Civil Law Juriprudence

University of Cebu College of Law UCLASS Bar Operations Civil Law Society
CIVIL LAW JURISPRUDENCE 2012

by:
Rey Cris Panugaling Marian Jane Alumbro Richel Carreon James Luego Leonardo Escorido Jr Stephanie Tan Ruth Restauro
Bar Operations 2012: Ace the Bar, Race the Car!

References: Law Textbooks, Codes, Reviewers, Notes, Compilations, Articles and Internet Sources
For Private and Personal Use Only
Civil Law Jurisprudence

University of Cebu College of Law UCLASS Bar Operations: Civil Law Society
SELECTED SUPREME COURT DECISIONS IN CIVIL LAW

FEBRUARY 2009 CASES
PAYMENT UNDER A PERFECTED CONTRACT OF SALE. Miguel Tan, doing business under the name and style of Manila Mandarin Marketing, was engaged in the business of selling electrical materials. From August 19 to November 26, 1997, Manila Mining Corporation (MMC) ordered and received various electrical materials from Tan valued at P2,347,880. MMC agreed to pay the purchase price within 30 days from delivery, or be charged interest of 18% per annum, and in case of suit to collect the same, to pay attorneys fees equal to 25% of the claim. MMC made partial payments in the amount of P464,636. Despite repeated demands, it failed to give the remaining balance of P1,883,244, which was covered by nine invoices. On September 3, 2001, Tan filed a collection suit against MMC at the Manila RTC. MMC contends that Tans claim for payment was premature inasmuch as the original invoices and purchase orders were not sent to its accounting department. Consequently, Tans claims were not verified and processed. MMC believes that mere delivery of the goods did not automatically give rise to its obligation to pay. It relied on Article 1545 of the Civil Code to justify its refusal to pay: ART. 1545. Where the oblig ation of either party to a contract of sale is subject to any condition which is not performed, such party may refuse to proceed with the contract or he may waive performance of the condition. The Supreme Court ruled that Article 1475 of the Civil Code provides the manner by which a contract of sale is perfected. The provision reads: ART. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. The Court held that the the purchase orders constituted accepted offers when Tan supplied the electrical materials to MMC. Hence, MMC cannot evade its obligation to pay by claiming lack of consent to the perfected contracts of sale. Manila Mining Corporation vs. Miguel Tan Doing Business Under the name and style of Manila Mandarin Marketing, G.R. No. 171702, February 12, 2009. REVOCATION OF SPECIAL POWER OF ATTORNEY BY PARTNER. A partner can be held civilly liable to his partner for revoking, in bad faith, the Special Power of Attorney given to the latter and for abandoning the partnership. Zenaida G. Mendoza Vs. Engr. Eduardo Paule, et al./Manuel Dela Cruz Vs. Engr. Eduardo Paule, et al., G.R. No. 175885/G.R. No. 176271. February 13, 2009. SALE BY FAITH. NON-OWNER; POSSESSION IN GOOD
The Supreme Court held that the deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was not the owner of the land she sold to petitioners, and the one-half northern portion of such land was owned by respondents. Being an absolute nullity, the deed is subject to attack anytime, in accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not prescribe. When there is a showing of such illegality, the property registered is deemed to be simply held in trust for the real owner by the person in whose name it is registered, and the former then has the right to sue for the reconveyance of the property. An action for reconveyance based on a void contract is imprescriptible. As long as the land wrongfully registered under the Torrens system is still in the name of the person who caused such registration, an action in personam will lie to compel him to reconvey the property to the real owner. In this case, title to the property is in the name of petitioner Rogelia; thus, the trial court correctly ordered the reconveyance of the subject land to respondents. Petitioners contend that they are possessors in good faith, thus, the award of damages should not have been imposed. They further contend that under Article 544, a possessor in good faith is entitled to the fruits received before the possession is legally interrupted; thus, if indeed petitioners are jointly and severally liable to

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. For marine vessels, Article 619 of the Code of Commerce provides that the ship captain is liable for the cargo from the time it is turned over to him at the dock or afloat alongside the vessel at the port of loading, until he delivers it on the shore or on the discharging wharf at the port of unloading, unless agreed otherwise. In Standard Oil Co. of New York v. Lopez Castelo, the Court interpreted the ship captains liability as ultimately that of the shipowner by regarding the captain as the representative of the ship owner. Lastly, Section 2 of the COGSA provides that under every contract of carriage of goods by sea, the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge of such goods, shall be subject to the responsibilities and liabilities and entitled to the rights and immunities set forth in the Act. Section 3 (2) thereof then states that among the carriers responsibilities are to properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried. Philippines First Insurance Co., Inc. vs. Wallem Phils. Shipping, Inc., et al., G.R. No. 165647, March 26, 2009. nes, adoption proceedings became easier. On March 12, 2009, the President signed into law Republic Act (RA) No. 9523, which amends RA 8552 (the Domestic Adoption Act of 1998), RA 8043 (the Inter-Country Adoption Act of 1995), and Presidential Decree (PD) 603 (the Child and Youth Welfare Code) The law makes the process of adopting a child administrative in nature. In lieu of a court order, the Department of Social Welfare and Development (DSWD) may issue a certification that a child is legally available for adoption. Under the law, the DSWD certification is the primary evidence that a child is legally available in a domestic adoption proceeding or in an inter-country proceeding. In case of abandoned or neglected children, the issuance of the DSWD certification is preceded by the filing of a petition, which must show the circumstances surrounding the neglect or abandonment of the child. The petition is filed by the head of an accredited or licensed child-caring or child-placement agency or a social welfare development officer. In case of a child whose parent or legal guardian knowingly and willingly relinquished parental authority to the DSWD or other accredited child caring agency, the DSWD Secretary will issue the DSWD certification within 3 months from the execution by the parent(s) of a Deed of Voluntary Commitment. The parent(s) may recover legal custody and parental authority over the child within three months from the execution of the Deed of Voluntary Commitment, provided the parent(s) can show that they are in a position to adequately provide for the needs of the child. It is interesting to note that the DSWD has three months from the execution of the Deed of Voluntary Commitment to issue respondents for the produce of the subject land, the liability should be reckoned only for 1991 and not 1984. The Supreme Court found partial merit in the argument. Article 528 of the Civil Code provides that possession acquired in good faith does not lose this character, except in a case and from the moment facts exist which show that the possessor is not unaware that he possesses the thing improperly or wrongfully. Possession in good faith ceases from the moment defects in the title are made known to the possessors, by extraneous evidence or by suit for recovery of the property by the true owner. Whatever may be the cause or the fact from which it can be deduced that the possessor has knowledge of the defects of his title or mode of acquisition, it must be considered sufficient to show bad faith. Such interruption takes place upon service of summons. Article 544 of the Civil Code provides that a possessor in good faith is entitled to the fruits only so long as his possession is not legally interrupted. Records show that petitioners received a summons together with respondents complaint on August 5, 1991; thus, petitioners good faith ceased on the day they received the summons. Consequently, petitioners should pay respondents 10 cavans of palay per annum beginning August 5, 1991 instead of 1984. Daclag vs. Macahilig, G.R. No. 159578, February 18, 2009. CONTINGENT FEE CONTRACTS. Contingent fee contracts are subject to the supervision and close scrutiny of the court in order that clients may be protected from unjust charges. The amount of contingent fees agreed upon by the parties is subject to the stipulation that counsel will be paid for his legal services only if the suit or litigation prospers. A much higher compensation is allowed as contingent fees because of the risk that the lawyer may get nothing if the suit fails. The Supreme Court found nothing illegal in the contingent fee contract between Atty. Go and Evangelinas husband and held that the Court of Appeals committed no error of law when it awarded the attorneys fees of Atty. Go and allowed him to receive an equivalent of 39% of the monetary award. Masmud vs. NLRC, G.R. No. 183385, February 13, 2009.
MARCH 2009 CASES

COMMON CARRIERS; LIABILITY. 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,

MORTGAGE; POSSESSION AFTER FORECLOSURE. A stipulation allowing the mortgagee to take actual or constructive possession of a mortgaged property upon foreclosure is valid. In Agricultural and Industrial Bank v. Tambunting, the Supreme Court explained: A stipulation authorizing the mortgagee, for the purpose stated therein specified, to take possession of the mortgaged premises upon the foreclosure of a mortgage is not repugnant [to either Article 2088 or Article 2137]. On the contrary, such a stipulation is in consonance or analogous to the provisions of Article [2132], et seq. of the Civil Code regarding antichresis and the provision of the Rules of Court regarding the appointment of a receiver as a convenient and feasible means of preserving and administering the property in litigation. Development Bank of the Philippines vs. Spouses Jesus and Anacorita Doyon, G.R. No. 167238. March 25, 2009. MORTGAGE; REDEMPTION PERIOD. The one-year redemption period should be counted not from the date of foreclosure sale, but from the time the certificate of sale was registered with the Register of Deeds. In this case, therefore, the one-year redemption period should be reckoned from the time the certificate of sale was registered on 27 October 1971. The law speaks of one year period within which to exercise redemption. Under Article 13 of the New Civil Code, a year is understood to be of three hundred sixty-five (365) days. Applying said article, the period of one year within which to redeem the properties mortgaged to Banco Filipino by the Spouses Bautista shall be 365 days from 27 October 1971. Thus, excluding the first day and counting from 28 October 1971, and bearing in mind that 1972 was a leap year, the redemption of the properties in question from Banco Filipino could only be made until 26 October 1972. National Investment and Development Corp. vs. Sps. Francisco and Basilisa Bautista , G.R. No. 150388. March 13, 2009. MORTGAGE; OWNERSHIP OF MORTGAGED PROPERTY. For a person to validly constitute a mortgage on real estate, he must be the absolute owner thereof as required by Article 2085 of the New Civil Code. In other words, the mortgagor must be the owner; otherwise, the mortgage is void. Del Rosario was NOT the owner of the 5,546-sq.- meter portion of the 6,368-sq.-meter lot, so she could not have mortgaged the same to PCIB. There being no valid mortgage of the said portion to PCIB, it could not be subjected to foreclosure; it could not be sold at the public auction; it could not be bought by PCIB as the highest bidder at the public auction; and it could not be assigned by PCIB to NIDC. National Investment and Development Corp. vs. Sps. Francisco and Basilisa Bautista, G.R. No. 150388. March 13, 2009. the DSWD certification and the parent(s) have the same period within which to change their mind. It would have been better for the law to provide that the DSWD Secretary may issue the certification if the parent(s) did not change their mind after the threemonth period. In case of an involuntarily committed child, the DSWD Secretary can issue the DSWD certification within three months from the involuntary commitment. What is the remedy against a decision of the DSWD Secretary? Section 5 of the law provides that: The decision of the Secretary shall be appealable to the Court of Appeals within five (5) days from receipt of the decision by the petitioner; otherwise, the same shall be final and executory. The appeal process in Section 5 clearly applies to decisions of the DSWD Secretary on petitions involving abandoned or neglected children. The law is not clear with respect to the appeal process for decisions involving voluntarily or involuntarily committed children, i.e., whether the decision of the DSWD Secretary should be appealed to the Office of the President or whether a judicial remedy is immediately available. FAMILY HOME. A family home is generally exempt from execution, provided it was duly constituted as such. It is likewise a given that the family home must be constituted on property owned by the persons constituting it. As pointed out in Kelley, Jr. v. Planters Products, Inc.: [T]he family home must be part of the properties of the absolute community or the conjugal partnership, or of the exclusive properties of either spouse with the latters consent, or on the property of the unmarried head of the family. In other words, the family home must be established on the properties of (a) the absolute community, or (b) the conjugal partnership, or (c) the exclusive property of either spouse with the consent of the other. It cannot be established on property held in co-ownership with third persons. However, it can be established partly on community property, or conjugal property and partly on the exclusive property of either spouse with the consent of the latter. If constituted by an unmarried head of a family, where there is no communal or conjugal property existing, it can be constituted only on his or her own property. Therein lies the fatal flaw in the postulate of petitioners. For all their arguments to the contrary, the stark and immutable fact is that the property on which their alleged family home stands is owned by respondents and the question of ownership had been long laid to rest with the finality of the appellate courts judgment in CA-G.R. CV No. 55207. Thus, petitioners continued stay on the subject land is only by mere tolerance of respondents. Simeon Cabang, et al. vs. Mr. & Mrs. Guillermo Basay , G.R. No. 180587, March 20, 2009.

Banatao, et al. and Marciano Carag, et al., G.R. No. 149221, April 7, 2009.
APRIL 2009 CASES

ACCRETION. Article 457 of the Civil Code requires the concurrence of the following requisites for accretion: (1) that the deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river; and (3) that the land where accretion takes place is adjacent to the banks of rivers. Thus, it is not enough to be a riparian owner in order to enjoy the benefits of accretion. One who claims the right of accretion must show by preponderant evidence that he has met all the conditions provided by law. New Regent Sources, Inc. vs. Teofilo Victor Tanjuatco, Jr. and Vicente Cuevas, G.R. No. 168800, April 16, 2009. COMPENSATION; REQUISITES. Under Article 1279 (1), it is necessary for compensation that the obligors be bound principally, and that he be at the same time a principal creditor of the other. There is, concededly, no mutual creditor-debtor relation between APT and UPSUMCO. However, we recognize the concept of conventional compensation, defined as occurring when the parties agree to compensate their mutual obligations even if some requisite is lacking, such as that provided in Article 1282. It is intended to eliminate or overcome obstacles which prevent ipso jure extinguishment of their obligations. Legal compensation takes place by operation of law when all the requisites are present, as opposed to conventional compensation which takes place when the parties agree to compensate their mutual obligations even in the absence of some requisites. The only requisites of conventional compensation are (1) that each of the parties can dispose of the credit he seeks to compensate, and (2) that they agree to the mutual extinguishment of their credits. United Planters Sugar Milling Co., Inc. (UPSUMCO) vs. The Honorable Court of Appeals, et al., G.R. No. 126890, April 2, 2009. COMPROMISE AGREEMENT; BINDING EFFECT. A compromise agreement, as a contract, is binding only upon the parties to the compromise, and not upon nonparties. This is the doctrine of relativity of contracts. 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. Otherwise stated, a court judgment made solely on the basis of a compromise agreement binds only the parties to the compromise, and cannot bind a party litigant who did not take part in the compromise agreement. Philippine National Bank Vs. Marcelino
COMPROMISE AGREEMENT; VALIDITY. The Compromise Agreement is in order and is not contrary to law, morals, good customs and public policy. Judicial approval thereof is in order. Guillermo Perciano vs. Heirs of Procopio Tumbali represented by Lydia Tumbali, G.R. No. 177346, April 21, 2009. CONTRACTS; CONSIDERATION. The Deed of Sale which states receipt of which in full I hereby acknowledge to my entire satisfaction is an acknowledgment receipt in itself. Moreover, the presumption that a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no consideration. Serafin Naranja, et al. vs. The Honorable Court of Appeals, et al.,G.R. No. 160132, April 17, 2009. CONTRACTS; SIMULATED CONTRACT. The late registration of the Deed of Sale and Roques execution of the second deed of sale in favor of Dema-ala did not mean that the contract was simulated. We are convinced with the explanation given by respondents witnesses that the deed of sale was not immediately registered because Belardo did not have the money to pay for the fees. This explanation is, in fact, plausible considering that Belardo could barely support herself and her brother, Roque. As for the second deed of sale, Dema-ala, herself, attested before the trial court that she let Roque sign the second deed of sale because the title to the properties were still in his name. Serafin Naranja, et al. vs. The Honorable Court of Appeals, et al., G.R. No. 160132, April 17, 2009. CONTRACTS; UNDUE INFLUENCE. Petitioners allege that Belardo unduly influenced Roque, who was already physically weak and senile at that time, into executing the deed of sale. Belardo allegedly took advantage of the fact that Roque was living in her house and was dependent on her for support. There is undue influence when a person takes improper advantage of his power over the will of another, depriving the latter of a reasonable freedom of choice. One who alleges any defect, or the lack of consent to a contract by reason of fraud or undue influence, must establish by full, clear and convincing evidence, such specific acts that vitiated the partys consent; otherwise, the latters presumed consent to the contract prevails. For undue influence to be present, the influence exerted must have so overpowered or subjugated the mind of a contracting party as to destroy his free agency, making him express the will of another rather than his own. Petitioners adduced no proof that Roque had lost control of his mental faculties at the time of the sale. Undue

DAMAGES; EXEMPLARY. Exemplary or corrective damages are imposed by way of example or correction for the public good in addition to the moral, temperate, liquidated or compensatory damages. While the amount of exemplary damages need not be proved, respondent must show proof of entitlement to moral, temperate or compensatory damages before the Court may consider awarding exemplary damages. No such damages were prayed for, however, hence, the Court finds no basis to grant the prayer for exemplary damages. De La Salle University, et al. Vs. De La Salle University Employees Association (DLSUEA-NAFTEU), G.R. No. 177283, April 7, 2009. DAMAGES; MORAL DAMAGES. Petitioners testimonies reveal the intense suff ering which they continue to experience as a result of Georges death. It is not difficult to comprehend that the sudden and unexpected loss of a husband and father would cause mental anguish and serious anxiety in the wife and children he left behind. Moral damages in the amount of P100,000.00 are proper for Georges death. The Heirs of George Y. Poe Vs. Malayan Insurance Co. Inc., G.R. No. 156302, April 7, 2009. DAMAGES; MORAL DAMAGES. Article 19 of the Civil Code provides that every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Article 21 of the Code states that any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage. And, lastly, Article 24 requires that in all contractual, property or other relations, when one of the parties is at a disadvantage on account of his moral dependence, ignorance, indigence, mental weakness, tender age or other handicap, the courts must be vigilant for his protection. Clearly, Rajab, Becmen and White Falcons acts and omissions are against public policy because they undermine and subvert the interest and general welfare of our OFWs abroad, who are entitled to full protection under the law. They set an awful example of how foreign employers and recruitment agencies should treat and act with respect to their distressed employees and workers abroad. Their shabby and callous treatment of Jasmins case; their uncaring attitude; their unjustified failure and refusal to assist in the determination of the true circumstances surrounding her mysterious death, and instead finding satisfaction in the unreasonable insistence that she committed suicide just so they can conveniently avoid pecuniary liability; placing their own corporate interests above of the welfare of their employees all these are contrary to morals, good customs and public policy, and constitute taking advantage of the poor employee and her familys ignorance, helplessness, influence is not to be inferred from age, sickness, or debility of body, if sufficient intelligence remains. The evidence presented pertained more to Roques physical condition rather than his mental condition. On the contrary, Atty. Sanicas, the notary public, attested that Roque was very healthy and mentally sound and sharp at the time of the execution of the deed of sale. Atty. Sanicas said that Roque also told him that he was a Law graduate. Serafin Naranja, et al. vs. The Honorable Court of Appeals, et al., G.R. No. 160132, April 17, 2009. DAMAGES; ACTUAL DAMAGES. Article 2206 of the Civil Code provides that in addition to the indemnity for death caused by a crime or quasidelict, the defendant shall be liable for the loss of th e earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter, x x x. Compensation of this nature is awarded not for loss of earnings but for loss of capacity to earn money. Hence, it is proper that compensation for loss of earning capacity should be awarded to the petitioners in accordance with the formula established in decided cases for computing net earning capacity, to wit: The formula for the computation of unearned income is: Net Earning Capacity = life expectancy x (gross annual income -reasonable and necessary living expenses). Life expectancy is determined in accordance with the formula: 2 / 3 x [80 - age of deceased at the time of death] Jurisprudence provides that the first factor, i.e., life expectancy, shall be computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial of Combined Experience Table of Mortality. The Heirs of George Y. Poe Vs. Malayan Insurance Co. Inc ., G.R. No. 156302, April 7, 2009.
DAMAGES; ACTUAL DAMAGES. Settled is the rule that only receipted expenses can be the basis of actual damages arising from funeral expenditures. All the prosecution presented was a receipt from the funeral parlor amounting to P15,000. Since the receipted expenses of the victims family was less than P25,000, temperate damages in the said amount can be awarded in lieu of actual damages. Accordingly, the heirs of the victim are not entitled to actual damages but to temperate damages in the amount of P25,000.as moral damages are mandatory in cases of murder (without need to allege and prove such damages), appellant is likewise ordered to indemnify the heirs of the victim P50,000. People of the Philippines vs. Alejo Obligado y Magdaraog , G.R. No. 171735, April 16, 2009.

validity; they follow the general rule on contracts that they may be entered into in whatever form, provided all the essential requisites for their validity are present. The requisites of a valid contract of sale under Article 1458 of the Civil Code are: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. The failure of the parties to specify with absolute clarity the object of a contract by including its technical description is of no moment. What is important is that there is, in fact, an object that is determinate or at least determinable, as subject of the contract of sale. The form of a deed of sale provided in Section 127 of Act No. 496 is only a suggested form. It is not a mandatory form that must be strictly followed by the parties to a contract. In the instant case, the deed of sale clearly identifies the subject properties by indicating their respective lot numbers, lot areas, and the certificate of title covering them. Resort can always be made to the technical description as stated in the certificates of title covering the two properties. Serafin Naranja, et al. vs. The Honorable Court of Appeals, et al., G.R. No. 160132, April 17, 2009. EASEMENT. The owner of the dominant estate cannot violate any of the following prescribed restrictions on its rights on the servient estate, to wit: (1) it can only exercise rights necessary for the use of the easement; (2) it cannot use the easement except for the benefit of the immovable originally contemplated; (3) it cannot exercise the easement in any other manner than that previously established; (4) it cannot construct anything on it which is not necessary for the use and preservation of the easement; (5) it cannot alter or make the easement more burdensome; (6) it must notify the servient estate owner of its intention to make necessary works on the servient estate; and (7) it should choose the most convenient time and manner to build said works so as to cause the least convenience to the owner of the servient estate. Any violation of the above constitutes impairment of the easement. Golderes Realty Corp. Vs. Cypress Gardens etc., G.R. No. 171072, April 7, 2009. INTEREST; LEGAL RATE. The claim in this case is one for reimbursement of the sum of money paid by FGU Insurance Corporation to RAGC. This is not one for forbearance of money, goods or credit. Forbearance in the context of the usury law is a contractual obligation of lender or creditor to refrain, during a given period of time, from requiring the borrower or debtor to repay a loan or debt then due and payable. Thus the interest rate should be as it is hereby fixed at 6%. Moreover, the interest rate of 6% shall be computed from the date of filing of the complaint, i.e., April 10, 1995. This is in accordance with the ruling that where the demand cannot be established with reasonable certainty, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the indigence and lack of power and resources to seek the truth and obtain justice for the death of a loved one.. The grant of moral damages to the employee by reason of misconduct on the part of the employer is sanctioned by Article 2219 of the Civil Code, which allows recovery of such damages in actions referred to in Article 21. Becmen Services Exporter and Promotion, Inc. vs. Sps. Simplicio and Mila Cuaresma, et al./Sps. Simplicio and Mila Cuaresma Vs. White Falcon Services, Inc., et al., G.R. No. 182978-79/G.R. No. 174298-99, April 7, 2009. DAMAGES; MURDER. When death occurs due to a crime, the following damages may be awarded: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; (4) exemplary damages; and (5) temperate damages. Civil indemnity is mandatory and granted to the heirs of the victim without need of proof other than the commission of the crime. ]Under the prevailing jurisprudence, the award of P50,000.00 as civil indemnity for each count of murder, to be paid to the heirs of the victims, is proper. As to actual damages, the heirs of the victims of murder are not entitled thereto because said damages were not duly proved with a reasonable degree of certainty. The award of P25,000.00 as temperate damages in homicide or murder cases is proper when no evidence of burial and funeral expenses is presented in the trial court. Under Article 2224 of the Civil Code, temperate damages may be recovered, as it cannot be denied that the heirs of the victims suffered pecuniary loss although the exact amount was not proved. Thus, this Court awards P25,000.00 as temperate damages for each count of murder. Anent moral damages, the same are mandatory in cases of murder and homicide, without need of allegation and proof other than the death of the victim. The award by the Court of Appeals of P50,000.00 as moral damages for each count of murder, is proper. The Court of Appeals awarded exemplary damages in the amount of P75,000.00 for each count of murder. Such award, following current jurisprudence, must be reduced to P25,000.00 since the qualifying circumstance of treachery was firmly established. People of the Philippines vs. Rolly Gidoc @ Bayeng, G.R. No. 185162. April 24, 2009 DEED OF SALE; TECHNICAL DESCRIPTION. The Court does not agree with petitioners contention that a deed of sale must contain a technical description of the subject property in order to be valid. Petitioners anchor their theory on Section 127 of Act No. 496, which provides a sample form of a deed of sale that includes, in particular, a technical description of the subject property. To be valid, a contract of sale need not contain a technical description of the subject property. Contracts of sale of real property have no prescribed form for their

(a) Patrimonial property is private property of the government. The person acquires ownership of patrimonial property by prescription under the Civil Code is entitled to secure registration thereof under Section 14(2) of the Property Registration Decree. (b) There are two kinds of prescription by which patrimonial property may be acquired, one ordinary and other extraordinary. Under ordinary acquisitive prescription, a person acquires ownership of a patrimonial property through possession for at least ten (10) years, in good faith and with just title. Under extraordinary acquisitive prescription, a persons uninterrupted adverse possession of patrimonial property for at least thirty (30) years, regardless of good faith or just title, ripens into ownership. Heirs of Malabanan vs. Republic of the Philippines, G.R. No. 179987, April 29, 2009. NEGLIGENCE; MEDICAL MALPRACTICE SUITS. For lack of a specific law geared towards the type of negligence committed by members of the medical profession, such claim for damages is almost always anchored on the alleged violation of Article 2176 of the Civil Code. In medical negligence cases, also called medical malpractice suits, there exist a physician-patient relationship between the doctor and the victim. But just like any other proceeding for damages, four essential (4) elements i.e., (1) duty; (2) breach; (3) injury; and (4) proximate causation, must be established by the plaintiff/s. All the four (4) elements must co-exist in order to find the physician negligent and, thus, liable for damages. When a patient engages the services of a physician, a physician-patient relationship is generated. And in accepting a case, the physician, for all intents and purposes, represents that he has the needed training and skill possessed by physicians and surgeons practicing in the same field; and that he will employ such training, care, and skill in the treatment of the patient. Thus, in treating his patient, a physician is under a duty to [the former] to exercise that degree of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases. Stated otherwise, the physician has the duty to use at least the same level of care that any other reasonably competent physician would use to treat the condition under similar circumstances. This standard level of care, skill and diligence is a matter best addressed by expert medical testimony, because the standard of care in a medical malpractice case is a matter peculiarly within the knowledge of experts in the field. There is breach of duty of care, skill and diligence, or the improper performance of such duty, by the attending computation of legal interest shall, in any case, be on the amount finally adjudged. International Container Terminal Services, Inc. vs. FGU Insurance Corporation, et al., G.R. No. 161539, April 24, 2009. LACHES. Laches has been defined as the failure of or neglect for an unreasonable and unexplained length of time to do that which by exercising due diligence, could or should have been done earlier, or to assert a right within reasonable time, warranting a presumption that the party entitled thereto has either abandoned it or declined to assert it. Thus, the doctrine of laches presumes that the party guilty of negligence had the opportunity to do what should have been done, but failed to do so. In the instant case, when Esquivel and Talens filed with the RTC their application for registration of the subject property on 5 March 1993, 28 years had passed since the execution by Hermogenes of the Quitclaim covering the subject property in favor of Hizon on 29 November 1965; and 25 years elapsed from the execution by Hizon of the Deed of Absolute Sale of the subject property in favor of Esquivel and Talens on 26 August 1968. During these periods, without providing any reasons therefor, neither Hizon nor Esquivel and Talens took possession of the subject property or exercised in any other way their rights over the same. Marcelino Lopez, et al. vs. Hon. Court of Appeals, et al./ Noel Rubber and Development Corp, et al. vs. Jose Esquivel, Jr., et al., G.R. No. 168734/G.R. No. 170621, April 24, 2009. MORTGAGE; HOMESTEAD PATENT. The mortgages cannot but be void ab initio. . . The rationale for the prohibition, reiterated in a line of cases, first laid down in Pascua v. Talens states that x x x homestead laws were designed to distribute disposable agricultural lots of the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent intention the State prohibits the sale or encumbrance of the homestead (Section 116, now Section 118) within five years after the grant of the patent. x x x. It aims to preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously given to him. In the present case, the annotation of the mortgage liens occurred only months after the date of the issuance of the homestead patents. Property; prescription. In complying with Section 14(2) of the Property Registration Decree, consider that under the Civil Code, prescription is recognized as a mode of acquiring ownership of patrimonial property. However, public domain lands become only patrimonial property not only with a declaration that these are alienable or disposable. There must also be an express government manifestation that the property is already patrimonial or no longer retained for public service or the development of national wealth, under Article 422 of the Civil Code. And only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run.

stating the manner of disposal thereof if there was a final judgment in favor of the defendant or the action was disposed of terminating finally all rights of the plaintiff over the property in litigation. Isabelita Cunanan, Carolyn Cunanan and Carmencita F. Nemoto vs. Jumping Jap Trading Corporation, represented by Reuben M. Protacio, G.R. No. 173834, April 24, 2009. PROPERTY; POSSESSION. In connection with Section 14(1) of the Property Registration Decree, Section 48(b) of the Public Land Act recognizes and confirms that those who by themselves or through their predecessors in interest have been in open, continuous, exclusive, and notorious possession and occupation of alienable and disposable lands of the public domain, under a bona fide claim of acquisition of ownership, since June 12, 1945 have acquired ownership of, and registrable title to, such lands based on the length and quality of their possession. (a) Since Section 48(b) merely requires possession since 12 June 1945 and does not require that the lands should have been alienable and disposable during the entire period of possession, the possessor is entitled to secure judicial confirmation of his title thereto as soon as it is declared alienable and disposable, subject to the timeframe imposed by Section 47 of the Public Land Act. (b) The right to register granted under Section 48(b) of the Public Land Act is further confirmed by Section 14(1) of the Property Registration Decree. Heirs of Malabanan vs. Republic of the Philippines, G.R. No. 179987, April 29, 2009. RECONSTITUTION. The following must be present for an order for reconstitution to issue: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an interest therein; (d) that the certificate of title was in force at the time it was lost and destroyed; and (e) that the description, area and boundaries of the property are substantially the same as those contained in the lost or destroyed certificate of title. Repubic of the Philippines vs. Macaria L. Tuastumban, G.R. No. 173210, April 24, 2009. SALE; INNOCENT PURCHASER FOR VALUE. An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another persons claim. Philippine National Bank Vs. Marcelino Banatao, et al. and Marciano Carag, et al., G.R. No. 149221, April 7, 2009. physician when the patient is injured in body or in health [and this] constitutes the actionable malpractice. Proof of such breach must likewise rest upon the testimony of an expert witness that the treatment accorded to the patient failed to meet the standard level of care, skill and diligence which physicians in the same general neighborhood and in the same general line of practice ordinarily possess and exercise in like cases. Even so, proof of breach of duty on the part of the attending physician is insufficient, for there must be a causal connection between said breach and the resulting injury sustained by the patient. Put in another way, in order that there may be a recovery for an injury, it must be shown that the injury for which recovery is sought must be the legitimate consequence of the wrong done; the connection between the negligence and the injury must be a direct and natural sequence of events, unbroken by intervening efficient causes; that is, the negligence must be the proximate cause of the injury. And the proximate cause of an injury is that cause, which, in the natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. Just as with the elements of duty and breach of the same, in order to establish the proximate cause [of the injury] by a preponderance of the evidence in a medical malpractice action, [the patient] must similarly use expert testimony, because the question of whether the alleged professional negligence caused [the patients] injury is generally one for specialized expert knowledge beyond the ken of the average layperson; using the specialized knowledge and training of his field, the experts role is to present to the [court] a realistic assessment of the likelihood that [the physicians] alleged negligence caused [the patients] injury. Peter Paul Patrick Lucas, et al. vs. Dr. Prospero Ma. C. Tuao, G.R. No. 178763, April 21, 2009. PROPERTY; LIS PENDENS. A notice of lis pendens is an announcement to the whole world that a particular real property is in litigation, serving as a warning that one who acquires an interest over said property does so at his own risk, or that he gambles on the result of the litigation over the said property. The filing of a notice of lis pendens charges all strangers with a notice of the particular litigation referred to therein and, therefore, any right they may thereafter acquire on the property is subject to the eventuality of the suit. Such announcement is founded upon public policy and necessity, the purpose of which is to keep the properties in litigation within the power of the court until the litigation is terminated and to prevent the defeat of the judgment or decree by subsequent alienation. Under Section 77 of Presidential Decree (P.D.) No. 1529,a notice of lis pendens shall be deemed cancelled only upon the registration of a certificate of the clerk of court in which the action or proceeding was pending

It is true that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the face of 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 or mortgagee has knowledge of a defect or the lack of title in his vendor or mortgagor 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 or mortgagee for value nor a purchaser or mortgagee in good faith. In the present case, the fact that the orders dismissing the case and directing the cancellation of the notice of lis pendens was not yet final and executory should have impelled the Cunanans to be wary of further developments, as in fact plaintiff filed a motion for reconsideration and the RTC granted the same. In short, the Cunanans knowledge of the existence of a pending litigation involving the disputed property makes them mortgagees in bad faith. Hence, respondent could still recover the property from the Cunanans. Isabelita Cunanan, Carolyn Cunanan and Carmencita F. Nemoto vs. Jumping Jap Trading Corporation, represented by Reuben M. Protacio, G.R. No. 173834, April 24, 2009. ALIAS NAME. As a rule, a person is required to use the name with which he or she was registered at birth in the office of the local civil registry. Generally, only a select group of persons like Love Marie Ongpauco (a.k.a. Heart Evangelista), Phylbert Angellie Ranollo Pagestrom (a.k.a. Bea Alonzo), Angelica Colmenares (a.k.a. Angel Locsin) and Joseph Ejercito (a.k.a. Joseph Estrada) can use a pseudonym. Commonwealth Act (C.A.) No. 142 provides: Section 1. Except as a pseudonym solely for literary, cinema, television, radio or other entertainment purposes and in athletic events where the use of pseudonym is a normally accepted practice, no person shall use any name different from the one with which he was registered at birth in the office of the local civil registry or with which he was baptized for the first time, or in case of an alien, with which he was registered in the bureau of immigration upon entry; or such substitute name as may have been authorized by a competent court: Provided, That persons whose births have not been registered in any local civil registry and who have not been baptized, have one year from the approval of this act SALE; INNOCENT PURCHASER FOR VALUE. The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances that ought to put a prudent person on inquiry. Good faith consists in the belief of the possessors that the persons from whom they received the thing are its rightful owners who could convey their title. Good faith, while always presumed in the absence of proof to the contrary, requires this well-founded belief. Spouses Juanito R. Villamil etc. et al. Vs. Lazaro Cruz-Villarosa, G.R. No. 177187, April 7, 2009. SALE; TORRENS TITLE. Well-settled is the rule that 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. Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right that may subsequently defeat his right thereto. 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. Spouses Juanito R. Villamil etc. et al. Vs. Lazaro Cruz-Villarosa, G.R. No. 177187, April 7, 2009. SALE; TORRENS TITLE. A forged or fraudulent document may become the root of a valid title if the property has already been transferred from the name of the owner to that of the forger. This doctrine serves to emphasize that a person who deals with registered property in good faith will acquire good title from a forger and be absolutely protected by a Torrens title. Having made the necessary inquiries and having found the title to be authentic, Villarosa need not go beyond the certificate of title. When dealing with land that is registered and titled, as in this case, buyers are not required by the law to inquire further than what the Torrens certificate of title indicates on its face. He examined the transferors title, which was then under the name of Spouses Tolentino. He did not have to scrutinize each and every title and previous owners of the property preceding Tolentino. Spouses Juanito R. Villamil etc. et al. Vs. Lazaro Cruz-Villarosa, G.R. No. 177187, April 7, 2009. SALE; TORRENS TITLE.
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the intent to publicly use the alias must be manifest. Given the foregoing, the Supreme Court ruled that the prosecutions evidence that former President Estrada used the name Jose Velarde when he opened bank trust accounts in the presence of PCIB officers Clarissa Ocampo and Manuel Curato, Malacanang Chief of Staff Aprodicio Lacquian and Estrada lawyer-friend Fernando Chua was not a public use of the alias. According to the Supreme Court: Our close reading of Ursua particularly, the requirement that there be intention by the user to be culpable and the historical reasons we cited above tells us that the required publicity in the use of alias is more than mere communication to a third person; the use of the alias, to be considered public, must be made openly, or in an open manner or place, or to cause it to become generally known. In order to be held liable for a violation of CA No. 142, the user of the alias must have held himself out as a person who shall publicly be known under that other name. In other words, the intent to publicly use the alias must be manifest. To our mind, the presence of Lacquian and Chua when Estrada signed as Jose Velarde and opened Trust Account No. C-163 does not necessarily indicate his intention to be publicly known henceforth as Jose Velarde. In relation to Estrada, Lacquian and Chua were not part of the public who had no access to Estradas privacy and to the confidential matters that transpired in Malacaan where he sat as President; Lacquian was the Chief of Staff with whom he shared matters of the highest and strictest confidence, while Chua was a lawyer-friend bound by his oath of office and ties of friendship to keep and maintain the privacy and secrecy of his affairs. Thus, Estrada could not be said to have intended his signing as Jose Velarde to be for public consumption by the fact alone that Lacquian and Chua were also inside the room at that time. The same holds true for Estradas alleged representations with Ortaliza and Dichavez, assuming the evidence for these representations to be admissible. All of Estradas representations to these people were made in privacy and in secrecy, with no iota of intention of publicity. The Supreme Court also stated that the nature of the transaction on which the indictment rests affords Estrada a reasonable expectation of privacy, as the alleged criminal act related to the opening of a trust account a transaction that Republic Act (R.A.) No. 1405 considers absolutely confidential in nature: We have consistently ruled that bank deposits under R.A. No. 1405 (the Secrecy of Bank Deposits Law) are statutorily protected or recognized zones of privacy. Given the private nature of Estradas act of signing the documents as Jose Velarde related to the opening of the trust account, the People cannot claim that there was within which to register their names in the civil registry of their residence. The name shall comprise the patronymic name and one or two surnames. Section 2. Any person desiring to use an alias shall apply for authority therefor in proceedings like those legally provided to obtain judicial authority for a change of name and no person shall be allowed to secure such judicial authority for more than one alias. The petition for an alias shall set forth the persons baptismal and family name and the name recorded in the civil registry, if different, his immigrants name, if an alien, and his pseudonym, if he has such names other than his original or real name, specifying the reason or reasons for the desired alias. The judicial authority for the use of alias, the Christian name and the alien immigrants name shall be recorded in the proper local civil registry, and no person shall use any name or names other than his original or real name unless the same is or are duly recorded in the proper local civil registry. According to the Supreme Court, CA 142 is violated by the use of an alias. In People of the Philippines vs. Joseph Ejercito , G.R. No. 164368-69, April 2, 2009, the Supreme Court, citing the earlier case of Ursua vs. Court of Appeals, defined an alias as: a name or names used by a person or intended to be used by him publicly and habitually usually in business transactions in addition to his real name by which he is registered at birth or baptized the first time or substitute name authorized by a competent authority. There must be, in the words of Ursua, a sign or indication that the user intends to be known by this name (the alias) in addition to his real name from that day forth [for the use of alias to] fall within the prohibition contained in C.A. No. 142 as amended. The person must use the alias publicly and habitually. In relation to the public use of an alias, the Supreme Court explained: . . . the required publicity in the use of alias is more than mere communication to a third person; the use of the alias, to be considered public, must be made openly, or in an open manner or place, or to cause it to become generally known. In order to be held liable for a violation of CA No. 142, the user of the alias must have held himself out as a person who shall publicly be known under that other name. In other words,
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of human will; (b) the event that constituted the caso fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid; (c) the occurrence must have been such as to render it impossible for the debtors to fulfill their obligation in a normal manner, and; (d) the obligor must have been free from any participation in the aggravation of the resulting injury to the creditor. A fortuitous event may either be an act of God, or natural occurrences such as floods or typhoons, or an act of man such as riots, strikes or wars. However, when the loss is found to be partly the result of a persons participation whether by active intervention, neglect or failure to act the whole occurrence is humanized and removed from the rules applicable to a fortuitous event. Asset Privatization Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009. CONTRACTS; VOIDABLE CONTRACT. In order that mistake may invalidate consent and constitute a ground for annulment of contract based on Article 1331, the mistake must be material as to go to the essence of the contract; that without such mistake, the agreement would not have been made. The effect of error must be determined largely by its influence upon the party. If the party would have entered into the contract even if he had knowledge of the true fact, then the error does not vitiate consent. In the case at bar, the relief sought by respondent was for a refund and he continued to occupy the subject properties after he found out that the same were smaller in area. All these show that respondent did not consider the error in size significant enough to vitiate the contract. Hence, the Court of Appeals erred in affirming the Boards decision to grant rescission based on Articles 1330 and 1331 of the Civil Code. Cebu Windland Development Corporation vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009. CONTRACTS; NOVATION. Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place of the old one, or by subrogating a third person to the rights of the creditor. In order for novation to take place, the concurrence of the following requisites are indispensable: 1. There must be a previous valid obligation; already a public use of alias when Ocampo and Curato witnessed the signing. We need not even consider here the impact of the obligations imposed by R.A. No.1405 on the bank officers; what is essentially significant is the privacy situation that is necessarily implied in these kinds of transactions. This statutorily guaranteed privacy and secrecy effectively negate a conclusion that the transaction was done publicly or with the intent to use the alias publicly. The Supreme Court noted the enactment of R.A. No. 9160 (the Anti-Money Laundering Act), which prohibits the opening of accounts under fictitious names. However, the Supreme Court stated that AntiMoney Laundering Act, which was enacted after Estradas alleged use of an alias in opening the trust account, cannot be applied to Estrada: The enactment of R.A. No.9160, on the other hand, is a significant development only because it clearly manifests that prior to its enactment, numbered accounts or anonymous accounts were permitted banking transactions, whether they be allowed by law or by a mere banking regulation. To be sure, an indictment against Estrada using this relatively recent law cannot be maintained without violating the constitutional prohibition on the enactment and use of ex post facto laws. . . . R.A. No. 9160, as a law of recent vintage in relation to the indictment against Estrada, cannot be a source or an influencing factor in his indictment. The Supreme Court pointed out that it did not decide whether Estradas use of an alias when he occupied the highest executive position in the land was valid and legal; according to the Supreme Court, it simply determined whether he may be made liable for the offense charged based on the evidence presented.
MAY 2009 CASES

CONTRACTS; FORCE MAJEURE. The matter of fortuitous events is governed by Art. 1174 of the Civil Code which provides that except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires assumption of risk, no person shall be responsible for those events which could not be foreseen, or which though foreseen, were inevitable. The elements of a fortuitous event are: (a) the cause of the unforeseen and unexpected occurrence, must have been independent
2. There must be an agreement of the parties concerned to a new contract; 3. There must be the extinguishment of the old contract; and 4. There must be the validity of the new contract.
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In Solid Homes, Inc. v. Spouses Tan, the Court ordered instead the payment of the current market value of the subdivision lot after it was established that the subdivision owner could no longer comply with its obligation to develop the subdivision property in accordance with the approved plans and advertisements. Vicenta Cantemprate vs. CRS Realty Development Corp., et al., G.R. No. 171399, May 8, 2009. DAMAGES; ATTORNEYS FEES. The award of attorneys fees is the exception rather than the general rule, and counsels fees are not to be awarded every time a party wins a suit. The discretion of the court to award attorneys 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 state the reason for the award of attorneys fees. None of the circumstances justifying an award of attorneys fees enumerated under Art. 2008 of the Civil Code are present, or have been proven in this case. Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. Mate, G.R. No. 154427, May 8, 2009. Damages; death and physical injuries caused by quasidelict. Civil indemnity for death caused by a quasidelict is pegged at P50,000. Moral damages in the amount of P50,000 is also awarded to the heirs of the deceased taking into consideration the pain and anguish they suffered. As to funeral and burial expenses, the court can only award such amount as are supported by proper receipts. As to hospitalization expenses, only substantiated and proven expenses, or those that appear to have been genuinely incurred in connection with the hospitalization of the victims will be recognized in court. Moral damages may be recovered in quasi-delicts causing physical injuries. However, in accordance with prevailing jurisprudence, the Supreme Court reduced the award of moral damages from P50,000 to P30,000 each since they only suffered physical injuries brought about by the collision. In quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. While the amount of exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. Under Article 2208 of the Civil Code, attorneys fees may be recovered when, as in this case, exemplary damages are awarded. Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009. DAMAGES; DELAY IN APPROVAL OR DISAPPROVAL OF CREDIT CARD PURCHASE. Novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement of the parties, or by their acts that are too clear and unmistakable. The extinguishment of the old obligation by the new one is a necessary element of novation, which may be effected either expressly or impliedly. The contracting parties must incontrovertibly disclose that their object in executing the new contract is to extinguish the old one. Upon the other hand, no specific form is required for an implied novation, and all that is prescribed by law would be an incompatibility between the two contracts. The test of incompatibility is whether the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first. Corollarily, changes that breed incompatibility must be essential in nature and not merely accidental. The incompatibility must take place in any of the essential elements of the obligation, such as its object, cause or principal conditions thereof; otherwise, the change would be merely modificatory in nature and insufficient to extinguish the original obligation. Transpacific Battery Corp., et al. vs. Security Bank and Trust Company / Melchor G. Say and Josephine G. Say vs. Security Bank and Trust Company, G.R. No. 173565/G.R. No. 173607. May 8, 2009 CONTRACTS; OBLIGATORY FORCE. An agreement entered into between the Republic of the Philippines and the Kingdom of Kuwait does not have the effect of terminating an agreement between Philippine Airlines and Kuwaiti Airlines. Philippine Airlines is no longer a government owned and controlled corporation. An agreement executed by the executive branch of government cannot ipso facto render legal rights of private persons obviated. Kuwait Airways Corporation vs. Philippine Airlines, Inc., G.R. No. 156087, May 8, 2009. CONTRACTS; RESCISSION. Rescission creates the obligation to return the object of the contract. It can be carried out only when the one who demands rescission can return whatever he may be obliged to restore. Rescission abrogates the contract from its inception and requires a mutual restitution of the benefits received. Thus, respondents Casal, Salvador and CRS Realty must return the benefits received from the contract to sell if they cannot comply with their obligation to deliver the corresponding certificates of title to petitioners. In the event that respondents Casal, Salvador and CRS Realty cannot deliver clean certificates of title to petitioners, the latter must be reimbursed not only of the purchase price of the subdivision lots sold to them but also of the incremental value arising from the appreciation of the lots. Thus, petitioners are entitled to actual damages equivalent to the current market value of the subdivision lots.
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that the filing of an unfounded suit does not automatically entitle the defendant to moral damages. Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. Mate, G.R. No. 154427, May 8, 2009. DAMAGES; QUASI-DELICT. Article 2176 of the Civil Code provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relations between the parties, is called a quasi-delict. To sustain a claim based on quasi-delict, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of defendant; and (c) connection of cause and effect between the fault or negligence of defendant and the damage incurred by the plaintiff. Sofia Guillang represented by Susan GuillangCabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009. DILIGENCE; STANDARD. Article 1173 of the Civil Code is very clear that if the law or contract does not state the degree of diligence which is to be observed in the performance of an obligation then that which is expected of a good father of a family or ordinary diligence shall be required. Mindanao Terminal, a stevedoring company which was charged with the loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau, had acted merely as a labor provider in the case at bar. There is no specific provision of law that imposes a higher degree of diligence than ordinary diligence for a stevedoring company or one who is charged only with the loading and stowing of cargoes. It was neither alleged nor proven by Phoenix and McGee that Mindanao Terminal was bound by contractual stipulation to observe a higher degree of diligence than that required of a good father of a family. Hence, the Supreme Court concluded that following Article 1173, Mindanao Terminal was required to observe ordinary diligence only in loading and stowing the cargoes of Del Monte Produce aboard M/V Mistrau. Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc., G.R. No. 162467, May 8, 2009. DUE DILIGENCE; STEVEDORE. There is a distinction between an arrastre and a stevedore. Arrastre, a Spanish word which refers to hauling of cargo, comprehends the handling of cargo on the wharf or between the establishment of the consignee or shipper and the ships tackle. The responsibility of the arrastre operator lasts until the delivery of the cargo to the consignee. The service is usually performed by longshoremen. On the other hand, stevedoring refers to the handling of the cargo in the holds of the vessel or between the ships tackle and the holds of the vessel. The responsibility of the stevedore ends upon the loading and stowing of the cargo in the vessel. It is not disputed that Moral damages avail in cases of breach of contract where the defendant acted fraudulently or in bad faith, and the court should find that under the circumstances, such damages are due. The findings of the trial court are ample in establishing the bad faith and unjustified neglect of respondent, attributable in particu lar to the dillydallying of respondents Manila credit authorizer, Edgardo Jaurique. It should be emphasized that the reason why petitioner is entitled to damages is not simply because respondent incurred delay, but because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages are remunerative. Moral damages do not avail to soothe the plaints of the simply impatient, so this decision should not be cause for relief for those who time the length of their credit card transactions with a stopwatch. There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts, however, it must be commensurate to the loss or injury suffered. Polo S. Pantaleon vs. American Express International, Inc., G.R. No. 174269, May 8, 2009. DAMAGES; EXEMPLARY DAMAGES. The award of moral damages is proper when the following circumstances concur: (1) there is an injury, whether physical, mental or psychological, clearly sustained by the claimant; (2) there is a culpable act or omission factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219. Here, the Supreme Court ruled that it cannot be concluded that the suit for annulment of sale that the petitioner filed was completely without basis and one that was filed simply to vex or harass the respondents. On the contrary, from the surrounding factual and legal circumstances, it appears that the petitioner was at the point of losing his home and was motivated by the desire to prevent the loss, rather than by any intent to vex or harass the respondents; he had a legal basis, although a disputable one, to back up his claim. If he failed at all to pursue his case, it was not due to lack of merit; the case was lost because nobody pursued the case after his son and attorney-in-fact, who was handling the case for him, died. Zacarias Delos Santos vs. Consuelo B. Papa and Maria C. Mate, G.R. No. 154427, May 8, 2009. DAMAGES; MORAL DAMAGES. Moral damages are only awarded if the basis therefor is duly established. In the present case, the ground the respondents invoked and failed to establish is malicious prosecution. Crystal v. Bank of the Philippine Islands is instructive on this point, as it tells us that the law never intended to impose a penalty on the right to litigate so
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guidelines in the interpretation and application of Article 36 of the Family Code, to wit: (1) The burden of proof to show the nullity of the marriage belongs to the plaintiff. Any doubt should be resolved in favor of the existence and continuation of the marriage and against its dissolution and nullity. This is rooted in the fact that both our Constitution and our laws cherish the validity of marriage and unity of the family. Thus, our Constitution devotes an entire Article on the Family, recognizing it as the foundation of the nation. It decrees marriage as legally inviolable, the reby protecting it from dissolution at the whim of the parties. Both the family and marriage are to be protected by the state. The Family Code echoes this constitutional edict on marriage and the family and emphasizes their permanence, inviolability and solidarity. (2) The root cause of the psychological incapacity must be: (a) medically or clinically identified, (b) alleged in the complaint, (c) sufficiently proven by experts and (d) clearly explained in the decision. Article 36 of the Family Code requires that the incapacity must be psychological not physical, although its manifestations and/or symptoms may be physical. The evidence must convince the court that the parties, or one of them, was mentally or psychically ill to such an extent that the person could not have known the obligations he was assuming, or knowing them, could not have given valid assumption thereof. Although no example of such incapacity need be given here so as not to limit the application of the provision under the principle of ejusdem generis (Salita v. Magtolis, 233 SCRA 100, 108), nevertheless such root cause must be identified as a psychological illness and its incapacitating nature fully explained. Expert evidence may be given by qualified psychiatrists and clinical psychologists. (3) The incapacity must be proven to be existing at the time of the celebration of the marriage. The evidence must show that the illness was existing when the parties exchanged their I dos. The manifestation of the illness need not be perceivable at such time, but the illness itself must have attached at such moment, or prior thereto. (4) Such incapacity must also be shown to be medically or clinically permanent or incurable. Such incurability may be absolute or even relative only in regard to the other spouse, not necessarily absolutely against everyone of the same sex. Furthermore, such incapacity must be relevant to the assumption of marriage obligations, not necessarily to those not related to marriage, like the exercise of a profession or employment in a job. Hence, a pediatrician may be effective in diagnosing illnesses of children and prescribing medicine to cure them but may not be psychologically capacitated to procreate, bear and raise his/her own children as an essential obligation of marriage. Mindanao Terminal was performing purely stevedoring function while the private respondent in theSumma case was performing arrastre function. Mindanao Terminal and Brokerage Service, Inc. vs. Phoenix Assurance Company of New York/MCGEE & Co., Inc., G.R. No. 162467, May 8, 2009. PERSONS; ADOPTION. As a rule, the husband and the wife must jointly adopt. Mere consent of the husband to the wifes petition to adopt it not sufficient. Petitioner, being married at the time the petitions for adoption were filed, should have jointly filed the petitions with her husband. The filing of a case for dissolution of the marriage between petitioner and her husband is of no moment. It is not equivalent to a decree of dissolution of marriage. Until and unless there is a judicial decree for the dissolution of the marriage between petitioner and her husband, the marriage still subsists. That being the case, joint adoption by the husband and the wife is required. The Supreme Court reiterated its ruling that since, at the time the petitions for adoption were filed, petitioner was married, joint adoption is mandatory. In Re: Petition for adoption of Michelle P. Lim, Monina P. Lim / In Re: Petition for adoption of Michael Jude P. Lim, Monina P. Lim, G.R. Nos. 16899293, May 21, 2009. PERSONS; EFFECTS OF ADOPTION. Adoption has the following effects: (1) sever all legal ties between the biological parent(s) and the adoptee, except when the biological parent is the spouse of the adopter; (2) deem the adoptee as a legitimate child of the adopter; and (3) give adopter and adoptee reciprocal rights and obligations arising from the relationship of parent and child, including but not limited to: (i) the right of the adopter to choose the name the child is to be known; and (ii) the right of the adopter and adoptee to be legal and compulsory heirs of each other. Therefore, even if emancipation terminates parental authority, the adoptee is still considered a legitimate child of the adopter with all the rights of a legitimate child such as: (1) to bear the surname of the father and the mother; (2) to receive support from their parents; and (3) to be entitled to the legitime and other successional rights. Conversely, the adoptive parents shall, with respect to the adopted child, enjoy all the benefits to which biological parents are entitled such as support and successional rights. In Re: Petition for adoption of Michelle P. Lim, Monina P. Lim / In Re: Petition for adoption of Michael Jude P. Lim, Monina P. Lim, G.R. Nos. 168992-93, May 21, 2009. PERSONS; PSYCHOLOGICAL INCAPACITY. The Supreme Court laid down in Republic of the Philippines v. Court of Appeals and Molina stringent
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Prescription and laches will run only from the time the express trust is repudiated. The Supreme Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them. It is hornbook doctrine that laches is a creation of equity and its application is controlled by equitable considerations. Lachescannot be used to defeat justice or perpetrate fraud and injustice. Neither should its application be used to prevent the rightful owners of a property from recovering what has been fraudulently registered in the name of another. The equitable remedy of laches is, therefore, unavailing in this case. Heirs of Tranquilino Labiste, et al. vs. Heirs of Jose Labiste, et al., G.R. No. 162033, May 8, 2009. QUASI-DELICT; NEGLIGENCE. Negligence is defined as the failure to observe for the protection of the interest of another person that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury. In Picart v. Smith, we held that the test of negligence is whether the defendant in doing the alleged negligent act used that reasonable care and caution which an ordinary person would have used in the same situation. Sofia Guillang represented by Susan GuillangCabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009. QUASI-DELICT; PRESUMPTION OF NEGLIGENCE. Under Article 2185 of the Civil Code, unless there is proof to the contrary, a person driving a vehicle is presumed negligent if at the time of the mishap, he was violating any traffic regulation. In this case, the report showed that the truck, while making the U-turn, failed to signal, a violation of traffic rules. The police records also stated that, after the collision, Bedania escaped and abandoned the petitioners and his truck. This is another violation of a traffic regulation. Therefore, the presumption arises (5) Such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Thus, mild characteriological peculiarities, mood changes, occasional emotional outbursts cannot be accepted as root causes. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, there is a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage. (6) The essential marital obligations must be those embraced by Articles 68 up to 71 of the Family Code as regards the husband and wife as well as Articles 220, 221 and 225 of the same Code in regard to parents and their children. Such non-complied marital obligation(s) must also be stated in the petition, proven by evidence and included in the text of the decision. (7) Interpretations given by the National Appellate Matrimonial Tribunal of the Catholic Church in the Philippines, while not controlling or decisive, should be given great respect by our courts. In Santos v. Court of Appeals, the Court declared that psychological incapacity must be characterized by (a) gravity, (b) juridical antecedence, and (c) incurability. It should refer to no less than a mental, not physical, incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. The intendment of the law has been to confine the meaning of psychological incapacity to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. However, in more recent jurisprudence, the Supreme Court observed that notwithstanding the guidelines laid down in Molina, there is a need to emphasize other perspectives as well which should govern the disposition of petitions for declaration of nullity under Article 36. Each case must be judged, not on the basis of a priori assumptions, predilections or generalizations but according to its own facts. In regard to psychological incapacity as a ground for annulment of marriage, it is trite to say that no case is on all fours with another case. The trial judge must take pains in examining the factual milieu and the appellate court must, as much as possible, avoid substituting its own judgment for that of the trial court. With the advent of Te v. Te, the Supreme Court encourages a reexamination of jurisprudential trends on the interpretation of Article 36 although there has been no major deviation or paradigm shift from the Molina doctrine. Marietta C. Azcueta vs. Republic of the Philippines and the CA , G.R. No. 180668, May 26, 2009. PRESCRIPTION; EXPRESS TRUST.
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alty Development Corp., et al., G.R. No. 171399, May 8, 2009. SALES; CONSTRUCTIVE DELIVERY. The ownership of a thing sold is transferred to the vendee upon the actual or constructive delivery thereof. The thing sold shall be understood as delivered when it is placed in the control and possession of the vendee. As a general rule, when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. With regard to movable property, its delivery may also be made by the delivery of the keys of the place or depository where it is stored or kept. In order for the execution of a public instrument to effect tradition, the purchaser must be placed in control of the thing sold. However, the execution of a public instrument only gives rise to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected because of a legal impediment. It is necessary that the vendor shall have control over the thing sold that, at the moment of sale, its material delivery could have been made. Thus, a person who does not have actual possession of the thing sold cannot transfer constructive possession by the execution and delivery of a public instrument. In this case, there was no constructive delivery of the machinery and equipment upon the execution of the deed of absolute sale or upon the issuance of the gate pass since it was not petitioner but Creative Lines which had actual possession of the property. The presumption of constructive delivery is not applicable as it has to yield to the reality that the purchaser was not placed in possession and control of the property. Asset Privatization Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009. SALES; DELIVERY. Delivery as used in the Law on Sales refers to the concurrent transfer of two things: (1) possession and (2) ownership. This is the rationale behind the jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated by the reality that the vendee actually failed to obtain material possession of the land subject of the sale. In the same vein, if the vendee is placed in actual possession of the property, but by agreement of the parties ownership of the same is retained by the vendor until the vendee has fully paid the price, the mere transfer of the possession of the property subject of the sale is not the delivery contemplated in the Law on Sales or as used in Article 1543 of the Civil Code. that Bedania was negligent at the time of the mishap. Sofia Guillang represented by Susan GuillangCabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009. QUASI-DELICT; PROXIMATE CAUSE. Proximate cause is that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which the result would not have occurred. The cause of the collision is traceable to the negligent act of Bedania for if the U-turn was executed with the proper precaution, the mishap in all probability would not have happened. The sudden U-turn of the truck without signal lights posed a serious risk to oncoming motorists. Bedania failed to prevent or minimize that risk. The trucks sudden U-turn triggered a series of events that led to the collision and, ultimately, to the death of Antero and the injuries of petitioners. Sofia Guillang represented by Susan Guillang-Cabatbat, et al. vs. Rodolfo Bedania, et al., G.R. No. 162987, May 21, 2009. SALES; AS IS WHERE IS. The phrase as-is where-is basis pertains solely to the physical condition of the thing sold, not to its legal situation. It is merely descriptive of the state of the thing sold. Thus, the as-is where-is basis merely describes the actual state and location of the machinery and equipment sold by petitioner to respondent. The depiction does not alter petitioners responsibility to deliver the property to respondent. Asset Privatization Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009. SALES; CONTRACTS TO SELL. The only requisite for a contract of sale or contract to sell to exist in law is the meeting of minds upon the thing which is the object of the contract and the price, including the manner the price is to be paid by the vendee. Under Article 1458 of the New Civil Code, in a contract of sale, whether absolute or conditional, one of the contracting parties obliges himself to transfer the ownership of and deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. In the instant case, the failure by respondent CRS Realty to obtain a license to sell the subdivision lots does not render the sales void on that ground alone especially that the parties have impliedly admitted that there was already a meeting of the minds as to the subject of the sale and price of the contract. The absence of the license to sell only subjects respondent CRS Realty and its officers civilly and criminally liable for the said violation under Presidential Decree (P.D.) No. 957 and related rules and regulations. The absence of the license to sell does not affect the validity of the already perfected contract of sale between petitioners and respondent CRS Realty. Vicenta Cantemprate vs. CRS Re
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contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area agreed upon, the vendee may oblige the vendor to deliver all that may be stated in the contract or demand for the proportionate reduction of the purchase price if delivery is not possible. If the vendor delivers more than the area stated in the contract, the vendee has the option to accept only the amount agreed upon or to accept the whole area, provided he pays for the additional area at the contract rate. In some instances, a sale of an immovable may be made for a lump sum and not at a rate per unit. The parties agree on a stated purchase price for an immovable the area of which may be declared based on an estimate or where both the area and boundaries are stated. In the case where the area of the immovable is stated in the contract based on an estimate, the actual area delivered may not measure up exactly with the area stated in the contract. According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price although there be a greater or lesser area or number than that stated in the contract. However, the discrepancy must not be substantial. A vendee of land, when sold in gross or with the description more or less with reference to its area, does not thereby ipso facto take all risk of quantity in the land. The use of more or less or similar words in designating quantity covers only a reasonable excess or deficiency. Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail. What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object. Cebu Windland Development Corporation vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009. SALES; WARRANTY. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is the object of the sale. Ownership of the thing sold is acquired by the vendee from the moment it its delivered to him in In the case at bar, it appears that respondent was already placed in possession of the subject properties. However, it is crystal clear that the deeds of absolute sale were still to be executed by the parties upon payment of the last installment. This fact shows that ownership of the said properties was withheld by petitioner. Following case law, it is evident that the parties did not intend to immediately transfer ownership of the subject properties until full payment and the execution of the deeds of absolute sale. Consequently, there is no delivery to speak of in this case since what was transferred was possession only and not ownership of the subject properties. Cebu Windland Development Corporation vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009. SALES; PRESCRIPTION. The transfer of possession of the subject properties on October 10, 1996 to respondent cannot be considered as delivery within the purview of Article 1543 of the Civil Code. It follows that since there has been no transfer of ownership of the subject properties since the deeds of absolute sale have not yet been executed by the parties, the action filed by respondent has not prescribed. Cebu Windland Development Corporation vs. Ong Siao Hua, G.R. No. 173215, May 21, 2009. SALES; DOUBLE SALE. Where it is an immovable property that is the subject of a double sale, ownership shall be transferred: (1) to the person acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.The requirement of the law then is two-fold: acquisition in good faith and registration in good faith. In this case there was a first sale by Eugenia Reyes to Agaton Pagaduan and a second sale by Eugenia Reyes to the respondents. For a second buyer like the respondents to successfully invoke the second paragraph, Article 1544 of the Civil Code, it must possess good faith from the time of the sale in its favor until the registration of the same. Respondents sorely failed to meet this requirement of good faith since they had actual knowledge of Eugenias prior sale of the southern portion property to the petitioners, a fact antithetical to good faith. This cannot be denied by respondents since in the same deed of sale that Eugenia sold them the northern portion to the respondents for P1,500.00, Eugenia also sold the southern portion of the land to Agaton Pagaduan for P500.00. Angel M. Pagaduan vs. Spouses Estanislao & Fe Posadas Ocuma, G.R. No. 176308, May 8, 2009. SALES; IMMOVABLE. Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per unit area. In a unit price
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circumstances surrounding the case. Traders Royal Bank vs. Cuison Lumber Co., Inc., Josefa Jerodias Vda. Cuison, G.R. No. 174286, June 5, 2009. CONTRACT; SIMULATED CONTRACTS. Given the factual antecedents of this case, it is obvious that the sugar crop loans were relatively simulated contracts and that both parties intended to be bound thereby. There are two juridical acts involved in relative simulation the ostensible act and the hidden act. The ostensible act is the contract that the parties pretend to have executed while the hidden act is the true agreement between the parties. To determine the enforceability of the actual agreement between the parties, we must discern whether the concealed or hidden act is lawful and the essential requisites of a valid contract are present. In this case, the juridical act which binds the parties are the loan and mortgage contracts, i.e., petitioners procurement of a loan from respondent. Although these loan and mortgage contracts were concealed and made to appear as sugar crop loans to make them fall within the purview of the Rural Banks Act, all the essential requisites of a contract were present. However, the purpose thereof is illicit, intended to circumvent the Rural Banks Act requirement in the procurement of loans. Consequently, while the parties intended to be bound thereby, the agreement is void and inexistent under Article 1409 of the Civil Code. The parties, being in pari delicto, cannot recover what they each has given by virtue of the contract. Neither can the parties demand performance of the contract. No remedy or affirmative relief can be afforded the parties because of their presumptive knowledge that the transaction was tainted with illegality. The courts will not aid either party to an illegal agreement and will instead leave the parties where they find them. Consequently, the parties having no cause of action against the other based on a void contract, and possession and ownership of the subject property being ultimately vested in respondent, the latter can enter into a separate and distinct contract for its alienation. Petitioners recognized respondents ownership of the subject property by entering into a Promise to Sell, which expressly designates respondent as the vendor and petitioners as the vendees. At this point, petitioners, originally co-owners and mortgagors of the subject property, unequivocally acquiesced to their new status as buyers thereof. In fact, the Promise to Sell makes no reference whatsoever to petitioners previous ownership of the subject property and to the void loan and mortgage contracts. On the whole, the Promise to Sell, an independent contract, did not purport to ratify the void loan and mortgage contracts. Joaquin Villegas, et al. vs. Rural Bank of Tanay, Inc., G.R. No. 161407, June 5, 2009. DAMAGES; LIQUIDATED DAMAGES. any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee. A perusal of the deed of absolute sale shows that both the vendor and the vendee represented and warranted to each other that each had all the requisite power and authority to enter into the deed of absolute sale and that they shall perform each of their respective obligations under the deed of absolute in accordance with the terms thereof. Asset Privatization Trust vs. T.J. Enterprises, G.R. No. 167195, May 8, 2009.
JUNE 2009 CASES

