Civil Law

Faculty of Civil Law Digest Pool 2010

VICENTE S. ALMARIO v. PHILIPPINE AIRLINES, INC.

532 SCRA 614 (2007), SECOND DIVISION (Carpio Morales, J.)

Courts will not allow one party to enrich himself at the expense of another.

On April 28, 1995, Almario, then about 39 years of age and a Boeing 737 (B-737) First Officer at

PAL, successfully bid for the higher position of Airbus 300 (A-300) First Officer. Since said higher

position required additional training, he underwent, at PAL‘s expense, more than five months of training

consisting of ground schooling in Manila and flight simulation in Melbourne, Australia. After completing

the training course, Almario served as A-300 First Officer of PAL, but after eight months of service as

such, he tendered his resignation, for ―personal reasons.‖ Despite a letter coming from PAL to

reconsider his resignation otherwise he will bear the cost of training, Mr. Almario still proceeded with his

resignation.

Later on, PAL filed a Complaint against Almario before the Regional Trial Court (RTC), for

reimbursement of P851,107 worth of training costs, attorney‘s fees equivalent to 20% of the said

amount, and costs of litigation. PAL invoked the existence of an innominate contract of do ut facias (I

give that you may do) with Almario in that by spending for his training, he would render service to it

until the costs of training were recovered in at least three (3) years. Almario having resigned before the 3-

year period, PAL prayed that he should be ordered to reimburse the costs for his training. In his Answer,

Almario denied the existence of any agreement with PAL that he would have to render service to it for

three years after his training failing which he would reimburse the training costs. He pointed out that the

Collective Bargaining Agreement (CBA) between PAL and the Airline Pilot‘s Association of the

Philippines (ALPAP), of which he was a member, carried no such agreement.

Mr. Almario‘s contention was confirmed by the RTC but was reversed by the Court of Appeals

(CA). The CA found Almario liable under the CBA between PAL and ALPAP and, in any event, under

Article 22 of the Civil Code. Thus, this action for review on Certiorari by Mr. Almario.

ISSUE:

Whether or not the act of Mr. Almario is in violation of the CBA

HELD:

Article XXIII, Section 1 of the CBA provides that pilots fifty-seven (57) years of age shall be

frozen in their position and shall not be permitted to occupy any position in the company‘s turbo-jet

fleet. The reason why pilots who are 57 years of age are no longer qualified to bid for a higher position is

because they have only three (3) years left before the mandatory retirement age of 60 and to send them

to training at that age, PAL would no longer be able to recover whatever training expenses it will have to

incur.


Simply put, the foregoing provision clearly and unequivocally recognizes the

prohibitive training cost principle such that it will take a period of at least three (3) years

before PAL could recover from the training expenses it incurred.

Admittedly, PAL invested for the training of Almario to enable him to acquire a higher level of

skill, proficiency, or technical competence so that he could efficiently discharge the position of A-300

First Officer. Given that, PAL expected to recover the training costs by availing of Almario‘s services for

at least three years. The expectation of PAL was not fully realized, however, due to Almario‘s resignation

after only eight months of service following the completion of his training course. He cannot, therefore,

refuse to reimburse the costs of training without violating the principle of unjust enrichment.

MANUEL B. ALORIA v. ESTRELLITA B. CLEMENTE 483 SCRA 634 (2006), THIRD DIVISION (Carpio Morales, J.)

The burden of proving the status of a purchaser in good faith lies upon one who asserts that status, and the onus

cannot be discharged by mere invocation of the legal presumption of good faith.

Manuel Aloria learned that Transfer Certificate of Title (TCT) No. 195684 covering his land and two-storey residential building was canceled. In lieu thereof, TCT No. C-342854 was issued in the name of Estrellita B. Clemente on the basis of a notarized Deed of Absolute Sale allegedly executed by him and Clemente. Aloria thereafter filed a Complaint against Clemente and the Register of Deeds before the Regional Trial Court (RTC) of Caloocan City for annulment of the Deed and TCT No. C-342854, reconveyance and damages alleging therein that the Deed was falsified and the signature appearing thereon was not his.

In defense, Clemente claimed that she bought the property from Aloria‘s parents-in-law as

evidenced by a Deed of Sale. The trial court rendered its decision holding that the Deed of Sale and cancellation of Aloria‘s title were null and void. On appeal, the Court of Appeals reversed the decision of the trial court. It held that Aloria failed to overcome by clear, strong, and convincing evidence the presumption of regularity. Furthermore, the CA held that Clemente is a purchaser for value in good faith. Hence, this petition.

ISSUES: Whether or not the Court of Appeals erred in finding Clemente as a purchaser for value and in good faith

HELD:

The burden of proving the status of a purchaser in good faith lies upon one who asserts that

status, and the onus cannot be discharged by mere invocation of the legal presumption of good faith. By Clemente‘s account, she purchased the property via Deed of Sale from the Spouses Diego

whom she claims showed her a Deed of Sale executed in their favor by Aloria. Given Bernardino Diego‘s denial that his signature in Deed of Sale executed by the Diegos in Clemente‘s favor is his which, as earlier observed, is starkly different from his acknowledged genuine signature, Clemente‘s claim that


Bernardino Diego signed the Deed of Sale in her presence fails, as does her witness Ernesto Tanigue‘s testimony on the same point. A comparison between her acknowledged signature and the signature appearing above her name

in the Deed of Sale reveals no marked differences. The presumption that Clemente's signature in the

Deed of Sale is genuine, thus stands. Upon the other hand, as reflected above, Aloria presented clear and

convincing evidence that the signature attributed to him in the same document is forged.

GELLIA ALTIZO, et al. v. BRYC-V DEVELOPMENT CORPORATION

203 SCRA 544 (2006), THIRD DIVISION (Carpio Morales J.)

Occupation by mere tolerance by a corporation ceases upon transfer of title of the property in favor of another corporation.

Sea Foods Corporation Inc. (SFC) was the registered owner of Lot 300 situated in Zamboanga City. It appears that in the early 60s, herein petitioners Gellia Altizo et al. started to occupy a portion of Lot 300.

In 1989, Altizo et al., together with other occupants of a portion of of the said land, organized

themselves into an association, United Muslim Christian Urban Poor Association, Inc. (UMCUPAI), for the purpose of negotiating the sale of the lands they occupy in their favor. SFC and UMCUPAI subsequently entered into an agreement where SFC signified its intent to sell to UMCUPAI Lot 300 and the latter‘s intention to buy the said lot at a stipulated price.

SFC later subdivided Lot 300 into three lots: Lot 300-A, Lot 300-B and Lot 300-C. Lot 300-A was thereafter sold to UMCAPAI. It then sold to BRYC-V Development Corporation (BRYC-V) Lot 300-C where Altizo et al. had constructed their houses. Over the objection of UMCUPAI, BRYC-V was issued Transfer Certificate of Title No. T-121523. BRYC-V later asked, verbally and in writing, Altizo et al. to vacate Lot 300-C but they refused. ISSUE:

Whether or not petitioners Altizo et al. has the right of continued possession based on the agreement they entered into with SFC HELD:

Altizo et al.‘s occupation of subject lot was on the mere tolerance of the previous owner SFC. Such right to occupy ceased when the SFC sold the subject lot to BRYC-V which has been issued a title thereto, hence, entitled to its possession. Altizo et al. having withheld possession of subject lot, despite BRYCV‘s demand, they have become deforciant occupants.

Altizo et al.‘s claim that they can continue to possess the subject lot, they having been granted by the previous owner preferential right to buy Lot 300 under the Letter of Intent, does not lie. No right of possession, which is the only issue in an unlawful detainer case, arises from such Letter of Intent which, as it clearly states, merely signifies intent to, not actually transfer ownership.

FELIPE R. ANGELES and GREGORIA ANGELES v. FERMIN TAN, et al. G.R. No. 146678, 29 September 2004, THIRD DIVISION (Carpio Morales, J.)


Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated, the assailed decision must remain. Spouses Felipe and Gregoria Angeles filed a complaint for reconveyance with damages against Spouses Fermin and Teresita Tan. The complaint involves the return of a parcel of land originally owned by the former which was mortgaged to a certain Prudencio Reyes who subsequently sold the same to spouses Tan after the redemption period expired without any redemption having been made by Angeles. The Regional Trial Court (RTC) dismissed the complaint and the subsequent Motion to Reconsider was likewise denied which prompted a filing of a Notice of Appeal. However during the pendency of the Notice of Appeal, Angeles proceeded with a Petition for Review with the Court of Appeals (CA). However, due to the procedural infirmity in the filing of the Petition for Review, the CA ordered that the RTC decision has become final and executory. ISSUE: Whether or not Spouses Angeles right to due process was violated by the outright dismissal of the case without full dress trial on the merit HELD: On procedural grounds alone, no reversible error on the part of the CA in dismissing the appeal is appreciated. The records indubitably show that although spouses Angeles‘ Notice of Appeal was filed on time and was given due course by the trial court, they subsequently filed a Petition for Review before the CA, hence, they were deemed to have abandoned the appeal. Spouses Angeles‘ petition for review was, however, denied by the CA.

At all events, Spouses Angeles‘ brief was filed beyond the reglementary period, no explanation for which was even offered. Section 1, Rule 50 of the 1997 Revised Rules of Civil Procedure reads that an appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, among others, on the ground of failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules;

On the merits, the petition fails just the same. Spouses Angeles‘ contention that they were

denied due process does not lie. The records show that hearings were conducted on spouses Tan‘s motion to dismiss during which both parties were given the opportunity to present evidence.

As pointed out by respondents, the records show there was a full dress trial on the merits before the motion to dismiss was granted. Like the CA then, the Court found no reason to order the remand of the case, not however, for the reasons advanced by the CA, but on the ground that petitioners failed to discharge the onus of proving their allegation that respondents fraudulently caused the transfer to them of the title of the disputed property.

Absent then any clear, competent and convincing proof as to exclude all reasonable controversy as to the falsity and nullity of spouses Tan‘s documentary evidence consisting of public instruments and


official entries in the Register of Deeds, following Section 44, Rule 130 of the Revised Rules on Evidence which provides that ―entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated, the assailed decision must remain‖.

ROSENDO BACALSO, et al. v. MAXIMO PADIGOS, et al. 552 SCRA 185 (2008), SECOND DIVISION, (Carpio-Morales, J.)

It is an enshrined rule that even a registered owner may be barred from recovering possession of property by virtue

of laches

Padigos et.al. filed before the Regional Trial Court (RTC) of Cebu City a complaint against

Bacalso et al. for quieting of title, declaration of nullity of documents, recover of possession, and

damages.

A parcel of land (the lot) located in Cebu was registered in the name of thirteen (13) co-owners

to which Maximo Padigos, et al are all heirs. Rosendo Bacalso et al occupied the disputed land for a

couple of decades in which they turned it into farmland. Padigos et al. alleged that Rosendo Bacalso et

al., heirs of Alipio Bacalso Sr. (Alipio, Sr.), secured a fraudulent Tax Declaration covering the disputed

potions of the lot without any legal basis. In their answer, Bacalso et. al. claimed that their father Alipio,

Sr. bought shares corresponding to some of the 13 co-owners via deed of sale decades ago. Alipio, Sr.

only failed to register the land to his name but subsequently occupied the land and passed it on to his

heirs.

Bacalso et. al also alleged that even if Padigos et al’s claim over the land is valid, the action to

recover is barred by laches since Padigos et al did not claim the land at the earliest possible time. After

trial, RTC ruled in favor of Padigos et. al. Bacalso et. al. appealed. The Court of Appeals found the deed

of sale valid Bacalso et. al ’s property and also cited laches as a means of loosing of a right over the

property.

ISSUE:

Whether or not Padigos et. al.’s claim is barred by laches

HELD:

Having failed to establish their claim by preponderance of evidence, Padigos et.al’s action for

quieting of title, declaration of nullity of documents, recovery of possession, and damages must fail.

Padigos et. al. lost the right of action to the property by laches - the negligence or omission to

assert a right within a reasonable time, warranting a presumption that the party entitled to assert it has

either abandoned it or declined to assert it. While, by express provision of law, no title to registered land

in derogation of that of the registered owner shall be acquired by prescription or adverse possession, it is


an enshrined rule that even a registered owner may be barred from recovering possession

of property by virtue of laches.

Upon the other hand, Bacalso et. al have been vigilant in protecting their rights over the lot,

which their predecessor-in-interest Alipio, Sr. had declared in his name for tax purposes as early as 1960,

and for which he had been paying taxes until his death in 1994, by continuing to pay the taxes thereon.

BANCO FILIPINO SAVINGS AND MORTGAGE BANK v. TALA REALTY SERVICES CORPORATION

503 SCRA 631 (2006), THIRD DIVISION, (CARPIO MORALES J.)

If the parties are in pari delicto, no affirmative relief must be given to one against the other. The majority of the stockholders of Banco Filipino Savings and Mortgage Bank agreed to form a corporation known as the Tala Realty Services Corporation (Tala) to which some of Banco Filipino‘s existing branch sites could be unloaded. The arrangement was that Banco Filipino would transfer some of its existing branch sites to Tala, and the latter would simultaneously lease them back to it. Banco Filipino executed in favor of Tala a Deed of Absolute Sale transferring to it one of its branch sites located at Poblacion, San Fernando, La Union (the property) at the agreed purchase price. On even date, Tala in turn leased the property to Banco Filipino for a period of 20-years, renewable for another 20 years at the option of Banco Filipino, at a monthly rental rate. The contract further required Banco Filipino to pay Tala a certain amount as advance rentals for the 11th to the 20th years of the lease. Tala claims that on that same day, the parties executed another lease contract which modified the previous lease contract. The second lease contract shortened the term of the lease to 11 years, renewable for 9 years at the option of Banco Filipino. The contract required Banco Filipino to pay a certain amount as security deposit to secure its faithful compliance with its obligations, to answer for any damage to the property, or for any damage that may be sustained by Tala on account of any breach or default on the part of Banco Filipino. More than 11 years after the execution of the contract of lease, Tala‘s director, Elizabeth H. Palma, sent Banco Filipino a letter informing it that the lease contract had expired as of August 1992, and that starting September 1992, the contract had been extended on a monthly basis under different terms and conditions including the monthly lease rental. Tala noted, however, that as Banco Filipino had failed to take any definite action towards the renewal of the contract, Tala was free to lease, dispose, sell and/or alienate the property. Tala subsequently notified Banco Filipino that the lease contract would no longer be renewed, hence, it demanded that it vacate the property and pay the unpaid rentals.

ISSUE:

Whether or not Banco Filipino is required to pay Tala the unpaid rental fees during the time when the Bank was declared to have been arbitrarily closed


HELD:

Clearly, the Bank was well aware of the limitations on its real estate holdings under the General

Banking Act and that its "warehousing agreement" with Tala was a scheme to circumvent the limitation.

Thus, the Bank opted not to put the agreement in writing and call a spade a spade, but instead phrased

its right to reconveyance of the subject property at any time as a "first preference to buy" at the "same

transfer price." This agreement which the Bank claims to be an implied trust is contrary to law. Thus,

while the Court finds the sale and lease of the subject property genuine and binding upon the parties, the

Court cannot enforce the implied trust even assuming the parties intended to create it. In the words of

the Court in the Ramos case, "the courts will not assist the payor in achieving his improper purpose by

enforcing a resultant trust for him in accordance with the ‗clean hands‘ doctrine." The Bank cannot thus

demand reconveyance of the property based on its alleged implied trust relationship with Tala.

The Bank and Tala are in pari delicto, thus, no affirmative relief should be given to one against the

other. The Bank should not be allowed to dispute the sale of its lands to Tala nor should Tala be allowed

to further collect rent from the Bank. The clean hands doctrine will not allow the creation nor the use of

a juridical relation such as a trust to subvert, directly or indirectly, the law. Neither the Bank nor Tala

came to court with clean hands; neither will obtain relief from the court as the one who seeks equity and

justice must come to court with clean hands.

SOCORRO TAOPO BANGA v. SPOUSES JOSE AND EMELINE BELLO 471 SCRA 653 (2005), THIRD DIVISION (Carpio Morales, J.)

It is the intention of the parties and not the terminology used in the contract that determines whether a deed of

absolute sale in form is an equitable mortgage. Nelson Banga, as mortgagor, with the consent of his wife Socorro, executed a Deed of Real Estate Mortgage in favor of Jose V. Bello over their real property as security for a loan extended by Jose to Nelson. The said mortgage was amended twice increasing the amount of the loan. It appears that a Deed on Absolute Sale was subsequently executed involving the same property. Socorro filed a complaint for the declaration of nullity of the sale for making it appear that she consented to the absolute sale. Also, Socorro questions the unconscionably low consideration for the sale of the property.

Bello contends that the sale was personally and voluntarily executed by Spouses Banga before the notary public and that the consideration of the sale is fair and reasonable because it is also based on the real estate mortgage and its amendments. Nelson, on the other hand, claims that the executed Deed was actually a third amendment to the mortgage and that he had already paid in full their principal indebtedness. ISSUE: Whether or not the parties intended the deed of absolute sale to be merely an equitable mortgage HELD:

Article 1602 of the Civil Code enumerates instances when a contract shall be presumed to be an

equitable mortgage. Some of these cases are: (1) When the price of a sale with right to repurchase is


unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) In any other cases where it may be fairly inferred that the real intention of the parties is that the transaction shall ensure the payment of a debt or the performance of an obligation. Also, Article 1604 of the Civil Code provides that the provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale.

It has been observed by the Trial Court that the Deed of Absolute Sale was prepared in 1987, the same year that the original deed of real estate mortgage was executed. Such is because the residence certificate numbers issued to the parties in 1987 appearing in the real estate mortgage of 1987 are the same as those appearing in the Deed of Absolute Sale purportedly executed in 1989. In fact, in the acknowledgement portion of the 1989 Deed of Absolute Sale whereon the phrase ―Series of 1987‖ appears, the number ―9‖ was superimposed on the number ―7‖, which this Court takes as a clear design to make it appear that it was notarized in 1989.

In determining whether a deed absolute in form is a mortgage, the court is not limited to the

written memorials of the transaction. The decisive factor in evaluating such agreement is the intention of the parties, as shown not necessarily by the terminology used in the contract but by all the surrounding circumstances, such as the relative situation of the parties at that time, the attitude, acts, conduct, declarations of the parties, the negotiations between them leading to the deed, and generally, all pertinent facts having a tendency to fix and determine the real nature of their design and understanding.

Revealing the true intention of the parties is the undisputed relationship of Nelson and the Bello spouses as debtor and creditors respectively, which, together with the circumstances mentioned above, draws the Supreme Court to affirm the trial court's ruling that the deed of absolute sale was executed to serve as additional security for the loan extended to Nelson.

TEOFILO BAUTISTA, represented by FRANCISCO MUÑOZ, Attorney-in-Fact v.

ALLEGRIA BAUTISTA, et al.


Since the deed of extra-judicial partition is invalid, it confers no rights upon the transferees under the principle of

nemo dat quod non habet.

During her lifetime, Teodora Rosario was the owner of a 211.80 square meter parcel of land (the

property) in Pangasinan. She died intestate leaving the said property behind to her spouse Isidro Bautista,

and five children namely: Teofilo, Alegria, Angelica, Pacita, and Gil Bautista. Later on, Isidro and four of

his five children, Pacita, Gil, Alegria and Angelica (Teofilo not included), executed a Deed of Extra-

Judicial Partition of the property where Isidro waived his share in favor of his four children.

Alegria and Angelica, sold the ½ of the property they have acquired to Pacita and her common-

law husband Pedro Tandoc, by Deed of Absolute Sale. Pacita, with Pedro‘s consent, later sold ½ of the

property in favor of Cesar Tamondong, Pedro‘s nephew via Deed of Absolute Sale. Teofilo, represented

by his Attorney-in-Fact Francisco Muñoz, then filed a complaint in the Regional Trial Court against his

siblings claiming that his co-heirs defrauded him of his rightful share of the property and that the Deed

of Sale executed by Pacita in favor of Cesar was fictitious because she was already seriously ill that time.


The RTC ruled in favor of Teofilo declaring null and void and no force and effect

the documents mentioned. On appeal by Tandoc and Tamondong, the Court of Appeals

(CA) reversed the trial court‘s decision and dismissed Teofilo‘s complaint on the ground of prescription.

The CA denied the Motion for Reconsideration filed by Teofilo. Thus, this Petition for Review on

Certiorari.

ISSUE:

Whether or not the extra-judicial partition executed by Teofilo Bautista‘s co-heirs is valid

HELD:

The Court of Appeals applied the prescriptive periods for annulment on the ground of fraud and

for reconveyance of property under a constructive trust.

The extra-judicial partition executed by Teofilo‘s co-heirs was invalid, however. As previously

held by this Court in Segura v. Segura, ―no extra-judicial settlement shall be binding upon any person who

has not participated therein or had no notice thereof.‖ As the partition was a total nullity and did not

affect the excluded heirs, it was not correct for the trial court to hold that their right to challenge the

partition had prescribed after two years.

The deed of extra-judicial partition in the case at bar being invalid, the action to have it annulled

does not prescribe.

Since the deed of extra-judicial partition is invalid, it transmitted no rights to Teofilo‘s co-heirs.

Consequently, the subsequent transfer by Angelica and Alegria of ½ of the property to Pacita and her

husband Pedro, as well as the transfer of ½ of the property to Cesar Tamondong is invalid, hence,

conferring no rights upon the transferees under the principle of nemo dat quod non habet.

SPOUSES ISABELO BERGADO and JUANA HERMINIA BERGARDO v. THE COURT OF

APPEALS, HON. CARLOTA P. VALENZUELA, in her capacity as the Liquidator of Banco

Filipino Savings and Mortgage Bank

463 SCRA 504 (2005), THIRD DIVISION (Carpio Morales, J.)

A purchaser is necessarily bound to acknowledge and respect the encumbrance constituted on the purchased thing.

Manila International Construction Corporation (MICC) secured a loan of 1,885,000.00 to Banco

Filipino Savings and Mortgage Bank (Banco Filipino), by mortgaging its 21 properties including its

improvements. The same was registered in the Registry of Deeds.

Subsequently, MICC sold part of the mortgage land to Spouses Rodrigo and Sonia Paderes, then

another part to Spouses Isabelo and Juana Bergado. For failure of MICC to settle its obligation, Banco

Filipino filed a petition for extra-judicial foreclosure of MICC‘s mortgage. Banco Filipino won the


bidding. Consequently, a certificate of sale was issued and the same was registered with the

Registry of Deeds.

Banco Filipino thereafter filed before the Regional Trial Court Makati a petition for issuance of

writ of possession. The RTC granted the petition. Pursuant to the Writ of Possession, Spouses Bergado

et al. were ordered to vacate the premises. However, they filed an action to Court of Appeals (CA)

questioning the validity of writ of possession. CA rendered decision against the Bergado et al. and upheld

the writ of possession. Hence, this petition.

ISSUE:

Whether or not the Bergado et al. have superior rights over Banco Filipino

HELD:

That Bergado et al.’s purchased their properties from MICC in good faith is of no moment. The

purchases took place after MICC‘s mortgage to Banco Filipino had been registered in accordance with

Article 2125 of the Civil Code and the provisions of P.D. 1529 (PROPERTY REGISTRY DECREE).

As such, under Articles 1312 and 2126 of the Civil Code, a real right or lien in favor of Banco Filipino

had already been established, subsisting over the properties until the discharge of the principal

obligation, whoever the possessor(s) of the land might be.

Respecting Bergado et al.‘s claim that their houses should have been excluded from the auction

sale of the mortgaged properties, it does not lie. The provision of Article 448 of the Civil Code, cited by Bergado et al, which pertain to those who, in good faith, mistakenly build, plant or sow on the land of

another, has no application to the case at bar. Here, the record clearly shows that Bergado et al purchased their respective houses from MICC,

as evidenced by the Addendum to Deed of Sale dated October 1, 1983 and the Deed of Absolute Sale dated January 9, 1984.

Being improvements on the subject properties constructed by mortgagor MICC, there is no

question that they were also covered by MICC‘s real estate mortgage following the terms of its contract with Banco Filipino and Article 2127 of the Civil Code the mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or income not yet received when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the estate remains in the possession of the mortgagor, or it passes

into the hands of a third person.

The established doctrine that the issuance of a writ of possession is a ministerial function whereby

the issuing court exercises neither discretion nor judgment bears reiterating. The writ issues as a matter

of course upon the filing of the proper motion and, if filed before the lapse of the redemption period,

the approval of the corresponding bond.


BANK OF THE PHILIPPINE ISLANDS v. SPS. HOMOBONO AND

LUZDELDIA TARAMPI

574 SCRA 537 (2008), SECOND DIVISION, (Carpio Morales, J.)

A writ of possession, unless annulled by a court of competent jurisdiction, remains the ministerial duty of the trial

court.

Spouses Homobono and Lusdeldia Tarampi (Spouses Tarampi) obtained loans from the Bank of

the Philippine Islands (BPI), which were secured by real estate mortgages over a parcel of land. Spouses

Tarampi failed to comply with their obligation, prompting BPI to institute extrajudicial foreclosure

proceedings. During the auction, BPI was the highest bidder and a Certificate of Sale was issued in its

name. The same was registered and annotated on the Transfer Certificate of Title (TCT) of the said

parcel of land.

Since the one-year redemption period expired without Spouses Tarampi redeeming the

mortgage, BPI executed an Affidavit of Consolidation. A new TCT was issued in favor of BPI. In the

meantime, Spouses Tarampi filed an action for annulment of the real estate mortgages. BPI, on the other

hand, filed a Petition for Writ of Possession over the property including all improvements thereon which

was granted by the Regional Trial Court of Quezon City. A Notice of Appeal was filed by Spouses

Tarampi alleging therein that a writ cannot be issued on the ground that there is a pending action

concerning the validity of the mortgages. The RTC ordered the suspension of issuance of writ of

possession.

On appeal, the Court of Appeals, held that since BPI is now the registered owner of the

property, it is entitled to a writ of possession as a matter of right; and that any question regarding the

validity of the mortgages or their foreclosure cannot be a legal ground for refusing the issuance of a writ

of possession after the consolidation of title in the buyer‘s name, following the debtor-mortgagor‘s

failure to redeem the mortgages.

ISSUE:

Whether or not the writ of possession should be implemented during the pendency of the case

for annulment of mortgages

HELD:

In the case at bar, Spouses Tarampi failed to redeem the mortgages within the reglementary

period, hence, ownership of the property covered thereby was consolidated in the name of BPI who had

in fact been issued a new TCT. Issuance of a writ of possession thus became a ministerial duty of the

court.


It is settled that the buyer in a foreclosure sale becomes the absolute owner of the

property purchased if it is not redeemed during the period of one year after the registration

of sale. As such, he is entitled to the possession of the property and can demand it any time following

the consolidation of ownership in his name and the issuance of a new transfer certificate of title.

The rationale for the rule is to allow the purchaser to have possession of the foreclosed property

without delay, such possession being founded on the right of ownership. To underscore this mandate,

the law further provides that the debtor-mortgagor may petition that the sale be set aside and the writ of

possession cancelled in the proceedings in which possession was requested; and the court‘s decision

thereon may be appealed by either party, but the order of possession shall continue in effect during the

pendency of the appeal.

To stress the ministerial character of the writ of possession, the Court has disallowed injunction

to prohibit its issuance, just as it has held that its issuance may not be stayed by a pending action for

annulment of mortgage or the foreclosure itself.

Clearly then, until the foreclosure sale of the property in question is annulled by a court of

competent jurisdiction, the issuance of a writ of possession remains the ministerial duty of the trial court.

The same is true with its implementation; otherwise, the writ will be a useless paper judgment – a result

inimical to the mandate of Act No. 3135 to vest possession in the purchaser immediately.

SPOUSES ILUMINADA and CIRILO CAPITLE v. FORTUNATA ELBAMBUENA et al. 509 SCRA 444 (2006), THIRD DIVISION, (Carpio Morales, J.)

Absent evidence to the contrary, the presumption is that public officers adhered to the provisions of Section 22 of

the Comprehensive Agrarian Reform Law (CARL).

A Certificate of Land Ownership Award (CLOA) was issued to Cristobal Olar covering a parcel of agricultural land situated in Nueva Ecija. Consequently, a Transfer Certificate of Title in his name was issued. When Olar died, respondents Fortunata Elbambuena and Rosalinda Olar, spouse and daughter-in-law, respectively, claim that Olar relinquished one-half of the lot in favour of Rosalinda; and that the remaining portion of the lot was surrendered to Fortunata. Spouses Iluminada and Cirilo Capitle, on the other hand, claim that they have been in possession of the lot since 1960 and presented a "Waiver of Rights" executed by Olar, wherein he acknowledged that he co-possessed the lot with petitioners Capitle. A ―Pinagsamang Patunay‖ certifying that they are the actual tillers and possessors of the lot was likewise presened.

While Elbambuena and Olar‘s petition was pending before the Provincial Agrarian Reform

Adjudicator (PARAD), petitioners Capitle filed before the Municipal Agrarian Reform Officer (MARO), Nueva Ecija a petition for cancellation of the CLOA issued to Olar, on the ground that they are the new farmer-beneficiaries as shown by, among other things, the "Waiver of Rights" executed by Olar.

PARAD ruled in favor of petitioners Capitle. Elbambuena and Olar appealed the decision to the DARAB. The DARAB set aside PARAD‘s decision. The case was then elevated to the Court of Appeals via petition for review. The appellate court affirmed in toto the DARAB decision.


ISSUES:

Whether or not the presumption that the CLOA was issued to Olar in the regular course of official function was overcome by contrary evidence

HELD:

Petitioners Capitle‘ argument that "it would be absurd for Olar to bequeath his property to his estranged wife not to a relative who had indeed helped him in tilling the property and took good care of his needs," is a virtual admission that their possession was not in the concept of owners, they having merely "helped" in tilling the lot, thereby acknowledging that Olar was the actual possessor and tiller.

Absent evidence to the contrary, the presumption that the public officers who issued the CLOA

to Olar regularly performed their duties, including adhering to the provisions of Section 22 of the Comprehensive Agrarian Reform Law (CARL) which provides that lands covered by the CARP shall be distributed as much as possible to landless residents of the same barangay, or in the absence thereof, landless residents of the same municipality in the order of priority provided.

MARIA B. CHING v. JOSEPH C. GOYANKO, JR., et al. 506 SCRA 735 (2006), THIRD DIVISION, (Carpio-Morales, J.)

In line with the policy of the State, the law emphatically prohibits the sale of properties between spouses.

Respondents Joseph Goyanko et al. filed with the Regional Trial Court of Cebu City a complaint

for recovery of property and damages against Maria Ching, praying for the nullification of the deed of sale and of transfer certificate and the issuance of a new one. Goyanko et al. aver that they are the real owners of the property involved. They further contend that it was after their father‘s death that they found out that a contract of sale involving the same property has been executed by their father and common-law wife Ching. However, Ching claimed that she is the actual owner of the property as it was she who provided its purchase price. The RTC dismissed the complaint against Ching, declaring that there is no valid and sufficient ground to declare the sale as null and void, fictitious and simulated.

On appeal, the Court of Appeals reversed the decision of the trial court and declared null and void the questioned deed of sale and TCT No. 138405. ISSUES:

Whether or not the contract of sale and TCT No. 138405, in favor of the Maria Ching, was null and void for being contrary to morals and public policy HELD:


The subject property having been acquired during the existence of a valid marriage between Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership. Moreover, while this presumption in favor of conjugality is rebuttable with clear and convincing proof to the contrary, the court find no evidence on record to conclude otherwise. The record shows that while Joseph Sr. and his wife Epifania have been estranged for years and that he and defendant-appellant Maria Ching, have in fact been living together as common-law husband and wife, there has never been a judicial decree declaring the dissolution of his marriage to Epifania nor their conjugal partnership. It is therefore undeniable that the property located at Cebu City belongs to the conjugal partnership. Assuming that the subject property was not conjugal, still the court cannot sustain the validity of the sale of the property by Joseph, Sr. to defendant-appellant Maria Ching, there being overwhelming evidence on records that they have been living together as common-law husband and wife.

The court therefore finds the contract of sale in favor of the defendant-appellant Maria Ching

null and void for being contrary to morals and public policy. The purported sale, having been made by Joseph Sr. in favor of his concubine, undermines the stability of the family, a basic social institution which public policy vigilantly protects.

DARREL CORDERO, et al. v. F.S. MANAGEMENT & DEVELOPMENT CORPORATION 506 SCRA 451 (2006), THIRD DIVISION, (Carpio Morales, J.)

Non-fulfillment of a suspensive condition in a contract of sale renders the latter ineffective and without force and effect.

Belen Cordero, in her own behalf and as attorney-in-fact of her co-petitioners, entered into a contract to sell with respondent F.S. Management and Development Corporation (FSMDC) over five (5) parcels of land located in Batangas. Pursuant to the terms and conditions of the contract, FSMDC paid earnest money. No further payments were made thereafter. Cordero sent FSMDC a demand letter, revoking the contract to sell and treating the payments already made as payment for damages suffered. FSMDC likewise demanded the payment for actual damages suffered due to loss of income.

Cordero thereafter filed before the Regional Trial Court of Parañaque a complaint for rescission of contract with damages alleging FSMDC failed to comply with its obligations under the contract to sell; and that consequently entitled to rescind the contract to sell as well as demand the payment of damages. FSMDC, on the other hand, alleged that Cordero has no cause of action considering that they were the first to violate the contract to sell. It was Cordero who prevented FSMDC from complying with its obligation to pay in full by refusing to execute the final contract of sale unless additional payment of legal interest is made. Moreover, Cordero‘s refusal to execute the final contract of sale was due to the willingness of another buyer to pay a higher price.

The RTC issued its decision, finding in favor of Cordero et al. and ordered FSMDC to pay damages and attorney‘s fees. The Court of Appeals affirmed the decision of the lower court and denied their motion for reconsideration. ISSUE: Whether or not contract to sell may be subject to rescission under Article 1191 of the Civil Code


HELD:

Under a contract to sell, the seller retains title to the thing to be sold until the purchaser fully pays the agreed purchase price. The full payment is a positive suspensive condition, the non-fulfillment of which is not a breach of contract but merely an event that prevents the seller from conveying title to the purchaser. The non-payment of the purchase price renders the contract to sell ineffective and without force and effect.

