Compendium Civil PDF

1
COMPILATION OF SUPREME COURT DECISIONS

(MARCH 2014-MARCH 2015)
CIVIL LAW
G.R. No. 193684

March 5,
2014, ONE NETWORK RURAL BANK, INC.
vs.DANILO G. BARIC,
A third party who did not

commit a violation or invasion
ofthe
plaintiffor
aggrieved
party's rights may not be held
liable for nominal damages.
While the Petition does not squarely

address the true issue involved, it is
nonetheless evident that the CA gravely
erred in holding Network Bank solidarily
liable with Palado for the payment of
nominal damages.
Nominal damages are recoverable where
a legal right is technically violated and
must be vindicated against an invasion
that has produced no actual present loss
of any kind or where there has been a
breach of contract and no substantial
injury or actual damages whatsoever have
been or can be shown.
Under Article 2221 of the Civil Code,
nominal damages may be awarded to a
plaintiff whose right has been violated or
invaded by the defendant, for the purpose
o f vindicating or recognizing that right,
not for indemnifying the plaintiff for any
loss suffered." "Nominal damages are not
for indemnification of loss suffered but for
the vindication or recognition ofa right
violated or invaded.
guilty unless it actually took part in the

commission of illegal acts, which does not
appear to be so from the evidence on
record. On the contrary, it appears that
Barie was ousted through Palado's acts
even before Network Bank acquired the
subject property or came into the picture.
Thus, it was error to hold the bank liable
for nominal damages.
With regard to Baric's argument that he
should be reinstated to the premises and
awarded damages, this may not be
allowed. He did not question the CA ruling
in an appropriate Petition before this
Court. "It is well-settled that a party who
has not appealed from a decision cannot
seek any relief other than what is
provided in the judgment appealed from.
An appellee who has himself not appealed
may not obtain from the appellate court
any affirmative relief other than the ones
granted in the decision of the court below.
G.R. No. 180069. March 5, 2014Philippine
Commercial International Bank (now BDO
Unibank, Inc.) Vs. Arturo P. Franco,
substituted by his heirs, namely: Mauricia
P. Franco, Floribel P. Franco, and
Alexander P. Franco
A quick point, however, on the
issue of alleged payment by
petitioner Bank on the subject trust
certificate indentures.
Jurisprudence abounds that, in civil cases,
one who pleads payment has the burden
of proving it. Even where the plaintiff
must allege nonpayment, the general
rule is that the burden rests on the
defendant to prove payment, rather than
on the plaintiff to prove non-payment.
When the creditor is in possession of the
document of credit, he need not prove
nonpayment for it is presumed. The
creditors possession of the evidence of
debt is proof that the debt has not been
discharged by payment.
Network Bank did not violate any of

Baric's rights; it was merely a purchaser
or transferee ofthe property. Surely, it is
not prohibited from acquiring the property
even while the forcible entry case was
pending, because as the registered owner
ofthe subject property, Palado may
transfer
his
title
at
any
time
andtheleasemerelyfollowsthepropertyasali
In this case, respondent's possession of
enorencumbrance.
Anyinvasion
or
the original copies of the subject TICs
violation of Baric's rights as lessee was
strongly supports his claim that petitioner
committed solely by Palado, and Network
Bank's obligation to return the principal
Bank may not be implicated or found
Prepared by: ATTY. RESCI ANGELLI RIZADA, RN
Ateneo de Davao University

plus interest of the money placement has

not been extinguished. The TICs in the
hands of respondent is a proof of
indebtedness and a prima facie evidence
that they have not been paid. Petitioner
Bank
could
have
easily
presented
documentary evidence to dispute the
claim, but it did not. In its omission, it
may be reasonably deduced that no
evidence to that effect really exist. Worse,
the testimonies of petitioner Bank's own
witnesses, reinforce, rather than belie,
respondent's allegations of non-payment.
G.R. No. 173423. March 5, 2014 Sps.
Antonio Fortuna and Erlinda Fortuna Vs.
Republic of the Philippines
We deny the petition for failure of
the spouses Fortuna to sufficiently
prove their compliance with the
requisites for the acquisition of title
to alienable lands of the public
domain.
The nature of Lot No. 4457 as
alienable and disposable public
land has not been sufficiently
established
The Constitution declares that all lands of
the public domain are owned by the State.
Of the four classes of public land, i.e.,
agricultural lands, forest or timber lands,
mineral lands, and national parks, only
agricultural lands may be alienated. Public
land that has not been classified as
alienable agricultural land remains part of
the inalienable public domain. Thus, it is
essential
for
any
applicant
for
registration of title to land derived
through a public grant to establish
foremost the alienable and disposable
nature of the land. The PLA provisions
on the grant and disposition of alienable
public lands, specifically, Sections 11 and
48(b), will find application only from the
time that a public land has been classified
as agricultural and declared as alienable
and disposable.
Under Section 6 of the PLA, the
classification and the reclassification of
public lands are the prerogative of the
Executive Department. The President,
through a presidential proclamation or

executive order, can classify or reclassify
a land to be included or excluded from the
public domain. The Department of
Environment
and
Natural
Resources
(DENR) Secretary is likewise empowered
by law to approve a land classification and
declare such land as alienable and
disposable.
In this case, the CA declared that the
alienable nature of the land was
established by the notation in the
survey plan. It also relied on the
Certification dated July 19, 1999 from
the DENR Community Environment and
Natural Resources Office (CENRO) that
there is, per record, neither any public
land application filed nor title previously
issued for the subject parcel[.]However,
we find that neither of the above
documents is evidence of a positive
act from the government reclassifying
the lot as alienable and disposable
agricultural land of the public domain.
Mere notations appearing in survey
plans are inadequate proof of the
covered properties alienable and
disposable character. These notations,
at the very least, only establish that the
land subject of the application for
registration falls within the approved
alienable
and
disposable
area
per
verification through survey by the proper
government
office.
The
applicant,
however, must also present a copy of
the original classification of the land
into alienable and disposable land, as
declared by the DENR Secretary or as
proclaimed by the President.
The survey plan and the DENR-CENRO
certification are not proof that the
President or the DENR Secretary has
reclassified and released the public land as
alienable and disposable. The offices that
prepared these documents are not the
official repositories or legal custodian
of the issuances of the President or the
DENR Secretary declaring the public land


as alienable and disposable.
For failure to present incontrovertible
evidence that Lot No. 4457 has been
reclassified as alienable and disposable
land of the public domain though a
positive act of the Executive Department,
the spouses Fortunas claim of title
through a public land grant under the PLA
should be denied.
In judicial confirmation of imperfect
or incomplete title, the period of
possession should commence, at the
latest, as of May 9, 1947
Although the above finding that the
spouses Fortuna failed to establish the
alienable and disposable character of Lot
No. 4457 serves as sufficient ground to
deny the petition and terminate the case,
we deem it proper to continue to address
the other important legal issues raised in
the petition.
As mentioned, the PLA is the law that
governs the grant and disposition of
alienable agricultural lands. Under Section
11 of the PLA, alienable lands of the public
domain may be disposed of, among
others, by judicial confirmation of
imperfect or incomplete title.
On June 22, 1957, the cut-off date of July
26, 1894 was replaced by a 30-year
period of possession under RA No. 1942.
Section 48(b) of the PLA, as amended by
RA No. 1942, read:
(b) Those who by themselves or through
their predecessors in interest have been in
open, continuous, exclusive and notorious
possession and occupation of agricultural
lands of the public domain, under a bona
fide claim of acquisition of ownership, for
at least thirty years immediately
preceding the filing of the application for
confirmation
of
title,
except
when
prevented by war or force majeure.
[emphasis and underscore ours]
On
January
25,
1977,
PD
No.
1073
replaced the 30-year period of possession

by requiring possession since June 12,
1945. Section 4 of PD No. 1073 reads:
SEC. 4. The provisions of Section 48(b)
and Section 48(c), Chapter VIII of the
Public Land Act are hereby amended in
the sense that these provisions shall apply
only to alienable and disposable lands of
the public domain which have been in
possession
and
occupation
by
the
applicant himself or thru his predecessorin-interest, under a bona fide claim of
acquisition of ownership, since June 12,
1945. [emphasis supplied]
Under the PD No. 1073 amendment,
possession of at least 32 years from
1945 up to its enactment in 1977 is
required. This effectively impairs the
vested rights of applicants who had
complied with the 30-year possession
required under the RA No. 1942
amendment,
but
whose
possession
commenced only after the cut-off date of
June 12, 1945 was established by the PD
No. 1073 amendment. To remedy this, the
Court ruled in Abejaron v. Nabasa that
Filipino citizens who by themselves or
their predecessors-in-interest have been,
prior to the effectivity of P.D. 1073 on
January 25, 1977, in open, continuous,
exclusive and notorious possession and
occupation of agricultural lands of the
public domain, under a bona fide claim of
acquisition of ownership, for at least 30
years, or at least since January 24,
1947 may apply for judicial confirmation
of their imperfect or incomplete title under
Sec. 48(b) of the [PLA]. January 24,
1947 was considered as the cut-off
date as this was exactly 30 years
counted backward from January 25,
1977 the effectivity date of PD No.
1073.
It appears, however, that January 25,
1977 was the date PD No. 1073 was
enacted; based on the certification from
the National Printing Office, PD No. 1073
was published in Vol. 73, No. 19 of


the Official Gazette, months later than
its enactment or on May 9, 1977. This
uncontroverted fact materially affects the
cut-off date for applications for judicial
confirmation of incomplete title under
Section 48(b) of the PLA.
Although Section 6 of PD No. 1073 states
that [the] Decree shall take effect upon
its promulgation, the Court has declared
in Tanada, et al. v. Hon. Tuvera, etc., et al
that the publication of laws is an
indispensable
requirement
for
its
effectivity. [A]ll statutes, including those
of local application and private laws, shall
be published as a condition for their
effectivity, which shall begin fifteen days
after publication unless a different
effectivity date is fixed by the legislature.
Accordingly, Section 6 of PD No. 1073
should be understood to mean that the
decree took
effect only upon its
publication, or on May 9, 1977. This,
therefore, moves the cut-off date for
applications for judicial confirmation
of imperfect or incomplete title under
Section 48(b) of the PLA to May 8,
1947. In other words, applicants must
prove that they have been in open,
continuous, exclusive and notorious
possession
and
occupation
of
agricultural lands of the public
domain, under a bona fide claim of
acquisition of ownership, for at least
30 years, or at least since May 8,
1947.
The spouses Fortuna were unable to
prove that they possessed Lot No.
4457 since May 8, 1947
Even if the Court assumes that Lot No.
4457 is an alienable and disposable
agricultural land of the public domain, the
spouses
Fortunas
application
for
registration of title would still not prosper
for failure to sufficiently prove that they
possessed the land since May 8, 1947.
The spouses Fortunas allegation that: (1)
the absence of a notation that Tax
Declaration No. 8366 was a new tax

declaration and (2) the notation stating
that Tax Declaration No. 8366 cancels the
earlier Tax Declaration No. 10543 both
indicate that Pastora possessed the land
prior to 1948 or, at the earliest, in 1947.
We also observe that Tax Declaration No.
8366 contains a sworn statement of the
owner that was subscribed on October 23,
1947. While these circumstances may
indeed indicate possession as of 1947,
none proves that it commenced as of the
cut-off date of May 8, 1947. Even if the
tax declaration indicates possession since
1947, it does not show the nature of
Pastoras possession. Notably, Section
48(b) of the PLA speaks of possession and
occupation. Since these words are
separated by the conjunction and, the
clear intention of the law is not to make
one
synonymous
with
the
other.
Possession is broader than occupation
because
it
includes
constructive
possession. When, therefore, the law adds
the word occupation, it seeks to delimit
the all encompassing effect of constructive
possession. Taken together with the words
open, continuous, exclusive and notorious,
the word occupation serves to highlight
the fact that for an applicant to qualify, his
possession must not be a mere fiction.
Nothing in Tax Declaration No. 8366
shows that Pastora exercised acts of
possession and occupation such as
cultivation of or fencing off the land.
Indeed, the lot was described as
cogonal.
G.R. No. 184371. March 5, 184371Spouses
Mario and Julia Campos Vs. Republic of
the Philippines
the sole issue raised by the
Republic was merely on the
discrepancies on the area and
description of the subject land as
indicated in the documents and
evidence presented, which issue
the petitioners already addressed
in their appeal brief before the CA.
Persons applying for registration o f title
under Section 14( 1) o f Presidential
Decree No. 1529 must prove: (1) that the


land sought to be
registered forms part of the disposable
and alienable lands of the public
domain, and (2) that they have been in
open, continuous, exclusive and
notorious possession and occupation of
the same under a bona fide claim of
ownership since June 12, 1945, or
earlier.
As the CA did, we find that the petitioners
failed to prove that they and their
predecessors-in-interest have been in
possession and occupation of the subject
land, under a bona
fide claim of ownership, since June 12,
1945, or earlier. The oldest documentary
evidence presented by the petitioners was
a 1948 tax declaration over the subject
land in the name of Margarita Laigo. The
petitioners failed to present evidence of
their possession prior to 1948. In fact, the
petitioners, in their application for
registration, base their possession of
the subject land only from 1948, and
not "since June 12, 1945, or earlier"
as required by law.
We emphasize that since the effectivity
ofP.D. No. 1073 on January 25, 1977, it
must be shown that possession and
occupation of the land sought to be
registered by the applicant himself or
through his predecessors- in-interest,
started on June 12, 1945 or earlier,
which totally conforms to the requirement
under Section 14(1) of P.D. No 1529. A
mere
showing
of
possession
and
occupation for thirty (30) years or more is
no longer sufficient.
G.R. No. 172909. March 5, 2014Spouses

Silvestre O. Plaza and Elena Y. Plaza Vs.
Guillermo Lustiva, et al.
Issue: NULLITY OF LAND AUCTION
Sections 181 and 267 of the Local

Government
Code
of
1991
are
inapplicable; these provisions do not
apply to the present case
The petitioners may not invoke Section
181 of the Local Government Code of
1991 to validate their alleged title. The
law authorizes the local government unit
to purchase the auctioned property only in
instances where There is no bidder or
the highest bid is insufficient. A
disqualified bidder is not among the
authorized grounds. The local government
also never undertook steps to purchase
the property under Section 181 of the
Local
Government
Code
of
1991,
presumably because it
knew the invoked provision does not
apply.
Neither can the Court agree with the
petitioners stance that the respondents
defense the petitioners defective title
must fail for want of deposit to the
court the amount required by Section 267
of the Local Government Code.
A simple reading of the title readily
reveals that the provision relates to
actions for annulment of tax sales. The
section likewise makes use of terms
entertain and institution to mean that
the deposit requirement applies only to
initiatory actions assailing the validity of
tax sales. The intent of the provision to
limit the deposit requirement to actions
for annulment of tax sales led to the
Courts
ruling
in
National
Housing
Authority v. Iloilo City, et al. that the
deposit requirement is jurisdictional a
condition necessary for the court to
entertain the action:
These rulings clearly render inapplicable
the petitioners insistence that the
respondents should have made a deposit
to the court. The suit filed by the
petitioners was an action for injunction
and damages; the issue of nullity of the


auction was raised by the respondents
themselves merely as a defense and in no
way converted the action to an action for
annulment of a tax sale.
The petitioners are guilty of forum
shopping
We agree with the CA that the petitioners
committed forum shopping when they
filed the specific performance case despite
the pendency of the present case before
the CA. In the recent case of Heirs of
Marcelo Sotto, etc., et al. v. Matilde S.
Palicte, the Court laid down the three
ways
forum
shopping
may
be
committed: 1) through litis pendentia
filing multiple cases based on the same
cause of action and with the same prayer,
the previous case not having been
resolved yet; 2) through res judicata
filing multiple cases based on the same
cause of action and the same prayer, the
previous
case
having
been
finally
resolved; and 3) splitting of causes of
action filing multiple cases based on the
same cause of action but with different
prayers the ground to dismiss being
either litis pendentia or res judicata. The
requisites of litis pendentia are: (a) the
identity of parties, or at least such as
representing the same interests in both
actions; (b) the identity of rights asserted
and relief prayed for, the relief being
founded on the same facts; and (c) the
identity of the two cases such that
judgment in one, regardless of which
party is successful, would amount to res
judicata in the other.
Noticeable among these three types of
forum shopping is the identity of the
cause of action in the different cases
filed. Cause of action is the act or
omission by which a party violates the
right of another.
The cause of action in the present case
(and the main case) is the petitioners
claim of ownership of the land when they
bought
it,
either
from
the
City
Government of Butuan or from Tuazon.
This ownership is the petitioners basis in

enjoining
the
respondents
from
dispossessing them of the property. On
the other hand, the specific performance
case prayed that the City Government of
Butuan be ordered to issue the petitioners
the certificate of sale grounded on the
petitioners ownership of the land when
they had bought it, either from the City
Government of Butuan or from Tuazon.
While it may appear that the main relief
prayed for in the present injunction case is
different from what was prayed for in the
specific performance case, the cause of
action which serves as the basis for the
reliefs
remains
the
same
the
petitioners alleged ownership of the
property after its purchase in a public
auction.
Thus, the petitioners' subsequent filing of
the specific performance action is forum
shopping of the third kind-splitting causes
of action or filing multiple cases based on
the same cause of action, but with
different prayers. As the Court has held in
the past, "there is still forum shopping
even if the reliefs prayed for in the two
cases are different, so long as both cases
raise substantially the same issues.
Similarly, the CA correctly found that the
petitioners and their counsel were guilty of
forum shopping based on litis pendentia.
Not only were the parties in both cases
the same insofar as the City Government
of Butuan is concerned, there was also
identity ofrights asserted and identity of
facts alleged. The cause of action in the
specific performance case had already
been ruled upon in the present case,
although it was still pending appeal before
the CA. Likewise, the prayer sought in the
specific performance case-for the City
Government ofButuan to execute a deed
of sale in favor of the petitioners - had
been indirectly ruled upon in the present
case when the RTC declared that no
certificate of sale could be issued because
there had been no valid sale.
G.R. No. 192123. March 10, 2014Dr.
Fernando P. Solidum Vs. People of the
Philippines


This appeal is taken by a physiciananesthesiologist who has been

pronounced guilty of reckless
imprudence resulting in serious
physical injuries by the Regional
Trial Court (RTC) and the Court of
Appeals (CA). He had been part of
the team of anesthesiologists
during the surgical pullthrough
operation conducted on a threeyear old patient born with an
imperforate anus.
Applicability of the Doctrine of Res

Ipsa Loquitur
In order to allow resort to the doctrine,
therefore,
the
following
essential
requisites must first be satisfied, to wit:
(1) the accident was of a kind that does
not ordinarily occur unless someone is
negligent; (2) the instrumentality or
agency that caused the injury was under
the exclusive control of the person
charged; and (3) the injury suffered must
not have been due to any voluntary action
or contribution of the person injured.
The Court considers the application here
of the doctrine of res ipsa loquitur
inappropriate. Although it should be
conceded without difficulty that the
second and third elements were present,
considering that the anesthetic agent and
the instruments were exclusively within
the control of Dr. Solidum, and that the
patient, being then unconscious during the
operation, could not have been guilty of
contributory negligence, the first element
was undeniably wanting. Luz delivered
Gerald to the care, custody and control of
his
physicians
for
a
pull-through
operation. Except for the imperforate
anus, Gerald was then of sound body and
mind at the time of his submission to the
physicians.
Yet,
he
experienced
bradycardia during the operation, causing
loss of his senses and rendering him
immobile. Hypoxia, or the insufficiency of
oxygen supply to the brain that caused
the slowing of the heart rate, scientifically
termed
as
bradycardia,
would
not
ordinarily occur in the process of a pullthrough

operation,
or
during
the
administration of anesthesia to the
patient, but such fact alone did not prove
that the negligence of any of his attending
physicians,
including
the
anesthesiologists, had caused the injury.
In fact, the anesthesiologists attending to
him had sensed in the course of the
operation that the lack of oxygen could
have been triggered by the vago-vagal
reflex, prompting them to administer
atropine to the patient.
Negligence of Dr. Solidum
In view of the inapplicability of the
doctrine of res ipsa loquitur, the Court
next determines whether the CA correctly
affirmed the conviction of Dr. Solidum for
criminal negligence.
Negligence is defined as the failure to
observe for the protection of the interests
of another person that degree of care,
precaution,
and
vigilance
that
the
circumstances justly demand, whereby
such other person suffers injury. Reckless
imprudence, on the other hand, consists
of voluntarily doing or failing to do,
without malice, an act from which material
damage results by reason of an
inexcusable lack of precaution on the part
of the person performing or failing to
perform such act.
Dr. Solidums conviction by the RTC was
primarily based on his failure to monitor
and properly regulate the level of
anesthetic agent administered on Gerald
by overdosing at 100% halothane.
The Prosecution did not prove the
elements of reckless imprudence beyond
reasonable
doubt
because
the
circumstances cited by the CA were
insufficient to establish that Dr. Solidum
had been guilty of inexcusable lack of
precaution
in
monitoring
the
administration of the anesthetic agent to
Gerald.


An action upon medical negligence
whether criminal, civil or administrative
calls for the plaintiff to prove by
competent evidence each of the following
four elements, namely: (a) the duty owed
by the physician to the patient, as created
by the physician-patient relationship, to
act in accordance with the specific norms
or
standards
established
by
his
profession; (b) the breach of the duty by
the physicians failing to act in accordance
with the applicable standard of care; (3)
the causation, i.e., there must be a
reasonably close and causal connection
between the negligent act or omission and
the resulting injury; and (4) the damages
suffered by the patient.
Dr. Solidum was criminally charged for
failing to monitor and regulate properly
the levels of anesthesia administered to
said Gerald Albert Gercayo and using
100% halothane and other anesthetic
medications. However, the foregoing
circumstances, taken together, did not
prove beyond reasonable doubt that Dr.
Solidum had been recklessly imprudent in
administering the anesthetic agent to
Gerald. Indeed, Dr. Vertidos findings did
not preclude the probability that other
factors
related
to
Geralds
major
operation, which could or could not
necessarily
be
attributed
to
the
administration of the anesthesia, had
caused the hypoxia and had then led
Gerald to experience bradycardia. Dr.
Vertido revealingly concluded in his
report, instead, that although the
anesthesiologist followed the normal
routine and precautionary procedures, still
hypoxia and its corresponding side effects
did occur.
Liability of Ospital ng Maynila
Although the result now reached has
resolved the issue of civil liability, we have
to address the unusual decree of the RTC,
as affirmed by the CA, of expressly
holding Ospital ng Maynila civilly liable
jointly and severally with Dr. Solidum. The
decree was flawed in logic and in law.

In criminal prosecutions, the civil action
for the recovery of civil liability that is
deemed instituted with the criminal action
refers only to that arising from the offense
charged. It is puzzling, therefore, how the
RTC and the CA could have adjudged
Ospital ng Maynila jointly and severally
liable with Dr. Solidum for the damages
despite the obvious fact that Ospital ng
Maynila, being an artificial entity, had not
been charged along with Dr. Solidum. The
lower courts thereby acted capriciously
and whimsically, which rendered their
judgment against Ospital ng Maynila void
as the product of grave abuse of
discretion
amounting
to
lack
of
jurisdiction.
Not surprisingly, the flawed decree raises
other material concerns that the RTC and
the CA overlooked. We deem it important,
then,
to
express
the
following
observations for the instruction of the
Bench and Bar.
For one, Ospital ng Maynila was not at all
a party in the proceedings. Hence, its
fundamental right to be heard was not
respected from the outset. The RTC and
the CA should have been alert to this
fundamental defect. Verily, no person can
be prejudiced by a ruling rendered in an
action or proceeding in which he was not
made a party. Such a rule would enforce
the constitutional guarantee of due
process of law.
Moreover, Ospital ng Maynila could be
held civilly liable only when subsidiary
liability would be properly enforceable
pursuant to Article 103 of the Revised
Penal Code. But the subsidiary liability
seems far-fetched here. The conditions for
subsidiary liability to attach to Ospital ng
Maynila should first be complied with.
Firstly, pursuant to Article 103 of the
Revised Penal Code, Ospital ng Maynila
must be shown to be a corporation
"engaged in any kind of industry." The
term industry means any department or


branch of art, occupation or business,

especially one that employs labor and
capital, and is engaged in industry.
However, Ospital ng Maynila, being a
public hospital, was not engaged in
industry conducted for profit but purely in
charitable
and
humanitarian
work.
Secondly, assuming that Ospital ng
Maynila was engaged in industry for profit,
Dr. Solidum must be shown to be an
employee of Ospital ng Maynila acting in
the discharge of his duties during the
operation on Gerald. Yet, he definitely was
not such employee but a consultant of the
hospital. And, thirdly, assuming that civil
liability was adjudged against Dr. Solidum
as an employee (which did not happen
here), the execution against him was
unsatisfied due to his being insolvent.
G.R. No. 163767. March 10, 2014Republic
of the Philippines represented by the
Director of Lands Vs. Rosario De Guzman
Vda. De Joson
This case concerns the discharge of
the burden of proof by the
applicant in proceedings for the
registration ofland under Section
14 (1) and (2) of Presidential
Decree
No.
1529
(Property
Registration Decree).
The respondent sought to have the land
registered in her name by alleging that
she and her predecessors-in-interest had
been in open, peaceful, continuous,
uninterrupted and adverse possession of
the land in the concept of owner since
time immemorial. However, the Republic
counters that the land was public land;
and that it could not be acquired by
prescription. The determination of the
issue hinges on whether or not the land
was public; if so, whether the respondent
satisfactorily proved that the land had
already been declared as alienable and
disposable land of the public domain; and
that she and her predecessors-in-interest
had been in open, peaceful, continuous,
uninterrupted and adverse possession of
the land in the concept of owner since
June 12, 1945, or earlier.
Under Section 14(1), therefore, the

respondent had to prove that: (1) the land
formed part of the alienable and
disposable land of the public domain; and
(2) she, by herself or through her
predecessors-in-interest, had been in
open, continuous, exclusive, and notorious
land under a bona fide claim of ownership
from June 12, 1945, or earlier.
what is left wanting is the fact that the
respondent did not discharge her burden
to prove the classification of the land as
demanded by the first requisite. She did
not present evidence of the land, albeit
public, having been declared alienable and
disposable by the State. During trial, she
testified that the land was not within any
military or naval reservation, and Frisco
Domingo, her other witness, corroborated
her. Although the Republic countered that
the verification made by the Bureau of
Forest Development showed that the land
was within the unclassified region of
Paombong, Bulacan as per BF Map LC No.
637 dated March 1, 1927, such showing
was based on the 1st Indorsement dated
July 22, 1977 issued by the Bureau of
Forest Development, which the CA did not
accord any evidentiary weight to for
failure of the Republic to formally offer it
in evidence. Still, Fiscal Reyes, in the
opposition he filed in behalf of the
Government, argued that the land was a
portion of the Labangan Channel operated
by the Pampanga River Control System,
and could not be the subject of
appropriation or land registration. Thus,
the respondent as the applicant remained
burdened with proving her compliance
with the first requisite.
This doctrine unavoidably means that the
mere certification issued by the CENRO or
PENRO did not suffice to support the
application for registration, because the
applicant must also submit a copy of the
original classification of the land as
alienable and disposable as approved by
the DENR Secretary and certified as a true
copy by the legal custodian of the official

10

records.
of impropriety. Thus,applying
Yet, even assuming that the DENR-CENRO

certification alone would have sufficed, the
respondents application would still be
denied considering that the reclassification
of the land as alienable or disposable
came only after the filing of the
application in court in 1976. The
certification itself indicated that the land
was reclassified as alienable or disposable
only on October 15, 1980.
On the other hand, under Section 14(2),
ownership of private lands acquired
through prescription may be registered in
the owners name. Did the respondent
then acquire the land through prescription
considering that her possession and
occupation of the land by her and her
predecessors-ininterest could be traced
back to as early as in 1926, and that the
nature of their possession and occupation
was that of a bona fide claim of ownership
for over 30 years?
Clearly, the respondent did not.
The period of possession prior to the
reclassification of the land as alienable
and disposable land of the public domain
is not considered in reckoning the
prescriptive period in favor of the
possessor.
In other words, the period of possession
prior to the reclassification of the land, no
matter how long, was irrelevant because
prescription did not operate against the
State before then.
In her act of dishonesty, respondent failed

to take heed of the Code of
Conduct for Court Personnel, which
regards all court personnel as sentinels
Of justice expected to refrain from any act
the penalties under the Revised Uniform

Rules on Administrative Cases in the Civil
Service, we sanction her perfidy by
imposing upon her the penalty ofdismissal
from service with accessory penalties.
G.R. No. 188539. March 12, 2014Mariano
Lim Vs. Security Bank Corporation
main issue is whether petitioner
may validly be held liable for the
principal debtor's loan obtained six
months after the execution of the
Continuing Suretyship.
In this case, what petitioner executed was
a Continuing Suretyship, which the Court
described in Saludo, Jr. v. Security Bank
Corporation as follows:
The essence of a continuing surety has
been highlighted in the case of Totanes v.
China Banking Corporation in this wise:
Comprehensive or continuing surety
agreements
are,
in
fact,
quite
commonplace in present day financial and
commercial
practice.
A
bank
or
financing company which anticipates
entering into a series of credit
transactions
with
a
particular
company,
normally
requires
the
projected principal debtor to execute
a continuing surety agreement along
with its sureties. By executing such
an agreement, the principal places
itself in a position to enter into the
projected series of transactions with
its creditor; with such suretyship
agreement, there would be no need to
execute a separate surety contract or
bond for each financing or credit
accommodation
extended
to
the
principal debtor.
The terms of the Continuing Suretyship
executed by petitioner, quoted earlier, are
very clear. It states that petitioner, as
surety, shall, without need for any notice,
demand or any other act or deed,
immediately become liable and shall pay
all credit accommodations extended

11

by the Bank to the Debtor, including

increases,
renewals,
roll-overs,
extensions, restructurings, amendments
or novations thereof, as well as (i) all
obligations of the Debtor presently or
hereafter owing to the Bank, as
appears in the accounts, books and
records of the Bank, whether direct or
indirect, and (ii) any and all expenses
which the Bank may incur in enforcing any
of its rights, powers and remedies under
the Credit
Instruments
as
defined
hereinbelow. Such stipulations are valid
and legal and constitute the law between
the parties, as Article 2053 of the Civil
Code provides that [a] guaranty may also
be given as security for future debts, the
amount of which is not yet known; x x x.
Thus, petitioner is unequivocally bound by
the terms of the Continuing Suretyship.
There can be no cavil then that petitioner
is liable for the principal of the loan,
together with the interest and penalties
due thereon, even if said loan was
obtained by the principal debtor even after
the date of execution of the Continuing
Suretyship.
G.R. No. 192717. March 12, 2014Minda S.
Gaerlan Vs. Republic of the Philippines
Essentially, the main issue to be
resolved is whether the CA erred in
dismissing petitioners application
for registration of title.
Now, on the merits. Petitioner asserts that
the land subject of her
application has been declared alienable
and disposable in 1925 and that her
possession through her predecessors-ininterest started in 1929. However, after a
careful examination of the evidence
adduced by petitioner, we find no error on
the part of the CA in dismissing
petitioners application for registration of
title for the failure of petitioner to prove
satisfactorily
the
requirements
for
registration provided under the law.
To comply with the first requisite,
petitioner submitted a CENRO Certification
stating that Lot 4342, Cad-237 located in
Patag, Cagayan de Oro City falls within

the alienable and disposable area under
Project No. 8, Block I. Petitioner also
submitted LC Map No. 543 which was
certified and approved on December 31,
1925. We, however, find that the attached
certification is inadequate to prove that
the subject lot is alienable and disposable.
We held in Republic v. T.A.N. Properties,
Inc. that a CENRO certification is
insufficient to prove the alienable and
disposable character of the land sought to
be registered. The applicant must also
show sufficient proof that the DENR
Secretary
has
approved
the
land
classification and released the land in
question as alienable and disposable.
Thus, as it now stands, aside from the
CENRO certification, an application for
original registration of title over a parcel
of land must be accompanied by a copy of
the original classification approved by the
DENR Secretary and certified as a true
records in order to establish that the land
is indeed alienable and disposable.
As to the second and third requisites, we
agree with the appellate court that
petitioner failed to establish that she and
her predecessors-ininterest have been in
land on or before June 12, 1945. Based on
the records, the earliest evidence of
possession that petitioner and her
predecessor-in-interest Mamerta Tan had
over the subject property was only in
1975 when Mamerta Tan purchased the
subject lot from Teresita Tan. While
Mamerta Tan testified that she purchased
the property from Teresita, the records
are bereft of any evidence to show
Teresitas
mode
of
acquisition
of
ownership over the subject lot or from
whom she acquired the property and
when her possession of the subject lot had
commenced.
In fine, since petitioner failed to prove
that (1) the subject property was

12

classified as part of the disposable and

alienable land of the public domain; and
(2) she and her predecessors-in-interest
have been in open, continuous, exclusive,
and notorious possession and occupation
thereof under a bona fide claim of
ownership since June 12, 1945 or earlier,
her application for registration of title of
the subject property under P.D. No. 1529
should be denied.
G.R.
No.
154390.
March
17,
2014Metropolitan Fabrics, Inc., et al. Vs.
Prosperity Credit Resources, Inc. et al.
The
genuineness
and
due
execution of a deed of real estate
mortgage
that
has
been
acknowledged before a notary
public
are
presumed.
Any
allegation of fraud and forgery
against
the
deed
must
be
established by clear and competent
evidence.
The contested deed of real estate
mortgage was a public document by virtue
of its being acknowledged before notary
public Atty. Noemi Ferrer. As a notarized
document,
the
deed
carried
the
evidentiary weight conferred upon it with
respect to its due execution, and had in its
favor the presumption of regularity.
Hence, it was admissible in evidence
without further proof of its authenticity,
and was entitled to full faith and credit
upon its face. To rebut its authenticity and
genuineness, the contrary evidence must
be clear, convincing and more than merely
preponderant; otherwise, the deed should
be upheld.
Action to assail the mortgage already
prescribed
The next issue to address is whether the
action to assail the real estate mortgage
already prescribed.
To resolve the issue of prescription, it is
decisive to determine if the mortgage was
void or merely voidable.
It appears that the original stance of
petitioners was that the deed of real

estate mortgage was voidable. In their
complaint, they averred that the deed,
albeit in printed form, was incomplete in
essential details, and that Metropolitan,
through Enrique Ang as its president,
signed it in good faith and in absolute
confidence.
As the records show, petitioners really
agreed to mortgage their properties as
security for their loan, and signed the
deed of mortgage for the purpose.
Thereafter, they delivered the TCTs of the
properties subject of the mortgage to
respondents.
Consequently, petitioners' contention of
absence of consent had no firm moorings.
It remained unproved. To begin with, they
neither alleged nor established that they
had been forced or coerced to enter into
the mortgage. Also, they had freely and
voluntarily applied for the loan, executed
the mortgage contract and turned over
the TCTs of their properties. And, lastly,
contrary to their modified defense of
absence of consent, Vicky Ang's testimony
tended at best to prove the vitiation of
their consent through insidious words,
machinations
or
misrepresentations
amounting to fraud, which showed that
the contract was voidable. Where the
consent was given through fraud, the
contract was voidable, not void ab initio.
This is because a voidable or annullable
contract is existent, valid and binding,
although it can be annulled due to want of
capacity or because of the vitiated consent
of one of the parties.
With
the
contract
being
voidable,
petitioners' action to annul the real estate
mortgage already prescribed. Article
1390, in relation to Article 1391 of the
Civil Code, provides that if the consent of
the contracting parties was obtained
through fraud, the contract is considered
voidable and may be annulled within four
years from the time of the discovery of
the fraud. The discovery of fraud is
reckoned from the time the document was

13

registered in the Register of Deeds in view

of the rule that registration was notice to
the whole world. Thus, because the
mortgage involving the seven lots was
registered on September 5, 1984, they
had until September 5, 1988 within which
to assail the validity of the mortgage. But
their complaint was instituted in the RTC
only on October 10, 1991. Hence, the
action, being by then already prescribed,
should be dismissed.
G.R. No. 200468. March 19, 2014Macaria
Arguelles and the Heirs of the Deceased
Petronio Arguelles Vs. Malarayat Rural
Bank, Inc.
In fine, the issue in this case is
whether the respondent Malarayat
Rural Bank is a mortgagee in good
faith who is entitled to protection
on its mortgage lien.
on the certificate of title of the mortgagor

of the property offered as security, and in
the absence of any sign that might arouse
suspicion,
the
mortgagee
has
no
obligation
to
undertake
further
investigation.
Petitioners imputed negligence on the part

of respondent Malarayat Rural Bank when
it approved the loan application of the
spouses Guia. They pointed out that the
bank failed to conduct a thorough ocular
inspection of the land mortgaged and an
extensive investigation of the title of the
registered
owner.
And
since
the
respondent Malarayat Rural Bank cannot
be considered a mortgagee in good faith,
petitioners argued that the unregistered
sale in their favor takes precedence over
the duly registered mortgage lien. On the
other hand, respondent Malarayat Rural
Bank claimed that it exercised the
required degree of diligence before
granting
the
loan
application.
In
particular, it asserted the absence of any
facts or circumstances that can reasonably
arouse suspicion in a prudent person.
Thus, the respondent Malarayat Rural
Bank argued that it is a mortgagee in
good faith with a better right to the
mortgaged land as compared to the
vendees to the unregistered sale.
In this case, we find that the respondent

Malarayat Rural Bank fell short of the
required degree of diligence, prudence,
and care in approving the loan application
of the spouses Guia.
[i]n cases where the mortgagee does not

directly deal with the registered owner of
real property, the law requires that a
higher degree of prudence be exercised by
the mortgagee.
Thus, where the mortgagor is not the
registered owner of the property but is
merely an attorney-in-fact of the same, it
is incumbent upon the mortgagee to
exercise greater care and a higher degree
of prudence in dealing with such
mortgagor.
Respondent
should
have
diligently
conducted an investigation of the
land offered as collateral. Although the
Report o f Inspection and Credit
Investigation found at the dorsal portion
of the Application for Agricultural Loan.
proved that the respondent Malarayat
Rural Bank inspected the land,
the respondent turned a blind eye to the
finding therein that the "lot is
planted [with] sugarcane with annual yield
(crops) in the amount of
P15,000. We disagree with respondent's
stance that the mere planting
The petition is meritorious.

In Bank of Commerce v. Spouses San
Pablo, Jr., we declared that indeed, a
mortgagee has a right to rely in good faith
and harvesting of sugarcane cannot

reasonably trigger suspicion that there is
adverse possession over the land offered
as mortgage. Indeed, such fact should

14

have
immediately
prompted
the
respondent to conduct further inquiries,
especially since the spouses Guia were not
the registered owners ofthe land being
mortgaged. They merely derived the
authority to mortgage the lot from the
Special Power of Attorney allegedly
executed by the late Fermina M. Guia.
Hence, it was incumbent upon the
respondent Malarayat Rural Bank to be
more cautious in dealing with the spouses
Guia, and inquire further regarding the
identity and possible adverse claim of
those in actual possession of the property.
Pertinently, in Land Bank ofthe Philippines
v. Poblete, we ruled that "[w]here the
mortgagee acted with haste in granting
the mortgage loan and did not ascertain
the ownership of
the land being
mortgaged, as well as the authority of the
supposed agent executing the mortgage,
it cannot be considered an innocent
mortgagee."
Since the subject land was not mortgaged

by the owner thereof and since the
respondent Malarayat Rural Bank is not a
mortgagee in good faith, said bank is not
entitled to protection under the law. The
unregistered sale in favor of the spouses
Arguelles must prevail over the mortgage
lien of respondent Malarayat Rural Bank.
G.R. No. 181055. March 19, 2014Heirs of
Teresita Montoya, et al. Vs. National
Housing Authority, et al.
The petitioners presented CLTs
could not have vested them
with
ownership
over
the
property
A CLT is a document that the
government issues to a tenantfarmer of an agricultural land
primarily devoted to rice and corn
production
placed
under
the
coverage of the governments OLT
program pursuant to P.D. No. 27.
It serves as the tenant-farmers
(grantee of the certificate) proof of
inchoate right over the land
covered thereby.
A CLT does not automatically grant a

tenant-farmer absolute ownership of the
covered landholding. Under PD No. 27,
land transfer is effected in two stages: (1)
issuance of the CLT to the tenant-farmer
in recognition that said person is a
deemed owner; and (2) issuance of an
Emancipation Patent (EP) as proof of full
ownership upon the tenant- farmers full
payment of the annual amortizations or
lease rentals.
As a preliminary step, therefore, the
issuance of a CLT merely evinces that the
grantee thereof is qualified to avail of the
statutory mechanism for the acquisition of
ownership of the land tilled by him, as
provided under P.D. No. 27. The CLT is
not a muniment of title that vests in the
tenant- farmer absolute ownership of his
tillage. It is only after compliance with the
conditions which entitle the tenant-farmer
to an EP that the tenant-farmer acquires
the vested right of absolute ownership in
the landholding. Stated otherwise, the
tenant-farmer does not acquire full
ownership of the covered landholding
simply by the issuance of a CLT. The
tenant-farmer must first comply with the
prescribed conditions and procedures for
acquiring full ownership but until then, the
title remains with the landowner.
G.R. No. 199146. March 19, 2014Heirs of
Pacifico Pocido, et al. Vs. Arsenia Avila and
Emelinda Chua
ISSUE:
JURISDICTION
OVER
A
COMPLAINT TO QUIET TITLE TO A LAND
THAT FORMS PART OF THE PUBLIC
DOMAIN
Having established that the disputed

property is public land, the trial court was
therefore correct in dismissing the
complaint to quiet title for lack of
jurisdiction. The trial court had no
jurisdiction to determine who among the
parties have better right over the disputed
property which is admittedly still part of
the public domain.
In an action for quieting of title, the

15

complainant
is
seeking
for
an
adjudication that a claim of title or interest
in property adverse to the claimant is
invalid, to free him from the danger of
hostile claim, and to remove a cloud upon
or quiet title to land where stale or
unenforceable claims or demands exist.
the two indispensable requisites in an
action to quiet title are: (1) that the
plaintiff has a legal or equitable title to or
interest in the real property subject of the
action; and (2) that there is a cloud on his
title by reason of any instrument, record,
deed, claim, encumbrance or proceeding,
which must be shown to be in fact invalid
or inoperative despite its prima facie
appearance of validity.
In this case, petitioners, claiming to be

owners of the disputed property, allege
that respondents are unlawfully claiming
the disputed property by using void
documents, namely the Catulagan and
the Deed of Waiver of Rights. However,
the records reveal that petitioners do not
have legal or equitable title over the
disputed property, which forms part of Lot
43, a public land within the Baguio
Townsite Reservation. It is clear from the
facts of the case that petitioners
predecessors-in-interest, the heirs of
Pocdo Pool, were not even granted a
Certificate of Ancestral Land Claim over
Lot 43, which remains public land. Thus,
the trial court had no other recourse but
to dismiss the case.
of the Philippines Vs. Zurbaran Realty &
Development Corp.
An
application
for
original
registration of land of the public
domain under Section 14(2) of
Presidential Decree (PD) No. 1529
must show not only that the land
has previously been declared
alienable and disposable, but also
that the land has been declared
patrimonial property of the State at
the onset of the 30-year or 10-year
period
of
possession
and
occupation required under the law
on acquisitive prescription.
Once again, the Court applies this rule-as
clarified in Heirs ofMario Malabanan v.
Republic
G.R. No. 161151. March 24, 2014BJDC
Construction,
represented
by
its
Manager/Proprieto Janet S. Dela Cruz Vs.
Nena E. Lanuzo, et al.
The party alleging the negligence
of the other as the cause of injury
has the burden to establish the
allegation
with
competent
evidence. If the action based on
negligence is civil in nature, the
proof required is preponderance
ofevidence.
This case involves a claim for
damages arising from the death of
a motorcycle rider in a nighttime
accident due to the supposed
negligence
of
a
construction
company then undertaking reblocking work on a national
highway. The plaintiffs insisted that
the accident happened because the
construction company did not
provide adequate lighting on the
site, but the latter countered that
the fatal accident was caused by
the negligence of the motorcycle
rider himself. The trial court
decided in favor of the construction
company, but the Court of Appeals
(CA) reversed the decision and
ruled for the plaintiffs.
Upon a review of the records, the Court
affirms the findings of the RTC, and rules
that the Lanuzo heirs, the parties carrying
the burden of proof, did not establish by
preponderance of evidence that the
negligence on the part of the company
was the proximate cause of the fatal
accident of Balbino.
the doctrine of res ipsa loquitur had no
application here.
For the doctrine to apply, the following
requirements must be shown to exist,
namely: (a) the accident is of a kind that

16

ordinarily does not occur in the absence of
someones negligence; (b) it is caused by
an instrumentality within the exclusive
control of the defendant or defendants;
and (c) the possibility of contributing
conduct that would make the plaintiff
responsible is eliminated.
Based on the evidence adduced by the
Lanuzo heirs, negligence cannot be fairly
ascribed to the company considering that
it has shown its installation of the
necessary warning signs and lights in the
project site. In that context, the fatal
accident was not caused by any
instrumentality
within
the
exclusive
control of the company. In contrast,
Balbino had the exclusive control of how
he operated and managed his motorcycle.
The records disclose that he himself did
not take the necessary precautions. As
Zamora
declared,
Balbino
overtook
another motorcycle rider at a fast speed,
and in the process could not avoid hitting
a barricade at the site, causing him to be
thrown off his motorcycle onto the newly
cemented
road.
SPO1
Corporals
investigation
report
corroborated
Zamoras declaration. This causation of
the fatal injury went uncontroverted by
the Lanuzo heirs.
Moreover, by the time of the accident, the
project,
which
had
commenced
in
September 1997, had been going on for
more than a month and was already in the
completion stage. Balbino, who had
passed there on a daily basis in going to
and from his residence and the school
where he then worked as the principal,
was thus very familiar with the risks at the
project site. Nor could the Lanuzo heirs
justly posit that the illumination was not
adequate, for it cannot be denied that
Balbinos motorcycle was equipped with
headlights that would have enabled him at
dusk or night time to see the condition of
the road ahead. That the accident still
occurred surely indicated that he himself
did not exercise the degree of care
expected of him as a prudent motorist.
According to Dr. Abilay, the cause of

death of Balbino was the fatal depressed
fracture at the back of his head, an injury
that Dr. Abilay opined to be attributable to
his head landing on the cemented road
after being thrown off his motorcycle.
Considering that it was shown that Balbino
was not wearing any protective head gear
or helmet at the time of the accident, he
was guilty of negligence in that respect.
Had he worn the protective head gear or
helmet, his untimely death would not have
occurred.
The RTC was correct on its conclusions
and findings that the company was not
negligent in ensuring safety at the project
site. All the established circumstances
showed that the proximate and immediate
cause of the death of Balbino was his own
negligence. Hence, the Lanuzo heirs could
not recover damages.
G.R. No. 160689. March 26, 2014Raul H.
Sesbreo Vs. Court of Appeals, et al.
This case conc~ms the claim for
damages of petitioner Raul H.
Sesbrefio founded on abuse of
rights. Sesbrefio accused
the
violation
of
contract
(VOC)
inspection team dispatched by the
Visayan Electric Company (VECO)
to check his electric meter with
conducting an unreasonable search
in his residential premises.
Sesbrenos insistence has no legal and
factual basis.
The
constitutional
guaranty
against
unlawful searches and seizures is intended
as a restraint against the Government and
its agents tasked with law enforcement. It
is to be invoked only to ensure freedom
from arbitrary and unreasonable exercise
of State power.
It is worth noting that the VOC inspectors
decided to enter the main premises only
after finding the meter of Sesbreno turned
upside down, hanging and its disc not
rotating. Their doing so would enable
them to determine the unbilled electricity

17

consumed
by
his
household.
The
circumstances justified their decision, and
their inspection of the main premises was
a continuation of the authorized entry.
There was no question then that their
ability to determine the unbilled electricity
called for them to see for themselves the
usage of electricity inside. Not being
agents of the State, they did not have to
first obtain a search warrant to do so.
Clearly, Sesbreno did not establish his

claim for damages if the respondents were
not guilty of abuse of rights. To stress, the
concept of abuse of rights prescribes that
a person should not use his right unjustly
or in bad faith; otherwise, he may be
liable to another who suffers injury. The
rationale for the concept is to present
some basic principles to be followed for
the rightful relationship between human
beings and the stability of social order.
G.R.
No.
195031.
March
26,
2014International Container Terminal
Services, Inc. Vs. Celeste M. Chua
ISSUE: LIABILITY FOR DAMAGES DUE TO
LOSS AS A RESULT OF FIRE
This Court will no longer delve on the

issue of whether or not the fire which
caused the loss of and/or damage to
respondents
personal
effects
is
a
fortuitous event since both the trial court
and the Court of Appeals correctly ruled
that the fire which occurred in this case
cannot be considered an act of God since
the same was not caused by lightning or a
natural disaster or other calamity not
attributable to human agency.
With respect to the issue of negligence,
there is no doubt that, under the
circumstances of this case, petitioner is
liable to respondent for damages on
account of the loss of the contents of her
container van. Petitioner itself admitted
during the pre-trial of this case that
respondents container van caught fire
while stored within its premises. Absent
any justifiable explanation on the part of
petitioner on the cause of the fire as
would absolve it from liability, the

presumption that there was negligence on
its part comes into play. The situation in
this case, therefore, calls for the
application of the doctrine of res ipsa
loquitur.
The doctrine of res ipsa loquitur is based
on the theory that the defendant either
knows the cause of the accident or has
the best opportunity of ascertaining it and
the plaintiff, having no knowledge thereof,
is compelled to allege negligence in
general terms. In such instance, the
plaintiff relies on proof of the happening of
the
accident
alone
to
establish
negligence.
Here, there was no evidence as to how or
why the fire in the container yard of
petitioner started; hence, it was up to
petitioner to satisfactorily prove that it
exercised the diligence required to prevent
the fire from happening. This it failed to
do. Thus, the trial court and the Court of
Appeals acted appropriately in applying
the principle of res ipsa loquitur to the
case at bar.
G.R. No. 189420. March 26, 2014Raul V.
Arambulo and Teresita Dela Cruz Vs.
Genaro Nolasco and Jeremy Spencer
Nolasco
As intimated above, the erroneous
application of Article 491 is, in this case,
an innate infirmity. The very initiatory
pleading below was captioned Petition For
Relief Under Article 491 of the New Civil
Code. Petitioners, likewise petitioners
before the RTC, filed the case on the
submission that Article 491 covers the
petition and grants the relief prayed for,
which is to compel the respondent coowners to agree to the sale of the coowned property.
That a sale constitutes an alteration as
mentioned in Article 491 is an established
jurisprudence. It is settled that alterations
include any act of strict dominion or
ownership and any encumbrance or
disposition has been held implicitly to be
an act of alteration. Alienation of the thing

18

by sale of the property is an act of strict
dominion. However, the ruling that
alienation is alteration does not mean that
a sale of commonly owned real property is
covered by the second paragraph of
Article 491, such that if a co- owner
withholds consent to the sale, the courts,
upon a showing of a clear prejudice to the
common interest, may, as adequate relief,
order the grant of the withheld consent.
Ruling that the trial court erred in its
conclusion, the Court of Appeals correctly
relied on Article 493 in support of the
finding that respondents cannot be
compelled to agree with the sale. We
affirm the reversal by the Court of Appeals
of the judgment of the trial court.
1. There is co-ownership whenever, as in
this case, the ownership of an undivided
thing, belongs to different persons. Article
493 of the Code defines the ownership of
the co-owner, clearly establishing that
each co- owner shall have full ownership
of his part and of its fruits and benefits.
Pertinent to this case, Article 493 dictates
that each one of the parties herein as coowners with full ownership of their parts
can sell their fully owned part. The sale by
the petitioners of their parts shall not
affect
the
full
ownership
by
the
respondents of the part that belongs to
them. Their part which petitioners will sell
shall be that which may be apportioned to
them in the division upon the termination
of the co-ownership. With the full
ownership of the respondents remaining
unaffected by petitioners sale of their
parts, the nature of the property, as coowned, likewise stays. In lieu of the
petitioners, their vendees shall be coowners with the respondents. The text of
Article 493 says so.
2. Our reading of Article 493 as applied to
the facts of this case is a reiteration of
what was pronounced in Bailon-Casilao v.
Court of Appeals. The rights of a co-owner
of a certain property are clearly specified
in Article 493 of the Civil Code. Thus:

12 13 14 15 16
Art. 493. Each co-owner shall have the full
ownership of his part and of the fruits and
benefits pertaining thereto, and he may
therefore alienate, assign or mortgage
it[,] and even substitute another person in
its enjoyment, except when personal
rights are involved. But the effect of the
alienation or [the] mortgage, with respect
to the co-owners, shall be limited to the
portion which may be allotted to him in
the division upon the termination of the
co-ownership.
The ultimate authorities in civil law,
recognized as such by the Court, agree
that co-owners such as respondents have
over their part, the right of full and
absolute ownership. Such right is the
same as that of individual owners which is
not diminished by the fact that the entire
property is co- owned with others. That
part which ideally belongs to them, or
their mental portion, may be disposed of
as they please, independent of the
decision of their co-owners. So we rule in
this case. The respondents cannot be
ordered to sell their portion of the coowned properties.
3. Indeed, the respected commentaries
suggest the conclusion that, insofar as the
sale of co-owned properties is concerned,
there is no common interest that may be
prejudiced should one or more of the coowners refuse to sell the co-owned
property, which is exactly the factual
situation in this case. When respondents
disagreed to the sale, they merely
asserted their individual ownership rights.
Without unanimity, there is no common
interest.
Petitioners who project themselves as
prejudiced co-owners may bring a suit for
partition, which is one of the modes of
extinguishing co- ownership. Article 494 of
the Civil Code provides that no co-owner
shall be obliged to remain in the co-

19

ownership, and that each co-owner may

demand at any time partition of the thing
owned in common insofar as his share is
concerned. Corollary to this rule, Article
498 of the Civil Code states that whenever
the thing is essentially indivisible and the
co-owners cannot agree that it be allotted
to one of them who shall indemnify the
others, it shall be sold and its proceeds
accordingly distributed. This is resorted to
(a) when the right to partition the
property is invoked by any of the coowners but because of the nature of the
property, it cannot be subdivided or its
subdivision would prejudice the interests
of the co-owners, and (b) the co- owners
are not in agreement as to who among
them shall be allotted or assigned the
entire
property
upon
proper
reimbursement of the co-owners. This is
the result obviously aimed at by
petitioners at the outset. As already
shown, this cannot be done while the coownership exists.
of the Philippines represented by Aklan
National Colleges of Fisheries (ANCF) and
Dr. Elenita R. Adrade, in her capacity as
ANCF Superintendent Vs. Heirs of Maxima
Lachica Sin, namely: Salvacion L. Sin,
Rosario S. Enriquez, Francisco L. Sin,
Maria S. Yuchintat, Manuel L. Sin, Jaime
Cardinal Sin, Ramon L. Sin, and Ceferina
S. Vita
ISSUE: segregating from the Aklan
National College of Fisheries (ANCF)
reservation the portion of land being
claimed by respondents.
In the case at bar, it is therefore the
respondents which have the burden to
identify
a
positive
act
of
the
government,
such
as
an
official
proclamation, declassifying inalienable
public land into disposable land for
agricultural or other purposes. Since
respondents failed to do so, the alleged
possession by them and by their
predecessors-in-interest is inconsequential
and could never ripen into ownership.
Accordingly,
respondents
cannot
be
considered to have private rights within
the purview of Proclamation No. 2074 as
to prevent the application of said

proclamation to the subject property.
A.M. No. P-09-2648/A.M. No. P-13-3174.
March 26, 2014Office of the Court
Administrator Vs. Atty. Leah Espera
Miranda, Clerk of Court and Ms. Jocelyn H.
Divinagracia, Clerk III both of the
Regional Trial Court, Br. 38, Iloilo
City/Atty. Rex G. Rico Vs. Clerk fo Court V
Leah Espera Miranda and Clerk III Jocelyn
H. Divinagracia
We find no merit in Miranda
and Divinagracias explanation.
Their involvement was not confined
to
the
routinary
process
of
receiving the Notice of Appeal and
checking if it complied with the
requirements. They knowingly
allowed the tampering of the
Notice of Appeal to make it
appear that it complied with
Section 11, Rule 13 of the 1997
Rules of Civil Procedure.
The Code of Conduct for Court Personnel
reminds court personnel, in performing
their duties and responsibilities, to serve
as sentinels of justice. Any act of
impropriety they commit immeasurably
affects the honor and dignity of the
Judiciary and the peoples confidence in
the Judiciary.
Miranda and Divinagracias act of allowing
the tampering of the records of Special
Civil Action No. 02-27326 to make it
appear that the Notice of Appeal filed by
private respondents complied with the
requirements
constitutes
grave
misconduct.
The Attorneys Oath mandates a lawyer,
among other duties: (a) to do no
falsehood; (b) nor consent to the doing of
the same in court; and (c) to conduct
himself as a lawyer to the best of his
knowledge and discretion with all good
fidelity to the court. Having this in mind,
Atty. Castillon and Atty. Lodero 's
involvement in the tampering o f the
records, and in the filing o f a falsified
document, should be fully investigated to

20

determine
if
their
disciplinary action.
A.M.
actions
merit
No.
P-12-3093.
March
26,
2014Anonymous
Complaint
Against
Otelia Lyn G. Maceda, Court Interpreter,
Municipal Trial Court, Palapag, Northern
Samar
ISSUE: Complaint against a COURT
INTERPRETER alleging falsification of the
her attendance in court so she could
attend her law classes at UEP in
Catarman, Norther Samar.
We see no reason to disturb the finding of
the OCA that Maceda did indeed falsify her
DTRs and is, therefore, guilty of
dishonesty.
Judge Falcotelo stated in his Report that
for Maceda to make it on time to her law
classes at UEP, she would have to leave
the MTC at 4:00 p.m. or even earlier.
Macedas Summary of Scholastic Records,
submitted by UEP College Secretary
Alfredo D. Tico, showed that Maceda had
law school subjects for the school years
2009-2010 and 2010-2011 which started
at 5:30 p.m. Hence, it was impossible for
Maceda to have left the MTC only at 5:00
p.m. as she had consistently logged in her
DTRs during the months she was also
attending her classes.
Macedas repeated assertion that she
continued her law school classes for selfimprovement and with the permission of
the MTC Presiding Judge does little to
exculpate her of administrative liability.
These are not acceptable excuses for not
properly declaring the time she logged-off
from work in her DTRs. Time and again,
the OCA and this Court have underscored
the importance of court employees
truthfully and accurately recording in their
DTRs the time of their arrival in and
departure from office.
Macedas falsification of her DTRs is
dishonesty. Dishonesty is defined as the
(d)isposition to lie, cheat, deceive, or
defraud;
untrustworthiness;
lack
of
integrity; lack of honesty, probity or

integrity in principle; lack of fairness and
straightforwardness;
disposition
to
defraud, deceive or betray.
G.R. No. 179155. April 2, 2014Nicomedes
J. Lozada Vs. Eulalia Bracewell, et al.
The core issue raised for the
Courts resolution is whether or not
the Las Pinas City-RTC has
jurisdiction over the petition for
review of Decree No. N-217036,
which was issued as a result of the
judgment rendered by the RTC of
Makati City, Branch 134.
Under Act No. 496 (Act 496), or the Land
Registration Act, as amended, which
was the law in force at the time of the
commencement by both parties of their
respective registration proceedings
jurisdiction over all applications for
registration of title was conferred upon the
Courts of First Instance (CFIs, now RTCs)
of the respective provinces in which the
land sought to be registered is
situated.
The land registration laws were updated
and codified under PD 1529, which took
effect on January 23, 1979, and under
Section 17 thereof, jurisdiction over an
application for land registration is still
vested on the CFI (now, RTC) of the
province or city where the land is
situated.
It should be pointed out, however,
that with the passage of PD 1529, the
distinction
between
the
general
jurisdiction vested in the RTC and the
limited jurisdiction conferred upon it
as a cadastral court was eliminated.
RTCs now have the power to hear and
determine all questions, even contentious
and substantial ones, arising from
applications for original registration of
titles to lands and petitions filed after such
registration.
Since the LRAs issuance of a decree of
registration only proceeds from the land
registration courts directive, a petition

21

taken under Section 32 of PD 1529 is
effectively
a
review
of
the
land
registration courts ruling. As
such, case law instructs that for as long
as a final decree has not been
entered by the [LRA] and the period of
one (1) year has not elapsed from the
date of entry of such decree, the title is
not finally adjudicated and the decision in
the registration proceeding continues to
be under the control and sound discretion
of the court rendering it.
While it is indeed undisputed that it was

the RTC of Makati City, Branch 134 which
rendered the decision directing the LRA to
issue Decree No. N-217036, and should,
applying the general rule as above-stated,
be the same court before which a petition
for the review of Decree No. N-217036 is
filed, the Court must consider the
circumstantial milieu in this case that, in
the interest of orderly procedure, warrants
the filing of the said petition before the
Las Pinas City-RTC.
Particularly, the Court refers to the fact
that
the
application
for
original
registration in this case was only filed
before the RTC of Makati City, Branch 134
because, during that time, i.e., December
1976, Las Pinas City had no RTC. Barring
this situation, the aforesaid application
should not have been filed before the RTC
of Makati City, Branch 134 pursuant to the
rules on venue prevailing at that time.
Under Section 2, Rule 4 of the 1964
Revised Rules of Court, which took effect
on January 1, 1964, the proper venue for
real actions, such as an application for
original registration, lies with the CFI of
the province where the property is
situated,
As the land subject of this case is
undeniably situated in Las Pinas City, the
application for its original registration
should have been filed before the Las
Pinas City-RTC were it not for the fact that

the said court had yet to be created at the
time the application was filed. Be that as it
may, and considering further that the
complication at hand is actually one of
venue and not of jurisdiction (given
that RTCs do retain jurisdiction over
review of registration decree cases
pursuant to Section 32 of PD 1529), the
Court, cognizant of the peculiarity of the
situation, holds that the Las Pinas CityRTC has the authority over the
petition for the review of Decree No.
N- 217036 filed in this case. Indeed ,
the filing of the petition for review before
the Las Pinas City-RTC was only but a
rectificatory implementation of the rules of
procedure
then-existing,
which
was
temporarily set back only because of past
exigencies. In light of the circumstances
now prevailing, the Court perceives no
compelling reason to deviate from
applying the rightful procedure. After all,
venue is only a matter of procedure and,
hence, should succumb to the greater
interests of the orderly administration of
justice.
G.R. No. 175540. April 7, 2014Dr. Filoteo
A. Alano Vs. Zenaida Magud-Logmao
Concurring OpinionJ. Leonen
ISSUE: LIABILITY FOR DAMAGES [issue of
notice of death to next of kin prior to
harvesting of internal organs]
A careful reading of the above shows that

petitioner instructed his subordinates to
make certain that all reasonable
efforts are exerted to locate the patient's
next of kin, even enumerating ways in
which to ensure that notices of the death
of the patient would reach said relatives.
It also clearly stated that permission or
authorization to retrieve and remove the
internal organs of the deceased was being
given ONLY IF the provisions of the
applicable law had been complied with.
Such instructions reveal that petitioner
acted
prudently
by
directing
his
subordinates to exhaust all reasonable
means of locating the relatives of the

22

deceased. He could not have made his
directives any clearer. He even specifically
mentioned that permission is only
being granted IF the Department of
Surgery has complied with all the
requirements of the law. Verily, petitioner
could not have been faulted for having full
confidence in the ability of the doctors in
the Department of Surgery to comprehend
the instructions, obeying all his directives,
and acting only in accordance with the
requirements of the law.
Furthermore, as found by the lower courts
from the records of the case, the doctors
and personnel of NKI disseminated notices
of the death of respondent's son to the
media and sought the assistance of the
appropriate police authorities as early as
March 2, 1988, even before petitioner
issued
the
Memorandum.
Prior
to
performing the procedure for retrieval of
the deceased's internal organs, the
doctors concerned also the sought the
opinion and approval of the Medico-Legal
Officer of the NBI.
Thus, there can be no cavil that petitioner
employed
reasonable
means
to
disseminate notifications intended to
reach the relatives of the deceased. The
only question that remains pertains to the
sufficiency of time allowed for notices to
reach the relatives of the deceased.
If respondent failed to immediately
receive notice of her son's death because
the notices did not properly state the
name or identity of the deceased, fault
cannot be laid at petitioner's door. The
trial and appellate courts found that it was
the EAMC, who had the opportunity to
ascertain the name of the deceased, who
recorded the wrong information regarding
the deceased's identity to NKI. The NKI
could not have obtained the information
about his name from the patient, because
as found by the lower courts, the
deceased was already unconscious by the
time he was brought to the NKI.
Ultimately, it is respondent's failure to
adduce adequate evidence that doomed

this case. "[i]n civil cases, it is a basic rule
that the party making allegations has the
burden
of
proving
them
by
a
preponderance of evidence. The parties
must rely on the strength of their own
evidence and not upon the weakness of
the defense offered by their opponent."
Here, there is to proof that, indeed, the
period of around 24 hours from the time
notices were disseminated, cannot be
considered as reasonable under the
circumstances. They failed to present any
expert witness to prove that given the
medical technology and knowledge at that
time in the 1980's, the doctors could or
should
have
waited
longer
before
harvesting
the
internal
organs
for
transplantation.
Verily, the Court cannot, in conscience,
agree with the lower court. Finding
petitioner liable for damages is improper.
It should be emphasized that the internal
organs ofthe deceased were removed only
after he had been declared brain dead;
thus, the emotional pain suffered by
respondent due to the death of her son
cannot in any way be attributed to
petitioner. Neither can the Court find
evidence on record to show that
respondent's emotional suffering at the
sight of the pitiful state in which she found
her son's lifeless body be categorically
attributed to petitioner's conduct.
G.R. No. 189563. April 7, 2014Gilat
Satellite Networks Ltd., Vs. United
Coconut Planters Bank General Insurance
Co., Inc.
The existence of a suretyship
agreement does not give the
surety the right to intervene in
the principal contract, nor can
an arbitration clause between
the buyer and the seller be
invoked by a non-party such as
the surety.
Petitioner alleges that arbitration laws
mandate that no court can compel
arbitration, unless a party entitled to it
applies for this relief. This referral,

