SEPTEMBAR 2023
Chair's
Cases
Civil
Law
Digest of cases penned by
Associate Justice Ramon
Paul Hernando
20
23
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SEPTEMBAR 2023
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TABLE OF CONTENTS
Topics
Page
PERSONS AND FAMILY RELATIONS
I.
PERSONS
J. Human Relations in Relation to Persons
●
II.
PNTC COLLEGES, INC. vs. TIME REALTY, INC. G.R. No. 219698,
September 27, 2021
1
MARRIAGE
C. Void Marriages
●
●
●
●
MARIA VICIA CARULLO-PADUA vs. JOSELITO PADUA G.R. No. 208258,
April 27, 2022
HANNAMER C. PUGOY-SOLIDUM vs. REPUBLIC OF THE PHILIPPINES
GR No. 213954, April 20, 2022
BEBERY O. SANTOS-MACABATA vs. FLAVIANO MACABATA, JR. G.R.
No. 237524, April 6, 2022
LUISITO G. PULIDO vs. PEOPLE OF THE PHILIPPINES G.R. No. 220149,
July 27, 2021
3
6
9
12
F. Foreign Marriages
●
REPUBLIC OF THE PHILIPPINES vs. JOCELYN ASUSANO KIKUCHI
G.R. No. 243646, June 22, 2022
15
K. Paternity and Filiation
5. Adopted Children
b) Who May Adopt
●
SPOUSES JOON HYUNG PARK AND KYUNG AH LEE vs.
HON. RICO SEBASTIAN D. LIWANAG G.R. No. 248035,
November 27, 2019
17
PROPERTY, OWNERSHIP, AND ITS MODIFICATIONS
II.
BUNDLE OF RIGHTS
A. Ownership
●
HEIRS OF JESUS P. MAGSAYSAY vs. SPS. ZALDY AND ANNALIZA
PEREZ G.R. No. 225426, June 28, 2021
19
C. Actions to Recover Ownership and Possession of Property
3. Accion Interdictal
●
SPOUSES BELINDA LIU AND HSI PIN LIU vs. MARCELINA
ESPINOSA G.R. No. 238513. July 31, 2019
21
4. Quieting of Title
●
●
●
HEIRS OF MANUEL ENANO vs. SAN PEDRO CINEPLEX
PROPERTIES G.R. No. 236619. April 6,2022
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M.
HERNANDEZ G.R. No. 236826, March 23, 2022
JOSEFINA Q. VILORIA vs. HEIRS OF PABLO GAETOS G.R. No.
206240, May 12, 2021
24
27
29
D. Co-Ownership
1. Distinctions Between Right to Property Owned in
Common and Full Ownership Over the Ideal Share
●
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M.
HERNANDEZ G.R. No. 236826, March 23, 2022
33
4. Partition
●
●
REYNALDO REYES vs. SPS. WILFREDO AND MELITA GARCIA
G.R. No. 225159. March 21, 2022
GUILLERMA S. SILVA vs. CONCHITA S. LO G.R. No. 206667. June
23, 2021
36
39
E. Possession
2. Possession in the Concept of an Owner
●
REPUBLIC OF THE PHILIPPINES vs. MANUEL M. CARAIG G.R.
No. 197389, October 12, 2020
43
III.
DIFFERENT MODES OF ACQUIRING OWNERSHIP
C. Donation
1. Features
●
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN
POLIÑO AND CORAZON ROM G.R. No. 200608. February 10, 2021
46
4. Form
●
DORIS MARIE S. LOPEZ vs. ANICETO G. SALUDO JR. G.R. No.
233775. September 15, 2021
48
D. Prescription
2. Distinctions Between Extinctive Prescription and
Laches
●
●
IV.
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M.
HERNANDEZ G.R. No. 236826, March 23, 2022
AMLAYON ENDE vs. ROMAN CATHOLIC PRELATE OF THE
PRELATURE NULLIUS OF COTABATO, INC. G.R. No. 191867,
December 6, 2021
50
52
LAND TITLES AND DEEDS
A. Torrens System
1. General Principles
●
●
HEIRS OF LEONARDA LATOJA vs. HEIRS OF GAVINO LATOJA
G.R. No. 195500, March 17, 2021
CELEDENIO C. DEMEGILLO vs. ARTURO S. LUMAMPAO G.R.
No. 211253, February 10, 2021
56
60
D. Original Registration (PD 1529)
1. Who may apply
●
REPUBLIC OF THE PHILIPPINES vs. PHILIPPINE NATIONAL
POLICE G.R. No. 198277, February 8, 2021
62
E. An Act Improving the Confirmation Process for Imperfect
Land Titles (RA 11573), amending CA 141 and PD 1529
●
●
EULOGIO ALDE vs. CITY OF ZAMBOANGA G.R. No. 214981, November 4,
2020
APOLINARION VALDEZ vs. HEIRS OF ANTERO CATABAS G.R. No.
201655, August 24, 2020
64
66
G. Subsequent Registration
1. Voluntary Dealings
●
CITY OF TANAUAN vs. GLORIA MILLONTE G.R. No. 219292, June
28,2021
70
2. Involuntary Dealings
a) Adverse Claims
●
ATTY. ARISTOTLE T. DOMINGUEZ vs. BANK OF
COMMERCE G.R No. 225207, September 29, 2021
72
I. Dealings With Unregistered Lands
●
SPOUSES EUGENIO PONCE AND EMILIANA NEROSA vs. JESUS
ALDANESE G.R No. 216587, August 04, 2021
75
K. Reconstitution of Title
●
V.
REPUBLIC OF THE PHILIPPINES vs. LUISA ABELLANOSA G.R. No.
205817, October 06, 2021
77
WILLS AND SUCCESSION
A. General Provisions
●
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES DOMINADOR
AND ESTEFANIA BASAS G.R. No. 206847, June 15, 2022
79
C. Intestate Succession
5. Determination of Heirs
●
AMLAYON ENDE vs. ROMAN CATHOLIC PRELATE OF THE
PRELATURE NULLIUS OF COTABATO, INC., G.R. No. 191867,
December 6, 2021
83
OBLIGATIONS AND CONTRACTS
I. OBLIGATIONS
B. General Provisions
●
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN POLIÑO
AND CORAZON ROM G.R. No. 200608, February 10, 2021
86
C. Different Kinds of Obligations
●
PNTC COLLEGES, INC. VS. TIME REALTY, INC. G.R. No. 219698,
September 27, 2021
89
D. Extinguishment of Obligations
1. Payment
b) Payment by Cession vs. Dation in Payment
●
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO
AND FLORA DACQUEL SOTELO G.R. No. 203946, August
4, 2021
91
5. Compensation
a) Requisites
●
BANCO DE ORO UNIBANK vs. EDGARDO C. YPIL G.R.
No. 212024, October 12, 2020
94
6. Novation
a) Concept of Novation
●
●
●
TONY N. CHUA vs. SECRETARY OF JUSTICE G.R. No.
214960, June 15, 2022
ASIAN
CONSTRUCTION
AND
DEVELOPMENT
CORPORATION vs. MERO STRUCTURES INC. G.R. No.
221147, September 29, 2021
CARLOS J. VALDES vs. LA COLINA DEVELOPMENT
CORPORATION G.R. No. 208140, July 12, 2021
98
99
103
II.
CONTRACTS
A. General Provisions
●
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT HOTEL, INC.
G.R. No. 233678, July 27, 2022
108
1. Definition of a Contract
●
LORENZO WILLY vs. REMEDIOS F. JULIAN G.R. No. 207051
December 1, 2021
110
B. Basic Principles of Contracts
1. Freedom to Stipulate (Autonomy of the Will) and
its Limitations
●
PNTC COLLEGES, INC. vs. TIME REALTY, INC. G.R. No. 219698,
September 27, 2021
112
4. Privity of Contract
a) Concept
●
HOME GUARANTY CORPORATION vs. ELVIRA S.
MANLAPAZ G.R. No. 202820, January 13, 2021
114
C. Essential Requisites of a Contract
●
SOCORRO P. CABILAO vs. MA. LORNA Q. TAMPAN G.R. No. 209702,
March 23, 2022
117
1. Consent
●
●
LAURO CARDINEZ vs. SPOUSES PRUDENCIO G.R. No. 213001,
August 4, 2021
SPOUSES EUGENIO DE VERA AND ROSALIA PADILLA vs.
FAUSTA CATUNGAL G.R No. 211687, February 10, 2021
121
123
D. Defective Contracts
1. Rescissible Contracts
●
CARLOS J. VALDES vs. LA COLINA
CORPORATION G.R. No. 208140, July 12, 2021
DEVELOPMENT
126
3. Unenforceable Contracts
●
●
LORENZO WILLY vs. REMEDIOS JULIAN G.R. No. 207051
December 1, 2021
THE HEIRS OF ANSELMA GODINES vs. PLATON DE MAYMAY
G.R. No. 230573, June 28, 2021
131
132
4. Void Contracts
●
●
●
●
●
LAURO CARDINEZ vs. SPOUSES PRUDENCIO and CRESENCIA
CARDINEZ G.R. No. 213001, August 4, 2021
HEIRS OF ELISEO BAGAYGAY vs. HEIRS OF ANASTACIO
PACIENTE G.R. No. 212126, August 4, 2021
CITY OF TANAUAN vs. GLORIA MILLONTE G.R. No. 219292, June
28,2021
ARAKOR
CONSTRUCTION
AND
DEVELOPMENT
CORPORATION vs. TERESITA G. STA. MARIA G.R. No. 215006,
January 11, 2021
PASTORA GANANCIAL vs. BETTY CABUGAO G.R. No. 203348,
July 06, 2020
136
137
139
141
146
SPECIAL CONTRACTS
I. SALES
A. Definition and Essential Requisites
●
●
●
●
●
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M.
HERNANDEZ G.R. No. 236826, March 23, 2022
CARLOS J. VALDES vs. LA COLINA DEVELOPMENT CORPORATION
G.R. No. 208140, July 12, 2021
CRISTINA R. SEMING vs. EMELITA P. ALAMAG G.R. No. 202284, March
17, 2021
INTEGRATED CREDIT AND CORPORATE SERVICES vs. ROLANDO
CABRERA G.R. No. 203420, February 15, 2021
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN POLIÑO
AND CORAZON ROM G.R. No. 200608, February 10, 2021
148
150
153
156
157
B. Contract of Sale
●
HOME GUARANTY CORPORATION vs. ELVIRA S. MANLAPAZ G.R. No.
202820, January 13, 2021
161
D. Double Sales
●
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES DOMINADOR
AND ESTEFANIA BASAS G.R. No. 206847, June 15, 2022
165
F. Breach of Contract of Sale
2. Maceda Law
●
●
PRYCE PROPERTIES CORP. (NOW PRYCE CORPORATION) vs.
NARCISO R. NOLASCO, JR. G.R. No. 203990, April 28, 2021
INTEGRATED CREDIT AND CORPORATE SERVICES vs.
ROLANDO CABRERA G.R. No. 203420, February 15, 2021
168
172
G. Extinguishment of the Sale
2. Legal Redemption
●
INTEGRATED CREDIT AND CORPORATE SERVICES vs.
ROLANDO CABRERA G.R. No. 203420, February 15, 2021
175
H. Equitable Mortgage
●
III.
●
●
●
IV.
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO AND FLORA
DACQUEL SOTELO G.R. No. 203946, August 4, 2021
177
AGENCY
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT HOTEL, INC. G.R. No.
233678, July 27, 2022
GUILLERMA S. SILVA vs. CONCHITA S. LO G.R. No. 206667, June 23, 2021
PNB-REPUBLIC BANK (MAYBANK PHILIPPINES INCORPORATED) vs.
REMEDIOS SIAN-LIMSIACO G.R. No. 196323, February 8, 2021
181
183
187
CREDIT TRANSACTIONS
A. Loans
●
REX RICO vs. UNION BANK OF THE PHILIPPINES G.R. No. 210928;
February 14, 2022
189
2. Interest
●
●
●
MAGNA READY MIX CONCRETE CORPORATION vs.
ANDERSEN BJORNSTAD KANE JACOBS, INC. G.R. No. 196158,
January 20, 2021
ARAKOR
CONSTRUCTION
AND
DEVELOPMENT
CORPORATION vs. TERESITA G. STA. MARIA G.R. No. 215006,
January 11, 2021
DEVELOPMENT BANK OF THE PHILIPPINES vs. HEIRS OF
JULIETA L. DANAICO G.R. No. 196476. September 28, 2020
191
192
196
D. Real Estate Mortgage
●
●
V.
●
●
VI.
SPS. GEMA O. TORRECAMPO vs. WEALTH DEVELOPMENT BANK
CORP. G.R. 221845, March 21, 2022
PASTORA GANANCIAL vs. BETTY CABUGAO G.R. No. 203348, July 06,
2020
200
202
COMPROMISE
LINO DOMILOS vs. SPOUSES JOHN AND DOROTHEA PASTOR G.R. No. 207887,
March 14, 2022
MARIA MAGDALENA vs. HEIRS OF SPOUSES WILFREDO AND LEONILA
SOMIS G.R. No. 204447. May 03, 2021
205
207
QUASI-CONTRACTS
B. Solutio Indebiti
●
VII.
NINIA P. LUMAUAN vs. COMMISSION ON AUDIT G.R. No. 218304,
December 9, 2020
210
TORTS AND DAMAGES
A. Principles
2. Unjust Enrichment
●
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES G.R.
No. 205172, June 15, 2021
213
D. Quasi-Delict vs. Culpa Contractual vs. Culpa Criminal
1. Nature of Liability
●
BANK OF THE PHILIPPINE ISLANDS vs. CENTRAL BANK OF
THE PHILIPPINES G.R. No. 197593, October 12, 2020
216
H. Damnum Absque Injuria
●
REX RICO vs. UNION BANK OF THE PHILIPPINES G.R. No. 210928;
February 14, 2022
219
K. Damages
1. Kinds of Damages
a) Actual and Compensatory Damages
●
●
●
●
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT
HOTEL, INC. G.R. No. 233678, July 27, 2022
SPS.
GEMA
O.
TORRECAMPO
vs.
WEALTH
DEVELOPMENT BANK CORP. G.R. 221845, March 21, 2022
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO
G.R. No. 203946, August 4, 2021
HERMINIO T. DISINI vs. REPUBLIC OF THE
PHILIPPINES G.R. No. 205172, June 15, 2021
223
225
226
228
b) Moral Damages
●
●
●
●
●
SPS.
GEMA
O.
TORRECAMPO
vs.
WEALTH
DEVELOPMENT BANK CORP. G.R. 221845, March 21, 2022
KLM ROYAL DUTCH AIRLINES vs. DR. JOSE M.
TIONGCO G.R. No. 212136, October 04, 2021
EDUARDO ATIENZA vs. GOLDEN RAM ENGINEERING
SUPPLIES & EQUIPMENT CORPORATION G.R. No.
205405, June 28, 2021
PASTORA GANANCIAL vs. BETTY CABUGAO G.R. No.
203348, July 06, 2020
PHILIPPINE NATIONAL BANK vs. MANUEL C.
BULATAO G.R. No. 200972, December 11, 2019
230
231
233
239
241
c) Nominal Damages
●
HERMINIO T. DISINI vs. REPUBLIC
PHILIPPINES G.R. No. 205172, June 15, 2021
OF
THE
244
d) Temperate or Moderate Damages
●
●
KLM ROYAL DUTCH AIRLINES vs. DR. JOSE M.
TIONGCO G.R. No. 212136, October 04, 2021
HERMINIO T. DISINI vs. REPUBLIC OF THE
PHILIPPINES G.R. No. 205172, June 15, 2021
246
248
e) Exemplary or Corrective Damages
●
●
●
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES
DOMINADOR AND ESTEFANIA BASAS G.R. No. 206847,
June 15, 2022
HERMINIO T. DISINI vs. REPUBLIC OF THE
PHILIPPINES G.R. No. 205172, June 15, 2021
PASTORA GANANCIAL vs. BETTY CABUGAO G.R. No.
203348, July 06, 2020
251
253
255
L. Damages in Case of Death
●
PEOPLE OF THE PHILIPPINES vs. GERALD MORENO Y TAZON G.R. No.
191759, March 02, 2020
257
Case Digests
J. Hernando - Civil Law
PERSONS AND FAMILY RELATIONS
I.J. Human Relations in Relation to Persons
PNTC COLLEGES, INC. vs. TIME REALTY, INC.
G.R. No. 219698, September 27, 2021
By: Pong
DOCTRINE:
Jurisprudence holds that there is unjust enrichment when a person unjustly retains a
benefit to the loss of another, or when a person retains money or property of another
against the fundamental principles of jμstice, equity and good conscience. The statutory
basis for the principle of unjust enrichment is Article 22 of the Civil Code which provides
that '[e]very person who through an act of performance by another or any other means,
acquires or comes into possession of something at the expense of the latter without just or
legal ground, shall return the same to him.
The principle of unjust enrichment under Article 22 of the Civil Code requires to
conditions:
1. that a person is benefited without a valid basis or justification, and
2. that such benefit is derived at another’s expense or damage. There is no unjust
enrichment when the person who will benefit has a valid claim to such benefit.
FACTS:
PNTC Colleges, Inc. (PNTC) and Time Realty, Inc. (Time Realty) entered into a Contract of
Lease for the latter’s property in Sampaloc Manila from 2005 – 2007. While the term of the lease
ended on December 31, 2005 the contract was impliedly renewed on a monthly basis after the
said date.
Eventually, Time Realty notified PNTC of its (Time Realty) intent not to extend the lease
effective April 2007. It gave PNTC the option to either extend the lease only until April 2007 or
transfer to the second floor of the same building. PNTC informed time Realty of its decision to
terminate its lease which would take effect at the end of April 2007.
Sometime in April 2007, PNTC commenced the transfer of its operations to its new site in
Intramuros, Manila. However, Time Realty alleged that PNTC did so without settling its
(PNTC’s) outstanding rentals and services (electricity and water), plus interest/surcharges.
Hence, Time Realty ordered PNTC to cease its moving out operations, then retained the
remaining properties of PNTC in its premises.
Civil Law_HernandoBAR2023
Page 1 of 260
Case Digests
J. Hernando - Civil Law
Time Realty averred that its retention of PNTC’s properties as security was in accordance with
Paragraph 23 of the Contract of lease:
Breach of Default
xxx should LESSEE violate any or all said conditions xxx LESSEEE hereby irrevocably
empowers LESSOR xxx to take inventory and possession of whatever equipment, furniture,
articles, merchandise, appliances, etc. found therein xxx
PNTC filed a Complaint for Delivery of Personal Properties with Damages.
Time Realty filed an Answer with Counterclaim arguing that PNTC started vacating the leased
premises absent a formal notice and without paying its remaining obligations.
ISSUE:
Whether or not unjust enrichment will result if Time Realty’s counterclaim would be granted.
RULING:
NO, unjust enrichment will not result if Time Realty’s counterclaim will be granted.
Contrary to the claim of PNTC and the findings of the RTC, there would be no unjust enrichment
to speak of, as Time Realty withheld the properties pursuant to Paragraph 23 of the Contract of
Lease, a provision which PNTC knowingly agreed to. In other words, Time Realty retained the
said properties as security to compel PNTC to pay and not to unduly enrich itself.
Civil Law_HernandoBAR2023
Page 2 of 260
Case Digests
J. Hernando - Civil Law
II.C. Void Marriages
MARIA VICIA CARULLO-PADUA vs. JOSELITO PADUA
G.R. No. 208258, April 27, 2022
By: melptjdatty
DOCTRINES:
1. In concluding that the husband was psychologically incapacitated, the following
parameters (Tan-Andal guidelines) in determining what constitutes psychological
incapacity:
a. The psychological incapacity must be shown to have been existing at the time
of the celebration of marriage;
b. Caused by a durable aspect of one's personality structure, one that was
formed prior to their marriage;
c. Caused by a genuinely serious psychic cause; and
d. Proven by clear and convincing evidence
2. Psychological incapacity is neither a mental incapacity nor a personality disorder
that must be proven through expert opinion. There must be proof, however, of the
durable or enduring aspects of a person's personality, called "personality
structure," which manifests itself through dear acts of dysfunctionality that
undermines the family.
3. Proof of these aspects of personality need not be given by an expert. Ordinary
witnesses who have been present in the life of the spouses before the latter
contracted marriage may testify on behaviors that they have consistently observed
from the supposedly incapacitated spouse.
4. It must also be mild characteriological peculiarities, mood changes, occasional
emotional outbursts" are still not accepted grounds that would warrant a finding of
psychological incapacity under Article 36 of the Family Code.
5. Tan-Andal also modified the requirement on incurability - that psychological
incapacity under Article 36 of the Family Code must now be incurable, not in the
medical, but in the legal sense. It must be so enduring and persistent with respect to
a specific partner, and contemplates a situation where the couple's respective
personality structures are so incompatible and antagonistic that the only result of
the union would be the inevitable and irreparable breakdown of the marriage.
"[A]n undeniable pattern of such persisting failure [to be a present, loving, faithful,
respectful, and supportive spouse] must be established so as to demonstrate that
there is indeed a psychological anomaly or incongruity in the spouse relative to the
other.”
Civil Law_HernandoBAR2023
Page 3 of 260
Case Digests
J. Hernando - Civil Law
6. The determination of psychological incapacity is not overly reliant on a
psychological report, as long as the totality of evidence presented supports a finding
of psychological incapacity.
7. We hereby reiterate our pronouncement in Molina that "mere showing of
'irreconcilable differences' and 'conflicting personalities' [ as in the present case,] in
no wise constitutes psychological incapacity. Sexual incompatibility is not a ground
for declaration of nullity of marriage.
8. Irreconcilable differences, conflicting personalities, emotional immaturity and
irresponsibility, physical abuse, habitual alcoholism, sexual infidelity or perversion,
and abandonment, by themselves, also do not warrant a finding of psychological
incapacity under the said Article. It must be stressed that an unsatisfactory
marriage is not a null and void marriage.
9. Article 36 contemplates incapacity or inability to take cognizance of and to assume
basic marital obligations and not merely difficulty, refusal, or neglect in "the
performance of marital obligations or ill will. This incapacity consists of the
following:
a. a true inability to commit oneself to the essentials of marriage;
b. this inability to commit oneself must refer to the essential obligations of
marriage: the conjugal act, the community of life and love, the rendering of
mutual help, the procreation and education of offspring; and
c. the inability must be tantamount to a psychological abnormality
It contemplates downright incapacity or inability to take cognizance of and to
assume the basic marital obligations. It is not enough to prove that a spouse failed
to meet his responsibilities and duties as a married person; incapacity must be so
enduring and persistent with respect to a specific partner, that the only result of the
union would be the inevitable and irreparable breakdown of the marriage.
10. Sexual infidelity and abandonment are not grounds for psychological incapacity,
rather, they are grounds for legal separation under Article 55 of the Family Code.
FACTS:
This case seeks to establish whether there is sufficient basis for nullity of marriage on the ground
of psychological incapacity under Article 36 of the Family Code, between the marriage of
petitioner Maria and respondent Joselito. According to Maria, Joselito is psychologically
incapacitated to perform his marital obligations in that he exhibited excessive sexual desire and
forced her to do unconventional sexual performances with him, specifically oral and anal sex.
Maria also claimed that Joselito insulted her for her religious beliefs, attempted to kill her, failed
to provide financial support for their son, never bothered to share household expenses; among
others.
Civil Law_HernandoBAR2023
Page 4 of 260
Case Digests
J. Hernando - Civil Law
During trial, Maria presented Dr. Villegas, a psychiatrist, as witness, testifying that Joselito had a
personality disorder of a sexual deviant or perversion based on Maria’s narrations. Further, the
report mentioned Joselito's personality disorder as traceable from his childhood for having a
cruel father and a very protective mother which developed emotional confusion in him. That as a
result, his sexual development failed to mature.
ISSUES:
1. Whether or not there was sufficient basis to render their marriage void on the ground of
psychological incapacity under Article 36 of the Family Code, based solely on the
findings of the psychiatrist.
RULING:
NONE.
Ordinary witnesses who have been present in the spouses’ lives before they contracted marriage
may likewise testify on their observations as to the incapacitated spouse’s behavior. What is
important is that the totality of evidence is sufficient to support a finding of psychological
incapacity.
In this case, it should be noted that the personality evaluation report by the psychiatrist was
based solely on Maria’s narrations. Further, the basis of the Maria’s narration was only due to the
contrasting behavior of Joselito’s parents, therefore, it does not give the court an intuitive
understanding of Joselito’s psychological state, as there was no information as to how Joselito
reacted towards this situation and how it affected his overall growth.
2. Whether or not there was sufficient basis to render their marriage void on the ground of
psychological incapacity under Article 36 of the Family Code, based on the totality of
evidence in this case.
NONE.
Jurisprudence provides that one of the yardsticks to determine the presence of psychological
incapacity is that the totality of evidence must present clear and convincing evidence to support
psychological incapacity as a ground for nullity of marriage.
In this case, apart from the psychological report, there is no other evidence presented to support
the allegation of psychological incapacity. Therefore, petitioner Maria failed to establish clear
and convincing evidence based on her total evidence presented.
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3. Whether or not there was sufficient basis to render their marriage void on the ground of
psychological incapacity under Article 36 of the Family Code, based on their
irreconcilable differences.
NONE.
Joselito’s inability to sexually satisfy his wife Maria because he prefers the unconventional way
of coitus could not be taken to mean that Joselito is psychologically incapacitated. Sexual
incompatibility is not a ground for declaration of nullity of marriage.
4. Whether or not there was sufficient basis to render their marriage void on the ground of
psychological incapacity under Article 36 of the Family Code, based on sexual infidelity
and abandonment.
NONE.
Article 36 contemplates incapability or inability to take cognizance of and to assume basic
marital obligations and not merely difficulty, refusal, or neglect in the performance of marital
obligations or ill will. This incapability consists of one’s true inability to commit oneself to the
essentials of the marriage—which consists of the essential obligations, the conjugal act, the
community of life and love, rendering of mutual help, procreation and education of offspring;
and that such inability must be tantamount to psychological abnormality.
It is not enough that a spouse failed to meet his or her responsibilities as a married person, but
such incapacity must be so enduring and persistent with respect to a specific partner, that the
only result of the union would be the inevitable and irreparable breakdown of marriage.
HANNAMER C. PUGOY-SOLIDUM vs. REPUBLIC OF THE PHILIPPINES
GR No. 213954, April 20, 2022
By: macchiato
DOCTRINE:
To render a marriage void ab initio under Article 36 of the Family Code, jurisprudence
dictates that psychological incapacity must be characterized by:
1. gravity - must be grave and serious such that the party would be incapable of
carrying out the ordinary duties required in a marriage;
2. juridical antecedence - it must be rooted in the history of the party antedating the
marriage, although the overt manifestations may emerge only after the marriage;
and
3. incurability - it must be incurable, or even if it were otherwise, the cure would be
beyond the means of the party involved.
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What is important is that the Totality of Evidence must support a finding of psychological
incapacity. In other words, the totality of evidence must still be sufficient to prove that the
incapacity was grave, incurable, and existing prior to the time of marriage.
The court used the Tan-Andal Guidelines:
1. Psychological incapacity must be shown to have been existing at the time of the
celebration of marriage;
2. Caused by a durable aspect of one’s personality structure, one that was formed
prior to the marriage;
3. Caused by a genuinely serious psychic cause; and
4. Proven by clear and convincing evidence.
Tan-Andal v. Andal further enunciates that psychological incapacity is not a mental
incapacity nor a personality disorder that must be proven through an expert witness.
Ordinary witnesses who have been present in the life of the spouses before marriage may
testify on the behaviors they have observed from the allegedly incapacitated spouse.
Likewise, juridical antecedence may also be proven by ordinary witnesses who can describe
the incapacitated spouse’s past experiences or environment growing up, which have
triggered one’s particular behavior. In any case, the gravity of psychological incapacity
must be shown to have been caused by a genuinely serious psychic cause.
Incurability requirement has also been modified. Such must now mean incurability in the
legal sense, not in the medical. It must be so enduring and persistent with respect to a
specific partner, that the only result of the union would be the inevitable and irreparable
breakdown of the marriage. Ultimately, totality of evidence must support a finding of
psychological incapacity.
FACTS:
Hannamer filed a petition for declaration of nullity of marriage on January 03, 2010 under
Article 36 of the Family Code before the RTC of Tagaytay City. She averred that Grant showed
complete lack of understanding of his duties and responsibilities as husband and father during the
marriage. He never worked and only depended on his older sibling for financial support. Despite
not earning, Grant spent most of his time and money on gambling and going to cockfights,
instead of taking care of his family.
Dra. Revita testified that she diagnosed Grant with narcissistic personality disorder and that such
disorder was considered grave and incurable. Dra. Revita traced back the root of Grant’s disorder
to his childhood and his exposure to a tolerant and dysfunctional and permissive family set up
contributed to the development of a faulty value system. Dra. Revita also testified that she was
not able to personally examine grant due to Grant’s failure to respond to her request for
psychological evaluation.
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RTC granted Hannamer’s petition and declared their marriage void ab initio. The Republic,
through the Office of the Solicitor General, appealed. OSG argued that Hannamer failed to prove
Grant’s psychological incapacity. Grant’s alleged irresponsible ways and addiction to gambling
and cockfighting were not established as manifestations of his personality disorder that rendered
him incapable of fulfilling his marital obligations. She also failed to identify and prove the root
cause of Grant’s psychological incapacity or that such incapacity existed prior to their marriage.
OSG also pointed out that Dra. Revita did not personally examine Grant, and only relied on the
partial and biased narrations of Hannamer. CA granted OSG’s appeal.
ISSUE:
Whether or not Psychological Incapacity was properly established.
RULING:
NO, psychological incapacity was not properly established.
Apart from Hannamer, Dra. Revita, and the psychological report, there is no other evidence
presented to support the allegation of Grant’s psychological incapacity.
In the case at bar, Court finds that Hannamer failed to sufficiently prove Grant’s psychological
incapacity. The psychological report is bereft of any factual basis proving Grant’s psychological
incapacity. It fails to prove the enduring aspects of Grant’s personality called “personality
structure” that manifest itself clear acts of dysfunctionality.
There is also no evidence proving that the alleged psychological incapacity existed prior to their
marriage. Dra. Revita’s findings were very general and are lacking data as to Grant’s personality
structure and how it incapacitates him. Neither does it prove that psychological incapacity was
due to genuine psychic cause.
In any case, the Court emphasizes that Tan-Andal dispensed with the need for a psychological
report. A psychologically incapacitated person need not be shamed and pathologized for what
could have been a simple mistake in one’s choice of intimate partner, a mistake too easy to make
as when one sees through rose-colored glasses. There is no need to label a person as having a
mental disorder just to obtain a decree of nullity because it could very well be that he or she did
not know that the incapacity existed in the first place.
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BEBERY O. SANTOS-MACABATA vs. FLAVIANO MACABATA, JR.
G.R. No. 237524, April 6, 2022
By: tyj
DOCTRINE:
The Court in Tan-Andal emphasized that there is a presumption of validity of marriage,
and that such presumption can only be rebutted by clear and convincing evidence.
In the Tan-Andal case, the Court categorically abandoned the requirement that
psychological incapacity must be medically or clinically identified and proven through
expert opinion as the term "psychological incapacity" does not refer to a mental incapacity
or a personality disorder.
Reiterating this Court's pronouncement in Marcos v. Marcos, the medical examination by
an expert of the spouse concerned is no longer required as courts may rely on the totality of
evidence to sustain a finding of psychological incapacity.
The case of Tan-Andal clarifies that "the psychological incapacity contemplated in Article
36 of the Family Code is incurable, not in the medical, but the legal sense", and that the
requirement of incurability means that "the incapacity is so enduring and persistent with
respect to a specific partner, and contemplates a situation where the couple's respective
personality structures are so incompatible and antagonistic that the only result of the union
would be inevitable and irreparable breakdown of marriage."
The term "psychological incapacity" under Article 36 of the Family Code is characterized
by:
1. gravity which entails that such "psychological incapacity" must be so grave or
serious such that the party would be incapable of carrying out the ordinary duties
required in marriage;
2. juridical antecedence that "psychological incapacity" must be rooted in the history
of the party antedating the marriage, although the overt manifestations may emerge
only after the marriage); and
3. incurability or, even if it were otherwise indeed curable, the cure would be beyond
the means of the party involved.
FACTS:
Sometime in October 1996, petitioner and respondent were working as factory workers in
separate electronic companies in Taiwan. Courtship and dating followed shortly after they were
introduced to each other.
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Later on, they learned that petitioner was pregnant with their first child. After the termination of
their employment contracts in Taiwan, they returned to the Philippines and got married. The
couple moved to a rented house in Caloocan City and soon welcomed their first child, followed
by their second child.
The couple initially enjoyed a peaceful marriage, but eventually the couple began to quarrel
encountering difficulties in supporting their family, the couple moved to the house of petitioner's
parents. In February 2000, respondent eventually found work as an entertainer in Japan.
Petitioner was shocked to learn that respondent indicated his civil status as "single" in his
passport. Respondent would then proceed to work in Japan and send money to petitioner.
Sometime in June 2002, respondent failed to send money to petitioner and ultimately ceased all
contact with his family.
After two years of no communication with respondent, petitioner was able to talk to respondent
after he called his sister to tell petitioner that he was no longer coming back to her, and that he
was already living with another woman. Respondent told her, "'Wag mo na akong hintayin pa at
aka 'y di na uuwi pa dahil may babae na aka dito. Kung gusto mo, mag-asawa ka na rin."
Aggrieved, petitioner filed before the RTC a petition for nullity of her marriage to respondent on
the ground of the latter's psychological incapacity.
Respondent did not file any responsive pleading. OSG entered its appearance. Conduct its
investigation and confirm therein that no collusion exists between the parties. Petitioner
submitted as evidence, among others, a report on the psychological condition of petitioner and
respondent (report), conducted by clinical psychologist Dr. H. Nedy L. Tayag. Dr. Tayag
concluded in her report that respondent suffered from antisocial personality disorder stemming
from his childhood years, and "being afflicted with said disorder, respondent lacked depth when
it concerned his marital duties and obligations."
RTC granted the petition declaring the marriage of the parties null and void ab initio and held
that the petitioner provided sufficient evidence to prove that respondent is psychologically
incapacitated to perform his marital obligations. OSG filed an MR asserted that the petitioner
failed to satisfactorily discharge the burden of proving that respondent was truly incapable of
complying with his marital obligations due to a serious form of psychological disorder.
CA reversed the RTC Decision, and held that the RTC erred in declaring the marriage of the
parties null and void, considering that the totality of the evidence presented is insufficient to
establish respondent's psychological incapacity to fulfill his marital obligations. The CA found
that Dr. Tayag's report failed to fully explain the symptoms of the antisocial personality disorder,
and establish a link between respondent's acts to respondent's alleged psychological incapacity to
comply with his marital obligations. Petitioner filed an MR, which was denied.
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ISSUE:
Whether or not the CA erred when it reversed the Decision of the RTC and issued a Decision
finding that petitioner failed to provide sufficient evidence that respondent is psychologically
incapacitated to perform his marital obligations.
RULING:
NO, the CA did not err in finding that petitioner failed to provide sufficient evidence that
respondent is psychologically incapacitated to perform his marital obligations.
The Court finds that the petitioner failed to prove and substantiate by clear and convincing
evidence that respondent suffers from such "psychological incapacity" that prevents him from
complying with his marital obligations as contemplated under Article 36 of the Family Code.
Indeed, the respondent has clearly failed to fulfill his essential obligations to his wife and
children when he abandoned his family. However, the totality of evidence does not show that
such failure to fulfill his essential marital obligations is caused by a genuinely serious and
incurable psychic cause which exists prior to or at the time of celebration of the marriage of the
parties.
From the foregoing, it is apparent that there are inconsistencies in the information provided in the
report, and the conclusion of the clinical psychologist therein. A thorough reading of the report
would show that the conclusion therein is grounded on general observations nitpicked from
certain aspects of respondent's life and based primarily on petitioner's assessment of his
upbringing, none of which are fully supported by the information provided by respondent's
younger brother who grew up with the respondent. Hence, there is doubt as to whether the report
is sufficient evidence to show that the acts of respondent are manifestations of a certain form of
psychological incapacity, and that the alleged psychological incapacity of the respondent exists
prior to, or at the time of, celebration of the marriage of the parties.
For failure to show by clear and convincing evidence that the respondent is incapable of
fulfilling his essential marital obligations due to a genuinely serious and incurable psychic cause
which exists prior to or at the time of celebration of the marriage of the parties, the Court is
compelled to deny the petition.
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LUISITO G. PULIDO vs. PEOPLE OF THE PHILIPPINES
G.R. No. 220149, July 27, 2021
By: Abonjoc
DOCTRINE:
Article 40 has retroactive application on marriages contracted prior to the effectivity of the
Family Code but only for the purpose of remarriage, as the parties are not permitted to
judge for themselves the nullity of their marriage. In other words, in order to remarry, a
judicial declaration of nullity is required for prior marriages contracted before the
effectivity of the Family Code.
The parties are not required to obtain a judicial declaration of absolute nullity of a VOID
AB INITIO first and subsequent marriages in order to raise it as a defense in a bigamy
case. The same rule now applies to all marriages celebrated under the Civil Code and the
Family Code. Article 40 of the Family Code did not amend Article 349 of the RPC, and
thus, did not deny the accused the right to collaterally attack the validity of a void ab initio
marriage in the criminal prosecution for bigamy.
But if the first marriage is merely VOIDABLE, the accused cannot interpose an annulment
decree as a defense in the criminal prosecution for bigamy since the voidable first marriage
is considered valid and subsisting when the second marriage was contracted. The crime of
bigamy, therefore, is consummated when the second marriage was celebrated during the
subsistence of the voidable first marriage. The same rule applies if the second marriage is
merely considered as voidable.
FACTS:
Petitioner, then 16-yr.old Luisito G. Pulido, married his teacher then 22, Nora S. Arcon on
September 5, 1983 in a civil ceremony solemnized by the Mayor. The couple lived together until
2007 when Pulido stopped going home to their conjugal dwelling. When confronted by Arcon,
Pulido admitted to his affair with Baleda. Arcon likewise learned that Pulido and Baleda entered
into marriage on July 31, 1995 solemnized by Rev. Conrado P. Ramos. Their Marriage
Certificate indicated Pulido’s civil status as single.
Arcon charged Pulido and Baleda with Bigamy on Dec. 4, 2007. In his defense, Pulido insisted
that he could not be held criminally liable for bigamy because both his marriages were null and
void. He claimed that his marriage with Arcon in 1983 was null and void for lack of a valid
marriage license while his marriage with Baleda is null and void for lack of a marriage
ceremony.
Baleda, on the other hand, claimed that she only knew of Pulido’s prior marriage with Arcon
sometime in April 2007. She alleged that even prior to the filing of the bigamy case, she already
filed a Petition to Annul her marriage with Pulido before the RTC.
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RTC declared her marriage with Pulido as null and void for being bigamous in nature. This
ruling attained finality, there being no appeal filed thereto.
ISSUE:
Whether or not Article 40 of the Family Code applies to the instant case, considering that
Pulido's first marriage was contracted during the Civil Code and his second marriage was
celebrated during the effectivity of the Family Code.
RULING:
NO, since this is a bigamy case, Pulido doesn’t need a judicial declaration of nullity of his
first marriage. Art. 40 is applied only for purposes of remarriage.
Article 40 of the Family Code applies retroactively on marriages celebrated before the Family
Code insofar as it does not prejudice or impair vested or acquired rights.
Art. 40. The absolute nullity of a previous marriage may be invoked for purposes of remarriage
on the basis solely of a final judgment declaring such previous marriage void. Without a judicial
declaration of absolute nullity of the first marriage having been obtained, the second marriage is
rendered void ab initio even though the first marriage is also considered void ab initio. The only
basis for establishing the validity of the second marriage is the judicial decree of nullity of the
first marriage.
In this case, Pulido's marriage with Arcon was celebrated when the Civil Code was in effect
while his subsequent marriage with Baleda was contracted during the effectivity of the Family
Code. Hence, Pulido is required to obtain a judicial decree of absolute nullity of his prior void ab
initio marriage but only for purposes of remarriage. As regards the bigamy case, however, Pulido
may raise the defense of a void ab initio marriage even without obtaining a judicial declaration of
absolute nullity.
While Pulido and Arcon's Marriage Contract bears a marriage license number issued on
September 5, 1983, there is doubt as to the fact of its existence and issuance as per Certification
dated December 8, 2008, which essentially affects the validity of their marriage. Thus, there
exists a reasonable doubt whether indeed Pulido and Arcon had a marriage license when they
entered into marriage on September 5, 1983. The Registrar found no entry of its date of issuance
and license number in its record book, which will likely explain why the original document of
the marriage license could not be found in its custody. With the absence of a valid marriage
license, a reasonable doubt arises as to existence of a prior valid marriage, i.e. Pulido's first
marriage with Arcon, which is one of the elements of bigamy.
The parties are not required to obtain a judicial declaration of absolute nullity of a void ab initio
first and subsequent marriages in order to raise it as a defense in a bigamy case. The same rule
now applies to all marriages celebrated under the Civil Code and the Family Code.
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Article 40 of the Family Code did not amend Article 349 of the RPC, and thus, did not deny the
accused the right to collaterally attack the validity of a void ab initio marriage in the criminal
prosecution for bigamy.
However, if the first marriage is merely voidable, the accused cannot interpose an annulment
decree as a defense in the criminal prosecution for bigamy since the voidable first marriage is
considered valid and subsisting when the second marriage was contracted. The crime of bigamy,
therefore, is consummated when the second marriage was celebrated during the subsistence of
the voidable first marriage. The same rule applies if the second marriage is merely considered as
voidable.
To our mind, it is time to abandon the earlier precedents and adopt a more liberal view that a
void ab initio marriage can be used as a defense in bigamy even without a separate judicial
declaration of absolute nullity. The accused may present testimonial or documentary evidence
such as the judicial declaration of absolute nullity of the first and/or subsequent void ab initio
marriages in the criminal prosecution for bigamy. The said view is more in accord with the
retroactive effects of a void ab initio marriage, the purpose of and legislative intent behind
Article 40 of the Family Code, and the rule on statutory construction of penal laws. Therefore,
the absence of a "prior valid marriage" and the subsequent judicial declaration of absolute nullity
of his first marriage, Pulido is hereby acquitted from the crime of Bigamy charged against him.
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II.F. Foreign Marriages
REPUBLIC OF THE PHILIPPINES vs. JOCELYN ASUSANO KIKUCHI
G.R. No. 243646, June 22, 2022
By: el filibusterismo
DOCTRINE:
Article 26 (par. 2) of the Family Code provides that “Where a marriage between a Filipino
citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall
likewise have capacity to remarry under Philippine law.”
In Republic v. Manalo, 831 Phil. 33, 75 (2018), citing Garcia v. Recio, 418 Phil. 723, 731
(2001), the Supreme Court held that before a foreign divorce decree can be recognized by
the court, the party pleading it must first prove the fact of divorce and its conformity to the
foreign law allowing it. As both of these purports to be official acts of a sovereign authority,
the required proof are their official publications or copies attested by the officers having
legal custody thereof, pursuant to Section 24, Rule 132 of the Rules of Court.
FACTS:
Respondent Jocelyn Kikuchi, through her attorney-in-fact, Edwin Asusano, filed before the trial
court a petition for judicial recognition of foreign divorce. She alleged that she was married to
Fumio in 1993, and in 2007, they jointly filed for divorce before the City Hall of Sakado City,
Saitama Prefecture. When the case was set for hearing, the OSG authorized the City Prosecutor
to appear on its behalf with "only notices or orders, resolutions and decisions served on it (OSG)
will bind the party represented.”
During the presentation of evidence, the following documents, among others, were presented: (1)
the Acceptance Certificate issued by the Mayor of Sakado City, Saitama Prefecture, Japan; (2) an
Authentication from the Vice Consul of Philippine Embassy in Tokyo, Japan; and (3) a
photocopy of the Civil Code of Japan in English text. The Republic, through the OCP, did not
object to the presentation and offer of such evidence and manifested that it will not be adducing
controverting evidence.
The RTC granted the petition, prompting the OSG to appeal the case to the CA. The appellate
court affirmed the ruling of the RTC. Aggrieved, the OSG appealed (Rule 45) the case to the SC.
The OSG raised the following arguments: 1) Kikuchi failed to comply with the requirements of
authentication and proof of documents concerning the Acceptance Certificate, and the
Authentication by the Philippine Embassy in Tokyo, Japan; 3) that Edwin's testimony as to the
fact of divorce should have been excluded for being hearsay; 4) and that the foreign law had not
been proven.
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ISSUE:
Whether or not the petition for judicial recognition of foreign divorce will prosper.
RULING:
NO, the case is remanded to the court of origin. Jocelyn failed to establish the law of Japan
on divorce.
For a petition for judicial recognition of foreign divorce to prosper, the party pleading it must
prove the fact of divorce and the national law of the foreign spouse.
In this case, in order to sufficiently establish the fact of divorce, the pieces of evidence presented
by the respondent should be assessed. To this end, the following were duly established:
1) The Acceptance Certificate issued by Mayor of Sakado City, Saitama Prefecture is equivalent
to foreign judgment of divorce, the only difference is that, the Acceptance Certificate is
issued by the Mayor while the foreign judgment is issued by the court.
2) The Authentication (issued by the Embassy of the Philippines in Tokyo, Japan)
accompanying the Acceptance Certificate complies with the rules on authentication because
it (Authentication) certifies that the Acceptance Certificate was signed by the official of the
Consular Service Division, Ministry of Foreign Affairs, Japan; that said official is authorized
to sign the same; and that, his signature is genuine. Ergo, these facts contained in the
Authentication sufficiently renders it admissible as evidence of the fact of divorce in
compliance with Rule 132, Section 24 of the Rules of Court.
3) Edwin’s testimony, although hearsay, is admissible for failure of the Republic to object to the
offer of evidence
4) Jocelyn was unable to establish the law of Japan on divorce because the translations by Eibun
Horei-Sha, Inc. (the publisher of the document submitted by Jocelyn) are not advertised as a
source of official translations of Japanese laws.
Given that Jocelyn was able to prove the fact of divorce but not the Japanese law on divorce, a
remand of the case rather than its outright dismissal is proper. This is consistent with the policy
of liberality that the Court has adopted in cases involving the recognition of foreign decrees to
Filipinos in mixed marriages.
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II.K.5.b. Who may Adopt
SPOUSES JOON HYUNG PARK AND KYUNG AH LEE vs. HON. RICO SEBASTIAN
D. LIWANAG
G.R. No. 248035, November 27, 2019
By: wom
DOCTRINE:
Section 4(2) of the Domestic Adoption Act provides that any alien possessing the same
qualifications as above-stated for Filipino nationals: Provided, That his country has
diplomatic relations with the Republic of the Philippines, that he has been living in the
Philippines for at least three (3) continuous years prior to the filing of the petition for
adoption and maintains such residence until the adoption decree is entered, that he has
been certified by his diplomatic or consular office or any appropriate government agency
to have the legal capacity to adopt in his country, and that his government allows the
adoptee to enter his country as his adopted child.
FACTS:
Petitioners Spouses Joon Hyung Park and Kyung Ah Lee (petitioners) are American citizens
residing in the Philippines since 2007 (in the case of petitioner Park) and since 2009 (in the case
of petitioner Lee). They have been gainfully employed in the Philippines for almost the same
length of time that they have been residing in the country. They previously adopted a child
named Hannah which was granted by RTC-Makati City through domestic adoption.
The spouse filed A Petition for Adoption with Change of Name of the minor "Mayca Alegado"
a.k.a. "Innah Alegado" (Innah) before the RTC of Makati City and raffled to Respondent
Liwanag.
In an Order dated September 11, 2017, respondent Judge found that since petitioners are both
foreigners, then the Petition for Adoption with Change of Name of the minor Innah presented a
proper case of inter-country adoption, instead of considering said petition as being appropriately
filed under the Domestic Adoption Act of 1998. Thus, pursuant to Section 32 of the Rule on
Adoption and Section 30 of the Amended Implementing Rules and Regulations on Inter-Country
Adoption, the trial court directed the transmittal of a copy of the petition and its annexes to the
Inter-Country Adoption Board (ICAB) for appropriate action.
On October 6, 2017, petitioners filed a Motion for Reconsideration (First Motion for
Reconsideration) praying for respondent Judge to: (a) reconsider and set aside the Order dated
September 11, 2017; (b) give petitioners time to confer with the ICAB and submit a best interest
assessment; and (c) allow the Deposition through Written Interrogatories to proceed.
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Said Motion for Reconsideration was denied by respondent Judge in its Order dated June 19,
2018. Petitioners received a copy of said Order on July 2, 2018.
On July 4, 2018, petitioners filed a Manifestation and Second Motion for Reconsideration. In an
Order dated July 10, 2018, respondent Judge denied the foregoing Manifestation and Second
Motion for Reconsideration for being a prohibited pleading. Petitioners received a copy of said
Order on July 19, 2018. Petitioners pointed out that they have 60 days from receipt of the Order,
or until September 17, 2018, to file a Petition for Certiorari under Rule 65 of the Rules of Court,
with the CA.
On September 12, 2018, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of
Court with the CA, which assailed respondent Judge's Orders dated September 11, 2017, June
19, 2018, and July 10, 2018. CA dismissed the Petition for Certiorari for being filed out of time.
The CA reasoned that the 60-day period should have been counted from the denial of petitioners'
First Motion for Reconsideration, not the second. Petitioners filed a Motion for Reconsideration
but the appellate court denied the motion. They argued that the transmittal of the copies of the
records of the case to the ICAB was in the nature of an interlocutory order, and not a final
decision; and as such, a second Motion for Reconsideration was permissible. However, in the CA
Resolution dated June 19, 2019, it denied petitioners' Motion for Reconsideration. Hence, this
petition.
ISSUE:
Whether or not Domestic Adoption Act is applicable in this case.
RULING:
YES, the Court finds that petitioners' Petition for Adoption was appropriately filed under
the Domestic Adoption Act in order for the appropriate Family Court or RTC to take
cognizance thereof.
Petitioners, who are both American citizens, have been residing and have been gainfully
employed in the Philippines since the year 2007 (in the case of petitioner Park) and since 2009
(in the case of petitioner Lee), and are thus living in the Philippines for at least three continuous
years prior to the filing of the petition for adoption, as required by the Domestic Adoption Act.
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PROPERTY, OWNERSHIP, AND ITS
MODIFICATIONS
II.A. Ownership
HEIRS OF JESUS P. MAGSAYSAY vs. SPS. ZALDY AND ANNALIZA PEREZ
G.R. No. 225426, June 28, 2021
By: cattorney
DOCTRINE:
Art. 434. In an action to recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the defendant's claim.
In other words, the person who claims a better right of ownership to the property sought to
be recovered must prove two things:
1. the identity of the land claimed, and
2. his title thereto.
FACTS:
This case originated from a complaint for reconveyance of lots covered by 15 separate Torrens
titles filed by petitioners Heirs of Magsaysay with the RTC. These titles were in the names of
respondents Sps. Zaldy and Annaliza Perez and others. The said titles were issued pursuant to
free patents which were obtained by respondents after administrative proceedings with the
DENR covering Cadastral Lot. 1377.
Petitioners alleged that their predecessor-in-interest, the late Jesus was in lawful possession in
the concept of an owner of a parcel of land (Cadastral Lot. 1177). In 1960, this parcel of land
was first declared for taxation purposes in the name of Jesus under a Tax Declaration.
After Jesus died, petitioners, as heirs, retained possession of the said parcel of land. They also
declared the same property for tax purposes in the name of Jesus in 1969, 1974, and 1980,
although the said tax declarations did not contain a specific cadastral lot number.
Jesus and petitioners alleged to be unaware of any claims by other parties on the property, thus
instituted land registration proceedings but their petition was withdrawn because the area was
mistakenly described as Lot No. 1377 of the Castillejos Cadastre. The area bears the correct
identification as Lot No. 1177.
Allegedly, after tax mapping operation, the property was identified as Cadastral Lot. 1377 which
changes were reflected in petitioner’s tax declaration.
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Respondents applied for the administrative titling of Cadastral Lot No. 1377. Thus, petitioners
instituted the instant case, alleging that the Torrens titles described above are void as respondents
purportedly falsified and committed fraud in their respective applications of the issuance of the
patent as they have never been in actual and physical possession of the subject land.
RTC ruled that respondent’s title were void and considered the photocopy of the tax declaration
submitted by petitioner. It noted that since 1960, the late Jesus was the one in actual and physical
possession of the subject property. CA however ruled that Lot No. 1177 being claimed by
petitioners was not the same parcel of land as Lot No. 1377 being claimed by respondents, as
these two lots were located in different places with different boundaries, and thus, petitioners'
suit for reconveyance must necessarily fail.
ISSUE:
Whether or not the petitioners are entitled to reconveyance.
RULING:
NO, petitioners are not entitled to reconveyance.
Petitioners utterly failed to prove the identity of the land they are claiming and also their title
thereto. In fact, as aptly observed by the CA; the RTC, despite ruling in favor of petitioners by
declaring respondents' title to be void, appeared to be unconvinced of petitioners' claim of
ownership when it ruled that the parcel of land covered by respondents' titles be reverted to
public land.
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II.C.3. Action Interdictal
SPOUSES BELINDA LIU AND HSI PIN LIU vs. MARCELINA ESPINOSA
G.R. No. 238513. July 31, 2019
By: Chai
DOCTRINE:
Unlawful detainer is a summary action for the recovery of possession of real property. This
action may be filed by a lessor, vendor, vendee, or other person against whom the
possession of any land or building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any contract, express or implied.
In unlawful detainer cases, the possession of the defendant was originally legal, as his
possession was permitted by the plaintiff on account of an express or implied contract
between them. However, defendant's possession became illegal when the plaintiff
demanded that defendant vacate the subject property due to the expiration or termination
of the right to possess under their contract, and defendant refused to heed such demand.
An action for unlawful detainer will stand if the following requisites are present:
1. Initially, possession of property by the defendant was by contract with or by
tolerance of the plaintiff;
2. Eventually, such possession became illegal upon notice by plaintiff to defendant of
the termination of the latter's right of possession;
3. Thereafter, the defendant remained in possession of the property and deprived the
plaintiff of the enjoyment thereof; and
4. Within one year from the last demand on defendant to vacate the property, the
plaintiff instituted the complaint for ejectment.
FACTS:
Petitioners owns a land covered by TCT No. 146-2010008891 in Barangay Centro, Agdao,
Davao City. It was from their predecessor-in-interest who, in turn, merely tolerated the
occupation of the property by respondents, who are the present occupants of the land.
After title was transferred to the petitioners, they likewise tolerated the presence of the
respondents upon the understanding that they will peacefully vacate the land once the petitioners'
need to use the same arises. When petitioners' demands to vacate the property were made,
however, the latest of which was on February 12, 2013, the respondents refused to comply.
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Thus, petitioners filed a complaint for Unlawful Detainer. The respondents alleged that:
1. Plaintiffs have no cause of action for defendants' occupation is not by tolerance as they
entered in good faith believing that the land in question is part of public land, which later
on they discovered was already titled and the title was issued before the land was
declared disposable and alienable;
2. That the plaintiffs have no right to demand upon defendants to vacate not only because
they have no right but also because the plaintiff's title was declared null and void in case
no. CA- G.R. CV No. 01640-MIN. x x x.
MTCC rendered judgment in favor of petitioners. It declared them as the rightful possessors and
directed the respondents to vacate and turn the same over to the petitioners.
Respondents appealed with the RTC, where they asserted that: (1) the MTCC had no jurisdiction
because it failed to take into consideration that they were in possession of the land in the concept
of an owner, and not by tolerance; (2) they were entitled to the possession and occupation of the
land because they had been in possession in the concept of an owner for more than twenty years
and they introduced valuable improvements therein; (3) they have priority in rights to apply for
title of their respective lots due to OCT No. 38 and its derivative titles being declared null and
void by CA; and (4) they were harassed thus entitled to the damages and reliefs
RTC affirmed in all respects the MTCC's Decision. Hence, respondents filed a Petition for
Review before the Court of Appeals.
The Court of Appeals reversed the findings of the RTC because petitioners' bare claim of
tolerance could not sustain their action for unlawful detainer. They were unable to sufficiently
prove the presence of tolerance of respondents' occupation from the start of their possession of
the subject property. Also, plaintiffs failed to adduce evidence that would have shown when the
respondents entered the property or who gave them the permission to do the same.
Petitioners asserted that: (1) respondents' offer to purchase the property from them was a tacit
recognition that the petitioners owned the property; (2) their Torrens certificate of title proved
their ownership of the land; and (3) there is clearly a case for unlawful detainer for they merely
tolerated the possession of the property by respondents.
ISSUE:
Whether or not Petitioners' action for unlawful detainer must be sustained.
RULING:
YES, Petitioners clearly possess superior rights over the possession of the property as the
registered owners thereof, and all the elements of unlawful detainer were sufficiently
proven in the case at bar.
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It is clear upon perusal of the records that petitioners are the registered owners of the subject
property, as evidenced by TCT No. 146- 2010008891, and that the respondents' occupation of the
subject property was merely tolerated by the petitioners' predecessor-in-interest and the
petitioners themselves based on the understanding that the said respondents will peacefully
vacate the same once the need to use the land by the petitioners arises.
Subsequently, this occupation became illegal when respondents refused to heed petitioners'
express and clear demands to vacate the subject property, the last of which was dated February
12, 2013. It is evidently clear that the complaint for unlawful detainer, filed on August 6, 2013,
was made within one year from the time the last formal demand to vacate was made.
Respondents would not have made an offer to purchase the subject land from petitioners had they
been truly in possession of the property in the concept of an owner. Their claim is thus negated
by the fact that the subject land is registered in the name of the petitioners. It is settled that a
Torrens title is evidence of an indefeasible title to property in favor of the person in whose name
the title appears. It is conclusive evidence with respect to the ownership of the land described
therein. Hence, petitioners as the titleholders are entitled to all the attributes of ownership of the
property including possession.
Even then, the respondents' claim of possession of the property in the concept of an owner is a
collateral issue that may not be decided upon in a case for unlawful detainer. To stress, the only
issue to be resolved in an unlawful detainer case is physical or material possession of the
property involved, independent of any claim of ownership by any of the parties involved.
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II.C.4. Quieting of Title
HEIRS OF MANUEL ENANO vs. SAN PEDRO CINEPLEX PROPERTIES
G.R. No. 236619. April 6,2022
By: tinee
DOCTRINE:
Nature of an action for quieting of title: In an action for quieting of title, the objective is
for the competent court to remove the cloud by determining the rights of the parties so that
the ones entitled to the subject property may exercise said rights without fear, disturbance
or interference from those who have no right over the same.
Requisites for quieting of title:
1. the plaintiff must have a legal or equitable title or interest in the property subject of
the complaint.
2. the deed, claim, encumbrance or proceeding allegedly casting doubt over one’s title
must be proven to be in truth invalid, a void or inoperative despite the prima facie
appearance of validity.
Legal title means registered ownership, where the subject property is registered under the
name of the complainant in action to quiet the title, which may be evidenced by presenting
the certificate of title in the latter’s name.
Equitable title denotes beneficial ownership, which is “ownership recognized by law and
capable of being enforced in the courts at the suit of the beneficial owner”
FACTS:
Manuel Enano is the registered owner of the subject property evidenced by TCT No. T-35050,
Manuel had been in open and continuous possession of the subject property since 1966 until his
demise in 1987 when his heirs had taken possession of the same. In June 2006, they received a
complaint for forcible entry filed by San Pedro Cineplex Properties Inc. claiming that it is the
registered owner of the subject property by virtue of TCT Nos. TCT 309608, TCT 309610 and
TCT 309610. Jennifer Enano Bote, daughter of Manuel H. Enano, was the Representative of the
latter’s legal heirs. In August 2006, she authorized her husband Virgilio Bote through an SPA to
file a complaint for quieting of title with damages.
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To support the petitioner’s claim, Virgilio recounted in his Judicial Affidavit that Manuel and his
predecessors continuously occupied the subject property since 1965 and the taxes due thereon
had been paid until 2008 when the complaint for forcible entry was filed, Virgilio discovered that
the respondent’s TCT’s were fictitious because they originated from an unnotarized and undated
Deed of Sale between respondent and La Paz Housing Development Corporation. Moreover, La
Paz Housing TCT Nos. were reconstituted in a proceeding that did not transpire because no
petition for reconstitution was filed nor any record of reconstitution was found. Petitioners then
concluded that the sale between respondent and La Paz Housing was fraudulent.
The version of the Respondent on the other hand chronicled the chain of transaction which led to
its acquisition of the subject property.
First, Gliceria owned the subject property as her paraphernal property evidenced by OCT No.
0-217. Second, Gliceria Sold the subject property to SPS. Antonio Sibulo and Rosario Islan in
1964, and consequently TCT No. T-31852 was issued in their favor. When TCT no. T-31852 was
cancelled. Two separate certificates of the title in the name of the Sps. Sibulo were issued as
follows: 1. TCT No. T-42530 over the portion of the subject property covering 34,847 sq meters
designated as Lot A and TCT No T- 42531 over the portion of the subject property covering
20,000 square meters each for Lot 2-B and 2-C. Third, the Sps. Sibulo sold lots 2-B and 2-C to
Dona Crisanta Investment and Development Corporation in 1966, Hence TCT no. T-27112 was
issued in their favor, Then in 1967, the Sps. Sibulo sold Lot 2-A to Dona Crisanta to whom TCTT-18811 was issued. Fourth, Dona Crisanta sold the lots to La Paz Housing as evidenced by the
Deed of Sale with Mortgage in 1985, As a Result TCT nos. T-129577, T-129578, and T-129579
were issued in favor of La Paz Housing. Fifth, La Paz Housing sold the subject property to
respondents evidenced by a Deed of Sale in 1994. Consequently, La Paz Housing Certificates of
Title were cancelled and TCT Nos. T-309608, T-309609 and T-309610 were issued in favor of
the respondent.
Respondent also contended that Manuel’s TCT No. T-35050 was in fact covered in 219 sqm
property in Barrio Mayapa, Calamba Laguna.
The RTC ruled in favor of the petitioners, aggrieved respondent appealed the decision. The CA
then reversed the RTC’s findings and dismissed the complaint for lack of merit. Hence, this
present petition.
ISSUE:
Whether or not the CA gravely erred when it reversed the decision of the RTC that Petitioners
have better right over the property subject of the instant case as against herein respondents.
RULING:
NO. Petitioners did not satisfy the requisites for quieting of title, thus, their complaint
must be dismissed for lack of merit.
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The crux of the controversy points us to Article 476 and 477 of the Civil Code of the Philippines,
the provisions that govern quieting of title which read:
ARTICLE 476: Whenever there is a cloud on title to real property or any interest therein, by
reason of any instrument, record, claim, encumbrance or proceeding which is apparently valid or
effective but is in truth and in fact invalid, ineffective, voidable or unenforceable, and may be
prejudicial to said title, an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or
any interest therein.
ARTICLE 477. The plaintiff must have legal or equitable title to or interest in the real property
which is the subject-matter of the action. He need not be in possession of said property.
As correctly observed by the appellate court, we likewise find that petitioners failed to
satisfactorily establish the two requisites. Consequently, their complaint for quieting must fail.
To begin with, petitioners failed to prove that they hold a legal or equitable title over the subject
property. Petitioners are neither holders of a legal title nor equitable title over the subject
property. To prove this requisite, they presented, among others, TCT No. T-35050 which was
issued in the name of manuel and tax declaration among others which were not sufficient to
establish their claim.
Similarly, Second requisite was not ascertained since the certificates of title in the name of the
respondent and the origin of the same were precisely demonstrated through the chain of
transactions, which led to respondent’s ownership of the subject property. Therefore, the alleged
cloud created by the respondent’s certificates of title did not exist. In fact, the genealogy of
respondent’s certificates of title were evidenced by the presentation of all certificates of title from
the original title in the name of gliceria, to sps. Sibulo, then Dona Crisanta investment to la paz
housing and finally to respondent. These documentary evidence serve as a competent proof that
respondent’s certificates of title are genuinely valid not just on their face but also on all legal
aspects.
Further, it is settled that a tax declaration does not prove ownership, it is merely an indicium of
chain of ownership. Payment of taxes is not proof of ownership; it is at best, an indicium of
possession in the concept of ownership. Neither Tax receipts nor declaration of ownership for tax
purposes is evidence of ownership or of a right to possess realty when not supported by other
effective proof.
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HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M. HERNANDEZ
G.R. No. 236826, March 23, 2022
By: Chie
DOCTRINE:
An action is deemed an attack on a title "when the object of the action or proceeding is to
nullify the title and thus challenge the judgment pursuant to which the title was decreed.
The attack is direct when the object of an action or proceeding is to annul or set aside such
judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral
when, in an action to obtain a different relief, an attack on the judgment is nevertheless
made as an incident thereof."
To be clear, what cannot be collaterally attacked is the certificate of title, and not the title
itself. The certificate referred to is the document issued by the Register of Deeds known as
the Transfer Certificate of Title or TCT.
In contrast, the title referred to by law means ownership which is represented by that
document. Title as a concept of ownership should not be confused with the certificate of
title evidencing such ownership.
FACTS:
The Heirs of Epifania Hernandez since 1955 have been occupying a parcel of land located in
Bulacan with an area of 200 square meters(subject property), which forms part of a 1417 square
meter property previously owned by the spouses Anastacio and Lourdes Sakay and spouses
Godofredo and Florsita Cruz. Epifania and respondents had built their house on the subject
property with consent and tolerance of its previous owners.
In 1967, the Spouses Sakay and Cruz sold the 1417 square meter property to Herminio. In 1985,
Herminio sold to Epifania the 200-square meter portion of the land on which her house was built
for P400.00 per square meter with sale agreement that the total price of the subject property will
be paid within a year. In the event that Epifania failed to comply with the terms, the sale
agreement would be treated as a lease contract, and the amounts paid by Epifania would be
treated as rentals or advances to Herminio under a continuing lease of the subject property.
Epifania made initial payment of P2000 on October 1985 signed by Herminio and made payment
by ay of installment to Herminio by depositing certain amounts of money in a joint account
between them with the bank and also through various Metrobank checks and was able to pay in
full the subject property before her death on July 28, 1995.
