CIVIL

LAW
PART II
SALES

I. DEFINITION
OF SALE

AND ESSENTIAL

REQUISITES

OF A

CONTRACT

A. DEFINITION

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO.

109125
December 2, 1994
A contract
obligates
ownership
which the

of sale is perfected when a person, called the seller,

himself, for a price certain, to deliver and to transfer
of a thing or right to another, called the buyer, over
latter agrees.

B. CONTRACT OF OPTION NOT A CONTRACT OF

SALE

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO.

109125
December 2, 1994

Both the trial court and CA found that defendants' offer to sell was
never accepted by the plaintiffs for the reason that the parties did
not agree upon the terms and conditions of the proposed sale, hence,
there was no contract of sale at all. An accepted unilateral promise
which specifies the thing to be sold and the price to be paid, when
coupled with a valuable consideration distinct and separate from the
price, is what may properly be termed a perfected contract of option
and not perfected contract of sale.
C. CONTRACT OF CONDITIONAL SALE
1

OLIVAREZ REALTY CORPORATION and DR. PABLO R. OLIVAREZ

v BENJAMIN CASTILLO, G.R No. 196251, July 9, 2014. J.
LEONEN
In both contracts to sell and contracts of conditional sale, title to the
property remains with the seller until the buyer fully pays the purchase price.
Both contracts are subject to the positive suspensive condition of the buyers
full payment of the purchase price. In a contract of conditional sale, the
buyer automatically acquires title to the property upon full payment of the
purchase price. This transfer of title is by operation of law without any
further act having to be performed by the seller. In a contract to sell, transfer
of title to the

prospective buyer is not automatic. The prospective seller must convey title
to the property through a deed of conditional sale.
In this case, Castillo reserved his title to the property and undertook to
execute a deed of absolute sale upon Olivarez Realty Corporations full
payment of the purchase price. Since Castillo still has to execute a deed of
absolute sale to Olivarez RealtyCorporation upon full payment of the
purchase price, the transfer of title is not automatic. The contract in this
case is a contract to sell.
Since Olivarez Realty Corporation illegally withheld payments of the
purchase price, Castillo is entitled to cancel his contract with petitioner
corporation. However, we properly characterize the parties contract as a
contract to sell, not a contract of conditional sale.
In both contracts to sell and contracts of conditional sale, title to the property
remains with the seller until the buyer fully pays the purchase price. Both
contracts are subject to the positive suspensive condition of the buyers full
payment of the purchase price.
In a contract of conditional sale, the buyer automatically acquires title to the
property upon full payment of the purchase price. This transfer of title is "by
operation of law without any further act having to be performed by the
seller." In a contract to sell, transfer of title to the prospective buyer is not
automatic. The prospective seller must convey title to the property [through]
a deed of conditional sale."
The distinction is important to determine the applicable laws and remedies in
case a party does not fulfill his or her obligations under the contract. In
contracts of conditional sale, our laws on sales under the Civil Code of the
Philippines apply. On the other hand, contracts to sell are not governed by
our law on sales but by the Civil Code provisions on conditional obligations.
Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal
obligations does not apply to contracts to sell. Failure to fully pay the
purchase price in contracts to sell is not the breach of contract under Article
1191. Failure to fully pay the purchase price is "merely an event which
prevents the [sellers] obligation to convey title from acquiring binding force.
This is because "there can be no rescission of an obligation that is still
nonexistent, the suspensive condition not having happened.
In this case, Castillo reserved his title to the property and undertook to
execute a deed of absolute sale upon Olivarez Realty Corporations full
payment of the purchase price. Since Castillo still has to execute a deed of
absolute sale to Olivarez Realty Corporation upon full payment of the
purchase price, the transfer of title is not automatic. The contract in this
case is a contract to sell.

As this case involves a contract to sell, Article 1191 of the Civil Code of the
Philippines does not apply. The contract to sell is instead cancelled, and the
parties shall stand as if the obligation to sell never existed.

HELEN E. CABLING, assisted by her husband ARIEL CABLING v

JOSELIN TAN LUMAPAS, as represented by NORY ABELLANES, G.R No.
196950, June 18, 2014. J. BRION
The courts obligation to issue an ex parte writ of possession in favor of the
purchaser in an extrajudicial foreclosure sale ceases to be ministerial when
there is a third party in possession of the property claiming a right adverse
to that of the judgment debtor/mortgagor. However, where the basis of the
third persons possession is a conditional contract of sale, such possessor
may still be ousted by the ex parte issuance of a writ of possession. The
possession contemplated in Rule 39 Section 33 must be adverse in that she
must prove a right independent of and even superior to that of the judgment
debtor/mortgagor.
The execution of a contract of conditional sale does not immediately
transfer title to the property to be sold from seller to buyer. In such
contract, ownership or title to the property is retained by the seller until
the fulfilment of a positive suspensive condition which is normally the
payment of the purchase price in the manner agreed upon.
SPOUSES JOSE C. ROQUE AND BEATRICE DELA CRUZ ROQUE, ET AL
vs. MA. PAMELA AGUADO, ET AL., G.R. No. 193787, April 7, 2014, J.
Perlas- Bernabe
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person. In a
contract to sell, there being no previous sale of the property, a third person
buying such property despite the fulfilment of the suspensive condition such
as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of
reconveyance of the property. There is no double sale in such case. Title to
the property will transfer to the buyer after registration because there is no
defect in the owner-sellers title per se, but the latter, of course, may be sued
for damages by the intending buyer .
SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE ET AL.
VS. MA. PAMELA P.
AGUADO, ET AL. G.R. No. 193787April 7, 2014, J. Perlas-Bernabe

Where the seller promises to execute a deed of absolute sale upon the
completion by the buyer of the payment of the purchase price, the contract
is only a contract to sell even if their agreement is denominated as a Deed of
Conditional Sale, as in this case. This treatment stems from the legal

characterization of a contract to sell, that is, a bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to
sell the subject property exclusively to the prospective buyer upon fulfilment
of the condition agreed upon, such as, the full payment of the purchase
price. Elsewise stated, in a contract to sell, ownership is retained by the
vendor and is not to pass to the vendee until full payment of the purchase
price Spouses Roque have not paid the final installment of the purchase
price. As such, the condition which would have triggered the parties
obligation to

enter into and thereby perfect a contract of sale in order to effectively

transfer the ownership of the subject portion from the sellers to the buyers
(Spouses Roque) cannot be deemed to have been fulfilled. Consequently, the
latter cannot validly claim ownership over the subject portion even if they
had made an initial payment and even took possession of the same.
It is essential to distinguish between a contract to sell and a conditional
contract of sale specially in cases where the subject property is sold by the
owner not to the party the seller contracted with, but to a third person, as in
the case at bench. In a contract to sell, there being no previous sale of the
property, a third person buying such property despite the fulfilment of the
suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer
cannot seek the relief of reconveyance of the property. There is no double
sale in such case. Title to the property will transfer to the buyer after
registration because there is no defect in the owner-sellers title per se, but
the latter, of course, may be sued for damages by the intending buyer.
ART 1458
TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009

The Deed of Conditional Sale, as termed by the parties, states that

"in case, BUYER has complied with the terms and conditions of this
contract, then the SELLERS shall execute and deliver to the BUYER
the appropriate Deed of Absolute Sale". The very essence of a
contract of sale is the transfer of ownership in exchange for a
price paid or promised, but where the seller promises to execute a
deed of absolute sale upon the completion by the buyer of the
payment of the price, the contract is only a contract to sell, even if it
is denominated as a Deed of Conditional Sale.
D. CONTRACT TO SELL
JUAN P. CABRERA vs. HENRY YSAAC, G.R. No. 166790, November 19,
2014, J. Leonen
Unless all the co-owners have agreed to partition their property, none of
them may sell a definite portion of the land. The co-owner may only sell his
or her proportionate interest in the co-ownership. A contract of sale which

purports to sell a specific or definite portion of unpartitioned land is null and

void ab initio.
At best, the agreement between Juan and Henry is a contract to sell, not a
contract of sale. A contract to sell is a promise to sell an object, subject to
suspensive conditions. Without the fulfillment of these suspensive conditions,
the sale does not operate to determine the obligation of the seller to deliver
the object.

A co-owner could enter into a contract to sell a definite portion of the

property. Such contract is still subject to the suspensive condition of the
partition of the property, and that the other co-owners agree that the part
subject of the contract to sell vests in favor of the co-owners buyer. Hence,
the co-owners consent is an important factor for the sale to ripen.

PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, March

17, 2000

Under the parties contract, the property will be transferred to

petitioner
only upon the latter's "complete compliance of
his
obligation provided in the contract" but because of petitioners
failure to fully pay the purchase price, the obligation
of private
respondents to convey title to the property did not arise.
Petitioner's reliance on Article 1592 of the Civil Code is misplaced
because what this provision contemplates is an absolute sale and
not a contract to sell as in the present case.
ART 1478

CRISTOBAL vs.
SALVADOR,
September 11, 2008

SR.,

G.R.

NO.

139365,

The Seller executed three separate contracts on the same property

with three different parties, wherein only the first two contracts
contained a stipulation that "if the Vendee fails to pay the Vendor
the sums stated within the period stipulated and after the grace
period for each payment, this contract shall automatically be null
and void and of no effect without the necessity of any demand,
and the Vendor shall have the full and exclusive right to sell to any
person. The first two contracts were both mere contracts to sell
and did not transfer ownership to either of the buyers for failure to
comply with the condition of full payment of the purchase price,
hence, vendor can still validly convey the subject property to
another buyer.

E. ELEMENTS OF A VALID CONTRACT OF SALE

PEALOSA vs. SANTOS, G.R. NO. 133749,
August 23, 2001

Respondent insist that the second deed is a complete nullity because

a) the consideration stated in the deed was not paid; b)seller was
not present when the deed was notarized; c) seller did not surrender
a copy of the title; d)real estate taxes were not paid. The elements
of a valid contract of sale are: (1) consent or meeting of the minds;
(2) determinate subject matter; and (3) price certain in money or its
equivalent which are present in the second Deed of Sale hence there
is already a perfected contract of sale.

ART 1475
HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO.
135634 May 31, 2000

Respondent alleged that there was no contract of sale to speak of,

while petitioner as proof of the sale presented a receipt stating that
Andres received from Rodriguez a sum representing an advance
payment for a residential lot with the agreed price of 15php per
square meter and that the payment of the full consideration after
the survey shall be due and payable in 5 years from the execution of
the formal deed of sale. All of the essential elements of a contract
of sale are present, i.e., that there was a meeting of the minds
between the parties, by virtue of which the late Andres undertook to
transfer ownership of and to deliver a determinate thing for a price
certain in money.
II.

PARTIES TO A CONTRACT OF SALE

A. SELLER
SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ vs. ROBERTO S.
SYLIANTENG and CAESAR S. SYLIANTENG, G.R. No. 205879, April 23,
2014, J. Peralta
Indeed, not being an heir of Luis, Romeo never acquired any right
whatsoever over the subject lots even if he was able to subsequently obtain
a title in his name. It is a well-settled principle that no one can give what one
does not have, nemo dat quod non habet. One can sell only what one owns
or is authorized to sell, and the buyer can acquire no more right than what
the seller can transfer legally.
ART 1459
HEIRS
OF
ARTURO
G.R. 176474
November 27, 2008

REYES

vs

SOCCO-BELTRAN,

It was unmistakably stated in the Contract to Sell and made clear

to both parties thereto that the vendor was not yet the owner of

the subject property and was merely expecting to inherit the

same. The law specifically requires that the vendor must have
ownership of the property at the time of delivery hence, there was
no valid sale from which ownership of the subject property could
have been transferred.
DACLAG vs. MACAHILIG et al., G.R. NO. 159578, February
18, 2009

Petitioners contend that the 10-year period for reconveyance is

applicable if the action is based on an implied or a constructive trust.
However, since respondents' action for reconveyance was based on
fraud, the action must be filed within four years from the discovery
of the fraud. Respondent's action for reconveyance was not even
subject to prescription, since the deed of sale that was executed in
favor of petitioners was null and void because the seller was not
the owner of the land, nor has the authority when she sold it to
petitioners, hence, being an absolute nullity, the deed is subject to
attack anytime because an action to declare the inexistence of a
void contract does not prescribe.
ART 1505
NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24,
1997
Petitioners contend that they could repurchase the property that they
"sold" to private respondents when they allowed the respondent to
redeem the properties for them from DBP but DBP certified that the
mortgagors' right of redemption was not exercised within the period.
Article 1505 of the Civil Code provides that "where goods are sold by a
person who is not the owner thereof, and who does not sell them
under authority or with consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless the owner of
the goods is by his conduct precluded from denying the seller's
authority to sell.", hence, petitioners "sold" nothing, it follows that
they can also "repurchase" nothing.
B. BUYER
ART
1491
DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998
The prohibition in Art. 1491 does not apply to the sale of a parcel of
land, acquired by a client to satisfy a judgment in his favor to his
counsel as long as the property was not the subject of the
litigation.

ARCENIO vs. JUDGE PAGOROGON, A.M . NO. MTJ-89-270

July 5, 1993
OFFICE OF THE COURT ADM INISTRATOR vs.
PAGOROGON, A.M . NO. MTJ-92-637 July 5, 1993

JUDGE

The respondent judge engaged the services of a mechanic to tow

the jeep in custodia legis and to place the jeep in good running
condition, spending in the process her own money and also
registered the same in her brother's name. The act of respondent
judge is not unlike the prohibited acquisition by purchase
described in Article 1491 of the New Civil code and is in fact, even
worse when she did not acquire the said vehicle from it's owner but
instead whimsically spent for its repairs and automatically
appropriated the jeep for her own use and benefit.

VALENCIA vs. ATTY. CABANTING, A.M . Nos. 1302, 1391

and 1543 April 26, 1991
Paulino alleged that the trial court failed to provide a workable
solution concerning his house and while the petition for certiorari
was pending the trial court issued an order of execution stating
that "the decision in this case has already become final and
executory". While it is true that Atty. Cabanting purchased the lot
after finality of judgment, there was still a pending certiorari
proceeding, and a thing is said to be in litigation not on ly if there
is some contest or litigation over it in court, but also from the
moment that it becomes subject to the judicial action of the judge.
FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE
COURT, G.R. NO. L-68838 March 11, 1991

After the court declared with finality that the petitioners are the lawful
owners,
they refused to comply when the respondent
lawyer
proceeded to implement the contract of services between him and
the petitioners by taking possession and exercising rights of
ownership over 40% of said properties which are the subject of
litigation. A contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491
(5) of the Civil Code because the payment of said fee is not made
during the pendency of the litigation but only after judgment has
been rendered in the case handled by the lawyer.
MANANQUIL vs. ATTY. VILLEGAS, A.M . NO. 2430 August
30, 1990

Complainant alleges that for over a period of 20 years, respondent

counsel allowed lease contracts to be executed between his client
and a partnership of which respondent is one of the partners,
covering parcels of land of the estate, but respondent claims that
he is only acting as an agent. Even if the respondent signed
merely as an agent, the lease contracts are covered by the
prohibition against any acquisition or lease by a lawyer of
properties involved in litigation in which he takes part.
BAUTISTA vs. ATTY. GONZALES, A.M . NO. 1625 February
12, 1990

The Solicitor General found that respondent counsel transferred to

himself one-half of the properties of his clients during the pendency
of the case where the properties were involved. Persons mentioned
in Art. 1491 of the Civil Code are prohibited from purchasing the
property mentioned therein because of the

existing fiduciary relationship with such property and rights, as

well as with the client.
ART 1492
IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE
TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA, B.M .
NO. 793. July 30, 2004

Maquera was suspended from the practice of law in Guam for

misconduct, as he acquired his clients property by exercising the
right of redemption previously assigned to him by the client in
payment of his legal services, then sold it and as a consequence
obtained an unreasonably high fee for handling his clients case.
The prohibition extends to sales in legal redemption and such
prohibition is founded on public policy because, by virtue of his
office, an attorney may easily take advantage of the credulity and
ignorance of his client and unduly enrich himself at the expense of
his client.
ART 1493
PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R.
NO. 170115, FEBRUARY 19, 2008
The City of Cebu was no longer the owner of the lot when it ceded
the same to petitioner under the compromise agreement and at
that time, the city merely retained rights as an unpaid seller but
had effectively transferred ownership of the lot to Morales. A
successor-in-interest could only acquire rights that its predecessor
had over the lo which include the right to seek rescission or
fulfillment of the terms of the contract and the right to damages in
either case.
III.

SUBJECT MATTER

GENERAL
MARIANO
ALVAREZ
SERVICES
COOPERATIVE,
INC.
(GEMASCO), vs. NATIONAL HOUSING AUTHORITY (NHA) AND
GENERAL MARIANO ALVAREZ WATER DISTRICT (GMAWD), G.R. No.
175417/ GENERAL MARIANO ALVAREZ WATER DISTRICT (GMAWD),
Petitioner, v. AMINA CATANGAY, ELESITA MIRANDA, ROSITA RICARTE,
ROSA FETIZANAN, ABSALON AGA, ELPIDIO SARMIENTO, FRANCISCO
RICARDE, ROMEO CATACUTAN, RASALIO LORENZO, ARTEMIO RAFAEL,
MYRN CEA, AND NORMA ESTIL; NATIONAL HOUSING AUTHORITY

(NHA) AND GENERAL

MARIANO
ALVAREZ
COOPERATIVE, INC., REPRESENTED BY ERNESTO
FLORES, G.R. No. 198923, February 09, 2015, J. Peralta

SERVICES

Properties of public dominion, being for public use, are not subject to levy,
encumbrance or disposition through public or private sale. Any encumbrance,
levy on execution or auction sale of any property of public dominion is void
for being contrary to public policy.
Otherwise, essential public services would stop if properties of public
dominion would be subject to encumbrances, foreclosures and auction sale.
Since it is GEMASCO which is liable

for the payment of the separation pay and backwages to its illegally
dismissed employees, any contemplated sale must be confined only to
those properties absolutely owned by it and the subject water tanks lent to
it by the NHA must corollarily be excluded from the same.
A. SALE OF AN EXPECTED THING
ART 1461
HEIRS OF AMPARO
NO. L-46892
September 30, 1981

DEL

ROSARIO

vs.

SANTOS,

G.R.

By the terms of the Deed of Sale itself, appellants declared

themselves to be
owners of one-half (1,2) interest thereof and
contend that the deed of assignment of one-half (1,2) interest
thereof executed by said Custodio in their favor is strictly personal
between them. Notwithstanding the lack of any title to the said lot
by appellants at the time of the execution of the deed of sale in
favor of appellee, the said sale may be valid as there can be a
sale of an expected thing.
B. SALE OF A MERE HOPE OR EXPECTANCY
JAVIER vs. COURT OF APPEALS, G.R. NO. L-48194 March
15, 1990
The efficacy of a deed of assignment is subject to the condition that
the application of private respondent for an additional area for forest
concession be approved by the Bureau of Forestry which was not
obtained. The efficacy of the sale of a mere hope or expectancy is
deemed subject to the condition that the thing will come into
existence, which did not happen, hence the agreement executed
never became effective or enforceable.
C. BOUNDARIES OF THE SUBJECT MATTER
DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225,
March 3,2010
The parties agreed on the purchase price of P40,000.00 for a
predetermined area of 4,000 sq m, more or less, but when the OCT
was issued, the area was declared to be 14,475 sq m, with an excess
1
0

of 10,475 sq m. Petititiomer, however, claims that respondents

are, therefore, duty-bound to deliver the whole area within the
boundaries stated, without any corresponding increase in the
price. Article 1542 is not hard and fast and admits of an exception
and the use of more or less or similar words in designating quantity
covers only a reasonable excess or deficiency, and clearly, the
discrepancy of 10,475 sq m cannot be considered a slight
difference in quantity.
SEM IRA vs. COURT OF APPEALS, G.R. NO. 76031 March 2,
1994

1
0

Private respondent sold Lot 4221 to his nephew by means of a

"Kasulatan ng Bilihan ng Lupa" which incorporated both the area
and the definite boundaries of the lot, the former transferred not
merely the 822.5 square meters stated in their document of sale
but the entire area circumscribed within its boundaries. 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.
IV.

OBLIGATIONS OF A SELLER TO TRANSFER

OWNERSHIP ART 1462

DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988
Respondent admits that she did not take physical possession of
property but argues that symbolic delivery was effected through
the notarized deed of sale. The thing is considered to be delivered
when it is placed "in the hands and possession of the vendee," and
in order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have had such
control over the thing sold at the moment of the sale, but if there is
no impediment to prevent the thing sold passing into the tenancy
of the purchaser by the sole will of the vendor, symbolic delivery
through the execution of a public instrument is sufficient.
ART 1495
CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9,
2003
Petitioner insists that he was ready to pay the balance of the
purchase price but withheld payment because he required that the
property be registered first in his name before he would turn over
the check to the private respondent. The obligation of the seller is
to transfer to the buyer ownership of the thing sold, but in the sale
of a real property, the seller is not obligated to transfer in the

11

name of the buyer a new certificate of title, but rather to transfer

ownership of the real property, because as between the seller and
buyer, ownership is transferred not by the issuance of a new
certificate of title in the name of the buyer but by the execution of
the instrument of sale in a public docume nt.
ART 1496
VISAYAN SAWM ILL COMPANY, INC., vs. COURT OF
APPEALS, G.R. NO. 83851. March 3, 1993.

12

The seller gave access to the buyer to

enter
his
premises,
manifesting no objection thereto but even sending people to start
digging up the scrap iron. The seller has placed the goods in the
control and possession of the vendee and such action or real delivery
(traditio) transfered ownership.
ART 1497
MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS,
G.R. NO. L- 31189 March 31, 1987

Respondent discovered that a parcel of land she owns is being

used by Petitioner, Municipality of Victorias, as a cemetery for 29
years and when the Mayor replied that Petitioner bought the land
from her grandmother, she asked to be shown the papers
concerning the sale but petitioner refused to show the same.
Where there is no express provision that title shall not pass until
payment of the price, and the thing sold has been delivered, title
passes from the moment the thing sold is placed in the possession
and control of the buyer.
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

Petitioner sold three parcels of land to respondent which were

mortgaged to a bank, hence petitioner and respondent executed a
notarized deed of absolute sale with assumption of mortgage, but
petitioner some time thereafter paid the mortgage and sold the
properties to another person. Settled is the rule that the seller is
obliged to transfer title over the properties and deliver the same to the
buyer, and as a rule, the execution of a notarized deed of sale is
equivalent to the delivery of a thing sold.
ART 1523
PUROMINES, INC., vs.
91228. March 22, 1993.

COURT

OF

APPEAL,

G.R.

NO.

Petitioner argues that the sales contract does not include the
contract of carriage which is a different contract entered into by the
carrier with the cargo owners.

As worded, the sales contract is comprehensive enough to include

claims for damages arising from carriage and delivery of the goods. As
a general rule, the seller has the obligation to transmit the goods to
the buyer, and concomitant thereto, the contracting of a carrier to
deliver the same. Art. 1523 of the Civil Code provides:
"Art. 1523. Where in pursuance of a contract of sale, the seller in
authorized or required to send the goods to the buyer, delivery
of the goods to a carrier,

whether named by the buyer or not, for the purpose of

transmission to the buyer is deemed to be a delivery of the goods
to the buyer, except in the cases provided for in article 1503, first,
second and third paragraphs, or unless a contrary intent appear.
"Unless otherwise authorized by the buyer, the seller must take
such contract with the carrier on behalf of the buyer as may be
reasonable, having regard to the nature of the goods and the other
circumstances of the case. If the seller omit so to do, and the
goods are lost or damaged in course of transit, the buyer may
decline to treat the delivery to the carrier as a delivery to himself,,
or may hold the seller responsible in damages."
xxx xxx xxx
The disputed sales contact provides for conditions relative to the
delivery of goods, such as date of shipment, demurrage, weight
as determined by the bill of lading at load port.

ART 1477
BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14,
2004

Petitioner sold the subject property to respondents as evidenced by

a notarized Deed of Absolute Sale, but contends that the
respondents have no right to material possession of the property
since the respondents have not paid the property in full. Unless
there is a stipulation to the contrary, when the sale is made
through a public instrument, the execution thereof is equivalent to
the delivery of the thing which is the object of the contract.
V.PRICE
A. G.R.OSS INADEQUACY OF THE
PRICE ART 1470
SPOUSES
BUENAVENTURA
APPEALS, G.R. NO.

et

al

vs.

COURT

OF

126376. November 20, 2003

Petitioners assert that their respondent siblings did not actually
pay the prices stated in the Deeds of Sale to their respondent
father and assuming that there
is consideration, the same is
grossly inadequate as to invalidate the Deeds of Sale. If there is a
meeting of the minds of the parties as to the price, the contract
of sale is valid and gross inadequacy of price does not affect a
contract of sale, except if there is a defect in the consent, or that
the parties really intended a donation or some other contract.

ART 1471
HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008

RTC considered that although the sales of the properties on the lot
were simulated, it can be assumed that the intention of Ho in
such transaction was to give and donate such properties to the
respondent. The Court holds that the reliance of the trial court on the
provisions of Article 1471 of the Civil Code to conclude that the
simulated sales were a valid donation to the respondent is misplaced
because its finding was based on a mere assumption when the law
requires positive proof, which the respondent was unable to show.

B. FIXING OF THE
PRICE ART 1473
HYATT ELEVATORS
NO. 173881
December 1, 2010

vs.

CATHEDRAL

HEIGHTS,

G.R.

As revealed by the records, it was only Hyatt who determined the

price, without the acceptance or conformity of CHBCAI. The fixing
of the price can never be left to the decision of one of the
contracting parties, but a price fixed by one of the contracting
parties, if accepted by the other, gives rise to a perfected sale.
C. W HEN AND W HERE TO PAY THE PRICE
CHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9,
2003

On the agreed date, Chua refused to pay the balance of the

purchase price as required by the contract to sell, the signed
Deeds of Sale, and imposes another condition. The vendee is
bound to accept delivery and to pay the price of the thing sold at
the time and place stipulated in the contract.
D. INTEREST
ART 1589

FULE vs. COURT OF APPEALS, G.R. NO. 112212, March 2,

1998
While it is true that the amount of P40,000.00 forming part of
the consideration was still payable to petitioner, its nonpayment by
Dr. Cruz is not a sufficient cause to invalidate the contract or bar
the transfer of ownership and possession of the things exchanged
considering the fact that their contract is silent as to when it
becomes due and demandable.
Neither may such failure to pay the balance of the purchase price
result in the

payment of interest thereon. Article 1589 of the Civil Code prescribes

the payment of interest by the vendee "for the period between the
delivery of the thing and the payment of the price" in the following
cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time
demand for the payment of the price.

of judicial or extrajudicial

E. SUSPENSION OF PAYMENT OF THE

PRICE ART 1590
CENTRAL BANK OF
THE
ALFONSO, G.R. NO.
131074, March 27, 2000

PHILIPPINES

vs.

SPOUSES

Respondents aver that they are entitled to cancel the obligation

altogether in view of petitioner's failure to pay the purchase price
when the same became due, while Petitioner claims that the
respondent failed to comply with their contractual obligations
hence it was entitled to withhold payment of the purchase price.
Should the vendee be disturbed in the possession or ownership of
the thing acquired, he may suspend the payment of the price until
the vendor has cause the disturbance or danger to cease. This is
not, however, the only justified cause for retention or withholding
the payment of the agreed price, but also, if the vendor fails to
perform any essential obligation of the contract.
ART 1592
SOLIVA
vs.
The
INTESTATE
M.VILLALBA, G.R. NO.
154017, December 8, 2003

ESTATE

of

MARCELO

While petitioner is now barred from recovering the subject property

due to laches, all is not lost for her since by respondent's own
admission, a balance of P1,250 of the total purchase price remains
unpaid. In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at the time

agreed upon the rescission of the contract shall take place, the
vendee may pay, even after the expiration of the period, as long as
no demand for rescission of the contract has been made upon him
either judicially or extrajudicially or by a notarial act.
VI.

FORMATION OF A CONTRACT OF SALE

A. STAGES TO THE CONTRACT OF SALE

SWEDISH
MATCH
NO.
128120
October 20, 2004

vs.

COURT

OF

APPEALS,

G.R.

Petitioners stress that respondent Litonjua made it clear in his

letters that the quoted prices were merely tentative and still
subject to further negotiations between him and the seller, hence,
there was no meeting of the minds on the essential terms and
conditions of the sale because SMAB did not accept respondents
offer that consideration would be paid in Philippine pesos. In
general, contracts undergo three distinct stages, to wit: (1)
Negotiation - begins from the time the prospective contracting
parties manifest their interest in the contract and ends at the
moment of agreement of the parties; (2) Perfection or birth of the
contract takes place when the parties aG.R.ee upon the essential
elements of the contract; and (3) Consummation occurs when the
parties fulfill or perform the terms agreed upon in the contract,
culminating in the extinguishment thereof.
B. ACCEPTED UNILATERAL PROMISE
ART 1479 (Read together with
ART 1324)
TUAZON vs. DEL ROSARIO-SUAREZ,
December 8, 2010

G.R.

NO.

168325,

The lessor made an offer to sell to the lessee the property at a

fixed price within a certain period, but the lessee failed to accept
the offer or to purchase on time, hence, the lessor sold the said
property to her daughter. An accepted unilateral promise can only
have a binding effect if supported by a consideration separate
and distinct from the purchase price. Hence, the option can still be
withdrawn, even if accepted, if the same is not supported by any
consideration.
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO.
109125, December 2, 1994

Both the trial court and CA found that defendants' offer to sell was
never accepted by the plaintiffs for the reason that the parties did
not agree upon the terms and conditions of the proposed sale,
hence, there was no contract of sale at all.
When the sale is not absolute but conditional, such as in a
"Contract to Sell" where invariably the ownership of the thing sold
is retained until the fulfillment of a positive suspensive condition
(normally, the full payment of the purchase price), the breach of
the condition will prevent the obligation to convey title from
acquiring an obligatory force.

An imperfect promise (policitacion) is merely an offer and is not

considered binding commitments, thus, at any time prior to the
perfection of the contract, either negotiating party may stop the
negotiation, and the offer, at this stage, may be withdrawn; the
withdrawal is effective immediately after its manifestation, such
as by its mailing and not necessarily when the offeree learns of the
withdrawal.
SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January
4, 1994

The court found the contract to be valid, but nonetheless ruled that
the option
to buy is unenforceable because it lacked a
consideration distinct from the price and RCBC did not exercise its
option within reasonable time. Article 1324 of the Civil Code
provides that when an offeror has allowed the offeree a certain
period to accept, the offer maybe withdrawn at anytime before
acceptance by communicating such withdrawal, except when the
option is founded upon consideration, as something paid or
promised; on the other hand, Article 1479 of the Code provides
that an accepted unilateral promise to buy and sell a determinate
thing for a price certain is binding upon the
promisor if the
promise is supported by a consideration distinct from the price.

C. EARNEST MONEY
In a potential sale transaction, the prior payment of earnest money even
before the property owner can agree to sell his property is irregular, and
cannot be used to bind the owner to the obligations of a seller under an
otherwise perfected contract of sale; to cite a well-worn clich, the carriage
cannot be placed before the horse. Securitrons sending of the February 4,
2005 letter to FORC which contains earnest money constitutes a mere
reiteration of its original offer which was already rejected previously. FORC
can never be made to push through a sale which they never agreed to in the
first place. FIRST OPTIMA REALTY CORPORATION vs. SECURITRON
SECURITY SERVICES, INC., G.R. No. 199648,
January 28, 2015, J. Del Castillo

ART 1482
SPOUSES SERRANO
February 28, 2007

vs.

CAGUIAT,

G.R.

NO.

139173,

The lower court ruled that the receipt stating that the respondent
made a partial payment and that the execution and final deed of
sale would be signed upon payment of the balance, is a Contract of
Sale and considered the partial payment as earnest money, which
prompted the respondent to demand specific performance and
damages when the herein petitioners cancelled the transaction.
Whenever earnest money is given in a contract of sale, it shall
be

considered as part of the price and proof of the perfection of the

contract, but the earnest money given in a contract to sell will form
part of the consideration only if the sale is consummated upon full
payment of the purchase price.
SAN MIGUEL PROPERTIES PHILIPPINES, INC., vs.
SPOUSES HUANG, G.R. NO. 137290. July 31, 2000

The appellate court held that all the requisites of a perfected

contract of sale had been complied with upon acceptance of the
petitioner of the earnest money tendered by respondents. It is not
the giving of earnest money, but the proof of the concurrence of
all the essential elements of the contract of sale which establishes
the existence of a perfected sale.
VII. TRANSFER OF OWNERSHIP
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATED
BROKERAGEAND/OR GERARDO TRINIDAD, G.R. No. 178169, January
12, 2015, J. Peralta
Under the Civil Code, the vendor is bound to transfer the ownership of and
deliver, as well as warrant the thing which is the object of the sale. The
ownership of thing sold is considered acquired by the vendee once it is
delivered to him. Thus, ownership does not pass by mere stipulation but
only by delivery. In the Law on Sales, delivery may be either actual or
constructive, but both forms of delivery contemplate "THE ABSOLUTE
GIVING UP OF THE CONTROL AND CUSTODY OF THE PROPERTY ON THE
PART OF THE VENDOR,
AND THE ASSUMPTION OF THE SAME BY THE VENDEE."
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATES BROKERAGE
AND/OR GERARDO TRINIDAD, G.R. No. 178169. January 12, 2015, J.
Peralta
The seller has actually delivered the bulk bags to buyer-company, although
the same was not delivered to the person named in the Purchase Order but
to the representative of the general manager of buyer-company. By allowing
sellers employee to pass through the guard-on-duty, who allowed the entry
of delivery into the buyers premises which is the designated delivery site,
the buyer had effectively abandoned whatever infirmities may have
attended the delivery of the bulk bags. Therefore, there was a valid delivery
on the part of the seller which transferred ownership to the buyer and which

would then give rise to an obligation to pay on the part of the buyer for the
value of the bulk bags.
A. DEED OF SALE
ART 1498

DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July

28, 2008

Respondents question the notarized deed of absolute sale presented

by the petitioner and refused to partition the property purportedly coowned by them. Ownership of the thing sold is acquired only from the
time of delivery thereof, either actual or constructive, and when the
sale is made through a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of
the contract, if from the deed the contrary does not appear or cannot
be inferred.
LEONARDO vs MARAVILLA, G.R. NO. 143369, November
27, 2002

It is not disputed that petitioner neither had, nor demanded,

material possession of the disputed lot as well as the transfer of
title to his name notwithstanding the alleged execution of a deed
of absolute sale and it was the respondents who have been in
control and possession thereof in the concept of owners. The
execution of the deed of sale is only a presumptive, not conclusive
delivery which can be rebutted by evidence to the contrary, as
when there is failure on the part of the vendee to take material
possession of the land subject of the sale in the concept of a
purchaser-owner.
SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK,
INC. (now UNION
BANK
OF
THE
PHILIPPINES)
et
al.,
G.R.
NO. 132709,
September 4, 2001

Petitioners claims that, Ayala Corporation failed to "complete and

perfect ownership and title" to the subject property since it was never
in actual occupation, possession, control and enjoyment of said
property due to the presence of illegal occupants. Notwithstanding
the presence of illegal occupants on the subject property, transfer
of ownership by symbolic delivery under Article 1498 can still be
effected through the execution of the deed of conveyance in a public
document which is equivalent to the delivery of the property.

B. CONSTRUCTIVE
DELIVERY ART 1499

DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8,

1991

There is constructive delivery already upon the execution of the

public instrument pursuant to Article 1498 and upon the consent or
agreement of the parties when
the
thing
sold
cannot
be
immediately transferred to the possession of the vendee. (Art.
1499)

DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988

Although denominated a "Deed of Conditional Sale," a sale is still
absolute where the contract is devoid of any proviso that title is
reserved or the right to unilaterally rescind is stipulated, e.g.,
until or unless the price is paid. Ownership will then be
transferred to the buyer upon actual or constructive delivery (e.g.,
by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ORION SAVINGS BANK VS. SHIGEKANE SUZUKI, G.R. No. 205487,
November 12,
2014, J. Brion
Petitioner delivered the properties to respondent upon the execution
of the notarized deed and handed over to respondent the keys to
the properties, hence respondent took actual possession and
exercised control over the property before he made the second sale.
Should there be no inscription, ownership shall pertain to the person
who in good faith was first in possession.
The petitioner asserts that it has a better right of ownership over the
disputed property in the case at bar by virtue of a Dacion En Pago. The
Supreme Court ruled that the most prominent index of simulation is the
complete absence of an attempt on the part of the vendee to assert his
rights of ownership over the property in question. After the sale, the vendee
should have entered the land and occupied the premises.
ART 1544
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

VIII.

RISK OF

LOSS ART 1504

(2)
AEROSPACE
CHEMICAL
G.R. NO. 108129

INDUSTRIES,

INC.

vs.

CA,
2
0

September 23, 1999

The petitioner contends that rental expenses of storing sulfuric acid

should
be
at private respondent's account, as a seller, until
ownership is transferred. The general rule that before delivery, the
risk of loss is borne by the seller who is still the owner, is not
applicable in this case because petitioner had incurred delay in
the performance of its obligation.

2
0

IX.

DOCUMENTS OF TITLE

A. TORRENS TITLE
VDA. DE
MELENCION
NO. 148846,
September 25, 2007

vs

COURT

OF

APPEALS,

G.R.

The subject property was under the operation of the Torrens

System even before the respective conveyances to AZNAR and Go
Kim Chuan were made. AZNAR knew of this, and admits this as
fact. Yet, despite this knowledge, AZNAR registered the sale in its
favor under Act 3344 on the contention that at the time of sale,
there was no title on file.
The fact that the certificate of title over the registered land is lost
does not convert it into unregistered land. After all, a certificate of
title is merely an evidence of ownership or title over the particular
property described therein. T
Act 3344 provides for the system of recording of transactions or
claims over unregistered real estate without prejudice to a third
party with a better right. But if the land is registered under the
Land Registration Act (and therefore has a Torrens Title), and it is
sold and the sale is registered not under the Land Registration Act
but under Act 3344, as amended, such sale is not considered
registered, as the term is used under Art. 1544 of the New Civil
Code.
Although it is obvious that Go Kim Chuan registered the sale in his
favor under Act 496 while AZNAR did not, SC did not make an
outright award of the subject property to the petitioners solely
on that basis. For the law is clear: mere registration of title is
not enough. Good faith must accompany the registration.
Thus, to be able
to enjoy priority status,
the
second
purchaser must be in good faith, i.e., he must have no knowledge
of the previous alienation of the property by the vendor to another.
Notably, what is important for this purpose is not whether the
second buyer is a buyer in good faith, but whether he registers the
21

second sale in good faith, meaning, he does so without knowledge

of any defect in the title over the property sold.

B. FIRST TO REGISTER IN GOOD FAITH

DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September
21, 2007

22

Respondents caused the registration of the sale of the land in the

Registry of the Deeds. Petitioners, on the other hand, failed to
cause the registration of the sale to them. Where both parties
claim to have purchased the same property,
the one who
registered the sale in his favor, in good faith, has a preferred right
over the other who has not registered his title, even if the latter is
in actual possession of the immovable property.
SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO.
135900, August 17, 2007
Article 1544 of the Civil Code contemplates a case of double sales
or multiple sales by a single vendor. It cannot be invoked where
the
two
different contracts of sale are made by two different
persons, one of them not being the owner of the property sold.
Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21,
2004

Both petitioners Abrigo and respondent registered the sale of the

property, but petitioners registered their sale under Act 3344, while
respondent registered the transaction under the Torrens system.
Between two buyers of the same immovable property, the law gives
ownership priority to (1) the first registrant in good faith; (2) then,
the first possessor in good faith; and (3) finally, the buyer who in
good faith presents the oldest title.
Since the property in dispute in the present case was already
registered under the Torrens system, petitioners registration of the
sale under Act 3344 was not effective for purposes of Article 1544 of
the Civil Code.

SPOUSES OCCEA vs.

156973, June 4, 2004

MORALES

OBSIANA,

G.R.

NO.

The general rule is that one who deals with property registered
under the Torrens system need not go beyond the same, but only

has to rely on the title. He is charged with notice only of such

burdens and claims as are annotated on the title.
However, this principle does not apply when the party has actual
knowledge of facts and circumstances that would impel a
reasonably cautious man to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his
vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. One
who falls within the exception can neither be denominated an
innocent purchaser for

value nor a purchaser in good faith.

ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES

TOLENTINO- RIVERA, G.R. NO. 132677, October 20, 2000

Cortez filed a complaint-in-intervention claiming ownership over two

parcels of land by virtue of a sale in 1988, alleging that the lots were
included in the four- hectare land covered by a Torrens Title of
petitioner Isabela Colleges.
Even assuming that Cortez was not guilty of bad faith when he
bought the land in question, the fact remains that the Isabela
Colleges was first in possession. Petitioner has been in possession
of the land since 1949. Between petitioner and Cortez, therefore,
the former had a better right for the latter only bought the
property in 1988 when it was already purchased by and titled
under the name of petitioner.

BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201.

September 12, 2000

First buyer registered the sale under Act 3344, while second buyer
registered the sale under PD 1529. The governing principle is prius
tempore, potior jure (first in time, stronger in right). Knowledge by
the first buyer of the second sale cannot defeat the first buyers rights
except when the second buyer first registers in good faith the
second sale, conversely, knowledge gained by the second buyer of
the first sale defeats his rights even if he is first to register, since
such knowledge taints his registration with bad faith.
BARICUATRO, JR.,
NO.
105902
February 9, 2000

vs.

COURT

OF

APPEALS,

G.R.

Amores was in good faith when he bought the disputed lots. When
he registered his title, however, he already had knowledge of the

previous sale of the disputed lots to petitioner.

tainted his registration with bad faith, and to
under article 1544, the second buyer must act
the time of the sale until the registration of the
X.

Such knowledge
merit protection
in good faith from
same

REMEDIES OF AN UNPAID

SELLER ART 1484 , 1485

PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE
IMAGING, INC., G.R. NO. 142618, July 12, 2007

Petitioner having recovered thru (replevin) the personal property

sought to be payable, leased on installments, still demanded the
balance of the rent. In choosing, through replevin, to deprive the
respondent of possession of the leased equipment, the petitioner
waived its right to bring an action to recover unpaid rentals on the
said leased items.
ART 1486
BANK OF THE PHILIPPINE ISLANDS vs. VICENTE VICTOR C. SANCHEZ
ET AL./GENEROSO TULAGAN ET AL. vs. VICENTE VICTOR C. SANCHEZ
ET AL./REYNALDO
V. MANIWANG vs. VICENTE VICTOR C. SANCHEZ and FELISA
GARCIA YAP, G.R. No.
179518, G.R. No. 179835, G.R. No. 179954, November 19, 2014, J.
Velasco Jr.
The failure of TSEI to pay the consideration for the sale of the subject
property entitled the Sanchezes to rescind the Agreement. And in view of the
finding that the intervenors acted in bad faith in purchasing the property, the
subsequent transfer in their favor did not and cannot bar rescission. Contrary
to the contention of BPI, although the case was originally an action for
rescission, it became a direct attack on the title, certainly there is no
indication that when the Sanchezes filed their complaint with the RTC they
already knew of the existence of TCT 383697.
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION,
vs. COURT OF APPEALS, G.R. NO. 112733 October 24, 1997

When petitioner failed to abide by its obligation to pay the

installments in accordance with the contract to sell, and
provision in the contract automatically took effect, which provides
that "(I)f the buyer fails to pay the installments due at the
expiration of the grace period, the seller may cancel the contract
and any and all sums of money paid under this contract shall be
considered and become rentals on the property. A stipulation
that the installments or rents paid shall not be returned to the
vendee or lessee shall be valid insofar as the same may not be
unconscionable under the circumstances.