CONTRACT; NOVATION. Article 1292 of the Civil Code provides that [i]n order that an obligation may be extinguished by another which substitutes the same, it is imperative that it be so declared in unequivocal terms, or that the old and the new obligations be on every point incompatible with each other. Novation is never presumed. Parties to a contract must expressly agree that they are abrogating their old contract in favor of a new one. In the absence of an express agreement, novation takes place only when the old and the new obligations are incompatible on every point. The test of incompatibility is whether or not the two obligations can stand together, each one having its independent existence. If they cannot, they are incompatible and the latter obligation novates the first. In the instant case, none of the requisites are present. There is only one existing and binding contract between the parties, because Kalayaan never agreed to the creation of a new contract between them or Juliet. True, petitioners may have offered that they be substituted by Juliet as the new debtor to pay for the remaining obligation. Nonetheless, Kalayaan did not acquiesce to the proposal. Spouses Jose T. Valenzuela & Gloria Valenzuela vs. Kalayaan Development and Industrial Corporation, G.R. No. 163244, June 22, 2009. CONTRACT; PERFECTION. Under the law, a contract is perfected by mere consent, that is, from the moment that there is a meeting of the offer and the acceptance upon the thing and the cause that constitute the contract. The law requires that the offer must be certain and the acceptance absolute and unqualified. An acceptance of an offer may be express and implied; a qualified offer constitutes a counter-offer. Case law holds that an offer, to be considered certain, must be definite, while an acceptance is considered absolute and unqualified when it is identical in all respects with that of the offer so as to produce consent or a meeting of the minds. We have also previously held that the ascertainment of whether there is a meeting of minds on the offer and acceptance depends on the
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acts, petitioners purportedly endured economic difficulties and humiliation among their peers. These arguments are untenable. The announcement made by Mayor Perdices on 2 July 2001 cannot be deemed the proximate cause for petitioners financial and emotional suffer ing. The validity of petitioners appointments did not depend on Mayor Perdices honoring or rejecting said appointments but on the CSC approving or disapproving of the same. CSC-FO Director Abucejo did release a letter dated 1 August 2001 invalidating and revoking petitioners appointments on the ground that they were mass appointments in violation of CSC Resolution No. 010988 dated 4 June 2001. Said letter was subsequently affirmed by the CSCRO and the CSC Proper. Therefore, the invalidation and revocation of petitioners appointments, as well as the non-payment of their salaries, salary adjustments, and emoluments, did not result from Mayor Perdices announcement, but from the official acts of the CSC on petitioners appointments. Leah M. Nazareno, et al. vs. City of Dumaguete, represented by City Mayor Agustin Percides, et al., G.R. No. 177795, June 19, 2009. DAMAGES; MORAL. Petitioner is entitled to moral damages but not in the amount of P500,000 awarded by the RTC, which the Court finds to be excessive. While trial courts are given discretion to determine` the amount of moral damages, it should not be palpably and scandalously excessive. Moral damages are not meant to enrich a person at the expense of the other but are awarded only to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone due to the other persons culpable action. It must always reasonably approximate the extent of injury and be proportional to the wrong committed. The award of P100,000 as moral damages is sufficient and reasonable under the circumstances. The award of P100,000 as exemplary damages is likewise excessive. Exemplary damages are imposed not to enrich one party or impoverish another but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. We think P50,000 is reasonable in this case. Serafin Cheng Vs. Spouses Vittorio and Ma. Helen Donini, G.R. No. 167017, June 22, 2009. LAND REGISTRATION; FREE PATENT. As clearly provided by Sec. 44 of the Public Land Act, the requirements for the issuance of a free patent include, among others, that: (1) the applicant has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, the tract or tracts of agricultural public lands; (2) he shall have paid the real estate tax thereon; and (3) the land has not been occupied by any person. Lynn Maagad and Director of Lands vs. Juanito Maagad, G.R. No. 171762, June 5, 2009. The three percent (3%) penalty interest appearing in the contract is patently iniquitous and unconscionable. Article 2227 of the Civil Code provides that [l]iquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable. A perusal of the Contract to Sell reveals that the three percent (3%) penalty interest on unpaid monthly installments (per condition No. 3) would translate to a yearly penalty interest of thirty-six percent (36%). Although this Court on various occasions has eliminated altogether the three percent (3%) penalty interest for being unconscionable, We are not inclined to do the same in the present case. A reduction is more consistent with fairness and equity. We should not lose sight of the fact that Kalayaan remains an unpaid seller and that it has suffered, one way or another, from petitioners nonperformance of its contractual obligations. In view of such glaring reality, We invoke the authority granted to us by Article 1229 of the Civil Code, and as equity dictates, the penalty interest is accordingly reimposed at a reduced rate of one percent (1%) interest per month, or twelve percent (12%) per annum, to be deducted from the partial payments made by the petitioners. Spouses Jose T. Valenzuela & Gloria Valenzuela vs. Kalayaan Development and Industrial Corporation, G.R. No. 163244, June 22, 2009. DAMAGES; MORAL. Moral damages are awarded if the following elements exist in the case: (1) an injury clearly sustained by the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by the defendant as the proximate cause of the injury sustained by the claimant; and (4) the award of damages predicated on any of the cases stated Article 2219 of the Civil Code. In addition, the person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, and serious anxiety as the result of the actuations of the other party. Invariably such action must be shown to have been willfully done in bad faith or with ill motive. Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that partakes of the nature of fraud. Petitioners enucleate that Mayor Perdices act of announcing during the flag ceremony at the City Hall on 2 July 2001 that he will not honor the mass appointments made by his predecessor, former Mayor Remollo, even before CSC-FO Director Abucejo invalidated and revoked petitioners appointments in a letter dated 1 August 2001, evidenced bad faith, especially since Mayor Perdices himself made 36 appointments at the end of his term in 1998. Mayor Perdices subsequent appointments to fill four of the contested positions sometime in 2001 to 2006 likewise amounted to bad faith. As a result of these
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probative value in court would be to allow variance or an evasion or circumvention of the requirement laid down in Section 105 of Act No. 2874. We are thus warned that any title sourced from the flawed OCT No. 380 could be void. On this basis, we are justified to consider with great care any claims derived therefrom. Conrado O. Lasquite and Teodora I. Andrade vs. Victory Hills, Inc. , G.R. No. 175375, June 23, 2009. LAND REGISTRATION; TORRENS SYSTEM. Under the established principles of land registration, a person dealing with registered land may generally rely on the correctness of a certificate of title and the law will in no way oblige him to go beyond it to determine the legal status of the property, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. Applying this standard to the facts of this case, we rule that respondents exercised the required diligence in ascertaining the legal condition of the title to the subject property as to be considered innocent purchasers for value and in good faith. Mactan-Cebu International Airport Authority vs. Sps. Edito and Merian Tirol and Sps. Alejandro and Mirando Ngo, G.R. No. 171535, June 5, 2009. LAND REGISTRATION; TORRENS SYSTEM. Well-settled is the rule that registration of instruments must be done in the proper registry in order to effect and bind the land. Prior to the Property Registration Decree of 1978, Act No. 496 (or the Land Registration Act) governed the recording of transactions involving registered land, i.e., land with a Torrens title. On the other hand, Act No. 3344, as amended, provided for the system of recording of transactions over unregistered real estate without prejudice to a third party with a better right. Accordingly, if a parcel of land covered by a Torrens title is sold, but the sale is registered under Act No. 3344 and not under the Land Registration Act, the sale is not considered registered and the registration of the deed does not operate as constructive notice to the whole world. Consequently, the fact that petitioner MCIAA was able to register its Deed of Absolute Sale under Act No. 3344 is of no moment, as the property subject of the sale is indisputably registered land. Section 50 of Act No. 496 in fact categorically states that it is the act of registration that shall operate to convey and affect the land; absent any such registration, the instrument executed by the parties remains only as a contract between them and as evidence of authority to the clerk or register of deeds to make registration. Mactan-Cebu International Airport Authority vs. Sps. Edito and Merian Tirol and Sps. Alejandro and Mirando Ngo, G.R. No. 171535, June 5, 2009. LEASE; IMPROVEMENTS. LAND REGISTRATION; FREE PATENT. Petitioner Lynn Maagad committed fraud and gross misrepresentation in his free patent application. Actual or positive fraud proceeds from an intentional deception practiced by means of misrepresentation of material facts, which in this case was the conscious misrepresentation by petitioner that he was a fully qualified applicant possessing all the requirements provided by law. Moreover, failure and intentional omission of the petitioner-applicant to disclose the fact of actual physical possession by the respondent constitutes an allegation of actual fraud. It is likewise fraud to knowingly omit or conceal a fact, upon which benefit is obtained to the prejudice of a third person. Lynn Maagad and Director of Lands vs. Juanito Maagad, G.R. No. 171762, June 5, 2009. LAND REGISTRATION; REGISTRATION OF TITLE. There are three requisites for the filing of an application for registration of title under Section 14(1) of PD 1529: (1) that the property in question is alienable and disposable land of the public domain; (2) that the applicant by himself or through his predecessors-ininterest have been in open, continuous, exclusive and notorious possession and occupation; and (3) that such possession is under a bona fide claim of ownership since 12 June 1945 or earlier. The right to file the application for registration derives from a bona fide claim of ownership going back to 12 June 1945 or earlier, by reason of the claimants open, continuous, exclusive and notorious possession of alienable and disposable land of the public domain. In this case, respondent failed to comply with the period of possession and occupation of the subject property, as required by both PD 1529 and CA 141. We agree with the Republic that respondents evidence was not enough to prove that her possession of the subject property started since 12 June 1945 or earlier because respondents earliest evidence can be traced back to a tax declaration issued in the name of her predecessors-in-interest only in the year 1948. In view of the lack of sufficient showing that respondent and her predecessors-in-interest possessed the subject property under a bona fide claim of ownership since 12 June 1945 or earlier, respondents application for confirmation and registration of the subject property under PD 1529 and CA 141 should be denied. Republic of the Philippines Vs. Ruby Lee Tsai, G.R. No. 168184, June 22, 2009. LAND REGISTRATION; REGISTRATION OF TITLE. In the case at bar, the appellate court gave credence to the certified true copy of OCT No. 380 as proof of ownership of respondents predecessor. Yet, it is readily apparent from a cursory reading of said copy that OCT No. 380 was supposedly signed, not by the Secretary of Agriculture and Natural Resources, as mandated by law, but by the Secretary of Agriculture and Commerce. Hence, it is plain to see that to give OCT No. 380
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MORTGAGE; FORECLOSURE. Personal notice to the foreclosure proceedings stipulated. Global Holiday Metropolitan Bank & Trust June 19, 2009. mortgagor in extrajudicial is not necessary, unless Ownership Corporation vs. Company, G.R. No. 184081, Under Article 1678 of the Civil Code, the lessor has the primary right (or the first move) to reimburse the lessee for 50% of the value of the improvements at the end of the lease. If the lessor refuses to make the reimbursement, the subsidiary right of the lessee to remove the improvements, even though the principal thing suffers damage, arises. Consequently, on petitioner rests the primary option to pay for one-half of the value of the useful improvements. It is only when petitioner as lessor refuses to make the reimbursement that respondents, as lessees, may remove the improvements. Should petitioner refuse to exercise the option of paying for one-half of the value of the improvements, he cannot be compelled to do so. It then lies on respondents to insist on their subsidiary right to remove the improvements even though the principal thing suffers damage but without causing any more impairment on the property leased than is necessary. As regards the ornamental expenses, respondents are not entitled to reimbursement. Article 1678 gives respondents the right to remove the ornaments without damage to the principal thing. But if petitioner appropriates and retains said ornaments, he shall pay for their value upon the termination of the lease. Serafin Cheng vs. Spouses Vittorio and Ma. Helen Donini, G.R. No. 167017, June 22, 2009. MARRIAGE; PSYCHOLOGICAL INCAPACITY. It has been sufficiently established that petitioner had a psychological condition that was grave and incurable and had a deeply rooted cause. This Court, in the same Te case, recognized that individuals with diagnosable personality disorders usually have long-term concerns, and thus therapy may be long-term.Particularly, personality disorders are long -standing, inflexible ways of behaving that are not so much severe mental disorders as dysfunctional styles of living. These disorders affect all areas of functioning and, beginning in childhood or adolescence, create problems for those who display them and for others. From the foregoing, it has been shown that petitioner is indeed suffering from psychological incapacity that effectively renders him unable to perform the essential obligations of marriage. Accordingly, the marriage between petitioner and respondent is declared null and void. Lester Benjamin S. Halili Vs. Chona M. Santos-Halili and the Republic of the Philippines, G.R. No. 165424, June 9, 2009. MARRIAGE; PSYCHOLOGICAL INCAPACITY. The psychologists testimony and conclusions leads us to conclude that they are not sufficiently in-depth and comprehensive to warrant the conclusion that a psychological incapacity existed that prevented the respondent from complying with the essential marital obligations of marriage. Renato Reyes So vs. Lorna Valera, G.R. No. 150677, June 5, 2009,
MORTGAGE; REDEMPTION. From these premises, we ruled that [P]etitioner -heirs have not lost their right to redeem, for in the absence of a written notification of the sale by the vendors, the 30day period has not even begun to run. These premises and conclusion leave no doubt about the thrust of Mariano: The right of the petitioner-heirs to exercise their right of legal redemption exists, and the running of the period for its exercise has not even been triggered because they have not been notified in writing of the fact of sale. We hold that the computation of the 30-day period to exercise the legal right of redemption did not start to run from the finality of the Mariano Decision, and that the petitioner-heirs seasonably filed, via a writ of execution, their notice of redemption, although they applied for the issuance of the writ some eight (8) months after the finality of the Decision. In seeking the execution of a final and executory decision of this Court, what controls is Section 11, Rule 51, in relation to Section 2, Rule 56, of the Rules of Court. Before the trial court executing the decision, Section 6, Rule 39, on the question of timeliness of the execution, governs. Eight (8) months after the finality of the judgment to be executed is still a seasonable time for execution by motion pursuant to this provision. The writ, notice of redemption, and the tender of payment were all duly served, so that it was legally in order for the Sheriff to issue a Certificate of Redemption when the respondent-buyers failed to comply with the writ and to accept the notice and the tender of payment. Grace Gosiengfiao Guillen, etc. Vs. The Court of Appeals, et al., G.R. No. 159755, June 18, 2009. SALE; DOUBLE SALES. The requisites that must concur for Article 1544 to apply, viz.: (a) The two (or more) sales transactions must constitute valid sales; (b) The two (or more) sales transactions must pertain to exactly the same subject matter; (c) The two (or more) buyers at odds over the rightful ownership of the subject matter must each represent conflicting interests; and (d) The two (or more) buyers at odds over the rightful ownership of the subject matter must each have bought from the very same seller.
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Since the obligation of respondent did not arise because of the failure of petitioners to fully pay the purchase price, Article 1191 of the Civil Code would have no application. Spouses Jose T. Valenzuela & Gloria Valenzuela Vs. Kalayaan Development and Industrial Corporation, G.R. No. 163244, June 22, 2009. SURETY; CHANGE IN PRINCIPAL CONTRACT. Indeed, a surety is released from its obligation when there is a material alteration of the principal contract in connection with which the bond is given, such as a change which imposes a new obligation on the promising party, or which takes away some obligation already imposed, or one which changes the legal effect of the original contract and not merely its form. However, a surety is not released by a change in the contract, which does not have the effect of making its obligation more onerous. In the instant case, the revision of the subcontract agreement did not in any way make the obligations of both the principal and the surety more onerous. To be sure, petitioner never assumed added obligations, nor were there any additional obligations imposed, due to the modification of the terms of the contract. Failure to receive any notice of such change did not, therefore, exonerate petitioner from its liabilities as surety. Stronghold Insurance, Company, Inc. Vs. Tokyu Construction Company, Ltd., G.R. No. 158820-21, June 5, 2009. TRUST. The trust created by the decedent in her will must be dissolved after 20 years. Hilarion, Jr. and Enrico Orendain, represented by Fe Orendain Vs. Trusteeship of the Estate of Doa Margarita Rodriquez, G.R. No. 168660, June 30, 2009. ALIEN & FILIPINA SPOUSES - REAL PROPERTY. We have heard the story so many times. Foreigner goes to the Philippines. Foreigner meets Filipina girl. They fall in love. They get married together). They buy a house and lot. (or live Obviously, said provision has no application in cases where the sales involved were initiated not by just one vendor but by several successive vendors. In the instant case, respondents and petitioner had acquired the subject property from different transferors. Petitioner, through its predecessor-in-interest (CAA), acquired the entire Lot No. 4763 from its original owners, spouses Julian Cuison and Marcosa Cosef, on March 23, 1958. On the other hand, respondents acquired the subject parcel of land, a portion of Lot No. 4763, from Mrs. Elma Jenkins, another transferee, some thirty-five years later. The immediate transferors of Elma Jenkins were the spouses Moises Cuizon and Beatriz Patalinghug who, in turn, obtained the subject property from spouses Julian Cuison and Marcosa Cosef. Therefore, the instant controversy cannot be governed by Article 1544 since petitioner and respondents do not have the same immediate seller. Mactan-Cebu International Airport Authority vs. Sps. Edito and Merian Tirol and Sps. Alejandro and Mirando Ngo, G.R. No. 171535, June 5, 2009 SALE; LEGAL REDEMPTION. Interpreting Article 1623, we have enumerated the requisites for the exercise of legal redemption, as follows: (1) there must be co-ownership; (2) one of the co-owners sold his right to a stranger; (3) the sale was made before the partition of the co-owned property; (4) the right of redemption must be exercised by one or more co-owners within a period of thirty days to be counted from the time he or they were notified in writing by the co-owner vendor; and (5) the vendee must be reimbursed the price of the sale. With respect to the written notice, the exception is when a co-owner has actual notice of the sale. Francisco G. Calma Vs. Arsenio Santos, et al., G.R. No. 161027, June 22, 2009. SALE; RESCISSION. Under a contract to sell, the seller retains title to the thing to be sold until the purchaser fully pays the agreed purchase price. The full payment is a positive suspensive condition, the non-fulfillment of which is not a breach of contract, but merely an event that prevents the seller from conveying title to the purchaser. The non-payment of the purchase price renders the contract to sell ineffective and without force and effect. Unlike a contract of sale, where the title to the property passes to the vendee upon the delivery of the thing sold, in a contract to sell, ownership is, by agreement, reserved to the vendor and is not to pass to the vendee until full payment of the purchase price. Otherwise stated, in a contract of sale, the vendor loses ownership over the property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to sell, title is retained by the vendor until full payment of the purchase price. In the latter contract, payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective.
We wish it could always be a happy ending and they will live happily ever after. For some, the fairy tale becomes reality. For other couples, the ending is not what they have hoped for. They fight. They go their separate ways. They fight over property. Philip Matthews vs. Benjamin A. Taylor and Joselyn C. Taylor, G.R. No. 164584, June 22, 2009, involves a similar story, but this time, the Filipina wife prevailed.
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we sustain Benjamins claim that he provided the funds for such acquisition. By entering into such contract knowing that it was illegal, no implied trust was created in his favor; no reimbursement for his expenses can be allowed; and no declaration can be made that the subject property was part of the conjugal/community property of the spouses. In any event, he had and has no capacity or personality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would countenance indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord the alien husband a substantial interest and right over the land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have. In fine, the Agreement of Lease entered into between Joselyn and petitioner cannot be nullified on the grounds advanced by Benjamin. Thus, we uphold its validity. The situation here can be distingusihed from the situation in Borromeo vs. Descallar, G.R. No. 159310, February 24, 2009. In Borromeo, the ex-boyfriend (who is a nonPhilippine national and who funded the purchase of the parcel of land) already sold the land to a qualified Philippine national; thus, the Supreme Court reiterated its earlier rulings that the while the acquisition of land by a foreigner violates the Constitution, its subsequent transfer to a qualified Philippine national cured the defect in the original transaction. LIVE-IN MARRIAGE PSYCHOLOGICAL INCAPACITY? Generally, cases decided by the Supreme Court involving annulment of marriage based on psychological incapacity involve situations where the couple married, lived together, and one spouse subsequently discovers the other spouses psychological incapacity to comply with his or her marital obligations. In Renato Reyes So vs. Lorna Valera, G.R. No. 150677, June 5, 2009, the Supreme Court was faced with the unique situation where the husband and the wife were in a common law relationship for 18 long years, had 3 children, and then got married. The husband subsequently filed a petition for annulment of marriage based on his wifes alleged psychological incapacity. Renato and Lorna first met in 1973 and lived together as husband and wife, without the benefit of marriage, before Here, the husband (Benjamin Taylor, a British national) supposedly funded the purchase of the parcel of land in Boracay and the construction of the improvements thereon. The title to the parcel of land was placed in the name of his Filipina wife (Joselyn Taylor). The spouses separated and Joselyn subsequently leased the parcel of land (together with the improvements) to a Philip Matthews for a period of 25 tears. Benjamin signed as a witness to the lease agreement. Claiming that the Agreement was null and void since it was entered into by Joselyn without his (Benjamins) consent, Benjamin instituted an action for Declaration of Nullity of Agreement of Lease with Damages against Joselyn and Philip. Benjamin claimed that his funds were used in the acquisition and improvement of the Boracay property, and coupled with the fact that he was Joselyns husband, any transaction involving said property required his consent. The Regional Trial Court (RTC) considered the Boracay property as community property of Benjamin and Joselyn. Hence, the RTC concluded that the consent of the spouses was necessary to validate any contract involving the property. Benjamins right over the Boracay property was bolstered by the courts findings that the property was purchased and improved through funds provided by Benjamin. Although the Agreement was evidenced by a public document, the trial court refused to consider the alleged participation of Benjamin in the questioned transaction primarily because his signature appeared only on the last page of the document and not on every page thereof. On appeal to the Court of Appeals (CA), the CA affirmed the conclusions made by the RTC. The appellate court was of the view that if, indeed, Benjamin was a willing participant in the questioned transaction, the parties to the Agreement should have used the phrase with my consent instead of signed in the presence of. The CA noted that Joselyn previously prepared an SPA in favor of Benjamin involving the Boracay property; it was therefore unnecessary for Joselyn to participate in the execution of the Agreement. Taken together, these circumstances yielded the inevitable conclusion that the contract was null and void having been entered into by Joselyn without the consent of Benjamin. The Supreme Court did not agree with the RTC and the CA. The Supreme Court ruled: . . . we find and so hold that Benjamin has no right to nullify the Agreement of Lease between Joselyn and petitioner. Benjamin, being an alien, is absolutely prohibited from acquiring private and public lands in the Philippines. Considering that Joselyn appeared to be the designated vendee in the Deed of Sale of said property, she acquired sole ownership thereto. This is true even if
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The Supreme Court agreed with the CA and ruled that the totality of evidence presented by Ramon failed to establish Lornas psychological incapacity to perform the essential marital obligations. The Supreme Court did not give much credence to the testimony and report of Renatos expert witness. According to the Supreme Court: Our own examination of the psychologists testimony and conclusions leads us to conclude that they are not sufficiently in-depth and comprehensive to warrant the conclusion that a psychological incapacity existed that prevented the respondent from complying with the essential marital obligations of marriage. In the first place, the facts on which the psychologist based her conclusions were all derived from statements by the petitioner whose bias in favor of his cause cannot be doubted. It does not appear to us that the psychologist read and interpreted the facts related to her with the awareness that these facts could be slanted. In this sense, we say her reading may not at all be completely fair in its assessment. We say this while fully aware that the psychologist appeared at the petitioners bidding and the arrangement between them was not pro bono. While this circumstance does not disqualify the psychologist for reasons of bias, her reading of the facts, her testimony, and her conclusions must be read carefully with this circumstance and the source of the facts in mind. In examining the psychologists Report, we find the Particulars and the Psychological Conclusions disproportionate with one another; the conclusions appear to be exaggerated extrapolations, derived as they are from isolated incidents, rather than from continuing patterns. The particulars are, as it were, snapshots, rather than a running account of the respondents life from which her whole life is totally judged. Thus, we do not see her psychological assessment to be comprehensive enough to be reliable. . . As against the negatives in viewing the respondent, we note that she lived with the petitioner for 18 years and begot children with him born in 1975, 1978 and 1984 developments that show a fair level of stability in the relationship and a healthy degree of intimacy between the parties for some eleven (11) years. She finished her Dentistry and joined her husband in the communications business traits that do not at all indicate an irresponsible attitude, especially when read with the comment that she had been strict with employees and in business affairs. The petitioners Memorandum itself is very revealing when, in arguing that the Marriage Contract was a sham, the petitioner interestingly alleged that (referring to 1987) [S]ince at that time, the relationship between the petitioner and respondent was going well, and future marriage between the two was not an impossibility, the petitioner signed these documents. The Supreme Court also noted that there was no proof that Lornas psychological disorder was incurable: . . . the psychologists testimony itself glaringly failed to show that the they got married in 1991. In the course of their relationship, they had three (3) children (born in 1975, 1978 and 1984) and established a business. On May 14, 1996, Renato filed with the Regional Trial Court (RTC) a petition for the declaration of the nullity of his marriage with Lorna. He alleged that their marriage was null and void for want of the essential and formal requisites. He also claimed that Lorna was psychologically incapacitated to exercise the essential obligations of marriage, as shown by the following circumstances: Lorna failed and refused to cohabit and make love to him; did not love and respect him; did not remain faithful to him; did not give him emotional, spiritual, physical, and psychological help and support; failed and refused to have a family domicile; and failed and refused to enter into a permanent union and establish conjugal and family life with him. The RTC nullified the marriage of Renato and Lorna in its decision of November 8, 1999. The RTC concluded that Lorna was psychologically incapacitated to comply with her martial obligations. The Republic of the Philippines, through the Office of the Solicitor General, appealed the RTC decision to the Court of Appeals (CA). The CA, in its Decision dated July 4, 2001, reversed and set aside the RTC decision and dismissed the petition for lack of merit. The CA ruled that Renato failed to prove Lornas psychological incapacity. According to the CA, Lornas character, faults, and defects did not constitute psychological incapacity warranting the nullity of the parties marriage. The CA reasoned out that while Lorna appears to be a less than ide al mother to her children, and loving wife to her husband, these flaws were not physical manifestations of psychological illness. The CA further added that although Lornas condition was clinically identified by an expert witness to be an Adjustment Disorder, it was not established that such disorder was the root cause of her incapacity to fulfill the essential marital obligations. The prosecution also failed to establish that Lornas disorder was incurable and permanent in such a way as to disable and/or incapacitate Lorna from complying with obligations essential to marriage. The CA likewise held that Lornas hostile attitude towards Renato when the latter came home late was a normal reaction of an ordinary housewife under a similar situation; and her subsequent refusal to cohabit with him was not due to any psychological condition, but due to the fact that she no longer loved him. Finally, the CA concluded that the declaration of nullity of a marriage was not proper when the psychological disorder does not meet the guidelines set forth by the Supreme Court in the case of Molina. Renato moved to reconsider the decision, but the CA denied his motion in its resolution dated October 18, 2001.
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marriage. Outside of this situation, this powerless to provide any permanent remedy. Court is respondents behavioral disorder was medically or clinically permanent or incurable as established jurisprudence requires. Neither did the psychologist testify that the disorder was grave enough to bring about the disability of the party to assume the essential obligations of marriage. . . In Molina, we ruled that mild characterological peculiarities, mood changes and occasional emotional outbursts cannot be accepted as indicative of psychological incapacity. The illness must be shown as downright incapacity or inability, not a refusal, neglect or difficulty, much less ill will. In other words, the root cause should be a natal or supervening disabling factor in the person, an adverse integral element in the personality structure that effectively incapacitates the person from really accepting and thereby complying with the obligations essential to marriage. In the present case, the psychologist simply narrated adverse snapshots of the respondents life showing her alleged failure to meet her marital duties, but did not convincingly prove her permanent incapacity to meet her marital duties and responsibilities; the root or psychological illness that gave rise to this incapacity; and that this psychological illness and consequent incapacity existed at the time the marriage was celebrated. Given the foregoing, the Supreme Court ruled that based on the evidence, psychological incapacity was not proved: Shorn of any reference to psychology, we conclude that we have a case here of parties who have very human faults and frailties; who have been together for some time; and who are now tired of each other. If in fact the respondent does not want to provide the support expected of a wife, the cause is not necessarily a grave and incurable psychological malady whose effects go as far as to affect her capacity to provide marital support promised and expected when the marital knot was tied. To be tired and to give up on ones situation and on ones husband are not necessarily signs of psychological illness; neither can falling out of love be so labeled. When these happen, the remedy for some is to cut the marital knot to allow the parties to go their separate ways. This simple remedy, however, is not available to us under our laws. Ours is still a limited remedy that addresses only a very specific situation a relationship where no marriage could have validly been concluded because the parties, or one of them, by reason of a grave and incurable psychological illness existing when the marriage was celebrated, did not appreciate the obligations of marital life and, thus, could not have validly entered into a
THE TRUST - AS A WAY OF PREVENTING THE SALE OF PROPERTY IN SAECULA SAECULORUM? Can a testator use a trust to prevent the sale of his properties in saecula saeculorum after his death? In her will, Doa Margarita Rodriguez provided for the creation of a trust to manage the income from her properties. She prohibited the mortgage or sale of certain of these properties, so that the income from these properties can be used for the benefit of the specified beneficiaries. She wrote: CLAUSULA DECIMA O PANG-SAMPU: Ipinaguutos ko na ang manga pagaareng nasasabi sa Clausulang ito ay pangangasiwaan sa habang panahon, at ito nga ang ipagbubukas ng Fideicomiso sa Jusgado pagkatapos na maayos ang naiwanan kong pagaare. Ang pangangasiwaang pagaare ay ang manga sumusunod . . . Ang lahat ng pagaaring nasasabe sa Clusulang ito (hindi kasama ang generator at automovil) hindi maisasanla o maipagbibili kailan man, maliban sa pagaaring nasa Quezon Boulevard, Maynila, na maaring isanla kung walang fondo na gagamitin sa ipagpapaigui o ipagpapagawa ng panibago alinsunod sa kaayusang hinihingi ng panahon. (underscoring supplied) At the time of her death in 1960, Margarita left no compulsory or forced heirs and, consequently, was completely free to dispose of her properties, without regard to legitimes, as provided in her will. Almost four decades after her death, petitioners Hilarion, Jr. and Enrico Orendain, heirs of Hilarion Orendain, Sr. (who was mentioned in Clause 24 of Margaritas will), moved to dissolve the trust on Margaritas estate, which they argued had been in existence for more than 20 years, in violation of Article 870 of the Civil Code, among others. Article 870 provides: The dispositions of the testator declaring all or part of the estate inalienable for more than twenty years are void. In 2005, the Regional Trial Court (RTC) ruled that while the testamentary disposition prohibiting the mortagage or sale of the property is void after the lapse of the 20 year period, the trust does not become void after the 20 year period. According to the RTC:
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Said Article 870 was designed to give more impetus to the socialization of the ownership of property and to prevent the perpetuation of large holdings which give rise to agrarian troubles. The trust herein involved covers only two lots, which have not been shown to be a large landholding. And the income derived therefrom is being devoted to a public and social purpose the education of the youth of the land. The use of said parcels therefore is in a sense socialized. There is no hint in the record that the trust has spawned agrarian conflicts. The Supreme Court explained the difference as follows: In this case, however, we reach a different conclusion as the testatrix specifically prohibited the alienation or mortgage of her properties which were definitely more than the two (2) properties in the aforecited case. The herein testatrixs large landholdings cannot be subjected indefinitely to a trust because the ownership thereof would then effectively remain with her even in the afterlife. The Supreme Courts statement suggests that following Palad, a trust may be upheld if the testator does not expressly prohibit the mortgage or sale of the properties covered by the trust. (Hilarion, Jr. and Enrico Orendain, represented by Fe Orendain vs. Trusteeship of the Estate of Doa Margarita Rodriquez, G.R. No. 168660, June 30, 2009) JULY 2009 CASES CONTRACTS; AGENCY. It is true that a person dealing with an agent is not authorized, under any circumstances, to trust blindly the agents statements as to the extent of his powers. Such person must not act negligently but must use reasonable diligence and prudence to ascertain whether the agent acts within the scope of his authority. The settled rule is that persons dealing with an assumed agent are bound at their peril; and if they would hold the principal liable, they must ascertain not only the fact of agency, but also the nature and extent of authority, and in case either is controverted, the burden of proof is upon them to prove it. Soriamont Steamship Agencies, Inc., et al. vs. Sprint Transport Services, Inc. etc., G.R. No. 174610, July 14, 2009. CONTRACTS; COMPROMISE AGREEMENT. Compromise agreements are contracts, whereby the parties undertake reciprocal obligations to resolve their differences, thus, avoiding litigation, or put an end to one already commenced. As a contract, when the terms of the agreement are clear and explicit that they do not justify an attempt to read into it any alleged intention of the parties; the terms are to be understood literally, just as they appear on the face of the contract. Considering There is no question that the testamentary disposition of Doa Margarita Rodriguez prohibiting the mortgage or sale of properties mentioned in clause X of her Last Will and Testament forevermore is void after the lapse of the twenty year period. However, it does not mean that the trust created by [the] testatrix in order to carry out her wishes under clauses 12, 13 and 24 will also become void upon expiration of the twenty year period. As ruled by the Supreme Court in Emetrio Barcelon v. CA, the codal provision cited in Art. 870 is clear and unequivocal and does not need any interpretation. What is declared void is the testamentary disposition prohibiting alienation after the twenty year period. Hence, the trustees may dispose of the properties left by the testatrix in order to carry out the latters testamentary disposition. In other words, the RTC ruled that: (1) only the perpetual prohibition to alienate or mortgage is void; (2) the trust over her properties stipulated in Clauses 12, 13 and 24 of the will remains valid; and (3) the trustees may dispose of these properties in order to carry out the latters testamentary disposition. The Supreme Court disagreed with the RTCs ruling. According to the Supreme Court, the RTC was mistaken in denying petitioners motion to dissolve the trust and ordering the disposition of the properties in Clause 10 according to Margaritas wishes. As regards these properties, intestacy should apply as the decedent did not institute an heir therefor (citing Article 782, in relation to paragraph 2, Article 960 of the Civil Code). The Supreme Court ruled that the trust on Margaritas properties must be dissolved and remanded the case to the RTC to determine the following: (1) the properties listed in Clause 10 of the will, constituting the perpetual trust, which are still within reach and have not been disposed of as yet; and (2) the intestate heirs of the decedent, with the nearest relative of the deceased entitled to inherit the remaining properties. The Supreme Court was conscious that its ruling may be read to be a departure from Palad, et al. vs. Governor of Quezon Province, et al., 46 SCRA 354 (1972), wherein the Supreme Court ruled that Article 870 is not violated by a trust created by the testator: Article 870 of the New Civil Code, which regards as void any disposition of the testator declaring all or part of the estate inalienable for more than 20 years, is not violated by the trust constituted by the late Luis Palad; because the will of the testator does not interdict the alienation of the parcels devised. The will merely directs that the income of said two parcels be utilized for the establishment, maintenance and operation of the high school.
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CONTRACTS; EARNEST MONEY. Considering that there was no perfected contract of sale, the concept of earnest money is certainly not applicable to this case. Article 1482 of the Civil Code states that: Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. Hence, there must first be a perfected contract of sale before we can speak of earnest money. As found by the trial court, the P15,500 paid by Lopez is merely a deposit for the exclusion of the subject property from the list of the properties to be auctioned off by GSIS. Government Service Insurance System vs. Abraham Lopez, G.R. No. 165568, July 13, 2009. CONTRACTS; FRAUD. Fraud under Article 1338 of the Civil Code refers to all kinds of deception whether through insidious machination, manipulation, concealment or misrepresentation that would lead an ordinarily prudent person into error after taking the circumstances into account. The deceit employed must be serious. It must be sufficient to impress or lead an ordinarily prudent person into error, taking into account the circumstances of each case. Gloria Ocampo, et al. vs. Land Bank of the Philippines, et al., G.R. No. 164968, July 3, 2009. CONTRACTS; PERFECTION. The stages of a contract of sale are: (1) negotiation, starting from the time the prospective contracting parties indicate interest in the contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential elements of the sale; and (3) consummation, which commences when the parties perform their respective undertakings under the contract of sale, culminating in the extinguishment of the contract. In the present case, the parties never got past the negotiation stage. Nothing shows that the parties had agreed on any final arrangement containing the essential elements of a contract of sale, namely, (1) consent or the meeting of the minds of the parties; (2) object or subject matter of the contract ; and (3) price or consideration of the sale. The 2 August 1988 letter of the GSIS cannot be classified as a perfected contract of sale which binds the parties. The letter was in reply to Lopezs offer to repurchase the property. Both the trial and appellate courts found that Lopezs offer to repurchase the property was subject to the approval of the Board of Trustees of the GSIS, as explicitly stated in the 2 August 1988 GSIS letter. No such approval appears in the records. When there is merely an offer by one party without acceptance by the other, there is no contract of sale. Since there was no acceptance by GSIS, which can validly act only through its Board of Trustees, of Lopezs offer to repurchase the that Caruff never intended to transfer the subject property to PMO, burdened by the generating set and sump pumps, respondent should remove them from the subject property. Privatization Management Office vs. Legaspi Towers 300, Inc., G.R. No. 147957, July 22, 2009.
CONTRACTS; DACION EN PAGO. Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. Thus, it is a special mode of payment where the debtor offers another thing to the creditor, who accepts it as equivalent of payment of an outstanding debt, which undertaking, in one sense, amounts to a sale. As such, the essential elements are consent, object certain, and cause or consideration. In its modern concept, what actually takes place in dacion en pago is an objective novation of the obligation where the thing offered as an accepted equivalent of the performance of an obligation is considered as the object of the contract of sale, while the debt is considered as the purchase price. In any case, common consent is an essential prerequisite, be it sale or novation, to have the effect of totally extinguishing the debt or obligation. The requisite consent is not present in this case. Gloria Ocampo, et al. vs. Land Bank of the Philippines, et al., G.R. No. 164968, July 3, 2009.
CONTRACTS; DELAY. Under the law on contracts, mora solvendi or debtors default is defined as a delay in the fulfillment of an obligation, by reason of a cause imputable to the debtor. There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays performance; and third, the creditor judicially or extrajudicially requires the debtors performance. In the present petition, PSE ins ists that Finvests liability for fines, penalties and charges has been established, determined and substantiated, hence, liquidated. A debt is liquidated when the amount is known or is determinable by inspection of the terms and conditions of relevant documents. Under the attendant circumstances, it cannot be said that Finvests debt is liquidated. At the time PSE left the negotiating table, the exact amount of Finvests fines, penalties and charges was still in dispute and as yet undetermined. Consequently, Finvest cannot be deemed to have incurred in delay in the payment of its obligations to PSE. It cannot be made to pay an obligation the amount of which was not fully explained to it. The public sale of the pledged seat would, thus, be premature. Armand O. Raquel-Santos, et al. vs. Court of Appeals, et al./Philippine Stock Exchange, Inc. vs. Finvest Securities Co., Inc./Finvest Securities, Co., Inc. vs. Trans-Phil Marine Ent., Inc., et al., G.R. No. 174986/G.R. No. 175071/G.R. No. 181415, July 7, 2009.
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a physician examine the person to be declared psychologically incapacitated. In fact, the root cause may be medically or clinically identified. What is important is the presence of evidence that can adequately establish the partys psychological condition. For indeed, if the totality of evidence presented is enough to sustain a finding of psychological incapacity, then actual medical examination of the person concerned need not be resorted to. In this case, the Supreme Court agreed with the Court of Appeals that the totality of the evidence submitted by petitioner failed to satisfactorily prove that respondent was psychologically incapacitated to comply with the essential obligations of marriage. The root cause of respondents alleged psychological incapacity was not sufficiently proven by experts or shown to be medically or clinically permanent or incurable. Digna A. Najera vs. Eduardo J. Najera, G.R. No. 164817, July 3, 2009. MARRIAGE; CONJUGAL PROPERTY. CONTRACTS; RESCISSION. The right of a party to rescission under Article 1191 of the Civil Code is predicated on a breach of faith by the other party who violates the reciprocity between them. In a contract of sale, the seller obligates itself to transfer the ownership of and deliver a determinate thing, and the buyer to pay therefor a price certain in money or its equivalent. In some contracts of sale, such as the sale of real property, prior physical delivery of the thing sold or its representation is not legally required, as the execution of the Deed of Sale effectively transfers ownership of the property to the buyer through constructive delivery. Hence, delivery of the certificate of title covering the real property is not necessary to transfer ownership. Armand O. Raquel-Santos, et al. vs. Court of Appeals, et al./Philippine Stock Exchange, Inc. vs. Finvest Securities Co., Inc./Finvest Securities, Co., Inc. vs. Trans-Phil Marine Ent., Inc., et al., G.R. No. 174986/G.R. No. 175071/G.R. No. 181415, July 7, 2009. CONTRACTS; SUBROGATION. When an interested party pays the obligation, he is subrogated in the rights of the creditor. Because of its payment of the Acua spouses loan, Cecilleville actually steps into the shoes of Prudential and becomes entitled, not only to recover what it has paid, but also to exercise all the rights which Prudential could have exercised. There is, in such cases, not a real extinguishment of the obligation, but a change in the active subject. Cecilleville Realty and Service Corporation vs. Spouses Tito Acua, et al., G.R. No. 162074, July 13, 2009. MARRIAGE; INCAPACITY. ANNULMENT; PSYCHOLOGICAL In the present case, the 1,650-square meter portion of the subject property was foreclosed extrajudicially through the Office of the Provincial Sheriff as reflected by the Certificate of Sale. In extrajudicial foreclosure, what is extant is the right of redemption, or the right of the mortgagor to redeem the property within one year from and after the date of sale. The remaining 5,625-square meter portion was sold to the bank through levy on execution. A similar right of redemption exists with respect to such purchase, pursuant to Rule 39, Section 30 of the then applicable Rules of Civil Procedure. There is no equity of redemption in either case because neither one of these acquisitions by the San Fernando Rural Bank was done through judicial foreclosure. Thus, at the time the parties predecessors -in-interest died, the bank was already the absolute owner of the properties. There is no basis for the petitioners to claim a co-ownership between them and the respondents Marital consent is required for the sale by a husband of property he purchased under a conditional contract to sell executed while he was still single but title of which was transferred when he was already married. Sps. Lita De Leon, et al. vs. Anita B. De Leon, et al., G.R. No. 185063, July 23, 2009. property, there was no perfected contract of sale. Government Service Insurance System vs. Abraham Lopez, G.R. No. 165568, July 13, 2009. CONTRACTS; PRESCRIPTION. Cecillevilles cause of action against the Acua spouses is one created by law; hence, the action prescribes in ten years. Prescription accrues from the date of payment by Cecilleville to Prudential of the Acua spouses debt on 5 April 1994. Cecillevilles present complaint against the Acua spouses was filed on 20 June 1996, which was almost two months from the extrajudicial demands to pay on 9 and 23 April 1996. Whether we use the date of payment, the date of the last written demand for payment, or the date of judicial demand, it is clear that Cecillevilles cause of action has not yet prescribed. Cecilleville Realty and Service Corporation vs. Spouses Tito Acua, et al., G.R. No. 162074, July 13, 2009.
MORTGAGE; EQUITY OF REDEMPTION. The term equity of redemption has a settled meaning. It refers to the right of the mortgagor in case of judicial foreclosure to redeem the mortgaged property after his default in the performance of the conditions of the mortgage but before the confirmation of the sale of the mortgaged property.
Psychological incapacity must be characterized by (1) gravity (2) juridical antecedence, and (3) incurability. The foregoing guidelines do not require that
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when the owner of two properties alienates one of them and an apparent sign of easement exists between the two estates, entitlement to it continues, unless there is a contrary agreement, or the indication that the easement exists is removed before the execution of the deed. Privatization Management Office vs. Legaspi Towers 300, Inc., G.R. No. 147957, July 22, 2009. PROPERTY; EASEMENT. Abandonment or neglect, as a ground for the cancellation of an emancipation patent or certificate of land award, according to Castellano v. Spouses Francisco, requires a clear and absolute intention to renounce a right or a claim, or to abandon a right or property coupled with an external act by which that intention is expressed or carried into effect. Intention to abandon, as held in Corpuz v. Grospe, implies a departure, with the avowed intent of never returning, resuming or claiming the right and the interest that have been abandoned. It consists in any one of these conditions: (1) failure to cultivate the lot due to reasons other than the nonsuitability of the land to agricultural purposes, for at least two (2) calendar years, and to pay the amortizations for the same period; (2) permanent transfer of residence by the beneficiary and his family, which has rendered him incapable of cultivating the lot; or (3) relinquishment of possession of the lot for at least two (2) calendar years and failure to pay the amortization for the same period. None of the instances cited above obtains in this case. Petronila Maylem vs. Carmelita Ellano and Antonia Morciento, G.R. No. 162721, July 13, 2009. An easement is a real right on anothers property, corporeal and immovable, whereby the owner of the latter must refrain from doing or allowing somebody else to do or something to be done on his property, for the benefit of another person or tenement. Easements are established either by law or by the will of the owner. The former are called legal, and the latter, voluntary easements. In this case, petitioner itself admitted that a voluntary easement of right of way exists in favor of respondents. Having made such an admission, petitioner cannot now claim that what exists is a legal easement and that the same should be cancelled since the dominant estate is not an enclosed estate as it has an adequate access to a public road which is Callejon Matienza Street. The opening of an adequate outlet to a highway can extinguish only legal or compulsory easements, not voluntary easements like in the case at bar. The fact that an easement by grant may have also qualified as an easement of necessity does not detract from its permanency as a property right, which survives the termination of the necessity. A voluntary easement of right of way, like any other contract, could be extinguished only by mutual agreement or by renunciation of the owner of the dominant estate. Neither can petitioner claim that the easement is personal only to Hidalgo since the annotation merely mentioned Sandico and Hidalgo without equally binding their heirs or assigns. That the heirs or assigns of the parties were not mentioned in the annotation does not mean that it is not binding on them. Again, a voluntary easement of right of way is like any other contract. As such, it is generally effective between the parties, their heirs and assigns, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. Petitioner cites City of Manila v. Entote in justifying that the easement should bind only the parties mentioned therein and exclude those not so mentioned. However, that case is inapplicable since the issue therein was whether the easement was intended not only for the benefit of the owners of the dominant estate but of the community and the public at large. In interpreting the easement, the Court ruled that the clause any and all other persons whomsoever in the easement embraces only those who are privy to the owners of the dominant estate, Lots 1 and 2 Plan Pcs-2672 and excludes the indiscriminate public from the enjoyment of the right-ofway easement. because no right as to the subject property could have been transmitted to them by the death of their predecessors-in-interest, the Spouses Ignacio Dela Pea and Engracia Rivera. Victoriano Dela Pea, et al. vs. Spouses Vicente Alonzo, et al., G.R. No. 172640, July 3, 2009. PROPERTY CANCELLATION OF LAND PATENT.
PROPERTY; EASEMENT. An easement or servitude is a real right constituted on anothers property, corporeal and immovable, by virtue of which the owner of the same has to abstain from doing or to allow somebody else to do something on his property for the benefit of another thing or person. There are two sources of easements: by law or by the will of the owners. In the present case, neither type of easement was constituted over the subject property. In its allegations, respondent claims that Caruff constituted a voluntary easement when it constructed the generating set and sump pumps over the disputed portion of the subject property for its benefit. However, it should be noted that when the appurtenances were constructed on the subject property, the lands where the condominium was being erected and the subject property where the generating set and sump pumps were constructed belonged to Caruff. Therefore, Article 613 of the Civil Code does not apply, since no true easement was constituted or existed, because both properties were owned by Caruff. Also, Article 624 of the Civil Code is controlling, as it contemplates a situation where there exists an apparent sign of easement between two estates established or maintained by the owner of both. It can be inferred that
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thereto. Otherwise, the integrity of the Torrens system shall forever be sullied by the ineptitude and inefficiency of land registration officials, who are ordinarily presumed to have regularly performed their duties. The general rule that the direct result of a previous void contract cannot be valid will not apply in this case as it will directly contravene the Torrens system of registration. Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, this Court cannot disregard such rights and order the cancellation of the certificate. The effect of such outright cancellation will be to impair public confidence in the certificate of title. The sanctity of the Torrens system must be preserved; otherwise, everyone dealing with the property registered under the system will have to inquire in every instance as to whether the title had been regularly or irregularly issued, contrary to the evident purpose of the law. Every person dealing with the 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 behind the certificate to determine the condition of the property. Respondents transfer certificate of title, having been derived from the Homestead Patent which was registered under the Torrens system on May 27, 1966, was thus vested with the habiliments of indefeasibility. Rabaja Ranch and Development Corporation vs. AFP Retirement and Separation Benefits System, G.R. No. 177181, July 7, 2009. UNJUST ENRICHMENT. There is unjust enrichment when a person unjustly retains a benefit to the loss of another, or when a person retains money or property of another against the fundamental principles of justice, equity and good conscience. Article 22 of the Civil Code provides that [e]very person who, through an act or performance by another, or any other means, acquires or comes into possession of something at the expense of the latter, without just or legal ground, shall return the same to him. The principle of unjust enrichment under A rticle 22 of the Civil Code requires two conditions: (1) that a person is benefited without a valid basis or justification, and (2) that such benefit is derived at anothers expense or damage. Privatization Management Office vs. Legaspi Towers 300, Inc., G.R. No. 147 SALE OF PROPERTY WITHOUT MARITAL CONSENT. Is marital consent required for the sale by the husband of property he purchased under a conditional contract to sell executed while he was still single but title of which was transferred when he was already married? The Supreme Court faced this issue in Sps. Lita De Leon, et al. vs. Anita B. De Leon, et al., G.R. No. 185063, July 23, 2009. Sometime in 1965, Bonifacio O. De Leon, then single, and the Peoples Homesite and Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the Although the easement does not appear in respondents title over the dominant estate, the same subsists. It is settled that the registration of the dominant estate under the Torrens system without the annotation of the voluntary easement in its favor does not extinguish the easement. On the contrary, it is the registration of the servient estate as free, that is, without the annotation of the voluntary easement, which extinguishes the easement. Finally, the mere fact that respondents subdivided the property does not extinguish the easement. Article 618 of the Civil Code provides that if the dominant estate is divided between two or more persons, each of them may use the easement in its entirety, without changing the place of its use, or making it more burdensome in any other way. Unisource Commercial and Development Corporation vs. Joseph Chung, et al., G.R. No. 173252, July 17, 2009. PROPERTY; EMANCIPATION PATENT. As holder of an emancipation patent, Abad is bound by the proscription against transfers of land awards to third persons, which is prohibited by law. Hence, even if Abad for a consideration had waived his rights to the property when he surrendered possession thereof to petitioner, such waiver is nevertheless ineffective and void, because it amounts to a prohibited transfer of the land award. As the Court held in Lapanday Agricultural & Development Corp. v. Estita, the waiver of rights and interests over landholdings awarded by the government is invalid for being violative of agrarian reform laws. And in Torres v. Ventura, the Court declared that the object of agrarian reform is to vest in the farmer-beneficiary, to the exclusion of others, the rights to possess, cultivate and enjoy the landholding for himself; hence, to insure his continued possession and enjoyment thereof, he is prohibited by law to make any form of transfer except only to the government or by hereditary succession. Petronila Maylem vs. Carmelita Ellano and Antonia Morciento, G.R. No. 162721, July 13, 2009. PROPERTY; TORRENS SYTEM. A Homestead Patent, once registered under the Land Registration Act, becomes as indefeasible as a Torrens Title. The Torrens system is not a mode of acquiring titles to lands; it is merely a system of registration of titles to lands. However, justice and equity demand that the titleholder should not be made to bear the unfavorable effect of the mistake or negligence of the States agents, in the absence of proof of his complicity in a fraud or of manifest damage to third persons. The real purpose of the Torrens system is to quiet title to land and put a stop forever to any question as to the legality of the title, except claims that were noted in the certificate at the time of the registration or that may arise subsequent
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existed. In other words, in a contract to sell ownership is retained by the seller and is not passed to the buyer until full payment of the price, unlike in a contract of sale where title passes upon delivery of the thing sold. Such is the situation obtaining in the instant case. The conditional contract to sell executed by and between Bonifacio and PHHC on July 20, 1965 provided that ownership over and title to the property will vest on Bonifacio only upon execution of the final deed of sale which, in turn, will be effected upon payment of the full purchase price. . . Evidently, title to the property in question only passed to Bonifacio after he had fully paid the purchase price on June 22, 1970. This full payment, to stress, was made more than two (2) years after his marriage to Anita on April 24, 1968. In net effect, the property was acquired during the existence of the marriage; as such, ownership to the property is, by law, presumed to belong to the conjugal partnership. Such presumption is rebuttable only with strong, clear, categorical, and convincing evidence. There must be clear evidence of the exclusive ownership of one of the spouses, and the burden of proof rests upon the party asserting it. The Supreme Court also ruled that the fact that the transfer certificate of title was in the name of Bonifacio did not change the conjugal nature of the property: Petitioners argument that the disputed lot was Bonifacios exclusive property, since it was registered solely in his name, is untenable. The mere registration of a property in the name of one spouse does not destroy its conjugal nature. What is material is the time when the property was acquired. As Anita never gave consent to the sale, the Supreme Court ruled that the sale was void: . . . the 1950 Civil Code is very explicit on the consequence of the husband alienating or encumbering any real property of the conjugal partnership without the wifes consent. To a specific point, the sale of a conjugal piece of land by the husband, as administrator, must, as a rule, be with the wifes consent. Else, the sale is not valid. So it is that in several cases we ruled that the sale by the husband of property belonging to the conjugal partnership without the consent of the wife is void ab initio, absent any showing that the latter is incapacitated, under civil interdiction, or like causes. The nullity, as we have explained, proceeds from the fact that sale is in contravention of the mandatory requirements of Art. 166 of the Code. Since Art. 166 of the Code requires the consent of the wife before the husband may alienate or encumber any real property of the conjugal partnership, it follows that the acts or transactions executed against this mandatory provision are void except when the law itself authorized their validity. purchase on installment of a parcel of land. Three years later, Bonifacio married Anita. After full payment of the purchase price for the lot, PHHC executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio. Transfer Certificate of Title (TCT) No. 173677 was issued on February 24, 1972 in the name of Bonifacio, single. Subsequently, Bonifacio, for PhP 19,000, sold the subject land to his sister, Lita, and her husband. Felix Rio Tarrosa (Tarrosas). The Deed of Sale dated January 12, 1974 (Deed of Sale) did not bear the written consent and signature of Anita. Bonifacio died in 1996. The Tarrosas registered the Deed of Sale and had TCT No. 173677 canceled. They secured the issuance in their names of TCT No. N-173911 from the Quezon City Register of Deeds. Anita and her children then filed an action for reconveyance against the Tarrosas. The Regional Trial Court, on the finding that the lot in question was the conjugal property of Bonifacio and Anita, rendered judgment in favor of Anita and her children. The Court of Appeals held that the Tarrosas failed to overthrow the legal presumption that the parcel of land in dispute was conjugal. In their petition before the Supreme Court, the Tarrosas assert that, since Bonifacio purchased the lot from PHHC on installment before he married Anita, the land was Bonifacios exclusive property and not conjugal, even though some installments were paid and the title was issued to Bonifacio during the marriage. The Supreme Court ruled that the property is conjugal: Article 160 of the 1950 Civil Code, the governing provision in effect at the time Bonifacio and Anita contracted marriage, provides that all property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or the wife. For the presumption to arise, it is not, as Tan v. Court of Appeals teaches, even necessary to prove that the property was acquired with funds of the partnership. Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. In fact, even when the manner in which the properties were acquired does not appear, the presumption will still apply, and the properties will still be considered conjugal. In the case at bar, ownership over what was once a PHHC lot and covered by the PHHC-Bonifacio Conditional Contract to Sell was only transferred during the marriage of Bonifacio and Anita. It is well settled that a conditional sale is akin, if not equivalent, to a contract to sell. In both types of contract, the efficacy or obligatory force of the vendors obligation to transfer title is subordinated to the happening of a future and uncertain event, usually the full payment of the purchase price, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never
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must be held liable for the cost of completion of the unfinished portion of the project. Continental Cement Corp., vs. Filipinas (PREFAB) Systems, Inc./Filipinas (PREFAB) Systems, inc. vs. Continental Cement Corp., G.R. No. 176917/G.R. No. 176919, August 4, 2009. CONTRACTS; DUE AND DEMANDABLE OBLIGATIONS. Petitioner does not deny that she obtained a loan from respondent. She, however, contends that the loan is not yet due and demandable because the suspensive condition the completion of the renovation of the apartment units has not yet been fulfilled. She also assails the award of attorneys fees to respondent as baseless. For his part, respondent admits that initially, they agreed that payment of the loan shall be made upon completion of the renovations. However, respondent claims that during their meeting with some family members in the house of their brother Genaro sometime in the second quarter of 1997, he and petitioner entered into a new agreement whereby petitioner was to start making monthly payments on her loan, which she did from June to October of 1997. Evidently, by virtue of the subsequent agreement, the parties mutually dispensed with the condition that petitioner shall only begin paying after the completion of all renovations. There was, in effect, a modificatory or partial novation, of petitioners obligation under Article 1291 of the Civil Code. Maria Soledad Tomimbang vs. Atty. Jose Tomimbang, G.R. No. 165116, August 4, 2009. CONTRACTS; EXTRAJUDICIAL SETTLEMENT. Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and the Tarrosas covering the PHHC lot is void. The Supreme Court held that Bonifacio cannot sell his portion of the conjugal partnership: Prior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result of the liquidation and settlement. The interest of each spouse is limited to the net remainder or remanente liquido (haber ganancial) resulting from the liquidation of the affairs of the partnership after its dissolution. Thus, the right of the husband or wife to onehalf of the conjugal assets does not vest until the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after settlement of conjugal obligations, there are net assets left which can be divided between the spouses or their respective heirs. Therefore, even on the supposition that Bonifacio only sold his portion of the conjugal partnership, the sale is still theoretically void, for, as previously stated, the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership. Finally, the Supreme Court ruled that the Tarrosas should be reimbursed for the amount they paid to purchase the property.
AUGUST 2009 CASES

CONTRACTS; BINDING EFFECT. As a general rule, obligations derived from a contract are transmissible (see Article 1311, par.1 of the Civil Code). The loan in this case was contracted by respondent. He died while the case was pending before the Court of Appeals. While he may no longer be compelled to pay the loan, the debt subsists against his estate. No property or portion of the inheritance may be transmitted to his heirs unless the debt has first been satisfied. William Ong Genato vs. Benjamin Bayhon, et al., G.R. No. 171035, August 24, 2009. CONTRACTS; BREACH. CCC defaulted in the payment of its obligation to FILSYSTEMS under the Compromise Agreement. On the other hand, FILSYSTEMS was not in default; however, considering that it failed to perform the obligation incumbent upon it under the Compromise Agreement, it
The Extrajudicial Settlement of Estate with Absolute Sale executed by Corazon and Epitacio through the la tters attorney-in-fact, Vicente Angeles, partakes of the nature of a contract. To be precise, the said document contains two contracts, to wit: the extrajudicial adjudication of the estate of Julian Angeles between Corazon and Epitacio as Julians compulsory heirs, and the absolute sale of the adjudicated properties to Cornelia. While contained in one document, the two are severable and each can stand on its own. Hence, for its validity, each must comply with the requisites prescribed in Article 1318 of the Civil Code, namely (1) consent of the contracting parties; (2) object certain, which is the subject matter of the contract; and (3) cause of the obligation which is established. Cornelia Baladad (Represented by Heinrich M. Angeles and Rex Aaron A. Baladad) vs. Sergio A. Rublico and Spouses Laureano E. Yupano, G.R. No. 160743. August 4, 2009 CONTRACTS; LOAN. Since the obligation in this case involves a loan and there is no stipulation in writing as to interest due, the rate of
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claimed that the P20,000.00 was given merely as guarantee by the respondents, as vendees, that they would not back out from the sale. As we have pointed out, the terms of the parties agreement are clear and explicit; indeed, all the essential elements of a perfected contract are present in this case. While the respondents required that the occupants vacate the subject properties prior to the payment of the second installment, the stipulation does not affect the perfection of the contract, but only its execution. In sum, the case contains no element, factual or legal, that negates the existence of a perfected contract between the parties. Heirs of Cayetano Pangan and Consuelo Pangan vs. Spouses Rogelio Perreras and Priscilla G. Perreras, G.R. No. 157374, August 27, 2009 CONTRACT; MACEDA LAW. As in the rescission of a contract of sale for nonpayment of the price, the defaulting vendee in a contract to sell may defeat the vendors right to cancel by invoking the rights granted to him under Republic Act No. 6552 or the Realty Installment Buyer Protection Act (also known as the Maceda Law); this law provides for a 60-day grace period within which the defaulting vendee (who has paid less than two years of installments) may still pay the installments due. Only after the lapse of the grace period with continued nonpayment of the amounts due can the actual cancellation of the contract take place. Significantly, the Court has consistently held that the Maceda Law covers not only sales on installments of real estate, but also financing of such acquisition; its Section 3 is comprehensive enough to include both contracts of sale and contracts to sell, provided that the terms on payment of the price require at least two installments. The contract entered into by the parties herein can very well fall under the Maceda Law. Based on the above discussion, we conclude that the respondents payment on June 15, 1989 of the installment due on June 14, 1989 effectively defeated the petitioners-heirs right to have the contract rescinded o r cancelled. Whether the parties agreement is characterized as one of sale or to sell is not relevant in light of the respondents payment within the grace period provided under Article 1592 of the Civil Code and Section 4 of the Maceda Law. The petitioners-heirs obligation to accept the payment of the price and to convey Consuelos conjugal and hereditary shares in the subject properties subsists. Heirs of Cayetano Pangan and Consuelo Pangan vs. Spouses Rogelio Perreras and Priscilla G. Perreras, G.R. No. 157374, August 27, 2009 CONTRACT; NOVATION. The obligation to pay a sum of money is not novated by an instrument that expressly recognizes the old, changes only the terms of payment, adds other obligations not incompatible with the old ones or the new contract merely supplements the old one. interest shall be 12% per annum computed from the date of extrajudicial demand. Maria Soledad Tomimbang vs. Atty. Jose Tomimbang, G.R. No. 165116, August 4, 2009. CONTRACT; PERFECTION. Article 1318 of the Civil Code declares that no contract exists unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation established. Since the object of the parties agreement involves properties co-owned by Consuelo and her children, the petitioners-heirs insist that their approval of the sale initiated by their mother, Consuelo, was essential to its perfection. Accordingly, their refusal amounted to the absence of the required element of consent. That a thing is sold without the consent of all the coowners does not invalidate the sale or render it void. Article 493 of the Civil Code recognizes the absolute right of a co-owner to freely dispose of his pro indiviso share as well as the fruits and other benefits arising from that share, independently of the other co-owners. Thus, when Consuelo agreed to sell to the respondents the subject properties, what she in fact sold was her undivided interest that, as quantified by the RTC, consisted of onehalf interest, representing her conjugal share, and onesixth interest, representing her hereditary share. The petitioners-heirs nevertheless argue that Consuelos consent was predicated on their consent to the sale, and that their disapproval resulted in the withdrawal of Consuelos consent. Yet, we find nothing in the parties agreement or even conduct save Consuelos selfserving testimony that would indicate or from which we can infer that Consuelos consent depended on her childrens approval of the sale. The explicit terms of the June 8, 1989 receipt provide no occasion for any reading that the agreement is subject to the petitioners-heirs favorable consent to the sale. The presence of Consuelos consent and, corollarily, the existence of a perfected contract between the parties are further evidenced by the payment and receipt of P20,000.00, an earnest money by the contracting parties common usage. The law on sales, specifically Article 1482 of the Civil Code, provides that 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. Although the presumption is not conclusive, as the parties may treat the earnest money differently, there is nothing alleged in the present case that would give rise to a contrary presumption. In cases where the Court reached a conclusion contrary to the presumption declared in Article 1482, we found that the money initially paid was given to guarantee that the buyer would not back out from the sale, considering that the parties to the sale have yet to arrive at a definite agreement as to its terms that is, a situation where the contract has not yet been perfected. These situations do not obtain in the present case, as neither of the parties
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DAMAGES; ATTORNEYS FEES. Article 2208 of the Civil Code enumerates the instances justifying the grant of attorneys fees; in all cases, the award must be reasonable, just and equitable. Attorneys fees as part of damages are not meant to enrich the winning party at the expense of the losing litigant. They are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. The award of attorneys fees is the exception rather than the general rule. Thus, findings reflecting the conditions imposed by Article 2208 are necessary to justify an award; attorney s fees mentioned only in the dispositive portion of the decision without any prior justification in the body of the decision is a baseless award that must be struck down. Francisco Madrid and Edgardo Bernardo vs. Spouses Bonifacio Mapoy and Felicidad Martinez, G.R. No. 150887, August 14, 2009. DAMAGES; ATTORNEYS FEES. No premium should be placed on the right to litigate. Attorneys fees are not to be awarded every time a party wins a suit. Even when a claimant is compelled to litigate or to incur expenses to protect his rights, still attorneys fees may not be awarded where there is no sufficient showing of bad faith in a partys persistence in a case other than an erroneous conviction of the righteousness of his cause. Dart Philippines, Inc. vs. Spouses Francisco and Erlinda Calogcog, G.R. No. 149241, August 24, 2009. DAMAGES; CRIME. When death occurs due to a crime, the following damages may be awarded: (1) civil indemnity ex delicto for the death of the victim; (2) actual or compensatory damages; (3) moral damages; (4) exemplary damages; and (5) temperate damages. People of the Philippines vs. Ismael Diaz @ Maeng and Rodolfo Diaz @ Nanding, G.R .No. 185841, August 4, 2009. DAMAGES; INTEREST. The interest has been pegged at 5% per month, or 60% per annum. This is unconscionable, hence cannot be enforced. In light of this, the rate of interest for this kind of loan transaction has been fixed in the case of Eastern Shipping Lines v. Court of Appeals, at 12% per annum, calculated from October 3, 1989, the date of extrajudicial demand. William Ong Genato vs. Benjamin Bayhon, et al., G.R. No. 171035, August 24, 2009. See Maria Soledad Tomimbang vs. Atty. Jose Tomimbang, G.R. No. 165116, August 4, 2009. DAMAGES; LIQUIDATED DAMAGES. In the present case, the factors considered by the Court of Appeals were the absence of bad faith on the part of Urban and the fact that the project was 97% complete at the time it was turned over to Insular. In addition, we noted that Insular is likewise not entirely blameless The grant by Betonval to FSI of a 45-day credit extension did not novate the contracts so as to extinguish the latter. There was no incompatibility between them. There was no intention by the parties to supersede the obligations under the contracts. In fact, the intention of the 45-day credit extension was precisely to revive the old obligation after the original period expired with the obligation unfulfilled. The grant of a 45-day credit period merely modified the contracts by extending the period within which FSI was allowed to settle its obligation. Since the contracts remained the source of FSIs obligation to Betonval, the stipulation to pay 30% p.a. interest likewise remained. Foundation Specialist, Inc. vs. Betonval Ready Concrete, Inc., et al., G.R. No. 170674, August 24, 2009. CONTRACTS; VOID CONTRACT. The subject dacion en pago is a simulated or fictitious contract, and hence void. The evidence shows that at the time it was allegedly signed by the wife of the respondent, his wife was already dead. This finding of fact cannot be reversed. William Ong Genato vs. Benjamin Bayhon, et al., G.R. No. 171035, August 24, 2009. CONTRACTS; WAIVER. Neither did Betonval waive the stipulated interest rate of 30% p.a., as FSI erroneously claims. A waiver is a voluntary and intentional relinquishment or abandonment of a known legal right or privilege. A waiver must be couched in clear and unequivocal terms which leave no doubt as to the intention of a party to give up a right or benefit which legally pertains to him. FSI did not adduce proof that a valid waiver was made by Betonval. FSIs claim is therefore baseless. On the other hand, there can be no other conclusion but that Betonval had reduced the imposable interest rate from 30% to 24% p.a. and this reduced interest rate was accepted, albeit impliedly, by FSI when it proposed a new schedule of payments and, in fact, actually made payments to Betonval with 24% p.a. interest. By its own actions, therefore, FSI is estopped from questioning the imposable rate of interest. Foundation Specialist, Inc. vs. Betonval Ready Concrete, Inc., et al., G.R. No. 170674, August 24, 2009. DAMAGES; ATTORNEYS FEES. As to attorneys fees, award therefor cannot be allowed by the Court. It is an oft-repeated rule that the trial court is required to state the factual, legal or equitable justification for awarding attorney s fees. In the present case, where it is understandable that some misunderstanding could arise as to when the obligation was indeed due and demandable, the Court must likewise disallow the award of attorneys fees. Maria Soledad Tomimbang vs. Atty. Jose Tomimbang, G.R. No. 165116, August 4, 2009.
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We find that bad faith cannot be attributed to the acts of petitioner. Petitioners exercise of its rights under the agreement to conduct an audit, to vary the manner of processing purchase orders, and to refuse the renewal of the agreement was supported by legitimate reasons, principally, to protect its own business. The exercise of its rights was not impelled by any evil motive designed, whimsically and capriciously, to injure or prejudice respondents. The rights exercised were all in accord with the terms and conditions of the distributorship agreement, which has the force of law between them. Clearly, petitioner could not be said to have committed an abuse of its rights. It may not be amiss to state at this juncture that a complaint based on Article 19 of the Civil Code must necessarily fail if it has nothing to support it but innuendos and conjectures. Given that petitioner has not abused its rights, it should not be held liable for any of the damages sustained by respondents. The law affords no remedy for damages resulting from an act which does not amount to a legal wrong. Situations like this have been appropriately denominated damnum absque injuria. Dart Philippines, Inc. vs. Spouses Francisco and Erlinda Calogcog, G.R. No. 149241, August 24, 2009. FREE PATENT. A Free Patent may be issued where the applicant is a natural-born citizen of the Philippines; is not the owner of more than twelve (12) hectares of land; has continuously occupied and cultivated, either by himself or through his predecessors-in-interest, a tract or tracts of agricultural public land subject to disposition, for at least 30 years prior to the effectivity of Republic Act No. 6940; and has paid the real taxes thereon while the same has not been occupied by any other person. Once a patent is registered and the corresponding certificate of title is issued, the land covered thereby ceases to be part of public domain, becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year from the date of such issuance. However, a title emanating from a free patent which was secured through fraud does not become indefeasible, precisely because the patent from whence the title sprung is itself void and of no effect whatsoever. No actual and extrinsic fraud existed in this case; at least, no convincing proof of such fraud was adduced. Other than his bare allegations, petitioner failed to prove that there was fraud in the application, processing and grant of the Free Patent, as well as in the issuance of OCT No. P-23505. Neither was it proven that respondent actually took part in the alleged fraud. Eugenio Encinares vs. Dominga Achero, G.R. No. 161419, August 25, 2009. TORRENS SYSTEM; COLLATERAL ATTACK ON TITLE. Registration of land under the Torrens system, aside from perfecting the title and rendering it indefeasible after the considering that it failed to pay Urban P1,144,030.94 representing the balance of unpaid change orders and to return the retention money in the amount of P2,134,908.80, or a total of P3,578,939.74. Had Insular released said amount upon demand, the same could have been used by Urban to comply with its obligation to purchase the needed construction materials and to expedite the completion of the project. Under the circumstances, we find that this omission on the part of Insular justifies a further reduction of the liquidated damages decreed against Urban from P2,940,000.00 to P1,940,000.00. As a general rule, courts are not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law, morals, and good custom, public policy or public order. Nevertheless courts may equitably reduce a stipulated penalty in the contract where, as in the instant case, the principal obligation has been partly performed (97%) and where the penalty is iniquitous. Urban Consolidated Constructors Philippines, Inc. vs. The Insular Life Assurance Co., Inc., G.R. No. 180824, August 28, 2009. DAMAGES; PROXIMATE CAUSE. Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. And more comprehensively, the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. If Aquilino heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda, the accident would not have happened. This specific untoward event is exactly what the MMDA prohibition was intended for. Thus, a prudent and intelligent person who resides within the vicinity where the accident occurred, Aquilino had reasonable ground to expect that the accident would be a natural and probable result if he crossed Katipunan Avenue since such crossing is considered dangerous on account of the busy nature of the thoroughfare and the ongoing construction of the Katipunan-Boni Avenue underpass. It was manifest error for the Court of Appeals to have overlooked the principle embodied in Article 2179 of the Civil Code, that when the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. Lambert S. Ramos vs. C.O.L. Realty Corporation, G.R. No. 184905, August 28, 2009 TORT; ABUSE OF RIGHT.
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It is true that both trial and appellate courts actually maintained the indefeasibility of the certificate of title and desisted from annulling or modifying the same. But by declaring that the property is not located in Antipolo City, the location stated in the certificate of title, they, in effect, modified the same to the prejudice of the petitioner. Worse, they did so based on incomplete information. Notably, in Odsigue v. Court of Appeals, this Court, indeed, held that a certificate of title is conclusive evidence not only of ownership but also the location of the property. Pioneer Insurance and Surety Corporation vs. Heirs of Vicente Coronado, et al., G.R. No. 180357, August 4, 2009. TORRENS SYSTEM; TORRENS TITLE. The petitioners-defendants attack on the validity of respondents-plaintiffs title, by claiming that fraud attended its acquisition, is a collateral attack on the title. It is an attack incidental to their quest to defend their possession of the properties in an accion publiciana, not in a direct action whose main objective is to impugn the validity of the judgment granting the title. This is the attack that possession of a Torrens Title specifically guards against; hence, we cannot entertain, much less accord credit to, the petitioners-defendants claim of fraud to impugn the validity of the respondents-plaintiffs title to their property. Francisco Madrid and Edgardo Bernardo vs. Spouses Bonifacio Mapoy and Felicidad Martinez, G.R. No. 150887, August 14, 2009. As a matter of law, a Torrens Certificate of Title is evidence of indefeasible title of property in favor of the person in whose name the title appears. The title holder is entitled to all the attributes of ownership of the property, including possession, subject only to limits imposed by law. In the present case, the respondentsplaintiffs are indisputably the holders of a certificate of title against which the petitioners-defendants claim of oral sale cannot prevail. As registered titleholders, they are entitled to possession of the properties. Francisco Madrid and Edgardo Bernardo vs. Spouses Bonifacio Mapoy and Felicidad Martinez, G.R. No. 150887, August 14, 2009. ALTIS VS. EXPEDITION: WHO WINS? (NEGLIGENCE). A Toyota Altis was traveling at a speed of five to ten kilometers per hour along Rajah Matanda Street and has just crossed the center lane of Katipunan Avenue when a Ford Expedition violently rammed against the cars right rear door and fender. With the force of the impact, the Altis turned 180 degrees towards the direction where it came from. A passenger of the Altis sustained injuries and was immediately brought to the hospital. The Altis owner demanded from the Expedition owner reimbursement for the expenses incurred in the repair of the car and the hospitalization of the car passenger in the aggregate amount of P103,989.60. The demand fell on deaf ears prompting the Altis owner to file a Complaint for Damages based on quasi-delict before the Metropolitan Trial Court of Metro Manila (MeTC), Quezon City. The Expedition owner denied liability for damages insisting that it was the negligence of the Altis driver which was the proximate cause of the accident. The Expedition owner maintained that the Altis crossed Katipunan Avenue from Rajah Matanda Street despite the concrete barriers placed thereon prohibiting vehicles to pass through the intersection. The Expedition owner further claimed that he was not in the vehicle when the mishap occurred. He asserted that he exercised the diligence of a good father of a family in the selection and supervision of his driver. lapse of the period allowed by law, also renders the title immune from collateral attack. A collateral attack transpires when, in another action to obtain a different relief and as an incident of the present action, an attack is made against the judgment granting the title. This manner of attack is to be distinguished from a direct attack against a judgment granting the title, through an action whose main objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet implemented, or to seek recovery if the property titled under the judgment had been disposed of. To permit a collateral attack on respondents-plaintiffs title is to water down the integrity and guaranteed legal indefeasibility of a Torrens title.
TORRENS SYSTEM; REGISTRATION OF TITLE. Section 14(1) of the Property Registration Decree lays down the following requisites for registration of title thereunder: (1) that the property in question is alienable and disposable land of the public domain; (2) that the applicants by themselves or through their predecessorsin-interest have been in open, continuous, exclusive and notorious possession and occupation; and (3) that such possession is under a bona fide claim of ownership since 12 June 1945 or earlier. Javier was able to comply with all these requirements. To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government, such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or statute. Republic of the Philippines vs. Neptuna G. Javier, G.R. No. 179905, August 19, 2009. TORRENS SYSTEM; TORRENS TITLE. Indubitably, a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. The real purpose of the Torrens System of land registration is to quiet title to land and put stop forever to any question as to the legality of the title.
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Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. And more comprehensively, the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom. According to the Supreme Court, if the Altis driver heeded the MMDA prohibition against crossing Katipunan Avenue from Rajah Matanda, the accident would not have happened. The Supreme Court ruled that it was manifest error for the CAs to have overlooked the principle embodied in Article 2179 of the Civil Code, that when the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. (Lambert S. Ramos vs. C.O.L. Realty Corporation, G.R. No. 184905, August 28, 2009.) The MeTC ruled in favor of the Expedition owner. The Altis owner appealed to the Regional Trial Court (RTC), which affirmed the MeTC decision. The Altis owner appealed to the Court of Appeals (CA) which affirmed the view that the Altis driver was negligent in crossing Katipunan Avenue from Rajah Matanda Street. The CA noted that based on a MMDA certification, the crossing of vehicles at Katipunan Avenue from Rajah Matanda Street to Blue Ridge Subdivision,Quezon City has (sic) not allowed since January 2004 up to the present in view of the ongoing road construction at the area . . . However, the CA noted that at the time of the collision, the Expedition was moving at high speed in a busy area that was then the subject of an ongoing construction (the Katipunan Avenue-Boni Serrano Avenue underpass), then smashed into the rear door and fender of the passengers side of Altis, sending it spinning in a 180-degree turn. It therefore found the Expedition driver guilty of contributory negligence for driving the Expedition at high speed along a busy intersection. The Expedition owner filed a motion for reconsideration, which the CA denied. The Supreme Court reversed the CA and held that the Altis drivers act of crossing Katipunan Avenue via Rajah Matanda constitutes negligence because it was prohibited by law. Moreover, it was the proximate cause of the accident, and thus precludes any recovery for any damages suffered by the Altis owner from the accident. According to the Supreme Court: Articles 2179 and 2185 of the Civil Code on quasi-delicts apply in this case, viz: Article 2179. When the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. Article 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. If the master is injured by the negligence of a third person and by the concurring contributory negligence of his own servant or agent, the latters negligence is imputed to his superior and will defeat the superiors action against the third person, assuming of course that the contributory negligence was the proximate cause of the injury of which complaint is made. Applying the foregoing principles of law to the instant case, Aquilinos act of crossing Katipunan Avenue via Rajah Matanda constitutes negligence because it was prohibited by law. Moreover, it was the proximate cause of the accident, and thus precludes any recovery for any damages suffered by respondent from the accident.
SEPTEMBER 2009 CASES

COMMON CARRIER; LIABILITY. Common carriers are bound to observe extraordinary diligence over the goods they transport, according to all the circumstances of each case. In the event of loss, destruction, or deterioration of the insured goods, common carriers are responsible, unless they can prove that such loss, destruction, or deterioration was brought about by, among others, flood, storm, earthquake, lightning, or other natural disaster or calamity. In all other cases not specified under Article 1734 of the Civil Code, common carriers are presumed to have been at fault or to have acted negligently, unless they observed extraordinary diligence. Regional Container Lines (RCL) of Singapore and Shipping Agency vs. The Netherlands Insurance Co. (Philippines) Inc., G.R. No. 168151, September 4, 2009. COMMON CARRIER; LIABILITY. Petitioner, through its bus driver, failed to observe extraordinary diligence, and was, therefore, negligent in transporting the passengers of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since the bus bumped
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x x x relieve him from one-sided contracts, or annul the effects of foolish acts. The courts are obliged to give effect to the agreement and enforce the contract to the letter. In the case at bar, the parties entered into a contract for the hauling and delivery of wood poles. By reason of a change in one of the delivery points, they executed a supplemental contract that embodied said change. The terms and conditions were clear. In both contracts, the parties voluntarily and freely affixed their signatures thereto without objection. Thus, the terms contained therein are the law between them. Premier failed to anticipate all expenses that may be incurred in the hauling and the delivery of the wood poles. The bid Premier submitted was sufficient for it to be declared the winner. However, when it incurred expenses it failed to foresee, Premier began charging NAPOCOR for the additional expenses that were part and parcel of the service it contracted to provide. The contract it entered into turned out to be a disastrous deal or an unwise investment. This Court will not allow Premier to recover from NAPOCOR the expenses Premier sustained for an undertaking it was bound to perform. There is no one to blame but Premier for plunging into an undertaking without fully studying it in its entirety. Concomitantly, there can be no unjust enrichment on the part of NAPOCOR, because the services rendered in its favor are included in the contract it entered into with Premier. National Power Corporation vs. Premier Shipping Lines, Inc./Premier Shipping LInes, Inc. vs. National Power Corporation, G.R. No. 179103/G.R. No. 180209, September 17, 2009. COMPROMISE AGREEMENT; BREACH. The non-fulfillment of the terms and conditions of a compromise agreement approved by the court justifies execution thereof, and the issuance of a writ for the said purpose is the courts ministerial duty e nforceable by mandamus. In this particular case, since the Compromise Agreements enforceability depends on the maturity of the subject SPPI shares, the RTC could not compel SPPI to deliver the cash value of the said investment accounts, simply because the latter was not a party to the Compromise Agreement. Hence, the RTC did not commit any grave abuse of discretion amounting to lack of or excess of jurisdiction when it granted petitioner Valdezs motion for execution in its Decision dated May 22, 2000. In short, as the stipulations in the Compromise Agreement remain unfulfilled, respondent Financiera is still obligated to pay its original indebtedness. Simeon M. Valdez vs. Financiera Manila Inc., G.R. No. 183387, September 29, 2009. COMPROMISE AGREEMENT; STATUS OF CHILD. It is settled in law and jurisprudence, that the status and filiation of a child cannot be compromised. Public policy demands that there be no compromise on the status and filiation of a child. Paternity and filiation or the lack of the same, is a relationship that must be judicially a tree and a house, and caused physical injuries to respondent. Article 1759 of the Civil Code explicitly states that the common carrier is liable for the death or injury to passengers through the negligence or willful acts of its employees, and that such liability does not cease upon proof that the common carrier exercised all the diligence of a good father of a family in the selection and supervision of its employees. Hence, even if petitioner was able to prove that it exercised the diligence of a good father of the family in the selection and supervision of its bus driver, it is still liable to respondent for the physical injuries he sustained due to the vehicular accident. R Transport Corporation vs. Eduardo Pante, G.R. No. 162104, September 15, 2009. COMMON CARRIER; PRESUMPTION OF NEGLIGENCE. 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, RCL and EDSA Shipping failed to prove that they did exercise that degree of diligence required by law over the goods they transported. There is is sufficient evidence showing that the fluctuation of the temperature in the refrigerated container van, as recorded in the temperature chart, occurred after the cargo had been discharged from the vessel and was already under the custody of the arrastre operator, ICTSI. This evidence, however, does not disprove that the condenser fan which caused the fluctuation of the temperature in the refrigerated container was not damaged while the cargo was being unloaded from the ship. It is settled in maritime law jurisprudence that cargoes while being unloaded generally remain under the custody of the carrier; RCL and EDSA Shipping failed to dispute this. Regional Container Lines (RCL) of Singapore and Shipping Agency vs. The Netherlands Insurance Co. (Philippines) Inc., G.R. No. 168151, September 4, 2009. CONTRACT; BINDING EFFECT. It is basic that a contract is the law between the parties, and the stipulations therein provided that they are not contrary to law, morals, good customs, public order or public policy shall be binding as between the parties. In contractual relations, the law allows the parties much leeway and considers their agreement to be the law between them. This is because courts cannot follow one every step of his life and extricate him from bad bargains
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Hon. Eleuterio F. Guerrero, etc. et al./Ameurfina Melencio-Herrera, et al. vs. Hon. Eleuterio F. Guerrero, etc., et al., G.R. Nos. 140743 & G.R. No. 140745/G.R. No. 141451-52, September 17, 2009. DAMAGES; MORAL DAMAGES. The gross negligence of the City of Tagaytay in levying taxes and auctioning properties to answer for real property tax deficiencies outside its territorial jurisdiction amounts to bad faith that calls for the award of moral damages. Moral damages are meant to compensate the claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly caused. Although incapable of pecuniary estimation, the amount must somehow be proportional to and in approximation of the suffering inflicted. Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering the person has undergone, by reason of defendants culpable action. The award is aimed at restoration, as much as possible, of the spiritual status quo ante. Thus, it must be proportionate to the suffering inflicted. Since each case must be governed by its own peculiar circumstances, there is no hard and fast rule in determining the proper amount. The social standing of the aggrieved party is essential to the determination of the proper amount of the award. Otherwise, the goal of enabling him to obtain means, diversions, or amusements to restore him to the status quo ante would not be achieved. City Government of Tagaytay vs. Hon. Eleuterio F. Guerrero, etc. et al./Ameurfina Melencio-Herrera, et al. vs. Hon. Eleuterio F. Guerrero, etc., et al., G.R. Nos. 140743 & G.R. No. 140745/G.R. No. 141451-52, September 17, 2009. DAMAGES; MORAL DAMAGES. Moral damages are not recoverable simply because a contract has been breached. They are recoverable only if the defendant acted fraudulently or in bad faith or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious or in bad faith, and oppressive or abusive. Likewise, a breach of contract may give rise to exemplary damages only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or malevolent manner. The court is not sufficiently convinced that PNB acted fraudulently, in bad faith, or in wanton disregard of its contractual obligations, simply because it increased the interest rates and delayed the foreclosure of the mortgages. Bad faith cannot be imputed simply because the defendant acted with bad judgment or with attendant negligence. Bad faith is more than these; it pertains to a dishonest purpose, to some moral obliquity, or to the conscious doing of a wrong, a breach of a known duty attributable to a motive, interest or ill will that partakes established, and it is for the court to declare its existence or absence. It cannot be left to the will or agreement of the parties. Being contrary to law and public policy, the Compromise Agreement dated 18 February 2000 between petitioner and respondent is void ab initio and vests no rights and creates no obligations. It produces no legal effect at all. The void agreement cannot be rendered operative even by the parties alleged performance (partial or full) of their respective prestations. Joanie Surposa Uy vs. Jose Ngo Chua, G.R. No. 183965, September 18, 2009. CONTRACTS; LEASE. Under Art. 1687, it is settled that if the rent is paid monthly, the lease is on a month-to-month basis and may be terminated at the end of each month. In the case at bar, it is undisputed that the lease was verbal, that the period for the lease had not been fixed, that the rentals were paid monthly, and that proper demand and notice by the lessor to vacate were given. A lease on a monthto-month basis provides for a definite period and may be terminated at the end of any month, hence, by the failure of the lessees to pay the rents due for a particular month, the lease contract is deemed terminated as of the end of that month. Applying this principle, the lease contract in the instant case was deemed terminated at the end of the month when the petitioner, as lessee, failed to pay the rents due. Salvador A. Fernandez vs. Cristina D. Amagna, G.R. No. 152614, September 30, 2009. DAMAGES; ATTORNEYS FEES. The award of attorneys fees is also in order because private respondent acted in gross and evident bad faith in refusing to satisfy petitioners plainly valid, just and demandable claim. Given the time spent on the present case, which lasted for more than 15 years, the extent of services rendered by petitioners lawyers, the benefits resulting in favor of the client, as well as said lawyers professional standing, the award of P100,000.00 is proper. Emma Ver Reyes and Ramon Reyes vs. The Register of Deeds of Cavite, et al. G.R. No. 166516, September 3, 2009. DAMAGES; EXEMPLARY. The Melencios are entitled to exemplary damages. Exemplary or corrective damages are imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated, or compensatory damages. Article 2229 of the Civil Code grants the award of exemplary or corrective damages in order to deter the commission of similar acts in the future and to allow the courts to mould behavior that can have grave and deleterious consequences to society. In the instant case, the gross negligence of the City of Tagaytay in erroneously exacting taxes and selling properties outside its jurisdiction, despite the clear mandate of statutory law, must be rectified. City Government of Tagaytay vs.
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to the will of one of the parties is void; the stipulation goes against the principle of mutuality of contract under Article 1308 of the Civil Code. As correctly found by the appellate court, even with a de-escalation clause, no matter how elaborately worded, an unconsented increase in interest rates is ineffective if it transgresses the principle of mutuality of contracts. Philippine National Bank vs. Spouses Agustin and Pilar Rocamora, G.R. No. 164549, September 18, 2009. INTEREST; FAILURE TO COMMENCE ACTION. Under PD 385, government financial institutions which was PNBs status prior to its full privatization in 1996 are mandated to immediately foreclose the securities given for any loan when the arrearages amount to at least 20% of the total outstanding obligation. As stated in the narrated facts, PNB commenced foreclosure proceedings in 1990 or three years after the spouses defaulted on their obligation in 1987. On this factual premise, the PNB now insists as a legal argument that its right to foreclose should not be affected by the mandatory tenor of PD 385, since it exercised its right still within the 10-year prescription period allowed under Articles 1142 and 1144 (1) of the Civil Code. PNBs argument completely misses the point. The issue is the effect of the delay in commencing foreclosure proceedings on PNBs right to recover the deficiency, not on its right to foreclose. The delay in commencing foreclosure proceedings bears a significant function in the deficiency amount being claimed, as the amount undoubtedly includes interest and penalty charges which accrued during the period covered by the delay. The depreciation of the mortgaged properties during the period of delay must also be factored in, as this affects the proceeds that the mortgagee can recover in the foreclosure sale, which in turn affects its deficiency claim. There was also, in this case, the four-year gap between the foreclosure proceedings and the filing of the complaint for deficiency judgment during which time interest, whether at the 12% per annum rate or higher, and penalty charges also accrued. For the Court to grant the PNBs deficiency claim would be to award it for its delay and its undisputed disregard of PD 385. Philippine National Bank vs. Spouses Agustin and Pilar Rocamora, G.R. No. 164549, September 18, 2009. MARRIAGE; PRESUMPTION OF DEATH. A petition for judicial declaration t hat petitioners husband is presumed to be dead cannot be entertained because it is not authorized by law. Under the Civil Code, the presumption of death is established by law and no court declaration is needed for the presumption to arise. Since death is presumed to have taken place by the seventh year of absence, Sofio is to be presumed dead starting October 1982. Consequently, at the time of petitioners marriage to Virgilio, there existed no impediment to petitioners of the nature of fraud. Proof of actions of this character is undisputably lacking in this case. Consequently, we do not find the spouses Rocamora entitled to an award of moral and exemplary damages. Under these circumstances, neither should they recover attorneys fees and litigation expense. These awards are accordingly deleted. Philippine National Bank vs. Spouses Agustin and Pilar Rocamora, G.R. No. 164549, September 18, 2009. DAMAGES; NOMINAL DAMAGES. Since private respondents fraudulent registration of the subject property in her name violated petitioners right to remain in peaceful possession of the subject property, petitioners are entitled to nominal damages under Article 2221 of the Civil Code. Emma Ver Reyes and Ramon Reyes vs. The Register of Deeds of Cavite, et al. G.R. No. 166516, September 3, 2009. INTEREST; AMOUNT. The imposition of 6% interest per annum is thus to be computed from the time the trial court rendered judgment on September 27, 2004, and not from July 21, 1997 (the date of the auction sale) as held by the trial court, nor from the filing of the complaint on March 19, 2001 since it was respondent which filed the complaint (for collection of deficiency of mortgage obligation). And after the finality of this Decision, the judgment award inclusive of interest shall bear interest of 12% per annum until full satisfaction thereof. Virgilio C. Crystal and Glynna F. Cystal vs. Bank of the Philippines Islands, G.R. No. 180274, September 4, 2009. INTEREST; ESCALATION CLAUSE . Escalation clauses are valid and do not contravene public policy. These clauses are common in credit agreements as means of maintaining fiscal stability and retaining the value of money on long-term contracts. To avoid any resulting one-sided situation that escalation clauses may bring, the Supreme Court required in Banco Filipino, the inclusion in the parties agreement of a de -escalation clause that would authorize a reduction in the interest rates corresponding to downward changes made by law or by the Monetary Board. The validity of escalation clauses notwithstanding, these clauses do not give creditors the unbridled right to adjust interest rates unilaterally. As the Supreme Court said in the same Banco Filipino case, any increase in the rate of interest made pursuant to an escalation clause must be the result of an agreement between the parties. The minds of all the parties must meet on the proposed modification as this modification affects an important aspect of the agreement. There can be no contract in the true sense in the absence of the element of an agreement, i.e., the parties mutual consent. Thus, any change must be mutually agreed upon, otherwise, the change carries no binding effect. A stipulation on the validity or compliance with the contract that is left solely
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published for the dissemination of local news and general information; it has a bona fide subscription list of paying subscribers; and it is published at regular intervals. The newspaper must not also be devoted to the interest or published for the entertainment of a particular class, profession, trade, calling, race or religious denomination. The newspaper need not have the largest circulation so long as it is of general circulation. Presidential Decree 1079, however, does not require accreditation. The requirement of accreditation was imposed by the Court only in 2001, through A.M. No. 011-07-SC or the Guidelines in the Accreditation of Newspapers and Periodicals Seeking to Publish Judicial and Legal Notices and Other Similar Announcements and in the Raffle Thereof. This circular cannot be applied retroactively to the case at bar as it will impair petitioners rights. Moreover, as held in Metrobank v. Peafiel, the accreditation by the presiding judge is not conclusive that a newspaper is of general circulation, as each case must be decided on its own merits and evidence. In the instant case, the Affidavit of Publication executed by the account executive of Sun Star General Santos expressly provided that the said newspaper is of general circulation and is published in the City of General Santos. This is prima facie proof that Sun Star General Santos is generally circulated in General Santos City, the place where the properties are located. Notably, respondents did not claim that the subject newspaper was not generally circulated in the city, but only that it was not accredited by the court. Hence, there was valid publication and consequently, the extrajudicial foreclosure and sale are valid. China Banking Corporation vs. Sps. Wenceslao & Marcelina Martir, G.R. No. 184252, September 11, 2009. MORTGAGE; REDEMPTION. The general rule in redemption is that it is not sufficient that a person offering to redeem manifests his desire to do so. The statement of intention must be accompanied by an actual and simultaneous tender of payment. This constitutes the exercise of the right to repurchase. In several cases decided by the Supreme Court where the right to repurchase was held to have been properly exercised, there was an unequivocal tender of payment for the full amount of the repurchase price. Otherwise, the offer to redeem is ineffectual. Bona fide redemption necessarily implies a reasonable and valid tender of the entire repurchase price, otherwise the rule on the redemption period fixed by law can easily be circumvented. Moreover, jurisprudence also characterizes a valid tender of payment as one where the full redemption price is tendered. China Banking Corporation vs. Sps. Wenceslao & Marcelina Martir, G.R. No. 184252, September 11, 2009. capacity to marry, and the marriage is valid under paragraph 2 of Article 83 of the Civil Code. Further, considering that it is the Civil Code that applies, proof of well-founded belief is not required. Petitioner could not have been expected to comply with this requirement since the Family Code was not yet in effect at the time of her marriage to Virgilio. The enactment of the Family Code in 1988 does not change this conclusion. Angelita Valdez vs. Republic of the Philippines, G.R. No. 180863, September 8, 2009. MORTGAGE; FORECLOSURE . It is a settled doctrine that foreclosure is proper when the debtors are in default of the payment of their obligation. The conditions essential for that foreclosure would be to show, firstly, the existence of the chattel mortgage; and, secondly, the default of the mortgagor. Orix Metro Leasing and Finance Corporation vs. M/V PILAR -I and Spouses Ernesto Dy and Lourdes Dy, G.R. No. 157901, September 11, 2009. MORTGAGE; FORECLOSURE NOTICE. Statutory provisions governing publication of notice of mortgage foreclosure sales must be strictly complied with, and that even slight deviations therefrom will invalidate the notice and render the sale at least voidable. Indeed, one of the most important requirements of Act No. 3135 is that the notice of the time and place of sale shall be given. If the sheriff acts without notice, or at a time and place other than that designated in the notice, the sheriff acts without warrant of law. Publication is required to give the extrajudicial foreclosure sale a reasonably wide publicity such that those interested might attend the public sale. To allow the parties to waive this jurisdictional requirement would result in converting into a private sale what ought to be a public auction. Philippine National Bank vs. Gregorio B. Maraya, Jr. and Wenefrida Maraya, G.R. No. 164104, September 11, 2009. MORTGAGE; FORECLOSURE NOTICE. The requirements for posting and publication in extrajudicial foreclosure are set out in Act No. 3135, as amended. Jurisprudence, however, has decreed that the publication of the notice of sale in a newspaper of general circulation alone is more than sufficient compliance with the noticeposting requirements of the law. Presidential Decree 1079, the governing law at the time of the subject foreclosure, requires that notices shall be published in newspapers or publications published, edited and circulated in the same city and/or province where the requirement of general circulation applies. Presidential Decree 1079 requires a newspaper of general circulation. A newspaper of general circulation is
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University of Cebu College of Law
OBLIGATIONS; INTEREST. The Supreme Court reduced the interest rate pegged by the CA at 1.5% monthly to 1% monthly and penalty charge fixed by the CA at 1.5% monthly to 1% monthly or a total of 2% per month or 24% per annum in line with the prevailing jurisprudence and in accordance with Art. 1229 of the Civil Code. Ileana Dr. Macalino vs. Bank of the Philippines Islands, G.R. No. 175490, September 17, 2009. PROPERTY; LACHES. Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. This equitable defense is based upon grounds of public policy, which requires the discouragement of stale claims for the peace of society. Juana sold the property to the Spouses Cereno in 1970 and since then have possessed the property peacefully and publicly without any opposition from petitioners. While petitioners claim that they knew about the sale only in 1980 yet they did not take any action to recover the same and waited until 1999 to file a suit without offering any excuse for such delay. Records do not show any justifiable reason for petitioners inaction for a long time in asserting whatever rights they have over the property given the publicity of respondents conduct as owners of the property. Julita V. Imuan, et al. vs. Juanito Cereno, et al., G.R. No. 167995, September 11, 2009. PROPERTY; PRESCRIPTION. Prescription is another mode of acquiring ownership and other real rights over immovable property. It is concerned with lapse of time in the manner and under conditions laid down by law, namely, that the possession should be in the concept of an owner, public, peaceful, uninterrupted and adverse. 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. Acquisitive prescription of real rights may be ordinary or extraordinary. Ordinary acquisitive prescription requires possession in good faith and with just title for ten years. In extraordinary prescription, ownership and other real rights over immovable property are acquired through uninterrupted adverse possession for thirty years without need of title or of good faith.
UCLASS Bar Operations: Civil Law Society

The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership. For purposes of prescription, there is just title when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right. Julita V. Imuan, et al. vs. Juanito Cereno, et al., G.R. No. 167995, September 11, 2009. PROPERTY; PUBLIC PROPERTY. Plaza Rizal partakes of the nature of a public park or promenade. As such, Plaza Rizal is classified as a property for public use. In Municipality of San Carlos, Pangasinan v. Morfe, the Court recognized that a public plaza is a public land belonging to, and, subject to the administration and control of, the Republic of the Philippines. Absent an express grant by the Spanish Government or that of the Philippines, the local government unit where the plaza was situated, which in that case was the Municipality of San Carlos, had no right to claim it as its patrimonial property. The Court further held that whatever right of administration the Municipality of San Carlos may have exercised over said plaza was not proprietary, but governmental in nature. The same did not exclude the national government. On the contrary, it was possessed on behalf and in representation thereof, the municipal government of San Carlos being in the performance of its political functions a mere agency of the Republic, acting for its benefit. Applying the above pronouncements to the instant case, Camarines Sur had the right to administer and possess Plaza Rizal prior to the conversion of the then Municipality of Naga into the independent City of Naga, as the plaza was then part of the territorial jurisdiction of the said province. Said right of administration by Camarines Sur was governmental in nature, and its possession was on behalf of and in representation of the Republic of the Philippines, in the performance of its political functions. Thereafter, by virtue of the enactment of Republic Act No. 305 and as specified in Section 2, Article I thereof, the City of Naga was created out of the territory of the old Municipality of Naga. Plaza Rizal, which was located in the said municipality, thereby ceased to be part of the territorial jurisdiction of Camarines Sur and was, instead transferred to the territorial jurisdiction of the City of Naga. Theretofore, the local government unit that is the proper agent of the Republic of the Philippines that should administer and possess Plaza Rizal is the City of Naga. Camarines Sur cannot claim that Plaza Rizal is part of its patrimonial property. The basis for the claim of ownership of Camarines Sur, i.e., the tax declaration covering Plaza Rizal in the name of the province, hardly
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QUASI-DELICT; NEGLIGENCE. Foreseeability is the fundamental test of negligence. To be negligent, a defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a general but definite class of risks. Cresencia Achevara, Alfredo Achevara and Benigno Valdez vs. Elvira Ramos, John Arnel Ramos and Kristine Camille Ramos, G.R. No. 175172, September 29, 2009. QUASI-DELICT; NEGLIGENCE. Under the doctrine of respondeat superior, the principal is liable for the negligence of its agents acting within the scope of their assigned tasks. The City of Tagaytay is liable for all the necessary and natural consequences of the negligent acts of its city officials. It is liable for the tortious acts committed by its agents who sold the subject lots to the Melencios despite the clear mandate of R.A. No. 1418, separating Barrio Birinayan from its jurisdiction and transferring the same to the Province of Batangas. The negligence of the officers of the City of Tagaytay in the performance of their official functions gives rise to an action ex contractu and quasi ex-delictu. However, the Melencios cannot recover twice for the same act or omission of the City of Tagaytay. Negligence is the failure to observe 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. Thus, negligence is the want of care required under circumstances. In this case, it is basic that before the City of Tagaytay may levy a certain property for sale due to tax delinquency, the subject property should be under its territorial jurisdiction. The city officials are expected to know such basic principle of law. The failure of the city officials of Tagaytay to verify if the property is within its jurisdiction before levying taxes on the same constitutes gross negligence. City Government of Tagaytay vs. Hon. Eleuterio F. Guerrero, etc. et al./Ameurfina MelencioHerrera, et al. vs. Hon. Eleuterio F. Guerrero, etc., et al., G.R. Nos. 140743 & G.R. No. 140745/G.R. No. 14145152, September 17, 2009. QUASI-DELICT; REQUISITES. In every tort case filed under Article 2176 of the Civil Code, the plaintiff has to prove by a preponderance of evidence: (1) the damages suffered by him; (2) the fault or negligence of the defendant or some other person to whose act he must respond; (3) the connection of cause and effect between the fault or negligence and the damages incurred; and (4) that there must be no preexisting contractual relation between the parties. convinces this Court. Well-settled is the rule that a tax declaration is not conclusive evidence of ownership or of the right to possess land, when not supported by any other evidence. The same is merely an indicia of a claim of ownership.[40] In the same manner, the Certification dated 14 June 1996 issued by the Department of Environment and Natural Resources Community Environment and Natural Resources Office (DENRCENRO) in favor of Camarines Sur, merely stating that the parcel of land described therein, purportedly Plaza Rizal, was being claimed solely by Camarines Sur, hardly constitutes categorical proof of the alleged ownership of the said property by the province. Thus, being a property for public use within the territorial jurisdiction of the City of Naga, Plaza Rizal should be under the administrative control and supervision of the said city. Province of Camarines Sur, represented by Governor Luis Raymund F. Villafuerte, Jr. vs. Hon. Court of Appeals and City of Naga, represented by Mayor Jesse M. Robredo, G.R. No. 175064, September 18, 2009. QUASI-DELICT; LAST CLEAR CHANCE. The doctrine of last clear chance applies to 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. However, the doctrine does not apply where the party charged is required to act instantaneously, and the injury cannot be avoided by the application of all means at hand after the peril is or should have been discovered. The doctrine of last clear chance does not apply to this case, because even if it can be said that it was Benigno Valdez who had the last chance to avoid the mishap when the owner-type jeep encroached on the western lane of the passenger jeep, Valdez no longer had the opportunity to avoid the collision. The Answer of petitioners stated that when the owner-type jeep encroached on the lane of the passenger jeep, Benigno Valdez maneuvered his vehicle towards the western shoulder of the road to avoid a collision, but the ownertype jeep driven by Ramos continued to move to the western lane and bumped the left side of the passenger jeep. Thus, petitioners assert in their Petition that considering that the time the owner-type jeep encroached on the lane of Valdez to the time of impact was only a matter of seconds, he no longer had the opportunity to avoid the collision. Although the records are bereft of evidence showing the exact distance between the two vehicles when the owner-type jeep encroached on the lane of the passenger jeep, it must have been near enough, because the passenger jeep driven by Valdez was unable to avoid the collision. Hence, the doctrine of last clear chance does not apply to this case. Cresencia Achevara, Alfredo Achevara and Benigno Valdez vs. Elvira Ramos, John Arnel Ramos and Kristine Camille Ramos, G.R. No. 175172, September 29, 2009.
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become patrimonial property not only with a declaration that these are alienable or disposable but also with an express government manifestation that the property is already patrimonial or no longer retained for public use, public service or the development of national wealth. And only when the property has become patrimonial can the prescriptive period for the acquisition of property of the public dominion begin to run. While the subject lots were declared alienable or disposable on March 15, 1982, there is no competent evidence that they are no longer intended for public use or for public service. The classification of the lots as alienable and disposable lands of the public domain does not change its status as properties of the public dominion. Petitioner cannot thus acquire title to them by prescription as yet. Joyce Y. Lim, represented by her attorney-in-fact Bernardo M. Nicolas/Joyce Y. Lim, represented by her attorney-in-fact Bernardo M. Nicolas, G.R. No. 158630/G.R. No. 162047, September 4, 2009. LAND; REGISTRATION. Any person, by himself or through his predecessor-ininterest, who has been in open, continuous, exclusive, and notorious possession and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945 or earlier, may file in the proper trial court an application for registration of title to land, whether personally or through his duly authorized representative. Being the applicant for confirmation of imperfect title, petitioner bears the burden of proving that: 1) the land forms part of the alienable and disposable land of the public domain; and 2) she has been in open, continuous, exclusive, and notorious possession and occupation of the subject land under a bona fide claim of ownership from June 12, 1945 or earlier. These the petitioner must prove by no less than clear, positive and convincing evidence. Peregina Mistica vs. Republic of the Philippines, G.R. No. 165141, September 11, 2009. LAND; REGISTRATION. The Property Registration Decree involves original registration through ordinary registration proceedings. Under Section 14 (1) of said law, the requisites for the filing of an application for registration of title are: that the property in question is alienable and disposable land of the public domain; that the applicants by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation; and that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier. Joyce Y. Lim, represented by her attorney-in-fact Bernardo M. Nicolas/Joyce Y. Lim, represented by her attorney-in-fact Bernardo M. Nicolas, G.R. No. 158630/G.R. No. 162047, September 4, 2009. SALE; NON-REGISTRATION. On the other hand, Article 26 of the Civil Code grants a cause of action for damages, prevention, and other relief in cases of breach, though not necessarily constituting a criminal offense, of the following rights: (1) right to personal dignity; (2) right to personal security; (3) right to family relations; (4) right to social intercourse; (5) right to privacy; and (6) right to peace of mind. Zenaida R. Gregorio vs. Court of Appeals, et al., G.R. No. 179799, September 11, 2009. SALE; AUCTION SALE. Nothing is more settled than that a judgment creditor (or more accurately, the purchaser at an auction sale) only acquires at an execution sale the identical interest possessed by the judgment debtor in the auctioned property; in other words, the purchaser takes the property subject to all existing equities applicable to the property in the hands of the debtor. The fact, too, that the judgment debtor is in possession of the land to be sold at public auction, and that the purchaser did not know that a third-party had acquired ownership thereof, does not protect the purchaser, because he is not considered a third-party, and the rule of caveat emptor applies to him. Thus, if it turns out that the judgment debtor has no interest in the property, the purchaser at an auction sale also acquires no interest therein. Juan Balbuena and Teodulfo Retuya vs. Leona Aparicio Sabay, et al., G.R. No. 154720, September 4, 2009. SALES; DOUBLE SALES. The spouses Cuevas only sold the subject property to them in 1976, and did not sell it a second time to private respondent in 1992. As a consequence, the rules on the double sale of registered property are not relevant herein. Emma Ver Reyes and Ramon Reyes vs. The Register of Deeds of Cavite, et al. G.R. No. 166516, September 3, 2009. Sale; inexistent. As the Deed of Absolute Sale in Milagrosas favor is not genuine, it transmitted no rights to her. Consequently, the subject land part of Cebreros estate which was allotted to Secundina was validly sold by her to petitioner. Progressive Trade & Service Enterprises vs. Maria Milagrosa Antonio, G.R. No. 179502, September 18, 2009. LAND; ALIENABLE AND DISPOSABLE. While the subject lots were verified to be alienable or disposable lands since March 15, 1982, there is no sufficient proof that open, continuous and adverse possession over them by petitioner and her predecessors-in-interest commenced on June 12, 1945 or earlier. Petitioners applications cannot thus be granted. While a property classified as alienable and disposable public land may be converted into private property by reason of open, continuous, exclusive and notorious possession of at least 30 years, public dominion lands
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petitioners, being the rightful owners of the subject property, are entitled to the reconveyance of the title over the same. Emma Ver Reyes and Ramon Reyes vs. The Register of Deeds of Cavite, et al. G.R. No. 166516, September 3, 2009. ZIP - ABSENTEE STRUCTURE OWNER. The following requisites must concur for one to be considered an absentee structure owner: one, the person must own a structure or dwelling unit within the ZIP zone; and two, the person has not occupied the structure or dwelling unit prior to the official closure of the census. The petitioner did not meet the second requisite because it was the respondents, not her, who were living in or occupying Structure No. 86-313 at the time of the official ZIP census and until they vacated the premises on November 17, 1996. In the award of the ZIP lot allocation, the primary bases for determining the potential program beneficiaries and structures or dwelling units in the project area were the official ZIP census and tagging conducted in 1987. It was, therefore, the primordial requisite that the intended beneficiary must be the occupant of the tagged structure at the time of the official ZIP census or at the closure thereof. Otherwise, the person was considered an absentee structure owner for being absent from his usual residence or domicile. At any rate, the Code of Policies made it clear that the issuance of a ZIP tag number to a structure did not guarantee ZIP lot allocation to the owner of the tagged structure. Such interpretation of the Code of Policies was in harmony with the objectives and principles underlying the program to provide adequate shelter and place of abode to the legally qualified beneficiaries. That the petitioner was the person who built Structure No. 86-313 did not necessarily mean that the lot on which the structure stood would be automatically awarded to her. Like any other beneficiary, she must first comply with the requirements imposed by the Government before being deemed entitled to the lot allocation. Unfortunately, she was not using Structure No. 86-313 as a dwelling or living quarters, but as a source of income, which only signified that she was not a homeless person whom the ZIP intended to benefit. To consider her a homelot beneficiary would be contrary to the spirit of the Code of Policies and would defeat the very object of the ZIP. Carmen A. Blas vs. Spouses Eduardo and Salud Galapon, G.R. No. 159710, September 30, 2009. REMEDIES FOR NON-PAYMENT OF LOAN SECURED BY MORTGAGE AND CHECKS. According to the Supreme Court, a creditor has three (3) alternative remedies if the debtor fails (or unjustly refuses) to pay his debt when it falls due and the debt is secured by a mortgage and by a check: . . . the creditor has three options against the debtor and the exercise of one will bar the exercise of the others. The reliance of the Dadizons on the unnotarized and unregistered deed of absolute sale of real property executed by Bernadas in their favor was misplaced and unwarranted, for the non-registration of the deed meant that the sale could not bind third parties like the respondents. The transaction affecting unregistered lands covered by an unrecorded contract, if legal, might be valid and binding on the parties themselves, but not on third parties. In the case of third parties, it was necessary for the contract to be registered. Bernadas execution on March 10, 1976 of the deed of absolute sale of real property in favor of the Dadizons, standing alone, did not suffice to bind and conclude the Mocorros. Pursuant to Sec. 113, Presidential Decree No. 1529, the recording of the sale was necessary. Besides, the deed, being the unilateral act of Bernadas, did not adversely affect the Mocorros, who were not her privies. Otherwise stated, the deed was res inter alios acta as far as they were concerned. Neither would the affidavit of adjoining owners support the Dadizons cause, considering that such affidavit, aside from its being self-serving and unilateral, had been executed only for the purpose of facilitating Felicidad Dadizons application for the low cost housi ng loan from the Development Bank of the Philippines. Sps. Nestor and Felicidad Dadizon vs. Hon. Court of Appeals and Sps. Dominador and Elsa Mocorro, G.R. No. 159116, September 30, 2009. TORRENS TITLE; FRAUDULENT TITLE. Insofar as a person who fraudulently obtained a property is concerned, the registration of the property in said persons name would not be sufficient to vest in him or her the title to the property. A certificate of title merely confirms or records title already existing and vested. The indefeasibility of the Torrens title should not be used as a means to perpetrate fraud against the rightful owner of real property. Good faith must concur with registration because, otherwise, registration would be an exercise in futility. A Torrens title does not furnish a shield for fraud, notwithstanding the long-standing rule that registration is a constructive notice of title binding upon the whole world. The legal principle is that if the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee. It has long been established that the sole remedy of the landowner whose property has been wrongfully or erroneously registered in anothers name is to bring an ordinary action in an ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. It is one thing to protect an innocent thi rd party; it is entirely a different matter and one devoid of justification if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed. Reconveyance is all about the transfer of the property, in this case the title thereto, which has been wrongfully or erroneously registered in another persons name, to its rightful and legal owner, or to one with a better right. Evidently,
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foreclose on the property of petitioners when it elected to sue Sammy for violation of BP 22. PDCP appealed to the Court of Appeals (CA). On February 8, 2005, the CA reversed the RTC. It opined that PDCP was not barred from exercising its right to foreclose on the property of Sammys parents despite suing Sammy for violation of BP 22. The purpose of BP 22 was to punish the act of issuing a worthless check, not to force a debtor to pay his debt. On appeal to the Supreme Court, Sammys parents argue that, when Sammy was sued for six counts of violation of BP 22, PDCP should have been deemed to have simultaneously filed for collection of the amount represented by the checks. The civil aspect of the case was naturally an action for collection of Sammys obligation to PDCP. PDCP clearly elected a remedy. PDCP should not be allowed to pursue another, like foreclosure of mortgage. The Supreme Court ruled in favor of PDCP: First, petitioners anchor their position on Supreme Court Circular 57-97, which provides for the rules and guidelines in the filing and prosecution of criminal cases under BP 22. . . Sad to say, Circular 57-97 (and, it goes without saying, Section 1(b), Rule 111 of the Rules of Court) was not yet in force when PDCP sued Sammy for violation of BP 22 and when it filed a petition for extrajudicial foreclosure on the mortgaged property of petitioners on February 8, 1993 and May 3, 1993, respectively. In Lo Bun Tiong v. Balboa, Circular 57-97 was not applied because the collection suit and the criminal complaints for violation of BP 22 were filed prior to the adoption of Circular 57-97. The same principle applies here. Thus, prior to the effectivity of Circular 57-97, the alternative remedies of foreclosure of mortgage and collection suit were not barred even if a suit for BP 22 had been filed earlier, unless a judgment of conviction had already been rendered in the BP 22 case finding the accused debtor criminally liable and ordering him to pay the amount of the check(s). In this case, no judgment of conviction (which could have declared the criminal and civil liability of Sammy) was rendered because Sammy moved for the provisional dismissal of the case. Hence, PDCP could have still foreclosed on the mortgage or filed a collection suit. Nonetheless, records show that, during the pendency of the BP 22 case, Sammy had already paid PDCP the total amount of P1,783,582. Thus, to prevent unjust enrichment on the part of the creditor, any foreclosure by PDCP should only be for the unpaid balance. Second, it is undisputed that the BP 22 cases were provisionally dismissed at Sammys instance. In other He may pursue either of the three but not all or a combination of them. First, the creditor may file a collection suit against the debtor. This will open up all the properties of the debtor to attachment and execution, even the mortgaged property itself. Second, the creditor may opt to foreclose on the mortgaged property. In case the debt is not fully satisfied, he may sue the debtor for deficiency judgment (not a collection case for the whole indebtedness), in which case, all the properties of the debtor, other than the mortgaged property, are again opened up for the satisfaction of the deficiency. Lastly, the creditor may opt to sue the debtor for violation of BP 22 if the checks securing the obligation bounce. Circular 57-97 and Section 1(b), Rule 111 of the Rules of Court both provide that the criminal action for violation of BP 22 shall be deemed to necessarily include the corresponding civil action, i.e., a collection suit. No reservation to file such civil action separately shall be allowed or recognized. Given the special circumstances of the case, the Supreme Court did not apply the above rule in Spouses Simon Yap and Milagros Guevarra vs. First e-Bank, Inc. , G.R. No. 169889, September 29, 2009. Here, Sammy Yap obtained a loan from PDCP. As security, his parents executed a third party mortgage covering their land and the warehouse standing on it. In addition, Yap delivered six post dated checks to PDCP. The checks bounced and PDCP filed a complaint for violation of the Bouncing Checks Law (BP 22). PDCP subsequently filed an application for the extrajudicial foreclosure of mortgage. On motion of Sammy and without objection from the public prosecutor and PDCP, the BP 22 cases were provisionally dismissed. His parents filed in the Regional Trial Court (RTC) a complaint for injunction (with prayer for the issuance of a temporary restraining order/preliminary injunction), damages and accounting of payments against the bank. The complaint sought to stop the foreclosure sale on the ground that PDCP waived its right to foreclose the mortgage on their property when it filed the BP 22 cases against Sammy. The RTC ruled in favor of Sammys parents. According to the RTC, PDCP had three options when Sammy defaulted in the payment of his loan: enforcement of the promissory note in a collection case, enforcement of the checks under the Negotiable Instruments Law and/or BP 22, or foreclosure of mortgage. The remedies were alternative and the choice of one excluded the others. Thus, PDCP was deemed to have waived its right to
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Under Article 2212 of the Civil Code, the interest due shall itself earn legal interest from the time it is judicially demanded, although the obligation may be silent upon this point. (b) Parties did not agree on interest payable words, PDCP was prevented from recovering the whole amount by Sammy himself. To bar PDCP from foreclosing on petitioners property for the balance of the indebtedness would be to penalize PDCP for the act of Sammy. That would not only be illogical and absurd but would also violate elementary rules of justice and fair play. In sum, PDCP has not yet effectively availed of and fully exhausted its remedy. While it can be argued that PDCP may revive the BP 22 cases anytime as their dismissal was only provisional, suffice it to state that the law gives the right of choice to PDCP, not to Sammy or to petitioners. Third, petitioners should be mindful that, by being third party mortgagors, they agreed that their property would stand as collateral to the loan of Sammy until the last centavo is paid to PDCP. That is a risk they willingly assumed. To release the mortgage just because they find it inconvenient would be the height of injustice against PDCP. All told, PDCP should not be left without recourse for the unsettled loan of Sammy. Otherwise, an iniquitous situation will arise where Sammy and petitioners are unjustly enriched at the expense of PDCP. That we cannot sanction. INTEREST: 6% VS. 12%. In the event that a party breaches his obligation to the other contracting party, what rate of interest can he expect to be held liable for? In Maria Soledad Tomimbang vs. Atty. Jose Tomimbang, G.R. No. 165116, August 4, 2009, the Supreme Court reminds us when the rate of 6% per annum applies and when the rate of 12% per annum applies. In Tomimbang, the respondent gave a loan to the petitioner (his sibling). However, the petitioner stopped making monthly repayments on the loan. The regional trial court and the Court of Appeals ruled that the petitioner must pay interest on the indebtedness at the rate of 12% per annum. The Supreme Court agreed. The Supreme Court reiterated its ruling in the 1994 case of Eastern Shipping, Inc. vs. Court of Appeals, 234 SCRA 78, 95-96 (1994). The holding can be summarized as follows: 1. Loans or forbearance of money, goods, or credits, as well as to judgments involving such loan or forbearance of money, goods, or credit (a) Parties agreed on interest payable
In the absence of stipulation between the parties on the rate of interest payable, the rate of interest will be 12% per annum to be computed from default, i.e., from the judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code. 2. Obligations not involving loans or forbearance of money (or judgments related thereto) If the obligation breached does not consist in the payment of a sum of loaned money, the court, in its discretion, may impose interest on the amount of damages awarded at the rate of 6% per annum (see Civil Code, art. 2209). However, no interest can be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. 3. Court judgment
When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. Since the obligation in Tomimbang involves a loan and there is no stipulation in writing as to interest due, the Supreme Court ruled that the rate of interest shall be 12% per annum computed from the date of extrajudicial demand.
If the parties agreed on the interest payable, the interest due is what has been stipulated upon by the parties. Pursuant to Article 1856 of the Civil Code, the agreed interest must have been expressly stipulated in writing.
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INIQUITOUS AND CARD PENALTIES.