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Sometime in March 2000, respondents executed an Extrajudicial Settlement of Heirs of Epifania
Hernandez which stated in part that proceeds of joint savings account of their mother and
Herminio with the Bank shall be considered as full payment for the subject property to which
Herminio conformed by affixing his signature thereon.
On December 15, 1999 and July 2000, respondents received from Marquez demand letters to
vacate the premises of the subject property. It appears that on August 4, 1994, Marquez and
Herminio executed an Extrajudicial Settlement of Estate with waiver of rights whereby Herminio
waived all his rights interest and participation over the 1417 square meter property in favor of
Marquez.
Despite respondents’ demands, Herminio allegedly refused to execute a deed of absolute sale
over the subject property in favor of Epifania. Thus, respondents’ complaint for specific
performance against Herminio. Respondents later on, amended their complaint and prayed that
judgment be rendered directing Herminio and Marquez to cause the execution of a deed of
absolute sale for the subject property in favor of respondents and that title over the subject
property be transferred to their names.
RTC and CA ruled in favor of the respondents. Hence the instant petition.
ISSUE:
Whether or not the conversion of then case for specific performance to quieting of title is a
collateral attack on the title which is prohibited by law.
RULING
NO, it is not a collateral attack.
Here, Marquez believes that an action for quieting of title which involves a challenge to the
validity of TCT No. T-81516 is a collateral attack to a certificate of title, which is prohibited by
law.
In this case, what respondents are assailing is Marquez's claim of ownership over the subject
property. In any event, placing a land under the Torrens system does not mean that ownership
thereof can no longer be attacked or disputed. A certificate cannot always be considered as
conclusive evidence of ownership. Even on the premise that respondents seek to invalidate TCT
No. T-81516 in an action for quieting of title, said action is in fact, not a collateral attack but a
direct attack thereto since it is essential in such action that respondents show the invalidity of the
deed which casts a cloud on their title over the subject property.
In other words, a complaint for quieting of title does not amount to a collateral attack because at
the heart of the action for quieting of title is the adjudication of the Ownership of the disputed
property and the consequent nullification of the questioned certificates of title, if so warranted by
the circumstances of the case.
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JOSEFINA Q. VILORIA vs. HEIRS OF PABLO GAETOS
G.R. No. 206240, May 12, 2021
By: Jay-R
DOCTRINE:
In order that an action for quieting of title may prosper, it is essential that the plaintiff
must have legal or equitable title to, or interest in, the property which is the subject-matter
of the action. Legal title denotes registered ownership, while equitable title means beneficial
ownership. In the absence of such legal or equitable title, or interest, there is no cloud to be
prevented or removed.
An action for quieting of title is essentially a common law remedy grounded on equity. The
competent court is tasked to determine the respective rights of the complainant and other
claimants, not only to place things in their proper place, to make the one who has no rights
to said immovable respect and not disturb the other, but also for the benefit of both, so that
he who has the right would see every cloud of doubt over the property dissipated, and he
could afterwards without fear introduce the improvements he may desire, to use, and even
to abuse the property as he deems best. But 'for an action to quiet title to prosper, two
indispensable requisites must concur, namely:
1. the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and
2. the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title
must be shown to be in fact invalid or inoperative despite its prima facie appearance
of validity or legal efficacy
Legal or equitable title to, or interest in, the real property subject matter of the action must
be established by the plaintiffs as a prerequisite in order for their action to quiet title to
prosper.
FACTS:
The Quejados family, namely, Josefina, Remedios, Benjamin, Demetrios, and Felicitas filed a
complaint for Quieting of Title with Damages claiming ownership over a 10,000 sq. meter lot
located in Taboc, San Juan, La Union as they inherited it from their predecessor-in-interest who
had openly, publicly, continuously and peacefully possessed the same without interruption for
more than 30 years in the concept of an owner.
The Quejados heirs alleged that the heirs of Gaetos surreptitiously and without their knowledge
and consent caused the subject property to be surveyed to claim ownership. Their acts disturbed
and put a cloud on their ownership, possession, and title over the subject property. Efforts toward
an amicable settlement between parties were exerted before the barangay council but failed.
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Gaetos heirs denied the allegations. They insisted that the Quejados were not the owners of the
subject property. They maintained that the Gaetos family owned the property in dispute by
succession from a common ancestor several years before World War II. The subject property was
later surveyed through a cadastral survey of San Juan, La Union and partitioned.
During the trial, they presented their testimonial evidence
Quejados testimonial evidence:
1. Demetrio and Remedios testified that upon the demise of their parents, they took over the
possession of the subject property, which was surrounded as follows: North-Chan Family; SouthAdelina Paredes; East-Segundo Gaetos; and West-China Sea. To fortify the veracity of their
claim of ownership over the land, they also averred that their mother mortgaged the subject
property on several occasions with various banks.
2. The testimonies of Eulogia Catbagan (Eulogia) and Vicente Laurea, Sr. (Vicente), a tenant and
a neighbor, respectively, were also presented. They both acknowledged the ownership of the
Quejados over the subject property. Eulogia attested its "sandy" state while Vicente claimed that
his brother was a tenant of the subject property. Pieces of documentary evidence, like the
mortgages and their cancellation and Tax Declaration Nos. 13457 and 15859 under the name of
Demetrio and Remedios' mother, were presented to support their claim of ownership.
Gaetos heirs' testimonial evidence:
1. Testimony of lsabelo Laurea (lsabelo), who testified that the subject property was near his
place and its original owner was the grandfather of Francisco Gaetos. The first tenant of
the subject property was Teodoro Laurea, his grandfather, who was succeeded by Cosme
Laurea and then his father, Laureano Laurea. The tenancy was later passed on to Isabelo.
The subject property was bounded as follows: North brother of Francisco Gaetos;
South-daughter of Edis Agbunag; East-national road; West-sea. He also knew that the
husband of Carmen Fernandez bought a land previously owned by Mariano Padua
located in the east of the national road. Meanwhile, the house of Carmen Fernandez was
located at a distance of 100 meters from his own place but not within the subject
property.
2. Teresita Ganaden (Teresita), granddaughter of Francisco Gaetos, also testified. She
recalled that the subject property was originally owned by Leon Gaetos and Praxedes
Pascua, who had six children, namely: Eudoxia, Galiciano, Francisco, Francisca, Feliza,
and Raymunda, who were already deceased when the case was instituted. She likewise
presented the San Juan,La Union Cadastre Cad 739-D to show that the subject property
was partitioned among the six children of Leon and Praxedes Gaetos. Eudoxia acquired
the northern portion (Lot 1434); the middle portions were allotted to Galicano (Lot
1433); Francisco was given Lot 1432; Feliza received Lot 1431; Raymunda had Lot
1430; and Francisca got the southern portion or Lot 1429.
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3. To bolster their claim, Teresita also presented receipts of expropriation payments for the
properties ordered expropriated by the Court of First Instance of La Union, including the
decision in the said case involving the subject property. The properties, as apportioned,
were subsequently transferred to individual persons, as evidenced by current tax
declarations their names presented before the court.
RTC dismissed the complaint for Quieting of Title of the petitioner. The court found that
Quejados did not convincingly establish that they possessed the property publicly, exclusively,
and peacefully in the concept of owners and did not have the requisite title to pursue an action
for quieting the title. CA affirmed the RTC’s decision. On the ground that they failed to prove
their title over the subject property and that the tax declarations under the name of their deceased
mother, coupled with their allegations of possession of the subject property did not suffice to
substantiate their claims. Petitioners filed a petition for review on certiorari.
Petitioner’s argument:
They argue that the appellate court seriously erred in declaring that they have not proven their
legal or beneficial title to institute the action to quiet title against the respondents despite the
evidence they presented. They allege that the uncontroverted tax declarations under the name of
their deceased mother support their claim of ownership. Their failure to declare the subject
property in their names for taxation purposes does not destroy their title over it. Moreover, the
fact that the subject property had been mortgaged by their predecessors-in-interest in favor of
several banks proves their ownership, considering that it is standard practice for banks to
investigate the identity of the owner of the real property being offered as a collateral. The banks'
approval of mortgages of the subject property under the name of their predecessors-in-interest
points to the veracity of their claim of ownership. Furthermore, respondents' pieces of evidence
did not show their actual possession over the subject property, which thus belies their claim of
ownership. The testimonial evidence presented by the Gaetoses, particularly as regards the
location, identity, and description of the subject property, clearly negates their claim of
ownership. Lastly, the cadastral plan and the tax declarations presented by respondents are not
conclusive proof of their ownership over the subject property.
Respondent’s arguments:
The respondents, in their Comments, are urging for the outright dismissal of the petition in view
of its defective Verification and Certification against Forum Shopping. They point out that not all
the petitioners signed the verification and certification against forum shopping. In addition, the
petition raised purely factual matters which were already passed upon by the appellate court.
Even brushing aside technical infirmities, the respondents also aver that petitioners' appeal
should nonetheless be denied for they failed to establish by preponderance of evidence their
superior, legal, and substantive right over the property in dispute. The pieces of evidence they
presented, including the tax declarations under the name of their mother, do not prove ownership
and title over the subject property. They stress that both the trial court and the appellate court
arrived at the same conclusion, which should no longer be disturbed.
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ISSUE:
Whether or not the petitioner has a legal and equitable title to or interest in the real property
subject of the action.
RULING:
NO, petitioner do not have legal and equitable title to the property.
Here, petitioners did not have a legal title to the subject property. There were no certificates of
title in their respective names. Moreover, based on the findings of the lower courts, they also
failed to substantiate their claim of having equitable title as well. The tax declarations under the
names of their predecessor-in-interests, documentation alluding to mortgages, and the testimonial
evidence they have presented did not convincingly establish their equitable title over the subject
property.
As accurately ruled by both the trial court and the appellate court, tax declarations and receipts
are not conclusive evidence of ownership or of the right to possess land when not supported by
other evidence. Mere allegation of open, continuous, and exclusive possession of the property in
dispute without substantiation does not meet the requirements of the law.
Hence, based on the foregoing, petitioners failed at the outset to establish the first requirement of
having legal or equitable title over the property in dispute. Their cause of action for quieting of
title simply cannot prosper. In view of their lack of title, legal or equitable, there is no cloud to be
prevented or removed and there is no case of quieting of title to speak of.
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II.D.1. Distinctions Between Right to Property Owned in Common and
Full Ownership Over the Ideal Share
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M. HERNANDEZ
G.R. No. 236826, March 23, 2022
By: Chie
DOCTRINE:
It is true that in a contract of sale which purports to sell a specific or definite portion of
unpartitioned land is null and void ab initio. The undivided interest of a co-owner is also
referred to as the “ideal or abstract quota” or “proportionate share”. On the other hand,
the definite portion of the land refers to specific metes and bounds of a co-owned property.
In other word, a co-owner cannot sell a definite portion of a land without the consent from
his or her co-owners. This is based on the principle that a sale of a portion of the property
is considered an alteration of the thing owned in common, and therefore, requires the
unanimous consent of the other co-owners. Of course, the law allows a co-owner to alienate
an undivided interest of the co-owned property.
Art 491 of the Civil Code states, in part, that none of the co-owners shall, without the
consent of the others, make alterations in the thing owned in common, even though benefits
for all would result therefrom.
Art 493 of the Civil Code states that each co-owner shall have the fill ownership of his part
and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or
mortgage it, and even substitute another person in its enjoyment, except when personal
rights are involved. But the effect of the alienation or the mortgage, with respect to the
co-owners, shall be limited to the portion which may be allotted to him in the division upon
the termination of the co-ownership.
FACTS:
The Heirs of Epifania Hernandez since 1955 have been occupying a parcel of land located in
Bulacan with an area of 200 square meters(subject property), which forms part of a 1417 square
meter property previously owned by the spouses Anastacio and Lourdes Sakay and spouses
Godofredo and Florsita Cruz. Epifania and respondents had built their house on the subject
property with consent and tolerance of its previous owners.
In 1967, the Spouses Sakay and Cruz sold the 1417 square meter property to Herminio. In 1985,
Herminio sold to Epifania the 200-square meter portion of the land on which her house was built
for P400.00 per square meter with sale agreement that the total price of the subject property will
be paid within a year.
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In the event that Epifania failed to comply with the terms, the sale agreement would be treated as
a lease contract, and the amounts paid by Epifania would be treated as rentals or advances to
Herminio under a continuing lease of the subject property.
Epifania made initial payment of P2000 on October 1985 signed by Herminio and made payment
by ay of installment to Herminio by depositing certain amounts of money in a joint account
between them with the bank and also through various Metrobank checks and was able to pay in
full the subject property before her death on July 28, 1995.
Sometime in March 2000, respondents executed an Extrajudicial Settlement of Heirs of Epifania
Hernandez which stated in part that proceeds of joint savings account of their mother and
Herminio with the Bank shall be considered as full payment for the subject property to which
Herminio conformed by affixing his signature thereon.
On December 15, 1999 and July 2000, respondents received from Marquez demand letters to
vacate the premises of the subject property. It appears that on August 4, 1994, Marquez and
Herminio executed an Extrajudicial Settlement of Estate with waiver of rights whereby Herminio
waived all his rights interest and participation over the 1417 square meter property in favor of
Marquez.
Despite respondents’ demands, Herminio allegedly refused to execute a deed of absolute sale
over the subject property in favor of Epifania. Thus, respondents’ complaint for specific
performance against Herminio. Respondents later on, amended their complaint and prayed that
judgment be rendered directing Herminio and Marquez to cause the execution of a deed of
absolute sale for the subject property in favor of respondents and that title over the subject
property be transferred to their names.
RTC and CA ruled in favor of the respondents. Hence the instant petition.
ISSUE:
Whether or not the sale agreement is void since, at the time the same was executed, Herminio
failed to obtain her consent as co-owner of the property, applying the Cabrera ruling.
RULING:
NO, the sale agreement is not void. The Cabrera ruling is not applicable to the case at bar.
First, unlike in Cabrera, no evidence was adduced during trial to show that Marquez had no
knowledge of, or disapproved the sale of the subject property to Epifania and respondents.
Second, the only evidence of co-ownership presented by Marquez is the Extra-judicial
Settlement of Estate with Waiver of Rights executed by and between Herminio and Marquez or
nine years after the contract of sale was entered into by Herminio and Epifania.
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Even if the 1417 square meter property was owned in common by Herminio and Marquez, the
sale of a definite portion thereof by Herminio ot Epifania is entirely valid. This is because the
moment Herminio pointed out the boundaries of the subject property, and Marquez made no
objection thereto, there is, in effect a partial partition of the co-owned property. Accordingly, the
sale of a definite portion thereof can no longer be questioned or assailed by Marquez.
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II.D.4. Partition
REYNALDO REYES vs. SPS. WILFREDO AND MELITA GARCIA
G.R. No. 225159. March 21, 2022
By: Unicorner
DOCTRINE:
1. A co-owner may alienate an inchoate portion of the subject property which belongs
to him or her. Article 493 of the Civil Code provides for the rights of the co-owners
over a co-owned property.
2. Since a co-owner is entitled to sell his undivided share, a sale of the entire property
by one co-owner without the consent of the other co-owners is not null and void.
However, only the rights of the co-owner-seller are transferred, thereby making the
buyer a co-owner of the property. The proper action in cases like this is not for the
nullification of the sale or for the recovery of the thing owned in common from the
third person who substituted the co-owner or co-owners who alienated their shares,
but the DIVISION of the common property as if it continued to remain in the
possession of the co-owners who possessed and administered it. The appropriate
recourse of co-owne rs in cases where their consent were not secured in a sale of the
entire property as well as in a sale merely of undivided shares of some of the
co-owners is an action for PARTITION under Rule 69 of the Revised Rules of
Court. Neither recovery of pos-session nor restitution can be granted since the
defendant buyers are legitimate proprietors and possessors in joint ownership of
the common property claimed.
3. Without partition, either by agreement between the parties or by judicial
proceeding, a co-heir cannot dispose of a specific portion of the estate.
4. An individual co-owner cannot adjudicate to himself or claim title to any definite
portion of the land or thing owned in common until its actual partition by
agreement or judicial decree. Prior to that time all that the co-owner has is an ideal
or abstract quota or proportionate share in the entire thing owned in common by all
the co-owners. What a co-owner may dispose of is only his undivided aliquot share,
which shall be limited to the portion that may be allotted to him upon partition.
FACTS:
Reynaldo Reyes claimed that Julian Reyes is the owner of an unregistered parcel of land located
in Quezon St., Bagumbayan, Taguig. Julian and his spouse, Marcela Reyes had nine children,
namely, Vitaliano, Maria, Felicidad, Ireneo, Isidoro, Anastacio, Julia, Vicente and Isadora.
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On September 21, 1944 and October 31, 1964, Julian and Marcela died, respectively.
On August 30, 1975, the heirs of Julian and Marcela executed a "Partihan at Bilihan nang
Kalahating Bahagi ng Lupang Tirahan sa Labas ng Hukuman," and sold half of the subject
property to one of the heirs, Anastacio. The remaining quarter of the subject property was
occupied by Vitaliano's children, namely, REYNALDO REYES and Fermin Reyes while the
other quarter was sold by Isidoro to Wilfredo and Melita Garcia (spouses Garcia).
Sometime in 1997, REYNALDO REYES and Fermin came to know of Isidoro's sale of 1/4 of
the subject property to spouses Garcia when the latter filed an ejectment case against Fermin.
Thus, REYNALDO REYES filed a complaint for recovery of ownership, quieting of title and
annulment of deed of sale against the spouses Garcia alleging that the Deed of Sale dated
August 16, 1989 is void since Isidoro is not the true and real owner of the subject property which
originally belongs to Julian's estate.
On their part, spouses Garcia countered that the complaint should be dismissed on the ground of
res judicata, failure to state a cause of action, and to implead indispensable parties,
non-compliance with a condition precedent, and extinguishment of claim by reason of waiver
and abandonment. The spouses Garcia pointed out that the assessed value of the subject property
was only P19,040.00 as per the tax declaration presented by them, which is below the
jurisdictional limit of P50,000.00.
Also, the spouses Garcia alleged that REYNALDO REYES is not the real party in interest and
thus cannot bring the present suit against them to recover the subject property which is co-owned
with other non-impleaded parties.
In addition, the spouses Garcia averred that although no partition agreement was executed by the
heirs of Julian and Marcela, the heirs already agreed to divide it among themselves when they
allowed a portion of the subject property to be occupied by heirs of Vitaliano. Also, they claimed
that the portion of the subject property sold to them was Isidoro's share in the subject property.
ISSUES:
1. Whether or not the proper remedy of the parties is to partition the subject property
RULING:
YES. Reyes’ recourse of filing a complaint for nullification of sale and recovery of
ownership is not the proper action.
In Bailon-Casilao v. Court of Appeals, the Court explained that the appropriate remedy is not a
nullification of the sale or for the recovery of the thing owned in common but a division of the
common property.
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To demand a partition or division of the common property is in accord with Article 494 of the
Civil Code, that is, no co-owner shall be obliged to remain in the co-ownership and that each
co-owner may demand at any time partition of the thing owned in common insofar as his or her
share is concerned.
Nevertheless, the spouses Garcia, as co-owner of the property by virtue of the deed of sale dated
August 16, 1989 31 executed by Isidoro in their favor, cannot claim a specific portion of the
subject property prior to its partition. With the subsistence of co-ownership, the spouses Garcia
only owns Isidoro's undivided aliquot share of the subject property. The spouses Garcia and all
the co-owners cannot adjudicate to himself or herself title to any definite portion of the subject
property until its actual partition by agreement or judicial decree.
While under Article 493 of the New Civil Code, each co-owner shall have the full ownership of
his part and of the fruits and benefits pertaining thereto and he may alienate, assign or mortgage
it, and even substitute another person in its enjoyment, the effect of the alienation or the
mortgage with respect to the co-owners, shall be limited, by mandate of the same article, to the
portion which may be allotted to him in the division upon the termination of the co- ownership.
He has no right to sell or alienate a concrete, specific, or determinate part of the thing in common
to the exclusion of the other co-owners because his right over the thing is represented by an
abstract or ideal portion without any physical adjudication. An individual co-owner cannot
adjudicate to himself or claim title to any definite portion of the land or thing owned in common
until its actual partition by agreement or judicial decree. Prior to that time all that the co-owner
has is an ideal or abstract quota or proportionate share in the entire thing owned in common by
all the co-owners. What a co-owner may dispose of is only his undivided aliquot share,
which shall be limited to the portion that may be allotted to him upon partition. Before
partition, a co-heir can only sell his successional rights.
In a catena of decisions, the Supreme Court had repeatedly held that no individual can claim
title to a definite or concrete portion before partition of co-owned property. Each co-owner only
possesses a right to sell or alienate his ideal share after partition. However, in case he disposes
his share before partition, such disposition does not make the sale or alienation null and void.
What will be affected on the sale is only his proportionate share, subject to the results of the
partition. The co-owners who did not give their consent to the sale stand to be unaffected by the
alienation.
2. Whether or not the Deed of Sale dated August 16, 1989 is null and void insofar as the
interests of the other heirs are concerned.
NO, Deed of Sale dated August 16, 1989 is not null and void insofar as the interests of the
other heirs are concerned.
It is undisputed that the subject property belongs to Julian, and that upon the demise of Julian
and his wife Marcela, the heirs executed Partihan at Bilihan nang Kalahating Bahagi ng Lupang
Tirahan sa Labas ng Hukuman dated August 30, 1975 26 which sold half of the subject property,
to their co-heirs Anastacio.
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As to the remaining half of the subject property, the same remains in the estate of Julian and
Marcela. Nonetheless, a co-owner may alienate an inchoate portion of the subject property
which belongs to him or her.
Thus, Isidoro, as one of the heirs of Julian and Marcela, has the right to alienate his pro indiviso
share in the co-owned property even without the consent of the other co-heirs. However, as mere
part owner, he cannot alienate the shares of the other co-owners.. Hence ,Isidoro's sale of the
remaining half of the subject property will only affect his own share but not those of the other
co-owners who did not consent to the sale. The spouses Garcia will only get Isidoro's undivided
share in the subject property.
Even if a co-owner sells the whole property as his, the sale will affect only his own share but not
those of the other co-owners who did not consent to the sale. A co- owner is entitled to sell his
undivided share, a sale of the entire property by one co-owner without the consent of the other
co-owners is not null and void. However, only the rights of the co-owner-seller are transferred,
thereby making the buyer a co-owner of the property.
A co-owner cannot rightfully dispose of a particular portion of a co- owned property prior to
partition among all the co- owners. However, this should not signify that the vendee does not
acquire anything at all in case a physically segregated area of the co-owned lot is in fact sold to
him. Since the co-owner/vendor's undivided interest could properly be the object of the
contract of sale between the parties, what the vendee obtains by virtue of such a sale are the same
rights as the vendor had as co-owner, in an ideal share equivalent to the consideration given
under their transaction. In other words, the vendee steps into the shoes of the vendor as co-owner
and acquires a proportionate abstract share in the property held in common.
Consequently, whether the disposition involves an abstract or concrete portion of the co-owned
property, the sale remains validly executed. Apropos, the fact that the sale executed by Isidoro in
favor of the spouses Garcia was made prior to the partition of the subject property will not render
the deed of sale dated August 16, 1989 null and void. Nonetheless, despite the validity of the
sale, the spouses Garcia only acquired Isidoro's inchoate interest in the subject property and not a
definite portion thereof.
GUILLERMA S. SILVA vs. CONCHITA S. LO
G.R. No. 206667. June 23, 2021
By: liz0114
DOCTRINE:
In Quijano v. Amante, we ruled that each of the co-owners holds the property pro indiviso
and exercises his or her rights with the entire property; thus, each co-owner may use and
enjoy the property with no other limitation than that he shall not injure the interests of his
co-owners.
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Until a division is actually made, the respective share of each cannot be determined, and
every co-owner exercises, together with his co-participants, joint ownership of the pro
indiviso property, in addition to his use and enjoyment of it.
FACTS:
On May 20, 1975, Carlos Sandico, Jr. (Carlos Jr.). died intestate leaving behind a sizeable estate
to his compulsory heirs: his surviving spouse Concepcion, and their seven children, Enrica,
Carlos III, Lily, Pamela, Teodoro, petitioner Guillerma Sandico-Silva, and respondent Conchita
Sandico-Lo. Sometime in 1976, the heirs of Carlos Jr. executed an Extrajudicial Settlement of
Estate which provided that all properties of the decedent shall be owned in common, pro
indiviso, by his heirs. In September 1988, Carlos, Jr. 's heirs executed a Memorandum of
Agreement for the physical division of the estate. However, both agreements were never
implemented and the heirs remained pro indiviso co-owners of the estate's properties.
In 1989, Enrica filed a civil case impleading all the other heirs. Teodoro withdrew as defendant
and joined suit as plaintiff-in-intervention. Defendants therein opposed the physical division of
the properties and primarily asserted Concepcion's usufructuary rights over the estate's real
properties. The RTC issued numerous orders reflecting the negotiations during court hearings for
the distribution and partition of the estate among the heirs. The contentious matters among the
heirs were the inventory and classification of the estate's properties and their respective proposals
for settlement and division thereof.
The Registry of Deeds issued a TCT issued in the names of Concepcion and Carlos III subject to
the encumbrances of the decedent's estate which listed the names of the other compulsory heirs.
The title likewise noted Enrica’s lis pendens. In the course of the trial, the heirs agreed on the
manner of division of each property-via raffle conducted by the trial court. The heirs drew lots
for an aliquot of each property of the estate. For the heirs who failed to attend the hearing and the
scheduled raffle, their respective counsels or their appointed attorney-in-fact, either Concepcion
or Guillerma. Since Concepcion and the other children refused to sign the final draft of the
compromise agreement, this sparked another set of discussion culminating in the Enrica's and
Teodoro's motion for the RTC to "decide the case on the basis of the stipulations entered into by
the parties embodied in the various orders of the Court."
On January 11, 2000 RTC ordered the partition, accounting, delivery of shares and damages
among the compulsory heirs of Carlos Jr. pursuant to the terms and conditions contained in the
final Compromise Agreement already signed by the Enrica and Teodoro, dated September 17,
1998. On June 26, 2000, Conchita executed a Revocation of her latest SPA dated June 8, 1999,
which authorized Concepcion to represent her in the hearings at the civil case and enter into any
compromise and partition agreement. Conchita filed a copy of the Revocation with the RTC but
failed to furnish her agent, Concepcion, a copy thereof.
Despite RTC’s Order of Partition, various properties of the estate remained undivided and were
not distributed among the heirs. Thus, on August 29, 2003, Enrica filed a Motion to Appoint
Commissioners to Make Partition.
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On October 17, 2003, the RTC granted the Motion to Appoint Commissioners. Yet again, the
appointment of commissioners did not happen as plaintiffs appeared to have acquiesced to the
defendants' proposed subdivision of the agricultural lands, including the herein subject property.
Sometime in 2006, Concepcion, representing herself and the other defendants-heirs, Carlos III,
petitioner Guillerma, Lily, Pamela and respondent Conchita, executed a second agreement with
the tenants of the subject property designated as the “2006 Kasunduan”. The 2006 Kasunduan,
similar to the 1999 Kasunduan, likewise covered the partition of the subject property and the
transfer of ownership of half thereof to the eight tenants while the other half remained with the
heirs of Carlos, Jr. Thereafter, the defendants filed a Motion for Approval of New Agreement
and New Subdivision Plan of certain agricultural properties, including the subject property,
which motion the plaintiffs no longer opposed.
On March 2, 2007, the RTC issued an Order noting the agreement among the parties to undertake
a raffle for the distribution of the subject property. Through their respective counsels, the parties
filed a Minutes of the Raffle for the Distribution of the Property covered by the TCT. On April
13, 2007, the RTC granted defendants' motions: it approved the New Agreement and Subdivision
Plan and ordered the plaintiffs Enrica and Teodoro to sign the document. The approval was
subject to the distribution of the property as agreed upon in the raffle done by the parties on
March 30, 2007. Conchita did not question the March 2 and April 13, 2007 Orders of the RTC.
On May 26, 2009, to execute the RTC's April 13, 2007 Order and facilitate the issuance of new
titles over the subject property, Concepcion filed a Motion to Order Register of Deeds to Enter
New Titles. On November 6, 2009, through a different counsel, Conchita opposed Concepcion's
May 26, 2009 Motion on the ground that the 2006 Kasunduan is void. As per Conchita, the 2006
Kasunduan lacked her signature since she had already revoked the agency relationship with her
mother, Concepcion. On February 9, 2010, the RTC granted Concepcion's motion and ordered
the Register of Deeds of Pampanga to enter new titles in the names of the tenants and the heirs of
Carlos, Jr. It ruled that its April 13, 2007 Order approving the subdivision of the subject property
and its distribution via raffle, had already become final and executory after the affected parties,
including Conchita, did not file the appropriate remedy therefrom.
Conchita filed an MFR but RTC denied. Furthermore, the RoD of Pampanga cancelled the TCT
and issued new ones in favor of the tenants. Conchita filed an R65 petition before the
CA,alleging that the April 13, 2007 Order did not attain finality as it was a void judgment based,
in tum, on a void agreement-the 2006 Kasunduan. Concepion died during the pendency of the
case and was substituted by the heirs.
CA annulled and set aside RTC’s decision. The CA invalidated the 2006 Kasunduan because it
lacked the signature of all the heirs: Enrica's, Teodoro's and Conchita's who now repudiates her
mother's, Concepcion's, signature on her behalf. Only Guillerma filed a motion for
reconsideration which was denied by the appellate court in its April 11, 2013 Resolution. Hence,
this R45 appeal by certiorari.
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ISSUE:
Whether or not the RTC effectively distributed the estate to persons who are not heirs of the
decedent by approving the transfer of, and title to, half of the subject property.
RULING:
YES, the partition of the subject property, and the consequent transfer and titling of half
thereof to qualified beneficiaries, is valid, just, and binding on all the heirs of the decedent,
including Conchita.
The CA mistakenly annulled the entire partition, and sale of half, of the subject property to the
tenants contrary to Articles 493-495 and 498 of the Civil Code which, in sum, allow for
alienation by a co-owner of his or her share in the co-owned property, termination of the
co-ownership, and partition of the property.
Even without going into the validity of Concepcion signing the 2006 Kasunduan on Conchita's
behalf, the appellate court could not void the sale and transfer of half of the subject property to
its qualified beneficiaries under a voluntary transfer arrangement provided in the CARL. As
correctly ruled by the trial court, albeit plaintiffs Enrica and Teodoro did not sign the Kasunduan,
they acquiesced to the partition and distribution of the subject property, the qualified tenants
receiving half thereof. In fact, Enrica filed a Manifestation dated December 18, 2006 that she and
Teodoro will not object to the 2006 Kasunduan as long as they will be given their preferred
portion of the subject property.
In this case, the partition and alienation of half of the subject property, through the 2006
Kasunduan, is not completely void and cannot be annulled as to the share of Concepcion and the
other heirs, including Enrica and Teodoro. As a co-owner pro indiviso, Conchita exercises her
right to the entire co-owned property.
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II.E.1. Possession in the Concept of an Owner
REPUBLIC OF THE PHILIPPINES vs. MANUEL M. CARAIG
G.R. No. 197389, October 12, 2020
By: Chai
DOCTRINE:
Pursuant to the requirements under Section 14 (1) of Presidential Decree (P.D.) No. 1529,
the applicant must prove the following requirements for the application for registration of
a land:
1. that the subject land forms part of the disposable and alienable lands of the public
domain;
2. that the applicants by themselves and their predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation thereof; and
3. that the possession is under a bona fide claim of ownership since June 12, 1945, or
earlier.
The testimonies of the witnesses that are credible enough can sufficiently established one’s
possession in the concept of owner of the property since June 12, 1945, or earlier.
FACTS:
On September 2, 2002, Manuel filed an Application for Original Registration of Title over a
40,000-square meter portion of Lot 5525, known as Lot No. 5525-B, located at Brgy. San Luis,
Sto. Tomas, Batangas.
Manuel alleged that he bought the said lot from a certain Reynaldo, as evidenced by a Deed of
Absolute Sale dated September 25, 1989. Reynaldo and his predecessors-in-interest had been in
open, peaceful, continuous, and exclusive possession of the land before June 12, 1945, under a
bona fide claim of ownership.
The Office of the Solicitor General, representing the Republic of the Philippines, filed its
Opposition to the application. It sought the denial of Manuel's application based on the following
grounds: (a) the land is inalienable and part of the public domain owned by the Republic; (b)
Manuel and his predecessors-in-interest were not in continuous, exclusive, and notorious
possession and occupation of the land since June 12, 1945, or prior thereto; and (c) the evidence
attached to the application insufficiently and incompetently proved his acquisition of the land or
his continuous, exclusive and notorious possession and occupation thereof.
During the trial, Manuel presented six witnesses to support his claim.
ISSUE:
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Whether the testimonies of the witnesses are enough to establish possession in the concept of an
owner of the property.
RULING:
YES. The testimonies of the witnesses are enough to establish possession in the concept of
an owner of the property.
Republic v. Court of Appeals, held that to prove that the land subject of the application for
registration is alienable, an applicant must establish the existence of a positive act of the
government such as a presidential proclamation or an executive order; an administrative action;
investigation reports of Bureau of Lands investigators; and a legislative act or a statute. Lot No.
5525-B is an alienable and disposable land of the public domain. The CENRO Certificates dated
February 11, 2003 and March 21, 2003 sufficiently showed that the government executed a
positive act of declaration that Lot No. 5525-B is alienable and disposable land of public domain
as of December 31, 1925. Remarkably, the OSG failed to controvert the said act of the
government. Hence, the certificates enjoy the presumption of regularity in the absence of
contradictory evidence.
In Republic v. T.A.N. Properties, Inc. (Tan Properties), 48 the Court has already declared that a
certification from the PENRO or CENRO is not enough identification that a land has been
declared alienable and disposable. Manuel filed his application for original registration on
September 2, 2002. The MTC granted the same on February 28, 2007 or 15 months before the
promulgation of T.A.N. Properties. Substantial compliance on the legal requirements should
therefore be applied in this case. Thus, Manuel duly proved that Lot No. 5525-B is alienable and
disposable.
Settled is the rule that an applicant for registration of a subject land must proffer proof of specific
acts of ownership to substantiate his claim. In other words, he should prove that he exercised acts
of dominion over the lot under a bona fide claim of ownership since June 12, 1945, or earlier.
"The applicant must present specific acts of ownership to substantiate the claim and cannot just
offer general statements which are mere conclusions of law than factual evidence of possession."
In Republic v. Alconaba, the Court explained what constitutes open, continuous, exclusive, and
notorious possession and occupation. The law speaks of possession and occupation. Since the
conjunction separates these words and, the clear intention of the law is not to make one
synonymous with the other. Possession is broader than occupation because it includes
constructive possession. When, therefore, the law adds the word occupation, it seeks to delimit
the all-encompassing effect of constructive possession. Taken together with the words open,
continuous, exclusive and notorious, the word occupation highlights the fact that for an applicant
to qualify, his possession must not be fiction. Actual possession of land consists in the
manifestation of acts of dominion over it of such a nature as a party would naturally exercise
over his property.
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Further, Republic v. Estate of Santos discussed when possession is considered open, continuous,
exclusive, and notorious: Possession is open when it is patent, visible, apparent, notorious, and
not clandestine. It is continuous when uninterrupted, unbroken, and not intermittent or
occasional. It is exclusive when the adverse possessor can show exclusive dominion over the
land and appropriation it to his own use and benefit. And it is notorious when it is so
conspicuous that it is generally known and talked of by the public or the people in the
neighborhood.
The respondent had sufficiently established his possession in the concept of owner of the
property since June 12, 1945, or earlier.
The testimonies of the witnesses are credible enough to support Manuel's claim of possession.
The witnesses unswervingly declared that Evaristo, in the concept of an owner, occupied and
possessed Lot No. 5525 even before June 12, 1945. Arcadio, who frequented the land since he
was a child, categorically testified that Evaristo possessed and owned Lot No. 5525 as early as
1942 and performed specific acts of ownership such as planting bananas and coffee in the land
and hiring other workers to help him till the soil. The testimony of Arcadio was in confluence
with the testimonies of other witnesses, particularly Fermin, who, despite his old age, clearly
remembered and firmly stated that as the owner, Evaristo would direct his workers to plant
banana and coffee in his land, harvest the crops, and sell them thereafter. Fermin also vividly
recalled that Evaristo donated Lot No. 5525 to Reynaldo in 1958 who continued cultivating the
land. The latter then sold a portion thereof, i.e., Lot No. 5525- B, to Manuel who constructed his
house and planted various crops therein.
The possession and occupation as bona fide owner of Evaristo and Reynaldo can be tacked to the
possession of Manuel who acquired Lot No. 5525-B by virtue of a Deed of Absolute Sale. Lot
No. 5525-B is duly proven to be alienable and disposable land of public domain. Further, Manuel
has been in continuous, open, notorious and exclusive possession and occupation thereof even
before June 12, 1945.
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III.C.1. Features
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN POLIÑO AND
CORAZON ROM
G.R. No. 200608. February 10, 2021
By: JLBL
DOCTRINE:
Donation has three indispensable elements:
1. the reduction of the patrimony of the donor;
2. the increase in the patrimony of the donee; and
3. the intent to do an act of liberality or animus donandi.
FACTS:
Aproniana, Juan, and Anecito Poliño5 (Anecito) were siblings. Anecito, married to Clara O.
Poliño (Clara), was the father of Aquilino and Ducepino. Both sons were mentally incapacitated.
Anecito and Clara were the registered owners of a parcel of land planted with coconuts located at
Cocomon, Lupon, Davao Oriental (subject property). It spanned an area of 80,003 square meters
and covered by Transfer Certificate of Title (TCT) No. T-3353. Anecito and Clara died intestate
on November 21, 1994 and November 18, 1987, respectively. They were survived by their sons
and sole heirs, Aquilino and Ducepino.
A Deed of Sale and an Agreement, executed by and between Anecito and Juan on April 13,
1992, however surfaced and spawned a legal controversy among the family members. In the
Deed of Sale, Anecito allegedly ceded unto Juan the subject property for a consideration of
P15,000.00, while the Agreement stipulated that during Anecito's lifetime, Juan shall allow
Anecito to enjoy the usufruct of the subject property, and that upon Anecito's death, Juan shall
continue to support and provide financial assistance to Aquilino and Ducepino. The Agreement
further provided that breach of its terms shall render the Deed of Sale non-effective and
nugatory.
Aproniana applied for the issuance of letters of guardianship over Aquilino and Ducepino
docketed as Special Proceedings No. 237 before the RTC, Branch 5 of Mati, Davao Oriental.
Aproniana's petition was granted on June 6, 1996 upon filing a bond of P20,000.00. She took her
oath of guardianship on August 7, 1996.
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While the guardianship proceedings were pending, Juan executed a Deed of Voluntary Transfer
on February 23, 1996 conveying the subject property to his children. On September 3, 1996,
Aproniana instituted the instant Complaint against the spouses Juan and Corazon and in behalf of
siblings Aquilino and Ducepino seeking the nullification of the April 13, 1992 Deed of Sale and
Agreement, among other reliefs.
Aproniana assailed the validity of both documents for being fictitious and without consideration.
She claimed that it was incongruous for Anecito to sell the subject property for P15,000.00 when
it had a market value of at least P150,000.00 at the time of sale. Moreover, Juan allegedly could
not afford to pay the real value of the subject property as he had no known means of livelihood.
She claimed that the transaction was in reality a donation mortis causa, and since it was not
executed in accordance with the formalities of the law, it was null and void.
Aproniana also claimed that while Juan knew that Aquilino and Ducepino were mentally
incapacitated, the sale transpired without the two brothers being represented therein. Aproniana
further averred that Juan and Corazon took possession of the property and arrogated unto
themselves the full enjoyment thereof and its fruits to the detriment of Aquilino and Ducepino
who had not been properly taken care of until she took them under her custody in 1996. Despite
being the rightful heirs of the spouses Anecito and Clara, the incompetent siblings were deprived
of their rights as owners of the subject property.
ISSUE:
Whether or not the contract was a donation.
RULING:
NO, the Contract between Anecito and Juan is not a donation
Here, not all three elements of donation are present.
While Anecito's patrimony may have decreased with the correlative increase in that of Juan by
virtue of the Deed of Sale and Agreement, it does not appear that this was impelled by liberality
on the part of Anecito. Had animus donandi really been the true motive for the transfer of the
subject property, Anecito and Juan would have so stated in the documents that they executed.
However, the Deed of Sale clearly states that the conveyance was for a consideration of the
amount of P15,000.00. Again, petitioner was remiss in her evidentiary duty to prove otherwise.
There was just a dearth of evidence to show that Juan and Anecito actually intended a donation
mortis causa or some contract other than a sale.
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III.C.4. Form
DORIS MARIE S. LOPEZ vs. ANICETO G. SALUDO JR.
G.R. No. 233775. September 15, 2021
By: bellie
DOCTRINE:
In Carinan v. Spouses Cueto, where it was argued that the respondent therein had
gratuitously paid the purchase money for property as a donation, this Court noted that
donations of purchase money must follow the formal requirements mandated by law.
Article 748 of the New Civil Code (NCC), which applies to donations of money, is explicit
as it reads:
Art. 748. The donation of a movable may be made orally or in writing. —
An oral donation requires the simultaneous delivery of the thing or of the document
representing the right donated.
If the value of the personal property donated exceeds five thousand pesos, the
donation and the acceptance shall be made in writing. Otherwise, the donation shall
be void.
As the Court ruled in Moreno-Lentfer v. Wolff, a donation must comply with the
mandatory formal requirements set forth by law for its validity. 'When the subject of
donation is purchase money, Article 748 of the NCC is applicable. Accordingly, the
donation of money as well as its acceptance should be in writing. Otherwise, the donation is
invalid for non-compliance with the formal requisites prescribed by law.
FACTS:
Saludo, Jr. alleged that sometime in April or May 1997, Lopez told him that she knows of two
parcels of land that were being offered for sale. He was convinced to purchase the subject
properties due to the persistent assurances of Lopez that the titles thereto were clean, the transfer
certificates of title (TCT) would be issued in his name after the execution of the sale, and that the
offered selling price was very reasonable.
Lopez then offered to pose as the buyer because the seller. Saludo, Jr. then entrusted to Lopez
the purchase price amounting to P15,000,000.00, with the agreement that Lopez would be the
signatory in the Deed of Sale but will hold the properties in trust for, and subsequently reconvey
the same to Saludo, Jr.
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After the execution of the sale, however, Lopez started evading Saludo, Jr. and did not give any
update as to the registration of the sale in his name. When Saludo, Jr. inquired on the status of
the properties, he found out that the properties were already registered in the name of Lopez
pursuant to a Deed of Absolute Sale executed by Bulalacao Realty Corporation (BRC) in favor
of Lopez.
This prompted Saludo, Jr. to immediately assume possession of the properties and introduce
major renovations on the house amounting to a total of P9,000,000.00. He likewise paid the real
property taxes thereon for 13 years. Since then, he has been in actual possession of the
properties. As the occupant thereof, he is also the one paying the homeowner's association dues.
Saludo, Jr. filed the instant Complaint for Reconveyance and Damages imputing bad faith on the
part of Lopez. He claimed that he is the true owner of the subject properties and that Lopez
merely holds the same in trust for him. In support thereof, he presented the four checks that he
issued in the name of Lopez for the payment of the purchase price. He also reiterated that he has
been in actual possession of the properties in question from the time he had fully paid them up to
the filing of the instant complaint.
In her Answer, Lopez claimed that she purchased the subject properties from BRC pursuant to a
Deed of Sale under Pacto de Retro. Since the properties were not repurchased by the
vendor-a-retro, a Deed of Absolute Sale was executed in her favor. Thereafter, Lopez effected
major renovations on the house constructed thereon. Lopez claimed that Saludo, Jr. volunteered
to finance the renovation of the house on account of their special relationship. Thereafter,
Saludo, Jr. and his family occupied the said properties. However, when their relationship turned
sour, Saludo, Jr. surreptitiously filed an adverse claim over the subject properties falsely
claiming ownership thereof. Both RTC and CA ruled in favor of Saludo, Jr.
ISSUE:
Whether or not the purchase money for the properties was gratuitously given by Saludo, Jr. on
account of their special relationship and is tantamount to a valid donation.
RULING:
NO, the purchase money for the properties was not proven to be gratuitously given by
Saludo, Jr. on account of their special relationship and must not tantamount to a valid
donation.
In the recent case of Spouses Devisfruto v. Greenfell, the court ruled that if as insisted by
petitioners, the purchase money for the properties was gratuitously given to them, the law
relevant to this transaction would be Article 748 of the Civil Code, which requires that donations
of personal property exceeding P5,000.00 must be in writing. Since petitioner, in this case, insists
that the purchase money for the properties was gratuitously furnished by respondent, the
formalities of a valid donation under Article 748 of the Civil Code should have been complied
with, failing which, there could be no donation to speak of. Petitioner never adduced evidence in
support of said argument. Thus, her claim of an alleged donation should necessarily fail.
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III.D.2. Distinctions Between Extinctive Prescription and Laches
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M. HERNANDEZ
G.R. No. 236826, March 23, 2022
By: Chie
DOCTRINE:
It has been held that an action for quieting of title does not prescribe against the person in
actual possession of the disputed property.
FACTS:
The Heirs of Epifania Hernandez since 1955 have been occupying a parcel of land located in
Bulacan with an area of 200 square meters (subject property), which forms part of a 1417 square
meter property previously owned by the spouses Anastacio and Lourdes Sakay and spouses
Godofredo and Florsita Cruz. Epifania and respondents had built their house on the subject
property with consent and tolerance of its previous owners.
In 1967, the Spouses Sakay and Cruz sold the 1417 square meter property to Herminio. In 1985,
Herminio sold to Epifania the 200-square meter portion of the land on which her house was built
for P400.00 per square meter with sale agreement that the total price of the subject property will
be paid within a year. In the event that Epifania failed to comply with the terms, the sale
agreement would be treated as a lease contract, and the amounts paid by Epifania would be
treated as rentals or advances to Herminio under a continuing lease of the subject property.
Epifania made initial payment of P2000 on October 1985 signed by Herminio and made payment
by way of installment to Herminio by depositing certain amounts of money in a joint account
between them with the bank and also through various Metrobank checks and was able to pay in
full the subject property before her death on July 28, 1995.
Sometime in March 2000, respondents executed an Extrajudicial Settlement of Heirs of Epifania
Hernandez which stated in part that proceeds of joint savings account of their mother and
Herminio with the Bank shall be considered as full payment for the subject property to which
Herminio conformed by affixing his signature thereon.
On December 15, 1999 and July 2000, respondents received from Marquez demand letters to
vacate the premises of the subject property. It appears that on August 4, 1994, Marquez and
Herminio executed an Extrajudicial Settlement of Estate with waiver of rights whereby Herminio
waived all his rights interest and participation over the 1417 square meter property in favor of
Marquez.
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Despite respondents’ demands, Herminio allegedly refused to execute a deed of absolute sale
over the subject property in favor of Epifania. Thus, respondents’ complaint for specific
performance against Herminio. Respondents later on, amended their complaint and prayed that
judgment be rendered directing Herminio and Marquez to cause the execution of a deed of
absolute sale for the subject property in favor of respondents and that title over the subject
property be transferred to their names.
RTC and CA ruled in favor of the respondents. Hence the instant petition.
ISSUE:
Whether or not Action Prescribes in Ten Years hence, lower court erred when it allowed the
complaint to be given due course despite the fact that eleven years had lapsed and no action was
filed against the appellant.
RULING:
NO, the trial court did not err since laches has not set in against both parties in this present
case.
In the instant case, ownership over the subject property was transferred to Epifania as early as
1985 by virtue of its delivery by Herminia. Respondents, as heirs of Epifania, thus acquired art
equitable title to the subject property.
However, the Extrajudicial Settlement of Estate with Waiver of Rights presented by Marquez,
which resulted in the issuance of TCT No. T-81516 in the latter's name, was casting a cloud on
the said equitable title of respondents over the said property. It is for this reason that respondents
filed the present action against petitioner to, once and for all, remove such cloud or to quiet the
title.
Accordingly, it can not be said that respondents are guilty of laches since their continuous actual
possession of the subject property has rendered their right to bring an action for quieting of title
imprescriptible. Moreover, it bears noting that Marquez's demand letters to respondents to vacate
the subject property were dated December 15, 1999 and July 17, 2000. Thus, it was only during
these instances that respondents were claiming ownership over the property. Respondents then
filed their complaint on November 21, 2000, while their amended complaint was filed on
December 14, 2001.
Clearly, laches has not yet set in against respondents. Certainly, the present suit is one for
quieting of title and thus, imprescriptible. Too, plaintiffs are not guilty of laches or estoppel
considering that they instituted the present action immediately upon receipt of the knowledge of
Alma Marie's claim over the subject premises.
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AMLAYON ENDE vs. ROMAN CATHOLIC PRELATE OF THE PRELATURE
NULLIUS OF COTABATO, INC.
G.R. No. 191867, December 6, 2021
By:Titaoframos
DOCTRINE:
Laches which is defined as "such neglect or omission to assert a right, taken in
conjunction with lapse of time and other circumstances causing prejudice to an adverse
party, as will operate as a bar in equity."
The essential elements of laches are, namely:
1. conduct on the part of the defendant, or of one under whom he claims, giving rise
to the situation complained of;
2. delay in asserting complainant's right after he had knowledge of the defendant's
conduct and after he has an opportunity to sue;
3. lack of knowledge or notice on the part of the defendant that the complainant
would assert the right on which he bases his suit; and
4. injury or prejudice to the defendant in the event relief is accorded to the
complainant.
Laches does not imply that a case in court must be filed in order that it may not be
successfully invoked. It merely requires "delay in asserting complainant's right after he
had knowledge of the defendant's conduct and after he has an opportunity to sue."
FACTS:
The spouses Butas Ende (Butas) and Damagi Arog (Damagi; collectively, spouses Ende), both
Manobo natives, were the registered owners of a lot with an area of 223,877 square meters
(sqm.) located in Sudapin, Kidapawan, Cotabato covered by OCT No. P-46114. However,
portions of the subject property are presently occupied by respondents Roman Catholic (11,356
sqm.); Welhilmina (112,023 sqm.); Eliza and Juanito Diaz (26,457 sqm.); and Jessie and Corazon
Flores (12,500 sqm.).
Amado, Daniel, Felipe, and Pilar, claiming to be the surviving heirs of the spouses Ende, filed a
complaint for quieting of OCT No. P-46114 and recovery of possession thereof with damages
and attorney's fees, docketed as Civil Case No. 1069. They claimed that, taking advantage of the
ignorance and illiteracy of the spouses Ende, respondents gradually took possession of portions
of the subject property through deceitful machinations.
Respondents filed their answer with compulsory counterclaim claiming that they acquired
ownership over their respective portions of the subject property from Damagi or from third
persons who, in turn, acquired the same from Damagi. Respondents belied Amado, Daniel,
Felipe, and Pilar's allegation that they are the rightful heirs of the spouses Ende.
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They argued that their ownership over the respective portions of the subject property were not
covered by transfer certificates of title registered in their name because of the difficulty in having
them registered due to numerous claimants. In addition, respondents invoked acquisitive
prescription claiming that their possession of the respective portions of the subject property
spanned at least 30 years to at most 50 years already. Since petitioners failed to assert their
alleged rights over the subject property, laches already set in that barred their recovery thereof.
Petitioners Amalayon and Quezon, claiming to be the surviving children and legitimate heirs of
the spouses Ende, intervened. In their answer-in-intervention, they claimed that they are the
children and legitimate heirs of the spouses Ende and that Amado, Daniel, Felipe, and Pilar, the
plaintiffs in the other civil case, are mere impostors. They further claimed that they were not able
to exercise their rights over the subject property after the death of the spouses Ende because they
were driven away from the subject property by Inacara Ende (Inacara) and Joseph Butas Canta
(Joseph), who are purportedly nephews of the spouses Ende.
ISSUE:
Whether or not petitioners Amlayon and Quezon are barred by the principle of laches to
recover the ownership and possession of the subject property covered by OCT No. P-46114.
RULING:
NO. Petitioners Amlayon and Quezon sufficiently proved that they did not sleep on their
rights and that the principle of laches is not applicable to them.
In the instant case, the CA applied the doctrine of laches for failure of herein petitioners to
pursue an action to recover the subject property from respondents for a considerable length of
time. We do not agree.
Petitioner Amlayon testified that they failed to recover the subject property immediately from
the dispositions made by Inacara, Joseph, Ayan, and Ayonan because they were driven away
from the land and were threatened by the alleged heirs of Butas. This fact was corroborated by
Elena, Marino, Laureana, and Cristina and was unrebutted by respondents. With petitioners
Amlayon and Quezon not in possession of their land, they could not have known the various
dispositions made by Inacara, Joseph, Ayan, and Ayonan after Damagi's death. Hence, they
could not be expected to assert their right against the herein respondent. Also, petitioners
Amlayon and Quezon's lack proper education and did not know the necessary legal procedures
they should resort to in order to recover their land.
Nonetheless, petitioner Amlayon averred that after the death of Inacara, he immediately went
to the persons in possession of the subject property. His daughter Leticia Bacalso (Leticia)
supported the testimony of her father, Amlayon, that indeed the latter went to respondent
Wilhelmina to claim back the subject property.
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In 1980, Wilhelmina and Amlayon were summoned by the Office for Southern Cultural
Communities (OSCC) to settle and Wilhelmina even offered 10 hectares of land in Indangan in
exchange of the portion of the land occupied by them but petitioner Amlayon did not agree
with the proposal. Prior to that, in 1970, petitioner Amlayon sought counsel from Ugalingan
on how to recover their land as he had no knowledge on legal matters. This was corroborated
by the testimony of Laureana, Ugalingan's daughter.
Moreover, Leticia testified that they went to the Register of Deeds to secure a copy of OCT
No. P-46114 only to discover that it was a clean title as there were no annotations of any
documents of sale or any conveyances on it. She was able to retrieve two photocopies of the
title and gave the other copy to petitioner Quezon. However, petitioner Quezon sought advice
from Ikling and gave the copy of the title to him because he thought Ikling would help them
recover their land. Thereafter, Ikling called a meeting, wherein herein witnesses Elena and
Cristina attended, to recover Butas' land but petitioners Amlayon and Quezon were excluded
from the said meeting. Also, petitioners appeared before the barangay conciliation regarding
the recovery of the subject property, wherein Felipe Vinluan (Vinluan), the representative of
Diaz, Acosta and Kintanar, offered them land or money in exchange for not filing a case in
court. However, petitioners did not agree with Vinluan's proposal. Later, in 1995, plaintiffs
filed an action for quieting of title and recovery of possession that surprised petitioners as they
were yet to gather and prepare more documents in support of their own case.
These steps taken by petitioners to assert their right over the subject property were affirmed by
the testimony of Laureana and Cristina. Laureana was a former employee of the OSCC and
was present when petitioners Amlayon and Quezon sought assistance to recover their land.
The OSCC advised them to consult a counsel to assist them. Also, Cristina testified that
indeed petitioners slowly gathered documents in support of their case. She even advised
Leticia regarding the recovery of the subject property and accompanied her to the Register of
Deeds to retrieve a copy of the title, and in the barangay conciliation involving the subject
property in 1995.
The foregoing acts of petitioners belie the claim that they slept on their rights. To reiterate,
petitioners Amlayon and Quezon were prevented from going into the subject property because
of Inacara's threats. However, upon Inacara's death, petitioners gradually prepared the
documents needed to recover the subject property and asked advice from certain individuals
and institution. Although they did not immediately file a case in court, this does not mean that
laches already set in against their favor. It must be pointed out that petitioners consistently
asserted their rights as legal heirs of the spouses Ende outside of court but due to certain
circumstances, they were unable to properly file the same for the court's consideration.
We cannot blame petitioners Amlayon and Quezon from not filing immediately in court since
they were still in the process of collating the necessary documents in support of their right. To
note, they immediately intervened in the case after having knowledge of the case filed by
herein plaintiffs. This shows that petitioners were serious in asserting their right against the
herein plaintiffs, who were claiming to be the alleged heirs of the spouses Ende and in the
recovery of the subject property from respondents.
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Moreover, the subject property is registered under the Torrens system. Section 47 of
Presidential Decree No. 1529 states that "[n]o title to registered land in derogation of the title
of the registered owner shall be acquired by prescription or adverse possession." Therefore, the
right to recover possession of registered lands is imprescriptible on the part of the registered
owner because possession is a mere consequence of ownership. Also, acquisitive prescription
or adverse possession, no matter how long, is unavailing even to the registered owner's
hereditary heirs as the latter simply steps into his or her shoes by operation of law and are
merely the continuation of the personality of their predecessor-in-interest.
In this case, the possession of herein respondents cannot ripen into ownership by acquisitive
prescription or adverse possession as the certificate of title, i.e., OCT No. P-46114, serves as
evidence of an indefeasible title to the property in favor of the person whose names appear
therein.
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IV.A.1. General Principles
HEIRS OF LEONARDA LATOJA vs. HEIRS OF GAVINO LATOJA
G.R. No. 195500, March 17, 2021
By: jhoanna
DOCTRINES:
The principle of indefeasibility of a Torrens title has been carved in case law edicts. This
means that a certificate of title registered under the Torrens System serves as proof of an
incontrovertible title over the property in favor of the individual whose name appears on
the title. With the emergence of the Torrens System, the integrity and conclusiveness of a
certificate of title may be guaranteed and preserved.
However, this system frowns upon those who fraudulently secure a certificate of title to the
prejudice of the real owner of the land. Hence, usurpers who intend to enrich themselves
cannot hide under the mantle of the Torrens System which may only be cancelled, altered
or modified through a direct attack where the objective of the action is to annul or set aside
the judgment or enjoin its enforcement.
An allegation of fraud in an action for reconveyance must have two requisites. First, that
the individual seeking reconveyance must prove entitlement or ownership over the
property in question, and second, that fraud must be established by clear and convincing
evidence, not just based on mere surmises or conjectures
An ordinary civil action for declaration of nullity of free patents and certificates of title is
not the same as an action for reversion. The difference between them lies in the allegations
as to the character of ownership of the realty whose title is sought to be nullified. In an
action for reversion, the pertinent allegations in the complaint would admit State
ownership of the disputed land. Hence in Gabila v. Barriga where the plaintiff in his
complaint admits that he has no right to demand the cancellation or amendment of the
defendant's title because even if the title were cancelled or amended the ownership of the
land embraced therein or of the portion affected by the amendment would revert to the
public domain, we ruled that the action was for reversion and that the only person or entity
entitled to relief would be the Director of Lands. On the other hand, a cause of action for
declaration of nullity of free patent and certificate of title would require allegations of the
plaintiffs ownership of the contested lot prior to the issuance of such free patent and
certificate of title as well as the defendant's fraud or mistake; as the case may be, in
successfully obtaining these documents of title over the parcel of land claimed by plaintiff.
In such a case, the nullity arises strictly not from the fraud or deceit but from the fact that
the land is beyond the jurisdiction of the Bureau of Lands to bestow and whatever patent
or certificate of title obtained therefor is consequently void ab initio.
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The real party in interest is not the State but the plaintiff who alleges a pre-existing right of
ownership over the parcel of land in question even before the grant of title to the defendant.
FACTS:
This petition involves from a 4,125.99-square-meter lot (Lot 5366) located in Villareal, Samar. In
1903, the spouses Tomas Dalaruya and Leonarda Latoja allegedly possessed, resided, and
cultivated Lot 5366. In 1945, Leonarda declared said lot for taxation purposes. When the spouses
died, their five children, namely Anacleto, Dionesio, Balbina, Antonia and Sofronia inherited Lot
5366. In 1960, Balbina sold her share to Antonia; Anacleto and Sofronia likewise sold their
shares to Antonia a month apart in 1967.
On the other hand, Friolan, a relative and representative of the Heirs of Gavino, purportedly
occupied and administered Lot 5366 when his aunt died. He applied for a free patent over said
lot through the assistance of Elmer Talbo (Elmer), Land Inspector of the Community
Environment and Natural Resources Office (CENRO) of Basey, Samar.
When Friolan approached Elmer in the field, the latter readily received and accepted the free
patent application on February 8, 1999, absent a personal inspection of the lot as he was already
leaving for Basey, Samar. On the succeeding day, Elmer personally posted the Notice of
Application in Villareal, processed the application in the office, and conducted a Confirmatory
Report. By virtue of the award of Patente Big. 086021-99-1181 issued on March 12, 1999, a
Katibayan ng Orihinal na Titulo Blg. 2078312 (OCT 20783) was subsequently secured and
registered in the name of the Heirs of Gavino, as represented by Friolan.
Distressed upon knowing of this development, the Heirs of Leonarda instituted before the RTC a
Complaint for Declaration of Nullity of Title, Reconveyance and Damages contending that they
inherited Lot 5366 from their predecessors-in-interest who are the real owners and possessors of
the lot since time immemorial They asserted that the Heirs of Gavino and Friolan obtained the
free patent and the consequent OCT 20783 through fraud and false representation that they were
owners and possessors of Lot 5366. They also avowed that the posting of notice of the free
patent application as required under the Public Land Act was not complied with. Due to this
noncompliance, the Heirs of Leonarda failed to take action against the free patent application.
In their Answer with Counterclaim, the Heirs of Gavino interposed a general denial of all
allegations set forth in the complaint, and raised the following special and affirmative defenses:
that the trial court failed to acquire jurisdiction over the person of indispensable heirs; that the
Heirs of Leonarda have no legal capacity to sue or have a cause of action; that there was an
existing action involving the same parties and for the same cause; that the claims of the Heirs of
Leonarda have been waived or extinguished; and that a condition sine qua non before the filing
of the complaint was not complied with.
While the trial court denied most of the defenses raised, it nonetheless held that prescription, lack
of cause of action and unenforceability were to be adjudicated on the merits based on clear and
convincing evidence.
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ISSUES:
1. Whether or not the title arising from the award of free patent has become indefeasible so
as to foreclose the action for reconveyance.
RULING:
NO. Despite the title’s indefeasibility, an action for reconveyance may still prosper.
Despite the finality accorded to a Torrens title, reconveyance may prosper as an equitable remedy
given to the rightful owner of a land that was erroneously registered in the name of another. This
action recognizes the validity of the registration and its incontrovertible nature; it does not
question the indefeasibility of the Torrens title. Even with the lapse of one year from the issuance
of OCT 20783, the action for reconveyance is still an appropriate and available remedy for the
Leonarda heirs. Here, they have also sufficiently complied with the two requisites for an action
for reconveyance based on fraud.
2. Whether or not the Heirs of Gavino employed fraud paving the way for the reconveyance
in favor of the Heirs of Leonarda.
YES, there is fraud in this case.
Fraud and irregularity are presupposed in an action for reconveyance of property. The party
seeking to recover the property must prove, by clear and convincing evidence, that he or she is
entitled to the property, and that the adverse party has committed fraud in obtaining his or her
title. Allegations of fraud are not enough. Intentional acts to deceive and deprive another of his
right, or in some manner injure him, must be specifically alleged and proved. In the absence of
any proof, the complaint for reconveyance cannot be granted.
Anent the first requisite, the Heirs of Leonarda's evidence on record established that Leonarda
was the lawful owner and possessor of Lot 5366 since time immemorial. Upon her demise, said
lot was inherited by her five children including Antonia who was adjudged to be the rightful
possessor of the 4/5 portion of Lot 5366 on the strength of a decision rendered by the MCTC of
Villareal-Pinabacdao, Samar dated August 29, 1994.50 To reinforce their assertion, the following
were also submitted by the Heirs of Leonarda: (a) the Sketch of Lot 5366 in the name of
Leonarda issued by the Department of Environment and Natural Resources (DENR) in Tacloban
City;51 (b) a Resolution52 dated March 3, 2002 from the Office of the Sangguniang Barangay of
Pang-Pang, Villareal recognizing the ownership of Lot 5366 in the name of Leonarda;53 (c) a
Tax Declaration No. 15199 in the name of Leonarda;54 and (d) a Tax Clearance Certificate dated
April 30, 1999 issued by the Office of the Municipal Treasurer of Villareal, Samar.55 In addition,
Friolan himself admitted in his testimony that Petra was one of the actual occupants of Lot 5366,
while he occupied the adjacent Lot 5367.56 These bespeak of the Heirs of Leonarda's rightful
possession, interest and entitlement to Lot 5366, making the first requisite present.
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In light of these documents and testimonies, it is evident that Patente Blg. 086021-99-118 was
secured though misrepresentation and fraud, and the consequent issuance of OCT 20783 was
marked with undue haste in the name of the Heirs of Gavino as represented by Friolan. Tersely,
the two requisites of an action for reconveyance were complied with, and the Heirs of Leonarda
discharged their burden of proving through clear and convincing evidence that misrepresentation
and fraud attended the application and processing of the free patent in favor of the Heirs of
Gavino. Ergo, the appellate court's reversal of the trial court's decision was unwarranted.
Second, The very essence of reconveyance is to transfer the property that was erroneously
registered in another's name back to the rightful owner or to the one with a better right.
Likewise in Hortizuela v. Tagufa, this Court expounded on Section 101 of the Public Land Act
which admits of an exception when a private individual may institute an action for reconveyance,
viz.:
A recognized exception is that situation where plaintiff-claimant seeks direct reconveyance from
defendant of public land unlawfully and in breach of trust titled by him, on the principle of
enforcement of a constructive trust. This was the ruling in Larzano v. Tabayag, Jr., where it was
written:
A private individual may bring an action for reconveyance of a parcel of land even if the title
thereof was issued through a free patent since such action does not aim or purport to re-open the
registration proceeding and set aside the decree of registration, but only to show that the person
who secured the registration of the questioned property is not the real owner thereof. In Roco, et
al v. Gimeda, we stated that if a patent had already been issued through fraud or mistake and has
been registered, the remedy of a party who has been injured by the fraudulent registration is an
action for reconveyance.
Contrary to the assertion of the Heirs of Gavino, the foregoing discourse clarified that the Heirs
of Leonarda, as private individuals, are allowed to institute an action for reconveyance of Lot
5366 considering the fraudulent scheme employed by the Heirs of Gavino, represented by
Friolan, in securing the free patent which resulted into the registration of OCT 20783 under the
latter's names. Considering that the Heirs of Leonarda alleged in their complaint that they are the
rightful owners and possessors of Lot 5366 and that they were deprived of the same through the
misrepresentation of Friolan in the application for free patent, then they have initiated the proper
remedy which is an action for reconveyance.
