SALES 2016

SPOUSES ALEXANDER AND JULIE LAM, Doing Business Under the Name
and Style "COLORKWIK LABORATORIES" AND "COLORKWIK PHOTO
SUPPLY" vs. KODAK PHILIPPINES, LTD., G.R. No. 167615, January 11,
2016 LEONEN, J.:

FACTS: On January 8, 1992, the Lam Spouses and Kodak Philippines, Ltd.
entered into an agreement (Letter Agreement) for the sale of three (3) units of
the Kodak Minilab System 22XL6 (Minilab Equipment) in the amount of Php
1,796,000.00 per unit,7 with the following terms:
This confirms our verbal agreement for Kodak Phils., Ltd. To provide Colorkwik
Laboratories, Inc. with three (3) units Kodak Minilab System 22XL . . . for your
proposed outlets in Rizal Avenue (Manila), Tagum (Davao del Norte), and your
existing Multicolor photo counter in Cotabato City under the following terms
and conditions:
1. Said Minilab Equipment packages will avail a total of 19% multiple order
discount based on prevailing equipment price provided said equipment
packages will be purchased not later than June 30, 1992.
2. 19% Multiple Order Discount shall be applied in the form of merchandise
and delivered in advance immediately after signing of the contract.
* Also includes start-up packages worth P61, 000.00.
3. NO DOWNPAYMENT.
4. Minilab Equipment Package shall be payable in 48 monthly installments at
THIRTY FIVE THOUSAND PESOS (P35,000.00) inclusive of 24% interest rate
for the first 12 months; the balance shall be re-amortized for the remaining 36
months and the prevailing interest shall be applied.
5. Prevailing price of Kodak Minilab System 22XL as of January 8, 1992 is at
ONE MILLION SEVEN HUNDRED NINETY SIX THOUSAND PESOS.
6. Price is subject to change without prior notice.
*Secured with PDCs; 1st monthly amortization due 45 days after installation.
However, Kodak Philippines, Ltd. delivered one (1) unit of the Minilab
Equipment in Tagum, Davao Province. The delivered unit was installed by
Noritsu representatives. The Lam Spouses issued postdated checks amounting
to ₱35,000.00 each for 12 months as payment for the first delivered unit, with
the first check due on March 31, 1992. Thereafter, the Lam Spouses requested
that Kodak Philippines, Ltd. not negotiate the checks due to insufficiency of
funds.. However, both checks were negotiated by Kodak Philippines, Ltd. and
were honored by the depository bank. The 10 other checks were subsequently
dishonored after the Lam Spouses ordered the depository bank to stop
payment. Afterwards, Kodak Philippines, Ltd. canceled the sale and demanded
that the Lam Spouses return the unit. The Lam Spouses ignored the demand
but also rescinded the contract through a letter on account of Kodak
Philippines, Ltd.’s failure to deliver the two (2) remaining Minilab Equipment
units. After which, Kodak Philippines, Ltd. filed a Complaint for replevin
and/or recovery of sum of money. The Lam Spouses failed to appear during the
pre-trial conference. Thus, they were declared in default. Kodak Philippines,
Ltd. presented evidence ex-parte, the trial court then, issued the Decision in
favor of Kodak Philippines, Ltd. ordering the seizure of the Minilab Equipment.
Based on this Decision, Kodak Philippines, Ltd. was able to obtain a writ of
seizure for the Minilab Equipment installed at the Lam Spouses’ outlet in
Tagum, Davao Province. The writ was enforced and Kodak Philippines, Ltd.
gained possession of the Minilab Equipment unit, accessories, and the
generator set. The Lam Spouses then filed before the CA a Petition to Set Aside
the Orders issued by the trial court. These Orders were subsequently set aside
by the CA, and the case was remanded to the trial court for pre-trial. In its
Decision, the RTC dismissed the case and ordered the plaintiff to pay Lam
Spouses. Thereafter, the Spouses filed their Notice of Partial Appeal and Kodak
Philippines, Ltd. also filed an appeal. However, the CA dismissed it for Kodak
Philippines, Ltd.’s failure to file its appellant’s brief, without prejudice to the
continuation of the Lam Spouses’ appeal. The Resolution became final and
executory. CA modified the decision of the RTC.

ISSUE: Whether or not upon rescission of the contract, the parties are entitled
to under Article 1190 and Article 1522 of the New Civil Code.

HELD: An obligation is indivisible when it cannot be validly performed in parts,

whatever may be the nature of the thing which is the object thereof. The
indivisibility refers to the prestation and not to the object thereof.

A contract of sale is perfected upon the meeting of minds as to the object and
the price, and the parties may reciprocally demand the performance of their
respective obligations from that point on.

Rescission creates the obligation to return the object of the contract. It can be
carried out only when the one who demands rescission can return whatever he
may be obliged to restore. To rescind is to declare a contract void at its
inception and to put an end to it as though it never was. It is not merely to
terminate it and release the parties from further obligations to each other, but
to abrogate it from the beginning and restore the parties to their relative
positions as if no contract has been made.

When rescission is sought under Article 1191 of the Civil Code, it need not be
judicially invoked because the power to resolve is implied in reciprocal
obligations.

