF APPEALS, G.R. NO. L-51824 February 7, 1992

A right to repurchase was granted subsequently in an instrument different from the original document of sale which caused the cancellation of the

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permit or lease by the Secretary of Fisheries. An agreement to repurchase becomes a promise to sell when made after the sale, because when the sale is made without such an agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the vendor the right to repurchase, it is a new contract entered into by the purchaser, as absolute owner already of the object.

VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO. 83759 July 12, 1991

Respondents sold the lot to the petitioners under a Deed of Sale, On the same day and along with the execution of the Deed of Sale, a separate instrument, denominated as Right to Repurchase was executed by the parties, Later, petitioners resisted the action for redemption. The transaction between the petitioners and private respondents was not a sale with right to repurchase, the second instrument is just an option to buy since it is not embodied in the same document of sale but in a separate document, and since such option is not supported by a consideration distinct from the price, said deed for right to repurchase is not binding upon them.

ART 1603BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

Where in a contract of sale with pacto de retro, the vendor remains in possession, as a lessee or otherwise, the contract shall be presumed to be an equitable mortgage because in a contract of sale with pacto de retro, the legal title to the property is immediately transferred to the vendee, subject to the vendor’s right to redeem and retention by the vendor of the possession of the property is inconsistent with the vendee’s acquisition of the right of ownership under a true sale.

ART 1606ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002

The legal question to be resolved is "May the vendors in a sale judicially declared as a pacto de retro exercise the right of repurchase under Article 1606, third paragraph, of the Civil Code, after they have taken the position that the same was an equitable mortgage?" No, where the proofs established that there could be no honest doubt as to the parties’ intention, that the transaction was clearly and definitely a sale with pacto de retro, the vendor a retro is not entitled to the benefit of the third paragraph of Article 1606.

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AGAN vs. HEIRS OF SPS. NUEVA, G.R. NO. 155018, December 11, 2003

The lower court's dispositive position states: "However, the vendors can still exercise the right to repurchase said property within thirty (30) days from receipt of this decision pursuant to Article 1606 and 1607 of the New Civil Code." Article 1606 grants the vendor a retro thirty (30) days “from the time final judgment was rendered,” not from the defendant’s receipt of the judgment, "final judgment” must be construed to mean one that has become final and executory.

ART 1607Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, March 9, 2000

The lower court rationalized that petitioners failed to comply with the provisions of Article 1607 of the Civil Code requiring a judicial order for the consolidation of the ownership in the vendee a retro to be recorded in the Registry of Property. A judicial order is necessary in order to determine the true nature of the transaction and to prevent the interposition of buyers in good faith while the determination is being made, however, notwithstanding Article 1607, the recording in the Registry of Property of the consolidation of ownership of the vendee is not a condition sine qua non to the transfer of ownership for the method prescribed thereunder is merely for the purpose of registering the consolidated title.

ART 1616BPI FAMILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974, August 9, 2004

The respondents offer to redeem the foreclosed properties and the subsequent consignation in court were made within the period of redemption, but the amount consigned did not include the interest and was also way below the amount paid by the highest bidder-purchaser of the properties during the auction sale. The redemption price should either be fully offered in legal tender or else validly consigned in court because only by such means can the auction winner be assured that the offer to redeem is being made in good faith.

ART 1619LEE CHUY REALTY CORPORATION vs.HON. COURT OF APPEALS, G.R. NO. 104114 December 4, 1995

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Petitioner questions the ruling of the Court of Appeals which concluded that a prior tender or offer of redemption is a prerequisite or precondition to the filing of the action for legal redemption. To avail of the right of redemption what is essential is to make an offer to redeem within the prescribed period. There is actually no prescribed form for an offer to redeem to be properly effected. It can either be through a formal tender with consignation, or by filing a complaint in court coupled with consignation of the redemption price within the prescribed period.

VILLANUEVA vs. HON. ALFREDO C. FLORENDO, G.R. NO. L-33158, October 17, 1985

It is not disputed that co-ownership exists but the lower court disallowed redemption because it considered the vendee, Vallangca, a co-heir, being married to Concepcion Villanueva.

The term "third person" or "stranger” in Art. 1620 refers to all persons who are not heirs in succession, either by will or the law or any one who is not a co-owner.

ART 1621PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R. NO. 150060. August 19, 2003

Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining owner of the property conveyed may be defeated if it can be shown that the buyer or grantee does not own any other rural land.

ART 1622G.R. NO. 134117. February 9, 2000SEN PO EK MARKETING CORPORATION vs. MARTINEZ

Petitioner invokes its right of first refusal against private respondents, when Teodora sold the property that petitioner has been leasing. Article 1622 of the New Civil Code only deals with small urban lands that are bought for speculation where only adjoining lot owners can exercise the right of pre-emption or redemption. It does not apply to a lessee trying to buy the land that it was leasing, especially when such right was never stipulated in any of the several lease contracts.

ART 1623

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JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen

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.

In the case at bar, no contract of sale exist. 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. 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.

SPOUSES MICHELLE M. NOYNAY and NOEL S. NOYNAY vs.CITIHOMES BUILDER AND DEVELOPMENT, INC., G.R. No. 204160, September 22, 2014, J. Mendoza

Well-established is the rule that the assignee is deemed subrogated to the rights as well as to the obligations of the seller/assignor. By virtue of the deed of assignment, the assignee is deemed subrogated to the rights and obligations of the assignor and is bound by exactly the same conditions as those which bound the assignor.What can be inferred from here is the effect on the status of the assignor relative to the relations established by a contract which has been subsequently assigned; that is, the assignor becomes a complete stranger to all the mattersthat have been conferred to the assignee.

SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA vs. UNITED COCONUT PLANTERS BANK, G.R. No. 207747, March 11, 2015, J. Carpio

UCPB assigned accounts receivable to Primetown. Thereafter, Spouses filed a complaint against the latter for refund for payment. The court ruled that the agreement conveys the straightforward intention of Primetown to “sell, assign, transfer, convey and set over” to UCPB the receivables, rights, titles, interests and participation over the units covered by the contracts to sell. It explicitly excluded any and all liabilities and obligations, which Primetown assumed under the contracts to sell. In every case, the obligations between assignor and assignee will depend upon the judicial relation which is the basis of the assignment. An assignment will be construed in accordance with the rules of construction governing contracts generally, the primary object being always to ascertain and carry out the intention of the parties. This intention is to be derived from a consideration of the whole instrument, all parts of which should be given effect, and is to be sought in the words and language employed.

CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007

Petitioners may redeem the subject property from respondents-spouses, but they must do so within thirty days from notice in writing of the sale by their

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co-owners vendors. In requiring written notice, Art. 1623 seeks to ensure that the redemptioner is properly notified of (a) the sale and (b) the date of such notice, as the date thereof becomes the reckoning point of the 30-day period of redemption.

SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047, October 12, 2000

Co-owners with actual notice of the sale are not entitled to written notice. A written notice is a formal requisite to make certain that the co-owners have actual notice of the sale to enable them to exercise their right of redemption within the limited period of thirty days. But where the co-owners had actual notice of the sale at the time thereof and/or afterwards, a written notice of a fact already known to them, would be superfluous. The statute does not demand what is unnecessary.

FRANCISCO vs. BOISER, G.R. NO. 137677, May 31, 2000

Art. 1623 of the Civil Code is clear in requiring that the written notification should come from the vendor or prospective vendor, not from any other person. Since the vendor of an undivided interest is in the best position to know who are his co-owners who under the law must be notified of the sale, and is in the best position to confirm whether consent to the essential obligation of selling the property and transferring ownership thereof to the vendee has been given.

LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R. NO. 149040, July 4, 2007

An assignment of credit has been defined as an agreement by virtue of which the owner of a credit (known as the assignor), by a legal cause - such as sale, dation in payment or exchange or donation - and without need of the debtor's consent, transfers that credit and its accessory rights to another (known as the assignee), who acquires the power to enforce it, to the same extent as the assignor could have enforced it against the debtor.

ART 1625TEOCO, JR.,vs METROPOLITAN BANK AND TRUST COMPANY, G.R. NO. 162333, December 23, 2008

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Would the exercise by the brothers Teoco of the right to redeem the properties in question be precluded by the fact that the assignment of right of redemption was not contained in a public document? NO, the phrase "effect as against third person" in Article 1625 of the Civil Code is interpreted as to be damage or prejudice to such third person, hence if the third person would not be prejudiced then the assignment of right to redeem may not be in a public instrument.

B. EQUITABLE MORTGAGE

SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco

A transaction is deemed to be an equitable mortgage, not an absolute sale, when a party have remained in possession of the subject property and exercised acts of ownership over the lot even after the purported absolute sale and it could be gleaned from the intention of the parties that the transaction is intended secure the payment of a debt.

SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco

Where the alleged sellers have remained in possession of the subject property and exercised acts of ownership over the lot even after its purported absolute sale, the real intention of the parties was for the transaction to secure the payment of a debt or an equitable mortgage and not a sale as provided under Article 1602 of the New Civil Code. If the transaction had really been one of sale, as the alleged buyers claim, they should have asserted their rights for the immediate delivery and possession of the lot instead of allowing the alleged sellers to freely stay in the premises for almost seventeen (17) years from the time of the purported sale until their filing of the complaint.

HEIRS OF REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA, JOSEPHINE SANTIAGO AND JOSEPH DELA ROSA v MARIO A. BA TONGBACAL, IRENEO BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA TONGBACAL, G.R No. 179205, July 30, 2014, J. PEREZ

Reynaldo, one of the co-owners of an undivided parcel of land, sold his share to the spouses Batongbacal in a “Contract to Sell.” The spouses advanced 31k with the balance deliverable after Reynaldo delivers a SPA authorizing him to alienate the property in behalf of his co-owners. Later, Reynaldo refused to deliver the SPA and the lot, claiming that there was no contract to sell, but an equitable mortgage.

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

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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.

In this case, Reynaldo failed to prove the second requisite. Nothing in the contract suggests, even remotely, that the subject property was given to secure a monetary obligation.

BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA TONGBACAL, G.R. No. 179205, July 30, 2014, J. Perez

The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties.  Such that when the contract denominated as Resibo reveals that nothing therein suggests, even remotely, that the subject property was given to secure a monetary obligation but an intent to sell his share in the property, said contract is a contract of sale and not an equitable mortgage.

ART 1602HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO. 158377, August 13, 2010

The provisions of the Civil Code governing equitable mortgages disguised as sale contracts, like the one herein, are primarily designed to curtail the evils brought about by contracts of sale with right to repurchase, particularly the circumvention of the usury law and pactum commissorium. Courts have taken judicial notice of the well-known fact that contracts of sale with right to repurchase have been frequently resorted to in order to conceal the true nature of a contract, that is, a loan secured by a mortgage. It is a reality that grave financial distress renders persons hard-pressed to meet even their basic needs or to respond to an emergency, leaving no choice to them but to sign deeds of absolute sale of property or deeds of sale with pacto de retro if only to obtain the much-needed loan from unscrupulous money lenders. This reality precisely explains why the pertinent provision of the Civil Code includes a peculiar rule concerning the period of redemption, to wit: 

Art. 1602. The contract shall be presumed to be an equitable mortagage, in any of the following cases:

x x x

(3) When upon or after the expiration of the right to

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repurchase another instrument extending the period of redemption or granting a new period is executed;

VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January 28, 2008

The essential requisites of an equitable mortgage are: (1) the parties enter into what appears to be a contract of sale, (2) but their intention is to secure an existing debt by way of mortgage and the presence of even one of the circumstances enumerated in Article 1602.

SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31, 2008

Respondent alleged that the transaction was an equitable mortgage because after the sale of the property respondent remained therein, and the price according to respondent was grossly inadequate. The presumption of equitable mortgage created in Article 1602 of the Civil Code is not conclusive and may be rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO. 155856, May 28, 2004

Petitioner argues that Mercado’s delay in registering the Deed of Absolute Sale and transferring the land title shows that the real agreement was an equitable mortgage. Delay in transferring title is not one of the instances enumerated by law in which an equitable mortgage can be presumed.

CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO. 155856, May 28, 2004

Petitioners contend that the sale was only an equitable mortgage because (1) the price was grossly inadequate, and (2) the vendors remained in possession of the land and enjoyed its fruits. For the presumption of an equitable mortgage to arise, one must first satisfy the requirement that the parties entered into a contract denominated as a contract of sale, and that their intention was to secure an existing debt by way of mortgage.

BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

The purchase price stated in the deed was the amount of the indebtedness of the respondent to petitioner but the deed purports to be a sale with right

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to purchase. The rule is firmly settled that whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitable mortgage.

ART 1604DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008

The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale, and in case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage in consonance with the rule that the law favors the least transmission of property rights.

XV. The Subdivision and Condominium Buyers' Protective Decree (P.D. 957)

AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO, AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes

In this case, the contract to sell between Rotairo and Ignacio & Company was entered into in 1970, and the agreement was fully consummated with Rotairo’s completion of payments and the execution of the Deed of Sale in his favor in 1979. Clearly, P.D. No. 957 (Sale of Subdivision Lots and Condominiums) is applicable in this case.

It was error for the CA to rule that the retroactive application of P.D. No. 957 is “warranted only where the subdivision is mortgaged after buyers have purchased individual lots.” According to the CA, the purpose of Sec. 18 requiring notice of the mortgage to the buyers is to give the buyer the option to pay the installments directly to the mortgagee; hence, if the subdivision is mortgaged before the lots are sold, then there are no buyers to notify. What the CA overlooked is that Sec. 21 requires the owner or developer of the subdivision project to complete compliance with its obligations within two years from 1976. The two-year compliance provides the developer the opportunity to comply with its obligation to notify the buyers of the existence of the mortgage, and consequently, for the latter to exercise their option to pay the installments directly to the mortgagee.

FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J. Perez

The Spouses Rosario purchased a condominium unit from Fil-Estate. Fil-Estate failed to comply with its obligations. The Supreme Court held that the Spouses are entitled to rescission, pursuant to Section 23 of P.D. 957 which regulates the sale of subdivisions and

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condominium lots. The Spouses Rosario may be reimbursed the total amount paid including amortization interests but excluding delinquency interests, with interest thereon at the legal rate.

EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404, January 22, 1996

Did the failure to develop a subdivision constitute legal justification for the non-payment of amortizations by a buyer on installment under land purchase agreements entered into prior to the enactment of P.D. 957, "The Subdivision and Condominium Buyers' Protective Decree"?

P.D. 957 is undeniably applicable to the contracts in question, it follows that Section 23 thereof had been properly invoked by private respondent when he desisted from making further payment to petitioner due to petitioner's failure to develop the subdivision project according to the approved plans and within the time limit for complying with the same.

PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528, January 18, 1996

A buyer of a property at a foreclosure sale cannot disposses prior purchasers on installment of individual lots therein, or compel them to pay again for the lots which they previously bought from the defaulting mortgagor-subdivision developer on the theory that P.D. 957, "The Subdivision and Condominium Buyers' Protective Decree", is not applicable to the mortgage contract in question, the same having been executed prior to the enactment of P.D. 957.

Moreover, the SC held that, P.D. 957 being applicable, Section 18 of said law obliges petitioner Bank to accept the payment of the remaining unpaid amortizations tendered by private respondents. Privity of contracts as a defense does not apply in this case for the law explicitly grants to the buyer the option to pay the installment payment for his lot or unit directly to the mortgagee (petitioner), which is required to apply such payments to reduce the corresponding portion of the mortgage indebtedness secured by the particular lot or unit being paid for.

XVI. The Condominium Act (R.A. NO. 4726)

HULST vs. PR BUILDERS, INC., G.R. NO. 156364, September 25, 2008

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Petitioner contends that the Contract to Sell between petitioner and respondent involved a condominium unit and did not violate the Constitutional proscription against ownership of land by aliens. The law expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipino-owned or controlled corporation, since under this set up, the ownership of the land is legally separated from the unit itself.

CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs. ASSET RECOVERY AND MANAGEMENT CORPORATION, G.R. No. 149696, July 14, 2006

Section 20 of R.A. No. 4726, otherwise known as the Condominium Act, provides:

Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon as may be authorized by the declaration of restrictions, a description of the condominium unit against which the same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien.

Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgage or real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.

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Records do not show that petitioner had its notice of assessment registered with the Registry of Deeds of Manila in order that the amount of such assessment could be considered a lien upon Marual's two condominium units. Clearly, pursuant to the above provisions, petitioner's claim can not be considered superior to that of respondent. As mentioned earlier, the deed of sale wherein Marual conveyed to respondent his two condominium units, was registered in the Registry of Deeds of Manila.

CHATEAU DE BAIE CONDOMINIUM CORPORATION vs. SPOUSES MORENO, G.R. NO. 186271, February 23, 2011

The petition sought to prohibit the scheduled extrajudicial sale for lack of a special power to sell from the registered owner. Under RA 4726 (the Condominium Act), when a unit owner fails to pay the association dues, the condominium corporation can enforce a lien on the condominium unit by selling the unit in an extrajudicial foreclosure sale, and a special authority from the condominium owner before a condominium corporation can initiate a foreclosure proceeding is not needed.

SUCCESSION

BERNARDINA P. BARTOLOME vs. SOCIAL SECURITY SYSTEM AND SCANMAR MARITIME SERVICES, INC. G.R. No. 192531, November 12, 2014, J. Velaso, Jr.

At the time of the adoptive parent’s death, which was prior to the effectivity of the Family Code, the governing provision is Art. 984 of the New Civil Code, which provides that in case of the death of an adopted child, leaving no children or descendants, his parents and relatives by consanguinity and not by adoption, shall be his legal heirs. The adoptive parent’s death during the adopted child’s minority resulted in the restoration of the biological mother’s parental authority over the adopted child. As a consequence thereof, the biological mother shall be the adopted child’s sole legal heir.

SPOUSES PERALTA v BERNARDINA ABALON, represented by MANSUETO ABALON. G.R No. 183448, June 30, 2014. J. SERENO

Under Article 975 of the Civil Code, siblings Mansueto and Amelia Abalon, being niece and nephew of a decedent who had no issue, are the legal heirs of Bernardina. As such, they succeeded to her estate when she passed away. While the Court agreed with the CA that the donation mortis causa in favor of the siblings was invalid in the absence of a will, the CA erred in concluding that the heirs acquired the subject property through ordinary acquisitive prescription. The subject parcel of land is a titled property; thus, acquisitive prescription is not applicable. Upon the death of Bernardina, Mansueto and Amelia, being her legal heirs, acquired the subject property by virtue of succession, and not by ordinary acquisitive prescription.

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NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs. ROSARIO CALALANG-GARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148, June 9, 2014, J. Villarama, Jr.

It is hornbook doctrine that successional rights are vested only at the time of death. Article 777 of the New Civil Code provides that "the rights to the succession are transmitted from the moment of the death of the decedent. Thus, in this case, 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 officious 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 .

NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG v ROSARIO CALALANG-GARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R No. 184148, June 9, 2014. VILLARAMA, JR.

It is hornbook doctrine that successional rights are vested only at the time of death. Article 777 of the New Civil Code provides that "the rights to the succession are transmitted from the moment of the death of the decedent.” 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 in officious donation inter vivos), the heirs have no right to question the sale of the disputed property on the ground that their father deprived them of their respective shares.

MA. ELENA R. DIVINAGRACIA AS ADMINISTRATIX OF THE ESTATE OF THE LATE SANTIAGO C. DIVINAGRACIA VS. CORONACION PARILLA ET AL. G.R. No. 196750. March 11, 2015, J. Perlas-Bernabe

The heirs – whether in their own capacity or in representation of their direct ascendant – have vested rights over the subject land and, as such, should be impleaded as indispensable parties in an action for partition thereof. In fine, the absence of the indispensable parties in the complaint for judicial partition renders all subsequent actions of the RTC null and void for want of authority to act.

Death & Presumptive Death & Death of Marriage;

Inheritance v. Succession, Patrimony; Money Obligations

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Transmission, Non-transmission; Presumptive Legitimes

Survivorship Agreement, Succession & Taxes; Aleatory Contract (Art. 2010, NCC)

Laws governing Form and content

In the matter of the Testate Estate of Edward Christensen, G.R. L-16749, January 31, 1963

Whether or not, the intrinsic validity of the testamentary disposition should be governed by Philippine Law, when the national law of the testator refers back to the Philippine Law. Edward is domiciled in the Philippines hence, Philippine court must apply its own laws which makes natural children legally acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, Mar. 29, 1990 183 SCRA 755

A will has been defined as "a personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights and declares or complies with duties to take effect after his death."

Cayatenao vs Leonidas, 129 SCRA 524

The law which governs Adoracion Campo’s will is the law of Pennsylvania, USA which is the national law of the decedent. It is settled that as regards to the intrinsic validity of the provisions of the wills as provided for by article 16 and 1039 of the New Civil Code, the national law of the decedent must apply.

Subjects and Object of Succession

Parish Priest of Victoria vs. Rigor, 89 SCRA 483

The issue in this case is whether or not a male relative referred in the will should include those who are born after the testator’s death. To construe it as referring to the nearest male relative at any time after his death would render the provisions difficult to apply and create uncertainty as to the disposition of the estate.

Opening of Succession

De Borja vs De Borja, G.R. No, L-28040, August 18, 1972

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There is no legal bar to a successor to dispose his or her share immediately after such death, even if the actual extent of such share is not determined until the subsequent liquidation of the estate. The effect of such alienation is to be deemed limited to what is ultimately adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in them even before the judicial declaration of their being declared as heirs. When Fortunata died, her claim or right to the parcel of land in litigation in civil case number 856 was not extinguished by her death but was transmitted to her heirs upon her death.

Borromeo-Herrera vs Borromeo, 152 SCRA 171

The properties included in an existing inheritance cannot be the subject of a contract. The heirs acquire a right to succession from the moment of death of the decedent. In this case, the purported “waiver of hereditary rights” cannot be considered effective.

Testamentary Succession

Form and Solemnities of Notarial Wills

Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012

It is an established rule that "[a] testament may not be disallowed just because the attesting witnesses declare against its due execution; neither does it have to be necessarily allowed just because all the attesting witnesses declare in favor of its legalization; what is decisive is that the court is convinced by evidence before it, not necessarily from the attesting witnesses, although they must testify, that the will was or was not duly executed in the manner required by law."

Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article 805 requires. In the absence of the required avowal by the witnesses themselves, no attestation clause can be deemed embodied in the Acknowledgement of the Deed of Donation Mortis Causa.

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Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages used upon which the will is written. The purpose of the law is to safeguard against possible interpolation or omission of one or some of its pages and prevent any increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify, among others, that the witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the attestation clause establish that the witnesses are referring to the statements contained in the attestation clause itself.

Lee v. Tambago, 544 SCRA 393

An acknowledgment is the act of one who has executed a deed in going before some competent officer or court and declaring it to be his act or deed. It involves an extra step undertaken whereby the signatory actually declares to the notary public that the same is his or her own free act and deed. The acknowledgment in a notarial will has a two-fold purpose: (1) to safeguard the testator’s wishes long after his demise and (2) to assure that his estate is administered in the manner that he intends it to be done.

Suroza vs. Honrado, 110 SCRA 388

In the opening paragraph of the will, it was stated that English was a language "understood and known" to the testatrix but in its concluding paragraph, it was stated that the will was read to the testatrix "and translated into Filipino language". That could only mean that the will was written in a language not known to the illiterate testatrix and, therefore, it is void because of the mandatory provision of article 804 of the Civil Code that every will must be executed in a language or dialect known to the testator.

Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the testator if he is blind or incapable of reading the will himself (as when he is illiterate), is to make the provisions thereof known to him, so that he may be able to object if they are not in accordance with his wishes. That the aim of the law is to insure that the dispositions of the will are properly communicated to and understood by the handicapped testator, thus making them truly reflective of his desire, is evidenced by the requirement that the will should be read to

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the latter, not only once but twice, by two different persons, and that the witnesses have to act within the range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial compliance is acceptable where the purpose of the law has been satisfied, the reason being that the solemnities surrounding the execution of wills are intended to protect the testator from all kinds of fraud and trickery but are never intended to be so rigid and inflexible as to destroy the testamentary privilege.

In the case at bar, private respondent read the testator's will and codicil aloud in the presence of the testator, his three instrumental witnesses, and the notary public. Prior and subsequent thereto, the testator affirmed, upon being asked, that the contents read corresponded with his instructions. Only then did the signing and acknowledgement take place. There is no evidence, and petitioner does not so allege, that the contents of the will and codicil were not sufficiently made known and communicated to the testator. On the contrary, with respect to the "Huling Habilin," the day of the execution was not the first time that Brigido had affirmed the truth and authenticity of the contents of the draft. The uncontradicted testimony of Atty. Rino is that Brigido Alvarado already acknowledged that the will was drafted in accordance with his expressed wishes even prior to 5 November 1977 when Atty. Rino went to the testator's residence precisely for the purpose of securing his conformity to the draft.

Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258

The subsequent signing and sealing by the notary of his certification that the testament was duly acknowledged by the participants therein is no part of the acknowledgment itself nor of the testamentary act. Hence their separate execution out of the presence of the testatrix and her witnesses cannot be said to violate the rule that testaments should be completed without interruption.

Cruz vs. Villasor NO.L-32213, 54 SCRA 31

The notary public before whom the will was acknowledged cannot be considered as the third instrumental witness since he cannot acknowledge before himself his having signed the will. This cannot be done because he cannot split his personality into two so that one will appear before the other to acknowledge his participation in the making of the will.

Caneda vs. CA, 222 SCRA 781

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The rule on substantial compliance in Article 809 cannot be revoked or relied on by respondents since it presupposes that the defects in the attestation clause can be cured or supplied by the text of the will or a consideration of matters apparent therefrom which would provide the data not expressed in the attestation clause or from which it may necessarily be gleaned or clearly inferred that the acts not stated in the omitted textual requirements were actually complied within the execution of the will.

Lopez v. Lopez, 685 SCRA 209

The statement in the Acknowledgment portion of the subject last will and testament that it "consists of 7 pages including the page on which the ratification and acknowledgment are written" cannot be deemed substantial compliance. The will actually consists of 8 pages including its acknowledgment which discrepancy cannot be explained by mere examination of the will itself but through the presentation of evidence aliunde. 

Guerrero v. Bihis, 521 SCRA 394

The issue in this case whether the will “acknowledged” by the testatrix and the instrumental witnesses before a notary public acting outside the place of his commission satisfies the requirement under Article 806 of the Civil Code? Outside the place of his commission, he is bereft of power to perform any notarial act; he is not a notary public. Any notarial act outside the limits of his jurisdiction has no force and effect.

Celada v. Abena, 556 SCRA 569

While it is true that the attestation clause is not a part of the will, error in the number of pages of the will as stated in the attestation clause is not material to invalidate the subject will. It must be noted that the subject instrument is consecutively lettered with pages A, B, and C which is a sufficient safeguard from the possibility of an omission of some of the pages.

Form and Solemnities of Holographic Wills

Rodelas vs. Aranza, 119 SCRA 16

The photostatic or xerox copy of a lost or destroyed holographic will may be admitted because then the authenticity of the handwriting of the deceased can be determined by the probate court.

Codoy vs. Calugay, 312 SCRA 333

The word “shall” connotes a mandatory order. We have ruled that “shall” in a statute commonly denotes an imperative obligation and is inconsistent

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with the idea of discretion and that the presumption is that the word “shall,” when used in a statute is mandatory."

Ajero vs. CA, 236 SCRA 488

Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date of the holographic will or on testator's signature, their presence does not invalidate the will itself. The lack of authentication will only result in disallowance of such changes.

Kalaw vs. Relova, 132 SCRA 237

To state that the Will as first written should be given efficacy is to disregard the seeming change of mind of the testatrix. But that change of mind can neither be given effect because she failed to authenticate it in the manner required by law by affixing her full signature.

Roxas vs. De Jesus, 134 SCRA 245

As a general rule, the "date" in a holographic Will should include the day, month, and year of its execution. However, when as in the case at bar, there is no appearance of fraud, bad faith, undue influence and pressure and the authenticity of the Will is established and the only issue is whether or not the date "FEB.,61" appearing on the holographic Will is a valid compliance with Article 810 of the Civil Code, probate of the holographic Will should be allowed under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170

The law does not specify a particular location where the date should be placed in the will. The only requirements are that the date be in the will itself and executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

Holographic wills being usually prepared by one who is not learned in the law, as illustrated in the present case, should be construed more liberally than the ones drawn by an expert, taking into account the circumstances surrounding the execution of the instrument and the intention of the testator.

Palaganas v. Palaganas, 2011 640 SCRA 538

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A foreign will can be given legal effects in our jurisdiction. But, reprobate or re-authentication of a will already probated and allowed in a foreign country is different from that probate where the will is presented for the first time before a competent court.

Vda.De Perez vs. Tolete, 232 SCRA 722

What the law expressly prohibits is the making of joint wills either for the testator’s reciprocal benefit or for the benefit of a third person (Civil Code of the Philippines, Article 818). In the case at bench, the Cunanan spouses executed separate wills. Since the two wills contain essentially the same provisions and pertain to property which in all probability are conjugal in nature, practical considerations dictate their joint probate.

Revocation of Wills and Testamentary Disposition

Modes of Revocation

Casiano vs CA 158 SCRA 451

Revocation under this condition to be effective must have complied with the two requirements: the overt act as mentioned under the law; the intent to revoke on the part of the testator. The document or paper burned by one of the witnesses was not satisfactorily established to be the will at all, much less the will of Adriana.

Adriana Maloto vs. CA, 158 SCRA 451

For one, the document or papers burned by Adriana's maid, Guadalupe, was not satisfactorily established to be a will at all, much less the will of Adriana Maloto. For another, the burning was not proven to have been done under the express direction of Adriana. And then, the burning was not in her presence.