CREDIT In the instant case, the records would reveal that petitioner Macalinao made partial payments to respondent BPI, as indicated in her Billing Statements. Further, the stipulated penalty charge of 3% per month or 36% per annum, in addition to regular interests, is indeed iniquitous and unconscionable. Given the foregoing, the Supreme Court reduced the interest and penalty payable as follows: Thus, under the circumstances, the Court finds it equitable to reduce the interest rate pegged by the CA at 1.5% monthly to 1% monthly and penalty charge fixed by the CA at 1.5% monthly to 1% monthly or a total of 2% per month or 24% per annum in line with the prevailing jurisprudence and in accordance with Art. 1229 of the Civil Code.
UNCONSCIONABLE
Credit card companies usually collect interest and finance charges from cardholders who do not pay the outstanding balance in full. It is not unusual for credit card companies to collect interest at the rate of 3% per month (or 36% per annum), in addition to finance charges that are also computed on a monthly basis. In Ileana Dr. Macalino vs. Bank of the Philippines Islands , G.R. No. 175490, September 17, 2009, the terms and conditions for the use of the credit card provide that balances remaining unpaid after the payment due date indicated on the monthly Statement of Account will bear interest at the rate of 3% per month, plus an additional penalty fee equivalent to another 3% per month. The Supreme Court ruled that the interest rate and penalty charge of 3% per month should be equitably reduced to 2% per month or 24% per annum. With respect to the interest rate, the Supreme Court stated: We find for petitioner. We are of the opinion that the interest rate and penalty charge of 3% per month should be equitably reduced to 2% per month or 24% per annum. Indeed, in the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card, there was a stipulation on the 3% interest rate. Nevertheless, it should be noted that this is not the first time that this Court has considered the interest rate of 36% per annum as excessive and unconscionable. . . Since the stipulation on the interest rate is void, it is as if there was no express contract thereon. Hence, courts may reduce the interest rate as reason and equity demand. With respect to the penalty charge, the Supreme Court ruled: The same is true with respect to the penalty charge. Notably, under the Terms and Conditions Governing the Issuance and Use of the BPI Credit Card, it was also stated therein that respondent BPI shall impose an additional penalty charge of 3% per month. Pertinently, Article 1229 of the Civil Code states: Art. 1229. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable. In exercising this power to determine what is iniquitous and unconscionable, courts must consider the circumstances of each case since what may be iniquitous and unconscionable in one may be totally just and equitable in another.
OCTOBER 2009 CASES

CONTRACT; BINDING EFFECT. Article 1311 of the New Civil Code states that, contracts take effect only between the parties, their assigns and heirs, except in case where the rights and obligations arising from the contract are not transmissible by their nature, or by stipulation or by provision of law. In this case, the rights and obligations between petitioner and Alfonso are transmissible. There was no mention of a contractual stipulation or provision of law that makes the rights and obligations under the original sales contract for Lot 3, Block 4, Phase IIintransmissible . Hence, Alfonso can transfer her ownership over the said lot to respondents and petitioner is bound to honor its corresponding obligations to the transferee or new lot owner in its subdivision project. Having transferred all rights and obligations over Lot 3, Block 4, Phase II to respondents, Alfonso could no longer be considered as an indispensable party. An indispensable party is one who has such an interest in the controversy or subject matter that a final adjudication cannot be made in his absence, without injuring or affecting that interest. Contrary to pet itioners claim, Alfonso no longer has an interest on the subject matter or the present controversy, having already sold her rights and interests on Lot 3, Block 4, Phase II to herein respondents. Sta. Lucia Realty & Development, Inc. vs. Spouses Francisco & Emelia Buenaventura, as represented by Ricardo Segismundo, G.R. No. 177113, October 2, 2009. CONTRACT; COMPROMISE AGREEMENT. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It contemplates mutual concessions and mutual gains to avoid the expenses of litigation; or when litigation has
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CONTRACT; PRESCRIPTION. It is true that an action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud. The RTC, however, seemed to have overlooked the fact that the basis of respondents complaint for reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos cronies upon the re latives of the Montanos while the latter were on self-exile. In fact, fraud was neither specifically alleged nor remotely implied in the complaint. Article 1391 of the Civil Code provides: Art. 1391. An action for annulment shall be brought within four years. This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases. In the circumstances prevailing in this case, the threat or intimidation upon respondents is deemed to have ceased only upon the ouster of then President Marcos from power on February 21, 1986. The four-year prescriptive period must, therefore, be reckoned from the said date. Thus, when respondents filed their complaint forreconveyance on September 15, 1989, the period provided for by law had not yet prescribed. Therefore, petitioners motion to dismiss should be denied. Associated Bank vs. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al. G.R. No. 166383. October 16, 2009 CONTRACT; RESCISSION. The remedy of rescission under Article 1191 cannot apply to mere contracts to sell. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009. CONTRACT; VOID CONTRACT . There can be no doubt that the contract of sale or Kasulatan lacked the essential element of consideration. It is a well-entrenched rule that where the deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void abinitio for lack of consideration. Moreover, Art. 1471 of the Civil Code, which provides that if the price is simulated, the sale is void, also applies to the instant case, since the price purportedly paid as indicated in the contract of sale was simulated for no payment was actually made. already begun, to end it because of the uncertainty of the result. The validity of a compromise agreement is dependent upon its fulfillment of the requisites and principles of contracts dictated by law; and its terms and conditions must not be contrary to law, morals, good customs, public policy and public order. Gov. Antonio P. Calingin vs. Civil Service Commission and Grace L. Anayron, G.R. No. 183322, October 30, 2009. CONTRACT; CONTRACT TO SELL. The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised. In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon fulfillment of the condition agreed,i.e., full payment of the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of asuspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009. CONTRACT; EQUITABLE MORTGAGE. An equitable mortgage has been defined as one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything contrary to law in thi s intent. For the presumption of an equitable mortgage to arise under Article 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale; and, (b) that their intention was to secure an existing debt by way of a mortgage. Any of the circumstances laid out in Article 1602, not the concurrence nor an overwhelming number of the enumerated circumstances, is sufficient to support the conclusion that a contract of sale is in fact an equitable mortgage. In several cases, we have not hesitated to declare a purported contract of sale to be an equitable mortgage based solely on one of the enumerated circumstances under Article 1602. This approach follows the rule that when doubt exists on the nature of the parties transaction, the law favors the least transmission of property rights. Rockville Excel International Exim Corporation vs. Spouses Oligario Culla and Bernardita Miranda, G.R. No. 155716, October 2, 2009.
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DAMAGES; ATTORNEYS FEES. Tan had a valid reason for refusing to pay the balance of the purchase price for the property. Consequently, there is no basis for the award of attorneys fees in favor of the respondents. On the other hand, we award attorneys fees in favor of Tan, since he was compelled to litigate due to the respondents refusal to return his down payment despite the fact that they could no longer comply with their obligation under the contract to sell, i.e., to convey a clean title. Given the facts of this case, we find the award of P50,000.00 as attorneys fees proper. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009. DAMAGES; ATTORNEYS FEES. Article 2208 of the Civil Code provides that in the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered. In this case, however, the charge invoice provides that 25% of the amount due is further charged for attorneys fees a nd cost of collection in case of suit. Thus, we agree that respondent is also entitled to 25% of P108,032 or P27,008 as attorneys fees. DAMAGES; INTEREST. Undoubtedly, Tan made a clear and unequivocal demand on the vendors to return his down payment as early as May 28, 1993. Pursuant to Our definitive ruling in Eastern Shipping Lines, Inc. v. Court of Appeals, we hold that the vendors should return the P200,000.00 down payment to Tan, subject to the legal interest of 6% perannum computed from May 28, 1993, the date of the first demand letter. Angelito Colmenares vs. Hand Tractor Parts and Agro-Industrial Corp., G.R. No. 170790, October 23, 2009. DAMAGES; INTEREST. After a judgment has become final and executory, the rate of legal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% perannum from such finality until its satisfaction. Accordingly, the principal obligation of P200,000.00 shall bear 6% interest from the date of first demand or from May 28, 1993. From the date the liability for the principal obligation and attorneys fees has become final andexecutory , an annual interest of 12% shall be imposed on these obligations until their final satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. Delfin Tan vs. Erlinda C. Benolirao, Andrew C. Benolirao, Romano C. Benolirao, Dion C. Benolirao, Sps. Reynaldo Taningco and Norma D. Benolirao, Evelyn T. Monreal and Ann Karina Taningco, G.R. No. 153820, October 16, 2009. Consideration and consent are essential elements in a contract of sale. Where a partys consent to a contract of sale is vitiated or where there is lack of consideration due to a simulated price, the contract is null and void abinitio. Sps. Ramon Lequin and Virgina Lequin vs. Sps. Raymundo Vizconde, et al., G.R. No. 177710, October 12, 2009. CONTRACT; VOIDABLE CONTRACT. A contract, as defined in the Civil Code, is a meeting of minds, with respect to the other, to give something or to render some service. For a contract to be valid, it must have three essential elements: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. The requisites of consent are (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. In De Jesus v. Intermediate Appellate Court, it was explained that intelligence in consent is vitiated by error, freedom by violence, intimidation or undue influence, and spontaneity by fraud. Article (Art.) 1330 of the Civil Code provides that when consent is given through fraud, the contract is voidable. Tolentino defines fraud as every kind of deception whether in the form of insidious machinations, manipulations, concealments or misrepresentations, for the purpose of leading another party into error and thus execute a particular act. Fraud has a determining influence on the consent of the prejudiced party, as he is misled by a false appearance of facts, thereby producing error on his part in deciding whether or not to agree to the offer. One form of fraud is misrepresentation through insidious words or machinations. Under Art. 1338 of the Civil Code, there is fraud when, through insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which without them he would not have agreed to. Insidious words or machinations constituting deceit are those that ensnare, entrap, trick, or mislead the other party who was induced to give consent which he or she would not otherwise have given. Deceit is also present when one party, by means of concealing or omitting to state material facts, with intent to deceive, obtains consent of the other party without which, consent could not have been given. Art. 1339 of the Civil Code is explicit that failure to disclose facts when there is a duty to reveal them, as when the parties are bound by confidential relations, constitutes fraud. Sps. Ramon Lequin and Virgina Lequin vs. Sps. Raymundo Vizconde, et al., G.R. No. 177710, October 12, 2009.
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DAMAGES; MORAL. The award of moral and exemplary damages must be reinstated in view of the fraud or fraudulent machinations employed by respondents on petitioners. The grant of damages in the concept of attorneys fees in the amount ofPhP 10,000 must be maintained considering that petitioners have to incur litigation expenses to protect their interest in conformity to Art. 2208(2) of the Civil Code. Sps. Ramon Lequin and Virgina Lequin vs. Sps. Raymundo Vizconde, et al., G.R. No. 177710, October 12, 2009 OBLIGATION; DACION. Dacion en pago is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of an existing obligation. It is a special mode of payment where the debtor offers another thing to the creditor who accepts it as equivalent to the payment of an outstanding debt. Fordacion en pago to exist, the following elements must concur: (a) existence of a money obligation; (b) the alienation to the creditor of a property by the debtor with the consent of the former; and (c) satisfaction of the money obligation of the debtor. Rockville Excel International Exim Corporation vs. Spouses Oligario Culla and Bernardita Miranda, G.R. No. 155716, October 2, 2009. OBLIGATION; DACION. Dacion en pago is the delivery and transmission of ownership of another thing by the debtor to the creditor as an accepted equivalent of performance of an obligation. It partakes of the nature of a contract of sale, where the thing offered by the debtor is the object of the contract, while the debt is the consideration or purchase price. The pivotal issue is thus whether respondent Sychinghos had the right to sell or convey title to the subject property at the time of the dacion en pago. The Court finds in the affirmative. There having been no previous foreclosure of the Real Estate Mortgage on the subject property, respondent Sychinghos ownership thereof remained intact. Indeed, a mortgage does not affect the ownership of the property as it is nothing more than a lien thereon serving as security for a debt. The mortgagee does not acquire title to the mortgaged real estate unless he purchases it at a public auction, and it is not redeemed within the period provided for by the Rules of Court. This applies afortiori to the present case where only 1/3, not the whole, of the subject property was actually encumbered to FEBTC. Joseph Typingco vs. Lina Lim, Jerry Sychingco, et al., G.R. No. 181232, October 23, 2009. OBLIGATION; ESTOPPEL. BY its own act of acknowledging the rights of respondent (in their June 7, 1991 Kasunduan) as a member of MUMI

and his entitlement to not less than 2,880 sq m lot in the resettlement area and the corresponding disturbance compensation, petitioner is now estopped from claiming that he is not qualified to avail himself of the benefits in the contract. The Court further notes that it was because of petitioners representations that respondent was impelled to peacefully vacate the portion of the estate he was tilling. Moreover, petitioners subsequent act of granting the same contractual benefits to another member of MUMI, who was also a caretaker, defeats any interpretation of the February 14, 1991 Kasunduan that only occupants of the estate in the concept of an owner may avail of such benefits. Antipolo Properties, Inc. (now Prime East Properties, Inc.) vs. Cesar Nuyda, G.R. No. 171832, October 12, 2009. OBLIGATION; EXTINGUISHMENT. Obligations are extinguished, among others, by payment or performance, the mode most relevant to the factual situation in the present case. Under Article 1232 of the Civil Code, payment means not only the delivery of money but also the performance, in any other manner, of an obligation. Article 1233 of the Civil Code states that a debt shall not be understood to have been paid unless the thing or service in which the obligation consists has been completely delivered or rendered, as the case may be. In contracts of loan, the debtor is expected to deliver the sum of money due the creditor. These provisions must be read in relation with the other rules on payment under the Civil Code, which rules impliedly require acceptance by the creditor of the payment in order to extinguish an obligation. In the present case, Manuel sought to pay Ester by authorizing her, through an SPA, to collect the proceeds of the PNB loan an act that would have led to payment if Ester had collected the loan proceeds as authorized. Admittedly, the delivery of the SPA was not, strictly speaking, a delivery of the sum of money due toMTLC , and Ester could not be compelled to accept it as payment based on Article 1233. Nonetheless, the SPA stood as an authority to collect the proceeds of the alreadyapprovedPNB loan that, upon receipt by Ester, would have constituted as payment of the MTLC loan. Had Ester presented the SPA to the bank and signed the deed of release/cancellation of mortgage, the delivery of the sum of money would have been effected and the obligation extinguished. As the records show, Ester refused to collect and allow the cancellation of the mortgage. Under these facts, Manuel posits two things: first, that Esters refusal was based on completely unjustifiable grounds; and second, that the refusal was equivalent to payment that led to theextinguishment of the obligation. Manuel Go Cinco and Araceli S. Go Cinco vs. Court of Appeals, et al., G.R. No. 151903, October 9, 2009. OBLIGATION; FORCE MAJEURE.
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by the statute of limitations or the doctrine of laches if wrong or injustice will result. Bicol Agro-Industrial Producers Cooperative, inc. (BAPCI) vs. Edmundo O. Obias, et al. G.R. No. 172077. October 9, 2009 OBLIGATION; RECIPROCAL OBLIGATIONS. The Contract to Buy and Sell of the parties contains reciprocal obligations, i.e., to complete and deliver the condominium unit on October 31, 1998 or six months thereafter on the part ofMegaworld, and to pay the balance of the purchase price at or about the time of delivery on the part of Tanseco. Compliance by Megaworld with its obligation is determinative of compliance by Tanseco with her obligation to pay the balance of the purchase price. Megaworld having failed to comply with its obligation under the contract, it is liable therefor. That Megaworlds sending of a notice of turnover preceded Tansecos demand for refund does not abate her cause. For demand would have been useless under Article 1169, Megaworld admittedly having failed in its obligation to deliver the unit on the agreed date. Megaworld Globus Asia, Inc. vs. Mila S. Tanseco, G.R. No. 181206, October 9, 2009. OBLIGATION; TENDER. While Esters refusal was unjustified and unreasonable, we cannot agree with Manuels position that this refusal had the effect of payment that extinguished his obligation to MTLC. Article 1256 is clear and unequivocal on this point. In short, a refusal without just cause is not equivalent to payment; to have the effect of payment and the consequent extinguishment of the obligation to pay, the law requires the companion acts of tender of payment and consignation. Tender of payment, as defined in Far East Bank and Trust Company v. Diaz Realty, Inc., is the definitive act of offering the creditor what is due him or her, together with the demand that the creditor accept the same. When a creditor refuses the debtors tender of payment, the law allows the consignation of the thing or the sum due. Tender and consignation have the effect of payment, as by consignation, the thing due is deposited and placed at the disposal of the judicial authorities for the creditor to collect. Manuel Go Cinco and Araceli S. Go Cinco vs. Court of Appeals, et al., G.R. No. 151903, October 9, 2009. PERSONS; ANNULMENT OF MARRIAGE. Article 45(5) of the Family Code refers to lack of power to copulate. Incapacity to consummate denotes the permanent inability on the part of the spouses to perform the complete act of sexual intercourse. Nonconsummation of a marriage may be on the part of the husband or of the wife and may be caused by a physical or structural defect in the anatomy of one of the parties The Court cannot generalize the 1997 Asian financial crisis to be unforeseeable and beyond the control of a business corporation. A real estate enterprise engaged in thepre-selling of condominium units is concededly a master in projections on commodities and currency movements, as well as business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, hence, not an instance ofcaso fortuito. Megaworlds ex cuse for its delay does not thus lie . Megaworld Globus Asia, Inc. vs. Mila S. Tanseco, G.R. No. 181206, October 9, 2009. OBLIGATIONS; INTEREST. The applicable interest rate for the amount to be reimbursed to respondents is 6% per annum, reckoned from the time of the filing of the complaint, because the case at bar involves a breach of obligation and not a loan or forbearance of money. Sta. Lucia Realty & Development, Inc. vs. Spouses Francisco & Emelia Buenaventura, as represented by Ricardo Segismundo, G.R. No. 177113, October 2, 2009. OBLIGATION; INTEREST. Under the circumstances, the spouses Go Cinco have undertaken, at the very least, the equivalent of a tender of payment that cannot but have legal effect. Since payment was available and was unjustifiably refused, justice and equity demand that the spouses GoCinco be freed from the obligation to pay interest on the outstanding amount from the time the unjust refusal took place; they would not have been liable for any interest from the time tender of payment was made if the payment had only been accepted. Under Article 19 of the Civil Code, they should likewise be entitled to damages, as the unjust refusal was effectively an abusive act contrary to the duty to act with honesty and good faith in the exercise of rights and the fulfillment of duty. Manuel Go Cinco and Araceli S. Go Cinco vs. Court of Appeals, et al., G.R. No. 151903, October 9, 2009. OBLIGATION; INTEREST. The legal interest is 6% p.a. and it shall be reckoned from April 25, 2007 when the RTC rendered its judgment, not from the time of respondents extrajudicial demand. This must be so as it was at the time the RTC rendered its judgment that the quantification of damages may be deemed to have been reasonably ascertained. Then, from the time this decision becomes final andexecutory, the interest rate shall be 12% p.a. until full satisfaction. Air France Philippines/KLM Air France vs. John Anthony De Camilis, G.R. No. 188961, October 13, 2009. OBLIGATION; LACHES. There is no absolute rule on what constitutes laches. It is a rule of equity and applied not to penalize neglect or sleeping on ones rights, but rather to avoid recognizing a right when to do so would result in a clearly unfair situation. The question of laches is addressed to the sound discretion of the court and each case must be decided according to its particular circumstances. It is the better rule that courts, under the principle of equity, should not be guided or bound strictly
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conform with such norms and results in damages to another, a legal wrong is thereby committed for which the wrong doer must be held responsible. Similarly, 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 the damages caused. It is patent in this case that petitioners alleged acts fall short of these established civil law standards. Patronica Ravina and Wilfredo Ravina vs. Mary Ann P. Villa Abrille, for behalf of Ingrid DLyn P. Villa Abrille, et al., G.R. No. 160708, October 16, 2009. PERSONS; PSYCHOLOGICAL INCAPACITY. In Santos v. Court of Appeals, the Court declared that psychological incapacity under Article 36 of the Family Code is not meant to comprehend all possible cases of psychoses. It should refer, rather, to no less than a mental (not physical) incapacity that causes a party to be trulyincognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. Psychological incapacity must be characterized by (a) gravity, (b) juridical antecedence, and (c)incurability. Veronica Cabacungan Alcazar vs. Rey C. Alcazar, G.R. No. 174451, October 13, 2009. PERSONS; PSYCHOLOGICAL INCAPACITY. It must be stressed that psychological incapacity must be more than just a difficulty, refusal or neglect in the performance of some marital obligations. The intention of the law is to confine the meaning of psychological incapacity to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. Noteworthy, as aptly pointed out by the appellate court, Rodolfo and Aurora initially had a blissful marital union for several years. They married in 1982, and later affirmed the ceremony in church rites in 1983, showing love and contentment with one another after a year of marriage. The letter of petitioner dated April 1, 1990addressed to respondent revealed the harmonious relationship of the couple continued during their marriage for about eight years from the time they married each other. From this, it can be inferred that they were able to faithfully comply with their obligations to each other and to their children. Aurora was shown to have taken care of her children and remained faithful to her husband while he was away. She even joined sales activities to augment the family income. She appeared to be a very capable woman who traveled a lot and pursued studies here and abroad. It was only when Rodolfos acts of infidelity were discovered that the marriage started to fail. Rodolfo A. Aspillaga vs. Aurora A. Aspillaga, G.R. No. 170925, October 26, 2009. PERSONS; SUPPORT. Petitioners partial concurrent obligation extends only to their descendants as this word is commonly understood or it may be due to chronic illness and inhibitions or fears arising in whole or in part frompsychophysical conditions. It may be caused by psychogenic causes, where such mental block or disturbance has the result of making the spouse physically incapable of performing the marriage act. No evidence was presented in the case at bar to establish that respondent was in any way physically incapable to consummate his marriage with petitioner. Petitioner even admitted during her cross-examination that she and respondent had sexual intercourse after their wedding and before respondent left for abroad. There obviously being no physical incapacity on respondents part, then, there is no ground for annulling petitioners marriage to respondent. Petitioners Complaint was, therefore, rightfully dismissed. Veronica Cabacungan Alcazar vs. Rey C. Alcazar, G.R. No. 174451, October 13, 2009. PERSONS; CONJUGAL PROPERTY. Article 160 of the New Civil Code provides, All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. There is no issue with regard to the lot covered by TCT No. T-26471, which was an exclusive property of Pedro, having been acquired by him before his marriage to Mary Ann. However, the lot covered by TCT No. T-88674 was acquired in 1982 during the marriage of Pedro and Mary Ann. No evidence was adduced to show that the subject property was acquired through exchange or barter. The presumption of the conjugal nature of the property subsists in the absence of clear, satisfactory and convincing evidence to overcome said presumption or to prove that the subject property is exclusively owned by Pedro. Petitioners bare assertion would not suffice to overcome the presumption that TCT No. T-88674, acquired during the marriage of Pedro and Mary Ann, is conjugal. Likewise, the house built thereon is conjugal property, having been constructed through the joint efforts of the spouses, who had even obtained a loan from DBP to construct the house. Significantly, a sale or encumbrance of conjugal property concluded after the effectivity of the Family Code on August 3, 1988, is governed by Article 124 of the same Code that now treats such a disposition to be void if done (a) without the consent of both the husband and the wife, or (b) in case of one spouses inability, the authority of the court. Patronica Ravina and Wilfredo Ravina Vs. Mary Ann P. Villa Abrille, for behalf of Ingrid DLyn P. Villa Abrille, et al., G.R. No. 160708, October 16, 2009. PERSONS; HUMAN RELATIONS. Firmly established in our civil law is the doctrine 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. When a right is exercised in a manner that does not
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the land and the sower the proper rent. He cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the option, because his right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory thing. Ophelia L. Tuatis vs. Spouses Eliseo Escol and Visminda Escol, et al., G.R. No. 175399, October 27, 2009. PROPERTY; BUILDER IN GOOD FAITH. When the co-ownership is terminated by a partition, and it appears that the house of an erstwhile co-owner has encroached upon a portion pertaining to another coowner, but the encroachment was in good faith, then the provisions of Article 448 should apply to determine the respective rights of the parties. In this case, the coownership was terminated due to the transfer of the title of the whole property in favor of JoaquinLimense. Under the foregoing provision, petitioners have the right to appropriate said portion of the house of respondents upon payment of indemnity to respondents, as provided for in Article 546 of the Civil Code. Otherwise, petitioners may oblige respondents to pay the price of the land occupied by their house. However, if the price asked for is considerably much more than the value of the portion of the house of respondents built thereon, then the latter cannot be obliged to buy the land. Respondents shall then pay the reasonable rent to petitioners upon such terms and conditions that they may agree. In case of disagreement, the trial court shall fix the terms thereof. Of course, respondents may demolish or remove the said portion of their house, at their own expense, if they so decide. The choice belongs to the owner of the land, a rule that accords with the principle of accession that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, ispreclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the land, he can compel the landowner to make a choice between two options: (1) to appropriate the building by paying the indemnity required by law, or (2) to sell the land to the builder. Heirs of the late Joaquin Limense vs. Rita vda. De Ramos, et al., G.R. No. 152319, October 28, 2009. PROPERTY; EASEMENT. The raison detre for this provision has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect the owner of the improvements without causing injustice to the owner of the land. In view of the impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to oblige the builder or planter to pay for Article 622 of the New Civil Code provides: Art. 622. Continuous non-apparent easements, and discontinuous ones, whether apparent or not, may be acquired only by virtue of a title. Based on the foregoing, in order for petitioner to acquire the disputed road as an easement of right-of-way, it was incumbent upon petitioner to show its right by title or by an agreement with the owners of the lands that said road traversed. Bicol Agro-Industrial to refer to relatives, by blood of lower degree. As petitioners grandchildren by blood, only respondents Lester Edward, Candice Grace and Mariano III belong to this category. Indeed, Cheryls right to receive support from theLim family extends only to her husband Edward, arising from their marital bond. Spouses Prudencio and Filomena Lim vs. Ma. Cheryl S. Lim, for herself and on behalf of her minor children Lester Edward S. Lim, Candice Grace S. Lim, and Mariano S. Lim, III, G.R. No. 163209, October 30, 2009. PROPERTY; BUILDER IN BAD FAITH. If a voidable contract is annulled, the restoration of what has been given is proper. The relationship between the parties in any contract even if subsequently annulled must always be characterized and punctuated by good faith and fair dealing. Hence, in consonance with justice and equity and the salutary principle of non-enrichment atanothers expense, we sustain the appellate courts order directing Pedro to return to petitioner spouses the value of the consideration for the lot covered byTCT No. T-88674 and the house thereon. However, this court rules that petitioners cannot claim reimbursements for improvements they introduced after their good faith had ceased. As correctly found by the Court of Appeals, petitionerPatrocinia Ravina made improvements and renovations on the house and lot at the time when the complaint against them was filed. Ravina continued introducing improvements during the pendency of the action. Thus, Article 449 of the New Civil Code is applicable. It provides that, (h)e who builds, plants or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. Patronica Ravina and Wilfredo Ravina vs. Mary Ann P. Villa Abrille, for behalf of Ingrid DLyn P. Villa Abrille, et al., G.R. No. 160708, October 16, 2009. PROPERTY; BUILDER IN BAD FAITH. The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, ispreclusive. The landowner cannot refuse to exercise either option and compel instead the owner of the building to remove it from the land.
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does the same state that the value of the land must be computed at the time of taking. The only primordial consideration is that the same should consist of the value of the land and the amount of damage caused to the servient estate. Hence, the same is a question of fact which should be left to the sound discretion of the RTC. Bicol Agro-Industrial Producers Cooperative, inc. (BAPCI) vs. Edmundo O. Obias, et al. G.R. No. 172077. October 9, 2009 PROPERTY; EASEMENT. Easements may be continuous apparent or non-apparent. or discontinuous, Producers Cooperative, inc. (BAPCI) vs. Edmundo O. Obias, et al. G.R. No. 172077. October 9, 2009 PROPERTY; EASEMENT. Petitioner would have this Court re-examine Costabella Corporation v. Court of Appeals (Costabella) where the Court held that, It is already well-established that a right of way is discontinuous and, as such, cannot be acquired by prescription. Petitioner contends that some recognized authorities share its view that an easement of right of way may be acquired by prescription. Be that as it may, this Court finds no reason to reexamine Costabella. This Court is guided by BogoMedellin Milling Co., Inc. v. Court of Appeals (BogoMedellin), involving the construction of a railroad track to a sugar mill. In Bogo-Medellin, this Court discussed the discontinuous nature of an easement of right of way and the rule that the same cannot be acquired by prescription. Applying Bogo-Medellin to the case at bar, the conclusion is inevitable that the road in dispute is a discontinuous easement notwithstanding that the same may be apparent. To reiterate, easements are either continuous or discontinuous according to the manner they are exercised, not according to the presence of apparent signs or physical indications of the existence of such easements. Hence, even if the road in dispute has been improved and maintained over a number of years, it will not change its discontinuous nature but simply make the same apparent. To stress, Article 622 of the New Civil Code states that discontinuous easements, whether apparent or not, may be acquired only by virtue of a title. Bicol Agro-Industrial Producers Cooperative, inc. (BAPCI) vs. Edmundo O. Obias, et al. G.R. No. 172077. October 9, 2009 PROPERTY; EASEMENT. Petitioner manifested in the RTC its desire, in the alternative, to avail of a compulsory easement of right of way as provided for under Article 649 the New Civil Code. Said relief was granted by the RTC because of the unavailability of another adequate outlet from the sugar mill to the highway. Despite the grant of a compulsory easement of right of way, petitioner, however, assails both the RTC and CA Decision with regard to the amount of indemnity due respondents. Petitioner likens the proceedings at bar to an expropriation proceeding where just compensation must be based on the value of the land at the time of taking.[ Petitioner thus maintains that the compensation due to respondents should have been computed in 1974 when the road was constructed. This Court does not agree. Under Article 649 of the Civil Code, it is clear that the law does not provide for a specific formula for the valuation of the land. Neither
Continuous easements are those the use of which is or may be incessant, without the intervention of any act of man. Discontinuous easements are those which are used at intervals and depend upon the acts of man. Apparent easements are those which are made known and are continually kept in view by external signs that reveal the use and enjoyment of the same. Non-apparent easements are those which show no external indication of their existence. In the present case, the easement of right of way is discontinuous and apparent. It is discontinuous, as the use depends upon the acts of respondents and other persons passing through the property. Being an alley that shows a permanent path going to and from Beata Street, the same is apparent. Being a discontinuous and apparent easement, the same can be acquired only by virtue of a title. Heirs of the late Joaquin Limense vs. Rita vda. De Ramos, et al., G.R. No. 152319, October 28, 2009. PROPERTY; PURCHASER IN GOOD FAITH. 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 a full and fair price for the same at the time of such purchase, or before he has notice of the claim or interest of some other person in the property. To establish his status as a buyer for value in good faith, a person dealing with land registered in the name of and occupied by the seller need only show that he relied on the face of the sellers certificate of title. But for a person dealing with land registered in the name of and occupied by the seller whose capacity to sell is restricted, such as by Articles 166 and 173 of the Civil Code or Article 124 of the Family Code, he must show that he inquired into thelatters capacity to sell in order to establish himself as a buyer for value in good faith. Patronica Ravina and Wilfredo Ravina vs.. Mary Ann P. Villa Abrille, for behalf of Ingrid DLyn P. Villa Abrille, et al., G.R. No. 160708, October 16, 2009. PROPERTY REGISTRATION GOOD FAITH. DECREE; BUYER IN
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title. The public interest in upholding theindefeasibility of a certificate of title, as evidence of the lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relies upon what appears on the face of the certificate of title. It is settled that registration in the public registry is notice to the whole world. Every conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land shall, if registered, filed 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. Under the rule of notice, it is presumed that the purchaser has examined every instrument of record affecting the title. Such presumption may not be rebutted. He is charged with notice of every fact shown by the record and is presumed to know every fact shown by the record and to know every fact which an examination of the record would have disclosed. This presumption cannot be overcome by any claim of innocence or good faith. Otherwise, the very purpose and object of the law requiring a record would be destroyed. Such presumption cannot be defeated by proof of want of knowledge of what the record contains any more than one may be permitted to show that he was ignorant of the provisions of the law. The rule that all persons must take notice of the facts which the public record contains is a rule of law. The rule must be absolute; any variation would lead to endless confusion and useless litigation. In the present case, since the mortgage contract was registered, petitioner may not claim lack of knowledge thereof as a valid defense. The subsequent sale of the property to petitioners husband cannot defeat the rights ofPNB as the mortgagee and, subsequently, the purchaser at the auction sale whose rights were derived from a prior mortgage validly registered. Eufemia vda. De Agatep vs. Roberta L. Rodriguez, et al., G.R. No. 170540, October 28, 2009. PROPERTY REGISTRATION DECREE; TORRENS TITLE. A title, once registered, cannot be defeated, even by adverse, open and notorious possession. The title, once registered, is notice to the world. All persons must take notice. No one can plead ignorance of the registration. Hence, while the Picos may have been in open, notorious, and continuous possession of the second lot from the time it was purchased in 1977 until the present time, such possession no matter how long could not ripen into ownership as the second lot is part of registered land. Even the Picos admit the indefeasible nature of Torrens titles; however, they argue that since the second lot was fraudulently included in the survey and registration of Catalinas land, they may still question the title, pursuant to Section 55 of the Land Registration Act. Every buyer of a registered land who takes a certificate of title for value and in good faith shall hold the same free of all encumbrances except those noted on said certificate. It has been held, however, that where the party has knowledge of a prior existing interest that was unregistered at the time he acquired a right to the same land, his knowledge of that prior unregistered interest has the effect of registration as to him. Good faith is an intangible and abstract quality with no technical meaning or statutory definition; and it encompasses, among other things, an honest belief, the absence of malice and the absence of a design to defraud or to seek an unconscionable advantage. Anindividuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belief in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. Good faith is always presumed, and upon him who alleges bad faith on the part of the possessor rests the burden of proof. Heirs of the late Joaquin Limense vs. Rita vda. De Ramos, et al., G.R. No. 152319, October 28, 2009. PROPERTY REGISTRATION DECREE; EMANCIPATION PATENT. Petitioners argue that the Emancipation Patents and Transfer Certificates of Title issued to them which were already registered with the Register of Deeds have already become indefeasible and can no longer be cancelled. We do not adhere to petitioners view. This Court has already ruled that the mere issuance of an emancipation patent does not put the ownership of the agrarian reform beneficiary beyond attack and scrutiny. Emancipation patents issued to agrarian reform beneficiaries may be corrected and cancelled for violations of agrarian laws, rules and regulations. In fact, DAR Administrative Order No. 02, series of 1994, which was issued in March 1994, enumerates the grounds for cancellation of registered Emancipation Patents or Certificates of Landownership Award. Pedro Mago (deceased), represented by his spouse Soledad Mago, et al. vs. Juana Z. Barbin, G.R. No. 173923, October 12, 2009. Property Registration Decree; registration. In any case, the Court finds no error in the findings of both the RTC and the CA that PNB is indeed an innocent mortgagee for value. When the lots were mortgaged to PNB by Lim, the titles thereto were in the latters name, and they showed neither vice nor infirmity. In accepting the mortgage, PNB was not required to make any further investigation of the titles to the properties being given as security, and could rely entirely on what was stated in the aforesaid
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In a judgment rendered on January 31, 1996, the regional trial court ordered Edward and his parents to jointly provide P40,000 monthly support to Cheryl and her children, with Edward shouldering P6,000 and Edwards parents the balance of P34,000 subject to Chua Giaks subsidiary liability. Edwards parents appealed to the Court of Appeals. They argued that while Edwards income is insufficient, the law itself sanctions its effects by providing that legal support should be in keeping with the financial capacity of the family under Article 194 of the Civil Code, as amended by Executive Order No. 209 (The Family Code of the Philippines). In its Decision dated 28 April 2003, the Court of Appeals affirmed the regional trial court.The Court of Appeals ruled: The law on support under Article 195 of is clear on this matter. Parents and children are obliged to mutually support this obligation extends down to grandchildren and great grandchildren. the Family Code their legitimate one another and the legitimate We note that the Picos have not shown any evidence to support their claim of fraudulent registration. Also telling is the Picos inaction to correct this alleged fraudulent registration. As we observed earlier, OCT No. 5930 was issued in Catalinas name and transcribed in the Registration Book for the Province ofSurigao del Sur on January 13, 1969. Since then, the Picos have not filed any action to correct the alleged fraudulent inclusion of their property in the land registered in Catalinas name. In fact, the present case arose from the complaint filed by the Salcedos, not the Picos, to quiet their title over the second lot. Montano Pico and Rosita Pico vs. Catalina Adalim-Salcedo and Urbano Salcedo, G.R. No. 152006, October 2, 2009. PROPERTY REGISTRATION DECREE; TORRENS TITLE. Under the Torrens system, registration is the operative act which gives validity to the transfer or creates a lien upon the land. Further, entrenched in our jurisdiction is the doctrine that registration in a public registry creates constructive notice to the whole world. But, there is nothing in Act No. 496, as amended by P.D. No. 1529, that imposes a period within which to register annotations of conveyance, mortgage, lease, lien, attachment, order, judgment, instrument or entry affecting registered land. If liens were not so registered, then it shall operate only as a contract between the parties and as evidence of authority to the Registry of Deeds to make registration. If registered, it shall be the operative act to convey or affect the land insofar as third persons are concerned. The mere lapse of time from the execution of the mortgage document to the moment of its registration does not affect the rights of a mortgagee. G Holdings, Inc. vs. National Mines and Allied Workers Union Locan 103 (NAMAWU), Sheriffs Richard H. Aprosta and Alberto Munoz, all acting sheriffs, Department of Labor and Employment, Region VI, Bacolod District Office, Bacolod City, G.R. No. 160236. October 16, 2009
In connection with this provision, Article 200 paragraph (3) of the Family Code clearly provides that should the person obliged to give support does not have sufficient means to satisfy all claims, the other persons enumerated in Article 199 in its order shall provide the necessary support. This is because the closer the relationship of the relatives, the stronger the tie that binds them. Thus, the obligation to support is imposed first upon the shoulders of the closer relatives and only in their default is the obligation moved to the next nearer relatives and so on The Court of Appeals denied the motion for reconsideration filed by Edwards parents, who appealed to the Supreme Court. On the issue of whether Edwards parents are concurrently liable with Edward to provide support to Cheryl and her children, the Supreme Court ruled in the affirmative but modified the appealed judgment by limiting liability of Edwards parents to the amount of monthly support needed by Cheryls children. According to the Supreme Court, Edwards parents are liable to provide support but only to their grandchildren: By statutory and jurisprudential mandate, the liability of ascendants to provide legal support to their descendants is beyond cavil. Petitioners themselves admit as much they limit their petition to the narrow question of when their liability is triggered, not if they are liable. Relying on provisions found in Title IX of the Civil Code, as amended, on Parental Authority, petitioners theorize that their liability is activated only upon default of parental authority, conceivably either by its termination or suspension during the childrens minority. Because at the time respondents sued for support, Cheryl and Edward exercised parental authority over their children,
GRANDPARENTS LEGAL OBLIGATION TO SUPPORT THEIR GRANDCHILDREN. Cheryl married Edward Lim sometime 1979 and they have three children. Cheryl, Edward and their children lived at the house of Edwards parents, Prudencio and Filomena, in Forbes Park, Makati City, together with Edwards ailing grandmother, Chua Giak and her husband Mariano. Edward was employed with the family business, which provided him with a monthly salary of P6,000 and shouldered the family expenses. Cheryl had no steady source of income. Cheryl caught Edward in a very compromising situation with the midwife of Chua Giak. After a violent confrontation with Edward, Cheryl left the Forbes Park residence on October 14, 1990. She subsequently sued, for herself and her children, Edward, Edwards parents, and Edwards grandparents for support.
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and pray that they be allowed to fulfill their obligation by maintaining respondents at petitioners Makati residence. The option is unavailable to petitioners. The application of Article 204 which provides that The person obliged to give support shall have the option to fulfill the obligation either by paying the allowance fixed, or by receiving and maintaining in the family dwelling the person who has a right to receive support. The latter alternative cannot be availed of in case there is a moral or legal obstacle thereto. . . is subject to its exception clause. Here, the persons entitled to receive support are petitioners grandchild ren and daughter-in-law. Granting petitioners the option in Article 204 will secure to the grandchildren a wellprovided future; however, it will also force Cheryl to return to the house which, for her, is the scene of her husbands infidelity. While not rising to the level of a legal obstacle, as indeed, Cheryls charge against Edward for concubinage did not prosper for insufficient evidence, her steadfast insistence on its occurrence amounts to a moral impediment bringing the case within the ambit of the exception clause of Article 204, precluding its application. (Spouses Prudencio and Filomena Lim vs. Ma. Cheryl S. Lim, for herself and on behalf of her minor children Lester Edward S. Lim, Candice Grace S. Lim, and Mariano S. Lim, III, G.R. No. 163209, October 30, 2009) WORLD FINANCIAL CRISIS -- A FORCE MAJEURE? Is the world financial crisis a force majeure that would allow Dow Chemical to walk away from a contract or require the extension of maturity of a construction loan guaranteed by Donald Trump? BusinessWeek reports: Is the economic crisis akin to an earthquake or an act of war? Under force majeure, a long-standing legal doctrine, companies can argue that natural disasters or other calamities should excuse them from living up to the terms of a deal. Now, a growing number are contending in lawsuits that the economic crisis should similarly let them off the hook. In a Feb. 3 filing in Delaware Chancery Court, Dow Chemical (DOW) said a cascading sequence of market failures of historic proportions justifies its effort to walk away from a July 2008 agreement to acquire Rohm & Haas (ROH). Rohm sued the chemical giant in January to force the $15.4 billion deal to go through, and a trial is scheduled for Mar. 9. Dow Chemical, which lost Kuwaiti funding for the deal in December, says in a statement that the economic reality of late December and early 2009 is far worse than in July 2008. A Rohm spokesperson says her company firmly believes that Dow has the means to finance the deal. petitioners submit that the obligation to support the latters offspring ends with them. Neither the text of the law nor the teaching of jurisprudence supports this severe constriction of the scope of familial obligation to give support. In the first place, the governing text are the relevant provisions in Title VIII of the Civil Code, as amended, on Support, not the provisions in Title IX on Parental Authority. While both areas share a common ground in that parental authority encompasses the obligation to provide legal support, they differ in other concerns including the duration of the obligation and its concurrence among relatives of differing degrees. Thus, although the obligation to provide support arising from parental authority ends upon the emancipation of the child, the same obligation arising from spousal and general familial ties ideally lasts during the obligees lifetime.. Also, while parental authority under Title IX (and the correlative parental rights) pertains to parents, passing to ascendants only upon its termination or suspension, the obligation to provide legal support passes on to ascendants not only upon default of the parents but also for the latters inability to provide sufficient support . . . Here, there is no question that Cheryl is unable to discharge her obligation to provide sufficient legal support to her children, then all school-bound. It is also undisputed that the amount of support Edward is able to give to respondents, P6,000 a month, is insufficient to meet respondents basic needs. This inability of Edward and Cheryl to sufficiently provide for their children shifts a portion of their obligation to the ascendants in the nearest degree, both in the paternal (petitioners) and maternal lines, following the ordering in Article 199. To hold otherwise, and thus subscribe to petitioners theory, is to sanction the anomalous scenario of tolerating extreme material deprivation of children because of parental inability to give adequate support even if ascendants one degree removed are more than able to fill the void. However, petitioners partial concurrent obligation extends only to their descendants as this word is commonly understood to refer to relatives, by blood of lower degree. As petitioners grandchildren by blood, only respondents Lester Edward, Candice Grace and Mariano III belong to this category. Indeed, Cheryls right to receive support from the Lim family extends only to her husband Edward, arising from their marital bond. Unfortunately, Cheryls share from the amount of monthly support the trial court awarded cannot be determined from the records. Thus, we are constrained to remand the case to the trial court for this limited purpose. The Supreme Court also ruled that Edwards parent are precluded from availing of the option under Article 204 of the Civil Code of providing support at their residence. According to the Supreme Court: As an alternative proposition, petitioners wish to avail of the option in Article 204 of the Civil Code, as amended,
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market is an everyday occurrence, hence, not an instance of caso fortuito. Megaworlds excuse for its delay does not thus lie. The Supreme Courts ruling is consistent with its previous rulings on the matter. For instance, Fil-Estate made the same arugument in Fil-Estate Properties Inc. vs. Sps. Gonzalo & Conzuelo Go., G.R. No. 165164, August 17, 2007: Petitioner, citing Article 1174 of the Civil Code, argues that the Asian financial crisis was a fortuitous event being unforeseen or inevitable. Petitioner likewise cites Servando v. Philippine Steam Navigation Co., to bolster its case. Petitioner explains that the extreme economic exigency and extraordinary currency fluctuations could not have been reasonably foreseen and were beyond the contemplation of both parties when they entered the contract. Petitioner further asserts that the resultant economic collapse of the real estate industry was unforeseen by the whole Asia and if it was indeed foreseeable, then all those engaged in the real estate business should have foreseen the impending fiasco. Petitioner adds that it had not committed any fraud; that it had all the required government permits; and that it had not abandoned the project but only suspended the work. It also admits its obligation to complete the project. It says that it had in fact asked the HLURB for extension to complete it. The Supreme Court ruled: Worthy of note, in a previous case, Asian Construction and Development Corporation v. Philippine Commercial International Bank, the Court had said that the 1997 financial crisis that ensued in Asia did not constitute a valid justification to renege on obligations. We emphatically stressed the same view in MondragonLeisure and Resorts Corporation v. Court of Appeals, that the Asian financial crisis in 1997 is not among the fortuitous events contemplated under Article 1174 of the Civil Code. Also, we cannot generalize that the Asian financial crisis in 1997 was unforeseeable and beyond the control of a business corporation. It is unfortunate that petitioner apparently met with considerable difficulty e.g. increase cost of materials and labor, even before the scheduled commencement of its real estate project as early as 1995. However, a real estate enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and currency movements and business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, and fluctuations in currency exchange rates happen everyday, thus, not an instance of caso fortuito. Based on the foregoing rulings of the Supreme Court, it is likely that the word financial crisis will not be considered force majeure under Article 1174 of the Civil Code. By most accounts, Dow Chemical faces an uphill fight. Judges rejected nearly every effort to revise or rescind deals after the oil price shocks of the early 1970s and the Asian economic collapse in 1997. Robert E. Scott, an expert in business transactions at Columbia Law School, says courts tend to dismiss economic force majeure cases because they dont want to let parties get out of contracts too easily. And Scott doesnt think the current downturn will lead to different results. Still, lawyers say they expect more businesses to cite the meltdown as an excuse to dodge obligations. Luc A. Despins, a bankruptcy attorney at Paul, Hastings, Janofsky & Walker in New York, says he already has seen several companies use that argument in negotiations with creditors. Business contracts often contain force majeure clauses, which detail events that can allow a company to delay or cancel what it has agreed to do. Events such as fires, floods, riots, strikes, and terrorism are typically specified. A construction loan pact between Donald Trump and Deutsche Bank (DB) also includes the unusually broad phrase any other event or circumstance not within the reasonable control of the borrower. Trump is now arguing in a New York State court that the calamitous economy falls under that definition and should preclude Deutsche Bank from collecting $40 million on a loan that he personally guaranteed for a hotel and condominium tower in Chicago. A lot of people are starting to say that were in a depression, says Trump, but its a lot better if you have the language in your contract. Deutsche Bank declined to comment on the pending lawsuit. In Megaworld Globus Asia, Inc. vs. Mila S. Tanseco , G.R. No. 181206, October 9, 2009, Megaworld failed to deliver a pre-sold condominium unit on the stipulated delivery date of the unit. In its Answer to the complaint filed by the buyer, Megaworld attributed the delay to the 1997 Asian financial crisis. The Supreme Court rejected the defense and reiterated its previous rulings that the 1997 Asian financial crisis cannot be considered a force majeure: Article 1174 of the Civil Code provides: Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. The Court cannot generalize the 1997 Asian financial crisis to be unforeseeable and beyond the control of a business corporation. A real estate enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and currency movements, as well as business risks. The fluctuating movement of the Philippine peso in the foreign exchange
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conclusion that a contract of sale is in fact an equitable mortgage. In several cases, we have not hesitated to declare a purported contract of sale to be an equitable mortgage based solely on one of the enumerated circumstances under Article 1602. This approach follows the rule that when doubt exists on the nature of the parties transaction, the law favors the least transmission of property rights. In Rockville, the Supreme Court ruled that the contract between the parties was an equitable mortgage. According to the Supreme Court: In the present case, three attendant circumstances indicate that the purported sale was in fact an equitable mortgage. First, the Sps. Culla retained possession of the property. Second, Rockville kept a part of the purchase price. Third, as previously discussed, Rockville continued to give the Sps. Culla extensions on the period to repay their loan even after the parties allegedly agreed to a dacion en pago. These circumstances, coupled with the clear and unequivocal testimonies of Oligario and Bernardita that the purpose of the Deed of Absolute Sale was merely to guarantee their loan, clearly reveal the parties true intention to execute an equitable mortgage and not a contract of sale. That a contract where the vendor remains in physical possession of the land, as lessee or otherwise, is an equitable mortgage is well-settled. The reason for this rule lies in the legal reality that in a contract of sale, the legal title to the property is immediately transferred to the vendee; retention by the vendor of the possession of the property is inconsistent with the vendees acquisition of ownership under a true sale. It discloses, in the alleged vendee, a lack of interest in the property that belies the truthfulness of the sale. According to Rockville, it took possession of the property, albeit constructively and not through actual occupation. Rockville contends, too, that its possession of the title to the property and its subsequent attempt to register the property in its name are clear indicators of its intent to enforce the contract of sale. We cannot agree with these positions. In the first place, the Sps. Culla retained actual possession of the property and this was never disputed. Rockville itself admits this in its petition, but claims in justification that since the property is contiguous to the site of the Sps. Cullas family home, it would have been impossible forRockville to obtain actual possession of the property. Regardless of where the property is located, however, if the transaction had really been a sale as Rockvilleclaimed, it should have asserted its rights for the immediate delivery and possession of the lot instead of allowing the Sps. Culla to freely stay in the premises. Its failure to do so suggests that Rockville did not truly intend to enforce the contract of sale. Moreover, we observe that while Rockville did take steps to register the property in its name, it did so more than DEED OF SALE VS. EQUITABLE MORTGAGE. Under the Civil Code, an agreement that, on its face, looks like a sale may be considered an equitable mortgage. Article 1602 of the Civil Code provides: Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following cases: (1) When the price of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. In any of the foregoing cases, any money, fruits, or other benefit to be received by the vendee as rent or otherwise shall be considered as interest which shall be subject to the usury laws. In Rockville Excel International Exim Corporation vs. Spouses Oligario Culla and Bernardita Miranda, G.R. No. 155716, October 2, 2009, the Supreme Court faced the issue of whether a Deed of Absolute Sale is really an absolute sale of real property or an equitable mortgage. The Supreme Court explained the concept of an equitable mortgage as follows: An equitable mortgage has been defined as one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, there being no impossibility nor anything contrary to law in this intent. A contract of sale is presumed to be an equitable mortgage when any of the following circumstances, enumerated in Article 1602 of the Civil Code, is present. . . The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale. For the presumption of an equitable mortgage to arise under Article 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale; and, (b) that their intention was to secure an existing debt by way of a mortgage. Any of the circumstances laid out in Article 1602, not the concurrence nor an overwhelming number of the enumerated circumstances, is sufficient to support the
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that the prescriptive period should be counted from the date President Marcos was ousted from power. It ruled: It is true that an action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud.[ The RTC, however, seemed to have overlooked the fact that the basis of respondents complaint for reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos cronies upon the relatives of the Montanos while the latter were on self-exile. In fact, fraud was neither specifically alleged nor remotely implied in the complaint. . . In the circumstances prevailing in this case, the threat or intimidation upon respondents is deemed to have ceased only upon the ouster of then President Marcos from power on February 21, 1986. The four-year prescriptive period must, therefore, be reckoned from the said date. Thus, when respondents filed their complaint for reconveyance on September 15, 1989, the period provided for by law had not yet prescribed. Therefore, petitioners motion to dismiss should be denied. PRESCRIPTIVE PERIOD FOR ANNULMENT CONTRACT (Oct. & Dec. 2009 Cases) OF two years after the Deed of Absolute Sale was executed, and only after Oligarios continued failure to pay the P2,000,000.00 loan. In addition, Rockville admitted that it never paid the P1,500,000.00 balance to the Sps. Culla. As found by the RTC, while Rockville claims that it deposited this amount with May Bank of Malaysia and notified Oligario of the deposit, no evidence was presented to support this claim. Besides, even if this contention had been true, the deposit in a foreign bank was neither a valid tender of payment nor an effective consignation. Lastly, the numerous extensions granted by Rockville to Oligario to pay his debt after the execution of the Deed of Sale convince us that the parties never intended to enter into a contract of sale; instead, the intent was merely to secure the payment of Oligarios loan. All told, we see no reason to depart from the findings and conclusions of both the trial court and the Court of Appeals. PRESCRIPTIVE PERIOD FOR ANNULMENT OF CONTRACT. How is the prescriptive period computed for the annulment of a contract entered into because of alleged threats and intimidation committed by cronies of then President Marcos? Under the Civil Code, the action must be brought within four years from the time the defect of the consent ceases. It provides: Art. 1391. An action for annulment shall be brought within four years. This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases. In Associated Bank vs. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al, G.R. No. 166383, October 16, 2009, the previous owners of the property claimed that the sale of property was made after their relatives were intimidated and threatened by Marcos cronies. The sale was done in 1976 and an action for reconveyance was filed in 1989. The regional trial trial court ruled that the action had prescribed and granted the motion to dismiss filed by the current owner. The Supreme Court disagreed and held
Under Article 1391 of the Civil Code, an action for annulment of a contract must be brought within 4 years. In Associated Bank vs. Spouses Justiniano S. Montano, Sr. and Ligaya Montano, et al, G.R. No. 166383, October 16, 2009, the Supreme Court ruled that under the circumstances of that case, an action for the annulment of a sale contract based on threat and intimidation allegedly committed by cronies of then President Marcos may be brought within 4 years from February 21, 1986, when President Marcos was ousted from power (see posting of November 22, 2009). In Associated Bank, the respondents claimed that Tres Cruces Agro-Industrial Corporation was only forced to sell the properties to ICCI because of threats and intimidation allegedly employed by Marcos cronies upon the relatives of the Montanos while the latter were on self-exile outside the country. The Montanos filed their complaint on September 15, 1989. In First Philippine Holdings Corporation vs. Trans Middle East (Phils.) Equities Inc., G.R. No. 179505. December 4, 2009, First Philippine Holdings Corporation (FPHC) argued that the prescriptive period for the annulment of the sale of its PCI Bank shares to Trans Middle East (Phils.) Equities Inc. (TMEE) should be reckoned from February 24, 1986, the date when President Marcos left the country. Here, FPHC sold its PCI Bank shares to TMEE on May 24, 1984. FPHC filed its complaint to annul the sale on December 28, 1988 (which is more than 4 years after the date of the sale but within 4 years from the date President Marcos left the country).
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fraudulent sale that petitioner assailed the same. By then, it was too late for petitioner to beset the same transaction, since the prescriptive period had already come into play. On the other hand, the complaint in Associated Bank alleged threat and intimidation as grounds for annulment of the sale contract: We do not, however, subscribe to the RTCs ruling that the action has already prescribed. It is true that an action for reconveyance of real property resulting from fraud may be barred by the statute of limitations, which requires that the action shall be filed within four (4) years from the discovery of the fraud. The RTC, however, seemed to have overlooked the fact that the basis of respondents complaint for reconveyance is not fraud but threat, duress and intimidation, allegedly employed by Marcos cronies upon the relatives of the Montanos while the latter were on self-exile. In fact, fraud was neither specifically alleged nor remotely implied in the complaint. The Supreme Court ruled that FPHCs complaint was filed beyond the 4-year prescriptive period provided in Article 1391 of the Civil Code. Why is the result different from Associated Bank? In the case of FPHC, the Supreme Court noted that FPHCs complaint for annulment was based on fraud, not threat or intimidation. The Supreme Court stated: FPHC, however, contends that the four-year prescriptive period should be reckoned from 24 February 1986, the date when former President Marcos left the country, as it was only then that the threat and intimidation against the Lopezes ceased. This argument is unconvincing. Based on FPHCs Petition for Review and its Complaint-in-Intervention, the ground relied upon by petitioner is fraud. FPHCs petition partly reads: PCIBank shares were obtained xxx by means of fraud and acts contrary to law, morals and public policy x x x. In its Complaint-in-Intervention, it is alleged: 32. Said sale, is therefore, void or voidable on said ground, in addition to having been obtained fraudulently with the connivance of defendant Kokoy Romualdezs dummy directors and officers in plaintiff-intervenors Board and Executive Committee, in breach of their fiduciary obligations to plaintiff-intervenor and its stockholders under the Corporation Code. x x x. Since the complaint alleged fraud as the ground for annulment of the sale contract, the Supreme Court ruled that the action has prescribed: Under Article 1391 of the Civil Code, a suit for the annulment of a voidable contract on account of fraud shall be filed within four years from the discovery of the same, thus: Article 1391. An action for annulment shall be brought within four years. This period shall begin: In case of intimidation, violence or undue influence, from the time the defect of the consent ceases. In case of mistake or fraud, from the time of the discovery of the same. Here, from the time the questioned sale transaction on 24 May 1984 took place, FPHC did not deny that it had actual knowledge of the same. Simply, petitioner was fully aware of the sale of the PCIB shares to TMEE. Despite all this knowledge, petitioner did not question the said sale from its inception and some time thereafter. It was only after four years and seven months had lapsed following the knowledge or discovery of the alleged
NOVEMBER 2009 CASES

CONTRACT; CONTRACT OF ADHESION. A contract of adhesion is defined as one in which one of the parties imposes a ready-made form of contract, which the other party may accept or reject, but which the latter cannot modify. One party prepares the stipulation in the contract, while the other party merely affixes his signature or his adhesion thereto, giving no room for negotiation and depriving the latter of the opportunity to bargain on equal footing. Contracts of adhesion are not invalid per se. Contracts of adhesion, where one party imposes a ready-made form of contract on the other, are not entirely prohibited. The one who adheres to the contract is, in reality, free to reject it entirely; if he adheres, he gives his consent. Norton Resources and Development Corporation vs. All Asia Bank Corporation, G.R. No. 162523. November 25, 2009 CONTRACT; FREEDOM OF CONTRACT. Petitioners allege that the Kasulatan was entered into by the parties freely and voluntarily. They maintain that there was already a meeting of the minds between the parties as regards the principal amount of the loan, the interest thereon and the property given as security for the payment of the loan, which must be complied with in good faith. Hence, they assert that the Court of Appeals should have given due respect to the provisions of the
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contract, to be paid in case of breach thereof. In the instant case, a cursory reading of the Kasulatan would show that it is devoid of any stipulation with respect to liquidated damages. Neither did any of the parties allege or prove the existence of any agreement on liquidated damages. Hence, for want of any stipulation on liquidated damages in the Kasulatan entered into by the parties, we hold that the liquidated damages awarded by the trial court and affirmed by the Court of Appeals to be without legal basis and must be deleted. Sps. Isagani & Diosdada Castro vs. Angelina de Leon Tan, G.R. No. 168940, November 24, 2009. CONTRACT; VOIDABLE CONTRACT. Pending approval or disapproval by the Provincial Governor of a contract entered into by a municipality which falls under the provisions of Section 2196 of the Revised Administrative Code, such contract is considered voidable. In the instant case, there is no showing that the contract of sale entered into between Pedro and the Municipality of Marikina was ever acted upon by the Provincial Governor. Hence, the subject contract should be considered voidable. Voidable or annullable contracts, before they are set aside, are existent, valid, and binding, and are effective and obligatory between the parties. In the present case, since the contract was never annulled or set aside, it had the effect of transferring ownership of the subject property to Pedro. Having lawfully acquired ownership of Lots A and C, Pedro, in turn, had the full capacity to transfer ownership of these parcels of land or parts thereof, including the subject property which comprises a portion of Lot C. The Estate of Pedro C. Gonzales and Heirs of Pedro C. Gonzales vs. The Heirs of Marcos Perez, G.R. No. 169681, November 5, 2009. DAMAGES ATTORNEYS FEES. As a rule, an award of attorneys fees should be deleted where the award of moral and exemplary damages is not granted. Nonetheless, attorneys fees may be awarded where the court deems it just and equitable even if moral and exemplary damages are unavailing. In the instant case, we find no reversible error in the grant of attorneys fees by the CA. Prosource International, Inc. vs. Horphag Research Management SA, G.R. No. 180073. November 25, 2009 INTEREST; ATTORNEYS FEES. The imposition of any interest, as prayed for in this instant petition, on any amount payable to petitioners is, however, unwarranted. Contracts for attorneys services are unlike any other contracts for the payment of compensation for any other services which allow the imposition of interest in case of delay under the provisions of the Civil Code. The practice of law is a profession, not a moneymaking venture. Jose Feliciano Loy, et al. vs. San Miguel Corporation Employees UnionKasulatan. They also stress that it is a settled principle that the law will not relieve a party from the effects of an unwise, foolish or disastrous contract, entered into with all the required formalities and with full awareness of what he was doing. Petitioners contentions deserve scant consideration. In Abe v. Foster Wheeler Corporation, we held that the freedom of contract is not absolute. The same is understood to be subject to reasonable legislative regulation aimed at the promotion of public health, morals, safety and welfare. One such legislative regulation is found in Article 1306 of the Civil Code which allows the contracting parties to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. To reiterate, we fully agree with the Court of Appeals in holding that the compounded interest rate of 5% per month, is iniquitous and unconscionable. Being a void stipulation, it is deemed inexistent from the beginning. The debt is to be considered without the stipulation of the iniquitous and unconscionable interest rate. Accordingly, the legal interest of 12% per annum must be imposed in lieu of the excessive interest stipulated in the agreement, in line with our ruling in Ruiz v. Court of Appeals. Sps. Isagani & Diosdada Castro vs. Angelina de Leon Tan, G.R. No. 168940, November 24, 2009. CONTRACT; LACHES. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could have been done earlier, thus giving rise to a presumption that the party entitled to assert it had either abandoned or declined to assert it. Respondent discovered in 1991 that a new owners copy of OCT No. 535 was issued to the Eniceo heirs. Respondent filed a criminal case against the Eniceo heirs for false testimony. When respondent learned that the Eniceo heirs were planning to sell the Antipolo property, respondent caused the annotation of an adverse claim. On 16 January 1996, when respondent learned that OCT No. 535 was cancelled and new TCTs were issued, respondent filed a civil complaint with the trial court against the Eniceo heirs and petitioner. Respondents actions negate petitioners argument that respondent is guilty of laches. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 CONTRACT; LIQUIDATED DAMAGE. In its June 11, 2002 Decision, the trial court granted an additional 1% per month penalty as liquidated damages beginning February 17, 1994 up to June 21, 2000. Article 2226 of the Civil Code provides that [L]iquidated damages are those agreed upon by the parties to a
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iniquitous, unconscionable and exorbitant. In Ruiz v. Court of Appeals, we declared a 3% monthly interest imposed on four separate loans to be excessive. In both cases, the interest rates were reduced to 12% per annum. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, stipulated in the Kasulatan is even higher than the 3% monthly interest rate imposed in the Ruiz case. Thus, we similarly hold the 5% monthly interest to be excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. It is therefore void ab initio for being violative of Article 1306 of the Civil Code. With this, and in accord with the Medel and Ruiz cases, we hold that the Court of Appeals correctly imposed the legal interest of 12% per annum in place of the excessive interest stipulated in the Kasulatan. Sps. Isagani & Diosdada Castro vs. Angelina de Leon Tan, G.R. No. 168940, November 24, 2009. MARRIAGE; CONJUGAL PROPERTY. The registration of the trade name in the name of one person a woman does not necessarily lead to the conclusion that the trade name as a property is hers alone, particularly when the woman is married. By law, all property acquired during the marriage, whether the acquisition appears to have been made, contracted or registered in the name of one or both spouses, is presumed to be conjugal unless the contrary is proved. Our examination of the records of the case does not show any proof that Kargo Enterprises and the properties or contracts in its name are conjugal. If at all, only the bare allegation of Navarro to this effect exists in the records of the case. Thus, for purposes solely of this case and of resolving the issue of whether Kargo Enterprises as a sole proprietorship is conjugal or paraphernal property, we hold that it is conjugal property. Roger V. Navarro Vs. Hon. Jose L. Escobido, Presiding Judge, RTC, Branch 37, Cagayan de Oro City, and Karen T. Go, doing business under the name Kargo Enterprises, G.R. No. 153788, November 27, 2009. MARRIAGE; CONJUGAL PROPETY. Article 124 od the Family Code, by its terms, allows either Karen or Glenn Go to speak and act with authority in managing their conjugal property, i.e., Kargo Enterprises. No need exists, therefore, for one to obtain the consent of the other before performing an act of administration or any act that does not dispose of or encumber their conjugal property. Under Article 108 of the Family Code, the conjugal partnership is governed by the rules on the contract of partnership in all that is not in conflict with what is expressly determined in this Chapter or by the spouses in their marriage settlements. In other words, the property relations of the husband and wife shall be governed primarily by Chapter 4 on Conjugal Partnership of Gains Philippine Transport and General Workers Organization (SMCEU-PTGWO), et al., G.R. No. 164886. November 24, 2009 LEASE; IMPLIED NEW LEASE. Under Article 1670, an implied new lease will set in if it is shown that: (a) the term of the original contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; and (c) the lessee continued enjoying the thing leased for 15 days with the acquiescence of the lessor. This acquiescence may be inferred from the failure of the lessor to serve notice to vacate upon the lessee. Joven Yuki, Jr. vs. Wellington Co, G.R. No. 178527. November 27, 2009 LEASE; RIGHT TO BUY. The right of first refusal, also referred to as the preferential right to buy, is available to lessees only if there is a stipulation thereto in the contract of lease or where there is a law granting such right to them (i.e., Presidential Decree No. 1517 (1978), which vests upon urban poor dwellers who merely lease the house where they have been residing for at least ten years, preferential right to buy the property located within an area proclaimed as an urban land reform zone). Unlike co-owners and adjacent lot owners, there is no provision in the Civil Code which grants to lessees preemptive rights. Nonetheless, the parties to a contract of lease may provide in their contract that the lessee has the right of first refusal. In this case, there is nothing in the Contract of Lease which grants petitioner preferential right to buy the subject premises. We are likewise unaware of any applicable law which vests upon him priority right to buy the commercial building subject matter of this case. Joven Yuki, Jr. vs. Wellington Co, G.R. No. 178527. November 27, 2009 LOAN; INTEREST. While we agree with petitioners that parties to a loan agreement have wide latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective January 1, 1983, it is also worth stressing that interest rates whenever unconscionable may still be declared illegal. There is certainly nothing in said circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets. In several cases, we have ruled that stipulations authorizing iniquitous or unconscionable interests are contrary to morals, if not against the law. In Medel v. Court of Appeals, we annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00 loan and a 6% per month or 72% per annum interest on aP60,000.00 loan, respectively, for being excessive,
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In Balatbat v. Court of Appeals, the Court held that in the realm of double sales, the registration of an adverse claim places any subsequent buyer of the registered land in bad faith because such annotation was made in the title of the property before the Register of Deeds and he could have discovered that the subject property was already sold. The Court explained further, thus: A purchaser of a valued piece of property cannot just close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith and under the belief that there were no defect in the title of the vendor. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as be necessary to acquaint him with the defects in the title of his vendor. Petitioner does not dispute that respondent registered his adverse claim with the Registry of Deeds on 14 March 1995. The registration of the adverse claim constituted, by operation of law, notice to the whole world. From that date onwards, subsequent buyers were deemed to have constructive notice of respondents adverse claim. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 SALE; EQUITABLE MORTGAGE. An equitable mortgage is one which although lacking in some formality, or form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to charge real property as security for a debt, and contains nothing impossible or contrary to law. The essential requisites of an equitable mortgage are: 1. The parties entered into a contract denominated as a contract of sale; and 2. Their intention was to secure existing debt by way of a mortgage. In Lim v. Calaguas, the Court held that in order for the presumption of equitable mortgage to apply, there must be: (1) something in the language of the contract; or (2) in the conduct of the parties which shows clearly and beyond doubt that they intended the contract to be a mortgage and not a pacto de retro sale. Proof by parol evidence should be presented in court. Parol evidence is admissible to support the allegation that an instrument in writing, purporting on its face to transfer the absolute title to property, was in truth and in fact given merely as security for the payment of a loan. The presumption of equitable mortgage under Article 1602 of the Civil Code is not conclusive. It may be rebutted by competent and satisfactory proof of the contrary. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 of the Family Code and, suppletorily, by the spouses marriage settlement and by the rules on partnership under the Civil Code. In the absence of any evidence of a marriage settlement between the spouses Go, we look at the Civil Code provision on partnership for guidance. Under Article 1181 of the Civil Code, Glenn and Karen Go are effectively co-owners of Kargo Enterprises and the properties registered under this name; hence, both have an equal right to seek possession of these properties. Applying Article 484 of the Civil Code, which states that in default of contracts, or special provisions, co ownership shall be governed by the provisions of this Title, we find further support in A rticle 487 of the Civil Code that allows any of the co-owners to bring an action in ejectment with respect to the co-owned property. Roger V. Navarro Vs. Hon. Jose L. Escobido, Presiding Judge, RTC, Branch 37, Cagayan de Oro City, and Karen T. Go, doing business under the name Kargo Enterprises, G.R. No. 153788, November 27, 2009. MORTGAGE; FORECLOSURE PROCEEDINGS. It is undisputed that sometime after the maturity of the loan, respondent Tan attempted to pay the mortgage debt of P30,000.00 as principal and some interest. Said offer was refused by petitioners because they demanded payment of the total accumulated amount of P359,000.00. Moreover, the trial court also mentioned an offer by respondent Tan of the amount of P200,000.00 to petitioners in order for her to redeem or re-acquire the property in litis. From these, it is evident that despite considerable effort on her part, respondent Tan failed to redeem the mortgaged property because she was unable to raise the total amount of P359,000.00, an amount grossly inflated by the excessive interest imposed. Thus, it is only proper that respondents be given the opportunity to repay the real amount of their indebtedness. On this basis, we nullify the foreclosure proceedings held on March 3, 1999 since the amount demanded as the outstanding loan was overstated. Consequently, it has not been shown that the respondents have failed to pay the correct amount of their outstanding obligation. Accordingly, we declare the registration of the foreclosure sale invalid and cannot vest title over the mortgaged property. Sps. Isagani & Diosdada Castro vs. Angelina de Leon Tan, G.R. No. 168940, November 24, 2009. SALE; BUYER IN BAD FAITH. In Agricultural and Home Extension Development Group v. Court of Appeals, a buyer in good faith is defined as one who buys the property of another wi thout notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property.
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SALE; OBLIGATIONS. It is said that when the buyer enters into a contract of sale, he assumes two obligations, first, the payment of the consideration and, second, the performance of such first obligation in good faith, an implied obligation but just as binding and as important as the first. Good faith is of course a matter of intent. It means giving what one owes to the other without concealment and evasion. Since intent is a state of mind, however, good faith needs a face that one can see. The steps that a party takes in fulfilling his obligation usually constitute the face that expresses good faith or lack of it. Ricardo C. Siverio vs. Eufemia Almeda and Ponciano Almeda, et al., G.R. No. 178255, November 24, 2009. SALE; REAL PROPERTY. Under Article 1403(2), the sale of real property should be in writing and subscribed by the party charged for it to be enforceable. In the case before the Court, the Deed of Sale between Pedro and Marcos is in writing and subscribed by Pedro and his wife Francisca; hence, it is enforceable under the Statute of Frauds. However, not having been subscribed and sworn to before a notary public, the Deed of Sale is not a public document and, therefore, does not comply with Article 1358 of the Civil Code. Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358 does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form required under the said Article is not essential to the validity or enforceability of the transaction, but merely for convenience. The Court agrees with the CA in holding that a sale of real property, though not consigned in a public instrument or formal writing, is, nevertheless, valid and binding among the parties, for the time-honored rule is that even a verbal contract of sale of real estate produces legal effects between the parties. Stated differently, although a conveyance of land is not made in a public document, it does not affect the validity of such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public instrument in order to validate the act or contract but only to insure its efficacy. Thus, based on the foregoing, the Court finds that the CA did not err in ruling that the contract of sale between Pedro and Marcos is valid and binding. The Estate of Pedro C. Gonzales and Heirs of Pedro C. Gonzales vs. The Heirs of Marcos Perez, G.R. No. 169681, November 5, 2009. SALE; SIMULATED SALE. The primary consideration in determining the true nature of a contract is the intention of the parties. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties.

Simulation takes place when the parties do not really want the contract they have executed to produce the legal effects expressed by its wordings.[2 0] This Courts pronouncement in Valerio v. Refresca is instructive Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest. Based on the foregoing, the subject deed of sale can hardly be considered simulated. There is no showing that the parties did not intend to be bound by the contract and to comply with its terms. In fact, Villadares surrendered to petitioners any right he had over the property. He caused the titling of the property and the transfer of the tax declaration in petitioners names, and thereafter, delivered the certificate of title and the tax declaration to petitioners and accepted the purchase price from them. To recall, Villadares admitted that he was swayed by petitioners claim that they had a right over the property and thus, he agreed to sell it to them. Such motivation for entering into the contract would not negate the efficacy of the contract. In the same way, petitioners opposition in the land registration case does not necessarily mean that petitioners did not really intend to purchase the property. Petitioners could have accepted or acquiesced to Villadares title and entered into the agreement to finally settle their claim over the property. Spouses Exequiel Lopez and Eusebia Lopez vs. Spouses Eduardo Lopez, et al., G.R. No. 161925. November 25, 2009. SALE; VALIDITY. The contract between the Eniceo heirs and respondent executed on 10 September 1973 was a perfected contract of sale. A contract is perfected once there is consent of the contracting parties on the object certain and on the cause of the obligation. In the present case, the object of the sale is the Antipolo property and the price certain is P250,000. The contract of sale has also been consummated because the vendors and vendee have performed their respective obligations under the contract. In a contract of sale, the seller obligates himself to transfer the ownership of the determinate thing sold, and to deliver the same to the buyer, who obligates himself to pay a price certain to the
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of the time and of the place. Negligence, as it is commonly understood, is conduct that creates an undue risk of harm to others. It is the failure to observe that degree of care, precaution and vigilance that the circumstances justly demand. It is the omission to do something which a reasonable man, guided by considerations that ordinarily regulate the conduct of human affairs, would do, or doing something that a prudent and reasonable man would not do. To determine whether there is negligence in a given situation, this Court laid down this test: Did defendant, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the person is guilty of negligence. Based on the foregoing test, we can conclude that Saycon was negligent. In the first place, he should not have been driving alone. The law clearly requires that the holder of a student-drivers permit should be accompanied by a duly licensed driver when operating a motor vehicle. Further, there is the matter of not wearing a helmet and the fact that he was speeding. All these prove that he was negligent. Stephen Cang and George Nardo y Josol vs. Herminia Cullen, G.R. No. 163078, November 25, 2009. TORT; NEGLIGENCE. Under Article 2179 of the Civil Code, [w]hen the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. Considering that Saycon was the negligent party, he would not have been entitled to recover damages from petitioners had he instituted his own action. Consequently, respondent, as his employer, would likewise not be entitled to claim for damages. Stephen Cang and George Nardo y Josol vs. Herminia Cullen, G.R. No. 163078, November 25, 2009. TORT; NEGLIGENCE. Based on the foregoing test, we can conclude that Saycon was negligent. In the first place, he should not have been driving alone. The law clearly requires that the holder of a student-drivers permit should be accompanied by a duly licensed driver when operating a motor vehicle. Further, there is the matter of not wearing a helmet and the fact that he was speeding. All these prove that he was negligent.Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. The Civil Code characterizes negligence as the omission of that diligence required by the nature of the obligation and corresponds with the circumstances of the persons, 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. Thus, in the selection of prospective employees, employers are required to examine them as to their qualifications, experience and service records. With respect to the supervision of employees, employers must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentary evidence. seller. The execution of the notarized deed of sale and the delivery of the owners duplicate copy of OCT No. 535 to respondent is tantamount to a constructive delivery of the object of the sale. In Navera v. Court of Appeals, the Court ruled that since the sale was made in a public instrument, it was clearly tantamount to a delivery of the land resulting in the symbolic possession thereof being transferred to the buyer. Petitioner alleges that the deed of sale is a forgery. The Eniceo heirs also claimed in their answer that the deed of sale is fake and spurious. However, as correctly held by the CA, forgery can never be presumed. The party alleging forgery is mandated to prove it with clear and convincing evidence. Whoever alleges forgery has the burden of proving it. In this case, petitioner and the Eniceo heirs failed to discharge this burden. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 TORT; NEGLIGENCE. Under Art. 2185 of the Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. The Civil Code characterizes negligence as the omission of that diligence required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. Negligence, as it is commonly understood, is conduct that creates an undue risk of harm to others. It is the failure to observe that degree of care, precaution and vigilance that the circumstances justly demand. It is the omission to do something which a reasonable man, guided by considerations that ordinarily regulate the conduct of human affairs, would do, or doing something that a prudent and reasonable man would not do. To determine whether there is negligence in a given situation, this Court laid down this test: Did defendant, in doing the alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the person is guilty of negligence.
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expiration of the 5-year period, for in such event the requirement of Section 118 of the Public Land Act becomes merely directory or a formality. The approval may be secured later, producing the effect of ratifying and adopting the transaction as if the sale had been previously authorized. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 UNRECORDED SALE; EFFECT. Unrecorded sales of land brought under Presidential Decree No. 1529 or the Property Registration Decree (PD 1529) are effective between and binding only upon the immediate parties. The registration required in Section 51 of PD 1529 is intended to protect innocent third persons, that is, persons who, without knowledge of the sale and in good faith, acquire rights to the property. Kings Properties Corporation, Inc. vs. Canuto A. Galido, G.R. No. 170023. November 27, 2009 INTEREST RATE. In September 2009, the Supreme Court promulgated its decision in Ileana Dr. Macalino vs. Bank of the Philippines Islands, G.R. No. 175490, September 17, 2009, and held that the interest rate of 1.5% per month on credit card payments should be reduced to 1% per month. In Sps. Isagani & Diosdada Castro vs. Angelina de Leon Tan, G.R. No. 168940. November 24, 2009, the Supreme Court again faced the issue of whether the interest rate imposed (this time under a loan agreement) is excessive. Here, the loan agreement (denominated as Kasulatan ng Sanglaan ng Lupa at Bahay ) provided for an interest rate of 5% per month, compounded monthly. The principal amount of the loan was PhP30,000. The borrowers (spouses Tan) failed to pay the loan and the lenders (spouses Castro) instituted an extra-judicial foreclosure of mortgage. The lenders emerged as the only bidder and the redemption period expired without the property being redeemed. A Complaint for Nullification of Mortgage and Foreclosure and/or Partial Rescission of Documents and Damages was subsequently filed before the Regional Trial Court of Malolos, Bulacan. The complainants alleged, inter alia, that the interest rate imposed on the principal amount of P30,000.00 is unconscionable. The Regional Trial Court reduced the interest rate to 12% per annum and the Court of Appeals affirmed. In proceedings before the Supreme Court, the petitioners contend that with the removal by the Bangko Sentral of the ceiling on the rate of interest that may be stipulated in a contract of loan, the lender and the borrower could validly agree on any interest rate on loans. Thus, they argue that the Court of Appeals gravely erred when it The fact that Saycon was driving alone with only a students permit is, to our minds, proof enough that Cullen was negligent either she did not know that he only had a students permit or she allowed him to drive alone knowing this deficiency. Whichever way we look at it, we arrive at the same conclusion: that she failed to exercise the due diligence required of her as an employer in supervising her employee. Thus, the trial court properly denied her claim for damages. One who seeks equity and justice must come to this Court with clean hands. Stephen Cang and George Nardo y Josol vs. Herminia Cullen, G.R. No. 163078, November 25, 2009. TORT; NEGLIGENCE. Negligence is defined as the failure to observe for the protection of the interests of another person that degree of care, precaution, and vigilance which the circumstances justly demand, by reason of which such other person suffers injury. The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in the performance of the alleged negligent act use reasonable care and caution which an ordinary person would have used in the same situation? If not, then he is guilty of negligence. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that norm. ANECOs act of leaving unprotected and uninsulated the main distribution line over Balens residence was the proximate cause of the incident which claimed Exclamados life and injured respondents Bale n and Lariosa. Proximate cause is defined as any cause that produces injury in a natural and continuous sequence, unbroken by any efficient intervening cause, such that the result would not have occurred otherwise. Agusan Del Norte Electric Cooperative, Inc. (ANECO), etc. vs. Angelina Balen, et al., G.R. No. 173146, November 25, 2009. HOMESTEAD; ALIENATION. A grantee or homesteader is prohibited from alienating to a private individual a land grant within five years from the time that the patent or grant is issued. A violation of this prohibition renders a sale void. This, however, expires on the fifth year. From then on until the next 20 years, the land grant may be alienated provided the Secretary of Agriculture and Natural Resources approves the alienation. The Secretary is required to approve the alienation unless there are constitutional and legal grounds to deny the approval. In this case, there are no apparent or legal grounds for the Secretary to disapprove the sale of the Subject Land. The failure to secure the approval of the Secretary does not ipso factomake a sale void. The absence of approval by the Secretary does not a sale made after the
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good faith. Hence, they assert that the Court of Appeals should have given due respect to the provisions of the Kasulatan. They also stress that it is a settled principle that the law will not relieve a party from the effects of an unwise, foolish or disastrous contract, entered into with all the required formalities and with full awareness of what he was doing. Petitioners contentions deserve scant consideration. In Abe v. Foster Wheeler Corporation, we held that the freedom of contract is not absolute. The same is understood to be subject to reasonable legislative regulation aimed at the promotion of public health, morals, safety and welfare. One such legislative regulation is found in Article 1306 of the Civil Code which allows the contracting parties to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public policy. To reiterate, we fully agree with the Court of Appeals in holding that the compounded interest rate of 5% per month, is iniquitous and unconscionable. Being a void stipulation, it is deemed inexistent from the beginning. The debt is to be considered without the stipulation of the iniquitous and unconscionable interest rate. Accordingly, the legal interest of 12% per annum must be imposed in lieu of the excessive interest stipulated in the agreement. .. From the foregoing, it is clear that there is no unilateral alteration of the terms and conditions of the Kasulatan entered into by the parties. Surely, it is more consonant with justice that the subject interest rate be equitably reduced and the legal interest of 12% per annum is deemed fair and reasonable. declared the stipulated interest in the Kasulatan as null as if there was no express stipulation on the compounded interest. On the other hand, respondents assert that the appellate court correctly struck down the said stipulated interest for being excessive and contrary to morals, if not against the law. They also point out that a contract has the force of law between the parties, but only when the terms, clauses and conditions thereof are not contrary to law, morals, public order or public policy. The Supreme Court agreed with Court of Appeals and the Regional Trial Court. It ruled: While we agree with petitioners that parties to a loan agreement have wide latitude to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest effective January 1, 1983, it is also worth stressing that interest rates whenever unconscionable may still be declared illegal. There is certainly nothing in said circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or lead to a hemorrhaging of their assets. In several cases, we have ruled that stipulations authorizing iniquitous or unconscionable interests are contrary to morals, if not against the law. In Medel v. Court of Appeals, we annulled a stipulated 5.5% per month or 66% per annum interest on a P500,000.00 loan and a 6% per month or 72% per annum interest on a P60,000.00 loan, respectively, for being excessive, iniquitous, unconscionable and exorbitant. In Ruiz v. Court of Appeals, we declared a 3% monthly interest imposed on four separate loans to be excessive. In both cases, the interest rates were reduced to 12% per annum. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly, stipulated in the Kasulatan is even higher than the 3% monthly interest rate imposed in the Ruiz case. Thus, we similarly hold the 5% monthly interest to be excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. It is therefore void ab initio for being violative of Article 1306 of the Civil Code. With this, and in accord with the Medel and Ruiz cases, we hold that the Court of Appeals correctly imposed the legal interest of 12% per annum in place of the excessive interest stipulated in the Kasulatan. The Supreme Court also ruled that the imposition of a 12% rate per annum does not violate the freedom of contract: Petitioners allege that the Kasulatan was entered into by the parties freely and voluntarily. They maintain that there was already a meeting of the minds between the parties as regards the principal amount of the loan, the interest thereon and the property given as security for the payment of the loan, which must be complied with in
DECEMBER 2009 CASES