All told, a land titled by virtue of a fraudulent and defective free patent, disregarding the
provisions of the Public Land Act, may be reconveyed to the rightful owner by an action for
reconveyance instituted by the latter. Since the Heirs of Leonarda, as actual possessors of Lot
5366, satisfactorily proved by clear and convincing evidence that there was misrepresentation
and fraud to their prejudice, the action for reconveyance was correctly adjudicated by the trial
court in their favor.
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CELEDENIO C. DEMEGILLO vs. ARTURO S. LUMAMPAO
G.R. No. 211253, February 10, 2021
By: zzzzzz123456
DOCTRINE:
Questioning the Torrens Original Certificate of Title in an answer as an affirmative defense
by the respondent in an ordinary civil action for recovery of possession filed by the
registered owner of the said lot partakes of the nature of a collateral attack against a
certificate of title brought under the operation of the Torrens system of registration
pursuant to Section 122 of the Land Registration Act, now Section 103 of P.D. 1529. The
case law on the matter does not allow a collateral attack on the Torrens certificate of title
on the ground of actual fraud. The rule now finds expression in Section 48 of P.D. 1529
otherwise known as the Property Registration Decree.
FACTS:
Respondents are the surviving heirs of Adolfo. They alleged that shortly before before Adolfo's
death in 1992, Demegillo (plaintiff) entered and tilled a 3-hectare portion of Lot 3106.
Meanwhile, the Director of Agrarian Reform (DAR) of Agusan del Sur approved the homestead
application of Adolfo over the same lot. A Certificate of Land Ownership Award (CLOA) No.
000299587 was then issued in the name of respondents. An OCT was later registered in the
names of respondents.
Notwithstanding such facts, plaintiff refused to vacate the property despite repeated demands
thereby prompting respondents to file a complaint for accion publiciana against him.
While the civil case for accion publiciana was pending trial before the RTC, Demegillo ( filed
with the DARAB against the heirs of Adolfo for the cancellation of CLOA No. 00029958 on the
ground that it erroneously included Demegillo's 3-hectare share in Lot 3106.9. Unfortunately,
DARAB and PARAB dismissed the case for lack of personality of Demegillo and ruled that
Demavivas (respondents) are the rightful owners.
In the civil suit before RTC, Demegillo averred that he, together with Adolfo, and a certain
Nicolas Vapor (Vapor) were the previous occupants of Lot 3106. Later, Vapor, by virtue of a
notarized agreement12 denominated as Transfer of Rights with Sale of Improvements, sold and
ceded his share in Lot 3106 to Adolfo, which supposedly included Demegillo's 3-hectare share.
Adolfo then utilized the notarized agreement for an exclusive homestead application with the
DAR over the entire area of Lot 3106.
The RTC, despite the ruling of DARAB and PARAB, ruled in favor of Demegillo, while the CA
reversed the ruling of RTC.
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ISSUE:
Whether or not the RTC’s cancellation of the OCT No. D-4960 allowed Demegillo to collaterally
attack OCT No. D-4960's validity
RULING:
YES. By ordering the cancellation of the OCT No. D-4960, the RTC, in effect, allowed
Demegillo to collaterally attack OCT No. D-4960's validity contrary to Section 48 of P.D.
No. 1529.
To be clear, the defense invoked by Demegillo in his answer, particularly, that the title was
secured by fraud, requires a review of the said title issued in favor of Demavivas and her
co-plaintiffs, and entails a determination of an issue that clearly involved a collateral attack on
their Torrens title.
Ybanez v. Intermediate Appellate Court is instructive on this point:
It was erroneous for petitioners to question the Torrens Original Certificate of Title
issued to private respondent over Lot No. 986 in Civil Case No. 671, an ordinary
civil action for recovery of possession filed by the registered owner of the said lot,
by invoking as affirmative defense in their answer the Order of the Bureau of
Lands, dated July 19, 1978, issued pursuant to the investigatory power of the
Director of Lands under Section 91 of Public Land Law (C.A. 141 as amended).
Such a defense partakes of the nature of a collateral attack against a certificate of
title brought under the operation of the Torrens system of registration pursuant to
Section 122 of the Land Registration Act, now Section 103 of P.D. 1529.
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IV.D.1. Who May Apply
REPUBLIC OF THE PHILIPPINES vs. PHILIPPINE NATIONAL POLICE
G.R. No. 198277, February 8, 2021
By: yourhonor
DOCTRINE:
For registration under Section 14(1) to prosper, the applicant for original registration of
title to land must establish the following:
1. that the subject land forms part of the disposable and alienable lands of the public
domain;
2. that the applicants by themselves and their predecessors-in-interest have been in
open, continuous, exclusive, and notorious possession and occupation thereof; and
3. that the possession is under a bona fide claim of ownership since June 12, 1945, or
earlier.
Registration under Section 14(1) is based on possession. Thus, under Section 14(1), it is not
necessary for the land applied for to be alienable and disposable at the beginning of the
possession on or before June 12, 1945 - Section 14(1) only requires that the property sought
to be registered is alienable and disposable at the time of the filing of the application for
registration.
On the other hand, registration under Section 14(2) requires the applicant to establish the
following requisites:
1. the land is an alienable and disposable, and patrimonial property of the public
domain;
2. the applicant and its predecessors-in-interest have been in possession of the land for
at least 10 years, in good faith and with just title, or for at least 30 years, regardless
of good faith or just title; and
3. the land had already been converted to or declared as patrimonial property of the
State at the beginning of the said 10-year or 30-year period of possession.
In Section 14(2), the alienable and disposable character of the land, as well as its
declaration as patrimonial property of the State, must exist at the beginning of the relevant
period of possession
An applicant for land registration must prove that the land is alienable and disposable land
of the public domain. Presidential Decree No. 1529 (PD 1529)- the Property Registration
Decree Provides for the instances when a person may file for an application for registration
of title over a parcel of land. Sec. 14 of PD 1529 provides who may file an application in the
property Court of First Instance, now RTC, whether personally or through their duly
authorized representatives.
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The doctrine enunciated in this case was the rule cited from the Case of Republic vs. T.A.N.
(June 26, 2008), properties require that an application for original registration must be
accompanied by
1. a CENRO of [Provincial Environment and Natural Resources Offices] (PENRO)]
Certification; and
2. a copy of the original classification approved by the DENR Secretary and certified
true copy by the legal custodian of the official records.
FACTS:
On May 6, 2003, the PNP filed a land application of the Iba, Cadastre before the Regional Trial
Court of Iba, Zambales. To support its application, it submitted a tracing cloth plan, the approved
sketch plan and the respective tax declarations of the subjected lots. On September 25, 2003, a
hearing was held and later January 23, 2004, the RTC required the PNP to comply with the
requirements for its application for land registration by virtue of LRA’s recommendation.
Subsequently, the RTC granted PNP’s application, it found that the PNP was able to prove that it
possessed all the qualifications and none of the disqualifications. Because of the RTC’s ruling,
the Republic of the Philippines, through the Office of the Solicitor General (OSG) filed an appeal
arguing that the PNP failed to prove that the subject lots are alienable and disposable lands of the
public domain since the subject lots had been reserved for constabulary purposes as of November
6, 1915. The OSG even furthered that the subject lots are unregistrable in the absence of a
positive act from the government withdrawing the land from being reserved for military
purposes.
ISSUE:
Whether or not the PNP has proven that the subject lots are alienable and disposable lands of the
public domain.
RULING:
NO, the PNP was not able to prove that the subject lots are alienable and disposable lands
of the public domain.
The PNP even failed to submit a DENR Certification to the effect that the subject lots are
alienable and disposable lands of the public domain, of which was the prevailing requirement
when its application was pending before the RTC. The only evidence presented by respondents
to prove the disposable and alienable character of the subject land was an annotation by a
geodetic engineer which clearly falls short of the requirements for original registration.
In sum, the SC found that the respondent’s evidence does not suffice to entitle it to register the
subject lots. The PNP failed to present any evidence showing that the DENR Secretary had
indeed released the subject lots as alienable and disposable lands of the public domain. Hence,
the petition was granted.
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IV.E. C.A. An Act Improving the Confirmation Process for Imperfect
Land Titles (RA 11573), amending CA 141 and PD 1529
EULOGIO ALDE vs. CITY OF ZAMBOANGA
G.R. No. 214981, November 4, 2020
By: mcmaligon
DOCTRINE:
There must be some sort of a presidential declaration that a piece of land classified under
Section 59(d) of the Public Land Act is no longer necessary for public use or public service
before it can be leased to private parties or private entities or private corporations, but the
same need not be exclusively in the form of a presidential proclamation. Any other form of
presidential declaration is acceptable.
FACTS:
Petitioner Alde filed a Miscellaneous Lease Application (MLA) to CENRO covering 2 lots in
Zamboanga City. The two lots were both in the name of the Republic. EO No. 285, Series of
1987 was issued transferring the possession of the lots to the DENR. The Office of the Regional
Executive Director (RED) ordered the appraisal of the subject lots covered by the MLA. The
Appraisal Committee reported that the lots are classified as commercial properties in the Zoning
Ordinance under DO No. 145-95 of the Department of Finance. The Committee determined the
rental rate per annum in accordance with Section 37 of CA No. 141 or "The Public Land Act".
The RED-DENR Region X approved the appraisal and granted the authority to lease the land in
accordance with the Public Land Act. The Notice of Lease over the subject lots was published b
in the Official Gazette and in a newspaper called Zamboanga Star. Alde was declared as winner
after submitting a bid of ₱174,250.00. The CENRO then referred to the DPWH the matter of
determining whether the subject lots are needed by the Government for public use. The Regional
Director of DPWH interposed no objection to the approval of the MLA. In turn, the Secretary of
the DPWH endorsed Alde's MLA to the RED DENR-Region IX interposing no objection to
Alde's MLA, provided "that 4.0 meters from the edge of the sidewalk be reserved for future
widening/improvements of the National Government". Thus, the RED DENR-Region IX issued
an Order of Award.
The respondent City Government of Zamboanga objected to the lease application of Alde. It
claimed that the awarded lots were needed for public use and that the posting and publication
requirements of the notice of lease, were not complied with. The City Government of
Zamboanga sent another letter of opposition to the DENR Secretary.
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Ruling of the DENR Secretary: Denied the Opposition. Subsequently, the City Government filed
an MR but it was denied by the DENR for being pro forma.
Ruling of the Office of the President: Affirmed the decision.
Ruling of the CA: Ruled in favor of respondent City of Zamboanga. It reversed and set aside the
Decision of the OP. It also declared as null and void the Order of Award by the RED-DENR
Region IX.
In fine, the CA ruled that a presidential proclamation is necessary to declare that a parcel of
public land is not necessary for public service before it can be disposed, even for those lands
referred to in Section 59(d) of CA 141. Alde filed an MR which was denied by the CA. Hence
this Petition.
ISSUES:
1. Whether or not a presidential proclamation is needed before the alienable and disposable
lands that are not necessary for public use or for public service can be opened for sale or
lease or disposed, to private parties, entities or corporations.
RULING:
NO, any other form of presidential declaration is acceptable.
An administrative action by the OP that declares a land under Section 59(d) as alienable and
disposable and not necessary for public use or public service, complies with the required
Presidential declaration that alienable and disposable lands are not necessary for public use or for
public service before they can be open for sale or lease or disposed, to private parties, entities or
corporations.
The SC agrees with the CA that even lands classified under Section 59 (d) of CA 141 must be
established as unnecessary for public use or for public service before they can be sold or leased
to private parties or entities or private corporations. However, this Court does not subscribe to
the absolute necessity of a presidential proclamation for such purposes.
Section 63, in relation to Section 61, of CA 141 gives leeway to the President and the DENR
Secretary in choosing the manner, mechanism or instrument in which to declare certain alienable
or disposable public lands as unnecessary for public use or public service before these are
disposed through sale or lease to private parties, entities or corporations.
Hence, all alienable and disposable lands enumerated in Section 59, from (a) to (d), suitable for
residence, commercial, industrial or other productive purposes other than agricultural, under
Chapter VIII of the same CA 141, must be subject to a presidential declaration that such are
exempt from public use or public service before they can be sold or leased, as the case may be,
but such need not be solely through a presidential proclamation.
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This Court has time and again ruled that to prove that a public land is alienable and disposable,
what must be clearly established is the existence of a positive act of the government. This is not
limited to a presidential proclamation.
2. Whether or not there was substantial compliance with posting and publication
requirements.
YES, there was substantial compliance with posting and publication requirement.
The appellate court held that the required posting and publication under the Public Land Act was
not complied with.
We disagree.
The Certificate of Publication issued by the National Printing Office showed that the Notice of
Lease issued to Alde was published in the Official Gazette for 6 consecutive weeks. Moreover, it
was published in the provincial newspaper, Zamboanga Star, for 3 consecutive weeks, as
evidenced by an Affidavit subscribed and sworn to by the publisher.
In addition, this Court agrees with Alde that the MLA remains valid even beyond the posting and
publication thereof because as an administrative proceeding before the CENRO, it is in the
nature of an action quasi in rem. Actions quasi in rem deal with the status, ownership or liability
of a particular property but which are intended to operate on these questions only as between the
particular parties to the proceedings and not to ascertain or cut off the rights or interests of all
possible claimants. The judgments therein are binding only upon the parties who joined in the
action.
Thus, the City Government of Zamboanga is not without recourse. It can legally step in and
assert its interest after the expiration of the lease awarded to Alde.
APOLINARION VALDEZ vs. HEIRS OF ANTERO CATABAS
G.R. No. 201655, August 24, 2020
By: chocobo
DOCTRINE:
Sec. 45 (b) of Act No. 2874 (the law applicable at the time of Antero’s acquisition of Lot No.
4976) states that “those who by themselves or through their predecessor-in-interest have
been in OCEN possession and occupation of agricultural lands of the public domain, under
a bona fide claim of acquisition of ownership, except as against the Government, since July
26, 1894, except when prevented by war or force majeure” may apply with the CFI of the
province for the confirmation of their claims and the issuance of a certificate of title
therefor, under the Land Registration Act.
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As held in Republic vs. Roasa, a possessor or occupant of property may be a possessor in
the concept of an owner prior to the determination that the property is alienable and
disposable (A&D) agricultural land. Thus, the computation of the period of possession may
include the period of adverse possession prior to the declaration that the land is alienable
and disposable.
FACTS:
On September 8, 1949, Antero filed Free Patent Application (FPA) No. V-8500 for Lot No. 4967.
Pursuant to Proclamation No. 427 dated November 7, 1931, Lot No. 4967 was subdivided into
three (3) lots. Lot Nos. 4967-A and 4967-B were reserved for public purposes (road and market
site). Then, on September 15, 1952, Antero amended his application to cover only Lot No.
4967-C (subject property).
Antero’s FPA was recommended for approval by Tomas Cruz (Asst. Public Land Inspector) on
September 24, 1952, which was then received by the Director of Lands on October 7, 1952, who
ordered the posting of notices of Antero’s FPA.
The controversy arose when petitioners herein filed their respective sales patent applications over
several lots which originally formed part of Lot No. 4967-C and were included in the FPA of
Antero.
This led to the protest filed by respondent Heirs of Catabas against the sales patent applications
of petitioners and other claimants over the subject Lot where they alleged that the lots in question
were covered by a subsisting FPA filed by Antero who acquired a vested right over it by reason
of his early possession since 1929 as evidenced by Tax Declarations and RPT payments. They
further claimed that although no free patent was yet issued to Antero, he had already acquired a
vested right over the subject Lot since FPA No. V-8500 was never cancelled by the proper
authority
On the other hand, it was argued by petitioners that pursuant to Proclamation No. 247 dated
January 19, 1956, the Bureau of Lands subdivided Lot Nos. 1 and 4967 into small residential
lots. Consequently, miscellaneous sales patent applications were approved in 1984 by the Bureau
of Lands over the lots occupied by some of the petitioners.
On July 13, 1988, Land Investigator Luis Salatan investigated the respective claims of the
parties, who then recommended the dismissal of respondents’ protest on the ground of Antero’s
failure to protest to protect his rights and interest over the subject property when a subdivision
survey was conducted in the area.
RED of DENR Region II: found the issuance of petitioners’ sales patent to be premature, illegal,
and fraudulent and their possession over the subject lots was characterized by bad faith
considering that their sales patents were issued while Antero’s application was still subsisting;
ordered the reversion of the lots covered by the sales patents issued to some of the petitioners.
DENR affirmed the ruling of the RED.
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Office of the President (OP): Antero already obtained vested rights over the subject property and
can be regarded as the equitable owner thereof; all the requirements for the issuance of a FP are
met; the petitioners herein only began to assert their respective claims over the disputed lots
sometime after the execution of the subdivision survey; the FPA of Antero should have been
given preferential attention in the processing of the claims over the lots in question; the fact that
the FPA of Antero was posted and subsequently recommended for approval implies that all the
terms and conditions entitling him to a patent were already fixed and established and were no
longer open to controversy.
CA: PetRev (R43) is denied for lack of merit; application of Antero should be given preference
over the claims of petitioners.
Hence, this petition for review on certiorari (R45) arguing that there was waiver by Antero when
he did not formally oppose the exclusion of the subject property from the operation of
Proclamation No. 247 and that Antero’s FPA was never approved, thus, he cannot be deemed to
have acquired vested right over the subject property.
Respondents contend that preference should be accorded to Antero and his successors-in-interest
over the sales patents issued to petitioners; that the free patent application of Antero was filed
prior to petitioners’ sales patent applications and had already been approved; that petitioners’
titles were premature because there was a previous and subsisting FPA filed by Antero AHEAD
of petitioners and their predecessors-in-interest; and that Antero’s open, continuous, exclusive,
and notorious (OCEN) possession of the subject property is deemed to have ripened into
acquisition by operation of law.
ISSUE:
Whether or not Antero has vested rights over the subject properties (Lot No. 4967-C) on the
basis of his free patent application which was never cancelled.
RULING:
YES. Antero acquired a vested right over the subject property based on his approved free
patent application.
As can be gleaned from the records of the case, the FPA for Lot No. 4976 was filed by Antero on
September 1, 1949 under CA 141. He later amended his FPA on September 15, 1952 to cover
only Lot No. 4976-C. However, at the time of the issuance of Proclamation No. 246 on January
19, 1956 and the conduct of the Cadastral Subdivision Survey, there was a subsisting and
pending FPA filed by Antero over the subject property, which was recommended for approval
and subsequently, notices of such application were posted in different conspicuous places.
Under Sec. 11 of CA 141, there are two modes of disposing public lands through confirmation of
imperfect or incomplete titles: (1) by judicial confirmation; and (2) by administrative
legalization, otherwise known as the grant of free patents.
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At the time Antero’s amended FPA was filed in 1952, RA 782 was enacted on June 21, 1952,
amending Sec. 44 of CA 141, which provided that “any natural-born citizen of the Philippines
who is not the owner of more than 24 hectares, and who since July 4, 1945 or prior thereto, has
continuously occupied and cultivated, either for himself or through his predecessors-in-interest, a
tract/s of agricultural lands subject to disposition, shall be entitled to have a free patent issued to
him xxx not to exceed 24 hectares.”
Thus, We are persuaded to give preference to the possession of Antero since 1929 over the
petitioners’ claims or interest which arose later than Antero’s. Antero’s possession of the subject
property as evidenced by the payment of real estate taxes starting the year 1929 strengthened his
continuous and notorious possession of the subject property which is earlier than July 4, 1945.
Here, even though at the time of his application, the subject property was not yet classified as
A&D, the subsequent declaration thereof should be considered in Antero’s favour whose FPA
was still pending and subsisting at the time and is not cancelled up to this time.
Hence, Antero acquired vested rights over Lot No. 4976-C by virtue of his subsisting FPA which
was filed ahead of petitioners’ claims over the subject property.
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IV.G.1. Voluntary Dealings
CITY OF TANAUAN vs. GLORIA MILLONTE
G.R. No. 219292, June 28,2021
By: tinee
DOCTRINE:
Case law provides that “forgery cannot be presumed and must be proved by clear, positive
and convincing evidence by the party alleging the same” xxx Time and again, we have
ruled that while it is true that a notarized document carries the evidentiary weight
conferred upon it with respect to its due execution, and has in its favor the presumption of
regularity, this presumption, however is not absolute. The presumption is not conclusive as
it can be refuted by clear and convincing evidence.
FACTS:
The registered owners of the lot covered by the OCT title No. 3243 were the Gonzaga Siblings
namely: Marcelo, Eleuteria, Pantaleona, Ambrosio, and Lucio. The mother of respondent,
Florencia Gonzaga Arroyo was the daughter of Lucio. Hence, Millonte is Lucio’s granddaughter
and direct descendant. Millonte filed a Complaint dated May 12, 2004 against petitioner City of
Tanauan, praying for the declaration of nullity of the Deed of Absolute Sale dated February
10,1970, as well as TCT No. T-42198 and for the reinstatement of OCT 3243.
The contested property is presently occupied by the Tanauan Water District, supposedly, the City
of Tanauan acquired the lot for 30,000 pursuant to a Deed of Absolute Sale allegedly signed by
the Gonzagas, as vendors, and the then municipality of Tanauan, represented by then Mayor
Sebastian Carandang, as vendee
In her complaint, Millonte asserted that by virtue of the Deed of Absolute Sale, OCT 3243 was
cancelled and TCT T-42198 was subsequently issued in favor of the Municipality of Tanauan on
July 16,1993 (23 years after the alleged sale). Upon Examination of the Deed of Absolute Sale,
however, Millonte realized that the Gonzaga siblings were already dead when the said deed was
executed, Hence, they could not have signed the document. Thus, there was no valid agreement,
and the Deed of Absolute Sale was void.
ISSUE:
Whether or not the deed of absolute sale is null and void.
RULING:
YES, the Deed of Sale is null and void.
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Here, Millonte bears the burden to prove that the signatures of the Gonzagas were Forgeries
because they had died prior to the execution of the Deed of Sale.
Millonte submitted a Certification indicating the fact of death of Ambosio, likewise, she
presented Certifications stating that the death certificates of Pantaleona, Lucio, Marcelo, and
Eleuteria Could not be produced or located due to the fire during the war. Testimonies were
offered as secondary evidence to establish the deaths. Hence, the deaths of the Gonzagas, the
supposed contracting parties, prior to the execution of the Deed of Absolute Sale were
sufficiently established.
More importantly, if any one party to a supposed contract was already dead at the time of its
execution, such contract is undoubtedly simulated and false, therefore, null and void by reason of
its having been made after the death of the party who appears as one of the contracting parties
therein.
Petitioner could not even claim to be an innocent purchaser for value, since it did not show that it
fully ascertained the identities and genuineness of the signatures of the purported vendors.
Petitioners could not also claim the due execution of the deed of Absolute Sale simple because it
was notarized. xxx Since the petitioner did not present the testimony of the notary public who
notarized the Deed of Absolute sale, there would be no convincing basis to conclude that the
signatories were the real owners of the property.
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G.2.a Adverse Claim
ATTY. ARISTOTLE T. DOMINGUEZ vs. BANK OF COMMERCE
G.R No. 225207, September 29, 2021
By: Histotective
DOCTRINE:
In petitions for cancellation of adverse claim, trial courts are not precluded from
adjudicating matters involving attorney’s fees.
FACTS:
In 2007, respondent Carmelo Africa Jr. (Carmelo), together with his brothers Carlos and Chito,
engaged the legal services of Atty, Dominguez in order to prevent the Bank of Commerce (BOC)
from taking possession of their family homes in Marikina City, Antipolo City and Quezon City
with a total redemption price of P25 million, Atty. Dominguez charged P250,000.00 or one
percent (1%) of the redemption price as his acceptance fee.
BOC filed a petition for cancellation of the adverse claim, on Transfer Certificate of Title (TCT)
Nos. 473882 and 473883. This petition was opposed by the spouses Carmelo and Elizabeth
Africa (spouses Africa) through Atty. Dominguez. During the hearing, BOC manifested that
there might be a settlement between the parties to which the spouses Africa did not interpose any
objections. In October 2012, Atty. Dominguez filed before the trial court a Request for
Admission of the aforesaid allegations. A month later, Atty, Dominguez manifested that he was
no longer representing the spouses Africa as oppositors in the petition for cancellation of adverse
claim.
In January 2013, Atty, Dominguez filed a Motion to Fix Attorney's Fees and to Approve
Charging (Attorney's) Lien with Motion for Production of Compromise Agreement (Motion to
Fix Attorney's Fees).
The spouses Africa insist that trial courts hearing a petition for cancellation of adverse claim
could only rule on the propriety or impropriety of the petition and could not decree money
judgments. On the other hand, BOC asserts that Atty, Dominguez could not claim his attorney's
fees in the petition for cancellation of adverse claim since his interest to be compensated for his
legal services is unrelated to said petition, arid should be addressed as against the spouses Africa
only.
On the other hand, Atty. Dominguez argues that the pronouncement of the appellate court did not
have basis in jurisprudence, and that despite the jurisdiction conferred to the trial courts, they can
still pass upon matters involving attorney's fees pursuant to their general jurisdiction.
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ISSUE:
Whether or not the trial court can rule on money judgments in a petition for cancellation of
adverse claim.
RULING:
YES, the trial court can rule on money judgments in a petition for cancellation of adverse
claim.
The trial court may rule on money judgments such as attorney's fees and record and. enforce
attorney's lien in a. petition for cancellation of adverse claim or in a separate action., at the option
of the counsel, claiming the same. To distinguish, registration or recording of attorney's lien
merely recognizes the right of the lawyer to claim from the judgment of the suit, whereas the lien
can only be enforced when the money judgment in favor of the counsel's client becomes final
and executory. It is to be noted that among the prayers of Atty. Dominguez in his Motion to Fix
Attorney's Fees is to register a statement of his lien before the rendition of judgment. If a lien
may be enforced in said, petition when the money judgment has become final, then the
registration of the lien may be granted even prior to the judgment in order to establish the
lawyer's claim. The determination and the fixing of attorney's fees may be deferred until the
resolution of the case and the finality of the money judgment in favor of the lawyer's client.
The language of Section 70 of the Property Registration Decree (PD 1529) is clear; it does not
limit the issues that may be resolved by the trial court in a petition for cancellation of adverse
claim.
While the trial court is directed to speedily hear the case on the validity of the adverse claim,
there is no prohibition or any restriction on the trial court from hearing issues on money
judgment particularly on matters concerning attorney's fees and lien. There is thus no basis to
BOC's argument that Atty. Dominguez could not assert the issue concerning his legal fees in the
petition for the cancellation of adverse claim itself. Since Atty. Dominguez represented the
spouses Africa as oppositors in the petition for cancellation of adverse claim, he may then
advance his claim thereon.
Likewise, Atty. Dominguez correctly claimed that while that the Court pronounced in
Diaz-Duarte v. Spouses Ong that a hearing is necessary in a petition for cancellation of adverse
claim in order to afford the parties opportunity to prove the propriety or impropriety of the said
claim, and as We have elucidated in Spouses Ching v. Spouses Enrile to the same effect, this
Court did not so declare that trial courts hearing a petition for cancellation of adverse claim are
limited to hear and decide only on the propriety or impropriety of the adverse claim. To stress,
trial courts are not precluded from adjudicating money claims such as attorney's fees in a petition
for cancellation of adverse claim.
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As correctly argued by Atty, Dominguez, even in cases for the determination of just
compensation, settlement of intestate estate, foreclosure of mortgage, and in probate of a will, the
Court had recognized and permitted the counsel to interpose his claim for attorney's fees and
lien. In Palanca v. Pecson (Palanca) the Court En Banc upheld the rule against multiplicity of
suits to justify its holding that probate courts may pass upon a petition to determine attorney's
fees.
The Court held that in a petition for cancellation of adverse claim, trial courts may at the same
time hear matters regarding claims for attorney's fees and charging of lien, in observance of the
policy against multiplicity of suits. Hence, the lawyer may choose to record and enforce his
attorney's fees and lien in a petition for cancellation of adverse claim or he may opt to file an
entirely separate action for this purpose.
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IV.I. Dealings with Unregistered Land
SPOUSES EUGENIO PONCE AND EMILIANA NEROSA vs. JESUS ALDANESE
G.R No. 216587, August 04, 2021
By: Histotective
DOCTRINE:
Although tax declarations or realty tax payment of property are not conclusive evidence of
ownership, nevertheless, they are good indicia of possession in the concept of owner, for no
one in his right mind would be paying taxes for a property that is not in his actual or
constructive possession. They constitute at least proof that the holder has a claim of title
over the property. The voluntary declaration of a piece of property for taxation purposes
manifests not only one's sincere and honest desire to obtain title to the property and
announces his adverse claim against the State and all other interested parties, but also the
intention to contribute needed revenues to the Government. Such an act strengthens one's
bona fide claim of acquisition of ownership.
A seller can only sell what he or she owns, or that which he or she does not own but has
authority to transfer, and a buyer can only acquire what the seller can legally transfer.
FACTS:
In 1973, respondent Jesus Aldanese (Jesus) inherited Lot No. 6890 from his father, Teodoro
Aldanese, Sr. He diligently paid its real property taxes from that time on under Tax Declaration
No. (TD) 13003 which is in his name. TD 13003 was subsequently cancelled and TD 13163-A
was issued by the Municipal Assessor of Sibonga, still in Jesus' name, as the owner and
possessor thereof.
Jesus stayed in the city because of his business. In August 1996, he was surprised when he
discovered that the Spouses Ponce encroached upon the entire portion of his lot. He immediately
demanded that they vacate his land and to return it to him. However, the Spouses Ponce refused
to heed Jesus' demand on the ground that Lot No. 6890 is part of the land that they bought from
his brother Teodoro Aldanese, Jr. (Teodoro Jr.).
Jesus then asked his brother Teodoro Jr. about the purported sale of his land. However, Teodoro
Jr. denied selling his brother's land to the Ponces. He explained to Jesus that what he sold to the
Spouses Ponce was a parcel of land that he owned known as Lot No. 11203 located in Masa,
Dumanjug, Cebu. Lot No. 11203 is adjacent to Lot No. 6890 of Jesus. Teodoro Jr. then showed
Jesus a photocopy of the Deed of Absolute Sale9 dated March 13, 1976.
Thereafter, Jesus and the spouses Ponce met at the barangay for conciliation. The latter
nonetheless refused to vacate his land.
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During the barangay proceedings, the Spouses Ponce admitted encroaching on Lot No. 6890
because Lot No. 11203 which they bought from Teodoro Jr. in Masa, Dumanjug, Cebu contained
less than the area stated in the Deed of Absolute Sale. The Ponces also remained firm in
possessing the subject land. As a result, Jesus filed a Complaint for recovery of possession and
damages with receivership against them before the RTC.
During trial, Jesus testified that he owned Lot No. 6890 and that it was not part of the land sold
by his brother Teodoro Jr. to the Spouses Ponce. Teodoro corroborated his brother's testimony. It
was only Lot No. 11203, the land that he owned and inherited which was situated in Masa,
Dumanjug, Cebu, that was sold to the Spouses Ponce in the Deed of Absolute Sale.
On the other hand, the Spouses Ponce maintained that the subject land was part of the entire 10
hectares that they bought from Teodoro, Jr. In fact, a survey of the land was conducted after the
sale showing that about seven hectares of the sold property is situated in Masa, Dumanjug, Cebu
while the remaining three hectares pertained to Lot No. 6890 located in Sibonga, Cebu. The
Ponces further asserted that Teodoro Jr., as the owner, has the right to sell the subject land
pursuant to the Deed of Confirmation of Oral Partition dated April 3, 1975 which was executed
by the Aldanese siblings.
ISSUE:
Whether Jesus is the absolute owner of Lot No. 6890 to be entitled of possession thereof.
RULING:
There is preponderant evidence on record to support the conclusion of both the appellate
court and the trial court that Jesus, being the lawful owner of the subject property, is
entitled to the possession of Lot No. 6890.
Indeed, while the tax declaration is not conclusive proof of ownership of Jesus over the subject
land, it is an indication however that he possesses the property in the concept of an owner for
nobody in his or her right mind
The Court also notes that during trial, Teodoro Jr. categorically testified that the land covered by
the Deed of Absolute Sale did not include Lot No. 6890. In fact, he toured around the Ponces on
the land prior to the sale. During the tour, he identified the cemented monuments which served as
markers of the land's boundaries. Interestingly, the Spouses Ponce admitted that the whole parcel
of land that they purchased from Teodoro Jr. is in Masa, Dumajug, Cebu. It was only during
cross-examination that he claimed Lot No. 6890 to be part of the land sold to them.
Thus, in the absence of competent evidence showing that Lot No. 6890 is covered by the Deed of
Absolute Sale, the Ponces have no right to possess the property, much less in the concept of an
owner. Moreover, they cannot be deemed possessors in good faith since they were aware that the
subject land is not part of the land that Teodoro Jr. sold to them. Besides, assuming that Teodoro
Jr. sold Lot No. 6890 to the Ponces, the sale would be invalid as it was owned by Jesus.
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IV.K. Reconstitution of Title
REPUBLIC OF THE PHILIPPINES vs. LUISA ABELLANOSA
G.R. No. 205817, October 06, 2021
By: anyaforger
DOCTRINE:
The judicial reconstitution of a Torrens title under Republic Act No. 26 means the
restoration in the original form and condition of a lost or destroyed Torrens certificate
attesting the title of a person to registered land. The purpose of the reconstitution is to
enable, after observing the procedures prescribed by law, the reproduction of the lost or
destroyed Torrens certificate in the same form and in exactly the same way it was at the
time of the loss or destruction.
For the judicial reconstitution of an existing and valid original certificate of Torrens title,
Section 2 of RA 26 enumerates the acceptable bases, while Sections 12 and 13 provide for
the procedure for the reconstitution.
In Sebastian v. Spouses Cruz, We pointed out that the following requisites must be complied
with for an order for reconstitution to be issued:
1. that the certificate of title had been lost or destroyed;
2. that the documents presented by petitioner are sufficient and proper to warrant
reconstitution of the lost or destroyed certificate of title;
3. that the petitioner is the registered owner of the property or had an interest therein;
4. that the certificate of title was in force at the time it was lost and destroyed; and
5. that the description, area and boundaries of the property are substantially the same
as those contained in the lost or destroyed certificate of title.
FACTS:
In a Petition for Judicial Reconstitution, the Spouses Manalo claimed that they were once
registered owners of two parcels of land in Lucena City. The Spouses Manalo sold the subject
lots to Valero which were then sold by Valero to FEPI. Valero was unable to surrender the
owner’s duplicate copy of the titles to FEPI because the documents were lost beyond retrieval
per the Certification of the Register of Deeds of Lucena City, which states that the titles of the
subject lots "are among those presumed burned during the fire that razed the City Hall Building
of the City of Lucena on August 30, 1983."
Respondents sought to amend (first amendment) the petition for reconstitution by attaching
thereto the respective sketch plans of the subject lots including the technical descriptions thereof.
The plans and technical descriptions of the subject lots were verified correct by the Land
Registration Authority.
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Respondents filed a motion to admit a second amended petition (second amendment) to propose
the substitution of parties by impleading Valero as co-petitioner following the death of the
spouses Manalo and to use the LRA-verified plans and technical descriptions of the subject lots
as bases for the reconstitution of the lost titles. The RTC admitted the motion and the second
amendment to the petition.
Petitioner contended that there was no sufficient basis for the reconstitution of the titles of the
subject lots because the grounds for the reconstitution of titles indicated in the second
amendment, such as plans and technical descriptions, are not grounds for filing a petition for
reconstitution. Thus, petitioner asserted that the RTC erred in granting the prayer for the
issuance of a second owner's duplicate of title.
ISSUE:
Whether or not there was sufficient basis for the reconstitution of titles.
RULING:
YES, there is a sufficient basis for the reconstitution of titles.
Petitioner's assertion that the bases of the second amendment, such as plans and technical
descriptions, are not grounds for filing the petition for reconstitution, is just as unacceptable.
For the judicial reconstitution of an existing and valid original certificate of Torrens title, Section
2 of RA 26 has expressly listed the acceptable bases:
SECTION 2. Original certificates of title shall be reconstituted from such of the
sources hereunder enumerated as may be available, in the following order:
(a)
The owner's duplicate of the certificate of title;
xxxx
(f)
Any other document which, in the judgment of the court, is sufficient and proper
basis for reconstituting the lost or destroyed certificate of title.
In the instant case, the contents of the second amendment and the original petition for
reconstitution, along with their respective supporting documents, were considered collectively by
the RTC. Thus, the bases for the reconstitution of the title were not only the plans and technical
descriptions but also the legible duplicate copies of the titles and a host of other official
documents.
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V.A. General Provisions
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES DOMINADOR AND
ESTEFANIA BASAS
G.R. No. 206847, June 15, 2022
By: lably
DOCTRINE:
A party's contractual rights and obligations are transmissible to the successors.
In determining which rights are intransmissible (extinguished by a person's death) or
transmissible (not extinguished by his death), the following general rules have been laid
down:
1. That rights which are purely personal, not in the inaccurate equivalent of this term
in contractual obligations, but in its proper sense, are, by their nature and purpose,
intransmissible, for they are extinguished by death; examples, those relating to civil
personality, to family rights, and to the discharge of public office.
2. That rights which are patrimonial or relating to property are, as a general rule, not
extinguished by death and properly constitute part of the inheritance, except those
expressly provided by law or by the will of the testator, such as usufruct and those
known as personal servitudes.
3. That rights of obligation are by nature transmissible and may constitute part of the
inheritance, both with respect to the rights of the creditor and as regards the
obligations of the debtor
The third rule stated above has three exceptions, especially with respect to the obligations
of the debtor. They are:
1. those which are personal, in the sense that the personal qualifications and
circumstances of the debtor have been taken into account in the creation of the
obligation;
2. those that are intransmissible by express agreement or by will of the testator, and
3. those that are intransmissible by express provision of law, such as life pensions given
under contract.
The heirs of the deceased are no longer liable for the debts he may leave at the time of his
death. Only money debts are chargeable against the estate left by the deceased; these are
the obligations which do not pass to the heirs, but constitute a charge against the
hereditary property. There are other obligations, however, which do not constitute money
debts; these are not extinguished by death, and must still be considered as forming part of
the inheritance.
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The question as to whether an action survives or not depends on the nature of the action
and the damage sued for. In the causes of action which survive the wrong complained
affects primarily and principally property and property rights, the injuries to the person
being merely incidental, while in the causes of action which do not survive the injury
complained of is to the person, the property and rights of property affected being
incidental.
FACTS:
The late Zenaida B. Gonzales (Zenaida) purchased from respondents spouses Dominador and
Estefania Basas ( collectively, spouses Basas ), a parcel of land including the house thereon,
situated at No. 427 Espinola St., Block 6, Magsaysay Village, Tondo, Manila, with an area of
152.98 square meters and covered by Transfer Certificate of Title No. (TCT) 1878986 (subject
property). An annotation in the title indicates that the consent of the National Housing Authority
(NHA) is necessary for the disposal of the same.
Zenaida and the spouses Basas executed the following documents to reflect their mutual
agreement on the sale and purchase of the subject property:
I.
II.
III.
Contract to Sell dated May 10, 1996 (Contract to Sell) which reflects the total price of the
subject property at P800,000.00.
Deed of Absolute Sale (DOAS) dated May 13, 1996 which indicates the consideration of
the subject property at P300,000.00.
Agreement to Purchase and to Sell allegedly dated August 14, 1996 (Agreement), which
states that the total price of the subject property is at Pl,050,000.00.
However, petitioners claimed that the Agreement was undated and unnotarized when Zenaida
signed it, and the date "August 14, 1996" was stamped therein without her consent. According to
petitioners, once the foregoing documents were executed, the spouses Basas requested Zenaida
to allow them to stay in the subject property until such time that they can transfer to another
place. Petitioners further alleged that the spouses Basas promised to procure the written consent
of the NHA for the sale of the subject property. In the meantime, pursuant to their mutual
agreement on the sale and purchase of the same, Zenaida paid the Basas couple an aggregate
amount of more than P800,000.00. as evidenced by receipts. Once the spouses Basas received
the said amount they promised to deliver the title of the subject property to Zenaida as soon as
they secured the NHA's consent. Meanwhile, the spouses Basas borrowed the certificate of title
of the property which at that time was already in the possession of Zenaida after she paid them
the amount of P650,000.00, so they can work on the cancellation of the mortgage on the subject
property. Petitioners point out that Zenaida has not paid the balance of the selling price because
the spouses Basas have not yet obtained NHA's written consent to the sale.
On January 4, 1997, Zenaida sent a written demand to the spouses Basas to: (1) Vacate the
property, (2) return the title so she can transfer the title to her name, (3) Give the written consent
of NHA with regards to the property.
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Despite Zenaida's verbal and written demands for the spouses Basas to comply with their
foregoing obligation, the latter failed to do so. In view of this, Zenaida brought the matter to the
barangay, but the parties failed to settle.
Eventually, Zenaida discovered that the spouses Basas subsequently sold the subject property to
respondent Romeo Munda (Munda) who immediately occupied the property. As a result, Zenaida
caused the annotation of her affidavit of adverse claim on the title of the subject property on
October 29, 1997.
When Zenaida learned of the second sale by the Spouses Basas to Munda, she and her son,
Andres Rico Gonzales, went to the subject property and found out that the same was already
being occupied by Munda. While thereat, they were informed by Munda's wife that she and her
husband already purchased the property, and she further told Zenaida that the latter's contract
was only a contract to sell while their contract was an absolute deed of sale. In view of the
foregoing, Zenaida filed a complaint on May 25, 1998 for nullity of sale, specific performance,
and damages against respondents. Zenaida died on April 30, 2012, and was eventually
substituted by her heirs, petitioners herein.
On the other hand, the spouses Basas argued that Zenaida did not purchase the subject property.
They pointed out that the August 14, 1996 Agreement superseded the two previously signed
documents. They asserted that there was a novation of the contracts, and the latter document
reflected the final and true intentions of the parties. The spouses Basas further posited that it was
the agreement of the parties that until the balance of the purchase price as reflected in the
Agreement is fully paid, they will continue to occupy the subject property. They did not deem it
necessary to inform Munda of the existence of the Agreement because there was no
consummated sale between them and Zenaida.
Meanwhile, Munda argued that he purchased the subject property in good faith and for value. At
the time he bought the subject property on August 25, 1997, its title was clean and there was no
encumbrance or adverse claim annotated on it. The adverse claim of Zenaida was filed and dated
only on October 29, 1997. Aside from the notarized August 25, 1997 Deed of Absolute Sale that
he and the spouses Basas executed, they also issued an unnotarized and undated Deed of
Absolute Sale, which reflected the true agreed selling price of the subject property in the amount
of Pl,400,000.00. The subject property was eventually registered under his name on March 2,
1998 under TCT 237326.
The RTC ruled in favor of the Heirs of Zenaida Gonzales. Aggrieved with the RTC's ruling,
respondents filed an appeal with the CA. However, in its November 5, 2012 Decision, the CA
reversed the findings of the RTC and found Munda as a buyer in good faith and for value.
ISSUE:
Whether or not the liabilities of the spouses Basas are transmittable to their heirs
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RULING:
YES, the liabilities of the spouses Basas are transmittable to their heirs
This Court further notes that the spouses Basas have already passed away, since Estefania died
on June 24, 1999, 105 while her husband, Dominador, died on March 9, 2005. However, their
death did not extinguish their contractual obligations in the instant case since as a rule, "a party's
contractual rights and obligations are transmissible to the successors
A contract of sale and contract to sell involving land or immovable property involve patrimonial
rights and obligations, which by their nature are essentially transmissible or transferrable.108
Thus, the heirs of the seller and the buyer are bound thereby as they are not deemed non-privies
to the contract of sale or contract to sell, as the case may be.
Therefore, the heirs of the spouses Basas are liable for the consequences of the contractual
obligations made by their predecessors-in-interest, which gave rise to the present claim for
damages and monetary awards.
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V.C.5. Determination of Heirs
AMLAYON ENDE vs. ROMAN CATHOLIC PRELATE OF THE PRELATURE
NULLIUS OF COTABATO, INC.,
G.R. No. 191867, December 6, 2021
By:Titaoframos
DOCTRINE:
1. Unless there is a pending special proceeding for the settlement of the decedent's estate or
for the determination of heirship, the compulsory or intestate heirs may commence an
ordinary civil action to declare the nullity of a deed or instrument, and for recovery of
property, or any other action in the enforcement of their ownership rights acquired by
virtue of succession, without the necessity of a prior and separate judicial declaration of
their status as such. xxx It bears stressing that what is abandoned in Treyes is the prior
determination of heirship in a separate special proceeding as a prerequisite for filing an
ordinary civil action.
2. Both the Civil Code and Family Code recognize such other means allowed by the Rules
of Court to prove filiation or the legitimacy status of a person, that includes testimonies of
witnesses. Although no documentary evidence was offered by petitioners to prove their
legitimacy, the testimonies of the witnesses presented preponderantly tipped the scales in
their favor. Section 36, Rule 130 of the Rules of Court provides that "a witness can testify
only to those facts which he knows of his personal knowledge; that is, which are derived
from his own perception, except as otherwise provided in the rules.
FACTS:
The spouses Butas Ende (Butas) and Damagi Arog (Damagi; collectively, spouses Ende), both
Manobo natives, were the registered owners of a lot with an area of 223,877 square meters
(sqm.) located in Sudapin, Kidapawan, Cotabato covered by OCT No. P-46114. However,
portions of the subject property are presently occupied by respondents Roman Catholic (11,356
sqm.); Welhilmina (112,023 sqm.); Eliza and Juanito Diaz (26,457 sqm.); and Jessie and Corazon
Flores (12,500 sqm.).
Amado, Daniel, Felipe, and Pilar, claiming to be the surviving heirs of the spouses Ende, filed a
complaint for quieting of OCT No. P-46114 and recovery of possession thereof with damages
and attorney's fees, docketed as Civil Case No. 1069. They claimed that, taking advantage of the
ignorance and illiteracy of the spouses Ende, respondents gradually took possession of portions
of the subject property through deceitful machinations.
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Respondents filed their answer with compulsory counterclaim claiming that they acquired
ownership over their respective portions of the subject property from Damagi or from third
persons who, in turn, acquired the same from Damagi. Respondents belied Amado, Daniel,
Felipe, and Pilar's allegation that they are the rightful heirs of the spouses Ende. They argued
that their ownership over the respective portions of the subject property were not covered by
transfer certificates of title registered in their name because of the difficulty in having them
registered due to numerous claimants. In addition, respondents invoked acquisitive
prescription claiming that their possession of the respective portions of the subject property
spanned at least 30 years to at most 50 years already. Since petitioners failed to assert their
alleged rights over the subject property, laches already set in that barred their recovery thereof.
Petitioners Amalayon and Quezon, claiming to be the surviving children and legitimate heirs of
the spouses Ende, intervened. In their answer-in-intervention, they claimed that they are the
children and legitimate heirs of the spouses Ende and that Amado, Daniel, Felipe, and Pilar, the
plaintiffs in the other civil case, are mere impostors. They further claimed that they were not
able to exercise their rights over the subject property after the death of the spouses Ende
because they were driven away from the subject property by Inacara Ende (Inacara) and Joseph
Butas Canta (Joseph), who are purportedly nephews of the spouses Ende.
ISSUES:
1. Whether or not a prior determination of heirship in a special proceeding is not a
prerequisite before one can file an ordinary civil action to enforce ownership rights by
virtue of succession.
RULINGS:
YES, a prior determination of heirship in a special proceeding is not a prerequisite before
one can file an ordinary civil action to enforce ownership rights by virtue of succession.
The Court laid down in Treyes v. Larlar (Treyes) that a prior determination of heirship in a
special proceeding is not a prerequisite before one can file an ordinary civil action to enforce
ownership rights by virtue of succession, to wit:
Given the clear dictates of the Civil Code that the rights of the heirs to the
inheritance vest immediately at the precise moment of the decedent's death even
without judicial declaration of heirship, and the various Court En Banc and
Division decisions holding that no prior judicial declaration of heirship is
necessary before an heir can file an ordinary civil action to enforce ownership
rights acquired by virtue of succession through the nullification of deeds
divesting property or properties forming part of the estate and reconveyance
thereof to the estate or for the common benefit of the heirs of the decedent, the
Court hereby resolves to clarify the prevailing doctrine.
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The ruling of the trial court shall only be in relation to the cause of action of the ordinary civil
action, i.e., the nullification of a deed or instrument, and recovery or reconveyance of property,
which ruling is binding only between and among the parties.
Accordingly, when two or more heirs rightfully assert ownership over another in an ordinary
civil action to recover the property of the estate against third persons, the trial court may
determine their status or right as legal heirs to protect their legitimate interests in the estate, since
successional rights is transmitted by operation of law from the moment of death of the decedent.
Thus, it is only proper to allow the legitimate heirs of Butas to institute the present civil action or
to intervene in the recovery of the property of the estate without a prior determination of heirship
in a special proceeding.
2. Whether or not petitioners Amlayon and Quezon are the legal heirs of Sps.
Ende.
YES. Petitioners Amlayon and Quezon to be the legal and rightful heirs of spouses Ende
entitled to the latter's estate, if any.
Article 265 of the Civil Code provides that the "filiation of legitimate children is proved by the
record of birth appearing in the Civil Register, or by an authentic document or a final
judgment." In the absence thereof, the filiation shall be proved by the continuous possession of
status of a legitimate child or by any other means allowed by the Rules of Court and special
laws. This action to claim one's legitimacy may be brought by the child during his or her
lifetime and shall be transmitted to his or her heirs if he or she should die during his or her
minority or in a state of insanity.
Petitioners claim that they are the legitimate children of the spouses Ende. However,
petitioners' records of birth were not recorded in the Civil Register or their legitimate filiation
embodied in a public document or a private handwritten instrument signed by the spouses
Ende. Instead, petitioners offered testimonies of their relatives, namely, Elena R. Birang
(Elena), Laureana Bayawan (Laureana), Cristina Birang Carbonel (Cristina), and Marino
Icdang (Marino) to prove that they are legitimate children of the spouses Ende.
We hold these testimonial evidence sufficient to establish petitioners' status as heirs of the Ende
couple. xxx Clearly, a testimony based on personal knowledge, such as that of an eyewitness,
may prove the fact that petitioners were the legitimate children of the spouses Ende.
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OBLIGATIONS AND CONTRACTS
I.B.2. Remedies for Breach of Obligation
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN POLIÑO AND
CORAZON ROM
G.R. No. 200608, February 10, 2021
By: JLBL
DOCTRINES:
Substantial breaches of contract are fundamental violations as would defeat the very object
of the parties in making the agreement. The happening of a resolutory condition is a
substantial breach that may give either party thereto the option to bring an action to
rescind the contract and/or seek damages.
As a general rule, the power to rescind an obligation must be invoked judicially and cannot
be exercised solely on a party's own judgment that the other has committed a breach of the
obligation.
As an exception, an injured party need not resort to court action in order to rescind a
contract when the contract itself provides that it may be revoked or cancelled upon
violation of its terms and conditions.
FACTS:
Aproniana, Juan, and Anecito Poliño5 (Anecito) were siblings. Anecito, married to Clara O.
Poliño (Clara), was the father of Aquilino and Ducepino. Both sons were mentally incapacitated.
Anecito and Clara were the registered owners of a parcel of land planted with coconuts located at
Cocomon, Lupon, Davao Oriental (subject property). It spanned an area of 80,003 square meters
and covered by Transfer Certificate of Title (TCT) No. T-3353. Anecito and Clara died intestate
on November 21, 1994 and November 18, 1987, respectively. They were survived by their sons
and sole heirs, Aquilino and Ducepino.
A Deed of Sale and an Agreement, executed by and between Anecito and Juan on April 13,
1992, however surfaced and spawned a legal controversy among the family members. In the
Deed of Sale, Anecito allegedly ceded unto Juan the subject property for a consideration of
P15,000.00, while the Agreement stipulated that during Anecito's lifetime, Juan shall allow
Anecito to enjoy the usufruct of the subject property, and that upon Anecito's death, Juan shall
continue to support and provide financial assistance to Aquilino and Ducepino.
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The Agreement further provided that breach of its terms shall render the Deed of Sale
non-effective and nugatory.
Aproniana applied for the issuance of letters of guardianship over Aquilino and Ducepino
docketed as Special Proceedings No. 237 before the RTC, Branch 5 of Mati, Davao Oriental.
Aproniana's petition was granted on June 6, 1996 upon filing a bond of P20,000.00. She took her
oath of guardianship on August 7, 1996.
While the guardianship proceedings were pending, Juan executed a Deed of Voluntary Transfer
on February 23, 1996 conveying the subject property to his children. On September 3, 1996,
Aproniana instituted the instant Complaint against the spouses Juan and Corazon and in behalf of
siblings Aquilino and Ducepino seeking the nullification of the April 13, 1992 Deed of Sale and
Agreement, among other reliefs.
Aproniana assailed the validity of both documents for being fictitious and without consideration.
She claimed that it was incongruous for Anecito to sell the subject property for P15,000.00 when
it had a market value of at least P150,000.00 at the time of sale. Moreover, Juan allegedly could
not afford to pay the real value of the subject property as he had no known means of livelihood.
She claimed that the transaction was in reality a donation mortis causa, and since it was not
executed in accordance with the formalities of the law, it was null and void.
Aproniana also claimed that while Juan knew that Aquilino and Ducepino were mentally
incapacitated, the sale transpired without the two brothers being represented therein. Aproniana
further averred that Juan and Corazon took possession of the property and arrogated unto
themselves the full enjoyment thereof and its fruits to the detriment of Aquilino and Ducepino
who had not been properly taken care of until she took them under her custody in 1996. Despite
being the rightful heirs of the spouses Anecito and Clara, the incompetent siblings were deprived
of their rights as owners of the subject property.
ISSUE:
Whether or not rescission of the contract is proper
RULING:
NO, rescission of the contract is improper
The exception appears to hold in this case, as the Agreement clearly directed as follows:
That the parties to this Agreement likewise agree and stipulate that they will abide
with the terms and conditions therein set forth and that in case of breach thereof
then the Deed of Sale shall be rendered non-effective and nugatory.
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The Agreement already provided a self-terminating clause upon a breach of the conditions
therein. Nonetheless, the Court is still left to decide whether the said conditions have indeed been
met to warrant the dissolution of the Deed of Sale.
Since the inception of this case, Aproniana had always insisted on the ineffectivity of the Deed of
Sale and the Agreement due to Juan's failure to comply with the twin conditions therein. The
necessity of proving, however, lies with the person who sues. Aproniana had never adduced any
concrete evidence that Anecito, during his lifetime, had never received any income produced by
the subject property. Nothing on record also shows that Juan truly left Aquilino and Ducepino to
fend on their own after the death of Anecito, or that Juan's neglect caused Ducepino's death as
Aproniana had insinuated.
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I.C. Different Kinds of Obligations
PNTC COLLEGES, INC. VS. TIME REALTY, INC.
G.R. No. 219698, September 27, 2021
By: Pong
DOCTRINE:
A penalty clause, expressly recognized by law, is an accessory undertaking to assume
greater liability on the part of an obligor in case of breach of an obligation. It functions to
strengthen the coercive force of the obligation and to provide, in effect for what could be
the liquidated damages resulting from such a breach. The obligor would then be bound to
pay the stipulated indemnity without the necessity of proof on the existence and on the
measure of damages caused by the breach.
Although a court is not at liberty to ignore the freedom of the parties to agree on such
terms and conditions as they see fit that contravene neither law nor morals, good customs,
public order or public policy, a stipulated penalty, nevertheless, may be equitably reduced
by the courts if it is iniquitous or unconscionable or if the principal obligation has been
partly or irregularly complied with.
In exercising this power to determine what is iniquitous and unconscionable, courts must
consider the circumstances of each case since what may be iniquitous and unconscionable
in one may be totally just and equitable in another.
FACTS:
PNTC Colleges, Inc. (PNTC) and Time Realty, Inc. (Time Realty) entered into a Contract of
Lease for the latter’s property in Sampaloc Manila from 2005 – 2007. While the term of the lease
ended on December 31, 2005 the contract was impliedly renewed on a monthly basis after the
said date.
Eventually, Time Realty notified PNTC of its (Time Realty) intent not to extend the lease
effective April 2007. It gave PNTC the option to either extend the lease only until April 2007 or
transfer to the second floor of the same building. PNTC informed time Realty of its decision to
terminate its lease which would take effect at the end of April 2007.
Sometime in April 2007, PNTC commenced the transfer of its operations to its new site in
Intramuros, Manila. However, Time Realty alleged that PNTC did so without settling its
(PNTC’s) outstanding rentals and services (electricity and water), plus interest/surcharges.
Hence, Time Realty ordered PNTC to cease its moving out operations, then retained the
remaining properties of PNTC in its premises.
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Time Realty averred that its retention of PNTC’s properties as security was in accordance with
Paragraph 23 of the Contract of lease:
Breach of Default
xxx should LESSEE violate any or all said conditions xxx LESSEEE hereby irrevocably
empowers LESSOR xxx to take inventory and possession of whatever equipment, furniture,
articles, merchandise, appliances, etc. found therein xxx
PNTC filed a Complaint for Delivery of Personal Properties with Damages.
Time Realty filed an Answer with Counterclaim arguing that PNTC started vacating the leased
premises absent a formal notice and without paying its remaining obligations.
ISSUE:
Whether or not interest on unpaid rentals is reasonable and equitable.
RULING:
NO, the penalty charge of 3% per month for unpaid rentals is unconscionable.
It is true that according to Paragraph 1 (Amount of Rent) of the Contract of Lease, "[w]ithout
prejudice to the exercise by [Time Realty] of its rights under Paragraph 24 herein, [PNTC] shall
pay to [Time Realty] an interest at the rate of three (3) per cent a month on any amount due and
not paid on time, to be computed per number of days delayed over thirty (30) days from the date
of delinquency, which is from the 5th of each and every month." However, it is also true that the
imposition of an interest on unpaid rentals contained in the said provision takes the nature of a
penalty clause, in case PNTC breaches any of the stipulations in the lease contract. Withal, even
if such was specified in the contract, public morals and policy dictate that the interest rate should
still be reasonable and equitable.
In light of this, the Court deems the penalty charge of 3% per month for unpaid rentals
unconscionable, especially considering that PNTC only failed to pay when it was already
clearing out of the premises. Thence, We find it equitable to reduce the interest rate from 3% to
1% per month or a total of 12% per annum in accordance with Article 122989 of the Civil Code.
As such, the amount of P870,038.40 should be subject to the interest rate of 1% per month or
12% per annum counting from May 2007 until full payment.
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I.D.1.b. Payment by Cession vs. Dation in Payment
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO AND
FLORA DACQUEL SOTELO
G.R. No. 203946, August 4, 2021
By: bsibsi
DOCTRINE:
Dacion en pago, according to Manresa, 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 en pago, as a special mode of payment, the debtor offers another thing to the
creditor who accepts it as equivalent 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 debtor's
debt. As such, the essential elements of a contract of sale, namely, consent, object certain,
and cause or consideration must be present. In its modem 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.
FACTS:
In 1994, Ernesto and Flora Sotelo began the construction of a 7-door apartment on a parcel of
land located in Malabon City formerly covered by TCT No. 738. Due to budget constraints, the
Spouses Sotelo had to borrow ₱140,000.00 from Arturo Dacquel, Flora’s brother. The
construction of the apartment was completed in 1997.
Spouses Sotelo claimed that the debt of ₱140,000.00 was agreed to be payable in double the said
amount, or ₱280,000.00, to be collected from the rental income of four out of the seven
apartment units. There was no agreed period within which to pay the loan and the interests.
Dacquel also required the Spouses Sotelo to cede to him the subject property as security from the
loan.
On September 1, 1994, the parties executed a Deed of Sale. TCT No. 738 was thereafter
cancelled and TCT No. M-10649 was issued under Dacquel’s name. In March 2000, when
Dacquel had collected the full amount of ₱280,000.00 in rental income from the four apartment
units, the Spouses Sotelo asked for the return of the subject property, however, Dacquel allegedly
held on to the title and refused to yield the same.
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On May 9, 2000, the Spouses Sotelo filed a complaint for annulment of title and reconveyance
against Dacquel before the RTC. They alleged that Dacquel held the title to the subject property
only as security for the loan and in trust for the Spouses Sotelo, who remained the beneficial
owners thereof. The building permits for the7-door apartment, as well as the original registration
of the electric and water meters of all seven units, were issued in Ernesto Sotelo's (Ernesto) name
and that the construction expenses were paid for by Ernesto's checks.
Dacquel, on the other hand, asserted that the Spouses Sotelo’s debts to him totaled ₱1,000,000.00
which he had recorded. As payment for their debts, the Spouses actually offered to sell to him the
subject property and he had accepted their offer. They reduced their agreement into writing as a
Deed of Sale on September 1, 1994 for the true consideration of ₱1,000,000.00, and the amount
of ₱140,000.00 was indicated in the Deed only for purposes of reducing the tax liabilities for the
transaction.
Dacquel claimed that the Spouses Sotelo are estopped from questioning the validity of the Deed
of Sale because of their acquiescence to the subject property’s transfer unto Dacquel’s name.
Also, Dacquel caused the construction of the apartment using the sum he inherited from one
Richard Lloyd Wilcox.
ISSUE:
Whether or not petitioner’s agreement with respondents-spouses constituted dation in payment or
dacion en pago
RULING:
NO, petitioner’s agreement with respondents-spouses does not constitute dation in payment
or dacion en pago
First, the March 1999 Dacion en Pago submitted by petitioner apparently pertains to another debt
that was not proven to have transpired.
This Dacion en Pago constituted petitioner Dacquel as the buyer of the subject lot and the
respondents-spouses Sotelo as the vendors, whereby Dacquel allegedly owed to the Sotelos the
remaining amount of PS00,000.00 out of the purported Pl,450,000.00 purchase price. These
stipulations were not at all shown to actually exist, or to be the same, or at least connected to the
parties' original transaction. While petitioner claims that this dation in payment stemmed from
the Pl40,000.00 he had loaned to respondents-spouses, no reference to the said established debt
was made in petitioner's Dacion en Pago. If anything, the existence of the Dacion en Pago relied
on the truth of the September I, 1994 Deed of Sale, which, unfortunately for petitioner, turned
out to be not a sale but only an equitable mortgage. Petitioner failed to adduce acceptable
evidence that this sale actually transpired, more so as respondents-spouses consistently denied
that they sold the subject property to petitioner.
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Second, even if the truth of this second transaction would be sustained, both parties still must be
shown to have mutually agreed to the dation in payment. Records, however, fail to disclose any
such consent on the part of respondents-spouses. Instead of an agreement, the said Dacion en
Pago appears to be a mere unilateral affidavit executed by petitioner. That both petitioner and
respondents-spouses left this document unsigned and unnotarized does not help the present
appeal. No witnesses even attested to the alleged Dacion En Pago. This Dacion En Pago rests on
claims that are too self-serving to be considered, and bare allegations have no probative value in
court.
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I.D.5.a. Requisites
BANCO DE ORO UNIBANK vs. EDGARDO C. YPIL
G.R. No. 212024, October 12, 2020
By: twistafate
DOCTRINE:
It is settled that "compensation is a mode of extinguishing to the concurrent amount the
debts of persons who in their own right are creditors and debtors of each other. The object
of compensation is the prevention of unnecessary suits and payments thru the mutual
extinction by operation of law of concurring debts.
ARTICLE 1279. In order that compensation may be proper, it is necessary:
1. That each one of the obligors be bound principally, and that he be at the same time
a principal creditor of the other;
2. That both debts consist in a sum of money, or if the things due are consumable, they
be of the same kind, and also of the same quality if the latter has been stated;
3. That the two debts be due;
4. That they be liquidated and demandable;
5. That over neither of them there be any retention or controversy, commenced by
third persons and communicated in due time to the debtor.
In relation to this, Article 1290 of the Civil Code states that "[w]hen all the requisites
mentioned in Article 1279 are present, compensation takes effect by operation of law, and
extinguishes both debts to the concurrent amount, even though the creditors and debtors
are not aware of the compensation."
"[a] claim is liquidated when the amount and time of payment is fixed. If acknowledged by
the debtor, although not in writing, the claim must be treated as liquidated."
FACTS:
On August 20, 2002, Leopoldo Kho (Kho), representing Cebu Sureway Trading Corporation
(CSTC), offered a proposal to Edgardo C. Ypil, Sr. (Ypil) to invest in the Prudentialife Plan —
Millionaires in Business scheme. Ypil acquiesced and Kho was able to solicit the total amount of
P300,000.00 from him. Eventually, though, Ypil opted to get a refund of the amounts he paid and
manifested such intent through a letter dated February 11, 2003. However, CSTC or Kho did not
answer.
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Ypil thus filed a Complaint for Specific Performance with Attachment, Damages and Attorney's
fees against CSTC and Kho before the RTC of Cebu City. Ypil asked for the sum of P300,000.00
as principal payment plus interest of two percent (2%) per month and two percent (2%)
collection fee compounded monthly, as well as damages and attorney's fees.
The RTC granted Ypil’s prayer for an ex-parte issuance of an attachment order, and issued a Writ
of Preliminary Attachment. The Sheriff then issued a Notice of Garnishment of the amount of
PhP300,000 plus lawful expenses addressed to the North Mandaue Branch of Banco De Oro
Unibank (Bank). The Bank, thru its branch head Cyrus Polloso (Polloso), sent its reply to the
sheriff informing him that CSTC and/or Kho have no available garnishable funds.
Polloso failed to appear during the pre-trial conference. He also failed to appear several times
despite the RTC issuing subpoenas for him to testify and bring documents related to the bank
accounts of CSTC and Kho. Eventually, Polloso was called to testify and the RTC discovered
that the Bank already debited from CSTC's savings and current accounts some amounts to offset
its (CSTC's) outstanding obligation with the Bank under a loan agreement. In view of this, the
trial court issued an Order directing the Bank, through Polloso, to show cause why it should not
be held guilty of indirect contempt for debiting the money from the accounts of CSTC and Kho
which was under custodia legis.
