Civ With Insertions

SURVEY OF 2014 SC DECISIONS IN
CIVIL LAW
Dean ED VINCENT S. ALBANO

HUMAN RELATIONS
Removal or retrieval of internal organs of a person must follow rules defined
by law; violation governed by Art. 20, NCC.
Q A suit was filed against several doctors alleging that they conspired to
remove the organs of Amelito while he was still alive. The facts show that he
fell from the overpass near the Farmers Market in Cubao, Quezon City. He was
brought to the hospital and found to be brain dead. As no relatives were
around at that time, there were attempts to look for them but to no avail. As it
was found out that he was brain dead, the Laboratory Section of the hospital
was asked to conduct a tissue typing and tissue cross-matching examination,
so that should he expire despite the necessary medical care and management
and he would be found to be a suitable organ donor and his family would
consent to organ donation, the organs thus donated could be detached and
transplanted promptly to any compatible beneficiary.
As the extensive search for the relatives of Amelito yielded no positive
result and time being of the essence in the success of organ transplantation,
Dr. Ona requested Dr. Filoteo A. Alano, Executive Director of NKI, to authorize
the removal of specific organs from the body of Amelito for transplantation
purposes. Dr. Ona likewise instructed Dr. Rose Marie Rosete-Liquete to secure
permission for the planned organ retrieval and transplantation from the
Medico-Legal Office of the National Bureau of Investigation (NBI), on the
assumption that the incident which lead to the brain injury and death of
Amelito was a medico legal case.
The trial court held the defendant Alano liable for damages which was
affirmed by the CA for alleged negligence in granting authorization for the
removal or retrieval of the internal organs of the respondents son who had
been declared brain dead.
Dr. Alano maintained that when he gave authorization for the removal of
some of the internal organs to be transplanted to other patients, he did so in
accordance with the letters of the law, Republic Act (R.A.) No. 349, as amended
by Presidential Decree (P.D.) 856, i.e., giving his subordinates instructions to
exert all reasonable efforts to locate the relatives or next of kin of
respondents son. In fact, announcements were made through radio and
television, the assistance of police authorities was sought, and the NBI MedicoLegal Section was notified. Thus, petitioner insisted that he should not be held
responsible for any damage allegedly suffered by respondent due to the death
of her son and the removal of her sons internal organs for transplant
purposes.
The CA affirmed the trial courts finding that there was negligence on
petitioners part when he failed to ensure that reasonable time had elapsed to
locate the relatives of the deceased before giving the authorization to remove
said deceaseds internal organs for transplant purposes.
Was petitioner negligent in granting authorization for the removal of the
internal organs of her son who had been declared brain dead, thus, he is liable
for damages? Explain.
Answer: No. He instructed his subordinates to make certain that all reasonable efforts
are exerted to locate the patients next of kin, even enumerating ways in which to ensure
that notices of the death of the patient would reach said relatives. It also clearly stated
that permission or authorization to retrieve and remove the internal organs of the
deceased was being given ONLY IF the provisions of the applicable law had been
complied with. Such instructions reveal that petitioner acted prudently by directing his
subordinates to exhaust all reasonable means of locating the relatives of the deceased.
He could not have made his directives any clearer. He even specifically mentioned that
permission is only being granted IF the Department of Surgery has complied with all
the requirements of the law. Verily, petitioner could not have been faulted for having full
confidence in the ability of the doctors in the Department of Surgery to comprehend the
1 | ABRC2015.SCD2014.Civil Law(with insertions)/revised/EVSA/crys
instructions, obeying all his directives, and acting only in accordance with the
requirements of the law. (Dr. Filoteo Alano v. Zenaida Magud-Lagmao, G.R. No. 175540,
April 7, 2014, Peralta, J).
Thus, there can be no cavil that petitioner employed reasonable means to
disseminate notifications intended to reach the relatives of the deceased.
In his concurring opinion, Justice Leonen, said that for the first time the SC was
confronted with the opportunity to resolve the issues concerning organ donation and
transplantation since the procedure was in 1983. He further said that the cause of action
should not be based on Article 2176, NCC, but Article 20, NCC since there was a violation
of a law. The applicable law is Sec. 2 of RA 349 as amended by RA 1056 otherwise known
as An Act To Legalize Permissions To Use Human Organs or Any Portion or Portions of the
Human Body for Medical, Surgical or Scientific Purposes Under Certain Conditions, which
provides for a way to determine substituted informed consent for deceased patients for
purposes of organ donations.
The doctrine of informed consent.
The doctrine of informed consent was introduced in this jurisdiction only very
recently in Dr. Li v. Spouses Soliman, G.R. No. 165279, June 7, 2011, 651 SCRA 32. The
Court ruled that liability may arise in cases where the physician fails to obtain the
consent of the patient before performing any medical procedure.
The doctrine of informed consent within the context of physician-patient
relationships goes far back into English common law. As early as 1767, doctors were
charged with the tort of battery (i.e., an unauthorized physical contact with a patient) if
they had not gained the consent of their patients prior to performing a surgery or
procedure. In the United States, the seminal case was Schoendorff v. Society of New York
Hospital which involved unwanted treatment performed by a doctor. Justice Benjamin
Cardozos oft-quoted opinion upheld the basic right of a patient to give consent to any
medical procedure or treatment: Every human being of adult years and sound mind has
a right to determine what shall be done with his own body; and a surgeon who performs
an operation without his patients consent, commits an assault, for which he is liable in
damages. From a purely ethical norm, informed consent evolved into a general principle
of law that a physician has a duty to disclose what a reasonably prudent physician in the
medical community in the exercise of reasonable care would disclose to his patient as to
whatever grave risks of injury might be incurred from a proposed course of treatment, so
that a patient, exercising ordinary care for his own welfare, and faced with a choice of
undergoing the proposed treatment, or alternative treatment, or none at all, may
intelligently exercise his judgment by reasonably balancing the probable risks against the
probable benefits.
Subsequently, in Canterbury v. Spence, the court observed that the duty to
disclose should not be limited to medical usage as to arrogate the decision on revelation
to the physician alone. Thus, respect for the patients right of self-determination on
particular therapy demands a standard set by law for physicians rather than one which
physicians may or may not impose upon themselves. x x x. (Schoendorff v. Society of
New York Hospital, 105 N.E. 92, 93 (N.Y. 1914); Blacks Law Dictionary, Fifth Edition, p.
701, citing Ze Barth v. Swedish Hospital Medical Center, 81 Wash. 2d 12, 499 P.2d 1, 8;
Canterbury v. Spence, 464 F.2d 772 C.A.D.C., 1972).
Those who consent to using their organs upon their death for the benefit of
another can make their consent known prior to their death by following the requirements
of the law. Should a patient die prior to making his or her informed consent known, the
law provides a list of persons who may consent on his or her behalf, that is, substituted
informed consent.
Since the incident in this case occurred in 1988, Republic Act No. 349, as amended
by Republic Act No. 1056, is the law that applies. Section 2 of the law states that:
SEC. 2. The authorization referred to in section one of this Act must:
be in writing; specify the person or institution granted the authorization; the
organ, part or parts to be detached, the specific use or uses to which the
organ, part or parts to be employed; and, signed by the grantor and two
disinterested witnesses.
If the grantor is a minor or an incompetent person, the authorization
may be executed by his guardian with the approval of the court; in default
thereof, by the legitimate father or mother, in the order named. Married
woman may grant the authority referred to in section one of this Act, without
the consent of the husband.
2 |ABRC2015.SCD2014.Civil Law(with insertions)revised/EVSA/crys
After the death of the person, authority to use human organs or any
portion or portions of the human body for medical, surgical or scientific
purposes may also be granted by his nearest relative or guardian at the time
of his death or in the absence thereof, by the person or head of the hospital,
or institution having custody of the body of the deceased Provided, however,
That the said person or head of the hospital or institution has exerted
reasonable efforts to locate the aforesaid guardian or relative.
A copy of every such authorization must be furnished the Secretary of
Health.
Under this law, consent to organ retrieval after the patients death may be given
first and foremost by the patients nearest relative or guardian at the time of death. It is
only in the event that these relatives cannot be contacted despite reasonable efforts that
the head of the hospital or institution having custody of the body may give consent for
organ retrieval on behalf of the patient. Failing this, liability for damages arises.
Considering that Republic Act No. 349, as amended, does not provide a remedy in
case of violation, an application of the doctrine of informed consent vis--vis Article 20 of
the Civil Code may give rise to an action for damages. In this case, Dr. Alano must first be
shown to have acted willfully and negligently to the damage and prejudice of Zenaida.
Q Is the doctor liable for damages? Explain.
Answer: No, because he did not willfully or negligently, in a manner contrary to law,
authorize the retrieval of the organs.
He did not violate the provisions of the law willfully or negligently. In accordance
with the requirements of the third paragraph of Section 2 of Republic Act No. 349, as
amended, he caused the discharge of reasonable efforts to locate the relatives, allowed
for a reasonable time to pass, and the harvested the organs with care and prudence.
Negligence has been defined by law 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. (United
States v. Barias, 23 Phil. 434, 437 [1912] [ Per J. Carson, En Banc], citing Judge Cooley in
his work on Torts, 3rd ed., 1324).
Plaintiff failed to prove that Dr. Alano did not exercise the reasonable care and
caution of an ordinarily prudent person.
The pain and anguish of the plaintiff indeed may have resulted from the loss of
her son. However, Dr. Alano or any of his subordinates did not cause the loss of her sons
life. Even if Dr. Alano did not order the organ retrieval, plaintiff would still find the body of
her son lifeless. (Dr. Filoteo Alano v. Zenaida Magud-Lagmao, G.R. No. 175540, April 7,
2014, Peralta, J).
There is no causal connection between the alleged negligent act and the
damage suffered by respondent.
The trial court, by using the codal definition of a quasi-delict, identified the act or
omission as that of authorizing the retrieval of the deceased patients organs without
seeking permission from his relatives; the presence of negligence as the failure to exert
reasonable efforts in searching for the deceased patients relatives; and the damage
pertaining to Zenaidas discovery of her sons lifeless body mangled, robbed of its vital
organs and x x x sewn up like x x x a rag doll.
There is no causal connection between the alleged negligent act of Dr. Alano and
the damage suffered by Zenaida.
The failure to locate Zenaida to secure her permission for the organ retrieval was
not caused by Dr. Alano.
The records show that the difficulty in locating Zenaida stemmed from the
erroneous information found on the deceaseds patient data sheet, which indicated his
name as Angelito Lugmoso, not Arnelito Logmao. It was the staff of East Avenue Medical
Center, not Dr. Alano and the staff of the National Kidney Institute, which provided the
erroneous information on the patient data sheet.
MARRIAGE
Duty to support; effect if a party is a foreigner who divorced the Filipino; rule
is not absolute.
Q Norma and Ernest Johan contracted marriage in Holland and begot a child
named Roderigo. A divorce decree was obtained by Ernest Johan with a
promise made to support their child which he did not comply with. Later on,
Norma contracted another marriage and resided in Cebu with their son. In
2009, she sent a letter of demand asking for support from Ernest Johan but the
latter refused, hence, a complaint for violation of Sec. 5 par. E(2) of RA 9262
for the latters unjust refusal to support the minor child. He submitted a
counter-affidavit. An information was filed but the RTC dismissed the
information for failure to make out a case under said law. MR was filed, where
she contended he has the obligation to support his son under Art. 195, Family
Code and refusal to do so makes him liable under RA 9262 which equally
applies to all persons in the Philippines regardless of their nationality. The MR
was denied on the ground that, being a foreign national, he is not subject to
Philippine law in regard to parents obligation to support. He is not likewise
governed by RA 9262. Before the SC she contended that under Art. 195 of the
Family Code, he is obliged to give support notwithstanding the divorce decree
to which Ernest Johan disagreed. Is petitioner correct in relying on Article 195
of the Family Code? Explain.
Answer: No, because of the nationality principle (Art. 15, NCC). Insofar as Philippine laws
are concerned, specifically the provisions of the Family Code on support, the same only
applies to Filipino citizens. By analogy, the same principle applies to foreigners such that
they are governed by their national law with respect to family rights and duties which
provides that laws relating to family rights and duties, or to the status, condition and
legal capacity of persons are binding upon citizens of the Philippines, even though living
abroad. (Art. 15, NCC).
The obligation to give support to a child is a matter that falls under family rights
and duties. Since the respondent is a citizen of Holland or the Netherlands, the lower
court was correct that he is subject to the laws of his country, not to Philippine law, as to
whether he is obliged to give support to his child, as well as the consequences of his
failure to do so.
In Vivo v. Cloribel, G.R. No. L-25441, October 26, 1968, 25 SCRA 616, it was said
that being still aliens, they are not in position to invoke the provisions of the Civil Code of
the Philippines, for that Code cleaves to the principle that family rights and duties are
governed by their personal law, i.e., the laws of the nation to which they belong even
when staying in a foreign country (Civil Code, Article 15; Norma A. Del Socorro v. Ernest
Johan Brinkman Van Wilsen, G.R. No. 193707, December 10, 2014, Peralta, J).
Q It cannot be gainsaid that the respondent is not obliged to support
petitioners son under Article 195 of the Family Code as a consequence of the
Divorce Covenant obtained in Holland. Does it mean that respondent is not
obliged to support petitioners son altogether? Explain.
Answer: No, unless he proves his national law. In international law, the party who wants
to have a foreign law applied to a dispute or case has the burden of proving the foreign
law. (EDI-Staffbuilders International, Inc. v. NLRC, 563 Phil. 1, 22 (2007)). In the present
case, he hastily concluded that being a national of the Netherlands, he is governed by
such laws on the matter of provision of and capacity to support. While he pleaded the
laws of the Netherlands in advancing his position that he is not obliged to support his
son, he never proved the same.
It is incumbent upon him to plead and prove that the national law of the
Netherlands does not impose upon the parents the obligation to support their child
(either before, during or after the issuance of a divorce decree), because as said in
Llorente v. Court of Appeals, 399 Phil. 342 [2000] foreign laws do not prove themselves in
our jurisdiction and our courts are not authorized to take judicial notice of them. Like any
other fact, they must be alleged and proved.
In view of his failure to prove the national law of the Netherlands in his favor, the
doctrine of processual presumption shall govern. Under this doctrine, if the foreign law
involved is not properly pleaded and proved, our courts will presume that the foreign law
is the same as our local or domestic or internal law. (Bank of America, NT and SA v.
American Realty Corporation, 378 Phil. 1279, 1296 (1999)). Thus, since the law of the
Netherlands as regards the obligation to support has not been properly pleaded and
proved, it is presumed to be the same with Philippine law, which enforces the obligation
of parents to support their children and penalizing the non-compliance therewith.
The Divorce Covenant presented by respondent does not completely show that he
is not liable to give support to his son after the divorce decree was issued. Emphasis is
placed on petitioners allegation that under the second page of the aforesaid covenant,
respondents obligation to support his child is specifically stated, which was not disputed
by respondent. (Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no.
193707, December 10, 2014, Peralta, J).
Q Why is it that the foreign law which does not oblige the father to support
his child cannot be made to apply in the Philippines? Explain.
Answer: Notwithstanding that the national law of respondent states that parents have no
obligation to support their children or that such obligation is not punishable by law, said
law would still not find applicability. In Bank of America, NT and SA v. American Realty
Corporation, 378 Phil. 1279 [1999] it was said that when the foreign law, judgment or
contract is contrary to a sound and established public policy of the forum, the said
foreign law, judgment or order shall not be applied.
Prohibitive laws concerning persons, their acts or property, and those which have
for their object public order, public policy and good customs shall not be rendered
ineffective by laws or judgments promulgated, or by determinations or conventions
agreed upon in a foreign country.
The public policy sought to be protected in the instant case is the principle
imbedded in our jurisdiction proscribing the splitting up of a single cause of action.
Section 4, Rule 2 of the 1997 Rules of Civil Procedure is pertinent
If two or more suits are instituted on the basis of the same cause of
action, the filing of one or a judgment upon the merits in any one is
available as a ground for the dismissal of the others.
Moreover, foreign law should not be applied when its application would work
undeniable injustice to the citizens or residents of the forum. To give justice is the most
important function of law; hence, a law, or judgment or contract that is obviously unjust
negates the fundamental principles of Conflict of Laws.
Applying the foregoing, even if the laws of the Netherlands neither enforce a
parents obligation to support his child nor penalize the non-compliance therewith, such
obligation is still duly enforceable in the Philippines because it would be of great injustice
to the child to be denied of financial support when the latter is entitled thereto. (Norma
A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no. 193707, December 10,
2014).
Q Is the defendant liable to support the former wife? Why?
Answer: No, he is no longer liable to support his former wife, in consonance with the
ruling in San Luis v. San Luis, 543 Phil 275 [2007], where it was said that as to the effect
of the divorce on the Filipino wife, she should no longer be considered married to the
alien spouse. Further, she should not be required to perform her marital duties and
obligations. To maintain, that, under our laws, petitioner has to be considered still
married to private respondent and still subject to a wife's obligations under our
laws cannot be just. Petitioner should not be obliged to live together with, observe
respect and fidelity, and render support to private respondent. The latter should not
continue to be one of her heirs with possible rights to conjugal property. She should not
be discriminated against in her own country if the ends of justice are to be served.
(Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no. 193707, December
10, 2014).
Q Is the denial of financial support encompassed within the meaning of
violence against women and children? Why?
Answer: Yes. Depriving or threatening to deprive the woman or her children of financial
support legally due her or her family , or deliberately providing the woman's children
insufficient financial support constitute violation of RA 9262 or violence against women
and children.
Under the aforesaid special law, the deprivation or denial of financial support to
the child is considered an act of violence against women and children. (Norma A. Del
Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no. 193707, December 10, 2014; RA
9262, Sec. 5(e) & (i)).
Respondent is living in the Philippines; effect.
Q At the time the complaint was filed, the respondent was living in the
Philippines. Can he be made liable under RA 9262? Explain.
Answer: Yes. Considering that respondent was currently living in the Philippines,
petitioners claim that the Territoriality Principle in criminal law, in relation to Article 14 of
the New Civil Code applies, which provides that: penal laws and those of public security
and safety shall be obligatory upon all who live and sojourn in Philippine territory, subject
to the principles of public international law and to treaty stipulations. On this score, it is
indisputable that the alleged continuing acts of respondent in refusing to support his
child with petitioner is committed here in the Philippines as all of the parties herein are
residents of the Province of Cebu City. As such, our courts have territorial jurisdiction
over the offense charged against respondent. It is likewise irrefutable that jurisdiction
over the respondent was acquired upon his arrest. (Norma A. Del Socorro v. Ernest Johan
Brinkman Van Wilsen, G.R. no. 193707, December 10, 2014, Peralta, J).
Q It was contended that the criminal liability has been extinguished on the
ground of prescription of crime under Section 24 of R.A. No. 9262, which
provides that acts falling under Sections 5(a) to 5(f) shall prescribe in twenty
(20) years. Acts falling under Sections 5(g) to 5(I) shall prescribe in ten (10)
years. Is the contention correct? Why?
Answer: No. The act of denying support to a child under Section 5(e)(2) and (i) of R.A. No.
9262 is a continuing offense, (People v. De Leon, 608 Phil. 701, 722 (2009)) which started
in 1995 but is still ongoing at present. Accordingly, the crime charged in the instant case
has clearly not prescribed. (Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen,
G.R. no. 193707, December 10, 2014).
A continued (continuous or continuing) crime is defined as a single crime,
consisting of a series of acts but all arising from one criminal resolution. Although there is
a series of acts, there is only one crime committed; hence, only one penalty shall be
imposed. (Norma A. Del Socorro v. Ernest Johan Brinkman Van Wilsen, G.R. no. 193707,
December 10, 2014, Peralta, J).
Divorce between Filipino citizens void; second marriage void.
Q In a case, there was marriage between two (2) Filipino citizens, the man, a
lawyer by profession. After almost two (2) decades of marriage, they opted to
live apart and had separation of properties evidenced by a document they
signed. Then, he went to the USA and obtained a divorce against the wife and
got married again. They came back to the Philippines and he resumed his law
practice and acquired properties. After his death, there was a quarrel over his
properties and the validity of his marriage with the second wife. Is the second
marriage valid? Why?
Answer: NO. When the first marriage between him and the first spouse, both Filipinos,
was solemnized in the Philippines, the law in force adopted the nationality rule to the
effect that Philippine laws relating to family rights and duties, or to the status, condition
and legal capacity of persons were binding upon citizens of the Philippines. Pursuant to
the nationality rule, Philippine laws governed this case. So they remained married until
his death which terminated their marriage. From the time of the celebration of his first
marriage until the present, absolute divorce between Filipino spouses has not been
recognized in the Philippines. The non-recognition of absolute divorce between Filipinos
has remained even under the Family Code, even if either or both of the spouses are
residing abroad.
Hence, the second marriage is void for being bigamous. And under Article 144 of
the Civil Code (now Art. 148, FC) the property relation between them is governed by the
rules on co-ownership. But in order to establish co-ownership the second wife should
prove that she actually contributed in the acquisition of the property. Even under the
Family Code, where co-ownership between them is presumed, there must still be proof of
actual contribution for the presumption to apply. In this case, she failed to prove her
actual contribution in the acquisition of the subject properties.
If the parties have no legal impediment to marry, it is not necessary that there be
actual or material contribution because in such a case, there is a presumption that the
contribution is equal. In fact, the contribution may only be spiritual. (Lavadia v. Heirs of
Luna, G.R. No. 171914, July 23, 2014).
PSYCHOLOGICAL INCAPACITY
Emotional immaturity
incapacity.
of
spouse
cannot
be
equated
with
psychological
Q In a complaint for declaration of nullity of marriage on the ground of