SPOUSES ROBERTO AND ADELAIDA PEN VS. SPOUSES SANTOS AND

LINDA JULIAN
G.R. No. 160408, January 11, 2016 BERSAMIN, J.:
FACTS: On April 9, 1986, the appellees (the Julians) obtained a Php 60,000.00
loan from appellant Adelaida Pen. On May 3, 1986, they had again extended
loans in the amounts of Php 50, 000.00 and Php 10, 000.00, respectively by
appellant Adelaida. The initial interests were deducted by the appellant, (1) Php
3,600.00 from the Php 60,000.00 loan; (2) Php 2,400.00 from the Php
50,000.00 loan; and (3) Php 600.00 from the Php 10,000.00 loan. Two (2)
promissory notes were executed by the appellees in favor of appellant. To
evidence the foregoing loans, one dated April 9, 1986 and payable on June 15,
1986 for the Php 60,000.00 loan and another dated May 22, 1986 and payable
on July 22, 1986 for the Php 50,000.00 loan. Both loans were charged interest
at 6% per month. As security, on May 23 1986, the appellees executed a Real
Estate Mortagage over their property covered by TCT NO. 327733 registered
under the name of appellee, Santos Julian Jr. The owner’s duplicate of TCT
NO. 327733 was delivered to the appellants.

When the loans became due and demandable, appellees failed to pay despite
several demands. Subsequently, the appellant decided to institute foreclosure
proceedings. However, she was prevailed by the appellee Linda not to foreclose
the property because of the cost of litigation and since it would cause her
embarrassment as the proceedings will be announced in public places at the
City Hall, where she has many friends. Instead, appellee Linda offered their
mortgaged property as payment in kind. After the ocular inspection, the parties
agreed to have the property valued at Php 70,000.00. Thereafter, on October
22, 1986, appellee executed a two (2) page Deed of Sale duly signed by her on
the left margin and over printed name. After the execution of the Deed of Sale,
appellant Pen paid the capital gains and real property tax. The title of the
property was transferred to the appellant by the issuance of TCT NO. 364880
on July 17, 1987. A reconstituted title was also issued to the appellants on
July 09, 1994whe the Quezon City Register of Deeds was burned.

In December 1992, Linda Julian offered to pay Adelaida the amount of P150,
000.00 to which the latter refused and demanded that she be paid the amount
of P250, 000.00. Unable to meet the demand, Linda desisted and requested
that she be shown the land title which she conveyed to Adelaida, but was
refused. Upon verification with the Registry of Deeds, she was informed that
the title to the mortgaged property had already been registered in the name of
Adelaida who have been paying the capital gains and required real property
tax. After said discoveries, Julians filed an Affidavit of Adverse Claim claiming
that said Absolute Deed of Sale is void.

ISSUE: WON there is a valid Absolute Deed of Sale.

HELD: NO. Article 2088 of the Civil Code prohibits the creditor from
appropriating the things given by way of pledge or mortgage, or from disposing
of them; any stipulation to the contrary is null and void.
Dacion en pago is in the nature of a sale because property is alienated in favor
of the creditor in satisfaction of a debt in money.

In a sale, the contract is perfected at the moment when the seller obligates
herself to deliver and to transfer ownership of a thing or right to the buyer for a
price certain, as to which the latter agrees.

MAE FLOR GALIDO v. NELSON P. MAGRARE, EVANGELINE M. PALCAT,

RODOLFO BAYOMBONG, AND REGISTER OF DEEDS OF ANTIQUE, SAN
JOSE, ANTIQUE
G.R. No. 206584, January 11, 2016

FACTS: The controversy revolves around three parcels of land, designated as

Lot 1052-A-l, Lot 1052-A-2 and Lot 1052-A-3, all of the San Jose, Antique
Cadastre. These parcels of land were, prior to subdivision in 1999, part of Lot
1052-A which was covered by TCT No. T-21405 in the name of Andigan.

On 28 December 1998, Andigan sold undivided portions of Lot 1052-A to

Nelson P. Magrare (Magrare), Evangeline M. Palcat (Palcat) and Rodolfo
Bayombong (Bayombong). To Magrare was sold an undivided portion with an
area of 700 square meters, more or less; to Palcat, 1,000 square meters, more
or less; and to Bayombong, 500 square meters, more or less.

Andigan caused the subdivision of Lot 1052-A into five lots, namely: Lot 1052-
A-l, Lot 1052-A-2, Lot 1052-A-3, Lot 1052-A-4 and Lot 1052-A-5. On 18
October 1999, TCT No. T-21405 was cancelled and new certificates were issued
for the subdivided portions. Pertinent to the case are TCT No. T-22374 which
was issued for Lot 1052-A-l, TCT No. T-22375 for Lot 1052-A-2 and TCT No. T-
22376 for Lot 1052-A-3, all in the name of Andigan. Andigan did not turn over
the new TCTs to Magrare, Palcat and Bayombong, and the latter were unaware
of the subdivision.

On 8 May 2000, Andigan mortgaged the same three lots to petitioner and the
latter came into possession of the owner's duplicate copies of TCT Nos. T-
22374, T-22375 and T-22376.

On 6 February 2001, at 11:00 a.m., Magrare, Palcat and Bayombong registered

their respective adverse claims on TCT Nos. T-22374, T-22375 and T-22376.
On the same day, at 3:00 p.m., petitioner also registered her mortgage on the
same TCTs.