23

however, can only be demanded by one
who is a party to the arbitration
agreement. Considering that neither
petitioner nor One Virtual has asked for a
referral, there is no basis for the CAs
order to arbitrate.
Moreover, Articles 1216 and 2047 of the
Civil Code clearly provide that the creditor
may proceed against the surety without
having first sued the principal debtor. ven
the Surety Agreement itself states that
respondent becomes liable upon mere
failure of the Principal to make such
prompt payment. Thus, petitioner should
not be ordered to make a separate claim
against One Virtual (via arbitration) before
proceeding against respondent.
In suretyship, the oft-repeated rule is that
a suretys liability is joint and solidary with
that of the principal debtor. This
undertaking makes a surety agreement an
ancillary contract, as it presupposes the
existence
of
a
principal
contract.
Nevertheless, although the contract of a
surety is in essence secondary only to a
valid principal obligation, its liability to the
creditor or promise of the principal is
said to be direct, primary and absolute; in
other words, a surety is directly and
equally bound with the principal. He
becomes liable for the debt and duty of
the principal obligor, even without
possessing a direct or personal interest in
the obligations constituted by the latter.
Thus, a surety is not entitled to a separate
notice of default or to the benefit of
excussion. It may in fact be sued
separately or together with the principal
debtor.
After a thorough examination of the pieces
of evidence presented by both parties, the
RTC found that petitioner had delivered all
the goods to One Virtual and installed
them. Despite these compliances, One
Virtual still failed to pay its obligation,
triggering
respondents
liability
to
petitioner as the formers surety. In other
words, the failure of One Virtual, as the
principal debtor, to fulfill its monetary
obligation to petitioner gave the latter an

immediate right to pursue respondent as
the surety.
Consequently,
we
cannot
sustain
respondents claim that the Purchase
Agreement, being the principal contract to
which the Suretyship Agreement is
accessory, must take precedence over
arbitration as the preferred mode of
settling disputes.
First, we have held in Stronghold
Insurance Co. Inc. v. Tokyu Construction
Co. Ltd., that [the] acceptance [of a
surety agreement], however, does not
change in any material way the creditors
relationship with the principal debtor nor
does it make the surety an active party to
the principal creditor-debtor relationship.
In other words, the acceptance does
not give the surety the right to
intervene in the principal contract.
The suretys role arises only upon the
debtors default, at which time, it can be
directly held liable by the creditor for
payment as a solidary obligor. Hence, the
surety remains a stranger to the Purchase
Agreement. We agree with petitioner that
respondent cannot invoke in its favor the
arbitration
clause
in
the
Purchase
Agreement, because it is not a party to
that contract. An arbitration agreement
being contractual in nature, it is binding
only on the parties thereto, as well as
their assigns and heirs.
Second, Section 24 of Republic Act No.
9285 is clear in stating that a referral to
arbitration may only take place if at least
one party so requests not later than the
pre-trial conference, or upon the request
of both parties thereafter. Respondent
has not presented even an iota of
evidence to show that either petitioner or
One Virtual submitted its contesting claim
for arbitration.
Third, sureties do not insure the solvency
of the debtor, but rather the debt itself.
They are contracted precisely to mitigate
risks of non- performance on the part of

24

the
obligor.
This
responsibility
necessarily places a surety on the
same level as that of the principal
debtor. The effect is that the creditor is
given the right to directly proceed against
either principal debtor or surety. This is
the reason why excussion cannot be
invoked. To require the creditor to
proceed to arbitration would render the
very essence of suretyship nugatory and
diminish its value in commerce.
operation.
Notwithstanding
these
compliances, respondent still failed to pay.
G.R. No. 193787. April 7, 2014Spouses
Jose C. Roque and Beatriz Dela Cruz
Roque, et al. Vs. Ma. Pamela P. Aguado,
et al.
The central issue in this case is
whether or not the CA erred in not
ordering the reconveyance of the
subject portion in Sps. Roques
favor.
Interest, as a form of indemnity, may

be awarded to a creditor for the delay
incurred by a debtor in the payment
of the latters obligation, provided
that the delay is inexcusable.
The essence of an action for reconveyance

is to seek the transfer of the property
which was wrongfully or erroneously
registered in another persons name to its
rightful owner or to one with a better
right. Thus, it is incumbent upon the
aggrieved party to show that he has a
legal claim on the property superior
to that of the registered owner and
that the property has not yet passed
to the hands of an innocent purchaser
for value.
Having held that a surety upon demand

fails to pay, it can be held liable for
interest, even if in thus paying, its liability
becomes
more
than
the
principal
obligation. The increased liability is not
because of the contract, but because of
the default and the necessity of judicial
collection.
However, for delay to merit interest, it
must be inexcusable in nature. We agree
with petitioner that records are bereft of
proof to show that respondents delay was
indeed justified by the circumstances
that is, One Virtuals advice regarding
petitioners alleged breach of obligations.
The lower courts Decision itself belied this
contention when it said that plaintiff is
not disputing that it did not complete
commissioning work on one of the two
systems because One Virtual at that time
is already in default and has not paid
GILAT. Assuming arguendo that the
commissioning work was not completed,
respondent has no one to blame but its
principal, One Virtual; if only it had paid
its obligation on time, petitioner would not
have been forced to stop operations.
Moreover, the deposition of Mr. Erez
Antebi, vice president of Gilat, repeatedly
stated that petitioner had delivered all
equipment,
including
the
licensed
software; and that the equipment had
been installed and in fact, gone into
Examining its provisions, the Court finds

that the stipulation above- highlighted
shows that the 1977 Deed of Conditional
Sale is actually in the nature of a contract
to sell and not one of sale contrary to Sps.
Roques belief. In this relation, it has been
consistently ruled that where the seller
promises to execute a deed of
absolute sale upon the completion by
the buyer of the payment of the
purchase price, the contract is only a
contract to sell even if their agreement is
denominated as a Deed of Conditional
Sale, as in this case. This treatment stems
from the legal characterization of a
contract to sell, that is, a bilateral contract
whereby the prospective seller, while
expressly reserving the ownership of
the subject property despite delivery
thereof to the prospective buyer, binds
himself to sell the subject property
exclusively to the prospective buyer
upon fulfillment of the condition
agreed upon, such as, the full
payment of the purchase price.
Elsewise stated, in a contract to sell,
ownership is retained by the vendor and is

25

not to pass to the vendee until full
payment of the purchase price.
On the matter of double sales, suffice it to
state that Sps. Roques reliance on Article
1544 of the Civil Code has been misplaced
since the contract they base their claim of
ownership on is, as earlier stated, a
contract to sell, and not one of sale. In
Cheng v. Genato, the Court stated the
circumstances which must concur in order
to determine the applicability of Article
1544, none of which are obtaining in this
case, viz.:
(a) The two (or more) sales transactions
in issue must pertain to exactly the same
subject matter, and must be valid sales
transactions;
(b) The two (or more) buyers at odds over
the rightful ownership of the subject
matter must each represent conflicting
interests; and
(c) The two (or more) buyers at odds over

the rightful ownership of the subject
matter must each have bought from the
same seller.
G.R. No. 192669. April 21, 2014Raul
Saberon, Joan F. Saberon and Jacqueline
Saberon Vs. Oscar Ventanilla, Jr., and
Carmen Gloria D. Ventanilla Separate
OpinionJ. Velasco, Jr.
Resolution of the Court
At first glance, it would seem that
the case involves convoluted issues
brought about by the number of
times the Ventanillas were impelled
by circumstances to seek judicial
action.
readily reveal that the essential
facts are not disputed: 1) that the
subject properties have indeed
been the objects of various
transfers effected by MRCI leading
to the current controversy between
the Saberons and the Ventanillas;
and 2) that prior to the sale to the
Saberons, a notice of levy as
Nonetheless,
the
antecedents
would
an encumbrance was already in

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

explain the purpose and effects of
registering both voluntary and involuntary
instruments,
These provisions encapsulate the rule that
documents, like the certificates of title do
not
effect
a
conveyance
of
or
encumbrances on a parcel of land.
Registration is the operative act that
conveys ownership or affects the land
insofar as third persons are concerned. By
virtue of registration, a constructive notice
to the whole world of such voluntary or
involuntary instrument or court writ or
processes, is thereby created.
The question of utmost relevance to this
case, then, is this:
not the registration of the notice of levy
had produced constructive notice that
would bind third persons despite the
failure of the ROD-QC to annotate
whether or
the same in the certificates of title?
In answering these questions, the Court is
beckoned to rule on two conflicting rights
over the subject properties: the right of
the Ventanillas to acquire the title to the
registered land from the moment of
inscription of the notice of levy on the day
book (or entry book), on one hand; and
the right of the Saberons to rely on what
appears on the certificate of title for
purposes of voluntary dealings with the
same parcel of land, on the other.
The Saberons could not be said to have
authored the entanglement they found
themselves in. No fault can be attributed
to them for relying on the face of the title
presented by Marquez. This is bolstered
by the fact that the RTC decision shows no
categorical finding that the Saberons
purchase of the lots from Marquez was

26

tainted with bad faith. That the Saberons
should have harbored doubts against
Marquez is too high a standard to impose
on a buyer of titled land. This is in
consonance to the rule that the one who
deals with property registered under the
Torrens system is charged with notice only
of such burdens and claims as are
annotated on the title. All persons dealing
with
property
covered
by
Torrens
certificate of title are not required to
explore further than what the Torrens title
upon its face indicates in quest for any
hidden defect or inchoate right that may
subsequently defeat his right thereto.
These rules remain as essential features
of the Torrens system. The present case
does not entail a modification or
overturning of these principles.
Be that as it may, no fault can likewise be
imputed to the Ventanillas.
In ultimately ruling for the Ventanillas, the
courts a quo focused on the superiority of
their notice of levy and the constructive
notice against the whole world which it
had produced and which effectively bound
third persons including the Saberons.
It has already been established in the two
previous cases decided by the Court that
the contracts to sell executed in favor of
the Ventanillas are valid and subsisting.
Clearly, it has been acknowledged, even
by MRCI, as can be seen in the latters
own choice to only question their solidary
liability in the 1990 case and its failure to
assign the same as an error in the 1994
case. In the same vein, the issue on
Marquezs title had already been passed
upon and settled in the 1994 case. That
he purchased the lots prior to the
In fact, the Court explicitly declared that
MRCIs transaction with Marquez cannot
prevail over the final and executory
judgment ordering MRCI to execute an
absolute deed of sale in favor of the
Ventanillas.
annotation of the notice of levy in MRCIs
title was of no moment.
These favorable findings prompted the
Ventanillas to register the notice of levy
on the properties. The records show that
on the strength of a final and executory
decision by the Court, they successfully
obtained a writ of execution from the RTC
and a notice of levy was then entered,
albeit on the primary entry book only. The
contract to sell to Marquez was registered
on May 21, 1991, while the notice of levy
was issued ten (10) days later, or on May
31, 1991. In February 1992, MRCI
executed the Deed of Sale with Marquez,
under whose name the clean titles, sans
the notice of levy, were issued. A year
later, or on March 11, 1992, MRCI
registered the deed of sale to Marquez
who later sold the same property to the
Saberons.
This complex situation could have been
avoided if it were not for the
failure of ROD Cleofe to carry over the
notice of levy to Marquezs title, serving as
a senior encumbrance that might have
dissuaded the Saberons
from purchasing the properties.
The Court agrees with the position of the
RTC in rejecting ROD
Cleofes theory.
Distinctions between a contract to sell and
a contract of sale are wellestablished in jurisprudence. In a contract
of sale, the title to the property passes to
the vendee upon the delivery of the thing
sold; in a contract to sell, ownership is, by
agreement, reserved in the vendor and is
not to pass to the vendee until full
payment of the purchase price. Otherwise
stated, in a contract of sale, the vendor
loses ownership over the property and

27

cannot recover it until and unless the
contract
is
resolved
or
rescinded;
whereas, in a contract to sell, title is
retained by the vendor until full payment
of the price. In the latter contract,
payment of the price is a positive
suspensive condition, failure of which is
not a breach but an event that prevents
the
obligation of the vendor to convey title
from becoming effective.
It is undeniable, therefore, that no title
was transferred to Marquez
upon the annotation of the contract to sell
on MRCIs title. As correctly found by the
trial court, the contract to sell cannot be
substituted by the Deed of Absolute Sale
as a mere conclusion of the previous
contract since the owners of the
properties under the two instruments are
different.
Considering that the deed of sale in favor
of Marquez was of later registration, the
notice of levy should have been carried
over to the title as a
senior encumbrance.
Corollary to this is the rule that a levy of a
judgment debtor creates a
lien, which nothing can subsequently
destroy except the very dissolution of the
attachment of the levy itself. Prior
registration of the lien creates a
preference, since the act of registration is
the operative act to convey and affect the
land. Jurisprudence dictates that the said
lien continues until the debt is paid, or the
sale is had under an execution issued on
the judgment or until the judgment is
satisfied, or the attachment is discharged
or vacated in
the same manner provided by law.
discharged upon sale of the property

other than under execution.
Additionally, Section 59 of P.D. No. 1529
provides that, [i]f, at the
time
of
the
transfer,
subsisting
encumbrances or annotations appear in
the registration book, they shall be carried
over and stated in the new certificate or
certificates, except so far as they may be
simultaneously released or discharged.
This provision undoubtedly speaks of the
ministerial duty on the part of the Register
of
Deeds
to
carry
over
existing
encumbrances to the
certificates of title.
From the foregoing, ROD Cleofes theory
that a deed of sale, as a
mere conclusion of a contract to sell, turns
into a senior encumbrance which may
surpass a notice of levy, has no leg to
stand on. It was, in fact, properly rejected
by the courts a quo. Verily, the
controversy at hand arose not from the
Ventanillas fault, but from ROD Cleofes
misplaced understanding of
his duty under the law.
Surely, the Ventanillas had every right to
presume that the Register of
Deeds would carry over the notice of levy
to subsequent titles covering the subject
properties. The notice was registered
precisely to bind the properties and to
serve as caution to third persons who
might potentially deal with the property
under the custody of the law.
While the Court is not unmindful that a
buyer is charged with notice only of such
burdens and claims as are annotated on
the title, the RTC and the CA are both
correct in applying the rule as to the
effects of involuntary registration. In
Under no law, not even P.D. No. 1529, is

it stated that an attachment shall be
28

cases
of
voluntary
registration
of
documents, an innocent purchaser for
value of registered land becomes the
registered owner, and, in contemplation of
law the holder of a certificate of title, the
moment he presents and files a duly
notarized and valid deed of sale and the
same is entered in the day book and at
the same time he surrenders or presents
the owner's duplicate certificate of title
covering the land sold and pays the
registration fees, because what remains to
be done lies not within his power to
perform. The Register of Deeds is duty
bound to perform it.
In cases of involuntary registration, an
entry thereof in the day book is a
sufficient notice to all persons even if the
owner's duplicate certificate of title is not
presented to the register of deeds.
Therefore, in the registration of an
attachment, levy upon execution, notice of
lis pendens, and the like, the
entry thereof in the day book is a
sufficient notice to all persons of such
adverse claim.
In the case at bench, the notice of levy
covering the subject property
was annotated in the entry book of the
ROD QC prior to the issuance of a TCT in
the name of the Saberons. Clearly, the
Ventanillas levy was placed on record
prior to the sale. This shows the
superiority and preference in rights of the
Ventanillas over the property as against
the Saberons.
The Court finds the Saberons to be
builders in good faith.
No less than the court a quo observed that
no actual evidence that the Saberons
connived with the MRCI and Marquez to
have the titles registered in their names to
the prejudice of the (Ventanillas) and
that what was obvious was that the
Saberons dealt with clean certificates of
titles. Also quite telling on this point is
the finding that MRCI, Krohn, Tabalingcos,
and Marquez are liable to the Saberons.

Consequently, Article 448 in relation to
Article 546 of the Civil Code will apply.
Thus, the two options available to the
Ventanillas: 1) they may exercise the right
to appropriate after payment of indemnity
representing
the
value
ofthe
improvements
introduced
and
the
necessary and useful expenses defrayed
on the subject lots; or 2) they may forego
payment of the said indemnity and
instead, oblige the Saberons to pay the
price ofthe land.
Should the Ventanillas elect to appropriate
the improvements, the trial court is
ordered to determine the value of the
improvements and the necessary and
useful expenses after hearing and
reception
of
evidence.
Should
the
Ventanillas, however, pursue the option to
oblige the Saberons to pay the "price of
the land," the trial court is ordered to
determine said price to be paid to the
Ventanillas.
G.R. No. 196023. April 21, 2014Jose Juan
Tong, et al. Vs. Go Tiat Kun, et al.
Briefly stated, the issues to be

resolved in this petition are: (1)
Was there an implied resulting
trust constituted over Lot 998
when Juan Tong purchased the
property and registered it in the
name of Luis, Sr.? (2) May parol
evidence be used as proof of the
establishment of the trust? (3)
Were the petitioners action barred
by prescription, estoppel and
laches?
A review of the records shows an intention

to create a trust between the parties.
Although Lot 998 was titled in the name of
Luis, Sr., the circumstances surrounding
the acquisition of the subject property
eloquently speak of the intent that the
equitable or beneficial ownership of the
property should belong to the Juan Tong

29

family.
receipts in the name of Luis Sr.
Second, the possession of Lot 998 had

always been with the petitioners. The
property was physically possessed by Juan
Tong and was used as stockyard for their
lumber business before it was acquired,
and even after it was acquired. In fact,
the lot remains to be the stockyard of the
family lumber business until this very day.
The appellate courts conclusion that an

express trust was created because there
was a direct and positive act by Juan Tong
to create a trust must inevitably yield to
the clear and positive evidence on record
which showed that what was truly created
was an implied resulting trust. As what
has been fully established, in view of the
mutual trust and confidence existing
between said parties who are family
members, the only reason why Lot 998
was registered in the name of Luis, Sr.
was to facilitate the purchase of the said
property to be used in the familys lumber
business since Luis, Sr. is the only Filipino
Citizen in the Juan Tong family at that
time. As the registered owner of Lot 998,
it is only natural that tax declarations and
the corresponding tax payment receipts
be in the name of Luis, Sr. so as to effect
payment thereof.
Third, from the time it was registered in

the name of Luis, Sr. in 1957, Lot 998
remained undivided and untouched by the
respondents. It was only after the death
of Luis, Sr. that the respondents claimed
ownership over Lot 998 and subdivided it
into two lots, Lot 998-A and Lot 998-B.
Fourth, respondent Leon admitted that up
to the time of his fathers death, (1) Lot
998 is in the possession of the petitioners,
(2) they resided in the tenement in the
front part of Juan Tongs compound, (3)
Luis Sr. never sent any letter or
communication to the petitioners claiming
ownership of Lot 998, and (4) he and his
mother have a residence at Ledesco
Village, La Paz, Iloilo City while his brother
and
sisters
also
have
their
own
residences.
Fifth, the real property taxes on Lot 998
were paid not by Luis Sr. but by his father
Juan Tong and the Juan Tong Lumber,
Inc., from 1966 up to early 2008 as
evidenced by the following: a) the letter of
assessment sent by the City Treasurer of
Iloilo, naming Juan Tong as the owner of
Lot 998; and b) the receipts of real
property taxes paid by Juan Tong Lumber,
and later by Juan Tong Lumber, Inc., from
1997 to 2008. While some of the tax
receipts were in the name of Luis Sr., the
fact that the petitioners were in
possession of the originals thereof
established that the petitioners, the Juan
Tong Lumber, Inc., or the late Juan Tong
paid for the taxes. The respondents did
not try to explain the petitioners
possession of the realty property tax
The principle of a resulting trust is based

on the equitable doctrine that valuable
consideration
and
not
legal
title
determines the equitable title or interest
and are presumed always to have been
contemplated by the parties. They arise
from the nature or circumstances of the
consideration involved in a transaction
whereby one person thereby becomes
invested with legal title but is obligated in
equity to hold his legal title for the benefit
of another. On the other hand, a
constructive trust, unlike an express trust,
does not emanate from, or generate a
fiduciary relation. Constructive trusts are
created by the construction of equity in
order to satisfy the demands of justice
and prevent unjust enrichment. They arise
contrary to intention against one who, by
fraud, duress or abuse of confidence,
obtains or holds the legal right to property
which he ought not, in equity and good
conscience, to hold.
Guided by the foregoing definitions, the
Court is in conformity with the finding of
the trial court that an implied resulting
trust was created as provided under the

30

first sentence of Article 1448 which is
sometimes referred to as a purchase
money resulting trust, the elements of
which are: (a) an actual payment of
money, property or services, or an
equivalent,
constituting
valuable
consideration; and (b) such consideration
must be furnished by the alleged
beneficiary of a resulting trust.
Here, the petitioners have shown that the
two elements are present in the instant
case. Luis, Sr. was merely a trustee of
Juan Tong and the petitioners in relation
to the subject property, and it was Juan
Tong who provided the money for the
purchase of Lot 998 but the corresponding
transfer certificate of title was placed in
the name of Luis, Sr.
The principle that a trustee who puts a
certificate of registration in his name
cannot repudiate the trust by relying on
the registration is one of the well-known
limitations upon a title. A trust, which
derives its strength from the confidence
one reposes on another especially
between families, does not lose that
character simply because of what appears
in a legal document.
Contrary to the claim of the respondents,
it is not error for the trial court to rely on
parol evidence, i.e., the oral testimonies
of witnesses Simeon Juan Tong and Jose
Juan Tong, to arrive at the conclusion that
an implied resulting trust exists. What is
crucial is the intention to create a trust.
Intentionalthough
only
presumed,
implied or supposed by law from the
nature of the transaction or from the facts
and circumstances accompanying the
transaction, particularly the source of the
considerationis always an element of a
resulting trust and may be inferred from
the acts or conduct of the parties rather
than from direct expression of conduct.
Certainly, intent as an indispensable
element is a matter that necessarily lies in
the evidence, that is, by evidence, even
circumstantial, of statements made by the
parties at or before the time title passes.
Because an implied trust is neither

dependent upon an express agreement
nor required to be evidenced by writing,
Article 1457 of our Civil Code authorizes
the admission of parol evidence to prove
their existence. Parol evidence that is
required to establish the existence of an
implied trust necessarily has to be
trustworthy and it cannot rest on loose,
equivocal or indefinite declarations.
Lastly, the respondents assertion that the
petitioners
action
is
barred
by
prescription, laches and estoppel is
erroneous.
As a rule, implied resulting trusts do not
prescribe except when the trustee
repudiates the trust. Further, the action to
reconvey does not prescribe so long as the
property stands in the name of the
trustee. To allow prescription would be
tantamount to allowing a trustee to
acquire title against his principal and true
owner. It should be noted that the title of
Lot 998 was still registered in the name of
Luis Sr. even when he predeceased Juan
Tong. Considering that the implied trust
has been repudiated through such death,
Lot 998 cannot be included in his estate
except only insofar as his undivided share
thereof is concerned. It is well-settled that
title to property does not vest ownership
but it is a mere proof that such property
has been registered. And, the fact that the
petitioners are in possession of all the tax
receipts and tax declarations of Lot 998 all
the more amplify their claim of ownership
over Lot 998-A. Although these tax
declarations or realty tax payments of
property are not conclusive evidence of
ownership, nevertheless, they are good
indicia of possession in the concept of
owner, for no one in his right mind would
be paying taxes for a property that is not
in his actual or at least constructive
possession. Such realty tax payments
constitute proof that the holder has a
claim of title over the property. Therefore,
the action for reconveyance of Lot 998-A,
which forms part of Lot 998, is
imprescriptible and the petitioners are not

31

estopped from claiming ownership thereof.
Moreso, when the petitioners received a

letter from VGCC, and discovered about
the
breach
ofthe
trust
agreement
committed by the heirs of Luis, Sr., they
immediately instituted an action to protect
their rights, as well as upon learning that
respondent Go Tiat Kun executed a Deed
of Sale of Undivided Interest over Lot 998A in favor of her children. Clearly, no
delay may be attributed to them. The
doctrine of laches is not strictly applied
between near relatives, and the fact that
the parties are connected by ties of blood
or marriage tends to excuse an otherwise
unreasonable delay.
G.R. No. 161380. April 21, 2014Aznar
Brothers Realty Company Vs. Spouses
Jose and Magdalena Ybaez
The ownership of a sizable parcel of land
is the subject of this dispute between the
buyer of its recognized owner and the
buyer of the successors-in-interest of the
recognized owner. The land has since
been registered under the Torrens system
in the name of the latter buyer who had
meanwhile obtained a free patent on the
premise that the land belonged to the
public domain.chanrobleslaw
We sustain the CAs conclusion that the
Spouses Ybaez were guilty of bad faith,
and that they acquired Lot No. 18563
from sellers who were not the owners.
Accordingly, we resolve the second error
raised herein in favor of Aznar Brothers.
The
records
and
evidence
fully
substantiated the CAs conclusion. The
Spouses Ybaez acquired Lot No. 18563
through the deed of sale executed on June
21, 1978 by Adriano in favor of Jose R.
Ybaez. Together with his siblings Fabian
Ybaez, Carmen Ybaez-Tagimacruz, Fe
Ybaez-Alison, and Dulcisima YbaezTagimacruz, Adriano had supposedly
inherited Lot No. 18563 from Casimiro,
their father, who had died intestate on
July 3, 1968. Holding themselves as the
heirs
and
successors-in-interest
of
Casimiro, they had then executed on
August
29,
1977
the
Extrajudicial
Declaration of Heirs with an Extrajudicial
Settlement of Estate of Deceased Person
and Deed of Absolute Sale, whereby they
divided and adjudicated Lot No. 18563
among themselves, and then sold the
entire lot to Adriano.
But, as the CA correctly found, the
Spouses Ybaez held no right to Lot No.
18563 because Adriano, their seller, and
his siblings were not the owners of Lot No.
18563. Indeed, Casimiro had absolutely
conveyed his interest in Lot No. 18563 to
Aznar Brothers under the Deed of
Absolute Sale of March 21, 1964 with the
marital
consent
of
Maria
Daclan,
Casimiros surviving spouse and the
mother of Adriano and his siblings.
Considering that such conveyance was
effective and binding on Adriano and his
siblings, there was no valid transmission
of Lot No. 18563 upon Casimiros death to
any of said heirs, and they could not
legally adjudicate Lot No. 18563 unto
themselves, and validly transfer it to
Adriano. The conveyance by Adriano to
Jose R. Ybaez on June 21, 1978 was
absolutely void and ineffectual.
There is also no question that the Spouses
Ybaez were aware of the conveyance of
Lot No. 18563 by Casimiro to Aznar
Brothers considering that the Deed of
Absolute Sale of March 21, 1964 between
Casimiro
and
Aznar
Brothers
was
registered in the book of registry of
unregistered land on the same day
pursuant to their agreement. Such
registration constituted a constructive
notice of the conveyance on the part of
the Spouses Ybaez pursuant to Section
194 of the Revised Administrative Code of
1917, as amended by Act No. 3344
Although a deed or instrument affecting
unregistered lands would be valid only
between the parties thereto, third parties
would also be affected by the registered
deed or instrument on the theory of
constructive notice once it was further
registered in accordance with Section 194,
i.e., the deed or instrument was written or
inscribed in the day book and the register
book for unregistered lands in the Office

32

of the Register of Deeds for the province
or city where the realty was located.
The effect on third parties of the
constructive notice by virtue of the
registration of the deed or instrument was
aptly illustrated in Bautista v. Fule,37
where the Court pronounced that the
subsequent buyer of unregistered land
sold at an execution sale, which the
purchaser at the public auction registered
under Act No. 3344 seven days after that
sale, was deemed to have constructive
notice of the sale, and, therefore, could
not be entitled to the rights of a
purchaser in good faith. The Court
emphasized that as to lands not registered
under either the Spanish Mortgage Law or
the Land Registration Act, the registration
under Act No. 3344 should produce its
effects against third persons if the law was
to have utility at all.38chanrobleslaw
It is worth mentioning that Act No. 3344
(approved on December 8, 1926) was the
governing law at the time of the execution
of the deed of absolute sale of March 21,
1964 between Casimiro and Aznar
Brothers, and the deed of absolute sale of
February 17, 1967 between Tanuco and
Aznar
Brothers.
Both
deeds
were
registered pursuant to Section 194; while,
on the other hand, the sale between
Adriano and Jose R. Ybaez on June 21,
1978 was covered by the P.D. No. 1529,
also known as the Property Registration
Decree (whose effectivity was upon its
approval
on
June
11,
1978).39chanrobleslaw
Section 3 of P.D. No. 1529, albeit
expressly discontinuing the system of
registration under the Spanish Mortgage
Law, has considered lands recorded under
that system as unregistered land that
could still be recorded under Section 113
of P.D. No. 1529 until the land shall have
been brought under the operation of the
Torrens system; and has provided that
[t]he
books
of
registration
for
unregistered lands provided under Section
194 of the Revised Administrative Code,
as amended by Act No. 3344, shall
continue to remain in force; provided, that
all instruments dealing with unregistered

lands shall henceforth be registered under
Section 113 of this Decree. It is clear,
therefore, that even with the effectivity of
P.D. No. 1529, all unregistered lands may
still be registered pursuant to Section 113
of P.D. No. 1529, which essentially
replicates Section 194, as amended by Act
No. 3344, to the effect that a deed or
instrument conveying real estate not
registered under the Torrens system40
should affect only the parties thereto
unless the deed or instrument was
registered in accordance with the same
section.41chanrobleslaw
The only exception to the rule on
constructive notice by registration of the
deed or instrument affecting unregistered
realty exists in favor of a third party with
a better right. This exception is provided
in Section 194, as amended by Act No.
3344, to the effect that the registration
shall be understood to be without
prejudice to a third party with a better
right; and in paragraph (b) of Section
113 of P.D. No. 1529, to the effect that
any recording made under this section
shall be without prejudice to a third party
with a better right. As to who is a third
party with better right under these
provisions is suitably explained in Hanopol
v. Pilapil,42 a case where the sale of
unregistered land was registered under
Act No. 3344 but the land was sold twice,
as follows:chanRoblesvirtualLawlibrary
It thus appears that the better right
referred to in Act No. 3344 is much more
than the mere prior deed of sale in favor
of the first vendee. In the Lichauco case
just mentioned, it was the prescriptive
right that had supervened. Or, as also
suggested in that case, other facts and
circumstances exist which, in addition
to his deed of sale, the first vendee
can be said to have better right than
the second purchaser.43 (Bold emphasis
supplied.)
The Court also observes in Sales v. Court
of Appeals,44 a case involving parties to a
deed of donation who had agreed to

33

register the instrument under Act No.

3344 but failed to do so, that the better
right of a third party relates to other
titles which a party might have acquired
independently of the unregistered deed
such as title by prescription.45 But the
exception does not obviously apply to the
Spouses Ybaez because they acquired
their right from Adriano who did not hold
any legal or equitable interest in Lot No.
18563 that he could validly transfer to the
Spouses Ybaez.chanrobleslaw
G.R. No. 182894. April 22, 2014Fe Floro
Valino Vs. Rosario D. Adriano, et al.
Dissenting OpinionJ. Leonen
The lone legal issue in this petition
is who between Rosario and Valino
is entitled to the remains of Atty.
Adriano.
The Courts Ruling
Article 305 of the Civil Code, in relation to
what is now Article 1996 of the Family
Code, specifies the persons who have the
right
and
duty
to
make
funeral
arrangements
for
the
deceased.
Thus:chanRoblesvirtualLawlibrary
Art. 305. The duty and the right to
make arrangements for the funeral of a
relative shall be in accordance with the
order established for support, under
Article 294. In case of descendants of the
same degree, or of brothers and sisters,
the oldest shall be preferred. In case of
ascendants, the paternal shall have a
better right. [Emphases supplied]
Art. 199. Whenever two or more persons
are obliged to give support, the liability
shall devolve upon the following persons
in the order herein provided:
(1) The spouse;
(2) The descendants in the nearest
degree;
(3) The ascendants in the nearest degree;
and
(4) The brothers and sisters. (294a)
[Emphasis supplied]
Further, Article 308 of the Civil Code
provides:chanRoblesvirtualLawlibrary
Art. 308. No human remains shall be

retained, interred, disposed of or
exhumed without the consent of the
persons mentioned in Articles 294 and
305. [Emphases supplied]
In this connection, Section 1103 of the
Revised
Administrative
Code
Section 1103. Persons charged with the
duty of burial. The immediate duty of
burying the body of a deceased person,
regardless of the ultimate liability for the
expense thereof, shall devolve upon the
persons herein below specified:
(a) If the deceased was a married
man or woman, the duty of the burial
shall devolve upon the surviving
spouse if he or she possesses
sufficient means to pay the necessary
expenses;
x x x x. [Emphases supplied]
From the aforecited provisions, it is
undeniable that the law simply confines
the right and duty to make funeral
arrangements to the members of the
family to the exclusion of ones common
law partner. In Tomas Eugenio, Sr. v.
Velez,7 a petition for habeas corpus was
filed by the brothers and sisters of the late
Vitaliana Vargas against her lover, Tomas
Eugenio, Sr., alleging that the latter
forcibly took her and confined her in his
residence. It appearing that she already
died of heart failure due to toxemia of
pregnancy, Tomas Eugenio, Sr. sought the
dismissal of the petition for lack of
jurisdiction and claimed the right to bury
the deceased, as the commonlaw
husband.
In its decision, the Court resolved that the
trial court continued to have jurisdiction
over the case notwithstanding the death
of Vitaliana Vargas. As to the claim of
Tomas Eugenio, Sr. that he should be
considered a spouse having the right
and duty to make funeral arrangements
for his commonlaw wife, the Court
ruled:chanRoblesvirtualLawlibrary

34

x x x Indeed, Philippine Law does not
recognize common law marriages. A
man and woman not legally married who
cohabit for many years as husband and
wife, who represent themselves to the
public as husband and wife, and who are
reputed to be husband and wife in the
community where they live may be
considered legally married in common law
jurisdictions but not in the Philippines.
While it is true that our laws do not just
brush
aside
the
fact
that
such
relationships are present in our society,
and that they produce a community of
properties and interests which is governed
by law, authority exists in case law to the
effect that such form of coownership
requires that the man and woman living
together must not in any way be
incapacitated to contract marriage. In any
case, herein petitioner has a subsisting
marriage with another woman, a legal
impediment which disqualified him from
even legally marrying Vitaliana. In
Santero vs. CFI of Cavite, the Court, thru
Mr. Justice Paras, interpreting Art. 188 of
the Civil Code (Support of Surviving
Spouse and Children During Liquidation of
Inventoried Property) stated: Be it noted,
however, that with respect to spouse,'
the same must be the legitimate
spouse' (not commonlaw spouses).
There is a view that under Article 332 of
the Revised Penal Code, the term
spouse embraces common law relation
for purposes of exemption from criminal
liability in cases of theft, swindling and
malicious mischief committed or caused
mutually by spouses. The Penal Code
article, it is said, makes no distinction
between a couple whose cohabitation is
sanctioned by a sacrament or legal tie and
another who are husband and wife de
facto. But this view cannot even apply to
the facts of the case at bar. We hold that
the provisions of the Civil Code, unless
expressly providing to the contrary as in
Article 144, when referring to a "spouse
contemplate
a
lawfully
wedded
spouse. Petitioner visavis Vitaliana was
not a lawfullywedded spouse to her; in
fact, he was not legally capacitated to

marry her in her lifetime.8 [Emphases
supplied]
As applied to this case, it is clear that the
law gives the right and duty to make
funeral arrangements to Rosario, she
being the surviving legal wife of Atty.
Adriano. The fact that she was living
separately from her husband and was in
the United States when he died has no
controlling significance. To say that
Rosario had, in effect, waived or
renounced, expressly or impliedly, her
right and duty to make arrangements for
the funeral of her deceased husband is
baseless. The right and duty to make
funeral arrangements, like any other right,
will not be considered as having been
waived or renounced, except upon
clear
and
satisfactory
proof
of
conduct indicative of a free and
voluntary intent to that end.9 While
there was disaffection between Atty.
Adriano and Rosario and their children
when he was still alive, the Court also
recognizes that human compassion, more
often than not, opens the door to mercy
and forgiveness once a family member
joins his Creator. Notably, it is an
undisputed fact that the respondents
wasted no time in making frantic pleas to
Valino for the delay of the interment for a
few days so they could attend the service
and view the remains of the deceased. As
soon as they came to know about Atty.
Adrianos death in the morning of
December 19, 1992 (December 20, 1992
in the Philippines), the respondents
immediately contacted Valino and the
Arlington Memorial Chapel to express their
request, but to no avail.
Valino insists that the expressed wishes of
the deceased should nevertheless prevail
pursuant to Article 307 of the Civil Code.
Valinos own testimony that it was Atty.
Adrianos wish to be buried in their family
plot is being relied upon heavily. It should
be noted, however, that other than
Valinos claim that Atty. Adriano wished to
be buried at the Manila Memorial Park, no
other
evidence
was
presented
to

35

corroborate such claim. Considering that
Rosario equally claims that Atty. Adriano
wished to be buried in the Adriano family
plot in Novaliches, it becomes apparent
that the supposed burial wish of Atty.
Adriano was unclear and undefinite.
Considering this ambiguity as to the true
wishes of the deceased, it is the law that
supplies the presumption as to his intent.
No presumption can be said to have been
created in Valinos favor, solely on account
of a longtime relationship with Atty.
Adriano.
Moreover, it cannot be surmised that just
because Rosario was unavailable to bury
her husband when she died, she had
already renounced her right to do so.
Verily, in the same vein that the right and
duty to make funeral arrangements will
not be considered as having been waived
or renounced, the right to deprive a
legitimate spouse of her legal right to bury
the remains of her deceased husband
should not be readily presumed to have
been exercised, except upon clear and
satisfactory proof of conduct indicative of
a free and voluntary intent of the
deceased to that end. Should there be
any doubt as to the true intent of the
deceased,
the
law
favors
the
legitimate
family.
Here,
Rosarios
keenness to exercise the rights and
obligations accorded to the legal wife was
even bolstered by the fact that she was
joined by the children in this case.
Even assuming, ex gratia argumenti, that
Atty. Adriano truly wished to be buried in
the Valino family plot at the Manila
Memorial Park, the result remains the
same. Article 307 of the Civil Code
Art. 307. The funeral shall be in
accordance with the expressed wishes
of the deceased. In the absence of such
expression, his religious beliefs or
affiliation shall determine the funeral
rites. In case of doubt, the form of the
funeral shall be decided upon by the
person obliged to make arrangements for
the same, after consulting the other
members of the family.

From its terms, it is apparent that Article
307 simply seeks to prescribe the form of
the funeral rites that should govern in the
burial of the deceased. As thoroughly
explained earlier, the right and duty to
make funeral arrangements reside in the
persons specified in Article 305 in relation
to Article 199 of the Family Code. Even if
Article 307 were to be interpreted to
include the place of burial among those on
which the wishes of the deceased shall be
followed, Dr. Arturo M. Tolentino (Dr.
Tolentino), an eminent authority on civil
law, commented that it is generally
recognized that any inferences as to
the wishes of the deceased should be
established
by
some
form
of
testamentary disposition.10 As Article
307 itself provides, the wishes of the
deceased must be expressly provided. It
cannot be inferred lightly, such as from
the circumstance that Atty. Adriano spent
his last remaining days with Valino. It
bears stressing once more that other than
Valinos claim that Atty. Adriano wished to
be buried at the Valino family plot, no
other
evidence
was
presented
to
corroborate it.
At any rate, it should be remembered that
the wishes of the decedent with respect
to his funeral are not absolute. As Dr.
Tolentino
further
wrote:chanRoblesvirtualLawlibrary
The dispositions or wishes of the deceased
in relation to his funeral, must not be
contrary to law. They must not violate
the legal and reglamentary provisions
concerning
funerals
and
the
disposition of the remains, whether as
regards the time and manner of
disposition, or the place of burial, or the
ceremony to be observed.11 [Emphases
supplied]
In this case, the wishes of the

deceased with respect to his
funeral are limited by Article 305
of the Civil Code in relation to
Article 199 of the Family Code,

36

and subject the same to those
charged with the right and duty to
make the proper arrangements to
bury the remains of their loved
one.
As for Valinos contention that there is no
point in exhuming and transferring the
remains of Atty. Adriano, it should be said
that the burial of his remains in a place
other than the Adriano family plot in
Novaliches runs counter to the wishes of
his family. It does not only violate their
right provided by law, but it also
disrespects the family because the
remains of the patriarch are buried in the
family plot of his livein partner.
It is generally recognized that the corpse
of an individual is outside the commerce
of man. However, the law recognizes that
a certain right of possession over the
corpse exists, for the purpose of a decent
burial, and for the exclusion of the
intrusion by third persons who have no
legitimate interest in it. This quasi
property right, arising out of the duty of
those obligated by law to bury their dead,
also authorizes them to take possession of
the dead body for purposes of burial to
have it remain in its final resting place, or
to even transfer it to a proper place where
the memory of the dead may receive the
respect of the living. This is a family
right. There can be no doubt that persons
having this right may recover the corpse
from third persons.13
All this notwithstanding, the Court

finds laudable the acts of Valino in
taking care of Atty. Adriano during
his final moments and giving him a
proper burial. For her sacrifices, it
would indeed be unkind to assess
actual or moral damages against
her.
Finally, it should be said that
controversies as to who should
make arrangements for the funeral
of
a
deceased
have
often
aggravated the bereavement of the
family and disturbed the proper
solemnity which should prevail at
every funeral. It is for the purpose
of preventing such controversies

that the Code Commission saw it
best to include the provisions on
Funerals.15
G.R. No. 180105. April 23, 2014Sps. David
Eserjose and Zenaida Eserjose Vs. Allied
Banking Corporation and Pacita Uy
This case is about the effect of a reduction
in the course of appeal of the judgment
amount after the execution sale of the
defendants properties to satisfy the trial
courts judgment had already taken place.
Issue Presented
The only issue to be resolved in this case
is whether or not the CA erred in
reversing the RTC ruling that allowed the
consolidation of ownership in and turnover
of possession of the two lots covered by
TCTs N241231 and N242930 to the
Eserjoses, in effect allowing ABC and Uy
to just pay them the amounts of the
awards in cash.
The Courts Ruling
When this Court substantially reduced the
amounts of damages that the RTC
awarded the Eserjoses, it in effect partially
reversed the executed judgment issued in
the case. Section 5, Rule 39 of the 1997
Rules of Civil Procedure applies to such a
situation.
It
SEC. 5. Effect of reversal of executed
judgment.
Where
the
executed
judgment is reversed totally or partially,
or annulled, on appeal or otherwise, the
trial court may, on motion, issue such
orders of restitution or reparation of
damages as equity and justice may
warrant under the circumstances.
Here, the RTC executed on a judgment
debt of P8,050,000 when what was later
determined
to
be
due
was
only
P4,050,000. Clearly, the trial court had
the discretion to order restitution and
reparation of damages. Its exercise of
that discretion must, however, be fair to
all the parties concerned.

37

The CA was right in holding that the RTC

committed grave abuse of discretion in
not allowing for the restitution of the
properties
improperly
auctioned
for
substantially wrong amounts considering
that the registration of titles in the names
of the Eserjoses and the turnover of
possession of such properties to them had
not yet taken place. There is no legal
impediment to ABC and Uy being allowed
to pay the judgment debt in cash, the
preferred mode of satisfaction of money
judgment.7
G.R. No. 205879. April 23, 2014Skunac
Corporation and Alfonso F. Enriquez Vs.
Roberto S. Sylianteng, et al.
Coming to the merits of the case,
the abovementioned assignment of
errors boils down to two basic
questions: (1) whether or not
respondents'
predecessorin
interest,
Emerenciana,
validly
acquired the subject lots from Luis,
and
(2)
whether
or
not
respondents,
in
turn,
validly
acquired the same lots from
Emerenciana.
The Court rules in the affirmative,

but takes exception to the CAs
and RTCs application of Article
1544 of the Civil Code.
Reliance by the trial and appellate

courts on Article 1544 of the Civil
Code is misplaced. The requisites
that must concur for Article 1544
to
apply
are:chanRoblesvirtualLawlibrary
(a) The two (or more sales)

transactions must constitute valid
sales;
(b) The two (or more) sales
transactions
must
pertain
to
exactly the same subject matter;
(c) The two (or more) buyers at
odds over the rightful ownership of
the subject matter must each
represent conflicting interests; and
(d)
The
two
(or
more)
buyers at odds over the rightful
ownership of the subject matter

must each have bought from
the very same seller.11
Obviously, said provision has no

application in cases where the
sales involved were initiated not by
just one but two vendors.12 In the
present case, the subject lots were
sold to petitioners and respondents
by
two
different
vendors
Emerenciana and Romeo Pujalte

(Romeo). Hence, Article 1544 of
the Civil Code is not applicable.
Nonetheless, the Court agrees with the
findings and conclusion of the CA that
Emerencianas acquisition of the subject
lots from Luis and her subsequent sale of
the same to respondents are valid and
lawful. Petitioners dispute such finding. To
prove their contention, they assail the
authenticity and due execution of the deed
of sale between Luis and Emerenciana.
Petitioners contend that respondents'
presentation of the duplicate/carbon
original of the Deed of Sale13 dated June
20, 1958 is in violation of the best
evidence rule under Section 3, Rule 130 of
the Rules of Court.14 The Court does not
agree.
The best evidence rule is inapplicable to
the present case. The said rule applies
only when the content of such document
is the subject of the inquiry.15 Where the
issue is only as to whether such document
was actually executed, or exists, or on the
circumstances relevant to or surrounding
its execution, the best evidence rule does
not apply and testimonial evidence is
admissible.16 Any other substitutionary
evidence is likewise admissible without
need to account for the original.17 In the
instant case, what is being questioned is
the authenticity and due execution of the
subject deed of sale. There is no real issue
as to its contents.
In any case, going to the matter of
authenticity and due execution of the
assailed document, petitioners do not
dispute that the copy of the deed of sale

38

that respondents submitted as part of
their evidence is a duplicate of the original
deed of sale dated June 20, 1958. It is
settled that a signed carbon copy or
duplicate of a document executed at the
same time as the original is known as a
duplicate original and maybe introduced in
evidence without accounting for the non
production of the original.18
Moreover, Section 4 (b), Rule 130 of the
Rules of Court provides that [w]hen a
document is in two or more copies
executed at or about the same time, with
identical contents, all such copies are
equally regarded as originals.
In addition, evidence of the authenticity
and due execution of the subject deed is
the fact that it was notarized. The
notarization of a private document
converts it into a public document.19
Moreover, a notarized instrument is
admissible in evidence without further
proof of its due execution, is conclusive as
to the truthfulness of its contents, and has
in
its
favor
the
presumption
of
regularity.20 This presumption is affirmed
if it is beyond dispute that the notarization
was regular.21 To assail the authenticity
and due execution of a notarized
document, the evidence must be clear,
convincing
and
more
than
merely
22
preponderant.
In the present case, petitioners failed to
present convincing evidence to prove that
the notarization of the subject deed was
irregular as to strip it of its public
character. On the contrary, a certified
copy of page 26 of the notarial register of
the notary public who notarized the
subject deed of sale, which was issued by
the Records Management and Archives
Office of Manila, shows that the sale of the
subject lots by Luis to Emerenciana was
indeed regularly notarized.23
Petitioners further argue that the deed of
sale between Emerenciana and Luis was
not registered with the Register of Deeds
of Quezon City. The Court, however,
agrees with the CA that the said deed
was, in fact, registered as evidenced by
official receipts24 issued to this effect.

Petitioners, again, did not present any
evidence to assail the authenticity of these
documents.
Petitioners also question the authenticity
of the subject deed of sale (Exhibit B1
C) by arguing that only one copy of such
deed was prepared as only one document
number was assigned by the notary to the
said deed. Petitioners claim that this is
contrary to the claim of respondents that
the said deed of sale was prepared,
executed and notarized in several copies.
The Court is not persuaded.
It is true that Section 246, Article V, Title
IV,
Chapter
II
of
the
Revised
Administrative Code provides that [t]he
notary shall give to each instrument
executed, sworn to, or acknowledged
before him a number corresponding to the
one in his register, and shall also state on
the instrument the page or pages of his
register on which the same is recorded.
In this regard, the Court agrees with
respondents'
contention
that
the
instrument being referred to in the
abovequoted provision is the deed or
contract which is notarized. It does not
pertain to the number of copies of such
deed or contract. Hence, one number is
assigned to a deed or contract regardless
of the number of copies prepared and
notarized. Each and every copy of such
contract is given the same document
number. It is, thus, wrong for petitioners
to argue that only one copy of the June
20, 1958 deed of sale was prepared and
notarized, because only one document
number appears on the notarial book of
the notary public who notarized the said
deed. On the contrary, evidence shows
that at least two copies of the subject
deed of sale was prepared and notarized
one was submitted for registration with
the Register of Deeds of Quezon City and
the other was retained by Emerenciana,
which is the copy presented in evidence
by respondents.
Petitioners, nonetheless, insist that they
have valid title over the subject
properties. They trace their respective

39

titles from that of Romeo. Romeo, in turn,
derives his supposed ownership of and
title over the subject lots from his claim
that he is the sole heir of the estate of his
alleged
predecessorininterest,
Luis.
Evidence, however, shows that Romeo
never became the owner of the subject
properties for two reasons.
First, as shown above, the disputed lots
were already sold by Luis during his
lifetime. Thus, these parcels of land no
longer formed part of his estate when he
died. As a consequence, Romeos sale of
the disputed lots to petitioners was not
affirmed by the estate court, because the
subject parcels of land were not among
those included in the said estate at the
time that Romeo was appointed as the
administrator thereof. As shown in its
October 11, 1993 Order,28 the RTC of
Pasig, acting as an estate court, denied
Romeos motion for approval of the sale of
the subject lots, because these properties
were already sold to respondents per
report submitted by the Register of Deeds
of San Juan.
Second, even granting that the subject
lots formed part of the estate of Luis, it
was subsequently proven in a separate
case that Romeo is not his heir. In a
criminal
case for use of falsified
documents filed against Romeo, it was
proven that his claim of heirship is
spurious. In the said criminal case, his
birth
certificate
and
the
marriage
certificate of his supposed parents, which
he presented before the estate court, to
prove his claim that he is the sole heir of
Luis, were found by the criminal court to
be falsified.
Indeed, not being an heir of Luis, Romeo
never acquired any right whatsoever over
the subject lots, even if he was able to
subsequently obtain a title in his name. It
is a wellsettled principle that no one can
give what one does not have, nemo dat
quod non habet.34 One can sell only what
one owns or is authorized to sell, and the
buyer can acquire no more right than
what
the
seller
can
transfer
legally.35 Since Romeo has no right
to the subject lots, petitioners, who

simply stepped into the shoes of Romeo,
in turn, acquired no rights to the same.
Stretching petitioners' contention a bit
further, granting that both petitioners and
respondents bought the disputed lots in
good faith by simply relying on the
certificates
of
the
sellers,
and
subsequently, acquiring titles in their own
names, respondents' title shall still prevail.
It is a settled rule that when two
certificates of title are issued to different
persons covering the same land in whole
or in part, the earlier in date must prevail,
and, in case of successive registrations
where more than one certificate is issued
over the land, the person holding a prior
certificate is entitled to the land as against
a person who relies on a subsequent
certificate.37 The titles of respondents,
having emanated from an older title,
should thus be upheld.
Anent petitioners' bad faith, this Court
finds no persuasive reason to depart from
the findings of the CA that petitioners had
prior knowledge of the estate proceedings
involving the subject lots and that they
have notice of the defect in the title of
Romeo.
It is true that a person dealing with
registered land need not go beyond the
title. However, it is equally true that such
person is charged with notice of the
burdens and claims which are annotated
on the title.38 In the instant case, The
Torrens Certificate of Title (TCT No. 5760
R) in the name of Romeo, which was the
title relied upon by petitioners, also
contained Entry No. P.E. 4023, quoted
above,
which
essentially
informs
petitioners that the lots which they were
about to buy and which they in fact
bought,
were
already
sold
to
Emerenciana.39 This entry should have
alerted petitioners and
should have
prodded
them
to
conduct
further
investigation. Simple prudence would
have impelled them as honest persons to
make deeper inquiries to clear the
suspiciousness haunting Romeos title. On
the contrary, rather than taking caution in

40

dealing with Romeo, petitioners, instead,

subsequently executed deeds of sale40
over the same properties but all of which
were, nonetheless, disallowed by the
estate court in its Order41 dated October
11, 1993 on the ground that the said lots
were already sold, this time, by
Emerenciana to respondents. In this
regard, petitioners acted in bad faith.
Philippine National Bank Vs. Jose Garcia
and children, et al.G.R. No. 182839.
June 2, 2014
The
Subject
Property
is
Conjugal
a. All property acquired during
marriage
is presumed conjugal
Since Jose Sr. and Ligaya were

married prior to the effectivity of
the Family Code, their property
relations were governed by the
conjugal partnership of gains as
provided under Article 119 of the
Civil Code. Under Article 160 of the
Civil Code, all property of the
marriage is presumed to belong to
the conjugal partnership, unless it
can be proven that it pertains
exclusively to the husband or to
the wife.
b. Registration of the subject property
in
the name of one spouse does not
destroy
the presumption that the property is
conjugal
The petitioner bank claims that the CA
failed to consider that the subject property
was registered in the name of Jose Sr.
alone. Likewise, it raises the argument
that Jose Sr.s change of status in the
subject propertys title from married to
widower prior to the constitution of the
real estate mortgage showed that the
property was no longer conjugal.
We do not consider this argument
persuasive.
Registration of a property alone in the
name of one spouse does not destroy its

conjugal nature. What is material is the
time
when
the
property
was
acquired.9 The registration of the
property is not conclusive evidence of the
exclusive ownership of the husband or the
wife. Although the property appears to be
registered in the name of the husband, it
has the inherent character of conjugal
property if it was acquired for valuable
consideration
during
marriage.10
It
retains its conjugal nature.
In order to rebut the presumptive conjugal
nature of the property, the petitioner must
present strong, clear and convincing
evidence of exclusive ownership of one of
the spouses.11 The burden of proving that
the property belongs exclusively to the
wife or to the husband rests upon the
party asserting it.
In the present case, aside from its
allegation that the subject property is no
longer conjugal and its assertion that it is
a mortgagee in good faith, the petitioner
bank offered no evidence, convincing to
this Court, that the subject property
exclusively belonged to Jose Sr. As stated
earlier, the petitioner bank failed to
overcome the legal presumption that the
disputed property was conjugal. Thus, the
conclusion of both lower courts that the
subject property was conjugal property
holds. Factual findings of the CA affirming
those of the trial court are binding on this
Court unless there is a clear showing that
such
findings
are
tainted
with
arbitrariness, capriciousness or palpable
error.12
The
conjugal
partnership
was
converted
into an implied ordinary co-ownership
upon the death of Ligaya
Upon the death of Ligaya on January 21,
1987, the conjugal partnership was
automatically dissolved and terminated
pursuant to Article 175(1) of the Civil
Code,13 and the successional rights of her
heirs vest, as provided under Article 777
of the Civil Code, which states that [t]he

41

rights to the succession are transmitted
from the moment of the death of the
decedent.
Consequently, the conjugal partnership
was converted into an implied ordinary coownership between the surviving spouse,
on the one hand, and the heirs of the
deceased, on the other.14 This resulting
ordinary co-ownership among the heirs is
governed by Article 493 of the Civil Code.
Under this provision, each co-owner has
the full ownership of his part or share in
the co-ownership and may, therefore,
alienate, assign or mortgage it except
when personal rights are involved. Should
a co-owner alienate or mortgage the coowned property itself, the alienation or
mortgage shall remain valid but only to
the extent of the portion which may be
allotted to him in the division upon the
termination of the co-ownership.1
In the present case, Jose Sr. constituted
the mortgage over the entire subject
property after the death of Ligaya, but
before the liquidation of the conjugal
partnership. While under Article 493 of
the Civil Code, even if he had the right to
freely mortgage or even sell his undivided
interest in the disputed property, he could
not dispose of or mortgage the entire
property without his childrens consent. As
correctly emphasized by the trial court,
Jose Sr.s right in the subject property is
limited only to his share in the
conjugal partnership as well as his
share as an heir on the other half of
the estate which is his deceased
spouses
share.
Accordingly,
the
mortgage contract is void insofar as it
extends to the undivided shares of his
children (Nora, Jose Jr., Bobby and
Jimmy) because they did not give their
consent to the transaction.17
Accordingly, the Amendment of Real
Estate Mortgage constituted by Jose Sr.
over the entire property without his coowners consent is not necessarily void in
its entirety. The right of the petitioner
bank as mortgagee is limited though only
to the portion which may be allotted to
Jose Sr. in the event of a division and

liquidation
of
the
subject
property.cra1awlaw1ibrary
Dolores Campos Vs. Dominador Ortega Sr.
and James SilosG.R. No. 171286. June
2, 2014
We agree with the CA that the case
for
specific performance with
damages instituted by petitioner
effectively attacks the validity of
respondents' Torrens title over the
subject lot. It is evident that,
ultimately, the objective of such
claim is to nullify the title of
respondents to the property in
question, which, in turn, challenges
the judgment pursuant to which
the title was decreed. This is a
collateral attack that is not
permitted under the principle of
indefeasibility of Torrens title.
Section 48 of Presidential Decree
No. 1529, otherwise known as the
Property
Registration
Decree,
unequivocally
states:ChanRoblesVirtualawlibrary
SEC. 48. Certificate not subject to

collateral attack. - A certificate of
title shall not be subject to
collateral attack. It cannot be
altered, modified, or cancelled
except in a direct proceeding in
accordance with law.
A collateral attack transpires when,

in another action to obtain a
different relief and as an incident
to the present action, an attack is
made
against
the
judgment
granting the title while a direct
attack
(against
a
judgment
granting the title) is an action
whose main objective is to annul,
set
aside,
or
enjoin
the
enforcement of such judgment if
not yet implemented, or to seek
recovery if the property titled
under the judgment had been
disposed of.19 The issue on the
validity of title, i.e., whether or not
it was fraudulently issued, can only
be raised in an action expressly

42

instituted
for
purpose.20cralawred
that
The appropriate legal remedy that

petitioner should have availed is an
action for reconveyance. Proof of
actual fraud is not required as it
may be filed even when no fraud
intervened such as when there is
mistake in including the land for
registration.
Under the principle of constructive
trust, registration of property by
one person in his name, whether
by mistake or fraud, the real owner
being another person, impresses
upon the title so acquired the
character of a constructive trust for
the real owner, which would justify
an action for reconveyance. In the
action
for
reconveyance,
the
decree of registration is respected
as incontrovertible but what is
sought instead is the transfer of
the
property
wrongfully
or
erroneously registered in another's
name to its rightful owner or to one
with a better right. If the
registration
of
the
land
is
fraudulent, the person in whose
name the land is registered holds it
as a mere trustee, and the real
owner is entitled to file an action
for
reconveyance
of
the
property.21cralawred
An
action
for
reconveyance
resulting from fraud prescribes four
years from the discovery of the
fraud, which is deemed to have
taken place upon the issuance of
the certificate of title over the
property, and if based on an
implied or a constructive trust it
prescribes ten (10) years from the
alleged fraudulent registration or
date of issuance of the certificate
of title over the property.22
However,
an
action
for
reconveyance based on implied or
constructive trust is imprescriptible
if the plaintiff or the person
enforcing the trust is in possession

of the property.23 In effect, the
action for reconveyance is an
action to quiet title to the property,
which does not prescribe.24
In this case, petitioner, taking into
account Article 1155 of the Civil Code27
and jurisprudence28 on the matter, should
be guided by the following facts in
enforcing her legal remedy/ies, if still any:
(1) her judicial admission that they no
longer possess the subject lot, claiming
that they stayed therein from 1966 until
1997 when they were ejected by the
sheriff of Pasig RTC;29 (2) TCT No. 13342
was issued on December 9, 1997; and (3)
the instant case for specific performance
with damages was filed on August 17,
1999.
Republic of the Philippines Vs. Corazon C.
Sese and Fe C. SeseG.R. No. 185092.
June 4, 2014
The vital issue to be resolved by the Court
is whether respondents are entitled to the
registration of land title under Section
14(1) of Presidential Decree (P.D.) No.
1529, or pursuant to Section 14(2) of the
same statute.
Based on the abovequoted provisions,
applicants for registration of land title
must establish and prove: (1) that the
subject land forms part of the disposable
and alienable lands of the public domain;
(2)
that
the
applicant
and
his
predecessorsininterest have been in
possession and occupation of the same;
and (3) that it is under a bona fide claim
of ownership since June 12, 1945, or
earlier.10
Compliance
with
the
foregoing
requirements is indispensable for an
application for registration of land title,
under Section 14(1) of P.D. No. 1529, to
validly prosper. The absence of any one
requisite renders the application for
registration substantially defective.
Anent the first requisite, respondents
presented evidence to establish the

43

disposable and alienable character of the
subject land through a survey plan, where
on its lower portion, a note stated, among
others, as follows: This survey is inside
the alienable and disposable area as per
Project No. 20 LC Map No. 637 certified by
the Bureau of Forestry on March 1, 1927.
It is outside any civil or military
reservation. The said plan was approved
by the DENR, Land Management Services,
Regional Office III, San Fernando,
Pampanga on December 3, 1998. The
annotation in the survey plan, however,
fell short of the requirement of the law in
proving its disposable and alienable
character.
In Republic v. Espinosa,11 citing Republic
v. Sarmiento12 and Menguito v. Republic,13
the Court reiterated the rule that that a
notation made by a surveyorgeodetic
engineer that the property surveyed was
alienable and disposable was not the
positive government act that would
remove the property from the inalienable
domain and neither was it the evidence
accepted as sufficient to controvert the
presumption that the property was
inalienable.
Thus, the present rule is that an
application for original registration must
be accompanied by (1) a CENRO or
PENRO Certification; and (2) a copy of the
original classification approved by the
records.16
Here, the only evidence presented by
respondents to prove the disposable and
alienable character of the subject land was
an annotation by a geodetic engineer in a
survey plan. Although this was certified by
the DENR, it clearly falls short of the
requirements for original registration.
With regard to the third requisite, it must
be shown that the possession and
occupation of a parcel of land by the
applicant, by himself or through his
predecessorsininterest, started on June
12, 1945 or earlier.17 A mere showing of
possession and occupation for 30 years or

more, by itself, is not sufficient.18
In this regard, respondents likewise failed.
As the records and pleadings of this case
will reveal, the earliest that respondents
and their predecessorininterest can
trace back possession and occupation of
the subject land was only in the year
1950, when their mother, Resurreccion,
acquired the subject land from the
Santoses on October 4, 1950 by virtue of
an
absolute
sale.
Evidently,
their
possession of the subject property
commenced roughly five (5) years beyond
June 12, 1945, the reckoning date
expressly provided under Section 14(1) of
P.D. No. 1529. Thus, their application for
registration of land title was legally infirm.
The case of Malabanan v. Republic19 gives
a definitive clarity to the applicability and
scope of original registration proceedings
under Section 14(2) of the Property
Registration Decree. In the said case, the
Court
laid
down
the
following
rules:chanRoblesvirtualLawlibrary
We synthesize the doctrines laid down in
this
case,
as
follows:chanRoblesvirtualLawlibrary
xxxx
(2) In complying with Section 14(2) of the
Property Registration Decree, consider
that under the Civil Code, prescription is
recognized as a mode of acquiring
ownership
of
patrimonial
property.
However,
public
domain
lands
become only patrimonial property not
only with a declaration that these are
alienable or disposable. There must
also be an express government
manifestation that the property is
already patrimonial or no longer
retained for public service or the
development of national wealth,
under Article 422 of the Civil Code.
And only when the property has become
patrimonial can the prescriptive period for
the acquisition of property of the public
dominion begin to run.