Gago vs. Mamuyac NO. L-26317, 49 Phil 902

Where a will which cannot be found is shown to have been in the possession of the testator, when last seen, the presumption is, in the absence of other competent evidence, that the same was cancelled or destroyed. The same presumption arises where it is shown that the testator had ready access to the will and it cannot be found after his death. It will not be presumed that

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such will has been destroyed by any other person without the knowledge or authority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires that the same must be effected through a will wherein the legal cause therefor shall be specified. With regard to the reasons for the disinheritance that were stated by Segundo in his document, the Court believes that the incidents, taken as a whole, can be considered a form of maltreatment of Segundo by his son, Alfredo, and that the matter presents a sufficient cause for the disinheritance of a child or descendant under Article 919 of the Civil Code.

Doctrine of dependent relative revocation

Molo vs. Molo NO. L- 2538, 90 Phil 37

The failure of a new testamentary disposition upon whose validity the revocation depends, is equivalent to the non-fulfillment of a suspensive conditions, and hence prevents the revocation of the original will. But a mere intent to make at some time a will in the place of that destroyed will not render the destruction conditional.

Allowance of Wills

Requirements for probate

Gan vs Yap, 104 Phil. 509

The loss of the holographic will entail the loss of the only medium of proof; if the ordinary will is lost, the subscribing witnesses are available to authenticate. In case of holographic will if oral testimony were admissible only one man could engineer the fraud this way.

Rodelas vs Aranza 119 SCRA 16

If the holographic will has been lost or destroyed and no other copy is available, the will cannot be probated because the best and only evidence is the handwriting of the testator. But a photostatic copy or Xerox copy of the holographic will may be allowed because comparison can be made with the standard writings of the testator.

Azaola vs Singson 109 Phil. 102

Since the authenticity of the will was not contested, the appellant is not required to produce more than one witness. Even if the genuiness of the

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holographic will were contested, article 811 cannot be interpreted as to require the compulsory presentation of three witnesses to identify the handwriting of the testator, under penalty of having denied the probate.

Codoy vs Calugay, 312 SCRA 333

We cannot eliminate the possibility that if the will is contested, the law requires that three witnesses to declare that the will was in the handwriting of the deceased. A visual examination of the holographic will convince us that the strokes are different when compared with other documents written by the testator.

Effect of allowance of Wills

Gallanosa vs Arcangel, 83 SCRA 676

After the finality of the allowance of a will, the issue as to the voluntariness of its execution cannot be raised anymore. It is not only the 1939 probate proceeding that can be interposed as res judicata with respect to private respondents complaint.

Roberts vs Leonidas, 129 SCRA 33

It is anomalous that the estate of a person who died testate should be settled in an intestate proceeding. Therefore, the intestate case should be consolidated with the testate proceeding and the judge assigned to the testate proceeding should hearing the two cases.

Nepomuceno vs CA, 139 SCRA 206

The general rule is that in probate proceedings, the court’s area of inquiry is limited to an examination and resolution of the extrinsic validity of the will. Where practically considerations demand that the intrinsic validity of the will be passed upon, even before it is probated, the court should meet the issue.

Legitime, Institution, Preterition

Aznar vs. Duncan, 17 SCRA 590

To constitute preterition, the omission must be total and complete, such that nothing must be given to the compulsory heir.

Acain vs. IAC, 155 SCRA 100

Preterition annuls the institution of an heir and annulment throws open to intestate succession the entire inheritance. The only provisions which do not

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result in intestacy are the legacies and devises made in the will for they should stand valid and respected, except insofar as the legitimes are concerned.

Nuguid vs. Nuguid, 17 SCRA 449

The will here does not explicitly disinherit the testatrix's parents, the forced heirs. It simply omits their names altogether. Said will rather than be labeled ineffective disinheritance is clearly one in which the said forced heirs suffer from preterition.

Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508 SCRA 172

The mere mention of the name of one of the petitioners, Virginia, in the document did not operate to institute her as the universal heir. Her name was included plainly as a witness to the altercation between Segundo and his son, Alfredo.

Legitime and Simulated Contracts; Spousal Marital Estrangement

Francisco vs. Francisco-Alfonso, 354 SCRA 112

Obviously, the sale was Gregorio's way to transfer the property to his illegitimate daughters at the expense of his legitimate daughter. The sale was executed to prevent respondent Alfonso from claiming her legitime and rightful share in said property.

Capitle v. Elbambuena, 509 SCRA 444

Although estranged from Olar, respondent Fortunata remained his wife and legal heir, mere estrangement not being a legal ground for the disqualification of a surviving spouse as an heir of the deceased spouse.

Reserva Troncal – Art. 891

Sienes vs. Esparcia, 1 SCRA 750

The sale made by Andrea Gutang in favor of appellees was, therefore, subject to the condition that the vendees would definitely acquire ownership, by virtue of the alienation, only if the vendor died without being survived by any person entitled to the reservable property. Inasmuch much as when Andrea Gutang died, Cipriana Yaeso was still alive, the conclusion becomes inescapable that the previous sale made by the former in favor of appellants became of no legal effect and the reservable property subject matter thereof passed in exclusive ownership to Cipriana.

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Gonzales vs. CFI, 104 SCRA 479

Mrs. Legarda could not convey in her holographic will to her sixteen grandchildren the reservable properties which she had inherited from her daughter Filomena because the reservable properties did not form part of her estate (Cabardo vs. Villanueva, 44 Phil. 186, 191). The reservor cannot make a disposition mortis causa of the reservable properties as long as the reservees survived the reservor.

Vizconde v. CA, 286 SCRA 217

Estrellita, it should be stressed, died ahead of Rafael, in fact, it was Rafael who inherited from Estrellita an amount more than the value of the Valenzuela property. Hence, even assuming that the Valenzuela property may be collated collation may not be allowed as the value of the Valenzuela property has long been returned to the estate of Rafael.

Substitution of Heirs

Palacios vs Ramirez, 111 SCRA 704

The word “degree” means generation and the present code has obviously followed this interpretation by providing that the substitution shall not go beyond one degree from the heir originally instituted. The code thus clearly indicates that the second heir must be related to and one generation from the first heir.

Crisologo vs Singzon, 49 SCRA 491

In fideicommissary substitution clearly impose an obligation upon the first heir to preserve and transmit to another the whole or part of the estate bequeathed to him, upon his death or upon the happening of a particular event.

Legal or Intestate Succession

Rosales vs Rosales, 148 SCRA 69

The daughter-in-law is not an intestate heir of her spouse’s parents. There is no provision in the civil code which states that a widow is an intestate heir of her mother-in-law.

Delos Santos vs Dela Cruz, 37 SCRA 555

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In an intestate succession, a grandniece of the deceased cannot participate in the inheritance with the surviving nieces and nephews because the existence of the latter excluded the more distant relatives. In the collateral line, the right of representation does not go beyond the children of brothers and sisters.

Corpuz vs Corpuz, 85 SCRA 567

Since, Teodoro was an acknowledged natural child or was illegitimate and since Juanita was the legitimate child of Tomas, himself was a legitimate child, appellant Tomas has no cause of action to recovery of the supposed hereditary share of his daughter, Juanita as a legal heir, in Yangco’s estate.

Santillon vs Mirandan, 14 SCRA 563

If there is only one legitimate child surviving with the spouse since they shall equally, one-half of the estate goes to the child and the other half goes to the surviving spouse. Although the law refers to children or descendants, the rule in the statutory construction that the plural can be understood to include the singular.

Bacayo vs Borromeo, 14 SCRA 986

A decedent’s uncle and aunt may not succeed intestate so long as nephews and nieces of the decedent survive and are willing and qualified to succeed. In this case, the nephews and nieces were not inheriting by right of representation because they only do so if they concur with the brothers and sisters of the decedent.

Provisions Common to Testate and Intestate Succession

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, vs. HEIRS OF ISIDRO BANGI and GENOVEVA DICCION, represented by NOLITO SABIANO, G.R. No. 185745, October 15, 2014, J. Reyes.

Partition is the separation, division and assignment of a thing held in common among those to whom it may belong. Every act which is intended to put an end to indivision among co-heirs and legatees or devisees is deemed to be a partition. Partition may be inferred from circumstances sufficiently strong to support the presumption. Thus, after a long possession in severalty, a deed of partition may be presumed. The evidence presented by the parties indubitably show that, after the death of Alipio, his heirs – Eusebio, Espedita and Jose Bangi – had orally partitioned his estate, including the subject property, which was assigned to Eusebio. Accordingly, considering that Eusebio already owned the subject property at the time he sold the one-third portion thereof.

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THELMA M. ARANAS vs. TERESITA V. MERCAO, FELIMON V. MERCADO, CARMENCIA M. STUERHLAND, RICHARD V. MERCADO, MA. TERESITA M. ANDERSON, AND FRANKLIN L. MERCADO, G.R. No. 156407, JANUARY 15, 2014, J. Bersamin

The probate court is authorized to determine the issue of ownership of properties for purposes of their inclusion or exclusion from the inventory to be submitted by the administrator, but its determination shall only be provisional unless the interested parties are all heirs of the decedent, or the question is one of collation or advancement, or the parties consent the assumption of jurisdiction by the probate court and the rights of third parties are not impaired. Its jurisdiction extends to matters incidental or to the settlement and distribution of the estate, such as the determination of the status of each heir and whether property included in the inventory is the conjugal or exclusive property of the deceased spouse.

Legitime; Proximity & Representation; Art. 962;

Bagunu vs. Piedad, 347 SCRA 571

The rule on proximity is a concept that favors the relatives nearest in degree to the decedent and excludes the more distant ones except when and to the extent that the right of representation can apply. In the collateral line, the right of representation may only take place in favor of the children of brothers or sisters of the decedent when such children survive with their uncles or aunts.

Sayson vs. CA, 205 SCRA 321

The relationship created by the adoption is between only the adopting parents and the adopted child and does not extend to the blood relatives of either party.

Corpus vs. Corpus, 85 SCRA 567

In default of natural ascendants, natural and legitimated children shall be succeeded by their natural brothers and sisters in accordance with the rules established for legitimate brothers and sisters." Hence, Teodoro R. Yangco's half brothers on the Corpus side, who were legitimate, had no right to succeed to his estate under the rules of intestacy.

Suntay v. Cojuangco-Suntay, 621 SCRA 142

Petitioner’s argument that the successional bar between the legitimate and illegitimate relatives of a decedent does not apply in this instance where facts indubitably demonstrate the contrary – Emilio III, an illegitimate grandchild of the decedent, was actually treated by the decedent and her husband as their own son, reared from infancy, educated and trained in their

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businesses, and eventually legally adopted by decedent’s husband, the original oppositor to respondent’s petition for letters of administration.

Diaz vs. IAC, 150 SCRA 645

It is therefore clear from Article 992 of the New Civil Code that the phrase "legitimate children and relatives of his father or mother" includes Simona Pamuti Vda. de Santero as the word "relative" includes all the kindred of the person spoken of. The record shows that from the commencement of this case the only parties who claimed to be the legitimate heirs of the late Simona Pamuti Vda. de Santero are Felisa Pamuti Jardin and the six minor natural or illegitimate children of Pablo Santero.

Diaz vs. IAC, 182 SCRA 427

The term relatives, although used many times in the Code, is not defined by it. In accordance therefore with the canons of statutory interpretation, it should be understood to have a general and inclusive scope, inasmuch as the term is a general one. 

Heirs of Uriarte vs. CA, 284 SCRA 511

A nephew is considered a collateral relative who may inherit if no descendant, ascendant, or spouse survive the decedent. That private respondent is only a half-blood relative is immaterial.

Delos Santos vs Ferraris-Borromeo, 14 SCRA 986

Nephews and nieces alone do not inherit by right of representation unless concurring with the brothers or sisters of the deceased which is provided in article 975 when children of one or more brothers or sisters of the deceased survive with their uncles and aunts but if they alone survive, they shall inherit in equal portions.

PARTNERSHIP

I. Contract of Partnership

LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., G.R. NO. 136448, November 3, 1999

A partnership may be deemed to exist among parties who agree to borrow money to pursue a business and to divide the profits or losses that may arise therefrom, even if it is shown that they have not contributed any capital of

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their own to a "common fund." Their contribution may be in the form of credit or industry, not necessarily cash or fixed assets.

ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L-12541, August 28, 1959

The following are the requisites of partnership: (1) two or more persons who bind themselves to contribute money, property, or industry to a common fund; (2) intention on the part of the partners to divide the profits among themselves. (Art. 1767, Civil Code.).

HEIRS OF TAN ENG KEE vs .COURT OF APPEALS and BENGUET LUMBER COMPANYG.R. NO. 126881; October 3, 2000

In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners as to each other are not partners as to third persons;(2) Co-ownership or co-possession does not of itself establish a partnership, whether such co-owners or co-possessors do or do not share any profits made by the use of the property;(3) The sharing of gross returns does not of itself establish a partnership, whether or not the persons sharing them have a joint or common right or interest in any property which the returns are derived;(4) The receipt by a person of a share of the profits of a business is a prima facie evidence that he is a partner in the business, but no such inference shall be drawn if such profits were received in payment:

(a) As a debt by installment or otherwise;(b) As wages of an employee or rent to a landlord;(c) As an annuity to a widow or representative of a deceased partner;(d) As interest on a loan, though the amount of payment vary with the profits of the business;(e) As the consideration for the sale of a goodwill of a business or other property by installments or otherwise.

II. Rights and Obligations of Partnership

ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and FELICIDAD S. VDA. DE ABROGAR, G.R. NO. 127347, November 25, 1999

Under Art. 1768 of the Civil Code, a partnership “has a juridical personality separate and distinct from that of each of the partners.” The partners cannot

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be held liable for the obligations of the partnership unless it is shown that the legal fiction of a different juridical personality is being used for fraudulent, unfair, or illegal purposes, hence it is the partnership, not its officers or agents, which should be impleaded in any litigation involving property registered in its name, violation of this rule will result in the dismissal of the complaint.

Villareal vs. Ramirez, G.R. NO. 144214.  July 14, 2003

Since it is the partnership, as a separate and distinct entity, that must refund the shares of the partners, the amount to be refunded is necessarily limited to its total resources. In other words, it can only pay out what it has in its coffers, which consists of all its assets. However, before the partners can be paid their shares, the creditors of the partnership must first be compensated. After all the creditors have been paid, whatever is left of the partnership assets becomes available for the payment of the partners’ shares.

Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29, 2005

The Angeles spouses’ position that there is no partnership because of the lack of a public instrument indicating the same and a lack of registration with the Securities and Exchange Commission (“SEC”) holds no water for the following reasons: first, the Angeles spouses contributed money to the partnership and not immovable property; and second, mere failure to register the contract of partnership with the SEC does not invalidate a contract that has the essential requisites of a partnership.  The purpose of registration of the contract of partnership is to give notice to third parties.  Failure to register the contract of partnership does not affect the liability of the partnership and of the partners to third persons.  Neither does such failure to register affect the partnership’s juridical personality.  A partnership may exist even if the partners do not use the words “partner” or “partnership.”

Ortega vs. CA, G.R. NO. 109248, July 3, 1995

The right to choose with whom a person wishes to associate himself is the very foundation and essence of that partnership. Its continued existence is, in turn, dependent on the constancy of that mutual resolve, along with each partner's capability to give it, and the absence of a cause for dissolution provided by the law itself. Verily, any one of the partners may, at his sole pleasure, dictate a dissolution of the partnership at will. He must, however, act in good faith, not that the attendance of bad faith can prevent the dissolution of the partnership but that it can result in a liability for damages. Among partners, mutual agency arises and the doctrine of delectus personae allows them to have the power, although not necessarily the right,

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to dissolve the partnership. An unjustified dissolution by the partner can subject him to a possible action for damages.

III. Rights and Obligations of Partners Among Themselves

Liwanag vs. CA, G.R. NO. 114398, October 24, 1997

Petitioner was charged with the crime of estafa and advances the theory that the intention of the parties was to enter into a contract of partnership, wherein Rosales (private complainant for Estafa) would contribute the funds while she would buy and sell the cigarettes, and later divide the profits between them But even assuming that a contract of partnership was indeed entered into by and between the parties, SC ruled that when money or property have been received by a partner for a specific purpose (such as that obtaining in the instant case) and he later misappropriated it, such partner is guilty of estafa.

Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984

The rule is, when a partner who has undertaken to contribute a sum of money fails to do so, he becomes a debtor of the partnership for whatever he may have promised to contribute (Art. 1786, Civil Code) and for interests and damages from the time he should have complied with his obligation (Art. 1788, Civil Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory damages in favor of the appellee because the appellant therein was remiss in his obligations as a partner and as prime contractor of the construction projects in question. 

Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO. L-55397 February 29, 1988

Petitioner being a partnership may sue and be sued in its name or by its duly authorized representative. Thus, Chua as the managing partner of the partnership may execute all acts of administrationincluding the right to sue debtors of the partnership in case of their failure to pay their obligations when it became due and demandable.

Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959

Catalan and Gatchalian as partners mortgaged two lots together with the improvements thereon to secure a credit. Catalan redeemed the property and he contends that title should be cancelled and a new one must be issued in his name. Under Article 1807 of the NCC every partner becomes

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a trustee for his co-partner with regard to any benefits or profits derived from his act as a partner. Consequently, when Catalan redeemed the properties in question, he became a trustee and held the same in trust for his co partner Gatchalian, subject to his right to demand from the latter his contribution to the amount of redemption.

Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June 28, 1973

Respondent industrial partner has the right to demand for a formal accounting and to receive her share in the net profit that may result from such an accounting.

IV. Obligations of Partnership, Partners to Third Persons

ISLAND SALES, INC.vs.UNITED PIONEERS GENERAL CONSTRUCTION COMPANY, G.R. NO. L-22493, July 31, 1975

Defendant company, a general partnership purchased from the plaintiff a motor vehicle on an installment basis with the condition that failure to pay any of said installments as they fall due would render the whole unpaid balance immediately due and demandable. Having failed to receive the installment, the plaintiff sued the defendant company for the unpaid balance with Benjamin C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto Palisoc were included as co-defendants in their capacity as general partners of the defendant company. In this case, there were five (5) general partners when the promissory note in question was executed for and in behalf of the partnership. Since the liability of the partners is pro rata, the liability of the appellant Benjamin C. Daco shall be limited to only one-fifth of the obligations of the defendant company. The fact that the complaint against the defendant Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not unmake the said Lumauig as a general partner in the defendant company. In so moving to dismiss the complaint, the plaintiff merely condoned Lumauig's individual liability to the plaintiff.

ELMO MUÑASQUE vs. COURT OF APPEALS, G.R. NO. L-39780, November 11, 1985

There is a general presumption that each individual partner is an authorized agent for the firm and that he has authority to bind the firm in carrying on the partnership transactions. The presumption is sufficient to permit third persons to hold the firm liable on transactions entered into by one of members of the firm acting apparently in its behalf and within the scope of his authority.

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ANTONIO C. GOQUIOLAY, ET AL. vs.WASHINGTON Z. SYCIP, ET AL, G.R. NO. L-11840, December 10, 1963

Where the partnership business is to deal in merchandise and goods, i.e., movable property, the sale of its real property (immovables) is not within the ordinary powers of a partner, because it is not in line with the normal business of the firm. But where the express and avowed purpose of the partnership is to buy and sell real estate (as in the present case), the immovables thus acquired by the firm from part of its stock-in-trade, and the sale thereof is in pursuance of partnership purposes, hence within the ordinary powers of the partner.

J. TIOSEJO INVESTMENT CORP. vs. Ang, G.R. NO. 174149, September 8, 2010

Petitioner cannot avoid liability by claiming that it was not in any way privy to the Contracts to Sell executed by PPGI and respondents.  As correctly argued by the respondent, a joint venture is considered in this jurisdiction as a form of partnership and is, accordingly, governed by the law of partnerships and under Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable with the partnership for everything chargeable to the partnership, including loss or injury caused to a third person or penalties incurred due to any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his co-partners.

V. Dissolution

PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATIONvs. LAZATIN-MAGAT, et.al, G.R. NO. 167379, June 27, 2006

On dissolution, the partnership is not terminated but continues until the winding up of partnership affairs is completed. Winding up means the administration of the assets of the partnership for the purpose of terminating the business and discharging the obligations of the partnership.

MARJORIE TOCAO vs.COURT OF APPEALS, G.R. NO. 127405, October 4, 2000

An unjustified dissolution by a partner can subject him to action for damages because by the mutual agency that arises in a partnership, the doctrine of delectus personae allows the partners to have the power, although not necessarily the right to dissolve the partnership.

VI. Limited Partnership

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COMMISSIONER OF INTERNAL REVENUEvs.WILLIAM J. SUTER, G.R. NO. L-25532, February 28, 1969

A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed on 30 September 1947 by herein respondent William J. Suter as the general partner, and Julia Spirig and Gustav Carlson, as the limited partners. The thesis that the limited partnership, William J. Suter "Morcoin" Co., Ltd., has been dissolved by operation of law because of the marriage of the only general partner, William J. Suter to the originally limited partner, Julia Spirig one year after the partnership was organized is not tenable. The subsequent marriage of the partners does not operate to dissolve it, such marriage not being one of the causes provided for that purpose either by the Spanish Civil Code or the Code of Commerce. The appellant's view, that by the marriage of both partners the company became a single proprietorship, is equally erroneous. The capital contributions of partners William J. Suter and Julia Spirig were separately owned and contributed by them before their marriage; and after they were joined in wedlock, such contributions remained their respective separate property under the Spanish Civil Code.

AGENCY

ALVIN PATRIMONIO v NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III, G.R No. 187769, June 4, 2014. J. BRION

As a general rule, a contract of agency may be oral. However, it must be written when the law requires a specific form, for example, in a sale of a piece of land or any interest therein through an agent. Article 1878 paragraph 7 of the Civil Code expressly requires a special power of authority before an agent can loan or borrow money in behalf of the principal, but it does not state that the authority be in writing.

In this case, Alvin Patrimonio’s agent, Gutierrez, did not have any authority to borrow money in Patrimonio’s behalf. Patrimonio did not execute any SPA in favor of Gutierrez, nor was Gutierrez given any authority, whether verbally or in writing, to borrow money in his behalf, nor was he aware of any such transaction. Patrimonio’s acts of pre-signing blank checks and releasing them to Gutierrez does not establish that Patrimonio authorized Gutierrez to fill them out and contract the loan in his behalf.

SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J. Mendoza

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,

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or the instructions as regards the agency. 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 enter into a contract to sell with the agent. They required her presentation of the power of attorney before they transacted with her principal. And when the agent presented the SPA to Spouses Rabaja, the latter had no reason not to rely on it.

I.Definition of Agency

Country Bankers Insurance Corp.. vs. Keppel Cebu Shipyard, June 18, 2012, G.R. NO. 166044

In a contract of agency, a person, the agent, binds himself to represent another, the principal, with the latter’s consent or authority. Thus, agency is based on representation, where the agent acts for and in behalf of the principal on matters within the scope of the authority conferred upon him. Such “acts have the same legal effect as if they were personally done by the principal.  By this legal fiction of representation, the actual or legal absence of the principal is converted into his legal or juridical presence.

Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006

It bears stressing that in an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court.

Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO. 167552, April 23, 2007

In a contract of agency, a person binds himself to render some service or to do something in representation or on behalf of another with the latter’s consent. The underlying principle of the contract of agency is to accomplish results by using the services of others – to do a great variety of things like selling, buying, manufacturing, and transporting. Its purpose is to extend the personality of the principal or the party for whom another acts and from whom he or she derives the authority to act. It is said that the basis of agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. By

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this legal fiction, the actual or real absence of the principal is converted into his legal or juridical presence – qui facit per alium facit per se. The elements of the contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.

II. Powers

III. Express vs. Implies Agency

Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006

An agency may be expressed or implied from the act of the principal, from his silence or lack of action, or his failure to repudiate the agency knowing that another person is acting on his behalf without authority. Acceptance by the agent may be expressed, or implied from his acts which carry out the agency, or from his silence or inaction according to the circumstances. Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void.

IV. Agency by Estoppel

Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3, 2003

The Court of Appeals recognized the existence of an “agency by estoppels citing Article 1873 of the Civil Code. Apparently, it considered that at the very least, as a consequence of the interaction between Naguiat and Ruebenfeldt, Queaño got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did nothing to correct Queaño’s impression.  In that situation, the rule is clear.  One who clothes another with apparent authority as his agent, and holds him out to the public as such, cannot be permitted to deny the authority of such person to act as his agent, to the prejudice of innocent third parties dealing with such person in good faith, and in the honest belief that he is what he appears to be. The Court of Appeals is correct in invoking the said rule on agency by estoppel.

V. General vs. Special Agency

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Siasat vs. Intermediate Appellate Court, G.R. NO. L-67889, October 10, 1985

A general agent is one authorized to do all acts pertaining to a business of a certain kind or at a particular place, or all acts pertaining to a business of a particular class or series. He has usually authority either expressly conferred in general terms or in effect made general by the usages, customs or nature of the business which he is authorized to transact. An agent, therefore, who is empowered to transact all the business of his principal of a particular kind or in a particular place, would, for this reason, be ordinarily deemed a general agent. A special agent is one authorized to do some particular act or to act upon some particular occasion, acts usually in accordance with specific instructions or under limitations necessarily implied from the nature of the act to be done

VI. Agency Couched in General Terms

Veloso vs. Court of Appeals, G.R. NO. 102737, August 21, 1996

There was no need to execute a separate and special power of attorney since the general power of attorney had expressly authorized the agent or attorney in fact the power to sell the subject property.  The special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required. Whether the instrument be denominated as “general power of attorney” or “special power of attorney,” what matters is the extent of the power or powers contemplated upon the agent or attorney in fact.  If the power is couched in general terms, then such power cannot go beyond acts of administration.  However, where the power to sell is specific, it not being merely implied, much less couched in general terms, there cannot be any doubt that the attorney in fact may execute a valid sale.  An instrument may be captioned as “special power of attorney” but if the powers granted are couched in general terms without mentioning any specific power to sell or mortgage or to do other specific acts of strict dominion, then in that case only acts of administration may be deemed conferred

VII. Agency Requiring Special Power of Attorney

ARDO C. CASTILLO, represented by LENNARD V. CASTILLO v SECURITY BANK CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR., and TERESITA FLORESCASTILLO, G.R No. 196118, July 30, 2014. J. PERALTA

In this case, the validity of a mortgage was attacked on the ground that Leon (petitioner Leonardo’s brother) was not authorized to contract it. Leon claims that the Community Tax

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Certificate presented during the notarization of the SPA was obtained after the SPA had been executed.

However, the defective notarization did not avoid the SPA. The 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. 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. The necessity of a public document for said contracts is only for convenience; it is not essential for validity or enforceability.

MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES VS. MALARAYAT RURAL BANK INC. G.R. No. 200468 March 19, 2014, J. Villarama Jr.

The issue in this case is case is whether Malarayat Rural Bank is a mortgagee in good faith who is entitled to protection on its mortgage lien.

In this case, 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 of 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. 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. 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.

SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J. Mendoza

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 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.

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Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005

A special power of attorney simply refers to a clear mandate specifically authorizing the performance of a specific power and of express acts subsumed therein, and there is a specific authority given to Mae Sendiong to sign her name in behalf of Paul Sendiong in contracts and agreements and to institute suits in behalf of her father. Neither would the fact that the document is captioned “General Power of Attorney” militate against its construction as granting specific powers to the agent pertaining to the petition for annulment of judgment she instituted in behalf of her father.  As Justice Paras has noted, a general power of attorney may include a special power if such special power is mentioned or referred to in the general power.

Country Bankers Insurance Corp. vs. Keppel Cebu Shipyard, June 18, 2012, G.R. NO. 166044

Our law mandates an agent to act within the scope of his authority. The scope of an agent’s authority is what appears in the written terms of the power of attorney granted upon him. Under Article 1878(11) of the Civil Code, a special power of attorney is necessary to obligate the principal as a guarantor or surety.

Mercado vs. Allied Banking Corpporation, G.R. NO. 171460, July 24, 2007

Equally relevant is the rule that a power of attorney must be strictly construed and pursued.  The instrument will be held to grant only those powers which are specified therein, and the agent may neither go beyond nor deviate from the power of attorney. Where powers and duties are specified and defined in an instrument, all such powers and duties are limited and are confined to those which are specified and defined, and all other powers and duties are excluded. This is but in accord with the disinclination of courts to enlarge the authority G.R.anted beyond the powers expressly given and those which incidentally flow or derive therefrom as being usual and reasonably necessary and proper for the performance of such express powers.

Angeles vs. Philippines National Railways, G.R. NO. 150128, August 31, 2006

A power of attorney is only but an instrument in writing by which a person, as principal, appoints another as his agent and confers upon him the authority to perform certain specified acts on behalf of the principal. The written authorization itself is the power of attorney, and this is clearly indicated by the fact that it has also been called a “letter of attorney.” Its

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primary purpose is not to define the authority of the agent as between himself and his principal but to evidence the authority of the agent to third parties with whom the agent deals. Except as may be required by statute, a power of attorney is valid although no notary public intervened in its execution.

SHOPPER’S PARADISE REALTY & DEVELOPMENT CORPORATION vs. EFREN P. ROQUE, G.R. NO. 148775, January 13, 2004

Article 1878 of the Civil Code expresses that a special power of attorney is necessary to lease any real property to another person for more than one year. The lease of real property for more than one year is considered not merely an act of administration but an act of strict dominion or of ownership. A special power of attorney is thus necessary for its execution through an agent.

VIII. Agency by Operation of Law

IX. Rights and Obligations of Principal

VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO. 117356, June 19, 2000

One factor which most clearly distinguishes agency from other legal concepts is control; one person - the agent - agrees to act under the control or direction of another - the principal. Indeed, the very word "agency" has come to connote control by the principal. The control factor, more than any other, has caused the courts to put contracts between principal and agent in a separate category.

X. Irrevocable Agency

Republic vs. Evangelista, G.R. NO. 156015, August 11, 2005

A contract of agency is generally revocable as it is a personal contract of representation based on trust and confidence reposed by the principal on his agent.  As the power of the agent to act depends on the will and license of the principal he represents, the power of the agent ceases when the will or permission is withdrawn by the principal.  Thus, generally, the agency may be revoked by the principal at will. However, an exception to the revocability of a contract of agency is when it is coupled with interest, i.e.,  if a bilateral contract depends upon the agency. The reason for its irrevocability is because the agency becomes part of another obligation or agreement.  It is not solely the rights of the principal but also that of the agent and third

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persons which are affected.  Hence, the law provides that in such cases, the agency cannot be revoked at the sole will of the principal.