On 22 February 2001, Magrare, Palcat and Bayombong filed before the RTC of
San Jose, Antique a Petition to Compel the Surrender to the Register of Deeds
of Antique the Owner's Duplicate Copies of TCT No. T-22374 Issued for Lot
1052-A-l; TCT No. T-22375 Issued for Lot 1052-A-2; and TCT No. T-22376
Issued for Lot 1052-A-3, all of the San Jose Cadastre against the Spouses
Isagani and Merle Andigan. The case, raffled to Branch 11 and docketed as
Civil Case No. 2001-2-3230, was tried and decided on its merits.

ISSUE: Whether or not the petitioner in a buyer in good faith.

HELD: NO. Under Art. 2085 of the Civil Code, two (2) of the prescribed
requisites for a valid mortgage are, that, the mortgagor be the absolute owner
of the thing mortgaged and, that, he has the free disposal thereof.

One who deals with property registered under the Torrens system need not go
beyond the certificate of title, but only has to rely on the certificate of title.

A purchaser in good faith and for value is one who buys the property of
another without notice that some other person has a right to or interest in
such property and pays a full and fair price for the same at the time of such
purchase, or before he has notice of the claims or interest of some other person
in the property.

FABIO CAHAYAG and CONRADO RIVERA vs. COMMERCIAL CREDIT

CORPORATION, represented by its President, LEONARDO B. ALEJANDRO;
TERESITA T. QUA, assisted by her husband ALFONSO MA. QUA; and the
REGISTER OF DEEDS OF LAS PINAS, METRO MANILA, DISTRICT IV
G.R. No. 168078, January 13, 2016

FACTS: Petitioner Dulos Realty was the registered owner of certain residential
lots covered by Transfer Certificate of Title (TCT) Nos. S-39767, S-39775, S-
28335, S-39778 and S-29776, located at Airmen's Village Subdivision, Pulang
Lupa II, Las Pinas, Metro Manila. On 20 December 1980, Dulos Realty
obtained a loan from respondent CCC in the amount of P300,000. To secure
the loan, the realty executed a Real Estate Mortgage over the subject properties
in favor of respondent. The mortgage was duly annotated on the certificates of
title on 3 February 1981.

On 29 March 1981, Dulos Realty entered into a Contract to Sell with petitioner
Cahayag over the lot covered by TCT No. S-39775. On 12 August 1981, Dulos
Realty entered into another Contract to Sell, this time with petitioner Rivera
over the lot covered by TCT No. S-28335. Dulos Realty defaulted in the
payment of the mortgage loan, prompting respondent CCC to initiate
extrajudicial foreclosure proceedings. On 17 November 1981, the auction sale
was held, with respondent CCC emerging as the highest bidder. On 23
November 1981, a Certificate of Sale covering the properties, together with all
the buildings and improvements existing thereon, was issued in favor of CCC.
The Certificate of Sale was annotated on the corresponding titles to the
properties on 8 March 1982. Thereafter, or on 13 January 1983, Dulos Realty
entered into a Contract to Sell with petitioner Escalona over the house and lot
covered by TCT No. S-29776.

On 10 November 1983, an Affidavit of Consolidation in favor of respondent

CCC dated 26 August 1983 was annotated on the corresponding titles to the
properties. By virtue of the affidavit, TCT Nos. S-39775, S-28335, S-39778 and
S-29776 - all in the name of Dulos Realty - were cancelled and TCT Nos.
74531, 74532, 74533 and 74534 were issued in the name of respondent CCC
on the same day. On 10 December 1983, Dulos Realty entered into a Deed of
Absolute Sale with petitioner Baldoza over the property covered by TCT No. S-
39778, together with the improvements existing thereon. On 21 December
1983, respondent CCC, through a Deed of Absolute Sale, sold to respondent
Qua the same subject properties, now covered by TCT Nos. 74531, 74532,
74533 and 74534, which were in the name of respondent CCC. The sale was
duly annotated on the corresponding titles to the properties on 5 January
1984. Accordingly, TCT Nos. 74531, 74532, 74533 and 74534 were cancelled;
and TCT Nos. 77012, 77013, 77014 and 770015 were issued to respondent
Qua on 5 January 1984. Subsequently, respondent Qua filed ejectment suits
individually against petitioners Du1os Realty, Cahayag, Esca1ona, and Rivera
before the Metropolitan Trial Court (MTC) of Las Piñas, Metro Manila.
The MTC rendered Decisions in favor of respondent Qua. It ordered Dulos
Realty, Escalona, Cahayag, and Rivera to vacate the properties. On 8 March
1988, the MTC issued a Writ of Execution to enforce its Decision dated 20
October 1986 in Civil Case No. 2257 against Dulos Realty "and all persons
claiming right under defendant." The subject of the writ of execution was Lot
11 Block II, which was the lot sold by Dulos Realty to petitioner Baldoza.

ISSUE: Whether or not Qua is an innocent purchaser for value.

HELD: Registration of the mortgage establishes a real right or lien in favor of

the mortgagee, as provided by Articles 1312 and 2126 of the Civil Code.

The purpose of registration is to notify persons other than the parties to the
contract that a transaction concerning the property was entered into.

The general rule is that the purchaser is not required to go beyond the Torrens
title if there is nothing therein to indicate any cloud or vice in the ownership of
the property or any encumbrance thereon; The exception arises when the
purchaser or mortgagee has knowledge of a defect in the vendor’s title or lack
thereof, or is aware of sufficient facts to induce a reasonably prudent person to
inquire into the status of the property under litigation.