The Bank filed its Compliance/Explanation on June 16, 2008 as a forced intervenor to the trial
court's May 9, 2008 Order. Essentially, it averred that since CSTC defaulted in its obligations to
the Bank as embodied in a Credit Agreement and Promissory Note, its entire obligation
immediately became due and demandable without need of demand or notice. In other words, it
asserted that since the Bank and CSTC were creditors and debtors of each other, legal
compensation already took effect.
The RTC then ordered the Bank to make available the garnished deposits of CSTC and Kho
pursuant to the Notice of Garnishment. It ruled that "[t]he bank, cannot, however, unilaterally
debit the defendants' [CSTC and Kho] accounts which are already in custodia legis, even
assuming for argument[']s sake that legal compensation ensued ipso jure. If the bank has any
claims against the defendants [CSTC and Kho], it must file the proper pleading for intervention
to protect whatever it claims to be its rights to include the right of legal compensation."
The Bank then filed a Petition for Certiorari with an application for TRO with the CA.
While this petition for certiorari was pending, the RTC rendered a Judgment Based on
Compromise Agreement, since Ypil and Kho submitted a Compromise Agreement wherein Kho,
in behalf of CSTC, agreed to pay the garnished amount of P300,000.00 as full and final
settlement of CSTC's obligation, given that the said amount is more or less the same amount it
owes Ypil. Moreover, Ypil and Kho agreed to waive any other claims and counterclaims in the
specific performance case. The RTC then ordered the Bank to tender the garnished amount of
P300,000 to Ypil.
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The Bank then filed a Manifestation before the RTC requesting to suspend the implementation of
the Judgment Based on the Compromise Agreement since it is the subject of a pending certiorari
petition with the CA. However, the RTC denied this.
In its certiorari petition, the Bank contended that when the Notice of Garnishment was served
upon it on February 4, 2004, CSTC had existing obligations with the Bank amounting to
P3,823,000.00 which was in excess of its (CSTC's) deposit balance in the amount of
P294,436.68. It argued that since CSTC's obligation with the Bank became due and demandable
even before the Notice of Garnishment was served upon it, there could not have been any
amount which could be garnished from CSTC's accounts. This is because legal compensation
took place by operation of law in accordance with Article 1279 of the Civil Code as apparently,
CSTC defaulted in its monthly amortizations. As a consequence, CSTC's entire obligation with
the Bank immediately became due and demandable even without demand pursuant to the
stipulations in the Promissory Note. Withal, the Bank claimed that the RTC committed grave
abuse of discretion because it failed to affirm that the Bank correctly applied legal compensation.
Conversely, Ypil contended that the RTC did not commit grave abuse of discretion. He
maintained that when the Complaint was filed and when the Notice of Garnishment was served,
CSTC and Kho had sufficient funds in their existing accounts with the Bank. He posited that the
amounts in the savings and checking accounts of CSTC were immediately put under custodia
legis and that the Bank cannot automatically and unilaterally debit the money in its favor
especially after service of the Notice of Garnishment. He opined that according to Section 7 (d),
Rule 57 of the Rules of Court, the trial court which issued the Notice of Garnishment already
acquired jurisdiction over the Bank, which in turn became a forced intervenor immediately upon
service and receipt of the said notice.
The CA ruled that the RTC did not commit grave abuse of discretion, since the service of the
Notice of Garnishment effectively placed CSTC’s deposits under custodia legis.
Further, the CA found that not all the elements of legal compensation pursuant to Article 1279 of
the Civil Code are present in this case. This is because notwithstanding CSTC's indebtedness to
the Bank, there is no proof as to when the obligation became due, liquidated and demandable.
Significantly, the CA found that the Bank debited CSTC's account only on February 10, 2004 or
six days after the Notice of Garnishment. It added that the Bank conveniently failed to mention
that there was a stipulation in the Promissory Note giving it the option to offset or not to offset
the deposits of CSTC. The fact that CSTC had P301,838.27 in its savings and checking accounts
when the Notice of Garnishment was served showed that the Bank had not yet opted to offset
CSTC's deposits to pay for its obligations.
ISSUE:
Whether or not compensation is proper in this case.
RULING:
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NO, compensation is not proper in this case, since CSTC’s indebtedness cannot be
considered as due and liquidated.
There is no dispute that the Bank and CSTC are both creditors and debtors of each other.
Moreover, the debts consist in or involve a sum of money, particularly CSTC's loan and its
deposit with the Bank. Notably, the Bank argues that CSTC's debts became due given that it
defaulted in its loan obligations even without need of demand pursuant to the Promissory Note.
Neither CSTC nor Kho categorically refuted that CSTC indeed defaulted.
The flaw in the Bank's argument is its failure to specify the date when CSTC actually defaulted
in its obligation or particularly pinpoint which installment it failed to pay. The Bank merely
revealed that CSTC owed it the amount of P3,823,000.00 without presenting a detailed
computation or proof thereof except for the Promissory Note. Although CSTC and Kho did not
question the computation made by the Bank, the fact remains that the actual date of default was
not disclosed and verified with corroborating preponderant proof. The Bank only stated that
CSTC has not been paying its monthly obligations prior to February 4, 2004 which is not
particular enough, even if the Promissory Note indicates that CSTC's obligation will immediately
become due after default and without need of notice.
Thus, CSTC's indebtedness cannot be considered as due and liquidated
In this case, the time of default and the amount due were not specific and particular. Without this
information, a simple arithmetic computation cannot possibly be done without risking errors
especially with regard to the application of interest and penalties. Similarly, despite CSTC's
failure to contest the Bank's computation, its debt still cannot be considered as liquidated.
Further confirmation is necessary in order to treat CSTC's debt as due, demandable and
liquidated, which the Bank unfortunately did not bother to elaborate on.
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I.D.6.a. Concept of Novation
TONY N. CHUA vs. SECRETARY OF JUSTICE
G.R. No. 214960, June 15, 2022
By: primrose
DOCTRINE:
Novation is a mode of extinguishing an obligation. The Civil Code provides that one of the
ways to novate an obligation is by changing its object, cause, or principal conditions.
A necessary element of novation is the cancellation of the old obligation by the new one,
which may be effected expressly or impliedly. It is never presumed and must be proven as
a fact. There is an express novation if the new obligation unequivocally declares that it
extinguishes or substitutes the old obligation; on the other hand, there is an implied
novation if the old and the new obligations are on every point incompatible with each other.
The test of incompatibility is whether the two contracts can stand together, each one having
an independent existence. "The incompatibility must take place in any of the essential
elements of the obligation, such as its object, cause or principal conditions thereof;
otherwise, the change would be merely modificatory in nature and insufficient to extinguish
the original obligation
FACTS:
This case arose from a Complaint-Affidavit filed with the Office of the City Prosecutor, Makati
City, by private respondent BDO Unibank, Inc. (BDO former EBC) against petitioners for four
counts of violation of the Trust Receipts Law. Petitioners are the responsible officers of NF
Agri-Business Corporation (NF ABC). In 1999, EBC issued commercial letters of credit and,
thereafter, imported merchandise for the account of NF ABC. The merchandise consisted of
peruvian fish meal and various kinds of soybean meals for agriculture purposes. The imported
merchandise was delivered to NF ABC. However, NF ABC failed to pay its obligation under the
trust receipts when it became due. BDO demanded payment from NF ABC of the outstanding
obligation under the trust receipts in the amount of Pl 7,430,882.88; despite demand, however,
NF ABC failed to tum-over the proceeds of the sale of the goods or return the goods if not sold.
Petitioners entered into negotiations with BDO and they reached an agreement with respect to
the terms of payment and interest. This agreement was reduced into writing. Petitioner insists
that the trust receipt agreement entered into by the parties was converted into a simple loan by
virtue of the new schedule of payment that is totally incompatible with the original agreement.
The new schedule of payment did not merely modify the trust receipt agreement as it provided
principal conditions that are incompatible with the latter agreement, thereby resulting to a
novation. Petitioners also add that BDO is estopped from insisting on the original trust receipt
transaction because the parties' contractual relationship has been converted, from entrustor
entrustee to debtor-creditor, long before the filing of the complaint.
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Petitioners note that the novation of a trust agreement before the filing of an Information has the
effect of preventing the rise of a criminal liability.
ISSUE:
Whether or not the new schedule of payments novated the trust receipt agreement.
RULING:
NO, the new schedule of payments did not novate the trust receipt agreement.
Here, the Court affirms and adopts the SOJ's and CA's factual finding that the new schedule of
payments did not novate the trust receipt agreement. As the CA has determined that there is no
written contract between the parties stating in unequivocal terms that they were novating the
original obligation, it is necessary and proper to determine whether the new schedule of
payments is incompatible with the original obligation under the trust receipts.
In this regard, there is no reason Us to disturb the conclusion that the new schedule of payments
is not incompatible with the original obligation. The new agreement expressly recognized the old
obligation; the former did not completely obliterate the latter. The object-payment of the amount
owed under the trust receipts-is retained, continues to exist, and is in fact extended by the new
schedule of payments by prolonging the period for payment of the amount owed; petitioners are
still liable under the trust receipts, but were given time to pay under the schedule of payments.
This means that there is no incompatibility in the objects, causes, and principal conditions of the
two agreements, despite the points of incompatibility petitioners posit. In other words, the new
schedule of payments is merely modificatory and supplementary to the original obligation. The
CA is correct in stating that the new agreement precisely revives the unpaid original obligation
whose term already expired
ASIAN CONSTRUCTION AND DEVELOPMENT CORPORATION vs. MERO
STRUCTURES INC.
G.R. No. 221147, September 29, 2021
By: Lewi
DOCTRINE:
Novation extinguishes an obligation between two parties when there is a substitution of
objects or debtors or when there is subrogation of the creditor.
It only occurs when the new contract declares so “in unequivocal terms” or that “the old
and new obligation be on every point incompatible with each other.
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In Garcia vs. Llamas, Novation is a mode extinguishing an obligation by changing its
objects or principal obligations, by substituting a new debtor in place of the old one, or by
subrogating a third person to the rights of the creditor.
In general, there are two modes of substituting the person of the debtor:
1. expromision - the initiative for the change does not come from --and may even be
made without the knowledge of ·- the debtor, since it consists of a third person's
assumption of the obligation. As such, it logically requires the consent of the third
person and the creditor.
2. delegacion - the debtor offers, and the creditor accepts, a third person who consents
to the substitution and assumes the obligation; thus, the consent of these three
persons are necessary.
Novation may also be extinctive or modificatory.
1. Extinctive - when an old obligation is terminated by the creation of a new one that
takes the place of the former.
2. Modificatory - when the old obligation subsists to the extent that it remains
compatible with the amendatory agreement.
Whether extinctive or modificatory, novation is made either by:
1. changing the object or the principal conditions, referred to as objective or real
novation; or
2. by substituting the person of the debtor or subrogating a third person to the rights
of the creditor, an act known as subjective or personal novation.
For novation to take place, the following requisites must concur:
1. There must be a previous valid obligation.
2. The parties concerned must agree to a new contract.
3. The old contract must be extinguished.
4. There must be a valid new contract.
Novation may also be express or implied.
1. express - when the new obligation declares in unequivocal terms that old obligation
is extinguished.
2. implied - when the new obligation is incompatible with the old one on every point.
The test of incompatibility is whether the two obligations can stand together, each
one with its own independent existence.
FACTS:
In line with the 100th anniversary celebration of the Philippine independence from Spanish
colonial, First Centennial Clark Corporation (FCCC) was created for the purpose of designing,
constructing, operating and managing the Philippines’ National Centennial Exposition to be
held in the Clark Special Economic Zone in Pampanga.
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FCCC entered into a Construction Agreement with petitioner Asian Construction and
Development
Corporation
(Asiakonstrukt) for
the
said
event.
Meanwhile,
Asiakonstrukt contracted with MERO Structures Inc. (MERO) for the supply of
materials in constructing a special Philippine flag.
However, FCCC failed to pay the Asiakonstrukt, which led Asiakonstrukt not to pay MERO.
MERO, thru a letter dated October 13, 1999, requested to Asiakonstrukt that it be paid directly
by the FCCC which the latter interposed no objection to MERO’s request to collect payment
directly from FCCC. By way of response, Asiakonstrukt, in a letter dated November 8, 1999,
stated that it interposed no objection to MERO’s request to collect payment directly from the
FCCC.
In a letter dated September 21, 2000, MERO through counsel, made a final demand on
Asiakonstrukt for its US$570,000 principal obligation plus 1.5% interest per month or 18%
annually.
But still no payment was made which prompt the MERO to institute before the
RTC a Complaint for sum of money. MERO prayed that Asiakonstrukt or FCCC
be ordered to pay US$1,033,990 including interest, plus litigation expenses and moral
and
exemplary damages, and NDC be directed to furnish FCCC with advances for this
purpose.
In its Answer with Counterclaim, NDC challenged MERO’s personality to sue in the Philippines
as well as the validity of the complaint’s verification and certification against forum shopping. It
argued that MERO has no cause of action against NDC because it was only a member of the
Oversight Committee tasked to oversee the release and utilization of the P1.4 B budget for the
Philippine Centennial Exposition Project and FCCC failed to comply with the required terms for
the approval of the loan drawdowns.
FCCC filed an Answer with Counterclaim and Cross-claim arguing that no privity of contract
exists between it and MERO because the transaction subject of the complaint involved only
MERO and Asiakonstrukt, thus, MERO has no cause of action against FCCC.
It further averred that FCCC’s approval of Asiakonstrukt’s proposal for design, supply and
installation of the flag structure was subject to certain conditions which were never met, hence
the approval did not take effect; in fact, the MERO flag was not utilized.
Asiakonstrukt filed an Answer with Cross-claim wherein it admitted the validity of MERO’s
claim for the value of the spaceframe but objected the imposition of 18% annual interest, which
was allegedly not stipulated in writing. It professed willingness to pay and explained that the
delay was due to FCCC and NDC’s refusal to pay their obligations to MERO. It claimed that as a
mere contractor of the project, it has no liability for the amount collected, instead, FCCC and
NDC, the project owners, should be held liable.
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By way of cross-claim, it contended that FCCC and NDC should be jointly and severally liable
to pay Asiakonstrukt P1M in attorney’s fees.
RTC rendered a Decision upholding MERO’s right to collect from Asiakonstrukt and FCCC in
the sum of $570,000 at 6% per annum from date hereof and 12% per annum from date of finality
of the decision until fully paid, the former by virtue of a contract and the latter for having
benefited from MERO’s fulfillment of its obligation to supply the spaceframe. However, the
RTC dismissed the complaint against NDC for lack of evidence.
Both MERO and Asiakonstrukt sought reconsideration but the RTC denied the same.
RTC held that the documentary presented by MERO, wherein 1.5% monthly interested was
stated, does not bear the signature of any of the defendants; therefore, it is not the written
agreement contemplated by law as a basis for the imposition of stipulated interest. Accordingly,
it stood firm with the imposition of the legal rate of interest.
CA denied the appeal of MERO and Asiakonstrukt and affirmed
DECISION with modification of the interest. The legal interest shall apply.
the
RTC
Asiakonstrukt would want to impress upon the Supreme Court that a new contract was entered
into by it and MERO, wherein MERO waives its rights to collect from Asiakonstrukt and is
subrogated to Asiakonstrukt’s place to collect directly from FCCC and NDC.
ISSUE:
Whether or not the exchanges of letters between MERO and Asiakonstrukt constitute a new
written contract wherein both parties agreed that MERO collects directly an unpaid obligation of
US$570,000 or its equivalent against FCCC.
RULING:
NO, there is no new contract borne of the letters exchanged by MERO and Asiakonstrukt.
At most, the said exchanges merely show Asiakonstrukt’s approval of MERO’s extraordinary
efforts in helping the former fulfill its obligation to the latter. In any event, Asiakonstrukt’s
approval of MERO’s request to collect directly from the FCCC did not extinguish
Asiakonstrukt’s obligation to pay MERO.
There are 2 relevant contracts in this case: 1) Construction Agreement between FCCC and
Asiakonstrukt and 2) MERO’s Materials’ Only Proposal that was accepted by Asiakonstrukt.
While Asiakonstrukt is a common party in these contracts, MERO and FCCC have no
contractual relationship with each other.
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A careful perusal of the instant petition would reveal that Asiakonstrukt’s argument is hinged on
the theory that its obligation to pay MERO was extinguished by novation of either or both of the
contracts, as evidenced by the letters exchanged between it and MERO.
Applying the foregoing, it is evident that there was neither an express nor implied novation
through the letters exchanged between MERO and Asiakonstrukt.
First, there is nothing in the latters that unequivocally states that the obligation of Asiakonstrukt
to pay MERO would be extinguished.
Second, there is no mention that MERO would substitute or subrogate Asiakonstrukt as FCCC’s
payee/obligee.
Lastly, using test of incompatibility, Asiakonstrukt’s non-objection to MERO’s request to collect
from FCCC directly is not incompatible with the obligation of Asiakonstrukt to pay MERO.
Since there was no novation, Asiakonstrukt’s obligation to MERO remains valid and existing.
Asiakonstrukt, therefore, must still pay respondent the full amount of US$570,000 with the
applicable interest.
CARLOS J. VALDES vs. LA COLINA DEVELOPMENT CORPORATION
G.R. No. 208140, July 12, 2021
By: nashmera
DOCTRINE:
Novation is defined "as the extinguishment of an obligation by the substitution or change of
the obligation by a subsequent one which terminates the first, either by changing the object
or principal conditions, or by substituting the person of the debtor, or subrogating a third
person in the rights of the creditor."
It is well settled that "[t]he cancellation of the old obligation by the new one is a necessary
element of novation which may be effected either expressly or impliedly. While there is
really no hard and fast rule to determine what might constitute sufficient change resulting
in novation, the touchstone, however, is irreconcilable incompatibility between the old and
the new obligations." Notably, "[i]n the absence of an express provision to this effect, a
contract may still be considered as novated if it passes the test of incompatibility, that is,
whether the contracts can stand together, each one having an independent existence."
For a valid novation to take place, the following requisites must concur:
1. a previous valid obligation;
2. the agreement of all the parties to the new contract;
3. the extinguishment of the old contract; and
4. validity of the new one.
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There must be consent of all the parties to the substitution, resulting in the extinction of the
old obligation and the creation of a valid new one.
FACTS:
Carlos Valdes (Carlos, Sr.) and his children, herein petitioners Gabriel A. S. Valdes (Gabriel),
Carlos J. Valdes, Antonio A.S. Valdes, Fatima de la Concepcion, Asuncion Mercado, and
Virginia A.S. Valdes (Valdeses), are the stockholders of Bataan Resorts Corporation (BARECO),
which owned a large tract of land in Bagac, Bataan under Transfer Certificates of Title Numbers
45864, 45865, 45867, 45868, and 45869 of the Registry of Deeds of Bataan.
Sometime in 1974, Carlos, Sr. invited Francisco Cacho (Francisco) and his son, individual
respondent Jose Mari Cacho (Jose Mari), to visit and assess the property's suitability for a beach
resort project (Montemar Project). Having received a favorable response from Francisco, both
Carlos, Sr. and Francisco proceeded to carry out the Montemar Project, which included the
development and improvement of the beach basin as a beach resort (Montemar Beach Club), and
the conversion of the remaining land area into a residential subdivision (Montemar Villas).
To implement the project, the Valdeses transferred and conveyed their shares of stock in
BARECO in favor of LCDC, a fully-owned corporation of the Cacho family, through a Deed of
Sale dated May 24, 1975, for a consideration of P20 Million. LCDC then made a partial payment
thereof in the amount of P2.5 Million from February 1975 to December 1979, while the
remaining balance amounting to P17.5 Million was covered by promissory notes. The P17.5
Million was to be paid by way of an Assignment of Rights14 dated October 30, 1975, wherein
LCDC: (1) assigned to the Valdeses three million worth of shares in LCRC, the corporation
established by LCDC to market and sell the shares of the beach resort; and (2) undertook to pay
the Valdeses (50%) of the net proceeds (later reduced 40%) from the sale of the Montemar Villas
lots inside BARECO, as previously acquired by LCDC.
Since Carlos, Sr. did not intend to use all BARECO real properties for the Montemar Project, he
prepared a Deed of Partition, whereby only the real properties intended to be part of the project
were transferred to LCDC. These properties, now owned by LCDC through its purchase of the
BARECO shares were, in turn, transferred by LCDC to LCRC in exchange for fifty thousand
LCRC shares issued in favor of LCDC. By virtue of the aforementioned Assignment of Rights,
LCDC and Carlos, Sr. became seventy percent (70%) and thirty (30%) shareholders of LCRC,
respectively.
Meanwhile, LCDC, as sole shareholder of BARECO, amended BARECO's Articles of
Incorporation and dissolved BARECO by shortening its term of existence up to June 30, 1975.
Thereafter, MBCI, a non-stock, non-profit club, was organized to develop the Montemar Project.
Proprietary shares in MBCI were later sold by LCRC to the general public. Meanwhile, LCDC
obtained loans to finance the construction and development of the Montemar Villas, including
the building and facilities in the Montemar Beach Club.
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The loans were obtained from the Development Bank of the Philippines (DBP) – subsequently
the Asset Privatization Trust (APT), Metrobank, and General Credit Corporation (GCC),
formerly the Commercial Credit Corporation.
Sales of the MBCI proprietary shares and the lots in the Montemar Villas, including the
patronage in the Montemar Beach Club were bringing adequate income for some time. The loans
obtained by LCDC were serviced and the remittances of the agreed share of the Valdeses in the
sale of the Montemar Villas lots were made on a regular basis. The Montemar Beach Club, on
the other hand, was able to sustain regular operations. However, during the years 1981 up to
1985, there was a delay in the remittances of the shares to the Valdeses in the net proceeds from
the sale of the Montemar Villas lots.
The foregoing notwithstanding, Carlos, Sr. filed a Complaint dated July 13, 1987 for Annulment
or Rescission of Contract or Specific Performance and Damages with Prayers for Receivership
Pendente Lite and Preliminary Injunction against LCDC before the RTC of Balanga, Bataan. In
the said letter agreement, LCDC vowed to continue to undertake the marketing of the Montemar
Villas lots for the purpose of remitting to the Valdeses their 40% share in the sale of the said lots
until full payment of the purchase price of BARECO shares amounting to P20 Million.
Meanwhile, as the loans obtained by LCDC from DBP/APT remained unpaid, the mortgaged
properties of LCDC, LCRC, and MBCI were eventually foreclosed by DBP/ATP.
Sometime in 1992, LCDC and LCRC initiated negotiations with Philcomsat, a prospective
investor of the Montemar Project. In this regard, Philcomsat presented a Memorandum of Intent
dated August 18, 1992, which embodied the terms and conditions agreed upon by LCDC, LCRC,
MBCI, and Philcomsat. This was with a view toward the latter investing on the project, and,
concurrently, bailing out LCDC, LCRC and MBCI from their loan obligations with APT, GCC,
and Philcomsat. The Memorandum of Intent was presented in the board and stockholders'
meeting of MBCI. A project profile was also furnished to the board members of MBCI, wherein
MRDC, a proposed new corporation, would transform and develop the unsold Montemar Villas
lots into a golf course and sports complex.
Meanwhile, to obtain from APT an extension of the period to pay the outstanding obligation of
LCDC and LCRC, Philcomsat paid APT the amount of P4 Million. During the extension period,
Philcomsat eventually decided to invest in the new project, subject to conditions, particularly,
that the Valdeses: (1) give their conformity to the new project; and (2) forego their claim to the
proceeds of the sale of the Montemar Villas lots. To convince Gabriel, acting attorney-in-fact of
Carlos, Sr. to conform to the conditions set by Philcomsat, Rafael Cacho (Rafael), the brother of
Francisco, presented orally and in writing to petitioner two (2) scenarios.
Thereafter, pursuant to the Memorandum of Intent dated August 18, 1992 and the
letter-conformity dated August 27, 1992, Philcomsat, together with LCDC, LCRC, and MBCI
executed a Memorandum of Agreement33 dated September 3, 1992 essentially identical to the
Memorandum of Intent dated August 18, 1992 executed by and between LCDC, LCRC, MBCI,
and Philcomsat.
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Meanwhile, on August 31, 1992, LCRC and LCDC, through a Consolidated Deed of Absolute
Sale, conveyed and sold to MRDC all their real and personal properties situated in Bagac,
Bataan.
Notably, after executing the letter-conformity dated August 27, 1992, Gabriel appointed Jose
Mari and Rafael on August 28, 1992 to sell the shareholdings of Carlo, Sr. in LCRC and other
real properties of the Valdeses. Thereafter, on November 18, 1992, Rafael informed Gabriel that
Philcomsat offered to purchase Carlo, Sr.'s shareholdings in LCRC and the Valdeses' other real
properties for a consideration of P24,771,800.00, which petitioners rebuffed.
On October 26, 2009, the trial court rendered a Decision declaring the Memorandum of
Agreement dated September 3, 1992 and the Consolidated Deed of Absolute Sale dated August
31, 1992 null and void. On October 31, 2012, the CA rendered its assailed Decision, which
reversed and set aside the aforesaid RTC ruling.
ISSUE:
Whether or not there was a novation of the May 24, 1975 Deed of Sale between LCDC and the
Valdeses that would result in the extinguishment of LCDC's liability to the Valdeses
RULING:
YES, there was a valid novation of the initial agreement between LCDC and the Valdeses to
develop and sell the Montemar Villas lots which thereby extinguished LCDC's original
obligation to the Valdeses.
It is undisputed that LCDC, by virtue of the May 24, 1975 Deed of Absolute Sale and October
30, 1975 Assignment of Rights, was obligated to sell the Montemar Villas lots and remit a
portion of the proceeds thereof to the Valdeses. On the basis of this finding, the next question is
whether the implementation of the new Montemar Project, through the execution of the
September 3, 1992 Memorandum of Agreement and the August 31, 1992 Consolidated Deed of
Sale, resulted in the novation of the terms and conditions contained in the initial agreements
between the parties.
In light of the foregoing facts, this Court finds that Gabriel, as the representative of the Valdeses,
had knowledge of the new concept of the Montemar Project, and consented to the entry of
Philcomsat as a new investor, this finding is based on the following established facts:
1. the August 27, 1992 letter-conformity which bore Gabriel's signature on the conforme
portion thereof;
2. several minutes of the board meetings of MBCI, where MBCI directors, including
Gabriel, discussed the entry of Philcomsat as a possible investor of the Montemar Project;
and
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3. the notices sent to the LCRC stockholders and directors of scheduled meetings for the
purpose of discussing the proposed new concept of the said project. We agree with the
findings of the CA that the wordings in the notices sent to Gabriel sufficiently apprised
him of the changes in the Montemar Project.
It cannot be overemphasized that Gabriel, being a director of the MBCI board, never questioned
the proposed new concept of the Montemar Project and the entry of Philcomsat as a new
investor. With the express conformity of Gabriel to the new concept of the Montemar Project, the
obligation of LCDC to sell the Montemar Villas lots, and remit the proceeds to the Valdeses has
been extinguished.
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II.A. General Provisions
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT HOTEL, INC.
G.R. No. 233678, July 27, 2022
By: shaaariiing
DOCTRINE:
A contract has three distinct stages: preparation, perfection, and consummation.
Preparation or negotiation begins when the prospective contracting parties manifest their
interest in the contract and ends at the moment of their agreement. Perfection or birth of
the contract occurs when they agree upon the essential elements thereof. Consummation,
the last stage, occurs when the parties "fulfill or perform the terms agreed upon in the
contract, culminating in the extinguishment thereof."
FACTS:
Luisito B. Padilla, in his personal capacity and in behalf of Robustiniano Quinto, Jr. and
respondent Puerto Galera Resort Hotel, Inc. (PGRHI) filed a Complaint for actual, moral, and
exemplary damages with prayer for attorney's fees and cost of suit against Cecilia Locsin, for
allegedly looting and gutting the fixtures, appliances and other movables found in a hotel
complex owned by Quinto. In 1993, Padilla entered into a lease contract with Quinto, registered
owner of PGRHI, over the hotel complex for a term of 10 years. In 2004, Padilla and Quinto
executed a Memorandum of Agreement (MOA) wherein they undertook to look for prospective
tenants or lessees of the hotel complex together with all its improvements; to jointly share in the
earnings to be derived from the rentals thereof, and to individually or collectively defend,
protect, or enforce their rights, title and/or interests in the said property.
In May 2006, Padilla and Quinto agreed to lease the hotel complex to Locsin pursuant to the
MOA, for a period of 10 years beginning June 1, 2006, with a guaranteed monthly rental of
P90,000.00. Cecilia paid a security deposit of P500,000.00, and immediately took possession of
the hotel complex. All keys to the hotel complex were turned over to her. Cecilia paid monthly
rentals thereafter. After one year, Quinto visited the hotel complex and to his utter shock, he
discovered that the premises was totally damaged. All the facilities, equipment, fixtures and
improvements existing prior to turnover were either removed or damaged. The place was a total
mess and in a state of ruin. Quinto immediately informed Padilla about the damage. Padilla
arrived the next day and reported the incident to the police. According to Padilla, the estimated
cost of the damages and losses amounted to P12,500,000.00.
Cecilia countered that there was no perfected contract of lease to begin with, thus, complainants
had no cause of action against her. Cecilia claimed that the execution of the lease contract was
conditioned upon Quinto's timely presentation of the original title covering the hotel complex
and since Quinto failed in this aspect, the contract was not finalized.
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She claims that the letter she sent to Quinto merely signified her family's interest to lease the
hotel complex but it never ripened into a contact.
During the trial, Quinto was supposed to be Padilla's fifth witness. However, Quinto asked for
postponement on two occasions. On the third re-setting, Quinto manifested that he would move
for the dismissal of the case against Cecilia alleging that he did not fully understand the contents
of the SPA he accomplished in favor of Padilla to pursue the instant case as well as his Judicial
Affidavit consisting of his direct testimony. In support of his Manifestation with Motion to
Dismiss, Quinto executed a Revocation of the SPA and an Affidavit stating that he never
intended to authorize Padilla to file a case against Cecilia in his behalf.
On the basis of Quinto's revocation of the August 28, 2007 SPA, the trial court granted Quinto's
Motion to Dismiss in an Order 22 dated March 4, 2013. The complainants moved for
reconsideration but it was Denied. Aggrieved, Padilla and PGRHI appealed before the CA.
Meanwhile, Cecilia passed away. She was substituted by Leandro Locsin. The CA granted the
appeal, thereby reversing and setting aside the RTC Orders. Hence, this Petition for Review on
Certiorari.
ISSUE:
Whether or not there was a perfected contract of lease between Cecilia and Quinto.
RULING:
YES, there was a perfected contract between Quinto and Locsin.
Here, Cecilia manifested her intention to lease the hotel complex through a letter which was
accepted by Quinto and Padilla. The parties agreed that the period of lease shall be for 10 years
beginning October 2006 with a monthly rental of P90,000.00 for both the hotel and store areas.
To consummate the agreement, Cecilia admittedly deposited a down payment of P500,000.00.
Thereafter, she took over the hotel complex, through her assistant, as testified to by Tagoc, the
stay-in caretaker of PGRHI. Cecilia also paid the rentals for the months of October, November,
and December 2006, and January 2007 as evidenced by the disbursement and check vouchers
presented by Padilla. Under the circumstances, it is clear that there was a perfected contract of
lease between the parties.
Cecilia's defense is anchored mainly on the alleged inexistence of the contract of lease. She
maintains that the contract of lease was never perfected. Surprisingly, she never denied nor
rebutted Padilla's contentions that she paid a security deposit and thereafter immediately took
possession and control of the hotel complex, and that she paid the monthly rentals for four
months. Neither did she refute Padilla's allegation that she abandoned the hotel complex in a
state of destruction. If it were true that the lease agreement did not materialize, she could have
easily denied entering the premises and damaging the structures and fixtures situated therein. A
perusal of her pleadings, however, reveals that no such denial was ever made, making her claim
highly suspect.
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II.A.1. Definition of a Contract
LORENZO WILLY vs. REMEDIOS F. JULIAN
G.R. No. 207051 December 1, 2021
By: Narika
DOCTRINE:
Article 1305, in relation to Article 1307, of the Civil Code, provide for the definition of a
contract in general, and the contemplation of innominate contracts, to wit:
Art. 1305. A contract is a meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service.
Art. 1307. Innominate contracts shall be regulated by the stipulations of the parties, by the
provisions of Titles I and II of this Book, by the rules governing the most analogous
nominate contracts, and by the customs of the place.
FACTS:
The case involves a 67,635-square meter unregistered land in Benguet owned by Modesto Willy
(Modesto). Lorenzo Willy (Lorenzo) is Modesto’s son. Modesto executed a written agreement in
March of 1963 conveying portions of the subject property to 3 persons who rendered services to
Modesto – (a) 10,000 square meters to Perfecto Jularbal (Jularbal), in consideration of his
services as the surveyor; (b) 27,365 square meters to B.F. Catbagen (Catbagen) in consideration
of his services as a lawyer and (c) 10,000 square meters to Emilio Dongpaen (Dongpaen) in
consideration of his services as an agent. The property was surveyed in November of 1968 for
the benefit of Ricardo, a prospective buyer, to whom Dongpaen offered for sale his portion of the
property. It was attended by Modesto, Dongpaen and another surveyor. During the survey, a total
area of 15,000 square meters was segregated for Ricardo’s intended purchase. This portion was
designated as lots 1 and 2.
Subsequently, several sale transactions occurred among Modesto, Dongpae and Ricardo for the
sale of lots 1 and 2 to Ricardo – On January 27, 1969, Dongpaen sold to Ricardo the 10,000
square meter portion of the property initially conveyed to Dongpaen by Modesto under the 1963
agreement; on June 17, 1969, Dongpaen sold to Ricardo an additional 5,000 square meters of the
property and on June 24, 1969, Modesto sold to Dongpaen an additional 5,000 square meters of
the property ostensibly covered by a deed of sale notarized the next day. Later, it was agreed that
Lorenzo would cultivate lots 1 and 2 for Ricardo on the latter’s behalf and that Ricardo’s share of
the fruits would be remitted to him. Modesto died in 1979.
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Later, upon learning that petitioners (Modesto’s heirs) attempted to sell the subject property,
including his portion, Ricardo started resorting to administrative remedies to protect his
ownership over lots 1 and 2. Ricardo filed a complaint for partition of property and damages
against the heirs of Modesto before the MCTC claiming ownership over lots 1 and 2.
ISSUE:
Whether or not the sales transactions among Modesto, Dongpaen and Ricardo covered by the 3
deeds of sales, validly conveyed to Ricardo lots 1 and 2
RULING:
YES, the series of transfers (reflecting a sales contract, a contract of agency to sell and a
contract to transfer ownership of property in exchange for services) among Modesto,
Dongpaen and Ricardo validly conveyed lots 1 and 2 to Ricardo.
The 1963 agreement is an innominate contract reflecting a sales contract, a contract of agency to
sell and a contract to transfer ownership of property in exchange for services. The November
1968 survey, undertaken for the benefit of Ricardo, segregated Ricardo’s 15,000-square meter
portion of the property. The contemporaneous acts of Modesto, Dongpaen and Ricardo after the
1963 agreement point to a meeting of the minds for the ultimate sale and transfer to Ricardo of
lots 1 and 2, which lots comprised of Dongpaen’s 10,000 square-meter portion and the
subsequent sale to him by Modesto of an additional 5,000-square meter portion of the property.
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II.B.2. Freedom to Stipulate (Autonomy of the Will) and its Limitations
PNTC COLLEGES, INC. vs. TIME REALTY, INC.
G.R. No. 219698, September 27, 2021
By: Pong
DOCTRINE:
In view of this, “it is well to remember that a contract is the law between the parties.
Obligations arising from contracts have the force of law between the contracting parties
and should be complied with in good faith. The parties are allowed by law to enter into
stipulations, clauses, terms and conditions they may deem convenient which bind the
parties as long as they are not contrary to law, morals, good customs, public order or
policy.
FACTS:
PNTC Colleges, Inc. (PNTC) and Time Realty, Inc. (Time Realty) entered into a Contract of
Lease for the latter’s property in Sampaloc Manila from 2005 – 2007. While the term of the lease
ended on December 31, 2005 the contract was impliedly renewed on a monthly basis after the
said date.
Eventually, Time Realty notified PNTC of its (Time Realty) intent not to extend the lease
effective April 2007. It gave PNTC the option to either extend the lease only until April 2007 or
transfer to the second floor of the same building. PNTC informed time Realty of its decision to
terminate its lease which would take effect at the end of April 2007.
Sometime in April 2007, PNTC commenced the transfer of its operations to its new site in
Intramuros, Manila. However, Time Realty alleged that PNTC did so without settling its
(PNTC’s) outstanding rentals and services (electricity and water), plus interest/surcharges.
Hence, Time Realty ordered PNTC to cease its moving out operations, then retained the
remaining properties of PNTC in its premises.
Time Realty averred that its retention of PNTC’s properties as security was in accordance with
Paragraph 23 of the Contract of lease:
Breach of Default
xxx should LESSEE violate any or all said conditions xxx LESSEEE hereby irrevocably
empowers LESSOR xxx to take inventory and possession of whatever equipment, furniture,
articles, merchandise, appliances, etc. found therein xxx
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PNTC filed a Complaint for Delivery of Personal Properties with Damages.
Time Realty filed an Answer with Counterclaim arguing that PNTC started vacating the leased
premises absent a formal notice and without paying its remaining obligations.
ISSUE:
Whether or not Time Realty is justified in retaining the properties of PNTC.
RULING:
YES, Time Realty is justified in retaining the properties of PNTC.
The continued payment of rentals by PNTC and Time Realty’s acceptance of payment created an
implied new lease (tacita reconduccion) in accordance with Article 1670 of the Civil Code.
PNTC incurred liabilities because it violated the provisions of the Contract of Lease which it
willingly signed.
Relevantly, the lease contract provides that Time Realty has the prerogative to take control or
possession of PNTC’s properties in the event the latter violates a provision of the contract,
including non-payment of rent and other charges. Through its judicial admission which the CA
already took note, there is no doubt that PNTC should settle the said obligations in accordance
with the Contract of Lease and applicable laws.
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II.B.4.a. Concept
HOME GUARANTY CORPORATION vs. ELVIRA S. MANLAPAZ
G.R. No. 202820, January 13, 2021
By: VictoriaAytona
DOCTRINE:
The parties to a contract are the real parties-in-interest in an action upon it. As such, "[t]he
basic principle of relativity of contracts is that contracts can only bind the parties who
entered into it, and cannot favor or prejudice a third person, even if he is aware of such
contract and has acted with knowledge thereof.
Where there is no privity of contract, there is likewise no obligation or liability to speak
about.
FACTS:
On September 20, 1995, Vive Eagle Land, Inc. (VELI), Planters Development Bank (Bank), and
petitioner HGC entered into the VELI Asset Pool Formation and Trust Agreement (Asset Pool)
for the development of the lots in Eagle Crest Village (Village) in Baguio City which included
the property in dispute, a parcel of land with an area of 166 square meters located at Lot 2, Block
5, Phase III of the Village. Housing and Development Participation Certificates backed up
VELI's properties and were floated and sold to investors. HGC extended a P130 Million guaranty
on the Participation Certificates in the event the Asset Pool fails to service the interest due to the
investors or to redeem the said Certificates upon maturity.
Meanwhile, the Bank acted as trustee and held the titles to the lots covered by the Asset Pool.
Due to the delay in the project's development, the Asset Pool was declared in default.
Consequently, the investors, through the Bank, called on HGC's guaranty.
On August 19, 1998, after HGC's payment of the guaranty call in the amount of
P135,691,506.85, the Bank assigned and transferred the possession and ownership of the assets
of the Asset Pool to HGC through a Deed of Assignment and Conveyance. Notably, this included
the contested land. Prior thereto, or on January 8, 1998, VELI entered into a Contract to Sell with
First La Paloma Properties, Inc. (FLPPI) involving the bulk of the properties in the Village which
included the property in question. On June 22, 1998, FLPPI, through its President, Marcelino
Yumol (Yumol), entered into a Contract to Sell with respondent Manlapaz over the disputed
property for P913,000.00.
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Given that a substantial part of the properties which were assigned to HGC was apparently sold
by VELI to FLPPI, on October 8, 1998, VELI, FLPPI, and HGC entered into a Memorandum of
Agreement (superseding the Contract to Sell dated January 8, 1998, and other agreements
between FLPPI and VELI) in which FLPPI assumed to pay HGC the value of the properties in
the total amount of P153,029,200.00. Accordingly, HGC and FLPPI executed a Contract to Sell
dated October 15, 1998, over the real properties. When FLPPI failed to pay, HGC informed
FLPPI on November 15, 2000, in a letter addressed to Yumol that it was invoking its right to
cancel its contract. Meanwhile, after failing to secure the title to the disputed land, Manlapaz
filed a Complaint for delivery of title with prayer for damages with the Legal Services Group
(LSG) of the Housing and Land Use Regulatory Board (HLURB).
Manlapaz claimed that despite full payment and demands for delivery, FLPPI failed to execute
the final deed of sale and to deliver the title of the lot in her favor. She alleged that she was
deprived of her title and ownership to the contested property and prayed for the award of moral
and exemplary damages as well as attorney's fees. The Bank contended that Manlapaz has no
cause of action against it and that it was not privy to her contract with FLPPI. The property in
question, along with the properties of the Asset Pool, had already been the subject of the Deed of
Assignment and Conveyance between the Bank and HGC. Similarly, HGC averred that
Manlapaz has no cause of action against it because it is also an unpaid seller based on the
Contract to Sell it entered into with FLPPI. HGC argued that it was not privy to the Contract to
Sell dated June 22, 1998, which Manlapaz executed with FLPPI, and that the said contract
violated its (HGC's) Contract to Sell dated October 15, 1998, with FLPPI which prohibited the
disposition of the properties without full payment and the written consent of HGC. HGC argued
that it canceled the Contract to Sell with FLPPI due to the latter's breach thereof.
By way of cross-claim, HGC asserted that in the event that it would be required to pay
Manlapaz's claim or to deliver the title, FLPPI should reimburse it for the awarded amounts and
the value required to cover the issuance of title. In the same way, VELI asserted that Manlapaz
has no cause of action against it since it was not privy to the Contract to Sell between Manlapaz
and FLPPI, and that pursuant to the October 8, 1998 Memorandum of Agreement, VELI is no
longer involved in any subsequent transactions involving the lots, which included TCT No.
T-64208 or the lot in question.
Ruling of the Legal Services Group - Housing and Land Use Regulatory Board: In a Decision
dated July 26, 2004, the LSG-HLURB held that as the subdivision owner or developer, FLPPI
has the obligation to deliver the title to Manlapaz upon full payment pursuant to Section 25 of
Presidential Decree (PD) No. 957. Insofar as the Bank is concerned, the LSG-HLURB noted that
pursuant to the Deed of Assignment and Conveyance dated August 19, 1998, it already
transferred the possession and ownership of the properties of the Asset Pool, including the lot
claimed by Manlapaz, to HGC. The trusteeship agreement had been terminated and possession of
the Transfer Certificate of Title (TCT) for the contested lot was transferred to HGC.
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Thus, Manlapaz has no cause of action against the Bank. Likewise, Manlapaz has no cause of
action against VELI as the latter was not privy to the contract between Manlapaz and FLPPI.
Before the execution of said contract, VELI had already finalized the Contract to Sell with
FLPPI. After Manlapaz transacted with FLPPI through a Contract to Sell, VELI, HGC, and
FLPPI then entered into a Memorandum of Agreement which caused the execution of another
Contract to Sell between FLPPI and HGC involving the same properties. However, the
LSG-HLURB found that Manlapaz has a cause of action against HGC. When HGC entered into
a Memorandum of Agreement with FLPPI and VELI, and the Contract to Sell with FLPPI, HGC
became aware of the Contract to Sell between VELI and FLPPI.
Thus, HGC's claim that the Contract to Sell between Manlapaz and FLPPI violated the Contract
to Sell between HGC and FLPPI has no merit since the contract between Manlapaz and FLPPI
was executed before the contract between HGC and FLPPI. The HLURB held that the intention
of PD No. 957 is to protect innocent lot buyers from scheming subdivision developers. Ergo,
HGC is liable to execute the deed of sale and to deliver the title to Manlapaz.
ISSUE:
Whether or not Manlapaz is bound by the Memorandum of Agreement and 3rd Contract
RULING:
NO, Manlapaz is not bound by the Memorandum of Agreement and 3rd Contract
The second contract was executed before the Asset Pool was declared in default and before the
Deed of Assignment and Conveyance was issued in HGC's favor. Moreover, it should be noted
that Manlapaz was not privy to the contracts (Memorandum of Agreement and 3rd contract)
which VELI, FLPPI and HGC entered into as she only dealt with FLPPI, which did not apprise
her of the subsequent contracts involving VELI and HGC.
HGC cannot expect Manlapaz to meddle in its dealings with VELI and FLPPI as she has no
business doing so, and, as she alleged, she was not made aware of these developments in the first
place. Notably, Manlapaz remitted all her installment payments to FLPPI and eventually paid the
purchase price for the disputed property in full. She has been religiously paying the installments
to FLPPI and completed the payments in November 1999. This is another indication that she did
not have knowledge of the subsequent transactions involving FLPPI, VELI and HGC, as she
solely transacted with FLPPI.
Moreover, FLPPI itself did not notify her of the changes and continued to receive her payments
and issued the corresponding receipts therefor. HGC did not sufficiently dispute Manlapaz's
claim that she had no information about the said contracts involving HGC, VELI and FLPPI; it
merely insisted that Manlapaz was not an innocent purchaser for value.
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II.C. Essential Requisites of a Contract
SOCORRO P. CABILAO vs. MA. LORNA Q. TAMPAN
G.R. No. 209702, March 23, 2022
By: quagmire4
DOCTRINE:
Article 1305 of New Civil Code (NCC) provides that a contract is "a meeting of minds
between two persons whereby one binds himself, with respect to the other, to give
something or to render some service." The essential requisites are:
1. consent of the contracting parties;
2. object certain which is the subject matter of the contract; and
3. cause of the obligation which is established. In the present case, all the elements of a
valid contract are present.
It is a well-settled rule that a duly notarized document enjoys the prima facie presumption
of authenticity and due execution, as well as the full faith and credence attached to a public
instrument. Thus, a party assailing the authenticity and due execution of a notarized
document is required to present evidence that is clear, convincing and more than merely
preponderant.
When a party claims that one is unable to read or is otherwise illiterate, and fraud is
alleged, a presumption that there is fraud or mistake in obtaining consent of that party
arises under Article 1332 of the NCC, which provides: When one of the parties is unable to
read, or if the contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms thereof have been fully
explained to the former. However, for Article 1332 to be applicable, the contracting party
who alleges fraud or vitiated consent must establish the same by full, clear and convincing
evidence. The party must show clear and convincing evidence of one's personal
circumstances and that he or she is unable to read at the time of execution of the contested
contract.
Gross inadequacy of price does not affect the validity of a contract of sale, unless it signifies
a defect in the consent or that the parties actually intended a donation or some other
contract. Inadequacy of cause will not invalidate a contract unless there has been fraud,
mistake or undue influence.
Transfer of the certificate of title in the name of the buyer and transfer of ownership to the
buyer are two different concepts. Article 1498 of the New Civil Code provides that: When
the sale is made through a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if from the deed the contrary
does not appear or cannot clearly be inferred.
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It is a settled rule that tax declarations and realty tax payment of property are not
conclusive evidence of ownership, they are nonetheless good indicia of the possession in the
concept of owner, for no one in his right mind would be paying taxes for a property that is
not in his actual or at least constructive possession.
FACTS:
In 1988, Lorna Tampan-Naldoza, represented by her mother, Antonieta purchased a residential
house and lot from Socorro Cabilao , through a Notarized Deed of Absolute Sale in the amount
of Pl0,000.00. The true consideration paid was more or less P100,000.00 but the Deed of Sale
reflected a lesser amount to avoid a higher payment of taxes. The owner's copy of TCT No. T-59
was stolen by Socorro while she was living in the subject property.
In 1995, Lorna decided to register the subject property in her name but she discovered that the
owner's duplicate got lost. Lorna, through Judith Tampan, filed a petition for the issuance of a
new owner's duplicate but spouses Lapulapu and Lelita opposed her petition on the ground that
they were in possession of the said title after buying the same from Socorro. Thus, Lorna's
petition was dismissed.
When Lelita informed Socorro about the petition for the issuance of a new owner's copy of the
title, Socorro denied having sold the subject property to Lorna. Socorro repurchased the subject
property and the owner's duplicate was surrendered back to her.
In 1996, Lorna and Judith lodged a complaint for declaration of nullity of a pacto de retro sale
entered into on January 25, 1995 between Socorro and spouses Buyer.
Socorro alleged that she was the absolute and registered owner of the subject property covered
by TCT No. T-59 which was in her possession. Moreover, on April 18, 1990, she sold the subject
property through a pacto de retro sale to Enriqueta Baybayon (Enriqueta) for P89,000.00, and to
Lelita on January 25, 1995. During both transactions, she surrendered her owner's copy of TCT
No. T-59 to Enriqueta and Lelita.
The RTC ruled that the action for nullity of the pacto de retro sale had already become moot and
academic considering that Socorro had already repurchased the property from Lelita and the
latter already returned the owner's copy of TCT No. T-59. The RTC declared the Deed of Sale
between Socorro and Lorna as null and void. It held that since TCT No. T-59 is under the name
of Socorro, it was evidence of indefeasible title to the property. Moreover, the title was in
Socorro's possession which is contrary to the regular course of business, if indeed it was sold to
Lorna. The Deed of Sale between Lorna and Socorro is unenforceable considering that Lorna did
not sign the document as she was in the United States at that time. While Antonieta signed on her
behalf, there was nothing on record to prove that Loma authorized her mother to transact on her
behalf. The price of Pl0,000.00 is grossly inadequate thereby rendering the contract questionable.
Lastly, the RTC pointed out that it took Loma seven years before transferring the title to her
name for no valid reason. Hence, the timing was suspicious since Lorna wanted to transfer the
title of the property in her name while Socorro was away.
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In 2013, the CA reversed the RTC's findings. Hence, a petition for certiorari to annul CA
decision is filed.
ISSUE:
Whether or not the Deed of Sale between Lorna and Socorro is valid.
RULING:
YES. The Deed of Sale between Lorna and Socorro is valid.
Arguing the absence of consent on her part, Socorro claims that the Deed of Sale is null and void
since her signature thereon was obtained through fraud, or under the guise of a contract of loan.
However, the evidence on record belies her theory. Reynaldo testified that he was present during
the execution of the Deed of Sale where he witnessed Antonieta and Socorro sign the document
and that Socorro gave Antonieta the owner's duplicate copy of the title the following day. More
importantly, the notary public who prepared and notarized the Deed of Sale, testified and
categorically stated that Socorro signed the Deed of Sale and received the consideration of
Pl0,000.00 from Antonieta.
Here, Socorro failed to overcome this burden. Aside from her self-serving allegation that she did
not know that she was signing a Deed of Sale, there is nothing else on record that supports her
assertion.
Socorro claims that she is an illiterate person but failed to prove this fact.
Here, there is nothing in Socorro's testimony showing that she cannot read English or that she
was illiterate. To the contrary, the pacto de retro sales that she entered into with Enriqueta and
Lelita, respectively, indicate that she is able to read, affix her signature, freely give her consent
and enter into contracts. Thus, the presumption of fraud did not arise and Socorro had the burden
of proving that the Tampans fraudulently secured her signature under the guise of another loan
document which she would usually sign whenever she borrowed money. However, she failed to
do so. In fact, such purported loan documents were not even offered in evidence.
It is also of no moment that the consideration was in the amount of Pl0,000.00. As earlier stated,
fraud was not proven. Hence, the consideration in the amount of Pl0,000.00 did not invalidate
the sale.
SC noted that the title over the subject property remained under Socorro's name despite the
execution of the Deed of Sale. However, this does not also affect the validity of the deed of sale.
As correctly held by the CA, between the seller and buyer, ownership is transferred not by the
issuance of the new certificate of title in the name of the buyer but by the execution of the
instrument of sale in a public document. Therefore, contrary to Soccoro's assertion, it is of no
moment that the title was only registered seven years after the deed of sale was executed. The
sale was already perfected upon the execution of the Deed of Sale before Atty. Mantilla.
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The non-registration of the title was also aptly explained by Judith in that the money given by
Loma, who was in the United States, was only enough for the purchase of the property.
It is also uncontested that the real property taxes are paid by the Tampans. Coupled with the
other pieces of respondent's evidence, it is reasonable to conclude that the property was indeed
sold to Loma since the Tampans have been living in the property and exercising acts of dominion
and control over the property. As between the testimonies of petitioner and her other witnesses
which failed to prove clearly, positively, and convincingly that she did not intend to sell the
property, and the testimonial and documentary evidence of respondents, i.e., the notarized Deed
of Sale, tax declaration, and tax receipts, the latter evidence prevails. Testimonial evidence is
susceptible to fabrication and there is very little room for choice between testimonial evidence
and documentary evidence. Thus, in the weighing of evidence, documentary evidence prevails
over testimonial evidence. Taking into account the totality of evidence in the present case, this
Court is inclined to rule in favor of Lorna.
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II.C.1.Consent
LAURO CARDINEZ vs. SPOUSES PRUDENCIO
G.R. No. 213001, August 4, 2021
By: shaaariiing
DOCTRINE:
Consent, to be valid, must have the following requisites:
1. intelligent or with an exact notion of the matter to which it refers;
2. free; and
3. spontaneous.
The parties' intention should be clear; otherwise, the donation is rendered void in the
absence thereof or voidable if there exists a vice of consent
FACTS:
The respondents filed a Complaint for Annulment of Document with Recovery of Possession and
Damages against petitioner.
The late Simeona Cardinez owned a parcel of land which was inherited by her sons, Prudencio
(respondent), Florentino, and Valentin (predecessor of the petitioners), and was equally divided
among themselves. In 1986, TCT No. T-26701 covering the land was issued in the name of the
brothers as co-owners. Prudencio's share in the land was the middle portion which he registered
for taxation purposes under Tax Declaration No. 18237.
Sometime in 1994, Valentin requested Prudencio to donate the ten-square meter portion of his
land being encroached by the former's balcony. Prudencio agreed to Valentin's request out of his
love and trust for his brother. Valentin then asked Prudencio and his wife Cresencia Cardinez to
sign a document that was written in English. Prudencio and Cresencia were unable to understand
the contents.
Hence, Valentin told the Cardinez couple that the purported document was for the partition of the
inherited land, cancellation of TCT No. T-26701, and transfer of their shares in their respective
names. As they were convinced by Valentin's explanation and trusted him, Prudencio and
Cresencia signed the document without even reading and understanding its contents. The spouses
Cardinez were not given a copy of the document after it was signed.
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Fourteen years later, or on June 8, 2008, Prudencio found out that a survey of the land was being
conducted. He then inquired if his inherited portion of the land was still in his name. To
Prudencio's surprise, the petitioners who are Valentin's children, informed him that he already
donated his inherited portion to them through the document that he allegedly executed with
Cresencia. A notarized deed of donation was showed to the sons of Prudencio which stated that
respondents, as well as Florentino Cardinez married to Isabel Cardinez, and Valentin Cardinez
married to Eufrosina Cardinez, donated their respective portions of the land covered by TCT No.
T-26701 to the petitioners. All the donors including respondents signed the purported document.
In 2008, respondents filed a Complaint for Annulment of Document with Recovery of
Possession and Damages. They averred that Valentin took advantage of their low level of
education when he made them believe that the document they were signing were for the partition
of the inherited land, cancellation of TCT No. T-26701, and transfer of their shares in their
respective names. Valentin therefore used machinations and misrepresentations to induce them to
sign the document which turned out to be a Deed of Donation.
Petitioners denied the allegations of respondents. They averred that Prudencio purchased the
subject land sometime in 1972 and then donated it to petitioners as evidenced by the Deed of
Donation. Consequently, Transfer Certificate of Title and Tax Declaration was issued in the name
of petitioners. They contend that the action had already prescribed because 10 years had lapsed
from the execution of the Deed of Donation, a written contract.
ISSUE:
Whether or not the donation is valid.
RULING:
NO, the Deed of Donation is void ab initio in the absence of respondent’s consent.
Consent is absent in the instant case.
The absence of consent, and not just a mere vitiation thereof, on the part of respondents to donate
their land has been satisfactorily established.
In this case, Prudencio categorically and firmly stated that he did not know that the document
which Valentin asked him to sign was a Deed of Donation. In fact, Prudencio did not read the
document before affixing his signature because he trusted his brother that it was for the partition
of their inherited land and the cancellation of its title.
Valentin neither read the contents of the document to respondents nor gave them a copy thereof.
The notary public likewise did not explain its contents to respondents and only asked them to
affix their signatures therein.
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The Court also finds it very perplexing why respondents would donate their portion of the land
which Prudencio inherited from his mother considering that Prudencio and Cresencia have
children of their own. It is clear in this case that respondents did not donate their land to
petitioners. They never understood the full import of the document because it was neither shown
to them nor read by either Valentin or the notary public.
To debunk the claim of respondents that they are not highly educated since they only finished
Grade 3, petitioners averred that Cresencia could not have become a Barangay Kagawad if she
and her husband did not understand and comprehend the English language. However, their
allegation was not supported by any evidence which could have proved their claim.
It is therefore clear that respondents did not donate their land to petitioners. They never
understood the full import of the document because it was neither shown to them nor read by
either Valenin or the notary public. Considering that they did not give their consent at all to the
Deed of Donation, it is therefore null and void
SPOUSES EUGENIO DE VERA AND ROSALIA PADILLA vs. FAUSTA CATUNGAL
G.R No. 211687, February 10, 2021
By: Histotective
DOCTRINES:
The Civil Code defines a contract as "a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give something or to render some service."
To create a valid contract, the meeting of the minds must be free, voluntary, willful, and
with a reasonable understanding of the various obligations the parties assumed for
themselves.
Consent may be vitiated by mistake, violence, intimidation, undue influence, or fraud.
When consent is vitiated, the contract is voidable. A voidable contract is valid and binding
until annulled in a proper court action.
It is important to note that "in determining whether consent is vitiated by any of these
circumstances, courts are given a wide latitude in weighing the facts or circumstances in a
given case and in deciding in favor of what they believe actually occurred, considering the
age, physical infirmity, intelligence, relationship, and conduct of the parties at the time of
the execution of the contract and subsequent thereto, irrespective of whether the contract is
in a public or private writing."
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When one of the contracting parties is unable to read or is otherwise illiterate, and fraud is
alleged, a presumption that there is fraud or mistake in obtaining consent of that party
arises. Article 1332 offers protection to contracting parties that are unfortunate and
disadvantaged to be illiterate and unable to read. It contemplates a situation where "a
contract is entered into but the consent of one of the contracting parties is vitiated by
mistake or fraud committed by the other." This provision also modifies the principle that a
party is presumed to know the contents and import of a document to which he affixed his
signature.
Initially, for the protection afforded by Article 1332 to be operative, the contracting party
who alleges that there is any defect or vitiated consent must establish the same by full, clear
and convincing evidence. The party must show that his personal circumstances warrant the
application of Article 1332; he must show, by clear and convincing evidence, that he is
unable to read at the time of execution of the contract. It is only then that the presumption
in Article 1332 will arise and the burden will shift to the other contracting party to rebut it.
FACTS:
Vicente Catungal (Vicente) owned two (2) parcels of unregistered land located in Macabito,
Calasiao, Pangasinan. He died on December 1, 1944 and was survived by five children, two of
whom are Fausta and Genaro Catungal (Genaro).
On July 23, 1994, Fausta and Genaro executed the Deed in question, adjudicating between
themselves the two parcels of land owned by Vicente and transferring ownership of the
properties to the spouses De Vera for a consideration of P30,000.00. Fausta affixed her thumb
mark in lieu of her signature.
On July 23, 1997, Fausta filed before the RTC a complaint for Declaration of Nullity of
Documents, Recovery of Ownership, Reconveyance, and Damages, with Prayer for Writ of
Preliminary Injunction and/or Temporary Restraining Order. She alleged that the Spouses De
Vera took advantage of her illiteracy and old age, and succeeded in making her affix her thumb
mark on the Deed by employing deceit, false pretenses, and false misrepresentations.
Fausta was unable to read at the time of the execution of the Deed due to her illiteracy. She stated
in her testimony taken on January 19, 2000 that she was an illiterate person. Fausta testified that
her children (specifically Lourdes, among others) were not present during the execution of the
Deed and that its contents were not explained to her when she affixed her thumb mark on it.
ISSUE:
Whether or not Fausta freely gave her consent to the Deed.
RULING:
NO, she did not freely give her consent.
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The Deed is voidable since Fausta's consent was vitiated by fraud and such Deed is annulled.
Consequently, the Spouses De Vera shall restore the parcels of land to Fausta's and Genaro's
heirs.
In the case at bench, the Court finds that Fausta was able to establish that she was unable to read
at the time of the execution of the Deed due to her illiteracy. She stated in her testimony taken on
January 19, 2000 that she was an illiterate person.
The presumption of fraud or mistake mentioned in Article 1332 of the Civil Code becomes
operative for the benefit of Fausta. To rebut this presumption, the Spouses De Vera must show,
by clear and convincing evidence, that the contents of the Deed were sufficiently explained to
Fausta at that time. In this regard, they have failed.
The records failed to show that the Spouses De Vera satisfactorily explained to Fausta the
contents of the Deed. That she was allegedly present during the execution of the Deed does not
mean that they explained to her the contents when she affixed her thumbmark to the Deed. Thus,
we agree with the CA that the Spouses De Vera failed to rebut the presumption under Article
1332 of the Civil Code. Consequently, we hold that Fausta's consent to the Deed was vitiated and
must perforce be annulled.
Finally, although notarized documents enjoy the presumption of regularity and are accorded
evidentiary weight as regards their due execution, this presumption, however, may be rebutted by
clear and convincing evidence. Therefore, the Deed, despite being notarized, was defective. The
Deed cannot enjoy the presumption of regularity as it was alleged and proven that the consent of
one of the parties was vitiated.
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II.D.1. Rescissible Contracts
CARLOS J. VALDES vs. LA COLINA DEVELOPMENT CORPORATION
G.R. No. 208140, July 12, 2021
By: nashmera
DOCTRINE:
Rescission is a remedy granted by law to the contracting parties, and even to third persons,
to secure the reparation of damages caused to them by a contract, even if it should be
valid" by reason of external causes resulting in a pecuniary prejudice to one of the
contracting parties or their creditors, the result of which, is the "restoration of things to
their condition at the moment prior to celebration of said contract.” The kinds of
rescissible contracts are the following:
1. those rescissible because of lesion or prejudice;
2. those rescissible on account of fraud or bad faith; and third, those which, by special
provisions of law, are susceptible to rescission.
Jurisprudence has shown that in order to constitute: fraud that provides basis to annul
contracts, it must fulfill two conditions:
1. the fraud must be dolo causante or it must be fraud in obtaining the consent of the
party, and
2. the fraud must be proven by clear and convincing evidence and not merely by a
preponderance thereof.
FACTS:
Carlos Valdes (Carlos, Sr.) and his children, herein petitioners Gabriel A. S. Valdes (Gabriel),
Carlos J. Valdes, Antonio A.S. Valdes, Fatima de la Concepcion, Asuncion Mercado, and
Virginia A.S. Valdes (Valdeses), are the stockholders of Bataan Resorts Corporation (BARECO),
which owned a large tract of land in Bagac, Bataan under Transfer Certificates of Title Numbers
45864, 45865, 45867, 45868, and 45869 of the Registry of Deeds of Bataan.
Sometime in 1974, Carlos, Sr. invited Francisco Cacho (Francisco) and his son, individual
respondent Jose Mari Cacho (Jose Mari), to visit and assess the property's suitability for a beach
resort project (Montemar Project). Having received a favorable response from Francisco, both
Carlos, Sr. and Francisco proceeded to carry out the Montemar Project, which included the
development and improvement of the beach basin as a beach resort (Montemar Beach Club), and
the conversion of the remaining land area into a residential subdivision (Montemar Villas).
To implement the project, the Valdeses transferred and conveyed their shares of stock in
BARECO in favor of LCDC, a fully-owned corporation of the Cacho family, through a Deed of
Sale dated May 24, 1975, for a consideration of P20 Million.
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LCDC then made a partial payment thereof in the amount of P2.5 Million from February 1975 to
December 1979, while the remaining balance amounting to P17.5 Million was covered by
promissory notes. The P17.5 Million was to be paid by way of an Assignment of Rights14 dated
October 30, 1975, wherein LCDC: (1) assigned to the Valdeses three million worth of shares in
LCRC, the corporation established by LCDC to market and sell the shares of the beach resort;
and (2) undertook to pay the Valdeses (50%) of the net proceeds (later reduced 40%) from the
sale of the Montemar Villas lots inside BARECO, as previously acquired by LCDC.
Since Carlos, Sr. did not intend to use all BARECO real properties for the Montemar Project, he
prepared a Deed of Partition, whereby only the real properties intended to be part of the project
were transferred to LCDC. These properties, now owned by LCDC through its purchase of the
BARECO shares were, in turn, transferred by LCDC to LCRC in exchange for fifty thousand
LCRC shares issued in favor of LCDC. By virtue of the aforementioned Assignment of Rights,
LCDC and Carlos, Sr. became seventy percent (70%) and thirty (30%) shareholders of LCRC,
respectively.
Meanwhile, LCDC, as sole shareholder of BARECO, amended BARECO's Articles of
Incorporation and dissolved BARECO by shortening its term of existence up to June 30, 1975.
Thereafter, MBCI, a non-stock, non-profit club, was organized to develop the Montemar Project.
Proprietary shares in MBCI were later sold by LCRC to the general public. Meanwhile, LCDC
obtained loans to finance the construction and development of the Montemar Villas, including
the building and facilities in the Montemar Beach Club. The loans were obtained from the
Development Bank of the Philippines (DBP) – subsequently the Asset Privatization Trust (APT),
Metrobank, and General Credit Corporation (GCC), formerly the Commercial Credit
Corporation.
Sales of the MBCI proprietary shares and the lots in the Montemar Villas, including the
patronage in the Montemar Beach Club were bringing adequate income for some time. The loans
obtained by LCDC were serviced and the remittances of the agreed share of the Valdeses in the
sale of the Montemar Villas lots were made on a regular basis. The Montemar Beach Club, on
the other hand, was able to sustain regular operations. However, during the years 1981 up to
1985, there was a delay in the remittances of the shares to the Valdeses in the net proceeds from
the sale of the Montemar Villas lots.