Since the obligation of Cordero et al. did not arise because of the failure of FSMDC to fully pay

the purchase price, Article 1191 of the Civil Code would have no application. The non-fulfillment by the FSMDC of his obligation to pay, which is a suspensive condition to

the obligation of the Cordero et al. to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened.

CORINTHIAN REALTY, INC. v. HON. COURT OF APPEALS, et al. 394 SCRA 260 (2002), THIRD DIVISION (Carpio Morales, J.)

A co-owner who sells the entire property without obtaining the consent of the other co-owners does not render the

sale null and void. The sale will affect only his own share but not those of the other co-owners who did not consent to the sale.

A parcel of land situated in Las Pinas is co-owned by Emilio Martin and Matilde Martin

(Martins) together with private respondent Delfin Guinto (Delfin), Teofilo Guinto, Prudencio Guinto and Margarita Guinto (Guintos) and the heirs of Spouses Tomas de Leon and Francisca Medina (Heirs of de Leon). The Martins and Guintos entered into a Deed of Conditional Sale with Corinthian Realty Inc. (Corinthian). However, Delfin and the Heirs of de Leon did not affix their signature in the said instrument although their names appeared therein. Before the execution of the Deed of Conditional Sale, Corinthian paid several amounts to Martins and Guintos. Corinthian however failed to pay the balance of the purchase price within ninety (90) days, as stipulated.

The action for specific performance was filed by Corinthian against the Martins and Guintos for

not executing a Deed of Absolute Sale. The Regional Trial Court of Makati (RTC) dismissed the complaint concluding that it was Corinthian who violated the deed. The Court of Appeals affirmed the RTC decision. Hence, the filing of this petition. ISSUE:

1. Whether or not the Court of Appeals erred in holding that the Deed of Conditional Sale was entered into with the co-owners individually

2. Whether or not the Court of Appeals erred in holding that the payment of the purchase price is a suspensive condition to the execution of the Deed of Absolute Sale, hence Petitioner Corinthian cannot file an action for specific performance


HELD: First Issue: Deed of Conditional Sale was entered into Individually

A co-owner has the right to sell his undivided share. If he sells the entire property without obtaining the consent of the other co-owners, the sale is not null and void. Only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property. The transferee gets only what his transferor would have been entitled to after partition. 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. This is because under Article 493 of the New Civil Code, the sale or other disposition affects only his undivided share and the transferee gets only what would correspond to his grantor in the partition of the thing owned in common.

This Court does not find any mistake on the part of the appellate court. Indeed, only the pro-indiviso shares in the property of the co-owners – signatories Martins and Guintos to the deed were affected by the deed. That Petitioner Corinthian paid specific amounts of money to the co-owners-private respondents-signatories Martins and Guintos to the deed and even had said -deed notarized inspite of the absence of the signatures of private respondent Delfin and Heirs bars the claim of petitioner Corinthian that it dealt with the co-owners of the property collectively. Second Issue: Payment of the Purchase Price as a Suspensive Condition

Corinthian‘s contention that its obligation to pay the balance of the purchase price within 90

days was not a condition precedent to the execution by private respondent Martins and Guintos of the Deed of Absolute Sale is bereft of merit. The deed could not be any clearer on the matter – Petitioner Corinthian‘s compliance with its obligation to pay the balance of the purchase price was a condition precedent to the execution by private respondent Martins and Guintos of an absolute sale. Since it failed to comply with such obligation, the obligation of private respondent Martins and Guintos to execute a deed of absolute sale had not arisen. Furthermore, where one of the parties to a contract does not perform the undertaking which he is bound by its terms, he is not entitled to insist upon the performance of the other party.

GILBERT T. DE LA PAZ v. MARIKINA FOOTWEAR DEVELOPMENT COOPERATIVE, INC.


The Court cannot allow unjust enrichment on the part of one party and unjust poverty on the part of another. Marikina Footwear Development Cooperative, Inc (MAFODECO) represented by its chairman

Rodolfo de Guzman (de Guzman), leased a space to Gilbert T. de la Paz (de la Paz), operator of a water-refilling station for a period of one year. It was found out that the real owner was Bayani Vergara who only allowed MAFODECO to use the property as its office for free. Upun the demise of Vergara, the ownership was transferred to his wife, Severina. De la Paz, de Guzman and Severina entered into an ―Agreement on Advance Rental‖ and agreed to split the rental payments of de la Paz between Severina and MAFODECO.

Severina later decided to discontinue the split rental arrangement and entered into a lease

contract with de la Paz. MAFODECO sent a letter to de la Paz demanding him to pay Seventy Eight Thousand (P78, 000) Pesos for his rent and to vacate the property within five days. Petitioner de la Paz


refused to comply with the demand prompting MAFODECO to file a complaint for unlawful detainer against petitioner before Metropolitan Trial Court of Marikina City. MALFODECO alleged that it is ―the OWNER and LESSOR‖ of the property ―under a verbal lease‖ which was denied by the de la Paz. He further alleged that MAFODECO has no cause of action against him because he already have a contract of lease with Severina. The Metropolitan Trial Court ruled in favor of MAFODECO which was affirmed by the Regional Trial Court of Marikina. On appeal, the Court of Appeals affirmed the decision of the lower court. Hence, this petition. ISSUE: Whether or not MAFODECO can demand payment of rentals from de la Paz and demand him to vacate the property HELD: MAFODECO, in misrepresenting in its complaint for unlawful detainer that it is ―the OWNER‖ of the property, attached a document entitled ―Pahintulot Sa Paghahanap-buhay,‖ which document, as the title itself says, is simply a permit or authority to engage in business. Apparently, MAFODECO made such false declaration of ownership to make it appear that it had the right to lease the property to de la Paz.

When MAFODECO filed on February 11, 2002 the complaint for unlawful detainer against de

la Paz, it could not also have anchored its right to lease the property on the "tolerance" of its previous owner Bayani who had died more than 11 years earlier or on October 16, 1993. Bayani‘s act of tolerance in favor of MAFODECO had automatically ceased with his demise.

To allow de la Paz, under the circumstances, to vacate the property and pay MAFODECO

rentals until the property shall have been vacated, as ordered by the MeTC and affirmed by both the RTC and Court of Appeals, de la Paz‘s existing lease contract with Severina notwithstanding, would constitute unjust enrichment in favor of MAFODECO and cause unjust poverty to de la Paz.

SUSAN D. DEGOLLACION v. REGISTER OF DEEDS OF CAVITE, et al.

500 SCRA 108 (2006), THIRD DIVISION (CARPIO-MORALES J.)

Where two transfer certificates of title have been issued on different dates, to two different persons, for the same parcel of land, even if both are presumed to be title holders in good faith, it does not necessarily follow that he who holds the earlier title should prevail. On the assumption that there was regularity in the registration leading to the eventual issuance of subject transfer certificates of title, the better approach is to trace the original certificates from which the certificates of title in dispute were derived. Should there be only one common original certificate of title, the transfer certificate issued on an earlier date along the line must prevail, absent any anomaly or irregularity tainting the process of registration.

Susan D. Degollacion purchased from Antonio Dizon two parcels of land situated at Dasmariñas, Cavite covered by Transfer Certificate of Title (TCT) No. T-20726 and TCT No. 26796. Dizon‘s titles were accordingly cancelled and TCT No. T-96011 and TCT No. T-96019 were issued in the name of Degollacion.

Degollacion allegedly learned that a portion of TCT T-96010 was covered by TCT T-26877

issued in the name of Pilar Development Corporation (Pilar Development). She thereafter instituted a Complaint for Cancellation of Transfer Certificate of Title with Damages and Prayer for a Temporary


Restraining Order or Writ of Preliminary Injunction against the Register of Deeds of Cavite and Pilar Development with the Regional Trial Court of Cavite.

Degollacion claimed that the title of the corporation, which was issued on November 8, 1967,

was derived from spurious sources.

The trial court dismissed Degollacion‘s complaint on the ground that the latter failed to prove through evidence that the documents of Pilar Development were derived from spurious sources. The trial court also held that it could be possible that it was Degollacion‘s documents that were derived from spurious sources.

Degollacion appealed to the Court of Appeals heavily relying on her witnesses and on the

statement of then Land Registration Authority Administrator saying that her Transfer Certificate of Titles were regularly issued and her tax payments are up to date. Later on however, the Court of Appeals ruled on the contrary.

Hence, the present petition relying heavily on the statements of the Land Registration Authority Administrator and arguing that Pilar Development‘s Transfer Certificate of Titles were spuriously produced.

ISSUE:

Whether or not the Degollacion has satisfactorily proved that the Transfer Certificate of Titles of Pilar Development Corporation came from spurious sources HELD:

Where two certificates of title purport to include the same land, whether wholly or partly, the better approach is to trace the original certificates from which the certificates of title were derived.

Respecting the testimony of Degollacion‘s witness Melanie Victoria, she merely declared that she could not produce the original of the corporation‘s title as it was, by her claim, taken by a certain Atty. Basa of the Investigation Division of the LRA for investigation, and that the photocopy she brought along with her was handed to her by the vault-keeper.

That Degolacion lost the Deed of Sale in her favor covering Lot 5766-B, from which deed material or relevant facts decisive of the case could be gathered, did not preclude her from procuring a certified true copy of the deed from the Register of Deeds, or the notary public, or Dizon failing which she then could have presented any of them to testify thereon in light of the following pertinent provisions of Rule 130 of the Rules of Court:

SEC. 3. Original document must be produced; exceptions. ─ When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the following cases:

(a)When the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror;


b) When the original is in the custody or under the control of the party against whom the evidence is offered, and the latter fails to produce it after reasonable notice;

(c) When the original consists of numerous accounts or other documents which cannot be examined in court without great loss of time and the fact sought to be established from them is only the general result of the whole; and (d) When the original is a public record in the custody of a public officer or is recorded in a public office.

x x x

SEC. 5. When original document is unavailable. ─ When the original document has been lost or destroyed, or cannot be produced in court, the offeror, upon proof of its execution or existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated.

x x x SEC. 7. Evidence admissible when original document is a public record. – When the original of a document is in the custody of a public officer or is recorded in a public office, its contents may be proved by a certified true copy issued by the public officer in custody thereof.

x x x

While Degollacion alleged in her complaint that the alleged spurious titles of the above-named Cristina Caro and Leonilo and Roberto Javier from which the Pilar Development‘s title was allegedly derived, were attached thereto as Annexes ―G‘ and ―H,‖ respectively, nowhere in the records could the same be found. As reflected earlier, Susan in fact failed to furnish copies the annexes to her complaint including Annexes ―G‖ and ―H‖ to the corporation, despite the order of the trial court.

GERARDA A. DIZON-ABILLA and the HEIRS OF RONALDO P. ABILLA v. SPS. CARLOS AND THERESITA GOBONSENG


A litigant whose rights have been adjudicated by a final judgment does not have unbridled license to litigate for another try. Gerarda A. Dizon-Abilla and the Heirs of Ronaldo P. Abilla extended to Spouses Carlos and Theresita Gobonseng a loan in the amount of Five Hundred Fifty Thousand Pesos (P550, 000.00). Spouses Gobonseng, however, failed to settle the same. They then executed a ―Deed of Sale‖ covering Seventeen (17) lots in favor of Dizon-Abilla and Heirs of Abilla. The Deed provides an option to buy the lots within six (6) months in favor of Spouses Gobonseng which they failed to exercise.


Dizon-Abilla and Heir of Abilla filed a case of specific performance and damages for the expenses attendant to the ―Preparation and Registration‖ of the Deed of Sale. The RTC of Dumaguete City ruled the option to buy was null and void. On appeal, the Court of Appeals affirmed the trial court‘s decision.

Nineteen (19) days after the decision of the CA became final, an ―Urgent Motion to Repurchase‖ was filed to the trial court by Spouses Gobonseng alleging that they made a tender of payment to RCBC Dumaguete Branch, but was denied. The case was raffled to a new judge which ordered the release of the deposited money as payment for the repurchase. Dizon-Abilla and Heirs of Abilla filed a Petition for Review on Certiorari challenging the trial court‘s decision allowing Spouses Gobonseng‘s repurchase. The Supreme Court denied their petition. Dizon-Abilla and Heirs of Abilla subsequently filed another case to the trial court asserting that they are entitled to 2% monthly interest. The trial court ruled in favor of Spouses Gobonseng which was affirmed by the CA. The appellate court ruled that the case has already been closed and terminated. ISSUE: Whether or not the Court of Appeals erred in its decision to consider the case closed and terminated HELD: The amount tendered by Spouses Domonseng, the correctness of which had already been passed upon by the appellate court, has been determined with finality. Every litigation must necessarily come to an end. Access to courts is guaranteed, but once a litigant‘s right has been adjudicated in a valid final judgment of a competent court, he should not be granted an unbridled license to go back for another try. The prevailing party should not be harassed by subsequent suits. For, if endless litigations were to be encouraged, unscrupulous litigations would multiply in number to the detriment of the administration of justice.

LEONARDO ACABAL, et al. v. VILLANER ACABAL, et al. 454 SCRA 555 (2005), THIRD DIVISION (Carpio Morales, J.)

Mere inadequacy of the price per se will not rule out the transaction as one of sale.

Alejandro Acabal and Felicidad Balasbas executed a Deed of Absolute Sale over a parcel of land in favor of their son, respondent Villaner Acabal (Villaner). Villaner was then married to Justiniana Lipajan. When he became a widower, he executed a deed conveying the same parcel of land in favor of petitioner Leonardo Acabal (Leonardo). However, Villaner later claims that the document he signed was a document captioned ―Lease Contract,‖ wherein he leased for the property for 3 years to Leonardo. Villaner filed a complaint with the Regional Trial Court (RTC) against Leonardo and Ramon Nicolas to whom Leonardo in turn conveyed the property for annulment of the deeds of sale.


The RTC ruled in favor of Acabal and dismissed the complaint. The Court of Appeals (CA) however reversed the decision of RTC and held that the Deed of Absolute Sale executed by Villaner in favor of Leonardo was simulated and fictitious. ISSUE: Whether or not the deed executed by respondent Villaner in favor of petitioner Leonardo is a Deed of Absolute Sale. HELD:

It bears noting, however, that Villaner failed to present evidence on the fair market value of the property as of April 19, 1990, the date of execution of the disputed deed. Absent any evidence of the fair market value of a land as of the time of its sale, it cannot be concluded that the price at which it was sold was inadequate. Inadequacy of price must be proven because mere speculation or conjecture has no place in our judicial system.

Even, however, on the assumption that the price of P10,000.00 was below the fair market value of the property in 1990, mere inadequacy of the price per se will not rule out the transaction as one of sale. For the price must be grossly inadequate or shocking to the conscience such that the mind revolts at it and such that a reasonable man would neither directly nor indirectly be likely to consent to it.

ANECITO CALIMPONG et al. v. HEIRS OF FILOMENA GUMELA


The jurisdiction of the Director of Lands is limited only to public lands and does not cover lands privately owned.

The subject lot was acquired by the heirs through a cadastral proceeding. The heirs of Gumelas

(heirs) decreed ―the owners in fee simple‖ of a lot located in Zamboanga Del Norte without certificate

of title was issued and registered in their names. The respondent heirs of Gumelas learned that the lot

was being occupied by petitioner Calimpong.

It turned out that Calimpong filed in 1976 an application for Free Patent over the lot, which the

application he followed up with the Bureau of Lands when his possession was ―disturbed‖ by the heirs.

The heirs thereafter filed before the Regional Trial Court of Dipolog City a complaint for quieting of

title, damages, with prayer for preliminary injunction against Calimpong and his wife. Subsequently, the

Original Certificate of Title (OCT) was issued in the name of Calimpong.

The RTC rendered judgment in favor of the heirs. It held that the title of the heirs is based on a

grant thereof to the predecessors-in-interest by the government in cadastral proceedings and by such

grant, the lot ceased to be part of the public domain as it become private property. It concluded that the

free patent and the title issued to Calimpong were null and void. On appeal, the Court of Appeals

affirmed the decision of the trial court.

ISSUE:


Whether or not the Bureau of Lands has the authority to grant a Free Patent for a

land ceased to be a public land

HELD:

Under the provision of Act No. 2874 pursuant to which the title of Heirs‘ predecessor in interest

was issued, the President of the Philippines or his alter ego, the Director of Lands, has no authority to

grant a free patent for land that has ceased to be a public land and has passed to private ownership, and a

title so issued is null and void. The nullity arises not, from the fraud or deceit, but from the fact that the

land is not under the jurisdiction of the Bureau of Lands. The jurisdiction of the Director of Lands is

limited only to public lands and does not cover lands privately owned. The purpose of the legislature in

adopting the former Public Land Act, Act No. 2874, was and is to limit its application to lands of the

public domain, and lands held in private ownership are not included therein and are not affected in any

manner whatsoever thereby. Land held in freehold or fee title, or of private ownership, constitute no

part of the public domain and cannot possibly come within the purview of said Act No. 2874, inasmuch

as the "subject" of such freehold or private land is not embraced in any manner in the title of the Act

and the same are excluded from the provisions of the text thereof.

Since the DENR had no authority to grant a free patent over the lot, Free Patent No.

09721093961 issued on August 17, 1993 by the PENRO of Zamboanga del Norte and Original

Certificate of Title No. P-33780 issued on August 19, 1993 by the Register of Deeds of Zamboanga del

Norte in favor of petitioner Calimpong are null and void.

JAIME D. ANG v. COURT OF APPEALS AND BRUNO SOLEDAD

567 SCRA 53 (2008), SECOND DIVISION (Morales, J.)

Even under the principle of solutio indebiti, Ang cannot recover from Soledad the amount he paid BA Finance

since Ang settled the mortgage debt on his own volition and that Soledad did not benefit therein, the latter not being the one

who mortgaged the vehicle.

Under a "car-swapping" scheme, Bruno Soledad sold his Mitsubishi GSR sedan 1982 model to

Jaime Ang. For his part, Ang conveyed to Soledad his Mitsubishi Lancer model 1988. Ang, a buyer and

seller of used vehicles, later offered the Mitsubishi GSR for sale through Far Eastern Motors, a second-

hand auto display center. The vehicle was eventually sold to Paul Bugash. Before the deed could be

registered in Bugash‘s name, however, the vehicle was seized by virtue of a writ of replevin on account

of the alleged failure of Ronaldo Panes, the owner of the vehicle prior to Soledad, to pay the mortgage

debt constituted thereon.

To secure the release of the vehicle, Ang paid BA Finance. Soledad refused to reimburse, despite

repeated demands, drawing Ang to charge him for Estafa with abuse of confidence. By Resolution, the

City Prosecutor‘s Office dismissed the complaint for insufficiency of evidence, drawing Ang to file for

consecutive complaints for damages against Soledad before the Regional Trial Court (RTC) of Cebu


City. Subsequently, the RTC rendered judgment in favor of Ang "for the sake of justice

and equity, and in consonance with the salutary principle of non-enrichment at another‘s

expense. The RTC then ordered Soledad to pay Ang the amount the latter paid to BA Finance.

Soledad then appealed to the Appellate Court, which reverses the decision of the RTC. The

Court of Appeals dismissed Ang‘s petition on the ground that the filing of said complaint seeking the

awarding of damages for breach of warranty has already prescribed.

Hence, this petition to the High Court.

ISSUE:

1) Whether or not Ang‘s cause of action had not yet prescribed when he filed the complaint

2) Whether or not Ang can recover from Soledad the amount he paid BA Finance on account of

the mortgage debt

HELD:

First Issue

The resolution of the sole issue of whether the complaint had prescribed hinges on a

determination of what kind of warranty is provided in the Deed of Absolute Sale subject of the present

case.

A warranty is a statement or representation made by the seller of goods, contemporaneously and

as part of the contract of sale, having reference to the character, quality or title of the goods, and by

which he promises or undertakes to insure that certain facts are or shall be as he then represents them.

Warranties by the seller may be express or implied. Art. 1546 of the Civil Code defines express warranty

– Any affirmation of fact or any promise by the seller relating to the thing is an express warranty if the

natural tendency of such affirmation or promise is to induce the buyer to purchase the same, and if the

buyer purchases the thing relying thereon. On the other hand, an implied warranty is that which the law

derives by application or inference from the nature of the transaction or the relative situation or

circumstances of the parties, irrespective of any intention of the seller to create it.

The ruling in Engineering & Machinery Corporation vs. Court of Appeals states that "the prescriptive

period for instituting actions based on a breach of express warranty is that specified in the contract, and

in the absence of such period, the general rule on rescission of contract, which is four years (Article

1389, Civil Code)."

As for actions based on breach of implied warranty, the prescriptive period is, under Art. 1571

(warranty against hidden defects of or encumbrances upon the thing sold) and Art. 1548 (warranty

against eviction), six months from the date of delivery of the thing sold.


In declaring that he owned and had clean title to the vehicle at the time the Deed

of Absolute Sale was forged, Soledad gave an implied warranty of title. In pledging that he

"will defend the same from all claims or any claim whatsoever and will save the vendee from any suit by

the government of the Republic of the Philippines," Soledad gave a warranty against eviction.

Given Ang‘s business of buying and selling used vehicles, he could not have merely relied on

Soledad‘s affirmation that the car was free from liens and encumbrances. He was expected to have

thoroughly verified the car‘s registration and related documents.

Since what Soledad, as seller, gave was an implied warranty, the prescriptive period to file a

breach thereof is six months after the delivery of the vehicle, following Art. 1571. But even if the date of

filing of the action is reckoned from the date petitioner instituted his first complaint for damages on

November 9, 1993, and not on July 15, 1996 when he filed the complaint subject of the present petition,

the action just the same had prescribed, it having been filed 16 months after July 28, 1992, the date of

delivery of the vehicle.

Second Issue

On the merits of his complaint for damages, even if Ang invokes breach of warranty against

eviction as inferred from the second part of the earlier-quoted provision of the Deed of Absolute Sale,

the following essential requisites for such breach: (1) The purchaser has been deprived of the whole or

part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof is by virtue of a right

prior to the sale made by the vendor; and (4) The vendor has been summoned and made co-defendant in

the suit for eviction at the instance of the vendee, have not been met. For one, there is no judgment

which deprived Ang of the vehicle. For another, there was no suit for eviction in which Soledad as seller

was impleaded as co-defendant at the instance of the vendee.

Finally, even under the principle of solutio indebiti which the RTC applied, Ang cannot recover

from Soledad the amount he paid BA Finance. For, as the appellate court observed, Ang settled the

mortgage debt on his own volition under the supposition that he would resell the car. It turned out that

he did pay BA Finance in order to avoid returning the payment made by the ultimate buyer Bugash. It

need not be stressed that Soledad did not benefit from Ang‘s paying BA Finance, he not being the one

who mortgaged the vehicle, hence, did not benefit from the proceeds thereof.

GREGORIO F. AVERIA, et al. v. DOMINGO AVERIA, et al.


The Statute of Frauds applies only to executory contracts and not to contracts which are either partially or totally performed


Macaria Francisco (Macaria) was married to Marcos Averia in which they had six children namely: petitioners Gregorio and Teresa and respondents Domingo, Angel, Felipe and Felimon. Upon the death of Marcos, Macaria contracted a second marriage with Roberto Romero in which they had no children. Upon the death of Roberto, he left three adjoining residential lots. In a Deed of Extrajudicial Partition and Summary Settlement of the Estate of Romero, a house and lot (Extremadura property) was apportioned to Macaria.

Macaria then filed an action for annulment of title and damages alleging that fraud was employed by her co-heirs in which she was represented by Atty. Mario C.R. Domingo. The case lasted for 10 years until the Court of Appeals (CA) decided in favor of Macaria entitling her to an additional 30 square meters of the estate of Romero. Her son Gregorio and his family and Teresa‘s family lived with her in the Extremadura property until her death. After six years, respondents Domingo, Angel, Felipe and Filemon filed an action for judicial partition against petitioners Gregorio and Teresa.

In their defense Gregorio contends that Macaria verbally sold ½ of her Extramadura property to him and his wife Agripina because they were the ones who spent for the litigation expenses in the former civil case and that Agripina took care of her. Gregorio and co-petitioner Sylvana claimed that Domingo sold to Gregorio and Agripina his 1/6 share in the remaining ½ portion of the property. Upon hearing, Gregorio presented oral evidence to establish their claim of the sale of the property to them by Macaria and also the sale of Domingo of his share. The Regional Trial Court of (RTC) decided in favor of Gregorio. The CA however, reversed the decision of the RTC on the ground that since the sale executed by Macaria in favor of Gregorio was in violation of the statute of frauds and it cannot be proven by oral

evidence.

Issue:

Whether or not parol evidence may be admitted in proving partial performance

Held:

With respect to the application by the appellate court of the Statute of Frauds, Gregorio

contends that the same refers only to purely executory contracts and not to partially or completely

executed contracts as in the instant case. The finding of the CA that the testimonies of Gregorio‘s

witnesses were timely objected to by Domingo is not, as Gregorio insist, borne out in the records of the

case except with respect to his testimony.

Indeed, except for the testimony of petitioner Gregorio bearing on the verbal sale to him by Macaria of the property, the testimonies of Gregorio‘s witnesses Sylvanna Vergara Clutario and Flora Lazaro Rivera bearing on the same matter were not objected to by respondents. Just as the testimonies of Gregorio, Jr. and Veronica Bautista bearing on the receipt by respondent Domingo on July 23, 1983 from Gregorio‘s wife of P5,000.00 representing partial payment of the P10,000.00 valuation of his (Domingo‘s) 1/6 share in the property, and of the testimony of Felimon Dagondon bearing on the receipt by Domingo of P5,000.00 from Gregorio were not objected to. Following Article 1405 of the Civil Code, the contracts which infringed the Statute of Frauds were ratified by the failure to object to the presentation of parol evidence, hence, enforceable.


Contrary then to the finding of the CA, the admission of parol evidence upon which the trial court anchored its decision in favor of respondents is not irregular and is not foreclosed by Article 1405.

In any event, the Statute of Frauds applies only to executory contracts and not to contracts which are either partially or totally performed. In the case at bar, petitioners claimed that there was total performance of the contracts, full payment of the objects thereof having already been made and the vendee Gregorio having, even after Macaria‘s death in 1983, continued to occupy the property until and after the filing on January 19, 1989 of the complaint subject of the case at bar as in fact he is still occupying it.

However it is not enough for a party to allege partial performance in order to render the Statute of Frauds inapplicable; such partial performance must be duly proved. But neither is such party required to establish such partial performance by documentary proof before he could have the opportunity to introduce oral testimony on the transaction. The partial performance may be proved by either documentary or oral evidence.

WENONAH L. MARQUEZ AZARCON v. HOUSING AND LAND USE ARBITER, et al. 399 SCRA 365 (2003), THIRD DIVISION (Carpio Morales, J.)

The agreement of the parties becomes the law between them and the same shall stand in the absence of evidence showing that it is contrary to public policy.

Sagana Construction and Development Corporation (Sagana) and Wenonah Marquez-Azarcon (Azarcon) entered into a contract to sell a house and lot (subject property). Azarcon‘s loan application was disapproved, however, on account partly of Sagana‘s failure to submit certain requirements including the title to the subject property which had been burned and was pending reconstitution. Consequently, Azarcon offered to pay the balance in cash but Sagana refused to accept the same unless she pays interest.

As Azarcon refused to pay interest on the balance of the purchase price, she filed a complaint against Sagana before the Housing and Land Use Regulatory Board (Board). After hearing, a Housing and Land Use Arbiter (HLA) rendered a decision ordering Azarcon to pay the balance of the purchase price, and Sagana to deliver the Deed of Sale and the title covering the subject property.

Upon reconsideration, the Board deleted a previous order for Azarcon to pay interest. The Board also required Azarcon to pay rentals during the time of her occupancy which shall form part of the purchase price of the premises. Azarcon thus filed a Petition for Certiorari with the Court of Appeals alleging therein that the Order issued by the HLA varied the terms of the Board decision and, as such, the Board acted with grave abuse of discretion amounting to lack of jurisdiction. CA nevertheless dismissed the petition holding that the HLA decision is in accordance with the Board Resolution. Hence, this petition.

ISSUE:

Whether or not the Court of Appeals erred in dismissing the case HELD:


The dispute arises from the parties‘ conflicting understanding or interpretation of the phrase ―the said amount of rental shall form part of the purchase price as adjusted‖ found in the fallo, Azarcon contending that the payment of rentals is an alternative to the payment of the balance of the purchase price, and SAGANA contending that the rental payments shall be in addition to the balance of the purchase price.

Of the parties‘ interpretations, Sagana‘s is contrary to their agreement. They agreed upon the purchase price of the subject property in 1995 when they entered into the contract to sell. The amount agreed upon became the law between them. In the absence of any showing that the agreement is contrary to law, courts are without power to alter what parties have clearly, voluntarily and knowingly agreed upon.

It is clear that the payment of rentals was devised by the Board merely as an interim scheme, until a substitute method of payment of the balance of the purchase price was agreed upon by the parties.

Since Azarcon fully paid the balance of the purchase price less than three months after the Board decision was promulgated on May 10, 1993, that part of the decision respecting ―payment through other means‖ devised by the Board for Azarcon to, in the meantime, ―pay rentals as equitable payment for the use of the premises, which can be applied to the balance of the purchase price,‖ had become functus oficio.

To hold otherwise would be to fault Azarcon in whom none was, as reflected above, found by

the Board. It would also gloss over Azarcon‘s initial payment of a substantial amount when they entered into the contract to sell and her tender of payment of the balance which was, however, rejected by Sagana. It would thus ignore the interest of justice and equity which underlies all systems of justice.

HEIRS OF ANTONIO BOBADILLA v. JAIME CASTILLO


If the land is not embraced in Areas for Priority Development/Urban Land Reform Zones, no preemptive right

under Presidential Decree No. 1517 can be invoked.

For over 20 years, Antonio Bobadilla, Maria Del Mundo and Ernesto, Danilo, Policarpio, have

been leasing portions of a 348 square meter parcel of land located at Gen. Luna Street in Caloocan City

on a verbal agreement from owner Virginia Rayo. After August 1991, Rayo offered to sell the land to

Bobadilla. Rayo gave Bobadilla two months to decide whether to purchase the land. Having heard

nothing from Bobadilla after two months, Rayo sold the parcel of land to Jaime Castillo.

Castillo required Bobadilla, Del Mundo and the Serranos to vacate the land after failing to heed

his previous demands to pay a monthly rental of P10 per square meter. Bobadilla instituted a complaint

at the Caloocan City Regional Trial Court (RTC) to annul the sale between Rayo and Castillo based on

fraud and bad faith. Bobadilla asserted the right of first refusal of their predecessor-in-interest under

Presidential Decree No. 1517, otherwise known as the Urban Land Reform Act. As the decree is not

self-executing, Proclamation No. 1967 was issued identifying 244 specific sites in Metropolitan Manila as

Areas for Priority Development (APD) and Urban Land Reform Zones.


ISSUE:

Whether or not P.D. 1517 and P.D. 1967 can be applied to Bobadilla‘s claim

HELD:

In Caloocan City where the land is situated, only 11 such areas/zones were identified, none of

which was found to encompass the subject land. Such finding of fact, as affirmed by the appellate court,

is final, conclusive and binding on this Court.

Only legitimate tenants then who have resided for ten years or more on specific parcels of land,

and who have built their homes thereon, have the right not to be dispossessed therefrom and the right of

first refusal to purchase them under reasonable terms and conditions to be determined by the

appropriate government agency.

NATIVIDAD BAUTISTA-BORJA v. ILUMINADA BAUTISTA, et al. 574 SCRA 375 (2008), SECOND DIVISION (Carpio Morales, J.)

An action for declaration of nullity of an alleged fraudulent deed of sale is imprescriptible under the Civil Code.

Petitioner Natividad Bautista- Borja (Natividad), one of the five children of deceased Spouses

Pablo and Segundina Tadiaman Bautista (spouses Bautista), claimed that Iluminada Bautista, et al.,

through fraud and deception, convinced her to take possession and cultivate some agricultural lands that

will eventually be partitioned. Unknown to Natividad, however, the titles to the lands were cancelled by

virtue of Deeds of Sale executed on different dates by her parents in favor of her siblings Simplicio and

Francisco, a fact which she found out subsequent to her possession and cultivation of the said lands.

Natividad thus filed a complaint before the Regional Trial Court (RTC) for Annulment of the Deeds of

Sale and/or Partition of Properties.

The RTC dismissed the complaint for lack of cause of action, prescription and laches. Natividad

thus elevated the case to the Court of Appeals (CA), contending that the nature of her complaint was

one for annulment of void contracts which is imprescriptible. The CA, however, affirmed the trial

court‘s decision.

ISSUES:

Whether or not the Natividad‘s cause of action has already prescribed

HELD:


From the earlier quoted-allegations in Natividad‘s complaint, it is clear that her action is one for declaration of the nullity of the Deeds of Sale which she claims to be either falsified ─ because at the time of the execution thereof, Pablo was already gravely ill and bedridden, hence he could not have gone and appeared before the Notary Public, much less understood the significance and legal deeds ─ and/or because there was no consideration therefor. Clearly, following Article 1410 of the Civil Code, petitioner‘s action is imprescriptible.

But even if Natividad‘s complaint were to be taken as one for reconveyance, given that it is based on an alleged void contract, it is just the same as imprescriptible.

JESUS CALDO v. VICTORIA CALDO-ATIENZA et al. 485 SCRA 504, (2006), THIRD DIVISION (Carpio Morales, J.)

Estoppel is not one of the modes of acquiring ownership.

Petitioner Jesus Caldo is the only child of Francisco Caldo to his first wife Pilar Sayaman.