In extrajudicial foreclosures, the law grants mortgagors or their successors-in-

interest an opportunity to redeem the property within one (1) year from the
date of the sale. The 1-year period has been jurisprudentially held to be
counted from the registration of the foreclosure sale with the Register of Deeds.

There is an established rule under the law on sales that one cannot give what
one does not have.

Ownership is not a requirement for a valid contract of sale; it is a requirement

for a valid transfer of ownership.

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 person’s claim.”

TIMOTEO BACALSO and DIOSDADA BACALSO vs. GREGORIA B. ACA-AC,

EUTIQUIA B. AGUILA, JULIAN BACUS and EVELYN SYCHANGCO
G.R. No. 172919, January 13, 2016

FACTS: The Bacus siblings were tbe registered owners of a parcel of land
described as Lot No. 1809-G-2 located in San Roque, Talisay, Cebu with an
area of 1,200 square meters and covered by Transfer Certificate of Title (TCT)
No. 59260. The Bacus siblings inherited the said property from their mother
Matea Bacalso (Matea). On October 15, 1987, the Bacus siblings executed a
Deed of Absolute Sale conveying a portion of Lot No. 1809-G-2 with an area of
271 sq m, described as Lot No. 1809-G-2-C, in favor of their cousin, Timoteo
for and in consideration of the amount of P8,000.00. On March 4, 1988,
however, Timoteo, together with his sisters Lucena and Victoria and some of
his cousins filed a complaint for declaration of nullity of documents, certificates
of title, reconveyance of real property and damages against the Bacus siblings
and four other persons before the RTC of Cebu City, Branch 12, and was
docketed as Civil Case No. CEB-6693. They claimed that they are co-owners of
the three-fourths portion of Lot No. 1809-G (which Lot No. 1809-G-2-C was
originally part of) as Matea had paid for the said property for and in behalf of
her brother Alejandro (father of petitioner Timoteo) and sisters Perpetua and
Liberata, all surnamed Bacalso. On November 29, 1989, the RTC found that
Matea was the sole owner of Lot No. 1809-G and affirmed the validity of the
conveyances of portions of Lot No. 1809-G made by her children. The same was
affirmed by the CA in a Decision dated March 23, 1992 and became final and
executory on April 15, 1992.

Undaunted, Timoteo and Diosdada Bacalso (petitioners) filed on October 26,

1995, a complaint for declaration of nullity of contract and certificates of title,
reconveyance and damages against the Bacus siblings, this time claiming
ownership over Lot No. 1809-G-2-C by virtue of the Deed of Absolute Sale
dated October 15, 1987. They claimed, however, that the Bacus siblings
reneged on their promise to cause the issuance of a new TCT in the name of
the petitioners. Moreover, the petitioners alleged that the Bacus siblings have
caused the subdivision of Lot No. 1809-G-2 into four lots and one of which is
Lot No. 1809-G-2-C which is now covered by TCT No. 70783. After subdividing
the property, the Bacus siblings, on February 11, 1992, without knowledge of
the petitioners, sold Lot No. 1809-G-2-C again to respondent Evelyn Sychangco
(Sychangco) and that TCT No. 74687 covering the same property was issued in
her name. In their answer, the Bacus siblings denied the allegations of the
petitioners and claimed that the alleged sale of Lot No. 1809-G-2-C in favor of
the petitioners did not push through because the petitioners failed to pay the
purchase price thereof. For her part, Sychangco averred that she is a buyer in
good faith and for value as she relied on what appeared in the certificate of title
of the property which appeared to be a clean title as no lien or encumbrance
was annotated therein. On April 19, 2000, the RTC issued a Decision declaring
the Deed of Absolute Sale dated October 15, 1987 void for want of
consideration after finding that the petitioners failed to pay the price of the
subject property. Moreover, the RTC held that even granting that the sale
between the Bacus siblings and the petitioners was valid, the petitioners still
cannot ask for the rescission of the sale of the disputed portion to Sychangco
as the latter was a buyer in good faith, thus has a better right to the property.
Aggrieved by the foregoing disquisition of the RTC, the petitioners interposed
an appeal with the CA. On December 14, 2005, however, the CA affirmed the
ruling of the RTC. The petitioners sought a reconsideration13 of the CA
decision but it was denied in a Resolution dated May 30, 2006.

ISSUE: Whether or not the Absolute Deed of Sale is null and void ab initio for
failure or want of consideration.

HELD: YES. Well-settled is the rule that where there is no consideration, the
sale is null and void ab initio.