RESCISSION (VS. RESOLUTION) OF CONTRACT. If the heirs of a lot buyer were evicted from the lot because of a final judgment based on a right prior to the sale (i.e., the seller did not validly acquire the lot from the person who sold the lot to the seller), should the evicted heirs file an action for rescission under article 1381 or an action for rescission/resolution under Article 1191? Within what period should the appropriate action be filed? Should the prescriptive period be four years as provided under Article 1389 of the Civil Code, which states that the action to claim rescission must be commenced within four years? Or should the prescriptive period be 10 years as provided under Article 1144 of the Civil Code, which states that actions upon a
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ordering the latter to return to the Quirong heirs the PhP78,000.00 Sofia Quirong paid the bank. On appeal by DBP, Court of Appeals (CA) reversed the RTC decision and dismissed the heirs action on the ground of prescription. The CA concluded that, reckoned from the finality of the December 16, 1992 decision in Civil Case D-7159, the complaint filed on June 10, 1998 was already barred by the 4-year prescriptive period under Article 1389 of the Civil Code. The Quirong heirs filed a motion for reconsideration of the decision but the CA court denied it. According to DBP, the prescriptive period should be 4 years as provided under Article 1389 of the Civil Code, which provides that the action to claim rescission must be commenced within four years. On the other hand, the Quirong heirs argue that it should be 10 years as provided under Article 1144 which states that actions upon a written contract must be brought within 10 years from the date the right of action accrues. The Supreme Court agreed with DBP that the prescriptive period was 4 years because the action involved was one for rescission under Article 1381. The Court distinguished between a rescission under Article 1381 and a rescission under Article 1191: The remedy of rescission is not confined to the rescissible contracts enumerated under Article 1381. Article 1191 of the Civil Code gives the injured party in reciprocal obligations, such as what contracts are about, the option to choose between fulfillment and rescission. Arturo M. Tolentino, a well-known authority in civil law, is quick to note, however, that the equivalent of Article 1191 in the old code actually uses the term resolution rather than the present rescission. The calibrated meanings of these terms are distinct. Rescission is a subsidiary action based on injury to the plaintiffs economic interests as described in Articles 1380 and 1381. Resolution, the action referred to in Article 1191, on the other hand, is based on the defendants breach of faith, a violation of the reciprocity between the parties. As an action based on the binding force of a written contract, therefore, rescission (resolution) under Article 1191 prescribes in 10 years. Ten years is the period of prescription of actions based on a written contract under Article 1144. The distinction makes sense. Article 1191 gives the injured party an option to choose between, first, fulfillment of the contract and, second, its rescission. An action to enforce a written contract (fulfillment) is definitely an action upon a written contract, which prescribes in 10 years (Article 1144). It will not be logical to make the remedy of fulfillment prescribe in 10 years while the alternative remedy of rescission (or resolution) is made to prescribe after only four years as provided in Article 1389 when the injury from which the two kinds of actions derive is the same. written contract must be brought within 10 years from the date the right of action accrues? In Heirs of Sofia Quirong, etc. vs. Development Bank of the Philippines, G.R. No. 173441, December 3, 2009, the late Emillo Daloppe left a parcel of land to his wife Felisa and nine children. To enable one of the children (Rosa Dalope-Funcion) to get a loan from the Development Bank of the Philippines (DBP), Felisa sold the parcel of land to Funcions. The Funcions failed to pay the loan. DBP subsequently foreclosed the mortgage and made a conditional sale of the land to Sofia Quirong for PhP78,000. In their contract of sale, Sofia Quirong waived any warranty against eviction. The contract provided that the DBP did not guarantee possession of the property and that it would not be liable for any lien or encumbrance on the same. Quirong gave a down payment of P14,000.00. Two months after the conditional sale to Quirong, Felisa and her eight other children subsequently filed an action for partition and declaration of nullity of documents with damages against DBP and the Funcions before the Regional Trial Court (RTC) of Dagupan City. Notwithstanding the suit, the DBP executed a deed of absolute sale of the subject lot in Sofia Quirongs favor. The deed of sale carried substantially the same waiver of warranty against eviction and of any adverse lien or encumbrance. Sofia Quirong having since died, her heirs filed an answer in intervention in which they asked the RTC to award the lot to them and, should it instead be given to the Dalopes, to allow the Quirong heirs to recover the lots value from the DBP. Because the heirs failed to file a formal offer of evidence, the trial court did not rule on the merits of their claim to the lot and, alternatively, to relief from DBP. The RTC rendered a decision, declaring DBPs sale to Sofia Quirong valid only with respect to the shares of Felisa and Rosa Funcion in the property. It declared Felisas sale to the Funcions, the latters mortgage to the DBP, and the latters sale to Sofia Quirong void insofar as they prejudiced the shares of the eight other children of Emilio and Felisa who were each entitled to a tenth share in the subject lot. The Quirong heirs then filed an action against DBP before the RTC of Dagupan City for rescission of the contract of sale between Sofia Quirong, their predecessor, and the DBP and praying for the reimbursement of the price of P78,000.00 that she paid the bank plus damages. The heirs alleged that they were entitled to the rescission of the sale because the decision in Civil Case D-7159 stripped them of nearly the whole of the lot that Sofia Quirong, their predecessor, bought from DBP. DBP filed a motion to dismiss the action on ground of prescription and res judicata but the RTC denied their motion. After hearing the case, the RTC rendered a decision, rescinding the sale between Sofia Quirong and DBP and
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action on June 10, 1998, they did so beyond the fouryear period. AGENCY; AGENCY BY ESTOPPEL. An agency by estoppel, which is similar to the doctrine of apparent authority requires proof of reliance upon the representations, and that, in turn, needs proof that the representations predated the action taken in reliance. There can be no apparent authority of an agent without acts or conduct on the part of the principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of reasonable prudence by a third person as claimant, and such must have produced a change of position to its detriment. Such proof is lacking in this case. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No. 163553, December 11, 2009. AGENCY; IMPLIED AGENCY. Article 1869 of the Civil Code states that implied agency is derived from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. Implied agency, being an actual agency, is a fact to be proved by deductions or inferences from other facts. On the other hand, apparent authority is based on estoppel and can arise from two instances. First, the principal may knowingly permit the agent to hold himself out as having such authority, and the principal becomes estopped to claim that the agent does not have such authority. Second, the principal may clothe the agent with the indicia of authority as to lead a reasonably prudent person to believe that the agent actually has such authority. In an agency by estoppel, there is no agency at all, but the one assuming to act as agent has apparent or ostensible, although not real, authority to represent another. The law makes no presumption of agency and proving its existence, nature and extent is incumbent upon the person alleging it. Whether or not an agency has been created is a question to be determined by the fact that one represents and is acting for another. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No. 163553, December 11, 2009. AGENCY; IMPLIED AGENCY. The basis for 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. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the The Court noted that the action filed by the Quirong heirs was an action for rescission (not resolution): Here, the Quirong heirs alleged in their complaint that they were entitled to the rescission of the contract of sale of the lot between the DBP and Sofia Quirong because the decision in Civil Case D-7159 deprived her heirs of nearly the whole of that lot. But what was the status of that contract at the time of the filing of the action for rescission? Apparently, that contract of sale had already been fully performed when Sofia Quirong paid the full price for the lot and when, in exchange, the DBP executed the deed of absolute sale in her favor. There was a turnover of control of the property from DBP to Sofia Quirong since she assumed under their contract, the ejectment of squatters and/or occupants on the lot, at her own expense. Actually, the cause of action of the Quirong heirs stems from their having been ousted by final judgment from the ownership of the lot that the DBP sold to Sofia Quirong, their predecessor, in violation of the warranty against eviction that comes with every sale of property or thing. Article 1548 of the Civil Code provides: Article 1548. 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 thing purchased. xxxx With the loss of 80% of the subject lot to the Dalopes by reason of the judgment of the RTC in Civil Case D-7159, the Quirong heirs had the right to file an action for rescission against the DBP pursuant to the provision of Article 1556 of the Civil Code which provides: Article 1556. Should the vendee lose, by reason of the eviction, a part of the thing sold of such importance, in relation to the whole, that he would not have bought it without said part, he may demand the rescission of the contract; but with the obligation to return the thing without other encumbrances than those which it had when he acquired it. x x x Finally, the Court concluded that the action for rescission was barred by prescription as it was filed beyond the 4year prescriptive period: And that action for rescission, which is based on a subsequent economic loss suffered by the buyer, was precisely the action that the Quirong heirs took against the DBP. Consequently, it prescribed as Article 1389 provides in four years from the time the action accrued. Since it accrued on January 28, 1993 when the decision in Civil Case D-7159 became final and executory and ousted the heirs from a substantial portion of the lot, the latter had only until January 28, 1997 within which to file their action for rescission. Given that they filed their
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creation of a new one that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent that it remains compatible with the amendatory agreement. Novation may either be express, when the new obligation declares in unequivocal terms that the old obligation is extinguished; or implied, when the new obligation is on every point incompatible with the old one. The test of incompatibility is whether the two obligations can stand together, each one with its own independent existence. In the instant case, the Court finds that the Partial Compromise Agreement entered into by petitioners and Land Bank constitutes as an implied modificatory novation or amendment to the Loan/Line Agreement. As such, any provision in the Loan/Line Agreement inconsistent with the provisions of the Partial Compromise Agreement is deemed amended or waived by the parties. In other words, by entering into the Partial Compromise Agreement and agreeing to suspend all actions, Land Bank effectively waived all its rights regarding MPC Nos. 0002 and 0004. This necessarily includes its right to assign under the Loan/Line Agreement. Adriatico Consortium, Inc. Primary Realty Corp., and Benito CuUy-Gam vs. Land Bank of the Philippines, G.R. No. 187838, December 23, 2009. CONTRACT; RESCISSION. CONTRACT; INTERPRETATION. A compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. It is an agreement intended to terminate a pending suit by making reciprocal concessions. In the construction or interpretation of a compromise agreement, the Court is guided by the fundamental and cardinal rule that the intention of the parties is to be ascertained from the contract and effect should be given to that intention. Likewise, it must be construed so as to give effect to all the provisions of the contract. In essence, the contract must be read as a whole. Adriatico Consortium, Inc. Primary Realty Corp., and Benito CuUy-Gam vs. Land Bank of the Philippines, G.R. No. 187838, December 23, 2009. CONTRACT; NOVATION. Novation is the extinguishment of an obligation by the substitution or change of the obligation by a subsequent one which extinguishes or modifies the first, either by changing the object or principal conditions, or by substituting another in place of the debtor, or by subrogating a third person in the rights of the creditor. Novation may be extinctive or modificatory. It is extinctive when an old obligation is terminated by the The remedy of rescission is not confined to the rescissible contracts enumerated under Article 1381. Article 1191 of the Civil Code gives the injured party in reciprocal obligations, such as what contracts are about, the option to choose between fulfillment and rescission. Arturo M. Tolentino, a well-known authority in civil law, is quick to note, however, that the equivalent of Article 1191 in the old code actually uses the term resolution rather than the present rescission. The calibrated meanings of these terms are distinct. Rescission is a subsidiary action based on injury to the plaintiffs economic interests as described in Articles 1380 and 1381. Resolution, the action referred to in Article 1191, on the other hand, is based on the defendants breach of faith, a violation of the reciprocity between the parties. As an action based on the binding force of a written contract, therefore, rescission (resolution) under Article 1191 prescribes in 10 years. Ten years is the period of prescription of actions based on a written contract under Article 1144. The distinction makes sense. Article 1191 gives the injured party an option to choose between, first, fulfillment of the contract and, second, its rescission. An action to enforce a written contract (fulfillment) is definitely an action upon a written contract, which prescribes in 10 years (Article 1144). It will not be logical to make the remedy of fulfillment prescribe in 10 years while the alternative remedy of rescission (or appointment and act on it. Absent such mutual intent, there is generally no agency. There is no implied agency in this case because PAGCOR did not hold out to the public as the principal of ABS Corporation. PAGCORs actions did not mislead the public into believing that an agency can be implied from the arrangement with the junket operators, nor did it hold out ABS Corporation with any apparent authority to represent it in any capacity. The Junket Agreement was merely a contract of lease of facilities and services. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No. 163553, December 11, 2009. CONTRACT; BINDING EFFECT. A consignee, although not a signatory to the contract of carriage between the shipper and the carrier, becomes a party to the contract by reason of either (1) the relationship of agency between the consignee and the shipper/ consignor; (2) the unequivocal acceptance of the bill of lading delivered to the consignee, with full knowledge of its contents or (3) availment of the stipulation pour autrui, i.e., when the consignee, a third person, demands before the carrier the fulfillment of the stipulation made by the consignor/shipper in the consignees favor, specifically the delivery of the goods/cargoes shipped. MoF Company, Inc. vs. Shin Brokerage Corporation, G.R. No. 172822, December 18, 2009.
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contract is imprescriptible. Hence, petitioners contention that respondents cause of action is already barred by prescription is without legal basis. Jesus Campos and Rosemarie Campos-Bautista vs. Nenita Buevinida Pastrana, et al., G.R. No. 175994, December 8, 2009. CONTRACT; VOID CONTRACT; RESCISSION. Petitioners argument that the applicable law in this case is Article 1381(3) of the Civil Code on rescissible contracts and not Article 1409 on void contracts is not a question of first impression. This issue had already been settled several decades ago when we held that an action to rescind is founded upon and presupposes the existence of a contract. A contract which is null and void is no contract at all and hence could not be the subject of rescission. In the instant case, the Deeds of Absolute Sale are fictitious and inexistent for being absolutely simulated contracts. It is true that the CA cited instances that may constitute badges of fraud under Article 1387 of the Civil Code on rescissible contracts. But there is nothing else in the appealed decision to indicate that rescission was contemplated under the said provision of the Civil Code. The aforementioned badges must have been considered merely as grounds for holding that the sale is fictitious. Consequently, we find that the CA properly applied the governing law over the matter under consideration which is Article 1409 of the Civil Code on void or inexistent contracts. Jesus Campos and Rosemarie CamposBautista vs. Nenita Buevinida Pastrana, et al., G.R. No. 175994, December 8, 2009. CONTRACT; VOID CONTRACT; GAMBLING. Gambling is prohibited by the laws of the Philippines as specifically provided in Articles 195 to 199 of the Revised Penal Code, as amended. Gambling is an act beyond the pale of good morals, and is thus prohibited and punished to repress an evil that undermines the social, moral, and economic growth of the nation. Presidential Decree No. 1602 (PD 1602), which modified Articles 195-199 of the Revised Penal Code and repealed inconsistent provisions, prescribed stiffer penalties on illegal gambling. As a rule, all forms of gambling are illegal. The only form of gambling allowed by law is that stipulated under Presidential Decree No. 1869, which gave PAGCOR its franchise to maintain and operate gambling casinos. The issue then turns on whether PAGCOR can validly share its franchise with junket operators to operate gambling casinos in the country. The Junket Agreement would be valid if under Section 3(h) of PAGCORs charter, PAGCOR could share its gambling franchise with another entity. In this case, PAGCOR, by taking only a percentage of the earnings of ABS Corporation from its foreign currency collection, allowed ABS Corporation to operate gaming tables in the dollar pit. The Junket Agreement is in direct violation of PAGCORs charter and is therefore void. resolution) is made to prescribe after only four years as provided in Article 1389 when the injury from which the two kinds of actions derive is the same. (Heirs of Sofia Quirong, etc. vs. Development Bank of the Philippines, G.R. No. 173441, December 3, 2009.) CONTRACT; VOID CONTRACT. A contract is void if one of the essential requisites of contracts under Article 1318 of the New Civil Code is lacking. All these elements must be present to constitute a valid contract. Consent is essential to the existence of a contract; and where it is wanting, the contract is nonexistent. In a contract of sale, its perfection is consummated at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract. To enter into a valid contract of sale, the parties must have the capacity to do so. Every person is presumed to be capacitated to enter into a contract until satisfactory proof to the contrary is presented. The burden of proof is on the individual asserting a lack of capacity to contract, and this burden has been characterized as requiring for its satisfaction clear and convincing evidence. While a corporation is a juridical person, it cannot act except through its board of directors as a collective body, which is vested with the power and responsibility to decide whether the corporation should enter into a contract that will bind the corporation, subject to the articles of incorporation, by-laws, or relevant provisions of law. This grant to the board of all corporate powers is explicit under Section 23 of the Corporation Code, stating: All corporate powers shall be exercised, and all corporate business shall be conducted by the board of directors. In the case under consideration, the dispute centers on the element of consent, which FPHC claimed to be lacking since the supposed board of directors that composed the FPHC was allegedly a dummy board of Benjamin Romualdez, the members of which were allegedly installed after the management and control of FPHC were supposedly fraudulently wrested from its true owners. The Sandiganbayan, however, differed. It stood pat in its ruling that the consent by the board of directors, who had the legal capacity to enter into said contract with a third person, was duly obtained. This Court finds no reason to diverge from the disquisition of the anti-graft court on this matter. First Philippine Holding Corporation vs. Trans Middle East (Phils.) Equities Inc., G.R. No. 179505. December 4, 2009. CONTRACT; VOID CONTRACT; PRESCRIPTION. The sale of subject properties to petitioners are null and void. Under Article 1410 of the Civil Code, an action or defense for the declaration of the inexistence of a
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between the parties. Article 2231 of the Civil Code, which provides that in quasi-delict, exemplary damages may be granted if the defendant acted with gross negligence, thus applies. For gross negligence implies a want or absence of or failure to exercise even slight care or diligence, or the entire absence of care, evincing a thoughtless disregard of consequences without exerting any effort to avoid them. Metropolitan Bank and Trust Company, etc. vs. BA Finance Corporation and Malayan Insurance Co, Inc., G.R. No. 179952, December 4, 2009. LAWS; RETROACTIVE APPLICATION. Contracts where consent is given through fraud, are voidable or annullable. These are not void ab initio since voidable or anullable contracts are existent, valid, and binding, although they can be annulled because of want of capacity or the vitiated consent of one of the parties. However, before such annulment, they are considered effective and obligatory between parties. As the complaint-in-intervention substantially alleged that the contract was voidable, the four-year prescriptive period under Art. 1391 of the New Civil Code will apply. FPHC, however, contends that the four-year prescriptive period should be reckoned from 24 February 1986, the date when former President Marcos left the country, as it was only then that the threat and intimidation against the Lopezes ceased. This argument is unconvincing. Based on FPHCs Petition for Review and its Complaint-in-Intervention, the ground relied upon by petitioner is fraud. Here, from the time the questioned sale transaction on 24 May 1984 took place, FPHC did not deny that it had actual knowledge of the same. Simply, petitioner was fully aware of the sale of the PCIB shares to TMEE. Despite all this knowledge, petitioner did not question the said sale from its inception and some time thereafter. It was only after four years and seven months had lapsed following the knowledge or discovery of the alleged fraudulent sale that petitioner assailed the same. By then, it was too late for petitioner to beset the same transaction, since the prescriptive period had already come into play. First Philippine Holding Corporation vs. Trans Middle East (Phils.) Equities Inc., G.R. No. 179505. December 4, 2009. DAMAGES; EXEMPLARY DAMAGES. Petitioner argues that assuming arguendo that compensatory damages had been awarded, the same contravened Article 2232 of the Civil Code which provides that in contracts or quasi-contracts, the court may award exemplary damages only if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. Since, so petitioner concludes, there was no finding that it acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner, it is not liable for exemplary damages. The argument fails. To reiterate, petitioners liability is based not on contract or quasi-contract but on quasidelict since there is no pre-existing contractual relation A perusal of RA 9302 shows that nothing indeed therein authorizes its retroactive application. In fact, its effectivity clause indicates a clear legislative intent to the contrary: Section 28. Effectivity Clause. This Act shall take effect fifteen (15) days following the completion of its publication in the Official Gazette or in two (2) newspapers of general circulation. Statutes are prospective and not retroactive in their operation, they being the formulation of rules for the future, not the past. Hence, the legal maxim lex de futuro, judex de praeterito the law provides for the future, the judge for the past, which is articulated in Article 4 of the Civil Code: Laws shall have no retroactive effect, unless the contrary is provided. The reason for the rule is the tendency of retroactive legislation to be unjust and oppressive on account of its liability to unsettle vested rights or disturb the legal effect of prior transactions. In Re: Petition for Assistance in the Liquidation of Intercity Savings and Loan Bank, Inc., Philippine Deposit Insurance Corporation vs. Stockholders of Intercity Savings and Loan Bank, Inc., G.R. No. 181556, December 14, 2009. MARRIAGE; DISPOSITION OF CONJUGAL PROPERTY. The husbands first act of disposition of the subject property occurred in 1963 when he executed the SPA and the Deed of Transfer of Rights in favor of Dolores Camisura. Thus, the right of action of the petitioners accrued in 1963, as Article 173 of the Civil Code provides that the wife may file for annulment of a contract entered into by the husband without her consent within ten (10) years from the transaction questioned. Petitioners filed the action for reconveyance in 1995. Even if we were to consider that their right of action arose when they learned of the cancellation of TCT No. 107534 and the issuance of TCT No. 290121 in Melanie Mingoas name in 1993, still, twelve (12) years have lapsed since such discovery, and they filed the petition beyond the period allowed by law. Moreover, when Sergia Hernandez, together with her children, filed the action for reconveyance, the conjugal partnership of property with Hernandez, Sr. had already been terminated by virtue of the latters death on April 16, 1983. Clearly, therefore, petitioners action has prescribed. Since the Junket Agreement violates PAGCORs charter, gambling between the junket player and the junket operator under such agreement is illegal and may not be enforced by the courts. Article 2014 of the Civil Code, which refers to illegal gambling, states that no action can be maintained by the winner for the collection of what he has won in a game of chance. Yun Kwan Byung vs. Philippine Amusement Gaming Corporation, G.R. No. 163553, December 11, 2009. CONTRACT; VOIDABLE.
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Not being a loan or forbearance of money, the interest should be 6% per annum computed from the date of extrajudicial demand on September 25, 1992 until finality of judgment; and 12% per annum from finality of judgment until payment, conformably with Eastern Shipping Lines, Inc. v. Court of Appeals. Metropolitan Bank and Trust Company, etc. vs. BA Finance Corporation and Malayan Insurance Co, Inc., G.R. No. 179952, December 4, 2009. OBLIGATIONS; LACHES. Petitioners cannot find refuge in the principle of laches. It is not just the lapse of time or delay that constitutes laches. The essence of laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which, through due diligence, could or should have been done earlier, thus giving rise to a presumption that the party entitled to assert it had earlier abandoned or declined to assert it. The essential elements of laches are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainants rights after he had knowledge of defendants acts and after he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant. In the instant case, the second and third elements are missing. Arsenio F. Olegario, et al. vs. Pedro C. Mari, represented by Lilia C. Mari-Camba, G.R. No. 147951, December 14, 2009. PROPERTY; POSSESSION. Respondents predecessor, Juan Mari, had declared the disputed realty for tax purposes as early as 1916. The tax declarations show that he had a two storey house on the realty. He also planted fruit bearing trees and bamboos thereon. The records also show that the 897square meter property had a bamboo fence along its perimeter. All these circumstances clearly show that Juan Mari was in possession of subject realty in the concept of owner, publicly and peacefully since 1916 or long before petitioners entered the disputed realty sometime in 1965. Based on Article 538 of the Civil Code, the respondent is the preferred possessor because, benefiting from his fathers tax declaration of the subject realty since 1916, he has been in possession thereof for a longer period. On the other hand, petitioners acquired joint possession only sometime in 1965. Arsenio F. Olegario, et al. vs. Pedro C. Mari, represented by Lilia C. Mari-Camba, G.R. No. 147951, December 14, 2009. SALE; CONTRACT TO SELL. A distinction between a contract to sell and a contract of sale is helpful in order to determine the true intention of The failure of Sergia Hernandez to file with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction necessarily barred her from questioning the sale of the subject property to third persons. Heirs of Domingo Hernandez Sr., et al. vs. Plaridel Mingoa, Sr., et al., G.R. No. 146548, December 18, 2009. MORTGAGE; FORECLOSURE. Foreclosure is valid where the debtor is in default in the payment of an obligation. The essence of a contract of mortgage indebtedness is that a property has been identified or set apart from the mass of the property of the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to answer the amount of indebtedness, in case of default in payment. Foreclosure is but a necessary consequence of nonpayment of the mortgage indebtedness. In a real estate mortgage when the principal obligation is not paid when due, the mortgagee has the right to foreclose the mortgage and to have the property seized and sold with the view of applying the proceeds to the payment of the obligation. On the face of respondents clear admission that they were unable to settle their obligations which were secured by the mortgages, EPCIB has a clear right to foreclose the mortgages. Equitable PCI Bank, Inc. vs. Maria Letecia Fernandez, et al., G.R. No. 163117, December 18, 2009. OBLIGATIONS; CORPORATIONS. A corporation is vested by law with a personality separate and distinct from the people comprising it. Ownership by a single or small group of stockholders of nearly all of the capital stock of the corporation is not by itself a sufficient ground to disregard the separate corporate personality. Thus, obligations incurred by corporate officers, acting as corporate agents, are direct accountabilities of the corporation they represent. In this case, none of these exceptional circumstances is present. In its decision, the trial court failed to provide a clear ground why Eugene Lim was held solidarily liable with Shrimp Specialists. The trial court merely stated that Eugene Lim signed on behalf of the Shrimp Specialists as President without explaining the need to disregard the separate corporate personality. The CA correctly ruled that the evidence to hold Eugene Lim solidarily liable should be more than just signing on behalf of the corporation because artificial entities can only act through natural persons. Thus, the CA was correct in dismissing the case against Eugene Lim. Shrimp Specialist, Inc. vs. Fuji-Triumph Agri-Industrial Corporation/Fuji-Trimph Agri-Industrial Corporation vs. Shrimp Specialist, Inc. et al., G.R. No. 168756/G.R. No. 171476, December 7, 2009. OBLIGATIONS; INTEREST.
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Corporation vs. Queens Row Subdivision, Inc., et al., G.R. No. 173158, December 4, 2009. LAND REGISTRATION; POSSESSION. In Director, Land Management Bureau v. Court of Appeals, we explained that x x x The phrase adverse, continuous, open, public, peaceful and in concept of owner, by which characteristics private respondent describes his possession and that of his parents, are mere conclusions of law requiring evidentiary support and substantiation. The burden of proof is on the private respondent, as applicant, to prove by clear, positive and convincing evidence that the alleged possession of his parents was of the nature and duration required by law. His bare allegations without more, do not amount to preponderant evidence that would shift the burden of proof to the oppositor. Here, we find that petitioners possession of the lot has not been of the character and length of time required by law Josephine Wee vs. Republic of the Philippines, G.R. No. 177384, December 8, 2009. REGISTERED LAND; BUYER IN GOOD FAITH. While every person dealing with registered land can 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, one will not be permitted to benefit from this general rule if there exist important facts which create suspicion to call for an investigation of the real condition of the land. One who deliberately ignores a significant fact which would naturally generate wariness is not an innocent purchaser for value. Vicente N. Luna, Jr. vs. Nario Cabales, Oscar Pabalan, et al., G.R. No. 173533, December 14, 2009. REGISTERED LAND; NON-OWNER. The registrati on of a property in ones name, whether by mistake or fraud, the real owner being another, impresses upon the title so acquired the character of a constructive trust for the real owner. The person in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of the property. The Torrens system does not protect a usurper from the true owner. Vicente N. Luna, Jr. vs. Nario Cabales, Oscar Pabalan, et al., G.R. No. 173533, December 14, 2009. REGISTERED OWNER; LACHES. This Court has, on several occasions, already ruled that even a registered owner of a property may be barred from recovering possession of the same by virtue of laches. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exerting due diligence could or should have been done earlier. The law serves those who are vigilant and diligent, and not those who sleep when the law the parties. In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; while in a contract to sell, ownership is, by agreement, reserved for the vendor and is not to pass to the vendee until full payment of the purchase price. In a contract of sale, non-payment of the price is a negative resolutory condition. In a contract to sell, full payment is a positive suspensive condition. In a contract of sale, the vendor loses and cannot recover ownership of the thing sold until and unless the contract of sale is itself resolved and set aside. In a contract to sell, the title remains with the vendor if the vendee does not comply with the condition precedent of making payment at the time specified in the contract. In a contract to sell, the payment of the purchase price is a positive suspensive condition, the failure of which is not a breach, casual or serious, but a situation which prevents the obligation of the vendor to convey title from acquiring an obligatory force. In the instant case, ownership of the general purpose polystyrene products was retained by SMP, Incorporated (SMP) until after the checks given as payment by Clothespak Manufacturing Philippines (Clothespak) cleared. This was evidenced by a provisional receipt issued by SMP to Clothespak. The agreement between SMP and Clothespak involved a contract to sell defined under Article 1478 of the Civil Code. On the other hand, the stipulation that the loss or destruction of the products during transit is on the account of Clothespak, as buyer of the products, is of no moment. This does not alter the nature of the contract as a contract to sell. The free on board stipulation on the contract can coexist with the contract to sell. Otherwise stated, the provisions or stipulations in the contract for the reservation of the ownership of a thing until full payment of the purchase price and for the loss or destruction of the thing would be on account of the buyer are valid and can exist in conjunction with the other. Bank of the Philippine Islands as successor-ininterest of Far East Bank and Trust Company vs. SMP, Inc., G.R. No. 175466, December 23, 2009. INNOCENT PURCHASER FOR VALUE; INSTITUTIONS. FINANCIAL
While we agree with petitioners that GSIS, as a financial institution, is bound to exercise more than just ordinary diligence in the conduct of its financial dealings, we nevertheless find no law or jurisprudence supporting petitioners claim that financial institutions are not protected when they are innocent purchasers for value. When financial institutions exercise extraordinary diligence in determining the validity of the certificates of title to properties being sold or mortgaged to them and still fail to find any defect or encumbrance upon the subject properties after said inquiry, such financial institutions should be protected like any other innocent purchaser for value if they paid a full and fair price at the time of the purchase or before having notice of some other persons claim on or interest in the property. Alejandro B. Ty and International Realty
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the postdated check (covering the purchase price for the property) would not bounce on its maturity hardly equates to dolo causante. The buyers assurance that the check issued was fully funded was not the principal inducement for the petitioners to sign the Deed of Absolute Sale. Even before the buyers issued the check, the parties had already consented and agreed to the sale transaction. The petitioners were never tricked into selling their property to the buyer. On the contrary, they willingly accepted his offer to purchase the property at P3,000,000. In short, there was a meeting of the minds as to the object of the sale as well as the consideration therefor. Spouses Carmen Tongson and Jose Tongson vs. Emergency Pawnshop Bula, Inc. et al., G.R. No. 167874, January 15, 2010. CONTRACT; INTERPRETATION. There is nothing in the subject Extrajudicial Settlement to indicate any express stipulation for petitioner and respondents to continue with their supposed coownership of the contested lot. On the contrary, a plain reading of the provisions of the Extrajudicial Settlement would not, in any way, support petitioners contention that it was his and his siblings intention to buy the subject property from the Bank and continue what they believed to be co-ownership thereof. It is a cardinal rule in the interpretation of contracts that the intention of the parties shall be accorded primordial consideration. It is the duty of the courts to place a practical and realistic construction upon it, giving due consideration to the context in which it is negotiated and the purpose which it is intended to serve. Such intention is determined from the express terms of their agreement, as well as their contemporaneous and subsequent acts. Absurd and illogical interpretations should also be avoided. Petitioners contention that he and his siblings intended to continue their supposed co-ownership of the subject property contradicts the provisions of the subject Extrajudicial Settlement where they clearly manifested their intention of having the subject property divided or partitioned by assigning to each of the petitioner and respondents a specific 1/3 portion of the same. Partition calls for the segregation and conveyance of a determinate portion of the property owned in common. It seeks a severance of the individual interests of each coowner, vesting in each of them a sole estate in a specific property and giving each one a right to enjoy his estate without supervision or interference from the other. In other words, the purpose of partition is to put an end to co-ownership, an objective which negates petitioners claims in the present case. Celestino Balus vs. Saturnino Balus and Leonarda Balus vda. De Calunod, G.R. No. 168970, January 15, 2010. CONTRACT; RECIPROCAL OBLIGATIONS; REMEDY OF RESCISSION. While no causal fraud attended the execution of the sales contract, the fraud existed in the consummation stage of the sale when the parties were in the process of performing their respective obligations under the perfected contract of sale. Indisputably, the sellers had requires them to act. Alejandro B. Ty and International Realty Corporation vs. Queens Row Subdivision, Inc., et al., G.R. No. 173158, December 4, 2009. TORRENS TITLE; REGISTRATION BY NON-OWNER. The fact that petitioners were able to secure titles in their names did not operate to vest upon them ownership over the subject properties. That act has never been recognized as a mode of acquiring ownership. The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from the true owner. Vicente N. Luna, Jr. vs. Nario Cabales, Oscar Pabalan, et al., G.R. No. 173533, December 14, 2009.
JANUARY 2010 CASES

AGENCY; PRINCIPLE OF UNDISCLOSED PRINCIPAL. It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal. Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. CAYETANO, G.R. No. 179909, January 25, 2010. CONTRACT; ELEMENT OF CONSENT; CAUSAL FRAUD. In order that fraud may vitiate consent to a contract, it must be the causal (dolo causante), not merely the incidental (dolo incidente), inducement to the making of the contract. Additionally, the fraud must be serious. In this case, causal fraud necessary to justify the annulment of the contract of sale between the parties was absent. It is clear from the records that petitioners agreed to sell their property to the buyers. The petitioners belief that the fraud employed by the buyers was already operational at the time of the perfection of the contract of sale is incorrect. The Buyers misrepresentation that
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The buyer defrauded the petitioners in his acts of issuing a worthless check and representing to them that the check was funded, committing in the process a substantial breach of his obligation as a buyer. For such fraudulent acts, the buyer is liable for moral damages and exemplary damages under Article 2220, and 2232 and 2234of the Civil Code, respectively. Spouses Carmen Tongson and Jose Tongson vs. Emergency Pawnshop Bula, Inc. et al., G.R. No. 167874, January 15, 2010. DAMAGES; MORAL AND EXEMPLARY; REDUCTION. Moral damages were correctly awarded to the respondent. Such damages may be awarded when the defendants transgression is the immediate cause of the plaintiffs anguish in the cases specifi ed in Article 2219 of the Civil Code. Here, respondents colleagues and friends testified that she suffered severe anxiety on account of the speculation over her employment status. She had to endure being referred to as a squatter in her workplace. She had to face inquiries from family and friends about her exclusion from the Bureaus centennial anniversary memorabilia. She did not have to endure all these affronts and the angst and depression they produced had petitioner abided in good faith by the courts order in her favor. Clearly, she is entitled to moral damages. The Court, however, finds the award excessive. Moral damages are not a bonanza. They are given to ease the defendants grief and suffering. Moral damages should reasonably approximate the extent of hurt caused and the gravity of the wrong done. The Court affirms the grant of exemplary damages by way of example or correction for the public good but, in line with the same reasoning, reduces it. Titus B. Villanueva vs. Emma M. Rosqueta, G.R. No. 180764, January 19, 2010. HUMAN RELATIONS; ABUSE OF RIGHT. Under the abuse of right principle found in Article 19 of the Civil Code, a person must, in the exercise of his legal right or duty, act in good faith. He would be liable if he instead acts in bad faith, with intent to prejudice another. Complementing this principle are Articles 20 and 21 of the Civil Code, which grant the latter indemnity for the injury he suffers because of such abuse of right or duty. The Court found that the petitioner had acted in bad faith and with intent to spite the respondent, when the petitioner, notwithstanding a preliminary injunction order preventing him from doing so, allowed another party to assume the office as Deputy Commissioner in place of the respondent. Petitioners exclusion of the respondent from the centennial anniversary memorabilia was not an honest mistake by any reckoning. Indeed, he withheld her salary and prevented her from assuming the duties of the position. A partys refusal to abide by a court order enjoining him from doing an act, otherwise lawful, constitutes an abuse and an unlawful exercise of right. That respondent was later appointed Deputy Commissioner for another division of the Bureau is immaterial. While such appointment, when accepted, rendered the quo warranto case moot and academic, it did not have the effect of wiping out the injuries she suffered on account of Petitioner treatment of her. The already performed their obligation of executing the Deed of Sale, which led to the cancellation of their title in favor of the buyer. Respondent buyers, on the other hand, failed to perform their correlative obligation of paying the full amount of the contract price. Clearly, respondents committed a substantial breach of their reciprocal obligation, entitling the petitioners to the rescission of the sales contract. Under the Civil Code, an injured party may choose between the fulfillment and the rescission of the obligation, with payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible. Respondents claims that rescission is not proper and that he should be given more time to pay for the unpaid remaining balance of the purchase price cannot be countenanced. Having acted fraudulently in performing his obligation, the respondent is not entitled to more time to pay the remaining balance, and thereby erase the default or breach that he had deliberately incurred. To do otherwise would be to sanction a deliberate and reiterated infringement of the contractual obligations incurred by the buyers, an attitude repugnant to the stability and obligatory force of contracts. Spouses Carmen Tongson and Jose Tongson vs. Emergency Pawnshop Bula, Inc. et al., G.R. No. 167874, January 15, 2010. CONTRACT; SALE; NULLITY BECAUSE OF FORGERY. In order that the holder of a certificate for value issued by virtue of the registration of a voluntary instrument may be considered a holder in good faith and for value, the instrument registered should not be forged. Indubitably, therefore, the questioned Deed of Absolute Sale did not convey any title to herein petitioners. Thus, we hold that with the presentation of the forged deed, even if accompanied by the owners duplicate certificate of title, the registered owner did not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the said property. Spouses Patricio and Myrna Bernales vs. Heirs of Julian Sambaan, et al., G.R. No. 163271, January 15, 2010. DAMAGES; ATTORNEYS FEE; REDUCTION. The relation to a foreclosure of a mortgage by a bank, the Court ruled that the award of attorneys fee, it being part of a partys liquidated damages, lik ewise could be equitably reduced. The Court affirmed the lower courts ruling reducing the attorneys fee from 10% to 1% based on the following reasons: (1) attorneys fee is not essential to the cost of borrowing, but a mere incident of collection; (2) 1% is just and adequate because the bank had already charged foreclosure expenses; (3) attorneys fee of 10% of the total amount due is onerous considering the rote effort that goes into extrajudicial foreclosures. Bank of the Philippines Islands, Inc. vs. Spouses Norman and Angelina Yu, et al., G.R. No. 184122, January 20, 2010. DAMAGES; MORAL AND EXEMPLARY; FRAUD IN CONTRACT.
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The continued receipt of lease payments by the lessor despite the contractual breach amounted to a waiver of their option to eject the lessee. Romeo D. Mariano vs. Petron Corporation, G.R. No. 169438, January 21, 2010. PRESCRIPTION; PERIOD FOR SUITS BASED ON WRITTEN CONTRACT. Petitioner filed his complaint regarding the lessees breach of the lease contracts assignment veto clause, nearly 22 years after the assignment of leasehold rights and almost six years after petitioner bought the property from the lessor. The lapse of more than two decades lputs this case well within the territory of the 10-year prescriptive bar to suits based upon a written contract under Article 1144 (1) of the Civil Code. Romeo D. Mariano vs. Petron Corporation, G.R. No. 169438, January 21, 2010. PRESCRIPTION; ACTION TO VOID CONTRACT DOES NOT PRESCRIBE. FORGED damage suit is an independent action. Titus B. Villanueva vs. Emma M. Rosqueta, G.R. No. 180764, January 19, 2010. LACHES; ELEMENTS. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. Its essential elements are: (1) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainants right after he had knowledge of the defendants conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. In the present case, records clearly show that respondents could have filed an action to annul the mortgage on their properties, but for unexplained reasons, they failed to do so. They only questioned the loan and mortgage transactions after the lapse of more than five years from the date of the foreclosure sale. It bears noting that the real estate mortgage was registered and annotated on the titles of respondents, and the latter were even informed of the extrajudicial foreclosure and the scheduled auction. Instead of impugning the real estate mortgage and opposing the scheduled public auction, respondents lawyer wrote a letter to petitioner and merely asked that the scheduled auction be postponed to a later date. Even after five years, respondents still failed to oppose the foreclosure and the subsequent transfer of titles to petitioner when their agent, acting in behalf of the principal, sent a letter proposing to buy back the properties. It was only when the negotiations failed that respondents filed the instant case. Clearly, respondents slept on their rights. Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010. LEASE; ASSIGNMENT; REQUIREMENT FOR LESSORS CONSENT. PNOCs buy-out of ESSO Philippines was total and unconditional, leaving no residual rights to ESSO Eastern. Logically, this change of ownership carried with it the transfer to PNOC of any proprietary interest ESSO Eastern may hold through ESSO Philippines, including ESSO Easterns lease over the Property, which lease contract provided that the contract could not be assigned by ESSO Eastern without the consent of the lessor. As the lessor has given no prior consent to the transaction between ESSO Eastern and PNOC, ESSO Eastern violated the Contracts assignment veto clause. Romeo D. Mariano vs. Petron Corporation, G.R. No. 169438, January 21, 2010. LEASE; WAIVER OF RIGHT TO EJECT LESSEE.
The supposed vendors signature having been proved to be a forgery, the instrument is totally void or inexistent as absolutely simulated or fictitious under Article 1409 of the Civil Code. According to Article 1410, the action or defense for the declaration of the inexistence of a contract does not prescribe. The inexistence of a contract is permanent and incurable which cannot be cured either by ratification or by prescription. Spouses Patricio and Myrna Bernales vs. Heirs of Julian Sambaan, et al., G.R. No. 163271, January 15, 2010. SUCCESSION. The rights to a persons succession are transmitted from the moment of his death. In addition, the inheritance of a person consists of the property and transmissible rights and obligations existing at the time of his death, as well as those which have accrued thereto since the opening of the succession. In the present case, since the father of the parties to the case lost ownership of the subject property during his lifetime, it only follows that at the time of his death, the disputed parcel of land no longer formed part of his estate to which his heirs may lay claim. Stated differently, petitioner and respondents never inherited the subject lot from their father. Petitioner and respondents, therefore, were wrong in assuming that they became co-owners of the subject lot. Thus, any issue arising from the supposed right of petitioner as co-owner of the contested parcel of land is negated by the fact that, in the eyes of the law, the disputed lot did not pass into the hands of petitioner and respondents as compulsory heirs at any given point in time. Celestino Balus vs. Saturnino Balus and Leonarda Balus vda. De Calunod, G.R. No. 168970, January 15, 2010. CONTRACTS; LEASE. INTERPRETATION; AGRICULTURAL
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Several cases decided by the Supreme Court indicate that the agent should be very careful in the manner he or she signs a mortgage contract on behalf of the principal; otherwise, the mortgage may be binding upon the agent only. In Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010, the principal executed a special power of attorney in favor of her daughter authorizing her to contract a loan from a bank and to mortgage the principals two lots. The principal also executed an affidavit of non-tenancy for the approval of the loan. The bank granted a loan secured by two promissory notes and a real estate mortgage over the principals two lots. The mortgage document was signed by the agent and her husband as mortgagors in their individual capacities, without stating that the agent was executing the mortgage contract for and in behalf of the principal. The bank foreclosed the mortgage due to non-payment of the loan. A notice of public auction sale was sent to principal. The latters lawyer responded with a letter to the bank requesting that the public auction be postponed. The letter went unheeded and the public auction was held as scheduled wherein the mortgaged properties were sold to the bank. Subsequently, the bank consolidated its title and obtained new titles in its name after the redemption period lapsed without the principal taking any action. Around five years later, the principal filed a complaint for annulment of mortgage and extrajudicial foreclosure of the properties with damages with the regional trial court (RTC) of Naga City. The principal sought nullification of the real estate mortgage and extrajudicial foreclosure sale, as well as the cancellation of the banks title over the properties. The RTC rendered judgment in favor of the principal, holding that the principal cannot be bound by the real estate mortgage executed by the agent unless it is shown that the same was made and signed in the name of the principal; hence, the mortgage will bind the agent only. The Court of Appeals (CA) affirmed the RTCs ruling. It held that it must be shown that the real estate mortgage was executed by the agent on behalf of the principal, otherwise the agent may be deemed to have acted on his own and the mortgage is void. However, the CA further declared that the principal loan agreement was not affected, which had become an unsecured credit. The Supreme Court held that the principal is not bound by the real estate mortgage executed by the authorized agent in her own name without indicating the principal. It is not sufficient for the principal to have authorized the agent through a special power of attorney to execute the mortgage on behalf of the principal; the mortgage contract itself must clealy state that the agent was There is no dispute that the parties executed an agreement, denominated as KASUNDUAN NG PAGHAHATI NG LUPA AT PAGTATALAGA NG DAAN UKOL SA MAGKABILANG PANIG . Therein, it was admitted that the petitioner was the tiller of the land. This Kasunduan was subsequently followed by another agreement, KASUNDUAN SA HATIAN SA LUPA , whereby a certain area was given to petitioners. The portion of the land where petitioners house is erected is the subject of the instant case for unlawful detainer. Respondent argues that this portion is not included in the deed of partition, while petitioners insist that it is. The issue before the Court (which court has jurisdiction over the dispute the regular courts or the Department of Agrarian Reform Adjudication Board) hinges on the correct interpretation of the contracts executed by the parties. The controversy involves an agricultural land, which petitioners have continuously and personally cultivated since the 1960s. In the Kasunduan, it was admitted that the petitioner was the tiller of the land. Being agricultural lessees, petitioners have a right to a home lot and a right to exclusive possession thereof by virtue of Section 24, R.A. No. 3844 of the Agricultural Land Reform Code. Logically, therefore, the case involves an agrarian dispute, which falls within the contemplation of R.A. No. 6657, or the Comprehensive Agrarian Reform Law. The contention that the Kasunduans, which allegedly terminated the tenancy relationship between the parties and, therefore, removed the case from the ambit of R.A. No. 6657, is untenable. There still exists an agrarian dispute because the controversy involves the home lot of petitioners, an incident arising from the landlord-tenant relationship. Spouses Jesus Fajardo and Emer Fajardo vs. Anita R. Flores, assisted by her husband, Bienvenido Flores, G.R. No. 167891, January 15, 2010. MORTGAGES; REDEMPTION; BOND REQUIREMENT UNDER ACT. NO. 3135; WRIT OF POSSESSION. The mortgagor or his successor-in-interest must redeem the foreclosed property within one year from the registration of the sale with the Register of Deeds in order to avoid the title from consolidating in the purchaser. By failing to redeem thus wise, the mortgagor loses all interest over the foreclosed property. The purchaser, who has a right to possession that extends beyond the expiration of the redemption period, becomes the absolute owner of the property when no redemption is made, that it is no longer necessary for the purchaser to file the bond required under Section 7 of Act No. 3135, as amended, considering that the possession of the land becomes his absolute right as the lands confirmed owner. The consolidation of ownership in the purchasers name and the issuance to him of a new TCT then entitles him to demand possession of the property at any time, and the issuance of a writ of possession to him becomes a matter of right upon the consolidation of title in his name. Eligio P. Mallari vs. Government Service Insurance System and the Provincial Sheriff of Pampanga, G.R. No. 157659, January 25, 2010. EXECUTION BY AGENT OF MORTGAGE AGREEMENT ON BEHALF OF PRINCIPAL
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part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (2) delay in asserting complainants right after he had knowledge of the defendants conduct and after he has an opportunity to sue; (3) lack of knowledge or notice on the part of the defendant that the complainant would assert the right on which he bases his suit; and (4) injury or prejudice to the defendant in the event relief is accorded to the complainant. There is no absolute rule on what constitutes laches. It is a creation of equity and applied not really to penalize neglect or sleeping upon ones rights but rather to avoid recognizing a right when to do so would result in a clearly inequitable situation. The question of laches, we said, is addressed to the sound discretion of the court and each case must be decided according to its particular circumstances. Verily, in a number of cases, it had been held that laches, the essence of which is the neglect to assert a right over a long period of time, may prevent recovery of a titled property. In the present case, records clearly show that respondents could have filed an action to annul the mortgage on their properties, but for unexplained reasons, they failed to do so. They only questioned the loan and mortgage transactions in December 1996, or after the lapse of more than five (5) years from the date of the foreclosure sale. It bears noting that the real estate mortgage was registered and annotated on the titles of respondents, and the latter were even informed of the extrajudicial foreclosure and the scheduled auction. Instead of impugning the real estate mortgage and opposing the scheduled public auction, respondents lawyer wrote a letter to petitioner and merely asked that the scheduled auction be postponed to a later date. Even after five (5) years, respondents still failed to oppose the foreclosure and the subsequent transfer of titles to petitioner when their agent, Tabing, acting in behalf of Cayetano, sent a letter proposing to buy back the properties. It was only when the negotiations failed that respondents filed the instant case. Clearly, respondents slept on their rights. executing the mortgage contract for and on behalf of the principal. The Supreme Court cited three earlier rulings in support of its finding: (1) The Philippine Sugar Estates Development Co., Ltd., Inc. vs. Poizat, et al, 48 Phil. 536 (1925), where Gabriela Andrea de Coster (Coster) executed a general power of attorney authorizing her husband, Juan Poizat (Poizat), to obtain a loan and to secure the same with mortgage, pledge or personal securities. Although the real estate mortgage mentioned that it was entered also in Poizats capacity as attorney-in-fact of Coster, Poizat signed the contract in his own name without any indication that he also signed it as the attorney-in-fact of his wife. The Supreme Court ruled that while Poizat may have had the authority to borrow money and mortgage the real property of his wife, the law specifies how and in what manner it must be done, and the stubborn fact remains that, as to the transaction in question, that power was never exercised; (2) Rural Bank of Bombon (Camarines Sur), Inc. vs. Court of Appeals, 212 SCRA 25 (1992), where the Supreme Court held that Aquinos act of signing the Deed of Real Estate Mortgage in his name alone as mortgagor, without any indication that he was signing for and in behalf of the property owner, Ederlinda M. Gallardo, bound himself alone in his personal capacity as a debtor of the petitioner Bank and not as the agent or attorney-in-fact of Gallardo; (3) Gozun vs. Mercado, 511 SCRA 305 (2006), where the Supreme Court held that the principal was not liable for the cash advance given to the agent who signed the receipt in her name alone, without indicating therein that she was acting for and in behalf of respondent. Thus, the Supreme Court ruled that the agent bound herself in her personal capacity and not as an agent of the principal or anyone for that matter. From the foregoing, it is not sufficient that the principal executed a power of attorney authorizing the agent to execute the mortgage contract or that the mortgage contract mention that it was entered into by the agent as attorney-in-fact of the principal. It is essential that the agent must sign the contract on behalf of the principal. While the Supreme Court held in Cayetano that the principal is not bound by the real estate mortgage executed by the agent, the Supreme Court ruled that laches prevent the principal from questioning the validity of the mortgage: Notwithstanding the nullity of the real estate mortgage executed by Tabing and her husband, we find that the equity principle of laches is applicable in the instant case. Laches is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. Its essential elements are: (1) conduct on the
FEBRUARY 2010 CASES

AGENCY; PRINCIPLE OF APPARENT AUTHORITY; AGENCY RELATIONSHIP BETWEEN HOSPITAL AND DOCTORS WHO PRACTICE IN ITS PREMISES. This Court holds that PSI (the owner of the hospital) is liable to the Aganas, not under the principle of respondeat superior for lack of evidence of an employment relationship with a Dr. Ampil (who had left two pieces of gauze in the body of a patient he had operated on) but under the principle of ostensible agency
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Natividad to consult Dr. Ampil was significantly influenced by the impression that Dr. Ampil was a staff member of Medical City General Hospital, and that said hospital was well known and prominent. Enrique looked upon Dr. Ampil not as independent of but as integrally related to Medical City. (3) PSIs acts tended to confirm and reinforce, rather than negate, Enriques view. It is of record that PSI required a consent for hospital care to be signed preparatory to the surgery of Natividad. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the confinement of xxx. (emphasis supplied). By such statement, PSI virtually reinforced the public impression that Dr. Ampil was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. (4) PSI pointed out in its memorandum that Dr. Ampils hospital affiliation was not the exclusive basis of the Aganas decision to have Natividad treated in Medical City General Hospital, meaning that, had Dr. Ampil been affiliated with another hospital, he would still have been chosen by the Aganas as Natividads surgeon. The Court cannot speculate on what could have been behind the Aganas decision but would rather adhere strictly to the fact that, under the circumstances at that time, Enrique decided to consult Dr. Ampil for he believed him to be a staff member of a prominent and known hospital. After his meeting with Dr. Ampil, Enrique advised his wife Natividad to go to the Medical City General Hospital to be examined by said doctor, and the hospital acted in a way that fortified Enriques belief. The court must therefore maintain the ruling that PSI is vicariously liable for the negligence of Dr. Ampil as its ostensible agent. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma AganaAndaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010. [Digesters Note: The courts explanation of its agency ruling is set out above almost verbatim. It is not clear, at least not to this writer, how the court arrived at the conclusion that Enrique was actually choosing and relying on Medical City rather than Ampil when based on Enriques testimony it appears to be the other way around. In any case, this ruling has a significant impact on hospitals despite the qualifications made by the court (see rest of digest of this case under Corporate responsibility). While it appears to work to require much closer monitoring of patients and doctors, the ruling may also allow the possibility of abuse. Hospitals cannot, and do not practice medicine, and should not be seen as somehow practicing medicine indirectly through credentialed doctors (who somehow then become agents). Most physicians that practice in hospital premises are independent contractors over whom hospitals have very little control, and indeed, no for the negligence of Dr. Ampil and, pro hac vice, under the principle of corporate negligence for its failure to perform its duties as a hospital. While in theory a hospital as a juridical entity cannot practice medicine, in reality it utilizes doctors, surgeons and medical practitioners in the conduct of its business of facilitating medical and surgical treatment. Within that reality, three legal relationships crisscross: (1) between the hospital and the doctor practicing within its premises; (2) between the hospital and the patient being treated or examined within its premises and (3) between the patient and the doctor. The exact nature of each relationship determines the basis and extent of the liability of the hospital for the negligence of the doctor. Where an employment relationship exists, the hospital may be held vicariously liable under Article 2176 in relation to Article 2180 of the Civil Code or the principle of respondeat superior. Even when no employment relationship exists but it is shown that the hospital holds out to the patient that the doctor is its agent, the hospital may still be vicariously liable under Article 2176 in relation to Article 1431 and Article 1869 of the Civil Code or the principle of apparent authority. Moreover, regardless of its relationship with the doctor, the hospital may be held directly liable to the patient for its own negligence or failure to follow established standard of conduct to which it should conform as a corporation. The concurrent finding of the RTC and the CA that PSI was not the employer of Dr. Ampil is correct. Consequently, PSI cannot be held vicariously liable for the negligence of Dr. Ampil under the principle of respondeat superior. There is, however, ample evidence that the hospital (PSI) held out to the patient (Natividad) that the doctor (Dr. Ampil) was its agent. Present are the two factors that determine apparent authority: first, the hospitals implied manifestation to the patient which led the latter to conclude that the doctor was the hospitals agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence. [Digesters Note: Here, the Supreme Court sets out what it believes are the indications of agency. We have numbered the premises.] (1) Enrique, the husband of the patient, testified that he consulted Dr. Ampil regarding the condition of his wife; that after the meeting and as advised by Dr. Ampil, he asked [his] wife to go to Medical City to be examined by [Dr. Ampil]; and that the next day, he told his daughter to take her mother to Dr. Ampil. This timeline indicates that it was Enrique who actually made the decision on whom Natividad should consult and where, and that the latter merely acceded to it. It explains the testimony of Natividad that she consulted Dr. Ampil at the instigation of her daughter. (2) Moreover, when asked what impelled him to choose Dr. Ampil, Enrique testified that he had known Ampil to be a specialist on that part of the body as a surgeon, and he had known him to be a staff member of the Medical City which is a prominent and known hospital. Ampil was also a neighbor so Enrique had expected more than the usual medical service to be given to us, than his ordinary patients. Clearly, the decision made by Enrique for
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sheets, both shall be solidarily liable for such loss. Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance Co., Ltd., G.R. No. 171194, February 4, 2010. ARRASTRE OPERATOR; LIABILITY. LIABILITY; EXTENT OF possibility of control when they practice medicine. They would have some control in approving or accepting or maintaining affiliation, and managing the systems supporting the care and treatment of patients. In this sense, PSI may have been, and based on the case narration, was liable but it is not clear to me that it should be under an agency concept. See rest of digest of this case under Corporate responsibility heading; below. Reading the case, I am of the impression that the court saw that equities were clearly on the side of the Aganas and applied such legal concepts as would ensure that the Aganas would be able to recover significant damages, if not from Ampil, then from PSI.] ARRASTRE OPERATOR; LIABILITY. The relationship between the consignee and the arrastre operator is akin to that existing between the consignee and/or the owner of the shipped goods and the common carrier, or that between a depositor and a warehouseman. In the performance of its obligations, an arrastre operator should observe the same degree of diligence as that required of a common carrier and a warehouseman. Being the custodian of the goods discharged from a vessel, an arrastre operators duty is to take good care of the goods and to turn them over to the party entitled to their possession. The loss of 14 out of 26 boxes of printed aluminum sheets is undisputed. Records show that the subject shipment was discharged from the vessel and placed under the custody of petitioner for a period of seven days. Thereafter, the same was withdrawn from the container yard by the customs broker, then delivered to the consignee. It was after such delivery that the loss of 14 boxes was discovered. Hence, the complaint against both the arrastre operator and the customs broker. In a claim for loss filed by the consignee (or the insurer), the burden of proof to show compliance with the obligation to deliver the goods to the appropriate party devolves upon the arrastre operator. Since the safekeeping of the goods is its responsibility, it must prove that the losses were not due to its negligence or to that of its employees. To prove the exercise of diligence in handling the subject cargoes, petitioner must do more than merely show the possibility that some other party could be responsible for the loss or the damage. It must prove that it exercised due care in the handling thereof. Petitioner failed to do this. Instead, it insists that it be exonerated from liability, because the customs brokers representative received the subject shipment in good order and condition without exception. The appellate courts conclusion on this matter is instructive. The signature of the person/broker representative merely signifies that said person thereby frees the ATI from any liability for loss or damage to the cargo so withdrawn while the same was in the custody of such representative to whom the cargo was released. It does not foreclose any remedy or right of the consignee to prove that any loss or damage to the subject shipment occurred while the same was under the custody, control and possession of the arrastre operator. Considering that both petitioner and V. Reyes Lazo were negligent in the performance of their duties in the handling, storage and delivery of the subject shipment to the consignee, resulting in the loss of 14 boxes of printed aluminum
The contract with the arrastre operator provided for a limitation on recovery for damages. But such limitation does not apply if the value of the cargo shipment is communicated to the arrastre operator before the discharge of the cargoes. It is undisputed that Access International, upon arrival of the shipment, declared the same for taxation purposes, as well as for the assessment of arrastre charges and other fees. For the purpose, the invoice, packing list and other shipping documents were presented to the Bureau of Customs as well as to petitioner for the proper assessment of the arrastre charges and other fees. Such manifestation satisfies the condition of declaration of the actual invoices of the value of the goods before their arrival, to overcome the limitation on the liability of the arrastre operator. Then, the arrastre operator, by reason of the payment to it of a commensurate charge based on the higher declared value of the merchandise, could and should take extraordinary care of the special or valuable cargo. What would, indeed, be unfair and arbitrary is to hold the arrastre operator liable for the full value of the merchandise after the consignee has paid the arrastre charges only on a basis much lower than the true value of the goods. What is essential is knowledge beforehand of the extent of the risk to be undertaken by the arrastre operator, as determined by the value of the property committed to its care. This defines its responsibility for loss of or damage to such cargo and ascertains the compensation commensurate to such risk assumed. Having been duly informed of the actual invoice value of the merchandise under its custody and having received payment of arrastre charges based thereon, petitioner cannot therefore insist on a limitation of its liability under the contract to less than the value of each lost cargo. The stipulation requiring the consignee to inform the arrastre operator and to give advance notice of the actual invoice value of the goods to be put in its custody is adopted for the purpose of determining its liability, that it may obtain compensation commensurate to the risk it assumes, not for the purpose of determining the degree of care or diligence it must exercise as a depositary or warehouseman. Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance Co., Ltd., G.R. No. 171194, February 4, 2010. COMMON CARRIER. In the case of Asian Terminals, Inc. vs. Daehan Fire and Marine Insurance Co., Ltd., it was observed that the relationship between the consignee and the arrastre operator is akin to that existing between the consignee and/or the owner of the shipped goods and the common carrier, or that between a depositor and a warehouseman. CONTRACT OF CARRIAGE; DAMAGES.
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lower courts had read in differing ways, depending on which document the court thought had been executed first. The Supreme Court opined that the issue of which of the two contracts was first executed by the parties is immaterial to the resolution of this case. In the first place, both contracts were executed and notarized on the same day, December 6, 1993. More importantly, both contracts, even independent of the time of their execution but, taken together, clearly spell out in full the respective rights and obligations of the parties. A reading of the kasunduan sa bilihan ng lupa and the kasunduan would readily reveal that payment of the purchase price does not depend on the survey of the property. In other words, the purchase price should be paid whether or not the property is surveyed. The survey of the property is important only insofar as the right of respondent to the reduction of the purchase price is concerned. On the other hand, the survey of the property to determine the metes and bounds of the 1,731 sq. m. portion that is excluded from the contract as well as the portions covered by the kasunduan which will be subject to reduction of the purchase price, is also not conditioned on the payment of any installment. Petitioner simply has to do it. In fact, under the kasunduan sa bilihan ng lupa, the survey should be done before the date of the last installment. Hence, the survey could have been done anytime after the execution of the agreement. The kasunduan sa bilihan ng lupa and the kasunduan should both be given effect rather than be declared conflicting, if there is a way of reconciling them. Petitioner and respondent would not have entered into either of the agreements if they did not intend to be bound or governed by them. Indeed, taken together, the two agreements actually constitute a single contract pertaining to the sale of a land to respondent by petitioner. Their stipulations must therefore be interpreted together, attributing to the doubtful ones that sense that may result from all of them taken jointly. Their proper construction must be one that gives effect to all. Valentin Movido substituted by Marginito Movido vs. Luisa Reyes Pastor, G.R. No. 172279, February 11, 2010 CONTRACTS; INTERPRETATION; GENERAL VERSUS SPECIFIC TERMS. In this connection, the kasunduan sa bilihan ng lupa contains the general terms and conditions of the agreement of the parties. On the other hand, the kasunduan refers to a particular or specific matter, i.e., that portion of the land that is traversed by a Napocor power line. As the kasunduan pertains to a special area of the agreement, it constitutes an exception to the general provisions of the kasunduan sa bilihan ng lupa, particularly on the purchase price for that portion. Specialibus derogat generalibus Valentin Movido substituted by Marginito Movido vs. Luisa Reyes Pastor, G.R. No. 172279, February 11, 2010. CONTRACTS; RESCISSION. Rescission is only allowed when the breach is so substantial and fundamental as to defeat the object of An examination of the evidence presented by petitioner shows that it consisted only of depositions of its witnesses. It had in its possession and disposition pertinent documents such as the flight manifest and the planes actual seating capacity and layout which could have clearly refuted respondents claims that there were not enough passenger seats available for them. It inexplicably failed to offer even a single piece of documentary evidence. The Court thus believes that if at least the cited documentary evidence had been produced, it would have been adverse to petitioners case. Moreover, petitioner failed to satisfactorily explain why it did not issue boarding passes to respondents who were confirmed passengers, even after they had checked-in their luggage three hours earlier. That respondents did not reserve seats prior to checking-in did not excuse the non-issuance of boarding passes. From Carns following testimony, it is gathered that respondents were made to wait for last-minute cancellations before they were accommodated onto the plane. This, coupled with petitioners failure to issue respondents their boarding passes and the eleventh-hour directive for them to embark, reinforces the impression that the flight was overbooked. Petitioners assertion that respondents disembarked from the plane when their request to be seated together was ignored does not impress. The fact that the respondents still boarded the plane ten minutes prior to the departure time, despite knowing that they would be seated apart, shows they were willing to abandon their request to be seated together. But as it turns out, there were not enough seats for the three of them. Respondents are correct that petitioner was guilty of breach of contract. They cite Singapore Airlines v. Fernandez, which ruled that when an airline issues a ticket to a passenger, confirmed for a particular flight on a certain date, a contract of carriage arises. The passenger then has every right to expect that he be transported on that flight and on that date. If he does not, then the carrier opens itself to a suit for a breach of contract of carriage. Northwest Airlines, Inc. vs. Spouses Edward J. Heshan and Neilia L. Heshan, et al., G.R. No. 179117, February 3, 2010 . CONTRACTS; FULFILLMENT OF CONDITION. Even assuming arguendo that the agreement of the parties was subject to the condition that RSLAI had to approve the assumption of mortgage, the said condition was considered fulfilled as petitioner prevented its fulfillment by paying his outstanding obligation and taking back the certificates of title without even notifying respondent. In this connection, Article 1186 of the Civil Code provides: Article 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. Raymundo S. De Leon vs. Benita T. Ong, G.R. No. 170405, February 2, 2010 CONTRACTS; INTERPRETATION; TWO CONTRACTS ON SAME MATTER CONSIDERED A SINGLE AGREEMENT. Parties had executed two contracts (a kasunduan, and a kasunduan sa bilihan ng lupa) the import of which the
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the ship role of any doctor rendering services within its premises for the purpose of ensuring the safety of the patients availing themselves of its services and facilities. Third, by such admission, PSI defined the standards of its corporate conduct under the circumstances of this case, specifically: (a) that it had a corporate duty to Natividad even after her operation to ensure her safety as a patient; (b) that its corporate duty was not limited to having its nursing staff note or record the two missing gauzes and (c) that its corporate duty extended to determining Dr. Ampils role in it, bringing the matter to his attention, and correcting his negligence. And finally, by such admission, PSI barred itself from arguing in its second motion for reconsideration that the concept of corporate responsibility was not yet in existence at the time Natividad underwent treatment; and that if it had any corporate responsibility, the same was limited to reporting the missing gauzes and did not include taking an active step in fixing the negligence committed. Given the standard of conduct that PSI defined for itself, the next relevant inquiry is whether the hospital measured up to it. PSI excuses itself from fulfilling its corporate duty on the ground that Dr. Ampil assumed the personal responsibility of informing Natividad about the two missing gauzes. Dr. Ricardo Jocson, who was part of the group of doctors that attended to Natividad, testified that toward the end of the surgery, their group talked about the missing gauzes but Dr. Ampil assured them that he would personally notify the patient about it. Furthermore, PSI claimed that there was no reason for it to act on the report on the two missing gauzes because Natividad Agana showed no signs of complications. She did not even inform the hospital about her discomfort. The excuses proffered by PSI are totally unacceptable. To begin with, PSI could not simply wave off the problem and nonchalantly delegate to Dr. Ampil the duty to review what transpired during the operation. The purpose of such review would have been to pinpoint when, how and by whom two surgical gauzes were mislaid so that necessary remedial measures could be taken to avert any jeopardy to Natividads recovery. Certainly, PSI could not have expected that purpose to be achieved by merely hoping that the person likely to have mislaid the gauzes might be able to retrace his own steps. By its own standard of corporate conduct, PSIs duty to initiate the review was non-delegable. While Dr. Ampil may have had the primary responsibility of notifying Natividad about the missing gauzes, PSI imposed upon itself the separate and independent responsibility of initiating the inquiry into the missing gauzes. The purpose of the first would have been to apprise Natividad of what transpired during her surgery, while the purpose of the second would have been to pinpoint any lapse in procedure that led to the gauze count discrepancy, so as to prevent a recurrence thereof and to determine corrective measures that would ensure the safety of Natividad. That Dr. Ampil negligently failed to notify Natividad did not release PSI from its self-imposed separate responsibility. Corollary to its non-delegable undertaking to review potential incidents of negligence committed within its premises, PSI had the duty to take notice of medical records prepared by its own staff and submitted to its custody, especially when these bear earmarks of a surgery gone awry. Thus, the record taken during the operation of Natividad which reported a gauze count the parties in entering into the contract. The court found no such substantial or material breach. It is true that respondent failed to pay the 7th and 8th installments of the purchase price. However, considering the circumstances of the instant case, particularly the provisions of the kasunduan, respondent cannot be deemed to have committed a serious breach. In the first place, respondent was not in default as petitioner never made a demand for payment. Also, under both the kasunduan sa bilihan ng lupa and the kasunduan, petitioner undertook to cause the survey of the property in order to determine the portion excluded from the sale, as well as the portion traversed by the Napocor power line. Despite repeated demands by respondent, however, petitioner failed to perform his obligation. Thus, considering that there was a breach on the part of petitioner (and no material breach on the part of respondent), he cannot properly invoke his right to rescind the contract. Valentin Movido substituted by Marginito Movido vs. Luisa Reyes Pastor, G.R. No. 172279, February 11, 2010. CORPORATE RESPONSIBILITY; NEGLIGENCE; DAMAGES. LIABILITY;
The Court notes that PSI made the following admission in its Motion for Reconsideration PSI is not liable for Dr. Ampils acts during the operation. Considering further that Dr. Ampil was personally engaged as a doctor by Mrs. Agana, it is incumbent upon Dr. Ampil, as Captain of the Ship, and as the Aganas doctor to advise her on what to do with her situation vis-a-vis the two missing gauzes. In addition to noting the missing gauzes, regular check-ups were made and no signs of complications were exhibited during her stay at the hospital, which could have alerted petitioner PSIs hospital to render and provide post-operation services to and tread on Dr. Ampils role as the doctor of Mrs. Agana. The absence of negligence of PSI from the patients admission up to her discharge is borne by the finding of facts in this case. Likewise evident therefrom is the absence of any complaint from Mrs. Agana after her discharge from the hospital which had she brought to the hospitals attention, could have alerted petitioner PSI to act accordingly and bring the matter to Dr. Ampils attention. But this was not the case. Ms. Agana complained ONLY to Drs. Ampil and Fuentes, not the hospital. How then could PSI possibly do something to fix the negligence committed by Dr. Ampil when it was not informed about it at all. PSI reiterated its admission when it stated that had Natividad Agana informed the hospital of her discomfort and pain, the hospital would have been obliged to act on it. This is a judicial admission by PSI that while it had no power to control the means or method by which Dr. Ampil conducted the surgery on Natividad Agana, it had the power to review or cause the review of what may have irregularly transpired within its walls strictly for the purpose of determining whether some form of negligence may have attended any procedure done inside its premises, with the ultimate end of protecting its patients. Second, it is a judicial admission that, by virtue of the nature of its business as well as its prominence in the hospital industry, it assumed a duty to tread on the captain of
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proper for the trial court and the appellate court to order petitioner to pay respondent actual damages in the amount of P45,000. Doris U. Sunbanun vs. Aurora B. Go, G.R. No. 163280, February 2, 2010 DAMAGES; ACTUAL DAMAGES; LOSS OF EARNING CAPACITY. The indemnity for loss of earning capacity of the deceased is provided for by Article 2206 of the Civil Code. Compensation of this nature is awarded not for loss of earnings, but for loss of capacity to earn money. As a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when: (1) the deceased is selfemployed and earning less than the minimum wage under current labor laws, in which case, judicial notice may be taken of the fact that in the deceaseds line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws. In this case, the records show that respondents husband was leasing and operating a gasoline station and earned an annual income of one million pesos. Respondent presented in evidence a Certificate of Creditable Income Tax Withheld at Source. It is reasonable to use the Certificate and respondents testimony as bases for fixing the gross annual income of the deceased at one million pesos before respondents husband died. However, no documentary evidence was presented regarding the income derived from their copra business; hence, the testimony of respondent as regards such income cannot be considered. In the computation of loss of earning capacity, only net earnings, not gross earnings, are to be considered; that is, the total of the earnings less expenses necessary for the creation of such earnings or income, less living and other incidental expenses. In the absence of documentary evidence, it is reasonable to peg necessary expenses for the lease and operation of the gasoline station at 80 percent of the gross income, and peg living expenses at 50 percent of the net income (gross income less necessary expenses). Philippine Hawk Corporation vs. Vivian Tan Lee, G.R. No. 166869, February 16, 2010. DAMAGES; FEES. EXEMPLARY DAMAGES; ATTORNEYS discrepancy should have given PSI sufficient reason to initiate a review. It should not have waited for Natividad to complain. As it happened, PSI took no heed of the record of operation and consequently did not initiate a review of what transpired during N atividads operation. Rather, it shirked its responsibility and passed it on to others to Dr. Ampil whom it expected to inform Natividad, and to Natividad herself to complain before it took any meaningful step. By its inaction, therefore, PSI failed its own standard of hospital care. It committed corporate negligence. It should be borne in mind that the corporate negligence ascribed to PSI is different from the medical negligence attributed to Dr. Ampil. The duties of the hospital are distinct from those of the doctorconsultant practicing within its premises in relation to the patient; hence, the failure of PSI to fulfill its duties as a hospital corporation gave rise to a direct liability to the Aganas distinct from that of Dr. Ampil. All this notwithstanding, we make it clear that PSIs hospital liability based on ostensible agency and corporate negligence applies only to this case, pro hac vice. It is not intended to set a precedent and should not serve as a basis to hold hospitals liable for every form of negligence of their doctors-consultants under any and all circumstances. The ruling is unique to this case, for the liability of PSI arose from an implied agency with Dr. Ampil and an admitted corporate duty to Natividad. Other circumstances peculiar to this case warrant this ruling, not the least of which being that the agony wrought upon the Aganas has gone on for 26 long years, with Natividad coming to the end of her days racked in pain and agony. Such wretchedness could have been avoided had PSI simply done what was logical: heed the report of a guaze count discrepancy, initiate a review of what went wrong and take corrective measures to ensure the safety of Nativad. Rather, for 26 years, PSI hemmed and hawed at every turn, disowning any such responsibility to its patient. Meanwhile, the options left to the Aganas have all but dwindled, for the status of Dr. Ampil can no longer be ascertained. Therefore, taking all the equities of this case into consideration, this Court believes P15 million would be a fair and reasonable liability of PSI, subject to 12% p.a. interest from the finality of this resolution to full satisfaction. Professional Services, Inc. vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010. DAMAGES; ACTUAL DAMAGES DUE TO LOSS OF INCOME. The lease contract clearly provides that petitioner leased to respondent the ground floor of her residential house for a term of one year commencing from 7 July 1995. Thus, the lease contract would expire only on 7 July 1996. However, petitioner started ejecting respondents lodgers in March 1996 by informing them that the lease contract was only until 15 April 1996. Clearly, petitione rs act of ejecting respondents lodgers resulted in respondent losing income from her lodgers. Hence, it was
Exemplary damages may be awarded when a wrongful act is accompanied by bad faith or when the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner which would justify an award of exemplary damages under Article 2232 of the Civil Code. Since the award of exemplary damages is proper in this case, attorneys fees and cost of the suit may also be recovered as provided under Article 2208 of the Civil Code. Doris U. Sunbanun vs. Aurora B. Go, G.R. No. 163280, February 2, 2010 . DAMAGES; MORAL DAMAGES.
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Nevertheless, this fact does not affect the finding of the trial court that petitioners bus drive r, Margarito Avila, was guilty of simple negligence as affirmed by the appellate court. Foreseeability is the fundamental test of negligence. To be negligent, a defendant must have acted or failed to act in such a way that an ordinary reasonable man would have realized that certain interests of certain persons were unreasonably subjected to a general but definite class of risks. In this case, the bus driver, who was driving on the right side of the road, already saw the motorcycle on the left side of the road before the collision. However, he did not take the necessary precaution to slow down, but drove on and bumped the motorcycle, and also the passenger jeep parked on the left side of the road, showing that the bus was negligent in veering to the left lane, causing it to hit the motorcycle and the passenger jeep. Philippine Hawk Corporation vs. Vivian Tan Lee, G.R. No. 166869, February 16, 2010. DAMAGES; QUASI-DELICT. Unlike the subsidiary liability of the employer under Article 103 of the Revised Penal Code, the liability of the employer, or any person for that matter, under Article 2176 of the Civil Code is primary and direct, based on a persons own negligence . This case involves the accidental discharge of a firearm inside a gun store. A higher degree of care is required of someone who has in his possession or under his control an instrumentality extremely dangerous in character, such as dangerous weapons or substances. Such person in possession or control of dangerous instrumentalities has the duty to take exceptional precautions to prevent any injury being done thereby. Unlike the ordinary affairs of life or business which involve little or no risk, a business dealing with dangerous weapons requires the exercise of a higher degree of care. As a gun store owner, respondent is presumed to be knowledgeable about firearms safety and should have known never to keep a loaded weapon in his store to avoid unreasonable risk of harm or injury to others. Respondent has the duty to ensure that all the guns in his store are not loaded. Firearms should be stored unloaded and separate from ammunition when the firearms are not needed for ready-access defensive use. With more reason, guns accepted by the store for repair should not be loaded precisely because they are defective and may cause an accidental discharge such as what happened in this case. Respondent was clearly negligent when he accepted the gun for repair and placed it inside the drawer without ensuring first that it was not loaded. In the first place, the defective gun should have been stored in a vault. Before accepting the defective gun for repair, respondent should have made sure that it was not loaded to prevent any untoward accident. Indeed, respondent should never accept a firearm from another person, until the cylinder or action is open and he has personally checked that the weapon is completely unloaded. For failing to ensure that the gun was not loaded, respondent himself was negligent. Furthermore, it was not shown in this case whether respondent had a License to Repair, which authorizes him to repair defective firearms to restore its original composition or enhance or upgrade firearms. Clearly, respondent did not Moral damges are not intended to enrich a plaintiff at the expense of the defendant. They are awarded to allow the plaintiff to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone due to the defendants culpable action and must, perforce, be proportional to the suffering inflicted. Philippine Hawk Corporation vs. Vivian Tan Lee, G.R. No. 166869, February 16, 2010. DAMAGES; MORAL DAMAGES. In this case, moral damages may be recovered under Article 2219 and Article 2220 of the Civil Code in relation to Article 21. The petitioners act of ejecting respondents lodgers three months before the lease contract expired without valid reason constitutes bad faith. What aggravates the situation was that petitioner did not inform respondent, who was then working in Hong Kong, about petitioners plan to pre-terminate the lease contract and evict respondents lodgers. Moral damages may be awarded when the breach of contract was attended with bad faith. Doris U. Sunbanun vs. Aurora B. Go, G.R. No. 163280, February 2, 2010 DAMAGES; MORAL DAMAGES. Nonetheless, the petition is in part meritorious. There is a need to substantially reduce the moral damages awarded by the appellate court. While courts are given discretion to determine the amount of damages to be awarded, it is limited by the principle that the amount awarded should not be palpably and scandalously excessive. Moral damages are neither intended to impose a penalty to the wrongdoer, nor to enrich the claimant. Taking into consideration the facts and circumstances attendant to the case, an award to respondents of P500,000, instead of P2,000,000, as moral damages is to the Court reasonable. Northwest Airlines, Inc. vs. Spouses Edward J. Heshan and Neilia L. Heshan, et al., G.R. No. 179117, February 3, 2010. DAMAGES; MORAL; EXEMPLARY; ATTORNEYS FEES. Since an award of moral damages is predicated on a categorical showing from the claimant that emotional and mental sufferings were actually experienced, absent any evidence thereon in the present case, the award must be disallowed. And so too must the award of attorneys fees, absent an indication in the trial courts decision of the factual basis thereof, the award having been merely stated in the dispositive portion. Parenthetically, while respondent prayed in her complaint for the award of attorneys fees there is no showing that she submitted any documentary evidence in support thereof. Metropolitan Bank and Trust Co. and Solidbank Corporation vs. Bernardita H. Perez, represented by her Attorney in fact Patria H. Perez, G.R. No. 181842, February 5, 2010. DAMAGES; NEGLIGENCE.
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be incapable of carrying out the ordinary duties required in a marriage; (b) judicial antecedence it must be rooted in the history of the party antedating the marriage, although the overt manifestations may emerge only after the marriage; and (c) incurability It must be incurable, or even if it were otherwise, the cure would be beyond the means of the party involved. The testimony of the psychologist that one of the parties was suffering from borderline personality disorder as manifested by his being a Mamas Boy did not constitute sufficient evidence of that partys cond ition. The diagnosis was only based on the interviews with the petitioning spouse and the transcript of that spouses testimony in court. The psychologist did not actually hear, see and evaluate the respondent. Her testimony constituted hearsay. The presentation of expert proof presupposes a thorough and in-dept assessment of the parties by the psychologist or expert, for a conclusive diagnosis of a grave, severe and incurable presence of psychological incapacity. Furthermore, the psychologist did not particularly describe the pattern of behavior which showed that Jordan indeed suffers from Borderline Personality Disorder. Gates also failed to explain how such a personality disorder made Jordan psychologically incapacitated to perform his obligations as a husband. In any case, the alleged psychological capacity of the respondent was not shown to be so grave and so permanent as to deprive him of the awareness of the duties and responsibilities of the matrimonial bond. At worst [Digesters Note: The decision as set out in the link says, at best, but thats obviously a mistake], the allegations show the respondent to be irresponsible, insensitive or emotionally immature. What the law requires is downright incapacity, not refusal or neglect or difficulty, much less ill will. The mere showing of irreconcilable differences and conflicting personalities does not constitute psychological incapacity. Nor was there any evidence that any condition was incurable. Jordan Chan Paz vs. Jeanice Pavon-Paz, G.R. No. 166579, February 18, 2010. FAMILY RELATIONS; ANNULMENT OF MARRIAGE; PSYCHOLOGICAL INCAPACITY. In this case, the court disregarded the testimony of a psychologist on both parties personality disorders (given to support the claim of psychological incapacity as ground for annulment of marriage), observing that the witness global conclusion was not supported by psychological tests properly administered by clinical psychologists specifically trained in the tests use and interpretation. The supposed personality disorders of the parties, considering that such diagnoses were made, could have been fully established by psychometric and neurological tests which are designed to measure specific aspects of peoples intelligence, thinking, or personality. [Digesters Note: The Supreme Court saw fit to cite material on psychological testing to show that parties had not provided adequate basis for the claim of psychological incapacity and then goes on to say] Concededly, a copy of DSM IV, or any of the psychology textbooks, does not transform a lawyer or a judge into a professional psychologist. A judge should not substitute his own psychological assessment of the parties for that of the exercise the degree of care and diligence required of a good father of a family, much less the degree of care required of someone dealing with dangerous weapons, as would exempt him from liability in this case. Alfredo P. Pacis and Cleopatra D. Pacis vs. Jerome Jovanne Morales, G.R. No. 169467, February 25, 2010. DAMAGES; QUASI-DELICT. Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption that the employer failed to exercise the due diligence of a good father of the family in the selection or supervision of its employees. To avoid liability for a quasi-delict committed by his employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. The Court upholds the finding of the trial court and the Court of Appeals that petitioner is liable to respondent, since it failed to exercise the diligence of a good father of the family in the selection and supervision of its bus driver, Margarito Avila, for having failed to sufficiently inculcate in him discipline and correct behavior on the road. Indeed, petitioners tests were concentrated on the ability to drive and physical fitness to do so. It also did not know that Avila had been previously involved in sideswiping incidents. Philippine Hawk Corporation vs. Vivian Tan Lee, G.R. No. 166869, February 16, 2010. DAMAGES; TEMPERATE DAMAGES. Under Art. 2224 of the Civil Code, temperate damages may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. The cost of the repair of the motorcycle was prayed for by respondent in her Complaint. However, the evidence presented was merely a job estimate of the cost of the motorcycles repair amounting to P17, 829.00. The Court of Appeals aptly held that there was no doubt that the damage caused on the motorcycle was due to the negligence of petitioners driver. In the absence of competent proof of the actual damage caused on the motorcycle or the actual cost of its repair, the award of temperate damages by the appellate court in the amount of P10,000.00 was reasonable under the circumstances. Philippine Hawk Corporation vs. Vivian Tan Lee, G.R. No. 166869, February 16, 2010. FAMILY RELATIONS; ANNULMENT OF MARRIAGE; PSYCHOLOGICAL INCAPACITY. In Santos v. Court of Appeals, the court first declared that psychological incapacity must be characterized by (a) gravity, (b) judicial antecedence, and (c) incurability. It must be confined to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. In Dimayuga-Laurena v. Court of Appeals, the court explained these elements: (a) gravity it must be grave and serious such that the party would
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agreements beyond its reach is to sanction a double standard in custody regulation of children under seven years old of separated parents. This effectively empowers separated parents, by the simple expedient of avoiding the courts, to subvert a legislative policy vesting to the separated mother sole custody of her children under seven years of age to avoid a tragedy where a mother has seen her baby torn away from her. This ignores the legislative basis that [n]o man can sound the deep sorrows of a mother who is deprived of her child of tender age. Herald Black Dacasin vs. Sharon Del Mundo Dacasin, G.R. No. 168785, February 5, 2010. FAMILY RELATIONS; DIVORCE. IMPACT OF FOREIGN psychologist or the psychiatrist. However, a judge has the bounden duty to rule on what the law is, as applied to a certain set of facts. Certainly, as in all other litigations involving technical or special knowledge, a judge must first and foremost resolve the legal question based on law and jurisprudence. The expert opinion of a psychiatrist arrived at after a maximum of seven hours of interview, and unsupported by separate psychological tests, cannot tie the hands of the trial court and prevent it from making its own factual finding on what happened in this case. The probative force of the testimony of an expert does not lie in a mere statement of his theory or opinion, but rather in the assistance that he can render to the courts in showing the facts that serve as a basis for his criterion and the reasons upon which the logic of his conclusion is founded. Edward N. Lim vs. Ma. Cheryl Sta. Cruz-Lim, G.R. No. 176464, February 4, 2010. FAMILY RELATIONS; CHILD CUSTODY; AGREEMENTS BETWEEN SEPARATED PARENTS. At the time the parties executed the Agreement on 28 January 2002, two facts are undisputed: (1) Stephanie was under seven years old; and (2) petitioner and respondent were no longer married under the laws of the United States because of the divorce decree. The relevant Philippine law on child custody for spouses separated in fact or in law (under the second paragraph of Article 213 of the Family Code) is also undisputed: no child under seven years of age shall be separated from the mother x x x. (This statutory awarding of sole parental custody to the mother is mandatory, grounded on sound policy consideration, subject only to a narrow exception not alleged to obtain here.) Clearly then, the Agreements object to establish a post-divorce joint custody regime between respondent and petitioner over their child under seven years old contravenes Philippine law. Thus the joint custody agreement between the parents is void ab initio for being contrary to law. Also, it has also been repudiated by the mother when she refused to allow joint custody by the father. The agreement would be valid if the spouses have not divorced or separated because the law provides for joint parental authority when spouses live together. However, upon separation of the spouses, the mother takes sole custody under the law if the child is below seven years old and any agreement to the contrary is void. The separated parents cannot contract away the provision in the Family Code on the maternal custody of children below seven years. Herald Black Dacasin vs. Sharon Del Mundo Dacasin, G.R. No. 168785, February 5, 2010 FAMILY CODE; CHILD CUSTODY; APPLICATION OF ARTICLE 213 ON ALL CUSTODY AGREEMENTS. It will not do to argue that the second paragraph of Article 213 of the Family Code applies only to judicial custodial agreements based on its text th at No child under seven years of age shall be separated from the mother, unless the court finds compelling reasons to order otherwise. To limit this provisions enforceability to court sanctioned agreements while placing private
In seeking the enforceability of a joint custody agreement, the petitioner cannot prevent the application of Article 213 of the Family Code (to the matter of custody of a child of separated parents) by relying on the alleged invalidity of the divorce that the parents had obtained. The argument that foreigners in this jurisdiction are not bound by foreign divorce decrees is hardly novel. Van Dorn v. Romillo settled the matter by holding that an alien spouse of a Filipino is bound by a divorce decree obtained abroad. There, we dismissed the alien divorcees Philippine suit for accounting of alleged post divorce conjugal property and rejected his submission that the foreign divorce (obtained by the Filipino spouse) is not valid in this jurisdiction. In that case the court ruled that there can be no question as to the validity of that Nevada divorce in any of the States of the United States. The decree is binding on private respondent as an American citizen. It is true that owing to the nationality principle embodied in Article 15 of the Civil Code, only Philippine nationals are covered by the policy against absolute divorces the same being considered contrary to our concept of public policy and morality. However, aliens may obtain divorces abroad, which may be recognized in the Philippines, provided they are valid according to their national law. In this case, the divorce in Nevada released private respondent from the marriage from the standards of American law, under which divorce dissolves the marriage. Thus, pursuant to his national law, private respondent is no longer the husband of petitioner. He would have no standing to sue in the case below as petitioners husband entitled to exercise control over conjugal assets. As he is bound by the Decision of his own countrys Court, which validly exercised jurisdiction over him, and whose decision he does not repudiate, he is estopped by his own representation before said Court from asserting his right over the alleged conjugal property. We reiterated Van Dorn in Pilapil v. IbaySomera to dismiss criminal complaints for adultery filed by the alien divorcee (who obtained the foreign divorce decree) against his former Filipino spouse because he no longer qualified as offended spouse entitled to file the complaints under Philippine procedural rules. Thus, it should be clear by now that a foreign divorce decree carries as much validity against the alien divorcee in this jurisdiction as it does in the jurisdiction of the aliens nationality, irrespective of who obtained the divorce. Herald Black Dacasin vs. Sharon Del Mundo Dacasin, G.R. No. 168785, February 5, 2010.
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LEASE; RIGHT TO SUBLEASE. It is undisputed that petitioner had ejected respondents lodgers three months before the expiration of the lease contract on 7 July 1996. Petitioner maintains that she had the right to terminate the contract prior to its expiration because respondent allegedly violated the terms of the lease contract by subleasing the rented premises. However, petitioners assertion is belied by the provision in the lease contract that states that the lessee can use the premises as a dwelling or as lodging house. Thus, the lessee had the right to sublease the premises. Doris U. Sunbanun vs. Aurora B. Go, G.R. No. 163280, February 2, 2010. MORTGAGE; MORTGAGEE STANDARD FOR BANKS. IN GOOD FAITH;

PRESCRIPTION; LACHES. According to them, since the OCT from which ALI derived its title is void for want of a duly approved survey plan, their cause of action did not prescribe. However, as discussed above, the conclusion of the trial court that OCT No. 242 is void was not sufficiently borne out by the evidence on record. Verily, the premise upon which petitioners build their theory of imprescriptibility of their action did not exist. As previously emphasized, OCT No. 242 of ALIs predecessor-in-interest was issued on May 7, 1950, or 45 years before plaintiffs-appellees filed their complaint on March 10, 1995. As such, it is the Courts firmly held view that plaintiffs-appellees claim is barred not only by prescription, but also by laches. Aside from the fact that OCT No. 242 had become incontrovertible after the lapse of one year from the time a decree of registration was issued, any action for reconveyance that plaintiffs-appellees could have availed of is also barred. Although plaintiffs-appellees complaint was for quieting of title, it is in essence an action for reconveyance based on an implied or constructive trust, considering that plaintiffs-appellees were alleging in said complaint that there was a serious mistake, if not fraud, in the issuance of OCT No. 242 in favor of ALIs predecessor -in-interest. It is now well-settled that an action for reconveyance, which is a legal remedy granted to a landowner whose property has been wrongfully or erroneously registered in anothers name, must be filed within ten years from the issuance of the title, since such issuance operates as a constructive notice. Since ALIs title is traced to an OCT issued in 1950, the ten-year prescriptive period expired in 1960. As for laches, the term means the negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it. It does not involve mere lapse or passage of time, but is principally an impediment to the assertion or enforcement of a right, which has become under the circumstances inequitable or unfair to permit. In the instant case, plaintiffs-appellees, as well as their predecessor-in-interest, have not shown that they have taken judicial steps to nullify OCT No. 242, from which ALIs title was derived, for 45 years. To allow them to do so now, and if successful, would be clearly unjust and inequitable to those who relied on the validity of said OCT, the innocent purchasers for value, who are protected by the precise provisions of P.D. 1529. Spouses Morris Carpo and Socorro Carpo vs. Ayala Land, Incorporated, G.R. No. 166577, February 3, 2010. PROPERTY; OWNERSHIP OF LAND. We hold that as between the petitioner and the respondent, it is the petitioner who has the better claim or title to the subject property. While the respondent merely relied on her tax declaration, petitioner was able to prove actual possession of the subject property coupled with his tax declaration. We have ruled in several cases that possession, when coupled with a tax declaration, is a weighty evidence of ownership. It certainly is more weighty and preponderant than a tax declaration alone. The preponderance of evidence is therefore clearly in favor of petitioner, particularly
Petitioner PNB points out that, since it did a credit investigation, inspected the property, and verified the clean status of the title before giving out the loan to the Songcuans, it should be regarded as a mortgagee in good faith. PNB claims that the precautions it took constitute sufficient compliance with the due diligence required of banks when dealing with registered lands. As a rule, the Court would not expect a mortgagee to conduct an exhaustive investigation of the history of the mortgagors title before he extends a loan. B ut petitioner PNB is not an ordinary mortgagee; it is a bank. Banks are expected to be more cautious than ordinary individuals in dealing with lands, even registered ones, since the business of banks is imbued with public interest. It is of judicial notice that the standard practice for banks before approving a loan is to send a staff to the property offered as collateral and verify the genuineness of the title to determine the real owner or owners. One of the CAs findings in this case is that in the cours e of its verification, petitioner PNB was informed of the previous TCTs covering the subject property. And the PNB has not categorically contested this finding. It is evident from the faces of those titles that the ownership of the land changed from Corpuz to Bondoc, from Bondoc to the Palaganases, and from the Palaganases to the Songcuans in less than three months and mortgaged to PNB within four months of the last transfer. The above information in turn should have driven the PNB to look at the deeds of sale involved. It would have then discovered that the property was sold for ridiculously low prices: Corpuz supposedly sold it to Bondoc for just P50,000.00; Bondoc to the Palaganases for just P15,000.00; and the Palaganases to the Songcuans also for just P50,000.00. Yet the PNB gave the property an appraised value of P781,760.00. Anyone who deliberately ignores a significant fact that would create suspicion in an otherwise reasonable person cannot be considered as an innocent mortgagee for value. PNB vs. Corpuz. Philippine National Bank, as the Attorney-in-fact of Opal Portfolio Investments (SPVAMC), Inc. vs. Mercedes Corpuz, represented by her Attorney-in-fact Valentina Corpuz, G.R. No. 180945, February 12, 2010.
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SALE; DOUBLE SALE; ARTICLE 1544; PRIOR POSSESSION. Article 1544 of the Civil Code provides that when neither buyer registered the sale of the properties with the registrar of deeds, the one who took prior possession of the properties shall be the lawful owner thereof. In this instance, petitioner delivered the properties to respondent when he executed the notarized deed and handed over to respondent the keys to the properties. For this reason, respondent took actual possession and exercised control thereof by making repairs and improvements thereon. Clearly, the sale was perfected and consummated on March 10, 1993. Thus, respondent became the lawful owner of the properties. Raymundo S. De Leon vs. Benita T. Ong, G.R. No. 170405, February 2, 2010 SALE; DOUBLE SALE; PURCHASER IN GOOD FAITH. This case involves a double sale as the disputed properties were sold validly on two separate occasions by the same seller to the two different buyers in good faith. Article 1544 of the Civil Code sets down the rules on double or multiple sales. This provision clearly states that the rules on double or multiple sales apply only to purchasers in good faith. Needless to say, it disqualifies any purchaser in bad faith. 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 persons claim or interest in the property. The law requires, on the part of the buyer, lack of notice of a defect in the title of the seller and payment in full of the fair price at the time of the sale or prior to having notice of any defect in the sellers title. Respondent purchased the properties, knowing they were encumbered only by the mortgage to RSLAI. According to her agreement with petitioner, respondent had the obligation to assume the balance of petitioners outstanding obligation to RSLAI. Consequently, respondent informed RSLAI of the sale and of her assumption of petitioners obligation. However, because petitioner surreptitiously paid his outstanding obligation and took back her certificates of title, petitioner himself rendered respondents obligation to assume petitioners indeb tedness to RSLAI impossible to perform. Since respondents obligation to assume petitioners outstanding balance with RSLAI became impossible without her fault, she was released from the said obligation. Moreover, because petitioner himself willfully prevented the condition vis--vis the payment of the remainder of the purchase price, the said condition is considered fulfilled pursuant to Article 1186 of the Civil Code. For purposes, therefore, of determining whether respondent was a purchaser in good faith, she is deemed to have fully complied with the condition of the payment of the remainder of the purchase price. Raymundo S. De Leon vs. Benita T. Ong, G.R. No. 170405, February 2, 2010. TRUST; CONSTRUCTIVE TRUST. I considering that, as the actual possessor under claim of ownership, he enjoys the presumption of ownership. Moreover, settled is the principle that a party seeking to recover real property must rely on the strength of her case rather than on the weakness of the defense. The burden of proof rests on the party who asserts the affirmative of an issue. For he who relies upon the existence of a fact should be called upon to prove that fact. Having failed to discharge her burden to prove her affirmative allegations, we find that the trial court rightfully dismissed respondents complaint. Modesto Palali vs. Juliet Awisan, represented by her Attorney-in-fact Gregorio Awisan, G.R. No. 158385, February 12, 2010 SALE; DIFFERENCE BETWEEN CONTRACT OF SALE AND CONTRACT TO SELL. In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof or have the contract judicially resolved and set aside. The non-payment of the price is therefore a negative resolutory condition. On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the payment thereof, the seller can only sue for damages. The deed executed by the parties stated that petitioner sold the properties to respondent in a manner absolute and irrevocable for a sum of P1.1 million. With regard to the manner of payment, it required respondent to pay P415,500 in cash to petitioner upon the execution of the deed, with the balance payable directly to RSLAI (on behalf of petitioner) within a reasonable time. Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price. On the contrary, the terms and conditions of the deed only affected the manner of payment, not the immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer. Otherwise stated, the said terms and conditions pertained to the performance of the contract, not the perfection thereof nor the transfer of ownership. In this instance, petitioner executed a notarized deed of absolute sale in favor of respondent. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer. In this regard, Article 1498 of the Civil Code provides that, as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold. Moreover, not only did petitioner turn over the keys to the properties to respondent, he also authorized RSLAI to receive payment from respondent and release his certificates of title to her. The totality of petitioners acts clearly indicates that he had unqualifiedly delivered and transferred ownership of the properties to respondent. Clearly, it was a contract of sale the parties entered into. Raymundo S. De Leon vs. Benita T. Ong, G.R. No. 170405, February 2, 2010
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In constructive trusts, the arrangement is temporary and passive in which the trustees sole duty is to transfer the title and possession over the property to the plaintiffbeneficiary. Of course, the wronged party seeking the aid of a court of equity in establishing a constructive trust must himself do equity. Accordingly, the court will exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration received from the latter just as the plaintiff-beneficiary would if he proceeded on the theory of rescission. In the good judgment of the court, the trustee may also be paid the necessary expenses he may have incurred in sustaining the property, his fixed costs for improvements thereon, and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts. The rights and obligations between the constructive trustee and the beneficiary, in this case, Government and the property owners over the lands, are echoed in Art. 1190 of the Civil Code, When the conditions have for their purpose the extinguishment of an obligation to give, the parties, upon the fulfillment of said conditions, shall return to each other what they have received x x x In case of the loss, deterioration or improvement of the thing, the provisions which, with respect to the debtor, are laid down in the preceding article shall be applied to the party who is bound to return x x x. Mactan-Cebu International Airport Authority (MCIAA) and Air Transportation Office (ATO) vs. Bernardo Lozada, et al., G.R. No. 176625, February 25, 2010. n this case, the respondents property was expropriated upon petition of the Mactan-Cebu International Airport Authority for the expansion of the Lahug airport. However, that project was shelved. The respondents sought to repurchase the property on the ground that the public purpose for which the expropriation was made did not took place and government had agreed that they would have a right to buy back the property in such a case. The Supreme Court sustained the respondents observing, among others that the right of respondents to repurchase the property may be enforced based on a constructive trust constituted on the property held by the government in favor of the former. It noted that MactanCebu International Airport Authority is correct in stating that one would not find an express statement in the case on the expropriation proceedings to the effect that the [condemned] lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. This omission notwithstanding, and while the inclusion of this pronouncement in the judgment of condemnation would have been ideal, such precision is not absolutely necessary nor is it fatal to the cause of petitioners herein. No doubt, the return or repurchase of the condemned properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport discontinued its activities. The predicament of petitioners involves a constructive trust, one that is akin to the implied trust referred to in Art. 1454 of the Civil Code, If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him. In the case at bar, petitioners conveyed Lots No. 916 and 920 to the government with the latter obliging itself to use the realties for the expansion of Lahug Airport; failing to keep its bargain, the government can be compelled by petitioners to reconvey the parcels of land to them, otherwise, petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. Although the symmetry between the instant case and the situation contemplated by Art. 1454 is not perfect, the provision is undoubtedly applicable. For, as explained by an expert on the law of trusts: The only problem of great importance in the field of constructive trust is to decide whether in the numerous and varying fact situations presented to the courts there is a wrongful holding of property and hence a threatened unjust enrichment of the defendant. Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy any situation in which the holder of legal title may not in good conscience retain the beneficial interest.
PUBLIC LAND ACT; FOREST LAND. Forest lands are not registrable under CA 141. [E]ven more important, Section 48[b] of CA No. 141, as amended, applies exclusively to public agricultural land. Forest lands or area covered with forest are excluded. It is well-settled that forest land is incapable of registration; and its inclusion in a title, whether such title be one issued using the Spanish sovereignty or under the present Torrens system of registration, nullifies the title. However, it is true that forest lands may be registered when they have been reclassified as alienable by the President in a clear and categorical manner (upon the recommendation of the proper department head who has the authority to classify the lands of the public domain into alienable or disposable, timber and mineral lands) coupled with possession by the claimant as well as that of her predecessors-in-interest. Unfortunately for petitioner, she was not able to produce such evidence. Accordingly, her occupation thereof, and that of her predecessors-ininterest, could not have ripened into ownership of the subject land. This is because prior to the conversion of forest land as alienable land, any occupation or possession thereof cannot be counted in reckoning compliance with the thirty-year possession requirement under Commonwealth Act 141 (CA 141) or the Public Land Act. This was our ruling in Almeda v. CA. The rules on the confirmation of imperfect titles do not apply unless
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ALIs title was the valid title having been derived from the earlier OCT. Spouses Morris Carpo and Socorro Carpo vs. Ayala Land, Incorporated, G.R. No. 166577, February 3, 2010. PROPERTY REGISTRATION; PROOF OF OWNERSHIP; VALUE OF TAX DECLARATION. Parenthetically, the Catarrojas did not present any tax declaration covering such vast piece of property. Although a tax declaration is not a proof of ownership, payment of realty tax is an exercise of ownership over the property and is the payers unbroken chain of claim of ownership over it. Republic of the Philippines vs. Apolinario Catarroja, et al., G.R. No. 171774, February 12, 2010. REPUBLIC ACT NO. 26; RECONSTITUTION OF TITLE; EVIDENCE TO BE PRESENTED. The Supreme Court opined that the respondents had not presented ample evidence to support their petition for reconstitution of title. Section 2 of R.A. No. 26 which governs the reconstitution of lost or destroyed Torrens certificates of title, enumerates specific sources for the reconstitution of such titles. The enumeration includes in its paragraph (f) any other document which, in the judgment of the court, is sufficient and proper basis for reconstituting the lost or destroyed certificate of title. However, the respondents were only able to present documents that are not specified in the statute, arguing that such documents are covered by Section 2(f). The court has applied the principle of ejusdem generis in interpreting Section 2(f) of R.A. 26. Any other document refers to reliable documents of the kind described in the preceding enumerations. The documents submitted by the Catarrojas do not fall in the same class as those specifically enumerated in Section 2. None of them proves that a certificate of title had in fact been issued in the name of their parents. In Republic v. Tuastumban, the court ruled that the documents must come from official sources which recognize the ownership of the owner and his predecessors-in-interest. None of the documents presented in this case fit such description. Furthermore, the Catarrojas failed to show that they exerted efforts to look for and avail of the specific sources enumerated in Section 2 before availing themselves of the sources in Section 2 (f). The court said in Republic v. Holazo that the documents referred to in Sec. 2(f) may be resorted to only in the absence of the preceding documents in the list. Only if the petitioner for reconstitution fails to show that he had, in fact, sought to secure such documents and failed to find them, can the presentation of the other document as evidence in substitution be allowed. Further, the following needs to be shown before the issuance of an order for reconstitution: (a) that the certificate of title had been lost or destroyed; (b) that the documents presented by petitioner are sufficient and proper to warrant reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the registered owner of the property or had an interest therein; (d) that the certificate of title was in force at the time it was lost or and until the land classified as forest land is released through an official proclamation to that effect. Then and only then will it form part of the disposable agricultural lands of the public domain. Florencia G. Diaz vs. Republic of the Philippines, G.R. No. 181502, February 2, 2010. PUBLIC LAND ACT; SALE PROHIBITION PERIOD. DURING FIVE-YEAR
Section 118 of CA 141 clearly provides that lands which have been acquired under free patent or homestead shall not be encumbered or alienated within five years from the date of issuance of the patent or be liable for the satisfaction of any debt contracted prior to the expiration of the period. In the present case, the three loans were obtained on separate dates 7 July 1979, 5 June 1981 and 3 September 1981, or several years before the free patents on the lots were issued by the government to respondent on 29 December 1982. The RTC of Manila, in a Decision dated 28 April 1983, ruled in favor of petitioner ordering the debtors, including respondent, to pay jointly and severally certain amounts of money. The public auction conducted by the sheriff on the lots owned by respondent occurred on 12 October 1984. For a period of five years or from 29 December 1982 up to 28 December 1987, Section 118 of CA 141 provides that the lots comprising the free patents shall not be made liable for the payment of any debt until the period of five years expires. In this case, the execution sale of the lots occurred less than two years after the date of the issuance of the patents. This clearly falls within the fiveyear prohibition period provided in the law, regardless of the dates when the loans were incurred. Metropolitan Bank and Trust Company vs. Edgardo D. Viray , G.R. No. 162218, February 25, 2010. PROPERTY PREVAILS. REGISTRATION; EARLIEST TITLE
Indubitably, in view of the CAs Decision in CA -G.R. SP No. 44243, this controversy has been reduced to the sole substantive issue of which between the two titles, purporting to cover the same property, deserves priority. This is hardly a novel issue. As petitioners themselves are aware, in this jurisdiction, it is settled that the general rule is that in the case of two certificates of title, purporting to include the same land, the earlier in date prevails. In successive registrations, where more than one certificate is issued in respect of a particular estate or interest in land, the person claiming under the prior certificate is entitled to the estate or interest; and that person is deemed to hold under the prior certificate who is the holder of, or whose claim is derived directly or indirectly from the person who was the holder of the earliest certificate issued in respect thereof. In Degollacion v. Register of Deeds of Cavite, we held that [w]here two certificates of title purport to include the same land, whether wholly or partly, the better approach is to trace the original certificates from which the certificates of title were derived. In all, we find that the CA committed no reversible error when it applied the principle Primus Tempore, Portior Jure (First in Time, Stronger in Right) in this case and found that
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fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. Leonardo clearly established the character of the possession of Cayetano and his predecessors-ininterest over the lot. Thus he declared that the lot was first owned by Lazaro Raada who sold the same to Julian Ydulzura in 1917 who in turn sold it to his and Cayetanos father Simeon in 1923; that Simeon built a house thereon after its acquisition, which fact is buttressed by entries in Tax Declaration No. 18,587 in the name of Simeon for the year 1924 indicating the existence of a 40-sq. meter residential structure made of nipa and mixed materials, and of coconut trees planted thereon; and that after Simeons demise in 1931, Cayetano built his own house beside the old nipa house before the war, and a bodega after the war, which claims find support in Tax Declarations made in 19481958. When pressed during the request for written interrogatories if Leonardo had any other pre-war tax declarations aside from Tax Declaration No. 18,587, he explained that all available records may have been destroyed or lost during the last war but that after the war, the lot was reassessed in his fathers name. The Court finds Leonardos explanation plausible and there is nothing in the records that detracts from its probative value. Finally, the official receipts of realty tax payments religiously made by Cayetano from 1948 to 1997 further serve as credible indicia that Cayetano, after his fathers death in 1931, continued to exercise acts of dominion over the lot. The totality of the evidence thus points to the unbroken chain of acts exercised by Cayetano to demonstrate his occupation and possession of the land in the concept of owner, to the exclusion of all others. Republic of the Philippines vs. Cayetano L. Serrano, and Heirs of Catalino M. Alaan, represented by Paulita P. Allaan, G.R. No. 183063, February 24, 2010. destroyed; and (e) that the description, area and boundaries of the property are substantially the same as those contained in the lost or destroyed certificate of title. None of the documents presented showed these preconditions. Republic of the Philippines vs. Apolinario Catarroja, et al., G.R. No. 171774, February 12, 2010. PROPERTY REGISTRATION DECREE; REGISTRATION OF TITLE; PROOF THAT LAND IS ALIENABLE AND DISPOSABLE. 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. The DENR certification enjoys the presumption of regularity absent any evidence to the contrary. It bears noting that no opposition was filed or registered by the Land Registration Authority or the DENR to contest respondents applications on the ground that their respective shares of the lot are inalienable. There being no substantive rights which stand to be prejudiced, the benefit of the Certification may thus be equitably extended in favor of respondents. Republic of the Philippines vs. Cayetano L. Serrano, and Heirs of Catalino M. Alaan, represented by Paulita P. Allaan, G.R. No. 183063, February 24, 2010. PROPERTY REGISTRATION DECREE; REGISTRATION OF TITLE; REQUISITES. The requisites for the filing of an application for registration of title under Section 14(1) of the Property Registration Decree are: that the property is alienable and disposable land of the public domain; that the applicants by themselves or through their predecessorsin-interest have been in open, continuous, exclusive and notorious possession and occupation thereof; and that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier. : Republic of the Philippines vs. Cayetano L. Serrano, and Heirs of Catalino M. Alaan, represented by Paulita P. Allaan, G.R. No. 183063, February 24, 2010. PROPERTY REGISTRATION DECREE; REGISTRATION OF TITLE; WHETHER IN CONTINUOUS POSSESSION. As to whether respondents had open, continuous, exclusive and notorious possession and occupation, the Court has previously opined that: the law speaks of possession and occupation Taken together with the words open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession must not be a mere
MARCH 2010 CASES

