You are on page 1of 135

CIVIL LAW REVIEW II

CASE DIGESTS
OBLIGATIONS
1. G.R. No. L-20865, December 29, 1967
ASELA P. TACTAQUINvs.JOSE B. PALILEO
Facts:
Tactaquin filed an action for damages against
Pailileo for the death of her daughter and serious
physical injuries inflicted upon her when a car
recklessly driven by Palileo hit them. Prior to the
reservation for the institution of a separate civil
action, Palileo was charged criminally and was
found guilty of homicide, with serious physical
injuries, through reckless imprudence, and was
sentenced not only to suffer imprisonment but
also to pay for damages. Because of this, Palileo
moved to dismiss the civil case for damages,
upon the ground that the action was already
barred by the final judgment rendered in the
criminal case. Sustaining this motion the lower
court dismissed the case (for damages).
Issue:
Can Tactaquin recover damages in a separate
civil action despite a prior award for damages in a
criminal action?
Ruling:
Yes. The private prosecutor timely made a
reservation on behalf of the offended party in
connection with the filling of separate civil action;
as a result thereof, the question of civil liability
was automatically taken out of the case and was
not before the court any longer. Upon these
premises, the conclusion becomes inescapable
that the portion of the decision of the Court in the
Criminal Case concerning civil indemnity was a
nullity, and being so, it cannot be accorded the
authority of res judicata.

The rule in this connection is that when a criminal


action is instituted, the civil action for recovery of
civil liability arising from the offense charged is
impliedly instituted with it "unless the offended
party expressly waives the civil action or reserves
his right to institute it separately." While the rule
does not say when or at what stage of the
criminal proceeding the reservation should be
made, it seems logical to presume that for the
reservation to be timely and legally effective, it
must be made as in present case before the
rendition of judgment.
2. G.R. No. L-40486, August 29, 1975
PAULINO PADUA and LUCENA BEBIN PADUA
vs.GREGORIO N. ROBLES and BAY TAXI CAB
Facts:
A taxicab operated by the Bay Taxi Cab owned by
Robles struck Normandy Padua, as a result of
which he died. Normandy's parents filed a
complaint for damages (civil case) against the
driver and the Bay Taxi Cab. The city Fiscal filed
with the same court an information for homicide
through reckless imprudence (criminal case). The
court in the civil case ordered the driver to pay
actual, moral, exemplary damages and attorneys
fees. On the other hand, in the criminal case, the
driver is convicted of the crime of homicide
through reckless imprudence. The court in its
dispositive portion stated that the civil liability of
the accused has already been determined and
assessed in the civil case.
The Paduas sought execution of the judgment.
This proved futile. They instituted an action
against Robles to enforce his subsidiary
responsibility under Article 103, RPC. Robles filed
a motion to dismiss which was granted on the
ground that the complaint states no cause of
action.
Issue:
Whether or not the judgment in the criminal case
includes a determination and adjudication of
Punzalans civil liability arising from his criminal

UNIVERSITY OF CEBU COLLEGE OF LAWPage 1


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

act
upon which Robles
responsibility may be based.

subsidiary

civil

Ruling:
Yes. Paduas' complaint in civil case states a cause
of action against Robles whose concomitant
subsidiary responsibility, per the judgment in
criminal case, subsists. The said judgment states
no civil liability arising from the offense charged
against Punzalan. However, a careful study of the
judgment in question, the situation to which it
applies, and the attendant circumstances, the
court a quo, on the contrary, recognized the
enforceable right of the Paduas to the civil
liability arising from the offense committed by
Punzalan and awarded the corresponding
indemnity therefore.
Civil liability coexists with criminal responsibility.
In negligence cases the offended party (or his
heirs) has the option between an action for
enforcement of civil liability based on culpa
criminal under article 100 of the Revised Penal
Code and an action for recovery of damages
based on culpa aquiliana under article 2177 of
the Civil Code. The action for enforcement of civil
liability based on culpa criminal section 1 of Rule
111 of the Rules of Court deems simultaneously
instituted with the criminal action, unless
expressly waived or reserved for a separate
application by the offended party. Article 2177 of
the Civil Code, however, precludes recovery of
damages twice for the same negligent act or
omission.
It is immaterial that the Paduas chose, in the first
instance, an action for recovery of damages
based on culpa aquiliana under articles 2176,
2177, and 2180 of the Civil Code, which action
proved ineffectual. Allowance of the latter
application involves no violation of the
proscription against double recovery of damages
for the same negligent act or omission. For, as
hereinbefore stated, the corresponding officer of
the court a quo returned unsatisfied the writ of
execution issued against Punzalan to satisfy the
amount of indemnity awarded to the Paduas in
the civil case.

The substance of such statement, taken in the


light of the situation to which it applies and the
attendant circumstances, makes unmistakably
clear the intention of the court to accord
affirmation to the Paduas' right to the civil liability
arising from the judgment against Punzalan in the
criminal case. Indeed, by including such
statement in the decretal portion of the said
judgment, the court intended to adopt the same
adjudication and award it made in the civil case
as Punzalan's civil liability in the criminal case.
Court a quo decision set aside. Case remanded to
the court a quo for further proceedings.
3. G.R. No. L-24837, June 27, 1968
JULIAN C. SINGSON and RAMONA DEL
CASTILLO vs.BANK OF THE PHILIPPINE
ISLANDS and SANTIAGO FREIXAS, in his
capacity as President of the said Bank
Facts:
Singson, was one of the defendants in a civil
case, in which judgment had been rendered
sentencing him and his co-defendants therein
Lobregat and Villa-Abrille & Co., to pay a sum of
money to the plaintiff therein. Said judgment
became final and executory as only against VilleAbrille for its failure to file an appeal. A writ of
garnishment was subsequently served upon BPI
in which the Singsons had a current account
insofar as Villa-Abrilles credits against the Bank
were concerned.
Upon receipt of the said Writ of Garnishment, a
clerk of the bank, upon reading the name of the
Singson in the title of the Writ of Garnishment as
a party defendants, without further reading the
body and informing himself that said garnishment
was merely intended for the deposits of
defendant Villa-Abrille & Co., et al, prepared a
letter informing Singson of the garnishment of his
deposits by the plaintiff in that case.
Subsequently, two checks issued by the plaintiff
Julian C. Singson, one in favor of B. M. Glass
Service and another in favor of the Lega
Corporation, were dishonored by the bank. B. M.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 2


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Glass Service then wrote to Singson that the


check was not honored by BPI because his
account therein had already been garnished and
that they are now constrained to close his credit
account with them.
Singson wrote to BPI, claiming that his name was
not included in the Writ of Execution and Notice
of Garnishment, which was served upon the bank.
The defendants lost no time to rectify the mistake
that had been inadvertently committed.
Thus. this action for damages due to illegal
freezing.
Issue:
Whether or not the existence of a contract
between the parties bars a plaintiffs claim for
damages based on torts.
Ruling:
No. The existence of a contract between the
parties does not bar the commission of a tort by
the one against the order and the consequent
recovery of damages therefore. Indeed, this view
has been, in effect, reiterated in a comparatively
recent case. Thus, in Air France vs. Carrascoso,
involving an airplane passenger who, despite his
first-class ticket, had been illegally ousted from
his first-class accommodation and compelled to
take a seat in the tourist compartment, was held
entitled to recover damages from the air-carrier,
upon the ground of tort on the latters part, for,
although the relation between a passenger and a
carrier is contractual both in origin and nature
the act that breaks the contract may also be a
tort.
In view, however, of the facts obtaining in the
case at bar, and considering, particularly, the
circumstance, that the wrong done to the plaintiff
was remedied as soon as the President of the
bank realized the mistake he and his subordinate
employee had committed, the Court finds that an
award of nominal damages the amount of
which need not be proven in the sum of
P1,000, in addition to attorneys fees in the sum

of P500, would suffice to vindicate plaintiffs


rights.
4. G.R. No. L-27730, January 21, 1974
PRIMA MALIPOL, in her own behalf and as
guardian ad litem of her minor children,
LYDIA
MALIJAN,
JOSEFINA
MALIJAN,
TEODORA MALIJAN, and SEBASTIAN MALIJAN
vs.LILY LIM TAN and ERNESTO LABSAN
Facts:
In the evening of February 6, 1965, at about 8:35
o'clock, Pantaleon Malijan, who was walking with
his companion Leonardo Amante on the shoulder
of the road in Barrio San Felix, Sto. Tomas,
Batangas, was hit by a gasoline tanker and was
thrown to the ground. While he was sprawling on
the ground Malijan was run over by the tanker's
right wheel that got detached from its axle.
Malijan's companion, with the aid of the barrio
captain, brought Malijan to the San Pablo City
Hospital where he died that same night, the
cause of death being "possible traumatic cerebral
hemorrhage due to vehicular accident."
The gasoline tanker with Plate No. T-52573, series
of 1964, driven at the time of the accident by
herein appellant Ernesto Labsan, was being used
in connection with the gasoline business of the
owner, the herein appellant Lily Lim Tan.
Representations and demands for payment of
damage having been ignored by appellants,
appellees filed on May 18, 1966 a complaint in
the Court of First Instance of Batangas praying
that appellants be condemned to pay, jointly and
severally, the damages as specified in said
complaint. The appellees are the mother and the
minor brothers and sisters of the deceased
Pantaleon Malijan.
The lower court rendered a decision making the
driver, Ernesto Labsan, primarily liable for the
payment of damages adjudged therein, and the
appellant Lily Lim Tan, being the owner and
operator of the gasoline tanker that figured in the
accident, is subsidiarily liable, that is, liable only
in case Ernesto Labsan was not able to pay.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 3


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Issue:
Whether or not the decision of the lower court is
proper?
Ruling:
This is not correct. We must, however, point out a
flaw in the decision of the lower court. It is stated
in the decision appealed from that the driver,
Ernesto Labsan, was primarily liable for the
payment of damages adjudged therein, and the
appellant Lily Lim Tan, being the owner and
operator of the gasoline tanker that figured in the
accident, is subsidiarily liable, that is, liable only
in case Ernesto Labsan was not able to pay.
The action in the instant case was brought not to
demand civil liability arising from a crime. The
complaint makes no mention of a crime having
been committed, much less of the driver Ernesto
Labsan having been convicted of a crime. But
there is an allegation in the complaint that
Ernesto Labsan was the authorized driver of the
truck that figured in the accident, which truck
was operated by appellant Lily Lim Tan in
connection with her gasoline business. The prayer
in the complaint, furthermore, sought to hold
appellants jointly and solidarily liable for
damages. The instant action, therefore, was
based, as the complaint shows, on quasi delict.
Under Article 218 of the Civil Code, which treats
of quasi delicts, the liability of the owners and
managers of an establishment or enterprise for
damages caused by their employees is primary
and direct, not subsidiary. The employer,
however, can demand from his employee
reimbursement of the amount which he paid
under his liability. The employer, appellant Lily
Lim Tan, must be held primarily and directly, not
subsidiarily, liable for damages awarded in the
decision of the lower court. This is, of course,
without prejudice to the right of appellant Lily Lim
Tan to demand from her co-appellant Ernesto
Labsan reimbursement of the damages that she
would have to pay to appellees.

5. G.R. No. L-34529, January 27, 1983


MAXIMO MARCIA, AMALIA MOJICA, TIRSO
YAP, DAMIANA MARCIA, EDGAR MARCIA, and
RENATO
YAPvs.COURT
OF
APPEALS,
FELARDO PAJE, and VICTORY LINER, INC.
Facts:
A passenger bus operated by private respondent
Victory Liner, Inc. and driven by its employee,
private respondent Felardo Paje, collided with a
jeep driven by Clemente Marcia, resulting in the
latter's death and in physical injuries to herein
petitioners, Edgar Marcia and Renato Yap. An
information for homicide and serious physical
injuries thru reckless imprudence was filed
against Felardo Paje.
An action for damages was filed by Edgar Marcia
and Renato Yap against Victory Liner, Inc. and
Felardo Paje, alleging that, the mishap was due to
the reckless imprudence and negligence of the
latter in driving the passenger bus.
While said civil case was in progress in one court,
the criminal action proceeded in another court.
The accused Felardo Paje was convicted of the
offense charged. However, on appeal to the CA,
he was acquitted based on the findings and the
conclusion that "CRIMINAL NEGLIGENCE is
WANTING in this case, and that appellant was
NOT even guilty of CIVIL NEGLIGENCE. Insofar as
appellant was concerned, it was a case of PURE
ACCIDENT."
As a consequence, herein private respondents,
defendants in the civil case, moved for the
dismissal of the complaint invoking the decision
of the CA acquitting Felardo Paje. The trial court
rendered
a
decision
dismissing
plaintiffs'

UNIVERSITY OF CEBU COLLEGE OF LAWPage 4


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

complaint against the defendants Victory Liner,


Inc. and Felardo Paje.
Petitioners appealed the case alleging that the
acquittal of Paje in the criminal action is not a
ground for dismissing the complaint in the instant
civil action; that the instant civil action is entirely
separate and distinct from the criminal action and
shall proceed independently of the criminal
prosecution, so that whatever may have been the
result of the criminal action is irrelevant to this
civil action.

Issue:
Whether or not the civil action is an independent
one, entirely separate and distinct from the
criminal action.
Ruling:
No. It is the stand of herein petitioners that
Section 2, Rule 111 of the Rules of Court, not
Section 3 (c) thereof, should apply in the case at
bar. We do not agree, Section 2 of Rule 111
merely refers to the institution of an independent
civil action without waiting for the filing or
termination of the criminal action and requires
only preponderance of evidence to prosper and
not proof beyond reasonable doubt as required
for conviction in criminal cases. However, an
acquittal based on the finding that the facts upon
which civil liability did not exist, bars the filing of
an independent civil action if it is based on the
crime.
As held in Corpus vs. Paje, reckless imprudence
or criminal negligence is not one of the three
crimes mentioned in Article 33 of the Civil Code.
Article 33 speaks only of defamation, fraud and
physical injuries. The injuries suffered by herein
petitioners were alleged to be the result of
criminal negligence; they were not inflicted with
malice. Hence, no independent civil action for
damages may be instituted in connection
therewith.

Further, Section 3 (c), Rule 111 of the Rules of


Court states that "Extinction of the penal action
does not carry with it extinction of the civil,
unless the extinction proceeds from a declaration
in a final judgment that the fact from which the
civil might arise did not exist." Otherwise stated,
unless the act from which the civil liability arises
is declared to be nonexistent in the final
judgment, the extinction of the criminal liability
will not carry with it the extinction of the civil
liability.
The charge against Felardo Paje was not for
homicide and physical injuries but for reckless
imprudence or criminal negligence resulting in
homicide (death of Clemente Marcia) and
physical injuries suffered by Edgar Marcia and
Renato Yap. They are not one of the three (3)
crimes mentioned in Article 33 of the Civil Code
and, therefore, no civil action shall proceed
independently of the criminal prosecution. The
decision appealed from is hereby AFFIRMED in
toto.

6. G.R. No. 92087, May 8, 1992


SOFIA FERNANDO, in her behalf and as the
legal guardian of her minor children,
namely: ALBERTO & ROBERTO, all surnamed
FERNANDO,
ANITA
GARCIA,
NICOLAS
LIAGOSO, ROSALIA BERTULANO, in her
behalf and as the legal guardian of her
minor
children,
namely:
EDUARDO,
ROLANDO, DANIEL, AND JOCELYN, all
surnamed BERTULANO, PRIMITIVA FAJARDO
in her behalf and as legal guardian of her
minor children, namely: GILBERT, GLEN,
JOCELYN AND JOSELITO, all surnamed
FAJARDO, and EMETERIA LIAGOSO, in her
behalf and as guardian ad litem, of her
minor
grandchildren,
namely:
NOEL,
WILLIAM,
GENEVIEVE
and
GERRY,
all
surnamed LIAGOSO vs.THE HONORABLE
COURT OF APPEALS AND CITY OF DAVAO
Facts:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 5


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Bibiano Morta, market master of the Agdao Public


Market, filed a requisition request with the Chief
of Property of the City Treasurer's Office for the
re-emptying of the septic tank in Agdao. An
invitation to bid was issued to 5 persons. Antonio
Suer, Jr. Bascon won the bid. On November 26,
1975, Bascon was notified and he signed the
purchase order. However, before such date, on
November 22, 1975, bidder Bertulano, with four
other companions were found dead inside the
septic tank. The bodies were removed by a
fireman. The City Engineer's office investigated
the case and learned that the five victims entered
the septic tank without clearance from it nor with
the knowledge and consent of the market master.
In fact, the septic tank was found to be almost
empty and the victims were presumed to be the
ones who did the re-emptying. In the autopsy
reports, the cause of death of all five victims was
"asphyxia" caused by the diminution of oxygen
supply in the body working below normal
conditions. The lungs of the five victims burst,
swelled in hemorrhagic areas and this was due to
their intake of toxic gas, which, in this case, was
sulfide gas produced from the waste matter
inside the septic tank.
The trial court dismissed the case. CA reversed
and set aside the appealed judgment and ordered
the defendant to pay to the plaintiffs damages.
However, CA rendered an Amended Decision
granting the motion for reconsideration of the
defendant-appellee Davao City and dismissed the
case.

Issues:
Whether or not respondent Davao City is guilty of
negligence. If yes, whether or not such
negligence is the immediate and proximate cause
of the death of the victims.
Ruling:

No. Negligence is 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. Under the law, a
person who by his omission causes damage to
another, there being negligence, is obliged to pay
for the damage done (Article 2176, New Civil
Code).
The test by which to determine the existence of
negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged
negligent act use that reasonable care and
caution which an ordinarily prudent person would
have used in the same situation? If not, then he is
guilty of negligence.
The question as to what would constitute the
conduct of a prudent man in a given situation
must of course be always determined in the light
of human experience and in view of the facts
involved in the particular case. Could a prudent
man, in the case under consideration, foresee
harm as a result of the course actually pursued?
If so, it was the duty of the actor to take
precautions to guard against that harm.
Reasonable foresight of harm, followed by the
ignoring of the suggestion born of this provision,
is always necessary before negligence can be
held to exist. The proper criterion for determining
the existence of negligence in a given case is
this: Conduct is said to be negligent when a
prudent man in the position of the tortfeasor
would have foreseen that an effect harmful to
another was sufficiently probable warrant his
foregoing conduct or guarding against its
consequences.
To be entitled to damages for an injury resulting
from the negligence of another, a claimant must
establish the relation between the omission and
the damage. He must prove under Article 2179 of
the New Civil Code that the defendant's
negligence was the immediate and proximate
cause of his injury. Proximate cause has been
defined as that cause, which, in natural and
continuous sequence unbroken by any efficient
intervening cause, produces the injury, and

UNIVERSITY OF CEBU COLLEGE OF LAWPage 6


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

without which the result would not have occurred.


Distinction must be made between the accident
and the injury, between the event itself, without
which there could have been no accident, and
those acts of the victim not entering into it,
independent of it, but contributing to his own
proper hurt.
Petitioners fault the city government of Davao for
failing to clean a septic tank for the period of 19
years resulting in an accumulation of hydrogen
sulfide gas which killed the laborers. They submit
that the public respondent's gross negligence was
the proximate cause of the fatal incident. We do
not subscribe to this view. While it may be true
that the public respondent has been remiss in its
duty to re-empty the septic tank annually, such
negligence was not a continuing one. Upon
learning from the report of the market master
about the need to clean the septic tank of the
public toilet in Agdao Public Market, the public
respondent immediately responded by issuing
invitations to bid for such service. Thereafter, it
awarded the bid to the lowest bidder, Mr.
Feliciano
Bascon.
The
public
respondent,
therefore, lost no time in taking up remedial
measures to meet thesituation. It is likewise an
undisputed fact that despite the public
respondent's failure to re-empty the septic tank
since 1956, people in the market have been using
the public toilet for their personal necessities but
have remained unscathed.
The absence of any accident was due to the
public respondent's compliance with the sanitary
and plumbing specifications in constructing the
toilet and the septic tank. Hence, the toxic gas
from the waste matter could not have leaked out
because the septic tank was air-tight. The only
indication that the septic tank was full and
needed emptying was when water came out from
it. Yet, even when the septic tank was full, there
was no report of any casualty of gas poisoning
despite the presence of people living near it or
passing on top of it or using the public toilet for
their personal necessities.
We also do not agree with the petitioner's
submission that warning signs of noxious gas

should have been put up in the toilet. Toilets and


septic tanks are not nuisances per se as defined
in Article 694 of the New Civil Code which would
necessitate warning signs for the protection of
the public. While the construction of these public
facilities demands utmost compliance with safety
and sanitary requirements, the putting up of
warning signs is not one of those requirements.
It would appear that an accident such as toxic
gas leakage from the septic tank is unlikely to
happen unless one removes its covers. The
accident in the case at bar occurred because the
victims on their own and without authority from
the public respondent opened the septic tank.
Considering the nature of the task of emptying a
septic tank especially one which has not been
cleaned for years, an ordinarily prudent person
should undoubtedly be aware of the attendant
risks. The victims are no exception; more so with
Mr. Bertulano, an old hand in this kind of service,
who is presumed to know the hazards of the job.
His failure, therefore, and that of his men to take
precautionary measures for their safety was the
proximate cause of the accident.
Petitioners further contend that the failure of the
market master to supervise the area where the
septic tank is located is a reflection of the
negligence of the public respondent. We do not
think so. The market master knew that work on
the septic tank was still forthcoming. The bidding
had just been conducted. Although the winning
bidder was already known, the award to him was
still to be made by the Committee on Awards.
Upon the other hand, the accident which befell
the victims who are not in any way connected
with the winning bidder, happened before the
award could be given. Hence, the duty of the
market master or his security guards to supervise
the work could not have started. Also, the victims
could not have been seen working in the area
because the septic tank was hidden by a garbage
storage which is more or less ten (10) meters
away from the comfort room itself. The
surreptitious way in which the victims did their
job without clearance from the market master or
any of the security guards goes against their
good faith.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 7


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Finally, petitioners' insistence on the applicability


of Article 24 of the New Civil Code cannot be
sustained. We approve of the appellate court's
ruling that "while one of the victims was invited
to bid for said project, he did not win the bid,
therefore, there is a total absence of contractual
relations between the victims and the City
Government of Davao City that could give rise to
any contractual obligation, much less, any
liability on the part of Davao City." The accident
was indeed tragic and We empathize with the
petitioners. However, the herein circumstances
lead Us to no other conclusion than that the
proximate and immediate cause of the death of
the victims was due to their own negligence.
Consequently, the petitioners cannot demand
damages from the public respondent. The
amended decision of the CA is AFFIRMED.

7. G.R. No. 104408, June 21, 1993


METRO
MANILA
TRANSIT
CORPORATIONvs.THE COURT OF APPEALS
AND NENITA CUSTODIA
Facts:
At about 6 o'clock in the morning of August 28,
1979, plaintiff-appellant Nenita Custodio boarded
as a paying passenger in PUJ, then driven by
defendant Agudo Calebag and owned by his codefendant Victorino Lamayo, bound for her work,
where she then worked as a machine operator
earning P16.25 a day. While the passenger
jeepney was travelling at (a) fast clip along DBP
Avenue, another fast moving vehicle, a Metro
Manila Transit Corp. (MMTC, for short) driven by
defendant
Godofredo
C.
Leonardo
was
negotiating Honeydew Road, bound for its
terminal at Bicutan. As both vehicles approached
the intersection of DBP Avenue and Honeydew
Road they failed to slow down and slacken their
speed; neither did they blow their horns to warn
approaching vehicles. As a consequence, a
collision between them occurred, the passenger

jeepney ramming the left side portion of the


MMTC bus. The collision impact caused plaintiffappellant Nenita Custodio to hit the front
windshield of the passenger jeepney and (she)
was thrown out therefrom, falling onto the
pavement unconscious with serious physical
injuries. She was brought to the Medical City
Hospital where she regained consciousness only
after one (1) week. Thereat, she was confined for
twenty-four (24) days, and as a consequence, she
was unable to work for three and one half months
(3 1/2). A complaint for damages was filed by
herein private respondent, who being then a
minor was assisted by her parents, against all of
therein named defendants following their refusal
to pay the expenses incurred by the former as a
result of the collision.
Said defendants denied all the material
allegations in the complaint. Further, MMTC, a
GOCC and one of the defendants in the court a
quo, contrarily averred in its answer with crossclaim and counterclaim that it was the passenger
jeepney which was driven recklessly, and that it
was defendant Lamayo, the owner of the jeepney
and employer of driver Calebag, who failed to
exercise due diligence in the selection and
supervision of employees and should thus be held
solidarily liable for damages caused to the MMTC
bus through the fault and negligence of its
employees.
Defendant Victorino Lamayo, for his part, alleged
in his answer with cross-claim and counterclaim
that the damages suffered by therein plaintiff
should be borne by defendants MMTC and its
driver, Godofredo Leonardo, because the latter's
negligence was the sole and proximate cause of
the accident and that MMTC failed to exercise due
diligence in the selection and supervision of its
employees.
The trial court dismissed the case against MMTC,
and order Calebag, Lamayo and Leonardo to pay
plaintiff. Plaintiff's MR having been denied for lack
of merit, an appeal was filed by her with
respondent appellate court. The CA modified the
trial court's decision by holding MMTC solidarily
liable with the other defendants for the damages

UNIVERSITY OF CEBU COLLEGE OF LAWPage 8


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

awarded by the trial court because of their


concurrent negligence, concluding that while
there is no hard and fast rule as to what
constitutes sufficient evidence to prove that an
employer has exercised the due diligence
required of it in the selection and supervision of
its employees, based on the quantum of evidence
adduced the said appellate court was not
disposed to say that MMTC had exercised the
diligence required of a good father of a family in
the selection and supervision of its driver,
Godofredo Leonardo.
The CA denied the MR of Custodio and appellant
MMTC, thus prompting MMTC to file appeal
invoking the review powers of SC.
Issue:
Whether or not the evidence presented during
the trial with respect to the proof of due diligence
of petitioner MMTC in the selection and
supervision of its employees, particularly driver
Leonardo, is sufficient.
Ruling:
The evidence presented by petitioner were not
sufficiently convincing to prove the diligence of a
good father of a family, which for an employer
doctrinally translates into its observance of due
diligence in the selection and supervision of its
employees but which mandate, to use an oftquoted phrase, is more often honored in the
breach than in the observance.
Petitioner attempted to essay in detail the
company's procedure for screening job applicants
and supervising its employees in the field,
through the testimonies of Milagros Garbo, as its
training officer, and Christian Bautista,as its
transport supervisor, both of whom naturally and
expectedly testified for MMTC. These statements
strike us as both presumptuous and in the nature
of petitio principii, couched in generalities and
shorn of any supporting evidence to boost their
verity. As earlier observed, respondent court
could not but express surprise, and thereby its
incredulity, that witness Garbo neither testified

nor presented any evidence that driver Leonardo


had complied with or had undergone all the
clearances and trainings she took pains to recite
and enumerate. The supposed clearances, results
of seminars and tests which Leonardo allegedly
submitted and complied with were never
presented in court despite the fact that, if true,
then they were obviously in the possession and
control of petitioner.
The case at bar is clearly within the coverage of
Article 2176 and 2177, in relation to Article 2180,
of the Civil Code provisions on quasi-delicts as all
the elements thereof are present, to wit: (1)
damages suffered by the plaintiff, (2) fault or
negligence of the defendant or some other
person for whose act he must respond, and (3)
the connection of cause and effect between fault
or negligence of the defendant and the damages
incurred by plaintiff.
Article 2180 is applicable only where there is an
employer-employee relationship, although it is
not necessary that the employer be engaged in
business or industry. Whether or not engaged in
any business or industry, the employer under
Article 2180 is liable for torts committed by his
employees within the scope of their assigned
tasks. But, it is necessary first to establish the
employment relationship. Once this is done, the
plaintiff must show, to hold the employer liable,
that the employee was acting within the scope of
his assigned task when the tort complained of
was committed. It is only then that the
defendant, as employer, may find it necessary to
interpose the defense of due diligence in the
selection and supervision of employees. The
diligence of a good father of a family required to
be observed by employers to prevent damages
under Article 2180 refers to due diligence in the
selection and supervision of employees in order
to protect the public.
We have consistently held that where the injury is
due to the concurrent negligence of the drivers of
the colliding vehicles, the drivers and owners of
the said vehicles shall be primarily, directly and
solidarily liable for damages and it is immaterial
that one action is based on quasi-delict and the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 9


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

other on culpa contractual, as the solidarily of the


obligation is justified by the very nature thereof.
On the matter of selection of employees, Campo
vs. Camarote, supra, lays down this admonition:
In order that the owner of a vehicle may be
considered as having exercised all diligence of a
good father of a family, he should not have been
satisfied with the mere possession of a
professional driver's license; he should have
carefully examined the applicant for employment
as to his qualifications, his experience and record
of service. These steps appellant failed to
observe; he has therefore, failed to exercise all
due diligence required of a good father of a family
in the choice or selection of driver.
Due diligence in the supervision of employees, on
the other hand, includes the formulation of
suitable rules and regulations for the guidance of
employees
and
the
issuance
of
proper
instructions intended for the protection of the
public and persons with whom the employer has
relations through his or its employees and the
imposition of necessary disciplinary measures
upon employees in case of breach or as may be
warranted to ensure the performance of acts
indispensable to the business of and beneficial to
their employer. To this, we add that actual
implementation and monitoring of consistent
compliance with said rules should be the constant
concern of the employer, acting through
dependable supervisors who should regularly
report on their supervisory functions.
In order that the defense of due diligence in the
selection and supervision of employees may be
deemed sufficient and plausible, it is not enough
to emptily invoke the existence of said company
guidelines and policies on hiring and supervision.
As the negligence of the employee gives rise to
the presumption of negligence on the part of the
employer, the latter has the burden of proving
that it has been diligent not only in the selection
of employees but also in the actual supervision of
their work. The mere allegation of the existence
of hiring procedures and supervisory policies,
without anything more, is decidedly not sufficient
to overcome presumption.

Finally, we believe that respondent court acted in


the exercise of sound discretion when it affirmed
the trial court's award, without requiring the
payment of interest thereon as an item of
damages just because of delay in the
determination thereof, especially since private
respondent did not specifically pray therefor in
her complaint. WHEREFORE, the impugned
decision of respondent CA is hereby AFFIRMED.

8. G.R. No. 70890, September 18, 1992


CRESENCIO LIBI * and AMELIA YAP LIBI
vs.HON. INTERMEDIATE APPELLATE COURT,
FELIPE GOTIONG and SHIRLEY GOTIONG
Facts:
Synthesized from the findings of the lower courts,
it appears that respondent spouses are the
legitimate parents of Julie Ann Gotiong who, at
the time of the deplorable incident which took
place and from which she died on January 14,
1979, was an 18-year old first year commerce
student of the USC, Cebu City; while petitioners
are the parents of Wendell Libi, then a minor
between 18 and 19 years of age living with his
aforesaid parents, and who also died in the same
event on the same date.
For more than two (2) years before their deaths,
Julie Ann Gotiong and Wendell Libi were
sweethearts until December, 1978 when Julie Ann
broke up her relationship with Wendell after she
supposedly found him to be sadistic and
irresponsible. During the first and second weeks
of January, 1979, Wendell kept pestering Julie Ann
with demands for reconciliation but the latter
persisted in her refusal, prompting the former to
resort to threats against her. In order to avoid
him, Julie Ann stayed in the house of her best
friend, Malou Alfonso, from January 7 to 13, 1978.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 10


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

On January 14, 1979, Julie Ann and Wendell died,


each from a single gunshot wound inflicted with
the same firearm, a Smith and Wesson revolver
licensed in the name of petitioner Cresencio Libi,
which was recovered from the scene of the crime
inside the residence of private respondents at the
corner of General Maxilom and D. Jakosalem
streets of the same city.
Due to the absence of an eyewitness account of
the circumstances surrounding the death of both
minors, their parents, who are the contending
parties herein, posited their respective theories
drawn from their interpretation of circumstantial
evidence, available reports, documents and
evidence of physical facts.
Private respondents, submitted that Wendell
caused her death by shooting her with the
aforesaid firearm and, thereafter, turning the gun
on himself to commit suicide. On the other hand,
Petitioners, puzzled and likewise distressed over
the death of their son, rejected the imputation
and contended that an unknown third party,
whom Wendell may have displeased or
antagonized by reason of his work as a narcotics
informer of the Constabulary Anti-Narcotics Unit
(CANU), must have caused Wendells death and
then shot Julie Ann to eliminate any witness and
thereby avoid identification.
As a result of the tragedy, the parents of Julie Ann
filed in the then CFI of Cebu against the parents
of Wendell to recover damages arising from the
latters vicarious liability under Article 2180 of the
Civil Code. After trial, the court below dismissed
the complaint for lack of sufficient evidence. On
appeal to respondent court, said judgment of the
lower court dismissing the complaint of therein
plaintiffs-appellants was set aside and another
judgment was rendered against defendantsappellees who, as petitioners in the present
appeal by certiorari, now submit for resolution the
following issue in this case.
Issue:

Whether or not Article 2180 of the Civil Code was


correctly interpreted by respondent court to make
petitioners liable for vicarious liability.
Ruling:
Petitioner Amelita Yap Libi, mother of Wendell,
testified that her husband, Cresencio Libi, owns a
gun which he kept in a safety deposit box inside a
drawer in their bedroom. Each of these
petitioners holds a key to the safety deposit box
and Amelitas key is always in her bag, all of
which facts were known to Wendell. They have
never seen their son Wendell taking or using the
gun. She admitted, however, that on that fateful
night the gun was no longer in the safety deposit
box. We, accordingly, cannot but entertain
serious doubts that petitioner spouses had really
been exercising the diligence of a good father of
a family by safely locking the fatal gun away.
Wendell could not have gotten hold thereof
unless one of the keys to the safety deposit box
was negligently left lying around or he had free
access to the bag of his mother where the other
key was.
The diligence of a good father of a family required
by law in a parent and child relationship consists,
to a large extent, of the instruction and
supervision of the child. Petitioners were gravely
remiss in their duties as parents in not diligently
supervising the activities of their son, despite his
minority and immaturity, so much so that it was
only at the time of Wendells death that they
allegedly discovered that he was a CANU agent
and that Cresencios gun was missing from the
safety deposit box. Both parents were sadly
wanting in their duty and responsibility in
monitoring and knowing the activities of their
children who, for all they know, may be engaged
in dangerous work such as being drug informers,
or even drug users. Neither was a plausible
explanation given for the photograph of Wendell
with a handwritten dedication to Julie Ann at the
back thereof holding upright what clearly appears
as a revolver and on how or why he was in
possession of that firearm.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 11


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Based on the foregoing discussions of the


assigned errors, this Court holds that the lower
court was not correct in dismissing herein
plaintiffs-appellants
complaint
because
as
preponderantly shown by evidence, defendantsappellees utterly failed to exercise all the
diligence of a good father of the family in
preventing their minor son from committing this
crime by means of the gun of defendantsappellees which was freely accessible to Wendell
Libi for they have not regularly checked whether
said gun was still under lock, but learned that it
was missing from the safety deposit box only
after the crime had been committed.
We agree with the conclusion of respondent court
that petitioners should be held liable for the civil
liability based on what appears from all
indications was a crime committed by their minor
son. Now, we do not have any objection to the
doctrinal rule holding, the parents liable, but the
categorization of their liability as being
subsidiary, and not primary, in nature requires a
hard second look considering previous decisions
of this court on the matter which warrant
comparative analyses. Our concern stems from
our readings that if the liability of the parents for
crimes or quasi-delicts of their minor children is
subsidiary, then the parents can neither invoke
nor be absolved of civil liability on the defense
that they acted with the diligence of a good
father of a family to prevent damages. On the
other hand, if such liability imputed to the
parents is considered direct and primary, that
diligence would constitute a valid and substantial
defense. In fact, if we apply Article 2194 of said
code which provides for solidary liability of joint
tortfeasors, the persons responsible for the act or
omission, in this case the minor and the father
and, in case of his death of incapacity, the
mother, are solidarily liable. Accordingly, such
parental liability is primary and not subsidiary,
hence the last paragraph of Article 2180 provides
that "(t)he responsibility treated of in this article
shall cease when the persons herein mentioned
prove that they observed all the diligence of a
good father of a family to prevent damages."

We are also persuaded that the liability of the


parents for felonies committed by their minor
children is likewise primary, not subsidiary. Article
101 of the RPC provides: a person under nine
years of age, or by one over nine but under
fifteen years of age, who has acted without
discernment, shall devolve upon those having
such person under their legal authority or control,
unless it appears that there was no fault or
negligence on their part". Accordingly, just like
the rule in Article 2180 of the Civil Code, the civil
liability of the parents for crimes committed by
their minor children is likewise direct and primary,
and also subject to the defense of lack of fault or
negligence on their part, that is, the exercise of
the diligence of a good father of a family.
Under the foregoing considerations, therefore, we
hereby rule that the parents are and should be
held primarily liable for the civil liability arising
from criminal offenses committed by their minor
children under their legal authority or control, or
who live in their company, unless it is proven that
the former acted with the diligence of a good
father of a family to prevent such damages. That
primary liability is premised on the provisions of
Art. 101 of the RPC with respect to damages ex
delicto caused by their children 9 years of age or
under, or over 9 but under 15 years of age who
acted without discernment; and, with regard to
their children over 9 but under 15 years of age
who acted with discernment, or 15 years or over
but under 21 years of age, such primary liability
shall be imposed pursuant to Article 2180 of the
Civil Code.
Under said Art. 2180, the enforcement of such
liability shall be effected against the father and,
in case of his death or incapacity, the mother.
However, under the Family Code, this civil liability
is now, without such alternative qualification, the
responsibility of the parents and those who
exercise parental authority over the minor
offender. For civil liability arising from quasidelicts committed by minors, the same rules shall
apply in accordance with Articles 2180 and 2182
of the Civil Code, as so modified.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 12


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

In the case at bar, whether Julies death was


caused by a felony or a quasi-delict committed by
Wendell Libi, respondent court did not err in
holding petitioners liable for damages arising
therefrom. We conjoin in its findings that said
petitioners failed to duly exercise the requisite
diligentissimi patris familias to prevent such
damages. ACCORDINGLY, the instant Petition is
DENIED and the assailed judgment of respondent
CA is hereby AFFIRMED.
9. G.R. No. L-33254 & G.R. No. L-33253,
January 20, 1978
THE PEOPLE OF THE PHILIPPINESvs.LICERIO
P.
SENDAYDIEGO,
JUAN
SAMSON
and
ANASTACIO QUIRIMIT
Facts:
In these three cases of malversation through
falsification, the prosecution's theory is that in
1969 Licerio P. Sendaydiego, the provincial
treasurer of Pangasinan, in conspiracy with Juan
Samson, an employee of a lumber and hardware
store in Dagupan City, and with Anastacio
Quirimit, the provincial auditor, as an accomplice,
used six (6) forged provincial vouchers in order to
embezzle from the road and bridge fund the total
sum of P57,048.
The lower court acquitted the auditor Quirimit
and found Sendaydiego and Samson guilty of
separate crimes of malversation and falsification
of public or official documents.
Sendaydiego and Samson appealed to
Supreme Court. Sendaydiego died in 1976.

the

Issues:
In view of Sendaydiegos death and the appeal,
what happens now to his criminal liability? How
about his civil liability?
Ruling:
Sendaydiegos appeal as to his criminal liability is
dismissed. The claim of complainant Province of
Pangasinan for the civil liability survives.

The death of appellant Sendaydiego during the


pendency of his appeal or before the judgment of
conviction rendered against him by the lower
court became final and executory extinguished
his criminal liability. In other words, his obligation
to serve the personal or imprisonment penalties
and his liability to pay the fines or pecuniary
penalties are extinguished.
The claim of the Province of Pangasinan for the
civil liability survived Sendaydiego because his
death occurred after final judgment was rendered
by the CFI of Pangasinan, which convicted him of
the crimes of malversation through falsification
and ordered him to indemnify the Province in the
total sum of P57,048.
The civil action for the civil liability is deemed
impliedly instituted with the criminal action in the
absence of express waiver or its reservation in a
separate action (Sec. 1, Rule 111 of the Rules of
Court). The civil action for the civil liability is
separate and distinct from the criminal action.
When the action is for the recovery of money and
the defendant dies before final judgment in the
CFI, it shall be dismissed to be prosecuted in the
manner especially provided in the Rules of Court.
The implication is that, if the defendant dies after
a money judgment had been rendered against
him by the CFI, the action survives him. It may be
continued on appeal.
Notwithstanding the dismissal of the appeal of
the deceased Sendaydiego insofar as his criminal
liability is concerned, the Court resolved to
continue exercising appellate jurisdiction over his
possible civil liability for the money claims of the
Province of Pangasinan arising from thealleged
criminal acts complained of, as if no criminal case
had been instituted against him, thus making
applicable, in determining his civil liability, Article
30 of the Civil Code.
The title of this case should be amended to show
its civil aspect by adding thereto the following.
Province of Pangasinan vs. Heirs of Licerio P.
Sendaydiego.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 13


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Courts Final Ruling: The estate of the late


Licerio P. Sendaydiego is ordered to indemnify the
province of Pangasinan in the sum of P57,048.
Samson and the said estate are solidarily liable
for the said indemnity (Art. 110, Revised Penal
Code). Samson should pay one-half of the costs.
Justice
Barredos
concurring-but-withreservations Opinion: The said justice agrees
with the Main Opinion, but he has reservations on
the procedural aspect, specifically relating to
filing of a separate civil action when an appeal
has been dismissed due to death of appellant. He
says that when appeals in criminal cases before
the SC have to be dismissed by reason of the
death of the appellant, it is not proper to qualify
such dismissal as limited to that of the criminal
liability of the appellant. The dismissal should be
unqualified and that the offended parties
concerned should be left to pursue their
remedies, if they so desire, in the appropriate
separate civil action contemplated both in the
Civil Code and in the Rules of Court. This view
might entail the institution of what is virtually a
repetitive proceeding, but it is whats provided in
the unequivocal language of the pertinent legal
provisions.
10. G.R. No. L-37632, July 30, 1982
GREGORIA VDA. DE PAMAN, ROMEO PAMAN,
ELISBERTO
PAMAN,
and
CESARIA
PAMANvs.HON. ALBERTO V. SEERIS, as
Judge of CFI, Branch II, Zamboanga City,
WESTERN MINDANAO LUMBER COMPANY
and TEODORO DE LOS SANTOS
Facts:
This is a petition for mandamus to order the
District Judge of the CFI of Zamboanga City to
perform his allegedly ministerial duty to execute
the judgment in Criminal Case No. 2953 entitled
"People of the Philippines, plaintiffs, versus,
Teodoro de los Santos, accused," for Homicide
Thru Reckless Imprudence In Violation of Section
52 of Act 3992, As Amended, in order to enforce
the subsidiary liability of employer respondent
Western Mindanao Lumber Company pursuant to
Article 103 of the RPC.

De los Santos is a driver of a cargo truck, owned


and operated by the Western Mindanao Lumber
Co. In 1956, thru his recklessness and lack of
foresight while driving said cargo truck caused
one Victoriano Paman to fall therefrom who was
riding the said truck and as a consequence, the
latter sustained injuries on his person which
caused his death.
De los Santos entered a plea of guilty. In view of
said plea, Judge Seeris, sentenced the driver to
an imprisonment of arresto mayor and to
indemnify the heirs of the late Victoriano Paman,
namely, the petitioner Gregoria Vda. de Paman
and her three children, in the amount of P12,000.
On August 4, 1972, Gregoria Vda. de Paman,
widow of the victim, filed the first motion for
execution of the judgment to enforce the civil
liability of the P12,000 of the accusedrespondent. This was followed on August 28,
1972 by the filing of Gregoria of an ex parte
motion for execution of judgment against the
accused. In both instances, Western Mindanao
Lumber was duly notified.
Judge Seeris granted the said motion
execution. However, the Sheriff's Return
Service showed that the accused-respondent
los Santos had no property registered in
name.

for
of
de
his

Upon discovery that accused-respondent is


insolvent, Gregoria filed a "Motion for Execution
on Subsidiary Liability of Employer Western
Mindanao Lumber Company under Article 103 of
the Revised Penal Code." Gregoria contended
therein that the subsidiary liability of the
employer Western Mindanao Lumber in the event
the accused is insolvent, is executory in nature
and there is no need for a separate action or a
further civil case to be filed in the enforcement of
the decision aforementioned.
In 1973, Judge Seeris denied the motion for
issuance of writ of execution against the
employer of de los Santos. He opined that the
alleged employer not having been notified that its

UNIVERSITY OF CEBU COLLEGE OF LAWPage 14


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

driver was facing a criminal charge, a separate


civil action must be filed. Hence, this petition for
mandamus.
Issue:
Should Gregoria file a separate civil action or a
further civil action to enforce the decision
rendered over a criminal case, specifically to
make the truck owner subsidiarily liable?
Ruling:
No, a separate
unnecessary.

and

independent

action

is

The apparent drawback in the enforcement of the


subsidiary liability in the same criminal
proceeding is the lack of due process to the
alleged employer. Not being a party to the case,
he is not heard as to whether he is indeed the
employer. Besides, even if the employeremployee relationship is not disputed, still, in
order that an employer may be subsidiarily liable
for the employee's civil liability in the criminal
action, it should be shown (1) that the employer,
etc. is engaged in any kind of industry, (2) that
the employee committed the offense in the
discharge of his duties, and (3) that he is
insolvent.
The Rules of Court provides, however, that "when
a criminal action is instituted, the civil action for
recovery of civil liability arising from the offense
charged is impliedly instituted with the criminal
action, unless the offended party expressly
waives the civil action or reserves his right to
institute it separately." That means as if two
actions are joined in one as twins, each one
complete with the same completeness as any of
the two normal persons composing the twins. It
means that the civil action may be tried and
prosecuted, with all the ancillary processes
providedby law. Said provision will be rendered
meaningless if the subsidiary civil liability is not
allowed to be enforced in the same proceeding.
To afford due process to the alleged employer,
the Supreme Court has to direct the court a quo

to hear and decide in the same proceeding the


subsidiary liability of the alleged owner and
operator of the cargo truck. It was explained
therein that the proceeding for the enforcement
of the subsidiary liability may be considered as
part of the proceeding for the execution of the
judgment. There is no question that the court
which rendered the judgment has a general
supervisory control over its process of execution,
and this power carries with it the right to
determine very question of fact and law which
may be involved in the execution.
A judgment of conviction sentencing a defendant
employer to pay an indemnity in the absence of
any collusion between the defendant and the
offended party, is conclusive upon the employer
in an action for the enforcement of the latter's
subsidiary liability not only with regard to the civil
liability, but also with regard to its amount. This
being the case, the Supreme Court has no other
function than to render decision based upon the
indemnity awarded in the criminal case and has
no power to amend or modify it even if in its
opinion an error has been committed in the
decision. A separate and independent action is,
therefore, unnecessary and would only unduly
prolong the agony of the heirs of the victim.
WHEREFORE, the lower court is directed to
conduct further proceedings in the same case on
whether the requisite facts to impose subsidiary
civil liability on the alleged employer of Teodoro
de los Santos are present.
11. G.R. No. 81337, August 16, 1991
RICHARD
V.
PETRALBAvs.THE
SANDIGANBAYAN and THE PEOPLE OF THE
PHILIPPINES
Facts:
Herein petitioner Richard V. Petralba was
designated Officer-in-Charge of the Municipal
Treasury of Alcoy Cebu on October 23, 1 979.
Fourteen
(14)
months
after
designation,
petitioner's cashbook balance was audited by
Auditors Constantino Alagar and Rene Flores. He
was found short of P28,107.00, Petitioner,

UNIVERSITY OF CEBU COLLEGE OF LAWPage 15


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

theretofore, was charged with, and convicted of,


31 counts of "Malversation of Public Funds,"
"Illegal Use of Public Funds" and "Falsification of
Public Documents."
Sandiganbayan found the accused Richard V.
Petralba guilty beyond reasonable doubt of the
crime of Malversation of Public Funds.
While the case was pending before the Supreme
Court, Petralba died.
Issue:
Does Petralba's civil liability survive his death?
Ruling:
Yes. Under Article 89 of the Revised Penal Code,
death of the convict extinguishes criminal liability.
In view of the fact that one of the juridical
conditions of penalty is that it is personal.
Criminal liability does not only mean the
obligation to serve the personal or imprisonment
penalties but it also includes the liability to pay
the fines or pecuniary penalties. Pecuniary
liability is extinguished only when the death of
the offender occurs before final judgment. (Art.
89(l), Revised Penal Code). In the case at bar,
petitioner Richard V. Petralba died pending appeal
and before any final judgment therein. Hence, the
death of Richard V. Petralba extinguished his
personal and pecuniary (such as the fine)
liabilities.
Though the death of an accused-appellant during
the pendency of an appeal extinguished his
criminal liability, his civil liability survives.
Extinction of criminal liability does not necessarily
mean that the civil liability is also extinguished. In
People vs. Navoa, 132 SCRA 410, and in People
vs. Sendaydiego, 81 SCRA 120, We ruled that
only the criminal liability (including the fine,
which is pecuniary but not civil) of the accused is
extinguished by his death, but the civil liability
remains. The claim of the government for the civil
liability survives Petralba but only if the offense
can be proved.