The foregoing notwithstanding, Carlos, Sr. filed a Complaint dated July 13, 1987 for Annulment
or Rescission of Contract or Specific Performance and Damages with Prayers for Receivership
Pendente Lite and Preliminary Injunction against LCDC before the RTC of Balanga, Bataan. In
the said letter agreement, LCDC vowed to continue to undertake the marketing of the Montemar
Villas lots for the purpose of remitting to the Valdeses their 40% share in the sale of the said lots
until full payment of the purchase price of BARECO shares amounting to P20 Million.
Meanwhile, as the loans obtained by LCDC from DBP/APT remained unpaid, the mortgaged
properties of LCDC, LCRC, and MBCI were eventually foreclosed by DBP/ATP.
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Sometime in 1992, LCDC and LCRC initiated negotiations with Philcomsat, a prospective
investor of the Montemar Project. In this regard, Philcomsat presented a Memorandum of Intent
dated August 18, 1992, which embodied the terms and conditions agreed upon by LCDC, LCRC,
MBCI, and Philcomsat. This was with a view toward the latter investing on the project, and,
concurrently, bailing out LCDC, LCRC and MBCI from their loan obligations with APT, GCC,
and Philcomsat. The Memorandum of Intent was presented in the board and stockholders'
meeting of MBCI. A project profile was also furnished to the board members of MBCI, wherein
MRDC, a proposed new corporation, would transform and develop the unsold Montemar Villas
lots into a golf course and sports complex.
Meanwhile, to obtain from APT an extension of the period to pay the outstanding obligation of
LCDC and LCRC, Philcomsat paid APT the amount of P4 Million. During the extension period,
Philcomsat eventually decided to invest in the new project, subject to conditions, particularly,
that the Valdeses: (1) give their conformity to the new project; and (2) forego their claim to the
proceeds of the sale of the Montemar Villas lots. To convince Gabriel, acting attorney-in-fact of
Carlos, Sr. to conform to the conditions set by Philcomsat, Rafael Cacho (Rafael), the brother of
Francisco, presented orally and in writing to petitioner two (2) scenarios.
Thereafter, pursuant to the Memorandum of Intent dated August 18, 1992 and the
letter-conformity dated August 27, 1992, Philcomsat, together with LCDC, LCRC, and MBCI
executed a Memorandum of Agreement33 dated September 3, 1992 essentially identical to the
Memorandum of Intent dated August 18, 1992 executed by and between LCDC, LCRC, MBCI,
and Philcomsat. Meanwhile, on August 31, 1992, LCRC and LCDC, through a Consolidated
Deed of Absolute Sale, conveyed and sold to MRDC all their real and personal properties
situated in Bagac, Bataan.
Notably, after executing the letter-conformity dated August 27, 1992, Gabriel appointed Jose
Mari and Rafael on August 28, 1992 to sell the shareholdings of Carlo, Sr. in LCRC and other
real properties of the Valdeses. Thereafter, on November 18, 1992, Rafael informed Gabriel that
Philcomsat offered to purchase Carlo, Sr.'s shareholdings in LCRC and the Valdeses' other real
properties for a consideration of P24,771,800.00, which petitioners rebuffed.
On October 26, 2009, the trial court rendered a Decision declaring the Memorandum of
Agreement dated September 3, 1992 and the Consolidated Deed of Absolute Sale dated August
31, 1992 null and void. On October 31, 2012, the CA rendered its assailed Decision, which
reversed and set aside the aforesaid RTC ruling.
ISSUES:
1. Whether or not petitioner can avail of the remedy of rescission of the September 3, 1992
Memorandum of Agreement and the August 31, 1992 Consolidated Deed of Sale.
RULING:
NO, petitioners cannot avail of the remedy of rescission under the Civil Code.
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None of the circumstances that allows rescission are present in this case. As discussed, the
records of the case are replete with evidence that the Valdeses, through Gabriel, gave their
express conformity to the new concept of the Montemar Project and the entrance of Philcomsat
as new investor for the said project. Having expressed their consent to the changes brought about
by these new contracts, and having been made aware of the effects thereof, the Valdeses cannot
now feign ignorance and assert that they were prejudiced in their rights and interests.
While they feel shorthanded as they will cease receiving their 40% income share from the sale of
the Montemar Villas lots, the fact of the matter is that they would have maintained a share or
interest in the new Montemar Project, which, however, the Valdeses opted to sell to respondent
Philcomsat. Notably, it appears that nothing has materialized from their negotiations.
In this regard, we have held that "courts cannot follow one every step of his life and extricate
him from bad bargains, protect him from unwise investments, relieve him from one-sided
contracts, or annul the effects of foolish acts. Courts cannot constitute themselves guardians of
persons who are not legally incompetent. There must be, in addition, a violation of the law, the
commission of what the law knows as an actionable wrong, before the courts are authorized to
lay hold of the situation and remedy it."
2. Whether or not Philcomsat and MRDC are purchasers in good faith and for value of the
subject properties in Bataan.
YES, Philcomsat and MRDC are purchasers in good faith and for value of the subject
properties in Bataan.
It bears noting that prior to its entry as investor of the Montemar Project, Philcomsat required
the: (1) written approval of the stockholders and board members of LCDC, LCRC and MBCI of
all the provisions in the September 3, 1992 Memorandum of Agreement; and (2) consent of the
Valdeses to the new Montemar Project as embodied in the August 27, 1992 letter-conformity
signed by Carlos, Sr. himself.
Clearly, Philcomsat had to make sure that LCDC and LCRC are able to procure the assent of the
Valdeses to the new concept of the Montemar Project. It was for this reason that Gabriel
executed and signed the August 27, 1992 letter-conformity, which bore his written approval to
the entry of Philcomsat as an investor.
In all the foregoing circumstances, it must be stressed that petitioners have not presented to this
Court how respondent Philcomsat employed fraudulent acts to deceive the Valdeses, or any of
the stockholders of LCRC, LCDC, and MBCI to consent to the implementation and execution of
the September 3, 1992 Memorandum of Agreement and the August 31, 1992 Consolidated Deed
of Sale.
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On the other hand, Philcomsat was able to state the steps it undertook to ensure utmost
consideration of the Valdeses' rights before it decided to invest in the Monetemar Project, and,
pursuant thereto, execute the September 3, 1992 Memorandum of Agreement and the August 31,
1992 Consolidated Deed of Sale.
As there was a valid consent on the part of petitioners and good faith on the part of respondents,
no reversible error was committed by the CA in reversing the RTC's Decision that declared as
null and void the September 3, 1992 Memorandum of Agreement and August 31, 1992
Consolidated Deed of Sale.
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II.D.3. Unenforceable Contracts
LORENZO WILLY vs. REMEDIOS JULIAN
G.R. No. 207051 December 1, 2021
By: Narika
DOCTRINE:
Art. 1403 (statute of frauds) is not applicable to agreements or contracts which have been
partially or totally performed.
FACTS:
The case involves a 67,635-square meter unregistered land in Benguet owned by Modesto Willy
(Modesto). Lorenzo Willy (Lorenzo) is Modesto’s son. Modesto executed a written agreement in
March of 1963 conveying portions of the subject property to 3 persons who rendered services to
Modesto – (a) 10,000 square meters to Perfecto Jularbal (Jularbal), in consideration of his
services as the surveyor; (b) 27,365 square meters to B.F. Catbagen (Catbagen) in consideration
of his services as a lawyer and (c) 10,000 square meters to Emilio Dongpaen (Dongpaen) in
consideration of his services as an agent. The property was surveyed in November of 1968 for
the benefit of Ricardo, a prospective buyer, to whom Dongpaen offered for sale his portion of the
property. It was attended by Modesto, Dongpaen and another surveyor. During the survey, a total
area of 15,000 square meters was segregated for Ricardo’s intended purchase. This portion was
designated as lots 1 and 2.
Subsequently, several sale transactions occurred among Modesto, Dongpae and Ricardo for the
sale of lots 1 and 2 to Ricardo – On January 27, 1969, Dongpaen sold to Ricardo the 10,000
square meter portion of the property initially conveyed to Dongpaen by Modesto under the 1963
agreement; on June 17, 1969, Dongpaen sold to Ricardo an additional 5,000 square meters of the
property and on June 24, 1969, Modesto sold to Dongpaen an additional 5,000 square meters of
the property ostensibly covered by a deed of sale notarized the next day. Later, it was agreed that
Lorenzo would cultivate lots 1 and 2 for Ricardo on the latter’s behalf and that Ricardo’s share of
the fruits would be remitted to him. Modesto died in 1979.
Later, upon learning that petitioners (Modesto’s heirs) attempted to sell the subject property,
including his portion, Ricardo started resorting to administrative remedies to protect his
ownership over lots 1 and 2. Ricardo filed a complaint for partition of property and damages
against the heirs of Modesto before the MCTC claiming ownership over lots 1 and 2.
ISSUE:
Whether or not the 1963 agreement and the 2 deeds of sale dated June 17 and 24, 1969 are
unenforceable contracts under Art. 1403 of the Civil Code
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RULING:
NO, the 1963 agreement and the 2 deeds of sale are not unenforceable.
Art. 1403 is not applicable since these agreements are partially performed contracts. All
contracts invoked in this case have been either partially or totally performed by Modesto,
Dongpaen and Ricardo, which performance removed them from the coverage of the statute of
frauds. The conduct of these 3 subsequent to the 1963 agreement indicate their intent to transfer
ownership of lots 1 and 2 to Ricardo. The survey done to segregate the 2 lots amounts to a partial
performance sufficient to remove it from the operation of the statute of frauds.
In the case at bench, we find that all the requisites for a valid contract are present in all the
questioned deeds of sale, specifically: ( 1) consent of the parties; (2) object or subject matter,
comprised of Lots 1 and 2 of the subject property; and (3) the various consideration listed in the
1963 Agreement and the purchase price for Lots l and 2 paid by Ricardo. The 1963 agreement
between Modesto and Dongpaen had long been consummated and completed. In fact, the 1963
Agreement was continuously performed by Modesto and Dongpaen which led to the November
1968 survey of the subject property for Ricardo's benefit, and finally resulted in the sale of Lots l
and 2 to Ricardo. More importantly, Modesto and his successors-in-interest, including Lorenzo,
ratified the agreement by the acceptance of benefits thereunder.
THE HEIRS OF ANSELMA GODINES vs. PLATON DE MAYMAY
G.R. No. 230573, June 28, 2021
By: clairefrance
DOCTRINE:
Our jurisdiction has long recognized the validity of oral contracts, including oral contracts
of sale. Article 1305 of the Civil Code provides the definition of a contract.
Contracts that have all the essential requisites for their validity are obligatory regardless of
the form they are entered into, except when the law requires that a contract be in some
form to be valid or enforceable. Article 1358 of the Civil Code provides for those contracts
that must appear in a public instrument.
Article 1403(2) of the Civil Code, otherwise known as the Statute of Frauds, requires that
covered transactions must be reduced into writing; otherwise, the same would be
unenforceable by action. In other words, a sale of real property must be evidenced by a
written document as an oral sale of immovable property is unenforceable.
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It has been uniformly held that the form required under the said Article is not essential to
the validly or enforceability of the transaction, but merely for convenience. A sale of real
property, though not consigned in a public instrument or formal writing, is, nevertheless,
valid and binding among the parties, for the time-honored rule is that even a verbal
contract of sale of real estate produces legal effects between the parties
The term "Statute of Frauds" is descriptive of statutes which require certain classes of
contracts to be in writing. The Statute does not deprive the parties of the right to contract
with respect to the matters therein involved, but merely regulates the formalities of the
contract necessary to render it enforceable. The Statute, however, simply provides the
method by which the contracts enumerated therein may be proved but does not declare
them in valid because they are not reduced to writing. Hence, if the parties permit a
contract to be proved, without any objection, it is then just as binding as if the Statute has
been complied with.
While the Statute of Frauds aims to safeguard the parties to a contract from fraud or
perjury, its non-observance does not adversely affect the intrinsic validity of their
agreement. The form prescribed by law is for evidentiary purposes, non-compliance of
which does not make the contract void or voidable, but only renders the contract
unenforceable by any action. In fact, contracts which do not comply with the Statute of
Frauds are ratified by the failure of the parties to object to the presentation of oral
evidence to prove the same, or by an acceptance of benefits under them.
The Statute of Frauds is confined to executory contracts where there is a wide field for
fraud as there is no palpable evidence of the intention of the contracting parties. It has no
application to executed contracts because the exclusion of parol evidence would promote
fraud or bad faith as it would allow parties to keep the benefits derived from the
transaction and at the same time evade the obligations imposed therefrom.
FACTS:
Petitioners Marlon, Francisco, Roque, Rosa, and Alma, all surnamed Godines, claim to be the
forced heirs of Anselma Yuson Godines (Anselma) who died on August 11, 1968 leaving a
parcel of residential lot. However, respondent spouses Platon and Matilde (Matilde; collectively,
spouses Demaymay or respondents) are in possession of the land in questions. During her
lifetime, Anselma obtained a loan from Matilde and in consideration thereof, the spouses
Demaymay were allowed to use the land for a period of 15 years. However, this agreement was
not reduced into writing.
Sometime in August 1987, petitioners went to the Office of the Provincial Assessor of Masbate
to inquire about the status of the lease contract between Anselma and the spouses Demaymay.
Petitioners then found out that Tax Declaration No. 6111 in the name of Anselma was cancelled
and Tax Declaration No. 7194 was issued under the name of Matilde by virtue of a Deed of
Confirmation of Sale supposedly executed by petitioner Alma in 1970.
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Given this, petitioners filed a Complaint for Recovery of Ownership and Possession and
Declaration of the Deed of Confirmation as Null and Void with Damages against the spouses
Demaymay before the Regional Trial Court (RTC) of Catalingan, Masbate, Branch 49.
On the other hand, the spouses Demaymay in their Answer denied petitioners' allegations and
argued that there was no cause of action; that such action, if any, had already prescribed. They
further claimed that they were the absolute owners and actual possessors of the subject land
which they acquired through sale. They also averred that Alma was estopped from questioning
the documents conveying the land in question, as she was the one who received the last
installment for the land and voluntarily executed the confirmation due to the untimely demise of
her parents.
Before the pre-trial, the RTC ordered the transfer of the case to the Municipal Circuit Trial Court
(MCTC) in Placer, Masbate, considering the assessed value of the subject property was less than
P20,000.00.
The MCTC took cognizance of the case and during the course of the proceedings, petitioners
presented their evidence ex parte as the spouses Demaymay were declared in default. However,
instead of deciding the case based on its merit, the MCTC in its September 18, 2008 judgment
dismissed it on the ground that the cause of action was annulment of the Deed of Confirmation
of Sale over which the RTC had jurisdiction.
On appeal, the RTC reversed the said MCTC judgment and once again remanded the case to the
MCTC for disposition. During the proceedings before the MCTC, the spouses Demaymay filed a
Motion to Dismiss but were denied by the MCTC.
On appeal, RTC ruled in favor of the heirs of Anselma and nullified the confirmation of sale of
land between Anselma and spouses Demaymay. But the CA reversed the decision of MCTC and
RTC and granted the ownership in favor of the heirs of Spouses Demaymay.
ISSUE:
Whether or not the heirs of Anselma are bound by the oral contract of sale allegedly executed in
favor of the spouses Demaymay
RULING:
YES, the heirs of Anselma are bound by the oral contract of sale allegedly executed in
favor of the spouses Demaymay.
the Court agrees with the observations of the CA that the Statute of Frauds is inapplicable in the
present case as the verbal sale between Anselma and the spouses Demaymay had already been
partially consummated when the former received the initial payment of P1,010.00 from the latter.
In fact, the said sale was already totally executed upon receipt of the balance of P450.00.
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Furthermore, from the time the verbal sale happened in 1967, the spouses Demaymay were in
possession the property for more than the 15-year period of their purported lease contract with
Anselma. Such property was eventually tax declared under Matilde's name after Alma had
executed the Deed of Confirmation of Sale in 1970 upon receipt of the full purchase price.
Indeed, possession of the property and payment of real property taxes may serve as indicators
that an oral sale of a piece of land has been performed or executed.
Considering that the oral sale between Anselma and the spouses Demaymay is valid (and is
actually enforceable by virtue of the partial, if not total consummation of the contract),
petitioners, being the heirs of Anselma, are legally bound by the said oral sale. Having already
been validly sold and transferred to the spouses Demaymay, we agree with theCA's conclusion
that the subject piece of land described in Tax Declaration No. 7194 no longer formed part of
Anselma's estate that petitioners could have inherited.
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II.D.4. Void Contracts
LAURO CARDINEZ vs. SPOUSES PRUDENCIO and CRESENCIA CARDINEZ
G.R. No. 213001, August 4, 2021
By: shaaariiing
DOCTRINE:
Article 1410 of the Civil Code which states that an action to declare the inexistence of a
void contract does not prescribe. The Deed of Donation is an absolute nullity hence it is
subject to attack at any time. Its defect, i.e., the absence of consent of respondents, is
permanent and incurable by ratification or prescription. In other words, the action is
imprescriptible.
FACTS:
The respondents filed a Complaint for Annulment of Document with Recovery of Possession and
Damages against petitioner.
The late Simeona Cardinez owned a parcel of land which was inherited by her sons, Prudencio
(respondent), Florentino, and Valentin (predecessor of the petitioners), and was equally divided
among themselves. In 1986, TCT No. T-26701 covering the land was issued in the name of the
brothers as co-owners. Prudencio's share in the land was the middle portion which he registered
for taxation purposes under Tax Declaration No. 18237.
Sometime in 1994, Valentin requested Prudencio to donate the ten-square meter portion of his
land being encroached by the former's balcony. Prudencio agreed to Valentin's request out of his
love and trust for his brother. Valentin then asked Prudencio and his wife Cresencia Cardinez to
sign a document that was written in English. Prudencio and Cresencia were unable to understand
the contents. Hence, Valentin told the Cardinez couple that the purported document was for the
partition of the inherited land, cancellation of TCT No. T-26701, and transfer of their shares in
their respective names. As they were convinced by Valentin's explanation and trusted him,
Prudencio and Cresencia signed the document without even reading and understanding its
contents. The spouses Cardinez were not given a copy of the document after it was signed.
Fourteen years later, or on June 8, 2008, Prudencio found out that a survey of the land was being
conducted. He then inquired if his inherited portion of the land was still in his name. To
Prudencio's surprise, the petitioners who are Valentin's children, informed him that he already
donated his inherited portion to them through the document that he allegedly executed with
Cresencia. A notarized deed of donation was showed to the sons of Prudencio which stated that
respondents, as well as Florentino Cardinez married to Isabel Cardinez, and Valentin Cardinez
married to Eufrosina Cardinez, donated their respective portions of the land covered by TCT No.
T-26701 to the petitioners. All the donors including respondents signed the purported document.
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In 2008, respondents filed a Complaint for Annulment of Document with Recovery of
Possession and Damages. They averred that Valentin took advantage of their low level of
education when he made them believe that the document they were signing were for the partition
of the inherited land, cancellation of TCT No. T-26701, and transfer of their shares in their
respective names. Valentin therefore used machinations and misrepresentations to induce them to
sign the document which turned out to be a Deed of Donation. Petitioners denied the allegations
of respondents. They averred that Prudencio purchased the subject land sometime in 1972 and
then donated it to petitioners as evidenced by the Deed of Donation. Consequently, Transfer
Certificate of Title and Tax Declaration was issued in the name of petitioners. They contend that
the action had already prescribed because 10 years had lapsed from the execution of the Deed of
Donation, a written contract.
ISSUE:
Whether or not the action instituted by respondents has already prescribed.
RULING:
NO, the action instituted by respondents has not prescribed.
Since the Deed of Donation is void ab initio due to the illegality in its execution, the disputed
land is deemed to be simply held by petitioners in trust for respondents who are the real owners.
Respondents therefore have the right to institute a case against petitioners for the reconveyance
of the property at any time. The well-settled rule is that "[a]s long as the land wrongfully
registered under the Torrens system is still in the name of the person who caused such
registration, an action in personam will lie to compel him to reconvey the property to the real
owner."
HEIRS OF ELISEO BAGAYGAY vs. HEIRS OF ANASTACIO PACIENTE
G.R. No. 212126, August 4, 2021
By: lably
DOCTRINE:
“Art. 1410. The action or defense for the declaration of the inexistence of a contract does
not prescribe.”
Laches, however, do not apply if the assailed contract is void ab initio. In Heirs of
Ingjug-Tiro v. Spouses Casals, the Court expounded that laches cannot prevail over the law
that actions to assail a void contract are imprescriptible it being based on equity.
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Laches is a doctrine in equity and our courts are basically courts of law and not courts of
equity. Equity, which has been aptly described as "justice outside legality," should be
applied only in the absence of, and never against, statutory law. Aequetas [nunquam]
contravenit legis. The positive mandate of Art. 1410 of the New Civil Code conferring
imprescriptibility to actions for declaration of the inexistence of a contract should pre-empt
and prevail over all abstract arguments based only on equity.
FACTS:
On October 8, 1953, Anastacio Paciente, Sr. (Anastacio) was granted a homestead patent over a
parcel of land situated in Barrio H, Bafiga, Province of Cotabato. Accordingly, on October 24,
l953, an Original Certificate of Title (OCT) No. V -2423 was issued in his name. Thereafter, by
virtue of a Deed of Sale allegedly executed by Anastacio in favor of his brother-in--1aw, Eliseo
Bagaygay (Eliseo), the latter took possession of the subject land, transferred the title under his
name, and later caused the subdivision of the entire land into three (3) lots covered by Transfer
Certificates of Title (TCT) Nos. T-34610,6 T-34611,7 and T-34612.
Years later, after the death of Anastacio and Eliseo, the latter’s wife, petitioner Anecita P.
Bagaygay (Anecita), and his children took possession of the subject land upon his death. On Dec
21, 1999, the heirs of Anastacio filed before the Regional Trial Court (RTC) of Surallah, South
Cotabato, an action for Declaration of Nullity of the Deed of Sale and the titles, Recovery of
Ownership and Possession, Accounting and Damages, docketed as Civil Case No. 679-S, against
the heirs of Eliseo (petitioners).
Respondents alleged that sometime in 1956, Eliseo, taking advantage of the financial distress of
Anastacio, was able to obtain the latter's title and take possession of his land; that despite
repeated demands by Anastacio, Eliseo refused to return the title and possession of the land; that
Eliseo caused the cancellation of Anastacio's title through a fictitious Deed of Sale; that
Anastacio never sold the subject land; and that the said Deed of Sale was likewise void as it was
executed during the five (5)-year period of prohibition under Section 118 of the Public Land Act.
Petitioners, on the other hand, contend that Anastacio and Eliseo allegedly went to Judge Rendon
who was a notary public, sometime in June 1958 to effect the selling of the land since Anastacio
needed money for the wedding of his son.
During the trial, respondents presented as witness the Registrar of Deeds of Kidapawan, South
Cotabato, Atty. Amelia Casabar, to identify in court the Primary Entry Book of the Registry of
Deeds of South Cotabato and prove that the Deed of Sale was executed within the 5-year
prohibitory period. Eliseo's title, TCT No. T-724418 which contains the annotation of the
Certification issued by the Register of Deeds of South Cotabato stating that the original copy of
OCT No. V-2423 was lost from the files and that as per record of Deed of Sale was executed by
Anastacio in favor of Eliseo on November 28, 1956, was also presented as evidence by
respondents. The testimonies of respondents Meregildo and Arturo (heirs of Anastacio) were
likewise offered in evidence.
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Petitioners, for their part, offered as evidence the testimonies of (1) Anastacia Paciente Dayot
(Anastacia - 84 years old), the youngest sister of Anastacio, (2) Julia Bagaygay (Julia - 60 yrs
old), (3) petitioner Inocencio Bagaygay, (4) petitioner Anecita Bagaygay (91 years old), and (5)
Benjamin Dones, a neighbor.
Witnesses Anastacia, Julia and Anecita all testified and were all certain that indeed the land was
validly sold to Eliseo in 1958. But when they were asked for other personal information such as
their birthdays, death anniversaries of their husbands, etc, they could not remember them. The
only documentary evidence presented by the respondents is the Marriage Certificate of
Meregildo (son of Anastacio) in June 1958.
The RTC ruled in favor of the respondents, Eliseo’s heirs. On appeal, the CA reversed the
decision giving more credence to the testimony and documentary evidence presented by
Anastacio’s heirs.
ISSUE:
Whether or not the principle of laches apply to this case.
RULING:
NO. The principle on laches does not apply because there is no valid contract (Deed of Sale)
executed.
A sale of a parcel of land is in violation of the five year prohibition on the alienation of land
acquired via patent application is void and produces no legal effect. As successors-in-interest of
Alido, petitioners' right to challenge the sale between Alido and respondent cannot be barred by
laches as it was in violation of the restriction on the sale of land acquired through free patent.
CITY OF TANAUAN vs. GLORIA MILLONTE
G.R. No. 219292, June 28,2021
By: tinee
DOCTRINE:
Article 1410 of the Civil Code relevantly states that "[t]he action or defense for the
declaration of the inexistence of a contract does not prescribe." In other words, "an action
that is predicated on the fact that the conveyance complained of was null and void ab initio
is imprescriptible.
Jurisprudence teaches that "the 'declaration of nullity of a contract which is void ab initio
operated to restore things to the state and condition in which they were found before the
execution thereof.
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FACTS:
The registered owners of the lot covered by the OCT title No. 3243 were the Gonzaga Siblings
namely: Marcelo, Eleuteria, Pantaleona, Ambrosio, and Lucio. The mother of respondent,
Florencia Gonzaga Arroyo was the daughter of Lucio. Hence, Millonte is Lucio’s granddaughter
and direct descendant. Millonte filed a Complaint dated May 12, 2004 against petitioner City of
Tanauan, praying for the declaration of nullity of the Deed of Absolute Sale dated February
10,1970, as well as TCT No. T-42198 and for the reinstatement of OCT 3243.
The contested property is presently occupied by the Tanauan Water District, supposedly, the City
of Tanauan acquired the lot for 30,000 pursuant to a Deed of Absolute Sale allegedly signed by
the Gonzagas, as vendors, and the then municipality of Tanauan, represented by then Mayor
Sebastian Carandang, as vendee
In her complaint, Millonte asserted that by virtue of the Deed of Absolute Sale, OCT 3243 was
cancelled and TCT T-42198 was subsequently issued in favor of the Municipality of Tanauan on
July 16,1993 (23 years after the alleged sale). Upon Examination of the Deed of Absolute Sale,
however, Millonte realized that the Gonzaga siblings were already dead when the said deed was
executed, Hence, they could not have signed the document. Thus, there was no valid agreement,
and the Deed of Absolute Sale was void.
ISSUE:
Whether or not the action is barred by prescription.
RULING:
NO, The action is not barred by prescription.
Millonte, as an heir, could assail the validity of the Deed of Absolute Sale even years after the
execution of the document, and even if the title of the property has already been transferred in
the name of the City of Tanauan. The passage of time in this case could not defeat the legal
principle that a null and void contract can be assailed anytime due to the imprescriptibility of the
action. In like manner, given that the action is imprescriptible, the petitioner cannot invoke
laches as a defense. Undeniably, Millonte is not estopped from assailing the Deed of Absolute
Sale specifically since the signatures of the Gonzaga siblings were forged and without any
binding or legal effect
If the Court were to permit the City of Tanauan to retain ownership of the property
notwithstanding the void nature of the contract of sale, such would result in unjust enrichment as
the petitioner would continue to benefit from the lot. This is regardless of the undisputed fact that
the Tanauan Water District stands on the contested property.
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ARAKOR CONSTRUCTION AND DEVELOPMENT CORPORATION vs. TERESITA
G. STA. MARIA
G.R. No. 215006, January 11, 2021
By: VictoriaAytona
DOCTRINE:
Case law provides that "forgery cannot be presumed and must be proved by clear, positive
and convincing evidence by the party alleging the same.
"No one can give what one does not have; nemo dat quod non habet. One can sell only what
one owns or is authorized to sell, and the buyer can acquire no more right than what the
seller can transfer legally."
In Bautista v. Silva, the Court erected a standard to determine the good faith of the buyers
dealing with a seller who had title to and possession of the land but whose capacity to sell
was restricted, in that the consent of the other spouse was required before the conveyance,
declaring that in order to prove good faith in such a situation, the buyers must show that
they inquired not only into the title of the seller but also into the seller's capacity to sell.
Thus, the buyers of conjugal property must observe two kinds of requisite diligence,
namely:
1. the diligence in verifying the validity of the title covering the property; and
2. the diligence in inquiring into the authority of the transacting spouse to sell conjugal
property in behalf of the other spouse
While it is true that a notarized document carries the evidentiary weight conferred upon it
with respect to its due execution, and has in its favor the presumption of regularity, this
presumption, however, is not absolute.' It may be rebutted by clear and convincing
evidence to the contrary.
Article 1410 of the Civil Code states that "[t]he action or defense for the declaration of the
inexistence of a contract does not prescribe." Simply put, "an action that is predicated on
the fact that the conveyance complained of was null and void ab initio is imprescriptible.
The doctrine of in pari delicto, which stipulates that the guilty parties to an illegal contract
are not entitled to any relief, cannot prevent recovery if doing so violates the public policy
against unjust enrichment.
Jurisprudence teaches that "the declaration of nullity of a contract which is void ab initio
operated to restore things to the state and condition in which they were found before the
execution thereof."
FACTS:
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The Spouses Fernando Gaddi, Sr. (Fernando Sr.) and Felicidad Nicdao Gaddi (Felicidad)
(collectively Spouses Gaddi) owned the five contested parcels of land located in Hermosa,
Bataan.
Felicidad died intestate on November 18, 1985, and was survived by Fernando Sr. and her eight
children, herein respondents, namely: Teresita G. Sta. Maria (Teresita), Alfredo N. Gaddi
(Alfredo), Fernando N. Gaddi, Jr. (Fernando Jr.), Marilyn G. Malixi (Marilyn), Evangeline G.
Golicruz (Evangeline), Efren N. Gaddi (Efren), Lilian G. Francisco (Lilian) and Lilibeth G.
Paguio (Lilibeth) (collectively the Gaddis). Felicidad's heirs inventoried her properties but they
did not initiate its partition; thus, the parcels of land remained in the name of the Spouses Gaddi.
On February 7, 1996, Fernando Sr. passed away, followed by Efren on May 8, 1998. After the
deaths of Fernando, Sr. and Efren, Atty. Greli Legaspi (Atty. Legaspi), the president of petitioner
Arakor Construction and Development Corporation (Arakor), informed the Gaddis that their
parents had already sold the contested five parcels of land to Arakor for P400,000.00 as
evidenced by two undated Deeds of Absolute Sale and that the titles to the properties have
already been transferred to Arakor's name.
Thus, the Gaddis filed a Complaint for Annulment of Deed[s] of Absolute Sale and Transfer
Certificates of Title against Arakor. They alleged that the two contracts of sale were forged and
the conveyance of the properties was fraudulent since Felicidad could not have signed the
documents and given her consent thereon since she has been dead for seven years before the
alleged execution of the said contracts.
Arakor denied employing fraud. It contended that the Deeds of Absolute Sale were already
signed and notarized when Fernando Sr. and Efren delivered them to the office of Atty. Legaspi
on September 8, 1992. Atty. Legaspi also disclaimed any knowledge about the death of
Felicidad.
In addition, Arakor alleged that Teresita, Evangeline, Marilyn and Lilibeth had already assigned
their rights to Fernando Sr. through the two Joint Waiver of Claim and/or Right dated February
1992. Efren, Alfredo, Lilian and Fernando Jr. likewise executed a Joint Waiver of Claims and/or
Right on October 28, 1992. Thus, full ownership and title over the contested properties had been
consolidated in favor of Fernando Sr. at the time of the sale. Thus, the signature of Felicidad in
the Deeds of Absolute Sale is no longer material in determining the sale's validity.
Moreover, Arakor averred that the Gaddis' claims are barred by prescription since the company
has been in open, continuous, and lawful possession of the properties as the owner thereof since
September 1992.
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On rebuttal, Fernando Jr. insisted that during the lifetime of Felicidad, the Gaddis formed a
family corporation in order to consolidate the properties under the said company through the
waivers. However, only one property was transferred since Efren sold all the others. He
maintained that the family company did not authorize Fernando Sr. and Efren to sell the
properties.
Ruling of the Regional Trial Court:
In its November 16, 2011 Decision, the RTC declared the Deeds of Absolute Sale as void for
being fictitious because Felicidad had already passed away when the documents were executed.
Additionally, it ruled that Arakor, represented by Atty. Legaspi, was not a buyer in good faith. It
thus ordered the Gaddis to return to Arakor the amount of P400,000.00 with interest, chargeable
to Fernando Sr.'s estate.
Arakor asked for reconsideration but it was denied by the trial court in its Order dated March 8,
2012. Aggrieved, Arakor appealed to the CA.
Ruling of the Court of Appeals:
The CA, in its assailed January 13, 2014 Decision, affirmed the RTC's ruling that the Deeds of
Absolute Sale were null and void for being simulated and forged.
The appellate court explained that "[s]ince it has been established that Felicidad died as early as
1985, there is no way for her to affix her signature to the deeds; neither could she have secured
the Residence Certificate Nos. 79465823 and 81476375 from Quezon City on February 5 and 12,
1992, respectively, and worse, she could not have possibly personally appeared before Notary
Public Cornelio G. Montesclaros on September 8, 1992 and acknowledged that the deeds were
executed as her (and Fernando Sr.'s) voluntary act and deed." It likewise noted that the
acknowledgment portion of the deeds indicated the names "Felicitas N. Gaddi/Felicitas Nicdao"
instead of "Felicidad."
The CA opined that Atty. Legaspi who is knowledgeable in law should have inquired about the
personal circumstances of Felicidad and not merely relied on the representations of Fernando Sr.
and Efren, particularly since the titles of the properties were still registered in the name of the
Spouses Gaddi.
The appellate court concluded that the parties must revert to their respective positions prior to the
execution of the Deeds of Absolute Sale.
ISSUE:
Whether or not the appellate court correctly affirmed the findings of the trial court that the Deeds
of Absolute Sale are null and void for being forged and fictitious.
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RULING:
Section 2, Rule 2 of the Rules of Court defines a cause of action as "that act or omission by
which a party violates a right of another." As Felicidad's heirs, the Gaddis definitely have the
right to assail the alleged fictitious and forged sale of the properties. Their alleged waivers could
not serve as basis to conclude that they have completely relinquished their rights to the contested
properties. To recall, the Gaddis consistently posited that they executed the waivers in favor of
Fernando Sr. merely to facilitate the transfer of ownership of the properties to the family
corporation. A perusal of these waivers suggests that the Gaddis did not fully intend to relinquish
their rights to dispose of any of the properties.
In fine, the waivers which were not notarized and bore dates incompatible with the sale fell short
of the requirement of preponderant evidence to support Arakor's claim that the Gaddis
effectively waived their rights to the contested properties.
As regards the validity of the Deeds of Absolute Sale, We note that Arakor acknowledged
Gaddis' allegation that Felicidad's signatures in the Deeds of Absolute Sale were forged since her
death occurred prior to the execution of the said contracts. In fact, Arakor alleged that Fernando
Sr. and Efren also sold a property to Matulac in spite of Felicidad's death, stressing that It was
also a victim of fraud.
In this case, the Gaddis satisfactorily discharged this burden by submitting in evidence the
Certificate of Death of Felicidad to prove that her demise preceded the execution of the contracts
of sale. This is in addition to Arakor's admission that Felicidad's death occurred before the sale
transpired. Obviously, she could not have signed any document which leads to no other
conclusion than that her signatures in the deeds were forged.
Considering that Felicidad's signatures were forged, the Deeds of Absolute Sale are null and void
and convey no title to Arakor. Thus, the TCTs which were issued in favor of Arakor "by virtue of
the said spurious and forged document are also null and void." In fact, "all the transactions
subsequent to the alleged sale are likewise void."
Even with the null and void nature of the contracts, Arakor Insists that it was a buyer in good
faith as it purchased and paid the fair price for the properties absent any notice that the sellers,
Fernando Sr. and Efren, did not have the full capacity to sell.
In the case at bench, Arakor cannot claim to be an innocent purchaser for value since Atty.
Legaspi did not diligently ascertain the genuineness of the signatures of the owners, Spouses
Gaddi, especially that of Felicidad's. He merely relied on Fernando Sr.'s representations that
Felicidad's signature was genuine. As aptly pointed out by the trial court, Atty. Legaspi, being a
lawyer, should have been more circumspect to determine if Spouses Gaddi both had the capacity
to sell and if they voluntarily and validly signed the deeds of sale. Atty. Legaspi could have
requested or even demanded to personally talk to Felicidad in order to affirm if she consented to
the disposition of the properties.
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He could have investigated further, considering Fernando Sr.'s age and the seeming enthusiastic
attitude of Fernando Sr. and Efren in delivering the contracts and causing its notarization even
without Atty. Legaspi's presence. If only Atty. Legaspi did his due diligence, he would have
discovered that Felicidad was already dead, if his claim that he had no idea about her death prior
to the sale is to be believed.
In the same way, Arakor cannot insist on the due execution of the Deeds of Absolute Sale simply
because these were notarized.
A reading of the acknowledgment portion of the deeds shows that Felicidad's name was not even
written correctly, as it indicated "Felicitas." Moreover, Arakor did not present the notary public
as a witness to affirm that the deeds were executed in accordance with the law, precisely because
Felicidad cannot possibly be physically present to confirm with the notary public that she
voluntarily signed. It is evident that the presumption of regularity as regards the due execution of
the contracts cannot stand in this instance.
The Gaddis could assail the validity of the Deeds of Absolute Sale and they rightly did so, in
spite of Arakor's claim that they failed to question the sale several years after Arakor secured the
titles to the properties. Lack of immediate challenge on the part of the Gaddis did not negate the
fact that the contracts were null and void and assailable anytime due to the imprescriptibility of
the action. Similarly, Arakor cannot invoke laches as a defense given that the action is
imprescriptible. The Gaddis cannot be estopped from assailing the validity of the deeds precisely
because Felicidad's signatures were forged and therefore produced no legal effect.
Arakor maintains that the Gaddis were in pari delicto, hence, their prayer should not be granted.
Yet, Arakor was not able to prove that the Gaddis had knowledge of the fraud committed by
Fernando Sr. and Efren, especially when a few of them are living in the United States as shown
by their waivers. Similarly, Arakor did not prove that the waivers were executed for the purpose
of evading payment of estate taxes, as this was contrary to the Gaddis' allegation that the
properties were intended to be transferred under the name of the family corporation.To allow
Arakor to retain ownership over the properties notwithstanding the void nature of the contracts of
sale would amount to unjust enrichment as the petitioner would continue to benefit from the
lands to the detriment of the Gaddis.
The trial court and the CA ordered the return of the certificates of title to the name of the
Spouses Gaddi. Moreover, to prevent unjust enrichment, the Gaddis should return the amount of
P400,000.00 with legal interest to Arakor, although the total amount should be deducted from the
estate of Fernando Sr. as there is an assumption that he received the consideration as the
remaining living owner of the properties at the time. There was no sufficient proof offered to
show that Efren also received part of the money, amidst the Gaddis' allegation that he procured a
loan from Atty. Legaspi. In other words, "the restitution of what each party has given is a
consequence of a void and inexistent contract."
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PASTORA GANANCIAL vs. BETTY CABUGAO
G.R. No. 203348, July 06, 2020
By: VictoriaAytona
DOCTRINE:
Under Article 1409 of the Civil Code, absolute simulation voids a contract.
In absolute simulation, there appears a colorable contract but there actually is none, as the
parties thereto have never intended to be bound by it. In determining the true nature of a
contract, the primary test is the intention of the parties. Such intention is determinable not
only from the express terms of their agreement but also from the contemporaneous and
subsequent acts of the parties.
FACTS:
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of P130,000.00,
agreed to be payable within three years. To guarantee her indebtedness, Ganancial entrusted to
Cabugao the Transfer Certificate of Title (TCT) No. 168803 and Tax Declaration No. 641, both
covering a 397-square-meter parcel of land, which Ganancial owns in her name.
The transaction later turned sour and ended in the parties’ respective lawsuits against each other
before the Regional Trial Court (RTC). Cabugao filed a case for foreclosure of real estate
mortgage against Ganancial, while the latter filed against the former a complaint for declaration
of the deed of mortgage as null and void.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject property as
collateral for her loan. Despite the lapse of three years from the date of the mortgage and
repeated demands, Ganancial failed and refused to pay the amount she owed Cabugao. A final
demand having proved futile, Cabugao sought the judicial foreclosure of the real estate
mortgage.
For her part, Ganancial assailed the authenticity of the Deed of Mortgage. While she entrusted
TCT No. 168803 with Cabugao, Ganancial averred that she never executed the supposed Deed of
Mortgage nor appeared for its notarization.
The RTC ruled in favor of Cabugao. It declared that Ganancial’s contentions against the
authenticity of the notarized Deed of Mortgage were not proven by clear and convincing
evidence. The CA denied Ganancial’s appeal. The CA ruled that mere irregularities in the
notarization do not affect the genuineness and due execution of the document.
ISSUE:
Whether or not Deed of Mortgage was absolutely simulated
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RULING:
NO, the Deed of Mortgage was not absolutely simulated
The totality of the circumstances negates the contention that the Deed of Mortgage was
absolutely simulated. Ganancial, having absolute ownership and full disposal of the property in
issue, admittedly conveyed TCT No. 168803 to secure her indebtedness to Cabugao in the
amount of P130,000.00. Their agreement was reduced into writing as a Deed of Mortgage, and
Ganancial's stand that the signatures thereon were manipulated does not convince. As aptly noted
by the RTC, the signatures of Ganancial and her children appear exactly above their typewritten
names, lending weak support to the claim that they had been made to sign a blank piece of paper
that Cabugao later completed as a Deed of Mortgage.20 There is also the undisputed
presumption of regularity enjoyed by notarized contracts, and the mere fact that two public
documents are covered by the same notarial entry neither identifies with sufficient definiteness
which one of them was fake, nor does it determine if any of them was spurious in the first place.
It is also a settled fact that the mortgage in issue was properly registered and annotated on TCT
No. 168803.
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SPECIAL CONTRACTS
I.A. Definition and Essential Requisites
HEIRS OF HERMINIO MARQUEZ vs. HEIRS OF EPIFANIA M. HERNANDEZ
G.R. No. 236826, March 23, 2022
By: Chie
DOCTRINE:
Ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof. The thing is understood as delivered when it is placed in the
control and possession of the vendee.
Payment of the purchase price is not essential to the transfer of ownership as long as the
property sold has been delivered; and such delivery(traditio) operated to divest the vendor
of title to the property which may not be regained or recovered until and unless the
contract is resolved or rescinded in accordance with law.
FACTS:
The Heirs of Epifania Hernandez since 1955 have been occupying a parcel of land located in
Bulacan with an area of 200 square meters(subject property), which forms part of a 1417 square
meter property previously owned by the spouses Anastacio and Lourdes Sakay and spouses
Godofredo and Florsita Cruz. Epifania and respondents had built their house on the subject
property with consent and tolerance of its previous owners.
In 1967, the Spouses Sakay and Cruz sold the 1417 square meter property to Herminio. In 1985,
Herminio sold to Epifania the 200-square meter portion of the land on which her house was built
for P400.00 per square meter with sale agreement that the total price of the subject property will
be paid within a year. In the event that Epifania failed to comply with the terms, the sale
agreement would be treated as a lease contract, and the amounts paid by Epifania would be
treated as rentals or advances to Herminio under a continuing lease of the subject property.
Epifania made initial payment of P2000 on October 1985 signed by Herminio and made payment
by ay of installment to Herminio by depositing certain amounts of money in a joint account
between them with the bank and also through various Metrobank checks and was able to pay in
full the subject property before her death on July 28, 1995.
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Sometime in March 2000, respondents executed an Extrajudicial Settlement of Heirs of Epifania
Hernandez which stated in part that proceeds of joint savings account of their mother and
Herminio with the Bank shall be considered as full payment for the subject property to which
Herminio conformed by affixing his signature thereon.
On December 15, 1999 and July 2000, respondents received from Marquez demand letters to
vacate the premises of the subject property. It appears that on August 4, 1994, Marquez and
Herminio executed an Extrajudicial Settlement of Estate with waiver of rights whereby Herminio
waived all his rights interest and participation over the 1417 square meter property in favor of
Marquez.
Despite respondents’ demands, Herminio allegedly refused to execute a deed of absolute sale
over the subject property in favor of Epifania. Thus, respondents’ complaint for specific
performance against Herminio. Respondents later on, amended their complaint and prayed that
judgment be rendered directing Herminio and Marquez to cause the execution of a deed of
absolute sale for the subject property in favor of respondents and that title over the subject
property be transferred to their names.
RTC and CA ruled in favor of the respondents. Hence the instant petition.
ISSUE:
Whether or not there is contract of sale because the essential elements are not present, hence
lower court erred when it disregarded that sale of real property must be in writing and in a public
instrument.
RULING:
YES, there was a valid contract of sale between Herminio and Epifania.
The Parties’ contract was consummated when Herminio accepted the initial payment of P2000
from Epifania on October 1985. Herminio transferred his ownership over the questioned portion
of the property when he allowed Epifania and Heirs to continue their occupation thereof and
consequent to their agreement. xxx When Herminio allowed Epifania to occupy the subject
property, he voluntarily relinquished whatever claim he has over the real property, particularly
over the piece of land where Epifania built her house.
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CARLOS J. VALDES vs. LA COLINA DEVELOPMENT CORPORATION
G.R. No. 208140, July 12, 2021
By: nashmera
DOCTRINE:
The elements of a contract of sale are:
1. consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
2. determinate subject matter; and
3. price certain in money or its equivalent
FACTS:
Carlos Valdes (Carlos, Sr.) and his children, herein petitioners Gabriel A. S. Valdes (Gabriel),
Carlos J. Valdes, Antonio A.S. Valdes, Fatima de la Concepcion, Asuncion Mercado, and
Virginia A.S. Valdes (Valdeses), are the stockholders of Bataan Resorts Corporation (BARECO),
which owned a large tract of land in Bagac, Bataan under Transfer Certificates of Title Numbers
45864, 45865, 45867, 45868, and 45869 of the Registry of Deeds of Bataan.
Sometime in 1974, Carlos, Sr. invited Francisco Cacho (Francisco) and his son, individual
respondent Jose Mari Cacho (Jose Mari), to visit and assess the property's suitability for a beach
resort project (Montemar Project). Having received a favorable response from Francisco, both
Carlos, Sr. and Francisco proceeded to carry out the Montemar Project, which included the
development and improvement of the beach basin as a beach resort (Montemar Beach Club), and
the conversion of the remaining land area into a residential subdivision (Montemar Villas).
To implement the project, the Valdeses transferred and conveyed their shares of stock in
BARECO in favor of LCDC, a fully-owned corporation of the Cacho family, through a Deed of
Sale dated May 24, 1975, for a consideration of P20 Million. LCDC then made a partial payment
thereof in the amount of P2.5 Million from February 1975 to December 1979, while the
remaining balance amounting to P17.5 Million was covered by promissory notes.
The P17.5 Million was to be paid by way of an Assignment of Rights14 dated October 30, 1975,
wherein LCDC: (1) assigned to the Valdeses three million worth of shares in LCRC, the
corporation established by LCDC to market and sell the shares of the beach resort; and (2)
undertook to pay the Valdeses (50%) of the net proceeds (later reduced 40%) from the sale of the
Montemar Villas lots inside BARECO, as previously acquired by LCDC.
Since Carlos, Sr. did not intend to use all BARECO real properties for the Montemar Project, he
prepared a Deed of Partition, whereby only the real properties intended to be part of the project
were transferred to LCDC. These properties, now owned by LCDC through its purchase of the
BARECO shares were, in turn, transferred by LCDC to LCRC in exchange for fifty thousand
LCRC shares issued in favor of LCDC.
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By virtue of the aforementioned Assignment of Rights, LCDC and Carlos, Sr. became seventy
percent (70%) and thirty (30%) shareholders of LCRC, respectively.
Meanwhile, LCDC, as sole shareholder of BARECO, amended BARECO's Articles of
Incorporation and dissolved BARECO by shortening its term of existence up to June 30, 1975.
Thereafter, MBCI, a non-stock, non-profit club, was organized to develop the Montemar Project.
Proprietary shares in MBCI were later sold by LCRC to the general public. Meanwhile, LCDC
obtained loans to finance the construction and development of the Montemar Villas, including
the building and facilities in the Montemar Beach Club. The loans were obtained from the
Development Bank of the Philippines (DBP) – subsequently the Asset Privatization Trust (APT),
Metrobank, and General Credit Corporation (GCC), formerly the Commercial Credit
Corporation.
Sales of the MBCI proprietary shares and the lots in the Montemar Villas, including the
patronage in the Montemar Beach Club were bringing adequate income for some time. The loans
obtained by LCDC were serviced and the remittances of the agreed share of the Valdeses in the
sale of the Montemar Villas lots were made on a regular basis. The Montemar Beach Club, on
the other hand, was able to sustain regular operations. However, during the years 1981 up to
1985, there was a delay in the remittances of the shares to the Valdeses in the net proceeds from
the sale of the Montemar Villas lots.
The foregoing notwithstanding, Carlos, Sr. filed a Complaint dated July 13, 1987 for Annulment
or Rescission of Contract or Specific Performance and Damages with Prayers for Receivership
Pendente Lite and Preliminary Injunction against LCDC before the RTC of Balanga, Bataan.
In the said letter agreement, LCDC vowed to continue to undertake the marketing of the
Montemar Villas lots for the purpose of remitting to the Valdeses their 40% share in the sale of
the said lots until full payment of the purchase price of BARECO shares amounting to P20
Million.
Meanwhile, as the loans obtained by LCDC from DBP/APT remained unpaid, the mortgaged
properties of LCDC, LCRC, and MBCI were eventually foreclosed by DBP/ATP.
Sometime in 1992, LCDC and LCRC initiated negotiations with Philcomsat, a prospective
investor of the Montemar Project. In this regard, Philcomsat presented a Memorandum of Intent
dated August 18, 1992, which embodied the terms and conditions agreed upon by LCDC, LCRC,
MBCI, and Philcomsat. This was with a view toward the latter investing on the project, and,
concurrently, bailing out LCDC, LCRC and MBCI from their loan obligations with APT, GCC,
and Philcomsat. The Memorandum of Intent was presented in the board and stockholders'
meeting of MBCI. A project profile was also furnished to the board members of MBCI, wherein
MRDC, a proposed new corporation, would transform and develop the unsold Montemar Villas
lots into a golf course and sports complex.
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Meanwhile, to obtain from APT an extension of the period to pay the outstanding obligation of
LCDC and LCRC, Philcomsat paid APT the amount of P4 Million. During the extension period,
Philcomsat eventually decided to invest in the new project, subject to conditions, particularly,
that the Valdeses: (1) give their conformity to the new project; and (2) forego their claim to the
proceeds of the sale of the Montemar Villas lots.
To convince Gabriel, acting attorney-in-fact of Carlos, Sr. to conform to the conditions set by
Philcomsat, Rafael Cacho (Rafael), the brother of Francisco, presented orally and in writing to
petitioner two (2) scenarios.
Thereafter, pursuant to the Memorandum of Intent dated August 18, 1992 and the
letter-conformity dated August 27, 1992, Philcomsat, together with LCDC, LCRC, and MBCI
executed a Memorandum of Agreement33 dated September 3, 1992 essentially identical to the
Memorandum of Intent dated August 18, 1992 executed by and between LCDC, LCRC, MBCI,
and Philcomsat.
Meanwhile, on August 31, 1992, LCRC and LCDC, through a Consolidated Deed of Absolute
Sale, conveyed and sold to MRDC all their real and personal properties situated in Bagac,
Bataan.
Notably, after executing the letter-conformity dated August 27, 1992, Gabriel appointed Jose
Mari and Rafael on August 28, 1992 to sell the shareholdings of Carlo, Sr. in LCRC and other
real properties of the Valdeses. Thereafter, on November 18, 1992, Rafael informed Gabriel that
Philcomsat offered to purchase Carlo, Sr.'s shareholdings in LCRC and the Valdeses' other real
properties for a consideration of P24,771,800.00, which petitioners rebuffed.
On October 26, 2009, the trial court rendered a Decision declaring the Memorandum of
Agreement dated September 3, 1992 and the Consolidated Deed of Absolute Sale dated August
31, 1992 null and void.
On October 31, 2012, the CA rendered its assailed Decision, which reversed and set aside the
aforesaid RTC ruling.
ISSUE:
Whether or not there was a valid contract of sale
RULING:
YES, The agreement entered into by the parties is a contract of sale.
The Deed of Sale executed by Carlos, Sr. and LCDC resulted in a perfected contract of sale, all
its elements being present. There was a mutual agreement between them, wherein 4,000 shares
of stock of the Valdeses in BARECO were sold to LCDC for a consideration of P20 Million.
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To be clear, the foregoing amount was paid in cash and the balance covered by promissory notes
to be paid by way of an Assignment of Rights. Specifically, P2.5 Million of the P20 Million
purchase price was paid in cash, while the balance of P17.5 Million was covered by promissory
notes and settled through the Assignment of Rights.
Notably, a perusal of the Assignment of Rights would show that the same constituted full
payment of the BARECO shares of stock, thus: "That the ASSIGNEE hereby accepts this
assignment in full payment of the aforementioned promissory note."67 There is, therefore, in this
case, an absolute transfer of ownership of the BARECO shares to LCDC for a consideration of
P20 Million.
Significantly, there is nothing in the above mentioned documents, nor in any of the subsequent
contracts between the parties that indicates that the transaction entered by and between them was
a joint venture. The transaction between the parties was clearly a sale of property.
CRISTINA R. SEMING vs. EMELITA P. ALAMAG
G.R. No. 202284, March 17, 2021
By: Hope
DOCTRINE:
A contract is a meeting of minds between two persons whereby one binds himself or
herself, with respect to the other, to give something or to render some service.
Article 1458 of the Civil Code, in turn, defines a sale as a contract whereby one of the
contracting parties, i.e., the seller, obligates himself or herself to transfer the ownership and
to deliver a determinate thing, and the other party, i.e., the buyer, obligates himself/herself
to pay therefor a price certain in money or its equivalent.
The elements of a contract of sale are:
1. consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
2. determinate subject matter; and
3. price certain in money or its equivalent.
A contract of sale is a consensual contract.Under Article 1475 of the Civil Code, the
contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price.
The object of every contract must be determinate. "The requisite that a thing be
determinate is satisfied if at the time the contract is entered into, the thing is capable of
being made determinate without the necessity of a new or further agreement between the
parties”
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FACTS:
An action for specific performance and damages was filed by Cristina Seming (petitioner) and
her husband, Eutiquio Seming (Spouses Seming) against Angel Pamat and Natividad Pamat
(Spouses Pamat) involving the half-portion of a parcel of land known as Lot 512-C (subject
property) with an area of 1,542 square meters registered under the names of Jesusa Seming Vda.
De Lopez (Jesusa) and Spouses Pamat claiming that sometime in 1977, they purchased the half
portion (771 square meters) of the property belonging to Jesusa and consequently, a verbal
agreement was entered into by the Spouses Seming and Spouses Pamat concerning the purchase
of the other half portion of the subject property, but no written agreement was executed by the
parties reflecting the alleged sale of the subject property in favor of Spouses Seming.
Petitioner further avers that, with the consent of Jesusa and Spouses Pamat, she shouldered the
litigation expenses of the complaint for quieting of title (Civil Case No. 744) filed by a certain
Maria Aguilar Avecilla against Jesusa and Spouses Pamat and the same shall be treated as part of
petitioner’s payment for the purchase price of the subject property. Sometime in 1990, petitioner
and Natividad agreed that the payments made both in cash and in kind shall serve as a partial
payment for the 200 square meter portion of the subject property and the same was
acknowledged by Natividad in an acknowledgment receipt prepared by petitioner purportedly
signed by Natividad and Jesusa, acting as a witness. In 1991, a similar receipt was executed by
petitioner acknowledged again by Natividad as payment for another 200 square meter portion of
the subject property.
Upon finality of Civil Case No. 744, sometime in 1983, Natividad agreed to pay petitioner who
shouldered the litigation expenses with another 200 square meter portion of the subject property,
thereby, petitioner has already acquired 600 square meter of the 771 square meter area of the
subject property. Sometime in 2002, petitioner offered to buy the remaining 171 square meter
portion of the subject property and further requested that the sale of the 600 square meter portion
be embodied in a Deed of Sale, however, Spouses Pamat refused to sell the same and execute the
Deed of Sale claiming that they never sold any portion of their share in the subject property.
In its November 4, 2009 Order, the RTC held that there was a perfected contract of sale relying
on the October 12, 1990 and January 23, 1991 receipts allegedly signed by Natividad covering
the 400 square meter portion. Anent the 200 square meter portion, the RTC held that the same
was orally sold to petitioner as payment for the litigation expenses in Civil Case No. 744. Thus,
the RTC ordered Spouses Pamat to execute a Deed of Sale in favor of petitioner covering the 600
square meters of the subject property.
However, the RTC decision was reversed and set aside by the Court of Appeals (CA) holding that
there was no meeting of the minds between petitioner and spouses Pamat as to the transfer and
sale of the subject property in favor of the petitioner. The CA also disregarded the October 12,
1990, and January 23, 1991, receipts as petitioner failed to prove the due execution and
authenticity of the receipts and the authenticity of the signatures appearing thereon.
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ISSUE:
Whether or not there is a perfected contract of sale between petitioner and Natividad.
RULING:
NO, there is no contract of sale between petitioner and Natividad.
There is strong countervailing evidence establishing the absence of consent or meeting of the
minds between petitioner and the spouses Pamat. To be clear, there is no other documentary
evidence offered by petitioner to prove that a contract of sale was entered into by the parties
aside from the October 22, 1990 and January 23, 1991 receipts.
The only other evidence presented to prove the existence of a contract of sale is the testimony of
petitioner and Jesusa. The testimonies of Jesusa and petitioner may serve to indicate that while
there may have been initial talks as to the sale of Lot 512-C, no actual transfer or conveyance of
Natividad's portion of Lot 512-C ever took place. A careful review of the foregoing testimonial
and documentary evidence reveals that Natividad did not consent to enter into any contract of
sale involving her half portion of Lot 512-C, completely belying petitioner's testimony and the
contents of the October 22, 1990 and January 23, 1991 receipts. Simply put, there was in reality
no meeting of the minds with respect to the alleged sale of the subject property. There is no clear
and convincing evidence that Natividad definitely sold the subject property to petitioner. In this
connection, We are also inclined to agree with the appellate court that, aside from the bare
allegations of petitioner, there is total lack of evidence which would establish that Natividad
expressly agreed to the arrangement that the financial aid extended to her would be treated as
consideration for the sale of the subject property.
The object of the supposed sale in the instant case is ambiguous. Petitioner relied on the October
22, 1990 and January 23, 1991 receipts to prove that Natividad transferred and conveyed to
petitioner the former's 771-square meter portion of Lot 512-C. But as mentioned above, said
receipts are null and void, and thus, should not be given evidentiary weight and credence.
Notably, even if we consider the receipts presented by petitioner, the exact portion of Lot 512-C
allegedly sold to petitioner was not specified. The phrase "[t]his amount is payment only for two
lots" renders the object of the sale ambiguous as it does not even define the metes and bounds of
the lots which are supposedly the subject of the sale.
The price for the sale of the subject property is also uncertain. Other than her bare testimonies,
petitioner's claim that she extended financial aid to Natividad was not supported by corroborating
evidence. Although the litigation expenses spent by petitioner form part of the purchase price of
the subject property, no receipt of expenses was presented by petitioner which would aid this
Court to determine the exact amount thereof. This undetermined amount of expenses all the more
renders the price or consideration of the sale ambiguous. Hence, there is total lack of evidence
which would establish that Natividad expressly agreed to the arrangement that the financial aid
extended to her would be treated as consideration for the sale of the subject property.
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INTEGRATED CREDIT AND CORPORATE SERVICES vs. ROLANDO CABRERA
G.R. No. 203420, February 15, 2021
By: 9756214576
DOCTRINE:
Article 1458 of the Civil Code defines a contract of sale to be a contract where "one of the
contracting parties obligates himself to transfer the ownership and to deliver a determinate
thing, and the other to pay therefor a price certain in money or its equivalent." The
essential elements of a contract of sale are:
1. consent;
2. object; and
3. price in money or its equivalent.
FACTS:
Cabreza was the registered owner of a house and lot covered by TCT No. 149759/T-752 (subject
property). In 1990, Cabreza applied a credit line with Citibank and secured by a REM over the
subject property. Public auction, however, was deferred as they agreed on restructuring Cabreza's
liability to Citibank. Cabreza again defaulted under the restructured loan, thus, public auction
was finally conducted and ICCS emerged as the highest bidder.
On June 9, 1994, or two days prior to the expiration of the redemption period, Cabreza sent ICCS
a letter offering the redemption of the subject property by paying the redemption price of PIO
million to be paid in installments. Subsequently, the parties entered into a Memorandum of
Agreement (MOA). Notably though, the MOA provided in evidence was not dated. Pursuant to
the MOA, Rosalinda issued several checks. The first three checks were deposited, cleared, and
credited to the bank account of ICCS. The fourth check, however, was dishonored due to
insufficient funds. Hence, on October 6, 1994, ICCS sent Cabreza and the spouses Aguilar a
letter demanding payment of the amount of the fourth check. Despite the non-payment,
Rosalinda still issued the fifth check in favor of ICCS. The fifth check was surprisingly cleared
and credited to the bank account of ICCS.
ICCS informed Cabreza and the spouses Aguilar that it had already consolidated its title to the
subject property, thereby requiring them to vacate the premises. ICCS then sold the subject
property to the spouses Gan as evidenced by a Deed of Sale dated February 1, 1995 (Deed of
Sale), for which the latter were issued TCT No. 199445. The foregoing prompted Cabreza and
the spouses Aguilar to file the instant Complaint against ICCS, spouses Gan, and Citibank.
RTC ordered the annulment of the Deed of Sale between ICCS and the spouses Gan, as well as
the corresponding title issued thereof. It also ordered ICCS to reimburse the purchase price the
spouses Gan paid. Further, the RTC ordered Cabreza and the spouses Aguilar were ordered to
pay ICCS the remaining balance under the MOA, after which a deed of absolute sale will be
executed in their favor.
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The CA affirmed with modifications the RTC Decision. The appellate court agreed that the MOA
is in fact a contract of sale of real property on installments, making Republic Act No. 6552,
otherwise known as the Realty Installment Buyer Protection Act or the Maceda Law (Maceda
Law), applicable.
ISSUE:
Whether or not the MOA is a contract of sale.
RULING:
YES, it is a contract of sale.
The MOA nevertheless remains to be a valid agreement that is in the form of a contract of sale of
real property in installments. Despite not being denominated as a "Deed of Sale," a contract is
what the law defines it to be and not what the contracting parties call it.
Here, the MOA contains all the essential elements of a contract of sale. As previously stated, it
was sufficiently shown that ICCS and Cabreza with the spouses Aguilar consented to the
execution of the MOA. The subject property, that is owned by ICCS, is the object of the contract.
Lastly, the Pl0,345,914.75 to be paid in installments on the period set by the parties constitutes
the price. Hence, the MOA is a contract of sale of the subject property entered into by ICCS and
Cabreza with the spouses Aguilar.
DIOSCORO POLIÑO BACALA vs. HEIRS OF SPOUSES JUAN POLIÑO AND
CORAZON ROM
G.R. No. 200608, February 10, 2021
By: JLBL
DOCTRINE:
The elements of a contract of sale are:
1. consent or meeting of the minds, that is, consent to transfer ownership in exchange
for the price;
2. determinate subject matter; and
3. price certain in money or its equivalent
A resolutory condition extinguishes a transaction that, for a time, existed and discharges
the obligations created thereunder.
Two presumptions find relevance in this case.
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First, a contract enjoys the presumption that it is supported by an existing and lawful cause
or consideration. This presumption is disputable and may be overthrown by
preponderance of evidence to the contrary. Preponderance of evidence is the weight, credit,
and value of the aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of evidence" or "greater weight of credible
evidence."
Second, notarized documents, being public in nature, require no further proof of their
authenticity and due execution. They are entitled to full faith and credit on its face and are
prima facie evidence of the facts stated therein. To overturn this presumption of regularity,
clear and convincing proof is required.
Gross inadequacy or simulation of price neither affects nor invalidates a sale, but it can be
shown that the parties may have really intended a donation or some other act or contract.
The burden of proof weighs on the party making the allegation against these presumptions.
FACTS:
Aproniana, Juan, and Anecito Poliño5 (Anecito) were siblings. Anecito, married to Clara O.
Poliño (Clara), was the father of Aquilino and Ducepino. Both sons were mentally incapacitated.
Anecito and Clara were the registered owners of a parcel of land planted with coconuts located at
Cocomon, Lupon, Davao Oriental (subject property). It spanned an area of 80,003 square meters
and covered by Transfer Certificate of Title (TCT) No. T-3353. Anecito and Clara died intestate
on November 21, 1994 and November 18, 1987, respectively. They were survived by their sons
and sole heirs, Aquilino and Ducepino.
A Deed of Sale and an Agreement, executed by and between Anecito and Juan on April 13,
1992, however surfaced and spawned a legal controversy among the family members. In the
Deed of Sale, Anecito allegedly ceded unto Juan the subject property for a consideration of
P15,000.00, while the Agreement stipulated that during Anecito's lifetime, Juan shall allow
Anecito to enjoy the usufruct of the subject property, and that upon Anecito's death, Juan shall
continue to support and provide financial assistance to Aquilino and Ducepino. The Agreement
further provided that breach of its terms shall render the Deed of Sale non-effective and
nugatory.
Aproniana applied for the issuance of letters of guardianship over Aquilino and Ducepino
docketed as Special Proceedings No. 237 before the RTC, Branch 5 of Mati, Davao Oriental.
Aproniana's petition was granted on June 6, 1996 upon filing a bond of P20,000.00. She took her
oath of guardianship on August 7, 1996.