TOMAS P. TAN, JR. v. JOSE G. HOSANA

G.R. No. 190846, February 03, 2016 BRION, J.:

FACTS: The respondent Jose G. Hosana (Jose) married Milagros C. Hosana

(Milagros) on January 14, 1979.4 During their marriage, Jose and Milagros
bought a house and lot located at Tinago, Naga City, which lot was covered by
Transfer Certificate of Title (TCT) No. 21229. On January 13, 1998, Milagros
sold to the petitioner Tomas P. Tan, Jr. (Tomas) the subject property, as
evidenced by a deed of sale executed by Milagros herself and as attorney-in-fact
of Jose, by virtue of a Special Power of Attorney (SPA) executed by Jose in her
favor.6 The Deed of Sale stated that the purchase price for the lot was
P200,000.00. After the sale, TCT No. 21229 was cancelled and TCT No. 32568
was issued in the name of Tomas.
On October 19, 2001, Jose filed a Complaint for Annulment of
Sale/Cancellation of Title/Reconveyance and Damages against Milagros,
Tomas, and the Register of Deeds of Naga City. The complaint was filed before
the Regional Trial Court (RTC), Branch 62, Naga City. In the complaint, Jose
averred that while he was working in Japan, Milagros, without his consent and
knowledge, conspired with Tomas to execute the SPA by forging Jose's
signature making it appear that Jose had authorized Milagros to sell the
subject property to Tomas. In his Answer, Tomas maintained that he was a
buyer in good faith and for value.11 Before he paid the full consideration of the
sale, Tomas claimed he sought advice from his lawyer-friend who told him that
the title of the subject lot was authentic and in order. Furthermore, he alleged
that the SPA authorizing Milagros to sell the property was annotated at the
back of the title.

ISSUE: Whether the deed of sale can be used as the basis for the amount of
consideration paid.

HELD: One who pleads payment has the burden of proving it; the burden rests
on the defendant to prove payment, rather than on the plaintiff to prove
nonpayment.

A void or inexistent contract has no force and effect from the very beginning.

Unjust enrichment exists “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.”

OSCAR S. VILLARTA v. GAUDIOSO TALAVERA, JR.

G.R. No. 208021, February 03, 2016 CARPIO, J.:

FACTS: Appellant Oscar Villarta filed the complaint a quo for reformation of
contracts, moral damages, and attorney's fees against appellee Gaudioso
Talavera, Jr. He alleged: he owned four parcels of land, all situated in Santiago
City viz: a) 1,243 square meters under TCT No. T-130095, b) 25,000 square
meters under TCT No. T-12142, c) 296 square meters [under] TCT No. T-
53252, and d) 1,475 square meters under TCT No. T-214950; sometime in
1993, he ventured into treasure hunting activites; in order to infuse his much
needed capital, he obtained several loans from appellee who was a distant
relative; as of 1996, his loan already reached P800,000.00, inclusive of 3%
interest per month; he religiously paid the interest, but when the 1997
financial crisis struck, appellee raised the interest to a rate between 7% and
10%; in 1995, appellee employed insidious words and machinations in
convincing him to execute a deed of absolute sale over TCT No. T-130095;
however, the real agreement was that the lot would only serve as security for
the several loans he obtained; in 1997, he was again convinced to execute two
more deeds of conveyance over the two lots under TCTs T-12142 and T-53252,
respectively; in 2001, he was informed that his loan had already reached
P2,000,000.00 and since the 3 parcels of land were no longer sufficient to cover
the loan, he was further convinced to mortgage to Maybank additional real
properties, on top of the 3 parcels of land, to secure a P50 million loan; when
appellee realized that his loan was going to be approved, the former demanded
that he execute a deed of absolute sale over the lot under TCT T-214950, yet,
the real agreement was that the lot would only serve as collateral; TCT T-53252
and T-12142 were returned to him; when he requested appellee to remove the
encumbrance on TCTs T-130095 and T-214950 so that the bank could process
the loan, appellee suddenly demanded P5,000,000.00; when the bank learned
of it, he was advised not to pursue the loan because he would no longer have
the means to pay it; appellee took advantage of the situation and caused the
cancellation of TCT T-214950, by utilizing the deed of absolute sale, contrary to
their real agreement that the property should only serve as collateral; the
Deeds of Absolute Sale dated March 1995 and May 18, 2001 were in reality an
equitable mortgage; the P500,000.00 consideration for the Deed of Absolute
Sale dated May 18, 2001 was grossly inadequate because the actual market
value of the subject land was P5,900,000.00; despite the execution of the two
deeds of absolute sale, he still had possession of the subject lots and and even
leased them to Wellmade Manufacturing Corp.; because of appellee's
fraudulent act of transferring titles of the two lots to his name, he suffered
sleepless nights and serious anxiety; and, he also prayed for attorney's fees
and costs of suit.

ISSUE: The Honorable Court of Appeals erred in holding that the petitioner's
request for recomputation to determine his correct obligation must fail in view
of said Honorable Court's findings that there is no equitable mortgage despite
the clear presence of the circumstances mentioned under Article 1602 of the
Civil Code.

HELD: Dacion en pago is the delivery and transmission of ownership of a thing

by the debtor to the creditor as an accepted equivalent of the performance of an
existing obligation.

JOEY R. PEÑA v. JESUS DELOS SANTOS AND THE HEIRS OF ROSITA

DELOS SANTOS FLORES.
G.R. No. 202223, March 02, 2016 REYES, J.