psychological incapacity, the plaintiff alleged that the defendant was suffering
from emotional immaturity; irresponsibility and sexual promiscuity. If you were
the judge, how would you decide? Explain.
Answer: If I were the judge, I would dismiss the complaint. Psychological incapacity, as
a ground to nullify a marriage under Article 36 of the Family Code, should refer to no less
than a mental not merely physical incapacity that causes a party to be truly
incognitive of the basic marital covenants that concomitantly must be assumed and
discharged by the parties to the marriage which, as so expressed in Article 68 of the
Family Code, among others, include their mutual obligations to live together, observe
love, respect and fidelity and render help and support. The intendment of the law has
been to confine the meaning of psychological incapacity to the most serious cases
of personality disorders clearly demonstrative of an utter insensitivity or
inability to give meaning and significance to the marriage. (Santos v. CA, G.R. No.
112019, January 4, 1995, 240 SCRA 20, 40 [2005]). In Santos v. CA (Santos), the Court
first declared that psychological incapacity must be characterized by: (a) gravity (i.e., it
must be grave and serious such that the party would be incapable of carrying out the
ordinary duties required in a marriage; (b) juridical antecedence (i.e., it must be rooted
in the history of the party antedating the marriage, although the overt manifestations
may emerge only after the marriage); and (c) incurability (i.e., it must be incurable, or
even if it were otherwise, the cure would be beyond the means of the party involved).
(Dimayuga-Laurena v. CA, 587 Phil. 597, 607-608 [2008]). The Court laid down more
definitive guidelines in the interpretation and application of Article 36 of the Family Code
in Republic of the Phils. v. CA, whose salient points are footnoted hereunder. These
guidelines incorporate the basic requirements that the Court established in Santos.
(Republic v. Galang, G.R. No. 168335, June 6, 2011, 650 SCRA 524, 535-537; Republic v.
Rodolfo de Garcia, G.R. No. 171557, February 5, 2014, Perlas-Bernabe, J; Vinas v. Vinas,
G.R. No. 208790, January 21, 2015).
Keeping with these principles, the Court, in Dedel v. CA, 466 Phil. 226 [2004], held
that respondents emotional immaturity and irresponsibility could not be equated
with psychological incapacity as it was not shown that these acts are manifestations of a
disordered personality which make her completely unable to discharge the
essential marital obligations of the marital state, not merely due to her youth,
immaturity or sexual promiscuity. In the same light, the Court, in the case of Pesca v.
Pesca (Pesca), 408 Phil. 713 [2001], ruled against a declaration of nullity, as petitioner
therein utterly failed, both in her allegations in the complaint and in her evidence, to
make out a case of psychological incapacity on the part of respondent, let alone at the
time of solemnization of the contract, so as to warrant a declaration of nullity of the
marriage, significantly noting that the emotional immaturity and irresponsibility,
involved by her, cannot be equated with psychological incapacity. In Pesca, the Court
upheld the appellate courts finding that the petitioner therein had not established that
her husband showed signs of mental incapacity as would cause him to be truly
incognitive of the basic marital covenant, as so provided for in Article 68 of the Family
Code; that the incapacity is grave, has preceded the marriage and is incurable; that his
incapacity to meet his marital responsibility is because of a psychological, not physical
illness; that the root cause of the incapacity has been identified medically or clinically,
and has been proven by an expert; and that the incapacity is permanent and incurable in
nature.
Effect of Church Tribunals declaration of nullity of marriage.
Q After the celebration of the marriage of the spouses, they lived together as
husband and wife but he was the one who cleaned the house; his mother was
the one who prepared their meals; his sister was the one who washed the
dishes because she did not want to have her polished nails destroyed. When
she went back to school she was dating another man. She likewise left their
conjugal home. An action for nullity of the marriage on the ground of
psychological incapacity was filed against her. During the pendency of the
action, he filed a Petition before the Metropolitan Tribunal of First Instance for
the Archdiocese of Manila. The RTC declared the marriage void on the ground
of psychological incapacity followed by the decision of the Church Metropolitan
Tribunal declaring the marriage void on the ground of grave lack of due
discretion on the part of both parties as contemplated by the second
paragraph of Canon 1095. This was affirmed by the National appellate
Matrimonial Tribunal (NAMT). The CA reversed the decision and ruled that the
real cause of marital discord was the sexual infidelity of the woman which is a
mere ground for legal separation. On appeal to the SC, he contended that her
illness was rooted on some debilitating psychological condition which
incapacitated her to carry the responsibilities of a married woman. He also
bolstered his contention by citing the decision of the Church Metropolitan
Tribunal which was affirmed by the NAMT. Rule on his contention. Explain.
Answer: The contention is not correct. The root cause of her alleged psychological
incapacity was not medically and clinically identified and sufficiently proven. Her
disposition of not cleaning the room, preparing their meal, washing their clothes and
propensity for dating and receiving different male visitors was not grave, deeply rooted
and incurable within the parameters of jurisprudence on psychological incapacity. Sexual
infidelity or perversion and abandonment do not, by themselves, constitute grounds for
declaring a marriage void based on psychological incapacity.
While it is true that the decision of the Church Metropolitan Tribunal as affirmed by
the NAMT should be accorded great respect, it is not controlling and decisive. Besides,
the decision of NAMT in this case was based on the second paragraph of Canon 1095
which refers to those who suffer from a grave lack of discretion of judgment concerning
essential marital rights and obligations to be mutually given and accepted. This is not a
cause of psychological nature similar to, and contemplated by Article 36 of the Family
Code. The cause of psychological nature under Article 36 is covered by the third
paragraph of Canon 1095 as pointed out by the Family Code Revision Committee which
drafted the Family Code. His petition therefore can only make a case for legal separation
where custody and separation of properties will be settled. (Mallilin v. Jamesolamin and
Republic, G.R. No. 192718, February 18, 2015).
Q The Spouses Santos have been married for 27 years until the man left the
conjugal dwelling to cohabit with another woman and later on got married. He
filed a petition for declaration of her absence and presumptive death alleging
that for a while the lived in San Juan City and move to Tarlac where they
engaged in a buy & sell business which did not prosper. It was alleged that the
wife went to Hongkong to work after the business failed. He further alleged
that she left the conjugal dwelling and despite efforts to locate her, she could
not be located. She discovered that the notice of hearing was never published,
but the court rendered a judgment declaring her presumptively dead, thus
enabling the man to remarry. She learned about the filing of the petition and
the decision after one year. She filed a petition to annul the RTC judgment with
the CA on the ground of extrinsic fraud and lack of jurisdiction. She claimed
that the allegations of her husband that she left the conjugal dwelling and that
she worked in Hongkong were all false. Instead it was her husband who left the
conjugal dwelling to cohabit with another woman. The CA dismissed the
petition for being the wrong remedy and held that the appropriate remedy is
to file a sworn statement before the Local Civil Registrar declaring her
reappearance. Is the CAs ruling correct? Why?
Answer: No. Mere filing of an affidavit of reappearance would not suffice for the purpose
of not only terminating the effects of the declaration of presumptive death. Annulment of
judgment on the ground of extrinsic fraud is the proper remedy. There is extrinsic fraud
when a litigant commits acts outside of the trial which prevents a party from having a
real contest or from presenting all of his or her case, or when there is no fair submission
of the controversy.
Her allegations in her petition for annulment of judgment constitute extrinsic fraud
and lack of jurisdiction. In fact there was even no publication of the notice of hearing of
her husbands petition in a newspaper of general circulation.
She did not admit to have been absent so it would be inappropriate to file an
affidavit of reappearance if she did not disappear in the first place. Besides, she sought
not merely the termination of the subsequent marriage but also the nullification of its
effects. So an affidavit of reappearance is not a sufficient remedy because it will only
terminate the subsequent marriage but not nullify the effects of the declaration of her
presumptive death and the subsequent marriage. (Santos v. Santos, G.R. No. 187061,
October 8, 2014).
Q If a spouse has been declared presumptively dead and the present spouse
contracted a subsequent marriage, what is the status of the children born out
of such second marriage? Explain.
Answer: Since an undisturbed subsequent marriage under Article 42 of the Family Code is
valid until terminated, the children of such marriage shall be considered legitimate, and
the property relations of the spouses of such marriage will be the same as in valid
marriage. If it is terminated by mere affidavit of reappearance, the children of the
subsequent marriage conceived before the termination shall still be considered
legitimate. Moreover, the judgment declaring presumptive death if not annulled is a
defense against prosecution for bigamy. (Santos v. Santos, G.R. No. 187061, October 8,
2014).
Annulment of judgment is the remedy when the Regional Trial Court's judgment,
order, or resolution has become final, and the "remedies of new trial, appeal, petition for
relief are no longer available through no fault of the petitioner." (Sec. 1, Rule 47, Rules of
Court).
The grounds for annulment of judgment are extrinsic fraud and lack of jurisdiction.
The court defined extrinsic fraud in Stilianopulos v. City of Legaspi: (Stiliana-Pulos v. City
of Legaspi, 374 Phil. 879).
For fraud to become a basis for annulment of judgment, it has to be extrinsic or
actual. It is intrinsic when the fraudulent acts pertain to an issue involved in the original
action or where the acts constituting the fraud were or could have been litigated, It is
extrinsic or collateral when a litigant commits acts outside of the trial which prevents a
parly from having a real contest, or from presenting all of his case, such that there is no
fair submission of the controversy.
There was also no other sufficient remedy available to Celerina at the time of her
discovery of the fraud perpetrated on her.
The choice of remedy is important because remedies carry with them certain
admissions, presumptions, and conditions.
Q What proof is necessary before a present spouse may contract a
subsequent marriage if the other spouse disappears? Explain.
Answer: The Family Code provides that it is the proof of absence of a spouse for four
consecutive years, coupled with a well-founded belief by the present spouse that the
absent spouse is already dead, that constitutes a justification for a second marriage
during the subsistence of another marriage.
The Family Code also provides that the second marriage is in danger of being
terminated by the presumptively dead spouse when he or she reappears. The law
provides that the subsequent marriage referred to in the preceding Article shall be
automatically terminated by the recording of the affidavit of reappearance of the absent
spouse, unless there is a judgment annulling the previous marriage or declaring it void
ab initio. (Art. 42, F.C.).
A sworn statement of the facts and circumstances of reappearance
shall be recorded in the civil registry of the residence of the parties to the
subsequent marriage at the instance of any interested person, with due
notice to the spouses of the subsequent marriage and without prejudice to
the fact of reappearance being judicially determined in case such fact is
disputed.
In other words, the Family Code provides the presumptively dead spouse with the
remedy of terminating the subsequent marriage by mere reappearance.
The filing of an affidavit of reappearance is an admission on the part of the first
spouse that his or her marriage to the present spouse was terminated when he or she
was declared absent or presumptively dead. (Santos v. Santos, G.R. No. 187061, October
8, 2014).
Q What are the conditions in order that the subsequent marriage may be
terminated in case a judgment of presumptive death of the absent spouse is
rendered? Explain.
Answer: The termination of the subsequent marriage by reappearance is subject to
several conditions: (1) the non-existence of a judgment annulling the previous marriage
or declaring it void ab initio; (2) recording in the civil registry of the residence of the
parties to the subsequent marriage of the sworn statement of fact and circumstances of
reappearance; (3) due notice to the spouses of the subsequent marriage of the fact of
reappearance; and (4) the fact of reappearance must either be undisputed or judicially
determined.
The existence of these conditions means that reappearance does not always
immediately cause the subsequent marriage's termination. Reappearance of the absent
or presumptively dead spouse will cause the termination of the subsequent marriage
only when all the conditions enumerated in the Family Code are present. (Santos v.
Santos, G.R. No. 187061, October 8, 2014).
Q Are there instances when the second marriage may still subsist even if the
absent spouse reappears? Explain.
Answer: Yes. The subsequent marriage may still subsist despite the absent or
presumptively dead spouse's reappearance (1) if the first marriage has already been
annulled or has been declared a nullity; (2) if the sworn statement of the reappearance is
not recorded in the civil registry of the subsequent spouses' residence; (3) if there is no
notice to the subsequent spouses; or (4) if the fact of reappearance is disputed in the
proper courts of law, and no judgment is yet rendered confirming, such fact of
reappearance.
When subsequent marriages are contracted after a judicial declaration of
presumptive death, a presumption arises that the first spouse is already dead and that
the second marriage is legal. This presumption should prevail over the continuance of the
marital relations with the first spouse. The second marriage, as with all marriages, is
presumed valid. The burden of proof to show that the first marriage was not properly
dissolved rests on the person assailing the validity of the second marriage.
The court recognized the conditional nature of reappearance as a cause for
terminating the subsequent marriage in Social Security System v. Vda. de Bailon. (520
Phil. 249 [2006]). The mere reappearance will not terminate the subsequent marriage
even if the parties to the subsequent marriage were notified if there was "no step . . .
taken to terminate the subsequent marriage, either by [filing an] affidavit [of
reappearance] or by court action." "Since the second marriage has been contracted
because of a presumption that the former spouse is dead, such presumption continues
inspite of the spouse's physical reappearance, and by fiction of law, he or she must still
be regarded as legally an absentee until the subsequent marriage is terminated as
provided by law." (Santos v. Santos, G.R. No. 187061, October 8, 2014).
Q Why is it that there is a need for a judgment declaring an absent spouse
presumptively dead before the present spouse may contract a subsequent
marriage? Explain.
Answer: Such an action is important for purposes of determining the status of the second
marriage and the liabilities of the spouse who, in bad faith, claimed that the other spouse
was absent.
A second marriage is bigamous while the first subsists. However, a bigamous
subsequent marriage may be considered valid when the following are present:
1. The prior spouse had been absent for four consecutive years;
2. The spouse present has a well-founded belief that the absent spouse was already
dead;
3. There must be a summary proceeding for the declaration of presumptive death of
the absent spouse; and
4. There is a court declaration of presumptive death of the absent spouse.
A subsequent marriage contracted in bad faith, even if it was contracted after a
court declaration of presumptive death, lacks the requirement of a well-founded
belief that the spouse is already dead. The first marriage will not be considered as validly
terminated. Marriages contracted prior to the valid termination of a subsisting marriage
are generally considered bigamous and void. Only a subsequent marriage contracted in
good faith is protected by law.
Therefore, the party who contracted the subsequent marriage in bad faith is also
not immune from an action to declare his subsequent marriage void for being bigamous.
The prohibition against marriage during the subsistence of another marriage still applies.
(Arts. 35(4) and 41; Santos v. Santos, G.R. No. 187061, October 8, 2014).).
Marriage declared void by reason of psychological incapacity; co-ownership

governs.
Q What property regime governs if a man and a woman who are capacitated
to marry one another live together as husband and wife and acquire properties
during such coverture or if the marriage was declared void by reason of
psychological incapacity? Explain.
Answer: It is governed by the rule on co-ownership. This particular kind of co-ownership
applies when a man and a woman, suffering no illegal impediment to marry each other,
exclusively live together as husband and wife under a void marriage or without the
benefit of marriage. (Valdes v. Regional Trial Court, Branch 102, Quezon City, 328 Phil.
1289, 1296 [1996]). It is clear, therefore, that for Article 147 to operate, the man and the
woman: (1) must be capacitated to marry each other; (2) live exclusively with each other
as husband and wife; and (3) their union is without the benefit of marriage or their
marriage is void. Here, all these elements are present. (Mercado-Fehr v. Fehr, 460 Phil.
445, 457 [2003]). The term capacitated in the first paragraph of the provision pertains
to the legal capacity of a party to contract marriage. Any impediment to marry has not
been shown to have existed on the part of either the spouses. They lived exclusively with
each other as husband and wife. However, their marriage was found to be void under
Article 36 of the Family Code on the ground of psychological incapacity.
Under this property regime, property acquired by both spouses through their work
and industry shall be governed by the rules on equal co-ownership. Any propertyacquired
during the union is prima facie presumed to have been obtained through their joint
efforts. A party who did not participate in the acquisition of the property shall be
considered as having contributed to the same jointly if said partys efforts considered in
the care and maintenance of the family household. Efforts in the care and maintenance
of the family and household are regarded as contributions to the acquisition of common
property by one who has no salary or income or work or industry. (Agapay v. Palang, 342
Phil. 302, 311 [1997]; Barrido v. Nonato, G.R. No. 176492, October 29, 2014, Peralta, J).
In the analogous case of Valdez, it was likewise averred that the trial court failed to
apply the correct law that should govern the disposition of a family dwelling in a situation
where a marriage is declared void ab initio because of psychological incapacity on the
part of either or both parties in the contract of marriage. The Court held that the court a
quo did not commit a reversible error in utilizing Article 147 of the Family Code and in
ruling that the former spouses own the family home and all their common property in
equal shares, as well as in concluding that, in the liquidation and partition of the property
that they owned in common, the provisions on co-ownership under the Civil Code should
aptly prevail. The rules which are set up to govern the liquidation of either the absolute
community or the conjugal partnership of gains, the property regimes recognized for
valid and voidable marriages, are irrelevant to the liquidation of the co-ownership that
exists between common-law spouses or spouses of void marriage.
Q A property acquired by spouses during the marriage by purchase but
registered under the name of one of them. What is the presumption? Explain.
Answer: If a property is acquired by the spouses by purchase during the marriage, the
same is presumed to be conjugal.
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. (Tarrosa v.
De Leon, G.R. No. 185063, July 23, 2009, 593 SCRA 768, 779). The registration of the
property is not conclusive evidence of the exclusive ownership of the husband or the
wife. Although the property appears to be registered in the name of the husband, it has
the inherent character of conjugal property if it was acquired for valuable consideration
during marriage. (Bucoy v. Paulino, 131 Phil. 790, 800 [1968]).
In order to rebut the presumptive conjugal nature of the property, the petitioner
must present strong, clear and convincing evidence of exclusive ownership of one of the
spouses. (Dewara v. Lamela, G.R. No. 179010, April 11, 2011, 647 SCRA 483, 490). The
burden of proving that the property belong exclusively to the wife or to the husband rests
upon the party asserting it. (PNB v. Garcia, et al., G.R. No. 182839, June 2, 2014, Brion, J;
Lim v. Equitable PCIBank, G.R. No. 183918, January 15, 2014).
Note that the registration of such property gives to the presumption of trust under
Article 1448 of the Civil Code. The presumption, however is merely rebuttable.
Presumption of conjugality of properties of husband and wife.
Along the same vein, in Lim v. Equitable PCI Bank, G.R. No. 183918, January 15,
2014, the SC had the occasion once again to say that all properties of the marriage is
presumed to be conjugal, unless it is shown that it is owned exclusively by the husband
or the wife (Dewara v. Lamela, G.R. No. 179010, April 11, 2011, 647 SCRA 483); that this
presumption is not overcome by the fact that the property is registered in the name of
the husband or the wife alone; and that the consent of both spouses is required before a
conjugal property may be mortgaged. (Art. 124, F.C. ).
Worth mentioning is the ruling in Philippine National Bank v. Court of Appeals, 237
Phil. 426 [1987], to wit:
The well-known rule in this jurisdiction is that a person dealing with a
registered land has a right to rely upon the face of the torrens certificate of
title and to dispense with the need of inquiring further, except when the party
concerned has actual knowledge of facts and circumstances that would impel
a reasonably cautious man to make such inquiry.
A torrens title concludes all controversy over ownership of the land
covered by a final decree of registration. Once the title is registered the
owner may rest assured without the necessity of stepping into the portals of
the court or sitting in the mirador de su casa to avoid the possibility of losing
his land.
Article 160 of the Civil Code provides as follows:
Art. 160. All property of the marriage is presumed to
belong to the conjugal partnership, unless it be proved
that it pertains exclusively to the husband or to the wife.
The presumption applies to property acquired during the lifetime of the
husband and wife. In this case, it appears on the face of the title that the
properties were acquired by Donata Montemayor when she was already a
widow. When the property is registered in the name of a spouse only and
there is no showing as to when the property was acquired by said spouse,
this is an indication that the property belongs exclusively to said spouse. And
this presumption under Article 160 of the Civil Code cannot prevail when the
title is in the name of only one spouse and the rights of innocent third parties
are involved.
The PNB had a reason to rely on what appears on the certificates of title of the
properties mortgaged. For all legal purposes, the PNB is a mortgagee in good faith for at
the time the mortgages covering said properties were constituted the PNB was not aware
to any flaw of the title of the mortgagor.
The conjugal partnership was converted into an implied ordinary co-ownership
upon the death of the other spouse.
Q What happens to the conjugal partnership properties of the husband and
wife after the death of one of them? Explain.
Answer: Upon the death of the other spouse, the conjugal partnership was automatically
dissolved and terminated pursuant to Article 175(1) of the Civil Code, and the
successional right of her heirs vest, as provided under Article 777 of the Civil Code, which
states that the rights to the succession are transmitted from the moment of the death of
the decedent.
Consequently, the conjugal partnership was converted into an implied ordinary coownership between the surviving spouse, on the one hand, and the heirs of the
deceased, on the other. (Metropolitan Bank and Trust Co. v. Pascual, G.R. No. 163744,
February 29, 2008, 547 SCRA 246, 259). This resulting ordinary co-ownership among the
heirs is governed by Article 493 of the Civil Code which provides that each co-owner shall
have the full ownership of his part and of the fruits and benefits pertaining thereto, and
he may therefore alienate, assign or mortgage it, and even substitute another person in
its enjoyment, except when personal rights are involved. But the effect of the alienation
or the mortgage, with respect to the co-owners shall be limited to the portion which may
be allotted to him in the division upon the termination of the co-ownership. (Lim v.
Equitable PCIBank, G.R. No. 183918, January 15, 2014).
An illegitimate child recognized by his father cannot be compelled to use his
surname.
Q Grace Grande and Patricio Antonio lived together as husband and wife
without the benefit of marriage. Out of their illicit relationship, two (2) sons
were born namely Andrew Lewis and Jerard Patrick. He filed a Petition for
Judicial Approval of Recognition with prayer for Parental Authority, Physical
Custody, Correction of Surname of Minors. The trial court granted the petition
and ordered the use of the surname of the Patricio by the minors. Is the
judgment correct? Why?
Answer: No, because an illegitimate child may carry the surname of the father if he was
recognized.
Article 176 of the Family Code as amended by RA 9255 provides that illegitimate
children shall use the surname and shall be under the parental authority of their mother,
and shall be entitled to support in conformity with this Code. However, illegitimate
children may use the surname of their father if their filiation has been expressly
recognized by their father through the record of birth appearing in the civil register, or
when an admission in a public document or private handwritten instrument is made by
the father, provided, the father has the right to institute an action before the regular
courts to prove non-filiation during his lifetime.
From the foregoing provisions, it is clear that the general rule is that an illegitimate
child shall use the surname of his or her mother. The exception provided by RA 9255 is, in
case his or her filiation is expressly recognized by the father through the record of birth
appearing in the civil register or when an admission in a public document or private
handwritten instrument is made by the father. In such a situation, the illegitimate child
MAY use the surname of the father. (Grace Grande v. Patricio Antonio, G.R. No. 206248,
February 18, 2014, Velasco, J).
Mother still exercises parental authority over the illegitimate child.
Q If a child has been recognized by the father who shall exercise parental
authority? Explain.
Answer: Parental authority over minor children is lodged by Art. 176 on the mother;
hence, respondents prayer has no legal mooring. Since parental authority is given to the
mother, then custody over the minor children also goes to the mother, unless she is
shown to be unfit. This is true even if the father acknowledged the said children. (Grace
Grande v. Patricio Antonio, G.R. No. 206248, February 18, 2014, Velasco, J).
Child decides the use of the surname of the father.
Q Who shall decide whether or not to carry the surname of the father if a
child has been recognized by the father? Explain.
Answer: Art. 176 gives illegitimate children the right to decide if they want to use the
surname of their father or not. It is not the father or the mother who is granted by law
the right to dictate the surname of their illegitimate children. This is so because the law
uses the word may.
Nothing is more settled than that when the law is clear and free from ambiguity, it
must be taken to mean what it says and it must be given its literal meaning free from
any interpretation. Respondents position that the court can order the minors to use his
surname, therefore, has no legal basis.
On its face, Art. 176, as amended, is free from ambiguity. And where there is no
ambiguity, one must abide its words. The use of the word may in the provision readily
shows that an acknowledged illegitimate child is under no compulsion to use the
surname of his illegitimate father. The word may is permissive and operates to confer
discretion upon the illegitimate children. ((Grace Grande v. Patricio Antonio, G.R. No.
206248, February 18, 2014, Velasco, J).
Yardstick of policies affecting children.
Q Is the idea that the use of the fathers surname by a child would always
serve his best interest? Explain.
Answer: The yardstick by which policies affecting children are to be measured is their
best interest. On the matter of childrens surnames, the Court has, time and again,
rebuffed the idea that the use of the fathers surname serves the best interest of the
minor child. In Alfon v. Republic, No. L-51201, May 29, 1980, 97 SCRA 858, the Court
allowed even a legitimate child to continue using the surname of her mother rather than
that of her legitimate father as it serves her best interest and there is no legal obstacle to
prevent her from using the surname of her mother to which she is entitled. In fact, in
Calderon v. Republic, 126 Phil. 1 [1967], the Court, upholding the best interest of the
child concerned, even allowed the use of a surname different from the surnames of the
childs father or mother. Indeed, the rule regarding the use of a childs surname is second
only to the rule requiring that the child be placed in the best possible situation
considering his circumstances.
In Republic of the Philippines v. Capote, G.R. No. 157043, February 2, 2007, 514
SCRA 76, 83-84, the Court gave due deference to the choice of an illegitimate minor to
use the surname of his mother as it would be best serve his interest. (Grace Grande v.
Patricio Antonio, G.R. No. 206248, February 18, 2014, Velasco, J).
PROPERTY
Co-Ownership-Partition
Partition is imprescriptible; exception.
Q In a case, a property was alleged to be the subject of co-ownership. The
petitioners filed a complaint for partition. It was however, contended that
partition is already barred by res judicata since the first case for partition was
dismissed for failure to prosecute. Is the contention correct? Why?
Answer: No. The dismissal with prejudice under Rule 17, Sec. 3 of the Rules of Court
cannot defeat the right of a co-owner to ask for partition at any time, provided that there
is no actual adjudication of ownership of shares yet. The rule is so because no co-owner
shall be obliged to remain in the co-ownership. Each co-owner may demand at any time
the partition of the thing owned in common, insofar as his share is concerned.
The law generally does not favor the retention of co-ownership as a property
relation, and is interested instead in ascertaining the co-owners specific shares so as to
prevent the allocation of portions to remain perpetually in limbo. Thus, the law provides
that each co-owner may demand at any time the partition of the thing owned in
common. (Quintos, et al. v. Nicolas, et al., G.R. No. 210252, June 16, 2014, Velasco, J).
Between dismissal with prejudice under Rule 17, Sec. 3 and the right granted to
co-owners under Art. 494 of the Civil Code, the latter must prevail. To construe otherwise
would diminish the substantive right of a co-owner through the promulgation of
procedural rules. Such a construction is not sanctioned by the principle, that a
substantive law cannot be amended by a procedural rule. (Philippine National Bank v.
Asuncion, 170 Phil. 356 [1977]).
Thus, for the Rules to be consistent with statutory provisions, it was held that Art.
494, NCC is an exception to Rule 17, Sec. 3 of the Rules of Court to the effect that even if
the order of dismissal for failure to prosecute is silent on whether or not it is wnhith
prejudice, it shall be deemed to be without prejudice.
Q When does the principle of res judicata apply in partition cases? Explain.
Answer: As a rule, the action for partition will never be barred by res judicata. There can
still be res judicata in partition cases concerning the same parties and the same subject
matter once the respective shares of the co-owners have been determined with finality
by a competent court with jurisdiction or if the court determines that partition is improper
for co-ownership does not or no longer exists.
In Rizal v. Naredo, G.R. No. 151898, March 14, 2012, 668 SCRA 114, 128-130, it
was ruled that Article 484 of the New Civil Code provides that there is co-ownership
whenever the ownership of an undivided thing or right belongs to different persons. Thus,
on the other hand, a co-owner of an undivided parcel of land is an owner of the whole,
and over the whole he exercises the right of dominion, but he is at the same time the
owner of a portion, there is no co-ownership when the different portions owned
by different people are already concretely determined and separately
identifiable, even if not yet technically described.
Res judicata can be applied if after the parties executed a compromise agreement
that was duly approved by the court, the different portions of the owners have already
been ascertained. Thus, there was no longer a co-ownership and there was nothing left to
partition. If the co-ownership is still subsisting, there is no legal bar preventing the
parties from praying for the partition of the property through counterclaim. (Quintos, et
al. v. Nicolas, et al., G.R. No. 210252, June 16, 2014, Velasco, J).
Partition can be oral.