12. G.R. No. 82562, April 11, 1997


LYDIA VILLEGAS, MA TERESITA VILLEGAS,
ANTONIO VILLEGAS, JR., and ANTONIETTE
VILLEGAS vs.THE COURT OF APPEALS,
PEOPLE OF THE PHILIPPINES and ANTONIO
V. RAQUIZA
Facts:
This case originated from a libel suit filed by then
Assemblyman Antonio V. Raquiza against then
Manila Mayor Antonio J. Villegas, who allegedly
publicly imputed to him acts constituting
violations of the Anti-Graft and Corrupt Practices
Act.
An Information for libel was filed against Villegas
who denied the charge. After losing in the 1971
elections, Villegas left for the United States where
he stayed until his death. Nevertheless, trial
proceeded on absentia. Two months after the
prosecution rested its case, the court issued an
order dismissing the criminal aspect of the case
but reserving the right to resolve its civil aspect.
Subsequently the Court awarded Raquiza actual,
moral, exemplary damages and cost of suit. On
appeal, the CA affirmed but reduced the amount
of damages. Hence, this petition.
Issue:
Did the death of the accused before final
judgment extinguish his civil liability?
Ruling:
No. Raquizas right to recover damages arose
from article 33 of the Civil Code and not from
delict.
This Court has already settled this issue with the
promulgation of the case of People vs. Bayotas
(G.R. No. 102007) on September 2, 1994, viz:
1. Death of the accused pending appeal of
his conviction extinguishes his criminal
liability as well as the civil liability xxx

UNIVERSITY OF CEBU COLLEGE OF LAWPage 16


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

2. Corollarily the claim for civil liability


survives notwithstanding the death of
(the) accused, if the same may also be
predicated on a source of obligation other
than delict. Article 1157 of the Civil Code
enumerates these other sources of
obligation from which the civil liability may
arise as a result of the same act or
omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x x x x x x x
e) Quasi-delicts
3. Where the civil liability survives, as
explained in Number 2 above, an action
for recovery therefor may be pursued but
only by way of filing a separate civil action
and subject to Section 1, Rule 111 of the
1985 Rules on Criminal Procedure as
amended. This separate civil action may
be
enforced
either
against
the
executor/administrator of the estate of the
accused, depending on the source of
obligation upon which the same is based
as explained above.
The Bayotas ruling, however, makes the
enforcement of a deceased accuseds civil
liability dependent on two factors, namely, that it
be pursued by filing a separate civil action and
that it be made subject to Section 1, Rule 111 of
the 1985 Rules on Criminal Procedure, as
amended.
Obviously, in the case at bar, the civil action was
deemed instituted with the criminal. There was
no waiver of the civil action and no reservation of
the right to institute the same, nor was it
instituted prior to the criminal action. What then
is the recourse of the private offended party in a
criminal case such as this which must be
dismissed in accordance with the Bayotas
doctrine.
The resolution of the civil aspect of the case after
the dismissal of the main criminal action by the
trial court was technically defective. There was no

proper substitution of parties, as correctly pointed


out by the Heirs.
The court set aside the order (one making the
heirs civilly liable) without prejudice to the right
of Raquiza to file the appropriate civil action for
damages against the executor or administrator of
the estate.
13. G.R. No. 108395, March 7, 1997
HEIRS OF THE LATE TEODORO GUARING, JR.
vs.COURT OF APPEALS, PHILIPPINE RABBIT
BUS LINES, INC., and ANGELES CUEVAS
Facts:
Heirs of Teodoro Guaring, Jr., brought this action
for damages, based on quasi delict, in the
Regional Trial Court of Manila. Their evidence
tended to show that the Rabbit bus tried to
overtake Guarings car by passing on the right
shoulder of the road and that in so doing it hit the
right rear portion of Guarings Mitsubishi Lancer.
The impact caused the Lancer to swerve to the
south-bound lane, as a result of which it collided
with the Toyota Cressida car coming from the
opposite direction.
The Regional Trial Court rendered judgment
finding Philippine Rabbit Bus Lines, Inc. and its
driver, Angeles Cuevas, at fault, and holding
them solidarily liable for damages to petitioners.
The Court of Appeals rendered a decision, setting
aside the decision of the Regional Trial Court of
Manila in the civil action for damages and
dismissing
the
complaint
against
private
respondents Philippine Rabbit Bus Lines, Inc. and
Cuevas, on the strength of a decision rendered by
the Regional Trial Court at San Fernando,
Pampanga, in the criminal case, acquitting the
bus
driver
Angeles
Cuevas
of
reckless
imprudence resulting in damage to property and
double homicide. The appellate court held that
since the basis of petitioners action was the
alleged negligence of the bus driver, the latters
acquittal in the criminal case rendered the civil
case based on quasi delict untenable.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 17


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Issue:
Whether or not the judgment in the criminal case
extinguished the liability of private respondent
Philippine Rabbit Bus Lines, Inc. and its driver,
Angeles Cuevas, for damages for the death of
Teodoro Guaring, Jr.
Ruling:
It is now settled that acquittal of the accused,
even if based on a finding that he is not guilty,
does not carry with it the extinction of the civil
liability based on quasi delict.
We held that the civil case for damages was not
barred since the cause of action of the heirs was
based on quasi delict.
Even if damages are sought on the basis of crime
and not quasi delict, the acquittal of the bus
driver will not bar recovery of damages because
the acquittal was based not on a finding that he
was not guilty but only on reasonable doubt.
It was thus error for the appellate court to skip
the review of the evidence in this case and
instead base its decision on the findings of the
trial court in the criminal case. In so doing, the
appellate court disregarded the fact that this case
had been instituted independently of the criminal
case and that petitioners herein took no part in
the criminal prosecution. In fact this action was
filed below before the prosecution presented
evidence in the criminal action.
It is unfair to bind petitioners to the result of the
criminal action when the fact is that they did not
take part therein. That the witnesses presented
on behalf of the petitioners are different from
those presented by the prosecution should have
brought home to the appellate court the
fundamental unfairness of considering the
decision in the criminal case conclusive of the
civil case.
Because the Court of Appeals did not consider the
evidence in the civil case, this case should be
remanded to it so that it may render another
decision in accordance with the law and the

evidence. The issues raised by petitioners are


essentially factual and require the evaluation of
evidence, which is the function of the Court of
Appeals in the exercise of its exclusive appellate
jurisdiction. They cannot be decided in this Court.
REVERSED and REMANDED.
14. G.R. No. L-29640, June 10, 1971
GUILLERMO
AUSTRIAvs.THE
COURT
OF
APPEALS (Second Division), PACIFICO ABAD
and MARIA G. ABAD
Facts:
Maria G. Abad acknowledged having received
from Guillermo Austria one (1) pendant with
diamonds valued at P4,500.00, to be sold on
commission basis or to be returned on demand.
On 1 February 1961, however, while walking
home to her residence in Mandaluyong, Rizal,
Abad was said to have been accosted by two
men, one of whom hit her on the face, while the
other snatched her purse containing jewelry and
cash, and ran away. Among the pieces of jewelry
allegedly taken by the robbers was the consigned
pendant. The incident became the subject of a
criminal case filed in the Court of First Instance of
Rizal against certain persons.
As Abad failed to return the jewelry or pay for its
value notwithstanding demands, Austria brought
in the Court of First Instance of Manila an action
against her and her husband for recovery of the
pendant or of its value, and damages. Answering
the allegations of the complaint, defendants
spouses set up the defense that the alleged
robbery had extinguished their obligation.
The trial court rendered judgment for Austria, and
ordered
defendants
spouses,
jointly
and
severally, to pay to the former. It was held that
defendants failed to prove the fact of robbery, or,
if indeed it was committed, that defendant Maria
Abad was guilty of negligence when she went
home without any companion, although it was
already getting dark and she was carrying a large
amount of cash and valuables on the day in
question, and such negligence did not free her

UNIVERSITY OF CEBU COLLEGE OF LAWPage 18


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

from liability for damages for the loss of the


jewelry.
The appellate court overruled the finding of the
trial court on the lack of credibility of the two
defense witnesses who testified on the
occurrence of the robbery, and holding that the
facts of robbery and defendant Maria Abad's
possession of the pendant on that unfortunate
day have been duly published, declared
respondents not responsible for the loss of the
jewelry on account of a fortuitous event, and
relieved them from liability for damages to the
owner. Plaintiff thereupon instituted the present
proceeding.
Issue:
Whether or not in a contract of agency
(consignment of goods for sale) it is necessary
that there be prior conviction for robbery before
the loss of the article shall exempt the consignee
from liability for such loss.
Ruling:
We find no merit in the contention of petitioner.
It is recognized in this jurisdiction that to
constitute a caso fortuito that would exempt a
person from responsibility, it is necessary that (1)
the event must be independent of the human will
(or rather, of the debtor's or obligor's); (2) the
occurrence must render it impossible for the
debtor to fulfill the obligation in a normal manner;
and that (3) the obligor must be free of
participation in or aggravation of the injury to the
creditor. 1 A fortuitous event, therefore, can be
produced by nature, e.g., earthquakes, storms,
floods, etc., or by the act of man, such as war,
attack by bandits, robbery, 2 etc., provided that
the event has all the characteristics enumerated
above.
It is not here disputed that if respondent Maria
Abad were indeed the victim of robbery, and if it
were really true that the pendant, which she was
obliged either to sell on commission or to return
to petitioner, were taken during the robbery, then

the occurrence of that fortuitous event would


have extinguished her liability. The point at issue
in this proceeding is how the fact of robbery is to
be established in order that a person may avail of
the exempting provision of Article 1174 of the
new Civil Code, which reads as follows:
ART. 1174. Except in cases expressly
specified by law, or when it is otherwise
declared by stipulation, or when the
nature of the obligation requires the
assumption of risk, no person shall be
responsible for those events which could
not be foreseen, or which, though
foreseen, were inevitable.
It may be noted the reform that the emphasis of
the provision is on the events, not on the agents
or factors responsible for them. To avail of the
exemption granted in the law, it is not necessary
that the persons responsible for the occurrence
should be found or punished; it would only be
sufficient to established that the enforceable
event, the robbery in this case, did take place
without any concurrent fault on the debtor's part,
and this can be done by preponderant evidence.
To require in the present action for recovery the
prior conviction of the culprits in the criminal
case, in order to establish the robbery as a fact,
would be to demand proof beyond reasonable
doubt to prove a fact in a civil case.
15. G.R. No. L-28967, July 22, 1975
AMELIA G. TIBLEvs.JOSE C. AQUINO
Facts:
Petition for review on certiorari of the decision of
the Court of Appeals, reversing the order of the
Court of First Instance of Camarines Sur which
dismissed the claim of Jose C. Aquino in the
amount of P30,000.00 against the estate of the
deceased, Emilio M. Tible, and instead, ordered
said claimant to pay said estate the sum of
P50,500.00 as his indebtedness to the deceased
Emilio M. Tible.
Petitioner was appointed administratrix of the
Intestate Estate of the late Congressman Emilio

UNIVERSITY OF CEBU COLLEGE OF LAWPage 19


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

M. Tible who died on August 14, 1957, by the


Court of First Instance of Naga City. Notice to
creditors as required by the Rules of Court having
been published on March 8, 15, 22, 1958, private
respondent-claimant Jose C. Aquino filed with the
probate court a claim against the estate for
P30,000.00 on February 6, 1959, or almost eleven
months after the date of the first publication of
the notice to creditors. A motion to dismiss was
filed by the petitioner-administratrix on the
ground that the claim was filed beyond the
reglementary period, but the trial court gave due
course to the claim. An answer with counterclaim
for
P54,500.00
was
filed
by
petitioneradministratrix on May 8, 1959, followed by an
amended answer with counterclaim filed on
October 12, 1959. After trial the lower court
rendered judgment in favor of the petitioneradministratrix as above mentioned.The lower
court dismissed Aquino's claim of P30,000.00.
From the appealed order of the trial court it can
be gleaned that although both petitioner and the
private respondent agree that there was a sale of
the portion of Aquino's forest concession in
Esperanza, Agusan, to Emilio Tible in 1955, two
conflicting versions of the agreement are put
forward by each party as regards the
consideration and the conditions agreed upon.
Private respondent Aquino's evidence seeks to
prove that Congressman Tible borrowed from him
P50,000.00; thereafter bought from him a portion
of his forest concession for an agreed amount of
P107,000.00; that Atty. Tible owed him a balance
of P30,000.00 as shown by promissory notes; that
said forest concession was transferred to Atty.
Tible by authority of the Director of Forestry after
the oral agreement of sale; and the balance of
P30,000.00 was never paid until the death of Atty.
Tible.
The two conflicting versions can be simplified
thus private respondent Aquino claims that
Tible borrowed from him P50,000.00 and then
bought from him 2,000 hectares of his timberland
in Agusan for P107,000.00; that Tible still owed
him a balance of P30,000.00 representing the
unpaid balance of the consideration of the sale of
the timberland at the time of Tible's death. On

the other hand, petitioner claims that the


consideration for the sale of the timberland of
Aquino to Tible was only P50,000.00 which was
already paid; that on April 9, 1955, Aquino and
Tible agreed on an increase of the sale price of
the timberland from P50,000.00 to P80,000.00, so
Tible executed promissory notes in favor of
Aquino for the balance of P30,000.00 subject to
the condition that payment of those promissory
notes would depend upon the operation by Tible
of the timberland; that after the foregoing
transaction, Aquino borrowed several amounts
from Tible (total P50,000.00) but payment of said
loans was subject to the condition that if Aquino
cannot pay the loans to Tible, the latter would be
made a partner by Aquino in the operation of the
remaining
2,000
hectares
of
timberland
controlled by Aquino. It is very clear that Aquino's
version speaks of two transactions loan of
P50,000.00 to Tible and sale of 2,000 hectares of
timberland to Tible for P107,000.00. Petitioner's
version speaks of three transactions sale of 2,000
hectares of Aquino's timberland to Tible for
P50,000.00; novation of the contract of sale by
increasing the consideration from P50,000.00 to
P80,000.00, payment of the balance of
P30,000.00 subject to the condition that payment
would depend upon Tible's operation of
thetimberland; and the supposed loans (total
P50,000.00) given by Tible to Aquino, which if not
paid by Aquino would render it obligatory upon
the latter to make Tible a partner in the operation
of his remaining timberland.
The trial court in its evaluation of the evidence
believed in petitioner's version of the transaction;
hence the order of October 31, 1961, which
dismissed the claim of private respondent Aquino
and ordered him to pay to the estate of Tible the
amount of P50,500.00 as his indebtedness to the
deceased
CA reversed the RTCs decision.
CAs Ruling:We rule, therefore, that the
subsequent agreement between Aquino and Tible
as to another mode of payment by giving the
latter more time to pay does not necessarily
constitute novation as contemplated in Article

UNIVERSITY OF CEBU COLLEGE OF LAWPage 20


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

1291 of the New Civil Code based on the well


settled principle on novation that a "mere
extension of payment and the addition of another
obligation not incompatible with the old one is
not a novation thereof. Novation is never
presumed; there must be a declaration to the
effect in unequivocal terms or that the old and
the new obligations must be incompatible"
(Santos vs. Acuna, G.R. No, L-8831, October 31,
1956). In short, the facts of the case should
plainly disclose that there was an unqualified
intent to discard the original substantial
agreement, and not merely a change as to the
mode of payment of an existing obligation for
novation is never presumed. The fact that Tible
was not able to operate is beside the point,
considering that the said 2,000 hectares of
Aquino's timber concession was already ceded
and transferred in the name of Emilio M. Tible of
which he was already granted by the Department
of Agriculture and Natural Resources "Ordinary
Timber License" and later on in the name of the
"Heirs of Emilio M. Tible." This consummates the
transaction relating to the sale of 2,000 hectares
of Aquino's timber concession in favor of Tible
and negates any idea that said sale of 2,000
hectares was speculative. Besides, the condition
that payment of amounts embodied in the
promissory notes shall be dependent upon Tible's
operation of the forest concession he acquired
from Aquino is undoubtedly a void conditional
obligation, since its fulfillment is made to depend
upon the exclusive will of the debtor (Tible) (Art.
115, Civil Code).
Issue:
Whether or not CA erred in its well-founded
conclusions for believing in claimant Aquino's
version of the transaction.
Ruling:
No. We find it difficult to dispute private
respondent's argument that the real solution of
this case hinges on findings based on an
evaluation of evidence as to the true nature of
the transaction that transpired between Tible and
Aquino. Even if We were to disregard the cardinal

rule that only issues of law decided by the


respondent Appellate Court may be reviewed by
Us, and its findings of facts may likewise be
subjected to a minute inquiry, still We see no
reasonable grounds for altering or modifying the
Appellate Court's well founded conclusions.
Here, evidence of a nature that approaches the
approximation of moral certainty, and not merely
preponderance of evidence, indicates the real
transaction that took place between Aquino and
Tible was that Tible borrowed P50,000.00 from
Aquino before Tible bought 2,000 hectares of
timberland
from
Aquino
for
an
agreed
consideration
of
P107,000.00.
Respondent
Appellate Court's ruling relative to the four
promissorynotes as executed by Tible in favor of
Aquino to pay the balance of the agreed
consideration of the sale, that "the subsequent
agreement between Aquino and Tible as to
another mode of payment by giving the latter
more time to pay does not necessarily constitute
novation as contemplated in Article 1291 of the
New Civil Code on the well settled principle on
novation that a "mere extension of payment and
the
addition
of
another
obligation
not
incompatible with the old one is not a novation
thereof", is well-buttressed by the evidence and
We find no compelling reason to overturn the
same. Neither do We see any reason to disagree
with respondent Appellate Court's ruling that "the
condition that payment of amounts embodied in
the promissory notes shall be dependent upon
Tible's operation of the forest concession he
acquired from Aquino is undoubtedly a void
conditional obligation since its fulfillment is made
to depend upon the exclusive will of the debtor,
Tible (Art. 1115, Civil Code)". The payment of the
remaining balance of the purchase price of the
2,000 hectares of timberland cannot be made to
depend on the exclusive will of the debtor, Tible,
whether or not he will operate the timber
concession.
As to the petitioner's contention raised for the
first time before Us that the sale of the
timberland for P107,000.00 by Aquino to Tible is
null and void for being contrary to law and public
policy, suffice it to say that this new contention

UNIVERSITY OF CEBU COLLEGE OF LAWPage 21


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

was not raised by petitioner in the respondent


Appellate Court where she only asked that the
order of the trial court recognizing the validity of
the sale in accordance with petitioner's version
and giving her a favorable judgment should be
affirmed. When the respondent Appellate Court
reversed the order of the trial court and rendered
judgment in favor of private respondent Aquino
by accepting his version of the transaction,
petitioner now claims that the sale is void. In
short, she wants to win the case at any cost even
by a complete change of theory on the real issues
involved.
Petitioner's argument that the trial court erred in
giving due course to Aquino's claim for
P30,000.00 since it was filed about eleven
months after the date of the first publication of
the notice to creditors hardly deserves
consideration at this time. When the trial court
accepted the claim, what the petitioner did,
instead of questioning the trial court's jurisdiction
on the matter, was to file a counterclaim against
claimant Aquino, wherein she was sustained by
the trial court, and she urged the respondent
Appellate Court to affirm it when claimant Aquino
appealed the trial court's order. It is now late in
the day to question the timeless of the filing of
the claim.
WHEREFORE, the decision of respondent Court of
Appeals is affirmed.
16. G.R. No. 112127, July 17, 1995
CENTRAL PHILIPPINE UNIVERSITYvs.COURT
OF
APPEALS,
REMEDIOS
FRANCO,
FRANCISCO N. LOPEZ, CECILIA P. VDA. DE
LOPEZ, REDAN LOPEZ AND REMARENE
LOPEZ
Principle: When a person donates land to
another on the condition that a construction be
made, the condition is akin to a resolutory (not
suspensive) one. The non-compliance to the
condition extinguishes the right to the donation,
but it need not occur first in order for the
donation to be effected and validated.
Facts:

CENTRAL PHILIPPINE UNIVERSITY filed this


petition for review on certiorari of the decision of
the Court of Appeals which reversed that of the
Regional Trial Court of Iloilo City directing
petitioner to reconvey to private respondents the
property donated to it by their predecessor-ininterest.
Sometime in 1939, the late Don Ramon Lopez,
Sr., who was then a member of the Board of
Trustees of the Central Philippine College (now
Central Philippine University [CPU]), executed a
deed of donation in favor of the latter of a parcel
of land identified as Lot No. 3174-B-1 of the
subdivision plan Psd-1144, then a portion of Lot
No. 3174-B, for which Transfer Certificate of Title
No. T-3910-A was issued in the name of the
donee CPU with the following annotations copied
from the deed of donation
1. The land described shall be utilized by
the CPU exclusively for the establishment
and use of a medical college with all its
buildings as part of the curriculum;
2. The said college shall not sell, transfer
or convey to any third party nor in any
way encumber said land;
3. The said land shall be called "RAMON
LOPEZ CAMPUS", and the said college shall
be under obligation to erect a cornerstone
bearing that name. Any net income from
the land or any of its parks shall be put in
a fund to be known as the "RAMON LOPEZ
CAMPUS
FUND"
to
be
used
for
improvements of said campus and
erection of a building thereon.
On 31 May 1989, private respondents, who are
the heirs of Don Ramon Lopez, Sr., filed an action
for annulment of donation, reconveyance and
damages against CPU alleging that since 1939 up
to the time the action was filed the latter had not
complied with the conditions of the donation.
Private respondents also argued that petitioner
had in fact negotiated with the National Housing

UNIVERSITY OF CEBU COLLEGE OF LAWPage 22


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Authority (NHA) to exchange the donated


property with another land owned by the latter.

2. Whether or not there is a need to fix the period


for compliance of the condition.

In its answer petitioner alleged that the right of


private respondents to file the action had
prescribed; that it did not violate any of the
conditions in the deed of donation because it
never used the donated property for any other
purpose than that for which it was intended; and,
that it did not sell, transfer or convey it to any
third party.

Ruling:

On 31 May 1991, the trial court held that


petitioner failed to comply with the conditions of
the donation and declared it null and void. The
court a quo further directed petitioner to execute
a deed of the reconveyance of the property in
favor of the heirs of the donor, namely, private
respondents herein.
Petitioner appealed to the Court of Appeals which
on 18 June 1993 ruled that the annotations at the
back of petitioner's certificate of title were
resolutory conditions breach of which should
terminate the rights of the donee thus making
the donation revocable.
The appellate court also found that while the first
condition mandated petitioner to utilize the
donated property for the establishment of a
medical school, the donor did not fix a period
within which the condition must be fulfilled,
hence, until a period was fixed for the fulfillment
of the condition, petitioner could not be
considered as having failed to comply with its
part of the bargain. Thus, the appellate court
rendered its decision reversing the appealed
decision and remanding the case to the court of
origin for the determination of the time within
which petitioner should comply with the first
condition annotated in the certificate of title
Issues:
1. Whether or not petitioner failed to comply the
resolutely conditions even without no fixed
period.

1. Yes. Under Art. 1181, on conditional


obligations, the acquisition of rights as well the
extinguishment or loss of those already acquired
shall depend upon the happening of the event
which constitutes the condition. Thus, when a
person donates land to another on the condition
that the latter would build upon the land a school
is such a resolutory one. The donation had to be
valid before the fulfillment of the condition. If
there was no fulfillment with the condition such
as what obtains in the instant case, the donation
may be revoked & all rights which the donee may
have acquired shall be deemed lost &
extinguished.
More than a reasonable period of fifty (50) years
has already been allowed petitioner to avail of
the opportunity to comply with the condition even
if it be burdensome, to make the donation in its
favor forever valid. But, unfortunately, it failed to
do so. Hence, there is no more need to fix the
duration of a term of the obligation when such
procedure would be a mere technicality and
formality and would serve no purpose than to
delay or lead to an unnecessary and expensive
multiplication of suits. Records are clear and facts
are undisputed that since the execution of the
deed of donation up to the time of filing of the
instant action, petitioner has failed to comply
with its obligation as donee. Petitioner has slept
on its obligation for an unreasonable length of
time. Hence, it is only just and equitable now to
declare the subject donation already ineffective
and, for all purposes, revoked so that petitioner
as donee should now return the donated property
to the heirs of the donor, private respondents
herein, by means of reconveyance.
2. No. Under Art. 1197, when the obligation does
not fix a period but from its nature &
circumstance it can be inferred that the period
was intended, the court may fix the duration
thereof because the fulfillment of the obligation
itself cannot be demanded until after the court
has fixed the period for compliance therewith &

UNIVERSITY OF CEBU COLLEGE OF LAWPage 23


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

such period has arrived. However, this general


rule cannot be applied in this case considering
the different set of circumstances existing more
than a reasonable period of 50yrs has already
been allowed to petitioner to avail of the
opportunity to comply but unfortunately, it failed
to do so. Hence, there is no need to fix a period
when
such
procedure
would
be
a
meretechnicality & formality & would serve no
purpose than to delay or load to unnecessary and
expensive multiplication of suits.
Under Art. 1191, when one of the obligors cannot
comply with what is incumbent upon him, the
obligee may seek rescission before the court
unless there is just cause authorizing the fixing of
a period. In the absence of any just cause for the
court to determine the period of compliance there
is no more obstacle for the court to decree
rescission.
Note: The donation was an onerous one, where
failure of the school to construct a medical
college would give the heirs the power to revoke
the donation, reverting the property back to the
heirs of the donor. It is therefore a resolutory
condition. Although, the period was not stated,
and the courts should have fixed a period, in this
case, 50 years has lapsed since the donation was
executed, thus fixing a period would serve no
purpose and the property must already be
reverted back.
Dissenting Opinion: Davide considered the
donation as "modal" where the obligations are
unconditional, and the fulfillment, performance,
existence or extinguishment is not dependent on
any future and uncertain event. It is more
accurate to say that the condition stated is not a
resolutory condition, rather a obligation itself,
being an onerous donation. Since this is an
onerous donation, it has to comply with the rules
on Obligations and Contracts, and therefore, the
courts should have fixed a period.

17. G.R. No. L-22558, May 31, 1967


GREGORIO
ARANETA,
INC.
vs.THE
PHILIPPINE SUGAR ESTATES DEVELOPMENT
CO., LTD.
Facts:
J. M. Tuason & Co., Inc. is the owner of Sta. Mesa
Heights Subdivision. Through Petitioner Araneta,
it sold a portion thereof (43, 034.4 sq. m.) for the
sum of Php 430,514.00 to Respondent on July 28,
1950. They agreed on the following stipulations:
1. Respondent will build on the parcel land
the Sto. Domingo Church and Convent;
and
2. The seller will construct streets on the
NE and NW and SW sides of the land
herein sold so that the latter will be a
block surrounded by streets on all four
sides; and the street on the NE side shall
be named Sto. Domingo Avenue.
The buyer finished constructing the church and a
convent but the seller, Gregorio Araneta, Inc. was
unable to finish constructing the street in the NE
side because of Manuel Abundo, who was
physically occupying the middle part thereof and
refused to vacate the same.
On May 7, 1958, Respondent filed a complaint
against J. M. Tuason & Co., Inc. seeking to compel
the latter to comply with their obligation and/or to
pay damages in the event they failed or refused
to perform the obligation. Both defendants J. M.
Tuason and Co. and Gregorio Araneta, Inc.
answered the complaint, the latter particularly
setting up the principal defense that the action
was premature since its obligation to construct
the streets in question was without a definite
period which needs to be fixed first by the court
in a proper suit for that purpose before a
complaint for specific performance will prosper.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 24


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

The lower court and the Court of Appeals decided


in favor of Respondent, giving Petitioner two
years from the date of finality of the decision to
comply with the obligation of constructing and
completing the streets.
Issue:
Whether or not the fixing of the period by the
Trial Court and the Court of Appeals was proper.

Ruling:
Negative. The application of Art. 1197 of the Civil
Code requires a two-step process:
1. The Court must first determine that "the
obligation does not fix a period" (or that
the period is made to depend upon the will
of the debtor)," but from the nature and
the circumstances it can be inferred that a
period was intended" (Art. 1197, pars. 1
and 2).
2. Once the preliminary point is settled,
the Court must then decide what period
was "probably contemplated by the
parties.
Ultimately, the Court cannot fix a period merely
because in its opinion it is or should be
reasonable, but must set the time that the parties
are shown to have intended. In the case at bar,
the trial Court appears, to have pulled the twoyear period set in its decision out of thin air, since
no circumstances are mentioned to support it.
Plainly, this is not warranted by the Civil Code.
The parties were fully aware that the land
described therein was occupied by squatters,
because the fact is expressly mentioned in their
pleadings. As the parties must have known that
they could not take the law into their own hands,
but must resort to legal processes in evicting the
squatters, they must have realized that the
duration of the suits to be brought would not be
under their control nor could the same be

determined in advance. The conclusion is thus


forced that the parties must have intended to
defer the performance of the obligations under
the contract until the squatters were duly evicted,
as contended by the petitioner Gregorio Araneta,
Inc. The time for the performance of the
obligations of petitioner Gregorio Araneta, Inc.
was fixed at the date that all the squatters on
affected areas are finally evicted therefrom.
18. G.R. No. L-46095, November 23, 1977
PHILIPPINE NATIONAL BANKvs.HONORABLE
ELIAS B. ASUNCION, FABAR INCORPORATED,
JOSE MA. BARREDO, CARMEN B. BORROMEO
and TOMAS L. BORROMEO
Facts:
Petitioner granted in favor of Fabar Incorporated
various credit accommodations and advances
covering the importation of machinery and
equipment. Petitioner likewise made advances by
way of insurance premiums covering the chattels
subject matter of a mortgage securing the
aforementioned credit accommodations. All of the
credit accommodations are secured by the joint
and several signatures of Jose Ma. Barredo,
Carmen B. Borromeo and Tomas L. Borromeo, and
Manuel H. Barredo
As of May 13, 1977, the credit accommodations
have
an
outstanding
balance
of
Php
8,449,169.98. For failure to pay the obligations,
Petitioner instituted a collection case against all
the private respondents and Manuel H. Barredo.
The latter died about three years after the filing
of the case and the court was informed of his
death.
The respondent court subsequently issued an
order of dismissal on the ground of Manuel
Barredos death. Citing Section 6, Rule 86 of the
Revised Rules of Court, the court stated that a
suit for money claim does not survive the death
of decedent in cases where he is solidarily liable
with another debtor.
Issue:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 25


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Whether or not the respondent Court erred in


dismissing the case against all the defendants,
instead of dismissing the case only as against the
deceased defendant and thereafter proceeding
with the hearing as against the other defendants.
Ruling:
Affirmative. Section 6, Rule 86 of the Revised
Rules of Court reveals that nothing therein
prevents a creditor from proceeding against the
surviving solidary debtors. It merely sets up the
procedure in enforcing collection in case a
creditor chooses to pursue his claim against the
estate of the deceased solidary debtor.
Article 1216 of the New Civil Code is the
applicable provision in this matter. Said provision
gives the creditor the night to "proceed against
anyone of the solidary debtors or some or all of
them simultaneously."
The choice is undoubtedly left to the solidary
creditor to determine against whom he will
enforce collection. In case of the death of one of
the solidary debtors, he (the creditor) may, if he
so chooses, proceed against the surviving
solidary debtors without necessity of filing a claim
in the estate of the deceased debtors. It is not
mandatory for him to have the case dismissed as
against the surviving debtors and file its claim
against the estate of the deceased solidary
debtor, as was made apparent in the aforequoted
decision. For to require the creditor to proceed
against the estate, making it a condition
precedent for any collection action against the
surviving debtors to prosper, would deprive him
of his substantive rights provided by Article 1216
of the New Civil Code.
19.G.R. No. 100290, June 4, 1993
NORBERTO TIBAJIA, JR. and CARMEN TIBAJIA
vs.THE HONORABLE COURT OF APPEALS and
EDEN TAN
Facts:

Norberto Jr. and Carmen Tibajia. The judgment


ordered the spouses to pay Tan and after the
decision was made final, Tan filed a motion for
execution and levied upon the garnished funds
which were deposited by the spouses with the
cashier of the Regional Trial Court of Pasig. The
spouses, however, delivered to the deputy sheriff
the total money judgment in the form of Cashiers
Check (P262,750.00) and Cash (P135,733.70).
Tan refused the payment and insisted upon the
garnished funds to satisfy the judgment
obligation. The spouses filed a motion to lift the
writ of execution on the ground that the judgment
debt had already been paid. The motion was
denied by the trial court on the ground that
payment in cashier's check is not payment in
legal tender and that payment was made by a
third party other than the defendant. After their
motion for reconsideration was denied, the
spouses Tibajia filed a petition for certiorari,
prohibition and injunction in the CA. The appellate
court dismissed the petition holding that payment
by cashier's check is not payment in legal tender
as required by R.A. 529. The motion for
reconsideration was also denied. Thus, this
petition for review.
Issue:
Whether or not payment by means of check
(even by cashiers check) is considered payment
in legal tender as required by the Civil Code.
Ruling:
No, it is not considered legal tender. The
provisions of law applicable to the case at bar
include the following:
a. Article 1249 of the Civil Code which provides:
Art. 1249. The payment of debts in money
shall be made in the currency stipulated,
and if it is not possible to deliver such
currency, then in the currency which is
legal tender in the Philippines.

A suit for collection of sum of money was ruled in


favor of Eden Tan and against the spouses
UNIVERSITY OF CEBU COLLEGE OF LAWPage 26
LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

b. Section 1 of Republic Act No. 529 (AN ACT TO


ASSURE UNIFORM VALUE TO PHILIPPINE COIN
AND CURRENCY), as amended, which provides:
Sec. 1. Every provision contained in, or
made with respect to, any obligation
which purports to give the obligee the
right to require payment in gold or in any
particular kind of coin or currency other
than Philippine currency or in an amount
of money of the Philippines measured
thereby, shall be as it is hereby declared
against public policy null and void, and of
no effect, and no such provision shall be
contained in, or made with respect to, any
obligation thereafter incurred. Every
obligation
heretofore
and
hereafter
incurred, whether or not any such
provision as to payment is contained
therein or made with respect thereto,
shall be discharged upon payment in any
coin or currency which at the time of
payment is legal tender for public and
private debts.
c. Section 63 of Republic Act No. 265, as
amended (Central Bank Act) which provides:
Sec. 63. Legal character - Checks
representing deposit money do not have
legal tender power and their acceptance
in the payment of debts, both public and
private, is at the option of the creditor:
Provided, however, that a check which has
been cleared and credited to the account
of the creditor shall be equivalent to a
delivery to the creditor of cash in an
amount equal to the amount credited to
his account.
From the aforequoted provisions of law, it is clear
that this petition must fail.
In recent cases, this Court held that a check,
whether a managers check or ordinary check, is
not legal tender, and an offer of a check in
payment of a debt is not a valid tender of
payment and may be refused receipt by the
obligee or creditor (Philippine Airlines vs. Court of

Appeals; Roman Catholic Bishop of Malolos vs.


Intermediate Appellate Court). The court is not,
by decision, sanctioning the use of a check for
the payment of obligations over the objection of
the creditor (Fortunado vs. Court of Appeals).
WHEREFORE, the petition is DENIED.
20.G.R. No. L-43446, May 3, 1988
FILIPINO PIPE AND FOUNDRY CORPORATION
vs.NATIONAL WATERWORKS AND SEWERAGE
AUTHORITY
Facts:
FPFC appealed the dismissal of its complaint
against NAWASA by the CFI of Manila. Finding that
the principal purpose of the action was to secure
a
judicial
declaration
that
there
exists
'extraordinary inflation' within the meaning of
Article 1250 of the New Civil Code to warrant the
application of that provision, the CA, pursuant to
Section 3, Rule 50 of the Rules of Court, certified
the case to this Court for proper disposition.
NAWASA entered into a contract with the plaintiff
FPFC for the latter to supply iron pressure pipes
worth P270,187.50 to be used in the construction
of the Waterworks in Masbate and Samar.
NAWASA paid in installments on various dates, a
total of P134,680.00 leaving a balance of
P135,507.50 excluding interest.
FPFC demanded payment from NAWASA of the
unpaid balance of the price with interest in
accordance with the terms of their contract but
NAWASA failed to pay thus plaintiff filed a
collection suit. RTC rendered judgment ordering
NAWASA to pay the unpaid balance in NAWASA
negotiable bonds however it did not deliver the
bonds to the judgment creditor.
In 1971, FPFC filed another complaint seeking an
adjustment of the unpaid balance in accordance
with the value of the Philippine peso when the
decision was already rendered in 1967. On May 3,
1971, the defendant filed a motion to dismiss the
complaint on the ground that it is barred by the
1967 decision.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 27


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

The trial court then denied the motion to dismiss


on the ground that the bar by prior judgment did
not apply to the case because the causes of
action in the two cases are different: the first
action being for collection of the defendant's
indebtedness for the pipes, while the second case
is for adjustment of the value of said judgment
due to alleged supervening extraordinary inflation
of the Philippine peso which has reduced the
value of the bonds paid to the plaintiff.
Upon the courts suggestion, FPFC presented
voluminous records and statistics showing that a
spiraling inflation has marked the progress of the
country from 1962 up to the present. There is no
denying that the price index of commodities,
which is the usual evidence of the value of the
currency has been rising.
The trial court pointed out that this is a worldwide
occurrence and hardly proof that the inflation is
extraordinary in the sense contemplated by
Article 1250 of the Civil Code. Noting that the
situation during the Japanese Occupation "cannot
be compared with the economic conditions
today," the court dismissed the complaint.
Issue:
Whether or not there exists an extraordinary
inflation of the currency justifying an adjustment
of NAWASA's unpaid judgment obligation to FPFC.
Ruling:
No, there was no extraordinary inflation to
warrant the adjustment.
Article 1250 of the Civil Code provides: In case an
extraordinary inflation or deflation of the currency
stipulated should supervene, the value of the
currency at the time of the establishment of the
obligation shall be the basis of payment, unless
there is an agreement to the contrary.
Extraordinary inflation exists "when there is a
decrease or increase in the purchasing power of
the Philippine currency which is unusual or
beyond the common fluctuation in the value said

currency, and such decrease or increase could


not have reasonably be foreseen or was
manifestly beyond contemplation of the parties at
the time of the establishment of the obligation.
While appellant's voluminous records and
statistics proved that there has been a decline in
the purchasing power of the Philippine peso, this
downward fall of the currency cannot be
considered "extraordinary." It is simply a
universal trend that has not spared our country.
WHEREFORE, the appealed decision of the trial
court is affirmed in toto.
21. A.M. No. 21901-96, June 27, 1978
REPARATIONS
COMMISSIONvs.UNIVERSAL
DEEP-SEA
FISHING
CORPORATION
and
MANILA SURETY AND FIDELITY CO., INC.
Facts:
The Universal Deep-Sea Fishing Corporation,
hereinafter referred to as UNIVERSAL was
awarded six (6) trawl boats by the Reparations
Commission as end-user of reparations goods.
These fishing boats, were delivered to UNIVERSAL
two at a time.
The first 2 were delivered to UNIVERSAL on
November 20,1958, and the contract of
Conditional Purchase and Sale of Reparations
Goods, executed by and between the parties on
February 12, 1960, provided among others, that
"the first instalment representing 10% of the
amount shall be paid within 24 months from the
date of complete delivery thereof, the balance
shall be paid in the manner stated in the
Schedule of Payments. Due date of first
installment is on May 8, 1961. The 3rd and 4th
had the same condition and the due date of the
first installment is on July 1961. The 5th and 6th
also had the same condition and the due date of
the first instalment is on October 17, 1961.
To guarantee the faithful compliance with the
obligations under said contracts, performance
bonds with UNIVERSAL as principal and the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 28


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Manila Surety & Fidelity Co., Inc., as surety, were


executed in favor of the Reparations Commission.
A Corresponding indemnity agreements were
executed in favor of the surety company in
consideration of the bonds.
On August 10, 1962, the Reparations Commission
instituted the present action against UNIVERSAL
and the surety company to recover various
amounts of money due under these contracts.
After appropriate proceedings and upon the
preceding facts, the trial court rendered the
judgment holding Manila Surety & Fidelity Co.,
Inc., liable jointly and severally with defendant
Universal Deep-Sea Fishing Corporation stated.
Hence, this appeal.

yearly installments of P56,597.20 per annum. The


amount of P10,000.00 was, indeed, deducted
from judgment, amount of P53,643.00, but then
judgment, first of judgment, 10 equal yearly
installments had also accrued, hence, no error
was committed in holding judgment, surety
company to judgment, full extent of its
undertaking.
22. G.R. No. L-22490, May 21, 1969
GAN TIONvs.HON. COURT OF APPEALS, HON.
JUDGE AGUSTIN P. MONTESA, as Judge of
the Court of First Instance of Manila, ONG
WAN SIENG and THE SHERIFF OF MANILA
Facts:

According to the surety company, under Article


1254 of the Civil rode, where there is no
imputation of payment made by either judgment,
debtor or creditor, the debt which is the most
onerous to the debtor shall be deemed to have
been satisfied, so that the amount of P10,000.00
paid by UNIVERSAL as down payment on the
purchase of the first 2 boats should be applied to
the guaranteed portion of the debt, this releasing
part of the liability hence the obligation of 'The
surety company shall be reduced by P10,000.

Ong Wan Sieng was a tenant in premises owned


by Gan Tion. In 1961 the latter filed an ejectment
case against the former, alleging non-payment of
rents for August and September of that year.The
defendant denied the allegation and said that the
agreed monthly rental was only P160, which he
had offered to but was refused by the plaintiff.
The plaintiff obtained a favorable judgment, but
upon appeal the Court of First Instance reversed
the judgment and dismissed the complaint. That
judgment became final.

Issue:

On October 10, 1963 Gan Tion served notice on


Ong Wan Sieng that he was increasing the rent to
P180 a month, effective November 1st, and at the
same time demanded the rents in arrears at the
old rate in the aggregate amount of P4,320.00,
corresponding to a period from August 1961 to
October 1963.

Whether or not trial court erred in not applying


amount of P10,000.00, paid as down payment by
UNIVERSAL to Reparations Commission, to
guaranteed indebtedness.
Ruling:
The rules contained in Articles 1252 to 1254 of
the Civil Code apply to a person owing several
debts of the same kind to a single creditor. They
cannot be made applicable to a person whose
obligation as a mere surety is both contingent
and singular, which in this case is the full and
faithful compliance with the terms of the contract
of the conditional purchase and sale of
reparations goods.The obligation included the
payment, not only of the first installment in the
amount of P53,643.00, but also of the 10 equal

In the meantime, over Gan Tion's opposition, Ong


Wan Sieng was able to obtain a writ of execution
of the judgment for attorney's fees in his favor.
Gan Tion went on certiorari to the Court of
Appeals, where he pleaded legal compensation,
claiming that Ong Wan Sieng was indebted to him
in the sum of P4,320 for unpaid rents.
The appellate court decided for the respondent,
holding that although "respondent Ong is
indebted to the petitioner for unpaid rentals in an
amount of more than P4,000.00," the sum of

UNIVERSITY OF CEBU COLLEGE OF LAWPage 29


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

P500 could not be the subject of legal


compensation, it being a "trust fund for the
benefit of the lawyer, which would have to be
turned over by the client to his counsel." In the
opinion of said court, the requisites of legal
compensation, namely, that the parties must be
creditors and debtors of each other in their own
right (Art. 1278, Civil Code) and that each one of
them must be bound principally and at the same
time be a principal creditor of the other (Art.
1279), are not present in the instant case, since
the real creditor with respect to the sum of P500
was the defendant's counsel.
Issue:
Whether or not there can be legal compensation
between petitioner Gan Tion and respondent Ong
Wan Sieng.
Ruling:
Yes. The statement of the appellate court is not
an accurate statement of the nature of an award
for attorney's fees. The award is made in favor of
the litigant, not of his counsel, and is justified by
way of indemnity for damages recoverable by the
former in the cases enumerated in Article 2208 of
the Civil Code. It is the litigant, not his counsel,
who is the judgment creditor and who may
enforce the judgment by execution. Such credit,
therefore, may properly be the subject of legal
compensation. Quite obviously it would be unjust
to compel petitioner to pay his debt for P500
when admittedly his creditor is indebted to him
for more than P4,000.

143, NATIVIDAD M. FAJARDO, and SILVINO R.


PASTRANA, as Deputy and Special Sheriff
Facts:
Private respondent (Natividad Fajardo) applied for
a P50M loan from petitioner predecessor-ininterest (Atrium Capital Corp.). To secure this
loan, private respondent mortgaged her real
properties in Quiapo, Manila and in San Rafael,
Bulacan. Of this loan, only the amount of
P20,000,000.00 was approved for release. The
same amount was applied to pay her other
obligations to petitioner, bank charges and fees.
Meanwhile, private respondent made a money
market placement with ATRIUM in the amount of
P1,046,253.77. On its maturity, the bank refused
to pay the proceeds, as private respondent
allegedly
failed
to
pay
her
mortgaged
indebtedness, but applied the amount instead to
the deficiency in the proceeds of the auction sale
of the mortgaged properties.
Petitioners Argument:After foreclosing the
mortgage, there is still due from private
respondent as deficiency the amount of P6.81
million against which it has the right to apply or
set off private respondent's money market claim
of P1,062,063.83.
Respondents Defense: The mortgage is not
yet due and demandable and accordingly the
foreclosure was illegal; she is entitled to the
proceeds of her money market placement as it
has long become due and payable
Issue:
Whether or not there can be legal compensation.
Ruling:

23. G.R. No. L-69560, June 30, 1988


THE INTERNATIONAL CORPORATE BANK INC.
vs.THE IMMEDIATE APPELLATE COURT, HON.
ZOILO AGUINALDO, as presiding Judge of
the Regional Trial Court of Makati, Branch

No. Compensation shall take place when two


persons, in their own right, are creditors and
debtors of each other. (Art. 1278, Civil Code).
"When all the requisites mentioned in Art. 1279 of
the Civil Code are present, compensation takes
effect by operation of law, even without the
consent or knowledge of the debtors." (Art. 1290,

UNIVERSITY OF CEBU COLLEGE OF LAWPage 30


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Civil Code). Article 1279 of the Civil Code requires


among others, that in order that legal
compensation shall take place, "the two debts be
due" and "they be liquidated and demandable."
Compensation is not proper where the claim of
the person asserting the set-off against the other
is not clear nor liquidated; compensation cannot
extend to unliquidated, disputed claim arising
from breach of contract.
There can be no doubt that petitioner is indebted
to private respondent in the amount of
P1,062,063.83 representing the proceeds of her
money market investment. This is admitted. But
whether private respondent is indebted to
petitioner in the amount of P6.81 million
representing the deficiency balance after the
foreclosure of the mortgage executed to secure
the loan extended to her is vigorously disputed.
This circumstance prevents legal compensation
from taking place.

being rolled-over to October 4 and 11, 1974,


respectively.
On September 9, 1974, MOJICA assigned Bill 1298
and 1419 to MEVER. MEVER then surrendered
said Bills to CONGENERIC and asked the latter to
compute the balance of its payable account.
On October 7, 1974, MEVER was served with
garnishment by the Provincial Sheriff of Rizal in
collection cases filed against CONGENERIC by its
creditors. On November 15, 1974, MEVER turned
over to the sheriff the sum of P79, 359, which it
had computed as the amount it was still owing
CONGENERIC and which was subject to
garnishment.

24. G.R. No. L-56101, February 20, 1984


CORAZON
PEREZvs.HON.
COURT
OF
APPEALS and MEVER FILMS, INCORPORATED

On July 14, 1975, petitioner CORAZON filed suit


against MEVER for the recovery of P100,000. Trial
Court rendered judgment in her favour. On
MEVERS appeal, the CA reversed the judgment
on the ground that there was legal compensation
under Article 1279 of the New Civil Code which
caused the extinguishment of the obligation
under NCI-0352. Hence, this petition.

Facts:

Issue:

CONGENERIC, a company engaged in money


market operations, issued two bearer promissory
notes to MOGICA on May 8, 1974: Bill 1298 to
mature on August 6, 1974 and Bill 1419 to
mature on August 13, 1974. On June 5, 1974,
private respondent MEVER borrowed P500.000
from CONGENERIC, the former issuing negotiable
certificate of indebtedness (NCI-0352) to the
latter, to mature on August 5, 1974 with interest
at 19% per annum if not paid on due date.

Was there legal compensation?

On July 3, 1974, CONGENERIC received P200,000


petitioner CORAZON and transferred to the latter
its interest in NCI-0352.
On August 5, 1974, MEVER paid P100,00 to
CONGENERIC on account of NCI-0352. On same
date, CONGENERIC paid CORAZON P100,000 plus
19% interest. CONGENERIC also paid MOJICA the
interest due on Bill 1298 and 1419, the principal

Ruling:
None. Bills 1298 and 1419 were not yet due and
demandable as of the date of their assignment by
MOJICA to MEVER on September 9, 1974, nor on
the date when MEVER surrendered said Bills to
CONGENERIC.
As a consequence, no legal
compensation could have taken place because,
for it to exist, the two debts, among other
requisites, must be due and demandable.
What is involved in this case is a money market
transaction where lenders and borrowers do not
deal directly with each other but through a
middleman or dealer in the open market. The
issuer necessarily knows in advance that the
commercial paper would be expeditiously
transferred to any investor without need of notice
to said issuer. Hence, it is the first paragraph of

UNIVERSITY OF CEBU COLLEGE OF LAWPage 31


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Article 1285 (NCC) that is applicable. (Article


1285. The debtor who has consented to the
assignment of rights made by a creditor in favour
of a third person cannot set up against the
assignee the compensation which would pertain
to him against the assignor, unless the assignor
was notified by the debtor at the time he gave
his consent, that he reserved his right to the
compensation)
25. G.R. No. L-18411, December 17, 1966
MAGDALENA ESTATES, INC. vs.ANTONIO A.
RODRIGUEZ and HERMINIA C. RODRIGUEZ
Facts:
Defendant-appellants Antonio and Herminia
Rodriguez bought a 2,191 sq. meter parcel of
land from plaintiff-appellee Magdalena Estates,
Inc. In lieu thereof, Rodriguez executed a
promissory note on Jan. 4, 1957 to pay within 60
days from Jan. 7, 1957 the sum of Php 5,000 (plus
9% per annum interest) representing the balance
of the purchase price of the said land. On that
same day, Rodriguez and the Luzon Surety Co.,
Inc. executed a bond in favor of Magdalena
Estates to secure the fulfillment of the obligation
to pay the Php 5,000 balance. On June 20, 1958,
when the obligation of Rodriguez became due
and demandable, Luzon Surety paid the sum of
Php 5,000 to Magdalena Estates.
Subsequently, Magdalena Estates demanded
from Rodriguez the payment for the accrued
interests in the sum of Php 655.89. The latter
refused to pay. Consequently, plaintiff Magdalena
Estates instituted a suit against Rodriguez for the
collection thereof. MTC Manila rendered a
decision ordering Rodriguez to pay the said
interests. Defendant appealed in the CFI.
Rodriguez contended on appeal that the
pleadings do not show that Magdalena Estates
made a demand of the said accrued interests.
And that because of the failure of plaintiff to
apply a portion of the Php 5,000 paid by the
surety for the payment of the accrued interest of
Php 655.89, despite its presumed knowledge of
the said right to apply, the appellee is deemed to

have waived or condoned the interests due (Art.


1235 and 1253 CC). Furthermore, that the
promissory note executed was novated when
Magdalena Estates unqualifiedly accepted the
surety bond.
Issues:
1. Whether or not Magdalena Estates, Inc. is
deemed to have waived or condoned the
interests due when it failed to exercise its right of
application of payment from the Php 5,000 paid
by the surety.
2. Whether or not the promissory note was
novated when Magdalena Estates unqualifiedly
accepted the surety bond from a third person
who has agreed to assume the obligation.
Ruling:
1. In the surety bond, Luzon Surety Co., Inc.
undertook "to pay only the amount of Php 5,000
representing the balance of the purchase price of
the parcel of land sold to Rodriguez". Magdalena
estates did not protest when it received only Php
5,000 because it knew that it was the only
amount that the surety obligated himself to
deliver as appeared in the contract. The liability
of the surety cannot be extended beyond the
terms of his contract. It is for the same reason
why the appellee cannot apply a portion thereof
for the payment of the interests. Therefore, there
is no waiver or condonation.
2. Novation by presumption has never been
favored. To be sustained, it needs to be
established that the old and the new contracts
are incompatible in all points, or that the will to
novate appears by express agreement of the
parties. An obligation to pay a sum of money is
not novated in a new instrument wherein the old
is ratified by changing only the terms of the
payment and adding other obligations not
incompatible with the old one or wherein the old
contract is merely supplemented by the new one.
The mere fact that the creditor received a
guaranty or accepts payments from a third
person who has agreed to assume the obligation,

UNIVERSITY OF CEBU COLLEGE OF LAWPage 32


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

when there is no agreement that the first debtor


is released from the responsibility, does not
constitute a novation, and the creditor can still
enforce the obligation against the original debtor.

CA held that there the chattel mortgage


agreement impliedly novated the CFI judgment. It
held
that
the
following
circumstances
demonstrated the incompatibility between the
judgment debt and the deed of chattel mortgage:

The judgment appealed was AFFIRMED.


26. G.R. No. L-29981, April 30, 1971
EUSEBIO S. MILLARvs.THE HON. COURT OF
APPEALS and ANTONIO P. GABRIEL
Facts:
Gabriel did not pay the first installment due on a
chattel mortgage on a jeep he had executed with
Millar.
The CFI of Manila issued a writ of execution
ordering Gabriel to return a Willys Ford jeep to
Millar.
Gabriel pleaded with Millar to release the jeep
under an arrangement whereby he was to
mortgage the jeep in order to pay the judgment
debt in favor of the latter. Gabriel executed a
chattel mortgage on the jeep.
Gabriel was to pay a total of PHP 1700 in two
installments at PHP 850 each. But he failed to pay
the first installment.
Millar then obtained a writ of execution but even
after the lapse of the entire chattel mortgage
period, it was returned unsatisfied.

Judgment Debt
Orders Gabriel to
pay PHP 1746.98
with interest at 12%
per annum from the
filing of complaint
plus PHP 400 in
attorneys fees and
the costs of suit
No specific mode of
payment
No
mention
damages

Unsecured

of

Chattel Mortgage
Only PHP 1700

Payment of the sum


of PHP 1700 in two
equal installments
Obligates Gabriel to
pay
liquidated
damages
in
the
amount of PHP 300
in case of default
Jeep
may
be
foreclosed
extrajudicially in case of
default

Issue:
Whether or not the deed of chattel mortgage
novated the judgment of the CFI.
Ruling:

After five unsatisfied writs of execution, the


sheriff levied on certain personal properties
belonging to Gabriel and scheduled them for
execution sale.
Respondent Gabriel filed an urgent motion for
suspension of execution sale on the ground of
payment of the judgment debt.

No. No novation shall be implied, unless there is


clear and convincing proof of complete
incompatibility between the two obligations.

The lower court ordered the suspension of the


execution sale and ruled that novation had taken
place and that the parties had executed the
chattel mortgage only to secure or get better
security for the judgment.

On the first circumstance: Only modifications


that alter the essence of the old obligation result
in implied novation.
The mere reduction of the amount due does not
constitute a sufficient indicium of incompatibility
especially in the light of Millar and Gabriels

There was no clear and convincing proof that


there was an implied novation in the execution of
the Chattel Mortgage Agreement.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 33


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

admission that the reduced amount was due to


partial payments made by the latter before the
execution of the chattel mortgage agreement.

of credit from P400,000.00 to P800,000.00 (the


Principal Obligation), with the Philippine
National Bank (PNB).

The deed of chattel mortgage was a mere


specification of how much exactly Gabriel owed
to Millar in order to avoid confusion.

PAGRICO submitted Surety Bond No. 4765, issued


by respondent R&B Surety and Insurance Co.,
(R&B Surety) in the amount of P400,000.00 in
favor of the PNB. In consideration of R & B
Surety's issuance of the Surety Bond, two
identical indemnityagreements were entered into
with R & B Surety executed by the Catholic
Church Mart(CCM) and by petitioner Joseph
Cochingyan, Jr, and (b) another agreement dated
24December 1963 was executed by PAGRICO.