GIL vs. HON. COURT

September 12, 2003

OF

APPEALS,

G.R.

NO.

127206,

The consignation by the vendee of the purchase price of the

property is sufficient to defeat the right of the petitioners to
demand for a rescission of the said deed of absolute sale.
IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107,
September 26, 2001

Petitioner contends that no rescission was effected simply by virtue

of the letter sent by respondent stating that he considered the
contract of sale rescinded. Petitioner asserts that a judicial or
notarial act is necessary before one party can unilaterally effect a
rescission.
Respondent, on the other hand, contends that the right to rescind
is vested by law on the obligee and since petitioner did not oppose
the intent to rescind the contract, petitioner in effect agreed to it
and had the legal effect of a mutually agreed rescission.
Article 1592 of the Civil Code is the applicable provision regarding
the sale of an immovable property.
Article 1592. In the sale of immovable property, even though it may
have been stipulated that upon failure to pay the price at the time
agreed upon the rescission of the contract shall of right take place,
the vendee may pay, even after the expiration of the period, as
long as no demand for rescission of the contract has been made upon
him either judicially or by a notarial act. After the demand, the court
may not grant him a new term.
A judicial or notarial act is necessary before a valid rescission can
take place, whether or not automatic rescission has been
stipulated. It is to be noted that the law uses the phrase "even
though" emphasizing that when no stipulation is found on
automatic rescission, the judicial or notarial requirement still
applies.

XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE &
IAC, G.R. NO. L69450, November 22, 1988

SURETY

CORPORATION

vs.

The ordinary meaning of execution is not limited to the signing or

concluding of
a contract but includes as well the performance or
implementation or accomplishment of the terms and conditions of
such contract.

XII.W ARRANTIES
A. EXPRESS
WARRANTIES ART
1502
INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE
PHILIPPINES,
INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140,
January 21, 1993

Respondent alleges that it cannot be held liable for the 47,000

plastic bags which were not used for packing cement as originally
intended invoking it's right of return. Article 1502 of the Civil Code,
has no application at all to this case, since the provision in the
Uniform Sales Act and the Uniform Commercial Code from which
Article 1502 was taken, clearly requires an express written
agreement to make a sales contract either a "sale or return" or a
"sale on approval", which is absent in this case.
Parol or extrinsic testimony could not be admitted for the purpose
of showing that an invoice or bill of sale that was complete in every
aspect and purporting to embody a sale without condition or
restriction constituted a contract of sale or return. If the purchaser
desired to incorporate a stipulation securing to him the right of
return, he should have done so at the time the contract was made.
On the other hand, the buyer cannot accept part and reject the
rest of the goods since this falls outside the normal intent of the
parties in the "on approval" situation.
B. IMPLIED
WARRANTIES ART
1628
LO vs. KJS ECO-FORMWORK SYSTEM
NO. 149420
October 8, 2003

PHIL., INC., G.R.

The vendor in good faith shall be responsible for the existence and
legality of the credit at the time of the sale, unless it should have
been sold as doubtful; but not for the solvency of the debtor,
unless it has been so expressly stipulated or unless the insolvency
was prior to the sale and of common knowledge.
ART 1546
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September
29, 2008
The seller, in declaring that he owned and had clean title to the
vehicle at the time the Deed of Absolute Sale, is giving an implied
warranty of title which prescribes six months after the delivery of the
vehicle.
ART 1547

PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION,

G.R. NO. 173454, October 6, 2008
MEGA PRIME REALTY AND HOLDINGS CORPORATION vs.
PNB, G.R. NO. 173456, October 6, 2008

In a contract of sale, unless a contrary intention appears, there is an

implied warranty on the part of the seller that he has a right to
sell the thing at the

time when the ownership is to pass, and that the buyer shall have
a peaceful possession of the thing and it shall be free from any
hidden faults or defects, or any charge or encumbrance not
declared or known to the buyer.
ART 1548
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September
29, 2008

The seller, in pledging that he will defend the same from all
claims or any claim whatsoe ver [and] will save the vendee from any
suit by the government of the Republic of the Philippines, is giving
a warranty against eviction. A breach of this warranty requires the
concurrence of these four requisites:(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.
ART 1561
DE YSASI vs. ARCEO, G.R. NO. 136586, November 22,
2001

Petitioner admitted that he inspected the premises three or four times

before signing the lease contract and during his inspection, he
noticed the rotten plywood on the ceiling which in his opinion was
caused by leaking water or "anay" (termites), yet he decided to go
through with the lease agreement. The lessor is responsible for
warranty against hidden defects, but he is not answerable for
patent defects or those which are visible.
C. REMEDIES AGAINST VIOLATIONS OF
WARRANTIES ART 1567
ENGINEERING & MACHINERY CORPORATION
OF APPEALS,
G.R. NO. 52267, January 24, 1996

vs.

COURT

The original complaint is one for damages arising from breach of a

written contract - and not a suit to enforce warranties against hidden

defects. The remedy against violations of the warranty against

hidden defects is either to withdraw from the contract (redhibitory
action) or to demand a proportionate reduction of the price (accion
quanti minoris), with damages in either case.

ART 1571
DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20,
2001

Respondent made the last delivery of the vinyl products to

petitioners on September 28, 1988 and the action to recover the
purchase price of the goods petitioners returned to the respondent
was filed on July 24, 1989, more than nine months from the date of
last delivery. Actions arising from breach of warranty against
hidden defects shall be barred after six months from the delivery of
the thing sold.
XIII.

BREACH OF

CONTRACT ART 1545

LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16,
2000

A MOA has this stipulation "....SELLER-LESSOR hereby agrees to

sell unto BUYER-LESSEE the property described within six (6)
months from the execution date hereof, or upon issuance by the
Court of a new owner's certificate of title and the execution of
extrajudicial partition with sale of the estate of Francisco Laforteza,
whichever is earlier;...". Petitioner contends that since the
condition was not met, they no longer had an obligation to proceed
with the sale of the house and lot. The petitioners fail to distinguish
between a condition imposed upon the perfection of the contract
and a condition imposed on the performance of an obligation,
failure to comply with the first condition results in the failure of a
contract, while the failure to comply with the second condition only
gives the other party the option either to refuse to proceed with
the sale or to waive the condition.
ART 1583
INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS,
G.R. NO. 115117, June 8, 2000

There is no dispute that the agreement provides for the delivery of

printing paper on different dates and a separate price has been
agreed upon for each delivery. When there is a contract of sale of
goods to be delivered by stated installments, which are to be
separately paid for, and the seller makes defective deliveries in
respect of one or more installments, it depends in each case on the

terms of the contract and the circumstances of the case, whether

the breach of contract is so material as to justify the injured party
in refusing to proceed further and suing for damages for breach of
the entire contract, or whether the breach is severable, giving rise
to a claim for compensation but not to a right to treat the whole
contract as broken.
ART 1597
VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE
COURT OF APPEALS, G.R. NO. 83851. March 3, 1993.

The petitioner agreed to deliver the scrap iron only upon payment
of the purchase price by means of an irrevocable and unconditional
letter of credit, which the respondent failed to obtain, thus, there
was no actual sale. Where the goods have not been delivered to
the buyer, and the buyer has repudiated the contract of sale, or
has manifested his inability to perform his obligations, thereunder,
or has committed a breach thereof, the seller may totally rescind
the contract of sale by giving notice of his election to do to the
buyer.
XIV.

EXTINGUSHMENT OF THE SALE

EAGLE RIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and

CRISPIN I. OBEN vs. CAMERON GRANVILLE 3 ASSET
MANAGEMENT, INC., G.R. No. 204700,
November 24, 2014, J. Leonen
Cameron Grandville filed a motion for reconsideration for the April 10, 2013
decision of the Supreme Court. It argues that the right of Eagle Ridge
Development to extinguish the obligation has already lapsed. However, the
Court in resolving this case stated that under the circumstances of this case,
the 30-day period under Article 1634 within which Eagle Ridge Developments
could exercise their right to extinguish their debt should begin to run only
from the time they were informed of the actual price paid by the assignee for
the transfer of their debt.

JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19,
2014, J. Leonen
Sale of a portion of the property is considered an alteration of the thing
owned in common. Such disposition requires the unanimous consent of the
other co-owners. However, the rules also allow a co-owner to alienate his or
her part in the co-ownership.
If the alienation precedes the partition, the co-owner cannot sell a definite
portion of the land without consent from his or her co-owners. He or she
could only sell the undivided interest of the co-owned property.
The undivided interestof a co-owner is also referred to as the "ideal or
abstract quota" or "proportionate share." On the other hand, the definite
portion of the land refers to specific metes and bounds of a co-owned
property.

Prior to partition, a sale of a definite portion of common property requires

the consent of all co-owners because it operates to partition the land with
respect to the co-owner selling his or her share. The co-owner or seller is
already marking which portion should redound to his or her autonomous
ownership upon future partition.
In this case, the object of the sales contract between petitioner and
respondent was a definite portion of a co-owned parcel of land. At the
time of the alleged sale between petitioner and respondent, the entire
property was still held in common.

While the rules allow respondent to sell his undivided interest in the
coownership, this was not the object of the sale between him and petitioner.
There was no showing that respondent was authorized by his co-owners to
sell the portion of land occupied by Juan Cabrera, the Espiritu family, or the
Borbe family. Without the consent of his co-owners, respondent could not
sell a definite portion of the co-owned property.
Thus, unless all the co-owners have agreed to partition their property, none
of them may sell a definite portion of the land. The co-owner may only sell
his or her proportionate interest in the co-ownership. A contract of sale which
purports to sell a specific or definite portion of unpartitioned land is null and
void ab initio.
The absence of a contract of sale means that there is no source of obligations
for respondent, as seller, orpetitioner, as buyer. Rescission is impossible
because there is no contract to rescind. The rule in Article 1592 that requires
a judicial or notarial act to formalize rescission of a contract of sale of an
immovable property does not apply.
ROBERTO R. DAVID vs. EDUARDO C. DAVID, G.R. No. 162365,
JANUARY 15, 2014, J.
Bersamin
Eduardo and his brother Edwin sold their properties to Roberto with the
agreement that they would be given the right to repurchase within three
years from the execution of the deed of sale. Eduardo paid the repurchase
price to Roberto by depositing the proceeds of the sale of the Baguio City lot
in the latters account. The Supreme Court ruled such payment was an
effective exercise of the right to repurchase. In a sale with right to
repurchase, title and ownership of the property sold are immediately vested
in the vendee, subject to the resolutory condition of repurchase by the
vendor within the stipulated period. Accordingly, the ownership of the
affected properties reverted to Eduardo once he complied with the condition
for the repurchase, thereby entitling him to the possession of the other
motor vehicle with trailer.
REDEMPTION
680 HOME APPLIANCES, INC. V THE HONORABLE COURT OF APPEALS,
THE HONORABLE MARYANNE. CORPUS-MAALAC, in her capacity as
the PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF MA.KATI
CITY, BRANCH 141, ATTY. ENGRACIO ESCASINAS, JR., in his capacity
as THE EX-OFFICIO SHERIFF/CLERK OF COURT VII, OFFICE OF THE
CLERK OF COURT, REGIONAL TRIAL COURT, MA.KATI CITY, FIRST
SOVEREIGN ASSET MANAGEMENT (SPV-AMC), INC. and ALDANCO
MERLMAR, INC. G.R No. 206599, September 29, 2014. J. BRION
3
0

Upon the lapse of the redemption period without the debtor exercising his
right of redemption and the purchaser consolidates his title, it becomes
unnecessary to require the purchaser to assume actual possession thereof
before the debtor may contest it. Possession of the land becomes an absolute
right of the purchaser, as this is merely an incident of his

3
0

ownership. In fact, the issuance of the writ of possession at this point

becomes ministerial for the court.
The debtor contesting the purchasers possession may no longer avail of the
remedy under Section 8 of Act No. 3135, but should pursue a separate
action e.g., action for recovery of ownership, for annulment of mortgage
and/or annulment of foreclosure. FSAMIs consolidation of ownership
therefore makes the remedy under Section 8 of Act No. 3135 unavailable for
680 Home.
FE H. OKABE v ERNESTO A. SATURNINO, G.R No. 196040, August 26,
2014. J. PERALTA
If the purchaser is a third party who acquired the property after the
redemption period, a hearing must be conducted to determine whether
possession over the subject property is still with the mortgagor or is already
in the possession of a third party holding the same adversely to the
defaulting debtor or mortgagor. If the property is in the possession of the
mortgagor, a writ of possession could thus be issued. Otherwise, the
remedy of a writ of possession is no longer available to such purchaser, but
he can wrest possession over the property through an ordinary action of
ejectment.
GE MONEY BANK, INC. (FORMERLY KEPPEL BANK PHILIPPINES) vs.
SPOUSES VICTORINO M. DIZON AND ROSALINA L. DIZON, G.R. No.
184301, March 23, 2015, J.
Peralta
An insufficient sum was tendered by the Spouses Dizon during the
redemption period. Whether the total redemption price is PhP 251,849.77 as
stated in the Petition for Review, or PhP 232,904.60 as stated in the Banks
Motion for Reconsideration of the CA Decision, or PhP 428,019.16 as stated in
its Appellants Brief, is immaterial. What cannot be denied is that the amount
of PhP 90,000.00 paid by the Spouses Dizon during the redemption period is
less than half of PhP 181,956.72 paid by the Bank at the extrajudicial
foreclosure sale... If only to prove their willingness and ability to pay, the
Spouses Dizon could have tendered a redemption price that they believe as
the correct amount or consigned the same. Seventeen long years passed
since the filing of the complaint but they did not do either. Indeed, they
manifestly failed to show good faith.
The Spouses Dizons own evidence show that, after payment of PhP
90,000.00, the earliest date they exerted a semblance of effort to re-acquire
the subject property was on October 15, 1996. Apart from being way too late,
the tender was not accompanied by the remaining balance of the redemption
price. The same is true with respect to their letter dated February 27, 1998,
wherein they were still making proposals to the Bank. The courts
31

intervention was resorted to only on April 3, 1998 after the redemption period
expired on October 18, 1994, making it too obvious that such recourse was
merely a delayed afterthought to recover a right already lost.
A. SALE W ITH PACTO DE
RETRO ART 1601

32

NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24,

1997

Petitioners contend that they could repurchase the property that they
"sold" to private respondents when they allowed the respondent to
redeem the properties for them from DBP. DBP, howe ver, certified
that
the
petitioner-mortgagors'
right of redemption was not
exercised within the period, hence DBP became the absolute owner of
said parcels of land when it entered into a Deed of Conditional
Sale involving the same parcels of land with Private Respondent as
vendee. One "repurchases" only what one has previously sold since
the right to repurchase presupposes a valid contract of sale
between the same parties.
DIAMANTE vs. HON. COURT OF APPEALS, G.R. NO. L51824 February 7, 1992

A right to repurchase was granted subsequently in an instrument

different from the original document of sale which caused the
cancellation of the permit or lease by the Secretary of Fisheries. An
agreement to repurchase becomes a promise to sell when made
after the sale, because when the sale is made without such an
agreement, the purchaser acquires the thing sold absolutely, and if
he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser, as absolute owner already
of the object.
VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO.
83759 July 12, 1991

Respondents sold the lot to the petitioners under a Deed of Sale,

On the same day and along with the execution of the Deed of Sale,
a separate instrument, denominated as Right to Repurchase was
executed by the parties, Later, petitioners resisted the action for
redemption. The transaction between the petitioners and private
respondents was not a sale with right to repurchase, the second
instrument is just an option to buy since it is not embodied in the
same document of sale but in a separate document, and since

such option is not supported by a consideration distinct from the

price, said deed for right to repurchase is not binding upon them.
ART 1603
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

Where in a contract of sale with pacto de retro, the vendor remains

in possession, as a lessee or otherwise, the contract shall be
presumed to be an equitable mortgage because in a contract of sale
with pacto de retro, the legal title to the
property is
immediately transferred to the vendee, subject to the

vendors right to redeem and retention by the vendor of the

possession of the property is inconsistent with the vendees
acquisition of the right of ownership under a true sale.
ART 1606
ABILLA vs. ANG
January 17, 2002

GOBONSENG,

JR.,

G.R.

NO.

146651,

The legal question to be resolved is "May the vendors in a sale

judicially declared as a pacto de retro exercise the right of
repurchase under Article 1606, third paragraph, of the Civil Code,
after they have taken the position that the same was an equitable
mortgage?" No, where the proofs established that there could be
no honest doubt as to the parties intention, that the transaction
was clearly and definitely a sale with pacto de retro, the vendor a
retro is not entitled to the benefit of the third paragraph of Article
1606.
AGAN vs. HEIRS OF
December 11, 2003

SPS.

NUEVA,

G.R.

NO.

155018,

The lower court's dispositive position states: "Howe ver, the vendors
can still exercise the right to repurchase said property within thirty
(30) days from receipt of this decision pursuant to Article 1606 and
1607 of the New Civil Code." Article 1606 grants the vendor a
retro thirty (30) days from the time final judgment was rendered,
not from the defendants receipt of the judgment, "final judgment
must be construed to mean one that has become final and executory.

ART 1607
Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, March 9,
2000

The lower court rationalized that petitioners failed to comply with

the provisions of Article 1607 of the Civil Code requiring a judicial
order for the consolidation of the ownership in the vendee a retro to
be recorded in the Registry of Property. A judicial order is necessary
in order to determine the true nature of the transaction and to

prevent the interposition of buyers in good faith while the

determination is being made, however, notwithstanding Article 1607,
the recording in the Registry of Property of the consolidation of
ownership of the vendee is not a condition sine qua non to the transfer
of ownership for the method prescribed thereunder is merely for the
purpose of registering the consolidated title.
ART 1616
BPI FAM ILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R.
NO. 141974,
August 9, 2004

The respondents offer to redeem the foreclosed properties and the

subsequent consignation in court were made within the period of
redemption, but the amount consigned did not include the interest
and was also way below the amount paid by the highest bidderpurchaser of the properties during the auction sale. The
redemption price should either be fully offered in legal tender or
else validly consigned in court because only by such means can the
auction winner be assured that the offer to redeem is being made
in good faith.
ART 1619
LEE CHUY REALTY CORPORATION
APPEALS, G.R. NO.
104114 December 4, 1995

vs.HON.

COURT

OF

Petitioner questions the ruling of the Court of Appeals which

concluded that a prior tender or offer of redemption is a prerequisite
or precondition to the filing of the action for legal redemption. To
avail of the right of redemption what is essential is to make an offer to
redeem within the prescribed period. There is actually no prescribed
form for an offer to redeem to be properly effected. It can either be
through a formal tender with consignation, or by filing a complaint in
court coupled with consignation of the redemption price within the
prescribed period.

VILLANUEVA vs.
NO. L-33158,
October 17, 1985

HON.

ALFREDO

C.

FLORENDO,

G.R.

It is not disputed that co-ownership exists but the lower court

disallowed redemption because it considered the vendee, Vallangca,
a co-heir, being married to Concepcion Villanueva.

The term "third person" or "stranger in Art. 1620 refers to all persons
who are not heirs in succession, either by will or the law or any one
who is not a co- owner.
ART 1621
PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R.
NO. 150060.
August 19, 2003
Article 1621 of the Civil Code expresses that the right of redemption
it grants to an adjoining owner of the property conveyed may be
defeated if it can be shown that the buyer or grantee does not own
any other rural land.

ART 1622
G.R. NO. 134117. February 9, 2000
SEN PO EK MARKETING CORPORATION vs. MARTINEZ
Petitioner invokes its right of first refusal against private
respondents, when Teodora sold the property that petitioner has
been leasing. Article 1622 of the New Civil Code only deals with
small urban lands that are bought for speculation where only
adjoining lot owners can exercise the right of pre- emption or
redemption. It does not apply to a lessee trying to buy the land
that it was leasing, especially when such right was never stipulated
in any of the several lease contracts.
ART 1623
JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19,
2014, J. Leonen
If the alienation precedes the partition, the co-owner cannot sell a definite
portion of the land without consent from his or her co-owners. He or she
could only sell the undivided interest of the co-owned property.
In the case at bar, no contract of sale exist. The object of a valid sales
contract must be owned by the seller. If the seller is not the owner, the seller
must be authorized by the owner to sell the object. There was no showing
that respondent was authorized by his co- owners to sell the portion of land
occupied by Juan Cabrera, the Espiritu family, or the Borbe family. Without
the consent of his co-owners, respondent could not sell a definite portion of
the co-owned property.
SPOUSES MICHELLE M. NOYNAY and NOEL S. NOYNAY vs.CITIHOMES
BUILDER AND DEVELOPMENT, INC., G.R. No. 204160, September 22,
2014, J. Mendoza
Well-established is the rule that the assignee is deemed subrogated to the
rights as well as to the obligations of the seller/assignor. By virtue of the
deed of assignment, the assignee is deemed subrogated to the rights and
obligations of the assignor and is bound by exactly the same conditions as
those which bound the assignor. What can be inferred from here is the effect
on the status of the assignor relative to the relations established by a
contract which has been subsequently assigned; that is, the assignor

becomes a complete stranger to all the mattersthat have been conferred to

the assignee.
SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA vs. UNITED
COCONUT PLANTERS BANK, G.R. No. 207747, March 11, 2015, J.
Carpio
UCPB assigned accounts receivable to Primetown. Thereafter, Spouses filed
a complaint against the latter for refund for payment. The court ruled that
the agreement conveys the straightforward intention of Primetown to sell,
assign, transfer, convey and set over to

UCPB the receivables, rights, titles, interests and participation over the units
covered by the contracts to sell. It explicitly excluded any and all liabilities
and obligations, which Primetown assumed under the contracts to sell. In
every case, the obligations between assignor and assignee will depend upon
the judicial relation which is the basis of the assignment. An assignment will
be construed in accordance with the rules of construction governing
contracts generally, the primary object being always to ascertain and carry
out the intention of the parties. This intention is to be derived from a
consideration of the whole instrument, all parts of which should be given
effect, and is to be sought in the words and language employed.
CABALES vs. COURT
August 31, 2007

OF

APPEALS,

G.R.

NO.

162421,

Petitioners may redeem the subject property from respondentsspouses, but they must do so within thirty days from notice in
writing of the sale by their co- owners vendors. In requiring written
notice, Art. 1623 seeks to ensure that the redemptioner is properly
notified of (a) the sale and (b) the date of such notice, as the date
thereof becomes the reckoning point of the 30-day period of
redemption.

SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047,

October 12, 2000
Co-owners with actual notice of the sale are not entitled to written
notice. A written notice is a formal requisite to make certain that
the co-owners have actual notice of the sale to enable them to
exercise their right of redemption within the limited period of thirty
days. But where the co-owners had actual notice of the sale at the
time thereof and/or afterwards, a written notice of a fact already
known to them, would be superfluous. The statute does not
demand what is unnecessary.
FRANCISCO vs. BOISER, G.R. NO. 137677, May 31, 2000

Art. 1623 of the Civil Code is clear in requiring that the written
notification should come from the vendor or prospective vendor, not
from any other person. Since the vendor of an undivided interest is
in the best position to know who are his co-owners who under the

law must be notified of the sale, and is in the best position to

confirm whether consent to the essential obligation of selling the
property and transferring ownership thereof to the vendee has been
given.
LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R.
NO. 149040, July 4, 2007

An assignment of credit has been defined as an agreement by

virtue of which the owner of a credit (known as the assignor), by a
legal cause - such as sale, dation in payment or exchange or
donation - and without need of the debtor's consent, transfers that
credit and its accessory rights to another (known as the assignee),
who acquires the power to enforce it, to the same extent as the
assignor could have enforced it against the debtor.

ART 1625
TEOCO,
JR.,vs
METROPOLITAN
COMPANY, G.R.
NO.
162333, December 23, 2008

BANK

AND

TRUST

Would the exercise by the brothers Teoco of the right to redeem the
properties in question be precluded by the fact that the assignment
of right of redemption was not contained in a public document?
NO, the phrase "effect as against third person" in Article 1625 of
the Civil Code is interpreted as to be damage or prejudice to such third
person, hence if the third person would not be prejudiced then
the assignment of right to redeem may not be in a public instrument.
B. EQUITABLE MORTGAGE
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES
GASTON JAQUE AND LILIA JAQUE, G.R. No. 199852. November 12,
2014, J. Velasco
A transaction is deemed to be an equitable mortgage, not an absolute sale,
when a party have remained in possession of the subject property and
exercised acts of ownership over the lot even after the purported absolute
sale and it could be gleaned from the intention of the parties that the
transaction is intended secure the payment of a debt.
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES
GASTON JAQUE AND LILIA JAQUE, G.R. No. 199852. November 12,
2014, J. Velasco
Where the alleged sellers have remained in possession of the subject
property and exercised acts of ownership over the lot even after its
purported absolute sale, the real intention of the parties was for the

transaction to secure the payment of a debt or an equitable mortgage and

not a sale as provided under Article 1602 of the New Civil Code. If the
transaction had really been one of sale, as the alleged buyers claim, they
should have asserted their rights for the immediate delivery and possession
of the lot instead of allowing the alleged sellers to freely stay in the
premises for almost seventeen (17) years from the time of the purported
sale until their filing of the complaint.
HEIRS OF REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA,
JOSEPHINE SANTIAGO AND JOSEPH DELA ROSA v MARIO A. BA
TONGBACAL, IRENEO

BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL

AND LOURDES BA TONGBACAL, G.R No. 179205, July 30, 2014, J.
PEREZ
Reynaldo, one of the co-owners of an undivided parcel of land, sold his share
to the spouses Batongbacal in a Contract to Sell. The spouses advanced
31k with the balance deliverable after Reynaldo delivers a SPA authorizing
him to alienate the property in behalf of his co - owners. Later, Reynaldo
refused to deliver the SPA and the lot, claiming that there was no contract to
sell, but an equitable mortgage.
An equitable mortgage is defined as one although lacking in some formality,
or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a
debt, and contains nothing impossible or contrary to law. For the presumption
of an equitable mortgage to arise, two requisites must concur: (1) that the
parties entered into a contract denominated as a sale; and (2) the intention
was to secure an existing debt by way of mortgage.
In this case, Reynaldo failed to prove the second requisite. Nothing in the
contract suggests, even remotely, that the subject property was given to
secure a monetary obligation.
BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL
AND LOURDES BA TONGBACAL, G.R. No. 179205, July 30, 2014, J.
Perez
The primary consideration in determining the true nature of a contract is the
intention of the parties. If the words of a contract appear to contravene the
evident intention of the parties, the latter shall prevail. Such intention is
determined not only from the express terms of their agreement, but also
from the contemporaneous and subsequent acts of the parties. Such that
when the contract denominated as Resibo reveals that nothing therein
suggests, even remotely, that the subject property was given to secure a
monetary obligation but an intent to sell his share in the property, said
contract is a contract of sale and not an equitable mortgage.

ART 1602
HEIRS OF JOSE REYES, JR. vs. REYES,
August 13, 2010

G.R. NO.
158377,

The provisions of the Civil Code governing equitable mortgages

disguised
as
sale contracts, like the one herein, are primarily
designed to curtail the evils brought about by contracts of sale with
right to repurchase, particularly the circumvention of the usury law
and pactum commissorium. Courts have taken judicial notice of the wellknown fact that contracts of sale with right to repurchase have been
frequently resorted to in order to conceal the true nature of a
contract, tha t is, a loan secured by a mortgage. It is a reality
that grave

financial distress renders persons hard-pressed to meet even their

basic needs or to respond to an emergency, leaving no choice to
them but to sign deeds of absolute sale of property or deeds of
sale with pacto de retro if only to obtain the much-needed loan from
unscrupulous money lenders. This reality precisely explains why
the pertinent provision of the Civil Code includes a peculiar rule
concerning the period of redemption, to wit:
Art. 1602. The contract shall be presumed to
be an equitable mortagage, in any of the following
cases:
xx
x
(3) When upon or after the expiration of the right
to repurchase another instrument extending the period
of redemption or granting a new period is executed;
VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January
28, 2008
The essential requisites of an equitable mortgage are: (1) the
parties enter into what appears to be a contract of sale, (2) but
their intention is to secure an existing debt by way of mortgage
and the presence of even one of the circumstances enumerated in
Article 1602.
SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31,
2008

Respondent alleged that the transaction was an equitable

mortgage because after the sale of the property respondent
remained therein, and the price according to respondent was
grossly inadequate. The presumption of equitable mortgage
created in Article 1602 of the Civil Code is not conclusive and may
be rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the

MERCADO, G.R. NO. 155856, May 28, 2004

Late

EMIGDIO

Petitioner argues that Mercados delay in registering the Deed of

Absolute Sale and transferring the land title shows that the real
agreement was an equitable mortgage. Delay in transferring title is
not one of the instances enumerated by law in which an equitable
mortgage can be presumed.
CEBALLOS vs. Intestate Estate of the Late
MERCADO, G.R. NO. 155856, May 28, 2004

EMIGDIO

Petitioners contend that the sale was only an equitable mortgage

because (1) the price was grossly inadequate, and (2) the vendors
remained in possession of the land and enjoyed its fruits. For the
presumption of an equitable mortgage to arise, one must first
satisfy the requirement that the parties entered into a contract
denominated as a contract of sale, and that their intention was to
secure an existing debt by way of mortgage.
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

The purchase price stated in the deed was the amount of the
indebtedness of
the respondent to petitioner but the deed
purports to be a sale with right to purchase. The rule is firmly
settled that whenever it is clearly shown that a deed of sale with
pacto de retro, regular on its face, is given as security for a loan, it
must be regarded as an equitable mortgage.
ART 1604
DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December
18, 2008
The provisions of Article 1602 shall also apply to a contract
purporting to be an absolute sale, and in case of doubt, a contract
purporting to be
a sale with right to repurchase shall be
construed as an equitable mortgage in consonance with the rule
that the law favors the least transmission of property rights.
XV.The Subdivision and Condominium Buyers' Protective Decree
(P.D. 957)
AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA
RONSAYRO ROTAIRO, AND HIS CHILDREN FELINA ROTAIRO, ERLINDA
ROTAIRO CRUZ, EUDOSIA ROTAIRO CRIZALDO, NIEVES ROTAIRO
TUBIG,
REMEDIOS
ROTAIRO
MACAHILIG,
FELISA
ROTAIRO
TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY,
EUGENIO PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA
ALCANTARA AND VICTOR ALCANTARA, G.R. No. 173632, September
29, 2014, J. Reyes

4
0

In this case, the contract to sell between Rotairo and Ignacio & Company
was entered into in 1970, and the agreement was fully consummated with
Rotairos completion of payments and the execution of the Deed of Sale in
his favor in 1979. Clearly, P.D. No. 957 ( Sale of Subdivision Lots and
Condominiums) is applicable in this case.
It was error for the CA to rule that the retroactive application of P.D. No. 957
is warranted only where the subdivision is mortgaged after buyers have
purchased individual lots. According to the CA, the purpose of Sec. 18
requiring notice of the mortgage to the buyers is to give the buyer the
option to pay the installments directly to the mortgagee; hence, if the
subdivision is mortgaged before the lots are sold, then there are no
buyers to notify.

4
0

What the CA overlooked is that Sec. 21 requires the owner or developer of

the subdivision project to complete compliance with its obligations within two
years from 1976. The two - year compliance provides the developer the
opportunity to comply with its obligation to notify the buyers of the existence
of the mortgage, and consequently, for the latter to exercise their option to
pay the installments directly to the mortgagee.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs.
SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No.
185798, JANUARY 13, 2014, J.
Perez
The Spouses Rosario purchased a condominium unit from Fil-Estate. FilEstate failed to comply with its obligations. The Supreme Court held that the
Spouses are entitled to rescission, pursuant to Section 23 of P.D. 957 which
regulates the sale of subdivisions and condominium lots. The Spouses
Rosario may be reimbursed the total amount paid including amortization
interests but excluding delinquency interests, with interest thereon at the
legal rate.

EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404,

January 22, 1996
Did the failure to develop a subdivision constitute legal justification
for the non-payment of amortizations by a buyer on installment
under land purchase agreements entered into prior to the
enactment of P.D. 957, "The Subdivision and Condominium Buyers'
Protective Decree"?
P.D. 957 is undeniably applicable to the contracts in question, it follows
that
Section 23 thereof had been properly invoked by private
respondent when he desisted from making further payment to
petitioner due to petitioner's failure to develop the subdivision project
according to the approved plans and within the time limit for
complying with the same.

PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528,

January 18, 1996

41

A buyer of a property at a foreclosure sale cannot disposses prior

purchasers on installment of individual lots therein, or compel them
to pay again for the lots which they previously bought from the
defaulting mortgagor-subdivision developer on the theory that P.D.
957, "The
Subdivision
and
Condominium
Buyers' Protective
Decree", is not applicable to the mortgage contract in question,
the same having been executed
prior to the enactment of P.D.
957.
Moreover, the SC held that, P.D. 957 being applicable, Section 18
of said law obliges petitioner Bank to accept the payment of
the remaining unpaid

42

amortizations tendered by private respondents. Privity of contracts as

a defense does not apply in this case for the law explicitly grants to
the buyer the option to pay the installment payment for his lot or
unit directly to the mortgagee (petitioner), which is required to apply
such payments to reduce the corresponding portion of the mortgage
indebtedness secured by the particular lot or unit being paid for.

XVI.

The Condominium Act (R.A. NO. 4726)

HULST vs. PR BUILDERS,

September 25, 2008

INC.,

G.R.

NO.

156364,

Petitioner contends that the Contract to Sell between petitioner and

respondent involved a condominium unit and did not violate the
Constitutional proscription against ownership of land by aliens. The
law expressly allows foreigners to acquire condominium units and
shares in condominium corporations up to not more than 40% of
the total and outstanding capital stock of a Filipino-owned or
controlled corporation, since under this set up, the ownership of the
land is legally separated from the unit itself.

CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs.

ASSET RECOVERY AND MANAGEMENT CORPORATION,
G.R. No. 149696, July 14, 2006

Section 20 of R.A. No. 4726, otherwise known as the Condominium

Act, provides:
Sec. 20. An assessment upon any condominium made in
accordance with a duly registered declaration of restrictions shall be
an obligation of the owner thereof at the time the assessment is
made. The amount of any such assessment plus any other charges
thereon, such as interest, costs (including attorney's fees) and
penalties, as such may be provided for in the declaration of
restrictions, shall be and become a lien upon the condominium
assessed when the management body causes a notice of assessment
to be registered with the Register of Deeds of the city or province

where such condominium project is located. The notice shall state the
amount of such assessment and such other charges thereon as may
be authorized by the declaration of restrictions, a description of the
condominium unit against which the same has been assessed,
and the name of the registered owner thereof. Such notice shall be
signed by an authorized representative of the management body
or as otherwise provided in the declaration of restrictions. Upon
payment of said assessment and charges or other
satisfaction
thereof, the management body shall cause to be registered a
release of the lien.
Such lien shall be
subsequent to the

superior

to

all

other

liens

registered

registration of said notice of assessment except real property tax

liens and except that the declaration of restrictions may provide for
the subordination thereof to any other liens and encumbrances.
Such liens may be enforced in the same manner provided for by
law for the judicial or extra-judicial foreclosure of mortgage or
real property. Unless otherwise provided for in the declaration of
restrictions, the management body shall have power to bid at
foreclosure sale. The condominium owner shall have the right of
redemption as in cases of judicial or extra-judicial foreclosure of
mortgages.
Records do not show that petitioner had its notice of assessment
registered with the Registry of Deeds of Manila in order that the
amount of such assessment could be considered a lien upon
Marual's two condominium units. Clearly, pursuant to the above
provisions, petitioner's claim can not be considered superior to
that of respondent. As mentioned earlier, the deed of sale wherein
Marual conveyed to respondent his two condominium units, was
registered in the Registry of Deeds of Manila.
CHATEAU DE BAIE CONDOMINIUM CORPORATION
MORENO,
G.R. NO. 186271, February 23, 2011

vs. SPOUSES

The petition sought to prohibit the scheduled extrajudicial sale for

lack of a special power to sell from the registered owner. Under
RA 4726 (the Condominium Act), when a unit owner fails to pay
the association dues, the condominium corporation can enforce a
lien on the condominium unit by selling the unit in an extrajudicial
foreclosure sale, and a special authority from the condominium
owner before a condominium corporation can initiate a foreclosure
proceeding is not needed.
SUCCESSION
BERNARDINA P. BARTOLOME vs. SOCIAL SECURITY SYSTEM AND
SCANMAR MARITIME SERVICES, INC. G.R. No. 192531, November
12, 2014, J. Velaso, Jr.

At the time of the adoptive parents death, which was prior to the effectivity
of the Family Code, the governing provision is Art. 984 of the New Civil Code,
which provides that in case of the death of an adopted child, leaving no
children or descendants, his parents and relatives by consanguinity and not
by adoption, shall be his legal heirs. The adoptive parents death during the
adopted childs minority resulted in the restoration of the biological mothers
parental authority over the adopted child. As a consequence thereof, the
biological mother shall be the adopted childs sole legal heir .
SPOUSES PERALTA v BERNARDINA ABALON, represented by
MANSUETO ABALON.
G.R No. 183448, June 30, 2014. J. SERENO

Under Article 975 of the Civil Code, siblings Mansueto and Amelia Abalon,
being niece and nephew of a decedent who had no issue, are the legal heirs
of Bernardina. As such, they succeeded to her estate when she passed away.
While the Court agreed with the CA that the donation mortis causa in favor of
the siblings was invalid in the absence of a will, the CA erred in concluding
that the heirs acquired the subject property through ordinary acquisitive
prescription. The subject parcel of land is a titled property; thus, acquisitive
prescription is not applicable. Upon the death of Bernardina, Mansueto and
Amelia, being her legal heirs, acquired the subject property by virtue of
succession, and not by ordinary acquisitive prescription.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs. ROSARIO
CALALANG- GARCIA, LEONORA CALALANG-SABILE, and CARLITO S.
CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
It is hornbook doctrine that successional rights are vested only at the time of
death. Article 777 of the New Civil Code provides that "the rights to the
succession are transmitted from the moment of the death of the decedent.
Thus, in this case, it is only upon the death of Pedro Calalang on December
27, 1989 that his heirs acquired their respective inheritances, entitling them
to their pro indiviso shares to his whole estate. At the time of the sale of the
disputed property, the rights to the succession were not yet bestowed upon
the heirs of Pedro Calalang. And absent clear and convincing evidence that
the sale was fraudulent or not duly supported by valuable consideration (in
effect an officious donation inter vivos), the respondents have no right to
question the sale of the disputed property on the ground that their father
deprived them of their respective shares. Well to remember, fraud must be
established by clear and convincing evidence .
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG v ROSARIO
CALALANG- GARCIA, LEONORA CALALANG-SABILE, and CARLITO S.
CALALANG, G.R No. 184148, June 9, 2014. VILLARAMA, JR.
It is hornbook doctrine that successional rights are vested only at the time of
death. Article 777 of the New Civil Code provides that "the rights to the
succession are transmitted from the moment of the death of the decedent.
Thus, it is only upon the death of Pedro Calalang on December 27, 1989 that
his heirs acquired their respective inheritances, entitling them to their pro
indiviso shares to his whole estate. At the time of the sale of the disputed
property, the rights to the succession were not yet bestowed upon the heirs
of Pedro Calalang. And absent clear and convincing evidence that the sale
was fraudulent or not duly supported by valuable consideration (in effect an
in officious donation inter vivos), the heirs have no right to question the sale
of the disputed property on the ground that their father deprived them of
their respective shares.

MA. ELENA R. DIVINAGRACIA AS ADMINISTRATIX OF THE ESTATE OF

THE LATE SANTIAGO C. DIVINAGRACIA VS. CORONACION PARILLA ET
AL. G.R. No. 196750.
March 11, 2015, J. Perlas-Bernabe

The heirs whether in their own capacity or in representation of their direct

ascendant have vested rights over the subject land and, as such, should be
impleaded as indispensable parties in an action for partition thereof. In fine,
the absence of the indispensable parties in the complaint for judicial
partition renders all subsequent actions of the RTC null and void for want of
authority to act.

Death & Presumptive Death & Death of

Marriage; Inheritance v. Succession, Patrimony;
Money Obligations Transmission, Nontransmission; Presumptive Legitimes
Survivorship Agreement,
Contract
(Art.
2010, NCC)

Succession

&

Taxes;

Aleatory

Laws governing Form and content

In the matter of the Testate Estate of Edward Christensen,
G.R. L-16749, January 31, 1963
Whether or not, the intrinsic validity of the testamentary
disposition should be governed by Philippine Law, when the
national law of the testator refers back to the Philippine Law.
Edward is domiciled in the Philippines hence, Philippine court must
apply its own laws which makes natural children legally
acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, Mar. 29, 1990

183 SCRA 755
A will has been defined as "a personal, solemn, revocable and free
act by which a capacitated person disposes of his property and
rights and declares or complies with duties to take effect after his
death."
Cayatenao vs Leonidas, 129 SCRA 524
The law which governs Adoracion Campos will is the law of
Pennsylvania, USA which is the national law of the decedent. It is

settled that as regards to the intrinsic validity of the provisions of

the wills as provided for by article 16 and 1039 of the New Civil
Code, the national law of the decedent must apply.
Subjects and Object of Succession
Parish Priest of Victoria vs. Rigor, 89 SCRA 483

The issue in this case is whether or not a male relative referred in

the will should include those who are born after the testators death.
To construe it as referring to the nearest male relative at any time
after his death would render the provisions difficult to apply and
create uncertainty as to the disposition of the estate.

Opening of Succession
De Borja vs De Borja, G.R. No, L-28040, August 18, 1972
There is no legal bar to a successor to dispose his or her share
immediately after such death, even if the actual extent of such share
is not determined until the subsequent liquidation of the estate. The
effect of such alienation is to be deemed limited to what is ultimately
adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in
them even before the judicial declaration of their being declared as
heirs. When Fortunata died, her claim or right to the parcel of land
in litigation in civil case number 856 was not extinguished by her
death but was transmitted to her heirs upon her death.
Borromeo-Herrera vs Borromeo, 152 SCRA

171

The properties included in an existing inheritance cannot be the

subject of a contract. The heirs acquire a right to succession from
the moment of death of the decedent. In this case, the purported
waiver of hereditary rights cannot be considered effective.

Testamentary Succession
Form and Solemnities of Notarial Wills
Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012
It is an established rule that "[a] testament may not be disallowed
just because the attesting witnesses declare against its due
execution; neither does it have to be necessarily allowed just
because all the attesting witnesses declare in favor of its
legalization; what is decisive is that the court is convinced by

evidence before it, not necessarily from the attesting witnesses,

although
they must testify, that the will was or was not duly
executed in the manner required by law."

Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article
805 requires. In the absence of the required avowal by the
witnesses
themselves,
no attestation clause can be deemed
embodied in the Acknowledgement of the Deed of Donation Mortis
Causa.

Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages
used upon which the will is written. The purpose of the law is to
safeguard against possible interpolation or omission of one or some
of its pages and prevent any increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify,
among others, that the witnesses are aware that the page they are
signing forms part of the will. On the other hand, the signatures
to the attestation clause establish that the witnesses are referring
to the statements contained in the attestation clause itself.
Lee v. Tambago, 544 SCRA 393
An acknowledgment is the act of one who has executed a deed in
going before some competent officer or court and declaring it to be
his act or deed. It involves an extra step undertaken whereby the
signatory actually declares to the notary public that the same is his
or her own free act and deed. The acknowledgment in a notarial will
has a two-fold purpose: (1) to safeguard the testators wishes long
after his demise and (2) to assure that his estate is administered in
the manner that he intends it to be done.
Suroza vs. Honrado, 110 SCRA 388
In the opening paragraph of the will, it was stated that English was a
language "understood and known" to the testatrix but in its concluding
paragraph, it was stated that the will was read to the testatrix "and
translated into Filipino language". That could only mean that the will
was written in a language not known to the illiterate testatrix and,
therefore, it is void because of the mandatory provision of article

804 of the Civil Code that every will must be executed in a language
or dialect known to the testator.

Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the
testator if he is blind or incapable of reading the will himself (as
when he is illiterate), is to make the provisions thereof known to
him, so that he may be able to object if they are not in accordance
with his wishes. That the aim of the law is to insure that the
dispositions of the will are properly communicated to and
understood by the handicapped testator, thus making them truly
reflective of his desire, is evidenced by the requirement that the
will should be read to the latter, not only once but twice, by two
different persons, and that the witnesses have to act within the
range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial
compliance is acceptable where the purpose of the law has been
satisfied, the reason being that the solemnities surrounding the
execution of wills are intended to protect the testator from all
kinds of fraud and trickery but are never intended to be so rigid
and inflexible as to destroy the testamentary privilege.
In the case at bar, private respondent read the testator's will and
codicil
aloud in the
presence
of
the
testator,
his
three
instrumental witnesses, and the notary public. Prior and subsequent
thereto, the testator affirmed, upon being asked, that the contents
read corresponded with his instructions. Only then did the signing
and acknowledgement take place. There is no evidence, and
petitioner does not so allege, that the contents of the will and codicil
were not sufficiently made known and communicated to the testator.
On the contrary, with respect to the "Huling Habilin," the day of the
execution was not the first time that Brigido had affirmed the truth
and authenticity of the contents of the draft. The uncontradicted
testimony
of
Atty.
Rino
is
that
Brigido
Alvarado already
acknowledged that the will was drafted in accordance with his
expressed wishes even prior to 5 November 1977 when Atty. Rino
went to the testator's residence precisely for the purpose of securing
his conformity to the draft.
Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258

The subsequent signing and sealing by the notary of his certification

that the testament was duly acknowledged by the participants therein
is no part of the acknowledgment itself nor of the testamentary act.
Hence their separate execution out of the presence of the testatrix
and her witnesses cannot be said
to violate the rule that
testaments should be completed without interruption.
Cruz vs. Villasor NO.L-32213, 54 SCRA 31

The notary public before whom the will was acknowledged cannot
be considered as the third instrumental witness since he cannot
acknowledge before himself his having signed the will. This cannot
be done because he cannot split his personality into two so that one
will appear before the other to acknowledge his participation in the
making of the will.
Caneda vs. CA, 222 SCRA 781
The rule on substantial compliance in Article 809 cannot be
revoked or relied on by respondents since it presupposes that the
defects in the attestation clause can be cured or supplied by the text
of the will or a consideration of matters apparent therefrom which
would provide the data not expressed in the attestation clause or from
which it may necessarily be gleaned or clearly inferred that the
acts not stated in the omitted textual requirements were actually
complied within the execution of the will.
Lopez v. Lopez, 685 SCRA 209
The statement in the Acknowledgment portion of the subject last will
and testament that it "consists of 7 pages including the page on
which the ratification and acknowledgment are written" cannot be
deemed substantial compliance. The will actually consists of 8 pages
including its acknowledgment which discrepancy cannot be explained
by mere examination of the will itself but through the
presentation of evidence aliunde.
Guerrero v. Bihis, 521 SCRA 394
The issue in this case whether the will acknowledged by the testatrix
and the instrumental witnesses before a notary public acting outside
the place of his commission satisfies the requirement under Article
806 of the Civil Code? Outside the place of his commission, he is
bereft of power to perform any notarial act; he is not a notary
public. Any notarial act outside the limits of his jurisdiction has no
force and effect.
Celada v. Abena, 556 SCRA 569
While it is true that the attestation clause is not a part of the will, error
in the number of pages of the will as stated in the attestation clause is
not material to invalidate the subject will. It must be noted that the
subject instrument is consecutively lettered with pages A, B, and C
which is a sufficient safeguard from the possibility of an omission
of some of the pages.
Form and Solemnities of Holographic W
ills Rodelas vs. Aranza, 119 SCRA 16

The photostatic or xerox copy of a lost or destroyed holographic

will may be
admitted because then the authenticity of the handwriting of the
deceased can be determined by the probate court.

Codoy vs. Calugay, 312 SCRA 333

The word shall connotes a mandatory order. We have ruled that
shall in a statute commonly denotes an imperative obligation and
is inconsistent with the idea of discretion and that the presumption
is that the word shall, when used in a statute is mandatory."
Ajero vs. CA, 236 SCRA 488
Thus, unless the unauthenticated alterations, cancellations or
insertions were made on the date of the holographic will or on
testator's signature, their presence does not invalidate the will
itself. The lack of authentication will only result in disallowance of
such changes.

Kalaw vs. Relova, 132 SCRA 237

To state that the Will as first written should be given efficacy is to
disregard the seeming change of mind of the testatrix. But that
change of mind can neither be given effect because she failed to
authenticate it in the manner required by law by affixing her full
signature.
Roxas vs. De Jesus, 134 SCRA 245
As a general rule, the "date" in a holographic Will should include
the day, month, and year of its execution. However, when as in the
case at bar, there is no appearance of fraud, bad faith, undue
influence and pressure and the authenticity of the Will is
established and the only issue is whether or not the date "FEB.,61"
appearing on the holographic Will is a valid compliance with Article
810 of the Civil Code, probate of the holographic Will should be
allowed under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170

The law does not specify a particular location where the date
should be placed in the will. The only requirements are that the date
be in the will itself and executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

5
0

Holographic wills being usually prepared by one who is not learned

in the law, as illustrated in the present case, should be construed
more liberally than the ones drawn by an expert, taking into
account the circumstances surrounding
the execution of the
instrument and the intention of the testator.

5
0

Palaganas v. Palaganas, 2011 640 SCRA 538

A foreign will can be given legal effects in our jurisdiction. But,
reprobate or re- authentication of a will already probated and
allowed in a foreign country is different from that probate where the
will is presented for the first time before a competent court.
Vda.De Perez vs. Tolete, 232 SCRA 722
What the law expressly prohibits is the making of joint wills either
for the testators reciprocal benefit or for the benefit of a third
person (Civil Code of the Philippines, Article 818). In the case at
bench, the Cunanan spouses executed separate wills. Since the
two wills contain essentially the same provisions and pertain to
property which in all probability are conjugal in nature, practical
considerations dictate their joint probate.

Revocation of W ills and Testamentary

Disposition

Modes of Revocation
Casiano vs CA 158 SCRA 451
Revocation under this condition to be effective must have complied
with the two requirements: the overt act as mentioned under the
law; the intent to revoke on the part of the testator. The document
or paper burned by one of the witnesses was not satisfactorily
established to be the will at all, much less the will of Adriana.

Adriana Maloto vs. CA, 158 SCRA 451

For one, the document or papers burned by
Adriana's maid,
Guadalupe, was not satisfactorily established to be a will at all,
much less the will of Adriana Maloto. For another, the burning was
not proven to have been done under the express direction of
Adriana. And then, the burning was not in her presence.

Gago vs. Mamuyac NO. L-26317, 49 Phil 902

Where a will which cannot be found is shown to have been in the
possession of the testator, when last seen, the presumption is, in
the absence of other competent evidence, that the same was

51

cancelled or destroyed. The same presumption arises where it is

shown that the testator had ready access to the will and it cannot
be found after his death. It will not be presumed that such

52

will has been destroyed by any

other
knowledge or authority of the testator.

person

without

the

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires
that the same must be effected through a will wherein the legal
cause therefor shall be specified. With regard to the reasons for the
disinheritance that were stated by Segundo in his document, the
Court believes that the incidents, taken as a whole, can be
considered a form of maltreatment of Segundo by his son, Alfredo,
and that the
matter presents a sufficient cause
for the
disinheritance of a child or descendant under Article 919 of the
Civil Code.

Doctrine of dependent relative

revocation Molo vs. Molo NO. L2538, 90 Phil

37

The failure of a new testamentary disposition upon whose

validity the
revocation depends, is equivalent to the non-fulfillment of a
suspensive conditions, and hence prevents the revocation of the
original will. But a mere intent to make at some time a will in the
place of that destroyed will not render the destruction conditional.
Allowance of W ills
Requirements for
probate Gan vs Yap,
104 Phil. 509
The loss of the holographic will entail the loss of the only
medium of proof; if
the ordinary will is lost, the subscribing witnesses are available to
authenticate. In case of holographic will if oral testimony were
admissible only one man could engineer the fraud this way.
Rodelas vs Aranza 119 SCRA 16
If the holographic will has been lost or destroyed and no other copy is
available, the will cannot be probated because the best and only

evidence is the handwriting of the testator. But a photostatic copy or

Xerox copy
of
the holographic will may be allowed because
comparison can be made with the standard writings of the testator.
Azaola vs Singson 109 Phil. 102
Since the authenticity of the will was not contested, the appellant
is not required to produce more than one witness. Even if
the genuiness of the

holographic will were contested, article 811 cannot be interpreted as

to require the compulsory presentation of three witnesses to identify
the handwriting of the testator, under penalty of having denied
the probate.
Codoy vs Calugay, 312 SCRA 333
We cannot eliminate the possibility that if the will is contested, the law
requires that three witnesses to declare that the will was in the
handwriting of the deceased. A visual examination of the holographic
will convince us that the strokes are different when compared with
other documents written by the testator.

Effect of allowance of W ills

Gallanosa vs Arcangel, 83
SCRA 676
After the finality of the allowance of a will, the issue as to the
voluntariness of
its execution cannot be raised anymore. It is not only the 1939
probate proceeding that can be interposed as res judicata with
respect to private respondents complaint.
Roberts vs Leonidas, 129 SCRA 33
It is anomalous that the estate of a person who died testate should
be settled in an intestate proceeding. Therefore, the intestate case
should be consolidated with the testate proceeding and the judge
assigned to the testate proceeding should hearing the two cases.
Nepomuceno vs CA, 139 SCRA 206
The general rule is that in probate proceedings, the courts area of
inquiry is limited to an examination and resolution of the extrinsic
validity of the will. Where practically considerations demand that
the intrinsic validity of the will be passed upon, even before it is
probated, the court should meet the issue.

Legitime, Institution,
Preterition Aznar vs.
Duncan, 17 SCRA 590

To
constitute
preterition, the
omission
must be
complete, such that
nothing must be given to the compulsory heir.

total and

Acain vs. IAC, 155 SCRA 100

Preterition annuls the institution of an heir and annulment throws
open to intestate succession the entire inheritance.
The only
provisions which do not

result in intestacy are the legacies and devises made in the will for
they should stand valid and respected, except insofar as the
legitimes are concerned.
Nuguid vs. Nuguid, 17 SCRA 449
The will here does not explicitly disinherit the testatrix's parents,
the forced heirs. It simply omits their names altogether. Said will
rather than be labeled ineffective disinheritance is clearly one in
which the said forced heirs suffer from preterition.

Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508

SCRA 172
The mere mention of the name of one of the petitioners, Virginia, in
the document did not operate to institute her as the universal heir.
Her name was included plainly as a witness to the altercation
between Segundo and his son, Alfredo.

Legitime and Simulated Contracts; Spousal Marital

Estrangement Francisco vs. Francisco-Alfonso, 354 SCRA
112
Obviously, the
sale
was
Gregorio's way
to transfer the
property to his
illegitimate daughters at the expense of his legitimate daughter. The
sale was executed to prevent respondent Alfonso from claiming her
legitime and rightful share in said property.
Capitle v. Elbambuena, 509 SCRA 444
Although estranged from Olar, respondent Fortunata remained his
wife and legal heir, mere estrangement not being a legal ground
for the disqualification of a surviving spouse as an heir of the
deceased spouse.
Reserva Troncal Art. 891
Sienes vs. Esparcia, 1
SCRA 750

The sale made by Andrea Gutang in favor of appellees was,

therefore, subject to the condition that the vendees would
definitely acquire ownership, by virtue of the alienation, only if the
vendor died without being survived by any person entitled to the
reservable property. Inasmuch much as when Andrea Gutang died,
Cipriana Yaeso was still alive, the conclusion becomes inescapable
that the previous sale made by the former in favor of appellants
became of no legal effect and the reservable property subject
matter thereof passed in exclusive ownership to Cipriana.

Gonzales vs. CFI, 104 SCRA 479

Mrs. Legarda could not convey in her holographic will to her
sixteen grandchildren the reservable properties which she had
inherited from her daughter Filomena because the reservable
properties did not form part of her estate (Cabardo vs. Villanueva,
44 Phil. 186, 191). The reservor cannot make a disposition morti s
causa of the reservable properties as long as the reservees
survived the reservor.

Vizconde v. CA, 286 SCRA 217

Estrellita, it should be stressed, died ahead of Rafael, in fact, it was
Rafael who inherited from Estrellita an amount more than the
value of the Valenzuela property. Hence, even assuming that the
Valenzuela property may be collated collation may not be allowed
as the value of the Valenzuela property has long been returned to
the estate of Rafael.

Substitution of Heirs
Palacios vs Ramirez, 111 SCRA 704
The word degree means generation and the present code has
obviously followed this interpretation by providing that
the
substitution shall not go beyond one degree from the heir originally
instituted. The code thus clearly indicates that the second heir must
be related to and one generation from the first heir.

Crisologo vs Singzon, 49 SCRA 491

In fideicommissary substitution clearly impose an obligation upon
the first heir to preserve and transmit to another the whole or part of
the estate bequeathed
to him, upon his death or upon the
happening of a particular event.

Legal or Intestate Succession

Rosales vs Rosales, 148
SCRA 69
The daughter-in-law is not an intestate heir of her spouses
parents. There is
no provision in the civil code which states that a widow is an
intestate heir of her mother-in-law.
Delos Santos vs Dela Cruz, 37 SCRA 555

In an intestate succession, a grandniece of the deceased cannot

participate in the inheritance with the surviving nieces and nephews
because the existence
of the latter excluded the more distant
relatives. In the collateral line, the right of representation does not
go beyond the children of brothers and sisters.
Corpuz vs Corpuz, 85 SCRA 567
Since, Teodoro was an acknowledged natural child or was
illegitimate and since Juanita was the legitimate child of Tomas,
himself was a legitimate child, appellant Tomas has no cause of
action to recovery of the supposed hereditary share of his
daughter, Juanita as a legal heir, in Yangcos estate .
Santillon vs Mirandan, 14 SCRA 563
If there is only one legitimate child surviving with the spouse since
they shall equally, one-half of the estate goes to the child and the
other half goes to the surviving spouse. Although the law refers to
children or descendants, the rule in the statutory construction that
the plural can be understood to include the singular.
Bacayo vs Borromeo, 14 SCRA 986
A decedents uncle and aunt may not succeed intestate so long as
nephews and nieces of the decedent survive and are willing and
qualified to succeed. In this case, the nephews and nieces were not
inheriting by right of representation because they only do so if they
concur with the brothers and sisters of the decedent.
Provisions Common to Testate and Intestate Succession

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, vs. HEIRS

OF ISIDRO BANGI
and GENOVEVA DICCION, represented by NOLITO SABIANO, G.R. No.
185745, October 15, 2014, J. Reyes.
Partition is the separation, division and assignment of a thing held in
common among those to whom it may belong. Every act which is intended to
put an end to indivision among co - heirs and legatees or devisees is deemed
to be a partition. Partition may be inferred from circumstances sufficiently
strong to support the presumption. Thus, after a long possession in
severalty, a deed of partition may be presumed. The evidence presented by
the parties indubitably show that, after the death of Alipio, his heirs
Eusebio, Espedita and Jose Bangi had orally partitioned his estate, including
the subject property, which was assigned to Eusebio. Accordingly,

considering that Eusebio already owned the subject property at the time he
sold the one-third portion thereof.

THELMA M. ARANAS vs. TERESITA V. MERCAO, FELIMON V. MERCADO,

CARMENCIA M. STUERHLAND, RICHARD V. MERCADO, MA. TERESITA
M. ANDERSON, AND FRANKLIN
L. MERCADO, G.R. No. 156407, JANUARY 15, 2014, J. Bersamin
The probate court is authorized to determine the issue of ownership of
properties for purposes of their inclusion or exclusion from the inventory to
be submitted by the administrator, but its determination shall only be
provisional unless the interested parties are all heirs of the decedent, or the
question is one of collation or advancement, or the parties consent the
assumption of jurisdiction by the probate court and the rights of third parties
are not impaired. Its jurisdiction extends to matters incidental or to the
settlement and distribution of the estate, such as the determination of the
status of each heir and whether property included in the inventory is the
conjugal or exclusive property of the deceased spouse.
Legitime; Proximity & Representation;
Art. 962; Bagunu vs. Piedad, 347 SCRA
571
The rule on proximity is a concept that favors the relatives nearest in
degree to
the decedent and excludes the more distant ones except when
and to the extent that the right of representation can apply. In the
collateral line, the right of representation may only take place in
favor of the children of brothers or sisters of the decedent when
such children survive with their uncles or aunts.
Sayson vs. CA, 205 SCRA 321
The relationship created by the adoption is between
only
the
adopting parents and the adopted child and does not extend to
the blood relatives of either party.
Corpus vs. Corpus, 85 SCRA 567
In default of natural ascendants, natural and legitimated children
shall be succeeded by their natural brothers and sisters in
accordance with the rules established for legitimate brothers and
sisters." Hence, Teodoro R. Yangco's half brothers on the Corpus
side, who were legitimate, had no right to succeed to his estate
under the rules of intestacy.
Suntay v. Cojuangco-Suntay, 621 SCRA 142

Petitioners argument that the successional bar between the

legitimate and illegitimate relatives of a decedent does not apply in
this instance where facts indubitably demonstrate the contrary
Emilio III, an illegitimate grandchild of the decedent, was actually
treated by the decedent and her husband as their own son, reared
from infancy, educated and trained in their businesses, and
eventually legally adopted by decedents husband, the original
oppositor to respondents petition for letters of administration.

Diaz vs. IAC, 150 SCRA 645

It is therefore clear from Article 992 of the New Civil Code that the
phrase "legitimate children and relatives of his father or mother"
includes Simona Pamuti Vda. de Santero as the word "relative"
includes all the kindred of the person spoken of. The record shows
that from the commencement of this case the only parties who
claimed to be the legitimate heirs of the late Simona Pamuti Vda.
de Santero are Felisa Pamuti Jardin and the six minor natural or
illegitimate children of Pablo Santero.
Diaz vs. IAC, 182 SCRA 427
The term relatives, although used many times in the Code, is not
defined by it. In accordance therefore with the canons of statutory
interpretation, it should be understood to have a general and
inclusive scope, inasmuch as the term is a general one.
Heirs of Uriarte vs. CA, 284 SCRA 511
A nephew is considered a collateral relative who may inherit if no
descendant, ascendant, or spouse survive the decedent. That
private respondent is only a half-blood relative is immaterial.
Delos Santos vs Ferraris-Borromeo, 14 SCRA 986
Nephews and nieces alone do not inherit by right of representation
unless concurring with the brothers or sisters of the deceased which
is provided in article 975 when children of one or more brothers or
sisters of the deceased survive with their uncles and aunts but if
they alone survive, they shall inherit in equal portions.

P ARTNERSHIP
I. Contract of Partnership
LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES,
INC., G.R. NO.
136448, November 3, 1999
A partnership may be deemed to exist among parties who agree to
borrow money to pursue a business and to divide the profits or losses

that may arise therefrom, even if it is shown that they have not
contributed any capital of their own to a "common fund." Their
contribution may be in the form of credit or industry, not necessarily
cash or fixed assets.

ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L12541, August 28, 1959
The following are the requisites of partnership: (1) two or more
persons who bind themselves to contribute money, property, or
industry to a common fund;
(2) intention on the part of the partners to divide the profits among
themselves. (Art. 1767, Civil Code.).

HEIRS OF TAN ENG KEE vs .COURT

BENGUET LUMBER COMPANY
G.R. NO. 126881; October 3, 2000

OF

APPEALS

and

In determining whether a partnership exists, these rules shall apply:

(1) Except as provided by Article 1825, persons who are not partners
as to each other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a
partnership,
whether such co-owners or co-possessors do or do not share any
profits made by the use of the property;
(3) The sharing of gross returns does not of itself establish a
partnership, whether or not the persons sharing them have a joint
or common right or interest in any property which the returns are
derived;
(4) The receipt by a person of a share of the profits of a business is a
prima facie evidence that he is a partner in the business, but no
such inference shall be drawn if such profits were received in
payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the
profits of the business;
(e) As the consideration for the sale of a goodwill of a business or other
property by installments or otherwise.

II. Rights and Obligations of Partnership

ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and
FELICIDAD S. VDA. DE ABROGAR, G.R. NO. 127347,
November 25, 1999

Under Art. 1768 of the Civil Code, a partnership has a juridical

personality separate and distinct from that
of
each
of
the
partners. The partners cannot be held liable for the obligations of
the partnership unless it is shown that the legal fiction of a different
juridical personality is being used for fraudulent, unfair, or illegal
purposes, hence it is the partnership, not its officers or agents,

which should be impleaded in any litigation involving property

registered in its name, violation of this rule will result in the
dismissal of the complaint.
Villareal vs. Ramirez, G.R. NO. 144214. July 14, 2003
Since it is the partnership, as a separate and distinct entity, that
must refund the shares of the partners, the amount to be refunded
is necessarily limited to its total resources. In other words, it can
only pay out what it has in its coffers, which consists of all its
assets. However, before the partners can be paid their shares, the
creditors of the partnership must first be compensated. After all the
creditors have been paid, whatever is left of the partnership assets
becomes available for the payment of the partners shares.
Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29,
2005
The Angeles spouses position that there is no partnership
because of the lack of a public instrument indicating the same and a
lack of registration with the Securities and Exchange Commission
(SEC) holds no water for the following reasons: first, the Angeles
spouses contributed money to the partnership and not immovable
property; and second, mere failure to register the contract of
partnership with the SEC does not invalidate a contract that has the
essential requisites of a partnership. The purpose of registration of the
contract of partnership is to give notice to third parties. Failure to
register the contract of partnership does not affect the liability of
the partnership and of the partners to third persons. Neither does
such failure to register affect the partnerships juridical personality. A
partnership may exist even if the partners do not use the words
partner or partnership.
Ortega vs. CA, G.R. NO. 109248, July 3, 1995
The right to choose with whom a person wishes to associate
himself is the very foundation and essence of that partnership. Its
continued existence is, in turn, dependent on the constancy of that
mutual resolve, along with each partner's capability to give it, and
the absence of a cause for dissolution provided by the law itself.
6
0

Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in
good faith, not that the attendance of bad faith can prevent the
dissolution of the partnership but that it can result in a liability
for damages.
Among
partners, mutual agency arises and the
doctrine of delectus personae allows them to have the power,
although not necessarily the right, to dissolve the partnership. An
unjustified dissolution by the partner can subject him to a possible
action for damages.

III. Rights and Obligations of Partners Among Themselves

6
0

Liwanag vs. CA, G.R. NO. 114398, October 24, 1997

Petitioner was charged with the crime of estafa and advances the
theory that the intention of the parties was to enter into a contract
of partnership, wherein Rosales (private complainant for Estafa) would
contribute the funds while she would buy and sell the cigarettes,
and later divide the profits between them But even assuming
that a contract of partnership was indeed entered into by and
between the parties, SC ruled that when money or property have
been received by a partner for a specific purpose (such as that
obtaining in the instant case) and he later misappropriated it, such
partner is guilty of estafa.
Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984
The rule is, when a partner who has undertaken to contribute a sum
of money fails to do so, he becomes a debtor of the partnership for
whatever he may have promised to contribute (Art. 1786, Civil Code)
and for interests and damages from the time he should have
complied with his obligation (Art. 1788, Civil Code). Thus in Uy v.
Puzon (79 SCRA 598), which interpreted Art. 2200 of the Civil Code of
the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein
was remiss in his obligations as a partner and as prime
contractor of the construction projects in question.

Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO.
L-55397 February 29, 1988
Petitioner being a partnership may sue and be sued in its name or
by its duly authorized representative. Thus, Chua as the
managing partner of the partnership may execute all acts of
administration including the right to sue debtors of the partnership
in case of their failure to pay their obligations when it became due
and demandable.
Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959

61

Catalan and Gatchalian as partners mortgaged two lots together with

the improvements thereon to secure a credit. Catalan redeemed
the property and he contends that title should be cancelled and a
new one must be issued in his name. Under Article 1807 of the NCC
every partner becomes a trustee for his co-partner with regard to any
benefits or profits derived from his act as a partner. Consequently,
when Catalan redeemed the properties in question, he became a
trustee and held the same in trust for his co partner Gatchalian,
subject to his right to demand from the latter his contribution to the
amount of redemption.

62

Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June
28, 1973
Respondent industrial partner has the right to demand for a formal
accounting and to receive her share in the net profit that may
result from such an accounting.

IV. Obligations of Partnership, Partners to Third Persons

ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL
CONSTRUCTION COMPANY, G.R. NO. L-22493, July 31,
1975
Defendant company, a general partnership purchased from the
plaintiff a motor vehicle on an installment basis with the condition
that failure to pay any of said installments as they fall due would
render the whole unpaid balance immediately due and
demandable. Having failed to receive the installment, the plaintiff
sued the defendant company for the unpaid balance with Benjamin
C. Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig,
and
Augusto Palisoc were included as co-defendants in their
capacity as general partners of the defendant company. In this
case, there were five (5) general partners when the promissory
note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the
liability of the appellant Benjamin C. Daco shall be limited to only
one -fifth of the obligations of the defendant company. The fact that
the complaint against the defendant Romulo B. Lumauig was
dismissed, upon motion of the plaintiff, does not unmake the said
Lumauig as a general partner in the defendant company. In so
moving to dismiss the complaint, the plaintiff merely condoned
Lumauig's individual liability to the plaintiff.
ELMO MUASQUE vs. COURT OF APPEALS, G.R. NO. L39780, November 11, 1985
There is a general presumption that each individual partner is an
authorized agent for the firm and that he has authority to bind the
firm in carrying on the partnership transactions. The presumption is
sufficient
to
permit
third
persons to hold the firm liable on

transactions entered into by one of members of the firm acting

apparently in its behalf and within the scope of his authority.
ANTONIO C. GOQUIOLAY, ET AL. vs. WASHINGTON Z.
SYCIP, ET AL, G.R. NO. L-11840, December 10, 1963
Where the partnership business is to deal in merchandise and
goods, i.e., movable property, the sale of its real property
(immovables) is not within the ordinary powers of a partner,
because it is not in line with the normal business of the firm. But
where the express and avowed purpose of the partnership is to
buy and sell real estate (as in the present case), the immovables
thus acquired

by the firm from part of its stock-in-trade, and the sale thereof is in
pursuance of partnership purposes, hence within the ordinary
powers of the partner.
J. TIOSEJO INVESTMENT CORP.
174149, September 8, 2010

vs.

Ang,

G.R.

NO.

Petitioner cannot avoid liability by claiming that it was not in any

way privy to the Contracts to Sell executed by PPGI and
respondents. As correctly argued by the respondent, a joint
venture is considered in this jurisdiction as a form of partnership
and is, accordingly, governed by the law of partnerships and under
Article 1824 of the Civil Code of the Philippines, all partners are
solidarily liable with the partnership for everything chargeable to
the partnership, including loss or injury caused to a third person or
penalties incurred due to any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of his co-partners.

V. Dissolution
PRIMELINK
PROPERTIES
AND
CORPORATION vs. LAZATIN-MAGAT,
167379, June 27, 2006

DEVELOPMENT
et.al, G.R.
NO.

On dissolution, the partnership is not terminated but continues

until the winding up of partnership affairs is completed. Winding
up means the administration of the assets of the partnership for
the purpose of terminating the business and discharging the
obligations of the partnership.
MARJORIE TOCAO vs. COURT
127405, October 4, 2000

OF

APPEALS,

G.R.

NO.

An unjustified dissolution by a partner can subject him to action for

damages because by the mutual agency that arises in a
partnership, the doctrine of delectus personae allows the partners
to have the power, although not necessarily the right to dissolve the
partnership.

VI.Limited Partnership
COMMISSIONER OF INTERNAL REVENUE vs. W ILLIAM J.
SUTER, G.R. NO.
L-25532, February 28, 1969
A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.,"
was formed on 30 September 1947 by herein respondent William J.
Suter as the general partner, and Julia Spirig and Gustav Carlson,
as the limited partners. The thesis that the limited partnership,
William J. Suter "Morcoin" Co., Ltd.,
has been dissolved by
operation of law because of the marriage of the only general
partner, William J. Suter to the originally limited partner, Julia
Spirig one year

after the partnership was organized is not tenable. The subsequent

marriage of the partners does not operate to dissolve it, such
marriage not being one of the causes provided for that purpose
either by the Spanish Civil Code or the Code of Commerce. The
appellant's view, that by the marriage of both partners the
company became a single proprietorship, is equally erroneous. The
capital contributions of partners William J. Suter and Julia Spirig
were separately owned and contributed by them before their
marriage; and after they were joined
in
wedlock, such
contributions remained their respective separate property under
the Spanish Civil Code.
AGENCY
ALVIN PATRIMONIO v NAPOLEON GUTIERREZ and OCTAVIO
MARASIGAN III, G.R No. 187769, June 4, 2014. J. BRION
As a general rule, a contract of agency may be oral. However, it must be
written when the law requires a specific form, for example, in a sale of a
piece of land or any interest therein through an agent. Article 1878
paragraph 7 of the Civil Code expressly requires a special power of authority
before an agent can loan or borrow money in behalf of the principal, but it
does not state that the authority be in writing.
In this case, Alvin Patrimonios agent, Gutierrez, did not have any authority to
borrow money in Patrimonios behalf. Patrimonio did not execute any SPA in
favor of Gutierrez, nor was Gutierrez given any authority, whether verbally or
in writing, to borrow money in his behalf, nor was he aware of any such
transaction. Patrimonios acts of pre-signing blank checks and releasing them
to Gutierrez does not establish that Patrimonio authorized Gutierrez to fill
them out and contract the loan in his behalf.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES
ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES, G.R.
No. 199990, February 04, 2015, J.
Mendoza
Persons dealing with an agent must ascertain not only the fact of agency,
but also the nature and extent of the agents authority. A third person with
whom the agent wishes to contract on behalf of the principal may require
the presentation of the power of attorney, or the instructions as regards the
agency. According to Article 1990 of the New Civil Code, insofar as third
persons are concerned, an act is deemed to have been performed within the
scope of the agent's authority, if such act is within the terms of the power of

attorney, as written. In this case, Spouses Rabaja did not recklessly enter into
a contract to sell with the agent. They required her presentation of the power
of attorney before they transacted with her principal. And when the agent
presented the SPA to Spouses Rabaja, the latter had no reason not to rely on
it.
I.

Definition of Agency

Country Bankers Insurance Corp.. vs.

Shipyard, June 18, 2012, G.R. NO. 166044

Keppel

Cebu

In a contract of agency, a person, the agent, binds himself to

represent
another, the principal, with the latters consent or
authority. Thus, agency is based on representation, where the
agent acts for and in behalf of the principal on matters within the
scope of the authority conferred upon him. Such acts have the
same legal effect as if they were personally done by the principal.
By this legal fiction of representation, the actual or legal absence
of the principal is converted into his legal or juridical presence.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
It bears stressing that in an agent-principal relationship, the
personality of the principal is extended through the facility of the
agent. In so doing, the agent, by legal fiction, becomes the
principal, authorized to perform all acts which the latter would have
him do. Such a relationship can only be effected with the consent
of the principal, which must not, in any way, be compelled by law
or by any court.

Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO.

167552, April 23, 2007
In a contract of agency, a person binds himself to render some
service or to do something in representation or on behalf of
another with the latters consent. The underlying principle of the
contract of agency is to accomplish results by using the services of
others to do a great variety of things like selling, buying,
manufacturing, and transporting. Its purpose is to extend the
personality of the principal or the party for whom another acts
and from whom he or she derives the authority to act. It is said that
the basis of agency is representation, that is, the agent acts for
and on behalf of the principal on matters within the scope of his
authority and said acts have the same legal effect as if they were
personally executed by the principal. By this legal fiction, the
actual or real absence of the principal is converted into his legal or

juridical presence qui facit per alium facit per se. The elements of
the contract of agency are: (1) consent, express or implied, of the
parties to establish the relationship; (2) the object is the execution
of a juridical act in relation to a third person; (3) the agent acts as
a representative and not for himself; (4) the agent acts within the
scope of his authority.

II. Powers

III. Express vs. Implies Agency

Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
An agency may be expressed or implied from the act of the principal,
from his silence or lack of action, or his failure to repudiate the
agency knowing that another person is acting on his behalf without
authority. Acceptance by the agent may be expressed, or implied
from his acts which carry out the agency, or from his silence or
inaction according to the circumstances. Agency may be oral
unless the law requires a specific form. However, to create or convey
real rights over immovable property, a special power of attorney is
necessary. Thus, when a sale of a piece of land or any portion thereof
is through an agent, the authority of the latter shall be in writing,
otherwise, the sale shall be void.

IV. Agency by Estoppel

Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3,
2003
The Court of Appeals recognized the existence of an agency by
estoppels citing Article 1873 of the Civil Code. Apparently, it
considered that at the
very least, as a consequence of the
interaction between Naguiat and Ruebenfeldt, Queao got the
impression that Ruebenfeldt was the agent of Naguiat, but Naguiat
did nothing to correct Queaos impression. In that situation,
the rule is clear. One who clothes another with apparent authority
as his agent, and holds him out to the public as such, cannot be
permitted to deny the authority of such person to act as his agent,
to the prejudice of innocent third parties dealing with such person
in good faith, and in the honest belief that he is what he appears
to be. The Court of Appeals is correct in invoking the said rule on
agency by estoppel.

V. General vs. Special Agency

Siasat vs. Intermediate Appellate Court, G.R. NO. L67889, October 10, 1985
A general agent is one authorized to do all acts pertaining to a
business of a certain kind or at a particular place, or all acts
pertaining to a business of a particular class or series. He has
usually authority either expressly conferred in general terms or in
effect made general by the usages, customs or nature of the
business which he is authorized to transact. An agent, therefore,
who is empowered to transact all the business of his principal of a
particular kind or in a particular place, would, for this reason, be
ordinarily deemed a general agent. A special agent is one
authorized to do some particular act or to act

upon some particular occasion, acts usually in accordance with

specific instructions or under limitations necessarily implied from
the nature of the act to be done
VI.Agency Couched in General Terms
Veloso vs. Court of Appeals, G.R. NO. 102737, August 21,
1996
There was no need to execute a separate and special power of
attorney
since the general power of attorney had expressly
authorized the agent or attorney in fact the power to sell the subject
property. The special power of attorney can be included in the
general power when it is specified therein the act or transaction for
which the special power is required. Whether the instrument be
denominated as general power of attorney or special power of
attorney, what matters is the extent of the power or powers
contemplated upon the agent or attorney in fact. If the power is
couched in general terms, then such power cannot go beyond acts
of administration. However, where the power to sell is specific, it not
being merely implied, much less couched in general terms, there
cannot be any doubt that the attorney in fact may execute a valid
sale. An instrument may be captioned as special power of attorney
but if the powers granted are couched in general terms without
mentioning any specific power to sell or mortgage or to do other
specific acts of strict dominion, then in that case only
acts of
administration may be deemed conferred
VII.Agency Requiring Special Power of Attorney
ARDO C. CASTILLO, represented by LENNARD V. CASTILLO v
SECURITY BANK CORPORATION, JRC POULTRY FARMS or SPOUSES
LEON C. CASTILLO, JR., and TERESITA FLORESCASTILLO, G.R No.
196118, July 30, 2014. J. PERALTA
In this case, the validity of a mortgage was attacked on the ground that Leon
(petitioner Leonardos brother) was not authorized to contract it. Leon claims
that the Community Tax Certificate presented during the notarization of the
SPA was obtained after the SPA had been executed.
However, the defective notarization did not avoid the SPA. The defective
notarization will simply strip the document of its public character and

reduce it to a private instrument, but nonetheless, binding, provided its

validity is established by preponderance of evidence.
Article 1358 of the Civil Code requires that the form of a contract that
transmits or
extinguishes real rights over immovable property should be in a public
document, yet the failure to observe the proper form does not render the
transaction invalid. The necessity of a public document for said contracts is
only for convenience; it is not essential for validity or enforceability.

MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO

ARGUELLES VS. MALARAYAT RURAL BANK INC. G.R. No. 200468
March 19, 2014, J. Villarama Jr.

The issue in this case is case is whether Malarayat Rural Bank is a mortgagee
in good faith who is entitled to protection on its mortgage lien.
In this case, Malarayat Rural Bank fell short of the required degree of
diligence, prudence, and care in approving the loan application of the
spouses Guia. Respondent should have diligently conducted an investigation
of the land offered as collateral. Although the Report of Inspection and Credit
Investigation found at the dorsal portion of the Application for Agricultural
Loan proved that the respondent Malarayat Rural Bank inspected the land,
the respondent turned a blind eye to the finding therein that the "lot is
planted [with] sugarcane with annual yield (crops) in the amount of P15,000.
They merely derived the authority to mortgage the lot from the Special Power
of Attorney allegedly executed by the late Fermina M. Guia. Hence, it was
incumbent upon the respondent Malarayat Rural Bank to be more cautious in
dealing with the spouses Guia, and inquire further regarding the identity and
possible adverse claim of those in actual possession of the property. Since
the subject land was not mortgaged by the owner thereof and since the
respondent Malarayat Rural Bank is not a mortgagee in good faith, said bank
is not entitled to protection under the law. The unregistered sale in favor of
the spouses Arguelles must prevail over the mortgage lien of respondent
Malarayat Rural Bank.

SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES

ROGELIO AND ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No.
199990, February 04, 2015, J.
Mendoza
According to Article 1990 of the New Civil Code, insofar as third persons are
concerned, an act is deemed to have been performed within the scope of the
agent's authority, if such act is within the terms of the power of attorney, as
written. In this case, Spouses Rabaja did not recklessly enter into a contract
to sell with Gonzales. They required her presentation of the power of
attorney before they transacted with her principal. And when Gonzales
presented the SPA to Spouses Rabaja, the latter had no reason not to rely on
it.

Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005

A special power of attorney simply refers to a clear mandate
specifically authorizing the performance of a specific power and of
express acts subsumed therein, and there is a specific authority
given to Mae Sendiong to sign her name in behalf of Paul Sendiong
in contracts and agreements and to institute suits in behalf of her
father. Neither would the fact that the document is captioned
General Power of Attorney militate against its construction as
granting specific powers to the agent pertaining to the petition for
annulment of judgment she instituted in behalf of her father. As
Justice Paras has noted, a

general power of attorney may include a special power if such special

power is mentioned or referred to in the general power.
Country Bankers Insurance Corp. vs.
Shipyard, June 18, 2012, G.R. NO. 166044

Keppel

Cebu

Our law mandates an agent to act within the scope of his authority.
The scope of an agents authority is what appears in the written
terms of the power of attorney granted upon him. Under Article
1878(11) of the Civil Code, a special power of attorney is necessary
to obligate the principal as a guarantor or surety.
Mercado vs. Allied Banking
171460, July 24, 2007

Corpporation,

G.R.

NO.

Equally relevant is the rule that a power of attorney must be strictly

construed and pursued. The instrument will be held to grant only
those powers which are specified therein, and the agent may
neither go beyond nor deviate from the power of attorney. Where
powers and duties are specified and defined in an instrument, all
such powers and duties are limited and are confined to those which
are specified and defined, and all other powers and duties are
excluded. This is but in accord with the disinclination of courts to
enlarge the authority G.R.anted beyond the powers expressly
given and those which incidentally flow or derive therefrom as
being usual and reasonably necessary and proper for the
performance of such express powers.
Angeles vs. Philippines
150128, August 31, 2006

National

Railways,

G.R.

NO.

A power of attorney is only but an instrument in writing by which a

person, as principal, appoints another as his agent and confers
upon him the authority to perform certain specified acts on
behalf of the principal. The written authorization itself is the
power of attorney, and this is clearly indicated by the fact that it
has also been called a letter of attorney. Its primary purpose is
not to define the authority of the agent as between himself and his
principal but to evidence the authority of the agent to third parties
with whom the agent deals. Except as may be required by statute,

a power of attorney is valid although no notary public intervened in

its execution.

SHOPPERS
PARADISE
REALTY
&
DEVELOPMENT
CORPORATION vs. EFREN P. ROQUE, G.R. NO. 148775,
January 13, 2004
Article 1878 of the Civil Code expresses that a special power of
attorney is necessary to lease any real property to another person for
more than one year. The lease of real property for more than
one year is considered not merely an

act of administration but an act of strict dominion or of ownership.

A special power of attorney is thus necessary for its execution
through an agent.
VIII. Agency by Operation of Law
IX. Rights and Obligations of Principal
VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO.
117356, June 19, 2000
One factor which most clearly distinguishes agency from other
legal concepts is control; one person - the agent - agrees to act
under the control or direction of another - the principal. Indeed, the
very word "agency" has come to connote control by the principal.
The control factor, more than any other, has caused the courts to
put contracts between principal and agent in a separate category.
X.Irrevocable Agency
Republic vs. Evangelista, G.R. NO. 156015, August 11,
2005
A contract of agency is generally revocable as it is a personal contract
of representation based on trust and confidence reposed by the
principal on his agent. As the power of the agent to act depends on
the will and license of the principal he represents, the power of the
agent ceases when the will or permission is withdrawn by the
principal. Thus, generally, the agency may be revoked by the principal
at will. However, an exception to the revocability of a contract of
agency is when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability is
because
the agency becomes part of another obligation or
agreement. It is not solely the rights of the principal but also that
of the agent and third persons which are affected. Hence, the law
provides that in such cases, the agency cannot be revoked at the
sole will of the principal.

Lim vs. Saban, G.R. NO. 163720, December 16, 2004

7
0

Under Article 1927 of the Civil Code, an agency cannot be revoked

if a bilateral contract depends upon it, or if it is the means of
fulfilling an obligation already contracted, or if a partner is
appointed manager of a partnership in the contract of partnership
and his removal from the management is unjustifiable. Stated
differently, an agency is deemed as one coupled with an interest
where it is established for the mutual benefit of the principal and of
the agent, or for the interest of the principal and of third persons,
and it cannot be revoked by the principal so long as the interest of
the agent or of a third person subsists. In an agency coupled with
an interest, the agents interest must be in the subject matter
of the power conferred and not merely an interest in the

7
0

exercise of the power because it entitles him to compensation.

When an agents interest is confined to earning his agreed
compensation, the agency is not one coupled with an interest,
since an agents interest in obtaining his compensation as such
agent is an ordinary incident of the agency relationship.