Lim vs. Saban, G.R. NO. 163720, December 16, 2004

Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted, or if a partner is appointed manager of a partnership in the contract of partnership and his removal from the management is unjustifiable.  Stated differently, an agency is deemed as one coupled with an interest where it is established for the mutual benefit of the principal and of the agent, or for the interest of the principal and of third persons, and it cannot be revoked by the principal so long as the interest of the agent or of a third person subsists.  In an agency coupled with an interest, the agent’s interest must be in the subject matter of the power conferred and not merely an interest in the exercise of the power because it entitles him to compensation. When an agent’s interest is confined to earning his agreed compensation, the agency is not one coupled with an interest, since an agent’s interest in obtaining his compensation as such agent is an ordinary incident of the agency relationship.

XI. Modes of Extinguishment

RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs.FELIX GO CHAN & SONS REALTY CORPORATION, G.R. NO. L-24332, January 31, 1978

By reason of the very nature of the relationship between principal and agent, agency is extinguished  ipso jure upon the death of either principal or agent. Although a revocation of a power of attorney to be effective must be communicated to the parties concerned, yet a revocation by operation of law, such as by death of the principal is, as a rule, instantaneously effective inasmuch as "by legal fiction the agent's exercise of authority is regarded as an execution of the principal's continuing will. With death, the principal's will ceases or is the of authority is extinguished.

TRUST

ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact, NYMPHA Z. SALES v MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF DEEDS OF MARIKINA CITY, G.R No. 197380, October 8, 2014. J. PERLAS-BERNABE.

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To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is material. If there is an actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance based on implied trust prescribes in ten (10) years, the reference point being the date of registration of the deed or the issuance of the title. On the other hand, if the real owner of the property remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him and in such case, the action for reconveyance would be in the nature of a suit for quieting of title which is imprescriptible.

Having alleged the commission of fraud by Gran in the transfer and registration of the subject properties in her name, there was, in effect, an implied trust created by operation of law pursuant to Article 1456 of the Civil Code.

Here, the filing of the complaint was beyond the 10-year prescriptive period, warranting the dismissal of the complaint.

HEIRS OF VALENTIN BASBAS, ANSELMA B. ENDRINAL, GERTRUD ES BASBAS, RUFINA BASBAS, CEFERINA B. CARTECIANO, ANACLETO BASBAS, ARSENIA BASBAS, ANASTACIO BASBAS, BEDACIO BASBAS, TEODOCIA B. OCAMPO, SEGUNDO C. BASBAS, MARIA B. RAMOS AND EUGENIO BASBAS IN REPRESENTATION OF PEDRO BASBAS; HERINO T. BASBAS AND NESTOR T. BASBAS IN REPRESENTATION OF LUCAS BASBAS; ADELAIDA B. FLORENTINO, RODRIGO BASBAS, FELIX BASBAS, JR., TEODULO BASBAS, ANDRESITO BASBAS, LARRY BASBAS AND JOEY BASBAS IN REPRESENTATION OF FELIX BASBAS, SR., VICTOR BEATO, ALIPIO BEATO, EUTIQUIO BEATO, JULIANA B. DIAZ, PABLO BEATO AND ALEJANDRO BEATO IN REPRESENTATION OF REMIGIA B. BEATO, AS REPRESENTED BY RODRIGO BASBAS V RICARDO BASBAS as represented by EUGENIO BASBAS, G.R No. 188773, September 10, 2014. J. PEREZ

Based on the evidence on hand, defendants including herein respondent Ricardo acquired the property in question through fraud and, therefore, an implied trust was created in favor of petitioners under Article 1456 of the New Civil Code.

Since a constructive trust was created, [petitioners] have the right to recover the property subject of this action. The fact that the decision of the RTC, Biñan, Laguna approving/granting the petition for the reconstitution of the title covering Lot No. 39 and said decision has obtained its finality, is of no moment. It has been held: "the rule that registration of real property under the Torrens System has the effect of constructive notice to the whole world cannot be availed of when the purpose of the action is to compel a trustee to convey the property registered in his name for the benefit of the cestui que trust. In other words, the defense of prescription cannot be set up in an action to enforce a trust.

JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No. 196023, April 21, 2014, J.Reyes

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The Court is in conformity with the finding of the trial court that an implied resulting trust was created as provided under the first sentence of Article 1448which 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. In this case, the petitioners have shown that the two elements are present. 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.

COMPROMISE

DOÑA ADELA EXPORT INTERNATIONAL, INC., vs. TRADE AND INVESTMENT DEVELOPMENT CORPORATION (TIDCORP), AND THE BANK OF THE PHILIPPINE ISLANDS, G.R. No. 201931, February 11, 2015, J. Villarama

Petitioner did not sign the compromise agreement. The Supreme Court held that it is basic in law that a compromise agreement, as a contract, is binding only upon the parties to the compromise, and not upon non-parties. This is the doctrine of relativity of contracts. The rule is based on Article 1311 (1) of the Civil Code which provides that “contracts take effect only between the parties, their assigns and heirs.” The sound reason for the exclusion of non-parties to an agreement is the absence of a vinculum or juridical tie which is the efficient cause for the establishment of an obligation. Consistent with this principle, a judgment based entirely on a compromise agreement is binding only on the parties to the compromise the court approved, and not upon the parties who did not take part in the compromise agreement and in the proceedings leading to its submission and approval by the court.

I.Definition

Air Transportation Office v. Gopuco, Jr., G.R. NO. 158563.  June 30, 2005

A compromise agreement, when not contrary to law, public order, public policy, morals, or good customs, is a valid contract which is the law between the parties.  It is a contract perfected by mere consent, whereby the parties, making reciprocal concessions, avoid litigation or put an end to one already commenced.  It has the force of law and is conclusive between the parties, and courts will not relieve parties from obligations voluntarily assumed, simply because their contracts turned out to be unwise

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II.Void Compromise

SERCONSISION R. MENDOZA vs. AURORA MENDOZA FERMIN, G.R. No. 177235, July 7, 2014, J. Peralta

Fermin filed a case for Annulment of Deed of Absolute Sale, Transfer Certificate of Title and Damages alleging that the signature of her father was forged. While the Court recognize that the technical nature of the procedure in examining forged documents calls for handwriting experts, resort to these experts is not mandatory or indispensable, because a finding of forgery does not depend entirely on their testimonies. Judges must also exercise independent judgment in determining the authenticity or genuineness of the signatures in question, and not rely merely on the testimonies of handwriting experts.

Uy vs. Chua, G.R. NO. 183965, September 18, 2009

Like any other contract, a compromise agreement must comply with the requisites in Article 1318 of the Civil Code, to wit:  (a) consent of the contracting parties; (b) object certain that is the subject matter of the contract; and (c) cause of the obligation that is established.  And, like any other contract, the terms and conditions of a compromise agreement must not be contrary to law, morals, good customs, public policy and public order.  Any compromise agreement that is contrary to law or public policy is null and void, and vests no rights in and holds no obligation for any party.  It produces no legal effect at all.

Rivero vs. Court of Appeals, G.R. NO. 141273, May 17, 2005

Article 2035(1) of the New Civil Code provides that no compromise upon the civil status of persons shall be valid. As such, paternity and filiation, or the lack of the same, is a relationship that must be judicially established, and it is for the court to determine its existence or absence. It cannot be left to the will or agreement of the parties.

III.Effect

Philippine National Oil Company-Energy Development Corporation (PNOC-EDC) v. Abella, G.R. NO. 153904, January 17, 2005

A compromise once approved by final orders of the court has the force of res judicata between the parties and should not be disturbed except for vices of consent or forgery.  Hence, ‘a decision on a compromise agreement is final and executory.’  Such agreement has the force of law and is conclusive on the parties.  It transcends its identity as a mere contract binding only upon

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the parties thereto, as it becomes a judgment that is subject to execution in accordance with the Rules.  Judges therefore have the ministerial and mandatory duty to implement and enforce it.” Hence, compromise agreements duly approved by the courts are considered the decisions in the particular cases they involve.

CREDIT TRANSACTIONS

CREDIT

I. LOAN

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS, ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SANTOS, ET.AL, G.R. No. 208293/G.R. No. 208295, December 10, 2014, J. Leonen

The contractual relationship between banks and their depositors is governed by the Civil Code provisions on simple loan. Once a person makes a deposit of his or her money to the bank, he or she is considered to have lent the bank that money. The bank becomes his or her debtor, and he or she becomes the creditor of the bank, which is obligated to pay him or her on demand.

LAND BANK OF THE PHILIPPINES VS. EMMANUEL OÑATE G.R. No. 192371, J. Del Castillo

Land Bank unilaterally offset the funds of the respondent without legal justification and commit undocumented withdrawals from the said fund. The SC held that the same was tantamount to a forbearance of money and considered it as an involuntary loan.

CONTRACT OF LOAN

PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA AND EDUAROSA REALTY DEVELOPMENT, INC., G.R. No. 195889, September 24, 2014, J. Mendoza

The agreement between PNB and [Spouses Tajonera] 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

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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.

PNB, not having released the balance of the last loan proceeds in accordance with the 3rd Amendment had no right to demand from [Spouses Tajonera’s] 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.

PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA and EDUAROSA REALTY DEVELOPMENT, INC.G.R. No. 195889, September 24, 2014, J. Mendoza

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.

CHECKS

NEIL B. AGUILAR AND RUBEN CALIMBAS vs. LIGHTBRINGERS CREDIT COOPERATIVE, G.R. No. 209605, January 12, 2015, J. Mendoza

The Court holds that there was indeed a contract of loan between the petitioners and respondent. The signatures of the petitioners were present on both the PNB checks and the cash disbursement vouchers. The checks were also made payable to the order of the petitioners. The Court pointed out that a check functions more than a promissory note since it not only contains an undertaking to pay an amount of money but is an "order addressed to a bank and partakes of a representation that the drawer has funds on deposit against which the check is drawn, sufficient to ensure payment upon its presentation to the bank."

BONEVIE vs CA, G.R. NO. L-49101 October 24, 1983

Petitioner assails the validity of the mortgage between Lozano and PBCOM arguing that on the day the deed was executed there was yet no principal

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obligation to secure as the loan of P75,000.00 was not received by the Lozano spouses, so that in the absence of a principal obligation, there is want of consideration in the accessory contract, which consequently impairs its validity and fatally affects its very existence. A contract of loan being a consensual contract, said contract of loan was perfected at the same time the contract of mortgage was executed, and the promissory note is only an evidence of indebtedness and does not indicate lack of consideration of the mortgage at the time of its execution.

SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT BANK OF THE PHILIPPINES, G.R. NO. L-24968, April 27, 1972

The trial court rendered judgment for the plaintiff, ruling that there was a perfected contract between the parties when the application of Saura, Inc. for a loan was approved by resolution of the defendant, and the corresponding mortgage was executed and registered and that the defendant was guilty of breach thereof.

An accepted promise to deliver something, by way of commodatum or simple loan is binding upon the parties, but the commodatum or simple loan itself shall not be perferted until the delivery of the object of the contract.

FRANCISCO HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L-48349, December 29, 1986

Pursuant to a contract, the defendant-appellee paid to the plaintfff-appellant advance rentals for the first eight years, subtracting therefrom the amount of the interest or discount for the first eight years, Plaintiff-appellant insists that the lower court erred in the computation of the interest collected out of the rentals paid for the first eight years; that such interest was excessive and violative of the Usury Law. The contract between the parties is one of lease and not of loan since the provision for the payment of rentals in advance cannot be construed as a repayment of a loan because there was no grant or forbearance of money as to constitute an indebtedness on the part of the lessor, hence usury law will not apply.

PNB vs. CA, G.R. NO. 75223, March 14, 1990

An escalation clause is a valid provision in the loan agreement provided that — (1) the increased rate imposed or charged does not exceed the ceiling fixed by law or the Monetary Board; (2) the increase is made effective not earlier than the effectivity of the law or regulation authorizing such an

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increase; and (3) the remaining maturities of the loans are more than 730 days as of the effectivity of the law or regulation authorizing such an increase.

ART 1249

SPOUSES TAGUMPAY N. ALBOS AND AIDA C. ALBOS vs. SPOUSES NESTOR M. EMBISAN AND ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, AND THE REGISTER OF DEEDS OF QUEZON CITY, G.R. No. 210831, November 26, 2014, J. Velasco Jr.

The compounding of interest should be in writing. Article 1956 of the New Civil Code, which refers to monetary interest provides that 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.

The imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust.

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. Thus, Spouses Embisan, having imposed, unilaterally at that, the compounded interest rate, had the correlative duty of clarifying and reducing in writing how the said interest shall be earned. Having failed to do so, the silence of the agreement on the manner of earning interest is a valid argument for prohibiting them from charging interest at a compounded rate.

MCMP CONSTRUCTION CORP. VS. MONARK EQUIPMENT CORP. G.R. No. 201001. November 10, 2014, J. Velaso Jr.

The interest rate of 24% per annum, penalty and collection charge of 3% or 36 % per annum on rental fees provided by invoices for the lease of heavy equipment was found by the court to be iniquitous, unconscionable and therefore void. Although C.B. Circular No. 905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest rates for both secured and unsecured loans, regardless of maturity, nothing in the said circular could possibly be read as granting carte blanche authority to lenders to raise interest rates to levels which would either enslave their borrowers or lead to a hemorrhaging of their assets. Therefore the rates may be validly reduced by the court.

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SUN LIFE OF CANADA (PHILIPPINES), INC. vs. SANDRA TAN KIT and The Estate of the Deceased NORBERTO TAN KIT, G.R. No. 183272, October 15, 2014, J. Del Castillo

Monetary interest refers to the compensation set by the parties for the use or forbearance of money.” No such interest shall be due unless it has been expressly stipulated in writing. “On the other hand, compensatory interest refers to the penalty or indemnity for damages imposed by law or by the courts. This being the case and judging from the tenor of the CA, there can be no other conclusion than that the interest imposed by the appellate-court is in the nature of compensatory interest.

ROLANDO C. DE LA PAZ vs. L & J DEVELOPMENT COMPANY, G.R. No. 183360, September 8, 2014, J. Del Castillo

When a person granted an unsecured loan without a maturity date in favor of a corporation and its president and general manager (who is a lawyer) without reducing the loan transaction in writing, the creditor cannot enforce payment of 6% monthly interest. The payments of the debtor to the creditor must be considered as payment of the principal amount of the loan because Article 1956 was not complied with. In addition, even if the interest was in writing, it cannot be collected because it is unconscionable.

ANCHOR SAVINGS BANK vs. PINZMAN REALTY AND DEVELOPMENT CORPORATION, MARYLIN MANALAC AND RENATO GONZALES, G.R. No. 192304, August 13, 2014, J. Villarama Jr.

Foreclosure sale arising from a usurious mortgage cannot be given legal effect. This Court has previously struck down a foreclosure sale where the amount declared as mortgage indebtedness involved excessive, unreasonable, and unconscionable interest charges. In no uncertain terms, this Court ruled that a mortgagor cannot be legally compelled to pay for a grossly inflated loan. In the case at bar, the unlawful interest charge which led to the amount demanded will result to the invalidity of the subsequent foreclosure sale.

ECE REALTY and DEVELOPMENT, INC. vs. HAYDYN HERNANDEZ, G.R. No. 212689, August 6, 2014, J. Reyes

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 Hernandez 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. 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

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judgments is now back at six percent (6%), the rate provided in Article 2209 of the Civil Code.

CONRADO A. LIM vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY BUNAG AND NELSON CAMILLER, G.R. No. 201483, August 04, 2014, J. Mendoza

Lim argues that legal interest in accordance with the case of Eastern Shipping must also be awarded. The rules on legal interest in Eastern Shipping have, however, been recently modified by Nacar in accordance with Bangko Sentral ng Pilipinas Monetary Board (BSP-MB) Circular No. 799, which became effective on July 1, 2013. Pertinently, it amended the rate of legal interest in judgments from 12% to 6% per annum, with the qualification that the new rate be applied prospectively. Thus, the 12% per annum legal interest in judgments under Eastern Shipping shall apply only until June 30, 2013, and the new rate of 6% per annum shall be applied from July 1, 2013 onwards.

SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045, July 2, 2014. J. DEL CASTILLO

Since the escalation clause was annulled for being violative of the mutuality principle, the principal amount of the loan is subject to the original or stipulated rate of interest, and upon maturity, the amount due shall be subject to legal interest at the rate of 12% per annum.

ESTANISLAO AND AFRICA SINAMBAN VS. CHINA BANKING CORPORATION G.R. No. 193890. March 11, 2015, J. REYES

The subject three PNs bear interests ranging from 21% to 23% per annum, exclusive of penalty of 1% on the overdue amount per month of delay, whereas in its complaint, Chinabank prayed to recover only the legal rate of 12% on whatever judgment it could obtain. Meanwhile, the Monetary Board of the Bangko Sentral ng Pilipinas in its Resolution No. 796 dated May 16, 2013, and now embodied in Monetary Board Circular No. 799, has effective July 1, 2013 reduced to 6%, from 12%, the legal rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of stipulation. Since Chinabank demanded only the legal, not the stipulated, interest rate on the deficiency and attorney’s fees due, the defendants will solidarily pay interest on their shares in the deficiency at the rate of 12% from November 18, 1998 to June 30, 2013, and 6% from July 1, 2013 until fully paid.

ILEANA DR. MACALINAO vs BANK OF THE PHILIPPINE ISLANDS, G.R. NO. 175490, September 17, 2009

In its Complaint, respondent BPI originally imposed the interest and penalty charges at the rate of 9.25% per month or 111% per annum which was declared as unconscionable by the lower courts for being clearly excessive, and was thus reduced to 2% per month or 24% per annum but which the CA

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modified increased them to 3% per month or 36% per annum based on the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card, which governs the transaction between petitioner Macalinao and respondent BPI.

The courts may reduce the interest rate as reason and equity demand, for stipulations demanding interest excessive, iniquitous, unconscionable and exorbitant interest rates are void for being contrary to morals, if not against the law.

COMMODATUM

CATHOLIC VICAR APOSTOLIC CHURCH vs. CA, G.R. L-80294-95, September 21, 1988

When respondents allowed the free use of the property they became bailors in commodatum and the petitioner the bailee. The bailees' failure to return the subject matter of commodatum to the bailor did not mean adverse possession on the part of the borrower. The bailee held in trust the property subject matter of commodatum. Hence, an adverse claim could not ripen into title by way of ordinary acquisitive prescription because of the absence of just title.

REPUBLIC OF THE PHILIPPINES vs BAGTAS, G.R. NO. L-17474, October 25, 1962

The appellant had been in possession of the bull even after the expiration of the contract. He contends, however, that since the contract was commodatum the appellee retained ownership or title to the bull. Hence, it should suffer its loss due to force majeure.

A contract of commodatum is essentially gratuitous. If the breeding fee be considered a compensation, then the contract would be a lease of the bull. Under article 1671 of the Civil Code the lessee would be subject to the responsibilities of a possessor in bad faith, because she had continued possession of the bull after the expiry of the contract. And even if the contract be commodatum, still the appellant is liable, because article 1942 of the Civil Code provides that a bailee in a contract of commodatum —

. . . is liable for loss of the things, even if it should be through a fortuitous event:

(2) If he keeps it longer than the period stipulated . . .

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(3) If the thing loaned has been delivered with appraisal of its value, unless there is a stipulation exempting the bailee from responsibility in case of a fortuitous event; xxx

REPUBLIC OF THE PHILIPPINES vs. CA, G.R. NO. L-46145 November 26, 1986

The disputed property is private land and this possession was interrupted only by the occupation of the land by the U.S. Navy which eventually abandoned the premises. The heirs of the late Baloy, are now in actual possession, and this has been so since the abandonment by the U.S. Navy.

The occupancy of the U.S. Navy partakes of the character of a commodatum, and one's ownership of a thing may be lost by prescription by reason of another's possession if such possession be under claim of ownership, not where the possession is only intended to be transient, in which case the owner is not divested of his title, although it cannot be exercised in the meantime.

MUTUUM

INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK, G.R. NO. L-60705, June 28, 1989

OVERSEAS BANK OF MANILA vs. COURT OF APPEALS, G.R. NO. L-60907, June 28, 1989

OBM contends that it had agreed to pay interest only up to the dates of maturity of the certificates of time deposit and that respondent Santos is not entitled to interest after the maturity dates had expired, unless the contracts are renewed. When respondent invested his money in time deposits with OBM they entered into a contract of simple loan or mutuum, not a contract of deposit.

REPUBLIC OF THE PHILIPPINES vs. GRIJALDO, G.R. NO. L-20240, December 31, 1965

The appellant maintains that because the loans were secured by a chattel mortgage on the standing crops on a land owned by him and these crops were lost or destroyed through enemy action his obligation to pay the loans was thereby extinguished.

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The chattel mortgage on the crops growing on appellant's land simply stood as a security for the fulfillment of appellant's obligation, which is the payment of the loan. The loss of the crops did not extinguish his obligation to pay, because his obligation, as a simple loan or mutuum, was to pay a generic thing, the amount of money with interest.

HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L-48349 December 29, 1986

The difference between a discount and a loan or forbearance is that the former does not have to be repaid. The loan or forbearance is subject to repayment and is therefore governed by the laws on usury.

BRIONES vs. CAMMAYO, G.R. NO. L-23559, October 4, 1971

In simple loan with stipulation of usurious interest, the prestation of the debtor to pay the principal debt, which is the cause of the contract is not illegal. The illegality lies only as to the prestation to pay the stipulated interest. Hence, being separable, the latter only should be deemed void, since it is the only one that is illegal.

II. DEPOSIT

INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK, G.R. NO. L-60705, June 28, 1989

OVERSEAS BANK OF MANILA vs. CA, G.R. NO. L-60907, June 28, 1989

OBM contends that it had agreed to pay interest only up to the dates of maturity of the certificates of time deposit and that respondent Santos is not entitled to interest after the maturity dates had expired, unless the contracts are renewed. When respondent invested his money in time deposits with OBM they entered into a contract of simple loan or mutuum, not a contract of deposit.

BPI vs. CA, G.R. NO. L-66826 August 19, 1988

The document which embodies the contract states that the US$3,000.00 was received by the bank for safekeeping. A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safely keeping it and of returning the same, but if the safekeeping of the

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thing delivered is not the principal purpose of the contract, there is no deposit but some other contract.

BPI vs. CA, G.R. NO. 104612, May 10, 1994

Bank deposits are in the nature of irregular deposits; they are really loans because they earn interest. The relationship then between a depositor and a bank is one of creditor and debtor, and the deposit under the questioned account was an ordinary bank deposit; hence, it was payable on demand of the depositor.

SERRANO vs. CENTRAL BANK OF THE PHILIPPINES, G.R. NO. L-30511, February 14, 1980

All kinds of bank deposits, whether fixed, savings, or current are to be treated as loans and are to be covered by the law on loans because it can use the same. Failure of he respondent Bank to honor the time deposit is failure to pay s obligation as a debtor and not a breach of trust arising from depositary's failure to return the subject matter of the deposit

WAREHOUSE RECEIPT LAW

LUA KIAN vs. MANILA RAILROAD COMPANY, G.R. NO. L-23033, January 5, 1967

The legal relationship between an arrastre operator and the consignee is akin to that of a depositor and warehouseman. As a custodian of the goods discharged from the vessel, it was defendant arrastre operator's duty, like that of any ordinary depositary, to take good care of the goods and to turn them over to the party entitled to their possession. Under this particular set of circumstances, said defendant should have withheld delivery because of the discrepancy between the bill of lading and the markings and conducted its own investigation, not unlike that under Section 18 of the Warehouse Receipts Law, or called upon the parties, to interplead, such as in a case under Section 17 of the same law, in order to determine the rightful owner of the goods.

TRUST RECEIPT

VINTOLA vs. INSULAR BANK OF ASIA AND AMERICA, G.R. NO. 73271, May 29, 1987

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A trust receipt is considered as a security transaction intended to aid in financing importers and retail dealers who do not have sufficient funds or resources to finance the importation or purchase of merchandise, and who may not be able to acquire credit except through utilization, as collateral of the merchandise imported or purchased.

III. GUARANTY AND SURETYSHIP

SURETY

OFFICE OF THE OMBUDSMAN, vs. AMALIO A. MALLARI, G.R. No. 183161, December 03, 2014, J. Mendoza

Mallari was administratively charged due to the fact the he approved surety bond in favor of ECOBEL without consideration of the policies by GSIS. The court finds substantial evidence to prove Mallari’s administrative liability. The Court notes that irregularities, defects and infirmities attended the processing, approval, issuance, and the actual drawdown of the US$10,000,000.00 ECOBEL bond in which Mallari actively participated. In a letter, dated September 13, 2002, to the FFIB, Mr. Reynaldo R. Nograles, OIC-Office of the President, Internal Audit Service, GSIS, attached a copy of the excerpts from the Final Report on the GSIS Audit of Underwriting Departments. Said Audit Report found that: there was non-adherence to existing policies/SOPs in the processing and release of the Ecobel Land, Inc. guaranty payment bond, as well as non-adherence to GSIS GIG’s business policy statement on survey, inspection or assessment of risks/properties to be insured including re-inspection and survey of insured properties.

CENTENNIAL GUARANTEE ASSURANCE CORPORATION vs. UNIVERSAL MOTORS CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and PETER YAP, G.R. No. 189358, October 8, 2014, J. Perlas-Bernabe.

Verily, in a contract of suretyship, one lends his credit by joining in the principal debtor’s obligation so as to render himself directly and primarily responsible with him, and without reference to the solvency of the principal. Thus, execution pending appeal against NSSC means that the same course of action is warranted against its surety, CGAC. The same reason stands for CGAC’s other principal, Orimaco, who was determined to have permanently left the country with his family to evade execution of any judgment against him.

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PEOPLE'S TRANS-EAST ASIA INSURANCE CORPORATION, a.k.a. PEOPLE'S GENERAL INSURANCE CORPORATIONvs. DOCTORS OF NEW MILLENNIUM HOLDINGS, INC., G.R. No. 172404, August 13, 2014, J. Leonen

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. 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.

GILAT SATELLITE NETWORKS, LTD vs. UNITED COCONUT PLANTERS BANK GENERAL INSURANCE CO., INC., G.R. No. 189563, April 7, 2014, CJ. Sereno

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 Gilathad delivered all the goods to One Virtual and installed them. Despite these compliances, One Virtual still failed to pay its obligation, triggering UCPB’s liability to Gilat as the former’s surety. In other words, the failure of One Virtual, as the principal debtor, to fulfill its monetary obligation to Gilat gave the latter an immediate right to pursue UCPB as the surety.

YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU, and ALMERICK TIENG LIM vs. INTERNATIONAL EXCHANGE BANK (now Union Bank of the Philippines), G.R. No. 203133, February 18, 2015, J. Reyes

A surety is considered in law as being the same party as the debtor in relation to whatever is adjudged touching the obligation of the latter, and their liabilities are interwoven as to be inseparable.” And it is well settled that when the obligor or obligors undertake to be “jointly and severally” liable, it means that the obligation is solidary, as in this case.

TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES (Formerly PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION VS. ASIA PACES CORPORATION, PACES INDUSTRIAL

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CORPORATION, NICOLAS C. BALDERRAMA, SIDDCOR INSURANCE CORPORATION, G.R. No. 187403 February 12, 2014, J. Perlas-Bernabe

A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty, an undertaking that the debtor shall pay. Stated differently, a surety promises to pay the principal’s debt if the principal will not pay, while a guarantor agrees that the creditor, after proceeding against the principal, may proceed against the guarantor if the principal is unable to pay. A surety binds himself to perform if the principal does not, without regard to his ability to do so. A guarantor, on the other hand, does not contract that the principal will pay, but simply that he is able to do so. In other words, a surety undertakes directly for the payment and is so responsible at once if the principal debtor makes default, while a guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of the principal debtor. 

Article 2079 of the Civil Code provides that "[a]n extension granted to the debtor by the creditor without the consent of the guarantor extinguishes the guaranty," equally applies to both contracts of guaranty and suretyship.

STRONGHOLD INSURANCE COMPANY, INC., vs. SPOUSES RUNE AND LEA STROEM, G.R. No. 204689, January 21, 2015, J. Leonen

It is settled that a surety’s solidary obligation for the performance of the principal debtor’s obligation is indirect and merely secondary. Nevertheless, the surety’s liability to the creditor or promisee of the principal is said to be direct, primary and absolute; in other words, he is directly and equally bound with the principal. In enforcing a surety contract, the ‘complementary-contracts-construed-together’ doctrine finds application. According to this principle, an accessory contract must be read in its entirety and together with the principal agreement, as provided in Article 1374.

GUARANTY

HOME GUARANTY CORPORATION, vs. LA SAVOIE DEVELOPMENT CORPORATION, G.R. No. 168616, January 28, 2015, J. Leonen

Home Guaranty Corporation is a guarantor of La Savoie. Subsequently, La Savoie was placed under receivership. The Supreme Court held that placing La Savoie under receivership brings into operation the rule against preference of creditors. Home Guaranty Corporation must submit itself, like La Savoie's other creditors, to how La Savoie's Petition for Rehabilitation shall be resolved. As a paying guarantor, Home Guaranty Corporation was subrogated into the rights of La Savoie's creditors and now stands as the latter's own creditor.

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COMMONWEALTH INSURANCE CORPORATION vs. CA, G.R. NO. 130886. January 29, 2004

Petitioner’s liability under the suretyship contract is different from its liability under the law. There is no question that as a surety, petitioner should not be made to pay more than its assumed obligation under the surety bonds. However, it is clear from the above-cited jurisprudence that petitioner’s liability for the payment of interest is not by reason of the suretyship agreement itself but because of the delay in the payment of its obligation under the said agreement.