On the second circumstance: The chattel


mortgage simply gave Gabriel an express and
specific method of payment and more time to
enable him to satisfy the judgment indebtedness.
It did not constitute any substantial modification
of the judgment.
On the third circumstance: Discrepancy
between the PHP 400 and PHP 300 fixed as
attorneys fees and damages in the judgment and
the deed respectively explained:
Partial payments made by Gabriel before the
execution of the chattel mortgage agreement
were applied in satisfaction of part of the
judgment debt and of part of the attorneys fees
fixed in the judgment, thereby reducing both
amounts.
There was no clear and convincing evidence that
the PHP 300 in attorneys fees stipulated in the
deed of chattel mortgage intended the same as
an obligation for payment of liquidated damages
in case of default.
On the fourth circumstance: The debt security
in the form of the jeep was stipulated to secure
the satisfaction of the liability. It effectuated no
substantial alteration in Gabriels liability.
Gabriel was directed to pay the PHP 1700.
27. G.R. No. L-47369, June 30, 1987
JOSEPH COCHINGYAN, JR. and JOSE K.
VILLANUEVA vs.R & B SURETY AND
INSURANCE COMPANY, INC.
Facts:
In November 1963, Pacific Agricultural Suppliers,
Inc. (PAGRICO) was granted an increase in its line

Under
both
indemnity
agreements,
the
indemnitors bound themselves jointly and
severally to R & B Surety to pay an annual
premium of P5,103.05 and "for the faithful
compliance of the terms and conditions set forth
in said SURETY BOND for a period beginning ...
until
the
same
is
CANCELLED
and/or
DISCHARGED."
When PAGRICO failed to comply with its Principal
Obligation to the PNB, the PNBdemanded
payment from R & B Surety of the sum of
P400,000.00, the full amount of the Principal
Obligation. R & B Surety made a series of
payments to PNB by virtue of that demand
totalling P70,000.00 evidenced by detailed
vouchers and receipts.
R & B Surety in turn sent formal demand letters
to petitioners Joseph Cochingyan, Jr.and Jose K.
Villanueva for reimbursement of the payments
made by it to the PNB andfor a discharge of its
liability to the PNB under the Surety Bond. When
petitioners failedto heed its demands, R & B
Surety brought suit against Joseph Cochingyan,
Jr., Jose K.Villanueva and Liu Tua Ben.
The lower court rendered a decision in favor of R
& B Surety, ordering the Cochingyan and
Villanueva to pay the plaintiff, jointly and
severally, the total amount of their liability on
Surety Bond No. 4765, at the interest rate of 6%
per annum.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 34


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Issue:
Whether or not the Trust Agreement had
extinguished, by novation, the obligation of R & B
Surety to the PNB under the Surety Bond which,
in turn, extinguished the obligations of the
petitioners under the Indemnity Agreements.
Ruling:
No. It is at once evident that the Trust Agreement
does not expressly terminate the obligation of R
& B Surety under the Surety Bond. On the
contrary, the Trust Agreement expressly provides
for the continuing subsistence of that obligation
by stipulating that "[the Trust Agreement] shall
not in any manner release" R & B Surety from its
obligation under the Surety Bond.
Neither can the petitioners anchor their defense
on implied novation. Absent an unequivocal
declaration of extinguishment of a pre-existing
obligation, a showing of complete incompatibility
between the old and the new obligation (and
nothing else) would sustain a finding of novation
by implication. But where, as in this case, the
parties to the new obligation expressly recognize
the continuing existence and validity of the old
one, where, in other words, the parties expressly
negated the lapsing of the old obligation, there
can be no novation. The issue of implied novation
is not reached at all.
What the trust agreement did was, at most,
merely to bring in another person or persons-the
Trustor[s]-to assume the same obligation that R &
B Surety was bound to perform under the Surety
Bond. It is not unusual in business for a stranger
to a contract to assume obligations thereunder; a
contract of suretyship or guarantee is the
classical example. The precise legal effect is the
increase of the number of persons liable to the
obligee, and not the extinguishment of the
liability of the first debtor.Thus, in Magdalena
Estates vs. Rodriguez, we held that:
[t]he mere fact that the creditor receives
a guaranty or accepts payments from a
third person who has agreed to assume

the obligation, when there is no


agreement that the first debtor shall be
released from responsibility, does not
constitute a novation, and the creditor can
still enforce the obligation against the
original debtor.
In the present case, we note that the Trustor
under the Trust Agreement, the CCM, was already
previously bound to R & B Surety under its
Indemnity
Agreement.
Under
the
Trust
Agreement, the Trustor also became directly
liable to the PNB. So far as the PNB was
concerned, the effect of the Trust Agreement was
that where there had been only two, there would
now be three obligors directly and solidarily
bound in favor of the PNB: PAGRICO, R & B Surety
and the Trustor. And the PNB could proceed
against any of the three, in any order or
sequence. Clearly, PNB never intended to release,
and never did release, R & B Surety. Thus, R & B
Surety, which was not a party to the Trust
Agreement, could not have intended to release
any of its own indemnitors simply because one of
those indemnitors, the Trustor under the Trust
Agreement, became also directly liable to the
PNB.
Note:If objective novation is to take place, it is
imperative that the new obligation expressly
declare that the old obligation is thereby
extinguished, or that the new obligation be on
every point incompatible with the old one.
Novation is never presumed: it must be
established either by the discharge of the old
debt by the express terms of the new agreement,
or by the acts of the parties whose intention to
dissolve the old obligation as a consideration of
the emergence of the new one must be clearly
discernible.
Again, if subjective novation by a change in the
person of the debtor is to occur, it is not enough
that the juridical relation between the parties to
the original contract is extended to a third
person. It is essential that the old debtor be
released from the obligation, and the third person
or new debtor take his place in the new relation.
If the old debtor is not released, no novation

UNIVERSITY OF CEBU COLLEGE OF LAWPage 35


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

occurs and the third person who has assumed the


obligation of the debtor becomes merely a codebtor or surety or a co-surety.
CONTRACTS
1. G.R. No. L-33360, April 25, 1977
MAXIMINO
CARANTES
(Substituted
by
Engracia Mabanta Carantes) vs. COURT OF
APPEALS,
BILAD
CARANTES,
LAURO
CARANTES,
EDUARDO
CARANTES
and
MICHAEL TUMPAO
Facts:
A proceeding for expropriation was commenced
by the government for the construction of the
Loakan Airport and a portion of Lot 44, which was
originally owned by Mateo Carantes, was needed
for the landing field. The lot was subdivided into
Lots Nos. 44-a (the portion which the government
sought to expropriate), 44-b, 44-c, 44-d and 44-e.
Negotiations were also under way for the
purchase by the government of lots 44-b and 44c. When Mateo Carantes died, his son Maximino
Carantes was appointed administrator of the
estate and filed a project of partition of the
remaining portion of Lot 44 wherein he listed as
the heirs of Mateo Carantes who were entitled to
inherit the estate, himself and his brothers and
sisters. An Assignment of Right to Inheritance
was executed by the children of Mateo and the
heirs of Apung Carantes in favor of Maximino
Carantes for a consideration of P1. Maximino sold
to the government lots nos. 44-b and 44-c and
divided the proceeds of the sale among himself
and the other heirs of Mateo. The assignment of
right to inheritance was registered by Maximino
and the TCT in the names of the heirs was
cancelled and a new one was issued in the name
of Maximino Carantes as the sole owner of the
remaining portions of lot 44. A complaint was
instituted by the three children of Mateo and the
heirs of Apung Carantes against Maximino
praying that the deed of assignment be declared
null and void and that the remaining portions of
lot 44 be ordered partitioned into six equal shares
and Maximino be accordingly ordered to execute

the necessary deed of conveyance in favor of the


other heirs.
Plaintiffs argument: They executed the deed
of assignment only because they were made to
believe by Maximino that the said instrument
embodied the understanding among parties that
it merely authorized the defendant Maximino to
convey portions of lot 44 to the government in
their behalf to minimize expenses and facilitate
the transaction and it was only when they
secured a copy of the deed that they came to
know that the same purported to assign in favor
of Maximino their rights to inheritance from
Mateo Carantes.
Defendants argument: Filed a motion to
dismiss. The plaintiffs cause of action is barred
by the statute of limitations because the deed of
assignment was recorded in the Registry of
Property and that ownership over the property
became vested in him by acquisitive prescription
ten years from its registration in his name of Feb.
21, 1947.
RTCs Ruling: Ruled in favor of defendant
Maximino Carantes stating that since an action
based on fraud prescribes in four years from the
discovery of the fraud, and in this case the fraud
allegedly perpetrated by defendant must deemed
to have been discovered on march 16, 1940 when
the deed of assignment was registered, the
plaintiffs right of action had already prescribed
when they filed the action in 1958. And even
assuming co-ownership existed, the same was
completely repudiated by the said defendant by
performance of several acts such as the
execution of deed of sale in favor of the
government in 1939, hence ownership had
vested
in
the
defendant
by
acquisitive
prescription.
CA reversed.
Issues:
1. Whether or not the deed of assignment is void
ab initio on the ground of fraud and the action to
annul it has prescribed.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 36


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

2. Whether or not a constructive trust exists


making an action for reconveyance based on
constructive trust imprescriptible.
Ruling:
SC dismissed the complaint and set aside CAs
decision.
1. When the consent to a contract was
fraudulently obtained, the contract is voidable.
Fraud or deceit does not render a contract void
ab initio, and can only be a ground for rendering
the contract voidable or annullable pursuant to
article 1390 of the NCC by a proper action in
court. The present action being one to annul a
contract on the ground of fraud, its prescriptive
period is 4 years from the time of discovery of
fraud. The weight of authorities is the effect that
the registration of an instrument in the Office of
the Register of Deeds constitutes a constructive
notice to the whole world, and, therefore,
discovery of fraud is deemed to have taken place
at the time of the registration. In this case, the
deed of assignment was registered on March 16,
1940. The 4 years period within which the private
respondents could have filed the present action
consequently commenced on March 16, 1940,
and since they filed it only in September 4, 1958,
it follows that the same is barred by the statute of
limitations.
2. No express trust was created in favor of the
private respondents. If trust there was, it could
only be a constructive trust, which is imposed by
law. In constructive trusts, there is neither
promise nor fiduciary relation; the so called
trustee does not recognize any trust and has no
intent to hold the property for the beneficiary. An
action for reconveyance based on implied or
constructive trust is prescriptible and prescribes
in 10 years. In this case, the ten year
prescriptive period began on March 16, 1940,
when the petitioner registered the deed of
assignment and secured the cancellation of the
certificate of title in the joint names of the heirs
of Mateo Carantes and, in lieu thereof, the
issuance of a new title exclusively in his name.

Since the present action was commenced only on


September 4, 1958, the same in barred by
extinctive prescription.
The present action is one to annul the contract
entitled "Assignment of Right to Inheritance" on
the ground of fraud. Article 1390 of the new Civil
Code provides that a contract "where the consent
is vitiated by mistake, violence, intimidation,
undue influence or fraud," is voidable or
annullable. Even article 1359, which deals on
reformation of instruments, provides in its
paragraph 2 that "If mistake, fraud, inequitable
conduct, or accident has prevented a meeting of
the minds of the parties, the proper remedy is not
reformation of the instrument but annulment of
the contract," When the consent to a contract
was fraudulently obtained, the contract is
avoidable. Fraud or deceit does not render a
contract void ab initio and can only be a ground
for rendering the contract voidable or annullable
pursuant to article 1390 of the new Civil Code by
a proper action in court.
2. G.R. No. L-48889, May 11, 1989
DEVELOPMENT BANK OF THE PHILIPPINES
(DBP) vs. THE HONORABLE MIDPAINTAO L.
ADIL, Judge of the Second Branch of the
Court of First Instance of Iloilo and
SPOUSES PATRICIO CONFESOR and JOVITA
VILLAFUERTE
Facts:
On February 10, 1940 spouses Patricio Confesor
and Jovita Villafuerte obtained an agricultural
loan from the Agricultural and Industrial Bank
(AIB), now the Development of the Philippines
(DBP), in the sum of P2,000.00, whereby they
bound themselves jointly and severally to pay the
account in ten (10) equal yearly amortizations. As
the obligation remained outstanding and unpaid
even after the lapse of the aforesaid ten-year
period, Confesor, executed a second promissory
note on April 11, 1961 expressly acknowledging
said loan and promising to pay the same on or
before June 15, 1961 and upon failure to do so,
he agreed to the foreclosure of his mortgage.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 37


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Said spouses not having paid the obligation on


the specified date, the DBP filed a complaint
dated September 11, 1970 in the City Court of
Iloilo City against the spouses for the payment of
the loan. A decision was rendered ordering the
defendants to pay. On appeal, the decision was
reversed and the complaint was dismissed on the
ground of prescription. Hence, this instant
petition.
Issue:
Whether or not a promissory note which was
executed in consideration of a previous
promissory note the enforcement of which had
been barred by prescription is valid.

As such administrator, all debts and obligations


contracted by the husband for the benefit of the
conjugal partnership, are chargeable to the
conjugal partnership. 5 No doubt, in this case,
respondent
Confesor
signed
the
second
promissory note for the benefit of the conjugal
partnership. Hence the conjugal partnership is
liable for this obligation.
3. G.R. No. L-38498, August 10, 1989
ISAAC BAGNAS, ENCARNACION BAGNAS,
SILVESTRE BAGNAS MAXIMINA BAGNAS,
SIXTO
BAGNAS
and
AGATONA
ENCARNACION
vs.
HON.
COURT
OF
APPEALS,
ROSA
L.
RETONIL
TEOFILO
ENCARNACION, and JOSE B. NAMBAYAN
Facts:

Ruling:
Yes. The right to prescription may be waived or
renounced. Prescription is deemed to have been
tacitly renounced when the renunciation results
from acts which imply the abandonment of the
right acquired. There is no doubt that prescription
has set in as to the first promissory note of
February 10, 1940. However, when respondent
Confesor executed the second promissory note
on April 11, 1961 whereby he promised to pay
the amount covered by the previous promissory
note on or before June 15, 1961, and upon failure
to do so, agreed to the foreclosure of the
mortgage, said respondent thereby effectively
and expressly renounced and waived his right to
the prescription of the action covering the first
promissory note.
In a similar case, the court ruled that when a debt
is already barred by prescription, it cannot be
enforced by the creditor. But a new contract
recognizing and assuming the prescribed debt
would be valid and enforceable.
Moreover, in signing the promissory note,
confessor can bind the conjugal partnership.
Under Article 165 of the Civil Code, the husband
is the administrator of the conjugal partnership.

Hilario Mateum died on March 11, 1964, single,


without ascendants or descendants, and survived
only by petitioners who are his collateral
relatives. He left no will, no debts, and an estate
consisting of 29 parcels of land in Kawit and Imus,
10 of which are involved in this controversy.
Respondents who are also collateral relatives of
the deceased, but more remote, registered 2
deeds of sale purportedly executed by Mateum in
their favor. The considerations were P1.00 and
services rendered, being rendered, and to be
rendered for my benefit. On the strength of the
deeds, respondents were able to secure title over
the 10 parcels of land.
On May 22, 1964, petitioners commenced a suit
against respondents, seeking annulment of the
deeds of sale a fictitious, fraudulent or falsified
or, alternatively, as donations void for want of
acceptance in public instrument. Respondents
however contend that the sales were made for
valuable considerations, and attacked the legal
standing of the petitioners as being mere
collateral heirs.
Issues:
1. Whether or not petitioners have the legal
standing to sue.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 38


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

2. Whether or not the sale is void for want of


consideration.
Ruling:
1. The law as it is now no longer deems contracts
with a false cause, or which are absolutely
simulated or fictitious, merely voidable, but
declares them void, i.e., inexistent ("nulo") unless
it is shown that they are supported by another
true and lawful cause or consideration. A logical
consequence of that change is the juridical status
of contracts without, or with a false, cause is that
conveyances of property affected with such a
vice cannot operate to divest and transfer
ownership, even if unimpugned. If afterwards the
transferor dies the property descends to his heirs,
and without regard to the manner in which they
are called to the succession, said heirs may bring
an action to recover the property from the
purported transferee. As pointed out, such an
action is not founded on fraud, but on the
premise that the property never leaves the estate
of the transferor and is transmitted upon his
death to heirs, who would labor under no
incapacity to maintain the action from the mere
fact that they may be only collateral relatives and
bound neither principally or subsidiarily under the
deed or contract of conveyance.
2. Upon the consideration alone that the apparent
gross, not to say enormous, disproportion
between the stipulated price (in each deed) of P
l.00 plus unspecified and unquantified services
and the undisputably valuable real estate
allegedly sold worth at least P10,500.00 going
only by assessments for tax purposes which, it is
well-known, are notoriously low indicators of
actual
value
plainly
and
unquestionably
demonstrates that they state a false and fictitious
consideration, and no other true and lawful cause
having been shown, the Court finds both said
deeds, insofar as they purport to be sales, not
merely voidable, but void ab initio. Neither can
the validity of said conveyances be defended on
the theory that their true causa is the liberality of
the transferor and they may be considered in
reality donations because the law also prescribes

that donations of immovable property, to be


valid, must be made and accepted in a public
instrument, and it is not denied by the
respondents that there has been no such
acceptance which they claim is not required. The
transfers in question being void, it follows as a
necessary consequence and conformably to the
concurring opinion in Armentia, with which the
Court fully agrees, that the properties purportedly
conveyed remained part of the estate of Hilario
Mateum,
said
transfers
notwithstanding,
recoverable by his intestate heirs, the petitioners
herein, whose status as such is not challenged.
4. G.R. No. L-23749, April 29, 1977
FAUSTINO CRUZ vs. J. M. TUASON &
COMPANY, INC., and GREGORIO ARANETA,
INC.
Facts:
In 1952, defendants availed of plaintiff's services
as an intermediary with the Deudors to work for
the amicable settlement of Civil Case No. Q-135,
then pending also in the Court of First Instance of
Quezon City, and involving 50 quinones of land,
of Which the 20 quinones aforementioned form
part, and notwithstanding his having performed
his services, as in fact, a compromise agreement
entered into on March 16, 1963 between the
Deudors and the defendants was approved by the
court, the latter have refused to convey to him
the 3,000 square meters of land occupied by him,
(a part of the 20 quinones above) which said
defendants had promised to do "within ten years
from and after date of signing of the compromise
agreement", as consideration for his services.
The defendants filed separate motions to dismiss
alleging that the alleged agreement about
plaintiffs
services
as
intermediary
in
consideration of which, defendants promised to
convey to him 3,000 square meters of land, that
the same is unenforceable under the Statute of
Frauds, there being nothing in writing about it.
Plaintiff opposed the motion, insisting that Article
2142 of the applicable to his case; that the
Statute of Frauds cannot be invoked by

UNIVERSITY OF CEBU COLLEGE OF LAWPage 39


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

defendants, not only because Article 1403 of the


Civil Code refers only to "sale of real property or
of an interest therein" and not to promises to
convey real property like the one supposedly
promised by defendants to him, but also because,
he, the plaintiff has already performed his part of
the agreement, hence the agreement has already
been partly executed and not merely executory
within the contemplation of the Statute.
Issue:
Whether or not the alleged agreement
unenforceable under the Statute of Frauds.

is

Ruling:
No. It is elementary that the Statute refers to
specific kinds of transactions and that it cannot
apply to any that is not enumerated therein. And
the only agreements or contracts covered
thereby are the following:
(1) Those entered into in the name of another
person by one who has been given no
authority or legal representation, or who
has acted beyond his powers;
(2) Those do not comply with the Statute of
Frauds as set forth in this number, In the
following cases an agreement hereafter
made shall be unenforceable by action,
unless the same, or some note or
memorandum thereof, be in writing, and
subscribed by the party charged, or by his
agent;
evidence, therefore,
of the
agreement cannot be received without the
writing, or a secondary evidence of its
contents:
(a) An agreement that by its terms is
not to be performed within a year
from the making thereof;
(b) A special promise to answer for the
debt, default, or miscarriage of
another;
(c) An
agreement
made
in
consideration of marriage, other
than a mutual promise to marry;
(d) An agreement for the sale of
goods, chattels or things in action,
at a price not less than five

hundred pesos, unless the buyer


accept and receive part of such
goods
and
chattels,
or
the
evidences, or some of them of such
things in action, or pay at the time
some part of the purchase money;
but when a sale is made by auction
and entry is made by the
auctioneer in his sales book, at the
time of the sale, of the amount and
kind of property sold, terms of sale,
price, names of the purchasers and
person on whose account the sale
is made, it is a sufficient
memorandum:
(e) An agreement for the leasing for a
longer period than one year, or for
the sale of real property or of an
interest therein:
(f) a representation as to the credit of
a third person.
(3) Those where both parties are incapable of
giving consent to a contract. (Art. 1403,
civil Code.)
In the instant case, what appellant is trying to
enforce is the delivery to him of 3,000 square
meters of land which he claims defendants
promised to do in consideration of his services as
mediator or intermediary in effecting a
compromise of the civil action, Civil Case No. 135,
between the defendants and the Deudors. In no
sense may such alleged contract be considered
as being a "sale of real property or of any interest
therein." Indeed, not all dealings involving
interest in real property come under the Statute.
Moreover, appellant's complaint clearly alleges
that he has already fulfilled his part of the
bargains to induce the Deudors to amicably settle
their differences with defendants as, in fact, on
March 16, 1963, through his efforts, a
compromise agreement between these parties
was approved by the court. In other words, the
agreement in question has already been partially
consummated, and is no longer merely executory.
And it is likewise a fundamental principle
governing the application of the Statute that the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 40


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

contract in dispute should be purely executory on


the part of both parties thereto.
We cannot, however, escape taking judicial
notice, in relation to the compromise agreement
relied upon by appellant, that in several cases We
have decided, We have declared the same
rescinded and of no effect. In J. M. Tuason & Co.,
Inc. vs. Bienvenido Sanvictores, 4 SCRA 123, the
Court held:
It is also worthy of note that the
compromise
between
Deudors
and
Tuason, upon which Sanvictores predicates
his right to buy the lot he occupies, has
been validly rescinded and set aside, as
recognized by this Court in its decision in
G.R. No. L-13768, Deudor vs. Tuason,
promulgated on May 30, 1961.
We repeated this observation in J.M. Tuason &
Co., Inc. vs. Teodosio Macalindong, 6 SCRA 938.
Thus, viewed from what would be the ultimate
conclusion of appellant's case, We entertain
grave doubts as to whether or not he can
successfully maintain his alleged cause of action
against
defendants,
considering
that
the
compromise agreement that he invokes did not
actually materialize and defendants have not
benefited therefrom, not to mention the
undisputed fact that, as pointed out by appellees,
appellant's other attempt to secure the same
3,000 square meters via the judicial enforcement
of the compromise agreement in which they were
supposed to be reserved for him has already
been repudiated by the courts. (pp. 5-7. Brief of
Appellee Gregorio Araneta, Inc.)
5. G.R. No. L-23213, October 28, 1977
WESTERN MINDANAO LUMBER CO., INC. vs.
NATIVIDAD M. MEDALLE and ANTONIO
MEDALLE
Facts:
Plaintiff is engaged in logging operations in
Curuan Zamboanga City and in connection with
the said logging operation it obtained on
September 8, 1955 a right-of-way through the

said Lot 2136, of the Cadastral Survey of


Zamboanga from Mr. Luciano Hernandez, the
registered owner. Long before the execution of
the right-of-way agreement on September 8,
1955, since then and up to the present time the
said road has been maintained and used not only
by the predecessor of the Plaintiff and the
Plaintiff, but also by the public. The said road is
indispensable to the business operations of the
Plaintiff, because it is the only access from their
concession to the highway. The said Lot 2136 was
purchased by the defendants in 1958 and the
said road then existed and was in public use and
the defendants did not oppose but instead
allowed the continued use and maintenance of
the road by the Plaintiff and the public. However,
the defendants have now sent to the Plaintiff a
notice (Annex 'B') of their intention to close the
road.
The Plaintiff contended that it has the right to the
continued use of said road, the closing of which
will cause injustice and irreparable damages to
the Plaintiff and the Plaintiff is willing to post a
bond for the issuance of a writ of preliminary
injunction to stop the defendants from closing the
road.
The plaintiff prayed that a writ of preliminary
injunction be issued restraining the defendants
from closing the said road, and after hearing,
make the injunction permanent. However, instead
of a responsive pleading, the defendants filed a
motion to dismiss the complaint on January 4,
1961, upon the ground that the claim on which
the action or suit is founded is unenforceable
under the provisions of the Statute of Frauds and
special law, in that the first page of the said road
right-of-way agreement was not signed by both
parties and their instrumental witnesses; page
two thereof is not dated, and the signature of the
plaintiffs corporate agent does not appear; and
that said agreement is not acknowledged before
a person authorized to administer oaths which
was granted. Hence, this appeal.
Issue:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 41


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Whether or not the claim on which the action is


founded is unenforceable under the State of
Frauds and Special law.
Ruling:
No. The Statute of Frauds refers to specific kinds
of transactions and cannot apply to any that is
not enumerated therein. The transactions or
agreements covered by said statute are the
following:
(a) An agreement that by its terms is not to
be performed within a year from the
making thereof;
(b) A special promise to answer for the debt,
default, or miscarriage of another;
(c) An agreement made in consideration of
marriage, other than a mutual promise to
marry;
(d) An agreement for the sale of goods,
chattels or things in action, at a price not
less than five hundred pesos unless the
buyer accept and receive part of such
goods and chattels, or the evidences, or
some of them, of such things in action, or
pay at the time some part of the purchase
money; but when a sale is made by
auction and entry is made by the
auctioneer in his sales book, at the time of
the sale, of the amount and kind of
property sold, terms of sale price, names
of purchasers and person on whose
account the sale is made, it is sufficient
memorandum;
(e) An agreement for the leasing for a longer
period than one year, or for the sale of
real property or of an interest therein;
(f) A representation as to the credit of a third
person.
An agreement creating an easement of right-ofway is not one of those contracts covered by the
statue of frauds since it is not a sale of property
or of an interest therein. The agreement may be
viewed not only as a claim for the recognition of
the existence of an easement of right-of-way on
defendants' estate, but also a demand for the
establishment of an easement of right-of-way, if
none exist, pursuant to Art. 649 of the Civil Code,

in view of the plaintiffs offer to pay reasonable


compensation for the use of the land.
6. G.R. No. L-19638, June 20, 1966
FILIPINAS COMPAIA DE SEGUROS, ET AL.
vs. HON. FRANCISCO Y. MANDANAS, in his
capacity
as
Insurance
Commissioner,
AGRICULTURAL FIRE INSURANCE & SURETY
CO., INC., ET AL.
Facts:
This is a special civil action for a declaratory relief
Thirty-nine (39) non-life insurance companies
instituted it, in the Court of First Instance of
Manila, to secure a declaration of legality of
Article 22 of the Constitution of the Philippine
Rating Bureau, of which they are members,
inasmuch as respondent Insurance Commissioner
assails its validity upon the ground that it
constitutes an illegal or undue restraint of trade.
Subsequently to the filing of the petition, twenty
(20) other non-life insurance companies, likewise,
members of said Bureau, were allowed to
intervene in support of the petition. The court
rendered
judgment
declaring
that
the
aforementioned Article 22 is neither contrary to
law nor against public policy, and that,
accordingly, petitioners herein, as well as the
intervenors
and
other
members
of
the
aforementioned Bureau, may lawfully observe
and enforce said Article, and are bound to comply
with the provisions thereof. Hence this appeal by
respondent Insurance Commissioner. Appellant
maintains that since, in the aforementioned
Article 22, members of the Bureau "agree not to
represent nor to effect reinsurance with, nor to
accept reinsurance from any company, body, or
underwriter, licensed to do business in the
Philippines not a member in good standing of the
Bureau", said provision is illegal as a combination
in restraint of trade.
Issue:
Whether or not Article 22 of the Constitution of
the Philippine Rating Bureau is valid.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 42


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Ruling:
We find nothing unlawful, or immoral, or
unreasonable, or contrary to public policy either
in the objectives thus sought to be attained by
the Bureau, or in the means availed of to achieve
said objectives, or in the consequences of the
accomplishment thereof. The purpose of said
Article 22 is not to eliminate competition, but to
promote ethical practices among non-life
insurance companies, although, incidentally it
may discourage, and hence, eliminate unfair
competition, through underrating, which in itself
is eventually injurious to the public. The true test
of legality is whether the restraint imposed is
such as merely regulates and promotes
competition, or whether it is such as may
suppress or even destroy competition. To
determine that question the court must ordinarily
consider the facts peculiar to the business to
which the restraint is applied; its condition before
and after the restraint was imposed; the nature of
the restraint, and its effect, actual or probable.
Furthermore, it shows that the limitation upon
reinsurance contained in the aforementioned
Article 22 does not affect the public at all, for,
whether there is reinsurance or not, the liability of
the insurer in favor of the insured is the same.
Besides, there are sufficient foreign reinsurance
companies operating in the Philippines from
which non-members of the Bureau may secure
reinsurance. What is more, whatever the Bureau
may do in the matter of rate-fixing is not decisive
insofar as the public is concerned, for no
insurance company in the Philippines may charge
a rate of premium that has not been approved by
the Insurance Commissioner.
7. G.R. No. L-27696, September 30, 1977
MIGUEL
FLORENTINO,
ROSARIO
ENCARNACION de FLORENTINO, MANUEL
ARCE,
JOSE
FLORENTINO,
VICTORINO
FLORENTINO,
ANTONIO
FLORENTINO,
REMEDION ENCARNACION and SEVERINA
ENCARNACION
vs.
SALVADOR
ENCARNACION,
SR.,
SALVADOR
ENCARNACION,
JR.,
and
ANGEL
ENCARNACION

Facts:
Herein petitioner appellants and appellees filed
with the Court of First Instance of Ilocos Sur an
application for the registration under Act 496 of a
parcel of agricultural land located at Barrio
Lubong Dacquel Cabugao Ilocos Sur. The
application alleged among others that the
applicants are the common and pro-indiviso
owners in fee simple of the said land with the
improvements existing thereon; that to the best
of their knowledge and belief, there is no
mortgage, lien or encumbrance of any kind
whatever affecting said land, nor any other
person having any estate or interest thereon,
legal or equitable, remainder, reservation or in
expectancy; that said applicants had acquired the
aforesaid land thru and by inheritance from their
predecessors in interest, lately from their aunt,
Doa Encarnacion Florentino who died in Vigan,
Ilocos Sur in 1941, and for which the said land
was adjudicated to them by virtue of the deed of
extrajudicial partition dated August 24, 1947; that
applicants Salvador Encarnacion, Jr. and Angel
Encarnacion acquired their respective shares of
the land thru purchase from the original heirs,
Jesus, Caridad, Lourdes and Dolores surnamed
Singson one hand and from Asuncion Florentino
on the other.
The crucial point in controversy in this
registration case is centered in the stipulation
marked Exhibit O-1 embodied in the deed of
extrajudicial partition (Exhibit O) dated August
24, 1947. The applicant Miguel Florentino asked
the court to include the said stipulation (Exhibit
O-1) as an encumbrance on the land sought to be
registered, and cause the entry of the same on
the face of the title that will finally be issued.
Opposing its entry on the title as an
encumbrance,
petitioners-appellee
Salvador
Encarnacion, Sr., Salvador Encarnacion, Jr. and
Angel Encarnacion filed on October 3, 1966 a
manifestation
seeking
to
withdraw
their
application on their respective shares of the land
sought to be registered. The withdrawal was
opposed by the petitioners-appellants.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 43


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

The lower court ruled that the stipulation


embodied in Exhibit O on religious expenses is
just an arrangement stipulation, or grant
revocable at the unilateral option of the coowners. It was revoked by the oppositor Salvador
Encarnacion, Sr., who is the only one of the three
oppositors who is a party to said Exhibit O as
shown by acts accompanying his refusal to have
the same appear as an encumbrance on the title
to be issued. The stipulation in Exhibit 0-1 is to be
viewed as a stipulation pour autrui the same
cannot now be enforced because the Church in
whose favor it was made has not communicated
its acceptance to the oppositors before the latter
revoked it. Hence, this appeal.
Issues:
1. Whether or not the stipulation embodied in
Exhibit O on religious expenses is just an
arrangement stipulation, or grant revocable at
the unilateral option of the co-owners.
2. Whether or not the encumbrance or religious
expenses embodied in Exhibit O, the extrajudicial
partition between the co-heirs, is binding only on
the
appoints
Miguel
Florentino,
Rosario
Encarnacion de Florentino, Manuel Arce, Jose
Florentino,
Antonio
Florentino,
Victorino
Florentino, Remedios Encarnacion and Severina
Encarnacion.
Ruling:
1. No. The stipulation embodied in Exhibit O-1 on
religious expenses is not revocable at the
unilateral option of the co-owners.

If a contract should contain a stipulation in


favor of a third person, he may demand
its fulfillment provided he communicated
his acceptance to the obligor before its
revocation. A mere incidental benefit or
interest of a person is not sufficient. The
contracting parties must have clearly and
deliberately conferred a favor upon a third
person.
The second paragraph of Article 1311 abovequoted states the law on stipulations pour autrui.
A stipulation pour autrui is a stipulation in favor of
a third person conferring a clear and deliberate
favor upon him, and which stipulation is merely a
part of a contract entered into by the parties,
neither of whom acted as agent of the third
person, and such third person and demand its
fulfillment provoked that he communicates his to
the obligor before it is revoked.
A stipulation in favor of a third person has no
binding effect in itself before its acceptance by
the party favored. Here, we find that the Church
accepted the stipulation in its favor before it is
sought to be revoked. It is not disputed that from
1941 to 1964, the church had been enjoying the
benefits of the stipulation. The enjoyment of
benefits flowing therefrom for almost seventeen
years without question from any quarters can
only be construed as an implied acceptance by
the Church of the stipulation pour autrui before
its revocation.

Under Art 1311 of the New Civil Code, this


stipulation takes effect between the parties, their
assign and heirs. The article provides:

Hence, the stipulation (Exhibit O-1) cannot now


be revoked by any of the stipulators at their own
option. This must be so because of Article 1257,
Civil Code and the cardinal rule of contracts that
it has the force of law between the parties.

Art. 1311. Contracts take effect only


between the parties, their assigns and
heirs, except in cases where the rights
and obligations arising from the contract
are not transmissible by their nature, or
by stipulation or by provision of law. The
heir is not liable beyond the value of the
property he received from the decedent.

2. No. The stipulation embodied in Exhibit O-1 on


religious expenses is neither binding only on the
petitioners-appellants Miguel Florentino, Rosario
Encarnacion de Florentino Manuel Arce, Jose
Florentino,
Victorino
Florentino
Antonio
Florentino, Remedios Encarnacion and Severina E.
It is also binding on the oppositors-appellees
Angel Encarnacion.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 44


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Salvador Encarnacion, Sr. must bear with Exhibit


O-1, being a signatory to the Deed of Extrajudicial
Partition embodying such beneficial stipulation.
Likewise, with regards to Salvador, Jr. and Angel
Encarnacion, they too are bound to the
agreement. Being subsequent purchasers, they
are privies or successors in interest; it is
axiomatic that contracts are enforceable against
the parties and their privies.
8. G.R. No. L-45710, October 3, 1985
CENTRAL BANK OF THE PHILIPPINES and
ACTING DIRECTOR ANTONIO T. CASTRO, JR.
OF THE DEPARTMENT OF COMMERCIAL AND
SAVINGS BANK, in his capacity as statutory
receiver of Island Savings Bank vs. THE
HONORABLE COURT OF APPEALS and
SULPICIO M. TOLENTINO
Facts:
Island Savings Bank (ISB) approved the loan of
Sulpicio Tolentino, who, as a security for the loan,
also executed a real estate mortgage over his
land. The approved loan application called for
P80,000
loan,
repayable
in
semi-annual
installments for a period of 3 years, with 12%
interest.
A mere P17,000 partial release of the loan was
made by ISB because there was no fund yet
available for the release of the P63,000 balance.
Tolentino made a promissory note covering the
P17,000.
Monetary Board of the Central Bank issued
resolutions which:
a. prohibited ISB from making new loans and
investments, after finding that it was
suffering liquidity problems.
b. prohibited ISB from doing business in the
Philippines, after finding that it failed to
put up the required capital to restore its
solvency.
ISB, for non-payment of the loan, filed an
application for the extra-judicial foreclosure of the
real estate mortgage.

Tolentino filed a petition for injunction, specific


performance or rescission and damages with
preliminary injunction, alleging that since ISB
failed to deliver the P63,000 remaining balance of
the loan, he is entitled:
a. to specific performance by ordering ISB to
deliver it with interest of 12% per annum,
and
b. if said balance cannot be delivered, to
rescind the real estate mortgage.
Issues:
1. Whether or not the action of Tolentino for
specific performance can prosper.
2. Whether or not Tolentino is liable to pay the
P17,000 debt covered by the promissory note.
3. Whether or not Tolentinos real estate
mortgage can be foreclosed to satisfy the
P17,000 if his liability to pay therefor subsists.
Ruling:
1. No. Since ISB was in default under the
agreement, Tolentino may choose between
specific performance or rescission, but since ISB
is now prohibited from doing further business, the
only remedy left is Rescission only for the
P63,000 balance of the loan.
2. Yes. The bank was deemed to have complied
with its reciprocal obligation to furnish a P17,000
loan. The promissory note gave rise to Tolentinos
reciprocal obligation to pay such loan when it falls
due and his failure to pay the overdue
amortizations under the promissory note made
him a party in default, hence not entitled to
rescission (Art. 1191, CC). ISB has the right to
rescind the promissory note, being the aggrieved
party.
Since both parties were in default in the
performance of their reciprocal obligations, both
are liable for damages. In case both parties have
committed
a
breach
of
their reciprocal
obligations, the liability of the first infractor shall

UNIVERSITY OF CEBU COLLEGE OF LAWPage 45


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

be equitably tempered by the courts (Art. 1192,


CC). The liability of ISB for damages in not
furnishing the entire loan is offset by the liability
of Tolentino for damages (penalties and
surcharges) for not paying his overdue P17,000
debt. Since Tolentino derived some benefit for his
use of the P17,000, he should account for the
interest thereon (interest was not included in the
offsetting).
3. No. The fact that when Tolentino executed his
real estate mortgage, no consideration was then
in existence, as there was no debt yet because
ISB had not made any release on the loan, does
not make the real estate mortgage void for lack
of consideration.
It is not necessary that any consideration should
pass at the time of the execution of the contract
of real mortgage. When the consideration is
subsequent to the mortgage, the latter can take
effect only when the debt secured by it is created
as a binding contract to pay. And when there is
partial failure of consideration, the mortgage
becomes unenforceable to the extentof such
failure. Where the indebtedness actually owing to
the holder of the mortgage is less than the sum
named in the mortgage, the mortgage cannot be
enforced for more than the actual sum due.
Since ISB failed to furnish the P63,000 balance,
the real estate mortgage of Tolentino became
unenforceable to such extent. P63,000 is 78.75%
of P80,000, hence the mortgage covering 100 ha
is unenforceable to the extent of 78.75 ha. The
mortgage covering the remainder of 21.25 ha
subsists as a security for the P17,000 debt.
Judgment:
1) Tolentino is ordered to pay ISB P17,000
plus P41, 210 (12% interest per annum);
2) In case Tolentino fails to pay, his real
estate mortgage covering 21.25 ha shall
be foreclosed to satisfy his total
indebtedness;
3) The real estate mortgage covering 78.75
ha is unenforceable and ordered released
in favor of Tolentino.

9. G.R. No. L-39378, August 28, 1984


GENEROSA
AYSON-SIMONvs.NICOLAS
ADAMOS and VICENTA FERIA
Facts:
Defendants, Adamos and Feria, purchased
lots forming from Porciuncula. Thereafter,
successors-in-interest of the latter filed
annulment of the sale and the cancellation of
The Court rendered a Decision annulling the
which was affirmed by the Appellate Court
had attained finality.

two
the
for
TCT.
sale
and

However, during the pendency of the case above,


defendants sold the said two lots to Generosa
Ayson-Simon. Due to the failure of the defendants
to deliver the said lots, petitioner filed a civil case
for specific performance. The trial court rendered
judgment
to
petitioners
favor.
However,
defendants could not deliver the said lots
because the CA had already annulled the sale of
the two lots in the abovementioned Civil Case.
Thus, petitioner filed another civil case for the
rescission of the contract.
Defendants were contending that petitioner
cannot choose to rescind the contract since
petitioner chose for specific performance of the
obligation. Also, even though petitioner can
choose to rescind the contract, it would not be
possible, because it has already prescribed.
Issues:
1. Can petitioner choose to rescind the contract
even after choosing for the specific performance
of the obligation?
2. Had the
prescribed?

option

to

rescind

the

contract

UNIVERSITY OF CEBU COLLEGE OF LAWPage 46


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Ruling:
1. Yes. The rule that the injured party can only
choose between fulfillment and rescission of the
obligation, and cannot have both, applies when
the obligation is possible of fulfillment. If, as in
this case, the fulfillment has become impossible,
Article 1191 allows the injured party to seek
rescission even after he has chosen fulfillment.
2. No. Article 1191 of the Civil Code provides that
the injured party may also seek rescission, if the
fulfillment should become impossible. The cause
of action to claim rescission arises when the
fulfillment of the obligation became impossible
when the Court of First Instance of Quezon City in
Civil Case No. 174 declared the sale of the land to
defendants by Juan Porciuncula a complete nullity
and ordered the cancellation of Transfer
Certificate of Title No. 69475 issued to them.
Since the two lots sold to plaintiff by defendants
form part of the land involved in Civil Case No.
174, it became impossible for defendants to
secure and deliver the titles to and the
possession of the lots to plaintiff. But plaintiff had
to wait for the finality of the decision in Civil Case
No. 174, According to the certification of the clerk
of the Court of First Instance of Quezon City
(Exhibit "E-2"), the decision in Civil Case No. 174
became final and executory "as per entry of
Judgment dated May 3, 1967 of the Court of
Appeals." The action for rescission must be
commenced within four years from that date, May
3, 1967. Since the complaint for rescission was
filed on August 16, 1968, the four year period
within which the action must be commenced had
not expired.
10. G.R. No. 72727, July 30, 1987
BENITO DILAG, SUSETTE DILAG, SUSSIE
DILAG and SUSAN DILAG vs. INTERMEDIATE
APPELLATE
COURT
AND
MARCIANO
ARELLANO
Facts:
Marciano Arellano, as parent of the late Herminio
Arellano who had died in a vehicular accident

involving a truck owned by spouses Dilag, was


awarded by the trial court in an action for quasidelict. Sps. Dilag filed a petition for relief from
judgment. A compromise agreement between the
parties was presented but the same was
disapproved by the Court for failure of sps. Dilag
to sign it, although it was alleged by private
respondent that the Dilag spouses made a partial
payment. Subsequently, the petition for relief of
judgment was dismissed.
Pursuant to the Writ of Execution, a Notice of
Levy on Execution was annotated on a TCT
registered in the name of Sps. Dilag. The lot was
sold at public auction to Arellano as the highest
bidder.
Subsequently the Dilag children filed for the
annulment of the decision alleging among other
things, that the levy on execution was illegal
since it was made on property no longer owned
by judgment debtors (the Dilag spouses); that
they (Dilag children) are not parties in the Case
and that the claim of the judgment creditor
should be brought against the administrator of
the estates of the spouses Pablo and Socorro
Dilag.
Issues:
1. Whether or not petitioners as plaintiffs below,
are the owners of lots 288 and 1927, of the
Dumangas Cadastre at the time of the levy on
execution in Civil Case No. 8714.
2. Whether or not the decision and the
consequent writ of execution in Civil Case No.
8714 of the court below are operative against
petitioners who admittedly were not parties to
said civil case.
Ruling:
It is not disputed that at the time of the levy on
execution the Dilag spouses were still the
registered owners of Lot. On the other hand, it is
alleged by Arellano and not refuted by the Dilag
children that the title in the name of herein

UNIVERSITY OF CEBU COLLEGE OF LAWPage 47


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

petitioners was issued several days ahead of the


deed of sale on which the new title in the name of
the petitioners was based (in bisaya: nag una ang
title kaysa deed of sale). Clearly the Deed of
Absolute Sale in favor of petitioners was a
simulated and fictitious transaction to defraud
Arellano who obtained a money judgment against
the parents of petitioners.
The records of the case do not support
petitioners' contention that the obligation of Sps.
Dilag was already extinguished when Arellano
acknowledged the receipt of payment of the
money judgment, by virtue of their own
admission thru that payment was only partial and
did not cover the whole amount of the money
judgment. It is also an undisputable fact that the
compromise agreement was denied by the trial
court.
11. G.R. No. L-23002, July 31, 1967
CONCEPCION FELIX VDA. DE RODRIGUEZ vs.
GERONIMO RODRIGUEZ., ET AL.
Facts:
Concepcion Felix contracted a second marriage
with Domingo Rodriguez who a widower with four
children by a previous marriage.
Prior to her marriage to Rodriguez, Concepcion
Felix was the registered owner of 2 fishponds.
She executed a deed of sale conveying ownership
of the aforesaid properties to her daughter, from
a previous marriage, for the sum of P2,500.00,
which the latter in turn transferred back the same
properties to her mother and stepfather. The
original titles were cancelled and TCTs were
issued in the names of the Sps. Domingo
Rodriguez and Concepcion Felix.
Domingo died intestate. The heirs entered into an
extra-judicial settlement of his (Domingo's)
estate, consisting of one-half of the properties
allegedly belonging to the conjugal partnership.
Then, the widow appeared to have leased from
the Rodriguez children and grandchildren then for
a period of 5 years. At about this time, it seemed

that the relationship between the widow and her


stepchildren had turned for the worse. Thus,
when she failed to deliver to them the balance of
the earnings of the fishponds, her stepchildren
endorsed the matter to their lawyer who, sent a
letter of demand to the widow for payment
thereof
Concepcion filed the present action to declare
null and void the deeds of transfer alleging:
a. That Her husband employed force and
pressure on her;
b. That the conveyances of the properties
from plaintiff to her daughter and then to
the conjugal partnership of plaintiff and
her husband are both without
consideration.
Thus, plaintiff prayed that the deeds of transfer
mentioned in the complaint be declared fictitious
and simulated; that the "Extrajudicial Settlement
of Estate" be also declared null and void.
Judgment was rendered for the defendants. In
upholding the validity of the contracts, the court
found that although the two documents, Exhibits
A and B, were executed for the purpose of
converting plaintiff's separate properties into
conjugal assets of the marriage with Domingo
Rodriguez, the consent of the parties thereto was
voluntary.
Issues:
1. Is the transfer from Conception to her daughter
and back to the spouses simulated or fictitious?
No.
2. Is it inexistent for lack of consideration? No.
Ruling:
We agree with the trial Court that the evidence is
not convincing that the contracts of transfer from
Concepcion Felix to her daughter, and from the
latter to her mother and stepfather were
executed through violence or intimidation.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 48


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

What is more decisive is that duress being merely


a vice or defect of consent, an action based upon
it must be brought within four years after it has
ceased;1 and the present action was instituted
only (28) years after the intimidation is claimed
to have occurred, and no less than nine (9) years
after the supposed culprit died.
The charge of simulation is untenable, for the
characteristic of simulation is the fact that the
apparent contract is not really desired or
intended to produce legal effects or in way alter
the juridical situation of the parties. Thus, where
a person, in order to place his property beyond
the reach of his creditors, simulates a transfer of
it to another, he does not really intend to divest
himself of his title and control of the property;
hence, the deed of transfer is but a sham. But
appellant contends that the sale by her to her
daughter, and the subsequent sale by the latter
to appellant and her husband, the late Domingo
Rodriguez, were done for the purpose of
converting the property from paraphernal to
conjugal, thereby vesting a half interest in
Rodriguez, and evading the prohibition against
donations from one spouse to another during
coverture (Civil Code of 1889, Art. 1334). If this is
true, then the appellant and her daughter must
have intended the two conveyance to be real and
effective; for appellant could not intend to keep
the ownership of the fishponds and at the same
time vest half of them in her husband. The two
contracts of sale then could not have been
simulated, but were real and intended to be fully
operative, being the means to achieve the result
desired.
Were the two conveyances from appellant to her
daughter and from the latter to the spouses
Rodriguez void ab initio or inexistent for lack of
consideration? We do not find them to be so. In
the first transaction, the price of P2,500.00 is
recited in the deed itself. Now, Article 1274 of the
Civil Code of 1889 (in force when the deeds were
executed) provided that
In onerous contracts the cause is
understood to be, for each contracting
party, the prestation or promise of a thing

or service
supplied.)

by

the

other.

(Emphasis

Since in each conveyance the buyer became


obligated to pay a definite price in money, such
undertaking constituted in themselves actual
causa or consideration for the conveyance of the
fishponds. That the prices were not paid
(assuming
ad
arguendo
that
Concepcion
Martelino's testimony, to this effect is true) does
not make the sales inexistent for want of causa.
The consideration need not be paid at the time of
the promise.
What would invalidate the conveyances now
under scrutiny is the fact that they were resorted
to in order to circumvent the legal prohibition
against donations between spouses.
Unfortunately for herein appellant, in contracts
invalidated by illegal subject matter or illegal
causa, Articles 1305 and 1306 of the Civil Code
then in force apply rigorously the rule in pari
delicto non oritur action, denying all recovery to
the guilty parties inter se.
Art. 1306. If the act which constitutes the
illicit consideration is neither a crime nor a
misdemeanor, the following rules shall be
observed:
1. When both parties are guilty, neither of
them can recover what he may have
given by virtue of the contract, or enforce
the performance of the undertaking of the
other party;
That Article 1306 applies to cases where the
nullity arises from the illegality of the
consideration or the purpose of the contract was
expressly recognized by this Supreme Court.
Appellant's inaction to enforce her right, for 28
years, cannot be justified by the lame excuse that
she assumed that the transfer was valid.
Knowledge of the effect of that transaction would
have been obtained by the exercise of diligence.
Ignorance which is the effect of inexcusable

UNIVERSITY OF CEBU COLLEGE OF LAWPage 49


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

negligence, it has been said, is no excuse for


laches.

consideration of "stifling a criminal prosecution"


against Lopez.

12. G.R. No. L-20753, February 28, 1966


BASIC BOOKS (PHIL.), INC. vs. EMILIO
LOPEZ, ET AL., ISIDRO C. KINTANAR

While it may be inferred from Kintanar's letter,


that his motive in assuming obligation under the
agreement was to help save Lopez from the
criminal case, this, we believe would be no
reason to declare the agreement void. Article
1351 of the New Civil Code states that "the
particular motives of the parties in entering into a
contract are different from the cause thereof."

Facts:
Basic Books (Phil.), Inc filed a complaint for
recovery of sum against Emilio Lopez and Isidro
Kintanar. Lopez, as agent of BBPI, received on
consignment various books for sale on
commission basis which he failed to account. In
order to secure the payment thereof, the Lopez
and Kintanar entered into an agreement with the
BBPI wherein they bound themselves, jointly and
severally, to pay but was unable to pay.
Lopez confessed judgment, but Kintanar denied
liability under the contract which, he averred, was
void because it was executed for the purpose of
stifling Lopez' prosecution for estafa. Kintanar
contends that he and Lopez signed it in
consideration of BBPIs promise to "petition the
Court for the absolute dismissal" of the estafa
case against Lopez and that the contract thus
executed is of the type declared to be against
public policy. On the other hand, the Basic Books
argues that the agreement was executed in
settlement of Lopez' account and not in
consideration of the dismissal of the estafa case.

"Cause" is "the essential reason which moves the


contracting parties to enter into it." In other
words, the cause is the immediate, direct and
proximate reason which justifies the creation of
an obligation through the will of the contracting
parties. Applying this definition, the cause of the
agreement would be the existing account of
Lopez with the appellee.

Issue:

13. G.R. No. L-43668-69, July 31, 1978


POTENCIANO MENIL and wife CRISPINA
NAYVE vs. COURT OF APPEALS, AGUEDA
GARAN, FRANCISCO CALANIAS, MIGUEL
NAYVE, JR., and DEVELOPMENT BANK OF
THE PHILIPPINES

Motive vs. Cause of entering a contract.

Facts:

Ruling:

Agueda Garan obtained a homestead patent over


the land in question and was issued OCT by the
Register of Deed of Surigao on May 7, 1955. After
4 years, Agueda Garan within the prohibitive
period sold the land to movant Patenciano Manil
evidenced by a deed of sale but the deed of sale
was not registered in the Registry of Deeds in
Surigao. The OCT was not cancelled and the land
remained registered in the name of Agueda
Garan.

We do not think Kintanar's obligation under the


agreement under question is based in an illegal
consideration.
A careful reading of the agreement will show that
Kintanar merely bound himself to pay, jointly and
severally with Lopez the latter's accounts. It is
thus seen that Kintanar's assumption of a joint
and several liability cannot in any way be
interpreted or based upon the so-called illegal

At the same time, Agueda Garan executed


another deed of sale over the same parcel of land

UNIVERSITY OF CEBU COLLEGE OF LAWPage 50


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

in favor of the same vendee, Potenciano Menil,


and for the same price P415.00. They registered
the second deed of sale in the Registry of Deeds
in Surigao and a TCT was issued to Potenciano
Menil.
Petitioners were in possession of the land in
question when private respondents Agueda
Garan, Francisco Calanias, Miguel Nayve Jr., Rufo
Nayve and Lucio Calanias forcibly took possession
of the land and filed again petitioners for
"Quieting of Title". The said court dismissed the
complaint, awarded damages to the petitioners,
and granted the writ of execution prayed for by
the latter. However, private respondents refused
to vacate the land upon the claim that the
decision was silent on who are entitled to the
possession of the land, thus, forcing petitioners to
filed for "recovery of possession" while the
private respondents filed for the reconveyance.
The court ruled that the spouses Menil were
legally entitled to the possession of the land.
Private respondents appealed to the Court of
Appeals and it dismissed the appeal and affirmed
the decision of the lower court, with a declaration
that the decision was res judicata. On a motion
for reconsideration, the appellate court set aside
its decision and rendered the resolution declaring
the sale of the homestead in question to
petitioners null and void and the re-issuance of
the OCT in favor of Agueda Garan, and to
reimburse Garan the sum of 415.00, the price of
the sale, the interest compensated by the fruits.
Hence, this petition.
Issue:
Whether or not the contract of sale entered
between Potenciano Menil and Agueda Garan is
valid even if it was executed less than 5 years
from the date the homestead patent was
awarded to private respondent.
Ruling:

Section 118 of C. A 141 (Public Land Act)


provides:
Sec 118: Except in favor the of the
government or any of its branches, units,
or institutions, lands acquired under free
patent or homestead provisions shall not
be subject to encumbrance or alienation
from the date of the approval of the
application and for a term of five years
from and after the date of the issuance of
the patent or grant, nor shall they become
liable to the satisfaction of any debt
contracted prior to the expiration of the
said period, but the improvements or
crops on the land may be mortgaged or
pledged to qualified persons, associations,
or corporations.
The appellate court in its Resolution, declared:
This case is almost Identical with Manzano
vs. Ocampo (1 SCRA 691) where it was
held;
We therefore, hold that the sale in
question is illegal and void for having been
made within five years from the date of
Manzano's patent, in violation of Section
118 of the Public Land Law, Being void
from its inception, the approval thereof by
the undersecretary of Agriculture and
Natural Resources after the lapse of five
years from Manzano's patent did not
legalize the sale. (Santander v. Villanueva,
G.R. No. L-6184, Feb. 28, 1958; Cadiz v.
Nicolas, G.R. No. L-9198, Feb. 13, 1958).
The result is that the homestead in
question must be returned to Manzano's
heirs, petitioners herein, who are, in turn,
bound to restore to appellee Ocampo the
sum of P3,000.00 received by Manzano as
the price thereof. (Medel v. Eliazo, G.R. No.
L-12617, Aug. 27, 1959, Santander vs.
Villanueva, supra; Feb. 28, 1958). The
fruits of the land should equitable
compensate the interest on the price.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 51


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

As to the execution of the confirmatory


deed of sale, by proper analogy, the
Supreme Court in the said case said:
The law prohibiting any transfer or
alienation of homestead land within five
years from the issuance of the patent does
not distinguish between executory and
consummated sales; and it would hardly
be in keeping with the primordial aim of
this prohibition to preserve and keep in
the family of the homesteader the piece of
land that the state had gratuitously given
to them, to hold valid a homestead sale
actually perfected during the period of
prohibition but with the execution of the
formal deed of conveyance and the the
delivery of possession of the land sold to
the buyer deferred until after the
expiration of the prohibitory period,
purposely to circumvent the very law that
prohibits and declares invalid such
transaction to protect the homesteader
and his family.
We are fully in accord with the conclusion of the
appellate court that the issue presented in the
case at bar is squarely resolved by the doctrine
enunciated in the aforecited case of Manzano vs.
Ocampo, supra. Indeed, We cannot discern in the
case at bar any new element or matter which
may possibly bar the application of the ruling in
Manzano vs. Ocampo as contended by the
petitioners.
It cannot be claimed that there are two contracts:
one which is undisputably null and void, and
another, having been executed after the lapse of
the 5-year prohibitory period, which is valid. The
second contract of sale executed on March 3,
1964 is admittedly a confirmatory deed of sale.
Even the petitioners concede this point. Inasmuch
as the contract of sale executed on May 7, 1960
is void for it is expressly prohibited or declared
void by law [CA- 141, Section 118], it therefore
cannot be confirmed nor ratified.
Article 1409 of the New Civil Code states:

Art. 1409. The following contracts are


inexistent and void from the beginning:
(1) Those whose cause, object, or purpose
is contrary to law, morals, good customs,
public order or public policy;
(2) Those which are absolutely simulated
or fictitious;
(3) Those whose cause or object did not
exist at the time of the transaction;
(4) Those whose object is outside the
commerce of men;
(5)
Those
which
contemplate
an
impossible service;
(6) Those where the intention of the
parties relative to the principal object of
the contract cannot be ascertained;
(7) Those expressly prohibited or declared
void by law.
These contracts cannot be ratified.
Neither can the right to set up the defense
of illegality be waived.
Further, noteworthy is the fact that the second
contract of sale over the said homestead in favor
of the same vendee, petitioner Potenciano Menil,
is for the same price of P415.00. Clearly, the
unvarying term of the said contract is ample
manifestation that the same is simulated and that
no object or consideration passed between the
parties to the contract. It is evident from the
whole record of the case that the homestead had
long been in the possession of the vendees upon
the execution of the first contract of sale on May
7, 1960; likewise, the amount of P415.00 had
long been paid to Agueda Garan on that same
occasion. We find no evidence to the contrary.
Judgement was rendered declaring null and void
the sale of the homestead under litigation to
petitioners Potenciano Menil and wife, Crispina
Nayve; Ordering the Register of Deeds of Surigao
del Norte to cancel Transfer Certificate of Title No.
T-60, and to re-issue Original Certificate of Title
No. 220 in the name of private respondent
Agueda Garan, subject to the mortgage executed
by petitioner Potenciano Menil in favor of private
respondent Development Bank of the Philippines

UNIVERSITY OF CEBU COLLEGE OF LAWPage 52


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

which is hereby declared valid, and ordered to be


annotated on said Original Certificate of Title by
the said Register of Deeds.
14. G.R. No. L-30205, March 15, 1982
UNITED GENERAL INDUSTRIES, INC. vs.JOSE
PALER and JOSE DE LA RAMA
Facts:
The defendant, Jose Paler and his wife Purifacion
Paler, purchased from the plaintiff United General
Industries (1) Zenith 23'' TV set on installment
basis; that to secure the payment of the purchase
price, the defendant, Jose Paler and his wife
executed a promissory note in the amount of
P2,690 and constituted a chattel mortgage which
was duly registered.
The defendants violated the terms and conditions
of the chattel mortgage so the plaintiff filed for
estafa. In order to settle extra-judicially the
criminal case, the defendants Jose Paler and his
wife, and his co-defendant, Jose de la Rama
executed another promissory note yet still failed
to pay the plaintiff despite repeated demands.
The lower court rendered in favor of the plaintiff
and against the defendants, sentencing said
defendants to pay the plaintiff the sum of
P3,083.58 with 12% interest per annum until full
payment is made and attorney's fees in the sum
of P250.00.
The defendants appealed the case to CA and
claim that the complaint should be dismissed
because the obligation sought to be enforce by
plaintiff-appellee against defendants arose or was
incurred in consideration for the compounding of
a crime.
Issue:
Whether or not the contention of the defendants
is proper and valid.
Ruling:
There is some merit in the contention of the
defendants. In Arroyo vs. Berwin, 36 Phil. 386

(1917), it was held that an agreement to stifle the


prosecution of a crime is manifestly contrary to
public policy and due administration of justice
and will not be enforced in a court of law.
Under the law and jurisprudence, there can be no
recovery against Jose de la Rama who incidentally
appears to have been an accommodation signer
only of the promissory note which is vitiated by
the illegality of the cause.
But it is different with Jose Paler who bought a
television set from the appellee, did not pay for it
and even sold the set without the written consent
of the mortgagee which accordingly brought
about the filing of the estafa case. He has an
obligation to the appellee independently of the
promissory note which was co-signed by Jose de
la Rama. For Paler to escape payment of a just
obligation will result in an unjust enrichment at
the expense of another. This we cannot in
conscience allow.