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While the guardianship proceedings were pending, Juan executed a Deed of Voluntary Transfer
on February 23, 1996 conveying the subject property to his children. On September 3, 1996,
Aproniana instituted the instant Complaint against the spouses Juan and Corazon and in behalf of
siblings Aquilino and Ducepino seeking the nullification of the April 13, 1992 Deed of Sale and
Agreement, among other reliefs.
Aproniana assailed the validity of both documents for being fictitious and without consideration.
She claimed that it was incongruous for Anecito to sell the subject property for P15,000.00 when
it had a market value of at least P150,000.00 at the time of sale. Moreover, Juan allegedly could
not afford to pay the real value of the subject property as he had no known means of livelihood.
She claimed that the transaction was in reality a donation mortis causa, and since it was not
executed in accordance with the formalities of the law, it was null and void.
Aproniana also claimed that while Juan knew that Aquilino and Ducepino were mentally
incapacitated, the sale transpired without the two brothers being represented therein. Aproniana
further averred that Juan and Corazon took possession of the property and arrogated unto
themselves the full enjoyment thereof and its fruits to the detriment of Aquilino and Ducepino
who had not been properly taken care of until she took them under her custody in 1996. Despite
being the rightful heirs of the spouses Anecito and Clara, the incompetent siblings were deprived
of their rights as owners of the subject property.
ISSUES:
1. Whether or not the agreement between Anecito and Juan was a valid contract of sale
RULING:
YES, Anecito and Juan entered into a valid contract of sale
The Deed of Sale stated:
WHEREAS, [Anecito] is the owner in fee simple of a parcel of land, situated at
Cocornon, Lupon, Davao Oriental, covered by Transfer Certificate of Title No.
T-3353 of the Register of Deeds of Davao Oriental xxx containing an area of
EIGHTY THOUSAND AND THREE (80,003) SQUARE METERS xxx.
That for and in consideration of the sum of FIFTEEN THOUSAND (P15,000.00)
PESOS, receipt of which is hereby confessed and acknowledged to the
satisfaction of [Anecito], [Anecito] by these presents do hereby SELL,
TRANSFER and CONVEY, forever and irrevocable unto [Juan], his heirs and
assigns, the above-described property together with all the improvements found
and existing thereon, free from all liens and encumbrances and charges
whatsoever.
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The Deed of Sale contains all the three basic requisites of a contract of sale. All three elements
were established, since no issue was raised as to any vice tainting Anecito's and Juan's consent to
the transaction conveying ownership over the subject property. The price therefor, the third
element, was also stated as the consideration in the Deed of Sale. As earlier discussed, the gross
inadequacy of the purchase price did not invalidate the Deed of Sale and the Agreement.
2. Whether or not the agreement between Anecito and Juan was an absolute sale
NO, the contract of sale between Anecito and Juan is not an absolute sale
The Agreement that was appended to and executed simultaneously with the Deed of Sale was
worded in this manner:
That [Juan] is a VENDEE from [Anecito] of a certain parcel of land with improvements
consisting of fruit bearing coconuts situated at Cocomon, Lupon, Davao Oriental, which land is
covered by Transfer Certificate of Title No. T-3353 of the Register of Deeds of Davao Oriental,
with an area of 80,003 square meters, more or less;
That [Juan] and [Anecito] after the execution of the Deed of Sale involving the said parcel of
land agreed and stipulated among other things that during the lifetime of [Anecito] he shall still
enjoy in usufruct the fruits of the above-described property, and in case of his death [Juan]
likewise agree[d] to support and give financial assistance to the two children who are mentally
incapacitated;
That the parties to this Agreement likewise agree and stipulate that they will abide with the terms
and conditions therein set forth and that in case of breach thereof then the Deed of Sale shall be
rendered non-effective and nugatory
It was stipulated in the Agreement that Anecito shall enjoy the usufruct of the subject property,
and that upon Anecito's death, Juan shall support and give financial assistance to Aquilino and
Ducepino. These stipulations in the Agreement are resolutory as Anecito and Juan also agreed
that breach of the terms and conditions of the Agreement shall render the Deed of Sale
non-effective and nugatory.
3. Whether or not gross inadequacy of the price will nullify the contract between Anecito
and Juan
NO, Gross inadequacy of the price did not invalidate the subject contract.
The Deed of Sale states in plain terms that the subject property is being sold for P15,000.00.
Anecito had expressly acknowledged in the Deed of Sale his receipt of the said amount as
consideration of the contract. No further issue on the regularity of the notarization was raised on
appeal. To debunk the existence of consideration in the Deed of Sale, there must be more than
mere preponderant evidence showing that Anecito did not truly execute the disputed document
or that the parties had not truly intended a contract of sale.
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I.B.1. Contract to Sell
HOME GUARANTY CORPORATION vs. ELVIRA S. MANLAPAZ
G.R. No. 202820, January 13, 2021
By: VictoriaAytona
DOCTRINE:
The Court has defined a purchaser in good faith or innocent purchaser for value as one
who buys property and pays a full and fair price for it at the time of the purchase or before
any notice of some other person's claim on or interest in it.
A "contract to sell is textually defined as a 'bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon.' The obligation of the
prospective seller, which is in the nature of an obligation to do, is to sell the property to the
prospective buyer upon the happening of the positive suspensive condition, that is, the full
payment of the purchase price.
It is settled that "the seller's obligation to deliver the corresponding certificates of title is
simultaneous and reciprocal to the buyer's full payment of the purchase price.
FACTS:
On September 20, 1995, Vive Eagle Land, Inc. (VELI), Planters Development Bank (Bank), and
petitioner HGC entered into the VELI Asset Pool Formation and Trust Agreement (Asset Pool)
for the development of the lots in Eagle Crest Village (Village) in Baguio City which included
the property in dispute, a parcel of land with an area of 166 square meters located at Lot 2, Block
5, Phase III of the Village. Housing and Development Participation Certificates backed up
VELI's properties and were floated and sold to investors. HGC extended a P130 Million guaranty
on the Participation Certificates in the event the Asset Pool fails to service the interest due to the
investors or to redeem the said Certificates upon maturity.
Meanwhile, the Bank acted as trustee and held the titles to the lots covered by the Asset Pool.
Due to the delay in the project's development, the Asset Pool was declared in default.
Consequently, the investors, through the Bank, called on HGC's guaranty.
On August 19, 1998, after HGC's payment of the guaranty call in the amount of
P135,691,506.85, the Bank assigned and transferred the possession and ownership of the assets
of the Asset Pool to HGC through a Deed of Assignment and Conveyance.
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Notably, this included the contested land. Prior thereto, or on January 8, 1998, VELI entered into
a Contract to Sell with First La Paloma Properties, Inc. (FLPPI) involving the bulk of the
properties in the Village which included the property in question. On June 22, 1998, FLPPI,
through its President, Marcelino Yumol (Yumol), entered into a Contract to Sell with respondent
Manlapaz over the disputed property for P913,000.00.
Given that a substantial part of the properties which were assigned to HGC was apparently sold
by VELI to FLPPI, on October 8, 1998, VELI, FLPPI, and HGC entered into a Memorandum of
Agreement (superseding the Contract to Sell dated January 8, 1998, and other agreements
between FLPPI and VELI) in which FLPPI assumed to pay HGC the value of the properties in
the total amount of P153,029,200.00. Accordingly, HGC and FLPPI executed a Contract to Sell
dated October 15, 1998, over the real properties. When FLPPI failed to pay, HGC informed
FLPPI on November 15, 2000, in a letter addressed to Yumol that it was invoking its right to
cancel its contract. Meanwhile, after failing to secure the title to the disputed land, Manlapaz
filed a Complaint for delivery of title with prayer for damages with the Legal Services Group
(LSG) of the Housing and Land Use Regulatory Board (HLURB).
Manlapaz claimed that despite full payment and demands for delivery, FLPPI failed to execute
the final deed of sale and to deliver the title of the lot in her favor. She alleged that she was
deprived of her title and ownership to the contested property and prayed for the award of moral
and exemplary damages as well as attorney's fees. The Bank contended that Manlapaz has no
cause of action against it and that it was not privy to her contract with FLPPI. The property in
question, along with the properties of the Asset Pool, had already been the subject of the Deed of
Assignment and Conveyance between the Bank and HGC. Similarly, HGC averred that
Manlapaz has no cause of action against it because it is also an unpaid seller based on the
Contract to Sell it entered into with FLPPI. HGC argued that it was not privy to the Contract to
Sell dated June 22, 1998, which Manlapaz executed with FLPPI, and that the said contract
violated its (HGC's) Contract to Sell dated October 15, 1998, with FLPPI which prohibited the
disposition of the properties without full payment and the written consent of HGC. HGC argued
that it canceled the Contract to Sell with FLPPI due to the latter's breach thereof.
By way of cross-claim, HGC asserted that in the event that it would be required to pay
Manlapaz's claim or to deliver the title, FLPPI should reimburse it for the awarded amounts and
the value required to cover the issuance of title. In the same way, VELI asserted that Manlapaz
has no cause of action against it since it was not privy to the Contract to Sell between Manlapaz
and FLPPI, and that pursuant to the October 8, 1998 Memorandum of Agreement, VELI is no
longer involved in any subsequent transactions involving the lots, which included TCT No.
T-64208 or the lot in question.
Ruling of the Legal Services Group - Housing and Land Use Regulatory Board: In a Decision
dated July 26, 2004, the LSG-HLURB held that as the subdivision owner or developer, FLPPI
has the obligation to deliver the title to Manlapaz upon full payment pursuant to Section 25 of
Presidential Decree (PD) No. 957.
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Insofar as the Bank is concerned, the LSG-HLURB noted that pursuant to the Deed of
Assignment and Conveyance dated August 19, 1998, it already transferred the possession and
ownership of the properties of the Asset Pool, including the lot claimed by Manlapaz, to HGC.
The trusteeship agreement had been terminated and possession of the Transfer Certificate of Title
(TCT) for the contested lot was transferred to HGC.
Thus, Manlapaz has no cause of action against the Bank. Likewise, Manlapaz has no cause of
action against VELI as the latter was not privy to the contract between Manlapaz and FLPPI.
Before the execution of said contract, VELI had already finalized the Contract to Sell with
FLPPI. After Manlapaz transacted with FLPPI through a Contract to Sell, VELI, HGC, and
FLPPI then entered into a Memorandum of Agreement which caused the execution of another
Contract to Sell between FLPPI and HGC involving the same properties. However, the
LSG-HLURB found that Manlapaz has a cause of action against HGC. When HGC entered into
a Memorandum of Agreement with FLPPI and VELI, and the Contract to Sell with FLPPI, HGC
became aware of the Contract to Sell between VELI and FLPPI.
Thus, HGC's claim that the Contract to Sell between Manlapaz and FLPPI violated the Contract
to Sell between HGC and FLPPI has no merit since the contract between Manlapaz and FLPPI
was executed before the contract between HGC and FLPPI. The HLURB held that the intention
of PD No. 957 is to protect innocent lot buyers from scheming subdivision developers. Ergo,
HGC is liable to execute the deed of sale and to deliver the title to Manlapaz.
ISSUE:
Whether or not HGC should execute a deed of absolute sale and cause the transfer of the
certificate of title to the contested lot in favor of Manlapaz
RULING:
YES. Since Manlapaz already fully paid the purchase price, she is entitled to the issuance of
the deed of absolute sale and the transfer certificate of title in her favor, even if the
disputed property has already been transferred to HGC's name due to FLPPI's default in
the third contract.
By virtue of the Memorandum of Agreement and the third contract, HGC not only acquired the
rights to the assets, but also the obligations attached thereto. Since Manlapaz paid the full price,
FLPPI, as the seller when the second contract was executed, should issue the title in her favor.
However, given that the assets were already transferred to HGC, it is now HGC's obligation to
turn over the disputed property to Manlapaz and then issue the corresponding deed of absolute
sale and certificate of title in her name. As found by the CA, "[Manlapaz], who had fully paid the
purchase price of the property, should not be made to suffer the consequences of the default of
the Asset Pool, including the failure of [FLPPI] to comply with its obligation to [HGC] under
their contract to sell.
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Considering the foregoing observations, and given that Manlapaz had fully paid the purchase
price of the contested lot, the property should now be transferred in her name.
Indeed, "[o]ne of the purposes of P.D. No. 957 is to discourage and prevent unscrupulous
owners, developers, agents and sellers from reneging on their obligations and representations to
the detriment of innocent purchasers." Manlapaz should be treated fairly, as she fulfilled her end
of the bargain. As she claimed, she already erected a house in the contested lot and it would be
unwarranted to deprive her of the use of the said property in spite of full payment.
Nevertheless, HGC is not without recourse. In order to prevent unjust enrichment and to abide by
the intent of the Memorandum of Agreement and the third contract, FLPPI should turn over
Manlapaz's full payment to HGC, with legal interest in accordance with Nacar v. Gallery Frames.
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I.D. Double Sales
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES DOMINADOR AND
ESTEFANIA BASAS
G.R. No. 206847, June 15, 2022
By: lably
DOCTRINE:
In order for the foregoing provision on double sale to apply, the following circumstances
must concur:
1. two ( or more) sales transactions in the issue must pertain to exactly the same
subject matter, and must be valid sales transactions;
2. two ( or more) buyers at odds over the rightful ownership of the subject matter
must each represent conflicting interests; and
3. two ( or more) buyers at odds over the rightful ownership of the subject matter
must each have bought from the very same seller.
Thus, the rule on double sales "applies when the same thing is sold to multiple buyers by
one seller but not to sales of the same thing by multiple sellers
The Civil Code provides that in a contract of sale, the seller binds himself to transfer the
ownership of the thing sold, and thus consequently, he must have the right to convey
ownership of the thing at the time of its delivery. Settled is the rule that "no one can give
what one does not have; nemo dat quad non habet. One can sell only what he owns or is
authorized to sell, and the buyer can acquire no more right than what the seller can
transfer legally.
Mere registration of a sale in one's favor does not give him [or her] any right over the land
if the vendor was no longer the owner of the land, having previously sold the same to
another even if the earlier sale was unrecorded. Neither could [the registration] validate the
purchase thereof by [the second buyer], which is null and void. Registration does not vest
title; it is merely the evidence of such title. Our land registration laws do not give the
holder any better title than what he [ or she] actually has.
FACTS:
The late Zenaida B. Gonzales (Zenaida) purchased from respondents spouses Dominador and
Estefania Basas ( collectively, spouses Basas ), a parcel of land including the house thereon,
situated at No. 427 Espinola St., Block 6, Magsaysay Village, Tondo, Manila, with an area of
152.98 square meters and covered by Transfer Certificate of Title No. (TCT) 1878986 (subject
property). An annotation in the title indicates that the consent of the National Housing Authority
(NHA) is necessary for the disposal of the same.
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Zenaida and the spouses Basas executed the following documents to reflect their mutual
agreement on the sale and purchase of the subject property:
I. Contract to Sell dated May 10, 1996 (Contract to Sell) which reflects the total price of the
subject property at P800,000.00
II. Deed of Absolute Sale (DOAS) dated May 13, 1996 which indicates the consideration of the
subject property at P300,000.00.
III. Agreement to Purchase and to Sell allegedly dated August 14, 1996 (Agreement), which
states that the total price of the subject property is at Pl,050,000.00.
However, petitioners claimed that the Agreement was undated and unnotarized when Zenaida
signed it, and the date "August 14, 1996" was stamped therein without her consent. According to
petitioners, once the foregoing documents were executed, the spouses Basas requested Zenaida
to allow them to stay in the subject property until such time that they can transfer to another
place. Petitioners further alleged that the spouses Basas promised to procure the written consent
of the NHA for the sale of the subject property. In the meantime, pursuant to their mutual
agreement on the sale and purchase of the same, Zenaida paid the Basas couple an aggregate
amount of more than P800,000.00. as evidenced by receipts. Once the spouses Basas received
the said amount they promised to deliver the title of the subject property to Zenaida as soon as
they secured the NHA's consent. Meanwhile, the spouses Basas borrowed the certificate of title
of the property which at that time was already in the possession of Zenaida after she paid them
the amount of P650,000.00, so they can work on the cancellation of the mortgage on the subject
property. Petitioners point out that Zenaida has not paid the balance of the selling price because
the spouses Basas have not yet obtained NHA's written consent to the sale.
On January 4, 1997, Zenaida sent a written demand to the spouses Basas to: (1) Vacate the
property, (2) return the title so she can transfer the title to her name, (3) Give the written consent
of NHA with regards to the property. Despite Zenaida's verbal and written demands for the
spouses Basas to comply with their foregoing obligation, the latter failed to do so. In view of
this, Zenaida brought the matter to the barangay, but the parties failed to settle.
Eventually, Zenaida discovered that the spouses Basas subsequently sold the subject property to
respondent Romeo Munda (Munda) who immediately occupied the property. As a result, Zenaida
caused the annotation of her affidavit of adverse claim on the title of the subject property on
October 29, 1997.
When Zenaida learned of the second sale by the Spouses Basas to Munda, she and her son,
Andres Rico Gonzales, went to the subject property and found out that the same was already
being occupied by Munda. While thereat, they were informed by Munda's wife that she and her
husband already purchased the property, and she further told Zenaida that the latter's contract
was only a contract to sell while their contract was an absolute deed of sale.
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In view of the foregoing, Zenaida filed a complaint on May 25, 1998 for nullity of sale, specific
performance, and damages against respondents. Zenaida died on April 30, 2012, and was
eventually substituted by her heirs, petitioners herein.
On the other hand, the spouses Basas argued that Zenaida did not purchase the subject property.
They pointed out that the August 14, 1996 Agreement superseded the two previously signed
documents. They asserted that there was a novation of the contracts, and the latter document
reflected the final and true intentions of the parties. The spouses Basas further posited that it was
the agreement of the parties that until the balance of the purchase price as reflected in the
Agreement is fully paid, they will continue to occupy the subject property. They did not deem it
necessary to inform Munda of the existence of the Agreement because there was no
consummated sale between them and Zenaida.
Meanwhile, Munda argued that he purchased the subject property in good faith and for value. At
the time he bought the subject property on August 25, 1997, its title was clean and there was no
encumbrance or adverse claim annotated on it. The adverse claim of Zenaida was filed and dated
only on October 29, 1997. Aside from the notarized August 25, 1997 Deed of Absolute Sale that
he and the spouses Basas executed, they also issued an unnotarized and undated Deed of
Absolute Sale, which reflected the true agreed selling price of the subject property in the amount
of Pl,400,000.00. The subject property was eventually registered under his name on March 2,
1998 under TCT 237326.
The RTC ruled in favor of the Heirs of Zenaida Gonzales. Aggrieved with the RTC's ruling,
respondents filed an appeal with the CA. However, in its November 5, 2012 Decision, the CA
reversed the findings of the RTC and found Munda as a buyer in good faith and for value.
ISSUE:
Whether or not there was a double sale
RULING:
NO, there was no double sale.
In the instant case, the spouses Basas sold the subject property to Zenaida in 1996, and sold the
same as well to Munda on August 25, 1997. However, the foregoing requisites of a double sale
are absent because the sale of the subject property by the Basas to Munda was not a valid sale
transaction since by that time, the spouses Basas were no longer the owners of the property, and
thus, they had no right to transfer the same.
In the case at bar, since ownership of the subject property had already been transferred by the
spouses Basas to Zenaida, then no right could be transmitted on to Munda on the second sale.
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I.F.2. Maceda Law (RA 6552)
PRYCE PROPERTIES CORP. (NOW PRYCE CORPORATION) vs. NARCISO R.
NOLASCO, JR.
G.R. No. 203990, April 28, 2021
By: Roch
DOCTRINE:
Section 4 of RA 6552 requires four (4) conditions before the seller may actually cancel the
contract thereunder:
1. the defaulting buyer has paid less than two (2) years of installments;
2. the seller must give such defaulting buyer a sixty (60)-day grace period, reckoned
from the date the installment became due;
3. if the buyer fails to pay the installments due at the expiration of the said grace
period, the seller must give the buyer a notice of cancellation and/or a demand for
rescission by notarial act; and
4. the seller may actually cancel the contract only after the lapse of thirty (30) days
from the buyer's receipt of the said notice of cancellation and/or demand for
rescission by notarial act.
It has been held that in the absence of a lawful rescission of a contract governed by RA
6552, the same remains valid and subsisting.
We point out that a defaulting buyer of real property on installments, whether or not she or
he has paid two (2) years of installments, has three (3) common legal remedies in the
absence of a valid rescission, granted by Section 6 of RA 6552 and jurisprudence:
1. Pay in advance any installment at any time, necessarily without interest;
2. Pay the full unpaid balance of the purchase price at any time without interest, and
to have such full payment of the purchase price annotated in the certificate of title
covering the real property subject of the transaction under RA 9552; or
3. Claim an equitable refund of prior payments and/or deposits made by the defaulting
buyer to the seller pertinent to their transaction under RA 9552, if any.
A defaulting buyer enjoys other rights in addition to the foregoing, depending on the status
of her or his payments and of the contract:
1. Under Section 3 of RA 6552, a defaulting buyer that has paid at least two years of
installments has the following options:
a. To pay, without additional interest, the unpaid installments due within the
total grace period earned by him, which is hereby fixed at the rate of one
month grace period for every one year of installment payments made:
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Provided, That this right shall be exercised by the buyer only once in every
five years of the life of the contract and its extensions, if any.
b. If the contract is cancelled, the seller shall refund to the buyer the cash
surrender value of the payments on the property equivalent to fifty per cent
of the total payments made and, after five years of installments, an additional
five per cent every year but not to exceed ninety per cent of the total
payments made: Provided, That the actual cancellation of the contract shall
take place after 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 full payment of the cash surrender value to the buyer.33
2. Under Section 4 of RA 6552, a defaulting buyer that has paid less than two years of
installments is entitled to the following:
a. The seller shall give the buyer a sixty-day grace period of not less than sixty
(60) days to be reckoned from the date the installment became due;
b. The seller must give the buyer a notice of cancellation/demand for rescission
by notarial act if the buyer fails to pay the installments due at the expiration
of the said grace period; and
c. The seller may actually cancel the contract only after thirty (30) days from
the buyer's receipt of the said notice of cancellation/demand for rescission by
notarial act
FACTS:
A complaint for recovery of a sum of money was filed by Narciso Nolasco, Jr. (Nolasco) on
January 22, 1999 against Pryce Corporation (Pryce). Nolasco alleged that in 1995, he purchased
three lots located in Cagayan de Oro City from Pryce and deposited a total amount of
P393,435.00 through check payments in favor of Pryce. The latter did not deliver to Nolasco the
copies of the lots' certificates of title and their sales agreement. He was surprised, frustrated, and
dismayed when he finally received the sales agreement, as it contained unacceptable conditions
to which he conveyed his objections to Pryce. According to Nolasco, since he had not yet signed
the sales agreement, there was still no meeting of the minds between him and Pryce and that
despite demands for refund of his deposit payments, Pryce failed to comply.
Important dates to remember:
Letter informing Nolasco of the 60-day grace period
December 5, 1998
Nolasco's Complaint for recovery of a sum of money January 22, 1999
Lapse of the 60-day grace period
February 5, 1999
Pryce's Answer with Counterclaims
June 11, 1999
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The RTC ruled in favor of Nolasco. The CA affirmed the RTC in part. The CA found that the
contract entered into by Pryce and Nolasco was a contract to sell. The CA nonetheless upheld
Nolasco's entitlement to a refund, as Pryce did not exercise the remedy of cancellation under RA
6552 and under equity considerations. Hence, Pryce filed this petition for Review on Certiorari
under Rule 45.
Petitioner Pryce maintains that respondent Nolasco impliedly agreed to the unsigned Contract to
Sell and harks on the applicability of RA 6552 or the Maceda Law. It posits that Nolasco is not
entitled to a refund of his installment payments because there was a valid rescission of the
Contract to Sell when Pryce sent Nolasco its December 5, 1998 letter and raised the affirmative
defense to deny Nolasco's claim for refund in its Answer with Counterclaims to the Complaint
before the RTC. Pryce thus maintains that Nolasco has forfeited his deposit payments in favor of
Pryce.
Respondent Nolasco alleges that petitioner Pryce raised questions of fact, failed to interpose any
question of law, and did not claim any of the exceptions favoring a generally-prohibited factual
review under Rule 45. While admitting that he entered into a contract to sell with Pryce, Nolasco
asserts that the CA correctly found that he did not sign a written Contract to Sell and that he is
entitled to a refund of the down payments he made to Pryce.
ISSUE:
Whether or not the contract between Pryce and Nolasco was rescinded in accordance with RA
6552.
RULING:
NO, the contract between Pryce and Nolasco was not rescinded in accordance with RA
6552.
In claiming that it had validly rescinded its contract to sell with Nolasco, Pryce relies on two
documents: a written Contract to Sell, which sets out an automatic cancellation provision in
case of default and which Pryce alleges that Nolasco impliedly agreed to, and its denial of the
refund as asserted in its Answer with Counterclaims against Nolasco's Complaint before the
RTC. Both documents, however, fail Pryce.
The written Contract to Sell is ineffectual. There is no dispute as to whether the parties herein
have forged and perfected an unwritten contract to sell. The CA correctly decided this question
in the affirmative. Contracts are created upon agreement between consenting parties and
generally do not require it to be reduced into writing to validate its existence. Nonetheless, Pryce
must be enlightened that the written Contract to Sell did not and does not bind Nolasco for the
following reasons.
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First, the highlighted conditions in the Contract to Sell conflict with RA 6552, which dictates
"receipt" and not "service" of the notice of rescission to the buyer as the reckoning point of the
thirty (30)-day period before actual cancellation. Pryce's Contract to Sell even dispensed with
this legal requirement of receipt by deeming mere service by registered mail as sufficient proof
of service and constructive receipt. For being contrary to Section 4 of RA 6552, these
stipulations are rendered null and void, and the general provisions governing a contract to sell
under RA 6552 shall govern.
Moreover, it was not signed by Nolasco. Even if so signed, the Contract to Sell was not worded
to effect its automatic cancellation upon Nolasco's default. While the word automatic
cancellation implies unconditionality, the body of the above contractual stipulation betrays its
title.
There was compliance with the first and second requisites when Pryce sent Nolasco, a defaulting
buyer whose payments did not amount to two years' worth of installments, its December 5, 1998
letter giving him sixty (60) days to make good on his obligation. Pryce, however, did not meet
the last two conditions. As properly determined by the CA, there was no notice of notarial
rescission served upon Nolasco. Necessarily, thirty (30) days could not have lapsed from a
non-existent service of such notice.
Pryce's Answer with Counterclaims cannot be deemed as a notarial rescission under RA
6552. A notarial rescission contemplated under RA 6552 is a unilateral cancellation by a seller
of a perfected contract thereunder acknowledged by a notary public and accompanied by
competent evidence of identity. This notarial notice of rescission has peculiar technical
requirements. The SC finds that Pryce violated all of them.
Related to Practical Exercises/Notarial Rules: Jurat v. Acknowledgement and CTC as
incompetent evidence of identity
Orbe v. Filinvest Land, Inc. (Orbe), an analogous case hereto, declared that the notarial act
converting the private notice of cancellation into a public one must be an acknowledgment. "An
acknowledgment is the act of one who has executed a deed in going before some competent
officer or court and declaring it to be his/her act or deed. This is specially so if the rescinding
seller is a juridical person acting through its officers, since acknowledgments, as defined under
Section 1, Rule II of A.M. No. 02-8-13-SC or the 2004 Rules on Notarial Practice, particularly
cover and validate such representative capacity.
Pryce's Answer with Counterclaims, however, was notarized through a jurat. A jurat is that part
of an affidavit in which the notary certifies that before him or her, the document was subscribed
and sworn to by the executor.
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Rescission is an act or a deed, directly or impliedly done, where a contract is cancelled, annulled,
or abrogated by the parties, one of them, or by the court. An act or a deed of rescission is distinct
and separate from an allegation of rescission, an allegation being an assertion, declaration, or
statement of a party to an action, contained generally in an affidavit or a legal pleading, setting
out what is yet to be proven. Under notarial rules, acknowledgments cover written deeds and
acts, whereas jurats confirm affidavits and pleadings.
The foregoing thus defined, a deed of rescission notarized via acknowledgment is already a piece
of evidence all on its own. On the other hand, an allegation of rescission contained in an affidavit
or a pleading and confirmed by a notarial jurat still remains to be proved; it merely implies that
the signatory thereof sets out to prove the fact of the rescission before a notary public.
Here, Pryce only alleged the fact of rescission in its Answer with Counterclaims without further
evidence that would adequately determine its truth. It is not the independent notarial rescission
contemplated by RA 6552.
Another fault is readily apparent from the immediately foregoing - the affiant for Pryce's Answer
with Counterclaims presented a Community Tax Certificate as his competent evidence of
identity. Orbe condemned cedulas as impermissible proof of identity for its established
unreliability and the considerable ease in securing its issuance, thereby justifying their eventual
exclusion from the list of competent evidence of identity that notaries public should use in
ascertaining the identity of persons appearing before them.
Having secured a mere jurat to notarize the supposed "notice of rescission" as embodied in its
Answer with Counterclaims and verifying the same upon an incompetent proof of identity, Pryce
executed a fatally infirm notarial rescission.
INTEGRATED CREDIT AND CORPORATE SERVICES vs. ROLANDO CABRERA
G.R. No. 203420, February 15, 2021
By: 9756214576
DOCTRINE:
Section 4 of RA 6552 provides remedies for the defaulting buyer who has paid less than two
years of installments in a purchase of real property
Section 4 of RA 6552 requires four (4) conditions before the seller may actually cancel the
contract thereunder:
1. the defaulting buyer has paid less than two (2) years of installments;
2. the seller must give such defaulting buyer a sixty (60)-day grace period, reckoned
from the date the installment became due;
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3. if the buyer fails to pay the installments due at the expiration of the said grace
period, the seller must give the buyer a notice of cancellation and/or a demand for
rescission by notarial act; and
4. the seller may actually cancel the contract only after the lapse of thirty (30) days
from the buyer's receipt of the said notice of cancellation and/or demand for
rescission by notarial act.
The notarial rescission contemplated in the law "is a unilateral cancellation by a seller of a
perfected contract thereunder acknowledged by a notary public and accompanied by
competent evidence of identity.
In Orbe v. Filivents Land, Inc. a refund of the partial payments to the defaulting buyer was
allowed as the property has already been sold to a third party while there was no valid
rescission of the contract.
FACTS:
Cabreza was the registered owner of a house and lot covered by TCT No. 149759/T-752 (subject
property). In 1990, Cabreza applied a credit line with Citibank and secured by a REM over the
subject property. Public auction, however, was deferred as they agreed on restructuring Cabreza's
liability to Citibank. Cabreza again defaulted under the restructured loan, thus, public auction
was finally conducted and ICCS emerged as the highest bidder.
On June 9, 1994, or two days prior to the expiration of the redemption period, Cabreza sent ICCS
a letter offering the redemption of the subject property by paying the redemption price of PIO
million to be paid in installments. Subsequently, the parties entered into a Memorandum of
Agreement (MOA). Notably though, the MOA provided in evidence was not dated. Pursuant to
the MOA, Rosalinda issued several checks. The first three checks were deposited, cleared, and
credited to the bank account of ICCS. The fourth check, however, was dishonored due to
insufficient funds. Hence, on October 6, 1994, ICCS sent Cabreza and the spouses Aguilar a
letter demanding payment of the amount of the fourth check. Despite the non-payment,
Rosalinda still issued the fifth check in favor of ICCS. The fifth check was surprisingly cleared
and credited to the bank account of ICCS.
ICCS informed Cabreza and the spouses Aguilar that it had already consolidated its title to the
subject property, thereby requiring them to vacate the premises. ICCS then sold the subject
property to the spouses Gan as evidenced by a Deed of Sale dated February 1, 1995 (Deed of
Sale), for which the latter were issued TCT No. 199445. The foregoing prompted Cabreza and
the spouses Aguilar to file the instant Complaint against ICCS, spouses Gan, and Citibank.
RTC ordered the annulment of the Deed of Sale between ICCS and the spouses Gan, as well as
the corresponding title issued thereof. It also ordered ICCS to reimburse the purchase price the
spouses Gan paid. Further, the RTC ordered Cabreza and the spouses Aguilar were ordered to
pay ICCS the remaining balance under the MOA, after which a deed of absolute sale will be
executed in their favor.
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The CA affirmed with modifications the RTC Decision. The appellate court agreed that the MOA
is in fact a contract of sale of real property on installments, making Republic Act No. 6552,
otherwise known as the Realty Installment Buyer Protection Act or the Maceda Law (Maceda
Law), applicable.
ISSUES:
1. Whether or not the CA is correct in ruling that MACEDA LAW is applicable
RULING:
YES, the Court of Appeals is correct in applying the MACEDA LAW as the MOA is a
contract of sale of real property in installment.
2. Whether or not there was a valid rescission of the MOA
NO, there is no valid rescission of the MOA as the requisites of the MACEDA LAW were
not complied with.
This Court agrees that the MOA was not validly rescinded but not on the same ground as held by
the appellate court. We find that there was no valid rescission because the requirements of the
Maceda Law were not complied with. The letter dated December 23, 1994 informing Cabreza
and the spouses Aguilar that the ICCS is already "consolidating title to the subject property,"
should have effectively canceled the MOA; the said letter, however, did not comply with the
Maceda Law which requires that the seller must give a notice or a demand for rescission by
notarial act. In the instant case, the letter is not notarized. It is not accompanied by an
acknowledgment or even a jurat. It is a simple letter addressed to Cabreza and the spouses
Aguilar, and signed by the managing partner of ICCS. Further, the Maceda Law provides that
actual cancellation can only be effected after 30 days from buyer's receipt of the notarial
rescission. In this case, there is no showing that this requirement was observed by ICCS as it
intended that the letter dated December 23, 1994 to be the termination of the MOA.
3. Whether or not the Court resolved the dispute in an equitable manner
YES, the Court resolved the dispute in an equitable manner by applying Orbe v. Filinvest
Land, Inc.
Applying this to the instant case, the Court reverses the CA's ruling with regard to the Deed of
Sale between ICCS and the spouses Gan: it remains valid. The spouses Gan, therefore remains to
be the valid owners of the subject property pursuant to the Deed of Sale. There is no need for the
cancellation of the transfer certificate of title under their names and the issuance thereof under
ICCS' name. It follows therefore that as the subject property is no longer available after being
sold to the spouses Gan, ICCS should, applying the resolution in Orbe, return the payments made
by Cabreza and the spouses Aguilar under the MOA subject to legal interest at the rate of twelve
percent (12%) per annum from filing of the Complaint until June 30, 2013, and the rate of six
percent (6%) per annum from July 1, 2013 until full payment.
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I.G.2. Legal Redemption
INTEGRATED CREDIT AND CORPORATE SERVICES vs. ROLANDO CABRERA
G.R. No. 203420, February 15, 2021
By: 9756214576
DOCTRINE:
As the Court noted in GE Money Bank, Inc. v. Spouses Dizon, for there to be a valid
extension of the redemption period, two requisites must be established:
1. voluntary agreement of the parties to extend the redemption period; and
2. the debtor's commitment to pay the redemption price on a fixed date.
The purchaser of a foreclosed property in a public auction becomes the absolute owner of
the property upon expiration of the redemption period without a valid redemption
exercised by the mortgagor.
FACTS:
Cabreza was the registered owner of a house and lot covered by TCT No. 149759/T-752 (subject
property). In 1990, Cabreza applied a credit line with Citibank and secured by a REM over the
subject property. Public auction, however, was deferred as they agreed on restructuring Cabreza's
liability to Citibank. Cabreza again defaulted under the restructured loan, thus, public auction
was finally conducted and ICCS emerged as the highest bidder
On June 9, 1994, or two days prior to the expiration of the redemption period, Cabreza sent ICCS
a letter offering the redemption of the subject property by paying the redemption price of PIO
million to be paid in installments. Subsequently, the parties entered into a Memorandum of
Agreement (MOA). Notably though, the MOA provided in evidence was not dated. Pursuant to
the MOA, Rosalinda issued several checks. The first three checks were deposited, cleared, and
credited to the bank account of ICCS. The fourth check, however, was dishonored due to
insufficient funds. Hence, on October 6, 1994, ICCS sent Cabreza and the spouses Aguilar a
letter demanding payment of the amount of the fourth check. Despite the non-payment,
Rosalinda still issued the fifth check in favor of ICCS. The fifth check was surprisingly cleared
and credited to the bank account of ICCS.
ICCS informed Cabreza and the spouses Aguilar that it had already consolidated its title to the
subject property, thereby requiring them to vacate the premises. ICCS then sold the subject
property to the spouses Gan as evidenced by a Deed of Sale dated February 1, 1995 (Deed of
Sale), for which the latter were issued TCT No. 199445. The foregoing prompted Cabreza and
the spouses Aguilar to file the instant Complaint against ICCS, spouses Gan, and Citibank.
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RTC ordered the annulment of the Deed of Sale between ICCS and the spouses Gan, as well as
the corresponding title issued thereof. It also ordered ICCS to reimburse the purchase price the
spouses Gan paid. Further, the RTC ordered Cabreza and the spouses Aguilar were ordered to
pay ICCS the remaining balance under the MOA, after which a deed of absolute sale will be
executed in their favor.
The CA affirmed with modifications the RTC Decision. The appellate court agreed that the MOA
is in fact a contract of sale of real property on installments, making Republic Act No. 6552,
otherwise known as the Realty Installment Buyer Protection Act or the Maceda Law (Maceda
Law), applicable.
ISSUE:
Whether or not the redemption period was validly extended
RULING:
NO, the redemption period was not validly extended
The first requisite is not met in the instant case. A valid extension must be made before the
expiration of the redemption period. Though there is a meeting of the minds in the MOA, the
Court is not convinced as to when the redemption period was voluntarily extended by the parties.
The MOA itself provides that the redemption period has already expired without a valid
redemption having been effected by Cabreza, and that ICCS is entitled to immediately
consolidate ownership over the subject property. It also provides that what was deferred was the
consolidation of title, not the postponement and extension of the redemption period. As correctly
found by the RTC, the redemption period has already lapsed and ICCS became the absolute
owner of the subject property.
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I.H. Equitable Mortgage
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO AND
FLORA DACQUEL SOTELO
G.R. No. 203946, August 4, 2021
By: bsibsi
DOCTRINE:
Decisive for the proper determination of the true nature of the transaction between the
parties is their intent, shown not merely by the contract's terminology but by the totality of
the surrounding circumstances, such as the relative situations of the parties at that time;
the attitudes, acts, conduct, and declarations of the parties; the negotiations between them
leading to the deed; and generally, all pertinent facts having a tendency to fix and
determine the real nature of their design and understanding. When in doubt, courts are
generally inclined to construe a transaction purporting to be a sale as an equitable
mortgage, which involves a lesser transmission of rights and interests over the property in
controversy.
The mortgagee's consolidation of ownership over the mortgaged property upon the
mortgagor's mere failure to pay the obligation is the essence of pactum commissorium. The
mortgagor's default does not operate to automatically vest on the mortgagee the ownership
of the encumbered property. This Court has repeatedly declared such arrangements as
contrary to morals and public policy and thus void. If a mortgagee in equity desires to
obtain title to a mortgaged property, the mortgagee's proper remedy is to cause the
foreclosure of the mortgage in equity and buy it at a foreclosure sale.
FACTS:
In 1994, Ernesto and Flora Sotelo began the construction of a 7-door apartment. Due to budget
constraints, the Spouses Sotelo had to borrow ₱140,000.00 from Arturo Dacquel, Flora’s brother.
The construction of the apartment was completed in 1997.
Spouses Sotelo claimed that the debt of ₱140,000.00 was agreed to be payable in double the said
amount, or ₱280,000.00, to be collected from the rental income of four out of the seven
apartment units. There was no agreed period within which to pay the loan and the interests.
Dacquel also required the Spouses Sotelo to cede to him the subject property as security from the
loan.
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On September 1, 1994, the parties executed a Deed of Sale. TCT No. 738 was thereafter
cancelled and TCT No. M-10649 was issued under Dacquel’s name. In March 2000, when
Dacquel had collected the full amount of ₱280,000.00 in rental income from the four apartment
units, the Spouses Sotelo asked for the return of the subject property, however, Dacquel allegedly
held on to the title and refused to yield the same.
On May 9, 2000, the Spouses Sotelo filed a complaint for annulment of title and reconveyance
against Dacquel before the RTC. They alleged that Dacquel held the title to the subject property
only as security for the loan and in trust for the Spouses Sotelo, who remained the beneficial
owners thereof. The building permits for the7-door apartment, as well as the original registration
of the electric and water meters of all seven units, were issued in Ernesto Sotelo's (Ernesto) name
and that the construction expenses were paid for by Ernesto's checks.
Dacquel asserted that the Spouses Sotelo’s debts to him totaled ₱1,000,000.00 which he had
recorded. As payment for their debts, the Spouses offered to sell to him the property and he had
accepted their offer. They reduced their agreement into writing as a Deed of Sale on September
1, 1994 for the true consideration of ₱1,000,000.00, and the amount of ₱140,000.00 was
indicated in the Deed only for purposes of reducing the tax liabilities for the transaction.
Dacquel claimed that the Spouses Sotelo are estopped from questioning the validity of the Deed
of Sale because of their acquiescence to the subject property’s transfer unto Dacquel’s name.
The RTC ruled in favor of Dacquel.
The CA reversed the RTC and decided in favor of the Spouses Sotelo. Applying the provisions
of Article 1602 and 1604 of the Civil Code, the CA declared the Deed to be one of equitable
mortgage. It found two badges of fraud: gross inadequacy of the price and the continued
possession by the Spouses Sotelo of the subject property.
The CA likewise found the Spouses to have continued their actual possession over the subject
property, taking into consideration their supervision of the apartment’s construction, their
execution of lease contracts over the units, and Dacquel’s failure to prove that he had instructed
the Spouses to act in his stead. Having remained a mortgagee in the transaction, the issuance of a
TCT in favor of Dacquel did not vest upon him ownership of the property and does not preclude
its cancellation.
ISSUES:
1. Whether or not the September 1, 1994 Deed of Sale between the petitioner and
respondents-spouses constituted an equitable mortgage.
RULING:
YES, the transaction between petitioner and respondents-spouses is an equitable mortgage.
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Here, the CA aptly found two badges of fraud against petitioner – gross inadequacy of price in
the Deed and continued possession of the subject property by respondents-spouses as debtors of
petitioner.
First, there was gross inadequacy in the purchase price. The Deed of Absolute Sale shows that
the consideration for the subject property was only Php140,000.00. While no evidence definitely
establishes this as the market value of the property for 1994, both parties agree that the proper
consideration for the same should be in the amount of at least Php 1 Million:
[respondents-spouses] averred that the price per square meter of the 350 square meter was
PhpS,000.00, while [petitioner] stressed that the property was transferred to him in satisfaction of
[respondents-spouses] debts to him amounting to more that Php 1 Million. It is also noteworthy
that the property was mortgaged for the amount of PhpS00,000.00, which [petitioner] did not
contest, and for which an annotation has been made on [respondents-spouses'] title. Furthermore,
We observed that the stated Php140,000.00 included the improvements already constructed at the
time. Thus, in light of these, that only Php 140,000.00 was the agreed upon consideration for the
subject property strikes Us as suspect and grossly inadequate.
Second, the [respondents-spouses}, as vendors of the subject property, remained in possession
of the same. Since the Deed was signed in 1994, [respondents-spouses] possessed the property
by actual possession thereof, as when they had supervised the construction of the apartment,
and subsequently, as lessors, when they entered into lease contracts with tenants and received
payment [therefor].
x x x [Petitioner] averred that he had authorized [Ernesto] to supervise the construction and the
management of the apartment. Again, however, [petitioner] presented no proof of such
authorization, or details as to the date, time, and place when he made such authorization, which
he should have recalled x x x as this was a matter of utmost importance. [Petitioner] never even
demanded an accounting of the expenses for the construction. x x x We note that the building
and electricity permits for the property were in [Ernesto's] name, and that when the apartment
was finished, [Ernesto] first managed the same. The inevitable conclusion that emerges is that
[Ernesto] independently carried out his plan to build and finish the apartment, with [petitioner]
only as a creditor who lent him some funds for the projects.
In addition, [respondents-spouses] have proved, and [petitioner] even confirmed, that when the
apartment was constructed, [respondents-spouses] collected payment, and only from three doors,
which is in accord with the arrangement between the parties. It is a glaring inconsistency that
[petitioner) vehemently alleges ownership of the subject property and the apartment and yet
allowed [respondents-spouses] for years to collect from three doors of the apartment, and even
enter into lease contracts with tenants. Such details only persuade Us that it was [petitioner's
right to collect which has been authorized by [respondents-spouses], and which has now been
extinguished, with the debt of Php280,000.00 (Phpl40,000.00 with 100% interest) having been
completely paid
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2. Whether or not the petitioner committed the prohibited act of pactum commissorium
YES, petitioner committed the prohibited act of pactum commissorium
As the transaction between the parties herein was demonstrated to be one of equitable mortgage,
petitioner did not become owner of the subject property but a mere mortgagee thereof. As such,
petitioner was bound by the prohibition against pactum commissorium as embodied in Article
2088 of the Civil Code.
Having proceeded to cause the cancellation of respondents-spouses title to the mortgaged
property and its transfer to his name without availing of the remedy of foreclosure, petitioner can
be concluded to have dabbled in the prohibited practice of pactum commissorium. The
transaction is consequently rendered void, and title to the subject property should be reverted to
respondents-spouses.
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III. Agency
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT HOTEL, INC.
G.R. No. 233678, July 27, 2022
By: shaaariiing
DOCTRINE:
In a contract of agency, "a person binds himself to render some service or to do something
in representation or on behalf of another, with the consent or authority of the latter
A contract of agency is generally revocable because it is a personal contract of
representation based on trust and confidence reposed by the principal on his agent. As the
power of the agent to act depends on the will and license of the principal he or she
represents, the power of the agent ceases when the will or permission is withdrawn by the
principal. Thus, generally, the agency may be revoked by the principal at will.
However, an exception to the revocability of a contract of agency is when it is coupled with
interest, e.g., if a bilateral contract depends upon the agency, or if it is the means of
fulfilling an obligation already contracted. The reason for its irrevocability is because the
agency becomes part of another obligation or agreement. It is not solely the rights of the
principal, but also that of the agent and third persons, which are affected. Hence, the law
provides that in such cases, the agency cannot be revoked at the sole will of the principal
FACTS:
Luisito B. Padilla, in his personal capacity and in behalf of Robustiniano Quinto, Jr. and
respondent Puerto Galera Resort Hotel, Inc. (PGRHI) filed a Complaint for actual, moral, and
exemplary damages with prayer for attorney's fees and cost of suit against Cecilia Locsin, for
allegedly looting and gutting the fixtures, appliances and other movables found in a hotel
complex owned by Quinto. In 1993, Padilla entered into a lease contract with Quinto, registered
owner of PGRHI, over the hotel complex for a term of 10 years. In 2004, Padilla and Quinto
executed a Memorandum of Agreement (MOA) wherein they undertook to look for prospective
tenants or lessees of the hotel complex together with all its improvements; to jointly share in the
earnings to be derived from the rentals thereof, and to individually or collectively defend,
protect, or enforce their rights, title and/or interests in the said property.
In May 2006, Padilla and Quinto agreed to lease the hotel complex to Locsin pursuant to the
MOA, for a period of 10 years beginning June 1, 2006, with a guaranteed monthly rental of
P90,000.00. Cecilia paid a security deposit of P500,000.00, and immediately took possession of
the hotel complex. All keys to the hotel complex were turned over to her. Cecilia paid monthly
rentals thereafter. After one year, Quinto visited the hotel complex and to his utter shock, he
discovered that the premises was totally damaged.
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All the facilities, equipment, fixtures and improvements existing prior to turnover were either
removed or damaged. The place was a total mess and in a state of ruin. Quinto immediately
informed Padilla about the damage. Padilla arrived the next day and reported the incident to the
police. According to Padilla, the estimated cost of the damages and losses amounted to
P12,500,000.00.
Cecilia countered that there was no perfected contract of lease to begin with, thus, complainants
had no cause of action against her. Cecilia claimed that the execution of the lease contract was
conditioned upon Quinto's timely presentation of the original title covering the hotel complex
and since Quinto failed in this aspect, the contract was not finalized. She claims that the letter
she sent to Quinto merely signified her family's interest to lease the hotel complex but it never
ripened into a contact.
During the trial, Quinto was supposed to be Padilla's fifth witness. However, Quinto asked for
postponement on two occasions. On the third re-setting, Quinto manifested that he would move
for the dismissal of the case against Cecilia alleging that he did not fully understand the contents
of the SPA he accomplished in favor of Padilla to pursue the instant case as well as his Judicial
Affidavit consisting of his direct testimony. In support of his Manifestation with Motion to
Dismiss, Quinto executed a Revocation of the SPA and an Affidavit stating that he never
intended to authorize Padilla to file a case against Cecilia in his behalf.
On the basis of Quinto's revocation of the August 28, 2007 SPA, the trial court granted Quinto's
Motion to Dismiss in an Order 22 dated March 4, 2013. The complainants moved for
reconsideration but it was Denied. Aggrieved, Padilla and PGRHI appealed before the CA.
Meanwhile, Cecilia passed away. She was substituted by Leandro Locsin. The CA granted the
appeal, thereby reversing and setting aside the RTC Orders. Hence, this Petition for Review on
Certiorari.
ISSUE:
Whether or not the SPA or the contract of agency between Padilla and Quinto had been
effectively revoked by Quinto.
RULING:
NO, the SPA or the contract of agency between Padilla and Quinto had been effectively
revoked by Quinto.
Quinto in this case cannot revoke at his whim and pleasure the SPA which he had executed in
favor of Padilla and duly acknowledged before a notary public. The agency, to stress, is one
coupled with interest which is irrevocable since Padilla has a material interest in the hotel
complex having spent a substantial amount of money for its renovation and improvement.
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The mutual interest of Quinto and Padilla being the owner and developer, respectively, of the
hotel complex is exactly the reason why they entered into a MOA wherein they agreed to look
for potential lessees of the hotel complex with a view to sharing in the actual income derived
therefrom. In this case, the MOA between Quinto and Padilla is the bilateral contract and the
SPA is the means of fulfilling Quinto's obligation in the MOA.
Notably, Quinto's denial of full understanding of the SPA is suspect especially in the light of his
execution of a Judicial Affidavit confirming Padilla's allegations and attesting to the due
execution of the SPA. To be sure, Quinto is not unlettered.
As pointed out by Padilla, Quinto was a uniformed officer who served as a military dentist for a
substantial period of time. He also owns a multi-million property and is thus well-versed in
contracts such as the subject MOA and SPA. Given this, it is puzzling why the trial court
outrightly accepted Quinto's revocation of the SPA and his Affidavit claiming that he did not
fully understand the contents of the SPA and his Judicial Affidavit.
If it were true that Quinto never intended to authorize Padilla to file an action for damages
against Cecilia, or to represent him in a civil suit, he should have opposed the filing thereof at the
first opportunity. Instead of doing so, he even executed a Judicial Affidavit consisting of his
direct testimony wherein he affirmed the authority of Padilla. In view of these circumstances, it
appears that Quinto's move to dismiss the complaint against Cecilia is suspicious and doubtful.
GUILLERMA S. SILVA vs. CONCHITA S. LO
G.R. No. 206667, June 23, 2021
By: liz0114
DOCTRINE:
Law and jurisprudence recognize actual authority and apparent authority. Apparent
authority is based on the principle of estoppel. The Civil Code provides:
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon
the person making it, and cannot be denied or disproved as against the person relying
thereon.
Art. 1869. Agency may be express, or implied from the acts of the principal, from his
silence or lack of action, or his failure to repudiate the agency, knowing that another person
is acting on his behalf without authority. Agency may be oral, unless the law requires a
specific form.
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FACTS:
On May 20, 1975, Carlos Sandico, Jr. (Carlos Jr.). died intestate leaving behind a sizeable estate
to his compulsory heirs: his surviving spouse Concepcion, and their seven children, Enrica,
Carlos III, Lily, Pamela, Teodoro, petitioner Guillerma Sandico-Silva, and respondent Conchita
Sandico-Lo. Sometime in 1976, the heirs of Carlos Jr. executed an Extrajudicial Settlement of
Estate which provided that all properties of the decedent shall be owned in common, pro
indiviso, by his heirs. In September 1988, Carlos, Jr. 's heirs executed a Memorandum of
Agreement for the physical division of the estate. However, both agreements were never
implemented and the heirs remained pro indiviso co-owners of the estate's properties.
In 1989, Enrica filed a civil case impleading all the other heirs. Teodoro withdrew as defendant
and joined suit as plaintiff-in-intervention. Defendants therein opposed the physical division of
the properties and primarily asserted Concepcion's usufructuary rights over the estate's real
properties. The RTC issued numerous orders reflecting the negotiations during court hearings for
the distribution and partition of the estate among the heirs. The contentious matters among the
heirs were the inventory and classification of the estate's properties and their respective proposals
for settlement and division thereof.
The Registry of Deeds issued a TCT issued in the names of Concepcion and Carlos III subject to
the encumbrances of the decedent's estate which listed the names of the other compulsory heirs.
The title likewise noted Enrica’s lis pendens. In the course of the trial, the heirs agreed on the
manner of division of each property-via raffle conducted by the trial court. The heirs drew lots
for an aliquot of each property of the estate. For the heirs who failed to attend the hearing and the
scheduled raffle, their respective counsels or their appointed attorney-in-fact, either Concepcion
or Guillerma. Since Concepcion and the other children refused to sign the final draft of the
compromise agreement, this sparked another set of discussion culminating in the Enrica's and
Teodoro's motion for the RTC to "decide the case on the basis of the stipulations entered into by
the parties embodied in the various orders of the Court."
On January 11, 2000 RTC ordered the partition, accounting, delivery of shares and damages
among the compulsory heirs of Carlos Jr. pursuant to the terms and conditions contained in the
final Compromise Agreement already signed by the Enrica and Teodoro, dated September 17,
1998. On June 26, 2000, Conchita executed a Revocation of her latest SPA dated June 8, 1999,
which authorized Concepcion to represent her in the hearings at the civil case and enter into any
compromise and partition agreement. Conchita filed a copy of the Revocation with the RTC but
failed to furnish her agent, Concepcion, a copy thereof.
Despite RTC’s Order of Partition, various properties of the estate remained undivided and were
not distributed among the heirs. Thus, on August 29, 2003, Enrica filed a Motion to Appoint
Commissioners to Make Partition. On October 17, 2003, the RTC granted the Motion to Appoint
Commissioners. Yet again, the appointment of commissioners did not happen as plaintiffs
appeared to have acquiesced to the defendants' proposed subdivision of the agricultural lands,
including the herein subject property.
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Sometime in 2006, Concepcion, representing herself and the other defendants-heirs, Carlos III,
petitioner Guillerma, Lily, Pamela and respondent Conchita, executed a second agreement with
the tenants of the subject property designated as the “2006 Kasunduan”. The 2006 Kasunduan,
similar to the 1999 Kasunduan, likewise covered the partition of the subject property and the
transfer of ownership of half thereof to the eight tenants while the other half remained with the
heirs of Carlos, Jr. Thereafter, the defendants filed a Motion for Approval of New Agreement
and New Subdivision Plan of certain agricultural properties, including the subject property,
which motion the plaintiffs no longer opposed.
On March 2, 2007, the RTC issued an Order noting the agreement among the parties to undertake
a raffle for the distribution of the subject property. Through their respective counsels, the parties
filed a Minutes of the Raffle for the Distribution of the Property covered by the TCT. On April
13, 2007, the RTC granted defendants' motions: it approved the New Agreement and Subdivision
Plan and ordered the plaintiffs Enrica and Teodoro to sign the document. The approval was
subject to the distribution of the property as agreed upon in the raffle done by the parties on
March 30, 2007. Conchita did not question the March 2 and April 13, 2007 Orders of the RTC.
On May 26, 2009, to execute the RTC's April 13, 2007 Order and facilitate the issuance of new
titles over the subject property, Concepcion filed a Motion to Order Register of Deeds to Enter
New Titles.
On November 6, 2009, through a different counsel, Conchita opposed Concepcion's May 26,
2009 Motion on the ground that the 2006 Kasunduan is void. As per Conchita, the 2006
Kasunduan lacked her signature since she had already revoked the agency relationship with her
mother, Concepcion. On February 9, 2010, the RTC granted Concepcion's motion and ordered
the Register of Deeds of Pampanga to enter new titles in the names of the tenants and the heirs of
Carlos, Jr. It ruled that its April 13, 2007 Order approving the subdivision of the subject property
and its distribution via raffle, had already become final and executory after the affected parties,
including Conchita, did not file the appropriate remedy therefrom.
Conchita filed an MFR but RTC denied. Furthermore, the RoD of Pampanga cancelled the TCT
and issued new ones in favor of the tenants. Conchita filed an R65 petition before the
CA,alleging that the April 13, 2007 Order did not attain finality as it was a void judgment based,
in tum, on a void agreement-the 2006 Kasunduan. Concepion died during the pendency of the
case and was substituted by the heirs.
CA annulled and set aside RTC’s decision. The CA invalidated the 2006 Kasunduan because it
lacked the signature of all the heirs: Enrica's, Teodoro's and Conchita's who now repudiates her
mother's, Concepcion's, signature on her behalf. Only Guillerma filed a motion for
reconsideration which was denied by the appellate court in its April 11, 2013 Resolution. Hence,
this R45 appeal by certiorari.
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ISSUE:
Whether or not the 2006 Kasunduan partitioning the subject property is void because it was not
signed by all the heirs of the decedent; In the alternative, whether the 2006 Kasunduan is
unenforceable as against Conchita.
RULING:
NO, it is not void. The 2006 Kasunduan is a valid partition of the subject property. It is
enforceable against Conchita.
Law and jurisprudence recognize actual authority and apparent authority. Apparent authority is
based on the principle of estoppel as provided under Art. 1431 and Art. 1869 of the Civil Code.
To begin with, Conchita failed to inform her agent, Concepcion, of the fact of revocation. She
continued to clothe her mother, Concepcion, with apparent authority to act on her behalf in the
civil case.
Despite the lack of signatures of specifically three (3) heirs of the decedent, Enrica, Teodoro and
respondent Conchita, the 2006 Kasunduan is a valid partition of the subject property which was
correctly confirmed by the RTC in its April 13, 2007 Order. Conchita failed to give her mother
notice of the revocation and belatedly repudiated her assent to the 2006 Kasunduan which was
signed by her mother on her behalf despite her full and complete knowledge that the civil case
filed by Enrica was ongoing and that the partition of her father's estate's properties was
underway. Conchita could not feign ignorance of the action for partition and what it sought, and
the consequence of failing to inform her mother that she had revoked the SPA which she had
previously given her.
The second paragraph of Article 1317 of the Civil Code provides that "a contract entered into in
the name of another by one who has no authority xxx shall be unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed.”
In this case, Conchita has impliedly ratified her mother's assent to the partition on her behalf by
failing to assail the RTC's April 13, 2007 Order and the conduct of the raffle for distribution of
the property even after she had obtained a copy of the Order and the Minutes of Raffle.
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PNB-REPUBLIC BANK (MAYBANK PHILIPPINES INCORPORATED) vs. REMEDIOS
SIAN-LIMSIACO
G.R. No. 196323, February 8, 2021
By: lewi
DOCTRINE:
The authority to encumber one’s land title naturally includes the authority to perform acts
to disencumber such title.
Under Art. 1882 of the Civil Code provides, “The limits of the agent’s authority shall not be
considered exceeded should it have been performed in a manner more advantageous to the
principal than that specified by him.
FACTS:
Respondent Remedios obtained sugar crop loan from Maybank which was payable within one
year. Through a SPA, Remedios executed a Real Estate Mortgage (REM) on the several parcels
of land. Subsequently in 1982, Remedios and her son Roy Sian-Limsiaco obtained another sugar
crop loan which was likewise due after one year. Through another SPA, Roy executed a REM on
other parcels of land owned by Sps. Jerome Gonzales and Perla Sian-Gonzales. Likewise, in
1984, Remedios obtained another sugar crop loan also secured by REM on a lot owned by Sian
Agricultural Corporation.
Maybank never demanded payment of the above sugar crop loans nor filed a case to collect or
foreclose the mortgage. Thus, on June 29, 2001 or after lapse of 17 years, Remedios and Roy
filed a petition before RTC to cancel the liens annotated on the titles of the mortgaged properties
on the ground of prescription and extinction of their loan obligation.
Maybank referred the case to PNB to which it had assigned its assets and liabilities including its
receivables. Hence, by virtue of a Deed of Assignment dated July 20, 1998, Maybank argued that
PNB should be treated as substitute respondent. Unconvinced and not satisfied with the
aforementioned Deed of Assignment, the RTC required additional documents to justify the
substitution which PNB failed to provide. Consequently, the RTC denied Motion for
Substitution.
Thereafter, Atty. Alovera for and on behalf of PNB filed Motion to Dismiss on Demurrer to
Evidence which the trial court denied in view of Atty Alovera’s failure to submit proof that he
was authorized to appear on Maybank’s behalf. Subsequently, the receivables were transferred to
Bangko Sentral ng Pilipinas.
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Trial Court issued an Order in Respondent Remedios’ favor granting that the mortgage contracts
as annotated in respective titles are declared unenforceable and of no force and effect due to
prescription. The Court of Appeals affirmed in toto the RTC’s decision.
ISSUE:
Whether or not the filing to cancel mortgage liens through the special authority granted should
be considered within the limits of Respondent’s authority
RULING:
YES, it is within the limits of the respondent's authority.
In this case, the Respondent already has special authority to encumber the mortgagors-principal’s
titles with the subject mortgage contracts, then it is indeed implicit that Respondent is also
authorized to do all the necessary acts to release the mortgagors-principals from encumbrance.
Thus, the filing to cancel the mortgage liens, which were annotated in the mortgagor-principal’s
respective titles through the special authority granted by them to Respondent should be
considered within the limits of respondent’s authority since disencumbering the
mortgagors-principals’ titles of the same mortgage liens are obviously advantageous to the latter.
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IV.A. Loans
REX RICO vs. UNION BANK OF THE PHILIPPINES
G.R. No. 210928; February 14, 2022
By: chocobo
DOCTRINE:
The contract between the card company and the credit card holder is a simple loan
arrangement.
Although the relationship between the card company and the card holder is that of
creditor-debtor, which exists upon the acceptance by the cardholder of the terms of the
card membership agreement, this creditor-debtor relationship arises only after the credit
card issuer has approved the cardholder’s purchase requests.
In other words, when the cardholder uses his/her credit card to pay for purchases, an offer
to enter into loan agreement with the credit card company is made. Only when the card
company approves the purchase request that the parties enter into a binding loan
agreement in line with Article 1319 of the Civil Code.
Although the credit card company may disapprove the cardholder’s credit card
transaction, it shall do so justifiably and within the bounds of laws and the credit card
membership agreement.
FACTS:
This case originated from the decision of petitioner Rex Rico to cancel his flight reservation with
Tiger Airways when he found out that there were no longer any available seats. When he used
his credit card while dining in Gourdo’s restaurant, the card was declined, thereby causing him
embarrassment and humiliation in front of his two guests.
This prompted petitioner Rico to file a complaint for damages against respondent Union Bank
alleging that Union Bank negligently handled his credit card account. He averred that respondent
Union Bank dishonoured his credit card for alleged non-payment of overdue account. He
maintained that he is entitled to the award of moral damages for the embarrassment and
humiliation he suffered on account of such a mortifying situation.
Union Bank asserted that it handled Rico’s credit card account diligently in good faith. The cause
of Rico’s credit card decline was due to the unresolved issue with regard to his online purchase
of a ticket with Tiger Airways which he allegedly cancelled and his failure to pay the minimum
amount due on his SOA, in accordance with the Terms and Conditions.
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Moreover, Union Bank averred that it should not be held liable for damages since it was Rico
who failed to comply with the T&C of the credit card.
Rico contested the SOA dated October 16, 2005 which still included the transaction with Tiger
Airways amounting to P30,376.79. According to him, Union Bank should refund him such
amount. But Union Bank suggested that before it can refund to him the amount paid, he should
first communicate with Tiger Airways for the request of refund. As a result, Rico did not pay
Union Bank for the amount corresponding to the Tiger Airways airline tickets charged to his
account.
RTC ruled that the dishonour of Rico’s credit card was without any valid reason. When Rico
used his credit card at Gourdo’s Restaurant, he had no liability to Union Bank. Respondent’s
careless, negligent, and unjustified dishonour of Rico’s credit card placed him in an embarrassing
situation. Thus, moral damages were awarded in favour of Rico in the amount of P500,000.00.
Furthermore, Union Bank’s wrongful act was accompanied by bad faith or done in a wanton and
reckless manner, thereby entitling Rico to exemplary damages in the amount of P200,000.00.
Lastly, attorney’s fees in the amount of P300,00 are also awarded to him.
CA affirmed the RTC but reduced the awarded damages to P30K, P20K, and 10K for moral
damages, exemplary damages, and attorney’s fees, respectively.
Hence, this petition for review on certiorari under R45 assailing the reduction of the award of
damages made by the CA.
ISSUE:
Whether or not Union Bank has the obligation to approve all the purchase requests of Rico by
virtue of the issuance of the credit card.
RULING:
NO. Union Bank has no obligation to approve all the purchase requests of Rico. It may or
may not approve his purchase requests based on his credit standing, credit card history,
and financial capability.
In this case, the respondent Bank has no obligation to enter into a loan agreement with Rico
when he tendered his offer by using his Union Bank visa credit card to pay for his purchase at
Gourdo’s Restaurant. Rico cannot demand from Union Bank to loan him or to pay for his
purchase. A demand presupposes the existence of an obligation between the parties.
While it is true that with the issuance of the credit card to Rico, Union Bank granted him credit
facility or a pre-approved amount, which the card holder may use in his purchases, this is not a
demandable right which the card holder may hold against the credit card company as if he is
entitled to be granted a loan whenever s/he wants to, or that the bank owes him/her money by the
mere issuance of a credit card.
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IV.A.2. Interest
MAGNA READY MIX CONCRETE CORPORATION vs. ANDERSEN BJORNSTAD
KANE JACOBS, INC.
G.R. No. 196158, January 20, 2021
By: Bonana
DOCTRINE:
Resolution No. 796 issued by the Monetary Board of the BSP on July 1, 2013, lowered the
interest rate from 12% to 6% per annum for loans or forbearance of money, goods, and
credit, in the absence of an express stipulation.