Francisco Caldo filed an ―Application to Purchase Friar Lands‖ covering Lot No. 5749-D of the Municipality of Dasmariñas, Cavite. Pilar Sayaman later died and Francisco Caldo subsequently married Juana Manareza, with whom he had three children, herein respondents Victoria Caldo-Atienza and Feliciana Caldo-Sabado, and the now deceased Alberto Caldo−father of respondent Zosimo Caldo. Juana (deceased) and the Republic of the Philippines forged a private sale, covering Lot No. 5749-D. After Juana had fully paid for the lot, she registered it in her name.

Petitioner Jesus Caldo and respondents Victoria Caldo-Atienza, Feliciana Caldo-Sabado and

Zosimo Caldo‘s executed a Salaysay ng Pag-aari ng Iba’t-Ibang Lupa. Atienza et al. thereafter executed a ―Deed of Extrajudicial Partition with Waiver‖ adjudicating the lot to themselves, prompting Jesus Caldo to file a Complaint against Atienza et al. for Annulment of Title before the Regional Trial Court of Imus, Cavite. The Court ruled that Jesus Caldo is entitled to inherit a share of the lot which was subsequently reversed by the Court of Appeals.

ISSUE

Whether or not Atienza, et al. are in estoppels to deny the claim of Jesus as co-owner

HELD: Under the New Civil Code, the modes of acquiring ownership are as follows: (a) occupation; (b)

intellectual creation; (c) donation; (d) succession; and (e) prescription. Estoppel is not one of them x x x. The recognition by the defendants-appellants Victoria Caldo-Atienza, Feliciana Caldo-Sabado and Zosimo Caldo of the plaintiff-appellee Jesus Caldo as co-owner of the subject parcel of land in the ―Salaysay ng Pag-aari ng Iba‘t Ibang Lupa‖ was based on the mistaken belief that the said land was a conjugal property of Francisco Caldo and Juana Manaresa. To rule otherwise, will not only cause injustice to the vested right of the defendants-appellants but also will run counter to the provisions of the law and applicable jurisprudence. In accordance with the settled rule, an innocent mistake on the part of the defendants-appellants as to the legal right does not estop them to assert the same

In estoppel, a person, who by his deed or conduct has induced another to act in a particular

manner, is barred from adopting an inconsistent position, attitude or course of conduct that thereby causes loss or injury to another. It further bars him from denying the truth of a fact which has, in the contemplation of law, become settled by the acts and proceedings of judicial or legislative officers or by


the act of the party himself, either by conventional writing or by representations, express or implied or in pais.

It can only be invoked between the person making the representation and the person to whom it

was addressed, the latter having relied upon the misrepresentation and having been influenced and misled thereby intentionally. Since it was Juana who allegedly made the representation to petitioner to the effect that he is a co-owner of the land, estoppel cannot be invoked against respondents.

As for the invocation of estoppel against respondents in light of their execution, together with Jesus, of the Salaysay, the following pronouncement of the Court is instructive. The doctrine of estoppel is predicated on, and has its origin in equity which, broadly defined, is justice according to natural law and right. It is a principle intended to avoid a clear case of injustice. The term is hardly distinguishable from a waiver of right. Estoppel, like its counterpart, must be unequivocal and intentional for, when misapplied, it can easily become a convenient and effective means of injustice. Estoppel is not understood to be a principal that, as a rule, should prevalently apply but, as it concededly is, a mere exception from the standard legal norms of general application that can be invoked only in highly exceptional and justifiable cases.

JOSE CAOIBES, JR., et al. v. CORAZON CAOIBES-PANTOJA

496 SCRA 273 (2006), THIRD DIVISION (Carpio Morales J.)

The law does not require that the application for registration be amended by substituting the "buyer" or the "person to whom the property has been conveyed" for the applicant. Neither does it require that the "buyer" or the "person to whom the property has been conveyed" be a party to the case.

In 1982, Jose Caoibes Jr., et al. (Caoibes, Jr., et al.) and Corazon Caoibes-Pantoja (Pantoja) entered to a contract of sale stating that a certain lot will be transferred, ceded and conveyed by the former in favour of the latter in consideration for a sum of money. The agreement included the stipulation that Pantoja will be subrogated or substituted to whatever rights, interests or representations Caoibes Jr., et al. may have pending land registration proceeding.

Fourteen years after the execution of the parties, Pantoja filed a motion to intervene and be

substituted as applicant in the Land Registration Court. The Land Registration Court denied the motion. Pantoja filed a complaint before the Regional Trial Court (RTC) for specific performance of the agreement. Caoibes, Jr., et al. opposed on the grounds of prescription. The RTC ruled in favor of Caoibes, Jr., et al. On appeal, the Court of Appeals (CA) reversed the RTC, holding that prescription had not yet set in. ISSUE:

Whether or not the action of for prescription on Pantoja started from the time of the agreement of the parties RULING:

The law does not require that the application for registration be amended by substituting the "buyer" or the "person to whom the property has been conveyed" for the applicant. Neither does it require that the "buyer" or the "person to whom the property has been conveyed" be a party to the case.


He may thus be a total stranger to the land registration proceedings. The only requirements of the law are: (1) that the instrument be presented to the court by the interested party together with a motion that the same be considered in relation with the application; and (2) that prior notice be given to the parties to the case.

The agreement of the parties is analogous to a deed of sale in favour of Pantoja, it having transferred ownership for and in consideration of her payment of the loan.. The agreement having been made through public instrument, the execution was equivalent to the delivery of the property to Pantoja.

The agreement is of course in consonance with Sec. 22 of P.D. 1529 (Property Registration Decree which became effective on June 11, 1978). In light of the law and jurisprudence, the substitution by Pantoja of Caoibes, Jr., et al. as applicant in the land registration case over Lot 2 is not even necessary. All Pantoja has to do is to comply with the requirements under the above-quoted Sec. 22 of the Property Registration Decree. It was unnecessary for Pantoja to file the case for specific performance subject of the present petition against Caoibes, Jr., et al. to honor their agreement allowing her to be substituted in their stead as applicant in the land registration proceeding.

LEONARDO M. DALWAMPO, et al. v. QUINOCOL FARMERS, et al. 488 SCRA 208 (2006), EN BANC (Carpio Morales, J.)

For a tenancy relationship to exist, the following essential elements must concur: 1) the parties are the landowner and the tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent between the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between landowner and the tenant or agricultural lessee.

The lots comprising the Almendras Coconut Plantation are alleged to have been part of the pre-war Y. Furukawa-Darong Plantation Company which has been reverted to the public domain as ―spoils of war‖ and placed under the administration of the National Abaca Fibers Corporation (NAFCO). Upon the dissolution of NAFCO, the lots were placed under the administration of the Board of Liquidators (Board) for sale or transfer to qualified occupants-applicants. The Board awarded the lots to several individuals. The Board also executed the deeds of sale to the awardees. There is no showing however that those certificates of title were issued to the awardees although tax declarations were issued wherein the name ―Alejandro D. Almendras, Sr.‖ was indicated as administrator. There is no showing on how Alejandro Almendras, Sr.(Almendras) acquired title over the lots.

When Almendras suffered a stroke, a petition for guardianship was filed before the Regional

Trial Court (RTC). The RTC granted and appointed Paul C. Almendras and Elizabeth A. Alba as guardians over his properties. The guardians later sold, with the approval of the court, the lots comprising the plantation to the petitioners Dalawampo et al. Thereafter, herein respondents Quinocol Farmers, Farmworkers and Settlers Association (QFFSA) et al. filed several complaints a for ejectment before the Municipal Trial Court (MTC) against Southern Davao Development Co., Inc. (SODACO), wherein petitioner Dalawampo was the Farm Manager.

Respondents QFFSA et al. also filed a complaint for annulment of the deeds of sale,

enforcement of preemptive rights, injunction, and damages against several persons including herein petitioners before the Department of Agrarian Reform Office of the Provincial Adjudicator. The Provincial Adjudicator decided in favor of QFFSA et al. He declared the conveyances in favor of


petitioners Dalawampo et al. Those have no force and effect as the guardians of Almendras who, in the meantime died on August 3, 1995, could not have transferred to them ownership of the lots in the plantation which was, at the time of the sale, still titled in the name of

the Republic of the Philippines. On appeal, the Department of Agrarian Reform Adjudication Board (DARAB) reversed the decision of the Provincial Adjudicator. The Court of Appeals reversed the DARAB decision and reinstated that of the Provincial Adjudicator. Hence this petition. ISSUE: Whether or not the QFFSA et al. are legitimate tenants of the Almendras Coconut Plantation HELD:

It is settled that the existence of a tenancy relationship cannot be presumed. There must be

evidence to prove it. Mere allegation is not evidence nor equivalent to proof.

For a tenancy relationship to exist, the following essential elements must concur: 1) the parties are the landowner and the tenant or agricultural lessee; 2) the subject matter of the relationship is an agricultural land; 3) there is consent between the parties to the relationship; 4) the purpose of the relationship is to bring about agricultural production; 5) there is personal cultivation on the part of the tenant or agricultural lessee; and 6) the harvest is shared between landowner and the tenant or agricultural lessee.

The present controversy is an agrarian dispute not any different from the case pending before the DAR because in both, the property involved is an agricultural land and QFFSA et al. claim to be the tenants thereon.

The RTC therefore erred when it treated this case as an ordinary ejectment suit and upheld the jurisdiction of the inferior court. It compounded its error when it sustained the annulment of the sale by the inferior court, contrary to the rule that in ejectment cases, inferior courts cannot adjudicate on ownership and regional trial courts cannot resolve the same on appeal because proceedings in such cases being summary in nature, they are inadequate for the full ventilation of issues involving title to controverted real property.

Of the essential elements of a tenancy relationship, the records do not show that the first, third, and fourth elements had been proved by substantial evidence. No written tenancy contract or proof of acts implying a mutual agreement to enter into a tenancy contract between Almendras and respondents was proffered.

The principal factor in determining whether a tenancy relationship exists is intent. Tenancy is not a purely factual relationship dependent on what the alleged tenant does upon the land. It also is a legal relationship. The intent of the parties, the understanding when the farmer is installed, and their written agreements, provided these are complied with and are not contrary to law, are even more important. Neither the fifth element – personal cultivation by the tenant or agricultural lessee which "includes all activities designed to promote the growth and care of the plants or trees and husbanding the earth, by general industry, so that it may bring forth more products or fruits" – was proved.

CLARA C. DE LA CRUZ et al. v. COURT OF APPEALS et al.



Proof of ownership, together with identity of the land, is the basic rule for an action to prosper.

The case involves two parcels of land, inherited by siblings Esteban, Andrea and Tomasa Dela

Cruz. Clara C. De la Cruz (Clara) and Claudia C. Manadong (Claudia) were the daughters of Esteban. On

the other hand, Rosario Opana (Rosario) was the second wife of Tomasa‘s husband.

Clara and Claudia filed a complaint for partition of the abovementioned land, alleging that they

were the heirs of Tomasa, and therefore entitled to the land presently occupied by Rosario. A tax

declaration statement and a deed of absolute sale were presented to support their claim. On the other

hand, Rosario alleges that the two properties were hers; the first having been bought by her husband

even before his marriage to his first wife, Tomasa, and the second property inherited by him from his

father. Rosario also alleges that the complaint is already barred by laches, since the land had been

registered in her name since 1974, while the action had only been brought in 1992.

The Regional Trial Court ruled in favor of Rosario and declared the same to be the absolute

owner of the land in question. On appeal, the Court of Appeals affirmed the lower court‘s Decision.

ISSUE:

Whether or not the action for recovery of property will prosper

HELD:

Contrary to the assertion of Clara and Claudia, since the Rosario alleged exclusive ownership, the

action for partition, which assumes that the parties are co-owners, had, as correctly held by the trial

court, it citing Rodriguez v. Ravilan, become one for recovery of property.

Clara and Clauidia harp on Tax Declaration No. 29824 covering the property in Mayana, but the

boundaries set forth therein do not jibe with those of the property in Mayana in the possession of and

registered in the name of respondent.

In Gesmundo v. Court of Appeals, the Supreme Court held a person who claims ownership of real

property is duty bound to clearly identify the land being claimed in accordance with the document on

which he anchors his right of ownership. When the record does not show that the land subject matter of

the action has been exactly determined, such action cannot prosper. Proof of ownership together with

identity of the land is the basic rule. Clara and Claudia failed to come up with a clear description of the

land sought or claimed. On that score alone, their case fails.

DEL MONTE PHILIPPINES, INC. vs. NAPOLEON N. ARAGONES



A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work.

Del Monte Philippines Inc. (DMPI) entered into an agreement with Mega-Engineering Services

in joint venture with WAFF Construction System Corporation (MEGA-WAFF) represented by Edilberto Garcia (Garcia), wherein Garcia will supply the installation of modular pavement in DMPI‘s warehouse. In this regard, Garcia as a contractor entered into a supply agreement with Dynablock Enterprises represented by respondent Aragones, to supply labor, materials, equipment and the like.

Thereafter, Argones started to do his obligation. The deadline however was not met. After the

installation, Aragones failed to collect the payment from Garcia. Then, Aragones sent a letter to DMPI saying that instead of paying Garcia, DMPI should directly pay him. But this did not happen. Hence Aragones filed a complaint for sum of money with damages against Garcia and DMPI before RTC.

RTC ruled in favor of Aragones, it held that DMPI and Garcia are jointly and severally liable.

DMPI appealed to Court of Appeal (CA). However at CA, the court affirmed RTC‘s decision. Hence, DMPI filed this petition. It contends that the supply agreement between Garcia and Aragones is a contract of sale to which DMPI was not privy, hence DMPI cannot be held liable.

ISSUE: Whether or not Supply Agreement between Aragones and Garcia is a contract of sale HELD:

Contrary to DMPI‘s claim that ―save for the shape, there was no consideration of any special needs or requirements of DMPI taken into account in the design or manufacture of the concrete paving blocks,‖ the ―Supply Agreement‖ is replete with specifications, terms or conditions showing that it was one for a piece of work.

As reflected in the highlighted and underscored above-quoted provisions of the ―Supply

Agreement,‖ as well as other evidence on record, the machines Aragones was obliged to fabricate were those for casting the concrete blocks specified by Garcia. Aragones did not have those kind of machines in his usual business, hence, the special order.

Under Article 1467 then of the Civil Code, a contract for the delivery at a certain price of an

article which the vendor in the ordinary course of his business manufactures or procures for the general

market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be

manufactured specially for the customer and upon his special order, and not for the general market, it is

a contract for a piece of work. The ―Supply Agreement‖ was decidedly a contract for a piece of work.

Following Art. 1729 of the Civil Code which provides that those who put their labor upon or

furnish materials for a piece of work undertaken by the contractor have an action against the owner up

to the amount owing from the latter to the contractor at the time the claim is made.


Aragones having specially fabricated three casting machines and furnished some

materials for the production of the concrete blocks specially ordered and specified by

MEGA-WAFF which were to be and indeed they were for the exclusive use of MEGA-WAFF, he has a

cause of action upon DMPI up to the amount it owed MEGA-WAFF at the time Aragones made his

claim to DMPI.

Hon. JEREMIAS L. DOLINO, et al. v. COURT OF APPEALS, et al. 401 SCRA 695 (2003), THIRD DIVISION (Carpio Morales, J.)

The Regional Trial Courts has exclusive jurisdiction over all applications for original registration of title to lands, including improvements and interests therein, and over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions.

Private respondents Viking Management and Development Corp., et al. (Viking, et. al.), requested for the survey or resurvey of their respective lots. However, herein petitioners Jeremias L. Dolino, et al. (Dolino, et al.), officers of the Department of Environment and Natural Resources (DENR), refused to accept such request. Such refusal is based on the ground that such lands were subject to the provisions of Presidential Proclamation (P.P.) No. 932 which prohibited the sale, entry, disposition or settlement of such lands in order to protect, maintain or improve the Kotkot and Lunsaran Watershed Forest Reserve located in Cebu and Davao.

Hence, Viking et al., filed a petition for the issuance of a Writ of Mandamus to compel Dolino, et al., to execute the survey or resurvey of their lots and render the necessary reports thereon.

The Regional Trial Court (RTC) granted the petition for mandamus and ordered Dolino et al. to effect the survey or resurvey of the subject lands. On appeal, the Court of Appeals (CA) affirmed the RTC decision. Hence, this petition.

ISSUE:

Whether or not the CA erred in granting the Writ of Mandamus

HELD:

Under Sec. 17 of Presidential Decree No. 1529, "THE PROPERTY REGISTRATION DECREE," a survey of a land subject of an application for registration is an essential requisite.

Such survey does not, however, automatically result in the adjudication of the land applied for in favor of the applicant, who is still required to prove that (a) the land is an alienable and disposable part of the public domain, and (b) his possession has been for the length of time and in the manner and concept required by law. The presumption is that land pertains to the State, and any person seeking to establish ownership over land must conclusively show that he is the owner.


Under Section 2, par. 2 of P.D. No. 1529, it is the Regional Trial Courts which "shall have exclusive jurisdiction over all applications for original registration of title to lands, including improvements and interests therein, and over all petitions filed after original registration of title, with power to hear and determine all questions arising upon such applications or petitions."

If respondents fail to prove by satisfactory evidence their supposed vested or private rights over the remaining lots, then their applications for registration should necessarily be rejected by the cadastral court and/or land registration court. However, without these lots being surveyed, respondents would not be able to initiate and pursue, as the case may be, the proper land registration proceedings and would be precluded from establishing their claimed vested rights thereon.

CRISOLOGO C. DOMINGO v. SEVERINO and RAYMUNDO LANDICHO, et al. 531 SCRA 606, 29 August 2007, SECOND DIVISION, (Carpio-Morales, J.)

To prove that a land is alienable, an applicant must conclusively establish the existence of a positive act of the

government, such as a presidential proclamation or an executive order, or administrative action, investigation reports of the Bureau of Lands investigator or a legislative act or statute.

Crisologo Domingo filed with the Regional Trial Court (RTC) of Tagaytay City, an application for registration of certain parcels of land (the ―lots‖), which he supposedly purchased from one Genoveva Manlapit in 1948, and has since been in continuous, open, public, adverse and uninterrupted possession thereof in the concept of an owner.

Severino and Raymundo Landicho, Julian Abello, Marta de Sagun and Editha G. Sarmiento subsequently filed an Answer/Opposition to Domingo‘s application, claiming, among other things, that they have been the ones in open, continuous, adverse and actual possession and cultivation of the lots in the concept of owners and have even been paying real estate taxes thereon.

The RTC approved Domingo‘s application for registration. On appeal by Landicho, et al., the

Court of Appeals reversed and set aside the RTC Decision and dismissed Domingo‘s application for registration of land title. Petitioner Domingo filed a motion for reconsideration with the Court of Appeals which was subsequently denied by said court.

ISSUE:

Whether or not Domingo is entitled to the registration of the lots in question pursuant to Section 14, sub pars. (1) and (4) of P.D. 1529 HELD:

Section 14 of P.D. No. 1529 provides that to be entitled of a land, the applicant must prove that:

(a) the land applied for forms part of the disposable and alienable agricultural lands of the public domain and (b) he has been in open, continuous, exclusive and notorious possession and occupation of the same under a bona fide claim of ownership either since time immemorial or since June 12, 1945.


All lands not otherwise appearing to be clearly within private ownership are presumed to belong to the State, and unless it has been shown that they have been reclassified by the State as alienable or disposable to a private person, they remain part of the inalienable public domain.

To prove that a land is alienable, an applicant must conclusively establish the existence of a

positive act of government, such as presidential proclamation or an executive order, or administrative action, investigation reports of the Bureau of Lands investigator or a legislative act or statute.

FELICIANO ESGUERRA, et al. v. VIRGINIA TRINIDAD, et al.


What really defines a piece of ground is not the area, calculated with more or less certainty, mentioned in its

description, but the boundaries therein laid down, as enclosing the land and indicating its limits. Felipe Esguerra and Praxedes de Vera (Esguerra spouses) owned several parcels of land half of

which they sold to their grandchildren Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra. The spouses sold half the remaining land were sold their other grandchildren, the brothers Eulalio and Julian Trinidad.. Subsequentlly, the Esguerra spouses executed the necessary Deeds of Sale before a notary public. They also executed a deed of partitioning of the lots , all were about 5,000 square meteres each.

Eulalio Trinidad (Trinidad) later sold his share of the land to his daughters. During a cadastral

survey conducted in the late 1960s, it was discovered that the 5,000-square meter portion of Esguerra‘s parcel of land sold to Trinidad actually measured 6,268 square meters.

Feliciano Esguerra (Feliciano), who inhabits the lot bordering Trinidad, subsequently filed a

motion for nullification of sale between the Esguerra spouses and Trinidad on the ground that they were procured through fraud or misrepresentation. Feliciano contended that the stipulations in the deed of sale was that Trinidad was sold a 5,000 square meter lot. The boundaries stipulated in the contract of sale which extend the lot‘s area

Both cases were consolidated and tried before the RTC which, after trial, dismissed the cases.

On appeal, the appellate court also dismissed the cases; and subsequently, the motion for reconsideration was also denied. ISSUES:

Whether or not the Appellate Court erred in holding that the description and boundaries of the lot override the stated area of the lot in the deed of sale HELD:

Where both the area and the boundaries of the immovable are declared, the area covered within the boundaries of the immovable prevails over the stated area. In cases of conflict between areas and boundaries, it is the latter which should prevail.


What really defines a piece of ground is not the area, calculated with more or less

certainty, mentioned in its description, but the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of sale of land in a mass, it is well established that the specific boundaries stated in the contract must control over any statement with respect to the area contained within its boundaries. It is not of vital consequence that a deed or contract of sale of land should disclose the area with mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the entirety thereof that distinguishes the determinate object.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries

a strong presumption that the provisions of the law governing the registration of land which led to its issuance have been duly followed. Fraud being a serious charge, it must be supported by clear and convincing proof. Petitioners failed to discharge the burden of proof, however.

The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver

what has been stipulated.

In fine, under Article 1542, what is controlling is the entire land included within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true since the area of the land in OCT No. 0-6498 was described in the deed as "humigit kumulang," that is, more or less.

A caveat is in order, however. The use of "more or less" or similar words in designating quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or with the description "more or less" with reference to its area does not thereby ipso facto take all risk of quantity in the land.

SPS. DANILO ESPARAGERA, et al., v. J. Y. REALTY & DEVELOPMENT CORPORATION 452 SCRA 335 (2005), THIRD DIVISION (Carpio Morales, J.)

It is a general rule in this country that compromises are to be favored, without regard to the nature of the controversy compromised, provided that such settlement is made free from fraud or mistake.

Danilo Esparagera and Enrique Gonzales, brother-in-laws, entered a parcel of land owned by Eugenio Rodil (Rodil) and Young by tolerance sometime 1960 and 1955. Esparagera and Gonzales were able to plant coconuts, corn and bananas and shared the produce with Rodil. After a few years Rodil issued a notice of eviction to Esparagera and Gonzales. Later, Rodil and Young sold the land to J.Y. Realty Corporation (JY Realty).

Esparagera and Gonzales filed two separate complaints against Toribio Rodil (Rodil) and Salud Young (Young) for Preservation of Tenancy Status which was later consolidated into one case by the Regional Trial Court. Both Esparagera and Gonzales also claimed to be tenants of a portion of the same


landholding. Gonzales and Esparageras sought to establish that the landholding in question is an agricultural land. The sale of the land was put on hold by JY Realty.

The Provincial Agrarian Reform Adjudicator (PARAD) ruled in favor of the Robil and Young and dismissed the complaint. On appeal with the Department of Agrarian Reform Adjudication Board (DARAB), the decision of PARAD was reversed and set aside.

Before the execution of said decision, Spouses Esparagera, et al. executed a compromise agreement between JY Realty. Esparagera, et al agreed to recognize the land as residential in exchange for JY Realty to purchase the land. Rodil and JY Realty filed Motion for Reconsideration to DARAB alleging that the Spouses Esparagera and JY Realty had already reached a compromise agreement. DARAB then denied the motion for reconsideration. The Court of Appeals (CA) held that the Spouses Esparagera, et al. were not tenants of the farm, thus reversing and setting aside the decision of DARAB and dismissing the said complaint. ISSUE:

1) Whether or not the land disputed is Residential rather than Agricultural

2) Whether or not the action of the compromise agreement of Spouses Esparagera and JY Realty takes precedence in importance compared to the decision of DARAB

HELD:

By the Certification, Esparagera, et al unconditionally declared that the subject land is residential, not agricultural; that they received P50,000.00 each "for whatever improvements they introduced thereon; that they would remove their houses and those of their children; and that they "have nothing whatsoever to do with the land and that they no longer are interested to pursue the DARAB case. Parenthetically, it is informed by respondent in its Comment to the present petition that Esparagera, et al had after the execution of the Certification vacated the landholding, which information was not denied by Esparagera, et al.

Since, unquestionably, the Certification was voluntarily accomplished by petitioners, that it was not submitted before the Adjudicator and was submitted to the DARAB only after its decision had been promulgated does not violate any rules. For it is a general rule in this country that compromises are to be favored, without regard to the nature of the controversy compromised. . . . If settlement be made . . . , free from fraud or mistake, whereby there is a surrender or satisfaction, in whole or in part, of a claim upon one side in exchange for or in consideration of a surrender or satisfaction of a claim in whole or in part, or of something of value, upon the other, however baseless may be the claim upon either side or harsh the terms as to either of the parties, the other cannot successfully impeach the agreement in a court of justice . . .

The settlement reflected in the Certification executed by Esparagera, et al, whether it is in the nature of a compromise agreement bereft of court approval, albeit it is more in the nature of a quitclaim the voluntariness of its execution of which has not been raised, is binding on the parties and may not, on account of alleged procedural or substantive legal infirmity, be denied evidentiary value to affect the outcome of the case. It thus has the effect of res judicata, following Art. 2037 of the Civil Code.


MA. LIZA FRANCO-CRUZ v. THE COURT OF APPEALS, et al.


Contentions must be proved by competent evidence and reliance must be had on the strength of the party's own

evidence and not upon the weakness of the opponent's defense.

Franco Transit bus collided with the rear portions of a bus and truck wrecker both owned by

respondent Victory Liner, Inc., killing five people. The heirs of the victims filed a civil case against Ma.

Liza Franco-Cruz (Franco-Cruz), the General Manager of Franco Transit; they argued that Franco-Cruz

failed to exercise the diligence of a good father of a family in the selection and supervision of the driver

of the Franco Transit bus. In her answer, Franco-Cruz alleged that she is not the real party-in-interest

and, therefore, the complaint stated no cause of action against her. Before establishing a defense, Franco

Transit failed to appear during pre-trial hearing. The court proceeded in hearing the case ex-parte and

declared her in default.

Franco-Cruz filed an Omnibus Motion alleging that it was error to declare her in default. Franco

Transit contended that the declaration in default of a defendant who fails to attend pre-trial had been

eliminated in the 1997 Rules of Civil Procedure. The trial court denied her partial motion for

reconsideration. On appeal, it was dismissed for having been filed out of time making the trial court‘s

decision final.

ISSUE:

Whether or not the RTC erred in not allowing a new trial on the basis of failure to appear

HELD:

There was no attempt, on the part of any of the witnesses for the heirs of the victims, to

controvert Franco-Cruz‘s affirmative defense that there is no cause of action against her, she not being

the registered owner of the Franco Transit bus, even despite her submission of the bus' Certificate of

Registration in the name of Felicisima R. Franco which is conclusive proof of ownership.

In maintaining their cause of action against Franco-Cruz, relied on the January 4, 1998 Traffic

Accident Report of Balajadia, who conducted a spot investigation after the occurrence of the accident,

wherein he stated that the Franco Transit bus was registered under the name of Marializa Franco-Cruz

of Batac, Ilocos Norte.

It bears emphasis that the presentation by the victims of evidence ex-parte did not relieve them

of the burden of proving their claims against petitioner. As in other civil cases, the burden of proof rests

upon the party who, as determined by the pleadings or nature of the case, asserts an affirmative issue.

This applies with more vigor where, as in the instant case, the plaintiff was allowed to present evidence

ex parte.


URSULINA GANUELAS, et al. v. HON. ROBERT T. CAWED, et al. G. R. No. 123968, 24 April 2003, THIRD DIVISION (Carpio-Morales, J.)

Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator. Celestina Ganuelas Vda. de Valin executed a Deed of Donation of Real Property in favor of petitioner Ursulina Ganuelas. The pertinent portion of the Deed of Donation reads: ―That for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect.‖ However, more than a month before Celestina died, she executed a document revoking such donation. After her death, Ursulina claimed ownership over the donated properties and refused to give private respondents Leocadia G. Flores, et al., niece of Celestina any share in the produce of the properties despite repeated demands. Thus, prompting Flores, et al. to file a complaint before the San Fernando, La Union Regional Trial Court (RTC), challenging the validity of the Deed of Donation. They alleged that such donation is void for failure to comply with the formalities of wills and testaments, which is necessary in a disposition mortis causa.

On the other hand, Ursulina maintains that there is no need to comply with the formalities of wills and testaments because such donation was inter vivos. The RTC ruled that the Deed of Donation is a disposition mortis causa, thus, void for failure to comply with the formalities of wills and testaments. ISSUE:

Whether or not the donation is inter vivos or mortis causa HELD: Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed. Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.

If the donation is made in contemplation of the donor‘s death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donor‘s death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a last will and testament.

But if the donation takes effect during the donor‘s lifetime or independently of the donor‘s death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donor‘s lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos.

The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 748 and 749 of the Civil Code, except when it is


onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership. The distinguishing characteristics of a donation mortis causa are the following: 1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; 2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the

properties conveyed; 3. That the transfer should be void if the transferor should survive the transferee. In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina. The phrase ―to become effective upon the death of the DONOR‖ admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime. More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the donation is a postmortem disposition. As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. More. The deed contains an attestation clause expressly confirming the donation as mortis causa: To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation. In other words, love and affection may also

underline transfers mortis causa. As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.

URSULINA GANUELAS, et al. v. HON. ROBERT T. CAWED, et al. G. R. No. 123968, 24 April 2003, THIRD DIVISION (Carpio-Morales, J.)

Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by

the donee until the death of the donor-testator. Celestina Ganuelas Vda. de Valin executed a Deed of Donation of Real Property in favor of petitioner Ursulina Ganuelas. The pertinent portion of the Deed of Donation reads: ―That for and in consideration of the love and affection which the DONOR has for the DONEE, and of the faithful services the latter has rendered in the past to the former, the said DONOR does by these presents transfer and convey, by way of DONATION, unto the DONEE the property above, described, to become effective upon the death of the DONOR; but in the event that the DONEE should die before the DONOR, the present donation shall be deemed rescinded and of no further force and effect.‖


However, more than a month before Celestina died, she executed a document revoking such donation. After her death, Ursulina claimed ownership over the donated properties and refused to give private respondents Leocadia G. Flores, et al., niece of Celestina any share in the produce of the properties despite repeated demands. Thus, prompting Flores, et al. to file a complaint before the San Fernando, La Union Regional Trial Court (RTC), challenging the validity of the Deed of Donation. They alleged that such donation is void for failure to comply with the formalities of wills and testaments, which is necessary in a disposition mortis causa. On the other hand, Ursulina maintains that there is no need to comply with the formalities of

wills and testaments because such donation was inter vivos. The RTC ruled that the Deed of Donation is a disposition mortis causa, thus, void for failure to comply with the formalities of wills and testaments. ISSUE: Whether or not the donation is inter vivos or mortis causa HELD: Crucial in the resolution of the issue is the determination of whether the donor intended to transfer the ownership over the properties upon the execution of the deed. Donation inter vivos differs from donation mortis causa in that in the former, the act is immediately operative even if the actual execution may be deferred until the death of the donor, while in the latter, nothing is conveyed to or acquired by the donee until the death of the donor-testator.

If the donation is made in contemplation of the donor‘s death, meaning that the full or naked ownership of the donated properties will pass to the donee only because of the donor‘s death, then it is at that time that the donation takes effect, and it is a donation mortis causa which should be embodied in a

last will and testament.

But if the donation takes effect during the donor‘s lifetime or independently of the donor‘s death, meaning that the full or naked ownership (nuda proprietas) of the donated properties passes to the donee during the donor‘s lifetime, not by reason of his death but because of the deed of donation, then the donation is inter vivos.

The distinction between a transfer inter vivos and mortis causa is important as the validity or revocation of the donation depends upon its nature. If the donation is inter vivos, it must be executed and accepted with the formalities prescribed by Articles 748 and 749 of the Civil Code, except when it is onerous in which case the rules on contracts will apply. If it is mortis causa, the donation must be in the form of a will, with all the formalities for the validity of wills, otherwise it is void and cannot transfer ownership. The distinguishing characteristics of a donation mortis causa are the following: 1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; 2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed;


3. That the transfer should be void if the transferor should survive the transferee. In the donation subject of the present case, there is nothing therein which indicates that any right, title or interest in the donated properties was to be transferred to Ursulina prior to the death of Celestina. The phrase ―to become effective upon the death of the DONOR‖ admits of no other interpretation but that Celestina intended to transfer the ownership of the properties to Ursulina on her death, not during her lifetime. More importantly, the provision in the deed stating that if the donee should die before the donor, the donation shall be deemed rescinded and of no further force and effect shows that the

donation is a postmortem disposition. As stated in a long line of cases, one of the decisive characteristics of a donation mortis causa is that the transfer should be considered void if the donor should survive the donee. More. The deed contains an attestation clause expressly confirming the donation as mortis causa: To classify the donation as inter vivos simply because it is founded on considerations of love and affection is erroneous. That the donation was prompted by the affection of the donor for the donee and the services rendered by the latter is of no particular significance in determining whether the deed constitutes a transfer inter vivos or not, because a legacy may have an identical motivation. In other words, love and affection may also underline transfers mortis causa. As the subject deed then is in the nature of a mortis causa disposition, the formalities of a will under Article 728 of the Civil Code should have been complied with, failing which the donation is void and produces no effect.

RAMON A. GONZALES v. PHILIPPINES AMUSEMENT AND GAMING

CORPORATION, et al. 429 SCRA 533 (2004), THIRD DIVISION (Carpio Morales, J.)

While PAGCOR is allowed under its charter to enter into operator’s and/or management contracts, it is not

allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so.