15. G.R. No. L-47986, July 16, 1984


AQUILINA P. MARIN and ANTONIO S. MARIN,
SR. vs. JUDGE MIDPANTAO L. ADIL, Branch
11, CFI, Iloilo; PROVINCIAL SHERIFF, CFI,
South Cotabato; REGISTER OF DEEDS,
General Santos City; MANUEL, P. ARMADA
and ARISTON P. ARMADA, now substituted
by his heirs
Facts:
In a 1963 document, Aquiline P. Marin assigned to
the brothers Manuel P. Armada and Ariston P.
Armada her hereditary share in the testate estate
of her deceased mother, Monica Pacificar Vda. de
Provido, situated in January, Iloilo in exchange for
the land of the Armadas located in Cotabato and
other properties in that province.
The exchange would be rescindible when it is
definitely ascertained that the parties have
respectively no right to the properties sought to
be exchanged. The exchange did not mean that
the parties were definitely entitled to the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 53


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

properties being exchanged but it was executed


"in anticipation of a declaration of said right".
When the deed of exchange was executed, the
estate of Proceso Pacificar, in which the Armadas
expected to inherit a part, had been adjudicated
to Soledad Pronido- Elevencionado a sister of Mrs.
Marin and a first cousin also of the Armadas.
Soledad claimed to be the sole heir of Proceso.
So, the Armadas and the other heirs had to sue
Soledad.
The litigation ended in a compromise in 1976
when the Armadas were awarded Lots Mrs. Marin
never possessed these two lots. They were
supposed to be exchange for her proindiviso
share in her parents' estate in January. She chose
to forget the deed. Her conduct showed that she
considered herself not bound by it. Five years
after that deed she agreed to convey to her
sister, Aurora Provido-Collado, her interest in two
lots in January in payment of her obligation
amounting to P1,700.
Then, in the extra-judicial partition of her parents'
estate was formally adjudicated to Aurora. It was
stated therein that Mrs. Marin "has waived,
renounced and quit-claimed her share" in favor of
Aurora. As already stated, that share was
supposed to be exchanged for the two lots in
General Santos City which the Armadas received
in 1976 after a pestiferous litigation.
The Armadas filed the instant rescissory action
against Mrs. Marin. There was no trial. The case
was submitted on the pleadings. Judge Midpantao
L. Adil rescinded the deed of exchange, ordered
restitution of whatever might have been received
by Mrs. Marin, released the Armadas from their
obligation under said deed and ordered Mrs.
Marin to pay the Armadas P10,000 as moral and
exemplary damages and P3,000 as attorney's
fees. Mrs. Marin appealed to this Court on legal
issues (L-49018).
Hence, this petition.
Issue:

Whether or not the Deed of Exchange is valid.


Ruling:
It is evident from the deed of exchange that the
intention of the parties relative to the lots, which
are the objects of the exchange, cannot be
definitely ascertained. We hold that this
circumstance renders the exchange void or
inexistent (Art. 1378, 2nd par. and Art. 1409 [6],
Civil Code).
Thus, as already noted, it is provided in
paragraph 7 that the deed should not be
construed as an acknowledgment by the Armadas
and Mrs. Marin that they are entitled to the
properties involved therein and that it was
executed "in anticipation of a declaration of" their
rights to the properties. Then, it is stipulated in
paragraph 8 that the parties should take
possession and make use of the properties
involved in the deed.
The two provisions are irreconcilable because
paragraph contemplates that the properties are
still to be awarded or adjudicated to the parties
whereas paragraph 8 envisages a situation where
the parties have already control and possession
thereof.
The instant rescissory action may be treated as
an action to declare void the deed of exchange.
The action to declare the inexistence of a
contract does not prescribe (Art. 1410, Civil
Code).
As we have seen, Mrs. Marin rendered impossible
the performance of her obligation under the
deed. Because of that impossibility, the Armadas
could rescind extrajudicially the deed of
exchange (Art. 1191 Civil Code; 4 Tolentino, civil
Code, 1973 Ed., pp. 171-172). If Mrs. Marin
should sue the Armadas, her action would be
barred under the rule of exceptio non adimpleti
contractus(plaintiff is not entitled to sue because
he has not performed his part of the agreement).
The deed of exchange is hereby declared void
and inexistent.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 54


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

16. G.R. No. L-54449, July 20, 1984


EUGENIO CABRAL and SABINA SILVESTRE vs.
COURT OF APPEALS, SILVINO SAN DIEGO
and EUGENIA ALCANTARA
Facts:
The controversy involves 13,472 square meters of
Lot No. 378 of the Malinta Friar Lands Estate,
located at Barrio litigunan, Valenzuela, Bulacan.
The proindiviso one-sixth portion was supposedly
sold by the spouses Silvino San Diego and
Eugenia Alcantara to the spouses Eugenio Cabral
and Sabina Silvestre on August 14, 1948 for
P4,000. The San Diegos claim that the sale was
fabricated.
Eugenio Cabral was charged in the Court of First
Instance at Baliuag with falsification of that sale.
Judge Juan F. Echiverri dismissed the charge on
the ground of prescription because the
information was filed only on September 24,
1974.
More than a quarter of a century after that
alleged sale, or on May 2, 1974, the San Diego
spouses, acting on the theory that the sale was
falsified, filed in the Court of First Instance,
Valenzuela Branch, an action to nullify the title
which the Cabrals had obtained for that 1/6
portion and for damages.
Judge Eduardo P. Caguioa in an order dated
January 9, 1978 dismissed the action on the
ground that the order of dismissal issued by
Judge Echiverri in the criminal case was res
judicata in the civil case.
The San Diegos assailed the order of dismissal by
means of a petition for certiorari in the Court of
Appeals in a resolution dated January 30, 1979,
Justices Porfirio V. Sison, Gancayco, and Gorospe
ruled that Judge Caguioa erred in applying res
judicataand that the San Diegos' action was
imprescriptible because it was an action to nullify
a document which was void ab initio.

However, in its decision of March 30, 1979,


Justices Porfirio V. Sison, Gancayco and Geraldez
dismissed the petition because certiorari is not
available to correct erroneous factual or legal
conclusions and because an action based on a
contract prescribes in ten years.
The Appellate Court in its resolution of November
29, 1979 set aside its decision. It held that, as the
action of the San Diegos is for a declaration of the
forged or fictitious character of the deed of sale,
it is imprescriptible. It reversed the lower court's
order of dismissal. In the interest of justice, it
ordered a trial on the merits.
The Cabrals appealed to this Court.
Issue:
Whether or not the Appellate Court erred in not
applying res judicata in the civil case.
Ruling:
It is obvious that the order of dismissal in the
criminal action for falsification, which was based
on prescription of the crime, cannot be
considered res judicata or a bar to the civil action
of the San Diegos against the Cabrals.
The civil complaint of the San Diegos does not
stress that the deed of sale is void ab initio. For
that reason, its imprescriptible character is not
immediately apparent. But the fact is that the
concocted character of the sale and the
imprescriptibility of the action to declare it
inexistent constitute the premise on which the
civil action is based (See art. 1410, Civil Code).
Since the trial court erred in dismissing the
complaint on the ground of res judicata the
Appellate Court acted correctly in reversing that
order. The resolution of the Court of Appeals is
affirmed.
17. G.R. No. L-54538, April 25, 1985
HEIRS OF SPOUSES LUIS YANAS and MARIA
AGLIMOT, represented by Abraham Yanas
vs. HEIRS OF SPOUSES ANTONIO ACAYLAR

UNIVERSITY OF CEBU COLLEGE OF LAWPage 55


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

and GELACIA ACAYLAR, namely, Antonio, Jr.,


Cecilia, Godofredo, Pacita, Corazon and
Loreta, all surnamed Acaylar, and COURT OF
APPEALS

affirmed the trial court's decision. The heirs of


Yanas appealed to this Court.

Facts:

Whether or not the Deed is valid and binding.

Yanas thumbmarked in Dapitan a deed of sale


and conveyance wherein he purportedly sold to
Antonio L. Acaylar of Dapitan for P200 his 13hectare land. The sale was notarized on the
following day, August 8. An instrumental witness
was lawyer Hamoy. The sale was approved by
Governor Felipe B. Azcuna on May 15, 1953 or 33
months after the sale.

Ruling:

It is the theory of the heirs of Yanas that that


deed of sale is fictitious and fraudulent because
what Yanas thumbmarked on August 7, 1950 was
supposed to be a receipt attesting that he owed
Hamoy P 200 for his legal services. Hamoy
allegedly taking advantage of his illiteracy, made
Yanas affix his thumbmark to a deed of sale in
English.
The decree issued by Judge Manalac in 1941 was
registered only on June 5, 1954. On that day, OCT
No. 64 was issued to Yanas. On December 21,
1954 Acaylar registered the 1950 deed of sale.
He obtained TCT No. T-3338 (Exh. 5). How Acaylar
came to have possession of the owner's duplicate
of OCT No. 64 and why it was not delivered to
Yanas are not shown in the record.
When Yanas discovered that his title was
cancelled, he caused on August 28, 1958 an
adverse claim to be annotated on Acaylar's title.
He stated in his adverse claim that he never sold
his land and that the price of P200 was grossly
inadequate because the land was worth not less
than P6,000.
Yanas died in 1962. His widow, Maria Aglimot,
also a Subano, and his children filed in 1963 an
action to declare void Acaylar's title. A notice of
lis pendens was annotated on that title.
Aglimot died in 1965. The trial court found the
sale to be valid and binding. The Appellate Court

Issue:

We hold that the sale was fictitious and


fraudulent. Among the badges of fraud and
fictitiousness taken collectively are the following:
(1) The fact that the sale is in English, the
alleged vendor being illiterate;
(2) The fact that his wife did not join in the
sale and that her name is indicated in the
deed as "Maria S. Yanas" when the truth is
that her correct name is Maria Aglimot
Yanas;
(3) The obvious inadequacy of P200 as price
for a 13-hectare land (P15.40 a hectare);
(4) The notarization of the sale on the day
following the alleged thumbmarking of the
document;
(5) The failure to state the boundaries of the
lot sold;
(6) The fact that the governor approved it
more than two years after the alleged
sale;
(7) Its registration more than three years
later, and
(8) The fact that the Acaylars were able to
occupy only four hectares out of the 13
hectares and were eventually forcibly
ousted therefrom by the children and
agents of the vendor. It was not a fair and
regular transaction done in the ordinary
course of business.
The grave flaws in the evidence for defendants
Acaylar are the patent contradictions in the
testimonies of Antonio L. Acaylar and lawyer
Hamoy, their principal witnesses on the validity of
the sale. Acaylar testified that he signed the deed
of sale and that one Tupas was an instrumental
witness (12-13 tsn May 4, 1970). The truth is that
Acaylar never signed the deed and Tupas was not

UNIVERSITY OF CEBU COLLEGE OF LAWPage 56


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

a witness. The instrumental witnesses were


Hamoy and Paulino Empeynado.

and the Philippine National Bank by Alfredo G.


Gaborro

The fact that the alleged sale took place in 1950


and the action to have it declared void or
inexistent was filed in 1963 is immaterial. The
action or defense for the declaration of the
inexistence of a contract does not prescribe (Art.
1410, Civil Code).

Said documents were executed by the parties and


the payments were made by Gaborro for the debt
of Dizon to said banks after the Development
Bank of the Philippines had foreclosed the
mortgage executed by Dizon and during the
period of redemption after the foreclosure sale of
the mortgaged property to said creditor bank.

18. G.R. No. L-36821, June 22, 1978


JOSE P. DIZON vs. ALFREDO G. GABORRO
(Substituted
by
PACITA
DE
GUZMAN
GABORRO as Judicial Administratrix of the
Estate of Alfredo G. Gaborro) and the
DEVELOPMENT BANK OF THE PHILIPPINES
Facts:
Petitioner Jose P. Dizon was the owner of the
three (3) parcels of land. He constituted a first
mortgage lien in favor of the Development Bank
of the Philippines in order to secure a loan in the
sum of P38,000.00 trial a second mortgage lien in
favor of the Philippine National Bank to cure his
indebtedness to said bank in the amount of
P93,831.91.Petitioner Dizon having defaulted in
the payment of his debt, the Development Bank
of the Philippines foreclosed the mortgage
extrajudicially.
Sometime prior to October 6, 1959 Alfredo G.
Gaborro trial Jose P. Dizon met. Gaborro became
interested in the lands of Dizon. Dizon originally
intended to lease to Gaborro the property which
had been lying idle for some time. But as the
mortgage was already foreclosed by the DPB trial
the bank in fact purchased the lands at the
foreclosure sale on May 26, 1959, they
abandoned the projected lease.
Dizon and Alfredo Gaborro. on the same day,
October 6, 1959, constitute in truth and in fact an
absolute sale of the three parcels of land therein
described or merely an equitable mortgage or
conveyance thereof by way of security for
reimbursement or repayment by petitioner Jose P.
Dizon of any and all sums which may have been
paid to the Development Bank of the Philippines

Gaborros contention; Deed of Sale with


Assumption of Mortgage trial Option to Purchase
Real Estate.
Dizons contention: Merely an equitable
mortgage or conveyance thereof by way of
security for reimbursement, refund or repayment
by petitioner Jose P. Dizon.
Issue:
Whether or not the deed was of a Deed of Sale
with Assumption of Mortgage', trial Option to
Purchase Real Estate or merely an equitable
mortgage or conveyance thereof by way of
security for reimbursement, refund or repayment
by petitioner Jose P. Dizon.
Ruling:
In the light of the foreclosure proceedings and
sale of the properties, a legal point of primary
importance here, as well as other relevant facts
and circumstances, We agree with the findings of
the trial and appellate courts that the true
intention of the parties is that respondent
Gaborro would assume and pay the indebtedness
of petitioner Dizon to DBP and PNB, and in
consideration therefor, respondent Gaborro was
given the possession, the enjoyment and use of
the lands until petitioner can reimburse fully the
respondent the amounts paid by the latter to DBP
and PNB, to accomplish the following ends: (a)
payment of the bank obligations; (b) make the
lands productive for the benefit of the possessor,
respondent Gaborro, (c) assure the return of the
land to the original owner, petitioner Dizon, thus

UNIVERSITY OF CEBU COLLEGE OF LAWPage 57


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

rendering equity and fairness to all parties


concerned.
In view of all these considerations, the law and
Jurisprudence, and the facts established. We find
that the agreement between petitioner Dizon and
respondent Gaborro is one of those inanimate
contracts under Art. 1307 of the New Civil Code
whereby petitioner and respondent agreed "to
give and to do" certain rights and obligations
respecting the lands and the mortgage debts of
petitioner which would be acceptable to the bank.
but partaking of the nature of the antichresis
insofar as the principal parties, petitioner Dizon
and respondent Gaborro, are concerned.

allowed them to continue to remain in


possession" thereof; that demands have "been
made upon defendants to fix the period within
which they would deliver to the herein plaintiff
the above-described parcels of land but
defendants have refused and until now still refuse
to fix a specific time within which they would
deliver to plaintiff the aforementioned parcels of
land.
Issue:
What rights were transmitted to defendants by
their father, Clemente Dalandan?
Ruling:

TRUSTS
1. G.R. No. L-19012, October 30, 1967
VICTORIA JULIO vs. EMILIANO DALANDAN
and MARIA DALANDAN
Facts:
Clemente
Dalandan,
deceased
father
of
defendants Emiliano and Maria Dalandan,
acknowledged that a four-hectare piece of
riceland in Las Pias, Rizal belonging to Victoriana
Dalandan, whose only child and heir is plaintiff
Victoria Julio, was posted as security for an
obligation which he, Clemente Dalandan,
assumed but, however, failed to fulfill. The result
was that Victoriana's said land was foreclosed.
Clemente Dalandan promised to Victoria Julio a
farm of about four hectares to replace the
aforesaid foreclosed property. An affidavit was
executed by Clemente which herein petitioner
accepted. One of the condition laid were neither
delivery of the land nor the fruits thereof could
immediately be demanded from his children.
After the death of Clemente Dalandan, Victoria
Julio requested from defendants, Clemente's
legitimate and surviving heirs who succeeded in
the possession of the land thus conveyed, to
deliver the same to her; that defendants "insisted
that according to the agreement", neither
delivery of the land nor the fruits thereof could
immediately be demanded, and that "plaintiff
acceded to this contention of defendants and

They are usufructuaries for an undetermined


length of time. For so long as that period has not
been fixed and has not elapsed, they hold the
property. Theirs is to enjoy the fruits of the land
and to hold the same as trustees of Victoria Julio.
And this because, by the deed, Clemente
Dalandan divested himself of the ownership
qualified solely by withholding enjoyment of the
fruits and physical possession. In consequence,
Clemente Dalandan cannot transmit to his heirs,
the present defendants, such ownership. Nemo
dat quod non habet. And then, the document is a
declaration
by
Clemente
Dalandan,
now
deceased, against his own proprietary interests.
Such document is binding upon his heirs.
But, defendants aver that recognition of the trust
may not be proved by evidence aliunde. They
argue that by the express terms of Article 1443 of
the Civil Code, "[n]o express trusts concerning an
immovable or any interest therein may be proved
by parol evidence." This argument overlooks the
fact that no oral evidence is necessary. The
express trust imposed upon defendants by their
predecessor appears in the document itself. For,
while it is true that said deed did not in definitive
words institute defendants as trustees, a duty is
therein imposed upon them when the proper
time comes to turn over both the fruits and the
possession of the property to Victoria Julio. Not
that this view is without statutory support. Article
1444 of the Civil Code states that: "No particular

UNIVERSITY OF CEBU COLLEGE OF LAWPage 58


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

words are required for the creation of an express


trust, it being sufficient that a trust is clearly
intended." In reality, the development of the trust
as a method of disposition of property, so
jurisprudence teaches, "seems in large part due
to its freedom from formal requirements." This
principle perhaps accounts for the provisions in
Article 1444 just quoted. For, "technical or
particular forms of words or phrases are not
essential to the manifestation of intention to
create a trust or to the establishment thereof."
Nor would the use of some such words as "trust"
or "trustee" essential to the constitution of a trust
as we have held in Lorenzo vs. Posadas, 64 Phil.
353, 368. Conversely, the mere fact that the word
"trust" or "trustee" was employed would not
necessarily prove an intention to create a trust.
What is important is whether the trustor
manifested an intention to create the kind of
relationship which in law is known as a trust. It is
unimportant that the trustor should know that the
relationship "which he intends to create is called
a trust, and whether or not he knows the precise
characteristics of the relationship which is called
a trust." Here, that trust is effective as against
defendants and in favor of the beneficiary
thereof, plaintiff Victoria Julio, who accepted it in
the document itself.
2. G.R. No. L-21616, December 11, 1967
GERTRUDES F. CUAYCONG, ET AL. vs. LUIS D.
CUAYCONG, ET AL.
Facts:

survived by her 5 children all surnamed Betia.


Anastacio Cuaycong, also deceased, is survived
by his 6 children all surnamed Cuaycong. Meliton
and Basilisa died without any issue. The surviving
children of Lino Cuaycong, the surviving children
of Anastacio, as well as children of deceased
Praxedes Cuaycong Betia, filed as pauper
litigants, a suit against Justo, Luis and Benjamin
Cuaycong for conveyance of inheritance and
accounting.
CFI ruled that the trust alleged in the complaint
refers to an immovable which under Article 1443
of the Civil Code may not be proved by parol
evidence. Plaintiffs were given 10 days to file an
amended complaint mentioning or alleging
therein the written evidence of the alleged trust,
otherwise the case would be dismissed. Later, the
court decreed that since there was no amended
complaint filed, thus, no enforceable claim, it was
useless to declare Benjamin Cuaycong in default.
Plaintiff thereafter manifested that the claim is
based on an implied trust. They added that there
being no written instrument of trust, they could
not amend the complaint to include such
instrument. The court dismissed the case for
failure to amend the complaint; it further refused
to reconsider its order denying the motion to
declare Benjamin Cuaycong in default, stating
that such a default declaration would be of no
purpose.
Issue:
Whether the trust is express or implied.

Eduardo Cuaycong, married to Clotilde de Leon,


died without issue but with three brothers and a
sister surviving him: Lino, Justo, Meliton and
Basilisa. Upon his death, his properties were
distributed to his heirs as he willed except two
haciendas in Victorias, Negros Occidental,
devoted to sugar and other crops the
Haciendas Sta. Cruz and Pusod both known as
Hacienda
Bacayan.
Hacienda
Bacayan
is
comprised of eight (8) lots all of which are
titled in the name of Luis D. Cuaycong, son of
Justo Cuaycong. Lino Cuaycong died and was
survived by his 8 children. Praxedes Cuaycong,
married to Jose Betia, is already deceased and is

Ruling:
An express trust was made over the properties in
question.
Paragraph 8 of the complaint state: That as the
said two haciendas were then the subject of
certain transactions between the spouses
Eduardo Cuaycong and Clotilde de Leon on one
hand, and Justo and Luis D. Cuaycong on the
other, Eduardo Cuaycong told his brother Justo
and his nephew, defendant Luis D. Cuaycong, to
hold in trust what might belong to his brothers

UNIVERSITY OF CEBU COLLEGE OF LAWPage 59


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

and sister as a result of the arrangements and to


deliver to them their shares when the proper time
comes, to which Justo and Luis D. Cuaycong
agreed.
Our Civil Code defines an express trust as one
created by the intention of the trustor or of the
parties, and an implied trust as one that comes
into being by operation of law. Express trusts are
those created by the direct and positive acts of
the parties, by some writing or deed or will or by
words evidencing an intention to create a trust.
On the other hand, implied trusts are those
which, without being expressed, are deducible
from the nature of the transaction by operation of
law as matters of equity, independently of the
particular intention of the parties. Thus, if the
intention to establish a trust is clear, the trust is
express; if the intent to establish a trust is to be
taken from circumstances or other matters
indicative of such intent, then the trust is implied.
From these and from the provisions of paragraph
8 of the complaint itself, We find it clear that the
plaintiffs alleged an express trust over an
immovable, especially since it is alleged that the
trustor expressly told the defendants of his
intention to establish the trust. Such a situation
definitely falls under Article 1443 of the Civil
Code.
We agree that it was pointless to declare
Benjamin Cuaycong in default, considering that
without a written instrument as evidence of the
alleged trust, the case for the plaintiffs must be
dismissed. The order of dismissal of the lower
court appealed from is affirmed.
3. G.R. No. L-19397, April 30, 1966
TEODORA MATIAS DE BUENCAMINO, ET AL.
vs. MARIA DIZON DE MATIAS, ET AL.

Facts:

registered owner of three parcels of farm lands.


The said deceased spouses had only one son,
Luis, who is now also deceased. Luis had with his
lawful wife Maria Dizon Matias, several children,
seven of whom are living, namely: 1. Modesta, 2.
Segundo, 3. Jacinto, 4. Vicente, 5. Jesus, 6.
Teodora, and 7. Mamerto, all surnamed Matias.
The first five, together with their mother, are
plaintiffs, and the last two with their respective
spouses, and two others, are the defendants.

Luis also kept a mistress with whom he had five


children. He maintained the latter family in a
house he constructed for them in the same
compound where his parents were living, and
found it more convenient and comfortable to
spend most of his time with his common-law wife
and his illegitimate children. And although Luis
attended to the immediate needs of his
legitimate children, who were then residing with
their grandparents (deceased spouses), Luis did
not lavish upon them as much care and attention
as he did the other family. This peculiar behavior
and conduct on the part of Luis, led his parents to
fear that should their properties pass on to him
upon their death, Luis might dispose of the same
in favor of his illegitimate children, to the
prejudice of his legitimate children. And because
of this, the deceased spouses decided to transfer
their properties in the name of one of their
legitimate grandchildren, for the latter to hold the
same in trust for the other brothers and sisters.
After a family council was held, the grandchild
Teodora was chosen as the transferee because
the deceased spouses felt that Teodora, being
married to a rich man, Roque Buencamino, would
not find any interest in retaining the properties
for herself, and that she would solemnly keep her
promise to give to each and every one of her
brothers and sisters their corresponding shares in
the properties in question at the proper time. This
transfer was kept a secret from the son Luis.

The deceased Hilaria Dizon Matias, married to


Fulgencio Matias (also deceased), was the
UNIVERSITY OF CEBU COLLEGE OF LAWPage 60
LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

However, as these three parcels of land were


previously mortgaged to Serafin and Encarnacion
Lazatin to secure an obligation of P4,500.00, the
same had first to be cleared. But as neither the
deceased spouses nor Teodora had the available
cash with which to settle the amount owing to the
Lazatins, what Teodora did was to approach her
father-in-law, Felipe Buencamino, Jr., who agreed
to loan her P5,000.00, provided she secure the
same with a mortgage over the properties in
question. The necessary papers were then
prepared. First, the mortgage to the Lazatins
were released upon the payment of P4,500.00,
plus interests. An Escritura de Venta con
Arrendamiento (Deed of Sale and Lease) was
then executed by the deceased spouses in favor
of Teodora and Roque Buencamino. A mortgage in
favor of Felipe Buencamino, Jr., for the sum of
P4,500.00 was then executed by the new
transferees Teodora and Roque Buencamino.

Trial court declared the Escritura de Venta to be


an equitable mortgage in favor of the plaintiffs.
CA affirmed the judgment of the CFI with some
modifications. CA declared that the three parcels
of land originally registered in the name of Hilaria
Dizon Matias, and presently in the name of
Teodora and Roque Buencamino are held by the
latter in trust for the benefit of Teodora's
legitimate brothers and sisters. Therefore, upon
payment of the mortgage debt with interest to
the estate of the late Felipe Buencamino, Jr., the
mortgage shall be cancelled, and, immediately
thereafter, TCT in the name of Teodora and Roque
Buencamino shall be surrendered to the Register
of Deeds, who shall issue another title.

Issue:

Whether or not the Escritura de Venta (Deed of


Sale) and the deed of mortgage resulted to an
implied trust.

Ruling:

Yes. The evidence is clear that the true intent and


understanding of the deceased spouses with
Teodora and Roque Buencamino was that the
latter would hold the title over the farm lands in
trust for the benefit of Teodora's brothers and
sisters. Teodora herself confirmed this when, in a
letter she wrote her grandfather, she reaffirmed
her intention to comply with the trust and
confidence
reposed
upon
her
by
her
grandparents. Again, when her mother asked
Teodora to comply with her promise to convey the
corresponding shares of her other brothers and
sisters, she replied that the only obstacle to this
conveyance was the payment of the mortgage
account to her father-in-law, Felipe Buencamino,
Jr.

The execution of the deed and the consequent


registration of the properties in the names of
petitioner spouses, created an implied trust in
favor of Teodora's legitimate brothers and sisters.
And while implied or constructive trust prescribes
in 10 years, the rule does not apply where a
fiduciary relation exists and the trustee
recognizes the trust. Continuous recognition of a
resulting trust precludes any defense of laches in
a suit to declare and enforce the trust. As it does
not appear when Teodora repudiated the
existence of fiduciary relations between her and
brothers and sisters, the same shall be taken to
have been made only upon the filing of her
answer to the complaint. The action brought by
the plaintiffs to enforce such trust, therefore, has
not yet prescribed. CA decision is affirmed.

4. G.R. No. L-37504, December 18, 1974


ROBERTO ESCAY, ET AL. vs. COURT
APPEALS, ET AL.

OF

UNIVERSITY OF CEBU COLLEGE OF LAWPage 61


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Facts:
Emilio and Jose Escay, now both deceased, were
brothers. In his lifetime, Emilio mortgaged his
properties now in question, to the Philippine
National Bank (PNB). He died before he could pay
his obligation with the bank which had mounted.
The bank then filed a foreclosure suit against the
estate of Emilio represented by the administrator,
Atty. Eduardo Arboleda. Pending the said suit, a
contract hereafter referred to as original
contract was entered among PNB, Jose Escay, Sr.,
and the administrator, Atty. Arboleda, under
which Jose assumed the mortgage indebtedness
of his deceased brother Emilio. This was agreed
to by Magdalena Vda. de Escay, widow of Emilio,
in her own behalf and as guardian ad litem of
their children. When it was discovered that the
original contract failed to state the transfer of the
ownership of the properties in question to Jose
Escay, Sr., in consideration of his assumption of
the mortgage indebtedness of Emilio (subject to
the right of repurchase of the heirs of Emilio
within five (5) years after the mortgage
indebtedness
had
been
fully
paid), a
supplementary contract was entered into among
PNB, the administrator, Atty. Arboleda and Jose
Escay, Sr. This was approved by the probate court
taking cognizance of the estate of the deceased
Emilio Escay. Magdalena Vda. de Escay, Roberto
and the other children filed a complaint against
Jose Escay, Sr. and Atty. Arboleda, for the
recovery of the ownership and possession of the
properties in question. This case was provisionally
dismissed.
Issue:
Whether or not a trust relation arose between the
testate estate of Emilio Escay and under Jose
Escay, Sr.
Ruling:
No. The evidence is clear that the original and
supplementary contracts were the result of a
series of negotiations by the testate estate of
Emilio Escay through its Judicial Administrator
and legal representative; its creditor, the PNB; the
heirs represented by their guardian ad litem,

Magdalena Vda. de Escay; and Jose Escay, Sr. As


the Court of Appeals found, in these negotiations,
in the series of conferences, Jose Escay, Sr. did
not appear to have been represented by counsel.
The contract and the "contrato suplementario"
were both prepared for execution by the Judicial
Administrator and by the lawyer of the bank, Atty.
Recto. It is not fair to imply that the PNB at that
time was a party to a fraud. As the CA observed,
there is no evidence whatsoever that Atty. Recto
or the PNB contrived and confederated with the
Judicial Administrator of the testate estate or the
heirs through their guardian ad litem, Magdalena
Vda. de Escay. Indeed, it is ridiculous to even
imagine that the PNB with no interest to serve
except its own would lend itself as a party to a
fraud in order to divest the testate estate of
Emilio Escay of its rightful ownership over the
properties in question. Since there was no fraud,
there was no trust relation that arose.
Petitioners' original theory was implied or
constructive trust. Petitioners now contend that
the trust being a result of the agreement of the
parties is after all an express trust. And they now
claim that an action based on express trust does
not prescribe and the property held in trust
cannot be acquired by adverse possession or
acquisitive prescription.
In any case, an express trust concerning an
immovable cannot be proved by parole evidence,
and actions based on express trust also prescribe
and the property held in trust may be acquired by
adverse possession from the moment the trust is
repudiated by the trustee.
Assuming that there was fraud in the transfer of
the properties, the lapse of time since the
discovery of the alleged fraud has extinguished
any right on the part of the petitioners to seek
the reconveyance of the properties. As the Court
of Appeals correctly ruled: And assuming the
existence of a trust relation, such trust was not
an express one. If there was a trust, it arose from
law, and therefore an implied trust. And implied
trust prescribes in ten years. According to the
appellants they discovered the fraud in 1941; the
action to enforce an implied trust prescribed ten

UNIVERSITY OF CEBU COLLEGE OF LAWPage 62


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

years thereafter. And assuming an express trust,


the trust had been repudiated by Jose Escay, Sr.
when in 1941 he refused to transfer the property
to the appellants, and appellants filed a civil case
in 1941 for the recovery of the properties. This
complaint, as stated above, was dismissed
provisionally.
The prescriptibility of an action for reconveyance
based on implied or constructive trust, is now a
settled question in this jurisdiction. It prescribes
in ten years. Express trusts prescribe 10 years
from the repudiation of the trust. In conclusion,
(a) all the findings of fact by the Court of Appeals
were supported by the evidence, and (b) in any
event, there was no grave abuse of discretion by
the Court of Appeals in arriving at its findings.
5. G.R. No. 109910, April 5, 1995
REMEDIOS G. SALVADOR and GRACIA G.
SALVADOR vs. COURT OF APPEALS, ALBERTO
and ELPIA YABO, FRANCISCA YABO, et al.
Facts:
Alipio Yabo was the owner of Lot No. 6080 and Lot
No. 6180 situated in Barrio Bulua, Cagayan de
Oro City. Upon his death, title thereto devolved
upon his nine children, namely, Victoriano,
Procopio, Lope, Jose, Pelagia, Baseliza, Francisca,
Maria, and Gaudencia.
Pastor Makibalo, husband of Maria Yabo, one of
Alipio's children, filed a complaint against the
spouses Alberto and Elpia Yabo for "Quieting of
Title, Annulment of Documents, and Damages." In
the complaint, he alleged that he owned a total of
eight shares of the subject lots, having purchased
the shares of seven of Alipio's children and
inherited the share of his wife, Maria, and that
except for the portion corresponding to
Gaudencia's share which he did not buy, he
occupied, cultivated, and possessed continuously,
openly, peacefully, and exclusively the two
parcels of land. He then prayed that he be
declared the absolute owner of 8/9 of the lots in
question.

Grandchildren and great-grandchildren of the late


Alipio Yabolodged a complaint for partition and
quieting of title with damages against Pastor
Makibalo, Enecia Cristal, and the spouses Eulogio
and Remedios Salvador. They alleged that the
two lots are the common property of the heirs of
Alipio Yabo, namely, the plaintiffs, defendant
Enecia Cristal, Maria Yabo and Jose Yabo, whose
share had been sold to Alberto Yabo; that after
Alipio's death, the spouses Pastor and Maria
Makibalo, Enecia Cristal and Jose Yabo became
the de facto administrators of the said properties;
and that much to their surprise, they discovered
that the Salvador spouses, who were strangers to
the family, have been harvesting coconuts from
the lots, which act as a cloud on the plaintiffs'
title over the lots.
The two cases were consolidated and jointly
heard. Trial court rendered judgment finding
Pastor Makibalo, now Eulogio Salvador and
Remedios Salvador the owner of eight (8) shares,
equivalent to eight-ninth (8/9) of Lot No. 6080,
and of seven (7) shares, equivalent to sevenninth (7/9) of Lot No. 6180, and therefore,
ordering the partition of Lot 6080 so that the oneninth (1/9) alloted to Gaudencia Yabo will go to
her heirs or their assigns, and the remaining
eight-ninth (8/9) will go to the spouses Eulogio
Salvador and Remedios Salvador, as successor of
Pastor Makibalo, and the partition of Lot 6180 so
that the seven-ninth (7/9) portion which formerly
belonged to Baseliza, Victoriano, Jose, Lope,
Maria, Francisca, and Pelagia will go to the
spouses Eulogio and Remedios Salvador, the oneninth (1/9) which formerly belonged to Procopio,
will go to Alberto Yabo, and the remaining oneninth (1/9) which formerly belonged to
Gaudencia, will go to Gaudencia's heirs or their
assigns.
CA affirmed the decision appealed from subject to
some modifications in the partition. CA held that
(a) Maria Yabo did not sell her share to Alberto
and Elpia Yabo; (b) prescription and laches have
not run against the private respondents with
respect to the 1/9 share of Maria Yabo in the
estate of her father and to her conjugal share in
the portions acquired from her brothers and

UNIVERSITY OF CEBU COLLEGE OF LAWPage 63


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

sisters; and (c) Procopio never sold his share in


Lot No. 6080 to Pastor Makibalo. CA then
concluded and held that appellee Pastor Makibalo
and his assigns, the spouses Eulogio and
Remedios Salvador, are entitled only to one-half
() of the one-ninth (1/9) share of Maria and
three-fourths (3/4) of the six-ninth (6/9) shares
acquired from Baseliza, Victoriano, Jose, Lope,
Pelagia and Francisca.
Issues:
1. Which portion of Lot No. 6080 and Lot No. 6180
formed part of the conjugal assets of the spouses
Pastor Makibalo and Maria Yabo?
2. Whether or not the rights of Pastor's co-heirs in
the estate of Maria Yabo were extinguished
through prescription or laches.

Ruling:
1. Article 160 of the Civil Code provides that all
property of the marriage is presumed to belong to
the conjugal partnership, unless it be proved that
it pertains exclusively to the husband or to the
wife. Since the shares of Jose, Victoriano, Lope,
Baseliza, Procopio, and Francisca in Lot No. 6180
and Lot No. 6080 had been purchased by Pastor
during his marriage with Maria, and there is no
proof that these were acquired with his exclusive
money, the same are deemed conjugal
properties. Not forming part of the conjugal
partnership are: (1) the 1/9 share inherited by
Maria which remained as her exclusive property
pursuant to Article 146 (2) of the Civil Code; (2)
the 1/9 share of Gaudencia which was not sold to
Pastor; and (3) the 1/9 share of Pelagia which was
acquired by Pastor five years after the death of
his wife and which was therefore his exclusive
property. CA should have excluded from the
conjugal partnership the share of Pelagia which
Pastor had acquired after his wife's death.
Upon Maria's death, the conjugal partnership of
gains was dissolved. Half of the conjugal
properties, together with Maria's 1/9 hereditary

share in the disputed lots, constituted Maria's


estate and should thus go to her surviving heirs.
Under Article 1001 of the Civil Code, her heirs are
her spouse, Pastor Makibalo, who shall be entitled
to-one-half (1/2) of her estate, her brother, Jose,
and the children of her other brothers and sisters,
who shall inherit the other half. There having
been no actual partition of the estate yet, the
said heirs became co-owners thereof by
operation of law.
2. No. Article 494 of the Civil Code which provides
that each co-owner may demand at any time the
partition of the common property implies that an
action to demand partition is imprescriptible or
cannot be barred by laches. The imprescriptibility
of the action cannot, however, be invoked when
one of the co-owners has possessed the property
as exclusive owner and for a period sufficient to
acquire it by prescription. Prescription as a mode
of acquiring ownership requires a continuous,
open, peaceful, public, and adverse possession
for a period of time fixed by law.
This Court has held that the possession of a coowner is like that of a trustee and shall not be
regarded as adverse to the other co-owners but
in fact as beneficial to all of them. Acts which
may be considered adverse to strangers may not
be considered adverse insofar as co-owners are
concerned. A mere silent possession by a coowner, his receipt of rents, fruits or profits from
the property, the erection of buildings and fences
and the planting of trees thereon, and the
payment of land taxes, cannot serve as proof of
exclusive ownership, if it is not borne out by clear
and convincing evidence that he exercised acts of
possession which unequivocably constituted an
ouster or deprivation of the rights of the other coowners. Thus, in order that a co-owner's
possession may be deemed adverse to the cestui
que trust or the other co-owners, the following
elements must concur: (1) that he has performed
unequivocal acts of repudiation amounting to an
ouster of the cestui que trust or the other coowners; (2) that such positive acts of repudiation
have been made known to the cestui que trust or
the other co-owners; and (3) that the evidence
thereon must be clear and convincing.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 64


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

The records do not show that Pastor Makibalo


adjudicated to himself the whole estate of his
wife by means of an affidavit filed with the Office
of the Register of Deeds as allowed under Section
1 Rule 74 of the Rules of Court, or that he caused
the issuance of a certificate of title in his name or
the cancellation of the tax declaration in Alipio's
name and the issuance of a new one in his own
name. The only act which may be deemed as a
repudiation by Pastor of the co-ownership over
the lots is his filing on of an action to quiet title.
The period of prescription started to run only from
this repudiation. However, this was tolled when
his co-heirs, the private respondents herein,
instituted an action for partition of the lots.
Hence, the adverse possession by Pastor being
for only about six months would not vest in him
exclusive ownership of his wife's estate, and
absent acquisitive prescription of ownership,
laches and prescription of the action for partition
will not lie in favor of Pastor.
Since the share of Procopio in the two litigated
parcels of land was purchased by Pastor during
his marriage with Maria, the same became
conjugal property, and half of it formed part of
Maria's estate upon her death. Accordingly,
Pastor's resale in favor of Alberto could only be
valid with respect to Pastor's one-half (1/2)
conjugal share and one-fourth (1/4) hereditary
share as heir of Maria. The remaining one-fourth
(1/4) should go to Pastor's co-heirs, the private
respondents herein.
The appealed judgment is affirmed, subject to the
following modifications: (a) the former 1/9 share
of Pelagia Yabo in the two lots which she sold to
Pastor should be treated as the latter's exclusive
property which should now pertain to the
petitioners, his successors-in-interest; and (b) the
former 1/9 share of Procopio Yabo in both lots
should be divided as follows: 3/4 (respondent
Pastor's 1/2 conjugal share and 1/4 representing
his share therein as Maria's heir) for the spouses
Alberto and Elpia Yabo, and 1/4 (representing the
share therein of Maria's collateral relatives as
Maria's heirs) for the private respondents,
including Alberto and Jose Yabo. In sum, Lots Nos.

6180 and 6080 should be partitioned as follows:


(a) 1/9 or 4/36 to Guadencia Yabo's heirs or
successors-in-interest; (b) 3/4 of 1/9 or 3/36 to
the spouses Alberto and Elpina Yabo; (c) 8/36
to the private respondents, including Jose Yabu or
his heirs; and (d) 21/36 to the petitioners as
successors-in-interest of Pastor Makibalo.
6. G.R. No. 108525, September 13, 1994
SPOUSES RICARDO AND MILAGROS HUANG
vs. COURT OF APPELAS, JUDGE, PEDRO N.
LAGGUI, Presiding Judge, RTC, Makati, Br.
60, and SPOUSES DOLORES AND ANICETO
SANDOVAL
Facts:
Respondent Dolores Sandoval wanted to buy two
(2) lots in Dasmarias Village, Makati, but was
advised by petitioner Milagros Huang, wife of her
brother, petitioner Ricardo Huang, that the policy
of the subdivision owner forbade the acquisition
of two (2) lots by a single individual.
Consequently, Dolores purchased Lot 21 and
registered it in her name. She also purchased the
adjacent lot, Lot 20, but heeding the advice of
Milagros, the deed of sale was placed in the name
of Ricardo and Registered in his name.
Thereafter, Dolores constructed a residential
house on Lot 21. Ricardo also requested her
permission to construct a small residential house
on Lot 20 to which she agreed. She also allowed
Ricardo to mortgage Lot 20 to the Social Security
System (SSS) to secure the payment of his loan
to be spent in putting up the house. However, she
actually financed the construction of the house,
the swimming pool and the fence thereon on the
understanding that the Huang spouses would
merely hold title in trust for her beneficial
interest.
To protect her rights and interests as the lawful
owner of Lot 20 and its improvements, Dolores
requested the Huangs to execute in her favor a
deed of absolute sale with assumption of
mortgage over the property. The latter obliged.
Huang spouses leased the house to DeltronSprague Electronics Corporation for its various
executives as official quarters without first

UNIVERSITY OF CEBU COLLEGE OF LAWPage 65


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

securing the permission of Dolores. Dolores


tolerated the lease of the property as she did not
need it at that time. But, after sometime, the
lessees started prohibiting the Sandoval family
from using the swimming pool and the Huangs
then began challenging the Sandovals' ownership
of the property.
Trial court found that it was indeed Dolores who
brought Lot 20 but had it registered in the name
of Ricardo; and, it was she who built the house
and swimming pool thereon and the fence
enclosing Lots 20 and 21. As regards the deed of
sale with assumption of mortgage, the trial court
found that it was signed voluntarily by the Huang
spouses so much so that their claim that they
were misled into signing it was unbelievable.
Thus, judgment was rendered in favor of the
Sandoval spouses. CA affirmed the decision of the
trial court. Petitioners assert that the finding of
the CA of a resulting or implied trust between
them and Dolores is not supported by evidence.
Issue:
Whether or not a resulting or implied trust existed
between Dolores and the Huangs.
Ruling:
Yes. The SC affirmed the decision of the trial and
appellate court. Dolores was able to prove by
overwhelming evidence that she purchased Lot
20 with her own funds while the spouses Huang's
evidence failed to help them in their bid to
establish ownership over Lot 20 and its
improvements.
Trust is a fiduciary relationship with respect to
property which involves the existence of
equitable duties imposed upon the holder of the
title to the property to deal with it for the benefit
of another. A person who establishes a trust is
called the trustor; one in whom confidence is
reposed as regards property for the benefit of
another person is known as the trustee; and the
person for whose benefit the trust has been
created is referred to as the beneficiary or cestui
que trust. Trust is either express or implied.

Express trust is created by the intention of the


trustor or of the parties. Implied trust comes into
being by operation of law. The latter kind is either
constructive or resulting trust. A constructive
trust is imposed where a person holding title to
property is subject to an equitable duty to convey
it to another on the ground that he would be
unjustly enriched if he were permitted to retain it.
The duty to convey the property arises because it
was acquired through fraud, duress, undue
influence or mistake, or through breach of a
fiduciary duty, or through the wrongful disposition
of another's property. On the other hand, a
resulting trust arises where a person makes or
causes to be made a disposition of property
under circumstances which raise an inference
that he does not intend that the person taking or
holding the property should have the beneficial
interest in the property. It is founded on the
presumed intention of the parties, and as a
general rule, it arises where, and only where such
may be reasonably presumed to be the intention
of the parties, as determined from the facts and
circumstances existing at the time of the
transaction out of which it is sought to be
established.
In the present case, Dolores provided the money
for the purchase of Lot 20 but the corresponding
deed of sale and transfer certificate of title were
placed in the name of Ricardo Huang because
she was advised that the subdivision owner
prohibited the acquisition of two (2) lots by a
single individual. In effect, a resulting trust was
created. Ricardo became the trustee of Lot 20
and its improvements for the benefit of Dolores
as owner. Art. 1448 of the New Civil Code
provides that there is an implied trust when
property is sold and the legal estate is granted to
one party but the price is paid by another for the
purpose of having the beneficial interest for the
property. A resulting trust arises because of the
presumption that he who pays for a thing intends
a beneficial interest therein for himself.
Petitioners raise the issue of prescription. But the
action to compel the trustee to convey the
property registered in his name for the benefits of
the cestui que trust does not prescribe. If at all, it

UNIVERSITY OF CEBU COLLEGE OF LAWPage 66


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

is only when the trustee repudiates the trust that


the period of prescription commences to run. The
prescriptive period is ten (10) years from the
repudiation of the trust. The reckoning point is
repudiation of the trust by the trustee because
from that moment his possession becomes
adverse, which in the present case gave rise to a
cause of action by Dolores against the Huang
spouses. However, before the period of
prescription may start, it must be shown that:(a)
the trustee has performed unequivocal acts of
repudiation amounting to an ouster of the cestui
que trust; (b) such positive acts of repudiation
have been made known to the cestui que trust;
and, (c) the evidence thereon is clear and
conclusive.
We agree with the trial court that the action filed
by Dolores has not prescribed. Firstly, Ricardo has
not performed any unequivocal act of repudiation
amounting to an ouster of Dolores. Secondly, the
acts done by Ricardo, such as leasing the house
without prior knowledge of Dolores, are not
positive acts of repudiation; and, thirdly, the
evidence on such acts is unclear and
inconclusive. Petitioners are of the mistaken
notion that the 10-year prescriptive period is
counted from the date of issuance of the Torrens
certificate of title. This rule applies only to the
remedy of reconveyance. Reconveyance is
available in case of registration of property
procured
by fraud thereby
creating
a constructive trust between the parties, a
situation which does not obtain in this case. We
concur with the finding of the appellate court that
the deed was executed by the parties as security
for the protection of the rights and interest of
Dolores as the true and lawful owner of Lot 20
and its improvements.
7. G.R. No. L-20274, October 30, 1969
ELOY MIGUEL and DEMETRIO MIGUEL vs.
THE COURT OF APPEALS and ANACLETA M.
VDA. DE REYES
Facts:
During the Spanish regime and prior to July 26,
1894, Eloy Miguel, then single and resident of

Laoag, Ilocos Norte, for some appreciable period


of time stayed. There he spotted an uncultivated
parcel of land, one hectare of which he forthwith
occupied, and then cleared and planted to corn.
After the Philippine Revolution, he returned to
Laoag, Ilocos Norte and took a wife. In the early
years of the ensuing American regime, Eloy
Miguel returned to Ingud Norte with his family,
resettled on the same land and paid the annual
realty taxes thereon. Eloy applied for Homestead
application for the land through Leonor Reyes.
However, World War II broke out in the Pacific,
and Miguel did not hear of and about his
homestead application; after the war he had no
way of ascertaining the outcome of his
application because Leonor Reyes had died
meanwhile during the Japanese occupation.
Sometime in 1932, on the occasion of the
marriage of Demetrio (son), Eloy Miguel ceded to
Demetrio 14 hectares of the southern portion of
the land as a gift propter nuptias. Demetrio
forthwith declared the said portion for taxation
purposes in his name, as evidenced by tax
declaration.
However, unknown to Eloy and Demetrio Miguel,
Leonor Reyes on June 25, 1935 filed sales
application in the name of his wife, Anacleta M.
Vda. de Reyes (hereinafter referred to as the
private respondent), covering the same parcel of
land occupied and cultivated by the Miguels and
the subject of Eloy Miguel's homesteadapplication. Demetrio discovered that their land
was covered by the sales application of the
private respondent. Eloy Miguel forthwith filed on
February 16, 1950 a protest with the Bureau of
Lands against sales application of the private
respondent. Consequently, on February 21, 1950,
the Director of Lands ordered an investigation.
Hearing of the protest was scheduled for May 26,
1950 but was postponed at the instance of the
private respondent. The hearing was then reset
for February 10, 1951. However, the Miguels had
in the interim discovered that notwithstanding
their protest and the investigation ostensibly
being conducted, sales patent V-522 and original
certificate of title P-1433, covering the parcel of
land in question, were granted and issued to the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 67


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

private respondent on January 10, 1951 and


January 22, 1951, respectively.

This action was seasonably instituted because


the complaint was filed on September 7, 1953.

On September 7, 1953, Eloy and Demetrio Miguel


commenced the action in the CFI of Isabela
against the private respondent to compel her to
reconvey to them the land covered by the
abovementioned patent and title. The trial court
found that Eloy Miguel "has always been, and up
to this time, in physical possession of the whole
tract of land in question under claim of ownership
thru occupancy, he having occupied and
cultivated the land since the Spanish regime;"
that he was a homestead applicant way back in
1932 for the land possessed by him; that there
exists a trust relationship Eloy Miguel would
himself have personally attended to his own
application; and that, through fraud and
misrepresentations, Leonor Reyes caused the
filing and approval of an application and the
issuance by the Bureau of Lands of a sales patent
covering the property in the name of his wife, the
private respondent, without the consent and
knowledge of the Miguels.