THE MANILA INSURANCE CO INC vs SPOUSES AMURAO, G.R. NO. 179628, January 16, 2013

Petitioner imputes error on the part of the CA in treating petitioner as a solidary debtor instead of a solidary guarantor and argues that while a surety is bound solidarily with the obligor, this does not make the surety a solidary co-debtor. A surety’s liability is joint and several and although the contract of suretyship is secondary to the principal contract, the surety’s liability to the obligee is nevertheless direct, primary, and absolute.

THE IMPERIAL INSURANCE, INC. vs. DE LOS ANGELES, G.R. NO. L-28030, January 18, 1982

Imperial Insurance, Inc. bound itself solidarily with the principal, the deceased defendant Reyes. In accordance with Article 2059, par. 2 of the Civil Code of the Philippines, excussion (previous exhaustion of the property of the debtor) shall not take place "if he (the guarantor) has bound himself solidarily with the debtor," hence the petitioner cannot escape liability on its counter-bonds.

MANILA SURETY & FIDELITY CO., INC. vs. ALMEDA, G.R. NO. L-27249 July 31, 1970

There is no question that under the bonds posted in favor of the NAMARCO in this case, the surety company assumed to make immediate payment to said firm of any due and unsettled accounts of the debtor-principal, even without demand and notice of the debtor's non-payment, the surety, in fact, agreeing

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that its liability to the creditor shall be direct, without benefit of exhaustion of the debtor's properties, and to remain valid and continuous until the guaranteed obligation is fully satisfied. In short, appellant secured to the creditor not just the payment by the debtor-principal of his accounts, but the payment itself of such accounts. Clearly, a contract of suretyship was thus created, the appellant becoming the insurer, not merely of the debtor's solvency or ability to pay, but of the debt itself.Under the Civil Code, with the debtor's insolvency having been judicially recognized, herein appellant's resort to the courts to be released from the undertaking thus assumed would have been appropriate.

RCBC vs. ARRO, G.R. NO. L-49401, July 30, 1982

The surety agreement which was earlier signed by Enrique and private respondent, is an accessory obligation, it being dependent upon a principal one which, in this case is the loan obtained by Daicor as evidenced by a promissory note. By the terms, it can be clearly seen that the surety agreement was executed to guarantee future debts which Daicor may incur with petitioner since a guaranty may also be given as security for future debts, the amount of which is not yet known; there can be no claim against the guarantor until the debt is liquidated.

REPUBLIC OF THE PHILIPPINES vs. PAL-FOX LUMBER CO., INC., G.R. NO. L-26473, February 29, 1972

On whether the surety's liability can exceed the amount of its bond, it is enough to remark that while the guarantee was for the original amount of the debt of Gabino Marquez, the amount of the judgment by the trial court in no way violates the rights of the surety. If it (the guaranty) be simple or indefinite, it shall comprise not only the principal obligation but also all its accessories, including judicial costs, provided with respect to the latter, that the guarantor shall only be liable for those costs incurred after he has been judicially required to pay.

IV. PLEDGE AND REAL MORTGAGE

ROLANDO ROBLES, REPRESENTED BY ATTY. CLARA C. ESPIRITU vs. FERNANDO FIDEL YAPCINCO, PATROCINIO B. YAPCINCO, MARIA CORAZON B. YAPCINCO, and MARIA ASUNCION B. YAPCINCO-FRONDA, G.R. No. 169569, October 22, 2014, J. Bersamin

The effect of the failure of Apolinario Cruz, the predecessor-in-interest of Rolando Robles, petitioner to this case, 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

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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.

RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451, July 30, 2014. PERLAS-j. BERNABE

In this case, the bank claims that it should be deemed a mortgagee in good faith for having conducted exhaustive investigations on the history of the mortgagor’s title.

However, the Court found this argument untenable. 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; and second, the principle is inapplicable to banking institutions which are behooved to exercise greater care and prudence before entering into a mortgage contract.

RURAL BANK OF CABADBARAN, INC. vs. JORGITA A. MELECIO-YAP, LILIA MELECIO PACIFICO (deceased, substituted by her only child ERILL*ISAAC M. PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R. No. 178451, July 30, 2014, J. Perlas-Bernabe

When a bank relied on a forged SPA, it has the burden to prove its authenticity and due execution as 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.

However, where a mortgage is not valid due to a forged SPA, the principal obligation which it guarantees is not thereby rendered null and void. What is lost is merely the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as evidence or proof of a personal obligation of the debtor and the amount due to the creditor may be enforced in an ordinary action.

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 the parties; thus, absent any cogent reason to hold otherwise, the need for the recomputation of said loan obligation should be dispensed with.

LEONARDO C. CASTILLO, represented by LENNARD V. CASTILLO vs. SECURITY BANK CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR., and TERESITA FLORESCASTILLO, G.R. No. 196118, July 30, 2014, J. Peralta

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In a real estate mortgage, allegations of forgery, like all other allegations, must be proved by clear, positive, and convincing evidence by the party alleging it. But even if there is variation on the date of issuance of the Community Tax Certificate (CTC) as indicated on the notarization of the alleged SPA and on the day it was actually secured, such defect in the SPA does not automatically render it invalid. 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.

The law 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. The necessity of a public document for said contracts is only for convenience; it is not essential for validity or enforceability.

PHILIPPINE NATIONAL BANK vs. JOSE GARCIA and CHILDREN et al., G.R. No. 182839, June 2, 2014, J. Brion

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 PNB 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. 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.

METROPOLITAN FABRICS INC. ET AL. VS. PROSPERITY CREDIT RESOURCES ENC. ET AL. G.R. No. 154390 March 17, 2014, J. Bersamin

Contrary to their modified defense of absence of consent, the testimony adduced tended at best to prove the vitiation of their consent through insidious words, machinations or misrepresentations amounting to fraud, which showed that the contract of mortgage 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.

ATTY. LEO N. CAUBANG vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R. No. 174581, February 04, 2015, J. Peralta

In an extrajudicial foreclosure of a real estate mortgage, failure to comply with the publication requirement by the mortgagee brought by the failure of its lawyer to make an effort to inquire as to whether the Oriental Daily Examiner was indeed a newspaper of general circulation, as required by law, and as a result, the mortgagee became the sole bidder, will invalidate the notice and render the sale voidable. The principal object of a notice of sale in a foreclosure of mortgage is to notify the mortgagor and to inform the public generally of the nature and condition of the property to be sold, and of the time,

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place, and terms of the sale.  These are given to secure bidders and prevent a sacrifice of the property. 

SPOUSES JOSE O. GATUSLAO AND ERMILA LEONILA LIMSIACO-GATUSLAO vs. LEO RAY V. YANSON, G.R. No. 191540, January 21, 2015, J. Del Castillo

Yanson, as a transferee or successor-in-interest of PNB by virtue of the contract of sale between them, is considered to have stepped into the shoes of PNB. As such, he is necessarily entitled to avail of the provisions of Section 7 of Act No. 3135. Verily, one of the rights that PNB acquired as purchaser of the subject properties at the public auction sale, which it could validly convey by way of its subsequent sale of the same to respondent, is the availment of a writ of possession.  This can be deduced from the stipulation that “the vendee further agrees to undertake, at xxx his expense, the ejectment of any occupant of the property.”  Accordingly, Yanson filed the contentious ex parte motion for a writ of possession to eject Spouses Gatuslao therefrom and take possession of the subject properties.

Further, respondent may rightfully take possession of the subject properties through a writ of possession, even if he was not the actual buyer thereof at the public auction sale, in consonance with the Court’s ruling in Ermitaño v. Paglas. The Court ruled that after the expiration of the redemption period without redemption having been made by petitioner, respondent became the owner thereof and consolidation of title becomes a right.  Being already then the owner, respondent became entitled to possession. Petitioner already lost his possessory right over the property after the expiration of the said period.

DEVELOPMENT BANK OF THE PHILIPPINES vs. GUARINA AGRICULTURAL AND REALTY DEVELOPMENT CORPORATION, G.R. No. 160758, JANUARY 15, 2014, J. Bersamin

Guarina executed a real estate mortgage over several real properties in favor of DBP as security for a loan. However, before the loan was due, DBP foreclosed upon the mortgage. The Supreme Court held that foreclosure of a mortgage prior to the mortgagor's default on the principal obligation is premature, and should be undone for being void and ineffectual. The mortgagee who has been meanwhile given possession of the mortgaged property by virtue of a writ of possession issued to it as the purchaser at the foreclosure sale may be required to restore the possession of the property to the mortgagor and to pay reasonable rent for the use of the property during the intervening period.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710 October 3, 1985

The fact that when Sulpicio M. Tolentino executed a real estate mortgage, no consideration was then in existence, as there was no debt yet because Island Savings Bank had not made any release on the loan, does not make the real

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estate mortgage void for lack of consideration. It is not necessary that any consideration should pass at the time of the execution of the contract of real mortgage, it may either be a prior or subsequent matter, but when the consideration is subsequent to the mortgage, the mortgage can take effect only when the debt secured by it is created as a binding contract to pay.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October 3, 1985

Where the indebtedness actually owing to the holder of the mortgage is less than the sum named in the mortgage, the mortgage cannot be enforced for more than the actual sum due.

INTEG.R.ATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK, G.R. NO. L-60705, June 28, 1989

OVERSEAS BANK OF MANILA vs.CA, G.R. NO. L-60907 June 28, 1989

The facts and circumstances leading to the execution of the deed of assignment, has satisfied the requirements of a contract of pledge (1) that it be constituted to secure the fulfillment of a principal obligation; (2) that the pledgor be the absolute owner of the thing pledged; (3) that the persons constituting the pledge have the free disposal of their property, and in the absence thereof, that they be legally authorized for the purpose. The further requirement that the thing pledged be placed in the possession of the creditor, or of a third person by common agreement was complied with by the execution of the deed of assignment in favor of PNB.

YULIONGSIU vs. PNB, G.R. NO. L-19227, February 17, 1968

The defendant bank as pledgee was therefore entitled to the actual possession of the vessels, and while it is true that plaintiff continued operating the vessels after the pledge contract was entered into, his possession was expressly made "subject to the order of the pledgee." On the other hand, there is an authority supporting the proposition that the pledgee can temporarily entrust the physical possession of the chattels pledged to the pledgor without invalidating the pledge. In such a case, the pledgor is regarded as holding the pledged property merely as trustee for the pledgee.

MAKATI LEASING and FINANCE CORPORATION vs. WEAREVER TEXTILE MILLS, INC., G.R. NO. L-58469, May 16, 1983

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A house of strong materials may be considered as personal property for purposes of executing a chattel mortgage thereon as long as the parties to the contract so agree and no innocent third party will be prejudiced thereby. There is absolutely no reason why a machinery, which is movable in its nature and becomes immobilized only by destination or purpose, may not be likewise treated as such. This is really because one who has so agreed is estopped from denying the existence of the chattel mortgage.

BUNDALIAN vs. CA, G.R. NO. L-55739, June 22, 1984

The contract also provides that "it is agreed that the vendor shall have the right to possess, use, and build on, the property during the period of redemption." When the vendee acknowledged the right of the vendor to retain possession of the property the contract is one of loan guaranteed by mortgage, not a conditional sale or an option to repurchase.

TIOSECO vs. CA, G.R. NO. L-66597, August 29, 1986

When the respondents chose to enforce their right of redemption thru a court action they were well within their right as the action was filed within one year from the registration of the foreclosure sale of the real estate. The law does not even require any previous notice to the vendee, nor a meeting between him and the redemptioner, much less a previous formal tender before any action is begun in court to enforce the right of redemption.

PNB vs. CA, G.R. NO. L-60208, December 5, 1985

When the foreclosure proceedings are completed and the mortgaged property is sold to the purchaser then all interest of the mortgagor are cut off from the property Prior to the completion of the foreclosure, the mortgagor is liable for the interests on the mortgage. However, after the foreclosure proceedings and the execution of the corresponding certificate of sale of the property sold at public auction in favor of the successful bidder, the redemptioner mortgagor would be bound to pay only for the amount of the purchase price with interests thereon at the rate of one per centum per month in addition up to the time of redemption, together with the amount of any assessments or taxes which the purchaser may have paid thereon after the purchase and interest on such last named amount at the same rate.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October 3, 1985

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Where the indebtedness actually owing to the holder of the mortgage is less than the sum named in the mortgage, the mortgage cannot be enforced for more than the actual sum due.

RAMIREZ vs. CA, G.R. NO. L-38185, September 24, 1986

The antichretic creditor cannot ordinarily acquire by prescription the land surrendered to him by the debtor. The petitioners are not possessors in the concept of owner but mere holders placed in possession of the land by its owners, thus, their possession cannot serve as a title for acquiring dominion.

OCAMPO vs. DOMALANTA, G.R. NO. L-21011, August 30, 1967

A proceeding for judicial foreclosure of mortgage is an action quasi in rem. It is based on a personal claim sought to be enforced against a specific property of a person named party defendant. And, its purpose is to have the property seized and sold by court order to the end that the proceeds thereof be applied to the payment of plaintiff's claim.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October 3, 1985

A pledge or mortgage is indivisible even though the debt may be divided among the successors in interest of the debtor or creditor. Therefore, the debtor's heirs who has paid a part of the debt can not ask for the proportionate extinguishment of the pledge or mortgage as long as the debt is not completely satisfied, neither can the creditor's heir who have received his share of the debt return the pledge or cancel the mortgage, to the prejudice of other heirs who have not been paid.

PACTUM COMMISSORIUM

PHILNICO INDUSTRIAL CORPORATION vs. PRIVATIZATION AND MANAGEMENT OFFICE, G.R. No. 199420, August 27, 2014, J. Leonardo-De Castro

The SC disagreed with the findings of the CA that there is no pactum commissorium, on the ground that since the ARDA and the Pledge Agreement are entirely separate and distinct contract and that neither contract contains both elements of pactum commissorium: the ARDA solely has the second element, while the Pledge Agreement only has the first element, such provision cannot be considered as one of pactum commissorium.

Jurisprudence holds that the agreement of the parties may be embodied in only one

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contract or in two or more separate writings. In case of the latter, the writings of the parties should be read and interpreted together in such a way as to render their intention effective.

In determining the existence of pactum commissorium, had focused more on the evident intention of the parties, rather than the formal or written form.

Here, the ARDA and the Pledge Agreement herein, although executed in separate written instruments, are integral to one another. It was the intention of the parties to enter into and execute both contracts for a complete effectuation of their agreement.

EXTRA-JUDICIAL FORECLOSURE

RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451, July 30, 2014. J. PERLAS-BERNABE

Where a mortgage is not valid, the principal obligation which it guarantees is not thereby rendered null and void. what is lost is merely the right to foreclose the mortgage as a special remedy for satisfying or settling the indebtedness which is the principal obligation. In case of nullity, the mortgage deed remains as evidence or proof of a personal obligation of the debtor and the amount due to the creditor may be enforced in an ordinary action.

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 Spouses Mantala.

SPOUSES RODOLFO and MARCELINA GUEVARRA vs. THE COMMONER LENDING CORPORATION, INC., G.R. No. 204672, J. Perlas-Bernabe

In an extra-judicial foreclosure of registered land acquired under a free patent, the mortgagor may redeem the property within two (2) years from the date of foreclosure if the land is mortgaged to a rural bank under Republic Act No. (RA) 720, as amended, otherwise known as the Rural Banks Act, or within one (1) year from the registration of the certificate of sale if the land is mortgaged to parties other than rural banks pursuant to Act No. 3135. If the mortgagor fails to exercise such right, he or his heirs may still repurchase the property within five (5) years from the expiration of the redemption period pursuant to Section 119 of the Public Land Act. The RTC and CA both correctly ruled that Spouses Guevarra’s right to repurchase the subject property had not yet expired when Cadastral Case No. 122 was filed on September 8, 2005.

METROPOLITAN BANK AND TRUST COMPANY vs. S.F. NAGUIAT ENTERPRISES, INC., G.R. No. 178407, March 18, 2015, J. Leonen

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The insolvency court has exclusive jurisdiction to deal with the property of the insolvent. Consequently, after the mortgagor-debtor has been declared insolvent and the insolvency court has acquired control of his estate, a mortgagee may not, without the permission of the insolvency court, institute proceedings to enforce its lien.

ATTY. LEO N. CAUBANG, vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R. No. 174581, February 04, 2015, J. Peralta

Petitioner failed to have the notice of sale published in a newspaper of general circulation. The Supreme Court held that the principal object of a notice of sale in a foreclosure of mortgage is to inform the public generally of the nature and condition of the property to be sold, and of the time, place, and terms of the sale. Notices are given to secure bidders and prevent a sacrifice of the property. Therefore, statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with and slight deviations therefrom will invalidate the notice and render the sale, at the very least, voidable.

LEASE

OWEN PROSPER A. MACKAY vs. SPOUSES DANA CASWELL AND CERELINA CASWELL, G.R. No. 183872, November 17, 2014, J. Del Castillo

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. In the case at bar, Mackay was given the opportunity to rectify his work. Subsequent to Zameco II’s disapproval to supply the spouses Caswell electricity for several reasons, credence must be given to the latter’s claim that they looked for said Mackay to demand a rectification of the work, but said Mackay and his group were nowhere to be found.

PRO-GUARD SECURITY SERVICES CORPORATION v TORMIL REALTY AND DEVELOPMENT CORPORATION, G.R No. 176341, July 7, 2014. J. DEL CASTILLO

Tormil filed an unlawful detainer case against Torres-Pabalan. Meanwhile the building was being leased to Pro-Guard. Tormil eventually prevailed in the ejectment case, and was adjudged entitled to Pro-Guard’s payment of rent. The issue in this case is when the rentals should be reckoned.

Tormil, as the victor in the unlawful detainer suit, is entitled to the fair rental value for the use and occupation of the unit in the building. Such compensation should not be reckoned from the time Pro-Guard began to occupy the same, but from the time of the demand to vacate. from the moment Pro-Guard started to occupy the unit in March 1994 up to November 15, 1998, the right of Pro-Guard to possess the premises was not challenged. It

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was only after Tormil prevailed over Manuel in its ownership of the same that it terminated Pro-Guard’s right to possess the unit it was occupying through a letter to vacate dated November 16, 1998. Hence, it is only from that point that Tormil is considered to have withdrawn its tolerance of Pro-Guard’s occupation.

NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno

New World and AMA entered into a lease agreement whereby New World agreed to lease to AMA its commercial building located in Manila. AMA failed to pay its rentals citing financial losses. AMA then preterminated the 8 year lease agreement and demanded the refund of its security deposit and advance rentals. It also prayed that its liabilities be reduced on account of its financial difficulties.

The Supreme Court ruled that in the sphere of personal and contractual relations governed by laws, rules and regulations created to promote justice and fairness, equity is deserved, not demanded. The application of equity necessitates a balancing of the equities involved in a case, for “[h]e who seeks equity must do equity, and he who comes into equity must come with clean hands.” Persons in dire straits are never justified in trampling on other persons’ rights. Litigants shall be denied relief if their conduct has been inequitable, unfair and dishonest as to the controversy in issue. The actions of AMA smack of bad faith.

MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL JUSAYANvs.JORGE SOMBILLA, G.R. No. 163928, January 21, 2015, J. Bersamin

By virtue of Republic Act No. 3844, the sharing of the harvest in proportion to the respective contributions of the landholder and tenant (share tenancy) was abolished. Hence, to date, the only permissible system of agricultural tenancy is leasehold tenancy, a relationship wherein a fixed consideration is paid instead of proportionately sharing the harvest as in share tenancy. Its elements are: (1) the object of the contract or the relationship is an agricultural land that is leased or rented for the purpose of agricultural production; (2) the size of the landholding is such that it is susceptible of personal cultivation by a single person with the assistance of the members of his immediate farm household; (3) the tenant-lessee must actually and personally till, cultivate or operate the land, solely or with the aid of labor from his immediate farm household; and (4) the landlord-lessor, who is either the lawful owner or the legal possessor of the land, leases the same to the tenant-lessee for a price certain or ascertainable either in an amount of money or produce. In the case at bar, there is no doubt that a land with a total area of 7.9 hectares were susceptible of cultivation by a single person with the help of the members of his immediate farm household. Also, one’s knowledge of and familiarity with the landholding, its production and the instances when the landholding was struck by drought definitely established that the lessee personally cultivated the land. Moreover, the fact that an

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agricultural lessee has a regular employment does not render his ability to farm physically impossible.

Pagurayan vs. Reyes, G.R. NO. 154577, July 23, 2008

A contract of lease is a consensual, bilateral, onerous and commutative contract by which the owner temporarily grants the use of his property to another who undertakes to pay the rent. Being a consensual contract, it is perfected at the moment there is a meeting of the minds on the thing and the cause and consideration which are to constitute the contract. Without the agreement of both parties, no contract of lease can be said to have been created or established. Nobody can force an owner to lease out his property if he is not willing.

I. Lease of Things

CA-AG.R.O-INDUSTRIAL DEVELOPMENT CORP. vs. Court of Appeals, G.R. NO. 90027, March 3, 1993

We agree with the petitioner's contention that the contract for the rent of the safety deposit box is not an ordinary contract of lease as defined in Article 1643 of the Civil Code. It cannot be characterized as an ordinary contract of lease under Article 1643 because the full and absolute possession and control of the safety deposit box was not given to the joint renters — the petitioner and the Pugaos.

II. Lease of Work or Services III. Lease of Rural and Urban Lands IV. Rights and Obligations of Lessor and Lessee V. Special Rules for Lease of Rural,Urban Lands VI. Household Service (Exclude, for inclusion in Labor Law) VII. Contract of Labor (Exclude, for inclusion in Labor Law) VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)

SOLUTIO INDEBITI

CBK POWER COMPANY LIMITED VS. COMMISSIONER OF INTERNAL REVENUE, G.R. Nos.198729-30, January 15, 2014, J. Sereno

The principle of Solutio Indebiti is not applicable in the case at bar. According to this principle, if something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. In that situation, a creditor-debtor relationship is created under a quasi-contract, whereby the payer becomes the creditor who then has the right to demand the return of payment made by mistake, and the person who has no right to receive the payment becomes obligated to return it. The quasi-

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contract of solutio indebiti is based on the ancient principle that no one shall enrich oneself unjustly at the expense of another.

There is solutio indebiti when:

(1) Payment is made when there exists no binding relation between the payer, who has no duty to pay, and the person who received the payment; and

(2) Payment is made through mistake, and not through liberality or some other cause.

Though the principle of solutio indebiti may be applicable to some instances of claims for a refund, the elements thereof are wanting in this case. First, there exists a binding relation between petitioner and the CIR, the former being a taxpayer obligated to pay VAT. Second, the payment of input tax was not made through mistake, since petitioner was legally obligated to pay for that liability. The entitlement to a refund or credit of excess input tax is solely based on the distinctive nature of the VAT system. At the time of payment of the input VAT, the amount paid was correct and proper.

LAND TITLES AND DEEDS

Torrens System

MARIFLOR T. HORTIZUELA, represented by JOVIER TAGAUFA vs. GREGORIA TAGUFA, ROBERTO TAGUFA and ROGELIO LUMABAN, G.R. No. 205867, February 23, 2015, J. Mendoza

Petitioner assails the decision of the CA that the action for reconveyance filed by her was not the proper remedy on the ground that it constitutes a collateral attack on the validity of the subject certificate of title. The SC however ruled that it is not unmindful of the principle of indefeasibility of a Torrens title and that a certificate of title shall not be subject to collateral attack. Contrary to the pronouncements of the MCTC and the CA, however, the complaint of petitioner 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 owner.

IMELDA, LEONARDO, FIDELINO, AZUCENA, JOSEFINA, ANITA AND SISA, ALL SURNAMED SYJUCOVS FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT CORPORATION, .R. No. 148748. January 14, 2015, J. Leonardo-De Castro

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

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sources. Certainly, there cannot be two or even 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. ."

IMELDA SYJUCO, et.al vs.  FELISA D. BONIFACIO and VSD REALTY & CORPORATION, G.R. No. 148748, January 14, 2015, J. Leonardo-De Castro

The filing of an action to quiet title is imprescriptible if the disputed real property is in the possession of the plaintiff. 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. The Syjucos' title, shows that it originated from OCT No. 994 registered on May 3, 1917 while Bonficacio's title shows that that it likewise originated from OCT No. 994, but registered on April 19, 1917. This case affirmed the earlier finding that “there is only one OCT No. 994, the registration date of which had already been decisively settled as 3 May 1917 and not 19 April 1917” and categorically concluded that “OCT No. 994 which reflects the date of 19 April 1917 as its registration date is null and void.”

UNGAY MALOBAGO MINES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892, January 14, 2015, J. Peralta

The persons who can file the petition for reconstitution of a lost certificate are the registered owner, his assigns or persons in interest in the property. In this case, Ungay Malobago Mines, Inc. admitted that it was not the owner of the land on which the mining patent was issued as the same was owned and registered in the name of Rapu Rapu Minerals Inc., thus it has no legal capacity to institute a petition for reconstitution of a lost certificate.

REPUBLIC OF THE PHILIPPINES vs. HEIRS OF SPOUSES DONATO SANCHEZ and JUANA MENESES represented by RODOLFO S. AGUINALDO, G.R. No. 212388, December 10, 2014, J. Velasco, Jr.

Before a certificate of title which has been lost or destroyed may be reconstituted, it must first be proved by the claimants that said certificate of title was still in force at the time it was lost or destroyed, among others.

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SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY vs. KEYSER MERCANTILE INC., G.R. No. 208462, December 10, 2014, J. Mendoza

Every person dealing with a registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.

FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 194077, December 03, 2014, J. Leonen

Spouses owned the subject property wherein petitioner Elena was allowed to stay. Upon the spouses’ divorce, the property went to the wife. She sold it to the respondent See. The Court held that See was a buyer in good faith. She went to the Register of Deeds to verify the title and relied on the marriage settlement agreement. The Court found that she exerted due diligence. 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.

HEIRS OF GREGORIO LOPEZ, REPRESENTED BY ROGELIA LOPEZ, ET AL., vs. DEVELOPMENT BANK OF THE PHILIPPINES [NOW SUBSTITUTED BY PHILIPPINE INVESTMENT TWO (SPV-AMC), INC.], G.R. No. 193551, November 19, 2014, J. Leonen

Marietta could acquire valid title over the whole property if she were an innocent purchaser for value. An innocent purchaser for value purchases a property without any notice of defect or irregularity as to the right or interest of the seller. He or she is without notice that another person holds claim to the property being purchased. Marietta cannot claim the protection to innocent purchasers for value because the circumstances do not make this available to her. In this case, there was no certificate of title to rely on when she purchased the property from Enrique. At the time of the sale, the property was still unregistered. What was available was only a tax declaration issued under the name of “Heirs of Lopez.”

AMADA COTONER-ZACARIAVS. SPOUSES ALFREDO REVILLA AND THE HEIRS OF PAZ REVILLA, G.R. No. 190901, November 12, 2014, J. Leonen

Amada argues that the subsequent buyer of the disputed parcel of land is in good faith. The 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.

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ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY: FERDINAND, ROSALINA, ERIBERTO, FROILAN, MA. CLEO FE, NELSON, GERMAN, GLORIA, ALEXANDER, MAY, ABRAHAM, AND AFRICA, ALL SURNAMED ANDRES vs. PHILIPPINE NATIONAL BANK, G.R. No. 173548, October 15, 2014, J. Leonen

A bank that accepts a mortgage based upon a title which appears valid on its face and after exercising the requisite care, prudence, and diligence appropriate to the public interest character of its business can be deemed a mortgagee in good faith. The subsequent consolidation of title in its name after a valid foreclosure shall be respected notwithstanding later proof showing that the title was based upon a void transaction. In this case, PNB is considered as a mortgagee in good faith because it complied with the standard operating practice expected from banks.

ELIZA ZUNIGA-SANTOS, represented by her Attorney-in Fact, NYMPHA Z. SALES vs. MARIA DIVINA GRACIA SANTOS-GRAN and REGISTER OF DEEDS OF MARIKINA CITY, G.R. No. 197380, October 8, 2014, J. Perlas-Bernabe

To determine when the prescriptive period commenced in an action for reconveyance, the plaintiff’s possession of the disputed property is material. If there is an actual need to reconvey the property as when the plaintiff is not in possession, the action for reconveyance based on implied trust prescribes in ten (10) years, the reference point being the date of registration of the deed or the issuance of the title. On the other hand, if the real owner of the property remains in possession of the property, the prescriptive period to recover title and possession of the property does not run against him and in such case, the action for reconveyance would be in the nature of a suit for quieting of title which is imprescriptible.

In the case at bar, a reading of the allegations of the Amended Complaint failed to show that Eliza remained in possession of the subject properties in dispute.

SPOUSES MARIO OCAMPO and CARMELITA F. OCAMPO vs. HEIRS OF BERNARDINO U. DIONISIO, represented by ARTEMIO SJ. DIONISIO, G.R. No. 191101, October 1, 2014, J. Reyes

Jurisprudence consistently holds that "prescription and laches cannot apply to registered land covered by the Torrens system" because "under the Property Registration Decree, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.

Mario claimed that they have been in possession of the said parcel of land since 1969 and that cause of action of the Dionisios is already barred by laches. Jurisprudence consistently holds that "prescription and laches cannot apply to registered land covered by the Torrens system" because "under the Property Registration Decree, no title to registered land in derogation to that of the registered owner shall be acquired by prescription or adverse possession.”

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AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO, AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes

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 Rotairo immediately secured a mayor’s permit for the construction of his residential house on the property. 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.” 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.” 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.” A purchaser cannot simply close his eyes to facts which should put a reasonable man on guard, and thereafter claim that he acted in good faith under the belief that there was no defect in the title of the vendor. Hence, Rovira cannot claim a right better than that of Rotairo's as she is not a buyer in good faith.

ENRIQUETA M. LOCSIN vs. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL AND LOURDES GUEVARA, G.R. No. 204369, September 17, 2014, J. Velasco Jr.