Petitioner Ramon A. Gonzales, as a citizen, taxpayer and member of the Philippine Bar, filed a Petition seeking to restrain respondent Philippine Amusement and Gaming Corporation (PAGCOR) from continuing its operations and prohibit it and its co-respondents Sports and Games Entertainment Corporation (SAGE), Best World Gaming and Entertainment Corporation (BEST WORLD), Belle Jai-alai Corporation (BELLE) and Filipinas Gaming Entertainment Totalizator Corporation (FILGAME)from enforcing: (1) the Grant of an Authority and Agreement for the Operation of Sports Betting and Internet Gambling executed between PAGCOR and SAGE; (2) the Grant of Authority to Operate Computerized Bingo Games between PAGCOR and BEST WORLD; and (3) the ―Agreement‖ among PAGCOR, BELLE and FILGAME to conduct jai-alai operations.

In Del Mar v. Phil. Amusement and Gaming Corp., et al., the Court enjoined PAGCOR, BELLE, and FILGAME from managing, maintaining and operating jai-alai games and from enforcing the agreement entered into by them for that purpose. Then, PAGCOR et al. filed several motions for clarification,

which the Supreme Court denied.


Respondents BELLE and FILGAME filed a Manifestation stating that they were impleaded in the instant petition by reason of the agreement which they executed with PAGCOR. The said agreement was already declared invalid by the Supreme Court. In its comment, the respondent BEST WORLD stated that it had been unable to operate its bingo terminals and bingo

games since its closure and shut down by PAGCOR and DILG.

ISSUE:

1. Whether or not Presidential Decree (P.D.) 1869, as amended (the PAGCOR Charter), is unconstitutional for having been issued pursuant to an unlawful exercise of legislative power by then President Ferdinand E. Marcos

2. Whether or not the contracts entered into by PAGCOR with its BELLE and FILGAME are void for being undue delegations by PAGCOR of its franchise to operate and maintain gambling casinos, sports, gaming pools and the like

HELD:

That the P.D. 1869 has been rendered moot and academic

In assailing the constitutionality of P.D. 1869, Gonzales does not point to any inconsistency between it and the present Constitution. Instead, it questions its issuance as an illegal exercise of legislative powers by then President Marcos.

Indeed, while Gonzales made several poignant observations regarding the jurisprudence in the foregoing cases, the Court is unable to accept his invitation to re-examine said cases for the simple reason that the power conferred on it by the Constitution is limited to the adjudication of actual controversies and the determination of whether a branch or instrumentality of the government has acted with grave abuse of discretion amounting to lack or excess of jurisdiction. Even with its expanded jurisdiction, it is beyond the powers of this Court to re-write history.

Since Gonzeles did not endeavor to show that P.D. 1869 itself is inconsistent with the Constitution, his prayer that PAGCOR be enjoined from continuing its operations and doing acts in

furtherance of its existence must necessarily be denied.

Movants may derive some satisfaction in the knowledge that Gonzales‘ prayer that respondents be enjoined from enforcing the "Agreement" among PAGCOR, BELLE and FILGAME to conduct jai-alai operations and the "Grant of an Authority and Agreement for the Operation of Sports Betting and Internet Gambling" between PAGCOR and SAGE had been granted, albeit in the separate

aforementioned cases of Del Mar and Jaworski.

That the contracts entered into by PAGCOR with BELLE and FILGAME is void

The second issue has already been raised in the Del Mar cases, this Court ruling that PAGCOR "has a valid franchise to, but only by itself (i.e., not in association with any other person or entity) operate, maintain and/or manage the game of jai-alai," and that, consequently, the Agreement of June 17, 1999 among PAGCOR, BELLE and FILGAME was without force and effect.


While PAGCOR is allowed under its charter to enter into operator‘s and/or management contracts, it is not allowed under the same charter to relinquish or share its franchise, much less grant a veritable franchise to another entity such as SAGE. PAGCOR can not delegate its power in view of the legal principle of delegata potestas delegare non potest, inasmuch as there is nothing in the charter to show that it has been expressly authorized to do so. In Lim v. Pacquing, the Court clarified that "since ADC has no franchise from Congress to operate the jai-alai, it may not so operate even if it has a license or permit from the City Mayor to operate the jai-alai in the City of Manila." By the same token, SAGE has to obtain a separate legislative franchise and not "ride on" PAGCOR‘s franchise if it were to legally operate on-line Internet gambling.

PAUL T. IRAO v. BY THE BAY, INC. 558 SCRA 315 (2008), (Carpio-Morales, J.)

A notice or demand to vacate does not have to expressly use the word “vacate”, as it suffices that the demand letter puts

the lessee or occupant on notice that if he does not pay the rentals demanded or comply with the terms of the lease contract, it should move out of the leased premises. Ruby Roxas (Ruby) the representative of the Estate of Doña Trinidad de Leon Roxas and Ronald Magbitang (Ronald) representative of By the Bay, Inc. forged a contract of lease of a 3-storey building located in Pasay City for 5 years. By the Bay‘s restaurant was closed by the City Government and they started defaulting in the payment of the rent. Ruby executed another contract of lease in favor of Paul T. Irao (Paul), herein petitioner. Paul, together with the Barangay Kagawad and Security Guards, entered and took possession of the leased premises. By the Bay, Inc. filed a case of Forcible Entry to the Metropolitan Trial Court of Pasay City (MeTC) with Prayer for Preliminary Injunction and Damages. The MeTC dismissed the complaint of By the Bay Inc. holding that the failure of By the Bay Inc. to pay monthly rentals renders them with unclean hands. By the Bay Inc. contends that the letter sent to them by Ruby Roxas was the demand to pay the rental arrears and not a notice to terminate the contract of lease.

The Regional Trial Court affirmed the decision of the MeTC. It was reversed by the Court of Appeals holding that Paul Irao should turn over the possession to By the Bay, Inc. ISSUE:

Whether or not the lessor‘s demand letter to respondent sufficiently contained a notice of termination of the lease contract and a demand to vacate the leased premises to justify the taking over the possession

HELD:


The language and intent x x x of the demand letter are unambiguous. The lessor demanded from By the Bay Inc. the full payment of its unpaid rentals of P2,517,333.36 within five days from notice. The phrase ―otherwise we shall be constrained, much to our regret‖ in the letter sends a clear warning that failure to settle the amount within the stated period would constrain the lessor to ―terminate [the] Contract of Lease‖ and ―take the necessary legal measures against [respondent] to protect [its] interest without further notice.‖

The letter made it clear to respondent that the therein stated adverse consequences would ensue ―without further notice,‖ an unmistakable warning to respondent that upon its default, the lease contract would be deemed terminated and that its continued possession of the leased premises would no longer be permitted.

The notice of impending termination was not something strange to respondent since it merely

implemented the stipulation in Section 31 of their contract that ―if default or breach be made of any of such covenants and conditions, then this lease, at the discretion of the LESSOR, may be terminated and cancelled forthwith.‖

To ―warn‖ means ―to give notice to somebody beforehand, especially of danger;‖ and a ―warning‖

may be ―a notice of termination of an agreement, employment, etc.‖ Its purpose is ―to apprise a party of the existence of danger of which he is not aware to enable him to protect himself against it.‖

―[W]here,‖ as here, ―the party is aware of the danger, the warning will serve no useful purpose and is

unnecessary, and there is no duty to warn against risks which are open and obvious.‖ The appellate court‘s ruling that the lessor‘s letter did not demand respondent to vacate is flawed. A

notice or demand to vacate does not have to expressly use the word ―vacate,‖ as it suffices that the demand letter puts the lessee or occupant on notice that if he does not pay the rentals demanded or comply with the terms of the lease contract, it should move out of the leased premises.

Contractual stipulations empowering the lessor and/or his representative to repossess the leased

property extrajudicially from a deforciant lessee, as in the present case, have been held to be valid. Being the law between the parties, they must be respected. By the Nay, Inc. cannot thus feign ignorance that the repossession of the leased property by the lessor and/or its representative-herein Paul was the appropriate legal measure it (respondent) itself authorized under their contract.

JENIE SAN JUAN DELA CRUZ, et al. v. RONALD PAUL S. GARCIA, in his capacity as City

Civil Registrar of Antipolo City

594 SCRA 648, (2009), SECOND DIVISION (Carpio Morales, J.)

The requirement that the private handwritten instrument be signed by the acknowledging parent must be strictly

complied with it the same is the lone evidence to prove filiation.

Jenie dela Cruz and Dominique Aquino lived together as husband and wife. Two months after

Dominique‘s death, Jenie gave birth to a child. Jenie applied for registration of the child‘s birth, using

Dominique‘s surname Aquino, with the Office of the City Civil Registrar. She attached to the Affidavits


a document entitled ―AUTOBIOGRAPHY‖ – a handwritten document by Dominique

which states that he and Jenie ―fell in love with each other, then we became good couples.

And as of now she is pregnant and for that we live together in our house now.‖

The City Civil Registrar denied Jenie‘s application, holding that the child cannot use the surname

of his father because he was born out of wedlock and the father unfortunately died prior to his birth.

Jenie filed a complaint with the Regional Trial Court, which dismissed the complaint on the ground that

the autobiography was unsigned and it does not contain any express recognition of paternity.

Hence, this Petition for Review on Certiorari.

ISSUES:

Whether or not the Autobiography, a private unsigned handwritten document, can be

considered as a recognition of paternity

HELD:

Article 176 of the Family Code, as amended, does not, indeed, explicitly state that the private

handwritten instrument acknowledging the child‘s paternity must be signed by the putative father. This

provision must, however, be read in conjunction with related provisions of the Family Code which

require that recognition by the father must bear his signature.

That a father who acknowledges paternity of a child through a written instrument must affix his

signature thereon is clearly implied in Article 176 of the Family Code. Paragraph 2.2, Rule 2 of A.O. No.

1, Series of 2004, merely articulated such requirement; it did not ―unduly expand‖ the import of Article

176 as claimed by petitioners.

In the present case, however, special circumstances exist to hold that Dominique‘s

Autobiography, though unsigned by him, substantially satisfies the requirement of the law.


First, Dominique died about two months prior to the child‘s birth. Second, the

relevant matters in the Autobiography, unquestionably handwritten by Dominique,

correspond to the facts culled from the testimonial evidence Jenie proffered. Third, Jenie‘s testimony is

corroborated by the Affidavit of Acknowledgment of Dominique‘s father Domingo Aquino and testimony of

his brother Joseph Butch Aquino whose hereditary rights could be affected by the registration of the

questioned recognition of the child. These circumstances indicating Dominique‘s paternity of the child

give life to his statements in his Autobiography that ―JENIE DELA CRUZ‖ is ―MY WIFE‖ as ―WE

FELL IN LOVE WITH EACH OTHER‖ and ―NOW SHE IS PREGNANT AND FOR THAT WE

LIVE TOGETHER.‖

In the case at bar, there is no dispute that the earlier quoted statements in Dominique‘s

Autobiography have been made and written by him. Taken together with the other relevant facts extant

herein – that Dominique, during his lifetime, and Jenie were living together as common-law spouses for

several months in 2005 at his parents‘ house in Pulang-lupa, Dulumbayan, Teresa, Rizal; she was

pregnant when Dominique died on September 4, 2005; and about two months after his death, Jenie gave

birth to the child – they sufficiently establish that the child of Jenie is Dominique‘s.

In view of the pronouncements herein made, the Court sees it fit to adopt the following rules

respecting the requirement of affixing the signature of the acknowledging parent in any private

handwritten instrument wherein an admission of filiation of a legitimate or illegitimate child is made:

1) Where the private handwritten instrument is the lone piece of evidence submitted to prove

filiation, there should be strict compliance with the requirement that the same must be signed by the

acknowledging parent; and

2) Where the private handwritten instrument is accompanied by other relevant and

competent evidence, it suffices that the claim of filiation therein be shown to have been made and

handwritten by the acknowledging parent as it is merely corroborative of such other evidence.

Our laws instruct that the welfare of the child shall be the ―paramount consideration‖ in

resolving questions affecting him. Article 3(1) of the United Nations Convention on the Rights of a

Child of which the Philippines is a signatory is similarly emphatic.

GIL JUSTALERO, et al. v. ZENAIDA SAN AGUSTIN


GONZALES and NOEMI SAN AGUSTIN


Where there is no showing that the deceased Free Patent Applicant availed himself of a legal remedy to assail an

adverse decision, his successors-in-interest are bound by the same.

Noemi San Agustin and Zenaida San Agustin Gonzles, together with their other siblings, entered

into a Subdivision Agreement wherein they parted the estate of their deceased parents. Subsequently, a

Transfer Certificate Titles were issued to Noemi and Zenaida.

After nine years, Gil Justalero and the heirs of his deceased brother, Jesus Justalero (Jesus) filed a

complaint against Zenaida and Noemi for quieting of title and reconveyance with damages before the

Regional Trial Court (RTC) of Iloilo contending that the lots subject of the petition were falsely claimed

by Zenaida and Noemi. Gil added that Jesus in fact filed an application for Free Patent over the subject

lot. For their part, Zenaida and Noemi aver that the lots were covered by an Original Certificate of Title

(OCT), which were owned by their deceased parent. The RTC ruled in favor of Zenaida and Noemi. Gil

and the heirs appealed to Court of Appeals which affirmed the RTC decision.

ISSUE:

Whether or not the subject lot which is claimed by Gil and the heirs is embraced in the transfer

certificate titles of Noemi and Zenaida

HELD:

The basis of the issuance of Noemi‘s title is the Consolidation and Subdivision Plan, Pcs-06-

000063 which bears a note on the lower portion thereof reading ―[t]his survey is covered by Original

Certificate of Title No. 30898, 32644 and 32645 all in the name of Vicente San Agustin and Rosario

Sabella.‖ The same plan was certified as correct by Bernan Certeza, Geodetic Engineer, and

recommended for approval by Teodoro Simpas, Chief, Surveys Division. The Director of Lands

through Regional Director Manuel Lagunilla also approved the same. Furthermore, the Court of First

Instance of Iloilo also approved the said Subdivision Plan by Order of May 22, 1979 in ―In re: Petition for


Approval of Consolidation and Subdivision Plan in accordance with Section 44 of Act 496 and Act

440. Betty S. Villanueva, Petitioner.‖

Moreover, almost two years before the filing of Justalero and the heirs‘ complaint, the Bureau of

Lands, Iloilo City rendered a Decision in the above-stated Free Patent application filed by Jesus J.

Justalero, declaring that the subject lot, Cadastral Lot No. 2596, is identical to Lot 8, Pcs-06-000063

which is now titled in the name of Noemi.

There is no showing that Gil Justaleros‘ predecessor-in-interest, Jesus Justalero as Free Patent

applicant availed himself of any legal remedy to assail the said decision which was adverse to him.

Hence, his successors-in-interest-herein - Justalero and the heirs are bound by the decision.

PLACIDO O. URBANES, JR., doing business under the name and style of LAGING QLEAN JANITORIAL SERVICES v. LOCAL WATER UTILITIES ADMINISTRATION, et al.


Government as advertiser makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice, unless an unfairness or injustice is shown, hence he has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid.

Petitioner Laging Qlean Janitorial Services (Qlean) and respondent Local Water Utilities

Administration (LWUA) entered into a contract wherein the former will render janitorial services for latter for one year which after the lapse of said period, the contract was renewed on a monthly basis. Subsequently, LWUA through its In-House Procurement Bidding Committee (IHPBC) conducted a public bidding for Janitorial Services for a period of one (1) year. Qlean ranked sixth among the lowest bidders.

Pending the completion of the bids, LWUA extended its contract with QLEAN twice which

accepted the first request for extension but did not grant the second extension of contract. Consequently, LWUA entered into a one year janitorial service contract with Fast Manpower Services, the lowest bidder, prompting Qlean to file a complaint against LWUA et al. alleging that the bids of the first five lowest bidders should have been rejected for not being in conformity with the Minimum Wage Law and that Qlean‘s one-year contract of janitorial maintenance services was the lowest complying bid and most advantageous to the government, hence, the contract should have been awarded to it.

Qlean filed a complaint before the Regional Trial Court (RTC) of Quezon City against LWUA but it dismissed the complaint. Qlean then appealed to the Court of Appeals but it affirmed the RTC decision. ISSUE:


Whether or not Qlean may compel LWUA to award the contract in its favor HELD:

LWUA made a reservation to reject bids as the Invitation to Prequalify and Bid published in the Philippine Daily Inquirer shows: ―LWUA reserves the right to reject any or all the bids.‖

The discourse in his ―A TREATISE ON GOVERNMENT CONTRACTS UNDER

PHILIPPINE LAW‖ of former Commissioner of the Commission on Audit Bartolome C. Fernandez, Jr. is enlightening: ―Government as advertiser, availing itself of that right, makes its choice in rejecting any or all bids, the losing bidder has no cause to complain nor right to dispute that choice, unless an unfairness or injustice is shown. Accordingly, he has no ground of action to compel the Government to award the contract in his favor, nor to compel it to accept his bid. x x x Verily, a reservation in the advertisement for bids of the right to reject any bid generally vests in the authorities a wide discretion as to who is the best and most advantageous bidder.‖ The exercise of such discretion involves inquiry, investigation, comparison, deliberation and decision, which are quasi-judicial functions, and when honestly performed, may not be reviewed by the courts. In such cases, there is no binding obligation to award the contract to any bidder and in the exercise of such discretion the award may be made validly to whoever among the participating bidders has submitted the most advantageous bid.

LAND BANK OF THE PHILIPPINES v. YOLANDA G. DAVID

563 SCRA 172 (2008), (Carpio Morales, J.)

Whether an interest rate or penalty charge is reasonable or iniquitous is addressed to the sound discretion of the courts. In determining what is an iniquitous and unconscionable, courts must consider the circumstances of each case, for what may be just in one case may be iniquitous and unconscionable in another.

Yolanda David, proprietor of David Poultry Farm, obtained a loan from Landbank of the Philippines. The loan shall bear an interest ―based on the prevailing lender‘s rates/special financing rate‖ and penalty charge of 12% per annum in case of default in the settlement thereof. As security for the payment of the aforesaid loan, David mortgaged a parcel of land registered under her name in favor of Landbank. Due to serious business reverses, David was not able to pay although there were initial payments made. A Restructured Loan Agreement was subsequently executed. The Restructured Loan Agreement provided that the interest rate shall be adjusted to 17% per annum. David defaulted in the payment of her monthly amortizations; hence, the whole amount became due and demandable. Demands for payment were made but David failed to settle her loan obligations, prompting Landbank to initiate foreclosure proceedings. David filed a complaint seeking the nullification of the interest rates imposed by Landbank. The trial court however dismissed David‘s complaint and instead granted Landbank‘s counterclaim. On appeal, the Court of Appeals modified the lower court‘s decision by reducing the interest and penalty rates, and nullifying the extra-judicial foreclosure of David‘s property and deleting the award of damages and attorney‘s fees. Landbank moved for a reconsideration of the appellate court‘s decision, but the same was denied.


ISSUES:

Whether or not the interest rate is exorbitant and unconscionable and if such, whether or not the foreclosure proceedings can be nullified HELD:

Jurisprudence empowers courts to equitably reduce interest rates. And the law empowers them to reduce penalty charges. Whether an interest rate or penalty charge is reasonable or iniquitous is addressed to the sound discretion of the courts. In determining what is an iniquitous and unconscionable, courts must consider the circumstances of each case, for what may be just in one case may be iniquitous and unconscionable in another.

While the nullity of the interest rate and penalty charge does not affect Landbank‘s right to

recover the principal amount of the loan, the public auction of the mortgaged property is nevertheless void, the amount indicated as mortgage indebtedness having included excessive, iniquitous, and exorbitant interest rate and penalty charge.

LINDA UY LIM v. HELEN O. TONG, et al.

574 SCRA 545, (2008), SECOND DIVISION (Carpio Morales, J.)

Intentional acts to deceive and deprive another of hid rights must be alleged and proved by clear and convincing

evidence.

In 1994, Linda Uy Lim (Lim) and her husband Saturnino Lim (Amay) executed a Special Power

of Attorney (SPA) in favor of Philip Ong (Ong) and Helen Tong (Tong), president and treasurer,

respectively, of Propmech Corporation (Propmech) where Amay worked as sales manager. The SPA

authorized Ong and Tong to mortgage or encumber a parcel of land owned by Spouses Lim. About two

years after the execution of the SPA, the subject property was made the subject of a Real Estate

Mortgage executed by Tong in favor of Propmech to secure a P1,000,000 obligation which the Lim

spouses purportedly obtained from it.

In late 1996, Lim received a Notification of Foreclosure of the mortgage, and subsequently

received a Sheriff‘s Notice of Public Auction Sale, drawing her to file before the Regional Trial Court of

General Santos City a Complaint against attorneys-in-fact Tong and Ong. Lim claimed that Amay, from

whom she had in the meantime been separated and had not heard from, obtained her signature on the

SPA through fraud by representing to her that the purpose was to secure a loan with which to build a

house. She also claimed that she had never been indebted to, and had not received any amount from

Propmech, hence, the Real Estate Mortgage was null and void, according to its own terms.

In their Answer, Ong, Tong, and Propmech alleged that Lim co-signed the SPA empowering

Ong and Tong to mortgage the property for the purpose of fully satisfying their outstanding obligation,


and that Lim received the amount of P400,000 in 1994 and 1995 from them representing a

portion of the loan for the purpose of building a house. The RTC and the Court of

Appeals both declared that the Real Estate Mortgage was legally executed and accordingly dismissed

Lim‘s complaint.

ISSUE:

Whether or not Philip Ong and Helen Tong were within the bounds of the SPA when they

executed the Real Estate Mortgage

HELD:

By Lim's admission, she read the SPA before signing it. She is a college graduate who had

worked as a Regional Operations Clerk of Metrobank. It is inconceivable that she did not understand the

contents of what she was signing. In fact, her allegation in her complaint that she agreed to sign the SPA

believing that the "intention and purpose behind the same was to secure a loan with which to build the

house that she had long dreamed of to be erected on the lot in question" confirms that she agreed to

authorize the attorneys-in-fact to perform the acts therein enumerated including encumbering the

property by way of mortgage.

At the witness stand, as well as before the Court of Appeals and this Court, petitioner posited a

different claim - that she signed the SPA merely as a formality to guarantee her husband's supposed

advances in the sum of P400,000, and not intended to authorize respondents to mortgage the property,

she having believed her husband's assurance that said advances would be deducted from his salaries and

commissions in the course of his employment at the corporation.

A party to a case should decide early on what version he is going to adopt. A change of theory in

the later stage of the proceedings is impermissible, not due to the strict application of procedural rules,

but because it is contrary to the rules of fair play, justice, and due process. Lim's subsequent position

thus fails.

MALAYAN REALTY, INC. v. UY HAN YONG 467 SCRA 411, (2006), THIRD DIVISION (Carpio Morales, J.)

The power of the courts to establish a grace period is potestative or discretionary, depending on the particular

circumstances of the case.

Malayan Realty Inc., entered into a verbal lease contract with Uy Han Yong over an apartment unit located in Manila. After several years, Malayan sent Uy a written notice informing him that the lease contract would no longer be renewed or extended. Despite Uy‘s receipt of the notice, he refused to vacate the property, prompting Malayan to file before the Metropolitan Trial Court (MeTC) of Manila a complaint for ejectment.

MeTC held that Uy could not be ejected on the ground of termination of the contract. The MeTC dismissed Malayan‘s complaint. Malayan appealed to the Regional Trial Court (RTC) which set


aside the judgment of the MeTC. On the basis of Article 1687 of the New Civil Code, the RTC extended the lease contract for a period of five years.

Malayan asserts that an extension of the period of a lease may be sought by the tenant before,

and not after the termination of the lease; and that Uy had sufficient time to request for extension, given that the notice of termination of the lease was served upon him more than 30 days before its effectivity, but that Uy did not so request even after the complaint was filed in court. Malayan thus maintains that no "equitable reason" justifies Uy‘s continued possession of the property for more than four years from the time the complaint for ejectment was filed.

The Court of Appeals (CA) modified the RTC decision by shortening the extension of the lease contract to one year from the finality of the decision. ISSUES:

Whether or not CA erred in granting a one year extension of the lease reckoned from the finality

of the decision HELD:

Under Article 1687 of the New Civil Code if the period of a lease contract has not been

specified by the parties, it is understood to be from month to month, if the rent agreed upon is monthly.

The lease contract thus expires at the end of each month, unless prior thereto, the extension of said term

has been sought by appropriate action and judgment is eventually rendered therein granting the relief.

In the case at bar, the lease period was not agreed upon by the parties. Rental was paid monthly,

and Uy Han Yong has been occupying the premises since 1958. As earlier stated, a written notice was

served upon respondent on January 17, 2001 terminating the lease effective August 31, 2001. As Uy han

Yong was notified of the expiration of the lease, effectively his right to stay in the premises had come to

an end on August 31, 2001. 24

The 2nd paragraph of Article 1687 provides, however, that in the event that the lessee has occupied the leased premises for over a year, the courts may fix a longer term for the lease.

The power of the courts to establish a grace period is potestative or discretionary, depending on

the particular circumstances of the case. Thus, a longer term may be granted where equities come into play, and may be denied where none appears, always with due deference to the parties‘ freedom to contract.

In the present case, Uy has remained in possession of the property from the time the complaint

for ejectment was filed on September 18, 2001 up to the present time. Effectively, Uy‘s lease has been extended for more than five years, which time is, under the circumstances, deemed sufficient as an extension and for him to find another place to stay.

HEIRS OF MARINA C. REGALADO,et al. v. REPUBLIC OF THE PHILIPPINES



An application for registration of land is required to indicate location, boundaries and technical description of the land being registered and shall be published in the Official Gazette for two consecutive times.

Marina Regalado filed an application for registration of a parcel of land in Marikina, Metro Manila. It was published in the Official Gazette and in Nueva Era, a newspaper of general circulation. She withdrew the application on the grounds of discrepancies on the question of the survey and accession number corresponding to the survey plan of the property and for the inevitable absence of the applicant from the country to arrange and assist in the intestate estate of her late widowed sister whose children, all minors, were in London.

Regalado later filed an Amended Application for Registration alleging that she had been in open and continuous possession and occupation of said land which is alienable and disposable of the public domain under a bona fide claim of ownership. She further alleges that she acquired the land by virtue of a Deed of Assignment executed by the registered claimant Tomas Antero as assignor in her favor. During the pendency of the application, Regalado died. Her surviving heirs pursued and litigated the land registration case in her behalf.

The Court of Appeals ruled in favor of the Republic holding that there was discrepancy in the lot size and technical description between the original, as published, and the technical descriptions.The Court held that such is a serious defect and should be precise for purposes of identification, delineation, and distinction, and notice to the public. The CA thereafter dismissed the application for registration of the Heirs of Regalado.

ISSUE:

1. Whether or not Marina and her heirs have rights over the subject land 2. Whether or not Marina and her heirs had been in open, continuous, and adverse possession

in the concept of owner under a bona fide claim of ownership

HELD:

Whether or not Marina and her heirs have registrable rights over the subject land

Here, the application in this case filed in the court was for registration, not of the big parcel of land (Lot No. 21), but of certain portions thereof designated by applicant as Lots Nos. 21-A and 21-B. It is the technical description of these two smaller lots that must be published in order that the persons who may be affected by their registration may be notified thereof.

Under Section 21 of the Land Registration Act, an application for registration of land is required to indicate location, boundaries and technical description of the land being registered and shall be published in the Official Gazette for two consecutive times. It is this publication of the notice of hearing that is considered one of the essential bases of the jurisdiction of the court.

Here, Marina and her heirs fail to comply with the proper technical description that should be indicated in the registration. Thus, it is the publication of the specific boundaries of Lot Nos. 21-A and 21-B that would actually put the interested parties on notice of the registration proceeding, and would confer authority on the land registration court to pass upon the issue of the registerability of said lots in favor of Marina and her heirs.


Whether or not Marina and her heirs had been in open, continuous, and adverse possession in the concept of owner under a bona fide claim of ownership

Marina and her heirs had not been in open, continuous, and adverse possession in the concept of owner under a bona fide claim of ownership fails.

There is no proof to sustain that Maria and her relatives have been residing in the property for more than 30 years and that she herself has been residing there for 15 years when Tomas Antero executed the deed of assignment in her favor.

At most, the evidence indicates that Marina possessed and occupied a small portion of the property, while some 600 other parties possessed and occupied the rest. As for the tax declaration, there is no proof that Marina religiously paid taxes on the property. In her testimony, she stated that she intended to pay taxes only if and when ordered to do so by the court.

PEDRO MOLINA v. COURT OF APPEALS, et al. 398 SCRA 97 (2003), THIRD DIVISION (Carpio Morales, J.)

If prior to the execution of the impugned Deed, a party signed receipts under which he acknowledged receiving sums of money as payment for his property, which receipts were worded in the vernacular and could not have been mistaken or misunderstood for anything else other than as evidence of the sale of his property, the transaction indicated was one of sale on installment.

More than four years after petitioner Pedro Molina (Molina) executed the Deed of Sale

conveying his share of the property to his sister Felisa, Molina executed another Deed of Absolute Sale in lieu of the first deed covering the same share in favor of Felisa‘s son respondent Margarito Flores and his wife Nerisa Herrera.

Molina filed an action for reformation of instrument and/or annulment of document and title

with reconveyance and damages before the Regional Trial Court (RTC) of Cavite, alleging that the Deed of Absolute Sale does not express the true will of the parties. The RTC ruled in favor of Molina and ordered the annulment of the Deed of Absolute Sale.

Margarito and Nerisa appealed to the Court of Appeals which reversed the RTC‘s decision and

dismissed the complaint of Molina.

ISSUE: Whether the parties intended the Deed of Absolute Sale in favor of Flores and Herrera to be an absolute sale or an equitable mortgage HELD:

For the presumption of an equitable mortgage to arise under Art. 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a contract of sale, and (b) that their intention was to secure an existing debt by way of a mortgage. In the case at bar, the second requisite is conspicuously absent. That the alleged loan was received by Molina in installments


of P1,000.00 per month for ten months or a total of P10,000.00 in fact indicates that the transaction was not one of a loan but of sale on installment.

Molina argues that assuming arguendo that a contract of sale was entered into, it was not

consummated as the entire purchase price was not paid. Assuming that to be so albeit, by the Deed in question Molina acknowledged receipt of the P8,000.00 purchase price, it does not by itself bar the transfer of the ownership or possession of the property, much less dissolve the contract of sale. The contract remains but the payment of the price is a resolutory condition, and the remedy of the seller is to exact fulfillment or, in case of a substantial breach, to rescind the contract under Article 1191 of the Civil Code.

That Molina, prior to the execution of the impugned Deed, signed receipts under which he

acknowledged receiving sums of money as payment for his property, which receipts were worded in the vernacular and could not have been mistaken or misunderstood for anything else other than as evidence of the sale of his property, seals the case against him. It confirms this Court‘s earlier observation that the transaction indicated was one of sale on installment.

NINOY AQUINO INTERNATIONAL AIRPORT AUTHORITY v. COURT OF APPEALS, et al.


Nothing appears objectionable in the lease contract between United Bus Lines and Ninoy Aquino International Airport such that the latter is no less bound by its terms and conditions like any other private person or entity that is party to a contract.

The Civil Aeronautics Administration (CAA), predecessor of Ninoy Aquino International Airport Authority (NAIAA), leased to United Bus Lines (UBL) a portion of a state-owned lot. The lease contract contained a provision that the terms shall be considered as extended for a period of time equal to that during which lessee was not in possession of the leased premises.

UBL was dispossessed of certain portions of the leased premises for an approximately ten-year period from 1980 to 1990 due to the presence of squatters in certain portions thereof as well as the adverse claims of ownership from some individuals and entities This led UBL to file an action to reform the lease agreement so as to have a new term of fifteen years, to start running after the premises are totally cleared by the NAIAA of any form of disturbance.

The Regional Trial Court rendered a decision in favor of UBL extending the lease contract for another ten years from the finality of the decision. This was affirmed by the Court of Appeals finding evidence supporting UBL‘s main averment that UBL was dispossessed of certain portions of the leased premises for ten (10) years; hence, it applied the stipulation on the contract providing for the extension of the lease for such period.

ISSUE: Whether or not the Court of Appeals erred in sustaining the trial court‘s finding that United Bus Lines are entitled to a ten-year extension of their lease contract with the Ninoy Aquino International Airport Authority


HELD:

Regardless of the extent of dispossession, whether total or partial, the provision on extension of term applies since the UBL‘s failure to use a portion of the leased premises is equivalent to a dispossession from the entire area in question.

By the terms of the contract then, NAIAA‘s obligation to deliver to UBL the entire leased

premises and maintain the latter in peaceful, uninterrupted possession was indivisible. When UBL could not occupy and use portions of the leased premises, it was in effect deprived of possession thereof for there was incomplete performance by the petitioner of its principal prestation, thereby calling for the application of the contractual provision on extension of term.

A contract is the law between the parties and courts have no choice but to enforce such contract so long as it is not contrary to law, morals, good customs or public policy. Nothing appears objectionable in the lease contract between respondents and petitioner such that the latter is no less bound by its terms and conditions like any other private person or entity that is party to a contract.

While the Court upholds the trial court‘s and appellate court‘s ruling that UBL is entitled to a ten-year extension of the period of lease, it does not uphold that which reckons the period from the date of finality of the decision of the trial court. If that were the case, respondent UBL would hold on to the leased premises for a period longer than it is entitled under the ten-year extension, thereby virtually rendering nugatory petitioner‘s right of ownership over the premises.

The extension must thus begin on the day following the termination of the amended lease contract or on May 8, 1990, to last for a 10-year period or up to May 8, 2000. Since UBL and Silva have in fact been in continuous and uninterrupted possession of the premises since the promulgation of the trial court‘s decision of May 31, 1990 and during the pendency of the case at bar, they have already occupied the premises in the exercise of their adjudged right to the extension for the full period of ten years.

SAMUEL PARILLA, et al. v. DR. PROSPERO PILAR 509 SCRA 420 (2006), THIRD DIVISION, (Carpio-Morales, J.)