44

(a) Patrimonial property is private
property of the government. The person
acquires
ownership
of
patrimonial
property by prescription under the Civil
Code is entitled to secure registration
thereof under Section 14(2) of the
Property Registration Decree.
(b) There are two kinds of prescription by
which patrimonial property may be
acquired,
one
ordinary
and
other
extraordinary. Under ordinary acquisitive
prescription, a person acquires ownership
of
a
patrimonial
property
through
possession for at least ten (10) years, in
good faith and with just title. Under
extraordinary acquisitive prescription, a
persons uninterrupted adverse possession
of patrimonial property for at least thirty
(30) years, regardless of good faith or just
title, ripens into ownership. (Emphasis
supplied)
Accordingly, there must be an express
declaration by the State that the public
dominion property is no longer intended
for public service or the development of
the national wealth or that the property
has been converted into patrimonial.
Without such express declaration, the
property, even if classified as alienable or
disposable, remains property of the public
dominion, pursuant to Article 420(2), and,
thus,
incapable
of
acquisition
by
prescription. It is only when such alienable
and disposable lands are expressly
declared by the State to be no longer
intended for public service or for the
development of the national wealth that
the period of acquisitive prescription can
begin to run. Such declaration shall be in
the form of a law duly enacted by
Congress or a Presidential Proclamation in
cases where the President is duly
authorized by law.20
Thus, under Section 14(2) of P.D. No.
1529, for acquisitive prescription to
commence and operate against the State,
the classification of land as alienable and
disposable alone is not sufficient. The
applicant must be able to show that the
State, in addition to the said classification,

expressly declared through either a law
enacted by Congress or a proclamation
issued by the President that the subject
land is no longer retained for public
service or the development of the national
wealth or that the property has been
converted into patrimonial. Consequently,
without an express declaration by the
State, the land remains to be a property
of public dominion and, hence, not
susceptible to acquisition by virtue of
prescription.21 The classification of the
subject
property
as
alienable
and
disposable land of the public domain does
not change its status as property of the
public dominion under Article 420(2) of
the Civil Code. It is still insusceptible to
acquisition by prescription.
For the above reasons, the respondents
cannot avail of either Section 14 (1) or 14
(2) of P.D. No. 1529. Under Section 14
(1), respondents failed to prove (a) that
the property is alienable and disposable;
and (b) that their possession of the
property dated back to June 12, 1945 or
earlier. Failing to prove the alienable and
disposable nature of the subject land,
respondents all the more cannot apply for
registration by way of prescription
pursuant to Section 14 (2) which requires
possession for 30 years to acquire or take.
Not only did respondents need to prove
the classification of the subject land as
alienable and disposable, but also to show
that
it
has
been
converted
into
patrimonial. As to whether respondents
were able to prove that their possession
and occupation were of the character
prescribed by law, the resolution of this
issue has been rendered unnecessary by
the foregoing considerations.
Republic of the Philippines Vs. Franklin M.
MilladoG.R. No. 194066. June 4, 2014
In this case, the source of
reconstitution is an authenticated
copy of Decree No. 295110 under
Section 2(d), which as certified by
the LRA, was issued on October 8,
1927 in favor of Isabel, Sixto and
Apolonia, all surnamed Bautista,
covering Lot 4616, San Narciso

45

Cadastre in Cad. Case No. 9, GLRO
Cad. Record No. 371. The said coowners pro indiviso are supposedly
the registered owners named in
OCT No. 2108. The Deed of ExtraJudicial Settlement of Estate with
Sale stated that Apolonia and
Isabel died single and without any
children and only the alleged heirs
of spouses Sixto and Elena Bautista
executed
the
said
document
conveying the 7,594-square meter
lot to respondent. These supposed
vendors claiming to be heirs of one
of the registered owners were not
notified
of
the
judicial
reconstitution proceedings.
The registered owners appearing in

the title sought to be reconstituted,
or in this case, their surviving
heirs, are certainly interested
parties who should be notified of
reconstitution proceeding under
Section 12 in relation to Section 13
of R.A. 26. Indeed, for petitions
based on sources enumerated in
Sections 2(c), 2(d), 2(e), 2(f),
3(c), 3(d), 3(e) and 3(f), Section
13 adds another requirement aside
from publication and posting of
notice of hearing: that the notice
be mailed to occupants, owners of
adjoining lots, and all other
persons who may have an interest
in the property.17 Notwithstanding
the sale supposedly effected by
vendors claiming to be heirs of the
registered owners, they remain as
interested parties entitled to notice
of
judicial
reconstitution
proceedings.
It is settled that the actual notice
requirement in Section 13 in
relation to Section 12 of R.A. 26 is
mandatory and jurisdictional.18 In
the early case of Manila Railroad
Company v. Hon. Moya, et al.,19
this
Court
categorically
declared:ChanRoblesVirtualawlibrar
y
It is clear from section 13 of

Republic Act No. 26 that notice by
publication is not sufficient under
the circumstances. Notice must
be actually sent or delivered to
parties affected by the petition
for reconstitution. The order of
reconstitution,
therefore,
having been issued without
compliance
with
the
said
requirement, has never become
final as it was null and void. The
Manila
Railroad
cannot
then
complain that the motion to set
aside
was
filed
beyond
the
reglementary period. (Emphasis
and underscoring supplied.)
Where the authority to proceed is
conferred by a statute and the
manner of obtaining jurisdiction is
mandatory, the same must be
strictly complied with, or the
proceedings will be void. As such,
the court upon which the petition
for reconstitution of title is filed is
duty-bound to examine thoroughly
the petition for reconstitution of
title and review the record and the
legal provisions laying down the
germane
jurisdictional
requirements.20 Thus, we have
held
that
notwithstanding
compliance
with
the
notice
publication, the requirement of
actual notice to the occupants and
the owners of the adjoining
property under Sections 12 and 13
of R.A. 26 is itself mandatory to
vest jurisdiction upon the court in a
petition for reconstitution of title
and essential in order to allow said
court to take the case on its
merits. The non-observance of the
requirement invalidates the whole
reconstitution proceedings in the
trial court.21cralawred
For non-compliance with the actual
notice requirement to all other
persons who may have interest in
the property, in this case the
registered owners and/or their

46

heirs, in accordance with Section

13 in relation to Section 12 of RA
26, the trial court did not acquire
jurisdiction over L.R.A. Case No.
RTC-237-I.
The
proceedings
therein were therefore a nullity and
the January 14, 2009 Decision was
void.
Josephine Wee Vs. Felicidad MardoG.R.
No. 202414. June 4, 2014
In the case of Republic vs. Umali,5
this Court ruled that once a patent
is registered and the corresponding
certificate of title is issued, the
land ceases to be part of public
domain
and
becomes
private
property over which the Director of
Lands has neither control nor
jurisdiction. A public land patent,
when
registered
in
the
corresponding Register of Deeds, is
a veritable Torrens title, and
becomes as indefeasible upon the
expiration of one (1) year from the
date of issuance thereof. Said title,
like one issued pursuant to a
judicial decree, is subject to review
within one (1) year from the date
of the issuance of the patent. This
rule is embodied in Section 103 of
PD
1529,
which
provides
that:ChanRoblesVirtualawlibrary
Section 103. Certificates of title

pursuant to patents. Whenever
public land is by the Government
alienated, granted or conveyed to
any person, the same shall be
brought
forthwith
under
the
operation of this Decree. x x x
After due registration and
issuance of the certificate of
title, such land shall be deemed
to be registered land to all
intents and purposes under this
Decree. (Emphasis supplied)
Accordingly,
respondents
registered
patent
in
the
corresponding Registry of Deeds is
a veritable Torrens title and
becomes as indefeasible as a
Torrens title upon the expiration of
one (1) year from the date of its

issuance.6cralawred
For said reason, the order of the

RTC directing the Administrator of
LRA to issue a corresponding
decree in petitioners name is null
and void. A land registration court
has no jurisdiction to order the
registration of land already decreed
in the name of another in an earlier
land registration case. A second
decree for the same land would be
null and void, since the principle
behind the original registration is
to register a parcel of land only
once.7cralawred
Verily, once a title is registered, as

a consequence either of judicial or
administrative proceedings, the
owner may rest secure, without the
necessity of waiting in the portals
of the court sitting in the mirador
de su casa to avoid the possibility
of losing his land.8 The certificate
of title cannot be defeated by
adverse,
open
and
notorious
possession. Neither can it be
defeated
by
prescription.
As
provided under Sec. 47 of PD
1529, no title to registered land in
derogation of the title of the
registered owner shall be acquired
by
prescription
or
adverse
possession.
A Certificate of Title Not
Subject to Collateral Attack
Petitioner argued that the rule on
indefeasibility of title does not attach to
titles
secured
by
fraud
and
misrepresentation. In this case, she
alleged that the respondent fraudulently
registered the subject property under her
name after she (respondent) had already
sold a portion thereof to her (petitioner).
By virtue of the deed of sale, petitioner
insists that she is considered to be the
real owner of the subject parcel of land.
The Court finds no merit in petitioners
argument. It is settled in this jurisdiction

47

that the issue of the validity of title can
only be assailed in an action expressly
instituted for such purpose.9 A certificate
of title cannot be attacked collaterally.
This rule is provided under Section 48 of
PD
1529
which
states
SEC. 48. Certificate not subject to
collateral attack. - A certificate of title
shall not be subject to collateral
attack. It cannot be altered, modified, or
canceled except in a direct proceeding in
accordance with law. (Emphasis supplied)
In Lagrosa v. Court of Appeals,10 it was
stated that it is a well-known doctrine that
the issue as to whether title was procured
by falsification or fraud as advanced by
petitioner can only be raised in an action
expressly instituted for the purpose. A
Torrens title can be attacked only for
fraud, within one year after the date of
the issuance of the decree of registration.
Such attack must be direct, and not by a
collateral
proceeding.
The
title
represented by the certificate cannot be
changed, altered, modified, enlarged, or
diminished in a collateral proceeding.
In this case, the petitioner is

contesting the indefeasibility of title
on the ground of fraud and
misrepresentation. Applying the
abovementioned doctrine, even
assuming that the petitioners
allegations are true, the same are
considered as collateral attacks,
and such must be raised in an
action expressly instituted for such
purpose
and
in
a
proper
proceeding.
Remedy of the petitioner is
to file a separate proceeding
such as an action for specific
performance or for reconveyance
The issue of fraudulent alienation raised in
the second application for registration of
the subject property is collateral attack
which should be directly raised in a
separate proceeding filed for such
purpose. It cannot be entertained in this
proceeding. In several cases, the Court

has ruled that an attack is indirect or
collateral when, in an action to obtain a
different relief, an attack on the judgment
or proceeding is nevertheless made as an
incident thereof.12cralawred
Registration, however, does not deprive
an aggrieved party of a remedy in
law. What cannot be collaterally attacked
is the certificate of title and not the title or
ownership which is represented by such
certificate. Ownership is different from a
certificate of title. The fact that a person
was able to secure a title in his name did
not operate to vest ownership upon him of
the subject land. Registration of a piece
of land under the Torrens System does
not create or vest title, because it is not a
mode of acquiring ownership. A certificate
of title is merely an evidence of ownership
or title over the particular property
described therein. It cannot be used to
protect a usurper from the true owner;
nor can it be used as a shield for the
commission of fraud; neither does it
permit one to enrich himself at the
expense of others. Its issuance in favor of
a particular person does not foreclose the
possibility that the real property may be
co-owned with persons not named in the
certificate, or that it may be held in trust
for another person by the registered
owner.14cralawred
The remedy of the petitioner is to file a
separate proceeding or action to protect
her alleged interest. As she claimed that
she bought the subject property for value
from the respondent as evidenced by a
deed of sale, she can file an action for
specific performance to compel the
respondent to comply with her obligation
in the alleged deed of sale and/or an
action for reconveyance of the property.
She can also file an action for rescission.
Needless to state, petitioner must prove
her entitlement because the respondent
claims that the sale was falsified.
Reconveyance is based on Section 55 of
Act No. 496, as amended by Act No. 3322,
which states that in all cases of

48

registration procured by fraud the owner

may pursue all his legal and equitable
remedies against the parties to such
fraud, without prejudice, however, to the
rights of any innocent holder for value of a
certificate of title.15 It is an action in
personam available to a person whose
property has been wrongfully registered
under the Torrens system in anothers
name.16 It does not seek to set aside the
decree
but,
respecting
it
as
incontrovertible and no longer open to
review, seeks to transfer or reconvey the
land from the registered owner to the
rightful owner.17 Reconveyance is always
available as long as the property has not
passed to an innocent third person for
value.18cralawred
Republic of the Philippines Vs. Francisca,
Geronimo and Crispin, all surnamed
SantosG.R. No. 191516. June 4, 2014
The Court agrees with petitioner's
stance. In Republic v. Medida,5 the
Court emphasized that anyone
who applies for registration of
ownership over a parcel of land
has the burden of overcoming
the presumption that the land
sought to be registered forms
part
of
the
public
domain.6 Expounding on the kind
of evidence required to overcome
said presumption, the Court stated,
thus:ChanRoblesVirtualawlibrary
As the rule now stands, an

applicant must prove that the land
subject of an application for
registration
is
alienable
and
disposable by establishing the
existence of a positive act of the
government such as a presidential
proclamation or an executive
order; an administrative action;
investigation reports of Bureau of
Lands
investigators;
and
a
legislative act or a statute. The
applicant may also secure a
certification from the government
that the land claimed to have been
possessed for the required number
of
years
is
alienable
and
disposable. In a line of cases, we
have ruled that mere notations

appearing in survey plans are
inadequate
proof
of
the
covered properties alienable
and disposable character.
To reiterate, the evidence required to
establish that land subject of an
application for registration is alienable and
disposable are: (1) CENRO or PENRO
Certification; and (2) a copy of the
original classification approved by the
copy by the legal custodian of the
official records. In the present case, the
foregoing documents had not been
submitted in evidence. There is no copy of
the original classification approved by the
DENR Secretary. As ruled by this Court, a
mere certification issued by the Forest
Utilization & Law Enforcement Division of
the DENR is not enough. Petitioner is then
correct that evidence on record is not
sufficient to prove that subject lots had
been declared alienable and disposable
lands.
Paul P. Gabriel, Jr., Ireneo C. Calwag,
Thomas L. Tingga-an and the Heirs of
Juliet B. Pulkera Vs. Carmeling
CrisologoG.R. No. 204626. June 9, 2014
The only question that needs to be
resolved in this petition is who
between
petitioners
and
respondent Crisologo have a better
right of possession over the subject
parcels of land. Both contending
parties claim that they have a
superior possessory right over the
disputed lands.
After a careful review of the

records, the Court holds that
Crisologo has a better right of
possession over the subject parcels
of land.
Accion Publiciana: its nature and

purpose
Also known as accion plenaria de

posesion, accion publiciana is an
ordinary
civil
proceeding
to
determine the better right of
possession of realty independently

49

of title. It refers to an ejectment
suit filed after the expiration of one
year from the accrual of the cause
of action or from the unlawful
withholding of possession of the
realty.
The objective of the plaintiffs in

accion publiciana is to recover
possession only, not ownership.
When parties, however, raise the
issue of ownership, the court may
pass upon the issue to determine
who between the parties has the
right to possess the property. This
adjudication, nonetheless, is not a
final and binding determination of
the issue of ownership; it is only
for the purpose of resolving the
issue of possession, where the
issue of ownership is inseparably
linked to the issue of possession.
The adjudication of the issue of
ownership, being provisional, is not
a bar to an action between the
same parties involving title to the
property. The adjudication, in
short, is not conclusive on the
issue of ownership.12
In her complaint, Crisologo prayed

that she be declared in prior actual
possession of the properties in
dispute and that petitioners vacate
the same and demolish their
houses
therein.
She
alleged,
among others, that she was the
registered owner of the subject
parcels of land and that petitioners
unlawfully entered her properties
by stealth, force and without her
prior consent and knowledge.
Clearly, she primarily wanted to
recover possession of the subject
parcels of land from petitioners.
Hence, the case is an accion
publiciana.
The respondents certificates of title
give her the better right to possess
the subject parcels of land
It is settled that a Torrens title is evidence
of indefeasible title to property in favor of
the person in whose name the title

appears. It is conclusive evidence with
respect to the ownership of the land
described therein. It is also settled that
the titleholder is entitled to all the
attributes of ownership of the property,
including possession. Thus, in Arambulo v.
Gungab,15 this Court declared that the
age-old rule is that the person who has a
Torrens title over a land is entitled to
possession thereof.16
The records show that TCT No. T-1393517
and TCT No. T-1393618 bear the name of
Carmeling P. Crisologo, as the registered
owner. Petitioners do not dispute the fact
that she has a Torrens title over the
subject parcels of land.
The respondents Torrens certificates of
title
are immune from a collateral attack.
As a holder of a Torrens certificate

of title, the law protects Crisologo
from a collateral attack on the
same. Section 48 of P.D. No. 1529,
otherwise known as the Property
Registration Decree, provides that
a certificate of title cannot be the
subject of a collateral attack.
As the lawful possessor, the respondent
has the right to eject the petitioners
The Court agrees with the CA that the
only question that needs to be resolved in
this suit to recover possession is who
between the parties is entitled to the
physical or material possession of the
subject parcels of land. Therefore, the
foremost relevant issue that needs to be
determined here is simply possession, not
ownership.
The
testimonial
and
documentary
evidence on record prove that Crisologo
has a preferred claim of possession over
that of petitioners. It cannot be denied
that she bought the subject properties
from the previous owner in 1967, which
was why the transfer certificates of title
were subsequently issued in her name.
Records further show that she has been

50

paying the realty taxes on the said

properties since 1969. She likewise
appointed Isican as administrator of the
disputed lands. More importantly, there is
no question that she offered to sell to
petitioners the portions of the subject
properties occupied by them. Hence, she
deserves to be respected and restored to
her lawful possession as provided in
Article 539 of the New Civil Code.2
Department of Education, represented by
its
Regional
Director
Teresita
Domalanta Vs. Mariano TuliaoG.R. No.
205664. June 9, 2014
ISSUE: ACTION FOR RECOVERY OF
POSSESION OF LAND
Here, Tuliao, as the registered owner, filed
a complaint for recovery of possession and
removal of structure. To support his claim,
he presented not only tax declarations and
tax receipts, but also a certificate of title.
The Court agrees with the CA that the said
pieces of evidence were sufficient to
resolve the issue of who had the better
right of possession. That being the case,
the burden was shifted to the DepEd to
prove otherwise. Unfortunately, the DepEd
only presented testimonial evidence and
nothing more to prove its defense and
refute Tuliaos claim. Its lone witness was
all that the DepEd had to prove its right of
possession. As between a certificate of
title, which is an incontrovertible proof of
ownership,19 accompanied with a tax
declaration and a tax receipt on one hand,
and a testimony of a lone witness who is a
retired teacher on the other, the former
prevails in establishing who has a better
right of possession over the property,
following
the
rule that
testimonial
evidence cannot prevail over documentary
evidence.20cralawred
As regards the DepEd 's defense of laches,
it has no merit either. It avers that its
possession of the subject land was open,
continuous, exclusive, adverse, notorious
and in the concept of an owner for at least
thirty-two (32) years already at the time
Tuliao filed the complaint. It must be
noted, however, that Tuliao's claim that
the DepEd's possession of a portion of his
land to be used as a passageway for the

students was mere tolerance was not
refuted. Thus, the same is deemed
admitted. This means that the DepEd's
possession was not truly adverse.
The Court once ruled that mere material
possession of the land vvas not adverse as
against the owner and was insufficient to
vest title, unless such possession was
accompanied by the intent to possess as
an owner.21 Accordingly, the DepEd 's
possession can only be considered as
adverse from the time the gymnasium
was being constructed in 1999 on the
subject portion of Tuliao's property.
In March 2000, Tuliao discovered the
construction and demanded that the
DepEd cease and desist from continuing
the same. When DepEd refused, Tuliao
filed a complaint for recovery of
possession of the subject lot in 2002.
Thus, only two (2) years had elapsed from
the time the DepEd resistedflliao 's claims.
Clearly, he did not sleep on his rights.
There was no prolonged inaction that
barred him from prosecuting his claims.
At any rate, the MTCC was fair when it
stated that it could not order the
immediately removal of the structures and
directed Tuliao to exercise his option
under Article 448.
If that would not be feasible or practical
for DepEd, its remedy is to file an action
for expropriation.
Nora B. Calalang-Parulan, et al. Vs.
Rosario Calalang-Garcia, et al.G.R.
No. 184148. June 9, 2014
We have carefully reviewed the
records of this case and sustain the
finding of the CA that Pedro
Calalang is the sole and exclusive
owner of the disputed property.
a close perusal of the records of this case

would show that the records are bereft of
any concrete proof to show that the
subject property indeed belonged to
respondents maternal grandparents. The
evidence respondents adduced merely
consisted of testimonial evidence such as

51

the declaration of Rosario Calalang-Garcia
that they have been staying on the
property as far as she can remember and
that the property was acquired by her
parents through purchase from her
maternal grandparents. However, she
was unable to produce any document to
evidence the said sale, nor was she able
to present any documentary evidence
such as the tax declaration issued in the
name of either of her parents. Moreover,
we note that the free patent was issued
solely in the name of Pedro Calalang and
that it was issued more than 30 years
after the death of Encarnacion and the
dissolution of the conjugal partnership of
gains of the first marriage. Thus, we
cannot
subscribe
to
respondents
submission that the subject property
originally belonged to the parents of
Encarnacion and was acquired by Pedro
Calalang and Encarnacion.
We likewise cannot sustain the argument
of the petitioners that the disputed
property
belongs
to
the
conjugal
partnership of the second marriage of
Pedro Calalang with Elvira B. Calalang on
the ground that the title was issued in the
name of Pedro Calalang, married to Elvira
Berba [Calalang].
The contents of a certificate of title are
enumerated by Section 45 of Presidential
Decree No. 1529, otherwise known as the
Property
Registration
Decree:chanroblesvirtuallawlibrary
SEC.
45.
Statement
of
personal
circumstances in the certificate. Every
certificate of title shall set forth the full
names of all persons whose interests
make up the full ownership in the whole
land, including their civil status, and the
names of their respective spouses, if
married, as well as their citizenship,
residence and postal address. If the
property covered belongs to the conjugal
partnership, it shall be issued in the
names of both spouses.
A plain reading of the above provision
would clearly reveal that the phrase
Pedro Calalang, married to Elvira Berba

[Calalang] merely describes the civil
status and identifies the spouse of the
registered
owner
Pedro
Calalang.
Evidently, this does not mean that the
property is conjugal. In Litam v. Rivera,15
we declared:chanroblesvirtuallawlibrary
Further strong proofs that the properties
in question are the paraphernal properties
of Marcosa Rivera, are the very Torrens
Titles covering said properties. All the said
properties are registered in the name of
Marcosa Rivera, married to Rafael Litam.
This circumstance indicates that the
properties in question belong to the
registered owner, Marcosa Rivera, as her
paraphernal properties, for if they were
conjugal, the titles covering the same
should have been issued in the names of
Rafael Litam and Marcosa Rivera. The
words married to Rafael Litam written
after the name of Marcosa Rivera, in each
of the above mentioned titles are merely
descriptive of the civil status of Marcosa
Rivera, the registered owner of the
properties covered by said titles.
It must likewise be noted that in his
application for free patent,16 applicant
Pedro Calalang averred that the land was
first occupied and cultivated by him since
1935 and that he had planted mango
trees, coconut plants, caimito trees,
banana plants and seasonal crops and
built his house on the subject lot. But he
applied for free patent only in 1974 and
was issued a free patent while already
married to Elvira B. Calalang. Thus,
having possessed the subject land in the
manner and for the period required by law
after the dissolution of the first marriage
and before the second marriage, the
subject property ipso jure became private
property and formed part of Pedro
Calalangs exclusive property.17 It was
therefore excluded from the conjugal
partnership of gains of the second
marriage.18
As the sole and exclusive owner, Pedro
Calalang had the right to convey his
property in favor of Nora B. Calalang-

52

Parulan by executing a Deed of Sale on
February 17, 1984. The CA therefore
erred in ruling that Pedro Calalang
deprived his heirs of their respective
shares over the disputed property when
he alienated the same.
It is hornbook doctrine that successional
rights are vested only at the time of
death. Article 777 of the New Civil Code
provides that [t]he rights to the
succession are transmitted from the
moment of the death of the decedent. In
Butte v. Manuel Uy and Sons, Inc.,19 we
proclaimed the fundamental tenets of
succession:chanroblesvirtuallawlibrary
The principle of transmission as of the
time of the predecessors death is basic in
our Civil Code, and is supported by other
related articles. Thus, the capacity of the
heir is determined as of the time the
decedent died (Art. 1034); the legitime is
to be computed as of the same moment
(Art. 908), and so is the inofficiousness of
the donation inter vivos (Art. 771).
Similarly, the legacies of credit and
remission are valid only in the amount due
and outstanding at the death of the
testator (Art. 935), and the fruits accruing
after that instant are deemed to pertain to
the legatee (Art. 948).
Thus, it is only upon the death of

Pedro Calalang on December 27,
1989 that his heirs acquired their
respective inheritances, entitling
them to their pro indiviso shares to
his whole estate. At the time of
the sale of the disputed property,
the rights to the succession were
not yet bestowed upon the heirs of
Pedro Calalang. And absent clear
and convincing evidence that the
sale was fraudulent or not duly
supported
by
valuable
consideration
(in
effect
an
inofficious donation inter vivos),
the respondents have no right to
question the sale of the disputed
property on the ground that their
father deprived them of their
respective
shares.
Well
to
remember,
fraud
must
be
established by clear and convincing
evidence. Mere preponderance of
evidence is not even adequate to
prove fraud.20 The Complaint for
Annulment
of
Sale
and
Reconveyance of Property must
therefore
be
dismissed.cra1awlaw1ibrary
Republic of the Philippines Vs. Crisanto S.
RanesesG.R. No. 189970. June 9, 2014
It bears noting that in support of
his
claim
that
the
subject
properties
are
alienable
and
disposable,
respondent
merely
presented
the
ConversionSubdivision
Plan
which
was
prepared by Engr. Montallana with
the annotation that the subject
properties were inside alienable
and disposable land area [P]roj.
[N]o. 27-B as per LC Map No. 2623
certified by the Bureau of Forestry
on January 3, 196842 and the
Inter-Office Memorandum from the
LLDA.
Respondents reliance on the said

annotation and Inter-Office
Memorandum is clearly insufficient.
In Republic v. Dela Paz43 citing

Republic v. Sarmiento,44 this Court
ruled that the notation of the
surveyor-geodetic engineer on the
blue print copy of the conversion
and subdivision plan approved by
the Department of Environment
and Natural Resources (DENR)
Center, that this survey is inside
the alienable and disposable area,
Project No. 27-B. L.C. Map No.
2623, certified on January 3, 1968
by the Bureau of Forestry, is
insufficient and does not constitute
incontrovertible
evidence
to
overcome the presumption that the
land remains part of the inalienable
public domain.
In contrast, this Court has held

that the applicant must present a

53

certificate of land classification

status issued by the Community
Environment
and
Natural
Resources Office (CENRO)45 or the
Provincial Environment and Natural
Resources Office (PENRO)46 of the
DENR. He must also prove that the
DENR Secretary had approved the
land classification and released the
land as alienable and disposable,
and that it is within the approved
area
per
verification
through
survey by the CENRO or PENRO.
Further, the applicant must present
a copy of the original classification
approved by the DENR Secretary
and certified as true copy by the
legal custodian of the official
records. These facts must be
established by the applicant to
prove that the land is alienable and
disposable.47cralawred
Golden Valley Exploration, Inc. Vs. Pinkian
Mining Company and Copper Valley,
Inc.G.R. No. 190080. June 11, 2014
The Issue Before the Court
The central issue for the Courts

resolution is whether or not there
was a valid rescission of the OA.
The Courts Ruling
The Court resolves
affirmative.
the
issue
in
the
In reciprocal obligations, either party may

rescind the contract upon the others
substantial breach of the obligation/s he
had assumed thereunder. The basis
therefor is Article 1191 of the Civil Code
which
states
as
follows:ChanRoblesVirtualawlibrary
Art. 1191. The power to rescind
obligations is implied in reciprocal ones, in
case one of the obligors should not comply
with what is incumbent upon him.
The injured party may choose between
the fulfillment and the rescission of the
obligation, with the payment of damages
in either case. He may also seek
rescission, even after he has chosen
fulfillment, if the latter should become

impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.
This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law.
More accurately referred to as resolution,
the right of rescission under Article 1191
is predicated on a breach of faith that
violates the reciprocity between parties to
the contract.24 This retaliatory remedy is
given to the contracting party who suffers
the injurious breach on the premise that it
is unjust that a party be held bound to
fulfill his promises when the other violates
his.25cralawred
As a general rule, the power to
rescind an obligation must be invoked
judicially and cannot be exercised
solely on a partys own judgment that
the other has committed a breach of
the obligation.26 This is so because
rescission of a contract will not be
permitted for a slight or casual breach,
but only for such substantial and
fundamental violations as would defeat
the very object of the parties in making
the agreement.27As a well-established
exception, however, an injured party
need not resort to court action in
order to rescind a contract when the
contract itself provides that it may be
revoked or cancelled upon violation of
its
terms
and
conditions.28
As
elucidated in Froilan v. Pan Oriental
Shipping Co.,29 there is x x x nothing in
the law that prohibits the parties from
entering into agreement that violation of
the terms of the contract would cause
cancellation thereof, even without court
intervention.30 Similarly, in Dela Rama
Steamship Co., Inc. v. Tan,31 it was held
that judicial permission to rescind an
obligation is not necessary if a contract
contains a special provision granting the

54

power
of
cancellation
party.32cralawred
to
With this in mind, the Court therefore

affirms the correctness of the CAs
Decision
upholding
PMCs
unilateral
rescission of the OA due to GVEIs nonpayment of royalties considering the
parties express stipulation in the OA that
said agreement may be cancelled on such
ground.
By expressly stipulating in the OA that
GVEIs non-payment of royalties would
give PMC sufficient cause to cancel or
rescind the OA, the parties clearly had
considered such violation to be a
substantial breach of their agreement.
Thus, in view of the above-stated
jurisprudence on the matter, PMCs extrajudicial rescission of the OA based on the
said ground was valid.
While it remains apparent that PMC had
not judicially invoked the other grounds to
rescind in this case, the only recognizable
effect, however, is with respect to the
reckoning point as to when the contract
would be formally regarded as rescinded.
Where parties agree to a stipulation
allowing extra-judicial rescission, no
judicial decree is necessary for
rescission to take place; the extrajudicial
rescission
immediately
releases the party from its obligation
under the contract, subject only to court
reversal if found improper. On the other
hand, without a stipulation allowing
extra-judicial rescission, it is the
judicial decree that rescinds, and not
the will of the rescinding party. This
may be gathered from previous Court
rulings on the matter.
jurisprudence still indicates that an extrajudicial rescission based on grounds
not specified in the contract would
not preclude a party to treat the same
as rescinded. The rescinding party,
however, by such course of action,
subjects himself to the risk of being held
liable for damages when the extra-judicial
rescission is questioned by the opposing
party in court
Sps. Reynaldo and Hilly G. Sombilon Vs.
Atty.
Rey
Ferdinand
Garay,
et
al./Atty. Rey Ferdinand T. Garay Vs.
Judge Rolando S. Venadas, Sr.G.R.
No. 179914 & A.M. No. RTJ-06-2000. June
16, 2014
A judge owes the public and the
court the duty to know the law by
heart and to have the basic rules of
procedure at the palm of his
hands.1
The issuance of a writ of possession is

ministerial upon the court.
A debtor has one year from the date the
Certificate of Sale is registered with the
Register of Deeds within which to redeem
his property.75 During the one-year
redemption period, the purchaser may
possess the property by filing a petition
for the issuance of a writ of possession
before the court, upon the posting of a
bond.76 But after the one-year period, the
purchaser has a right to consolidate the
title and to possess the property, without
need of a bond.77 And once title is
consolidated under the name of the
purchaser, the issuance of the writ of
possession becomes ministerial on the
part of the court; thus, no discretion is left
to the court.78 Questions regarding the
regularity and validity of the mortgage or
the foreclosure sale may not be raised as
a ground to oppose or hold in abeyance
the issuance of the writ of possession as
these must be raised in a separate action
for the annulment of the mortgage or the
foreclosure sale.79 The pendency of such
action is also not a ground to stay the
issuance of a writ of possession.80
In this case, the redemption period had
long lapsed when PNB applied for the
issuance of the Writ of Possession. In fact,
the title over the subject property had
already been consolidated in PNBs name.
Thus, it was ministerial upon Judge
Venadas, Sr. to issue the Writ of
Possession in favor of PNB, the registered
owner of the subject property.
Though there are instances when

the issuance of the Writ of

55

Possession may be deferred,81 we
find none of these recognized
exceptions present in the instant
case. Spouses Sombilon claim that
the sale between PNB and Atty.
Garay was invalid as it was done in
violation of paragraph 5, Article
1491 of the Civil Code. However,
the alleged invalidity of the sale is
not a ground to oppose or defer
the issuance of the Writ of
Possession as this does not affect
PNBs right to possess the subject
property. Thus, there was no
reason for Judge Venadas, Sr. to
hold
in
abeyance
the
implementation of the Writ of
Possession. Clearly, he committed
grave abuse of discretion in issuing
the assailed Order holding in
abeyance the implementation of
the Writ of Possession because
PNB, as the registered owner, is
entitled to the possession of the
subject property as a matter of
right.
As to the Administrative Complaint filed
against Judge Venadas, Sr., we agree with
the findings and recommendations of the
OCA.
Records show that spouses Sombilon
failed to comply with the three-day notice
rule and the required proof of service
embodied in Sections 4, 5, and 6 of Rule
15 of the Rules of Court, thereby
rendering the motion fatally defective.
Despite this, Judge Venadas, Sr. still took
cognizance of the motion filed by spouses
Sombilon, depriving PNB and Atty. Garay
of their right to due process.
To exculpate himself from the charges
against him, Judge Venadas, Sr. claims
that the motion was personally served on
PNB and its counsel on July 12, 2005 but
they refused to receive the same.
However, as aptly pointed out by the OCA,
no affidavit was submitted to substantiate
such allegation. Thus, we agree with the
Court Administrator that Judge Venadas,
Sr. is guilty of grave abuse of authority
bordering on gross
Spouses Victor and Edna Binua Vs. Lucia

P. OngG.R. No. 207176. June 18, 2014
Spouses
Victor
and
Edna
Binua
(petitioners) seek the declaration of the
nullity of the real estate mortgages
executed by petitioner Victor in favor of
Lucia P. Ong (respondent), on the ground
that these were executed under fear,
duress and threat.
Article 1390(2) of the Civil Code provides
that contracts where the consent is
vitiated
by
mistake,
violence,
intimidation, undue influence or fraud
are voidable or annullable. Article 1335 of
the Civil Code, meanwhile, states that
[t]here is intimidation when one of the
contracting parties is compelled by a
reasonable and well-grounded fear of
an imminent and grave evil upon his
person or property, or upon the person
or property of his spouse, descendants or
ascendants, to give his consent. The
same article, however, further states that
[a] threat to enforce ones claim
through competent authority, if the
claim is just or legal, does not vitiate
consent.
Based on the petitioners own allegations,
what the respondent did was merely
inform
them
of
petitioner
Ednas
conviction in the criminal cases for
estafa. It might have evoked a sense of
fear or dread on the petitioners part, but
certainly there is nothing unjust, unlawful
or evil in the respondents act. The
petitioners also failed to show how such
information was used by the respondent in
coercing
them
into
signing
the
mortgages.
The
petitioners
must
remember
that
petitioner
Ednas
conviction was a result of a valid judicial
process and even without the respondent
allegedly ramming it into petitioner
Victors
throat,
petitioner
Ednas
imprisonment
would
be
a
legal
consequence of such conviction.
In
Callanta v. National Labor Relations
Commission,29 the Court stated that the
threat to prosecute for estafa not being an
unjust act, but rather a valid and legal act
to enforce a claim, cannot at all be
considered as intimidation.30 As correctly

56

ruled by the CA, [i]f the judgment of
conviction is the only basis of the
[petitioners] in saying that their consents
were vitiated, such will not suffice to
nullify the real estate mortgages and the
subsequent foreclosure of the mortgaged
properties. No proof was adduced to show
that [the respondent] used [force],
duress, or threat to make [petitioner]
Victor
execute
the
real
estate
mortgages.31cralawred
Mariano Mendoza and Elvira Lim Vs.

Spouses Leonora J. Gomez and
Gabriel V. GomezG.R. No. 160110. June
18, 2014
espondents anchor their claim for
damages on Mendozas negligence,
banking on Article 2176 of the Civil
Code,
to
wit:chanRoblesvirtualLawlibrary
Whoever by act or omission causes

damage to another, there being
fault or negligence, is obliged to
pay for the damage done. Such
fault or negligence, if there is no
pre-existing contractual relation
between the parties, is called a
quasi-delict and is governed by the
provisions of this Chapter.
In impleading Lim, on the other

hand, respondents invoke the
latters
vicarious
liability
as
espoused in Article 2180 of the
same
Code:chanRoblesvirtualLawlibrary
The obligation imposed by Article

2176 is demandable not only for
ones own acts or omissions, but
also for those of persons for whom
one is responsible.
xxxx
Employers shall be liable for the

damages
caused
by
their
employees and household helpers
acting within the scope of their
assigned tasks, even though the
former are not engaged in any
business of industry.
The first question to address, then,

is whether or not Mendozas
negligence
was
duly
proven.
Negligence is defined as the failure
to observe for the protection of the
interests of another person, that
degree of care, precaution and
vigilance which the circumstances
justly demand, whereby such other
person suffers injury.21cralawred
As found by the RTC, and affirmed
by the CA, Mendoza was negligent
in driving the subject Mayamy bus,
as demonstrated by the fact that,
at the time of the collision, the bus
intruded on the lane intended for
the Isuzu truck. Having encroached
on the opposite lane, Mendoza was
clearly in violation of traffic laws.
Article 2185 of the Civil Code
provides that unless there is proof
to the contrary, it is presumed that
a person driving a motor vehicle
has been negligent if at the time of
the mishap, he was violating any
traffic regulation. In the case at
bar, Mendozas violation of traffic
laws was the proximate cause of
the harm.
Proximate cause is defined as that
cause, which, in natural and
continuous sequence, unbroken by
any efficient intervening cause,
produces the injury, and without
which the result would not have
occurred.
And
more
comprehensively, the proximate
legal cause is that acting first and
producing
the
injury,
either
immediately or by setting other
events in motion, all constituting a
natural and continuous chain of
events, each having a close causal
connection with its immediate
predecessor, the final event in the
chain immediately effecting the
injury as a natural and probable
result of the cause which first
acted, under such circumstances

57

that the person responsible for the
first event should, as an ordinary
prudent and intelligent person,
have reasonable ground to expect
at the moment of his act or default
that an injury to some person
might
probably
result
22
therefrom. cralawred
The evidence on record shows that

before the collision, the Isuzu truck
was in its rightful lane, and was
even at a stop, having been
flagged down by a security guard
of St. Ignatius Village.23 The
mishap occurred when the Mayamy
bus, travelling at a fast speed as
shown by the impact of the
collision, and going in the opposite
direction as that of the Isuzu truck,
encroached on the lane rightfully
occupied by said Isuzu truck, and
caused the latter to spin, injuring
Perez, Anla, Banca, and Repisada,
and considerably damaging the
Isuzu truck.
Having
settled
the
fact
of
Mendozas negligence, then, the
next question that confronts us is
who may be held liable. According
to Manresa, liability for personal
acts and omissions is founded on
that indisputable principle of justice
recognized by all legislations that
when a person by his act or
omission
causes
damage
or
prejudice to another, a juridical
relation is created by virtue of
which the injured person acquires a
right to be indemnified and the
person causing the damage is
charged with the corresponding
duty of repairing the damage. The
reason for this is found in the
obvious truth that man should
subordinate his
acts
to the
precepts of prudence and if he fails
to observe them and causes
damage to another, he must repair
the damage.24 His negligence
having
caused
the
damage,
Mendoza is certainly liable to repair
said damage.
Additionally, Mendozas employer

may also be held liable under the
doctrine of vicarious liability or
imputed negligence. Under such
doctrine, a person who has not
committed the act or omission
which caused damage or injury to
another may nevertheless be held
civilly liable to the latter either
directly
or
subsidiarily
under
certain circumstances.25 In our
jurisdiction, vicarious liability or
imputed negligence is embodied in
Article 2180 of the Civil Code and
the basis for damages in the action
under said article is the direct and
primary negligence of the employer
in the selection or supervision, or
both, of his employee.26cralawred
In the case at bar, who is deemed

as Mendozas employer? Is it
Enriquez, the actual owner of the
bus or Lim, the registered owner of
the bus?
Generally, when an injury is caused by the
negligence of a servant or employee,
there instantly arises a presumption of law
that there was negligence on the part of
the master or employer either in the
selection of the servant or employee
(culpa in eligiendo) or in the supervision
over him after the selection (culpa
vigilando), or both. The presumption is
juris tantum and not juris et de jure;
consequently, it may be rebutted.
Accordingly, the general rule is that if the
employer shows to the satisfaction of the
court that in the selection and supervision
of his employee he has exercised the care
and diligence of a good father of a family,
the presumption is overcome and he is
relieved of liability.32 However, with the
enactment
of
the
motor
vehicle
registration law, the defenses available
under Article 2180 of the Civil Code - that
the employee acts beyond the scope of his
assigned task or that it exercised the due
diligence of a good father of a family to
prevent damage are no longer available
to the registered owner of the motor

58

vehicle, because the motor
registration law, to a certain
modified Article 2180.33cralawred
vehicle
extent,
As such, there can be no other conclusion

but to hold Lim vicariously liable with
Mendoza.
This does not mean, however, that

Lim is left without any recourse
against Enriquez and Mendoza.
Under the civil law principle of
unjust enrichment, the registered
owner of the motor vehicle has a
right to be indemnified by the
actual employer of the driver; and
under Article 2181 of the Civil
Code, whoever pays for the
damage caused by his dependents
or employees may recover from
the latter what he has paid or
delivered in satisfaction of the
claim.
Wentling is not personally liable for
the satisfaction of nominal damages
in favor of Deoferio
Intel shall be solely liable to Deoferio for
the satisfaction of nominal damages.
Wentling, as a corporate officer, cannot be
held liable for acts done in his official
capacity because a corporation, by legal
fiction, has a personality separate and
distinct from its officers, stockholders, and
members. There is also no ground for
piercing the veil of corporate fiction
because Wentling acted in good faith and
merely relied on Dr. Lees psychiatric
report
in
carrying
out
the
dismissal.48cralawred
Deoferio is not entitled to salary
differential, backwages, separation
pay, moral and exemplary damages,
as well as attorneys fees
Deoferios claim for salary differential is
already barred by prescription. Under
Article 291 of the Labor Code, all money
claims arising from employer-employee
relations shall be filed within three years
from the time the cause of action accrued.
In the current case, more than four years
have elapsed from the pre-termination of

his assignment to the United States until
the filing of his complaint against the
respondents. We thus see no point in
further discussing this matter. His claim
for backwages, separation pay, moral and
exemplary damages, as well as attorneys
fees must also necessarily fail as a
consequence of our finding that his
dismissal was for an authorized cause and
that the respondents acted in good faith
when they terminated his services.
Helen E. Cabling, assisted by her husband,
Arnel
Cabling
Vs.
Joselin
Tan
Lumapas,
as
rep
by
Nory
AbellanesG.R. No. 196950. June 18,
2014
The well-settled rule is that in the
extrajudicial foreclosure of real
estate mortgages under Act No.
313522 (as amended), the issuance
of a writ of possession23 is
ministerial upon the court after the
foreclosure sale and during the
redemption period when the court
may issue the order for a writ of
possession upon the mere filing of
an ex parte motion and the
approval of the corresponding
bond.24cralawred
The writ of possession also issues

as a matter of course, without
need of a bond or of a separate
and independent action, after the
lapse of the period of redemption,25
and after the consolidation of
ownership and the issuance of
a new TCT in the purchasers
name.26cralawred
There is, however, an exception to

the rule.
Under Section 33,27 Rule 39 of the

Rules of Court, which is made
applicable
to
extrajudicial
foreclosures
of
real
estate
mortgages, the possession of the
property shall be given to the
purchaser or last redemptioner
unless a third party is actually

59

holding the property in a capacity
adverse to the judgment obligor.28
Thus, the courts obligation to issue
an ex parte writ of possession in
favor of the purchaser in an
extrajudicial
foreclosure
sale
ceases to be ministerial when there
is a third party in possession of the
property claiming a right adverse
to
that
of
the
judgment
debtor/mortgagor.
full payment of the purchase price,

despite the delivery of the subject
property to the respondent. It is
provided in paragraph 6 of the
parties contract that only upon full
payment of the total sale value of
P2.2 million that the seller shall
execute a deed of absolute sale in
favor of the respondent.31cralawred
We emphasize that the exception

provided under Section 33, Rule 39
of the Rules of Court contemplates
a situation in which a third party
holds the property by adverse
title or right, such as that of a coowner, tenant or usufructuary,
who possesses the property in
his own right, and is not merely
the successor or transferee of
the right of possession of
another co-owner or the owner
of the property.29cralawred
In
the
present
case,
the
respondent cannot be said to
possess the subject property by
adverse title or right as her
possession is merely premised on
the alleged conditional sale of the
property to her by the judgment
debtor/mortgagor.
The execution of a contract of
conditional
sale
does
not
immediately transfer title to the
property to be sold from seller to
buyer. In such contract, ownership
or title to the property is retained
by the seller until the fulfillment of
a positive suspensive condition
which is normally the payment of
the purchase price in the manner
agreed upon.30cralawred
In the present case, the Deed of
Conditional Sale between the
respondent (buyer) and the subject
propertys registered owner (seller)
expressly reserved to the latter
ownership over the property until
It likewise appears from the

records that no deed of absolute
sale over the subject property has
been executed in the respondents
favor. Thus, the respondents
possession from the time the
subject property was delivered to
her by the seller cannot be claimed
as possession in the concept of an
owner, as the ownership and title
to the subject property still then
remained with the seller until the
title
to
the
property
was
transferred to the petitioner in
March 2009. In order for the
respondent not to be ousted by the
ex parte issuance of a writ of
possession, her possession of the
property must be adverse in that
she
must
prove
a
right
independent
of
and
even
superior
to
that
of
the
judgment debtor/mortgagor.
Under these circumstances, the

general
rule,
and
not
the
exception, applies.
Arco Pulp and Paper Co., Inc. and Candida
A. Santos Vs. Dan. T. Lim, doing
business under the name and style of
Quality Papers & Plastic Products
EnterprisesG.R. No. 206806. June 25,
2014
Novation must be stated in clear and
unequivocal terms to extinguish an
obligation. It cannot be presumed and
may be implied only if the old and new
contracts are incompatible on every point.
The obligation between the
parties was an alternative
obligation
The
rule on

alternative
obligations is
60

governed by Article 1199 of the Civil
Code,
which
states:chanRoblesvirtualLawlibrary
Article 1199. A person alternatively bound
by different prestations shall completely
perform one of them.
The creditor cannot be compelled to
receive part of one and part of the other
undertaking.
In an alternative obligation, there is more
than one object, and the fulfillment of one
is sufficient, determined by the choice of
the debtor who generally has the right of
election.32 The right of election is
extinguished when the party who may
exercise that option categorically and
unequivocally makes his or her choice
known.33 The choice of the debtor must
also be communicated to the creditor who
must
receive
notice
of
it
since:chanRoblesvirtualLawlibrary
The object of this notice is to give the
creditor . . . opportunity to express his
consent, or to impugn the election made
by the debtor, and only after said notice
shall the election take legal effect when
consented by the creditor, or if impugned
by the latter, when declared proper by a
competent court.34
respondent, would either pay him the

price of the raw materials or, in the
alternative, deliver to him the finished
products of equivalent value.
When petitioner Arco Pulp and Paper
tendered a check to respondent in partial
payment for the scrap papers, they
exercised their option to pay the price.
Respondents receipt of the check and his
subsequent act of depositing it constituted
his notice of petitioner Arco Pulp and
Papers option to pay.
The memorandum of
agreement did not constitute
a novation of the original
contract
The trial court erroneously ruled that the
execution
of
the
memorandum
of
agreement constituted a novation of the
contract between the parties. When
petitioner Arco Pulp and Paper opted
instead to deliver the finished products to
a third person, it did not novate the
original obligation between the parties.
The rules on novation are outlined in the
Civil
Code,
thus:chanRoblesvirtualLawlibrary
Article 1291. Obligations may be modified
by:
According to the factual findings of the

trial court and the appellate court, the
original contract between the parties was
for respondent to deliver scrap papers
worth P7,220,968.31 to petitioner Arco
Pulp and Paper. The payment for this
delivery became petitioner Arco Pulp and
Papers
obligation.
By
agreement,
petitioner Arco Pulp and Paper, as the
debtor, had the option to either (1) pay
the price or (2) deliver the finished
products
of
equivalent
value
to
respondent.35cralawred
(1) Changing their object or principal

conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the
rights of the creditor. (1203)
The appellate court, therefore, correctly

identified the obligation between the
parties as an alternative obligation,
whereby petitioner Arco Pulp and Paper,
after receiving the raw materials from
Article 1293. Novation which consists in

substituting a new debtor in the place of
the original one, may be made even
without the knowledge or against the will
of the latter, but not without the consent
Article 1292. In order that an obligation

may be extinguished by another which
substitute the same, it is imperative that it
be so declared in unequivocal terms, or
that the old and the new obligations be on
every point incompatible with each other.
(1204)

61

of the creditor. Payment by the new
debtor gives him the rights mentioned in
Articles 1236 and 1237. (1205a)
Novation
extinguishes
an
obligation
between two parties when there is a
substitution of objects or debtors or when
there is subrogation of the creditor. It
occurs only when the new contract
declares so in unequivocal terms or that
the old and the new obligations be on
every point incompatible with each
other.36cralawred
There is nothing in the memorandum of
agreement that states that with its
execution, the obligation of petitioner Arco
Pulp and Paper to respondent would be
extinguished. It also does not state that
Eric Sy somehow substituted petitioner
Arco Pulp and Paper as respondents
debtor. It merely shows that petitioner
Arco Pulp and Paper opted to deliver the
finished products to a third person
instead.
The consent of the creditor must also be
secured
for
the
novation
to
be
valid:chanRoblesvirtualLawlibrary
Novation
must
be
expressly
consented to. Moreover, the conflicting
intention and acts of the parties
underscore the absence of any express
disclosure or circumstances with which to
deduce a clear and unequivocal intent by
the parties to novate the old agreement.40
(Emphasis supplied)
In this case, respondent was not privy to
the memorandum of agreement, thus, his
conformity to the contract need not be
secured.
If the memorandum of agreement was
intended to novate the original agreement
between the parties, respondent must
have first agreed to the substitution of
Eric Sy as his new debtor. The
memorandum of agreement must also
state in clear and unequivocal terms that
it has replaced the original obligation of
petitioner Arco Pulp and Paper to
respondent.
Neither
of
these
circumstances is present in this case.
Petitioner Arco Pulp and Papers act of
tendering partial payment to respondent
also conflicts with their alleged intent to
pass on their obligation to Eric Sy. When
respondent sent his letter of demand to
petitioner Arco Pulp and Paper, and not to
Eric Sy, it showed that the former neither
acknowledged nor consented to the latter
as his new debtor. These acts, when taken
together, clearly show that novation did
not take place.
Since there was no novation, petitioner
Arco Pulp and Papers obligation to
respondent remains valid and existing.
Petitioner Arco Pulp and Paper, therefore,
must still pay respondent the full amount
of P7,220,968.31.
Petitioner Candida A. Santos
is solidarily liable with petitioner
corporation
As a general rule, directors, officers, or
employees of a corporation cannot be held
personally liable for obligations incurred
by the corporation. However, this veil of
corporate fiction may be pierced if
complainant is able to prove, as in this
case, that (1) the officer is guilty of
negligence or bad faith, and (2) such
negligence or bad faith was clearly and
convincingly proven.
Here, petitioner Santos entered into a
contract with respondent in her capacity
as the President and Chief Executive
Officer of Arco Pulp and Paper. She also
issued the check in partial payment of
petitioner corporations obligations to
respondent on behalf of petitioner Arco
Pulp and Paper. This is clear on the face of
the check bearing the account name,
Arco Pulp & Paper, Co., Inc.54 Any
obligation arising from these acts would
not, ordinarily, be petitioner Santos
personal undertaking for which she would
be solidarily liable with petitioner Arco
Pulp and Paper.
We find, however, that the corporate veil
must be pierced. Petitioner Santos cannot

62

be allowed to hide behind the corporate

veil. When petitioner Arco Pulp and
Papers obligation to respondent became
due and demandable, she not only issued
an unfunded check but also contracted
with a third party in an effort to shift
petitioner Arco Pulp and Papers liability.
She unjustifiably refused to honor
petitioner corporations obligations to
respondent. These acts clearly amount to
bad faith. In this instance, the corporate
veil may be pierced, and petitioner Santos
may be held solidarily liable with
petitioner Arco Pulp and Paper.
G.R. Nos. 183448/183464. June 30, 2014
The main issue to be resolved in
this case is whether a forged
instrument may become the root of
a valid title in the hands of an
innocent purchaser for value, even
if the true owner thereof has been
in possession of the genuine title,
which is valid and has not been
cancelled.
It is well-settled that a certificate

of title serves as evidence of an
indefeasible and incontrovertible
title to the property in favor of the
person
whose
name
appears
therein. The real purpose of the
Torrens system of land registration
is to quiet title to land and put a
stop forever to any question as to
the legality of the title.17cralawred
The Torrens system was intended to
guarantee
the
integrity
and
conclusiveness of the certificate of
registration, but the system cannot be
used for the perpetration of fraud against
the real owner of the registered land. The
system merely confirms ownership and
does not create it. It cannot be used to
divest lawful owners of their title for the
purpose of transferring it to another one
who has not acquired it by any of the
modes allowed or recognized by law.
Thus, the Torrens system cannot be used
to protect a usurper from the true owner
or to shield the commission of fraud or to
enrich oneself at the expense of
another.19cralawred
It is well-established in our laws and

jurisprudence that a person who is dealing
with a registered parcel of land need not
go beyond the face of the title. A person is
only charged with notice of the burdens
and claims that are annotated on the
title.20 This rule, however, admits of
exceptions: that a person dealing with
registered land has a right to rely on the
Torrens certificate of title and to dispense
with the need of inquiring further except
when the party has actual knowledge of
facts and circumstances that would impel
a reasonably cautious man to make such
inquiry or when the purchaser has
knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into
the status of the title of the property in
litigation. The presence of anything which
excites or arouses suspicion should then
prompt the vendee to look beyond the
certificate and investigate the title of the
vendor appearing on the face of said
certificate. One who falls within the
exception can neither be denominated an
innocent purchaser for value nor a
purchaser in good faith; and hence does
not merit the protection of the law.22
Thus, the determination whether one is a
buyer in good faith or can be considered
an innocent purchaser for value becomes
imperative. Section 55 of the Land
Registration Act provides protection to an
innocent purchaser for value23 by allowing
him to retain the parcel of land bought
and his title is considered
valid.
Otherwise, the title would be cancelled
and the original owner of the parcel of
land is allowed to repossess it.
Jurisprudence has defined an

innocent purchaser for value as
one who buys the property of
another without notice that some
other person has a right to or
interest therein and who then pays
a full and fair price for it at the
time of the purchase or before
receiving a notice of the claim or
interest of some other persons in
the property. Buyers in good faith

63

buy a property with the belief that
the person from whom they receive
the thing is the owner who can
convey title to the property. Such
buyers do not close their eyes to
facts that should put a reasonable
person on guard and still claim that
they
are
acting
in
good
faith.24cralawred
After executing the Deed of Sale
with Bernardina Abalon under
fraudulent circumstances, Rellama
succeeded in obtaining a title in his
name and selling a portion of the
property to the Andals, who had no
knowledge
of
the
fraudulent
circumstances
involving
the
transfer from Abalon to Rellama. In
fact, the Decisions of the RTC and
the CA show no factual findings or
proof
that
would
rebut
the
presumption in favor of the Andals
as buyers in good faith. Thus, the
CA correctly considered them as
buyers in good faith and upheld
their title.
The records of the RTC and the CA have a
finding that when Rellama sold the
properties to the Andals, it was still in his
name; and there was no annotation that
would blight his clean title. To the Andals,
there was no doubt that Rellama was the
owner of the property being sold to them,
and that he had transmissible rights of
ownership over the said property. Thus,
they had every right to rely on the face of
his title alone.
The established rule is that a

forged deed is generally null and
cannot convey title, the exception
thereto, pursuant to Section 55 of
the Land Registration Act, denotes
the registration of titles from the
forger to the innocent purchaser
for value. Thus, the qualifying point
here is that there must be a
complete chain of registered titles.
30
This means that all the transfers
starting from the original rightful
owner to the innocent holder for
value and that includes the
transfer to the forger must be
duly registered, and the title must

be
properly
issued
to
the
transferee.
In the instant case, there is no
evidence
that
the
chain
of
registered titles was broken in the
case of the Andals. Neither were
they proven to have knowledge of
anything that would make them
suspicious
of
the
nature
of
Rellamas ownership over the
subject parcel of land. Hence, we
sustain the CAs ruling that the
Andals were buyers in good faith.
Consequently, the validity of their
title to the parcel of the land
bought from Rellama must be
upheld.
Hector L. Uy Vs. Virginia G. Fule, et al.G.R.
No. 164961. June 30, 2014
The decisive question here is
whether or not the petitioner was a
purchaser in good faith of the
property in litis. The standard is
that for one to be a purchaser in
good faith in the eyes of the law,
he should buy the property of
another without notice that some
other person has a right to, or
interest in, such property, and
should pay a full and fair price for
the same at the time of such
purchase, or before he has notice
of the claim or interest of some
other persons in the property.1 He
buys the property with the belief
that the person from whom he
receives the property was the
owner and could convey title to the
property.2 Indeed, a purchaser
cannot close his eyes to facts that
should put a reasonable man on his
guard and still claim he acted in
good faith.3cralawred
An examination of the deed of sale
executed between Isabel Ronda, et al. and
the petitioner respecting the portions
covered by TCT No. 31120 and TCT No.
31121 indicates that the TCTs were issued
only on August 17, 1998 but the deed of
sale was executed on July 31, 1998. While
it is true, as the petitioner argues, that
succession occurs from the moment of

64

death of the decedent pursuant to Article
777 of the Civil Code,46 his argument did
not extend to whether or not he was a
buyer in good faith, but only to whether or
not, if at all, Isabel Ronda, et al., as the
heirs of Mariano Ronda, held the right to
transfer
ownership
over
their
predecessors property. The argument did
not also address whether or not the
transfer to the petitioner was valid.
Evidently, the petitioner entered into the
deed of sale without having been able to
inspect TCT No. 31120 and TCT No. 31121
by virtue of such TCTs being not yet in
existence at that time. If at all, it was OCT
No. 9852 and OCT No. 9853 that were
available at the time of the execution of
the deed of sale, and such OCTs were
presumably inspected by petitioner before
he signed the deed of sale. It is notable
that said OCTs categorically stated that
they were entered pursuant to an
emancipation patent of the Ministry of
Agrarian
Reform
pursuant
to
the
Operation Land Transfer (OLT) Program of
the government. Furthermore, said OCTs
plainly recited the following prohibition:
it shall not be transferred except by
hereditary
succession
or
to
the
Government in accordance with the
provisions of Presidential Decree No. 27,
Code of Agrarian Reforms of the
Philippines and other existing laws and
regulations.
The foregoing circumstances negated the
third element of good faith cited in
Bautista v. Silva, i.e., that at the time of
sale, the buyer was not aware of any
claim or interest of some other person in
the property, or of any defect or
restriction in the title of the seller or in his
capacity to convey title to the property.
As we have ruled in Bautista v. Silva,47 the
absence of the third condition put the
petitioner on notice and obliged him to
exercise a higher degree of diligence by
scrutinizing the certificates of title and
examining all factual circumstances in
order to determine the sellers title and
capacity to transfer any interest in the
lots. Consequently, it is not sufficient for
him to insist that he relied on the face of

the certificates of title, for he must further
show that he exercised reasonable
precaution by inquiring beyond the
certificates of title. Failure to exercise
such degree of precaution rendered him a
buyer in bad faith. It is a well-settled rule
that a purchaser cannot close his eyes to
facts which should put a reasonable man
upon his guard, and then claim that he
acted in good faith under the belief that
there was no defect in the title of the
vendor.48cralawred
Linda Rana Vs. Teresita Lee Wong, et

al./Sps Rosario and Wilson Uy, et al. Vs.
Sps. Reynaldo and Linda RanaG.R. No.
192861/G.R. No. 192862. June 30, 2014
Civil Case No. CEB-20893For Abatement
of Nuisance and Damages.
Under Article 694 of the Civil Code, a nuisance is
defined as "any act, omission, establishment,
business, condition of property, or anything else
which: (1) Injures or endangers the health or
safety of others; or (2) Annoys or offends the
senses; or (3) Shocks, defies or disregards
decency or morality; or (4) Obstructs or
interferes with the free passage of any public
highway or street, or any body of water; or (5)
Hinders or impairs the use of property." Based on
case law, however, the term "nuisance" is
deemed to be "so comprehensive that it has been
applied to almost all ways which have interfered
with the rights of the citizens, either in person,
property, the enjoyment of his property, or his
comfort."48cralawred
Article 695 of the Civil Code classifies nuisances
with respect to the object or objects that they
affect. In this regard, a nuisance may either be:
(a) a public nuisance (or one which "affects a
community or neighborhood or any considerable
number of persons, although the extent of the
annoyance, danger or damage upon individuals
may be unequal"); or (b) a private nuisance (or
one "that is not included in the foregoing
definition" [or, as case law puts it, one which
"violates only private rights and produces
damages
to
but
one
or
a
few
persons"]).49cralawred
Jurisprudence
further

classifies
nuisances
in
65

relation to their legal susceptibility to summary

abatement (that is, corrective action without
prior judicial permission). In this regard, a
nuisance "may either be: (a) a nuisance per se
(or one which "affects the immediate safety of
persons and property and may be summarily
abated under the undefined law of necessity"); 50
or (b) a nuisance per accidens (or that which
"depends
upon
certain
conditions
and
circumstances, and its existence being a question
of fact, it cannot be abated without due hearing
thereon in a tribunal authorized to decide
whether such a thing does in law constitute a
nuisance.")51cralawred
It is a standing jurisprudential rule that
unless a nuisance is a nuisance per se, it
may not be summarily abated. In Lucena
Grand Central Terminal, Inc. v. Jac Liner, lnc.,52
the Court, citing other cases on the matter,
emphasized the need for judicial intervention
when the nuisance is not a nuisance per se, to
wit:cralawlawlibrary
In Estate of Gregoria Francisco v. Court of
Appeals,
this
Court
held:chanRoblesvirtualLawlibrary
Respondents can not seek cover under the
general welfare clause authorizing the abatement
of nuisances without judicial proceedings. That
tenet applies to a nuisance per se, or one which
affects the immediate safety of persons and
property and may be summarily abated
under the undefined law of necessity. The
storage of copra in the quonset building is a
legitimate business. By its nature, it can not be
said to be injurious to rights of property, of
health or of comfort of the community. If it
be a nuisance per accidens it may be so
proven in a hearing conducted for that purpose.
It is not per se a nuisance warranting its
summary
abatement
without
judicial
intervention.
In Pampanga Bus Co., Inc. v. Municipality of
Tarlac where the appellant-municipality similarly
argued that the terminal involved therein is a
nuisance that may be abated by the Municipal
Council via an ordinance, this Court held: "Suffice
it to say that in the abatement of nuisances
the provisions of the Civil Code-(Articles
694-707) must be observed and followed.
This appellant failed to

supplied; citations omitted)
do."53
(Emphases
Aside from the remedy of summary abatement

which should be taken under the parameters
stated in Articles 704.54 (for public nuisances)
and 70655 (for private nuisances) of the Civil
Code, a private person whose property right was
invaded or unreasonably interfered with by the
act, omission, establishment, business or
condition of the property of another may file a
civil action to recover personal damages.56
Abatement may be judicially sought through a
civil
action
therefor57
if
the
pertinent
requirements under the Civil Code for summary
abatement, or the requisite that the nuisance is a
nuisance per se, do not concur. To note, the
remedies of abatement and damages are
cumulative-;
hence,
both
may
be
demanded.58cralawred
In the present cases, Wong, et al. availed of the
remedy of judicial abatement and damages
against Sps. Rana, claiming that both the
elevated and cemented subject portion and
the
subject
backfilling
are
"nuisances"
caused/created by the latter which curtailed their
use and enjoyment of their properties.
With respect to the elevated and cemented
subject portion, the Court finds that the same
is not a nuisance per se. By its nature, it is not
injurious to the health or comfort of the
community. It was built primarily to facilitate the
ingress and egress of Sps. Rana from their house
which was admittedly located on a higher
elevation than the subject road and the adjoining
Uy, and Wong-Ong properties. Since the subject
portion is not a nuisance per se (but actually a
nuisance per accidens as will be later discussed)
it cannot be summarily abated. As such, Wong,
et al. 's demolition of Sps. Rana's subject portion,
which was not sanctioned under the RTC's
November 27, 1997 Order, remains unwarranted.
Resultantly, damages ought to be awarded in
favor of Sps. Rana particularly that of (a)
nominal damages59 - for the vindication and
recognition of Sps. Rana's right to be heard
before the court prior to Wong, et al. 's
abatement of the subject portion (erroneously
perceived as a nuisance per se) - and (b)
temperate damages60 - for the pecuniary loss
owing to the demolition of the subject portion,

66

which had been established albeit uncertain as to

the actual amount of loss.
Sps. Rana's entitlement to the above-mentioned
damages, however, only stands in theory. This is
because the actual award thereof is precluded by
the damage they themselves have caused Wong,
et al. in view of their construction of the subject
portion. As the records establish, Sps. Rana,
without prior consultation with Wong, et al. and
to their sole advantage, elevated and cemented
almost half61 of the 10-meter wide subject road.
As homeowners of Peace Valley Subdivision,
Wong, et al. maintain the rights to the
unobstructed use of and free passage over the
subject road. By constructing the subject portion,
Sps. Rana introduced a nuisance per accidens
that particularly transgressed the aforesaid
rights. Thus, for the vindication and recognition
of Wong, et al. 's rights, Sps. Rana should be
similarly held liable for nominal damages.
Under Article 2216 of the Civil Code,[62 courts
have the discretion to determine awards of
nominal and temperate damages without actual
proof of pecuniary loss, as in this case.
Assessing the respective infractions of the parties
herein, the Court finds it prudent to sustain the
CA's verdict offsetting the damage caused by said
parties against each other. The Court can,
however, only concur with the CA in result since
the latter inaccurately applied,63 as basis for its
ruling, the in pari delicto principle enunciated in
the case of Yu Bun Guan v. Ong64 (Yu Guan). In
said case, the Court discussed the in pari delicto
principle with respect to the subject matter of
inexistent
and
void
contracts,
viz.:chanRoblesvirtualLawlibrary
Inapplicability of the in Pari Delicto Principle
The principle of in pari delicto provides that when
two parties are equally at fault, the law leaves
them as they are and denies recovery by either
one of them. However, this principle does not
apply with respect to inexistent and void
contracts. Said this Court in Modina v. Court of
Appeals:cralawlawlibrary
"The principle of in pari delicto non oritur 'actio
denies all recovery to the guilty parties inter se.
It applies to cases where the nullity arises from
the illegality of the consideration or the purpose
of the contract. When two persons are equally at
fault, the law does not relieve them. The

exception to this general rule is when the
principle is invoked with respect to inexistent
contracts."65
(emphasis
supplied;
citations
omitted)
Clearly, no void or inexistent contract is herein at
issue, hence, the Court's disagreement with the
CA's invocation of Yu Guan in this respect.
As for the subject backfilling touching the
perimeter fence of the Uy property, records show
that the said fence was not designed to act as a
retaining wall66 but merely to withhold windload
and its own load.67 Both the RTC and the CA
found the subject backfilling to have added
pressure
on
the
fence,68
consequently
endangering the safety of the occupants of the
Uy property, especially considering the higher
elevation of the Rana property. With these
findings, the Court thus agrees with the courts a
quo that there is a need for Linda Rana to
construct a retaining wall69 which would bear the
weight and pressure of the filling materials
introduced on their property. The Court,
however, observed that neither the RTC nor the
CA specified in their respective decisions the
backfilled areas which would require the retaining
wall. Due to the technicality of the matter, and
considering that the due authenticity and
genuineness of the findings/recommendation70 of
the OBO and the accompanying sketch71 thereto
were not specifically denied by Sps. Rana, 72 the
required retaining wall shall be constructed in
accordance with the said sketch which showed
the area backfilled.
Spouses Eduardo and Lydia Silos Vs.
Philippine National BankG.R. No.
181045. July 2, 2014
In loan agreements, it cannot be
denied that the rate of interest is a
principal condition, if not the most
important component. Thus, any
modification
thereof
must
be
mutually agreed upon; otherwise,
it has no binding effect. Moreover,
the Court cannot consider a
stipulation granting a party the
option to prepay the loan if said
party is not agreeable to the
arbitrary interest rates imposed.
Premium may not be placed upon a

67

stipulation in a contract which

grants one party the right to
choose whether to continue with or
withdraw from the agreement if it
discovers that what the other party
has been doing all along is
improper or illegal.
These stipulations must be once
more invalidated, as was done in
previous
cases. The common
denominator in these cases is the
lack of agreement of the parties to
the imposed interest rates. For this
case, this lack of consent by the
petitioners has been made obvious
by the fact that they signed the
promissory notes in blank for the
respondent to fill. We find credible
the testimony of Lydia in this
respect. Respondent failed to
discredit her; in fact, its witness
PNB Kalibo Branch Manager Aspa
admitted that interest rates were
fixed solely by its Treasury
Department in Manila, which were
then simply communicated to all
PNB branches for implementation.
If this were the case, then this
would explain why petitioners had
to sign the promissory notes in
blank, since the imposable interest
rates have yet to be determined
and fixed by respondents Treasury
Department in Manila.
Accordingly, petitioners are correct
in arguing that estoppel should not
apply to them, for [e]stoppel
cannot be predicated on an illegal
act. As between the parties to a
contract, validity cannot be given
to it by estoppel if it is prohibited
by law or is against public policy.88
It appears that by its acts,
respondent violated the Truth in
Lending Act, or Republic Act No.
3765, which was enacted to
protect x x x citizens from a lack of
awareness of the true cost of credit
to the user by using a full
disclosure of such cost with a view
of preventing the uninformed use
of credit to the detriment of the
national economy.89 The law
gives a detailed enumeration of

the specific information required to
be disclosed, among which are the
interest and other charges incident
to the extension of credit.90
Section 4 thereof provides that a
disclosure statement must be
furnished
prior
to
the
consummation of the transaction
By requiring the petitioners to sign
the credit documents and the
promissory notes in blank, and
then unilaterally filling them up
later on, respondent violated the
Truth in Lending Act, and was
remiss in its disclosure obligations
AFP Retirement and Separation Benefits
System [AFP-RSBS] Vs. Republic of
the PhilippinesG.R. No. 180086. July 2,
2014
The period of possession prior to the
declaration that land is alienable and
disposable agricultural land is included in
the computation of
possession
for
purposes of acquiring registration rights
over a property if the land has already
been declared as such at the time of the
application for registration.
this court explained that there was no
other legislative intent that could be
associated with the date, June 12, 1945,
as written in our registration laws except
that it qualifies the requisite period of
possession and occupation.
The law
imposes no requirement that land should
have
been
declared
alienable
and
disposable agricultural land as early as
June 12, 1945.
Therefore, what is important in computing
the period of possession is that the land
has already been declared alienable and
disposable at the time of the application
for registration. Upon satisfaction of this
requirement, the computation of the
period may include the period of adverse
possession prior to the declaration that
land is alienable and disposable.
Persons are entitled to the registration of
their titles upon satisfaction of all the
requirements enumerated under our
laws. No presumption or doctrine in favor