FACTS: Jesus Delos Santos (Jesus) and Rosita Delos Santos Flores (Rosita)
were the judgment awardees of the two-thirds portion or 9,915 square meters
of four adjoining lots designated as Lots 393-A, 393-B, 394-D and 394-E,
measuring 14,771 sq m, located in Boracay Island, Malay, Aldan.5 The award
was embodied in the Decision dated April 29, 1996 of the Regional Trial Court
(RTC) of Kalibo, Aklan in the herein Civil Case No. 3683. The losing parties in
the case, Vicente Delos Santos, et al. (plaintiffs) and Spouses Fred and Joan
Elizalde (appellants), appealed the foregoing judgment to the CA thru petitions
separately docketed as CA-G.R. CV No. 54136 and CA-G.R. SP No. 48475,
respectively. Both appeals were dismissed and considered withdrawn in the CA
Resolution dated May 11, 1999 upon the appellants' motion to withdraw
appeal. In the subsequent CA Resolution dated January 31, 2000, the motion
for reconsideration and motion to reinstate appeal filed by the plaintiffs were
denied for being time-barred as it was filed nine days late. The plaintiffs sought
recourse with the Court via a petition for review on certiorari docketed as G.R.
Nos. 141810 and 141812. In a Decision dated February 2, 2007, the Court
denied the petition on the ground that the plaintiffs already lost their right of
appeal to the CA when they failed to file an appellant's brief during the more
than 180-day extension.9 The Court reiterated its ruling in a Resolution dated
April 23, 2007, which denied reconsideration. An Entry of Judgment in the
case was forthwith issued. The case was then remanded to the RTC of Kalibo,
Aklan for the execution proceedings during which a Motion for Substitution
with a Motion for a Writ of Execution and Demolition11 dated March 14, 2008
was filed by Peña. Peña averred that he is the transferee of Jesus and Rosita's
adjudged allotments over the subject lots. He claimed that he bought the same
from Atty. Romeo Robiso (Atty. Robiso) who in turn, acquired the properties
from Jesus and Rosita through assignment and sale. Atty. Robiso later on sold
Lots No. 393-A and 394-D to Peña on December 15, 2006 thru a Deed of
Absolute Sale. The tax declarations over the said portions were subsequently
registered in Peña's name. The plaintiffs opposed Peña's motion claiming that
the conveyance made by Jesus and Rosita in favor of Atty. Robiso was null and
void for being a prohibited transaction because the latter was their counsel in
the case. Apparently, Atty. Robiso was engaged by Jesus and Rosita to be their
counsel in Civil Case No. 3683 by virtue of an Attorney's Agreement and
Undertaking dated July 11, 1998. Under the agreement, Atty. Robiso bound
himself to render his legal services in connection with Jesus and Rosita's
involvement as party-litigants in Civil Case No. 3683 and to any proceedings
that may arise in connection therewith before the CA and this Court. Atty.
Robiso undertook to advance his own funds for all expenses and costs he may
incur in relation to the case. In consideration thereof, Jesus and Rosita obliged
themselves to give or pay to him as contingent professional fees, 2,000 sq m of
any and all lands that the courts will award to them in the case.

ISSUE: Whether or not there is a valid transfer of title

RULING: NONE. Under Article 1409 of the Code, contracts which are expressly
prohibited or declared void by law are considered inexistent and void from the
beginning.
Estoppel is a principle in equity and pursuant to Article 1432 it is adopted
insofar as it is not in conflict with the provisions of the Civil Code and other
laws.

EQUITABLE SAVINGS BANK, (NOW KNOWN AS THE MERGED ENTITY

"BDO UNIBANK, INC.") v. ROSALINDA C. PALCES
G.R. No. 214752, March 09, 2016 PERLAS-BERNABE, J.:

FACTS: On August 15, 2005, respondent purchased a Hyundai Starex GRX

Jumbo (subject vehicle) through a loan granted by petitioner in the amount of
P1, 196,100.00. In connection therewith, respondent executed a Promissory'
Note with Chattel Mortgage in favor of petitioner, stating, inter alia, that: (a)
respondent shall pay petitioner the aforesaid amount in 36-monthly
installments of P33,225.00 per month, beginning September 18, 2005 and
every 18th of the month thereafter until full payment of the loan; (b)
respondent's default in paying any installment renders the remaining balance
due and payable; and (c) respondent's failure to pay any installments shall give
petitioner the right to declare the entire obligation due and payable and may
likewise, at its option, x x x foreclose this mortgage; or file an ordinary civil
action for collection and/or such other action or proceedings as may be allowed
under the law. From September 18, 2005 to December 21, 2006, respondent
paid the monthly installment of P33, 225.00 per month. However, she failed to
pay the monthly installments in January and February 2007, thereby
triggering the acceleration clause contained in the Promissory Note with
Chattel Mortgage and prompting petitioner to send a demand letter dated
February 22, 2007 to compel respondent to pay the remaining balance of the
loan in the amount of P664,500.00. As the demand went unheeded, petitioner
filed on March 7, 2007 the instant Complaint for Recovery of Possession with
Replevin with Alternative Prayer for Sum of Money and Damages against
respondent before the RTC, praying that the court a quo: (a) issue a writ of
replevin ordering the seizure of the subject vehicle and its delivery to petitioner;
or (b) in the alternative as when the recovery of the subject vehicle cannot be
effected, to render judgment ordering respondent to pay the remaining balance
of the loan, including penalties, charges, and other costs appurtenant thereto.
Pending respondent's answer, summons and a writ of replevin were issued and
served to her personally on April 26, 2007, and later on, a Sheriffs Return
dated May 8, 2007 was submitted as proof of the implementation of such writ.
In her defense, while admitting that she indeed defaulted on her installments
for January and February 2007, respondent nevertheless insisted that she
called petitioner regarding such delay in payment and spoke to a bank officer,
a certain Rodrigo Dumagpi, who gave his consent thereto. Respondent then
maintained that in order to update her installment payments, she paid
petitioner the amounts of P70,000.00 on March 8, 2007 and P33,000.00 on
March 20, 2007, or a total of P103,000.00. Despite the aforesaid payments,
respondent was surprised when petitioner filed the instant complaint, resulting
in the sheriff taking possession of the subject vehicle.