XI. Modes of Extinguishment

RAMON RALLOS, Administrator of the Estate of

CONCEPCION RALLOS vs. FELIX GO CHAN & SONS
REALTY CORPORATION, G.R. NO. L-24332,
January 31, 1978
By reason of the very nature of the relationship between principal
and agent, agency is extinguished ipso jure upon the death of either
principal or agent. Although a revocation of a power of attorney
to be effective must be communicated to the parties concerned,
yet a revocation by operation of law, such as by death of the
principal is, as a rule, instantaneously effective inasmuch as "by
legal fiction the agent's exercise of authority is regarded as an
execution of the principal's continuing will. With death, the
principal's will ceases or is the of authority is extinguished.
TRUST
ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact,
NYMPHA Z. SALES v MARIA DIVINA GRACIA SANTOS-GRAN** and
REGISTER OF DEEDS OF MARIKINA CITY, G.R No. 197380, October 8,
2014. J. PERLAS-BERNABE.
To determine when the prescriptive period commenced in an action for
reconveyance, the plaintiffs possession of the disputed property is material.
If there is an actual need to reconvey the property as when the plaintiff is not
in possession, the action for reconveyance based on implied trust prescribes
in ten (10) years, the reference point being the date of registration of the
deed or the issuance of the title. On the other hand, if the real owner of the
property remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him and in
such case, the action for reconveyance would be in the nature of a suit for
quieting of title which is imprescriptible.

71

Having alleged the commission of fraud by Gran in the transfer and

registration of the subject properties in her name, there was, in effect, an
implied trust created by operation of law pursuant to Article 1456 of the Civil
Code.
Here, the filing of the complaint was beyond the 10-year prescriptive
period, warranting the dismissal of the complaint.

72

HEIRS OF VALENTIN BASBAS, ANSELMA B. ENDRINAL, GERTRUD ES BASBAS,

RUFINA BASBAS, CEFERINA B. CARTECIANO, ANACLETO BASBAS, ARSENIA
BASBAS, ANASTACIO BASBAS, BEDACIO BASBAS, TEODOCIA B. OCAMPO,
SEGUNDO C. BASBAS, MARIA B. RAMOS AND EUGENIO BASBAS IN
REPRESENTATION OF PEDRO BASBAS; HERINO T. BASBAS AND NESTOR T.
BASBAS IN REPRESENTATION OF LUCAS BASBAS; ADELAIDA B. FLORENTINO,
RODRIGO BASBAS, FELIX BASBAS, JR., TEODULO BASBAS, ANDRESITO
BASBAS, LARRY BASBAS AND JOEY BASBAS IN REPRESENTATION OF FELIX
BASBAS, SR., VICTOR BEATO, ALIPIO BEATO, EUTIQUIO BEATO, JULIANA B.
DIAZ, PABLO BEATO AND ALEJANDRO BEATO IN REPRESENTATION OF
REMIGIA B. BEATO, AS REPRESENTED BY RODRIGO BASBAS V RICARDO
BASBAS as represented by EUGENIO BASBAS, G.R No. 188773, September 10, 2014. J.
PEREZ
Based on the evidence on hand, defendants including herein respondent
Ricardo acquired the property in question through fraud and, therefore, an
implied trust was created in favor of petitioners under Article 1456 of the
New Civil Code.
Since a constructive trust was created, [petitioners] have the right to recover
the property subject of this action. The fact that the decision of the RTC,
Bian, Laguna approving/granting the petition for the reconstitution of the
title covering Lot No. 39 and said decision has obtained its finality, is of no
moment. It has been held: "the rule that registration of real property under
the Torrens System has the effect of constructive notice to the whole world
cannot be availed of when the purpose of the action is to compel a trustee to
convey the property registered in his name for the benefit of the cestui que
trust. In other words, the defense of prescription cannot be set up in an
action to enforce a trust.
JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No.
196023, April 21, 2014,
J.Reyes
The Court is in conformity with the finding of the trial court that an implied
resulting trust was created as provided under the first sentence of Article
1448which is sometimes referred to as a purchase money resulting trust, the
elements of which are: (a) an actual payment of money, property or services,
or an equivalent, constituting valuable consideration; and (b) such
consideration must be furnished by the alleged beneficiary of a resulting
trust. In this case, the petitioners have shown that the two elements are
present. Luis, Sr. was merely a trustee of Juan Tong and the petitioners in
relation to the subject property, and it was Juan Tong who provided the

money for the purchase of Lot 998 but the corresponding transfer certificate
of title was placed in the name of Luis, Sr.
COMPROM ISE
DOA ADELA EXPORT INTERNATIONAL, INC., vs. TRADE AND
INVESTMENT DEVELOPMENT CORPORATION (TIDCORP), AND
THE BANK OF THE PHILIPPINE
ISLANDS, G.R. No. 201931, February 11, 2015, J. Villarama

Petitioner did not sign the compromise agreement. The Supreme Court held
that it is basic in law that a compromise agreement, as a contract, is binding
only upon the parties to the compromise, and not upon non-parties. This is
the doctrine of relativity of contracts. The rule is based on Article 1311 (1) of
the Civil Code which provides that contracts take effect only between the
parties, their assigns and heirs. The sound reason for the exclusion of nonparties to an agreement is the absence of a vinculum or juridical tie which is
the efficient cause for the establishment of an obligation. Consistent with
this principle, a judgment based entirely on a compromise agreement is
binding only on the parties to the compromise the court approved, and not
upon the parties who did not take part in the compromise agreement and in
the proceedings leading to its submission and approval by the court.

I.

Definition

Air Transportation Office v. Gopuco, Jr., G.R. NO. 158563.

June 30, 2005
A compromise agreement, when not contrary to law, public order,
public policy, morals, or good customs, is a valid contract which is
the law between the parties. It is a contract perfected by mere
consent, whereby the parties, making reciprocal concessions, avoid
litigation or put an end to one already commenced. It has the force of
law and is conclusive between the parties, and courts will not relieve
parties from obligations voluntarily assumed, simply because their
contracts turned out to be unwise

II.Void Compromise
SERCONSISION R. MENDOZA vs. AURORA MENDOZA FERMIN, G.R. No.
177235, July 7,
2014, J. Peralta

Fermin filed a case for Annulment of Deed of Absolute Sale, Transfer

Certificate of Title and Damages alleging that the signature of her father was
forged. While the Court recognize that the technical nature of the procedure
in examining forged documents calls for handwriting experts, resort to these
experts is not mandatory or indispensable, because a finding of forgery does

not depend entirely on their testimonies. Judges must also exercise

independent judgment in determining the authenticity or genuineness of the
signatures in question, and not rely merely on the testimonies of handwriting
experts.
Uy vs. Chua, G.R. NO. 183965, September 18, 2009

Like any other contract, a compromise agreement must comply

with the requisites in Article 1318 of the Civil Code, to wit: (a)
consent of the contracting parties; (b) object certain that is the
subject matter of the contract; and (c) cause of the obligation that
is established. And, like any other contract, the terms and
conditions of a compromise agreement must not be contrary to
law, morals, good customs, public policy and public order. Any
compromise agreement that is contrary to law or public policy is
null and void, and vests no rights in and holds no obligation for any
party. It produces no legal effect at all.
Rivero vs. Court of Appeals, G.R. NO. 141273, May 17,
2005
Article 2035(1) of the New Civil Code provides that no compromise
upon the civil status of persons shall be valid. As such, paternity
and filiation, or the lack of the same, is a relationship that must
be judicially established, and it is for the court to determine its
existence or absence. It cannot be left to the will or agreement of
the parties.
III. Effect
Philippine National Oil Company-Energy Development
Corporation (PNOC- EDC) v. Abella, G.R. NO. 153904,
January 17, 2005
A compromise once approved by final orders of the court has the force
of res judicata between the parties and should not be disturbed
except for vices of consent or forgery. Hence, a decision on a
compromise agreement is final and executory. Such agreement has
the force of law and is conclusive on the parties. It transcends its
identity as a mere contract binding only upon the parties thereto,
as it becomes a judgment that is subject to execution in accordance
with the Rules. Judges therefore have the ministerial and
mandatory duty to implement and enforce it. Hence, compromise
agreements duly approved by the courts are considered the
decisions in the particular cases they involve.

CREDIT TRANSACTIONS
CREDIT
I. LOAN

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L.

SANTOS, ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L.
SANTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
The contractual relationship between banks and their depositors is governed
by the Civil Code provisions on simple loan. Once a person makes a deposit
of his or her money to the bank, he or she is considered to have lent the
bank that money. The bank becomes his or her debtor, and he or she
becomes the creditor of the bank, which is obligated to pay him or her on
demand.
LAND BANK OF THE PHILIPPINES VS. EMMANUEL OATE G.R. No.
192371, J. Del
Castillo
Land Bank unilaterally offset the funds of the respondent without legal
justification and commit undocumented withdrawals from the said fund. The
SC held that the same was tantamount to a forbearance of money and
considered it as an involuntary loan.
CONTRACT OF LOAN
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA.
ROSARIO TAJONERA AND EDUAROSA REALTY DEVELOPMENT, INC.,
G.R. No. 195889, September 24, 2014,
J. Mendoza
The agreement between PNB and [Spouses Tajonera] was one of a loan.
Under the law, a loan requires the delivery of money or any other
consumable object by one party to another who acquires ownership thereof,
on the condition that the same amount or quality shall be paid. Loan is a
reciprocal obligation, as it arises from the same cause where one party is the
creditor, and the other the debtor. The obligation of one party in a reciprocal
obligation is dependent upon the obligation of the other, and the
performance should ideally be simultaneous. This means that in a loan, the
creditor should release the full loan amount and the debtor repays it when it
becomes due and demandable.

PNB, not having released the balance of the last loan proceeds in accordance
with the 3rd Amendment had no right to demand from [Spouses Tajoneras]

compliance with their own obligation under the loan. Indeed, if a party in a
reciprocal contract like a loan does not perform its obligation, the other party
cannot be obliged to perform what is expected of them while the other's
obligation remains unfulfilled.
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA.
ROSARIO TAJONERA and EDUAROSA REALTY DEVELOPMENT, INC.G.R.
No. 195889, September 24, 2014, J.
Mendoza

A loan requires the delivery of money or any other consumable object by one
party to another who acquires ownership thereof, on the condition that the
same amount or quality shall be paid. Loan is a reciprocal obligation, as it
arises from the same cause where one party is the creditor, and the other
the debtor. The obligation of one party in a reciprocal obligation is dependent
upon the obligation of the other, and the performance should ideally be
simultaneous. This means that in a loan, the creditor should release the full
loan amount and the debtor repays it when it becomes due and demandable.

CHECKS
NEIL B. AGUILAR AND RUBEN CALIMBAS vs. LIGHTBRINGERS
CREDIT COOPERATIVE, G.R. No. 209605, January 12, 2015, J.
Mendoza
The Court holds that there was indeed a contract of loan between the
petitioners and respondent. The signatures of the petitioners were present
on both the PNB checks and the cash disbursement vouchers. The checks
were also made payable to the order of the petitioners. The Court pointed
out that a check functions more than a promissory note since it not only
contains an undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the drawer has
funds on deposit against which the check is drawn, sufficient to ensure
payment upon its presentation to the bank."

BONEVIE vs CA, G.R. NO. L-49101 October 24, 1983

Petitioner assails the validity of the mortgage between Lozano and

PBCOM arguing that on the day the deed was executed there was yet
no principal obligation to secure as the loan of P75,000.00 was not
received by the Lozano spouses, so that in the absence of a principal
obligation, there is want of consideration in the accessory contract,
which consequently impairs its validity and fatally affects its very
existence. A contract of loan being a consensual contract, said
contract of loan was perfected at the same time the contract of
mortgage was executed, and the promissory note is only an evidence
of indebtedness and does not indicate lack of consideration of the
mortgage at the time of its execution.

SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT

BANK OF THE PHILIPPINES, G.R. NO. L-24968, April 27,
1972

The trial court rendered judgment for the plaintiff, ruling that there
was a perfected contract between the parties when the application of
Saura, Inc. for a loan was approved by resolution of the defendant,
and the corresponding mortgage was executed and registered and
that the defendant was guilty of breach thereof.
An accepted promise to deliver something, by way of
commodatum or simple loan is binding upon the parties, but the
commodatum or simple loan itself shall not be perferted until the
delivery of the object of the contract.
FRANCISCO HERRERA vs. PETROPHIL CORPORATION, G.R.
NO. L-48349,
December 29, 1986

Pursuant to a contract, the defendant-appellee paid to the plaintfffappellant advance rentals for the first eight
years,
subtracting
therefrom the amount of the interest or discount for the first eight
years, Plaintiff-appellant insists that the lower court erred in the
computation of the interest collected out of the rentals paid for the
first eight years; that such interest was excessive and violative of
the Usury Law.
The contract between the parties is one of lease and not of loan
since the provision for the payment of rentals in advance cannot be
construed as a repayment of a loan because there was no grant or
forbearance of money as to constitute an indebtedness on the part
of the lessor, hence usury law will not apply.
PNB vs. CA, G.R. NO. 75223, March 14, 1990
An escalation clause is a valid provision in the loan agreement
provided that
(1) the increased rate imposed or charged does not exceed the ceiling
fixed by law or the Monetary Board; (2) the increase is made
effective not earlier than the effectivity of the law or regulation
authorizing such an increase; and (3) the remaining maturities of the
loans are more than 730 days as of the effectivity of the law or
regulation authorizing such an increase.
ART 1249

SPOUSES TAGUMPAY N. ALBOS AND AIDA C. ALBOS vs. SPOUSES

NESTOR M. EMBISAN AND ILUMINADA A. EMBISAN, DEPUTY SHERIFF
MARINO V. CACHERO, AND THE REGISTER OF DEEDS OF QUEZON
CITY, G.R. No. 210831, November 26, 2014, J.
Velasco Jr.
The compounding of interest should be in writing. Article 1956 of the New
Civil Code, which refers to monetary interest provides that No interest shall
be due unless it has been expressly stipulated in writing. As mandated by
the foregoing provision, payment of

monetary interest shall be due only if: (1) there was an express stipulation
for the payment of interest; and (2) the agreement for such payment was
reduced in writing.
The imposition of an unconscionable rate of interest on a money debt,
even if knowingly and voluntarily assumed, is immoral and unjust.
In the case at bar, it is undisputed that the parties have agreed for the loan
to earn 5% monthly interest, the stipulation to that effect put in writing.
When the petitioners defaulted, the period for payment was extended,
carrying over the terms of the original loan agreement, including the 5%
simple interest. However, by the third extension of the loan, respondent
spouses decided to alter the agreement by changing the manner of earning
interest rate, compounding it beginning June 1986. This is apparent from the
Statement of Account prepared by the spouses Embisan themselves. Thus,
Spouses Embisan, having imposed, unilaterally at that, the compounded
interest rate, had the correlative duty of clarifying and reducing in writing
how the said interest shall be earned. Having failed to do so, the silence of
the agreement on the manner of earning interest is a valid argument for
prohibiting them from charging interest at a compounded rate.

MCMP CONSTRUCTION CORP. VS. MONARK EQUIPMENT CORP. G.R.

No. 201001.
November 10, 2014, J. Velaso Jr.
The interest rate of 24% per annum, penalty and collection charge of 3% or
36 % per annum on rental fees provided by invoices for the lease of heavy
equipment was found by the court to be iniquitous, unconscionable and
therefore void. Although C.B. Circular No. 905-82, which took effect on
January 1, 1983, effectively removed the ceiling on interest rates for both
secured and unsecured loans, regardless of maturity, nothing in the said
circular could possibly be read as granting carte blanche authority to
lenders to raise interest rates to levels which would either enslave their
borrowers or lead to a hemorrhaging of their assets. Therefore the rates
may be validly reduced by the court.
SUN LIFE OF CANADA (PHILIPPINES), INC. vs. SANDRA TAN KIT and
The Estate of the
Deceased NORBERTO TAN KIT, G.R. No. 183272, October 15, 2014, J.
Del Castillo
Monetary interest refers to the compensation set by the parties for the use
or forbearance of money. No such interest shall be due unless it has been
expressly stipulated in writing. On the other hand, compensatory interest

refers to the penalty or indemnity for damages imposed by law or by the

courts. This being the case and judging from the tenor of the CA, there can
be no other conclusion than that the interest imposed by the appellate-court
is in the nature of compensatory interest.
ROLANDO C. DE LA PAZ vs. L & J DEVELOPMENT COMPANY, G.R. No.
183360,
September 8, 2014, J. Del Castillo

When a person granted an unsecured loan without a maturity date in favor of

a corporation and its president and general manager (who is a lawyer)
without reducing the loan transaction in writing, the creditor cannot enforce
payment of 6% monthly interest. The payments of the debtor to the creditor
must be considered as payment of the principal amount of the loan because
Article 1956 was not complied with. In addition, even if the interest was in
writing, it cannot be collected because it is unconscionable.
ANCHOR SAVINGS BANK vs. PINZMAN REALTY AND DEVELOPMENT
CORPORATION, MARYLIN MANALAC AND RENATO GONZALES, G.R.
No. 192304, August 13, 2014, J.
Villarama Jr.
Foreclosure sale arising from a usurious mortgage cannot be given legal
effect. This Court has previously struck down a foreclosure sale where the
amount declared as mortgage indebtedness involved excessive,
unreasonable, and unconscionable interest charges. In no uncertain terms,
this Court ruled that a mortgagor cannot be legally compelled to pay for a
grossly inflated loan. In the case at bar, the unlawful interest charge which
led to the amount demanded will result to the invalidity of the subsequent
foreclosure sale.

ECE REALTY and DEVELOPMENT, INC. vs. HAYDYN HERNANDEZ, G.R.

No. 212689,
August 6, 2014, J. Reyes
There is no doubt that ECE incurred in delay in delivering the subject
condominium unit, for which reason the trial court was justified in awarding
interest to Hernandez from the filing of his complaint. There being no
stipulation as to interest, under Article 2209 the imposable rate is six
percent (6%) by way of damages. Section 1 of Resolution No. 796 of the
Monetary Board of the Bangko Sentral ng Pilipinas dated May 16, 2013
provides: "The rate of interest for the loan or forbearance of any money,
goods or credits and the rate allowed in judgments, in the absence of an
express contract as to such rate of interest, shall be six percent (6%) per
annum." Thus, the rate of interest to be imposed from finality of judgments
is now back at six percent (6%), the rate provided in Article 2209 of the Civil
Code.
CONRADO A. LIM vs. HMR PHILIPPINES, INC., TERESA SANTOSCASTRO, HENRY BUNAG AND NELSON CAMILLER, G.R. No.
201483, August 04, 2014, J. Mendoza

Lim argues that legal interest in accordance with the case of Eastern
Shipping must also be awarded. The rules on legal interest in Eastern
Shipping have, however, been recently modified by Nacar in accordance with
Bangko Sentral ng Pilipinas Monetary Board (BSP- MB) Circular No. 799, which
became effective on July 1, 2013. Pertinently, it amended the rate of legal
interest in judgments from 12% to 6% per annum, with the qualification that
the new rate be applied prospectively. Thus, the 12% per annum legal
interest in

judgments under Eastern Shipping shall apply only until June 30, 2013, and
the new rate of 6% per annum shall be applied from July 1, 2013 onwards.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK,
G.R No. 181045, July 2, 2014. J. DEL CASTILLO
Since the escalation clause was annulled for being violative of the mutuality
principle, the principal amount of the loan is subject to the original or
stipulated rate of interest, and upon maturity, the amount due shall be
subject to legal interest at the rate of 12% per annum.
ESTANISLAO AND AFRICA SINAMBAN VS. CHINA BANKING
CORPORATION G.R. No. 193890. March 11, 2015, J. REYES
The subject three PNs bear interests ranging from 21% to 23% per annum,
exclusive of penalty of 1% on the overdue amount per month of delay,
whereas in its complaint, Chinabank prayed to recover only the legal rate of
12% on whatever judgment it could obtain. Meanwhile, the Monetary Board
of the Bangko Sentral ng Pilipinas in its Resolution No. 796 dated May 16,
2013, and now embodied in Monetary Board Circular No. 799, has effective
July 1, 2013 reduced to 6%, from 12%, the legal rate of interest for the loan
or forbearance of any money, goods or credits and the rate allowed in
judgments, in the absence of stipulation. Since Chinabank demanded only
the legal, not the stipulated, interest rate on the deficiency and attorneys
fees due, the defendants will solidarily pay interest on their shares in the
deficiency at the rate of 12% from November 18, 1998 to June 30, 2013, and
6% from July 1, 2013 until fully paid.
ILEANA DR. MACALINAO vs BANK OF THE PHILIPPINE
ISLANDS, G.R. NO.
175490, September 17, 2009

In its Complaint, respondent BPI originally imposed the interest and

penalty charges at the rate of 9.25% per month or 111% per
annum which was declared as unconscionable by the lower courts
for being clearly excessive, and was thus reduced to 2% per month
or 24% per annum but which the CA modified increased them to
3% per month or 36% per annum based on the Terms and
Conditions Governing the Issuance and Use of the BPI Credit Card,
which governs the transaction between petitioner Macalinao and
respondent BPI.
The courts may reduce the interest rate as reason and equity
demand,
for
stipulations
demanding
interest
excessive,
8
0

iniquitous, unconscionable and exorbitant interest rates are void

for being contrary to morals, if not against the law.

COMMODATUM

8
0

CATHOLIC
VICAR
G.R. L-80294-95,
September 21, 1988

APOSTOLIC

CHURCH

vs.

CA,

When respondents allowed the free use of the property they became
bailors in commodatum and the petitioner the bailee. The bailees'
failure to return the subject matter of commodatum to the bailor did
not mean adverse possession on the part of the borrower. The
bailee held in trust the property subject matter of commodatum.
Hence, an adverse claim could not ripen into title by way of ordinary
acquisitive prescription because of the absence of just title.
REPUBLIC OF THE PHILIPPINES vs BAGTAS, G.R.
17474, October 25, 1962

NO.

L-

The appellant had been in possession of the bull even after the
expiration of the contract. He contends, however, that since the
contract was commodatum the appellee retained ownership or title
to the bull. Hence, it should suffer its loss due to force majeure.
A contract of commodatum is essentially gratuitous. If the breeding fee
be considered a compensation, then the contract would be a lease
of the bull. Under article 1671 of the Civil Code the lessee would be
subject to the responsibilities of a possessor in bad faith, because
she had continued possession of the bull after the expiry of the
contract. And even if the contract be commodatum, still the appellant
is liable, because article 1942 of the Civil Code provides that a
bailee in a contract of commodatum
. . . is liable for loss of the things, even if it should be through
a fortuitous event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value,
unless there is a stipulation exempting the bailee from responsibility
in case of a fortuitous event; xxx

81

REPUBLIC OF THE PHILIPPINES vs. CA, G.R. NO. L-46145

November 26, 1986

The disputed property is private land and this possession was

interrupted on ly by the occupation of the land by the U.S. Navy
which eventually abandoned the premises. The heirs of the late
Baloy, are now in actual possession, and this has been so since
the abandonment by the U.S. Navy.

82

The occupancy of the U.S. Navy partakes of the character of a

commodatum,
and one's ownership of a thing may be lost by
prescription by reason of another's possession if such possession
be under claim of ownership, not where the possession is only
intended to be transient, in which case the owner is not divested of
his title, although it cannot be exercised in the meantime.
MUTUUM
INTEGRATED
REALTY
CORPORATION
vs.
PHILIPPINE
NATIONAL BANK, G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. COURT OF APPEALS, G.R.
NO. L-60907, June 28, 1989
OBM contends that it had agreed to pay interest only up to the
dates
of
maturity of the certificates of time deposit and that
respondent Santos is not entitled to interest after the maturity dates
had expired, unless the contracts are renewed. When respondent
invested his money in time deposits with OBM they entered into a
contract of simple loan or mutuum, not a contract of deposit.

REPUBLIC OF THE
NO. L-20240,
December 31, 1965

PHILIPPINES

vs.

GRIJALDO,

G.R.

The appellant maintains that because the loans were secured by a

chattel mortgage on the standing crops on a land owned by him
and these crops were lost or destroyed through enemy action his
obligation to pay the loans was thereby extinguished.
The chattel mortgage on the crops growing on appellant's land
simply stood
as a security for
the
fulfillment of appellant's
obligation, which is the payment of the loan. The loss of the crops
did not extinguish his obligation to pay, because his obligation, as a
simple loan or mutuum, was to pay a generic thing, the amount of
money with interest.

HERRERA vs. PETROPHIL

48349 December 29, 1986

CORPORATION,

G.R.

NO.

L-

The difference between a discount and a loan or forbearance is that

the former does not have to be repaid. The loan or forbearance is
subject to repayment and is therefore governed by the laws on
usury.

BRIONES vs. CAMMAYO, G.R. NO. L-23559, October 4,

1971

In simple loan with stipulation of usurious interest, the prestation

of the debtor to pay the principal debt, which is the cause of the
contract is not illegal. The illegality lies only as to the prestation to
pay the stipulated interest. Hence, being separable, the latter only
should be deemed void, since it is the only one that is illegal.
II. DEPOSIT
INTEGRATED
REALTY
CORPORATION
vs.
PHILIPPINE
NATIONAL BANK, G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. CA, G.R. NO. L-60907,
June 28, 1989

OBM contends that it had agreed to pay interest only up to the

dates
of
maturity of the certificates of time deposit and that
respondent Santos is not entitled to interest after the maturity dates
had expired, unless the contracts are renewed. When respondent
invested his money in time deposits with OBM they entered into a
contract of simple loan or mutuum, not a contract of deposit.

BPI vs. CA, G.R. NO. L-66826 August 19, 1988

The document which embodies the contract states that the

US$3,000.00 was received by the bank for safekeeping. A deposit
is constituted from the moment a person receives a thing belonging
to another, with the obligation of safely keeping it and of returning
the same, but if the safekeeping of the thing delivered is not the
principal purpose of the contract, there is no deposit but some
other contract.
BPI vs. CA, G.R. NO. 104612, May 10, 1994

Bank deposits are in the nature of irregular deposits; they are

really loans because they earn interest. The relationship then
between a depositor and a bank is one of creditor and debtor, and
the deposit under the questioned account was an ordinary bank
deposit; hence, it was payable on demand of the depositor.
SERRANO vs. CENTRAL
NO. L-30511,
February 14, 1980

BANK OF THE

PHILIPPINES, G.R.

All kinds of bank deposits, whether fixed, savings, or current are to

be treated as loans and are to be covered by the law on loans
because it can use the same. Failure of he respondent Bank to
honor the time deposit is failure to pay
s obligation as a debtor
and not a breach of trust arising from depositary's failure to
return the subject matter of the deposit

WAREHOUSE RECEIPT LAW

LUA KIAN vs. MANILA RAILROAD COMPANY, G.R. NO. L23033, January 5, 1967

The legal relationship between an arrastre operator and the

consignee is akin to that of a depositor and warehouseman. As a
custodian of the goods discharged from the vessel, it was
defendant arrastre operator's duty, like that of any ordinary
depositary, to take good care of the goods and to turn them over
to the party entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld delivery
because of the discrepancy between the bill of lading and the
markings and conducted its own investigation, not unlike that
under Section 18 of the Warehouse Receipts Law, or called upon
the parties, to interplead, such as in a case under Section 17 of the
same law, in order to determine the rightful owner of the goods.

TRUST RECEIPT
VINTOLA vs. INSULAR BANK OF ASIA AND AMERICA, G.R.
NO. 73271, May 29, 1987

A trust receipt is considered as a security transaction intended to

aid in financing importers and retail dealers who do not have
sufficient funds or resources to finance the importation or purchase
of merchandise, and who may not be able to acquire credit except

through utilization, as collateral of the merchandise imported or

purchased.

III.

GUARANTY AND

SURETYSHIP SURETY
OFFICE OF THE OMBUDSMAN, vs. AMALIO A. MALLARI, G.R. No.
183161, December
03, 2014, J. Mendoza

Mallari was administratively charged due to the fact the he approved surety
bond in favor of ECOBEL without consideration of the policies by GSIS. The
court finds substantial evidence to prove Mallaris administrative liability. The
Court notes that irregularities, defects and infirmities attended the
processing, approval, issuance, and the actual drawdown of the
US$10,000,000.00 ECOBEL bond in which Mallari actively participated. In a
letter, dated September 13, 2002, to the FFIB, Mr. Reynaldo R. Nograles, OICOffice of the President, Internal Audit Service, GSIS, attached a copy of the
excerpts from the Final Report on the GSIS Audit of Underwriting
Departments. Said Audit Report found that: there was non-adherence to
existing policies/SOPs in the processing and release of the Ecobel Land, Inc.
guaranty payment bond, as well as non-adherence to GSIS GIGs business
policy statement on survey, inspection or assessment of risks/properties to
be insured including re-inspection and survey of insured properties.

CENTENNIAL GUARANTEE ASSURANCE CORPORATION vs.

UNIVERSAL
MOTORS CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN
CAGAYAN DE ORO DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and
PETER YAP, G.R. No. 189358, October 8,
2014, J. Perlas-Bernabe.

Verily, in a contract of suretyship, one lends his credit by joining in the

principal debtors obligation so as to render himself directly and primarily
responsible with him, and without reference to the solvency of the principal.
Thus, execution pending appeal against NSSC means that the same course of
action is warranted against its surety, CGAC. The same reason stands for
CGACs other principal, Orimaco, who was determined to have permanently
left the country with his family to evade execution of any judgment against
him.
PEOPLE'S TRANS-EAST ASIA INSURANCE CORPORATION, a.k.a.
PEOPLE'S GENERAL INSURANCE CORPORATIONvs. DOCTORS OF
NEW MILLENNIUM HOLDINGS, INC., G.R.
No. 172404, August 13, 2014, J. Leonen
The liabilities of an insurer under the surety bond are not extinguished when
the modifications in the principal contract do not substantially or materially
alter the principal's obligations. The surety is jointly and severally liable with
its principal when the latter defaults from its obligations under the principal
contract. On the basis of petitioners own admissions, the principal contract
of the suretyship is the signed agreement. The surety, therefore, is presumed

to have acquiesced to the terms and conditions embodied in the principal

contract when it issued its surety bond.
GILAT SATELLITE NETWORKS, LTD vs. UNITED COCONUT PLANTERS
BANK GENERAL INSURANCE CO., INC., G.R. No. 189563, April 7,
2014, CJ. Sereno
In suretyship, the oft-repeated rule is that a suretys liability is joint and
solidary with that of the principal debtor. This undertaking makes a surety
agreement an ancillary contract,

as it presupposes the existence of a principal contract. Nevertheless,

although the contract of a surety is in essence secondary only to a valid
principal obligation, its liability to the creditor or "promise" of the principal is
said to be direct, primary and absolute; in other words, a surety is directly
and equally bound with the principal. He becomes liable for the debt and duty
of the principal obligor, even without possessing a direct or personal interest
in the obligations constituted by the latter. Thus, a surety is not entitled to a
separate notice of default or to the benefit of excussion. It may in fact be
sued separately or together with the principal debtor.
After a thorough examination of the pieces of evidence presented by both
parties, the RTC found that Gilathad delivered all the goods to One Virtual
and installed them. Despite these compliances, One Virtual still failed to pay
its obligation, triggering UCPBs liability to Gilat as the formers surety. In
other words, the failure of One Virtual, as the principal debtor, to fulfill its
monetary obligation to Gilat gave the latter an immediate right to pursue
UCPB as the surety.
YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU,
and ALMERICK
TIENG LIM vs. INTERNATIONAL EXCHANGE BANK (now Union Bank of
the Philippines), G.R. No. 203133, February 18, 2015, J. Reyes
A surety is considered in law as being the same party as the debtor in relation
to whatever is adjudged touching the obligation of the latter, and their
liabilities are interwoven as to be inseparable. And it is well settled that when
the obligor or obligors undertake to be jointly and severally liable, it
means that the obligation is solidary, as in this case.
TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES
(Formerly PHILIPPINE EXPORT AND
FOREIGN LOAN
GUARANTEE
CORPORATION VS. ASIA PACES CORPORATION, PACES INDUSTRIAL
CORPORATION, NICOLAS
C. BALDERRAMA,
SIDDCOR INSURANCE
CORPORATION, G.R. No. 187403 February 12, 2014, J. Perlas-Bernabe
A surety is an insurer of the debt, whereas a guarantor is an insurer of the
solvency of the debtor. A suretyship is an undertaking that the debt shall be
paid; a guaranty, an undertaking that the debtor shall pay. Stated differently,
a surety promises to pay the principals debt if the principal will not pay,
while a guarantor agrees that the creditor, after proceeding against the
principal, may proceed against the guarantor if the principal is unable to pay.
A surety binds himself to perform if the principal does not, without regard to

his ability to do so. A guarantor, on the other hand, does not contract that the
principal will pay, but simply that he is able to do so. In other words, a surety
undertakes directly for the payment and is so responsible at once if the
principal debtor makes default, while a guarantor contracts to pay if, by the
use of due diligence, the debt cannot be made out of the principal debtor.

Article 2079 of the Civil Code provides that "[a]n extension granted to the
debtor by the creditor without the consent of the guarantor extinguishes the
guaranty," equally applies to both contracts of guaranty and suretyship.
STRONGHOLD INSURANCE COMPANY, INC., vs. SPOUSES RUNE AND LEA
STROEM, G.R. No. 204689, January 21, 2015, J. Leonen
It is settled that a suretys solidary obligation for the performance of the
principal debtors obligation is indirect and merely secondary. Nevertheless,
the suretys liability to the creditor or promisee of the principal is said to be
direct, primary and absolute; in other words, he is directly and equally bound
with the principal. In enforcing a surety contract, the complementarycontracts-construed-together doctrine finds application. According to this
principle, an accessory contract must be read in its entirety and together
with the principal agreement, as provided in Article 1374.

GUARANTY
HOME GUARANTY CORPORATION, vs. LA SAVOIE DEVELOPMENT
CORPORATION, G.R.
No. 168616, January 28, 2015, J. Leonen
Home Guaranty Corporation is a guarantor of La Savoie. Subsequently, La
Savoie was placed under receivership. The Supreme Court held that placing
La Savoie under receivership brings into operation the rule against
preference of creditors. Home Guaranty Corporation must submit itself, like
La Savoie's other creditors, to how La Savoie's Petition for Rehabilitation
shall be resolved. As a paying guarantor, Home Guaranty Corporation was
subrogated into the rights of La Savoie's creditors and now stands as the
latter's own creditor.
COMMONWEALTH INSURANCE CORPORATION vs. CA, G.R.
NO. 130886.
January 29, 2004

Petitioners liability under the suretyship contract is different from

its liability under the law. There is no question that as a surety,
petitioner should not be made to pay more than its assumed
obligation under the surety bonds. However, it is clear from the
above-cited jurisprudence that petitioners liability for the payment

of interest is not by reason of the suretyship agreement itself but

because of the delay in the payment of its obligation under the said
agreement.

THE MANILA INSURANCE CO INC vs SPOUSES AMURAO, G.R.

NO.
179628,
January 16, 2013

Petitioner imputes error on the part of the CA in treating petitioner

as a solidary debtor instead of a solidary guarantor and argues
that while a surety is bound solidarily with the obligor, this does not
make the surety a solidary co-debtor. A suretys liability is joint and
several and although the contract of suretyship is secondary to the
principal contract, the suretys
liability
to
the obligee
is
nevertheless direct, primary, and absolute.

THE IMPERIAL INSURANCE, INC. vs. DE LOS ANGELES, G.R.

NO. L-28030,
January 18, 1982

Imperial Insurance, Inc. bound itself solidarily with the principal,

the deceased defendant Reyes. In accordance with Article 2059,
par. 2 of the Civil Code of the Philippines, excussion (previous
exhaustion of the property of the debtor) shall not take place "if he
(the guarantor) has bound himself solidarily with the debtor,"
hence the petitioner cannot escape liability on its counter-bonds.
MANILA SURETY & FIDELITY CO., INC. vs. ALMEDA, G.R.
NO. L-27249 July 31, 1970

There is no question that under the bonds posted in favor of the

NAMARCO in this case, the surety company assumed to make
immediate payment to
said firm of any due and unsettled
accounts of the debtor-principal, even without demand and notice
of the debtor's non-payment, the surety, in fact, agreeing that its
liability to the creditor shall be direct, without benefit of exhaustion
of the debtor's properties, and to remain valid and continuous
until the guaranteed obligation is fully satisfied. In short, appellant
secured to the creditor not just the payment by the debtorprincipal of his accounts, but the payment itself of such accounts.
Clearly, a contract of suretyship was thus created, the appellant
becoming the insurer, not merely of the debtor's solvency or ability
to pay, but of the debt itself. Under the Civil Code, with the

debtor's insolvency having been judicially recognized, herein

appellant's resort to the courts to be released from the undertaking
thus assumed would have been appropriate.
RCBC vs. ARRO, G.R. NO. L-49401, July 30, 1982

The surety agreement which was earlier signed by Enrique and

private respondent, is an accessory obligation, it being dependent
upon a principal one which, in this case is the loan obtained by
Daicor as evidenced by a promissory

note. By the terms, it can be clearly seen that the surety

agreement was executed to guarantee future debts which Daicor
may incur with petitioner since a guaranty may also be given as
security for future debts, the amount of which is not yet known;
there can be no claim against the guarantor until the debt is
liquidated.
REPUBLIC OF THE PHILIPPINES vs. PAL-FOX LUMBER CO.,
INC., G.R. NO.
L-26473, February 29, 1972

On whether the surety's liability can exceed the amount of its

bond, it is enough to remark that while the guarantee was for the
original amount of the debt of Gabino Marquez, the amount of the
judgment by the trial court in no way violates the rights of the
surety. If it (the guaranty) be simple or indefinite, it shall comprise
not only the principal obligation but also all its accessories,
including judicial costs, provided with respect to the latter, that the
guarantor shall only be liable for those costs incurred after he has
been judicially required to pay.
IV.PLEDGE AND REAL MORTGAGE
ROLANDO ROBLES, REPRESENTED BY ATTY. CLARA C. ESPIRITU vs.
FERNANDO FIDEL YAPCINCO, PATROCINIO B. YAPCINCO, MARIA
CORAZON B. YAPCINCO, and MARIA ASUNCION B. YAPCINCOFRONDA, G.R. No. 169569, October 22, 2014, J. Bersamin
The effect of the failure of Apolinario Cruz, the predecessor-in-interest of
Rolando Robles, petitioner to this case, to obtain the judicial confirmation
was only to prevent the title to the property from being transferred to him.
For sure, such failure did not give rise to any
right in favor of the mortgagor or the respondents as his successors-ininterest to take back the property already validly sold through public auction.
Nor did such failure invalidate the foreclosure proceedings. To maintain
otherwise would render nugatory the judicial foreclosure and foreclosure sale,
thus unduly disturbing judicial stability.
RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA
MELECIO

PACIFICO (deceased, substituted by her only child ERILL* ISAAC M.

PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH
MELECIO PALMA-GIL, G.R No. 178451, July 30, 2014. PERLAS-j.
BERNABE

In this case, the bank claims that it should be deemed a mortgagee in good
faith for having conducted exhaustive investigations on the history of the
mortgagors title.
However, the Court found this argument untenable. first, the doctrine of
mortgagee in good faith applies only to lands registered under the Torrens
system and not to unregistered lands, as the properties in suit; and second,
the principle is inapplicable to banking

institutions which are behooved to exercise greater care and prudence

before entering into a mortgage contract.
RURAL BANK OF CABADBARAN, INC. vs. JORGITA A. MELECIO-YAP,
LILIA MELECIO
PACIFICO (deceased, substituted by her only child ERILL*ISAAC M.
PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH MELECIO
PALMA-GIL, G.R. No. 178451,
July 30, 2014, J. Perlas-Bernabe
When a bank relied on a forged SPA, it has the burden to prove its
authenticity and due execution as when there is a defect in the notarization
of a document, the clear and convincing evidentiary standard normally
attached to a duly-notarized document is dispensed with, and the measure to
test the validity of such document is preponderance of evidence.
However, where a mortgage is not valid due to a forged SPA, the principal
obligation which it guarantees is not thereby rendered null and void. What is
lost is merely the right to foreclose the mortgage as a special remedy for
satisfying or settling the indebtedness which is the principal obligation. In
case of nullity, the mortgage deed remains as evidence or proof of a personal
obligation of the debtor and the amount due to the creditor may be enforced
in an ordinary action.
The partial invalidity of the subject real estate mortgage brought about by
the forged status of the subject SPA would not, therefore, result into the
partial invalidation of the loan obligation principally entered into by the
parties; thus, absent any cogent reason to hold otherwise, the need for the
recomputation of said loan obligation should be dispensed with.
LEONARDO C. CASTILLO, represented by LENNARD V. CASTILLO vs.
SECURITY BANK CORPORATION, JRC POULTRY FARMS or SPOUSES
LEON C. CASTILLO, JR., and TERESITA FLORESCASTILLO, G.R. No.
196118, July 30, 2014, J. Peralta
In a real estate mortgage, allegations of forgery, like all other allegations,
must be proved by clear, positive, and convincing evidence by the party
alleging it. But even if there is variation on the date of issuance of the
Community Tax Certificate (CTC) as indicated on the notarization of the
alleged SPA and on the day it was actually secured, such defect in the SPA
does not automatically render it invalid. Defective notarization will simply
strip the document of its public character and reduce it to a private
instrument, but nonetheless, binding, provided its validity is established by
preponderance of evidence.
The law requires that the form of a contract that transmits or extinguishes
real rights over immovable property should be in a public document, yet the
9
0

failure to observe the proper form does not render the transaction invalid.
The necessity of a public document for said contracts is only for
convenience; it is not essential for validity or enforceability.
PHILIPPINE NATIONAL BANK vs. JOSE GARCIA and CHILDREN et al.,
G.R. No. 182839,
June 2, 2014, J. Brion

9
0

The Amendment of Real Estate Mortgage constituted by Jose Sr. over the
entire property without his co-owners' consent is not necessarily void in its
entirety. The right of the PNB as mortgagee is limited though only to the
portion which may be allotted to Jose Sr. in the event of a division and
liquidation of the subject property. Registration of a property alone in the
name of one spouse does not destroy its conjugal nature. What is material is
the time when the property was acquired.
METROPOLITAN FABRICS INC. ET AL. VS. PROSPERITY CREDIT RESOURCES
ENC. ET AL. G.R.
No. 154390 March 17, 2014, J. Bersamin

Contrary to their modified defense of absence of consent, the testimony

adduced tended at best to prove the vitiation of their consent through
insidious words, machinations or misrepresentations amounting to fraud,
which showed that the contract of mortgage was voidable. Where the
consent was given through fraud, the contract was voidable, not void ab
initio. This is because a voidable or annullable contract is existent, valid and
binding, although it can be annulled due to want of capacity or because of
the vitiated consent of one of the parties.

ATTY. LEO N. CAUBANG vs. JESUS G. CRISOLOGO AND NANETTE B.

CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
In an extrajudicial foreclosure of a real estate mortgage, failure to comply
with the publication requirement by the mortgagee brought by the failure of
its lawyer to make an effort to inquire as to whether the Oriental Daily
Examiner was indeed a newspaper of general circulation, as required by law,
and as a result, the mortgagee became the sole bidder, will invalidate the
notice and render the sale voidable. The principal object of a notice of sale in
a foreclosure of mortgage is to notify the mortgagor and to inform the public
generally of the nature and condition of the property to be sold, and of the
time, place, and terms of the sale. These are given to secure bidders and
prevent a sacrifice of the property.
SPOUSES JOSE O. GATUSLAO AND ERMILA LEONILA LIMSIACOGATUSLAO vs. LEO RAY
V. YANSON, G.R. No. 191540, January 21, 2015, J. Del Castillo
Yanson, as a transferee or successor-in-interest of PNB by virtue of the
contract of sale between them, is considered to have stepped into the shoes
of PNB. As such, he is necessarily entitled to avail of the provisions of
Section 7 of Act No. 3135. Verily, one of the rights that PNB acquired as
91

purchaser of the subject properties at the public auction sale, which it could
validly convey by way of its subsequent sale of the same to respondent, is
the availment of a writ of possession. This can be deduced from the
stipulation that the vendee further agrees to undertake, at xxx his
expense, the ejectment of any occupant of the property. Accordingly,
Yanson filed the contentious ex parte motion for a writ of possession to eject
Spouses Gatuslao therefrom and take possession of the subject properties.

92

Further, respondent may rightfully take possession of the subject properties

through a wr it of possession, even if he was not the actual buyer thereof at
the public auction sale, in consonance with the Courts ruling in Ermitao v.
Paglas. The Court ruled that after the expiration of the redemption period
without redemption having been made by petitioner, respondent became the
owner thereof and consolidation of title becomes a right. Being already then
the owner, respondent became entitled to possession. Petitioner already lost
his possessory right over the property after the expiration of the said period.
DEVELOPMENT BANK OF THE PHILIPPINES vs. GUARINA
AGRICULTURAL AND REALTY DEVELOPMENT CORPORATION,
No. 160758, JANUARY 15, 2014, J.
Bersamin

G.R.

Guarina executed a real estate mortgage over several real properties in

favor of DBP as security for a loan. However, before the loan was due, DBP
foreclosed upon the mortgage. The Supreme Court held that foreclosure of a
mortgage prior to the mortgagor's default on the principal obligation is
premature, and should be undone for being void and ineffectual. The
mortgagee who has been meanwhile given possession of the mortgaged
property by virtue of a writ of possession issued to it as the purchaser at the
foreclosure sale may be required to restore the possession of the property to
the mortgagor and to pay reasonable rent for the use of the property during
the intervening period.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L45710 October 3, 1985

The fact that when Sulpicio M. Tolentino executed a real estate

mortgage, no consideration was then in existence, as there was no
debt yet because Island Savings Bank had not made any release
on the loan, does not make the real estate mortgage void for lack
of consideration. It is not necessary that any consideration should
pass at the time of the execution of the contract of real mortgage,
it may either be a prior or subsequent matter, but when the
consideration is subsequent to the mortgage, the mortgage can
take effect only when the debt secured by it is created as a binding
contract to pay.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L45710, October 3, 1985

Where the indebtedness actually owing to the holder of the

mortgage is less than the sum named in the mortgage, the
mortgage cannot be enforced for more than the actual sum due.
INTEG.R.ATED REALTY CORPORATION vs. PHILIPPINE
NATIONAL BANK, G.R. NO. L-60705, June 28, 1989

OVERSEAS BANK OF MANILA vs.CA, G.R. NO. L-60907 June

28, 1989

The facts and circumstances leading to the execution of the deed

of assignment, has satisfied the requirements of a contract of pledge
(1) that it be constituted to secure the fulfillment of a principal
obligation; (2) that the pledgor be the absolute owner of the thing
pledged; (3) that the persons constituting the pledge have the free
disposal of their property, and in the absence thereof, that they be
legally authorized for the purpose. The further requirement that the
thing pledged be placed in the possession of the creditor, or of a
third person by common agreement was complied with by the
execution of the deed of assignment in favor of PNB.
YULIONGSIU vs. PNB, G.R. NO. L-19227, February 17,
1968

The defendant bank as pledgee was therefore entitled to the

actual possession of the vessels, and while it is true that plaintiff
continued operating the vessels after the pledge contract was
entered into, his possession was expressly made "subject to the order
of the pledgee." On the other hand, there is an authority supporting
the proposition that the pledgee can temporarily entrust the
physical possession of the chattels pledged to the pledgor without
invalidating the pledge. In such a case, the pledgor is regarded as
holding the pledged property merely as trustee for the pledgee.
MAKATI
LEASING
and
FINANCE
CORPORATION
vs.
WEAREVER TEXTILE MILLS, INC., G.R. NO. L-58469, May
16, 1983

A house of strong materials may be considered as personal

property for purposes of executing a chattel mortgage thereon as
long as the parties to the contract so agree and no innocent third
party will be prejudiced thereby. There is absolutely no reason why
a machinery, which is movable in its nature and becomes
immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is
estopped from denying the existence of the chattel mortgage.

BUNDALIAN vs. CA, G.R. NO. L-55739, June 22, 1984

The contract also provides that "it is agreed that the vendor shall
have the right to possess, use, and build on, the property during the
period of redemption." When the vendee acknowledged the right of
the vendor to retain possession of the property the contract is one
of loan guaranteed by mortgage, not a conditional sale or an
option to repurchase.

TIOSECO vs. CA, G.R. NO. L-66597, August 29, 1986

When the respondents chose to enforce their right of redemption thru

a court action they were well within their right as the action was filed
within one year from the registration of the foreclosure sale of the
real estate. The law does not even require any previous notice to the
vendee, nor a meeting between him and the redemptioner, much
less a previous formal tender before any action is begun in court
to enforce the right of redemption.
PNB vs. CA, G.R. NO. L-60208, December 5, 1985

When the foreclosure proceedings are completed and the mortgaged

property is sold to the purchaser then all interest of the mortgagor are
cut off from the property Prior to the completion of the foreclosure,
the mortgagor is liable for the interests on the mortgage. However,
after
the
foreclosure
proceedings
and the execution of the
corresponding certificate of sale of the property sold at public
auction in favor of the successful bidder, the redemptioner mortgagor
would be bound to pay only for the amount of the purchase price with
interests thereon at the rate of one per centum per month in addition
up to the time of redemption, together with the amount of any
assessments or taxes which the purchaser may have paid thereon
after the purchase and interest on such last named amount at the
same rate.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L45710, October 3, 1985

Where the indebtedness actually owing to the holder of the

mortgage is less than the sum named in the mortgage, the
mortgage cannot be enforced for more than the actual sum due.
RAMIREZ vs. CA, G.R. NO. L-38185, September 24, 1986

The antichretic creditor cannot ordinarily acquire by prescription the

land surrendered to him by the debtor. The petitioners are not
possessors in the concept of owner but mere holders placed in
possession of the land by its owners, thus, their possession
cannot serve as a title for acquiring dominion.
OCAMPO vs. DOMALANTA, G.R. NO. L-21011, August 30,
1967

A proceeding for judicial foreclosure of mortgage is an action quasi in

rem. It is based on a personal claim sought to be enforced against a
specific property of a person named party defendant. And, its purpose
is to have the property seized and sold by court order to the end
that the proceeds thereof be applied to the payment of plaintiff's
claim.

CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L45710, October 3, 1985

A pledge or mortgage is indivisible even though the debt may be

divided among the successors in interest of the debtor or creditor.
Therefore, the debtor's heirs who has paid a part of the debt
can not ask for the proportionate extinguishment of the pledge or
mortgage as long as the debt is not completely satisfied, neither
can the creditor's heir who have received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of other
heirs who have not been paid.
P ACTUM COMM ISSORIUM
PHILNICO INDUSTRIAL CORPORATION vs. PRIVATIZATION AND
MANAGEMENT
OFFICE, G.R. No. 199420, August 27, 2014, J. Leonardo-De Castro
The SC disagreed with the findings of the CA that there is no pactum
commissorium, on the ground that since the ARDA and the Pledge
Agreement are entirely separate and distinct contract and that neither
contract contains both elements of pactum commissorium: the ARDA solely
has the second element, while the Pledge Agreement only has the first
element, such provision cannot be considered as one of pactum
commissorium.
Jurisprudence holds that the agreement of the parties may be embodied in
only one contract or in two or more separate writings. In case of the latter,
the writings of the parties should be read and interpreted together in such
a way as to render their intention effective.
In determining the existence of pactum commissorium, had focused more
on the evident intention of the parties, rather than the formal or written
form.

Here, the ARDA and the Pledge Agreement herein, although executed in
separate written instruments, are integral to one another. It was the
intention of the parties to enter into and execute both contracts for a
complete effectuation of their agreement.
EXTRA- JU DICIAL FORECLOSURE

RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA

MELECIO
PACIFICO (deceased, substituted by her only child ERILL* ISAAC M.
PACIFICO, JR.), REYNALDO A. MELECIO DELOSO, and SARAH
MELECIO PALMA-GIL, G.R No. 178451, July 30, 2014. J. PERLASBERNABE
Where a mortgage is not valid, the principal obligation which it guarantees is
not thereby rendered null and void. what is lost is merely the right to
foreclose the mortgage as a special remedy for satisfying or settling the
indebtedness which is the principal obligation. In case of nullity, the
mortgage deed remains as evidence or proof of a personal obligation of the
debtor and the amount due to the creditor may be enforced in an ordinary
action.
Based on the foregoing, the partial invalidity of the subject real estate
mortgage brought about by the forged status of the subject SPA would not,
therefore, result into the partial invalidation of the loan obligation principally
entered into by RBCI and Spouses Mantala.
SPOUSES RODOLFO and MARCELINA GUEVARRA vs. THE COMMONER
LENDING CORPORATION, INC., G.R. No. 204672, J. Perlas-Bernabe

In an extra-judicial foreclosure of registered land acquired under a free

patent, the mortgagor may redeem the property within two (2) years from
the date of foreclosure if the land is mortgaged to a rural bank under
Republic Act No. (RA) 720, as amended, otherwise known as the Rural Banks
Act, or within one (1) year from the registration of the certificate of sale if
the land is mortgaged to parties other than rural banks pursuant to Act No.
3135. If the mortgagor fails to exercise such right, he or his heirs may still
repurchase the property within five (5) years from the expiration of the
redemption period pursuant to Section 119 of the Public Land Act. The RTC
and CA both correctly ruled that Spouses Guevarras right to repurchase the
subject property had not yet expired when Cadastral Case No. 122 was filed
on September 8, 2005.
METROPOLITAN BANK AND TRUST COMPANY vs. S.F. NAGUIAT
ENTERPRISES, INC.,
G.R. No. 178407, March 18, 2015, J. Leonen
The insolvency court has exclusive jurisdiction to deal with the property of
the insolvent. Consequently, after the mortgagor-debtor has been declared
insolvent and the insolvency court has acquired control of his estate, a

mortgagee may not, without the permission of the insolvency court,

institute proceedings to enforce its lien.

ATTY. LEO N. CAUBANG, vs. JESUS G. CRISOLOGO AND NANETTE B.

CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
Petitioner failed to have the notice of sale published in a newspaper of general
circulation. The Supreme Court held that the principal object of a notice of
sale in a foreclosure of mortgage is to inform the public generally of the
nature and condition of the property to be

sold, and of the time, place, and terms of the sale. Notices are given to
secure bidders and prevent a sacrifice of the property. Therefore, statutory
provisions governing publication of notice of mortgage foreclosure sales
must be strictly complied with and slight deviations therefrom will invalidate
the notice and render the sale, at the very least, voidable.
LEASE
OWEN PROSPER A. MACKAY vs. SPOUSES DANA CASWELL AND
CERELINA CASWELL,
G.R. No. 183872, November 17, 2014, J. Del Castillo
Under Article 1715 of the Civil Code, if the work of a contractor has defects
which destroy or lessen its value or fitness for its ordinary or stipulated use,
he may be required to remove the defect or execute another work. If he
fails to do so, he shall be liable for the expenses by the employer for the
correction of the work. In the case at bar, Mackay was given the opportunity
to rectify his work. Subsequent to Zameco IIs disapproval to supply the
spouses Caswell electricity for several reasons, credence must be given to
the latters claim that they looked for said Mackay to demand a rectification
of the work, but said Mackay and his group were nowhere to be found.
PRO-GUARD SECURITY SERVICES CORPORATION v TORMIL
REALTY AND DEVELOPMENT CORPORATION, G.R No. 176341,
July 7, 2014. J. DEL CASTILLO
Tormil filed an unlawful detainer case against Torres-Pabalan. Meanwhile the
building was being leased to Pro-Guard. Tormil eventually prevailed in the
ejectment case, and was adjudged entitled to Pro-Guards payment of rent.
The issue in this case is when the rentals should be reckoned.
Tormil, as the victor in the unlawful detainer suit, is entitled to the fair rental
value for the use and occupation of the unit in the building. Such
compensation should not be reckoned from the time Pro-Guard began to
occupy the same, but from the time of the demand to vacate. from the
moment Pro-Guard started to occupy the unit in March 1994 up to November
15, 1998, the right of Pro-Guard to possess the premises was not challenged.
It was only after Tormil prevailed over Manuel in its ownership of the same
that it terminated Pro-Guards right to possess the unit it was occupying
through a letter to vacate dated November 16, 1998. Hence, it is only from
that point that Tormil is considered to have withdrawn its tolerance of ProGuards occupation.

NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA

COMPUTER LEARNING CENTER INC., G.R. Nos. 187930 & 188250,
February 23, 2015, C.J. Sereno
New World and AMA entered into a lease agreement whereby New World
agreed to lease to AMA its commercial building located in Manila. AMA
failed to pay its rentals citing financial losses. AMA then preterminated the
8 year lease agreement and demanded the

refund of its security deposit and advance rentals. It also prayed that its
liabilities be reduced on account of its financial difficulties.
The Supreme Court ruled that in the sphere of personal and contractual
relations governed by laws, rules and regulations created to promote justice
and fairness, equity is deserved, not demanded. The application of equity
necessitates a balancing of the equities involved in a case, for [h]e who
seeks equity must do equity, and he who comes into equity must come with
clean hands. Persons in dire straits are never justified in trampling on other
persons rights. Litigants shall be denied relief if their conduct has been
inequitable, unfair and dishonest as to the controversy in issue. The actions
of AMA smack of bad faith.
MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL
JUSAYANvs.JORGE SOMBILLA,
G.R. No. 163928, January 21, 2015, J. Bersamin
By virtue of Republic Act No. 3844, the sharing of the harvest in proportion
to the respective contributions of the landholder and tenant (share tenancy)
was abolished. Hence, to date, the only permissible system of agricultural
tenancy is leasehold tenancy, a relationship wherein a fixed consideration is
paid instead of proportionately sharing the harvest as in share tenancy. Its
elements are: (1) the object of the contract or the relationship is an
agricultural land that is leased or rented for the purpose of agricultural
production; (2) the size of the landholding is such that it is susceptible of
personal cultivation by a single person with the assistance of the members
of his immediate farm household; (3) the tenant-lessee must actually and
personally till, cultivate or operate the land, solely or with the aid of labor
from his immediate farm household; and (4) the landlord-lessor, who is
either the lawful owner or the legal possessor of the land, leases the same to
the tenant-lessee for a price certain or ascertainable either in an amount of
money or produce. In the case at bar, there is no doubt that a land with a
total area of 7.9 hectares were susceptible of cultivation by a single person
with the help of the members of his immediate farm household. Also, ones
knowledge of and familiarity with the landholding, its production and the
instances when the landholding was struck by drought definitely established
that the lessee personally cultivated the land. Moreover, the fact that an
agricultural lessee has a regular employment does not render his ability to
farm physically impossible.
Pagurayan vs. Reyes, G.R. NO. 154577, July 23, 2008
A contract of lease is a consensual, bilateral, onerous and
commutative contract by which the owner temporarily grants the use

of his property to another who undertakes to pay the rent. Being a

consensual contract, it is perfected at the moment there is a meeting
of the minds on the thing and the cause and consideration which are
to constitute the contract. Without the agreement of both parties, no
contract of lease can be said to have been created or established.
Nobody can force an owner to lease out his property if he is not
willing.

I. Lease of Things

CA-AG.R.O-INDUSTRIAL DEVELOPMENT CORP. vs. Court of

Appeals, G.R. NO. 90027, March 3, 1993
We agree with the petitioner's contention that the contract for the rent
of the safety deposit box is not an ordinary contract of lease as
defined in Article 1643 of the Civil Code. It cannot be characterized
as an ordinary contract of lease under Article 1643 because the full
and absolute possession and control of the safety deposit box was not
given to the joint renters the petitioner and the Pugaos.
II. Lease of Work or Services
III. Lease of Rural and Urban Lands
IV. Rights and Obligations of Lessor and Lessee
V.Special Rules for Lease of Rural,Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)

SOLUTIO IN DEBITI
CBK POWER COMPANY LIMITED VS. COMMISSIONER OF INTERNAL
REVENUE, G.R.
Nos.198729-30, January 15, 2014, J. Sereno
The principle of Solutio Indebiti is not applicable in the case at bar. According
to this principle, if something is received when there is no right to demand it,
and it was unduly delivered through mistake, the obligation to return it
arises. In that situation, a creditor - debtor relationship is created under a
quasi-contract, whereby the payer becomes the creditor who then has the
right to demand the return of payment made by mistake, and the person who
has no right to receive the payment becomes obligated to return it. The
quasi- contract of solutio indebiti is based on the ancient principle that no
one shall enrich oneself unjustly at the expense of another.
There is solutio indebiti when:
(1) Payment is made when there exists no binding relation between the payer,
who has no duty to pay, and the person who received the payment; and
(2) Payment is made through mistake, and not through liberality or some other
cause.

Though the principle of solutio indebiti may be applicable to some instances

of claims for a refund, the elements thereof are wanting in this case. First,
there exists a binding relation between petitioner and the CIR, the former
being a taxpayer obligated to pay VAT. Second, the payment of input tax
was not made through mistake, since petitioner was legally

obligated to pay for that liability. The entitlement to a refund or credit of

excess input tax is solely based on the distinctive nature of the VAT system.
At the time of payment of the input VAT, the amount paid was correct and
proper.
LAND TITLES AN D DEEDS
Torrens System
MARIFLOR T. HORTIZUELA, represented by JOVIER TAGAUFA vs.
GREGORIA TAGUFA, ROBERTO TAGUFA and ROGELIO LUMABAN, G.R.
No. 205867, February 23, 2015, J.
Mendoza
Petitioner assails the decision of the CA that the action for reconveyance
filed by her was not the proper remedy on the ground that it constitutes a
collateral attack on the validity of the subject certificate of title. The SC
however ruled that it is not unmindful of the principle of indefeasibility of a
Torrens title and that a certificate of title shall not be subject to collateral
attack. Contrary to the pronouncements of the MCTC and the CA, however,
the complaint of petitioner was not a collateral attack on the title warranting
dismissal. As a matter of fact, an action for reconveyance is a recognized
remedy, an action in personam, available to a person whose property has
been wrongfully registered under the Torrens system in anothers name. In
an action for reconveyance, the decree is not sought to be set aside. It does
not seek to set aside the decree but, respecting it as incontrovertible and no
longer open to review, seeks to transfer or reconvey the land from the
registered owner to the rightful owner.
IMELDA, LEONARDO,
FIDELINO, AZUCENA,
JOSEFINA, ANITA
AND
SISA, ALL
SURNAMED SYJUCO VS FELISA D. BONIFACIO AND VSD REALTY &
DEVELOPMENT
CORPORATION, .R. No. 148748. January 14, 2015, J. Leonardo-De
Castro
Moreover, the rule on the incontrovertibility or indefeasibility of title has no
application in this case given the fact that the contending parties claim
ownership over the subject land based on their respective certificates of title
thereon which originated from different sources. Certainly, there cannot be
two or even several certificates of title on the same parcel of real property
because "a land registration court has no jurisdiction to order the registration
of land already decreed in the name of another in an earlier land registration
case" and "a second decree for the same land would be null and void, since
the principle behind original registration is to register a parcel of land only
once." The indefeasibility of a title under the Torrens system could be claimed
10
0

only if a previous valid title to the same parcel of land does not exist. Where
the issuance of the title was attended by fraud, the same cannot vest in the
titled owner any valid legal title to the land covered by it; and the person in
whose name the title was issued cannot transmit the same, for he has no
true title thereto. This ruling is a mere affirmation of the recognized principle
that a certificate is not conclusive evidence of title if it is shown that the
same land had already been registered and that an earlier certificate for the
same land is in existence. ."

10
0

IMELDA SYJUCO, et.al vs. FELISA D. BONIFACIO and VSD REALTY &
CORPORATION,
G.R. No. 148748, January 14, 2015, J. Leonardo-De Castro
The filing of an action to quiet title is imprescriptible if the disputed real
property is in the possession of the plaintiff. The rule on the
incontrovertibility or indefeasibility of title has no application in this case
given the fact that the contending parties claim ownership over the subject
land based on their respective certificates of title thereon which originated
from different sources. The Syjucos' title, shows that it originated from OCT
No. 994 registered on May 3, 1917 while Bonficacio's title shows that that it
likewise originated from OCT No. 994, but registered on April 19, 1917. This
case affirmed the earlier finding that there is only one OCT No. 994, the
registration date of which had already been decisively settled as 3 May
1917 and not 19 April 1917 and categorically concluded that OCT No. 994
which reflects the date of 19 April 1917 as its registration date is null and
void.
UNGAY MALOBAGO MINES, INC. vs. REPUBLIC OF THE PHILIPPINES,
G.R. No. 187892,
January 14, 2015, J. Peralta
The persons who can file the petition for reconstitution of a lost certificate
are the registered owner, his assigns or persons in interest in the property.
In this case, Ungay Malobago Mines, Inc. admitted that it was not the owner
of the land on which the mining patent was issued as the same was owned
and registered in the name of Rapu Rapu Minerals Inc., thus it has no legal
capacity to institute a petition for reconstitution of a lost certificate.
REPUBLIC OF THE PHILIPPINES vs. HEIRS OF SPOUSES DONATO
SANCHEZ and JUANA
MENESES represented by RODOLFO S. AGUINALDO, G.R. No. 212388,
December 10, 2014, J. Velasco, Jr.
Before a certificate of title which has been lost or destroyed may be
reconstituted, it must first be proved by the claimants that said certificate
of title was still in force at the time it was lost or destroyed, among others.

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY vs. KEYSER

MERCANTILE INC.,
G.R. No. 208462, December 10, 2014, J. Mendoza
Every person dealing with a registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no
10
1

way oblige him to go beyond the certificate to determine the condition of

the property.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE,
G.R. No. 194077,
December 03, 2014, J. Leonen
Spouses owned the subject property wherein petitioner Elena was allowed
to stay. Upon the spouses divorce, the property went to the wife. She sold
it to the respondent See. The

10
2

Court held that See was a buyer in good faith. She went to the Register of
Deeds to verify the title and relied on the marriage settlement agreement.
The Court found that she exerted due diligence. An innocent purchaser for
value refers to someone who buys the property of another without notice
that some other person has a right to or interest in it, and who pays a full and
fair price at the time of the purchase or before receiving any notice of
another persons claim.
HEIRS OF GREGORIO LOPEZ, REPRESENTED BY ROGELIA LOPEZ, ET
AL., vs. DEVELOPMENT BANK OF THE PHILIPPINES [NOW
SUBSTITUTED BY PHILIPPINE INVESTMENT TWO (SPV-AMC), INC.],
G.R. No. 193551, November 19, 2014, J. Leonen
Marietta could acquire valid title over the whole property if she were an
innocent purchaser for value. An innocent purchaser for value purchases a
property without any notice of defect or irregularity as to the right or interest
of the seller. He or she is without notice that another person holds claim to
the property being purchased. Marietta cannot claim the protection to
innocent purchasers for value because the circumstances do not make this
available to her. In this case, there was no certificate of title to rely on when
she purchased the property from Enrique. At the time of the sale, the
property was still unregistered. What was available was only a tax declaration
issued under the name of Heirs of Lopez.

AMADA COTONER-ZACARIAVS. SPOUSES ALFREDO REVILLA AND

THE HEIRS OF PAZ REVILLA, G.R. No. 190901, November 12, 2014,
J. Leonen
Amada argues that the subsequent buyer of the disputed parcel of land is
in good faith. The court has held that the rule in land registration law that
the issue of whether the buyer of realty is in good or bad faith is relevant
only where the subject of the sale is registered land and the purchase was
made from the registered owner whose title to the land is clean.
ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY:
FERDINAND, ROSALINA, ERIBERTO, FROILAN, MA. CLEO FE,
NELSON, GERMAN, GLORIA, ALEXANDER, MAY, ABRAHAM, AND
AFRICA, ALL SURNAMED ANDRES vs. PHILIPPINE NATIONAL BANK,
G.R. No. 173548, October 15, 2014, J. Leonen
A bank that accepts a mortgage based upon a title which appears valid on
its face and after exercising the requisite care, prudence, and diligence
appropriate to the public interest character of its business can be deemed a

mortgagee in good faith. The subsequent consolidation of title in its name

after a valid foreclosure shall be respected notwithstanding later proof
showing that the title was based upon a void transaction. In this case, PNB
is considered as a mortgagee in good faith because it complied with the
standard operating practice expected from banks.

ELIZA ZUNIGA-SANTOS, represented by her Attorney-in Fact, NYMPHA Z.

SALES vs. MARIA DIVINA GRACIA SANTOS-GRAN and REGISTER OF DEEDS
OF MARIKINA CITY, G.R. No. 197380,
October 8, 2014, J. Perlas-Bernabe

To determine when the prescriptive period commenced in an action for

reconveyance, the plaintiffs possession of the disputed property is material.
If there is an actual need to reconvey the property as when the plaintiff is not
in possession, the action for reconveyance based on implied trust prescribes
in ten (10) years, the reference point being the date of registration of the
deed or the issuance of the title. On the other hand, if the real owner of the
property remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him and in
such case, the action for reconveyance would be in the nature of a suit for
quieting of title which is imprescriptible.
In the case at bar, a reading of the allegations of the Amended Complaint
failed to show that Eliza remained in possession of the subject properties in
dispute.
SPOUSES MARIO OCAMPO and CARMELITA F. OCAMPO vs. HEIRS OF
BERNARDINO U. DIONISIO, represented by ARTEMIO SJ. DIONISIO,
G.R. No. 191101, October 1, 2014, J.
Reyes
Jurisprudence consistently holds
to registered land covered by
Property Registration Decree, no
of the registered owner shall
possession.

that "prescription and laches cannot apply

the Torrens system" because "under the
title to registered land in derogation to that
be acquired by prescription or adverse

Mario claimed that they have been in possession of the said parcel of land
since 1969 and that cause of action of the Dionisios is already barred by
laches. Jurisprudence consistently holds that "prescription and laches cannot
apply to registered land covered by the Torrens system" because "under the
Property Registration Decree, no title to registered land in derogation to that
of the registered owner shall be acquired by prescription or adverse
possession.
AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA
RONSAYRO ROTAIRO, AND HIS CHILDREN FELINA ROTAIRO, ERLINDA
ROTAIRO CRUZ, EUDOSIA ROTAIRO CRIZALDO, NIEVES ROTAIRO
TUBIG,
REMEDIOS
ROTAIRO
MACAHILIG,
FELISA
ROTAIRO
TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY,
EUGENIO PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA
ALCANTARA AND VICTOR ALCANTARA, G.R. No. 173632, September
29, 2014, J. Reyes

More than the charge of constructive knowledge, the surrounding

circumstances of this case show Roviras actual knowledge of the disposition
of the subject property and Rotairos possession thereof. It is undisputed that
after the contract to sell was executed Rotairo immediately secured a
mayors permit for the construction of his residential house on the property.
Rotairo, and subsequently, his heirs, has been residing on the property since
then. Rovira, who lives only fifty (50) meters away from the subject property,
in fact,

knew that there were structures built on the property. Rovira, however,
claims that she did not bother to inquire as to the legitimacy of the rights of
the occupants, because she was assured by the bank of its title to the
property. But Rovira cannot rely solely on the title and assurances of
Pilipinas Bank; it was incumbent upon her to look beyond the title and make
necessary inquiries because the bank was not in possession of the property.
Where the vendor is not in possession of the property, the prospective
vendees are obligated to investigate the rights of one in possession. A
purchaser cannot simply close his eyes to facts which should put a
reasonable man on guard, and thereafter claim that he acted in good faith
under the belief that there was no defect in the title of the vendor. Hence,
Rovira cannot claim a right better than that of Rotairo's as she is not a buyer
in good faith.
ENRIQUETA M. LOCSIN vs. BERNARDO HIZON, CARLOS HIZON, SPS.
JOSE MANUEL AND LOURDES GUEVARA, G.R. No. 204369,
September 17, 2014, J. Velasco Jr.
A purchaser of property under the Torrens system cannot simply invoke that
he is an innocent purchaser for value when there are attending
circumstances that raise suspicions. In that case, he cannot merely rely on
the title and must look beyond to ascertain the truth as to the right of the
seller to convey the property.
HEIRS OF SPOUSES JOAQUIN MANGUARDIA AND SUSANA MANALO, ET AL vs.
HEIRS OF SIMPLICIO VALLES AND MARTA VALLES, ET AL., G.R. No. 177616,
August 27, 2014, J. Del Castillo
The petitioners assail the decision of the CA affirming in toto the decision of
the RTC declaring that their predecessors-in-interest are not buyers in good
faith and for value. In denying the petition the SC ruled that the transfers of
the properties in question did not go far, but were limited to close family
relatives by affinity and consanguinity. Good faith among the parties to the
series of conveyances is therefore hard if not impossible to presume.
Unfortunately for the petitioners, they did not provide any sufficient
evidence that would convince the courts that the proximity of relationships
between/among the vendors and vendees in the questioned sales was not
used to perpetrate fraud. Thus there is nothing to dispel the notion that
apparent anomalies attended the transactions among close relations.

It must be emphasized that "the burden of proving the status of a purchaser

in good faith and for value lies upon him who asserts that standing. In
discharging the burden, it is not enough to invoke the ordinary presumption
of good faith that everyone is presumed to act in good faith. The good faith

that is here essential is integral with the very status that must be proved. x
x x Petitioners have failed to discharge that burden."

HECTOR L. UY vs. VIRGINIA G. FULE; HEIRS OF THE LATE AMADO A.

GARCIA, HEIRS OF THE LATE GLORIA GARCIA ENCARNACION; HEIRS
OF THE LATE PABLO GARCIA; and HEIRS OF THE LATE ELISA G.
HEMEDES,G.R. No. 164961, June 30, 2014, J. Bersamin
The standard is that for one to be a purchaser in good faith in the eyes of the
law, he should buy the property of another without notice that some other
person has a right to, or interest in, such property, and should pay a full and
fair price for the same at the time of such purchase, or before he has notice
of the claim or interest of some other persons in the property. He buys the
property with the belief that the person from whom he receives the property
was the owner and could convey title to the property. Indeed, a purchaser
cannot close his eyes to facts that should put a reasonable man on his guard
and still claim he acted in good faith.
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA vs. HEIRS OF
BERNARDINA ABALON / HEIRS OF BERNARDINA ABALON vs.
MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL, SPOUSES
DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of
RESTITUTO RELLAMA, represented by his children ALEX, IMMANUEL,
JULIUS and
SYLVIA, all surnamed RELLAMA, G.R. No. 183448 / G.R. No. 183464,
June 30, 2014, CJ.
Sereno
The established rule is that a forged deed is generally null and cannot
convey title, the exception thereto, pursuant to Section 55 of the Land
Registration Act, denotes the registration of titles from the forger to the
innocent purchaser for value. Thus, the qualifying point here is that there
must be a complete chain of registered titles. This means that all the
transfers starting from the original rightful owner to the innocent holder for
value and that includes the transfer to the forger must be duly
registered, and the title must be properly issued to the transferee.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG
vs.ROSARIO CALALANG- GARCIA, LEONORA CALALANG-SABILE, and
CARLITO S. CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
Further strong proofs that the properties in question are the paraphernal
properties of a spouse are the very Torrens Titles covering said properties.
The phrase Pedro Calalang, married to Elvira Berba Calalang merely
describes the civil status and identifies the spouse of the registered owner
Pedro Calalang. Evidently, this does not mean that the property is conjugal.
As the sole and exclusive owner, Pedro Calalang had the right to convey his
property in favor of Nora B. Calalang-Parulan by executing a Deed of Sale on

February 17, 1984. A close perusal of the records of this case would show
that the records are bereft of any concrete proof to show that the subject
property indeed belonged to respondents maternal grandparents. The
evidence respondents adduced merely consisted of testimonial evidence
such as the declaration of Rosario Calalang-Garcia that they have been
staying on the property as far as she can remember and that the property
was acquired by her parents through purchase from her

maternal grandparents. However, she was unable to produce any document

to evidence the said sale, nor was she able to present any documentary
evidence such as the tax declaration issued in the name of either of her
parents.
REPUBLIC OF THE PHILIPPINES vs. FRANKLIN M. MILLADO, G.R. No.
194066, June 4,
2014, J. Villarama, Jr.
Where the authority to proceed is conferred by a statute and the manner of
obtaining jurisdiction is mandatory, the same must be strictly complied with,
or the proceedings will be void. For non-compliance with the actual notice
requirement to all other persons who may have interest in the property, in
this case the registered owners and/or their heirs, in accordance with Section
13 in relation to Section 12 of RA 26, the trial court did not acquire
jurisdiction over L.R.A. The proceedings therein were therefore a nullity and
the Decision was void.
VERGEL PAULINO AND CIREMIA PAULINOvs.COURT OF APPEALS AND
REPUBLIC OF
THE PHILIPPINES, represented by the ADMINISTRATOR of the LAND
REGISTRATION AUTHORITY, G.R. No. 205065, June 4, 2014, J.
Mendoza
In reconstitution proceedings, the Court has repeatedly ruled that before
jurisdiction over the case can be validly acquired, it is a condition sine quo
non that the certificate of title has not been issued to another person. If a
certificate of title has not been lost but is in fact in the possession of another
person, the reconstituted title is void and the court rendering the decision has
not acquired jurisdiction over the petition for issuance of new title. In the case
at bench, the CA found that the RTC lacked jurisdiction to order the
reconstitution of the original copy of TCT No. 301617, there being no lost or
destroyed title over the real property, the respondent having duly proved that
TCT No. 301617 was in the name of a different owner, Florendo, and the
technical description appearing on that TCT No. 301617 was similar to the
technical description appearing in Lot 939, Piedad Estate covered by TCT No.
RT-55869 (42532) in the name of Antonino.
DOLORES CAMPOS vs. DOMINADOR ORTEGA, SR. AND JAMES SILOS,
G.R. No. 171286,
June 02, 2014, J. Peralta

It cannot be argued that Dolores had already acquired a vested right over the
subject property when the NHA recognized her as the censused owner by
assigning to her a tag number TAG No. 77-0063. While it is true that NHA
recognizes Dolores as the censused owner of the structure built on the lot,
the issuance of the tag number is not a guarantee for lot allocation. The
census, tagging, and Dolores petition, did not vest upon her a legal title to
the lot she was occupying, but a mere expectancy that the lot will be
awarded to her. The expectancy did not ripen into a legal title when the NHA,
informed her that her petition for the award of the lot was denied.

AZNAR
BROTHERS REALTY
COMPANY vs. SPOUSES JOSE
MAGDALENA YBAEZ,
G.R. No. 161380, April 21, 2014, J. Bersamin

AND

The settled rule is that a free patent issued over a private land is null and
void, and produces no legal effects whatsoever. Private ownership of land
as when there is a prima facie proof of ownership like a duly registered
possessory information or a clear showing of open, continuous, exclusive,
and notorious possession, by present or previous occupants is not affected
by the issuance of a free patent over the same land, because the Public Land
Law applies only to lands of the public domain. Lot No. 18563, not being land
of the public domain as it was already owned by Aznar Brothers, was no
longer subject to the free patent issued to the Spouses Ybaez.
Grey Alba vs. De la Cruz, 17 SCRA

49

The Torren system generally refer to the system of registration of

transactions with interest in land whose declared object is, under
governmental authority, to establish and certify to the ownership of
an absolute and indefeasible title to realty, and to simplify its
transfer.
Legarda vs. Saleeby, G.R. NO. 8936, Oct. 2, 1915
The real purpose of the Torrens system of registration is to quiet title
to land; to put a stop forever to any question of the legality of the
title, except claims which were noted at the time of registration, in
the certificate, or which may arise subsequent thereto.
Government of the Philippine Islands v. Abural, 39 Phil. 996
The Torrens system aims to decree land titles that shall be final,
irrevocable, and indisputable, and to relieve the land of the burden
of known as well as unknown claims.
Sta. Lucia
15, 2011

vs.

Pasig,

G.R.NO.

166838,

June

While a certificate of title is conclusive as to its ownership and

location, this does not preclude the filing of an action for the very
purpose of attacking the statements therein. Mere reliance therefore
on the face of the TCTs will not suffice as they can only be
conclusive evidence of the subject properties' locations if both the
stated and described locations point to the same area.

Regalian Doctrine
REPUBLIC OF THE PHILIPPINES REPRESENTED BY AKLAN NATIONAL
COLLEGE OF FISHERIES (ANCF) AND DR. ELENITA R. ANDRADE, IN
HER CAPACITY AS ANCF SUPERINTENDENT VS. HEIRS OF MAXIMA
LACHICA SIN, NAMELY: SALVACION L. SIN, ROSARIO S. ENRIQUEZ,
FRANCISCO L. SIN, MARIA S. YUCHINTAT, MANUEL L. SIN,

JAIME CARDINAL SIN, RAMON L. SIN, AND CEFERINA S. VITA G.R.

No. 157485 March
26, 2014, J. Leonardo-De Castro
It is the respondent applicants which have the burden to identify a
positive act of the government, such as an official proclamation,
declassifying inalienable public land into disposable land for agricultural or
other purposes. Since respondents failed to do so, the alleged possession
by them and by their predecessorsininterest is inconsequential and could
never ripen into ownership. Accordingly, respondents cannot be considered
to have private rights within the purview of Proclamation No. 2074 as to
prevent the application of said proclamation to the subject property.

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC.,

represented by RONNIE P. INOCENCIO, G.R. No. 199310 February 19,
2014, J. Reyes
That the subject properties are not part of the bed of Laguna Lake,
however, does not necessarily mean that they already form part of the
alienable and disposable lands of the public domain. It is still incumbent
upon the respondent to prove, with we ll-nigh incontrovertible evidence,
that the subject properties are indeed part of the alienable and disposable
lands of the public domain.
REPUBLIC OF THE PHILIPPINES VS.
G.R. No. 186639
February 5, 2014, J. Reyes

EMMANUEL

C. CORTEZ,

Lands of the public domain that are patrimonial in character are susceptible
to acquisitive prescription and, accordingly, eligible for registration under
Section 14(2) of P.D. No. 1529 but the period of acquisitive prescription
would only begin to run from the time that the State officially declares that
the public dominion property is no longer intended for public use, public
service, or for the development of national wealth. The Court finds no
evidence of any official declaration from the state attesting to the patrimonial
character of the subject property. Cortez failed to prove that acquisitive
prescription has begun to run against the State, much less that he has
acquired title to the subject property by virtue thereof. It is of no moment
that Cortez and his predecessors-in-interest have been in possession of the
subject property for 57 years at the time he applied for the registration of
title thereto. "[l]t is not the notorious, exclusive and uninterrupted possession
and occupation of an alienable and disposable public land for the mandated
periods that converts it to patrimonial. The indispensability of an official

declaration that the property is now held by the State in its private capacity
or placed within the commerce of man for prescription to have any effect
against the State cannot be overemphasized.
REPUBLIC OF THE PHILIPPINES vs. SPS. JOSE CASTUERA AND PERLA
CASTUERA, G.R.
No. 203384, January 14, 2015, J. Carpio

The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain
as alienable and disposable, and that the land subject of the application for
registration falls within the approved area per verification through survey
by the PENRO or CENRO.
REMMAN ENTERPRISES, INC. vs. REPUBLIC OF THE PHILIPPINES,
G.R. No. 188494,
November 26, 2014, J. Reyes
It is not enough for the PENRO or CENRO to certify that a land is alienable
and disposable. The applicant for land registration must prove that the DENR
Secretary had approved the land classification and released the land of the
public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification
through survey by the PENRO or CENRO. In addition, the applicant for land
registration must present a copy of the original classification approved by the
DENR Secretary and certified as a true copy by the legal custodian of the
official records. Thus, the property registration of a corporation merely
relying on the CENRO Certification must be dismissed for failure to prove that
the land had been declared alienable and disposable.
DANILO ALMERO, TERESITA ALAGON, CELIA BULASO, LUDY RAMADA,
REGINA GEGREMOSA, ISIDRO LAZARTE, THELMA EMBARQUE, FELIPE
LAZARTE, GUILERMA LAZARTE, DULCESIMA BENIMELEvs. HEIRS OF
MIGUEL PACQUING, as represented by LINDA PACQUING FADRILAN,
G.R. No. 199008, November 19, 2014, J. Brion
Thus, in order for the homestead grantees or their direct compulsory heirs to
retain their homestead, the following conditions must be satisfied: (a) they
must still be the owners of the original homestead at the time of the CARL's
effectivity, and (b) they must continue to cultivate the homestead land. In this
case, Linda, as the direct compulsory heir of the original homestead
grantee, is no longer cultivating the homestead land. That parcels of land
are covered by homestead patents will not automatically exempt them from
the operation of land reform. It is the continued cultivation by the original
grantees or their direct compulsory heirs that shall exempt their lands from
land reform coverage."
HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, vs. VICTORIO
DELA CRUZ, LORENZO MANALAYSAY, RICARDO MARCELO, JR. and
LEONCIO DE GUZMAN, G.R. No.
200454, October 22, 2014, J. Bersamin

Consequently, before land may be placed under the coverage of Republic Act
No. 6657, two requisites must be met, namely: (1) that the land must be
devoted to agricultural activity; and (2) that the land must not be classified
as mineral, forest, residential, commercial or industrial land. For land to be
covered under Presidential Decree No. 27, it must be devoted to rice or corn
crops, and there must be a system of share-crop or lease-tenancy obtaining
therein. Unfortunately, the Dakila property did not meet these requirements.

CARMEN T. GAHOL, substituted by her heirs, RICARDO T. GAHOL,

MARIA ESTER GAHOL PEREZ, JOSE MARI T. GAHOL, LUISITO T. GAHOL
and ALCREJ CORPORATION vs. ESPERANZA COBARRUBIAS, G.R. No.
187144, September 17, 2014, J. Peralta
Petitioner Gahol applied for Townsite Sales Application with the DENR for the
land adjacent to her property. Respondent Cobarrubias filed a protest,
stating that she and her family are occupying said lot. The Court ruled that
Gahols application must be rejected because one of the requirements was
that the applicant must not own any other lot but Gahol is a registered owner
of a residential lot. She also stated that there are no signs of improvement or
occupation in the said lot but it was in fact occupied by Cobarrubias. She is
disqualified due to the untruthful statements in her application.

KASAMAKA-CANLUBANG, INC., represented by PABLITO M. EGILDO

vs. LAGUNA ESTATE DEVELOPMENT CORPORATION, G.R. No. 200491,
June 9, 2014, J. Peralta
The approval by city and municipal boards and councils of an application for
subdivision through an ordinance should already be understood to include
approval of the reclassification of the land, covered by said application, from
agricultural to the intended non-agricultural use. Otherwise, the approval of
the subdivision application would serve no practical effect; for as long as the
property covered by the application remains classified as agricultural, it
could not be subdivided and developed for non-agricultural use.
REPUBLIC OF THE PHILIPPINES vs. CRISANTO S. RANESES, G.R. No.
189970, June 9, 2014, J.
Villarama, Jr.