68

of state ownership can deprive them of
their titles once all the conditions are
satisfied.39 Our Constitution contains no
such limit upon our citizens or privilege
upon the state.40
Neither was this
doctrine extended to our organic acts. 41
Respondent argued that [s]ince the land
subject of petitioners application for
registration was classified alienable and
disposable only on March 15, 1982, it
follows that petitioner could not have
possessed the same in the concept of
owner, earlier than the said date.42
Respondent
is
mistaken.
Although
adverse, open, continuous, and notorious
possession in the concept of an owner is a
conclusion of law to be determined by
courts, it has more to do with a persons
belief in good faith that he or she has just
title to the property that he or she is
occupying.
It is unrelated to the
declaration that land is alienable or
disposable. A possessor or occupant of
property may, therefore, be a possessor in
the concept of an owner prior to the
determination that the property is
alienable and disposable agricultural
land. His or her rights, however, are still
to be determined under the law.
Petitioners
right
to
the
original
registration of title over the property is,
therefore, dependent on the existence of:
a) a declaration that the land is alienable
and disposable at the time of the
application for registration and b) open
and continuous possession in the concept
of an owner through itself or through its
predecessors-in-interest since June 12,
1945 or earlier.
In this case, there is no dispute that the
properties were already declared alienable
and disposable land on March 15,
1982. Hence, the property was already
alienable and disposable at the time of
petitioners application for registration on
July 10, 1997.
As to the required period of possession,
petitioner was able to show that it,
through itself or its predecessors-ininterest, has been in open, continuous,

exclusive, and notorious possession before
1945 through testimonies and documents.
Respondent
argues
that
although
petitioner is a government-owned and controlled corporation, it cannot acquire
title through acquisitive prescription. This
argument is unmeritorious. The type of
corporation that petitioner is has nothing
to do with the grant of its application for
original
registration.
Petitioner
also
acquired title to the property under
Section 14(1) of the Property Registration
Decree or Section 48(b) of the Public Land
Act,
and
not
through
acquisitive
prescription.
If respondents argument stems from the
Court of Appeals ruling that petitioner
cannot acquire title to the property
because of Section 3, Article XII of the
Constitution, which prohibits private
corporations from acquiring public land,
respondent is, again, mistaken.
The
prohibition in Section 3, Article XII of the
Constitution applies only to private
corporations. Petitioner is a government
corporation organized under Presidential
Decree No. 361, as amended by
Presidential Decree No. 1656.
Serconsision R. Mendoza Vs. Aurora
Mendoza FerminG.R. No. 177235. July
7, 2014
With regard to the issue on forgery, the
general rule is, the same cannot be
presumed and must be proved by clear,
positive and convincing evidence; the
burden of proof of which lies on the party
alleging forgery.43 The best evidence of a
forged signature in the instrument is the
instrument itself reflecting the alleged
forged signature.44 The fact of forgery can
only be established by comparison
between the alleged forged signature and
the authentic and genuine signature of the
person whose signature is theorized upon
to have been forged.45
We cannot likewise uphold the validity of
the questioned Deed of Absolute Sale on
the basis that it was notarized by one
Atty. Julian Tubig, and, therefore, carries

69

with it the presumption of regularity. Time
and again, we have ruled that while it is
true that a notarized document carries the
evidentiary weight conferred upon it with
respect to its due execution, and has in its
favor the presumption of regularity, this
presumption, however, is not absolute.60
It may be rebutted by clear and
convincing evidence to the contrary.61
For one, it is undisputed that there are
two (2) versions of the notarized Deed of
Absolute Sale, as admitted by petitioner,
that were allegedly executed for taxation
purposes.62 Such is certainly not in
accordance with the normal scheme of
things. Executing different adaptations of
a conveying document involving the same
parties and property invites questions, not
only as to the due execution and
genuineness thereof but also with respect
to the true intent of the parties in the
provisions contained therein. In addition,
the records show that one of the deeds is
allegedly notarized by Atty. Julian Tubig
for the City of Pasay (superimposed by
word Manila).
Taking into account the foregoing defects,
as well as the testimony of respondent
and her expert witnesses (had it been
properly appreciated), is sufficient to
overcome the presumption of regularity
attached to public documents and to meet
the stringent requirements to prove
forgery.
The necessity of a public document for
contracts which transmit or extinguish real
rights over immovable property, as
mandated by Article 1358 of the Civil
Code, is only for convenience; it is not
essential for validity or enforceability.64
The presumptions that attach to notarized
documents can be affirmed only so long as
it is beyond dispute that the notarization
was regular.65 A defective notarization will
strip the document of its public character
and reduce it to a private instrument.66
Consequently, when there is a defect in
the notarization of a document, the clear
and convincing evidentiary standard
normally attached to a duly-notarized
document is dispensed with, and the
measure to test the validity of such

document is preponderance of evidence. 67
Here, preponderance of evidence heavily
tilts in favor of respondent.
Being a forgery, the Deed of Absolute Sale
conveyed nothing in favor of Eduardo C.
Sanchez, as claimed by petitioner. The
necessary consequence of which was
succinctly stated by the CA in the
following wise:chanroblesvirtuallawlibrary
Having ruled that the signatures of
Leonardo in the Deed of Absolute Sale
were forgeries, then it follows that such
document should be annulled for lack
of consent on the part of Leonardo.
Notably, the subject property was part of
the conjugal property of the Spouses
Leonardo and Serconsision Mendoza, this
can be gleaned from TCT No. 48946
wherein it states that the same is owned
by Leonardo G. Mendoza & Serconsision
R. Mendoza, both of legal age. Besides,
Aurora has not adduced any proof to
substantiate
her
allegation
that
Serconsision was just the common-law
wife of her father.
As Leonardo and Serconsision were
married sometime in 1985, the applicable
provision governing the property relations
of the spouses is Article 172 of the Civil
Code of the Philippines which states that
the wife cannot bind the conjugal
partnership
without
the
husbands
consent. In Felipe vs. Heirs of Maximo
Aldon, a case decided under the provisions
of the Civil Code, the Supreme Court had
the occasion to rule that the sale of a land
belonging to the conjugal partnership
made by the wife without the consent of
the husband is voidable. The Supreme
Court further ruled that the view that the
disposal by the wife of their conjugal
property without the husbands consent is
voidable is supported by Article 173 of the
Civil Code which states that contracts
entered by the husband without the
consent of the wife when such consent is
required are annullable at her instance
during the marriage and within ten years
from the transaction questioned. In the

70

present case, the fictitious Deed of
Absolute Sale was executed on September
22, 1986, one month after or specifically
on November 25, 1986, Leonardo died.
Aurora as one of the heirs and the duly
appointed administratrix of Leonardos
estate, had the right therefore to seek for
the annulment of the Deed of Sale as it
deprived her and the other legal heirs of
Leonardo of their hereditary rights.
Consequently, TCT No. 52593 in the name
of Eduardo must be cancelled. Defendantappellees unauthorized and fictitious
transaction cannot be invoked as a source
of right.68
Considering that the questioned sale was
concluded on September 22, 1986, before
the Family Code took effect, the
transaction could still be aptly governed
by the then governing provisions of the
Civil Code. Under Article 173 of the Civil
Code, the remedy available to the wife in
case her husband should dispose of their
conjugal property without her consent is
as follows:chanroblesvirtuallawlibrary
Art. 173. The wife may, during the
marriage, and within ten years from the
transaction questioned, ask the courts for
the annulment of any contract of the
husband entered into without her consent,
when such consent is required, or any act
or contract of the husband which tends to
defraud her or impair her interest in the
conjugal partnership property. Should the
wife fail to exercise this right, she or her
heirs, after the dissolution of the
marriage, may demand the value of the
property fraudulently alienated by the
husband.
Vicente
Josefa
Vs.
Manila
Electric
CompanyG.R. No. 182705. July 18,
2014
Bautistas
negligence
was
the
proximate cause of the property
damage caused to Meralco The truck
hit the electricity post
Whoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the
damage done. This fault or negligence, if
there is no pre-existing contractual

relation between the parties, is called
quasi-delict.36 Thus, for a quasi-delict case
to
prosper,
the
complainant
must
establish:
(1)
damages
to
the
complainant; (2) negligence, by act or
omission, of the defendant or by some
person for whose acts the defendant must
respond, was guilty; and (3) the
connection of cause and effect
between such negligence and the
damages.37 With respect to the third
element, the negligent act or omission
must be the proximate cause of the injury.
Bautista is presumed to be negligent
in driving the truck under
the
doctrine
of
res
ipsa
loquitur Contrary to the CAs opinion,
the finding that it was the truck that hit
the electricity post would not immediately
result in Josefas liability. It is a basic rule
that it is essentially the wrongful or
negligent act or omission that creates
the vinculum juris in extra-contractual
obligations.46 In turn, the employees
negligence
established
to
be
the
proximate cause of the damage would
give rise to the disputable presumption
that the employer did not exercise the
diligence of a good father of a family in
the selection and supervision of the erring
employee.47
Nonetheless, in some cases where
negligence is difficult to prove, the
doctrine of res ipsa loquitur permits
an inference of negligence on the part
of the defendant or some other
person
who
is
charged
with
negligence
where
the
thing
or
transaction speaks for itself.48 This
doctrine postulates that, as a matter of
common knowledge and experience and in
the absence of some explanation by the
defendant who is charged with negligence,
the very nature of occurrences may justify
an inference of negligence on the part of
the
person
who
controls
the
instrumentality causing the injury. In
other words, res ipsa loquitur is grounded
on the superior logic of ordinary human
experience that negligence may be
deduced from the mere occurrence of the

71

accident itself.49
The procedural effect of res ipsa
loquitur in quasi-delict cases is that
the
defendants
negligence
is
presumed. In other words, the burden
of evidence shifts to the defendant to
prove that he did not act with
negligence.50
This
doctrine
thus
effectively furnishes a bridge by which the
complainant, without knowledge of the
cause of the injury, reaches over to the
defendant, who knows or should know the
cause, for any explanation of care
exercised by him to prevent the injury.51
For this doctrine to apply, the complainant
must show that: (1) the accident is of
such character as to warrant an inference
that it would not have happened except
for the defendants negligence; (2) the
accident must have been caused by an
agency or instrumentality within the
exclusive management or control of the
person charged with the negligence
complained of; and (3) the accident must
not have been due to any voluntary action
or contribution on the part of the person
injured.
The present case satisfies all the elements
of res ipsa loquitur. It is very unusual and
extraordinary for the truck to hit an
electricity post, an immovable and
stationary object, unless Bautista, who
had the exclusive management and
control of the truck, acted with fault or
negligence. We cannot also conclude that
Meralco contributed to the injury since it
safely and permanently installed the
electricity post beside the street. Thus, in
Republic v. Luzon Stevedoring Corp.,52 we
imputed vicarious responsibility to Luzon
Stevedoring Corp. whose barge rammed
the bridge, also an immovable and
stationary object. In that case, we found it
highly unusual for the barge to hit the
bridge which had adequate openings for
the passage of water craft unless Luzon
Stevedoring Corp.s employee had acted
with negligence.
Josefa is vicariously liable
under paragraph 5, Article 2180
of the Civil Code
There is an employer-employee
relations between Bautista and Josefa
The finding that Bautista acted with
negligence in driving the truck gives rise
to the application of paragraph 5, Article
2180 of the Civil Code which holds the
employer vicariously liable for damages
caused by his employees within the scope
of their assigned tasks. In the present
case, Josefa avoids the application of this
provision by denying that Bautista was his
employee at the time of the incident.
Josefa cannot evade his responsibility by
mere denial of his employment relations
with Bautista in the absence of proof that
his truck was used without authorization
or that it was stolen when the accident
occurred.53 In quasi-delict cases, the
registered owner of a motor vehicle is the
employer of its driver in contemplation of
law.54 The registered owner of any vehicle,
even if not used for public service, would
primarily be responsible to the public or to
third persons for injuries caused while the
vehicle was being driven on highways or
streets. The purpose of motor vehicle
registration is precisely to identify the
owner so that if any injury is caused by
the vehicle, responsibility can be imputed
to the registered owner.55
Josefa failed to show that he
exercised
the diligence of a good father of a
family
in the selection and supervision of
Bautista
In order for Josefa to be relieved of his
vicarious liability, he must show that he
exercised due diligence in the selection
and supervision of Bautista. In concrete
terms, Josefa should show by competent
object or documentary evidence that he
examined Bautista as to the latters
qualifications, experience and service
records prior to employment. He should
likewise prove by competent object or
documentary evidence that he formulated
standard operating procedures, monitored
their
implementation
and
imposed
disciplinary measures for breach of these

72

procedures.56 However, Josefa failed to

overcome the presumption of negligence
against him since he waived his right to
present evidence during trial. We are thus
left with no other conclusion other than to
rule that Josefa is primarily liable for all
natural and probable consequences of
Bautistas negligence.57
Soledad Lavadia Vs. Heirs of Juan Luces
Luna, represented by Gregorio Z. Luna
and Eugenia Zaballero-LunaG.R. No.
171914. July 23, 2014
Divorce between Filipinos is void and
ineffectual under the nationality rule
adopted by Philippine law. Hence, any
settlement of property between the
parties of the first marriage involving
Filipinos submitted as an incident of a
divorce obtained in a foreign country lacks
competent judicial approval, and cannot
be enforceable against the assets of the
husband who contracts a subsequent
marriage.
1.
Atty. Lunas first marriage with
Eugenia
subsisted up to the time of his death
Filipinos has remained even under the

Family Code,16 even if either or both of
the spouses are residing abroad. 17 Indeed,
the only two types of defective marital
unions under our laws have been the void
and the voidable marriages. As such, the
remedies against such defective marriages
have been limited to the declaration of
nullity of the marriage and the annulment
of the marriage.
The first marriage between Atty. Luna and

Eugenia, both Filipinos, was solemnized in
the Philippines on September 10, 1947.
The law in force at the time of the
solemnization was the Spanish Civil Code,
which adopted the nationality rule. The
Civil Code continued to follow the
nationality rule, to the effect that
Philippine laws relating to family rights
and duties, or to the status, condition and
legal capacity of persons were binding
upon citizens of the Philippines, although
living abroad.15 Pursuant to the nationality
rule, Philippine laws governed this case by
virtue of both Atty. Luna and Eugenio
having remained Filipinos until the death
of Atty. Luna on July 12, 1997 terminated
their marriage.
It is true that on January 12, 1976, the

Court of First Instance (CFI) of Sto.
Domingo in the Dominican Republic issued
the Divorce Decree dissolving the first
marriage of Atty. Luna and Eugenia.18
Conformably with the nationality rule,
however, the divorce, even if voluntarily
obtained abroad, did not dissolve the
marriage between Atty. Luna and Eugenia,
which subsisted up to the time of his
death on July 12, 1997. This finding
conforms to the Constitution, which
characterizes marriage as an inviolable
social institution,19 and regards it as a
special contract of permanent union
between a man and a woman for the
establishment of a conjugal and family
life.20 The non-recognition of absolute
divorce
in
the
Philippines
is
a
manifestation of the respect for the
sanctity of the marital union especially
among Filipino citizens. It affirms that the
extinguishment of a valid marriage must
be grounded only upon the death of either
spouse, or upon a ground expressly
provided by law. For as long as this public
policy on marriage between Filipinos
exists, no divorce decree dissolving the
marriage between them can ever be given
legal
or
judicial
recognition
and
enforcement in this jurisdiction.
2.
The Agreement for Separation and
Property Settlement
was void for lack of court approval
From the time of the celebration of the

first marriage on September 10, 1947
until the present, absolute divorce
between Filipino spouses has not been
recognized in the Philippines. The nonrecognition of absolute divorce between
The petitioner insists that the Agreement

for Separation and Property Settlement
(Agreement) that the late Atty. Luna and
Eugenia had entered into and executed in
connection with the divorce proceedings
before the CFI of Sto. Domingo in the

73

Dominican Republic to dissolve and
liquidate their conjugal partnership was
enforceable against Eugenia. Hence, the
CA
committed
reversible
error
in
decreeing otherwise.
The insistence
unwarranted.
of
the
petitioner
was
Considering that Atty. Luna and Eugenia

had not entered into any marriage
settlement prior to their marriage on
September 10, 1947, the system of
relative
community
or
conjugal
partnership of gains governed their
property relations. This is because the
Spanish Civil Code, the law then in force
at the time of their marriage, did not
specify the property regime of the spouses
in the event that they had not entered
into any marriage settlement before or at
the time of the marriage. Article 119 of
the Civil Code clearly so provides, to
wit:cralawlawlibrary
Article 119. The future spouses may
in the marriage settlements agree
upon absolute or relative community
of
property,
or
upon
complete
separation of property, or upon any
other regime. In the absence of
marriage settlements, or when the
same are void, the system of relative
community or conjugal partnership of
gains as established in this Code,
shall govern the property relations
between husband and wife.
Article 142 of the Civil Code has defined a
conjugal partnership of gains
The conjugal partnership of gains subsists
until terminated for any of various causes
of termination enumerated in Article 175
of
the
Civil
Code,
viz:chanRoblesvirtualLawlibrary
Article 175. The conjugal partnership of
gains terminates:cralawlawlibrary
(1)
Upon
the
death
of
spouse;chanroblesvirtuallawlibrary
either
(2) When there is a decree of legal
separation;chanroblesvirtuallawlibrary
(3)
When
the
marriage
annulled;chanroblesvirtuallawlibrary
is
(4) In case of judicial separation of

property under Article 191.
The mere execution of the Agreement by
Atty. Luna and Eugenia did not per se
dissolve and liquidate their conjugal
partnership of gains. The approval of the
Agreement by a competent court was still
required under Article 190 and Article 191
of
the
Civil
Code,
as
Article 190. In the absence of an express
declaration in the marriage settlements,
the separation of property between
spouses during the marriage shall not take
place save in virtue of a judicial order.
(1432a)
Article 191. The husband or the wife may
ask for the separation of property, and it
shall be decreed when the spouse of the
petitioner has been sentenced to a penalty
which carries with it civil interdiction, or
has been declared absent, or when legal
separation has been granted.
xxxx
The husband and the wife may agree upon
the dissolution of the conjugal partnership
during the marriage, subject to judicial
approval. xxxxxx
But was not the approval of the
Agreement by the CFI of Sto. Domingo in
the Dominican Republic sufficient in
dissolving and liquidating the conjugal
partnership of gains between the late
Atty. Luna and Eugenia?
The query is answered in the negative.
There is no question that the approval
took place only as an incident of the
action for divorce instituted by Atty. Luna
and Eugenia, for, indeed, the justifications
for their execution of the Agreement were
identical to the grounds raised in the

74

action for divorce.21 With the divorce not
being itself valid and enforceable under
Philippine law for being contrary to
Philippine public policy and public law, the
approval of the Agreement was not also
legally valid and enforceable under
Philippine law. Consequently, the conjugal
partnership of gains of Atty. Luna and
Eugenia subsisted in the lifetime of their
marriage.
3.
Atty. Lunas marriage with Soledad,
being bigamous,
was void; properties acquired during
their marriage
were governed by the rules on coownership
What law governed the property relations
of the second marriage between Atty.
Luna and Soledad?
The CA expressly declared that Atty.
Lunas subsequent marriage to Soledad on
January 12, 1976 was void for being
bigamous,22 on the ground that the
marriage between Atty. Luna and Eugenia
had not been dissolved by the Divorce
Decree rendered by the CFI of Sto.
Domingo in the Dominican Republic but
had subsisted until the death of Atty. Luna
on July 12, 1997.
The Court concurs with the CA.
In the Philippines, marriages that are
bigamous, polygamous, or incestuous are
void. Article 71 of the Civil Code clearly
states:chanRoblesvirtualLawlibrary
Article 71. All marriages performed
outside the Philippines in accordance with
the laws in force in the country where
they were performed, and valid there as
such, shall also be valid in this country,
except bigamous, polygamous, or
incestuous marriages as determined
by Philippine law.
Bigamy is an illegal marriage committed
by contracting a second or subsequent
marriage before the first marriage has
been legally dissolved, or before the
absent
spouse
has
been
declared
presumptively dead by means of a
judgment
rendered
in
the
proper
proceedings.23 A bigamous marriage is
considered void ab initio.24cralawred
Due to the second marriage between Atty.
Luna and the petitioner being void ab
initio by virtue of its being bigamous, the
properties acquired during the bigamous
marriage were governed by the rules on
co-ownership, conformably with Article
144
of
the
Civil
Code,
Article 144. When a man and a woman
live together as husband and wife, but
they are not married, or their marriage is
void from the beginning, the property
acquired by either or both of them
through their work or industry or their
wages and salaries shall be governed by
the rules on co-ownership.(n)
In such a situation, whoever alleges coownership carried the burden of proof to
confirm such fact. To establish coownership,
therefore,
it
became
imperative for the petitioner to offer proof
of her actual contributions in the
acquisition
of
property.
Her
mere
allegation
of
co-ownership,
without
sufficient and competent evidence, would
warrant no relief in her favor.
Leonardo C. Castillo represented by
Lennard V. Castillo Vs. Security Bank
Corporation, JRC Poultry Farms or
Spouses Leon C. Castillo, Jr., and
Teresita
Flores-CastilloG.R.
No.
196118. July 30, 2014
The
following
are
the
legal
requisites for a mortgage to be
valid:chanRoblesvirtualLawlibrary
(1) It must be constituted to

secure the fulfillment of a principal
obligation;chanroblesvirtuallawlibra
ry
(2) The mortgagor must be the

absolute owner of the thing
mortgaged;chanroblesvirtuallawlibr
ary

75

(3) The persons constituting the

mortgage must have the free
disposal of their property, and in
the absence thereof, they should
be legally authorized for the
purpose.9
Leonardo asserts that his signature in the
SPA authorizing his brother, Leon, to
mortgage his property covered by TCT No.
T-28297 was falsified. He claims that he
was in America at the time of its
execution. As proof of the forgery, he
focuses on his alleged CTC used for the
notarization10 of the SPA on May 5, 1993
and points out that it appears to have
been issued on January 11, 1993 when, in
fact, he only obtained it on May 17,
1993. But it is a settled rule that
allegations of forgery, like all other
allegations, must be proved by clear,
positive, and convincing evidence by the
party alleging it. It should not be
presumed, but must be established by
comparing the alleged forged signature
with the genuine signatures.11 Here,
Leonardo simply relied on his self-serving
declarations and refused to present
further corroborative evidence, saying that
the falsified document itself is the best
evidence.12 He did not even bother
comparing the alleged forged signature on
the SPA with samples of his real and
actual signature. What he consistently
utilized as lone support for his allegation
was the supposed discrepancy on the date
of issuance of his CTC as reflected on the
subject
SPAs
notarial
acknowledgment. On the contrary, in
view of the great ease with which CTCs
are obtained these days,13 there is
reasonable ground to believe that, as the
CA correctly observed, the CTC could have
been issued with the space for the date
left blank and Leonardo merely filled it up
to accommodate his assertions. Also,
upon careful examination, the handwriting
appearing on the space for the date of
issuance is different from that on the
computation of fees, which in turn was
consistent with the rest of the writings on
the document.14 He did not likewise
attempt to show any evidence that would
back up his claim that at the time of the

execution of the SPA on May 5, 1993, he
was actually in America and therefore
could not have possibly appeared and
signed the document before the notary.
And even if the Court were to assume,
simply for the sake of argument, that
Leonardo indeed secured his CTC only on
May 17, 1993, this does not automatically
render the SPA invalid. The appellate
court aptly held that defective notarization
will simply strip the document of its public
character and reduce it to a private
instrument, but nonetheless, binding,
provided its validity is established by
preponderance of evidence.15 Article 1358
of the Civil Code requires that the form of
a contract that transmits or extinguishes
real rights over immovable property
should be in a public document, yet the
failure to observe the proper form does
not render the transaction invalid.16 The
necessity of a public document for said
contracts is only for convenience; it is not
essential
for
validity
or
enforceability.17 Even a sale of real
property, though not contained in a public
instrument
or
formal
writing,
is
nevertheless valid and binding, for even a
verbal contract of sale or real estate
produces legal effects between the
parties.18 Consequently, when there is a
defect in the notarization of a document,
the clear and convincing evidentiary
standard originally attached to a dulynotarized document is dispensed with, and
the measure to test the validity of such
document
is
preponderance
of
evidence.19cralawred
Here, the preponderance of evidence
indubitably
tilts
in
favor
of
the
respondents, still making the SPA binding
between the parties even with the
aforementioned
assumed
irregularity. There are several telling
circumstances
that
would
clearly
demonstrate that Leonardo was aware of
the mortgage and he indeed executed the
SPA to entrust Leon with the mortgage of
his property. Leon had in his possession
all the titles covering the eleven (11)

76

properties mortgaged, including that of
Leonardo.20 Leonardo and the rest of
their relatives could not have just blindly
ceded their respective TCTs to Leon.21 It
is likewise ridiculous how Leonardo
seemed to have been totally oblivious to
the status of his property for eight (8)
long years, and would only find out about
the mortgage and foreclosure from a
nephew who himself had consented to the
mortgage of his own lot.22 Considering
the lapse of time from the alleged forgery
on May 5, 1993 and the mortgage on
August 5, 1994, to the foreclosure on July
29, 1999, and to the supposed discovery
in 2001, it appears that the suit is a mere
afterthought or a last-ditch effort on
Leonardos part to extend his hold over his
property and to prevent SBC from
consolidating
ownership
over
the
same.
More
importantly,
Leonardo
himself admitted on cross-examination
that he granted Leon authority to
mortgage, only that, according to him, he
thought it was going to be with China
Bank, and not SBC.23 But as the CA
noted, there is no mention of a certain
bank in the subject SPA with which Leon
must specifically deal. Leon, therefore,
was simply acting within the bounds of the
SPAs authority when he mortgaged the
lot to SBC.
True,
banks
and
other
financing
institutions, in entering into mortgage
contracts, are expected to exercise due
diligence.24 The ascertainment of the
status or condition of a property offered to
it as security for a loan must be a
standard and indispensable part of its
operations.25 In this case, however, no
evidence was presented to show that SBC
was remiss in the exercise of the standard
care and prudence required of it or that it
was
negligent
in
accepting
the
mortgage.26 SBC could not likewise be
faulted for relying on the presumption of
regularity of the notarized SPA when it
entered into the subject mortgage
agreement.
Heirs of Reynaldo Dela Rosa, Namely:

Teofista
Dela
Rosa,
Josephine
Santiago and Joseph Dela Rosa Vs.

Mario A. Batongbacal, et al.G.R. No.
179205, July 30, 2014
An equitable mortgage is defined
as one although lacking in some
formality, or form or words, or
other requisites demanded by a
statute, nevertheless reveals the
intention of the parties to charge
real property as security for a debt,
and contains nothing impossible or
contrary
to
law.
For
the
presumption
of
an
equitable
mortgage to arise, two requisites
must concur: (1) that the parties
entered
into
a
contract
denominated as a sale; and (2) the
intention was to secure an existing
debt
by
way
of
mortgage.
Consequently, the non-payment of
the debt when due gives the
mortgagee the right to foreclose
the mortgage, sell the property and
apply the proceeds of the sale for
the satisfaction
of
the loan
obligation.18 While there is no
single test to determine whether
the deed of absolute sale on its
face is really a simple loan
accommodation secured by a
mortgage, the Civil Code, however,
enumerates several instances when
a contract is presumed to be an
equitable
mortgage,
to
Article 1602. The contract shall be

presumed to be an equitable
mortgage, in any of the following
cases:chanRoblesvirtualLawlibrary
(1) When the price of a sale with right to repurc

(2) When the vendor remains in possession as l
(3) When upon or after the expiration of the rig
the period of redemption or granting a new
(4) When the purchaser retains for himself a p
binds himself to pay the taxes on the thing s
(6) In any other case where it may be fairly infe
the transaction shall secure the payment
obligation.
In any of the foregoing cases, any

money, fruits, or other benefit to

77

be received by the vendee as rent
or otherwise shall be considered as
interest which shall be subject to
the usury laws.
A
perusal
of
the
contract
denominated as Resibo reveals the
utter frailty of petitioners' position
because nothing therein suggests,
even remotely, that the subject
property was given to secure a
monetary obligation. The terms of
the contract set forth in no
uncertain
terms
that
the
instrument was executed with the
intention
of
transferring
the
ownership or the subject property
to the buyer in exchange for the
price. Nowhere in the deed is it
indicated that the transfer was
merely intended to secure a debt
obligation. On the contrary, the
document clearly indicates the
intent of Reynaldo to sell his share
in the property. The primary
consideration in determining the
true nature of a contract is the
intention of the parties.19 If the
words of a contract appear to
contravene the evident intention of
the parties, the latter shall
prevail.20
Such
intention
is
determined not only from the
express terms of their agreement,
but also from the contemporaneous
and subsequent acts of the
parties.21 That the parties intended
some other acts or contracts apart
from the express terms of the
agreement, was not proven by
Reynaldo during the trial or by his
heirs herein.22 Beyond their bare
and uncorroborated asseverations
that the contract failed to express
the true intention of the parties,
the record is bereft of any evidence
indicative that there was an
equitable mortgage.
Neither could the allegation of
gross inadequacy of the price carry
the day for the petitioners. It must
be underscored at this point that
the subject of the Contract to Sell

was limited only to 1/4 pro-indiviso
share of Reynaldo consisting an
area of 3,750 square meter and
not the entire 15,001-square meter
parcel of land. As a co-owner of the
subject property, Reynaldo's right
to sell, assign or mortgage his ideal
share in the property held in
common is sanctioned by law. The
applicable law is Article 493 of the
New Civil Code, which spells out
the rights of co-owners over a coowned property,
Pursuant to this law, a co-owner
has the right to alienate his
pro-indiviso share in the co-owned
property even without the consent
of his co--owners.23 This right is
absolute and in accordance with
the well-settled doctrine that a coowner has a full ownership of his
pro-indiviso share and has the right
to alienate, assign or mortgage it,
and substitute another person for
its enjoyment.24
In other words,
the law does not prohibit a coowner from selling, alienating,
mortgaging his ideal share in the
property
held
m
common.25cralawlawlibrary
In the same breadth, a co-owner
cannot be compelled by the court
to give their consent to the sale of
his share in a co-owned property.
hus, even if the impression of the Court of
Appeals were true, i.e., that the entire
propc1iy has been sold to thirds persons,
such sale could not have affected the right
of Mario and Guillermo to recover the
property from Reynaldo. In view of the
nature of co-ownership, the Court of
Appeals correctly ruled that the terms in
the Contract to Sell, which limited the
subject to Reynaldo's ideal share in the
property held in common is perfectly valid
and binding. In fact, no authority from the
other co-owners is necessary for such
disposition to be valid as he is afforded by
the law full-ownership of his part and of
the fruits and benefits pertaining thereto.
A condition set forth in a sale contract
requiring a co-owner to secure an

78

authority from his co-owners for the
alienation of his share, as seemingly
indicated in this case, should be
considered mere surplusage and docs not,
in any way, affect the validity or the
enforceability of the contract. Nor should
such a condition indicate an intention to
sell the whole because the contrary
intention
has
been
clearly
written:chanRoblesvirtualLawlibrary
x x x Ang bahaging aking ipinagbibili ay
ang !.ole No. 1, may sukat na 3,750 sq.m.
na makikita sa nakalakip na sketch plan
na aking ding nilagdaan sa ikaliliwanag ng
kasulatang ito.28chanrobleslaw
Indeed, the intention clearly written,
settles the issue regarding the purchase
price. A contract of sale is a consensual
contract, which becomes valid and binding
upon the meeting of minds of the parties
on the price and the object of the sale.29
The mere inadequacy of the price docs not
affect its validity when both parties arc in
a position to form an independent
judgment concerning the transaction,
unless fraud, mistake or undue influence
indicative of a defect in consent is
present.30 A contract may consequently be
annulled on the ground of vitiated consent
and not due to the inadequacy of the
price.31 In the case at bar, however, no
evidence to prove fraud, mistake or undue
influence indicative of vitiated consent is
attendant.
As the parties invoking equitable

mortgage, the Heirs of Reynaldo
did not even come close to proving
that the parties intended to charge
the property as security for a debt,
leaving us with no other choice but
to uphold the stipulations in the
contract. Basic is the rule that if
the terms of the contract are clear
and leave no doubt upon the
intention of the parties, the literal
meaning of its stipulations shall
control,32 we find that the Court of
Appeals cannot be faulted for
ruling, in modification of its original
judgment, that the sale effected by
Reynaldo of his undivided share in

the
property
is
valid
and
enforceable.
Rural Bank of Cabadbaran, Inc. Vs. Jorgita
A. Melecio-Yap, et al.G.R. No. 178451.
July 30, 2014
The essential issues for the Courts
resolution are whether or not (a) the
presumption of regularity accorded to the
notarized
SPA
and
Extra-Judicial
Adjudication Documents was rebutted by
clear and convincing evidence; (b)
respondents are guilty of laches and, thus,
estopped from questioning the validity of
the real estate mortgage and subsequent
foreclosure proceedings; and (c) RBCI can
be considered as a mortgagee in good
faith.
he settled rule is that persons constituting
a mortgage must be legally authorized for
the purpose.53 In the present case, while
Erna appears to be a co-owner of the
mortgaged properties, she made it appear
that she was duly authorized to sell the
entire properties by virtue of the notarized
SPA dated August 24, 1990.
Generally, a notarized document carries
the evidentiary weight conferred upon it
with respect to its due execution, and
documents acknowledged before a notary
public have in their favor the presumption
of regularity which may only be rebutted
by clear and convincing evidence.54
However, the presumptions that attach to
notarized documents can be affirmed only
so long as it is beyond dispute that the
notarization was regular.55 A defective
notarization will strip the document of its
public character and reduce it to a private
document.56 Hence, when there is a defect
in the notarization of a document, the
clear and convincing evidentiary standard
normally attached to a duly-notarized
document is dispensed with, and the
measure to test the validity of such
document is preponderance of evidence.57
In the present case, RBCI failed to show
that the subject SPA which it relied upon
as proof of Ernas ostensible authority to
mortgage the entirety of the subject
properties was regularly notarized. Aside

79

from the respondents who denied having
participated
in
the
execution
and
notarization of the subject SPA, the
witnesses
to
the
instrument,
i.e.,
Guendelyn Lopez Salas-Montaus and
Carmelita Cayeta Bunga, categorically
denied having appeared before Notary
Public Alan M. Famador (Atty. Famador)
on August 24, 1990 to witness the
respondents sign the SPA in the notary
publics
presence.58
Despite
this
irregularity, RBCI did not present Atty.
Famador to refute the same and establish
the authenticity of the contested SPA. It
may not be amiss to point out that the
principal function of a notary public is to
authenticate documents. When a notary
public certifies to the due execution and
delivery of a document under his hand
and seal, he gives the document the force
of evidence.59
Thus, having failed to sufficiently establish
the regularity in the execution of the SPA,
the presumption of regularity accorded by
law to notarized documents can no longer
apply and the questioned SPA is to be
examined under the parameters of Section
20, Rule 132 of the Rules of Court which
provides that [b]efore any private
document offered as authentic is received
in evidence, its due execution and
authenticity must be proved either (a)
[b]y anyone who saw the document
executed or written, or (b) [b]y evidence
of the genuineness of the signature or
handwriting of the maker.
To be clear, the above-stated conclusion is
only made with respect to the subject SPA
and not the Extra-Judicial Adjudication
Documents as the latter should be
excluded from any forgery analysis since
they were not among those documents
sought to be nullified by respondents in its
complaint. Nevertheless, this observation
bears little significance to the resolution of
the ultimate issue at hand. This is because
the forged status of the subject SPA alone
is already enough for the Court to declare
the real estate mortgage contract null and
void but only with respect to the
shares of the other co-owners (i.e.,
respondents) whose consent thereto was

not actually procured by Erna. While Erna,
as herself a co-owner, by virtue of Article
493 of the Civil Code,63 had the right to
mortgage or even sell her undivided
interest in the said properties, she, could
not, however, dispose of or mortgage the
subject properties in their entirety without
the consent of the other co-owners.64
Accordingly, the validity of the subject real
estate mortgage and the subsequent
foreclosure
proceedings
therefor
conducted in favor of RBCI should be
limited only to the portion which may
be allotted to it (as the successor-ininterest of Erna) in the event of
partition. In this relation, the CAs
directive to remand the case to the RTC in
order to determine the exact extent of the
respective rights, interests, shares and
participation of respondents and RBCI
over
the
subject
properties,
and
thereafter,
effect
a
final
division,
adjudication and partition in accordance
with law remains in order. Meanwhile, the
writ of possession issued in favor of RBCI,
and all proceedings relative thereto should
be set aside considering that the latters
specific possessory rights to the said
properties remain undetermined.
Based on the foregoing, the partial
invalidity of the subject real estate
mortgage brought about by the forged
status of the subject SPA would not,
therefore,
result
into
the
partial
invalidation
of
the
loan
obligation
principally entered into by RBCI and Sps.
Mantala; thus, absent any cogent reason
to hold otherwise, the need for the
recomputation of said loan obligation
should be dispensed with.
As for RBCIs claim that it should be
deemed a mortgagee in good faith for
having
conducted
exhaustive
investigations on the history of the
mortgagors title,70 the Court finds the
same untenable. Two reasons impel this
conclusion:
first,
the
doctrine
of
mortgagee in good faith applies only to
lands registered under the Torrens system
and not to unregistered lands, as the
properties in suit;71 and second, the

80

principle is inapplicable to banking
institutions which are behooved to
exercise greater care and prudence before
entering into a mortgage contract. Hence,
the ascertainment of the status or
condition of properties offered as security
for loans must be a standard and an
indispensable part of its operations.72
In this case, RBCI failed to observe the
required level of caution in ascertaining
the genuineness of the SPA considering
that Erna owns only an aliquot part of the
properties offered as security for the loan.
It should not have simply relied on the
face of the documents submitted since its
undertaking to lend a considerable
amount of money as a banking institution
requires a greater degree of diligence.
Hence, its rights as mortgagee and, now,
as co-owner, should only be limited to
Ernas share to the subject properties and
not, absent the other co-owners consent,
to its entirety.
Finally, the Court cannot subscribe to
RBCI's contention that respondents are
barred by laches from laying claim over
the subject properties in view of their
inexplicable inaction from the time they
learned of the falsification. Laches is
principally a doctrine of equity. It is
negligence or omission to assert a right
within a reasonable time, warranting a
presumption that the party entitled to
assert it either has abandoned or declined
to assert it.73 In this case, the complaint
for nullification of the SPA was filed before
the RTC on April 17, 1996, or barely three
years from respondents discovery of the
averred forgery in 1993, which is within
the four-year prescriptive period provided
under Article 114674 of the Civil Code to
institute an action upon the injury to their
rights over the subject properties. A delay
within the prescriptive period is sanctioned
by law and is not considered to be a delay
that would bar relief. Laches applies only
in the absence of a statutory prescriptive
period.75 Furthermore, the doctrine of
laches cannot be used to defeat justice or
perpetrate fraud and injustice. It is the
more prudent rule that courts, under the
principle of equity, will not be guided or
bound strictly by the statute of limitations

or the doctrine of laches when by doing
so, manifest wrong or injustice would
result,76 as in this case.
Neither is there estoppel. Under Article
1431 of the Civil Code, an essential
element of estoppel is that the person
invoking it has been influenced and has
relied on the representations or conduct of
the person sought to be estopped. Said
element is, however, wanting in this case.
Midway
Maritime
and
Technological
Foundation,
represented
by
its
Chairman/President
PhD
in
Education, Dr. Sabino M. Manglicmot
Vs. Marissa E. Castro, et al.G.R. No.
189061. August 6, 2014
Given the existence of the lease,
the petitioners claim denying the
respondents ownership of the
residential house must be rejected.
According to the petitioner, it is
Adoracion who actually owns the
residential building having bought
the same, together with the two
parcels of land, from her father
Tomas, who, in turn, bought it in
an auction sale.
It is settled that [o]nce a contact

of lease is shown to exist between
the parties, the lessee cannot by
any
proof,
however
strong,
overturn
the
conclusive
presumption that the lessor has a
valid title to or a better right of
possession to the subject premises
than the lessee.14 Section 2(b),
Rule 131 of the Rules of Court
prohibits a tenant from denying the
title of his landlord at the time of
the commencement of the relation
of landlord and tenant between
them.15 In Santos v. National
Statistics
Office,16
the
Court
expounded on the rule on estoppel
against a tenant and further
clarified that what a tenant is
estopped from denying is the title
of his landlord at the time of the
commencement of the landlordtenant relation. If the title

81

asserted is one that is alleged to
have been acquired subsequent to
the
commencement
of
that
relation, the presumption will not
apply.17cralawred
In this case, the petitioners basis

for
insisting
on
Adoracions
ownership dates back to the
latters purchase of the two parcels
of land from her father, Tomas. It
was Tomas who bought the
property in an auction sale by
Union Bank in 1993 and leased the
same to the petitioner in the same
year. Note must be made that the
petitioners president, Manglicmot,
is the husband of Adoracion and
son-in-law of Tomas. It is not
improbable that at the time the
petitioner leased the residential
building from the respondents
mother in 1993, it was aware of
the circumstances surrounding the
sale of the two parcels of land and
the nature of the respondents
claim over the residential house.
Yet, the petitioner still chose to
lease the building. Consequently,
the petitioner is now estopped from
denying the respondents title over
the residential building.
More importantly, the respondents
ownership
of
the
residential
building is already an established
fact.
Nemo dat quod non habet. One
can sell only what one owns or is
authorized to sell, and the buyer
can acquire no more right than
what the seller can transfer
legally.18 It must be pointed out
that what Tomas bought from
Union Bank in the auction sale
were the two parcels of land
originally owned and mortgaged by
CCC to Bancom, and which
mortgage was later assigned by
Bancom to Union Bank. Contrary to
the petitioners assertion, the
property subject of the mortgage
and consequently the auction sale

pertains only to these two parcels
of land and did not include the
residential
house.
This
was
precisely the tenor of Castro, Jr. v.
CA19 where the Court nullified the
writ of possession issued by the
trial court insofar as it affected the
residential house constructed by
the respondents on the mortgaged
property as it was not owned by
CCC, which was the mortgagor.
As regards the ruling of the RTC of
Cabanatuan City, Branch 26, in Civil Case
No. 2939 (AF) that the advertised sale of
the
property
included
all
the
improvements thereon,23 suffice it to say
that said case involved an action for
ejectment and any resolution by the RTC
on the matter of the ownership of the
improvements of the property is merely
provisional and cannot surpass the Courts
pronouncement in Castro and in the
present case. The petitioner should be
reminded that in ejectment suits, the
only issue for resolution is the physical or
material possession of the property
involved, independent of any claim of
ownership by any of the party litigants.
However, the issue of ownership may be
provisionally ruled upon for the sole
purpose of determining who is entitled to
possession de facto.24 The MTC and RTCs
adjudication of ownership is merely
provisional and would not bar or
prejudice an action between the same
parties
involving
title
to
the
Also, Adoracions subsequent acquisition
of the two parcels of land from her father
does not necessarily entail the acquisition
of the residential building. A building by
itself is a real or immovable property
distinct from the land on which it is
constructed and therefore can be a
separate subject of contracts.26 Whatever
Adoracion acquired from her father is still
subject to the limitation pronounced by
the Court in Castro, and the sale between
Adoracion and Tomas is confined only to
the two parcels of land and excluded the
residential
building
owned
by
the

82

respondents. It is beyond question that
Tomas, and subsequently, Adoracion,
could not have acquired a right greater
than what their predecessors-in-interest
CCC
and
later,
Union
Bank
had.27cralawred
There is also nothing on record that will
prove the petitioners claim that the lease
between CCC and the respondents already
expired.
The
fact
that
Adoracion
subsequently bought the property did not
ipso facto terminate the lease. While the
lease between CCC and the respondents
contained a 15-year period, to end in
1992, the petitioner failed to show that
the subsequent transferors/purchasers of
the two parcels of land opted to terminate
the lease or instituted any action for its
termination. Bancom bought the property
at an auction sale in 1979; Union Bank, in
1984; Tomas, and later, Adoracion,
acquired the property in 1993.
Adoracion who actually owns the

residential building having bought
the same, together with the two
parcels of land, from her father
Tomas, who, in turn, bought it in
an auction sale.
Article
1676
of
the
Civil
Code
provides:ChanRoblesVirtualawlibrary
The purchaser of a piece of land which is
under a lease that is not recorded in the
Registry of property may terminate the
lease, save when there is a stipulation to
the contrary in the contract of sale, or
when the purchaser knows of the
existence of the lease.
x x x x.
It
cannot
be
denied
that
the
transferors/purchasers of the property all
had knowledge of the lease between CCC
and the respondents; yet, not any of the
transferors/purchasers
moved
to
terminate the lease.
Midway
Maritime
and
Technological
Foundation,
represented
by
its
Chairman/President
PhD
in
Education, Dr. Sabino M. Manglicmot
Vs. Marissa E. Castro, et al.G.R. No.
189061. August 6, 2014
Given the existence of the lease,
the petitioners claim denying the
respondents ownership of the
residential house must be rejected.
According to the petitioner, it is
It is settled that [o]nce a contact

of lease is shown to exist between
the parties, the lessee cannot by
any
proof,
however
strong,
overturn
the
conclusive
presumption that the lessor has a
valid title to or a better right of
possession to the subject premises
than the lessee.14 Section 2(b),
Rule 131 of the Rules of Court
prohibits a tenant from denying the
title of his landlord at the time of
the commencement of the relation
of landlord and tenant between
them.15 In Santos v. National
Statistics
Office,16
the
Court
expounded on the rule on estoppel
against a tenant and further
clarified that what a tenant is
estopped from denying is the title
of his landlord at the time of the
commencement of the landlordtenant relation. If the title
asserted is one that is alleged to
have been acquired subsequent to
the
commencement
of
that
relation, the presumption will not
apply.17cralawred
In this case, the petitioners basis
for
insisting
on
Adoracions
ownership dates back to the
latters purchase of the two parcels
of land from her father, Tomas. It
was Tomas who bought the
property in an auction sale by
Union Bank in 1993 and leased the
same to the petitioner in the same
year. Note must be made that the
petitioners president, Manglicmot,
is the husband of Adoracion and
son-in-law of Tomas. It is not
improbable that at the time the
petitioner leased the residential
building from the respondents
mother in 1993, it was aware of

83

the circumstances surrounding the
sale of the two parcels of land and
the nature of the respondents
claim over the residential house.
Yet, the petitioner still chose to
lease the building. Consequently,
the petitioner is now estopped from
denying the respondents title over
the residential building.
More importantly, the respondents

ownership
of
the
residential
building is already an established
fact.
Nemo dat quod non habet. One

can sell only what one owns or is
authorized to sell, and the buyer
can acquire no more right than
what the seller can transfer
legally.18 It must be pointed out
that what Tomas bought from
Union Bank in the auction sale
were the two parcels of land
originally owned and mortgaged by
CCC to Bancom, and which
mortgage was later assigned by
Bancom to Union Bank. Contrary to
the petitioners assertion, the
property subject of the mortgage
and consequently the auction sale
pertains only to these two parcels
of land and did not include the
residential
house.
This
was
precisely the tenor of Castro, Jr. v.
CA19 where the Court nullified the
writ of possession issued by the
trial court insofar as it affected the
residential house constructed by
the respondents on the mortgaged
property as it was not owned by
CCC, which was the mortgagor.
As regards the ruling of the RTC of
Cabanatuan City, Branch 26, in Civil Case
No. 2939 (AF) that the advertised sale of
the
property
included
all
the
improvements thereon,23 suffice it to say
that said case involved an action for
ejectment and any resolution by the RTC
on the matter of the ownership of the
improvements of the property is merely
provisional and cannot surpass the Courts
pronouncement in Castro and in the
present case. The petitioner should be

reminded that in ejectment suits, the
only issue for resolution is the physical or
material possession of the property
involved, independent of any claim of
ownership by any of the party litigants.
However, the issue of ownership may be
provisionally ruled upon for the sole
purpose of determining who is entitled to
possession de facto.24 The MTC and RTCs
adjudication of ownership is merely
provisional and would not bar or
prejudice an action between the same
parties
involving
title
to
the
Also, Adoracions subsequent acquisition
of the two parcels of land from her father
does not necessarily entail the acquisition
of the residential building. A building by
itself is a real or immovable property
distinct from the land on which it is
constructed and therefore can be a
separate subject of contracts.26 Whatever
Adoracion acquired from her father is still
subject to the limitation pronounced by
the Court in Castro, and the sale between
Adoracion and Tomas is confined only to
the two parcels of land and excluded the
residential
building
owned
by
the
respondents. It is beyond question that
Tomas, and subsequently, Adoracion,
could not have acquired a right greater
than what their predecessors-in-interest
CCC
and
later,
Union
Bank
had.27cralawred
There is also nothing on record that will
prove the petitioners claim that the lease
between CCC and the respondents already
expired.
The
fact
that
Adoracion
subsequently bought the property did not
ipso facto terminate the lease. While the
lease between CCC and the respondents
contained a 15-year period, to end in
1992, the petitioner failed to show that
the subsequent transferors/purchasers of
the two parcels of land opted to terminate
the lease or instituted any action for its
termination. Bancom bought the property
at an auction sale in 1979; Union Bank, in
1984; Tomas, and later, Adoracion,
acquired the property in 1993.

84

Article
1676
of
the
Civil
Code
Second Accretion, covered by OCT

No. 21481 in the name of all
respondents.
To
recount,
Francisco, et al. asserted coownership over the Motherland,
alleging that Ciriaco agreed to hold
the same in trust for their
predecessors-in-interest Alejandra
and Balbina upon issuance of the
title in his name. Likewise, they
alleged that respondents acquired
the First and Second Accretions by
means of fraud and deceit.
The purchaser of a piece of land which is

under a lease that is not recorded in the
Registry of property may terminate the
lease, save when there is a stipulation to
the contrary in the contract of sale, or
when the purchaser knows of the
existence of the lease.
x x x x.
It
cannot
be
denied
that
the
transferors/purchasers of the property all
had knowledge of the lease between CCC
and the respondents; yet, not any of the
transferors/purchasers
moved
to
terminate the lease.
Heirs of Francisco I. Narvasa, Sr., et al. Vs.
Emiliana Imbornal, et al.G.R. No.
182908. August 6, 2014
A. Procedural Matter: Issue of
Prescription.
At the outset, the Court finds that

the causes of action pertaining to
the Motherland and the First
Accretion
are
barred
by
prescription.
An action for reconveyance is one

that seeks to transfer property,
wrongfully registered by another,
to
its
rightful
and
legal
owner.36Thus, reconveyance is a
remedy granted only to the owner
of the property alleged to be
erroneously titled in anothers
name.37cralawred
As the records would show, the

Amended
Complaint
filed
by
petitioners
predecessors-ininterest, Francisco, et al. is for the
reconveyance of their purported
shares or portions in the following
properties: (a) the Motherland,
originally covered by OCT No. 1462
in the name of Ciriaco; (b) the First
Accretion, originally covered by
OCT No. P-318 in the name of
respondent Victoriano; and (c) the
When property is registered in

anothers name, an implied or
constructive trust is created by law
in favor of the true owner.38Article
1456 of the Civil Code provides
that a person acquiring property
through
fraud
becomes,
by
operation of law, a trustee of an
implied trust for the benefit of the
real owner of the property. An
action for reconveyance based on
an implied trust prescribes in ten
(10) years, reckoned from the date
of registration of the deed or the
date of issuance of the certificate
of title over the property,39 if the
plaintiff
is
not
in
possession.However, if the plaintiff
is in possession of the property,
the action is imprescriptible.
Based on the foregoing, Francisco, et al.
had then a period of ten (10) years from
the registration of the respective titles
covering the disputed properties within
which to file their action for reconveyance,
taking into account the fact that they were
never in possession of the said
properties. Hence, with respect to the
Motherland covered by OCT No. 1462
issued on December 5, 1933 in the
name
of
Ciriaco,
an
action
for
reconveyance therefor should have been
filed until December 5,1943; with respect
to the First Accretion covered by OCT No.
P-318 issued on August 15, 1952 in the
name of respondent Victoriano, an action
of the same nature should have been filed
until August 15, 1962; and, finally, with
respect to the Second Accretion covered

85

by OCT No. 21481issued on November 10,
1978in the name of the respondents, a
suit for reconveyance therefor should have
been filed until November 10, 1988.
A judicious perusal of the records,

however, will show that the
Amended Complaint42covering all
three (3) disputed properties was
filed only on February 27, 1984.
As such, it was filed way beyond
the 10-year reglementary period
within
which
to
seek
the
reconveyance of two (2) of
theseproperties,
namely,
the
Motherland and the First Accretion,
with only the reconveyance action
with respect to the Second
Accretion having been seasonably
filed.
Thus,
considering
that
respondents raised prescription as
a defense in their Amended
Answer,43 the Amended Complaint
with respect to the Motherland and
the First Accretion ought to have
been dismissed based on the said
ground, with only the cause of
action pertaining to the Second
Accretion surviving. As will be,
however, discussed below, the
entirety
of
the
Amended
Complaint, including the aforesaid
surviving cause of action, would
falter on its substantive merits
since the existence of the implied
trust asserted in this case had not
been established. In effect, the
said
complaint
is
completely
dismissible.
B. Substantive Matter: Existence of
an Implied Trust.
The main thrust of Francisco, et al.s
Amended Complaint is that an implied
trust had arisen between the Imbornal
sisters, on the one hand, and Ciriaco, on
the other, with respect to the Motherland.
This implied trust is anchored on their
allegation that the proceeds from the sale
of the Sabangan property an inheritance
of their predecessors, the Imbornal sisters
were used for the then-pending
homestead application filed by Ciriaco
over the Motherland. As such, Francisco,

et al. claim that they are, effectively, coowners of the Motherland together with
Ciriacos heirs.
An implied trust arises, not from any
presumed intention of the parties, but by
operation of law in order to satisfy the
demands of justice and equity and to
protect against unfair dealing or downright
fraud.44 To reiterate, Article 1456 of the
Civil Code states that[i]f property is
acquired through mistake or fraud, the
person obtaining it is, by force of law,
considered a trustee of an implied trust for
the benefit of the person from whom the
property comes.
The burden of proving the existence of a
trust is on the party asserting its
existence, and such proof must be clear
and satisfactorily show the existence of
the trust and its elements.45 While implied
trusts may be proven by oral evidence,
the evidence must be trustworthy and
received by the courts with extreme
caution, and should not be made to rest
on
loose,
equivocal
or
indefinite
declarations. Trustworthy evidence is
required because oral evidence can easily
be fabricated.46cralawred
In this case, it cannot be said, merely on
the basis of the oral evidence offered by
Francisco, et al., that the Motherland had
been either mistakenly or fraudulently
registered in favor of Ciriaco. Accordingly,
it cannot be said either that he was
merely a trustee of an implied trust
holding the Motherland for the benefit of
the Imbornal sisters or their heirs.
In this light, the Court cannot fully accept
and accord evidentiary value to the oral
testimony offered by Francisco, et al. on
the alleged verbal agreement between
their predecessors, the Imbornal sisters,
and
Ciriaco
with
respect
to
the
Motherland.
Weighed
against
the
presumed regularity of the award of the
homestead patent to Ciriaco and the lack
of evidence showing that the same was
acquired and registered by mistake or
through fraud, the oral evidence of

86

Francisco, et al. would not effectively
establish their claims of ownership. It has
been held that oral testimony as to a
certain fact, depending as it does
exclusively on human memory, is not as
reliable as written or documentary
evidence,50 especially since the purported
agreement transpired decades ago, or in
the 1920s. Hence, with respect to the
Motherland, the CA did not err in holding
that Ciriaco and his heirs are the owners
thereof, without prejudice to the rights of
any subsequent purchasers for value of
the said property.
Consequently, as Francisco, et al. failed to
prove their ownership rights over the
Motherland, their cause of action with
respect to the First Accretion and,
necessarily, the Second Accretion, must
likewise fail. A further exposition is
apropos.
Article 457 of the Civil Code states the
rule on accretion as follows: [t]o the
owners of lands adjoining the banks of
rivers belong the accretion which they
gradually receive from the effects of the
current of the waters.
Accordingly, therefore, alluvial deposits
along the banks of a creek or a river do
not form part of the public domain as the
alluvial property automatically belongs to
the owner of the estate to which it may
have been added. The only restriction
provided for by law is that the owner of
the adjoining property must register the
same
under
the
Torrens
system;
otherwise, the alluvial property may be
subject to acquisition through prescription
by third persons.53cralawred
In this case, Francisco, et al. and, now,
their heirs, i.e., herein petitioners, are not
the riparian owners of the Motherland to
which the First Accretion had attached,
hence, they cannot assert ownership over
the First Accretion. Consequently, as the
Second Accretion had merely attached to
the First Accretion, they also have no right
over the Second Accretion. Neither were
they able to show that they acquired these
properties through prescription as it was

not established that they were in
possession of any of them. Therefore,
whether
through
accretion
or,
independently, through prescription, the
discernible conclusion is that Francisco et
al. and/or petitioners claim of title over
the First and Second Accretions had not
been substantiated, and, as a result, said
properties cannot be reconveyed in their
favor.This is especially so since on the
other end of the fray lie respondents
armed with a certificate of title in their
names covering the First and Second
Accretions coupled with their possession
thereof, both of which give rise to the
superior credibility of their own claim.
Hence,
petitioners
action
for
reconveyance with respect to both
accretions must altogether fail.
Ece Realty & Development, Inc. Vs.
Haydyn HernandezG.R. No. 212689.
August 6, 2014
Article 2209 of the New Civil Code
provides that If the obligation consists in
the payment of a sum of money, and the
debtor incurs in delay, the indemnity for
damages, there being no stipulation to the
contrary, shall be the payment of the
interest agreed upon, and in the absence
of stipulation, the legal interest, which is
six per cent per annum. There is no
doubt that ECE incurred in delay in
delivering the subject condominium unit,
for which reason the trial court was
justified in awarding interest to the
respondent from the filing of his
complaint. There being no stipulation as
to interest, under Article 2209 the
imposable rate is six percent (6%) by way
of damages, following the guidelines laid
down in the landmark case of Eastern
Shipping
Lines
v.
Court
of
Appeals:16cralawred
Thus, from the finality of the judgment
awarding a sum of money until it is
satisfied, the award shall be considered a
forbearance of credit, regardless of
whether the award in fact pertained to
one.20 Pursuant to Central Bank Circular
No. 416 issued on July 29, 1974, in the
absence of written stipulation the interest

87

rate to be imposed in judgments involving
a forbearance of credit was twelve percent
(12%) per annum, up from six percent
(6%) under Article 2209 of the Civil
Code. This was reiterated in Central Bank
Circular No. 905, which suspended the
effectivity of the Usury Law beginning on
January 1, 1983.
But since July 1, 2013, the rate of twelve

percent (12%) per annum from finality of
the judgment until satisfaction has been
brought back to six percent (6%). Section
1 of Resolution No. 796 of the Monetary
Board of the Bangko Sentral ng Pilipinas
dated May 16, 2013 provides: The rate of
interest for the loan or forbearance of any
money, goods or credits and the rate
allowed in judgments, in the absence of
an express contract as to such rate of
interest, shall be six percent (6%) per
annum. Thus, the rate of interest to be
imposed from finality of judgments is now
back at six percent (6%), the rate
provided in Article 2209 of the Civil Code.
Elizabeth
Del
Carmen
Vs.
Spouses
Restituto Sabordo and Mima MahilimSabordoG.R. No. 181723. August 11,
2014
Petitioner's main contention is that
the consignation which she and her
co-heirs made was a judicial
deposit based on a final judgment
and, as such, does not require
compliance with the requirements
of Articles 125611 and 125712 of the
Civil Code.
The petition lacks merit.
At the outset, the Court quotes

with approval the discussion of the
CA regarding the definition and
nature
of
consignation,
to
consignation [is] the act of

depositing the thing due with the
court
or
judicial
authorities
whenever the creditor cannot
accept or refuses to accept
payment,
and
it
generally
requires a prior tender of
payment.
It
should
be
distinguished from tender of
payment
which
is
the
manifestation by the debtor to
the creditor of his desire to
comply with his obligation, with
the
offer
of
immediate
performance.
Tender
is
the
antecedent of consignation, that is,
an
act
preparatory
to
the
consignation, which is the principal,
and from which are derived the
immediate consequences which the
debtor desires or seeks to obtain.
Tender of payment may be
extrajudicial, while consignation is
necessarily judicial, and the priority
of the first is the attempt to make
a
private
settlement
before
proceeding to the solemnities of
consignation.
Tender
and
consignation, where validly made,
produces the effect of payment and
extinguishes the obligation.13
In the case of
Arzaga v.
Rumbaoa,14 which was cited by
petitioner
in
support
of
his
contention, this Court ruled that
the deposit made with the court by
the plaintiff-appellee in the said
case is considered a valid payment
of the amount adjudged, even
without a prior tender of payment
thereof
to
the
defendantsappellants, because the plaintiffappellee,
upon
making
such
deposit, expressly petitioned the
court that the defendants-appellees
be notified to receive the tender of
payment. This Court held that
while [t]he deposit, by itself
alone,
may
not
have
been
sufficient, but with the express
terms of the petition, there was full
and complete offer of payment
made directly
to
defendantsappellants.15 In the instant case,
however, petitioner and her coheirs, upon making the deposit
with the RTC, did not ask the trial
court that respondents be notified
to receive the amount that they

88

have deposited. In fact, there was
no tender of payment. Instead,
what petitioner and her co-heirs
prayed for is that respondents and
RPB be directed to interplead with
one another to determine their
alleged respective rights over the
consigned
amount;
that
respondents be likewise directed
to substitute the subject lots with
other real properties as collateral
for their loan with RPB and that
RPB be also directed to accept the
substitute
real
properties
as
collateral
for the said loan.
Nonetheless,
the
trial
court
correctly ruled that interpleader is
not the proper remedy because
RPB did not make any claim
whatsoever
over
the
amount
consigned by petitioner and her coheirs with the court.
In the cases of Del Rosario v.

Sandico16 and Salvante v. Cruz,17
likewise cited as authority by
petitioner, this Court held that, for
a consignation or deposit with the
court of an amount due on a
judgment to be considered as
payment, there must be prior
tender to the judgment creditor
who refuses to accept it. The same
principle was reiterated in the later
case
of
Pabugais
v.
Sahijwani.[18
As stated above,
tender of payment involves a
positive and unconditional act by
the obligor of offering legal tender
currency as payment to the obligee
for the formers obligation and
demanding that the latter accept
the same.19 In the instant case, the
Court finds no cogent reason to
depart from the findings of the CA
and the RTC that petitioner and her
co-heirs failed to make a prior valid
tender of payment to respondents.
It is settled that compliance with
the
requisites
of
a
valid
consignation
is
mandatory.20
Failure to comply strictly with any
of the requisites will render the

consignation void. One of these
requisites is a valid prior tender of
payment.21cralawred
Under Article 1256, the only

instances where prior tender of
payment is excused are: (1) when
the creditor is absent or unknown,
or does not appear at the place of
payment; (2) when the creditor is
incapacitated
to
receive
the
payment at the time it is due; (3)
when, without just cause, the
creditor refuses to give a receipt;
(4) when two or more persons
claim the same right to collect; and
(5) when the title of the obligation
has been lost. None of these
instances are present in the instant
case. Hence, the fact that the
subject lots are in danger of being
foreclosed
does
not
excuse
petitioner and her co-heirs from
tendering payment to respondents,
as directed by the court.
Krystle Realty Development Corporation,
rep. by Chairman of the Board,
William C. Cu Vs. Domingo Alibin, etc.,
et
al./Caridad
Rodrigueza,
as
substituted by Rufino Rodrigueza Vs.
Domingo Alibin, etc., et al.G.R. No.
196117/G.R. No. 196129. August 13,
2014
In this case, both the RTC and the
CA
conducted
independent
examinations of the specimen
signatures, which is authorized by
law,40 and unanimously concluded
that the questioned signature on
the Deed of Sale dated August 23,
1962 is different from the standard
signatures
of
Domingo
as
appearing on documents submitted
in evidence by petitioner Caridad
Rodrigueza. Absent any cogent
reason to deviate from such finding
of forgery, which is the basis for
the annulment of the said deed,
the same should be deemed
conclusive and binding upon the
Court.