It is noteworthy that the complaint for


reconveyance was not dismissed by the trial
court. What it denied was merely the relief or
remedy of reconveyance. However, in its
decision, the trial court made certain findings of
fact which justified the relief of reconveyance
e.g., that Eloy Miguel "has always been, and up to
this time, in physical possession of the whole
tract of land in question under claim of ownership
thru occupancy, he having occupied and
cultivated the land since the Spanish regime;"
that there was a trust relationship between Eloy
Miguel and the Reyes spouses; and that the
Reyes spouses have fraudulently and in bad faith
breached that trust. Hence, in reiterating their
positions before the respondent Court on the
private nature of the land, on the impropriety of
impleading the Director of Lands and the Register
of Deeds of Isabela, and on the existence of a
trust relationship between the petitioners and the
Reyes spouses, the petitioners were in point of
fact inviting the respondent Court's attention to
questions erroneously decided against them by
the trial court, in the hope that the respondent
Court would render judgment in accordance with
the facts adjudged by the trial court as proven.

The private respondent appealed to the CA


(respondent
Court)
which
dismissed
the
complaint. Eloy and, Demetrio Miguel filed a
motion for reconsideration was denied.
Issue:
Whether or not its finding that, assuming that
reconveyance is still proper, the cases cited in the
latter's first motion for reconsideration are not in
point.
Ruling:
This is an action for the enforcement of
a constructive trust the ultimate object of
which is the reconveyance of property lost
through breach of fiduciary relations and/or fraud.
Therefore, it can be filed within four years from
the discovery of the fraud. And since the
petitioners discovered the fraud committed
against them by the Reyes spouses in 1950, they
had until 1954 within which to bring this action.

Parenthetically, a fiduciary relation arises where


one man assumes to act as agent for another and
the other reposes confidence in him, although
there is no written contract or no contract at all. If
the agent violates his duty as fiduciary, a
constructive trust arises. It is immaterial that
there was no antecedent fiduciary relation and
that it arose contemporaneously with the
particular transaction.
In the case at bar, Leonor Reyes, the private
respondent's husband, suggested that Eloy
Miguel file a homestead application over the land
and offered his services in assisting the latter to
secure a homestead patent. Eloy Miguel accepted
Leonor Reyes' offer of services, thereby relying,
on his word and reposing confidence in him. And
in payment for the services rendered by Leonor
Reyes in preparing and filing the homestead

UNIVERSITY OF CEBU COLLEGE OF LAWPage 68


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

application and those still to be rendered by him


in securing the homestead patent, Eloy Miguel
delivered to Reyes 1/5 of his yearly harvest from
the said land. When Leonor Reyes died, the
petitioners continued to deliver the same
percentage of their annual harvest to the private
respondent who undertook to continue assisting
the former to secure a homestead patent over
said land. However, in breach of their fiduciary
duty and through fraud, Leonor Reyes and the
private respondent filed a sales application and
obtained a sales patent and ultimately an original
certificate of title over the same parcel of land.
Therefore, following the ruling in Fox v. Simons,
supra, the private respondent can be compelled
to reconvey or assign to the petitioners the parcel
of land in the proportion of nine hectares in favor
of Eloy Miguel and 14 hectares in favor of
Demetrio Miguel, respectively.
8. G.R. No. L-47924, July 31, 1989
MARCIANO ASUNCION vs. HON. GREGORIO
G. PINEDA, Judge of the Court of First
Instance of Rizal, Branch XXI, Pasig, Metro
Manila,
HEIRS
OF
MARIA
OLIVEROSSORIANO and HEIRS OF SOTERO OLIVEROS
Facts:
On 7 August 1977, petitioner filed a complaint
before the CFI of Rizal to compel defendants (now
private respondents) to execute a Deed of
Reconveyance over 3.5 hectares of real property
registered in the names of Estanislawa Partoza,
Sotero Oliveros and Maria Oliveros.
The complaint alleges that the property was held
in trust by the private respondents' grandfather,
Macario Oliveros, for the benefit of petitioner's
father, Filemon Oliveros Asuncion. According to
petitioner, as plaintiff, Filemon (his father) is the
son of Marcela Oliveros (sister of Macario
Oliveros); that Filemon possessed, developed and
cultivated the disputed 3.5 hectares of the land
originally covered by OCT No. 10 long before the
title was issued; that Macario Oliveros and
Filemon (his nephew) agreed to consolidate the
possession and cultivation of their respective
lands in order that the former's application with

the Bureau of Lands for a Homestead Patent


would be approved, since the possession and
cultivation of Macario was incomplete and was
then opposed by a third party; that it was also
agreed that the 3.5 hectares of Filemon would
remain registered in the name of Macario to be
held in trust and for the benefit of Filemon; that
after the approval of the application and issuance
of the Homestead Patent in the name of Macario
Oliveros, Filemon, and, later, his only son, herein
petitioner Marciano Asuncion, continued to
cultivate and possess the 3.5 hectares up to the
present; that after the death of Macario, OCT No.
10 was transferred in the names of his
compulsory heirs, namely, his wife Estanislawa
Partoza, and two children, Sotero and Maria, both
surnamed Oliveros.
Private respondents, the Heirs of Spouses Maria
Oliveros and Alejandro Soriano, moved for the
dismissal of the complaint on the ground, among
other things, of res judicata.
In dismissing petitioner's complaint, respondent
Judge found that the same facts and the same
cause of action alleged in petitioner's motion for
intervention in Civil Case No. 21048 are present
in the case at bar. And since the Order denying
petitioner's motion for intervention in Civil Case
No. 21048 had become final and executory, the
present complaint is barred by said final Order.
Petitioner moved for a reconsideration was
likewise denied on 7 February 1978.
Petitioner filed a notice of appeal and appeal
bond. Later, he withdrew the same, whereupon,
the court a quo dismissed his appeal as per its
Order dated 30 June 1978. In lieu of his
withdrawn appeal, petitioner filed the instant
petition for review on certiorari, on the ground
that the issue involves jurisdiction of the lower
court and that the instant petition is more
expeditious than the ordinary appeal.
On 23 April 1979, the Court resolved to give due
course to the petition.
Issues:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 69


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

1. Whether or not the denial of his Motion to


Intervene for partition is a bar to the petition for
reconveyance, a remedy invoked by petitioner
under Section 102 of the Land Registration Law,
Act 496;
2. Whether or not the action for reconveyance for
the enforcement of the trust is subject to
prescription under Act 496.
Ruling:
1. The crux of petitioner's arguments in support
of this petition is that he is not seeking a remedy
under Section 38 of Act 496 (Land Registration
Law) but rather the enforcement of a trust under
the provisions of Section 102 of the said Act.
It is well settled that the essential requisites for
the existence of res judicata are:
(1) that the former judgment must be final;
(2) it must have been rendered by a court
having jurisdiction of the subject matter
and the parties;
(3) it must be a judgment on the merits; and
(4) there must be, between the first and
second actions,
(a) identity of parties;
(b) identity of subject matter; and
(c) identity of cause of action.
We note that in Civil Case No. 21048 which was
an action for partition, the complainants were the
Heirs of Spouses Maria Oliveros and Alejandro
Soriano against the Heirs of Sotero Oliveros and
Fausta Alarcon. Petitioner filed a motion to
intervene therein which was denied by the court
for reasons aforequoted. When petitioner's
motion for intervention was denied, resultantly,
he did not become a party to the case. Besides,
the Order of the court denying his intervention is
not a decision on the merits of Civil Case No.
21048..
But, even granting for the sake of argument that
petitioner is a party in Civil Case No. 21048, yet,
as admitted by the parties, the case was still
pending before the same court when the present
case (Civil Case No. 26938) for reconveyance was

filed by petitioner herein. In other words, there is


as yet no final judgment, to speak of, in Civil Case
No. 21048, which would have the effect of barring
the present case, on the ground of res judicata.
The application of res judicata is at best not
indubitable and the defense should, if at all, be
alleged in the answer and resolved after trial on
the merits, instead of by resolution of a simple
motion to dismiss. For the foregoing reasons, we
believe that the denial of herein petitioner's
Motion To Intervene in Civil Case No. 21048 is
not res judicata to his present action.
2. As regards, however, the second issue, we rule
in the affirmative and against the petitioner. In
the case of Sinaon vs. Sorongon, this Court held
that the petitioners therein having been
registered owners of the lot for more than forty
(40) years and having possessed it during said
period, their title had become indefeasible and
their possession could not be disturbed. Any
pretension as to the existence of an implied trust
should not be countenanced.
In the case at bar, OCT No. 10 in the name of
Macario Oliveros was issued in 1917, or almost
sixty (60) years before the filing of the present
complaint. Even granting that an implied or
constructive trust was created in favor of Filemon
O. Asuncion, petitioner's father, under Article
1456 of the Civil Code, still an action to reconvey
real property based upon a constructive or
implied
trust
can
be
barred
by
prescription. Hence, we find that the present
action is barred by prescription.
9. G.R. No. 74449, August 20, 1993
IMELDA A. NAKPIL vs. INTERMEDIATE
APPELLATE COURT, CARLOS J. VALDES and
CAVAL REALTY CORPORATION
Facts:
Pinggoy and Charlie were the best of friends.
Charlie easily became Pinggoy's confidant, and
later, his lawyer, accountant, auditor, and on
some occasions, a business and financial
consultant. On 8 July 1973, while the two families
were vacationing at the beach house of the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 70


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Valdeses in Bagac, Bataan, Pinggoy drowned. As


expected, Charlie went to the succor of Pinggoy's
distressed wife Nena. He acted as the legal
counsel and accountant of Nena, who became the
administratrix of her husband's estate. Towards
the end of 1978, the question arose as to who
between the Nakpils and the Valdeses should
own Pulong Maulap.
On 21 March 1979, petitioner instituted an action
for reconveyance with damages for breach of
trust before the Regional Trial Court of Baguio
City against respondents Carlos "Charlie" Valdes
and Caval Realty Corporation. She alleged in her
complaint that her husband Jose "Pinggoy" Nakpil
prior to his death had requested Valdes to
purchase Pulong Maulap and thereafter register
the sale and hold the title thereto in trust for him
(Pinggoy Nakpil), which respondent Valdes did.
But after her husband's death, Valdes concealed
and suppressed all information regarding the
trust agreement; instead, he transferred Pulong
Maulap in the name of respondent Caval Realty
Corporation, which is 99.7% owned by him, in
exchange for 1,500 shares of stock.
Valdes, on the other hand, denied the existence
of any trust agreement over Pulong Maulap and
bought the summer residence for himself with his
own funds and without any participation of the
late Nakpil; neither was it bought in trust for the
latter. Valdes claims that he only informed
Pinggoy Nakpil of the acquisition of Pulong
Maulap, and Pinggoy merely showed interest in
buying the property if he could have the money.
Meanwhile, considering their avowed friendship,
he (Valdes) offered the usufruct of the property to
the Nakpils who in turn agreed to shoulder its
maintenance expenses, real estate taxes, fire
insurance premiums and servicing of interest on
the mortgage obligation constituted on the
property.
From the records it appears that the Valdeses
bought Pulong Maulap for P150,000.00 with
respondent Valdes giving a downpayment of
P50,000.00 and assuming the vendors' mortgage
obligation of P100,000.00 with the Philippine
National Bank (PNB), which he reduced to
P75,000.00 by paying P25,000.00. Meanwhile, in

order to facilitate the servicing of the mortgage


obligation over Pulong Maulap, the loan was
transferred to the First United Bank (FUB) where
Pinggoy Nakpil was then a vice-president. Valdes
borrowed P75,000.00 from FUB with which he
paid PNB, and at the same time constituted in
favor of FUB a mortgage overPulong Maulap. He
also borrowed P65,000.00 from FUB to finance
the repair and renovation of Pulong Maulap.
Nevertheless, the trial court dismissed the
petition for reconveyance. Not satisfied with the
decision of the trial court, both parties appealed
to respondent Intermediate Appellate Court which
on 17 December 1985 reversed the trial court
and ruled that "[f]rom the foregoing facts, it is
quite evident there was no trust at all. On 21 April
1986, the motion of herein petitioner to
reconsider the decision of respondent appellate
court was denied for "absolute lack of merit."
Thus, this petition for review was filed.
Issue:
Whether or not Art. 1450 of the Civil Code
applies; and, if it so applies, whether petitioner
can
still
compel
reconveyance
of Pulong
Maulap from respondent Valdes.
Ruling:
Implied trusts, which may either be resulting or
constructive, are those which, without being
express, are deducible from the nature of the
transaction as matters of intent, or which are
super induced on the transaction by operation of
law as matter of equity, independently of the
particular intention of the parties. Article 1450,
which petitioner invokes in the case at bar, is an
illustration of an implied trust which is
constructive.
Article 1450 presupposes a situation where a
person, using his own funds, purchases a certain
piece of land in behalf of another who, in the
meantime, may not have sufficient funds to
purchase the land. The property is then
transferred in the name of the trustee, the person
who paid for the land, until he is reimbursed by

UNIVERSITY OF CEBU COLLEGE OF LAWPage 71


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

the beneficiary, the person for whom the land is


purchased. It is only after the beneficiary
reimburses the trustee of the purchase price that
the former can compel conveyance of the
purchased property from the latter.
From the evidence adduced, it may be concluded
that respondent Valdes, using his own funds,
purchased Pulong Maulap in behalf of the late
Nakpil. This is based on the letters to petitioner of
Valdes where he categorically admitted that
"[b]oth of these loans, while in my (respondent
Valdes) name, were obtained by Pinggoy (the late
Nakpil) for his person, and that the "P75,000.00
initially advanced for the Moran property still
remains unpaid.
It is evident from these letters that while the
balance of P75,000.00 on the mortgage of the
vendors with PNB was liquidated from the
proceeds of a loan respondent obtained from
FUB, such loan was actually secured by the late
Nakpil by merely using Valdes' name. Such is also
the case with respect to another FUB loan
amounting to P65,000.00, the proceeds of which
were used to finance the repair and renovation
of Pulong Maulap. And, while the downpayment of
P50,000.00 and the partial payment of
P25,000.00 to PNB came from the personal funds
of Valdes, he considered them as advances to the
late Nakpil. Otherwise, Valdes would never have
deemed the amount as "unpaid" in his letter to
petitioner of 17 September 1974.
The letter of Valdes to the City Treasurer of
Baguio made while remitting payment of real
estate taxes is also enlightening. It provided
therein that the payment being tendered was
"[o]n behalf" of the Nakpil's, which is an express
recognition of the implied trust.
Consequently, respondent Valdes is estopped
from claiming that he bought Pulong Maulap for
himself, and not merely in trust for the late
Nakpil, as this contention is belied by the facts.
Hence, we rule that constructive trust under Art.
1450 of the New Civil Code existed between the
parties.

However, petitioner cannot as yet redeem and


compel conveyance of the property. For, Valdes
must still be reimbursed for the advances he
made
on
the
disputed
property,
such
reimbursement being a condition sine qua non for
compelling conveyance under Art. 1450.
The period within which to compel conveyance
of Pulong Maulap is not imprescriptible. The rule
is well-settled that an action for reconveyance
based on an implied or constructive trust
prescribes in ten (10) years. But, in the case
before
us,
petitioner
could
still
compel
conveyance of the disputed property from
respondent provided the former reimburses the
latter for all his expenses. After all, Valdes never
repudiated the constructive trust during the
lifetime of the late Jose Nakpil. On the contrary,
he expressly recognized it. The prescriptive
period therefore did not begin to run until after he
repudiated the trust. And such repudiation came
when Valdes excluded Pulong Maulap from the list
of properties of the late Jose Nakpil submitted to
the intestate court in 1973. Even then, the
present action for conveyance was filed in 1979
or well within the ten-years period.
WHEREFORE, the petition is GRANTED. The
assailed decision of the then Intermediate
Appellate Court which affirmed that of the
Regional Trial Court is SET ASIDE.
10. G.R. No. 89667, October 20, 1993
JOSEPHINE
B.
BELCODERO
vs.
THE
HONORABLE COURT OF APPEALS, et al.
Facts:
The husband, Alayo D. Bosing, married Juliana
Oday on 27 July 1927, with whom he had three
children, namely, Flora, Teresita, and Gaido. In
1946, he left the conjugal home, and he forthwith
started to live instead with Josefa Rivera with
whom he later begot one child, named Josephine
Bosing, now Josephine Balcobero.
On 23 August 1949, Alayo purchased a parcel of
land on installment basis from the Magdalena
Estate, Inc. In the deed, he indicated his civil

UNIVERSITY OF CEBU COLLEGE OF LAWPage 72


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

status as, "married to Josefa R. Bosing," the


common-law wife. In a letter, dated 06 October
1959, he authorized the latter to transfer the lot
in the name of his "wife Josefa R. Bosing." The
final deed of sale was executed by Magdalena
Estate, Inc., on 24 October 1959. A few days
later, or on 09 November 1959, TCT was issued in
the name of "Josefa R. Bosing, married to Alayo
Bosing, . . ."
On 06 June 1958, Alayo married Josefa even while
his prior marriage with Juliana was still subsisting.
Alayo died on 11 March 1967. About three years
later, or on 17 September 1970, Josefa and
Josephine executed a document of extrajudicial
partition and sale of the lot in question, which
was there described as "conjugal property" of
Josefa and deceased Alayo. In this deed, Josefa's
supposed one-half (1/2) interest as surviving
spouse of Alayo, as well as her one-fourth (1/4)
interest as heir, was conveyed to Josephine for a
P10,000.00 consideration, thereby completing for
herself, along with her one-fourth (1/4) interest as
the surviving child of Alayo, a full "ownership" of
the property.
On 30 October 1980, Juliana (deceased Alayo's
real widow) and her three legitimate children filed
with the court a quo an action for reconveyance
of the property. The trial court ruled in favor of
the plaintiffs, and it ordered Josephine Bosing to
reconvey the property in question to the legal
heirs and pay, jointly and severally, actual
damages by way of attorney's fees and expenses
in litigation. CA which affirmed the trial court's
order for reconveyance but reversed the decision
on the award for damages.
Issues:
1. Whether or not the respondent court erred in
not holding the action for reconveyance as
prescribed.
2. Whether or not the respondent court erred in
finding that the said action is based upon an
implied or constructive trust.

3. Whether or not the respondent court erred in


not holding that the property in question belongs
exclusively to the petitioners.
4. Whether or not the respondent court erred in
not granting the petitioners motion for new trial.
Ruling:
1, 2, 3. We rule for affirmance.
Whether the property in question was acquired by
Alayo in 1949 when an agreement for its
purchase on installment basis was entered into
between him and Magdalena Estate, Inc., or in
1959 when a deed of sale was finally executed by
Magdalena Estate, Inc., the legal results would be
the same. The property remained as belonging to
the conjugal partnership of Alayo and his
legitimate wife Juliana. Under both the new Civil
Code (Article 160) and the old Civil Code (Article
1407), "all property of the marriage is presumed
to belong to the conjugal partnership, unless it be
proved that it pertains exclusively to the husband
or to the wife." This presumption has not been
convincingly rebutted.
It cannot be seriously contended that, simply
because the property was titled in the name of
Josefa at Alayo's request, she should thereby be
deemed to be its owner. Alayo's letter, dated 06
October 1959, to Magdalena Estate, Inc., merely
authorized the latter to have title to the property
transferred to her name. More importantly, she
implicitly recognized Alayo's ownership when,
three years after the death of Alayo, she and
Josephine executed the deed of extrajudicial
partition and sale in which she asserted a onehalf (1/2) interest in the property in what may be
described as her share in the "conjugal
partnership" with Alayo, plus another one-fourth
(1/4) interest as "surviving widow," the last onefourth (1/4) going to Josephine as the issue of the
deceased. Observe that the above adjudication
would have exactly conformed with a partition in
intestacy had they been the sole and legitimate
heirs of the decedent.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 73


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

It was at the time that the adjudication of


ownership was made following Alayo's demise
(not when Alayo merely allowed the property to
be titled in Josefa's name which clearly was not
intended to be adversarial to Alayo's interest),
that a constructive trust was deemed to have
been created by operation of law under the
provisions of Article 1456 of the Civil Code.
Article 1456. If the 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 applicable prescriptive period for an action
seeking a reconveyance of the property by the
beneficiaries thereof is ten (10) years (Article
1144, Civil Code). Unfortunately for Josefa and
Josephine, the property involved in this case is a
realty titled under the Torrens System and is thus
to be counted from the time the transaction
affecting the property is registered with the
corresponding issuance of a new certificate of
title. Between the time TCT was issued on 1974,
and the filing of the action for the reconveyance
of the property on 1980, barely a period of six (6)
years and four (4) months had elapsed. The case
has accordingly been initiated seasonably.
The four-year prescriptive period would have had
some relevance had the private respondents or
their predecessor in interest been parties to the
extrajudicial partition and sale which was
predicated on a vitiation of consent. The
applicable statutory limitation would be four
years.
4. The last issue raises the supposed error in the
rejection of a new trial on the basis of newly
discovered evidence. We concur with the
resolution of the appellate court, such that it is
not newly discovered evidence but merely
considered as forgotten evidence, which the
appellant knew or should have known during the
trial

WHEREFORE, the decision appealed from in the


instant petition for review on certiorari is
AFFIRMED.
SPECIAL CONTRACTS SALES
1. G.R. No. L-29972, January 26, 1976
ROSARIO
CARBONELL
vs.
HONORABLE
COURT OF APPEALS, JOSE PONCIO, EMMA
INFANTE and RAMON INFANTE
Facts:
Prior to January 27, 1955, respondent Jose Poncio,
was the owner of the parcel of land covered by
TCT No. 5040 and subject to mortgage in favor of
the Republic Savings Bank (RSB) for the sum of
P1,500.00. Petitioner Rosario Carbonell, was the
cousin and adjacent neighbor of respondent
Poncio. Both petitioners Rosario Carbonell and
respondent Emma Infante offered to buy the said
lot from Poncio (Poncio's Answer, p. 38, rec. on
appeal).
Respondent Poncio, unable to keep up with the
installments due on the mortgage, approached
petitioner one day and offered to sell to the latter
the said lot, excluding the house wherein
respondent lived. Petitioner accepted proposed
the price of P9.50/sqm which was accepted the
price proposed by petitioner, on the condition
that from the purchase price would come the
money to be paid to the bank.
Petitioner and respondent Jose Poncio then went
to the Republic Savings Bank and secured the
consent of the President thereof for her to pay
the arrears on the mortgage and to continue the
payment of the installments as they fall due. The
amount in arrears reached a total sum of
P247.26. But because respondent Poncio had
previously told her that the money, needed was
only P200.00, only the latter amount was brought
by petitioner constraining respondent Jose Poncio
to withdraw the sum of P47.00 from his bank
deposit with Republic Savings Bank. But the next
day, petitioner refunded to Poncio the sum of
P47.00.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 74


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Thereafter, petitioner asked Atty. Salvador Reyes,


also from the Batanes Islands, to prepare the
formal deed of sale. Upon arriving at respondent
Jose Poncio's house, however, the latter told
petitioner that he could not proceed any more
with the sale, because he had already given the
lot to respondent Emma Infante; and that he
could not withdraw from his deal with respondent
Mrs. Infante, even if he were to go to jail. On
February 5, 1955, petitioner saw Emma Infante
erecting a wall around the lot with a gate.
Atty. Jose Garcia, who advised petitioner to
present an adverse claim over the land in
question with the Office of the Register of Deeds
of Rizal. Atty. Garcia actually sent a letter of
inquiry to the Register of Deeds and demand
letters to private respondents Jose Poncio and
Emma Infante. In his answer to the complaint
Poncio admitted "that Mrs. Infante improved her
offer and he agreed to sell the land and its
improvements to her for P3,535.00".

respondents Ramon R. Infante and Emma L.


Infante be declared null and void, and that
respondent Jose Poncio be ordered to execute the
corresponding deed of conveyance of said land in
her favor and for damages and attorney's fees
(pp. 1-7, rec. on appeal in the C.A.). Trial court
dismissed the complaint on the ground that the
memorandum presented by petitioner to prove
said sale does not satisfy the requirements of the
law. From the above order of dismissal, petitioner
appealed to the Supreme Court which ruled in a
decision dated May 12, 1958, that the Statute of
Frauds, being applicable only to executory
contracts, does not apply to the alleged sale
between petitioner and respondent Poncio, which
petitioner claimed to have been partially
performed, so that petitioner is entitled to
establish by parole evidence "the truth of this
allegation, as well as the contract itself." The
order appealed from was thus reversed, and the
case remanded to the court a quo for further
proceedings.

In a private memorandum agreement dated


January 31, 1955, respondent Poncio indeed
bound himself to sell to his co-respondent Emma
Infante, with Infante still assuming the existing
mortgage debt in favor of RSB.

After trial in the court a quo; a decision was,


rendered on December 5, 1962, declaring the
second sale null and void and ordering
respondent Poncio to execute the proper deed of
conveyance of said land in favor of petitioner.

On February 2, 1955, respondent Jose Poncio


executed the formal deed of sale in favor of
respondent Mrs. Infante in the total sum of
P3,554.00 and on the same date, the latter paid
RSB the mortgage indebtedness of P1,500.00.
The mortgage on the lot was eventually
discharged.

Infantes, through another counsel, filed a motion


for re-trial, but before their motion for re-trial
could be resolved, respondent filed another
motion for new trial, claiming that the decision of
the trial court is contrary to the evidence and the
law. The trial court granted a new trial, at which
re-hearing only the respondents introduced
additional evidence consisting principally of the
cost of improvements they introduced on the land
in question. The trial court rendered a decision,
reversing its decision of on the ground that the
claim of the respondents was superior to the
claim of petitioner, and dismissing the complaint.
From this decision, petitioner Rosario Carbonell
appealed to the respondent CA.

The deed of sale in favor of respondent Mrs.


Infante was registered only on February 12,
1955. As a consequence thereof, a Transfer
Certificate of Title was issued to her but with the
annotation of the adverse claim of petitioner
Rosario Carbonell.
On June 1, 1955, petitioner Rosario Carbonell,
thru counsel, filed a second amended complaint
against private respondents, praying that she be
declared the lawful owner of the questioned
parcel of land; that the subsequent sale to

On November 2, 1967, the CA rendered judgment


reversing the decision of the trial court, declaring
petitioner therein, to have a superior right to the
land in question, and condemning the defendant

UNIVERSITY OF CEBU COLLEGE OF LAWPage 75


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Infantes to reconvey to petitioner after her


reimbursement to them.
Respondent Infantes sought reconsideration of
said decision thus entered another judgment
affirming in toto the decision of the court a quo.
Petitioner Rosario Carbonell moved to reconsider
the Resolution but was denied. Hence, this appeal
by certiorari.
Issue:
Whether or not Carbonell has superior right
against Infante.
Ruling:
Article 1544, New Civil Code, which is decisive of
this case, recites:
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 movable property.
Should it be immovable property, the
ownership shall belong to the person
acquiring it who in good faith first
recorded it in the Registry of Property.
Should there be no inscription, the
ownership shall pertain to the person who
in
good
faith
was
first
in
the
possession; and, in the absence thereof,
to the person who presents the oldest
title, provided there is good faith
(emphasis supplied).
It is essential that the buyer of realty must act in
good faith in registering his deed of sale to merit
the protection of the second paragraph of said
Article 1544.
Unlike the first and third paragraphs of said
Article 1544, which accord preference to the one
who first takes possession in good faith of
personal or real property, the second paragraph
directs that ownership of immovable property

should be recognized in favor of one "who in


good faith first recorded" his right. Under the first
and third paragraph, good faith must characterize
the act of anterior registration. If there is no
inscription, what is decisive is prior possession in
good faith. If there is inscription, as in the case at
bar, prior registration in good faith is a precondition to superior title.
When Carbonell bought the lot from Poncio on
January 27, 1955, she was the only buyer thereof
and the title of Poncio was still in his name solely
encumbered by bank mortgage duly annotated
thereon. Carbonell was not aware and she
could not have been aware of any sale of
Infante as there was no such sale to Infante then.
Hence, Carbonell's prior purchase of the land was
made in good faith. Her good faith subsisted and
continued to exist when she recorded her adverse
claim four (4) days prior to the registration of
Infantes's deed of sale. Carbonell's good faith did
not cease after Poncio told her on January 31,
1955 of his second sale of the same lot to Infante.
Because of that information, Carbonell wanted an
audience with Infante, which desire underscores
Carbonell's good faith. With an aristocratic
disdain unworthy of the good breeding of a good
Christian and good neighbor, Infante snubbed
Carbonell like a leper and refused to see her. So
Carbonell did the next best thing to protect her
right she registered her adversed claim on
February 8, 1955. Under the circumstances, this
recording of her adverse claim should be deemed
to have been done in good faith and should
emphasize Infante's bad faith when she
registered her deed of sale four (4) days later on
February 12, 1955.
Bad faith arising from previous knowledge
by Infante of the prior sale to Carbonell is
shown by the following facts, the vital
significance and evidenciary effect of
which
the
respondent
CA
either
overlooked of failed to appreciate:
(1) Mrs. Infante refused to see Carbonell,
who wanted to see Infante after she was
informed by Poncio that he sold the lot to
Infante but several days before Infante

UNIVERSITY OF CEBU COLLEGE OF LAWPage 76


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

registered her deed of sale. This indicates


that Infante knew from Poncio and from
the bank of the prior sale of the lot by
Poncio to Carbonell. Ordinarily, one will
not refuse to see a neighbor. Infante lives
just behind the house of Carbonell. Her
refusal to talk to Carbonell could only
mean that she did not want to listen to
Carbonell's story that she (Carbonell) had
previously bought the lot from Poncio.
(2) Carbonell was already in possession of
the mortgage passbook [not Poncio's
saving deposit passbook Exhibit "1"
Infantes] and Poncio's copy of the
mortgage contract, when Poncio sold the
lot Carbonell who, after paying the
arrearages of Poncio, assumed the
balance of his mortgaged indebtedness to
the bank, which in the normal course of
business must have necessarily informed
Infante about the said assumption by
Carbonell of the mortgage indebtedness of
Poncio. Before or upon paying in full the
mortgage indebtedness of Poncio to the
Bank. Infante naturally must have
demanded from Poncio the delivery to her
of his mortgage passbook as well as
Poncio's mortgage contract so that the
fact of full payment of his bank mortgage
will be entered therein; and Poncio, as well
as the bank, must have inevitably
informed her that said mortgage passbook
could not be given to her because it was
already delivered to Carbonell.
(Naa pa ni daghan pero kani lang ako
gibutang, basta naay bad faith.)
Thus, Petitioner Rosario Carbonell have superior
right to the land in question and is hereby
directed to reimburse Infante for the useful
improvements constructed. Register of Deeds is
also directed to cancel the TCT of Infantes and
issue a new TCT in favor of Carbonell.
2. G.R. No. 96306, August 20, 1993
LORENZO BERICO and VISITACION SANCHEZ
vs. THE HONORABLE COURT OF APPEALS

(Former Ninth Division), CIRIACO FLORES


and FELISA BAREJA
(The One Where To Quiet Is Forever)
Facts:
Jose de los Santos owned a 98,254 square-meter
parcel of land designated as Lot No. 785, PLs-32
located at Balo-Andang, San Ramon, San Pascual
(now Claveria), Masbate; the property is
specifically described in Original Certificate of
Title (OCT) No. P-671.
In 1961, Jose sold, in a private document, a 2 1/4
hectare portion thereof to Felisa Bareja and
Ciriaco Flores (the private respondents). In Nov
1963, however, Jose executed another deed of
sale which he acknowledged before a notary
public. Private respondents took possession of the
portion sold to them immediately after the 1961
Sale and declared the same for taxation purposes
in the name of Ciriaco Flores; private respondents
likewise paid the taxes.
On 3 Jan 1963, Jose sold one-half of Lot No. 785
to petitioner Lorenzo Berico. Thereafter, or on 30
March 1963, Jose's minor children sold to Mr.
Berico the remaining half. Jose represented his
children in this transaction.
Petitioner Berico was aware of the 1961 Sale of a
portion of the lot to the private respondents and
of the latter's possession thereof. Despite such
knowledge and recognition of the sale in favor of
and the possession of the property by the private
respondents, Berico registered on 5 June 1968
the two deeds of sale in his favor and caused the
cancellation of OCT No. P-671; the latter also
secured the issuance in his name of Transfer
Certificate of Title (TCT) No. T-1346. He paid the
appropriate taxes thereon only from 1973 to
1986. It appears, however, that he declared the
property for taxation purposes in his wife's name
in 1968.
On the other hand, it was only on 8 Nov 1978 that
the private respondents registered the deed of
sale in their favor after discovering the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 77


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

cancellation of OCT No. P-671 and issuance in


favor of petitioner Berico of TCT No. T-1346. On
14 Dec 1978, private respondents filed against
the petitioners a complaint for "Annulment of
Title" with the CFI of Masbate.

RUPERTO G. CRUZ, ET AL. vs. FILIPINAS


INVESTMENT and FINANCE CORPORATION
(The One Where Filipinas Cannot be Too Secured)
Facts:

Issue:
In the double sale of an immovable property
under Art. 1544 of the Civil Code, does
prescription bar an action by the first buyers, who
are in possession of the said property, against the
second buyer for the annulment of a TCT over the
property procured by the latter who has
knowledge of the first sale and who recognizes
the first buyers' possession?
Ruling:
No. The petition of Berico is denied.
Berico's act in causing the cancellation of OCT
No. P-671 and securing a new TCT No. T-1346,
knowing that his transfer certificate included a
property not his but belonging to plaintiff Flores
makes him a holder in bad faith of a certificate
and is not to be accorded the protection of the
law.
TCT No. T-1346 in the name of Lorenzo Berico is
ordered annulled.
Insofar as prescription is concerned, petitioners
(Berico, et al.) may only acquire ownership of the
questioned property assuming that they did
not register the deed of sale in their favor
through extraordinary acquisitive prescription
under Art. 1137 of the Civil Code, and not by
ordinary acquisitive prescription since they
cannot claim just title or good faith.
Finally, the complaint for annulment of title filed
by the private respondents is substantially one
for the Quieting of Title to quiet their title
against a cloud cast by the claim of the
petitioners. It is settled that an action to quiet
title does not prescribe.
3. G.R. No. L-24772, May 27, 1968

Ruperto Cruz bought a bus from Far East Motor


Corp which was payable on installments of
P1,487/month for 30 months with 12% interest.
Cruz executed a PN in the sum of the purchase
price. To secure the payment of the PN, Cruz
executed a chattel mortgage on the bus. Since no
downpayment was made, Far East required Cruz
to execute another security and for that a REM
was executed on the land and building of Mrs.
Reyes which at that time was mortgaged to a
bank.
Far East then assigned all its rights and indorsed
the PN to Filipinas Investment and Financing
Corp. Cruz defaulted in payment of the PN with
only P500 being ever paid. Filipinas had the
chattel mortgage foreclosed and it was the
highest bidder at the foreclosure sale.
However, the proceeds were not sufficient to
cover the balance so it paid the indebtedness of
Mrs. Reyes and requested that it be sold at
foreclosure sale as well.
Cruz and Mrs. Reyes filed an action with the CFI
to have the REM constituted on her land
cancelled. The CFI ruled in favor of Cruz and
Reyes finding that the extrajudicial foreclosure
barred further action for recovery.
Issue:
Is Filipinas allowed to recover from the additional
security (REM on Mrs. Reyess property) after
foreclosing the chattel mortgage?
Ruling:
No. Art. 1484 provides that when in a (1) a sale of
personal property and (2) payable on installments
there was default in payment of 2 or more
installments, the remedies of the seller are:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 78


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

1. To exact fulfillment of the obligation,


should the buyer fail to pay;
2. Cancel the sale;
3. Foreclose the chattel mortgage on the
thing sold, if one has been constituted,
should the buyers failure to pay cover 2
or more installments. In this case, the
seller shall have no further action against
the buyer to recover any unpaid balance
of the price. x x x
It has been held that these remedies are
alternative thus the exercise of one bars the
exercise of the others. This is so to prevent
abuses committed in connection with foreclosure
mortgages wherein the mortgagees would seize
the mortgaged property and buying them at a
very low price at the sale and then bringing suit
for collection of the unpaid balance resulting in
the mortgagor still liable to pay his original debt
plus losing the property.
To allow Filipinas to recover thru the additional
security would result in a circumvention of the
law. Should the guarantor be compelled to pay
the balance then the guarantor would be entitled
to recover from the debtor-vendee. In the end, it
would still be the debtor-vendee (Cruz) who would
bear the payment of the purchase price.
Also, the word action in Art. 1484 covers all
types of legal demand of ones right whether
judicial or extrajudicial thus the barring effect
applies to an extrajudicial foreclosure.
4. G.R. No. L-50449, January 30, 1982
FILINVEST
CREDIT
CORPORATION
PHILIPPINE ACETYLENE, CO., INC.

vs.

(The One Where No Dacion Was Made)

favor of Lim. Then, Lim assigned to Filinvest all


his rights, title, and interests in the promissory
note and chattel mortgage.
Phil Acetylene defaulted in the payment of 9
successive installments. Filinvest sent a demand
letter. Replying thereto, Phil Acetylene wrote back
of its desire to return the mortgaged property,
which return shall be in full satisfaction of its
indebtedness. So the vehicle was returned to
Filinvest together with the document Voluntary
Surrender with Special Power of Attorney To Sell.
Filinvest failed to sell the motor vehicle as there
were unpaid taxes on the said vehicle. Filinvest
requested Phil Acetylene to update its account by
paying the installments in arrears and accruing
interest. Filinvest offered to deliver back the
motor vehicle to Phil Acetylene but the latter
refused to accept it, so Filinvest instituted an
action for collection of a sum of money with
damages.
Phil Acetylenes defense: The delivery of the
motor vehicle to Filinvest extinguished its money
obligation as it amounted to a dation in payment.
Assuming arguendo that the return did not
extinguish, it was justified in refusing payment
since the Filinvest is not entitled to recover the
same due to the breach of warranty committed
by the original vendor-assignor Alexander Lim.
Issue:
Whether or not there was dation in payment that
extinguished Phil Acetylenes obligation.
Ruling:
No. The mere return of the mortgaged motor
vehicle by the mortgagor does not constitute
dation in payment in the absence, express or
implied, of the true intention of the parties.

Facts:
Philippine
Acetylene
Co.
purchased
from
Alexander Lim a motor vehicle described as
Chevrolet 1969 model for P55K to be paid in
installments. As security for the payment of said
promissory note, the Filinvest Credit executed a
chattel mortgage over the same motor vehicle in

Dacion en pago is the transmission of the


ownership of a thing by the debtor to the creditor
as an accepted equivalent of the performance of
obligation. In dacion, the debtor offers another
thing to the creditor who accepts it as equivalent

UNIVERSITY OF CEBU COLLEGE OF LAWPage 79


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

of payment of an outstanding debt. The


undertaking really partakes in one sense of the
nature of sale, that is, the creditor is really buying
the thing or property of the debtor, payment for
which is to be charged against the debtors debt.
As such, the essential elements of a contract of
sale, namely, consent, object certain, and cause
or consideration must be present.

the sale to the mortgage indebtedness, with the


undertaking of Phil Acetylene to pay the
difference, if any, between the selling price and
the mortgage obligation. Filinvest in essence was
constituted as a mere agent to sell the motor
vehicle, which was delivered not as its property. If
it were, he would have full power of disposition of
the property, not only to sell it.

In its modern concept, what actually takes place


in dacion en pago is an objective novation of the
obligation where the thing offered as an accepted
equivalent of the performance of an obligation is
considered as the object of the contract of sale,
while the debt is considered as the purchase
price. In any case, common consent is an
essential prerequisite, be it sale or in novation, to
have the effect of totally extinguishing the debt
or obligation.

5. G.R. No. L-41555, July 27, 1977


INDUSTRIAL FINANCE CORPORATION
CASTOR TOBIAS

The evidence on the record fails to show that


Filinvest consented, or at least intended, that the
mere delivery to, and acceptance by him, of the
mortgaged motor vehicle be construed as actual
payment, more specifically dation in payment or
dacion en pago.
The fact that the mortgaged motor vehicle was
delivered to him does not necessarily mean that
ownership thereof, as juridically contemplated by
dacion en pago, was transferred from Phil
Acetylene to Filinvest. In the absence of clear
consent of Filinvest to the proferred special mode
of payment, there can be no transfer of
ownership of the mortgaged motor vehicle from
appellant to appellee. If at all, only transfer of
possession of the mortgaged motor vehicle took
place, for it is quite possible that Filinvest, as
mortgagee, merely wanted to secure possession
to forestall the loss, destruction, fraudulent
transfer of the vehicle to third persons, or its
being rendered valueless if left in the hands of
the Phil Acetylene.
As to the strength of the Voluntary Surrender
with Special Power of Attorney To Sell, it only
authorized Filinvest to look for a buyer and sell
the vehicle in behalf of Phil Acetylene who retains
ownership thereof, and to apply the proceeds of

vs.

Facts:
Castor Tobias bought on installment a Dodge
truck from Leelin Motors. To answer for his
obligation he executed a promissory note in favor
of the latter, for the sum of P29,070 payable in 36
equal installments with interest at the rate of
12% per annum. To secure payment of the
promissory note, Tobias executed in favor of
Leelin Motors a chattel mortgage on the Dodge
truck.
Leelin Motors indorsed the promissory note and
assigned the chattel mortgage to Industrial
Finance Corporation. As a consequence Tobias
paid 6 installments on the promissory note
directly to Industrial Finance.
When Tobias was in arrear in the payment for
more than 2 installments, Industrial Finance sent
a final demand letter to Tobias for him to either
(a) pay the arrear and balance amounts; or (b)
surrender the Dodge truck.
Tobias responded with a letter saying that he was
voluntarily surrendering the truck to Industrial
Finance for the following reasons: (a) the truck
has been with Leelin Motors ever since the truck
met an accident; (b) there is too much delay in
the repair of said truck because until now the
truck is not yet completely finished; (c) upon
seeing said truck, Tobias is not satisfied with the
repair of the finished portions. In the same letter,
Tobias gave full authority to Industrial Finance to
get said truck at Leelin Motors.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 80


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Upon learning that the truck met an accident,


Industrial Finance decided not to get the truck
anymore from Leelin Motors.
Instead, Industrial Finance filed in CFI-Manila an
action against Tobias to recover the unpaid
balance of the promissory note. The lower court
ruled against Industrial Finance. On appeal, CA
affirmed the decision of the lower court
dismissing the complaint of Industrial Finance but
modifying the same by ordering Tobias to pay the
cost of repairs of the damaged truck plus interest.
Issue:
Is the mortgagees letter informing the mortgagor
of his intent to foreclose already considered a
foreclosure of the chattel?
Ruling:
No. A mere offer by the mortgagor to surrender
the chattel, not accepted by the mortgagee, does
not preclude the mortgagee from bringing suit to
recover the balance of the purchase price.
Art. 1484 of the Civil Code is clear that "should
the vendee or purchaser of a personal property
be in default in the payment of two or more of the
agreed installments, the vendor or seller has the
option to either exact fulfillment by the purchaser
of -the obligation, or to cancel the sale, or to
foreclose the mortgage on the purchased
personal property, if one was constituted.
The remedies in Art. 1484 are considered
alternative, not cumulative such that the exercise
of one would bar the exercise by the others. Here,
Industrial Finance has not cancelled the sale, nor
has it exercised the remedy of foreclosure.
Foreclosure, judicial or extra-judicial, presupposes
something more than a mere demand to
surrender possession of the object of the
mortgage. Since it has not availed itself of the
remedy of cancelling the sale of the truck in
question or of foreclosing the chattel mortgage
on said truck, Industrial Finance is still free to
avail of the remedy of exacting fulfillment of the
obligation of Tobias.

Although Industrial Finance at first offered the


option for Tobias to surrender the truck, Industrial
Finance desisted, on its own initiative, from
consummating an auction sale, without gaining
any advantage or benefit, and without causing
any disadvantage, or harm to Tobias. Industrial
Finance cannot be considered as having
"exercised the remedy of foreclosure because of
its incomplete implementation, and, therefore, it
is not barred from suing on the unpaid account.
Besides, to hold Industrial Finance in estoppel, it
must be shown that when it gave Tobias the
choice of either paying the balance or of
surrendering the truck, it had already knowledge
of the accident and the consequent damage to
the truck. Industrial Finance claims it had no
knowledge of the accident when it gave Tobias
the Options. It is hard to believe that Industrial
Finance would make such offer of options if it
knew that the truck has had an accident.
(EVIDENCE portion, you may skip this paragraph,
but for eclectic feels) The allegation of
Industrial Finance that it had no knowledge of the
accident is a negative allegation and needs no
evidence to support it, not being an essential part
of the statement of the right on which the cause
of action is founded. It is Tobias who has the
burden of disproving the claim of Industrial
Finance that it has no knowledge of the accident
when it made the Options offer to him. Tobias
failed in this (suck it, dude).
Tobiass letter supposedly surrendering the truck
is ineffectual as far as Industrial Finance is
concerned because it could not take possession
of the truck as it was in the custody of Leelin
Motors, which had a mechanic's lien over it. Even
Tobias cannot expect Industrial Finance to accept
the term of surrender because, aside that the
truck being surrendered met an accident, he
himself was not satisfied with the repair of the
finished portion of the truck. Industrial Finance
was justified in refusing to accept such surrender
and in bringing suit to recover the balance of the
purchase price.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 81


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Tobias is ordered to pay the balance of the


purchase price of the truck in question plus legal
interest from the time of the filing of the
complaint.
6. G.R. No. L-25140, July 15, 1980
UNIVERSAL MOTORS CORPORATION
MARIANO D. VELASCO, ET AL.
(The One Where Justice
Mortagage and Mortagagee)

Aquino

vs.

Spelled

Facts:
Mariano Velasco bought from Universal Motors
Corporation a Mercedes-Benz truck on installment
basis. To the balance of the purchase price, he
executed a promissory note and executed a
chattel mortgage over the truck. He defaulted in
his payments and as a consequence Universal
Motors asked him to surrender the truck in
accordance with the term and conditions of the
chattel mortgage contract.
He failed and refused to surrender the truck.
Universal Motors instituted an action in the lower
court to recover the truck as preparatory to
foreclosure of the chattel mortgage. As an
alternative, in case the truck could not be
recovered, Universal Motors asked for the
payment, among other things, of the balance of
purchase price plus legal interest.
By virtue of a writ of replevin issued by said
court, Universal Motors was able to re-possess
the truck.
Lower Court held that Universal Motors is entitled
to the possession and Velasco was ordered to pay
Universal Motors the costs of suit plus attorneys
fees. However, it held that all these sums may be
enforced only against the proceeds of the sale of
the truck on the ground that, in proceedings for
foreclosure of mortgages executed on chattels
which have been sold on installments, the
mortgagee is limited to the property included in
the mortgage. Hence, this appeal by Universal
Motors.

Issue:
Whether or not the costs of suit and attorneys
fees are limited to the property included in the
mortgage and thus be enforced only against the
proceeds of the sale of the truck.
Ruling:
No. Velasco should be made to pay the costs of
suit and attorneys fees independently of the
proceeds of the auction sale of truck.
Art. 184 of the Civil Code is NOT applicable in the
case at bar for two reasons: (1) The action
instituted in the lower court was not foreclosure
of the chattel mortgage, but for replevin; and (2)
Amounts adjudged in favor of Universal Motors
were not part of the unpaid balance of the price,
or in the concept of a deficiency judgment, but
were for the expenses of the suit.
This case is for the delivery of personal property
under Rule 60 of the Rules of Court. The mere
fact that Universal Motors has secured possession
of the truck does not necessarily mean that it will
foreclose the mortgage. Indeed, there is no
showing at all that Universal Motors is causing
the sale thereof at public auction or even in
preparing to do so.
As held in the Tajanlajit & Manila Motors case, it is
the actual sale of the mortgaged chattel that
would bar the creditor from recovering any
unpaid balance.
Justice Aquinos concurring addendum (may
be skipped, for oral purposes):
The action filed by the (mortagagee) was a
collection suit with replevin as a provisional
remedy. The action was not judicial foreclosure of
the (mortagage). Repossession of the truck by
means of replevin was a preliminary step to
extra-judicial foreclosure.
The extrajudicial foreclosure would be conducted
in accordance with Act No. 1508 which indicates
how the proceeds of the sale should be disposed

UNIVERSITY OF CEBU COLLEGE OF LAWPage 82


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

of. The expenses of the foreclosure proceeding


would be deducted from the proceeds of the sale.
Those expenses are distinct from the bond
premium, etc. and attorney's fees adjudged in the
replevin suit which should be paid directly by
Mariano D. Velasco, the (mortagagee).

Trial court rendered judgment in favor of ASIAN.


Court of Appeals affirmed the judgment and held
that
". . . no extrajudicial foreclosure of chattel
mortgage ever transpired in the case at
bar. Undoubtedly, plaintiff had first chosen
to extrajudically foreclose the mortgage,
but this did not materialize through no
fault of plaintiff, as defendant refused to
surrender the Hino truck. The mere fact
that the writ in now in possession of
plaintiff and a Technical and Inspection
Report was made in connection therewith
is not conclusive of the extrajudicial
foreclosure, for in this kind of foreclosure,
possession of the chattel by the sheriff is
necessary, aside from the sale at public
auction."
"Though the remedy of foreclosure was
first chosen, this remedy however proved
ineffectual due to no fault of plaintiff.
Therefore, plaintiff may exercise other
remedies such as exact fulfillment of the
obligation and thereafter recover the
deficiency. This is the essence of the rule
of alternative remedies under Article
1484.

But, of course, as stipulated by the parties in the


deed of chattel (mortagage), they could also be
deducted from the proceeds of the extrajudicial
sale in the case Velasco failed to pay the same as
adjudged herein.
7. G.R. No. 94828, September 18, 1992
SPOUSES ROMULO DE LA CRUZ and DELIA
DE LA CRUZ, and DANIEL FAJARDO vs. ASIAN
CONSUMER
AND
INDUSTRIAL
FINANCE
CORPORATION and the HONORABLE COURT
OF APPEALS
Facts:
In 1982, the spouses Romulo de la Cruz and Delia
de la Cruz, and one Daniel Fajardo, petitioners
herein, purchased on installment basis one Hino
truck from Benter Motor Sales Corporation
(BENTER for brevity). To secure payment, they
executed in favor of BENTER a chattel mortgage
over the vehicle and a promissory note.
On the same date, BENTER assigned its rights
and interest over the vehicle in favor of private
respondent Asian Consumer and Industrial
Finance Corporation (ASIAN for brevity).
The spouses defaulted on more than two (2)
installments.
1984, by virtue of a petition for extrajudicial
foreclosure of chattel mortgage, the sheriff
attempted to repossess the vehicle but was
unsuccessful because of the refusal of the son of
petitioner, Rolando de la Cruz to surrender the
same. Hence, the return of the sheriff that the
service was not satisfied.
1984, ASIAN filed an ordinary action with the
court a quo for collection of the balance of
P196,152.99 of the purchase price, plus
liquidated damages and attorneys fees.

Issue:
Whether or not a chattel mortgagee, after opting
to foreclose the mortgage but failing afterwards
to sell the property at public auction, may still
sue to recover the unpaid balance of the
purchase price.
Ruling:
Yes. The instant case is covered by the so-called
"Recto Law", now Art. 1484 of the New Civil Code,
which provides:
"In a contract of sale of personal property
the price of which is payable in
installments, the vendor may exercise any
of the following remedies: (1) Exact
fulfillment of the obligation, should the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 83


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

vendee fail to pay; (2) Cancel the sale,


should the vendees failure to pay cover
two or more installments; (3) Foreclose
the chattel mortgage on the thing sold, if
one has been constituted, should the
vendees failure to pay cover two or more
installments. In this case, he shall have no
further action against the purchaser to
recover any unpaid balance of the price.
Any agreement to the contrary shall be
void."
In this jurisdiction, the three (3) remedies
provided for in the "Recto Law" are alternative
and not cumulative; the exercise of one would
preclude the other remedies. Consequently,
should the vendee-mortgagor default in the
payment of two or more of the agreed
installments, the vendor-mortgagee has the
option to avail of any of these three (3) remedies:
either to exact fulfillment of the obligation, to
cancel the sale, or to foreclose the mortgage on
the purchased chattel, if one was constituted.
It is thus clear that while ASIAN eventually
succeeded in taking possession of the mortgaged
vehicle, it did not pursue the foreclosure of the
mortgage as shown by the fact that no auction
sale of the vehicle was ever conducted.
Consequently, in the case before Us, there being
no actual foreclosure of the mortgaged property,
ASIAN is correct in resorting to an ordinary action
for collection of the unpaid balance of the
purchase price.
Affirmed with modification that the subject
vehicle be returned to petitioners or, at their
option, they be allowed to deduct P60,000.00
from their adjudged liability.
8. G.R. No. L-25494, June 14, 1972
NICOLAS SANCHEZ vs. SEVERINA RIGOS
Facts:
In an instrument entitled "Option to Purchase,"
executed on April 3, 1961, defendant-appellant
Severina Rigos "agreed, promised and committed

... to sell" to plaintiff-appellee Nicolas Sanchez for


the sum of P1,510.00 within two (2) years from
said date, a parcel of land situated in the barrios
of Abar and Sibot, San Jose, Nueva Ecija. It was
agreed that said option shall be deemed
"terminated and elapsed," if Sanchez shall fail to
exercise his right to buy the property" within the
stipulated period. On March 12, 1963, Sanchez
deposited the sum of Pl,510.00 with the CFI of
Nueva Ecija and filed an action for specific
performance and damages against Rigos for the
latters refusal to accept several tenders of
payment that Sanchez made to purchase the
subject land.
Defendant Rigos contended that the contract
between them was only a unilateral promise to
sell, and the same being unsupported by any
valuable consideration, by force of the New Civil
Code, is null and void." Plaintiff Sanchez, on the
other hand, alleged in his compliant that, by
virtue of the option under consideration,
"defendant agreed and committed to sell" and
"the plaintiff agreed and committed to buy" the
land described in the option. The lower court
rendered judgment in favor of Sanchez and
ordered Rigos to accept the sum Sanchez
judicially consigned, and to execute in his favor
the requisite deed of conveyance. The Court of
Appeals certified the case at bar to the Supreme
Court for it involves a question purely of law.
Issue:
Was there a contract to buy and sell between the
parties or only a unilateral promise to sell?
Ruling:
The Supreme Court affirmed the lower courts
decision. The instrument executed in 1961 is not
a "contract to buy and sell," but merely granted
plaintiff an "option" to buy, as indicated by its
own title "Option to Purchase." The option did not
impose upon plaintiff Sanchez the obligation to
purchase defendant Rigos' property. Rigos
"agreed, promised and committed" herself to sell
the land to Sanchez for P1,510.00, but there is
nothing in the contract to indicate that her

UNIVERSITY OF CEBU COLLEGE OF LAWPage 84


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

aforementioned
agreement,
promise
and
undertaking is supported by a consideration
"distinct from the price" stipulated for the sale of
the land. The lower court relied upon Article 1354
of the Civil Code when it presumed the existence
of said consideration, but the said Article only
applies to contracts in general.
However, it is not Article 1354 but the Article
1479 of the same Code which is controlling in the
case at bar because the latters 2nd paragraph
refers to "sales" in particular, and, more
specifically, to "an accepted unilateral promise to
buy or to sell." Since there may be no valid
contract without a cause or consideration, the
promisor is not bound by his promise and may,
accordingly, withdraw it. Pending notice of its
withdrawal, his accepted promise partakes,
however, of the nature of an offer to sell which, if
accepted, results in a perfected contract of sale.
Upon mature deliberation, the Court reiterates
the doctrine laid down in the Atkins case and
deemed abandoned or modified the view adhered
to in the Southwestern Company case.
9. G.R. No. L-35272, August 26, 1977
FLORENCIA
CRONICO,
substituted
by
LUCILLE E. VENTURANZAvs.J. M. TUASON &
CO., INC., and CLAUDIO R. RAMIREZ
Facts:
JM Tuason was the registered owner of Lot 22.
Florencio Cronico offered to buy the lot from JM
Tuason with the help of Mary Venturanza. Cronico
was required to present proofs of her rights to the
lot, and indeed presented certain documents
showing her priority rights to buy the lot. Claudio
Ramirez also learned that said lot was being sold.
Both Cronico and Ramirez then sent individual
letters to JM Tuason expressing their desire to
purchase the land and requested information
concerning the area, the price, and other terms
and conditions of the contract to sell. JM Tuason
sent separate reply letters to the prospective
buyers. Cronico was able to obtain the letter the
next day and thus presented the letter to the
Head of the Real Estate Department of JM Tuason;
and requested Venturanza to issue a check as

down payment, but the same was refused.