A tenant cannot be said to be a builder in good faith as he has no pretension to be owner. At all events, under the

Civil Code, it is the lessor who is given the option, upon termination of the lease contract, either to appropriate the useful improvements by paying one-half of their value at that time, or to allow the lessee to remove the improvements.

Spouses Samuel and Chinita Parilla and their son, as dealers of Pilipinas Shell Petroleum

Corporation (Pilipinas Shell), have been in possession of a parcel of land in Bantay, Ilocos Sur which was

leased to them by respondent Dr. Prospero Pilar.

When the lease contract between Pilipinas Shell and Pilar expired, and despite demands to vacate,

the Parillas remained in possession of the property on which they built improvements., the Parillas and

the other occupants remained in the property. Hence, Pilar filed a complaint for ejectment before the

Municipal Trial Court (MTC) of Bantay, Ilocos Sur. The MTC ordered the Parillas to vacate and to pay

Pilar a reasonable compensation for the use of the property. It also ordered Pilar to reimburse the


Parillas the amount Two Million Pesos representing the value of the improvements

introduced on the property.

Pilar appealed to the Regional Trial Court of Vigan and the RTC affirmed the MTC‘s Decision.

However, on Pilar‘s petition for review, the Court of Appeals set aside the lower courts decision.

ISSUES:

Whether or not the Parillas are entitled to reimbursement for the improvements being builders

in good faith HELD:

Jurisprudence is replete with cases which categorically declare that Article 448 covers only cases in which the builders, sowers or planters believe themselves to be owners of the land or, at least, have a claim of title thereto, but not when the interest is merely that of a holder, such as a mere tenant, agent or usufructuary. A tenant cannot be said to be a builder in good faith as he has no pretension to be owner.

The right of the lessor upon the termination of a lease contract with respect to useful

improvements introduced on the leased property by a lessee is covered by Article 1678. Clearly, it is Article 1678 of the New Civil Code which applies to the present case. The Parillas claim for reimbursement of the alleged entire value of the improvements does not thus lie under Article 1678. Not even for one-half of such alleged value, there being no substantial evidence, e.g., receipts or other documentary evidence detailing costs of construction. Besides, by the Parillas‘ admission, of the structures they originally built — the billiard hall, restaurant, sari-sari store and a parking lot, only the ―bodega-like‖ sari-sari store and the parking lot now exist. At all events, under Article 1678, it is the lessor who is given the option, upon termination of the lease contract, either to appropriate the useful improvements by paying one-half of their value at that time, or to allow the lessee to remove the improvements. This option solely belongs to the lessor as the law is explicit that ―[s]hould the lessor refuse to reimburse said amount, the lessee may remove the improvements, even though the principal thing may suffer damage thereby.‖ It appears that the lessor has opted not to reimburse. PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY v. COURT OF APPEALS, et al.


The New Civil Code provides that “various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly.’’ Philippine Fisheries Development Authority (PFDA) as lessor, and respondent QVEGG Marine Transport and Builders Corporation (QVEGG) as lessee, entered into a 10-year lease contract covering the Iloilo Fishing Port Complex slipways and other auxiliary facilities for a monthly rental of P85,000.00.

QVEGG was delinquent in the performance of its contractual obligations so QVEGG requested the restructuring of its overdue account which was granted by the PFDA subject to several ―instructions.‖ Should QVEGG fail to comply with the ―instructions,‖ PFDA would terminate the contract and file the necessary legal action. It appears, however, that it was only on February 22, 1993


that QVEGG paid its January 1993 space rental and electric and water bills. PFDA then terminated their contract for failure of QVEGG to strictly comply with the terms and conditions imposed. QVEGG, on the other hand, sought reconsideration explaining that it interpreted paragraph c of the ―instructions‖ in relation to paragraph 3 of the contract which provides for that its failure to pay rentals for two successive months shall be a ground for the termination of the contract. This was denied.

QVEGG then filed a complaint for Enforcement of Contract and Damages before the Regional

Trial Court (RTC). PFDA contended that paragraph 3 of the contract was rendered ineffective by the new terms and conditions of the ―instructions.‖ The RTC found for QVEGG and declared illegal the termination of the contract by the PFDA, it holding that paragraph c of the ―instructions‖ did not modify paragraph 3 of the lease contract but it did not grant QVEGG‘s prayer for damages.

Both QVEGG and PFDA appealed to the Court of Appeals (CA) which dismissed their

petitions for want of merit. Hence, this petition. ISSUE: Whether or not paragraph 3 of the lease contract is rendered ineffective by the new terms and conditions set forth in the ―instructions‖ HELD: The termination by the PFDA of the contract is illegal since paragraph 3 of the contract calls for its termination only after the QVEGG fails for two successive months to comply with its obligations thereunder. The New Civil Code provides that ―various stipulations of a contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly.‘‘ Indeed, paragraph c of the ―instructions‘ cannot stand alone independently of paragraph 3 of the lease contract for paragraph c does not provide for the amount, period or manner of payment. Said paragraph c did not amend paragraph 3 of the lease contract, hence, it is only the QVEGG that fails.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY v. LAURO LEVISTE, et al.

477 SCRA 634 (2005), Carpio Morales, J.

Once a notice of lis pendens has been duly registered, any cancellation or issuance of title over the land involved as

well as any subsequent transaction affecting the same would have to be subject to the outcome of the suit.

El Dorado Plantation sold a parcel of land with an area of approximately 1,825 hectares in

Occidental Mindoro to Fernando O. Carrascoso, Jr. within a period of three (3) years. In the meantime,

Carrascoso and the Philippine Long Distance Telephone Company (PLDT), executed an Agreement to

Buy and Sell whereby the former agreed to sell 1,000 hectares of the property to the latter.

In view of Carrascoso‘s failure to pay the balance of the purchase price, Lauro Leviste, a

stockholder and member of the Board wants a rescission of the sale. Thus, Jose P. Leviste, as President,


sent a letter to Carrascoso informing him that, El Dorado was seeking the rescission with

damages before the Court of First Instance (CFI). Lauro and El Dorado also caused to be

annotated a Notice of Lis Pendens.

Carrascoso alleged that he was given an extension to pay the balance and El Dorado committed

a gross misrepresentation when it warranted that the property was not being cultivated by any tenant to

take it out of the coverage of the Land Reform Code. Two years after their agreement to Buy and Sell,

Carrascoso and PLDT forged a Deed of Absolute Sale over the 1,000 hectare portion of the property.

PLDT alleged that it is a purchaser in good faith and for value.

The CFI dismissed the complaint on the ground of prematurity. The Court of Appeals (CA)

reversed the decision of the CFI granting the rescission of El Dorado. Hence, this petition for review.

ISSUES:

Whether or not the Court of Appeals erred in holding that PLDT took the right, interest and

title to the farm subject to the notice of lis pendens

HELD:

Once a notice of lis pendens has been duly registered, any cancellation or issuance of title over

the land involved as well as any subsequent transaction affecting the same would have to be subject to

the outcome of the suit. In other words, a purchaser who buys registered land with full notice of the fact

that it is in litigation between the vendor and a third party stands in the shoes of his vendor and his title

is subject to the incidents and result of the pending litigation.

Notice of lis pendens has been conceived and, more often than not, availed of, to protect the real

rights of the registrant while the case involving such rights is pending resolution or decision. With the

notice of lis pendens duly recorded, and while it remains uncancelled, the registrant could rest secure that

he would not lose the property or any part of it during the litigation.

The filing of a notice of lis pendens in effect (1) keeps the subject matter of litigation within the

power of the court until the entry of the final judgment so as to prevent the defeat of the latter by

successive alienations; and (2) binds a purchaser of the land subject of the litigation to the judgment or

decree that will be promulgated thereon whether such a purchaser is a bona fide purchaser or not; but (3)

does not create a non-existent right or lien.

The doctrine of lis pendens is founded upon reason of public policy and necessity, the purpose of

which is to keep the subject matter of the litigation within the power of the court until the judgment or

decree shall have been entered; otherwise by successive alienations pending the litigation, its judgment or

decree shall be rendered abortive and impossible of execution. The doctrine of lis pendens is based on

considerations of public policy and convenience, which forbid a litigant to give rights to others, pending

the litigation, so as to affect the proceedings of the court then progressing to enforce those rights, the


rule being necessary to the administration of justice in order that decisions in pending suits

may be binding and may be given full effect, by keeping the subject matter in controversy

within the power of the court until final adjudication, that there may be an end to litigation, and to

preserve the property that the purpose of the pending suit may not be defeated by successive alienations

and transfers of title.

PLDT cannot shield itself from the notice of lis pendens because all that it had at the time of its

inscription was an Agreement to Buy and Sell with Carrascoso, which in effect is a mere contract to sell

that did not pass to it the ownership of the property. PLDT's possession at the time the notice of lis

pendens was registered not being a legal possession based on ownership but a mere possession in fact and

the Agreement to Buy and Sell under which it supposedly took possession not being registered, it is not

protected from an adverse judgment that may be rendered in the case subject of the notice of lis pendens.

RADIO COMMUNICATIONS OF THE PHILIPPINES, INC. v. ALFONSO VERCHEZ, et al.


Those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.

Respondent Grace Verchez-Infante (Grace) hired the services of Radio Communications of the Philippines, Inc. (RCPI) to send a telegram to her sister respondent Zenaida Verchez-Catibog (Zenaida), asking her to send money for their mother Editha Verchez (Editha) who at that time was confined in a hospital in Sorsogon. But it took 25 days before such message was conveyed to Zenaida.

When Editha died, her husband, respondent Alfonso Verchez (Alfonso), along with his daughters Grace and Zenaida and their respective spouses, filed an action for damages against RCPI before the Regional Trial Court (RTC) of Sorsogon. They alleged that the delay in the delivery of the message contributed to the early death of Editha. RCPI argues that there is no privity of contract between other respondents except with Grace, also the delay in the delivery is caused by force majeure, maintaining further that they exercised due diligence in choosing their employees; hence they must be released from any liability. The RTC rendered judgement against RCPI. RCPI appealed to the Court of Appeals (CA). The CA affirmed the decision of the RTC.

ISSUE:

Whether or not the award of moral damages is proper despite the fact that there was no direct

connection between the injury and the alleged negligent acts

HELD:

RCPI‘s stand fails. It bears noting that its liability is anchored on culpa contractual or breach of contract with regard to Grace, and on tort with regard to her co-plaintiffs-herein-co-respondents. Article 1170 of the Civil Code provides that those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages.


In the case at bar, RCPI bound itself to deliver the telegram within the shortest possible time. It took 25 days, however, for RCPI to deliver it. RCPI invokes force majeure, specifically, the alleged radio noise and interferences which adversely affected the transmission and/or reception of the telegraphic message. Additionally, its messenger claimed he could not locate the address

of Zenaida and it was only on the third attempt that he was able to deliver the telegram.

For the defense of force majeure to prosper, it is necessary that one has committed no negligence or misconduct that may have occasioned the loss. An act of God cannot be invoked to protect a person who has failed to take steps to forestall the possible adverse consequences of such a loss. One‘s negligence may have concurred with an act of God in producing damage and injury to another; nonetheless, showing that the immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one from liability. When the effect is found to be partly the result of a person‘s participation – whether by active intervention, neglect or failure to act – the whole occurrence is humanized and removed from the rules applicable to acts of God.

Assuming arguendo that fortuitous circumstances prevented RCPI from delivering the telegram at the soonest possible time, it should have at least informed Grace of the non-transmission and the non-delivery s that she could have taken steps to remedy the situation. But it did not. There lies the fault or negligence.

And for quasi-delict, RCPI is liable to Grace‘s co-respondents following Article 2176 of the Civil Code which provides that whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

RCPI‘s liability as an employer could of course be avoided if it could prove that it observed the diligence of a good father of a family to prevent damage provided in Article 2180 of the Civil Code. RCPI failed, however, to prove that it observed all the diligence of a good father of a family to prevent damage.

REPUBLIC OF THE PHILIPPINES v. HEIRS OF PASCUAL OCARIZA, REPRESENTED

BY CO-HEIR BACALSO


There must be sufficient evidence to prove that an Original Certificate of Title was issued to his predecessors-in-

interest for an order of reconstitution to be valid.

Remedios Bacalso, in representation of the Heirs of Pascual Ocariza, filed before the Regional

Trial Court (RTC) an Application for Original Registration of a parcel of land, situated in Inayawan,

Cebu City but was dismissed by the RTC. It was held that upon verification of Record Books of

Cadastral Lots, it was found that Decree No. 99211 has already been issued on the lot.

Years later, Bacalso filed a Petition for the Reconstitution of Lost Certificate of Title covering

the same lot before the RTC, alleging that pursuant to the decree, an original certificate of title to said

Lot No. 4147 had been issued by the Register of Deed, in the name of Pascual Ocariza, but the owner's


duplicate and original copy of which on file in the office of the Register of Deeds of Cebu,

were lost during the last World War.

RTC ordered the reconstitution of the lost original certificate of title in the name of Pascual

Ocariza, upon payment of the required fees. The Solicitor General appealed the RTC‘s decision, arguing

that the heirs failed to prove their interest. The Court of Appeals (CA) affirmed the RTC decision.

ISSUE:

Whether or not the order of reconstitution is valid

HELD:

The Court finds the petition meritorious not on the ground advanced by the Solicitor General

but on the ground that there is no evidence to show that the alleged Decree No. 99211, and an Original

Certificate of Title, was issued to Pascual Ocariza, the heirs‘ alleged predecessor-in-interest.

Assuming arguendo that there was indeed a Decree No. 99211 which is, however, "not among the

salvaged decrees on file in the Land Registration Authority," there is no statement, as shown in the

Report of the LRA, that the decree was issued in the name of Pascual Ocariza.

That even the heirs of Pascual Ocariza were not aware of any such decree is shown by the fact

that, as reflected above, before filing their Petition for Reconstitution, they had years earlier filed an

application for original registration covering the lot, which application was deemed withdrawn by Branch

17 of the RTC on their motion, after the LRA recommended its dismissal.

It was thus palpably wrong for RTC Cebu to credit heirs' attorney-in-fact Remedios Bacalso's

testimony that the decree was issued in the name of Pascual Ocariza "per" LRA Report, to credit

Remedios Bacalso's testimony that the decree was issued in the name of Pascual Ocariza "per" the LRA

Report because nothing in said Report is there any statement that the decree was issued in the name of

Pascual Ocariza, and to credit Remedios Bacalso's testimony that a title was issued covering the lot in the

name of Pascual Ocariza, the duplicate copy of which was lost as well as the original copy in the

possession of the Cebu Registry of Deeds.

REPUBLIC OF THE PHILIPPINES v. LAILA TANYAG-SAN JOSE

and MANOLITO SAN JOSE


Being jobless and a drug user is not a state or condition or attitude shown to be a malady or disorder rooted on

some incapacitating or debilitating psychological condition.

Repondents Manolito San Jose and Laila Tanyag-San Jose got married. Thereafter Laila gave

birth to two children. Laila, then left Manolito for being jobless and hooked into gambling and drugs.


Laila then filed a Petition for Declartion of Nullity on the ground of psychological

incapacity before the Regional Trial Court (RTC) of Pasig City.

Dr. Nedy Tayag found that Manolito was psychologically incapacitated based on the testimony

of Laila. Dr. Tayag further said that he suffers from anti-social personality disorder because of the

following overt manipulations: the presence of drug, the absence of remourse, the constant incapacity in

terms of maintaining the marital relationship, the lack of concern to his family, and his self-centeredness.

The RTC denied Laila‘s petition on the ground that it is not enough to prove that one failed to

perform his marital duty, it is essential that it must be shown that the other party is incapable of doing so

due to psychological incapacity not physical illness. Laila appealed to Court of Appeals (CA). The CA

held that Manolito was psychologically incapacitated hence their marriage is void ab Initio. The CA

concluded that the deficiency of Manolito was so grave and so permanent as to deprive one of awareness

of the duties and responsibilities of the matrimonial bond one is about to assume.

ISSUE:

Whether or not Manolito is psychologically incapacitated

HELD:

Psychological incapacity, as a ground for nullity of marriage, has been succinctly expounded in

the recent case of Ma. Armida Perez-Ferraris v. Brix Ferraris (Ferraris), the term "psychological incapacity"

to be a ground for the nullity of marriage under Article 36 of the Family Code, refers to a serious

psychological illness afflicting a party even before the celebration of the marriage. It is a malady so grave

and so permanent as to deprive one of the awareness of the duties and responsibilities of the

matrimonial bond one is about to assume.

As the earlier-quoted Report of Dr. Tayag shows, her conclusion about Manolito‘s psychological

incapacity was based on the information supplied by Laila which she found to be ―factual.‖

Undoubtedly, the doctor‘s conclusion is hearsay. It is ―unscientific and unreliable,‖ so this Court

declared in Choa v. Choa where the assessment of the therein party sought to be declared psychologically

incapacitated was based merely on the information communicated to the doctor by the therein

respondent-spouse. In this case, Dr. Gauzon had no personal knowledge of the facts he testified to, as

these had merely been relayed to him by respondent. The former was working on pure suppositions and

secondhand information fed to him by one side. Consequently, his testimony can be dismissed as

unscientific and unreliable.

Parenthetically, Dr. Tayag's Psychological Report does not even show that the alleged anti-social

personality disorder of Manolito was already present at the inception of the marriage or that it is

incurable. Neither does it explain the incapacitating nature of the alleged disorder nor identify its root


cause. It merely states that "such disorder is considered to be grave and is deeply immersed

within the system and continues to influence the individual until the later stage of life."

Manolito's alleged psychological incapacity is thus premised on his being jobless and a drug user,

as well as his inability to support his family and his refusal or unwillingness to assume the essential

obligations of marriage. Manolito's state or condition or attitude has not been shown, however, to be a

malady or disorder rooted on some incapacitating or debilitating psychological condition.

NORBERTO RIMASUG et al. v. MELENCIO MARTIN et al.


Concurrence of all the essential requisites must be established by substantial evidence to prove the existence of a tenancy

relationship between the previous landowner and the subsequent landowner.

Petitioners Norberto Rimasug et al. were ―either employees or relatives of some employees‖ who

were members of the San Miguel Cooperative Credit Union (SMCCU) organized by the San Miguel

Corporation (SMC) labor force. SMCCU acquired several lots and were sold to Rimasug et al. Separate

titles were issued in their favor.

Due to financial constraints, Rimasug et al. were unable to construct houses on their respective

lots. They later came to know, however, that respondents Melencio Martin et al., without their

knowledge and consent, entered the lots on which they planted various agricultural crops. Rimasug et al.

thereupon put Martin et al. on notice of their ownership, even bringing the matter

before barangay authorities but the latter were ―uncooperative.‖

In the meantime, Rimasug et al. could not ―come up with money to start a legal battle with

respondents‖ tolerated Martin‘s et al. continued occupation of their lots until they advised Martin et al. of

their intention to build their houses thereon and accordingly asked them to vacate within fifteen (15)

days from receipt of the letter. When the demand went unheeded Rimasug et al. filed a complaint for

unlawful detainer against them with Municipal Trial Court (MTC).

The MTC held that Martin et al. failed to prove the existence of a landlord-tenant relationship

ordering them to vacate the premises. On appeal with the Regional Trial Court (RTC), it affirmed the

decision of MTC. Martin et al. filed an Urgent Verified Motion for Immediate Issuance of a Temporary

Restraining Order/Writ of Injunction and Petition for Review before the Court of Appeals. The

appellate court reversed RTC decision and dismissed the complaint of Rimasug et al.

The appellate court held that, contrary to the findings of both the MTC and the RTC,

respondents had satisfactorily proven that they are duly recognized agricultural tenants of SMCCU on

the subject lots. And it belied Rimasug et al.’s claim of having tolerated Martin et al.’s occupation of the


lots, it charging the former ―as former employees or workers of the previous landowner

company‖ with actual knowledge of the latter‘s tenancy.

ISSUE:

Whether or not CA erred in finding that there was an implied tenancy relationship between the

Rimasug et al. and Martin et al.

HELD:

For this purpose, the concurrence of all the following essential requisites must be established

by substantial evidence: 1.) The parties are the landowner and the tenant or agricultural lessee; 2.) the

subject matter of the relationship is an agricultural land; 3.) there is consent between the parties to the

relationship; 4.) the purpose of the relationship is to bring about agricultural production; 5.) there is

personal cultivation on the part of the tenant or agricultural lessee; and 6.) the harvest is shared between

the landowner and the tenant or agricultural lessee.

By their own admission, Martin et al. were ―informed‖ that the lots they are tilling are

―allegedly‖ owned by SMC because the one collecting the payments was working at SMC, although the

official receipts issued to them were under the name of SMCCU. On that score alone, the claim of the

existence of a tenancy relationship fails, requirements No. 1 – that the parties are the landowner and the

tenant is agricultural lessee, – and No. 3 – that there is consent between the parties – not being present,

for how could respondents have contracted with a landowner whose identity they are not even certain

of? Such uncertainty becomes more pronounced when note is taken that before the trial and appellate

courts they maintained that the lots are owned by SMC.

JOSE C. SABERON v. ATTY. FERNANDO T. LARONG 561 SCRA 493 (2008), SECOND DIVISION (Carpio Morales, J.)

Utterances, petitions and motions are considered as absolutely privileged, however false or malicious they may be, only if they are pertinent and relevant to the subject of inquiry. Petitioner Jose C. Saberon charged respondent Atty. Fernando T. Larong of grave misconduct for allegedly using abusive and offensive language in pleadings filed before the Bangko Sentral ng Pilipinas (BSP).

The Investigation Commissioner found Larong guilty of grave misconduct, Saberon nevertheless submits that the recommended penalty of suspension should be modified to disbarment. On the other hand, Larong seeks for the Court‘s declaration that the questioned allegations were privileged communication. He submits that the statements, while opening up a lawyer to possible administrative sanction for the use of intemperate language under the Canons of Professional Responsibility, should not be stripped of their privileged nature.


ISSUES:

Whether or not Larong is guilty of grave misconduct

HELD:

On many occasions, the Court has reminded members of the Bar to abstain from all offensive personality and to advance no fact prejudicial to the honor or reputation of a party or witness, unless required by the justice of the cause with which he is charged. In keeping with the dignity of the legal profession, a lawyer's language even in his pleadings must be dignified.

Respecting Larong's argument that the matters stated in the Answer he filed before the BSP were privileged, it suffices to stress that lawyers, though they are allowed a latitude of pertinent remark or comment in the furtherance of the causes they uphold and for the felicity of their clients, should not trench beyond the bounds of relevancy and propriety in making such remark or comment.

True, utterances, petitions and motions made in the course of judicial proceedings have consistently been considered as absolutely privileged, however false or malicious they may be, but only for so long as they are pertinent and relevant to the subject of inquiry.

Thus, while Larong is guilty of using infelicitous language, such transgression is not of a grievous character as to merit Larong's disbarment. In light of Larong's apologies, the Court finds it best to temper the penalty for his infraction which, under the circumstances, is considered simple, rather than grave, misconduct.

DOLORES SALINAS, ASSISTED BY HER HUSBAND, JUAN CASTILLO v.

SPOUSES BIENVENIDO S. FAUSTINO AND ILUMINADA G. FAUSTINO


In a contract of sale of land in a mass, the specific boundaries stated in the contract must control over any statement

with respect to the area contained within its boundaries.

Bienvenido S. Faustino purchased from his several co-heirs, including Benjamin Salinas and

Dolores Salinas, their respective shares to a parcel of land consisting of 1,381 sq. m.

Faustino and his wife filed before the Regional Trial Court (RTC) a complaint for recovery of

possession with damages against Salinas alleging that she is occupying part of former‘s land. Salinas

contended that her signature on the Deed of Sale was forged and she paid the taxes due on the land she is

occupying. The RTC dismissed the complaint. On appeal, the Court of Appeals (CA) modified the RTC

decision and concluded that Faustino owned only 753 sq. m. of the land.

ISSUE:

Whether or not a description of a lot area can be used as evidence for purchase and ownership

of the lot


HELD:

Indeed, in a contract of sale of land in a mass, the specific boundaries stated in the contract must

control over any statement with respect to the area contained within its boundaries. Thus, it is the

boundaries indicated in a deed of absolute sale, and not the area in sq. m. mentioned therein 300.375 sq.

m. in the Deed of Sale in respondents favor that control in the determination of which portion of the

land a vendee acquires.

In concluding that Faustino acquired via the June 27, 1962 Deed of Sale the total land area of 753

sq. m., the Court of Appeals subtracted from the total land area of 1,381 sq. m. reflected in Exh. A, which

is Plan of Lot 3, Block 5-k, Psd-8268, as prepared for Benjamin R. Salinas containing an area of 1,381 sq.

m. and which was prepared on February 10, 1960 by a private land surveyor, the 628 sq. m. area of the lot

claimed by Salinas as reflected in Tax Declaration No. 1017 in her name. As will be shown shortly,

however, the basis of the appellate court‘s conclusion is erroneous.

As the immediately preceding paragraph reflects, the Plan of Lot 3, Bk 5-K, Psd-82 was prepared

for Spouses Faustino and Salinas‘ first cousin co-heir Benjamin Salinas on February 10, 1960. Why the

appellate court, after excluding the 628 sq. m. lot covered by a Tax Declaration in the name of petitioner

from the 1,381 sq. m. lot surveyed for Benjamin P. Salinas in 1960, concluded that what was sold via the

1962 Deed of Sale to respondent Faustino was the remaining 753 sq. m., despite the clear provision of said Deed

of Sale that what was conveyed was 300.375 sq. m., escapes comprehension. It defies logic, given that

respondents base their claim of ownership of the questioned 628 sq. m. occupied by Salinas on that June

27, 1962 Deed of Sale covering a 300.375 sq. m. lot.

The Court of Appeals thus doubly erred in concluding that 1) what was sold to respondents via

the June 27, 1962 Deed of Sale was the 1,381 sq. m. parcel of land reflected in the Plan-Exh. A prepared

in 1960 for Benjamin Salinas, and 2) Salinas occupied 628 sq. m. portion thereof, hence, Spouses Fausto

own the remaining 753 sq. m.

SPOUSES VICTOR VALDEZ and JOCELYN VALDEZ v. SPOUSES FRANCISCO TABISULA and CARIDAD TABISULA 560 SCRA 332 (2008), SECOND DIVISION (Carpio Morales, J.)

The requisites provided in conferment of a legal easement of right of way under the Civil Law must be complied and such existence be proven. Spouses Victor and Jocelyn Valdez bought from Spouses Francisco and Caridad Tabisula a parcel of land located in San Fernando, La Union. The absolute sale indicated a right of way. Spouses Tabisula subsequently built a concrete wall on the western side of the subject property. Believing that that side is the intended road right of way mentioned in the deed, Spouses Valdez opposed such act. Conciliation was then initiated. Spouses Tabisula failed to attend the conferences scheduled. This prompted Spouses Valdez to file, after more than six years of execution of the deed, a complaint for Specific Performance with Damages.


Spouses Valdez contended that they purchased the subject property on the assurance of providing them a road right of way. On the other hand, spouses Tabisula averred that the 2-meter easement should be taken from the western portion of the subject property and not theirs. The trial court dismissed the petition. On appeal, the Court of Appeals affirmed the dismissal. ISSUES: Whether or not Spouses Valdez are entitled to the right of way as indicated in the absolute sale HELD: Article 1358 of the Civil Code provides that any transaction involving the sale or disposition of real property must be in writing. The stipulation harped upon by Spouses Valdez that they shall be provided a 2 meters wide road right-of-way on the western side of their lot but which is not included in this sale is not a disposition of real property. The proviso that the intended grant of right of way is not included in this sale could only mean that the parties would have to enter into a separate and distinct agreement for the purpose. The use of the word shall, which is imperative or mandatory in its ordinary signification, should be construed as merely permissive where, as in the case at bar, no public benefit or private right requires it to be given an imperative meaning. As found, however, by the trial court, which is supported by the Sketch of the location of the lots of the parties and those adjoining them, a common evidence of the parties, Spouses Valdez and their family are also the owners of two properties adjoining the subject property which have access to two public roads or highways.

To be conferred a legal easement of right of way under Article 649, the following requisites must be complied with: (1) the property is surrounded by other immovables and has no adequate outlet to a public highway; (2) proper indemnity must be paid; (3) the isolation is not the result of the owner of the dominant estates own acts; (4) the right of way claimed is at the point least prejudicial to the servant estate; and (5) to the extent consistent with the foregoing rule, the distance from the dominant estate to a public highway may be the shortest. The onus of proving the existence of these prerequisites lies on the owner of the dominant estate, herein the spouses Valdez.

Since Spouses Valdez then have more than adequate passage to two public roads, they have no right to demand the grant by spouses Tabisula of an easement on the western side of Spouses Tabisula‘s lot.

SPOUSES FERDINAND AGUILAR and JOSEPHINE AGUILAR v. CITYTRUST

FINANCE CORPORATION



In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those

already acquired, shall depend upon the happening of the event which constitutes the condition.

Petitioner Spouses Josephine and Ferdinand Aguilar bought a car from World Cars, Inc. (World

Cars) through the latter‘s agent, Joselito Perez. The spouses issued three checks payable to Perez who

was authorized by World Cars to receive payment. Spouses Aguilar subsequently executed a promissory

note, chattel mortgage and other accessory documents the dates of which were left blank. The same were

intended to take effect only if the checks issued by Spouses Aguilar would be dishonored. The

promissory notes and chattel mortgage were subsequently assigned by World Cars to Citytrust.

Spouses Aguilar received letters from Citytrust, advising them of overdue account and unpaid

installments for the months of August to December 1992 plus accumulated penalty charges. World

Cars‘ Vice President Domondon informed Spouses Aguilar that the last payment had not been received.

Thus, Spouses Aguilar filed a complaint for ―annulment of chattel mortgage plus damages‖ against

Citytrust and World Cars before the Regional Trial Court (RTC).

The RTC held that the Spouses Aguilar had paid World Cars the full purchase price of the car

and Citytrust, as the assignee, had no right to collect from them the amount stated in the simulated

Chattel Mortgage cum Deed of Assignment. Further, RTC ordered Citytrust and World Cars jointly and

severally for damages in favor of Spouses Aguilar. On appeal, the Court of Appeals modified RTC‘s

decision. It ruled that the promissory note and its derivative instruments were not really intended to

produce legal effect. Hence, these present petitions of the Spouses Aguilar and World Cars.

ISSUE:

Whether or not CA erred in ruling that the promissory note and derivative instruments were null

and void for the same were not really intended to produce legal effect

HELD:

Clearly, Perez was the agent of World Cars and was duly authorized to accept payment for the

car. Josephine‘s testimony that before issuing the checks in the name of Perez, she verified from his

supervisor and the latter confirmed Perez‘ authority to receive payment remains unrefuted by World

Cars. In fact, World Cars admitted in its Answer with Counterclaim that ―[w]hat was actually paid [by the

Spouses Aguilar] and received by [it] was [Josephine‘s] check in the amount of P148,000.00

as downpayment for the said car.‖ Parenthetically, as earlier stated, when Josephine spoke to World Cars‘

Vice President Domondon, the latter informed her that the last payment had not been received. This

information of Domondon does not jibe with the claim of World Cars that it received only Josephine‘s

first check in the amount of P148,000.00 as downpayment payable to Perez.


Since Spouses Aguilar payment to Perez is deemed payment to World Cars, the

promissory note, chattel mortgage and other accessory documents they executed

which were to take effect only in the event the checks would be dishonored were deemed nullified, all

the checks having been cleared.

Since the condition for the instruments to become effective was fulfilled, the obligation on the

part of the spouses Aguilar to be bound thereby did not arise and World Cars did not thus acquire rights

thereunder following Art. 1181 of the Civil Code which provides that in conditional obligations, the

acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon

the happening of the event which constitutes the condition.

As no right against the Spouses Aguilar was acquired by World Cars under the promissory note

and chattel mortgage, it had nothing to assign to Citytrust. Consequently, Citytrust cannot enforce the

instruments against the spouses Aguilar, for an assignee cannot acquire greater rights than those

pertaining to the assignor.

At all events, the Spouses Aguilar having fully paid the car before they became aware of the

assignment of the instruments to Citytrust when they received notice thereof by Citytrust, they were

released of their obligation thereunder. The Civil Code so provides that the debtor who, before having

knowledge of the assignment, pays his creditor, shall be released from the obligation.

While Citytrust cannot enforce the instruments against the Spouses Aguilar, since under the RFA, specifically paragraph 5(a) thereof, World Cars guaranteed that as further warranties, [World Cars] hereby agrees and shall be bound by the following: a. World Cars guarantees to [Citytrust] its successors, and assigns, that it has full right and legal authority to make the assignment or discounting; that the installment papers so discounted by virtue of this agreement, are subsisting, valid, enforceable and in all respects what they purport to be; that the papers contain the entire agreement between the customers and [World Cars]; x x x that it has absolute and good title to such contracts and the personalties covered thereby and the right to sell and transfer the same in favor of [Citytrust].

ATTY. MARTIN T. SUELTO v. NELSON A. SISON et al. 465 SCRA 29 (2005), THIRD DIVISION (Carpio Morales, J.)

Parties, having agreed in an agreement, which is the law between them, to charge notorial fees, are under obligation to

settle the same, at a reasonable amount.

Respondents Sison brothers negotiated for the sale of their 3 parcels of land to their co-respondent

Santos Land Development Corporation (the corporation). In the series of negotiations, Atty. Danilo A. Basa, one of two retained counsel of the corporation,

was present in order to incorporate whatever the parties agreed upon in the draft of the Memorandum of Agreement (MOA) and the Deed of Absolute Sale they were going to forge.

The parties agreed to conclude and sign the MOA prepared by Atty. Basa whereon the Sisons had in fact affixed their signatures but since Atty. Basa was at the time out of the country, the corporation asked its other retained counsel, petitioner Atty. Martin Suelto to give the MOA a final look.


Atty. Suelto inputed in the MOA the names of the respective spouses of the

Sisons. He also made some amendments and prepared a Joint Affidavit of Clarification and Confirmation (Joint Affidavit).