Q After the death of their predecessor-in-interest, the heirs orally partitioned
his estate. A portion was assigned to one of the heir who took possession of
the same. Is the oral partition valid? Explain.
Answer: Yes. That there was no written memorandum of the partition among the heirs
cannot detract from appellees cause. Oral partition is effective when the parties have
consummated it by the taking of possession in severalty and the exercise of ownership of
the respective portions set off to each. Here, it is obvious that an heir took possession of
his share and exercised ownership over it.
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. (Maglucot-aw
v. Maglucot, 385 Phil. 720, 736-737 [2000]; Hernandez v. Andal, 78 Phil. 196 [1947]; Sps.
Marcos v. Heirs of Bangi, et al., G.R. No. 185745, October 15, 2014, Reyes, J
Co-owner cannot be compelled to give consent to sale by another co-owner.
Q A property subject of the co-ownership of some people was about to be
sold but the others refused to give consent. Hence, a suit was filed to compel
the others to give consent contending among others that their refusal to give
consent resulted in prejudice to the others who wanted to sell. They sought
relief under Article 491, NCC to compel them to give consent to the sale. The
trial court ruled that the act of the other co-owners of withholding consent to
the sale prejudiced the other co-owners and considered it an alteration within
the purview of the law, thus, it granted the relief. Is the ruling correct? Explain.
Answer: No. Each co-owner shall have the full ownership of his part and of the fruits and
benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and
even substitute another person in its enjoyment, except when personal rights are
involved. But the effect of the alienation or the mortgage, with respect to the co-owners,
shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership. (Art. 493, NCC). Furthermore, the law provides that
none of the co-owners shall, without the consent of the others, make alterations in the
things owned in common, even though benefits for all would result therefrom. However,
if the withholding of the consent by one or more of the co-owners is clearly prejudicial to
the common interest, the courts may afford adequate relief. (Art. 491, NCC).
That a sale constitutes an alteration as mentioned in Article 491, NCC is an
established jurisprudence. It is settled that alterations include any act of strict dominion
or ownership and any encumbrance or disposition has been held implicitly to be an act of
alteration. (Cruz v. Catapang, G.R. No. 164110, February 12, 2008, 544 SCRA 512, 519
citing gala v. Rodriguez, 70 Phil. 124 [1940]). Alienation of the thing by sale of the
property is an act of strict dominion. However, the ruling that alienation is alteration does
not mean that a sale of commonly owned real property is covered by the second
paragraph of Article 491, NCC, such that if a co-owner withholds consent to the sale, the
courts, upon a showing of a clear prejudice to the common interest, may, as adequate
relief, order the grant of the withheld consent. This is so because, a co-owner can sell an
undivided part of the property subject of the co-ownership but its validity is limited to his
share. Hence, there is no need for the consent of the other co-owners. (Arambulo, et al.
v. Nolasco, et al., G.R. No. 189420, March 26, 2014, Perez, J).
Mortgage of property subject of co-ownership; extent of validity.
Q A property subject of co-ownership was mortgaged to a rural bank but the
SPA of the mortgagor was proven to be a forged document. Is the mortgage
valid? Why?
Answer: Yes. The mortgage is valid to the extent of the share of the mortgagor, but not
the entire property. A co-owner by virtue of Article 493 of the Civil Code, has the right to
mortgage or even sell her undivided interest in the said properties, she, could not,
however, dispose of or mortgage the subject properties in their entirety without the
consent of the other co-owners. accordingly, the validity of the subject real estate
mortgage and the subsequent foreclosure proceedings therefor conducted in favor of

RBCI should be limited only to the portion which may be allotted to it in the event of
partition. (Rural Bank of Cabadbaran, Inc. v. Nulecio-Yap, et al., G.R. No. 178451, July 30,
2014, Bernabe, J).
Title prevails over oral testimony to prove a better right.
Q If there is a controversy over a real property covered by a TCT where the
evidence presented to prove possession is the testimony of a lone witness as
against a title which shall prevail? Explain.
Answer: As between a certificate of title, which is an incontrovertible proof of ownership,
accompanied with a tax declaration and a tax receipt on one hand, and a testimony of a
lone witness, the former prevails in establishing who has a better right of possession over
the property, following the rule that testimonial evidence cannot prevail over
documentary evidence. (Jarantilla v. Jarantilla, G.R. No. 154486, December 1, 2010, 636
SCRA 299, 317; Dept. of Education v. Tuliao, G.R. No. 205664, June 9, 2014, Mendoza, J).
QUIETING OF TITLE
Quieting of title; requisites.
Q Plaintiffs alleged that they applied for a purchase of the property from the
government through townsite sales application coursed through the DENR. In
their complaint, they asked for the nullification of the title of the respondent in
order that the said title would not hinder their townsite sales application, but
admitted that they were not the owners of the property. They admitted that it
belonged to the State. They alleged that such title is void as it was derived
from another title that was previously declared void. Is the the action for
quieting of title proper? Why?
Answer: No. The plaintiffs have no equitable title over the property since they were
merely applying for a purchase over the same. Such application would not entitle them to
prosecute the case especially so that they recognized the title of the State over the
property.
For an action to quiet title to prosper, two indispensable requisites must be
present, namely: (1) the plaintiff or complainant has a legal or an equitable title to or
interest in the real property subject of the action; and (2) the deed, claim, encumbrance
or proceeding claimed to be casting cloud on his title must be shown to be in fact invalid
or inoperative despite its prima facie appearance of validity or legal efficacy. (Elaand
Philippines, Inc. v. Garcia, G.R. No. 173289, February 17, 2010, 613 SCRA 66, 92;
Residents of Lower Atab & Teachers Village, Sto. Tomas Proper Barangay, Baguio City, etc.
v. Sta. Monica Industrial & Dev. Corp., G.R. No. 198878, October 15, 2014, Del Castillo, J).
Q Give the concept of legal title and equitable title. Explain.
Answer: Legal title denotes registered ownership, while equitable title means beneficial
ownership. (Mananquil v. Moico, G.R. No. 180076, November 21, 2012, 686 SCRA 123,
124).
Beneficial ownership has been defined as ownership recognized by
law and capable of being enforced in the courts at the suit of the beneficial
owner. Blacks Law Dictionary indicates that the term is used in two senses:
first, to indicate the interest of a beneficiary in trust property (also called
equitable ownership); and second, to refer to the power of a corporate
shareholder to buy or sell the shares, though the shareholder is not
registered in the corporations books as the owner. Usually, beneficial
ownership is distinguished from naked ownership, which is the enjoyment of
all the benefits and privileges of ownership, as against possession of the bare
title to property. (La Bugal-BLaan Tribal Association, Inc. v. Ramos, 486 Phil.
754, 844-845 [2004]; Residents of Lower Atab & Teachers Village, Sto. Tomas
Proper Barangay, Baguio City, etc. v. Sta. Monica Industrial & Dev. Corp., G.R.
No. 198878, October 15, 2014, Del Castillo, J).
NUISANCE
Concept of nuisance and kinds.
Q Wong and Ong are the co-owners of a parcel of land abutting a 10-meter
wide subdivision road. On the opposite side of the road is a property belonging
to Rana. The said lots follow a rolling terrain with the Rana property standing
about two (2) meters higher than and overlooking the Uy property while the
Wong-Ong property is at the same level with the road. Rana elevated and
cemented a portion of the road that runs between Rana and Wong-Ong
properties to level said portion with their gate. Rana likewise backfilled a
portion of the perimeter fence separating the Rana and Uy properties without
erecting a retaining wall that would hold the weight of the added filling
materials. Wong, et al. availed of the remedy judicial abatement with damages
against Rana claiming that both elevated and cemented subject portion and the
subject backfilling are nuisances caused/created by the latter which curtailed
their use and enjoyment of their properties. Is their contention correct? Why?
Answer: No. The elevated and cemented subject portion is not a nuisance per se. By its
nature, it is not injurious to the health or comfort of the community. It was built primarily
to facilitate the ingress and egress of Sps. Rana from their house which was admittedly
located on a higher elevation than the subject road and the adjoining Uy and Wong-Ong
properties. Since the subject portion is not a nuisance per se but actually a nuisance per
accidens it cannot be summarily abated. As such, Wong, et al.s demolition of Sps. Ranas
subject portion, which was not sanctioned by the court, remained unwarranted. (Rana v.
Wong, et al., G.R. No. 192861; Uy, et al. v. Rana, G.R. No. 192862, June 30, 2014, PerlasBernabe, J)
Concept of nuisance.
Under Article 694 of the Civil Code, a nuisance is defined as any act, omission,
establishment, business, condition of property, or anything else which: (1) Injures or
endangers the health and safety of others; or (2) Annoys or offends the senses; or (3)
Shocks, defies or disregards decency or morality; or (4) Obstructs or interferes with the
free passage of any public highway or street, or anybody of water; or (5) Hinders or
impairs the use of property. Based on case law, however, the term nuisance is deemed
to be so comprehensive that it has been applied to almost all ways which have
interfered with the rights of the citizens, either in person, property, the enjoyment of his
property, or his comfort. (AC Enterprises, Inc. v. Frabelle Properties Corp., 537 Phil. 114,
143 [2006]).
Kinds of nuisance.
Article 695 of the Civil Code classifies nuisances with respect to the object or
objects that they affect. In this regard, a nuisance may either be: (a) a public nuisance (or
one which affects a community or neighborhood or any considerable number of persons,
although the extent of the annoyance, danger or damage upon individuals may be
unequal); or (b) a private nuisance (or one that is not included in the foregoing
definition [or, as case law puts it, one which violates only private rights and produces
damages to but one or a few persons]).
Jurisprudence further classifies nuisances in relation to their legal susceptibility to
summary abatement (that is, corrective action without prior judicial permission). In this
regard, a nuisance may either be: (a) a nuisance per se (or one which affects the
immediate safety of persons and property and may be summarily abated under the
undefined law of necessity); (Peres v. Madrona, G.R. No. 184478, March 21, 2012, 668
SCRA 696, 706-707); or (b) a nuisance per accidens (or that which depends upon certain
conditions and circumstances, and its existence being a question of fact, it cannot be
abated without due hearing thereon in a tribunal authorized to decide whether such a
thing does in law constitute a nuisance.) (Salao v. Santos, 67 Phil. 547, 550-551 [1939]).
Nuisance per se can be summarily abated.
It is a standing jurisprudential rule that unless a nuisance is a nuisance per se, it
may not be summarily abated. In Lucena Grand Central Terminal, Inc. v. Jac Liner, Inc.,
492 Phil. 314 [2005], the Court, citing other cases on the matter, emphasized the need
for judicial intervention when the nuisance is not a nuisance per se, to wit:
In Estate of Gregoria Francisco v. Court of Appeals, this Court held:
Respondents cannot seek cover under the general welfare clause
authorizing the abatement of nuisances without judicial proceedings. That
tenet applies to a nuisance per se, or one which affects the immediate safety
of persons and property and may be summarily abated under the undefined
law of necessity. The storage of copra in the Quonset building is a legitimate
business. By its nature, it cannot be said to be injurious to rights of property,
of health or of comfort of the community. If it be a nuisance per accidens it
may be so proven in a hearing conducted for that purpose. It is not per se a
nuisance warranting its summary abatement without judicial intervention.
In Pampanga Bus Co., Inc. v. Municipality of Tarlac where the appellantmunicipality similarly argued that the terminal involved therein is a nuisance
that may be abated by the Municipal Council via an ordinance, this Court
held: Suffice it to say that in the abatement of nuisances the provisions of
the Civil Code (Articles 694-707) must be observed and followed. This
appellant failed to do so.
Other remedies against nuisance.
Aside from the remedy of summary abatement which should be taken under the
parameters stated in Article 704 (for public nuisances) and 706 (for private nuisances) of
the Civil Code, a private person whose property right was invaded or unreasonably
interfered with by the act, omission, establishment, business or condition of the property
of another may file a civil action to recover personal damages. Abatement may be
judicially sought through a civil action therefor if the pertinent requirements under the
Civil Code for summary abatement, or the requisite that the nuisance is a nuisance per
se, do not concur. To note, the remedies of abatement and damages are cumulative;
hence, both may be demanded.
As for the subject backfilling touching the perimeter fence of the Uy property the
said fence was not designed to act as a retaining wall but merely to withhold windload
and its own load. The subject backfilling has added pressure on the fence, consequently
endangering the safety of the occupants of the Uy property, especially considering the
higher elevation of the Rana property. There is a need for Rana to construct a retaining
wall which would bear the weight and pressure of the filling materials introduced on their
property.
DONATIONS
Donation of movable must be in writing.
Q There was a contract to sell over a property owned by the GSIS but due to
failure to pay the amortization she sought for financial assistance from her
brother who paid the balance. He then sought for the transfer of the property,
but the couple contended that the payment was made out of sheer generosity
and pity to her. She denied having borrowed an amount of money from him.
Hence, he filed a complaint for specific performance for the transfer of the
property. Instead, the lower courts ordered the refund of his payments. She
questioned the decision contending that the lower courts erred in declaring the
contract as loan instead of a donation. Is the contention that the payment was
in the form of a donation correct? Why?
Answer: No. There was no compliance with the formal requisite that it be in writing,
hence, there can be no donation. She never presented a copy of the written agreement
evidencing the same. In Moreno-Lentfer v. Wolff, 484 Phil. 552 [2004], it was said that a
donation must comply with the mandatory formal requirements set forth by law for its
validity. When the subject of donation is purchase money, Article 748 of the NCC is
applicable. Accordingly, the donation of money as well as its acceptance should be in
writing. Otherwise, the donation is invalid for non-compliance with the formal requisite
prescribed by law. (Carinan v. Sps. Cueto, G.R. No. 198636, October 8, 2014, Reyes, J).
SUCCESSION
Will of a foreigner can be probated in the Philippines.
Q Ruperta C. Paglanas, a Filipino who became a naturalized US citizen, died
single and childless. In her last will and testament she executed in California,
she designated her brother Sergio as the executor of the will. Respondent
Ernesto, another brother of Ruperta, filed with the RTC of Malolos, Bulacan a
petition for the probate of Rupertas will and prayed for his appointment as
special administrator of her estate. However, petitioners Manuel and Benjamin,

nephews of Ruperta opposed the petition contending that wills executed by
foreigners abroad must first be probated and allowed in the country of its
execution before it can be probated in the Philippines. Is the contention
correct? Explain.
Answer: No. Our laws do not prohibit the probate of wills executed by foreigners abroad
although the same have not as yet been probated and allowed in the countries of their
execution. A foreign will can be given legal effects in our jurisdiction. Article 816 of the
Civil Code states that the will of an alien who is abroad produces effect in the Philippines
if made in accordance with the formalities prescribed by the law of the place where he
resides, or according to the formalities observed in his country.
Section 1, Rule 73 of the 1997 Rules of Civil Procedure provides that if the
decedent is an inhabitant of a foreign country, the RTC of the province where he has an
estate may take cognizance of the settlement of such estate. Sections 1 and 2 of Rule 76
of the Rules of Court further state that the executor, devisee, or legatee named in the
will, or any other person interested in the estate, may at any time after the death of the
testator, petition the court having jurisdiction to have the will allowed, whether the same
be in his possession, or not, or is lost or destroyed.
Our rules require merely that the petition for the allowance of a will must show, so
far as known to the petition: (a) the jurisdictional facts; (b) the names, ages, and
residences of the heirs, legatees, and devisees of the testator or decedent; (c) the
probable value and character of the property of the estate; (d) the name of the person
for whom letters are prayed; (e) if the will has not been delivered to the court, the name
of the person having custody of it.
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. Reprobate is specifically governed by Rule 77 of the Rules of Court.
Reprobate cannot be made to apply in the present case. In reprobate, the local court
acknowledge as binding the findings of the foreign probate court, provided its jurisdiction
over the matter can be established. (In Re: In the Matter of the Petition to Approve the
Will of Ruperta Palagans, G.R. No. 169144, January 26, 2014).
PRESCRIPTION
Interruption of the period.
In Sps. Suntay v. Keyser Mercantile, Inc., G.R. No. 208462, December 10, 2014, the
SC once again said that the filing of an action interrupts the running of the prescriptive
period of action. In Fulton Insurance Company v. Manila Railroad Company, 129 Phil. 195,
202 [1967], it was ruled that the filing of the first action interrupted the running of the
period, and then declared that, at any rate, the second action was filed within the
balance of the remaining period. Applying Article 1155 of the New Civil Code, the
interruption took place when the first action was filed in the Court. The interruption
lasted during the pendency of the action until the order of dismissal for alleged lack of
jurisdiction became final.
The prescriptive period was interrupted when the first case was filed on March 21,
1996. The interruption lasted during the pendency of the action and until the judgment of
dismissal due to lack of jurisdiction was rendered on the September 23, 2005. Thus, the
filing of the second case on March 24, 2006 was squarely within the prescriptive period of
four (4) years.
LACHES
Once again, in Arroyo v. Bocago Inland Dev. Corp., et al., G.R. No. 167880,
November 14, 2012, Peralta, J, the SC had the occasion to say that laches is not
concerned only with the mere lapse of time. The following elements must be
present in order to constitute laches:
(1)
conduct on the part of the defendant, or of one under whom he claims,
giving rise to the situation of which complaint is made for which the
complaint seeks a remedy;
(2)
delay in asserting the complainants rights, the complainant having had
knowledge or notice, of the defendants conduct and having been afforded
an opportunity to institute a suit;
(3)
(4)
lack of knowledge or notice on the part of the defendant that the