Ramirez, on the other hand, received the letter
two days after it was sent stating that the lot was
available for sale under the conditions set forth
and that said lot was being offered for sale on a
first come first serve basis. He then immediately
verbally accepted such, followed by a letter to JM
Tuason confirming the verbal acceptance, the
next day. Counsel of Ramirez then wrote JM
Tuason for the early execution of the Contract to
Sell with a check as down payment (Mar 31).
Counsel of Cronico, however, also wrote JM
Tuason requesting that the lot be sold to him (Mar
27). Subsequently, JM Tuason and Ramirez
executed a Contract to Sell, which resulted an
instant suit.
Arguments:
Cronico: That the promise to sell is supported by
a consideration as to her because she had
established her link as successor of Gregorio
Venturanza who bought the lot from Juan Ramos
who in turn acquired said lot from Pedro Deudor.
JM Tuason: As ruled by the CA, the records do not
show that JM Tuasons letter-offer or unilateral
promise to sell was supported by a consideration
other than the selling price.
Issue:
Whether or not JM Tuasons promise to sell the lot
to Cronico has a consideration separate from the
selling price of said lot and thus binding upon the
promissory to comply with such promise.
Ruling:
No, the promise of the respondent company to
sell the lot in question to the petitioner, Florencia
Cronico has no consideration separate from the
selling price of said lot. It appears that the
Compromise Agreement upon which Cronico
predicates her right to buy the lot in question has
been rescinded and set aside.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 85


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

(1) In order that a unilateral promise may be


binding upon the promisor, Article 1479, Civil
Code of the Philippines, requires the concurrence
of the condition that the promise be supported
by a consideration distinct from the price.
Accordingly, the promisee cannot compel the
promisor to comply with the promise, unless the
former establishes the existence of said distinct
consideration. The promisee has the burden of
proving such consideration. (Sanchez vs. Rigos,
45 SCRA 368, 372-373) The petitioner, Florencia
Cronies, has not established the existence of a
consideration distinct from the price of the lot in
question.
(2) The petitioner cannot claim that she had
accepted the promise before it was withdrawn
because she had violated the condition of first,
come, first served basis.
(3) It was only on March 27, 1962 that the
respondent company received a letter from
counsel of the petitioner requesting that the lot
subject of this litigation be sold to her.
The respondent, Claudio R. Ramirez, had on
March 23, 1962, confirmed in writing his verbal
acceptance of the terms and conditions of the
sale of the lot in question.

10. G.R. No. 107207, November 23, 1995


VIRGILIO R. ROMERO vs. HON. COURT OF
APPEALS and ENRIQUETA CHUA VDA. DE
ONGSIONG
Facts:
Private respondent entered into a Conditional
Deed of Sale with petitioner over a parcel of land
in Paranaque, the latter advancing P50,000 for
the eviction of squatters therein. An ejectment
suit was then filed by the private respondent
against the squatters. Although successful,
private respondent sought the return of the

downpayment she received because she could


not get rid of the squatters.
Issue:
Whether or not the vendor demand the rescission
of a contract for the sale of a parcel of land for a
cause traceable to his own failure to have the
squatters on the subject property evicted within
the contractually-stipulated period.
Ruling:
A perfected contract of sale may either be
absolute or conditional depending on whether the
agreement is devoid of, or subject to, any
condition imposed on the passing of title of the
thing to be conveyed or on the obligation of a
party thereto. When ownership is retained until
the fulfillment of a positive condition the breach
of the condition will simply prevent the duty to
convey title from acquiring an obligatory force. If
the condition is imposed on an obligation of a
party which is not complied with, the other party
may either refuse to proceed or waive said
condition. Where, of course, the condition is
imposed upon the perfection of the contract
itself, the failure of such condition would prevent
the juridical relation itself from coming into
existence.
In determining the real character of the contract,
the title given to it by the parties is not as much
significant as its substance. For example, a deed
of sale, although denominated as a deed of
conditional sale, may be treated as absolute in
nature, if title to the property sold is not reserved
in the vendor or if the vendor is not granted the
right to unilaterally rescind the contract
predicated on the fulfillment or non-fulfillment, as
the case may be, of the prescribed condition. The
term "condition" in the context of a perfected
contract of sale pertains, in reality, to the
compliance by one party of an undertaking the
fulfillment of which would beckon, in turn, the
demandability of the reciprocal prestation of the
other party. The reciprocal obligations referred to
would normally be, in the case of vendee, the
payment of the agreed purchase price and, in the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 86


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

case of the vendor, the fulfillment of certain


express warranties (which, in the case at bench is
the timely eviction of the squatters on the
property).
It would be futile to challenge the agreement
here in question as not being a duly perfected
contract. A sale is at once perfected when a
person (the seller) obligates himself, for a price
certain, to deliver and to transfer ownership of a
specified thing or right to another (the buyer)
over which the latter agrees. From the moment
the contract is perfected, the parties are bound
not only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Under the agreement, private respondent is
obligated to evict the squatters on the property.
Private respondent's failure "to remove the
squatters from the property" within the stipulated
period gives petitioner the right to either refuse
to proceed with the agreement or waive that
condition in consonance with Article 1545 of the
Civil Code. This option clearly belongs to
petitioner and not to private respondent.
In contracts of sale particularly, Article 1545 of
the Civil Code allows the obligee to choose
between proceeding with the agreement or
waiving the performance of the condition. Here,
evidently, petitioner has waived the performance
of the condition imposed on private respondent to
free the property from squatters.
The right of resolution of a party to an obligation
is predicated on a breach of faith by the other
party that violates the reciprocity between them.
It is private respondent who has failed in her
obligation under the contract. Petitioner did not
breach the agreement. He has agreed, in fact, to
shoulder the expenses of the execution of the
judgment in the ejectment case and to make
arrangements with the sheriff to effect such
execution.

11. G.R. No. 109125, December 2, 1994


ANG YU ASUNCION, ARTHUR GO AND KEH
TIONG vs. THE HON. COURT OF APPEALS
and
BUEN
REALTY
DEVELOPMENT
CORPORATION
Facts:
July 29, 1987: An amended Complaint for Specific
Performance was filed by petitioners Ang Yu
Asuncion and others against Bobby Cu Unjieng,
Rose Cu Unjieng and Jose Tan before RTC.
Petitioners (Ang Yu) alleged that:
- They are the tenants or lessees of
residential and commercial spaces owned
by Bobby Unijeng and others located in
Binondo, Manila (since 1935);
- That on several occasions before October
9, 1986, the lessors informed the lessees
(petitioners) that they are offering to sell
the premises and are giving them priority
to acquire the same;
- That during the negotiations, Bobby Cu
Unjieng offered a price of P6-million while
they made a counter offer of P5-million;
- That they wrote them on October 24, 1986
asking that they specify the terms and
conditions of the offer to sell; that when
plaintiffs did not receive any reply, they
sent another letter dated January 28, 1987
with the same request.
The RTC found that Cu Unjiengs offer to sell was
never accepted by the petitioners (Ang Yu) for the
reason that they did not agree upon the terms
and conditions of the proposed sale, hence, there
was no contract of sale at all. The Court of
Appeals affirmed the decision of the lower court.
This decision was brought to the Supreme Court
by petition for review on certiorari which
subsequently denied the appeal on May 6, 1991

UNIVERSITY OF CEBU COLLEGE OF LAWPage 87


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

for insufficiency in form and substance.


(Referring to the first case filed by Ang Yu.)
November 15, 1990: While the case was pending
consideration by this Court, the Cu Unjieng
spouses executed a Deed of Sale transferring the
subject property to petitioner Buen Realty and
Development Corporation.
Petitioner
Buen
Realty
and
Development
Corporation, as the new owner of the subject
property, wrote a letter to the lessees demanding
that the latter vacate the premises.
August 30, 1991: the RTC ordered the Cu
Unjiengs to execute the necessary Deed of Sale
of the property in litigation in favor of plaintiffs
Ang Yu Asuncion, Keh Tiong and Arthur Go for the
consideration of P15 Million pesos in recognition
of petitioners right of first refusal and that a new
Transfer Certificate of Title be issued in favor of
the buyer. The court also set aside the title issued
to Buen Realty Corporation for having been
executed in bad faith. On September 22, 1991,
the Judge issued a writ of execution.
The CA reversed the RTC ruling.
Issue:
Whether or not Buen Realty can be bound by the
writ of execution by virtue of the notice of lis
pendens, carried over on TCT No. 195816 issued
in the name of Buen Realty, at the time of the
latters purchase of the property on 15 November
1991 from the Cu Unjiengs.
Ruling:
No.
Right of first refusal is not a perfected contract of
sale under Article 1458 of the Civil Code
In the law on sales, the so-called right of first
refusal is an innovative juridical relation.
Needless to point out, it cannot be deemed a
perfected contract of sale under Article 1458 of
the Civil Code.

In a right of first refusal, while the object might


be made determinate, the exercise of the right,
however, would be dependent not only on the
grantors eventual intention to enter into a
binding juridical relation with another but also on
terms, including the price, that obviously are yet
to be later firmed up. Prior thereto, it can at best
be so described as merely belonging to a class of
preparatory juridical relations governed not by
contracts (since the essential elements to
establish the vinculum juris would still be
indefinite and inconclusive) but by, among other
laws of general application, the pertinent
scattered provisions of the Civil Code on human
conduct.
The proper action for violation of the right of first
refusal is to file an action for damages and NOT
writ of execution
The final judgment in Civil Case No. 87-41058, it
must be stressed, has merely accorded a right of
first refusal in favor of petitioners (Ang Yu et. al).
The consequence of such a declaration entails no
more than what has heretofore been said. In fine,
if, as it is here so conveyed to us, petitioners are
aggrieved by the failure of private respondents to
honor the right of first refusal, the remedy is not
a writ of execution on the judgment, since there
is none to execute, but an action for damages in
a proper forum for the purpose.
Unconditional mutual promise
Accepted unilateral promise

to

buy

vs.

An unconditional mutual promise to buy and sell,


as long as the object is made determinate and
the price is fixed, can be obligatory on the
parties,
and
compliance
therewith
may
accordingly be exacted.
An accepted unilateral promise which specifies
the thing to be sold and the price to be paid,
when coupled with a valuable consideration
distinct and separate from the price, is what may
properly be termed a perfected contract of
option. This contract is legally binding, and in

UNIVERSITY OF CEBU COLLEGE OF LAWPage 88


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

sales, it conforms with the second paragraph of


Article 1479 of the Civil Code, viz:
Art. 1479. . . .
An accepted unilateral promise to buy or
to sell a determinate thing for a price
certain is binding upon the promissor if
the
promise
is
supported
by
a
consideration distinct from the price.
(1451a)
Observe, however, that the option is not the
contract of sale itself. The optionee has the right,
but not the obligation, to buy. Once the option is
exercised timely, i.e., the offer is accepted before
a breach of the option, a bilateral promise to sell
and to buy ensues and both parties are then
reciprocally bound to comply with their respective
undertakings.
Buen Realty cannot be ousted from the ownership
and possession of the property
Furthermore, whether private respondent Buen
Realty Development Corporation, the alleged
purchaser of the property, has acted in good faith
or bad faith and whether or not it should, in any
case, be considered bound to respect the
registration of the lis pendens in Civil Case No.
87-41058
are
matters
that
must
be
independently
addressed
in
appropriate
proceedings. Buen Realty, not having been
impleaded in Civil Case No. 87-41058, cannot be
held subject to the writ of execution issued by
respondent Judge, let alone ousted from the
ownership and possession of the property,
without first being duly afforded its day in court.
12. G.R. No. 91901, June 3, 1991
SPOUSES LEONCIO G. CIFRA and AURORA R.
JONGCO-CIFRA vs. COURT OF APPEALS and
MANUEL G. YU CHUA
Facts:
In 1985, petitioners spouses, represented by their
attorney-in-fact Benedicto Catalan, entered into
an agreement.

A reading of the subject contract which the


parties labeled as "Earnest money" shows that it
is an agreement to sell the real property
described therein for the amount of P1.1M with
assumption of the P40,000.00 mortgage, by
which P5,000.00 was paid upon signing of the
agreement by private respondent to petitioner as
earnest
money,
which
is
part
of
the
consideration. The balance of the consideration
shall be paid upon the removal of the tenant or
occupant from the premises and upon the
execution of the deed of absolute sale.
In the addendum to the agreement it is stipulated
that in case the buyer fails to purchase the
property after the seller formally notified him of
the surrender of the premises by the tenant or
occupant, in addition to the forfeiture of the
earnest money, the buyer must pay the seller
P20,000.00 plus attorney's fees and other costs in
case of litigation. On the other hand, if the seller
does not make good his promise to sell the
property even after the present tenant shall have
surrendered the premises, the seller binds himself
to return the earnest money and in addition pay
the buyer P20,000.00 plus the attorney's fees and
other costs in case of litigation.
The proceeds of the sale of the property by
petitioners were intended to apply to a proposed
business venture of petitioners abroad. As said
proposed business did not prosper and the
tenants/occupants of the premises have not yet
vacated the premises, petitioners decided to
rescind the contract of sale in accordance with
the agreement.
Issue:
Does Chua, the respondent, have the right to
demand
specific
performance
from
the
petitioners to sell the house and lot to him
despite the fact that he had agreed to a waiver of
such right when he consented to the addendum
stipulated?
Ruling:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 89


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

No. The action for specific performance must fail.


For the rescission of the contract, petitioners
must return the P5,000.00 earnest money and
pay P20,000.00 to the private respondent.
Under the addendum to the same agreement,
both parties are given the freedom to back out of
the transaction provided that, in the case of the
seller, he must return the earnest money in
addition to being liable to the buyer for
P20,000.00, plus attorney's fees and other costs
in case of litigation; and in case of the buyer, the
earnest money is forfeited, and he is liable to pay
the seller P20,000.00 in damages plus attorneys
fees and other costs in case of litigation to the
seller. This right which is afforded to both parties
may be availed of by them, irrespective of
whether or not the occupant of the premises had
vacated the same. This stipulation is the law
between the parties.
13. G.R. No. L-27136, April 30, 1973
HEIRS OF JOSE A. ARCHES vs. MARIA B.
VDA. DE DIAZ
Facts:

ownership and title over Lot 2706, Capiz


Cadastre, by virtue of the alleged sale a retro
executed by defendant herein in his favor on
January 21, 1954, with reservation of vendor's
right to repurchase in one year, said Jose A.
Arches, had two remedies, inconsistent though
they certainly were (a) to consolidate title and
ownership, and (b) to foreclose in the event the
deed of sale a retro be declared one of equitable
mortgage. That said Jose A. Arches elected to
consolidate without alternatively opting to
foreclose. When he opted to consolidate and
prosecuted his option to a final determination, he
was thereby barred from pursuing the other
alternative
and
inconsistent
remedy
of
foreclosure of mortgage or collection of debt.
Issue:
Did the decision of the cadastral court, holding in
effect that the sale with pacto de retro was an
equitable mortgage and consequently dismissing
the petition to consolidate ownership, constitute
an adjudication of the right to foreclose the
mortgage or to collect the indebtedness?
Ruling:

The heirs of Jose A. Arches filed a complaint


against Maria B. Vda. de Diaz in the court a quo,
alleging inter alia: that on January 21, 1954 the
defendant executed in favor of the late Jose A.
Arches a deed of sale with pacto de retro * over a
parcel of land known as Lot No. 2706 of the
Cadastral Survey of Capiz for and in consideration
of P12,500.00 that Jose A. Arches during his
lifetime filed a petition on November 20, 1958 in
Cadastral Case No. 6, L.R.C. Record No. 338 of the
Court of First Instance of Capiz, to consolidate
ownership over the lot; that the defendant
opposed the petition alleging among other things
that the said deed of sale with pacto de retro did
not express the true intention of the parties,
which was merely to constitute a mortgage on
the proper security for a loan.
The Trial Court ruled that when the late Jose A.
Arches, father and predecessor in interest of
plaintiffs herein, petitioned this Court on
November 20, 1958, to consolidate in his name

No. In the case of Correa vs. Mateo and Icasiano,


wherein an unrecorded pacto de retro sale was
construed as an equitable mortgage, it was ruled
that the plaintiff had the right "within sixty days
after final judgment, for a failure to pay the
amount due and owing him, to foreclose his
mortgage in a proper proceeding and sell all or
any part of the ten parcels of land to satisfy his
debt." In effect this Court recognized the right of
the plaintiff to enforce his lien in a separate
proceeding notwithstanding the fact that he had
failed to obtain judgment declaring him the sole
and absolute owner of the parcels of land in
question.
The law abhors injustice. It would be unjust in this
case to allow the defendant to escape payment of
his debt and, worse still, to rationalize such a
result by his very claim that he is a debtor and
not, as the plaintiff says, a vendor of property in
favor of the latter. Strictly speaking, where the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 90


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

petition of the vendee in a pacto de retro sale is


for a judicial order pursuant to Article 1607 of the
Civil Code, so that consolidation of ownership by
virtue of the failure of the vendor to redeem may
be recorded in the Registry of Property, the right
of action to foreclose the mortgage or to collect
the indebtedness arises from the judgment of the
court declaring the contract as equitable
mortgage. Although an alternative prayer to this
effect may be made in the petition, the same
cannot but be conditional, that is, only in the
event such a declaration made, contrary to the
plaintiff's claim and the principal relief he seeks.
His failure to make that alternative prayer, and
the failure of the court to grant it in the judgment
dismissing the petition, should not be considered
as a bar to collecting the indebtedness in a
proper action for that purpose.

intention of the petitioner, Atty. Fernandez


immediately took steps to protect his interest by
filing with the trial court a motion to annotate his
attorney's lien on TCT No. 31841 on June 10,
1965 and by notifying the prospective buyers of
his claim over the one-half portion of the parcels
of land.

14. G.R. No. L-26096, February 27, 1979


THE DIRECTOR OF LANDS vs. SILVERETRA
ABABA,
ET
AL.,
claimants,
JUAN
LARRAZABAL, MARTA C. DE LARRAZABAL,
MAXIMO
ABAROQUEZ
and
ANASTACIA
CABIGAS, petitioners-appellants, ALBERTO
FERNANDEZ

No. The petition is bereft of merit.

Facts:
Maximo Abarquez made known through this
agreement that for the services rendered by Atty.
Alberto B. Fernandez, who is his lawyer, that if
the appeal is won up to the Supreme Court, the
former promise and guaranteed that if he won he
would give to said lawyer one-half (1/2) of what
he may recover from the estate of his father in
Lots No. 5600 and 5602 which are located at
Bulacao Pardo, City of Cebu.
The case having been resolved and title having
been issued to Abarquez, Atty. Fernandez waited
for petitioner to comply with his obligation under
the document executed by him on June 10, 1961
by delivering the one-half () portion of the said
parcels of land. Abarquez refused to comply with
his obligation and instead offered to sell the
whole parcels of land covered by TCT No. 31841
to petitioner-spouses Juan Larrazabal and Marta
C. de Larrazabal. Upon being informed of the

Issue:
Is the validity or nullity of the registration of the
adverse claim of Atty. Fernandez, resolution of
which in turn hinges on the question of whether
or not the contract for a contingent fee, basis of
the interest of Atty. Fernandez, prohibited by the
Article 1491 of the New Civil Code?
Ruling:

Article 1491 prohibits only the sale or assignment


between the lawyer and his client, of property
which is the subject of litigation. As we have
already stated. "The prohibition in said article
only to applies stated: "The prohibition in said
article applies only to a sale or assignment to the
lawyer by his client of the property which is the
subject of litigation. In other words, for the
prohibition to operate, the sale of the property
must take place during the pendency of the
litigation involving the property.
A contract for a contingent fee is not covered by
Article 1491 because the transfer or assignment
of the property in litigation takes effect only after
the finality of a favorable judgment. In the instant
case, the attorney's fees of Atty. Fernandez,
consisting of one-half (1/2) of whatever Maximo
Abarquez might recover from his share in the lots
in question, is contingent upon the success of the
appeal. Hence, the payment of the attorney's
fees, that is, the transfer or assignment of onehalf (1/2) of the property in litigation will take
place only if the appeal prospers. Therefore, the
transfer actually takes effect after the finality of a
favorable judgment rendered on appeal and not
during the pendency of the litigation involving the
property in question. Consequently, the contract

UNIVERSITY OF CEBU COLLEGE OF LAWPage 91


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

for a contingent fee is not covered by Article


1491.
15. G.R. No. L-26882, November 21, 1978
ROSARIO VDA. DE LAIG, ROMEO, JOSE,
NESTOR and BENITO, JR., all surnamed LAIG,
minors, assisted by Rosario Vda. de Laig,
their Guardian, Ad Litem vs. COURT OF
APPEALS, CARMEN VERSO, PETRE GALERO,
THE REGISTER OF DEEDS OF CAMARINES
NORTE, THE DIRECTOR OF LANDS, AND THE
SECRETARY OF AGRICULTURE AND NATURAL
RESOURCES
Facts:
Petre Galero obtained from the Bureau of Lands a
Homestead Patent covering 219, 949 sq. m. of
land located at Labo, Camarines Norte. On June
25, 1940, Galero sold the land to a Mario Escuta
for P300. Escuta also sold the same land to
Florencio Caramoan. Through a proper court
action, Petre Galero with Atty. Benito Laig, the
deceased husband of herein petitioner Rosarion
Vda. De Laig as counsel, recovered the subject
land after the court was convinced that the
alienation violated Sec. 118 of the Public Land
Act. Later on, a deed of sale was executed by
Galero as vendorin favor of Atty. Benito Laig as
vendee. Galero sold to Atty. Laig the subject land
with its improvements for P1,600 plus Atty.s fees
due to Atty. De Laig for his legal services as
counsel for Galero.

Issue:
Was the first sale of the property in question
made by Petre Galero in favor of Atty. Benito Laig
void ab initio, for being in violation of Article
1491, paragraph 5, of the New Civil Code?
Ruling:
No. The first sale of the one-half () of the
property in question in favor of Atty. Laig was not
in violation of Art. 1491, paragraph 5. The
prohibition in said article applies only to a sale or

assignment to the lawyer by his client of the


property which is the subject of litigation. In other
words, for the prohibition to operate, the sale or
assignment of the property must take place
during the pendency of the litigation involving the
property.
In the case at bar, Atty. Laig was the lawyer of
Petre Galero in Civil Case No. 164-R-14 entitled,
"Petre Galero vs. Mario Esucta and Florencio
Caramoan," for the recovery of the property in
question which was then in the possession of the
defendants therein. The case was decided in
favor of Petre Galero and became final on March
27, 1948.
If said decision in the civil case was not yet final
when one-half of the property was sold to Benito
Laig in 1948, then Petre Galero would have
interposed it as a defense in the criminal case
against him at least insofar as the said one-half
was concerned.
Thus, when the one-half portion of the property in
question was sold by Petre Galero to Atty. Laig on
June 1, 1948, the decision in Civil Case No. 164-R14 was already final and therefore the property in
question was no longer subject of litigation.
Hence Atty. Laig was no longer prohibited from
buying the property in question because
"attorneys are only prohibited from buying their
clients' property which is the subject of litigation"
(Araneta vs. Tuazon, et al., 91 Phil. 786 [1952];
Emphasis supplied).
Consequently, the sale having taken place after
the finality of the favorable judgment in the said
civil case and not during the pendency of the
litigation, there was no violation of Article 1491,
paragraph 5. Hence, the first sale to Atty. Laig of
the property in question is valid.
With respect to the other one-half (1/2) of the
property in question, which was given to Atty.
Laig as his attorney's fees on a contingent basis,
we find nothing wrong in this for the reason that
contingent fees are recognized in this jurisdiction
(Canon 13 of the Canons of Professional Ethics
adopted by the Philippine Bar Association in

UNIVERSITY OF CEBU COLLEGE OF LAWPage 92


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

1917, which contingent fees may be a portion of


the property in litigation.
16. G.R. No. L-39877, February 20, 1976
FIDELA C. LEGASPI vs. COURT OF APPEALS,
ROMANA YAP VDA. DE AGUILAR, substituted
by her heirs, namely: DOMINADOR JR.,
FELICIANO,
EVANGELINA
ADORACION,
TERESITA,
OFELIA
and
MANUEL,
all
surnamed AGUILAR, CLARO PESTEJO, MARIA
PESTEJO and ANTONIO PESTEJO

The determinative factor should be that provided


for in paragraph 3 of Article 1622 of the Civil
Code - the intended use that appears best
justified - and not whether the said lot was
acquired for speculative purposes.
ART. 1622. Whenever a piece of urban
land..
xxx xxx xxx
When two or more owners of adjoining
lands wish to exercise the right of preemption or redemption, the owner whose
intended use of the land question appears
best justified shall be preferred.

Facts:
Both petitioner and respondent Romana Yap Vda.
de Aguilar (substituted by her heirs and
hereinafter referred to as respondent Aguilar), are
adjoining owners of Lot No. 268; that lot 268 was
sold by the Pestejos to respondent Aguilar; that
prior to the sale of lot 268, petitioner tried to
exercise her right of pre- emption over the said
lot, as early as 1963, from respondents Pestejos
as a portion of her ancestral home occupies a
part of the same, but she failed as the price
demanded was exorbitant and was fixed at
P9,000.00; that sometime in July 1971,
respondent Aguilar bought lot 268 from her corespondents, the Pestejos, for only P1,500.00;
that immediately upon learning of the sale of lot
268, petitioner sought the redemption of the
property in her favor from the private
respondents but it was flatly denied.
Plaintiff has part of her house standing on the
same lot. The defendants also claim the lot but
have no improvement standing thereon.
Issue:
Who has the preferential right of pre-emption or
redemption among the contending adjoining
owners in regard to their intended use of the land
in question?
Ruling:
Petitioner has the preferential right of preemption and/or redemption over Lot 268 as
against private respondent Aguilar.

17. G.R. No. 72873, May 28, 1987


CARLOS ALONZO and CASIMIRA ALONZO vs.
INTERMEDIATE
APPELLATE
COURT
and
TECLA PADUA
Facts:
Five brothers and sisters inherited in equal pro
indiviso shares a parcel of land registered in the
name of their deceased parents. One of them
transferred his undivided share by way of
absolute sale. A year later, his sister sold her
share in a Con Pacto de Retro Sale. By virtue of
such agreements, the petitioners occupied, after
the said sales, an area corresponding to two-fifths
of the said lot, representing the portions sold to
them. The vendees subsequently enclosed the
same with a fence with their consent, their son
Eduardo Alonzo and his wife built a semi-concrete
house on a part of the enclosed area.
One of the five co-heirs sought to redeem the
area sold to petitioners but was dismissed when it
appeared that he was an American citizen.
Another co-heir filed her own complaint invoking
the same right of redemption of her brother. Trial
court dismissed the complaint, on the ground that
the right had lapsed, not having been exercised
within thirty days from notice of the sales.
Although there was no written notice, it was held
that actual knowledge of the sales by the co-heirs

UNIVERSITY OF CEBU COLLEGE OF LAWPage 93


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

satisfied the requirement of the law. Respondent


court reversed the decision of the Trial Court.
Issue:
Whether or not actual knowledge satisfied the
requirement of Article 1088 of the New Civil
Code.
Ruling:
Yes. Decision of respondent court was reversed
and that of trial court reinstated.

actually informed of the sale and that thereafter


the 30-day period started running and ultimately
expired. This could have happened any time
during the interval of thirteen years, when none
of the co-heirs made a move to redeem the
properties sold. By 1977, in other words, when
Tecla Padua filed her complaint, the right of
redemption had already been extinguished
because the period for its exercise had already
expired.
The following doctrine is also worth noting:
While the general rule is, that to charge a
party with laches in the assertion of an
alleged right it is essential that he should
have knowledge of the facts upon which
he
bases
his
claim,
yet
if
the
circumstances were such as should have
induced inquiry, and the means of
ascertaining the truth were readily
available upon inquiry, but the party
neglects to make it, he will be chargeable
with laches, the same as if he had known
the facts.

Article 1088 of the Civil Code, provides that:


Should any of the heirs sell his hereditary
rights to a stranger before the partition,
any or all of the co-heirs may be
subrogated to the rights of the purchaser
by reimbursing him for the price of the
sale, provided they do so within the period
of one month from the time they were
notified in writing of the sale by the
vendor.
In the face of the established facts, we cannot
accept the private respondents' pretense that
they were unaware of the sales made by their
brother and sister in 1963 and 1964. By requiring
written proof of such notice, we would be closing
our eyes to the obvious truth in favor of their
palpably false claim of ignorance, thus exalting
the letter of the law over its purpose. The
purpose is clear enough: to make sure that the
redemptioners are duly notified. We are satisfied
that in this case the other brothers and sisters
were actually informed, although not in writing, of
the sales made in 1963 and 1964, and that such
notice was sufficient.
Now, when did the 30-day period of redemption
begin?
While we do not here declare that this period
started from the dates of such sales in 1963 and
1964, we do say that sometime between those
years and 1976, when the first complaint for
redemption was filed, the other co-heirs were

The co-heirs in this case were undeniably


informed of the sales although no notice in
writing was given them. And there is no doubt
either that the 30-day period began and ended
during the 14 years between the sales in question
and the filing of the complaint for redemption in
1977, without the co-heirs exercising their right of
redemption. These are the justifications for this
exception
While [courts] may not read into the law a
purpose that is not there, [courts] nevertheless
have the right to read out of it the reason for its
enactment. In doing so, [courts] defer not to the
letter that killeth but to the spirit that vivifieth,
to give effect to the lawmakers will.
18. G.R. No. L-15499, February 28, 1962
ANGELA M. BUTTE vs. MANUEL UY and
SONS, INC.
Facts:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 94


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

It appears that Jose V. Ramirez, during his


lifetime, was a co-owner of a house and lot
located at Sta. Cruz, Manila, as shown by Transfer
Certificate of Title No. 52789, issued in the name
of the following co-owners: Marie Garnier Vda. de
Ramirez, 1/6; Jose V. Ramirez, 1/6; Jose E.
Ramirez, 1/6; Rita de Ramirez, 1/6; and Jose Ma.
Ramirez, 1/6.
On October 20, 1951, Jose V. Ramirez died. Upon
the death of Jose V. Ramirez, all his property
including
the
1/6
undivided
share
was
bequeathed to his children and grandchildren and
1/3 of the free portion to Mrs. Angela M. Butte.
Mrs. Marie Garnier Vda de Ramirez sold the
property to Manuel Uy and Sons, Inc. including
the undivided 1/6 share property in Sta Cruz,
Manila. On the same day, a copy of letter
regarding the above-mentioned sell was sent to
Bank of the Philippine Islands, as administrator of
the property of Jose V. Ramirez.
Mrs. Angela M. Butte filed a case against Manuel
Uy and Sons, Inc for legal redemption when the
latter refused Mrs. Butte to redeem the said sold
property.
After the filing by defendant of its answer
containing a counterclaim, and plaintiff's reply
thereto, trial was held, after which the court
rendered decision on May 13, 1959, dismissing
plaintiff's complaint on the grounds that she has
no right to redeem the property and that, if ever
she had any, she exercised the same beyond the
statutory 30-day period for legal redemptions
provided by the Civil Code. The counterclaim of
defendant for damages was likewise dismissed
for not being sufficiently established.
Both parties appealed directly to this Court.
Issue:
Whether or not Mrs. Angela M. Butte has the right
of succession to exercise legal redemption over
the share sold by Mrs. Marie Garnier Vda. de
Ramirez.

Yes. The applicable law involved in the present


case is contained in Articles 1620, p. 1, and 1623
of the Civil Code of the Philippines, which read as
follows:
ART. 1620. A co-owner of a thing may
exercise the right of redemption in case
the shares of all the other-co-owners or of
any of them, are sold to a third person. If
the price of the alienation is grossly
excessive, the redemptioner shall pay
only a reasonable one.
Should two or more co-owners desire to
exercise the right of redemption, they
may only do so in proportion to the share
they may respectively have in the thing
owned in common. (1522a)
ART. 1623. The right of legal predemption
or redemption shall not be exercised
except within thirty days from the notice
in writing by the respective vendor, or by
the vendor, as the case may be. The deed
of sale shall not be accorded in the
Registry of Property, unless accompanied
by an affidavit of the vendor that he has
given written notice thereof at all possible
redemptioners.
The right of redemption of co-owners
excludes that of adjoining owners. (1524a)
Mrs. Angela M. Butte has the right of succession
to exercise legal redemption over the share sold
by Mrs. Marie Garnier Vda de Ramirez for being
one of the co-owners of the heirs of the 1/6
undivided property of Jose V. Ramirez.
According to Article 1620 of the Civil Code of the
Philippines, a co-owner of a thing may exercise
the right of redemption in case the shares of all
the other co-owners or of any of them, are sold to
a third person. If the price of the alienation is
gross expensive, the redemptioner shall pay only
a reasonable one.

Ruling:
UNIVERSITY OF CEBU COLLEGE OF LAWPage 95
LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Should two or more co-owners desire to exercise


the right to redemption, they may only do so in
proportion to the share that may respectively
have in the thing owned in common.
The redemption and consignation having been
properly made, the Uy counterclaim for damages
and attorney's fees predicated on the assumption
that plaintiff's action was clearly unfounded,
becomes untenable.
19. G.R. No. L-21812, April 29, 1966
PAZ TORRES DE CONEJERO and ENRIQUE
CONEJERO
vs.
COURT
OF
APPEALS,
VISITACION A. DE RAFFIAN and ENRIQUE
TORRES
Facts:
Petitioners, spouses Paz Torres and Enrique
Conejero, petitioned for the review and setting
aside a decision rendered by the Court of
Appeals, in its Case CA-G.R. No. 19634-R,
dismissing their action to compel respondents
Miguel Raffian and his wife, Visitacion A. de
Raffian, to permit redemption of an undivided
half interest in a property in Cebu City which had
been sold to said respondents by their corespondent, Enrique Torres, brother and co-owner
of petitioner Paz Torres de Conejero.
Shorn of unessentials, the facts found by the
Court of Appeals, in its decision under review, are
that Paz Torres and Enrique Torres were coowners pro indiviso of a lot and building in Cebu
City and that both had inherited from their
deceased parents. As of September 15, 1949,
Enrique Torres sold his half interest to the
Raffian spouses for P13,000, with right to
repurchase
within
one
year.
Subsequent
advances by the vendees a retro increased their
claims against Enrique Torres, and finally, on April
3, 1951 (six months after the expiration of the
right to repurchase), said Enrique executed a
deed of absolute sale of the same half interest in
the property in favor of the Raffians for P28,000.
This deed of absolute sale had not been brought
to the attention of Enrique's sister and co-owner,
Paz Torres de Conejero, nor of her husband, until

August 19, 1952, when Enrique Torres showed his


brother-in-law, Enrique Conejero1, a copy of the
deed of absolute sale of his share of the property
in favor of the Raffians. Conejero forthwith went
to the buyers, offering to redeem his brother-inlaw's share, which offer he latter raised to
P29,000.00 and afterwards to P34,000.
Amicable settlement not having been attained,
the Conejeros filed, on October 4, 1952, a
complaint in the Court of First Instance of Cebu,
seeking to be declared entitled to redeem the
half interest of Enrique Torres; to which the
Raffians made answer, claiming absolute title to
the property in dispute and pleading that
plaintiffs lost their right of redemption because
they failed to exercise it within the statutory
period.
The court of first instance found the deed of sale
to be an equitable mortgage, and declared the
plaintiffs Conejero entitled to redeem Enrique's
half interest for P34,000. Upon appeal by the
defendants, the Court of Appeals reversed the
decision of the court of first instance, found that
the deed in favor of the Raffians was a true sale,
and declared as follows:
The pertinent provision of the law reads:
"The right of legal re-emption or
redemption shall not be exercised except
within thirty days from the notice in
writing by the prospective vendor, or by
the vendor, as the case may be. The deed
of sale shall not be recorded in the
Registry of Property, unless accompanied
by an affidavit of the vendor that he has
given written notice thereof to all possible
redemptioners.
"The right of redemption of co-owners
excludes that of adjoining owners" (Art.
1623).
Issue:
Whether or not there was a valid and effective
offer to redeem.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 96


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Ruling:
No. The law grants unto the co-owner of a
property the right of redemption. But in so
granting that right, the law intended that the
offer must be valid and effective, accompanied by
an actual tender of an acceptable redemption
price;
In the case at bar, the evidence shows that the
appellees had offered only P10,000.00 in check
with which to redeem the property with a promise
to pay the balance by means of a loan which they
would apply for and obtain from the bank. We
hold that the offer was not in pursuance of a legal
and effective exercise of the right of redemption
as contemplated by law; hence, refusal of the
offer on the part of the appellants is justified. The
conditions precedent for the valid exercise of the
right do not exist.
We are now asked by petitioners Conejero to
reverse and set aside the foregoing decision of
the Court of Appeals, on the basis of two
propositions advanced by them, to wit: (a) that
no written notice of the sale to the Raffians
having been given by Enrique Torres to his sister
and co-owner, Paz T. de Conejero, the latter's
light to exercise legal redemption has not
expired, in fact, it has not even started to run;
and (b) that in legal redemption no tender of the
redemption price is required, mere demand to
allow redemption being sufficient to preserve the
redemptioner's right.
With regard to the written notice, we agree with
petitioners that such notice is indispensable, and
that, in view of the terms in which Article of the
Philippine Civil Code is couched, mere knowledge
of the sale, acquired in some other manner by the
redemptioner, does not satisfy the statute. The
written notice was obviously exacted by the Code
to remove all uncertainty as to the sale, its terms
and its validity, and to quiet any doubts that the
alienation is not definitive. The statute not having
provided for any alternative, the method of
notification prescribed remains exclusive.

Upon the other hand, Article 1623 does not


prescribe any particular form of notice, nor any
distinctive method for notifying the redemptioner.
So long, therefore, as the latter is informed in
writing of the sale and the particulars thereof, the
30 days for redemption start running, and the
redemptioner has no real cause to complain. In
the case at bar, the redemptioners (now
petitioners) admit that on August 19, 1952 the
co-owner-vendor, Enrique Torres, showed and
gave Enrique Conejero (who was acting for and
on behalf of his wife, Paz Torres) a copy of the
1951 deed of sale in favor of respondents
Raffian. The furnishing of this copy was
equivalent to the giving of written notice required
by law: it came from the vendor and made
available in writing the details and finality of the
sale. In fact, as argued for the respondents at
bar, it served all the purposes of the written
notice, in a more authentic manner than any
other writing could have done. As a necessary
consequence, the 30-day period for the legal
redemption by co-owner Paz Torres (retracto de
comuneros) began to run its course from and
after August 19, 1952, ending on September 18,
of the same year.
We agree with the Court of Appeals that they did
not effectuate all the steps required for the
redemption, for they failed to make a valid tender
of the price of the sale paid by the Raffians
within the period fixed by law. Conejero merely
offered a check for P10,000, which was not even
legal tender and which the Raffians rejected, in
lieu of the price of P28,000 recited by the deed of
sale. The factual finding of the Court of Appeals
to this effect is final and conclusive. Nor were the
vendees obligated to accept Conejero's promise
to pay the balance by means of a loan to be
obtained in future from a bank. Bona fide
redemption necessarily imports a seasonable and
valid tender of the entire repurchase price, and
this was not done. There is no cogent reason for
requiring the vendee to accept payment by
installments from a redemptioner, as it would
ultimately result in an indefinite extension of the
30-day redemption period, when the purpose of
the law in fixing a short and definite term is

UNIVERSITY OF CEBU COLLEGE OF LAWPage 97


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

clearly to avoid prolonged and anti-economic


uncertainty as to ownership of the thing sold.
It is, likewise, argued that tender of the price is
excused because Article 1620 of the new Civil
Code allows the redemptioner to pay only a
reasonable price if the price of alienation is
grossly excessive, and that the reasonableness of
the price to be paid can only be determined by
the courts. We think that the right of a
redemptioner to pay a reasonable price under
Article 1620 does not excuse him from the duty
to make proper tender of the price that can be
honestly
deemed
reasonable
under
the
circumstances,
without
prejudice
to
final
arbitration by the courts; nor does it authorize
said redemptioner to demand that the vendee
accept payment by installments, as petitioners
have sought to do. At any rate, the petitioners, in
making their offer to redeem, never contested
the reasonableness of the price recited in the
deed of sale. In fact, they even offered more, and
were willing to pay as much as P34,000.
It is not difficult to discern why the redemption
price should either be fully offered in legal tender
or else validly consigned in court. Only by such
means can the buyer become certain that the
offer to redeem is one made seriously and in
good faith. A buyer cannot be expected to
entertain an offer of redemption without
attendant evidence that the redemptioner can,
and is willing to accomplish the repurchase
immediately. A different rule would leave the
buyer open to harassment by speculators or
crackpots, as well as to unnecessary prolongation
of the redemption period, contrary to the policy of
the law. While consignation of the tendered price
is
not
always
necessary
because
legal
redemption is not made to discharge a preexisting debt (Asturias Sugar Central vs. Cane
Molasses Co., 60 Phil. 253), a valid tender is
indispensable, for the reasons already stated. Of
course, consignation of the price would remove
all controversy as to the redemptioner's ability to
pay at the proper time.
20. G.R. No. L-45349, August 15, 1988

NEWTON JISON and SALVACION I. JOSUE vs.


COURT OF APPEALS and ROBERT 0. PHILLIPS
& SONS, INC.
Facts:
Petitioners, the spouses Newton and Salvacion
Jison, entered into a Contract to Sell with private
respondent, Robert O. Phillips & Sons, Inc.,
whereby the latter agreed to sell to the former a
lot at the Victoria Valley Subdivision in Antipolo,
Rizal for the agreed price of P55,000.00, with
interest at 8,1965 per annum, payable on an
installment basis.
Pursuant to the contract, petitioners paid private
respondents a down payment of P11,000.00 on
October 20, 1961 and from October 27, 1961; to
May 8, 1965 a monthly installment of P533.85.
Thereafter, due to the failure of petitioners to
build a house as provided in the contract, the
stipulated penalty of P5.00 per square meter was
imposed to the effect that the monthly
amortization was increased to P707.24.
On January 1, 1966, February 1, 1966 and March
1, 1966, petitioners failed to pay the monthly
installments due on said dates although
petitioners subsequently paid the amounts due
and these were accepted by private respondent.
Again on October 1, 1966, November 1, 1966,
December 1, 1966 and January 1, 1967,
petitioners failed to pay. On January 11, 1967,
private respondent sent a letter (Exh. "3") to
petitioners calling their attention to the fact that
their account was four months overdue. This
letter was followed up by another letter dated
February 27, 1967 (Exh. "3") where private
respondent reminded petitioner of the automatic
rescission clause of the contract. Petitioners
eventually paid on March 1, 1967.
Petitioners again failed to pay the monthly
installments due on February 1, 1967, March 1,
1967 and April 1, 1967. Thus, in a letter dated
April 6, 1967 (Exh. "D"), private respondent
returned petitioners' check and informed them

UNIVERSITY OF CEBU COLLEGE OF LAWPage 98


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

that the contract was cancelled when on April 1,


1987 petitioners failed to pay the monthly
installment due, thereby making their account
delinquent for three months.
On April 19, 1967, petitioners tendered payment
for all the installments already due but the tender
was refused. Thus, petitioners countered by filing
a complaint for specific performance with the
Court of First Instance of Rizal on May 4, 1967
and consigning the monthly installments due with
the court.
Following the hearing of the case, wherein the
parties entered into a stipulation of facts, the trial
court on January 9, 1969 rendered judgment in
favor of private respondent, dismissing the
complaint and declaring the contract cancelled
and all payments already made by petitioner
franchise, ordering petitioners to pay P1,000.00
as and for attorney's fees; and declaring the
consignation and tender of payment made by
petitioners as not amounting to payment of the
corresponding monthly installments.
Not satisfied with the decision of the trial court,
petitioners appealed to the Court of Appeals.
Agreeing with the findings and conclusions of the
trial court, the Court of Appeals on November 4,
1976 affirmed the former's decision.

Well settled is the rule, as held in previous


cases that judicial action for the rescission
of a contract is not necessary where the
contract provides that it may be cancelled
for violation of any of its terms and
conditions. However, even in the cited
cases, there was at least a written notice
sent to the degeneration, informing him of
the rescission. As stressed in University of
the Philippines vs. Walfrido de los Angeles
[35 SCRA 102] the act of a party in
treating a contract as cancelled should be
made known to the other....
xxx xxx xxx
In other words, resolution of reciprocal
contracts may be made extrajudicially
unless successfully impugned in Court. If
the debtor impugns the declaration it shall
be subject to judicial determination.
In this case, private respondent has
denied that rescission is justified and has
resorted to judicial action. It is now for the
Court to determine whether resolution of
the contract by petitioner was warranted.

Thus, the instant petition for review.

We hold that resolution by petitioners of


the
contract
was
ineffective
and
inoperative against private respondent for
lack of notice of resolution, as held in the
U.P. vs. Angeles case, supra.

Issue:

xxx xxx xxx

Whether or not rescission of the contract and the


forfeiture of the payments already made by
petitioners are valid.

The
indispensability
of
notice
of
cancellation to the buyer was to be later
underscored in Republic Act No. 65856,
entitled "An Act to Provide Protection to
Buyers of Real Estate on Installment
Payments."
which
took
effect
on
September 14-15). when it specifically
provided:

Ruling:
Yes. The decision in the recent case of Palay, Inc.
vs. Clave, G.R. No. L-56076, September 21, 1983,
124 SCRA 7,1969, factions the resolution of the
controversy. In deciding whether the rescission of
the contract to sell a subdivision lot after the lot
buyer has failed to pay several installments was
valid, the Court said:

Sec. 3 (b) ... the actual cataract, of the


contract shall take place thirty days from
receipt by the buyer of the notice of
cancellation or the demand for rescission
of the contract by a notarial act and upon

UNIVERSITY OF CEBU COLLEGE OF LAWPage 99


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

full payment of the cash surrender value


to the buyer.
There is no denying that in the instant case the
resolution or rescission of the Contract to Sell was
valid. Neither can it be said that the cancellation
of the contract was ineffective for failure of
private respondents to give petitioners notice
thereof as petitioners were informed cancelled
private respondent that the contract was
cancelled in the letter dated April 6, 1967. As R.A.
No. 65856, was not yet effective, the notice of
cancellation need not be by notarial act, private
respondent's letter being sufficient compliance
with the legal requirement.
The facts of the instant case should be
distinguished from those in the Palay Inc. case, as
such distinction will explain why the Court in said
case invalidated the resolution of the contract. In
said case, the subdivision developer, without
informing the buyer of the cancellation of the
contract, resold the lot to another person. The lot
buyer in said case was only informed of the
resolution of the contract some six years later
after the developer, rejected his request for
authority to assign his rights under the contract.
Such a situation does not obtain illness: the
instant case. In fact, petitioners were informed of
the cancellation of their contract in April 1967,
when private respondent wrote them the letter
dated April 6, 1967 and within a month they were
able to file a complaint against Private
respondent.
While the resolution of the contract and the
forfeiture of the amounts already paid are valid
and binding upon petitioners, the Court is
convinced that the forfeiture of the amount of
P5.00 although it includes the accumulated fines
for petitioners' failure to construct a house as
required by the contract, is clearly iniquitous
considering that the contract price is only
P6,173.15 The forfeiture of fifty percent (50%) of
the amount already paid, or P3,283.75 appears to
be a fair settlement. In arriving at this amount
the Court gives weight to the fact that although
petitioners have been delinquent in paying their
amortizations several times to the prejudice of

private respondent, with the cancellation of the


contract the possession of the lot review.... to
private respondent who is free to resell it to
another party. Also, had R.A. No. 65856, been
applicable to the instant case, the same
percentage of the amount already paid would
have been forfeited [Torralba 3(b).]
The Court's decision to reduce the amount
forfeited finds support in the Civil Code. As stated
in paragraph 3 of the contract, in case the
contract is cancelled, the amounts already paid
shall be forfeited in favor of the vendor as
liquidated damages. The Code provides that
liquidated damages, whether intended as an
indemnity or a penalty, shall be equitably
reduced if they are iniquitous or unconscionable
[Art. 2227.]
Further, in obligations with a penal clause, the
judge shall equitably reduce the penalty when the
principal obligation has been partly or irregularly
complied with by the debtor [Art. 1229; Hodges v.
Javellana, G.R. No. L-17247, April 28, 1962, 4
SCRA 1228]. In this connection, the Court said:
It follows that, in any case wherein there
has been a partial or irregular compliance
with the provisions in a contract for special
indemnification in the event of failure to
comply with its terms, courts will rigidly
apply the doctrine of strict construction
and against the enforcement in its entirety
of the industry.' where it is clear from the
terms of the contract that the amount or
character of the indemnity is fixed without
regard to the probable damages which
might be anticipated as a result of a
breach of the terms of the contract; or, in
other words, where the indemnity
provided for is essentially a mere penalty
having for its principal object the
enforcement of compliance with the
corporations; (Laureano v. Kilayco, 32 Phil.
194 (1943).
This
principle
was
reiterated
in
Makati
Development Corp. v. Empire Insurance Co. [G.R.
No. L-21780, June 30, 1967, 20 SCRA 557] where

UNIVERSITY OF CEBU COLLEGE OF LAWPage 100


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

the Court affirmed the judgment of the Court of


First Instance reducing the subdivision lot buyer's
liability from the stipulated P12,000.00 to
Plaintiffs after finding that he had partially
performed his obligation to complete at least fifty
percent (50%) of his house within two (2) years
from March 31, 1961, fifty percent (50%) of the
house having been completed by the end of April
1961.
WHEREFORE, the Decision of the Court of Appeals
is hereby MODIFIED as to the amount forfeited
which is reduced to fifty percent (50%) of the
amount already paid or P23,656.32 and
AFFIRMED as to all other respects.
Private respondent is ordered to refund to
petitioners the excess of P23,656.32 within thirty
(30) days from the date of finality of this
judgment.
SPECIAL CONTRACTS LEASE
1. G.R. No. 167680, November 30, 2006
SAMUEL PARILLA, CHINITA PARILLA and
DEODATO PARILLA vs. DR. PROSPERO PILAR
Facts:
Spouses Samuel and Chinita Parilla and their son,
as
dealers
of
Pilipinas
Shell
Petroleum
Corporation (Pilipinas Shell), have been in
possession of a parcel of land in Bantay, Ilocos
Sur which was leased to them by respondent Dr.
Prospero Pilar.
When the lease contract between Pilipinas Shell
and Pilar expired, and despite demands to
vacate, the Parillas remained in possession of the
property on which they built improvements, the
Parillas and the other occupants remained in the
property. Hence, Pilar filed a complaint for
ejectment before the Municipal Trial Court (MTC)
of Bantay, Ilocos Sur. The MTC ordered the Parillas
to vacate and to pay Pilar a reasonable
compensation for the use of the property. It also
ordered Pilar to reimburse the Parillas the amount
Two Million Pesos representing the value of the
improvements introduced on the property.