A pertinent provision in the MOA prepared by Atty. Basa, which was retained in the final MOA,

called for the retention by the corporation of 10% of the total purchase price for taxes, notarial and attorney‘s fees and other fees and charges and incidental expenses. There was, however, no agreement on the amount of notarial fees to be paid or taken from the 10% retained amount.

The Sisons and the corporation affixed their signatures on the MOA, as finalized by Atty. Suelto

who notarized it. They also executed 3 Deeds of Absolute Sale which were notarized by the Sisons‘ counsel Atty. Agudo.

The corporation received from Atty. Suelto a Statement of Account addressed to it, for the account

of the Sisons, wherein Atty. Suelto indicated the billing for the preparation and notarization of the MOA and for the final preparation of the Deeds of Absolute Sale. The Sisons denied their obligation to pay Atty. Suelto his legal fees.

As Atty. Suelto failed to collect his fees, he filed a complaint before the Regional Trial Court (RTC)

for Collection of Sum of Money and Attorney‘s Fees against the Sisons. The RTC ruled in favor of Atty. Suelto and ordered the Sisons to pay him his legal fees. The Court of Appeals (CA), however, reversed the decision of RTC, noting the provision in the MOA regarding the retention of the 10% selling price by the buyer corporation to be applied to expenses including notarial and attorney‘s fees. ISSUES:

Whether or not Atty. Suelto is entitled to receive payment from the Sisons for his legal services HELD:

The Sisons were ―willing to pay for the notarial fees to be charged to the 10% retained amount of

the purchase price, if the lawyer notarizing it is one of their choice‖. The CA‘s presumption that the notarial fees had been paid with the return by the corporation to the

Sisons of the balance of the 10% retained purchase is thus incongruous with the clearly established fact that Atty. Suelto‘s notarial fees had not been paid.

The MOA provision that notarial fees relative to the sale, among other expenses, would be charged

to the 10% retained purchase price bears no qualification whatsoever, however, on which lawyer — whether of the Sisons or of the corporation — would perform notarial services for the provision to apply.

The Sisons, having agreed in the MOA, which is the law between them and the corporation, to

charge notarial fees from the retained 10% of the purchase price, but the balance thereof having been returned to them without Atty. Suelto‗s notarial fees being settled, they are under obligation to settle the same, at a reasonable amount of course.


The RTC‘s determination of the amount of P100,000.00 as fair and reasonable

notarial fees, inclusive of actual litigation cost, under the circumstances reflected above, merits the Court‘s approval.

CARLOS TAMAYO v. MILAGROS HUANG et al.


In case the developer of a subdivision or condominium fails in its obligation, it gives the buyer the option to demand

reimbursement of the total amount paid, or to wait for further development of the subdivision, and when the buyer opts for the

latter alternative, he may suspend payment of installments until such time that the owner or developer had fulfilled its

obligation to him.

Respondents Huang Sui Sin, Josefino Huang, Miguel Huang and Milagros Huang, entered into a

contract of ―Indenture‖ with EAP Development Corporation (EAP) under which the EAP shall develop

their lands into a first class subdivision. Carlos R. Tamayo purchased a lot from Huang et al. under a

contract to sell. In the said agreement, Tamayo agreed to pay in 60 monthly installments a total purchase

price of P242, 080.00. Tamayo paid installments up to June 1982, but stopped paying thereafter due to

the non-development of the subdivision as agreed upon in the contract. Later on, Huang et al. filed an

action to rescind the contract of ―Indenture‖ against EAP for abandoning the development of the

subdivision. Such petition was granted by the Regional Trial Court (RTC).

More than 5 years after the execution of the contract to sell, Huang et al. demanded Tamayo for

the payment of lot. Tamayo issued a check representing the full payment of the value of the lot, for

which a receipt was issued. However, Huang et al. returned the check to Tamayo. Tamayo thus filed an

action for specific performance with damages against Huang et al. before the Housing and Land Use

Regulatory Board (HLURB). Both the HLURB Arbiter and HLRUB Board of Commissioners dismissed

Tamayo‘s complaint, on the ground that there has been no valid consignation. However, HLURB

removed the awards of damages in favor of Huang et al.

On appeal by Huang et al. to the Office of the President (OP), they raised for the first time that

the subject lot has been sold to certain Nene Abijar. The OP affirmed the decision of the HLURB

holding that Abijar‘s right as a purchaser of the land in good faith prevails over the right of Tamayo,

without prejudice to Tamayo‘s right to reimburse what he has already paid.

ISSUE:

Whether or not the contract to purchase the lot between Tamayo and Huang et al. remains valid

HELD:

It is not disputed that EAP, acting as the Attorney-in-Fact and Manager of the Huang et al. totally

abandoned the development of the subdivision in 1983, thus prompting Huang et al., to continue

development thereof on May 22, 1985 and to even file a complaint to rescind its contract of ―Indenture‖

with EAP which the RTC Davao granted.


The Subdivision and Condominium Buyers‘ Protective Decree directs every owner

and developer of real property to provide the necessary facilities, improvements,

infrastructures and other forms of development, failure to carry out which is sufficient cause for the

buyer to suspend payment, and any sums of money already paid shall not be forfeited.

In case the developer of a subdivision or condominium fails in its obligation under Section 20,

Section 23 of the Subdivision and Condominium Buyers‘ Protective Decree gives the buyer the option to

demand reimbursement of the total amount paid, or to wait for further development of the subdivision,

and when the buyer opts for the latter alternative, he may suspend payment of installments until such

time that the owner or developer had fulfilled its obligation to him.

From Tamayo‘s earlier-mentioned letter of December 24, 1986, he made clear his intention not to

seek reimbursement of the total amount he had already paid but to comply with his obligation to pay the

balance in full upon completion of the development of the subdivision.

The claim-advice of Tamayo notwithstanding, the Huang et al. were mum about it. Such silence

suggests an admission of the veracity and validity of Tamayo‘s claim.

Huang et al., nevertheless claim that the contract was ―deemed rescinded‖ five years after its

execution on April 30, 1981. Huang et al.‘s demand for payment of the unpaid balance sometime between

the period of April 30, 1986 to December 24, 1986 betrays such claim, however. In any event, it puts

them in estoppel.

As noted earlier, Tamayo, by letter of December 24, 1986, informed Huang et al. that he desisted

from further paying monthly installments and that he would resume payment if the development of the

subdivision had been completed. Yet Huang et al. sent no notarized notice or any notice of cancellation at

all. In fact, it was only after Tamayo filed on July 24, 1997 the complaint before the HLURB that Huang

et al. offered to reimburse Tamayo of the total amount he had already paid.

The contract not having been cancelled in accordance with law, it has remained valid and

subsisting. It was, therefore, within Tamayo‘s right to maintain his option to await the completion of the

development of and introduction of improvements in the subdivision and thereafter, upon full payment

of the purchase price, without interest, compel Huang et al. to execute a deed of absolute sale.

The decision of the OP which was deemed affirmed by the appellate court ordering a full

refund of the installment payments of Tamayo in the amount of P59,706.00 and the release to Tamayo

of the amount of P270,537.00 he had consigned does not lie too, for under the law, Tamayo is entitled

to the lot he contracted to purchase after payment of the outstanding balance which he was ready and

willing to do.

The Supreme Court, not being a trier of facts, thus resolves to remand the case to the HLURB

for a proper determination of the respective rights of the parties vis a vis the alleged sale of the lot to

Abijar in accordance with the foregoing discussions.


SPOUSES LEOPOLDO S. VIOLA and MERCEDITA VIOLA v.

EQUITABLE PCI BANK, INC. 572 SCRA 245 (2008), SECOND DIVISION (Carpio Morales, J.)

A mortgage must sufficiently describe the debt sought to be secured, which description must not be such as to mislead or deceive. An obligation is not secured by a mortgage unless it comes fairly within the terms of the mortgage.

Spouses Leopoldo and Mercedita Viola of Leo-Mers Commercial, Inc. obtained a loan through a

credit line facility from the Philippine Commercial International Bank (PCI Bank), which was later merged with Equitable Bank and became known as Equitable PCI Bank, Inc. To secure the payment of the loan, a ―Real Estate Mortgage‖ in favor of PCI Bank was executed. Spouses Viola made partial payments therein; PCI Bank contends however, that Spouses Viola made no further payments despite demands. Thus, PCI Bank extrajudicially foreclosed the mortgage before the Regional Trial Court (RTC) and that the mortgaged properties were sold at a public auction.

Spouses Viola filed a complaint for annulment of foreclosure sale, accounting and damages

before the RTC. They alleged that they had made substantial payments of P3,669,210.67, receipts of which were issued without PCI Bank specifying "whether the payment was for interest, penalty or the principal obligation". Based on PCI Bank‘s statement of account, not a single centavo of their payments was applied to the principal obligation, that the foreclosure proceedings and auction sale were null and void because the mortgage debt is only P2,224,073.31, for the principal obligation, and P1,455,137.36, on the interest, but the mortgaged properties were sold to satisfy an inflated of P4,783,254.69, plus 3% penalty fee per month year and 15% interest per year, which amounted to P14,024,623.22.

The RTC upheld the position of the PCI Bank but reduced the interest of the principal. Spouses

Viola filed a Motion for Reconsideration but it was denied. On appeal, the Court of Appeals (CA) dismissed the petition for lack of merit.

ISSUE:

Whether or not the mortgage contract also secured the penalty fee per month on the outstanding amount as stipulated in the Credit Line Agreement. HELD:

A mortgage must sufficiently describe the debt sought to be secured, which description must not be such as to mislead or deceive, and an obligation is not secured by a mortgage unless it comes fairly within the terms of the mortgage.

In the case at bar, the parties executed two separate documents on March 31, 1997 – the Credit Line Agreement granting the Client a loan through a credit facility in the maximum amount of P4,700,000.00, and the Real Estate Mortgage contract securing the payment thereof. As the Credit Line Agreement specifically defined ―a penalty fee of three percent (3%) per month of the outstanding amount to be computed from the day deficiency is incurred up to the date of full payment thereon,‖ the provision of the mortgage contract does not specifically mention that.


Since an action to foreclose ―must be limited to the amount mentioned in the mortgage‖ and the penalty fee of 3% per month of the outstanding obligation is not mentioned in the

mortgage, it must be excluded from the computation of the amount secured by the mortgage.

―Penalty fee‖ is entirely different from ―bank charges‖. The phrase ―bank charges‖ is normally understood to refer to compensation for services. A ―penalty fee‖ is likened to a compensation for damages in case of breach of the obligation. Being penal in nature, such fee must be specific and fixed by the contracting parties, unlike in the present case which slaps a 3% penalty fee per month of the outstanding amount of the obligation.

Moreover, the ―penalty fee‖ does not belong to the species of obligation enumerated in the mortgage contract, namely: "loans, credit and other banking facilities obtained x x x from the Mortgagee, . . . including the interest and bank charges, . . . the costs of collecting the same and of taking possession of and keeping the mortgaged properties, and all other expenses to which the Mortgagee may be put in connection with or as an incident to this mortgage . . ."

In Philippine Bank of Communications v. Court of Appeals which raised a similar issue, the Court held that there is also sufficient authority to declare that any ambiguity in a contract whose terms are susceptible of different interpretations must be read against the party who drafted it.

FERNANDA GEONZON VDA. DE BARRERA, et al. v. HEIRS OF VICENTE LEGASPI,

REPRESENTED BY PEDRO LEGASPI

G.R. No. 174346 (2008), SECOND DIVISION (Carpio Morales, J.)

Disputes involving title to or possession of real property falls within the exclusive jurisdiction of the Municipal Trial Court.

Johnny Oco Jr. (Oco), representing to be a peace officer connected with the PNP, accompanied

by unidentified CAFGU members, forced his way into land owned by the heirs of Vicente Legaspi (heirs

of Legaspi) and dispossessed them of the property, destroyed the planted crops and took possession of

the land. The heirs of Legaspi thus filed a complaint before the Regional Trial Court (RTC) for

Reconveyance of Possession with Preliminary Mandatory Injunction and Damages against Oco. Oco

questions the exercise of the RTC of jurisdiction over the case.

The RTC favored the heirs of Legaspi and ordered to return the possession of the land. The

Court of Appeals (CA) affirmed the decision of RTC.

ISSUE:

Whether or not the court lacks jurisdiction over the case

HELD:

Section 33 of Batas Pambansa Bilang 129, (the Judiciary Reorganization Act of 1980), as

amended by Republic Act No. 7691 provides for the jurisdiction of metropolitan trial courts, municipal

trial courts and municipal circuit trial courts, to wit: (3) Exclusive original jurisdiction in all civil actions


which involve title to, or possession of, real property, or any interest therein where the

assessed value of the property or interest therein does not exceed Twenty thousand pesos

(P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty

thousand pesos (P50,000.00) exclusive of interest, damages of whatever kind, attorney‘s fees, litigation

expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such

property shall be determined by the assessed value of the adjacent lots.

Before the amendments introduced by Republic Act No. 7691, the plenary action of accion

publiciana was to be brought before the regional trial court. With the modifications introduced by R.A.

No. 7691 in 1994, the jurisdiction of the first level courts has been expanded to include jurisdiction over

other real actions where the assessed value does not exceed P20,000, P50,000 where the action is filed in

Metro Manila. The first level courts thus have exclusive original jurisdiction over accion publiciana and

accion reivindicatoria where the assessed value of the real property does not exceed the aforestated amounts.

Accordingly, the jurisdictional element is the assessed value of the property.

Assessed value is understood to be ―the worth or value of property established by taxing

authorities on the basis of which the tax rate is applied. Commonly, however, it does not represent the

true or market value of the property.‖ The subject land has an assessed value of P11,160 as reflected in

Tax Declaration No. 7565, a common exhibit of the parties. The bare claim of Legaspi heirs that it has

a value of P50,000 thus fails. The case, therefore, falls within the exclusive original jurisdiction of the

municipal trial court.

GF EQUITY, INC. v. ARTURO VALENZONA


Mutuality is one of the characteristics of a contract, its validity or performance or compliance of which cannot be left to the will of only one of the parties.

GF Equity hired Arturo Valenzona (Valenzona) as head basketball coach of Alaska team. As head coach, Valenzona was required to comply to his duties such as coaching at all practices and games scheduled for the team. Under their contract, Valenzona would receive P 35,000.00 monthly and GF Equity will provide him with a service vehicle and gasoline allowance. Under paragraph 3 of the same contract it was stipulated there that;

“If at any time during the contract, the COACH, in the sole opinion of the CORPORATION, fails to exhibit sufficient skill or

competitive ability to coach the team, the CORPORATION may terminate this contract.”

Subsequently, Valenzona was terminated. GF equity invoked paragraph 3 of the said contract.

Counsel of Valenzona demands for compensation arising from arbitrary and unilateral termination of his employment. However, GF equity refused it. Valenzona filed a complaint before the Regional Trial Court (RTC) of Manila against GF Equity for breach of contract. Valenzona contends that the condition in paragraph 3 violates Article 1308 of New Civil Code (NCC). But the RTC dismissed the complaint and affirmed the validity of paragraph 3 on the grounds that Valenzona was fully aware of entering into a bad bargain.


On appeal, the Court of Appeals (CA) held that the questioned provision in the contract ―merely confers upon GF Equity the right to fire its coach upon a finding of inefficiency, a valid reason within the ambit of its management prerogatives, subject to limitations imposed by law, although not expressly stated in the clause‖; and ―the right granted in the contract can neither be said to be immoral, unlawful, or contrary to public policy.‖ It concluded, however, that while ―the mutuality of the clause‖ is evident, GF Equity ―abused its right by arbitrarily terminating Valenzona‘s employment and opened itself to a charge of bad faith.‖ ISSUE: Whether or not paragraph 3 of the contract is violative of the principle of mutuality of contracts HELD:

The ultimate purpose of the mutuality principle is thus to nullify a contract containing a condition which makes its fulfillment or pre-termination dependent exclusively upon the uncontrolled will of one of the contracting parties.

The contract incorporates in paragraph 3 the right of GF Equity to pre-terminate the contract — that ―if the coach, in the sole opinion of the corporation, fails to exhibit sufficient skill or competitive ability to coach the team, the corporation may terminate the contract.‖ The assailed condition clearly transgresses the principle of mutuality of contracts. It leaves the determination of whether Valenzona failed to exhibit sufficient skill or competitive ability to coach Alaska team solely to the opinion of GF Equity. Whether Valenzona indeed failed to exhibit the required skill or competitive ability depended exclusively on the judgment of GF Equity. In other words, GF Equity was given an unbridled prerogative to pre-terminate the contract irrespective of the soundness, fairness or reasonableness, or even lack of basis of its opinion.

To sustain the validity of the assailed paragraph would open the gate for arbitrary and illegal dismissals, for void contractual stipulations would be used as justification therefor. The nullity of the stipulation notwithstanding, GF Equity was not precluded from the right to pre-terminate the contract. The pre-termination must have legal basis, however, if it is to be declared justified.

HEIRS OF EMILIO R. DOMINGO, et al. v. HEIRS OF CLARITA D. MARTIN, et al. 508 SCRA 563 (2006), THIRD DIVISION (Carpio Morales, J.)

A judgment is conclusive as to the facts admitted by the pleadings or assumed by the decision, where they were essential to the judgment, and were such that the judgment could not legally have been rendered without them.

Intestate proceedings were filed before the then Court of First Instance of Davao City involving the parcel of land owned by the late spouses Emilio Domingo (Domingo) and Felicidad Cornejo (Cornejo), whose family were killed during World War II.

The said property was subdivided, the first half was awarded to Mario Domingo, et al., heirs of

Domingo (Domingo heirs), and the other half, Lot 1769-A, was said to be awarded to the heirs of Cornejo (Cornejo heirs), the former‘s wife. The heirs of Emilio Domingo‘s siblings, represented by Emilio Bernabe (Bernabe), claim that the Cornejos‘ share was sold to them in a transaction represented by Arturo Domingo. They filed a complaint "for judicial settlement of estate with damages and


attorney‘s fees," before the Regional Trial Court against the heirs-children of Enrique and Clarita Martin who claimed that the same share was sold to their parents by the heirs of Felicidad Cornejo.

The RTC held in favor of the Domingo heirs. The Court of Appeals (CA) reversed the trial

court‘s decision upon a finding that the Domingo heirs failed to establish their claim to the share of the property ivolved. The Domingos‘ Motion for Reconsideration before the CA was denied.

ISSUES: Whether or not the claim of ownership was established by preponderance of evidence

HELD: Domingo heirs failed to prove their claim to Lot 1769-A by preponderance of evidence. Domingo heirs‘ evidence of receipt of payment presented to show that Arturo Domingo paid the purchase price of a "lupa sa Lapanday sapagkat iyon ay mana rin namin" could refer to any parcel of land in Lapanday. Domingo heirs‘ claim, without more, that "lupa sa Lapanday" was understood to refer to the lot covered by Lot 1769-A does not persuade.

While the decision in Misc. Case No. 4100 does not constitute res judicata to the present case,

there being no identity in causes of action, it is settled that "a judgment is conclusive as to the facts admitted by the pleadings or assumed by the decision, where they were essential to the judgment, and were such that the judgment could not legally have been rendered without them." The finding in Misc. Case No. 4100 was essential to the judgment since a petition for reconstitution may be filed only by the registered owner, his assigns, or any person who has an interest in the property.

Martin heirs have proved their predecessors‘ title by presenting the decision in the intestate

estate proceedings and the Subdivision Plan, both of which identify Lot No. 1769-A as the portion allotted to the Cornejo heirs.

In fine, Martin heirs have proven their claim by a preponderance of evidence.

HEIRS OF FLORES RESTAR v. HEIRS OF DOLORES R. CICHON 475 SCRA 73 (2005), THIRD DIVISION (Carpio Morales, J.)

Ordinary acquisitive prescription requires possession of things in good faith and with just title for a period of ten

years while extraordinary acquisitive prescription only requires uninterrupted adverse possession for thirty years.

Emilio Restar died intestate, leaving eight children-compulsory heirs. Restar's eldest child, Flores,

on the basis of a Joint Affidavit he executed with Helen Restar, caused the cancellation of Tax

Declaration in Restar's name. The same covers a 5,918 square meter parcel of land in Aklan which was

among the properties left by Restar. Flores thereafter sought the issuance of another Tax Declaration in

his name. Flores later on died.


Ten years later, the heirs of Flores' sisters, Dolores R. Cichon, et. al. (Heirs of

Cichon) filed a Complaint against Flores' heirs for "partition of the lot, declaration of

nullity of documents, ownership with damages and preliminary injunction" before the Regional Trial

Court (RTC) of Aklan alleging that the widow Esmenia appealed to them to allow her to hold on to the

lot to finance the education of her children, to which they agreed on the condition that after the children

had finished their education, it would be divided into eight equal parts; and upon their demand for

partition of the lot, the defendants Flores‘ heirs refused, they claiming that they were the lawful owners

thereof as they had inherited it from Flores. Flores‘ heirs claimed that they had been in possession of the

lot in the concept of owner for more than thirty (30) years and have been paying realty taxes since time

immemorial. And they denied having shared with the plaintiffs the produce of the lot or that upon

Flores' death in 1989, Esmenia requested the plaintiffs to allow her to hold on to it to finance her

children's education, they contending that by 1977, the children had already finished their respective

courses.

The RTC of Kalibo, Aklan held that Flores and his heirs had performed acts sufficient to

constitute repudiation of the co-ownership, concluded that they had acquired the lot by prescription.

The Court of Appeals reversed the decision finding that there was no adequate notice by Flores to his

co-heirs of the repudiation of the co-ownership and neither was there a categorical assertion by the

defendants of their exclusive right to the entire lot that barred the plaintiffs' claim of ownership.

ISSUE:

Whether or not Heirs of Flores acquired ownership over the lot by extraordinary prescription

HELD:

Acquisitive prescription of dominion and other real rights may be ordinary or extraordinary.

Ordinary acquisitive prescription requires possession of things in good faith and with just title for a

period of ten years. Without good faith and just title, acquisitive prescription can only be extraordinary in

character which requires uninterrupted adverse possession for thirty years.

When Restar died in 1935, his eight children became pro indiviso co-owners of the lot by intestate

succession. Heirs of Chichon never possessed the lot, however, much less asserted their claim thereto

until January 21, 1999 when they filed the complaint for partition subject of the present petition. In

contrast, Flores took possession of the lot after Restar's death and exercised acts of dominion thereon —

tilling and cultivating the land, introducing improvements, and enjoying the produce thereof. Flores'

possession thus ripened into ownership through acquisitive prescription after the lapse of thirty years in

accordance with the earlier quoted Article 1137 of the New Civil Code.

Heirs of Cichon did not deny that aside from the verbal partition of one parcel of land in

Carugdog, Lezo, Aklan way back in 1945, they also had an amicable partition of the lands of Emilio

Restar in Cerrudo and Palale, Banga Aklan on September 28, 1973 (exhibit "20"). If they were able to

demand the partition, why then did they not demand the inclusion of the land in question in order to

settle once and for all the inheritance from their father Emilio Restar, considering that at that time all of


the brothers and sisters, the eight heirs of Emilio Restar, were still alive and participated in

the signing of the extra-judicial partition?

Indeed, the following acts of Flores show possession adverse to his co-heirs: the cancellation of

the tax declaration certificate in the name of Restar and securing another in his name; the execution of a

Joint Affidavit stating that he is the owner and possessor thereof to the exclusion of respondents;

payment of real estate tax and irrigation fees without respondents having ever contributed any share

therein; and continued enjoyment of the property and its produce to the exclusion of respondents. And

Flores' adverse possession was continued by his heirs.

The trial court's finding and conclusion that Flores and his heirs had for more than 38 years

possessed the land in open, adverse and continuous possession in the concept of owner — which length

of possession had never been questioned, rebutted or disputed by any of the heirs of Cichon, being thus

duly supported by substantial evidence, he and his heirs have become owner of the lot by extraordinary

prescription. It is unfortunate that respondents slept on their rights. Dura lex sed lex.

HEIRS OF SALVADOR HERMOSILLA v. Spouses JAIME REMOQUILLO and LUZ REMOQUILLO, (2007), SECOND DIVISION (Carpio Morales, J.)

A transfer of property arising from a void contract does not confer title over it.

Apolinario Hermosilla (Apolinario) occupies a parcel of land in San Pedro Tunasan Homesite until his death in 1964. The lot was subdivided into two, Lot 12 and Lot 19 with the same area of 341 square meters. The Republic of the Philippines acquired through purchase a 65- square meter lot which forms part of Lot 19. Apolinario made a Deed of Assignment in 1962 transferring possession of Lot 19 in favor of his grandson, Jaime Remoquillo. The Land Tenure Administration (LTA) later found that Lot 19 is still available for qualified applicants. Jaime, being its occupant filed an application in 1963. Apolinario conveyed Lot 12 to his son Salvador Hermosilla (Salvador). He filed for an application to purchase the said lot and was granted by the LTA. Jaime and Salvador made a Kasunduan whereby Jaime transferred ownership of the 65 sq. m. in Lot 19 in favor of Salvador. The LTA awarded Lot 19 to Jaime, for which he and his wife were issued a title.

After Apolinario died, his daughter Angela Hermosilla (Angela) filed a protest before the LTA contending that as an heir of the deceased, she is also entitled to Lots 12 and 19. By Resolution of the LTA, the protest was dismissed.

Thus, Angela et al. filed for the annulment of the title on the ground of fraud. The trial court held that the Angela et al. were co-owners of the subject property. The Court of Appeals (CA) rendered the Kasunduan void because at the time of its execution, the lot was still owned by the state and so there was no right that was transferred to Jaime as well as to Angela, et al.

ISSUES:


Whether or not Angela et al. acquired any right over the property HELD: The transfer "became one in violation of law (the rules of the PHHC being promulgated in

pursuance of law have the force of law) and therefore void ab initio." Hence, Angela et al. acquired no

right over the lot from a contract void ab initio, no rights are created. Estoppel will not apply for it cannot

be predicated on an illegal act. It is generally considered that as between the parties to a contract, validity

cannot be given to it by estoppel if it is prohibited by law or is against public policy.

Angela et al. go on to postulate that if the Kasunduan is void, it follows that the 1962 Deed of

Assignment executed by Apolinario in favor of Jaime is likewise void to thus deprive the latter of any

legal basis for his occupation and acquisition of Lot 19.

Angela et al.'s position fails. They lose sight of the fact that, as reflected above, Jaime acquired

Lot 19 in his own right, independently of the Deed of Assignment.

In another vein, since the property was previously a public land, Angela et al. have no personality

to impute fraud or misrepresentation against the State or violation of the law. If the title was in fact

fraudulently obtained, it is the State which should file the suit to recover the property through the Office

of the Solicitor General. The title originated from a grant by the government, hence, its cancellation is a

matter between the grantor and the grantee.

DON PEPE HENSON ENTERPRISES v. MARIANO DAVID et al. 436 SCRA 605 (2004), THIRD DIVISION (Carpio Morales, J.)

Any agricultural lessee whose landholding is not yet covered by a Certificate of Land Transfer and who shall continue not to pay his lease rentals or amortization payments when they fall due for a period of two (2) years to the landowner/agricultural lessor shall, upon proper hearing and judgment, lose his right to be issued a Certificate of Land Transfer under Presidential Decree No. 27 and his farmholding. Petitioner Don Pepe Henson Enterprises (DPHE) impugns the coverage of its land under P.D. No. 27, otherwise know as the Tenant Emancipation Decree, and the issuance of the Emancipation Patents in favor of respondents Mariano David, et al. The Provincial Adjudicator decided in favor of DPHE and on appeal to the Department of Agrarian Reform Adjudication Board (DARAB), the decision was reversed and the complaint was dismissed. The Court of Appeals sustained the finding that the disputed land was indeed under the coverage of P.D. No. 27. It however annulled the Certificate of Land Transfer, Emancipation Patents and TCT‘s issued in favor of David without prejudice to another application. ISSUE:


Whether or not the disputed land is covered by the P.D. No. 27 HELD:

With regard to the first ground to which the present petition is anchored, the Court holds that

while it is undisputed that the bulk of the 19-hectare land of DPHE is devoted to sugarcane production, the 5.5 hectare portion thereof – the farmholding of David et al.– is devoted to palay, hence, such farmholding is covered by P.D. No. 27.

If the 5.5-hectare farmholding is deducted from the 19-hectare property of DPHE, it still has

13.5 hectares of farmland. The 5.5 hectare farmholding of the land was thus legally disposed to David et al. under the Operation Land Transfer Program.

DPHE‘s position that the 19-hectare land is not owned by the partnership but by at least twenty-three (23) partners in common each of these partners is entitled to the 7-hectare retention limit, it‘s conclusion that the aggregate area of 19 hectares is exempted likewise fails. A partnership has a juridical personality separate from the individual partners. The CA has found as a fact that DPHE is the registered owner of the land. . . . The land being then owned by a single entity, a partnership, it is among those covered by the Operation Land Transfer Program pursuant to LOI 474.

The Certificates of Land Transfer, Emancipation Patents and TCTs being void then as they are

unchallenged by both parties, it would be incongruous to apply Section 2 of P.D. No. 816. What should apply instead is Section 3 of the same law which provides that any agricultural lessee whose landholding is not yet covered by a Certificate of Land Transfer and who shall continue not to pay his lease rentals or amortization payments when they fall due for a period of two (2) years to the landowner/agricultural lessor shall, upon proper hearing and judgment, lose his right to be issued a Certificate of Land Transfer under Presidential Decree No. 27 and his farmholding;‖ Therefore, in so far as that the CA allowed David, et al. to apply for new patents and certificates, its decision is not in accordance with Section 3 of P.D. No. 816 which operates to deprive David et al. of their ―right to be issued Certificates of Land Transfer under P.D. No. 27 and their farmholding.‖ On this score, David‘s ejectment is proper.

JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION v. DANIEL

PONCE PACIFICO


Cancellation of the contract, under the law, requires that the seller should extend the buyer a grace period of at

least 60 days from the due date of the installment, and at the end of the grace period, the seller shall furnish the buyer with

a notice of cancellation or demand for rescission.

Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with Fil-Estate Marketing

Association for the purchase of a house and lot located at Paranaque, Metro Manila and paid the

reservation fee of 20,000.00. Under the Reservation Application, upon fulfillment of the 30% down


payment by Pacifico, he will sign a contract to sell with the owner and developer of the

property which is the JESTRA Development and Management Corporation (Jestra).

Pacifico run out of funds to pay for the property, and he requested to Jestra to suspend payment.

Jestra denied his request. Pacifico filed a complaint before the Housing and Land Use Regulatory Board

(HLURB) against Jestra claiming that despite his full payment of the down payment, Jestra failed to

deliver to him the property within 90 days as provided in the contract to sell dated March 6, 1997 and

Jestra instead sold the property to another buyer in October 1998.

ISSUE:

Whether or not the act of Jestra in canceling the contract to sell agreement with Pacifico is valid

HELD:

R.A. 6552 was enacted to protect buyers of real estate on installment against onerous and

oppressive conditions. In Fabrigas v. San Francisco del Monte,Inc., the court described the cancellation of the

contract under Section 4 of R.A. 6552 as a two-step process. First, the seller should extend the buyer a

grace period of at least 60 days from the due date of the installment. Second, at the end of the grace

period, the seller shall furnish the buyer with a notice of cancellation or demand for rescission through a

notarial act, effective 30 days from the buyer‘s receipt thereof.

Pacifico admits that the first installment on the 70% balance of the purchase price was due on

January 5, 1998. He issued checks for it but was dishonored due to insufficiency of funds. Pacifico was

notified of the dishonor of the checks but he took no action, hence, 60 days grace period lapsed. Pacifico

made no further payments thereafter. Instead, he requested for suspension of payment.

Also, Pacifico admits that Jestra was justified in canceling the contract to sell via the notarial

Notice of Cancellation which he received on May 13, 1998 which took effect on June 12, 1998. Thus, the

cancellation of the contract to sell of Jestra is valid.

ANN BRIGITT LEONARDO, et al. v. COURT OF APPEALS, et al. G.R. No. 125329, 10 September 2003, THIRD DIVISION (Carpio Morales, J.)

When there is a right, there is a remedy. Conversely, if there is no right, there is no remedy as every remedial right is

based on a substantive right. Petitioner Ann Brigitt Leonardo (Brigitt) is an illegitemate child of common-law-spouses Eddie B.

Fernandez and Gloria C. Leonardo. Wanting Brigitt to carry his surname, Eddie executed an affidavit and a letter which was submitted to the Local Civil Registrar asking for the change of her surname. The


Local Civil Registrar of Manila denied said request on the ground that under the family code, illegitimate children should carry their mother‘s surname. It likewise held that it does not have the authority to effect such change. Brigitt then appealed to the Civil Registrar General which also denied the request on the ground the same ground.

Undaunted, Leonardo filed a Petition for Review upon the Court of Appeals. The CA declared that an illegitimate child born after the effectivity of the Family Code can use the surname of the father but the power to effect the change lies in the Court and not with Local and Civil Registrar. Hence, this appeal.

ISSUE: Whether or not an illegitimate child born after the effectivity of the Family Code can use the surname of the father HELD: Ubi jus, ibi remedium. When there is a right, there is a remedy. Conversely, if there is no right, there is no remedy as every remedial right is based on a substantive right.

Article 176 of the Family Code provides that ―an illegitimate children shall use the surname and shall be under the parental authority of their mother, and shall be entitled to support in conformity with this Code. The legitime of each illegitimate child shall consist of one-half of the legitime of a legitimate child. The rule applies even if petitioner‘s father admits paternity.‖

The Court declared in Mossesgeld the Family Code has effectively repealed the provisions of Article 366 of the Civil Code of the Philippines giving a natural child acknowledged by both parents the right to use the surname of the father.

Since Brigitt was born an illegitimate child after the Family Code took effect, she has no right to

use her father's surname.

EVANGELINE A. LEONIN and PEPITO A. LEONIN v. COURT OF APPEALS and GERMAINE P. LEONIN


Occupants of a property by tolerance of the owner becomes deforciant occupants upon their failure to heed to the owner’s demand to vacate.