complainant would assert the right on which he bases his suit; and
injury or prejudice to the defendant in the event relief is accorded to the
complainant, or the suit is not held to be barred. (Heirs of Anacleto B. Nieto
v. Municipality of Meycauayan, Bulacan, G.R. No 150654, December 13,
2007, 540 SCRA 100).
In Labrador vs. Perlas, G.R. No. 173900, August 9, 2010, 627 SCRA 265, it was
ruled that as a registered owner, petitioner has a right to eject any person illegally
occupying his property. This right is imprescriptible and can never be barred by laches. In
Bishop v. Court of Appeals, it was likewise said that even if it be supposed that they were
aware of the petitioners' occupation of the property, and regardless of the length of that
possession, the lawful owners have a right to demand the return of their property at any
time as long as the possession was unauthorized or merely tolerated, if at all. This right is
never barred by laches.
Social justice and equity cannot be used to justify the court's grant of property to
one at the expense of another who may have a better right thereto under the law. These
principles are not intended to favor the underprivileged while purposely denying another
of his right under the law.
Declaration of heirship need not be in a settlement of estate proceeding;
exception.
Q Severo was married to Ana Rivera. They had a child named Valentin. During
his lifetime, he acquired a parcel of land purchased from the government. Then
he died. In 1995, it was discovered by Valentin that Crispiniano and Ricardo
Basbas were able to transfer said property under their names when they filed a
petition for reconstitution of the title, claiming that they were the heirs of
Severo. They executed an Extrajudicial Settlement of Estate claiming that they
were the only heirs of Severo Basbas hence, title was issued under their name.
The heirs of Valentin Basbas, filed an action for declaration of nullity of the
title claiming that said persons were not the heirs of Severo, but the sole heir
was Valentin. On appeal, the CA reversed the judgment. Applying Heirs of
Yaptinchay v. Del Rosario, 363 Phil. 393 [1999] that the declaration of heirship
can be made only in a special proceeding in as much as it involves the
establishment of a status or right and not in a civil case for annulment of title,
reconveyance with damages. Is the CAs decision correct? Why?
Answer: No. As a general rule, the declaration of heirship must be done in a settlement of
estate proceeding as it is a mere incident in such case. The rule however is not absolute
as it accepts an exception as when, in the civil action, evidence has been presented on
the heirship. In this case, there was evidence that Valentin was the only son of Severo
hence, declared as his heir when he died. Therefore, when Valentin died, they inherited
the property which Valentin inherited from Severo, entitling them to such property. There
is therefore, no need to go through a settlement of estate proceeding to determine the
heirship.
A claim of status as heir of a decedent must always be substantially supported by
evidence as required under our law. The resolution of a case, an action for annulment of
title and reconveyance of real property, cannot be further stalled and waylaid by a mere
assertion of a party of an ostensible conflicting claims of heirship of the common
decedent. Not all rights to property and incidents thereof, such as titling, ought to be
preceded by a declaration of heirship, albeit supposedly traced to a single decedent and
original titleholder. (Heirs of Valentin Basbas, et al. v. Ricardo Basbas, G.R. No. 188773,
September 10, 2014, Perez, J).
The rights to the succession vested from the moment of death of Severo. In turn,
when Valentin, the heir of Severo died, rights to the succession vested from the moment
of his death to his heirs who are entitled to the property in question. (Art. 777, NCC).
OBIGATIONS AND CONTRACTS
Nature of action for rescission and its effects.
In Reyes v. Rossi, G.R. No. 159823, February 18, 2013, Bersamin, J, the SC had the
occasion to say that Article 1191 of the Civil Code recognizes an implied or tacit
resolutory condition in reciprocal obligations. The condition is imposed by law, and
applies even if there is no corresponding agreement thereon between the parties. The
explanation for this is that in reciprocal obligations a party incurs in delay once the other
party has performed his part of the contract; hence, the party who has performed or is
ready and willing to perform may rescind the obligation if the other does not perform, or
is not ready and willing to perform.
It is true that the rescission of a contract results in the extinguishment of the
obligatory relation as if it was never created, the extinguishment having a retroactive
effect. The rescission is equivalent to invalidating and unmaking the juridical tie, leaving
things in their status before the celebration of the contract. However, until the contract is
rescinded, the juridical tie and the concomitant obligations subsist.
No need for judicial intervention if extrajudicial rescission is agreed upon.
Q In a case, the contract provided that in case of violation of the same, the
aggrieved party can extrajudicially cancel the contract. As there was a
violation, the contract was extrajudicially rescinded. Is the extrajudicial
rescission correct? Why?
Answer: Yes. In reciprocal obligations, either party may rescind the contract upon the
others substantial breach of the obligation/s he had assumed thereunder, based on
Article 1191, NCC.
As a general rule, the power to rescind an obligation must be invoked judicially and
cannot be exercised solely on a partys own judgment that the other has committed a
breach of the obligation. (Phil. Amusement Enterprises, Inc. v. Natividad, 128 Phil. 320,
325 [1967]). This is so because rescission of a contract will not be permitted for a slight or
casual breach, but only for such substantial and fundamental violations as would defeat
the very object of the parties in making the agreement. (Eds Manufacturing, Inc. v.
Healthcheck International, Inc., G.R. No. 162802, October 9, 2013; Spouses Cannu v.
Spouses Galang, 498 Phil. 128, 145 [2005]). As a well-established exception, however, an
injured party need not resort to court action in order to rescind a contract when the
contract itself provides that it may be revoked or cancelled upon violation of its terms and
conditions. (Spouses Faustino and Josefina Garcia v. CA, G.R. No. 172036, April 23, 2010,
619 SCRA 280, 286-290). As elucidated in Froilan v. Pan Oriental Shipping, Co., 120 Phil.
1066 [1964], there is x x x nothing in the law that prohibits the parties from entering into
agreement that violation of the terms of the contract would cause cancellation thereof,
even without court intervention. Similarly, in Dela Rama Steamship Co., Inc. v. Tan, 99
Phil. 1034 [1964], it was held that judicial permission to rescind an obligation is not
necessary if a contract contains a special provision granting the power of cancellation to
a party.
Where parties agree to a stipulation allowing extra-judicial rescission, no judicial
decree is necessary for rescission to take place; the extra-judicial rescission immediately
releases the party from its obligation under the contract, subject only to court reversal if
found improper. On the other hand, without stipulation allowing extra-judicial rescission, it
is judicial decree that rescinds, and not the will of the rescinding party. (Golden Valley
Exploration, Inc. v. Pinkan Mining Co., et al., G.R. No. 190080, June 11, 2014, PerlasBernabe, J).
Q A property was donated with a stipulation that if the condition is not
complied with, there is automatic reversion to the donee. What is the nature of
such agreement? Explain.
Answer: Such automatic reversion of donated property to the donor upon non-compliance
of certain conditions was akin to an agreement granting a party the right to extrajudicially rescind the contract in case of breach. A subsequent court judgment does not
rescind the contract but merely declares the fact that the same has been rescinded,
judicial intervention is necessary not for purpose of obtaining a judicial declaration
rescinding a contract already deemed rescinded by virtue of an agreement providing for
rescission even without judicial intervention, but in order to determine whether or not the
rescission was proper.
In Roman Catholic Archbishop of Manila v. CA, G.R. Nos. 77425 and 77450, June 19,
1991, 198 SCRA 300, allowing the ipso facto reversion of the donated property upon noncompliance with the conditions was likewise upheld, where the Court held that where the
propriety of the automatic rescission is sustained, the decision of the court will be merely
declaratory of the revocation, but it is not in itself the revocatory act.
An extra-judicial rescission based on grounds not specified in the contract would

not preclude a party to treat the same as rescinded. The rescinding party, however, by
such course of action, subjects himself to the risk of being held liable for damages when
the extra-judicial rescission is questioned by the opposing party in court. (U.P v. De Los
Angeles, 146 Phil. 108 [1970]; Luna v. Abrigo, 260 Phil. 157 (1990); Golden Valley
Exploration, Inc. v. Pinkan Mining Co., et al., G.R. No. 190080, June 11, 2014, PerlasBernabe, J).
Rescission by the buyer of a condominium property is the remedy if there is
failure to develop.
Q Fil-Estate Properties Incorporated entered into a contract of sale on
installment basis with the buyers over a condominium property for a
consideration of P5,174,000.00. Downpayment of P1,552,000.00 was paid but
when the buyers learned that the seller stopped development, they stopped
paying after payment of P2,198,949.96. They asked for refund of the payments
but when the seller refused to heed the demand, they filed a complaint for
refund and damages with the HLURB which ordered the refund. Before the CA
and the SC on appeal, the seller contended that it was due to the Asian
Financial crisis that it failed to develop, treating it as a fortuitous event. Is the
defense proper? Explain.
Answer: No. The Asian Financial crisis is not a fortuitous event. In cases of similar nature,
the SC had the occasion to rule that the Philippine peso in the foreign exchange market is
an everyday occurrence, and fluctuations in currency exchange rates happen everyday,
thus, not an instance of caso fortuito. (Fil-Estate Properties, Inc., et al. v. Sps. Ronquillo,
G.R. No. 185798, January 13, 2014 citing Fil-Estate Properties, Inc. v. Go, 553 Phil. 337
[2007]; Asian Construction & Dev. Corp. v. PCIB, 522 Phil. 168 [2006]; Mondragon Leisure
& Resorts Corp. v. CA, 499 Phil. 268 [2005]).
No presumption of solidary liability of 2 persons.
Q Janet Ang entered into a rice supply contract with Manlar Rice Mill, Inc.
where the latter delivered rice to her and as consideration, she issued checks
amounting to P3.8M, but when presented for payment, the checks were
dishonored on the ground of closed account. Demands were made for Ang and
her mother, Lourdes Deyto to pay but to no avail, hence, a complaint for sum of
money was filed against them alleging that they are solidarily liable especially
so, that it was alleged that she guaranteed the checks of Ang and consented to
be solidarily liable when there was a verbal assurance given by her to the rice
supply agreement. No other evidence was presented to show her solidary
liability. Can Deyto be made solidarily liable? Explain.
Answer: No. The verbal assurance that Deyto would be solidarily liable and the alleged
guarantee made by Deyto to Angs checks are not sufficient to hold her solidarily liable.
Well-entrenched is the rule that solidary obligation cannot be lightly inferred. There is a
solidary liability only when the obligation expressly so states, when the law so provides
or when the nature of the obligation so requires.
In this case, there is an attempt to recover from Deyto simply because Ang has
already absconded, but this attempt must fail since the contract was only between Ang
and Manlar.
As a general rule, a contract affects only the parties to it, and cannot be enforced
by or against a person who is not a party thereto. It is a basic principle in law that
contracts can bind only the parties who had entered into it; it cannot favor or prejudice a
third person. Under Article 1311 of the Civil Code, contracts take effect only between the
parties, their assigns and heirs. Thus, Manlar may sue Ang, but not Deyto, was not a party
to the rice supply contract. (Manlar Rice Mill, Inc. v. Deyto, et al., G.R. No. 191189,
January 29, 2014).
Consignation; tender of payment when not necessary.
Q Petitioners debt is outstanding; that the Rural Banks receiver, PDIC,
informed petitioners that it has no record of their loan even as it took over the
affairs of the Rural Bank, which on record is the petitioners creditor a per the
July 4, 1994 Loan and Mortgage Agreement; that one way or another, AFPMBAI
came into possession of the loan documents as well as TCT No. 37017; that
petitioners are ready to pay the loan in full; however, under the circumstances,
they do not know which of the two the Rural Bank or AFPMBAI should
receive full payment of the purchase price, or to whom tender of payment must
validly be made. Is tender of payment necessary? Explain.
Answer: No. Under Article 1256 of the Civil Code, the debtor shall be released from
responsibility by the consignation of the thing or sum due, without need of prior tender of
payment, when the creditor is absent or unknown, or when he is incapacitated to receive
the payment at the time it is due, or when two or more persons claim the same right to
collect, or when the title to the obligation has been lost. Applying Article 1256 to the
petitioners case it was found out that a case for consignation has been made out, as
there are two entities which petitioners must deal with in order to fully secure their title
to the property: 1) the Rural Bank (through PDIC), which is the apparent creditor under
the July4, 1994 Loan and Mortgage Agreement; and 2) AFPMBAI, which is currently in
possession of the loan documents and the certificate of title, and the one making
demands upon petitioners to pay. Clearly, the allegations in the Complaint present a
situation where the creditor is unknown, or that two or more entities appear to possess
the same right to collect from petitioners.
The lack of prior tender of payment by the petitioners is not fatal to their
consignation case. They filed the case for the exact reason that they were at a loss as to
which between the two the Rural Bank or AFPMBAI was entitled to such a tender of
payment. Besides, Article 1256 authorizes consignation alone, without need of prior
tender of payment, where the ground for consignation is that the creditor is unknown, or
does not appear at the place of payment; or is incapacitated to receive the payment at
the time it is due; or when, without just cause, he refuses to give a receipt; or when two
or more persons claim the same right to collect; or when the title of the obligation has
been lost. (Sps. Cacayorin v. Armed Forces & Police Mutual Benefit Assn., Inc., G.R. No.
171298, April 15, 2013, Del Castillo, J).
Casino chips can be used as payment of obligations.
Q Respondent went to Legenda with his brothers and handed to his brothers
US$6,000.00 worth of casino chips for them to use at the casino. Legenda
however accosted his brothers and confiscated the chips and failed to return
them, hence, a complaint was filed praying for the return of the chips and for
damages. Legenda interposed the defense that the casino chips were merely
intended to be encashed and that they were stolen, hence, refused to return,
but did not even file a criminal case to prosecute them. The lower court ordered
the return of the casino chips, on the ground that there was no evidence that
the chips were stolen. Is the ruling of the lower court correct? Explain.
Answer: Since there was no proof that the chips were stolen, Legenda acted arbitrarily in
confiscating the same.
In fact, they can be used and transacted outside of the casino even as payment of
an obligation. Though casino chips do not constitute legal tender, there is no law which
prohibits their use or trade outside of the casino which issues them. In any case, it is not
unusual nor is it unlikely that respondent could be paid by his Chinese client at the
formers car shop with the casino chips in question; said transaction, if not common, is
nonetheless not unlawful. These chips are paid for anyway; petitioner would not have
parted with the same if their corresponding representative equivalent in legal tender,
goodwill, or otherwise was not received by it in return or exchange. Given this premise
that casino chips are considered to have been exchanged with their corresponding
representative value it is with more reason that petitioner should prove convincingly
and persuasively that the chips it confiscated were indeed stolen from it; if so, any Tom,
Dick or Harry in possession of genuine casino chips is presumed to have paid for their
representative value in exchange therefor. If petitioner cannot prove its loss, then Article
559 cannot apply; the presumption that the chips were exchanged for value remains.
(Subic Bay Resorts & Casinos, Inc. v. Fernandez, G.R. No. 193426, September 29, 2014,
Del Castillo, J).
Binding effect of contracts.
Q An action for damages arising from the suspension of a credit card holders privileges
due to her supposed failure to reapply for reactivation was filed. She claimed that she
was never informed of such condition. BPI contended that it was not grossly negligent in
refusing to lift the suspension for her failure to comply with the requisite submission of a
new application form for the renewal of the privileges. If it was negligent, it contended, it
was not gross as to amount to malice or bad faith. Is BPI correct? Explain.
Answer: No. 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. (Pantaleon v. American Express International, Inc., G.R. No.
174269, August 25, 2010, i629 SCRA 276, 293). Such terms and conditions constitute the
law between the parties.
Considering that the terms and conditions nowhere stated that the card holder
must submit the new application form in order to reactivate her credit card, to allow BPI
Express Credit to impose the duty to submit the new application in order to enable
Armovit to reactivate the credit card would contravene the Parol Evidence Rule. Indeed,
there was no agreement between the parties to add the submission of the new
application form as the means to reactivate the credit card. The only condition for the
reinstatement of her credit card was the payment of her outstanding obligation. Had it
intended otherwise, BPI Express Credit would have surely informed her of the additional
requirement in its letters of March 19, 1992 and March 31, 1992. That it did not do so
confirmed that they did not agree on having her submit the new application form as the
condition to reactivate her credit card. (BPI Express Card Corp. v. Ma. Antonia Armorvit,
G.R. No. 163654, October 8, 2014, Bersamin, J).
Possession of evidence of credit; there is a presumption of payment.
Q State the effect if the creditor is in possession of the evidence of credit.
Explain.
Answer: Jurisprudence abounds that, in civil cases, one who pleads payment has the
burden of proving it. (Agner v. BPI Family Savings Bank, Inc., G.R. No. 182963, June 3,
2013, 697 SCRA 89). Even where the plaintiff must allege non-payment, the general rule
is that the burden rests on the defendant to prove payment, rather than on the plaintiff
to prove non-payment. (Halley v. Printwell, Inc., G.R. No. 157549, May 30, 2011, 649
SCRA 116). When the creditor is in possession of the document of credit, he need not
prove non-payment for it is presumed. (Tai Tong Chuache & Co. v. Insurance Commission,
G.R. No. L-55397, February 29, 1988, 158 SCRA 366). The creditors possession of the
evidence of debt is proof that the debt has not been discharged by payment. (PCIBank v.
Franco, G.R. No. 180069, March 5, 2014 citing Bank of the Philippine Islands v. Sps.
Royeca, 581 Phil. 188 [2008]).
Legal compensation cannot apply if one of the obligations is not fixed or
merely contingent.
Q Foodmasters Inc. had outstanding loan obligations to Bancom and DBP. FI &
DBP entered into a dacion en pago whereby FI ceded its properties to DBP in
payment of its loans where DBP assumed the obligations of FI to Bancom. DBP
leased the properties to FI which was obliged to pay rentals to be shared by
DBP and Bancom. DBP and Bancom entered into a separate agreement where
DBP undertook to remit 30% of any rentals due from FI to Bancom which would
serve as payment of the assumed obligations. FI assigned its leasehold rights
to Foodmasters Worlwide Inc. (FW) and Bancom assigned its receivables to
Union Bank. Claiming that the rentals were not remitted by DBP, Union Bank
filed an action for sum of money against DBP which contended that the
obligations it assumed were contingent only out of the rental payment made
by FI and since FI had not paid, DBPs obligation to Union Bank had not arisen.
Union Bank contended that legal compensation applies between it and DBP for
sums of money due to DBP. Is the contention of Union Bank correct? Why?
Answer: No, because the obligations are not liquidated or fixed as the payment by DBO is
dependent upon a contingency, that is the payment by Foodmasters of the rentals to it.
Compensation is a mode of extinguishing obligations whereby two persons in their
capacity as principals are mutual debtors and creditors of each other with respect to
equally liquidated and demandable obligations to which no retention or controversy has
been timely commenced and communicated by third parties. (See Mavest (U.S.A.), Inc. v.
Sampaguita Garment Corporation, G.R. No. 127454, September 21, 2005, 470 SCRA
440). The requisites of compensation are provided under Article 1279 of the Civil Code
which reads as follows:
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and
that he be at the same time a principal creditor of the
other;
(2) That both debts consist in a sum of money, or if the things
due are consumable, they be of the same kind, and also
of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy,
commenced
by
third
persons
and
communicated in due time to the debtor.
In this case, legal compensation cannot take place in order to effectively offset (a)
its own obligation to return the funds it previously received from DBP with DBPs assumed
obligations under the Assumption Agreement, the obligations are not yet due and they
are not liquidated. Since DBPs assumed obligations to Union Bank for remittance of the
lease payments are contingent on the prior payment thereof by (FW) to DBP, it cannot be
said that both debts are due (requisite 3 of Article 1279 of the Civil Code). Any deficiency
that DBP had to make up for the full satisfaction of the assumed obligations cannot be
determined until after the satisfaction of Foodmasters obligation to DBP. In this regard, it
cannot be concluded that the same debt had already been liquidated, and thereby
became demandable (requisite 4 of Article 1279 of the Civil Code). (Union Bank v. DBP,
G.R. No. 191555, January 20, 2014).
Fraud to annul a contract must be the essential factor in giving consent.
Q There was an advertisement that a condominium shall be constructed in
Makati City and it was offered for pre-selling. An interested buyer signed a
Contract to Sell despite the information contained therein that it was located in
Pasay City. Later on she contended that the seller committed fraud in its
advertisement and sought to annul the contract. The HLURB and the Office of
the President ruled that the buyer failed to show that the essential and/or
moving factor that led to her giving consent to the sale was the advantageous
and unique location in Makati; hence, dismissed the action. Is the dismissal
correct? Why?
Answer: Yes. The contract cannot be annulled on the ground of fraud because despite the
information that it was located in Pasay City, she proceeded to sign the contract. This only
means that she still agreed to buy the subject property regardless of the fact that it is
located in a place different from what she was originally informed. If she had a problem
with the propertys location, she should not have signed the Contract to Sell and, instead,
immediately raised this issue with petitioner. But she did not.
Even assuming that petitioners misrepresentation consists of fraud which could be
a ground for annulling their Contract to Sell respondents act of affixing her signature to
the said Contract, after having acquired knowledge of the propertys actual location, can
be construed as an implied ratification thereof. (ECE Realty & Dev. Corp. v. Mandap, G.R.
No. 196182, September 1, 2014).
Q When does fraud provide a basis to annul a contract? Explain.
Answer: Jurisprudence has shown that in order to constitute fraud that provides basis to
annul contracts, it must fulfill two conditions.
First, the fraud must be dolo causante or it must be fraud in obtaining the consent
of the party. (Tankeh v. Development Bank of the Philippines, G.R. No. 171428, November
11, 2013, 709 SCRA 19, 50). This is referred to as casual fraud. The deceit must be
serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily
prudent person into error; that which cannot deceive a prudent person cannot be a
ground for nullity. (Viloria v. Continental Airlines, Inc., G.R. No. 188288, January 16, 2012,
663 SCRA 57, 81, citing Sierra v. Court of Appeals, G.R. No. 90270, July 24, 1992, 211
SCRA 785, 793). The circumstances of each case should be considered, taking into
account the personal conditions of the victim.
Second, the fraud must be proven by clear and convincing evidence and not
merely by a preponderance thereof. (ECE Realty & Dev. Corp. v. Mandap, G.R. No. 196182,
September 1, 2014, Peralta, J).
Sale of property without authority is unenforceable.
Q Iglesia Filipina Independente was the owner of a parcel of land in
Tuguegarao, Cagayan. Supreme Bishop Ga sold the property without the
consent of laymans committee, the parish priest, the Diocesan Bishop with the
sanction of the Supreme Council and finally the approval of the Supreme
Bishop as administrator of all the temporalities of the Church. A complaint for
annulment was filed which was granted by the RTC. On appeal, the CA reversed
the decision ruling that the petitioner, being a corporation sole, validly
transferred ownership over the land in question through its Supreme Bishop,
who was at the time the administrator of all properties and the official
representative of the church. It further held that the authority of the then
Supreme Bishop Rev. Ga to enter into a contract and represent the plaintiffappellee cannot be assailed, as there are no provisions in its constitution and
canons giving the said authority to any other person or entity.
Appeal was made to the SC contending that there was no consent to the
contract of sale as Supreme Bishop Rev. Ga had no authority to give such
consent. It emphasized that Article IV(a) of their Canons provides that All real
properties of the Church located or situated in such parish can be disposed of
only with the approval and conformity of the laymens committee, the parish
priest, the Diocesan Bishop, with sanction of the Supreme Council, and finally
with the approval of the Supreme Bishop, as administrator of all the
temporalities of the Church. It is alleged that the sale of the property in
question was done without the required approval and conformity of the
entities mentioned in the Canons; hence, petitioners argued that the sale was
null and void. Rule on the contention. Explain.
Answer: No. It is only unenforceable. When the Supreme Bishop executed the contract of
sale of petitioners lot despite the opposition made by the laymens committee, he acted
beyond his powers, hence, the contract is unenforceable as it was entered into the name
of another person by one who has been given no authority or legal representation, or
who has acted beyond his power and it was not ratified.
In Mercado v. Allied Banking Corporation, 555 Phil. 411 [2007], it was ruled that
unenforceable contracts are those which cannot be enforced by a proper action in court,
unless they are ratified, because either they are entered into without or in excess of
authority or they do not comply with the statute of frauds or both of the contracting
parties do not possess the required legal capacity. (Iglesia Filipina Independiente v. Heirs
of Bernardino Taeza, G.R. No. 179597, February 3, 2014, Peralta, J).
Note: Closely analogous cases of unenforceable contracts are those where a person
signs a deed of extrajudicial partition in behalf of co-heirs without the latters authority;
(Heirs of Policarpio M. Ureta, Sr. v. Heirs of Liberato M. Ureta, G.R. Nos. 165748 & 165930,
September 14, 2011, 657 SCRA 555) where a mother as judicial guardian of her minor
children, executed a deed of extrajudicial partition wherein she favored one child by
giving him more than his share of the estate to the prejudice of her other children; (Vda.
de Esconde v. Court of Appeals, 323 Phil 81 [1996]) and where a person, holding a
special power of attorney, sells a property of his principal that is not included in said
special power of attorney. (Mercado v. Allied Banking Corp., 555 Phil. 411 [2007]).
UNJUST ENRICHMENT
No unjust enrichment; liability to return amount paid in advance; exception to
in pari delicto.
Q Petitioner had a contract with the government for the dregging of
Masarawag and San Francisco Rivers in Guinobatan, Albay. He, however
entered into a subcontract with the respondent where the amount of P2M was
advanced. It did not however push through hence, a demand for the return of
the amount paid was made but to no avail. A complaint for sum of money was
filed as the money was retained without any justification. Under PD 1594, a
contractor shall not subcontract a part or interest in a government