FACTS:
Respondent Andersen is a corporation organized under the laws of the State of Washington,
United States of America. It filed a complaint for collection of a sum of money and damages
against Petitioner Magna, a domestic corporation. In its complaint, Andersen alleged that it was
neither doing business in the Philippines nor licensed to do business herein. Moreover, it averred
that it was suing on an isolated transaction.
Allegedly, Magna ordered a form design and drawing development for its project of a precast
plan and P/C double tee design from Andersen. It issued a purchase order dated October 21,
1996 and they executed an Agreement for Professional Services dated November 29, 1996.
Thereafter, in February 1997, Magna asked Andersen to prepare a preliminary design for its
Ecocentrum Garage Project which the latter delivered. Andersen averred that Magna made
partial payments but despite repeated demands to pay, it left an unpaid balance amounting to
US$60,786.59.
In response, Magna denied that Andersen rendered any inspection or consultation services for it.
It claimed that the complaint had no basis because the alleged contract was executed after the
services had been performed. Moreover, it maintained that Andersen did not deliver the P/C
double tee design, plant development design, and Ecocentrum Garage preliminary design were
not delivered. Its general manager, Gene Lim, testified that the alleged services were not for
Magna’s benefit but were for business development, due diligence, and feasibility studies for the
creation of Structural Pre-case Inc., (SPI). The said SPI was a corporation that Andersen’s
principal owner and Lim planned to incorporate for their business venture, but was not formally
incorporated due to the Asian Financial Crises.
During the trial, Magna filed a Motion to Dismiss with Motion to Cancel Hearing alleging that
Andersen had no legal capacity to sue. It alleged that it belatedly discovered that Andersen had
previously filed a case for a collection of a sum of money against another Philippine corporation.
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Allegedly, the earlier case covered several transactions different from the subject of the instant
case but involved the same Ecocentrum design drawing and concluded that Andersen was doing
business in the Philippines without the necessary license.
The RTC denied the Motion to Dismiss on the ground of estoppel. It ruled that Magna was
estopped from challenging Andersen’s personality after it acknowledged that it entered a contract
with it. After trial, the RTC ruled in favor of Andersen although it did not grant a complete relief
of the amount prayed for. The 12% per annum interest awarded was also reckoned only from the
time of the filing of the complaint.
The CA ruled in favor of Andersen but modified the award by ordering Magna to pay the
complete relief and the amount of interest was to be reckoned from the time of the extrajudicial
demand on June 26, 1998.
ISSUE:
Whether or not the imposition of the legal interest was correct.
RULING:
YES, the 12% interest imposed was correct but only until June 30, 2013.
Here, applying the aforementioned-resolution the interest to be imposed must be: a) 12% per
annum to be computed on the amount due from June 26, 1998, the date of the extrajudicial
demand, until June 30, 2013; and (b) 6% per annum to be computed on the amount due from July
1, 2013 until full payment.
ARAKOR CONSTRUCTION AND DEVELOPMENT CORPORATION vs. TERESITA
G. STA. MARIA
G.R. No. 215006, January 11, 2021
By: VictoriaAytona
DOCTRINE:
The guidelines laid down by the Court in Nacar v. Gallery Frames to wit:
1. [I]n the absence of an express stipulation as to the rate of interest that would govern
the parties, the rate of legal interest for loans or forbearance of any money, goods or
credits and the rate allowed in judgments shall no longer be twelve percent (12%)
per annum — as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its
amendment by BSP-MB Circular No. 799 —
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2. Now be six percent (6%) per annum effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall
apply only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%)
per annum shall be the prevailing rate of interest when applicable.
xxxx
Nonetheless, with regard to those judgments that have become final and executory prior to
July 1, 2013, said judgments shall not be disturbed and shall continue to be implemented
applying the rate of interest fixed therein.
To recapitulate and for future guidance, the guidelines laid down in the case of Eastern
Shipping Lines are accordingly modified to embody BSP-MB Circular No. 799, as follows:
I.
When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts,
delicts or quasi-delicts is breached, the contravenor can be held liable for damages.
The provisions under Title XVIII on "Damages" of the Civil Code govern in
determining the measure of recoverable damages.
II.
With regard particularly to an award of interest in the concept of actual and
compensatory damages, the rate of interest, as well as the accrual thereof, is
imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that
which may have been stipulated in writing. Furthermore, the interest due
shall itself earn legal interest from the time it is judicially demanded. In the
absence of stipulation, the rate of interest shall be 6% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed at
the discretion of the court at the rate of 6% per annum. No interest, however,
shall be adjudged on unliquidated claims or damages, except when or until
the demand can be established with reasonable certainty.
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Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code), but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1
or paragraph 2, above, shall be 6% per annum from such finality until its
satisfaction, this interim period being deemed to be by then an equivalent to
a forbearance of credit.
FACTS:
The Spouses Fernando Gaddi, Sr. (Fernando Sr.) and Felicidad Nicdao Gaddi (Felicidad)
(collectively Spouses Gaddi) owned the five contested parcels of land located in Hermosa,
Bataan.
Felicidad died intestate on November 18, 1985, and was survived by Fernando Sr. and her eight
children, herein respondents, namely: Teresita G. Sta. Maria (Teresita), Alfredo N. Gaddi
(Alfredo), Fernando N. Gaddi, Jr. (Fernando Jr.), Marilyn G. Malixi (Marilyn), Evangeline G.
Golicruz (Evangeline), Efren N. Gaddi (Efren), Lilian G. Francisco (Lilian) and Lilibeth G.
Paguio (Lilibeth) (collectively the Gaddis). Felicidad's heirs inventoried her properties but they
did not initiate its partition; thus, the parcels of land remained in the name of the Spouses Gaddi.
On February 7, 1996, Fernando Sr. passed away, followed by Efren on May 8, 1998. After the
deaths of Fernando, Sr. and Efren, Atty. Greli Legaspi (Atty. Legaspi), the president of petitioner
Arakor Construction and Development Corporation (Arakor), informed the Gaddis that their
parents had already sold the contested five parcels of land to Arakor for P400,000.00 as
evidenced by two undated Deeds of Absolute Sale and that the titles to the properties have
already been transferred to Arakor's name.
Thus, the Gaddis filed a Complaint for Annulment of Deed[s] of Absolute Sale and Transfer
Certificates of Title against Arakor. They alleged that the two contracts of sale were forged and
the conveyance of the properties was fraudulent since Felicidad could not have signed the
documents and given her consent thereon since she has been dead for seven years before the
alleged execution of the said contracts.
Arakor denied employing fraud. It contended that the Deeds of Absolute Sale were already
signed and notarized when Fernando Sr. and Efren delivered them to the office of Atty. Legaspi
on September 8, 1992. Atty. Legaspi also disclaimed any knowledge about the death of
Felicidad.
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In addition, Arakor alleged that Teresita, Evangeline, Marilyn and Lilibeth had already assigned
their rights to Fernando Sr. through the two Joint Waiver of Claim and/or Right dated February
1992. Efren, Alfredo, Lilian and Fernando Jr. likewise executed a Joint Waiver of Claims and/or
Right on October 28, 1992. Thus, full ownership and title over the contested properties had been
consolidated in favor of Fernando Sr. at the time of the sale. Thus, the signature of Felicidad in
the Deeds of Absolute Sale is no longer material in determining the sale's validity.
Moreover, Arakor averred that the Gaddis' claims are barred by prescription since the company
has been in open, continuous, and lawful possession of the properties as the owner thereof since
September 1992.
On rebuttal, Fernando Jr. insisted that during the lifetime of Felicidad, the Gaddis formed a
family corporation in order to consolidate the properties under the said company through the
waivers. However, only one property was transferred since Efren sold all the others. He
maintained that the family company did not authorize Fernando Sr. and Efren to sell the
properties.
Ruling of the Regional Trial Court:
In its November 16, 2011 Decision, the RTC declared the Deeds of Absolute Sale as void for
being fictitious because Felicidad had already passed away when the documents were executed.
Additionally, it ruled that Arakor, represented by Atty. Legaspi, was not a buyer in good faith. It
thus ordered the Gaddis to return to Arakor the amount of P400,000.00 with interest, chargeable
to Fernando Sr.'s estate.
Arakor asked for reconsideration but it was denied by the trial court in its Order dated March 8,
2012. Aggrieved, Arakor appealed to the CA.
Ruling of the Court of Appeals:
The CA, in its assailed January 13, 2014 Decision, affirmed the RTC's ruling that the Deeds of
Absolute Sale were null and void for being simulated and forged.
The appellate court explained that "[s]ince it has been established that Felicidad died as early as
1985, there is no way for her to affix her signature to the deeds; neither could she have secured
the Residence Certificate Nos. 79465823 and 81476375 from Quezon City on February 5 and 12,
1992, respectively, and worse, she could not have possibly personally appeared before Notary
Public Cornelio G. Montesclaros on September 8, 1992 and acknowledged that the deeds were
executed as her (and Fernando Sr.'s) voluntary act and deed." It likewise noted that the
acknowledgment portion of the deeds indicated the names "Felicitas N. Gaddi/Felicitas Nicdao"
instead of "Felicidad."
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The CA opined that Atty. Legaspi who is knowledgeable in law should have inquired about the
personal circumstances of Felicidad and not merely relied on the representations of Fernando Sr.
and Efren, particularly since the titles of the properties were still registered in the name of the
Spouses Gaddi.
The appellate court concluded that the parties must revert to their respective positions prior to the
execution of the Deeds of Absolute Sale.
ISSUE:
Whether or not the proper interest rates were applied.
RULING:
NO, the amount of P400,000.00 shall be subject to interest at the rate of twelve percent
(12%) per annum from the date of the filing of the Complaint or on July 20, 1998 until
June 30, 2013, and thereafter, six percent (6%) per annum from July 1, 2013 until finality
of this judgment.
Moreover, once the judgment in this case becomes final and executory, the monetary awards
discussed above shall be subject to legal interest at the rate of six percent (6%) per annum from
such finality until its satisfaction.
Withal, the legal interest on the amount of P400,000.00 shall commence to run from the time
judicial demand was made, or the date when the Gaddis actually filed the Complaint against
Arakor, specifically on July 20, 1998.88 However, the Court modifies the appealed Decision of
the appellate court with regard to the interest on the monetary awards following the guidelines
laid down by the Court in Nacar v. Gallery Frames.
DEVELOPMENT BANK OF THE PHILIPPINES vs. HEIRS OF JULIETA L. DANAICO
G.R. No. 196476. September 28, 2020
By: el filibusterismo
DOCTRINE:
Article 1956 of the Civil Code states that no interest shall be due unless it has been
expressly stipulated in writing. As can be gleaned from the foregoing provision, payment of
monetary interest is allowed only if:
1. there was an express stipulation for the payment of interest; and
2. the agreement for the payment of interest was reduced in writing.
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The concurrence of the two conditions is required for the payment of monetary interest.
Thus, We have held that collection of interest without any stipulation therefor in writing is
prohibited by law.
Interest accrues only from the time judicial or extrajudicial demand is made.
Guidelines laid down in the case of Eastern Shipping Lines, Inc. v. Court of Appeals as
modified in Nacar v. Gallery Frames:
1. In the absence of an express stipulation as to the rate of interest that would govern
the parties, the rate of legal interest for loans or forbearance of any money, goods or
credits and the rate allowed in judgments shall no longer be twelve percent (12%)
per annum — as reflected in the case of Eastern Shipping Lines and Subsection
X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and
4303P.1 of the Manual of Regulations for Non-Bank Financial Institutions, before its
amendment by BSP-MB Circular No. 799
2. It is six percent (6%) per annum effective July 1, 2013. It should be noted,
nonetheless, that the new rate could only be applied prospectively and not
retroactively. Consequently, the twelve percent (12%) per annum legal interest shall
apply only until June 30, 2013. Come July 1, 2013 the new rate of six percent (6%)
per annum shall be the prevailing rate of interest when applicable.
With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of money,
i.e., a loan or forbearance of money, the interest due should be that which may have
been stipulated in writing. Furthermore, the interest due shall itself earn legal
interest from the time it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 6% per annum to be computed from default, i.e., front
judicial or extrajudicial demand under and subject to the provisions of Article 1169
of the Civil Code.
xxx
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 6% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.
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FACTS:
On April 22, 1977, the Spouses Danico obtained an agricultural loan from petitioner DBP in the
total amount of P150,000.00 which was secured by: a) real estate mortgage (REM) over their
four (4) real properties covered by Original Certificate of Title (OCT) No. P-1439, TCT No.
T-8127, TCT No. T-3278 and OCT No. P-537;[5] and b) a chattel mortgage over one unit of
Massey Fergusson tractor and accessories.
On August 6, 1982, DBP extrajudicially foreclosed the real property covered by TCT No. T-8127
for failure of the Spouses Danico to pay their loan obligation. Upon the expiration of the
redemption period on September 12, 1983, DBP consolidated the ownership of the real property.
On September 9, 1985, NPC bought from the Spouses Danico the following: (a) Lot No. 861
which is covered by OCT No. P-1439; (b) Lot No. 857-B which is a portion of the land covered
by TCT No. T-3278, as the two lots are part of the NPC's Reservoir Area. As per the Deed of
Absolute Sale of Registered Land dated September 9, 1985, Lot No. 861 covered by OCT No.
P-1439 was sold by the Danicos to NPC in the total amount of P511,290.00.
DBP agreed to the sale of the two lots to NPC on the condition that a portion of the proceeds
would be applied to the Spouses Danico's outstanding obligation with DBP. However, NPC paid
DBP only the total amount of P92,003.47 from the proceeds of the sale of a portion of land
covered by TCT No. T-3278 as per Official Receipt No. 2205487 dated November 17, 1986.
NPC did not remit to DBP the amount P301,350.50 from the proceeds of the sale of the land
covered by OCT No. P-1439.
On May 7, 2001, NPC filed a Manifestation that the check in the total amount of P301,350.50
issued in the name of DBP was ready to be delivered to DBP provided that the latter surrender
TCT No. T-21793 and TCT No. T-3278.
However, petitioner DBP refused to accept the check in the total amount of P301,350.50 on the
ground that the said amount did not include the interest allegedly due. Thus, on June 28, 2001.
the RTC ordered the consignment of the said check with DBP, Malaybalay City Branch which
shall be under the name and custody of the RTC Clerk of Court, Branch 9, Malaybalay City.
On December 2, 2010, the CA rendered its assailed Decision holding that respondent NPC's
obligation to petitioner DBP was only P393,353.97 and not P509,320.82 by reason of the
following: (a) the two deeds of sale of the real properties covered by OCT No. P-1439 and TCT
No. T-3278 stated that the obligation of the Spouses Danico as of December 31, 1985 was only
P393,353.97; and (b) DBFs own admission in its Certification dated February 24, 1987 that it
will only release the original copy of the OCT No. P-1439 upon payment by NPC of the amount
of P301,350.50, which is the difference after deducting NPC's first payment of P92,003.47 from
P393,353.97 which is the Spouses Danico's outstanding obligation as of December 31, 1985.
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CA rendered a decision holding that respondent NPC's obligation to petitioner DBP was only
P393,353.97 and not P509,320.82 by reason of the following: (a) the two deeds of sale of the real
properties covered by OCT No. P-1439 and TCT No. T-3278 stated that the obligation of the
Spouses Danico as of December 31, 1985 was only P393,353.97; and (b) DBPs own admission
in its Certification dated February 24, 1987 that it will only release the original copy of the OCT
No. P-1439 upon payment by NPC of the amount of P301,350.50, which is the difference after
deducting NPC's first payment of P92,003.47 from P393,353.97 which is the Spouses Danico's
outstanding obligation as of December 31, 1985.
ISSUE:
Whether or not respondent NPC is liable to pay interest and penalty charges.
RULING:
NO, respondent NPC is not liable to pay interest and penalty charges that were not
stipulated by the contracting parties.
In the case at bar, it is clearly apparent that the two deeds of sale do not contain any stipulation as
to the payment of monetary interest. Contrary to the contention of petitioner DBP, the stipulation
as to interest in the original agricultural loan dated April 22, 1977 and the Deed of Conditional
Sale dated October 10, 1985 are not applicable to NPC as the latter is not privy to the said
contracts. DBP also approved and agreed with the terms and conditions of the two deeds of sale.
Moreover, the two deeds of sale contain no provision that NPC expressly assumed the loan
obligation of the Spouses Danico.
As to DBP's claim for interest by reason of NPC's delay in the payment of the purchase price of
the two deeds of sale, We hold that the interest accrues only from the time judicial or
extrajudicial demand is made. However, a thorough review of the records would reveal that
petitioner DBP failed to make any extrajudicial demand for the payment of the purchase price of
the two deeds of sale.
Nonetheless, NPC is liable to pay compensatory interest of twelve percent (12%) per annum
from the time of its judicial demand, i.e. the filing of its Answer with Counterclaim and
Crossclaim on July 13, 1999 until the date of its consignment of P301,350.50 on June 28, 2001.
However, as to the remaining amount of P150,641.03 which is a part of the purchase price of the
second deed of sale, the same shall earn 12% legal interest per annum to be computed from the
time of DBP's judicial demand on July 13, 1999 until June 30, 2013 and six percent (6%) legal
interest per annum from July 1, 2013 until the judgment becomes final as per the guidelines laid
down in the case of Eastern Shipping Lines, Inc. v. Court of Appealsas modified in Nacar v.
Gallery Frames.
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IV.D. Real Estate Mortgage
SPS. GEMA O. TORRECAMPO vs. WEALTH DEVELOPMENT BANK CORP.
G.R. 221845, March 21, 2022
By: Czarina
DOCTRINE:
The general rule is that in extra-judicial foreclosures, a writ of possession may be issued to
the purchaser in two different instances and based on two different sources:
1. within the redemption period, in accordance with Act No. 3135, particularly Section
7, as amended; and
2. after the lapse of the redemption period, based on the purchaser’s right of
ownership.
After consolidation of ownership in the purchaser’s name and issuance of a new TCT,
possession of the land too becomes an absolute right of the purchaser.
Thus, the issuance of the writ of possession to the purchaser, upon proper application and
proof of title, merely becomes a ministerial duty of the court which cannot be enjoined or
restrained, even by filing a civil case for the declaration of nullity of the foreclosure and
consequent auction sale. Any question regarding the regularity or validity of the mortgage
or its foreclosure cannot be raised as a justification for opposing the issuance of the writ.
FACTS:
On December 12, 2008 the Torrecampo spouses entered into a housing loan agreement with the
respondent secured by a real estate mortgage over a property owned by the spouses.
Subsequently, they defaulted in payment which led the respondent to commence an action to
foreclose the real estate mortgage extra-judicially under the provisions of Act No. 3135, or an
Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages, as amended. A certificate of sale was issued on July 11, 2010 and was duly
registered with the Register of Deeds of Cebu City on June 24, 2010.
After the lapse of one-year redemption period and without any attempt on the part of the spouses
to redeem the mortgaged property, the ownership of the lot was then consolidated in favor of
respondent bank as the purchaser in auction sale. However, the petitioners refused to vacate the
property which led the respondent to file an ex-parte petition for the issuance of a writ of
possession which was granted by the RTC. Then, a notice to vacate was issued by the sheriff.
The petitioners filed a motion for reconsideration but it was also denied by the RTC. The writ of
possession was issued and the petitioners were evicted on the property.
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On March 8, 2012, the petitioners filed a motion to set aside the extra-judicial foreclosure sale
and cancel the writ of possession with prayer for damages on the ground that there was no
violation of the mortgage contract, they argued that: (1) the agreed maturity date of the loan has
not yet arrived; (2) the term loan agreement , the real estate mortgage contract, the promissory
notes and the disclosure statement of the loan/credit transaction did not provide for the amount of
the monthly amortization; and (3) no demand letter or statement of account of any amount
payable for any given month was sent at their address.
The respondent bank countered that there was no violation of the real estate contract which
contains an acceleration clause to the effect that in any event of default, the entire obligation
immediately becomes due and payable, and as a consequence of default, the mortgagee has the
right to foreclose the mortgage, to have the property seized and sold, and to apply the proceeds to
the obligation. They followed the requirements on posting and publication of the notice of
extra-judicial foreclosure under Act No. 3135, and whatever damages petitioners have suffered
were due to their own acts.
The RTC denied the petitioner’s motion to set aside the extra-judicial foreclosure sale and cancel
the writ of possession with prayer for damages ruling that proceedings for issuance of the writ of
possession are non-litigious in nature such that the court will not delve into the merits of the
petition.
Upon giving due course to the notice of appeal, the case was elevated to the CA which denied
the petition and affirmed the findings of the RTC on the ground that Section 8 of Act No. 3135
are only applicable until the period of redemption, further stating that once redemption lapses
and consolidation of the purchaser’s title ensues. Act No. 3135 is not applicable anymore.
Hence, this petition for review for certiorari which seeks the reversal of the decision of the CA.
ISSUE:
Whether or not the Court of Appeals erred in applying the provisions of Act No. 3135 to the case
at bar and whether there was no violation of the mortgage contract that would warrant the
extra-judicial foreclosure of the mortgage property.
RULING:
NO, the CA did not err in applying the provisions of Act No. 3135 and there was no
violation of the mortgage contract that would warrant the extra-judicial foreclosure of the
mortgage property.
In the first instance, Section 7 of Act No. 3135 provides that the purchaser in a foreclosure sale
may apply for a writ of possession by filing an ex-parte motion under oath. The provision also
requires that a bond be furnished and approved, and no third person is involved. On the other
hand, Section 8 of the same Act, as amended provides the remedy available to the debtor, that is,
the opportunity to contest the transfer of possession but only within the period of redemption.
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Under the second instance, which is what happened in the case at bar, a writ of possession may
also be issued after consolidation of ownership of property in the name of the purchaser or, in
this case, the respondent bank. The purchaser becomes the absolute owner of the property
purchased in the foreclosure sale, if it is not redeemed during the one-year period after the
registration of the sale.
Here, the respondent bank registered the foreclosure sale on June 24, 2010. After the lapse of one
year or after June 24, 2011, the provisions of Act No. 3135 no longer apply to the parties. The
respondent bank became the absolute owner of the subject property as a matter of right. In line
with this, the writ of possession was issued as a ministerial duty of the trial court. It was issued to
the respondent bank as a matter of right, a mere incident of the bank’s ownership, and not in
accordance with the remedy provided under Section 8.
PASTORA GANANCIAL vs. BETTY CABUGAO
G.R. No. 203348, July 06, 2020
By: VictoriaAytona
DOCTRINE:
Formal infirmities in the notarization of the instrument will not invalidate the mortgage.
An irregular notarization merely reduces the evidentiary value of a document to that of a
private document, which requires proof of its due execution and authenticity to be
admissible as evidence. The irregular notarization — or, for that matter, the lack of
notarization — does not thus necessarily affect the validity of the contract reflected in the
document
Contracts, in general, require no form to exist.
Article 2085 of the Civil Code specifies the elements of valid contracts of mortgage:
1. That they be constituted to secure the fulfillment of a principal obligation;
2. That the mortgagor be the absolute owner of the thing mortgaged; and
3. That the persons constituting the x x x mortgage have the free disposal of their
property, and in the absence thereof, that they be legally authorized for the purpose.
Article 2125 of the same law adds a fourth requirement, the absence of which, however,
shall not affect the validity of the agreement between the mortgagor and the mortgagee:
Art. 2125. In addition to the requisites stated in Article 2085, it is indispensable, in order
that a mortgage may be validly constituted, that the document in which it appears be
recorded in the Registry of Property. If the instrument is not recorded, the mortgage is
nevertheless binding between the parties.
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FACTS:
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of P130,000.00,
agreed to be payable within three years. To guarantee her indebtedness, Ganancial entrusted to
Cabugao the Transfer Certificate of Title (TCT) No. 168803 and Tax Declaration No. 641, both
covering a 397-square-meter parcel of land, which Ganancial owns in her name.
The transaction later turned sour and ended in the parties’ respective lawsuits against each other
before the Regional Trial Court (RTC). Cabugao filed a case for foreclosure of real estate
mortgage against Ganancial, while the latter filed against the former a complaint for declaration
of the deed of mortgage as null and void.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject property as
collateral for her loan. Despite the lapse of three years from the date of the mortgage and
repeated demands, Ganancial failed and refused to pay the amount she owed Cabugao. A final
demand having proved futile, Cabugao sought the judicial foreclosure of the real estate
mortgage.
For her part, Ganancial assailed the authenticity of the Deed of Mortgage. While she entrusted
TCT No. 168803 with Cabugao, Ganancial averred that she never executed the supposed Deed of
Mortgage nor appeared for its notarization.
The RTC ruled in favor of Cabugao. It declared that Ganancial’s contentions against the
authenticity of the notarized Deed of Mortgage were not proven by clear and convincing
evidence. The CA denied Ganancial’s appeal. The CA ruled that mere irregularities in the
notarization do not affect the genuineness and due execution of the document.
ISSUE:
Whether or not mere the contract of mortgage is valid.
RULING:
YES. The Contract of Mortgage is valid.
Ganancial reiterates that she and her two sons were made to sign a blank piece of paper as an
acknowledgment of her indebtedness to Cabugao, and that thereafter, the latter supplied the
particulars of the mortgage on the same piece of paper. The following circumstances allegedly
attest to the spuriousness of the Deed of Mortgage: the document was supposedly executed and
notarized on March 4, 1998, but was entered in a 2001 notarial book by a notary public whose
notarial commission ended in 2001; that the entry indicated in the notarial register actually
pertained to a deed of sale of a motor vehicle; that different typewriters were used in typing the
contents of the Deed of Mortgage and its notarization; and that the acknowledgment was written
on the back of the document, despite the considerable space allotted and remaining below the
Deed of Mortgage. In fine, Ganancial assails the validity of the mortgage and not merely its
notarial irregularities.
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We do not find for Ganancial.
It bears noting that Ganancial had alleged that fraud invalidated her consent to the mortgage.
While she had worded her arguments as an attack on the existence of the mortgage, vitiation of
consent by means of fraud is a ground for the annulment of a voidable contract, and not for the
nullification of a void contract. Having raised lack of consent on the ground of fraud in her
complaint for "declaration of document as null and void plus damages,” her case is practically
devoid of any factual basis.
Even if the present case is one for annulment of contract, the fraud alleged to have vitiated
Ganancial's consent to the mortgage must still be proven by clear and convincing evidence.
Clear and convincing evidence is less than proof beyond reasonable doubt but greater than
preponderance of evidence. The degree of believability upon an imputation of fraud in a civil
case is higher than that of an ordinary civil case, the latter generally requiring only a
preponderance of evidence to meet the required burden of proof. The burden of proof rests on the
party alleging fraud.
Even assuming that Ganancial's complaint for the declaration of nullity of the Deed of Mortgage
was truly grounded on its nonexistence or absolute simulation, it would still have no basis in fact
and in law.
Unfortunately for Ganancial, her contract of mortgage with Cabugao is already fully compliant
with the foregoing provisions, as earlier discussed. The notarization issues are rendered
irrelevant. All of the foregoing leads to the inevitable conclusion that their mortgage contract
was perfected, valid, and effective, and Ganancial and Cabugao were far from having absolutely
no intention to be bound thereunder.
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V. Compromise
LINO DOMILOS vs. SPOUSES JOHN AND DOROTHEA PASTOR
G.R. No. 207887, March 14, 2022
By: el filibusterismo
DOCTRINE:
Article 1312. In contracts creating real rights, third persons who come into possession of
the object of the contract are bound thereby, subject to the provisions of the Mortgage Law
and the Land Registrations Laws.
Article 1315. Contracts are perfected by mere consent, and from that moment 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.
Article 1385. Rescission creates the obligation to return the things which were the object of
the contract, together with their fruits, and the price with its interest; consequently, it can
be carried out only when he who demands rescission can return whatever he may be
obliged to restore.
Rescission, revocation or cancellation of a contract cannot take place when the things
which are the object of the contract are legally in the possession of third persons who did
not act in bad faith.
FACTS:
In February 1976, Victoriano transferred all his rights over the property to his son, petitioner
Lino Domilos (Lino). A month later or in March 1976, Nabunat and his family, including his
mother-in-law, Can-ay Palichang (Palichang), returned to the subject property and constructed a
house thereon without Lino's consent. This prompted Lino to file a complaint for forcible entry
before MTCC. On November 17, 1977, the City Court of Baguio rendered a Decision in favor of
Lino.
The Court of First Instance (now the RTC), Branch 4, in a Decision dated January 6, 1979,
sustained the Decision of the City Court of Baguio. A Writ of Execution and Alias Writs of
Execution were issued, and Nabunat's house was demolished.
Several years after, on November 17, 1986, Lino and Palichang entered into a compromise
agreement, dividing the property among five different parties.
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From the years 1987 to 1989, Lino, Nabunat and Palichang sold different portions of the
property to different parties, INCLUDING SPOUSES PASTOR.
On May 9, 1989, Lino sought to execute the November 17, 1977, Decision of the court of
Baguio City by filing a motion for issuance of 4th alias Writ of Execution on Special Order of
Demolition and to restore physical possession of land to Lino (motion for 4th Alias Writ of
Execution) against Nabunat. On May 15, 1989, Lino and Palichang executed a revocation and
cancellation of compromise agreement.
The following day, the City Court of Baguio granted Lino's motion for 4th Alias Writ of
Execution. On May 20, 1989, the corresponding 4th Alias Writ of Execution on Special Order
for Demolition of Improvement was issued resulting in the demolition of some of the properties
of the spouses Pastor.
Thus, on June 26, 1989, the spouses Pastor and Joseph filed a suit for annulment of Order, 4th
Alias Writ of Execution, revocation of compromise agreement, recovery of possession, damages,
with petition for issuance of preliminary prohibitory and mandatory injunction (annulment of
order) against Lino, Palichang and Soledad Nabunat (Soledad) before the RTC, Branch 3, Baguio
City, claiming ownership and possession over the disputed properties, and sought annulment of
the order granting the Writ of Execution and the corresponding 4th Alias Writ of Execution.
The Pastors claimed that Lino wrongfully sold a portion of his property even if he had none left
to sell, according to the compromise agreement. Thus, to get rid of the other lawful owners, Lino
revoked the compromise agreement to deliver the disputed properties to the buyer. Lino averred
that the spouses Pastor are not parties to the compromise agreement. As such, they have no legal
personality to sue Lino for revoking the same.
RTC Ruled in favor of spouses Pastor and the CA affirmed the ruling.
Lino contends that both the RTC and CA Decisions were in violation of the first paragraph of
Article VIII, Section 14 of the 1987 Constitution which states:
SECTION 14. No decision shall be rendered by any court without expressing therein clearly and
distinctly the facts and the law on which it is based.
Lino also alleges that the RTC and CA Decisions violated Rule 36, Section 1 of the Rules of
Court, to wit:
SECTION 1. Rendition of judgments and final orders. - A judgment or final order determining
the merits of the case shall be in writing personally and directly prepared by the judge, stating
clearly and distinctly the facts and the law on which it is based, signed by him, and filed with the
clerk of court.
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ISSUE:
Whether or not the Spouses Pastors have legal right and real interest in the subject properties
even if they are not parties to the compromise agreement.
RULING:
YES, the Pastors have a legal and real interest in the subject properties.
In this case, indemnity for damages may be demanded from the person using the loss.
It is clear from the above provisions that the compromise agreement was a contract that created
real rights as it was a contract for division of property. The third persons, the Pastors, who came
into possession of the object of the contract are thus, bound by the contract or compromise
agreement.
Furthermore, rescission, or in this case, revocation or cancellation of the compromise agreement,
cannot take place because the objects of the contract are already in the legal possession of the
Pastors who did not act in bad faith. At the time the compromise agreement was revoked by Lino
and Palichang, the Pastors were already legal co-owners of the property by virtue of a valid sale.
As such, their respective shares in the disputed property may not be validly included in the
revocation of the compromise agreement without their knowledge and consent. Although it is
clear that the Pastors are not parties to the compromise agreement, their objection to its
revocation can be treated as an adverse claim over the disputed property
MARIA MAGDALENA vs. HEIRS OF SPOUSES WILFREDO AND LEONILA SOMIS
G.R. No. 204447. May 03, 2021
By: el filibusterismo
DOCTRINE:
Article 1305 of the Civil Code provides that a contract is a meeting of the minds between
two persons, whereby one is bound to give something or to render some service to the other.
A valid contract requires the concurrence of the following essential elements pursuant to
Article 1318 of the same Code:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established
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FACTS:
Petitioner filed an action for annulment of Deed of Documents with damages against
respondents. Eventually, petitioner and respondents entered into a compromise agreement
wherein Lot A shall belong to petitioner while Lot B shall belong to the respondents. The
Compromise Agreement was approved by the trial court in its January 17, 2008 Decision which
became final. A Writ of Execution was issued on June 27, 2008.
On July 8, 2008, Maria filed a motion to set aside the Order granting the issuance of the writ of
execution. She claimed that she intended to give Lot C (and not Lot B) to the spouses Somis. She
asserted that the description or PIN of the property given to the spouses Somis under the
Compromise Agreement was erroneous.
In its October 20, 2008 Order, the RTC granted the motion. It directed that PIN
008-08-005-08-025 (referring to Lot B), as written in the Compromise Agreement, be changed to
PIN 008-08-005-09-001 (referring to Lot C). The spouses Somis moved for reconsideration, but
they were denied.
Aggrieved, the Somis couple filed a Petition for Certiorari before the appellate court/in its
January 22, 2010 Decision. The CA granted the Petition, declaring that "unless the
court-approved compromise agreement is set aside through the available remedies provided
under the law, its nature as a final and executory judgment demands that it be implemented
strictly in accordance with its terms and conditions.
On February 15, 2010, Maria, through her counsel, Atty. Benilda Indasen (Atty. Indasen), filed a
Motion to Annul the Compromise Agreement, but the same was denied for being moot and
academic. Next, they filed a petition for relief from judgment which was denied for non-payment
of docket fees.
Subsequently, Maria, through Atty. Manolito S. Hidalgo, filed a Petition for Reformation of
Compromise Agreement, but later said petition was withdrawn when Maria opted to file a
Petition for Annulment of Judgment before the CA, arguing that the RTC has no jurisdiction over
the person of the respondents and over the subject matter (Compromise Agreement). The
decision of the RTC was obtained through extrinsic fraud when her former counsel, Atty.
Indasen, connived with the mediator and the counsel of the spouses Somis in giving Lot B to the
latter by writing the incorrect PIN of the property in the Compromise Agreement.
ISSUE:
Whether or not the Compromise agreement is valid.
RULING:
YES, the compromise agreement is valid.
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Here, the Compromise Agreement was clear that the contracting parties mutually agreed to
transfer to each other the properties indicated therein. Even if it was Maria's counsel who
prepared the written instrument, she or her representative was expected to exercise due diligence
in reviewing the entries therein before signing the instrument. Moreover, if indeed there was a
mistake on which property should be transferred to the spouses Somis, Maria should have
availed of her remedies immediately.
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VI.B. Solutio Indebiti
NINIA P. LUMAUAN vs. COMMISSION ON AUDIT
G.R. No. 218304, December 9, 2020
By: Cara V
DOCTRINE:
Solutio indebiti is an equitable principle applicable to cases involving disallowed benefits
which prevents undue fiscal leakage that may take place if the government is unable to
recover from passive recipients amounts corresponding to a properly disallowed
transaction.
The jurisprudential standard for the exception to apply is that the amounts received by the
payees constitute disallowed benefits that were genuinely given in consideration of services
rendered (or to be rendered) negating the application of unjust enrichment and the solutio
indebiti principle. These disallowed benefits may be in the nature of performance
incentives, productivity pay, or merit increases that have not been authorized by the
Department of Budget and Management as an exception to the rule on standardized
salaries. The Court may also determine in the proper case bona fide exceptions, depending
on the purpose and nature of the amount disallowed.
Moreover, the Court may also determine in a proper case other circumstances that warrant
excusing the return despite the application of solutio indebiti, such as when undue
prejudice will result from requiring payees to return or where social justice or
humanitarian considerations are attendant.
FACTS:
Petitioner Lumauan was the Acting General Manager of Metropolitan Tuguegarao Water District
(MTWD), a government-owned and controlled corporation (GOCC) created pursuant to
Presidential Decree (PD) No. 198 or the Provincial Water Utilities Act of 1973, as amended by
Republic Act (RA) No. 9286.
The Board of Directors of MTWD issued Board Resolution Nos. 2009-0053 and 2009-0122,
approving the payment of accrued Cost of Living Allowance (COLA) to qualified MTWD
employees for calendar years (CYs) 1992 to 1997 in the aggregate amount of P1,689,750.00.
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However, after post-audit, a Notice of Disallowance No. 10-003-101-(09) was issued,
disallowing the payment of P1,689,750.00 for lack of legal basis specifically since the COLA
was already deemed integrated into the basic salary of the employees pursuant to Section 12 of
RA No. 6758, otherwise known as the Compensation and Position Classification Act of 1989,
and the Department of Budget and Management (DBM) Corporate Compensation Circular
(CCC) No. 10.
Regional Director III Atty. Elwin Gregorio A. Torre denied the appeal for lack of merit. He
affirmed the disallowance on the ground that the payment of COLA was prohibited since it was
already integrated into the basic salary of the employees. Respondent COA-CP agreed with the
observation of the Regional Director that the appeal was belatedly filed. It ruled that the
disallowance has already become final and executory because petitioner belatedly filed the
Appeal Memorandum or 12 days from receipt of the Decision of the Regional Director. It
reiterated the ruling of the Regional Director that the payment of COLA was prohibited because
it was already incorporated in the standardized salary rates of government employees under the
general rule of integration.
As regards petitioner's defense of good faith, respondent COA-CP found the same unmeritorious
considering that under the principle of solutio indebiti, all employees of MTWD who received
the disallowed COLA were obliged to return the same.
ISSUE:
Whether or not petitioner can be held personally liable for the disallowed benefit to the extent of
the amount she actually and individually received.
RULING:
YES, petitioner can be held personally liable for the disallowed benefit to the extent of the
amount she actually and individually received pursuant to our ruling in Madera v.
Commission on Audit.
In Madera, the Court promulgated the following rules on return of disallowed amounts:
1. If a Notice of Disallowance is set aside by the Court, no return shall be required from any of
the persons held liable therein;
2.If a Notice of Disallowance is upheld, the rules on return are as follows:
a.Approving and certifying officers who acted in good faith, regular performance of official
functions, and with the diligence of a good father of the family are not civilly liable to return
consistent with Section 38 of the Administrative Code of 1987;
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b. Approving and certifying officers who are clearly shown to have acted in bad faith, malice, or
gross negligence are, pursuant to Section 43 of the Administrative Code of 1987, solidarily liable
to return only the net disallowed amount which, as discussed herein, excludes amounts excused
under the following sections 2c and 2d.
c. Recipients — whether approving or certifying officers or mere passive recipients — are
liable to return the disallowed amounts respectively received by them, unless they are able
to show that the amounts they received were genuinely given in consideration of services
rendered.
d. The Court may likewise excuse the return of recipients based on undue prejudice, social
justice considerations, and other bona fide exceptions as it may determine on a case to case basis.
Here, petitioner Lumauan, as Acting General Manager of MTWD, was not the one who
approved the grant of the accrued COLA or certified for its funding availability but the Board of
Directors of MTWD who approved the payment of the accrued COLA. Petitioner was only a
recipient or a passive payee of the allowance.
She thus fell under category 2 (c). Under the rules on return of disallowed amounts in Madera ,
and applying the civil law principles on solutio indebiti and unjust enrichment, recipients —
whether approving or certifying officers or mere passive recipients," like petitioner Madera
in this case, are all liable to return the disallowed amounts respectively received by them,
unless they are able to show that the amounts they received were genuinely given in
consideration of services rendered. Payees who receive undue payment, regardless of good
faith, are liable for the return of the amounts they received.
None of the extenuating circumstances were present. As pointed out by the COA, petitioner is
not entitled to said allowance because it was already incorporated in the standardized salary rates
of government employees. Neither was it established that ordering its return would unduly
prejudice the petitioner. It was also not shown that social justice or humanitarian considerations
were extant to the instant case. Thus, there is no justifiable circumstance present that would
excuse petitioner from returning the disallowed benefit to the extent of the amount she actually
and individually received. Petitioner should only be held liable to return the disallowed amount
corresponding to the amount actually and individually received by her.
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VII.A.2. Unjust Enrichment
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES
G.R. No. 205172, June 15, 2021
By: Czarina
DOCTRINES:
Unjust enrichment is a term used to depict result or effect of failure to make remuneration
of or for property or benefits received under circumstances that give rise to legal or
equitable obligation to account for them; to be entitled to remuneration, one must confer
benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of
reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution.
There is unjust enrichment when a person unjustly retains a benefit to the loss of another,
or when a person retains money or property of another against the fundamental principals
of justice, equity and good conscience. The principle of unjust enrichment essentially
contemplates payment when there is no duty to pay, and the person who receives the
payment has no right to receive it.
FACTS:
On July 23, 1987, the Republic, through the Presidential Commission on Good Government
(PCGG), filed a complaint for reconveyance, reversion, accounting, restitution and damages
against Disini, President Marcos and Imelda Marcos, for amassing ill-gotten wealth during
President Marcos' term. Among others, the Republic alleged that Disini, a known close associate
of President Marcos, president of Herdis and who became Special Sales Representative (SSR) of
Westinghouse received special concessions from President Marcos in relation to the award of the
Bataan Nuclear Power Plant (BNPP) contract to Westinghouse and B&R, for a scandalously
exorbitant amount. Allegedly, Disini received substantial commissions from Westinghouse and
B&R for the award of the contract and its execution.
During trial, only the Republic presented evidence since Disini was a party in default: after
summons to him remained unserved and after summons by publication against him was
completed. The default order was sustained by the SC in a Decision rendered on July 5, 2010
which became final and executory on November 18, 2010.
On April 11, 2012, the Sandiganbayan rendered its assailed Decision declaring the commissions
in the amount of $50,562,500.00 received by Disini to be ill-gotten wealth and ordering him to
account for and reconvey the said amount to the Republic. In ruling for the Republic, the
Sandiganbayan relied on the testimonies of witnesses Manahan, Vergara, and Jacob, all of whom
were privy to the BNPP project.
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However, while the Sandiganbayan found, Disini liable, it held that there was no evidence of
President Marcos' and Imelda's receipt of the commissions. Hence, a motion for reconsideration
was submitted by both parties.
The Republic argued that it sufficiently proved that anomalous grants of loans and guarantees
were given to the companies owned by President Marcos and Disini through Presidential
issuances insisted that President Marcos and Disini misappropriated, embezzled and converted
funds of government financial institutions by granting unwarranted favors to Herdis.
It likewise claimed that it is entitled to actual, temperate, nominal and exemplary damages,
attorney's fees and other judicial costs. On the other hand, Disini opined that the Republic had no
cause of action against him as there was no contract or quasi-contract violated, he also alleged
that witnesses Manahan, Vergara and Jacob had no personal knowledge of the allegations in their
affidavits, and that no evidence was adduced to prove the amount of commissions he allegedly
received from Westinghouse and B&R. Both motions as well as Disini’s Motion to Strike Out
were denied by the Sandiganbayan for lack of merit.
Hence, this Petition for Review on Certiorari which assails the April 11, 2012 Decision and the
October 24, 2012 Resolution3 of the Sandiganbayan in Civil Case No. 0013 which declared as
ill-gotten the commissions received by Herminio T. Disini relative to the Bataan Nuclear Power
Plant (BNPP) project, and ordered him to account for and reconvey the total amount of
$50,562,500.00, with interest until fully paid.
ISSUE:
Whether or not the Republic is entitled to actual, moral, nominal and exemplary damages under
the principle of unjust enrichment.
RULING:
YES. the Court recognize that the Republic preponderantly proved that Disini indeed
received substantial commissions and thus, it is entitled to recover even without a definite
proof of its total amount.
Evidently, Disini unjustly enriched himself by receiving substantial commissions from
Westinghouse and B&R and acting as the SSR in order to ensure the award of the BP project to
the said companies by taking undue advantage of his close relationship with President Marcos.
Article 22 of the Civil Code provides that every person who through an act or performance by
another, or any other means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him."
In fine, the Republic's failure to particularly prove the actual amount of commissions received by
Disini should not override its right to recover the illegally-acquired commissions considering the
fact that it has satisfactorily established, by preponderance of evidence, Disini's receipt thereof.
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Necessarily, public funds were released for the construction of the BNPP project. Disini
indirectly amassed a portion of these public funds through commissions paid by Westinghouse
and B&R. These commissions or "kickbacks" are not only illegal or fraudulent but detrimental to
the Republic and highly unfair and prejudicial to ordinary Filipino taxpayers.
Thus, under the principle of unjust enrichment, We uphold the Republic's right to recover these
commissions in favor of the Filipino people. No one should unjustly enrich himself by receiving
commissions in connection with a government project when clearly he has no right for it nor
entitled to retain the same.
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D.1. Nature of Liability
BANK OF THE PHILIPPINE ISLANDS vs. CENTRAL BANK OF THE PHILIPPINES
G.R. No. 197593, October 12, 2020
By: wen
DOCTRINE:
The test of liability depends on whether or not the employees, acting in behalf of the
government agency, were performing governmental or proprietary functions. The State in
the performance of its governmental functions is liable only for the tortuous acts of its
special agents. On the other hand, the State becomes liable as an ordinary employer when
performing its proprietary functions.
The 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 damage.
Article 2180 of the Civil Code provides that an employer shall be liable for the damages
caused by their employees acting within the scope of their assigned tasks. An act is deemed
an assigned task if it is "done by an employee, in furtherance of the interests of the
employer or for the account of the employer at the time of the infliction of the injury or
damage.
FACTS:
BPI filed a complaint before the CBP on the latter’s irregular charging of its demand deposit
account in the amount of P9 million. NBI investigated the matter and the result showed that an
organized criminal syndicate using a scheme known as “pilferage scheme” committed the bank
fraud. It was further disclosed that Mariano Bustamante opened two accounts, a savings account
and a current account at BPI Laoag City Branch. On the other hand, Marcelo Desiderio opened a
current account under Magna Management Consultant (MMC) at Citibank Greenhills Branch.
Thereafter, Citibank Greenhills Branch received by way of deposit to the current account of
MMC various checks drawn against BPI Laoag City Branch. All these checks were sent by
Citibank Greenhills Branch to the CBP Clearing House for clearing purposes.
Upon arrival of the checks at the CBP Clearing House, Valentino, CBP's Bookkeeper, with the
assistance of Janitor-Messenger Estacio, intercepted and pilfered the BPI Laoag checks, and
tampered the clearing envelope. They reduced the amounts appearing on the clearing manifest,
the BPI clearing statement and the CBP manifest to conceal the fact that the BPI Laoag checks
showing the original amounts were deposited with Citibank Greenhills Branch.
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Thereafter, the altered CBP manifest and clearing statement, together with the clearing envelope
which contained the checks intended for BPI Laoag but without the pilfered checks deposited
with the Citibank Greenhills Branch in the account of MMC and drawn against Bustamante's
BPI Laoag account, were forwarded to CBP Laoag Clearing Center.
As a standard operating procedure, the CBP Laoag Clearing Center forwarded the said
documents to the drawee bank, BPI Laoag. However, BPI Laoag City Branch could neither
honor nor dishonor the pilfered checks as they were not included in the clearing envelope or in
the tampered CBP manifest and clearing statement. BPI Laoag was not given the chance to
dishonor the pilfered checks as they were not presented for payment. Thereafter, upon receipt of
the original clearing manifest from CBP Laoag Clearing Center with BPI's acknowledgement,
Valentino added back the amount of the pilfered checks so that the original manifest would tally
with all the records in CBP.
On the other hand, the sending bank, Citibank Greenhills Branch, did not receive any notice of
dishonor within the period provided under the CBP regulations, thus, it presumed that the checks
deposited in MMC's Current Account had been presented in due course to the drawee bank, BPI
Laoag, and were consequently honored by the latter. Thereafter, Citibank Greenhills Branch
allowed the withdrawal of the checks in the total amount of P9 million.
As a result of the aforesaid fraud committed against petitioner BPI, Desiderio and Estacio,
together with other personalities, were convicted of three (3) counts of Estafa thru Falsification
of Public Documents by the Sandiganbayan (SB). On the other hand, Valentino was discharged
and utilized as the main witness for the prosecution.
The RTC rendered a decision in favor of BPI. It gave credence to the NBI investigation Report
that the immediate and proximate cause of the defraudation were the criminal acts of Valentino
and Estacio. The lower court ruled that CBP, as employer, shall be liable for the damage caused
by its employees, to petitioner BPI under Articles 2176 and 2180 of the Civil Code.
On appeal, the CA reversed and set aside the decision of the RTC.
It reasoned that under Article 2180 of the Civil Code, the State is generally liable only for quasi
delicts in case the act complained of was performed by a special agent. Both Valentino and
Estacio were not special agents as neither of them was duly empowered by a definite order or
commission to perform some act or were charged with some definite purpose which gives rise to
the claim.
ISSUE:
Whether or not CBP shall be liable for the damage caused by its two employees under Articles
2176 and 2180 of the Civil Code.
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RULING:
NO, CBP is not liable for the damage caused by its employees because Valentino and
Estacio were not "special agents.
To reiterate, CBP's establishment of clearing house facilities for its member banks to which
Valentino and Estacio were assigned as Bookkeeper and Janitor-Messenger, respectively, is a
governmental function. As such, the State or CBP in this case, is liable only for the torts
committed by its employee when the latter acts as a special agent but not when the said
employee or official performs his or her functions that naturally pertain to his or her office. A
special agent is defined as one who receives a definite and fixed order or commission, foreign to
the exercise of the duties of his office.43 Evidently, both Valentino and Estacio are not
considered as special agents of CBP during their commission of the fraudulent acts against
petitioner BPI as they were regular employees performing tasks pertaining to their offices,
namely, bookkeeping and janitorial-messenger. Thus, CBP cannot be held liable for any damage
caused to petitioner BPI by Valentino and Estacio's unlawful acts.
Even on the assumption that CBP is performing proprietary functions, still, it cannot be held
liable because Valentino and Estacio acted beyond the scope of their duties.
Nonetheless, even assuming that CBP is an ordinary employer, it still cannot be held liable.
Obviously, Valentino and Estacio's fraudulent acts of tampering with and pilfering of documents
are not in furtherance of CBP's interests nor done for its account as the said acts were
unauthorized and unlawful. Also, petitioner BPI has the burden to prove that Valentino and
Estacio's fraudulent acts were performed within the scope of their assigned tasks, which it failed
to do. It is only then that the presumption that CBP, as employer, was negligent would arise
which then compels CBP to show evidence that it exercised due diligence in the selection and
supervision of its employees.
Thus, where a public officer acts without or in excess of jurisdiction, any injury or damage
caused by such acts is his or her own personal liability and cannot be imputed to the State.
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VII.H. Damnum Absque Injuria
REX RICO vs. UNION BANK OF THE PHILIPPINES
G.R. No. 210928; February 14, 2022
By: chocobo
DOCTRINE:
When a Bank issues a credit card to a party, the parties entered into a contractual
relationship governed by the terms and conditions found in the card membership
agreement which constitute as the law between the parties. Hence, in case of breach
thereof, moral damages may be recovered if any of the party is shown to have acted
fraudulently or in bad faith. "Malice or bad faith implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity. However, a
conscious or intentional design need not always be present because negligence may
occasionally be so gross as to amount to malice or bad faith." Article 2220 of the Civil Code
contemplates gross negligence as bad faith which would justify an award of moral
damages.
Every credit card transaction involves three contracts, namely:
1. the sales contract between the credit card holder and the merchant or the business
establishment which accepted the credit card;
2. the loan agreement between the credit card issuer and the credit card holder; and
3. the promise to pay between the credit card issuer and the merchant or business
establishment.
Damnum Absque Injuria – there can be no damage without injury when the loss or harm
was not the result of a violation of a legal duty. In such cases, the consequences must be
borne by the injured person alone. The law affords no remedy for damages resulting from
an act which does not amount to legal injury or wrong.
In order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant owed
to the plaintiff.
It is also required that a culpable act or omission was factually established, that proof that
the wrongful act or omission of the defendant is shown as the proximate cause of the
damage sustained by the claimant and that the case is predicated on any of the instances
expressed or envisioned by Arts. 2219 and 2220 of the Civil Code
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FACTS:
This case originated from the decision of petitioner Rex Rico to cancel his flight reservation with
Tiger Airways when he found out that there were no longer any available seats. When he used
his credit card while dining in Gourdo’s restaurant, the card was declined, thereby causing him
embarrassment and humiliation in front of his two guests.
This prompted petitioner Rico to file a complaint for damages against respondent Union Bank
alleging that Union Bank negligently handled his credit card account. He averred that respondent
Union Bank dishonoured his credit card for alleged non-payment of overdue account. He
maintained that he is entitled to the award of moral damages for the embarrassment and
humiliation he suffered on account of such a mortifying situation.
Union Bank asserted that it handled Rico’s credit card account diligently in good faith. The cause
of Rico’s credit card decline was due to the unresolved issue with regard to his online purchase
of a ticket with Tiger Airways which he allegedly cancelled and his failure to pay the minimum
amount due on his SOA, in accordance with the Terms and Conditions. Moreover, Union Bank
averred that it should not be held liable for damages since it was Rico who failed to comply with
the T&C of the credit card.
Rico contested the SOA dated October 16, 2005 which still included the transaction with Tiger
Airways amounting to P30,376.79. According to him, Union Bank should refund him such
amount. But Union Bank suggested that before it can refund to him the amount paid, he should
first communicate with Tiger Airways for the request of refund. As a result, Rico did not pay
Union Bank for the amount corresponding to the Tiger Airways airline tickets charged to his
account.
RTC ruled that the dishonour of Rico’s credit card was without any valid reason. When Rico
used his credit card at Gourdo’s Restaurant, he had no liability to Union Bank. Respondent’s
careless, negligent, and unjustified dishonour of Rico’s credit card placed him in an embarrassing
situation. Thus, moral damages were awarded in favour of Rico in the amount of P500,000.00.
Furthermore, Union Bank’s wrongful act was accompanied by bad faith or done in a wanton and
reckless manner, thereby entitling Rico to exemplary damages in the amount of P200,000.00.
Lastly, attorney’s fees in the amount of P300,00 are also awarded to him. CA affirmed the RTC
but reduced the awarded damages to P30K, P20K, and 10K for moral damages, exemplary
damages, and attorney’s fees, respectively.
Hence, this petition for review on certiorari under R45 assailing the reduction of the award of
damages made by the CA.
ISSUE:
Whether or not petitioner Rico is entitled to moral damages, exemplary damages and attorney’s
fees due to the alleged gross negligence of respondent Union Bank when it dishonored Rico’s
credit card purchase request, causing him embarrassment and humiliation in the restaurant.
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RULING:
NO. Petitioner Rex Rico is not entitled to moral damages, exemplary damages and
attorney’s fees.
In this case, the award of moral damages by the RTC and the CA was clearly unjustified.
The disapproval of the credit card transaction which allegedly caused him embarrassment and
humiliation worthy of moral damages cannot be solely attributed to respondent Union Bank
when there is no demandable right to begin with. However, when Union Bank issued a Visa
credit card to Rico, the parties entered into a contractual relationship governed by the terms and
conditions found in the card membership agreement. Hence, in case of breach thereof, moral
damages may be recovered if any of the parties is shown to have acted fraudulently or in bad
faith.
But it is quite unfortunate for Rico to fault Union Bank for its failure to refund or reverse the
amount of Tiger Airways airline tickets, when it was clear that the incident arose from his own
decision to cancel his flight with Tiger Airways and insistence to refund or reverse the same.
When Rico used his credit card to pay for his purchase of Tiger Airways airline tickets, three
contracts were created, namely: (a) sales contract between Rico and Tiger Airways; (b) loan
agreement between Rico and Union Bank; and ( c) the promise to pay between Union Bank and
Tiger Airways. When the said transaction was executed, Union Bank's promise to pay Tiger
Airways arose. On the other hand, a creditor-debtor relationship was created between Union
Bank and Rico, respectively. Thus, Union Bank had the right to demand the payment of the
amount of airline tickets against Rico which the bank did so as indicated in its July, August,
September, and October 2005 SOAs
Union Bank cannot be faulted when it continued to charge Rico with the amount of the airline
tickets. As per the Terms and Conditions, in case of payment default, the right to use the credit
card shall automatically be revoked which Union Bank did rightly so. Union Bank did not violate
the Terms and Conditions, nor any legal duty, to pay for Rico’s purchases using the credit card.
Union Bank cannot also be considered grossly negligent when it automatically revoked Rico’s
credit card account when he failed to pay the minimum amount due pending the resolution of the
disputed transactions.
Union Bank cannot be considered grossly negligent in charging the amount of airline tickets
against Rico's credit card account in the July to October SOAs, or prior to the final resolution of
the dispute. Union Bank did not violate the Terms and Conditions, nor any legal duty, to pay for
Rico's purchases using the credit card. Union Bank cannot also be considered grossly negligent
when it automatically revoked Rico's credit card account when the latter failed to pay the
minimum amount due pending the resolution of the disputed transactions. Insofar as Union Bank
is concerned, Rico offered to enter into a loan agreement with Union Bank to pay for his Tiger
Airways airline tickets and Union Bank, when it allowed the said transactions, accepted Rico's
offer.
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Subsequently, a contract between Union Bank and Tiger Airways arose, such that, the former is
obliged to pay the latter the amount of airline tickets purchased by Rico. In reviewing and
investigating the alleged cancelled sales agreement between Rico and Tiger Airways, Union
Bank is justified to protect itself as a business for profit.
Hence, the Court finds the disapproval of Rico’s credit card on November 20, 2005 (date of
credit card decline in Gourdo’s) as justified and done in good faith. Union Bank neither breached
its contract with Rico nor acted with wilful intent to cause harm when it revoked Rico’s credit
card privileges when he failed to pay the minimum amount due on his SOA.
It is not enough that Rico merely suffered humiliation or embarrassment as a result of
respondent’s disapproval of the credit card transaction.
It was Rico's own action, i.e., his resolve to cancel his flight with Tiger Airways, which was the
proximate cause of his embarrassing and humiliating experience, We find the award of moral
damages by the RTC and the CA clearly unjustified.
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VII.K.1.a. Actual and Compensatory Damages
CECILIA YULO LOCSIN vs. PUERTO GALERA RESORT HOTEL, INC.
G.R. No. 233678, July 27, 2022
By: shaaariiing
DOCTRINE:
Time and again, it has been held that the power of the court to award attorney's fees under
Article 2208 demands factual, legal, and equitable justification. Even when a claimant is
compelled to litigate with third persons, or to incur expenses to protect his rights,
attorney's fees may not be awarded where no sufficient showing of bad faith in a party's
persistence in a case other than an erroneous conviction of the righteousness of his cause.
FACTS:
Luisito B. Padilla, in his personal capacity and in behalf of Robustiniano Quinto, Jr. and
respondent Puerto Galera Resort Hotel, Inc. (PGRHI) filed a Complaint for actual, moral, and
exemplary damages with prayer for attorney's fees and cost of suit against Cecilia Locsin, for
allegedly looting and gutting the fixtures, appliances and other movables found in a hotel
complex owned by Quinto. In 1993, Padilla entered into a lease contract with Quinto, registered
owner of PGRHI, over the hotel complex for a term of 10 years. In 2004, Padilla and Quinto
executed a Memorandum of Agreement (MOA) wherein they undertook to look for prospective
tenants or lessees of the hotel complex together with all its improvements; to jointly share in the
earnings to be derived from the rentals thereof, and to individually or collectively defend,
protect, or enforce their rights, title and/or interests in the said property.
In May 2006, Padilla and Quinto agreed to lease the hotel complex to Locsin pursuant to the
MOA, for a period of 10 years beginning June 1, 2006, with a guaranteed monthly rental of
P90,000.00. Cecilia paid a security deposit of P500,000.00, and immediately took possession of
the hotel complex. All keys to the hotel complex were turned over to her. Cecilia paid monthly
rentals thereafter. After one year, Quinto visited the hotel complex and to his utter shock, he
discovered that the premises was totally damaged. All the facilities, equipment, fixtures and
improvements existing prior to turnover were either removed or damaged. The place was a total
mess and in a state of ruin. Quinto immediately informed Padilla about the damage. Padilla
arrived the next day and reported the incident to the police. According to Padilla, the estimated
cost of the damages and losses amounted to P12,500,000.00.
Cecilia countered that there was no perfected contract of lease to begin with, thus, complainants
had no cause of action against her. Cecilia claimed that the execution of the lease contract was
conditioned upon Quinto's timely presentation of the original title covering the hotel complex
and since Quinto failed in this aspect, the contract was not finalized.
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She claims that the letter she sent to Quinto merely signified her family's interest to lease the
hotel complex but it never ripened into a contact.
During the trial, Quinto was supposed to be Padilla's fifth witness. However, Quinto asked for
postponement on two occasions. On the third re-setting, Quinto manifested that he would move
for the dismissal of the case against Cecilia alleging that he did not fully understand the contents
of the SPA he accomplished in favor of Padilla to pursue the instant case as well as his Judicial
Affidavit consisting of his direct testimony. In support of his Manifestation with Motion to
Dismiss, Quinto executed a Revocation of the SPA and an Affidavit stating that he never
intended to authorize Padilla to file a case against Cecilia in his behalf.
On the basis of Quinto's revocation of the August 28, 2007 SPA, the trial court granted Quinto's
Motion to Dismiss in an Order 22 dated March 4, 2013. The complainants moved for
reconsideration but it was Denied. Aggrieved, Padilla and PGRHI appealed before the CA.
Meanwhile, Cecilia passed away. She was substituted by Leandro Locsin. The CA granted the
appeal, thereby reversing and setting aside the RTC Orders. Hence, this Petition for Review on
Certiorari.
ISSUE:
Whether or not Cecilia is entitled to attorney's fees and litigation expenses
RULING:
NO, Cecilia is not entitled to attorney’s fees and litigation expenses.
It bears stressing that when Padilla filed the complaint for damages against Cecilia, he was
merely exercising his right to litigate based on his material interest over the hotel complex
having introduced very substantial improvements therein. With the MOA and SPA executed in
his favor, he had factual and legal bases to back up his claim and thus, the suit was not
unfounded as claimed by petitioner. Besides, there was no showing that Padilla filed the case in
bad faith. Accordingly, attorney's fees and litigation expenses should not have been awarded.
In the extant case, even the trial court found that not only did petitioner fail to satisfy her claim
for damages. She also failed to show that the complaint was tainted with fraud, malice or was
filed in bad faith.
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SPS. GEMA O. TORRECAMPO vs. WEALTH DEVELOPMENT BANK CORP.
G.R. 221845, March 21, 2022
By: Czarina
DOCTRINE:
There must be pleading and proof of actual damages suffered for the same to be recovered.
Self-serving statements of account are not sufficient basis for an award of actual or
compensatory damages
FACTS:
On December 12, 2008 the Torrecampo spouses entered into a housing loan agreement with the
respondent secured by a real estate mortgage over a property owned by the spouses.
Subsequently, they defaulted in payment which led the respondent to commence an action to
foreclose the real estate mortgage extra-judicially under the provisions of Act No. 3135, or an
Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages, as amended. A certificate of sale was issued on July 11, 2010 and was duly
registered with the Register of Deeds of Cebu City on June 24, 2010.
After the lapse of one-year redemption period and without any attempt on the part of the spouses
to redeem the mortgaged property, the ownership of the lot was then consolidated in favor of
respondent bank as the purchaser in auction sale. However, the petitioners refused to vacate the
property which led the respondent to file an ex-parte petition for the issuance of a writ of
possession which was granted by the RTC. Then, a notice to vacate was issued by the sheriff.
The petitioners filed a motion for reconsideration but it was also denied by the RTC. The writ of
possession was issued and the petitioners were evicted on the property.
On March 8, 2012, the petitioners filed a motion to set aside the extra-judicial foreclosure sale
and cancel the writ of possession with prayer for damages on the ground that there was no
violation of the mortgage contract, they argued that: (1) the agreed maturity date of the loan has
not yet arrived; (2) the term loan agreement , the real estate mortgage contract, the promissory
notes and the disclosure statement of the loan/credit transaction did not provide for the amount of
the monthly amortization; and (3) no demand letter or statement of account of any amount
payable for any given month was sent at their address.
The respondent bank countered that there was no violation of the real estate contract which
contains an acceleration clause to the effect that in any event of default, the entire obligation
immediately becomes due and payable, and as a consequence of default, the mortgagee has the
right to foreclose the mortgage, to have the property seized and sold, and to apply the proceeds to
the obligation. They followed the requirements on posting and publication of the notice of
extra-judicial foreclosure under Act No. 3135, and whatever damages petitioners have suffered
were due to their own acts.
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The RTC denied the petitioner’s motion to set aside the extra-judicial foreclosure sale and cancel
the writ of possession with prayer for damages ruling that proceedings for issuance of the writ of
possession are non-litigious in nature such that the court will not delve into the merits of the
petition. Upon giving due course to the notice of appeal, the case was elevated to the CA which
denied the petition and affirmed the findings of the RTC on the ground that Section 8 of Act No.
3135 are only applicable until the period of redemption, further stating that once redemption
lapses and consolidation of the purchaser’s title ensues. Act No. 3135 is not applicable anymore.
Hence, this petition for review for certiorari which seeks the reversal of the decision of the CA.
ISSUE:
Whether or not the petitioners are entitled to actual damages.
RULING:
NO, petitioners are not entitled to actual damages.
Petitioners failed to prove with a reasonable degree of certainty that they lost an actual pecuniary
amount. Petitioners cannot obtain compensation for their own wrongdoing.
ARTURO A. DACQUEL vs. SPOUSES ERNESTO SOTELO
G.R. No. 203946, August 4, 2021
By: bsibsi
DOCTRINE:
The general rule is that attorney's fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate. They are not to be
awarded every time a party wins a suit. Being the exception rather than the rule, an award
of attorney's fees requires compelling reason before it may be granted. Parties still are
allowed to stipulate on it beforehand. In the absence of any agreement, however, factual,
legal, and equitable justification must be established to avoid speculation and conjecture
surrounding the grant of attorney's fees by the courts.