A purchaser of property under the Torrens system cannot simply invoke that he is an innocent purchaser for value when there are attending circumstances that raise suspicions. In that case, he cannot merely rely on the title and must look beyond to ascertain the truth as to the right of the seller to convey the property.

HEIRS OF SPOUSES JOAQUIN MANGUARDIA AND SUSANA MANALO, ET AL vs. HEIRS OF SIMPLICIO VALLES AND MARTA VALLES, ET AL., G.R. No. 177616, August 27, 2014, J. Del Castillo

The petitioners assail the decision of the CA affirming in toto the decision of the RTC declaring that their predecessors-in-interest are not buyers in good faith and for value. In denying the petition the SC ruled that the transfers of the properties in question did not go far, but were limited to close family relatives by affinity and consanguinity. Good faith among the parties to the series of conveyances is therefore hard if not impossible to presume. 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

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is nothing to dispel the notion that apparent anomalies attended the transactions among close relations.

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."

HECTOR L. UY vs. VIRGINIA G. FULE; HEIRS OF THE LATE AMADO A. GARCIA, HEIRS OF THE LATE GLORIA GARCIA ENCARNACION; HEIRS OF THE LATE PABLO GARCIA; and HEIRS OF THE LATE ELISA G. HEMEDES,G.R. No. 164961, June 30, 2014, J. Bersamin

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. 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. 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.

SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA vs. HEIRS OF BERNARDINA ABALON / HEIRS OF BERNARDINA ABALON vs. MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of RESTITUTO RELLAMA, represented by his children ALEX, IMMANUEL, JULIUS and SYLVIA, all surnamed RELLAMA, G.R. No. 183448 / G.R. No. 183464, June 30, 2014, CJ. Sereno

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. 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.

NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs.ROSARIO CALALANG-GARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148, June 9, 2014, J. Villarama, Jr.

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Further strong proofs that the properties in question are the paraphernal properties of a spouse are the very Torrens Titles covering said properties.

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. As the sole and exclusive owner, Pedro Calalang had the right to convey his property in favor of Nora B. Calalang-Parulan by executing a Deed of Sale on February 17, 1984. 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 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.

REPUBLIC OF THE PHILIPPINES vs. FRANKLIN M. MILLADO, G.R. No. 194066, June 4, 2014, J. Villarama, Jr.

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. 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 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. The proceedings therein were therefore a nullity and the Decision was void.

VERGEL PAULINO AND CIREMIA PAULINOvs.COURT OF APPEALS AND REPUBLIC OF THE PHILIPPINES, represented by the ADMINISTRATOR of the LAND REGISTRATION AUTHORITY, G.R. No. 205065, June 4, 2014, J. Mendoza

In reconstitution proceedings, the Court has repeatedly ruled that before jurisdiction over the case can be validly acquired, it is a condition sine quo non that the certificate of title has not been issued to another person. If a certificate of title has not been lost but is in fact in the possession of another person, the reconstituted title is void and the court rendering the decision has not acquired jurisdiction over the petition for issuance of new title. In the case at bench, the CA found that the RTC lacked jurisdiction to order the reconstitution of the original copy of TCT No. 301617, there being no lost or destroyed title over the real property, the respondent having duly proved that TCT No. 301617 was in the name of a different owner, Florendo, and the technical description appearing on that TCT No. 301617 was similar to the technical description appearing in Lot 939, Piedad Estate covered by TCT No. RT-55869 (42532) in the name of Antonino.

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DOLORES CAMPOS vs. DOMINADOR ORTEGA, SR. AND JAMES SILOS, G.R. No. 171286, June 02, 2014, J. Peralta

It cannot be argued that Dolores had already acquired a vested right over the subject property when the NHA recognized her as the censused owner by assigning to her a tag number TAG No. 77-0063. While it is true that NHA recognizes Dolores as the censused owner of the structure built on the lot, the issuance of the tag number is not a guarantee for lot allocation. The census, tagging, and Dolores’ petition, did not vest upon her a legal title to the lot she was occupying, but a mere expectancy that the lot will be awarded to her. The expectancy did not ripen into a legal title when the NHA, informed her that her petition for the award of the lot was denied.

AZNAR BROTHERS REALTY COMPANY vs. SPOUSES JOSE AND MAGDALENA YBAÑEZ, G.R. No. 161380, April 21, 2014, J. Bersamin

The settled rule is that a free patent issued over a private land is null and void, and produces no legal effects whatsoever. Private ownership of land – as when there is a prima facie proof of ownership like a duly registered possessory information or a clear showing of open, continuous, exclusive, and notorious possession, by present or previous occupants – is not affected by the issuance of a free patent over the same land, because the Public Land Law applies only to lands of the public domain. Lot No. 18563, not being land of the public domain as it was already owned by Aznar Brothers, was no longer subject to the free patent issued to the Spouses Ybañez.

Grey Alba vs. De la Cruz, 17 SCRA 49

The Torren system generally refer to the system of registration of transactions with interest in land whose declared object is, under governmental authority, to establish and certify to the ownership of an absolute and indefeasible title to realty, and to simplify its transfer.

Legarda vs. Saleeby, G.R. NO. 8936, Oct. 2, 1915

The real purpose of the Torrens system of registration is to quiet title to land; to put a stop forever to any question of the legality of the title, except claims which were noted at the time of registration, in the certificate, or which may arise subsequent thereto.

Government of the Philippine Islands v. Abural, 39 Phil. 996

The Torrens system aims to decree land titles that shall be final, irrevocable, and indisputable, and to relieve the land of the burden of known as well as unknown claims.

Sta.  Lucia  vs.  Pasig,  G.R.NO.  166838,  June  15,  2011

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While a certificate of title is conclusive as to its ownership and location, this does not preclude the filing of an action for the very purpose of attacking the statements therein. Mere reliance therefore on the face of the TCTs will not suffice as they can only be conclusive evidence of the subject properties' locations if both the stated and described locations point to the same area. 

Regalian Doctrine

REPUBLIC OF THE PHILIPPINES REPRESENTED BY AKLAN NATIONAL COLLEGE OF FISHERIES (ANCF) AND DR. ELENITA R. ANDRADE, 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 G.R. No. 157485 March 26, 2014, J. Leonardo-De Castro

It is the respondent applicants 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.

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by RONNIE P. INOCENCIO, G.R. No. 199310 February 19, 2014, J. Reyes

That the subject properties are not part of the bed of Laguna Lake, however, does not necessarily mean that they already form part of the alienable and disposable lands of the public domain. It is still incumbent upon the respondent to prove, with well-nigh incontrovertible evidence, that the subject properties are indeed part of the alienable and disposable lands of the public domain.

REPUBLIC OF THE PHILIPPINES VS. EMMANUEL C. CORTEZ, G.R. No. 186639 February 5, 2014, J. Reyes

Lands of the public domain that are patrimonial in character are susceptible to acquisitive prescription and, accordingly, eligible for registration under Section 14(2) of P.D. No. 1529 but the period of acquisitive prescription would only begin to run from the time that the State officially declares that the public dominion property is no longer intended for public use, public service, or for the development of national wealth. The Court finds no evidence of any official declaration from the state attesting to the patrimonial character of the subject property. Cortez failed to prove that acquisitive prescription has begun to run against the State, much less that he has acquired title to the subject property by virtue thereof. It is of no moment that Cortez and his predecessors-in-interest have been in

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possession of the subject property for 57 years at the time he applied for the registration of title thereto. "[l]t is not the notorious, exclusive and uninterrupted possession and occupation of an alienable and disposable public land for the mandated periods that converts it to patrimonial. The indispensability of an official declaration that the property is now held by the State in its private capacity or placed within the commerce of man for prescription to have any effect against the State cannot be overemphasized.

REPUBLIC OF THE PHILIPPINES vs. SPS. JOSE CASTUERA AND PERLA CASTUERA, G.R. No. 203384, January 14, 2015, J. Carpio

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.

REMMAN ENTERPRISES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 188494, November 26, 2014, J. Reyes

It is not enough for the PENRO 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 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. Thus, the property registration of a corporation merely relying on the CENRO Certification must be dismissed for failure to prove that the land had been declared alienable and disposable.

DANILO ALMERO, TERESITA ALAGON, CELIA BULASO, LUDY RAMADA, REGINA GEGREMOSA, ISIDRO LAZARTE, THELMA EMBARQUE, FELIPE LAZARTE, GUILERMA LAZARTE, DULCESIMA BENIMELEvs. HEIRS OF MIGUEL PACQUING, as represented by LINDA PACQUING FADRILAN, G.R. No. 199008, November 19, 2014, J. Brion

Thus, in order for the homestead grantees or their direct compulsory heirs to retain their homestead, the following conditions must be satisfied: (a) they must still be the owners of the original homestead at the time of the CARL's effectivity, and (b) they must continue to cultivate the homestead land. In this case, Linda, as the direct compulsory heir of the original homestead grantee, is no longer cultivating the homestead land. That parcels of land are covered by homestead patents will not automatically exempt them from the operation of land reform. It is the continued cultivation by the original grantees or their direct compulsory heirs that shall exempt their lands from land reform coverage."

HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, vs. VICTORIO DELA CRUZ, LORENZO MANALAYSAY, RICARDO MARCELO, JR. and LEONCIO DE GUZMAN, G.R. No. 200454, October 22, 2014, J. Bersamin

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Consequently, before land may be placed under the coverage of Republic Act No. 6657, two requisites must be met, namely: (1) that the land must be devoted to agricultural activity; and (2) that the land must not be classified as mineral, forest, residential, commercial or industrial land. For land to be covered under Presidential Decree No. 27, it must be devoted to rice or corn crops, and there must be a system of share-crop or lease-tenancy obtaining therein. Unfortunately, the Dakila property did not meet these requirements.

CARMEN T. GAHOL, substituted by her heirs, RICARDO T. GAHOL, MARIA ESTER GAHOL PEREZ, JOSE MARI T. GAHOL, LUISITO T. GAHOL and ALCREJ CORPORATION vs. ESPERANZA COBARRUBIAS, G.R. No. 187144, September 17, 2014, J. Peralta

Petitioner Gahol applied for Townsite Sales Application with the DENR for the land adjacent to her property. Respondent Cobarrubias filed a protest, stating that she and her family are occupying said lot. The Court ruled that Gahol’s application must be rejected because one of the requirements was that the applicant must not own any other lot but Gahol is a registered owner of a residential lot. She also stated that there are no signs of improvement or occupation in the said lot but it was in fact occupied by Cobarrubias. She is disqualified due to the untruthful statements in her application.

KASAMAKA-CANLUBANG, INC., represented by PABLITO M. EGILDO vs. LAGUNA ESTATE DEVELOPMENT CORPORATION, G.R. No. 200491, June 9, 2014, J. Peralta

The approval by city and municipal boards and councils of an application for subdivision through an ordinance should already be understood to include approval of the reclassification of the land, covered by said application, from agricultural to the intended non-agricultural use. Otherwise, the approval of the subdivision application would serve no practical effect; for as long as the property covered by the application remains classified as agricultural, it could not be subdivided and developed for non-agricultural use.

REPUBLIC OF THE PHILIPPINES vs. CRISANTO S. RANESES, G.R. No. 189970, June 9, 2014, J. Villarama, Jr.

The Regalian doctrine, embodied in Section 2, Article XII of the 1987 Constitution, provides that all lands of the public domain belong to the State, which is the source of any asserted right to ownership of land. All lands not appearing to be clearly within private ownership are presumed to belong to the State. Unless public land is shown to have been reclassified or alienated to a private person by the State, it remains part of the inalienable public domain for land classification or reclassification cannot be assumed. It must be proved.

In this case, the records do not support the findings made by the RTC and the CA that the subject properties are part of the alienable and disposable portion of the public domain. It bears noting that in support of his claim that the subject properties are alienable and disposable, Raneses merely presented the Conversion Subdivision Plan which was

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prepared by Engr. Montallana with the annotation that the subject properties were "inside alienable and disposable land area Proj. No. 27-B as per LC Map No. 2623 certified by the Bureau of Forestry on January 3, 1968" and the Inter-Office Memorandum from the LLDA. Raneses failed to hurdle this burden and his reliance on the said annotation and Inter-Office Memorandum is clearly insufficient. Clearly, the pieces of evidence submitted by Raneses before the RTC in this case hardly satisfy the aforementioned documentary requirements.

REPUBLIC OF THE PHILIPPINES vs. CORAZON C. SESE and FE C. SESE, G.R. No. 185092, June 4, 2014, J. Mendoza

The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration or claiming ownership, who must prove that the land is alienable or disposable. To overcome this presumption, incontrovertible evidence must be established that the land is alienable or disposable. There must be an 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; or 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 this case, petitioners cite a surveyor geodetic engineer’s notation indicating that the survey was inside alienable and disposable land. Such notation does not constitute a positive government act validly changing the classification of the land. A mere surveyor has no authority to reclassify lands of the public domain. By relying solely on the said surveyor’s assertion, petitioners have not sufficiently proven that the land in question has been declared alienable."

REPUBLIC OF THE PHILIPPINES vs. FRANCISCA, GERONIMO AND CRISPIN, ALL SURNAMED SANTOS, G.R. No. 191516, June 4, 2014, J. Peralta

Petitioner Republic assails the decision of the CA affirming in toto the decision of the trial court holding that the respondents was able to prove that the subject lots had been classified as alienable and disposable. Ruling in favor of Republic, the SC ruled that 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 DENR Secretary and certified as a true 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. Republic is then correct that evidence on record is not sufficient to prove that subject lots had been declared alienable and disposable lands.

Republic vs. Santos, G.R.NO.  180027, July  18,  2012

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Jura Regalia simply means that the State is the original proprietor of all lands and, as such, is the general source of all private titles. Thus, pursuant to this principle, all claims of private title to land, save those acquired from native title, must be traced from some grant, whether express or implied, from the State. Absent a clear showing that land had been let into private ownership through the State’s imprimatur, such land is presumed to belong to the State.

Yu Chang vs. Republic, G.R.NO. 171726, Feb. 23, 2011

The fact that the area within which the subject parcels of land are located is being used for residential and commercial purposes does not serve to convert the subject parcels of land into agricultural land. It is fundamental that before any land may be declassified from the forest group and converted into alienable or disposable land for agricultural or other purposes, there must be a positive act from the government.

Republic  vs. East Silverlane, G.R. No. 186961, Feb.  20, 2012

It is primordial that the status of the property as patrimonial be first established. Furthermore, the period of possession preceding the classification of the property as patrimonial cannot be considered in determining the completion of the prescriptive period.

Citizenship Requirement

Krivenko vs. Register of Deeds 79 Phil 461

Aliens mat not acquire private or public agricultural lands.

Ong Ching Po v. Court of Appeals G.R. NO. 113472, Dec. 20, 1994, 239 SCRA 341.

The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or only to individuals or entities qualified to acquire lands of the public domain.

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Halili vs. Court of Appeals, 287 SCRA 465

A natural-born citizen of the Philippines who has lost his citizenship may be a transferee of private lands, subject to limitations provided by law.

Director of Lands vs. Intermediate Appellate Court and Acme, 146 SCRA 509

The time to determine whether a person acquiring land is qualified is the time the right to own it is acquired and not the time to register ownership.

Original Registration

LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 200894, November 10, 2014, J. Leonen

An applicant for land registration or judicial confirmation of incomplete or imperfect title under Section 14(1) of Presidential Decree No. 1529 must prove the following requisites:(1) that the subject land forms part of the disposable and alienable lands of the public domain, and (2) that the applicant has 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. Concomitantly, the burden to prove these requisites rests on the applicant. With regard to the first requisite, it is undisputed that the land subject of registration is part of the alienable and disposable lands of the public domain. The trial court found the Department of Environment and Natural Resources’ report sufficient to prove the existence of the first requisite. The Court of Appeals’ decision was silent on this matter. Respondent Republic failed to make objections on the issue as well. Thus, we do not see any reason to deviate from the findings of the lower courts.

RODOLFO V. FRANCISCO vs. EMILIANA M. ROJAS, and the legitimate heirs of JOSE A. ROJAS, namely: JOSE FERDINAND M. ROJAS II, ROLANDO M. ROJAS, JOSE M. ROJAS, JR., CARMELITA ROJAS-JOSE, VICTOR M.ROJAS, and LOURDES M. ROJAS, all represented by JOSEFERDINAND M. ROJAS II, G.R. No. 167120, April 23, 2014, J. Peralta

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. After the promulgation of the Guido, it can no longer be said that an original registration proceeding is proper, since Guido held that certificate of title are genuine and authentic. What the land registration court should have done was to dismiss the application for registration upon learning that the same property was already covered by a valid title.

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REPUBLIC OF THE PHILIPPINES VS. EMETERIA G. LUALHATI, G.R. No. 183511, March 25, 2015, J. Peralta

Emeteria G. Lualhati filed with the RTC of Antipolo City an application for original registration covering Lots 1 and 2 situated in C-5 C-6 Pasong Palanas, Sitio Sapinit, San Juan, Antipolo, Rizal. To support her contention that the lands subject of her application is alienable and disposable, Lualhati submitted certifications from the DENR-CENRO, Region IV, Antipolo City, stating that no public land application or land patent covering the subject lots is pending nor are the lots embraced by any administrative title. It has been repeatedly ruled that certifications issued by the CENRO, or specialists of the DENR, as well as Survey Plans prepared by the DENR containing annotations that the subject lots are alienable, do not constitute incontrovertible evidence to overcome the presumption that the property sought to be registered belongs to the inalienable public domain.  Rather, this Court stressed the importance of proving alienability by presenting a copy of the original classification of the land approved by the DENR Secretary and certified as true copy by the legal custodian of the official records.

Moreover, as petitioner Republic aptly points out, Lualhati failed to provide any other proof of acts of dominion over the subject land other than the fact that she, together with her husband and children, planted fruit-bearing trees and constructed their home thereon considering the vastness of the same. A mere casual cultivation of portions of the land by the claimant, and the raising thereon of cattle, do not constitute possession under claim of ownership. In that sense, possession is not exclusive and notorious as to give rise to a presumptive grant from the State.

REPUBLIC OF THE PHILIPPINES vs. SPOUSES DANTE and LOLITA BENIGNO, G.R. No. 205492, March 11, 2015, J. Del Castillo

The State is not estopped from the acts of the Clerk of Court in land registration cases. Illegal acts of government agents do not bind the State. Assuming that it is, the respondents did not prove that the land sought to be registered is an alienable and disposable land. All applications for original registration under the Property Registration Decree must include both (1) a CENRO or PENRO certification and (2) a certified true copy of the original classification made by the DENR Secretary.

SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and ZOEY G. BAUTISTA vs. FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF FILIPINA DAQUIGAN, IMELDA DAQUIGAN and CORSINO DAQUIGAN, REBECCA QUIAMCO and ANDRES QUIAMCO, ROMULO LORICA and DELIA LORCIA, GEORGE CAJES and LAURA CAJES, MELIDA BANEZ AND FRANCISCO BANEZ, MELANIE GOFREDO, GERVACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA SEGOVIA, ELSA N. SAM, PEDRO M. SAM, and LINA SAM, SANTIAGO MENDEZ and MINA MENDEZ, HELEN M. BURTON and LEONARDO BURTON, JOSE JACINTO and BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MATIGA and ALICIA MATIGA,

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FLORENCIO ACEDO JR., and LYLA VALERIO, G.R. No. 208232, March 10, 2014, J. Velasco Jr.

Alfredo Bautista was awarded a free-patent land, which he subdivided and subsequently sold to several vendees. He tried to repurchase the said lands three years later. The Supreme Court held that while the deeds of sale do not explicitly contain the stipulation that the sale is subject to repurchase by the applicant within a period of five (5) years from the date of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed integrated and made part of the deed of sale as prescribed by law. It is basic that the law is deemed written into every contract. Although a contract is the law between the parties, the provisions of positive law which regulate contracts are deemed written therein and shall limit and govern the relations between the parties. Thus, it is a binding prestation in favor of Bautista which he may seek to enforce.

RAFAEL VALES, CECILIA VALES-VASQUEZ, and YASMIN VALES-JACINTO,  vs. MA. LUZ CHORESCA GALINATO, ERNESTO CHORESCA, TEOFILO AMADO, LORNA PARIAN MEDIANERO, REBECCA PORCAL, and VIVENCIO ORDOYO, G.R. No. 180134,   March 5, 2014, J. Perlas-Bernabe

DAR Memorandum provides that tenants should (a) have actual knowledge of unregistered transfers of ownership of lands covered by Torrens Certificate of Titles prior to October 21, 1972, (b) have recognized the persons of the new owners, and (c) have been paying rentals/amortization to such new owners in order to validate the transfer and bind the tenants to the same. In the case at bar, it is undisputed that the subject sale was not registered or even annotated on the certificates of title covering the subject lands.

SPOUSES MARIO AND JULIA CAMPOS, vs. REPUBLIC OF THE PHILIPPINES,G.R. No. 184371, March 5, 2014, J. Brion

Persons applying for registration of title under Section 14(1) of Presidential Decree No. 1529 must prove: (1) that the 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. It is emphasized that since the effectivity of P.D. No. 1073 on January 25, 1977, a mere showing of possession and occupation for thirty (30) years or more is no longer sufficient.

SPS. ANTONIO FORTUNA AND ERLINDA FORTUNA, vs. REPUBLIC OF THE PHILIPPINES,G.R. No. 173423, March 05, 2014, J. Brion

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

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alienable and disposable land, as declared by the DENR Secretary or as proclaimed by the President.

THE HON. SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM VS. NEMESIO DUMAGPI, REPRESENTED BY VICENTE DUMAGPI, G.R. No. 195412, February 04, 2015, J. Reyes

The respondent claims that he is the owner of the disputed parcel of land by virtue of his open, exclusive, notorious and continuous possession of the land for more than 30 years. The Supreme Court ruled that adverse possession can only ripen into ownership when the land adversely owned is classified as an agricultural land. If the disputed land is non-agricultural, adverse possession cannot ripen into ownership.

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, J. Peralta

An applicant for original registration of title based on a claim of exclusive and continuous possession or occupation must show the existence of the following: (1) Open, continuous, exclusive and notorious possession, by themselves or through their predecessors-in-interest, of land; (2) The land possessed or occupied must have been declared alienable and disposable agricultural land of public domain; (3) The possession or occupation was under a bona fide claim of ownership; (4) Possession dates back to June 12, 1945 or earlier.

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.

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 Roasa's application for registration, which was filed on December 15, 2000. Moreover, the unchallenged testimonies of two of Roasa'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.

LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 200894. November 10, 2014, J. Leonen

An applicant for land registration or judicial confirmation of incomplete or imperfect title under Section 14(1) of Presidential Decree No. 1529 must prove the following requisites:"(1) that the subject land forms part of the disposable and alienable lands of the

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public domain, and (2) that [the applicant has] 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." Concomitantly, the burden to prove these requisites rests on the applicant.

The two requisites were complied with in this case. With regard to the first requisite, the land subject of registration is part of the alienable and disposable lands of the public domain by virtue of Department of Environment and Natural Resources’ report. With regard to the second requisite, applicant acquired the property by inheritance from Honorio and Gregorio S. Apran and she and her predecessors-in-interest have been in its continuous possession of the alienable and disposable parcel of land of the public domain under a bona fide claim of ownership since 1900.

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN FOUNDATION, INC. VS. HON. TEODORO T. RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON CITY,  UNIVERSITY OF THE PHILIPPINES, G.R. No. 176508. January 12, 2015, J. Bersamin

The petition for judicial reconstitution of Original Certificate of Title was validly dismissed for failure of the petitioner to present the duplicate or certified copy of Original Certificate of Title .Thereby, it disobeyed Section 2 and Section 3 of Republic Act No. 26, the provisions that expressly listed the acceptable bases for judicial reconstitution of an existing Torrens title.

REPUBLIC OF THE PHILIPPINES VS. SPOUSES JOSE CASTURA AND CASTUERA G.R. No. 203384. January 14, 2015, J. CARPIO

The advance plan and the CENRO certification are insufficient proofs of the alienable and disposable character of the property. The 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.

UNGAY MALOBAGO MINES INC. VS. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892. January 14, 2015, J. PERALTA

Persons who can file the petition for reconstitution of a lost certificate are the registered owner, his assigns or persons in interest in the property. In this case, petitioner admitted that it was not the owner of the land on which the mining patent was issued as the same was owned and registered in the name of Rapu Rapu Minerals Inc. Thus, not having an interest on the land amounting to a title to the same, petitioner is not possessed of a legal personality to institute a petition for judicial reconstitution of the alleged lost Original Certificate of Title.

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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, J. LEONARDO-DE CASTRO

SC found untenable the contention that the action instituted by petitioners is a prohibited collateral attack on the certificate of title of respondents over the subject land.

To determine whether an attack on a certificate of title is direct or indirect, the relevance of the object of the action instituted and the relief sought therein must be examined.

When is an action an attack on a title? It is 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 an action or proceeding 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.

The instituted action in this case is clearly a direct attack on a certificate of title to real property. In their complaint for quieting of title, petitioners specifically pray for the declaration of nullity and/or cancellation of respondents’ TCTs. The relief sought by petitioners is certainly feasible since the objective of an action to quiet title, as provided under Article 476 of the Civil Code of the Philippines, is precisely to quiet, remove, invalidate, annul, and/or nullify “a cloud on title to real property or any interest therein by reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title.”

REPUBLIC OF THE PHILIPPINES VS. EMMANUEL C. CORTEZ, G.R. No. 186639 February 5, 2014, J. Reyes

A survey plan does not constitute incontrovertible evidence to overcome the presumption that the subject property remains part of the inalienable public domain. Cortez failed to present a certification from the proper government agency as to the classification of the subject property. Cortez likewise failed to present any evidence showing that the DENR Secretary had indeed classified the subject property as alienable and disposable.

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by RONNIE P. INOCENCIO, G.R. No. 199310 February 19, 2014, J. REYES

To prove that the subject property forms part of the alienable and disposable lands of the public domain, the respondent presented two certifications issued by Senior Forest Management Specialist of the DENR attesting that Lots form part of the alienable and disposable lands of the public domain "under Project No. 27-B of Taguig, Metro Manila as per LC Map 2623, approved on January 3, 1968." However, the said certifications are insufficient to prove that the subject properties are alienable and disposable. The certification issued by the proper government agency that a parcel of land is alienable and

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disposable, applicants for land registration must prove that the DENR Secretary had approved the land classification and released the land of public domain as alienable and disposable. They must present a copy of the original classification approved by the DENR Secretary and certified as true copy by the legal custodian of the records.

With regard to possession, although it was testified that the respondent and its predecessors-in-interest cultivated the subject properties, by planting different crops thereon, his testimony is bereft of any specificity as to the nature of such cultivation as to warrant the conclusion that they have been indeed in possession and occupation of the subject properties in the manner required by law. There was no showing as to the number of crops that are planted in the subject properties or to the volume of the produce harvested from the crops supposedly planted thereon.

Further, assuming ex gratia argumenti that the respondent and its predecessors-in-interest have indeed planted crops on the subject properties, it does not necessarily follow that the subject properties have been possessed and occupied by them in the manner contemplated by law. The supposed planting of crops in the subject properties may only have amounted to mere casual cultivation, which is not the possession and occupation required by law.

REPUBLIC OF THE PHILIPPINES VS. ZURBARAN REALTY & DEVELOPMENT CORP. G.R. No. 164408, March 24, 2014, J. BERSAMIN

Registration under Section 14(1) of P.D. No. 1529 is based on possession and occupation of the alienable and disposable land of the public domain since June 12, 1945 or earlier, without regard to whether the land was susceptible to private ownership at that time. The applicant needs only to show that the land had already been declared alienable and disposable at any time prior to the filing of the application for registration.

On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on acquisitive prescription and must comply with the law on prescription as provided by the Civil Code. In that regard, only the patrimonial property of the State may be acquired by prescription pursuant to the Civil Code. For acquisitive prescription to set in, therefore, the land being possessed and occupied must already be classified or declared as patrimonial property of the State. Otherwise, no length of possession would vest any right in the possessor if the property has remained land of the public dominion. Malabanan stresses that even if the land is later converted to patrimonial property of the State, possession of it prior to such conversion will not be counted to meet the requisites of acquisitive prescription. Thus, registration under Section 14(2) of P.D. No. 1529 requires that the land had already been converted to patrimonial property of the State at the onset of the period of possession required by the law on prescription.

An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore, establish the following requisites, to wit: (a) the land is an alienable and disposable, and patrimonial property of the public domain; (b) the applicant and its predecessors-in-interest have been in possession of the land for at least 10 years, in good faith and with just title, or for at least 30 years, regardless of good faith or just title; and (c) the land had

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already been converted to or declared as patrimonial property of the State at the beginning of the said 10-year or 30-year period of possession.

Republic vs. Gomez, G.R.NO.  189021, Feb. 22, 2012

The applicant for land registration must prove that the DENR Secretary had approved the land classification and released the land of the public domain as alienable and disposable, and that the land subject of the application for registration falls within the approved area per verification through survey by the PENRO or CENRO. In addition, the applicant for land registration must present a copy of the original classification approved by the DENR Secretary and certified as a true copy by the legal custodian of the official records.

Republic vs. Vega, 639 SCRA 541

While Cayetano failed to submit any certification which would formally attest to the alienable and disposable character of the land applied for, the Certification by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the subdivision plan submitted in evidence by Paulita, constitutes substantial compliance with the legal requirement. It clearly indicates that Lot 249 had been verified as belonging to the alienable and disposable area as early as July 18, 1925.

Ong vs. Republic, 548 SCRA 160

Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property.

Republic  vs.  Espinosa, 677 SCRA 92

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

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law.