CONJUGAL PARTNERSHIP; EFFECTS OF LEGAL SEPARATION; FORFEITURE OF SHARE IN PROFITS. Among the effects of the decree of legal separation is that the conjugal partnership is dissolved and liquidated and the offending spouse would have no right to any share of the net profits earned by the conjugal partnership. Thus it is only the offending spouses share in the net profits, and not the share in the property, which is forfeited. Article 102(4) of the Family Code provides that [f]or purposes of computing the net pr ofits subject to forfeiture in accordance with Article 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution. Mario Siochi vs. Alfredo Gozon, et al./Inter-
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Winifred and then sold to IDRI clearly indicates that the offer was already withdrawn. Mario Siochi vs. Alfredo Gozon, et al./Inter-Dimensional Realty, Inc. Vs. Mario Siochi, et al., G.R. No. 169900/G.R. No. 169977, March 18, 2010 CONTRACTS; FRAUDS. ENFORCEABILITY; STATUTE OF Dimensional Realty, Inc. Vs. Mario Siochi, et al., G.R. No. 169900/G.R. No. 169977, March 18, 2010 CONJUGAL PARTNERSHIP; PRESUMPTION OF CONJUGAL NATURE; NEED FOR MARITAL CONSENT. The Civil Code of the Philippines, the law in force at the time of the celebration of the marriage between Martha and Manuel in 1957, provides all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. This includes property which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses. The court is not persuaded by Titans arguments that the property was Marthas exclusive property because Manuel failed to present before the RTC any proof of his income in 1970, hence he could not have had the financial capacity to contribute to the purchase of the property in 1970; and that Manuel admitted that it was Martha who concluded the original purchase of the property. In consonance with its ruling in Spouses Castro v. Miat, Manuel was not required to prove that the property was acquired with funds of the partnership. Rather, the presumption applies even when the manner in which the property was acquired does not appear. Here, we find that Titan failed to overturn the presumption that the property, purchased during the spouses marriage, was part of the conjugal partnership. Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the consent of both spouses. Article 165 of the Civil Code expressly provides that the husband is the administrator of the conjugal partnership. Likewise, Article 172 of the Civil Code ordains that (t)he wife cannot bind the conjugal partnership without the husbands consent, except in cases provided by law. Titan Construction Corporation Vs. Manuel A. David, Sr. and Martha S. David, G.R. No. 169548, March 15, 2010. CONJUGAL PARTNERSHIP; SOLE ADMINISTRATION. In this case, Alfredo was the sole administrator of the property because Elvira, with whom Alfredo was separated in fact, was unable to participate in the administration of the conjugal property. However, as sole administrator of the property, Alfredo still cannot sell the property without the written consent of Elvira or the authority of the court. Without such consent or authority, the sale is void. The absence of the consent of one of the spouse renders the entire sale void, including the portion of the conjugal property pertaining to the spouse who contracted the sale. Even if the other spouse actively participated in negotiating for the sale of the property, that other spouses written consent to the sale is still required by law for its validity. The Agreement entered into by Alfredo and Mario was without the written consent of Elvira. Thus, the Agreement is entirely void. As regards Marios contention that the Agreement is a continuing offer which may be perfected by Elviras acceptance before the offer is withdrawn, the fact that the property was subsequently donated by Alfredo to
The Statute of Frauds found in paragraph (2), Article 1403 of the Civil Code, requires for enforceability certain contracts enumerated therein to be evidenced by some note or memorandum. The term Statute of Frauds is descriptive of statutes that require certain classes of contracts to be in writing; and that do not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulate the formalities of the contract necessary to render it enforceable. In other words, the Statute of Frauds only lays down the method by which the enumerated contracts may be proved. But it does not declare them invalid because they are not reduced to writing inasmuch as, by law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. The object is to prevent fraud and perjury in the enforcement of obligations depending, for evidence thereof, on the unassisted memory of witnesses by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. The effect of noncompliance with this requirement is simply that no action can be enforced under the given contracts. If an action is nevertheless filed in court, it shall warrant a dismissal under Section 1(i), Rule 16 of the Rules of Court, unless there has been, among others, total or partial performance of the obligation on the part of either party. It has been private respondents consistent stand, since the inception of the instant case that she has entered into a contract with petitioners. As far as she is concerned, she has already performed her part of the obligation under the agreement by undertaking the delivery of the 21 motor vehicles contracted for by Ople in the name of petitioner municipality. This claim is well substantiated at least for the initial purpose of setting out a valid cause of action against petitioners by copies of the bills of lading attached to the complaint, naming petitioner municipality as consignee of the shipment. Petitioners have not at any time expressly denied this allegation and, hence, the same is binding on the trial court for the purpose of ruling on the motion to dismiss. In other words, since there exists an indication by way of allegation that there has been performance of the obligation on the part of respondent, the case is excluded from the coverage of the rule on dismissals based on unenforceability under the statute of frauds, and either party may then enforce its claims against the other. The Municipality of Hagonoy, Bulacan, represented by the Hon. Felix V. Ople, Municipal Mayor, and Felix V. Ople, in his capacity vs. Hon. Simeon P. Dumdum, Jr. in his capacity as Presiding Judge of the Regional Trial Court, Branch 7, Cebu City, et al., G.R. No. 168289, March 22, 2010 CONTRACTS; INTEREST RATE APPLICABLE.
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the payment of a sum of money is the payment of penalty interest at the rate agreed upon in the contract of the parties. In the absence of a stipulation of a particular rate of penalty interest, payment of additional interest at a rate equal to the regular monetary interest becomes due and payable. Finally, if no regular interest had been agreed upon by the contracting parties, then the damages payable will consist of payment of legal interest which is 6%, or in the case of loans or forbearances of money, 12% per annum. It is only when the parties to a contract have failed to fix the rate of interest or when such amount is unwarranted that the Court will apply the 12% interest per annum on a loan or forbearance of money. The written agreement entered into between petitioners and respondent provides for an interest at the current bank lending rate in case of delay in payment and the promissory note charged an interest of 18%. To prove petitioners entitlement to the 18% bank lending rate of interest, petitioners presented the promissory note prepared by respondent bank itself. This promissory note, although declared void by the lower courts because it did not express the real intention of the parties, is substantial proof that the bank lending rate at the time of default was 18% per annum. Absent any evidence of fraud, undue influence or any vice of consent exercised by petitioners against the respondent, the interest rate agreed upon is binding on them. Pan Pacific Service Contractors, Inc. et al. vs. Equitable PCI Bank, etc., G.R. No. 169975, March 18, 2010. CONTRACTS; RESCISSION. Unless the parties stipulated it, rescission is allowed only when the breach of the contract is substantial and fundamental to the fulfillment of the obligation. Whether the breach is slight or substantial is largely determined by the attendant circumstances. GG Sportswear anchors its claim for rescission of a reservation agreement (the Agreement) for the purchase of units and parking slots in a condominum property being developed by World Class, on two grounds: (a) its dissatisfaction with the completion date; and (b) the lack of a Contract to Sell. However, GG Sportswear cannot claim that it did not know the time-frame for the projects completion when it entered into the Agreement with World Class. As World Class points out, it is absurd and unbelievable that Mr. Gidwani, the president of GG Sportswear and an experienced businessman, did not have an idea of the expected completion date of the condominium project before he bought the condominium units for P89,624,272.82. The grant, too, to World Class of a first License to Sell up to August 1998 and a second License to Sell up to December 1999, to our mind, served as a clear notice of when the project was to be completed. Moreover, the provisional Contract to Sell that accompanied the second Reservation Agreement explicitly provided that the condominium project would be ready for turnover no later than December 15, 1998, a clear expression of the projects completion date. Having known the date, the fact of dissatisfaction with it does not constitute a breach so substantial as to render the Agreement rescissible. GG Sportswear has never alleged that the given December 15, 1998 completion date The issue in this case is the interest rate applicable for respondents delay in the payment of the balance of the price adjustment. Petitioners submit that the CA, in awarding the unpaid balance of the price adjustment, erred in fixing the interest rate at 12% instead of the 18% bank lending rate. In this appeal, petitioners allege that the contract between the parties consists of two parts, the Agreement and the General Conditions, both of which provide for interest at the bank lending rate on any unpaid amount due under the contract. Petitioners further claim that there is nothing in the contract which requires the consent of the respondent to be given in order that petitioners can charge the bank lending rate. In this case, the CA already settled that petitioners consulted respondent on the imposition of the price adjustment, and held respondent liable for the balance of P1,516,015.07. Respondent did not appeal from the decision of the CA; hence, respondent is estopped from contesting such fact. However, the CA went beyond the intent of the parties by requiring respondent to give its consent to the imposition of interest before petitioners can hold respondent liable for interest at the current bank lending rate. This is erroneous. A review of Section 2.6 of the Agreement and Section 60.10 of the General Conditions shows that the consent of the respondent is not needed for the imposition of interest at the current bank lending rate, which occurs upon any delay in payment. When the terms of a contract are clear and leave no doubt as to the intention of the contracting parties, the literal meaning of its stipulations governs. In these cases, courts have no authority to alter a contract by construction or to make a new contract for the parties. The Courts duty is confined to the interpretation of the contract which the parties have made for themselves without regard to its wisdom or folly as the court cannot supply material stipulations or read into the contract words which it does not contain. It is only when the contract is vague and ambiguous that courts are permitted to resort to construction of its terms and determine the intention of the parties. The escalation clause must be read in conjunction with Section 2.5 of the Agreement and Section 60.10 of the General Conditions which pertain to the time of payment. Once the parties agree on the price adjustment after due consultation in compliance with the provisions of the escalation clause, the agreement is in effect an amendment to the original contract, and gives rise to the liability of respondent to pay the adjusted costs. Under Section 60.10 of the General Conditions, the respondent shall pay such liability to the petitioner within 28 days from issuance of the interim certificate. Upon respondents failure to pay within the time provided (28 days), then it shall be liable to pay the stipulated interest. This is the logical interpretation of the agreement of the parties on the imposition of interest. To provide a contrary interpretation, as one requiring a separate consent for the imposition of the stipulated interest, would render the intentions of the parties nugatory. As to the applicable rate, under Article 2209 of the Civil Code, the appropriate measure for damages in case of delay in discharging an obligation consisting of
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project owner ordering or allowing the written changes in work and (2) written agreement of parties with regard to the increase in price or cost due to the change in work or design modification. Furthermore, compliance with the two requisites of Article 1724, a specific provision governing additional works, is a condition precedent for the recovery. The absence of one or the other condition bars the recovery of additional costs. Neither the authority for the changes made nor the additional price to be paid therefor may be proved by any other evidence. Respondent, in this instance, presented the August 12, 1997 progress report signed by Bennett. However, respondent knew that Bennett was not authorized to order any changes in the scope of works or to approve the cost thereof. It addressed all correspondences relating to the project to (petitioners) project manager Michael Dent, not Bennett. Moreover, Bennett did not sign the subcontract for and in behalf of respondent but only as a witness. Respondent was therefore aware of Bennetts lack of authority. In this respect, aside from respondents failure to present the documents required by Article 1724 of the Civil Code, we find that the subcontract was never modified. Petitioner therefore cannot be liable for the additional costs incurred by respondent. In a fixed lump-sum contract, the project owner agrees to pay the contractor a specified amount for completing a scope of work involving a variety of unspecified items of work without requiring a cost breakdown. The contractor estimates the project cost based on the scope of work and schedule and considers probable errors in measurement and changes in the price of materials. By entering into a fixed lump-sum contract, respondent undertook the risk of incurring a loss due to errors in measurement. The sub-contract explicitly stated that the stipulated price was not subject to remeasurement. Since the roof ridge ventilation and crane beams were included in the scope of work, respondent was presumed to have estimated the quantity of steel (the minimum and maximum amount) needed on the said portions when it made its formal offer on July 5, 1997. Concomitantly, by the very nature of a fixed lump-sum contract, petitioner was only liable to pay the stipulated subcontract price. Leighton Contractors Philippines, Inc. vs. CNP Industries, Inc., G.R. No. 160972, March 9, 2010 ESTOPPEL. We cannot apply the doctrine of estoppel in the present case since the facts and circumstances, as established by the record, negate its application. Under the promissory note, what the petitioners agreed to was the payment of a specific sum of P40,000.00 per month for six months not a 4% rate of interest per month for six (6) months on a loan whose principal is P1,000,000.00, for the total amount of P1,240,000.00. Thus, no reason exists to place the petitioners in estoppel, barring them from raising their present defenses against a 4% per month interest after the six-month period of the agreement. The board resolution, on the other hand, simply authorizes Pantaleon to contract for a loan with a monthly interest of not more than 4%. This resolution merely embodies the extent of Pantaleons authority to contract and does not create any right or obligation except as between Pantaleon and the board. Again, no violates the completion date previously agreed upon by the parties. In fact, nowhere does GG Sportswear allege that the parties ever agreed upon an earlier completion date. Even assuming that GG Sportswear was not aware of the exact completion date, we note that GG Sportswear signed the Agreement despite the Agreements omission to expressly state a specific completion date. This directly implies that a specific completion date was not a material consideration for GG Sportswear when it executed the Agreement. Neither is the initial lack of a License to Sell a basis to cancel the Agreement and has in fact effectively been cured even if it may be considered an initial defect. We therefore find no reason for GG Sportswear to be dissatisfied [Digesters Note: I guess the court means to be dissatisfied since a breach had occurred] with the indicated completion date. Even if it had been unhappy with the completion date, this ground, standing alone, is not sufficient basis to rescind the Agreement; unhappiness is a state of mind, not a defect available in law as a basis to rescind a contract. [Digesters note: Last line good candidate for car sticker for IBP members.] On GG Sportwears second ground, we note that the Agreement expressly provides that GG Sportswear shall be entitled to a Contract to Sell only upon its payment of at least 30% of the total contract price. Since GG Sportswear had only paid 21% of the total contract price, World Classs obligation to execute a Contract to Sell had not yet arisen. Accordingly, GG Sportswear had no basis to claim that World Class breached this obligation and to seek the application of Article 1191 of the Civil Code. G.G. Sportswear Mfg. Corp vs. World Class Properties, Inc., G.R. No. 182720, March 2, 2010. CONTRACTS; LUMP SUM FOR PIECE OF WORK. The parties entered into a contract for a piece of work whereby petitioner engaged respondent as contractor to build and provide the necessary materials for the construction of the structural steel works of HJIs fiber cement plant for a fixed lump-sum price of P44,223,909. The scope of work was defined in the subcontract as the completion of the structural steel works according to the main drawing, technical specifications and the main contract. Thus, to determine whether the roof ridge ventilation and crane beams were included in the scope of work, reference to the main drawing, technical specifications and main contract is necessary. The main contract stated that the structural steel works included Drawing Nos. P302-6200-S-405 and P302-6200-S-402. This, according to petitioner and respondent, referred to the roof ridge ventilation and crane beams. Hence, the said works were clearly included in the sub-contract works. Nevertheless, respondent contends that when Bennett signed the August 12, 1997 progress report, petitioner approved the additional cost estimates, in effect modifying the original agreement in the subcontract. In contracts for a stipulated price like fixed lump-sum contracts, the recovery of additional costs is governed by Article 1724 of the Civil Code. Settled is the rule that a claim for the cost of additional work arising from changes in the scope of work can only be allowed upon the (1) written authority from the developer or
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is not squarely in point with this case. Unlike in Yasin, which involved a Muslim divorcee whose former husband is already married to another woman, petitioners marriage remains subsisting. Another point, Yasin did not involve a request to resume ones maiden name in a replacement passport, but a petition to resume ones maiden name in view of the dissolution of ones marriage. The law governing passport issuance is RA 8239 and the applicable provision in this case is Section 5(d) which sets out when a married woman may revert to her maiden name in her passport. None of these instances are present. Petitioner, however, argues that RA 8239 effectively conflicts with and, thus, operates as an implied repeal of Article 370 of the Civil Code. Petitioner is mistaken. RA 8239 does not prohibit a married woman from using her maiden name in her passport. In fact, in recognition of this right, the DFA allows a married woman who applies for a passport for the first time to use her maiden name. Such an applicant is not required to adopt her husbands surname. In the case of renewal of passport, a married woman may either adopt her husbands surname or continuously use her maiden name. If she chooses to adopt her husbands surname in her new passport, the DFA additionally requires the submission of an authenticated copy of the marriage certificate. Otherwise, if she prefers to continue using her maiden name, she may still do so. The DFA will not prohibit her from continuously using her maiden name. However, once a married woman adopts her husbands surname in her passport, she may not revet to the use of her maiden name, except in the cases enumerated in Section 5(d) of RA 8239. These cases are (1) death of husband, (2) divorce, (3) annulment, (4) nullity of marriage. Ma. Virginia V. Remo vs. The Honorable Secretary of Foreign Affairs, G.R. No. 169202. March 5, 2010. Interest; stipulation on interest must be in writing. In the present case, the borrower obtained a P1,000,000.00 loan payable within six (6) months, or from January 8, 1994 up to June 8, 1994. During this period, the loan shall earn an interest of P40,000.00 per month, for a total obligation of P1,240,000.00 for the six-month period. This agreed sum can be computed at 4% interest per month, but no such rate of interest was stipulated in the promissory note; rather a fixed sum equivalent to this rate was agreed upon. Article 1956 of the Civil Code specifically mandates that no interest shall be due unless it has been expressly stipulated in writing. Under this provision, the payment of interest in loans or forbearance of money is allowed only if: (1) there was an express stipulation for the payment of interest; and (2) the agreement for the payment of interest was reduced in writing. The concurrence of the two conditions is required for the payment of interest at a stipulated rate. Thus, the court held in Tan v. Valdehueza and Ching v. Nicdao that collection of interest without any stipulation in writing is prohibited by law. Applying this provision, we find that the interest of P40,000.00 per month corresponds only to the six (6)-month period of the loan, or from January 8, 1994 to June 8, 1994, as agreed upon by the parties in the promissory note. Thereafter, the interest on the loan should be at the legal interest rate of 12% per annum, consistent with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals. cause exists to place the petitioners in estoppel. Prisma Construction and Development Corporation and Rogelio S. Pantaleon vs. Arthur F. Menchavez, G.R. No. 160545, March 9, 2010 FAMILY RELATIONS; CHILD SUPPORT; FILIATION. Arhbencels demand for support, being based on her claim of filiation to petitioner as his illegitimate daughter, falls under Article 195(4). As such, her entitlement to support from petitioner is dependent on the determination of her filiation. [Digesters note: The Court cites Herrera v. Alba to summarize the laws, rules, and jurisprudence on establishing filiation.] In the present case, Arhbencel relies, in the main, on the handwritten note executed by petitioner which reads: I, Ben Hur C. Nepomuceno, hereby undertake to give and provide financial support in the amount of P1,500.00 every fifteen and thirtieth day of each month for a total of P3,000.00 a month starting Aug. 15, 1999, to Ahrbencel Ann Lopez, presently in the custody of her mother Araceli Lopez without the necessity of demand, subject to adjustment later depending on the needs of the child and my income. The note does not contain any statement whatsoever about Arhbencels filiation to petitioner. It is, therefore, not within the ambit of Article 172(2) vis--vis Article 175 of the Family Code which admits as competent evidence of illegitimate filiation an admission of filiation in a private handwritten instrument signed by the parent concerned. The note cannot also be accorded the same weight as the notarial agreement to support the child referred to in Herrera. For it is not even notarized. And Herrera instructs that the notarial agreement must be accompanied by the putative fathers admission of filiation to be an acceptable evidence of filiation. Here, however, not only has petitioner not admitted filiation through contemporaneous actions. He has consistently denied it. The only other documentary evidence submitted by Arhbencel, a copy of her Certificate of Birth, has no probative value to establish filiation to petitioner, the latter not having signed the same. At bottom, all that Arhbencel really has is petitioners handwritten undertaking to provide financial support to her which, without more, fails to establish her claim of filiation. The Court is mindful that the best interests of the child in cases involving paternity and filiation should be advanced. It is, however, just as mindful of the disturbance that unfounded paternity suits cause to the privacy and peace of the putative fathers legitimate family. BenHur Nepomuceno vs. Archbencel Ann Lopez, represented by her mother Araceli Lopez, G.R. No. 181258, March 18, 2010 FAMILY RELATIONS; USE OF MAIDEN NAME BY MARRIED WOMAN; IN A PASSPORT. In the present case, petitioner, whose marriage is still subsisting and who opted to use her husbands surname in her old passport, requested to resume her maiden name in the replacement passport arguing that no law prohibits her from using her maiden name. Petitioner cites Yasin as the applicable precedent. However, Yasin
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issue is whether the transfer of the property violated the option that had been granted to GHRC. An option is a contract by which the owner of a property agrees with another that the latter shall have the right to buy the formers property at a fixed price within a certain time. It binds the party who has given the option, not to enter into a contract with any other person during the period designated, and within that period, to enter into such a contract with the one to whom the option was granted, if the latter decides to use the option. On the other hand, a right of first refusal is a contractual grant, not of a sale of a property, but of first priority to buy the property in the event the owner sells the same. As distinguished from an option contract, in a right of first refusal, while the object might be made determinate, the exercise of the right of first refusal would eb dependent not only on the owners eventual intention to enter into a transaction with another, but also on terms, including the price, that are yet to be firmed up. The option given to GHRC is obviously a mere right of first refusal and this is not disputed by the parties. What PUP and NDC assail is the conclusion that such right of first refusal subsisted even after the expiration of the original lease period when GHRC was allowed to continue staying in the leased premises under an implied renewal of lease. They argue that the right of first refusal provision was not carried over to such month-to-month lease. The court found this position untenable. Evidence shows that at the time NDC began negotiating for the transfer of the land to PUP, the right of first refusal was subsisting. Hence, whether or not the right of first refusal was carried over to the implied lease, is irrelevant. Polytechnic University of the Philippines Vs. Golden Horizon Realty Corporation/National Development Company Vs. Golden Horizon Realty Corporation , G.R. No. 183612/G.R. No. 184260, March 15, 2010 MARRIAGE; GROUNDS FOR PSYCHOLOGICAL INCAPACITY. ANNULMENT; In other words, the facts show that the parties agreed to the payment of a specific sum of money of P40,000.00 per month for six months, not to a 4% rate of interest payable within a six (6)-month period. Prisma Construction and Development Corporation and Rogelio S. Pantaleon vs. Arthur F. Menchavez, G.R. No. 160545, March 9, 2010 Interest; whether rate is unconscionable. The court noted in the Prisma case (see above digest) that the case of Medel v. Court of Appeals was not applicable. In Medel, the debtors in a P500,000.00 loan were required to pay an interest of 5.5% per month, a service charge of 2% per annum, and a penalty charge of 1% per month, plus attorneys fee equivalent to 25% of the amount due, until the loan is fully paid. Taken in conjunction with the stipulated service charge and penalty, we found the interest rate of 5.5% to be excessive, iniquitous, unconscionable, exorbitant and hence, contrary to morals, thereby rendering the stipulation null and void. Medel finds no application in the present case where no other stipulation exists for the payment of any extra amount except a specific sum of P40,000.00 per month on the principal of a loan payable within six months. Additionally, no issue on the excessiveness of the stipulated amount of P40,000.00 per month was ever put in issue by the petitioners; they only assailed the application of a 4% interest rate, since it was not agreed upon. It is a familiar doctrine in obligations and contracts that the parties are bound by the stipulations, clauses, terms and conditions they have agreed to, which is the law between them, the only limitation being that these stipulations, clauses, terms and conditions are not contrary to law, morals, public order or public policy. The payment of the specific sum of money of P40,000.00 per month was voluntarily agreed upon by the petitioners and the respondent. There is nothing from the records and, in fact, there is no allegation showing that petitioners were victims of fraud when they entered into the agreement with the respondent. Prisma Construction and Development Corporation and Rogelio S. Pantaleon vs. Arthur F. Menchavez, G.R. No. 160545, March 9, 2010 LEASE; RIGHT OF FIRST REFUSAL; DISTINGUISHED FROM OPTION TO BUY. In the seventies, NDC had entered tinto two contracts of lease with a company called Golden Horizon Realty Corporation (GHRC). These each had a term of 10 years, renewable for another 10 upon the consent of the parties. In addition GHRC was granted an option to purchase the leased property. Before the expiration of the second lease contract, GHRC sought to exercise its option to renew the lease and requested priority to negotiate for the propertys purchase should NDC opt to sell. NDC did not respond to this request but even after the expiry of the term kept on accepting the rentals. GHRC learned that NDC had decided to secretly dispose of the land which prompted GHR to take legal action. Meanwhile, then President Aquino issued a memorandum order ordering the transfer to the National government of that NDC property. The National Government in turn transferred the property to PUP. The
This is another case where the Supreme Court insisted on keeping two unhappy people, who will probably proceed to have relationships outside wedlock, bound hand and foot in marriage. The court found the evidence presented by the wife, Jocelyn, as insufficient to establish the psychological incapacity of her husband. The expert opinion was not considered so expert since the psychologist derived all her conclusions from information provided by Jocelyn whose bias cannot of course be doubted (so essentially the court assumed without possibility of error, and without evidence as well, that Jocelyn was a liar). The court clarified that it was not suggesting that a personal examination of the party alleged to be psychologically incapacitated is mandatory; jurisprudence holds that this type of examination is not a mandatory requirement. While such examination is desirable, we recognize that it may not be practical in all instances given the oftentimes estranged relations between the parties. For a determination though of a partys complete personality profile, information coming from persons intimately related to him (such as the partys close relatives and friends) may be helpful. This is an approach in the application of Article 36 that allows flexibility, at the same time that it avoids, if not totally
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not satisfy the requirement of Article 36 and its related jurisprudence, specifically the Santos requisites. [Digesters note: This case is useful in that it mentions important previous cases -the jurisprudential touchstones -- on psychological incapacity. But it is also pretty amazing in its complete lack of emphathy or sense that the law is not some separate, cold human construct, but is there to help us live our lives with dignity and a chance at happiness. The court seems to allow for the possibility that Angelito is not only a deadbeat but a wife beater someone who they would not wish on a daughter or sister and who they would probably threaten with a slow painful death if they tried to come near a loved one except that since all the drunkenness and good-for-nothingness and violence took place after the wedding, Jocelyn is stuck. Oops, sorry. Here, the court, quite calmly states that such violence, standing alone, does not constitute psychological incapacity. One does not have to have a degree in psychology, I think, to see that violence the ability to injure even a loved one on a repeated basis does not develop overnight and would have begun germination even before the first blow is struck. In a way, very similar to the GG Sportwear case unhappiness is a state of mind but not a ground for rescission.] Jocelyn M. Suazo vs. Angelito Suazo and Republic of the Philippines, G.R. No. 164493, March 12, 2010. MORAL DAMAGES; CONDITIONS. The following are the conditions for the award of moral damages: (1) there is an injury whether physical, mental or psychological – clearly sustained by the claimant; (2) the culpable act or omission is factually established, (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of the of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. In the present case, Suarez failed to establish that his claimed injury was proximately caused by the erroneous marking of DAIF on the checks. Proximate cause has been defined as any cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the result complained of and without which would not have occurred. There is nothing in Suarezs testimony which convincingly shows that the erroneous marking of DAIF on the checks proximately caused his alleged psychological or social injuries. Suarez merely testified that he suffered humiliation and that the prospective consolidation of the titles to the Tagaytay Properties did not materialize due to the dishonor of his checks, not die to the erroneous marking of the DAIF on his checks. Hence, Suarez has only himself to blame for his hurt feelings and the unsuccessful transaction with his client as these were directly caused by the justified dishonoring of his checks. Bank of the Philippines Islands Vs. Reynald R. Suarez, G.R. No. 167750, March 15, 2010. MORTGAGE; INTEREST. REDEMPTION PERIOD; APPLICABLE obliterate, the credibility gaps spawned by supposedly expert opinion based entirely on doubtful sources of information. From these perspectives, we conclude that the psychologist, using meager information coming from a directly interested party, could not have secured a complete personality profile and could not have conclusively formed an objective opinion or diagnosis of Angelitos psychological condition. While the report or evaluation may be conclusive with respect to Jocelyns psychological condition, this is not true for Angelitos Other than this credibility or reliability gap, both the psychologists report and testimony simply provided a general description of Angelitos purported anti -social personality disorder, supported by the characterization of this disorder as chronic, grave and incurable. The psychologist was conspicuously silent, however, on the bases for her conclusion or the particulars that gave rise to the characterization she gave. These particulars are simply not in the report, and neither can they be found in her testimony. The inadequacy and/or lack of probative value of the psychological report and the psychologists testimony impel us to proceed to the evaluation of Jocelyns testimony, to find out whether she provided the court with sufficient facts to support a finding of Angelitos psychological incapacity. Unfortunat ely, we find Jocelyns testimony to be insufficient. Jocelyn merely testified on Angelitos habitual drunkenness, gambling, refusal to seek employment and the physical beatings she received from him all of which occurred after the marriage. Significantly, she declared in her testimony that Angelito showed no signs of violent behavior, assuming this to be indicative of a personality disorder, during the courtship stage or at the earliest stages of her relationship with him. She testified on the alleged physical beatings after the marriage, not before or at the time of the celebration of the marriage. She did not clarify when these beatings exactly took place whether it was near or at the time of celebration of the marriage or months or years after. This is a clear evidentiary gap that materially affects her cause, as the law and its related jurisprudence require that the psychological incapacity must exist at the time of the celebration of the marriage. Habitual drunkenness, gambling and refusal to find a job, while indicative of psychological incapacity, do not, by themselves, show psychological incapacity. All these simply indicate difficulty, neglect or mere refusal to perform marital obligations that, as the cited jurisprudence holds, cannot be considered to be constitutive of psychological incapacity in the absence of proof that these are manifestations of an incapacity rooted in some debilitating psychological condition or illness. The physical violence allegedly inflicted on Jocelyn deserves a different treatment. While we may concede that physical violence on women indicates abnormal behavioral or personality patterns, such violence, standing alone, does not constitute psychological incapacity. Jurisprudence holds that there must be evidence showing a link, medical or the like, between the acts that manifest psychological incapacity and the psychological disorder itself. The evidence of this nexus is irretrievably lost in the present case under our finding that the opinion of the psychologist cannot be relied upon. Even assuming, therefore, that Jocelyns account of the physical beatings she received from Angelito were true, this evidence does
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formally organized. Nonetheless, we are asked to determine who between Jose and Elfledo was the partner in the trucking business. The evidence presented by petitioners falls short of the quantum of proof required to establish that: (1) Jose was the partner and not Elfledo; and (2) all the properties acquired by Elfledo and respondent form part of the estate of Jose, having been derived from the alleged partnership. Petitioners heavily rely on Jimmys testimony. But that testimony is just one piece of evidence against respondent. Applying the provisions of Article 1769 of the Civil Code (on whether a partnership exists), the following circumstances tend to prove that Elfledo was himself the partner of Jimmy and Norberto: (1) Cresencia testified that Jose gave Elfledo P50,000.00, as share in the partnership, on a date that coincided with the payment of the initial capital in the partnership; (2) Elfledo ran the affairs of the partnership, wielding absolute control, power and authority, without any intervention or opposition whatsoever from any of petitioners herein; (3) all of the properties, particularly the nine trucks of the partnership, were registered in the name of Elfledo; (4) Jimmy testified that Elfledo did not receive wages or salaries from the partnership, indicating that what he actually received were shares of the profits of the business; and (5) none of the petitioners, as heirs of Jose, the alleged partner, demanded periodic accounting from Elfledo during his lifetime. Furthermore, petitioners failed to adduce any evidence to show that the real and personal properties acquired and registered in the names of Elfledo and respondent formed part of the estate of Jose, having been derived from Joses alleged partnership with Jimmy and Norberto. They failed to refute respondents claim that Elfledo and respondent engaged in other businesses. Edison even admitted that Elfledo also sold Interwood lumber as a sideline. Petitioners could not offer any credible evidence other than their bare assertions. The testimonies prove it was through Elfredos efforts and hard work that the partnership was able to acquire more trucks and otherwise prosper. Even the appellant participated in the affairs of the partnership by acting as the bookkeeper sans salary. It is notable too that Jose Lim died when the partnership was barely a year old, and the partnership and its business not only continued but also flourished. If it were true that it was Jose Lim and not Elfledo who was the partner, then upon his death the partnership should have been dissolved and its assets liquidated. On the contrary, these were not done but instead its operation continued under the helm of Elfledo and without any participation from the heirs of Jose Lim. Heirs of Jose Lim, represented by Elenito Lim vs. Juliet Villa Lim, G.R. No. 172690, March 3, 2010 SALE; BUYER IN GOOD FAITH. The party, IDRI, was not a buyer in good faith. It had actual knowledge of facts and circumstances, which should impel a reasonably cautious person to make further inquiries about the vendors title to the property. The representative of IDRI testified that he knew about the existence of the notice of lis pendens on the property subject of the sale and the legal separation case that had The one-year redemption period applied by the CA is the rule that generally applies to foreclosure of mortgage by a bank. The period of redemption is not tolled by the filing of a complaint or petition for annulment of the mortgage and the foreclosure sale conducted pursuant to the said mortgage. However, considering the exceptional circumstances surrounding this case, we will not apply the rule in this instance pro hac vice. In Lipat, this Court upheld the RTC decision giving petitioners five months and 17 days from the finality of the trial courts decision to redeem their foreclosed property. Lipat, already final and executory, has therefore become the law of the case between the parties, including their heirs who are petitioners and respondents in this case. Consequently, petitioners had five months and 17 days from the finality of Lipat to exercise their right of redemption, even though this period was beyond one year from the date of registration of the sale. Thus, the CA erred (and even committed a grave abuse of discretion) when it insisted on a contrary ruling. The CA had no power to reverse this Courts final and executory judgment. The CA overstepped its authority when it held that the right of redemption had already expired one year after the date of the registration of the certificate of sale. Like all other courts in our judicial system, the CA must take its bearings from the rulings and decisions of this Court. Nevertheless, we note that the amount tendered by petitioners to redeem their foreclosed property was determined by the sheriff at the rate of one percent per month for only one year. Section 78 of the General Banking Act requires payment of the amount fixed by the court in the order of execution, with interest thereon at the rate specified in the mortgage contract , and all the costs and other judicial expenses incurred by the bank or institution concerned by reason of the execution and sale and as a result of the custody of said property less the income received from the property. The rate of interest specified in the mortgage contract shall be applied for the one-year period reckoned from the date of registration of the certificate of sale in accordance with the General Banking Act. However, since petitioners effectively had more than one year to exercise the right of redemption, justice, fairness and equity require that they pay 12% p.a. interest beyond the one-year period up to June 16, 2004 when Partas consigned the redemption price with the RTC. Heirs of Estelita Burgos-Lipat namely: Alan B. Lipat and Alfredo B. Lipat, Jr. vs. Heirs of Eugenio D. Trinidad namely: Asuncion R. Trinidad, et al., G.R. No. 185644, March 2, 2010. PARTNERSHIP; EXISTENCE OF A PARTNERSHIP. A partnership exists when two or more persons agree to place their money, effects, labor, and skill in lawful commerce or business, with the understanding that there shall be a proportionate sharing of the profits and losses among them. A contract of partnership is defined by the Civil Code as one where two or more persons bind themselves to contribute money, property, or industry to a common fund, with the intention of dividing the profits among themselves. Undoubtedly, the best evidence would have been the contract of partnership or the articles of partnership. Unfortunately, there is none in this case, because the alleged partnership was never
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rights to and interests in Lot 18026-A to the spouses Pacardo who assigned the property to the husband of petitioner as early as June 3, 1977. From then on, the heirs of Ebora lost all their rights and interest over the property. Indeed, the heirs of Ebora even confirmed the sale to Josefa and the assignment and waiver of rights in favor of petitioners husband in an instrument dated January 31, 1983. Thus, the heirs of Ebora had nothing to adjudicate among themselves on October 8, 1987. Neither did they have anything to transfer to the vendees or successors-ininterest. As such, the transferees of the heirs of Ebora acquired no better right than that of the transferors. The spring cannot rise higher than its source. Lydia L. Roa Vs. Heirs of Santiago Ebora, et al., G.R. No. 161137, March 15, 2010. SALE; LUMP SUM. In the instant case, the deed of sale is not one of a unit price contract. The parties agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, bounded on the North by Lot No. 11903, on the East by Lot No. 11908, on the South by Lot Nos. 11858 & 11912, and on the West by Lot No. 11910. In a contract of sale of land in a mass, the specific boundaries stated in the contract must control over any other statement, with respect to the area contained within its boundaries. Clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity. The difference in the area is obviously sizeable and too substantial to be overlooked. It is not a reasonable excess or deficiency that should be deemed included in the deed of sale. Carmen Del Prado vs. Spouses Antonio L. Caballero and Leonarda Caballero, G.R. No. 148225, March 3, 2010 SALE; PRESCRIPTION NOT RELEVANT. The petitioners assert that the lot, being titled in the name of their predecessors-in-interest, could not be acquired by prescription or adverse possession. The assertion is unwarranted. Prescription, in general, is a mode of acquiring or losing ownership and other real rights through the lapse of time in the manner and under the conditions laid down by law. However, prescription was not relevant to the determination of the dispute herein, considering that Lim did not base his right of ownership on an adverse possession over a certain period. He insisted herein, instead, that title to the land had been voluntarily transferred by the registered owners themselves to Luisa, his predecessor-ininterest. Lim showed that his mother had derived a just title to the property by virtue of sale; that from the time Luisa had acquired the property in 1937, she had taken over its possession in the concept of an owner, and had performed her obligation by paying real property taxes on the property, as evidenced by tax declarations issued in her name; and that in view of the delivery of the property, coupled with Luisas actual occupation of it, all that remained to be done was the issuance of a new transfer certificate of title in her been filed. Thus IDRI could not feign ignorance of the property being conjugal. Furthermore, if IDRI made further inquiries, it would have known that the cancellation of the notice of lis pendens was highly irregular. Under Section 77 of Presidential Decree No. 1529, the notice of lis pendens may be cancelled (a) upon order of the court, or (b) by the Register of Deeds upon verified petition of the party who caused the registration of the lis pendens. In this case, the lis pendens was cancelled by the Register of Deeds upon the request of Alfredo. There was no court order for the cancellation of the lis pendens. Neither did Elvira, the party who caused the registration of the lis pendens, file a verified petition for its cancellation. Besides, had IDRI been more prudent before buying the property, it would have discovered that Alfredos donation of the property to Winifred was without the consent of Elvira. Under Article 125 of the Family Code, a conjugal property cannot be donated by one spouse without the consent of the other spouse. Clearly, IDRI was not a buyer in good faith. Mario Siochi vs. Alfredo Gozon, et al./InterDimensional Realty, Inc. Vs. Mario Siochi, et al., G.R. No. 169900/G.R. No. 169977, March 18, 2010. SALE; LAND; INNOCENT PURCHASER FOR VALUE. This case stemmed from a conflict of ownership (resulting from multiple transactions) over Lot 18026-A. Although it was continuously, openly and adversely possessed by Santiago Ebora, the property was mistakenly included by Chacon Enterprises in its application for original registration. As a result, litigation arose between respondents (the heirs of Ebora) and Chacon Enterprises. During the pendency of this litigation, the heirs of Ebora sold the entire Lot 18026-A to their co-heirs, the Pacardos. On the same day, the Pacardos assigned the property to Digno Roa, married to petitioner Lydia Roa. TCT No. T-24488 was issued in the name of Digno Roa. Meanwhile, the case between Chacon Enterprises and the heirs of Ebora was decided in favor of the latter. By reason of this decision, TCT No. T-48097 was issued in the name of the heirs of Ebora. New TCTs were issued and the lots were thereafter sold to various respondents, which resulted in the issuance of new TCTs in the names of the respective vendees. All these transactions occurred without petitioners knowledge and consent. In the case before the Supreme Court, the petitioner sought that respondents be declared as not innocent purchasers for value and that the subject properties be adjudicated in her favor. The court, however, ruled that respondents are innocent purchasers for value. Nonetheless, without undermining the reason behind this doctrine (of protecting innocent purchasers for value), the court when on to hold that petitioner is entitled to the property following Sanchez v. Quinio In this case, as in Sanchez, petitioners title was validly issued and had been undisturbed for 10 years before the title of respondents predecessor (the Ebora heirs) was issued. Petitioner never relinquished her title to respondents or to anybody else. She therefore possessed a superior right over those of respondents, notwithstanding the fact that respondents were innocent purchasers for value. Moreover, the heirs of Ebora sold and conveyed their
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held that except for errors or omissions in the notice of sale which are calculated to deter or mislead bidders, to depreciate the value of the property, or to prevent it from bringing a fair price, simple mistakes or omissions are not considered fatal to the valid*ity of the notice and the sale made pursuant thereto. Spouses Norman K. Certeza, Jr. et al. vs. Philippines Savings Bank, G.R. No. 190078, March 5, 2010. SUBDIVISION AND CONDOMINIUM BUYERS DECREE; P.D. NO. 957; RESCISSION OF CONTRACT; IMPACT OF LACK OF LICENSE TO SELL ON CONTRACT. GG Sportswear, which had entered into a reservation agreement for the purchase of condo units, cannot seek the rescission of the agreement, where the developer had not breached any substantial provision of the agreement. Neither can GG Sportswear find recourse through P.D. No. 957, or the Subdivision and Condominium Buyers Protective Decree. This law covers all sales and purchases of subdivision or condominium units, and provides that the buyers installment payments shall not be forfeited in favor of the developer or owner if the latter fails to develop the subdivision or condominium project. To recall, the completion date of the Antel Global Corporate Center was either in August 1998 (based on World Classs first License to Sell), on December 15, 1998 (based on the provisional Contract to Sell), or on December 1999 (based on World Classs second License to Sell). At the time GG Sportswear filed its complaint against World Class on June 10, 1997, the Antel Global Corporate Center was still in the course of development and none of these projected completion dates had arrived. Hence, any complaint for refund was premature. Significantly, World Class completed the project in August 1999, or within the time period granted by the HLURB for the completion of the condominium project under the second License to Sell. This completion, undertaken while the case was pending before the Arbiter, rendered the issue of World Classs failure to develop the condominium project moot and academic. On a final note, we choose to reiterate, for the benefit of the HLURB, our ruling in Co Chien v. Sta. Lucia Realty & Development, Inc., that the requirements of Sections 4 and 5 of P.D. No. 957 are intended merely for administrative convenience in order to allow for a more effective regulation of the industry and do not go into the validity of the contract such that the absence thereof would automatically render the contract null and void. G.G. Sportswear Mfg. Corp vs. World Class Properties, Inc., G.R. No. 182720, March 2, 2010 USE BY MARRIED WOMAN OF HER MAIDEN NAME IN HER REPLACEMENT PASSPORT. Can a married woman, who originally used her husbands surname in her expired passport, revert to the use of her maiden name in the replacement passport, despite the subsistence of her marriage? In Ma. Virginia V. Remo vs. The Honorable Secretary of Foreign Affairs, G.R. No. 169202, March 5, 2010, name. Teofisto Oo, et al. vs. Vicente N. Lim, G.R. No. 154270, March 9, 2010. SALE. When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. Monasterio-Pe vs Tong, G.R. No. 151369, March 23, 2011. SALE. A provision in a Conditional Deed of Sale stating that the vendee shall pay the balance of the purchase price when he has successfully negotiated & secured a road right of way is not a condition on the perfection of the contract nor on the validity of the entire contract or its compliance as contemplated by Art 1308 of the Civil Code --- such a condition is not purely potestative --- such a condition is likewise dependent on chance as there is no guarantee that the vendee and the 3rd party landowners would come to an agreement regarding the road right of way, a type mixed condition expressly allowed under Art 1182 of the Civil Code. Catungal vs Rodriguez, G.R. No. 146839, March 23, 2011. MORTGAGE; EXTRA-JUDICIAL FORECLOSURE; ACT NO. 3135; OLD TWO-BIDDER REQUIREMENT. Petitioners sought the nullification of an extrajudicial foreclosure sale for allegedly having been conducted in contravention of the procedural requirements prescribed in A.M. No. 99-10-05-0 (Re: Procedure in Extrajudicial Foreclosure of Real Estate Mortgages) and in violation of petitioners right to due process. Petitioners argue that A.M. No. 99-10-05-0 which took effect on January 15, 2000, requires that there must be at least two participating bidders in an auction sale. However, the Court noted that the requirement for at least two participating bidders provided in the original version of paragraph 5 of A.M. No. 99-10-05-0 is not found in Act No. 3135. Hence, pursuant to the Resolution of the Supreme Court en banc dated January 30, 2001, it is no longer required to have at least two bidders in an extrajudicial foreclosure of mortgage. It should also be noted that pursuant to A.M. No. 99-10-05-0, as amended by the Resolutions of January 30, 2001 and August 7, 2001, the Court Administrator issued Circular No. 7-2002 dated January 22, 2002 which became effective on April 22, 2002. Section 5(a) of the said circular states [T]he bidding shall be made through sealed bids which must be submitted to the Sheriff who shall conduct the sale between the hours of 9 a.m. and 4 p.m. of the date of the auction (Act 3135, Sec. 4). The property mortgaged shall be awarded to the party submitting the highest bid and in case of a tie, an open bidding shall be conducted between the highest bidders. Payment of the winning bid shall be made either in cash or in managers check, in Philippine currency, within five (5) days from notice. The use of the word bids (in plural form) does not make it a mandatory requirement to have more than one bidder for an auction sale to be valid. A.M. No. 99-10-05-0, as amended, no longer prescribes the requirement of at least two bidders for a valid auction sale. We further
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(1) HER MAIDEN FIRST NAME AND SURNAME AND ADD HER HUSBANDS SURNAME, OR (2) HER MAIDEN FIRST NAME AND HER HUSBANDS SURNAME, OR (3) HER HUSBANDS FULL NAME, BUT PREFIXING A WORD INDICATING THAT SHE IS HIS WIFE, SUCH AS MRS. We agree with petitioner that the use of the word may in the above provision indicates that the use of the husbands surname by the wife is permissive rather than obligatory. . . Clearly, a married woman has an option, but not a duty, to use the surname of the husband in any of the ways provided by Article 370 of the Civil Code. She is therefore allowed to use not only any of the three names provided in Article 370, but also her maiden name upon marriage. She is not prohibited from continuously using her maiden name once she is married because when a woman marries, she does not change her name but only her civil status. Further, this interpretation is in consonance with the principle that surnames indicate descent. However, the Supreme Court differentiated petitioners case from that in Yasin, which petitioner was citing as precedent: In Yasin, petitioner therein filed with the Sharia District Court a Petition to resume the use of maiden name in view of the dissolution of her marriage by divorce under the Code of Muslim Personal Laws of the Philippines, and after marriage of her former husband to another woman. .. In the present case, petitioner, whose marriage is still subsisting and who opted to use her husband s surname in her old passport, requested to resume her maiden name in the replacement passport arguing that no law prohibits her from using her maiden name. Petitioner cites Yasin as the applicable precedent. However,Yasin is not squarely in point with this case. Unlike in Yasin, which involved a Muslim divorcee whose former husband is already married to another woman, petitioners marriage remains subsisting. Another point, Yasin did not involve a request to resume ones maiden name in a replacement passport, but a petition to resume ones maiden name in view of the dissolution of ones marriage. The Supreme Court agreed with the DFA that petitioner can no longer use her maiden name in her renewal passport. The Office of the Solicitor General (OSG), on behalf of the Secretary of Foreign Affairs, argues that the highlighted proviso in Section 5(d) of RA 8239 limits the instances when a married woman may be allowed to revert to the use of her maiden name in her passport. These petitioner Maria Virginia V. Remo is a married Filipino citizen whose Philippine passport was then expiring on 27 October 2000. Petitioner is married to Francisco R. Rallonza and the following entries appear in her passport: Rallonza as her surname, Maria Virginia as her given name, and Remo as her middle name. Prior to the expiry of the validity of her passport, petitioner, whose marriage still subsists, applied for the renewal of her passport with the Department of Foreign Affairs (DFA) office in Chicago, Illinois, U.S.A., with a request to revert to her maiden name and surname in the replacement passport. The DFA denied the request. According to the DFA: Use of maiden name is allowed in passport application only if the married name has not been used in previous application. The Implementing Rules and Regulations for Philippine Passport Act of 1996 clearly defines the conditions when a woman applicant may revert to her maiden name, that is, only in cases of annulment of marriage, divorce and death of the husband. Ms. Remos case does not meet any of these conditions. Petitioners motion for reconsideration was denied by the DFA and this prompted petitioner to appeal the matter to the Office of the President, which similarly denied the request as well as a subsequent motion for reconsideration. Petitioner then filed a petition for review with the Court of Appeals, which also denied the petition. The Court of Appeals found no conflict between Article 370 of the Civil Code and Section 5(d) of RA 8239. The Court of Appeals held that for passport application and issuance purposes, RA 8239 limits the instances when a married woman applicant may exercise the option to revert to the use of her maiden name such as in a case of a divorce decree, annulment or declaration of nullity of marriage. Since there was no showing that petitioners marriage to Francisco Rallonza has been annulled, declared void or a divorce decree has been granted to them, petitioner cannot simply revert to her maiden name in the replacement passport after she had adopted her husbands surname in her old passport. Hence, according to the Court of Appeals, the DFA was justified in refusing the request of petitioner to revert to her maiden name in the replacement passport. The Supreme Court also denied the petition for lack of merit. The Supreme Court noted that a married woman has the option, but not the duty, to use the surname of the husband: Title XIII of the Civil Code governs the use of surnames. In the case of a married woman, Article 370 of the Civil Code provides: ART. 370. A married woman may use:
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instances are death of husband, annulment or nullity of marriage. . .

divorce decree, Respondent sold land owned by her daughter without any written authority. Article 1874 of the Civil Code explicitly requires a written authority before an agent can sell an immovable property. Based on a review of the records, there is absolutely no proof of respondents written authority to sell the lot to petitioners. In fact, during the pre-trial conference, petitioners admitted that at the time of the negotiation for the sale of the lot, petitioners were of the belief that respondent was the owner of lot. Consequently, the sale of the lot by respondent who did not have a written authority from the real owner is void. A void contract produces no effect either against or in favor of anyone and cannot be ratified. Sps. Joselina Alcantara and Antonio Alcantara, et al. vs. Brigida L. Nido, as attorneyin-fact of Revelen Srivastava, G.R. No. 165133, April 19, 2010. Contracts; breach of; rebus sic stantibus. See Daniel T. So vs. Food Fest Land, Inc./Food Fest Land, Inc. vs. Daniel T. So, G.R. Nos. 183628 & 183670, April 7, 2010, below. Contracts; void and voidable; prescription. See Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010, below. DAMAGES; PROFITS. ACTUAL DAMAGES; UNREALIZED
Since petitioners marriage to her husband subsists, placing her case outside of the purview of Section 5(d) of RA 8239 (as to the instances when a married woman may revert to the use of her maiden name), she may not resume her maiden name in the replacement passport. This prohibition, according to petitioner, conflicts with and, thus, operates as an implied repeal of Article 370 of the Civil Code. Petitioner is mistaken. The conflict between Article 370 of the Civil Code and Section 5(D) of RA 8329 is more imagined than real. RA 8329, including its implementing rules and regulations, does not prohibit a married woman from using her maiden name in her passport. In fact, in recognition of this right, the DFA allows a married woman who applies for a passport for the first time to use her maiden name. Such an applicant is not required to adopt her husbands surname. In the case of renewal of passport, a married woman may either adopt her husbands surnam e or continuously use her maiden name. If she chooses to adopt her husbands surname in her new passport, the DFA additionally requires the submission of an authenticated copy of the marriage certificate. Otherwise, if she prefers to continue using her maiden name, she may still do so. The DFA will not prohibit her from continuously using her maiden name. However, once a married woman opted to adopt her husbands surname in her passport, she may not revert to the use of her maiden name, except in the cases enumerated in Section 5(D) of RA 8329. These instances are: (1) death of husband, (2) divorce, (3) annulment, or (4) nullity of marriage. Since petitioners marriage to her husband subsists, she may not resume her maiden name in the replacement passport. Otherwise stated, a married womans reversion to the use of her maiden name must be based only on the severance of the marriage. Even assuming RA 8329 conflicts with the Civil Code, the provisions of RA 8329 which is a special law dealing with passport issuance must prevail over the provisions of Tittle XIII of the Civil Code which is the general law on the use of surnames.
Food Fest leased property from So. Food Fest sought to pre-terminate the lease. So sued Food Fest for ejection, payment of arrears and damages. On the matter of damages, So claims that Food Fest did not exercise care in removing the installations and fixtures, thereby causing destruction to the premises to thus entitle him to damages, as well as to damages corresponding to unrealized profits ( lucrum cessans) to answer for the period during which the unit was not rented out. Unrealized profits fall under the category of actual or compensatory damages. If there exists a basis for a reasonable expectation that profits would have continued to be generated had there been no breach of contract, indemnification for damages based on such expected profits is proper. This is, however, subject to the rule that a party is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Other than the photographs evincing damage to the premises, no evidence was proffered to show Sos entitlement to unrealized profits. That the leased unit was not subsequently leased is not solely attributable to Food Fest. As borne by the records, no renovation was undertaken by So for almost three years following Food Fests vacation of the premises in 2001. The quotations issued by construction companies for purposes of renovation were issued only in 2004. However, So may seek damages pursuant to the contract. Respecting Sos claim for renovation expenses, the same must be denied absent proof as to the actual cost of
APRIL 2010 CASES

AGENCY; SALE OF LAND BY AN UNAUTHORIZED AGENT.
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respondents alleged sexual infidelity, emotional immaturity and irresponsibility do not constitute psychological incapacity within the contemplation of the Family Code and that the psychologist failed to identify and prove the root cause thereof or that the incapacity was medically or clinically permanent or incurable. In this case at bench, the Court finds no commission of a grave abuse of discretion in the rendition of the assailed CA decision dismissing petitioners complaint for declaration of nullity of marriage under Article 36 of the Family Code. A petition for declaration of nullity of marriage is anchored on Article 36 of the Family Code. Psychological incapacity required by Art. 36 must be characterized by (a) gravity, (b) juridical antecedence and (c) incurability. The incapacity must be grave or serious such that the party would be incapable of carrying out the ordinary duties required in marriage. It must be rooted in the history of the party antedating the marriage, although the overt manifestations may emerge only after the marriage. It must be incurable or, even if it were otherwise, the cure would be beyond the means of the party involved. The Court likewise laid down the guidelines in resolving petitions for declaration of nullity of marriage, based on Article 36 of the Family Code, in Republic v. Court of Appeals. Relevant to this petition are the following: (1) The burden of proof to show the nullity of the marriage belongs to the plaintiff; (2) the root cause of the psychological incapacity must be medically or clinically identified, alleged in the complaint, sufficiently proven by experts and clearly explained in the decision; (3) the incapacity must be proven to be existing at the time of the celebration of the marriage; (4) such incapacity must also be shown to be medically or clinically permanent or incurable; and (5) such illness must be grave enough to bring about the disability of the party to assume the essential obligations of marriage. Guided by these pronouncements, it is the Courts considered view that petitioners evidence failed to establish respondents psycholog ical incapacity. Petitioners testimony did not prove the root cause, gravity and incurability of private respondents condition. Even the psychologist failed to show the root cause of her psychological incapacity. The root cause of the psychological incapacity must be identified as a psychological illness, its incapacitating nature fully explained and established by the totality of the evidence presented during trial. More importantly, the acts of private respondent do not even rise to the level of the psychological incapacity that the law requires. Private respondents act of living an adulterous life (wife came home late and had lovers) did not come cannot automatically be equated with a psychological disorder, especially when no specific evidence was shown that promiscuity was a trait already existing at the inception of marriage. Petitioner must be able to establish that respondents unfaithfulness is a manifestation of a disordered personality, which makes her completely unable to discharge the essential obligations of the marital state. Doubtless, the private respondent was far from being a perfect wife and a good mother. She certainly had some character flaws. But these imperfections do not warrant a conclusion that she had a renovation. Only firm offers or quotations from construction companies are in the records. Following Article 2224 of the Civil Code, however, the appellate courts award of temperate damages is in order. This Court notes that the appellate court did not award liquidated damages in contravention of the contract. As for the appellate courts award of P20,000.00 as attorneys fees, the contractual stipulation should prevail. As for Food Fests invocation of the principle of rebus sic stantibus as enunciated in Article 1267 of the Civil Code to render the lease contract functus officio, and consequently release it from responsibility to pay rentals, the Court is not persuaded. Article 1267 provides: Article 1267. When the service has become so difficult as to be manifestly beyond the contemplation of the parties, the obligor may also be released therefrom, in whole or in part. This article, which enunciates the doctrine of unforeseen events, is not, however, an absolute application of the principle of rebus sic stantibus, which would endanger the security of contractual relations. The parties to the contract must be presumed to have assumed the risks of unfavorable developments. It is, therefore, only in absolutely exceptional changes of circumstances that equity demands assistance for the debtor. Food Fest claims that its failure to secure the necessary business permits and licenses rendered the impossibility and nonmaterialization of its purpose in entering into the contract of lease, in support of which it cites the earlier-quoted portion of the preliminary agreement dated July 1, 1999 of the parties. The cause or essential purpose in a contract of lease is the use or enjoyment of a thing. A partys motive or particular purpose in entering into a contract does not affect the validity or existence of the contract; an exception is when the realization of such motive or particular purpose has been made a condition upon which the contract is made to depend. The exception does not apply here. It is clear that the condition set forth in the preliminary agreement pertains to the initial application of Food Fest for the permits, licenses and authority to operate. It should not be construed to apply to Food Fests subsequent applications. Food Fest was able to secure the permits, licenses and authority to operate when the lease contract was executed. Its failure to renew these permits, licenses and authority for the succeeding year, does not, however, suffice to declare the lease functus officio, nor can it be construed as an unforeseen event to warrant the application of Article 1267. Contracts, once perfected, are binding between the contracting parties. Obligations arising therefrom have the force of law and should be complied with in good faith. Food Fest cannot renege from the obligations it has freely assumed when it signed the lease contract. Daniel T. So vs. Food Fest Land, Inc. / Food Fest Land, Inc. vs. Daniel T. So, G.R. Nos. 183628 & 183670, April 7, 2010. FAMILY RELATIONS; ANNULMENT OF MARRIAGE; PSYCHOLOGICAL INCAPACITY. This is a petition for certiorari under Rule 65, questioning a Court of Appeals decision that ruled that private
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no action is taken to set it aside, when any of its terms have been performed, an action to declare its inexistence is necessary to allow restitution of what has been given under it. This action, according to Article 1410 of the Civil Code does not prescribe. Here, the Rocas filed an action against the Fuentes spouses in 1997 for annulment of sale and reconveyance of the real property that Tarciano sold without their mothers (his wifes) written consent. The passage of time did not erode the right to bring such an action. Besides, even assuming that it is the Civil Code that applies to the transaction, Article 173 provides that the wife may bring an action for annulment of sale on the ground of lack of spousal consent during the marriage within 10 years from the transaction. Consequently, the action that the Rocas, her heirs, brought in 1997 fell within 10 years of the January 11, 1989 sale. It did not yet prescribe. The Fuentes spouses point out that it was to Rosario, whose consent was not obtained, that the law gave the right to bring an action to declare void her husbands sale of conjugal land. But here, Rosario died in 1990, the year after the sale. Does this mean that the right to have the sale declared void is forever lost? The answer is no. As stated above, that sale was void from the beginning. Consequently, the land remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership of the property to their heirs, namely, the Rocas. As lawful owners, the Rocas had the right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and disposal. In fairness to the Fuentes spouses, however, they should be entitled, among other things, to recover from Tarcianos heirs, the Rocas, the P200,000.00 that they paid him, with legal interest until fully paid, chargeable against his estate. Further, the Fuentes spouses appear to have acted in good faith in entering the land and building improvements on it. Atty. Plagata, whom the parties mutually entrusted with closing and documenting the transaction, represented that he got Rosarios signature on the affidavit of consent. The Fuentes spouses had no reason to believe that the lawyer had violated his commission and his oath. They had no way of knowing that Rosario did not come to Zamboanga to give her consent. There is no evidence that they had a premonition that the requirement of consent presented some difficulty. Indeed, they willingly made a 30 percent down payment on the selling price months earlier on the assurance that it was forthcoming. Further, the notarized document appears to have comforted the Fuentes spouses that everything was already in order when Tarciano executed a deed of absolute sale in their favor on January 11, 1989. In fact, they paid the balance due him. And, acting on the documents submitted to it, the Register of Deeds of Zamboanga City issued a new title in the names of the Fuentes spouses. It was only after all these had passed that the spouses entered the property and built on it. He is deemed a possessor in good faith, said Article 526 of the Civil Code, who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. As possessor in good faith, the Fuentes spouses were under no obligation to pay for their stay on the property prior to its legal interruption by a final judgment against psychological malady at the time of the marriage that rendered her incapable of fulfilling her marital and family duties and obligations. Silvino A. Ligeralde vs. May Ascension A. Patalinghug, et al., G.R. No. 168796, April 15, 2010. Family relations; applicable law Civil Code vs. Family Code. See Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010, below. FAMILY RELATIONS; PROPERTY. SALE OF CONJUGAL
The law that applies to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988. When Tarciano married Rosario, the Civil Code put in place the system of conjugal partnership of gains on their property relations. While its Article 165 made Tarciano the sole administrator of the conjugal partnership, Article 166 prohibited him from selling commonly owned real property without his wifes consent. Still, if he sold the same without his wifes consent, the sale is not void but merely voidable. Article 173 gave Rosario the right to have the sale annulled during the marriage within ten years from the date of the sale. Failing in that, she or her heirs may demand, after dissolution of the marriage, only the value of the property that Tarciano fraudulently sold. But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights. Thus: Art. 105. x x x The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n) Consequently, when Tarciano sold the conjugal lot to the Fuentes spouses on January 11, 1989, the law that governed the disposal of that lot was already the Family Code. In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which the wife who gave no consent may assail her husbands sale of the real property. It simply provides that without the other spouses written consent or a court order allowing the sale, the same would be void. Under the provisions of the Civil Code governing contracts, a void or inexistent contract has no force and effect from the very beginning. And this rule applies to contracts that are declared void by positive provision of law, as in the case of a sale of conjugal property without the other spouses written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or prescription. But, although a void contract has no legal effects even if
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Faustino and Josefina Garcia, et al. vs. Court of Appeals, et al., G.R. No. 172036, April 23, 2010. SUCCESSION; WAIVER OF INHERITANCE. The basic questions to be resolved in this case are: Is a waiver of hereditary rights in favor of another executed by a future heir while the parents are still living valid? Is an adverse claim annotated on the title of a property on the basis of such waiver likewise valid and effective as to bind the subsequent owners and hold them liable to the claimant? Pursuant to the second paragraph of Article 1347 of the Civil Code, no contract may be entered into upon a future inheritance except in cases expressly authorized by law. For the inheritance to be considered future, the succession must not have been opened at the time of the contract. A contract may be classified as a contract upon future inheritance, prohibited under the second paragraph of Article 1347, where the following requisites concur: (1) the succession has not yet been opened., (2) the object of the contract forms part of the inheritance; and (3) the promissor has, with respect to the object, an expectancy of a right which is purely hereditary in nature. In this case, there is no question that at the time of execution of Comandantes Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided), succession to either of her parents properties has not yet been opened since both of them are still living. With respect to the other two requisites, both are likewise present considering that the property subject matter of Comandantes waiver concededly forms part of the properties that she expect to inherit from her parents upon their death and, such expectancy of a right, as shown by the facts, is undoubtedly purely hereditary in nature. From the foregoing, it is clear that Comandante and petitioner entered into a contract involving the formers future inheritance as embodied in the Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by her in petitioners favor. Guided by the above discussions, the court declares in this case that the Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by Comandante in favor of petitioner as not valid and that same cannot be the source of any right or create any obligation between them for being violative of the second paragraph of Article 1347 of the Civil Code. Anent the validity and effectivity of petitioners adverse claim, it is provided in Section 70 of PD 1529, that it is necessary that the claimant has a right or interest in the registered land adverse to the registered owner and that it must arise subsequent to registration. Here, as no right or interest on the subject property flows from Comandantes invalid waiver of hereditary rights upon petitioner, the latter is thus not entitled to the registration of his adverse claim. Therefore, petitioners adverse claim is without any basis and must consequently be adjudged invalid and ineffective and perforce be cancelled. Atty. Pedro M. Ferrer vs. Spouses Alfredo Diaz, et al., G.R. No. 165300, April 23, 2010. them. What is more, they are entitled under Article 448 to indemnity for the improvements they introduced into the property with a right of retention until the reimbursement is made. The Rocas shall of course have the option, pursuant to Article 546 of the Civil Code, of indemnifying the Fuentes spouses for the costs of the improvements or paying the increase in value which the property may have acquired by reason of such improvements. Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010. Property; possession in good faith . See Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010 above. Sale; conjugal property. See Manuel O. Fuentes, et al. vs. Conrado G. Roca, et al., G.R. No. 178902, April 21, 2010. SALE; CONTRACT TO SELL LAND; PAYMENT OF PRICE; MACEDA LAW. Contracts are law between the parties, and they are bound by its stipulations. It is clear from the abovequoted provisions that the parties intended their agreement to be a Contract to Sell: Dela Cruz retains ownership of the subject lands and does not have the obligation to execute a Deed of Absolute Sale until petitioners payment of the full purcha se price. Payment of the price is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. Strictly speaking, there can be no rescission or resolution of an obligation that is still non-existent due to the non-happening of the suspensive condition. Dela Cruz is thus not obliged to execute a Deed of Absolute Sale in petitioners favor because of petitioners failure to make full payment on the stipulated date. The trial court erred in applying R.A. 6552, or the Maceda Law, to the present case. The Maceda Law applies to contracts of sale of real estate on installment payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants. The subject lands, comprising five parcels and aggregating 69,028 square meters, do not comprise residential real estate within the contemplation of the Maceda Law. Moreover, even if we apply the Maceda Law to the present case, petitioners offer of payment to Dela Cruz was made a year and a half after the stipulated date. This is beyond the sixty-day grace period under Section 4 of the Maceda Law. Petitioners still cannot use the second sentence of Section 4 of the Maceda Law against Dela Cruz for Dela Cruzs alleged failure to give an effective notice of cancellation or demand for rescission because Dela Cruz merely sent the notice to the address supplied by petitioners in the Contract to Sell. It is undeniable that petitioners failed to pay the balance of the purchase price on the stipulated date of the Contract to Sell. Thus, Dela Cruz is within her rights to sell the subject lands to Bartolome. Neither Dela Cruz nor Bartolome can be said to be in bad faith. Spouses
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an Affidavit of Consolidation of Ownership. Clearly, respondents have lost their opportunity to redeem the properties in question. National Housing Authority vs. Augusto Basa, Jr. Luz Basa and Eduardo S. Basa, G.R. No. 149121, April 20, 2010. PUBLIC LAND ACT; VIOLATION PROHIBITORY PERIOD. OF FIVE-YEAR
SPECIAL LAWS
FORECLOSED PROPERTY; RULES ON REDEMPTION PERIOD. See Spouses Basilio and Norma Hilaga vs. Rural Bank of Isulan, etc., G.R. No. 179781. April 7, 2010, below. PROPERTY REGISTRATION DECREE; EFFECT OF ANNOTATION OF SHERIFFS CERTIFICATE OF SALE IN REGISTRY ON REDEMPTION PERIOD. In the case under consideration, NHA presented the sheriffs certificate of sale to the Register of Deeds and the same was entered as Entry No. 2873 and said entry was further annotated in the owners transfer certificate of title. A year later and after the mortgagors did not redeem the said properties, respondents filed with the Register of Deeds an Affidavit of Consolidation of Ownership after which the same instrument was presumably entered into in the day book as the same was annotated in the owners duplicate copy. NHA followed the procedure in order to have its sheriffs certificate of sale annotated in the transfer certificates of title. It was not NHAs fault that the certificate of sale was not annotated on the transfer certificates of title which were supposed to be in the custody of the Registrar, since the same were burned. Neither could NHA be blamed for the fact that there were no reconstituted titles available during the time of inscription as it had taken the necessary steps in having the same reconstituted as early as July 15, 1988. NHA did everything within its power to assert its right. The current doctrine that entry in the primary book produces the effect of registration can be applied since the registrant therein complied with all that was required of it, hence, it was fairly reasonable that its acts be given the effect of registration, just as the Court did in past cases. To hold said entry ineffective, amounts to declaring that it did not, and does not, protect the registrant from claims arising, or transactions made, thereafter which are adverse to or in derogation of the rights created or conveyed by the transaction thus entered. That, surely, is a result that is neither just nor can, by any reasonable interpretation of Section 56 of Presidential Decree No. 1529 be asserted as warranted by its terms. Since entry of the certificate of sale was validly registered, the redemption period accruing to respondents commenced therefrom, since the one-year period of redemption is reckoned from the date of registration of the certificate of sale. It must be noted that on April 16, 1991, the sheriffs certificate of sale was registered and annotated only on the owners duplicate copies of the titles and on April 16, 1992, the redemption period expired, without respondents having redeemed the properties. In fact, on April 24, 1992, NHA executed
Petitioners executed a document called a Deed of Confirmation and Quitclaim in favor of a certain Vicente Lazo whereby petitioners agreed to sell, cede, convey, grant, and transfer by way of QUITCLAIM a parcel of land covered by an original certificate of title. The OCT had been issued pursuant to a homestead patent. Lazo then sold the property to the respondent. The latter later filed an action for ownership, quieting of title, partition and damages against petitioners, praying that he be declared as the true owner of the property. In answer, petitioners stated that they had not relinquished ownership or possession of the land to Lazo. While admitting that they executed the Deed of Confirmation and Quitclaim in favor of Lazo, petitioners claimed that they were misled into signing the same, with Lazo taking advantage of their lack of education.Without going into petitioners allegation that they were unaware of the contents of the Deed of Confirmation and Quitclaim, we nonetheless hold that the deed is void for violating the five-year prohibitory period against alienation of lands acquired through homestead patent as provided under Section 118 of the Public Land Act. It bears stressing that the law was enacted to give the homesteader or patentee every chance to preserve for himself and his family the land that the State had gratuitously given to him as a reward for his labor in cleaning and cultivating it. Its basic objective, as the Court had occasion to stress, is to promote public policy, that is to provide home and decent living for destitutes, aimed at providing a class of independent small landholders which is the bulwark of peace and order. Hence, any act which would have the effect of removing the property subject of the patent from the hands of a grantee will be struck down for being violative of the law. To repeat, the conveyance of a homestead before the expiration of the five-year prohibitory period following the issuance of the homestead patent is null and void and cannot be enforced, for it is not within the competence of any citizen to barter away what public policy by law seeks to preserve. There is, therefore, no doubt that the Deed of Confirmation and Quitclaim, which was executed three years after the homestead patent was issued, is void and cannot be enforced. Julio Flores, et al. vs. Marciano Bagaoisan, G.R. No. 173365, April 15, 2010. RURAL BANKS ACT; REDEMPTION OF MORTGAGED LANDS. Section 5 of Republic Act No. 720, as amended by Republic Act Nos. 2670 and 5939, specifically provides for the redemption period for lands foreclosed by rural banks. It provides in part as follows: Loans may be granted by rural banks on the security of lands without Torrens titles where the owner of private property can
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the respondent bank to believe that their only proof of ownership was the tax declaration. Thus, the two (2)year redemption period shall be reckoned from the date of the foreclosure. For the same reason, petitioners assertion that they will have five (5) years from the date of registration of the sale to redeem the foreclosed property under Section 119 of the Public Land Act has no merit, the reckoning period for the redemption period being properly from the date of sale. But even assuming arguendo that petitioners can avail of the five (5)-year redemption period provided under Section 119 of the Public Land Act, they still failed to exercise their right of redemption within the reglementary period provided by law. As mentioned earlier, Section 119 of said Act expressly provides that where the land involved is acquired as a homestead or under a free patent, if the mortgagor fails to exercise the right of redemption, he or his heirs may still repurchase the property within five (5) years from the expiration of the two (2)-year redemption period. The auction sale having been conducted on April 20, 1977, petitioners had until April 20, 1984 within which to redeem the mortgaged property. Since petitioner only filed the instant suit in 1999, their right to redeem had already lapsed. It took petitioners twenty-two (22) years before instituting an action for redemption. The considerable delay in asserting ones right before a court of justice is strongly persuasive of the lack of merit in petitioners claim, since it is human nature for a person to enforce his right when the same is threatened or invaded. Spouses Basilio and Norma Hilaga vs. Rural Bank of Isulan, etc., G.R. No. 179781. April 7, 2010. show five years or more of peaceful, continuous and uninterrupted possession in the concept of an owner; x x x or of homesteads or free patent lands pending the issuance of titles but already approved, the provisions of any law or regulations to the contrary notwithstanding: Provided, That when the corresponding titles are issued the same shall be delivered to the register of deeds of the province where such lands are situated for the annotation of the encumbrance: x x x Provided, That when a homestead or free patent land is foreclosed, the homesteader or free patent holder, as well as their heirs shall have the right to redeem the same within two years from the date of foreclosure in case of a land not covered by a Torrens title or two years from the date of the registration of the foreclosure in case of a land covered by a Torrens title x x x. In Sta. Ignacia Rural Bank, Inc. v. Court of Appeals, we summarized the rules on redemption in the case of an extrajudicial foreclosure of land acquired under our free patent or homestead statutes as follows. If the land is mortgaged to a rural bank under Republic Act No. 720, as amended, the mortgagor may redeem the property within two (2) years from the date of foreclosure or from the registration of the sheriffs certificate of sale at such foreclosure if the property is not covered or is covered, respectively, by a Torrens title. 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 two (2)-year redemption period pursuant to Section 119 of the Public Land Act (C.A. No. 141). If the land is mortgaged to parties other than rural banks, the mortgagor may redeem the property within one (1) year from the registration of the certificate of sale pursuant to Act No. 3135. If he fails to do so, he or his heirs may repurchase the property within five (5) years from the expiration of the redemption period also pursuant to Section 119 of the Public Land Act. In the present case, petitioners admit that when the property was mortgaged, only the tax declaration was presented. Although a free patent title was subsequently issued in their favor on August 4, 1976, petitioners failed to inform the creditor rural bank of such issuance. As a result, the certificate of sale was not registered or annotated on the free patent title. Petitioners are estopped from redeeming the property based on the free patent title which was not presented during the foreclosure sale nor delivered to the Register of Deeds for annotation of the certificate of sale as required under Section 5 of Republic Act No. 720, as amended. Estoppel in pais arises when one, by his acts, representations or admissions, or by his own silence when he ought to speak out, intentionally or through culpable negligence, induces another to believe certain facts to exist and such other rightfully relies and acts on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such facts. Petitioners cannot fault respondent for the nonregistration of the certificate of sale because petitioners did not inform the respondent bank that a Torrens title had already been acquired by them on August 4, 1976. By their silence and inaction, petitioners misled
OCTOBER 2010 CASES

Agency. The sale of the DMCI shares made by EIB is null and void for lack of authority to do so, for petitioners never gave their consent or permission to the sale. Moreover, Article 1881 of the Civil Code provides that the agent must act within the scope of his authority. Pursuant to the authority given by the principal, the agent is granted the right to affect the legal relations of his principal by the performance of acts effectuated in accordance with the principals manifestation of consent. In the case at bar, the scope of authority of EIB as agent of petitioners is to retain, apply, sell or dispose of all or any of the clients [petitioners] property, if all or any indebtedness or other obligations of petitioners to EIB are not discharged in full by petitioners when due or on demand in or towards the payment and discharge of such obligation or liability. The right to sell or dispose of the properties of petitioners by EIB is unequivocally confined to payment of the obligations and liabilities of petitioners to EIB and none other. Thus, when EIB sold the DMCI shares to buy back the KKP shares, it paid the proceeds to the vendees of
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and 1283 of the Civil Code. In short, both parties are creditors and debtors of each other, although in different amounts that are already due and demandable. Spouses Victoriano chung and Debbie Chung vs. Ulanday Construction, Inc.;G.R. No. 156038, October 11, 2010. Agency; agency by estoppel. Attorneys fees. It is settled that the award of attorneys fees is the exception rather than the general rule; counsels fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. Attorneys fees, as part of damages, are not necessarily equated to the amount paid by a litigant to a lawyer. In the ordinary sense, attorneys fees represent the reasonable compensation paid to a lawyer by his client for the legal services he has rendered to the latter; while in its extraordinary concept, they may be awarded by the court as indemnity for damages to be paid by the losing party to the prevailing party. Attorneys fees as part of damages are awarded only in the instances specified in Article 2208 of the Civil Code. As such, it is necessary for the court to make findings of fact and law that would bring the case within the ambit of these enumerated instances to justify the grant of such award, and in all cases it must be reasonable. Filomena R. Benedicto vs. Antonio Villaflores; G.R. No. 185020. October 6, 2010. Attorneys fees. We have stressed that the award of attorneys fees i s the exception rather than the rule, as they are not always awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate. Attorneys fees as part of damages is awarded only in the instances specified in Article 2208 of the Civil Code. Financial Building Corporation vs. Rudlin International Corporation, et al./Rudlin International Corporation, et al. vs. Financial Building Corporation; G.R. No. 164186/G.R. No. 164347. October 4, 2010. Attorneys fees. An award of attorneys fees is the exception rather than the rule. The right to litigate is so precious that a penalty should not be charged on those who may exercise it erroneously. It is not given merely because the defendant prevails and the action is later declared to be unfounded unless there was a deliberate intent to cause prejudice to the other party. Spouses Ramy and Zenaida Pudadera vs. Ireneo Magallanes and the late Daisy Teresa cortel Magallanes, substituted by her children, Nelly M. Marquez, et al.;G.R. No. 170073, October 18, 2010. Compensation; partial set-off. Under the circumstances, fairness and reason dictate that we simply order the set-off of the petitioners contractual liabilities totaling P575,922.13 against the repair cost for the defective gutter, pegged at P717,524.00, leaving the amount ofP141,601.87 still due from the respondent. Support in law for this ruling for partial legal compensation proceeds from Articles 1278, 1279, 1281, The doctrine of estoppel is based upon the grounds of public policy, fair dealing, good faith and justice, and its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one to whom they were directed and who reasonably relied thereon. The doctrine of estoppel springs from equitable principles and the equities in the case. It is designed to aid the law in the administration of justice where without its aid injustice might result. It has been applied by this Court wherever and whenever special circumstances of a case so demand. Based on the events and circumstances surrounding the issuance of the assailed orders, this Court rules that MEGAN is barred from assailing both the authority of Atty. Sabig and the jurisdiction of the RTC. While it is true, as claimed by MEGAN, that Atty. Sabig said in court that he was only appearing for the hearing of Passi Sugars motion for intervention and not for the case itself, his subsequent acts, coupled with MEGANs inaction and negligence to repudiate his authority, effectively bars MEGAN from assailing the validity of the RTC proceedings under the principle of estoppel. Megan Sugar Corporation v. Regional Trial Court of Iloilo, Br. 68, Dumangas, Iloilo; New Frontier Sugar Corp., et al., G.R. No. 170352. June 1, 2011 Agency; doctrine of apparent authority . The Court finds that the signature of Abcede is sufficient to bind PRHC. As its construction manager, his very act of signing a letter embodying the P 36 million escalation agreements produced legal effect, even if there was a blank space for a higher officer of PHRC to indicate approval thereof. At the very least, he indicated authority to make such representation on behalf of PRHC. On direct examination, Abcede admitted that, as the construction manager, he represented PRHC in running its affairs with regard to the execution of the aforesaid projects. Abcede had signed, on behalf of PRHC, other documents that were almost identical to the questioned letter-agreement. PRHC does not question the validity of these agreements; it thereby effectively admits that this individual had actual authority to sign on its behalf with respect to these construction projects. Philippine Realty and Holding Corp. vs. Ley Const. and Dev. Corp./Ley Cons. and Dev. Corp. vs. Philippine Realty and Holding Corp., G.R. No. 165548/G.R. No. 167879. June 13, 2011 Agency; doctrine of apparent authority . The doctrine of apparent authority in respect of government contracts, has been restated to mean that the government is NOT bound by unauthorized acts of its agents, even though within the apparent scope of their authority. Under the law on agency, however, apparent authority is defined as the power to affect the legal relations of another person by transactions with third said shares, the act of which is clearly an obligation to a third party and, hence, is beyond the ambit of its authority as agent. Such act is surely illegal and does not bind petitioners as principals of EIB. Pacific Rehouse Corporation, et al. vs. EIB Securities, Inc.;G.R. No. 184036, October 13, 2010.
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vs. The Court of Appeals, et al./Natividad (substituted by her children Marcelino Agana III, Enrique Agana, Jr. Emma Agana-Andaya, Jesus Agana and Raymund Agana and Errique Agana) vs. The Court of Appeals and Juan Fuentes Miguel Ampil vs. Natividad and Enrique Agana, G.R. Nos. 126297/G.R. No. 126467/G.R. No. 127590, February 2, 2010. Several cases decided by the Supreme Court indicate that the agent should be very careful in the manner he or she signs a mortgage contract on behalf of the principal; otherwise, the mortgage may be binding upon the agent only. In Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010, the principal executed a special power of attorney in favor of her daughter authorizing her to contract a loan from a bank and to mortgage the principals two lots. The principal also executed an affidavit of non-tenancy for the approval of the loan. The bank granted a loan secured by two promissory notes and a real estate mortgage over the principals two lots. The mortgage document was signed by the agent and her husband as mortgagors in their individual capacities, without stating that the agent was executing the mortgage contract for and in behalf of the principal. The bank foreclosed the mortgage due to non-payment of the loan. A notice of public auction sale was sent to principal. The latters lawyer responded with a letter to the bank requesting that the public auction be postponed. The letter went unheeded and the public auction was held as scheduled wherein the mortgaged properties were sold to the bank. Subsequently, the bank consolidated its title and obtained new titles in its name after the redemption period lapsed without the principal taking any action. Around five years later, the principal filed a complaint for annulment of mortgage and extrajudicial foreclosure of the properties with damages with the regional trial court (RTC) of Naga City. The principal sought nullification of the real estate mortgage and extrajudicial foreclosure sale, as well as the cancellation of the banks title over the properties. The RTC rendered judgment in favor of the principal, holding that the principal cannot be bound by the real estate mortgage executed by the agent unless it is shown that the same was made and signed in the name of the principal; hence, the mortgage will bind the agent only. The Court of Appeals (CA) affirmed the RTCs ruling. It held that it must be shown that the real estate mortgage was executed by the agent on behalf of the principal, otherwise the agent may be deemed to have acted on his own and the mortgage is void. However, the CA further declared that the principal loan agreement was not affected, which had become an unsecured credit. Agency; principle of undisclosed principal. It is a general rule in the law of agency that, in order to bind the principal by a mortgage on real property persons arising from the others manifestations to such third person such that the liability of the principal for the acts and contracts of his agent extends to those which are within the apparent scope of the authority conferred on him, although no actual authority to do such acts or to make such contracts has been conferred. Apparent authority, or what is sometimes referred to as the holding out theory, or doctrine of ostensible agency, imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. The existence of apparent authority may be ascertained through (1) the general manner in which the corporation holds out an officer or agent as having the power to act or, in other words, the apparent authority to act in general, with which it clothes him; or (2) the acquiescence in his acts of a particular nature, with actual or constructive knowledge thereof, whether within or beyond the scope of his ordinary powers. It requires presentation of evidence of similar act(s) executed either in its favor or in favor of other parties. Easily discernible from the foregoing is that apparent authority is determined only by the acts of the principal and not by the acts of the agent. The principal is, therefore, not responsible where the agents own conduct and statements have created the apparent authority. In this case, not a single act of respondent, acting through its Board of Directors, was cited as having clothed its general manager with apparent authority to execute the contract with it.Sargasso Construction & Development Corporation / Pick & Shovel, Inc./Atlantic Erectors, Inc./ Joint Venture vs. Philippine Ports Authority, G.R. No. 170530, July 5, 2010. Agency; principle of apparent authority. There is ample evidence that the hospital held out to the patient that the doctor was its agent. The two factors that determined apparent authority in this case were: first, the hospitals implied manifestation to the patient which led the latter to conclude that the doctor was the hospitals agent; and second, the patients reliance upon the conduct of the hospital and the doctor, consistent with ordinary care and prudence. It is of record that the hospital required a consent for hospital care to be signed preparatory to the surgery of the patient. The form reads: Permission is hereby given to the medical, nursing and laboratory staff of the Medical City General Hospital to perform such diagnostic procedures and to administer such medications and treatments as may be deemed necessary or advisable by the physicians of this hospital for and during the confinement of xxx. By such statement, the hospital virtually reinforced the public impression that the doctor was a physician of its hospital, rather than one independently practicing in it; that the medications and treatments he prescribed were necessary and desirable; and that the hospital staff was prepared to carry them out. Professional Services, Inc.
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executed by an agent, it must upon its face purport to be made, signed and sealed in the name of the principal, otherwise, it will bind the agent only. It is not enough merely that the agent was in fact authorized to make the mortgage, if he has not acted in the name of the principal. Neither is it ordinarily sufficient that in the mortgage the agent describes himself as acting by virtue of a power of attorney, if in fact the agent has acted in his own name and has set his own hand and seal to the mortgage. This is especially true where the agent himself is a party to the instrument. However clearly the body of the mortgage may show and intend that it shall be the act of the principal, yet, unless in fact it is executed by the agent for and on behalf of his principal and as the act and deed of the principal, it is not valid as to the principal. Far East Bank and Trust Company (Now Bank of the Philippine Islands) and Rolando Borja, Deputy Sherrif vs. Sps. Ernesto and Leonor C. Cayetano, G.R. No. 179909, January 25, 2010.
LAND REGISTRATION. The Property Registration Decree (P.D. No. 1529) provides for original registration of land in an ordinary registration proceeding. Under Section 14(1)thereof, a petition may be granted upon compliance with the following requisites: (a) that the property in question is alienable and disposable land of the public domain; (b) that the applicants by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession and occupation; and (c) that such possession is under a bona fide claim of ownership since June 12, 1945 or earlier. Under the Regalian doctrine which is embodied in Section 2, Article XII of the 1987 Constitution, 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. To overcome this presumption, incontrovertible evidence must be established that the land subject of the application is alienable or disposable. To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order; an administrative action; investigation reports of Bureau of Lands investigators; and a legislative act or a statute.The applicant may also secure a certification from the Government that the lands applied for are alienable and disposable We have held that a person who seeks the registration of title to a piece of land on the basis of possession by himself and his predecessors-in-interest must prove his claim by clear and convincing evidence, i.e., he must prove his title and should not rely on the absence or weakness of the evidence of the oppositors.23 Furthermore, the court has the bounden duty, even in the absence of any opposition, to require the petitioner to show, by a preponderance of evidence and by positive and absolute proof, so far as possible, that he is the owner in fee simple of the lands which he is attempting to register.24 Since petitioner failed to meet the quantum of proof required by law, the CA was correct in reversing the trial court and dismissing his application for judicial confirmation of title. Ramon Aranda, vs. Republic of the Philippines, G.R. No. 172331, August 24, 2011. LEASEHOLD. An agricultural leasehold relationship is said to exist upon the concurrence of the following essential requisites: (1) the parties are the landowner and the tenant or agricultural lessee; (2) the subject matter of the relationship is agricultural land; (3) there is consent between the parties to the relationship; (4) the purpose of the relationship is to bring about agricultural production; (5) there is personal cultivation on the part of the tenant or agricultural lessee; and (6) the harvest is shared between the landowner and the tenant or agricultural lessee.21 Once the tenancy relationship is established, the tenant is entitled to security of tenure
APRIL 2011 CASES

SALE. The requirement that a sale must have for its object a determinate thing is satisfied as long as at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties. Carabeo vs Dingco, G.R. No. 190823, April 4, 2011.
JUNE 2011 CASES

SALE. Buyers failure to pay in full the purchase price is not the breach of contract contemplated under Art 1191 of the New Civil Code but rather just an event that prevents the seller from being bound to convey title to the buyer. Reyes vs Tuparan, G.R. No. 188064, 1 June 1, 2011. SALE. The unpaid sellers remedy in a sale of real property is either an action to collect the balance or to rescind the contract within the time allowed by law, and where rescission is no longer an option, considering that the buyers have been in possession of the properties for a considerable period of time, substantial justice dictates that the seller be entitled to receive the unpaid balance of the purchase price, plus legal interest thereon. Mahusay vs B.E. San Diego Inc, G.R. No. 179675, June 8, 2011.
AUGUST 2011 CASES