Prospero Leonin and his co-owners allowed his siblings, Evangelime and Pepito Leonil to occupy Apartment C without paying any rentals. The owners of the property mortgaged it with the Government Service Insurance System (GSIS) to secure a loan in the amount of Forty Eight Thousand Pesos (P48,000.00). They however failed to settle the said loan. As a consequence thereof, GSIS foreclosed the mortgage and the property was sold at public auction to GSIS.

Prospero‘s brother, Teofilo Leonin (Teofilo), redeemed the property, upon which GSIS executed a Release of Mortgage and turned over to him the owner‘s duplicate title. Teofilo later sold the property by Deed of Absolute Sale to his daughter, herein respondent Germaine Leonin, for Forty Eight Thousand Pesos (P48,000.00). A new Transfer Certificate of Title (TCT) No. 95939 was issued in her favor.


After her father Teofilo‘s death, Germaine sent a letter to her father‘s siblings-

herein petitioners asking them to vacate Apartment C as their occupation thereof was by mere tolerance and, at any rate, requiring them to execute a contract of lease with her. This demand remained unheeded.

ISSUE:

Whether respondent had the right to possess the property upon the execution of a deed of absolute sale and the issuance of a transfer of certificate of title in her favor HELD: Respecting the issue of whether germane has the right to possess the property upon the

execution of a deed of absolute sale and the issuance of a transfer of certificate of title in her favor, the

same must be resolved in the affirmative. It bears noting that Evangeline‘s and Pepito‘s occupation of

the property was on the mere tolerance of the former owners. Hence, when they failed to heed

Germaine's demand to vacate, they had become deforciant occupants.

LOOC BAY TIMBER INDUSTRIES, INC., v. INTESTATE ESTATES OF VICTOR

MONTECALVO AND CONCORDIA L. MONTECALVO, REPRESENTED BY DR.

VICTOR L. MONTECALVO, JR, et.al.


An essential requisite of a valid contract is the consent of the contracting parties.

Victor Montecalvo Sr. and his wife Concordia purchased a parcel of land which was leased to

petitioner Looc Bay Timber Industries, Inc. (Looc Bay). Said lease agreement will expire in 1978 but was

to be extended for another ten years as provided for in the agreement. Spouses Montecalvo and Looc

Bay subsequently forged an agreement under which latter will buy portion of the land which it presently

uses as log pond. Looc Bay paid for the consideration the balance of which to be paid on

installment.Spouses Montecalvo agreed to sell to Looc Bay‘s sister company, the Visayan Forest

Development (VFD) Corporation, portions of land adjoining the logging road of Looc Bay. Under VFD

will pay Spouses Montecalvo in consideration of which a deed of absolute sale shall be executed by the

parties.

Later, Spouses Montecalvo died. Consequently, the couple‘s heirs notified Looc Bay that they

were terminating 1978 lease agreement. Looc Bay claims that during the Victor‘s lifetime, he promised to

execute the deeds of sale corresponding to the two agreements and deliver the titles of lands subject


thereof but he failed to do so and despite repeated demands from Intestate Estates of the

Montecalvos, represented by couple‘s heirs, no documents of sale nor were copies of titles

delivered to Looc Bay.

Thus Looc Bay filed an action for specific performance with Regional Trial Court of Samar. The

RTC held that the agreements were valid but that there was no showing that the considerations in two

agreements were fully paid. On appeal, the Court of Appeals held the first agreement was fully paid but

with respect to the second agreement, CA held it as not binding since Looc Bay‘s sister company Visayan

Forest‘s representative Valeriano Bueno did not affix his signature on the agreement. Hence, Looc Bay

elevated the case to the Supreme Court for review.

ISSUE:

Whether or not CA erred in declaring the contract void and no effect for lack of consent on part

of the vendee

HELD:

An essential requisite of a valid contract is the consent of the contracting parties. Consent may

be construed to be present if the vendee also signed this second agreement. In the absence of Valeriano

Bueno's signature, the court cannot give validity to the second agreement.

In the present case, the Court finds that the trial court overlooked the fact that the November

28, 1984 Agreement was not signed by Valeriano Bueno, the representative of petitioner's Looc Bay‘s

sister company-prospective vendee. Absent such signature, petitioner Looc Bay and/or its sister

company could not have accepted the offer made by Victor to sell those "certain portions adjoining the

logging road of [petitioner] or the entirety of the said land." The agreement was thus not perfected and

therefore created or transmitted no rights.

TRISTAN LOPEZ as Attorney-in-Fact of LETICIA and

CECILIA LOPEZ v. LETICIA R. FAJARDO


A month-to-month lease under the New Civil Code is a lease with a definite period and expires after the last day

of any given thirty-day period, upon proper demand and notice by the lessor to vacate.


Leonor Sobrepena and her kins (the Sobrepenas) were the owners of a 2-door

apartment at 1326 and 1328 Tomas Mapua St., Sta. Cruz, Manila. The apartment at No.

1328 has for so many years been occupied under a verbal contract of lease Leticia Fajardo (Fajardo). The

Sobrepenas sold such property to Leticia and Cecilia Lopez (the Lopez sisters).

The Lopez sisters filed before the Metropolitan Trial Court of Manila (MeTC) a complaint for

ejectment with damages, against Fajardo on the ground of failure to pay her monthly rentals from May

1999 to February 2000. This was settled after Fajardo paid P35,000.00 representing rental in arrears and

current rental for June 2000.

Fajardo again failed and refused to pay her July and August 2000 rentals, prompting Lopez, et al.

to send her a letter informing her that they have decided to terminate their monthly lease contract

effective midnight of August 31, 2000, the very time their oral lease contract shall expire and they are

giving her a grace period of one (1) month within which to vacate the premises. Fajardo then remitted to

Lopez, et al. a check in the amount of P30,000 representing payment of the rentals in arrears for July

2000, August 2000 and September 2000, and advance rentals for October 2000 up to July 2001 but it was

not accepted by Lopez, et al.

Having no settlement, Lopez, et al. filed a new complaint for ejectment and damages against

Fajardo before the MeTC wherein it held that Lopez, et al. had sufficiently established their cause of

action arising from the expiration of the lease contract, the lease being terminable at the end of any

month after due notice, and failure of Fajardo to pay the stipulated rental which are the grounds for

ejectment under Article 1673 of the Civil Code. Such was appealed by Fajardo to the Regional Trial

Court of Manila (RTC) which affirmed in toto the decision of MeTC.

Fajardo appealed to the Court of Appeals which held that a minimum of 3-month arrearages is

required to justify a lessor to eject a lessee and held that Fajardo had incurred back rentals of only 2

months when Lopez, et al. sent her the letter of demand hence, ―the filing of the ejectment case was

premature.‖

ISSUE:

Whether or not Lopez, et al. has a valid ground for the ejectment of Fajardo

HELD:

A month-to-month lease under Article 1687 is a lease with a definite period and expires after the

last day of any given thirty-day period, upon proper demand and notice by the lessor to vacate.

Under the Rent Control Law, the prohibition against the ejectment of a lessee by his lessor is not

absolute. There are exceptions expressly provided by law, which include the expiration of a lease for a

definite period. In the instant case, it was noted that the rentals were paid on a month-to-month basis.

Thus, the lease could be validly terminated at the end of any given month upon prior notice to that effect


on the lessee. After all, when the rentals are paid monthly, the lease is deemed to be for a

definite period, i.e., it expires at the end of every month.

When Lopez, et al. then sent the August 18, 2000 letter to respondent informing her that the

lease would be terminated effective at the end of the same month, it was well within his rights.

In fine, it was error for the appellate court to ignore the fact that by the earlier-quoted August

18, 2000 letter of which was annexed as Annex "F" to the complaint, they had notified Fajardo of the

expiration of the lease contract, another legal ground for judicial ejectment.

THE MANILA BANKING CORPORATION v. SPOUSES ALFREDO AND CELESTINA

RABINA, et al.


The Housing and Land Use Regulatory Board (HLURB) has the power to regulate real estate trade and the

same include complaints for annulment f mortgage.

Marenir Development Corporation (MDC), owner/developer of a subdivision project in

Quezon City obtained a loan from the Manila Banking Corporation (MBC). To secure the payment of

such loan, it forged a real estate mortgage covering real estate properties including the lot which was

subject of a Contract to Sell to Amante Sibuyan (Sibuyan). Sibuyan transferred the lot via ―Assignment

and Transfer of Rights‖ to Celestina Rabina (Rabina), with the conformity of MDC. The said document

mentioned the Contract to Sell which MDC had executed in favor of Sibuyan.

After Rabina had fully paid the amortization payments for the lot, she asked MDC for the

transfer to her of its title. MDC, however, failed, prompting Rabina to institute a complaint for non-

delivery of titles, annulment of mortgage and incomplete development of the subdivision project

Reymarville Subdivision, against MDC before the Office of Appeals, Adjudication and Legal Affairs

(OAALA) of the Housing and Land Use Regulatory Board (HLURB). MBC contended that the HLURB

has no jurisdiction over it by virtue of Section 29 of Republic Act 265, as amended by Executive Order

No. 289.

Housing and Land Use Arbiter Cesar Manuel found in favor of the Rabina and ordered for the

payment of moral damages. Upon MBC‘s appeal, the HLURB Board of Commissioners affirmed the

Arbiter‘s decision. MBC then elevated the case to the Office of the President (OP) but the same have

been dismissed.

On elevation to the Court of Appeals, the appeal was dismissed and the CA affirmed the Orders

of the OP. Hence, this petition.

ISSUES:


Whether or not the HLURB has jurisdiction over the case at bar under

Presidential Decree 957

HELD:

The act of MDC in mortgaging the lot, without the knowledge and consent of lot Spouses

Rabina and without the approval of the HLURB, as required by P.D. 957, is not only an unsound real

estate business practice but also highly prejudicial to them.

The jurisdiction of the HLURB to regulate the real estate trade is broad enough to include

jurisdiction over complaints for annulment of mortgage. To disassociate the issue of nullity of mortgage

and lodge it separately with the liquidation court would only cause inconvenience to the parties and

would not serve the ends of speedy and inexpensive administration of justice as mandated by the laws

vesting quasi-judicial powers in the agency.

METROPOLITAN BANK AND TRUST COMPANY, et al. v. JOSE B. TAN, et al. 509 SCRA 383 (2006), THIRD DIVISION (Carpio Morales, J.)

Absent any evidence that the property is conjugal, lack of consent by one spouse does not automatically render the

mortgage void.

Upon application of the Metropolitan Bank and Trust Company (Metrobank) for extra-judicial foreclosure of mortgage, the Office of the Provincial Sheriff issued a "Sheriff‘s Notice of Sale" setting on the sale at public auction of four mortgaged parcels of land registered in the name of Jose B. Tan. Before the scheduled public auction, Spouses Jose B. Tan and Eliza Go Tan filed a complaint against Metrobank for removal of cloud on the title in question and injunction before the Regional Trial Court of Misamis Oriental.

Eliza Go Tan avers that she never gave her consent or conformity to encumber the title in question. The real estate mortgages are null and void because Jose B. Tan had already fully paid the obligations secured by the mortgages. On the other hand, Metrobank alleged that the Spouses Tan, together with their two sons, obtained a credit line from which they made availments from time to time. Consequently, the line was gradually increased.

The RTC rendered judgment in favor of Spouses Tan. Metrobank appealed before the Court of Appeals. By Decision the CA affirmed the trial court‘s decision and accordingly dismissed the appeal. A Motion for Reconsideration was filed but the same has been dismissed. Hence, this petition. ISSUE:

Whether or not the lack of respondent Eliza Go Tan‘s consent to the mortgage covering the title in question would render the encumbrance void


HELD:

As for the claim that respondent Eliza Go Tan did not give her consent to the mortgage of the title in question, the same is belied by her signature on Real Estate Mortgage which is annotated as Entry No. 174644 at the back of the title. Her bare denial that the signature was forged, without more, does not lie.

In any event, lack of respondent Eliza Go Tan‘s consent to the mortgage covering the title in question would not render the encumbrance void under the second paragraph of Article 124 of the Family Code. For proof is wanting that the property covered by the title is conjugal — that it was acquired during respondents‘ marriage which is what would give rise to the presumption that it is conjugal property. The statement in the title that the property is "registered in accordance with the provisions of Section 103 of the Property Registration Decree in the name of JOSE B. TAN, of legal age, married to Eliza Go Tan" does not prove or indicate that the property is conjugal.

The presumption under Article 116 of the Family Code that properties acquired during the marriage are presumed to be conjugal cannot apply in the instant case. Before such presumption can apply, it must first be established that the property was in fact acquired during the marriage. In other words, proof of acquisition during the marriage is a condition sine qua non for the operation of the presumption in favor of conjugal ownership. No such proof was offered nor presented in the case at bar.

NORTHWEST AIRLINES v. DELFIN S. CATAPANG


Any discourteous conduct on the part of the carrier’s employees toward a passenger gives the latter an action for

damages against the carrier.

Delfin S. Catapang requested First United Travel, Inc. (FUT) to issue in his favor a ticket that

would allow rebooking or rerouting of flights within the United States. FUT informed him that

Northwest Airlines, Inc. (Northwest) was willing to accommodate his request provided that he will pay

an additional US$50 for every rebooking or rerouting of flight. Catapang agreed with the condition.

Upon Catapang‘s arrival in New York, he called up Northwest‘s office, which informed him that

his ticket was not ―rebookable or reroutable.‖ He thus proceeded to Northwest‘s nearest ticketing office

where he was treated in a rude manner by an employee who informed him that his ticket was not

rebookable or reroutable. He was further informed that his ticket was of a ―restricted type,‖ and he could

not rebook unless he pays US644.00. Catapang paid that amount for rebooking.

Catapang, upon his return, filed with RTC of Makati a complaint for damages against

Northwest. The RTC ruled that Northwest was liable for breach of contract of carriage. On appeal, the

Court of Appeals, affirmed the trial court‘s Decision.

ISSUES:


Whether or not Northwest was right to assail the award to Catapang of moral and

exemplary damages by virtue of breach of contract

HELD:

When Catapang inquired from Northwest‘s agent FUT if he would be allowed to

rebook/reroute his flight, FUT advised him that he could, on the condition that he would pay $50 for

every rebooking. He was not told by FUT and the ticket did not reflect it that the ticket being issued to

him was a "restricted type" to call for its upgrading before a rebooking/rerouting

Northwest‘s breach in this case was aggravated by the undenied treatment received by Catapang

when he tried to rebook his ticket. Instead of civilly informing Catapang that his ticket could not be

rebooked, Northwst‘s agent in New York exhibited rudeness in the presence of Catapang‘s brother-in-

law and other customers, insulting Catapang by telling him that he could not understand English.

Passengers have the right to be treated by a carrier‘s employees with kindness, respect, courtesy

and due consideration. They are entitled to be protected against personal misconduct, injurious language,

indignities and abuses from such employees. So it is that any discourteous conduct on the part of these

employees toward a passenger gives the latter an action for damages against the carrier.

SPOUSES MARIO ONG AND MARIA CARMELITA ONG and DEMETRIO VERZANO v.

SPOUSES ERGELIA OLASIMAN and LEONARDO OLASIMAN


The issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and

the purchaser is buying the same from the registered owner whose title to the land is clean in such case the purchaser who

relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value.

Paula Verzano sold an unregistered parcel of land covered by Tax Declaration No. 18-270-A 1 in

her name to her niece Bernandita Verzano-Matugas (Bernandita). Bernandita subsequently sold the same

to Spouses Ergelia nd Leonardo Olasiman. Paula thereafter died without an issue and was survived by

her sibling Demetrio Verzano, Victoria Verzano, and the children of her deceased brother Isebero

Verzano, namely Isebero Verzano, Jr. Epifanio Verzano, Bernandita and Estrella Verzano.

Demetrio executed a document entitled ―Extrajudicial Settlement by Sole Heir and Sale‖ where

he adjudicated to himself the subject property. He likewise sold the same to Spouses Carmelita Ong and

Mario Ong.


Spouses Olasiman filed a Complaint against Spouses Ong and Demetrio for

annulment of the ―Extrajudicial Settlement by Sole Heir and Sale,‖ quiet of title and

damages before the Regional Trial Court of Dumaguete City.

The Regional Trial Court dismissed the complaint. On appeal, the Court of Appeals reversed the

dismissal and ruled that the ―Extrajudicial Settlement by Sole Heir and Sale‖ as null and void.

Consequently, it likewise declared that the sale in favor of Spouses Ong is null and void.

ISSUE:

Whether or not the ownership over the parcel of land, by virtue of the ―Extrajudicial Settlement

by Sole Heir and Sale‖, is transferred to Spouses Ong

HELD:

When Paula sold to Bernandita by Deed of Absolute Sale dated June 1, 1992 the parcel of land

of which the questioned lot formed part, ownership thereof was transferred to the latter in accordance

with Article 1496 of the Civil Code which provides that the ownership of the thing sold is acquired by

the vendee from the moment it is delivered to him in any of the ways specified in articles 1497 to 1501,

or in any other manner signifying an agreement that the possession is transferred from the vendor to the

vendee.

The Deed of Absolute Sale in favor of Bernandita contains nothing contrary to an intent to

transfer ownership.

When Paula died on November 26, 1992, she no longer owned the questioned lot and, therefore,

her brother Demetrio could not have inherited it. The ―Extrajudicial Settlement by Sole Heir and Sale‖

did not thus confer upon Demetrio ownership of the questioned lot; hence, he could not have conveyed

it to Spouses Ong.

The issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is

registered land and the purchaser is buying the same from the registered owner whose title to the land is

clean in such case the purchaser who relies on the clean title of the registered owner is protected if he is

a purchaser in good faith for value. Since the properties in question are unregistered lands, Spouses Ong

as subsequent buyers thereof did so at their peril. Their claim of having bought the land in good faith,

i.e., without notice that some other person has a right to or interest in the property, would not protect

them if it turns out, as it actually did in this case, that their seller did not own the property at the time of

the sale.

SPOUSES WILFREDO N. ONG AND EDNA SHEILA PAGUIO-ONG

v. ROBAN LENDING CORPORATION



In a true dacion en pago, the assignment of the property extinguishes the monetary debt.

On various dates, petitioner Spouses Wilfredo N. Ong and Edna Sheila Paguio-Ong obtained

several loans from respondent Roban Lending Corporation in the total amount of P4, 000,000. These

loans were secured by real estate mortgage on Spouses Ong‘s parcel of lands.

Later Spouses Ong and Roban executed several agreements - an amendment to the amended

Real Estate Mortgage which consolidated their loans amounting to P5, 916,117.50; dacion in payment

wherein spouses Ong assigned their mortgaged properties to Roban to settle their total obligation and

Memorandum of Agreement (MOA) in which the dacion in payment agreement will be automatically

enforced in case spouses Ong fail to pay within one year from the execution of the agreement.

Spouses Ong filed a complaint before Regional Trial Court of Tarlac City to declare the

mortgage contract, dacion in payment agreement, and MOA void. Spouses Ong allege that the dacion in

payment agreement is pactum commissorium, and therefore void. In its Answer with counterclaim, Roban

alleged that the dacion in payment agreement is valid because it is a special form of payment recognized

under Article 1245 of the Civil Code. RTC ruled in favor of Roban, finding that there was no pactum

commissorium. The Court of Appeals upheld the RTC decision.

ISSUE:

Whether or not the dacion in payment agreement entered into by Spouses Ong and Roban

constitutes pactum commissorium

HELD:

The Court finds that the Memorandum of Agreement and Dacion in Payment constitute pactum

commissorium, which is prohibited under Article 2088 of the Civil Code which provides that the creditor

cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation

to the contrary is null and void

The elements of pactum commissorium, which enables the mortgagee to acquire ownership of the

mortgaged property without the need of any foreclosure proceedings, are: (1) there should be a property

mortgaged by way of security for the payment of the principal obligation, and (2) there should be a

stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of

the principal obligation within the stipulated period.

Here, Memorandum of Agreement and the Dacion in Payment contain no provisions for

foreclosure proceedings nor redemption. Under the Memorandum of Agreement, the failure by the


petitioners to pay their debt within the one-year period gives respondent the right to

enforce the Dacion in Payment transferring to it ownership of the properties covered by

TCT No. 297840. Respondent, in effect, automatically acquires ownership of the properties upon

Spouses Ong's failure to pay their debt within the stipulated period.

In a true dacion en pago, the assignment of the property extinguishes the monetary debt.

Here, the alienation of the properties was by way of security, and not by way of satisfying the

debt. The Dacion in Payment did not extinguish Spouses Ong's obligation to Roban. On the contrary,

under the Memorandum of Agreement executed on the same day as the Dacion in Payment, petitioners

had to execute a promissory note for P5, 916, 117.50 which they were to pay within one year

EDMUNDO T. OSEA, et al. v. ANTONIO G. AMBROSIO, et al.


The doctrine of primary administrative jurisdiction provides that courts cannot or will not determine a controversy

where the issues call for the exercise of sound administrative discretion.

The Contract to Sell executed by spouses Edmundo T. Osea and Ligaya R. Osea and respondent Antonio

Ambrosio, involves the sale and purchase of a ―house and lot unit‖ in Villa San Agustin Subdivision, a low-

cost housing and lot project. Even after signing the Deed of Sale on the lot, Spouses Osea stipulated that the

house would be constructed in accordance with, inter alia, the terms of the Contract to Sell, wherein

respondent Ambrosio contracted his co-respondent Rodolfo C. Perez to construct the Spouses Osea‘s house

in accordance with the Specifications in the Contract to Sell, the Bill of Materials, and Approved Building

Plan by the Building Official of Quezon City.

Ligaya Osea executed a Certificate of Lot and House Acceptance and thereafter occupied it. A month after occupying the house, its front and back walls cracked. Spouses Osea filed a complaint for damages against respondents Ambrosio and Perez before the Regional Trial Court of Quezon City.

Respondent questioned the jurisdiction of the RTC over the complaint for damages, contending that it is within the exclusive jurisdiction of the Housing and Land Use Regulatory Board (HLURB).

ISSUE:

Whether or not RTC has jurisdiction over the complaint damages based on the violation or deviation

from the approved subdivision plan

HELD:


The Court of Appeals, by Decision which is being challenged in the present petition

for review on certiorari, declared null and void the trial court‘s Decision for lack of jurisdiction

as it is the Housing and Land Use Regulatory Board (HLURB) which has jurisdiction over the complaint.

The appellate court did not thus err when it characterized petitioners complaint for damages as based

on the violation or deviation from the ―approved subdivision plan‖. ―Sale‖ and ―purchase‖ of subdivision

lots under P.D. 957 explicitly include the sale and purchase of buildings and other improvements thereon

which form an integral part of the approved subdivision plan.

The extent to which the HLURB has been vested with quasi-judicial authority must also be

determined by referring to the terms of P.D. No. 957, ―THE SUBDIVISION AND CONDOMINIUM

BUYERS' PROTECTIVE DECREE.‖ Section 3 of this statute provides the HLUB has the exclusive

jurisdiction to regulate the real estate trade and business in accordance with the provisions of this Decree.

JESUS PASCO et al. v. PISON-ARCEO AGRICULTURAL AND DEVELOPMENT CORPORATION


Under the Comprehensive Agrarian Reform Law, ownership of the land is transferred only after the award of the same to the beneficiary by the Department of Agrarian Reform.

Pison-Arceo Agricultural and Development Corporation, is the registered owner of a parcel of land in Negros Occidental. Constructed on the said land are houses occupied by the corporation‘s workers. Jesus Pasco et al. are former workers of the corporation. When their employment contracts were terminated, they were asked to vacate the house but they refused to do so. The corporation thereafter filed a complaint for unlawful detainer before the Metropolitan Trial Court in Cities in Bacolod City. The trial court rendered judgment in favor of Pasco et al. On appeal, the Regional Trial Court affirmed the decision. Pasco et al. appealed the decision contending that the court has no jurisdiction over the case on the ground of a pending agrarian reform dispute between them and the corporation.

The Court of Appeals rendered a decision which affirmed the RTC‘s decision.

ISSUE:

Whether or not one who has been identified by the Department of Agrarian Reform (DAR) as

potential agrarian reform beneficiary may be ejected from the land where he is identified as such, by the

landowner, who has already been notified by the DAR of the coverage of his land by the Comprehensive

Agrarian Reform Program of the government

HELD:

The issuance during the pendency of the case of a Notice of Coverage to Pison-Arceo Agricultural and Development Corporation does not, however, automatically make the ejectment case an


agrarian dispute over which the Department of Agrarian Reform Adjudication Board (DARAB) has jurisdiction. The issuance of a Notice of Coverage is merely a preliminary step for the State‘s acquisition of the land for agrarian reform purposes and it does not automatically vest title or transfer the ownership of the land to the government.

Since during a field investigation the DAR and Land Bank of the Philippines would make a determination as to whether, among other things, "the land will be placed under agrarian reform, the land‘s suitability to agriculture," a Notice of Coverage does not ipso facto render the land subject thereof a land reform area. The owner retains its right to eject unlawful possessors of his land, as what respondent Pison- Arceo Agricultural and Development Corporation did in the present case. Nothing in the records of the case shows that the DAR has made an award in favor of Spouses Pasco et al. Hence, no rights over the land they occupy can be considered to have vested in their favor in accordance with Section 24 of the CARL which provides that the rights and responsibilities of the beneficiary shall commence from the time the DAR makes an award of the land to him, which award shall be completed within one hundred eighty (180) days from the time the DAR takes actual possession of the land.

REPUBLIC OF THE PHILIPPINES v. LYNNETTE CABANTUG-BAGUIO


Psychological incapacity must be characterized by utter insensitivity or inability to give meaning and significance to

the marriage.

Respondent Lynnette Baguio (Lynnette) and Martini Baguio (Martini), a seaman working

overseas, got married in 1997. The couple lived at Lynette‘s parents. Martini stayed there only on

weekends and during weekdays, he stayed with his parents. Because of this, Lynette suggested that they

lived with Martini‘s parents but the later disagreed.

Lynette later on noticed that every time the two of them talk, Martini would always mention his

mother and his family. She therafter realized that Martini was a ―mama‘s boy.‖ On Martini‘s mother

insistence, Martini‘s money was equally divided between her and Lynette. In 1999, when Martini

returned from work, he stayed with his parents. Since then, Lynette had not heard from Martini and

stopped receiving her share of the allotment, drawing her to inquire from Martini's employer who told

her that he had already disembarked. Lynette soon found out that he was in Muntinlupa.

When Lynette and Martini finally met, he informed her that they should part ways. The last time

the two of them talked was at the airport when Martini was about to depart for abroad. Since then,

Martini never communicated with Lynnette. On investigation, Lynnette learned that Martini declared in

his employment records that he is "single" and named his mother as principal allottee. Hence, Lynette

filed before Regional Trial Court of Cebu a Complaint for the Declaration of Nullity of Marriage on the

ground of Martini‘s psychological incapacity to comply with essential marital duties and obligations

under Articles 68-70 of the Family Code. The RTC found that Martini‘s being ―mama‘s boy‖ manifests


his psychologically incapacity to comply with the essential marital obligations of marriage,

and that the same incapacity existed at the time the couple exchanged their marriage vows.

The Solicitor General challenged the RTC‘s decision before the Court of Appeals. The CA held

that Lynette‘s oral deposition and the Psychological Evaluation Report of Dr. Gerong, a clinical

psychologist, declaring Martini‘s psychological incapacity was sufficient proof that indeed Martini suffers

psychological incapacity.

ISSUE:

Whether or not CA erred in declaring the marriage between Lynette and Martini null and void

on the ground of latter‘s psychological incapacity

HELD:

Article 36 of the Family Code on which Lynnette anchors her complaint provides that "[a]

marriage contracted by any party who, at the time of the celebration, was psychologically incapacitated to

comply with the essential marital obligations of marriage, shall likewise be void even if such incapacity

becomes manifest only after its solemnization."

Article 36 must be read in conjunction with the other articles in the Family Code, specifically

Articles 35, 37, 38, and 41 which provide different grounds to render a marriage void ab initio, as well as

Article 45 which dwell on voidable marriages, and Article 55 on legal separation. Care must be observed

so that these various circumstances are not to be applied indiscriminately as if the law were indifferent

on the matter. And Article 36 should not be confused with a divorce law that cuts the marital bond at

the time the causes therefore manifest themselves, nor with legal separation in which the grounds need

not be rooted in psychological incapacity but on physical violence, moral pressure, moral corruption,

civil interdiction, drug addiction, habitual alcoholism, sexual infidelity, abandonment, and the like.

"Psychological incapacity" has been elucidated on as follows: The term "psychological incapacity"

to be a ground for the nullity of marriage under Article 36 of the Family Code, refers to a serious

psychological illness afflicting a party even before the celebration of the marriage. It is a malady so grave

and so permanent as to deprive one of awareness of the duties and responsibilities of the matrimonial

bond one is about to assume. As all people may have certain quirks and idiosyncrasies, or isolated

characteristics associated with certain personality disorders, there is hardly a doubt that the intendment

of the law has been to confine the meaning of "psychological incapacity" to the most serious cases of

personality disorders clearly demonstrative of an utter insensitivity or inability to give meaning and

significance to the marriage. The root cause must be identified as a psychological illness, and its

incapacitating nature must be fully explained the mere showing of "irreconcilable differences" and

"conflicting personalities" does not constitute psychological incapacity nor does failure of the parties to

meet their responsibilities and duties as married persons. It is essential that the parties to a marriage


must be shown to be insensitive to or incapable of meeting their duties and responsibilities

due to some psychological (not physical) illness, which insensitivity or incapacity should

have been existing at the time of the celebration of the marriage even if it becomes manifest only after its

solemnization.

Here, Dr. Gerong found that Martini's "personality disorders" including his being a "mama's

boy" are "serious, grave, existing already during the adolescent period and incurable" and concluded that

Martini "appeared" to be dependent upon his family and unable "to establish a domicile for his family

and to support his family."

The doctor's findings and conclusion were derived from his interview of Lynnette and her sister

and Lynnette's deposition. From Lynnette's deposition, however, it is gathered that Martini's failure to

establish a common life with her stems from his refusal, not incapacity, to do so. It is downright

incapacity, not refusal or neglect or difficulty, much less ill will,which renders a marriage void on the

ground of psychological incapacity. In another vein, how the doctor arrived at the conclusion, after

interviewing Lynnette and considering her deposition, that any such personality disorders of Martini

have been existing since Martini's adolescent years has not been explained.

REPUBLIC OF THE PHILIPPINES v. MARIA ISABEL LAUREL BARANDIARAN 538 SCRA 705, 23 November 2007, SECOND DIVISION, (Carpio Morales, J.)

The person applying for the registration of the land has the burden of proof to overcome the presumption of the

State’s ownership over lands of public domain by incontrovertible evidence.

Respondent Maria Isabel Laurel Barandiaran (Barandiaran) filed an application for registration of a parcel of land (Land) before the Municipal Trial Court of Tanauan, Batangas (MTC). Only petitioner Republic of the Philippines (RP) opposed the said application on the ground that the land belongs to them, it being a portion of the public domain and that Barandiaran or her predecessors-in-interest had not been in open, continuous, exclusive and notorious possession or occupation thereof.

Barandiaran testified that she and her siblings became interested in the land and upon asking

from the people within the vicinity of the land and from the Assessor‘s Office of Tanauan, they found out that the land was registered in the name of a certain Isadora Gonzales (Gonzales). Barandiaran and her siblings bought the land from the heirs of Gonzales and the land was subsequently declared under Barandiaran‘s name for taxation purposes. MTC declared that the land is registrable under Barandiaran‘s name. The Court of Appeals affirmed the lower court‘s decision. Hence, this petition.

ISSUE:

Whether or not ownership of the property has been sufficiently established by Barandiaran

HELD:

The burden of proof to overcome the presumption of state ownership of lands of the public

domain lies on the person applying for registration. The evidence to overcome the presumption must be ―well-nigh incontrovertible. The Declaration of Real Property in Gonzales‘ name, does not prove


ownership of the land. It is settled that tax receipts and declarations of ownership for tax purposes are ―not incontrovertible evidence of ownership; they only become evidence of ownership acquired by prescription when accompanied by proof of actual possession of the property.‖ No such proof of actual possession of the property was presented.

As for the notation on the subdivision plan of the lot stating that ―the survey is inside alienable

and disposable area,‖ the same does not constitute proof that the lot is alienable and disposable. So Republic v. Tri-Plus Corporation instructs: ―To prove that the land subject of an application for registration is alienable, an applicant must establish the existence of a positive act of the government such as a presidential proclamation or an executive order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute.‖

MONICO SAN DIEGO v. EUFROCINIO EVANGELISTA


The contract, as well as contemporaneous and subsequent acts of the parties, is used to determine the nature of the

relationship of the parties.

Monico San Diego has been an agricultural tenant in a parcel of land owned by Andres

Evangelista. After Andres Evangelista died, his son Eufrocinio Evangelista inherited the property which

part of it was planted with rice and the remaining with bamboo.

San Diego filed a complaint before the Department of Agrarian Reform Adjudication Board

(DARAB) against Evangelista for maintenance of peaceful possession, enjoyment, and damages with

respect to the bambooland portion of the property. Evangelista countered that San Diego is a tenant

only with respect to the riceland portion of the property, the bambooland portion not being tenanted.

The DARAB held in favor of San Diego but the Court of Appeals reversed the DARAB

decision citing Monsanto v. Zerna where the Supreme Court laid down the elements of a tenancy

relationship. Following the guidelines set forth in Monsanto, the Agricultural Leasehold Contract of San

Diego with the late Andres Evangelista excluded the bamboo land area, for the simple reason that

requisites of ―personal cultivation on the part of the tenant or lessee‖ and ―harvest sharing between the

landowner and the tenant or lessee." are wanting in the instant case. Moreover, the annual payment of

lease clearly showed that the said payments correspond only to the yield of rice over the portion of

riceland and not on the disputed bamboo land.