infrastructure project without the approval of the relevant department
secretary. A subcontract is void if there is no approval of the secretary, hence,
the contention was that, the money paid cannot be recovered due to the
principle of in pari delicto. Is the contention correct? Explain.
Answer: No one should unjustly enrich himself at the expense of another. Under Article
22 of the Civil Code of the Philippines, every person who through an act of performance
by another, or any other means, acquires or comes into possession of something at the
expense of the latter without just or legal ground, shall return the same to him. There is
unjust enrichment when a person unjustly retains a benefit to the loss of another, or
when a person retains money or property of another against the fundamental principles
of justice, equity and good conscience. (Carlos Loria v. Munoz, Jr., G.R. No. 1872400,
October 15, 2014, Leonen, J ; Locsin II v. Mekeni Food Corporation, G.R. No. 192105,
December 9, 2013; Elegir v. Philippine Airlines, Inc., G.R. No. 181995, July 16, 2012, 676
SCRA 463, 484).
The principle of unjust enrichment has two conditions. First, a person must have
been benefited without a real or valid basis or justification. Second, the benefit was
derived at another persons expense or damage. (Locsin II v. Mekeni Foods Corporation,
G.R. No. 192105, December 9, 2013; Elegir v. Philippine Airlines, Inc., G.R. No. 181995,
July 16, 2012, 676 SCRA 463, 484).
Q A subcontract therefore, is void only if not approved by the department
secretary. Can there be recovery of what has been paid? Explain.
Answer: Yes. Even assuming that there was a subcontracting arrangement there can be
recovery under a void subcontract as an exception to the in pari delicto doctrine.
(Gonzalo v. Tarnate, Jr., G.R. No. 160600, January 15, 2014).
Generally, parties to an illegal contract may not recover what they gave under the
contract. (Civil Code, Art. 1412(1)). Under the doctrine of in pari delicto, no action arises,
in equity or at law, from an illegal contract. No suit can be maintained for its specific
performance, or to recover the proper agreed to be sold or delivered, or the money
agreed to be paid, or damages for its violation. (Gonzalo v. Tarnate, Jr., G.R. No. 160600,
January 15, 2014).
The application of the in pari delicto is not always rigid. An exception to the
doctrine is when its application contravenes well-established public policy. (Pajuyo v.
Court of Appeals, G.R. No. 146364, June 3, 2004, 430 SCRA 492, 515). In Gonzalo, the
Court ruled that the prevention of unjust enrichment is a recognized public policy of the
State. It is, therefore, an exception to the application of the in pari delicto doctrine. This
court explained:
. . . the application of the doctrine of in pari delicto is not always rigid.
An accepted exception arises when its application contravenes wellestablished public policy. In this jurisdiction, public policy has been defined as
that principle of the law which holds that no subject or citizen can lawfully
do that which has a tendency to be injurious to the public or against the
public good.
Unjust enrichment exists, according to Hulst v. PR Builders, Inc., when
a person unjustly retains a benefit at the loss of another, or when a person
retains money or property of another against the fundamental principles of
justice, equity and good conscience. The prevention of unjust enrichment is
a recognized public policy of the State, for Article 22 of the Civil Code
explicitly provides that every person who through an act of performance by
another, or any other means, acquires or comes into possession of something
at the expense of the latter without just or legal ground, shall return the same
to him. It is well to note that Article 22 is part of the chapter of the Civil
Code on Human Relations, the provisions of which were formulated as basic
principles to be observed for the rightful relationship between human beings
and for the stability of the social order; designed to indicate certain norms
that spring from the fountain of good conscience; guides for human conduct
that should run as golden threads through society to the end that law may
approach its supreme ideal which is the sway and dominance of justice.
Given that Tarnate, Jr. performed his obligations under the subcontract and the
deed of assignment, this court ruled that he was entitled to the agreed fee. According to
this court, Gonzalo would be unjustly enriched at the expense of Tarnate if the latter was
to be barred from recovering because of the rigid application of the doctrine of in pari
delicto. (Carlos Loria v. Munoz, Jr., G.R. No. 1872400, October 15, 2014, Leonen, J).
TRUST
Trust is created if property is registered under anothers name due to fraud;
Action for reconveyance is the proper remedy.
Q An action for specific performance to recover a real property covered by a
TCT was brought alleging fraud in the registration of the same. Is the
contention correct? Why?
Answer: No. The case for specific performance with damages instituted was effectively an
attack on the validity of respondents Torrens title over the subject lot. It is evident that,
ultimately, the objective of such claim is to nullify the title to the property in question,
which, in turn, challenger the judgment pursuant to which the title was decreed. This is a
collateral attack that is not permitted under the principle of indefeasibility of Torrens title.
Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration
Decree.
A collateral attack transpires when, in another action to obtain a different relief and
as an incident to the present action, an attack is made against the judgment granting the
title while a direct attack (against a judgment granting the title) is an action whose main
objective is to annul, set aside, or enjoin the enforcement of such judgment if not yet
implemented, or to seek recovery if the property titled under the judgment had been
disposed of. (Urieta Vda. de Aguilar v. Alfaro, G.R. No. 164402, July 5, 2010, 623 SCRA
130, 143-144). The issue on the validity of title, i.e., whether or not it was fraudulently
issued, can only be raised in an action expressly instituted for that purpose.
The appropriate legal remedy that should be availed of is an action for
reconveyance. Proof of actual fraud is not required as it may be filed even when no fraud
intervened such as when there is mistake in including the land for registration. (Campos
v. Ortega, et al., G.R. No. 171286, June 2, 2014, Peralta, J).
Q What is the effect if a property registered under the name of another due to
mistake or fraud? Explain.
Answer: Under the principle of constructive trust, registration of property by one person in
his name, whether by mistake or fraud, the real owner being another person, impresses
upon the title so acquired the character of a constructive trust for the real owner, which
would justify an action for reconveyance. In the action for reconveyance, the decree of
registration is respective as incontrovertible but what is sought instead is the transfer of
the property wrongfully or erroneously registered in anothers name to its rightful owner
or to one with a better right. If the registration of the land is fraudulent, the person in
whose name the land is registered holds it as a mere trustee, and the real owner is
entitled to file an action for reconveyance of the property. (Pasino v. Dr. Monterroyo, 582
Phil. 703, 715-716 [2008]; Campos v. Ortega, et al., G.R. No. 171286, June 2, 2014,
Peralta, J).
Q When does an action for reconveyance based on resulting trust prescribe?
Explain.
Answer: An action for reconveyance resulting from fraud prescribes four years from the
discovery of the fraud, which is deemed to have taken place upon the issuance of the
certificate of title over the property, and if based on an implied or a constructive trust it
prescribes ten (10) years from the alleged fraudulent registration or date of issuance of
the certificate of title over the property. (Philippine Economic Zone Authority (PEZA) v.
Fernandez, 411 Phil. 107, 119 [2001]). However, an action for reconveyance based on
implied or constructive trust is imprescriptible if the plaintiff or the person enforcing the
trust is in possession of the property. In effect, the action for reconveyance is an action to
quiet title to the property, which does not prescribe. (Yared v. Tiongco, G.R. No. 161360,
October 19, 2011, 659 SCRA 545; Campos v. Ortega, et al., G.R. No. 171286, June 2,
2014, Peralta, J).
Trust; action for reconveyance due to fraud; prescription.
Q A case for nullification of a supposed sale of a property alleging fraud. It
sought for reconveyance of the same. It appears that the titles sought to be
nullified were issued in 1976 and 1975, yet the complaint was filed in 2006. Has
the action already prescribed? Explain.
Answer: Yes. 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. (Spouses Aguirre v. Heirs of Lucas Villanueva, 551 Phil. 932, 935
[2007]).
Q State the effect if a poperty acquired by mistake? Explain.
Answer: A property was acquired through sale from a person without authority to sell, but
the same would not make him the owner property, hence, he is holding the property
merely in trust in favor of the owner. If a property is acquired through mistake or fraud,
the person obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes (Art. 1456, NCC); Vda de Esconde v.
CA, 323 Phil. 81 [1996], hence, it is only just that the subject property be returned to the
rightful owner. (Iglesia Filipina Independiente v. Sps. Taeza, G.R. No. 179597, February 3,
2014, Peralta, J).
Acquisition of ownership in constructive trust.
Q May a person acquire a property held in trust for and in behalf of another?
Explain.
Answer: It depends. Unlike in express trusts and resulting implied trusts where a trustee
cannot acquire by prescription any property entrusted to him unless he repudiates the
trust, in constructive implied trusts, the trustee may acquire the property through
prescription even if he does not repudiate the relationship. It is then incumbent upon the
beneficiary to bring an action for reconveyance before prescription bars the same.
Just as an implied or constructive trust is an offspring of the law (Art. 1456, Civil
Code), so is the corresponding obligation to reconvey the property and the title thereto in
favor of the true owner. Hence, an action based on implied trust must be brought within
ten years from the time the right of action accrues because it is an action based upon an
obligation created by law. (Art. 1144, NCC).
An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. Undoubtedly, it is now well-settled that
an action for reconveyance based on an implied or constructive trust prescribes in ten
years from the issuance of the Torrens title over the property.
The ten-year prescriptive period begins to run from the date of registration of the
deed or the date of the issuance of the certificate of title over the property. (Iglesia
Filipina Independiente v. Sps. Taeza, G.R. No. 179597, February 3, 2014, Peralta, J).
Q If a the property was acquired through fraud, what is the nature of the
title? Explain.
Answer: The title is void and the registered owners are holding the property in trust for
the Heirs of Severo. An implied trust was created in favor of the heirs of Severo because
if a property is acquired through fraud the person obtaining it is, by force of law,
considered a trustee of an implied trust for the benefit of the person from whom the
property comes. The fact that the decision approving/granting the petition for the
reconstitution has obtained its finality, is of no moment. 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 x x x.
(Heirs of Valentin Basbas, et al. v. Ricardo Basbas, G.R. No. 188773, September 10,
2014).
Note: When a person obtains a certificate of title to a land belonging to another and he
has full knowledge of the rights of a true owner, he is considered guilty of fraud, and he
may be compelled to transfer the land to the defrauded owner so long as the property
has not passed to the hands of an innocent purchaser for value x x x. Also it has been
held that an original owner of registered land may seek annulment of the transfer
thereof on the ground of fraud and the proper remedy is reconveyance x x x.
Where seller promises to execute a deed of absolute sale after payment, the
same is a contract to sell.
Q In a case, the contract states that as soon as the total amount of the
property has been paid and the Certificate of Title has been issued, an absolute
deed of sale shall be executed accordingly. What is the nature of the contract?
Explain.
Answer: It is actually in the nature of a contract to sell and not one of sale. (See Tan v.
Benolirao, G.R. No. 153820, October 16, 2009, 604 SCRA 36, 48-49; Ver Reyes v.
Salvador, Sr., G.R. No. 139047 and 139365, September 11, 2008, 564 SCRA 456, 476481). It has been consistently ruled that where the seller promises to execute a deed of
absolute sale upon the completion by the buyer of the payment of the purchase price, the
contract is only a contract to sell even if their agreement is denominated as a Deed of
Conditional Sale. 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 exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, such as, the full payment of the purchase price.
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. (Ursal v. CA, G.R. No. 142411, October 14, 2005,
473 SCRA 52, 65; Coronel v. CA, 331 Phil. 294, 310 [1996]; Sps. Roque v. Aguado, et al.,
G.R. No. 193787, April 7, 2014, Perlas-Bernabe, J).
Q When does the obligation to sell arise in a contract to sell? Explain.
Answer: In contracts to sell the obligation of the seller to sell becomes demandable only
upon the happening of the suspensive condition, that is, the full payment of the purchase
price by the buyer. It is only upon the existence of the contract of sale that the seller
becomes obligated to transfer the ownership of the thing sold to the buyer. Prior to the
existence of the contract of sale, the seller is not obligated to transfer the ownership to
the buyer, even if there is a contract to sell between them. (Sps. Roque v. Aguado, et al.,
G.R. No. 193787, April 7, 2014, Perlas-Bernabe, J).
Buyer in good faith and for value.
Q Florentino and Carmelita Leong were married until they obtained a divorce
decree in the USA. A provision in their marital settlement provided that
Florentino shall convey and quitclaim all his rights, title and interest over a
property in Manila in favor of Carmelita which he did. In 1996, Carmelita sold
the land to Edna Sy where in lieu of the signature of Florentino, she presented
to Edna & her father a waiver of interest notarized in Illinois executed by
Florentino. Edna was aware that relatives of the seller were staying in the
makeshift houses on the land but Carmelita assured her that her nephews and
nieces would move out on demand. Later on, Edna filed a complaint to recover
the said land from Carmelitas relatives, but they contended that Ednas title is
void for lack of conformity of Florentino. In fact, Florentino filed a complaint to
declare the contract of sale and title void for lack of consent on his part.
Judgment was granted in favor of Edna which was affirmed by the CA on appeal
where they contended that the title of Edna is void being a buyer in bad faith
since the relative of Florentino and Carmelita were in actual possession, hence,
Edna should have made inquiries on their right to the property. They further
contended that the waiver is in the form of a donation which is void under Art.
87, Family Code. Is Edna a buyer in good faith and for value? Explain.
Answer: Yes. Good faith is presumed, and petitioners did not substantiate their bold
allegation of fraud. Edna did not rely on the clean title alone precisely because of the
possession by third parties, thus, she also relied on Florentinos waiver of interest. Edna
even verified the authenticity of the title at the Manila Register of Deeds with her father
and Carmelita. These further inquiries prove her good faith.
The Torrens system was adopted to obviate possible conflicts of title by giving the
public the right to rely upon the face of the Torrens certificate and to dispense, as a rule,
with the necessity of inquiring further. (Casimiro Development Corporation v.

Mateo, G.R. No. 175485, July 27, 2011, 654 SCRA 676, 686).
One need not inquire beyond the four corners of the certificate of title when
dealing with registered property. (Casimiro Development Corporation v. Mateo, G.R. No.
175485, July 27, 2011, 654 SCRA 676, 689). Section 44 of Presidential Decree No. 1529
known as the Property Registration Decree recognizes innocent purchasers in good faith
for value and their right to rely on a clean title. (Leong, et al. v. Sy, G.R. No. 194077,
December 3, 2014, Leonen, J).
Q Who is an innocent purchaser for value and state the foundation of the
same? Explain.
Answer: 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. (Sps. Villamil v. Villarosa, 602 Phil. 932, 941 (2009)). One
claiming to be an innocent purchaser for value has the burden of proving such status.
(Potenciano v. Reynoso, 449 Phil. 396, 410 (2003)).
The protection of innocent purchasers in good faith for value grounds on the social
interest embedded in the legal concept granting indefeasibility of titles. Between the
third party and the owner, the latter would be more familiar with the history and status of
the titled property. Consequently, an owner would incur less costs to discover alleged
invalidities relating to the property compared to a third party. Such costs are, thus,
better borne by the owner to mitigate costs for the economy, lessen delays in
transactions, and achieve a less optimal welfare level for the entire society. (Leong, et al.
v. Sy, G.R. No. 194077, December 3, 2014, Leonen, J).
Q The subject property was registered land under the Torrens System
covered by CCT No. 15802 with Bayfront as the registered owner. At the time
that the Notice of Levy was annotated on January 18, 1995, the title had no
previous encumbrances and liens. Evidently, it was a clean title. The Certificate
of Sale, pursuant to an auction sale, was also annotated on April 7, 1995, with
Bayfront still as the registered owner.
It was only on March 12, 1996, almost a year later, that Keyser was able
to register its Deed of Absolute Sale with Bayfront. Prior to such date, Spouses
Suntay appropriately relied on the Torrens title of Bayfront to enforce the
latters judgment debt. Who has a better right? Explain.
Answer: The one who annotated the notice of levy. Because "the act of registration is the
operative act to convey or affect the land insofar as third persons are concerned," it
follows that where there is nothing in the certificate of title to indicate any cloud or vice
in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore farther than what the Torrens title upon its face indicates in quest for
any hidden defect or inchoate right that may subsequently defeat his right thereto. If the
rule were otherwise, the efficacy and conclusiveness of the certificate of title which the
Torrens system seeks to insure would entirely be futile and nugatory. The public shall
then be denied of its foremost motivation for respecting and observing the Torrens
system of registration. (Guaranteed Homes, Inc. v. Heirs of Valdez, 597 Phil. 437, 446-447
[2009]; Suntay v. Keyser Mercantile, Inc., G.R. No. 208462, December 10, 2014).
Effect of prior registration.
When the notice of levy and certificate of sale were annotated on the title, the
subject property was unoccupied and no circumstance existed that might suggest to
Spouses Suntay that it was owned by another individual.
The doctrine is well-settled that a levy on execution duly registered takes
preference over a prior unregistered sale. Even if the prior sale was subsequently
registered before the sale in execution but after the levy was duly made, the validity of
the execution sale should be maintained because it retroacts to the date of the levy.
Otherwise, the preference created by the levy would be meaningless and illusory.
In the case of Uy v. Spouses Medina, G.R. No. 172541, August 8, 2010, 627 SCRA
245, 252-253, citing Valdevieso v. Damalerio, 492 Phil. 51, 57-58 (2005), which dealt with
essentially the same issues, the Court wrote:
Considering that the sale was not registered earlier, the right of
petitioner over the land became subordinate and subject to the preference
created over the earlier annotated levy in favor of Swift. The levy of
execution registered and annotated on September 1, 1998 takes