89

Separately, on Krystle Realtys

claim that it is a buyer in good
faith, the Court finds that the latter
cannot veer away from the
admission of its representative, Mr.
William Cu, i.e., that he was aware
of Domingos interest in the subject
lot, and that Caridad had no title in
her name at the time of the sale,
thus, giving rise to the conclusion
that it (Krystle Realty) had been
reasonably
apprised
of
the
ownership controversy over the
subject lot. This notwithstanding,
records show that Krystle Realty
proceeded with the transaction
without further examining the
sellers title and thus, could not
claim to have purchased the
subject lot in good faith. Verily,
one is considered a buyer in bad
faith not only when he purchases
real estate with knowledge of a
defect or lack of title in his seller
but also when he has knowledge of
facts which should have alerted
him to conduct further inquiry or
investigation,41 as Krystle Realty in
this case. Further, the irregularities
attending the issuance of TCT Nos.
40467, 40468, and 40469 as
pointed out by the CA are equally
indicative of lack of good faith on
Krystle Realtys part. Indeed, what
it failed to realize is that, as one
asserting the status of a buyer in
good faith and for value, it had the
burden of proving such status,
which goes beyond a mere
invocation
of
the
ordinary
presumption
of
good
faith.42cralawred
Anchor Savings Bank (now Equicom
Savings Bank) Vs. Pinzman Realty and
Development Corporation, et al.G.R.
No. 192304. August 13, 2014
Essentially, the sole issue for our
resolution is whether the imposition of
usurious interest rates on a loan obligation
secured by a real estate mortgage will
result in the invalidity of the subsequent
foreclosure sale of the mortgage.
It is jurisprudential axiom that a
foreclosure sale arising from a usurious

mortgage
cannot
be
given
legal
effect.14 Relevantly, in Heirs of Zoilo
Espiritu v. Sps. Landrito,15 we struck down
a foreclosure sale where the amount
declared
as
mortgage
indebtedness
involved excessive, unreasonable, and
unconscionable interest charges. In no
uncertain terms, we ruled that a
mortgagor cannot be legally compelled to
pay for a grossly inflated loan:chanRobl
In the case at bar, the unlawful interest
charge which led to the demand for
P4,577,269.42 as stated in the Notice of
Extrajudicial Sale resulted in the invalidity
of the subsequent foreclosure sale held on
June 1, 1999. The private respondents
cannot be obliged to pay an inflated or
overstated mortgage indebtedness on
account of excessive interest charges
without offending the basic tenets of due
process and equity.
The argument of the petitioner that
defects in the Notice of Sale cannot affect
the validity of the foreclosure sale cannot
be given credence. In relying on a long
litany of cases, the petitioner failed to
realize that the issue in those cases was
the validity of the Notice of Sale per se.
Meanwhile, in the present case, the issue
is the validity of the foreclosure sale in
view of the presence of usurious interest
charges.
People's
Trans-East
Asis
Insurance
Corporation, a.k.a. People's General
Insurance Corporation Vs. Doctors of
New Millenium Holdings, Inc.G.R. No.
172404. August 13, 2014
The liabilities of an insurer under
the
surety
bond
are
not
extinguished
when
the
modifications
in
the
principal
contract do not substantially or
materially alter the principals
obligations. The surety is jointly
and severally liable with its
principal when the latter defaults
from its obligations under the
principal contract.
The
principal
contract
of
the
suretyship is the signed agreement

90

The obligations of the surety to the
principal under the surety bond are
different from the obligations of the
contractor to the client under the principal
contract.
The surety guarantees the
performance
of
the
contractors
obligations. Upon the contractors default,
its client may demand against the surety
bond even if there was no privity of
contract between them. This is the
essence of a surety agreement.
In this case, the surety bond was
executed to guarantee the repayment of
the downpayment46 and to secure the
full and faithful performance47 of Million
State Development. According to the
terms of the bond, Peoples General
Insurance bound itself to be liable in the
amount of P10,000,000.00 in the event
that Million State Development defaults in
its obligations.48cralawred
Petitioner, however, contends that the
inclusion of the clause or the Project
Owners waiver in Article XIII of the
signed agreement made its obligations
more onerous and, therefore, the surety
must be released from its bond.
A suretyship consists of two different
contracts: (1) the surety contract and (2)
the
principal
contract
which
it
guarantees. Since the insurers liability is
strictly based only on the terms stated in
the surety contract in relation to the
principal contract, any change in the
principal contract, which materially alters
the principals obligations would, in effect,
constitute an implied novation of the
surety
contract:ChanRoblesVirtualawlibrary
[A] surety is released from its obligation
when there is a material alteration of the
contract in connection with which the
bond is given, such as a change which
imposes a new obligation on the promising
party, or which takes away some
obligation already imposed, or one which
changes the legal effect of the original
contract and not merely its form. A
surety, however, is not released by a

change in the contract which does not
have the effect of making its obligation
more onerous.49cralawred
Petitioner insists that the principal
contract of the suretyship was the draft
agreement since it was assured by its
principal that the draft would embody the
same terms and conditions as the final
signed agreement. The insertion of the
disputed clause in the signed agreement,
it argues, effectively deprived petitioner
of the opportunity to objectively assess
the real risk of its undertaking and fix the
reasonable
rate
of
premium
thereon.50cralawred
This
argument
is
unmeritorious.
Petitioner, as the surety, had the
responsibility to read through the terms of
the principal contract; it cannot simply
rely on the assurances of its principal. It
was petitioners duty to carefully scrutinize
the agreement since the Insurance Code
mandates that its liability is determined
strictly in accordance with the provisions
of
the
principal
contract:ChanRoblesVirtualawlibrary
If petitioner had any objection to the
terms of the signed agreement, it could
have pointed it out before its principal
defaults and it becomes liable under the
surety bond. The silence of petitioner
must be taken against it since it was
responsible for exerting diligence in the
conduct of its affairs.
On the basis of petitioners own
admissions, the principal contract of the
suretyship is the signed agreement. The
surety, therefore, is presumed to have
acquiesced to the terms and conditions
embodied in the principal contract when it
issued its surety bond.
Accordingly,
petitioner cannot argue that the insertion
of the clause in the signed agreement
constituted an implied novation of the
obligation
which
extinguished
its
obligations as a surety since there was
nothing
to
novate:ChanRoblesVirtualawlibrary
Rowena R. Solante Vs. Commission on

91

Audit, Chairperson Ma. Gracia PulidoTan, et al.G.R. No. 207348. August 19,
2014
The Issue
The resolution of the present

controversy
rests
on
the
determination of a sole issue: who
between the City of Mandaue and
F.F. Cruz owned during the period
material the properties that were
demolished.
The Courts Ruling
The petition is meritorious. The

COA and its audit team obviously
misread the relevant stipulations of
the MOA in relation to the
provisions on project completion
and termination of contract of the
Mandaue-F.F. Cruz
reclamation
contract.
Essentially, the COA is alleging that

the
Contract
of
Reclamation
establishes an obligation on the
part of F.F. Cruz to finish the
project within the allotted period of
six (6) years from contract
execution
in
August
1989.
Prescinding from this premise, the
COA would conclude that after the
six (6)-year period, F.F. Cruz is
automatically deemed to be in
delay, the contract considered as
completed, and the ownership of
the structures built in accordance
with the MOA transferred to the
City of Mandaue.
COAs basic position and the

arguments holding it together is
untenable.
On this point, the Civil Code

provision on obligations with a
period is relevant. Article 1193
thereof
provides:ChanRoblesVirtualawlibrar
y
Article 1193. Obligations for
whose fulfillment a day certain

has
been
fixed,
shall
be
demandable only when that day
comes.
Obligations with a resolutory period

take effect at once, but terminate
upon arrival of the day certain.
A day certain is understood to
be that which must necessarily
come, although it may not be
known when.
If the uncertainty consists in
whether the day will come or not,
the obligation is conditional, and it
shall be regulated by the rules of
the preceding Section. (emphasis
supplied)
A plain reading of the Contract of
Reclamation reveals that the six
(6)-year
period
provided
for
project completion, or, with like
effect, termination of the contract
was a mere estimate and cannot
be considered a period or a day
certain in the context of the
aforequoted Art. 1193. To be clear,
par. 15 of the Contract of
Reclamation states: [T]he project
is estimated to be completed in six
(6) years. As such, the lapse of six
(6) years from the perfection of the
contract did not, by itself, make
the
obligation
to
finish
the
reclamation project demandable,
such as to put the obligor in a state
of actionable delay for its inability
to finish. Thus, F.F. Cruz cannot be
deemed
to
be
in
delay.
Parenthetically, the Ombudsman,
in a Resolution of June 29, 2006 in
OMB-V-C-03-0173-C, espoused a
similar view in dismissing the
complaint
against
Solante,
A careful reading of the pertinent
section
of
the
Contract
of
Reclamation between F.F. Cruz and
Mandaue City, however, would

92

confirm
respondents
RancesSolante[s] and Sungahids view
that herein respondent Cruz was
still the owner of the subject
properties at the time these were
demolished. Indeed, the Contract
specifies that the six (6)-year
period was no more than an
estimate of the project completion.
It was not a fixed period
agreed upon. Being so, the
mere lapse of six (6) years
from the execution of the
Contract, did not by itself deem
the
reclamation
project
completed, much less bring
about the fulfillment of the
condition stipulated in the MOA
(on the shift of ownership over
the
demolished
properties).
Herein respondent Cruz, and/or
his company, at least on this
particular regard, can be said
to be still the owner of the
structures
along
Plaridel
Extension x x x, when these
were demolished to give way to
road widening. It was nothing
but equitable that they get
compensated for the damages
caused by the demolition.16
(emphasis supplied)
demand and delay and the

exceptions to the requirement of
demand
relevantly
states:ChanRoblesVirtualawlibrary
Put a bit differently, the lapse of

six (6) years from the perfection of
the subject reclamation contract,
without more, could not have
automatically vested Mandaue City,
under the MOA, with ownership of
the structures.
Moreover, even if we consider the

allotted six (6) years within which
F.F.
Cruz
was
supposed
to
complete the reclamation project,
the
lapse
thereof
does
not
automatically mean that F.F. Cruz
was in delay. As may be noted, the
City of Mandaue never made a
demand for the fulfillment of its
obligation under the Contract of
Reclamation. Article 1169 of the
Civil Code on the interaction of
Article 1169. Those obliged to

deliver or to do something
incur in delay from the time the
obligee
judicially
or
extrajudicially demands from
them the fulfillment of their
obligation.
However, the demand by the
creditor shall not be necessary in
order that delay may exist:
(1) When the obligation or the law
expressly so declares; or
(2) When from the nature and the
circumstances of the obligation it
appears that the designation of the
time when the thing is to be
delivered or the service is to be
rendered was a controlling motive
for the establishment of the
contract; or
(3) When demand would be
useless, as when the obligor has
rendered it beyond his power to
perform.
In reciprocal obligations, neither
party incurs in delay if the other
does not comply or is not ready to
comply in a proper manner with
what is incumbent upon him. From
the moment one of the parties
fulfills his obligation, delay by the
other begins.
In the instant case, the records are
bereft of any document whence to
deduce that the City of Mandaue
exacted from F.F.
Cruz the
fulfillment of its obligation under
the reclamation contract. And to be
sure, not one of the exceptions to
the requisite demand under Art.
1169 is established, let alone
asserted. On the contrary, the
then city mayor of Mandaue, no
less, absolved F.F. Cruz from
incurring under the premises in

93

delay.
As it were, the Mandaue-F.F.Cruz MOA
states that the structures built by F.F.
Cruz on the property of the city will belong
to the latter only upon the completion of
the project. Clearly, the completion of the
project is a suspensive condition that has
yet to be fulfilled. Until the condition
arises, ownership of the structures
properly pertains to F.F. Cruz.
To be clear, the MOA does not

state that the structures shall inure
in ownership to the City of
Mandaue after the lapse of six (6)
years from the execution of the
Contract of Reclamation. What the
MOA
does
provide
is
that
ownership of the structures shall
vest upon, or ipso facto belong to,
the City of Mandaue when the
Contract of Reclamation shall have
been completed. Logically, before
such time, or until the agreed
reclamation project is actually
finished, F.F. Cruz owns the
structures.
The
payment
of
compensation for the demolition
thereof
is
justified.
The
disallowance of the payment is
without factual and legal basis.
COA then gravely abused its
discretion when it decreed the
disallowance.
188289. August 20, 2014
In summary and review, the basic
facts are: David and Leticia are US
citizens who own properties in the
USA and in the Philippines. Leticia
obtained a decree of divorce from
the Superior Court of California in
June 2005 wherein the court
awarded all the properties in the
USA to Leticia. With respect to
their properties in the Philippines,
Leticia filed a petition for judicial
separation of conjugal properties.
At the outset, the trial court erred

in recognizing the divorce decree
which
severed
the
bond
of
marriage between the parties. In
Corpuz v. Sto. Tomas,13 we stated
that:chanRoblesvirtualLawlibrary
The
starting
point
in
any
recognition of a foreign divorce
judgment is the acknowledgment
that our courts do not take judicial
notice of foreign judgments and
laws. Justice Herrera explained
that, as a rule, no sovereign is
bound to give effect within its
dominion to a judgment rendered
by a tribunal of another country.
This means that the foreign
judgment and its authenticity must
be proven as facts under our rules
on evidence, together with the
aliens applicable national law to
show the effect of the judgment on
the alien himself or herself. The
recognition may be made in an
action instituted specifically for the
purpose or in another action where
a party invokes the foreign decree
as an integral aspect of his claim or
defense.14
The requirements of presenting the
foreign divorce decree and the
national law of the foreigner must
comply with our Rules of Evidence.
Specifically, for Philippine courts to
recognize a foreign judgment
relating to the status of a
marriage, a copy of the foreign
judgment may be admitted in
evidence and proven as a fact
under Rule 132, Sections 24 and
25, in relation to Rule 39, Section
48(b)
of
the
Rules
of
Court.15cralawlawlibrary
Under Section 24 of Rule 132, the
record of public documents of a
sovereign authority or tribunal may
be proved by: (1) an official
publication thereof or (2) a copy
attested by the officer having the
legal custody thereof. Such official
publication or copy must be
accompanied, if the record is not
kept in the Philippines, with a
certificate that the attesting officer
has the legal custody thereof. The

94

certificate may be issued by any of
the authorized Philippine embassy
or consular officials stationed in the
foreign country in which the record
is kept, and authenticated by the
seal of his office. The attestation
must state, in substance, that the
copy is a correct copy of the
original, or a specific part thereof,
as the case may be, and must be
under the official seal of the
attesting officer.
Section 25 of the same Rule states

that whenever a copy of a
document or record is attested for
the purpose of evidence, the
attestation
must
state,
in
substance, that the copy is a
correct copy of the original, or a
specific part thereof, as the case
may be. The attestation must be
under the official seal of the
attesting officer, if there be any, or
if he be the clerk of a court having
a seal, under the seal of such
court.
Based on the records, only the
divorce decree was presented in
evidence. The required certificates
to prove its authenticity, as well as
the pertinent California law on
divorce were not presented.
It may be noted that in Bayot v.
Court of Appeals,16 we relaxed the
requirement on certification where
we held that [petitioner therein]
was clearly an American citizen
when she secured the divorce and
that divorce is recognized and
allowed in any of the States of the
Union, the presentation of a copy
of foreign divorce decree duly
authenticated by the foreign
court issuing said decree is, as
here, sufficient. In this case
however, it appears that there is
no seal from the office where the
divorce decree was obtained.
Even if we apply the doctrine of
processual presumption17 as the

lower courts did with respect to the
property regime of the parties, the
recognition of divorce is entirely a
different matter because, to begin
with, divorce is not recognized
between Filipino citizens in the
Philippines.
Absent a valid recognition of the

divorce decree, it follows that the
parties are still legally married in
the Philippines. The trial court thus
erred in proceeding directly to
liquidation.
As a general rule, any modification
in the marriage settlements must
be made before the celebration of
marriage. An exception to this rule
is allowed provided that the
modification is judicially approved
and refers only to the instances
provided in Articles 66, 67, 128,
135 and 136 of the Family
Code.18cralawlawlibrary
Leticia anchored the filing of the

instant
petition
for
judicial
separation
of
property
on
paragraphs 4 and 6 of Article 135
of the Family Code
Separation in fact for one year as a
ground to grant a judicial separation of
property was not tackled in the trial
courts decision because, the trial court
erroneously treated the petition as
liquidation of the absolute community of
properties.
The records of this case are replete with
evidence that Leticia and David had
indeed separated for more than a year
and
that
reconciliation
is
highly
improbable.
First,
while
actual
abandonment had not been proven, it is
undisputed that the spouses had been
living separately since 2003 when David
decided to go back to the Philippines to
set up his own business. Second, Leticia
heard from her friends that David has
been cohabiting with Estrellita Martinez,
who represented herself as Estrellita

95

Noveras. Editha Apolonio, who worked in
the hospital where David was once
confined, testified that she saw the name
of Estrellita listed as the wife of David in
the Consent for Operation form.20 Third
and more significantly, they had filed for
divorce and it was granted by the
California court in June 2005.
Having established that Leticia and David
had actually separated for at least one
year, the petition for judicial separation of
absolute community of property should be
granted.
The grant of the judicial separation of the
absolute
community
property
automatically dissolves the absolute
community regime, as stated in the 4th
paragraph of Article 99 of the Family
Code, thus:chanRoblesvirtualLawlibrary
Art.
99.
The
absolute
community
terminates:chanRoblesvirtualLawlibrary
(1) Upon the death of either spouse;
(2) When there is a decree of legal
separation;
(3) When the marriage is annulled or
declared void; or
(4) In case of judicial separation of
property during the marriage under
Articles
134
to
138.
(Emphasis
supplied).
Under Article 102 of the same Code,
liquidation follows the dissolution of the
absolute community regime and the
following
procedure
should
apply:chanRoblesvirtualLawlibrary
(4)
(5)
(6)
each of them.
The net remainder of the properties of th
assets, which shall be divided equally be
proportion or division was agreed upon in
been a voluntary waiver of such share provi
net profits subject to forfeiture in accordanc
said profits shall be the increase in value
property at the time of the celebration of th
its dissolution.
The presumptive legitimes of the common
accordance with Article 51.
Unless otherwise agreed upon by the parties
dwelling and the lot on which it is situated
the majority of the common children choo
years are deemed to have chosen the mot
case there is no such majority, the court
interests of said children.
At the risk of being repetitious, we will not

remand the case to the trial court.
Instead, we shall adopt the modifications
made by the Court of Appeals on the trial
courts
Decision
with
respect
to
liquidation.
We agree with the appellate court

that the Philippine courts did not
acquire
jurisdiction
over
the
California properties of David and
Leticia. Indeed, Article 16 of the
Civil Code clearly states that real
property as well as personal
property is subject to the law of
the country where it is situated.
Thus, liquidation shall only be
limited to the Philippine properties.
Fe H. Okabe Vs. Ernesto A. SaturninoG.R.

No. 196040. August 26, 2014
In essence, the issue is whether or
not, in the case at bar, an ex-parte
Art. 102. Upon dissolution of the absolute
petition for the issuance of a writ of
community
regime,
the
following
possession was the proper remedy
procedure
shall
of the petitioner in obtaining
apply:chanRoblesvirtualLawlibrary
possession of the subject property.
28
(1) An inventory shall be prepared, listing separately allSection
the properties
the 3135,
absolute
7 of ActofNo.
as
community and the exclusive properties of each spouse. amended by Act No. 4118,29
(2) The debts and obligations of the absolute community shallstate:XXXXXXChanRoXblesVirtuala
be paid out of its assets. In case
of insufficiency of said assets, the spouses shall be solidarily
liable
for the unpaid balance
wlibrary
XXXX
with their separate properties in accordance with the
provisions
of
the
second
of
Under the provision
citedparagraph
above, the
Article 94.
purchaser or the mortgagee who is also
(3) Whatever remains of the exclusive properties of the
spouses
shallinthereafter
be delivered
to
the
purchaser
the foreclosure
sale may
96

apply for a writ of possession during the
redemption period,30 upon an ex-parte
motion and after furnishing a bond.
In GC Dalton Industries, Inc. v.

Equitable PCI Bank,31 the Court
held that the issuance of a writ of
possession to a purchaser in an
extrajudicial
foreclosure
is
summary and ministerial in nature
as such proceeding is merely an
incident in the transfer of title.
Also, in China Banking Corporation
v. Ordinario,32 we held that under
Section 7 of Act No. 3135, the
purchaser in a foreclosure sale is
entitled to possession of the
property.
Here, petitioner does not fall under the
circumstances of the aforequoted case and
the provisions of Section 7 of Act No.
3135, as amended, since she bought the
property long after the expiration of the
redemption period. Thus, it is PNB, if it
was the purchaser in the foreclosure sale,
or the purchaser during the foreclosure
sale, who can file the ex-parte petition for
the issuance of writ of possession during
the redemption period, but it will only
issue upon compliance with the provisions
of Section 7 of Act No. 3135.
In fact, the Real Estate Mortgage35
contains a waiver executed by the
mortgagor in favor of the mortgagee,
wherein the mortgagor even waives the
issuance of the writ of possession in favor
of the mortgagee. The contract provides
that effective upon the breach of any
condition of the mortgage and in addition
to the remedies herein stipulated, the
mortgagee is hereby likewise appointed
Attorney-in-Fact of the Mortgagor/s with
full power and authority with the use of
force, if necessary, to take actual
possession of the mortgaged property/ies
without the necessity of any judicial order
or permission, or power, to collect rents,
to eject tenants, to lease or sell the
mortgaged property/ies or any part
thereof at a private sale without previous
notice or advertisement of any kind and
execute the corresponding bills of sale,
lease or other agreement that may be
deemed convenient to make repairs or

improvements
on
the
mortgaged
property/ies and pay for the same and
perform any other act which the
Mortgagee may deem convenient for the
proper administration of the mortgaged
property/ies.36cralawred
Moreover, even without the waiver, the
issuance of the writ of possession is
ministerial and non-adversarial for the
only issue involved is the purchasers right
to
possession;
thus,
an
ex-parte
proceeding is allowed.
Nevertheless, the purchaser is not left
without any remedy. Section 6 of Act No.
3135, as amended by Act No. 4118,
SEC. 6. In all cases in which an
extrajudicial sale is made under the
special power herein before referred to,
the debtor, his successor-in-interest or
any judicial creditor or judgment creditor
of said debtor, or any person having a lien
on the property subsequent to the
mortgage or deed of trust under which the
property is sold, may redeem the same at
any time within the term of one year from
and after the date of the sale; and such
redemption shall be governed by the
provisions of sections four hundred and
sixty-six, inclusive, of the Code of Civil
Procedure, in so far as these are not
inconsistent with the provisions of this
Act.
Consequently, the provision of Section 33,
Rule 39 of the Rules of Court relative to
an execution sale is made applicable to
extrajudicial foreclosure of real estate
mortgages by virtue of Section 6 of Act
No. 3135, as amended.37 Section 33, Rule
39
of
the
Rules
of
Court
SEC. 33. Deed and possession to be given
at expiration of redemption period; by
whom executed or given. If no
redemption be made within one (1) year
from the date of registration of the
certificate of sale, the purchaser is entitled

97

to a conveyance and possession of the
property; or, if so redeemed whenever
sixty (60) days have elapsed and no other
redemption has been made, and notice
thereof
given,
and
the
time
for
redemption
has
expired,
the
last
redemptioner is entitled to the conveyance
and possession; but in all cases the
judgment obligor shall have the entire
period of one (1) year from the date of
registration of the sale to redeem the
property. The deed shall be executed by
the officer making the sale or his
successor in office, and in the latter case
shall have the same validity as though the
officer making the sale had continued in
office and executed it.
Upon the expiration of the right of
redemption,
the
purchaser
or
redemptioner shall be substituted to and
acquire all the rights, title, interest and
claim of the judgment obligor to the
property as of the time of the levy. The
possession of the property shall be given
to the purchaser or last redemptioner by
the same officer unless a third party is
actually
holding
the
property
adversely to the judgment obligor.38
From the foregoing, upon the expiration of
the right of redemption, the purchaser or
redemptioner shall be substituted to and
acquire all the rights, title, interest and
claim of the judgment debtor to the
property, and its possession shall be given
to the purchaser or last redemptioner
unless a third party is actually holding the
property adversely to the judgment
debtor. In which case, the issuance of the
writ of possession ceases to be ex-parte
and non-adversarial. Thus, where the
property levied upon on execution is
occupied by a party other than a
judgment debtor, the procedure is for the
court to conduct a hearing to determine
the nature of said possession, i.e.,
whether or not he is in possession of the
subject property under a claim adverse to
that of the judgment debtor.
It is but logical that Section 33, Rule 39 of
the Rules of Court be applied to cases
involving
extrajudicially
foreclosed
properties that were bought by a
purchaser and later sold to third-partypurchasers after the lapse of the
redemption period. The remedy of a writ
of possession, a remedy that is available
to the mortgagee-purchaser to acquire
possession of the foreclosed property from
the mortgagor, is made available to a
subsequent purchaser, but only after
hearing and after determining that the
subject property is still in the possession
of the mortgagor. Unlike if the purchaser
is the mortgagee or a third party during
the redemption period, a writ of
possession may issue ex-parte or without
hearing. In other words, if the purchaser
is a third party who acquired the property
after the redemption period, a hearing
must be conducted to determine whether
possession over the subject property is
still with the mortgagor or is already in
the possession of a third party holding the
same adversely to the defaulting debtor or
mortgagor. If the property is in the
possession of the mortgagor, a writ of
possession
could
thus
be
issued. Otherwise, the remedy of a writ of
possession is no longer available to such
purchaser, but he can wrest possession
over the property through an ordinary
action of ejectment.
To be sure, immediately requiring

the subsequent purchaser to file a
separate case of ejectment instead
of a petition for the issuance of a
writ of possession, albeit not exparte, will only prolong the
proceedings and unduly deny the
subsequent
purchaser
of
possession of the property which
he already bought.
Heirs of Spouses Joaquin Manguardia ans
Susana Manalo, et al. Vs. Heirs of
Simplicio Valles and Marta Valles, et
al.G.R. No. 177616. August 27, 2014
[T]he burden of proving the status of a
purchaser in good faith and for value lies upon
him who asserts that standing.1cralawred
Petitioners failed to discharge the burden
of proving that their predecessors-in-interest

98

were buyers in good faith.

Petitioners do not dispute that the original Deed
of Absolute Sale is a forgery because the alleged
vendors were already long dead when the
questioned deed was executed. While their
ownership rights are ultimately based upon this
forged deed, petitioners assert that the good
faith of their predecessors-in-interest validates
their title over the lots.
The Court, however, disagrees. It must be noted
that the relationships by consanguinity or affinity,
between and among the vendors and vendees in
the series of sales of the subject properties, were
established by testimonial evidence. Again, these
were not contradicted by petitioners. And as
aptly concluded by the trial court, it can
reasonably be assumed from these relations that
the spouses Manguardia and Leonardo were not
buyers
in
good
faith,
Are the Manguardias and Leonardo Araza third
persons x x x who are innocent purchasers for
value?
The general rule x x x that a person dealing with
registered land has a right to rely on the Torrens
Certificate of Title without need of inquiring
further cannot apply when the party has actual
knowledge of facts and circumstances that would
impel a reasonably cautious man to make such
inquiry or when the purchaser has knowledge of
a defect or lack of title in his vendor or of
sufficient facts to induce a reasonably prudent
man to [inquire] into the status of the title of the
property in litigation (Voluntad vs. Dizon, 313
SCRA 209). If circumstances exist that [require]
a prudent man to investigate and he does not, he
is deemed to have acted in mala fide, and his
mere refusal to believe that a defect exists or his
willful closing of his eyes to the possibility of the
existence of a defect in his vendors title will not
make him an innocent purchaser for value
(Voluntad vs. Dizon, supra).
Spouses Soledad Manalo and Pedro Araza
purchased the properties in question from
Roberto Araza, x x x [Visitacion] Valles Arazas
son. The father of Roberto Araza, Panfilo Araza,
was Pedro Arazas brother, making Pedro Araza
the uncle of Roberto Araza. Encarnacion Ordas,
one of the two [v]endors of the land in question

to Pedro Araza and Soledad Manalo Araza, is
Roberto Arazas cousin as the mother of
Encarnacion Ordas and Robertos mother, x x x
[Visitacion] are sisters. Joaquin Manguardia, on
the other hand, is the husband of Susana Manalo,
niece of Soledad Manalo Araza, being the
daughter of Jose Manalo, Soledads brother.
Leonardo Araza, on the other hand is x x x
[Visitacion] Valles-Arazas son, whose father,
Panfilo Araza is brother of Pedro Araza, Soledad
Arazas husband. x x x [Visitacion] is a sister of
Simplicio Valles and Marta Valles, both of whom
were dead when the Deed of Sale, exh. B was
purportedly executed in 1968, selling the
property, Lot 835, to x x x [Visitacions] brothers,
Rustico and Melquiades, and [Visitacions] nieces,
namely: Encarnacion Ordas and Adelaida Valles.
The transfers of the properties in question did not
go far, but [were] limited to close family relatives
by affinity and consanguinity. Circuitous and
convoluted [as they may be], and involving more
than two families but belonging to a clan which,
although living in different barangays, such
barangays belong to the same city and [are]
adjacent to each other. Good faith among the
parties to the series of conveyances is therefore
hard if not impossible to presume.60
Unfortunately for the petitioners, they did not
provide any sufficient evidence that would
convince the courts that the proximity of
relationships between/among the vendors and
vendees in the questioned sales was not used to
perpetrate fraud. Thus there is nothing to dispel
the notion that apparent anomalies attended the
transactions among close relations. Glaringly
emphasized were the established facts that the
parties to the alleged original sale in 1968, and
the witnesses thereto were close relatives
(siblings, children and nephew of Marta and
Simplicio). Similarly, the vendors and vendees in
subsequent sale transactions were either the covendees themselves in the original sale, first
cousins, and close relatives by consanguinity and
affinity. In addition, these transactions between
close relatives happened at a time when
everybody knew everyone, in a place where
vendees lived in close proximity to the vendors,
and to the disputed properties.

99

This is not to say however, that a sale between

close relatives is automatically anomalous. It is
just
that
in
this
particular
case,
the
circumstances strongly show that fraud was
committed by relatives against relatives and the
evidence adduced by petitioners was insufficient
to remove the cloud of doubt pertaining to the
good faith of their predecessors-in-interest in
acquiring the properties in question.
It must be emphasized that the burden of
proving the status of a purchaser in good faith
and for value lies upon him who asserts that
standing. In discharging the burden, it is not
enough to invoke the ordinary presumption of
good faith that everyone is presumed to act in
good faith. The good faith that is here essential is
integral with the very status that must be
proved. x x x Petitioners have failed to discharge
that burden.61cralawr
Acquisitive prescription is not applicable
in the case at bar.
Petitioners contention of acquisitive prescription
cannot prevail over the rights of respondents. To
begin with, the disputed property is a duly
registered land under the Torrens system. It is
well-settled that no title to registered land in
derogation of that of the registered owner shall
be
acquired
by
prescription
or
adverse
possession. Neither can prescription be allowed
against the hereditary successors of the
registered owner, because they merely step into
the shoes of the decedent and are merely the
continuation
of
the
personality
of
their
predecessor[-]in[-]interest. Consequently, since
a certificate of registration covers it, the disputed
land cannot be acquired by prescription
regardless of petitioner's good faith.62cralawred
Laches cannot be used to perpetrate injustice.
On the claim of laches, this Court reiterates that
[l]aches is based upon equity and the public
policy of discouraging stale claims. Since laches
is an equitable doctrine, its application is
controlled by equitable considerations. It cannot
be used to defeat justice or to [perpetrate] fraud
and injustice. Thus, the assertion of laches to
thwart the claim of respondents is foreclosed
because the [d]eed upon which [petitioners base
their] claim is[, first and foremost,] a
forgery.63cralawred
Philnico Industrial Corporation (formerly

Philnico
Mining
and
Industrial
Corporation) Vs. Privatization and
Management Office (formerly Asset
Privatization Trust)/Privatization and
Management Office (formerly Asset
Privatization
Trust)
Vs.
Philnico
Industrial
Corporation
(formerly
Philnico
Mining
and
Industrial
Corporation)G.R. Nos. 199420/199432.
August 27, 2014
RULING OF THE COURT
The allegations and arguments of

PIC and PMO in their respective
Petitions essentially boil down to
two fundamental
issues:
(1)
Whether Section 8.02 of the ARDA
on
ipso
facto
or
automatic
reversion of the PPC shares of
stock to PMO in case of default by
PIC
constitutes
pactum
commissorium; and (2) Whether
the Writ of Preliminary Injunction
should be dissolved.
The Court resolves the first issue in

the positive and the second issue
in the negative.
Section 8.02 of the ARDA
constitutes pactum commissorium
and, thus, null and void for being
contrary to Article 2088 of the Civil
Code.
Article 1305 of the Civil Code allows
contracting parties to establish such
stipulation, clauses, terms, and conditions
as they may deem convenient, provided,
however, that they are not contrary to
law, morals, good customs, public order,
or public policy.
Pactum commissorium is among the
contractual stipulations that are deemed
contrary to law. It is defined as a
stipulation empowering the creditor to
appropriate the thing given as guaranty
for the fulfillment of the obligation in the
event the obligor fails to live up to his
undertakings, without further formality,
such as foreclosure proceedings, and a

10
0

public sale.33 It is explicitly prohibited
under Article 2088 of the Civil Code which
ART.
2088.
The
creditor
cannot
appropriate the things given by way of
pledge or mortgage, or dispose of
them. Any stipulation to the contrary is
null and void.
There are two elements for pactum
commissorium to exist: (1) that there
should be a pledge or mortgage wherein a
property is pledged or mortgaged by way
of security for the payment of the principal
obligation; and (2) that there should be a
stipulation for an automatic appropriation
by the creditor of the thing pledged or
mortgaged in the event of nonpayment of
the
principal
obligation
within
the
stipulated period.34cralawred
Both elements of pactum commissorium
are present in the instant case: (1) By
virtue of the Pledge Agreement dated May
2, 1997, PIC pledged its PPC shares of
stock in favor of PMO as security for the
fulfillment of the formers obligations
under the ARDA dated May 10, 1996 and
the Pledge Agreement itself; and (2)
There is automatic appropriation as under
Section 8.02 of the ARDA, in the event of
default by PIC, title to the PPC shares of
stock shall ipso facto revert from PIC to
PMO without need of demand.
PMO though insists that there is no valid
Pledge Agreement, arguing that PIC could
not have validly pledged the PPC shares of
stock because it is not yet the absolute
owner of said shares. According to PMO,
the sale of the PPC shares of stock to PIC
is subject to the resolutory condition of
nonpayment by PIC of the installments
due on the purchase price.
Again, the Court is unconvinced.
Among the requirements of a contract of
pledge is that the pledgor is the absolute
owner of the thing pledged.37 Based on
the provisions of the ARDA, ownership of
the PPC shares of stock had passed on to
PIC, hence, enabling PIC to pledge the
very same shares to PMO. In accordance

with Section 2.07(a)(1) and 2.07(a)(2) of
the ARDA, PMO had transferred to PIC all
rights, title, and interests in and to the
PPC shares of stock, and delivered to PIC
the certificates for said shares for
cancellation and replacement of new
certificates already in the name of PIC. In
addition, Section 2.07(b) of the ARDA
explicitly declares that PIC as buyer shall
exercise all the rights, including the right
to vote, of a shareholder in respect of the
PPC shares of stock.
PMO cannot maintain that the ownership
of the PPC shares of stock did not pass on
to PIC, but in the same breath claim that
non-payment by PIC of the installments
due on the purchase price is a resolutory
condition for the contract of sale these
two
arguments
are
actually
contradictory.
As the Court clearly
explained in Heirs of Paulino Atienza v.
Espidol38:ChanRoblesVirtualawlibrary
Regarding the right to cancel the
contract for nonpayment of an
installment, there is need to initially
determine if what the parties had was a
contract of sale or a contract to sell. In a
contract of sale, the title to the
property passes to the buyer upon the
delivery of the thing sold. In a contract
to sell, on the other hand, the ownership
is, by agreement, retained by the seller
and is not to pass to the vendee until full
payment of the purchase price. In the
contract
of
sale,
the
buyers
nonpayment of the price is a negative
resolutory condition; in the contract to
sell, the buyers full payment of the price
is a positive suspensive condition to the
coming into effect of the agreement. In
the first case, the seller has lost and
cannot recover the ownership of the
property unless he takes action to set
aside the contract of sale. In the
second case, the title simply remains in
the seller if the buyer does not comply
with the condition precedent of making
payment at the time specified in the
contract. x x x. (Emphases supplied,
citation omitted.)

10
1

So that it could invoke the resolutory
condition
of
nonpayment
of
an
installment,
PMO
must
necessarily
concede that its contract with PIC was a
one of sale and that ownership of the PPC
shares of stock had indeed passed on to
PIC.
And even then, having lost
ownership of the shares, PMO cannot
automatically recover the same without
taking steps to set aside the contract of
sale.
Moreover, the general rule is that in the
absence of a stipulation, a party cannot
unilaterally and extrajudicially rescind a
contract. A party must invoke the right to
rescind a contract judicially.39 It is also
settled that the rescission of a contract
based on Article 1191 of the Civil Code
requires mutual restitution to bring back
the parties to their original situation prior
to
the
inception
of
the
contract. Rescission creates the obligation
to return the object of the contract. It can
be carried out only when the one who
demands rescission can return whatever
he may be obliged to restore.40cralawred
Even
though
PMO
had
previously
acknowledged the need for restitution or
restoration following rescission, it also
qualified
that
such
restitution
or
restoration shall still be subject x x x to
the fair determination of the amount to be
restored as may be deemed reasonable
and substantiated.41cralawred
Section 8.02 of the ARDA provides for the

ipso facto reversion of the pledged shares
of PIC to PMO in case of default on the
part of the former, which as explained
above, is prohibited by Article 2088 of the
Civil Code. The said Section does not
mention the broader concept of rescission
of the entire ARDA.
Edelina T. Ando Vs. Department of Foreign
AffairsG.R. No. 195432. August 27, 2014
THE COURTS RULING
The Court finds the Petition to be without merit.
DFA to issue her passport, petitioner incorrectly

filed a petition for declaratory relief before the
RTC. She should have first appealed before
the Secretary of Foreign Affairs, since her
ultimate entreaty was to question the DFAs
refusal to issue a passport to her under her
second husbands name.
Under the Implementing Rules and Regulations
(IRR) of R.A. 8239, which was adopted on 25
February 1997, the following are the additional
documentary requirements before a married
woman may obtain a passport under the name of
her spouse:ChanRoblesVirtualawlibrary
SECTION 2. The issuance of passports to
married, divorced or widowed women shall be
made
in
accordance
with
the
following
provisions:ChanRoblesVirtualawlibrary
a) In case of a woman who is married and who
decides to adopt the surname of her husband
pursuant to Art. 370 of Republic Act No. 386, she
must present the original or certified true copy of
her marriage contract, and one photocopy
thereof.
In addition thereto, a Filipino who contracts
marriage in the Philippines to a foreigner, shall be
required to present a Certificate of Attendance in
a Guidance and Counselling Seminar conducted
by the CFO when applying for a passport for the
first time.
b) In case of annulment of marriage, the
applicant must present a certified true copy of
her annotated Marriage Contract or Certificate of
Registration and the Court Order effecting the
annulment.
c) In case of a woman who was divorced by her
alien husband, she must present a certified true
copy of the Divorce Decree duly authenticated by
the Philippine Embassy or consular post which
has jurisdiction over the place where the divorce
is obtained or by the concerned foreign
diplomatic or consular mission in the Philippines.
When the divorcee is a Filipino Muslim, she must
present a certified true copy of the Divorce
Decree or a certified true copy of the Certificate
of Divorce from the Shariah Court or the OCRG.
First, with respect to her prayer to compel the

10
2

d) In the event that marriage is dissolved by the

death of the husband, the applicant must present
the original or certified true copy of the Death
Certificate of the husband or the Declaration of
Presumptive Death by a Civil or Shariah Court, in
which case the applicant may choose to continue
to use her husbands surname or resume the use
of her maiden surname.
From the above provisions, it is clear that for
petitioner to obtain a copy of her passport under
her married name, all she needed to present
were the following: (1) the original or certified
true copy of her marriage contract and one
photocopy
thereof;
(2)
a
Certificate
of
Attendance in a Guidance and Counseling
Seminar, if applicable; and (3) a certified true
copy of the Divorce Decree duly authenticated by
the Philippine Embassy or consular post that has
jurisdiction over the place where the divorce is
obtained or by the concerned foreign diplomatic
or consular mission in the Philippines.
In this case, petitioner was allegedly told that she
would not be issued a Philippine passport under
her second husbands name. Should her
application for a passport be denied, the
remedies available to her are provided in Section
9
of
R.A.
8239,
which
reads
Sec. 9. Appeal. Any person who feels
aggrieved as a result of the application of this Act
of the implementing rules and regulations issued
by the Secretary shall have the right to appeal to
the Secretary of Foreign Affairs from whose
decision judicial review may be had to the Courts
in due course.
Clearly, she should have filed an appeal with the
Secretary of the DFA in the event of the denial of
her application for a passport, after having
complied with the provisions of R.A. 8239.
Petitioners argument that her application cannot
be said to have been either denied, cancelled or
restricted by [the DFA], so as to make her an
aggrieved party entitled to appeal,7 as instead
she was merely told8 that her passport cannot
be issued, does not persuade. The law provides a
direct recourse for petitioner in the event of the
denial of her application.
Second, with respect to her prayer for the
recognition of her second marriage as valid,

petitioner should have filed, instead, a petition
for the judicial recognition of her foreign
divorce from her first husband.
In Garcia v. Recio,9 we ruled that a divorce
obtained abroad by an alien may be recognized in
our jurisdiction, provided the decree is valid
according to the national law of the foreigner.
The presentation solely of the divorce decree is
insufficient; both the divorce decree and the
governing personal law of the alien spouse who
obtained the divorce must be proven. Because
our courts do not take judicial notice of foreign
laws and judgment, our law on evidence requires
that both the divorce decree and the national law
of the alien must be alleged and proven and like
any other fact. 10cralawred
While it has been ruled that a petition for the
authority to remarry filed before a trial court
actually constitutes a petition for declaratory
relief,11 we are still unable to grant the prayer of
petitioner. As held by the RTC, there appears to
be insufficient proof or evidence presented on
record of both the national law of her first
husband, Kobayashi, and of the validity of the
divorce decree under that national law. 12 Hence,
any declaration as to the validity of the divorce
can only be made upon her complete submission
of evidence proving the divorce decree and the
national law of her alien spouse, in an action
instituted in the proper forum.
ECE Realty and Development, Inc. Vs.
Rachel G. MandapG.R. No. 196182.
September 1, 2014
The basic issue in the present case
is whether petitioner was guilty of
fraud and if so, whether such fraud
is sufficient ground to nullify its
contract with respondent.

provides that [t]here is fraud
when through insidious words or
machinations
of
one of
the
contracting parties, the other is
induced to enter into a contract
which, without them, he would not
have agreed to.
In addition, under Article 1390 of

10
3

the same
voidable or
consent is
violence,
influence or
Code, a contract is
annullable where the
vitiated by mistake,
intimidation,
undue
fraud.
Also, Article 1344 of the same

Code provides that [i]n order that
fraud may make a contract
voidable, it should be serious and
should not have been employed by
both contracting parties.
Jurisprudence has shown that in
order to constitute fraud that
provides basis to annul contracts, it
must fulfill two conditions.
First, the fraud must be dolo
causante or it must be fraud in
obtaining the consent of the
party.16 This is referred to as
causal fraud. The deceit must be
serious. The fraud is serious when
it is sufficient to impress, or to lead
an ordinarily prudent person into
error; that which cannot deceive a
prudent person cannot be a ground
for nullity.17 The circumstances of
each case should be considered,
taking into account the personal
conditions of the victim.18cralawred
Second, the fraud must be proven
by clear and convincing evidence
and not merely by a preponderance
thereof.19cralawred
In the present case, this Court
finds that petitioner is guilty of
false representation of a fact. This
is
evidenced
by
its
printed
advertisements indicating that its
subject condominium project is
located in Makati City when, in
fact, it is in Pasay City. The Court
agrees with the Housing and Land
Use Arbiter, the HLURB Board of
Commissioners, and the Office of
the President, in condemning
petitioner's
deplorable
act
of
making misrepresentations in its
advertisements and in issuing a
stern warning that a repetition of

this act shall be dealt with more
severely.
However, insofar as the present

case is concerned, the Court
agrees with the Housing and Land
Use Arbiter, the HLURB Board of
Commissioners, and the Office of
the
President,
that
the
misrepresentation
made
by
petitioner in its advertisements
does not constitute causal fraud
which would have been a valid
basis in annulling the Contract to
Sell
between
petitioner
and
respondent.
Indeed, evidence shows that respondent
proceeded to sign the Contract to Sell
despite information contained therein that
the condominium is located in Pasay City.
This only means that she still agreed to
buy the subject property regardless of the
fact that it is located in a place different
from what she was originally informed. If
she had a problem with the property's
location, she should not have signed the
Contract to Sell and, instead, immediately
raised this issue with petitioner. But she
did not. As correctly observed by the
Office of the President, it took respondent
more than two years from the execution
of the Contract to Sell to demand the
return of the amount she paid on the
ground that she was misled into believing
that the subject property is located in
Makati City. In the meantime, she
continued to make payments.
The Court is not persuaded by the

ruling of the CA which expresses
doubt on the due execution of the
Contract to Sell. The fact remains
that the said Contract to Sell was
notarized. It is settled that absent
any clear and convincing proof to
the contrary, a notarized document
enjoys
the
presumption
of
regularity and is conclusive as to
the truthfulness of its contents.20
Neither does the Court agree that
the presumption of regularity
accorded to the notarized Contract

10
4

to Sell was overcome by evidence
to the contrary. Respondent's
allegation that she signed the said
Contract to Sell with several blank
spaces, and which allegedly did not
indicate
the location
of
the
condominium, was not supported
by proof. The basic rule is that
mere allegation is not evidence and
is not equivalent to proof.21 In
addition, the fact that respondent
made several payments prior to
the execution of the subject
Contract to Sell is not the kind of
evidence needed to overcome such
presumption of regularity.
In any case, even assuming that
petitioners misrepresentation consists of
fraud which could be a ground for
annulling
their
Contract
to
Sell,
respondent's act of affixing her signature
to the said Contract, after having acquired
knowledge of the property's actual
location, can be construed as an implied
ratification thereof.
Ratification of a voidable contract is
defined under Article 1393 of the Civil
Code
as
Art. 1393. Ratification may be effected
expressly or tacitly. It is understood that
there is a tacit ratification if, with
knowledge of the reason which renders
the contract voidable and such reason
having ceased, the person who has a right
to invoke it should execute an act which
necessarily implies an intention to waive
his right.
Implied ratification may take diverse
forms,
such
as
by
silence
or
acquiescence;
by
acts
showing
approval or adoption of the contract;
or by acceptance and retention of benefits
flowing therefrom.23cralawred
Under Article 1392 of the Civil

Code, ratification extinguishes the
action
to
annul
a
voidable
contract. In addition, Article 1396
of the same Code provides that
[r]atification cleanses the contract

from all its defects from the
moment it was constituted.
Meyr Enterprises Corporation Vs. Rolando
CorderoG.R. No. 197336. September 3,
2014
The resolution of the case hinges on the
question of whether petitioner is guilty of
malice and bad faith in instituting Civil
Case No. CEB-28040; if it is not so, then
there is no ground to hold it liable for
malicious prosecution.
Thus, both tribunals unanimously held
that in the first instance, petitioner had no
probable cause to complain, since it had
no personality to sue, given that the
affected portion is foreshore or public
land; that petitioner did not deny that it
conducted quarrying of sand and gravel
which could have caused the erosion of its
own beach; that it offered to buy
respondents land; that petitioner cannot
deny and in fact constructively knew that
respondent was authorized by Resolution
No. 38 to construct the dike; that a
previous case filed by petitioner against
respondent, based on the same facts, was
dismissed; and that as a whole,
petitioners baseless accusations were
particularly intended to vex and humiliate
the respondent, who openly objected to
petitioners quarrying of sand and gravel
precisely because it caused the erosion of
his beach as well. Although it may have
been a bit extreme for the CA to declare
that petitioner had an axe to grind
against respondent, this characterization
is
merely
semantic;
there
is
no
capriciousness or arbitrariness in the
description, because the circumstances
leading to the conclusion that petitioner is
guilty of malicious prosecution are already
present, as far as the tribunals below are
concerned. This conclusion can no longer
be questioned, given the limitations
petitioner is confronted with in a recourse
of this nature.
With the foregoing view, there is no need
to resolve the other issues and arguments
pointed out by the petitioner, which are
correspondingly discredited. Notably, the
recovery of moral damages for malicious

10
5

prosecution is allowed under Article 2219

of the Civil Code,31 while attorneys fees
and expenses of litigation may be
adjudged in malicious prosecution cases
pursuant to Article 220832 of the same
Code.
Rolando C. Dela Paz Vs. L & J Development
CompanyG.R. No. 183360. September
8, 2014
No interest shall be due unless it has
been
expressly
stipulated
in
writing.1cralawre
The lack of a written stipulation
to pay interest on the loaned amount
disallows a creditor from charging
monetary interest.
Under Article 1956 of the Civil Code, no
interest shall be due unless it has been
expressly
stipulated
in
writing. Jurisprudence on the matter also
holds that for interest to be due and
payable, two conditions must concur: a)
express stipulation for the payment of
interest; and b) the agreement to pay
interest is reduced in writing.
Here, it is undisputed that the parties did
not
put
down
in
writing
their
agreement. Thus, no interest is due. The
collection
of
interest
without
any
stipulation in writing is prohibited by
law.22cralawred
But Rolando asserts that his situation
deserves an exception to the application
of Article 1956. He blames Atty. Salonga
for the lack of a written document,
claiming that said lawyer used his legal
knowledge to dupe him. Rolando thus
imputes bad faith on the part of L&J and
Atty. Salonga. The Court, however, finds
no deception on the part of L&J and Atty.
Salonga. For one, despite the lack of a
document stipulating the payment of
interest, L&J nevertheless devotedly paid
interests on the loan. It only stopped
when it suffered from financial difficulties
that prevented it from continuously paying
the 6% monthly rate. For another,
regardless of Atty. Salongas profession,
Rolando who is an architect and an
educated man himself could have been a
more reasonably prudent person under

the circumstances. To top it all, he
admitted
that
he
had
no
prior
communication
with
Atty.
Salonga. Despite Atty. Salonga being a
complete stranger, he immediately trusted
him and lent his company P350,000.00, a
significant amount. Moreover, as the
creditor, he could have requested or
required that all the terms and conditions
of the loan agreement, which include the
payment of interest, be put down in
writing to ensure that he and L&J are on
the same page. Rolando had a choice of
not acceding and to insist that their
contract be put in written form as this will
favor
and
safeguard
him
as
a
lender. Unfortunately, he did not. It
must be stressed that [c]ourts cannot
follow one every step of his life and
extricate him from bad bargains, protect
him from unwise investments, relieve him
from one-sided contracts, or annul the
effects of foolish acts. Courts cannot
constitute
themselves
guardians
of
persons
who
are
not
legally
incompetent.23cralawred
Even if the payment of interest has been
reduced in writing, a 6% monthly interest
rate
on a loan is unconscionable, regardless of
who
between the parties proposed the rate.
Indeed at present, usury has been legally
non-existent in view of the suspension of
the Usury Law25 by Central Bank Circular
No. 905 s. 1982.26 Even so, not all
interest rates levied upon loans are
permitted by the courts as they have the
power to equitably reduce unreasonable
interest rates.
Time and again, it has been ruled in a
plethora of cases that stipulated interest
rates of 3% per month and higher, are
excessive, iniquitous, unconscionable and
exorbitant. Such stipulations are void for
being contrary to morals, if not against
the law.29 The Court, however, stresses
that these rates shall be invalidated and
shall be reduced only in cases where the
terms of the loans are open-ended, and

10
6

where the interest rates are applied for an

indefinite period. Hence, the imposition of
a specific sum of P40,000.00 a month for
six months on a P1,000,000.00 loan is not
considered unconscionable.30 In the case
at bench, there is no specified period as to
the payment of the loan. Hence, levying
6% monthly or 72% interest per annum is
definitely
outrageous
and
inordinate.31cralawred
Federal Builders, Inc. Vs. Foundation
Specialists,
Inc/Foundation
Specialists Inc. Vs. Federal Builders,
Inc.G.R. No. 194507/G.R. No. 194621.
September 8, 2014
In line, however, with the recent
circular of the Monetary Board of
the Bangko Sentral ng Pilipinas
(BSP-MB) No. 799, we have
modified the guidelines in Nacar v.
Gallery
Frames,22
as
I. When an obligation, regardless

of its source, i.e., law, contracts,
quasi-contracts, delicts or quasidelicts
is
breached,
the
contravenor can be held liable for
damages. The provisions under
Title XVIII on "Damages" of the
Civil Code govern in determining
the
measure
of
recoverable
damages.
II. With regard particularly to an

award of interest in the concept of
actual and compensatory damages,
the rate of interest, as well as the
accrual thereof, is imposed, as
1. When the obligation is breached,

and it consists in the payment of a
sum of money, i.e., a loan or
forbearance of money, the interest
due should be that which may have
been
stipulated
in
writing.
Furthermore, the interest due shall
itself earn legal interest from the
time it is judicially demanded. In
the absence of stipulation, the rate
of interest shall be 6% per
annum to be computed from
default, i.e., from judicial or

extrajudicial demand under and
subject to the provisions of Article
1169 of the Civil Code.
2.
When
an
obligation,
not
constituting a loan or forbearance
of money, is breached, an interest
on the amount of damages
awarded may be imposed at the
discretion of the court at the rate
of 6% per annum. No interest,
however, shall be adjudged on
unliquidated claims or damages,
except when or until the demand
can be established with reasonable
certainty. Accordingly, where the
demand
is
established
with
reasonable certainty, the interest
shall begin to run from the time
the claim is made judicially or
extrajudicially (Art. 1169, Civil
Code), but when such certainty
cannot
be
so
reasonably
established at the time the demand
is made, the interest shall begin to
run only from the date the
judgment of the court is made (at
which time the quantification of
damages may be deemed to have
been reasonably ascertained). The
actual base for the computation of
legal interest shall, in any case, be
on the amount finally adjudged.
3. When the judgment of the court
awarding a sum of money becomes
final and executory, the rate of
legal interest, whether the case
falls
under
paragraph
1
or
paragraph 2, above, shall be 6%
per annum from such finality until
its satisfaction, this interim period
being deemed to be by then an
equivalent to a forbearance of
credit.
And, in addition to the above,
judgments that have become final
and executory prior to July 1,
2013, shall not be disturbed and
shall continue to be implemented
applying the rate of interest fixed

10
7

therein.23
It should be noted, however, that

the new rate could only be applied
prospectively and not retroactively.
Consequently, the twelve percent
(12%) per annum legal interest
shall apply only until June 30,
2013. Come July 1, 2013, the new
rate of six percent (6%) per annum
shall be the prevailing rate of
interest when applicable. Thus, the
need to determine whether the
obligation involved herein is a loan
and
forbearance
of
money
nonetheless exists.
Civil Code prescribing a yearly

6% interest. Art. 2209 pertinently
provides:ChanRoblesVirtualawlibrar
y
In S.C. Megaworld Construction

and Development Corporation v.
Engr. Parada,24 We clarified the
meaning of obligations constituting
loans or forbearance of money in
the
following
wise:ChanRoblesVirtualawlibrary
As further clarified in the case of
Sunga-Chan v. CA, a loan or
forbearance of money, goods or
credit describes a contractual
obligation whereby a lender or
creditor has refrained during a
given period from requiring the
borrower or debtor to repay the
loan or debt then due and
payable.
Thus:ChanRoblesVirtualawlibrary
In Reformina v. Tomol, Jr., the
Court held that the legal interest at
12% per annum under Central
Bank (CB) Circular No. 416 shall be
adjudged only in cases involving
the loan or forbearance of money.
And for transactions involving
payment of indemnities in the
concept of damages arising
from
default
in
the
performance of obligations in
general and/or for money
judgment not involving a loan
or
forbearance
of
money,
goods, or credit, the governing
provision is Art. 2209 of the
Art. 2209. If the obligation consists

in the payment of a sum of money,
and the debtor incurs in delay, the
indemnity for damages, there
being
no
stipulation
to
the
contrary, shall be the payment of
the interest agreed upon, and in
the absence of stipulation, the legal
interest, which is six per cent per
annum.
The term "forbearance," within the
context of usury law, has been
described
as
a
contractual
obligation of a lender or creditor to
refrain, during a given period of
time, from requiring the borrower
or debtor to repay the loan or debt
then due and payable.25
Forbearance of money, goods or
credits,
therefore,
refers
to
arrangements other than loan
agreements,
where
a
person
acquiesces to the temporary use of
his money, goods or credits
pending the happening of certain
events or fulfilment of certain
conditions.26 Consequently, if those
conditions are breached, said
person is entitled not only to the
return of the principal amount paid,
but also to compensation for the
use of his money which would be
the same rate of legal interest
applicable to a loan since the use
or deprivation of funds therein is
similar to a loan.27cralawred
This case, however, does not
involve an acquiescence to the
temporary use of a partys money
but a performance of a particular
service,
specifically
the
construction of the diaphragm wall,
capping beam, and guide walls of
the Trafalgar Plaza.

10
8

A review of similar jurisprudence

would tell us that this Court had
repeatedly
recognized
this
distinction and awarded interest at
a rate of 6% on actual or
compensatory
damages
arising
from a breach not only of
construction contracts,28 such as
the one subject of this case, but
also of contracts wherein one of
the
parties
reneged
on
its
obligation to perform messengerial
services,29
deliver
certain
quantities of molasses,30 undertake
the reforestation of a denuded
forest land,31 as well as breaches of
contracts
of
carriage,32
and
trucking agreements.33 We have
explained therein that the reason
behind such is that said contracts
do not partake of loans or
forbearance of money but are more
in the nature of contracts of
service.
Thus, in the absence of any
stipulation as to interest in the
agreement between the parties
herein, the matter of interest
award arising from the dispute in
this case would actually fall under
the second paragraph of the
above-quoted guidelines in the
landmark case of Eastern Shipping
Lines, which necessitates the
imposition of interest at the rate of
6%, instead of the 12% imposed
by the courts below.
The 6% interest rate shall further

be imposed from the finality of the
judgment herein until satisfaction
thereof, in light of our recent ruling
in
Nacar
v.
Gallery
Frames.34cralawred
Heirs of Valentin Basbas, et al. Vs. Ricardo
Basbas, as represented by Eugenio
BasbasG.R. No. 188773. September 10,
2014
A claim of status as heir of a decedent
must always be substantially supported by
evidence as required under our law. The
resolution of a case, in this instance, an
action for annulment of title and

reconveyance of real property, cannot be
further stalled and waylaid by a mere
assertion of a party of an ostensible
conflicting claims of heirship of the
common decedent. Not all rights to
property and incidents thereof, such as
titling, ought to be preceded by a
declaration of heirship, albeit supposedly
traced to a single decedent and original
titleholder.
We cannot subscribe to the appellate
court's ruling unqualifiedly applying Heirs
of Yaptinchay. Mistakenly, the Court of
Appeals
glosses
over
facts,
not
controverted
by
Crispiniano
and
respondent Ricardo:
(1) Valentin was a legitimate child of
Severo and Ana Rivera; and
(2) Petitioners are themselves legitimate
descendants of Valentin.
Not only is the petitioners heirship to
Severo uncontroverted. The status of
Valentin as a compulsory heir of Severo
and of petitioners statuses as heirs of
Valentin and Severo are stipulated facts
agreed to by Crispiniano and respondent
Ricardo:
In all, Valentins long-possessed status as
a legitimate child and thus, heir of Severo,
need no longer be the subject of a special
proceeding for declaration of heirship as
envisioned by the Court of Appeals. There
is no need to re-declare his status as an
heir of Severo.
And, contraposed to the fact that
Valentins status as a legitimate child of
Severo is already established, Nicolas
status as a purported heir of Severo can
no longer be established, Nicolas right
thereto expiring upon his death.
Glaringly, there is no pretension from
respondents end that Nicolas was born of
a valid marriage, only that he is Severos
son. Nonetheless, even if respondents
were minded to establish the status of
Nicolas, whether he is a legitimate or an
illegitimate child of Severo, such can no
longer be done.

10
9

Article 165, in relation to Articles 173 and
175, of the Family Code and Article 285 of
the
Civil
Code
state:ChanRoblesVirtualawlibrary
Art. 165. Children conceived and born
outside a valid marriage are illegitimate,
unless otherwise provided in this Code.
Chapter 3. Illegitimate Children
Art. 173. The action to claim legitimacy
may be brought by the child during his or
her lifetime and shall be transmitted to
the heirs should the child die during
minority or in a state of insanity. In these
cases, the heirs shall have a period of five
years within which to institute the action.
Art. 175. Illegitimate children may
establish their illegitimate filiation in the
same way and on the same evidence as
legitimate children.
The action must be brought within the
same period specified in Article 173,
except when the action is based on the
second paragraph of Article 172, in which
case the action may be brought during the
lifetime of the alleged parent.
CHAPTER 4
ILLEGITIMATE CHILDREN
SECTION
Children
1.
Recognition
of
Natural
Art. 285. The action for the recognition of

natural children may be brought only
during the lifetime of the presumed
parents,
except
in
the
following
cases:ChanRoblesVirtualawlibrary
(1) If the father or mother died during
minority of the child, in which case
latter may file the action before
expiration of four years from
attainment of his majority;
the
the
the
the
(2) If after the death of the father or of

the mother a document should appear of
which nothing had been heard and in
which either or both parents recognize the

child.
In this case, the action must be
commenced within four years from the
finding of the document.
Thus, we find no need for a separate
proceeding for a declaration of the heirs of
Severo in order to resolve petitioners
Action for Annulment of Title and
Reconveyance of the subject property.
Prescinding from the foregoing, a closer
scrutiny of the documents presented in
evidence by Crispiniano and Ricardo
before the trial court, betray the
fraudulence of their claim.
We add that Valentins rights to the
succession vested from the moment of
death of the decedent Severo.19 In turn,
petitioners, as Heirs of Valentin, who is an
uncontested heir of decedent Severo,
rights to the succession vested from the
moment of Valentins death. As such, they
own Lot No. 39, undisputedly titled in
Severos name and forming part of
Severos estate, and are entitled to the
titling thereof in their names.
In this regard, we note that the Court of
Appeals did not reverse the trials courts
factual finding on Cripinianos and
Ricardos fraudulent titling of Lot No. 39 in
their names. The evidence presented by
Crispiniano and Ricardo highlight the
fraudulence
of
their
claim:ChanRoblesVirtualawlibrary
1. Title to Lot No. 39 is not in their names,
neither is it titled in the name of their
predecessors-in-interest,
Nicolas
and
Felomino Basbas;
2. Crispiniano and Ricardo are not the only
heirs of Severo, if they are even heirs to
begin with.
One final note. Severo, as well as
Valentin, have been long dead. It is wellnigh that title to the subject property, Lot
No. 39 of the Santa Rosa Detached Estate,
appear in the names of the petitioners,

11
0

Heirs of Valentin, herein declared heirs of

Severo, or their successors-in-interest, to
finally settle title thereto and prevent
occurrences of fraudulent titling thereof.
Hence, petitioners, Heirs of Valentin and
their successors-in-interest, are directed
to take the appropriate action for titling of
the subject property.
Spouses Francisco Sierra (substituted by
Donato, Teresita Teodora, Lorenza,
Lucina, Imelda, Vilma and Milagros
Sierra) and Antonina Santos, et al. Vs.
PAIC Savings and Mortgage BankG.R.
No. 197857. September 10, 2014
The Issues Before The Court
The essential issues in this case are

whether or not the CA erred
in: (a) ruling that petitioners were
aware that they were mere
accommodation mortgagors, and
(b) dismissing the complaint on the
grounds of prescription and laches.
The Courts Ruling
The petition lacks merit.
A. Vitiation of Consent.
Time and again, the Court has stressed
that allegations must be proven by
sufficient
evidence
because
mere
allegation is not evidence.47 Thus, one
who alleges any defect or the lack of
a valid consent to a contract must
establish the same by full, clear, and
convincing evidence, not merely by
preponderance of evidence.48 The rule
is that he who alleges mistake affecting a
transaction
must
substantiate
his
allegation, since it is presumed that a
person takes ordinary care of his concerns
and that private transactions have been
fair and regular.49Where mistake or
error is alleged by parties who claim
to have not had the benefit of a good
education, as in this case, they must
establish
that
their
personal
circumstances prevented them from
giving their free, voluntary, and
spontaneous
consent
to
a
contract.50cralawred
After a judicious perusal of the records,
the Court finds petitioners claim of
mistake or error (that they acted merely
as accommodation mortgagors) grounded
on their very limited education and lack
of proper instruction not to be firmly
supported by the evidence on record.
As correctly observed by the CA, the
testimony of petitioner Francisco Sierra as
to petitioners respective educational
backgrounds51 remained uncorroborated.
The other petitioners-signatories to the
deed never testified that their educational
background
prevented
them
from
knowingly executing the subject deed as
mere
accommodation
mortgagors.
Petitioners claim of lack of proper
instruction on the intricacies in securing
[the] loan from the bank is further belied
by the fact that petitioners Francisco and
Rosario Sierra had previously mortgaged
two (2) of the subject properties twice to
the Rural Bank of Antipolo. Moreover,
petitioners did not: (a) demand for any
loan document containing the details of
the
transaction,
i.e.,
monthly
amortization,
interest
rate,
added
charges, etc., and the release of the
remaining amount of their alleged loan;
and (b) offer to pay the purported partial
loan proceeds they received at any time,52
complaining thereof only in 1991 when
they filed their complaint. Indeed, the
foregoing circumstances clearly show that
petitioners are aware that they were mere
accommodation mortgagors, debunking
their claim that mistake vitiated their
consent to the mortgage.
Thus, there being valid consent on the
part
of
petitioners
to
act
as
accommodation mortgagors, no reversible
error was committed by the CA in setting
aside the RTCs Decision declaring the real
estate mortgage as void for vices of
consent and awarding damages to
petitioners. As mere accommodation
mortgagors, petitioners are not entitled to
the proceeds of the loan, nor were
required to be furnished with the loan

11
1

documents53 or notice of the borrowers
default in paying the principal, interests,
penalties, and other charges on due
date,54 or of the extrajudicial foreclosure
proceedings, unless stipulated in the
subject deed.55 As jurisprudence states,
an accommodation mortgagor is a third
person who is not a debtor to a principal
obligation but merely secures it by
mortgaging his or her own property.56 Like
an accommodation party to a negotiable
instrument,
the
accommodation
mortgagor in effect becomes a surety to
enable the accommodated debtor to
obtain credit,57 as petitioners in this case.
B. Prescription.
On a second matter, petitioners insist that
the CA erred in ruling that their action for
nullification of the subject deed had
already prescribed, contending that the
applicable provision is the ten-year
prescriptive period of mortgage actions
under Article 114258 of the Civil Code.
are the borrowers under the loan secured

by the mortgage, the action should have
been brought within four (4) years from
its discovery.
A perusal of the complaint, however,
failed to disclose when petitioners
learned that they were not the
borrowers under the loan secured by
the subject mortgage. Nonetheless,
considering that petitioners admitted
receipt on June 19, 198462 of PSMBs
letter dated June 11, 1984 informing them
of the scheduled foreclosure sale on June
27, 1984 due to GCIs breach of its loan
obligation
secured
by
the
subject
properties, the discovery of the averred
mistake should appear to be reckoned
from June 19, 1984, and not from the
dishonor of the checks on January 9, 1984
as ruled by the CA.
C. Laches.
As to this final issue, the Court holds that
laches applies.
The contention is bereft of merit.