Thus, granting that Isabel and, later, Espinosa possessed and occupied the property for an aggregate period of thirty (30) years, this does not operate to divest the State of its ownership. The property, albeit allegedly alienable and disposable, is not patrimonial. As the property is not held by the State in its private capacity, acquisition of title thereto necessitates observance of the provisions of Section 48(b) of the PLA in relation to Section 14(1) of P.D. No. 1529 or possession and occupation since June 12, 1945. For prescription to run against the State, there must be proof that there was an official declaration that the subject property is no longer earmarked for public service or the development of national wealth. Moreover, such official declaration should have been issued at least ten (10) or thirty (30) years, as the case may be, prior to the filing of the application for registration. The period of possession and occupation prior to the conversion of the property to private or patrimonial shall not be considered in determining completion of the prescriptive period. Indeed, while a piece of land is still reserved for public service or the development of national wealth, even if the same is alienable and disposable, possession and occupation no matter how lengthy will not ripen to ownership or give rise to any title that would defeat that of the State’s if such did not commence on June 12, 1945 or earlier.

At any rate, the notation on the survey plan does not constitute incontrovertible evidence that would overcome the presumption that the property belongs to the inalienable public domain.

Tan  vs.  Republic April  16,  2012

Possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood.

Rep.  vs.  Metro  Index  Realty, G.R. No. 198585, July 2, 2012

The mere planting of a sign or symbol of possession cannot justify a Magellan-like claim of dominion over an immense tract of territory. Possession as a means of acquiring ownership, while it may be constructive, is not a mere fiction.

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Roman Catholic Apostolic Administrator of Davao, Inc. vs. Land Registration Commission, 102 Phil. 596.

A corporation sole, which consists of one person only, is vested with the right to purchase and hold real estate and to register the same in trust for the faithful or members of the religious society or church for which the corporation was organized.

Subsequent Registration

Lucena vs. CA, G.R. NO. L-77468, August 25, 1999

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. His mere refusal to believe that such 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, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defect as would have led to its discovery had he acted with that measure of precaution which may reasonably be required of a prudent man in a like situation.

Heirs of Brusas vs. CA, G.R. No. 126875, August 26, 1999

In the instant case, the litigated property is still registered in the name of Ines Brusas, so that insofar as procedure is concerned, petitioners were correct in availing of the remedy of reconveyance. However, an action for reconveyance presupposes the existence of a defrauded party who is the lawful owner of the disputed property.

Philippine National Bank vs. Court of Appeals, 98 SCRA 207

A person dealing with registered land is not required to go behind the register to determine the condition of the property. He is only charged with notice of the burdens on the property which are noted on the face of the register or the certificate of title. To require him to do more is to defeat one of the primary objects of the Torrens system.

Potenciano vs. Dineros, G.R. No. L-7614, May 31, 1955

The judgment creditor may not, as purchaser at the auction sale, invoke the protection accorded by law to purchasers in good faith, because at the time of the auction he already had notice, thru the third party claim filed by Potenciano, that the property had already been acquired by the latter from the judgment debtor.

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Guaranteed Homes Inc vs. Valdez, G.R. No. 171531, Jan. 30, 2009

Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filled or entered in the office of the Register of Deeds of the province or city where the land to which it relates lies, be constructive notice to all persons from the time of such registering filing or entering.

Fudot vs. Cattleya Land Inc., G.R. No. 171008 , Sept. 13, 2007

The registration of a void deed, for instance, is not an impediment to a declaration by the courts of its invalidity.

Cusi vs. Domingo, G.R.NO. 195825, Feb. 27, 2013

As the purchasers of the property, they also came under the clear obligation to purchase the property not only in good faith but also for value. A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or interest in, such property and pays full and fair price for the same.

Non-Registrable Properties

Malabanan vs. Republic, 587 SCRA 172

Only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public domain begin to run.

Alvarez vs. PICOP Resources, Inc., 606 SCRA 444

Forest lands cannot be alienated in favor of petitioner private persons or entities.

Republic vs. Fabio, G.R. No. 159589, Dec. 23, 2008

The usual proviso requiring the reservation to be subject to private rights simply means that persons claiming rights over the reserved land are not precluded from proving their claims.

Almagro vs. Kwan, 634 SCRA 250

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To qualify as foreshore land, it must be shown that the land lies between the high and low water marks and is alternately wet and dry according to the flow of the tide. The land's proximity to the waters alone does not automatically make it a foreshore land.

Republic  vs.  Espinosa G.R.NO.  171514, July 18, 2012

The notation made by a surveyor-geodetic engineer that the property surveyed is alienable and disposable is not the positive government act that would remove the property from the inalienable domain. Neither it is the evidence accepted as sufficient to controvert the presumption that the property is inalienable.

Chavez v. Public Estates Authority and AMARI Coastal Development Corporation, G.R. No. 133250, July 9, 2002

Foreshore and submerged areas irrefutably belonged to the public domain and were inalienable unless reclaimed, classified as alienable lands open to disposition and further declared no longer needed for public service. The fact that alienable lands of the public domain were transferred to the PEA (now PRA) and issued land patents or certificates of title in PEA’s name did not automatically make such lands private.

Republic  vs. Parañaque G.R.NO.  191109, July 18, 2012

The subject reclaimed lands are still part of the public domain, owned by the State and, therefore, exempt from payment of real estate taxes. Here, the subject lands are reclaimed lands, specifically portions of the foreshore and offshore areas of Manila Bay. As such, these lands remain public lands and form part of the public domain.

Dealings with Unregistered Land

Heirs  of  Tanyag  vs.  Gabriel, 669  SCRA  284

It is continuous when uninterrupted, unbroken and not intermittent or occasional. It is exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit. It is notorious when it is so conspicuous that it

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is generally known and talked of by the public or the people in the neighborhood. 

The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

Tan vs. Republic, G.R. No. 193443   G.R. No. 193443, April 16, 2012

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.

For one to invoke the provisions of Section 14(2) and set up acquisitive prescription against the State, it is primordial that the status of the property as patrimonial be first established. Furthermore, the period of possession preceding the classification of the property as patrimonial cannot be considered in determining the completion of the prescriptive period.

Tan vs. Republic, G.R. No. 193443   G.R. No. 193443, April 16, 2012

Possession is open when it is patent, visible, apparent, notorious and not clandestine. It is continuous when uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse possessor can show exclusive dominion over the land and an appropriation of it to his own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people in the neighborhood. The party who asserts ownership by adverse possession must prove the presence of the essential elements of acquisitive prescription.

Tax declarations per se do not qualify as competent evidence of actual possession for purposes of prescription.

A claim of ownership will not proper on the basis of tax declarations if unaccompanied by proof of actual possession.

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Valiao v. Republic, 661 SCRA 299

The burden of proof in overcoming the presumption of State ownership of the lands of the public domain is on the person applying for registration (or claiming ownership), who must prove that the land subject of the application is alienable or disposable. It is settled that the applicant must present proof of specific acts of ownership to substantiate the claim and cannot just offer general statements which are mere conclusions of law than factual evidence of possession.

DUTY OF THE BUYER/BUYER IN GOOD FAITH

THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI,* MELENCIA** S. MAXIMO, ALBERTO A. SARILI, IMELDA S. HIDALGO, all herein represented by CELSO A. SARILIvs.PEDRO F. LAGROSA, represented in this act by his Attorney-in-Fact LOURDES LABIOS MOJICA, G.R. No. 193517, January 15, 2014, J. Perlas-Bernabe

A higher degree of prudence is required from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. The buyer also has the duty to ascertain the identity of the person with whom he is dealing with and the latter’s legal authority to convey the property.

The strength of the buyer’s inquiry on the seller’s capacity or legal authority to sell depends on the proof of capacity of the seller. If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If no such special power of attorney is provided or there is one but there appears to be flaws in its notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution.

In the present case, it is undisputed that Spouses Sarili purchased the subject property from Ramos on the strength of the latter’s ostensible authority to sell under the subject SPA. The said document, however, readily indicates flaws in its notarial acknowledgment since the respondent’s community tax certificate (CTC) number was not indicated thereon. Despite this irregularity, however, Spouses Sarili failed to show that they conducted an investigation beyond the subject SPA and into the circumstances of its execution as required by prevailing jurisprudence. Hence, Spouses Sarili cannot be considered as innocent purchasers for value.

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FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 194077, December 03, 2014, J. Leonen

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.” One claiming to be an innocent purchaser for value has the burden of proving such status. 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. The Supreme Court upheld the ruling of the lower courts which considered the inquiries made by respondent to be acts of an innocent purchaser in good faith and for value.

KRYSTLE REALTY DEVELOPMENT CORPORATION, rep. by CHAIRMAN OF THE BOARD, WILLIAM C. CU vs. DOMINGO ALIBIN, as substituted by his heirs, G.R. No. 196117/G.R. No. 196129, August 13, 2014, J. Perlas-Bernabe

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, as Krystle Realty in this case. Further, 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.

The agreement of the parties to submit the determination of the genuineness of Domingo’s signature to a handwriting expert of the NBI does not, authorize the RTC to accept the findings of such expert. The opinion of a handwriting expert, therefore, does not mandatorily bind the court, the expert's function being to place before the court data upon which it can form its own opinion.

RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON vs. OSCAR VENTANILLA, JR., and CARMEN GLORIA D. VENTANILLA, G.R. No. 192669, April 21, 2014, J. Mendoza

While a third party may not be considered as innocent purchaser for value, he can still rightfully claim for actual and compensatory damages, considering that he did not join the other defendants in their efforts to frustrate plaintiffs’ rights over the disputed properties and who might well be an unwilling victim of the fraudulent scheme employed by the other defendants.

Nonetheless, even if when no bad faith can be ascribed to the parties alike, an equal footing of the parties necessarily tilts in favor of the superiority of the notice of levy and the constructive notice against the whole world which the original party to the contract of sale had produced and which effectively bound third persons. Thus, the latter has two options available: 1) they may exercise the right to appropriate after payment of indemnity

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representing the value of the 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 of the land.

ALFARO VS. DUMALAGAN, G.R. No.186622, January 22, 2014, J. Perez

A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an interest in such property, and pays a full and fair price for the same at the time of such purchase, or before he has notice of some other person’s claim or interest in the property.  The petitioners are not such purchaser.

Petitioners had prior knowledge of the previous sales by installment of portions of the property to several purchasers. Moreover, petitioners had prior knowledge of respondents’ possession over the subject property. Hence, the rule on double sale is inapplicable in the case at bar. As correctly held by the appellate court, petitioners’ prior registration of the subject property, with prior knowledge of respondents’ claim of ownership and possession, cannot confer ownership or better right over the subject property.

SPOUSES BERNADETTE and RODULFO VILLABAR VS.ANGELITO L. OPININ, G.R. N.O 17604, January 15, 2014. J. del Castillo

Bad faith cannot be presumed. It is a question of fact that must be proven by clear and convincing evidence. The burden of proving bad faith rests on the one alleging it. Spouses Vilbar failed to adduce the necessary evidence. Furthermore, the Court recognizes the settled rule that levy on attachment, duly registered, takes preference over a prior unregistered sale. This result is a necessary consequence of the fact that the properties involved were duly covered by the Torrens system which works under the fundamental principle that registration is the operative act which gives validity to the transfer or creates a lien upon the land.

JUST COMPENSATION

LAND BANK OF THE PHILIPPINES vs. JAIME K. IBARRA, ANTONIO K. IBARRA, JR., LUZ IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA, and CYNTHIA IBARRA-GUERRERO, G.R. No. 182472. November 24, 2014, J. Peralta

The petitioner’s lands were subjected to the coverage of the agrarian reform program. The petitioner then filed a complaint for just compensation of the said land. The issue in the case is what will be the basis of valuation of the property taken for Just Compensation.

The Supreme Court held that the seizure of landholdings or properties covered by PD No. 27 did not take place on October 21, 1972, but upon the payment of just compensation. Indeed, acquisition of property under the Operation Land Transfer Program under PD No. 27 does not necessarily mean that the computation of just compensation thereof must

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likewise be governed by the same law. In determining the applicable formula, the date of the payment of just compensation must be taken into consideration for such payment marks the completion of the agrarian reform process. If the agrarian reform process is still incomplete as when just compensation is not settled prior to the passage of RA No. 6657, it should be computed in accordance with said law despite the fact that the property was acquired under PD No. 27.  Clearly, by law and jurisprudence, R.A. No. 6657, upon its effectivity, became the primary law in agrarian reform covering all then pending and uncompleted processes, with P.D. No. 27 and E.O. No. 228 being only suppletory to the said law.

It is, therefore, on equitable considerations that the retroactive application of RA No. 6657 is based for it would be highly inequitable on the part of the landowners to compute just compensation using the values not at the time of the payment but at the time of the taking in 1972, considering that the government and the farmer-beneficiaries have already benefitted from the land.

CANCELLATION OF TITLE

ROSARIO BANGUIS-TAMBUYAT vs. WENIFREDA BALCOM-TAMBUYAT, G.R. No. 202805, March 23, 2015, J. Del Castillo

Under Sec. 108 of PD 1529, the proceeding for the erasure, alteration, or amendment of a certificate of title may be resorted to in seven instances: (1) when registered interests of any description, whether vested, contingent, expectant, or inchoate, have terminated and ceased; (2) when new interests have arisen or been created which do not appear upon the certificate; (3) when any error, omission or mistake was made in entering a certificate or any memorandum thereon or on any duplicate certificate; (4) when the name of any person on the certificate has been changed; (5) when the registered owner has been married, or, registered as married, the marriage has been terminated and no right or interest of heirs or creditors will thereby be affected; (6) when a corporation, which owned registered land and has been dissolved, has not conveyed the same within three years after its dissolution; and (7) when there is reasonable ground for the amendment or alteration of title. The present case falls under (3) and (7), where the Registrar of Deeds of Bulacan committed an error in issuing TCT T-145321 in the name of “Adriano M. Tambuyat married to Rosario E. Banguis” when, in truth and in fact, respondent Wenifreda – and not Banguis – is Adriano’s lawful spouse.

ACTION FOR RECONVEYANCE

HEIRS OF FRANCISCO I. NARVASA, SR., ANDHEIRS OF PETRA IMBORNAL AND PEDRO FERRER,REPRESENTED BY THEIR ATTORNEY-IN-FACT, MRS. REMEDIOS B. NARVASA-REGACHO vs. EMILIANA, VICTORIANO, FELIPE, MATEO, RAYMUNDO, MARIA,AND EDUARDO, ALL SURNAMED IMBORNAL, G.R. No. 182908, August 06, 2014, J. Perlas Bernabe

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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, if the plaintiff is not in possession. Hence, when a complaint for reconveyance is filed beyond the 10-year reglementary period, such cause of action is barred by prescription.

HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ, SONIA J. TOLENTINO and RODERICK JULAO v SPOUSES ALEJANDRO and MORENITA DE JESUS, G.R No. 176020, September 29, 2014. DEL CASTILLO.

In an action to recover, the property must be identified. Article 434 of the Civil Code states that "[i]n an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendant's claim." The plaintiff, therefore, is duty-bound to clearly identify the land sought to be recovered, in accordance with the title on which he anchors his right of ownership. It bears stressing that the failure of the plaintiff to establish the identity of the property claimed is fatal to his case. In this case, petitioners failed to identify the property they seek to recover as they failed to describe the location, the area, as well as the boundaries thereof. No survey plan was presented by petitioners to prove that respondent spouses actually encroached upon the 70-square meter portion of petitioners' property.

TORTS AND DAMAGES

THE TORTFEASOR

RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND ADVERTISING CORPORATION* AND TRANSWORLD MEDIA ADS, INC.,G.R. No. 204866, January 21, 2015, J. Perlas-Bernabe

Pursuant to Article 2194, joint tortfeasors are solidarily liable. They are each liable as principals, to the same extent and in the same manner as if they had performed the wrongful act themselves. When a construction of a billboard’s lower structure without the proper foundation by the first contractor, and that of the second contractor’s finishing its upper structure and just merely assuming that the first would reinforce the weak foundation are the two successive acts which were the direct and proximate cause of the damages sustained by the company who hired their services. Worse, both contractors were fully aware that the foundation for the 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.

Ylarde vs. Aquino, 163 SCRA 697

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Teacher Edgardo Aquino, after bringing his pupils to an excavation site dug by them, left them all by themselves, and one of the pupils fell into the pit. A teacher acted with fault and gross negligence because a teacher who stands in loco parentis to his pupils would have made sure that the children are protected from all harm in his company.

Cogeo-Cubao Operators and Drivers Association vs. Court of Appeals, G.R. NO. 100727, March 18, 1992

Cogeo-Cubao Operators and Drivers Association, a group of drivers, took over all jeepneys of a transportation company, Lungsod Corporation, as well as the operation of the service in the company’s route without authority from the Public Service Commission. The act was in violation of Article 21 of the Civil Code [Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages] because the constitutional right of the drivers to redress their grievances with the company should not undermine public peace and order nor should it violate the legal rights of other persons.

PROXIMATE CAUSE

F.F. Cruz and Co. vs. Court of Appeals, 164 SCRA 731

A fire that broke out in the furniture shop of the petitioner spread to an adjacent house because of the shop owner’s failure to construct a firewall as required by a city ordinance. The doctrine of res ipsa loquitur, which is applied by the Court in this case, may be stated as follows: ‘Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in the ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from want of care.

Phoenix Construction, Inc. vs. Dionisio, 148 SCRA 353

The driver of a dump truck parked it improperly at night near his residence and it was bumped by the driver of a car, who suffered damages. The proximate cause of the accident was the improper parking of the dump truck.

Africa vs. Caltex, 16 SCRA 448

A fire broke out at a gasoline station while gasoline was being hosed from a tank truck into the underground storage, right at the opening of the

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receiving tank where the nozzle of the hose was inserted, as a result of which several houses were burned. Under the principle of res ipsa loquitor, the employees’ negligence was the proximate cause of the fire which in the ordinary course of things does not happen.

Gabeto vs. Araneta, 42 Phil. 232

Araneta stopped a calesa with passengers aboard on the street and seized the rein of the horse’s bridle, by reason of which the driver brought the carromata to the adjacent curb and alighted to fix the bridle, and while the driver was engaged at the horse’s head, the horse moved forward bringing down a police telephone box, and because of the noise caused thereby, the horse was frightened and it ran away and one of the passengers jumped and was killed. Araneta's act in stopping the horse was held as not the proximate cause of the accident because the bridle was old, and the leather of which it was made was probably so weak as to be easily broken.

Gregorio vs. Go, 102 Phil. 556

Go ordered his cargador, who had only a student’s permit to drive his truck, but a policeman who boarded the truck took the wheel, and while driving the truck, it hit and ran over a pedestrian. There was no direct and proximate casual connection between the defendant’s negligence and the death because the proximate immediate and direct cause of the death was the negligence of the policeman.

Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA 353

Dionisio's negligence was only contributory, that the "immediate and proximate cause" of the injury remained the truck driver's "lack of due care" and that consequently respondent Dionisio may recover damages though such damages are subject to mitigation by the courts (Article 2179, Civil Code of the Philippines).

Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA 353

Petitioners sought the application of the doctrine of "last clear chance".

The Supreme Court said that the common law rule of contributory negligence prevented any recovery at all by a plaintiff who was also negligent, even if the plaintiff's negligence was relatively minor as compared with the wrongful act or omission of the defendant. The common law notion of last clear

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chance permitted courts to grant recovery to a plaintiff who had also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what role, if any, the common law last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the Philippines.

Is there perhaps a general concept of "last clear chance" that may be extracted from its common law matrix and utilized as a general rule in negligence cases in a civil law jurisdiction like ours? We do not believe so. Under Article 2179, the task of a court, in technical terms, is to determine whose negligence — the plaintiff's or the defendant's — was the legal or proximate cause of the injury. That task is not simply or even primarily an exercise in chronology or physics, as the petitioners seem to imply by the use of terms like "last" or "intervening" or "immediate." The relative location in the continuum of time of the plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors that may be taken into account. Of more fundamental importance are the nature of the negligent act or omission of each party and the character and gravity of the risks created by such act or omission for the rest of the community. The petitioners urge that the truck driver (and therefore his employer) should be absolved from responsibility for his own prior negligence because the unfortunate plaintiff failed to act with that increased diligence which had become necessary to avoid the peril precisely created by the truck driver's own wrongful act or omission. To accept this proposition is to come too close to wiping out the fundamental principle of law that a man must respond for the forseeable consequences of his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and burdens of living in society and to allocate them among the members of society. To accept the petitioners' pro-position must tend to weaken the very bonds of society.

Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695

Respondent entrusted company’s cash for deposit to his secretary who defrauded the company by depositing the money, not to the company’s account, but to her husband who maintained similar account with the bank, made possible because the duplicate slip was not compulsory required by the bank in accepting the deposits. Under the doctrine of last clear chance, an antecedent negligence of a person does not preclude the recovery of damages for the supervening negligence of, or bar a defense against liability sought by another, if the latter, who had the last fair chance, could have avoided, the impending harm by the exercise of due diligence. Here, assuming that the respondent company was negligent in entrusting cash to a dishonest employee, thus providing the latter with the opportunity to defraud

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the company, as advanced by the petitioner, yet it cannot be denied that the petitioner bank, thru its teller, had the last clear opportunity to avert the injury incurred by its client, simply by faithfully observing their self-imposed validation procedure.’’

Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384

The driver of a Pantranco bus encroached into the lane of an incoming jeepney and failed to return the bus immediately to its own lane upon seeing the jeepney coming from the opposite direction, resulting to the death of eight passengers of the jeep. The doctrine of last clear chance does not take into operation here because it applies only in a situation where the plaintiff was guilty of prior or antecedent negligence but the defendant, who had the last fair chance to avoid the impending harm and failed to do so, is made liable for all the consequences of the accident notwithstanding the prior negligence of the plaintiff.

Cebu Shipyard and Engineering Works, Inc. vs. William Lines, Inc., 306 SCRA 762

The passenger ship of William Lines, Inc. caught fire and sank while in the custody of Cebu Shipyard and Engineering Works to which it was brought for annual repair. The doctrine of res ipsa loquitor applies here because the fire that occurred and consumed MV Manila City would not have happened in the ordinary course of things if reasonable care and diligence had been exercised by Cebu Shipyard.

Radio Communications of the Phils., Inc. [RCPI] vs. Court of Appeals, 143 SCRA 657

Defamatory words were inserted in the telegram sent by respondent Timan, which were not noticed and were included by the RCPI in the teleG.R.am when delivered. Since negligence may be hard to substantiate in some cases, we may apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by considering the presence of facts or circumstances surrounding the injury.

LEGAL INJURY

Custodio vs. Court of Appeals, 253 SCRA 483

Custodio filed a case for damages because his tenants cancelled their contract of lease due to adobe fences constructed by adjoining lot owners which restricted passage from and to his apartment. To warrant the recovery

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of damages, there must be both a right of action for a legal wrong inflicted by the defendant, and damage resulting to the plaintiff therefrom as a wrong without damage, or damage without wrong, does not constitute a cause of action, since damages are merely part of the remedy allowed for the injury caused by a breach or wrong.

Metropolitan Bank and Trust Company vs. Tan Chuan Leong, 42 SCRA 352

Although B&I Trading had knowledge of the simulated sale between Tan Chuan Leong and his son and had entered into the contract of mortgage pursuant to a design to defraud Leong’s creditors, no damage or prejudice appears to have been suffered by the petitioner thereby. Absent damage or prejudice, no right of action arises in favor of the petitioner because wrongful violation of a legal right is not a sufficient element of a cause of action unless it has resulted in an injury causing loss or damages.

INTENTIONAL TORTS

Yu vs. Court of Appeals, 217 SCRA 328

House of Mayfair, a foreign manufacturer of wall covering products, with which Yu has had an exclusive distributorship aageement was duped into believing that the goods ordered through the FNF Trading were to be shipped to Nigeria only, but the goods were actually sent to and sold in the Philippines. A ploy of this character is akin to the scenario of a third person who induces a party to renege on or violate his undertaking under a contract, thereby entitling the other contracting party to relief therefrom.

Valenzuela vs. Court of Appeals, G.R. NO. 83122, October 19, 1990

Valenzuela did not receive his full commission which amounted to P1.6 Million from the P4.4 Million insurance coverage of the Delta Motors he obtained for Philippine American General Insurance (Philamgen) because the Philamgen terminated their agency agreement after Valenzuela refused to share his commission with the company. Philamgen was found to have acted with bad faith and with abuse of right in terminating the agency under the principle that ‘every person must in the exercise of his rights and in the performance of his duties act with justice, give everyone his due, and observe honesty and good faith (Art. 19, Civil Code), and every person who, contrary to law, willfully or negligently causes damages to another, shall indemnify the latter for the same.

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NEGLIGENCE

DR. FILOTEO A. ALANO vs, ZENAIDA MAGUD-LOGMAO, G.R. No. 175540, April 7, 2014, J. Peralta

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 Dr. Alano acted prudently by directing his subordinates to exhaust all reasonable means of locating the relatives of the 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, Dr. Alano 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.

DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION vs. SPOUSES EULOGIO AND CARMELITA EMPHASIS, G.R. No. 211424, November 26, 2014, J. Reyes

Contending that it exercised extraordinary diligence in the selection and supervision of its drivers, petitioner argues that it should be absolved from any liability for damages caused by its employee. The SC ruled 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. Failure however of petitioner to establish the modes and measures it adopted to ensure the proper selection and supervision of its employees, petitioner therefore should be held liable for the damages cause by its employee.

CAGAYAN ELECTRIC COOPERATIVE, INC. REPRESENTED BY ITS GENERAL MANAGER AND CHIEF EXECUTIVE OFFICER, GABRIEL A. TORDESILLAS vs. ALAN RAPANAN AND MARY GINE TANGONAN, G.R. No. 199886, December 3, 2014, J. Villarama Jr.

1 died and 2 suffered injury due to mishap along the highway. The respondents contended that the cause of death and injuries was due to live tension wire of Cagayan Electric Cooperative Inc. The court ruled there was no negligence on the part of Cagayan Electric Cooperative Inc. 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

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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.

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS, ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SATNTOS, ET.AL, G.R. No. 208293/G.R. No. 208295, December 10, 2014, J. Leonen

PNB failed to release to respondents their deposits as they released it to someone else. The Supreme Court ruled that PNB, being a bank, should have exercised a degree of diligence higher than that of a good father of a family. However, their actions and inactions constitute gross negligence. Thus, the award for moral damages was in order. PNB and Aguilar’s gross negligence deprived Angel C. Santos’ heirs what is rightfully theirs. Respondents also testified that they experienced anger and embarrassment when petitioners PNB and Aguilar refused to release Angel C. Santos’ deposit.

Exemplary damages should also be awarded. The law allows the grant of exemplary damages by way of example for the public good. The public relies on the banks’ sworn profession of diligence and meticulousness in giving irreproachable service, which must be maintained at all times by the banking sector.

RUKS KONSULT AND CONSTRUCTION vs.  ADWORLD SIGN AND ADVERTISING CORPORATION* AND TRANSWORLD MEDIA ADS, INC., G.R. No. 204866, January 21, 2015, J. Perlas-Bernabe

The petitioners were found negligent by both the RTC and the Court of Appeals and ordered to pay jointly and severally for damages. The petitioners allege that they are not negligent. The Supreme Court ruled that 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. 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. CA correctly affirmed the RTC’s finding that Transworld and Ruks are guilty of negligence.

R TRANSPORT CORPORATIONvs. LUISITO G. YU, G.R. No. 174161, February 18, 2015, J. Peralta

Negligence has been 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.” Verily, foreseeability is the fundamental test of negligence. It is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. The records show that driver Gimena was clearly running at a reckless speed. He did not take the necessary precaution and instead, drove on and bumped the deceased despite

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being aware that he was traversing a commercial center where pedestrians were crossing the street. Gimena should have observed due diligence of a reasonably prudent man by slackening his speed and proceeding cautiously while passing the area.

UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD., AND INTER-ASIA MARINE TRANSPORT, INC. vs. ASIAN TERMINALS, INC., G.R. No. 195661, March 11, 2015, J. Reyes

ATI suffered damage due to the fault of petitioners’ negligence. However, petitioners contended that they should not be held liable for there was no negligence on their part. The court ruled that Negligence, on the other hand, is defined as the failure to observe that degree of care, precaution and vigilance that the circumstances justly demand, whereby another suffers injury. In the case under consideration, the parties do not dispute the facts of damage upon ATI’s unloader, and of such damage being the consequence of someone’s negligence. However, the petitioners deny liability claiming that it was not established with reasonable certainty whose negligence had caused the co-mingling of the metal bars with the soybean meal cargo. The Court, on this matter, agrees with the CA’s disquisition that the petitioners should be held jointly and severally liable to ATI. ATI cannot be faulted for its lack of direct access to evidence determinative as to who among the shipowner, Samsun, ContiQuincyBunge and Inter-Asia should assume liability. The CA had exhaustively discussed why the doctrine of res ipsa loquitur applies.

EASTERN SHIPPING LINES, INC., Petitioner, v. BPI/MS INSURANCE CORP., & MITSUI SUMITOMO INSURANCE CO., LTD. G.R. No. 182864. January 12, 2015, J. PEREZ

Mere proof of delivery of the goods in good order to a common carrier and of their arrival in bad order at their destination constitutes a prima facie case of fault or negligence against the carrier. If no adequate explanation is given as to how the deterioration, loss, or destruction of the goods happened, the transporter shall be held responsible. From the foregoing, the fault is attributable to ESLI. While no longer an issue, it may be nonetheless state that ATI was correctly absolved of liability for the damage.

BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET S. DELA CRUZ vs. NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E. LANUZO, JOAN BERNABE E. LANUZO, AND RYAN JOSE E. LANUZO, G.R. No. 161151 March 24, 2014, J. BERSAMIN

This case involves a claim for damages arising from the death of a motorcycle rider in a night time 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. In order that a party may be held liable for damages for any injury brought about by the negligence of another, the claimant must prove that the negligence was the immediate and proximate cause of the injury. Proximate cause is

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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.

The company has shown the 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. It was shown that the proximate and immediate cause of the death of Balbino was his own negligence. Hence, the heirs could not recover damages.

VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014. J. BRION

Paragraph 5, Article 2180 of the Civil Code holds the employer vicariously liable for damages caused by his employees within the scope of their assigned tasks. In this case, Josefa seeks to avoid 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. In quasi-delict cases, the registered owner of a motor vehicle is the employer of its driver in contemplation of law. 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.