FACTS:
In 1994, Ernesto and Flora Sotelo began the construction of a 7-door apartment on a parcel of
land located in Malabon City formerly covered by TCT No. 738. Due to budget constraints, the
Spouses Sotelo had to borrow ₱140,000.00 from Arturo Dacquel, Flora’s brother. The
construction of the apartment was completed in 1997. Spouses Sotelo claimed that the debt of
₱140,000.00 was agreed to be payable in double the said amount, or ₱280,000.00, to be collected
from the rental income of four out of the seven apartment units.
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There was no agreed period within which to pay the loan and the interests. Dacquel also required
the Spouses Sotelo to cede to him the subject property as security from the loan. On September
1, 1994, the parties executed a Deed of Sale. TCT No. 738 was thereafter cancelled and TCT No.
M-10649 was issued under Dacquel’s name. In March 2000, when Dacquel had collected the full
amount of ₱280,000.00 in rental income from the four apartment units, the Spouses Sotelo asked
for the return of the subject property, however, Dacquel allegedly held on to the title and refused
to yield the same.
On May 9, 2000, the Spouses Sotelo filed a complaint for annulment of title and reconveyance
against Dacquel before the RTC. They alleged that Dacquel held the title to the subject property
only as security for the loan and in trust for the Spouses Sotelo, who remained the beneficial
owners thereof. The building permits for the7-door apartment, as well as the original registration
of the electric and water meters of all seven units, were issued in Ernesto Sotelo's (Ernesto) name
and that the construction expenses were paid for by Ernesto's checks.
Dacquel, on the other hand, asserted that the Spouses Sotelo’s debts to him totaled ₱1,000,000.00
which he had recorded. As payment for their debts, the Spouses actually offered to sell to him the
subject property and he had accepted their offer.
They reduced their agreement into writing as a Deed of Sale on September 1, 1994 for the true
consideration of ₱1,000,000.00, and the amount of ₱140,000.00 was indicated in the Deed only
for purposes of reducing the tax liabilities for the transaction. Dacquel claimed that the Spouses
Sotelo are estopped from questioning the validity of the Deed of Sale because of their
acquiescence to the subject property’s transfer unto Dacquel’s name. Also, Dacquel caused the
construction of the apartment using the sum he inherited from one Richard Lloyd Wilcox.
ISSUE:
Whether or not respondents-spouses are entitled to attorney’s fees.
RULING:
NO, respondent-spouses are not entitled to attorney’s fees.
While the CA declared that petitioner's acts forced respondents-spouses to litigate, records show
scant reason to consider the case within the said exception cited under Article 2208. Even when a
claimant is compelled to bring his cause to court or incur expenses to protect his rights, attorney's
fees still may not be awarded as part of damages where no sufficient showing of bad faith could
be reflected in a party's persistence in a case other than an erroneous conviction of the
righteousness of his cause.
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No such bad faith was proven against petitioner. On the contrary, both parties were impelled by
the honest belief that their respective actions were justified. The entire legal ruckus was sparked
by a series of undocumented transactions over the subject property, driving both parties into
deeper misunderstandings that ended up too complicated and far too late to be clarified. Yet, in
the records, both petitioner and respondents-spouses appeared to be merely in pursuit of their
own interests. Respondents-spouses' victory should not earn petitioner an automatic label of bad
faith and a correlative award of attorney's fees.
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES
G.R. No. 205172, June 15, 2021
By: Czarina
DOCTRINE:
Actual damages to be recoverable must be supported by evidence on record and cannot be
left merely to the discretion of the court.
FACTS:
On July 23, 1987, the Republic, through the Presidential Commission on Good Government
(PCGG), filed a complaint for reconveyance, reversion, accounting, restitution and damages
against Disini, President Marcos and Imelda Marcos, for amassing ill-gotten wealth during
President Marcos' term.
Among others, the Republic alleged that Disini, a known close associate of President Marcos,
president of Herdis and who became Special Sales Representative (SSR) of Westinghouse
received special concessions from President Marcos in relation to the award of the Bataan
Nuclear Power Plant (BNPP) contract to Westinghouse and B&R, for a scandalously exorbitant
amount. Allegedly, Disini received substantial commissions from Westinghouse and B&R for
the award of the contract and its execution.
During trial, only the Republic presented evidence since Disini was a party in default: after
summons to him remained unserved and after summons by publication against him was
completed. The default order was sustained by the SC in a Decision rendered on July 5, 2010
which became final and executory on November 18, 2010.
On April 11, 2012, the Sandiganbayan rendered its assailed Decision declaring the commissions
in the amount of $50,562,500.00 received by Disini to be ill-gotten wealth and ordering him to
account for and reconvey the said amount to the Republic. In ruling for the Republic, the
Sandiganbayan relied on the testimonies of witnesses Manahan, Vergara, and Jacob, all of whom
were privy to the BNPP project.
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However, while the Sandiganbayan found, Disini liable, it held that there was no evidence of
President Marcos' and Imelda's receipt of the commissions. Hence, a motion for reconsideration
was submitted by both parties.
The Republic argued that it sufficiently proved that anomalous grants of loans and guarantees
were given to the companies owned by President Marcos and Disini through Presidential
issuances insisted that President Marcos and Disini misappropriated, embezzled and converted
funds of government financial institutions by granting unwarranted favors to Herdis.
It likewise claimed that it is entitled to actual, temperate, nominal and exemplary damages,
attorney's fees and other judicial costs. On the other hand, Disini opined that the Republic had no
cause of action against him as there was no contract or quasi-contract violated, he also alleged
that witnesses Manahan, Vergara and Jacob had no personal knowledge of the allegations in their
affidavits, and that no evidence was adduced to prove the amount of commissions he allegedly
received from Westinghouse and B&R. Both motions as well as Disini’s Motion to Strike Out
were denied by the Sandiganbayan for lack of merit.
Hence, this Petition for Review on Certiorari which assails the April 11, 2012 Decision and the
October 24, 2012 Resolution3 of the Sandiganbayan in Civil Case No. 0013 which declared as
ill-gotten the commissions received by Herminio T. Disini relative to the Bataan Nuclear Power
Plant (BNPP) project, and ordered him to account for and reconvey the total amount of
$50,562,500.00, with interest until fully paid.
ISSUE:
Whether or not the Republic is entitled to actual damages.
RULING:
NO, the Republic is not entitled to actual damages.
While We affirm the Republic's entitlement to recover Disini's ill-gotten wealth, no other
evidence was presented to show the definite amount thereof. The Republic failed to substantiate
its claim for actual pecuniary loss or damages sustained by reason of Disini's acquisition of
ill-gotten wealth.
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VII.K.1.b. Moral damages
SPS. GEMA O. TORRECAMPO vs. WEALTH DEVELOPMENT BANK CORP.
G.R. 221845, March 21, 2022
By: Czarina
DOCTRINE:
According to Article 2217 of the Civil Code, moral damages are meant to compensate the
claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation and similar injuries unjustly
caused. Such damages, to be recoverable, must be the proximate result of a wrongful act or
omission, the factual basis for which must be satisfactorily established by the aggrieved
party.
FACTS:
On December 12, 2008 the Torrecampo spouses entered into a housing loan agreement with the
respondent secured by a real estate mortgage over a property owned by the spouses.
Subsequently, they defaulted in payment which led the respondent to commence an action to
foreclose the real estate mortgage extra-judicially under the provisions of Act No. 3135, or an
Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate
Mortgages, as amended. A certificate of sale was issued on July 11, 2010 and was duly
registered with the Register of Deeds of Cebu City on June 24, 2010.
After the lapse of one-year redemption period and without any attempt on the part of the spouses
to redeem the mortgaged property, the ownership of the lot was then consolidated in favor of
respondent bank as the purchaser in auction sale. However, the petitioners refused to vacate the
property which led the respondent to file an ex-parte petition for the issuance of a writ of
possession which was granted by the RTC. Then, a notice to vacate was issued by the sheriff.
The petitioners filed a motion for reconsideration but it was also denied by the RTC. The writ of
possession was issued and the petitioners were evicted on the property.
On March 8, 2012, the petitioners filed a motion to set aside the extra-judicial foreclosure sale
and cancel the writ of possession with prayer for damages on the ground that there was no
violation of the mortgage contract, they argued that: (1) the agreed maturity date of the loan has
not yet arrived; (2) the term loan agreement , the real estate mortgage contract, the promissory
notes and the disclosure statement of the loan/credit transaction did not provide for the amount of
the monthly amortization; and (3) no demand letter or statement of account of any amount
payable for any given month was sent at their address.
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The respondent bank countered that there was no violation of the real estate contract which
contains an acceleration clause to the effect that in any event of default, the entire obligation
immediately becomes due and payable, and as a consequence of default, the mortgagee has the
right to foreclose the mortgage, to have the property seized and sold, and to apply the proceeds to
the obligation. They followed the requirements on posting and publication of the notice of
extra-judicial foreclosure under Act No. 3135, and whatever damages petitioners have suffered
were due to their own acts.
The RTC denied the petitioner’s motion to set aside the extra-judicial foreclosure sale and cancel
the writ of possession with prayer for damages ruling that proceedings for issuance of the writ of
possession are non-litigious in nature such that the court will not delve into the merits of the
petition. Upon giving due course to the notice of appeal, the case was elevated to the CA which
denied the petition and affirmed the findings of the RTC on the ground that Section 8 of Act No.
3135 are only applicable until the period of redemption, further stating that once redemption
lapses and consolidation of the purchaser’s title ensues. Act No. 3135 is not applicable anymore.
Hence, this petition for review for certiorari which seeks the reversal of the decision of the CA.
ISSUE:
Whether or not the petitioners are entitled to moral damages.
RULING:
NO, petitioners were not entitled to recover moral damages.
No wrongful act or omission was proven to be committed by respondent bank, petitioners cannot
claim moral damages.
KLM ROYAL DUTCH AIRLINES vs. DR. JOSE M. TIONGCO
G.R. No. 212136, October 04, 2021
By: zzzzzz123456
DOCTRINE:
The award of moral damages is proper to enable the injured party to obtain means of
diversion or amusement that will serve to alleviate the moral suffering they underwent
because of another's culpable action.
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FACTS:
On October 1998 Respondent was invited by the United Nations - World Health Organization
(UN-WHO) to be a keynote speaker in the 20th Anniversary of Alma-Ata Declaration to be held
in Almaty, Kazakhstan from November 27-28, 1998. Hence, respondent booked a trip from
Manila to Almaty.
The main carrier of respondent was KLM Royal Dutch Airlines, Lufthansa was his intermediate
carrier, while Singapore airline was his first carrier and due to some circumstances, Turkish
airline became his last carrier. During his trip, respondent had with him one hand carry bag, and
one checked-in a suitcase containing a copy of his speech, resource materials, clothing for the
event, and other personal items.
Respondent’s initial flight was as follow:
a) From Manila to Singapore via Singapore Airline;
b) From Singapore to Amsterdam via KLM Airline;
c) From Amsterdam to Frankfurt via KLM Airline; and
d) From Frankfurt to Almaty via Lufthansa Airline.
However, as his flight from Frankfurt departed from Amsterdam 45 minutes late, respondent
missed his next flight to Almaty. Upon arrival in Frankfurt, respondent sought help from a KLM
airline employee regarding his missed flight, checked in luggage, and his speaking engagement.
The KLM employee assured him that his checked in luggage will be with him for the next flight
arranged via Lufthansa and Turkish Airline. The new itinerary of respondent was then: (a) From
Frankfurt to Instanbul via Lufthansa Airline; and (b) From Istanbul to Almaty via Turkish
Airline.
During his flight, he was likewise assured by a Lufthansa employee or Ms. Chisem that his
checked in luggage will be transported in the same flight. However, before boarding Turkish
Airline, Respondent looked for his suitcase but could not locate it. He asked Mr. Osman Bey
(Bey) of Turkish Airlines to ask Miss Chizem to find his missing suitcase. Thirty minutes passed
and yet his suitcase was not in sight. However, to avoid missing the flight, Mr. Bey told
respondent to board and assured that his suitcase will be with him.
Upon arriving in Almaty and even after going back to Manila, the checked in luggage of
respondent could not be found, this caused respondent to attend his speaking engagement poorly
dressed without any visual aid and resource material.
After three months from arrival in the Philippines, and still his luggage was not returned,
respondent wrote Singapore Airlines, KLM and Lufthansa, demanding for compensation for his
lost luggage and the inconvenience he suffered. None of the airline compensated respondent and
all denied liability. Hence, respondent was constrained to file a case against the airlines for
damages.
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RTC Ruling: KLM is solely liable for the damages suffered by Dr. Tiongco on account of his lost
suitcase. KLM failed to exercise extraordinary care in handling the suitcase of Dr. Tiongco when
it wrongfully transferred it to Lufthansa flight no. LH10381 instead of LH3346, Dr. Tiongco's
flight to Almaty. KLM also failed to immediately inquire about what happened to the suitcase
after Dr. Tiongco informed its personnel.
CA Ruling: agreed with the trial court on KLM's liability for breach of contract of carriage.
However, it modified the awards of damages for being excessive.
ISSUE:
Whether or not the awards of moral and exemplary damages are proper.
RULING:
NO, the amounts need to be modified.
Here, KLM displayed indifference to the plight and inconvenience suffered by Dr. Tiongco when
he lost his luggage. It made empty promises that his luggage would be travelling with him and
even failed to inform Dr. Tiongco that his suitcase had been found. Moreover, it did not return
the luggage to him even after it was found. The award of exemplary damages likewise needs to
be modified. Undoubtedly, KLM acted in a wanton, and reckless manner. Given the surrounding
facts and circumstances in the instant case, the Court holds that the amount of P100,000.00 is
sufficient.
EDUARDO ATIENZA vs. GOLDEN RAM ENGINEERING SUPPLIES & EQUIPMENT
CORPORATION
G.R. No. 205405, June 28, 2021
By: January B. Mar
DOCTRINES:
Moral damages are awarded if the following elements exist in the case:
1. an injury clearly sustained by the claimant;
2. a culpable act or omission factually established;
3. a wrongful act or omission by the defendant as the proximate cause of the injury
sustained by the claimant; and
4. the award of damages predicated on any of the cases stated Article 2219 of the Civil
Code.
In addition, the person claiming moral damages must prove the existence of bad faith by
clear and convincing evidence for the law always presumes good faith.
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It is not enough that one merely suffered sleepless nights, mental anguish, and serious
anxiety as the result of the actuations of the other party. Invariably such action must be
shown to have been willfully done in bad faith or with ill motive. Bad faith, under the law,
does not simply connote bad judgment or negligence. It imports a dishonest purpose or
some moral obliquity and conscious doing of a wrong, a breach of a known duty through
some motive or interest or ill will that partake of the nature of fraud.
Bad faith, under the law, does not simply connote bad judgment or negligence. It imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a breach of a
known duty through some motive or interest or ill will that partake of the nature of fraud.
FACTS:
Petitioner Eduardo Atienza was engaged in the business of operating MV Ace I, a passenger
vessel plying the Batangas-Mindoro route. Respondent Golden Ram Engineering Supplies and
Equipment Corporation [GRESEC] is a dealer and distributor of engines and heavy equipment.
Its President and Manager is [respondent] Bartolome T. Torres.
Asserting his claim for damages arising from breach of warranty. Atienza filed a Complaint,
averring, inter alia, that Torres offered for sale two vessel engines amounting to P3.5 Million
Pesos to be installed in MV Ace I.
On 24 August 1993, Atienza bought the two vessel engines from GRESEC and as proof of his
purchase, he was issued a Proforma Invoice which stated therein the warranty period, viz:
WARRANTY PERIOD OF THE EQUIPMENT: The warranty period is given in accordance
with the General Conditions of Sale DK.0105.N-12-87, article XI, herewith attached, for a period
of 12 months, reckoned from date of commissioning, but not longer than 18 months after
notification of readiness for delivery ex-warehouse Manila. The warranty period is farther
limited to 2000 hours of operation.
Atienza forthwith paid the amount of P2.5 Million Pesos, after which the two engines were
delivered and commissioned by GRESEC sometime in March 1994.
On 26 September 1994, the engine on the right side of MV Ace I suffered a major dysfunction,
the diagnosis of which revealed that the connecting rod had split resulting in engine stuck up.
Atienza immediately reported the incident to GRESEC which sent a certain Engineer R. R.
Torres (Engr. Torres), its Sales and Service Engineer, to inspect and determine the extent of the
damage. Engr. Torres confirmed that the "defect was inherent being attributable to factory
defect". This finding was reported to MAN B&W Diesel, Singapore Pte. Ltd. (MAN Diesel), the
foreign supplier. In turn, the latter promised that the engine which suffered the malfunction
would be replaced in accordance with the warranty.
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Thereafter, Atienza made pleas for the replacement of the engine but his entreaties fell on deaf
ears. Inevitably, he suffered losses for failure to operate since 26 September 1994. On 28 October
1994, Atienza wrote GRESEC a Demand Letter offering two alternatives for the company – one,
replace the engine or reimburse him for the losses he had incurred, or two, retrieve the two
engines and refund the cost with interest plus payment for losses. However, GRESEC paid no
heed to his demand prompting him to lodge a Complaint for damages.
In their Answer, GRESEC and Torres (collectively, defendants) admitted the breakdown of the
engine but confuted Atienza's assertion that Engr. Torres had confirmed that "defect was inherent
being attributable to factory defect". Contrariwise, they claimed that the cause of the damage to
the engine was improper maintenance on the part of Atienza. Defendants maintained that they
never promised to replace the engine and that MAN Diesel was liable only for replacement of
parts found to be defective on account of unsound material, faulty design or poor workmanship.
Inasmuch as the defect of the engine was brought about by improper maintenance, the warranty
claim must necessarily be denied as it was not within the coverage thereof. Moreover, GRESEC
was merely an agent of MAN Diesel which had the authority to grant or deny warranty claims.
Defendants likewise professed that Atienza had quoted portions of Article XI (Warranty Clause)
of the General Conditions to support his claim; yet, he conveniently omitted other provisions
which would nullify his claim, In particular, they cited Item 5 which states –
5. No warranty shall be accepted by MAN if damage is due to:
xxx
- Purchaser failing to comply with handling, maintenance and service instructions for
goods (e.g. operation instructions)."
On the other hand, the RTC's factual findings, cited by the appellate court in its disposition,
presented the testimonial and documentary evidence of both parties. The Pro-forma invoice
provides the conditions and the period of the warranty.
It is not controverted that the starboard engine broke down six months from time it was
commissioned. This means that it was well within the 12-month period under the warranty.
Raymond Torres testified on cross-examination that the starboard engine had not reached 2,000
hours at the time of breakdown of the engine and it was also within the period of 12 months from
the time of commissioning (tsn, pp. 22-23, dated September 10, 1996). From the time the
starboard engine was commissioned it had performed differently from that of the portside engine.
According to [Atienza] who was present during the sea trial in Manila Bay on February 13, 1994
it was [respondent] Bartolome Torres and [Engr.] Raymond Torres who effected the start of the
vessel and [Atienza] observed that the right side of engine was [not functioning properly]. When
asked what is the matter with the right engine (sic). Bartolome Torres and Engr. Raymond Torres
said that it only lacks adjustment. On the trip from Manila to Batangas. the right engine was still
slow in acceleration. But they were told to just use the engine for two weeks. The right engine
emitted black smoke (tsn, dated February 23, 1999). They again informed Bartolome Torres and
Engr. Raymond Torres who fixed the engine while the vessel MV Ace I was docked in Batangas
City. The black smoke disappeared but the acceleration was still the same.
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After one week, the right engine again emitted black smoke. Atienza again informed Bartolome
Torres who said that they will change the piston ring. Atienza was concerned why anything had
to be replaced in the new engine. After repair, the black smoke disappeared but the acceleration
of the engine was still slow. The right engine again emitted black smoke after three weeks.
Atienza was advised by defendants to change the propeller because it’s heavy and big. However.
when a brand-new propeller was used there was no remarkable change. It was only for one
month that the black smoke did not appear.
Atienza did not receive any written report about the repairs that were done on the starboard
engine. It was their understanding that it was Bartolome Torres and Engr. Raymond Torres who
will maintain the engines, all instructions by them were being followed by Manila Ace crew (tsn,
dated August 12, 1999). When the right engine broke down, [Atienza] was verbally assured that
[respondents] will replace the engine. They did not say that they will refer the matter to MAN
Diesel nor did they furnish Atienza with a copy of the findings of MAN Singapore (tsn, dated
January 27, 2000).
It is the allegation of [respondents] that MAN denied the warranty claims of Atienza under
paragraph 5 on the ground that, "the Purchaser failed to comply with the handling, maintenance
and servicing instructions for the goods." However, [respondents] failed to substantiate their
claim. It merely presented log sheets that were allegedly accomplished by the crew of MV Ace I.
xxx
Atienza, on the other hand, presented witnesses to prove that [respondents] were the ones in
charge of maintaining the two engines. Arsenio Lim, operations Manager of Manila Ace,
testified that they were instructed by [respondents] that when something goes wrong with the two
engines, they should call Mr. Torres (tsn, dated March 14, 1996). They are not supposed to let
another person touch the engine. A week after the starboard engine broke, Engr. Raymond Torres
went to see the engine and even took pictures without even opening the engine. In front of many
people Engr. Raymond Torres said "ok, I will change this after one week."
Rolando Casipi, oiler of Manila Ace, testified that Engr. Raymond Torres [told] them when to
change oil and that they cannot change oil without Raymond Torres present or supervising it. He
was beside the chief engineer when [Engr.] Raymond Torres told their chief engineer that if there
is any trouble in the engine just call him (tsn, dated August 12, 1997). [Atienza] testified that he
received no written report about the repairs that were done and that it was their understanding
that it was Bartolome Torres and Engr. Raymond Torres who will maintain the engines, all
instructions by them were being followed by Manila Ace crew (tsn, dated August 12, 1999).
Respondents maintain that for Atienza to avail of the warranty he should submit a written
complaint. This was not accomplished by Atienza for the reason that he always called upon
Bartolome Torres and Engr. Raymond Torres whenever there were problems with the engine (tsn,
dated April 13, 1999). Respondents did not require from Atienza a written complaint whenever
they fixed the engine. Respondents acted in bad faith when it required a written complaint from
[Atienza] after MAN Singapore had allegedly denied the claim on the warranty. They did not
even inform Atienza that they will refer the matter to MAN Singapore.
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Respondents also failed to explain the reason why of the two engines bought by Atienza, which
was used and maintained simultaneously, only the starboard engine suffered malfunction and
eventually it broke down.
ISSUE:
Whether respondents' denial of Atienza's warranty claim for the defective vessel engines was
done in bad faith as to hold Bartolome solidarily liable with GRESEC for the payment of actual
and moral damages, attorney's fees and costs of suit.
RULING:
YES, there is bad faith hence Atienza is entitled to moral damages and attorney’s fees.
In finding that respondents acted in bad faith in denying Atienza's warranty claim, the RTC
considered the following circumstances:
First. The starboard engine broke down a mere six (6) months from the time it was
commissioned. In fact, on cross examination of respondents' witness, Engr. Torres, respondent
Bartolome's son, testified that the engine broke down well within the period of 12 months from
the time of its commissioning and had not reached 2,000 hours of use.
Second. From the time it was commissioned, the starboard engine performed poorly compared
with the portside engine and continuously emitted black smoke which Atienza reported to the
respondents.
Third. Various parts of the malfunctioning engine, such as the piston ring and the propeller,
successively conked out and had to be replaced which concerned Atienza given that the engine
was purportedly brand new. Respondents ostensibly appeared to remedy the problem, but the
starboard engine continued to malfunction and breakdown.
Fourth. During negotiations for the sale of the engines and in the course of its operation,
respondents, along with Engr. Torres, repeatedly told Atienza that they were responsible for, and
in charge of, maintaining the engines. Atienza's employees, the operations manager, the chief
engineer and the oiler of MV Ace I, were specifically instructed by respondent Bartolome and
Engr, Torres to inform them of any problem concerning the engine.
Fifth. Respondents did not provide Atienza with written reports on the repairs made on the
engines. Atienza thought he was only dealing with respondents in the repair of the engine. He
was not made aware of respondents' principal, MAN Singapore's, requirement to file a written
claim in order to avail of the warranty. Atienza maintains that respondents never required him to
file a written complaint before they undertook to repair the malfunctioning engine. Neither did
respondents inform Atienza that they will refer the matter to their principal, MAN Singapore.
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Sixth. Respondents represented to Atienza that the starboard engine performs up to par and
comparably with the portside engine reaching between 1,800 to 2,200 Revolutions Per Minute
(RPM). However, contrary to the representation of respondents, the starboard engine had a weak
acceleration and below the minimum RPM required by MV Ace I.
Lastly. Respondents presented in evidence "the authorization of MAN regarding the shipment of
four (4) demo units."
We find no fault in the ratiocination of the RTC, to wit:
Had respondents complied with its obligation under the warranty, it can be reasonably expected
that Atienza would have continued earning in the same manner as its previous trips, which
clearly indicate that it failed to earn during the time it had to stop operations because of engine
breakdown.
Because of respondents' failure to replace the unserviceable engine which resulted in cessation of
operations of [Atienza's] vessel, he suffered serious anxiety, sleepless nights, social humiliation
and economic dislocation. He is entitled to moral damages in the amount of P200,000.00.
Atienza presented evidence that because of the cessation of the operations of MV Ace I on
September 26, 1994, the company failed to meet its obligations and creditors abandoned it for its
failure to pay its obligations.
The breach of warranty involved in this case does not involve simple negligence on the part of
respondents. They presented (Exh. "16"). the authorization of MAN regarding the shipment of
four (4) demo units. To the mind of the Court, this is an indication that it delivered demo units
instead of brand new units to Atienza. Coupled by the fact that from the beginning. Atienza has
complained of the slow acceleration of the starboard engine, the black smoke that it emits and its
breakdown. There being fraud and bad faith on the part of respondents, the award of moral
damages is proper.
Because of respondents' unjustifiable refusal to satisfy [Atienza's] valid claim, Atienza was
compelled to litigate and incur expenses to protect his interest. Atienza was constrained to
engage the services of a counsel for a fee of 20% of all amounts recovered as and for attorney's
fees plus P1,000.00 as appearance fee. In his direct-examination, Atienza disclosed that he had
already incurred half a million for his legal expenses (tsn, dated February 23, 1999). The award
of P150,000.00 attorney's fee is therefore proper.
From all the foregoing circumstances and as found by the trial court, we need not belabor the
point. The bad faith of respondents in refusing to repair and subsequently replace a defective
engine which already underperformed during sea trial and began malfunctioning six (6) months
after its commissioning has been clearly established. Respondents' uncaring attitude towards
fixing the engine which relates to MV Ace I's seaworthiness amounts to bad faith. Thus, the
RTC's grant of moral damages, attorney's fees and costs of suit has sufficient basis.
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Undoubtedly, respondents' unjustified denial of Atienza's warranty claim compelled him to
litigate. Under Article 2208 (2) and (5) of the Civil Code, attorney's fees and expenses of
litigation may be recovered:
(2) When the defendant's act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
xxx
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiffs plainly valid, just and demandable claim;
Consistent with the foregoing principles, the Court disagree with the CA's pronouncement
absolving respondent Bartolome from liability to the damages incurred by Atienza. Atienza
established sufficient and specific evidence to show that Bartolome had acted in bad faith or
gross negligence in the sale of the defective vessel engine and the delivery and installation of
demo units instead of a new engine which Atienza paid for.
Respondents Golden Ram Engineering Supplies and Equipment Corporation and Bartolome T.
Torres are DECLARED SOLIDARILY LIABLE to petitioner Eduardo Atienza for
Compensatory or actual damages in the form of unrealized income, Moral damages, Attorney's
fees and costs of suit, and 6% per annum interest.
ASTORA GANANCIAL vs. BETTY CABUGAO
G.R. No. 203348, July 06, 2020
By: VictoriaAytona
DOCTRINE:
Moral damages are not recoverable simply because a contract has been breached. They are
recoverable only if the party from whom they are claimed acted fraudulently or in bad
faith or in wanton disregard of his/her contractual obligations.
The person claiming moral damages must prove the existence of bad faith by clear and
convincing evidence for the law always presumes good faith. It is not enough that one
merely suffered sleepless nights, mental anguish, serious anxiety as the result of the
actuations of the other party. Invariably such action must be shown to have been willfully
done in bad faith or with ill motive. Mere allegations of besmirched reputation,
embarrassment and sleepless nights are insufficient to warrant an award for moral
damages. It must be shown that the proximate cause thereof was the unlawful act or
omission of the x x x petitioners
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FACTS:
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of P130,000.00,
agreed to be payable within three years. To guarantee her indebtedness, Ganancial entrusted to
Cabugao the Transfer Certificate of Title (TCT) No. 168803 and Tax Declaration No. 641, both
covering a 397-square-meter parcel of land, which Ganancial owns in her name.
The transaction later turned sour and ended in the parties’ respective lawsuits against each other
before the Regional Trial Court (RTC). Cabugao filed a case for foreclosure of real estate
mortgage against Ganancial, while the latter filed against the former a complaint for declaration
of the deed of mortgage as null and void.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject property as
collateral for her loan. Despite the lapse of three years from the date of the mortgage and
repeated demands, Ganancial failed and refused to pay the amount she owed Cabugao. A final
demand having proved futile, Cabugao sought the judicial foreclosure of the real estate
mortgage.
For her part, Ganancial assailed the authenticity of the Deed of Mortgage. While she entrusted
TCT No. 168803 with Cabugao, Ganancial averred that she never executed the supposed Deed of
Mortgage nor appeared for its notarization.
The RTC ruled in favor of Cabugao. It declared that Ganancial’s contentions against the
authenticity of the notarized Deed of Mortgage were not proven by clear and convincing
evidence. The CA denied Ganancial’s appeal. The CA ruled that mere irregularities in the
notarization do not affect the genuineness and due execution of the document.
ISSUE:
Whether or not the award of moral damages is proper
RULING:
NO, the award of moral damages is improper.
These minimum standards for a grant of moral damages are not at all extractable from Cabugao's
declarations in open court.
These statements were the only tangible proof in the records in support of Cabugao's claim for
damages. The RTC readily acceded to her monetary pleas and granted her a total of P100,000.00
as moral damages, P20,000.00 as exemplary damages, and a full P30,000.00 as attorney's fees
and litigation expenses, all attributed to and payable by Ganancial. We, however, find these
judicial awards legally unsound.
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A robotic allegation that one "suffered anxiety and sleepless nights," or a seemingly haphazard
conversion of these disturbed feelings into some pecuniary equivalent, without more, will not
automatically entitle a party to moral damages. On the other hand, Ganancial's refusal to pay her
indebtedness was grounded on her firm belief that the subject Deed of Mortgage was fake. She
was unwavering in her claim that she had a sound cause against Cabugao, and the honesty in her
legal pursuit is reflected in the consistency of her allegations throughout the proceedings. To the
Court, Ganancial's actuations as testified to by Cabugao cannot be seen as being motivated by a
corrupt purpose, some moral obliquity and conscious doing of a wrong, or a breach of known
duty through some other motive or interest or ill will that partakes of the nature of fraud37 to
merit an award of moral damages.
PHILIPPINE NATIONAL BANK vs. MANUEL C. BULATAO
G.R. No. 200972, December 11, 2019
By: Bonana
DOCTRINE:
It is settled that moral damages are recoverable where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or was done in a
manner contrary to morals, good customs, or public policy.
Exemplary damages may be awarded if the dismissal was effected in a wanton, oppressive
or malevolent manner."
Attorney's fees may be awarded since there is a factual, legal, or equitable basis for doing
so in light of the circumstances surrounding the case.
FACTS:
Respondent Bulatao was formerly the Senior Vice-President (SVP) of the Information
Technology Group of the Petitioner PNB. The respondent alleged that on October 1, 1999,
PNB’s President Mr. Benjamin Palma and Mr. Samit Roy, an Indian national, hosted a dinner for
PNB’s IT staff. In the dinner, the conclusion of a Joint Venture Agreement (JVA) between PNB
and Mr. Roy was announced. Additionally, it was announced that not all of the IT staff would be
retained because they would be required to undergo an International Competitive Test as a
precondition for absorption. Meanwhile, those who would not be absorbed would be offered
retirement packages.
The respondent objected to the JVA. He maintained that it was merely a ploy to force the IP
personnel who were not supportive of the project to leave the bank. In a letter dated November
10, 1999, the respondent manifested his intent to retire.
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Pertinent in the letter was his objection to the JVA and his manifestation that the working
environment brought about by the recent decisions of the management made it difficult for him
to stay at the employ of the petitioner. Moreover, in the said letter, he stated that he was going to
be on an official leave of absence,
Meanwhile, the JVA did not materialize. The respondent had a meeting with Mr. Lucio Tan, a
member of the Board of the Petitioner. He was asked to reconsider his decision to retire and
instead, to join Mr. Tan’s management Team. Subsequently, the respondent went back to work on
January 1, 2000. During this time, his previous letter was not yet acted upon, causing the
respondent to withdraw the same.
However, on January 29, 2000, the respondent was informed that the Board had already accepted
his decision and informed him not to report to work. As a consequence, the respondent filed a
complaint for illegal dismissal with the NLRC.
The NLRC dismissed the complaint for lack of jurisdiction. It held that it was the RTC in
accordance with RA 8799 that had jurisdiction over the complaint because he was an appointed
officer of the corporation. As a result, the respondent filed a suit for Illegal Termination of
Appointment and Damages before the RTC of Parañaque.
The RTC ruled in favor of PNB. It held that the respondent abandoned his employment because
there was not document to prove that his absence was with prior leave. Moreover, his application
to retire was deemed to be a resignation letter which was effective immediately.
On appeal, the CA reversed the RTC’s decision. It held that the respondent was illegally
dismissed and was entitled to reinstatement, backwages, and damages. It held that PNB’s
announcement during the dinner was akin to a principle of promissory estoppel because the
respondent relied on the same when he submitted his letter. Moreover, even if the application for
retirement was to be considered as a resignation letter, under the circumstances, it was
involuntary because the respondent was prompted by the unbearable conditions brought by the
JVA and not due to his desire to sever his working relationship with PNB.
PNB argued that the during the period when the respondent submitted his supposed application
for retirement, the company had no offer of retirement plans. Additionally, considering the
respondent’s position in the company, coupled with his expressed sentiments evinced his desire
to leave the bank.
ISSUE:
Whether or not respondent was entitled to damages and attorney’s fees.
RULING:
YES, respondent was entitled to damages and attorney’s fees.
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Here, the SC held that the proper action on his application for retirement should have been to
deny it instead of immediately terminating him and treating it as a resignation letter. Worse, he
received the resolution months after he was told not to report for work anymore. Additionally, he
was compelled to engage the services of counsel in order to protect his rights after he was
unjustly dismissed.
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VII.K.1.c. Nominal Damages
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES
G.R. No. 205172, June 15, 2021
By: Czarina
DOCTRINE:
Nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or
where there has been a breach of contract but no substantial injury or actual damages
whatsoever have been or can be shown
FACTS:
On July 23, 1987, the Republic, through the Presidential Commission on Good Government
(PCGG), filed a complaint for reconveyance, reversion, accounting, restitution and damages
against Disini, President Marcos and Imelda Marcos, for amassing ill-gotten wealth during
President Marcos' term. Among others, the Republic alleged that Disini, a known close associate
of President Marcos, president of Herdis and who became Special Sales Representative (SSR) of
Westinghouse received special concessions from President Marcos in relation to the award of the
Bataan Nuclear Power Plant (BNPP) contract to Westinghouse and B&R, for a scandalously
exorbitant amount. Allegedly, Disini received substantial commissions from Westinghouse and
B&R for the award of the contract and its execution.
During trial, only the Republic presented evidence since Disini was a party in default: after
summons to him remained unserved and after summons by publication against him was
completed. The default order was sustained by the SC in a Decision rendered on July 5, 2010
which became final and executory on November 18, 2010.
On April 11, 2012, the Sandiganbayan rendered its assailed Decision declaring the commissions
in the amount of $50,562,500.00 received by Disini to be ill-gotten wealth and ordering him to
account for and reconvey the said amount to the Republic. In ruling for the Republic, the
Sandiganbayan relied on the testimonies of witnesses Manahan, Vergara, and Jacob, all of whom
were privy to the BNPP project. However, while the Sandiganbayan found, Disini liable, it held
that there was no evidence of President Marcos' and Imelda's receipt of the commissions. Hence,
a motion for reconsideration was submitted by both parties.
The Republic argued that it sufficiently proved that anomalous grants of loans and guarantees
were given to the companies owned by President Marcos and Disini through Presidential
issuances insisted that President Marcos and Disini misappropriated, embezzled and converted
funds of government financial institutions by granting unwarranted favors to Herdis.
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It likewise claimed that it is entitled to actual, temperate, nominal and exemplary damages,
attorney's fees and other judicial costs. On the other hand, Disini opined that the Republic had no
cause of action against him as there was no contract or quasi-contract violated, he also alleged
that witnesses Manahan, Vergara and Jacob had no personal knowledge of the allegations in their
affidavits, and that no evidence was adduced to prove the amount of commissions he allegedly
received from Westinghouse and B&R. Both motions as well as Disini’s Motion to Strike Out
were denied by the Sandiganbayan for lack of merit.
Hence, this Petition for Review on Certiorari which assails the April 11, 2012 Decision and the
October 24, 2012 Resolution3 of the Sandiganbayan in Civil Case No. 0013 which declared as
ill-gotten the commissions received by Herminio T. Disini relative to the Bataan Nuclear Power
Plant (BNPP) project, and ordered him to account for and reconvey the total amount of
$50,562,500.00, with interest until fully paid.
ISSUE:
Whether or not the Republic is entitled to nominal damages.
RULING:
NO, the Republic is not entitled to nominal damages as it is incompatible with the award of
temperate damages.
Clearly, Disini' s illegal acquisition of substantial commissions from Westinghouse and B&R
produces injury or damage to the Republic which has been deprived the use of these public funds
in the interest of the Filipinos
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VII.K.1.d. Temperate or Moderate Damages
KLM ROYAL DUTCH AIRLINES vs. DR. JOSE M. TIONGCO
G.R. No. 212136, October 04, 2021
By: zzzzzz123456
DOCTRINE:
Article 2224 of the same Code states that temperate damages or moderate damages, which
are more than nominal but less than compensatory damages, may be recovered when the
court finds that some pecuniary loss has been suffered but its amount cannot, from the
nature of the case, be provided with certainty. Simply put, temperate damages are awarded
when the injured party suffered some pecuniary loss but the amount thereof cannot, from
the nature of the case, be proven with certainty.
FACTS:
On October 1998 Respondent was invited by the United Nations - World Health Organization
(UN-WHO) to be a keynote speaker in the 20th Anniversary of Alma-Ata Declaration to be held
in Almaty, Kazakhstan from November 27-28, 1998. Hence, respondent booked a trip from
Manila to Almaty.
The main carrier of respondent was KLM Royal Dutch Airlines, Lufthansa was his intermediate
carrier, while Singapore airline was his first carrier and due to some circumstances, Turkish
airline became his last carrier. During his trip, respondent had with him one hand carry bag, and
one checked-in a suitcase containing a copy of his speech, resource materials, clothing for the
event, and other personal items.
Respondent’s initial flight was as follow:
e) From Manila to Singapore via Singapore Airline;
f) From Singapore to Amsterdam via KLM Airline;
g) From Amsterdam to Frankfurt via KLM Airline; and
h) From Frankfurt to Almaty via Lufthansa Airline.
However, as his flight from Frankfurt departed from Amsterdam 45 minutes late, respondent
missed his next flight to Almaty. Upon arrival in Frankfurt, respondent sought help from a KLM
airline employee regarding his missed flight, checked in luggage, and his speaking engagement.
The KLM employee assured him that his checked in luggage will be with him for the next flight
arranged via Lufthansa and Turkish Airline. The new itinerary of respondent was then: (a) From
Frankfurt to Instanbul via Lufthansa Airline; and (b) From Istanbul to Almaty via Turkish
Airline.
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During his flight, he was likewise assured by a Lufthansa employee or Ms. Chisem that his
checked in luggage will be transported in the same flight. However, before boarding Turkish
Airline, Respondent looked for his suitcase but could not locate it. He asked Mr. Osman Bey
(Bey) of Turkish Airlines to ask Miss Chizem to find his missing suitcase. Thirty minutes passed
and yet his suitcase was not in sight. However, to avoid missing the flight, Mr. Bey told
respondent to board and assured that his suitcase will be with him.
Upon arriving in Almaty and even after going back to Manila, the checked in luggage of
respondent could not be found, this caused respondent to attend his speaking engagement poorly
dressed without any visual aid and resource material.
After three months from arrival in the Philippines, and still his luggage was not returned,
respondent wrote Singapore Airlines, KLM and Lufthansa, demanding for compensation for his
lost luggage and the inconvenience he suffered. None of the airline compensated respondent and
all denied liability. Hence, respondent was constrained to file a case against the airlines for
damages.
RTC Ruling: KLM is solely liable for the damages suffered by Dr. Tiongco on account of his lost
suitcase. KLM failed to exercise extraordinary care in handling the suitcase of Dr. Tiongco when
it wrongfully transferred it to Lufthansa flight no. LH10381 instead of LH3346, Dr. Tiongco's
flight to Almaty. KLM also failed to immediately inquire about what happened to the suitcase
after Dr. Tiongco informed its personnel.
CA Ruling: agreed with the trial court on KLM's liability for breach of contract of carriage.
However, it modified the awards of damages for being excessive.
ISSUE:
Whether or not the award of temperate damages are proper.
RULING:
YES, the award of temperate is proper.
Dr. Tiongco incurred pecuniary loss when his suitcase containing his personal belongings was
lost during his flight and was never returned. Unfortunately, he did not present any actual receipt
that would have proved the actual amount due, as mandated under Article 2199 of the Civil
Code, so as to entitle him to the award of actual damages.70 This, however, does not preclude Dr.
Tiongco from recovering temperate damages, and not nominal damages, since the exact amount
of damage or pecuniary loss he sustained was not duly established by competent evidence.
Verily, the Court finds the award of P50,000.00 as temperate damages fair and reasonable in
view of the circumstances in this case. KLM's liability for temperate damages may not be limited
to that prescribed in Article 22(2)71 of the Warsaw Convention, as amended by the Hague
Protocol, in the presence of bad faith.
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The Convention's provisions do not "regulate or exclude liability for other breaches of contract
by the carrier" or misconduct of its officers and employees, or for some particular or exceptional
type of damage.
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES
G.R. No. 205172, June 15, 2021
By: Czarina
DOCTRINE:
Under Article 2224 of the Civil Code, temperate or moderate damages, which are more
than nominal but less than compensatory damages, may be recovered when the court finds
that some pecuniary loss has been suffered but its amount cannot, from the nature of the
case, be determined with certainty.
There are cases where from the nature of the case, definite proof of pecuniary loss cannot
be offered although the court is convinced that there has been such loss'.
FACTS:
On July 23, 1987, the Republic, through the Presidential Commission on Good Government
(PCGG), filed a complaint for reconveyance, reversion, accounting, restitution and damages
against Disini, President Marcos and Imelda Marcos, for amassing ill-gotten wealth during
President Marcos' term. Among others, the Republic alleged that Disini, a known close associate
of President Marcos, president of Herdis and who became Special Sales Representative (SSR) of
Westinghouse received special concessions from President Marcos in relation to the award of the
Bataan Nuclear Power Plant (BNPP) contract to Westinghouse and B&R, for a scandalously
exorbitant amount. Allegedly, Disini received substantial commissions from Westinghouse and
B&R for the award of the contract and its execution.
During trial, only the Republic presented evidence since Disini was a party in default: after
summons to him remained unserved and after summons by publication against him was
completed. The default order was sustained by the SC in a Decision rendered on July 5, 2010
which became final and executory on November 18, 2010.
On April 11, 2012, the Sandiganbayan rendered its assailed Decision declaring the commissions
in the amount of $50,562,500.00 received by Disini to be ill-gotten wealth and ordering him to
account for and reconvey the said amount to the Republic. In ruling for the Republic, the
Sandiganbayan relied on the testimonies of witnesses Manahan, Vergara, and Jacob, all of whom
were privy to the BNPP project. However, while the Sandiganbayan found, Disini liable, it held
that there was no evidence of President Marcos' and Imelda's receipt of the commissions. Hence,
a motion for reconsideration was submitted by both parties.
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The Republic argued that it sufficiently proved that anomalous grants of loans and guarantees
were given to the companies owned by President Marcos and Disini through Presidential
issuances insisted that President Marcos and Disini misappropriated, embezzled and converted
funds of government financial institutions by granting unwarranted favors to Herdis.
It likewise claimed that it is entitled to actual, temperate, nominal and exemplary damages,
attorney's fees and other judicial costs. On the other hand, Disini opined that the Republic had no
cause of action against him as there was no contract or quasi-contract violated, he also alleged
that witnesses Manahan, Vergara and Jacob had no personal knowledge of the allegations in their
affidavits, and that no evidence was adduced to prove the amount of commissions he allegedly
received from Westinghouse and B&R. Both motions as well as Disini’s Motion to Strike Out
were denied by the Sandiganbayan for lack of merit.
Hence, this Petition for Review on Certiorari which assails the April 11, 2012 Decision and the
October 24, 2012 Resolution3 of the Sandiganbayan in Civil Case No. 0013 which declared as
ill-gotten the commissions received by Herminio T. Disini relative to the Bataan Nuclear Power
Plant (BNPP) project, and ordered him to account for and reconvey the total amount of
$50,562,500.00, with interest until fully paid.
ISSUE:
Whether or not the Republic is entitled to temperate damages.
RULING:
YES, it is proper to award the Republic temperate damages for the pecuniary loss and the
Filipino people suffered on account of Disini's illegal acquisitions of substantial
commissions from Westinghouse and B&R, albeit the amount thereof not being proven
with certainty.
In Tan v. OMC Carriers, Inc., temperate damages were rightly awarded because plaintiff suffered
a loss, although definitive proof of its amount cannot be presented as the photographs prcduced
as evidence were deemed insufficient. Established in that case, however, was the fact that
respondent's truck was responsible for the damage to petitioner's property and that petitioner
suffered some form of pecuniary loss.
In Canada v. All Commodities Marketing Corporation, temperate damages were also awarded
wherein respondent's goods did not reach the Pepsi Cola Plant at Muntinlupa City as a result of
the negligence of petitioner in conducting its trucking and hauling services, even if the amount of
the pecuniary loss had not been proven.
In Philtranco Services Enterprises, Inc. v. Paras, the respondent was likewise awarded temperate
damages in an action for breach of contract of carriage, even if his medical expenses had not
been established with certainty.
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In People v. Briones, in which the accused was found guilty of murder, temperate damages were
given even if the funeral expenses for the victim had not been sufficiently proven
Here, the Republic is entitled to recover temperate damages as there is no doubt that Disini
trampled on the rights of the Filipino people to benefit from, and make good use of, these
ill-gotten wealth, i.e., substantial commissions or kickbacks he acquired; and that the whole
nation significantly suffered pecuniary loss due to Disini' s illegal acquisition of these public
funds
Considering the relevant circumstances of this case, the amount of One Billion Pesos
(Pl,000,000,000) as temperate damages is reasonable and justified. It bears stressing that this is
not just an ordinary civil action for recovery of property and d;amages. This is an action for
recovery of ill-gotten wealth which is imbued with public interest and concerns not only the
government but every Filipino citizen, then and now. As part of the healing process of this
nation, the Freedom Constitution specifically mandates the President to prioritize the recovery of
these ill-gotten wealth. Hence, the loss or injury suffered by every Filipino due to Disini's
acquisition of ill-gotten wealth must be duly recognized and compensated.
Also, the Republic was unduly deprived of its rights over these substantial commissions as part
of public funds, and was compelled to litigate for their recovery for more than three decades. We
cannot overemphasize that Disini received this ill-gotten wealth starting in 1976 when the
construction of the BNPP began. Consequently, he had profited immensely from these
commissions for a significant portion of his lifetime at the expense of the Filipinos.
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VII.K.1.f. Exemplary or Corrective Damages
THE HEIRS OF ZENAIDA B. GONZALES vs. SPOUSES DOMINADOR AND
ESTEFANIA BASAS
G.R. No. 206847, June 15, 2022
By: lably
DOCTRINE:
Exemplary damages are imposed by way of example or correction for the public good.
They are imposed not to enrich one party or impoverish another, but to serve as a
deterrent against, or as a negative incentive to curb socially deleterious actions.
FACTS:
The late Zenaida B. Gonzales (Zenaida) purchased from respondents spouses Dominador and
Estefania Basas ( collectively, spouses Basas ), a parcel of land including the house thereon,
situated at No. 427 Espinola St., Block 6, Magsaysay Village, Tondo, Manila, with an area of
152.98 square meters and covered by Transfer Certificate of Title No. (TCT) 1878986 (subject
property). An annotation in the title indicates that the consent of the National Housing Authority
(NHA) is necessary for the disposal of the same.
Zenaida and the spouses Basas executed the following documents to reflect their mutual
agreement on the sale and purchase of the subject property:
I. Contract to Sell dated May 10, 1996 (Contract to Sell) which reflects the total price of the
subject property at P800,000.00.
II. Deed of Absolute Sale (DOAS) dated May 13, 1996 which indicates the consideration of the
subject property at P300,000.00.
III. Agreement to Purchase and to Sell allegedly dated August 14, 1996 (Agreement), which
states that the total price of the subject property is at Pl,050,000.00.
However, petitioners claimed that the Agreement was undated and unnotarized when Zenaida
signed it, and the date "August 14, 1996" was stamped therein without her consent. According to
petitioners, once the foregoing documents were executed, the spouses Basas requested Zenaida
to allow them to stay in the subject property until such time that they can transfer to another
place. Petitioners further alleged that the spouses Basas promised to procure the written consent
of the NHA for the sale of the subject property. In the meantime, pursuant to their mutual
agreement on the sale and purchase of the same, Zenaida paid the Basas couple an aggregate
amount of more than P800,000.00. as evidenced by receipts.
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Once the spouses Basas received the said amount they promised to deliver the title of the subject
property to Zenaida as soon as they secured the NHA's consent. Meanwhile, the spouses Basas
borrowed the certificate of title of the property which at that time was already in the possession
of Zenaida after she paid them the amount of P650,000.00, so they can work on the cancellation
of the mortgage on the subject property. Petitioners point out that Zenaida has not paid the
balance of the selling price because the spouses Basas have not yet obtained NHA's written
consent to the sale.
On January 4, 1997, Zenaida sent a written demand to the spouses Basas to: (1) Vacate the
property, (2) return the title so she can transfer the title to her name, (3) Give the written consent
of NHA with regards to the property. Despite Zenaida's verbal and written demands for the
spouses Basas to comply with their foregoing obligation, the latter failed to do so. In view of
this, Zenaida brought the matter to the barangay, but the parties failed to settle.
Eventually, Zenaida discovered that the spouses Basas subsequently sold the subject property to
respondent Romeo Munda (Munda) who immediately occupied the property. As a result, Zenaida
caused the annotation of her affidavit of adverse claim on the title of the subject property on
October 29, 1997.
When Zenaida learned of the second sale by the Spouses Basas to Munda, she and her son,
Andres Rico Gonzales, went to the subject property and found out that the same was already
being occupied by Munda. While thereat, they were informed by Munda's wife that she and her
husband already purchased the property, and she further told Zenaida that the latter's contract
was only a contract to sell while their contract was an absolute deed of sale. In view of the
foregoing, Zenaida filed a complaint on May 25, 1998 for nullity of sale, specific performance,
and damages against respondents. Zenaida died on April 30, 2012, and was eventually
substituted by her heirs, petitioners herein.
On the other hand, the spouses Basas argued that Zenaida did not purchase the subject property.
They pointed out that the August 14, 1996 Agreement superseded the two previously signed
documents. They asserted that there was a novation of the contracts, and the latter document
reflected the final and true intentions of the parties. The spouses Basas further posited that it was
the agreement of the parties that until the balance of the purchase price as reflected in the
Agreement is fully paid, they will continue to occupy the subject property. They did not deem it
necessary to inform Munda of the existence of the Agreement because there was no
consummated sale between them and Zenaida.
Meanwhile, Munda argued that he purchased the subject property in good faith and for value. At
the time he bought the subject property on August 25, 1997, its title was clean and there was no
encumbrance or adverse claim annotated on it. The adverse claim of Zenaida was filed and dated
only on October 29, 1997. Aside from the notarized August 25, 1997 Deed of Absolute Sale that
he and the spouses Basas executed, they also issued an unnotarized and undated Deed of
Absolute Sale, which reflected the true agreed selling price of the subject property in the amount
of Pl,400,000.00. The subject property was eventually registered under his name on March 2,
1998 under TCT 237326.
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The RTC ruled in favor of the Heirs of Zenaida Gonzales. Aggrieved with the RTC's ruling,
respondents filed an appeal with the CA. However, in its November 5, 2012 Decision, the CA
reversed the findings of the RTC and found Munda as a buyer in good faith and for value.
ISSUE:
Whether or not the award of exemplary damages is proper
RULING:
YES, the award of exemplary damages is proper.
In the case at bar, not only did the spouses Basas fail to comply in good faith with their
obligations as stated in the Agreement, but they likewise proceeded to sell the subject property to
Munda. They even exerted effort to procure the written consent of the NHA's transfer of rights
dated December 1, 1997 in favor of Munda despite their earlier obligation to obtain the same for
Zenaida, or despite the latter's October 29, 1997 annotated·adverse claim, and without any
intention to refund Zenaida the previous payments she made.
HERMINIO T. DISINI vs. REPUBLIC OF THE PHILIPPINES
G.R. No. 205172, June 15, 2021
By: Czarina
DOCTRINE:
With the grant of temperate damages, this allows the imposition of exemplary damages by
way of example or correction for the public good. Exemplary damages cannot be recovered
as a matter of right and are only considered when moral, temperate, liquidated or
compensatory damages are granted. "Exemplary damages are designed by our civil law to
permit the courts to reshape behavior that is socially deleterious in its consequence by
creating negative incentives or deterrents against such behavior." Its purpose is to serve as
a deterrent to serious wrong doings and as a vindication of undue sufferings and wanton
invasion of the rights of an injured or a punishment for those guilty of outrageous conduct.
FACTS:
On July 23, 1987, the Republic, through the Presidential Commission on Good Government
(PCGG), filed a complaint for reconveyance, reversion, accounting, restitution and damages
against Disini, President Marcos and Imelda Marcos, for amassing ill-gotten wealth during
President Marcos' term. Among others, the Republic alleged that Disini, a known close associate
of President Marcos, president of Herdis and who became Special Sales Representative (SSR) of
Westinghouse received special concessions from President Marcos in relation to the award of the
Bataan Nuclear Power Plant (BNPP) contract to Westinghouse and B&R, for a scandalously
exorbitant amount. Allegedly, Disini received substantial commissions from Westinghouse and
B&R for the award of the contract and its execution.
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During trial, only the Republic presented evidence since Disini was a party in default: after
summons to him remained unserved and after summons by publication against him was
completed. The default order was sustained by the SC in a Decision rendered on July 5, 2010
which became final and executory on November 18, 2010.
On April 11, 2012, the Sandiganbayan rendered its assailed Decision declaring the commissions
in the amount of $50,562,500.00 received by Disini to be ill-gotten wealth and ordering him to
account for and reconvey the said amount to the Republic. In ruling for the Republic, the
Sandiganbayan relied on the testimonies of witnesses Manahan, Vergara, and Jacob, all of whom
were privy to the BNPP project. However, while the Sandiganbayan found, Disini liable, it held
that there was no evidence of President Marcos' and Imelda's receipt of the commissions. Hence,
a motion for reconsideration was submitted by both parties.
The Republic argued that it sufficiently proved that anomalous grants of loans and guarantees
were given to the companies owned by President Marcos and Disini through Presidential
issuances insisted that President Marcos and Disini misappropriated, embezzled and converted
funds of government financial institutions by granting unwarranted favors to Herdis.
It likewise claimed that it is entitled to actual, temperate, nominal and exemplary damages,
attorney's fees and other judicial costs. On the other hand, Disini opined that the Republic had no
cause of action against him as there was no contract or quasi-contract violated, he also alleged
that witnesses Manahan, Vergara and Jacob had no personal knowledge of the allegations in their
affidavits, and that no evidence was adduced to prove the amount of commissions he allegedly
received from Westinghouse and B&R. Both motions as well as Disini’s Motion to Strike Out
were denied by the Sandiganbayan for lack of merit.
Hence, this Petition for Review on Certiorari which assails the April 11, 2012 Decision and the
October 24, 2012 Resolution3 of the Sandiganbayan in Civil Case No. 0013 which declared as
ill-gotten the commissions received by Herminio T. Disini relative to the Bataan Nuclear Power
Plant (BNPP) project, and ordered him to account for and reconvey the total amount of
$50,562,500.00, with interest until fully paid.
ISSUE:
Whether or not the Republic is entitled to exemplary damages.
RULING:
YES, the Republic is entitled to exemplary damages.
There is no doubt that Disini 's receipt of these substantial commissions from Westinghouse and
B&R is illegal and despicable which is no less than abhorred by our Freedom Constitution as its
mandate includes eradication of graft and corruption, punishment of those guilty thereof and
recovery of ill-gotten wealth.
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Verily, Disini's conduct should be corrected and deterred as his use of influence or power for his
own personal benefit to the detriment of the Republic caused substantial injury not only to public
funds but to the morale, trust and confidence of Filipinos in the government and its projects.
Hence, this Court finds it reasonable under the circumstances to award One Million Pesos
(Pl,000,000.00) as exemplary damages.
PASTORA GANANCIAL vs. BETTY CABUGAO
G.R. No. 203348, July 06, 2020
By: VictoriaAytona
DOCTRINE:
The wrongful act must be accompanied by bad faith, and the award therefor would be
allowed only if the guilty party acted in a wanton, fraudulent, reckless or malevolent
manner. Also known as "punitive," "vindictive," or "corrective" damages, exemplary
damages serve as a deterrent to serious wrongdoings, and as a vindication of undue
sufferings and wanton invasion of the rights of an injured or a punishment for those guilty
of outrageous conduct
FACTS:
Pastora Ganancial (Ganancial) owed Betty Cabugao (Cabugao) the amount of P130,000.00,
agreed to be payable within three years. To guarantee her indebtedness, Ganancial entrusted to
Cabugao the Transfer Certificate of Title (TCT) No. 168803 and Tax Declaration No. 641, both
covering a 397-square-meter parcel of land, which Ganancial owns in her name.
The transaction later turned sour and ended in the parties’ respective lawsuits against each other
before the Regional Trial Court (RTC). Cabugao filed a case for foreclosure of real estate
mortgage against Ganancial, while the latter filed against the former a complaint for declaration
of the deed of mortgage as null and void.
Cabugao alleged that Ganancial executed a Deed of Mortgage over the subject property as
collateral for her loan. Despite the lapse of three years from the date of the mortgage and
repeated demands, Ganancial failed and refused to pay the amount she owed Cabugao. A final
demand having proved futile, Cabugao sought the judicial foreclosure of the real estate
mortgage.
For her part, Ganancial assailed the authenticity of the Deed of Mortgage. While she entrusted
TCT No. 168803 with Cabugao, Ganancial averred that she never executed the supposed Deed of
Mortgage nor appeared for its notarization.
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The RTC ruled in favor of Cabugao. It declared that Ganancial’s contentions against the
authenticity of the notarized Deed of Mortgage were not proven by clear and convincing
evidence. The CA denied Ganancial’s appeal. The CA ruled that mere irregularities in the
notarization do not affect the genuineness and due execution of the document.
ISSUE:
Whether or not the award of exemplary damages is proper.
RULING:
NO, the award of exemplary damages is not proper.
As the evidence on record militates against Cabugao's claim for moral damages, a grant of
exemplary damages is necessarily uncalled for. Article 2234 of the Civil Code is already clear in
requiring a prior determination of entitlement to moral, temperate, or compensatory damages
before the Court may consider the question of whether or not exemplary damages should be
awarded.
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VII.L. Damages in Case of Death
PEOPLE OF THE PHILIPPINES vs. GERALD MORENO Y TAZON
G.R. No. 191759, March 02, 2020
By: Limecooler
DOCTRINES:
It is jurisprudentially settled that when death occurs due to a crime, the following may be
recovered:
1. civil indemnity ex delicto for the death of the victim;
2. actual or compensatory damages;
3. moral damages;
4. exemplary damages;
5. attorney's fees and expenses of litigation; and
6. interest, in proper cases.
In People v. Jugueta, this Court held that for crimes like murder where the penalty imposed
is reclusion perpetua, the nature and amount of damages that may be awarded are:
P75,000.00 as civil indemnity, P75,000.00 as moral damages, and P75,000.00 as exemplary
damages.
The settled rule is that when the amount of actual damages proven by receipts during the
trial is less than the sum allowed by the court as temperate damages, the award of
temperate damages in lieu of actual damages, which is of a lesser amount, is justified.
Conversely, if the amount of actual damages proven exceeds P50,000.00, then temperate
damages may no longer be awarded; actual damages based on the receipts presented
during trial should instead be granted. The rationale for this rule is that it would be
anomalous and unfair for the victim's heirs, who tried and succeeded in presenting receipts
and other evidence to prove actual damages, to receive an amount which is less than that
given as temperate damages to those who were not able to present any evidence at all.
Article 2208 of the Civil Code enumerates the legal grounds warranting the grant of
attorney's fees and expenses of litigation, and this case qualifies since exemplary damages
are awarded and the Court deems it just and equitable that attorney's fees be recovered.
The formula used by this Court in computing loss of earning capacity is: Net Earning
Capacity = [2/3 x (80 - age at time of death) x (gross annual income — reasonable and
necessary living expenses)].
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FACTS:
On November 16, 2001, at around 2:15 in the morning, Adelriza Mijares ("Adelriza") was
awakened from her sleep when a hard object hit her head. When she turned on the lights, a man,
wearing khaki shorts and white t-shirt, leap on their bed and repeatedly stabbed her husband,
Cecil Mijares ("Mijares"), on the leg and chest. Mijares was able to kick the man out of the room
and even close the door. Immediately thereafter, Mijares collapsed and fell on the floor. Adelriza
shouted for help and their neighbor, Virgie Perey ("Virgie"), came to their rescue. Virgie sought
assistance from their neighbors, in bringing Mijares to the Philippine General Hospital (PGH).
Unfortunately, Mijares died while undergoing treatment.
Police investigation took place. Adelriza did not know who the killer was but she only
remembered his face. A cartographer drew a sketch of the killer’s face. In the afternoon of the
same day, the police received a call from Virgie informing them that appellant, who fitted the
description of the suspect, was in the vicinity of his house. According to Virgie, she heard rumors
that appellant was responsible for the killing of Mijares. Acting on Virgie's tip, SPO1 Olavario
invited appellant to the police station for an interview regarding the killing that transpired to
which appellant acceded.
The police officers then summoned Adelriza to the police station. Upon her arrival, she
positively identified appellant as the person who stabbed her husband. It was only at this point
that she learned of Moreno's name. SPO1 Olavario thus arrested appellant and informed him of
his constitutional right to remain silent and to have a competent counsel of his choice. Moreno
however did not respond. Hence, SPO1 Olavario merely asked for his name and then prepared
the Crime Report, Booking and Arrest Sheet and Referral to Inquest. An Information for murder
was filed against Moreno, who entered a plea of “not guilty.” At trial, Moreno denied the
accusation. His mother and brother corroborated his story.
After due trial, the Regional Trial Court found him guilty of murder which sentenced him for
imprisonment of Reclusion Perpetua and ordered to pay [the] heirs of Cecil Mijares the
following amounts: PHP75,000.00 as indemnity for his death; PHP603,288.00 as unearned
income; PHP31,500.00 as actual damages; PHP50,000.00 as reimbursement for attorney's fees;
and PHP50,000.00 as moral damages. The court held that “the clear, positive and credible
testimony of (Alderiza) that (Moreno) was the culprit sufficiently removed any reasonable doubt
on his guilt.” It rejected his defenses of alibi and denial.
On appeal, the Court of Appeals upheld the trial court’s decision. Thus, Moreno appealed to the
Supreme Court.
ISSUE:
What are the proper indemnities to be recovered?
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RULING:
In this case, the following are to be recovered:
1) Moral damages in the amount of P75,000.00;
2) Unearned income due to loss of income capacity of P1,378,944.00;
3) Actual damages in the amount of P31,500.00 is deleted;
4) Temperate damages in the amount of P50,000.00 is awarded in lieu of actual damages;
5) Exemplary damages in the amount of P75,000.00 is likewise awarded.
All damages awarded shall then earn six percent (6%) interest per annum from the date of
finality of this Decision until full payment.
As regards the award of Civil Indemnity,
Moral damages, and Exemplary Damages
Pursuant to Jugueta, We sustain the award of P75,000.00 as civil indemnity but increase the
moral damages from P50,000.00 to P75,000.00. In addition, an award of exemplary damages in
the amount of P75,000.00 is proper.
As regards the award of Actual Damages
And Temperate Damages
However, in lieu of actual damages, We award temperate damages in the amount of P50,000.00.
xxx
In the present case, Mijares' heirs were able to prove, and were awarded, actual damages in the
amount of P31,500.00.64 Since, prevailing jurisprudence now fixes the amount of P50,000.00 as
temperate damages in cases where the penalty imposed is reclusion perpetua, this Court finds it
proper to award temperate damages to Mijares' heirs, in lieu of actual damages.
As regards the award of Attorney’s Fees
Considering too that Mijares' heirs spent for attorney's fees to prosecute the case against the
appellant, the award of P50,000.00 is sustained.
As regards the award of Unearned Income
and Interest thereon
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Here, it was sufficiently established that the victim, at the time of his death, was 32 years old and
was employed as a bookkeeper at the Philippine Amusement and Gaming Corp. with a monthly
basic salary of P7,182.00 or P86,184.00 in a year. We thus apply the formula for loss of income
capacity in this wise:
Net Earning Capacity = life expectancy x [gross annual income - living expenses]
= 2/3 [80-age of the victim at time of death] x [gross annual income - 50% of gross annual
income]
= 2/3 [80-32 years] x [P86,184.00- P43,092.00]
= 2(48) x P43,092.00
3
= 32 x P43,092.00
= P1,378,944.00
We are thus impelled to modify the award of unearned income from to P603,288.00 to
P1,378,944.00.
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