Pilar appealed to the Regional Trial Court of Vigan


and the RTC affirmed the MTCs Decision.
However, on Pilars petition for review, the Court
of Appeals set aside the lower courts decision.
Issue:
Whether or not the Parillas are entitled to
reimbursement for the improvements being
builders in good faith.
Ruling:
No. A tenant cannot be said to be a builder in
good faith as he has no pretension to be owner.
At all events, under the Civil Code, it is the lessor
who is given the option, upon termination of the
lease contract, either to appropriate the useful
improvements by paying one-half of their value at
that time, or to allow the lessee to remove the
improvements. Jurisprudence is replete with
cases which categorically declare that Article 448
covers only cases in which the builders, sowers or
planters believe themselves to be owners of the
land or, at least, have a claim of title thereto, but
not when the interest is merely that of a holder,
such as a mere tenant, agent or usufructuary. A
tenant cannot be said to be a builder in good
faith as he has no pretension to be owner.
The right of the lessor upon the termination of a
lease
contract
with
respect
to
useful
improvements introduced on the leased property
by a lessee is covered by Article 1678. Clearly, it
is Article 1678 of the New Civil Code which
applies to the present case.
The Parillas claim for reimbursement of the
alleged entire value of the improvements does
not thus lie under Article 1678. Not even for onehalf of such alleged value, there being no
substantial evidence, e.g., receipts or other
documentary
evidence
detailing
costs
of
construction. Besides, by the Parillas admission,
of the structures they originally built the
billiard hall, restaurant, sari-sari store and a
parking lot, only the bodega-like sari-sari store
and the parking lot now exist.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 101


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

1. Affirmative.
At all events, under Article 1678, it is the lessor
who is given the option, upon termination of the
lease contract, either to appropriate the useful
improvements by paying one-half of their value at
that time, or to allow the lessee to remove the
improvements. This option solely belongs to the
lessor as the law is explicit that [s]hould the
lessor refuse to reimburse said amount, the
lessee may remove the improvements, even
though the principal thing may suffer damage
thereby. It appears that the lessor has opted not
to reimburse.
2. G.R. No. 171891, February 24, 2009
HERNANIA "LANI" LOPEZ vs. GLORIA UMALECOSME
Facts:
Umale-Cosme is the owner of an apartment
building at 15 Sibuyan Street, Sta. Mesa Heights,
Quezon City, while the Lopez is a lessee of one of
the units therein. She was paying a monthly rent
ofP1,340.00 as of 1999.
No written contract of lease existed between
Umale-Cosme and Lopez. The rent was paid by
Lopez to Umale-Cosme on a month-to-month
basis. Umale-Cosme sent written notices of
termination of lease and to vacate to Lopez.
Lopez, however, refused to vacate. Umale-Cosme
filed a complaint for unlawful detainer against
Lopez on the ground of termination of the lease.
Lopez argued that the contract of lease between
her and Umale-Cosme lacked a definite period
and, therefore, she may not be evicted on the
ground of termination of period.
Issues:
1. Whether or not the contract of lease had a
period.
2. Whether or not the contract of lease has
already expired.
Ruling:

The verbal contract of lease is deemed to have a


period even though it was not fixed by the parties
and in this case, it is deemed to be from monthto-month since Art.1687 of the Civil Code
provides that if the period for the lease has not
been fixed, it is understood to be from year to
year if the rent agreed upon is annual; from
month to month if the rent agreed upon is
monthly; from week to week if the rent is weekly;
and from day to day if the rent is to be paid daily.
2. Affirmative.
It has already expired. Where the contract of
lease is verbal and on a monthly basis, the lease
is one with a definite period which expires after
the last day of any given 30-day period upon
proper notice and demand to vacate from the
lessor. Therefore, by virtue of Art. 1673(1) of the
Civil Code, Umale-Cosme may judicially eject
Lopez since the duration of the lease fixed under
Art.1687 has already expired.
3. G.R. No. 155227-28, February 9, 2011
EMILIANA G. PEA, AMELIA C. MAR, and
CARMEN REYES vs. SPOUSES ARMANDO
TOLENTINO AND LETICIA TOLENTINO
Facts:
The petitioners, Carmen Reyes; Amelia Mar; and
Emiliana Pea, are lessees of three distinct and
separate parcels of land owned by the
respondents. On August 1995, the respondents
wrote a demand letter to each of the petitioners
informing that effective September 15, 2995,
they were terminating the respective month-tomonth lease contracts and demanding that the
petitioners vacate and remove their houses from
their respective premises.
After the petitioners refused to vacate within the
period allowed, the respondents filed three
distinct complaints for ejectment. The petitioners
uniformly contended that the respondents could
not summarily eject them from their leased

UNIVERSITY OF CEBU COLLEGE OF LAWPage 102


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

premises without circumventing Presidential


Decree (P.D.) No. 20 and related laws.

PHOENIX
ASSURANCE
MACONDRAY & CO., INC.

The MeTC ruled in favor of the respondents.

Facts:

The RTC affirmed the MeTCs holding that the


leases expired at the end of every month, upon
demand to vacate by the respondents. However,
it held that considering that the respondents had
allowed the petitioners to construct their own
houses of good materials on the premises, and
that the petitioners had been occupants for over
30 years.

This is a case involving the law of common


carriers.

The CA reinstated the MeTC decision.


Issue:
Whether or not the ejectment is illegal.
Ruling:
Negative.
The petitioners contend that their lease contracts
were covered by P.D. No. 20, which suspended
paragraph 1 of Article 1673, Civil Code; that as a
result, the expiration of the period of their leases
was no longer a valid ground to eject them; and
that their leases should be deemed to be for an
indefinite period. However, their reliance on P.D.
20 is futile and misplaced because that law had
been repealed by Batas Pambansa Blg. 25, which
was extended by BP 877.
Under Section 5 (f) of B.P. Blg. 877, the expiration
of the period of the lease is among the grounds
for judicial ejectment of a lessee. In this case,
because no definite period was agreed upon by
the parties, their contracts of lease being oral,
the leases were deemed to be for a definite
period, considering that the rents agreed upon
were being paid monthly, and terminated at the
end of every month, pursuant to Article 1687.
SPECIAL CONTRACTS COMMON CARRIERS
1. G.R. No. L-25048, May 13, 1975

COMPANY

vs.

On October 24, 1961 the SS Fernbank received


from Saco Lowell Shops, Greenville, South
Carolina, a shipment consigned to the order of
the Commercial Bank and Trust Company, a
Manila bank, with arrival notice to Floro Spinning
Mills 280 Escolta, Manila.
The shipment was insured for $5,450 with
Phoenix Assurance Company of New York against
all risks including loss or damage. In the bill of
lading the shipment is described as one box and
one carton containing textile machinery spare
parts including ball bearings weighing 930
pounds. The bill of lading contains a notation
stating that on July 3, 1961 the consignee, Floro
Spinning Mills, opened a letter of credit through
the Commercial Bank and Trust Company for the
amount of $4,183.74 which was to expire on
October 31, 1961.
Printed in the smallest type on the back of the bill
of lading is the following stipulation limiting the
carrier's liability for loss or damage to $500 per
package unless the shipper in writing declares
the nature of the goods and a higher valuation
and pays additional freightage on the basis of
such higher valuation. (This clause is hereinafter
called, Clause 17.)
The SS Fernbank arrived at the port of Manila on
November 23, 1961. The shipment was
discharged into the custody of the Manila Port
Service. The second carton was in bad order and
was almost empty. It contained only a small
package containing a steel wire clip which was
worthless.
The Floro Spinning Mills filed claims with
Macondray & Co., Inc., the agent of the vessel,
and with Ker & Company, Ltd., the agent of the
insurance company, for the value of the missing
cargo in the total sum of $1,512.78 (including

UNIVERSITY OF CEBU COLLEGE OF LAWPage 103


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

freight, insurance premium and other charges)


which was equivalent to P4,554.98 at the
prevailing rate of exchange of 3.011. Macondray
& Co., Inc. replied that the maximum limitation of
the vessel's liability was $500 per package.
Phoenix Assurance Company paid the claim of
Floro Spinning Mills in the sum of P4,554.98. As
subrogee, it filed this action against Macondray &
Co., Inc. for the recovery of the actual value of
the missing cargo in the sum of P4,554.98.
The RTC decided in favor of Macondray & Co.,
Inc., and ordered it to pay of P1,505.50, as the
peso equivalent of $500 based on the conversion
rate at that time.
Issue:
Whether or not the respondent is liable to the
petitioner only in the amount of $500 as provided
for in Clause 17.

Provided, That such maximum shall not be


less than the figure above named. In no
event shall the carrier be liable for more
than the amount of damage actually
sustained.
Neither the carrier nor the ship shall be
responsible in any event for loss or
damage to or in connection with the
transportation of the goods if the nature
or value thereof has been knowingly and
fraudulently misstated by the shipper in
the bill of lading.
It has been held that the foregoing provisions on
limited liability are as much a part of a bill of
lading as though physically in it and as much a
part thereof as though placed therein by
agreement of the parties.

Ruling:

2. G.R. No. L-21438, September 28, 1966


AIR FRANCEvs.RAFAEL CARRASCOSO and
the HONORABLE COURT OF APPEALS

Affirmative.

Facts:

Clause 17 is sanctioned by section 4 of the


Carriage of Goods by Sea Act which provides:

On March 1958, Rafael Carrascoso and several


other Filipinos were tourists en route to Rome
from Manila. Carrascoso was issued a first class
round trip ticket by Air France. But during a stopover in Bangkok, he was asked by the plane
manager of Air France to vacate his seat because
a white man allegedly has a better right than
him. Carrascoso protested but when things got
heated and upon advise of other Filipinos on
board, Carrascoso gave up his seat and was
transferred to the planes tourist class.

(5) Neither the carrier nor the ship shall in


any event be or become liable for any loss
or damage to or in connection with the
transportation of goods in the amount
exceeding $500 per package lawful
money of the United States, or in case of
goods not shipped in packages, per
customary freight unit, or the equivalent
of that sum in other currency, unless the
nature and value of such goods have been
declared by the shipper before shipment
and inserted in the bill of lading. This
declaration, if embodied in the bill of
lading, shall be prima facie evidence, but
shall not be conclusive on the carrier.
By agreement between the carrier, master
or agent of the carrier, and the shipper
another maximum amount than that
mentioned in this paragraph may be fixed:

After their tourist trip when Carrascoso was


already in the Philippines, he sued Air France for
damages for the embarrassment he suffered
during his trip. In court, Carrascoso testified,
among others, that he when he was forced to
take the tourist class, he went to the planes
pantry where he was approached by a plane
purser who told him that he noted in the planes
journal the following: First-class passenger was
forced to go to the tourist class against his will,
and that the captain refused to intervene.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 104


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

The said testimony was admitted in favor of


Carrascoso. The trial court eventually awarded
damages in favor of Carrascoso. This was
affirmed by the Court of Appeals.
Air France is assailing the decision of the trial
court and the CA. It avers that the issuance of a
first class ticket to Carrascoso was not an
assurance that he will be seated in first class
because allegedly in truth and in fact, that was
not the true intent between the parties.
Air France also questioned the admissibility of
Carrascosos testimony regarding the note made
by the purser because the said note was never
presented in court.
Issue:
Whether or not Air France is liable for damages
and on what basis.
Ruling:
Affirmative It appears that Air Frances liability
is based on culpa-contractual and on culpa
aquiliana.
Culpa Contractual
There exists a contract of carriage between Air
France and Carrascoso. There was a contract to
furnish Carrasocoso a first class passage; Second,
That said contract was breached when Air France
failed to furnish first class transportation at
Bangkok; and Third, that there was bad faith
when
Air
Frances
employee
compelled
Carrascoso to leave his first class accommodation
berth after he was already, seated and to take
a seat in the tourist class, by reason of which he
suffered inconvenience, embarrassments and
humiliations, thereby causing him mental
anguish, serious anxiety, wounded feelings and
social humiliation, resulting in moral damages.
The Supreme Court did not give credence to Air
Frances claim that the issuance of a first class
ticket to a passenger is not an assurance that he

will be given a first class seat. Such claim is


simply incredible.
Culpa Aquiliana
Here, the SC ruled, even though there is a
contract of carriage between Air France and
Carrascoso, there is also a tortuous act based on
culpa aquiliana. Passengers do not contract
merely for transportation. They have a right to be
treated by the carriers employees with kindness,
respect, courtesy and due consideration. They are
entitled to be protected against personal
misconduct, injurious language, indignities and
abuses from such employees. So it is, that any
rule or discourteous conduct on the part of
employees towards a passenger gives the latter
an action for damages against the carrier. Air
Frances contract with Carrascoso is one attended
with public duty. The stress of Carrascosos action
is placed upon his wrongful expulsion. This is a
violation of public duty by the Air France a case
of quasi-delict. Damages are proper.
3. G.R. No. L-20099, July 7, 1966
PARMANAND SHEWARAM vs.PHILIPPINE AIR
LINES, INC.
Facts:
Shewaram paid for his ticket for his flight from
Zamboanga to Manila. He checked in three pieces
of luggage. Upon arrival in Manila, one of his
luggage which contained a radio and a camera
worth P353 was missing. Upon investigation by
the respondent, PAL, it was found out that it was
mistagged and was sent to Iligan. The next day
the lugggage was returned but the camera and
radio were already missing.
Shewaram instituted an action to recover
damages suffered by him due to the alleged
failure of defendant-appellant Philippines Air
Lines, Inc. to observe extraordinary diligence in
the vigilance and carriage of his luggage. He
prayed that PAL pay for the original amount of
the camera and radio but PAL invoked the
provision at the back of the ticket, which states

UNIVERSITY OF CEBU COLLEGE OF LAWPage 105


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

that it would pay only P100 for any lost item not
initially declared.

LA MALLORCAvs.HONORABLE COURT
APPEALS, MARIANO BELTRAN, ET AL.

Issue:

Facts:

Whether or not PAL is liable and to what extent.

Respondents, Mario Beltran and his wife, together


with their 3 minor daughters, one of which was
Raquel, about 4 years old, boarded a
Pambusco Bus owned and operated by petitioner
La Mallorca, at San Fernando, Pampanga, bound
for Anao, Mexico, Pampanga.

Ruling:
Affirmative PAL, being a common carrier, is
liable.
Its contention that the liability limitation to P100
cannot be enforced. The Court ruled that there is
nothing wrong in limiting the liability but first
there must be a contract which is just and
reasonable under the circumstances and must
fairly be agreed upon, citing Art. 1750 of the Civil
Code.
In this case, the print at the back of the ticket
was so small and there was no signature at the
back of the ticket to manifest a fairly agreed
contract. Hence, PAL is liable for the whole
amount of the objects although they were not
initially declared.
To establish negligence, the Court based its ruling
on Arts. 1734 and 1735 of the Civil Code, which
provide for is an exclusive enumeration where
common carriers are exempted from liability.
These are the following:
1. Flood, storm, earthquake, lightning or
other natural disaster
2. Act of the public enemy in war, whether
international or civil
3. Act or omission of the shipper or owner of
goods
4. The character of the goods or defects in
the packing or in containers; and
5. Order or act of competent public
authorities.
Since in the case at bar, none of these fall in the
categories cited, PAL is considered negligent and
liable.
4. G.R. No. L-20761, July 27, 1966

OF

When the bus reached its destination, it stopped


to allow the passengers bound therefor to get off.
Mariano, who was then carrying some of their
baggages, and his family boarded off the bus and
went to a shaded spot on the left pedestrians
side of the road. Afterwards, he returned to the
bus to get his other baggage or bayong, which
he had left behind, but in so doing, his daughter
Raquel followed him, unnoticed by her father.
While Mariano was on the running board of the
bus waiting for the conductor to hand him his
bayong, the bus, whose motor was not shut off
while unloading, suddenly started moving
forward,
evidently
to
resume
its
trip,
notwithstanding the fact that the conductor has
not given the driver the customary signal to start,
since said conductor was still attending to the
baggage left behind by Mariano. Incidentally,
when the bus was again placed into a complete
stop, it had travelled about ten meters from the
point where the plaintiffs had gotten off.
Sensing that the bus was again in motion,
Mariano immediately jumped from the running
board without getting his bayong from the
conductor. He landed on the side of the road
almost in front of the shaded place where he left
his wife and children. At that precise time, he saw
people beginning to gather around the body of a
child lying prostrate on the ground, her skull
crushed, and without life. The child was none
other than his daughter Raquel, who was run over
by the bus in which she rode earlier together with
her parents.
For the death of their said child, the plaintiffs
commenced the present suit against the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 106


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

defendant seeking to recover from the latter an


aggregate amount of P16,000 to cover moral
damages and actual damages sustained as a
result thereof and attorneys fees. After trial on
the merits, the court below rendered the
judgment in question.
RTC ruled in favor of Beltran. On appeal, CA
affirmed. La Mallorca claimed that there could not
be a breach of contract in the case for the reason
that when the child met her death, she was no
longer a passenger of the bus involved in the
incident and, therefore, the contract of carriage
had already terminated. Although the Court of
Appeals sustained this theory, it nevertheless
found the defendant-appellant guilty of quasidelict and held the latter liable for damages for
the negligence of its driver. La Mallorca appealed
on the ground that the CA should not have held
them liable for quasi-delict when the complaint
was one for breach of contract.
Issues:
1. Whether or not La Mallorca is liable for breach
of contract of carriage.
2. Whether or not the carrier may be held liable
for breach of contract of carriage and/or quasidelict.
Ruling:
1. Petitioner carrier is liable for breach of the
contract of carriage. The relation of carrier and
passenger does not cease at the moment the
passenger alights from the carriers vehicle at a
place selected by the carrier at the point of
destination, but continues until the passenger has
had a reasonable time or a reasonable
opportunity to leave the carriers premises. And,
what is a reasonable time or a reasonable delay
within this rule is to be determined from all the
circumstances.
In the present case, the presence of the family of
passengers, including the deceased child, Raquel,
near the bus was not unreasonable and they are,
therefore, to be considered still as passengers of !

he carrier, entitled to the protection under their


contract of carriage.
Under the circumstances, it cannot be claimed
that the carriers agent had exercised the utmost
diligence of a very cautious person required by
Article 1755 of the Civil Code to be observed by a
common carrier in the discharge of its obligation
to transport safely its passengers. In the first
place, the driver, although stopping the bus,
nevertheless did not put off the engine. Secondly,
he started to run the bus even before the bus
conductor gave him the signal to go and while
the latter was still unloading part of the baggages
of the passengers Mariano Beltran and family.
2. The Supreme Court stated that even assuming
arguendo that the contract of carriage has
already terminated, herein petitioner can still be
held liable for the negligence of its driver, as
ruled by the Court of Appeals, pursuant to Article
2180 of the Civil Code. Paragraph 7 of the
complaint clearly avers an allegation for quasidelict. The inclusion of this averment for quasidelict, while incompatible with the other claim
under the contract of carriage, is permissible
under the Rules of Court, which allows a plaintiff
to allege causes of action in the alternative, be
they compatible with each other or not, to the
end that the real matter in controversy may be
resolved and determined.
The presentation of proof of the negligence of its
employee gave rise to the presumption that the
defendant employer did not exercise the
diligence of a good father of the family in the
selection and supervision of its employees. And
this presumption, as the Court of Appeals found,
petitioner had failed to overcome. Consequently,
petitioner must be adjudged peculiarly liable for
the death of the child, Raquel Beltran.
5. G.R. No. L-45637, May 31, 1985
ROBERTO JUNTILLAvs.CLEMENTE FONTANAR,
FERNANDO BANZON and BERFOL CAMORO
Facts:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 107


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Herein plaintiff was a passenger of the public


utility jeepney on course from Danao City to Cebu
City. The jeepney was driven by defendant Berfol
Camoro and registered under the franchise of
Clemente Fontanar but was actually owned by
defendant Fernando Banzon. When the jeepney
reached Mandaue City, the right rear tire
exploded causing the vehicle to turn turtle. In the
process, the plaintiff who was sitting at the front
seat was thrown out of the vehicle. Plaintiff
suffered a lacerated wound on his right palm
aside from the injuries he suffered on his left arm,
right thigh, and on his back. Juntilla, who was in
shock, went back to Danao and confined himself
to a hospital to treat his injuries. On his way back,
he discovered that his OMEGA wrist watch was
also missing after the incident.
Plaintiff filed a case for breach of contract with
damages before the City Court of Cebu City.
Defendants, in their answer, alleged that the tire
blow out was beyond their control, taking into
account that the tire that exploded was newly
bought and was only slightly used at the time it
blew up. RTC favored the plaintiff. But upon an
appeal filed by the respondents, the judgment
was reversed upon a finding that the accident in
question was due to a fortuitous event. After the
motion for reconsideration was denied, petitioner
then filed the present case raising the following
alleged errors committed by the Court of First
Instance of Cebu on appeal
a. The Honorable Court below committed grave
abuse of discretion in failing to take cognizance of
the fact that defendants and/or their employee
failed to exercise "utmost and/or extraordinary
diligence"
required
of
common
carriers
contemplated under Art. 1755 of the Civil Code of
the Philippines.
b. The Honorable Court below committed grave
abuse of discretion by deciding the case contrary
to the doctrine laid down by the Honorable
Supreme Court in the case of Necesito et al. vs.
Paras, et al.
Issue:

Whether or not the tire blow-out is a fortuitous


event to which the common carrier cannot be
held liable for as an exception under the Civil
Code.
Ruling:
No. The Court of First Instance of Cebu erred
when it absolved the carrier from any liability
upon a finding that the tire blow out is a
fortuitous event.
In the case at bar, there are specific acts of
negligence on the part of the respondents. The
records show that the passenger jeepney turned
turtle and jumped into a ditch immediately after
its right rear tire exploded and that the passenger
jeepney was running at a very fast speed before
the accident. A public utility jeep running at a
regular and safe speed will not jump into a ditch
when its right rear tire blows up. The evidence
also shows that the passenger jeepney was
overloaded at the time of the accident.
While it may be true that the tire that blew-up
was still good because the grooves of the tire
were still visible, this fact alone does not make
the explosion of the tire a fortuitous event. No
evidence was presented to show that the
accident was due to adverse road conditions or
that precautions were taken by the jeepney driver
to compensate for any conditions liable to cause
accidents. The sudden blowing-up, therefore,
could have been caused by too much air pressure
injected into the tire coupled by the fact that the
jeepney was overloaded and speeding at the time
of the accident.
In a legal sense and, consequently, also in
relation to contracts, a caso fortuito presents the
following essential characteristics: (1) The cause
of the unforeseen and unexpected occurrence, or
of the failure of the debtor to comply with his
obligation, must be independent of the human
will. (2) It must be impossible to foresee the
event which constitutes the caso fortuito, or if it
can be foreseen, it must be impossible to avoid.
(3) The occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in

UNIVERSITY OF CEBU COLLEGE OF LAWPage 108


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

a normal manner. And (4) the obligor (debtor)


must be free from any participation in the
aggravation of the injury resulting to the creditor.

with a due regard for all the circumstances. The


records show that this obligation was not met by
the respondents.

In the case at bar, the cause of the unforeseen


and unexpected occurrence was not independent
of the human will. The accident was caused either
through the negligence of the driver or because
of mechanical defects in the tire. Common
carriers should teach their drivers not to overload
their vehicles, not to exceed safe and legal speed
limits, and to know the correct measures to take
when a tire blows up thus insuring the safety of
passengers at all times.

6. G.R. No. L-23733, October 31, 1969


HERMINIO L. NOCUM vs.LAGUNA TAYABAS
BUS COMPANY

Relative to the contingency of mechanical


defects, it was held in Necesito, et al. v. Paras, et
al. (104 Phil. 75), that:
... The preponderance of authority is in
favor of the doctrine that a passenger is
entitled to recover damages from a carrier
for an injury resulting from a defect in an
appliance purchased from a manufacturer,
whenever it appears that the defect would
have been discovered by the carrier if it
had exercised the degree of care which
under the circumstances was incumbent
upon it, with regard to inspection and
application of the necessary tests.
The rationale of the carrier's liability is the fact
that the passenger has neither choice nor control
over the carrier in the selection and use of the
equipment and appliances in use by the carrier.
Having no privity whatever with the manufacturer
or vendor of the defective equipment, the
passenger has no remedy against him, while the
carrier usually has. It is but logical, therefore, that
the carrier, while not an insurer of the safety of
his passengers, should nevertheless be held to
answer for the flaws of his equipment if such
flaws were at all discoverable.
It is sufficient to reiterate that the source of a
common carrier's legal liability is the contract of
carriage, and by entering into the said contract, it
binds itself to carry the passengers safely as far
as human care and foresight can provide, using
the utmost diligence of a very cautious person,

Facts:
Herminio L. Nocum, who was a passenger in
appellants Bus No. 120 then making a trip within
the barrio of Dita, Municipality of Bay, Laguna,
was injured as a consequence of the explosion of
firecrackers, contained in a box, loaded in said
bus and declared to its conductor as containing
clothes and miscellaneous items by a copassenger. The findings of fact of the trial court
are not assailed. The appeal is purely on legal
questions.
Appellee has not filed any brief. All that the Court
had was the appellant's brief which contained this
assignment of error: Based on the facts the lower
court found as established, it erred as a matter of
law in not absolving appellant from liability
resulting from the explosion of firecrackers
contained in a package, the contents of which
were misrepresented by a passenger.
The lower court ruled in favor of the plaintiff upon
the main basis that appellant did not observe the
extraordinary or utmost diligence of a very
cautious person required by Articles 1733, 1755
and 1756 of the Civil Code. It stated that the
service manual of the common carrier prohibits
the employees to allow explosives, such as
dynamite and firecrackers to be transported on
its buses. To implement this particular rule for
'the safety of passengers, it was therefore
incumbent upon the employees of the company
to make the proper inspection of all the baggages
which are carried by the passengers.
It further discussed the unlikeliness of the
accident to be one caused by a fortuitous event
since to be considered as caso fortuito, the cause
of the unexpected event must be independent of
the will of man or something which cannot be

UNIVERSITY OF CEBU COLLEGE OF LAWPage 109


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

avoided. If proper and rigid inspection were


observed by the defendant, the contents of the
box could have been discovered and the accident
avoided. Refusal by the passenger to have the
package opened was no excuse because, as
stated by Dispatcher Cornista, employees should
call the police if there were packages containing
articles against company regulations.
Issue:
Whether or not the bus company was negligent,
hence liable for the injuries suffered by Nocum.
Ruling:
No. The Bus Company has succeeded in rebutting
the presumption of negligence by showing that it
has exercised extraordinary diligence for the
safety of its passengers, according to the
circumstances of the (each) case.
Article 1733 qualifies the extraordinary diligence
required of common carriers for the safety of the
passengers transported by them to be according
to all the circumstances of each case. In fact,
Article 1755 repeats this same qualification: "A
common carrier is bound to carry the passengers
safely as far as human care and foresight can
provide, using the utmost diligence of very
cautious persons, with due regard for all the
circumstances."
In this case, it must be considered that while it is
true the passengers of appellant's bus should not
be made to suffer for something over which they
had no control, fairness demands that in
measuring a common carrier's duty towards its
passengers, allowance must be given to the
reliance that should be reposed on the sense of
responsibility of all the passengers in regard to
their common safety. It is to be presumed that a
passenger will not take with him anything
dangerous to the lives and limbs of his copassengers, not to speak of his own. Not to be
lightly considered must be the right to privacy to
which each passenger is entitled. He cannot be
subjected to any unusual search, when he
protests the innocuousness of his baggage and

nothing appears to indicate the contrary, as in


the case at bar. Hence, the bus companys failure
to confiscate the baggage cannot be considered
as a negligent act, but in accord to the
circumstance of the case.
In other words, inquiry may be verbally made as
to the nature of a passenger's baggage when
such is not outwardly perceptible, but beyond
this, constitutional boundaries are already in
danger of being transgressed. Calling a
policeman to his aid, as suggested by the service
manual invoked by the trial judge, in compelling
the passenger to submit to more rigid inspection,
after the passenger had already declared that the
box
contained
mere
clothes
and
other
miscellaneous, could not have justified invasion
of a constitutionally protected domain. Police
officers acting without judicial authority secured
in the manner provided by law are not beyond
the pale of constitutional inhibitions designed to
protect individual human rights and liberties.
Of course, when there are sufficient indications
that the representations of the passenger
regarding the nature of his baggage may not be
true, in the interest of the common safety of all,
the assistance of the police authorities may be
solicited, not necessarily to force the passenger
to open his baggage, but to conduct the needed
investigation consistent with the rules of
propriety and, above all, the constitutional rights
of the passenger.
Thus, in other jurisdictions, and squarely
applicable in the instant case: There is need for
evidence of circumstances indicating cause or
causes for apprehension that the passengers
baggage is dangerous and that it is failure of the
common carriers employee to act in the face of
such evidence that constitutes the cornerstone of
the common carriers liability in cases similar to
the present one.
According to a number of cases in other
jurisdictions, a carrier is ordinarily not liable for
injuries to passengers from fires or explosions
caused by articles brought into its conveyances
by other passengers, in the absence of any

UNIVERSITY OF CEBU COLLEGE OF LAWPage 110


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

evidence that the carrier, through its employees,


was aware of the nature of the article or had any
reason to anticipate danger therefrom.

7. G.R. No. L-19161, April 29, 1966


MANILA RAILROAD COMPANY vs.MACARIA
BALLESTEROS, TIMOTEO CAMAYO, JOSE
REYES and JULIAN MAIMBAN, JR.
Facts:
Private respondents are passengers of Manila
Railroad Companys (MRR) bus driven by Jose
Anastacio. While the bus was in Bayombong,
Nueva Vizcaya, Anastacio stopped the bus and
got off to replace a defective spark plug. While he
was thus engaged, one Dionisio Abello, an auditor
assigned to MRR by the General Auditing Office,
took the wheel and told the driver to sit
somewhere else. With Abello driving, the bus
proceeded on its way, from time to time stopping
to pick up passengers. Anastacio tried twice to
take the wheel back but Abello would not
relinquish it.
While the bus was travelling between Km. posts
328 and 329 in Isabela, a freight truck bound for
Manila and driven by Marcial Nocum was also
travelling the same road. When these two
vehicles were about to meet at the bend of the
road, Marcial Nocum, in trying to evade several
holes on the right lane, where his truck was
running, swerved his truck towards the middle
part of the road and in so doing, the left front
fender and left side of the freight truck smashed
the left side of the bus resulting in extensive
damages to the body of the bus and injuries to
seventeen of its passengers, including the
respondents herein.
Thus, the respondents herein filed a complaint for
damages against MRR. The lower court ruled in
favor of the passengers and to this, the
defendant company appealed from the judgment,

but upon motion by the plaintiffs, the trial court,


by order dismissed the appeal on the ground that
it was "manifestly and palpably frivolous and
interposed ostensibly to delay the settlement of
the just and reasonable claims of the herein
plaintiffs, which have been pending since 1958."
The defendant moved to reconsider, and upon
denial of its motion instituted in the Supreme
Court the instant petition for mandamus to set
aside the order of dismissal and to order
respondent court to give due course to the
appeal.
The common carrier interposed the following
defenses:
1. The accident was caused by the
negligence of the driver of the freight
truck, Nocum.
2. MRR should not be held liable for Abellos
acts who is not their employee.
Issue:
Whether or not a common carrier may be held
liable on account of negligence of a stranger.
Ruling:
Yes. The trial court found Abello was likewise
reckless when he was driving the bus at the rate
of from 40 to 50 kilometers per hour on a bumpy
road at the moment of the collision. As opined by
the Government Corporate Counsel, who
represents herein petitioner, rendered two
separate opinions (Op. No. 86, May 19, 1960; and
Op. No. 99, series of 1961) wherein, after
analyzing the facts and the law applicable, he
reached the conclusion that the acts of the bus
personnel, particularly "in allowing Mr. Abello to
drive despite two occasions when the bus
stopped and the regular driver could have taken
over, constitute reckless imprudence and wanton
injurious conduct on the part of the MRR
employees." On the basis of those opinions, the
Government
Corporate
Counsel
advised
petitioner that the offer of the claimants was
reasonable and should be accepted. His advice,

UNIVERSITY OF CEBU COLLEGE OF LAWPage 111


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

however, was not favorably acted


petitioner obviously preferring to litigate.

upon,

Furthermore, the defenses set up by MRR will not


lie because of the following provisions of Article
1763 of the Civil Code and section 48 (b) of the
Motor Vehicle Law, which respectively provide as
follows:
Art. 1763.
A common carrier is
responsible for injuries suffered by a
passenger on account of the wilfull acts or
negligence of other passengers or of
strangers, if the common carrier's
employees through the exercise of the
diligence of a good father of a family
could have prevented or stopped the act
or omission.
Sec. 48 (b). No professional chauffeur
shall permit any unlicensed person to
drive the motor vehicle under his control,
or permit a person, sitting beside him or in
any other part of the car, to interfere with
him in the operation of the motor vehicle,
by allowing said person to take hold of the
steering wheel, or in any other manner
take part in the manipulation or control of
the car.

8. G.R. No. L-40597, June 29, 1979


AGUSTINO
B.
ONG
YIUvs.HONORABLE
COURT OF APPEALS and PHILIPPINE AIR
LINES, INC.
Facts:
Ong Yiu, a practicing lawyer, the herein
petitioner, engaged on the service of PAL as a
paying passenger. On August 26, 1967, Ong Yiu
was bound for Butuan City from Cebu City, for a
scheduled trial. As a passenger, he checked in
one piece of luggage which he was issued a Claim
Check. Upon arrival at Butuan City, he found out
that his luggage was missing. He then

approached the porter clerk about the matter. It


was then found out that the said luggage was
transported to Manila, instead of doing so to
Butuan City. The porter clerk informed Ong Yiu
that the said luggage will be transported from
Manila to Cebu to Butuan City on the following
day. The next day, Ong Yiu went back to Butuan
City airport to check if the luggage has already
arrived. Knowing that the same was not yet
delivered at the Butuan City airport, Ong Yiu left
the premises. After few hours, the luggage
arrived but since the latter has already left, the
driver who used to drive the petitioner delivered
the luggage to the latter with the notification that
the luggage has arrived with its lock opened.
Upon inspection, Ong Yiu noticed that a folder
containing documents was missing.
As a consequence, Ong Yiu requested for the
postponement of the trial he was supposed to
attend in Butuan City. Petitioner asked for the
investigation of his missing folder but the PAL
failed to trace where the folder is. Petitioner then
demanded for damages for breach of contract of
transportation against PAL. The trial court
awarded the sum of P80,000.00 for moral
damages
and
P30,000.00
for
exemplary
damages.
Both parties appealed on the CA which the latter,
on its decision, found out that PAL did not act in
bad faith, hence, removed the moral and
exemplary damages in favor of Ong Yiu and
ordered PAL to pay the latter with P100.00, in
pursuance to the stipulation written on the ticket
issued by PAL to Ong Yiu; thus, this appeal.
Issue:
Whether or not PAL acted in bad faith and Ong Yiu
should be paid for moral and exemplary damages
due to breach of contract of transportation.
Ruling:
No. Although PAL is guilty of negligence, the SC
found out that the latter is guilty of simple
negligence only. The efforts of PAL on locating the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 112


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

luggage proved that it acted in good faith and


with due diligence of duty. Moreover, it was
stated that Ong Yiu should have received and
checked his luggage upon the latters arrival on
the airport if the former waited a little longer.
Furthermore, petitioner is not entitled of the
moral and exemplary damages due to following
findings:
(a) Ong Yiu failed to declare a higher value of
the luggage;
(b) Ong Yiu did not pay for any additional
transportation charge;
(c) while it may be true that petitioner had
not signed the plane ticket, he is bound by
the provisions thereof.
Such provisions have been held to be a part of
the contract of carriage, and valid and binding
upon the passenger regardless of the latter's lack
of knowledge or assent to the regulation
The plane ticket is regarded as a contract of
adhesion. A contract of adhesion is that where
one party imposes a ready-made form of contact
on the other. It is not entirely prohibited by the
law. The one who adhered to the contract is in
reality free to reject it entirely; if he adheres, he
gives his consent.
Therefore, the Supreme Court ruled that Ong Yiu
cannot claim damages higher than P100.00
because of his failure to declare a greater value
of the luggage and in accordance with the
stipulation of the contract of adhesion, in which
he consented, as in this case, the plane ticket
which was issued to him. Passengers are advised
not to place valuable items inside their baggage.
It is likewise to be noted that there is nothing in
the evidence to show the actual value of the
goods allegedly lost by petitioner.

9. G.R. No. L-28692, July 30, 1982


CONRADA VDA. DE ABETO, CARMELO
ABETO,
CECILIA
ABETO,
CONCEPCION
ABETO, MARIA ABETO, ESTELA ABETO,
PERLA ABETO, PATRIA ABETO and ALBERTO
ABETO
vs.
PHILIPPINE
AIR
LINES,
INCORPORATED
Facts:
Plaintiff's evidence shows that in the afternoon of
November 23, 1960, Judge Quirico Abeto, with
the necessary tickets, boarded the Philippine Air
Lines plane in Iloilo City for Manila. The plane
which would then take two hours from Iloilo to
Manila did not reach its destination and the next
day there was news that the plane was missing.
After three weeks, it was ascertained that the
plane crashed at Mt. Baco, Province of Mindoro.
All the passengers, including Judge Abeto, must
have been killed instantly.
Plaintiff-appellee Conrada Vda. de Abeto was
appointed administratrix of the estate of Judge
Abeto. The other plaintiffs-appellees are the
children of the deceased.
Defendant-appellant tried to prove that the plane
at the time of the crash was airworthy as shown
by the certificate of airworthiness issued by the
Civil Aeronautics Administration (CAA). Further,
deviation from its prescribed route was due to the
bad weather conditions between Mt. Baco and
Romblon and strong winds which caused the
plane to drift to Mt. Baco. Appellant argues that
the crash was a fortuitous event and, therefore,
defendant-appellant cannot be held liable.
The trial court favoured the plaintiff saying it was
established by the evidence of the plaintiff that
the defendant did not exercise extraordinary
diligence or prudence as far as human foresight
can provide imposed upon by the Law, but on the
contrary showed negligence and indifference for
the safety of the passengers when the Pilot of the
plane disobeyed instruction given in not following

UNIVERSITY OF CEBU COLLEGE OF LAWPage 113


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

the route of Amber 1 prescribed by the CAA,


among others.

Civil Aeronautics Administration also testified that


the pilot of said plane was "off course."

Issue:

At any rate, in the absence of a satisfactory


explanation by appellant as to how the accident
occurred, the presumption is, it is at fault.

Whether or not the defendant is liable for


violation of its contract of carriage.

10. G.R. No. L-46558, July 31, 1981


PHILIPPINE AIR LINES, INC. vs.THE COURT
OF APPEALS and JESUS V. SAMSON

Ruling:
Yes. The provisions of the Civil Code on this
question of liability are clear and explicit. Article
1733 binds common carriers, "from the nature of
their business and by reasons of public policy, ...
to observe extraordinary diligence in the
vigilance ... for the safety of the passengers
transported by them according to all the
circumstances of each case." Article 1755
establishes the standard of care required of a
common carrier, which is, "to carry the
passengers safely as far as human care and
foresight can provide, using the utmost diligence
of very cautious persons, with due regard for all
the circumstances." Article 1756 fixes the burden
of proof by providing that "in case of death of or
injuries to passengers, common carriers are
presumed to have been at fault or to have acted
negligently, unless they prove that they observed
extra-ordinary diligence as prescribed in Articles
1733 and 1755." Lastly, Article 1757 states that
"the responsibility of a common carrier for the
safety of passengers ... cannot be dispensed with
or lessened by stipulation, by the posting of
notices, by statements on tickets, or otherwise."
The prescribed airway of plane that afternoon
with Capt. de Mesa, as the pilot, was IloiloRomblon-Manila, denominated as airway "Amber
l," and the prescribed elevation of the flight was
6,000 ft. The fact is, the plane did not take the
designated route because it was some 30 miles
to the west when it crashed at Mt. Baco.
According to defendant's witness, Ramon A.
Pedroza, Administrative Assistant of the Philippine
Air Lines, Inc., this tragic crash would have not
happened had the pilot continued on the route
indicated. Assistant Director Cesar Mijares of the

Facts:
On January 8, 1951, respondent flew as co-pilot
on a regular flight with Captain Delfin
Bustamante as commanding pilot of a plane
belonging to defendant Philippine Air Lines, Inc.,
now the herein petitioner; that on attempting to
land the plane at Daet airport, Captain
Bustamante due to his very slow reaction and
poor judgment overshot the airfield and as a
result, notwithstanding the diligent efforts of the
plaintiff co-pilot to avert an accident, the airplane
crashlanded beyond the runway; that the jolt
caused the head of the plaintiff to hit and break
through the thick front windshield of the airplane
causing him severe brain concussion, wounds and
abrasions on the forehead with intense pain and
suffering.
Defendant instead of giving plaintiff expert and
proper medical treatment called for by the nature
and severity of his injuries, defendant simply
referred him to a company physician, a general
medical practitioner, who limited the treatment to
the exterior injuries without examining the severe
brain concussion of plaintiff; that several days
after the accident, defendant Philippine Air Lines
called back the plaintiff to active duty as co-pilot,
and inspite of the latters repeated request for
expert medical assistance, defendant had not
given him any; that as a consequence of the
brain injury sustained by plaintiff from the crash,
he had been having periodic dizzy spells and had
been suffering from general debility and
nervousness; that defendant airline company
instead of submitting the plaintiff to expert
medical treatment, discharged the latter from its
employ on grounds of physical disability, thereby

UNIVERSITY OF CEBU COLLEGE OF LAWPage 114


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

causing plaintiff not only to lose his job but to


become physically unfit to continue as aviator
due to defendants negligence in not giving him
the proper medical attention.
Defendant PAL denied the averments, alleging
among others, that the accident was due solely
and
exclusively
to
inevitable
unforeseen
circumstances whereby plaintiff sustained only
superficial wounds and minor injuries which were
promptly treated by defendants medical
personnel; that plaintiff did not sustain brain
injury or cerebral concussion from the accident
since he passed the annual physical and medical
examination given thereafter; that the headaches
and dizziness experienced by plaintiff were due to
emotional disturbance over his inability to pass
the required up-grading or promotional course
given by defendant company, and that, as
confirmed by an expert neuro-surgeon, plaintiff
was suffering-from neurosis and in view of this
unfitness and disqualification from continuing as
a pilot, defendant had to terminate plaintiffs
employment.
Lower Court ruled in favor of defendant appellant
which was affirmed by the CA. Hence, this instant
petition for Certiorari.
Issues:
1. Whether or not there is a causal connection
between the injuries suffered by private
respondent during the accident and the
subsequent periodic dizzy spells, headache and
general debility of which private respondent
complained every now and then, on the one
hand, and such periodic dizzy spells, headache
and general debility allegedly caused by the
accident and private respondents eventual
discharge from employment, on the other.
2. Whether or not there was gross negligence.
Ruling:
1. We agree with the respondent court in finding
that the dizzy spells, headache and general

debility of private respondent Samson was an


after-effect of the crash-landing and We find that
such holding is supported by substantial
evidence, which We quote from the courts
decision, to wit:
We hesitate to accept the opinion of the
defendants two physicians, considering
that Dr. Bernardo admittedly referred to
Dr. Reyes because he could not determine
the cause of the dizzy spells and headache
and the latter admitted that it is
extremely hard to be certain of the cause
of his dizzy spells.
Whatever it might be, the fact is that such
dizzy spells, headache and general debility
was an after-effect of the crash-landing.
Be it brain injury or psychosomatic,
neurasthenic or psychogenic, there is no
gainsaying the fact that it was caused by
the crash-landing. As an effect of the
cause, not fabricated or concocted,
plaintiff has to be indemnified. The fact is
that such effect caused his discharge.
2. We also find the imputation of gross negligence
by respondent court to PAL for having allowed
Capt. Delfin Bustamante to fly on that fateful day
of the accident and We affirm the same on the
evidence that the pilot was sick. He admittedly
had tumor of the nasopharynx (nose). The spot is
very near the brain and the eyes. Tumor on the
spot will affect the sinus, the breathing, the eyes
which are very near it. No one will certify the
fitness to fly a plane of one suffering from the
disease.
At any rate, it is incorrect to say that the Accident
Report, signed by plaintiff, exculpated Capt.
Bustamante from any fault. We observed that the
Report does not categorically state that Capt.
Bustamante was not at fault. It merely relates in
chronological sequence what Capt. Bustamante
and plaintiff did from the take-off from Manila to
the landing in Daet which resulted in an accident.
On the contrary, we may infer the negligence of
Bustamante from the following portion of the
Report, to wit:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 115


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

. . I felt his brakes strong but as we


neared the intersection of the NE-SW
runway, the brakes were not as strong and
I glanced at the system pressure which
indicated 900 lbs. per sq. m.
It was during the above precise instance that
Capt.
Bustamante
lost
his
bearing
and
disposition. Had he maintained the pressure on
the brakes the plane would not have overshot the
runway. Verily, Bustamante displayed slow
reaction and poor judgment.
Petitioner is a common carrier engaged in the
business of carrying or transporting passengers
or goods or both, by land, water, or air, for
compensation, offering their services to the
public,. The law is clear in requiring a common
carrier to exercise the highest degree of care in
the discharge of its duty and business of carriage
and transportation.
11. G.R. No. 104235, November 18, 1993
SPOUSES CESAR & SUTHIRA ZALAMEA and
LIANA ZALAMEAvs.HONORABLE COURT OF
APPEALS and TRANSWORLD AIRLINES, INC.

Out of the 42 names on the wait-list, the first 22


names were eventually allowed to board the
flight including Cesar Zalamea. The two others,
on the other hand, being ranked lower than 22,
were not able to fly. As it were, those holding fullfare ticket were given first priority among the
wait-listed passengers. Mr. Zalamea, who was
holding the full-fare ticket of his daughter, was
allowed to board the plane; while his wife and
daughter, who presented the discounted tickets
were denied boarding. Even in the next TWA flight
to Los Angeles, Mrs. Zalamea and her daughter,
could not be accommodated because it was full
booked. Thus, they were constrained to book in
another flight and purchased two tickets from
American Airlines.
Upon their arrival in the Philippines, the spouses
Zalamea filed an action for damages based on
breach of contract of air carriage before the RTC
which rendered a decision in their favor of the
spouses Zalamea. On appeal, the CA rendered
judgement in favor of TWA holding that
overbooking is allowed by the US Code of Federal
Regulations and that there was no bad faith on
the part of TWA.
Issue:

Facts:
Spouses Cesar and Suthira Zalamea, and their
daughter, Liana Zalamea, purchased three (3)
airline tickets from the Manila agent of
respondent TransWorld Airlines, Inc. (TWA). The
tickets
of
the
spouses
were
purchased at a discount of 75% while that of their
daughter was a full fare ticket. All three tickets
represented confirmed reservations.
While in New York, the spouses Zalamea and their
daughter received a notice of reconfirmation of
their reservations for said flight. On the appointed
date, however, the spouses Zalamea and their
daughter checked an hour earlier than the
scheduled flight but were placed on the wait-list
because the number of passengers who checked
in before them had already taken all the seats
available on the flight.

Whether or not the CA erred in finding that


overbooking is specifically allowed by the US
Code of Federal Regulations and that there was
no fraud or bad faith on the part of TWA.
Ruling:
The CA was in error. There was fraud or bad faith
on the part of TWA when it did not allow Mrs.
Zalamea and her daughter to board their flight
for Los Angeles in spite of confirmed tickets. The
US law or regulation allegedly authorizing
overbooking has never been proved.
Foreign laws do not prove themselves nor can the
court take judicial notice of them. Like any other
fact, they must be alleged and proved. Written
law may be evidenced by an official publication
thereof or by a copy attested by the officers
having legal custody of the record, or by his

UNIVERSITY OF CEBU COLLEGE OF LAWPage 116


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

deputy and accompanied with a certificate that


such officer has custody.

DEVELOPMENT
CORPORATION

"Even if the claimed U.S. Code of Federal


Regulations does exist, the same is not applicable
to the case at bar in accordance with the
principle of lex loci contractus which require that
the law of the place where the airline ticket was
issued should be applied by the court where the
passengers are residents and nationals of the
forum and the ticket is issued in such State by
the defendant airline. Since the tickets were sold
and issued in the Philippines, the applicable law
in this case would be Philippine law."

Facts:

Existing jurisprudence explicitly states that


overbooking amounts to bad faith, entitling the
passengers concerned to an award of moral
damages. Where an airline had deliberately
overbooked, it took the risk of having todeprive
some passengers of their seats in case all of
them would show up for check in. for the
indignity and inconvenience of being refused a
confirmed seat on the last minute, said passenger
is entitled to an award of moral damages. This is
so, for a contract of carriage generates a relation
attended with public duty --- a duty to provide
public service and convenience to its passengers
which must be paramount to self-interest or
enrichment. Even on the assumption that
overbooking is allowed, TWA is still guilty of bad
faith in not informing its passengers beforehand
that it could breach the contract of carriage even
if they have confirmed tickets if there was
overbooking. Moreover, TWA was also guilty of
not informing its passengers of its alleged policy
of giving less priority to discounted tickets.
Evidently, TWA placed self-interest over the rights
of the spouses Zalamea and their daughter under
their contract of carriage. Such conscious
disregard make respondent TWA liable for moral
damages, and to deter breach of contracts by
TWA in similar fashion in the future, the SC
adjudged TWA liable for exemplary damages, as
well.
12. G.R. No. L-69044, May 29, 1987
EASTERN
SHIPPING
LINES,
INC.
vs.INTERMEDIATE APPELLATE COURT and

INSURANCE

&

SURETY

Sometime in or prior to June 1977, the M/S


Asiatica, a vessel operated by petitioner Eastern
Shipping Lines Inc., loaded at Kobe, Japan for
transportation to Manila loaded 5,000 pieces of
calorized pipes valued at P256,039.00 which was
consigned to Philippine Blooming Mills Co, Inc.
and 7 cases of spare parts valued at P92, 361.75
consigned to Central Textile Mills. Both sets of
goods were insured against marine risk for their
stated value with respondent Development
Insurance and Surety Corp.
In the same vessel, 2 containers of garment
fabrics were also loaded which was consigned to
Mariveles Apparel Corp worth $46,583. The said
cargoes were consigned to Nisshin Fire and
Marine Insurance. Another cargo loaded to the
vessel was the surveying instruments consigned
to Aman Enterprises and General Merchandise
and insured against respondent Dowa Fire &
Marine Insurance.
On the way to Manila, M/S Asiatica caught fire
and sank. This resulted to the loss of the ship and
its cargoes. The respective Insurers paid the
corresponding marine insurance values and were
thus subrogated to the rights of the insured.
The insurers filed a suit against the petitioner
carrier for recovery of the amounts paid to the
insured. However, petitioner contends that it is
not liable on the ground that the loss was due to
an extraordinary fortuitous event.
Issue:
Which law should govern the Civil Code
provisions on Common carriers or the Carriage of
Goods by Sea Act?
Ruling:
The law of the country to which the goods are to
be transported governs the liability of the
common carrier in case of their loss, destruction

UNIVERSITY OF CEBU COLLEGE OF LAWPage 117


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

or deterioration. As the cargoes in question were


transported from Japan to the Philippines, the
liability of Petitioner Carrier is governed primarily
by the Civil Code. However, in all matters not
regulated by said Code, the rights and obligations
of common carrier shall be governed by the Code
of Commerce and by special laws. Thus, the
Carriage of Goods by Sea Act, a special law, is
suppletory to the provisions of the Civil Code.
13. G.R. No. L-28673, October 23, 1984
SAMAR
MINING
COMPANY,
INC.
vs.NORDEUTSCHER LLOYD and C.F. SHARP &
COMPANY, INC.
Facts:
The case arose from an importation made by
plaintiff, SAMAR MINING COMPANY, INC. of one (1)
crate Optima welded wedge wire sieves through a
vessel
owned
by
defendant-appellant
NORDEUTSCHER LLOYD, which shipment is
covered by Bill of Lading No. 18 duly issued to
consignee plaintiff. Upon arrival of the aforesaid
vessel at the port of Manila, the aforementioned
importation was unloaded and delivered in good
order and condition to the bonded warehouse of
AMCYL. The goods were however never delivered
to, nor received by, the consignee at the port of
destination Davao.
When the letters of complaint sent to defendants
failed to elicit the desired response, consignee
herein appellee, filed a formal claim against the
former, but neither paid. Hence, the filing of the
instant suit to enforce payment. Defendantsappellants brought in AMCYL as third party
defendant. The trial court rendered judgment in
favor of plaintiff. Only the defendants appealed
from said decision.
Issue:
Whether or not the stipulation in bills of lading
exempting the carrier from liability for loss or
damage to the goods when the same are not in
its actual custody is valid.