INDOPHIL TEXTILE MILLS, INC v ENGR. SALVADOR ADVIENTO, G.R No. 171212, August 4, 2012. PERALTA.

Engr. Adviento was hired by Indophil Textile Mills to maintain its thread-manufacturing facilities. Later he was diagnosed with Chronic Poly Sinusitis. Engr. Adviento filed a case for damages based on quasi-delict with the RTC, alleging that he contracted such occupational disease by reason of the gross negligence of petitioner to provide him with a safe, healthy and workable environment. Indophil moved to dismiss, arguing that jurisdiction is with the Labor Arbiter.

True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases. However, Adviento’s claim for damages is specifically grounded on petitioner’s gross negligence to provide a safe, healthy and workable environment for its employees −a case of quasi-delict.

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Clearly, injury and damages were allegedly suffered by respondent, an element of quasi-delict. Secondly, the previous contract of employment between petitioner and respondent cannot be used to counter the element of "no pre-existing contractual relation" since petitioner’s alleged gross negligence in maintaining a hazardous work environment cannot be considered a mere breach of such contract of employment, but falls squarely within the elements of quasi-delict under Article 2176 of the Civil Code since the negligence is direct, substantive and independent.

NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO., LTD. vs. GLOW LAKS ENTERPRISES, LTD, G.R. No. 156330 , November 19, 2014, J. PEREZ

The respondent loaded to the vessel owned by the petitioner who is common carrier. By an unfortunate turn of events, however, unauthorized persons managed to forge the covering bills of lading and on the basis of the falsified documents, the ports authority released the goods.

In this case, there is no dispute that the custody of the goods was never turned over to the consignee or his agents but was lost into the hands of unauthorized persons who secured possession thereof on the strength of falsified documents. The loss or the misdelivery of the goods in the instant case gave rise to the presumption that the common carrier is at fault or negligent.

A common carrier is presumed to have been negligent if it fails to prove that it exercised extraordinary vigilance over the goods it transported. When the goods shipped are either lost or arrived in damaged condition, a presumption arises against the carrier of its failure to observe that diligence, and there need not be an express finding of negligence to hold it liable. To overcome the presumption of negligence, the common carrier must establish by adequate proof that it exercised extraordinary diligence over the goods. It must do more than merely show that some other party could be responsible for the damage. In the present case, petitioners failed to prove that they did exercise the degree of diligence required by law over the goods they transported.

Sanitary Steam Laundry, Inc. vs. Court of Appeals, 300 SCRA 20

The driver was in violation of the Land Transportation and Traffic Code when its vehicle got involved in an accident that killed three persons. For the driver to be found negligent petitioner must show that the violation of the statute was the proximate or legal cause of the injury or that it substantially contributed thereto because such negligence, consisting in whole or in part, of violation of law, like any other negligence is without legal consequence unless it is a contributing cause of the injury.

Mckee vs. Intermediate Appellate Court, 211 SCRA 517

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A head-on-collision took place between a cargo truck driver and a car driver Jose Koh, which resulted in the death of Jose Koh and two others because the Koh avoided hitting two boys who suddenly darted across the lane. Under the Emergency Rule, Koh was not negligent because his entry into the lane of the truck was necessary in order to avoid what was, in his mind at that time, a greater peril of death or injury to the two boys. Under this rule, a person who, without fault or negligence on his part, is suddenly placed in an emergency or unexpected danger and compelled to act instantly and instinctively with no time for reflection and exercise of the required precaution, is not guilty of negligence and, therefore, exempt from liability, if he did not make the wisest choice of the available courses of conduct to avoid injury which a reasonably prudent person would have made under normal circumstances.

Del Rosario vs. Manila Electric Co., 57 Phil. 478

An overhead wire of Meralco conducting electricity parted and one of the charged ends fell to the ground, and a nine (9) year old school child touched the wire and was electrocuted. It is doubtful whether contributory negligence can properly be imputed to the deceased, owing to his immature years and the natural curiosity which a child would feel to do something out of the ordinary, and the mere fact that the deceased ignored the caution of a companion of the age of 8 years does not, in our opinion, alter the case.

Astudillo vs. Manila Electric Co., 55 Phil. 327

A young man by the name of Juan Diaz Astudillo met his death through electrocution, when he placed his right hand on a wire connected with an electric light pole owned by Meralco. Meralco was negligent in so placing the pole and wires as to be within the proximity of a place frequented by many persons, with the possibility of coming in contact with a highly charged and defectively insulated wire.

Bernardo vs. Legaspi, 29 Phil. 12

Two automobiles, going in opposite directions, collide on turning a street corner, and it appears from the evidence that the drivers were equally negligent and contributed equally to the collision. Under the doctrine of contributory negligence, neither can recover from the other for the damages suffered.

Negros Navigation Co., Inc. vs. Court of Appeals, 281 SCRA 534

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The ship captain of MT Tacloban City, an oil tanker owned by PNOC, was playing mah-jong when it collided off the Tablan Strait in Mindoro, with M,V Don Juan owned by petitioner NENACO. The owner of the ship was found equally negligent with the ship captain because of tolerating the playing of mahjong by the ship captain and other crew members while on board the ship and failing to keep the ship seaworthy.

Philippine Long Distance Telephone Co., Inc. vs. Court of Appeals, 178 SCRA 94

The jeepney of the respondents fell into an open excavation when the jeep swerved from the inside lane of the street, respondents being aware of the presence of said excavation. The negligence of respondent Antonio Esteban was not only contributory to his injuries and those of his wife but goes to the very cause of the occurrence of the accident, as one of its determining factors, and thereby precludes their right to recover damages.

GROSS MISCONDUCT

DR. IDOL L. BONDOC vs. MARILOU R. MANTALA, G.R. No. 203080, November 12, 2014, J. Villarma, Jr.

A physician is guilty of gross misconduct when he chose to conduct a normal delivery and deliberately left her patient to a midwife and two inexperienced assistants despite knowing that the patient was under prolonged painful labor and about to give birth to a macrosomic baby by vaginal delivery which resulted to a stillborn baby and the loss of her reproductive capacity. A physician should be dedicated to provide competent medical care with full professional skill in accordance with the current standards of care, compassion, independence and respect for human dignity.

NOEL CASUMPANG, RUBY SANGA-MIRANDA AND SAN JUAN DE DIOS HOSPITAL, vs. NELSON CORTEJO, G.R. No. 171127/DRA. RUBY SANGA-MIRANDA, v. NELSON CORTEJO, G.R. No. 171217/SAN JUAN DE DIOS HOSPITAL, vs. NELSON CORTEJO, G.R. No. 171228, March 11, 2015, J. Brion

Dr. Casumpang and Dr. Miranda are accused of negligence leading to the death of a young boy. The SC held that, to successfully pursue a medical malpractice suit, the plaintiff (in this case, the deceased patient's heir) must prove that the doctor either failed to do what a reasonably prudent doctor would have done, or did what a reasonably prudent doctor would not have done; and the act or omission had caused injury to the patient. The patient's heir/s bears the burden of proving his/her cause of action. The elements of medical negligence are: (1) duty; (2) breach; (3) injury; and (4) proximate causation. Given these elements, only Dr. Casumpang, attending physician, was found to be negligent for having failed to promptly detect dengue fever and undertake the proper medical management needed for this disease.

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THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE VADAVEDO AND BENITA ARCOYCADAVEDO(both deceased), substituted by their heirs, namely: HERMINIA, PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL, EVANGELINE, VICENTE JR., and ARMANO, all surnamed CADAVEDO vs. VICTORINO (VIC) T. LACAYA, married to Rosa Legados, G.R. No. 173188, January 15, 2014, J. Brion

Atty. Lacaya claims he had an arrangement with his client that he would be awarded one half of the property acquired by his client if they obtained favorable judgment.

Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or assignment, the property that has been the subject of litigation in which they have taken part by virtue of their profession. The same proscription is provided under Rule 10 of the Canons of Professional Ethics.

A thing is in litigation if there is a contest or litigation over it in court or when it is subject of the judicial action. Following this definition, SC held that the subject lot was still in litigation when Atty. Lacaya acquired the disputed one-half portion. We note in this regard the following established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion for the issuance of a writ of execution in Civil Case No. 1721; (2) on September 23, 1981, the spouses Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on October 16, 1981, the RTC granted the motion filed for the issuance of a writ of execution in Civil Case No. 1721 and the spouses Cadavedo took possession of the subject lot on October 24, 1981; (4) soon after, the subject lot was surveyed and subdivided into two equal portions, and Atty. Lacaya took possession of one of the subdivided portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya executed the compromise agreement.

From these timelines, whether by virtue of the alleged oral contingent fee agreement or an agreement subsequently entered into, Atty. Lacaya acquired the disputed one-half portion (which was after October 24, 1981) while Civil Case No. 3352 and the motion for the issuance of a writ of execution in Civil Case No. 1721 were already pending before the lower courts. Similarly, the compromise agreement, including the subsequent judicial approval, was effected during the pendency of Civil Case No. 3352. In all of these, the relationship of a lawyer and a client still existed between Atty. Lacaya and the spouses Cadavedo.

Thus, whether we consider these them to be prohibited and void by reason of public policy.Under Article 1409 of the Civil Code, contracts which are contrary to public policy and those expressly prohibited or declared void by law are considered in existent and void from the beginning.

While contingent fee agreements are indeed recognized in this jurisdiction as a valid exception to the prohibitions under Article 1491(5) of the Civil Code, this recognition does

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not apply to the present case. A contingent fee contract is an agreement in writing where the fee, often a fixed percentage of what may be recovered in the action, is made to depend upon the success of the litigation. The payment of the contingent fee is not made during the pendency of the litigation involving the client’s property but only after the judgment has been rendered in the case handled by the lawyer.

In the present case, we reiterate that the transfer or assignment of the disputed one-half portion to Atty. Lacaya took place while the subject lot was still under litigation and the lawyer-client relationship still existed between him and the spouses Cadavedo. Thus, the general prohibition provided under Article 1491 of the Civil Code, rather than the exception provided in jurisprudence, applies.

The compromise agreement entered into between Vicente and Atty. Lacaya in Civil Case No. 215 (ejectment case) was intended to ratify and confirm Atty. Lacaya’s acquisition and possession of the disputed one-half portion which were made in violation of Article 1491 (5) of the Civil Code. As earlier discussed, such acquisition is void; the compromise agreement, which had for its object a void transaction, should be void.

A contract whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy is in existent and void from the beginning. It can never be ratified nor the action or defense for the declaration of the in existence of the contract prescribe; and any contract directly resulting from such illegal contract is likewise void and in existent.

Consequently, the compromise agreement did not supersede the written contingent fee agreement providing for attorney’s fee of P2,000.00.

SC fixed the attorney’s fees on a quantum meruit basis.The doctrine of quantum meruit is a device to prevent undue enrichment based on the equitable postulate that it is unjust for a person to retain benefit without paying for it.

SPECIAL LIABILITY IN PARTICULAR ACTIVITIES

Doctors

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 PASAMBA, G.R. No. 192973, September 29, 2014, J. Reyes

Medical malpractice or, more appropriately, medical negligence, is that type of claim which a victim has available to him or her to redress a wrong committed by a medical professional which has caused bodily harm. In order to successfully pursue such a claim, a patient, 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.

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As the Court held in Spouses Flores v. Spouses Pineda, et al. ,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, which the Court finds absent in the case at bar. As regards the respondents' counterclaim, the CA's award of P48,515.58 is sustained.

Ramos vs. Court of Appeals, 321 SCRA 584

At the time of her admission, patient Erlinda Ramos was neurologically sound but during the administration of anesthesia and prior to the performance of a gall bladder operation, she suffered irreparable damage to her brain and was diaganosed to be suffering from “diffuse cerebral parenchymal damage.” The damage sustained by Erlinda Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur in medical malpractice as it was found out that brain damage does not normally occur in the process of gall bladder operations, and does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube.

Batiquin vs. Court of Appeals, 258 SCRA 334

A piece of rubber glove was left in the abdomen of a patient after a caesarean section operation. The doctrine of res ipsa loquitor applies because aside from the caesarean section, private respondent Villegas underwent no other operation which could have caused the offending piece of rubber to appear in her uterus, it stands to reason that such could only have been a by-product of the caesarean section performed by Dr. Batiquin.

Lawyers

Roque vs. Gunigundo, 89 SCRA 178

Atty. Gunigundo was charged by his client Roque with G.R.oss negligence in not seasonably filing their motion for reconsideration and in not perfecting an appeal from the trial court’s order of dismissal. Atty. Gunigundo's filing of motions for extension on the last day and sending them by registered mail (thus giving the court insufficient time to act before the extension sought had expired) and his omission to verify whether his second motion for extension was granted are indicative of lack of competence, diligence and fidelity in the dispatch of his clients’ business.

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Adarne vs. Aldaba, 83 SCRA 734

Adarne was declared in default for failure to appear in the hearing because his one of his lawyers honestly believed that he had appeared for the complainant only for a special purpose and that the complainant had agreed to contact his attorney of record to handle his case after the hearing of October 23, 1964, so that he did nothing more about it. An attorney is not bound to exercise extraordinary diligence, but only a reasonable degree of care and skill having reference to the character of the business he undertakes to do.

STRICT LIABILITY

Vestil vs. Intermediate Appellate Court, 179 SCRA 47

Theness, a three-year old child, was killed after she was bitten by a dog while she was playing with the child of Purita Vestil in the house of Vicente Miranda, the late father of Purita. Spouses Vestil’s contention that they cannot be faulted as they are not the owner of the house where the child was bitten cannot be accepted because under the Article 2183 of the Civil Code the possessor of animal is liable even if the animal should “escape or be lost” and so be removed from his control.

Amadora vs. Court of Appeals, 160 SCRA 315

Amadora was shot dead by his classmate Daffon inside the school auditorium, when the classes had formally ended. As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective, in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues.

Caedo vs. Yu Khe Thai, 26 SCRA 410

Yu was inside his car when his driver bumped a carretela in front and at the same time hit another car coming from the opposite direct. Under [Article 2184], if the causative factor was the driver’s negligence, the owner of the vehicle who was present is likewise held liable if he could have prevented the mishap by the exercise of due diligence.

ART 2176 , 2177

ANDAMO vs. IAC, G.R. NO. 74761November 6, 1990

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Clearly, from petitioner's complaint, the waterpaths and contrivances built by respondent corporation are alleged to have inundated the land of petitioners. All the elements of a quasi-delict or culpa aquiliana are present, to wit: (a) damages suffered by the plaintiff, (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff.

PONCE vs. LEGASPI, G.R. NO. 79184 May 6, 1992

The present case stemmed from the filing before the Supreme Court OF a complaint for disbarment against respondent by petitioner which was dismissed. Respondent thereafter filed a complaint for damages against the petitioner. The adverse result of an action does not per se make the action wrongful and subject the actor to make payment of damages for the law could not have meant to impose a penalty on the right to because one who exercises his rights does no injury, and if damage results from a person's exercising his legal rights, it is damnum absque injuria.

EXTRAORDINARY DILIGENCE

EASTERN SHIPPING LINES INC., vs. BPI/MS INSURANCE CORP. and MITSUI SUM TOMO INSURANCE CO. LTD., G.R. No. 193986 January 15, 2014, J. Villarama, Jr.

It bears stressing unto petitioner that common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code, common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. Owing to this high degree of diligence required of them, common carriers, as a general rule, are presumed to have been at fault or negligent if the goods they transported deteriorated or got lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they have the burden of proving that they observed such high level of diligence. In this case, petitioner failed to hurdle such burden.

RES IPSA LOQUITUR

VICENTE JOSEFA vs. MANILA ELECTRICCOMPANY, G.R. No. 182705, July 18, 2014, J.Brion

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For the doctrine of res ipsa loquitur 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.

UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD., AND INTER-ASIA MARINE TRANSPORT, INC. v. ASIAN TERMINALS, INC, G.R. No. 195661. March 11, 2015, J. REYES

The three requisites to the application of the doctrine of res ipsa loquitur are found to be attendant in the case at bar. First, the co-mingling of the two foreign metal objects with the soybean meal cargo and the consequent damage to ATI’s unloader is an accident which ordinarily does not occur in the absence of someone’s negligence. Second, the foreign metal objects were found in the vessel’s Hold No. 2, which is within the exclusive control of the petitioners. Third, records do not show that ATI’s negligence had in any way contributed to the damage caused to its unloader. All 3 requisites of res ipsa loquitur being present, the presumption or inference arises that defendants’ negligence was the proximate cause of the damage to ATI’s unloader. The burden of evidence shifted to defendants to prove otherwise. The defendants failed to do so.

INTERNATIONAL CONTAINER TERMINAL SERVICES INC. VS. CELESTE M. CHUA, G.R. No. 195031March 26, 2014, J. PEREZ

The container van loaded with the personal effects of respondent Chua arrived at North Harbor, Manila and was unloaded in the depot belonging to petitioner for safekeeping pending the customs inspection.The container van was stripped and partially inspected by custom authorities. Further inspection thereof was scheduled on May 8, 1997. However, on the date scheduled, petitioner’s depot was gutted by fire and respondent’s container van was burned.

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 is “based on the theory that the defendant either knows the cause of the accident or has the best opportunity of ascertaining it and the plaintiff, having no knowledge thereof, is compelled to allege negligence in general terms. In such instance, the plaintiff relies on proof of the happening of the accident alone to establish negligence.” The

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principle, furthermore, provides a means by which a plaintiff can hold liable a defendant who, if innocent, should be able to prove that he exercised due care to prevent the accident complained of from happening. It is, consequently, the defendant’s responsibility to show that there was no negligence on his part. The doctrine, however, “can be invoked when and only when, under the circumstances involved, direct evidence is absent and not readily available.” Here, there was no evidence as to how or why the fire in the container yard of petitioner started; hence, it was up to petitioner to satisfactorily prove that it exercised the diligence required to prevent the fire from happening. 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.

VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014. J. BRION

Res ipsa loquitor is the doctrine which 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 this case, the driver Bautista is presumed to be negligent in driving the truck under the res ipsa loquitor doctrine. 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.

DAMAGESNEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno

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. Also proper is an award of exemplary damages since pursuant to Article 2234, petitioner was able to prove he was entitled moral, temperate or compensatory damages were it not for the stipulation of liquidated damages.

MERALCO vs. RAMOY, G.R. NO. 158911, March 4, 2008

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In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by withholding from him and his tenants the supply of electricity to which they were entitled under the Service Contract. MERALCO's failure to exercise utmost care and diligence in the performance of its obligation to its customer, is tantamount to bad faith hence is entitled to moral damages.

MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. vs. PHOENIX ASSURANCE COMPANY OF NEW YORK,MCGEE & CO., INC., G.R. NO. 162467, May 8, 2009

The Court ruled that Mindanao Terminal had duly exercised the required degree of diligence in loading and stowing the cargoes, which is the ordinary diligence of a good father of a family. There is no basis for the award of attorney’s fees in favor of petitioner since none of the circumstances enumerated in Article 2208 of the Civil Code exists because the present case is clearly not an unfounded civil action against the plaintiff as there is no showing that it was instituted for the mere purpose of vexation or injury.

AIR FRANCE vs.CARRASCOSO, G.R. NO. L-21438, September 28, 1966

Plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air France while at Bangkok, and was transferred to the tourist class without his consent and against his will. The contract of air carriage, therefore, generates a relation attended with a public duty, and neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.

BAYANI vs. PANAY ELECTRIC CO., INC., G.R. NO. 139680, April 12, 2000

The requisites for an action for damages based on malicious prosecution are:

(1) the fact of the prosecution and the further fact that the defendant was himself the prosecutor, and that the action was finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted without probable cause; and (3) the prosecutor was actuated or impelled by legal malice.

WASSMER vs VELEZ, G.R. NO. L-20089, December 26, 1964

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Two days before the wedding, defendant, who was then 28 years old, simply left a note for plaintiff stating: "Will have to postpone wedding — My mother opposes it ... ", then enplaned to his home city in Mindanao, and never returned and was never heard from again. This is not a case of mere breach of promise to marry but unjustifiably contrary to good customs for which defendant must be held answerable in damages in accordance with Article 21 aforesaid and per express provision of Article 2219 (10) of the New Civil Code, moral damages are recoverable in the cases mentioned in Article 21 of said Code.

SANTOS VENTURA HOCORMA FOUNDATION, INC. vs. ERNESTO V. SANTOS and RIVERLAND, INC., G.R. NO. 153004, November 5, 2004

The demand letter sent to the petitioner on October 28, 1992, was in accordance with an extra-judicial demand contemplated by law. When the debtor knows the amount and period when he is to pay, interest as damages is generally allowed as a matter of right.

EXEMPLARY DAMAGES

METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES AND YO YUK TO, G.R. No. 183204, JANUARY 13, 2014, J. del Castillo

As to the award of exemplary damages, Article 2229 of the Civil Code provides that exemplary damages may be imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. They are awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The bank acted in a wanton, fraudulent, reckless, oppressive or malevolent manner when it refused to release the deposits of respondents without any legal basis. The banking industry is impressed with public interest. As such, the highest degree of diligence is expected, and high standards of integrity and performance are even required of it. It must therefore treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its relationship with them.

SEVEN BROTHERS SHIPPING CORPORATION vs. DMC-CONSTRUCTION RESOURCES, INC., G.R. No. 193914. November 26, 2014, C.J. Sereno

Petitioner questions the decision of the CA awarding respondent nominal damages after having ruled that the actual damages awarded by the RTC was unfounded. Petitioner argues that nominal damages are only awarded to vindicate a right that has been violated and not to indemnify a party for any loss suffered by the latter. The SC ruled that what should have been awarded was temperate and not nominal damages. Temperate or moderate damages may be recovered when the court finds that some pecuniary loss has

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been suffered but its amount cannot, from the nature of the case, be provided with certainty. Considering that it has been established that respondent suffered a loss, even if the amount thereof cannot be proven with certainty, the Court ruled that what should have been awarded was temperate damages.

PEOPLE OF THE PHILIPPINES vs. SHIRLEY A. CASIO, G.R. No. 211465, December 3, 2014, J. Leonen

The payment of P500,000 as moral damages and P100,000 as exemplary damages for the crime of Trafficking in Persons as a Prostitute finds basis in Article 2219 of the Civil Code, which provides that Moral and Exemplary Damages may be awarded in cases of seduction, abduction, rape, or other lascivious acts. The criminal case of Trafficking in Persons as a Prostitute is an analogous case to the crimes of seduction, abduction, rape, or other lascivious acts. To be trafficked as a prostitute without one’s consent and to be sexually violated four to five times a day by different strangers is horrendous and atrocious. There is no doubt that Lolita experienced physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation when she was trafficked as a prostitute in Malaysia. Since the crime of Trafficking in Persons was aggravated, being committed by a syndicate, the award of exemplary damages is likewise justified.

TELEFAST COMMUNICATIONS vs. CASTRO, G.R. NO. 73867, February 29, 1988

Petitioner and private respondent entered into a contract whereby, for a fee, petitioner undertook to send said private respondent's message overseas by teleG.R.am but which petitioner did not do, despite performance by said private respondent of her obligation by paying the required charges. The award of exemplary damages by the trial court is likewise justified and, therefore, sustained as a warning to all teleG.R.am companies to observe due diligence in transmitting the messages of their customers.

BANK OF THE PHILIPPINE ISLANDS vs.COURT OF APPEALS, G.R. NO. 136202, January 25, 2007

Upon the prompting of Templonuevo and with full knowledge of the brewing dispute between Salazar and Templonuevo, petitioner debited the account held in the name of the sole proprietorship of Salazar without even serving due notice upon her. The award of exemplary damages is justified when the acts of the bank are attended by malice, bad faith or gross negligence and the award of reasonable attorney’s fees is proper where exemplary damages are awarded because depositors are compelled to litigate to protect their interest.

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ACTUAL or COMPENSATORY DAMAGES

S.V. MORE PHARMA CORPORATION AND ALBERTO SANTILLAN VS. DRUGMAKERS LABORATORIES INC. AND ELIEZER DEL MUNDO G.R. Nos. 200408/200416. November 12, 2014, J. PERLAS-BERNABE

It was an error to award actual damages for supposed loss of profits based on the erroneous sales projection. 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. Nevertheless, considering that injured party palpably suffered some form of pecuniary loss resulting from the breach of contract it was proper to, instead, award in their favor temperate damages.

ALEJANDRO C. ALMENDRAS JR. VS. ALEXIS C. ALMENDRAS G.R. No. 179491. January 14, 2015, J. SERENO

In awarding damages in libel cases, the court is given ample discretion to determine the amount, depending upon the facts of the particular case. Article 2219 of the Civil Code expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. However, "while no proof of pecuniary loss is necessary in order that moral damages may be awarded, it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of damages and its causal connection to defendant’s acts." Considering that respondent sufficiently justified his claim for damages (he testified that he was "embarrassed by the said letters and ashamed to show his face in government offices"), the Court found that he was entitled to moral and exemplary damages.

LITO CORPUZ vs. PEOPLE OF THE PHILIPPINES, G.R. No. 180016 April 29, 2014, J. PERALTA

In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary restitution or compensation to the victim for the damage or infraction that was done to the latter by the accused, which in a sense only covers the civil aspect. Precisely, it is civil indemnity. Thus, in a crime where a person dies, in addition to the penalty of imprisonment imposed to the offender, the accused is also ordered to pay the victim a sum of money as restitution. Clearly, this award of civil indemnity due to the death of the victim could not be contemplated as akin to the value of a thing that is unlawfully taken which is the basis in the imposition of the proper penalty in certain crimes. Thus, the reasoning in increasing the value of civil indemnity awarded in some offense cannot be the same reasoning that would sustain the adoption of the suggested ratio. Also, it is apparent from Article 2206 that the law only imposes a minimum amount for awards of civil indemnity, which is P3,000.00.

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The law did not provide for a ceiling. Thus, although the minimum amount for the award cannot be changed, increasing the amount awarded as civil indemnity can be validly modified and increased when the present circumstance warrants it. Corollarily, moral damages under Article 2220of the Civil Code also does not fix the amount of damages that can be awarded. It is discretionary upon the court, depending on the mental anguish or the suffering of the private offended party. The amount of moral damages can, in relation to civil indemnity, be adjusted so long as it does not exceed the award of civil indemnity.

SNOW MOUNTAIN DAIRY CORPORATION vs. GMA VETERANS FORCE, INC., G.R. No. 192446, November 19, 2014, J. Peralta

Actual or compensatory damages are those awarded in satisfaction of, or in recompense for, loss or injury sustained. The burden is to establish one's case by a preponderance of evidence which means that the evidence, as a whole, adduced by one side, is superior to that of the other. Actual damages are not presumed. In this case, GMA Veterans had not shown that the security guards were not assigned to another employer, and that it was compelled to pay the guards despite the pre-termination of the security agreement to be entitled to the amount of PI6,014.00 per month. Indeed, no evidence was presented by GMA Veterans establishing the actual amount of loss suffered by reason of the pre-termination. It is elementary that to recover damages, there must be pleading and proof of actual damages suffered. Temperate damages may be allowed in cases where from the nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is convinced that the aggrieved party suffered some pecuniary loss. The SC also take into consideration that GMA Veterans certainly spent for the security guard's training, firearms with ammunitions, uniforms and other necessary things before their deployment to Snow Mountain. Hence, the SC find it just and proper to award temperate damages in the amount of P200,000.00 in lieu of actual damages.

LOADSTAR SHIPPINGCOMPANY, INCORPORATED and LOADSTARINTERNATIONAL SHIPPINGCOMPANY, INCORPORATED vs. MALAYAN INSURANCE COMPANY, INCORPORATED, G.R. No. 185565, November 26, 2014, J. Reyes

Actual damages are not presumed. The claimant must prove the actual amount of loss with a reasonable degree of certainty premised upon competent proof and on the best evidence obtainable. Thus, an insurer of copper concentrates which were contaminated by seawater while at sea, who, along with the consignee, arbitrarily fixed the salvage value of the cargo, and who failed to refute expert testimony from the common carrier as regards the lack of any adverse effect of seawater on copper concentrates, then actual damages are not proven.

ART 2203

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VELASCO vs.MERALCO, G.R. NO. L-18390, August 6, 1971

It is undisputed that a sound unceasingly emanates from the substation of MERALCO and whether this sound constitutes an actionable nuisance or not is the principal issue in this case and appellant asked that he be declared entitled to recover compensatory, moral and other damages. Article 2203 clearly obligates the injured party to undertake measures that will alleviate and not aggravate his condition after the infliction of the injury, and places upon him the burden of explaining why he could not do so.

MORAL DAMAGES

ARCO PULP AND PAPER CO. v DAN T. LIM, G.R No. 206806, June 25, 2014. J. LEONEN

Moral damages are not recoverable on the mere breach of contract. Article 2220 requires that the breach be done fraudulently or in bad faith. To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless and malicious, in bad faith, oppressive, or abusive. Hence, the person claiming bad faith must prove its existence by clear and convincing evidence for the law always presumes good faith. When the party to a contract’s actions clearly show "a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud, moral damages may be awarded. Here, the Court justified the award since the debtor issued a bouncing check in partial payment of its obligation, presumably with the knowledge that it was being drawn against a closed account. Worse, it attempted to shift their obligations to a third person without the consent of the creditor.

WPM INTERNATIONAL TRADING, INC. and WARLITO P. MANLAPAZ v FE CORAZON LABAYEN, G.R No. 182770, September 17, 2014. J. BRION

On the award of moral damages, the Court found the award in order in view of WPM's unjustified refusal to pay a just debt. Such cold refusal to pay a just debt amounts to a breach of contract in bad faith, as contemplated by Article 2220.

Under Article 2220 of the New Civil Code, moral damages may be awarded in cases of a breach of contract where the defendant acted fraudulently or in bad faith or was guilty of gross negligence amounting to bad faith.

FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J. Perez

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In order that moral damages may be awarded in breach of contract cases, the defendant must have acted in bad faith, must be found guilty of gross negligence amounting to bad faith, or must have acted in wanton disregard of contractual obligations. Petitioners acted in bad faith when they breached their contract, when they failed to address respondents’ grievances and when they adamantly refused to refund respondents' payment.

SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES,G.R. No. 199990, February 04, 2015, J. Mendoza

The award of damages to Spouses Rabaja cannot be sustained by this Court. The filing alone of a civil action should not be a ground for an award of moral damages in the same way that a clearly unfounded civil action is not among the grounds for moral damages. Article 2220 of the New Civil Code provides that to award moral damages in a breach of contract, the defendant must act fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently show that Spouses Salvador acted in a fraudulent manner or with bad faith when it breached the contract of sale. Thus, the award of moral damages cannot be warranted.

NANCY S. MONTINOLA v PHILIPPINE AIRLINES. G.R No. 198656, September 8, 2014. LEONEN

Illegally suspended employees, similar to illegally dismissed employees, are entitled to moral damages when their suspension was attended by bad faith or fraud, oppressive to labor, or done in a manner contrary to morals, good customs, or public policy.

In this case, a PAL employee was suspended for one year. In upholding the award of moral damages, the Court said that PAL’s act was contrary to morals, good customs, and public policy. PAL was willing to deprive Montinola of the wages she would have earned during her year of suspension even if there was no substantial evidence that she was involved in the pilferage.

BPI EXPRESS CARD CORPORATION vs. MA. ANTONIA R. ARMOVIT, G.R. No. 163654, October 8, 2014, J. Bersamin

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. 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. Malice or bad faith implies a conscious and intentional design to do a wrongful act for a dishonest purpose or moral obliquity. 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. Hence, bad faith in the context of Article 2220 of the Civil Code includes gross negligence. Nowhere in the terms and conditions requires the

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defendant to submit new application form in order to reactivate her credit card. Indeed, BPI Express Credit did not observe the prudence expected of banks whose business was imbued with public interest, hence, defendant is entitled to damages.

JOSE ESPINELI a.k.a. DANILO ESPINELI vs. PEOPLE OF THE PHILIPPINES, G.R. No. 179535, June 9, 2014, J. Del Castillo

Moral damages are mandatory without need of allegation and proof other than the death of the victim, owing to the fact of the commission of murder or homicide, such as when the victim was gunned down in front of his house. If medical and funeral expenses were substantiated, actual damages may be awarded. However, damages for loss of earning capacity may not be awarded absent documentary evidence except where the victim was either self-employed or a daily wage worker earning less than the minimum wage under current labor laws. The testimony of the wife of the victim, a Senior Desk Coordinator of a radio station, as to the latter’s monthly salary without any documentary evidence will not suffice to substantiate the claim.

BPI vs CA, G.R. NO. 136202, January 25, 2007

The bank froze and later unilaterally debited an amount from the account of A.A. Salazar Construction and Engineering Services without informing her that it had already done so, which caused plaintiff-appellee great damage and prejudice particularly when she had already issued checks drawn against the said account and as can be expected, the said checks bounced, thereby causing private respondent Salazar undue embarrassment and inflicting damage to her standing in the business community.

A depositor has the right to recover reasonable moral damages even if the bank’s negligence may not have been attended with malice and bad faith, if the former suffered mental anguish, serious anxiety, embarrassment and humiliation.

VILLA REY TRANSIT, INC., vs. THE COURT OF APPEALS, G.R. NO. L-25499 February 18, 1970

The trial court and the Court of Appeals, both found that the accident and the death of Policronio had been due to the negligence of the bus driver, for whom petitioner was liable under its contract of carriage with the deceased but the only issue raised in this appeal is the amount of damages recoverable by private respondents herein. The determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis and much is left to the discretion of the court considering the

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moral and material damages involved, and so it has been said that "(t)here can be no exact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by precise mathematical calculation, but the amount recoverable depends on the particular facts and circumstances of each case.

PEOPLE vs. EBAROLA, G.R. NO. L-69666, January 23, 1992

Appellant had been convicted of homicide and the trial court awarded the amount of P100,000.00 to the heirs of Manahan as indemnity for death. The indemnity for death must be reduced to P50,000.00 conformably with prevailing jurisprudence on the matter and aside from the ordinary indemnity for death appellant is obliged: (1) to compensate the heirs for the latter's loss of earning capacity; (2) to give support in the form of expenses for education to dependents of the deceased and (3) to pay the heirs for moral damages for the mental anguish suffered by them.

COJUANGCO vs. COURT OF APPEALS, G.R. NO. 119398. July 2, 1999

To hold public officers personally liable for moral and exemplary damages and for attorney’s fees for acts done in the performance of official functions, the plaintiff must prove that these officers exhibited acts characterized by evident bad faith, malice, or gross negligence, but even if their acts had not been so tainted, public officers may still be held liable for nominal damages if they had violated the plaintiff’s constitutional rights.

TEMPERATE DAMAGES

S.V. MORE PHARMA CORPORATION and ALBERTO A. SANTILLANA vs. DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL MUNDO; S.V. MORE PHARMA CORPORATION and ALBERTO A. SANTILLANA vs. DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL MUNDO, G.R. No. 200408; G.R. No. 200416, November 12, 2014, J. Perlas- Bernabe

The existence of contractual breach in this case revolves around the exclusive status of Drugmakers as the manufacturer of the subject pharmaceutical products. In particular, the Contract Manufacturing Agreement states that Drugmakers, being the exclusive manufacturer of the subject pharmaceutical products, had to first give its written consent before S.V. More could contract the services of another manufacturer. The agreements notwithstanding, S.V More, through the CMPP and absent the prior written consent of Drugmakers, contracted the services of Hizon Laboratories to manufacture some of the pharmaceutical products covered by the said contracts. Considering that Drugmakers palpably suffered some form of pecuniary loss resulting from S.V. More’s breach of contract, the Court deems it proper to, instead, award in their favor the sum of P100,000.00 in the form of temperate damages. This course of action is hinged on Article 2224 of the Civil Code.

PLENO vs. COURT OF APPEALS, G.R. NO. L-56505, May 9, 1988

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Temperate damages are included within the context of compensatory damages and in arriving at a reasonable level of temperate damages to be awarded, trial courts are guided by our ruling that: There are cases where from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is convinced that there has been such loss.

NOMINAL DAMAGES

ONE NETWORK RURAL BANK, INC., vs. DANILO G. BARIC, G.R. No. 193684, March 5, 2014, J. Castillo

Palado was the registered owner of real property with a building containing commercial spaces for lease who eventually transferred his title to Network Bank. Baric was a lessee therein, operating a barber shop on one of the commercial spaces. Baric demanded nominal damages against Network Bank after having been evicted from the building. The Supreme Court held he was not entitled to nominal damages. Under Article 2221 of the Civil Code, nominal damages may be awarded to a plaintiff whose right has been violated or invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered. Nominal damages are not for indemnification of loss suffered but for the vindication or recognition of a right violated or invaded. Network Bank did not violate any of Baric's rights; it was merely a purchaser or transferee of the property. If any, it was Palado who violated Baric’s rights.

LIBCAP MARKETING v BAQUIAL, G.R No. 192011, June 30, 2014. DEL CASTILLO

Unpaid overtime pay should not be included in the computation for the award of nominal damages. The Court did not agree with the CA’s finding that since respondent rendered overtime work for four years without receiving any overtime pay, she is entitled to P100,000.00 nominal damages. Nominal damages are awarded for the purpose of vindicating or recognizing a right and not for indemnifying a loss. Hence, the CA should have limited the justification of the award of nominal damages to petitioners’ violation of respondent’s right to due process in effecting her termination. It should not have considered the claimed unpaid overtime pay.

AREOLA vs. COURT OF APPEALS, G.R. NO. 95641 September 22, 1994

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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.

ATTORNEY’S FEES

WILLAWARE PRODUCTS CORPORATION vs. JESICHRIS MANUFACTURING CORPORATION, G.R. No. 195549, September 3, 2014, J. Peralta

This is a case where the plaintiff in a case of unfair competition under the Civil Code fails to satisfactorily prove that it had lost income. Since the award of Two Million Pesos (P2,000,000.00) in actual damages had been deleted and in its place Two Hundred Thousand Pesos (P200,000.00) in nominal damages is awarded, the attorney's fees should concomitantly be modified and lowered to Fifty Thousand Pesos (P50,000.00).

RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES, INC., et al., G.R. No. 204233, September 3, 2014, Acting C.J. Carpio

Attorneys’ fees is not available when the defendant employer is not guilty of bad faith. Thus, when the company-designated physician gave the seafarer a final, permanent partial disability grading beyond the 120-day period but before the 240 day maximum, then the latter is not entitled to permanent disability benefits. The employer is not in bad faith in refusing to give the seafarer full disability benefits; thus the award of attorney’s fees in favor of the seafarer is unwarranted.

AUGUSTO M. AQUINO, vs. HON. ISMAEL P. CASABAR, as Presiding Judge Regional Trial Court-Guimba, Nueva Ecija, Branch 33 and MA. ALA F. DOMINGO and MARGARITA IRENE F. DOMINGO, substituting Heirs of the deceased ANGEL T. DOMINGO, G.R. No. 191470, January 26, 2015, J. Peralta

The award that the court may grant to a successful party by way of attorney’s fee is an indemnity for damages sustained by him in prosecuting or defending his cause in court. It may be decreed in favor of the party, not his lawyer, in any of the instances authorized by law. On the other hand, the attorney’s fee which a client pays his counsel refers to the compensation for the latter’s services. The losing party against whom damages by way of attorney’s fees may be assessed is not bound by, nor is his liability dependent upon, the fee arrangement of the prevailing party with his lawyer. The amount stipulated in such fee arrangement may, however, be taken into account by the court in fixing the amount of counsel fees as an element of damages. The fee as an item of damages belongs to the party litigant and not to his lawyer. It forms part of his judgment recoveries against the losing party. The client and his lawyer may, however, agree that whatever attorney’s fee as an element of damages the court may award shall pertain to the lawyer as his compensation or as part thereof.

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ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January 14, 2015, C.J. Sereno

The award of attorney's fees is not proper because respondent failed to justify satisfactorily his claim, and both the trial and appellate courts failed to explicitly state in their respective decisions the rationale for the award. It is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsel's fees are not to be awarded every time a party wins a suit. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorney's fees. The same is true for the award of litigation expenses because respondent failed to satisfactorily justify his claim.

RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC. G.R. No. 204702. January 14, 2015, CARPIO

The trial court awarded attorney's fees to petitioner as it "deemed it just and reasonable" to do so, using the amount provided by petitioner on the witness stand. Undoubtedly, attorney's fees may be awarded if the trial court "deems it just and equitable." Such ground, however, must be fully elaborated in the body of the ruling. Its mere invocation, without more, negate the nature of attorney's fees as a form of actual damages.

JUAN CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. LEONEN

Petitioner is not entitled to attorney's fees and the costs of litigation since he did not have a clear right over the property in question. The Court of Appeals awarded attorney's fees and litigation costs on the erroneous premise that the contract between petitioner and respondent was perfected. Without a valid contract that stipulates his rights, petitioner risked litigation in order to determine if he has rights, and not to protect rights that he currently has. Hence, the award of attorney's fees and litigation costs was not properly justified.

BANK OF THE PHILIPPINE ISLANDS VS, AMADOR DOMINGO (DECEASED) SUBSTITUTED BU HIS CHILDREN, JOANN MOYA, ET AL. G.R. No. 169407. March 25, 2015, J. LEONARDO-DE CASTRO

It is basic that the claim for actual, moral and punitive damages as well as exemplary damages and attorney’s fees must each be independently identified and justified.

ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January 14, 2015, C.J. Sereno

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In awarding damages in libel cases, the court is given ample discretion to determine the amount, depending upon the facts of the particular case. Article 2219 of the Civil Code expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. However, “while no proof of pecuniary loss is necessary in order that moral damages may be awarded, x x x it is nevertheless essential that the claimant should satisfactorily show the existence of the factual basis of damages and its causal connection to defendant’s acts.” Considering that respondent sufficiently justified his claim for damages (i.e. he testified that he was “embarrassed by the said letters [and] ashamed to show his face in [sic] government offices”), the Court finds him entitled to moral and exemplary damages. However, the Court equitably reduce the amounts awarded because even though the letters were libellous, respondent has not suffered such grave or substantial damage to his reputation to warrant receiving P5,000,000 as moral damages and P100,000.00 as exemplary damages.

As to the award of attorney’s fees, it is an accepted doctrine that the award thereof as an item of damages is the exception rather than the rule, and counsel’s fees are not to be awarded every time a party wins a suit. The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture. In all events, the court must explicitly state in the text of the decision, and not only in the decretal portion thereof, the legal reason for the award of attorney’s fees.

RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC., G.R. No. 204702, January 14, 2015, J. Carpio

In a licensing contract, the essence of which is the transfer by the licensor, Honrado to the licensee, GMA Films, for a fee, of the exclusive right to telecast the films listed in the Agreement. Stipulations for payment of “commission” to the licensor is incongruous to the nature of such contracts unless the licensor merely acted as agent of the film owners. Nowhere in the Agreement, however, did the parties stipulate that Honrado signed the contract in such capacity. Being a stranger to such arrangements, they are not entitled to complain of any breach by Honrado of his contracts with the film owners than the film owners are for any breach by a stranger of its Agreement with aforementioned. The trial court awarded attorney’s fees to Honrado as it “deemed it just and reasonable” to do so, using the amount provided by Honrado on the witness stand (P100,000). Undoubtedly, attorney’s fees may be awarded if the trial court “deems it just and equitable.” Such ground, however, must be fully elaborated in the body of the ruling. Its mere invocation, without more, negates the nature of attorney’s fees as a form of actual damages.

INTEREST/COMPUTATION

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REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R. No. 211666, February 25, 2015, J. Peralta

Effectively, therefore, the debt incurred by the government on account of the taking of the property subject of an expropriation constitutes a forbearance which runs contrary to the trial court’s opinion that the same is in the nature of indemnity for damages calling for the application of Article 2209 of the Civil Code. Nevertheless, in line with the recent circular of the Monetary Board of the BSP-MB No. 799, Series of 2013, effective July 1, 2013, the prevailing rate of interest for loans or forbearance of money is six percent (6%) per annum, in the absence of an express contract as to such rate of interest.

The records of this case reveal that DPWH did not delay in its payment of just compensation as it had deposited the pertinent amount in full due to respondent on January 24, 2011, or four (4) months before the taking thereof, which was when the RTC ordered the issuance of a Writ of Possession and a Writ of Expropriation on May 27, 2011. The amount deposited was deemed by the trial court to be just, fair, and equitable, taking into account the well-established factors in assessing the value of land, such as its size, condition, location, tax declaration, and zonal valuation as determined by the BIR. Considering, therefore, the prompt payment by the DPWH of the full amount of just compensation as determined by the RTC, the Court finds that the imposition of interest thereon is unjustified and should be deleted.

FAJ CONSTRUCTION & DEVELOPMENT CORPORATION vs. SUSAN M. SAULOG, G.R. No. 200759, March 25, 2015, J. Del Castillo

FAJ Construction was found guilty of violating the construction agreement for its defective and incomplete work, delay, and for unjustified abandonment of the project. Susan argued that the issue of whether the trial and appellate courts correctly decided the amount of damages is a factual issue which is beyond the jurisdiction of this Court. The Supreme Court held that it is not a trier of facts and does not normally undertake the re-examination of the evidence presented by the contending parties during trial.

PEOPLE OF THE PHILIPPINES vs. BENJAMIN CASAS Y VINTULAN, G.R. No. 212565, February 25, 2015, J. Perlas-Bernabe

The formula for the computation of loss of earning capacity is as follows:

Net earning capacity = Life Expectancy x [Gross Annual Income - Living Expenses (50% of gross annual income)], where life expectancy = 2/3 (80 - the age of the deceased).

CIVIL LIABILITY

ANTONIO M. GARCIA vs. FERRO CHEMICALS, INC.,G.R. No. 172505, October 01, 2014, J. Leonen

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Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for certiorari before this court. Ramon Garcia, President of Ferro Chemicals, Inc., signed the verification and certification of non-forum shopping of the petition for certiorari. When the civil action for the recovery of civil liability ex delicto is instituted with the criminal action, whether by choice of private complainant (i.e., no reservation is made or no prior filing of a separate civil action) or as required by the law or rules, the case will be prosecuted under the direction and control of the public prosecutor. The civil action cannot proceed independently of the criminal case.

OTHER LAWS EXCLUDED FROM THE SYLLABUS

EUFROCINA NIEVES vs. ERNESTO DULDULAO and FELIPE PAJARILLO, G.R. No. 190276, April 2, 2014, J. Perlas-Bernabe

Agricultural lessees, being entitled to security of tenure, may be ejected from their landholding only on the grounds provided by law. These grounds — the existence of which is to be proven by the agricultural lessor in a particular case — are enumerated in Section 36 of Republic Act No. (RA) 3844, otherwise known as the “Agricultural Land Reform Code.” In this case, it was established that the agricultural lessees willfully and deliberately failed to pay the lease rentals when they fell due, which is one of the grounds for dispossession of their landholding as provided in said provision of law.

CHARLES BUMAGAT, et al. vs. REGALADO ARRIBAY, G.R. No. 194818, June 9, 2014, J. Del Castillo

A case involving agricultural land does not immediately qualify it as an agrarian dispute. The mere fact that the land is agricultural does not ipso facto make the possessor an agricultural lessee or tenant; there are conditions or requisites before he can qualify as an agricultural lessee or tenant, and the subject matter being agricultural land constitutes simply one condition. In order to qualify as an agrarian dispute, there must likewise exist a tenancy relation between the parties. Thus, when farmer-beneficiaries of PD 27 who are registered owners of agricultural lands filed a complaint for forcible entry against a person whose claim of ownership over the same parcels of land emanates from a donation by the heirs of the original owner, it is a civil case within the jurisdiction of the ordinary courts, as all the elements for an agrarian dispute are not present.

MARIANO JOSE, FELICISIMO JOSE, DECEASED, SUBSTITUTED BY HIS CHILDREN MARIANO JOSE, CAMILO JOSE, TIBURCIA JOSE, FERMINA JOSE, AND VICTORIA JOSE vs. ERNESTO M. NOVIDA, RODOLFO PALAYPAY, JR., ALEX M. BELARMINO, RODRIGO LIBED, LEONARDO L. LIBED, BERNARDO B. BELARMINO, BENJAMIN G. ACOSTA, MODESTO A. ORLANDA, WARLITO B. MEJIA, MAMERTO B. BELARMINO, MARCELO O. DELFIN AND HEIRS OF LUCINO A. ESTEBAN, REPRESENTED BY CRESENCIA M. VDA. ESTEBAN, G.R. No. 177374, July 2, 2014, J. Del Castillo

In Heirs of Lazaro Gallardo vs. Soliman, the DARAB has exclusive jurisdiction over cases involving the cancellation of registered EPs; the DAR Secretary, on the other hand, has

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exclusive jurisdiction over the issuance, recall or cancellation of EPs or Certificates of Land Ownership Awards that are not yet registered with the Register of Deeds.

Thus, since certificates of title have been issued in the respective names of the respondents as early as in 1990, the DAR Region I Director had no jurisdiction to cancel their titles; the same is true with respect to the DAR Secretary. Thus, their respective January 30, 1991 and August 22, 1995 Orders are null and void; consequently, respondents’ EPs and titles subsists, contrary to petitioner’s claim that they have been cancelled. Void judgments or orders have no legal and binding effect, force or efficacy for any purpose; in contemplation of law, they are nonexistent.

LAND BANK OF THE PHILIPPINES vs. JOSE T. LAJOM, represented by PORFIRIO RODRIGUEZ et al., G.R. No. 184982 & 185048, August 20, 2014, J. Perlas-Bernabe

Properties of the Lajoms were taken due to the Agrarian Reform Program. Just compensation was partially given. The Lajoms contested the computation of just compensation due to an alleged error in the applicable law. The Court ruled that the date of taking of the subject land for purposes of computing just compensation should be reckoned from the issuance dates of the emancipation patents. An emancipation patent constitutes the conclusive authority for the issuance of a Transfer Certificate of Title in the name of the grantee. It is from the issuance of an emancipation patent that the grantee can acquire the vested right of ownership in the landholding, subject to the payment of just compensation to the landowner.

RENATO L. DELFINO, SR. (Deceased), Represented by his Heirs, namely: GRACIA DELFINO, GREGORIO A. DELFINO; MA. ISABEL A. DELFINO, RENATO A. DELFINO, JR., MA. REGINA DELFINO ROSELLA, MA. GRACIA A. DELFINO, MARIANO A. DELFINO, MA. LUISA DELFINO GREGORIO and REV. FR. GABRIELA. DELFINO vs. AVELINO K. ANASAO and ANGEL K. ANASAO (Deceased and represented by his sole heir, SIXTO C. ANASAO), G.R. No. 197486, September 10, 2014, J. Villarama, Jr.

The right to choose the area to be retained, which shall be compact or contiguous, shall pertain to the landowner; Provided, however, That in case the area selected for retention by the landowner is tenanted, the tenant shall have the option to choose whether to remain therein or be a beneficiary in the same or another agricultural land with similar or comparable features. In case the tenant chooses to remain in the retained area, he shall be considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a leaseholder to the land retained by the landowner. The tenant must exercise this option within a period of one (1) year from the time the landowner manifests his choice of the area for retention.

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AUTOMAT REALTY AND DEVELOPMENT CORPORATION, LITO CECILIA AND LEONOR LIM vs. SPOUSES MARCIANO DELA CRUZ, SR. AND OFELIA DELA CRUZ, G.R. No. 192026, October 01, 2014, J. Leonen

When Automat asked the spouses to vacate the premises, the spouses refused to vacate unless they were paid compensation. They claimed “they were agricultural tenants [who] enjoyed security of tenure under the law.” The Court ruled that tenancy relationship cannot be presumed. The allegation of its existence must be proven by evidence, and working on another’s landholding raises no presumption of an agricultural tenancy. Consequently, the landowner’s consent to an agricultural tenancy relationship must be shown.

REMIGIO D. ESPIRITU and NOEL AGUSTIN vs. LUTGARDA TORRES DEL ROSARIO represented by SYLVIA R. ASPERILLA, G.R. No. 204964, October 15, 2014, J. Leonen

Lands classified as non-agricultural in zoning ordinances approved by the Housing and Land Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the coverage of the compulsory acquisition program of the Comprehensive Agrarian Reform Law. However, there has to be substantial evidence to prove that lands sought to be exempted fall within the non-agricultural classification. In this case del Rosario failed to prove with substantial evidence that the subject property is industrial property and as such is not sufficient to rebut the findings of both the Department of Agrarian Reform and the Office of the President.

SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIANvs.BPI FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO, G.R. No. 160107, October 22, 2014, J. Bersamin

It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on installment payments, not borrowers or mortgagors who obtained a housing loan to pay the costs of their purchase of real estate and used the real estate as security for their loan. The "financing of real estate in installment payments" referred to in Section 3, should be construed only as a mode of payment vis-à-vis the seller of the real estate, and excluded the concept of bank financing that was a type of loan. Accordingly, Sections 3, 4 and 5, supra, must be read as to grant certain rights only to defaulting buyers of real estate on installment, which rights are properly demandable only against the seller of real estate

The Sps. Sebastian’s insistence would have been correct if the monthly amortizations being paid to BPI Family arose from a sale or financing of real estate. In their case, however, the monthly amortizations represented the installment payments of a housing loan that BPI Family had extended to them as an employee’s benefit. The monthly amortizations they were liable for was derived from a loan transaction, not a sale transaction, thereby giving rise to a lender-borrower relationship between BPI Family and the petitioners.

MONCAYO INTEGRATED SMALL-SCALE MINERS ASSOCIATION, INC. (MISSMA) vs. SOUTHEAST MINDANAO GOLD MINING CORP. (SMGMC), BALITE INTEGRATED

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SMALL-SCALE MINING CORP., (BISSMICO) ET AL., G.R. No. 149638 (consolidated), December 10, 2014, J. Leonen

The issue in these two consolidated cases involves the tightly contested “Diwalwal Gold Rush Area” (DGRA) in Mt. Diwata, Mindanao, specifically, the 729-hectare portion excluded from SMGMC’s Mineral Production Sharing Agreement application (MPSA No. 128), and declared as People’s Small Scale Mining Area. SMGMC was the assignee of the original holder of a permit to explore (EP 133) covering 4,941 hectares of DGRA. Due to supervening events, [the Court] declares the petitions moot and academic.

IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No. 192270, January 26, 2015, J. del Castillo

While a tenancy relationship cannot be extinguished by the sale, alienation, or transfer of the legal possession of the landholding, the same may nevertheless be terminated due to circumstances more advantageous to the tenant and his/her family. The tenants having received an adequate consideration of P1.1 million, it can be reasonably concluded that the tenancy relationship between the previous owners and the spouses Andal had already been severed.

IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No. 192270, January 26, 2015, J. del Castillo

The fact alone of working on another’s landholding does not raise a presumption of the existence of agricultural tenancy. For tenancy to be proven, all indispensable elements must be established, the absence of one or more requisites will not make the alleged tenant a de facto one. These are: 1) the parties are the landowner and the tenant; 2) the subject is agricultural land; 3) there is consent by the landowner; 4) the purpose is agricultural production; 5) there is personal cultivation; and 6) there is sharing of the harvests.

RICARDO V. QUINTOSvs.DEPARTMENT OF AGRARIAN REFORM ADJUDICATION BOARD AND KANLURANG MINDORO FARMER'S COOPERATIVE, INC, G.R. No. 185838 February 10, 2014, J. PERLAS-BERNABE

GCFI contracted substantial loans with the PNB DBP which were secured by several real estate mortgages over GCFI properties. In 1981, Romualdez abandoned the management of the GCFI properties, after which DBP took over. Sometime during the same year, certain people started to plant palay on the subject property, eventually covering the riceland.

After the EDSA revolution, the possession and management of the GCFI properties were returned to GCFI. However, in July 1987, the properties were sequestered by the PCGG albeit, eventually cleared. In the meantime, PNB and DBP transferred their financial claims against GCFI to the Asset Privatization Trust (APT). KAMIFCI members were allegedly installed as tenants by APT, the "legal possessor" of the land. However there was no showing that APT was authorized by the property’s landowner, GCFI, to install tenants thereon.  Thus, since the consent of the standing landowner, GCFI, had not been secured by

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APT in this case, it had no authority to enter into any tenancy agreement with the KAMIFCI members. The right to hire a tenant is basically a personal right of a landowner, except as may be provided by law. Hence, the consent of the landowner should be secured prior to the installation of tenants.

DEPARTMENT OF AGRARIAN REFORM, now represented by OIC-SEC. NASSER PANGANDAMAN vs .TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION,ET AL./ GRACE B. FUA, ET AL. VS. TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION ET AL/ TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION ET AL. VS. REPUBLIC OF THE PHILIPPINES, ET AL. G.R. No. 1733866 174162 February 11, 2014, J. VILLARAMA JR.

Under Republic Act No. 6657, the Comprehensive Agrarian Reform Law, the Special Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the determination of just compensation to landowners, and the prosecution of all criminal offenses. The case at bar deals with acts of the DAR and the application, implementation, enforcement, or interpretation of RA 6657 - issues which do not involve the "special jurisdiction" of the RTC acting as a Special Agrarian Court. Hence, when the court a quo heard and decided the instant case, it did so without jurisdiction. Decisions, orders, awards or rulings of the DAR may be brought to the CA by certiorari and not with the RTC through an ordinary action for cancellation of title.

FRANCLER P. ONDE v THE OFFICE OF THE LOCAL CIVIL REGISTRATION OF LAS PIÑAS CITY, G.R No. 197174, September 10, 2014. J. VILLARAMA

Francler Onde filed a petition for correction of entries in his birth certificate with the RTC, impleading the LCR of Las Pinas City. The RTC held that a correction on his birth certificate that his parents were married on December 23, 1983 in Bicol to "not married" is a substantial correction affecting his legitimacy that requires adversarial proceedings.

The Supreme Court agreed. Said correction is substantial as it will affect his legitimacy and convert him from a legitimate child to an illegitimate one. Corrections of entries in the civil register including those on citizenship, legitimacy of paternity or filiation, or legitimacy of marriage, involve substantial alterations. Substantial errors in a civil registry may be corrected and the true facts established provided the parties aggrieved by the error avail themselves of the appropriate adversary proceedings.

SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045, July 2, 2014. J. DEL CASTILLO

One of the promissory notes issued by PNB to the spouses Silos contained a penalty clause where upon default, a penalty charge of 24% per annum based on the defaulted principal amount shall be imposed. PNB claims this penalty charge should be covered by the real estate mortgage along with the principal.

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The Court ruled that the penalty may not be included as part of the secured amount. An examination of the mortgage agreements reveals that nowhere is it stated that penalties are to be included in the secured amount. Having the attributes of a contract of adhesion as the principal credit documents, we must construe the mortgage contracts strictly, and against the party who drafted it.

BIGNA Y EX-IM PHILIPPINES, INC. vs. UNION BANK OF THE PIDLIPPINES/UNION BANK OF THE PIDLIPPINES vs. BIGNAY EX-IM PHILIPPINES, INC., G.R. No. 171590 171598 February 12, 2014, J. DEL CASTILLO

Eviction shall take place whenever by a final judgment based on a right prior to the sale or an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing purchased. In case eviction occurs, the vendee shall have the right to demand of the vendor, among others, the return of the value which the thing sold had at the time of the eviction, be it greater or less than the price of the sale; the expenses of the contract, if the vendee has paid them; and the damages and interests, and ornamental expenses, if the sale was made in bad faith.

REX M. TUPAL VS. JUDGE REMEGIO V. ROJO ETC., M. No. MTJ-14-1842 February 24, 2014, J. LEONEN

Municipal trial court judges cannot notarize affidavits of cohabitation of parties whose marriage they will solemnize.

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