ISSUE:

Whether or not San Diego has a right over the bamboo portion of the land for allegedly being

part of the leased property


HELD:

The contract relied upon by San Diego is clearly worded. It provides that "an agricultural

leasehold relation . . . is . . . created . . . on a farm lot which is a portion of a parcel of land." Art. 1370 of

the New Civil Code which provides that if the terms of the contract are clear and leave no doubt upon

the intention of the contracting parties, the literal meaning of its stipulations shall control, thus applies.

Acts contemporaneous and subsequent to the execution of the contract show that the parties

intended to establish a tenancy relationship only as regards the rice-planted portion of the property.

Thus, petitioner has been paying rentals in palay, not in bamboo.

Neither does San Diego's suggestion that there was a prevailing custom entitling landlords to a

share of 10 cavans of palay per hectare lie, it not having been proven in accordance with Article 12 of the

New Civil Code which provides: A custom must be proved as a fact, according to the rules of evidence.

The evidence proffered by Evangelista on the other hand abundantly shows that the

bambooland portion of the property has always been untenanted, which evidence has not been

controverted by petitioner.

In fine, the contract, as well as the acts of both San Diego and Evangelista contemporaneous

and subsequent to the execution thereof, shows that the parties established a tenancy relationship only

with respect to the riceland portion of the property.

A.F. SANCHEZ BROKERAGE INC., v. THE HON. COURT OF APPEALS and FGU INSURANCE CORPORATION

447 SCRA 427 (2004), THIRD DIVISION (Carpio Morales, J.) A common carrier is liable to the resulting damage to the goods if the improper packaging is known to the carrier

or his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception. Respondent FGU Insurance Corporation (FGU) brought an action for reimbursement against petitioner A.F. Sanchez Brokerage Inc. (Sanchez Brokerage) to collect the amount paid by the former to Wyeth-Suaco Laboratories Inc. (Wyeth-Suaco) as insurance payment for the goods delivered in bad condition. A.F. Brokerage refused to admit liability for the damaged goods which it delivered from Philippines Skylanders, Inc. (PSI) to Wyeth-Suaco as it maintained that the damage was due to improper and insufficient export packaging, discovered when the sealed containers were opened outside the PSI warehouse. The Regional Trial Court of Makati dismissed the said complaint; however, the decision was subsequently reversed and set aside by the Court of Appeals, finding that Sanchez Brokerage is liable for the carriage of cargo as a ―common carrier‖ by definition of the New Civil Code. ISSUE:


Whether or not the FGU Insurance is liable for the delivery of the damaged goods HELD: As defined under Article 1732 of the Civil Code, common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both by land, water or air for compensation, offering their services to the public. It does not distinguish between one whose principal business activity is the carrying of goods and one who does such carrying only as an ancillary activity. The contention therefore of Sanchez Brokerage that it is not a common carrier but a customs broker whose principal function is to prepare the correct customs declaration and proper shipping documents as required by law is bereft of merit. It suffices that petitioner undertakes to deliver the goods for pecuniary consideration. In this light, Sanchez Brokerage as a common carrier is mandated to observe, under Article 1733 of the Civil Code, extraordinary diligence in the vigilance over the goods it transports according to all the circumstances of each case. In the event that the goods are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted negligently, unless it proves that it observed extraordinary diligence.

The concept of ―extra-ordinary diligence‖ was explained in Compania Maritima v. Court of Appeals. The extraordinary diligence in the vigilance over the goods tendered for shipment requires the common carrier to know and to follow the required precaution for avoiding damage to or destruction of the goods entrusted to it for sale, carriage and delivery. It requires common carriers to render service with the greatest skill and foresight and ―to use all reasonable means to ascertain the nature and characteristics of goods tendered for shipment and to exercise due care in the handling and storage including such methods as their nature requires.

It was established that Sanchez Brokerage received the cargoes from the PSI warehouse in good order and condition and that upon delivery by petitioner some of the cargoes were found to be in bad order as noted in the Delivery Receipt and as indicated in the Survey and Destruction Report.

While paragraph no. 4 of Article 1734 of the Civil Code exempts a common carrier from liability

if the loss or damage is due to the character of the goods or defects in the packaging or in the containers, the rule is that if the improper packaging is known to the carrier or his employees or is apparent upon ordinary observation, but he nevertheless accepts the same without protest or exception notwithstanding such condition, he is not relieved of liability for the resulting damage. If the claim of Sanchez Brokerage that some of the cartons were already damaged upon delivery to it were true, then it should naturally have received the cargo under protest or with reservation duly noted on the receipt issued by PSI but it made no such protest or reservation.

SCHMITZ TRANSPORT & BROKERAGE CORPORATION v. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.


A common carrier shall exercise extraordinary diligence to prevent and/or minize the loss or destruction of goods.


SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V ―Alexander Saveliev‖ (a vessel of Russian registry and owned by respondent Black Sea) 545 hot rolled steel sheets. The vessel arrived at the port of Manila and the Philippine Ports Authority (PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor. Petitioner Schmitz Transport, engaged to secure the requisite clearances, to receive the cargoes from the shipside, and to deliver them to Little Giant Steelpipe Corporation‘s warehouse at Cainta, Rizal. It likewise engaged the services of respondent Transport Venture Inc. (TVI) to send a barge and tugboat at shipside.

The tugboat, after positioning the barge alongside the vessel, left and returned to the port

terminal. Later on, arrastre operator commenced to unload 37 of the 545 coils from the vessel unto the barge. By noon the next day, during which the weather condition had become inclement due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished. However, there was no tugboat that pulled the barge back to the pier. Eventually, because of the strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge capsized, washing the 37 coils into the sea. Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI and Black Sea through its representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorney‘s fees, and litigation expenses. Industrial Insurance won and the Schmitz et al.’s motion for reconsideration is denied.

In effect, Schmitz now filed charges against TVI et al. It asserts that in chartering the barge and

tugboat of TVI, it was acting for its principal, consignee Little Giant, hence, the transportation contract was by and between Little Giant and TVI. The Court rendered a decision holding Schmitz and TVI liable.

ISSUES: Whether or not the liability for the loss may attach to Black Sea, Schmitz and TVI HELD:

TVI‘s failure to promptly provide a tugboat did not only increase the risk that might have been reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable number of hours, at such a precarious time, and in the open sea, knowing that the barge does not have any power of its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore, the members of the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.

As for Schmitz, for it to be relieved of liability, it should, following Article 1739 of the Civil Code, prove that it exercised due diligence to prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the loss of the goods.

While Schmitz sent checkers and a supervisor on board the vessel to counter-check the operations of TVI, it failed to take all available and reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea conditions, it should have summoned the same or another tugboat to extend help, but it did not.


The Court holds then that Schmitz and TVI are solidarily liable for the loss of the

cargoes. As for Black Sea, its duty as a common carrier extended only from the time the goods were surrendered or unconditionally placed in its possession and received for transportation until they were delivered actually or constructively to consignee Little Giant

Parties to a contract of carriage may, however, agree upon a definition of delivery that extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the shipment provides that delivery be made ―to the port of discharge or so near thereto as she may safely get, always afloat.‖ The delivery of the goods to the consignee was not from ―pier to pier‖ but from the shipside of ―M/V Alexander Saveliev‖ and into barges, for which reason the consignee contracted the services of petitioner. Since Black Sea had constructively delivered the cargoes to Little Giant, through Schmitz, it had discharged its duty.

In fine, no liability may thus attach to Black Sea.

SIAIN ENTERPRISES, INC. v. F.F. CRUZ & CO., INC. 500 SCRA 406 (2006), THIRD DIVISION (Carpio-Morales, J.)

That the foreshore area had been reclaimed does not remove it from its classification of foreshore area subject to the preferential right to lease of the littoral owner.

Western Visayas Industrial Corporation (WESVICO) filed a foreshore lease application over the foreshore land adjacent to certain lots registered in its name. It eventually withdrew the application and filed a petition for registration over the same foreshore land with the then Court of First Instance of Iloilo. The case was, however, archived as WESVICO‘s representative could no longer be contacted, and later on, WESVICO has ceased operations.

F.F. Cruz & Co. (F.F. Cruz) filed with the Bureau of Lands, Iloilo City a foreshore lease application over a foreshore land, a portion of which is adjacent to the lot previously occupied by WESVICO. Sian Enterprises Inc. (SIAIN) purchased the properties previously owned by WESVICO from the Development Bank of the Philippines. It subsequently filed a foreshore lease application over the foreshore land adjacent to the properties it bought from DBP.

Upon learning that 130 linear meters of the foreshore land subject of F.F. Cruz's foreshore lease

application overlapped that covered by its foreshore lease application, SIAIN filed a protest 8 alleging

that it being the owner of the property adjoining the overlapping area, it should be given preference in its

lease.

F.F. Cruz, argued that SIAIN must not be given preferential right since the area in dispute is classified as ―reclaimed‖ and that the ownership was not by means of accretion. This argument has been sustained by the Land Management Bureau.

Upon appeal to the DENR Secretary, SIAIN was upheld, declaring that there was no basis to declare the area as ―reclaimed‖. F.F. Cruz however appealed to the Office of the President which overturned the decision of the DENR Secretary and found that the area is reclaimed. On appeal, the Court of Appeals affirmed the decision. Hence, the present petition. SIAIN contends that the evidence overwhelmingly proves that the disputed area is foreshore land and not reclaimed land which thus entitles it preferential rights over the


ISSUES: Whether the disputed land is a ―foreshore‖ or ―reclaimed‖ area

HELD: That the foreshore area had been reclaimed does not remove it from its classification of foreshore area subject to the preferential right to lease of the littoral owner.

It bears noting that it was not the reclamation that brought the disputed foreshore area into existence. Such foreshore area existed even before F.F. Cruz undertook its reclamation. It was ―formed by accretions or alluvial deposits due to the action of the sea.‖ Following Santulan, the littoral owner has preferential right to lease the same. Contrary to the ruling of the Office of the President, as affirmed by the appellate court, littoral owner WESVICO cannot be considered to have waived or abandoned its preferential right to lease the disputed area when it subsequently filed an application for registration thereover. For being a part of the public domain, ownership of the area could not be acquired by WESVICO. Its preferential right remained, however. Its move to have the contested land titled in its name, albeit a faux pas, in fact more than proves its interest to utilize it. As correctly argued by SIAIN, were WESVICO‘s petition for registration which, as stated earlier, was archived by the trial court, pursued but eventually denied, WESVICO would not have been barred from filing anew a foreshore lease application. Parenthetically, the petition for registration of WESVICO was archived not on account of lack of interest but because it ceased operations due to financial reasons.

SPOUSES BENJAMIN and AGRIFINA SIM v. M.B. FINANCE CORPORATION 508 SCRA 556 (2006), THIRD DIVISION (Carpio Morales, J.)

In the absence of an agreement, the mere fact that the creditor is entitled to the proceeds of the insurance policy does not release the debtor from his responsibility. Such a situation does not constitute novation.

Spouses Benjamin and Agrifina Sim purchased a motor vehicle from Angus Motors Corporation (Angus) on installment basis. To secure the obligation, they executed a chattel mortgage over the vehicle which is insured with the Commonwealth Insurance Company (CIC) and a promissory note in favor of Angus. The latter then assigned its rights, title and interest to M.B. Finance Corporation (MBC). Spouses Sim defaulted in paying the monthly installments. The vehicle was carnapped and was not recovered, prompting them to file an insurance claim with the CIC making MBC as the beneficiary thereof. M.B. Finance then filed a complaint against Spouses Sim for sum of money with damages before the Regional Trial Court of Makati. The trial court discredited Spouses Sim‘s claim that the payment of the proceeds of the insurance policy for the loss of the vehicle extinguished their obligation.

On appeal, Spouses Sim argued that the insurance contract novated their obligation which should be computed on the basis of the principal amount. The appellate court, however, held that there was no novation.


ISSUE: Whether or not the appellate court erred when it failed to release Spouses Sim from liability to the M.B. Finance on the ground that the contract between the parties has not been novated HELD:

In the absence of an agreement, the mere fact that M.B. Finance is entitled to the proceeds of the insurance policy issued by CIC does not release spouses Sim from their responsibility. Such a situation does not constitute novation.

Novation may either be extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. An extinctive novation results 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. Under this mode, novation would have dual functions ─ one to extinguish an existing obligation, the other to substitute a new one in its place ─ requiring a conflux of four essential requisites: (1) a previous valid obligation; (2) an agreement of all parties concerned to a new contract; (3) the extinguishment of the old obligation; and (4) the birth of a valid new obligation.

In this case, there is no new or old contract to speak of since all agreements were apparently executed simultaneously, or on or about the same time. Furthermore, the insurance agreement was between Benjamin L. Sim, respondent and CIC as the insured, beneficiary and the insurer, respectively. There was no reference to said promissory note. Clearly, the insurance policy was not intended to substitute the promissory note.

SOUTHEAST ASIA SHIPPING CORPORATION v. SEAGULL MARITIME CORP. and

COURT OF APPEALS


When the terms of the contract are clear and unambiguous, the literal meaning shall stand.

Philimare Shipping and Equipment Supply (Philimare), manning agent in the Philippines of

Navales Shipmanagement and Marine Consulting Pte, Ltd. of Singapore (Navales) which was acting for

and on behalf of Turtle Bay Shipping Pte, Ltd of Singapore (Turtle), hired Nerry Balatogan to work

aboard the vessel Turtle Bay. Navales subsequently appointed Seagull Maritime Corporation(Seagull) as

its manning agent in the Philippines and assumed full responsibility for all seaman deployed by

Philimare. Balatogan met an accident in Egypt and was found to be permanently disabled. He thereafter

filed a claim before the Philippine Overseas Employment Administration (POEA) for the payment of

his insurance from Philimare and Seagull. The POEA rendered judgment in favor of Balatongan. On

appeal, the NLRC affirmed the decision of the POES. The same decision was upheld by the Supreme

Court.


However, before the promulgation of the Supreme Court of the earlier decision,

Navales ―on behalf of Arawa Bay Shipping Corporation Pte Ltd. Of Singapore” and Southeast Asia

Shipping Corporation(Seascorp) enterd into a manning agency agreement wherein Navales appointed

Seascorp as recruiting agent of Filipino seamen. It was stated in the affidavit and special power of

attorney that Seascorp will assume all liabilities that may arise with respect to all seamen recruited and

deployed by Seagull for Navales. On the basis of the agreement, Seagull filed a complaint before the

Regional Trial Court against Seascorp for the recovery of the amount paid by them to Balatogan. The

RTC rendered judgment in favor of Seagull. On appeal, the Court of Appeals affirmed the trial court‘s

decision.

ISSUE:

Whether or not Seascorp is liable to Seagull‘s claim solely on the basis of the agreement executed

by Seascorp and Navales prior to the rendition of judgment by the Supreme Court

HELD:

As stated earlier, Seagull was the manning agent of Navales which was acting for and behalf of

Tutle Bay Shipping. Upon the other hand, Seascorp was the manning agent of Navales which was acting

for and on behalf of Arawa Bay Shipping.

SEASCORP could only have referred to liabilities that may arise or have arisen with respect to

seamen it recruited and deployed for NAVALES ―acting for and on behalf of ARAWA BAY SHIPPING”.

There is no doubt that the general rule is that when the terms of a contract are clear and

unambiguous about the intention of the contracting parties, the literal meaning of its stipulation shall

control. That is the mandate of Article 1370 of the Civil Code.

The Manning Agency Agreement clearly states that Navales, ‖acting for and in behalf of Arawa Bay

Shipping, appointed Seascrp as its recruitment agent for the hiring of Filipino seaman. The same Manning

Agency Agreement states that it shall incorporate the Special Power of Attorney executed by Navales for the purpose

in favor of Seascorp. Reference then to the Special Power of Attorney is likewise in order. The Special

Power of Attorney just as clearly stated that Navales, ―acting for and in behalf of Arawa Bay Shipping,” named,

constituted and appointed Seascorp as its attorney-in-fact. To disregard the Manning Agency Agreement

and the Special Power of Attorney in construing the affidavit as the appellate court did, thus upholding

the literal interpretation of the affidavit against affiant Seascorp, despite the circumstances under which it

was accomplished, which circumstances throw light upon, explain and restrict the terms of the affidavit,

would sacrifice the substantial rights of Seascorp and thus work injustice, rather than promote justice.

Whether Seascorp‘s employees merely copied the Affidavit from a copy of the POEA, one fact is

certain; Seascorp was mistaken either through ignorance, lack of skill, or negligence. The affidavit does

not thus express the true intention of the parties.


SPOUSES ANTONIO and LOLITA TAN v. CARMELITO VILLAPAZ


A check, the entries of which are no doubt in writing, could prove a loan transaction.

Respondent Carmelito Villapaz filed before the Regional Trial Court (RTC) a Complaint for sum

of money against Spouses Antonio and Lolita Tan. Villapaz alleged that Spouses Tan obtained a loan from him where he issued a crossed check payable to the order of Antonio Tan and deposited the same to the latter‘s account at the PBCom Davao City branch. On the maturity date of the loan, Antonio Tan failed to settle the same.

Spouses Tan denied obtaining a loan from Villapaz. They also alleged that 1) the check issued by Villapaz was in exchange for equivalent cash; 2) that they never received any demand for payment be it verbal or written; 3) that since the alleged loan was one with a period, it should have been expressly stipulated upon in writing by the parties, but it was not, hence, the essential requisite for the validity and enforceability of a loan is wanting; and, finally 3) that the check is inadmissible to prove the existence of the a P250,000 loan.

By way of Compulsory Counterclaim, they prayed for the award of damages and litigation

expenses and attorney‘s fees. The RTC dismissed the Complaint and granted the Counterclaim. Villapaz appealed to the Court of Appeals (CA) which reversed the trial court‘s decision.

ISSUE: Whether or not the CA erred in concluding that the transaction in dispute was a contract of loan and not a mere matter of check encashment HELD: At all events, a check, the entries of which are no doubt in writing, could prove a loan transaction.

That apart from the check no written proof of the grant of the loan was executed was credibly explained by Villapaz when he declared that Spouses Tan‘s son being his godson, he, out of trust and respect, believed that the crossed check sufficed to prove their transaction.

As for spouses Tan‘s reliance on Art. 1358 of the Civil Code, the same is misplaced for the requirement that contracts where the amount involved exceeds P500.00 must appear in writing is only for convenience.

That Antonio Tan had an outstanding balance of more than P950,000.00 in his account at PBCom Monteverde branch where he was later to deposit respondent‘s check did not rule out petitioners‘ securing a loan. It is pure naivete to believe that if a businessman has such an outstanding balance in his bank account, he would have no need to borrow a lesser amount.

In fine, as Spouses Tan‘s side of the case is incredible as it is inconsistent with the principles by which men similarly situated are governed, whereas Villapaz‘s claim that the proceeds of the check,


which were admittedly received by petitioners, represented a loan extended to petitioner Antonio Tan is credible, the preponderance of evidence inclines on Villapaz.

SOCIAL SECURITY SYSTEM v. TERESITA JARQUE VDA. DE BAILON 485 SCRA 376 (2006), THIRD DIVISION (Carpio Morales, J.)

Where a person has entered into two successive marriages, a presumption arises in favor of the validity of the

second marriage, and the burden is on the party attacking the validity of the second marriage to prove that the first marriage had not been dissolved.

Clemente G. Bailon and Alice P. Diaz contracted marriage. More than 15 years later, a Petition for Declaration of Presumptive Death has been filed before the Court of First Instance of Sorsogon, which has been granted. Bailon, subsequently, contracted marriage with respondent Teresita Jarque and designated her the Social Security System (SSS) beneficiary of the former.

SSS cancelled the claim of respondent Teresita Jarque of her monthly pension for death benefits on the basis of the opinion rendered by its legal department that her marriage with Bailon was void as it was contracted during the subsistence of Bailon’s marriage with Alice.

Teresita protested the cancellation of her monthly pension for death benefits asserting that her marriage with Bailon was not declared before any court of justice as bigamous or unlawful. Hence, it remained valid and subsisting for all legal intents and purposes.

ISSUE

Whether or not the subsequent marriage of Clemente Bailon and respondent Teresita Jarque may terminate by mere reappearance of the absent spouse of Bailon

HELD:

The second marriage contracted by a person with an absent spouse endures until annulled. It is only the competent court that can nullify the second marriage pursuant to Article 87 of the Civil Code and upon the reappearance of the missing spouse, which action for annulment may be filed.

The two marriages involved herein having been solemnized prior to the effectivity on August 3, 1988 of the Family Code, the applicable law to determine their validity is the Civil Code which was the law in effect at the time of their celebration.

Under the Civil Code, a subsequent marriage being voidable, it is terminated by final judgment of annulment in a case instituted by the absent spouse who reappears or by either of the spouses in the subsequent marriage.

Under the Family Code, no judicial proceeding to annul a subsequent marriage is necessary. Thus Article 42 thereof provides the subsequent marriage shall be automatically terminated by the recording of the affidavit of reappearance of the absent spouse, unless there is a judgment annulling the

previous marriage or declaring it void ab initio.


If the absentee reappears, but no step is taken to terminate the subsequent marriage, either by affidavit or by court action, such absentee‘s mere reappearance, even if made known to the spouses in the subsequent marriage, will not terminate such marriage. Since the second marriage has been contracted because of a presumption that the former spouse is dead, such presumption continues inspite of the spouse‘s physical reappearance, and by fiction of law, he or she must still be regarded as legally an absentee until the subsequent marriage is terminated as provided by law.

In the case at bar, as no step was taken to nullify, in accordance with law, Bailon‘s and Teresita‘s marriage prior to the former‘s death in 1998, Teresita is rightfully the dependent spouse-beneficiary of Bailon.

STA. LUCIA REALTY & DEVELOPMENT, INC., v. ROMEO UYECIO, AMARIS UYECIO, REYNALDO UYECIO and MANUEL UYECIO


Articles 1191 of the Civil Code does not thus apply to a contract to sell since there can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred. Romeo, Amaris, Reynaldo a and Manuel, all surnamed Uyecio (Uyecios), entered into a contract to sell with Sta. Lucia Realty & Development, Inc., (Sta. Lucia Realty) covering seven (7) lots. The sale was premised upon the brochures of the project detailing the improvements and amenities to the unconstructed

subdivision. The Uyecios agreed to pay part of down payment of the lots in installment of 10 years at 21% interest per annum. They partially paid amortization until April 2001, despite the fact that the improvements and amenities reflected in the sales brochures were yet to be completed. The Uyecios filed a complaint against the Sta. Lucia Realty at the Housing and Land Use Regulatory Board (HLURB) compelling the completion of the Sta. Lucia Realty‘s project within six (6) months or refund of their total payments. After the investigation, HLURB ruled in favor of the Uyecios and ordered, among others, the rescission of the Contract to Sell between the parties. The decision of HLURB was affirmed by the Office of the President and by the Court of Appeals. ISSUES: Whether or not the Court of Appeals erred in ordering the rescission of the Contract to Sell between the parties HELD: In the absence of substantial showing that the findings of facts of administrative bodies charged with their specific field of expertise were arrived at from an erroneous estimation of the evidence presented, they are considered conclusive, and in the interest of stability of the governmental structure, are not to be disturbed. In the present case, Sta. Lucia has not shown any ground to merit a disturbance of the findings of the HLURB which have been sustained by the OP and the appellate court.


Articles 1191 of the Civil Code does not thus apply to a contract to sell since there

can be no rescission of an obligation that is still non-existent, the suspensive condition not having occurred. In other words, the breach contemplated in Article 1191 is the obligor's failure to comply with an obligation already extant, like a contract of sale, not a failure of a condition to render binding that obligation.

In a contract to sell real property on installments, the full payment of the purchase price is a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event which prevented the obligation of the vendor to convey title from acquiring any obligatory force. Cancellation, not rescission, of the contract to sell is thus the correct remedy in the premises.

TEODORO STA. ANA v. LOURDES PANLASIGUE, et al.

500 SCRA 476 (2006), THIRD DIVISION, (Carpio Morales, J.)

The doctrine of laches should never be applied earlier than the expiration of time limited for the commencement of actions, unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are proven.

Two parcels of land situated in Pasig City were registered in the name of Petronilo Sta. Ana who

died leaving behind his widow Anatolia and ten children. After sometime, Nicolas, one of the ten children of the Sta. Ana couple, died leaving behind two children, Annaliza and Andrea.

In 1988, Anatolia, together with eight of her living children and Fe Sta Ana, the wife of her

eldest child-herein petitioner Teodoro Sta. Ana, who was then abroad, executed a Deed of Sale covering the first of the aforementioned lots in favor of herein respondents Lourdes Panlasigue and Julieta P. Santiago. On even date, Anatolia, together with the same eight children and Teodoro‘s wife Fe, donated the second lot to Ireneo Sta. Ana, one of the Sta. Ana children, via a ―Deed of Extrajudicial Partition and Donation.‖

Teodoro, upon coming home to the country in 1996, filed a complaint alleging among others

that he did not participate in the extrajudicial partition and donations relative to the conveyance of land in favor of Lourdes, Julieta and Ireneo. He prayed that his share be reconveyed back to him.

The Regional Trial Court of Pasig held that the sale and donations were null and void. On

appeal, the Court of Appeals reversed the lower court‘s decision holding that the sale and donations were not null and void. The CA also held that the right of Teodoro to question the title of Lourdes and Julieta has been barred by laches.

ISSUES: Whether or not Teodoro‘s right to question the title of Lourdes, Julieta and Ireneo has been barred by laches HELD:


Jurisprudence of course dictates that the "[t]he doctrine of laches should never be

applied earlier than the expiration of time limited for the commencement of actions,

unless, as a general rule, inexcusable delay in asserting a right and acquiescence in existing conditions are

proven."

From the annotation on May 6, 1988 of the challenged documents on Petronilo's title up to the

filing by Teodoro on August 20, 1996 of the complaint subject of the present case, a period of more

than 8 years had elapsed. Gratuitously assuming that the action for reconveyance is based on implied

trust, it prescribes in 10 years. Therefore, Teodoro's complaint had not prescribed when he filed his

complaint. The facts and circumstances attendant to the case indicate, however, that there was

inexcusable delay on the part of Teodoro in asserting his right and acquiescence in existing conditions.

Tala Realty Services Corporation, et al. v. Honorable Court of Appeals and Banco Filipino

Savings and Mortgage Bank G. R. No. 130088, 7 April 2009, SECOND DIVISION (Carpio Morales, J.)

No right is created where the purchase is made in violation of an existing statute and in evasion of its express provision.

Banco Filipino Savings and Mortgage Bank (Banco Filipino) filed before 17 Regional Trial Courts (RTC) 17 complaints for reconveyance of different properties against Tala Realty Services Corporation (Tala Realty) et al.

Banco Filipino‘s complaints commonly alleged that in 1979, expansion of its operations required the purchase of real properties for the purpose of acquiring sites for more branches; that as Sections 25(a) and 34 of the General Banking Act limit a bank‘s allowable investments in real estate to 50% of its capital assets, its board of directors decided to warehouse some of its existing properties and branch sites. Thus, Nancy L. Ty, a major stockholder and director, persuaded Pedro Aguirre and his brother Tomas Aguirre, both major stockholders of Banco Filipino, to organize and incorporate Tala Realty to hold and purchase real properties in trust for Banco Filipino; that after the transfer of Banco Filipino properties to Tala Realty, the Aguirres‘ sister Remedios prodded her brother Tomas to, as he did, endorse to her his shares in Tala Realty and registered them in the name of her controlled corporation, Add International.

Thus, Nancy, Remedios, and Pedro Aguirre controlled Tala Realty, with Nancy exercising control through her nominees Pilar, Cynthia, and Dolly, while Remedios exercised control through Add International and her nominee Elizabeth. Pedro Aguirre exercised control through his own nominees, the latest being Tala Realty‘s president, Rubencito del Mundo.

In the course of the implementation of their trust agreement, Banco Filipino sold to Tala Realty some of its properties. Tala Realty simultaneously leased to Banco Filipino the properties for 20 years, renewable for another 20 years at the option of Banco Filipino with a right of first refusal in the event Tala Realty decided to sell them.

Tala Realty repudiated the trust, claimed the titles for itself, and demanded payment of rentals,

deposits, and goodwill, with a threat to eject Banco Filipino.


Thus arose Banco Filipino‘s 17 complaints for reconveyance against Tala Realty.

ISSUE: Whether or not the trust agreement is void HELD:

In Tala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, the Court, by Decision dated November 22, 2002, ruling on one of several ejectment cases filed by Tala Realty against Banco Filipino arising from the same trust agreement in the reconveyance cases subject of the present petitions, held that the trust agreement is void and cannot thus be enforced.

An implied trust could not have been formed between the Bank and Tala as the Court has held that "where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party who is guilty of the fraud."

The bank cannot use the defense of nor seek enforcement of its alleged implied trust with Tala since its purpose was contrary to law. As admitted by the Bank, it "warehoused" its branch site holdings to Tala to enable it to pursue its expansion program and purchase new branch sites including its main branch in Makati, and at the same time avoid the real property holdings limit under Sections 25(a) and 34 of the General Banking Act which it had already reached.

Clearly, the Bank was well aware of the limitations on its real estate holdings under the General Banking Act and that its "warehousing agreement" with Tala was a scheme to circumvent the limitation. Thus, the Bank opted not to put the agreement in writing and call a spade a spade, but instead phrased its right to reconveyance of the subject property at any time as a "first preference to buy" at the "same transfer price." This agreement which the Bank claims to be an implied trust is contrary to law. Thus, while the Court finds the sale and lease of the subject property genuine and binding upon the parties, the Court cannot enforce the implied trust even assuming the parties intended to create it. In the words of the Court in the Ramos case, "the courts will not assist the payor in achieving his improper purpose by enforcing a resultant trust for him in accordance with the ‗clean hands‘ doctrine." The Bank cannot thus demand reconveyance of the property based on its alleged implied trust relationship with Tala.

UNIWIDE HOLDINGS, INC., v. ALEXANDER M. CRUZ


Where there is a joinder of causes of action between the same parties one of which does not arise out of the

contract where the exclusive venue was stipulated upon, the complain may be brought before other venues.

Uniwide Holdings, Inc. entered into a franchise agreement with Alexander M. Cruz granting the

latter a five-year franchise to adopt and use the ―Uniwide Family Store System‖ for the establishment

and operation of a ―Uniwide Family Store‖ in Marikina City.

The contract stipulated that Cruz will pay a monthly service fee of P50,000.00 or three percent

of gross monthly purchases, whichever is higher to UHI, payable within five days after the end of each

month without need of formal billing or demand from UHI. In case of any delay in the payment of the

monthly service fee, Cruz would, under Article 10.3 of the agreement, be liable to pay an interest charge


of three percent per month. Cruz thereafter purchased goods from UHI's affiliated companies First

Paragon Corporation (FPC) and Uniwide Sales Warehouse Club, Inc. (USWCI).

FPC and USWCI subsequently executed Deeds of Assignment in favor of UHI assigning all

their rights and interests over Cruz‘s accounts payable to them. Cruz had outstanding obligations with

UHI, FPC and USWCI in the amount of P1, 358, 531.89.00. UHI sent a letter demanding for the

payment of such amount but it was not settled.

Thus, UHI filed a complaint for collection of sum of money before the Regional Trial Court of

Parañaque against Cruz praying for payment of service fee, accounts payable to FPC and USWCI and

attorney‘s fees and litigation expenses.

Cruz filed a Motion to Dismiss on the ground of improper venue. He invokes Article 27.5 of the

agreement which provides that exclusive jurisdiction is vested with the courts f Quezon City. The trial

court granted the Motion to Dismiss.

ISSUE:

Whether or not a case based on several causes of action is dismissible on the ground of

improper venue where only one of the causes of action arises from a contract with exclusive venue

stipulation

HELD:

In this case, UHI contended that nowhere in the agreement is there a mention of FPC and

USWCI, and neither are the two parties thereto, hence, they cannot be bound to the stipulation on

―exclusive venue.‖ The Court found merit in this contention.

The Supreme Court cited Section 2, Rule 4 of the Rules of Court which provides that all other

actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant

or any of the principal defendants resides, or in the case of a nonresident defendant, where he may be found, at the

election of the plaintiff.

The forging of a written agreement on an exclusive venue of an action does not, however,

exclude parties from bringing a case to other venues.

Where there is a joinder of causes of action between the same parties one of which does not

arise out of the contract where the exclusive venue was stipulated upon, the complaint, as in the one at

bar, may be brought before other venues provided that such other cause of action falls within the

jurisdiction of the court and the venue lies therein.


It bears emphasis that the causes of action on the assigned accounts are not based

on a breach of the agreement between UHI and Cruz. They are based on separate, distinct

and independent contracts-deeds of assignment in which UHI is the assignee of Cruz‘s obligations to the

assignors FPC and USWCI. Thus, any action arising from the deeds of assignment cannot be subjected

to the exclusive venue stipulation embodied in the agreement.

XAVIERVILLE III HOMEOWNERS ASSOCIATION, INC. v. XAVIERVILLE II

HOMEOWNERS ASSOCIATION, INC.

510 SCRA 619 (2006), THIRD DIVISION, (Carpio Morales, J.)

Contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Xavierville II Homeowners Association, Inc. (Xavier II) contended that it is the Housing Land

Use Regulatory Board (HLURB) which has jurisdiction over Xavierville III Homeowners Association,

Inc. (Xavier III), hence, it filed a motion to dismiss the same. The RTC denied the motion.

The appellate court having denied the association‘s motion for reconsideration and thus, filed

this present petition. Now comes the parties‘ ―Joint Manifestation and Motion to Dismiss based on

Compromise which prays for the dismissal of the case.

ISSUE:

Whether or not the complaint filed by the petitioner is within the jurisdiction or of the HLURB

HELD:

En passant, the parties' attention is invited to National Commercial Bank of Saudi Arabia v. Court of Appeals wherein the Court held that under Article 1306 of the Civil Code, contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy. Thus, a compromise agreement whereby the parties make reciprocal concessions to resolve their differences to thereby put an end to litigation is binding on the contracting parties and is expressly acknowledged as a juridical agreement between them. To have the force of res judicata, however, the compromise agreement must be approved by final order of the court.

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