The Regalian doctrine, embodied in Section 2, Article XII of the 1987

Constitution, provides that all lands of the public domain belong to the State,
which is the source of any asserted right to ownership of land. All lands not
appearing to be clearly within private ownership are presumed to belong to
the State. Unless public land is shown to have been reclassified or alienated
to a private person by the State, it remains part of the inalienable public
domain for land classification or reclassification cannot be assumed. It must
be proved.
In this case, the records do not support the findings made by the RTC and the
CA that the subject properties are part of the alienable and disposable
portion of the public domain. It bears noting that in support of his claim that
the subject properties are alienable and disposable, Raneses merely
presented the Conversion Subdivision Plan which was prepared by Engr.
11
0

Montallana with the annotation that the subject properties were "inside
alienable and disposable land area Proj. No. 27-B as per LC Map No. 2623
certified by the Bureau of Forestry on January 3, 1968" and the Inter-Office
Memorandum from the LLDA. Raneses failed to hurdle this burden and his
reliance on the said annotation and Inter - Office Memorandum is clearly
insufficient. Clearly, the pieces of evidence submitted by Raneses before the
RTC in this case hardly satisfy the aforementioned documentary
requirements.

11
0

REPUBLIC OF THE PHILIPPINES vs.

C. SESE, G.R. No.
185092, June 4, 2014, J. Mendoza

CORAZON C. SESE and FE

The burden of proof in overcoming the presumption of State ownership of the

lands of the public domain is on the person applying for registration or
claiming ownership, who must prove that the land is alienable or disposable.
To overcome this presumption, incontrovertible evidence must be established
that the land is alienable or disposable. There must be an 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; or a legislative act or a statute. The applicant may also
secure a certification from the government that the land claimed to have
been possessed
for the required number of years is alienable and
disposable. In this case, petitioners cite a surveyor geodetic engineers
notation indicating that the survey was inside alienable and disposable land.
Such notation does not constitute a positive government act validly changing
the classification of the land. A mere surveyor has no authority to reclassify
lands of the public domain. By relying solely on the said surveyors
assertion, petitioners have not sufficiently proven that the land in question
has been declared alienable."

REPUBLIC OF THE PHILIPPINES vs. FRANCISCA, GERONIMO AND

CRISPIN, ALL SURNAMED SANTOS, G.R. No. 191516, June 4, 2014, J.
Peralta
Petitioner Republic assails the decision of the CA affirming in toto the
decision of the trial court holding that the respondents was able to prove
that the subject lots had been classified as alienable and disposable. Ruling
in favor of Republic, the SC ruled that the evidence required to establish that
land subject of an application for registration is alienable and disposable are:
(1) CENRO or PENRO Certification; and (2) a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal
custodian of the official records. In the present case, the foregoing
documents had not been submitted in evidence. There is no copy of the
original classification approved by the DENR Secretary. As ruled by this
Court, a mere certification issued by the Forest Utilization & Law
Enforcement Division of the DENR is not enough. Republic is then correct
that evidence on record is not sufficient to prove that subject lots had been
declared alienable and disposable lands.
11
1

Republic vs. Santos, G.R.NO. 180027, July

18,

2012

Jura Regalia simply means that the State is the original proprietor
of all lands and, as such, is the general source of all private titles.
Thus, pursuant to this principle, all claims of private title to land,
save those acquired from native title, must be traced from some
grant, whether express or implied, from the State. Absent a clear
showing that land had been let into private ownership through the
States imprimatur, such land is presumed to belong to the State.

11
2

Yu Chang vs. Republic, G.R.NO. 171726, Feb. 23, 2011

The fact that the area within which the subject parcels of land are
located is being used for residential and commercial purposes does
not serve to convert the subject parcels of land into agricultural
land. It is fundamental that before any land may be declassified
from the forest group and converted into alienable or disposable land
for agricultural or other purposes, there must be a positive act
from the government.

Republic vs. East Silverlane, G.R. No. 186961, Feb.

2012

20,

It is primordial that the status of the property as patrimonial

be first established. Furthermore, the period of possession
preceding the classification of the property as patrimonial
cannot be considered in determining the completion of the
prescriptive period.

Citizenship Requirement
Krivenko vs. Register of Deeds 79 Phil 461
Aliens mat not acquire private or public agricultural lands.
Ong Ching Po v. Court of Appeals G.R. NO. 113472, Dec.
20, 1994, 239 SCRA 341.
The capacity to acquire private land is made dependent upon the
capacity to acquire or hold lands of the public domain. Private land
may be transferred or only to individuals or entities qualified to
acquire lands of the public domain.
Halili vs. Court of Appeals, 287 SCRA 465
A natural-born citizen of the Philippines who has lost his citizenship
may be a transferee of private lands, subject to limitations
provided by law.

Director of Lands vs. Intermediate Appellate Court and

Acme, 146 SCRA 509
The time to determine whether a person acquiring land is qualified
is the time the right to own it is acquired and not the time to
register ownership.

Original Registration
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES,
G.R. No. 200894,
November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or
imperfect title under Section 14(1) of Presidential Decree No. 1529 must
prove the following requisites:(1) that the subject land forms part of the
disposable and alienable lands of the public domain, and (2) that the
applicant has been in open, continuous, exclusive and notorious possession
and occupation of the same under a bona fide claim of ownership since June
12, 1945, or earlier. Concomitantly, the burden to prove these requisites
rests on the applicant. With regard to the first requisite, it is undisputed that
the land subject of registration is part of the alienable and disposable lands
of the public domain. The trial court found the Department of Environment
and Natural Resources report sufficient to prove the existence of the first
requisite. The Court of Appeals decision was silent on this matter.
Respondent Republic failed to make objections on the issue as well. Thus, we
do not see any reason to deviate from the findings of the lower courts.
RODOLFO V. FRANCISCO vs. EMILIANA M. ROJAS, and the legitimate
heirs of JOSE A. ROJAS, namely: JOSE FERDINAND M. ROJAS II,
ROLANDO M. ROJAS, JOSE M. ROJAS, JR., CARMELITA ROJAS-JOSE,
VICTOR M.ROJAS, and LOURDES M. ROJAS, all represented by
JOSEFERDINAND M. ROJAS II, G.R. No. 167120, April 23, 2014, J.
Peralta
A land registration court has no jurisdiction to order the registration of land
already decreed in the name of another in an earlier land registration case.
After the promulgation of the Guido, it can no longer be said that an original
registration proceeding is proper, since Guido held that certificate of title
are genuine and authentic. What the land registration court should have
done was to dismiss the application for registration upon learning that the
same property was already covered by a valid title.
REPUBLIC OF THE PHILIPPINES VS. EMETERIA G.
G.R. No. 183511,
March 25, 2015, J. Peralta

LUALHATI,

Emeteria G. Lualhati filed with the RTC of Antipolo City an application for
original registration covering Lots 1 and 2 situated in C-5 C-6 Pasong
Palanas, Sitio Sapinit, San Juan, Antipolo, Rizal. To support her contention
that the lands subject of her application is alienable and disposable, Lualhati

submitted certifications from the DENR-CENRO, Region IV, Antipolo City,

stating that no public land application or land patent covering the subject
lots is pending nor are the lots embraced by any administrative title. It has
been repeatedly ruled that certifications issued by the CENRO, or specialists
of the DENR, as well as Survey Plans prepared by the DENR containing
annotations that the subject lots are alienable, do not constitute
incontrovertible evidence to overcome the presumption that the property
sought to be registered belongs to the inalienable public domain. Rather,
this Court stressed the importance of proving alienability by presenting a
copy of the original

classification of the land approved by the DENR Secretary and certified as

true copy by the legal custodian of the official records.
Moreover, as petitioner Republic aptly points out, Lualhati failed to provide
any other proof of acts of dominion over the subject land other than the fact
that she, together with her husband and children, planted fruit-bearing trees
and constructed their home thereon considering the vastness of the same. A
mere casual cultivation of portions of the land by the claimant, and the
raising thereon of cattle, do not constitute possession under claim of
ownership. In that sense, possession is not exclusive and notorious as to
give rise to a presumptive grant from the State.
REPUBLIC OF THE PHILIPPINES vs. SPOUSES DANTE and LOLITA
BENIGNO, G.R. No.
205492, March 11, 2015, J. Del Castillo
The State is not estopped from the acts of the Clerk of Court in land
registration cases. Illegal acts of government agents do not bind the State.
Assuming that it is, the respondents did not prove that the land sought to be
registered is an alienable and disposable land. All applications for original
registration under the Property Registration Decree must include both (1) a
CENRO or PENRO certification and (2) a certified true copy of the original
classification made by the DENR Secretary.
SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G.
BAUTISTA and ZOEY G. BAUTISTA vs. FRANCISCO LINDO and
WELHILMINA LINDO; and HEIRS OF FILIPINA DAQUIGAN, IMELDA
DAQUIGAN and CORSINO DAQUIGAN, REBECCA QUIAMCO and
ANDRES QUIAMCO, ROMULO LORICA and DELIA LORCIA, GEORGE
CAJES and LAURA CAJES, MELIDA BANEZ AND FRANCISCO BANEZ,
MELANIE GOFREDO, GERVACIO CAJES and ISABEL CAJES, EGMEDIO
SEGOVIA and VERGINIA SEGOVIA, ELSA N. SAM, PEDRO M. SAM, and
LINA SAM, SANTIAGO MENDEZ and MINA MENDEZ, HELEN M.
BURTON and LEONARDO BURTON, JOSE JACINTO and BIENVENIDA
JACINTO, IMELDA DAQUIGAN, LEO MATIGA and ALICIA MATIGA,
FLORENCIO ACEDO JR., and LYLA VALERIO, G.R. No. 208232,
March 10, 2014,
J.
Velasco Jr.
Alfredo Bautista was awarded a free-patent land, which he subdivided and
subsequently sold to several vendees. He tried to repurchase the said lands
three years later. The Supreme Court held that while the deeds of sale do not
explicitly contain the stipulation that the sale is subject to repurchase by the
applicant within a period of five (5) years from the date of conveyance
pursuant to Sec. 119 of CA 141, still, such legal provision is deemed

integrated and made part of the deed of sale as prescribed by law. It is basic
that the law is deemed written into every contract. Although a contract is the
law between the parties, the provisions of positive law which regulate
contracts are deemed written therein and shall limit and govern the relations
between the parties. Thus, it is a binding prestation in favor of Bautista
which he may seek to enforce.

RAFAEL VALES, CECILIA VALES-VASQUEZ, and YASMIN VALESJACINTO, vs. MA. LUZ CHORESCA GALINATO, ERNESTO CHORESCA,
TEOFILO AMADO, LORNA PARIAN MEDIANERO, REBECCA PORCAL, and
VIVENCIO ORDOYO, G.R. No. 180134,
March 5,
2014, J. Perlas-Bernabe
DAR Memorandum provides that tenants should (a) have actual knowledge
of unregistered transfers of ownership of lands covered by Torrens Certificate
of Titles prior to October 21, 1972, (b) have recognized the persons of the
new owners, and (c) have been paying rentals/amortization to such new
owners in order to validate the transfer and bind the tenants to the same. In
the case at bar, it is undisputed that the subject sale was not registered or
even annotated on the certificates of title covering the subject lands.
SPOUSES MARIO AND JULIA CAMPOS, vs. REPUBLIC OF THE
PHILIPPINES,G.R. No.
184371, March 5, 2014, J. Brion
Persons applying for registration of title under Section 14(1) of Presidential
Decree No. 1529 must prove: (1) that the land sought to be registered forms
part of the disposable and alienable lands of the public domain, and (2) that
they have been in open, continuous, exclusive and notorious possession and
occupation of the same under a bona fide claim of ownership since June 12,
1945, or earlier. It is emphasized that since the effectivity of P.D. No. 1073 on
January 25, 1977, a mere showing of possession and occupation for thirty
(30) years or more is no longer sufficient.
SPS. ANTONIO FORTUNA AND ERLINDA FORTUNA, vs.
REPUBLIC OF THE PHILIPPINES,G.R. No. 173423, March
05, 2014, J. Brion
Mere notations appearing in survey plans are inadequate proof of the
covered properties alienable and disposable character. These notations, at
the very least, only establish that the land subject of the application for
registration falls within the approved alienable and disposable area per
verification through survey by the proper government office. The applicant,
however, must also present a copy of the original classification of the land
into alienable and disposable land, as declared by the DENR Secretary or as
proclaimed by the President.
THE HON. SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM
VS. NEMESIO DUMAGPI, REPRESENTED BY VICENTE DUMAGPI,
G.R. No. 195412, February 04,
2015, J. Reyes

The respondent claims that he is the owner of the disputed parcel of land
by virtue of his open, exclusive, notorious and continuous possession of
the land for more than 30 years. The Supreme Court ruled that adverse
possession can only ripen into ownership when the land adversely owned
is classified as an agricultural land. If the disputed land is non-agricultural,
adverse possession cannot ripen into ownership.

REPUBLIC OF THE PHILIPPINES vs. CECILIA GRACE L. ROASA,

married to GREG
AMBROSE ROASA, as herein represented by her Attorneys-in-Fact,
BERNARDO M. NICOLAS, JR. and ALVIN B. ACAYEN, G.R. No. 176022,
February 2, 2015, J. Peralta

An applicant for original registration of title based on a claim of exclusive and

continuous possession or occupation must show the existence of the
following: (1) Open, continuous, exclusive and notorious possession, by
themselves or through their predecessors-in- interest, of land; (2) The land
possessed or occupied must have been declared alienable and disposable
agricultural land of public domain; (3) The possession or occupation was
under a bona fide claim of ownership; (4) Possession dates back to June 12,
1945 or earlier.
Therefore, what is important in computing the period of possession is that
the land has already been declared alienable and disposable at the time of
the application for registration. Upon satisfaction of this requirement, the
computation of the period may include the period of adverse possession prior
to the declaration that land is alienable and disposable.
In the present case, there is no dispute that the subject lot has been declared
alienable and disposable on March 15, 1982. This is more than eighteen (18)
years before Roasa's application for registration, which was filed on
December 15, 2000. Moreover, the unchallenged testimonies of two of
Roasa's witnesses established that the latter and her predecessors-in-interest
had been in adverse, open, continuous, and notorious possession in the
concept of an owner even before June 12, 1945.
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No.
200894. November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or
imperfect title under Section 14(1) of Presidential Decree No. 1529 must
prove the following requisites:"(1) that the subject land forms part of the
disposable and alienable lands of the public domain, and (2) that [the
applicant has] been in open, continuous, exclusive and notorious possession
and occupation of the same under a bona fide claim of ownership since June
12, 1945, or earlier." Concomitantly, the burden to prove these requisites
rests on the applicant.

The two requisites were complied with in this case. With regard to the first
requisite, the land subject of registration is part of the alienable and
disposable lands of the public domain by virtue of Department of
Environment and Natural Resources report. With regard to the second
requisite, applicant acquired the property by inheritance from Honorio and
Gregorio S. Apran and she and her predecessors-in-interest have been in
its continuous possession of the alienable and disposable parcel of land of
the public domain under a bona fide claim of ownership since 1900.

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN

FOUNDATION, INC. VS. HON. TEODORO T. RIEL, ACTING PRESIDING
JUDGE, REGIONAL TRIAL COURT, NATIONAL CAPITAL JUDICIAL
REGION, BRANCH 85, QUEZON CITY, UNIVERSITY OF THE
PHILIPPINES, G.R. No. 176508. January 12, 2015, J. Bersamin
The petition for judicial reconstitution of Original Certificate of Title was
validly dismissed for failure of the petitioner to present the duplicate or
certified copy of Original Certificate of Title .Thereby, it disobeyed Section 2
and Section 3 of Republic Act No. 26, the provisions that expressly listed the
acceptable bases for judicial reconstitution of an existing Torrens title.
REPUBLIC OF THE PHILIPPINES VS. SPOUSES JOSE CASTURA AND
CASTUERA G.R. No. 203384. January 14, 2015, J. CARPIO
The advance plan and the CENRO certification are insufficient proofs of the
alienable and disposable character of the property. The applicants for
registration of title must present a certified true copy of the Department of
Environment and Natural Resources Secretarys declaration or classification
of the land as alienable and disposable.
UNGAY MALOBAGO MINES INC. VS. REPUBLIC OF THE PHILIPPINES,
G.R. No. 187892. January 14, 2015, J. PERALTA
Persons who can file the petition for reconstitution of a lost certificate are
the registered owner, his assigns or persons in interest in the property. In
this case, petitioner admitted that it was not the owner of the land on
which the mining patent was issued as the same was owned and
registered in the name of Rapu Rapu Minerals Inc. Thus, not having an
interest on the land amounting to a title to the same, petitioner is not
possessed of a legal personality to institute a petition for judicial
reconstitution of the alleged lost Original Certificate of Title.

IMELDA LEONARDO, FIDELINO AZUCENA, JOSEFINA, ANITA AND SISA

ALL SURNAMED SYJUCO VS. FELISA D. BONIFACIO AND VSD REALTY
& DEVELOPMENT CORPORATION,
G.R. No. 148748. January 14, 2015, J. LEONARDO-DE CASTRO
SC found untenable the contention that the action instituted by petitioners
is a prohibited collateral attack on the certificate of title of respondents
over the subject land.

To determine whether an attack on a certificate of title is direct or indirect,

the relevance of the object of the action instituted and the relief sought
therein must be examined.
When is an action an attack on a title? It is when the object of the action or
proceeding is to nullify the title, and thus challenge the judgment pursuant
to which the title was decreed. The attack is direct when the object of an
action or proceeding is to annul or set aside such judgment, or enjoin its
enforcement. On the other hand, the attack is indirect or collateral

when, in an action to obtain a different relief, an attack on the judgment

is nevertheless made as an incident thereof.
The instituted action in this case is clearly a direct attack on a certificate of
title to real property. In their complaint for quieting of title, petitioners
specifically pray for the declaration of nullity and/or cancellation of
respondents TCTs. The relief sought by petitioners is certainly feasible since
the objective of an action to quiet title, as provided under Article 476 of the
Civil Code of the Philippines, is precisely to quiet, remove, invalidate, annul,
and/or nullify a cloud on title to real property or any interest therein by
reason of any instrument, record, claim, encumbrance or proceeding which
is apparently valid or effective but is in truth and in fact invalid, ineffective,
voidable, or unenforceable, and may be prejudicial to said title.
REPUBLIC OF THE PHILIPPINES VS.
186639
February 5, 2014, J. Reyes

EMMANUEL C. CORTEZ, G.R. No.

A survey plan does not constitute incontrovertible evidence to overcome

the presumption that the subject property remains part of the inalienable
public domain. Cortez failed to present a certification from the proper
government agency as to the classification of the subject property. Cortez
likewise failed to present any evidence showing that the DENR Secretary
had indeed classified the subject property as alienable and disposable.
REPUBLIC OF THE PHILIPPINES vs. REMMANENTERPRISES, INC.,
represented by RONNIE P. INOCENCIO, G.R. No. 199310 February 19, 2014,
J. REYES

To prove that the subject property forms part of the alienable and
disposable lands of the public domain, the respondent presented two
certifications issued by Senior Forest Management Specialist of the DENR
attesting that Lots form part of the alienable and disposable lands of the
public domain "under Project No. 27-B of Taguig, Metro Manila as per LC
Map 2623, approved on January 3, 1968." However, the said certifications
are insufficient to prove that the subject properties are alienable and
disposable. The certification issued by the proper government agency that
a parcel of land is alienable and disposable, applicants for land registration
must prove that the DENR Secretary had approved the land classification
and released the land of public domain as alienable and disposable. They
must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the records.
With regard to possession, although it was testified that the respondent and
its predecessors-in-interest cultivated the subject properties, by planting

different crops thereon, his testimony is bereft of any specificity as to the

nature of such cultivation as to warrant the conclusion that they have been
indeed in possession and occupation of the subject properties in the manner
required by law. There was no showing as to the number of crops that are
planted in the subject properties or to the volume of the produce harvested
from the crops supposedly planted thereon.

Further, assuming ex gratia argumenti that the respondent and its

predecessors-in-interest have indeed planted crops on the subject properties,
it does not necessarily follow that the subject properties have been
possessed and occupied by them in the manner contemplated by law. The
supposed planting of crops in the subject properties may only have
amounted to mere casual cultivation, which is not the possession and
occupation required by law.
REPUBLIC OF THE PHILIPPINES VS. ZURBARAN REALTY &
DEVELOPMENT CORP. G.R. No. 164408, March 24, 2014, J. BERSAMIN
Registration under Section 14(1) of P.D. No. 1529 is based on possession and
occupation of the alienable and disposable land of the public domain since
June 12, 1945 or earlier, without regard to whether the land was susceptible
to private ownership at that time. The applicant needs only to show that the
land had already been declared alienable and disposable at any time prior to
the filing of the application for registration.
On the other hand, an application under Section 14(2) of P.D. No. 1529 is
based on acquisitive prescription and must comply with the law on
prescription as provided by the Civil Code. In that regard, only the patrimonial
property of the State may be acquired by prescription pursuant to the Civil
Code. For acquisitive prescription to set in, therefore, the land being
possessed and occupied must already be classified or declared as patrimonial
property of the State. Otherwise, no length of possession would vest any
right in the possessor if the property has remained land of the public
dominion. Malabanan stresses that even if the land is later converted to
patrimonial property of the State, possession of it prior to such conversion
will not be counted to meet the requisites of acquisitive prescription. Thus,
registration under Section 14(2) of P.D. No. 1529 requires that the land had
already been converted to patrimonial property of the State at the onset of
the period of possession required by the law on prescription.
An application for registration based on Section 14(2) of P.D. No. 1529 must,
therefore, establish the following requisites, to wit: (a) the land is an alienable
and disposable, and patrimonial property of the public domain; (b) the
applicant and its predecessors-in- interest have been in possession of the
land for at least 10 years, in good faith and with just title, or for at least 30
years, regardless of good faith or just title; and (c) the land had already been

converted to or declared as patrimonial property of the State at the

beginning of the said 10-year or 30-year period of possession.

Republic vs. Gomez, G.R.NO. 189021, Feb. 22, 2012

The applicant for land registration must prove that the DENR
Secretary had approved the land classification and released the
land of the public domain as alienable and disposable, and that the
land subject of the application for registration falls within the
approved area per verification through survey by the PENRO or
CENRO. In addition, the applicant for land registration must present
a copy of the original classification approved by the
DENR
Secretary and certified as a true copy by the legal custodian of the
official records.

Republic vs. Vega, 639 SCRA 541

While Cayetano failed to submit any certification which would
formally attest to the alienable and disposable character of the
land applied for, the Certification by DENR Regional Technical
Director Celso V. Loriega, Jr., as annotated on the subdivision plan
submitted in evidence
by Paulita, constitutes substantial
compliance with the legal requirement. It clearly indicates that Lot
249 had been verified as belonging to the alienable and disposable
area as early as July 18, 1925.
Ong vs. Republic, 548 SCRA 160
Actual possession of a land consists in the manifestation of acts of
dominion over it of such a nature as a party would naturally
exercise over his own property.
Republic vs.

Espinosa, 677 SCRA 92

There must be an express declaration by the State that the public

dominion property is no longer intended for public service or the
development of the national wealth or that the property has been
converted into patrimonial. Without such express declaration, the
property, even if classified as alienable or disposable, remains
property of the public dominion, pursuant to Article 420(2), and thus
incapable of acquisition by prescription. It is only when such alienable
and disposable lands are expressly declared by the State to be no
longer intended for public service or for the development of the
national wealth that the period of acquisitive prescription can begin
to run. Such declaration shall be in the form of a law duly enacted
by Congress or a Presidential Proclamation in cases where the
President is duly authorized by law.
Thus, granting that Isabel and, later, Espinosa posse ssed and
occupied the property for an aggregate period of thirty (30) years,
this does not operate to divest the State of its ownership. The
property, albeit allegedly alienable and disposable, is not
patrimonial. As the property is not held by the State in its private
12
0

capacity, acquisition of title thereto necessitates observance of the

provisions of Section 48(b) of the PLA in relation to Section 14(1) of
P.D. No. 1529 or possession and occupation since June 12, 1945.
For prescription to run against the State, there must be proof that
there was an official declaration that the subject property is no
longer earmarked for public service or the development of national
wealth. Moreover, such official declaration should have been issued
at least ten (10) or thirty (30) years, as the case may be, prior to
the filing of the application for registration. The period of
possession and occupation prior to the conversion of the
property to private or patrimonial

12
0

shall not be considered in determining completion of the

prescriptive period. Indeed, while a piece of land is still reserved
for public service or the development of national wealth, even if
the same is alienable and disposable, possession and occupation
no matter how lengthy will not ripen to ownership or give rise to
any title that would defeat that of the States if such did not
commence on June 12, 1945 or earlier.
At any rate, the notation on the survey plan does not constitute
incontrovertible evidence that would overcome the presumption that
the property belongs to the inalienable public domain.

Tan vs. Republic April

16,

2012

Possession is open when it is patent, visible,

apparent,
notorious
and not clandestine. It is continuous when
uninterrupted, unbroken and not intermittent or occasional;
exclusive when the adverse possessor can show exclusive
dominion over the land and an appropriation of it to his own
use and benefit; and notorious when it is so conspicuous that
it is generally known and talked of by the public or the
people in the neighborhood.
Rep. vs.
2012

Metro Index

Realty, G.R. No. 198585, July 2,

The mere planting of a sign or symbol of possession cannot justify

a Magellan- like claim of dominion over an immense tract of
territory. Possession as a means of acquiring ownership, while it
may be constructive, is not a mere fiction.
Roman Catholic Apostolic Administrator of Davao, Inc. vs.
Land Registration Commission, 102 Phil. 596.
A corporation sole, which consists of one person only, is vested
with the right to purchase and hold real estate and to register the
same in trust for the faithful or members of the religious society or
church for which the corporation was organized.
Subsequent Registration
12
1

Lucena vs. CA, G.R. NO. L-77468, August 25, 1999

It is a well-settled rule that a purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard, and then claim
that he acted in good faith under the belief that there was no
defect in the title of the vendor. His mere refusal to believe that
such defect exists, or his willful closing of his

12
2

eyes to the possibility of the existence of a defect in his vendor's

title, will not make him an innocent purchaser for value, if it
afterwards develops that the title was in fact defective, and it
appears that he had such notice of the defect as would have led
to its discovery had he acted with that measure of precaution
which may reasonably be required of a prudent man in a like
situation.
Heirs of Brusas vs. CA, G.R. No. 126875, August 26, 1999
In the instant case, the litigated property is still registered in the
name of Ines Brusas, so that insofar as procedure is concerned,
petitioners were correct in availing of the remedy of reconveyance.
However, an action for reconveyance presupposes the existence of
a defrauded party who is the lawful owner of the disputed
property.
Philippine National Bank vs. Court of Appeals, 98 SCRA 207
A person dealing with registered land is not required to go behind
the register to determine the condition of the property. He is only
charged with notice of the burdens on the property which are noted
on the face of the register or the certificate of title. To require him to
do more is to defeat one of the primary objects of the Torrens
system.
Potenciano vs. Dineros, G.R. No. L-7614, May 31, 1955
The judgment creditor may not, as purchaser at the auction sale,
invoke the protection accorded by law to purchasers in good faith,
because at the time of the auction he already had notice, thru
the third party claim filed by Potenciano, that the property had
already been acquired by the latter from the judgment debtor.

Guaranteed Homes Inc vs. Valdez, G.R. No. 171531, Jan.

30, 2009
Every conveyance, mortgage, lease, lien, attachment, order,
judgment, instrument or entry affecting registered land shall, if

registered, filled or entered in the office of the Register of Deeds of

the province or city where the land to which it relates lies, be
constructive notice to all persons from the time of such registering
filing or entering.
Fudot vs. Cattleya Land Inc., G.R. No. 171008 , Sept.
13, 2007
The registration of a void deed, for instance, is not an impediment
to a declaration by the courts of its invalidity.

Cusi vs. Domingo, G.R.NO. 195825, Feb. 27, 2013

As the purchasers of the property, they also came under the clear
obligation to purchase the property not only in good faith but also
for value. A purchaser in good faith is one who buys the property
of another without notice that some other person has a right to, or
interest in, such property and pays full and fair price for the same.

Non-Registrable Properties
Malabanan vs. Republic, 587 SCRA 172
Only when the property has become patrimonial can the prescriptive
period for the acquisition of property of the public domain begin to
run.

Alvarez vs. PICOP Resources, Inc., 606 SCRA 444

Forest lands cannot be alienated
persons or entities.

in

favor

of

petitioner

private

Republic vs. Fabio, G.R. No. 159589, Dec. 23, 2008

The usual proviso requiring the reservation to be subject to private
rights simply means that persons claiming rights over the reserved
land are not precluded from proving their claims.
Almagro vs. Kwan, 634 SCRA 250
To qualify as foreshore land, it must be shown that the land lies
between the high and low water marks and is alternately wet and
dry according to the flow of the tide. The land's proximity to the
waters alone does not automatically make it a foreshore land.
Republic vs. Espinosa G.R.NO. 171514, July 18, 2012
The notation made
by
a surveyor-geodetic engineer that the
property surveyed is alienable and disposable is not the positive
government
act
that
would remove the property from the
inalienable domain. Neither it is the evidence accepted as sufficient to
controvert the presumption that the property is inalienable.

Chavez v. Public Estates Authority and AMARI Coastal

Development Corporation, G.R. No. 133250, July 9, 2002

Foreshore and submerged areas irrefutably belonged to the public

domain and were inalienable unless reclaimed, classified as
alienable lands open to disposition and further declared no longer
needed for public service. The fact that alienable lands of the
public domain were transferred to the PEA (now PRA) and issued
land patents or certificates of title in PEAs name did not
automatically make such lands private.
Republic vs. Paraaque G.R.NO. 191109, July 18, 2012
The subject reclaimed lands are still part of the public
domain,
owned by the State and, therefore, exempt from
payment of real estate taxes. Here, the subject lands are
reclaimed lands, specifically portions of the foreshore and
offshore areas of Manila Bay. As such, these lands remain
public lands and form part of the public domain.
Dealings with Unregistered Land
Heirs

of

Tanyag

vs.

Gabriel, 669

SCRA

284

It is continuous when uninterrupted, unbroken and not

intermittent or occasional. It is exclusive when the adverse
possessor can show exclusive dominion over the land and
an appropriation of it to his own use and benefit. It is
notorious when it is so conspicuous that it is generally
known and talked of by the public or the people in the
neighborhood.
The party who asserts ownership by adverse possession
must prove the presence of the essential elements of
acquisitive prescription.
Tan vs. Republic,
No. 193443, April 16, 2012

G.R. No. 193443 G.R.

There must be an express declaration by the State that the public

dominion property is no longer intended for public service or the
development of the national wealth or that the property has been

converted into patrimonial. Without such express declaration, the

property, even if classified as alienable or disposable, remains
property of the public dominion, pursuant to Article 420(2), and
thus incapable of acquisition by prescription.
For one to invoke the provisions of Section 14(2) and set up
acquisitive prescription against the State, it is primordial that the
status of the property as patrimonial be first established.
Furthermore, the period of possession preceding the classification
of the property as patrimonial cannot be considered in determining
the completion of the prescriptive period.

Tan vs. Republic,

No. 193443, April 16, 2012

G.R. No. 193443 G.R.

Possession is open when it is patent, visible, apparent, notorious

and not clandestine. It is continuous when uninterrupted, unbroken
and not intermittent or occasional; exclusive when the adverse
possessor can show exclusive dominion over the land and an
appropriation of it to his own use and benefit; and notorious when
it is so conspicuous that it is generally known and talked of by the
public or the people in the neighborhood. The party who asserts
ownership by adverse possession must prove the presence of the
essential elements of acquisitive prescription.
Tax declarations per se do not qualify as competent evidence of
actual possession for purposes of prescription.
A claim of ownership will not proper on the basis of tax
declarations if unaccompanied by proof of actual possession.
Valiao v. Republic, 661 SCRA 299
The burden of proof in overcoming the presumption of State
ownership of the lands of the public domain is on the person
applying for registration (or claiming ownership), who must prove
that the land subject of the application is alienable or disposable. It is
settled that the applicant must present proof of specific acts of
ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law than factual evidence
of possession.

DUTY OF THE BUYER/BUYER IN GOOD FAITH

THE
HEIRS
OF
VICTORINO
SARILI,
NAMELY:
ISABEL
A.
SARILI,* MELENCIA** S.
MAXIMO, ALBERTO A.
SARILI, IMELDA S. HIDALGO, all herein
represented by CELSO
A. SARILI vs. PEDRO F. LAGROSA, represented in this act by his
Attorney-in-Fact LOURDES LABIOS MOJICA, G.R. No. 193517, January
15, 2014, J. Perlas-Bernabe

A higher degree of prudence is required from one who buys from a person
who is not the registered owner, although the land object of the transaction
is registered. The buyer also has the duty to ascertain the identity of the
person with whom he is dealing with and the latters legal authority to
convey the property.

The strength of the buyers inquiry on the sellers capacity or legal authority
to sell depends on the proof of capacity of the seller. If the proof of capacity
consists of a special power of

attorney duly notarized, mere inspection of the face of such public document
already constitutes sufficient inquiry. If no such special power of attorney is
provided or there is one but there appears to be flaws in its notarial
acknowledgment, mere inspection of the document will not do; the buyer
must show that his investigation went beyond the document and into the
circumstances of its execution.

In the present case, it is undisputed that Spouses Sarili purchased the

subject property from Ramos on the strength of the latters ostensible
authority to sell under the subject SPA. The said document, however, readily
indicates flaws in its notarial acknowledgment since the respondents
community tax certificate (CTC) number was not indicated thereon. Despite
this irregularity, however, Spouses Sarili failed to show that they conducted
an investigation beyond the subject SPA and into the circumstances of its
execution as required by prevailing jurisprudence. Hence, Spouses Sarili
cannot be considered as innocent purchasers for value.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE,
G.R. No. 194077,
December 03, 2014, J. Leonen
An innocent purchaser for value refers to someone who buys the property of
another without notice that some other person has a right to or interest in it,
and who pays a full and fair price at the time of the purchase or before
receiving any notice of ano ther persons claim. One claiming to be an
innocent purchaser for value has the burden of proving such status.
Respondent exerted due diligence when she ascertained the authenticity of
the documents attached to the deed of sale such as the marital settlement
agreement with Florentinos waiver of interest over the property. She did not
rely solely on the title. She even went to the Registry of Deeds to verify the
authenticity of the title. The Supreme Court upheld the ruling of the lower
courts which considered the inquiries made by respondent to be acts of an
innocent purchaser in good faith and for value.
KRYSTLE
REALTY
DEVELOPMENT
CORPORATION,
rep.
by
CHAIRMAN OF THE
BOARD, WILLIAM C. CU vs. DOMINGO ALIBIN, as substituted by his
heirs, G.R. No. 196117/G.R. No. 196129, August 13, 2014, J. PerlasBernabe
One is considered a buyer in bad faith not only when he purchases real
estate with knowledge of a defect or lack of title in his seller but also when
he has knowledge of facts which should have alerted him to conduct further
inquiry or investigation, as Krystle Realty in this case. Further, as one

asserting the status of a buyer in good faith and for value, it had the burden
of proving such status, which goes beyond a mere invocation of the ordinary
presumption of good faith.
The agreement of the parties to submit the determination of the genuineness
of Domingos signature to a handwriting expert of the NBI does not, authorize
the RTC to accept the findings of such expert. The opinion of a
handwriting expert, therefore, does not

mandatorily bind the court, the expert's function being to place before the
court data upon which it can form its own opinion.
RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON vs.
OSCAR VENTANILLA, JR., and CARMEN GLORIA D. VENTANILLA,
G.R. No. 192669, April 21,
2014, J. Mendoza
While a third party may not be considered as innocent purchaser for value,
he can still rightfully claim for actual and compensatory damages,
considering that he did not join the other defendants in their efforts to
frustrate plaintiffs rights over the disputed properties and who might well be
an unwilling victim of the fraudulent scheme employed by the other
defendants.
Nonetheless, even if when no bad faith can be ascribed to the parties alike,
an equal footing of the parties necessarily tilts in favor of the superiority of
the notice of levy and the constructive notice against the whole world which
the original party to the contract of sale had produced and which effectively
bound third persons. Thus, the latter has two options available: 1) they may
exercise the right to appropriate after payment of indemnity representing the
value of the improvements introduced and the necessary and useful
expenses defrayed on the subject lots; or 2) they may forego payment of the
said indemnity and instead, oblige the Saberons to pay the price of the land.
ALFARO VS. DUMALAGAN, G.R. No.186622, January 22, 2014, J. Perez
A purchaser in good faith is one who buys the property of another without
notice that some other person has a right to, or an interest in such property,
and pays a full and fair price for the same at the time of such purchase, or
before he has notice of some other persons claim or interest in the property.
The petitioners are not such purchaser.
Petitioners had prior knowledge of the previous sales by installment of
portions of the property to several purchasers. Moreover, petitioners had
prior knowledge of respondents possession over the subject property. Hence,
the rule on double sale is inapplicable in the case at bar. As correctly held by
the appellate court, petitioners prior registration of the subject property,
with prior knowledge of respondents claim of ownership and possession,
cannot confer ownership or better right over the subject property.
SPOUSES BERNADETTE and RODULFO VILLABAR VS.ANGELITO L.
OPININ, G.R. N.O
17604, January 15, 2014. J. del Castillo

Bad faith cannot be presumed. It is a question of fact that must be proven

by clear and convincing evidence. The burden of proving bad faith rests on
the one alleging it. Spouses Vilbar failed to adduce the necessary evidence.
Furthermore, the Court recognizes the settled rule that levy on attachment,
duly registered, takes preference over a prior unregistered sale. This result
is a necessary consequence of the fact that the properties involved were
duly covered by the Torrens system which works under the fundamental

principle that registration is the operative act which gives validity to the
transfer or creates a lien upon the land.

JUST COMPENSATION
LAND BANK OF THE PHILIPPINES vs. JAIME K. IBARRA, ANTONIO K.
IBARRA, JR., LUZ IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA,
and CYNTHIA IBARRA- GUERRERO, G.R. No. 182472. November 24,
2014, J. Peralta
The petitioners lands were subjected to the coverage of the agrarian reform
program. The petitioner then filed a complaint for just compensation of the
said land. The issue in the case is what will be the basis of valuation of the
property taken for Just Compensation.
The Supreme Court held that the seizure of landholdings or properties
covered by PD No.
27 did not take place on October 21, 1972, but upon the payment of
just compensation. Indeed, acquisition of property under the Operation Land
Transfer Program under PD No. 27 does not necessarily mean that the
computation of just compensation thereof must likewise be governed by the
same law. In determining the applicable formula, the date of the payment of
just compensation must be taken into consideration for such payment marks
the completion of the agrarian reform process. If the agrarian reform process
is still incomplete as when just compensation is not settled prior to the
passage of RA No. 6657, it should be computed in accordance with said law
despite the fact that the property was acquired under PD No. 27. Clearly, by
law and jurisprudence, R.A. No. 6657, upon its effectivity, became the
primary law in agrarian reform covering all then pending and uncompleted
processes, with P.D. No. 27 and E.O. No. 228 being only suppletory to the said
law.
It is, therefore, on equitable considerations that the retroactive application of
RA No. 6657 is based for it would be highly inequitable on the part of the
landowners to compute just compensation using the values not at the time of
the payment but at the time of the taking in 1972, considering that the
government and the farmer-beneficiaries have already benefitted from the
land.
CANCELLATION OF TITLE
ROSARIO
TAMBUYAT,

BANGUIS-TAMBUYAT
G.R. No.

vs.

WENIFREDA

BALCOM-

202805, March 23, 2015, J. Del Castillo

Under Sec. 108 of PD 1529, the proceeding for the erasure, alteration, or
amendment of a certificate of title may be resorted to in seven instances: (1)
when registered interests of any description, whether vested, contingent,
expectant, or inchoate, have terminated and ceased; (2) when new interests
have arisen or been created which do not appear upon the certificate; (3)
when any error, omission or mistake was made in entering a certificate or

any memorandum thereon or on any duplicate certificate; (4) when the name
of any person on the certificate has been changed; (5) when the registered
owner has been married, or, registered as married, the marriage has been
terminated and no right or interest of heirs or creditors will thereby be
affected; (6) when a corporation, which owned registered land and has been
dissolved, has not conveyed the same within three years after its dissolution;
and (7) when there is reasonable ground for the amendment or alteration of
title. The present case falls under (3) and (7), where the Registrar of Deeds of
Bulacan committed an error in issuing TCT T-145321 in the name of Adriano
M. Tambuyat married to Rosario E. Banguis when, in truth and in fact,
respondent Wenifreda and not Banguis is Adrianos lawful spouse.
ACTION FOR RECONVEYANCE
HEIRS OF FRANCISCO I. NARVASA, SR., ANDHEIRS OF PETRA
IMBORNAL
AND
PEDRO FERRER,REPRESENTED BY THEIR
ATTORNEY -IN-FACT, MRS. REMEDIOS B. NARVASA-REGACHO vs.
EMILIANA, VICTORIANO, FELIPE, MATEO, RAYMUNDO, MARIA,AND
EDUARDO, ALL SURNAMED IMBORNAL, G.R. No. 182908, August
06,
2014, J. Perlas Bernabe
An action for reconveyance based on an implied trust prescribes in ten (10)
years, reckoned from the date of registration of the deed or the date of
issuance of the certificate of title over the property, if the plaintiff is not in
possession. Hence, when a complaint for reconveyance is filed beyond the
10-year reglementary period, such cause of action is barred by prescription.
HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ,
SONIA J. TOLENTINO and RODERICK JULAO v SPOUSES ALEJANDRO
and MORENITA DE JESUS,
G.R No. 176020, September 29, 2014. DEL CASTILLO.
In an action to recover, the property must be identified. Article 434 of the
Civil Code states that "[i]n an action to recover, the property must be
identified, and the plaintiff must rely on the strength of his title and not on
the weakness of the defendant's claim." The plaintiff, therefore, is dutybound to clearly identify the land sought to be recovered, in accordance
with the title on which he anchors his right of ownership. It bears stressing
that the failure of the plaintiff to establish the identity of the property
claimed is fatal to his case. In this case, petitioners failed to identify the
property they seek to recover as they failed to describe the location, the
area, as well as the boundaries thereof. No survey plan was presented by
petitioners to prove that respondent spouses actually encroached upon the
70-square meter portion of petitioners' property.

TORTS AN D DAM AGES

THE TORTFEASOR

RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND

ADVERTISING CORPORATION* AND TRANSWORLD MEDIA ADS,
INC.,G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe
Pursuant to Article 2194, joint tortfeasors are solidarily liable. They are each
liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves. When a construction of a
billboards lower structure without the proper foundation by the first
contractor, and that of the second contractors finishing its upper structure
and just merely assuming that the first would reinforce the weak foundation
are the two successive acts which were the direct and proximate cause of
the damages sustained by the company who hired their services. Worse,
both contractors were fully aware that the foundation for the billboard was
weak; yet, neither of them took any positive step to reinforce the same. They
merely relied on each others word that repairs would be done to such
foundation, but none was done at all.
Ylarde vs. Aquino, 163 SCRA 697
Teacher Edgardo Aquino, after bringing his pupils to an excavation site
dug by them, left them all by themselves, and one of the pupils fell
into the pit. A teacher acted with fault and gross negligence
because a teacher who stands in loco parentis to his pupils would
have made sure that the children are protected from all harm in
his company.