precedence over the sale of the land to petitioner on February 16, 1997,
despite the subsequent registration on September 14, 1998 of the prior
sale. Such preference in favor of the levy on execution retroacts to the date
of levy for to hold otherwise will render the preference nugatory and
meaningless.
xxx
The settled rule is that levy on attachment, duly registered,
takes preference over a prior unregistered sale. This result is a
necessary consequence of the fact that the property involved was 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.
The preference created by the levy on attachment is not
diminished even by the subsequent registration of the prior
sale. This is so because an attachment is a proceeding in rem. It is against
the particular property, enforceable against the whole world. The attaching
creditor acquires a specific lien on the attached property which nothing can
subsequently destroy except the very dissolution of the attachment or levy
itself. Such a proceeding, in effect, means that the property attached is an
indebted thing and a virtual condemnation of it to pay the owners debt. The
lien continues until the debt is paid, or sale is had under execution issued on
the judgment, or until the judgment is satisfied, or the attachment
discharged or vacated in some manner provided by law.
Buyer not in good faith for failure to investigate.
Q - The buyer of a parcel of land covered by a TCT through agent knew that the
subject property was in the possession of persons other than the seller.
Instead of investigating the rights and interests of the persons occupying it, it
chose to just believe the seller that he owned it. Is the buyer, a buyer in good
faith? Explain.
Answer: No, because he knew of a defect or flaw in his title. Having first registered the
parcels of land will not help its cause. Ownership of an immovable property which is the
subject of a double sale shall be transferred: (1) to the person acquiring it who in good
faith first recorded it in the Registry of Property; (2) in default thereof, to the person who
in good faith was first in possession; and (3) in default thereof, to the person who
presents the oldest title, provided there is good faith. The requirement of the law then is
two-fold: acquisition in good faith and registration in good faith. Good faith must concur
with the registration. If it would be shown that a buyer was in bad faith, the alleged
registration they have made amounted to no registration at all.
The principle of primus tempore, potior jure (first in time, stronger in right) gains
greater significance in case of a double sale of immovable property. When the thing sold
twice is an immovable, the one who acquires it and first records it in the Registry of
Property, both made in good faith, shall be deemed the owner. Verily, the act of
registration must be coupled with good faith that is, the registrant must have no
knowledge of the defect or lack of title of his vendor or must not have been aware of
facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor). (San Lorenzo
Development Corporation v. Court of Appeals, 490 Phil. 7, 23 [2005]).
When a piece of land is in the actual possession of persons other than the seller,
the buyer must be wary and should investigate the rights of those in possession. Without
making such inquiry, one cannot claim that he is a buyer in good faith. When a man
proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to
look and see who is there upon it and what his rights are. A want of caution and
diligence, which an honest man of ordinary prudence is accustomed to exercise in
making purchases, is in contemplation of law, a want of good faith. The buyer who has
failed to know or discover that the land sold to him is in adverse possession of another is
a buyer in bad faith. (Spouses Sarmiento v. Court of Appeals, 507 Phil. 101, 127-129
[20005]; Rosaroso, et al. v. Soria, et al., G.R. No. 194846, June 13, 2013, Mendoza, J).
Q State the effect of registration after knowledge of a previous sale. Explain.
Answer: If a vendee in a double sale registers the sale after he has acquired knowledge
of a previous sale, the registration constitutes a registration in bad faith and does not
confer upon him any right. If the registration is done in bad faith, it is as if there is no
registration at all, and the buyer who has first taken possession of the property in good
faith shall be preferred. (San Lorenzo Development Corporation v. Court of Appeals, supra
note 35, citingAbarquez v. Court of Appeals, G.R. No. 95843, September 2, 1992, 213
SCRA 415).
Mirror doctrine, its instructions to become buyer in good faith.
Q There was an action to recover a real property, but the parties entered into
a compromise agreement which was approved by the court. Later on, it was
discovered by plaintiff that her title was cancelled by virtue of a deed of sale,
hence, a new title was issued under the name of Bolos. The latter sold it to
Hizon. A letter of demand was sent to Hizon to return the property on the
ground that her signature in the deed of sale was forged. In the meantime,
Hizon sold it to the spouses Guevarra, hence, a title was issued under their
names. Locsin, the alleged owner filed a complaint for reconveyance,
annulment of title with damages. The Guevarras contended that they are
buyers in good faith and for value. The RTC dismissed the complaint ruling that
there was insufficient evidence that Locsins signature was forged. On appeal,
the CA ruled that the signature of Locsin was forged but held that the
Guevarras are buyers in good faith. Is the ruling correct? Explain.
Answer: No. The Guevarras are not buyers in good faith as they failed to exercise the
necessary level of caution in light of the factual milieu surrounding the sequence of
transfers of the property. An innocent purchaser for value is one who buys the property of
another without notice that some other person has a right to or interest in it, and who
pays a full and fair price at the time of the purchase or before receiving any notice of
another persons claim. (Rufloe v. Burgos, G.R. No. 143573, January 30, 2009, 577 SCRA
264, 273). As such, a defective titleor one the procurement of which is tainted with
fraud and misrepresentationmay be the source of a completely legal and valid title,
provided that the buyer is an innocent third person who, in good faith, relied on the
correctness of the certificate of title, or an innocent purchaser for value. (See Philippine
National Bank v. Heirs of Militar, et al., G.R. No. 164801, June 30, 2006, 494 SCRA 308,
315).
Complementing this is the mirror doctrine which echoes the doctrinal rule that
every person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and is in no way obliged to go beyond the certificate to
determine the condition of the property. The recognized exceptions to this rule are stated
as follows:
[A] person dealing with registered land has a right to rely on the
Torrens certificate of title and to dispense with the need of inquiring further
except when the party has actual knowledge of facts and circumstances
that would impel a reasonably cautious man to make such inquiry or when
the purchaser has knowledge of a defect or the lack of title in his vendor or
of sufficient facts to induce a reasonably prudent man to inquire into the
status of the title of the property in litigation. The presence of anything
which excites or arouses suspicion should then prompt the vendee
to look beyond the certificate and investigate the title of the
vendor appearing on the face of said certificate. One who falls
within the exception can neither be denominated an innocent
purchaser for value nor a purchaser in good faith and, hence, does
not merit the protection of the law. (Sandoval v. Court of Appeals, G.R.
No. 106657, August 1, 1996, 260 SCRA 283, 295; Locsin v. Hizon, et al.,
G.R. No. 204369, September 17, 2014, Velasco, J).
MACEDA LAW
Notarial act of rescission; refund of full payment of cash surrender value;
cancellation after 30 days from receipt of notice and payment of cash
surrender value.
Q When is there actual cancellation of a contract off sale under the Maceda
Law? Explain.
Answer: The cancellation of the contract by the seller must be in accordance with Section
3(b) of the Maceda Law, which requires the notarial act of rescission and the refund to
the buyer of the full payment of the cash surrender value of the payments made on the
property. The actual cancellation of the contract takes place after thirty (30) days from
receipt by the buyer of the notice of cancellation or the demand for rescission of the
contract by a notarial act and upon full payment of the case surrender value to the buyer.
(Sps. Noynay v. Citihomes Builders & Dev. Corp., Inc., G.R. No. 204160, September 22,
2014, Mendoza, J, reiterating Pagtalunan v. Manzano, 559 Phil. 658 [2007]).
Seller is liable in case of eviction.
Q There was a sale of a property with a warranty against eviction. At the time
of the sale there was a pending litigation. By this warranty, the bank
represented Bignay that it had title to the property, and by assuming the
obligation to defend such title, it promised to do so at least in good faith and
with sufficient prudence, if not to the best of its abilities. But it was negligent
in handling the case, resulting in the dismissal of the same. Is the bank liable
in case of eviction? Why?
Answer: Yes. Such negligence in the handling of the case is far from coincidental; it is
decidedly glaring, and amounts to bad faith. Negligence may be occasionally so gross as
to amount to malice or bad faith. Indeed, in culpa contractual or breach of contract,
gross negligence of a party to bad faith is a ground for the recovery of damages by the
injured party.
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. (Art. 1548, NCC). 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. (Bignay Ex-IM Ent. Inc. v.
Union Bank, G.R. No. 171590, Union Bank v. Bignay, EX-IM Ent. Inc., G.R. No. 171598,
February 12, 2014).
Buyer in good faith and for value; knowledge of a prior sale on installment,
buyer in bad faith.
Q In a case, the buyers had prior knowledge of the previous sales by
installment of portions of the property to several purchasers. Moreover, they
had prior knowledge of prior buyers possession over the subject property.
State the effect of such prior knowledge. Explain.
Answer: He is not in good faith. 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. (Centeno v.
Spouses Viray, 440 Phil. 881, 885 [2002]). The petitioners are not such purchaser.
It is a wellsettled rule that a purchaser or mortgagee 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 or
mortgagor. His mere refusal to believe that such defect exists, or his willful closing of his
eyes to the possibility of the existence of a defect in the vendors or mortgagors title,
will not make him an innocent purchaser or mortgagee for value, if it afterwards
develops that the title was in fact defective, and it appears that he had such notice of
the defects as would have led to its discovery had he acted with the measure of
precaution which may be required of a prudent man in a like situation. (Alfaro, et al. v.
Sps. Dumalagan, et al., G.R. No. 186622, January 22, 2014; Consolidated Rural Bank,
Inc., v. CA, 489 Phil. 320, 334 [2005]; Crisostomo v. Court of Appeals, 274 Phil. 1134,
1142-1143).
Q At the time of the purchase of the property there was a notice of lis
pendens. Is the purchaser was in good faith? Explain.
Answer: No. When a prospective buyer is faced with facts and circumstances as to arouse
his suspicion, he must take precautionary steps to qualify as a purchaser in good faith. In
Spouses Mathay v. CA, 356 Phil. 870, 892 [1998] it was said that although it is a
recognized principle that a person dealing on a registered land need not go beyond its
certificate of title, it is also a firmly settled rule that where there are circumstances which
would put a party on guard and prompt him to investigate or inspect the property being
sold to him, such as the presence of occupants/tenants thereon, it is of course, expected
from the purchaser of a valued piece of land to inquire first into the status or nature of
possession of the occupants, i.e., whether or not the occupants possess the land en
concepto de dueo, in the concept of the owner. As is the common practice in the real
estate industry, an ocular inspection of the premises involved is a safeguard a cautious
and prudent purchaser usually takes. Should he find out that the land he intends to buy is
occupied by anybody else other than the seller who, as in this case, is not in actual
possession, it would then be incumbent upon the purchaser to verify the extent of the
occupants possessory rights. The failure of a prospective buyer to take such
precautionary steps would mean negligence on his part and would thereby preclude him
from claiming or invoking the rights of a purchaser in good faith.
Lis pendens is a Latin terms which literally means, a pending suit or a pending
litigation while a notice of lis pendens is an announcement to the whole world that a real
property is in litigation, serving as a warning that anyone who acquires an interest over
the property does so at his/her own risk, or that he/she gambles on the result of the
litigation over the property. It is a warning to prospective buyers to take precautions and
investigate the pending litigation. (Homeowners Saving & Loan Bank v. Felonia, et al.,
G.R. No. 189477, February 26, 2014).
Banks duty before accepting a mortgage.
Q What should a bank do before accepting a property to secure the payment
of an obligation? Explain.
Answer: It should first make an inquiry on the status of the property. Primarily, it bears
noting that the doctrine of mortgagee in good faith is based on the rule that all persons
dealing with property covered by a Torrens Certificate of Title are not required to go
beyond what appears on the face of the title. This is in deference to the public interest in
upholding the indefeasibility of a certificate of title as evidence of lawful ownership of the
land or of any encumbrance thereon. (Erena v. Querrer-Kauffman, G.R. No. 165853, June
22, 2006, 492 SCRA 298). In the case of banks and other financial institutions, however,
greater care and due diligence are required since they are imbued with public interest,
failing which renders the mortgagees in bad faith. Thus, before approving a loan
application, it is a standard operating practice for these institutions to conduct an ocular
inspection of the property offered for mortgagee and to verify the genuineness of the
title to determine the real owners thereof. (Alano v. Planter's Development Bank, G.R. No.
171628, June 13, 2011, 651 SCRA 766, 774). The apparent purpose of an ocular
inspection is to protect the true owner of the property as well as innocent third parties
with a right, interest or claim thereof from a usurper who may have acquired a fraudulent
certificate of title thereto.
In this case, while Philbank failed to exercise greater care in conducting the ocular
inspection of the properties offered for mortgagee, its omission did not prejudice any
innocent third parties. (Phil. Banking Corporation v. Dy, et al., G.R. No. 183774,
November 14, 2012).
Right of redemption; expression of intention is insufficient; there must be
actual and simultaneous tender of payment.
Q What should a vendor a retro do if he wants to exercise the right to
repurchase? Explain.
Answer: In the exercise of the right to repurchase, it is not enough that the vendor a retro
signifies his intention to repurchase or to redeem. In China Banking Corp. v. Martir, G.R.
No. 184252, September 11, 2009, 599 SCRA 672, it was said that the general rule in
redemption is that it is not sufficient that a person offering to redeem manifests his
desire to do so. The statement of intention must be accompanied by an actual and
simultaneous tender of payment. This constitutes the exercise of the right to repurchase.
Otherwise, the offer to redeem is ineffectual. Bona fide redemption necessarily implies a
reasonable and valid tender of the entire repurchase price, otherwise the rule on the
redemption period fixed by law can easily be circumvented. (Sps. Hojas v. Phil. Amanah
Bank, et al., G.R. No. 193453, June 5, 2013; BPI Family Savings Bank v. Spouses Veloso,
479 Phil. 627, 632 [2004]).
Q What should the vendor a retro pay to effect redemption? Explain.
Answer: In order to effect a redemption, the judgment debtor must pay the purchaser the
redemption price composed of the following: (1) the price which the purchaser paid for
the property; (2) interest o 1% per month on the purchase price; (3) the amount of any
assessments or taxes which the purchaser may have paid on the property after the
purchase; and (4) interest of 1% per month on such assessments and taxes.
Furthermore, the vendor cannot avail himself of the right to repurchase without
returning to the vendee the price of the sale. (Article 1616, NCC; Sps. Hojas v. Phil.
Amanah Bank, et al., G.R. No. 193453, June 5, 2013, Mendoza, J).
Remedy of unpaid seller is rescission if the consideration is not paid.
Q There was a contract of sale over a real property, but the sellers contended
that there was lack of consideration, hence, not valid. No evidence, however
was presented to support such claim of no consideration. Is the contention
correct? Why?
Answer: No. Bare allegations, unsubstantiated by evidence, are not equivalent to proof
under the Rules of Court. Under Section , Rule 131 of the Rules of Court, the following are
disputable presumptions: (1) private transactions have been fair and regular; (2) the
ordinary course of business has been followed; and (3) there was sufficient consideration
for a contract. (Surtida v. Rural Bank of Malinao (Albay), Inc., G.R. No. 170563, December
20, 2006, 511 SCRA 507, 519). These presumptions operate against an adversary who
has not introduced proof to rebut them. They create the necessity of presenting evidence
to rebut the prima facie case they created, and which, if no proof to the contrary is
presented and offered, will prevail. The burden of proof remains where it is but, by the
presumption, the one who has that burden is relieved for the time being from introducing
evidence in support of the averment, because the presumption stands in the place of
evidence unless rebutted. (Rosaroso, et al. v. Soria, et al., G.R. No.194846, June 13,
2013).
Q State the effect if consideration in a contract of sale is not delivered.
Explain.
Answer: If there was no delivery of the consideration, the seller would have no right to
sell again what he no longer owned. His remedy would be to rescind the sale for failure
on the part of the buyer to perform his part of their obligation pursuant to Article 1191 of
the New Civil Code.
The failure of the buyer to make good the price does not, in law, cause the
ownership to revest to the seller unless the bilateral contract of sale is first rescinded or
resolved pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right
to demand the fulfillment of the obligation or to rescind the contract. ((Clara M. Balatbat
v. Court of Appeals and Spouses Jose Repuyan and Aurora Repuyan, G.R. No. 109410,
August 28, 1996, 329 Phil. 870; Rosaroso, et al. v. Soria, et al. G.R. No. 194846, June 13,
2013, Mendoza, J).
When contract of sale presumed to be an equitable mortgage.
Q It appears that there was a sale of a real property consisting of four (4)
hectares for only P12,000.00, but the buyer never took possession of the same
as the sellers remained in possession. The owner-sellers contended that their
signatures in the Deed of Sale were forged, hence, they filed an action to
nullify the contract. While the trial court upheld its validity, it however ruled
that it is a equitable mortgage, hence, ordered the reformation of the
instrument. The CA reversed on appeal ruling that the plaintiffs failed to prove
that the contract was sham and that there was no evidence that the
consideration was inadequate. Is the ruling of the RTC correct? Why?
Answer: There is no single conclusive test to determine whether a deed of sale, absolute
on its face, is really a simple loan accommodation secured by a mortgage. (Sps. Alvaro v.
Sps. Ternida, G.R. No. 166183, January 20, 2006). However, Article 1602 in relation to
Article 1604 of the Civil Code enumerates several instances when a contract, purporting
to be, and in fact styled as, an absolute sale, is presumed to be an equitable mortgage, if
the vendor remains in possession as lessee. It has never been denied that sellers have
remained in possession of the subject property and exercised acts of ownership over the
said lot even after the purported absolute sale. This fact is immediately apparent from
the testimonies of the parties and the evidence extant on record, showing that the real
intention of the parties was for the transaction to secure the payment of a debt. Nothing
more. (Sps. Solitarios v. Sps. Jaque, G.R. No. 199852, November 12, 2014, Velasco, J).
Q State the effect if the seller continues to have possession of the subject
property after the purported sale. Explain.
Answer: A purported contract of sale where the vendor remains in physical possession of
the land, as lessee or otherwise, is an indicium of an equitable mortgage. (Bernice
Legaspi v. Spouses Rita and Francisco Ong, G.R. No. 141311, May 26, 2005, 459 SCRA
122). Rockville v. Sps. Culla, G.R. No. 155716, October 2, 2009, explains that the reason
for this rule lies in the legal reality that in a contract of sale, the legal title to the property
is immediately transferred to the vendee. Thus, retention by the vendor of the possession
of the property is inconsistent with the vendee's acquisition of ownership under a true
sale. It discloses, in the alleged vendee, a lack of interest in the property that belies the
truthfulness of the sale. (Sps. Solitarios v. Sps. Jaque, G.R. No. 199852, November 12,
2014, Velasco, J).
The transfer of the subject property is a pactum commissorium; contrary to
morals.
Q A 4-hectare lot was sold for only P12,000.00 where the buyer never took
possession of the property sold. What is the effect if the buyer would transfer
the property under his name? Explain.
Answer: The transfer of the property under the name of the buyer cannot be allowed as it
would amount to condoning the prohibited practice of pactum comissorium. Article 2088
of the Civil Code clearly provides that a creditor cannot appropriate or consolidate
ownership over a mortgaged property merely upon failure of the mortgagor to pay a debt
obligation any stipulation to the contrary is null and void. (Montevirgen v. Court of
Appeals, No. L-44943, March 17, 1982, 112 SCRA 641).
The essence of pactum commissorium is that ownership of the security will pass to
the creditor by the mere default of the debtor. Such arrangements as contrary to morals
and public policy. (Guerrero v. Ynigo, et al, 96 Phil. 37, 41-42 (1954)).
The only right of a mortgagee in case of non-payment of debt secured by
mortgage would be to foreclose the mortgage and have the encumbered property sold to
satisfy the outstanding indebtedness. The mortgagor's default does not operate to
automatically vest on the mortgagee the ownership of the encumbered property, for any
such effect is against public policy, as earlier indicated. (Guanzon vs. Argel, No. L-27706,
June 16, 1970, 33 SCRA 474, 478-479; Sps. Solitarios v. Sps. Jaque, G.R. No. 199852,
November 12, 2014).
Q May the mortgage of a property transfer the same under his name? why?
Answer: No, because the principle of pactum commissorium to equitable mortgages, it
was ruled that the consolidation of ownership in the person of the mortgagee in equity,
merely upon failure of the mortgagor in equity to pay the obligation, would amount to
a pactum commissorium. If a mortgagee in equity desires to obtain title to a mortgaged
property, the mortgagee's proper remedy is to cause the foreclosure of the mortgage in
equity and buy it at a foreclosure sale.
In Sps. Cruz vs. CA, G.R. No. 143388, October 6, 2003, it was ruled that, in an
equitable mortgage, perfect title over the mortgaged property may not be secured in
a pactum commissorium fashion, but only by causing the foreclosure of the mortgage
and buying the same in an auction sale. (Sps. Solitarios v. Sps. Jaque, G.R. No. 199852,
November 12, 2014, Velasco, J).
Furthermore, given that the transaction between the parties is an equitable
mortgage, this means that the title to the subject property actually remained with the
mortgagor, as owner-mortgagor, conformably with the well-established doctrine that the
mortgagee does not become the owner of the mortgaged property because the
ownership remains with the mortgagor. Thus, Felipe Solitarios' ownership over the
subject property is not affected by the fact that the same was already registered in the
name of the mortgagee.
In Montevirgen v. Court of Appeals is instructive:

x x x Equity looks through the form and considers the substance, and
no kind of engagement can be allowed which will enable the parties to
escape from the equitable doctrine adverted to. In other words, a
conveyance of land, accompanied by registration in the name of the
transferee and the issuance of a new certificate, is no more secured from
the operation of this equitable doctrine than the most informal conveyance
that could be devised.
Finally, the circumstance that the original transaction was
subsequently declared to be an equitable mortgage must mean that the
title to the subject land which had been transferred to private respondents
actually remained or is transferred back to petitioners herein as ownersmortgagors, conformably to the well-established doctrine that the
mortgagee does not become the owner of the mortgaged property because
the ownership remains with the mortgagor (Art. 2088, New Civil Code).
LEASE / UNJUST ENRICHMENT
Lessor can become the owner of improvements by lessee.
Q The contract of lease provided that in case of termination of the lease
agreement all permanent improvements and structures found therein shall
belong to the lessors. The lessees violated the contract, hence, there was
termination. It was contended that it would result in unjust enrichment of the
lessor if he would appropriate the improvement without payment of of the
value of the same. Is the contention correct? Why?
Answer: No. The principle of unjust enrichment requires two conditions: (1) that a person
is benefited without a valid basis or justification, and (2) that such benefit is derived at
the expense of another. (Flores v. Lindo, Jr., G.R. No. 183984, April 13, 2011, 648 SCRA
772, 783). It does not, however, apply in this case since any benefit that the lessors may
obtain from the subject premises cannot be said to be without any valid basis or
justification. It is well to remind lessees that they violated the contract of lease and that
they failed to vacate the premises upon demand. Hence, the lessors are justified in
recovering the physical possession thereof and consequently, in making use of the
property. Besides, in violating the lease by failing to pay the rent, lessees took the risk of
losing the improvements it introduced thereon in favor of the lessors. This is because
despite the fact that the lease contract provides that in case of termination of the lease
agreement all permanent improvements and structures found in the subject premises
shall belong to the lessors, it still violated the lease. It must be recalled that such
stipulation is the law between the parties. In fact, the lessee waived its right to be
compensated under Art. 1678, NCC. Such waiver is valid. (Sps. Manzanilla v. Waterfields
Industries, Inc., G.R. No. 177484, July 18, 2014, Del Castillo, J).
Acceptance of rentals, a ratification of unwritten lease.
Q Petitioner Automat acquired a property. Petitioner Lim admitted having
executed an affidavit that respondents volunteered to act as caretakers of the
said property only to prevent squatters from entering the same but with the
undertaking to vacate when asked to do so by Automat. Such installation by
Lim of respondents was confirmed by Automat. Petitioners admitted having
received rental payments from respondents. State the nature of the contract.
Explain.
Answer: Automat is considered to have consented to a civil lease.
Article 1643 of the Civil Code provides that in the lease of things, one of the
parties binds himself to give to another the enjoyment or use of a thing for a price
certain, and for a period which may be definite or indefinite . . .
Respondent spouses were allowed to stay in the property as caretakers and, in
turn, they paid petitioners rent for their use of the property. Petitioners acceptance of
rental payments may be considered as ratification (Art. 1405, NCC) of an unwritten lease
agreement whose period depends on their agreed frequency of rental payments.
(Automat Realty & Dev. Corp., et al. v. Sps. Dela Cruz, G.R. No. 192026, October 1, 2014,
Leonen, J).
AGENCY
Contract of agency may be oral unless the law requires otherwise; requirement
of SPA refers to nature; not to form.
Q Petitioner pre-signed several checks and delivered the same to the
respondent with the condition that the same shall be filled out with previous
notification and approval by him. Without the consent of petitioner, respondent
obtained a loan and delivered one of the checks to the creditor but when it was
presented for payment, it was dishonored, hence, a complaint for sum of
money was filed where the trial court held him liable, which was affirmed by
the CA. Before the SC, he contended that the contract was a complete nullity
on the ground that he never authorized the borrowing of money. He pointed to
Article 1878, paragraph 7 of the Civil Code, which explicitly requires a written
authority when the loan is contracted through an agent. He contended that
absent such authority in writing, he should not be held liable for the face value
of the check because he was not a party or privy to the agreement.
Gutierrez did not have any authority to borrow money in behalf of the
petitioner. Petitioner did not execute any special power of attorney (SPA) in
favor of Gutierrez as confirmed by his testimony.
The creditor however submitted that the petitioners acts of pre-signing
the blank checks and releasing them to Gutierrez sufficed to establish that the
petitioner had authorized Gutierrez to fill them out and contract the loan in his
behalf. Is the petitioner liable? Explain.
Answer: No. In the absence of any authorization, Gutierrez could not enter into a contract
of loan in behalf of the petitioner. As held in Yasuma v. Heirs of De Villa, G.R. No. 150350,
August 22, 2006, 499 SCRA 466, 472, involving a loan contracted by de Villa secured by
real estate mortgages in the name of East Cordillera Mining Corporation, in the absence
of an SPA conferring authority on de Villa, there is no basis to hold the corporation liable,
the power to borrow money is one of those cases where corporate officers as agents of
the corporation need a special power of attorney. In the case at bar, no special power of
attorney conferring authority on de Villa was ever presented. x x x There was no showing
that respondent corporation ever authorized de Villa to obtain the loans on its behalf.
In Gozun v. Mercado, G.R. No. 167812, December 19, 2006, 511 SCRA 305, 313314, where it was held that it is a general rule in the law of agency that, in order to bind
the principal by a mortgage on real property executed by an agent, it must upon its face
purport to be made, signed and sealed in the name of the principal, otherwise, it will bind
the agent only. It is not enough merely that the agent was in fact authorized to make the
mortgage, if he has not acte din the name of the principal. (Alvin Patrimonio v. Napoleon
Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Q 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. To loan or borrow money, unless the latter act be urgent and
indispensable for the preservation of the things which are under
administration. What is the nature of such authority? Explain.
Answer: Article 1878, NCC does not state that the authority be in writing. As long as the
mandate is express, such authority may be either oral or written. It unequivocably
declared in Lim Pin v. Liao Tian, et al., 200 Phil. 685 [1982], that the requirement under
Article 1878 of the Civil Code refers to the nature of the authorization and not to its form.
Be that as it may, the authority must be duly established by competent and convincing
evidence other than the self serving assertion of the party claiming that such authority
was verbally given, thus:
The requirements of a special power of attorney in Article 1878 of the
Civil Code and of a special authority in Rule 138 of the Rules of Court refer to
the nature of the authorization and not its form. The requirements are met if
there is a clear mandate from the principal specifically authorizing the
performance of the act. As early as 1906, this Court in Strong v. GutierrezRepide (6 Phil. 680) stated that such a mandate may be either oral or written,
the one vital thing being that it shall be express. And more recently, We
stated that, if the special authority is not written, then it must be duly
established by evidence:
x x x the Rules require, for attorneys to compromise the litigation of

their clients, a special authority. And while the same does not state that the
special authority be in writing the Court has every reason to expect that, if
not in writing, the same be duly established by evidence other than the selfserving assertion of counsel himself that such authority was verbally given
him. (Home Insurance Company v. United States Lines Company, et al., 21
SCRA 863; 866; Vicente v. Geraldez, 52 SCRA 210; 225; Alvin Patrimonio v.
Napoleon Gutierrez, et al., G.R. No. 187769, June 4, 2014, Brion, J).
Agent must act for and in behalf of principal, otherwise, act not binding on
principal.
Q Is a contract of mortgage of a property by an alleged agent who acted not
for the principal but for himself valid? Explain.
Answer: No. Mortgage executed by an authorized agent who signed in his own name
without indicating that he acted for and on behalf of his principal binds only the agent
and not the principal.
In order to bind the principal by a deed executed by an agent, the deed must upon
its face purport to be made, signed and sealed in the name of the principal. In other
words, the mere fact that the agent was authorized to mortgage the property is not
sufficient to bind the principal, unless the deed was executed and signed by the agent for
and on behalf of his principal. (Rural Bank of Bombon (Camarines Sur), Inc. v. Court of
Appeals, G.R. No. 95703, August 3, 1992, 212 SCRA 25, Gozun v. Mercado, 540 Phil. 323
[2006], and Far East Bank and Trust Company (now Bank of the Philippine Island) v.
Cayetano, G.R. No. 179909, January 25, 2010, 611 SCRA 96; Philippine Sugar Estates
Development Co. v. Poizat, 48 Phil. 536 [1925]; Bucton v. Rural Bank of El Salvador, Inc.,
Misamis Oriental, et al., G.R. No. 179625, February 24, 2014, Del Castillo J).
GUARANTY AND SURETY
Continuing surety; liability for all obligations contracted by debtor.
Q In a case, the Continuing Suretyship stated that as surety he shall without
need of any notice, demand or any other act or deed, immediately become
liable and shall pay all credit accommodations extended by the Bank to the
debtor, including increases, renewals, roll-overs, extensions, restructurings,
amendments or novations as well as all obligations of the debtor presently or
hereafter owing to the Bank The debtor failed to pay. Is the surety is liable
for the debtors loan obtained six months after the execution of the Continuing
Suretyship? Explain.
Answer: Yes. A contract of suretyship is an agreement whereby a party, called the surety,
guarantees the performance by another party, called the principal or obligor, of an
obligation or undertaking in favor of another party, called the oblige. Although the
contract of a surety is secondary only to a valid principal obligation, the surety becomes
liable for the debt or duty of another although it possesses no direct or personal interest
over the obligations nor does it receive any benefit therefrom. In Stronghold Insurance
Company, Inc. v. Republic-Asahi Glass Corporation, where it was ruled that the suretys
obligation is not an original and direct one for the performance of his own act, but merely
accessory or collateral to the obligation contracted by the principal. Nevertheless,
although the contract of a surety is in essence secondary only to a valid principal
obligation, his liability to the creditor or promisee of the principal is said the be direct,
primary and absolute; in other words, he is directly and equally bound with the principal.
(Mariano Lim v. Security Bank Corp., G.R. No. 188539, March 12, 2014, Peralta, J).
Q When does surety arise? Explain.
Answer: The suretyship arises upon the solidary binding of a person deemed the surety
with the principal debtor for the purpose of fulfilling an obligation. 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.
(Philippine Charter Insurance Corporation v. Petroleum Distributors & Service Corporation,
G.R. No. 180898, April 18, 2012, 670 SCRA 166; Mariano Lim v. Security Bank Corp., G.R.
No. 188539, March 12, 2014, Peralta, J).
Q What is the essence of a continuing surety? Explain.

Answer: Comprehensive or continuing surety agreements are, in fact, quite commonplace
in present day financial and commercial practice. A bank or financing company which
anticipates entering into a series of credit transactions with a particular company,
normally requires the projected principal debtor to execute a continuing surety
agreement along with its sureties. By executing such an agreement, the principal places
itself in a position to enter into the projected series of transactions with its creditor; with
such suretyship agreement, there would be no need to execute a separate surety contract
or bond for each financing or credit accommodation extended to the principal debtor.
(Saludo, Jr. v. Security Bank Corporation, G.R. No. 184041, October 13, 2010, 633 SCRA
247).
Liability of surety even if there is no moratorium request and payment
extensions.
Q What is the nature of the liability of a surety? Explain.
Answer: 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. Although the contract of a surety is in essence
secondary only to a valid principal obligation, his liability to the creditor is direct, primary
and absolute; he becomes liable for the debt and duty of another although he possesses
no direct or personal interest over the obligations nor does he receive any benefit
therefrom. The fundamental reason therefor is that a contract of suretyship effectively
binds the surety as a solidary debtor. This is provided under Article 2047 of the Civil Code
which states that if a person binds himself solidarily with the principal debtor. (Trade
Investment Dev. Corp. of the Phils., et al. v. Asia Paces Corp., et al., G.R. No. 187403,
February 12, 2014).
Q In surety, is it necessary that the debtor fails to pay before the surety may
be liable? Explain.
Answer: No. Since the surety is a solidary debtor, it is not necessary that the original
debtor first failed to pay before the surety could be made liable; it is enough that a
demand for payment is made by the creditor for the suretys liability to attach. (TIDCORP
v. Roblett Industrial Construction Corp., 523 Phil. 360 [2006]). Article 1216 of the Civil
Code provides that the creditor may proceed against any one of the solidary debtors or
some or all of them simultaneously. The demand made against one of them shall not be
an obstacle to those which may subsequently be directed against the others, so long as
the debt has not been fully collected. (Trade Investment Dev. Corp. of the Phils., et al. v.
Asia Paces Corp., et al., G.R. No. 187403, February 12, 2014).
Q How do you distinguish the liability of the guarantor from that of a surety?
Explain.
Answer: A surety is responsible for the debts payment at once if the principal debtor
makes default, whereas a guarantor pays only if the principal debtor is unable to pay.
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. (Palmares v. CA, 351 Phil. 664 [1998]; Trade
Investment Dev. Corp. of the Phils., et al. v. Asia Paces Corp., et al., G.R. No. 187403,
February 12, 2014).
Note: Despite these distinctions, the Court in Cochingyan, Jr. v. R&B Surety & Insurance
Co., Inc., 235 Phil. 332 [1987], and later in the case of Security Bank, held that Article
2079 of the Civil Code, which pertinently 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. The rationale
therefor was explained by the Court as follows:
The theory behind Article 2079 is that an extension of time given to
the principal debtor by the creditor without the suretys consent
would deprive the surety of his right to pay the creditor and to be
immediately subrogated to the creditors remedies against the
principal debtor upon the maturity date. The surety is said to be entitled
to protect himself against the contingency of the principal debtor or the
indemnitors becoming insolvent during the extended period.
Continuing surety is a valid and binding stipulation.
Q In a case, there was a continuing surety undertaking which stated that as
surety, the petitioner shall, without need for any notice, demand or any other
act or deed, immediately become liable and pay all credit accommodations
extended by the bank to the debtor, including increases, renewals, roll-overs,
extensions, restructurings, amendments and novations as well as all
obligations of the debtor presently or hereafter owing. Is the stipulation on
continuing surety valid? Explain.
Answer: Yes. Such stipulations are valid and legal and constitute the law between the
parties. A guaranty may also be given as security for future debts, the amount of which is
not yet known (Art. 2053, NCC), thus, the surety is unequivocably bound by the terms of
the Continuing Suretyship. (Lim v. Security Bank Corp., G.R. No. 188539, March 12, 2014,
Peralta, J).
LOAN INTEREST
Two (2) kinds of interests; monetary and compensatory.
Q An action for reimbursement of premium paid was filed. In ruling for the
plaintiff, the lower court imposed 12% interest per annum from the time of
death of the insured until fully paid. What is the nature of the interest
imposed? Explain.
Answer: The interest imposed partakes of the nature of compensatory interest because
there was no forbearance of money or that the interests was not the one which was
agreed upon by the parties. (Sun Life of Canada (Phils.), Inc. v. Sandra Tan Kit, et al., G.R.
No. 183272, October 15, 2014, Del Castillo).
Q State the effect if there is lack of a written stipulation to pay interest on the
loaned amount. Explain.
Answer: Well-settled is the rule that if there is no express stipulation on interest, no
interest shall be due. (De La Paz v. L & J Dev. Co., G.R. No. 183360, September 8, 2014,
Del Castillo). Under Article 1956 of the Civil Code, no interest shall be due unless it has
been expressly stipulated in writing. Jurisprudence on the matter also holds that for
interest to be due and payable, two conditions must concur: (a) express stipulation for the
payment of interest; and (b) the agreement to pay interest is reduced in writing.
If the parties did not put down in writing their agreement, no interest is due. The
collection without stipulation in writing is prohibited by law. (Siga-an v. Villanueva, 596
Phil. 760, 769 [2009]; Sun Life of Canada (Phils.), Inc. v. Sandra Tan Kit, et al., G.R. No.
183272, October 15, 2014, Del Castillo; Federal Builders, Inc. v. Foudnation Specialsts,
Inc., G.R. No. 194507, September 8, 2014).
No unilateral right to change interest rate agreed upon.
Q In a credit agreement there is a stipulation granting the creditor a
unilateral right to modify and increase or decrease the interest rate of a loan.
Is the stipulation valid? Why?
Answer: No. For lack of consent, the stipulation is void.
Any modification in the contract, such as the interest rates, must be made with the
consent of the contracting parties. The minds of all the parties must meet as to the
proposed modification, especially when it affects an important aspect of the agreement.
In the case of loan agreements, the rate of interest is a principal condition, if not the most
important component. Thus, any modification thereof must be mutually agreed upon;
otherwise, it has no binding effect. (Sps. Sitos v. PNB, G.R. No. 181405, July 2, 2014).
Q The credit document issued by a bank allows it to increase or decrease
interest rates within the limits allowed by law at any time depending on
whatever policy it may adopt in the future. Is the stipulation valid? Explain.
Answer: No. Such stipulation and similar ones were declared in violation of Article 1308 of
the Civil Code. The very same stipulations found in the credit agreement and the
promissory notes prepared and issued by the respondent were again invalidated.
In Spouses Almeda v. Court of Appeals, 326 Phil. 309 [1996], the SC said:
The binding effect of any agreement between parties to a contract is
premised on two settled principles: (1) that any obligation arising from
contract has the force of law between the parties; and (2) that there must be
mutuality between the parties based on their essential equality. Any contract
which appears to be heavily weighed in favor of one of the parties so as to
lead to an unconscionable result is void. Any stipulation regarding the validity
or compliance of the contract which is left solely to the will of one of the
parties, is likewise, invalid.
Escalation clauses are not basically wrong or legally objectionable so long as they
are not solely potestative but based on reasonable and valid grounds. Here, as clearly
demonstrated above, not only are the increases of the interest rates on the basis of the
escalation clause patently unreasonable and unconscionable, but also there are no valid
and reasonable standards upon which the increases are anchored. (Philippine National
Bank v. Court of Appeals, 273 Phil. 789, 796-797, 799 [1991]; Philippine National Bank v.
Court of Appeals, G.R. No. 107569, November 8, 1994, 238 SCRA 20; Sps. Sitos v. PNB,
G.R. No. 181405, July 2, 2014).
Q Why is a unilateral increase in interest rate not valid? Explain.
Answer: Loan and credit arrangements may be made enticing by, or sweetened with,
offers of low initial interest rates, but actually accompanied by provisions written in fine
print that allow lenders to later on increase or decrease interest rates unilaterally, without
the consent of the borrower, and depending on complex and subjective factors. Because
they have been lured into these contracts by initially low interest rates, borrowers get
caught and stuck in the web of subsequent steep rates and penalties, surcharges and the
like. Being ordinary individuals or entities, they naturally dread legal complications and
cannot afford court litigation; they succumb to whatever charges the lenders impose. At
the very least, borrowers should be charged rightly; but then again this is not possible in
a one-sided credit system where the temptation to abuse is strong and the willingness to
rectify is made weak by the eternal desire for profit. (Sps. Sitos v. PNB, G.R. No. 181405,
July 2, 2014).
Q Is an unilateral and absolute authority granting lenders the right to
increase interest rate valid? Explain.
Answer: No, it is void. In Sps. Agner v. BPI Family Savings Bank, Inc., G.R. No. 182963,
June 3, 2013, Peralta, J, it was said that while Central Bank Circular No. 905-82, which
took effect on January 1, 1983, as amended by Cir. No. 799 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. (Macalinao v. Bank of the Philippine Islands, G.R. No.
175490, September 17, 2009, 600 SCRA 67, 77, citing Chua v. Timan, G.R. No. 170452,
August 13, 2008, 562 SCRA 146, 149-150). Since the stipulation on the interest rate is
void for being contrary to morals, if not against the law, it is as if there was no express
contract on said interest rate; thus, the interest rate may be reduced as reason and
equity demand. (Arthur F. Menchavez v. Marlyn M. Bermudez, G.R. No. 185368, October
11, 2012, citing Macalinao v. Bank of the Philippine Islands, supra.; and Chua v. Timan,
supra.; Sps. Sitos v. PNB, G.R. No. 181405, July 2, 2014).).
INTEREST
Two (2) kinds of interest.
Monetary interest refers to the compensation set by the parties for the use or
forbearance of money. (Asia Trust Development Bank v. Tuble, G.R. No. 183987, July 25,
2012, 677 SCRA 519, 536). No such interest shall be due unless it has been expressly
stipulated in writing. (Siga-an v. Villanueva, 596 Phil. 760, 769 (2009)). On the other
hand, compensatory interest refers to the penalty or indemnity for damages imposed by
law or by the courts." The interest mentioned in Articles 2209 and 2212 28of the Civil Code
applies to compensatory interest.
MORTGAGE
Accommodation mortgagor receives nothing from the proceeds of the loan.
Q State the nature, effect and rights of an accommodation mortgagor. Explain.
Answer: As mere accommodation mortgagors, they are not entitled to the proceeds of the
loan, nor are required to be furnished with the loan documents or notice of the borrowers
default in paying the principal, interests, penalties, and other charges on due date, or of
the extrajudicial foreclosure proceedings, unless stipulated in the subject deed. (Union
Bank of the Philippines v. CA, G.R. No. 164910, September 30, 2005, 471 SCRA 751, 761762). As jurisprudence states, an accommodation mortgagor is a third person who is not a
debtor to a principal obligation but merely secures it by mortgaging his or her own
property. (Spouses Belo v. Philippine National Bank, 405 Phil 851, 870 [2001]; see also
Article 2085 of the Civil Code). Like an accommodation party to a negotiable instrument,
the accommodation mortgagor in effect becomes a surety to enable the accommodated
debtor to obtain credit. (New Sampaguita Builders Construction, Inc. (NSBCI) v. PNB, 479
Phil. 483, 529 [2004] citing Sps. Gardose v. Tarroza, 352 Phil. 797, 807 [1998]; Sps. Sierra,
et al. v. PAIC Savings & Mortgage Bank, Inc., G.R. No. 197857, September 10, 2014,
Perlas-Bernabe, J).
TORTS AND DAMAGES
No liability for damages, if the damage done was due to plaintiffs negligence.
Q A motorcycle with three passengers figured in a mishap along the national
highway in Buguey, Cagayan driven by Camilo Tangonan who died and the
passengers suffered injuries. A complaint for damages was filed by Gine, the
common-law wife of Camilo alleging that while the victims were traversing the
national highway, they were struck and electrocuted by a live tension wire
from one of the electric posts owned by petitioner. They contended that the
mishap was due to petitioners negligence when it failed to fix and change said
live tension wire.
In its Answer, petitioner alleged that the typhoons that struck its areas of
responsibility caused some of its electric poles to fall and high tension wires to
snap or cut-off which caused brownouts in said areas, hence, a caused by
typhoons which are fortuitous events. It also alleged that it was able to clear
the said areas of fallen electric poles and dangling or hanging high tension
wires immediately after the typhoons, to secure the safety of persons and
vehicles traveling in said areas. It likewise contended that the proximate cause
of the mishap was the victims negligence and imprudence in operating and
driving the motorcycle they were riding on.
The complaint was dismissed ruling that the proximate cause of the
incident was the negligence and imprudence of Camilo in driving the
motorcycle and that Mary Gine has no legal personality to institute the action
since such right is only given to the legal heir of the deceased, common law
wife.
The CA reversed the RTC decision ruling that without the dangling wire
which struck the victims, they would not have fallen down and sustained
injuries, ruling that if petitioner had not been negligent in maintaining its
facilities, and making sure that every facility needing repairs had been
repaired, the mishap could have been prevented. Is the CAs decision correct?
Why?
Answer: Petitioner is not liable because the proximate cause of the damage done was the
negligence of Camilo.
Negligence is defined as the failure to observe for the protection of the interest of
another person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury. (Guillang v. Bedania, 606 Phil.
57, 69 [2009]). Article 2176 of the Civil Code provides that [w]hoever by act or omission
causes damage to another, there being fault or negligence, is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation

between the parties, is a quasi-delict. Under this provision, the elements necessary to
establish a quasi-delict case are: (1) damages to the plaintiff; (2) negligence, by act or
omission, of the defendant or by some person for whose acts the defendant must
respond, was guilty; and (3) the connection of cause and effect between such negligence
and the damages.
There was no negligence on the part of petitioner that was allegedly the proximate
cause of Camilos death and Rapanans injuries. 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
motorcycle was not on the shoulder but still on the road, that the three passengers were
thrown off from the motorcycle to the shoulder of the road and caught up with the wires.
As to how that happened cannot be blamed on petitioner but should be attributed to
Camilos over speeding as shown by the skid mark on the road. Therefore, the mishap
already occurred even while they were on the road and away from petitioners electric
wires and was not caused by the latter. It just so happened that after the motorcycle
tilted and slid, the passengers were thrown off to the shoulder where the electric wires
were, hence, the proximate cause of the mishap was the negligence of Camilo. Had
Camilo driven the motorcycle at an average speed, the three passengers would not have
been thrown off from the vehicle towards the shoulder and eventually strangulated by
the electric wires sitting thereon. Moreover, it was also negligent of Camilo to have
allowed two persons to ride with him and for Rapanan to ride with them when the
maximum number of passengers of a motorcycle is two including the driver. This most
likely even aggravated the situation because the motorcycle was overloaded which made
it harder to drive and control. When the plaintiffs own negligence was the immediate
and proximate cause of his injury, he cannot recover damages. (Civil Code, Art. 2179;
Cagayan Electric Cooperative, Inc. v. Rafanan, et al., G.R. No. 199886, December 3,
2014).
Doctrine of res ipsa loquitur applies if no direct evidence to prove negligence
of defendant is available.
Q A container van containing personal effects was stored at the depot of the
petitioner. It was however gutted by fire resulting in the loss of the contents.
In a suit for damages alleging negligence for damages alleging negligence of
petitioner, the latter interposed the defense of fortuitous event while not
denying custody of the van. The lower courts held petitioner liable holding that
there was negligence on its part and that since the van was under its custody
and control, the doctrine of res ipsa loquitur applies placing upon it the burden
to prove lack of negligence. Is the ruling of the lower court correct? Explain.
Answer: Yes. With respect to the issue of negligence, there is no doubt that petitioner is
liable to respondent for damages on account of the loss of the contents of her container
van. It itself admitted during the pre-trial of this case that respondents container van
caught fire while stored within its premises. Absent any justifiable explanation on the part
of petitioner on the cause of the fire as would absolve it from liability, the presumption
that there was negligence on its part comes into play. The situation in this case,
therefore, calls for the application of the doctrine of res ipsa loquitur.
The doctrine of res ipsa loquitur is based on the theory that the defendant either
knows the cause of the accident or has the best opportunity of ascertaining it and the
plaintiff, having no knowledge thereof, is compelled to allege negligence in general
terms. In such instance, the plaintiff relies on proof of the happening of the accident
alone to establish negligence. (Perla Compania De Seguros, Inc. v. Sps. Sarangaya III,
510 Phil. 676, 686 [2005] citing 57B Am Jur 2d, Negligence $ 1819). 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. (57B Am Jur 2d, Negligence $ 1819). The
doctrine, however, can be invoked when and only when, under the circumstances
involved, direct evidence is absent and not readily available. (Rodriguez v. CA, G.R. No.
121964, 17 June 1997, 272 SCRA 607, 621 citing Batiquin v. Court of Appeals, G.R. No.
118231, 5 July 1996, 258 SCRA 334, 344-345). 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 courts acted appropriately in applying the
principle of res ipsa loquitur to the case at bar. (International Container Terminal Services,
Inc. v. Chua, G.R. No. 195031, March 26, 2014, Perez, J).
Award of temperate damages.
In the absence of competent proof on the amount of actual damages suffered, a
party is entitled to receive temperate damages. (Manila Electric Company (MERALCO) v.
Castillo, supra note 38 at 482 citing Dueas v. GuceAfrica, G.R. No. 165679, 5 October
2009, 603 SCRA 11, 22). Article 2224 of the New Civil Code provides that: Temperate or
moderate damages, which are more than nominal but less than compensatory damages,
may be recovered when the court finds that some pecuniary loss has been suffered but
its amount cannot, from the nature of the case, be proved with certainty. The amount
thereof is usually left to the sound discretion of the courts but the same should be
reasonable, bearing in mind that temperate damages should be more than nominal but
less than compensatory.
Liability for compensatory damages must be duly proved.
It was ruled that Article 2199 of the Civil Code states that except as provided by
law or by stipulation, one is entitled to an adequate compensation only for such pecuniary
loss suffered by him as he has duly proved. Such compensation is referred to as actual or
compensatory damages. Actual damages are compensation for an injury that will put
the injured party in the position where it was before the injury. They pertain to such
injuries or losses that are actually sustained and susceptible of measurement. Except as
provided by law or by stipulation, a party is entitled to adequate compensation only for
such pecuniary loss as is duly proven. Basic is the rule that to recover actual damages,
not only must the amount of loss be capable of proof; it must also be actually proven with
a reasonable degree of certainty, premised upon competent proof or the best evidence
obtainable. (Manila Electric Company (MERALCO) v. Castillo, G.R. No. 182976, January
14, 2013, 688 SCRA 455, 478 citing Manila Electric Company v. T.E.A.M. Electronics
Corporation, G.R. No. 131723, December 13, 2007, 540 SCRA 62, 79).
Q What evidence is necessary to recover compensatory damages? Explain.
Answer: The evidence to prove compensatory damages must be satisfactory.
Actual damages cannot be presumed and courts, in making an award, must point
out specific facts which could afford a basis for measuring whatever compensatory or
actual damages are borne. (Canada v. All Commodities Marketing Corporation, 590 Phil.
3452, 350 [2008] citing B.F. Metal (Corporation) v. Sps. Rolando M. Lomotan, G.R. No.
170813, April 16, 2008, 551 SCRA 618). An award of actual damages is dependent upon
competent proof of the damages suffered and the actual amount thereof. The award must
be based on the evidence presented, not on the personal knowledge of the court; and
certainly not on flimsy, remote, speculative and unsubstantial proof. (Manila Electric
Company (MERALCO) v. Castillo, supra. citing Quisumbing v. Manila Electric Company,
G.R. No. 142943, April 3, 2002, 380 SCRA 195, 211-212).
In the absence of competent proof on the amount of actual damages suffered, a
party is entitled to received temperate damages. (Manila Electric Company (MERALCO) v.
Castillo, supra., citing Duenas v. Guce-Africa, G.R. No. 165679, October 5, 2009, 603 SCRA
11, 22). Article 2224 of the New Civil Code provides that: Temperate or moderates
damages, which are more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with certainty. The amount
thereof is usually left to the sound discretion of the courts but the same should be
reasonable, bearing in mind that temperate damages should be more than nominal but
less than compensatory. Considering the concomitant circumstances prevailing in this
case, temperate damages in the amount of P350,000.00 is deemed equitable.
(International Container Terminal Services, Inc. v. Chua, G.R. No. 195031, March 26, 2014,
Peralta, J).
When award of moral damages is proper.
Certainly, an award of moral damages must be anchored on a clear showing that
the party claiming the same actually experienced mental anguish, besmirched reputation,
sleepless nights, wounded feelings, or similar injury. In the case herein under
consideration, the records are bereft of any proof that respondent in fact suffered moral
damages as contemplated in the afore-quoted provision of the Civil Code. The ruling of
the trial court provides simply that: Petitioners outright denial and unjust refusal to heed
respondents claim for payment of the value of her lost/damaged shipment caused the
latter to suffer serious anxiety, mental anguish and wounded feelings warranting the
award of moral damages x x x. The testimony of respondent, on the other hand, merely
states that when she failed to recover damages from petitioner, she was saddened, had
sleepless nights and anxiety without providing specific details of the suffering she
allegedly went through. Since an award of moral damages is predicated on a categorical
showing by the claimant that she actually experienced emotional and mental sufferings, it
must be disallowed absent any evidence thereon. (De Guzman v. Tumolva, G.R. No.
188072, October 19, 2011, 659 SCRA 725, 734 citing Metropolitan Bank and Trust Co. v.
Perez, G.R. No. 181842, February 5, 2010, 611 SCRA 740, 746 further citing Bank of
Commerce v. Sps. San Pablo, G.R. No. 167848, April 27, 2007, 522 SCRA 713, 715).
Minimum award for death under Art. 2206, NCC cannot be less, but can be
more.
Q State the nature of the award of damages in case of death. Explain.
Answer: 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 as civil indemnity can be validly modified and increased when the present
circumstance warrants it. Corollarily, moral damages under Article 2220 of 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. (Corpuz v. People, G.R. No. 180016, April 29,
2014, Peralta, J).
EXEMPLARY DAMAGES
Q The victim was raped four (4) times. The court awarded exemplary damages to the
victim. What is the justification for such award? Explain.
AnswerL Exemplary damages are intended to deter serious wrong doings, and to serve as
vindication of undue sufferings and wanton invasion of the rights of an injured or a
punishment for those guilty of outrageous conduct. (People v. Catubig, 416 Phil. 102, 118119 [2001]). They may be awarded when circumstances of the case show the highly
reprehensible or outrageous conduct of the offender. On more than on occasion, we have
awarded exemplary damages to set a public example, to serve as deterrent to elders who
abuse and corrupt the youth, and to protect the latter from sexual abuse. (People v.
Canada, G.R. No. 175317, October 2, 2009, 602 SCRA 378; People v. Neverio, G.R. No.
182792, August 25, 2009, 597 SCRA 149; People v. Layco, Sr., G.R. No. 182191, May 8,
2009, 587 SCRA 803; People v. Ramos, G.R. No. 200077, September 17, 2014, Perez, J).
Exemplary damages, when awarded; if the conduct is highly irreprehensible
and outrageous.
Q In a case of rape, state the reason why exemplary damages would be
awarded. Explain.
Answer: Being corrective in nature, exemplary damages, therefore, can be awarded, not
only in the presence of an aggravating circumstance, but also where the circumstances
of the case show the highly reprehensible or outrageous conduct of the offender. In much
the same way as Article 2230 prescribes an instance when exemplary damages may be
awarded, Article 2229, the main provision, lays down the very basis of the award. x x x
Recently, in People of the Philippines v. Cristino Caada, People of the Philippines v.
Pepito Neverio and The People of the Philippines v. Lorenzo Layco, Sr., the Court awarded
exemplary damages to set a public example, to serve as deterrent to elders who abuse
and corrupt the youth, and to protect the latter from sexual abuse.
It must be noted that, in the said cases, the Court used as basis Article 2229,
rather than Article 2230, to justify the award of exemplary damages. Indeed, to borrow
Justice Carpio Morales' words in her separate opinion in People of the Philippines v. Dante
Gragasin y Par, [t]he application of Article 2230 of the Civil Code strictissimi juris in such
cases, as in the present one, defeats the underlying public policy behind the award of
exemplary damages -- to set a public example or correction for the public good. (People
v. Veloso, G.R. No. 188849, February 13, 2013, Leonardo-De Castro, J).
Moral and exemplary damages cannot be awarded if not alleged and proved;
nominal damages may be awarded.
Q A complaint for reconveyance, nullification of title was filed. The plaintiff
did not allege and pray for moral and exemplary damages. May the court
award the same? Why?
Answer: No, because of lack of proof of the same. It is a well-settled rule that this species
of damages is allowed only in addition to moral damages such that no exemplary
damages can be awarded unless the claimant first establishes his clear right to moral
damages. Consequently, despite our finding that respondent acted in a fraudulent
manner, petitioners claim for exemplary damages is unavailing at this point.
Nevertheless, nominal damages may be awarded. Under prevailing jurisprudence,
nominal damages are recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any kind or
where there has been a breach of contract and no substantial injury or actual damages
whatsoever have been or can be shown. As expounded in Almeda v. Carino, a violation
of the plaintiffs right, even if only technical, is sufficient to support an award of nominal
damages. So long as there is a showing of a violation of the right of the plaintiff, as herein
petitioner, an award of nominal damages is proper. (Savellano v. Northwest Airlines, 453
Phil. 342, 260 [2003]; Locsin v. Hizon, et al., G.R. No. 204369, September 17, 2014).
NOMINAL DAMAGES
If a party is not a privy to a contract, it cannot be liable for nominal damages.
Q The owner of a property sold it to a bank while a case of forcible entry was
pending between him and the occupant. The occupant contended that the
bank is liable for nominal damages as it violated or invaded his right. Is the
contention correct? Why?
Answer: No. A third party who did not commit a violation or invasion of the plaintiff or
aggrieved partys rights may not be held liable for nominal damages.
Nominal damages are recoverable where a legal right is technically violated and
must be vindicated against an invasion that has produced no actual present loss of any
kind or where there has been a breach of contract and no substantial injury or actual
damages whatsoever have been or can be shown. Under Article 2221 of the Civil Code,
nominal damages may be awarded to a plaintiff whose right has been violated or invaded
by the defendant, for the purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered." (Cathay Pacific Airways v. Reyes, G.R. No.
185891, June 26, 2013). "Nominal damages are not for indemnification of loss suffered
but for the vindication or recognition of a right violated or invaded." (Ventanilla v.
Centeno, 110 Phil. 811, 817 [1961]).
Network Bank did not violate any of Baric's rights; it was merely a purchaser or
transferee of the property. Surely, it is not prohibited from acquiring the property even
while the forcible entry case was pending, because as the registered owner of the subject
property, Palado may transfer his title at any time and the lease merely follows the
property as a lien or encumbrance. Any invasion or violation of Baric's rights as lessee
was committed solely by Palado, and Network Bank may not be implicated or found guilty
unless it actually took part in the commission of illegal acts, which does not appear to be
so from the evidence on record. On the contrary, it appears that Barie was ousted through
Palado's acts even before Network Bank acquired the subject property or came into the
picture. Thus, it was error to hold the bank liable for nominal damages. (One Network
Rural Bank Inc. v. Baric, G.R. No. 193684, March 5, 2014).
LAND REGISTRATION
Land registration court has no jurisdiction over land already decreed under the
name of another.
Q May an application for registration over a portion of a big lot covered by a
TCT be granted? Explain.
Answer: No. 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. Issuance of
another decree covering the same land is, therefore, null and void. (Top Management
Programs Corporation v. Fajardo, G.R. No. 150462, June 15, 2011, 652 SCRA 18, 37, and
Mercado v. Valley Mountain Mines Exploration, Inc., G.R. Nos. 141019, 164281, and
185781, November 23, 2011, 661 SCRA 13, 44).
The rationale behind the Torrens System is that the public should be able to rely on
a registered title. The Torrens System was adopted in this country because it was
believed to be the most effective measure to guarantee the integrity of land titles and to
protect their indefeasibility once the claim of ownership is established and recognized.
The real purpose of the Torrens System is to quiet title to land and to stop forever any
question as to its legality. Once a title is registered, the owner may rest secure, without
the necessity of waiting in the portals of the court, or sitting on the "mirador su casa" to
avoid the possibility of losing his land. (Ingusan v. Heirs of Reyes, 558 Phil. 50, 61 [2007];
Francisco v. Rojas, et al., G.R. No. 167120, April 23, 2014, Peralta, J).
Application should be dismissed.
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 TCT.
Unlike ordinary civil actions, the adjudication of land in a land registration or cadastral
proceeding does not become final and incontrovertible until after the expiration of one
(1) year after the entry of the final decree of registration and that until such time the title
is not finally adjudicated and the decision in the registration proceeding continues to be
under the control and sound discretion of the court rendering it. 26 Until then the court
rendering the decree may, after hearing, set aside the decision or decree and adjudicate
the land to another person.
Notice to owners in land registration application.
Likewise, on the assumption that what is being applied for formed part of a bigger
parcel of land belonging to other persons, then, as registered owners thereof, they should
have been mentioned in the Application for Registration as adjoining owners conformably
with Section 15 of PD 1529, which requires in the application for registration the inclusion
of the full names and addresses of the adjoining owners. Contrary to the mandatory
requirement of the law, there is nothing in the application for registration alleging that
the Rojases and Guidos are adjoining owners. As adjoining owners, respondents are
indispensable parties entitled to actual and personal notice of the application for
registration. A valid judgment cannot be rendered where there is want of indispensable
parties like respondents who hold subsisting Torrens title to the property in question.
A Certificate of Title cannot be subject to collateral attack.
Q A parcel of land was allegedly registered under the name of the seller with
the use of fraud despite having sold the same to another. It was contended
that by virtue of the sale, she became the owner of the same. This was the
contention in a land registration proceeding. It was contended that the
indefeasibility of a title does not attach to title secured by fraud and
misrepresentation. Is the contention correct? Why?
Answer: No. It is settled in this jurisdiction that the issue of the validity of title can only be
assailed in an action expressly instituted for such purpose. (Ingusanl, Miguel v. Heirs of
Aureliano I. Reyes, 558 Phil. 60 (2007), citing Caraan v. Court of Appeals, 551 Phil. 172
(2005); and Spouses Apostol v. Court of Appeals, 476 Phil. 414 (2004)). A certificate of
title cannot be attacked collaterally. This rule is provided under Section 48 of PD 1529
which states that a certificate of title shall not be subject to collateral attack. It cannot be
altered, modified, or canceled except in a direct proceeding in accordance with law. ( Wee
v Mardo, G.R. No. 202414, June 4, 2014, Mendoza, J).
For purpose of registration of alienable land, reckoning point of possession is
prior to declaration of alienability.
The basic issue resolved in Rep. v. Roasa, et al., G.R. No. 176022, February 2,
2015, Peralta, J, is when possession should be reckoned with for purposes of land
registration of a parcel of land originally belonging to the State. Should it be prior to
declaration of alienability or even before? The SC
Held: It should be reckoned prior to the declaration of inalienability of the land by the
State. It should not computed merely when the land is declared alienable.
Reiterating Republic v. Naguit, 409 Phil. 405, involves the similar question, the
Court clarified that Section 14(1) of the Property Registration Decree should be
interpreted to include possession before the declaration of the lands alienability as long
as at the time of the application for registration, the land has already been declared part
of the alienable and disposable agricultural public lands. The Court also emphasized in
that case the absurdity that would result in interpreting Section 14(1) as requiring that
the alienability of public land should have already been established by June 12, 1945.
Thus, the Court said in Naguit:
Besides, we are mindful of the absurdity that would result if we adopt
petitioners position. Absent a legislative amendment, the rule would be
adopting the OSGs view, that all lands of the public domain which were not
declared alienable or disposable before June 12, 1945, would not be
susceptible to original registration, no matter the length of unchallenged
possession by the occupant. Such interpretation renders paragraph (1) of
Section 14 virtually inoperative and even precludes the government from
giving it effect even as it decides to reclassify public agricultural lands as
alienable and disposable. The unreasonableness of the situation would even
be aggravated considering that before June 12, 1945, the Philippines was not
yet even considered an independent state.
Instead, the more reasonable interpretation of Section 14(1) is that it
merely requires the property sought to be registered as already alienable and
disposable at the time the application for registration of title is filed. If the
State, at the time the application is made, has not yet deemed it proper to
release the property for alienation or disposition, the presumption is that the
government is still reserving the right to utilize the property; hence, the need
to preserve its ownership in the State irrespective of the length of adverse
possession even if in good faith. However, if the property has already been
classified as alienable and disposable, as it is in this case, then there is
already an intention on the part of the State to abdicate its exclusive
prerogative over the property.
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. (Heirs of Mario Malabanan
v. Rep., 605 Phil. 244).
Although adverse, open, continuous, and notorious possession in the concept of an
owner is a conclusion of law to be determined by courts, it has more to do with a
persons belief in good faith that he or she has just title to the property that he or she is
occupying. (AFT Retirement and Separation Benefits System (AFP-RSBS) v. Republic of
the Philippines). It is unrelated to the declaration that land is alienable or disposable. A
possessor or occupant of property may, therefore, be a possessor in the concept of an
owner prior to the determination that the property is alienable and disposable
agricultural
land.
The right to the original registration of title over the subject property is, therefore,
dependent on the existence of (a) a declaration that the land is alienable and disposable
at the time of the application for
registration and (b) open and continuous possession in the concept of an owner through
itself or through its predecessors-in-interest since June 12, 1945 or earlier.

Civ With Insertions

Hochgeladen von

Dokumentinformationen

Originaltitel

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

Civ With Insertions

Hochgeladen von

Copyright:

Verfügbare Formate

SURVEY OF 2014 SC DECISIONS IN

Dean ED VINCENT S. ALBANO

Q In a complaint for declaration of nullity of marriage on the ground of

Marriage declared void by reason of psychological incapacity; co-ownership

Partition can be oral.

mortgage and the subsequent foreclosure proceedings therefor conducted in favor of

special administrator of her estate. However, petitioners Manuel and Benjamin,

lack of knowledge or notice on the part of the defendant that the

An extra-judicial rescission based on grounds not specified in the contract would

contractor shall not subcontract a part or interest in a government

with the necessity of inquiring further. (Casimiro Development Corporation v.

execution registered and annotated on September 1, 1998 takes

33 |ABRC2015.SCD2014.Civil Law(with insertions)revised/EVSA/crys

In Montevirgen v. Court of Appeals is instructive:

x x x the Rules require, for attorneys to compromise the litigation of

Q What is the essence of a continuing surety? Explain.

damage done. Such fault or negligence, if there is no pre-existing contractual relation

Das könnte Ihnen auch gefallen