The stipulation reads:


The short form Bill of Lading ( ) states in
no uncertain terms that the port of
discharge of the cargo is Manila, but that
the same was to be transshipped beyond
the port of discharge to Davao City.
Pursuant to the terms of the long form Bill
of Lading ( ), appellee's responsibility as a
common carrier ceased the moment the
goods were unloaded in Manila and in the
matter of transshipment, appellee acted
merely as an agent of the shipper and
consignee.
Finding the stipulations not contrary to law,
morals, good customs, public order or public
policy, Court sustained their validity.
A careful perusal of the provisions of the New
Civil Code on common carriers (Section 4, Title
VIII, Book IV) directs our attention to Article 1736
thereof, which reads:
Article
1736.
The
extraordinary
responsibility of the common carrier lasts
from
the
time
the
goods
are
unconditionally placed in the possession
of, and received by the carrier for
transportation
until
the
same
are
delivered, actually or constructively, by
the carrier to the consignee, or to the
person who has a right to receive them,
without prejudice to the provisions of
article 1738.
There is no doubt that Art. 1738 finds no
applicability to the instant case. The said article
contemplates a situation where the goods had
already reached their place of destination and are
stored in the warehouse of the carrier. The
subject goods were still awaiting transshipment
to their port of destination, and were stored in the
warehouse of a third party when last seen and/or
heard of.
However, Article 1736 is applicable to the instant
suit. Under said article, the carrier may be

Ruling:
UNIVERSITY OF CEBU COLLEGE OF LAWPage 118
LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

relieved of the responsibility for loss or damage


to the goods upon actual or constructive delivery
of the same by the carrier to the consignee, or to
the person who has a right to receive them.
There is actual delivery in contracts for the
transport of goods when possession has been
turned over to the consignee or to his duly
authorized agent and a reasonable time is given
him to remove the goods. The court a quo found
that there was actual delivery to the consignee
through its duly authorized agent, the carrier.
It becomes necessary at this point to dissect the
complex relationship that had developed between
appellant and appellee in the course of the
transactions. Two undertakings are embodied
and/or provided for in the Bill of Lading in
question. The first is FOR THE TRANSPORT OF
GOODS from Bremen, Germany to Manila. The
second, THE TRANSSHIPMENT OF THE SAME
GOODS from Manila to Davao, with appellant
acting as agent of the consignee.
When the subject goods are discharged in Manila,
its personality changes from that of carrier to that
of agent of the consignee. Thus, the character of
appellant's possession also changes, from
possession in its own name as carrier, into
possession in the name of consignee as the
latter's agent. Such being the case, there was, in
effect, actual delivery of the goods from appellant
as carrier to the same appellant as agent of the
consignee. Upon such delivery, the appellant, as
erstwhile carrier, ceases to be responsible for any
loss or damage that may befall the goods from
that point onwards.
But even as agent of the consignee, the appellant
cannot be made answerable for the value of the
missing goods, It is true that the transshipment of
the goods, which was the object of the agency,
was not fully performed. However, appellant had
commenced said performance, the completion of
which was aborted by circumstances beyond its
control. An agent who carries out the orders and
instructions of the principal without being guilty
of negligence, deceit or fraud, cannot be held
responsible for the failure of the principal to
accomplish the object of the agency

The records fail to reveal proof of negligence,


deceit or fraud committed by appellant or by its
representative in the Philippines. Neither is there
any showing of notorious incompetence or
insolvency on the part of AMCYT, which acted as
appellant's substitute in storing the goods
awaiting transshipment.
The actions of appellant carrier and of its
representative in the Philippines being in full faith
with the lawful stipulations of Bill of Lading No. 18
and in conformity with the provisions of the New
Civil Code on common carriers, agency and
contracts, they incur no liability for the loss of the
goods in question.
14. G.R. No. 60673, May 19, 1992
PAN AMERICAN WORLD AIRWAYS, INC.
vs.JOSE K. RAPADAS and THE COURT OF
APPEALS
Facts:
Private respondent held passenger ticket and
baggage claim check for petitioners flight with
the route from Guam to Manila. While standing in
line to board the flight at the Guam Airport,
Rapadas was ordered by petitioners hand carry
control agent to check in his samsonite attach
case. Rapadas protested pointing to the fact that
other co-passengers were permitted to hand
carry baggage. He stepped out of the line only to
go back again at the end of it to try of he can get
through without having to register his attach
case. However, the same control agent ordered
him again to register his baggage. Upon arriving
in Manila on the same day, Rapadas claimed and
was given all his checked in baggage except the
attach case. Rapadas filed an action for
damages. Petitioner-defendant acknowledged
responsibility for the loss of the attache case but
asserted that the claim was subject to the "Notice
of Baggage Liability Limitations" allegedly
attached to and forming part of the passenger
ticket.
The trial court ruled, which was affirmed in toto
by the CA, that the petitioner can not avail of a

UNIVERSITY OF CEBU COLLEGE OF LAWPage 119


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

limitation of liabilities for lost baggages of a


passenger
Issue:

recover expenses for litigation in the amount of


P5,000.00. Article 22(4) of the Warsaw
Convention, as amended does not preclude an
award of attorney's fees.

1. Whether or not the limitations of liability set


forth in the Warsaw Convention shall apply in
case of loss, damage or destruction to a
registered luggage of a passenger.
2. Whether or not private respondent should be
paid attorneys fees.

15. G.R. No. 101538, June 23, 1992


AUGUSTO
BENEDICTO
SANTOS
III,
represented by his father and legal
guardian,
Augusto
Benedicto
Santos
vs.NORTHWEST
ORIENT
AIRLINES
and
COURT OF APPEALS

Ruling:

Facts:

1. Yes. There is no dispute and the courts below


admit that there was such a notice appearing on
the airline ticket stating that the Warsaw
Convention governs in case of death or injury of
passengers or of loss, damage or destruction to a
passengers luggage. Furthermore, paragraph 2
of the "Conditions of Contract" also appearing on
the ticket states: Carriage hereunder is subject to
the rules and limitations relating to liability
established by the Warsaw Convention unless
such carriage is not "international carriage" as
defined by that Convention.

Augusto Benedicto Santos III is a minor


represented by his dad. In October 1986, he
bought a round trip ticket from Northwest Orient
Airlines (NOA) in San Francisco. His flight would
be from San Francisco to Manila via Tokyo and
back to San Francisco. His scheduled flight was in
December. A day before his departure he checked
with NOA and NOA said he made no reservation
and that he bought no ticket. The next year, due
to the incident, he sued NOA for damages. He
sued NOA in Manila. NOA argued that Philippine
courts have no jurisdiction over the matter
pursuant to Article 28(1) of the Warsaw
Convention, which provides that complaints
against international carriers can only be
instituted in:
1. The court of the domicile of the carrier
(NOAs domicile is in the USA);
2. The court of its principal place of business
(which is San Francisco, USA);
3. The court where it has a place of business
through which the contract had been
made (ticket was purchased in San
Francisco so thats where the contract was
made);
4. The court of the place of destination
(Santos bought a round trip ticket which
final destination is San Francisco).

The arguments of the petitioner do not belie the


fact that it was indeed accountable for the loss of
the attache case. What the petitioner is
concerned about is whether or not the notice,
which it did not fail to state in the plane ticket
and which it deemed to have been read and
accepted by the private respondent will be
considered by this Court as adequate under the
circumstances of this case. As earlier stated, the
Court finds the provisions in the plane ticket
sufficient to govern the limitations of liabilities of
the airline for loss of luggage. The passenger,
upon contracting with the airline and receiving
the plane ticket, was expected to be vigilant
insofar as his luggage is concerned. If the
passenger fails to adduce evidence to overcome
the stipulations, he cannot avoid the application
of the liability limitations.
2. Yes. The Court sustains the finding of the trial
court and the respondent appellate court that it is
just and equitable for the private respondent to

The lower court ruled in favor of NOA. Santos III


averred that Philippine courts have jurisdiction
over the case and he questioned the
constitutionality of Article 28 (1) of the Warsaw
Convention.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 120


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Issue:
Whether or not Philippine courts have jurisdiction
over the matter to conduct judicial review.
Ruling:
No. The Supreme Court ruled that they cannot
rule over the matter for the SC is bound by the
provisions of the Warsaw Convention which was
ratified by the Senate. Until & unless there would
be amendment to the Warsaw Convention, the
only remedy for Santos III is to sue in any of the
place indicated in the Convention such as in San
Francisco, USA.
The SC cannot rule upon the constitutionality of
Article 28(1) of the Warsaw Convention. In the
first place, it is a treaty which was a joint act by
the
legislative
and
the
executive.
The
presumption is that it was first carefully studied
and determined to be constitutional before it was
adopted and given the force of law in this country.
In this case, Santos was not able to offer any
compelling
argument
to
overcome
the
presumption.
16. G.R. No. L-42926, September 13, 1985
PEDRO VASQUEZ, SOLEDAD ORTEGA, CLETO
B. BAGAIPO, AGUSTINA VIRTUDES, ROMEO
VASQUEZ and MAXIMINA CAINAYvs.THE
COURT OF APPEALS and FILIPINAS PIONEER
LINES, INC.
Facts:
When the inter-island vessel MV "Pioneer Cebu"
left the Port of Manila in the early morning of May
15, 1966 bound for Cebu, it had on board the
spouses Alfonso Vasquez and Filipinas Bagaipo
and a four-year old boy, Mario Marlon Vasquez,
among her passengers. The MV "Pioneer Cebu"
encountered typhoon "Klaring" and struck a reef
on the southern part of Malapascua Island,
located somewhere north of the island of Cebu
and subsequently sunk. The aforementioned
passengers were unheard from since then.

Plaintiffs Pedro Vasquez and Soledad Ortega are


the parents of Alfonso Vasquez; plaintiffs Cleto
Bagaipo and Agustina Virtudes are the parents of
Filipinas Bagaipo; and plaintiffs Romeo Vasquez
and Maxima Cainay are the parents of the child,
Mario Marlon Vasquez. They seek the recovery of
damages due to the loss of Alfonso Vasquez,
Filipinas Bagaipo and Mario Marlon Vasquez
during said voyage.
At the pre-trial, the defendant admitted its
contract of carriage with Alfonso Vasquez,
Filipinas Bagaipo and Mario Marlon Vasquez, and
the fact of the sinking of the MV "Pioneer Cebu".
The MV "Pioneer Cebu" was owned and operated
by the defendant and used in the transportation
of goods and passengers in the inter-island
shipping. Scheduled to leave the Port of Manila at
9:00 p.m. on May 14, 1966, it actually left port at
5:00 a.m. the following day, May 15, 1966. It had
a passenger capacity of three hundred twentytwo (322) including the crew. It undertook the
said voyage on a special permit issued by the
Collector of Customs inasmuch as, upon
inspection, it was found to be without an
emergency electrical power system. The special
permit authorized the vessel to carry only two
hundred sixty (260) passengers due to the said
deficiency and for lack of safety devices for 322
passengers. A headcount was made of the
passengers on board, resulting on the tallying of
168 adults and 20 minors, although the
passengers manifest only listed 106 passengers.
It has been admitted, however, that the
headcount is not reliable inasmuch as it was only
done by one man on board the vessel.
When the vessel left Manila, its officers were
already aware of the typhoon Klaring building up
somewhere in Mindanao. There being no typhoon
signals on the route from Manila to Cebu, and the
vessel having been cleared by the Customs
authorities, the MV "Pioneer Cebu" left on its
voyage to Cebu despite the typhoon. When it
reached Romblon Island, it was decided not to
seek shelter thereat, inasmuch as the weather
condition was still good. After passing Romblon
and while near Jintotolo island, the barometer still

UNIVERSITY OF CEBU COLLEGE OF LAWPage 121


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

indicated the existence of good weather condition


continued until the vessel approached Tanguingui
island. Upon passing the latter island, however,
the weather suddenly changed and heavy rains
felt Fearing that due to zero visibility, the vessel
might hit Chocolate island group, the captain
ordered a reversal of the course so that the
vessel could 'weather out' the typhoon by facing
the winds and the waves in the open.
Unfortunately, at about noontime on May 16,
1966, the vessel struck a reef near Malapascua
island, sustained leaks and eventually sunk,
bringing with her Captain Floro Yap who was in
command of the vessel.

owner also extends to the value of vessel and the


insurance proceeds thereon.

Due to the loss of their children, petitioners sued


for damages before the Court of First Instance of
Manila. Respondent defended on the plea of force
majeure, and the extinction of its liability by the
actual total loss of the vessel.

The plaintiff, Philippine Bar Association, a civicnon-profit association, incorporated under the
Corporation Law, decided to construct an office
building on its 840 square meters lot located at
the comer of Aduana and Arzobispo Streets,
Intramuros, Manila. The construction was
undertaken by the United Construction, Inc. on an
"administration" basis, on the suggestion of Juan
J. Carlos, the president and general manager of
said corporation. The proposal was approved by
plaintiff's board of directors and signed by its
president Roman Ozaeta, a third-party defendant
in this case. The plans and specifications for the
building were prepared by the other third-party
defendants Juan F. Nakpil & Sons. The building
was completed in June, 1966.

Issues:
1. Whether or not it is a fortuitous event.
2. Whether or not respondents are liable.
Ruling:
1. No. It is not a caso fortuito. The elements to
consider in sustaining a case of caso fortuito are
the following:
1) the event must be independent of the human
will,
2) the occurrence must render it impossible for
the debtor to fulfill the obligation in a normal
manner,
3) the obligor must be free of participation in,
aggravation of, the injury to the creditor,
2. Petitioners are liable as it is not a caso
fortutito. There is no caso fortuito when the ship
captain proceeded en route despite a typhoon
advice close to the area where the vessel will
pass. Moreover, the Board of Marines inquiry
conclusion that the ship captain was not
negligent is not binding on the Court when said
finding is not complete. The liability of the ship

SPECIAL CONTRACTS
CONTRACT FOR A PIECE OF WORK
1. G.R. No. L-47851, October 3, 1986
JUAN F. NAKPIL & SONS, and JUAN F. NAKPIL
vs.THE
COURT
OF
APPEALS,
UNITED
CONSTRUCTION COMPANY, INC., JUAN J.
CARLOS,
and
the
PHILIPPINE
BAR
ASSOCIATION
Facts:

In the early morning of August 2, 1968 an


unusually strong earthquake hit Manila and its
environs and the building in question sustained
major damage. The front columns of the building
buckled, causing the building to tilt forward
dangerously. The tenants vacated the building in
view of its precarious condition. As a temporary
remedial measure, the building was shored up by
United Construction, Inc. at the cost of
P13,661.28.
On November 29, 1968, the plaintiff commenced
this action for the recovery of damages arising
from the partial collapse of the building against
United Construction, Inc. and its President and
General Manager Juan J. Carlos as defendants.
Plaintiff alleges that the collapse of the building

UNIVERSITY OF CEBU COLLEGE OF LAWPage 122


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

was accused by defects in the construction, the


failure of the contractors to follow plans and
specifications and violations by the defendants of
the terms of the contract.
Defendants in turn filed a third-party complaint
against the architects who prepared the plans
and specifications, alleging in essence that the
collapse of the building was due to the defects in
the said plans and specifications. Roman Ozaeta,
the then president of the plaintiff Bar Association
was included as a third-party defendant for
damages for having included Juan J. Carlos,
President of the United Construction Co., Inc. as
party defendant.

United Pioneers General Construction Company is


a general partnership formed by Benjamin Daco,
Daniel Guizona, Noel Sim, Augusto Palisoc and
Romulo Lumauig. In 1961, United Pioneers
purchased by installment a motor vehicle from
Island Sales, Inc. United Pioneers defaulted in its
payment hence it was sued and the 5 partners
were impleaded as co-defendants.
Upon motion of Island Sales,
removed as a defendant.

Lumauig was

Whether or not the petitioner is liable for


damages.

United Pioneers lost the civil case and the trial


court rendered judgment ordering United
Pioneers to pay the outstanding balance plus
interest and costs. It further decreed that the
remaining 4 co-defendants shall pay Island Sales
in case United Pioneers property will not be
enough to satisfy its indebtedness to Island Sales.

Ruling:

Issue:

Yes. The petitioner made substantial deviations


from the plans and specifications and failed to
observe requisite workmanship standards in the
construction of the building while their architect
drew plans that contain defects and other
inadequacies. Both the contractor and the
architect cannot escape liability for damages
when the building collapsed due to an
earthquake. Other buildings in the area withstood
the tremor. The lower court also found that the
spirals in one of the columns in the ground floor
have been cut. One who creates a dangerous
condition cannot escape liability even if an act of
God may have intervened as in this case. As
such, the liability of the contractor (herein
petitioner) and the architect for the collapse of
the building is solidary.

What is the extent of the liability of the partners


considering that one partner was removed as a
co-defendant on motion of Island Sales?

Issue:

SPECIAL CONTRACTS PARTNERSHIP


1. G.R. No. L-22493, July 31, 1975
ISLAND SALES, INC. vs. UNITED PIONEERS
GENERAL CONSTRUCTION COMPANY, ET. AL
defendants. BENJAMIN C. DACO

Ruling:
Their liability is pro-rata pursuant to Article 1816
of the Civil Code. But it should be noted that
since there were 5 partners when the purchase
was made in behalf of the partnership, the
liability of each partner should be 1/5th (of the
companys obligation) each. The fact that the
complaint against Lumauig was dismissed, upon
motion of the Island Sales, does not unmake
Lumauig as a general partner in the company. In
so moving to dismiss the complaint, Island Sales
merely condoned Lumauigs individual liability to
them.
2. G.R. No. L-25532, February 28, 1969
COMMISSIONER OF INTERNAL REVENUE vs.
WILLIAM J. SUTER and THE COURT OF TAX
APPEALS
Facts:

Facts:
UNIVERSITY OF CEBU COLLEGE OF LAWPage 123
LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

A limited partnership named William J. Suter


'Morcoin' Co., Ltd was formed 30 September 1947
by William J. Suter as the general partner, and
Julia Spirig and Gustav Carlson. They contributed,
respectively,
P20,000.00,
P18,000.00
and
P2,000.00. it was also duly registered with the
SEC. On 1948 Suter and Spirig got married and in
effect Carlson sold his share to the couple, the
same was also registered with the SEC.
The limited partnership had been filing its income
tax returns as a corporation, without objection by
the herein petitioner, Commissioner of Internal
Revenue, until in 1959 when the latter, in an
assessment, consolidated the income of the firm
and the individual incomes of the partnersspouses Suter and Spirig resulting in a
determination of a deficiency income tax against
respondent Suter in the amount of P2,678.06 for
1954 and P4,567.00 for 1955.
Issue:
Whether or not the limited partnership has been
dissolved after the marriage of Suter and Spirig
and buying the interest of limited partner Carlson.
Ruling:
No, the limited partnership was not dissolved.
A husband and a wife may not enter into a
contract of general copartnership, because under
the Civil Code, which applies in the absence of
express provision in the Code of Commerce,
persons prohibited from making donations to
each other are prohibited from entering into
universal partnerships. It follows that the
marriage of partners necessarily brings about the
dissolution of a pre-existing partnership.
What the law prohibits was when the spouses
entered into a general partnership. In the case at
bar, the partnership was limited.
3. G.R. No. L-27343, February 28, 1979
MANUEL G. SINGSONG, JOSE BELZUNCE,
AGUSTIN E. TONSAY, JOSE L. ESPINOS,
BACOLOD SOUTHERN LUMBER YARD, and

OPPEN,
ESTEBAN,
INC.
vs.
ISABELA
SAWMILL, MARGARITA G. SALDAJENO and
her husband CECILIO SALDAJENO LEON
GARIBAY, TIMOTEO TUBUNGBANUA, and THE
PROVINCIAL
SHERIFF
OF
NEGROS
OCCIDENTAL, defendants, MARGARITA G.
SALDAJENO and her husband CECILIO
SALDAJENO
Facts:
Petitioners filed in the Court of First Instance of
Negros Occidental against Respondents a
complaint praying for a writ of preliminary
injunction restraining the Sheriff from proceeding
with the sales at public auction, and to declare
null and void the Chattel Mortgage executed by
defendants in favor of defendant Saldajeno, being
in fraud of creditors of the defendant partnership.
Defendants Leon Garibay, Margarita G. Saldejeno,
and Timoteo Tubungbanua had entered into a
Contract of Partnership under the firm name
"Isabela Sawmill. Civil Case No. 4797 was filed
by the spouses Cecilio Saldajeno and Margarita G.
Saldajeno against the Isabela Sawmill, Leon
Garibay, and Timoteo Tubungbanua. The same
defendants executed a document entitled
"Assignment of Rights with Chattel Mortgage".
Thereafter, the defendants Leon Garibay and
Timoteo Tubungbanua did not divide the assets
and properties of the "Isabela Sawmill" between
them, despite the withdrawal of defendant
Saldajeno, they continued the business of said
partnership under the same firm name "Isabela
Sawmill".
Provincial Sheriff of Negros Occidental executed a
Certificate of Sale in favor of the defendant
Margarita G. Saldajeno, as a result of the sale
conducted for the enforcement of the judgment
rendered in Civil Case No. 5223 of the Court of
First Instance of Negros Occidental.
After trial, judgment was rendered in favor of the
plaintiffs and against the defendants. Thereafter,
defendants appealed to the CA. CA certified the
records of this case to the Supreme Court

UNIVERSITY OF CEBU COLLEGE OF LAWPage 124


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

"considering that the resolution of this appeal


involves purely questions or question of law.

annulment of a judgment and an order of a court


of justice belongs to the category.

It is contended by the appellants that the Court of


First Instance of Negros Occidental had no
jurisdiction over Civil Case No. 5343 because the
plaintiffs Oppen, Esteban, Inc., Agustin R. Tonsay,
Jose L. Espinos and the Bacolod Southern Lumber
Yard sought to collect sums of moeny, the biggest
amount of which was less than P2,000.00 and,
therefore, within jurisdiction of the municipal
court.

In determining whether an action is one the


subject matter of which is not capable of
pecuniary estimation this Court has adopted the
criterion of first ascertaining the nature of the
principal action or remedy sought. If it is primarily
for the recovery of a sum of money, the claim is
considered capable of pecuniary estimation, and
whether jurisdiction is in the municipal courts or
in the courts of first instance would depend on
the amount of the claim. However, where the
basic issue is something other than the right to
recover a sum of money, where the money claim
is purely incidental to, or a consequence of, the
principal relief sought, this Court has considered
such actions as cases where the subject of the
litigation may not be estimated in terms of
money, and are cognizable exclusively by courts
of first instance.

Issue:
Whether or not the Court of First Instance has
jurisdiction over the case.
Ruling:
Court of First Instance of Negros Occidental did
no err in exercising jurisdiction over Civil Case No.
5343.
Appellants contention is devoid of merit because
all the plaintiffs also asked for the nullity of the
assignment of right with chattel mortgage
entered into by and between Margarita G.
Saldajeno and her former partners Leon Garibay
and Timoteo Tubungbanua. This cause of action is
not capable of pecuniary estimation and falls
under the jurisdiction of the Court of First
Instance. Where the basic issue is something
more than the right to recover a sum of money
and where the money claim is purely incidental to
or a consequence of the principal relief sought,
the action is as a case where the subject of the
litigation is not capable of pecuniary estimation
and is cognizable exclusively by the Court of First
Instance.
The jurisdiction of all courts in the Philippines, in
so far as the authority thereof depends upon the
nature of litigation, is defined in the amended
Judiciary Act, pursuant to which courts of first
instance shall have exclusive original jurisdiction
over any case the subject matter of which is not
capable of pecuniary estimation. An action for the

SPECIAL CONTRACTS AGENCY


1. G.R. No. 75640, April 5, 1990
NATIONAL FOOD AUTHORITY, (NFA) vs.
INTERMEDIATE
APPELLATE
COURT,
SUPERIOR (SG) SHIPPING CORPORATION
Facts:
Medalla, as commission agent of Superior
Shipping Corporation (SSC), entered into a
contract for hire of ship with the National Grains
Authority (NGA), where sacks of rice belonging to
the latter would be transported from Occidental
Mindoro to Manila. SSC then asked payments
from NGA and it requested that the payment be
made to it and not to Medalla. NGA replied that it
could not grant its request because the contract
was entered into by NGA and Medalla who did not
disclose that he was acting as a mere agent of
SSC. NGA paid Medalla. The SSC asked Medalla
for the payment but the latter ignored the
request.
Issue:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 125


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Whether or not National Grains Authority is liable


to Superior Shipping Corporation.

the properties distributed accordingly. Special


Proceedings No. 512 was then closed.

Ruling:

It appears also that, as early as March of 1947,


the widow of the late Vicente Perez inquired by
letter from the Bank the status of her husband's
account; and she was informed that there was an
outstanding balance thereon of P2,758.84
earning a daily interest of P0.4488. She was
furnished a copy of the mortgage and, on April 2,
1947, a copy of the Tax Declaration (Rec. App. pp.
45-48).

NGA is liable under Art 1883 of the Civil Code.


Relevant portion of the provision states, In such
case the agent is the one directly bound in favor
of the person with whom he has contracted, as if
the transaction were his own, except when the
contract involves things belonging to the
principal.
Consequently, when things belonging to the
principal (in this case, SSC) are dealt with, the
agent is bound to the principal although he does
not assume the character of such agent and
appears acting in his own name. Thus, in effect,
the contract must be considered as entered into
between the principal and the third person.
2. G.R. No. L-21813, July 30, 1966
AMPARO G. PEREZ, ET AL. vs. PHILIPPINE
NATIONAL BANK, Binalbagan Branch, ET AL.
Facts:
On August 29, 1939, Vicente Perez mortgaged Lot
No. 286-E of the Kabankalan Cadastre, with
Transfer certificate of Title No. 29530, to the
appellant Philippine National Bank, Bacolod
Branch, in order to secure payment of a loan of
P2,500, plus interest, payable in yearly
installments. On October 7, 1942, Vicente Perez,
mortgagor, died intestate, survived by his widow
and children (appellees herein). At that time,
there was an outstanding balance of P1,917.00,
and corresponding interest, on the mortgage
indebtedness.
On October 18, 1956, the widow of Perez
instituted Special Proceedings No. 512 of the
Court of First Instance of Occidental Negros for
the settlement of the estate of Vicente Perez. The
widow was appointed Administratrix and notice to
creditors was duly published. The Bank did not
file a claim. The project of partition was
submitted on July 18, 1956; it was approved and

On January 2, 1963, the Bank, pursuant to


authority granted it in the mortgage deed,
caused the mortgaged properties to be
extrajudicially foreclosed. The Provincial Sheriff
accordingly sold Lot No. 286-E at auction, and it
was purchased by the Bank. In the ordinary
course after the lapse of the year of redemption,
Certificate of Title No. T-29530 in the name of
Vicente Perez was cancelled, and Certificate T32066, dated May 11, 1962, was issued in the
name of the Bank. The widow and heirs were not
notified.
Three months later, on August 15, 1962, the
widow and heirs of Vicente Perez instituted this
case against the Bank in the court below, seeking
to annul the extra-judicial foreclosure sale and
the transfer of the Certificate of Title as well as to
recover damages, claiming that the Bank had
acted illegally and in bad faith. The Bank
answered, denying the charges. After trial, the
court a quo, on December 15, 1962, rendered
judgment holding that, according to the doctrine
of this Supreme Court in Pasno vs. Ravina 54 Phil.
382, the Bank should have foreclosed its
mortgage in court; that the power to sell
contained in the deed of mortgage had
terminated upon the death of the mortgagor,
Vicente Perez. Wherefore, the trial court declared
null and void the extra-judicial foreclosure sale to
the Bank, as well as the cancellation of the
Certificate of Title of Vicente Perez and issuance
in its stead of a new certificate in the name of the
Bank, and ordered the latter to pay the plaintiffs
P3,000 damages and P2,000 attorney's fees and
cost.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 126


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Issue:
Whether or not the foreclosure by the Bank under
its power of sale is barred upon death of the
debtor, because agency is extinguished by the
death of the principal.
Ruling:
No. The ruling in Pasno vs. Ravina not having
been reiterated in any other case, We have
carefully reexamined the same after mature
deliberation have reached the conclusion that the
dissenting opinion is more in conformity with
reason and law. Of the three alternative courses
that section 7, Rule 87 (now Rule 86), offers the
mortgage creditor, to wit, (1) to waive the
mortgage and claim the entire debt from the
estate of the mortgagor as an ordinary claim; (2)
to foreclose the mortgage judicially and prove
any deficiency as an ordinary claim; and (3) to
rely on the mortgage exclusively, foreclosing the
same at any time before it is barred by
prescription, without right to file a claim for any
deficiency, the majority opinion in Pasno vs.
Ravina, in requiring a judicial foreclosure, virtually
wipes out the third alternative conceded by the
Rules to the mortgage creditor, and which would
precisely include extra-judicial foreclosures by
contrast with the second alternative. This result
we do not consider warranted by the text of the
Rules; and, in addition, the recognition of
creditor's right to foreclose extra-judicially
presents undoubted advantages for the estate of
the mortgagor, as pointed out by the dissenting
opinion in Pasno vs. Ravina, supra. In the light of
these considerations, we have decided to
overrule the majority decision in said case, and
uphold the right of the mortgage creditor to
foreclose extra-judicially in accordance with
section 7, Rule 86, of the Revised Rules (old Rule
87).
The argument that foreclosure by the Bank under
its power of sale is barred upon death of the
debtor, because agency is extinguished by the
death of the principal, under Article 1732 of the
Civil Code of 1889 and Article 1919 of the Civil

Code of the Philippines, neglects to take into


account that the power to foreclose is not an
ordinary agency that contemplates exclusively
the representation of the principal by the agent
but is primarily an authority conferred upon the
mortgagee for the latter's own protection. It is, in
fact, an ancillary stipulation supported by the
same causa or consideration for the mortgage
and forms an essential and inseparable part of
that bilateral agreement. As can be seen in the
preceding quotations from Pasno vs. Ravina, 54
Phil. 382, both the majority and the dissenting
opinions conceded that the power to foreclose
extrajudicially survived the death of the
mortgagor, even under the law prior to the Civil
Code of the Philippines now in force.
Nevertheless, while upholding the validity of the
appellant Bank's foreclosure, We cannot close our
eyes to the fact that the Bank was apprised since
1947 of the death of its debtor, Vicente Perez, yet
it failed and neglected to give notice of the
foreclosure to the latter's widow and heirs as
expressly found by the court a quo. Such failure,
in effect, prevented them from blocking the
foreclosure through seasonable payment, as well
as impeded their effectuating a seasonable
redemption. In view of these circumstances, it is
our view that both justice and equity would be
served by permitting herein appellees to redeem
the foreclosed property within a reasonable time,
by paying the capital and interest of the
indebtedness up to the time of redemption, plus
foreclosure and useful expenses, less any rents
and profits obtained by the Bank from and after
the same entered into its possession.
SPECIAL CONTRACTS CREDIT
TRANSACTIONS
1. G.R. No. L-20978, February 28, 1966
THE
PHILIPPINE
AMERICAN
GENERAL
INSURANCE COMPANY, INC. vs. EUGENIO B.
RAMOS, and PILAR MIRANDA
Facts:
Associated
Reclamation
&
Development
Corporation executed on March 29, 1961 a

UNIVERSITY OF CEBU COLLEGE OF LAWPage 127


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

promissory note for P11,765 in favor of General


Acceptance & Finance Corporation. Philippine
American General Insurance Co., Inc., on the
same date, executed a surety bond in the amount
of P11,765 to secure payment of the
aforementioned promissory note. Subsequently,
on April 5, 1961, the spouses Eugenio Ramos and
Pilar
Miranda
signed
a
counter-guaranty
agreement with real estate mortgage, in favor of
Philippine American General Insurance Co., Inc.,
against its liability under the surety bond. The
next day, April 6, 1961, the Ramos spouses and
Associated
Reclamation
&
Development
Corporation executed an indemnity agreement in
favor of Philippine American General Insurance
Co., Inc., thereunder binding themselves "jointly
and severally" to indemnify the Philippine
American General Insurance Co., Inc., for
whatever it may suffer under its aforesaid surety
bond.
Philippine American General Insurance Co., Inc.,
on November 3, 1961, filed a complaint in the
Court of First Instance of Bataan against the
Ramos spouses. Attached to the complaint, as
parts thereof, were (1) the surety bond
agreement of March 29, 1961, and (2) the
counter-guaranty with real estate mortgage
agreement of April 6, 1961. Plaintiff alleged that
Associated
Reclamation
&
Development
Corporation failed to pay its obligation under the
promissory note, as a result of which plaintiff paid
its liability under its surety bond in the sum of
P11,765. It therefore asked that defendants be
ordered jointly and severally to pay plaintiff
P11,765 with the stipulated 12% per annum
interest, plus attorneys fees and costs. In the
event of non-payment thereof within 90 days
from service of judgment, it was further prayed
that the mortgaged property be sold to realize
the aforesaid sum and costs, with a deficiency
judgment if necessary.
Defendants on January 26, 1962 filed a motion to
dismiss, asserting that the complaint stated no
cause of action. It was contended that under the
Agreement of Counter-Guaranty with Real Estate
Mortgage, the defendants were guarantors only
so that plaintiff must first exhaust the properties

of the principal debtor, Associated Reclamation &


Development Corporation, before proceeding
against defendants.
Plaintiff thereafter filed, on February 10, 1962, an
amended complaint. Incorporated thereto and
made parts of said amended complaint were (1)
the surety bond agreement, as Schedule A; (2)
the indemnity agreement of April 6, 1961, as
Schedule B; and (3) the Agreement of CounterGuaranty with Real Estate Mortgage, as Schedule
C. It prayed for the same relief as the original
complaint.
Sustaining the ground of defendants motion, the
Court of First Instance issued an order on August
31, 1962 dismissing the case. Said court ruled
that under Schedules B and C of the amended
complaint, defendants cannot be made liable
without first proceeding against Associated
Reclamation & Development Corporation.
Issue:
Whether
or
not,
under
the
counterguaranty/agreement, the defendants as counterguarantors are entitled to demand exhaustion of
the properties of the principal debtor.
Ruling:
No. It is clear from the foregoing that the
amended complaint sufficiently states a cause of
action against defendants. For the creditor may
proceed against any one of the solidary debtors
or some or all of them simultaneously (Art. 1216,
New Civil Code). It should not be overlooked, also,
that the above-quoted indemnity agreement
could not have been modified by Schedule C, the
counter-guaranty agreement since the former
was executed one day after the latter.
Finally, even under Schedule C, the defendants as
counter- guarantors are not entitled to demand
exhaustion of the properties of the principal
debtor. For Schedule C is a counter-guaranty with
real estate mortgage. It is accepted that
guarantors have no right to demand exhaustion
of the properties of the principal debtor, under

UNIVERSITY OF CEBU COLLEGE OF LAWPage 128


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Article 2058 of the New Civil Code, where a


pledge or mortgage has been given as a special
security (Saavedra v. Price, 68 Phil. 688;
Southern Motors v. Barbosa, 53 O.G. 137).

2. G.R. No. L-27132, April 29, 1971


PHILIPPINE NATIONAL BANK vs. MANILA
INVESTMENT & CONSTRUCTION, INC. and
CIPRIANO S. ALLAS
Facts:
The Court of First Instance of Manila rendered
decision condemning defendants, jointly and
severally, to pay plaintiff an amount of
P88,939.48 and P356,913.01, based on first and
second causes of action, plus interests and
attorneys fees in favor of the plaintiff.
In case of non-payment of the amounts adjudged,
the decision also provided for the sale at public
auction of the personal properties covered by the
chattel mortgage executed by the defendants in
favor of the plaintiff Bank, and for the disposition
of the proceeds in accordance with law.
After the decision had become executory, instead
of having the mortgaged personal properties sold
at public auction, the parties agreed to have
them sold, and were in fact sold, at a private sale.
The net proceeds obtained therefrom amounting
to P256,941.70 were applied to the partial
satisfaction of the above judgment.
On August 11, 1964, that is, more than five years
but less than ten years from the date when the
decision aforesaid became executory, the
Philippine National Bank filed in the same Court
of First Instance of Manila an action to revive it.
The defendants filed their answer in which,
saying that sometime after the judgment
rendered by the Court of First Instance of Manila
became final and executory, plaintiff sold to
various parties in a private sale the mortgaged
properties specifically mentioned in the judgment

to be foreclosed and sold at public auction hence


the proceeds thereof must therefore be
accounted by plaintiff to the defendants in order
that the same be properly and accordingly
applied to the judgment. However, plaintiff never
rendered an accounting of the proceeds of the
sale of the mortgaged properties to the
defendants; hence, plaintiff has no cause of
action in reviving the aforesaid judgment not until
it has rendered proper accounting to the
defendants of the proceeds of the aforesaid sale.
The court rendered the appealed decision
ordering the defendants to pay the plaintiff,
jointly and severally, the amount of THREE
HUNDRED EIGHTY TWO THOUSAND THREE
HUNDRED
THIRTY
EIGHT
AND
47/100
(P382,338.47) PESOS, with interest at the legal
rate from August 12, 1964 until fully paid.
The defendants appealed to secure a reversal of
the above decision claiming firstly, that the action
instituted below is not the proper remedy;
secondly, that the private sale of the mortgaged
personal properties was null and void, and lastly,
that the appellee is not entitled to a deficiency
judgment.
Issue:
Whether or not the sale of the mortgaged
properties was valid.
Ruling:
We are of the opinion that, upon the facts of the
case and the law thereto applicable, appellants'
contentions are without merit.
While it is true that the decision of the Court of
First Instance of Manila provided for the sale at
public auction of the personal properties covered
by the chattel mortgage executed in favor of the
Bank, but it is likewise true that said personal
properties were sold at a private sale by
agreement between the parties. Besides, We see
nothing illegal, immoral or against public order in
such agreement entered into freely and
voluntarily. It is in line with the provisions of the

UNIVERSITY OF CEBU COLLEGE OF LAWPage 129


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

substantive law giving the contracting parties full


freedom to contract provided their agreement is
not contrary to law, morals, good customs, public
order or public policy (Article 1306, Civil Code of
the Philippines).
As the disposition of the mortgaged personalities
in a private sale was by agreement between the
parties, it is clear that appellants are now in
estoppel to question it except on the ground of
fraud or duress pleas that they do not invoke.
They do not even claim that the private sale
agreed upon had caused them substantial
prejudice.
On the appellants' contention that the appellee
Bank is not entitled to a deficiency judgment,
invoking the provisions of Article 2115 of the new
Civil Code. The issue thus raised was already
resolved in the negative in Ablaza vs. Ignacio,
G.R. No. L-11466, promulgated on March 23, 1958
where We said, inter alia, the following:
We are of the opinion that the trial court is
in error. It is clear from Article 2141 that
the provisions of the New Civil Code on
pledge shall apply to a chattel Mortgage
only in so far as they are not counter to
any provision of the Chattel Mortgage Law,
otherwise the provisions of the latter will
not apply. Here we find that the provisions
of the Chattel Mortgage with regard to the
effects of the foreclosure of a chattel
mortgage are precisely contrary to the
provisions of Article 2115 which were
applied by the trial Court.
It is clear, therefore, that the proceeds of the sale
of the mortgaged personal properties of the
herein appellants constitute only a pro tanto
satisfaction of the monetary award made by the
court and the appellee Bank is entitled to collect
the balance.
WHEREFORE, the decision appealed from is
hereby affirmed, with costs.
3. G.R. No. L-21836, April 22, 1975

CARRIED
LUMBER
COMPANY
vs.AGRICULTURAL
CREDIT
AND
COOPERATIVE FINANCING ADMINISTRATION
(ACCFA)
Facts:
Sta. Barbara Farmers Cooperative Marketing
Association, Inc. (Facoma) purchased on credit
from the lumber company materials used in the
construction of its warehouse. Facoma made
partial payments but was unable to pay the whole
amount due. Thus, a suit for recovery of the
amount was filed by the lumber comp against
Facoma and obtained a writ of execution over the
warehouse and ricemill building.
However, here comes ACCFA alleging that said a
mortgage over the same warehouse plus the
improvements on a certain parcel of lot was
already extra-judicially foreclosed for Facomas
failure to pay the loan contracted by it from
ACCFA.
Trial court rendered a decision in favor of the
lumber company ruling that it had a preferential
lien over the warehouse and ricemill of Facoma
than ACCFA. ACCFA, contends, however, that the
company waived its lien when it filed an ordinary
action to recover its claim instead of enforcing its
lien.
Issue:
Whether or not the materialmans/mechanics
lien (lumber companys lien) is superior to that of
the mortgage lien (ACCFAs lien).
Ruling:
The materialmans lien is not superior to that of a
mortgage lien.
It is not correct to say that the materialmans
(mechanics) lien or refectionary credit of the
lumber company, being listed as No. 4 in article
2242, is superior to the ACCFAs mortgage credit
which is listed as No. 5. The enumeration in

UNIVERSITY OF CEBU COLLEGE OF LAWPage 130


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

article 2242 is not an order of preference. That


article lists the credits which may concur with
respect to specific real properties and which
would be satisfied pro rata according to article
2249. It is just and proper that the two creditors
should havepro rata shares in that warehouse.
xxxxxxxxxxxxxxxxxxxxxxxx
The lumber company has no lien over the ricemill
building. The evidence for the lumber company
shows that it supplied materials only for the
construction of the warehouse. Thus, it has no
materialmans lien on the ricemill building.
4. G.R. No. L-56568, May 20, 1987
REPUBLIC OF THE PHILIPPINES, represented
by the Bureau of Customs and the Bureau of
Internal Revenue vs. HONORABLE E.L.
PERALTA, PRESIDING JUDGE OF THE COURT
OF FIRST INSTANCE OF MANILA, BRANCH
XVII, QUALITY TABACCO CORPORATION,
FRANCISCO, FEDERACION OBRERO DE LA
INDUSTRIA
TABAQUERA
Y
OTROS
TRABAJADORES DE FILIPINAS (FOITAF) USTC
EMPLOYEES ASSOCIATION WORKERS UNIONPTGWO

for their members, an amount similarly


awarded by the NLRC in the same NLRC
Case.
iii. P1,085,188.22 by the Bureau of Internal
Revenue for tobacco inspection fees
covering the period 1 October 1967 to 28
February 1973;
iv. P276,161.00 by the Bureau of Customs for
customs duties and taxes payable on
various importations by the Insolvent.
In its questioned Order, the trial court held that
the above-enumerated claims of USTC and
FOITAF (hereafter collectively referred to as the
"Unions") for separation pay of their respective
members embodied in final awards of the
National Labor Relations Commission were to be
preferred over the claims of the Bureau of
Customs and the Bureau of Internal Revenue. The
trial court, in so ruling, relied primarily upon
Article 110 of the Labor Code.
The Solicitor General, in seeking the reversal of
the questioned Orders, argues that Article 110 of
the Labor Code is not applicable as it speaks of
"wages," a term which he asserts does not
include the separation pay claimed by the Unions.

Facts:

Issue:

The Republic of the Philippines seeks the review


on certiorari of the Order of the Court of First
Instance of Manila in "In the Matter of Voluntary
Insolvency of Quality Tobacco Corporation,
Quality Tobacco Corporation, Petitioner," and of
the Order denying the motion for reconsideration
filed by the Bureau of Internal Revenue and the
Bureau of Customs for the Republic.

Whether or not the claim of separation pays are


preferred over the claims of BoC and BIR.

In
the
voluntary
insolvency
proceedings
commenced in May 1977 by private respondent
Quality Tobacco Corporation (the "Insolvent"), the
following claims of creditors were filed:
i. P2,806,729.92, by the USTC Association of
Employees and workers Union-PTGWO
USTC as separation pay for their members.
ii. P53,805.05 by the Federacion de la
Industria Tabaquera y Otros Trabajadores
de Filipinas ("FOITAF), as separation pay

Ruling:
We are unable to subscribe to the view urged by
the Solicitor General.
The resolution of the issue of priority among the
several claims filed in the insolvency proceedings
instituted by the Insolvent cannot, however, rest
on a reading of Article 110 of the labor Code
alone. Rather, Article 110 must be read in relation
to the provisions of the Civil Code concerning the
classification, concurrence and preference of
credits,
which
provisions
find
particular
application in insolvency proceedings where the
claims of all creditors, preferred or non-preferred,
may be adjudicated in a binding manner.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 131


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

Thus, the claim of the Bureau of Customs for


unpaid customs duties and taxes enjoys the
status of a specially preferred credit under Article
2241, No. 1, of the Civil Code. only in respect of
the articles importation of which by the Insolvent
resulted in the assessment of the unpaid taxes
and duties, and which are still in the custody or
subject to the control of the Bureau of Customs.
The goods imported on one occasion are not
subject to a lien for customs duties and taxes
assessed upon other importations though also
effected by the Insolvent. Customs duties and
taxes which remain unsatisfied after levy upon
the imported articles on which such duties and
taxes are due, would have to be paid out of the
Insolvent's "free property" in accordance with the
order of preference embodied in Article 2244 of
the Civil Code. Such unsatisfied customs duties
and taxes would fall within Article 2244, No. 9, of
the Civil Code and hence would be ninth in
priority.
As to Tobacco inspection fees are specifically
mentioned as one of the miscellaneous taxes
imposed under the National Internal Revenue
Code, the claim of the Bureau of Internal Revenue
for unpaid tobacco inspection fees constitutes a
claim for unpaid internal revenue taxes which
gives rise to a tax lien upon all the properties and
assets, movable and immovable, of the Insolvent
as taxpayer. Clearly, under Articles 2241 No. 1,
2242 No. 1, and 2246-2249 of the Civil Code, this
tax claim must be given preference over any
other claim of any other creditor, in respect of
any and all properties of the Insolvent.
With respect to the claims of the Unions for
Separation Pay of Their Members Article 110 of
the Labor Code does not purport to create a lien
in favor of workers or employees for unpaid
wages either upon all of the properties or upon
any particular property owned by their employer.
Claims for unpaid wages do not therefore fall at
all within the category of specially preferred
claims established under Articles 2241 and 2242
of the Civil Code, except to the extent that such
claims for unpaid wages are already covered by
Article 2241, number 6. "claims for laborers'
wages, on the goods manufactured or the work

done;" or by Article 2242, number 3: "claims of


laborers and other workers engaged in the
construction, reconstruction or repair of buildings,
canals and other works, upon said buildings,
canals or other works." To the extent that claims
for unpaid wages fall outside the scope of Article
2241, number 6 and 2242, number 3, they would
come within the ambit of the category of ordinary
preferred credits under Article 2244.
Applying Article 2241, number 6 to the instant
case, the claims of the Unions for separation pay
of their members constitute liens attaching to the
processed leaf tobacco, cigars and cigarettes and
other products produced or manufactured by the
Insolvent, but not to other assets owned by the
Insolvent. And even in respect of such tobacco
and tobacco products produced by the Insolvent,
the claims of the Unions may be given effect only
after the Bureau of Internal Revenue's claim for
unpaid tobacco inspection fees shall have been
satisfied out of the products so manufactured by
the Insolvent.
Article 2242, number 3, also creates a lien or
encumbrance upon a building or other real
property of the Insolvent in favor of workmen who
constructed or repaired such building or other
real property. Article 2242, number 3, does not
however appear relevant in the instant case,
since the members of the Unions to whom
separation pay is due rendered services to the
Insolvent not (so far as the record of this case
would show) in the construction or repair of
buildings or other real property, but rather, in the
regular course of the manufacturing operations of
the Insolvent. The Unions' claims do not therefore
constitute a lien or encumbrance upon any
immovable property owned by the Insolvent, but
rather, as already indicated, upon the Insolvent's
existing inventory (if any of processed tobacco
and tobacco products.
We come to the question of what impact Article
110 of the Labor Code has had upon the
complete scheme of classification, concurrence
and preference of credits in insolvency set out in
the Civil Code. We believe and so hold that Article
110 of the Labor Code did not sweep away the
overriding preference accorded under the scheme

UNIVERSITY OF CEBU COLLEGE OF LAWPage 132


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

of the Civil Code to tax claims of the government


or any subdivision thereof which constitute a lien
upon properties of the Insolvent. It is frequently
said that taxes are the very lifeblood of
government. The effective collection of taxes is a
task of highest importance for the sovereign. It is
critical indeed for its own survival. It follows that
language of a much higher degree of specificity
than that exhibited in Article 110 of the Labor
Code is necessary to set aside the intent and
purpose of the legislator that shines through the
precisely crafted provisions of the Civil Code. It
cannot be assumed simpliciter that the legislative
authority, by using in Article 110 the words "first
preference" and "any provision of law to the
contrary notwithstanding" intended to disrupt the
elaborate and symmetrical structure set up in the
Civil Code. Neither can it be assumed casually
that Article 110 intended to subsume the
sovereign itself within the term "other creditors"
in stating that "unpaid wages shall be paid in full
before other creditors may establish any claim to
a share in the assets of employer." Insistent
considerations of public policy prevent us from
giving to "other creditors" a linguistically
unlimited scope that would embrace the universe
of creditors save only unpaid employees.
Accordingly, and by way of recapitulating the
application of Civil Code and Labor Code
provisions to the facts herein, the trial court
should inventory the properties of the Insolvent
so as to determine specifically: (a) whether the
assets of the Insolvent before the trial court
includes stocks of processed or manufactured
tobacco products; and (b) whether the Bureau of
Customs still has in its custody or control articles
imported by the Insolvent and subject to the lien
of the government for unpaid customs duties and
taxes.
In respect of (a), if the Insolvent has inventories
of processed or manufactured tobacco products,
such inventories must be subjected firstly to the
claim of the Bureau of Internal Revenue for
unpaid tobacco inspection fees. The remaining
value of such inventories after satisfaction of
such fees (or should such inspection fees be
satisfied out of other properties of the Insolvent)

will be subject to a lien in favor of the Unions by


virtue of Article 2241, number 6. In case, upon
the other hand, the Insolvent no longer has any
inventory of processed or manufactured product,
then the claim of the Unions for separation pay
would have to be satisfied out of the "free
property" of the Insolvent under Article 2244 of
the Civil Code. as modified by Article 110 of the
Labor Code.
Turning to (b), should the Bureau of Customs no
longer have any importations by the Insolvent
still within customs custody or control, or should
the importations still held by the Bureau of
Customs be or have become insufficient in value
for the purpose, customs duties and taxes
remaining unpaid would have only ninth priority
by virtue of Article 2244, number 9. In respect
therefore of the Insolvent's "free property, " the
claims of the Unions will enjoy first priority under
Article 2244 as modified and will be paid ahead of
the claims of the Bureau of Customs for any
customs duties and taxes still remaining
unsatisfied.
WHEREFORE, the petition for review is granted
and the Orders dated 17 November 1980 and 19
January 1981 of the trial court are modified
accordingly. This case is hereby remanded to the
trial court for further proceedings in insolvency
compatible with the rulings set forth above. No
pronouncement as to costs. SO ORDERED.
5. G.R. No. 86227, January 19, 1994
DEVELOPMENT BANK OF THE PHILIPPINES
vs. THE NATIONAL LABOR RELATIONS
COMMISSION and MALAYANG SAMAHAN NG
MGA MANGAGAWA SA ATLAS TEXTILE
DEVELOPMENT CORPORATION
Facts:
Herein private respondent labor union filed on
January 10, 1986, a complaint. After hearing, the
Labor Arbiter rendered a decision on January 5,
1990, finding DBP jointly and severally liable with
Midland Cement for the payment of the
separation pay, as follows:

UNIVERSITY OF CEBU COLLEGE OF LAWPage 133


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

WHEREFORE, judgment is hereby rendered


giving due course to the complaint
thereby ordering the respondents DBP and
Midland Cement Corporation jointly and
severally liable for the separation pay of
the affected members of the complainant
union.
It appearing that as published in the
morning dailies lately that the assets of
Midland Cement Corporation are now
being offered for sale through public
bidding by the Asset Privatization Trust,
(APT) let copies of this decision be served
upon said APT to protect the interest of
the herein complainants.
DBP appealed, contending that its acquisition of
the mortgaged assets of Midland through
foreclosure sale did not make it the owner of the
defunct Midland Cement, and that the doctrine of
successor-employee is not applicable in this case,
since DBP did not continue the business
operations of Midland. The NLRC, while finding
merit in DBP's contention, nonetheless held DBP
liable since respondent's claim "constitutes a first
preference with respect to the proceeds of the
foreclosure sale" as provided in Article 110 of the
Labor Code:
Art. 110. Worker preference in case of
bankruptcy. In the event of bankruptcy
or liquidation of an employer's business,
his workers shall enjoy first preference as
regards their wages and other monetary
claims, any provisions of law to the
contrary notwithstanding. Such unpaid
wages and monetary claims shall be paid
in full before claims of the government
and other creditors may be paid. (p. 46,
Rollo)
Following the denial of its motion for
reconsideration, DBP filed the instant petition.
Issue:
Whether or not mortgage lied should be classified
as preferred credit.

Ruling:
DBP correctly points out that its mortgage lien
should not be classified as a preferred credit. The
issue raised was settled in Republic vs. Peralta
(150 SCRA 37 [1987]) and reinforced in DBP vs.
NLRC (183 SCRA 328 [1990]) wherein we held
because of its impact on the entire system of
credit, Article 110 of the Labor Code cannot be
viewed in isolation but must be read in relation to
the Civil Code scheme on classification and
preference of credits. Thus, a distinction should
be made between a preference of credit or a lien.
A preference applies only to claims which do not
attach to specific properties, A lien creates a
charge on a particular property. The right of first
preference as regards unpaid wages recognized
by Article 110 does not constitute a lien on the
property of the insolvent debtor in favor of
workers. It is but a preference of credit in their
favor, a preference in application. It is a method
adopted to determine and specify the order in
which credits should be paid in the final
distribution of the proceeds of the insolvent's
assets. It is a right to a first preference in the
discharge of the funds of the judgment debtor.
In fine, the right to preference given to workers
under Article 110 of the Labor Code cannot exist
in any effective way prior to the time of its
presentation in distribution proceedings. It will
find application when, in proceedings such as
insolvency, such unpaid wages shall be paid in
full before the "claims of the Government and
other creditors" may be paid. . . . (DBP vs, NLRC,
supra; pp. 337-339.)
The NLRC, therefore, erred in holding DBP liable
"to the extent of the proceeds of the foreclosure
sale." And making such liability dependent on a
bankruptcy or liquidation proceedings is really
beside the point, for these proceedings are
relevant only to preferred credits, which is not the
situation in the case at bar. To equate DBP's
mortgage lien with a preferred credit would be to
render inutile the protective mantle of the
mortgage in DBP's favor and thus in the process
wreak havoc to commercial transactions.

UNIVERSITY OF CEBU COLLEGE OF LAWPage 134


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

WHEREFORE, the petition is GRANTED. The


decision of the NLRC dated November 28, 1990
and the Resolution of February 1, 1991 are
hereby SET ASIDE, and a new judgment is
entered absolving Development Bank of the
Philippines of any and all liabilities to private
respondent and its members.

1. G.R. No. L-40683, June 27, 1975


ARTURO SAMONTE, ET AL. vs. FAUSTINO
SAMONTE, ET AL., defendants. FAUSTINO
SAMONTE
AND
LOURDES
MANUEL,
defendants-appellees,
vs.
CAYETANO
SAMONTE, ET AL.
Facts:

SPECIAL CONTRACTS COMPROMISE

UNIVERSITY OF CEBU COLLEGE OF LAWPage 135


LLB 4 (S.Y. 2015-2016)

Lynn

Abing, Patrick
Caputol, Danica Patricia
Cortes, Angeli Victoria

Garcia, Felicito Jr.


Gulbin, Lou Ann
Jane JD-4
Jacinto, Jamero Jr.
Roel JD-4

Magdoza, Bregette
Maglasang, Laarni
Niere, Sherlyn

Tirado, Adrianne
Tomonglay, Noel
Ursal,

April

Rebato, Mar Francis


Semblante, Sarah Jane

Ysulan, Aura Bern


Franje,
Hanelli

Tan, Steffanieh Gail

Tabuag,

Vincent

You might also like