Based on case law, a mortgage action
refers to an action to enforce a right
necessarily arising from a mortgage.59
In the present case, petitioners are not
enforcing
their
rights
under
the
mortgage but are, in fact, seeking to be
relieved therefrom. The complaint filed by
petitioners is, therefore, not a mortgage
action as contemplated under Article
1142.
Considering, however, petitioners failure
to establish that their consent to the
mortgage was vitiated, rendering them
without a cause of action, much less a
right of action to annul the mortgage, the
question of whether or not the complaint
has
prescribed
becomes
merely
academic.60cralawred
In any event, even assuming that
petitioners have a valid cause of action,
the four-year prescriptive period on
voidable contracts61 shall apply. Since the
complaint for annulment was anchored on
a claim of mistake, i.e., that petitioners
As the records disclose, despite notice on

June 19,
1984
of
the
scheduled
foreclosure
sale,
petitioners,
for
unexplained reasons, failed to impugn
the real estate mortgage and oppose the
public auction sale for a period of more
than seven (7) years from said
notice.63 As such, petitioners action is
already barred by laches, which, as case
law holds, operates not really to penalize
neglect or sleeping on ones rights, but
rather to avoid recognizing a right when to
do so would result in a clearly inequitable
situation.64 As mortgagors desiring to
attack a mortgage as invalid, petitioners
should act with reasonable promptness,
else its unreasonable delay may amount
to ratification.65 Verily, to allow petitioners
to assert their right to the subject
properties now after their unjustified
failure to act within a reasonable time
would be grossly unfair to PSMB, and
perforce should not be sanctioned.
Enriqueta M. Locsin Vs. Bernardo Hizon,
Carlos Hizon, Sps. Jose Manuel &
Lourdes GuevarraG.R. No. 204369.
September 17, 2014

11
2

Precautionary measures for
buyers of real property
An innocent purchaser for value is one
who buys the property of another without
notice that some other person has a right
to or interest in it, and who pays a full and
fair price at the time of the purchase or
before receiving any notice of another
persons claim.16 As such, a defective
titleor one the procurement of which is
tainted with fraud and misrepresentation
may be the source of a completely legal
and valid title, provided that the buyer is
an innocent third person who, in good
faith, relied on the correctness of the
certificate of title, or an innocent
purchaser for value.17cralawlawlibrary
Complementing this is the mirror doctrine
which echoes the doctrinal rule that every
person dealing with registered land may
safely rely on the correctness of the
certificate of title issued therefor and is in
no way obliged to go beyond the
certificate to determine the condition of
the
property.18
The
recognized
exceptions to this rule are stated as
[A] person dealing with registered land
has a right to rely on the Torrens
certificate of title and to dispense with the
need of inquiring further except when the
party has actual knowledge of facts and
circumstances
that
would
impel
a
reasonably cautious man to make such
litigation. The presence of anything
which excites or arouses suspicion
should then prompt the vendee to
look beyond the certificate and
investigate the title of the vendor
appearing on the face of said
certificate. One who falls within the
exception can neither be denominated
an innocent purchaser for value nor a
purchaser in good faith and, hence,
does not merit the protection of the
law.19 (emphasis added)

Thus, in Domingo Realty, Inc. v. CA,20 we
emphasized the need for prospective
parties to a contract involving titled lands
to exercise the diligence of a reasonably
prudent person in ensuring the legality of
the title, and the accuracy of the metes
and bounds of the lot embraced therein,by
undertaking precautionary measures, such
as:chanRoblesvirtualLawlibrary
Verifying
the
origin,
history,
authenticity, and validity of the
title with the Office of the Register
of Deeds and the Land Registration
Authority;
Engaging the services of a competent
and reliable geodetic engineer to
verify the boundary, metes, and
bounds of the lot subject of said
title based on the technical
description in the said title and the
approved survey plan in the Land
Management Bureau;
Conducting an actual ocular inspection
of the lot;
Inquiring
from
the
owners
and
possessors of adjoining lots with
respect to the true and legal
ownership of the lot in question;
Putting up of signs that said lot is being
purchased, leased, or encumbered;
and
Undertaking such other measures to
make the general public aware that
said lot will be subject to
alienation, lease, or encumbrance
by the parties.
In the case at bar, Bolos certificate of title
was concededly free from liens and
encumbrances on its face. However,the
failure of Carlos and the spouses Guevara
to exercise the necessary level of caution
in light of the factual milieu surrounding
the sequence of transfers from Bolos to
respondents bars the application of the
mirror doctrine and inspires the Courts
concurrence with petitioners proposition.
Carlos is not an innocent purchaser
for value

11
3

Foremost, the Court is of the view that
Bernardo negotiated with Bolos for the
property as Carlos agent. This is bolstered
by the fact that he was the one who
arranged for the sale and eventual
registration of the property in Carlos
favor.
Consistent with the rule that the principal
is chargeable and bound by the knowledge
of, or notice to, his agent received in that
capacity,22 any information available and
known to Bernardo is deemed similarly
available and known to Carlos
Having knowledge of the foregoing facts,
Bernardo and Carlos, to our mind, should
have been impelled to investigate the
reason behind the arrangement. They
should have been pressed to inquire into
litigation in order to protect Carlos
interest. It should have struck them as
odd that it was Locsin, not Bolos, who
sought the recovery of possession by
commencingan ejectment case against
Aceron, and even entered into a
compromise agreement with the latter
years after the purported sale in Bolos
favor. Instead, Bernardo and Carlos
took inconsistent positions when they
argued for the validity of the transfer
of the property in favor of Bolos, but
in the same breath prayed for the
enforcement
of
the
compromise
agreement entered into by Locsin.
At this point it is well to emphasize that
entering into a compromise agreement is
an act of strict dominion.25 If Bolos
already acquired ownership of the
property as early as 1979, it should have
been her who entered into a compromise
agreement with Aceron in 1993, not her
predecessor-in-interest,
Locsin,
who,
theoretically, had already divested herself
of ownership thereof.
The spouses Guevara are not innocent
purchasers for value
As regards the transfer of the property
from Carlos to the spouses Guevara, We
find the existence of the sale highly
suspicious. For one, there is a dearth of
evidence to support the respondent
spouses position that the sale was a bona

fide transaction. Even if we repeatedly sift
through the evidence on record, still we
cannot find any document, contract, or
deed evidencing the sale in favor of the
spouses Guevara. The same goes for the
purported payment of the purchase price
of the property in the amount of PhP 1.5
million in favor of Carlos
Philippine National Bank Vs. Spouses
Eduardo and Ma. Rosario Tajonera, et
al.G.R. No. 195889. September 24, 2014
PNBs assignment of errors boils down to
the sole issue of whether the CA erred in
annulling
the
mortgage
contract
constituted over the Greenhills property of
the respondents.
The agreement between PNB and the
respondents was one of a loan. Under the
law, a loan requires the delivery of money
or any other consumable object by one
party to another who acquires ownership
thereof, on the condition that the same
amount or quality shall be paid. Loan is a
reciprocal obligation, as it arises from the
same cause where one party is the
creditor, and the other the debtor. The
obligation of one party in a reciprocal
obligation
is
dependent
upon
the
obligation
of
the
other,
and
the
performance
should
ideally
be
simultaneous. This means that in a loan,
the creditor should release the full loan
amount and the debtor repays it when it
becomes
due
and
demandable.19cralawlawlibrary
PNB, not having released the balance of
the last loan proceeds in accordance with
the Third Amendment had no right to
demand from the respondents compliance
with their own obligation under the
loan. Indeed, if a party in a reciprocal
contract like a loan does not perform its
obligation, the other party cannot be
obliged to perform what is expected of
them while the other's obligation remains
unfulfilled.20cralawlawlibrary
When PNB and the respondents entered
into the First, Second and Third
Amendments on January 31, 1992,

11
4

October 28, 1992 and November 3, 1993,
respectively, they undertook reciprocal
obligations. In reciprocal obligations, the
obligation or promise of each party is the
consideration for that of the other; and
when one party has performed or is ready
and willing to perform his part of the
contract, the other party who has not
performed or is not ready and willing to
perform incurs in delay.21 The promise of
the respondents to pay was the
consideration for the obligation of PNB to
furnish the P40,000,000.00 additional loan
under the First Amendment as well as the
P55,000,000.00 the second additional loan
under the Third Amendment. When the
respondents executed the Supplement to
REM covering their Greenhills property,
they signified their willingness to pay the
additional loans. It should be noted, as
correctly found by the CA, that the
Supplement to REM was constituted not
only as security for the execution of the
First Amendment but also in consideration
of the Second and Third Amendments.
The obligation of PNB was to furnish the
P55,000,000.00 additional loan accrued
on November 3, 1993, the date the
parties
entered
into
the
Third
Amendment.
Thus, PNBs delay in
furnishing the entire additional loan
started from the said date.
Considering that PNB refused to release
the total amount of the additional loan
granted to ERDI under the Third
Amendment
amounting
to
P39,503,088.84, the CA was correct in
affirming the RTCs conclusion that there
was no sufficient valuable consideration in
the execution of the Supplement to REM.
Still in the said case, at the time the
original loan was approved, the title to the
property offered as collateral appeared to
pertain
exclusively
to
Spouses
Omengan. By the time the application for
increase was considered, PNB had
acquired information that the said
property, although in the name of spouses
petitioners
was
owned
in
coownership. The Court justified PNBs act
of withholding the release of the additional

loan because it already had reason to
suspect the spouses claim of exclusive
ownership
over
the
mortgaged
collateral. In this case, the respondents
were unquestionably the exclusive owners
of the mortgaged property (Greenhills
property) at the time the initial and the
additional loans were approved.
For said reasons, the Court holds that PNB
was indeed guilty of breach of contract of
its reciprocal obligation under the credit
agreements.
Considering that there was no sufficient
valuable consideration in the execution of
the Supplement to REM on the Third
Amendment as the balance of the last
approved additional loan in the amount of
P39,503,088.54 remained unreleased, the
cancellation of the Supplement to REM
constituted
over
the
respondents
Greenhills property was in order.
It is true that loans are often secured by a
mortgage constituted on real or personal
property to protect the creditor's interest
in case of the default of the debtor. By its
nature, however, a mortgage remains an
accessory contract dependent on the
principal obligation, such that enforcement
of the mortgage contract depends on
whether or not there has been a violation
of the principal obligation.
While a
creditor and a debtor could regulate the
order in which they should comply with
their
reciprocal
obligations,
it
is
presupposed that in a loan the lender
should perform its obligation the release
of the full loan amount.28cralawlawlibrary
In this case, to repeat, PNB did not fulfill
its principal obligation under the Third
Amendment by failing to release the
amount of the last additional loan in
full. Consequently, the Supplement to
REM covering the Greenhills property
became unenforceable, as the said
property could not be entirely foreclosed
to satisfy the respondents total debts to
PNB. Moreover, the Supplement to REM
was no longer necessary because PNBs

11
5

interest was amply protected as the loans

had been sufficiently secured by the
Paranaque properties. As aptly found by
the RTC, the Paranaque properties
together with the 20-storey condominium
building to be erected thereon would have
been sufficient security in the execution of
the REM even without the Greenhills
property as additional collateral. Thus,
under the circumstances, PNBs actuation
in foreclosing the Greenhills property was
legally unfounded.
Leonardo
Bognot
Vs.
RPI
Lending
Corporation
represented
by
its
General
Manager,
Dario
J.
BernandezG.R. No. 180144. September
24, 2014
The Issues
The case presents to us the

following
issues:chanRoblesvirtualLawlibrary
1. Whether the CA committed a

reversible error in holding the
petitioner solidarily liable with
Rolando;
2.
Whether the petitioner is
relieved from liability by reason of
the material alteration in the
promissory note; and
3. Whether the parties obligation

was extinguished by: (i) payment;
and (ii) novation by substitution of
debtors.
No Evidence Was Presented to
Establish the Fact of Payment
Jurisprudence tells us that one who pleads
payment has the burden of proving it;17
the burden rests on the defendant to
prove payment, rather than on the
plaintiff to prove non-payment.18 Indeed,
once the existence of an indebtedness is
duly established by evidence, the burden
of showing with legal certainty that the
obligation has been discharged by
payment
rests
on
the
debtor.19cralawlawlibrary
to satisfactorily prove that his obligation

had already been extinguished by
payment. As the CA correctly noted, the
petitioner failed to present any evidence
that the respondent had in fact encashed
his check and applied the proceeds to the
payment of the loan. Neither did he
present official receipts evidencing
payment, nor any proof that the check
had been dishonored.
We note that the petitioner merely relied
on the respondents cancellation and
return to him of the check dated April 1,
1997. The evidence shows that this check
was issued to secure the indebtedness.
The acts imputed on the respondent,
standing alone, do not constitute sufficient
evidence of payment.
Article 1249, paragraph 2 of the Civil Code
xxxx
The delivery of promissory notes payable
to order, or bills of exchange or other
mercantile documents shall produce the
effect of payment only when they
have been cashed, or when through the
fault of the creditor they have been
impaired.
Although Article 1271 of the Civil Code
provides for a legal presumption of
renunciation of action (in cases where a
private document evidencing a credit was
voluntarily returned by the creditor to the
debtor), this presumption is merely prima
facie
and
is
not
conclusive;
the
presumption loses efficacy when faced
with evidence to the contrary.
Moreover, the cited provision merely
raises a presumption, not of payment,
but of the renunciation of the credit
where more convincing evidence would be
required than what normally would be
called for to prove payment.21 Thus,
reliance by the petitioner on the legal
presumption
to
prove
payment
is
misplaced.
In the present case, the petitioner failed

11
6

To reiterate, no cash payment was proven
by the petitioner. The cancellation and
return of the check dated April 1, 1997,
simply established his renewal of the loan
not the fact of payment. Furthermore, it
has been established during trial, through
repeated acts, that the respondent
cancelled and surrendered the post-dated
check previously issued whenever the loan
is renewed.
The Alteration of the Promissory Note
Did Not Relieve the Petitioner From
Liability
We now come to the issue of material
alteration. The petitioner raised as
defense the alleged material alteration of
Promissory Note No. 97-035 as basis to
claim release from his loan. He alleged
that the respondents superimposition of
the due date June 30, 1997 on the
promissory note without his consent
effectively relieved him of liability.
We find this defense untenable.
Although the respondent did not dispute
the fact of alteration, he nevertheless
denied that the alteration was done
without the petitioners consent.
Under this evidentiary situation, the
petitioner
cannot
validly
deny
his
obligation and liability to the respondent
solely on the ground that the Promissory
Note in question was tampered. Notably,
the existence of the obligation, as well as
its subsequent renewals, have been duly
established by: first, the petitioners
application for the loan; second, his
admission that the loan had been obtained
from the respondent; third, the post-dated
checks issued by the petitioner to secure
the loan; fourth, the testimony of Mr.
Bernardez on the grant, renewal and nonpayment of the loan; fifth, proof of nonpayment of the loan; sixth, the loan
renewals; and seventh, the approval and
receipt of the loan renewals.
In Guinsatao v. Court of Appeals,31 this
Court pointed out that while a promissory
note is evidence of an indebtedness, it is
not the only evidence, for the existence of

the obligation can be proven by other
documentary evidence such as a written
memorandum signed by the parties.
In Pacheco v. Court of Appeals,32 this
Court likewise expressly recognized that a
check
constitutes
an
evidence
of
indebtedness and is a veritable proof of an
obligation. It can be used in lieu of and for
the same purpose as a promissory note
and can therefore be presented to
establish
the
existence
of
indebtedness.33cralawlawlibrary
In the present petition, we find that the
totality of the evidence on record
sufficiently established the existence of
the petitioners indebtedness (and liability)
based on the contract of loan. Even with
the tampered promissory note, we hold
that the petitioner can still be held liable
for the unpaid loan.
Novation cannot be presumed and
must be clearly and unequivocably
proven.
Novation is a mode of extinguishing an
obligation by changing its objects or
principal obligations, by substituting a new
debtor in place of the old one, or by
subrogating a third person to the rights of
the creditor.36cralawlawlibrary
Article 1293 of the Civil Code defines
novation
as
Art. 1293. Novation which consists in
substituting a new debtor in the place of
the original one, may be made even
without the knowledge or against the will
of the latter, but not without the consent
of the creditor. Payment by the new
debtor gives him rights mentioned in
Articles 1236 and 1237.
To give novation legal effect, the original
debtor must be expressly released from
the obligation, and the new debtor must
assume the original debtors place in the
contractual relationship. Depending on
who took the initiative, novation by

11
7

substitution of debtor has two forms
substitution
by
expromision
and
substitution by delegacion. In both
cases, the original debtor must be
released from the obligation; otherwise,
there can be no valid novation.38
Furthermore, novation by substitution of
debtor must always be made with the
consent of the creditor.39cralawlawlibrary
The petitioner contends that novation took
place through a substitution of debtors
when Mrs. Bognot renewed the loan and
assumed the debt. He alleged that Mrs.
Bognot assumed the obligation by paying
the renewal fees and charges, and by
executing a new promissory note. He
further claimed that she issued her own
check40 to cover the renewal fees, which
fact, according to the petitioner, was done
with the respondents consent.
Contrary to the petitioners contention,
Mrs. Bognot did not substitute the
petitioner
as
debtor.
She
merely
attempted to renew the original loan by
executing a new promissory note41 and
check. The purported one month renewal
of the loan, however, did not push
through, as Mrs. Bognot did not return the
documents or issue a new post dated
check. Since the loan was not renewed for
another month, the original due date,
June 30, 1997, continued to stand.
More importantly, the respondent never
agreed to release the petitioner from his
obligation. That the respondent initially
allowed Mrs. Bognot to bring home the
promissory note, disclosure statement and
the petitioners previous check dated June
30, 1997, does not ipso facto result in
novation. Neither will this acquiescence
constitute an implied acceptance of the
substitution of the debtor.
respondent assented to the substitution,

no valid novation took place with the
effect of releasing the petitioner from his
obligation to the respondent.
Moreover, in the absence of showing that
Mrs. Bognot and the respondent had
agreed to release the petitioner, the
respondent can still enforce the payment
of the obligation against the original
debtor. Mere acquiescence to the renewal
of the loan, when there is clearly no
agreement to release the petitioner from
his responsibility, does not constitute
novation.
The Nature of the Petitioners Liability
On the nature of the petitioners liability,
we rule however, that the CA erred in
holding the petitioner solidarily liable with
Rolando.
A solidary obligation is one in which each
of the debtors is liable for the entire
obligation, and each of the creditors is
entitled to demand the satisfaction of the
whole obligation from any or all of the
debtors.42 There is solidary liability when
the obligation expressly so states, when
the law so provides, or when the nature of
the obligation so requires.43 Thus, when
the obligor undertakes to be "jointly and
severally" liable, the obligation is solidary,
In this case, both the RTC and the CA
found the petitioner solidarily liable with
Rolando based on Promissory Note No.
97-035 dated June 30, 1997. Under the
promissory note, the Bognot Siblings
defined the parameters of their obligation
as follows:chanRoblesvirtualLawlibrary
In order to give novation legal effect, the

creditor should consent to the substitution
of a new debtor. Novation must be
clearly and unequivocally shown, and
cannot be presumed.
FOR VALUE RECEIVED, I/WE, jointly

and severally, promise to pay toxxxxxx
Although the phrase jointly and severally
in the promissory note clearly and
unmistakably provided for the solidary
liability of the parties, we note and stress
that the promissory note is merely a
photocopy of the original, which was
never produced.
Since the petitioner failed to show that the
Under the best evidence rule, when the

11
8

subject of inquiry is the contents of a
document, no evidence is admissible other
than the original document itself except in
the instances mentioned in Section 3, Rule
130
of
the
Revised
Rules
of
Court.45cralawlawlibrary
The records show that the respondent had
the custody of the original promissory
note dated April 1, 1997, with a
superimposed rubber stamp mark June
30, 1997, and that it had been given
every opportunity to present it. The
respondent even admitted during pre-trial
that it could not present the original
promissory note because it is in the
custody of its cashier who is stranded in
Bicol.46 Since the respondent never
produced the original of the promissory
note, much less offered to produce it, the
photocopy of the promissory note cannot
be admitted as evidence.
Other than the promissory note in
question,
the
respondent
has
not
presented any other evidence to support a
finding of solidary liability. As we earlier
noted, both lower courts completely relied
on the note when they found the Bognot
siblings solidarily liable.
The well-entrenched rule is that solidary

obligation cannot be inferred lightly. It
must be positively and clearly expressed
and
cannot
be
presumed.47cralawlawlibrary
Ambrosio Rotairo substituted by his
Spouse Maria Ronsaryo Rotairo, et al.
Vs. Rovira Alcantara and Victor
AlcantaraG.R. No. 173632. September
29, 2014
Rovira is not a buyer in good
faith
Rovira contended that the registered
mortgage between Pilipinas Bank and
Alcantara and Ignacio is superior to the
unregistered contract to sell between
Ignacio & Co. and Rotairo, which was
sustained by the CA. The CA applied
Section 50 of Act No. 496 or the Land
Registration Act and ruled that since the
sale to Rotairo was unregistered and
subsequent to the registered mortgage,
the latter was obligated to respect the

foreclosure and eventual sale of the
property
in
dispute,
among
others.19cralawlawlibrary
Indeed, the rule is that as "[b]etween
two transactions concerning the same
parcel
of
land,
the
registered
transaction prevails over the earlier
unregistered right."2
Section 51 of the Land Registration Act
further states that "[e]very conveyance,
mortgage, lease, lien, attachment, order,
decree, instrument, or entry affecting
registered land x x x, if registered x x x be
notice to all persons from the time of
such registering x x x." "The principal
purpose of registration is merely to notify
other persons not parties to a contract
that a transaction involving the property
has been entered into."22 Thus, it has
been held that "registration in a public
registry creates constructive notice to the
whole world."23 Moreover, "[a] person
dealing with registered land may safely
rely on the correctness of the certificate of
title issued therefor, and he is not
required to go beyond the certificate to
determine
the
condition
of
the
property."24cralawlawlibrary
The rule, however, is not without
recognized exceptions. "The conveyance
shall not be valid against any person
unless registered, except (1) the grantor,
(2) his heirs and devisees, and (3) third
persons having actual notice or knowledge
thereof."25 Moreover, "when the party has
actual
knowledge
of
facts
and
circumstances
that
would
impel
a
reasonably cautious man to make such
litigation,26 he cannot find solace in the
protection afforded by a prior registration.
Neither can such person be considered an
innocent purchaser for value nor a
purchaser in good faith.27cralawlawlibrary

11
9

In this case, two factors work against
Rovira as a buyer in good faith. One, she
cannot be considered a third person for
purposes of applying the rule. Rovira does
not deny that she is the daughter and an
heir of Victor C. Alcantara, one of the
parties to the contract to sell (and the
contract of sale) executed in favor of
Rotairo. "The vendor's heirs are his
privies."28 Based on such privity, Rovira
is charged with constructive knowledge of
prior
dispositions
or
encumbrances
affecting the subject property made by
her father.29 The fact that the contract to
sell was unregistered became immaterial
and she is, therefore, bound by the
provisions of the contract to sell and
eventually, the contract of sale, executed
by her father in favor of Rotairo.
Further, more than the charge of
constructive
knowledge,
the
surrounding circumstances of this case
show Rovira's actual knowledge of
the disposition of the subject property
and Rotairo's possession thereof. It is
undisputed that after the contract to
sell was executed in April 1970,
Rotairo immediately secured a mayor's
permit in September 28, 1970 for the
construction of his residential house on
the
property.30
Rotairo,
and
subsequently, his heirs, has been
residing on the property since then.
Rovira, who lives only fifty (50) meters
away from the subject property, in
fact, knew that there were "structures
built on the property."31 Rovira,
however, claims that "she did not
bother to inquire as to the legitimacy
of the rights of the occupants, because
she was assured by the bank of its title
to the property."32 But Rovira cannot
rely solely on the title and assurances
of Pilipinas Bank; it was incumbent
upon her to look beyond the title and
make necessary inquiries because the
bank was not in possession of the
property. "Where the vendor is not in
possession of the property, the
prospective vendees are obligated to
investigate the rights of one in
possession."33
A purchaser cannot
simply close his eyes to facts which

should put a reasonable man on
guard,34 and thereafter claim that he
acted in good faith under the belief
that there was no defect in the title of
the vendor.35 Hence, Rovira cannot
claim a right better than that of
Rotairo's as she is not a buyer in good
faith.
Pedrito Dela Torre Vs. Dr. Arturo Imbuido,
Dra. Norma Imbuido in their capacity
as owners and operators of Divine
Spirit General Hospital and/or Dr.
Nestor PasambaG.R. No. 192973.
September 29, 2014
Hence, this petition for review on
certiorari in which Pedrito insists
that the respondents should be
held liable for the death of Carmen.
The petition is denied.
[M]edical
malpractice
or,
more
appropriately, medical negligence, is that
type of claim which a victim has available
to him or her to redress a wrong
committed by a medical professional
which has caused bodily harm. In order
to successfully pursue such a claim, a
patient, or his or her family as in this
case, must prove that a health care
provider, in most cases a physician, either
failed to do something which a reasonably
prudent health care provider would have
done, or that he or she did something that
a reasonably prudent provider would not
have done; and that failure or action
caused
injury
to
the
patient.27cralawlawlibrary
The Court emphasized in Lucas, et al. v.
Tuao28 that in medical negligence cases,
there is a physician-patient relationship
between the doctor and the victim, but
just like in any other proceeding for
damages, four essential elements must be
established by the plaintiff, namely: (1)
duty; (2) breach; (3) injury; and (4)
proximate causation. All four elements
must be present in order to find the
physician negligent and, thus, liable for
damages.29cralawlawlibrary

12
0

It is settled that a physicians duty to his
patient relates to his exercise of the
degree of care, skill and diligence which
physicians
in
the
same
general
neighborhood, and in the same general
line of practice, ordinarily possess and
exercise in like cases. There is breach of
this duty when the patient is injured in
body or in health. Proof of this breach
rests upon the testimony of an expert
witness that the treatment accorded to
the patient failed to meet the standard
level of care, skill and diligence. To justify
an award of damages, the negligence of
the doctor must be established to be the
proximate
cause
of
the
injury.30cralawlawlibrary
For the trial court to give weight to Dr.
Patilanos report, it was necessary to show
first Dr. Patilanos specialization and
competence to testify on the degree of
care, skill and diligence needed for the
treatment of Carmens case. Considering
that it was not duly established that Dr.
Patilano practiced and was an expert in
the
fields
that
involved
Carmens
condition, he could not have accurately
identified the said degree of care, skill,
diligence and the medical procedures that
should have been applied by her attending
physicians.
Similarly, such duty, degree of care, skill
and diligence were not sufficiently
established in this case because the
testimony of Dr. Patilano was based solely
on the results of his autopsy on the
cadaver of Carmen. His study and
assessment were restricted by limitations
that denied his full evaluation of Carmens
case. He could have only deduced from
the injuries apparent in Carmens body,
and in the condition when the body was
examined. Judging from his testimony, Dr.
Patilano
did
not
even
take
full
consideration of the medical history of
Carmen, her actual health condition at the
time of hospital admission, and her
condition as it progressed while she was
being monitored and treated by the
respondents. There was also no reference
to the respondents defense that the
emergency caesarian section operation

had to be performed in order to protect
the lives and safety of Carmen and her
then unborn child. For lack of sufficient
information on Carmens health condition
while still alive, Dr. Patilano could not
have fully evaluated the suitability of the
respondents
decisions
in
handling
Carmens medical condition as it turned
critical.
On the other hand, the CA pointed out
that Dr. Nestor, a surgeon, possessed the
reasonable degree of learning, skill and
experience required by his profession for
the
treatment
of
Carmen.
The
respondents also emphasized in their
pleadings before the RTC that Dr. Nestor
had his training and experience in surgery
and obstetrics since 1970. Without
sufficient proof from the claimant on a
different degree of care, skill and diligence
that should be expected from the
respondents, it could not be said with
certainty that a breach was actually
committed.
Moreover, while Dr. Patilano opined that
Carmen died of peritonitis which could be
due to the poor state of the hospital
equipment and medical supplies used
during her operation, there was no
sufficient proof that any such fault actually
attended the surgery of Carmen, caused
her illness and resulted in her death. It is
also significant that the Chief of the
Medico-Legal Division of the PNP Crime
Laboratory Service, Dr. Torres, testified
before the trial court that based on the
autopsy report issued by Dr. Patilano, the
latter did not comply with the basic
autopsy procedure when he examined the
cadaver of Carmen. Dr. Patilano did not
appear to have thoroughly examined
Carmens vital organs such as her heart,
lungs, uterus and brain during the
autopsy.
His
findings
were
then
inconclusive on the issue of the actual
cause of Carmens death, and the claim of
negligence allegedly committed by the
respondents.
As the Court held in Spouses Flores v.

12
1

Spouses Pineda, et al.,31 the critical and

clinching factor in a medical negligence
case is proof of the causal connection
between the negligence and the injuries.
The claimant must prove not only the
injury but also the defendants fault, and
that such fault caused the injury. A verdict
in a malpractice action cannot be based on
speculation or conjecture. Causation must
be proven within a reasonable medical
probability based upon competent expert
testimony,32 which the Court finds absent
in the case at bar.
Spouses Mario Ocampo and Carmelita F.
Ocampo Vs. Heirs of Bernardino U.
Dionisio, et al.G.R. No. 191101.
October 1, 2014
Ownership of the Subject
Property
The respondents were able to

prove that they have a superior
right over the subject property as
against the petitioners. It is
undisputed
that
the
subject
property is indeed covered by OCT
No. M-4559, which is registered in
the
name
of
Dionisio,
the
respondents'
predecessor-ininterest.
Between
the
petitioners'
unsubstantiated and self-serving
claim that the subject property was
inherited by Carmelita from her
father and OCT No. M-4559
registered in Dionisio's name, the
latter
must
prevail.
The
respondents' title over the subject
property is evidence of their
ownership
thereof.
That
a
certificate of title serves as
evidence of an indefeasible and
incontrovertible
title
to
the
property in favor of the person
whose name appears therein and
that a person who has a Torrens
title over a land is entitled to the
possession thereof are fundamental
principles
observed
in
this
jurisdiction.25cralawred
Further, it is settled that a Torrens
Certificate of Title is indefeasible

and binding upon the whole world
unless and until it has been
nullified by a court of competent
jurisdiction.
Under
existing
statutory and decisional law, the
power to pass upon the validity of
such certificate of title at the first
instance properly belongs to the
Regional Trial Courts in a direct
proceeding for cancellation of
title.26 Accordingly, the petitioners
may not assail the validity of the
issuance of OCT No. M-4559 in the
name of Dionisio in their answer to
the
complaint
filed
by
the
respondents
for
recovery
of
possession of the subject property;
it is a collateral attack to the
validity of OCT No. M-4559, which
the RTC and the CA aptly
disregarded.
With the companys discharge
of the burden to prove its
defense,
the
burden
of
evidence shifted to Apolinario
to rebut the petitioners case.
In other words, Apolinario has to
prove by substantial evidence that
Dennis may be insane at the time
he took his life.
BPI Express Card Corp. Vs. Ma. Antonia R.
ArmovitG.R. No. 163654. October 8,
2014
This case involves a credit card holder's
claim for damages arising from the
suspension of her credit privileges due to
her supposed failure to re-apply for their
reactivation. She has insisted that she was
not informed of the condition for
reactivation.
The relationship between the credit card
issuer and the credit card holder is a
contractual one that is governed by the
terms and conditions found in the card
membership agreement.16 Such terms and
conditions constitute the law between the
parties. In case of their breach, moral
damages may be recovered where the
defendant is shown to have acted
fraudulently or in bad faith.17 Malice or
bad faith implies a conscious and
intentional design to do a wrongful act for

12
2

a dishonest purpose or moral obliquity.18
However, a conscious or intentional design
need not always be present because
negligence may occasionally be so gross
as to amount to malice or bad faith.19
Hence, bad faith in the context of Article
2220 of the Civil Code includes gross
negligence.20cralawred
BPI Express Credit contends that it was
not grossly negligent in refusing to lift the
suspension of Armovit's credit card
privileges inasmuch as she had not
complied with the requisite submission of
a new application form; and that under
the circumstances its negligence, if any,
was not so gross as to amount to malice
or bad faith following the ruling in Far East
Bank and Trust Company v. Court of
Appeals.21cralawred
The Court disagrees with the contentions
of BPI Express Credit. The Terms and
Conditions Governing the Issuance and
Use of the BPI Express Credit Card22
printed on the credit card application form
spelled out the terms and conditions of
the contract between BPI Express Credit
and its card holders, including Armovit.
Such terms and conditions determined the
rights and obligations of the parties.23 Yet,
a review of such terms and conditions did
not reveal that Armovit needed to submit
her new application as the antecedent
condition for her credit card to be taken
out of the list of suspended cards.
Considering that the terms and conditions
nowhere stated that the card holder must
submit the new application form in order
to reactivate her credit card, to allow BPI
Express Credit to impose the duty to
submit the new application form in order
to enable Armovit to reactivate the credit
card would contravene the Parol Evidence
Rule.24 Indeed, there was no agreement
between the parties to add the submission
of the new application form as the means
to reactivate the credit card. When she did
not promptly settle her outstanding
balance, BPI Express Credit sent a
message on March 19, 1992 demanding
payment with the warning that her failure
to pay would force it to temporarily

suspend her credit card effective March
31, 1992. It then sent another demand
letter dated March 31, 1992 requesting
her to settle her obligation in order to lift
the suspension of her credit card and
prevent its cancellation. In April 1992, she
paid her obligation. In the context of the
contemporaneous and subsequent acts of
the parties, the only condition for the
reinstatement of her credit card was the
payment of her outstanding obligation.25
Had it intended otherwise, BPI Express
Credit would have surely informed her of
the additional requirement in its letters of
March 19, 1992 and March 31, 1992. That
it did not do so confirmed that they did
not agree on having her submit the new
application form as the condition to
reactivate her credit card.
Esperanza C. Carinan Vs. Sps. Gavino
Cuento, et al.G.R. No. 198636. October
8, 2014
In order to sufficiently substantiate
her claim that the money paid by
the respondents was actually a
donation, Esperanza should have
also submitted in court a copy of
their written contract evincing such
agreement. Article 748 of the New
Civil Code (NCC), which applies to
donations of money, is explicit on
this
point
as
it
reads:chanRoblesvirtualLawlibrary
Art. 748. The donation of a

movable may be made orally or in
writing.
An oral donation requires the

simultaneous delivery of the thing
or of the document representing
the right donated.
If the value of the personal

property donated exceeds five
thousand pesos, the donation and
the acceptance shall be made in
writing. Otherwise, the donation
shall be void.
As the Court ruled in MoreoLentfer v. Wolff,22 a donation must

12
3

comply with the mandatory formal
requirements set forth by law for
its validity. When the subject of
donation
is
purchase
money,
Article 748 of the NCC is
applicable.
Accordingly,
the
donation of money as well as its
acceptance should be in writing.
Otherwise, the donation is invalid
for non-compliance with the formal
requisites
prescribed
by
law.23cralawlawlibrary
The respondents statement that

they
paid
for
Esperanzas
obligations because they wanted to
help her did not contradict an
understanding for the return of the
claimed amounts. Clearly, the aid
then needed by Esperanza was for
the immediate production of the
money that could pay for her
obligations to the GSIS and effect
transfer of title, in order that her
payments and interest over the
property would not be forfeited.
The
help
accorded
by
the
respondents corresponded to such
need. It did not follow that the
respondents could no longer be
allowed to later demand the
repayment. In disputing the claim
against her, Esperanza imputed
deceit upon the respondents and
claimed that they misled her into
their real intention behind the
payment of her obligations and
possession of TCT No. T-636804.
Deceit, however, is a serious
charge which must be proven by
more than just bare allegations.
Although the Court affirms the trial
and appellate courts ruling that,
first, there was no donation in this
case and, second, the respondents
are entitled to a return of the
amounts which they spent for the
subject property, it still cannot
sustain the respondents plea for
Esperanzas full conveyance of the
subject property. To impose the
propertys
transfer
to
the
respondents names would totally

disregard Esperanzas interest and
the payments which she made for
the propertys purchase. Thus, the
principal amount to be returned to
the respondents shall only pertain
to the amounts that they actually
paid or spent. The Court finds no
cogent reason to disturb the trial
courts resolve to require in its
Decision dated December 15,
2009, around four years after the
sums were paid for the subject
propertys
acquisition
and
renovation, the immediate return
of the borrowed amounts.
Celerina
J.
Santos
Vs.
Ricardo
T.
SantosG.R. No. 187061. October 8,
2014
The proper remedy for a judicial
declaration of presumptive death obtained
by extrinsic fraud is an action to annul the
judgment. An affidavit of reappearance is
not the proper remedy when the person
declared presumptively dead has never
been absent.
Annulment of judgment is the remedy
when the Regional Trial Court's judgment,
order, or resolution has become final, and
the "remedies of new trial, appeal, petition
for relief (or other appropriate remedies)
are no longer available through no fault of
the petitioner."36chanrobleslaw
The grounds for annulment of judgment
are
extrinsic
fraud
and
lack
of
jurisdiction.37 This court defined extrinsic
fraud
in
Stilianopulos
v.
City
of
Legaspi:38chanrobleslaw
For fraud to become a basis for annulment
of judgment, it has to be extrinsic or
actual. It is intrinsic when the fraudulent
acts pertain to an issue involved in the
original action or where the acts
constituting the fraud were or could have
been litigated, It is extrinsic or collateral
when a litigant commits acts outside of
the trial which prevents a parly from
having a real contest, or from presenting
all of his case, such that there is no fair
submission
of
the
controversy.39
(Emphasis supplied)

12
4

Celerina alleged in her petition for
annulment of judgment that there was
fraud when Ricardo deliberately made
false allegations in the court with respect
to her residence.40 Ricardo also falsely
claimed that she was absent for 12 years.
There was also no publication of the notice
of hearing of Ricardo's petition in a
newspaper
of
general
circulation.41
Celerina claimed that because of these,
she
was
deprived
of
notice
and
opportunity to oppose Ricardo's petition to
declare
her
presumptively
dead.42chanrobleslaw
Celerina alleged that all the facts
supporting
Ricardo's
petition
for
declaration of presumptive death were
false.43 Celerina further claimed that the
court did not acquire jurisdiction because
the Office of the Solicitor General and the
Provincial Prosecutor's Office were not
given
copies
of
Ricardo's
petition.44chanrobleslaw
These are allegations of extrinsic fraud
and lack of jurisdiction. Celerina alleged in
her petition with the Court of Appeals
sufficient ground/s for annulment of
judgment.
Celerina filed her petition for annulment of
judgment45 on November 17, 2008. This
was less than two years from the July 27,
2007 decision declaring her presumptively
dead and about a month from her
discovery of the decision in October 2008.
The petition was, therefore, filed within
the four-year period allowed by law in
case of extrinsic fraud, and before the
action is barred by laches, which is the
period allowed in case of lack of
jurisdiction.46chanrobleslaw
There was also no other sufficient remedy
available to Celerina at the time of her
discovery of the fraud perpetrated on her.
The choice of remedy is important
because remedies carry with them certain
admissions, presumptions, and conditions.
The Family Code provides that it is the

proof of absence of a spouse for four
consecutive years, coupled with a wellfounded belief by the present spouse that
the absent spouse is already dead, that
constitutes a justification for a second
marriage during the subsistence of
another marriage.47chanrobleslaw
The Family Code also provides that the
second marriage is in danger of being
terminated by the presumptively dead
spouse when he or she reappears.
Thus:chanRoblesvirtualLawlibrary
Article 42. The subsequent marriage
referred to in the preceding Article shall
be automatically terminated by the
recording of the affidavit of reappearance
of the absent spouse, unless there is a
judgment annulling the previous marriage
or declaring it void ab initio.
A sworn statement of the fact and
circumstances of reappearance shall be
recorded in the civil registry of the
residence of the parties to the subsequent
marriage at the instance of any interested
person, with due notice to the spouses of
the subsequent marriage and without
prejudice to the fact of reappearance
being judicially determined in case such
fact is disputed. (Emphasis supplied)
In other words, the Family Code provides
the presumptively dead spouse with the
remedy of terminating the subsequent
marriage by mere reappearance.
The filing of an affidavit of reappearance is
an admission on the part of the first
spouse that his or her marriage to the
present spouse was terminated when he
or
she
was
declared
absent
or
presumptively dead.
Moreover, a close reading of the entire
Article 42 reveals that the termination of
the subsequent marriage by reappearance
is subject to several conditions: (1) the
non-existence of a judgment annulling the
previous marriage or declaring it void ab
initio; (2) recording in the civil registry of

12
5

the residence of the parties to the
subsequent marriage of the sworn
statement of fact and circumstances of
reappearance; (3) due notice to the
spouses of the subsequent marriage of the
fact of reappearance; and (4) the fact of
reappearance must either be undisputed
or judicially determined.
The existence of these conditions means
that reappearance does not always
immediately
cause
the
subsequent
marriage's termination. Reappearance of
the absent or presumptively dead spouse
will cause the termination of the
subsequent marriage only when all the
conditions enumerated in the Family Code
are present.
Hence, the subsequent marriage may still
subsist
despite
the
absent
or
presumptively
dead
spouse's
reappearance (1) if the first marriage has
already been annulled or has been
declared a nullity; (2) if the sworn
statement of the reappearance is not
recorded in the civil registry of the
subsequent spouses' residence; (3) if
there is no notice to the subsequent
spouses; or (4) if the fact of reappearance
is disputed in the proper courts of law,
and no judgment is yet rendered
confirming, such fact of reappearance.
reappearance will not terminate the

subsequent marriage even if the parties to
the subsequent marriage were notified if
there was "no step . . . taken to terminate
the subsequent marriage, either by [filing
an] affidavit [of reappearance] or by court
action[.]"53 "Since the second marriage
has been contracted because of a
presumption that the former spouse is
dead, such presumption continues inspite
of the spouse's physical reappearance,
and by fiction of law, he or she must still
be regarded as legally an absentee until
the subsequent marriage is terminated as
provided by law."54chanrobleslaw
The choice of the proper remedy is also
important for purposes of determining the
status of the second marriage and the
liabilities of the spouse who, in bad faith,
claimed that the other spouse was absent.
A second marriage is bigamous while the
first subsists.
However, a bigamous
subsequent marriage may be considered
valid
when
the
following
are
present:chanRoblesvirtualLawlibrary
1)
2)
3)
When
subsequent
marriages
are
contracted after a judicial declaration of
presumptive death, a presumption arises
that the first spouse is already dead and
that the second marriage is legal. This
presumption should prevail over the
continuance of the marital relations with
the first spouse.48 The second marriage,
as with all marriages, is presumed valid.49
The burden of proof to show that the first
marriage was not properly dissolved rests
on the person assailing the validity of the
second marriage.50chanrobleslaw
This court recognized the conditional
nature of reappearance as a cause for
terminating the subsequent marriage in
Social Security System v. Vda. de
Bailon.51 This court noted52 that mere
4)
The prior spouse had been absent

for four consecutive years;
The spouse present has a wellfounded belief that the absent
spouse was already dead;
There
must
be
a
summary
proceeding for the declaration of
presumptive death of the absent
spouse; and
There is a court declaration of
presumptive death of the absent
spouse.55
A subsequent marriage contracted in bad

faith, even if it was contracted after a
court declaration of presumptive death,
lacks the requirement of a well-founded
belief56 that the spouse is already dead.
The first marriage will not be considered
as.
validly
terminated.
Marriages
contracted prior to the valid termination of
a subsisting marriage are generally
considered bigamous and void.57 Only a
subsequent marriage contracted in good
faith is protected by law.

12
6

Therefore, the party who contracted the
subsequent marriage in bad faith is also
not immune from an action to declare his
subsequent marriage void for being
bigamous.
The
prohibition
against
marriage during the subsistence of
another
marriage
still
applies.58chanrobleslaw
If, as Celerina contends, Ricardo was in
bad faith when he filed his petition to
declare her presumptively dead and when
he contracted the subsequent marriage,
such marriage would be considered void
for being bigamous under Article 35(4) of
the Family Code. This is because the
circumstances lack the element of "wellfounded belief under Article 41 of the
Family Code, which is essential for the
exception to the rule against bigamous
marriages to apply.59chanrobleslaw
The provision on reappearance in the
Family Code as a remedy to effect the
termination of the subsequent marriage
does not preclude the spouse who was
declared presumptively dead from availing
other remedies existing in law. This court
had, in fact, recognized that a subsequent
marriage may also be terminated by filing
"an action in court to prove the
reappearance of the absentee and obtain
a declaration of dissolution or termination
of
the
subsequent
marriage."60chanrobleslaw
Celerina does not admit to have been
absent. She also seeks not merely the
termination of the subsequent marriage
but also the nullification of its effects. She
contends that reappearance is not a
sufficient remedy because it will only
terminate the subsequent marriage but
not nullify the effects of the declaration of
her
presumptive
death
and
the
subsequent marriage.
Celerina is correct. Since an undisturbed
subsequent marriage under Article 42 of
the Family Code is valid until terminated,
the "children of such marriage shall be
considered legitimate, and the property
relations of the spouse[s] in such

marriage will be the same as in valid
marriages."61 If it is terminated by mere
reappearance,
the
children
of
the
subsequent marriage conceived before the
termination shall still be considered
legitimate.62
Moreover,
a
judgment
declaring presumptive death is a defense
against
prosecution
for
bigamy.63chanrobleslaw
It is true that in most cases, an action to
declare the nullity of the subsequent
marriage may nullify the effects of the
subsequent marriage, specifically, in
relation to the status of children and the
prospect of prosecuting a respondent for
bigamy.
However, "a Petition for Declaration of
Absolute Nullity of Void Marriages may be
filed
solely
by
the
husband
or
wife."64 This means that even if Celerina
is a real party in interest who stands to be
benefited or injured by the outcome of an
action to nullify the second marriage,65
this remedy is not available to her.
Therefore, for the purpose of not only
terminating the subsequent marriage but
also of nullifying the effects of the
declaration of presumptive death and the
subsequent marriage, mere filing of an
affidavit of reappearance would not
suffice. Celerina's choice to file an action
for annulment of judgment will, therefore,
lie.
Extraordinary Development Corporation
Vs. Hermina F. Samson-Bico, et
al.G.R. No. 191090. October 13, 2014
aving established respondents coownership rights over the subject
property, we find no error in the
appellate courts ruling sustaining
the validity of the Deed of Absolute
Sale but only with respect to the
rights of the heirs of Juan over
one-half of the property.

recognizes the absolute right of a
co-owner to freely dispose of his
pro indiviso share as well as the

12
7

fruits and other benefits arising
from that share, independently of
the
other
co-owners,27
thus:chanRoblesvirtualLawlibrary
Art. 493. Each co-owner shall have

the full ownership of his part of the
fruits
and
benefits
pertaining
thereto, and he may therefore
alienate, assign or mortgage it, and
even substitute another person in
its
enjoyment,
except
when
personal rights are involved. But
the effect of the alienation or the
mortgage, with respect to the coowners, shall be limited to the
portion which may be allotted to
him in the division upon the
termination of the co-ownership.
We are also in full accord with the
appellate courts order for the heirs
of Juan to return one-half of the
purchase price to EDC. There is
unjust enrichment when a person
unjustly retains a benefit to the
loss of another, or when a person
retains money or property of
another against the fundamental
principles of justice, equity and
good conscience.30 Therefore, it is
correct for the Court of Appeals to
order the heirs of Juan to return
the amount of P1,487,400.00,
representing
one-half
of
the
purchase price to prevent unjust
enrichment at the expense of EDC.
Residents of Lower Atab & Teachers'
Village, Sto. Tomas Proper Barangay,
Baguio City, represented by Beatrice
T. Pulas, et al. Vs. Sta. Monica
Industrial
&
Development
CorporationG.R. No. 198878. October
15, 2014
For an action to quiet title to
prosper,
two
indispensable
requisites
must
be
present,
namely: (1) the plaintiff or
complainant has a legal or an
equitable title to or interest in the
real property subject of the action;
and
(2)
the
deed,
claim,
encumbrance,
or
proceeding
claimed to be casting cloud on his
title must be shown to be in fact

invalid or inoperative despite its
prima facie appearance of validity
or legal efficacy.28cralawlawlibrary
Legal title denotes registered

ownership, while equitable title
means
beneficial
ownership.29cralawlawlibrary
Beneficial ownership has been
defined as ownership recognized by
law and capable of being enforced
in the courts at the suit of the
beneficial owner.
Blacks Law
Dictionary indicates that the term
is used in two senses: first, to
indicate
the
interest
of
a
beneficiary in trust property (also
called equitable ownership); and
second, to refer to the power of a
corporate shareholder to buy or
sell the shares, though the
shareholder is not registered in the
corporations
books
as
the
owner.
Usually,
beneficial
ownership is distinguished from
naked ownership, which is the
enjoyment of all the benefits and
privileges of ownership, as against
possession of the bare title to
property.30chanrobleslaw
Petitioners do not have legal or
equitable title to the subject
property. Evidently, there are no
certificates
of
title
in
their
respective names. And by their
own admission in their pleadings,
specifically in their pre-trial brief
and memorandum before the trial
court, they acknowledged that they
applied for the purchase of the
property from the government,
through townsite sales applications
coursed through the DENR. In
their Petition before this Court,
they particularly prayed that TCT
No. T-63184 be nullified in order
that the said title would not hinder
the approval of their townsite sales
applications pending with the
DENR. Thus, petitioners admitted

12
8

that they are not the owners of the
subject
property;
the
same
constitutes state or government
land which they would like to
acquire by purchase. It would
have been different if they were
directly claiming the property as
their own as a result of acquisitive
prescription, which would then give
them
the
requisite
equitable
title. By stating that they were in
the process of applying to purchase
the subject property from the
government, they admitted that
they had no such equitable title, at
the very least, which should allow
them to prosecute a case for
quieting of title.
In short, petitioners recognize that

legal and equitable title to the
subject property lies in the
State. Thus, as to them, quieting
of title is not an available remedy.
Carlos A. Loria Vs. Ludolfo P. Muoz,
Jr.G.R. No. 187240. October 15, 2014
No person should unjustly enrich himself
or herself at the expense of another.
Loria
must
return
Munozs
P2,000,000.00
under
the
principle
of
unjust
enrichment
In this case, Loria received P2,000,000.00

from Muoz for a subcontract of a
government project to dredge the
Masarawag and San Francisco Rivers in
Guinobatan, Albay. However, contrary to
the parties agreement, Munoz was not
subcontracted
for
the
project.
Nevertheless,
Loria
retained
the
P2,000,000.00.
Thus, Loria was unjustly enriched. He
retained Munozs money without valid
basis or justification. Under Article 22 of
the Civil Code of the Philippines, Loria
must return the P2,000,000.00 to Muoz.
Rolando Robles, represented by Atty.
Clara C. Espiritu Vs. Fernando Fidel
Yapcinco, et al.G.R. No. 169568.
October 22, 2014
The dispute involves the ownership of a
judicially-foreclosed parcel of land sold at
a public auction, but which sale was not
judicially confirmed. On one side is the
petitioner, the successor in interest of the
purchaser in the public auction, and, on
the other, the heirs of the mortgagor, who
never manifested interest in redeeming
the property from the time of the
foreclosure.
Ruling of the Court
The petition for review is meritorious.
Under Article 22 of the Civil Code of the

Philippines, every person who through an
act of performance by another, or any
other means, acquires or comes into
possession of something at the expense of
the latter without just or legal ground,
shall return the same to him. There is
unjust enrichment when a person
unjustly retains a benefit to the loss of
another, or when a person retains money
or property of another against the
fundamental principles of justice, equity
and good conscience.55cralawlawlibrary
The principle of unjust enrichment has two
conditions. First, a person must have
been benefited without a real or valid
basis or justification. Second, the benefit
was derived at another persons expense
or damage.56cralawlawlibrary
Before anything more, the Court clarifies

that the failure of Apolinario Cruz to
register the certificate of sale was of no
consequence in this adjudication. The
registration of the sale is required only in
extra-judicial foreclosure sale because the
date of the registration is the reckoning
point for the exercise of the right of
redemption. In contrast, the registration
of the sale is superfluous in judicial
foreclosure because only the equity of
redemption is granted to the mortgagor,
except in mortgages with banking
institutions.34 The equity of redemption is
the right of the defendant mortgagor to
extinguish the mortgage and retain
ownership of the property by paying the
secured debt within the 90-day period
after the judgment becomes final, or even

12
9

after the foreclosure sale but prior to the
confirmation of the sale.35 In this light, it
was patent error for the CA to declare
that: "By Apolinario Cruz's failure to
register the 18 March 1958 Certificate of
Absolute Sale in the Office of the Register
of Deeds, the period of redemption did not
commence to run."36
The applicable rule on March 18, 1959,
the date of the foreclosure sale, was
Section 3, Rule 7037 of the Rules of Court,
which relevantly provided that: "Such sale
shall not affect the rights of persons
holding prior incumbrances upon the
property or a part thereof, and when
confirmed by an order of the court, it shall
operate to divest the rights of all the
parties to the action and to vest their
rights in the purchaser, subject to such
rights of redemption as may be allowed by
law." The records show that no judicial
confirmation of the sale was made despite
the lapse of more than 40 years since the
date of the sale. Hence, it cannot be said
that title was fully vested in Apolinario
Cruz.
However, the Court will not be dispensing
true and effective justice if it denies the
petition for review on the basis alone of
the absence of the judicial confirmation of
the sale. Although procedural rules are not
to be belittled or disregarded considering
that they insure an orderly and speedy
administration of justice, it is equally true
that litigation is not a game of
technicalities. Law and jurisprudence
grant to the courts the prerogative to
relax compliance with procedural rules of
even the most mandatory character,
mindful of the duty to reconcile both the
need to speedily put an end to litigation
and the parties' right to an opportunity to
be heard.38 The Rules of Court itself calls
for a liberal construction of its rules with
the view of promoting their objective of
securing a just, speedy and inexpensive
disposition
of
every
action
and
proceeding.39
To better serve the ends of justice, the
Court holds that the real issue to consider
and resolve is who between the parties

had the better right to the property, not
whether there was a valid transfer of
ownership to Apolinario Cruz.
It was not denied that Fernando F.
Yapcinco, as the mortgagor, did not pay
his obligation, and that his default led to
the filing of the action for judicial
foreclosure against him, in which he
actively participated in the proceedings,
and upon his death was substituted by the
administratrix of his estate. In the end,
the decision in the action for judicial
foreclosure called for the holding of the
public sale of the mortgaged property.
Due to the subsequent failure of the
estate of Fernando F. Yapcinco to exercise
the equity of redemption, the property
was sold at the public sale, and Apolinario
Cruz was declared the highest bidder.
Under the circumstances, the respondents
as the successors-in-interest of Fernando
F. Yapcinco were fully bound by that
decision and by the result of the ensuing
foreclosure sale.
In this regard, determining whether
Patrocinio
Yapcinco
Kelly,
the
adminsitratrix
of
the
estate,
and
respondent Patrocinio Yapcinco were one
and the same person was not necessary.
Even if they were not one and the same
person, they were both bound by the
foreclosure proceedings by virtue of their
being
both
of
Fernando F. Yapcinco.
Although the respondents admitted the
existence of the mortgage, they somehow
denied knowledge of its foreclosure. Yet,
in asserting their superior right to the
property, they relied on and cited the
entry dated February 11, 1992 concerning
the release of mortgage inscribed on TCT
No. 20458. This duplicity the Court cannot
countenance.
Being
the
heirs
and
successors-in-interest of the late Fernando
F. Yapcinco, they could not repudiate the
foreclosure sale and its consequences, and
escape such consequences that bound and
concluded their predecessor-in-interest
whose shoes they only stepped into.40

13
0

Given their position on the lack of judicial
confirmation of the sale in favor of
Apolinario
Cruz,
they
should
have
extinguished the mortgage by exercising
their equity of redemption through paying
the secured debt. They did not do so, and,
instead, they sought the annulment of TCT
No. 243719 and caused the issuance of
another title in their name.
Even assuming that there was no
foreclosure of the mortgage, such that the
respondents did not need to exercise the
equity of redemption, the legal obligation
to pay off the mortgage indebtedness in
favor of Apolinario Cruz nonetheless
devolved on them and the estate of
Fernando F. Yapcinco. They could not
sincerely rely on the entry about the
release or cancellation of the mortgage in
TCT No. 20458, because such entry
appeared to be unfounded in the face of
the lack of any showing by them that
either they or the estate of Fernando F.
Yapcinco had settled the obligation.
The petitioner did not tender any
explanation for the failure of Apolinario
Cruz to secure the judicial confirmation of
the sale. Fie reminds only that Apolinario
Cruz and his successors-in-interest and
representatives have been in actual,
notorious,
public
and
uninterrupted
possession of the property from the time
of his purchase at the foreclosure sale
until the present.
The effect of the failure of Apolinario Cruz
to obtain the judicial confirmation was
only to prevent the title to the property
from being transferred to him. For sure,
such failure did not give rise to any right
in favor of the mortgagor or the
respondents as his successors-in-interest
to take back the property already validly
sold through public auction. Nor did such
failure
invalidate
the
foreclosure
proceedings. To maintain otherwise would
render nugatory the judicial foreclosure
and
foreclosure
sale,
thus
unduly
disturbing judicial stability. The nontransfer of the title notwithstanding,
Apolinario Cruz as the purchaser should
not be deprived of the property purchased

at the foreclosure sale. With the
respondents having been fully aware of
the mortgage, and being legally bound by
the judicial foreclosure and consequent
public sale, and in view of the
unquestioned possession by Apolinario
Cruz
and
his
(including the petitioner) from the time of
the foreclosure sale until the present, the
respondents could not assert any better
right to the property. It would be the
height of inequity to still permit them to
regain the property on the basis alone of
the lack of judicial confirmation of the
sale. After all, under the applicable rule
earlier cited, the judicial confirmation
operated only "to divest the rights of all
the parties to the action and to vest
their rights in the purchaser, subject to
such rights of redemption as may be
allowed by law."
Consequently, the late Fernando F.
Yapcinco and the respondents as his
successors-in-interest were divested of
their right in the property, for they did not
duly exercise the equity of redemption
decreed in the decision of the trial court.
With Yapcinco having thereby effectively
ceased to be the owner of the property
sold, the property was taken out of the
mass of the assets of Yapcinco upon the
expiration of the equity of redemption.
Republic of the Philippines Vs. Apostolita
San Mateo, Brigida Tapang, Rosita
Accion, and Celso MercadoG.R. No.
203560. November 10, 2014
Further, it is not enough for the
PENRQ or CENRO to certify that
a
land
is
alienable
and
disposable. The applicant for
land registration must prove
that the DENR Secretary had
approved the land classification
and released the land of the
public domain as alienable and
disposable, and that the land
subject of the application for
registration falls within the
approved area per verification
through survey by the PENRO
or CENRO. In addition, the

13
1

applicant for land registration
must present a copy of the
original classification approved
by the DENR Secretary and
certified as a true copy by the
legal custodian of the official
records. These facts must be
established to prove that the land
is
alienable
and
disposable.
Respondent failed to do so because
the certifications presented by
respondent do not, by themselves,
prove that the land is alienable and
disposable.20 (emphasis supplied)
Clearly,
therefore,
a
CENRO
certification that a certain property
is
alienable,
without
the
corresponding proof that the DENR
Secretary had approved such
certification,
is
insufficient
to
support a petition for registration
of land. Both certification and
approval are required to be
presented as proofs that the land is
alienable. Otherwise, the petition
must be denied.
Metro Manila Shopping Mecca Corp.,

Shoemart, Inc., SM Prime Holdings,
Inc., Star Appliances Center, Super
Value, Inc., Ace Hardware Philippines,
Inc.,
Health
and
Beauty,
Inc.,
Jollimart Philippines Corp. Vs. Ms.
Liberty M. Toledo, in her capacity as
City Treasurer of Manila and The City
of ManilaG.R. No. 190818. November
10, 2014
A compromise agreement is a
contract whereby the parties, by
making
reciprocal
concessions,
avoid a litigation or put an end to
one
already
commenced.8
It
contemplates mutual concessions
and mutual gains to avoid the
expenses of litigation; or when
litigation has already begun, to end
it because of the uncertainty of the
result.9 Its validity is dependent
upon
the
fulfillment
of
the
requisites
and
principles
of
contracts dictated by law; and its
terms and conditions must not be
contrary to law, morals, good

customs, public policy, and public
order.10
When
given
judicial
approval, a compromise agreement
becomes more than a contract
binding upon the parties. Having
been sanctioned by the court, it is
entered as a determination of a
controversy and has the force and
effect of a judgment. It is
immediately executory and not
appealable, except for vices of
consent
or
forgery.
The
nonfulfillment of its terms and
conditions justifies the issuance of
a writ of execution; in such an
instance, execution becomes a
ministerial duty of the court.11
A review of the whereas clauses12

of the UCA reveals the various
court cases filed by petitioners,
including this case, for the refund
and/or issuance of tax credit
covering the local business taxes
payments they paid to respondent
City of Manila pursuant to Section
21 of the latter's Revenue Code.13
Thus, contrary to the submission of
respondents, the local business
taxes subject of the instant case is
clearly covered by the UCA since
they were also paid in accordance
with the same provision of the
Revenue Code of Manila.
In this relation, it is observed that
the present case would have been
rendered moot and academic had
the parties informed the Court of
the UCA's supervening execution.14
Be that as it may, and considering
that: (a) the UCA appears to have
been executed in accordance with
the requirements of a valid
compromise agreement; (b) the
UCA was executed more than a
year prior to the promulgation of
the subject Decision; and (c) the
result of both the UCA and the
subject Decision are practically
identical, i.e., that petitioners are
not
entitled
to
any
tax

13
2

refund/credit, the Court herein

resolves to approve and adopt the
pertinent terms and conditions of
the UCA insofar as they govern the
settlement of the present dispute.
Sps. Felipe Solitarios and Julia Torda Vs.
Sps.
Gaston
Jaque
and
Lilia
JaqueG.R. No. 199852. November 12,
2014
Issue
From the foregoing narration of

facts, it is abundantly clear that the
only material point of inquiry is
whether the parties effectively
entered into a contract of absolute
sale or an equitable mortgage of
Lot
4089.ChanRoblesVirtualawlibrary
At the outset, We note that, contrary to
the finding of the CA, petitioner spouses
Solitarios actually presented before the
RTC their position that the real agreement
between the parties was a mortgage, and
not a sale. Being unlettered, petitioners
may have averred that the deeds of sale
and TCT presented by respondents were
forgeries, obtained as they were through
fraud and machination. However, their
saying that the sale instruments were
"fictitious" and their signatures thereon
were "forged" amounts to alleging that
they never agreed to the sale of their lot,
and they never intended to sign such
conveyances. This reality is supported by
the testimony of petitioner Felipe
Solitarios that was offered to prove the
true intention of the parties that Lot
4089 was only mortgaged, not sold, to the
Jaques
The Court is, therefore, not precluded
from looking into the real intentions of the
parties in order to resolve the present
controversy. For that reason, the Court
takes guidance from Article 1370 of the
Civil Code, which instructs that "if the
words [of a contract] appear to be
contrary to the evident intention of the
parties, the latter shall prevail over the
former." Indeed, it is firmly settled that
clarity of contract terms and the name
given to it does not bar courts from
determining the true intent of the parties.