Cogeo-Cubao Operators and Drivers Association vs. Court

of Appeals, G.R. NO. 100727, March 18, 1992
Cogeo-Cubao Operators and Drivers Association, a group of drivers,
took
over
all jeepneys of a transportation company, Lungsod
Corporation, as well as the operation of the service in the companys
route without authority from the Public Service Commission. The act
was in violation of Article 21 of the Civil Code [Any person who
willfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate
the latter for damages] because the constitutional right of the
drivers to redress their grievances with the company should not
undermine public peace and order nor should it violate the legal
rights of other persons.
PROXIMATE CAUSE
13
0

F.F. Cruz and Co. vs. Court of Appeals, 164 SCRA 731
A fire that broke out in the furniture shop of the petitioner spread
to an adjacent house because of the shop owners failure to construct
a firewall as required by a city ordinance. The doctrine of res ipsa
loquitur, which is applied

13
0

by the Court in this case, may be stated as follows: Where the

thing which caused the injury complained of is shown to be under
the management of the defendant or his servants and the accident
is such as in the ordinary course of things does not happen if those
who have its management or control use proper care, it affords
reasonable evidence, in the absence of explanation
by
the
defendant, that the accident arose from want of care.
Phoenix Construction, Inc. vs. Dionisio, 148 SCRA 353
The driver of a
residence and
damages. The
parking of the

dump truck parked it improperly at night near his

it was bumped by the driver of a car, who suffered
proximate cause of the accident was the improper
dump truck.

Africa vs. Caltex, 16 SCRA 448

A fire broke out at a gasoline station while gasoline was being
hosed from a tank truck into the underground storage, right at the
opening of the receiving tank where the nozzle of the hose was
inserted, as a result of which several houses were burned. Under
the principle of res ipsa loquitor, the employees negligence was the
proximate cause of the fire which in the ordinary course of things
does not happen.
Gabeto vs. Araneta, 42 Phil. 232
Araneta stopped a calesa with passengers aboard on the street
and seized the rein of the horses bridle, by reason of which the
driver brought the carromata to the adjacent curb and alighted to
fix the bridle, and while the driver was engaged at the horses
head, the horse moved forward bringing down a police telephone
box, and because of the noise caused thereby, the horse was
frightened and it ran away and one of the passengers jumped and
was killed. Araneta's act in stopping the horse was held as not the
proximate cause of the accident because the bridle was old, and
the leather of which it was made was probably so weak as to be
easily broken.

13
1

Gregorio vs. Go, 102 Phil. 556

Go ordered his cargador, who had only a students permit to drive
his truck, but a policeman who boarded the truck took the wheel, and
while driving the truck, it hit and ran over a pedestrian. There was
no
direct
and
proximate
casual connection between
the
defendants negligence and the death because the proximate
immediate and direct cause of the death was the negligence of
the policeman.

13
2

Phoenix Construction,
Court, 148 SCRA 353

Inc.

vs.

Intermediate

Appellate

Dionisio's negligence was only contributory, that the "immediate and

proximate cause" of the injury remained the truck driver's "lack of due
care" and that consequently respondent Dionisio may recover
damages though such damages are subject to mitigation by the
courts (Article 2179, Civil Code of the Philippines).
Phoenix Construction,
Court, 148 SCRA 353
Petitioners sought the
chance".

Inc.

vs.

application

Intermediate

of the

doctrine

Appellate

of "last clear

The Supreme Court said that the common law rule of contributory
negligence prevented any recovery at all by a plaintiff who was also
negligent, even if the plaintiff's negligence was relatively minor as
compared with the wrongful act or omission of the defendant. The
common law notion of last clear chance permitted courts to grant
recovery to a plaintiff who had also been negligent provided that the
defendant had the last clear chance to avoid the casualty and failed to
do so.
Accordingly, it is difficult to see what role, if any, the
common law last clear chance doctrine has to play in a jurisdiction
where the common law concept of contributory negligence as an
absolute bar to recovery by the plaintiff, has itself been rejected, as it
has been in Article 2179 of the Civil Code of the Philippines.
Is there perhaps a general concept of "last clear chance" that may be
extracted from its common law matrix and utilized as a general
rule in negligence cases in a civil law jurisdiction like ours? We do
not believe so. Under Article 2179, the task of a court, in technical
terms, is to determine whose negligence the plaintiff's or the
defendant's was the legal or proximate cause of the injury. That
task is not simply or even primarily an exercise in chronology or
physics, as the petitioners seem to imply by the use of terms like
"last" or "intervening" or "immediate." The relative location in the
continuum of time of the plaintiff's and the defendant's negligent
acts or omissions, is only one of the relevant factors that may be
taken into account. Of more fundamental importance are the

nature of the negligent act or omission of each party and the

character and gravity of the risks created by such act or omission for
the rest of the community. The petitioners urge that the truck driver
(and therefore his employer) should be absolved from responsibility
for his own prior negligence because the unfortunate plaintiff failed
to act with that increased diligence which had become necessary
to avoid the peril precisely created by the truck driver's own wrongful
act or omission. To accept this proposition is to come too close to
wiping out the fundamental principle of law that a man must
respond for the forseeable consequences of his own negligent act
or omission. Our law on quasi-delicts seeks to reduce the risks
and burdens of living in society and

to allocate them among the members of society. To accept the

petitioners' pro- position must tend to weaken the very bonds of
society.

Philippine Bank
SCRA 695

of Commerce

vs.

Court of

Appeals,

269

Respondent entrusted companys cash for deposit to his

secretary who defrauded the company by depositing the money,
not to the companys account, but to her husband who
maintained similar account with the bank, made possible because
the duplicate slip was not compulsory required by the bank in
accepting the deposits. Under the doctrine of last clear chance, an
antecedent negligence of a person does not preclude the recovery
of damages for the supervening negligence of, or bar a defense
against liability sought by another, if the latter, who had the last
fair chance, could have avoided, the impending harm by the
exercise of due diligence. Here, assuming that the respondent
company was negligent in entrusting cash to a dishonest
employee, thus providing the latter with the opportunity to defraud
the company, as advanced by the petitioner, yet it cannot be
denied that the petitioner bank, thru its teller, had the last clear
opportunity to avert the injury incurred by its client, simply by
faithfully observing their self-imposed validation procedure.
Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384
The driver of a Pantranco bus encroached into the lane
of an
incoming jeepney and failed to return the bus immediately to its
own lane upon seeing the jeepney coming from the opposite
direction, resulting to the death of eight passengers of the jeep. The
doctrine of last clear chance does not take into operation here
because it applies only in a situation where the plaintiff was guilty
of prior or antecedent negligence but the defendant, who had the last
fair chance to avoid the impending harm and failed to do so, is
made
liable
for all
the consequences of the accident
notwithstanding the prior negligence of the plaintiff.

Cebu Shipyard and Engineering W orks, Inc. vs. W illiam

Lines, Inc., 306 SCRA 762
The passenger ship of William Lines, Inc. caught fire and sank while
in the custody of Cebu Shipyard and Engineering Works to which it
was brought for annual repair. The doctrine of res ipsa loquitor
applies here because the fire that occurred and consumed MV
Manila City would not have happened in the ordinary course of things
if reasonable care and diligence had been exercised by Cebu
Shipyard.
Radio Communications of the Phils., Inc. [RCP I] vs. Court
of Appeals, 143 SCRA 657

Defamatory words were inserted in the telegram sent by

respondent Timan, which were not noticed and were included by
the RCPI in the teleG.R.am when delivered. Since negligence may
be hard to substantiate in some cases, we may apply the doctrine
of RES IPSA LOQUITUR (the thing speaks for itself), by considering
the presence of facts or circumstances surrounding the injury.

LEGAL INJURY
Custodio vs. Court of Appeals, 253 SCRA 483
Custodio filed a case for damages because his tenants cancelled
their contract
of lease due to adobe fences constructed by
adjoining lot owners which restricted passage from and to his
apartment. To warrant the recovery of damages, there must be
both a right of action for a legal wrong inflicted by the defendant,
and damage resulting to the plaintiff therefrom as a wrong without
damage, or damage without wrong, does not constitute a cause of
action, since damages are merely part of the remedy allowed for
the injury caused by a breach or wrong.
Metropolitan Bank and
Leong, 42 SCRA 352

Trust

Company

vs.

Tan

Chuan

Although B&I Trading had knowledge of the simulated sale between

Tan Chuan Leong and his son and had entered into the contract of
mortgage pursuant to a design to defraud Leongs creditors, no
damage or prejudice appears to have been suffered by the
petitioner thereby. Absent damage or prejudice, no right of action
arises in favor of the petitioner because wrongful violation of a
legal right is not a sufficient element of a cause of action unless it
has resulted in an injury causing loss or damages.

INTENTIONAL TORTS
Yu vs. Court of Appeals, 217 SCRA 328
House of Mayfair, a foreign manufacturer of wall covering products,
with which Yu has had an exclusive distributorship aageement was

duped into believing that the goods ordered through the FNF Trading
were to be shipped to Nigeria only, but the goods were actually sent
to and sold in the Philippines. A ploy of this character is akin to the
scenario of a third person who induces a party to renege on or violate
his undertaking under a contract, thereby entitling the other
contracting party to relief therefrom.

Valenzuela vs. Court of Appeals, G.R. NO. 83122, October

19, 1990
Valenzuela did not receive his full commission which amounted to
P1.6 Million from the P4.4 Million insurance coverage of the Delta
Motors he obtained for Philippine American General Insurance
(Philamgen) because the Philamgen terminated their agency
agreement after Valenzuela refused to share his commission with
the company. Philamgen was found to have acted with bad faith
and with abuse of right in terminating the agency under the
principle that every person must in the exercise of his rights and in
the performance of his duties act with justice, give everyone his
due, and observe honesty and good faith (Art. 19, Civil Code), and
every person who, contrary to law, willfully or negligently causes
damages to another, shall indemnify the latter for the same.

NEGLIGENCE
DR. FILOTEO A. ALANO vs, ZENAIDA MAGUD-LOGMAO, G.R. No.
175540, April 7, 2014, J.
Peralta

It also clearly stated that permission or authorization to retrieve and remove

the internal organs of the deceased was being given ONLY IF the provisions of
the applicable law had been complied with. Such instructions reveal that Dr.
Alano acted prudently by directing his subordinates to exhaust all
reasonable means of locating the relatives of the deceased. He could not
have made his directives any clearer. He even specifically mentioned that
permission is only being granted IF the Department of Surgery has complied
with all the requirements of the law. Verily, Dr. Alano could not have been
faulted for having full confidence in the ability of the doctors in the
Department of Surgery to comprehend the instructions, obeying all his
directives, and acting only in accordance with the requirements of the law.

DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION vs.

SPOUSES EULOGIO AND CARMELITA EMPHASIS, G.R. No. 211424,
November 26, 2014, J. Reyes

Contending that it exercised extraordinary diligence in the selection and

supervision of its drivers, petitioner argues that it should be absolved from
any liability for damages caused by its employee. The SC ruled that when an
employee causes damage due to his own negligence while performing his
own duties, there arises the juris tantum presumption that his employer is
negligent, rebuttable only by proof of observance of the diligence of a good
father of a family. Failure however of petitioner to establish the modes and
measures it adopted to ensure the proper selection and supervision of its
employees, petitioner therefore should be held liable for the damages cause
by its employee.

CAGAYAN ELECTRIC COOPERATIVE, INC. REPRESENTED BY ITS

GENERAL MANAGER AND CHIEF EXECUTIVE OFFICER, GABRIEL A.
TORDESILLAS vs. ALAN RAPANAN AND MARY GINE TANGONAN, G.R.
No. 199886, December 3, 2014, J. Villarama Jr.
1 died and 2 suffered injury due to mishap along the highway. The
respondents contended that the cause of death and injuries was due to live
tension wire of Cagayan Electric Cooperative Inc. The court ruled there was
no negligence on the part of Cagayan Electric Cooperative Inc. Thus, there is
no negligence on the part of petitioner that was allegedly the proximate
cause of Camilos death and Rapanans injuries. From the testimonies of
petitioners employees and the excerpt from the police blotter, this Court can
reasonably conclude that, at the time of that fatal mishap, said wires were
quietly sitting on the shoulder of the road, far enough from the concrete
portion so as not to pose any threat to passing motor vehicles and even
pedestrians. Hence, if the victims of the mishap were strangled by said wires,
it can only mean that either the motorcycle careened towards the shoulder or
even more likely, since the police found the motorcycle not on the shoulder
but still on the road, that the three passengers were thrown off from the
motorcycle to the shoulder of the road and caught up with the wires.
PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L.
SANTOS, ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L.
SATNTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
PNB failed to release to respondents their deposits as they released it to
someone else. The Supreme Court ruled that PNB, being a bank, should
have exercised a degree of diligence higher than that of a good father of a
family. However, their actions and inactions constitute gross negligence.
Thus, the award for moral damages was in order. PNB and Aguilars gross
negligence deprived Angel C. Santos heirs what is rightfully theirs.
Respondents also testified that they experienced anger and
embarrassment when petitioners PNB and Aguilar refused to release
Angel C. Santos deposit.
Exemplary damages should also be awarded. The law allows the grant of
exemplary damages by way of example for the public good. The public relies
on the banks sworn profession of diligence and meticulousness in giving
irreproachable service, which must be maintained at all times by the
banking sector.
RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN
AND ADVERTISING CORPORATION* AND TRANSWORLD MEDIA
ADS, INC., G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe

The petitioners were found negligent by both the RTC and the Court of
Appeals
and
ordered to pay jointly and severally for damages. The
petitioners allege that they are not negligent. The Supreme Court ruled that
as the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would
do, or the doing of something which a prudent and reasonable man would not
do. It is the failure to observe for the protection of the interest of another
person

that degree of care, precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury. CA correctly affirmed the
RTCs finding that Transworld and Ruks are guilty of negligence.
R TRANSPORT CORPORATIONvs.
February 18, 2015,
J. Peralta

LUISITO G. YU, G.R. No. 174161,

Negligence has been defined as "the failure to observe for the protection of
the interests of another person that degree of care, precaution, and vigilance
which the circumstances justly demand, whereby such other person suffers
injury. Verily, foreseeability is the fundamental test of negligence. It is the
omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would
do, or the doing of something which a prudent and reasonable man would
not do. The records show that driver Gimena was clearly running at a
reckless speed. He did not take the necessary precaution and instead, drove
on and bumped the deceased despite being aware that he was traversing a
commercial center where pedestrians were crossing the street. Gimena
should have observed due diligence of a reasonably prudent man by
slackening his speed and proceeding cautiously while passing the area.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD.,
AND INTER-ASIA MARINE TRANSPORT, INC. vs. ASIAN TERMINALS, INC., G.R.
No. 195661, March 11, 2015, J. Reyes

ATI suffered damage due to the fault of petitioners negligence. However,

petitioners contended that they should not be held liable for there was no
negligence on their part. The court ruled that Negligence, on the other hand,
is defined as the failure to observe that degree of care, precaution and
vigilance that the circumstances justly demand, whereby another suffers
injury. In the case under consideration, the parties do not dispute the facts of
damage upon ATIs unloader, and of such damage being the consequence of
someones negligence. However, the petitioners deny liability claiming that it
was not established with reasonable certainty whose negligence had caused
the co-mingling of the metal bars with the soybean meal cargo. The Court, on
this matter, agrees with the CAs disquisition that the petitioners should be
held jointly and severally liable to ATI. ATI cannot be faulted for its lack of
direct access to evidence determinative as to who among the shipowner,
Samsun, ContiQuincyBunge and Inter-Asia should assume liability. The CA had
exhaustively discussed why the doctrine of res ipsa loquitur applies.

EASTERN SHIPPING LINES, INC., Petitioner, v. BPI/MS INSURANCE

CORP., & MITSUI SUMITOMO INSURANCE CO., LTD. G.R. No.
182864. January 12, 2015, J. PEREZ
Mere proof of delivery of the goods in good order to a common carrier and of
their arrival in bad order at their destination constitutes a prima facie case of
fault or negligence against the carrier. If no adequate explanation is given as
to how the deterioration, loss, or

destruction of the goods happened, the transporter shall be held

responsible. From the foregoing, the fault is attributable to ESLI. While no
longer an issue, it may be nonetheless state that ATI was correctly absolved
of liability for the damage.
BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET
S. DELA CRUZ vs. NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E.
LANUZO, JOAN BERNABE E. LANUZO, AND RYAN JOSE E. LANUZO, G.R. No.
161151 March 24, 2014, J. BERSAMIN

This case involves a claim for damages arising from the death of a
motorcycle rider in a night time accident due to the supposed negligence of a
construction company then undertaking reblocking work on a national
highway. The plaintiffs insisted that the accident happened because the
construction company did not provide adequate lighting on the site, but the
latter countered that the fatal accident was caused by the negligence of the
motorcycle rider himself. In order that a party may be held liable for
damages for any injury brought about by the negligence of another, the
claimant must prove that the negligence was the immediate and proximate
cause of the injury. Proximate cause is defined as that cause, which, in
natural and continuous sequence, unbroken by any efficient intervening
cause, produces the injury and without which the result would not have
occurred.
The company has shown the installation of the necessary warning signs and
lights in the project site. In that context, the fatal accident was not caused by
any instrumentality within the exclusive control of the company. In contrast,
Balbino had the exclusive control of how he operated and managed his
motorcycle. The records disclose that he himself did not take the necessary
precautions. As Zamora declared, Balbino overtook another motorcycle rider
at a fast speed, and in the process could not avoid hitting a barricade at the
site, causing him to be thrown off his motorcycle onto the newly cemented
road. SPO1 Corporals investigation report corroborated Zamoras
declaration. It was shown that the proximate and immediate cause of the
death of Balbino was his own negligence. Hence, the heirs could not recover
damages.
VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014.
J. BRION
Paragraph 5, Article 2180 of the Civil Code holds the employer vicariously
liable for damages caused by his employees within the scope of their
assigned tasks. In this case, Josefa seeks to avoid the application of this

provision by denying that Bautista was his employee at the time of the
incident.
Josefa cannot evade his responsibility by mere denial of his employment
relations with Bautista in the absence of proof that his truck was used
without authorization or that it was stolen when the accident occurred. In
quasi-delict cases, the registered owner of a motor vehicle is the employer of
its driver in contemplation of law. The registered owner of any vehicle, even
if not used for public service, would primarily be responsible to the public or
to third persons for injuries caused while the vehicle was being driven on
highways or

streets. The purpose of motor vehicle registration is precisely to identify the

owner so that if any injury is caused by the vehicle, responsibility can be
imputed to the registered owner.
INDOPHIL TEXTILE MILLS, INC v ENGR. SALVADOR ADVIENTO, G.R No.
171212, August 4, 2012. PERALTA.
Engr. Adviento was hired by Indophil Textile Mills to maintain its threadmanufacturing facilities. Later he was diagnosed with Chronic Poly Sinusitis.
Engr. Adviento filed a case for damages based on quasi-delict with the RTC,
alleging that he contracted such occupational disease by reason of the gross
negligence of petitioner to provide him with a safe, healthy and workable
environment. Indophil moved to dismiss, arguing that jurisdiction is with the
Labor Arbiter.
True, the maintenance of a safe and healthy workplace is ordinarily a subject
of labor cases. However, Advientos claim for damages is specifically
grounded on petitioners gross negligence to provide a safe, healthy and
workable environment for its employees a case of quasi-delict.
Clearly, injury and damages were allegedly suffered by respondent, an
element of quasi- delict. Secondly, the previous contract of employment
between petitioner and respondent cannot be used to counter the element of
"no pre-existing contractual relation" since petitioners alleged gross
negligence in maintaining a hazardous work environment cannot be
considered a mere breach of such contract of employment, but falls squarely
within the elements of quasi-delict under Article 2176 of the Civil Code since
the negligence is direct, substantive and independent.
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO., LTD.
vs. GLOW LAKS ENTERPRISES, LTD, G.R. No. 156330 , November 19,
2014, J. PEREZ
The respondent loaded to the vessel owned by the petitioner who is common
carrier. By an unfortunate turn of events, however, unauthorized persons
managed to forge the covering bills of lading and on the basis of the falsified
documents, the ports authority released the goods.
In this case, there is no dispute that the custody of the goods was never
turned over to the consignee or his agents but was lost into the hands of
unauthorized persons who secured possession thereof on the strength of
falsified documents. The loss or the misdelivery of the goods in the instant
case gave rise to the presumption that the common carrier is at fault or
negligent.

A common carrier is presumed to have been negligent if it fails to prove that

it exercised extraordinary vigilance over the goods it transported. When the
goods shipped are either lost or arrived in damaged condition, a presumption
arises against the carrier of its failure to observe that diligence, and there
need not be an express finding of negligence to hold it liable. To overcome
the presumption of negligence, the common carrier must establish by

adequate proof that it exercised extraordinary diligence over the goods. It

must do more than merely show that some other party could be responsible
for the damage. In the present case, petitioners failed to prove that they did
exercise the degree of diligence required by law over the goods they
transported.
Sanitary Steam Laundry, Inc. vs. Court of Appeals, 300 SCRA
20
The driver was in violation of the Land Transportation and Traffic
Code when its vehicle got involved in an accident that killed three
persons. For the driver to be found negligent petitioner must show
that the violation of the statute was the proximate or legal cause of
the injury or that it substantially contribute d thereto because such
negligence, consisting in whole or in part, of violation of law, like
any other negligence is without legal consequence unless it is a
contributing cause of the injury.
Mckee vs. Intermediate Appellate Court, 211 SCRA 517
A head-on-collision took place between a cargo truck driver and a
car driver Jose Koh, which resulted in the death of Jose Koh and two
others because the Koh avoided hitting two boys who suddenly
darted across the lane. Under the Emergency Rule, Koh was not
negligent because his entry into the lane of the truck was
necessary in order to avoid what was, in his mind at that time, a
greater peril of death or injury to the two boys. Under this rule, a
person who, without fault or negligence on his part, is suddenly
placed in an emergency or unexpected danger and compelled to
act instantly and instinctively with no time for reflection and
exercise of the required precaution, is not guilty of negligence and,
therefore, exempt from liability, if he did not make the wisest
choice of the available courses of conduct to avoid injury which a
reasonably prudent person would have made under normal
circumstances.

Del Rosario vs. Manila Electric Co., 57 Phil. 478

An overhead wire of Meralco conducting electricity parted and one
of the charged ends fell to the ground, and a nine (9) year old
14
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school child touched the wire and was electrocuted. It is doubtful

whether contributory negligence can properly be imputed to the
deceased, owing to his immature years and the natural curiosity
which a child would feel to do something out of the ordinary, and
the mere fact that the deceased ignored the caution of a
companion of the age of 8 years does not, in our opinion, alter the
case.

Astudillo vs. Manila Electric Co., 55 Phil. 327

14
0

A young man by the name of Juan Diaz Astudillo met his death
through electrocution, when he placed his right hand on a wire
connected with an electric light pole owned by Meralco. Meralco
was negligent in so placing the pole and wires as to be within the
proximity of a place frequented by many persons, with the
possibility of coming in contact with a highly charged and
defectively insulated wire.
Bernardo vs. Legaspi, 29 Phil. 12
Two automobiles, going in opposite directions, collide on turning a
street corner, and it appears from the evidence that the drivers were
equally negligent and contributed equally to the collision. Under the
doctrine of contributory negligence, neither can recover from the
other for the damages suffered.
Negros Navigation Co., Inc. vs. Court of Appeals, 281
SCRA 534
The ship captain of MT Tacloban City, an oil tanker owned by PNOC,
was
playing mah-jong when it collided off the Tablan Strait in
Mindoro, with M,V Don Juan owned by petitioner NENACO. The
owner of the ship was found equally negligent with the ship captain
because of tolerating the playing of mahjong by the ship captain
and other crew members while on board the ship and failing to
keep the ship seaworthy.
Philippine Long Distance Telephone Co., Inc. vs. Court of
Appeals, 178 SCRA 94
The jeepney of the respondents fell into an open excavation when
the jeep swerved from the inside lane of the street, respondents
being aware of the presence of said excavation. The negligence of
respondent Antonio Esteban was not only contributory to his injuries
and those of his wife but goes to the very cause of the occurrence of
the accident, as one of its determining factors, and thereby precludes
their right to recover damages.
GROSS M ISCONDUCT
DR. IDOL L. BONDOC vs. MARILOU R. MANTALA, G.R. No. 203080,
November 12, 2014,
14
1

J. Villarma, Jr.
A physician is guilty of gross misconduct when he chose to conduct a normal
delivery and deliberately left her patient to a midwife and two inexperienced
assistants despite knowing that the patient was under prolonged painful
labor and about to give birth to a macrosomic baby by vaginal delivery which
resulted to a stillborn baby and the loss of her reproductive capacity. A
physician should be dedicated to provide competent medical care with full
professional skill in accordance with the current standards of care,
compassion, independence and respect for human dignity.

14
2

NOEL CASUMPANG, RUBY SANGA-MIRANDA AND SAN JUAN DE DIOS

HOSPITAL, vs. NELSON CORTEJO, G.R. No. 171127/DRA. RUBY
SANGA-MIRANDA, v. NELSON CORTEJO, G.R. No. 171217/SAN JUAN
DE DIOS HOSPITAL, vs. NELSON CORTEJO, G.R. No. 171228, March
11, 2015, J. Brion
Dr. Casumpang and Dr. Miranda are accused of negligence leading to the
death of a young boy. The SC held that, to successfully pursue a medical
malpractice suit, the plaintiff (in this case, the deceased patient's heir) must
prove that the doctor either failed to do what a reasonably prudent doctor
would have done, or did what a reasonably prudent doctor would not have
done; and the act or omission had caused injury to the patient. The patient's
heir/s bears the burden of proving his/her cause of action. The elements of
medical negligence are: (1) duty; (2) breach; (3) injury; and (4) proximate
causation. Given these elements, only Dr. Casumpang, attending physician,
was found to be negligent for having failed to promptly detect dengue fever
and undertake the proper medical management needed for this disease.

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE VADAVEDO

AND BENITA
ARCOYCADAVEDO(both deceased), substituted by their heirs,
namely: HERMINIA, PASTORA, Heirs of FRUCTUOSA, Heirs of
RAQUEL, EVANGELINE, VICENTE JR., and
ARMANO, all surnamed CADAVEDO vs. VICTORINO (VIC) T. LACAYA,
married to Rosa Legados, G.R. No. 173188, January 15, 2014, J.
Brion

Atty. Lacaya claims he had an arrangement with his client that he would
be awarded one half of the property acquired by his client if they obtained
favorable judgment.
Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase
or assignment, the property that has been the subject of litigation in which
they have taken part by virtue of their profession. The same proscription is
provided under Rule 10 of the Canons of Professional Ethics.
A thing is in litigation if there is a contest or litigation over it in court or when
it is subject of the judicial action. Following this definition, SC held that the
subject lot was still in litigation when Atty. Lacaya acquired the disputed onehalf portion. We note in this regard the following established facts:(1)on
September 21, 1981, Atty. Lacaya filed a motion for the issuance of a writ of
execution in Civil Case No. 1721; (2) on September 23, 1981, the spouses

Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on October
16, 1981, the RTC granted the motion filed for the issuance of a writ of
execution in Civil Case No. 1721 and the spouses Cadavedo took possession
of the subject lot on October 24, 1981;
(4) soon after, the subject lot was surveyed and subdivided into two equal
portions, and Atty. Lacaya took possession of one of the subdivided
portions; and (5) on May 13, 1982, Vicente and Atty. Lacaya executed the
compromise agreement.

From these timelines, whether by virtue of the alleged oral contingent fee
agreement or an agreement subsequently entered into, Atty. Lacaya
acquired the disputed one-half portion (which was after October 24, 1981)
while Civil Case No. 3352 and the motion for the issuance of a writ of
execution in Civil Case No. 1721 were already pending before the lower
courts. Similarly, the compromise agreement, including the subsequent
judicial approval, was effected during the pendency of Civil Case No. 3352.
In all of these, the relationship of a lawyer and a client still existed between
Atty. Lacaya and the spouses Cadavedo.
Thus, whether we consider these them to be prohibited and void by reason
of public policy. Under Article 1409 of the Civil Code, contracts which are
contrary to public policy and those expressly prohibited or declared void by
law are considered in existent and void from the beginning.
While contingent fee agreements are indeed recognized in this jurisdiction as
a valid exception to the prohibitions under Article 1491(5) of the Civil Code,
this recognition does not apply to the present case. A contingent fee
contract is an agreement in writing where the fee, often a fixed percentage
of what may be recovered in the action, is made to depend upon the success
of the litigation. The payment of the contingent fee is not made during the
pendency of the litigation involving the clients property but only after the
judgment has been rendered in the case handled by the lawyer.
In the present case, we reiterate that the transfer or assignment of the
disputed one-half portion to Atty. Lacaya took place while the subject lot
was still under litigation and the lawyer-client relationship still existed
between him and the spouses Cadavedo. Thus, the general prohibition
provided under Article 1491 of the Civil Code, rather than the exception
provided in jurisprudence, applies.
The compromise agreement entered into between Vicente and Atty. Lacaya
in Civil Case No. 215 (ejectment case) was intended to ratify and confirm
Atty. Lacayas acquisition and possession of the disputed one-half portion
which were made in violation of Article 1491
(5) of the Civil Code. As earlier discussed, such acquisition is void; the
compromise agreement, which had for its object a void transaction,
should be void.
A contract whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy is in existent and void from the
beginning. It can never be ratified nor the action or defense for the
declaration of the in existence of the contract prescribe; and any contract
directly resulting from such illegal contract is likewise void and in existent.
Consequently, the compromise agreement did not supersede the written
contingent fee agreement providing for attorneys fee of P2,000.00.

SC fixed the attorneys fees on a quantum meruit basis.The doctrine of

quantum meruit is a device to prevent undue enrichment based on the
equitable postulate that it is unjust for a person to retain benefit without
paying for it.

SPECIAL LIABILITY IN PARTICULAR ACTIVITIES

Doctors
PEDRITO DELA TORRE vs. DR. ARTURO IMBUIDO, DRA. NORMA IMBUIDO in
their capacity as
owners and operators of DIVINE SPIRIT GENERAL HOSPITAL and/or DR.
NESTOR PASAMBA,
G.R. No. 192973, September 29, 2014, J. Reyes

Medical malpractice or, more appropriately, medical negligence, is that type

of claim which a victim has available to him or her to redress a wrong
committed by a medical professional which has caused bodily harm. In
order to successfully pursue such a claim, a patient, or his or her family as in
this case, "must prove that a health care provider, in most cases a physician,
either failed to do something which a reasonably prudent health care provider
would have done, or that he or she did something that a reasonably prudent
provider would not have done; and that failure or action caused injury to the
patient.
As the Court held in Spouses Flores v. Spouses Pineda, et al. ,the critical and
clinching factor in a medical negligence case is proof of the causal
connection between the negligence and the injuries. The claimant must
prove not only the injury but also the defendant's fault, and that such fault
caused the injury. A verdict in a malpractice action cannot be based on
speculation or conjecture. Causation must be proven within a reasonable
medical probability based upon competent expert testimony, which the Court
finds absent in the case at bar. As regards the respondents' counterclaim, the
CA's award of P48,515.58 is sustained.
Ramos vs. Court of Appeals, 321 SCRA 584
At the time of her admission, patient Erlinda Ramos was
neurologically sound but during the administration of anesthesia
and prior to the performance of a gall bladder operation, she
suffered irreparable damage to her brain and was diaganosed to be
suffering from diffuse cerebral parenchymal damage. The
damage sustained by Erlinda Erlinda in her brain prior to a
scheduled gall bladder operation presents a case for the
application of res ipsa loquitur in medical malpractice as it was
found out that brain damage does not normally occur in the

process of gall bladder operations, and does not happen in the

absence of negligence of someone in the administration
of
anesthesia and in the use of endotracheal tube.

Batiquin vs. Court of Appeals, 258 SCRA 334

A piece of rubber glove was left in the abdomen of a patient after a
caesarean section operation. The doctrine of res ipsa loquitor applies
because aside from the caesarean section, private respondent
Villegas underwent no other operation which could have caused
the offending piece of rubber to appear in

her uterus, it stands to reason that such could only have been a byproduct of the caesarean section performed by Dr. Batiquin.
Lawyers
Roque vs. Gunigundo, 89 SCRA 178
Atty. Gunigundo was charged by his client Roque with G.R.oss
negligence in not seasonably filing their motion for reconsideration
and in not perfecting an appeal from the trial courts order of
dismissal. Atty. Gunigundo's filing of motions for extension on the
last day and sending them by registered mail (thus giving the
court insufficient time to act before the extension sought had expired)
and his omission to verify whether his second motion for extension
was granted are indicative of lack of competence, diligence and
fidelity in the dispatch of his clients business.
Adarne vs. Aldaba, 83 SCRA 734
Adarne was declared in default for failure to appear in the hearing
because
his one of his lawyers honestly believed that he had
appeared for the complainant only for a special purpose and that the
complainant had agreed to contact his attorney of record to handle
his case after the hearing of October 23, 1964, so that he did
nothing more about it. An attorney is not bound to exercise
extraordinary diligence, but only a reasonable degree of care and skill
having reference to the character of the business he undertakes to
do.
STRICT LIABILITY
Vestil vs. Intermediate Appellate Court, 179 SCRA 47
Theness, a three-year old child, was killed after she was bitten by
a dog while she was playing with the child of Purita Vestil in the
house of Vicente Miranda, the late father of Purita. Spouses
Vestils contention that they cannot be faulted as they are not the
owner of the house where the child was bitten cannot be
accepted because under the Article 2183 of the Civil Code the
possessor of animal is liable even if the animal should escape or
be lost and so be removed from his control.
Amadora vs. Court of Appeals, 160 SCRA 315

Amadora was shot dead by his classmate Daffon inside the school
auditorium, when the classes had formally ended. As long as it can
be shown that the student is in the school premises in pursuance
of a legitimate student objective, in the exercise of a legitimate
student right, and even in the enjoyment of a legitimate student
privilege, the responsibility of the school authorities
over
the
student continues.

Caedo vs. Yu Khe Thai, 26 SCRA

410

Yu was inside his car when his driver bumped a carretela in front
and at the same time hit another car coming from the opposite
direct. Under [Article 2184], if the causative factor was the drivers
negligence, the owner of the vehicle who was present is likewise
held liable if he could have prevented the mishap by the exercise of
due diligence.
ART 2176 , 2177
ANDAMO vs. IAC, G.R. NO. 74761November 6, 1990
Clearly, from petitioner's complaint, the waterpaths and contrivances
built by respondent corporation are alleged to have inundated the
land of petitioners. All the elements of a quasi-delict or culpa
aquiliana are present, to wit: ( a) damages suffered by the plaintiff, (b)
fault or negligence of the defendant, or some other person for
whose acts he must respond; and (c) the connection of cause and
effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.

PONCE vs. LEGASPI, G.R. NO. 79184 May 6, 1992

The present case stemmed from the filing before the Supreme
Court OF a complaint for disbarment against respondent by
petitioner which was dismissed. Respondent thereafter filed a
complaint for damages against the petitioner. The adverse result of
an action does not per se make the action wrongful and subject
the actor to make payment of damages for the law could not have
meant to impose a penalty on the right to because one who
exercises his rights does no injury, and if damage results from a
person's exe rcising his legal rights, it is damnum absque injuria.
EXTRAORDINARY DILIGENCE

EASTERN SHIPPING LINES INC., vs. BPI/MS INSURANCE CORP. and

MITSUI SUM TOMO INSURANCE CO. LTD., G.R. No. 193986 January 15,
2014, J. Villarama, Jr.
It bears stressing unto petitioner that common carriers, from the nature of
their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods transported by them.
Subject to certain exceptions enumerated under Article 1734 of the Civil
Code, common carriers are responsible for the loss, destruction, or
deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the
possession
of, and

received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to the consignee, or to the person
who has a right to receive them. Owing to this high degree of diligence
required of them, common carriers, as a general rule, are presumed to have
been at fault or negligent if the goods they transported deteriorated or got
lost or destroyed. That is, unless they prove that they exercised extraordinary
diligence in transporting the goods. In order to avoid responsibility for any
loss or damage, therefore, they have the burden of proving that they
observed such high level of diligence. In this case, petitioner failed to hurdle
such burden.
RES IPSA LOQUITUR
VICENTE JOSEFA vs. MANILA ELECTRICCOMPANY, G.R. No. 182705, July
18, 2014,
J.Brion
For the doctrine of res ipsa loquitur to apply, the complainant must show
that: (1) the accident is of such character as to warrant an inference that it
would not have happened except for the defendants negligence (2) the
accident must have been caused by an agency or instrumentality within the
exclusive management or control of the person charged with the negligence
complained of and (3) the accident must not have been due to any
voluntary action or contribution on the part of the person injured. The
present case satisfies all the elements of res ipsa loquitur.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN
SHIPPING LTD., AND INTER-ASIA MARINE TRANSPORT, INC. v.
ASIAN TERMINALS, INC, G.R. No. 195661. March 11, 2015, J.
REYES
The three requisites to the application of the doctrine of res ipsa loquitur are
found to be attendant in the case at bar. First, the co-mingling of the two
foreign metal objects with the soybean meal cargo and the consequent
damage to ATIs unloader is an accident which ordinarily does not occur in
the absence of someones negligence. Second, the foreign metal objects
were found in the vessels Hold No. 2, which is within the exclusive control of
the petitioners. Third, records do not show that ATIs negligence had in any
way contributed to the damage caused to its unloader. All 3 requisites of res
ipsa loquitur being present, the presumption or inference arises that
defendants negligence was the proximate cause of the damage to ATIs
unloader. The burden of evidence shifted to defendants to prove otherwise.
The defendants failed to do so.

INTERNATIONAL CONTAINER TERMINAL SERVICES INC. VS. CELESTE

M. CHUA, G.R. No. 195031March 26, 2014, J. PEREZ
The container van loaded with the personal effects of respondent Chua
arrived at North Harbor, Manila and was unloaded in the depot belonging to
petitioner for safekeeping pending the customs inspection. The container van
was stripped and partially inspected by custom authorities. Further
inspection thereof was scheduled on May 8, 1997. However, on

the date scheduled, petitioners depot was gutted by fire and respondents
container van was burned.
Under the circumstances of this case, petitioner is liable to respondent for
damages on account of the loss of the contents of her container van.
Petitioner itself admitted during the pretrial of this case that respondents
container van caught fire while stored within its premises. Absent any
justifiable explanation on the part of petitioner on the cause of the fire as
would absolve it from liability, the presumption that there was negligence on
its part comes into play. The situation in this case, therefore, calls for the
application of the doctrine of res ipsa loquitur.

The doctrine is based on the theory that the defendant either knows the
cause of the accident or has the best opportunity of ascertaining it and the
plaintiff, having no knowledge thereof, is compelled to allege negligence in
general terms. In such instance, the plaintiff relies on proof of the happening
of the accident alone to establish negligence. The principle, furthermore,
provides a means by which a plaintiff can hold liable a defendant who, if
innocent, should be able to prove that he exercised due care to prevent the
accident complained of from happening. It is, consequently, the defendants
responsibility to show that there was no negligence on his part. The doctrine,
however, can be invoked when and only when, under the circumstances
involved, direct evidence is absent and not readily available. Here, there was
no evidence as to how or why the fire in the container yard of petitioner
started; hence, it was up to petitioner to satisfactorily prove that it exercised
the diligence required to prevent the fire from happening. This it failed to do.
Thus, the trial court and the Court of Appeals acted appropriately in applying
the principle of res ipsa loquitur to the case at bar.

VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July

18, 2014. J. BRION
Res ipsa loquitor is the doctrine which postulates that, as a matter of
common knowledge and experience and in the absence of some
explanation by the defendant who is charged with negligence, the very
nature of occurrences may justify an inference of negligence on the part of
the person who controls the instrumentality causing the injury.
In this case, the driver Bautista is presumed to be negligent in driving the
truck under the res ipsa loquitor doctrine. The present case satisfies all the

elements of res ipsa loquitur. It is very unusual and extraordinary for the
truck to hit an electricity post, an immovable and stationary object, unless
Bautista, who had the exclusive management and control of the truck, acted
with fault or negligence.

DAMAGES

NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA

COMPUTER LEARNING CENTER INC., G.R. Nos. 187930 & 188250,
February 23, 2015, C.J. Sereno
Pretermination is effectively the breach of a contract, that was originally
intended to cover an agreed upon period of time. A definite period assures
the lessor a steady income for the duration. A pretermination would
suddenly cut short what would otherwise have been a longer profitable
relationship. Along the way, the lessor is bound to incur losses until it is able
to find a new lessee, and it is this loss of income that is sought to be
compensated by the payment of liquidated damages. Also proper is an
award of exemplary damages since pursuant to Article 2234, petitioner was
able to prove he was entitled moral, temperate or compensatory damages
were it not for the stipulation of liquidated damages.
MERALCO vs. RAMOY, G.R. NO. 158911, March 4, 2008
In the present case, MERALCO wilfully caused injury to Leoncio Ramoy
by withholding from him and his tenants the supply of electricity to
which they were entitled under the Service Contract. MERALCO's
failure to exercise utmost care and diligence in the performance
of its obligation to its customer, is tantamount to bad faith hence
is entitled to moral
damages.
MINDANAO TERMINAL AND BROKERAGE SERVICE, INC. vs.
PHOENIX ASSURANCE COMPANY OF NEW YORK,MCGEE &
CO., INC., G.R. NO. 162467, May 8, 2009

The Court ruled that Mindanao Terminal had duly exercised the
required degree of diligence in loading and stowing the cargoes,
which is the ordinary diligence of a good father of a family. There is
no basis for the award of attorneys fees in favor of petitioner
since none of the circumstances enumerated in Article 2208 of
the Civil Code exists because the present case is clearly not an
unfounded civil action against the plaintiff as there is no showing
that it was instituted for the mere purpose of vexation or injury.
AIR
FRANCE
vs.CARRASCOSO,
September 28, 1966

G.R.

NO.

L-21438,

Plaintiff was forced out of his seat in the first class compartment of
the plane belonging to the defendant Air France while at Bangkok,
and was transferred to the tourist class without his consent and
against his will. The contract of air carriage, therefore, generates a
relation attended with a public duty, and neglect or malfeasance
of the carrier's employees, naturally, could give ground for an
action for damages.

BAYANI vs. PANAY ELECTRIC CO., INC., G.R. NO. 139680,

April 12, 2000

The requisites for

prosecution are:

an

action

for

damages based

on

malicious

(1) the fact of the prosecution and the further fact that the defendant
was himself the prosecutor, and that the action was finally
terminated with an acquittal;
(2) that in bringing the action, the prosecutor acted without probable
cause; and
(3) the prosecutor was actuated or impelled by legal malice.
WASSMER vs VELEZ, G.R. NO. L-20089, December 26, 1964

Two days before the wedding, defendant, who was then 28 years
old, simply left a note for plaintiff stating: "Will have to postpone
wedding My mother opposes it ... ", then enplaned to his home
city in Mindanao, and never returned and was never heard from
again. This is not a case of mere breach of promise to marry but
unjustifiably contrary to good customs for which defendant must
be held answerable in damages in accordance with Article 21
aforesaid and per express provision of Article 2219 (10) of the New
Civil Code, moral damages are recoverable in the cases mentioned
in Article 21 of said Code.