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(7) The lessee employed a sub-lessee on his landholding in violation of the terms of paragraph 2 of Section twenty-seven. The rule is settled that failure to pay the lease rentals must be willful and deliberate in order to be considered as ground for dispossession of an agricultural tenant.25 While the "term deliberate is characterized by or results from slow, careful, thorough calculation and consideration of effects and consequences," the term "willful" has been "defined as one governed by will without yielding to reason or without regard to reason." Fealty to the fact that "R.A. No. 3844 does not operate to take away completely every landowners rights to his land" or "authorize the agricultural lessee to act in an abusive or excessive manner in derogation of the landowners rights"impels us to uphold Antonios dispossession as ordered by the PARAD, the DARAB and the CA. "Although the agrarian laws afford the opportunity for the landless to break away from the vicious cycle of having to perpetually rely on the kindness of others, a becoming modesty demands that this kindness should at least be reciprocated, in whatever small way, by those benefited by them." Rene Antonio, vs. Gregorio Manahan, G.R. No. 176091, August 24, 2011. PARTY AUTONOMY. The principle of party autonomy in contracts is not an absolute principle. The rule in Article 1306 of our Civil Code is that the contracting parties may establish such stipulations as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. Thus, counter-balancing the principle of autonomy of contracting parties is the equally general rule that provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into the contract. Put a little differently, the governing principle is that parties may not contract away applicable provisions of law, especially peremptory provisions dealing with matters heavily impressed with public interest. Power Sector Assets and Liabilities Management Corporation, vs. Pozzolanic Philippines Incorporated, G.R. No. 183789, August 24, 2011. APPOINTMENT TRUSTS. OF SPECIAL ADMINISTRATOR; and cannot be ejected by the landlord unless ordered by the court for causes provided by law.22 In recognition and protection of the tenants right to security o f tenure, the burden of proof is upon the agricultural lessor to show the existence of the lawful causes for ejectment23 or dispossession under Section 36 of Republic Act No. 3844 which provides as follows: Section 36. Possession of Landholding; Exceptions . Notwithstanding any agreement as to the period or future surrender, of the land, an agricultural lessee shall continue in the enjoyment and possession of his landholding except when his dispossession has been authorized by the Court in a judgment that is final and executory if after due hearing it is shown that: (1) The agricultural lessor-owner or a member of his immediate family will personally cultivate the landholding or will convert the landholding, if suitably located, into residential, factory, hospital or school site or other useful nonagricultural purposes: Provided; That the agricultural lessee shall be entitled to disturbance compensation equivalent to five years rental on his landholding in addition to his rights under Sections twenty-five and thirtyfour, except when the land owned and leased by the agricultural lessor, is not more than five hectares, in which case instead of disturbance compensation the lessee may be entitled to an advanced notice of at least one agricultural year before ejectment proceedings are filed against him: Provided, further, That should the landholder not cultivate the land himself for three years or fail to substantially carry out such conversion within one year after the dispossession of the tenant, it shall be presumed that he acted in bad faith and the tenant shall have the right to demand possession of the land and recover damages for any loss incurred by him because of said dispossessions. HSD (2) The agricultural lessee failed to substantially comply with any of the terms and conditions of the contract or any of the provisions of this Code unless his failure is caused by fortuitous event or force majeure; (3) The agricultural lessee planted crops or used the landholding for a purpose other than what had been previously agreed upon; (4) The agricultural lessee failed to adopt proven farm practices as determined under paragraph 3 of Section twenty-nine; (5) The land or other substantial permanent improvement thereon is substantially damaged or destroyed or has unreasonably deteriorated through the fault or negligence of the agricultural lessee; (6) The agricultural lessee does not pay the lease rental when it falls due: Provided, That if the non-payment of the rental shall be due to crop failure to the extent of seventy-five per centum as a result of a fortuitous event, the non-payment shall not be a ground for dispossession, although the obligation to pay the rental due that particular crop is not thereby extinguished; or
The fact that Diosdado is an heir to the estate of Florentino Manungas does not mean that he is entitled or even qualified to become the special administrator of the Estate of Manungas. Jurisprudence teaches us that the appointment of a special administrator lies within the discretion of the court. In Heirs of Belinda Dahlia A. Castillo v. LacuataGabriel,24 it was stated that: It is well settled that the statutory provisions as to prior or preferred right of certain persons to appointment of administrator under Section 1, Rule as well as the statutory provisions as to causes the the 81, for
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trusts ex maleficio, trusts ex delicto and trusts de son tort, they are construed against one who by actual or constructive fraud, duress, abuse of confidence, commission of a wrong or any form of unconscionable conduct, artifice, concealment of questionable means, or who in any way against equity and good conscience has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.36 They are aptly characterized as "fraud-rectifying trust,"37 imposed by equity to satisfy the demands of justice38 and to defeat or prevent the wrongful act of one of the parties.39Constructive trusts are illustrated in Articles 1450, 1454, 1455 and 1456. On the other hand, resulting trusts arise from the nature or circumstances of the consideration involved in a transaction whereby one person becomes invested with legal title but is obligated in equity to hold his title for the benefit of another. This is based on the equitable doctrine that valuable consideration and not legal title is determinative of equitable title or interest and is always presumed to have been contemplated by the parties.41Such intent is presumed as it is not expressed in the instrument or deed of conveyance and is to be found in the nature of their transaction.42 Implied trusts of this nature are hence describable as "intentionenforcing trusts."43Specific examples of resulting trusts may be found in the Civil Code, particularly Articles 1448, 1449, 1451, 1452 and 1453. First, fundamental is 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, in which case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith and for value.64 Since the properties in question are unregistered lands, respondents purchased the same at their own peril. Their claim of having bought the properties in good faith, i.e., without notice that there is some other person with a right to or interest therein, would not protect them should it turn out, as it in fact did in this case, that their seller, Roberto, had no right to sell them. Second, the invocation of the rules on limitation of actions relative to a resulting trust is not on point because the resulting trust relation between Margarita and Roberto had been extinguished by the latters death. A trust, it is said, terminates upon the death of the trustee, particularly where the trust is personal to him.65 Besides, prescription and laches, in respect of this resulting trust relation, hardly can impair petitioners cause of action. On the one hand, in accordance with Article 114466 of the Civil Code, an action for reconveyance to enforce an implied trust in ones favor prescribes in ten (10) years from the time the right of action accrues, as it is based upon an obligation created by law.67 It sets in from the time the trustee performs unequivocal acts of repudiation amounting to an ouster of the cestui que trust which are made known to the latter.68 In this case, it was the 1992 sale of the properties to respondents that comprised the act of repudiation which, however, was made known to removal of an executor or administrator under section 653 of Act No. 190, now Section 2, Rule 83, do not apply to the selection or removal of special administrator. x x x As the law does not say who shall be appointed as special administrator and the qualifications the appointee must have, the judge or court has discretion in the selection of the person to be appointed, discretion which must be sound, that is, not whimsical or contrary to reason, justice or equity. (Emphasis supplied; citation omitted.) While the RTC considered that respondents were the nearest of kin to their deceased parents in their appointment as joint special administrators, this is not a mandatory requirement for the appointment. It has long been settled that the selection or removal of special administrators is not governed by the rules regarding the selection or removal of regular administrators. The probate court may appoint or remove special administrators based on grounds other than those enumerated in the Rules at its discretion, such that the need to first pass upon and resolve the issues of fitness or unfitness and the application of the order of preference under Section 6 of Rule 78, as would be proper in the case of a regular administrator, do not obtain. As long as the discretion is exercised without grave abuse, and is based on reason, equity, justice, and legal principles, interference by higher courts is unwarranted.25 (Emphasis supplied.) While the trial court has the discretion to appoint anyone as a special administrator of the estate, such discretion must be exercised with reason, guided by the directives of equity, justice and legal principles. It may, therefore, not be remiss to reiterate that the role of a special administrator is to preserve the estate until a regular administrator is appointed A trust is the legal relationship between one person having an equitable ownership of property and another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter.30 Trusts are either express or implied.31 Express or direct trusts are created by the direct and positive acts of the parties, by some writing or deed, or will, or by oral declaration in words evincing an intention to create a trust.32 Implied trusts also called "trusts by operation of law," "indirect trusts" and "involuntary trusts" arise by legal implication based on the presumed intention of the parties or on equitable principles independent of the particular intention of the parties.33They are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or, independently of the particular intention of the parties, as being inferred from the transaction by operation of law basically by reason of equity. Implied trusts are further classified into constructive trusts and resulting trusts. Constructive trusts, on the one hand, come about in the main by operation of law and not by agreement or intention. They arise not by any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the demands of justice.35 Also known as
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withholding of the object to which the ownership pertains, whether such object of the ownership is found in the hands of an original owner or a transferee, or in a different form, as long as it can be identified.75 Accordingly, the person to whom is made a transfer of trust property constituting a wrongful conversion of the trust property and a breach of the trust, when not protected as a bona fide purchaser for value, is himself liable and accountable as a constructive trustee. The liability attaches at the moment of the transfer of trust property and continues until there is full restoration to the beneficiary. Thus, the transferee is charged with, and can be held to the performance of the trust, equally with the original trustee, and he can be compelled to execute a reconveyance. When property is registered in another's name, an implied or constructive trust is created by law in favor of the true owner. The action for reconveyance of the title to the rightful owner prescribes in 10 years from the issuance of the title. An action for reconveyance based on implied or constructive trust prescribes in ten years from the alleged fraudulent registration or date of issuance of the certificate of title over the property. It is now well settled that the prescriptive period to recover property obtained by fraud or mistake, giving rise to an implied trust under Art. 1456 of the Civil Code, is 10 years pursuant to Art. 1144. This ten-year prescriptive period begins to run from the date the adverse party repudiates the implied trust, which repudiation takes place when the adverse party registers the land. Estate of Margarita D. Cabacungan, represented by Luz Laigo-Ali, vs. Marilou Laigo, Pedro Roy Laigo, Stella Balagot and Spouses Mario B. Campos and Julia S. Campos, G.R. No. 175073, August 15, 2011. SURETY. A contract of suretyship is an agreement whereby a party called the surety, guarantees the performance by another party, called the principal or obligor, of an obligation or undertaking in favor of another party called the obligee. By its very nature, under the laws regulating suretyship, the liability of the surety is joint and several but is limited to the amount of the bond, and its terms are determined strictly by the terms of the contract of suretyship in relation to the principal contract between the obligor and the obligee. The surety is considered in law as possessed of the identity of the debtor in relation to whatever is adjudged touching upon the obligation of the latter. Their liabilities are so interwoven as to be inseparable. Although the contract of suretyship is, in essence, secondary only to a valid principal obligation, the suretys liability to the creditor is direct, primary, and absolute; he becomes liable for the debt and duty of another although he possesses no direct or personal interest over the obligations nor does he receive any benefit therefrom. American Home Insurance Co. of New York, vs. F.F. Cruz & Co., Inc., G.R. No. 174926, August 10, 2011. PARTITION. Margarita only in 1995 but nevertheless impelled her to institute the action in 1996 still well within the prescriptive period. Hardly can be considered as act of repudiation Robertos open court declaration which he made in the 1979 adoption proceedings involving respondents to the effect that he owned the subject properties,69 nor even the fact that he in 1977 had entered into a lease contract on one of the disputed properties which contract had been subject of a 1996 decision of the Court of Appeals.70 These do not suffice to constitute unequivocal acts in repudiation of the trust. Diosdado S. Manungas, vs. Margarita Avila Loreto and Lorencia Avila Parreo, G.R. No. 193161, August 22, 2011. TRUST. On the other hand, laches, being rooted in equity, is not always to be applied strictly in a way that would obliterate an otherwise valid claim especially between blood relatives. The existence of a confidential relationship based upon consanguinity is an important circumstance for consideration; hence, the doctrine is not to be applied mechanically as between near relatives.71 Adaza v. Court of Appeals72 held that the relationship between the parties therein, who were siblings, was sufficient to explain and excuse what would otherwise have been a long delay in enforcing the claim and the delay in such situation should not be as strictly construed as where the parties are complete strangers vis-a-vis each other; thus, reliance by one party upon his blood relationship with the other and the trust and confidence normally connoted in our culture by that relationship should not be taken against him. Too, Sotto v. Teves73 ruled that the doctrine of laches is not strictly applied between near relatives, and the fact that the parties are connected by ties of blood or marriage tends to excuse an otherwise unreasonable delay. Third, there is a fundamental principle in agency that where certain property entrusted to an agent and impressed by law with a trust in favor of the principal is wrongfully diverted, such trust follows the property in the hands of a third person and the principal is ordinarily entitled to pursue and recover it so long as the property can be traced and identified, and no superior equities have intervened. This principle is actually one of trusts, since the wrongful conversion gives rise to a constructive trust which pursues the property, its product or proceeds, and permits the beneficiary to recover the property or obtain damages for the wrongful conversion of the property. Aptly called the "trust pursuit rule," it applies when a constructive or resulting trust has once affixed itself to property in a certain state or form. Hence, a trust will follow the property through all changes in its state and form as long as such property, its products or its proceeds, are capable of identification, even into the hands of a transferee other than a bona fidepurchaser for value, or restitution will be enforced at the election of the beneficiary through recourse against the trustee or the transferee personally. This is grounded on the principle in property law that ownership continues and can be asserted by the true owner against any
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when the plaintiff or the person enforcing the trust is not in possession of the property. Philippine National Bank, vs. Ciriaco Jumamoy and Heirs of Antonio Go Pace, represented by Rosalia Pace, G.R. No. 169901, August 3, 2011 The original complaint filed by Lun involves an action for partition and damages. A division of property cannot be ordered by the court unless the existence of coownership is first established. In Ocampo v. Ocampo,10 we held that an action for partition will not lie if the claimant has no rightful interest over the property. Basic is the rule that the party making an allegation in a civil case has the burden of proving it by a preponderance of evidence. Co Giok Lun, as substituted by his legal heirs namely: Magdalena D. Co, Milagros D. Co, Benjamin D. Co, Albert D. Co, Angelita C. Teng, Virginia C. Ramos, Charlie D. Co, and Elizabeth C . Paguio, vs. Jose Co, as substituted by his legal heirs namely: Rosalina Co, Marlon Co, Joseph Co, Frank Co, Antonio Co, Nelson Co, Roland Co, Johnson Co, Corazon Co, Adela Co, Sergio Co, Paquito Co, John Co, Nancy Co, and Teresita Co, G.R. No. 184454, August 3, 2011. INNOCENT PURCHASER FOR VALUE. Our land registration statute extends its protection to an innocent purchaser for value, defined as "one who buys the property of another, without notice that some other person has a right or interest in such property and pays the full price for the same, at the time of such purchase or before he has notice of the claims or interest of some other person in the property."25 An "innocent purchaser for value" includes an innocent lessee, mortgagee, or other encumbrancer for value. A banking institution is expected to exercise due diligence before entering into a mortgage contract. The ascertainment of the status or condition of a property offered to it as security for a loan must be a standard and indispensable part of its operations the incontrovertibility of a title does not preclude a rightful claimant to a property from seeking other remedies because it was never the intention of the Torrens system to perpetuate fraud. The mere possession of a certificate of title under the Torrens system does not necessarily make the possessor a true owner of all the property described therein for he does not by virtue of said certificate alone become the owner of the land illegally included. It is evident from the records that the petitioner owns the portion in question and therefore the area should be conveyed to her. The remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages. (Emphasis supplied.) "If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes."30 An action for reconveyance based on implied trust prescribes in 10 years as it is an obligation created by law,31 to be counted from the date of issuance of the Torrens title over the property.32 This rule, however, applies only
SEPTEMBER 2011 CASES

LACHES. Section 47 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, states that "[n]o title to registered land in derogation of the title of the registered owner shall be acquired by prescription or adverse possession." Thus, the Court has held that the right to recover possession of registered land is imprescriptible because possession is a mere consequence of ownership. Thus, in Heirs of Batiog Lacamen v. Heirs of Laruan,36 the Court had held that while a person may not acquire title to the registered property through continuous adverse possession, in derogation of the title of the original registered owner, the heir of the latter, however, may lose his right to recover back the possession of such property and the title thereto, by reason of laches. Laches means the failure or neglect for an unreasonable and unexplained length of time to do that which, by observance of due diligence, could or should have been done earlier. It is negligence or omission to assert a right within a reasonable time, warranting the presumption that the party entitled to assert his right either has abandoned or declined to assert it. Laches thus operates as a bar in equity.38 The essential elements of laches are: (a) conduct on the part of the defendant, or of one under whom he claims, giving rise to the situation complained of; (b) delay in asserting complainants rights after he had knowledge of defendants acts and afte r he has had the opportunity to sue; (c) lack of knowledge or notice by defendant that the complainant will assert the right on which he bases his suit; and (d) injury or prejudice to the defendant in the event the relief is accorded to the complainant a dried-up creek bed is property of public dominion: A creek, like the Salunayan Creek, is a recess or arm extending from a river and participating in the ebb and flow of the sea. As such, under Articles 420(1) and 502(1) of the Civil Code, the Salunayan Creek, including its natural bed, is property of the public domain which is not susceptible to private appropriation and acquisitive prescription. And, absent any declaration by the government, that a portion of the creek has dried-up does not, by itself, alter its inalienable character. Jose Fernando, Jr., Zoilo Fernando, Norma Fernando Banares, Rosario Fernando Tangkencgo, Heirs of Tomas Fer$nando, represented by Alfredo V. Fernando, Heirs of Guillermo Fernando, represented by
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was not the act of a temporary possessor or a mere mortgagee. This certainly looked like an act of ownership. Yet, given this unseemly situation, none of the co-heirs saw fit to object or at least inquire, to ascertain the facts, which were readily available. It took all of thirteen years before one of them chose to claim the right of redemption, but then it was already too late Justice Edgardo Paras, referring to the origins of the requirement, would explain in his commentaries on the New Civil Code that despite actual knowledge, the person having the right to redeem is STILL entitled to the written notice. Both the letter and the spirit of the New Civil Code argue against any attempt to widen the scope of the "written notice" by including therein any other kind of notice such as an oral one, or by registration. If the intent of the law has been to include verbal notice or any other means of information as sufficient to give the effect of this notice, there would have been no necessity or reason to specify in the article that said notice be in writing, for under the old law, a verbal notice or mere information was already deemed sufficient. Armando Barcellano, vs. Dolores Baas, represented by her son and attorney-in-fact Crispino Bermillo, G.R. No. 165287, September 14, 2011. SALE. The general principle is that a seller without title cannot transfer a better title than he has.32 Only the owner of the goods or one authorized by the owner to sell can transfer title to the buyer. Therefore, a person can sell only what he owns or is authorized to sell and the buyer can, as a consequence, acquire no more than what the seller can legally transfer. Moreover, the owner of the goods who has been unlawfully deprived of it may recover it even from a purchaser in good faith. Thus, the purchaser of property which has been stolen from the owner has been held to acquire no title to it even though he purchased for value and in good faith. The exception from the general principle is the doctrine of estoppel where the owner of the goods is precluded from denying the sellers authority to sell. But in order that there may be estoppel, the owner must, by word or conduct, have caused or allowed it to appear that title or authority to sell is with the seller and the buyer must have been misled to his damage. Antonio Francisco, substituted by his heirs: Nelia E.S. Francisco, Emilia F. Bertiz, Rebecca E.S. Francisco, Antonio E.S. Francisco, Jr., Socorro F. Fontanilla, and Jovito E.S. Francisco, vs. Chemical Bulk Carriers, Incorporated, G.R. No. 193577, September 7, 2011. DISSOLUTION OF CONJUGAL PARTNERSHIP. It is clear that conjugal partnership of gains established before and after the effectivity of the Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property Relations Between Husband And Wife) of the Family Code. Hence, any disposition of the conjugal property after the dissolution of the conjugal partnership must be made Ronnie H. Fernando, Heirs of Iluminada Fernando, represented by Benjamin Estrella and Heirs of Germogena Fernando, vs. Leon Acuna, Hermogenes Fernando, Heirs of Spouses Antonio Fernando and Felisa Camacho, represented by Hermogenes Fernando, G.R. No. 161030, September 14, 2011. CONTRACT OF SALE. A contract of sale is perfected the moment the parties agree upon the object of the sale, the price, and the terms of payment.60 Once perfected, the parties are bound by it whether the contract is verbal or in writing because no form is required.61 Contrary to the view of petitioner, the Statute of Frauds does not apply in the present case as this provision applies only to executory, and not to completed, executed or partially executed contracts.62 In this case, the contract of sale had been partially executed because the possession of the laptop was already transferred to petitioner and the partial payments had been made by her. Thus, the absence of a written contract is not fatal to respondents case. Respondent only needed to show by a preponderance of evidence that there was an oral contract of sale, which he did by submitting in evidence his own affidavit, the affidavit of his witness Dy, the receipt dated February 18, 2002 and the demand letter dated July 29, 2002. Elena Jane Duarte, vs. Miguel Samuel A.E. Duran, G.R. No. 173038, September 14, 2011. SALE; WRITTEN NOTICE. With regard to the written notice, we agree with petitioners that such notice is indispensable, and that, in view of the terms in which Article of the Philippine Civil Code is couched, mere knowledge of the sale, acquired in some other manner by the redemptioner, does not satisfy the statute. The written notice was obviously exacted by the Code to remove all uncertainty as to the sale, its terms and its validity, and to quiet any doubts that the alienation is not definitive. The statute not having provided for any alternative, the method of notification prescribed remains exclusive. The written notice of sale is mandatory. This Court has long established the rule that notwithstanding actual knowledge of a co-owner, the latter is still entitled to a written notice from the selling co-owner in order to remove all uncertainties about the sale, its terms and conditions, as well as its efficacy and status. While the general rule is, that to charge a party with laches in the assertion of an alleged right it is essential that he should have knowledge of the facts upon which he bases his claim, yet if the circumstances were such as should have induced inquiry, and the means of ascertaining the truth were readily available upon inquiry, but the party neglects to make it, he will be chargeable with laches, the same as if he had known the facts. It was the perfectly natural thing for the co-heirs to wonder why the spouses Alonzo, who were not among them, should enclose a portion of the inherited lot and build thereon a house of strong materials. This definitely
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on September 14, 1994 is sufficient notice to all persons, including the respondent, that the land is already subject to an attachment. The earlier registration of the notice of levy on attachment already binds the land insofar as third persons are concerned. The act of registration shall be the operative act to convey or affect the land insofar as third persons are concerned, and in all cases under this Decree, the registration shall be made in the office of the Register of Deeds for the province or city where the land lies. From the standpoint of third parties, a property registered under the Torrens system remains, for all legal purposes, the property of the person in whose name it is registered, notwithstanding the execution of any deed of conveyance, unless the corresponding deed is registered.45 Simply put, if a sale is not registered, it is binding only between the seller and the buyer, but it does not affect innocent third persons. One of the principal features of the Torrens system of registration is that all encumbrances on the land shall be shown, or at least intimated upon the certificate of title and a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions, the existence of which is not there intimated.46 Since the Bulaongs had no knowledge of the unregistered sale between Regina and her parents, the Bulaongs can neither be bound by it, nor can they be prejudiced by its consequences. This is but the logical corollary to the rule set forth in Section 51 of P.D. No. 1529, in keeping with the basic legal maxim that what cannot be done directly cannot be done indirectly. Where the property to be sold consists of distinct lots, tracts or parcels, or is susceptible of division without injury, it should be offered for sale in parcels and not en masse, for the reason that a sale in that manner will generally realize the best price, and will not result in taking from the debtor any more property than is necessary to satisfy the judgment. It will also enable the defendant to redeem any one or more of the parcels without being compelled to redeem all the land sold.47 A sale of additional land or personal property after enough has been sold to satisfy the judgment is unauthorized.48 While the general policy of the law is to sustain execution sales, the sale may be set aside where there is a resulting injury based on fraud, mistake and irregularity.49 Where the properties were sold together when the sale of less than the whole would have been sufficient to satisfy the judgment debt, the sale may be set aside. Spouses Elbe Lebin and Erlinda Lebin, vs. Vilma S. Mirasol, and Regional Trial Court of Iloilo, Branch XXVII, G.R. No. 164255, September 2011. only after the liquidation; otherwise, the disposition is void. Before applying such rules, however, the conjugal partnership of gains must be subsisting at the time of the effectivity of the Family Code. There being no dispute that Protacio, Sr. and Marta were married prior to the effectivity of the Family Code on August 3, 1988, their property relation was properly characterized as one of conjugal partnership governed by the Civil Code. Upon Martas death in 1987, the conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil Code,15 and an implied ordinary co-ownership ensued among Protacio, Sr. and the other heirs of Marta with respect to her share in the assets of the conjugal partnership pending a liquidation following its liquidation. Article 105 of the Family Code, supra, expressly provides that the applicability of the rules on dissolution of the conjugal partnership is "without prejudice to vested rights already acquired in accordance with the Civil Code or other laws." This provision gives another reason not to declare the sale as entirely void. Indeed, such a declaration prejudices the rights of Servacio who had already acquired the shares of Protacio, Sr. and Rito in the property subject of the sale. The Heirs of Protacio Go, Sr. and Marta Barola, namely: Leonor, Simplicio, Protacio, Jr., Antonio, Beverly Ann Lorrainne, Tita, consolacion, leonora and asuncion, all surnamed go, represented by leonora b. go, vs. Ester L. Servacio and Rito B. Go, G.R. No. 157537, Sepetember 7, 2011. LAND REGISTRATION. Without doubt, the disposal of estate property required judicial approval before it could be executed.42 Implicit in the requirement for judicial approval was that the probate court could rescind or nullify the disposition of a property under administration that was effected without its authority.43 This power included the authority to nullify or modify its approval of the sale of the property of the estate to conform to the law or to the standing policies set and fixed for the purpose, where the invalidation or modification derived from the falsity of the factual basis of the disposition, or from any other factual mistake, or from the concealment of a material fact by a party. Consequently, the probate courts modification of its approval of the petitioners offer to purchase was well within the power of the RTC to nullify or modify after it was found to be contrary to the condition for the approval. In voluntary registration , such as a sale, mortgage, lease and the like, if the owner's duplicate certificate be not surrendered and presented or if no payment of registration fees be made within fifteen (15) days, entry in the day book of the deed of sale does not operate to convey and affect the land sold. In involuntary registration, such as an attachment, levy upon execution, lis pendens and the like, entry thereof in the day book is a sufficient notice to all persons of such adverse claim. The entry of the notice of levy on attachment in the primary entry book or day book of the Registry of Deeds
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ruling in Faja v. Court of Appeals34 which we quote: x x x There is settled jurisprudence that one who is in actual possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain and determine the nature of the adverse claim of a third party and its effect on his own title, which right can be claimed only by one who is in possession. No better situation can be conceived at the moment for Us to apply this rule on equity than that of herein petitioners whose mother, Felipa Faja, was in possession of the litigated property for no less than 30 years and was suddenly confronted with a claim that the land she had been occupying and cultivating all these years, was titled in the name of a third person. We hold that in such a situation the right to quiet title to the property, to seek its reconveyance and annul any certificate of title covering it, accrued only from the time the one in possession was made aware of a claim adverse to his own, and it is only then that the statutory period of prescription commences to run against such possessor. In the case of Sandoval v. Court of Appeals,38 the Court defined an innocent purchaser for value as one who buys property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claim or interest of some other persons in the property. He is one who buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. A purchaser can not close his eyes to facts which should put a reasonable man on his guard and still claim that he acted in good faith. And while it is settled that every person dealing with a property registered under the Torrens title need not inquire further but only has to rely on the title, this rule has an exception. The exception is 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 some knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith and hence does not merit the protection of the law . Estrella Tiongco Yared (deceased) substituted by Carmen M. Tiongco a.k.a. Carmen Matilde B. Tiongco, vs. Jose B. Tiongco and Antonio G. Doronila, Jr., G.R. No. 161360, October 16, 2011.
RECONVEYANCE. An action for reconveyance can indeed be barred by prescription. In a long line of cases decided by this Court, we ruled that an action for reconveyance based on implied or constructive trust must perforce prescribe in ten (10) years from the issuance of the Torrens title over the property.26 However, there is an exception to this rule. In the case of Heirs of Pomposa Saludares v. Court of Appeals,27 the Court reiterating the ruling in Millena v. Court of Appeals,28 held that there is but one instance when prescription cannot be invoked in an action for reconveyance, that is, when the plaintiff is in possession of the land to be reconveyed. In Heirs of Pomposa Saludares,29 this Court explained that the Court in a series of cases,30 has permitted the filing of an action for reconveyance despite the lapse of more than ten (10) years from the issuance of title to the land and declared that said action, when based on fraud, is imprescriptible as long as the land has not passed to an innocent buyer for value. But in all those cases, the common factual backdrop was that the registered owners were never in possession of the disputed property. The exception was based on the theory that registration proceedings could not be used as a shield for fraud or for enriching a person at the expense of another. In Alfredo v. Borras,31 the Court ruled that prescription does not run against the plaintiff in actual possession of the disputed land because such plaintiff has a right to wait until his possession is disturbed or his title is questioned before initiating an action to vindicate his right. His undisturbed possession gives him the continuing right to seek the aid of a court of equity to determine the nature of the adverse claim of a third party and its effect on his title. The Court held that where the plaintiff in an action for reconveyance remains in possession of the subject land, the action for reconveyance becomes in effect an action to quiet title to property, which is not subject to prescription. The Court reiterated such rule in the case of Vda. de Cabrera v. Court of Appeals,32 wherein we ruled that the imprescriptibility of an action for reconveyance based on implied or constructive trust applies only when the plaintiff or the person enforcing the trust is not in possession of the property. In effect, the action for reconveyance is an action to quiet the property title, which does not prescribe. Similarly, in the case of David v. Malay33 the Court held that there was no doubt about the fact that an action for reconveyance based on an implied trust ordinarily prescribes in ten (10) years. This rule assumes, however, that there is an actual need to initiate that action, for when the right of the true and real owner is recognized, expressly or implicitly such as when he remains undisturbed in his possession, the statute of limitation would yet be irrelevant. An action for reconveyance, if nonetheless brought, would be in the nature of a suit for quieting of title, or its equivalent, an action that is imprescriptible. In that case, the Court reiterated the
DECEMBER 2011 CASES

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The creditor, in a contract of real security, like pledge, cannot appropriate without foreclosure the things given by way of pledge. Any stipulation to the contrary, termed pactum commissorio, is null and void. The law requires foreclosure in order to allow a transfer of title of the good given by way of security from its pledgor, and before any such foreclosure, the pledgor, not the pledgee, is the owner of the goods. Ramona Ramos and The Estate of Luis T. Ramos vs. Philippine National Bank, Opal Portfolio Investments (SPV-AMC), Inc. and Golden Dragon Star Equities, Inc., G.R. No. 178218, December 14, 2011. PRESCRIPTION TRUST. OF ENFFORCEMNT OF EXPRESS
LACHES. Before the entry of a new certificate of title, the registered owner may pursue all legal and equitable remedies to impeach or annul such proceedings. It is clear that PD 1529 provides the solution to respondents quandary. The reasons behind the law make a lot of sense; it provides due process to a registered landowner (in this case the petitioner) and prevents the fraudulent or mistaken conveyance of land, the value of which may exceed the judgment obligation. x x x. While we certainly will not condone any attempt by petitioner to frustrate the ends of justice the only way to describe his refusal to surrender his owners duplicates of the certificates of title despite the final and executory judgment against him respondent, on the other hand, cannot simply disregard proper procedure for the issuance to it of new certificates of title. There was a law on the matter and respondent should have followed it. Laches is the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier; it is negligence or omission to assert a right within a reasonable time, warranting a presumption that the party entitled to assert it either has abandoned it or declined to assert it.35 Laches thus operates as a bar in equity. Ruben C. Reyes vs. Tang Soat Ing (Joanna Tang) and Ando G. Sy, G.R. No. 185620, December 14, 2011. ACQUISITIVE PRESCRIPTION. Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.16 Ordinary acquisitive prescription requires possession in good faith and with just title for ten (10) years.17 Without good faith and just title, acquisitive prescription can only be extraordinary in character which requires uninterrupted adverse possession for thirty (30) years. Possession "in good faith" consists in the reasonable belief that the person from whom the thing is received has been the owner thereof, and could transmit his ownership.19 There is "just title" when the adverse claimant came into possession of the property through one of the modes recognized by law for the acquisition of ownership or other real rights, but the grantor was not the owner or could not transmit any right. Jaime Abalos and Spouses Felix Salazar and Consuelo Salazar, Glicerio Abalos, Heirs of Aquilino Abalos, namely: Segunda Bautista, Rogelio Abalos, Dolores A. Rosario, Felicidad Abalos, Roberto Abalos, Juanito Abalos, Tita Abalos, Lita A. dela Cruz and Heirs of Aquilina Abalos, namely: Arturo Bravo, Purita B. Mendoza, Lourdes B. Aganon, Consuelo B. Salazar, Prima B. delos Santos, Thelma Apostol and Glecerio Abalos vs. Heirs of Vicente Torio, namely: Publio Torio, Liborio Torio, Victorina Torio, Angel Torio, Ladislao Torio, Primo Torio and Norberto Torio, G.R. No. 175444, December 14, 2011. PLEDGE.
The prescriptive period for the enforcement of an express trust of ten (10) years starts upon the repudiation of the trust by the trustee. To apply the 10-year prescriptive period, which would bar a beneficiarys action to recover in an express trust, the repudiation of the trust must be proven by clear and convincing evidence and made known to the beneficiary.67The express trust disables the trustee from acquiring for his own benefit the property committed to his management or custody, at least while he does not openly repudiate the trust, and makes such repudiation known to the beneficiary or cestui que trust . For this reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to "continuing and subsisting" (i.e., unrepudiated) trusts. In an express trust, the delay of the beneficiary is directly attributable to the trustee who undertakes to hold the property for the former, or who is linked to the beneficiary by confidential or fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until and unless the latter is made aware that the trust has been repudiated The Court already rejected a similar argument in Ringor v. Ringor69 for the following reasons: A trustee who obtains a Torrens title over a property held in trust for him by another cannot repudiate the trust by relying on the registration. A Torrens Certificate of Title in Joses name did not vest ownership of the land upon him. The Torrens system does not create or vest title. It only confirms and records title already existing and vested. It does not protect a usurper from the true owner. The Torrens system was not intended to foment betrayal in the performance of a trust. It does not permit one to enrich himself at the expense of another. Where one does not have a rightful claim to the property, the Torrens system of registration can confirm or record nothing. Petitioners cannot rely on the registration of the lands in Joses name nor in the name of the Heirs of Jose M. Ringor, Inc., for the wrong result they seek. For Jose could not repudiate a trust by relying on a Torrens title he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust, notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained.70 (Emphasis supplied.) In the more recent case of Heirs of Tranquilino Labiste v. Heirs of Jose Labiste,71 the Court refused to apply prescription and laches and reiterated that:
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the homestead; but in line with the primordial purpose to favor the homesteader and his family the statute provides that such alienation or conveyance (Section 117) shall be subject to the right of repurchase by the homesteader, his widow or heirs within five years. This section 117 is undoubtedly a complement of section 116. It aims to preserve and keep in the family of the homesteader that portion of public land which the State had gratuitously given to him. It would, therefore, be in keeping with this fundamental idea to hold, as we hold, that the right to repurchase exists not only when the original homesteader makes the conveyance, but also when it is made by his widow or heirs. This construction is clearly deducible from the terms of the statute. The applicant for a homestead is to be given all the inducement that the law offers and is entitled to its full protection. Its blessings, however, do not stop with him. This is particularly so in this case as the appellee is the son of the deceased. There is no question then as to his status of being a legal heir. The policy of the law is not difficult to understand. The incentive for a pioneer to venture into developing virgin land becomes more attractive if he is assured that his effort will not go for naught should perchance his life be cut short. This is merely a recognition of how closely bound parents and children are in Filipino family. Logic, the sense of fitness and of right, as well as pragmatic considerations thus call for continued adherence to the policy that not the individual applicant alone but those so closely related to him as are entitled to legal succession may take full advantage of the benefits the law confers. Rodolfo Morla vs. Corazon Nisperos Belmonte, Abraham U. Nisperos, Perlita Nisperos Ocampo, Armando U. Nisperos, Alberto U. Nisperos, HIlario U. Nisperos, Archimedes U. NIsperos, Buenafe Nispores Perez, Arthur U. Nisperos, and Esperanza Urbno Nisperos, G.R. No. 171146, December 7, 2011. SALE; PROCEEDS INSUFFICIENT TO COVER DEBT. It is settled that if "the proceeds of the sale are insufficient to cover the debt in an extrajudicial foreclosure of mortgage, the mortgagee is entitled to claim the deficiency from the debtor. While Act No. 3135, as amended, does not discuss the mortgagees right to recover the deficiency, neither does it contain any provision expressly or impliedly prohibiting recovery. If the legislature had intended to deny the creditor the right to sue for any deficiency resulting from the foreclosure of a security given to guarantee an obligation, the law would expressly so provide. Absent such a provision in Act No. 3135, as amended, the creditor is not precluded from taking action to recover any unpaid balance on the principal obligation simply because he chose to extrajudicially foreclose the real estate mortgage. Inadequacy of the price at a forced sale is immaterial and does not nullify the sale. In fact, in a forced sale, a low price is more beneficial to the mortgage debtor for it makes redemption of the property easier. If the foreclosed property is registered, the mortgagor has one year within which to redeem the property from and after registration of sale with the Register of Deeds.
[P]rescription and laches will run only from the time the express trust is repudiated. The Court has held that for acquisitive prescription to bar the action of the beneficiary against the trustee in an express trust for the recovery of the property held in trust it must be shown that: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui que trust; (b) such positive acts of repudiation have been made known to the cestui que trust, and (c) the evidence thereon is clear and conclusive. Respondents cannot rely on the fact that the Torrens title was issued in the name of Epifanio and the other heirs of Jose. It has been held that a trustee who obtains a Torrens title over property held in trust by him for another cannot repudiate the trust by relying on the registration. The rule requires a clear repudiation of the trust duly communicated to the beneficiary. The only act that can be construed as repudiation was when respondents filed the petition for reconstitution in October 1993. And since petitioners filed their complaint in January 1995, their cause of action has not yet prescribed, laches cannot be attributed to them. It is a well-settled rule that a purchaser or mortgagee 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 or mortgagor. 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 the vendor's or mortgagor's title, will not make him an innocent purchaser or mortgagee for value, if it afterwards develops that the title was in fact defective, and it appears that he had such notice of the defects as would have led to its discovery had he acted with the measure of precaution which may be required of a prudent man in a like situation. Maria Torbela, represented by her heirs, namely: Eulogio Tosino, husband and children: Claro, Maximino, Cornelio, Olivia and Calixta, all surnamed Tosino, Apolonia Tosino Vda. de Ramirez and Julita Tosino Dean; Pedro Torbela, represented by his heirs, namely: Jose and Dionisio, both surnamed Torbela; Eufrosina Torbela Rosario, represented by her heirs, namely: Esteban T. Rosario, Manuel T. Rosario, Romulo T. Rosario and Andrea Rosario-Haduca; Leonila Torbela Tamin; Fernando Torbela, represented by his heirs, namely: Sergio T. Torbela, Eutropia T. Velasco, Pilar T. Zulueta, Candido T. Torbela, Florentina T. Torbela and Pantaleon T. Torbela; Dolores Torbela Tablada; Leonora Torbela Agustin, represented by her heirs, namely: Patricio, Segundo, Consuelo and Felix, all surnamed Agustin; and Severina Torbela Ildefonso vs. Spouses Andres T. Rosario and Lena Duque-Rosario and Banco Filipino Savings and Mortgage Bank, G.R. No. 140528, December 7, 2011. HOMESTEAD. It is well-known that the homestead laws were designed to distribute disposable agricultural lots of the State to land-destitute citizens for their home and cultivation. Pursuant to such benevolent intention the State prohibits the sale or encumbrance of the homestead (Section 116) within five years after the grant of the patent. After that five-year period the law impliedly permits alienation of
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On the other hand, for family homes constructed after the effectivity of the Family Code on August 3, 1988, there is no need to constitute extrajudicially or judicially , and the exemption is effective from the time it was constituted and lasts as long as any of its beneficiaries under Art. 154 actually resides therein. Moreover, the family home should belong to the absolute community or conjugal partnership, or if exclusively by one spouse, its constitution must have been with consent of the other, and its value must not exceed certain amounts depending upon the area where it is located. Further, the debts incurred for which the exemption does not apply as provided under Art. 155 for which the family home is made answerable must have been incurred after August 3, 1988.21(citations omitted) The foregoing rules on constitution of family homes, for purposes of exemption from execution, could be summarized as follows: First, family residences constructed before the effectivity of the Family Code or before August 3, 1988 must be constituted as a family home either judicially or extrajudicially in accordance with the provisions of the Civil Code in order to be exempt from execution; Second, family residences constructed after the effectivity of the Family Code on August 3, 1988 are automatically deemed to be family homes and thus exempt from execution from the time it was constituted and lasts as long as any of its beneficiaries actually resides therein; Third, family residences which were not judicially or extrajudicially constituted as a family home prior to the effectivity of the Family Code, but were existing thereafter, are considered as family homes by operation of law and are prospectively entitled to the benefits accorded to a family home under the Family Code. Spouses Araceli Oliva-de Mesa and Ernesto S. de Mesa vs.Spouses Claudio D. Acero, Jr. and Ma. Rufina D. Acero, Sheriff Felixberto L. Samonte and Registrar Alfredo Santoss, G.R. No.185064, January 16, 2012. RESCISSION. That a claim for a reimbursement in view of the other partys failure to comply with his obligations under the contract is one for rescission or resolution. However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2) inconsistent remedies. In resolution, all the elements to make the contract valid are present; in annulment, one of the essential elements to a formation of a contract, which is consent, is absent. In resolution, the defect is in the consummation stage of the contract when the parties are in the process of performing their respective obligations; in annulment, the defect is already present at the time of the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy of rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts, forfeiting their right to demand their annulment. A party cannot rely on the contract and claim rights or obligations under it and at BPI Family Savings Bank, Inc. vs. Ma. Arlyn T. Avenido &Pacifico A. Avenido, G.R. No.175816, December7, 2011.
JANUARY 2012 CASES

CONTRACT. Three elements are needed to create a perfected contract: 1) the consent of the contracting parties; (2) an object certain which is the subject matter of the contract; and (3) the cause of the obligation which is established.6 Under the law on sales, a contract of sale is perfected when the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to the buyer, over which the latter agrees.7 From that moment, the parties may demand reciprocal performance. A subjective novation results through substitution of the person of the debtor or through subrogation of a third person to the rights of the creditor. To accomplish a subjective novation through change in the person of the debtor, the old debtor needs to be expressly released from the obligation and the third person or new debtor needs to assume his place in the relation. Novation serves two functions one is to extinguish an existing obligation, the other to substitute a new one in its place requiring concurrence of four requisites: 1) a previous valid obligation; 2) an agreement of all parties concerned to a new contract; 3) the extinguishment of the old obligation; and 4) the birth of a valid new obligation. Edgardo Medalla vs. Resurreccion D. Laxa, G.R. No. 193362, January 18, 2012. EXEMPTION OF FAMILY HOME FROM EXECUTION. For the family home to be exempt from execution, distinction must be made as to what law applies based on when it was constituted and what requirements must be complied with by the judgment debtor or his successors claiming such privilege. Hence, two sets of rules are applicable. If the family home was constructed before the effectivity of the Family Code or before August 3, 1988, then it must have been constituted either judicially or extra-judicially as provided under Articles 225, 229-231 and 233 of the Civil Code. Judicial constitution of the family home requires the filing of a verified petition before the courts and the registration of the courts order with the Registry of Deeds of the area where the property is located. Meanwhile, extrajudicial constitution is governed by Articles 240 to 242 of the Civil Code and involves the execution of a public instrument which must also be registered with the Registry of Property. Failure to comply with either one of these two modes of constitution will bar a judgment debtor from availing of the privilege.
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Spouses Fernando and Lourdes Viloria vs. Continental Airlines Inc., G.R. No.188288, January 16, 2012. the same time impugn its existence or validity. Indeed, litigants are enjoined from taking inconsistent positions.
MORE CASES AND PRINCIPLES

CAN THE ADOPTED CHILD USE THE SURNAME OF HIS BIOLOGICAL MOTHER AS HIS MIDDLE NAME? IN THE MATTER OF THE ADOPTION OF STEPHANIE NATHY ASTORGA GARCIA, HONORATO B. CATINDIG, petitioner. [G.R. No. 148311. March 31, 2005] DECISION SANDOVAL-GUTIERREZ, J.: May an illegitimate child, upon adoption by her natural father, use the surname of her natural mother as her middle name? This is the issue raised in the instant case. The facts are undisputed. On August 31, 2000, Honorato B. Catindig, herein petitioner, filed a petition to adopt his minor illegitimate child Stephanie Nathy Astorga Garcia. He alleged therein, among others, that Stephanie was born on June 26, 1994; that her mother is Gemma Astorga Garcia; that Stephanie has been using her mothers middle name and surname; and that he is now a widower and qualified to be her adopting parent. He prayed that Stephanies middle name Astorga be changed to Garcia , her mothers surname, and that her surname Garcia be changed to Catindig, his surname. On March 23, 2001, the trial court rendered the assailed Decision granting the adoption, thus: After a careful consideration of the evidence presented by the petitioner, and in the absence of any opposition to the petition, this Court finds that the petitioner possesses all the qualifications and none of the disqualification provided for by law as an adoptive parent, and that as such he is qualified to maintain, care for and educate the child to be adopted; that the grant of this petition would redound to the best interest and welfare of the minor Stephanie Nathy Astorga Garcia. The Court further holds that the petitioners care and custody of the child since her birth up to the present constitute more than enough compliance with the requirement of Article 35 of Presidential Decree No. 603. WHEREFORE, finding the petition to be meritorious, the same is GRANTED. Henceforth, Stephanie Nathy Astorga Garcia is hereby freed from all obligations of obedience and maintenance with respect to her natural mother, and for civil purposes, shall henceforth be the petitioners legitimate child and legal heir. Pursuant to Article 189 of the Family Code of the Philippines, the minor shall be known as STEPHANIE NATHY CATINDIG. Upon finality of this Decision, let the same be entered in the Local Civil Registrar concerned pursuant to Rule 99 of the Rules of Court. Let copy of this Decision be furnished the National Statistics Office for record purposes. SO ORDERED. On April 20, 2001, petitioner filed a motion for clarification and/or reconsideration praying that Stephanie should be allowed to use the surname of her natural mother (GARCIA) as her middle name. On May 28, 2001, the trial court denied petitioners motion for reconsideration holding that there is no law or jurisprudence allowing an adopted child to use the surname of his biological mother as his middle name. Hence, the present petition raising the issue of whether an illegitimate child may use the surname of her mother as her middle name when she is subsequently adopted by her natural father. Petitioner submits that the trial court erred in depriving Stephanie of a middle name as a consequence of adoption because: (1) there is no law prohibiting an adopted child from having a middle name in case there is only one adopting parent; (2) it is customary for every Filipino to have as middle name the surname of the mother; (3) the middle name or initial is a part of the name of a person; (4) adoption is for the benefit and best interest of the adopted child, hence, her right to bear a proper name should not be violated; (5) permitting Stephanie to use the middle name Garcia (her mothers surname) avoids the stigma of her illegitimacy; and; (6) her continued use of Garcia as her middle name is not opposed by either the Catindig or Garcia families. The Republic, through the Office of the Solicitor General (OSG), agrees with petitioner that Stephanie should be permitted to use, as her middle name, the surname of her natural mother for the following reasons: First, it is necessary to preserve and maintain Stephanies filiation with her natural mother because under Article 189 of the Family Code, she remains to be an intestate heir of the latter. Thus, to prevent any confusion and needless hardship in the future, her relationship or proof of that relationship with her natural mother should be maintained. Second, there is no law expressly prohibiting Stephanie to use the surname of her natural mother as her middle name. What the law does not prohibit, it allows. Last, it is customary for every Filipino to have a middle name, which is ordinarily the surname of the mother. This custom has been recognized by the Civil
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and surname. However, she may choose to continue employing her former husband's surname, unless: (1) The court decrees otherwise, or (2) She or the former husband is married again to another person. Art. 372. When legal separation has been granted, the wife shall continue using her name and surname employed before the legal separation. Art. 373. A widow may use the deceased husband's surname as though he were still living, in accordance with Article 370. Art. 374. In case of identity of names and surnames, the younger person shall be obliged to use such additional name or surname as will avoid confusion. Art. 375. In case of identity of names and surnames between ascendants and descendants, the word Junior can be used only by a son. Grandsons and other direct male descendants shall either: (1) Add a middle name or the mother's surname, (2) Add the Roman numerals II, III, and so on. x x x Law Is Silent As To The Use Of Middle Name As correctly submitted by both parties, there is no law regulating the use of a middle name. Even Article 176 of the Family Code, as amended by Republic Act No. 9255, otherwise known as An Act Allowing Illegitimate Children To Use The Surname Of Their Father, is silent as to what middle name a child may use. The middle name or the mothers surname is only considered in Article 375(1), quoted above, in case there is identity of names and surnames between ascendants and descendants, in which case, the middle name or the mothers surname shall be added. Notably, the law is likewise silent as to what middle name an adoptee may use. Article 365 of the Civil Code merely provides that an adopted child shall bear the surname of the adopter. Also, Article 189 of the Family Code, enumerating the legal effects of adoption, is likewise silent on the matter, thus: "(1) For civil purposes, the adopted shall be deemed to be a legitimate child of the adopters and both shall acquire the reciprocal rights and obligations arising from the relationship of parent and child, including the right of the adopted to use the surname of the adopters ; x x x However, as correctly pointed out by the OSG, the members of the Civil Code and Family Law Committees that drafted the Family Code recognized the Filipino Code and Family Code. In fact, the Family Law Committees agreed that the initial or surname of the mother should immediately precede the surname of the father so that the second name, if any, will be before the surname of the mother. We find merit in the petition.
Use Of Surname Is Fixed By Law
For all practical and legal purposes, a man's name is the designation by which he is known and called in the community in which he lives and is best known. It is defined as the word or combination of words by which a person is distinguished from other individuals and, also, as the label or appellation which he bears for the convenience of the world at large addressing him, or in speaking of or dealing with him. It is both of personal as well as public interest that every person must have a name. The name of an individual has two parts: (1) the given or proper name and (2) the surname or family name. The given or proper name is that which is given to the individual at birth or at baptism, to distinguish him from other individuals. The surname or family name is that which identifies the family to which he belongs and is continued from parent to child. The given name may be freely selected by the parents for the child, but the surname to which the child is entitled is fixed by law. Thus, Articles 364 to 380 of the Civil Code provides the substantive rules which regulate the use of surname of an individual whatever may be his status in life, i.e., whether he may be legitimate or illegitimate, an adopted child, a married woman or a previously married woman, or a widow, thus: Art. 364. Legitimate and legitimated children shall principally use the surname of the father. Art. 365. An adopted child shall bear the surname of the adopter. xxx Art. 369. Children conceived before the decree annulling a voidable marriage shall principally use the surname of the father. Art. 370. A married woman may use:
(1) Her maiden first name and surname and add her husband's surname, or (2) Her maiden first name and her husband's surname or (3) Her husband's full name, but prefixing a word indicating that she is his wife, such as Mrs. Art. 371. In case of annulment of marriage, and the wife is the guilty party, she shall resume her maiden name and surname. If she is the innocent spouse, she may resume her maiden name
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Surnames, they should say that initial or surname of the mother should immediately precede the surname of the father so that the second name, if any, will be before the surname of the mother. Prof. Balane added that this is really the Filipino way. The Committee approved the suggestion. (Emphasis supplied) In the case of an adopted child, the law provides that the adopted shall bear the surname of the adopters. Again, it is silent whether he can use a middle name. What it only expressly allows, as a matter of right and obligation, is for the adoptee to bear the surname of the adopter, upon issuance of the decree of adoption. The Underlying Intent of Adoption Is In Favor of the Adopted Child Adoption is defined as the process of making a child, whether related or not to the adopter, possess in general, the rights accorded to a legitimate child. It is a juridical act, a proceeding in rem which creates between two persons a relationship similar to that which results from legitimate paternity and filiation. The modern trend is to consider adoption not merely as an act to establish a relationship of paternity and filiation , but also as an act which endows the child with a legitimate status . This was, indeed, confirmed in 1989, when the Philippines, as a State Party to the Convention of the Rights of the Child initiated by the United Nations, accepted the principle that adoption is impressed with social and moral responsibility, and that its underlying intent is geared to favor the adopted child. Republic Act No. 8552, otherwise known as the Domestic Adoption Act of 1998, secures these rights and privileges for the adopted. One of the effects of adoption is that the adopted is deemed to be a legitimate child of the adopter for all intents and purposes pursuant to Article 189 of the Family Code and Section 17 Article V of RA 8552. Being a legitimate child by virtue of her adoption, it follows that Stephanie is entitled to all the rights provided by law to a legitimate child without discrimination of any kind, including the right to bear the surname of her father and her mother, as discussed above . This is consistent with the intention of the members of the Civil Code and Family Law Committees as earlier discussed. In fact, it is a Filipino custom that the initial or surname of the mother should immediately precede the surname of the father. Additionally, as aptly stated by both parties, Stephanies continued use of her mothers surname (Garcia) as her middle name will maintain her maternal lineage. It is to be noted that Article 189(3) of the Family Code and Section 18, Article V of RA 8552 (law on adoption) provide that the adoptee remains an intestate heir of his/her biological parent. Hence, Stephanie can well assert or claim her hereditary rights from her natural mother in the future. custom of adding the surname of the childs mother as his middle name. In the Minutes of the Joint Meeting of the Civil Code and Family Law Committees, the members approved the suggestion that the initial or surname of the mother should immediately precede the surname of the father, thus Justice Caguioa commented that there is a difference between the use by the wife of the surname and that of the child because the fathers surname indicates the family to which he belongs, for which reason he would insist on the use of the fathers surname by the child but that, if he wants to, the child may also use the surname of the mother. Justice Puno posed the question: If the child chooses to use the surname of the mother, how will his name be written? Justice Caguioa replied that it is up to him but that his point is that it should be mandatory that the child uses the surname of the father and permissive in the case of the surname of the mother. Prof. Baviera remarked that Justice Caguioas point is covered by the present Article 364, which reads: Legitimate and legitimated children shall principally use the surname of the father. Justice Puno pointed out that many names change through no choice of the person himself precisely because of this misunderstanding. He then cited the following example: Alfonso Ponce Enriles correct surname is Ponce since the mothers surname is Enrile but everybody calls him Atty. Enrile. Justice Jose Gutierrez Davids family name is Gutierrez and his mothers surname is David but they all call him Justice David. Justice Caguioa suggested that the proposed Article (12) be modified to the effect that it shall be mandatory on the child to use the surname of the father but he may use the surname of the mother by way of an initial or a middle name. Prof. Balane stated that they take note of this for inclusion in the Chapter on Use of Surnames since in the proposed Article (10) they are just enumerating the rights of legitimate children so that the details can be covered in the appropriate chapter. xxx Justice Puno remarked that there is logic in the simplification suggested by Justice Caguioa that the surname of the father should always be last because there are so many traditions like the American tradition where they like to use their second given name and the Latin tradition, which is also followed by the Chinese wherein they even include the Clan name. xxx Justice Puno suggested that they agree in principle that in the Chapter on the Use of
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CARULASAN WANG also known as JULIAN LIN WANG, to be amended/corrected as JULIAN LIN WANG, JULIAN LIN WANG, duly represented by his mother ANNA LISA WANG, petitioner, vs. CEBU CITY CIVIL REGISTRAR, duly represented by the Registrar OSCAR B. MOLO, respondent. DECISION TINGA, J.: I will not blot out his name out of the book of life. Revelati on 3:5 On 22 September 2002, petitioner Julian Lin Carulasan Wang, a minor, represented by his mother Anna Lisa Wang, filed a petition dated 19 September 2002 for change of name and/or correction/cancellation of entry in the Civil Registry of Julian Lin Carulasan Wang. Petitioner sought to drop his middle name and have his registered name changed from Julian Lin Carulasan Wang to Julian Lin Wang. The petition was docketed as Special Proceedings Case No. 11458 CEB and raffled to the Regional Trial Court (RTC) of Cebu City, Branch 57. The RTC established the following facts: Julian Lin Carulasan Wang was born in Cebu City on February 20, 1998 to parents Anna Lisa Wang and Sing-Foe Wang who were then not yet married to each other. When his parents subsequently got married on September 22, 1998, ...they executed a deed of legitimation of their son so that the childs name was changed from Julian Lin Carulasan to Julian Lin Carulasan Wang. The parents of Julian Lin Carulasan Wang plan to stay in Singapore for a long time because they will let him study there together with his sister named Wang Mei Jasmine who was born in Singapore. Since in Singapore middle names or the maiden surname of the mother are not carried in a persons name, they anticipate that Julian Lin Carulasan Wang will be discriminated against because of his current registered name which carries a middle name. Julian and his sister might also be asking whether they are brother and sister since they have different surnames. Carulasan sounds funny in Singapores Man darin language since they do not have the letter R but if there is, they pronounce it as L. It is for these reasons that the name of Julian Lin Carulasan Wang is requested to be changed to Julian Lin Wang.[1] On 30 April 2003, the RTC rendered a decision denying the petition. The trial court found that the reason given for the change of name sought in the petition that Moreover, records show that Stephanie and her mother are living together in the house built by petitioner for them at 390 Tumana, San Jose, Baliuag, Bulacan. Petitioner provides for all their needs. Stephanie is closely attached to both her mother and father. She calls them Mama and Papa. Indeed, they are one normal happy family. Hence, to allow Stephanie to use her mothers surname as her middle name will not only sustain her continued loving relationship with her mother but will also eliminate the stigma of her illegitimacy. Liberal Construction of Adoption Statutes In Favor Of Adoption It is a settled rule that adoption statutes, being humane and salutary, should be liberally construed to carry out the beneficent purposes of adoption. The interests and welfare of the adopted child are of primary and paramount consideration, hence, every reasonable intendment should be sustained to promote and fulfill these noble and compassionate objectives of the law Lastly, Art. 10 of the New Civil Code provides that: In case of doubt in the interpretation or application of laws, it is presumed that the lawmaking body intended right and justice to prevail. This provision, according to the Code Commission, is necessary so that it may tip the scales in favor of right and justice when the law is doubtful or obscure. It will strengthen the determination of the courts to avoid an injustice which may apparently be authorized by some way of interpreting the law. Hence, since there is no law prohibiting an illegitimate child adopted by her natural father, like Stephanie, to use, as middle name her mothers surname, we find no reason why she should not be allowed to do so. WHEREFORE, the petition is GRANTED. The assailed Decision is partly MODIFIED in the sense that Stephanie should be allowed to use her mothers surname GARCIA as her middle name. Let the corresponding entry of her correct and complete name be entered in the decree of adoption. SO ORDERED. Panganiban, (Chairman), Corona, Carpio-Morales, and Garcia, JJ., concur.
CAN A PERSON CHANGE HIS NAME BY DELETING HIS MIDDLE NAME (his mothers surname)? G.R. No. 159966. March 30, 2005 IN RE: PETITION FOR CHANGE OF NAME AND/OR CORRECTION/CANCELLATION OF ENTRY IN CIVIL REGISTRY OF JULIAN LIN
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support a petition for change of name and/or cancellation of entry. The OSG also adds that the petitioner has not shown any compelling reason to justify the change of name or the dropping of the middle name, for that matter. Petitioners allegation that the continued use of the middle name may result in confusion and difficulty is allegedly more imaginary than real. The OSG reiterates its argument raised before the trial court that the dropping of the childs middle n ame could only trigger much deeper inquiries regarding the true parentage of petitioner. Hence, while petitioner Julian has a sister named Jasmine Wei Wang, there is no confusion since both use the surname of their father, Wang. Even assuming that it is customary in Singapore to drop the middle name, it has also not been shown that the use of such middle name is actually proscribed by Singaporean law. We affirm the decision of the trial court. petition should be denied. The is, that petitioner Julian may be discriminated against when studies in Singapore because of his middle name did not fall within the grounds recognized by law. The trial court ruled that the change sought is merely for the convenience of the child. Since the State has an interest in the name of a person, names cannot be changed to suit the convenience of the bearers. Under Article 174 of the Family Code, legitimate children have the right to bear the surnames of the father and the mother, and there is no reason why this right should now be taken from petitioner Julian, considering that he is still a minor. The trial court added that when petitioner Julian reaches the age of majority, he could then decide whether he will change his name by dropping his middle name.[3] Petitioner filed a motion for reconsideration of the decision but this was denied in a resolution dated 20 May 2004. The trial court maintained that the Singaporean practice of not carrying a middle name does not justify the dropping of the middle name of a legitimate Filipino child who intends to study there. The dropping of the middle name would be tantamount to giving due recognition to or application of the laws of Singapore instead of Philippine law which is controlling. That the change of name would not prejudice public interest or would not be for a fraudulent purpose would not suffice to grant the petition if the reason for the change of name is itself not reasonable. Petitioner then filed this Petition for Review on Certiorari (Under Rule 45) arguing that the trial court has decided a question of substance not theretofore determined by the Court, that is: whether or not dropping the middle name of a minor child is contrary to Article 174 of the Family Code. Petitioner contends that [W]ith globalization and mixed marriages, there is a need for the Supreme Court to rule on the matter of dropping of family name for a child to adjust to his new environment, for consistency and harmony among siblings, taking into consideration the best interest of the child. It is argued that convenience of the child is a valid reason for changing the name as long as it will not prejudice the State and others. Petitioner points out that the middle name Carulasan will cause him undue embarrassment and the difficulty in writing or pronouncing it will be an obstacle to his social acceptance and integration in the Singaporean community. Petitioner also alleges that it is error for the trial court to have denied the petition for change of name until he had reached the age of majority for him to decide the name to use, contrary to previous cases decided by this Court that allowed a minor to petition for change of name. The Court required the Office of the Solicitor General (OSG) to comment on the petition. The OSG filed its Comment positing that the trial court correctly denied the petition for change of name. The OSG argues that under Article 174 of the Family Code, legitimate children have the right to bear the surnames of their father and mother, and such right cannot be denied by the mere expedient of dropping the same. According to the OSG, there is also no showing that the dropping of the middle name Carulasan is in the best interest of petitioner, since mere convenience is not sufficient to
The Court has had occasion to express the view that the State has an interest in the names borne by individuals and entities for purposes of identification, and that a change of name is a privilege and not a right, so that before a person can be authorized to change his name given him either in his certificate of birth or civil registry, he must show proper or reasonable cause, or any compelling reason which may justify such change. Otherwise, the request should be denied. The touchstone for the grant of a change of name is that there be proper and reasonable cause for which the change is sought. To justify a request for change of name, petitioner must show not only some proper or compelling reason therefore but also that he will be prejudiced by the use of his true and official name. Among the grounds for change of name which have been held valid are: (a) when the name is ridiculous, dishonorable or extremely difficult to write or pronounce; (b) when the change results as a legal consequence, as in legitimation; (c) when the change will avoid confusion; (d) when one has continuously used and been known since childhood by a Filipino name, and was unaware of alien parentage; (e) a sincere desire to adopt a Filipino name to erase signs of former alienage, all in good faith and without prejudicing anybody; and (f) when the surname causes embarrassment and there is no showing that the desired change of name was for a fraudulent purpose or that the change of name would prejudice public interest. In granting or denying petitions for change of name, the question of proper and reasonable cause is left to the sound discretion of the court. The evidence presented need only be satisfactory to the court and not all the best evidence available. What is involved is not a mere matter of allowance or disallowance of the request, but a judicious evaluation of the sufficiency and propriety of the justifications advanced in support thereof, mindful of the consequent results in the event of its grant and with the sole prerogative for making such determination being lodged in the courts. The petition before us is unlike other petitions for change of name, as it does not simply seek to change the
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father and the mother, while illegitimate children shall use the surname of their mother, unless their father recognizes their filiation, in which case they may bear the fathers surname. Applying these laws, an illegitimate child whose filiation is not recognized by the father bears only a given name and his mothers surname, and does not have a middle name. The name of the unrecognized illegitimate child therefore identifies him as such. It is only when the illegitimate child is legitimated by the subsequent marriage of his parents or acknowledged by the father in a public document or private handwritten instrument that he bears both his mothers surname as his middle name and his fathers surname as his surname, reflecting his status as a legitimated child or an acknowledged illegitimate child. Accordingly, the registration in the civil registry of the birth of such individuals requires that the middle name be indicated in the certificate. The registered name of a legitimate, legitimated and recognized illegitimate child thus contains a given or proper name, a middle name, and a surname. Petitioner theorizes that it would be for his best interest to drop his middle name as this would help him to adjust more easily to and integrate himself into Singaporean society. In support, he cites Oshita v. Republic and Calderon v. Republic, which, however, are not apropos both. In Oshita, the petitioner therein, a legitimate daughter of a Filipino mother, Buena Bartolome, and a Japanese father, Kishimatsu Oshita, sought to change her name from Antonina B. Oshita to Antonina Bartolome. The Court granted her petition based on the following considerations: she had elected Philippine citizenship upon reaching the age of majority; her other siblings who had also elected Philippine citizenship have been using their mothers surname; she was embarrassed to bear a Japanese surname there still being ill feeling against the Japanese due to the last World War; and there was no showing that the change of name was motivated by a fraudulent purpose or that it will prejudice public interest. In Calderon, the Court allowed petitioner Gertrudes Josefina del Prado, an illegitimate minor child acting through her mother who filed the petition in her behalf, to change her name to Gertudes Josefina Calderon, taking the surname of her stepfather, Romeo C. Calderon, her mothers husband. The Court held that a petition for change of name of an infant should be granted where to do is clearly for the best interest of the child. The Court took into consideration the opportunity provided for the minor petitioner to eliminate the stigma of illegitimacy which she would carry if she continued to use the surname of her illegitimate father. The Court pronounced that justice dictates that every person be allowed to avail of any opportunity to improve his social standing as long as doing so he does not cause prejudice or injury to the interests of the State or of other people. Petitioner cites Alfon v. Republic, in arguing that although Article 174 of the Family Code gives the legitimate child the right to use the surnames of the name of the minor petitioner and adopt another, but instead seeks to drop the middle name altogether. Decided cases in this jurisdiction involving petitions for change of name usually deal with requests for change of surname. There are only a handful of cases involving requests for change of the given name and none on requests for changing or dropping of the middle name. Does the law allow one to drop the middle name from his registered name? We have to answer in the negative. A discussion on the legal significance of a persons name is relevant at this point. We quote, thus: For all practical and legal purp oses, a man's name is the designation by which he is known and called in the community in which he lives and is best known. It is defined as the word or combination of words by which a person is distinguished from other individuals and, also, as the label or appellation which he bears for the convenience of the world at large addressing him, or in speaking of or dealing with him. Names are used merely as one method of indicating the identity of persons; they are descriptive of persons for identification, since, the identity is the essential thing and it has frequently been held that, when identity is certain, a variance in, or misspelling of, the name is immaterial. The names of individuals usually have two parts: the given name or proper name, and the surname or family name. The given or proper name is that which is given to the individual at birth or baptism, to distinguish him from other individuals. The name or family name is that which identifies the family to which he belongs and is continued from parent to child. The given name may be freely selected by the parents for the child; but the surname to which the child is entitled is fixed by law. A name is said to have the following characteristics: (1) It is absolute, intended to protect the individual from being confused with others. (2) It is obligatory in certain respects, for nobody can be without a name. (3) It is fixed, unchangeable, or immutable, at least at the start, and may be changed only for good cause and by judicial proceedings. (4) It is outside the commerce of man, and, therefore, inalienable and intransmissible by act inter vivos or mortis causa. (5) It is imprescriptible. This citation does not make any reference to middle names, but this does not mean that middle names have no practical or legal significance. Middle names serve to identify the maternal lineage or filiation of a person as well as further distinguish him from others who may have the same given name and surname as he has. Our laws on the use of surnames state that legitimate and legitimated children shall principally use the surname of the father. The Family Code gives legitimate children the right to bear the surnames of the
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of name is based, it is best that the matter of change of his name be left to his judgment and discretion when he reaches the age of majority. As he is of tender age, he may not yet understand and appreciate the value of the change of his name and granting of the same at this point may just prejudice him in his rights under our laws. WHEREFORE, in view of the foregoing, the Petition for Review on Certiorari is DENIED. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur. father and the mother, it is not mandatory such that the child could use only one family name, even the family name of the mother. In Alfon, the petitioner therein, the legitimate daughter of Filomeno Duterte and Estrella Alfon, sought to change her name from Maria Estrella Veronica Primitiva Duterte (her name as registered in the Local Civil Registry) to Estrella S. Alfon (the name she had been using since childhood, in her school records and in her voters registration). The trial court denied her petition but this Court overturned the denial, ruling that while Article 364 of the Civil Code states that she, as a legitimate child, should principally use the surname of her father, there is no legal obstacle for her to choose to use the surname of herm other to which she is entitled. In addition, the Court found that there was ample justification to grant her petition, i.e., to avoid confusion. Weighing petitioners reason of convenience for the change of his name against the standards set in the cases he cites to support his contention would show that his justification is amorphous, to say the least, and could not warrant favorable action on his petition. The factual antecedents and unique circumstances of the cited cases are not at all analogous to the case at bar. The instant case is clearly distinguishable from the cases of Oshita and Alfon, where the petitioners were already of age when they filed their petitions for change of name. Being of age, they are considered to have exercised their discretion and judgment, fully knowing the effects of their decision to change their surnames. It can also be unmistakably observed that the reason for the grant of the petitions for change of name in these two cases was the presence of reasonable or compelling grounds therefore. The Court, in Oshita, recognized the tangible animosity most Filipinos had during that time against the Japanese as a result of World War II, in addition to the fact of therein petitioners election of Philippine citizenship. In Alfon, the Court granted the petition since the petitioner had been known since childhood by a name different from her registered name and she had not used her registered name in her school records and voters registration records; thus, denying the petition would only result to confusion. Calderon, on the other hand, granted the petition for change of name filed by a mother in behalf of her illegitimate minor child. Petitioner cites this case to buttress his argument that he does not have to reach the age of majority to petition for change of name. However, it is manifest in Calderon that the Court, in granting the petition for change of name, gave paramount consideration to the best interests of the minor petitioner therein. In the case at bar, the only reason advanced by petitioner for the dropping his middle name is convenience. However, how such change of name would make his integration into Singaporean society easier and convenient is not clearly established. That the continued use of his middle name would cause confusion and difficulty does not constitute proper and reasonable cause to drop it from his registered complete name. In addition, petitioner is only a minor. Considering the nebulous foundation on which his petition for change
SOMETHING INTO NOTHING: THE PERIL OF NOT ACCEPTING A DONATION PROMPTLY The donees non-acceptance (or belated acceptance) of a donation will make the donation invalid. Sometime in 1985, a certain Esperanza MaglunobDalisan executed an Affidavit dated June 9, 1986 (the Affidavit) whereby she renounced, relinquished, waived and quitclaimed all her rights, share, interest and participation whatsoever over a parcel of land in favor of Elvira Arangote and her husband, Ray. The Arangotes built a house on the property. Elvira was able to subsequently obtain an Original Certificate of Title over the property. Subsequently, certain heirs of Martin Maglunob (the Heirs) entered the property, which compelled the Arangotes to file an action for Quieting of Title, Declaration of Ownership and Possession, Damages with Preliminary Injunction, and Issuance of Temporary Restraining Order before the Municipal Circuit Trial Court (MCTC). In their Complaint, the Arangotes claim that:
Esperanza inherited the property from her uncle Victorino Sorrosa by virtue of a notarized Partition Agreement dated 29 April 1985, executed by the latters heirs. Esperanza executed an Affidavit renouncing her rights over the property in favor of Elvira. Esperanza declared the property in her name for real property tax purposes, as evidenced by Tax Declaration No. 16218 (1985).
On the other hand, in their answer to the Complaint, the Heirs claim that:
they co-owned the property with Esperanza. They claim that Esperanza and her siblings, Tomas and Inocencia, inherited the property, in equal shares, from their father Martin Maglunob (Martin I). When Tomas and Inocencia passed away, their shares passed
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considered as possessors in good faith and entitled to the rights provided under Articles 448 and 546 of the Civil Code. The Supreme Court agreed with the RTC and the CA and held that the petition filed by Elvira is not meritorious. Invalidity of the OCT According to the Supreme Court, the judicial action required to challenge the validity of title is a direct attack, not a collateral attack. Section 48 of Presidential Decree No. 1529 states: A certificate of title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law. The Court noted that in the Heirs Answer to the Complaint for Quieting of Title filed by the Arangotes before the MCTC, the Heirs included a Counterclaim wherein they repleaded all the material allegations in their affirmative defenses, the most essential of which was their claim that Elvira and her husband by means of fraud, undue influence and deceit were able to make their grand aunt, Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit. In addition, the Heirs maintained in their Answer that as the Arangotes were not tenants either of Esperanza or of the Heirs, the Department of Agrarian Reform could not have validly issued in favor of Elvira OCT No. CLOA-1748. Thus, the Heirs prayed, in their counterclaim in Civil Case No. 156 before the MCTC, that OCT No. CLOA-1748 issued in the name of Elvira be declared null and void, insofar as their two-thirds shares in the property are concerned. The Court ruled that a counterclaim is considered a new suit in which the defendant is the plaintiff and the plaintiff in the complaint becomes the defendant. It stands on the same footing as, and is to be tested by the same rules as if it were, an independent action. Given the allegations in the counterclaim, the Court ruled that: respondents Answer with Counterclaim was a direct attack on petitioners certificate of title. In this regard, the Supreme Court affirmed the findings of the RTC and the Court of Appeals as regards the origin of the subject property and the fact that the Heirs, with their grand aunt Esperanza, were co-heirs and co-owners of the property. According to the Court: it is clear from the records that the subject property was not Esperanzas exclusive share, but also that of the other heirs of her father, Martin I. Esperanza expressly affixed her thumbmark to the Deed of Extrajudicial Settlement of July 1981 not only for herself, but also on behalf of the other heirs of Martin I. Though in the Partition Agreement dated 29 April 1985 Esperanza affixed her thumbmark without stating that she was doing so not only for herself, but also on behalf of the other heirs of Martin I, this does not mean that Esperanza was already the exclusive owner thereof. The on by inheritance to respondents Martin II and Romeo, respectively. Hence, the property was co-owned by Esperanza, respondent Martin II (together with his wife Lourdes), and respondent Romeo, each holding a one-third proindiviso share therein. Thus, Esperanza could not validly waive her rights and interest over the entire subject property in favor of the Arangotes.
the Arangotes, by means of fraud, undue influence and deceit were able to make Esperanza, who was already old and illiterate, affix her thumbmark to the Affidavit, wherein she renounced all her rights and interest over the subject property in favor of the Arangotes.
The Heirs therefore asked the court to declare the OCT issued in Elviras name be declared null and void insofar as their two-thirds shares are concerned. The MCTC rendered a decision in favor the Arangotes, but the Regional Trial Court (RTC) reversed the MCTC. On appeal to the Court of Appeals (CA), the CA affirmed the RTC decision. Before the Supreme Court, Elvira contends that:
OCT No. CLOA-1748 was issued in her name on 26 March 1993 and was registered in the Registry of Deeds of Aklan on 20 April 1993. From 20 April 1993 until the institution of Civil Case No. 156 on 10 June 1994 before the MCTC, more than one year had already elapsed. Considering that a Torrens title can only be attacked within one year after the date of the issuance of the decree of registration on the ground of fraud and that such attack must be through a direct proceeding, it was an error on the part of the RTC and the Court of Appeals to declare OCT No. CLOA-1748 null and void; the RTC and the Court of Appeals committed a mistake in declaring null and void the Affidavit dated 9 June 1986 executed by Esperanza, waiving all her rights and interest over the subject property in favor of Elvira and her husband. Esperanzas Affidavit is a valid and binding proof of the transfer of ownership of the subject property in Elviras name, as it was also coupled with actual delivery of possession of the property to Elvira and her husband. The Affidavit is also proof of good faith on the part of Elvira and her husband; assuming for the sake of argument, that Esperanzas Affidavit is null and void, Elvira and her husband had no knowledge of any flaw in Esperanzas title when the latter relinquished her rights to and interest in the property in their favor. Hence, Elvira and her husband can be
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It is true that the acceptance of a donation may be made at any time during the lifetime of the donor. And granting arguendo that such acceptance may still be admitted in evidence on appeal, there is still need for proof that a formal notice of such acceptance was received by the donor and noted in both the Deed of Donation and the separate instrument embodying the acceptance. At the very least, this last legal requisite of annotation in both instruments of donation and acceptance was not fulfilled by the petitioner. Neither the Affidavit nor the Deed of Acceptance bears the fact that Esperanza received notice of the acceptance of the donation by petitioner. For this reason, even Esperanzas one-third share in the subject property cannot be adjudicated to the petitioner. No Possession in Good Faith Logically, if Esperanza fully owned the subject property, she would have simply waived her rights to and interest in the subject property, without mentioning her share and participation in the same. By including such words in her Affidavit, Esperanza was aware of and was limiting her waiver, renunciation, and quitclaim to her one-third share and participation in the subject property. Invalidity of the Affidavit The Court also ruled that the affidavit executed by Esperanza is really a donation and did not comply with the requirements for a valid donation. Citing Article 749 of the Civil Code, the Court stated: there are three requisites for the validity of a simple donation of a real property, to wit: (1) it must be made in a public instrument; (2) it must be accepted, which acceptance may be made either in the same Deed of Donation or in a separate public instrument; and (3) if the acceptance is made in a separate instrument, the donor must be notified in an authentic form, and the same must be noted in both instruments. . . In the present case, the said Affidavit, which is tantamount to a Deed of Donation, met the first requisite, as it was notarized; thus, it became a public instrument. Nevertheless, it failed to meet the aforesaid second and third requisites. The acceptance of the said donation was not made by the petitioner and her husband either in the same Affidavit or in a separate public instrument. As there was no acceptance made of the said donation, there was also no notice of the said acceptance given to the donor, Esperanza. Therefore, the Affidavit executed by Esperanza in favor of petitioner and her husband is null and void. The subsequent notarized Deed of Acceptance dated 23 September 2000, as well as the notice of such acceptance, executed by the petitioner did not cure the defect. Moreover, it was only made by the petitioner several years after the Complaint was filed in court, or when the RTC had already rendered its Decision dated 12 September 2000, although it was still during Esperanzas lifetime. Evidently, its execution was a mere afterthought, a belated attempt to cure what was a defective donation. The Court also ruled that the Arangotes cannot be deemed possessors in food faith under the Civil Code, which provides: Art. 526. He is deemed a possessor in good faith who is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. He is deemed a possessor in bad faith who possesses in any case contrary to the foregoing. Mistake upon a doubtful or difficult question of law may be the basis of good faith. Art. 1127. The good faith of the possessor consists in the reasonable belief that the person from whom he received the thing was the owner thereof, and could transmit his ownership The Court explained: Possession in good faith ceases from the moment defects in the title are made known to the possessor by extraneous evidence or by a suit for recovery of the property by the true owner. Every possessor in good faith becomes a possessor in bad faith from the moment he becomes aware that what he believed to be true is not so. In the present case, when respondents came to know that an OCT over the subject property was issued and registered in petitioners name on 26 March 1993, respondents brought a Complaint on 7 August 1993 before the Lupon of Barangay Maloco, Ibajay, Aklan, challenging the title of petitioner to the subject property on the basis that said property constitutes the inheritance of respondent, together with their grandaunt Esperanza, so Esperanza had no authority to relinquish the entire subject property to petitioner. From that moment, the good faith of the petitioner had ceased. The Court also held that the Arangotes are not builders in good faith. evidence shows that the subject property is the share of the heirs of Martin I. The Court also stated that the language of the affidavit shows that the Affidavit she executed in favor of Elvira and her husband on 6 June 1985 was worded as follows: That I hereby renounce, relinquish, waive and quitclaim all my rights, share, interest and participation whatsoever in the [subject property] unto the said Sps. Ray Mars Arangote and Elvira T. Arangote, their heirs, successors, and assigns including the improvement found thereon. . . According to the Court:
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a choice be made by the landowner, he should be able to prove good faith on his part. Good faith, here understood, is an intangible and abstract quality with no technical meaning or statutory definition, and it encompasses, among other things, an honest belief, the absence of malice and the absence of design to defraud or to seek an unconscionable advantage. An individuals personal good faith is a concept of his own mind and, therefore, may not conclusively be determined by his protestations alone. It implies honesty of intention, and freedom from knowledge of circumstances which ought to put the holder upon inquiry. The essence of good faith lies in an honest belie f in the validity of ones right, ignorance of a superior claim, and absence of intention to overreach another. Applied to possession, one is considered in good faith if he is not aware that there exists in his title or mode of acquisition any flaw which invalidates it. In this case, the subject property waived and quitclaimed by Esperanza to the petitioner and her husband in the Affidavit was only covered by a tax declaration in the name of Esperanza. Petitioner did not even bother to look into the origin of the subject property and to probe into the right of Esperanza to relinquish the same. Thus, when petitioner and her husband built a house thereon in 1989 they cannot be considered to have acted in good faith as they were fully aware that when Esperanza executed an Affidavit relinquishing in their favor the subject property the only proof of Esperanzas ownership over the same was a mere tax declaration. This fact or circumstance alone was enough to put the petitioner and her husband under inquiry. Settled is the rule that a tax declaration does not prove ownership. It is merely an indicium of a claim of ownership. Payment of taxes is not proof of ownership; it is, at best, an indicium of possession in the concept of ownership. Neither tax receipts nor a declaration of ownership for taxation purposes is evidence of ownership or of a right to possess realty when not supported by other effective proofs. Elvira T. Arangote vs Sps. Martin and Lourdes S. Maglunob and Romeo Salido, G.R. No. 178906, February 18, 2009. INVALID NOTICE, INVALID SALE Various provisions of law require the publication of legal or judicial notices in newspapers of general circulation. For example, Act No. 3135 requires that in extra-judicial foreclosure proceedings, the notice of the sale must be published in a newspaper of general circulation in the municipality or city where the property is located. The law provides: SECTION 3. Notice shall be given by posting notices of the sale for not less than twenty days in at least three public places of the municipality or city where Moreover, the petitioner cannot be considered a builder in good faith of the house on the subject property. In the context that such term is used in particular reference to Article 448 of the Civil Code, a builder in good faith is one who, not being the owner of the land, builds on that land, believing himself to be its owner and unaware of any defect in his title or mode of acquisition. The various provisions of the Civil Code, pertinent to the subject, read: Article 448. The owner of the land on which anything has been built, sown, or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. In such a case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms thereof. Article 449. He who builds, plants, or sows in bad faith on the land of another, loses what is built, planted or sown without right to indemnity. Article 450. The owner of the land on which anything has been built, planted or sown in bad faith may demand the demolition of the work, or that the planting or sowing be removed, in order to replace things in their former condition at the expense of the person who built, planted or sowed; or he may compel the builder or planter to pay the price of the land, and the sower the proper rent. Under the foregoing provisions, the builder in good faith can compel the landowner to make a choice between appropriating the building by paying the proper indemnity or obliging the builder to pay the price of the land. The choice belongs to the owner of the land, a rule that accords with the principle of accession, i.e., that the accessory follows the principal and not the other way around. Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. He must choose one. He cannot, for instance, compel the owner of the building to instead remove it from the land. In order, however, that the builder can invoke that accruing benefit and enjoy his corresponding right to demand that
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The bank argued that Maharlika Pilipinas is a newspaper of general circulation: . . . Maharlika Pilipinas is a newspaper of general circulation since it is published for the dissemination of local news and general information, it has a bona fide subscription list of paying subscribers, and it is published at regular intervals. It asserts that the publishers Affidavit of Publication attesting that Maharlika Pilipinas is a newspaper of general circulation is sufficient evidence of such fact. Further, the absence of subscribers in Mandaluyong City does not necessarily mean that Maharlika Pilipinas is not circulated therein; on the contrary, as testified to by its publisher, the said newspaper is in fact offered to persons other than its subscribers. Petitioner stresses that the publishers statement that Maharlika Pilipinas is also circulated in Rizal and Cavite was in response to the question as to where else the newspaper was circulated; hence, such testimony does not conclusively show that it is not circulated in Mandaluyong City. To prove that Maharlika Pilipinas was not a newspaper of general circulation in Mandaluyong City, the mortgagees presented the following documents: (1) a certification from the Chief of the Business Permit and Licensing Office of Mandaluyong City, attesting that Maharlika Pilipinas did not have a business permit in Mandaluyong City; and (2) List of Subscribers of Maharlika Pilipinas showing that there were no subscribers from Mandaluyong City. In addition, during the direct examination the publisher of Maharlika Pilipinas, he stated: Atty. Mendoza: Do you offer your newspaper to other persons other than the subscribers listed here? Witness: Yes, but we do not just offer it to anybody. The Court ruled that Maharlika Pilipinas is not a newspaper of general circulation in Mandaluyong City. It held: Petitioner correctly points out that neither the publishers statement that Maharlika Pilipinas is being circulated in Rizal and Cavite, nor his admission that there are no subscribers in Mandaluyong City proves that said newspaper is not circulated in Mandaluyong City. the property is situated, and if such property is worth more than four hundred pesos, such notice shall also be published once a week for at least three consecutive weeks in a newspaper of general circulation in the municipality or city. If the required notice of sale is not published in a newspaper of general circulation in the municipality or city where the property is located, the court can declare the extra-judicial foreclosure sale of the property as invalid. In Metropolitan Bank and Trust Company vs. Peafiel , G.R. No. 173976, February 29, 2009, the Supreme Court explained the rationale for the requirement: The object of a notice of sale is to inform the public of the nature and condition of the property to be sold, and of the time, place and terms of the sale. Notices are given for the purpose of securing bidders and to prevent a sacrifice of the property. The goal of the notice requirement is to achieve a reasonably wide publicity of the auction sale. This is why publication in a newspaper of general circulation is required. But what is a newspaper of general circulation? According to the Supreme Court: True, to be a newspaper of general circulation, it is enough that it is published for the dissemination of local news and general information, that it has a bona fide subscription list of paying subscribers, and that it is published at regular intervals. Over and above all these, the newspaper must be available to the public in general, and not just to a select few chosen by the publisher. Otherwise, the precise objective of publishing the notice of sale in the newspaper will not be realized. In fact, to ensure a wide readership of the newspaper, jurisprudence suggests that the newspaper must also be appealing to the public in general. The Court has, therefore, held in several cases that the newspaper must not be devoted solely to the interests, or published for the entertainment, of a particular class, profession, trade, calling, race, or religious denomination. The newspaper need not have the largest circulation so long as it is of general circulation. In Metropolitan Bank, the notice of sale was published in Maharlika Pilipinas. The mortgagors defaulted in the payment of their loan obligation and the bank instituted an extrajudicial foreclosure proceeding under Act No. 3135. The mortgagors assailed the validity of the auction sale on the ground that the notice of sale was not published in a newspaper of general circulation.
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They fall in love. They get married (or live together). They buy a house and lot. We wish it could always be a happy ending and they will live happily ever after. For some, the fairy tale becomes reality. For other couples, the ending is not what they have hoped for. They fight. They go their separate ways. They fight over property. Because the Philippine Constitution does not allow foreigners to own land in the Philippines, it is not unusual for title to parcels of land to be placed in the name of the Filipina wife or girlfriend. What are the rights of a foreigner (and his successor-in-interest) who acquired real properties in the Philippines as against his former Filipina girlfriend in whose sole name the properties were registered in the Transfer Certificate of Title ( TCT) covering the properties? In Borromeo vs. Descallar, G.R. No. 159310, February 24, 2009, Wilhelm Jambrich (the foreigner) and Antonietta Descallar (the Filipina girlfriend) were designated as buyers in a Contract to Sell a house and lot located in Agro-Macro subdivision, Mandaue City. They were also designated as buyers in the Deed of Absolute Sale over the property. When the Deed of Absolute Sale was presented for registration before the Register of Deeds, the Register of Deeds refused registration on the ground that Wilhelm was an alien and could not acquire land. Consequently, Wilhelms name was erased from the Deed of Absolute Sale. However, his signature remained on the left hand margin of page 1, beside Antoniettas signature as buyer on page 3, and at the bottom of page 4 which is the last page of the deed. The Register of Deeds issued several TCTs in Antoniettas name. The couple parted ways. Subsequently, Wilhelm became indebted to Camilo, a real estate dealer who repaired Wilhems speedboat. To pay his debt, Wilhelm sold his rights and interests in the Agro-Macro property to Camilo for PhP250,000, as evidenced by a Dee d of Absolute Sale/Assignment. When Camilo sought to register the Deed of Absolute Sale/Assignment with the Register of Deeds, he discovered thatthe TCTs to the three lots have been transferred in the name of Antonietta, and that the property has already been mortgaged. Camilo filed petitioner filed a complaint against Antonietta for recovery of real property before the Regional Trial Court of Mandaue City. According to Camilo: . . . the Contracts to Sell dated November 18, 1985 and March 10, 1986 and the Deed of Absolute Sale dated November 16, 1987 over the properties which identified Nonetheless, the publishers testimony that they do not just offer [Maharlika Pilipinas] to anybody implies that the newspaper is not available to the public in general. This statement, taken in conjunction with the fact that there are no subscribers in Mandaluyong City, convinces us that Maharlika Pilipinas is, in fact, not a newspaper of general circulation in Mandaluyong City. . . Noticeably, in the Affidavit of Publication, Mr. Alvarez attested that he was the Publisher of Maharlika Pilipinas, a newspaper of general circulation, published every Thursday. Nowhere is it stated in the affidavit that Maharlika Pilipinas is in circulation in Mandaluyong City. To recall, Sec. 3 of Act No. 3135 does not only require that the newspaper must be of general circulation; it also requires that the newspaper be circulated in the municipality or city where the property is located. Indeed, in the cases wherein the Court held that the affidavit of the publisher was sufficient proof of the required publication, the affidavit of the publisher therein distinctly stated that the newspaper was generally circulated in the place where the property was located. There are several items that should be noted here. First, a newspaper cannot be deemed a newspaper of general circulation if it is offered to a select group of persons only. Second, the Affidavit of Publication should specify where the newspaper is being circulated. It is noteworthy that the Court seems to have found unconvincing what appears to be testimony that Maharlika Pilipinas is circulated in Marikina City: Atty. Mendoza: Now, you said that you print and publish Maharlika Pilipinas in Marikina and Quezon City? Witness: Yes. Atty. Mendoza: Where else circulate your newspaper? Witness: In Rizal and in Cavite. While the lawyer used the phrase print and publish, the question appears to be where Maharlika Pilipinas is circulated (as may be implied by the succeeding question). As noted by the Supreme Court , for the purpose of extrajudicial foreclosure of mortgage, the party alleging non-compliance with the requisite publication has the burden of proving the same. The Court was convinced that the mortgagors met the burden of proof. NOT A FAIRY TALE ENDING We have heard the story so many times. Foreigner goes to the Philippines. Foreigner meets Filipina girl. do you
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Having found that Wilhelm is the true owner of the properties, the Court then addressed the issue of the effect of the registration of the property in the name of Antonietta. The Court stated: It is settled that registration is not a mode of acquiring ownership. It is only a means of confirming the fact of its existence with notice to the world at large. Certificates of title are not a source of right. The mere possession of a title does not make one the true owner of the property. Thus, the mere fact that respondent has the titles of the disputed properties in her name does not necessarily, conclusively and absolutely make her the owner. The rule on indefeasibility of title likewise does not apply to respondent. A certificate of title implies that the title is quiet, and that it is perfect, absolute and indefeasible. However, there are well-defined exceptions to this rule, as when the transferee is not a holder in good faith and did not acquire the subject properties for a valuable consideration. This is the situation in the instant case. Respondent did not contribute a single centavo in the acquisition of the properties. She had no income of her own at that time, nor did she have any savings. She and her two sons were then fully supported by Jambrich. On the issue of Wilhelms ineligibil ity of acquire land, the Court reiterated its earlier rulings that the while the acquisition of land by a foreigner violates the Constitution, its subsequent transfer to a qualified Philippine national cured the defect in the original transaction. According to the Court: The transfer of land from Agro-Macro Development Corporation to Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino citizen. In United Church Board for World Ministries v. Sebastian, the Court reiterated the consistent ruling in a number of cases that if land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. Lesson for the foreigner: it was wise to keep proof that he used his funds to purchase the property. It was also wise to sell the property. Lesson for the Filipina: it was unwise to offer no proof that she funded the purchase price of the property. Lesson for the buyer: he would have saved the cost of litigation if he checked the title to the property prior to executing the Deed of Assignment. both Jambrich and respondent as buyers do not reflect the true agreement of the parties since respondent did not pay a single centavo of the purchase price and was not in fact a buyer; that it was Jambrich alone who paid for the properties using his exclusive funds; that Jambrich was the real and absolute owner of the properties; and, that petitioner acquired absolute ownership by virtue of the Deed of Absolute Sale/Assignment dated July 11, 1991 which Jambrich executed in his favor. On the other hand, Antonietta: . . . belied the allegation that she did not pay a single centavo of the purchase price. On the contrary, she claimed that she solely and exclusively used her o wn personal funds to defray and pay for the purchase price of the subject lots in question, and that Jambrich, being an alien, was prohibited to acquire or own real property in the Philippines. The regional trial court ruled in favor of Camilo. On the other hand, the Court of Appeals ruled in favor of Antonietta. The Court of Appeals ruled: We disagree with the lower courts conclusion. The circumstances involved in the case cited by the lower court and similar cases decided on by the Supreme Court which upheld the validity of the title of the subsequent Filipino purchasers are absent in the case at bar. It should be noted that in said cases, the title to the subject property has been issued in the name of the alien transferee (Godinez et al., vs. Fong Pak Luen et al., 120 SCRA 223 citing Krivenko vs. Register of Deeds of Manila, 79 Phils. 461; United Church Board for World Ministries vs. Sebastian, 159 SCRA 446, citing the case of Sarsosa Vda. De Barsobia vs. Cuenco, 113 SCRA 547; Tejido vs. Zamacoma, 138 SCRA 78). In the case at bar, the title of the subject property is not in the name of Jambrich but in the name of defendant-appellant. Thus, Jambrich could not have transferred a property he has no title thereto. . . The Supreme Court reversed the Court of Appeals and agreed with the regional trial court. With respect to the issue of who purchased the house and lot, the Court stated that the evidence presented before the trial court indicate that Wilhelm possessed the financial capacity to purchase the Agro-Macro property and that Wilhelm was the source of funds used to purchase the property. On the other hand, Antonietta (who used to work as a waitress) was unemployed at the time of the purchase and did not substantiate her alleged source of income. Thus, the Court ruled that Wilhelm has all authority to transfer all his rights, interests and participation over the subject properties to Camilo by virtue of the Deed of Absolute Sale/Assignment he executed on July 11, 1991.
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testamentary, taking the prescribed oath, enters upon the execution and performance of its trust. On July 24, 1956, the executor filed a project of partition. The wife of the decedent, Magdalena Bohanan and her two children questioned the validity of the will which gab e to a grandson P 90,819.67 of the P211, 639 and one half of all shares of stock of several mining companies and to his brother and sister the same amount, to his children, a legacy of only P6, 000 each; that they have been deprived of their legitime. HELD: Article 10 of the Civil Code (Article 16, NCC) provides that the validity of testamentary dispositions is to be governed by the national law of the person whose succession is in question. In the present case, the testator was a citizen of the state of Nevada. Since the law of sais state allow the testator to dispose all of his property according to his will, the testamentary disposition depriving his wife and children of what should be their legitime under the laws of the Philippines, should be respected and the project of partition made in accordance to his testamentary disposition should be approved. The pertinent law of the state of the testator may be taken judicial notice of without proof of such law having been offered at the hearing of the project of partition where it appears that the sail law was admitted by the court as exhibit during the probate of the will; that the same was introduced as evidence of a motion of the appellants for withdrawal of a certain sum of money, and that the other appellants do dispute the said law. Phisec Investment vs. CA 274 SCRA 102 FACTS: Private respondent Ventura Ducat obtained separate loans from petitioners Ayala and Philsec in the amount of US$ 2, 500.00, secured by shares of stock owned by Ducat with a market value of P14, 088.00. In order to facilitate the payment of the loans, private respondent 1488 Inc., through its president, private respondent Daic, assumed Ducats obligation under an agreement whereby the former executed a Warranty Deed with Vendors Lien by which it sold to petitioner ATHONA a parcel of land in Texas for US$2, 807, 209.02,
CONFLICT OF LAWS CASES