In Zamora vs. Court of Appeals,7 the
Court elucidated that
In determining the nature of a contract,
courts are not bound by the title or name
given by the parties. The decisive factor
in evaluating such agreement is the
intention of the parties, as shown not
necessarily by the terminology used
in the contract but by their conduct,
words, actions and deeds prior to,
during
and
immediately
after
executing the agreement. As such
therefore,
documentary
and
parol
evidence may be submitted and admitted
to prove such intention.8
Further, in resolving this kind of
controversy, the doctrinal teaching of
Reyes vs. Court of Appeals9 impels us to
give utmost consideration to the intention
of the parties in light of the relative
situation of each, and the circumstances
surrounding the execution of the contract,
thus:chanroblesvirtuallawlibrary
In determining whether a deed absolute
inform is a mortgage, the court is not
limited to the written memorials of the
transaction.
The
decisive
factor
in
evaluating such agreement is the intention
of the parties, as shown not necessarily by
the terminology used in the contract but
by all the surrounding circumstances, such
as the relative situation of the parties at
that time, the attitude, acts, conduct,
declarations
of
the
parties,
the
negotiations between them leading to the
deed, and generally, all pertinent facts
having a tendency to fix and determine
the real nature of their design and
understanding, x x x
There is no single conclusive test to
determine whether a deed of sale,
absolute on its face, is really a simple loan
accommodation secured by a mortgage.10
However, Article 1602 in relation to Article
1604 of the Civil Code enumerates several
instances when a contract, purporting to
be, and in fact styled as, an absolute sale,
is presumed to be an equitable mortgage,

13
3

thus:chanroblesvirtuallawlibrary
Art. 1602. The contract shall be
presumed
to
be
an
equitable
mortgage, in any of the following
cases:
(1) When the price of a sale with right to
repurchase
is
unusually
inadequate;cralawlawlibrary
(2) When the vendor remains
possession as lessee or otherwise;
in
(3) When upon or after the expiration of

the
right
to
repurchase
another
instrument extending the period of
redemption or granting a new period is
executed;cralawlawlibrary
(4) When the purchaser retains for himself
a
part
of
the
purchase
price;cralawlawlibrary
(5) When the vendor binds himself to pay
the
taxes
on
the
thing
sold;cralawlawlibrary
(6) In any other case where it may
be fairly inferred that the real
intention of the parties is that the
transaction shall secure the payment
of a debt or the performance of any
other obligation.
In any of the foregoing cases, any money,
fruits, or other benefit to be received by
the vendee as rent or otherwise shall be
considered as interest which shall be
subject to the usury laws."
Art. 1604. The provisions of Article 1602
shall also apply to a contract purporting to
be an absolute sale.
As evident from Article 1602 itself, the
presence of any of the circumstances set
forth therein suffices for a contract to be
deemed an equitable mortgage. No
concurrence or an overwhelming number
is needed.12
With the foregoing in mind, We thus
declare that the transaction between the

parties of the present case is actually one
of equitable mortgage pursuant to the
foregoing provisions of the Civil Code. It
has never denied by respondents that the
petitioners, the spouses Solitarios, have
remained in possession of the subject
property and exercised acts of ownership
over the said lot even after the purported
absolute sale of Lot 4089. This fact is
immediately
apparent
from
the
testimonies of the parties and the
evidence extant on record, showing that
the real intention of the parties was for
the transaction to secure the payment of a
debt. Nothing more.
Petitioner's Possession of the
Subject Property after the Purported
Sale
During pre-trial, the Jaques admitted that
the spouses Solitarios were in possession
of the subject property.13 Gaston Jaque
likewise confirmed that petitioners were
allowed to produce copra and till the rice
field, which comprise one-half of the lot
that was previously covered by the real
estate mortgage, after said portion was
allegedly sold to them.14
This Court had held that a purported
contract of sale where the vendor remains
in physical possession of the land, as
lessee or otherwise, is an indicium of an
equitable mortgage.15 In Rockville v. Sps.
Culla,16 We explained that the reason for
this rule lies in the legal reality that in a
contract of sale, the legal title to the
property is immediately transferred to the
vendee. Thus, retention by the vendor of
the possession of the property is
inconsistent with the vendee's acquisition
of ownership under a true sale. It
discloses, in the alleged vendee, a lack of
interest in the property that belies the
truthfulness of the sale.
During the period material to the present
controversy, the petitioners, spouses
Solitarios, retained actual possession of
the property. This was never disputed. If
the transaction had really been one of

13
4

sale, as the Jaques claim, they should
have asserted their rights for the
immediate delivery and possession of the
lot instead of allowing the spouses
Solitarios to freely stay in the premises for
almost seventeen (17) years from the
time of the purported sale until their filing
of the complaint. Human conduct and
experience reveal that an actual owner of
a productive land will not allow the
passage of a long period of time, as in this
case, without asserting his rights of
ownership.
Further, Gaston Jaque first claimed
possession of the subject property
through his mother-in-law, and then
through hired workers when the latter
passed away;17 not personally. It is also
undisputed that the Jaques never installed
a tenant on Lot 4089 and did not disturb
the Solitarios' possession of the same.18
On this note, We agree with the finding of
the RTC that the Jaques' alleged
possession of the subject property is
suspect and unsubstantial, and they never
possessed the same in the concept of
owners,
Not only is there a presumption that the
deeds of sale are an equitable mortgage,
it has been amply demonstrated by
petitioners that the deed of sale is
intended to be one of mortgage based on
the proof presented by petitioners and
propped up even by the admissions of
respondents.
The intention of the parties was for
the transaction to secure the
payment of a debt
To stress, Article 1602(6) of the Civil Code
provides that a transaction is presumed to
be
an
equitable
mortgage:chanroblesvirtuallawlibrary
(6) In any other case where it may be
fairly inferred that the real intention of the
parties is that the transaction shall secure
the payment of a debt or the performance
of any other obligation.
This provision may very well be applied in
this case. There is sufficient basis to
indulge in the presumption that the

transaction between the parties was that
of an equitable mortgage and that the
spouses Solitarios never wanted to sell the
same to the Jaques.
The foregoing presumption finds support
in the following: First, the very testimony
of Gaston Jaque and the documents he
presented establish the existence of two
loans, which the Jaques extended to the
spouses Solitarios, that were secured by
the subject property; and, second, the
testimonies of the parties reveal that they
came to an agreement as to how these
loans would be paid.
The first loan was contracted when Gaston
Jaque gave the spouses
Solitarios
P7,000.00 to help them redeem the
subject property from PNB.20 In effect, by
extending
the
P7,000.00
financial
assistance to the spouses Solitarios,
Gaston Jaque took over the loan, became
the lender and assumed the role of
mortgagee in place of PNB.
Thereafter,
the
spouses
Solitarios
obtained a second loan from the Jaques
amounting to P3,000.00. This is evidenced
by an REM dated July 15, 1981 by virtue
of which the spouses Solitarios mortgaged
one-half of the subject property to the
Jaques to secure the payment of said
loan.
The parties testified that they entered into
a verbal agreement on the sharing of the
produce of the subject property. For his
part, it seemed that Gaston Jaque wanted
to impress upon the lower court that this
sharing agreement was fixed as a
condition for his allowing the Solitarios'
continued possession and cultivation of
the subject property. However, there is a
strong reason to believe that this
arrangement was, in fact, a payment
scheme for the debts that the spouses
Solitarios incurred.
It is, thus, clear from the foregoing that
the Jaques extended two loans to the
spouses Solitarios, who in exchange,

13
5

offered to the former the subject property,
not to transfer ownership thereto, but to
merely secure the payment of their debts.
This may be deduced from the testimonies
of both Felipe Solitarios and Gaston Jaque,
revealing the fact that they agreed upon
terms for the payment of the loans, in
particular, the sharing in the produce of
the lot.
Verily, the fact that the parties agreed on
payment terms is inconsistent with the
claim of the Jaques that when the spouses
Solitaries executed the questioned deeds
of sale they had no other intention but to
transfer ownership over the subject
property.
Thus, there is ground to presume that the
transaction between the parties was an
equitable mortgage and not a sale. There
is nothing in the records sufficient enough
to overturn this presumption.
The contracts of sale and mortgage
are of doubtful veracity
Furthermore, an examination of the
transaction documents casts doubts on
their validity. As alleged by petitioners,
their signatures therein appear to be
forged. We distinctly observe that each of
the three (3) documents bears different
versions of petitioner Julia Solitarios'
signatures. First, on the first page of the
1981 Deed of Sale, particularly on the
space provided for Julia Solitarios to
express her marital consent to the sale,
the signature "Julia Torda Solitarios"
appears.24 What is strange is that in the
acknowledgement page of the very same
document, Julia Solitarios purportedly
signed as "Julia T. Solitarios,"25cralawred
which is obviously different from the
signature appearing on the first page.
Further, while the 1981 REM document
contains the signature "Julia Turda,"26 the
1983 Deed of Sale bears the signature
"Julia Torda." These discrepancies suggest
that the documents were signed by
different persons.
Nevertheless, assuming arguendo that
these documents were really signed by
petitioners, there is reason to believe that

they did so without understanding their
real nature and that the Jaques never
explained to them the effects and
consequences of signing the same.
In negotiating the transactions,
the parties did not deal with
each other on equal terms
The Civil Code provisions that consider
certain types of sales as equitable
mortgages are intended for the protection
of the unlettered such as the spouses
Solitarios, who are penurious vis-a-vis
their creditors.27 In Cruz v. Court of
Appeals.28 the Court held Vendors covered by Art. 1602 usually find
themselves in an unequal position when
bargaining with the vendees, and will
readily sign onerous contracts to get the
money they need. Necessitous men are
not really free men in the sense that to
answer a pressing emergency they will
submit to any terms that the crafty may
impose on them. This is precisely the evil
that Art. 1602 seeks to guard against. The
evident intent of the provision is to give
the
supposed
vendor
maximum
safeguards for the protection of his legal
rights under the true agreement of the
parties.
Without doubt, the spouses Solitarios
need the protection afforded by the Civil
Code provisions on equitable mortgage.
Certainly, the parties were negotiating on
unequal footing. As opposed to the
uneducated and impoverished farmer,
Felipe Solitarios,30 Gaston Jaque, was a
2nd Lieutenant of the Armed Forces of the
Philippines when he retired.31 Further,
Felipe Solitarios was constantly in financial
distress. He was constantly in debt and in
dire financial need. That he borrowed
money from the PNB twice, first in 1975
then in 1976, and mortgaged the subject
property to the Jaques suggest as much.
While Felipe Solitarios was able to settle
his 1975 loan and redeem the mortgage
with his own money,32 he no longer had
enough funds to redeem the subject

13
6

property after obtaining a loan in 1976.
Thus, he was impelled to borrow money
from the Jaques to get his property back
in 1981. Shortly after, on July 15, 1981,
Felipe Solitarios, again in desperate need,
borrowed money from Gaston Jaque and
mortgaged to the latter a portion of the
subject property.
It is, therefore, not difficult to imagine
that Felipe Solitarios quickly consented to
arrangements proposed to him by a
seemingly trustworthy Gaston Jaque, and
mindlessly signed instrumental documents
that were never explained to him and he
never fully understood but nonetheless
assured him of fast cash and easy
payment terms. What the court a quo
wrote
in
this
regard
merits
concurrence:chanroblesvirtuallawlibrary
Still another fact which militates against
plaintiffs' cause is their failure to prove
during trial that they really endeavored to
explain to the defendants the real nature
of the contract they were entering into, it
appearing that the defendants are of low
education compared to them especially
plaintiff Gaston Jaque who is a retired
military officer. The law requires that in
case one of the parties to a contract is
unable to read (or maybe of low
education), and fraud is alleged, the
person enforcing the contract must show
that the term thereof have been fully
explained
to
the
former
(Spouses
NenaArriola and Francisco Adolfo, et.al.
vs. Demetrio Lolita, Pedro, Nena, Brauliq
and Dominga, all surnamed Mahilum, et.
al. G.R. No. 123490, August 9, 2000).33
The law favors the least
transmission of rights
It is further established that when doubt
exists as to the true nature of the parties'
transaction, courts must construe such
transaction purporting to be a sale as an
equitable mortgage, as the latter involves
a lesser transmission of rights and
interests
over
the
property
in
controversy.34 Thus, in several cases, the
Court has not hesitated to declare a
purported contract of sale to be an
equitable mortgage based solely on one of

the enumerated circumstances under
Article 1602. So it should be in the
present case.
In Sps. Raymundo v. Sps. Bandong,35 the
Court observed that it is contrary to
human experience that a person would
easily part with his property after
incurring a debt. Rather, he would first
look for means to settle his obligation, and
the selling of a property on which the
house that shelters him and his family
stands, would be his last resort.
Here, the Court finds the spouses
Solitarios' alleged sale of the subject
property in favor of the Jaques simply
contrary to normal human behavior. Be it
remembered that the spouses Solitarios
depended much on this property as source
of income and livelihood. Further, they
made use of it to obtain and secure badly
needed loans. This property was so
important to them that they had to borrow
money from the Jaques to raise funds to
ensure its redemption. Furthermore, even
after the supposed sale, the spouses
Solitarios remained tied to this land as
they never left it to live in another place
and continued tilling and cultivating the
same. Thus, considering how valuable this
land was to the spouses Solitarios, being
their main, if not, only source of income, it
is hard to believe that they would easily
part with it and sell the same to another.
Furthermore, it is also difficult to
understand why, after going through all
the complications in redeeming the
property from PNB, the spouses Solitarios
would simply transfer this to the Jaques.
It is inconceivable that the spouses
Solitarios would sell their property just to
pay the PNB loan. It is more believable
that, if at all, they conveyed their land on
a temporary basis only, without any
intention to transfer ownership thereto
and with the assurance that upon the
payment of their debts, the same would
be returned to them.
The only reasonable conclusion that may

13
7

be derived from the execution of the
Deeds of Sale in favor of the Jaques is to
ensure that the Solitarios will pay their
obligation.
The transfer of the subject property
is a pactum commissorium
Further, We cannot allow the transfer of
ownership of Lot 4098 to the Jaques as it
would amount to condoning the prohibited
practice of pactum comissorium. Article
2088 of the Civil Code clearly provides
that a creditor cannot appropriate or
consolidate ownership over a mortgaged
property merely upon failure of the
mortgagor to pay a debt obligation,[36
viz.:chanroblesvirtuallawlibrary
Art. 2088. The creditor cannot appropriate
the things given by way of pledge or
mortgage, or dispose of them. Any
stipulation to the contrary is null and void.
The essence of pactum commissorium is
that ownership of the security will pass to
the creditor by the mere default of the
debtor. This Court has repeatedly declared
such arrangements as contrary to morals
and public policy.37
As We have repeatedly held, the only right
of a mortgagee in case of non-payment of
debt secured by mortgage would be to
foreclose the mortgage and have the
encumbered property sold to satisfy the
outstanding
indebtedness.
The
mortgagor's default does not operate to
automatically vest on the mortgagee the
ownership of the encumbered property,
for any such effect is against public policy,
as earlier indicated.38
Applying
the
principle
of
pactum
commissorium to equitable mortgages,
the Court, in Montevirgen vs. CA,39
enunciated that the consolidation of
ownership in the person of the mortgagee
in equity, merely upon failure of the
mortgagor in equity to pay the obligation,
would amount to a pactum commissorium.
The Court further articulated that if a
mortgagee in equity desires to obtain title
to a mortgaged property, the mortgagee's
proper remedy is to cause the foreclosure

of the mortgage in equity and buy it at a
foreclosure sale.
In Sps. Cruz vs. CA,40 the Court again
reiterated that, in an equitable mortgage,
perfect title over the mortgaged property
may not be secured in a pactum
commissorium fashion, but only by
causing the foreclosure of the mortgage
and buying the same in an auction sale.
The Court held Indeed, all the circumstances, taken
together, are familiar badges of an
equitable mortgage. Private respondents
could not in a pactum commissorium
fashion appropriate the disputed property
for themselves as they appeared to have
done; otherwise, their act will not be
countenanced by this Court being contrary
to good morals and public policy hence
void. If they wish to secure a perfect title
over the mortgaged property, they should
do so in accordance with law, i.e., by
foreclosing the mortgage and buying the
property in the auction sale.
It does not appear, under the premises,
that the Jaques availed themselves of the
remedy of foreclosure, or that they bought
the subject property in an auction sale
after the spouses Solitarios failed to pay
their debt obligation. What seems clear is
that the Jaques took advantage of the
spouses
Solitarios'
intellectual
and
educational deficiency and urgent need of
money and made it appear that the latter
executed in their favor the questioned
Deeds of Sale, thereby automatically
appropriating unto themselves the subject
property upon their debtors' default.
The amount reflected in the 1981 Deed of
Sale is telling. The sum of P7,000.00
representing the alleged purchase price of
one-half of the subject property in the
1981 Deed of Sale is actually the amount
advanced to the spouses Solitarios by way
of loan. Other than the testimony of
Gaston Jaque, there is no evidence
showing that this purchase price was
actually paid or that the subject property

13
8

was bought in a foreclosure sale.
Further, it can be gleaned from the
testimony of Gaston Jaque that when the
spouses Solitarios failed to pay their loan
of P3,000.00, reflected in the July 15,
1981 REM covering the remaining half of
the subject property,41 the Jaques did not
foreclose the mortgage and purchase the
said lot in an auction sale. Rather, they
supposedly bought the lot directly from
the spouses Solitarios and offset the loan
amount against a portion of the supposed
purchase price they agreed upon.42
Indubitably, the subject property was
transferred to the Jaques in a prohibited
pactum
commisorium
manner
and,
therefore, void. Thus, the foregoing
transaction and the registration of the
deeds of sale, by virtue of which the
Jaques were able to obtain the impugned
TCT No. 745 must be declared void.43
Furthermore, given that the transaction
between the parties is an equitable
mortgage, this means that the title to the
subject property actually remained with
Felipe Solitarios, as owner-mortgagor,
conformably with the well-established
doctrine that the mortgagee does not
become the owner of the mortgaged
property because the ownership remains
with the mortgagor.44 Thus, Felipe
Solitarios' ownership over the subject
property is not affected by the fact that
the same was already registered in the
name of the Jaques. The pronouncement
in Montevirgen v. Court of Appeals is
instructive:chanroblesvirtuallawlibrary
x x x Equity looks through the form and
considers the substance, and no kind of
engagement can be allowed which will
enable the parties to escape from the
equitable doctrine adverted to. In other
words,
a
conveyance
of
land,
accompanied by registration in the name
of the transferee and the issuance of a
new certificate, is no more secured from
the operation of this equitable doctrine
than the most informal conveyance that
could be devised.
Finally, the circumstance that the original

transaction was subsequently declared to
be an equitable mortgage must mean that
the title to the subject land which had
been transferred to private respondents
actually remained or is transferred back to
petitioners herein as owners-mortgagors,
conformably
to
the
well-established
doctrine that the mortgagee does not
become the owner of the mortgaged
property because the ownership remains
with the mortgagor (Art. 2088, New Civil
Code).45
S.V. More Pharma Corporation and Alberto
A.
Santillana
Vs.
Drugmakers
Laboratories, Inc. and Eliezer Del
MundoG.R.
Nos.
200408/200416.
November 12, 2014
The primordial issue for the Courts

resolution is whether or not the CA
correctly
affirmed
petitioners
liability for breach of contract.
The Courts Ruling
The consolidated
meritorious.
petitions
are
partly
The existence of contractual breach in this

case revolves around the exclusive status
of Drugmakers as the manufacturer of the
subject pharmaceutical products which
was stipulated and, hence, recognized
under the following contracts: (a) the CMA
dated
October
30,
1992
between
Drugmakers, as manufacturer, and S.V.
More, as the holder of the CPR covering
the pharmaceutical products; (b) the
Agreement dated May 31, 1993 covering
the change in ownership in E.A. Northam,
or the distributor of the pharmaceutical
products manufactured by Drugmakers
and covered by S.V. Mores CPR; and (c)
the Deed of Sale/Assignment of even date
between E.A. Northam and S.V. More,
whereby the formers distributorship rights
were transferred to the latter.
In particular, the CMA states that
Drugmakers, being the exclusive
manufacturer of the subject
pharmaceutical products, had to first give

13
9

its written consent before S.V. More could
contract the services of another
manufacturer:chanroble
These provisions notwithstanding, records
disclose that petitioner S.V More, through
the CMPP and absent the prior written
consent of respondent Drugmakers, as
represented by its President, respondent
Eliezer, contracted the services of Hizon
Laboratories to manufacture some of the
pharmaceutical products covered by the
said contracts. Thus, since the CMPP with
Hizon Laboratories was executed on
October 23, 1993,54 or seven (7) days
prior to the expiration of the CMA on
October 30, 1993, it is clear that S.V.
More, as well as its President, petitioner
Alberto, who authorized the foregoing,
breached the obligation to recognize
Drugmakers as exclusive manufacturer,
thereby causing prejudice to the latter.
While the CA correctly affirmed the
existence of the aforementioned breach,
the Court, however, observes that the
appellate courts award of actual damages
(due to loss of profits) in the amount of
P6,000,000.00 was erroneous due to
improper factual basis.
Records reveal that in their attempt to
prove their claim for loss of profits
corresponding to the aforesaid amount,
respondents based their computation
thereof on a Sales Projection Form 55 for
the period November 1993 to February
1995.56 However, it is readily observable
that the breach occurred only for a
period of seven (7) days, or from
October 23, 1993 until October 30,
1993 that is, the date when the CMA
expired. Notably, the CMA from which
stems S.V. Mores obligation to recognize
Drugmakerss status as the exclusive
manufacturer
of
the
subject
pharmaceutical products and which was
only carried over in the other two (2)
above-discussed contracts was never
renewed by the parties, 57 nor contained
an automatic renewal clause, rendering
the breach and its concomitant effect, i.e.,
loss of profits on the part of Drugmakers,
only extant for the limited period of, as
mentioned, seven (7) days.

Aside from the lack of substantiation as
regards the length of time for which
supposed profits were lost, it is also
evident that only six (6) of the 28
pharmaceutical products58 were caused by
petitioners to be manufactured by Hizon
Laboratories.
Since the sales projection on which the CA
based its award for actual damages was
derived from figures representing the
alleged unregistered or fabricated sales
invoices of E.A. Northam from 1990 to
199359 and the desired profit of 1520%,60 it would therefore be a legal
mishap to sustain that award. As case law
holds, the amount of loss warranting the
grant of actual or compensatory damages
must be proved with a reasonable degree
of certainty, based on competent proof
and the best evidence obtainable by the
injured party.61 The CAs finding on
respondents supposed loss of profits in
the amount of P6,000,000.00 based on
the erroneous sales projection hardly
meets this requirement. Accordingly, it
must be set aside.
Rolando S. Abadilla, Jr. Vs. Sps. Bonifacio
P.
Obrero
and
Bernabela
N.
ObreroG.R. No. 199448. November 12,
2014
As holders of the disputed
land's
TCT,
the
respondents
are
entitled
to its possession.
"Ejectment
proceedings
are
summary proceedings intended to
provide an expeditious means of
protecting actual possession or
right to possession of property.
Title is not involved. The sole issue
to be resolved is who is entitled to
the physical or material possession
of the premises or possession de
factor."20 "Issues as to the right of
possession or ownership are not
involved in the action; evidence
thereon is not admissible, except
only for the purpose of determining

14
0

the issue of possession."21
Thus, where the parties to an

ejectment case raise the issue of
ownership, the courts may pass
upon that issue but only to
determine who between the parties
has the better right to possess the
property. As such, any adjudication
of the ownership issue is not final
and binding; it is only provisional,
and not a bar to an action between
the same parties involving title to
the property.22
Here, the right of possession
claimed by both parties is anchored
on ownership. The respondents
posited that they are the registered
owners of the subject land by
virtue of TCT No. T-38422 issued
on July 3, 2007. They further
asserted that their ownership
actually dates back to August 26,
1991 when the ownership over the
subject land was waived in their
favor by its previous owner, Palma
through an Affidavit of Waiver and
Quitclaim. They have occupied and
possessed it by residing thereon,
building structures for commercial
purposes and declaring it for realty
tax purposes. Meanwhile, the
petitioner contended that he and
his co-heirs are the owners of the
subject land having inherited it
from their father, Abadilla, Sr., who
in turn acquired it from the
respondents themselves through
an unregistered Deed of Absolute
Sale executed sometime in 1991.
As between the petitioner's Deed of
Absolute Sale and the respondents'
TCT No. T-38422, the latter must
prevail. A certificate of title is
evidence
of
indefeasible
and
incontrovertible
title
to
the
property in favor of the person
whose name appears therein.23
"[A] title issued under the Torrens
system is entitled to all the
attributes of property ownership,
which
necessarily
includes
possession."24 Hence, as holders of
the Torrens title over the subject
land, the respondents are entitled
to its possession.
The criminal case filed by Palma
against
respondent
Bonifacio
involving the Quitclaim through
which the respondents trace their
ownership is immaterial to the
controversy at bar. Questions on
the validity of a Torrens title are
outside
the
jurisdiction
and
competence of the trial court in
ejectment proceedings which are
limited only to the determination of
physical possession.26 This is in
consonance
with
the
settled
doctrine that questions relating to
the validity of a certificate of title
during ejectment proceedings are
deemed
and
proscribed
as
collateral attack to such title. A
Torrens certificate of title cannot
be the subject of collateral attack.
The title represented by the
certificate cannot be changed,
altered, modified, enlarged, or
diminished except in a direct
proceeding.27 Thus, issues as to
the validity of the respondents' title
can only be definitively resolved in
a direct proceeding for cancellation
of title before the RTCs.
Amada Cotoner-Zacarias Vs. Sps. Alfredo
Revilla and the Heirs of Paz Revilla
G.R. No. 190901. November 12, 2014
Well-settled is the rule that conveyances
by virtue of a forged signature. . . are void
ab initio [as] [t]he absence of the
essential [requisites] of consent and cause
or consideration in these cases rendered
the contract inexistent[.]1
I.
On the first issue, petitioner argues that
respondents Revilla spouses claim is
barred by laches since they allowed 16
years to lapse, with petitioner having
possession of the property, before filing
suit.46
Laches has been defined as the failure or

14
1

neglect,
for
an
unreasonable
and
unexplained length of time, to do that
which by the exercise of due diligence
could or should have been done
earlier.47
The elements that need to be present and
proven before an action is considered
barred by laches are the following:
The four basic elements of laches are: (1)
conduct on the part of the defendant, or
of one under whom he claims, giving rise
to the situation of which complaint is
made and for which the complaint seeks a
remedy; (2) delay in asserting the
complainant's rights, the complainant
having had knowledge or notice of the
defendants conduct and having been
afforded an opportunity to institute suit;
(3) lack of knowledge or notice on the part
of the defendant that the complainant
would assert the right on which he bases
his suit; and, (4) injury or prejudice to the
defendant in the event relief is accorded
to the complainant or the suit is not held
to be barred.48
There was no delay by respondents Revilla
spouses in asserting their rights over the
property. The lower courts found that
respondents Revilla spouses first learned
of the existence of the Kasulatan ng
Bilihan ng Lupa in February 1995 when
they were served a copy of the pleading in
the land registration case instituted by the
Sun spouses.49 They filed their complaint
within the same year, specifically, on
November 17, 1995. The lapse of only
nine (9) months from the time they
learned of the questionable transfers on
the property cannot be considered as
sleeping on their rights.
In any case, doctrines of equity such as
laches apply only in the absence of
statutory law. The Civil Code clearly
provides that [t]he action or defense for
the declaration of the inexistence of a
contract does not prescribe.50
II.
On the second issue, petitioner argues
that respondents Revilla spouses did not

pay the correct docket fees. She submits
that docket fees paid were based on the
prayer for actual damages of P50,000.00,
moral damages of P50,000.00, and
attorneys fee of P80,000.00, when the
spouses Revilla should have based it on
P12,000,000.00, the value of the property
they alleged in their supplemental pre-trial
brief.52 Petitioner cites Supreme Court
Circular No. 7 and jurisprudence holding
that the payment of proper docket fees is
crucial in vesting courts with jurisdiction
over the subject matter.53
This court finds that respondents Revilla
spouses paid the proper docket fees, thus,
the trial court acquired jurisdiction.
It is true that [i]t is not simply the filing
of the complaint or appropriate initiatory
pleading, but the payment of the
prescribed docket fee, that vests a trial
court with jurisdiction over the subject
matter or nature of the action.54
In Manchester Development Corporation
v. Court of
Appeals,55
this court
condemned the practice of counsel who
in filing the original complaint omitted
from the prayer any specification of the
amount of damages although the amount
of over ?78 million is alleged in the body
of the complaint.56 The court gave the
following warning against this unethical
practice that serves no other purpose than
to avoid paying the correct filing fees:
The Court serves warning that it will take
drastic action upon a repetition of this
unethical practice. This ruling was
circularized
through
Supreme
Court
Circular No. 758 addressed to all lower
court judges and the Integrated Bar of the
Philippines for dissemination to and
guidance for all its members.
The facts of this case differ from
Manchester
and
similar
situations
envisioned under the circular.
The
complaint filed by respondents Revilla
spouses included in its prayer the amount
of P50,000.00 as actual damages, without

14
2

mention of any other amount in the body
of the complaint. No amended complaint
was filed to increase this amount in the
prayer.
III.
The third issue involves the reinstatement
of respondents Revilla spouses in the
property and reconveyance of its tax
declaration in their favor.
Petitioner argues that antichresis is a
formal contract that must be in writing in
order to be valid.68 Respondents Revilla
spouses were not able to prove the
existence of the alleged antichresis
contract. On the other hand, the sale of
the property to petitioner was established
by the Kasulatan ng Bilihan ng Lupa and
the testimony of Rosita Castillo, the
second wife of the previous owner,
Felimon Castillo.69
We affirm the lower courts order of
reinstatement and reconveyance of the
property in favor of respondents Revilla
spouses.
Respondents Revilla spouses complaint
sought to annul the sales and transfers of
title emanating from Tax Declaration No.
7971 registered in their name involving a
15,000-square[-]meter unregistered land
. . . with prayer for reconveyance and
claims for damages.70 There was no
prayer to declare the purported contract
of
sale
as
antichresis.71
Thus,
respondents
Revilla
spouses
neither
discussed nor used the term antichresis
in their comment and memorandum
before this court. They focused on the
nature of their complaint as one for
annulment of titles on the ground of
forgery.72
Article 2132 of the Civil Code provides
that [b]y the contract of antichresis the
creditor acquires the right to receive the
fruits of an immovable of his debtor, with
the obligation to apply them to the
payment of the interest, if owing, and
thereafter to the principal of his credit.
Thus, antichresis involves an express

agreement between parties such that the
creditor will have possession of the
debtors real property given as security,
and such creditor will apply the fruits of
the property to the interest owed by the
debtor, if any, then to the principal
amount.74
The term, antichresis, has a Greek origin
with anti (against) and chresis (use)
denoting the action of giving a credit
against the use of a property.75
In the Civil Code, antichresis provisions
may be found under Title XVI, together
with other security contracts such as
pledge and mortgage.
Antichresis requires delivery of
property to the antichretic creditor,
the latter cannot ordinarily acquire
immovable property in his or
possession by prescription.82
the
but
this
her
Similar to the prohibition against pactum

commissorium83 since creditors cannot
appropriate the things given by way of
pledge or mortgage, or dispose of
them,84 an antichretic creditor also
cannot appropriate the real property in his
or her favor upon the non-payment of the
debt.85
Antichresis also requires that the amount
of the principal and the interest be in
writing for the contract to be valid.86
However, the issue before us does not
concern the nature of the relationship
between the parties, but the validity of the
documents that caused the subsequent
transfers of the property involved.
The reinstatement of the property in favor
of respondents Revilla spouses was
anchored on the lower courts finding that
their signatures as sellers in the
Kasulatan ng Bilihan ng Lupa were
forged.
This court has held that the question of
forgery is one of fact.87 Well-settled is
the rule that [f]actual findings of the

14
3

lower courts are entitled great weight and
respect on appeal, and in fact accorded
finality when supported by substantial
evidence on the record.88
The Court of Appeals agreed with the
finding of the trial court that the signature
of Alfredo Revilla in the Kasulatan ng
Bilihan ng Lupa was forged:
Petitioner contends that the lower courts
never declared as falsified the signature of
Alfredos wife, Paz Castillo-Revilla. Since
the property is conjugal in nature, the sale
as to the one-half share of Paz CastilloRevilla should not be declared as void.90
The transaction took place before the
effectivity of the Family Code in 2004.
Generally, civil laws have no retroactive
effect.91 Article 256 of the Family Code
provides that [it] shall have retroactive
effect insofar as it does not prejudice or
impair vested or acquired rights in
accordance with the Civil Code or other
laws.
Article 165 of the Civil Code states that
[t]he husband is the administrator of the
conjugal partnership. Article 172 of the
Civil Code provides that [t]he wife cannot
bind the conjugal partnership without the
husbands consent, except in cases
provided by law.92 In any case, the
Family
Code
also
provides
as
follows:XXXXX
Thus, as correctly found by the Court of
Appeals, assuming arguendo that the
signature of plaintiff-appellee Paz on the
Kasulatan ng Bilihan ng Lupa was not
forged, her signature alone would still not
bind the subject property, it being already
established that the said transaction was
made without the consent of her husband
plaintiff-appellee Alfredo.93
Lastly, petitioner argues that she has no
obligation to prove the genuineness and
due execution of the Kasulatan ng Bilihan
ng Lupa considering it is a public
document.94
The trial court found otherwise. Atty.

Diosdado
de
Mesa,
who
allegedly
notarized the Kasulatan ng Bilihan ng
Lupa, was not a commissioned notary
public.
Petitioner contends that the Sun spouses
were buyers in good faith for value, thus,
the court erred in ordering reinstatement
of the property in favor of respondents
Revilla spouses.96
This court has held that the rule in land
registration law that the issue of whether
the buyer of realty is in good or bad faith
is relevant only where the subject of the
sale is registered land and the purchase
was made from the registered owner
whose title to the land is clean[.]97 Our
laws have adopted the Torrens system to
strengthen public confidence in land
transactions:
Necessarily, those who rely in good faith
on a clean title issued under the Torrens
system for registered lands must be
protected. On the other hand, those who
purchase unregistered lands do so at their
own peril.99
This good faith argument cannot be
considered
as
this
case
involves
unregistered land.
In any case, as
explained by respondents Revilla spouses
in their memorandum, this is a defense
personal to the Sun spouses and cannot
be borrowed by petitioner.100 The Sun
spouses no longer raised this argument on
appeal, but only made a partial appeal
regarding legal interest on the award.101
Orion Savings Bank Vs. Shigekane Suzuki
G.R. No. 205487. November 12, 2014
Philippine Law governs the
transfer of real property
It is a universal principle that real or
immovable property is exclusively subject
to the laws of the country or state where
it is located.21 The reason is found in the
very nature of immovable property its
immobility. Immovables are part of the
country and so closely connected to it that
all rights over them have their natural
center
of
gravity
there.22chanRoblesvirtualLawlibrary

14
4

Thus, all matters concerning the title and
disposition of real property are determined
by what is known as the lex loci rei sitae,
which can alone prescribe the mode by
which a title can pass from one person to
another, or by which an interest therein
can be gained or lost.23 This general
principle includes all rules governing the
descent, alienation and transfer of
immovable property and the validity,
effect and construction of wills and other
conveyances.24chanRoblesvirtualLawlibrar
y
This principle even governs the capacity of
the person making a deed relating to
immovable property, no matter what its
nature may be. Thus, an instrument will
be ineffective to transfer title to land if the
person making it is incapacitated by the
lex loci rei sitae, even though under the
law of his domicile and by the law of the
place where the instrument is actually
made,
his
capacity
is
undoubted.25chanRoblesvirtualLawlibrary
On the other hand, property relations
between spouses are governed principally
by the national law of the spouses.26
However,
the
party
invoking
the
application of a foreign law has the burden
of proving the foreign law. The foreign law
is a question of fact to be properly
pleaded and proved as the judge cannot
take judicial notice of a foreign law. 27 He
is presumed to know only domestic or the
law
of
the
forum.28chanRoblesvirtualLawlibrary
To prove a foreign law, the party invoking
it must present a copy thereof and comply
with Sections 24 and 25 of Rule 132 of the
Revised
Rules
of
Court
which
reads:chanroblesvirtuallawlibrary
SEC. 24. Proof of official record. The
record of public documents referred to in
paragraph (a) of Section 19, when
admissible for any purpose, may be
evidenced by an official publication thereof
or by a copy attested by the officer having
the legal custody of the record, or by his
deputy, and accompanied, if the record is

not kept in the Philippines, with a
certificate that such officer has the
custody. If the office in which the record is
kept is in a foreign country, the certificate
may be made by a secretary of the
embassy or legation, consul general,
consul, vice consul, or consular agent or
by any officer in the foreign service of the
Philippines stationed in the foreign country
in which the record is kept, and
authenticated by the seal of his office.
(Emphasis supplied)
SEC. 25. What attestation of copy must
state. Whenever a copy of a document
or record is attested for the purpose of the
evidence, the attestation must state, in
substance, that the copy is a correct copy
of the original, or a specific part thereof,
as the case may be. The attestation must
be under the official seal of the attesting
officer, if there be any, or if he be the
clerk of a court having a seal, under the
seal of such court.
Accordingly, matters concerning the title
and disposition of real property shall be
governed by Philippine law while issues
pertaining to the conjugal nature of the
property shall be governed by South
Korean law, provided it is proven as a
fact.
In the present case, Orion, unfortunately
failed to prove the South Korean law on
the conjugal ownership of property. It
merely attached a Certification from the
Embassy of the Republic of Korea29 to
prove the existence of Korean Law. This
certification, does not qualify as sufficient
proof of the conjugal nature of the
property for there is no showing that it
was properly authenticated by the
seal of his office, as required under
Section
24
of
Rule
132.30chanRoblesvirtualLawlibrary
Accordingly,
the
International
Law
doctrine of presumed-identity approach or
processual presumption comes into play,
i.e., where a foreign law is not pleaded or,
even if pleaded, is not proven, the

14
5

presumption is that foreign law is the
same
as
Philippine
Law.31chanRoblesvirtualLawlibrary
Under Philippine Law, the phrase "Yung
Sam Kang married to' Hyun Sook Jung
is merely descriptive of the civil status of
Kang.32 In other words, the import from
the certificates of title is that Kang is the
owner of the properties as they are
registered in his name alone, and that he
is married to Hyun Sook Jung.
We are not unmindful that in numerous
cases we have held that registration of the
property in the name of only one spouse
does not negate the possibility of it being
conjugal or community property.33 In
those cases, however, there was proof
that the properties, though registered in
the name of only one spouse, were indeed
either conjugal or community properties.34
Accordingly, we see no reason to declare
as invalid Kangs conveyance in favor of
Suzuki for the supposed lack of spousal
consent.
The petitioner failed to adduce
sufficient
evidence to prove the due execution
of the
Dacion en Pago
Article 1544 of the New Civil Code of the
Philippines
provides
that:chanroblesvirtuallawlibrary
there is good faith.

The application of Article 1544 of the New
Civil Code presupposes the existence of
two or more duly executed contracts
of sale. In the present case, the Deed of
Sale dated August 26, 200335 between
Suzuki and Kang was admitted by Orion36
and was properly identified by Suzukis
witness
Ms.
Mary
Jane
Samin
(Samin).37chanRoblesvirtualLawlibrary
It is not disputed, too, that the Deed of
Sale dated August 26, 2003 was
consummated. In a contract of sale, the
seller obligates himself to transfer the
ownership of the determinate thing sold,
and to deliver the same to the buyer, who
obligates himself to pay a price certain to
the seller.38
The execution of the
notarized deed of sale and the actual
transfer of possession amounted to
delivery that produced the legal effect of
transferring
ownership
to
Suzuki.39chanRoblesvirtualLawlibrary
On the other hand, although Orion claims
priority in right under the principle of prius
tempore, potior jure (i.e., first in time,
stronger in right), it failed to prove the
existence and due execution of the Dacion
en Pago in its favor.
Should it be immovable property, the

ownership shall belong to the person
acquiring it who in good faith first
recorded it in the Registry of Property.
At the outset, Orion offered the Dacion en

Pago as Exhibit 5 with submarkings 5a to 5-c to prove the existence of the
February 6, 2003 transaction in its Formal
Offer dated July 20, 2008. Orion likewise
offered
in
evidence
the
supposed
promissory note dated September 4, 2002
as Exhibit 12 to prove the existence of
the additional P800,000.00 loan. The RTC,
however, denied the admission of Exhibits
5 and 12, among others, in its order
dated August 19, 2008 since the same
[were] not identified in court by any
witness.40chanRoblesvirtualLawlibrary
Should there be no inscription, the

ownership shall pertain to the person who
in good faith was first in the possession;
and, in the absence thereof, to the person
who presents the oldest title, provided
Despite the exclusion of its most critical

documentary evidence, Orion failed to
make a tender of excluded evidence, as
provided under Section 40, Rule 132 of
the Rules of Court. For this reason
ART. 1544. If the same thing should have

been sold to different vendees, the
ownership shall be transferred to the
person who may have first taken
possession thereof in good faith, if it
should be movable property.

14
6

alone, we are prevented from seriously
considering
Exhibit
5
and
its
submarkings and Exhibit 12 in the
present petition.
Moreover, even if we consider

Exhibit 5 and its submarkings
and Exhibit 12 in the present
petition,
the
copious
inconsistencies and contradictions
in the testimonial and documentary
evidence of Orion, militate against
the conclusion that the Dacion en
Pago was duly executed.
First, there appears to be no d
ue and demandable obligation
when the Dacion en Pago was
executed,
contrary
to
the
allegations
of
Orion.
Orions
witness Perez tried to impress upon
the RTC that Kang was in default in
his P1,800,000.00 loan.
A reading of the supposed promissory
note, however, shows that there was no
default to speak of when the
supposed
Dacion
en
Pago
was
executed.
Based on the promissory note, Kangs loan
obligation would mature only on August
27, 2003. Neither can Orion claim that
Kang had been in default in his installment
payments because the wordings of the
promissory note provide that [t]he
principal of this loan and its interest
and other charges shall be paid by
me/us in accordance hereunder:
SINGLE PAYMENT LOANS.42 There
was thus no due and demandable loan
obligation when the alleged Dacion en
Pago was executed.
Second, Perez, the supposed

person who prepared the Dacion en
Pago, appears to only have a
vague idea of the transaction he
supposedly prepared.
Third, the Dacion en Pago, mentioned
that the P1,800,000.00 loan was secured
by a real estate mortgage. However, no
document was ever presented to prove
this real estate mortgage aside from it
being mentioned in the Dacion en Pago
itself.
Fourth, the Dacion en Pago was
first mentioned only two (2)
months after Suzuki and Samin
demanded the delivery of the titles
sometime in August 2003, and
after Suzuki caused the annotation
of
his
affidavit
of
adverse
claim. Records show that it was
only on October 9, 2003, when
Orion, through its counsel,
Cristobal
Balbin
Mapile
&
Associates first spoke of the
Dacion en Pago.45 Not even
Perez mentioned any Dacion en
Pago on October 1, 2003, when he
personally
received
a
letter
demanding the delivery of the
titles. Instead, Perez refused to
accept the letter and opted to first
consult
with
his
lawyer.46chanRoblesvirtualLawlibrar
y
Fifth,
it
is
undisputed
that
notwithstanding the supposed execution
of the Dacion en Pago on February 2,
2003, Kang remained in possession of the
condominium unit. In fact, nothing in the
records shows that Orion even bothered to
take possession of the property even six
(6) months after the supposed date of
execution of the Dacion en Pago. Kang
was even able to transfer possession of
the condominium unit to Suzuki, who then
made immediate improvements thereon.
If Orion really purchased the condominium
unit on February 2, 2003 and claimed to
be its true owner, why did it not assert its
ownership immediately after the alleged
sale took place? Why did it have to assert
its ownership only after Suzuki demanded
the delivery of the titles? These gaps
have remained unanswered and unfilled.
In Suntay v. CA,48 we held that the most
prominent index of simulation is the
complete absence of an attempt on the
part of the vendee to assert his rights of
ownership over the property in question.
After the sale, the vendee should have
entered the land and occupied the
premises. The absence of any attempt
on the part of Orion to assert its right

14
7

of
dominion
over
the
property
allegedly sold to it is a clear badge of
fraud.
That
notwithstanding
the
execution of the Dacion en Pago,
Kang remained in possession of the
disputed condominium unit from the
time of the execution of the Dacion en
Pago until the propertys subsequent
transfer to Suzuki unmistakably
strengthens the fictitious nature of
the Dacion en Pago.
These circumstances, aside from

the glaring inconsistencies in the
documents
and
testimony
of
Orions witness, indubitably prove
the spurious nature of the Dacion
en Pago.
The fact that the
Dacion en Pago is
a
notarized
document
does
not support the
conclusion
that
the
sale
it
embodies is a true
conveyance
Public instruments are evidence of the
facts that gave rise to their execution and
are to be considered as containing all the
terms of the agreement.49
While a
notarized
document
enjoys
this
presumption, the fact that a deed is
notarized is not a guarantee of the validity
of its contents.50 The presumption of
regularity of notarized documents is not
absolute and may be rebutted by clear
and
convincing
evidence
to
the
contrary.51chanRoblesvirtualLawlibrary
In the present case, the presumption
cannot apply because the regularity in the
execution of the Dacion en Pago and the
loan documents was challenged in the
proceedings below where their prima facie
validity was overthrown by the highly
questionable circumstances surrounding
their
execution.52chanRoblesvirtualLawlibrary
Owen Prosper A. Mackay Vs. Spouses
Dana Caswell and Cerelina Caswell
G.R. No. 183872. November 17, 2014

The CA correctly ruled that
Caswells
effort to communicate with Owen
effectively
served as a demand to rectify the
latters work.
Under Article 1715 of the Civil

Code, if the work of a contractor
has defects which destroy or lessen
its value or fitness for its ordinary
or stipulated use, he may be
required to remove the defect or
execute another work. If he fails to
do so, he shall be liable for the
expenses by the employer for the
correction of the work. The
demand required of the employer
under the subject provision need
not be in a particular form. In the
case at bar, we agree with the CA
that
Owen
was
given
the
opportunity to rectify his work.
Subsequent
to
Zameco
IIs
disapproval to supply the Caswells
electricity for several reasons, the
Court gives credence to the latters
claim that they looked for Owen to
demand a rectification of the work,
but Owen and his group were
nowhere to be found. Had Owen
really been readily available to the
Caswells to correct any deficiency
in the work, the latter would not
have entertained the thought that
they were deceived and would not
have been constrained to undergo
the rigors of filing a criminal
complaint and testifying therein.
Without
doubt,
the
Caswells
exercised due diligence when they
demanded from Owen the proper
rectification of his work. As
correctly held by the CA, the
Caswells substantially complied
with the requirement of Article
1715
of
the
Civil
Code,
To Our mind, however, the effort to

communicate
with
[Owen]
effectively
served
as
[the

14
8

Caswells] request for the former to
rectify the flaws in the contracted
work. In fact, [the Caswells] act of
demanding that [Owen] secure the
permit
and
to
subject
the
transformer to testing can already
be construed as a substantial
compliance with Article 1715. It
must be emphasized that it was
[Owens] refusal to secure the
necessary permits and to comply
with the requirements of Zameco
[II] as well as his refusal to
communicate with [the Caswells]
that impelled the latter to file a
case for estafa against him. Had he
been willing to make good his
obligation, then it would not have
been necessary for [the Caswells]
to file the said criminal case.
Instead of complying with his end
of the bargain, [Owen] opted to file
a case for collection of sum of
money with damages. Thus, any
effort to require [Owen] either to
rectify his flawed work or to
remove the same would have been
futile since [Owens] act of
demanding payment through the
said complaint showed his belief
that his work in the house was
done.36
Furthermore,
to
require
the
Caswells to file an action for
specific performance, as opined by
the RTC, not only deprives them of
hiring someone else to rectify the
work, but also defeats the very
purpose of the contracted work,
i.e., to immediately have electricity
in their home. In this situation,
time is of the essence.
Bank of the Philippine Islands Vs. Vicente
Victor C. Sanchez, et al./Generoso
Tulagan, et al. Vs. Vicente Victor C.
Sanchez, et al./Reynaldo V. Maniwang
Vs. Vicente C. Sanchez and Felisa
Garcia Yap G.R. No. 179518/G.R. No.
179835/G.R. No. 179954. November 19,
2014
relevantly states:
Article 453. If there was bad faith,

not only on the part of the person
who built, planted or sowed on the
land of another, but also on the
part of the owner of such land, the
rights of one and the other shall be
the same as though both had acted
in good faith.
It is understood that there is
bad faith on the part of the
landowner whenever the act
was done with his knowledge
and without opposition on his
part. (emphasis supplied)
The second paragraph of the
provision clearly reads that a
landowner is considered in bad
faith if he does not oppose the
unauthorized construction thereon
despite knowledge of the same. It
does not, however, state what
form such opposition should take.
The fact of the matter is that the
Sanchezes did take action to
oppose the construction on their
property by writing the HLURB and
the City Building Official of Quezon
City. As a result, the HLURB issued
two (2) Cease and Desist Orders
and several directives against
Garcia/TSEI which, however, were
left unheeded.
In addition, the Sanchezes could
not be faulted for not having been
able to enjoin the sale of the
townhouses by Garcia and TSEI to
the intervenors Sps. Caminas,
Maniwang, Tulagan, and Marquez
who bought their townhouse units
during the same period that the
Sanchezes were demanding the full
payment of the subject lot and
were exercising their right of
extrajudicial rescission of the
Agreement. As the intervenors
asserted
having
bought
the
townhouse units in early 1989, it
can be seen that the pre-selling
was done almost immediately after

14
9

the Sanchezes and Garcia/TSEI
agreed on the terms of the sale of
the subject lot, or shortly after
Garcia and TSEI had taken over
the property and demolished the
old house built thereon. In either
case,
the
pre-selling
already
commenced and was continuing
when the two postdated checks
amounting
to
the
remaining
balance of P800,000 bounced. And
when the Sanchezes informed
Garcia and TSEI that they were
rescinding the Agreement in early
1989, the intervenors apparently
were already in the process of
closing their deals with TSEI for the
purchase of townhouse units.
As to the transactions between

FEBTC and Garcia/TSEI and that
between VTCI and Garcia/TSEI, it
is suffice to state that the
Sanchezes, despite the actions
they undertook, were not aware of
the said dealings.
The effects of attributing bad
faith to the intervenors, BPI, TSEI,
and Garcia
Rescission of the Agreement was not
barred by the subsequent transfer
Article 1191 of the Civil Code states that
rescission is available to a party in a
reciprocal obligation where one party fails
to comply therewith:
Article 1191. The power to rescind
obligations is implied in reciprocal
ones, in case one of the obligors
should not comply with what is
incumbent upon him.
The injured party may choose between
the fulfillment and the rescission of the
obligation, with the payment of damages
in either case. He may also seek
rescission, even after he has chosen
fulfillment, if the latter should become
impossible.
The court shall decree the rescission
claimed, unless there be just cause
authorizing the fixing of a period.

This is understood to be without prejudice
to the rights of third persons who have
acquired the thing, in accordance with
Articles 1385 and 1388 and the Mortgage
Law. (emphasis supplied)
Article 1385 of the Civil Code does provide
that rescission shall not take place if the
subject matter of the prior agreement is
already in the hands of a third party who
did not act in bad faith, to wit:
Article 1385. Rescission creates the
obligation to return the things which were
the object of the contract, together with
their fruits, and the price with its interest;
consequently, it can be carried out only
when he who demands rescission can
return whatever he may be obliged to
restore.
Neither shall rescission take place
when the things which are the object
of the contract are legally in the
possession of third persons who did
not act in bad faith.
In this case, indemnity for damages may
be demanded from the person causing the
loss. (emphasis added)
In the extant case, the failure of TSEI to
pay the consideration for the sale of the
subject property entitled the Sanchezes to
rescind the Agreement. And in view of the
finding that the intervenors acted in bad
faith in purchasing the property, the
subsequent transfer in their favor did not
and cannot bar rescission.
The Sanchezes are to elect their option
under the Arts. 449-450 of the
New Civil Code
Moreover, bad faith on the part of TSEI,
Garcia and the intervenors leads to the
application of Articles 449-450 of the New
Civil Code, which provide:
Article 449. He who builds, plants or sows
in bad faith on the land of another, loses
what is built, planted or sown without

15
0

right to indemnity.
Article 450. The owner of the land on
which anything has been built, planted or
sown in bad faith may demand the
demolition of the work, or that the
planting or sowing be removed, in order to
replace things in their former condition at
the expense of the person who built,
planted or sowed; or he may compel the
builder or planter to pay the price of the
land, and the sower the proper rent.
Consequently, the Sanchezes have the
following options: (1) acquire the property
with the townhouses and other buildings
and improvements that may be thereon
without
indemnifying
TSEI
or
the
intervenors;63 (2) demand from TSEI or
the intervenors to demolish what has been
built on the property at the expense of
TSEI or the intervenors; or (3) ask the
intervenors to pay the price of the
land.64 As such, the Sanchezes must
choose from among these options within
thirty (30) days from finality of this
Decision. Should the Sanchezes opt to ask
from the intervenors the value of the land,
the case shall be remanded to the RTC for
the sole purpose of determining the fair
market value of the lot at the time the
same were taken from the Sanchezes in
1988.
If the Sanchezes decide to appropriate the
townhouses,
other
structures
and
improvements as their own pursuant to
Article 449 of the Civil Code, then the
intervenors-purchasers
Caminas,
Maniwang, Tulagan, Marquez and VCTI
shall be ordered to vacate said premises
within a reasonable time from notice of
the finality of the decision by the
Sanchezes. They have a right to recover
their investment in the townhouses from
Garcia and TSEI. If the Sanchezes do not
want to make use of the townhouses and
improvements on the subject lot, then the
purchasers can be ordered to demolish
said townhouses or if they dont demolish
the same within a reasonable time, then it
can be demolished at their expense. On
the 3rd option, if the Sanchezes do not
want to appropriate the townhouses or

have the same demolished, then they can
ask that the townhouse purchasers pay to
them the fair market value of the
respective
areas
allotted
to
their
respective townhouses subject of their
deeds of sale.
The suit is not a collateral attack on
TSEIs title
Finally, BPI argues that the CA erred in
ordering the cancellation of TCT 383697
considering that Section 48 of Presidential
Decree No. 1529, or the Property
Registration Decree, states that a Torrens
certificate of title cannot be cancelled
except in a direct attack thereon. The
provision reads:
Section 48. Certificate not subject to
collateral attack. A certificate of title shall
not be subject to collateral attack. It
cannot be altered, modified, or canceled
except
in
a
direct
proceeding
in
accordance with law.
In Sarmiento v. Court of Appeals,65 the
Court differentiated a direct and a
collateral
attack
in
this
wise:chanroblesvirtuallawlibrary
An action is deemed an attack on a title
when the object of the action or
proceeding is to nullify the title, and thus
challenge the judgment pursuant to which
the title was decreed. The attack is direct
when the object of the action is to annul
or set aside such judgment, or enjoin its
enforcement. On the other hand, the
attack is indirect or collateral when, in an
action to obtain a different relief, an
attack on the judgment is nevertheless
made as an incident thereof.
In the instant case, contrary to the
contention of BPI, although the case was
originally an action for rescission, it
became a direct attack on TCT 383697. To
be sure, there is no indication that when
the Sanchezes filed their complaint with
the RTC they already knew of the
existence of TCT 383697. However, when
they were confronted with the title
through the filing of the various Answers
of the intervenors, the Sanchezes directly

15
1

stated that the title was a fake. Thus, in
their Answer with Counterclaims to
Complaint in Intervention filed by Varied
Traders Concept, Inc. dated April 2, 1991,
paragraph 2.1. thereof states:
2.1. Like the rest of the intervenors
herein, VTCI is claiming rights under a
forged deed and a fake or absolutely void
title. There was never any Deed of
Absolute Sale between plaintiffs and
defendants. Much less was there any valid
land title issued to defendants. Whatever
deeds defendants may have shown VTCI
are definitely fakes or foregeries, hence,
null and void. Thus, no rights to plaintiffs
property ever passed to VTCI.66
An identical paragraph is also contained in

the Sanchezes Answer with Counterclaims
to Intervention filed by Far East Bank and
Trust Company and Supplement to
Complaint
dated
January
11,
1993.67 Thus, the complaint filed by the
Sanchezes later became a direct attack
against TCT 383697 and the CA correctly
ordered the cancellation thereof.
Juan P. Cabrera Vs. Henry YsaacG.R. No.
166790. November 19, 2014
Unless all the co-owners have agreed to
partition their property, none of them may
sell a definite portion of the land. The
co-owner may only sell his or her
proportionate interest in the coownership. A contract of sale which
purports to sell a specific or definite
portion of unpartitioned land is null and
void ab initio.
There was no valid contract of sale
between petitioner and respondent
We find that there was no contract of sale.
It was null ab initio.
As defined by the Civil Code, "[a] contract
is a meeting of minds between two
persons whereby one binds himself, with
respect to the other, to give something or
to render some service."75 For there to be
a valid contract, there must be consent of
the contracting parties, an object certain
which is the subject matter of the
contract, and cause of the obligation
which
is
established.76chanRoblesvirtualLawlibrary
Sale is a special contract. The seller
obligates himself to deliver a determinate
thing and to transfer its ownership to the
buyer. In turn, the buyer pays for a price
certain in money or its equivalent.77 A
"contract of sale is perfected at the
moment there is a -meeting of minds
upon the thing which is the object of the
contract and upon the price.'"78 The seller
and buyer must agree as to the certain
thing that will be subject of the sale as
well as the price in which the thing will be
sold. The thing to be sold is the object of
the contract, while the price is the cause
or consideration.
The object of a valid sales contract must
be owned by the seller. If the seller is not
the owner, the seller must be authorized
by
the
owner
to
sell
the
object.79chanRoblesvirtualLawlibrary
Specific rules attach when the seller coowns the object of the contract. Sale of a
portion of the property is considered an
alteration of the thing owned in common.
Under the Civil Code, such disposition
requires the unanimous consent of the
other co-owners.80 However, the rules also
allow a co-owner to alienate his or her
part in the co-ownership. These two rules
are
reconciled
through
jurisprudence.81chanRoblesvirtualLawlibrar
y
If the alienation precedes the partition,
the co-owner cannot sell a definite portion
of the land without consent from his or
her co-owners. He or she could only sell
the undivided interest of the co-owned
property.82 As summarized in Lopez v.
Ilustre,83 "[i]f he is the owner of an
undivided half of a tract of land, he has a
right to sell and convey an undivided half,
but he has no right to divide the lot into
two parts, and convey the whole of one
part
by
metes
and
bounds."84chanRoblesvirtualLawlibrary
The undivided interest of a co-owner is
also referred to as the "ideal or abstract

15
2

quota" or "proportionate share." On the
other hand, the definite portion of the land
refers to specific metes and bounds of a
co-owned property.
To illustrate, if a ten-hectare property is
owned equally by ten co-owners, the
undivided interest of a co-owner is one
hectare. The definite portion of that
interest is usually determined during
judicial or extrajudicial partition. After
partition, a definite portion of the property
held in common is allocated to a specific
co-owner. The co-ownership is dissolved
and, in effect, each of the former coowners is free to exercise autonomously
the rights attached to his or her ownership
over the definite portion of the land.
It is crucial that the co-owners agree to
which portion of the land goes to whom.
Hence, prior to partition, a sale of a
definite portion of common property
requires the consent of all co-owners
because it operates to partition the land
with respect to the co-owner selling his or
her share. The co-owner or seller is
already marking which portion should
redound to his or her autonomous
ownership upon future partition.
The object of the sales contract between
petitioner and respondent was a definite
portion of a co-owned parcel of land. At
the time of the alleged sale between
petitioner and respondent, the entire
property was still held in common. This is
evidenced by the original certificate of
title, which was under the names of
Matilde Ysaac, Priscilla Ysaac, Walter
Ysaac, respondent Henry Ysaac, Elizabeth
Ysaac, Norma Ysaac, Luis Ysaac, Jr.,
George Ysaac, Franklin Ysaac, Marison
Ysaac, Helen Ysaac, Erlinda Ysaac, and
Maridel
Ysaac.85chanRoblesvirtualLawlibrary
The rules allow respondent to sell his
undivided interest in the co-ownership.
However, this was not the object of the
sale between him and petitioner. The
object of the sale was a definite portion.
Even if it was respondent who was

benefiting from the fruits of the lease
contract to petitioner, respondent has "no
right to sell or alienate a concrete, specific
or determinate part of the thing owned in
common, because his right over the thing
is represented by quota or ideal portion
without
any
physical
adjudication."86chanRoblesvirtualLawlibrar
y
There was no showing that respondent
was authorized by his co-owners to sell
the portion of land occupied by Juan
Cabrera, the Espiritu family, or the Borbe
family. Without the consent of his coowners, respondent could not sell a
definite portion of the co-owned property.
Respondent had no right to define a 95square-meter parcel of land, a 439square-meter parcel of land, or a 321square-meter parcel of land for purposes
of selling to petitioner. The determination
of those metes and bounds are not
binding to the co-ownership and, hence,
cannot be subject to sale, unless
consented to by all the co-owners.
At best, the agreement between petitioner
and respondent is a contract to sell, not a
contract of sale. A contract to sell is a
promise to sell an object, subject to
suspensive conditions.89 Without the
fulfillment of these suspensive conditions,
the sale does not operate to determine
the obligation of the seller to deliver the
object.
A co-owner could enter into a contract to
sell a definite portion of the property.
However, such contract is still subject to
the suspensive condition of the partition of
the property, and that the other coowners agree that the part subject of the
contract to sell vests in favor of the coowner's buyer. Hence, the co-owners'
consent is an important factor for the sale
to ripen.
A non-existent contract cannot be a
source of obligations, and it cannot be
enforced by the courts
The absence of a contract of sale means

15
3

that there is no source of obligations for
respondent, as seller, or petitioner, as
buyer. Rescission is impossible because
there is no contract to rescind. The rule in
Article 1592 that requires a judicial or
notarial act to formalize rescission of a
contract of sale of an immovable property
does not apply. This court does not need
to rule whether a letter is a valid method
of rescinding a sales contract over an
immovable property because the question
is moot and academic.
Even if we assume that respondent had
full ownership of the property and that he
agreed to sell a portion of the property to
petitioner, the letter was enough to cancel
the contract to sell.
Generally, "[t]he power to rescind
obligations is implied in reciprocal ones, in
case one of the obligors should not comply
with
what
is
incumbent
on
him."95chanRoblesvirtualLawlibrary
For the sale of immovable property, the
following
provision
governs
its
rescission:chanroblesvirtuallawlibrary
Article 1592. In the sale of immovable
property, even though it may have been
stipulated that upon failure to pay the
price at the time agreed upon the
rescission of the contract shall of right
take place, the vendee may pay, even
after the expiration of the period, as long
as no demand for rescission of the
contract has been made upon him either
judicially or by notarial act. After the
demand, the court may not grant him a
new term.
This provision contemplates (1) a contract
of sale of an immovable property and (2)
a stipulation in the contract that failure to
pay the price at the time agreed upon will
cause the rescission of the contract. The
vendee or the buyer can still pay even
after the time agreed upon, if the
agreement between the parties has these
requisites. This right of the vendee to pay
ceases when the vendor or the seller
demands the rescission of the contract
judicially or extrajudicially. In case of an

extrajudicial demand to rescind the
contract, it should be notarized.
Hence, this provision does not apply if it is
not a contract of sale of an immovable
property and merely a contract to sell an
immovable property. A contract to sell is
"where the ownership or title is retained
by the seller and is not to pass until the
full payment of the price, such payment
being a positive suspensive condition and
failure of which is not a breach, casual or
serious,
but simply an event that
prevented the obligation of the vendor to
convey title from acquiring binding force."9
Davao
Holiday
Transport
Services
Corporation Vs. Spouses Eulogio and
Carmelita Emphasis G.R. No. 211424.
November 26, 2014
Article 2180 of the New Civil Code
provides that an obligation for
damages is demandable not only
for ones own acts or omissions,
but also for those of persons for
whom
he
is
responsible.
Employers, in particular, shall be
liable for the damages caused by
their employees acting within the
scope of their assigned tasks. The
responsibility of employers shall
only cease upon proof that they
observed all the diligence of the
good father of a family to prevent
damage.
The CA correctly held that the

petitioner,
being
Tungals
employer, was presumed liable to
the heirs of Christian after a finding
that it was Tungal who should be
faulted for the accident that caused
the death of the child. In Cang v.
Cullen,6 the Court emphasized that
when an employee causes damage
due to his own negligence while
performing his own duties, there
arises
the
juris
tantum
presumption that his employer is
negligent, rebuttable only by proof
of observance of the diligence of a
good father of a family. In the
selection of prospective employees,

15
4

employers are required to examine
them as to their qualifications,
experience and service records.
With respect to the supervision of
employees,
employers
must
formulate
standard
operating
procedures,
monitor
their
implementation
and
impose
disciplinary measures for breaches
thereof. These facts must be shown
by
concrete
proof,
including
documentary evidence.7
The petitioner failed in this aspect.

There then appears no cogent
reason for the Court to depart from
the RTCs and CAs observation
that the petitioner failed to
establish the modes and measures
it adopted to ensure the proper
selection
and
supervision
of
Tungal. This makes proper the
order upon the petitioner to
compensate the spouses Emphasis
for damages.
Remman Enterprises, Inc. Vs. Republic of
the Philippines G.R. No. 188494.
November 26, 2014
The burden of proof in overcoming
the
presumption
of
State
ownership of the lands of the public
domain is on the person applying
for registration, who must prove
that the properties subject of the
application
are
alienable
and
disposable.21 Even the notations on
the survey plans submitted by the
petitioner cannot be admitted as
evidence of the subject properties'
alienability and disposability. Such
notations
do
not
constitute
incontrovertible
evidence
to
overcome the presumption that the
subject properties remain part of
the
inalienable
public
domain.22chanroblesvirtuallawlibrar
y
Given the foregoing, the dismissal

of the petitioner's application for
registration was proper. Under
pertinent laws and jurisprudence,
the petitioner had to sufficiently
establish that: first, the subject

properties form part of the
disposable and alienable lands of
the public domain; second, the
applicant and his predecessors-ininterest have been in open,
continuous,
exclusive,
and
notorious
possession
and
occupation of the same; and third,
the possession is under a bona fide
claim of ownership since June 12,
1945
or
earlier.23chanroblesvirtuallawlibrary
Without sufficient proof that the

subject
properties
had
been
declared alienable and disposable,
the Court finds no reason to look
further into the petitioner's claim
that the CA erred in finding that it
failed to satisfy the nature and
length of possession that could
qualify for land registration.
Hermano Oil Manufacturing and Sugar
Corporation Vs. Toll Regulatory Board,
et al. G.R. No. 167290. November 26,
2014
The issue to be determined
concerns the demand of the
petitioner to have access to the
North Luzon Expressway (NLEX) by
way of an easement of right of
way. The demand was rebuffed by
the respondents, and upheld by
both the trial and appellate courts.
In our view, the TRB, Dumlao and the

DPWH correctly invoked the doctrine of
sovereign immunity in their favor. The
TRB and the DPWH performed purely or
essentially
government
or
public
functions. As such, they were invested
with the inherent power of sovereignty.
Being unincorporated agencies or entities
of the National Government, they could
not be sued as such. On his part, Dumlao
was acting as the agent of the TRB in
respect of the matter concerned.
In Air Transportation Office v. Ramos,16
we expounded on the doctrine of
sovereign immunity in the following
manner:chanroblesvirtuallawlibrary

15
5

An unincorporated government agency
without any separate juridical personality
of its own enjoys immunity from suit
because it is invested with an inherent
power of sovereignty. Accordingly, a claim
for damages against the agency cannot
prosper; otherwise, the doctrine of
sovereign immunity is violated. However,
the need to distinguish between an
unincorporated
government
agency
performing governmental function and one
performing proprietary functions has
arisen. The immunity has been upheld in
favor of the former because its function is
governmental or incidental to such
function; it has not been upheld in favor
of the latter whose function was not in
pursuit of a necessary function of
government
but
was
essentially
a
business.
Nonetheless,
the
petitioner
properly
argued that the PNCC, being a private
business entity, was not immune from
suit. The PNCC was incorporated in 1966
under its original name of Construction
Development
Corporation
of
the
Philippines (CDCP) for a term of fifty years
pursuant to the Corporation Code.17 In
1983, the CDCP changed its corporate
name to the PNCC to reflect the extent of
the Governments equity investment in
the company, a situation that came about
after the government financial institutions
converted their loans into equity following
the CDCPs inability to pay the loans.18
Hence, the Government owned 90.3% of
the equity of the PNCC, and only 9.70% of
the PNCCs voting equity remained under
private ownership.19 Although the majority
or controlling shares of the PNCC belonged
to the Government, the PNCC was
essentially a private corporation due to its
having been created in accordance with
the Corporation Code, the general
corporation statute.20 More specifically,
the PNCC was an acquired asset
corporation under Administrative Order
No. 59, and was subject to the regulation
and jurisdiction of the Securities and
Exchange Commission.21 Consequently,
the doctrine of sovereign immunity had no
application to the PNCC.
Frustrated homicide requires intent to kill
on the part of the offender. Without proof

of such intent, the felony may only be
serious physical injuries. Intent to kill may
be established through the overt and
external acts and conduct of the offender
before, during and after the assault, or by
the nature, location and number of the
wounds inflicted on the victim.
Vicente Torres, Jr., Carlos Velez and The
Heirs of Mariano Velez, namely Anita
Chiong Velez, Robert Oscar Chiong
Velez, et al. Vs. Lorenzo Lapinid and
Jesus VelezG.R. No. 187987. November
26, 2014
Admittedly, Jesus sold an area of
land to Lapinid on 9 November
1997. To simplify, the question
now is whether Jesus, as a coowner, can validly sell a portion of
the property he co-owns in favor of
another person. We answer in the
affirmative.
A co-owner has an absolute ownership of

his undivided and pro-indiviso share in the
co-owned property.17 He has the right to
alienate, assign and mortgage it, even to
the extent of substituting a third person in
its enjoyment provided that no personal
rights will be affected. This is evident from
the
provision
of
the
Civil
Code:chanroblesvirtuallawlibrary
Art. 493. Each co-owner shall have the full
ownership of his part and of the fruits and
benefits pertaining thereto, and he may
therefore alienate, assign or mortgage it,
and even substitute another person in its
enjoyment, except when personal rights
are involved. But the effect of the
alienation or the mortgage, with respect
to the co-owners, shall be limited to the
portion which may be allotted to him in
the division upon the termination of the
co-ownership.
A co-owner is an owner of the whole and
over the whole he exercises the right of
dominion, but he is at the same time the
owner of a portion which is truly
abstract.18 Hence, his co-owners have no
right to enjoin a co-owner who intends to
alienate or substitute his abstract portion
or substitute a third person in its

15
6

enjoyment.19
In this case, Jesus can validly alienate his

co-owned property in favor of Lapinid, free
from any opposition from the co-owners.
Lapinid, as a transferee, validly obtained
the same rights of Jesus from the date of
the execution of a valid sale. Absent any
proof that the sale was not perfected, the
validity of sale subsists. In essence,
Lapinid steps into the shoes of Jesus as
co-owner of an ideal and proportionate
share in the property held in common.20
Thus, from the perfection of contract on 9
November
1997,
Lapinid
eventually
became a co-owner of the property.
Even assuming that the petitioners are
correct in their allegation that the
disposition in favor of Lapinid before
partition was a concrete or definite
portion, the validity of sale still prevails.
In a catena of decisions,21 the Supreme
Court had repeatedly held that no
individual can claim title to a definite or
concrete portion before partition of coowned property. Each co-owner only
possesses a right to sell or alienate his
ideal share after partition. However, in
case he disposes his share before
partition, such disposition does not make
the sale or alienation null and void. What
will be affected on the sale is only his
proportionate share, subject to the results
of the partition. The co-owners who did
not give their consent to the sale stand to
be unaffected by the alienation.22
Sps. Tagumpay N. Albos and Aida C. Albos
Vs. Sps. Nestor M. Embisan, et al.G.R.
No. 210831. November 26, 2014
The compounding of interest
should be in writing
For academic purposes, We first

determine whether or not the
stipulation
compounding
the
interest charged should specifically
be
indicated
in
a
written
agreement.
We rule in the affirmative.
Article 1956 of the New Civil Code,

which refers to monetary interest,
provides:
Article 1956. No interest shall be
due unless it has been expressly
stipulated in writing.
As mandated by the foregoing
provision, payment of monetary
interest shall be due only if: (1)
there was an express stipulation
for the payment of interest; and
(2) the agreement for such
payment was reduced in writing.
Thus, We have held that collection
of interest without any stipulation
thereof in writing is prohibited by
law.13chanrobleslaw
In the case at bar, it is undisputed
that the parties have agreed for
the loan to earn 5% monthly
interest,the stipulation to that
effect put in writing. When the
petitioners defaulted, the period for
payment was extended, carrying
over the terms of the original loan
agreement, including the 5%
simple interest. However, by the
third extension of the loan,
respondent spouses decided to
alter the agreement by changing
the manner of earning interest
rate, compounding it beginning
June 1986. This is apparent from
the Statement of Account prepared
by
the
spouses
Embisan
themselves.
Given the circumstances, We rule
that the first requirementthat
there be an express stipulation for
the payment of interestis not
sufficiently complied with, for
purposes of imposing compounded
interest
on
the
loan.
The
requirement does not only entail
reducing in writing the interest rate
to be earned but also the manner
of earning the same, if it is to be
compounded. Failure to specify the
manner
of
earning
interest,
however, shall not automatically
render the stipulation imposing the

15
7

interest rate void since it is readily
apparent from the contract itself
that the parties herein agreed for
the loan to bear interest. Instead,
in default of any stipulation on the
manner of earning interest, simple
interest shall accrue.
Imposing
5%
monthly
interest,
whether compounded or simple, is
unconscionable
Nevertheless, even if there was such an
agreement
that
interest
will
be
compounded,
We
agree
with
the
petitioners that the 5% monthly rate, be it
simple or compounded, written or verbal,
is void for being too exorbitant, thus
running afoul of Article 1306 of the New
Civil Code, which provides:
Article 1306. The contracting parties
may establish such stipulations, clauses,
terms and conditions as they may deem
convenient, provided they are not
contrary to law, morals, good customs,
public order, or public policy. (emphasis
added)
As
case
law
instructs,
the
imposition of an unconscionable
rate of interest on a money debt,
even if knowingly and voluntarily
assumed, is immoral and unjust. It
is tantamount to a repugnant
spoliation
and
an
iniquitous
deprivation of property, repulsive
to the common sense of man. It
has no support in law, in principles
of justice, or in the human
conscience nor is there any reason
whatsoever which may justify such
imposition as righteous and as one
that may be sustained within the
sphere
of
public
or
private
morals.17chanrobleslaw
The foreclosure sale should be
nullified
In view of the above disquisitions, We are
constrained to nullify the foreclosure
proceedings
with
respect
to
the
mortgaged property in this case, following
the doctrine in Heirs of Zoilo and Primitiva
Espiritu v. Landrito.21chanrobleslaw
In Heirs of Espiritu, the spouses Maximo

and Paz Landrito, sometime in 1986,
borrowed from the spouses Zoilo and
Primitiva
Espiritu
the
amount
of
P350,000.00, secured by a real estate
mortgage. Because of the Landritos
continued inability to pay the loan, the
due date for payment was extended on
the condition that the interest that has
already accrued shall, from then on, form
part of the principal. As such, after the
third extension, the principal amounted to
P874,125.00 in only two years. Despite
the extensions, however, the debt
remained unpaid, prompting the spouses
Espiritu to foreclose the mortgaged
property.
The foreclosure proceeding in Heirs of
Espiritu, however,was eventually nullified
by this Court because the Landritos were
deprived of the opportunity to settle the
debt, in view of the overstated amount
demanded from them. As held:
Since the Spouses Landrito, the debtors in
this case, were not given an opportunity
to settle their debt, at the correct amount
and without the iniquitous interest
imposed, no foreclosure proceedings may
be instituted. A judgment ordering a
foreclosure sale is conditioned upon a
finding on the correct amount of the
unpaid obligation and the failure of the
debtor to pay the said amount. In this
case, it has not yet been shown that the
Spouses Landrito had already failed to pay
the correct amount of the debt and,
therefore, a foreclosure sale cannot be
conducted in order to answer for the
unpaid debt. x x x
As a result, the subsequent registration of
the foreclosure sale cannot transfer any
rights over the mortgaged property to the
Spouses Espiritu. The registration of the
foreclosure sale, herein declared invalid,
cannot vest title over the mortgaged
property. x x x
Cagayan II Electric Cooperative, Inc.
represented by its General Manager
and Chief Executive Officer, Gabriel A.
Tordesillas Vs. Allan Rapanan and
Mary Gine TangonanG.R. No. 199886.