SANTOS VENTURA HOCORMA FOUNDATION, INC. vs.

ERNESTO V. SANTOS and RIVERLAND, INC., G.R. NO.
153004, November 5, 2004
The demand letter sent to the petitioner on October 28, 1992, was
in accordance with an extra-judicial demand contemplated by law.
When the debtor knows the amount and period when he is to pay,
interest as damages is generally allowed as a matter of right.
EXEMPLARY DAMAGES

15
0

METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE

ROSALES AND YO YUK TO, G.R. No. 183204, JANUARY 13, 2014, J. del
Castillo
As to the award of exemplary damages, Article 2229 of the Civil Code
provides that exemplary damages may be imposed by way of example or
correction for the public good, in addition to the moral, temperate,
liquidated or compensatory damages. They are awarded only if the guilty
party acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. The bank acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner when it refused to release the deposits of respondents
without any

15
0

legal basis. The banking industry is impressed with public interest. As such,
the highest degree of diligence is expected, and high standards of integrity
and performance are even required of it. It must therefore treat the
accounts of its depositors with meticulous care and always to have in mind
the fiduciary nature of its relationship with them.
SEVEN BROTHERS SHIPPING CORPORATION vs. DMCCONSTRUCTION RESOURCES, INC., G.R. No. 193914. November 26,
2014, C.J. Sereno
Petitioner questions the decision of the CA awarding respondent nominal
damages after having ruled that the actual damages awarded by the RTC
was unfounded. Petitioner argues that nominal damages are only awarded to
vindicate a right that has been violated and not to indemnify a party for any
loss suffered by the latter. The SC ruled that what should have been awarded
was temperate and not nominal damages. Temperate or moderate damages
may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be provided
with certainty. Considering that it has been established that respondent
suffered a loss, even if the amount thereof cannot be proven with certainty,
the Court ruled that what should have been awarded was temperate
damages.
PEOPLE OF THE PHILIPPINES vs. SHIRLEY A. CASIO, G.R. No. 211465,
December 3,
2014, J. Leonen
The payment of P500,000 as moral damages and P100,000 as exemplary
damages for the crime of Trafficking in Persons as a Prostitute finds basis in
Article 2219 of the Civil Code, which provides that Moral and Exemplary
Damages may be awarded in cases of seduction, abduction, rape, or other
lascivious acts. The criminal case of Trafficking in Persons as a Prostitute is
an analogous case to the crimes of seduction, abduction, rape, or other
lascivious acts. To be trafficked as a prostitute without ones consent and to
be sexually violated four to five times a day by different strangers is
horrendous and atrocious. There is no doubt that Lolita experienced physical
suffering, mental anguish, fright, ser ious anxiety, besmirched reputation,
wounded feelings, moral shock, and social humiliation when she was
trafficked as a prostitute in Malaysia. Since the crime of Trafficking in Persons
was aggravated, being committed by a syndicate, the award of exemplary
damages is likewise justified.
TELEFAST COMMUNICATIONS vs. CASTRO, G.R. NO.
73867, February 29, 1988
15
1

Petitioner and private respondent entered into a contract whereby, for

a fee, petitioner undertook to send said private respondent's message
overseas by teleG.R.am but which petitioner did not do, despite
performance by said private respondent of her obligation by paying
the required charges.
The award of

15
2

exemplary damages by the trial court is likewise justified and,

therefore, sustained as a warning to all teleG.R.am companies to
observe due diligence in transmitting the messages of their
customers.
BANK
OF THE PHILIPPINE ISLANDS vs.COURT
APPEALS, G.R. NO. 136202, January 25, 2007

OF

Upon the prompting of Templonuevo and with full knowledge of the

brewing dispute between Salazar and
Templonuevo,
petitioner
debited the account held in the name of the sole proprietorship of
Salazar without even serving due notice upon her. The award of
exemplary damages is justified when the acts of the bank are
attended by malice, bad faith or gross negligence and the award of
reasonable attorneys fees is proper where exemplary damages are
awarded because depositors are compelled to litigate to protect
their interest.
ACTUAL or COMPENSATORY DAMAGES
S.V. MORE PHARMA CORPORATION AND ALBERTO SANTILLAN VS.
DRUGMAKERS LABORATORIES INC. AND ELIEZER DEL MUNDO G.R.
Nos. 200408/200416. November 12, 2014, J. PERLAS-BERNABE
It was an error to award actual damages for supposed loss of profits
based on the erroneous sales projection. The amount of loss warranting
the grant of actual or compensatory damages must be proved with a
reasonable degree of certainty, based on competent proof and the best
evidence obtainable by the injured party. Nevertheless, considering that
injured party palpably suffered some form of pecuniary loss resulting from
the breach of contract it was proper to, instead, award in their favor
temperate damages.
ALEJANDRO C. ALMENDRAS JR. VS. ALEXIS C. ALMENDRAS G.R. No.
179491. January 14, 2015, J. SERENO
In awarding damages in libel cases, the court is given ample discretion to
determine the amount, depending upon the facts of the particular case.
Article 2219 of the Civil Code expressly authorizes the recovery of moral
damages in cases of libel, slander or any other form of defamation.
However, "while no proof of pecuniary loss is necessary in order that moral
damages may be awarded, it is nevertheless essential that the claimant

should satisfactorily show the existence of the factual basis of damages

and its causal connection to defendants acts." Considering that
respondent sufficiently justified his claim for damages (he testified that he
was "embarrassed by the said letters and ashamed to show his face in
government offices"), the Court found that he was entitled to moral and
exemplary damages.

LITO CORPUZ vs. PEOPLE OF THE PHILIPPINES, G.R. No. 180016 April
29, 2014, J. PERALTA
In our jurisdiction, civil indemnity is awarded to the offended party as a kind
of monetary restitution or compensation to the victim for the damage or
infraction that was done to the latter by the accused, which in a sense only
covers the civil aspect. Precisely, it is civil indemnity. Thus, in a crime where a
person dies, in addition to the penalty of imprisonment imposed to the
offender, the accused is also ordered to pay the victim a sum of money as
restitution. Clearly, this award of civil indemnity due to the death of the
victim could not be contemplated as akin to the value of a thing that is
unlawfully taken which is the basis in the imposition of the proper penalty in
certain crimes. Thus, the reasoning in increasing the value of civil indemnity
awarded in some offense cannot be the same reasoning that would sustain
the adoption of the suggested ratio. Also, it is apparent from Article 2206
that the law only imposes a minimum amount for awards of civil indemnity,
which is P3,000.00.
The law did not provide for a ceiling. Thus, although the minimum amount
for the award cannot be changed, increasing the amount awarded as civil
indemnity can be validly modified and increased when the present
circumstance warrants it. Corollarily, moral damages under Article 2220of
the Civil Code also does not fix the amount of damages that can be
awarded. It is discretionary upon the court, depending on the mental
anguish or the suffering of the private offended party. The amount of moral
damages can, in relation to civil indemnity, be adjusted so long as it does
not exceed the award of civil indemnity.
SNOW MOUNTAIN DAIRY CORPORATION vs. GMA VETERANS FORCE,
INC., G.R. No.
192446, November 19, 2014, J. Peralta
Actual or compensatory damages are those awarded in satisfaction of, or in
recompense for, loss or injury sustained. The burden is to establish one's
case by a preponderance of evidence which means that the evidence, as a
whole, adduced by one side, is superior to that of the other. Actual damages
are not presumed. In this case, GMA Veterans had not shown that the
security guards were not assigned to another employer, and that it was
compelled to pay the guards despite the pre-termination of the security
agreement to be entitled to the amount of PI6,014.00 per month. Indeed, no
evidence was presented by GMA Veterans establishing the actual amount of
loss suffered by reason of the pre- termination. It is elementary that to
recover damages, there must be pleading and proof of actual damages
suffered. Temperate damages may be allowed in cases where from the
nature of the case, definite proof of pecuniary loss cannot be adduced,

although the court is convinced that the aggrieved party suffered some
pecuniary loss. The SC also take into consideration that GMA Veterans
certainly spent for the security guard's training, firearms with ammunitions,
uniforms and other necessary things before their deployment to Snow
Mountain. Hence, the SC find it just and proper to award temperate damages
in the amount of P200,000.00 in lieu of actual damages.

LOADSTAR SHIPPINGCOMPANY, INCORPORATED and

LOADSTARINTERNATIONAL SHIPPINGCOMPANY, INCORPORATED vs.
MALAYAN INSURANCE COMPANY, INCORPORATED, G.R. No. 185565,
November 26, 2014, J. Reyes
Actual damages are not presumed. The claimant must prove the actual
amount of loss with a reasonable degree of certainty premised upon
competent proof and on the best evidence obtainable. Thus, an insurer of
copper concentrates which were contaminated by seawater while at sea,
who, along with the consignee, arbitrarily fixed the salvage value of the
cargo, and who failed to refute expert testimony from the common carrier as
regards the lack of any adverse effect of seawater on copper concentrates,
then actual damages are not proven.
ART 2203
VELASCO vs.MERALCO, G.R. NO. L-18390, August 6, 1971

It is undisputed that a sound unceasingly emanates from the

substation of MERALCO and whether this sound constitutes an
actionable nuisance or not is the principal issue in this case and
appellant asked that he be declared entitled
to recover
compensatory, moral and other damages. Article 2203 clearly
obligates the injured party to undertake measures that will
alleviate and not aggravate his condition after the infliction of the
injury, and places upon him the burden of explaining why he could
not do so.
MORAL DAMAGES
ARCO PULP AND PAPER CO. v DAN T. LIM, G.R No. 206806, June 25,
2014. J. LEONEN
Moral damages are not recoverable on the mere breach of contract. Article
2220 requires that the breach be done fraudulently or in bad faith. To
recover moral damages in an action for breach of contract, the breach must
be palpably wanton, reckless and malicious, in bad faith, oppressive, or
abusive. Hence, the person claiming bad faith must prove its existence by
clear and convincing evidence for the law always presumes good faith.
When the party to a contracts actions clearly show "a dishonest purpose or

some moral obliquity and conscious doing of a wrong, a breach of known

duty through some motive or interest or ill will that partakes of the nature of
fraud, moral damages may be awarded. Here, the Court justified the award
since the debtor issued a bouncing check in partial payment of its obligation,
presumably with the knowledge that it was being drawn against a closed
account. Worse, it attempted to shift their obligations to a third person
without the consent of the creditor.

WPM INTERNATIONAL TRADING, INC. and WARLITO P. MANLAPAZ

v FE CORAZON LABAYEN, G.R No. 182770, September 17, 2014. J.
BRION
On the award of moral damages, the Court found the award in order in
view of WPM's unjustified refusal to pay a just debt. Such cold refusal to
pay a just debt amounts to a breach of contract in bad faith, as
contemplated by Article 2220.
Under Article 2220 of the New Civil Code, moral damages may be awarded in
cases of a breach of contract where the defendant acted fraudulently or in
bad faith or was guilty of gross negligence amounting to bad faith.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs.
SPOUSES CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No.
185798, JANUARY 13, 2014, J.
Perez
In order that moral damages may be awarded in breach of contract cases,
the defendant must have acted in bad faith, must be found guilty of gross
negligence amounting to bad faith, or must have acted in wanton disregard
of contractual obligations. Petitioners acted in bad faith when they
breached their contract, when they failed to address respondents
grievances and when they adamantly refused to refund respondents'
payment.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO
AND ELIZABETH RABAJA AND ROSARIO GONZALES,G.R. No. 199990,
February 04, 2015, J.
Mendoza
The award of damages to Spouses Rabaja cannot be sustained by this Court.
The filing alone of a civil action should not be a ground for an award of moral
damages in the same way that a clearly unfounded civil action is not among
the grounds for moral damages. Article 2220 of the New Civil Code provides
that to award moral damages in a breach of contract, the defendant must act
fraudulently or in bad faith. In this case, Spouses Rabaja failed to sufficiently
show that Spouses Salvador acted in a fraudulent manner or with bad faith
when it breached the contract of sale. Thus, the award of moral damages
cannot be warranted.
NANCY S. MONTINOLA v PHILIPPINE AIRLINES. G.R No. 198656,
September 8, 2014. LEONEN
Illegally suspended employees, similar to illegally dismissed employees,
are entitled to moral damages when their suspension was attended by

bad faith or fraud, oppressive to labor, or done in a manner contrary to

morals, good customs, or public policy.
In this case, a PAL employee was suspended for one year. In upholding the
award of moral damages, the Court said that PALs act was contrary to
morals, good customs, and public policy. PAL was willing to deprive
Montinola of the wages she would have earned during

her year of suspension even if there was no substantial evidence that she
was involved in the pilferage.
BPI EXPRESS CARD CORPORATION vs. MA. ANTONIA R. ARMOVIT,
G.R. No. 163654,
October 8, 2014, J. Bersamin
The relationship between the credit card issuer and the credit card holder is a
contractual one that is governed by the terms and conditions found in the
card membership agreement. Such terms and conditions constitute the law
between the parties. In case of their breach, moral damages may be
recovered where the defendant is shown to have acted fraudulently or in bad
faith. Malice or bad faith implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity. However, a conscious
or intentional design need not always be present because negligence may
occasionally be so gross as to amount to malice or bad faith. Hence, bad faith
in the context of Article 2220 of the Civil Code includes gross negligence.
Nowhere in the terms and conditions requires the defendant to submit new
application form in order to reactivate her credit card. Indeed, BPI Express
Credit did not observe the prudence expected of banks whose business was
imbued with public interest, hence, defendant is entitled to damages.

JOSE ESPINELI a.k.a. DANILO ESPINELI

PHILIPPINES, G.R. No.
179535, June 9, 2014, J. Del Castillo

vs.

PEOPLE

OF

THE

Moral damages are mandatory without need of allegation and proof other
than the death of the victim, owing to the fact of the commission of murder
or homicide, such as when the victim was gunned down in front of his house.
If medical and funeral expenses were substantiated, actual damages may be
awarded. However, damages for loss of earning capacity may not be
awarded absent documentary evidence except where the victim was either
self-employed or a daily wage worker earning less than the minimum wage
under current labor laws. The testimony of the wife of the victim, a Senior
Desk Coordinator of a radio station, as to the latters monthly salary without
any documentary evidence will not suffice to substantiate the claim.
BPI vs CA, G.R. NO. 136202, January 25, 2007

The bank froze and later unilaterally debited an amount from the
account of
A.A. Salazar
Construction
and
Engineering
Services
without
informing her that it had already done so, which caused plaintiffappellee great damage and prejudice particularly when she had
already issued checks drawn against the said account and as can
be expected, the said checks bounced, thereby causing private
respondent Salazar undue embarrassment and inflicting damage
to her standing in the business community.

A depositor has the right to recover reasonable moral damages

even if the banks negligence may not have been attended with
malice and bad faith, if the former suffered mental anguish, serious
anxiety, embarrassment and humiliation.
VILLA
REY
TRANSIT,
APPEALS, G.R. NO. L25499 February 18, 1970

INC.,

vs.

THE

COURT

OF

The trial court and the Court of Appeals, both found that
the
accident and the death of Policronio had been due to the negligence
of the bus driver, for whom petitioner was liable under its contract of
carriage with the deceased but the only issue raised in this
appeal is the amount of damages recoverable by private
respondents herein. The determination of the indemnity to be
awarded to the heirs of a deceased person has therefore no fixed
basis and much is left to the discretion of the court considering the
moral and material damages involved, and so it has been said that
"(t)here can be no exact or uniform rule for measuring the value
of a human life and the measure of damages cannot be arrived at by
precise mathematical calculation, but the
amount
recoverable
depends on the particular facts and circumstances of each case.
PEOPLE vs. EBAROLA, G.R. NO. L-69666, January 23, 1992

Appellant had been convicted of homicide and the trial court

awarded the amount of P100,000.00 to the heirs of Manahan as
indemnity for death. The indemnity for death must be reduced
to P50,000.00 conformably with prevailing jurisprudence on the
matter and aside from the ordinary indemnity for death appellant
is obliged: (1) to compensate the heirs for the latter's loss of
earning capacity; (2) to give support in the form of expenses for
education to dependents of the deceased and (3) to pay the heirs
for moral damages for the mental anguish suffered by them.
COJUANGCO vs. COURT OF APPEALS, G.R. NO. 119398.
July 2, 1999

To hold public officers personally liable for moral and exemplary

damages and for attorneys fees for acts done in the performance of
official functions, the plaintiff must prove that these officers exhibited
acts
characterized
by
evident
bad faith, malice, or gross
negligence, but even if their acts had not been so tainted, public
officers may still be held liable for nominal damages if they had
violated the plaintiffs constitutional rights.

TEMPERATE DAMAGES

S.V. MORE PHARMA CORPORATION and ALBERTO A. SANTILLANA vs.

DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL MUNDO; S.V. MORE
PHARMA CORPORATION and ALBERTO
A. SANTILLANA vs. DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL
MUNDO, G.R. No. 200408; G.R. No. 200416, November 12, 2014, J. PerlasBernabe
The existence of contractual breach in this case revolves around the exclusive status
of Drugmakers as the manufacturer of the subject pharmaceutical products. In
particular, the Contract Manufacturing Agreement states that Drugmakers, being the
exclusive manufacturer of the subject pharmaceutical products, had to first give its
written consent before S.V. More could contract the services of another manufacturer.
The agreements notwithstanding, S.V More, through the CMPP and absent the prior
written consent of Drugmakers, contracted the services of Hizon Laboratories to
manufacture some of the pharmaceutical products covered by the said contracts.
Considering that Drugmakers palpably suffered some form of pecuniary loss resulting
from S.V. Mores breach of contract, the Court deems it proper to, instead, award in
their favor the sum of P100,000.00 in the form of temperate damages. This course of
action is hinged on Article 2224 of the Civil Code.

PLENO vs. COURT OF APPEALS, G.R. NO. L-56505, May 9,

1988

Temperate damages are included within the context of compensatory

damages and in arriving at a reasonable level of temperate damages
to be awarded, trial courts are guided by our ruling that: There are
cases where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court is convinced
that there has been such loss.
NOMINAL DAMAGES
ONE NETWORK RURAL BANK, INC., vs. DANILO G. BARIC, G.R. No.
193684, March 5,
2014, J. Castillo
Palado was the registered owner of real property with a building containing
commercial spaces for lease who eventually transferred his title to Network
Bank. Baric was a lessee therein, operating a barber shop on one of the
commercial spaces. Baric demanded nominal damages against Network Bank
after having been evicted from the building. The Supreme Court held he was
not entitled to nominal damages. Under Article 2221 of the Civil Code,
nominal damages may be awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the purpose of vindicating or

recognizing that right, not for indemnifying the plaintiff for any loss suffered.
Nominal damages are not for indemnification of loss suffered but for the
vindication or recognition of a right violated or invaded. Network Bank did
not violate any of Baric's rights; it was merely a purchaser or transferee of
the property. If any, it was Palado who violated Barics rights.

LIBCAP MARKETING v BAQUIAL, G.R No. 192011, June 30, 2014. DEL
CASTILLO
Unpaid overtime pay should not be included in the computation for the
award of nominal damages. The Court did not agree with the CAs finding
that since respondent rendered overtime work for four years without
receiving any overtime pay, she is entitled to P100,000.00 nominal
damages. Nominal damages are awarded for the purpose of vindicating or
recognizing a right and not for indemnifying a loss. Hence, the CA should
have limited the justification of the award of nominal damages to
petitioners violation o f respondents right to due process in effecting her
termination. It should not have considered the claimed unpaid overtime pay.
AREOLA vs. COURT OF APPEALS, G.R. NO. 95641
September 22, 1994
Nominal damages are "recoverable where a legal right is
technically violated and must be vindicated against an invasion
that has produced no actual present loss of any kind, or where
there has been a breach of contract and no substantial injury or
actual damages whatsoe ver have been or can be shown.
ATTORNEYS FEES

WILLAWARE PRODUCTS CORPORATION vs. JESICHRIS

MANUFACTURING CORPORATION, G.R. No. 195549, September 3,
2014, J. Peralta
This is a case where the plaintiff in a case of unfair competition under the
Civil Code fails to satisfactorily prove that it had lost income. Since the award
of Two Million Pesos (P2,000,000.00) in actual damages had been deleted and
in its place Two Hundred Thousand Pesos (P200,000.00) in nominal damages
is awarded, the attorney's fees should concomitantly be modified and
lowered to Fifty Thousand Pesos (P50,000.00).
RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES,
INC., et al., G.R. No.
204233, September 3, 2014, Acting C.J. Carpio
Attorneys fees is not available when the defendant employer is not guilty of
bad faith. Thus, when the company-designated physician gave the seafarer
a final, permanent partial disability grading beyond the 120-day period but
before the 240 day maximum, then the latter is not entitled to permanent
disability benefits. The employer is not in bad faith in refusing to give the
seafarer full disability benefits; thus the award of attorneys fees in favor of
the seafarer is unwarranted.

AUGUSTO M. AQUINO, vs. HON. ISMAEL P. CASABAR, as Presiding

Judge Regional Trial Court-Guimba, Nueva Ecija, Branch 33 and MA.
ALA F. DOMINGO and MARGARITA IRENE F. DOMINGO, substituting
Heirs of the deceased ANGEL T. DOMINGO, G.R. No.
191470, January 26, 2015, J. Peralta

The award that the court may grant to a successful party by way of
attorneys fee is an indemnity for damages sustained by him in prosecuting
or defending his cause in court. It may be decreed in favor of the party, not
his lawyer, in any of the instances authorized by law. On the other hand, the
attorneys fee which a client pays his counsel refers to the compensation for
the latters services. The losing party against whom damages by way of
attorneys fees may be assessed is not bound by, nor is his liability
dependent upon, the fee arrangement of the prevailing party with his
lawyer. The amount stipulated in such fee arrangement may, however, be
taken into account by the court in fixing the amount of counsel fees as an
element of damages. The fee as an item of damages belongs to the party
litigant and not to his lawyer. It forms part of his judgment recoveries
against the losing party. The client and his lawyer may, however, agree that
whatever attorneys fee as an element of damages the court may award
shall pertain to the lawyer as his compensation or as part thereof.
ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No.
179491, January 14, 2015, C.J. Sereno
The award of attorney's fees is not proper because respondent failed to
justify satisfactorily his claim, and both the trial and appellate courts failed to
explicitly state in their respective decisions the rationale for the award. It is
an accepted doctrine that the award thereof as an item of damages is the
exception rather than the rule, and counsel's fees are not to be awarded
every time a party wins a suit. The power of the court to award attorney's
fees under Article 2208 of the Civil Code demands factual, legal and
equitable justification, without which the award is a conclusion without a
premise, its basis being improperly left to speculation and conjecture. In all
events, the court must explicitly state in the text of the decision, and not only
in the decretal portion thereof, the legal reason for the award of attorney's
fees. The same is true for the award of litigation expenses because
respondent failed to satisfactorily justify his claim.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC. G.R. No.
204702. January 14, 2015, CARPIO
The trial court awarded attorney's fees to petitioner as it "deemed it just and
reasonable" to do so, using the amount provided by petitioner on the
witness stand. Undoubtedly, attorney's fees may be awarded if the trial court
"deems it just and equitable." Such ground, however, must be fully
elaborated in the body of the ruling. Its mere invocation, without more,
negate the nature of attorney's fees as a form of actual damages.
JUAN CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19,
2014, J. LEONEN
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Petitioner is not entitled to attorney's fees and the costs of litigation since he
did not have a clear right over the property in question. The Court of Appeals
awarded attorney's fees and litigation costs on the erroneous premise that
the contract between petitioner and respondent was perfected. Without a
valid contract that stipulates his rights, petitioner risked litigation in order to
determine if he has rights, and not to protect rights that he

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currently has. Hence, the award of attorney's fees and litigation costs
was not properly justified.
BANK OF THE PHILIPPINE ISLANDS VS, AMADOR DOMINGO
(DECEASED) SUBSTITUTED BU HIS CHILDREN, JOANN MOYA, ET AL.
G.R. No. 169407. March 25, 2015, J. LEONARDO-DE CASTRO
It is basic that the claim for actual, moral and punitive damages as well as
exemplary damages and attorneys fees must each be independently
identified and justified.
ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No.
179491, January 14, 2015, C.J. Sereno

In awarding damages in libel cases, the court is given ample discretion to

determine the amount, depending upon the facts of the particular case.
Article 2219 of the Civil Code expressly authorizes the recovery of moral
damages in cases of libel, slander or any other form of defamation.
However, while no proof of pecuniary loss is necessary in order that moral
damages may be awarded, x x x it is nevertheless essential that the
claimant should satisfactorily show the existence of the factual basis of
damages and its causal connection to defendants acts. Considering that
respondent sufficiently justified his claim for damages (i.e. he testified that
he was embarrassed by the said letters [and] ashamed to show his face in
[sic] government offices), the Court finds him entitled to moral and
exemplary damages. However, the Court equitably reduce the amounts
awarded because even though the letters were libellous, respondent has
not suffered such grave or substantial damage to his reputation to warrant
receiving P5,000,000 as moral damages and P100,000.00 as exemplary
damages.
As to the award of attorneys fees, it is an accepted doctrine that the award
thereof as an item of damages is the exception rather than the rule, and
counsels fees are not to be awarded every time a party wins a suit. The
power of the court to award attorneys fees under Article 2208 of the Civil
Code demands factual, legal and equitable justification, without which the
award is a conclusion without a premise, its basis being improperly left to
speculation and conjecture. In all events, the court must explicitly state in
the text of the decision, and not only in the decretal portion thereof, the
legal reason for the award of attorneys fees.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC., G.R. No.
204702, January 14,
2015, J. Carpio
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In a licensing contract, the essence of which is the transfer by the licensor,

Honrado to the licensee, GMA Films, for a fee, of the exclusive right to
telecast the films listed in the Agreement. Stipulations for payment of
commission to the licensor is incongruous to the nature of such contracts
unless the licensor merely acted as agent of the film owners.
Nowhere in the Agreement, however, did the parties stipulate that Honrado
signed the

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contract in such capacity. Being a stranger to such arrangements, they are

not entitled to complain of any breach by Honrado of his contracts with the
film owners than the film owners are for any breach by a stranger of its
Agreement with aforementioned. The trial court awarded attorneys fees to
Honrado as it deemed it just and reasonable to do so, using the amount
provided by Honrado on the witness stand (P100,000). Undoubtedly,
attorneys fees may be awarded if the trial court deems it just and
equitable. Such ground, however, must be fully elaborated in the body of
the ruling. Its mere invocation, without more, negates the nature of
attorneys fees as a form of actual damages.

INTEREST/COMPUTATION

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT

OF PUBLIC WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R. No.
211666, February 25, 2015,
J. Peralta
Effectively, therefore, the debt incurred by the government on account of the
taking of the property subject of an expropriation constitutes a forbearance
which runs contrary to the trial courts opinion that the same is in the nature
of indemnity for damages calling for the application of Article 2209 of the Civil
Code. Nevertheless, in line with the recent circular of the Monetary Board of
the BSP-MB No. 799, Series of 2013, effective July 1, 2013, the prevailing rate
of interest for loans or forbearance of money is six percent (6%) per annum,
in the absence of an express contract as to such rate of interest.
The records of this case reveal that DPWH did not delay in its payment of
just compensation as it had deposited the pertinent amount in full due to
respondent on January 24, 2011, or four (4) months before the taking
thereof, which was when the RTC ordered the issuance of a Writ of
Possession and a Writ of Expropriation on May 27, 2011. The amount
deposited was deemed by the trial court to be just, fair, and equitable,
taking into account the well-established factors in assessing the value of
land, such as its size, condition, location, tax declaration, and zonal
valuation as determined by the BIR. Considering, therefore, the prompt
payment by the DPWH of the full amount of just compensation as
determined by the RTC, the Court finds that the imposition of interest
thereon is unjustified and should be deleted.
FAJ CONSTRUCTION & DEVELOPMENT CORPORATION vs. SUSAN M.
SAULOG, G.R. No.
200759, March 25, 2015, J. Del Castillo

FAJ Construction was found guilty of violating the construction agreement

for its defective and incomplete work, delay, and for unjustified
abandonment of the project. Susan argued that the issue of whether the
trial and appellate courts correctly decided the amount of damages is a
factual issue which is beyond the jurisdiction of this Court. The Supreme
Court held that it is not a trier of facts and does not normally undertake the
re- examination of the evidence presented by the contending parties during
trial.

PEOPLE OF THE PHILIPPINES vs. BENJAMIN CASAS Y VINTULAN, G.R.

No. 212565,
February 25, 2015, J. Perlas-Bernabe
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life Expectancy x [Gross Annual Income - Living
Expenses (50% of gross annual income)], where life expectancy = 2/3 (80 the age of the deceased).
CIVIL LIABILITY

ANTONIO M. GARCIA vs. FERRO CHEMICALS, INC.,G.R. No. 172505,

October 01, 2014, J.
Leonen
Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for
certiorari before this court. Ramon Garcia, President of Ferro Chemicals, Inc.,
signed the verification and certification of non-forum shopping of the petition
for certiorari. When the civil action for the recovery of civil liability ex delicto
is instituted with the criminal action, whether by choice of private
complainant (i.e., no reservation is made or no prior filing of a separate civil
action) or as required by the law or rules, the case will be prosecuted under
the direction and control of the public prosecutor. The civil action cannot
proceed independently of the criminal case.
OTHER LAWS EXCLUDED FROM THE SYLLABUS

EUFROCINA NIEVES vs. ERNESTO DULDULAO and FELIPE PAJARILLO,

G.R. No.
190276, April 2, 2014, J. Perlas-Bernabe
Agricultural lessees, being entitled to security of tenure, may be ejected
from their landholding only on the grounds provided by law. These grounds
the existence of which is to be proven by the agricultural lessor in a
particular case are enumerated in Section 36 of Republic Act No. (RA)
3844, otherwise known as the Agricultural Land Reform Code. In this case,
it was established that the agricultural lessees willfully and deliberately
failed to pay the lease rentals when they fell due, which is one of the
grounds for dispossession of their landholding as provided in said provision
of law.
CHARLES BUMAGAT, et al. vs. REGALADO ARRIBAY, G.R. No. 194818,
June 9, 2014, J.
Del Castillo

A case involving agricultural land does not immediately qualify it as an

agrarian dispute. The mere fact that the land is agricultural does not ipso
facto make the possessor an agricultural lessee or tenant; there are
conditions or requisites before he can qualify as an agricultural lessee or
tenant, and the subject matter being agricultural land constitutes simply one
condition. In order to qualify as an agrarian dispute, there must likewise
exist a tenancy relation between the parties. Thus, when farmerbeneficiaries of PD 27 who are registered owners of agricultural lands filed a
complaint for forcible entry against a person

whose claim of ownership over the same parcels of land emanates from a
donation by the heirs of the original owner, it is a civil case within the
jurisdiction of the ordinary courts, as all the elements for an agrarian dispute
are not present.
MARIANO JOSE, FELICISIMO JOSE, DECEASED, SUBSTITUTED BY HIS
CHILDREN MARIANO JOSE, CAMILO JOSE, TIBURCIA JOSE, FERMINA
JOSE, AND VICTORIA JOSE vs. ERNESTO M. NOVIDA, RODOLFO
PALAYPAY, JR., ALEX M. BELARMINO, RODRIGO LIBED, LEONARDO L.
LIBED, BERNARDO B. BELARMINO, BENJAMIN G. ACOSTA, MODESTO
A. ORLANDA, WARLITO B. MEJIA, MAMERTO B. BELARMINO, MARCELO
O. DELFIN AND HEIRS OF LUCINO A. ESTEBAN, REPRESENTED BY
CRESENCIA M. VDA. ESTEBAN, G.R. No. 177374, July 2, 2014, J. Del
Castillo
In Heirs of Lazaro Gallardo vs. Soliman, the DARAB has exclusive jurisdiction
over cases involving the cancellation of registered EPs; the DAR Secretary, on
the other hand, has exclusive jurisdiction over the issuance, recall or
cancellation of EPs or Certificates of Land Ownership Awards that are not yet
registered with the Register of Deeds.
Thus, since certificates of title have been issued in the respective names of
the respondents as early as in 1990, the DAR Region I Director had no
jurisdiction to cancel their titles; the same is true with respect to the DAR
Secretary. Thus, their respective January 30, 1991 and August 22, 1995
Orders are null and void; consequently, respondents EPs and titles subsists,
contrary to petitioners claim that they have been cancelled. Void judgments
or orders have no legal and binding effect, force or efficacy for any purpose;
in contemplation of law, they are nonexistent.
LAND BANK OF THE PHILIPPINES vs. JOSE T. LAJOM, represented by
PORFIRIO
RODRIGUEZ et al., G.R. No. 184982 & 185048, August 20, 2014, J.
Perlas-Bernabe
Properties of the Lajoms were taken due to the Agrarian Reform Program.
Just compensation was partially given. The Lajoms contested the
computation of just compensation due to an alleged error in the applicable
law. The Court ruled that the date of taking of the subject land for purposes
of computing just compensation should be reckoned from the issuance dates
of the emancipation patents. An emancipation patent constitutes the
conclusive authority for the issuance of a Transfer Certificate of Title in the
name of the grantee. It is from the issuance of an emancipation patent that
the grantee can acquire the vested right of ownership in the landholding,
subject to the payment of just compensation to the landowner.

RENATO L. DELFINO, SR. (Deceased), Represented by his Heirs,

namely: GRACIA DELFINO, GREGORIO A. DELFINO; MA. ISABEL A.
DELFINO, RENATO A. DELFINO, JR., MA. REGINA DELFINO ROSELLA,
MA. GRACIA A. DELFINO, MARIANO A. DELFINO, MA. LUISA DELFINO
GREGORIO and REV. FR. GABRIELA. DELFINO vs. AVELINO K. ANASAO
and ANGEL K. ANASAO (Deceased and represented by his sole heir,
SIXTO C. ANASAO), G.R. No. 197486, September 10, 2014, J.
Villarama, Jr.

The right to choose the area to be retained, which shall be compact or

contiguous, shall pertain to the landowner; Provided, however, That in case
the area selected for retention by the landowner is tenanted, the tenant shall
have the option to choose whether to remain therein or be a beneficiary in
the same or another agricultural land with similar or comparable features. In
case the tenant chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a beneficiary under
this Act. In case the tenant chooses to be a beneficiary in another
agricultural land, he loses his right as a leaseholder to the land retained by
the landowner. The tenant must exercise this option within a period of one
(1) year from the time the landowner manifests his choice of the area for
retention.
AUTOMAT REALTY AND DEVELOPMENT CORPORATION, LITO CECILIA
AND LEONOR LIM vs. SPOUSES MARCIANO DELA CRUZ, SR. AND
OFELIA DELA CRUZ, G.R. No.
192026, October 01, 2014, J. Leonen
When Automat asked the spouses to vacate the premises, the spouses
refused to vacate unless they were paid compensation. They claimed they
were agricultural tenants [who] enjoyed security of tenure under the law. The
Court ruled that tenancy relationship cannot be presumed. The allegation of
its existence must be proven by evidence, and working on anothers
landholding raises no presumption of an agricultural tenancy. Consequently,
the landowners consent to an agricultural tenancy relationship must be
shown.
REMIGIO D. ESPIRITU and NOEL AGUSTIN vs. LUTGARDA TORRES DEL
ROSARIO
represented by SYLVIA R. ASPERILLA, G.R. No. 204964, October 15,
2014, J. Leonen
Lands classified as non-agricultural in zoning ordinances approved by the
Housing and Land Use Regulatory Board or its predecessors prior to June 15,
1998 are outside the coverage of the compulsory acquisition program of the
Comprehensive Agrarian Reform Law. However, there has to be substantial
evidence to prove that lands sought to be exempted fall within the nonagricultural classification. In this case del Rosario failed to prove with
substantial evidence that the subject property is industrial property and as
such is not sufficient to rebut the findings of both the Department of Agrarian
Reform and the Office of the President.
SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIANvs.BPI
FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO, G.R.
No. 160107, October 22, 2014, J.
Bersamin

It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of
real estate on installment payments, not borrowers or mortgagors who
obtained a housing loan to pay the costs of their purchase of real estate and
used the real estate as security for their loan. The "financing of real estate in
installment payments" referred to in Section 3, should be construed only as a
mode of payment vis--vis the seller of the real estate, and excluded the
concept of bank financing that was a type of loan. Accordingly, Sections 3, 4
and 5, supra, must be read as to grant certain rights only to defaulting buyers
of real estate on installment, which rights are properly demandable only
against the seller of real estate

The Sps. Sebastians insistence would have been correct if the monthly
amortizations being paid to BPI Family arose from a sale or financing of real
estate. In their case, however, the monthly amortizations represented the
installment payments of a housing loan that BPI Family had extended to
them as an employees benefit. The monthly amortizations they were liable
for was derived from a loan transaction, not a sale transaction, thereby
giving rise to a lender-borrower relationship between BPI Family and the
petitioners.
MONCAYO INTEGRATED SMALL-SCALE MINERS ASSOCIATION, INC.
(MISSMA) vs. SOUTHEAST MINDANAO GOLD MINING CORP.
(SMGMC), BALITE INTEGRATED SMALL-SCALE MINING CORP.,
(BISSMICO) ET AL., G.R. No. 149638 (consolidated),
December 10, 2014, J. Leonen
The issue in these two consolidated cases involves the tightly contested
Diwalwal Gold Rush Area (DGRA) in Mt. Diwata, Mindanao, specifically, the
729-hectare portion excluded from SMGMCs Mineral Production Sharing
Agreement application (MPSA No. 128), and declared as Peoples Small Scale
Mining Area. SMGMC was the assignee of the original holder of a permit to
explore (EP 133) covering 4,941 hectares of DGRA. Due to supervening
events, [the Court] declares the petitions moot and academic.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL
ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo

AND MIRAFLOR

While a tenancy relationship cannot be extinguished by the sale, alienation,

or transfer of the legal possession of the landholding, the same may
nevertheless be terminated due to circumstances more advantageous to the
tenant and his/her family. The tenants having received an adequate
consideration of P1.1 million, it can be reasonably concluded that the
tenancy relationship between the previous owners and the spouses Andal
had already been severed.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR
ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo
The fact alone of working on anothers landholding does not raise a
presumption of the existence of agricultural tenancy. For tenancy to be
proven, all indispensable elements must be established, the absence of one
or more requisites will not make the alleged tenant a de facto one. These
are: 1) the parties are the landowner and the tenant; 2) the subject is

agricultural land; 3) there is consent by the landowner; 4) the purpose is

agricultural production; 5) there is personal cultivation; and 6) there is
sharing of the harvests.
RICARDO V. QUINTOS vs. DEPARTMENT OF AGRARIAN REFORM
ADJUDICATION BOARD AND KANLURANG MINDORO FARMER'S
COOPERATIVE, INC, G.R. No. 185838 February 10, 2014, J. PERLASBERNABE
GCFI contracted substantial loans with the PNB DBP which were secured by
several real estate mortgages over GCFI properties. In 1981, Romualdez
abandoned the management of

the GCFI properties, after which DBP took over. Sometime during the
same year, certain people started to plant palay on the subject property,
eventually covering the riceland.
After the EDSA revolution, the possession and management of the GCFI
properties were returned to GCFI. However, in July 1987, the properties were
sequestered by the PCGG albeit, eventually cleared. In the meantime, PNB
and DBP transferred their financial claims against GCFI to the Asset
Privatization Trust (APT). KAMIFCI members were allegedly installed as
tenants by APT, the "legal possessor" of the land. However there was no
showing that APT was authorized by the propertys landowner, GCFI, to
install tenants thereon. Thus, since the consent of the standing landowner,
GCFI, had not been secured by APT in this case, it had no authority to enter
into any tenancy agreement with the KAMIFCI members. The right to hire a
tenant is basically a personal right of a landowner, except as may be
provided by law. Hence, the consent of the landowner should be secured
prior to the installation of tenants.
DEPARTMENT OF AGRARIAN REFORM, now represented by OIC-SEC.
NASSER PANGANDAMAN vs .TRINIDAD VALLEY REALTY &
DEVELOPMENT CORPORATION,ET AL./ GRACE B. FUA, ET AL. VS.
TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION ET AL/
TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION ET AL. VS.
REPUBLIC OF THE PHILIPPINES, ET AL. G.R. No. 1733866 174162
February 11, 2014, J. VILLARAMA JR.
Under Republic Act No. 6657, the Comprehensive Agrarian Reform Law, the
Special Agrarian Courts shall have original and exclusive jurisdiction over all
petitions for the determination of just compensation to landowners, and the
prosecution of all criminal offenses. The case at bar deals with acts of the
DAR and the application, implementation, enforcement, or interpretation of
RA 6657 - issues which do not involve the "special jurisdiction" of the RTC
acting as a Special Agrarian Court. Hence, when the court a quo heard and
decided the instant case, it did so without jurisdiction. Decisions, orders,
awards or rulings of the DAR may be brought to the CA by certiorari and not
with the RTC through an ordinary action for cancellation of title.
FRANCLER P. ONDE v THE OFFICE OF THE LOCAL CIVIL REGISTRATION
OF LAS PIAS CITY, G.R No. 197174, September 10, 2014. J.
VILLARAMA
Francler Onde filed a petition for correction of entries in his birth certificate
with the RTC, impleading the LCR of Las Pinas City. The RTC held that a
correction on his birth certificate that his parents were married on December

23, 1983 in Bicol to "not married" is a substantial correction affecting his

legitimacy that requires adversarial proceedings.

The Supreme Court agreed. Said correction is substantial as it will affect his
legitimacy and convert him from a legitimate child to an illegitimate one.
Corrections of entries in the civil register including those on citizenship,
legitimacy of paternity or filiation, or legitimacy of

marriage, involve substantial alterations. Substantial errors in a civil

registry may be corrected and the true facts established provided the
parties aggrieved by the error avail themselves of the appropriate
adversary proceedings.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK,
G.R No. 181045, July 2, 2014. J. DEL CASTILLO
One of the promissory notes issued by PNB to the spouses Silos contained a
penalty clause where upon default, a penalty charge of 24% per annum
based on the defaulted principal amount shall be imposed. PNB claims this
penalty charge should be covered by the real estate mortgage along with the
principal.
The Court ruled that the penalty may not be included as part of the secured
amount. An examination of the mortgage agreements reveals that nowhere
is it stated that penalties are to be included in the secured amount. Having
the attributes of a contract of adhesion as the principal credit documents,
we must construe the mortgage contracts strictly, and against the party who
drafted it.
BIGNA Y EX-IM PHILIPPINES, INC. vs. UNION BANK OF
THE
PIDLIPPINES/UNION BANK OF THE PIDLIPPINES vs. BIGNAY EX-IM
PHILIPPINES, INC., G.R. No. 171590 171598 February 12, 2014, J. DEL
CASTILLO
Eviction shall take place whenever by a final judgment based on a right prior
to the sale or an act imputable to the vendor, the vendee is deprived of the
whole or of a part of the thing purchased. In case eviction occurs, the vendee
shall have the right to demand of the vendor, among others, the return of
the value which the thing sold had at the time of the eviction, be it greater
or less than the price of the sale; the expenses of the contract, if the vendee
has paid them; and the damages and interests, and ornamental expenses, if
the sale was made in bad faith.
REX M. TUPAL VS. JUDGE REMEGIO V. ROJO ETC., M. No. MTJ-14-1842
February 24, 2014, J. LEONEN
Municipal trial court judges cannot notarize affidavits of cohabitation of
parties whose marriage they will solemnize.