[from the Bar Review Notes pp. 7,8]
Testate Estate of Bohanan vs. Bohanan, et al. 106 Phil 997 FACTS: On April 24, 1950, CFI Manila, presided by Hon. Amparo, admitted to probate a last will and testament of C. O. Bohanan, executed by him on April 23, 1944 in Manila. In the said order, the court made the following findings: XXX Notwithstanding the long residence of the decedent in the Philippines, his stay here is merely temporary, an he continued and remained to be a citizen of the US and of the state of his particular choice, which is Nevada, as stated in his will XXX His permanent residence or domicile in the US depend upon his personal intent or desire, and he selected Nevada as his domicile and therefore, at the time of his death, he was a citizen of that state XXX XXX that his will and testament is fully in accordance with the laws of the state of Nevada and admits the same to probate XXX The Philippine Trust Co., named as executor of the will, was appointed and after the filing of the required bond, and the issuance of letters of
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In this jurisdiction, with respect to actions in personam, as distinguished from action in rend, a foreign judgment merely constitutes prima facie evidence of the justness of the claim of the party and, as such, is subject to proof to the contrary. A foreign judgment is valid and enforceable in the Philippines if there is no showing that it was viated by want of notice of the party, collusion, fraud or clear mistake of law or fact.. Court of Appeals erred to summarily rule that the petitioners action is barred by principle of res judicata. Nor the trial courts refusal to take cognizance of the case justifiable under the principle of forum non conveniens. MTD is limited to the grounds under Rule 16, Sec. 1 which does not include forum non conveniens. The dismissal must be based on factual determination. Trial court may abstain from assuming jurisdiction on this ground only after vital facts are e stablished, to determine whether special circumstances requires the courts desistance. When the property of the defendants has been attached within the Philippines, extraterritorial service of summon may be effected. CAs decision reversed. Case remanded to RTC. while Philsec and Ayala extended a loan to ATHONA in the amount of US$ 2, 500.00 as initial payment of the purchase price. The balance of US$ 307, 209.02 was to be paid by means of promissory note executed by ATHONA in favor of 1488 Inc. Ducat was released from indebtedness and Philsec and Ayala delivered to 1488 Inc. all the shares of stocks in their possession belonging to Ducat. ATHONA failed to pay the interest of the balance. Private respondent 1488 Inc. sued ATHONA, Ayala and Philsec in the US for the payment of the balance and for damages for breach of contract and fraud. During the pendency of the case (US), petitioners filed a complaint For sum of money with damages and Writ of Preliminary Attachment against the respondents in RTC Manila. The complainant reiterated the allegations of petitioners in their respective counterclaims in US case (counterclaim; dismissed) on the ground of fraud. Trial court issued a writ of preliminary attachment. Private respondent Ducat moved to dismiss Civil Case No. 16563 on the grounds of (1) litis pendentia, vis-a-vis Civil Action No. H-86-440 filed by 1488, Inc. and Daic in the U.S., (2) forum non conveniens, and (3) failure of petitioners PHILSEC and BPI-IFL to state a cause of action. Ducat contended that the alleged overpricing of the property prejudiced only petitioner ATHONA, as buyer, but not PHILSEC and BPI-IFL which were not parties to the sale and whose only participation was to extend financial accommodation to ATHONA under a separate loan agreement. On the other hand, private respondents 1488, Inc. and its president Daic filed a joint "Special Appearance and Qualified Motion to Dismiss," contending that the action being in personam, extraterritorial service of summons by publication was ineffectual and did not vest the court with jurisdiction over 1488, Inc., which is a non-resident foreign corporation, and Daic, who is a non-resident alien. Trial court granted the motion to dismiss. CA affirmed lower courts decision. Hence, this petition for review on certiorari. N.B. while the present case was pending in the CA, US court rendered judgment in the case before it which affirmed by the Circuit Court of Appeals. HELD:
Pennoyer v. Neff 95 U.S. 714 (1877) Facts: Mitchell brought suit against Neff to recover unpaid legal fees. Mitchell published notice in an Oregon newspaper and did not serve Neff personally. Neff failed to appear and a default judgment was entered against him. Mitchell seized land belonging to Neff in Oregon and purchased it at a Sheriffs auction that was held to satisfy the judgment. Mitchell assigned the land to Pennoyer. Neff sued Pennoyer in federal court in Oregon to recover possession of the property, claiming that the original judgment against him had not been valid for lack of personal jurisdiction over both him and the land. The court found that the judgment had not been valid and that the land belonged to Neff. Pennoyer lost on appeal. Issue: Can a state court exercise personal jurisdiction over a non-resident who has not been personally served while within the state and whose property within the state was not attached before the onset of litigation? Held: No. A court may enter a judgment against a non-resident only if the party 1) is personally served with process while within the state, or 2) has property within the state, and that property is attached before litigation begins (i.e. quasi in rem jurisdiction).
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Abelardo Licaros (Abelardo, for short) and Margarita Romualdez-Licaros (Margarita, hereafter) were lawfully married on December 15, 1968. Out of this marital union were born Maria Concepcion and Abelardo, Jr. Ironically, marital differences, squabbles and irreconcilable conflicts transpired between the spouses, such that sometime in 1979, they agreed to separate from bed and board. In 1982, Margarita left for the United States and there, to settle down with her two (2) children. On June 24, 1991, Abelardo commenced Civil Case No. 91-1757, for the declaration of nullity of his marriage with Margarita, based on psychological incapacity under the New Family Code. As Margarita was then residing in California, U.S.A., Abelardo initially moved that summons be served through the International Express Courier Service. The court a quo denied the motion. Instead, it ordered that summons be served by publication in a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time furnishing respondent a copy of the order, as well as the corresponding summons and a copy of the petition at the given address in the United States through the Department of Foreign Affairs, all at the expense of Abelardo. Respondent was given sixty (60) days after publication to file a responsive pleading. On November 8, 1991, the Decision was handed down declaring the marriage between Abelardo and Margarita null and void. The Court of Appeals rejected Margaritas claim that the trial court lacked jurisdiction to hear and decide the Petition for Declaration of Nullity of Marriage for improper service of summons on her. Hence, the instant petition. The Issue Whether Margarita was validly served with summons in the case for declaration of nullity of her marriage with Abelardo? The Courts Ruling The petition is bereft of merit. At the time Abelardo filed the petition for nullity of the marriage in 1991, Margarita was residing in the United States. She left the Philippines in 1982 together with her two children. The trial court considered Margarita a non-resident defendant who is not found in the Philippines. Since the petition affects the personal status of the plaintiff, the trial court authorized extraterritorial service of summons under Section 15, Rule 14 of the Rules of Court. The term personal status includes family relations, particularly the relations between husband and wife. Under Section 15 of Rule 14, a defendant who is a non-resident and is not found in the country may be served with summons by extraterritorial service The Oregon court did not have power over Neff because he was not served in Oregon. The courts judgment would have been valid if Mitchell had attached Neffs land at the beginning of the suit. Mitchell could not have done this because Neff did not own the land at the time Mitchell initiated the suit. The default judgment was declared invalid. Therefore, the sheriff had no power to auction the land and Neff was the legal owner. Therefore, lower courts decision is affirmed. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950). Facts Central Hanover Bank was the trustee of a common trust fund formed by pooling the assets of a number of smaller trusts. Central Hanover Bank petitioned to the New York Surrogates Court for a judicial settlement of the trust. The only notice provided to beneficiaries was via publication in a newspaper. Mullane was appointed attorney and special guardian for a number of beneficiaries who either were unknown or did not appear. Mullane objected to the statutory provision for notice by publication, arguing that it was unconstitutional for lack of due process under the 14th amendment. The Surrogates Court overruled Mullanes objection and the ruling was affirmed on appeal to the New York Supreme Court Appellate Division and the New York Court of Appeals. The United States Supreme Court granted cert. Issue Is notice given to out of state parties by publication in a newspaper, when the parties addresses were known, constitutional in light of the Due Process Clause of the 14th amendment? Ruling No. Notice given to out of state parties by publication in a newspaper, when the parties addresses were known, is unconstitutional in light of the Due Process Clause of the 14th amendment. Notice must be reasonably calculated to inform known parties affected by the proceedings. However, constructive notice by publication was acceptable with regard to missing or unknown parties or for those whose whereabouts could not be ascertained by due diligence or for whom future interests were too conjectural to be known with certainty. Reversed for Mullane. MARGARITA ROMUALDEZ-LICAROS, petitioner, vs. ABELARDO B. LICAROS, respondent. [G.R. No. 150656. April 29, 2003] The Facts
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On September 5, 1938, the trial court ordered Eugene Arthur Perkins, to include in his complaint as parties defendants petitioner, Idonah Slade Perkins, and George H. Engelhard. The complaint was accordingly amended and in addition to the relief prayed for in the original complaint, respondent Perkins prayed that petitioner Idonah Slade Perkins and George H. Engelhard be adjudged without interest in the shares of stock in question and excluded from any claim they assert thereon. Thereafter, summons by publication were served upon the non-resident defendants, Idonah Slade Perkins and George H. Engelhard, pursuant to the order of the trial court. On December 9, 1938, Engelhard filed his answer to the amended complaint, and on January 8, 1940, petitioner's objection to the court's jurisdiction over her person having been overruled by the trial court , Idonah Perkins sets up a judgment allegedly obtained by her against respondent, Eugene Arthur Perkins, from the Supreme Court of the State of New York, wherein it is declared that she is the sole legal owner and entitled to the possession and control of the shares of stock in question together with all the cash dividends declared thereon by the Benguet Consolidated Mining Company. Eugene Arthur Perkins sets up several defenses to the enforcement in this jurisdiction of the judgment of the Supreme Court of the State of New York above alluded to. Idonah Slade Perkins, on June 5, 1940, filed a demurrer thereto on the ground that "the court has no jurisdiction of the subject of the action," because the alleged judgment of the Supreme Court of the State of New York is res judicata. ISSUE: Whether or not the local court jurisdiction over the subject matter has in four instances: (1) when the action affects the personal status of the plaintiff; (2) when the action relates to, or the subject of which is property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent; (3) when the relief demanded consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; or (4) when the property of the defendant has been attached within the Philippines. In these instances, extraterritorial service of summons may be effected under any of three modes: (1) by personal service out of the country, with leave of court; (2) by publication and sending a copy of the summons and order of the court by registered mail to the defendants last known address, also with leave of court; or (3) by any other means the judge may consider sufficient. Applying the foregoing rule, the trial court required extraterritorial service of summons to be effected on Margarita in the following manner: x x x, service of Summons by way of publication in a newspaper of general circulation once a week for three (3) consecutive weeks, at the same time, furnishing respondent copy of this Order as well as the corresponding Summons and copy of the petition at her given address at No. 96 Mulberry Lane, Atherton, California, U.S.A., thru the Department of Foreign Affairs, all at the expense of petitioner. (Emphasis ours) The trial courts prescribed mode of extraterritorial service does not fall under the first or second mode specified in Section 15 of Rule 14, but under the third mode. This refers to any other means that the judge may consider sufficient. IDONAH SLADE PERKINS, petitioner, vs. MAMERTO ROXAS, ET AL., respondents. FACTS: On July 5, 1938, Eugene Arthur Perkins, filed a complaint in the Court of First Instance of Manila against the Benguet Consolidated Mining Company for the recovery of the sum of P71,379.90, consisting of dividends which have been declared and made payable on 52,874 shares of stock registered in his name, payment of which was being withheld by the company, and for the recognition of his right to the control and disposal of said shares, to the exclusion of all others. The company alleged, that the withholding of plaintiff's right to the disposal and control of the shares was due to certain demands made with respect to said shares by Slade Perkins, and by one George H. Engelhard.
RULING: By jurisdiction over the subject matter is meant the nature of the cause of action and of the relief sought, and this is conferred by the sovereign authority which organizes the court, and is to be sought for in general nature of its powers, or in authority specially conferred. In the present case, the amended complaint filed by the respondent, Eugene Arthur Perkins, in the court below alleged the ownership in himself of the conjugal partnership between him and his wife, Idonah Slade Perkins; that the petitioner, Idonah Slade Perkins, and George H. Engelhard assert claims to and interests in the said stock adverse to Eugene Arthur Perkins; that such claims are invalid, unfounded, and made only for the purpose of vexing, hindering and delaying Eugene Arthur Perkins in the exercise of the lawful control over and use of said shares and dividends accorded to
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of Estanislao, sadi petition was granted by the court. Morris Carpo filed a complaint with the Court of First Instance of Rizal, for "declaration of nullity of Decree No. N-63394 and TCT No. 20408." Named defendants were Realty Sales Enterprise, Inc., Macondray Farms, Inc. and the Commissioner of Land Registration. Subsequently, however, Carpo withdrew his complaint as against the last named defendant, and the answer filed on behalf of said government official was ordered stricken off the record. The complaint alleged that TCT No. 20408 as well as OCT No. 1609 from which it was derived, is a nullity as the CFI of Rizal, Branch VI, then presided over by Judge Andres Reyes (hereafter referred to as the Reyes Court) which issued the order dated May 21, 1958 directing the issuance of a decree of registration, for it was not sitting as a land registration court, but as a court of ordinary jurisdiction. Realty and Macondray alleged that the Reyes Court was acting as a court of land registration was actually performing a purely ministerial duty for the registration court,with which in said case rendered a decision adjudicating the two (2) lots in question to Estanislao Mayuga (father of Dominador Mayuga, predecessor-in-interest of Realty and Macondray), which decision was upheld by the Court of Appeals. It was alleged that it is the title of Carpo which is null and void, having been issued over a parcel of land previously registered under the Torrens System in favor of another. ISSUES: 1. Whether or not the Reyes Court had no authority to issue the order directing the issuance of a decree of registration in favor of Mayuga, predecessor-in-interest of Realty, as it was not sitting as a land registration court 2. Whether or not the instant case is an action in rem RULING: Under Act No. 496, Land Registration Act, (1902) as amended by Act No. 2347 (1914), jurisdiction over all applications for registration of title to and was conferred upon the Courts of First Instance of the respective provinces in which the land sought to be registered is situated. Jurisdiction over land registration cases, as in ordinary actions, is acquired upon the filing in court of the application for registration, and is retained up to the end of the litigation. The issuance of a decree of registration is but a step in the entire land registration process; and as such, does not constitute a separate proceeding. The petition filed by Dominador is not a distinct and separate him and by law and by previous orders and decrees of this court; and the said amended complaint prays, inter alia, "that defendant Benguet Consolidated Mining Company be required and ordered to recognize the right of the plaintiff to the control and disposal of said shares so standing in his name to the exclusion of all others; that the additional defendants, Idonah Slade Perkins and George H. Engelhard, be each held to have no interest or claim in the subject matter of the controversy between plaintiff and defendant Benguet Consolidated Mining Company, or in or under the judgment to be rendered herein and that by said judgment they, and each of them be excluded therefrom; and that the plaintiff be awarded the costs of this suit and general relief." The respondent's action, therefore, calls for the adjudication of title to certain shares of stock of the Benguet Consolidated Mining Company, and the granting of affirmative reliefs, which fall within the general jurisdiction of the Court of First Instance of Manila The test of jurisdiction is whether or not the tribunal has power to enter upon the inquiry, not whether its conclusion in the course of it is right or wrong. If its decision is erroneous, its judgment case be reversed on appeal; but its determination of the question, which the petitioner here anticipates and seeks to prevent, is the exercise by that court and the rightful exercise of its jurisdiction. REALTY SALES ENTERPRISE, INC. and MACONDRAY FARMS, INC., petitioners, vs. INTERMEDIATE APPELLATE COURT (Special Third Civil Cases Division), HON. RIZALINA BONIFACIO VERA, as Judge, Court of First Instance of Rizal, Branch XXIII, MORRIS G. CARPO, QUEZON CITY DEVELOPMENT AND FINANCING CORPORATION, and COMMISSIONER OF LAND REGISTRATION, respondents. FACTS: Estanislao Mayuga, father of Dominador Mayuga, predecessor-in-interest of Realty, who originally filed on June 24, 1927 a registration proceeding in the Court of First Instance of Rizal to confirm his title over parcels of land described as Lots 1, 2 and 3, Plan Psu-47035. Before he could secure a decree of registration in his name, Estanislao died. On May 13, 1958 Dominador Mayuga, son of Estanislao, filed a petition with the Reyes Court docketed as Case No. 2689 alleging that he was the only heir of the deceased Estanislao Mayuga and praying for the issuance of a decree of registration over the property adjudicated in favor
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back to Missouri and shipments from the plant were sent f.o.b.. International Shoe did not pay the tax at issue in this case, so the state effected service of process on one of their salesmen with a notice of assessment. Washington also sent a letter by registered mail to their place of business in Missouri. International Shoe made a special appearance before the office of unemployment to dispute the state's jurisdiction over it as a corporate "person." Personal jurisdiction was upheld in the appeal tribunal and by the Superior Court and the Supreme Court of Washington, so International Shoe Co. appealed to the U.S. Supreme Court. Issue What level of connection must exist between a non-resident corporation and a state in order for that corporation to be sued within that state? Result The Supreme Court, in an opinion by Chief Justice Harlan Fiske Stone, held that the Fourteenth Amendment requires that a defendant cannot be brought before a court of a particular state unless that person has: Minimum contacts . . . such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice." ...a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected within the activities within the state, a procedure that requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. Jurisdiction was appropriate in this case because International Shoe Co. engaged in substantial activities in the state of Washington, enjoyed the benefits and protections of the state of Washington through the ability to sell there, and had access to Washingtons courts to resolve its disputes. Concurrence Justice Hugo Black wrote a separate opinion, agreeing with the outcome in this case, but contending that the Court has excessively restricted the power of states to find jurisdiction over companies doing business therein. REPUBLIC OF THE PHILIPPINES, petitioner, vs. HON. ZENAIDA ELEPANO, Presiding Judge of RTC Kalookan, Branch 128 and CORAZON SANTOS PUNSALAN, respondents proceeding from, but a continuation of, the original land registration proceedings initiated by Estanislao Mayuga. The Reyes Court, as Branch VI of the Court of First Instance of Rizal, was continuing in the exercise of jurisdiction over the case, which jurisdiction was vested in the CFI-Rizal upon filing of the original applications. It must be emphasized that the action filed by Carpo against Realty is in the nature of an action to remove clouds from title to real property. By asserting its own title to the property in question and asking that Carpo's title be declared null and void instead, and by filing the third-party complaint against QCDFC, Realty was similarly asking the court to remove clouds from its own title. Actions of such nature are governed by Articles 476 to 481, Quieting of Title, Civil Code (Republic Act No. 386), and Rule 64, Declaratory Relief and Similar Remedies, Rules of Court. Suits to quiet title are not technically suits in rem, nor are they, strictly speaking, in personam, but being against the person in respect of the res, these proceedings are characterized as quasi in rem. The judgment in such proceedings is conclusive only between the parties
International Shoe Co. v. Washington, 326 U.S. 310 (1945)[1], was a landmark decision of the United States Supreme Court holding that a civil defendant could not be subjected to personal jurisdiction by the courts of a state unless the defendant had certain minimum contacts with that state. Facts The plaintiff, responsible for filing this suit in the State of Washington, established a tax on employers doing business therein. The "tax" was a mandatory contribution to the state's Unemployment Compensation Fund. The defendant, International Shoe Co., was a company that was incorporated in Delaware with its principal place of business ("PPB") in Missouri. The corporation had maintained for some time a staff of 11-13 salesmen in Washington, working on commission, who were residents of that state, and who occasionally rented space to put up displays, as well as met with prospective customers in motels and hotels, thus having no permanent "situs" of business in the State. Each year they brought in about $31,000 in compensation. International Shoe's solicitation system was set up to explicitly avoid establishing the situs of the business in other states. Salesman did not have offices, did not negotiate prices, sent all orders
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the welfare of the child and every reasonable intendment should be sustained to promote that objective. On January 3, 1990, private respondent Corazon Santos Punsalan, a nonresident, filed a verified petition for adoption, before the Regional Trial Court of Caloocan City, of the minors Pinky Gonzales Punsalan, the daughter of her full blood brother, and Ellyn Mae Punsalan Urbano, the daughter of her full blood sister, be declared her daughters by adoption for all intents and purposes. On January 12, 1990, private respondent's deposition was taken because she needed to go abroad immediately. Despite notice, no representative from the OSG (Office of Solicitor General) appeared to oppose the taking of the deposition. The OSG, however, subsequently filed an "Opposition to the Deposition", TC denied the same. Again, despite notice, the OSG failed to appear in the said hearing and in all the subsequent hearings for the petition for adoption. The respondent judge granted the petition for adoption. Hence this instant petition for certiorari. Issue: Is the argument of the OSG, that depositions should not be allowed in adoption proceedings until the publication requirement has been fully complied with, correct? Held: No, While it is true that in an action in personam, personal service of summons within the forum or voluntary appearance in the case is essential for the court to acquire jurisdiction over the person of the defendant, in an adoption case which involves the status of a person, there is no particular defendant to speak of since the action is one in rem. In such case, jurisdiction over the person of the defendant is a non-essential condition for the taking of a deposition for the jurisdiction of the court is based on its power over the res, to render judgment with respect to such "thing" (or status, as in this case) so as to bar indifferently all who might be minded to make an objection against the right so established. (Banco Espanol Filipino vs. Palanca, 37 Phil. 921; Greg Alba vs. de la Cruz, 17 Phil. 49). Indeed, publication of the scheduled hearing for the petition for adoption is necessary for the validity of a decree of adoption but not for the purpose merely of taking a deposition. In taking a deposition, no substantial rights are affected since depositions may or may not be presented or may even be objected to when formally offered as evidence at the trial of the main case later on. The OSG, however, was notified of the scheduled taking of the deposition, as well as of all the hearings of the petition for adoption, but the OSG chose not to attend ALL the said hearings, without explanation. The OSG, therefore, has no reason to invoke lack of procedural due process. Finally, it must not be forgotten that the philosophy behind adoption statutes is to promote
HEINE VS. NEW YORK INSURANCE COMPANY 45 F2d 426 (1940) FACTS: This is a case brought against New York Life Insurance Company and the Guardian Insurance Company to recover on some two hundred and forty life insurance policies made and issued by them in Germany, in favor of German citizens and payable in German marks. As a condition to the insurance companies rights to do business in Germany, they were compelled to accede to the supervision and control of German insurance officials, to invest the proceeds arising from German policies in German securities, and to establish an office there with an agent upon whom service can be made. The actions are brought in the name of the insured parties in the United States and Germany for amounts due or owing under the policies. The courts of New York refused to entertain jurisdiction over the matter. Hence, this suit filed in the courts of Oregon. The plaintiffs argued that this court has jurisdiction of the subject matter and the parties, it has no discretion, but should proceed with the case, regardless of where the cause of action arose, or the convenience of the parties. ISSUE: Whether or not the Oregon court has no discretion but to try the case. RULING: The arguments of the plaintiff cannot be given merit. It is but a matter of resting in its discretion. It may retain jurisdiction of causes of action arising in a foreign jurisdiction, where both parties are nonresidents of the forum. Oregon courts should refuse to try the case. The courts of Germany and NY are open and functioning and competent to take jurisdiction of the controversies To require the defendants to defend the actions in Oregon would impose upon them great and unnecessary inconvenience and
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temporary restraining order or writ of preliminary injunction to stop the defendants from harassing IVO with their insistent demands to recognize the contracts entered into by Dominador Monteverde and from portraying the IVO as one that defaults on its contracts and obligations and has fallen into bad times and from interfering with IVO's normal conduct of business. IVO also prayed that the defendants pay it moral damages of P5 million, actual damages of P10 million, exemplary damages of P5 million, attorney's fees of P1 million, P3,000 per appearance of counsel, and litigation expenses. On April 25, 1987, without submitting to the court's jurisdiction and only for the purpose of objecting to said jurisdiction over their persons, the petitioners filed motions to dismiss the complaint against them on the ground that the extraterritorial service of summons to them was improper and that hence the court did not acquire jurisdiction over them. On December 15, 1987, the court denied their motions to dismiss and upheld the validity of the extraterritorial service of summons to them on the ground that "the present action relates to property rights which lie in contracts within the Philippines, or which defendants claim liens or interests, actual or inchoate, legal or equitable (par. 2, complaint). And one of the reliefs demanded consists, wholly or in part, in excluding the defendants from any interest in such property for the reason that their transactions with plaintiff's former president are ultra vires." Furthermore, "as foreign corporations doing business in the Philippines without a license, they opened themselves to suit before Philippine courts, pursuant to Sec. 133 of the Corporation Code of the Philippines." Issue: Whether or not the court acquired jurisdiction. Held: The petition is meritorious. The complaint in this case does not involve the personal status of the plaintiff, nor any property in the Philippines in which the defendants have or claim an interest, or which the plaintiff has attached. The action is purely an action for injunction to restrain the defendants from enforcing against IVO ("abusing and harassing") its contracts for the delivery of coconut oil to the defendants, and to recover from the defendants P21 million in damages for such "harassment." It is clearly a personal action as well as an action inpersonam, not an action in rem or quasi in rem. "An action in personam is an action against a person on the basis of his personal liability, while an action in remedies is an action against the thing itself, instead of against the person." (Hernandez vs. Rural Bank of Lucena, Inc., 76 SCRA 85). A personal action is one expense and compel them to produce 3000 miles from their home numerous records, books and papers. It would also consume months of tome of this court to try and dispose of the same thus necessarily disarranging the calendar, resulting in delay, inconvenience and expense to other litigants. Even if the court has jurisdiction over the subject matter, the court can exercise its discretion in determining whether or not it would try the case.
DIAL CORPORATION VS. JUDGE SORIANO ( 161 SCRA 737) Facts: The petitioners are foreign corporations organized and existing under the laws of the United States, the United Kingdom, and Malaysia, are not domiciled in the Philippines, nor do they have officers or agents, place of business, or property in the Philippines; they are not licensed to engage, and are not engaged, in business here. The respondent Imperial Vegetable Oil Company, Inc. (or "IVO" for brevity) is a Philippine corporation which through its president, Dominador Monteverde, had entered into several contracts for the delivery of coconut oil to the petitioners. Those contracts stipulate that any dispute between the parties will be settled through arbitration under the rules of either the Federation of Oils Seeds and Fats Association (FOSFA) or the National Institute of Oil Seed Products (NIOP). Because IVO defaulted under the contracts, the petitioners and 15 others, initiated arbitration proceedings abroad, and some have already obtained arbitration awards against IVO. On April 8, 1987, IVO filed a complaint for injunction and damages against nineteen (19) foreign coconut oil buyers including the petitioners, with whom its president, Dominador Monteverde, had entered into contracts for the delivery of coconut oil (Civil Case No. 8740166, RTC Manila entitled "Imperial Vegetable Oil Co., Inc. vs. Dial Corporation et al."). IVO repudiated Monteverde's contracts on the grounds that they were mere "paper trading in futures" as no actual delivery of the coconut oil was allegedly intended by the parties; that the Board of Directors of IVO convened in a special meeting on March 21, 1987 and removed Dominador Monteverde from his position as president of the corporation, named in his place, Rodrigo Monteverde, and disowned Dominador Monteverde's allegedly illegal and unauthorized acts; that the defendants have allegedly "harassed" IVO to comply with Dominador's contracts and to come to a settlement with them. IVO prayed for the issuance of a
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foreclosure sale; because of the breach of their fiduciary duties and/or negligence of the petitioners and/or the persons designated by them in the operation of private respondents' six vessels, the revenues derived from the operation of all the vessels declined drastically; the loans acquired for the purchase of the four additional vessels then matured and remained unpaid, prompting defendant banks to have all the six vessels, including the two vessels originally owned by the private respondents, foreclosed and sold at public auction to answer for the obligations incurred for and in behalf of the operation of the vessels; they (Litonjuas) lost sizeable amounts of their own personal funds equivalent to ten percent (10%) of the acquisition cost of the four vessels and were left with the unpaid balance of their loans with defendant banks. The Litonjuas prayed for the accounting of the revenues derived in the operation of the six vessels and of the proceeds of the sale thereof at the foreclosure proceedings instituted by petitioners; damages for breach of trust; exemplary damages and attorney's fees. Defendant banks filed a Motion to Dismiss on grounds of forum non conveniens and lack of cause of action against them. Instead of filing an answer the defendant banks went to the Court of Appeals on a "Petition for Review on Certiorari" which was aptly treated by the appellate court as a petition for certiorari. They assailed the above-quoted order as well as the subsequent denial of their Motion for Reconsideration. The appellate court dismissed the petition and denied petitioners' Motion for Reconsideration. Issue: Whether or not the private respondents cause of action is barred by another action or litis pendentia. Held: We deny the petition for lack of merit. Forum shopping exists where the elements of litis pendentia are present and where a final judgment in one case will amount to res judicata in the other. Parenthetically, for litis pendentia to be a ground for the dismissal of an action there must be: (a) identity of the parties or at least such as to represent the same interest in both actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same acts; and (c) the identity in the two cases should be such that the judgment which may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. In case at bar, not all the requirements for litis pendentia are present. While there may be identity of parties, notwithstanding the presence of other respondents, as well as the reversal in positions of brought for the recovery of personal property, for the enforcement of some contract or recovery of damages for its breach, or for the recovery of damages for the commission of an injury to the person or property. As a general rule, when the defendant is not residing and is not found in the Philippines, the Philippine courts cannot try any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court. But, when the action affects the personal status of the plaintiff residing in the Philippines, or is intended to seize or dispose of any property, real or personal, of the defendant located in the Philippines, it may be validly tried by the Philippine courts, for then, they have jurisdiction over the res, i.e., the personal status of the plaintiff or the property of the defendant and their jurisdiction over the person of the nonresident defendant is not essential. Venue in such cases may be laid in the province where the property of the defendant or a part thereof involved in the litigation is located. BANK OF AMERICA VS. COURT OF APPEALS (400 SCRA ) Facts: On May 10, 1993, Eduardo K. Litonjua, Sr. and Aurelio J. Litonjua (Litonjuas, for brevity) filed a Complaint before the Regional Trial Court of Pasig against the Bank of America NT&SA and Bank of America International, Ltd. (defendant banks for brevity) alleging that: they were engaged in the shipping business; they owned two vessels: Don Aurelio and El Champion, through their whollyowned corporations; they deposited their revenues from said business together with other funds with the branches of said banks in the United Kingdom and Hongkong up to 1979; with their business doing well, the defendant banks induced them to increase the number of their ships in operation, offering them easy loans to acquire said vessels; thereafter, the defendant banks acquired, through their (Litonjuas') corporations as the borrowers: (a) El Carrier; (b) El General; (c) El Challenger; and (d) El Conqueror; the vessels were registered in the names of their corporations; the operation and the funds derived therefrom were placed under the complete and exclusive control and disposition of the petitioners; and the possession the vessels was also placed by defendant banks in the hands of persons selected and designated by them (defendant banks). The Litonjuas claimed that defendant banks as trustees did not fully render an account of all the income derived from the operation of the vessels as well as of the proceeds of the subsequent
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by stated, the Wing On Company of New York may sue in Philippine courts in connection with the transaction in question and considering, further that the present suit arising from said transaction is in the nature of a personal action; the case may be commenced and tried where the defendant resides or may be found; or where the plaintiff resides; at the election of the plaintiff (Section 2b, Rule 4 of the Rules of Court] Consequently, venue in the instant case was not improperly laid and the court a quo did not err in taking cognizance of the case. plaintiffs and defendants still the other requirements necessary for litis pendentia were not shown by petitioner. It merely mentioned that civil cases were filed in Hongkong and England without however showing the identity of rights asserted and the reliefs sought for as well as the presence of the elements of res judicata should one of the cases be adjudged. Wing On Company v Syyap 64 O.G. 8311 (1967) Facts: Syyap & Co, a domestic corporation ordered various quantities of clothing materials from Wing On Company, a foreign partnership based in New York which did not have license to transact business in the Philippines. There was a verbal agreement that SYYAP would pay for the cost of merchandize and that after its sale the profits realized would be divided between Syyap and Wing On. Syyap failed to settle the debt account for and divide the profits. Wing On filed a civil case for recovery of sum of money. Issue: 1.) Does the court have jurisdiction to try the case knowing that Wing On is not licensed to do business in the Philippines and therefore, has no legal capacity to sue? 2) Was the trial court justified in hearing the suit pursuant to the principle of forum non conveniens? RULING: It is a well-established practice in the application of the principle of forum non conveniens that unless the balance is strongly in favor of the defendant, the plaintiffs choice of forum should rarely be disturbed, and that, furthermore, the consideration of inadequacy to enforce the judgment, which is one of the important factors to be considered in the application of said principle, would precisely constitute a problem to the plaintiff if the local courts decline to assume jurisdiction on the basis of said principle, considering that the defendant is a resident of the Philippines. It is true that the agreement in question involving the purchase of clothing materials was entered into in New York, U.S.A. The goods, however, were delivered to, and received and sold Fluemer v Hix Facts: Fluemer, The special administrator of the estate of Edward Randolph Hix appeals from a decision of Judge of First Instance Tuason denying the probate of the document alleged to be the last will and testament of the deceased. It is theory of the petitioner that the alleged will was executed in Elkins, West Virginia, on November 3, 1925, by Hix who had his residence in that jurisdiction, and that the laws of West Virginia Code, He submitted a copy of section 3868 of Act 1882 as found in the West Virginia Code, annotated, by Hogg, Charles E., vol. 2, 1914, p. 1690, and as certified to by the Director of the National Library. Issue: Whether or not, the mere submission of a copy of the foreign law is enough in order for the lower court to take cognizance of such foreign law. Ruling: The laws of a foreign jurisdiction do not prove themselves in our courts. the courts of the Philippine Islands are not authorized to take judicial notice of the various laws of the American Union. Such laws must be proved as facts. Here the requirements of the law were not met. There was no showing that the book from which the extract was taken was printed or published under the authority of the State of West Virginia, as provided in section 300 of the Code of Civil Procedure. Nor was the extract from the law attested by the certificate of the officer having charge of the original, under the sale of the State of West Virginia, as provided in section 301 of the Code of Civil Procedure. No evidence was introduced to show that the extract from the laws of West Virginia was in force at the time the alleged will was executed. In addition, the due execution of the will was not established. The only evidence on this point is to be found in the testimony of the petitioner. Aside from this, there was nothing to indicate that the
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employment at the Palace Hotel print shop would be terminated due to business reverses brought about by the political upheaval in China. On September 5, 1989, the Palace Hotel terminated the employment of respondent Santos and paid all benefits due him, including his plane fare back to the Philippines. Respondent Santos was repatriated to the Philippines. Respondent Santos, through his lawyer, Atty. Ednave wrote Mr. Shmidt, demanding full compensation pursuant to the employment agreement. Respondent Santos filed a complaint for illegal dismissal with the Arbitration Branch, National Capital Region, National Labor Relations Commission (NLRC). He prayed for an award of nineteen thousand nine hundred and twenty three dollars (US$19,923.00) as actual damages, forty thousand pesos (P40,000.00) as exemplary damages and attorney's fees equivalent to 20% of the damages prayed for. The complaint named MHC, MHICL, the Palace Hotel and Mr. Shmidt as respondents. The Palace Hotel and Mr. Shmidt were not served with summons and neither participated in the proceedings before the Labor Arbiter. Labor Arbiter Ceferina J. Diosana, decided the case against petitioners. Petitioners appealed to the NLRC, arguing that the POEA, not the NLRC had jurisdiction over the case. NLRC promulgated a resolution, stating want of jurisdiction. Complainant is hereby enjoined to file his complaint with the POEA. Respondent Santos moved for reconsideration of the afore-quoted resolution. He argued that the case was not cognizable by the POEA as he was not an "overseas contract worker." The NLRC granted the motion and reversed itself. The NLRC directed Labor Arbiter Emerson Tumanon to hear the case on the question of whether private respondent was retrenched or dismissed. The NLRC ruled in favor of private respondent Petitioners filed a motion for reconsideration arguing that Labor Arbiter de Vera's recommendation had no basis in law and in fact. The NLRC denied the motion for reconsideration. ISSUE: Whether or not the NLRC was the convenient forum in this case RULING: The petition is meritorious. The NLRC was a seriously inconvenient forum. We note that the main aspects of the case transpired in two foreign jurisdictions and the case involves purely foreign elements. The only link that the Philippines has with the case is that respondent Santos is a Filipino citizen. The Palace Hotel and will was acknowledged by the testator in the presence of two competent witnesses, of that these witnesses subscribed the will in the presence of the testator and of each other as the law of West Virginia seems to require. On the supposition that the witnesses to the will reside without the Philippine Islands, it would then the duty of the petitioner to prove execution by some other means (Code of Civil Procedure, sec. 633.) It was also necessary for the petitioner to prove that the testator had his domicile in West Virginia and not establish this fact consisted of the recitals in the CATHY will and the testimony of the petitioner. Also in beginning administration proceedings orginally in the Philippine Islands, the petitioner violated his own theory by attempting to have the principal administration in the Philippine Islands.
Manila Hotel v NLRC Facts. During his employment with the Mazoon Printing Press in the Sultanate of Oman, respondent Santos received a letter dated May 2, 1988 from Mr. Gerhard R. Shmidt, General Manager, Palace Hotel, Beijing, China. Mr. Schmidt informed respondent Santos that he was recommended by one Nestor Buenio, a friend of his. Mr. Shmidt offered respondent Santos the same position as printer, but with a higher monthly salary and increased benefits. Respondent Santos wrote to Mr. Shmidt and signified his acceptance of the offer. The Palace Hotel Manager, Mr. Hans J. Henk mailed a ready to sign employment contract to respondent Santos. Respondent Santos resigned from the Mazoon Printing Press, effective June 30, 1988, under the pretext that he was needed at home to help with the family's piggery and poultry business. Respondent Santos wrote the Palace Hotel and acknowledged Mr. Henk's letter. On June 30, 1988, respondent Santos was deemed resigned from the Mazoon Printing Press. On July 1, 1988, respondent Santos arrived in Manila. On November 5, 1988, respondent Santos left for Beijing, China. He started to work at the Palace Hotel. From June 8 to 29, 1989, respondent Santos was in the Philippines on vacation leave. He returned to China and reassumed his post on July 17, 1989. On July 22, 1989, Mr. Shmidt's Executive Secretary, a certain Joanna suggested in a handwritten note that respondent Santos be given one (1) month notice of his release from employment. the Palace Hotel informed respondent Santos by letter signed by Mr. Shmidt that his
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MHICL are foreign corporations. Not all cases involving our citizens can be tried here. The employment contract. Respondent Santos was hired directly by the Palace Hotel, a foreign employer, through correspondence sent to the Sultanate of Oman, where respondent Santos was then employed. He was hired without the intervention of the POEA or any authorized recruitment agency of the government. Under the rule of forum non conveniens, a Philippine court or agency may assume jurisdiction over the case if it chooses to do so provided: (1) that the Philippine court is one to which the parties may conveniently resort to; (2) that the Philippine court is in a position to make an intelligent decision as to the law and the facts; and (3) that the Philippine court has or is likely to have power to enforce its decision.37 The conditions are unavailing in the case at bar. Not Convenient. We fail to see how the NLRC is a convenient forum given that all the incidents of the case from the time of recruitment, to employment to dismissal occurred outside the Philippines. The inconvenience is compounded by the fact that the proper defendants, the Palace Hotel and MHICL are not nationals of the Philippines. Neither .are they "doing business in the Philippines." Likewise, the main witnesses, Mr. Shmidt and Mr. Henk are non-residents of the Philippines. No power to determine applicable law. Neither can an intelligent decision be made as to the law governing the employment contract as such was perfected in foreign soil. This calls to fore the application of the principle of lex loci contractus (the law of the place where the contract was made). The employment contract was not perfected in the Philippines. Respondent Santos signified his acceptance by writing a letter while he was in the Republic of Oman. This letter was sent to the Palace Hotel in the People's Republic of China. No power to determine the facts. Neither can the NLRC determine the facts surrounding the alleged illegal dismissal as all acts complained of took place in Beijing, People's Republic of China. The NLRC was not in a position to determine whether the Tiannamen Square incident truly adversely affected operations of the Palace Hotel as to justify respondent Santos' retrenchment. Principle of effectiveness, no power to execute decision. Even assuming that a proper decision could be reached by the NLRC, such would not have any binding effect against the employer, the Palace Hotel. The Palace Hotel is a corporation incorporated under the laws of China and was not even served with summons. Jurisdiction over its person was not acquired.
WILLIAM F. GEMPERLE, plaintiff-appellant, vs. HELEN SCHENKER and PAUL SCHENKER as her husband, defendants-appellees. 19 SCRA 45, Jan. 23, 1967 The facts of the case are as follows: The record shows that sometime in 1952, Paul Schenker-hereinafter referred to as Schenker acting through his wife and attorney-in-fact, Helen Schenker herein-after referred to as Mrs. Schenker filed with the Court of First Instance of Rizal, a complaint against herein plaintiff William F. Gemperle. Alleging that, in connection with said complaint, Mrs. Schenker had caused to be published some allegations thereof and other matters, which were impertinent, irrelevant and immaterial to said case side from being false and derogatory to the reputation, good name and credit of Gemperle, "with the only purpose of attacking" his" honesty, integrity and reputation" and of bringing him "into public hatred, discredit, disrepute and contempt as a man and a businessman", Gemperle commenced the present action against the Schenkers. The Court of First Instance of Rizal dismissed the case for lack of jurisdiction over the person of defendant Paul Schenker and for want of cause of action against his wife and co-defendant, Helen Schenker said Paul Schenker "being in no position to be joined with her as party defendant, because he is beyond the reach of the magistracy of the Philippine courts." Issue: Whether or not the lower court had acquired jurisdiction over the person of Schenker. NATIONAL GRAINS AUTHORITY, plaintiff-appellee, vs. INTERMEDIATE APPELLATE COURT, MELECIO MAGCAMIT, NENA COSICO and EMELITA MAGCAMIT, defendants-appellants. 157 SCRA 380, Jan. 28, 1988 The undisputed facts of this case as found by the Trial Court and the Intermediate Appellate Court are as follows: On December 2,1971, the spouses Vivas, as owners of a parcel of land sold in favor of spouses Magcamit, (herein private respondents) as evidenced by "Kasulatan Ng Bilihang Mabiling Muli." This sale with right to repurchase was recorded in the Office of the Register of Deeds. On January 31,1972 the sale was made absolute by the spouses Vivas in favor of the private
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owner of the said property, then, to order it to reconvey or transfer the ownership to them under such terms and conditions as the court may find just, fair and equitable under the premises. In its answer to the complaint, the petitioner (defendant therein) maintained that it was never a privy to any transaction between the private respondents (plaintiffs therein) and the spouses Vivas that it is a purchaser in good faith and for value of the property and that the title is now indefeasible, hence, private respondents' cause of action has' already prescribed. The court a quo rendered a decision in favor of the petitioner. On appeal, IAC reversed and set aside the decision of the court a quo. Hence, this petition. Issue: Whether or not violation of the terms of the agreement between the spouses Vivas and Lizardo, the sellers, and private respondents, the buyers, to deliver the certificate of title to the latter, upon its issuance, constitutes a breach of trust sufficient to defeat the title and right acquired by petitioner NGA, an innocent purchaser for value. PARAS, J.: Time and time again, this Court has ruled that the proceedings for the registration of title to land under the Torrens System is an action in rem not in personam, hence, personal notice to all claimants of the res is not necessary in order that the court may have jurisdiction to deal with and dispose of the res. Neither may lack of such personal notice vitiate or invalidate the decree or title issued in a registration proceeding, for the State, as sovereign over the land situated within it, may provide for the adjudication of title in a proceeding in rem or one in the nature of or akin a to proceeding in rem which shall be binding upon all persons, known or unknown. It is thus evident that respondents' right over the property was barred by res judicata when the decree of registration was issued to spouses Vivas and Lizards. It does not matter that they may have had some right even the right of ownership, BEFORE the grant of the Torrens Title. The only exception to this rule is where a person obtains a certificate of title to a land belonging to another and he has full knowledge of the rights of the true owner. He is then considered as guilty of fraud and he may be compelled to transfer the land to the defrauded owner so long as the property has not passed to the hands of an innocent purchaser for value. respondents upon the execution of the instrument, entitled "Kasulatan Ng Bilihan Tuluyan," From the execution of said Kasulatan, private respondent have remained in peaceful, adverse and open possession of subject property. On February 26, 1975, an OCT covering the property in question was issued to and in the name of the spouses Vivas without the knowledge of the private respondents and on April 30, 1975, said Spouses executed a SPA in favor of Ramirez authorizing the latter to mortgage the property with the petitioner, NGA. On May 2, 1974, the counsel for the petitioner wrote the Provincial Sheriff, requesting for the extrajudicial foreclosure of the mortgage executed by Ramirez on May 18, 1975, covering, among others, the property involved in this case. On May 31, 1974, the Provincial Sheriff caused the issuance of the notice of sale of the property in question, scheduling the public auction sale on June 28, 1974. The petitioner was the highest and successful bidder so that a Certificate of Sale was issued in its favor on the same date by the Provincial Sheriff. On July 10, 1974, the petitioner in its capacity as attorney-in-fact of the mortgagor sold the subject real property in favor of itself. By virtue of the deed of absolute sale, a TCT was issued in the name of the petitioner on July 16, 1974. It was only in July 1974, that private respondents learned that a title in the name of the Vivas spouses had been issued covering the property in question and that the same property had been mortgaged in favor of the petitioner. Private respondent offered to pay the petitioner NGA the amount of P40,000.00 which is the balance of the amount due the Vivas spouses under the terms of the absolute deed of sale but the petitioner refused to accept the payment. On July 31, 1974, counsel for private respondents made a formal demand on the spouses Vivas to comply with their obligation under the terms of the absolute deed of sale; and soon after reiterated to the NGA, the offer to pay the balance of P40,000.00 due under the absolute deed of sale. On August 13, 1974 petitioner in its reply informed counsel of private respondents that petitioner is now the owner of the property in question and has no intention of disposing of the same. The private respondents, who as previously stated, are in possession of subject property were asked by petitioner to vacate it but the former refused. Petitioner filed a suit for ejectment against private respondents, but the case was dismissed. On June 4, 1975, private respondents filed a complaint before the then CFI-Laguna, against the petitioner and the spouses Vivas, praying, among others, that they be declared the owners of the property in question and entitled to continue in possession of the same, and if the petitioner is declared the
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Puyat vs. Zabarte 352 SCRA 738 FACTS: Respondent Zabarte commenced an action to enforce the money judgment rendered by the Superior Court for the State of California against petitioner Puyat. Thereafter, petitioner (Puyat) filed his answer, but the allegations therein were found by the court (RTC) to be mere conclusions of law and did not, therefore, raise any issue. So, upon motion by respondent Zabarte, the RTC rendered a summary judgment based on the complaint. On appeal, the Court of Appeals affirmed the RTCs decision. Hence, the present petition for certiorari under Rule 45. Petitioner Puyat argued that the judgment rendered by the California Court is void because, under California law, the case should have been filed in the Securities and Exchange Commission in California, not in the Superior Court of California. Furthermore, petitioner argued that the RTC should have refused to entertain the complaint for enforcement of the foreign judgment on the principle of forum non conveniens. Petitioner claimed that the trial court had no jurisdiction because the case involved partnership interest, and there was difficulty in ascertaining the applicable law in California. All the aspects of the transaction took place in a foreign country, and respondent Zabarte is not even a Filipino. ISSUES: (1) In the absence of proof of a foreign law, what rule shall apply? (2) Whether or not the Philippine court in the case at bar may refuse to entertain the complaint on the ground of forum non conveniens. HELD: The petitioners arguments must all fail. As regards the first issue, in the absence of proof of California law on the jurisdiction of courts, we presume that such law, if any, is similar to Philippine law. We base this conclusion on the presumption of identity or similarity, also known as processual presumption. Thus, since the subject controversy is cognizable by civil courts under our Philippine law, the petitioners claim shall fail. Apropos to the second issue, we likewise disagree with the petitioner. Under the principle of forum non conveniens, even if the exercise of jurisdiction is authorized by law, courts may

nonetheless refuse to entertain a case for any of the following practical reasons, viz.: (1) Belief that the matter can be better tried elsewhere; (2) Belief that the non-resident plaintiff sought the forum merely to secure procedural advantages, or to harass the defendant; (3) The unwillingness to extend local judicial facilities to non-residents or aliens when the docket may already be overcrowded; (4) The inadequacy of the local judicial machinery for effectuating the right sought to be maintained; and, (5) The difficulty of ascertaining foreign law. In the case at bar, none of the foregoing reasons barred the RTC from exercising its jurisdiction. Since the present action lodged in the said court was for the enforcement of a foreign judgment, there was no need to ascertain the rights and the obligations of the parties based on foreign laws or contracts.
VALMONTE vs. COURT OF APPEALS 252 SCRA 92, 1/22/96 FACTS: Petitioners Lourdes and Alberto Valmonte are husband and wife, both residents of Washington, USA. Alfredo Valmonte is a member of the Philippine Bar, practices his profession in the Philippines commuting for this purpose between his residence in the USA and Manila. Private respondent, Rosita Dimalanta (sister of Lourdes) filed a complaint for partition and accounting of rentals against petitioners before RTC Manila. Service of summons was made upon petitioner Alfredo Valmonte at his office in Manila. Alfredo accepted the summons for him but refused to accept the summons for his wife on the ground that he was not authorized. The service of summons was duly published in a newspaper of general circulation. Alfredo filed his answer while his wife did not and was later on declared by the court in default. ISSUE: Whether or not the court has acquired jurisdiction over petitioner Lourdes Valmonte.
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HELD: The action for partition and accounting for rentals is an action quasi in rem. If the action is in rem or quasi in rem jurisdiction over the person of the defendant is not essential for giving the court jurisdiction so long as at the court acquires jurisdiction over the res. If the defendant is nonresident and he is not found in the country, summons may be served exterritorialy. In such cases, what gives the court jurisdiction is that it has jurisdiction over the res. Service of summons under Rule 14, section 17 is not for the purpose of vesting it with jurisdiction but for complying with the requirements of fair play or due process, so that he will be informed of pendency of the action against him and he can thereby take steps to protect his interest if he is so minded.

in rem jurisdiction, based on a Delaware statute declared stock owned in a Delaware corporation to be legally located in Delaware. Defendants appealed to the U.S Supreme Court. ISSUE: Whether or not the minimum contracts standard established in International Shoe apply to quasi in rem suit. HELD: The conceptual basis for the exercise of jurisdiction has shifted from the theory of territorial power to considerations of minimum contracts and fundamental fairness. The Supreme Court defined the outer reaches of permissible exercise of judicial jurisdiction when it hels that the minimum contracts and fairness test should be satisfied regardless of whether the proceedings are in rem, quasi in rem or in personam. In this case, minimum contracts exist among the forum, defendant, and the cause of action. Judgment of Delaware state court was reversed.
SHAFFER vs. HEITNER 433 U.S 186 (1997) FACTS: Arnold Heitner (as custodian for Mark Andrew Heitner, owner of one share of stock in Greyhound Corp.) instituted a shareholders derivative suit against Greyhound corporation, Greyhound Lines Inc. (subsidiary), and 28 members of Greyhounds Board of Directors and officers. Heitner brought the suit in the court of Chancery of New Castle County in Delaware, Greyhounds state of incorporation. He also simultaneously filed a motion for an order to sequester approximately 82,000 shares of Greyhound stock owned by the 21 of the defendants. The defendants were notified by certified mail and by publication in a New Castle County, Delaware newspaper. The defendants responded by entering a special appearance in the Delaware court for the purpose of moving to quash service of process ad to vacate the sequestration order and to contest personal jurisdiction, pointing out that none of them had ever set foot in Delaware or conducted any activities in that state. They contended that the ex parte sequestration procedure did not accord them due process of law and that the property seized was not capable of attachment in Delaware. In addition, appellants asserted that they did not have sufficient contrscts with Delaware to sustain that jurisdiction of that states court. The Delaware court found that it had quasi
Vicente Caluag and Juliana Garcia v. Potenciano and Angel Mojica, CFI Judge Pecson and Leon Alejo , 82 Phil 8 (10/29/48)
FACTS: On August 10, 1937, Fortunato Alejo filed a complaint against the spouses Vicente Caluag and Juliana Garcia for the redemption of pro indiviso of a parcel of land in Bulacan. After trial, CFI Bulacan ordered petitioners to execute a deed of sale in favor of Fortunato, upon payment by plaintiff of the purchase price. CA affirmed. SC denied the petition for review on certiorari. Fortunato died so Leon Alejo, his judicial administrator of the estate, filed a motion with CFI Bulacan for the execution of judgment. Judge Pecson ordered defendants to execute the Deed of Sale, with the warning that upon failure to do so the said defendants will be dealt with for contempt of court. From the record, it appeared that no charge for contempt was filed against the petitioners nor was a trial held. The only proceeding had which led to the conviction of the defendants were the order issued by the lower
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of default, petitioners were allowed to submit their evidence ex parte. Helen Boyon, who was then in United Sates, was surprised to learn from her sister of the resolution issued by the court. Respondents filed an Ad Cautelam motion questioning, among others, the validity of the service of summons effected by the court a quo. The court issued an order denying the said motion on the basis of the defaulted respondent supposed loss of standing in court. Once again, the respondents raised the issue of the jurisdiction of the trial court via a motion for reconsideration and the same was denied. The petitioners moved for the execution of the controverted judgment which the judge granted. Thereafter, respondents filed before the CA a petition for certiorari which held that the trial court had no authority to issue the questioned resolution and orders. Issue: Whether or not summons by publication can validly serve in the instant case. Held: In general, courts acquire jurisdiction over the person of the defendant by the service of summons, such service may be done personal or substituted service, where the action is in personam and the defendant is in the Philippines. However, extraterritorial service of summons or summons by publication applies only when the action is in rem or quasi in rem. That is, the action against the thing itself instead of against the defendants person if the action is in rem or an individual is named as defendant and the purpose is to subject the individuals interest in a piece of property to the obligation or loan burdening it if quasi in rem. In the instant case, what was filed before the trial court was an action for specific performance directed against respondents. While the suit incidentally involved a piece of land, the ownership or possession thereof was not put in issue. Moreover, court has consistently declared that an action for specific performance is an action in personam. Hence, summons by publication cannot be validly served. FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the Philippines) and MERCURIO RIVERA vs. COURT OF APPEALS, CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE JANOLO court requiring defendants to execute the Deed of Sale, a motion filed by the lawyer for the respondent that petitioners be punished for contempt and a resolution of the court denying the motion for reconsideration of the petitioners order and ordering petitioners to be imprisoned until they have complied with the courts order. ISSUE: Whether or not the court acquired jurisdiction over the subject matter when no charge or complaint has been filed against the party. RULING: No, the court did not acquire jurisdiction over the subject matter in this instance. Although CFI Bulacan has the power conferred by law to punish as guilty of indirect contempt a party who disobeys its order, it did not acquire jurisdiction to declare petitioners guilty as such because neither a charge has been filed against them nor a hearing thereof held as required by law. Jurisdiction over the subject matter is something more than the general power conferred by law upon a court to take cognizance of cases of the general class to which the particular case belongs. It is not enough that the court has power in abstract to try and decide the class of litigations to which a case belongs; it is necessary that the said power be properly invoked, or called into activity, by the filing of a petition, complaint or other appropriate pleading. ________________________________ SPOUSES PATRICK AND RAFAELA JOSE VS. SPOUSES HELEN AND ROMEO BOYON G.R. No. 147369. October 23, 2003 Facts: Petitioners lodged a complaint for specific performance against respondents to compel them to facilitate the transfer of ownership of a parcel of land subject of a controverted sale. The RTC issued a summons to respondents. As per return of the summons, substituted service was resorted to by the process server allegedly because efforts to serve personally to re respondents failed. Meanwhile, petitioners filed before the RTC an ex parte motion for leave of court to effect summons by publication and the judge issued an order granting the same. The respondents were declared in default and as a consequence of the declaration
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of Court to Dismiss the Case Without Prejudice. "Private respondent opposed this motion on the ground, among others, that plaintiff's act of forum shopping justifies the dismissal of both cases, with prejudice."5 Private respondent, in his memorandum, averred that this motion is still pending in the Makati RTC. In order to prevent the vexations of multiple petitions and actions, the Supreme Court promulgated Revised Circular No. 28-91 requiring that a party "must certify under oath . . . [that] (a) he has not (t)heretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or any other tribunal or agency; (b) to the best of his knowledge, no such action or proceeding is pending" in said courts or agencies. A violation of the said circular entails sanctions that include the summary dismissal of the multiple petitions or complaints. To be sure, petitioners have included a VERIFICATION/CERTIFICATION in their Petition stating "for the record(,) the pendency of Civil Case No. 92-1606 before the Regional Trial Court of Makati, Branch 134, involving a derivative suit filed by stockholders of petitioner Bank against the conservator and other defendants but which is the subject of a pending Motion to Dismiss Without Prejudice.9 Private respondent Ejercito vigorously argues that in spite of this verification, petitioners are guilty of actual forum shopping because the instant petition pending before this Court involves "identical parties or interests represented, rights asserted and reliefs sought (as that) currently pending before the Regional Trial Court, Makati Branch 134 in the Second Case. In fact, the issues in the two cases are so interwined that a judgement or resolution in either case will constitute res judicata in the other." On the other hand, petitioners explain that there is no forum-shopping because: 1) In the earlier or "First Case" from which this proceeding arose, the Bank was impleaded as a defendant, whereas in the "Second Case" (assuming the Bank is the real party in interest in a derivative suit), it was plaintiff; 2) "The derivative suit is not properly a suit for and in behalf of the corporation under the circumstances"; 3) Although the CERTIFICATION/VERIFICATION (supra) signed by the Bank president and attached to the Petition identifies the action as a "derivative suit," it "does not mean that it is one" and "(t)hat is a legal question for the courts to decide"; 4) Petitioners did not hide the Second Case at they mentioned it in the said VERIFICATION/CERTIFICATION
FACTS: Petitioner First Philippine International Bank (formerly Producers Bank of the Philippines; petitioner Bank, for brevity) is a banking institution organized and existing under the laws of the Republic of the Philippines. Petitioner Mercurio Rivera (petitioner Rivera, for brevity) is of legal age and was, at all times material to this case, Head-Manager of the Property Management Department of the petitioner Bank. Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age and is the assignee of original plaintiffs-appellees Demetrio Demetria and Jose Janolo. Respondent Court of Appeals is the court which issued the Decision and Resolution sought to be set aside through this petition. In the course of its banking operations, the defendant Producer Bank of the Philippines acquired six parcels of land with a total area of 101 hectares located at Don Jose, Sta. Rose, Laguna, and covered by Transfer Certificates of Title Nos. T-106932 to T-106937. The property used to be owned by BYME Investment and Development Corporation which had them mortgaged with the bank as collateral for a loan. The original plaintiffs, Demetrio Demetria and Jose O. Janolo, wanted to purchase the property and thus initiated negotiations for that purpose. In the early part of August 1987 said plaintiffs, upon the suggestion of BYME investment's legal counsel, Jose Fajardo, met with defendant Mercurio Rivera, Manager of the Property Management Department of the defendant bank. The meeting was held pursuant to plaintiffs' plan to buy the property (TSN of Jan. 16, 1990, pp. 7-10). After the meeting, plaintiff Janolo, following the advice of defendant Rivera, made a formal purchase offer to the bank through a letter dated August 30, 1987 (Exh. "B"), as follows: On July 11, 1992, during the pendency of the proceedings in the Court of Appeals, Henry Co and several other stockholders of the Bank, through counsel Angara Abello Concepcion Regala and Cruz, filed an action (hereafter, the "Second Case") purportedly a "derivative suit" with the Regional Trial Court of Makati, Branch 134, docketed as Civil Case No. 92-1606, against Encarnacion, Demetria and Janolo "to declare any perfected sale of the property as unenforceable and to stop Ejercito from enforcing or implementing the sale"4 In his answer, Janolo argued that the Second Case was barred by litis pendentia by virtue of the case then pending in the Court of Appeals. During the pre-trial conference in the Second Case, plaintiffs filed a Motion for Leave
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vs. THE COURT OF APPEALS, ELISEO SEVILLA, and ERNA SEVILLA
ISSUE: Whether or not there was forum shopping on the part of the petitioner bank. RULING: To begin with, forum-shopping originated as a concept in private international law where nonresident litigants are given the option to choose the forum or place wherein to bring their suit for various reasons or excuses, including to secure procedural advantages, to annoy and harass the defendant, to avoid overcrowded dockets, or to select a more friendly venue. To combat these less than honorable excuses, the principle of forum non conveniens was developed whereby a court, in conflicts of law cases, may refuse impositions on its jurisdiction where it is not the most "convenient" or available forum and the parties are not precluded from seeking remedies elsewhere. In this light, Black's Law Dictionary says that forum shopping "occurs when a party attempts to have his action tried in a particular court or jurisdiction where he feels he will receive the most favorable judgment or verdict." Hence, according to Words and Phrases, "a litigant is open to the charge of "forum shopping" whenever he chooses a forum with slight connection to factual circumstances surrounding his suit, and litigants should be encouraged to attempt to settle their differences without imposing undue expenses and vexatious situations on the courts". In summary, there are two procedural issues involved forum-shopping and the raising of issues for the first time on appeal [viz., the extinguishment of the Bank's offer of P5.5 million and the conservator's powers to repudiate contracts entered into by the Bank's officers] which per se could justify the dismissal of the present case. We did not limit ourselves thereto, but delved as well into the substantive issues the perfection of the contract of sale and its enforceability, which required the determination of questions of fact. While the Supreme Court is not a trier of facts and as a rule we are not required to look into the factual bases of respondent Court's decisions and resolutions, we did so just the same, if only to find out whether there is reason to disturb any of its factual findings, for we are only too aware of the depth, magnitude and vigor by which the parties through their respective eloquent counsel, argued their positions before this Court. ___________________________________ PATRICIA S. VILLAREAL, for herself and as guardian of her minor children, CLAIRE HOPE and TRICIA, both surnamed VILLAREAL
FACTS: The complaint in this case was filed by petitioner Patricia Villareal to recover damages in the total amount of P1,944,000.00 from private respondents Eliseo and Erna Sevilla and certain John Does for the killing on June 6, 1986 of petitioner's husband Jose Villareal. The complaint, docketed as Civil Case No. 16194, was filed with the Regional Trial Court of Makati, Metro Manila. It was found that prior to the filing of the complaint on March 2, 1987, the Sevillas had abruptly left the country (at least two months after the murder) and had started disposing of their properties in the Philippines. On March 11, 1987, after a hearing, during which witness Deborah Alamares gave private respondents' address in the United States as allegedly divulged to her by private respondent Erna Sevilla herself, the trial court ordered the Sevillas' properties in the Philippines attached, upon the posting of a bond in the amount of P500,000.00. Pursuant to this, Deputy Sheriff Eulalio C. Juanson attached private respondents' personal and real properties on March 17, 18, and 19, 1987. On October 13, 1987, the trial court motu proprio set aside its order of March 11, 1987 on the ground that the attachment of property was improper because petitioners' claims were unliquidated. Accordingly, all properties garnished and attached pursuant to the writ of attachment were ordered released. Petitioners moved for reconsideration of the court's order. On December 21, 1987, the trial court modified its order by allowing attachment in the amount of P30,000.00 to answer for actual damages for the death of Jose Villareal. The amount represents the value of human life as then fixed by this Court. On January 24, 1990, upon motion of the petitioners, the trial court declared the private respondents in default for the second time for having failed to file their Answer to the Amended Complaint within 60 days after publication of the summons. It also declared the case submitted for decision, upon being informed by the petitioners that the very same evidence earlier presented would be reproduced and adopted in support of the Amended Complaint. On April 2, 1990, the trial court rendered a decision finding private respondents liable for the
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To recapitulate, the court held: (1) that the trial court acquired jurisdiction over the persons of private respondents; (2) that it validly declared them in default; (3) that consequently, its decision is valid and private respondents' remedy was to appeal from the decision; (4) that private respondents' appeal was timely and therefore it was grave abuse of discretion for the trial court to hold that private respondents' notice of appeal was filed late and for that reason deny due course to it. The decision of the Court of Appeals is REVERSED insofar as it nullified and set aside the orders of default, the hearing ex-parte the default judgment, the execution pending appeal, and all other orders related thereto issued prior to the order refusing to give due course to the appeal of private respondents of the Regional Trial Court of Makati, Branch 132, and AFFIRMED insofar as it set aside the orders refusing to five due course to private respondents' appeal and ordering the entry of the judgment by default and insofar as it ordered that the attachment on the properties of private respondents be maintained. The Regional Trial Court of Makati, Branch 132, is hereby ORDERED to give due course to the appeal of private respondents. IN RE: UNION CARBIDE CORPORATION GAS PLANT DISASTER AT BHOPAL, INDIA IN DECEMBER, 1984 MDL No. 626; Misc. No. 21-38 (JFK) ALL CASES UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK 634 F. Supp. 842; 1986 U.S. Dist. LEXIS 25624 May 12, 1986 FACTS: On the night of December 2-3, 1984 the most tragic industrial disaster in history occurred in the city of Bhopal, state of [**2] Madhya Pradesh, Union of India. Located there was a chemical plant owned and operated by Union Carbide India Limited ("UCIL"). The plant, situated in the northern sector of the city, had numerous hutments adjacent to it on its southern side which were occupied by impoverished squatters. UCIL manufactured the pesticides Sevin and Temik at the Bhopal plant at the request of, and with the approval of, the Government of India. (Affidavit of John MacDonald ("MacDonald Aff.") at 2). UCIL was incorporated under Indian law in 1934. 50.9% of its stock is owned by the defendant, Union Carbide Corporation, a New York corporation. (MacDonald Aff. at 1). Methyl isocyanate (MIC), a highly toxic gas, is an ingredient in the production of both Sevin and Temik. On the night of the killing of Jose Villareal and ordering them jointly and severally to pay petitioners more than P10 million in damages. The trial court found that private respondent Erna Sevilla and the victim Jose Villareal were lovers; that private respondent Eliseo Sevilla, Erna's husband, is a very jealous husband who inflicts physical injuries upon his wife; that apparently, private respondent Eliseo discovered his wife's infidelity; and, that in conspiracy with several other persons, including his wife Erna whom he seemed to have threatened, private respondent Eliseo hatched a plan whereby Erna was to lure Jose Villareal to a carpark near the latter's office where Eliseo and his companions were to attack and kill Jose. The trial court found that after the killing, private respondents lost no time in disposing of their properties in the Philippines, pulling out their children from school, and escaping to the United States. September 11, 1991, private respondents filed in the Court of Appeals a petition for certiorari, prohibition, and mandamus with preliminary injunction, alleging that the trial court had acted without or in excess of jurisdiction and with grave abuse of discretion in issuing the aforesaid orders and decisions and that there was neither appeal nor any plain, speedy and adequate remedy open to them in the ordinary course of law. Private respondents contended (1) that the trial court never acquired jurisdiction over them since they are non-resident defendants and petitioners' action is purely in personam and (2) that they were denied due process of law. On December 23, 1991, the Court of Appeals granted the petition, ruling that the trial court was guilty of grave abuse of discretion. ISSUE: Whether or not the court acquired jurisdiction over the person of the non-resident defendants? RULING: It is true that where the defendant in an action in personam is a non-resident, as in this case, and refuses to appear and submit to the jurisdiction of the court, the jurisdiction of the latter is limited to the property within the country which the court may have ordered attached. In such a case, the property itself is "the sole thing which is impleaded and is the responsible object which is the subject of the judicial power." Accordingly, "the relief must be confined to the res, and the court cannot lawfully render a personal judgment against him."
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Before this Court is a motion by the defendant Union Carbide Corporation ("Union Carbide") to dismiss the consolidated action on the grounds of forum non conveniens. RULING: The doctrine of forum non conveniens allows a court to decline jurisdiction, even when jurisdiction is authorized by a general venue statute. In support of its position that the consolidated action before the Court should be transferred to a more convenient forum within the Union of India pursuant to this doctrine, Union Carbide relies on the United States Supreme Court's decisions in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 91 L. Ed. 1055, 67 S. Ct. 839 [**6] (1947) and Piper Aircraft Co. v. Reyno, 454 U.S. 235, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981). The plaintiffs cite numerous other lower United States federal court cases in their briefs and seek to distinguish the Supreme Court's decisions from this case. Of course, Gilbert and Piper are the touchstones in sorting out and examining the contentions of both sides to this motion on the various factors bearing on convenience. Piper teaches a straightforward formulation of the doctrine of forum non conveniens. A district court is advised to determine first whether the proposed alternative forum is "adequate." This inquiry should proceed in the order followed below. Then, as a matter within its "sound discretion," Piper at 257, the district court should consider relevant public and private interest factors, and reasonably balance those factors, in order to determine whether dismissal is favored. It is difficult to imagine how a greater tragedy could occur to a peacetime population than the deadly gas leak in Bhopal on the night of December 2-3, 1984. The survivors of the dead victims, the injured and others who suffered, or may in the future suffer due to the disaster, are entitled to compensation. This Court is firmly convinced that the Indian legal system is in a far better position than the American courts to determine the cause of the tragic event and thereby fix liability. Further, the Indian courts have greater access to all the information needed to arrive at the amount of the compensation to be awarded the victims. The presence in India of the overwhelming majority of the witnesses and evidence, both documentary and real, would by itself suggest that India is the most convenient forum for this consolidated case. The additional presence in India of all but the less than handful of claimants tragedy MIC leaked from the plant in substantial quantities for reasons not yet determined. The prevailing winds on the early morning of December 3, 1984 were from Northwest to Southeast. They blew the deadly gas into the overpopulated hutments adjacent to the plant and into the most densely occupied parts of the city. The results were horrendous. Estimates of deaths directly attributable to the leak range as high as 2,100. [**3] No one is sure exactly how many perished. Over 200,000 people suffered injuries -some serious and permanent -- some mild and temporary. Livestock were killed and crops damaged. Businesses were interrupted. On December 7, 1984 the first lawsuit was filed by American lawyers in the United States on behalf of thousands of Indians. Dawani et al. v. Union Carbide Corp., S.D. W.Va. (84-2479). Since then 144 additional actions have been commenced in federal courts in the United States. The actions have all been joined and assigned by the Judicial Panel on Multidistrict Litigation to the Southern District of New York by order of February 6, 1985, 601 F. Supp. 1035. The individual federal court complaints have been superseded by a consolidated complaint filed on June 28, 1985. The Indian Government on March 29, 1985 enacted legislation, the Bhopal Gas Leak Disaster (Processing of Claims) Act (21 of 1985) ("Bhopal Act"), providing that the Government of India has the exclusive right to represent Indian plaintiffs in India and elsewhere in connection with the tragedy. Pursuant to the Bhopal Act, the Union of India, on April 8, 1985, filed a complaint with this Court setting forth claims [**4] for relief similar to those in the consolidated complaint of June 28, 1985. On September 24, 1985, pursuant to the Bhopal Act, the Central Government of India framed a "scheme" for the Registration and Processing of Claims arising out of the disaster. According to the Union of India's [*845] counsel, over 487,000 claims have been filed in India pursuant to the "scheme." There presently are 145 actions filed in the United States District Court for the Southern District of New York under the Judicial Panel for Multidistrict Litigation's order of February 6, 1985, involving approximately 200,000 plaintiffs. ISSUE:
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before the independent and legitimate judiciary created there since the Independence of 1947. This Court defers to the adequacy [**82] and ability of the courts of India. Their interest in the sad events of December 2-3, 1984 at the UCIL plant in the City of Bhopal, State of Madhya Pradesh, Union of India, is not subject to question or challenge. The availability of the probative, relevant, material and necessary evidence to Indian courts is obvious and has been demonstrated in this opinion. Therefore, the consolidated case is dismissed on the grounds of forum non conveniens under the following conditions: 1. Union Carbide shall consent to submit to the jurisdiction of the courts of India, and shall continue to waive defenses based upon the statute of limitations; 2. Union Carbide shall agree to satisfy any judgment rendered by an Indian court, and if applicable, upheld by an appellate court in that country, where such judgment and affirmance comport with the minimal requirements of due process; 3. Union Carbide shall be subject to discovery under the model of the United States Federal Rules of Civil Procedure after appropriate demand by plaintiffs. SO ORDERED. underscores the convenience of holding trial in India. All of the private interest factors described in Piper and Gilbert weigh heavily toward [*867] dismissal of this case on the grounds of forum non conveniens. The public interest factors set [**80] forth in Piper and Gilbert also favor dismissal. The administrative burden of this immense litigation would unfairly tax this or any American tribunal. The cost to American taxpayers of supporting the litigation in the United States would be excessive. When another, adequate and more convenient forum so clearly exists, there is no reason to press the United States judiciary to the limits of its capacity. No American interest in the outcome of this litigation outweighs the interest of India in applying Indian law and Indian values to the task of resolving this case. The Bhopal plant was regulated by Indian agencies. The Union of India has a very strong interest in the aftermath of the accident which affected its citizens on its own soil. Perhaps Indian regulations were ignored or contravened. India may wish to determine whether the regulations imposed on the chemical industry within its boundaries were sufficiently stringent. The Indian interests far outweigh the interests of citizens of the United States in the litigation. Plaintiffs, including the Union of India, have argued that the courts of India are not up to the task of conducting the Bhopal litigation. They assert [**81] that the Indian judiciary has yet to reach full maturity due to the restraints placed upon it by British colonial rulers who shaped the Indian legal system to meet their own ends. Plaintiffs allege that the Indian justice system has not yet cast off the burden of colonialism to meet the emerging needs of a democratic people. The Court thus finds itself faced with a paradox. In the Court's view, to retain the litigation in this forum, as plaintiffs request, would be yet another example of imperialism, another situation in which an established sovereign inflicted its rules, its standards and values on a developing nation. This Court declines to play such a role. The Union of India is a world power in 1986, and its courts have the proven capacity to mete out fair and equal justice. To deprive the Indian judiciary of this opportunity to stand tall before the world and to pass judgment on behalf of its own people would be to revive a history of subservience and subjugation from which India has emerged. India and its people can and must vindicate their claims
NELSON BUNKER HUNT vs BP EXPLORATION COMPANY (LIBYA) LTD. FACTS: 1- Hunt and BPs relationship pertains to an oil field located in Libya; 2- 1957, Libya granted Hunt Concession No. 65; 3- June 1960, Hunt entered into a letter agreement with operating agreement as to Concession No. 65;
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4- May 2, 1975, BP instituted suit in England relying on Section 1 (3) of the Frustrated Contracts Act (1943); 5-BP claimed that its contract with Hunt was frustrated when BPs interest in the concession was expropriated and because of BPs contractual performance before expropriation, Hunt obtained a valuable benefit; 6- May 2, 1975, Hunt declined to accept service of writ; 7- June 19, 1975, High Court of Justice, Queens Bench Division, Commercial Court, granted BPs request for service by mail; 8-June 30, 1978, a judgment was entered against Hunt; 9- March 26, 1979, English court awarded BP $15, 575, 823 and $8, 922, 060. Issues/Rulings: 1- WON Hunt was properly notified. Yes. Hunt cannot seriously assert that there was not timely notice and opportunity to defend, that fraud was involved, or that the proceedings were not rendered according to a civilized jurisprudence. The record reflects, however, that the English court did have jurisdiction over Hunt Hunts contacts with England are of such an extent and of such nature that the maintenance of this suit does not offend fair play and substantial justice. 2- WON reciprocity is an essential element of recognition of a foreign judgment. No. Though the Hilton case required reciprocity as a condition of recognition, American decisions since Hilton have moved decisively away from the requirement of reciprocity as a condition of recognition. Indeed, the draftsmen of the Uniform Foreign Money-Judgment Recognition Act consciously rejected reciprocity as a factor to consider in recognizing foreign money judgments.
2- 1957, Libya granted Hunt Concession No. 65; 3- June 1960, Hunt entered into a letter agreement with operating agreement as to Concession No. 65; 4- May 2, 1975, BP instituted suit in England relying on Section 1 (3) of the Frustrated Contracts Act (1943); 5-BP claimed that its contract with Hunt was frustrated when BPs interest in the concession was expropriated and because of BPs contractual performance before expropriation, Hunt obtained a valuable benefit; 6- May 2, 1975, Hunt declined to accept service of writ; 7- June 19, 1975, High Court of Justice, Queens Bench Division, Commercial Court, granted BPs request for service by mail; 8-June 30, 1978, a judgment was entered against Hunt; 9- March 26, 1979, English court awarded BP $15, 575, 823 and $8, 922, 060. Issues/Rulings: 1- WON Hunt was properly notified. Yes. Hunt cannot seriously assert that there was not timely notice and opportunity to defend, that fraud was involved, or that the proceedings were not rendered according to a civilized jurisprudence. The record reflects, however, that the English court did have jurisdiction over Hunt Hunts contacts with England are of such an extent and of such nature that the maintenance of this suit does not offend fair play and substantial justice. 2- WON reciprocity is an essential element of recognition of a foreign judgment. No. Though the Hilton case required reciprocity as a condition of recognition, American decisions since Hilton have moved decisively away from the requirement of reciprocity as a condition of recognition. Indeed, the draftsmen of the Uniform Foreign Money-Judgment Recognition Act consciously rejected reciprocity as a factor to consider in recognizing foreign money judgments.
NELSON BUNKER HUNT vs BP EXPLORATION COMPANY (LIBYA) LTD. FACTS: 1- Hunt and BPs relationship pertains to an oil field located in Libya;
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belongs to him or to which he is legally entitled whether secured by contract, conferred with statute, or guaranteed by constitution, provided such rights and privileges do not infringe on the rights of others, and further provided the waiver of the right or privilege is not forbidden by law, and does not contravene public policy. Rights guaranteed to one accused of a crime fall naturally into two classes: (a) Those in which the state, as well as the accused, is interested, and (b) those which are personal to the accused, which are in the nature of personal privileges. Those of the first class cannot be waived, those of the second may be. (Commonwealth v. Petrillo). This Court has recognized waivers of constitutional rights such as the rights against unreasonable searches and seizures, the right to counsel and to remain silent, and the right to be heard. The right to bail is another of the constitutional rights which can be waived. It is a right personal to the accused and whose waiver would not be contrary to law, public order, morals or good customs, or prejudicial to a third person with a right recognized by law. PEOPLE V. LICERA [65 S 270 (1975)] F: In 1961, accused was granted an appointment as secret agent of Governor Leviste. In 1965, accused was charged with illegal possession of firearms. The SC held that where at the time of his appointment, People v. Macarandang (1959) was applicable, which held that secret agents were exempt from the license requirement, and later People v. Mapa (1967) was decided, the earlier case should be held applicable. HELD: Art. 8 of the Civil Code decrees that judicial decisions applying or interpreting the laws or the Constitution form part of this jurisdiction's legal system. These decisions, although in themselves not law, constitute evidence of what the laws mean. The application or interpretation placed by the courts upon a law is part of the law as of the date of the enactment of the said law since the Court's application or interpretation merely establishes the contemporaneous legislative intent that the construed law purports to carry into effect. A new doctrine abrogating an old rule operates prospectively and should not adversely affect those favored by the old rule.
CASES ON HUMAN RELATIONS