15
8

December 3, 2014
Thus, there are two main issues that need
to be resolved by this Court: (1) Was
petitioners negligence in maintenance of
its facilities the proximate cause of the
death of Camilo and the injuries of
Rapanan? and (2) In the event that
petitioners negligence is found to be the
proximate cause of the accident, should
damages be awarded in favor of Camilos
heirs even if they were not impleaded?
Negligence is defined as the failure to
observe for the protection of the interest
of another person that degree of care,
precaution, and vigilance which the
circumstances justly demand, whereby
such other person suffers injury.12 Article
2176 of the Civil Code provides that
[w]hoever by act or omission causes
damage to another, there being fault or
negligence, is obliged to pay for the
damage done. Such fault or negligence, if
there is no pre-existing contractual
relation between the parties, is a quasidelict. Under this provision, the elements
necessary to establish a quasi-delict case
are: (1) damages to the plaintiff; (2)
negligence, by act or omission, of the
defendant or by some person for whose
acts the defendant must respond, was
guilty; and (3) the connection of cause
and effect between such negligence and
the damages.13chanrobleslaw
The presence of the first element is
undisputed because the unfortunate
incident brought about the death of
Camilo and physical injuries to Rapanan.
This Court, however, finds that the second
and third elements are lacking thus
precluding the award of damages in favor
of respondents.
Adviento, petitioners employee testified
that their electric poles along the
highways, including the one where the
mishap took place, were erected about
four to five meters from the shoulder of
the road. Another employee of petitioner,
Rasos, testified that after the typhoons hit
Cagayan, he together with his coemployees, after checking the damage to
the electric lines, rolled the fallen electric
wires and placed them at the foot of the

electric poles so as to prevent mishaps to
pedestrians and vehicles passing by.
Thus, there is no negligence on the part of
petitioner
that
was
allegedly
the
proximate cause of Camilos death and
Rapanans injuries. From the testimonies
of petitioners employees and the excerpt
from the police blotter, this Court can
reasonably conclude that, at the time of
that fatal mishap, said wires were quietly
sitting on the shoulder of the road, far
enough from the concrete portion so as
not to pose any threat to passing motor
vehicles and even pedestrians. Hence, if
the victims of the mishap were strangled
by said wires, it can only mean that either
the motorcycle careened towards the
shoulder or even more likely, since the
police found the motorcycle not on the
shoulder but still on the road, that the
three passengers were thrown off from
the motorcycle to the shoulder of the road
and caught up with the wires. As to how
that happened cannot be blamed on
petitioner but should be attributed to
Camilos over speeding as concluded by
the police after it investigated the mishap.
SPO2 Tactac, in his testimony, explained
how they made such conclusion:
The foregoing shows that the motorcycle
was probably running too fast that it lost
control and started tilting and sliding
eventually which made its foot rest cause
the skid mark on the road. Therefore, the
mishap already occurred even while they
were on the road and away from
petitioners electric wires and was not
caused by the latter as alleged by
respondents. It just so happened that
after the motorcycle tilted and slid, the
passengers were thrown off to the
shoulder where the electric wires were.
This Court hence agrees with the trial
court that the proximate cause of the
mishap was the negligence of Camilo. Had
Camilo driven the motorcycle at an
average speed, the three passengers
would not have been thrown off from the
vehicle
towards
the
shoulder
and
eventually strangulated by the electric
wires sitting thereon. Moreover, it was

15
9

also negligent of Camilo to have allowed
two persons to ride with him and for
Rapanan to ride with them when the
maximum number of passengers of a
motorcycle is two including the driver.
This most likely even aggravated the
situation because the motorcycle was
overloaded which made it harder to drive
and control. When the plaintiffs own
negligence was the immediate and
proximate cause of his injury, he cannot
recover damages.16chanrobleslaw
As to the second issue, assuming

arguendo that petitioner was indeed
negligent, the appellate court erred in
awarding damages in favor of Camilos
legal heirs since they were not impleaded
in the case. It should be noted that it was
Mary Gine, the common law wife of
Camilo, who is the complainant in the
case. As a mere common law wife of
Camilo, she is not considered a legal heir
of the latter, and hence, has no legal
personality to institute the action for
damages due to Camilos death.
Florentino W. Leong and Elena Leong, et
al. Vs. Edna C. See G.R. No. 194077.
December 3, 2014
The sole issue for resolution is whether
respondent Edna C. See is a buyer in good
faith and for value.
We affirm the Court of Appeals.
The Torrens system was adopted to
obviate possible conflicts of title by giving
the public the right to rely upon the face
of the Torrens certificate and to dispense,
as a rule, with the necessity of inquiring
further.57
One need not inquire beyond the four
corners of the certificate of title when
dealing
with
registered
property.58 Section 44 of Presidential
Decree No. 1529 known as the Property
Registration Decree recognizes innocent
purchasers in good faith for value and
their right to rely on a clean title:
An innocent purchaser for value refers to
someone who buys the property of
another without notice that some other
person has a right to or interest in it, and

who pays a full and fair price at the time
of the purchase or before receiving any
notice of another persons claim.60 One
claiming to be an innocent purchaser for
value has the burden of proving such
status.61
The protection of innocent purchasers in
good faith for value grounds on the social
interest embedded in the legal concept
granting indefeasibility of titles. Between
the third party and the owner, the latter
would be more familiar with the history
and
status
of
the
titled
property. Consequently, an owner would
incur less costs to discover alleged
invalidities relating to the property
compared to a third party. Such costs
are, thus, better borne by the owner to
mitigate costs for the economy, lessen
delays in transactions, and achieve a less
optimal welfare level for the entire
society.62
The question of whether Florentino and
Carmelita were already American citizens
at the time of the propertys sale to Edna
thus no longer covered by our laws
relating to family rights and duties77
involves a factual question outside the
ambit of a petition for review on certiorari.
In any event, respondent exerted due
diligence when she ascertained the
authenticity of the documents attached to
the deed of sale such as the marital
settlement agreement with Florentinos
waiver of interest over the property. She
did not rely solely on the title. She even
went to the Registry of Deeds to verify the
authenticity of the title.78 These further
inquiries were considered by the lower
courts in finding respondent to be an
innocent purchaser in good faith and for
value.
Lastly, an allegation of fraud must be
substantiated. Rule 8, Section 5 of the
Rules of Court provides:
SEC. 5. Fraud, mistake, condition of the
mind. In all averments of fraud or
mistake,
the
circumstances

16
0

constituting fraud or mistake must be
stated with particularity .
Malice
intent, knowledge or other condition of the
mind of a person may be averred
generally. (Emphasis supplied)
Even assuming the procurement of title
was
tainted
with
fraud
and
misrepresentation, such defective title
may still be the source of a completely
legal and valid title in the hands of an
innocent purchaser for value.80
Respondent, an innocent purchaser in
good faith and for value with title in her
name, has a better right to the property
than Elena.
Elenas possession was
neither adverse to nor in the concept of
owner.81
Article 428 of the Civil Code provides:
Art. 428. The owner has the right to
enjoy and dispose of a thing, without
other limitations than those established by
law.
The owner has also a right of action
against the holder and possessor of the
thing in order to recover it.82
Thus, respondent had every right to

pursue her claims as she did.
Norma A. Del Socorro, for and in behalf of
her minor child Roderigo Norjo Van
Wilsem Vs. Ernst Johan Brinkman Van
WilsemG.R. No. 193707. December 10,
2014
Hence, the present Petition for Review on
Certiorari raising the following issues:
Whether or not a foreign national has an
obligation to support his minor
child under Philippine law; and
Whether or not a foreign national can be
held criminally liable under R.A. No. 9262
for his unjustified failure to support his
minor child.27
It cannot be negated, moreover, that the
instant petition highlights a novel question
of law concerning the liability of a foreign
national who allegedly commits acts and
omissions
punishable
under
special
criminal laws, specifically in relation to

family rights and duties. The inimitability
of the factual milieu of the present case,
therefore, deserves a definitive ruling by
this Court, which will eventually serve as a
guidepost for future cases. Furthermore,
dismissing the instant petition and
remanding the same to the CA would only
waste the time, effort and resources of the
courts. Thus, in the present case,
considerations of efficiency and economy
in the administration of justice should
prevail over the observance of the
hierarchy of courts.
Now, on the matter of the substantive
issues, We find the petition meritorious.
Nonetheless, we do not fully agree with
petitioners contentions.
To determine whether or not a person is
criminally liable under R.A. No. 9262, it is
imperative that the legal obligation to
support exists.
Petitioner invokes Article 19530 of the
Family Code, which provides the parents
obligation to support his child. Petitioner
contends
that
notwithstanding
the
existence of a divorce decree issued in
relation to Article 26 of the Family Code,31
respondent is not excused from complying
with his obligation to support his minor
child with petitioner.
On the other hand, respondent contends
that there is no sufficient and clear basis
presented by petitioner that she, as well
as her minor son, are entitled to financial
support.32 Respondent also added that by
reason of the Divorce Decree, he is not
obligated to petitioner for any financial
support.33
On this point, we agree with respondent
that petitioner cannot rely on Article 19534
of the New Civil Code in demanding
support from respondent, who is a foreign
citizen, since Article 1535 of the New Civil
Code stresses the principle of nationality.
In other words, insofar as Philippine laws
are concerned, specifically the provisions
of the Family Code on support, the same

16
1

only applies to Filipino citizens. By
analogy, the same principle applies to
foreigners such that they are governed by
their national law with respect to family
rights and duties.36
The obligation to give support to a child is
a matter that falls under family rights and
duties. Since the respondent is a citizen
of Holland or the Netherlands, we agree
with the RTC-Cebu that he is subject to
the laws of his country, not to Philippine
law, as to whether he is obliged to give
support to his child, as well as the
consequences of his failure to do so.37
In the case of Vivo v. Cloribel,38 the Court
held that
Furthermore, being still aliens, they are
not
in
position
to
invoke
the
provisions of the Civil Code of the
Philippines, for that Code cleaves to
the principle that family rights and
duties are governed by their personal
law, i.e., the laws of the nation to which
they belong even when staying in a
foreign country (cf. Civil Code, Article
15).39
It cannot be gainsaid, therefore, that the
respondent is not obliged to support
petitioners son under Article 195 of the
Family Code as a consequence of the
Divorce Covenant obtained in Holland.
This does not, however, mean that
respondent is not obliged to support
petitioners son altogether.
In international law, the party who wants
to have a foreign law applied to a dispute
or case has the burden of proving the
foreign law.40
In the present case,
respondent hastily concludes that being a
national of the Netherlands, he is
governed by such laws on the matter of
provision of and capacity to support. 41
While respondent pleaded the laws of the
Netherlands in advancing his position that
he is not obliged to support his son, he
never proved the same.
It is incumbent upon respondent to plead
and prove that the national law of the

Netherlands does not impose upon the
parents the obligation to support their
child (either before, during or after the
issuance of a divorce decree), because
Llorente v. Court of Appeals,42 has already
enunciated that:
True,
foreign
laws
do
not
prove
themselves in our jurisdiction and our
courts are not authorized to take judicial
notice of them. Like any other fact, they
must be alleged and proved. 43
In view of respondents failure to prove
the national law of the Netherlands in his
favor,
the
doctrine
of
processual
presumption shall govern. Under this
doctrine, if the foreign law involved is not
properly pleaded and proved, our courts
will presume that the foreign law is the
same as our local or domestic or internal
law.44 Thus, since the law of the
Netherlands as regards the obligation to
support has not been properly pleaded
and proved in the instant case, it is
presumed to be the same with Philippine
law, which enforces the obligation of
parents to support their children and
penalizing the non-compliance therewith.
Moreover, while in Pilapil v. IbaySomera',45 the Court held that a divorce
obtained in a foreign land as well as its
legal effects may be recognized in the
Philippines in view of the nationality
principle on the matter of status of
persons, the Divorce Covenant presented
by respondent does not completely show
that he is not liable to give support to his
son after the divorce decree was issued.
Emphasis is placed on petitioners
allegation that under the second page of
the aforesaid covenant, respondents
obligation to support his child is
specifically stated,46 which was not
disputed by respondent.
We likewise agree with petitioner that
notwithstanding that the national law of
respondent states that parents have no
obligation to support their children or that
such obligation is not punishable by law,

16
2

said law would still not find applicability, in
light of the ruling in Bank of America, NT
and SA v. American Realty Corporation,47
to wit:
In the instant case, assuming arguendo
that the English Law on the matter were
properly
pleaded
and
proved
in
accordance with Section 24, Rule 132 of
the Rules of Court and the jurisprudence
laid down in Yao Kee, et al. vs. SyGonzales, said foreign law would still not
find applicability.
Thus, when the foreign law, judgment
or contract is contrary to a sound and
established public policy of the forum,
the said foreign law, judgment or
order shall not be applied.
Additionally, prohibitive laws concerning
persons, their acts or property, and those
which have for their object public order,
public policy and good customs shall not
be rendered ineffective by laws or
judgments
promulgated,
or
by
determinations or conventions agreed
upon in a foreign country.
The public policy sought to be protected in
the instant case is the principle imbedded
in our jurisdiction proscribing the splitting
up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil
Procedure is pertinent
If two or more suits are instituted on the
basis of the same cause of action, the
filing of one or a judgment upon the
merits in any one is available as a ground
for the dismissal of the others.
Moreover, foreign law should not be
applied when its application would
work undeniable injustice to the
citizens or residents of the forum. To
give justice is the most important function
of law; hence, a law, or judgment or
contract that is obviously unjust negates
the fundamental principles of Conflict of
Laws.48
Applying the foregoing, even if the laws of
the Netherlands neither enforce a parents
obligation to support his child nor penalize

the
non-compliance
therewith,
such
obligation is still duly enforceable in the
Philippines because it would be of great
injustice to the child to be denied of
financial support when the latter is
entitled thereto.
We emphasize, however, that as to
petitioner herself, respondent is no longer
liable to support his former wife, in
consonance with the ruling in San Luis v.
San Luis,49 to wit:
As to the effect of the divorce on the
Filipino wife, the Court ruled that she
should no longer be considered married to
the alien spouse. Further, she should not
be required to perform her marital duties
and obligations. It held:
To maintain, as private respondent
does, that, under our laws, petitioner
has to be considered still married to
private respondent and still subject to
a wife's obligations under Article 109,
et. seq. of the Civil Code cannot be
just . Petitioner should not be obliged to
live together with, observe respect and
fidelity, and render support to private
respondent. The latter should not continue
to be one of her heirs with possible rights
to conjugal property. She should not be
discriminated against in her own
country if the ends of justice are to be
served. (Emphasis added)50
Based on the foregoing legal precepts, we
find that respondent may be made liable
under Section 5(e) and (i) of R.A. No.
9262 for unjustly refusing or failing to give
support to petitioners son, to wit:
SECTION 5. Acts of Violence Against
Women and Their Children.- The crime of
violence against women and their children
is committed through any of the following
acts:chanroblesvirtuallawlibrary
xxxx
(e) Attempting to compel or compelling
the woman or her child to engage in
conduct which the woman or her child has

16
3

the right to desist from or desist from
conduct which the woman or her child has
the right to engage in, or attempting to
restrict or restricting the woman's or her
child's freedom of movement or conduct
by force or threat of force, physical or
other harm or threat of physical or other
harm, or intimidation directed against the
woman or child. This shall include, but not
limited to, the following acts committed
with the purpose or effect of controlling or
restricting the woman's or her child's
movement or conduct:
xxxx
(2) Depriving or threatening to
deprive the woman or her children of
financial support legally due her or
her family , or deliberately providing the
woman's children insufficient financial
support;
xxxx
(i) Causing mental or emotional anguish,
public ridicule or humiliation to the woman
or her child, including, but not limited to,
repeated verbal and emotional abuse, and
denial of financial support or custody
of minor children of access to the
woman's child/children.51
Under the aforesaid special law, the
deprivation or denial of financial support
to the child is considered an act of
violence against women and children.
In addition, considering that respondent is
currently living in the Philippines, we find
strength in petitioners claim that the
Territoriality Principle in criminal law, in
relation to Article 14 of the New Civil
Code, applies to the instant case, which
provides that:[p]enal laws and those of
public security and safety shall be
obligatory upon all who live and sojourn in
Philippine territory, subject to the principle
of public international law and to treaty
stipulations.
On this score, it is
indisputable that the alleged continuing
acts of respondent in refusing to support
his child with petitioner is committed here
in the Philippines as all of the parties
herein are residents of the Province of

Cebu City. As such, our courts have
territorial jurisdiction over the offense
charged against respondent. It is likewise
irrefutable that jurisdiction over the
respondent was acquired upon his arrest.
Finally, we do not agree with respondents
argument
that
granting,
but
not
admitting, that there is a legal basis for
charging violation of R.A. No. 9262 in the
instant case, the criminal liability has been
extinguished on the ground of prescription
of crime52 under Section 24 of R.A. No.
9262, which provides that:
SECTION 24. Prescriptive Period. Acts
falling under Sections 5(a) to 5(f) shall
prescribe in twenty (20) years. Acts falling
under Sections 5(g) to 5(I) shall prescribe
in ten (10) years.
The act of denying support to a child
under Section 5(e)(2) and (i) of R.A. No.
9262 is a continuing offense,53 which
started in 1995 but is still ongoing at
present. Accordingly, the crime charged in
the
instant
case
has
clearly
not
prescribed.
Given, however, that the issue on whether
respondent has provided support to
petitioners child calls for an examination
of the probative value of the evidence
presented, and the truth and falsehood of
facts being admitted, we hereby remand
the determination of this issue to the RTCCebu which has jurisdiction over the case.
NFF Industrial Corporation Vs. G & L
Associates Brokerage and/or Gerardo
Trinidad G.R. No. 178169. January 12,
2015
Simply, the issue before us is whether or
not there was valid delivery on the part of
petitioner in accordance with law, which
would give rise to an obligation to pay on
the part of respondent for the value of the
bulk bags.
The resolution of the issue at bar
necessitates a scrutiny of the concept of
delivery in the context of the Law on
Sales.33 Under the Civil Code, the vendor
is bound to transfer the ownership of and

16
4

deliver, as well as warrant the thing which
is the object of the sale.34 The ownership
of thing sold is considered acquired by the
vendee once it is delivered to him in the
following wise:ChanRoblesVirtualawlibrary
Art. 1496. The ownership of the thing sold
is acquired by the vendee from the
moment it is delivered to him in any of the
ways specified in Articles 1497 to 1501, or
in any other manner signifying an
agreement
that
the
possession
is
transferred from the vendor to the
vendee.
Art. 1497. The thing sold shall be
understood as delivered, when it is placed
in the control and possession of the
vendee.
Thus, ownership does not pass by mere
stipulation but only by delivery.35 Manresa
explains, the delivery of the thing x x x
signifies that title has passed from the
seller to the buyer."36 Moreover, according
to Tolentino, the purpose of delivery is not
only for the enjoyment of the thing but
also a mode of acquiring dominion and
determines the transmission of ownership,
the birth of the real right.37 The delivery
under any of the forms provided by
Articles 1497 to 1505 of the Civil Code
signifies
that
the
transmission
of
ownership from vendor to vendee has
taken place.38 Here, emphasis is placed on
Article 1497 of the Civil Code, which
contemplates what is known as real or
actual delivery, when the thing sold is
placed in the control and possession of the
vendee.39chanRoblesvirtualLawlibrary
In Equatorial Realty Development, Inc. v.
Mayfair Theater, Inc.,40 the concept of
delivery
was
elucidated,
to
wit:ChanRoblesVirtualawlibrary
Delivery has been described as a
composite act, a thing in which both
parties must join and the minds of both
parties concur. It is an act by which one
party parts with the title to and the
possession of the property, and the other
acquires the right to and the possession of
the same. In its natural sense, delivery
means something in addition to the
delivery of property or title; it means
transfer of possession. In the Law on

Sales, delivery may be either actual or
constructive, but both forms of delivery
contemplate "the absolute giving up of
the control and custody of the
property on the part of the vendor,
and the assumption of the same by
the vendee."41
Applying the foregoing criteria to the case
at bar, We find that there were various
occasions of delivery by petitioner to
respondents, and the same was duly
acknowledged by respondent Trinidad.
Based on the foregoing, it is clear that
petitioner has actually delivered the bulk
bags to respondent company, albeit the
same was not delivered to the person
named in the Purchase Order. In addition,
by allowing petitioners employee to pass
through the guard-on-duty, who allowed
the entry of delivery into the premises of
Hi-Cement, which is the designated
delivery site, respondents had effectively
abandoned whatever infirmities may have
attended the delivery of the bulk bags. As
a matter of fact, if respondents were wary
about the manner of delivery, such issue
should have been brought up immediately
after the first delivery was made. Instead,
Mr. Trinidad acknowledged receipt of the
first batch of the bulk bags and even
followed up the remaining balance of the
orders for delivery.
At any rate, We find merit in petitioners
argument that despite its failure to strictly
comply with the instruction to deliver the
bulk bags to the specified person,
acceptance of delivery may be inferred
from the conduct of the respondents.52
Accordingly, respondents may be held
liable to pay for the price of the bulk bags
pursuant to Article 1585 of the Civil Code,
which
provides
ARTICLE 1585. The buyer is deemed to
have accepted the goods when he
intimates to the seller that he has
accepted them, or when the goods have
been delivered to him, and he does any
act in relation to them which is
inconsistent with the ownership of the
seller, or when, after the lapse of a
reasonable time, he retains the goods

16
5

without intimating to the seller that he has
rejected them.
As early as Sy v. Mina,53 it has been
pronounced that the vendees acceptance
of the equipment and supplies and
accessories, and the use it made of them
is an implied conformity to the terms of
the invoices and he is bound thereby. 54
The Court in that case also held that the
buyers failure to interpose any objection
to the invoices issued to it, to evidence
delivery of the materials ordered as per
their agreement, should be deemed as an
implied acceptance by the buyer of the
said
conditions.55chanRoblesvirtualLawlibrary
Indeed, the use by respondent of the bulk

bags is an act of dominion, which is
inconsistent with the ownership of
petitioner
Saint Mary Crusade to Alleviate Poverty of
Brethren Foundation, Inc. Vs. Hon.
Teodoro T. Riel, acting Presding
Judge,
Regional
Trial
Court,
respondent,
University
of
the
Philippines G.R. No. 176508. January
12, 2015
A petition for the judicial reconstitution of
a Torrens title must strictly comply with
the requirements prescribed in Republic
Act No. 26;1 otherwise, the petition should
be dismissed.
Velerio E. Kalaw Vs. Ma. Elena Fernandez
G.R. No. 166357. January 14, 2015
Dissenting OpinionJ. Del Castillo
I
Psychological incapacity as a
ground for the nullity of marriage
under Article 36 of the Family Code
refers to a serious psychological
illness afflicting a party even prior
to the celebration of the marriage
that is permanent as to deprive the
party of the awareness of the
duties and responsibilities of the
matrimonial bond he or she was
about to assume.
The foregoing guidelines have turned out
to be rigid, such that their application to
every instance practically condemned the
petitions for declaration of nullity to the

fate of certain rejection. But Article 36 of
the Family Code must not be so strictly
and too literally read and applied given
the clear intendment of the drafters to
adopt its enacted version of less
specificity obviously to enable some
resiliency in its application. Instead,
every court should approach the issue of
nullity not on the basis of a priori
assumptions, predilections or
generalizations, but according to its own
facts in recognition of the verity that no
case would be on all fours with the next
one in the field of psychological incapacity
as a ground for the nullity of marriage;
hence, every trial judge must take pains
in examining the factual milieu and the
appellate court must, as much as possible,
avoid substituting its own judgment for
that of the trial court.
After a long and hard second look, we
consider it improper and unwarranted to
give to such expert opinions a merely
generalized consideration and treatment,
least of all to dismiss their value as
inadequate basis for the declaration of the
nullity of the marriage. Instead, we hold
that said experts sufficiently and
competently described the psychological
incapacity of the respondent within the
standards of Article 36 of the Family Code.
We uphold the conclusions reached by the
two expert witnesses because they were
largely drawn from the case records and
affidavits, and should not anymore be
disputed after the RTC itself had accepted
the veracity of the petitioners factual
premises.
Admittedly, Dr. Gates based her findings
on the transcript of the petitioners
testimony, as well as on her interviews of
the petitioner, his sister Trinidad, and his
son Miguel. Although her findings would
seem to be unilateral under such
circumstances, it was not right to
disregard the findings on that basis alone.
After all, her expert opinion took into
consideration other factors extant in the
records, including the own opinions of
another expert who had analyzed the

16
6

issue from the side of the respondent
herself. Moreover, it is already settled that
the courts must accord weight to expert
testimony on the psychological and mental
state of the parties in cases for the
declaration of the nullity of marriages, for
by the very nature of Article 36 of the
Family Code the courts, despite having
the primary task and burden of decisionmaking, must not discount but, instead,
must consider as decisive evidence the
expert opinion on the psychological and
mental temperaments of the parties.
The expert opinion of Dr. Gates was
ultimately necessary herein to enable the
trial court to properly determine the issue
of psychological incapacity of the
respondent (if not also of the petitioner).
Consequently, the lack of personal
examination and interview of the person
diagnosed with personality disorder, like
the respondent, did not per se invalidate
the findings of the experts. The Court has
stressed in Marcos v. Marcos that there is
no requirement for one to be declared
psychologically incapacitated to be
personally examined by a physician,
because what is important is the presence
of evidence that adequately establishes
the partys psychological incapacity.
Hence, if the totality of evidence
presented is enough to sustain a finding of
psychological incapacity, then actual
medical examination of the person
concerned need not be resorted to.
Verily, the totality of the evidence must
show a link, medical or the like, between
the acts that manifest psychological
incapacity and the psychological disorder
itself. If other evidence showing that a
certain condition could possibly result
from an assumed state of facts existed in
the record, the expert opinion should be
admissible and be weighed as an aid for
the court in interpreting such other
evidence on the causation.
Indeed, an expert opinion on
psychological incapacity should be
considered as conjectural or speculative
and without any probative value only in

the absence of other evidence to establish
causation. The experts findings under
such circumstances would not constitute
hearsay that would justify their exclusion
as evidence. This is so, considering that
any ruling that brands the scientific and
technical procedure adopted by Dr. Gates
as weakened by bias should be eschewed
if it was clear that her psychiatric
evaluation had been based on the parties
upbringing and psychodynamics.
In her Psychological Evaluation Report, Dr.
Dayan impressed that the respondent had
compulsive and dependent tendencies to
the extent of being relationship
dependent.
The frequency of the respondents
mahjong playing should not have
delimited our determination of the
presence or absence of psychological
incapacity. Instead, the determinant
should be her obvious failure to fully
appreciate the duties and responsibilities
of parenthood at the time she made her
marital vows. Had she fully appreciated
such duties and responsibilities, she would
have known that bringing along her
children of very tender ages to her
mahjong sessions would expose them to a
culture of gambling and other vices that
would erode their moral fiber.
Nonetheless, the long-term effects of the
respondents obsessive mahjong playing
surely impacted on her family life,
particularly on her very young children.
We do find to be revealing the disclosures
made by Valerio Teodoro Kalaw the
parties eldest son in his deposition,
whereby the son confirmed the claim of
his father that his mother had been
hooked on playing mahjong,
The fact that the respondent brought her
children with her to her mahjong sessions
did not only point to her neglect of
parental duties, but also manifested her
tendency to expose them to a culture of
gambling. Her willfully exposing her

16
7

children to the culture of gambling on
every occasion of her mahjong sessions
was a very grave and serious act of
subordinating their needs for parenting to
the gratification of her own personal and
escapist desires.
The respondent revealed her wanton
disregard for her childrens moral and
mental development. This disregard
violated her duty as a parent to safeguard
and protect her children, as expressly
defined under Article 209 and Article 220
of the Family Code
More than twenty (20) years had passed
since the parties parted ways. By now,
they must have already accepted and
come to terms with the awful truth that
their marriage, assuming it existed in the
eyes of the law, was already beyond
repair. Both parties had inflicted so much
damage not only to themselves, but also
to the lives and psyche of their own
children. It would be a greater injustice
should we insist on still recognizing their
void marriage, and then force them and
their children to endure some more
damage.
In this case, the marriage never existed
from the beginning because the
respondent was afflicted with
psychological incapacity at and prior to
the time of the marriage. Hence, the Court
should not hesitate to declare the nullity
of the marriage between the parties.
To stress, our mandate to protect the

inviolability of marriage as the basic
foundation of our society does not
preclude striking down a marital union
that is ill-equipped to promote family
life, t
Republic of the Philippines Vs. Sps. Jose
Castura and CastueraG.R. No. 203384.
January 14, 2015
The advance plan and the CENRO
certification are insufficient proofs
of the alienable and disposable
character of the property. The
Spouses Castuera, as applicants for
registration of title, must present a

certified true copy of the
Department of Environment and
Natural Resources Secretarys
declaration or classification of the
land as alienable and disposable.
Imelda, Leonardo, Fidelino, Azucena,

Josefina, Anita and Sisa, all surnamed
Syjuco Vs. Felisa D. Bonifacio and VSD
Realty & Development Corporation
G.R. No. 148748. January 14, 2015
It is an established doctrine in land
ownership disputes that the filing of an
action to quiet title is imprescriptible if the
disputed real property is in the possession
of the plaintiff. One who is in actual
possession of a piece of land claiming to
be owner thereof may wait until his
possession is disturbed or his title is
attacked before taking steps to vindicate
his right, the reason for the rule being
that his undisturbed possession gives him
a continuing right to seek the aid of a
court of equity to ascertain and determine
the nature of the adverse claim of a third
party and its effect on his own title, which
right can be claimed only by one who is in
possession.
In this case, petitioners have duly
established during the trial that they
and/or their predecessors-in-interest have
been in uninterrupted possession of the
subject land since 1926 and that it was
only in 1994 when they found out that
respondent Bonifacio was able to register
the said property in her name in another
title. It was also only in 1995 when
petitioners learned that respondent
Bonifacio was able to sell and transfer her
title over the subject land in favor of
respondent VSD Realty.
Moreover, the rule on the
incontrovertibility or indefeasibility of title
has no application in this case given the
fact that the contending parties claim
ownership over the subject land based on
their respective certificates of title thereon
which originated from different sources.
Certainly, there cannot be two or even

16
8

several certificates of title on the same

parcel of real property because a land
registration court has no jurisdiction to
order the registration of land already
decreed in the name of another in an
earlier land registration case and a
second decree for the same land would be
null and void, since the principle behind
original registration is to register a parcel
of land only once. The indefeasibility of a
title under the Torrens system could be
claimed only if a previous valid title to the
same parcel of land does not exist. Where
the issuance of the title was attended by
fraud, the same cannot vest in the titled
owner any valid legal title to the land
covered by it; and the person in whose
name the title was issued cannot transmit
the same, for he has no true title thereto.
This ruling is a mere affirmation of the
recognized principle that a certificate is
not conclusive evidence of title if it is
shown that the same land had already
been registered and that an earlier
certificate for the same land is in
existence. Accordingly, petitioners filing
of an action to quiet title over the subject
land is in order.
Glenn Vias Vs. Mary Grace Parel-Vias
G.R. No. 208790. January 21, 2015
issue of whether or not sufficient evidence
exist justifying the RTCs declaration of
nullity of his marriage with Mary Grace.
Ruling of the Court
The instant petition lacks merit.
The lack of personal examination or
assessment of the respondent by a
psychologist
or
psychiatrist
is
not
necessarily fatal in a petition for the
declaration of nullity of marriage. If the
totality of evidence presented is enough to
sustain
a
finding
of
psychological
incapacity,
then
actual
medical
examination of the person concerned need
not
be
resorted
to.29chanRoblesvirtualLawlibrary
In the instant petition, however, the
cumulative testimonies of Glenn, Dr.
Tayag and Rodelito, and the documentary
evidence offered do not sufficiently prove
the root cause, gravity and incurability of

Mary Graces condition. The evidence
merely shows that Mary Grace is outgoing,
strong-willed and not inclined to perform
household
chores.
Further,
she
is
employed in Dubai and is romanticallyinvolved with another man. She has not
been maintaining lines of communication
with Glenn at the time the latter filed the
petition before the RTC. Glenn, on the
other hand, is conservative, familyoriented and is the exact opposite of Mary
Grace. While Glenn and Mary Grace
possess incompatible personalities, the
latters acts and traits do not necessarily
indicate psychological incapacity.
It is worth noting that Glenn and Mary
Grace lived with each other for more or
less seven years from 1999 to 2006. The
foregoing established fact shows that
living together as spouses under one roof
is not an impossibility. Mary Graces
departure from their home in 2006
indicates either a refusal or mere
difficulty, but not absolute inability to
comply with her obligation to live with her
husband.
Further, considering that Mary Grace was
not personally examined by Dr. Tayag,
there arose a greater burden to present
more convincing evidence to prove the
gravity,
juridical
antecedence
and
incurability of the formers condition.
Glenn, however, failed in this respect.
Glenns testimony is wanting in material
details. Rodelito, on the other hand, is a
blood
relative
of
Glenn.
Glenns
statements
are
hardly
objective.
Moreover, Glenn and Rodelito both
referred to Mary Graces traits and acts,
which she exhibited during the marriage.
Hence, there is nary a proof on the
antecedence of Mary Graces alleged
incapacity. Glenn even testified that, six
months before they got married, they saw
each other almost everyday.32 Glenn saw
a loving[,] caring and well[-]educated
person33 in Mary Grace.
In the case at bar, Dr. Tayag made
general references to Mary Graces status

16
9

as the eldest among her siblings,36 her
fathers being an overseas contract worker
and her very tolerant mother, a
housewife.37 These, however, are not
sufficient to establish and explain the
supposed psychological incapacity of Mary
Grace warranting the declaration of the
nullity of the couples marriage.
The Court understands the inherent

difficulty attendant to obtaining the
statements of witnesses who can attest to
the
antecedence
of
a
persons
psychological
incapacity,
but
such
difficulty does not exempt a petitioner
from complying with what the law
requires.
While
the
Court
also
commiserates with Glenns marital woes,
the totality of the evidence presented
provides inadequate basis for the Court to
conclude that Mary Grace is indeed
psychologically incapacitated to comply
with her obligations as Glenns spouse.
Ruks
Konsult
and
Construction
Vs.
Adworld
Sign
and
Advertising
Corporation and Transworld Media
Ads, Inc.G.R. No. 204866. January 21,
2015
The primordial issue for the Courts

resolution is whether or not the CA
correctly affirmed the ruling of the
RTC declaring Ruks jointly and
severally liable with Transworld for
damages sustained by Adworld.
After a judicious perusal of the records,
the Court sees no cogent reason to
deviate from the findings of the RTC and
the CA and their uniform conclusion that
both Transworld and Ruks committed acts
resulting in the collapse of the formers
billboard, which in turn, caused damage to
the adjacent billboard of Adworld.
Jurisprudence defines negligence as the
omission to do something which a
reasonable
man,
guided
by
those
considerations which ordinarily regulate
the conduct of human affairs, would do, or
the doing of something which a prudent
and reasonable man would not do.27 It is
the failure to observe for the protection of
the interest of another person that degree

of care, precaution, and vigilance which
the circumstances justly demand, whereby
such
other
person
suffers
injury.28chanRoblesvirtualLawlibrary
In this case, the CA correctly affirmed the
RTCs finding that Transworlds initial
construction of its billboards lower
structure without the proper foundation,
and that of Rukss finishing its upper
structure and just merely assuming that
Transworld would reinforce the weak
foundation are the two (2) successive acts
which were the direct and proximate
cause of the damages sustained by
Adworld. Worse, both Transworld and
Ruks were fully aware that the foundation
for the formers billboard was weak; yet,
neither of them took any positive step to
reinforce the same. They merely relied on
each others word that repairs would be
done to such foundation, but none was
done at all. Clearly, the foregoing
circumstances show that both Transworld
and Ruks are guilty of negligence in the
construction of the formers billboard, and
perforce, should be held liable for its
collapse and the resulting damage to
Adworlds billboard structure. As joint
tortfeasors, therefore, they are solidarily
liable to Adworld. Verily, [j]oint
tortfeasors are those who command,
instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the
commission of a tort, or approve of it after
it is done, if done for their benefit. They
are also referred to as those who act
together in committing wrong or whose
acts, if independent of each other, unite in
causing a single injury. Under Article
219429 of the Civil Code, joint tortfeasors
are solidarily liable for the resulting
damage. In other words, joint tortfeasors
are each liable as principals, to the same
extent and in the same manner as if they
had performed the wrongful act
themselves.3
First Optima Realty Corporation Vs.
Securitron Security Services Inc.G.R.
No. 199648. January 28, 2015
In a potential sale transaction, the
prior payment of earnest money

17
0

even before the property owner
can agree to sell his property is
irregular, and cannot be used to
bind the owner to the obligations
ofa seller under an otherwise
perfected contract ofsale; to cite a
well-worn cliche, the carriage
cannot be placed before the horse.
The property ov\.rner-prospective
seller may not be legally obliged to
enter into a sale with a prospective
buyer through the latter's
employment of questionable
practices which prevent the owner
from freely giving his consent to
the transaction; this constitutes a
palpable transgression ofthe
prospective seller's rights of
ownership over his property, an
anomaly which the Court will
certainly not condone.
It cannot be denied that there were
negotiations between the parties
conducted after the respondents
December 9, 2004 letter-offer and prior to
the February 4, 2005 letter. These
negotiations culminated in a meeting
between Eleazar and Young whereby the
latter declined to enter into an agreement
and accept cash payment then being
tendered by the former. Instead, Young
informed Eleazar during said meeting that
she still had to confer with her sister and
petitioners board of directors; in turn,
Eleazar told Young that respondent shall
await the necessary approval.
Art. 1482 of the Civil Code, there must

first be a perfected contract of sale before
we can speak of earnest money. Where
the parties merely exchanged offers and
counter-offers, no contract is perfected
since they did not yet give their consent to
such offers. Earnest money applies to a
perfected sale.
In a potential sale transaction, the prior
payment of earnest money even before
the property owner can agree to sell his
property is irregular, and cannot be used
to bind the owner to the obligations of a
seller under an otherwise perfected
contract of sale; to cite a well-worn cliche,
the carriage cannot be placed before the
horse. The property owner-prospective
seller may not be legally obliged to enter
into a sale with a prospective buyer
through the latters employment of
questionable practices which prevent the
owner from freely giving his consent to
the transaction; this constitutes a palpable
transgression of the prospective sellers
rights of ownership over his property, an
anomaly which the Court will certainly not
condone. An agreement where the prior
free consent of one party thereto is
withheld or suppressed will be struck
down, and the Court shall always
endeavor to protect a property owners
rights against devious practices that put
his property in danger of being lost or
unduly disposed without his prior
knowledge or consent. As this ponente
has held before, [t]his Court cannot
presume the existence of a sale of.land,
absent any direct proof ofit.
Thus, the trial and appellate courts failed

Nor will respondent's supposed payment
to appreciate that respondents offer to
be 'treated as a deposit or guarantee; its
purchase the subject property was never
actions will not be dignified and must be
accepted by the petitioner at any instance,
called for what they are: they were done
even after negotiations were held between
irregularly and with a view to acquiring
them. Thus, as between them, there is no
the subject property against petitioner's
sale to speak of. When there is merely an
consent.
offer by one party without acceptance of
the other, there is no contract.
Finally, since there is nothing in legal
Since there is no perfected sale between
contemplation which petitioner must
the parties, respondent had no obligation
perform particularly for the respondent, it
to make payment through the check; nor
should follow that Civil Case No. 06- 0492
did it possess the right to deliver earnest
CFM for specific performance with
money to petitioner in order to bind the
damages is left with no leg. to stand on; it
latter to a sale. As contemplated under
17
1

must be dismissed.
Rodolfo S. Aguilar Vs. Edna G. SiasatG.R.

No. 200169. January 28, 2015
Our Ruling
The Court grants the Petition.
This Court, speaking in De Jesus v. Estate
of Dizon, has held that
The filiation of illegitimate children, like
legitimate children, is established by (1)
the record of birth appearing in the civil
register or a final judgment; or (2) an
admission of legitimate filiation in a
public document or a private
handwritten instrument and signed by
the parent concerned. In the absence
thereof, filiation shall be proved by (1) the
open and continuous possession of the
status of a legitimate child; or (2) any
other means allowed by the Rules of Court
and special laws. The due recognition of
an illegitimate child in a record of
birth, a will, a statement before a
court of record, or in any authentic
writing is, in itself, a consummated
act of acknowledgment of the child,
and no further court action is
required. In fact, any authentic
writing is treated not just a ground
for compulsory recognition; it is in
itself a voluntary recognition that
does not require a separate action for
judicial approval. Where, instead, a
claim for recognition is predicated on
other evidence merely tending to prove
paternity, i.e., outside of a record of birth,
a will, a statement before a court of
record or an authentic writing, judicial
action within the applicable statute of
limitations is essential in order to establish
the childs acknowledgment.
A scrutiny of the records would show that
petitioners were born during the
marriage of their parents. The
certificates of live birth would also identify
Danilo de Jesus as being their father.
There is perhaps no presumption of
the law more firmly established and
founded on sounder morality and

more convincing reason than the
presumption that children born in
wedlock are legitimate. This
presumption indeed becomes conclusive in
the absence of proof that there is physical
impossibility of access between the
spouses during the first 120 days of the
300 days which immediately precedes the
birth of the child due to (a) the physical
incapacity of the husband to have sexual
intercourse with his wife; (b) the fact that
the husband and wife are living separately
in such a way that sexual intercourse is
not possible; or (c) serious illness of the
husband, which absolutely prevents sexual
intercourse. Quite remarkably, upon the
expiration of the periods set forth in
Article 170, and in proper cases Article
171, of the Family Code (which took effect
on 03 August 1988), the action to impugn
the legitimacy of a child would no longer
be legally feasible and the status
conferred by the presumption becomes
fixed and unassailable.
Thus, applying the foregoing
pronouncement to the instant case, it
must be concluded that petitioner who
was born on March 5, 1945, or during the
marriage of Alfredo Aguilar and Candelaria
Siasat-Aguilar and before their respective
deaths has sufficiently proved that he is
the legitimate issue of the Aguilar
spouses. As petitioner correctly argues,
Alfredo Aguilars SSS Form E-1 (Exhibit
G) satisfies the requirement for proof of
filiation and relationship to the Aguilar
spouses under Article 172 of the Family
Code; by itself, said document constitutes
an admission of legitimate filiation in a
public document or a private handwritten
instrument and signed by the parent
concerned.
To repeat what was stated in De Jesus,
filiation may be proved by an admission of
legitimate filiation in a public document or
a private handwritten instrument and
signed by the parent concerned, and such
due recognition in any authentic writing is,
in itself, a consummated act of
acknowledgment of the child, and no

17
2

further court action is required. And,
relative to said form of acknowledgment,
the Court has further held that:
In view of the pronouncements herein
made, the Court sees it fit to adopt the
following rules respecting the requirement
of affixing the signature of the
acknowledging parent in any private
handwritten instrument wherein an
admission of filiation of a legitimate or
illegitimate child is made:
1) Where the private handwritten
instrument is the lone piece of
evidence submitted to prove filiation,
there should be strict compliance with
the requirement that the same must
be signed by the acknowledging
parent; and
2) Where the private handwritten
instrument is accompanied by other
relevant and competent evidence, it
suffices that the claim of filiation therein
be shown to have been made and
handwritten by the acknowledging parent
as it is merely corroborative of such other
evidence.
As to petitioner's argument that
respondent has no personality to impugn
his legitimacy and cannot
collaterallyattack his legitimacy, and that
the action to impugn his legitimacy has
already prescribed pursuant to Articles
170 and 171 of the Family Code, the Court
has held before that Article 263 refers to an action to impugn
the legitimacy of a child, to assert and
prove that a person is not a man's child by
his wife. However, the present case is not
one impugning petitioner's legitimacy.
Respondents are asserting not merely
thatfetitioner is not a legitimate child
ofJose, but that she is not a child of Jose
at all.
Finally, ifpetitioner has shown that he is
the legitimate issue ofthe Aguilar spouses,
then he is as well heir to the latter's
estate. Respondent is then left with no
right to inherit from her aunt Candelaria
Siasat-Aguilar's. estate, since succession

pertains, in the first place, to the
descending direct line.
Republic of the Philippines Vs. Cecilia
Grace L. Roasa, married to Greg
Ambrose
Roasa,
as
herein
represented by her Attorneys-in-fact,
Bernardo M. Nicolas, Jr. and Alvin B.
Acayen G.R. No. 176022. February 2,
2015
issue as to when an applicant's
possession should be reckoned and
the resulting prevailing doctrine
Respondents
right
to
the
original
registration of title over the subject
property is, therefore, dependent on the
existence of (a) a declaration that the land
is alienable and disposable at the time of
the application for registration and (b)
open and continuous possession in the
concept of an owner through itself or
through its predecessors-in-interest since
June 12, 1945 or earlier.
In the present case, there is no dispute
that the subject lot has been declared
alienable and disposable on March 15,
1982. This is more than eighteen (18)
years before respondent's application for
registration, which was filed on December
15, 2000. Moreover, the unchallenged
testimonies of two of respondent's
witnesses established that the latter and
her predecessors-in-interest had been in
adverse, open, continuous, and notorious
possession in the concept of an owner
even before June 12, 1945.
Spouses Rolando and Herminia Salvador
Vs. Spouses Rogelio and Elizabeth
Rabaja and Rosario GonzalesG.R. No.
199990. February 4, 2015
The failure of Spouses Salvador to
attend pre-trial conference warrants
the presentation of evidence ex parte
by Spouses Rabaja
On the procedural aspect, the Court
reiterates the rule that the failure to
attend the pre-trial conference does not
result in the default of an absent party.
Under the 1997 Rules of Civil Procedure, a

17
3

defendant is only declared in default if he
fails to file his Answer within the
reglementary period. On the other hand, if
a defendant fails to attend the pre-trial
conference, the plaintiff can present his
evidence ex parte.
From the foregoing, the failure of a party
to appear at the pre-trial has indeed
adverse consequences. If the absent party
is the plaintiff, then his case shall be
dismissed. If it is the defendant who fails
to appear, then the plaintiff is allowed to
present his evidence ex parte and the
court shall render judgment based on the
evidence presented. Thus, the plaintiff is
given the privilege to present his evidence
without objection from the defendant, the
likelihood being that the court will decide
in favor of the plaintiff, the defendant
having forfeited the opportunity to rebut
or present its own evidence. The stringent
application of the rules on pre-trial is
necessitated from the significant role of
the pre-trial stage in the litigation process.
Pre- trial is an answer to the clarion call
for the speedy disposition of cases.
Although it was discretionary under the
1940 Rules of Court, it was made
mandatory under the 1964 Rules and the
subsequent amendments in 1997. The
importance of pre-trial in civil actions
cannot be overemphasized.
Gonzales,
as
agent of
Spouses
Salvador, could validly receive the
payments of Spouses Rabaja
Even on the substantial aspect, the
petition does not warrant consideration.
The Court agrees with the courts below in
finding that the contract entered into by
the parties was essentially a contract of
sale which could be validly rescinded.
Spouses Salvador insist that they did not
receive the payments made by Spouses
Rabaja from Gonzales which totalled
P950,000.00 and that Gonzales was not
their duly authorized agent. These
contentions, however, must fail in light of
the applicable provisions of the New Civil
Code which state:

Art. 1900. So far as third persons are
concerned, an act is deemed to have been
performed within the scope of the agent's
authority, if such act is within the terms of
the power of attorney, as written, even if
the agent has in fact exceeded the limits
of
his
authority
according
to
an
understanding between the principal and
the agent.
xxx
x
Art. 1902. A third person with whom the
agent wishes to
contract on behalf of the principal may
require the presentation of the power of
attorney, or the instructions as regards
the agency. Private or secret orders and
instructions of the principal do not
prejudice third persons who have relied
upon the power of attorney or instructions
shown them.
xxxx
Art. 1910. The principal must comply with
all the obligations which the agent may
have contracted within the scope of his
authority.
Persons dealing with an agent must
ascertain not only the fact of agency, but
also the nature and extent of the agents
authority. A third person with whom the
agent wishes to contract on behalf of the
principal may require the presentation of
the power of attorney, or the instructions
as regards the agency. The basis for
agency is representation and a person
dealing with an agent is put upon inquiry
and must discover on his own peril the
authority of the agent.
According to Article 1990 of the New Civil
Code, insofar as third persons are
concerned, an act is deemed to have been
performed within the scope of the agent's
authority, if such act is within the terms of
the power of attorney, as written. In this
case, Spouses Rabaja did not recklessly

17
4

enter into a contract to sell with Gonzales.
They required her presentation of the
power of attorney before they transacted
with her principal. And when Gonzales
presented the SPA to Spouses Rabaja, the
latter had no reason not to rely on it.
The law mandates an agent to act within

the scope of his authority which what
appears in the written terms of the power
of attorney granted upon him. The Court
holds that, indeed, Gonzales acted within
the scope of her authority. The SPA
precisely stated that she could administer
the property, negotiate the sale and
collect any document and all payments
related to the subject property. As the
agent acted within the scope of his
authority, the principal must comply with
all the obligations. As correctly held by the
CA, considering that it was not shown that
Gonzales exceeded her authority or that
she expressly bound herself to be liable,
then she could not be considered
personally and solidarily liable with the
principal, Spouses Salvador.
G.R. No. 192718. February 18, 2015
Dissenting Opinion
J. Leonen
The Courts Ruling
The main issue is whether the
totality of the evidence adduced
proves that Luz was psychologically
incapacitated to comply with the
essential obligations of marriage
warranting the annulment of their
marriage under Article 36 of the
Family Code.
Psychological incapacity," as a ground to
nullify a marriage under Article 36 of the
Family Code, should refer to no less than
a mental not merely physical
incapacity that causes a party to be truly
incognitive of the basic marital covenants
that concomitantly must be assumed and
discharged by the parties to the marriage
which, as so expressed in Article 68 of the
Family Code, among others, include their
mutual obligations to live together;
observe love, respect and fidelity; and
render help and support. There is hardly a
doubt that the intendment of the law has

been
to
confine
the
meaning
of
"psychological incapacity" to the most
serious cases of personality disorders
clearly
demonstrative
of
an
utter
insensitivity or inability to give meaning
and significance to the marriage.
Psychological incapacity as required by
Article 36 must be characterized by (a)
gravity, (b) juridical antecedence and (c)
incurability. The incapacity must be grave
or serious such that the party would be
incapable of carrying out the ordinary
duties required in marriage. It must be
rooted in the history of the party
antedating the marriage, although the
overt manifestations may only emerge
after the marriage. It must be incurable
or, even if it were otherwise, the cure
would be beyond the means of the party
involved.
Guided by these pronouncements, the
Court is of the considered view that
Roberts evidence failed to establish the
psychological incapacity of Luz.
First, the testimony of Robert failed to
overcome the burden of proof to show the
nullity of the marriage. Other than his
self-serving testimony, no other evidence
was adduced to show the alleged
incapacity of Luz. He presented no other
witnesses to corroborate his allegations on
her behavior. Thus, his testimony was
self-serving and had no serious value as
evidence.
Second, the root cause of the alleged
psychological incapacity of Luz was not
medically or clinically identified, and
sufficiently proven during the trial. Based
on the records, Robert failed to prove that
her disposition of not cleaning the room,
preparing their meal, washing the clothes,
and propensity for dating and receiving
different male visitors, was grave, deeply
rooted,
and
incurable
within
the
parameters
of
jurisprudence
on
psychological incapacity.

17
5

The alleged failure of Luz to assume her
duties as a wife and as a mother, as well
as
her
emotional
immaturity,
irresponsibility and infidelity, cannot rise
to the level of psychological incapacity
that justifies the nullification of the
parties'
marriage.
The
Court
has
repeatedly stressed that psychological
incapacity
contemplates
"downright
incapacity or inability to take cognizance
of and to assume the basic marital
obligations," not merely the refusal,
neglect or difficulty, much less ill will, on
the part of the errant spouse. Indeed, to
be
declared
clinically
or
medically
incurable is one thing; to refuse or be
reluctant to perform one's duties is
another. Psychological incapacity refers
only to the most serious cases of
personality
disorders
clearly
demonstrative of an utter insensitivity or
inability to give meaning and significance
to the marriage.
psychological examination. The finding as

to her psychological incapacity was based
entirely on hearsay and the self-serving
information provided by Robert.
As correctly found by the CA, sexual

infidelity or perversion and abandonment
do not, by themselves, constitute grounds
for declaring a marriage void based on
psychological incapacity. Robert argues
that the series of sexual indiscretion of
Luz were external manifestations of the
psychological
defect
that
she
was
suffering within her person, which could
be considered as nymphomania or
excessive sex hunger. Other than his
allegations, however, no other convincing
evidence was adduced to prove that these
sexual indiscretions were considered as
nymphomania, and that it was grave,
deeply rooted, and incurable within the
term of psychological incapacity embodied
in Article 36. To stress, Roberts testimony
alone is insufficient to prove the existence
of psychological incapacity.
Granting that it was offered and admitted,

it must be pointed out that the basis of
the declaration of nullity of marriage by
the NAMT was not the third paragraph
of Canon 1095 which mentions causes of
a psychological nature similar to Article 36
of the Family Code, but the second
paragraph of Canon 1095 which
refers to those who suffer from grave
lack
of
discretion
of
judgment
concerning
essential
matrimonial
rights and obligations to be mutually
given and accepted.
Third,
the
psychological
report
of
Villanueva, Guidance Psychologist II of the
Northern
Mindanao
Medical
Center,
Cagayan de Oro City, was insufficient to
prove the psychological incapacity of Luz.
There was nothing in the records that
would indicate that Luz had either been
interviewed or was subjected to a
Fourth, the decision of the Metropolitan

Tribunal is insufficient to prove the
psychological incapacity of Luz. Although
it is true that in the case of Republic v.
Court of Appeals and Molina, the Court
stated that interpretations given by the
NAMT of the Catholic Church in the
Philippines, while not controlling or
decisive, should be given great respect by
our courts, still it is subject to the law on
evidence.
In this regard, the belated presentation of
the decision of the NAMT cannot be given
value since it was not offered during the
trial, and the Court has in no way of
ascertaining the evidence considered by
the same tribunal.
Hence, Roberts reliance on the NAMT

decision is misplaced. To repeat, the
decision of the NAMT was based on the
second paragraph of Canon 1095
which refers to those who suffer from
a grave lack of discretion of judgment
concerning
essential
matrimonial
rights and obligations to be mutually
given and accepted, a cause not of
psychological nature under Article 36 of
the Family Code. A cause of psychological
nature similar to Article 36 is covered by
the third paragraph of Canon 1095 of

17
6

the Code of Canon Law
and supervision of its employees.
To hold that annulment of marriages

decreed by the NAMT under the second
paragraph of Canon 1095 should also be
covered would be to expand what the
lawmakers did not intend to include. What
would prevent members of other religious
groups
from
invoking
their
own
interpretation of psychological incapacity?
Would this not lead to multiple, if not
inconsistent, interpretations?
Unfortunately, however, the records of

this case are bereft of any proof showing
the exercise by petitioner of the required
diligence. As aptly observed by the CA, no
evidence of whatever nature was ever
presented
depicting
petitioners
due
diligence in the selection and supervision
of its driver, Gimena, despite several
opportunities to do so. In fact, in its
petition,
apart
from
denying
the
negligence of its employee and imputing
the same to the bus from which the victim
alighted, petitioner merely reiterates its
argument that since it is not the
registered owner of the bus which bumped
the victim, it cannot be held liable for the
damage caused by the same. Nowhere
was it even remotely alleged that
petitioner had exercised the required
diligence in the selection and supervision
of its employee. Because of this failure,
petitioner cannot now avoid liability for
the quasi-delict committed by its negligent
employee.
To consider church annulments as

additional grounds for annulment under
Article 36 would be legislating from the
bench. As stated in Republic v. Court
ofAppeals and Molina, interpretations
given by the NAMT of the Catholic Church
in the Philippines are given great respect
by our courts, but they are not controlling
or decisive.
As asserted by the OSG, the allegations of
the petitioner make a case for legal
separation. Hence, this decision is without
prejudice to an action for legal separation
if a party would want to pursue such
proceedings. In this disposition, the Court
cannot decree a legal separation because
in such proceedings, there are matters
and consequences like custody and
separation of properties that need to be
considered and settled.
R. Transport Corporation Vs. Luisito G. Yu
G.R. No. 174161. February 18, 2015
Under Article 2180 of the New Civil Code,
employers are liable for the damages
caused by their employees acting within
the scope of their assigned tasks. Once
negligence on the part of the employee is
established, a presumption instantly arises
that the employer was remiss in the
selection and/or supervision of the
negligent employee. To avoid liability for
the
quasi-delict
committed
by
its
employee, it is incumbent upon the
employer to rebut this presumption by
presenting adequate and convincing proof
that it exercised the care and diligence of
a good father of a family in the selection
it must be noted that the case at hand

does not involve a breach of contract of
carriage, as in Tamayo, but a tort or
quasi-delict under Article 2176, in relation
to Article 2180 of the New Civil Code. As
such, the liability for which petitioner is
being made responsible actually arises not
from a pre-existing contractual relation
between petitioner and the deceased, but
from a damage caused by the negligence
of its employee. Petitioner cannot,
therefore, rely on our ruling in Tamayo
and escape its solidary liability for the
liability of the employer for the negligent
conduct of its subordinate is direct and
primary, subject only to the defense of
due diligence in the selection and
supervision ofthe employee.
Hence, considering that the negligence of
driver Gimena was sufficiently proven by
the records of the case, and that no
evidence
of
whatever
nature
was
presented by petitioner to support its
defense of due diligence in the selection

17
7

and
supervision
of
its
employees,
petitioner, as the employer of Gimena,
may be held liable for damages arising
from the death of respondent Y u's wife.
New World Developers and Management,
Inc. Vs. AMA Computer Learning
Center, Inc./AMA Computer Learning
Center,
Inc.
Vs.
New
World
Developers and Management, Inc.
G.R. Nos. 187930 & 188250. February 23,
2015
1. I.
and conditions as they may deem

convenient, provided
they are not
contrary to law, morals, good customs,
public order, or public policy.
AMA is liable for six months

worth of rent as liquidated
damages.
It is quite easy to understand the reason

why a lessor would impose liquidated
damages
in
the
event
of
the
pretermination of a lease contract.
Pretermination is effectively the breach of
a contract, that was originally intended to
cover an agreed upon period of time. A
definite period assures the lessor a steady
income for the duration. A pretermination
would suddenly cut short what would
otherwise have been a longer profitable
relationship. Along the way, the lessor is
bound to incur losses until it is able to find
a new lessee, and it is this loss of income
that is sought to be compensated by the
payment of liquidated damages.
Mariflor T. Hortizuela (represented by
Jovier Tagufa) Vs. Gregoria Tagufa,
Roberto Tagufa and Rogelio Lumaban
G.R. No. 205867. February 23, 2015
Contrary to the pronouncements of
the MCTC and the CA, however,
the complaint of Hortizuela was not
a collateral attack on the title
warranting dismissal. As a matter
of fact, an action for reconveyance
is a recognized remedy, an action
in personam, available to a person
whose
property
has
been
wrongfully registered under the
Torrens system in anothers name.
In an action for reconveyance, the
decree is not sought to be set
aside. It does not seek to set aside
the decree but, respecting it as
incontrovertible and no longer open
to review, seeks to transfer or
reconvey the land from the
registered owner to the rightful
Quite notable is the fact that AMA never

denied its liability for the payment of
liquidated damages in view of its
pretermination of the lease contract with
New World. What it claims, however, is
that it is entitled to the reduction of the
amount due to the serious business losses
it suffered as a result of a drastic decrease
in its enrollment.
The law does not relieve a party from the
consequences of a contract it entered into
with all the required formalities. Courts
have no power to ease the burden of
obligations voluntarily assumed by parties,
just because things did not turn out as
expected at the inception of the contract.
It must also be emphasized that AMA is an
entity that has had significant business
experience, and is not a mere babe in the
woods.
Articles 1159 and 1306 of the Civil Code
state:
Art. 1159. Obligations arising from
contracts have the force of law between
the contracting parties and should be
complied with in good faith.
xxx x
The fundamental rule is that a contract is

the law between the parties. Unless it has
been shown that its provisions are wholly
or in part contrary to law, morals, good
customs, public order, or public policy, the
contract will be strictly enforced by the
courts.
Art. 1306. The contracting parties may

establish such stipulations, clauses, terms
17
8

owner. Reconveyance is always

available as long as the property
has not passed to an innocent third
person for value.
There is no quibble that a
certificate of title, like in the case
at bench, can only be questioned
through a direct proceeding. The
MCTC and the CA, however, failed
to take into account that in a
complaint for reconveyance, the
decree of registration is respected
as incontrovertible and is not being
questioned. What is being sought is
the transfer of the property
wrongfully
or
erroneously
registered in another's name to its
rightful owner or to the one with a
better right. If the registration of
the land is fraudulent, the person
in whose name the land is
registered holds it as a mere
trustee, and the real owner is
entitled to file an action for
reconveyance of the property.
The fact that Gregoria was able to secure

a title in her name does not operate to
vest ownership upon her of the subject
land. Registration of a piece of land under
the Torrens System does not create or
vest title, because it is not a mode of
acquiring ownership. A certificate of title is
merely an evidence of ownership or title
over the particular property described
therein. It cannot be used to protect a
usurper from the true owner; nor can it be
used as a shield for the commission of
fraud; neither does it permit one to enrich
himself at the expense of others. Its
issuance in favor of a particular person
does not foreclose the possibility that the
real property may be co-owned with
persons not named in the certificate, or
that it may be held in trust for another
person by the registered owner.
The Court is not unaware of the rule that
a fraudulently acquired free patent may
only be assailed by the government in an
action for reversion pursuant to Section
101 of the Public Land Act.
An action for reconveyance is proper

The foregoing rule is, however, not
without exception. A recognized exception
is that situation where plaintiff-claimant
seeks direct reconveyance from defendant
of public land unlawfully and in breach of
trust titled by him, on the principle of
enforcement of a constructive trust.
In this case, in filing the complaint for
reconveyance and recovery of possession,
Hortizuela
was
not
seeking
a
reconsideration of the granting of the
patent or the decree issued in the
registration proceedings. What she was
seeking was the reconveyance of the
subject property on account of the fraud
committed by respondent Gregoria. An
action for reconveyance is a legal and
equitable remedy granted to the rightful
landowner, whose land was wrongfully or
erroneously registered in the name of
another, to compel the registered owner
to transfer or reconvey the land to him.
Thus, the RTC did not err in upholding the
right of Hortizuela to ask for the
reconveyance of the subject property. To
hold otherwise would be to make the
Torrens
system
a
shield
for
the
commission of fraud.


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1

COMPILATION OF SUPREME COURT DECISIONS

G.R. No. 193684

A third party who did not

While the Petition does not squarely

guilty unless it actually took part in the

Network Bank did not violate any of

COMPILATION OF SUPREME COURT DECISIONS

plus interest of the money placement has

through a presidential proclamation or

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

replaced the 30-year period of possession

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

Declaration No. 8366 was a new tax

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

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

Sections 181 and 267 of the Local

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

This ownership is the petitioners basis in

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

This appeal is taken by a physiciananesthesiologist who has been

Applicability of the Doctrine of Res

ordinarily occur in the process of a pullthrough

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

decree was flawed in logic and in law.

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

branch of art, occupation or business,

Under Section 14(1), therefore, the

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

Yet, even assuming that the DENR-CENRO

In her act of dishonesty, respondent failed

the penalties under the Revised Uniform

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

by the Bank to the Debtor, including

Patag, Cagayan de Oro City falls within

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

classified as part of the disposable and

petitioners was that the deed of real

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

registered in the Register of Deeds in view

on the certificate of title of the mortgagor

Petitioners imputed negligence on the part

In this case, we find that the respondent

[i]n cases where the mortgagee does not

The petition is meritorious.

and harvesting of sugarcane cannot

Prepared by: ATTY. RESCI ANGELLI RIZADA, RN

COMPILATION OF SUPREME COURT DECISIONS

Since the subject land was not mortgaged

A CLT does not automatically grant a

Having established that the disputed