Umali v. Estanislao Facts:Congress enacted RA 7167 entitled An act adjusting the basic personal andadditional exemptions allowable to individuals for income tax purposes tothe poverty threshold level, amending for the purpose Sec.29 of the NIRC.The said act was signed and approved by the President on Dec.19,1991 andpublished on Jan.14,1992 in Malaya, a newspaper of general circulation.Sec.3 of the said act states: This act shall take effect upon its approval,while Sec.5 states: These regulations shall take effect on compensationincome from January 1, 1992.
Issue/s:1. WON RA 7167 took effect upon its approval by the president onDec.19,1991 or on Jan.30 1992, 15 days after its publication? RA 7167 took effect on January 30,1992 after 15 days of itspublication. (Tanada vs Tuvera) The clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself which cannot in any event be omitted. This clause does not mean that the legislator may make the law effective immediately upon approval, or on any other date without its previous publication. Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen (15) day period shall be shortened or extended. PEOPLE V. DONATO [198 S 130 (1991)] The doctrine of waiver extends to the rights and privileges of any character, and since the word "waiver" covers any conceivable right, it is the general rule that a person may waive any matter which affects his property, and any alienable right or privilege of which he is the owner or which
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Art. 14. Penal laws and those of public security and safety shall be obligatory upon all who live or sojourn in Philippine territory, subject to the principles of public international law and to treaty stipulations. Balane: There are 2 principles involved here: Territoriality and Generality. Territoriality means that our criminal laws are enforceable only w/in Phil. territory. Exception to the territoriality principle is Art. 2 of RPC. Generality w/c means that w/in the Phil. territory, our criminal laws will apply to anyone, citizen or alien. Exceptions: (1) treaty stipulations w/c exempted some persons w/in the jurisdiction of the Phil. courts. and (2) ambassadors [consuls are subject to the jurisdiction of our criminal courts (Schneckenburger v. Moran.)] Tolentino: Exemption under International Law.-- Under the theory of extraterritoriality, foreigners may be exempted from the operation of the Phil. laws in the following cases: (1) when the offense is committed by a foreign sovereign while in Phil. territory; (2) when the offense is committed by diplomatic representatives; and (3) when the offense is committed in a public or armed vessel of a foreign country. Offenses in Merchant Vessels.-- A merchant vessel of foreign registry does not enjoy the extraterritorial privilege of foreign public or war vessels. An offense committed on such vessel while it is in a Phil. port, constituting a breach of public order and a viol. of the policy established by the legislature, is triable in Phil. ports. Art. 15. Laws relating to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though living abroad. Tolentino: Theories on Personal Law.-Domiciliary theory, followed in the US, according to w/c the personal laws of a person are determined by his domicile. Nationality theory w/c makes nationality or citizenship as the basis for determining the personal laws of an individual. Capacity to Contract.-- If under the law of the State of w/c a party to a contract is a citizen, he is already of age at the time he enters into the contract, he cannot set such contract aside on t he Co vs. Court of Appeals [227 SCRA 444] The Supreme Court rendered that: "It would seem, then, that the weight of authority is decidedly in favor of the proposition that the Court's decision of September 21, 1987 in Que vs. People, 154 SCRA 160 (1987) - i.e., that a check issued merely to guarantee the performance of an obligation is nevertheless covered by B.P. 22 should not be given retrospective effect to the prejudice of the petitioner and other persons similarly situated, who relied on the official opinion of the Minister of Justice that such a check did not fall within the scope of B.P. 22. National Marketing Corporation v Tecson Facts: December 21, 1965, National Marketing Corporation filed a complaint, docketed as civil case no. 63701 on the same court, as successor of the Price Stabilization Corporation, against the same defendant from 10 years ago. Defendant Miguel Tecson moved to dismiss the said complaint upon the ground lack of jurisdiction over the subject matter of that and prescription of action. The court, then, issued an order of dismissal with regards the article 13 of the civil code. However, National Marketing Corporation appealed to the court of appeals from such order. Looking at the fact that 1960 and 1964 is a leap year, they insisted that a year means a calendar year and a leap year would still be counted as 1 year even if it consists of 366 days. The case reached its conclusion with the appellant s theory with regards to the article 13 of the civil code. Issues: Whether or not the term year as used in the article 13 of the civil code is limited to 365 days. Ruling: The term year as used in the article 13 of the civil code is limited to 365 days. However, it is said to be unrealistic and if public interest demands a reversion to the policy embodied in the revised administrative code, this may be done through legislative process and not by judicial decree. QUIZON V. BALTAZAR [76 S 560 (1977)] - The RPC provides that an action for serious oral defamation prescribes in six months. The months should be computed by the regular 30 days, not the calendar months. Hence, where the crime was committed on November 11, 1963, and the action was filed exactly 180 days later, said action was filed on time.
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forced leave, petitioner Hendry went up to him and called him a crook and a swindler. Tobias was then ordered to take a lie detector test. Also, he was instructed to submit specimen of his handwriting, signature, and initials for examination by the police investigators to determine his complicity in the anomalies. ground of minority, even if under the laws of the Phils. he is still a minor. (Government vs. Frank, 13 P 238.) Renunciation of Allegiance.-- The question of how a citizen may strip himself of the status as such citizen is governed by his national law. Bellis vs Bellis 20 scra 358 Nationality Principle Facts: Amos Bellis was a citizen of the State of Texas, and of the United States. By his first wife whom he divorced he had five legitimate children, by his second wife, who survived him, he had three legitimate children, and three illegitimate children. Before he died, he made two wills, one disposing of his Texas properties and the other disposing his Philippine properties. In both wills, his illegitimate children were not given anything. The illegitimate children opposed the will on the ground that they have been deprived of their legitimes to which they should be entitled, if Philippine law were to be applied. ISSUE: Whether or not the national law of the deceased should determine the successional rights of the illegitimate children. HELD: The Supreme Court held that the said children are not entitled to their legitimes under the Texas Law, being the national law of the deceased, there are no legitimes. GLOBE MACKAY CABLE AND RADIO CORP V. CA G.R. NO. 81262 August 25, 1989 FACTS: Respondent Restituto Tobias was employed by petitioner Globe Mackay in a dual capacity, as a purchasing agent and administrative assistant to the engineering operations manager. In 1972, globe Mackay discovered fictitious purchases and other fraudulent transactions for which it lost several thousands of pesos. Respondent was the one who discovered the anomalies and reported them to his immediate superior Ferraren and to petitioner Herbert C. Hendry who was then the Executive Vice President and General Manager of Globe Mackay. A day after respondent Tobias made the report, petitioner Hendry confronted him by stating that he was the number one suspect and ordered him to take one week forced leave, not to communicate with the office, to leave his table drawers open and to leave the office keys. When respondent Tobias returned to work after the Manila police investigators submitted a laboratory crime report clearing private respondent of participation in the anomalies. Not satisfied with the police report, petitioners hired a private investigator, Jose Fernandez who submitted a report finding Tobias guilty. This report however expressly stated that further investigation was still to be conducted. Petitioner Hendry issued a memorandum suspending Tobias from work preparatory to the filing of criminal charges against him. DioscoroTagle, Metro Manila Police Chief Document Examiner, after investigating other documents pertaining to the alleged anomalous transactions, submitted a report reiterating his previous finding that the handwritings, signatures, and initials appearing in the checks and other documents were not those of Tobias. Moreover, lie detector tests conducted on Tobias also yielded negative results. Notwithstanding the two police reports, petitioners filed with the City Fiscal of Manila a complaint for estafa through falsification of commercial documents, later amended to just estafa. Subsequently, five other criminal complaints were filed against Tobias. All of the six criminal complaints were dismissed by the fiscal. Meanwhile, Tobias received a notice from petitioners that his employment has been terminated. Tobias filed a complaint for illegal dismissal which has been dismissed by the labor arbiter. On appeal, the National Labor Relations Commission reversed the labor arbiter s decision. Secretary of Labor reinstated the labor arbiter s decision. Tobias appealed the Secretary of Labor s order with the Office of the President. During the pendency of the appeal, petitioners and respondent Tobias entered into a compromise agreement regarding the complaint for illegal dismissal. Unemployed, Tobias sought employment with the Republic Telephone Company (RETELCO). However, petitioner Hendry, without being asked by RETELCO, wrote a letter to the latter stating that Tobias was dismissed by Globe Mackay due to dishonesty. Respondent Tobias filed a civil case for damages anchored on alleged unlawful, malicious, oppressive, and abusive acts of petitioners. Petitioners contend that they could not be made liable for damages in the lawful exercise of their
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Nikko Hotel Manila Garden & Ruby Lim vs. Reyes G.R. No. 154259. February 28, 2005 Facts: Robeto Reyes known as AmayBisaya was seen in a hotel lobby by his friend Dr. VioletaFilart, who he identified to have invited him to the party of the hotel s outgoing manager. However, Ruby Lim, the coordinator of the party asked him to leave since it is an exclusive party and he is not one of those invited. Reyes did not leave the party as was instructed but created a scene thereby he was escorted out the party by the policeman. He sued the hotel and Ruby Lim for damages. Issue: Whether or not Ruby Lim acted abusively in asking Roberto Reyes to leave the party where he was not invited by the celebrant thereof; thereby, becoming liable under Articles 19 and 21 of the Civil Code. Held: No. In the absence of any proof of motive on the part of Ms. Lim to humiliate Mr. Reyes and expose him to ridicule and shame, it is highly unlikely that she would shout at him from a very close distance. Ms. Lim having been in the hotel business for twenty years wherein being polite and discreet are virtues to be emulated, the testimony of Mr. Reyes that she acted to the contrary does not inspire belief and is indeed incredible. Thus, the lower court was correct in observing that Considering the closeness of defendant Lim to plaintiff when the request for the latter to leave the party was made such that they nearly kissed each other, the request was meant to be heard by him only and there could have been no intention on her part to cause embarrassment to him. Absent such intention and as the Court observed the conduct of Lim of asking Reyes to leave was in an exemplary manner, there can be no damages to be awarded. Any damage suffered by Reyes must be borne by him alone. It was plaintiff s reaction to the request that must have made the other guests aware of what transpired between them, had plaintiff simply left the party as requested; there was no need for the police to take him out. Ms. Lim, not having abused her right to ask Mr. Reyes to leave the party to which he was not invited, cannot be made liable to pay for damages under Articles 19 and 21of the Civil Code. Necessarily, neither can her employer, Hotel Nikko, be held liable as its liability springs from that of its employee. RCPI vs. CA 143 SCRA 657 (1986) right to dismiss respondent. On the other side, respondent contends that because of petitioners abusive manner in dismissing him as well as for the inhuman treatment he got from them, the petitioner must indemnify him for the damage that he had suffered. ISSUE: Whether or not petitioners are liable for damages to respondent in relation to Article 19 of the New Civil Code. HELD: Supreme Court held that petitioners have indeed abused the right that they invoke, causing damage to Tobias and for which the respondent must be indemnified. Furthermore, Article 19 of the New Civil Code provides that, Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed not only in the exercise of one s rights but also in the performance of one s duties. A right, though by itself legal because recognized or granted by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be held responsible. Upon reporting for work, Tobias was confronted by Hendry who said that respondent Tobias was a crook and a swindler to the company. Considering that the first report made by the police investigators was yet to be submitted, the statement made by Hendry was baseless. The imputation of guilt without basis and the pattern of harassment during the investigations of Tobias transgress the standards of human conduct set forth in Article 19 of the New Civil Code. The Court has already ruled that the right of the employer to dismiss an employee should not be confused with the manner in which the right is exercised and the effect flowing therefrom. If the dismissal is done abusively, then the employer is liable for damages to the employee. Under the circumstances of this case, the petitioners clearly failed to exercise in a legitimate manner their right to dismiss Tobias, giving the latter the right to recover damages under Article 19 in relation to Article 21 of the Civil Code.
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The petitioner filed a motion for reconsideration which led to the increase in the indemnity. On March 7, 1973, the accused filed a motion for reconsideration but was denied; thus, he appealed to the Court of Appeals. The accused died on August 5, 1973 and for this reason his counsel moved that the appeal be dismissed arguing that the death of a convict extinguishes, not only the personal penalties, but also the pecuniary penalties as long as the death occurs before final judgment. The CA sustained the motion. Hence, on February 20, 1975, the petitioner challenged the order of the Court of Appeals be reversed. Issue: Whether or not the accused is still liable under Article 20 of the Civil Code. Ruling: Yes. The court ruled that the acquittal from the criminal liability of the accused by death does not extinguish his accountability for his civil obligations. Thus, the petitioner is not precluded from pursuing a civil action for the injuries. Moreover, the accused is liable under Article 20 of the Civil Code, which states that every person, contrary to law, willfully or negligently causes damage to another, shall indemnify the latter for the same , since he deliberately sold again the property to another person which has been previously sold to the petitioner, thereby causing damage to the latter. Wherefore, the challenged order dated February 20, 1975 is hereby set aside, the appeal shall proceed with respect to the issue of civil liability of the accused appellant. FACTS: Loreto Dionela alleges that the defamatory words on the telegram sent to him by the operator RCPI not only wounded his feelings but also caused him undue embarrassment and affected adversely his business as well because other people have come to know said defamatory words. RCPI claims, as its defense, that the additional words in Tagalog were not intended for plaintiff and were included in the original telegram unintentionally. Dionela filed for damages and was granted by the trial court and was affirmed by the Court of Appeals the liability of RCPI company employer. RCPI now comes to the Supreme Court alleging that the CA erred in holding that RCPI should answer directly and primarily for the civil liability arising from the criminal action of its employees. ISSUE: Is RCPI directly and primarily liable to Dionela for damages? HELD: Yes. The action for damages was filed directly against RCPI not as an employer subsidiarily liable under the provisions of Article 1161 of the New Civil Code in relation to article 103 of the Revised Penal Code. The cause of action of Dionela is based on Articles 19 and 20 of the New Civil Code as well as on petitioner s breach of contract thru the negligence of its own employees. As a corporation, the petitioner can act only through its employees. Hence, the acts of its employees in receiving and transmitting messages are the acts of RCPI. To hold that RCPI is not liable directly for the acts of its employees in the pursuit of RCPI s business is to deprive the general public availing of the services of RCPI of an effective and adequate remedy. In most cases, negligence must be proved in order that plaintiff may recover. However, 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.
CECILIO PE, ET. AL. VS.ALFONSO PE G.R. No. L-17396 May 30, 1962 FACTS: CecilioPe, the plaintiff and father of Lolita Pe, filed a case against the defendant, Alfonso Pe, an adopted son of a Chinaman named PeBeco, a relative of Lolita s father. The defendant was a frequent visitor in the plaintiff s residence in Marinduque, and this was where he met Lolita. Lolita Pe (24, single) and Alfonso Pe s (married) friendship grew into a clandestine love affair where the two would even meet in the town of Gasan and in Boac. The parents forbade them from seeing each other, but the forbidden love affair persisted, through love letters sent to one another. Deportation proceedings were even filed against the defendant in the parents wish of separating the two. In April 14, 1957, while residing in 54-B Espaa Extension, Quezon City, Lolita disappeared from the family s residence. The family found a note in her cabinet written in the defendant s handwriting telling her of their supposedly
LAMBERTO V. TORRIJOS, Petitioner, vs. THE HONORABLE COURT OF APPEALS, Respondent G.R. No. L-40336 October 24, 1975 Facts: Lamberto V. Torrijos bought a parcel of land containing an area of 39.9643 hectares located in SitioCacuban, Barrio Gumatdang, Pitogon, Benguet from WakatDiamnuan and his wife. The petitioner however sued Diamnuan for estafa after selling to one Victor de Guia the same property, which the petitioner has originally purchased. The accused was sentenced to an imprisonment of 3 months and to indemnify the petitioner for the damages.
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attention to her and married another woman. Also, instead of the baby boy being christened as Cesar Syquia Jr. as planned, Cesar arranged that the baby be christened Ismael Loanco. Issue: Given these facts, Antonia demanded for the recovery of the sum of thirty thousand pesos as damages resulting form a breach of promise of marriage, to compel him to recognize the two children as natural children and to pay them the amount of five hundred pesos per month. It was pondered upon (1) whether the letters written by Cesar during Antonia s pregnancy proves acknowledgement of paternity and (2) whether the breach of promise to marry is actionable. Held: (1) In the issue of acknowledgement of paternity, the plaintiff has provided sufficient evidence in the form of documents (letters) with regard to Cesar s recognition of paternity and hence the Supreme Court granted Antonia s appeal of monetary support and acknowledgement of only their son. (2) For the issue of whether the breach of promise to marry is actionable, the Supreme Court ruled that Antonia shall not be given damages for the breach of promise to marry because for a promise to be actionable, Article 21 of the Constitution posed that there should be fraud, deceit or abduction or rape. These elements were not evident in this case. However, Antonia will recover incurred expenses pursuant to the subsection 19.2.2 of Article 21 of the Civil Code. Art 22 CAR COOL Philippines, Inc. vs. USHIO Realty and Development Corporation G.R. No. 138088 January 23, 2006 Ponente: Justice Carpio FACTS: USHIO Realty alleges that CAR COOL leased the property from the former owners, spouses Lopez, since 1972. On June 15, 1995, Hector Lopez wrote to CAR COOL informing the latter of his intention to sell the property. Hector Lopez gave CAR COOL the option to buy the property before offering it to prospective buyers. CAR COOL failed to respond to the offer. Thus, on June 28, 1995, Hector Lopez terminated the lease agreement and gave CAR COOL until August 31, 1995 to vacate the property. In a letter dated August 31, 1995, USHIO Realty informed CAR COOL that it had purchased the property from the spouses Lopez. CAR COOL continued to occupy the property despite USHIO Realty s demand. This prompted USHIO Realty to file a complaint for ejectment. CAR COOL, on the other hand, alleges that Hector Lopez agreed to renew the lease agreement for another two (2) years covering the period from January 1, 1995 to December 1996. CAR COOL further claims that it had paid in advance to Hector rendezvous. The two decided to elope and were not seen again. ISSUE: Whether or not the defendant, Alfonso Pe, is liable for damages under Article 21 of the new Civil Code. HELD: Article 21 states, 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 the damage. The defendant is held liable to the damages he had caused the plaintiff s family. Despite the fact that he is a married man, he still pursued Lolita to the point of making her fall in love with him. Indeed, no other conclusion can be drawn from this chain of events than that defendant not only deliberately, but through a clever strategy, succeeded in winning the affection and love of Lolita to the extent of having illicit relations with her. The wrong he has caused her and her family is indeed immeasurable considering the fact that he is a married man. Verily, he has committed an injury to Lolita's family in a manner contrary to morals, good customs and public policy as contemplated in Article 21 of the new Civil Code.
ART. 21 ANTONIA L. DE JESUS, ET AL.,plaintiffappellant, vs. CESAR SYQUIA,defendantappellant G.R. No. L-39110 November 28, 1933 Facts: Cesar Syquia, a 23-year old man from a prominent family courted the cashier of their barbershop, Antonia De Jesus then 20 years old. Their intimate relationship resulted in the pregnancy of Antonia and the baby was born on June 17, 1931. Through out her pregnancy, Cesar has been constantly visiting her and later shouldered the expenses of her labor and hospitalization. Further, Cesar, on the eve of February 1931 before his departure for China and Japan he wrote a note for the priest which read: Saturday, 1:30 p. m. February 14, 1931 Rev. FATHER, The baby due in June is mine and I should like for my name to be given to it. CESAR SYQUIA After the labor, Cesar took Antonia and the baby and they all lived together for a year as a family. Over the course of time, as Antonia showed signs of second pregnancy; Cesar deviated his
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took possession of said property. The payment of P2,160 was duly given by the sheriff to Kincaid and Hurd, attorneys of Standard Oil Company. On the month of March 1910, Felix Cuenca and others commenced an action in the Court of First Instance of the Province of Cavite to recover the said parcel of land and on 29th of March 1912, the judge ruled in favor of the said Felix Cuenca et al.. Issue: When the right, title, and interest, of a judgment debtor to the possession of property sold by the sheriff are brought into question and it later develops that the judgment debtor had no right, title or interest in the property sold, and there are no irregularities in the proceedings concerning the sale, can the purchaser, upon being evicted, recover the purchase price from the judgment creditor? Held: The plaintiff AgapitoBonzon was not able to obtain favorable judgment hence the plaintiff appealed to the court. In this jurisdiction under the principle that one person may not enrich himself at the expense of another, a judgment creditor would not be permitted to retain the purchase price of land sold as the property of the judgment debtor had no title to the land and that the purchaser had been evicted therefrom. No claim was made either in the lower court or here that the defendant, in any way, participated in the alleged illegal sale of the property sold under said execution. There is no claim made by any of the parties that the purchaser was evicted from the property sold, in consequence of any irregularity in the proceedings concerning the sale of the same. There is no claim that there was any irregularity in the proceedings, for which the defendant was, in any way, responsible. In fact, no charge of any irregularity is made, except the fact that the sheriff sold the property of one man for the purpose of paying the debt of another. Lopez the monthly rentals covering the 2-year period. In this regard, CAR COOL asserts that to award damages to USHIO Realty would constitute unjust enrichment at the expense of CAR COOL. ISSUE: Whether or not to award damages by way of rentals in favor of USHIO Realty would constitute unjust enrichment at the expense of CAR COOL. HELD: Contrary to CAR COOL S allegations, the Supreme Court held that the payment of damages in the form of rentals for the property does not constitute unjust enrichment. The court finds that the allegations of the complainant (USHIO Realty) are true. Article 22 of the Civil Code states that every person who through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him. The principle of unjust enrichment under the above stated article requires two (2) conditions, namely: 1) That a person is benefited without a valid basis or justification, and 2) That such benefit is derived at another s expense or damage. USHIO Realty, as the new owner of the property, has a right to physical possession of the property. Since CAR COOL deprived USHIO Realty of its property, the latter has the legal right to receive some amount as reasonable compensation for CAR COOL s occupation of the property. CAR COOL is ordered to pay the aggregate amount of P198,000 as the rental fee for the use of property from December 19, 1995 to November 18, 1996 (the date when CAR COOL vacated the property). AgapitoBonzon, Plaintiff-Appellee vs The Standard Oil Company of New York, et al., the Defendant The Standard Oil Company of New York, the Appellant Facts: On the 19th of November, 1912, the defendant Standard Oil Company appealed to the Court of First Instance of the Province of Cavite to recover the sum of P2,160, with legal interest from the month of December, 1909, and costs. On the month of November 1909 an execution was issued in favor of Standard Oil Company against AlipioLocso and the said writ of execution which involves seven parcels of land owned by AlipioLocso was placed in the hands of Leonardo Osorio, sheriff of the Province of Cavite. On December 23, 1909 the said property was sold at a public auction to the plaintiff-appellee, AgapitoBonzon for P2,160. Prior to the sale of the said property, a written notice stating that the parcels of land belong to Felix, Pablo Cuenca and others was given to the sheriff. Disregarding said written notice the sale continued and the plaintiff
Art 23 Anita Tan vs. Standard Vacuum Oil Co., et al. G.R. No. L-4160 July 29, 1952 Facts: Standard Vacuum Oil Co. ordered the delivery of gasoline to the Rural Transit Company on May 13, 1949. Unfortunately, the gasoline tanktruck trailer used in the delivery accidentally caught fire. JulitoSto. Domingo, the driver, with Igmidio Rico, moved the truck and abandoned it in the middle of the street resulting to the destruction of buildings within the area. Both Sto. Domingo and Rico were acquitted of criminal charges because it cannot be proved that it was their negligence that started the fire. Anita Tan, the
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ISSUE: Whether or not the plaintiff is entitled to compensation despite the fact that there was no written contract agreed upon by the parties. HELD: The Court decided in favor of the plaintiff, ordering the defendant to pay 200 Mexican Pesos less the 50 Pesos personal debt of the plaintiff to the defendant. Whether the plaintiff's services were solicited or offered to the defendant for his assistance, inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and mutual consent as to the rendition of the services. This gives rise to the bilateral obligation of the parties to render service and payment to each other. If it is a fact sufficiently proven that the defendant, Pomar, on various occasions consented to accept an interpreter's services, rendered in his behalf and not gratuitously, it is but just that he should pay a reasonable remuneration therefor, because it is a well-known principle of law that no one should be permitted to enrich himself to the damage of another, as provided for under Article 23 of the Civil Code of the Philippines. plaintiff, was one of the owners of the houses destroyed during the accident. Tan filed a case against the two companies as well as the two employees involved for the damages she suffered. However, the defendants filed separate motions for the dismissal of the plaintiff s allegation. Issue: Whether or not the defendants are liable for the damages incurred by the plaintiff. Held: The Court, based on Article 23 of the Civil Code of the Philippines, decided that Rural Transit Company is with no doubt liable for damages. With Sto. Domingo moving the truck to avoid a greater harm, it was the Rural Transit Company which benefited the most. The fire should have caused the explosion of the company s gasoline deposit yet it was avoided. And under Article 23 of the Civil Code, the defendant is held liable as long as he gets benefited even if the act or event that caused damage is not his fault, thus it applies to the company s situation. VICENTE PEREZ, plaintiff POMAR, defendant G.R. November 16, 1903 vs. EUGENIO No. L-1299;
FACTS: On August 27, 1902, Vicente Perez filed a case against Eugenio Pomar for the recovery of due and unpaid wage. Plaintiff alleged that he rendered his service from December 8, 1901 up to May 31, 1902, as an English interpreter for the Tabacalera Company. Herein defendant, an agent of the said company, was alleged to have paved the way for Perez to be the company s interpreter in various meetings and conferences where prominent business people and military authorities were present. Being assured by the defendant of the company s generosity in compensation, plaintiff held himself ready to render service whenever needed on account of his private business, a soap factory, which he later on abandoned for the same reason. Plaintiff portrayed a vital role in the company s business transactions, for the employees of the company do not understand the business language. The company obtained large profits; however plaintiff did not receive any compensation. The defendant denied the plaintiff s allegations and alleged that there was no legal relation existing between him and the plaintiff because the latter s services were spontaneous, voluntary and in its private capacity as the defendant s acquaintance and not as the company s agent.
Art 24 Rongavilla vs. Court of Appeals G.R. No. 83974. August 17, 1998 Ponente: Justice Quisumbing Facts: The complainants in this case were Mercedes de la Cruz, age 60, and Florencia de la Cruz, age 71. Both are spinsters, uneducated in English, but knows how to read and write in Tagalog. They earned their livelihood as embroiderers and dressmakers. Both were living in house constructed in a parcel of land consisting of 131 square meters. On May, 1976, the complainants borrowed P2, 000 from Dolores Rongavilla, their niece, for the purpose of having their dilapidated roof repaired. After a month, one of the defendants, visited her aunts and asked them to sign a document which was written in English. When the complainants asked, in Tagalog, what the document was all about, the defendant replied that it was just a document admitting their debt of P2, 000. Hence the complainants signed it. After four years, Dolores Rongavilla asked the complainants to vacate the land claiming that she and her husband were already the owners of the land. It was only then that the sisters learned that what they have signed four years ago was a deed of sale of their property to the defendants. Then the complainants filed a complaint to declare the
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Ponciano Mendoza who was present during the transaction stating that Carlos Telosa was made to sign blank forms by the Rural Bank of Lucena. This then proves that the said bank has taken advantage of the limited education of Carlos Telosa. Art 25 Thoughtless extravagance in expenses for pleasure or display during a period of acute public want or emergency may be stopped by order of the courts at the instance of any government or private charitable institution has no jurisprudence provided by the supreme court. This provision was enforced by President Ferdinand Marcos during martial law through general order 15. GENERAL ORDER No. 15 which called upon every resident and citizen of the Philippines, including all elective local officials from provincial governors and city mayors down to barrio captains and councilmen, to avoid and prevent, as the case may be, ostentatious display of wealth and extravagance, including lavish town fiestas or social gatherings. To this end, they are directed to limit town fiestas and other local festivities to one day, which should be as simple and economical as possible. All concerned, particularly the local executives aforementioned, are enjoined to comply with and to enforce this Order. sale as null and void. Issue: Whether or not the Court should declare that the deed of sale to be void, due to the fraudulent nature in which the signature to the deed was secured. Held: Yes. The Court is of the opinion and so holds that there was fraud exercised by the defendants in securing the signature to the deed of sale. Undoubtedly the deed of sale is simulated, fictitious and void. The Court also declared that public policy is also well served in defending the rights of the aged to legal protection, including their right to property that is their home, as against fraud, chicanery and abuse of trust and confidence by those who owed them respect and candor. Valenzuela vs. Court of Appeals G.R. No. L56169 FACTS: Carlos Telosa who is a fisherman and farmer with very limited education acquired a loan from the Rural Bank of Lucena. In exchange for the granted loan, his property located at Bo. Amugeria, Malunay, Quezon, with an area of fifty thousand square metres was mortgaged. Several months after the said transaction, the Rural Bank of Lucena became a distressed bank. The Monetary Board later decided to liquidate the Rural Bank of Lucena. Among the assets inventoried was the mortgaged property of Carlos Telosa. In the document shown in the records of the bank, it specified that the principal amount owed to them by Carlos Telosa was P5,000.00. Carlos Telosa fully aware of the fact that the obliged amount was only P300.00 not P500.00 submitted an affidavit in protest of the demand letter submitted to him. Claiming that payments did not satisfied the whole balance of P9,032.22, the Central Bank extra judicially foreclosed the mortgaged property and sell it in a public auction. To restrain the auction of the mortgaged property, a complaint was filed by the widow and children of Carlos Telosa before the Court of First Instance of Quezon seeking that the mortgage executed bu Carlos Telosa is null and void. ISSUE: Whether the extra judicial foreclosure of the property should continue? HELD: The court has ruled that the heirs of Carlos Telosa are entitled to the appeals they have submitted. Due to the fact that the contract entered upon by Carlos Telosa was anomalous in nature. This was proved by a receipt which served as evidence showing that the receive amount was on P300.00, and a testimony of
Art 26 Hal McElroy vs. Hon. Ignacio Capulong and Juan Ponce Enrile G.R. No. 82398 April 29, 1988 Ponente: Justice Feliciano FACTS: Petitioner McElroy an Australian film maker, and his movie production company, Ayer Productions, envisioned, sometime in 1987, for commercial viewing and for Philippine and international release, the historic peaceful struggle of the Filipinos at EDSA. The proposed motion picture entitled "The Four Day Revolution" was endorsed by the MTRCB as and other government agencies consulted. Ramos also signified his approval of the intended film production. It is designed to be viewed in a six-hour mini-series television play, presented in a "docu-drama" style, creating four fictional characters interwoven with real events, and utilizing actual documentary footage as background. Enrile declared that he will not approve the use, appropriation, reproduction and/or exhibition of his name, or picture, or that of any member of his family in any cinema or television production, film or other medium for
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privacy is the right to be free from unwarranted publicity, from the wrongful publicizing of the private affairs and activities of an individual which are outside the realm of legitimate public concern. ST. LOUIS REALTY CORPORATION vs. COURT OF APPEALS and CONRADO J. ARAMIL 133 SCRA 179 November 14, 1984 Facts: Dr. ConradoAramil, a neuropsychiatrist and member of the faculty of UE Ramon Magsaysay Medical Center, seek to recover damage for a wrongful advertisement in the Sunday Times where St Louis Realty Corp. misrepresented his house with Mr. Arcadio. St. Louis published an ad on December 15, 1968 with the heading where the heart is . This was republished on January 5, 1969. In the advertisement, the house featured was DrAramil s house and not Mr. Arcadio with whom the company asked permission and the intended house to be published. After DrAramil noticed the mistake, he wrote a letter to St. Louis demanding an explanation 1 week after such receipt. No rectification or apology was published despite that it was received by Ernesto Magtoto, the officer in charge of the advertisement. This prompted Dr. Aramil s counsel to demand actual, moral and exemplary damages. On March 18, 1969, St Louis published an ad now with Mr. Arcadio s real house but nothing on the apology or explanation of the error. DrAramil filed a complaint for damages on March 29. During the April 15 ad, the notice of rectification was published. Moreover, there was violation of Aramil's right to privacy. Trial court through Judge Leuterio awarded P8,000 as actual damages, P20,000 as moral damages and P2,000 as attorney s fees. Had it not been a late action for publication of rectification and apology which only took place 15 April 1969 issue of Manila Times Doctor Aramil could have not suffered mental anguish and his income would have not been reduced by about P1,000 to P1,500 a month. Petitioner assailed the decision of the Appellate Court when it affirmed the trial court s decision. Furthermore, the corporation contends that the decision is contrary to law and that the case was decided in a way not in conformity with the rulings of this Court and still continues to argue that the case is not covered by article 26. Issue: Whether or not the case filed against St. Louis Realty Corporation is covered by Article 26 of the new Civil Code. Held: Yes, this case is covered by Article 26 of the Civil Code.St. Louis Realty's employee was grossly negligent in mixing up the advertising or commercial exploitation. Petitioners acceded to this demand and the name of Enrile was deleted from the movie script, and petitioners proceeded to film the projected motion picture. However, a complaint was filed by Enrile invoking his right to privacy. RTC ordered for the desistance of the movie production and making of any reference to plaintiff or his family and from creating any fictitious character in lieu of plaintiff which nevertheless is based on, or bears substantial or marked resemblance to Enrile. Hence, the appeal. ISSUE: Whether or not private respondent Juan Ponce Enrile s right of privacy was violated, under Article 26 of the Civil Code, by the production of the film The Four Day Revolution . HELD: The projected motion picture was as yet uncompleted and hence not exhibited to any audience. Neither private respondent nor the respondent trial Judge knew what the completed film would precisely look like. There was, in other words, no "clear and present danger" of any violation of any right to privacy. The subject matter of the film does not relate to the private life of Ponce Enrile. The intrusion is no more than necessary to keep the film a truthful historical account. Movie s theme is one of public interest and concern. The subject thus relates to a highly critical stage in the history of the country. The line of equilibrium in the specific context of the instant case between freedom of speech and of expression and the right of privacy may be marked out in terms of a requirement that the proposed motion picture must be fairly truthful and historical in its presentation of facts. There must be no showing of a reckless disregard of truth. At all relevant times, during which the momentous events, clearly of public concern, that petitioners propose to film were taking place, Enrile was a "public figure . A limited intrusion into a person's privacy has long been regarded as permissible where that person is a public figure and the information sought to be elicited from him or to be published about him constitutes matters of a public character. Succinctly put, the right of privacy cannot be invoked to resist publication and dissemination of matters of public interest. The right of privacy of a "public figure" is necessarily narrower than that of an ordinary citizen. Private respondent cannot object to his inclusion in the movie on the EDSA Revolution by invoking his right to privacy. The right of privacy is not an absolute right. The right of privacy cannot be invoked to resist publication and dissemination of matters of public interest. The interest sought to be protected by the right of
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complained of had been paid by the plaintiff. According to Article 27, Any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against he latter, without prejudice to any disciplinary administrative action that may be taken. , the same contemplates a refusal or neglect without just cause by a public servant or employee to perform his official duty which causes material suffering or moral loss. The provisions of the article invoked by the plaintiff do not lend support to his claim and contention, because the defendant did not refuse nor did he neglect to perform his official duty but on the contrary he performed it. All the moral damages the plaintiff claims he has suffered are but the product of over sensitiveness. Nessia vs. Fermin and Municipality of Victorias, Negros Occidental G.R. No. 102918 March 30, 1993 Ponente: Justice Bellosillo FACTS: According to Article 27 of the Civil Code of the Philippines, a judicial relief may be given to any person suffering material or moral loss because a public servant or employee refuses or neglects, without just cause, to perform his official duty. Applying this, herein petitioner filed a case against the respondent for recovery of damages and reimbursement of expenses incurred in the performance of his official duties as the then Deputy Municipal Assessor of Victorias. Petitioner claimed that respondent deliberately ignored and caused the non-payment of the vouchers because he defied the former's request to all municipal officials to register and vote in Victorias in the 1980 local elections. However, herein respondent counterclaimed that the vouchers were not approved because they exceeded the budgetary appropriations. ISSUE: Whether or not a judicial relief shall be accorded to the herein petitioner for suffering material or moral loss because a public servant or employee (respondent) refuses or neglects, without just cause, to perform his official duty. HELD: The allegations in the complaint such as, "petitioner presented the said claims to the respondent Mayor Jesus Fermin, but refused and continued to refuse the payments thereof" and "respondents refused and continue to refuse to pay," should not be interpreted as mere admission of the act of disapproval of the claims. Refusal to pay is not inferred solely from disapproval of claims but from inaction as well. However, while it Aramil and Arcadio residences in a widely circulated publication like the Sunday Times. Through that negligence, persons who know the residence of Doctor Aramil, were confused by the distorted, lingering impression that he was renting his residence from Arcadio or that Arcadio had leased it from him. Either way, his private life was mistakenly and unnecessarily exposed. He suffered diminution of income and mental anguish. CA affirmed the judgement for the reason that St. Louis Realty committed an actionable quasi-delict under articles 21 and 26 of the Civil Code because the questioned advertisements pictured a beautiful house which did not belong to Arcadio but to Doctor Aramil who, naturally, was annoyed by that contretemps. WHEREFORE, the judgment of the Appellate Court is affirmed. Costs against the petitioner. SO ORDERED. Art 27 BAGALAY VS. URSAL G.R. No. L-6445 July 29, 1954 Ponente: Justice Padilla FACTS: The City Assessor of Cebu, GenaroUrsal, during the course of his duties, mailed a letter to the appellant, Tomas Bagalay informing the latter that he was delinquent in the payment of realty tax from 1947 to 1951 on a parcel of land assessed at P1,800, amounting to P98.45 including penalties, and that unless the same be paid the real property would be advertised for sale to satisfy the tax and penalty due and expenses of the auction sale. The letter caused the appellant mental anguish, frights, serious anxiety, moral shock and social humiliation, due to such, Bagalay fairly estimates his moral damages with the sum of P10,000. The Court dismissed the case upon the motion of the appellee. Hence, this appeal. ISSUE: Whether or not Ursal is liable for moral damages under Article 27 of the Civil Code. RULING: The order appealed from is AFFIRMED, with costs against the plaintiff. The Court ruled that despite the truthfulness of the facts were proven, Bagalay is not entitled to recover for moral damages he claims to have suffered as a result of the writing and mailing of the letter by the defendant in his official capacity and receipt thereof by the plaintiff because the former has done nothing more than to write and mail the letter. There is no allegation in the complaint that the amount due for the realty tax and penalty referred to in the defendant's letter
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Justice that the manufacture of the SPALDING balls was obviously done to deceive would-be buyers. The projected sale would have pushed through were it not for the timely seizure of the goods made by the NBI. MCDONALD'S CORPORATION and MCGEORGE FOOD INDUSTRIES, INC.,Petitioners, vs. L.C. BIG MAK BURGER, INC., FRANCIS B. DY, EDNA A. DY, RENE B. DY, WILLIAM B. DY, JESUS AYCARDO, ARACELI AYCARDO, and GRACE HUERTO,Respondents. G. R. No. 143993 - August 18, 2004 FACTS:McDonald s Corporation is a corporation bound by the laws of the United States. It consists of many family marks including the Big Mac mark for its double-decker hamburger sandwich . The trademark for Big Mac is registered in the United States Trademark Registry as well as in the Philippines Intellectual Property Office for its franchises in the country. The approval by the then PBPTT for the registration of McDonald s for the Big Mac mark in the Principal Register was given on 18 July 1985. Respondent L.C. Big Mak Burger, Inc., a domestic corporation operating in Metro Manila and selling hamburger sandwiches along with other food items. The respondent corporation applied with PBPTT for the registration of Big Mak mark for its hamburger sandwiches but was quickly opposed by the petitioner corporation on the ground that Big Mak was a colorable imitation of its registered Big Mac mark, a mark which the petitioner exclusively owns. Respondent corporation claimed that they are not liable for trademark infringement and unfair competition, as Big Mak is not a colorable imitation of Big Mac and also because they do not pass of their hamburger sandwiches as those of petitioner s Big Mac hamburgers. Although previous marks have been registered for the Big Mac mark by the Isaiyas Group of Corporations and one Rodolfo Topacio, the former s registration was only in the Supplemental registration of the PBPTT and the latter s rights were acquired by McDonald s Corporation in a Deed of Assignment dated 18 May 1981. ISSUE: Whether L.C. Big Mak Burger Inc. is liable for unfair competition under Article 28 of the Civil Code HELD:The Court reinstated the decision made by the Regional Trial court of Makati dated 5 September 1994 which found L.C. Big Mak Burger Inc. liable for trademark infringement and unfair competition. The court arrived at this decision upon defining the elements of an action for unfair competition, which are (1) confusing similarity in is true that herein respondent may not be compelled by law to approve vouchers because they exceeded the budgetary appropriations, he may, nevertheless, be held liable for damages under Art. 27 for malicious inaction because he did not act on the vouchers. It should be noted that public officials should act efficiently on matters pending before them. For only in acting thereon either by signifying approval or disapproval may the petitioner continue on to the next step of the bureaucratic process. On the other hand, official inaction brings to a standstill the administrative process and the petitioner is left in the darkness of uncertainty. In this regard, official "inaction" cannot be equated with "disapproval." Art 28 PRO LINE SPORTS CENTER, INC., and QUESTOR CORPORATION, petitioners, vs. COURT OF APPEALS, UNIVERSAL ATHLETICS INDUSTRIAL PRODUCTS, INC.,and MONICO SEHWANI,respondents G.R. No. 118192. October 23, 1997 FACTS: On 11 February 1981, Edwin DyBuncio,General Manager of PRO LINE, whose domestic company is the exclusive distributor of Spalding sports products in the Philippines, sent a letter-complaint to the National Bureau of Investigation (NBI) regarding the alleged manufacture of fake SPALDING balls by UNIVERSAL. On 23 February 1981 the NBI applied for a search warrant with the then Court of First Instance, Br.23, Pasig Rizal, presided over by Judge RizalinaBonifacio Vera. On that same day, Judge Vera issued Search Warrant No. 2-81 authorizing the search of the premises of UNIVERSAL in Pasig. In the course of search, some 1,200 Basketballs and volleyballs marked SPALDING were seized and confiscated by the NBI. And days later, Judge Vera issued another order to seal and padlock the molds, rubber mixer, boiler and other instruments at UNIVERSAL s factory that were used to manufacture the fake Spalding products. ISSUE: Whether Universal Athletics Industrial Products, Inc. is liable for unfair competition even if the selling has not been proved? HELD: Yes. The respondents act constituted unfair competition even if the element of selling has not been approved. To hold that the act of selling is an indispensable element of the crime of unfair competition is illogical because if the law punishes the seller of the imitation goods, then with more reason should the law penalize the manufacturer. In this case, it was observed by the Minister of
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not reserve the right in the criminal case its right to separately enforce the civil liability of the defendant. Issue: Whether or not Catipon may be charged with a civil case following his acquittal from the criminal case of estafa. Held: Although the trial court has realized that the Catipon s case has no merit. The decision acquitting Catipon of the charge of estafa, however, does not bar or prevent the filing of the Bank s action to enforce his civil liability. The acquittal of Catipon was predicated on the conclusion that his guilt has not been duly established and the acquittal being equivalent to one on reasonable doubt does not necessarily prevent a suit to enforce the civil liability for the same act or omission and it does not finally determine nor expressly declare that the fact from which the civil case might arise did not exist. In addition, the declaration in the decision of the acquittal to the effect that if any responsibility be given to the accused, which would be civil in nature and not criminal, amounts to a reservation of the civil action in favor of the offended party, for the court in its decision had no reason to dwell on a civil liability that it intended to extinguish by the same decision. Finally because Catipon executed the trust receipt, that the present action seeks to enforce, he is liable ex-contractu for its breach, whether he did or he did not misappropriate, misapply or convert the said merchandise as charged in the information filed in the criminal case. Thus, a civil liability may be charged against Catipon. FRANCISCO BONITE vs. MARIANO A. ZOSA G.R. No. L-33772 June 20, 1988 Facts: On September 24, 1968 Florencio Bonite was working as caminero in the Bureau of Public Highways. He was hit by a truck driven by a private respondent, as a result Bonite died on the same day. A criminal complaint for homicide trough reckless imprudence was filed by the surviving heirs. As private prosecutor Atty. Alberto Dulalasactivrly participated in the prosecution of the criminal case. December28, 1970, petitioners filed an action for recovery of damages against the same accused on account of the death of Florencio Bonite, with the Court of First Instance of Misamis Occidental, 16th Judicial District, Branch III, docketed as Civil Case No. 2806. In an order dated 25 February 1971. Issue: Whether or not an independent civil action for damages, under Article 29 of the Civil Code, is deemed barred by petitioners' failure in the criminal action to make a reservation to file a separate civil action and by their active participation in the prosecution of such criminal action. the general appearance of goods, and (2) intent to deceive the public and defraud a competitior. The intent to deceive and defraud may be inferred from the similarity of the appearance of goods as offered for sale to the public. Unfair competition exists not only if there is a likelihood of confusion for the two goods but also if there is an actual or probable deception on the public because of the general appearance of goods. To support their claim of unfair competition, petitioners allege that respondents fraudulently passed off their hamburgers as "Big Mac" hamburgers. Petitioners add that respondents' fraudulent intent can be inferred from the similarity of the marks in question. Also, the respondents' goods are hamburgers which are also the goods of petitioners. If respondents sold egg sandwiches only instead of hamburger sandwiches, their use of the "Big Mak" mark would not give their goods the general appearance of petitioners' "Big Mac" hamburgers. However, since respondents chose to apply the "Big Mak" mark on hamburgers, just like petitioner's use of the "Big Mac" mark on hamburgers, respondents have obviously clothed their goods with the general appearance of petitioners' goods. Moreover, there is no notice to the public that the "Big Mak" hamburgers are products of "L.C. Big Mak Burger, Inc." The plastic wrappers used for the Big Mak hamburgers did not bore the respondent s corporation name thus providing no notice to the public that Big Mak hamburgers are goods owned by the respondents and not of the petitioners. Because of this, intention to deceive the public is existing in the part of L.C. Big Mak Burger Inc. The order appealed from is AFFIRMED, with costs against the respondent corporation. The Court reinstated the decision made by the Regional Trial court of Makati dated 5 September 1994 which found L.C. Big Mak Burger Inc. liable for trademark infringement and unfair competition. Art 29 PHILIPPINE NATIONAL BANK VS. DALMACIO CATIPON G.R. No. L-6662 January 31, 1956 Ponente: Justice Reyes Facts:Charged with estafa for having misappropriated and convereted the the merchandise covered by the trust receipt but after a while with due trial, Catipon was acquitted from the charge. Shortly thereafter, the bank initiated the present action to recover the value of goods by filing a civil case. But Catipon appealed that his acquittal in the estafa case is a bar to the Bank s instituting the present civil action for the bank did
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accused while his conviction is on appeal. We hold that the death of appellant Bayotas extinguished his criminal liability and the civil liability based solely on the act complained of, i.e., rape. Consequently, the appeal is hereby dismissed without qualification. Wherefore, the appeal of the late Rogelio Bayotas is DISMISSED with costs de oficio. I G.R. No. L-33254 January 20, 1978 Ponente: Justice Aquino FACTS: In a scheme of malversation, accused Licerio P. Sendaydiego, the provincial treasurer of Pangasinan, in conspiracy with Juan Samson y Galvan, an employee of a lumber and hardware store in Dagupan City, and with AnastacioQuirimit, the provincial auditor, as an accomplice, used six (6) forged provincial vouchers in order to embezzle from the road and bridge fund the total sum of P57,048.23. After trial the lower court acquitted the auditor, Quirimit and found Sendaydiego and Samson guilty of malversation through falsification of public or official documents imposing each with 3 criminal cases, with reclusion perpetua being the highest. Sendaydiego and Samson appealed to the Supreme Court. Sendaydiego died on October 5, 1976. His appeal as to his criminal liability was dismissed. Sendaydiego's appeal will be resolved only for the purpose of showing his criminal liability which is the basis of the civil liability for which his estate would be liable. ISSUE: Whether or not after his criminal liability was extinguished because of death that the civil liability stands even when there is no separate civil action. HELD: The supreme court are convinced after a minutiose examination of the documentary and oral evidence and an unprejudiced consideration of the arguments of Sendaydiego's counsel that his criminal liability was established beyond reasonable doubt and, therefore, the civil liability for his estate for the amounts malversed was duly substantial. The Supreme Court held that claims for civil liability survive the death of the accused, there by treating the civil action impliedly instituted with the criminal as one filed under Article 30, as though no criminal proceedings had been filed but merely a separate civil action. The estate of the late Licerio P. Sendaydiego is ordered to indemnify the province of Pangasinan in the sum of P57,048.23. Art 31
Held: The court believes and so holds that as the plaintiffs did not reserve the right to file an independent civil action, and the further fact that the plaintiffs have been represented by a private prosecutor in the prosecution of the criminal case, the action presently filed by the plaintiffs is already res adjudicata and therefore, dismisses the complaint without pronouncement as to costs. Art 30 PEOPLE OF THE PHILIPPINES, PlaintiffAppellee, vs ROGELIO BAYOTAS y CORDOVA, Accused-Appellant. G.R No. 102007 September 2, 1994 FACTS: Rogelio Bayotas y Cordova, in Criminal Case filed before RTC Roxas City, was charged with Rape and eventually convicted. Bayotas appealed his case, but before the final judgment, he died at the National Bilibid Hospital. The Supreme Court decided to dismiss the criminal aspect of the appeal but required the Solicitor General to file its comment with regard to Bayota's civil liability arising from his commission of the offense charged. The Solicitor General commented that the death of the accused-appellant did not extinguish his civil liability and insists that the appeal should be resolved for the purpose of reviewing his conviction on which the civil liability is based. ISSUE: Does death of the accused pending appeal of his conviction extinguishes his civil liability? HELD: Affirmative. Article 30 of the Civil Code provides: "When a separate civil action is brought to demand civil liability arising from a criminal offense, and no criminal proceedings are instituted during the pendency of the civil case, a preponderance of evidence shall likewise be sufficient to prove the act complained of." What Article 30 recognizes is a separate civil action to recover civil liability arising from a criminal offense. In pursuing recovery of civil liability arising from crime, the determining factor of the criminal liability is the condition precedent to the prosecution of the civil action. That is, when the criminal action is cancelled out by death of the accused while pending appeal, the said civil action cannot survive. Article 89 of the Revised Penal Code is clear on this matter and states that death of the convict before final judgment totally extinguishes his criminal liability. Whether asserted in a criminal action or in a separate civil action, civil liability is extinguished by the death of the
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Cancio vs. Isip G.R. No. 133978. November 12, 2002 Ponente: Justice Ynares- Santiago Facts: The petitioner, Jose S. Cancio Jr. represented by Roberto Cancio filed 3 cases of estafaagainst respondent EmerencianaIsip for allegedly issuing 3 checks (a. Php 80,000.00, b. Php 80,000.00 & c. Php 30,000.00) without sufficient funds. The trial court dismissed the complaint due to lack of interest or failure to prosecute. It was also held that the civil case filing amounted to forum-shopping (filing of multiple suits involving the same parties for the same cause of action, either simultaneously or successively, to secure favorable judgment). After a few months, the courts lso denied the motion for reconsideration of the petitioner. Issue: Whether or not the estafa cases dismissal bars the institution of a civil action for collection of the checks value which is the subject of the estafa cases. Held: The complaint filed by the petitioner show that his cause of action is based on culpa contractual, an independent civil action (portions of the complaint reads: that when the said checks were presented to the drawee bank for encashment, the same were all dishonored for reason of drawn against insufficient funds, that several demands were made upon the defendant to make good the checks but failed and refused and still refuses without justifiable reasons to pay plaintiff). The respondent s breach of contract is the petitioner s cause of action. Based on Article 31 of the Civil Code, when the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless the result of the latter . As such, the case at bar is distinct and independent from the estafa case filed against the offender and may proceed regardless the dismissal of the criminal case filed. Therefore, the instant petition is GRANTED. The orders of the regional trial court are REVERSED and SET ASIDE. Art 32 LIM VS. PONCE DE LEON G.R. No. L-22554 August 29, 1975 FACTS:On April 29, 1961, JikilTaha sold to a certain Alberto Timbangcaya of Brooke s Point, Palawan a motor launch named M/L San Rafael . A year later, Timbangcaya filed a complaint The Heirs of Jose Marcial Ochoa vs. G & S Transport Corporation G.R. No. 170071, March 9, 2011 Ponente: Justice Corona FACTS:On the night of March 10, 1995, Jose Marcial K. Ochoa died while on board an Avis taxicab owned and operated by G & S Transport Corporation, a common carrier. The death certificate issued by the Office of the Civil Registrar of Quezon City cited the cause of his death as vehicular accident it was found that the death of Jose Marcial Ochoa was caused by negligence on the part of the taxicab driver employed by G & S Transport Corporation, Bibiano Padilla. However, the taxicab driver, Bibiano Padilla, was acquitted of the crime of reckless imprudence resulting in homicide. Regardless, the petitioners alleged that respondent, as a common carrier, was under legal obligation to observe and exercise extraordinary diligence in transporting its passengers to their destination safely and securely. The contract was entered the moment Ochoa entered the vehicle owned by the respondent. The failure of the respondent, as evidenced by the death of Ochoa, led the petitioners to aver that they, the respondents, are liable for having breached the contract of common carriage. The heirs thus prayed for G & S to pay them actual damages, moral damages, exemplary damages, and attorney s fees and expenses of litigation. ISSUE:Whether or not the petitioner may proceed with the civil action given that there was already an acquittal in the related criminal case. HELD:The Supreme Court declared the ruling of Cancio, Jr., v. Isip, which stated that in the instant case, it must be stressed that the action filed by petitioner is an independent civil action, which remains separate and distinct from any criminal prosecution based on the same act. Not being deemed instituted in the criminal action based on culpa criminal, a ruling on the culpability of the offender will have no bearing on said independent civil action based on an entirely different cause of action, i.e., culpa contractual. Considering Article 31 of the Civil Code, the petitioners claim for damages is valid considering that the civil action, being based on an obligation, proceeded independently of the criminal proceedings and regardless of the result of the latter. Thus, the respondent is liable to pay the petitioners for damages because by not transporting Jose Marcial Ochoa safely to his destination the former breached its contract with the passenger.
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petitioners detention; (2) respondents were immune from liability for acts done in the performance of their official duties, and that (3) the complaint did not state a cause of action against respondents. ISSUE:Whether or not respondents may invoke state immunity from suit for acts done in the performance of official duties and functions. HELD: The petition is GRANTED, with costs against the respondents. The respondents may be, as members of the AFP, merely responding to their duties, as they claim, to prevent or suppress lawless violence, insurrection, rebellion and subversion in accordance with Proclamation No. 2054 of Pres. Marcos, despite the lifting of Martial Law on January 27, 1981, and in pursuance of such objective, to launch pre-emptive strikes against alleged CT underground houses. But this cannot be construed as a blanket license or roving commission untrammeled by any constitutional restraint, to disregard or transgress upon the rights and liberties of the individual citizen enshrined and protected by the Constitution. Article 32 of the Civil Code, which renders any public officer or employees, or any private individual, liable in damages for violating the constitutional rights and liberties of another, does not exempt the respondents from responsibility. Only judges are excluded from liability under the said article, provided their acts or omissions do not constitute a violation of the Revised Penal Code or other penal statute. Art 33 Garcia vs. Florido G.R. No. 35095, Aug. 31, 1973 Facts:On August 4, 1971, petitioners, German C. Garcia, Chief of the Misamis Occidental Hospital, together with his wife, Luminosa L. Garcia, and Ester Francisco, bookkeeper of said hospital, hired and boarded a PU car owned and operated by respondent, MarcelinoInesin, and driven by respondent, Ricardo Vayson, for a round-trip from Oroquieta City to Zamboanga City, for the purpose of attending a conference. Their car then collided with an oncoming passenger bus. Alleging that both drivers of the PU car and the passenger bus were at the time of the accident driving in a reckless, grossly negligent and imprudent manner in gross violation of traffic rules and without due regard to the safety of the passengers aboard the PU car, petitioners, filed on September 1, 1971 with respondent Court of First Instance of Misamis Occidental an action for damages (Civil Case No. alleging that Taha forcibly took away the motor launch from him. Without a search warrant and in the absence of consent, Fiscal Francisco Ponce de Leon effected the impound of the motor launch from Delfin Lim. Fiscal de Leon explained in his request that the subsequent sale of the motor launch to a third party cannot prevent the court from taking custody of the same. In his defense, Fiscal de Leon claimed that he was in good faith, without malice and without the slightest intention of inflicting injury to plaintiff-appellant, JikilTaha when he ordered the seizure of the motor launch. ISSUE: Is the defense of good faith enough to clear the liability of Fiscal de Leon under Article 32 of the Civil Code? HELD: The Court held in the negative. The Court citing Dr. Jorge Bocobo, Chairman of the Code Commission stated that the very nature of Article 32 is that the wrong may be civil or criminal. It is not necessary therefore that that there should be malice or bad faith. To make such a requisite would defect the main purpose of Article 32 which is the effective protection of individual rights. Public officials in the past have abused their powers on the pretext of justifiable motives or good faith in the performance of their duties. Precisely, the object of the Article is to put an end to official abuse by the plea of good faith. Aberca vs. Ver G.R. No. L-69866 April 15, 1988 Ponente: Justice Yap FACTS: Sometime in the early 1980s, various Intelligence units of the AFP known as Task Force Makabansa (TFM) were ordered by respondents then Maj. Gen. Fabian Ver to conduct pre-emptive strikes against known communist-terrorist (CT) underground houses in view of increasing reports about CT plans to sow disturbances in Metro Manila. In compliance thereof, the TFM raided several places, employing in most cases defectively issued judicial search warrants. During these raids, certain members of the raiding TFM confiscated a number of purely personal items belonging to the 20 petitioners. Petitioners were arrested without proper arrest warrants issued by the courts. For some period after their arrest, they were arrested with denied visits of relatives and lawyers; interrogated in violation of their rights to silence and counsel, through threats, torture and other forms of violence in order to obtain incriminatory information or confessions and in order to punish them. Plaintiffs then filed an action for damages before the regional trial court of Quezon City against respondents-officers of the AFP headed by Ver. Respondents, in their motion to dismiss, claimed that (1) the writ of habeas corpus was suspended, thus giving credence to
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criminal libel cases against petitioner s employee. Ruling:Article 33 of the Civil Code provides specifically that in cases of defamation, the injured party may bring a civil action for damages, entirely separate and distinct from the criminal action. Such civil action proceeds independently of the criminal prosecution and requires only a preponderance of evidence. In Joaquin vs. Aniceto, 12 SCRA 308 (1964), the Court held that Article 33 contemplates an action against the employee in his primary civil liability. It does not apply to an action against the employer to enforce its subsidiary civil liability, because such liability arises only after conviction of the employee in the criminal case or when the employee is adjudged guilty of the wrongful act in a criminal action and found to have committed the offense in the discharge of his duties. Any action brought against the employer based on its subsidiary liability before the conviction of its employee is premature. The court ruled that the civil suit filed against the petitioners in their subsidiary capacity is premature under Article 33 of the New Civil Code. Art 34 Cancio, Jr. vs. Isip 391 SCRA 393 November 12, 2002 Ponente: Justice Ynares-Santiago FACTS: Petitioner filed three cases of violation of B.P. No. 22 and three cases of Estafa against respondent for allegedly issuing checks without insufficient funds. The three cases for Estafa were filed in the Regional Trial Court (RTC) of Pampanga and docketed as Criminal Case Nos. G-3611 to G3613. On October 21, 1997, after failing to present its second witness, the prosecution moved to dismiss the estafa cases against respondent. The prosecution likewise reserved its right to file a separate civil action arising from the said criminal case. On December 15, 1997, petitioner filed the instant case for collection of sum of money to recover amount of checks subject of the estafa cases. Thus, respondent filed a motion to dismiss the complaint contending that petitioner s action is barred by the doctrine of res judicata. The RTC ruled in favor of respondent. ISSUES: 1) Whether or not the dismissal of the criminal cases (Estafa cases) against respondent bars the institution of a civil action for the value of the checks subject of the estafa cases. 2) Whether or not the trial court erred in ruling that the dismissal of the criminal cases against respondent on the ground of lack of interest or 2850) against the private respondents, owners and drivers, respectively, of the PU car and the passenger bus that figured in the collision, with prayer for preliminary attachment. Said action was filed, however, despite the pending of a criminal case filed prior to that of the petitioners, when they were still recovering from the accident. Issue: Whether or not the civil case be allowed to prosper, despite the pendency of the criminal proceedings? Held: The Supreme Court cited its ruling in the case of Meneses vs. Luat, stating that when the criminal action for physical injuries against the defendant did not proceed to trial as he pleaded guilty upon arraignment and the Court made no pronouncement on the matter or damages suffered by the injured party, the mere appearance of private counsel in representation of the offended party in said criminal case does not constitute such active intervention as could impart an intention to press a claim for damages in the same action, and, therefore, cannot bar a separate civil action for damages subsequently instituted on the same ground under Article 33 of the New Civil Code. INTERNATIONAL FLAVORS AND FRAGRANCES (PHIL.), INC., petitioner, vs. MERLIN J. ARGOS and JAJA C. PINEDA, respondents, September 10, 2001 -364 S.C.R.A. 792G.R. No. 130362 Facts:Respondents Merlin Argos and Jaja Pineda are the general manager and commercial director, respectively, of the Fragrances Division of the petitioner International Flavors and Fragrances, Inc. (IFFI). The general managers reported directly to Hernan Costa, a Spaniard who was the appointed managing director of the operations of the petitioner in the Philippines. Costa and respondents had serious differences. When the positions of the general managers became redundant, respondents agreed to the termination of their services. They signed a Release Waiver and Quitclaim on December 10, 1993. That same time, Costa issued a Personnel Announcement which described respondents as persona non grata and urged the employees not to have further dealings with them. Two Information were filed against Costa for the criminal charge of libel while the respondents also filed a civil case for damages against Costa and petitioner (IFFI), in its subsidiary capacity as the employer of Costa. Issue:Whether or not private respondents could sue petitioner for damages based on subsidiary liability in an independent civil action under Article 33 of the Civil Code, during the pendency of the
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alleged. Defendants disclaimed liability by establishing that Juanito is married and is no longer a minor living in the company of his parents, and that he is also not an employee of Lim Koo. Thus, Neither Juanito s parents can be made liable under vicarious liability (2180 of the NCC) nor the owner of vehicle be the subsidiary liable under 103 of the RPC. The separate civil action was dismissed, since petitioner already tried to execute the indemnity adjudged in the criminal action and Juanito already served subsidiary imprisonment because he was unable to pay indemnity. Petitioner insists on the liability of parents and truck owner. Her Motion for Reconsideration was denied, hence this petition. ISSUES & ARGUMENTS: Whether or not the judgment of the criminal case bars the civil action? HOLDING & RATIO DECIDENDI: Art. 2180 par 5 of the NCC (primary liabilityvicarious liability) only applies if the offender is a MINOR LIVING in the COMPANY of his PARENTS. In this case, Juanito was already married and lives independently from his parents 103 of the RPC (subsidiary liability) only attaches if the act happened while he was discharging his duties (as employee). In this case, no evidence was presented to establish such relationship. The civil complaint was confused with the nature of liability to charge (103 or 2180). Court however clarified that the lower court erred when they adjudged that the civil action is barred by res judicata. The civil action from criminal act and independent civil action are of different nature and purpose. The 2 cases affect different parties. In the independent civil action, subsidiary and vicarious liability were being established. Nevertheless, since 2180 of NCC and 103 of RPC was inapplicable, the action was still dismissed. William R. Bayani vs. Panay Electric Co., Inc. G.R. No. 139680 April 12, 2000 Ponente: Justice Quisimbing FACTS:Private respondent Panay Electric Co., Inc.(PECO) discontinued supplying electric services to two pension houses owned by petitioner William Bayani, alleging that it had discovered theft of electricity in the establishments of the latter. Private respondent then filed two complaints under R.A. No. 7832 or Anti- Electricity and Electric Transmission Lines/ Materials Pilferage Act against petitioner in the City Prosecutor of Iloilo City but such complaints were dismissed. PECO then appealed the dismissal to the Secretary of Justice. In return, petitioner filed a case in the Regional Trial Court of Iloilo City for injunction and damages failure to prosecute is an adjudication on the merits which amounted to res judicata on the civil case for collection. HELD:The Supreme Court ruled in favor of the petitioner. According to the Supreme Court, an act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and (2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as felony [e.g. culpa contractual or obligations arising under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code]; or (b) where the injured party is granted a right to file an action independent and distinct from criminal action [Article 33 of the Civil Code]. Under the present rules, the independent civil actions may be filed separately and prosecuted independently even without any reservation in the criminal action. Moreover, the Supreme Court believed that the trial court erred in dismissing petitioner s complaint for collection of the value of checks issued by the respondent. Being an independent civil action which is separate and distinct from any criminal prosecution and which require no prior reservation for its institution, the doctrine of res judicata will not operate to bar the same.
Art 35 EstanislawaCanlas v Chan Lin Po, RemediosDiala, and LimKoo| Barrera G.R. No. L-16929, July 31, 1969 | 2 SCRA 973 FACTS: On June 11 1951, Juanito Chan, son of Chan Lin Po and RemediosDiala, drove and operated a motor vehicle (a truck) along Rizal Ave Ext, Manila allegedly in a reckless and imprudent manner and so hitting Nicolas Paras, 65 yrs old, and ran over his head, crushing it, resulting to his instantaneous death. It must be noted that the truck was co-owned by Juan s parents and one Lim Koo. At the initial stage of the criminal trial, Petitioner, EstanislawaCanlas (widow of Nicolas, representing also 5 minor children), made a reservation to file a separate civil action. Trial Court held: Juanito is guilty, serve sentence of 1yr8mos, plus 5K indeminity. Upon appeal to the Court of Appeals, it was modified: 1yr not less than 4 yrs of imprisonment, indemnity also affirmed. In the civil action, the same facts were
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Ras vs. Rasul 100 SCRA 125 (1980) Petitioner: Alejandro Ras Respondent: Hon. Jainal D. Rasul, District Judge of the Court of First Instance of Basilan, and PEOPLE OF THE PHILIPPINES Ponente: Teehankee, J. FACTS: 1. Alejandro Ras was a defendant in the Civil Case No. 73 over a property allegedly sold twice. 2. Alejandro Ras claims the signatures appearing in the prior deed of sale were forgeries and that he never sold the property twice. 3. While the Civil Case against Ras was pending, Criminal Case No. 240 of estafa was filed against him over the alleged double sale subject of the Civil Case. 4. The petitioner Alejandro Ras filed for the suspension of Criminal Case No. 240 due to the existence of a prejudicial question in Civil Case No. 73 of the same court. 5. 6. The motion for suspension was denied. The matter was elevated to the Supreme Court. ISSUES: Whether or not the Criminal Case against Alejandro Ras should be suspended by the Supreme Court until the matter of the Civil Case is to be decided, on the grounds of the existence of a prejudicial question between the two cases. HELD:Yes. The resolution of the Civil Case against Alejandro Ras would be directly determinative of the outcome of the Criminal Case. If the alleged forgeries in the former case were to be proven null and void, then the alleged double sale and crime of estafa in the Criminal Case would be a nonexistent issue and no offense could be legally charged. Therefore, the Supreme Court decided that there indeed was a prejudicial question present, a valid basis sufficient to suspend the latter case until the Civil Case is resolved. SPOUSES VICENTE YU AND DEMETRIA LEE-YU, Petitioners, vs. PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Respondent G.R. No. 147902; March 17, 2006 PETITION FOR REVIEW ON CERTIORARI Facts: Spouses Vicente Yu &Demetria Lee-Yu, among others mortgaged their title, interest and participation over several parcels of land located in Dagupan City and Quezon City in favor of the Philippine Commercial International Bank as security for the payment of loan. However the petitioners failed to pay the loan, interests & penalties due thereon and the respondent filed a Petition for Extra-Judicial Foreclosure of Real Estate Mortgage on Dagupan City properties before the RTC of Dagupan City. The said properties were auctioned on September 10, 1998 where respondent emerged as the highest bidder. Then for malicious prosecution. PECO moved to dismiss the petition. After which, petitioner amended his complaint and prayed for PECO to desist from making false imputations that he allegedly continued to commit violations of the aforementioned republic act. PECO also moved to dismiss the amended petition but the court denied it alongside a motion for reconsideration instituted by PECO. The trial court ruled in favor of the petitioner and ordered him to put up a bond before a writ of preliminary injunction is issued. The court likewise ordered PECO to restore the electric services to the establishments owned by William Bayani. Petitioner submitted a surety bond but substituted it with a cashier s check which was approved by the trial court. PECO appealed to the Court of Appeals and prayed for the reversal of the lower court s decision which was granted by the same. The petitioned moved for reconsideration but was denied. Hence, petitioner seeks redress from the Supreme Court. ISSUE/S: Whether or not the case filed by petitioner against private respondent is based on malicious prosecution under Art. 35 of the Civil Code. RULING:Before deciding the matter, it is necessary to define the meaning of malicious prosecution. There is malicious prosecution when a person directly insinuates or imputes to an innocent person the commission of a crime and the maliciously accused is compelled to defend himself in court. Such may be proved when the prosecutor acted without probable cause, the prosecutor was impelled by legal malice, or a prior case was filed against the prosecutor and the same subsequently files a case ahead of the decision in the first case. In this case, petitioner insists that his case is founder on other causes of action other than malicious prosecution. He alleged particularly that the summary disconnection of the electrical services of his two establishments were in violation of Art. 19 and 21 of the Civil Code. However, a review of the facts of the amended complaint shows that it deals mainly with the criminal complaints instituted by PECO against the petitioner. Moreover, the initial complaint was filed even before the dismissal of the Secretary of Justice of the criminal complaints filed by PECO. Thus, the Supreme Court finds no reversible error in the decision of the Court of Appeals and, therefore, denies the petition. Art 36
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on mortgaged properties located in different provinces since these are two unrelated concepts. As to the second issue, civil case no. 99-01369-D and Special Proclamation no. 99-00988-D are both civil in nature. Clearly no prejudicial question can arise from the existence of the two actions and since the two cases are both civil in nature it can proceed separately and take its own direction independently of each other. The petition is denied. PNB v. CA PNB vs CA, 83SCRA237 G.R. No. L-27155 May 18, 1978 PHILIPPINE NATIONAL BANK, petitioner, vs. THE COURT OF APPEALS, RITA GUECO TAPNIO, CECILIO GUECO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC., respondents. ANTONIO, J.: Facts: plaintiff, Philam gen as surety, issued a bond in favor of Tapnio, to secure the latters obligation to PNB 2371.79 plus 12% interest. Philamgen paid the said amount to PNB and seek indemnity from Tapnio. Tapnio refused to pay alleging that he was not liable to the bank because due to the negligence of the latter the contract of lease w/ Tuazon was rescind which amounts to 2800. Tapnio mortgage his standing crops and sugar quota to PNB. Tapnio agreed to leased the sugar quota, in excess of his need to Tuazon which was approved by the branch and vice president of the PNB in the amount of P2.80 per picul. However, the banks board of directors disapproved the lease, stating that the amount should be P3.00 per picul, its market value. Tuazon ask for reconsideration to the board which was not acted by the board, so the lease was not consummated resulting to the loss of P2,800, which could have been earned by Tapnio. The Trial court and CA ruled that the bank was liable to Tapnio. Thus this petition Issue : WON PNB is liable to tapnio Held:Yes pnb is liable to Tapnio. PNB argue that it has a right both under its own Charter and under the Corporation Law, to approve or disapprove the said lease of sugar quota and in the exercise of that authority. The SC said that time is of the essence in the approval of the lease of sugar quota allotments, since the same must be utilized during the milling season. There was no proof that there was any other person at that time willing to lease the sugar quota allotment of private respondents for a price higher than P2.80 per picul. Also, Considering that all the accounts of Rita Gueco Tapnio with the Bank were secured by chattel mortgage on standing crops, assignment of leasehold rights and interests on her properties, four days after the auction a Certificate of Sale was issued in favor of the respondent and afterwards the sale was registered with the Registry of Deeds of Dagupan City. Then on August 20, 1998, about two months before the expiration of the redemption period, respondent filed an Ex-Parte Petition for Writ of Possession before the RTC of Dagupan City, docketed as Special Proceeding No. 99-00988-D. A hearing was conducted on September 14, 1999 where the respondent presented its evidence ex-parte by the testimony of Rodante Manuel. But on September 30, 1999 the petitioners filed a Motion to Dismiss and to Strike Out testimony of Rodante Manuel stating that the Certificate of Sale dated September 14, 1998, was void because respondent violated Article 2089 of the Civil Code in the indivisibility of the mortgaged by conducting two separate foreclosure proceedings on the mortgaged properties in Dagupan City and Quezon City. Likewise the petitioners filed a Complaint for Annulment for a Certificate of Sale before the RTC of Dagupan City, docketed as Civil Case No. 99-03169-D. On Feb. 14, 2000, RTC Branch 43 denied petitioners Motion to Dismiss to Strike Out Testimony of Rodante Manuel. Nonetheless the petitioners filed a Motion of Reconsideration further arguing that the pendency of Civil Law No. 99-03169-D in RTC Branch 44 is a prejudicial issue to Special proclamation No. 99-00988-D in RTC Branch 43, but was denied because the pending case before RTC Branch 44 is also a civil case and not a criminal case. Furthermore on June 1, 2000 petitioners filed a Petition for Certiorari but the CA dismissed it. Over and above that the petitioners filed a Motion for Reconsideration but were denied again by the CA on April 26, 2001. Hence, the present Petition for Review on Certiorari. Issues: 1. Whether or not a real estate mortgage over several properties located in different locality can be separately foreclosed in different places. 2. Whether or not the pendency of civil case no. 9903169-D is a prejudicial issue that will render the issues in Special Proclamation no. 99-00988-D moot and academic. Held:As to the first issue, the court finds that petitioners have mistaken a notion that the indivisibility of a real estate mortgage relates to the venue of extra judicial foreclosure proceedings. The rule on indivisibility of a real estate mortgage is provided for in Article 2089 of the Civil Code. Indivisibility means that the mortgage obligation cannot be divided among the different lots, that is each and every parcel under mortgage answers for the totality of the debt. In addition the court holds that the rule on indivisibility of the real estate mortgage cannot be equated with the venue of foreclosure proceedings
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Subsequently, the movie was shown in different theaters all over the country. Because petitioner refused to pay any additional amounts pursuant to the Agreement, Vda. de Gonzales instituted the present suit against him praying for judgment in her favor ordering petitioner 1) to pay her the balance of P15,000.00, with legal interest from the filing of the Complaint; and 2) to render an accounting of the proceeds from the picture and to pay the corresponding 2-1/2% royalty therefrom, among others. Petitioner contended in his Answer that the episodes in the life of Moises Padilla depicted in the movie were matters of public knowledge and occurred at or about the same time that the deceased became and was a public figure; that private respondent has no property right over those incidents; that the Licensing Agreement was without valid cause or consideration and constitutes an infringement on the constitutional right of freedom of speech and of the press; and that he paid private respondent the amount of P5,000.00 only because of the coercion and threat employed upon him. As a counterclaim, petitioner sought for the nullification of the Licensing Agreement, Both the trial court and the CA ruled in favor of Vda. de Gonzales. Ruling: LAGUNZAD vs. VDA. DE GONZALES & CA FACTS Petitioner Manuel Lagunzad, a newspaperman, began the production of a movie entitled "The Moises Padilla Story" portraying the life of Moises Padilla, a mayoralty candidate of the Nacionalista Party for the Municipality of Magallon, Negros Occidental and for whose murder, Governor Rafael Lacson, a member of the Liberal Party then in power and his men were tried and convicted. Although the emphasis of the movie was on the public life of Moises Padilla, there were portions which dealt with his private and family life including the portrayal in some scenes, of his mother, Maria Soto, private respondent herein, and of one "Auring" as his girl friend. Padillas half sister, for and in behalf of her mother, Vda. de Gonzales, objected to the "exploitation" of his life and demanded in writing for certain changes, corrections and deletions in the movie. After some bargaining as to the amount to be paid Lagunzad and Vda. de Gonzales, executed a "Licensing Agreement" whereby the latter as LICENSOR granted Lagunzad authority and permission to exploit, use, and develop the life story of Moises Padilla for purposes of producing the picture for consideration of P20,000.00. Lagunzad paid Vda. de Gonzales the amount of P5,000.00. 1.Being a public figure ipso facto does not automatically destroy in toto a person's right to privacy. The right to invade as person's privacy to disseminate public information does not extend to a fictional or novelized representation of a person, no matter how public a figure he or she may be. In the case at bar, while it is true that petitioner exerted efforts to present a true-to-life story of Moises Padilla, petitioner admits that he included a little romance in the film because without it, it would be a drab story of torture and brutality. 2. Lagunzad cannot dispense with the need for prior consent and authority from the deceased heirs to portray publicly episodes in said deceased's life and in that of his mother and the members of his family. As held in Schuyler v. Curtis, "a privilege may be given the surviving relatives of a deceased person to protect his memory, but the privilege exists for the benefit of the living, to protect their feelings and to prevent a violation of their own rights in the character and memory of the deceased." 3. Lagunzad claims that as a citizen and as a newspaperman, he had the right to express his thoughts in film on the public life of Moises Padilla without prior restraint. The right of freedom of expression, indeed, occupies a preferred position in and surety bonds and that she had apparently "the means to pay her obligation to the Bank, there was NO REASONABLE BASIS for the Board of Directors of petitioner to have rejected the lease agreement. While petitioner had the ultimate authority of approving or disapproving the proposed lease since the quota was mortgaged to the Bank, the latter certainly cannot escape its responsibility of observing, for the protection of the interest of private respondents. The law makes it imperative 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. Certainly, it knew that the agricultural year was about to expire, that by its disapproval of the lease private respondents would be unable to utilize the sugar quota in question. Under Article 21 of the New Civil Code, "any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage." This grants adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to specifically provide in the statutes.
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there is no res judicata, the parties and causes of action being different. Furthermore, under Art. 31 of the Civil Code, When the civil action is based on an obligation not arising from crime, the civil action may proceed independently of the criminal proceedings regardless of result of the latter. Citing Garcia v. Florido, "As we have stated at the outset, the same negligent act causing damages may produce a civil liability arising from crime or create an action for quasi-delict or culpa extra-contractual. The former is a violation of the criminal law, while the latter is a distinct and independent negligenc, having always had its own foundation and individuality. Some legal writers are of the view that in accordance with Article 31, the civil action based upon quasi-delict may proced independently of the criminal proceeding for criminal negligence and regardless of the result of the latter. Hence, the proviso in Section 2 of Rule 111 (requiring reservation of civil actions) with reference to Articles 32, 33, and 34 of the Civil Code, is contrary to the letter and spirit of the said articles, for these articles were drafted and are intended to constitute as exceptions to the general rule stated in what is now Section 1 of Rule 111. The proviso, which is procedural, may also be regarded as an unauthorized amendment of substantive law, Articles 32, 33 and 34 of the Civil Code, which do not provide for the reservation required in the proviso." However, a civil action for damages against the owner-driver of the jeep would not prosper because civil liability arising from crime co-exists with criminal liability in criminal cases. Hence, the offended party had the option to prosecute on civil liability arising from crime or from quasi-delict. His active participation in the criminal case implies that he opted to recover the civil liability arising from crime. Hence, since the acquittal in the criminal case, which was not based on reasonable doubt, a civil action for damages can no longer be instituted. the "hierarchy of civil liberties." It is not, however, without limitations. One criterion for permissible limitation on freedom of speech and of the press is the "balancing-of-interests test." The principle requires a court to take conscious and detailed consideration of the interplay of interests observable in a given situation or type of situation." In the case at bar, the interests observable are the right to privacy asserted by respondent and the right of -freedom of expression invoked by petitioner. Taking into account the interplay of those interests, and considering the obligations assumed in the Licensing Agreement entered into by petitioner, the validity of such agreement will have to be upheld particularly because the limits of freedom of expression are reached when expression touches upon matters of essentially private concern.
MENDOZA V. ALCALA [2 S 1032 (1961)] Where the accused in a criminal case for estafa is acquitted on the ground that the prosecution has not proven his guilt beyond reasonable doubt, a civil action based on the same transaction may prosper. (1) The conclusion that his guilt has not been proven beyond reasonable doubt is equivalent to one of reasonable doubt. Thus, a civil action may prosper. (2) Under the Rules of Court, the extinction of the penal action does not carry with it extinction of civil unless there is a declaration that fact from which civil is based did not exist. (3) Although no reservation was made, the declaration in the criminal case that the obligation is purely civil amounts to a reservation of the civil action in favor of the offended party. (4) Furthermore, since estafa involves fraud, an independent civil action may prosper under Art. 33 of the Civil Code.
MENDOZA V. ARRIETA [91 S 113 (1979)] Where in a multiple highway accident involving a truck which hit a jeep which then hit a Mercedes Benz coming from the opposite direction, two criminal actions for reckless imprudence was filed against the drivers of the truck and jeep, and the driver of the truck was found guilty and the driver of the jeep acquitted, a civil action for damages against the owner of the truck would prosper as
REPUBLIC V. BELLO [120 S 203 (1983)] Where a cashier was acquitted in a Malversation case on the ground that his guilt was not proven beyond reasonable doubt, since he spent the money for a legitimate purpose, a civil case for the recovery of the amounts will prosper since there was no declaration in the criminal case that the facts from which the civil action might arise did not exist.
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to the accused, and to prevent needless clogging of court dockets and unnecessary duplication of litigation. PADILLA V. CA [129 S 558 (1990)] Where in the complaint for Grave Coercion against the mayor and policemen, they were acquitted on the ground that their guilt has not been proven beyond reasonable doubt, such acquittal will not bar a civil case for damages arising from the demolition of petitioner's market stalls. The acquittal on the ground that their guilt has not been proven beyond reasonable doubt refers to the element of Grave Coercion and not to the fact of that the stalls were not demolished. Under the Rules of Court, the extinction of penal action carries with it the extinction of civil only if there is a declaration that facts from which civil may arise did not exist. Also, Art. 29 of the Civil Code does not state that civil liability can be recovered only in a separate civil action. The civil liability can be recovered either in the same or a separate action. The purpose of recovering in the same action is to dispense with the filing of another civil action where the same evidence is to be presented, and the unsettling implications of permitting reinstituttion of a separate civil action. However, a separate civil action is warranted when (1) additional facts are to be established; (2) there is more evidence to be adduced; (3) there is full termination of the criminal case and a separate complaint would be more efficacious than a remand. Hence, CA did not err in awarding damages despite the acquittal. SAPIERA V. CA 10 Sept. 1999 Civil Liability Facts: The estafa cases filed against A were dismissed due to insufficiency of evidence. Issue: Whether the dismissal of the criminal cases erased As civil liability Held: No. The dismissal of the criminal cases against petitioner did not erase her civil liability since the dismissal was due to insufficiency of evidence and not from a declaration from the court that the fact from which the civil action might arise did not exist. ESCUETA V. FANDIALAN [61 S 278 (1974)] Where the cause of action for physical injuries accrued in 1952, and a criminal action for Frustrated Homicide was filed in 1955 and a reservation of civil action was made, and a civil action for damages was filed in 1956 but was dismissed for lack of interest, when the civil action was refiled in 1968, the said civil action has already prescribed. Since there was a reservation of the civil action, the prescription period for an action based on tort applies, which is 4 years from cause of action [Art. 1146 (1)]. Furthermore, no reservation was even required since it is an independent civil action under Art. 33. Had no reservation been made, the civil case would have been impliedly instituted with the criminal, and since accused was convicted in 1955, an action to enforce judgment would only expire after ten years from judgment [Art. 1144 (3)]. Thus, where the offended party reserves the right to file a separate action for damages arising from physical injuries, the cause of action prescribes in four years, not ten years.
MAXIMO V. GEROCHI [144 S 326 (1986)] Where the accused was acquitted of Estafa on the ground of failure to establish guilt beyond reasonable doubt and that if accused had any obligation, it was civil in nature, the court can award civil liabity in the same case without need of the institution of a separate civil action. Citing Padilla v. CA, the court may acquit and at the same time order payment of civil liability in the same case. The rationale is that there is no reason to require a separate civil action where the facts to be proved in the civil case have been proven in the criminal case, and due process has already been accorded
MADEJA V. CARO [126 S 295 (1983)] Where accused was charged with Homicide thru reckless impru-dence, pending the criminal action, an independent civil action under Art. 33 may proceed independently of the criminal case. Citing Carandang v. Santiago [97 P 94 (1955)], "The term "physical injuries" is used in the generic sence, not the crime of physical injuries defined in
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personality of a conceived child (conceptus pro nato habetur) under Article 40 of the Civil Cod, because that same article expressly limits such provisional personality by imposing the condition that the child should be subsequently born alive: "provided it be born later with the condition specified in the following article." In the present case, there is no dispute that the child was dead when separated from its mother's womb. (2) This is not to say that the parents are not entitled to collect any damages at all. But such damages must be those inflicted directly upon them, as distinguished from the injury or violation of the rights of the deceased, his right to life and physical integrity. Because the parents cannot expect either help, support or services from an unborn child, they would normally be limited to moral damages for the illegal arrest of the normal development of the spes hominis that was the foetus, i.e., on account of distress and anguish attendant to its loss, and the disappointment of their parental expectations (Art. 2217, CC), as well as to exemplary damages, if the circumstances should warrant them (Art. 2230, CC). But in this case, there is no basis for an award of moral damages, evidently because the husband's indifference to the previous abortions clearly indicates that he was unconcerned with the frustration of his parental hopes and affection. the Revised Penal Code. It includes not only physical injuries but consummated, frustrated and attempted homicide." Defamation and fraud are also used in their generic sense because there are no specific provisions in the Revised Penal Code using these terms as means of offenses defined therein.
PERSONALITY CASES
GELUZ V. CA [2 S 801 (1961)] - F: Nita Villanueva came to know the defendant (Antonio Geluz) for the first time in 1948-- thru her aunt. In 1950, she became preganant by her present husband before they were legally married. During to conceal her pregnancy from her parent, she had herself aborted by def. After the marriage w/ the pltff., she again became pregnant. As she was employed in the COMELEC and her pregnancy proved to be inconvenient, she had herself aborted again by def. in Oct 1953. Less than 2 years later, she again became pregnant. On 2/21/55, she again repaired to the def's clinic. Nita was again aborted of a 2month old foetus, in consideration of the sum of P50. It is the third and last abortion that constitutes pltff's basis in filing this action and award of damages The CA and the trial court predicated the award of damages upon the provisions of the initial par. of Art. 2206 of the NCC. RULING: This award, we believe, to be error for the said art., in fixing an award for the death of a person, does not cover the case of an unborn foetus that is not endowed w/ personality. RATIO: Parents of unborn foetus cannot sue for damages on its behalf. A husband of a woman who voluntarily procured her abortion could not recover damages from the physician who caused the same. (1) Since an action for pecuniary damages on account of personal injury or death pertains primarily to the injured, no such right of action could derivatively accrue to the parents or heirs of an unborn child. In fact, even if a cause of action did accrue on behalf of the unborn child, the same was extinguished by its pre-natal death, since no transmission to anyone can take place from one that lacked juridical personality (or juridical capacity, as distinguished from capacity to act). It is no answer to invoke the provisional
RUFO MAURICIO CONSTRUCTION November 27, 1987
vs.
IAC
FACTS: A driver of the construction company collided with a car, killing the owner. What was filed was a criminal case against the driver. No reservation was made. Therefore the civil liability arising from the crime is already instituted. The driver was convicted. On appeal, the driver died. ISSUE: What will happen to the civil liability arising from the crime? Can you enforce it against the employer based on Article 103, RPC on subsidiary liability HELD: NO, because there was no judgment of conviction which became final. There must be a judgment of conviction against the employee; it must be final; he must be proven insolvent. But the trouble is he died. So you cannot enforce the subsidiary liability of the employer. However, if this was quasi-delict, you can file a direct action against he employer because in quasi-delict, the liability of the employer is primary, not subsidiary.
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first postdated check. Hong sent Suan a formal demand letter requesting the latter to make good the value of the remaining dishonored checks within five days from the receipt thereof. Thereafter, the second batch of checks were issued by Suan and Gui but were all dishonored again. Mansion Biscuit Corporation filed a case against Suan and Gui for violation of Batasang Pambansa Blg. 22 (Bouncing Checks Law) ISSUE: Whether or not the contention of Ty Teck Suan that the subject checks were issued merely to guarantee or secure fulfillment of the agreement with the complaint. HELD: The court concludes of the above-mentioned checks by the accused subject to these two criminal cases, and their subsequent dishonor, cannot be considered in violation of the Batasang Pambansa Blg.22 because one important element of the offense is missing: that the check is made or drawn and issued to apply on account or for value and because these were issued to guarantee the fulfillment of an agreement to deliver biscuits by complainant when accused Suan would place orders. Accused are hereby declared not guilty of the offense charged. The SC treated the case as an action for quasidelict against the employer but that is unfair for the employer because he never participated in the trial of the civil case. According to the SC, we will put it back and now you will cross-examine them (Dean I: Anong klaseng procedure ito?!). This is what the SC said: The death of the accused during the pendency of his appeal or before the judgment of conviction became final and executory extinguished his criminal liability but not his civil liability should the liability or obligation arise not from a crime but from a quasi-delict. The liability of the employer here would not be subsidiary but solidary with his driver unless said employer can prove there was no negligence on his part at all, that is, if he can prove due diligence in the selection and supervision of his driver. Inasmuch as the employer was not a party in the criminal case, and to grant him his day in court for the purpose of cross-examining the prosecution witnesses on their testimonies on the driver's alleged negligence and the amount of damages to which the heirs of the victim are entitled, as well as to introduce any evidence or witnesses he may care to present in his defense, the hearing on the motion to quash the subsidiary writ of execution must be reopened precisely for the purpose adverted to hereinabove. This is the only instance I knew that the criminal case against a driver ended up as a case for quasi-delict against the employer.
MANSION BISCUIT CORP. V. CA Sometime in 1981, Ty Teck Suan, as president of Edward Ty Brothers Corporation, ordered numerous canons of nutria-wafer biscuits from Mansion Biscuit Corporation, before the delivery of the goods on November 12, 1981, Ty Teck Suan issued to Ang Cho Hong, president of Mansion Biscuit Corp., four postdated checks totaling P404,980.00 as payment for the nutria-wafer biscuits. Four other postdated checks in the amount of P100,000.00 each were issued by Ty Teck Suan with Siy Gui as Co-signor in December of the same year. Accordingly, Mansion Biscuit Corp. delivered the goods. When the first four checks were deposited, they were all dishonored due to insufficiency of funds. Ang Cho Hong informed Ty Teck Suan of the dishonor and requested him to replace the checks with good cash or good checks. Ty Teck Suan failed to heed said request. Subsequently, Ty Teck Suan delivered a total of 1,150 sacks of Australian flour to Mansion Biscuits plus cash advance by Suan and the amount paid was applied as payment for the
MARRIAGE CASES
THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appellee, vs. FELIPE SANTIAGO, defendant-appellant. Fausto C. Cuizon for appellant. Attorney-General Jaranilla for appellee. This appeal has been brought to reverse a judgment of the Court of First Instance of the Province of Nueva Ecija, finding the appellant, Felipe Santiago, guilty of the offense of rape and sentencing him to undergo imprisonment for fourteen years, eight months and one day, reclusion temporal, with the accessories prescribed by law, requiring him to endow the offended party, Felicita Masilang, in the amount of P500, without
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that crime was committed en despoblado. The incident occurred only a few paces from the Manila North Road, and it appears that there was an unoccupied house nearby to which the girl was taken and where food was procured from Florentina Cuizon who lived not far away. It is the constant doctrine of the court that an aggravating circumstance must be as clearly proved as any other element of the crime (U. S. vs. Binayoh, 35 Phil., 23, 31; Albert, Law on Crimes, pp. 88-89); and we cannot feel certain, upon the proof before us, that the place of the commission of this offense was remote enough from habitation or possible aid to make appropriate the estimation of the aggravating circumstance referred to. The judgment appealed from is in accordance with law, and will be affirmed. So ordered, with costs against the appellant. NAVARRO VS. DOMAGTOY Solemnizing Marriage) (Mayor subsidiary imprisonment in case of insolvency, requiring him also to recognize and maintain, at P15 per month, the offspring, if there should be any, as consequence of the rape, and requiring him further to pay the costs. The deceased wife of the appellant was the aunt of Felicita Masilang, aged 18, who was the injured girl in this case. She is therefore appellant's niece by marriage, and she calls him uncle. Both are residents of the municipality of Gapan, in the Province of Nueva Ecija. On November 23, 1926, the appellant asked Felicita, who was them about 18 years of age, to accompany him across the river on some errand. The girl agreed and they went over the river together into the municipality of San Leonardo. After crossing the river, the appellant conducted the girl to a place about twenty paces from the highway where tall grass and other growth hid them public view. In this spot the appellant manifested a desire to have sexual intercourse with the girl, but she refused to give her consent, and he finally notwithstanding her resistance, accomplished his purpose by force and against her will. After the deed had been done the appellant conducted the girl to the house of his uncle, Agaton Santiago, who lived not far away. They arrived here about 11 a. m., and remained for several hours. In the course of the afternoon Agaton Santiago brought in a protestant minister who went through the ceremony of marrying the couple. After this was over the appellant gave the girl a few pesos and sent her home. Her father happened to be away that night, but upon his return the next day, she told him what had happened, a this prosecution for rape was started. The trial court found that the offense of rape had been committed, as above stated, and the marriage ceremony was a mere ruse by which the appellant hoped to escape from the criminal consequences of his act. We concur in this view of the case. The manner in which the appellant death with the girl after the marriage, as well as before, shows that he had no bona fide intention of making her his wife, and the ceremony cannot be considered binding on her because of duress. The marriage was therefore void for lack of essential consent, and it supplies no impediment to the prosecution of the wrongdoer. The Attorney-General suggest that, in fixing the penalty, it would be proper to take into account the aggravating circumstance that the offense was committed in an uninhabited place. But the evidence fails to show beyond a reasonable doubt
Dapa, Surigao del Norte Municipal Mayor Rodolfo G. Navarro filed charges against Municipal Circuit Trial Court Judge Hernando Domagtoy for gross misconduct and inefficiency in office and ignorance of the law. He solemnized the wedding of Tagadan & Borga despite knowing that Tagadan (groom) was merely separated from his wife. He presumed that Tagadans first wife was already dead because Tagadan has not seen her for seven years. Presumption was made without the requisite summary proceeding. Second instance was when he performed marriage ceremony between Sumaylo & del Rosario in Dapa, which is outside his jurisdiction. ISSUE: WON judge acted with gross misconduct in these instances? HELD: Yes. Suspended for six months. RATIO: 1. First marriage is bigamous. Presumption of death for purposes of marriage needs a summary proceeding (Art. 41 FC). Affidavits saying that Tagadans wife has not been heard of for almost seven years are not sufficient proof. 2. Second marriage is beyond judges jurisdiction. Marriage can only be held outside a judges chamber or courtroom if: (a) at the point of death (b) in remote places (c) request of both parties in writing & sworn statement (Art. 8 FC). Sumaylo & del Rosario were not under any of these conditions. Only appellate and SC justices have jurisdiction over entire country. Judges with specific jurisdictions can only officiate within those areas.
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Felix resisted the action, setting up his rights as widower. They obtained favorable judgment in the court of first instance, but on appeal the Court of Appeals reversed and dismissed the complaint. Their request for review here was given due course principally to consider the legal questionwhich they amply discussed in their petition and printed brief whether the events which took place in January 1945 constituted, in the eyes of the law, a valid and binding marriage. Issue: W/N the marriage was celebrated in Articulo Mortis? Does the failure to sign the "marriage certificate or contract" constitute a cause for nullity? Ruling: Yes. There is no question about the officiating priest's authority to solemnize marriage. There is also no question that the parties had legal capacity to contract marriage, and that both declared before Fr. Bautista and Carmen Ordiales and Judith Vizcarra that "they took each other as husband and wife." The law permits in articulo mortis marriages, without marriage license; but it requires the priest to make the affidavit and file it. Such affidavit contains the data usually required for the issuance of a marriage license. The first practically substitutes the latter. Now then, if a marriage celebrated without the license is not voidable (under Act 3613) this marriage should not also be voidable for lack of such affidavit. In the first place, the Marriage Law itself, in sections 28, 29 and 30 enumerates the causes for annulment of marriage. Failure to sign the marriage contract is not one of them. In the second place, bearing in mind that the "essential requisites for marriage are the legal capacity of the contracting parties and their consent" (section 1), the latter being manifested by the declaration of "the parties" "in the presence of the person solemnizing the marriage and of two witnesses of legal age that they take each other as husband and wife" which in this case actually occurred In the third place, the law, imposing on the priest the duty to furnish to the parties copies of such marriage certificate (section 16) and punishing him for its omission (section 41) implies his obligation to see that such "certificate" is executed accordingly. Hence, it would not be fair to visit upon the wedded couple in the form of annulment, Father Bautista's omission, if any, which apparently had been caused by the prevailing disorder during the liberation of Manila and its environs. Cohabitation for Five Years (Article 34) Martinez v. Tan People v. David (13 CA Rep. 495) held that a marriage license was issued although it was not in regular form. The civil code does not prescribe a definite form for a marriage license, nor does it provide for what data should be stated therein. In this case, all the requirements for issuance of the marriage license was complied with, viz: 1) filing of application 2) posting of notice 3) payment of the fee 4) issuance of the OR which contains the name, age, residence of the parties for all legal intents and purposes, such receipt is considered as a valid marriage license. Exception: marriage of exception character (art. 27-34) Marriage in Articulo Mortis (Article 27, 31, 32) Case: Arsenio De Loria and Ricarda De Loria and Felipe Apelan Felix Nature: Review of a decision of CA involving the central issue of the validity of the marriage in articulo mortis between Matea de la Cruz and Felipe Apelan Felix. Facts: 11 Article 1-73 of the Family Code of the Philippine June 23, 2009 Remulla, Jammy Kate S. Case Digests Fact appears that long before, and during the War of the Pacific, these two persons lived together as wife and husband at Cabrera Street, Pasay City. They acquired properties but had no children. In the early part of the liberation of Manila and surrounding territory, Matea be came seriously ill. Knowing her critical condition, two young ladies of legal age dedicated to the service of God, named Carmen Ordiales and Judith Vizcarra visited and persuaded her to go to confession. They fetched Father Gerardo Bautista, Catholic parish priest of Pasay. The latter, upon learning that the penitent had been living with Felipe Apelan Felix without benefit of marriage, asked both parties to ratify their union according to the rites of his Church. Both agreed. Whereupon the priest heard the confession of the bed-ridden old woman, gave her Holy Communion, administered the Sacrament of Extreme Unction and then solemnized her marriage with Felipe Apelan Felix in articulo mortis, Carmen Ordiales and Judith Vizcarra acting as sponsors or witnesses. It was then January 29 or 30, 1945. After a few months, Matea recovered from her sickness; but death was not to be denied, and in January 1946, she was interred in Pasay, the same Fr. Bautista performing the burial ceremonies. On May 12, 1952, Arsenio de Loria and Ricarda de Loria filed this complaint to compel defendant to an accounting and to deliver the properties left by the deceased. They are grandchildren of Adriana de la Cruz, sister of Matea, and claim to be the only surviving forced heirs of the latter. Felipe Apelan
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Does the failure of Julia to return home, or at the very least to communicate with him, for more than five years constitute psychological incapacity? RULING: No, the failure of Julia to return home or to communicate with her husband Leouel for more than five years does not constitute psychological incapacity. Psychological incapacity must be characterized by (a) GRAVITY (b) JURIDICAL ANTECEDENCE (c) INCURABILITY Psychological incapacity should refer to no less than a mental (not physical) incapacity that causes a party to be truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage which, as so expressed by Art. 68 of the Family Code, include their mutual obligations to live together, observe love, respect and fidelity and render help and support. The intendment of the law has been to confine the meaning of PSYCHOLOGICAL INCAPACITY to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. This psychological condition must exist at the time the marriage is celebrated. Undeniably and understandably, Leouel stands aggrieved, even desperate, in his present situation. Regrettably, neither law nor society itself can always provide all the specific answers to every individual problem. PETITION IS DENIED. GOMEZ vs. LIPANA The defendant-appellant, Joaquin P. Lipana, contracted two marriages: the first with Maria Loreto Ancino in 1930 and the second with Isidra Gomez y Aquino in 1935. At the time of the second marriage the first was still subsisting, which fact, however, Lipana concealed from the second wife. On December 17, 1943 the spouses of the second marriage acquired by purchase a piece of land in Cubao, Quezon City, for the price of P3,000.00. The Torrens title for the property (Transfer Certificate No. 25289 of the Register of Deeds for Quezon City) was issued on February 1, 1944, in the name of Joaquin Lipana married to Isidra Gomez. On July 20, 1958 Isidra Gomez died intestate and childless, and survived only by her sisters as the nearest relatives. On August 7, 1961 The court below decided the case in favor of the defendant, holding that the parties were legally married on the day named. The evidence in support of that decision is: First. The document itself, which the plaintiff admits that she signed. Second. The evidence of the defendant, who testifies that he and said plaintiff appeared before the justice of the peace at the time named, together with the witness Zacarias Esmero and Pacita Ballori, and that they all signed the document above mentioned. Third. The evidence of Zacarias Esmero, one of the above-named witnesses, who testifies that the plaintiff, the defendant, and Pacita Ballori appeared before the justice at the time named and did sign the document referred to. Fourth. The evidence of Pacita Ballori, who testified to the same effect. Fifth. The evidence of Jose Santiago, the bailiff of the court of the justice of the peace, who testified that the plaintiff, the defendant, the two witnesses above-named, and the justice of the peace were all present in the office of the justice of the peace at the time mentioned. The only direct evidence in favor of the plaintiff is her own testimony that she never appeared before the justice of the peace and never was married to the defendant.
NULLITY OF MARRIAGE CASES

LEOUEL SANTOS, Petitioner, vs. THE HONORABLE COURT OF APPEALS AND JULIA ROSARIO BEDIA-SANTOS, Respondents. G.R. No. 112019 January 4, 1995 FACTS: Plaintiff Leouel Santos married defendant Julia Bedia on September 20, 1986. On May 18 1988, Julia left for the U.S. She did not communicate with Leouel and did not return to the country. In 1991, Leoul filed with the RTC of Negros Oriental, a complaint for voiding the marriage under Article 36 of the Family Code of the Philippines. The RTC dismissed the complaint and the CA affirmed the dismissal. ISSUE:
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generally considered dead or was believed by him to be so. On the second issue, the conjugal partnership formed by the second marriage was dissolved by the death of the second wife; and there has been no judicial declaration of nullity except possibly in this very action, filed after dissolution by death had taken place and when Article 1417 of the Spanish Civil Code was no longer in force. Even though the said provision was no longer in force it is still presumed, with respect to the spouse who acted in bad faith, that neither the marriage nor the conjugal partnership ever existed, and hence such spouse has no right to share in the conjugal properties; but this legal effect of such presumption derives from the premise that Article 1417 is still in force, and in any event is of doubtful application if it would be in derogation of and to the prejudice of the right of the other spouse of the first marriage in the conjugal partnership formed thereby, which includes properties acquired by the husband during its existence. The only just and equitable solution in this case would be to recognize the right of the second wife to her husband, and consider the other half as pertaining to the conjugal partnership of the first marriage. The decision appealed from is reversed and the complaint is dismissed, without pronouncement as to costs. Ofelia Gomez, judicial administratrix of her estate, commenced the present suit, praying for the forfeiture of the husbands share in the Cubao property in favor of the said estate. Reliance is placed on Article 1417 of the old Civil Code, the Spanish text of which provides: La sociedad de gananciales concluye al disolverse el matrimonio o al ser declarado nulo. El conjuge que por su mala fe hubiere sido causa de la nulidad, no tendra parte en los bienes gananciales. The society of joint property concludes after the marriage dissolves or on having been declared void. The conjuge that for his bad faith will have been a cause of the nullity, will not have part in the community properties. The trial court, ruling that the second marriage was void ab initio and that the husband was the one who gave cause for its nullity, applied the aforequoted provision and declared his interest in the disputed property forfeited in favor of the estate of the deceased second wife. In the present appeal by the defendant he attributes two errors to the trial court: (1) in allowing a collateral attack on the validity of the second marriage and in holding it to be bigamous and void ab initio; and (2) in holding that Article 1417 of the Spanish Civil Code is applicable in this case. ISSUE: WON a collateral attack on the validity on the second marriage in holding it to be bigamous and void ab initio. WON that Article 1417 of the Spanish Civil Code is applicable in this case. HELD: Yes. The party who challenges the validity of the second marriage can be challenged collaterally. There is no suggestion here that the defendants 1930 marriage to Maria Loreto Ancino had been annulled or dissolved when he married Isidra Gomez in 1935, and there is no proof that he did so under the conditions envisioned in sub-section (b). the burden is on the party invoking the exception to prove that he comes under it; and the defendant has not discharged that burden at all, no evidence whatsoever having been adduced by him at the trial. Indeed, he contracted the second marriage less than seven years after the first, and he has not shown that his first wife was then
Republic vs. CA and Molina GR 108763, 13 February 1997 Facts: Roridel Olaviano was married to Reynaldo Molina on 14 April 1985 in Manila, and gave birth to a son a year after. Reynaldo showed signs of immaturity and irresponsibility on the early stages of the marriage, observed from his tendency to spend time with his friends and squandering his money with them, from his dependency from his parents, and his dishonesty on matters involving his finances. Reynaldo was relieved of his job in 1986, Roridel became the sole breadwinner thereafter. In March 1987, Roridel resigned from her job in Manila and proceeded to Baguio City. Reynaldo left her and their child a week later. The couple is separated-in-fact for more than three years.
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The Court, in this case, promulgated the guidelines in the interpretation and application of Article 36 of the Family Code, removing any visages of it being the most liberal divorce procedure in the world: (1) The burden of proof belongs to the plaintiff; (2) the root cause of psychological incapacity must be medically or clinically identified, alleged in the complaint, sufficiently proven by expert, and clearly explained in the decision; (3) The incapacity must be proven existing at the time of the celebration of marriage; (4) the incapacity must be clinically or medically permanent or incurable; (5) such illness must be grave enough; (6) the essential marital obligation must be embraced by Articles 68 to 71 of the Family Code as regards husband and wife, and Articles 220 to 225 of the same code as regards parents and their children; (7) interpretation made by the National Appellate Matrimonial Tribunal of the Catholic Church, and (8) the trial must order the fiscal and the Solicitor-General to appeal as counsels for the State. The Supreme Court granted the petition, and reversed and set aside the assailed decision; concluding that the marriage of Roridel Olaviano to Reynaldo Molina subsists and remains valid. CHI MING TSOI vs. COURT OF APPEALS, GINA LAO-TSOI GR NO. 119190 January 16, 1997 FACTS: Ching married Gina on May 22, 1988 at the Manila Cathedral, Intramuros, Manila as evidenced by their marriage contract. After the celebration they had a reception and then proceeded to the house of the Ching Ming Tsois mother. There they slept together on the same bed in the same room for the first night of their married life. Ginas version: that contrary to her expectations that as newlyweds they were supposed to enjoy making love that night of their marriage, or having sexual intercourse, with each other, Ching however just went to bed, slept on one side and then turned his back and went to sleep. There was no sexual intercourse between them that night. The same thing happened on the second, third and fourth nights. In an effort to have their honey moon in a private place where they can enjoy together during their first week as husband and wife they went to Baguio City. But they did so together with Chings mother, uncle and nephew as they were all invited by her husband. There was no sexual intercourse between them for four days in Baguio since Ching avoided her by taking a long walk during siesta time or by just sleeping on a rocking chair located at the living room. They
On 16 August 1990, Roridel filed a verified petition for declaration of nullity of her marriage to Reynaldo Molina. Evidence for Roridel consisted of her own testimony, that of two of her friends, a social worker, and a psychiatrist of the Baguio General Hospital and Medical Center. Reynaldo did not present any evidence as he appeared only during the pre-trial conference. On 14 May 1991, the trial court rendered judgment declaring the marriage void. The Solicitor General appealed to the Court of Appeals. The Court of Appeals denied the appeals and affirmed in toto the RTCs decision. Hence, the present recourse. Issue: Whether opposing or conflicting personalities should be construed as psychological incapacity Held: The Court of Appeals erred in its opinion the Civil Code Revision Committee intended to liberalize the application of Philippine civil laws on personal and family rights, and holding psychological incapacity as a broad range of mental and behavioral conduct on the part of one spouse indicative of how he or she regards the marital union, his or her personal relationship with the other spouse, as well as his or her conduct in the long haul for the attainment of the principal objectives of marriage; where said conduct, observed and considered as a whole, tends to cause the union to self-destruct because it defeats the very objectives of marriage, warrants the dissolution of the marriage. The Court reiterated its ruling in Santos v. Court of Appeals, where psychological incapacity should refer to no less than a mental (not physical) incapacity, existing at the time the marriage is celebrated, and that there is hardly any doubt that the intendment of the law has been to confine the meaning of psychological incapacity to the most serious cases of personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and significance to the marriage. Psychological incapacity must be characterized by gravity, juridical antecedence, and incurability. In the present case, there is no clear showing to us that the psychological defect spoken of is an incapacity; but appears to be more of a difficulty, if not outright refusal or neglect in the performance of some marital obligations. Mere showing of irreconcilable differences and conflicting personalities in no wise constitutes psychological incapacity.
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psychological incapacity. One of the essential marital obligations under the Family Code is to procreate children basedon the universal principle that procreation of children through sexual cooperation is the basic end of marriage. Constant non-fulfillment of this obligation will finally destroy the integrity or wholeness of the marriage. In the case at bar, the senseless and protracted refusal of one of the parties to fulfill this marital obligation is equivalent to psychological incapacity. While the law provides that the husband and the wife are obliged to live together, observer mutual love, respect and fidelity, the sanction therefore is actually the spontaneous, mutual affection between husband and wife and not any legal mandate or court order (Cuaderno vs. Cuaderno, 120 Phil. 1298). Love is useless unless it is shared with another. Indeed, no man is an island, the cruelest act of a partner in marriage is to say I could not have cared less. This is so because an ungiven self is an unfulfilled self. The egoist has nothing but himself. In the natural order, it is sexual intimacy that brings spouses wholeness and oneness. Sexual intimacy is a gift and a participation in the mystery of creation. It is a function which enlivens the hope of procreation and ensures the continuation of family relations. LENI O. CHOA vs. HON. BELDIA & ALFONSO CHOA Facts: In 1991, petitioner Leni Choa initiated a case for concubinage against her husband, Alfonso Choa, in the MTCC, Bacolod City, docketed as Criminal Case NO. 49106. In March 1994, when the promulgation of the decision was about to take place, Alfonso filed with the RTC, Bacolod City, a complaint for annulment of marriage based on psychological incapacity. Thus, Alfonso filed with the MTCC a motion in an order dated March 23, 1994. His motion for reconsideration having been likewise denied, on June 22, 1994, he filed with the RTC, Bacolod City, a petition for certiorari with injunction against the trial court. On July 13, 1994, the RTC issued a restraining order, and denied Leni Choa's motion for intervention. Issue: WON Prejudicial question comes into play here? Ruling: YES. A prejudicial question comes into play generally in a situation where a civil action and a criminal action are both pending and there exist in the former an issue which must be preemptively resolved before the criminal action may proceed, because howsoever the issue in the civil action resolved would be determinative juris et de jure of slept together in the same room and on the same bed since May 22, 1988 (day of their marriage) until March 15, 1989 (ten months). But during this period there was no attempt of sexual intercourse between them. Gina claims that she did not even see her husbands private parts nor did he see hers. Because of this, they submitted themselves for medical examinations to Dr. Eufemio Macalalag. Results were that Gina is healthy, normal and still a virgin while Chings examination was kept confidential up to this time. The Gina claims that her husband is impotent, a closet homosexual as he did not show his penis. She said she had observed him using an eyebrow pencil and sometimes the cleansing cream of his mother. She also said her husband only married her to acquire or maintain his residency status here in the country and to publicly maintain the appearance of a normal man Chings version: he claims that if their marriage shall be annulled by reason of psychological incapacity, the fault lies with Gina. He does not want their marriage annulled for reasons of (1) that he loves her very much (2) that he has no defect on his part and he is physically and psychologically capable (3) since the relationship is still very young and if there is any differences between the two of them, it can still be reconciled and that according to him, if either one of them has some incapabilities, there is no certainty that this will not be cured. Ching admitted that since his marriage to Gina there was no sexual contact between them. But, the reason for this, according to the defendant, was that everytime he wants to have sexual intercourse with his wife, she always avoided him and whenever he caresses her private parts, she always removed his hands. ISSUE: Whether or not Ching is psychologically incapacitated to comply with the essential marital obligations of marriage RULING: The Supreme Court affirmed the decisions of the trial court and Court of Appeals in rendering as VOID the marriage entered into by Ching and Gina on May 22, 1988. No costs. RATIO: The Supreme Court held that the prolonged refusal of a spouse to have sexual intercourse with his or her spouse is considered a sign of psychological incapacity. If a spouse, although physically capable but simply refuses to perform his or her essential marriage obligations, and the refusal is senseless and constant, Catholic marriage tribunals attribute the causes to psychological incapacity than to stubborn refusal. Senseless and protracted refusal is equivalent to
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solely for purposes of remarriage...," the word "solely" will qualify "for purposes of remarriage" and the husband would have been correct. That Art. 40 as finally formulated included the significant clause denotes that such final judgment declaring the previous marriage void need not be obtained only for purposes of remarriage. the guilt innocence of the accused in the criminal case.4 [Carlos v. Court of Appeals, G.R. No. 109887, February 10, 1997.] The prejudicial question is the issue raised in the civil case for declaration of nullity of marriage based on psychological incapacity under Article 36 of the Family Code. Under this article, a marriage was psychologically incapacitated to comply with the marital obligations of marriage.5 [Arturo M. Tolentino, Civil Code of the Philippines, vol. 1, p. 274.] True enough, the nullity of marriage between petitioner and private respondent brings about two things: One, there is no marriage at all; Two, there is no ground to convict Alfonso Choa of concubinage because one element of the crime is not attendant, that is, the man must be married at the time of its commission. The TRO issued by the RTC merely interlocutory; hence, the proper remedy is appeal in due time from the decision of the case. WHEREFORE, finding that the regional trial court committed no grave abuse of discretion, we resolve to DENY the petition. DOMINGO V. CA [226 SCRA 572 (1993)] - A spouse may petition for the declaration of nullity of her marriage for a purpose other than her remarriage. F: Delia Domingo filed a pet. for decl. of nullity of her marriage w/ Roberto Domingo, on the ground that, unknown to her, he was previously married at the time of their marriage. She prays that their marriage be declared null and void and, as a consequence, to declare that she is the exclusive owner of all properties she acquired during the marriage and to recover them from him. Roberto moved to dismiss the petition on the ground that the marriage being void ab initio, the petition for decl. of nullity is unnecessary citing Peo. v. Aragon and Peo. v. Mendoza. Roberto claims that decl of nullity is necessary under Art. 40, FC only for the purpose of remarriage. The lower court denied the motion. CA affirmed the denial. HELD: The Declaration of nullity of a marriage under Art. 40 may be resorted to even for a purpose other than remarriage. Crucial to the proper interpretation of Art. 40 is the position of the word "solely." xxx. As it is placed, it is meant to qualify "final judgment." Had the provision been stated as follows: "The absolute nullity of a previous marriage may be invoked
VOIDABLE MARRIAGE CASES Aquino V. Delizo Facts: Complaint for annulment. Wife was pregnant of another man during the marriage. No birth certificate was presented to show that the child was born within 180 days after the marriage between the parties. TC dismissed the complaint on the ground that it does not constitute fraud. Motion for NEW TRIAL by plaintiff annexed affidavits and pictures of the defendants natural plumpness at that time which shows that the defendant does not show signs of pregnancy at 4 months. Held: The evidence sought to be introduced at the new trial taken together with what has already been adduced would be sufficient to sustain the fraud alleged by plantiff. The dismissal of plaintiffs complaint was unsustainable. Under the NCC, concealment by the wife of the fact that at the time of the marriage she was pregnant with another man other than her husband constitutes fraud and isground for annulment of marriage. CA should not have denied the motion praying for new trial simplu because defendant failed to file her answer thereto. Anaya V. Palaroan Facts: Husband concealed to the wie that he had pre-marital relationship with a close relative. Issue: Did this constitute fraud and makes the marriage voidable? Held: No, Non-disclosure of a husbands premarital relationship with another woman is not one of the enumerated circumstances that would constitute a ground for annulment; and it is further excluded by the last paragraph of the article, providing that no other misrepresentation or deceit as to chastity shall give ground for an action to annul a marriage.
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University of Cebu College of Law UCLASS Bar Operations Civil Law Society

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