ISSUE: Whether or not the CA correctly ordered petitioner to return to

respondent the amount of P103, 000.00 representing the latter's late
installment payments

HELD: Article 1484 of the Civil Code governs the sale of personal properties in
installments.

There was no vendor-vendee relationship between respondent and petitioner. A

judicious perusal of the records would reveal that respondent never bought the
subject vehicle from petitioner but from a third party, and merely sought
financing from petitioner for its full purchase price.

In view of petitioner’s prayer for and subsequent possession of the subject

vehicle in preparation for its foreclosure, it is only proper that petitioner be
ordered to commence foreclosure proceedings, if none yet has been
conducted/concluded, over the vehicle in accordance with the provisions of the
Chattel Mortgage Law, i.e., within thirty (30) days from the finality of this
Decision.

ROSARIO VICTORIA AND ELMA PIDLAOAN v. NORMITA JACOB

PIDLAOAN, HERMINIGILDA PIDLAOAN AND EUFEMIA PIDLAOAN
G.R. No. 196470, April 20, 2016 BRION, J.:

FACTS: The petitioners Rosario Victoria (Rosario) and Elma lived together since
1978 until Rosario left for Saudi Arabia.
In 1984, Elma bought a parcel of land with an area of 201 square meters in
Lucena City and was issued Transfer Certificate of Title (TCT) No. T-50282.2
When Rosario came home, she caused the construction of a house on the lot
but she left again after the house was built. Elma allegedly mortgaged the
house and lot to a certain Thi Hong Villanueva in 1989. When the properties
were about to be foreclosed, Elma allegedly asked for help from her sister-in-
law, Eufemia Pidlaoan (Eufemia), to redeem the property. On her part, Eufemia
called her daughter abroad, Normita, to lend money to Elma. Normita agreed to
provide the funds. Elma allegedly sought to sell the land. When she failed to
find a buyer, she offered to sell it to Eufemia or her daughter. On March 21,
1993, Elma executed a deed of sale entitled "Panananto ng Pagkatanggap ng
Kahustuhang Bayad" transferring the ownership of the lot to Normita. The last
provision in the deed of sale provides that Elma shall eject the person who
erected the house and deliver the lot to Normita. The document was signed by
Elma, Normita, and two witnesses but it was not notarized. When Elma and
Normita were about to have the document notarized, the notary public advised
them to donate the lot instead to avoid capital gains tax. On the next day, Elma
executed a deed of donation in Normita's favor and had it notarized. TCT No. T-
50282 was cancelled and TCT No. T-70990 was issued in Normita's name.
Since then, Normita had been paying the real property taxes over the lot but
Elma continued to occupy the house. Rosario found out about the donation
when she returned to the country a year or two after the transaction. In 1997,
the petitioners filed a complaint for reformation of contract, cancellation of TCT
No. T-70990, and damages with prayer for preliminary injunction against
Eufemia, Normita, and Herminigilda Pidlaoan (respondents).

ISSUE: Whether the transaction between Elma and Normita was an equitable
mortgage

HELD: NO. One who deals with property registered under the Torrens system
has a right to rely on what appears on the face of the certificate of title and
need not inquire further as to the property’s ownership.

The issuance of a certificate of title does not preclude the possibility that
persons not named in the certificate may be co-owners of the real property, or
that the registered owner is only holding the property in trust for another
person.

Mere construction of a house on another’s land does not create a co-

ownership.existing debt by A document is absolutely simulated when the
parties have no intent to bind themselves at all, while it is relatively simulated
when the parties concealed their true agreement.

An equitable mortgage is one which, although lacking in some formality or

other requisites demanded by statute, nevertheless reveals the intention of the
parties to charge real property as security for a debt, and contains nothing
impossible or contrary to law.

TRIFONIA D. GABUTAN, DECEASED, HEREIN REPRESENTED BY HER

HEIRS, NAMELY: ERLINDA LLAMES, ELISA ASOK, PRIMITIVO GABUTAN,
VALENTINA YANE; BUNA D. ACTUB, FELISIA TROCIO, CRISANTA D.
UBAUB, AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED
BY HIS HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY
DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES
NICOLAS & EVELYN DAILO v. DANTE D. NACALABAN, HELEN N.
MAANDIG, SUSAN N. SIAO, AND CAGAYAN CAPITOL COLLEGE
G.R. Nos. 185857-58, June 29, 2016 JARDELEZA, J.:

FACTS: On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased an

800-square meter parcel of prime land (property) in Poblacion, Cagayan de Oro
City from Petra, Fortunata, Francisco and Dolores, all surnamed Daamo.
Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-2259 covering the
property was issued in the name of Godofredo. He thereafter built a house on
it. Godofredo died on January 7, 1974. ITe was survived by his wife,
Baldomera, and their children, Dante, Helen, and Susan. On March 19, 1979,
Baldomera issued a Certification in favor of her mother, Melecia. It provided, in
effect, that Baldomera was allowing her mother to build and occupy a house on
the portion of the property. Accordingly, the house was declared for taxation
purposes. The tax declaration presented in evidence showed that Melecia
owned the building on the land owned by Godofredo. Baldomera died on
September 11, 1994. On July 3, 1996, her children executed an Extrajudicial
Settlement of Estate of Deceased Person with Sale (Extrajudicial Settlement
with Sale) where they adjudicated unto themselves the property and sold it to
the College. On August 22, 1996, TCT No. T-2259 was cancelled and TCT No.
T-111846 covering the property was issued in the name of the College. Melecia
died on April 20, 1997 and was survived by her children, Trifonia, Buna,
Felisia, Crisanta, and Tirso. In a letter dated May 5, 1997, the College
demanded Trifonia D. Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn
Dailo, the heirs of Melecia who were occupying the house on the property, to
vacate the premises. On July 7, 1997, Gabutan, et al. filed a Complaint for
Reconveyance of Real Property, Declaration of Nullity of Contracts, Partition
and Damages with Writ of Preliminary Attachment and Injunction against
Nacalaban, et al. and the College. They alleged that: (1) Melecia bought the
property using her own money but Godofredo had the Deed of Absolute Sale
executed in his name instead of his mother-in-law; (2) Godofredo and
Baldomera were only trustees of the property in favor of the real owner and
beneficiary, Melecia; (3) they only knew about the Extrajudicial Settlement with
Sale upon verification with the Registry of Deeds; and (4) the College was a
buyer in bad faith, being aware they were co-owners of the property.

ISSUE: Whether the College is a buyer in good faith.

HELD: NO. Article 1448 of the Civil Code provides in part that there is an
implied trust when property is sold, and the legal estate is granted to one party
but the price is paid by another for the purpose of having the beneficial interest
of the property.

An action for reconveyance is a legal and equitable remedy granted to the

rightful landowner, whose land was wrongfully or erroneously registered in the
name of another, to compel the registered owner to transfer or reconvey the
land to him.

An action for reconveyance based on an implied or a constructive trust

prescribes ten (10) years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property. 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.
Whether one is a buyer in good faith and whether due diligence and prudence
were exercised are question of fact.

FE B. SAGUINSIN v. AGAPITO LIBAN, CESARIO LIBAN, EDDIE TANGUILAN,

PACENCIA MACANANG, ISIDRO NATIVIDAD, TIMMY SIBBALUCA AND
ISIDRO SIBBALUCA
G.R. No. 189312, July 28, 2016 JARDELEZA, J.:

FACTS: On June 23, 1952, Cristino Sibbaluca (Cristino) purchased from one
Pedro Espero a parcel of land with an area of 10.9524 hectares, located in
Bacayan, Baggao, Cagayan. On October 21, 1972, Presidential Decree (PD) No.
278 was promulgated. Under this law, the Operation Land Transfer (OLT) was
launched to implement and enforce the provisions on transferring ownership to
qualified tenant-farmers or farmer beneficiaries of the rice or corn land they are
cultivating under a system of sharecrop or lease tenancy, with the landowner
having retention of not more than seven hectares of agricultural land.
Cristino's property was placed under the coverage of the OLT. On March 21,
1975, Cristino sold seven hectares of the lot covered by Transfer Certificate of
Title (TCT) No. T-1336 to Lito Sibbaluca (Lito); and on October 12, 1976, he
sold the remaining 3.9524 hectare property (property) to petitioner. For the sale
to petitioner, Cristino executed an Affidavit certifying that the property was not
tenanted (Affidavit of Non- Tenancy). On December 4, 1987 and February 19,
1988, Emancipation Patents (EPs) were issued in favor of the farmer-
beneficiaries of the property including Agapito Liban, Cesario Liban, Frederito
Tanguilan, Eustaquio Macanang, Jr., Pacita Vda. De Macanang, Isidro
Natividad, Saturnino Sibbaluca and Isidro Sibbaluca. In a Resolution dated
October 7, 1991, the Provincial Agrarian Reform Office (PARO) recommended
the following: (1) granting the application of Isabel; (2) causing the recall and
cancellation of the Certificate of Land Transfer (CLT) and/or EPs awarded to
the farmer- beneficiaries; and (3) the execution of a leasehold contract between
the landowner and the farmer-beneficiaries. The PARO ruled that the sale of
the property to petitioner does not affect the coverage of the land under the
OLT because the property still belonged to spouses Cristino and Isabel in 1972
when PD No. 27 took effect. In an Order dated January 30, 1995, the DAR
Regional Office (DARRO) OIC Director affirmed the PARO Order and authorized
Isabel to withdraw any amortization deposited by the tenants to the Land Bank
of the Philippines. In addition, he declared the sale between Cristino and
petitioner "null and void, x x x being contrary to the provisions of DAR Memo
Circular No. 8, Series of 1974, which prohibits the transfer of ownership of
tenanted rice/corn lands after October 21, 1972." In the same Order, the
DARRO Director stated that the Municipal Agrarian Reform Office (MARO) of
Baggao, Cagayan placed the land under OLT "finding that [the property] is
devoted to the production of palay and [is] tenanted. The DARRO ruled in
petitioner's favor. Respondents appealed the resolution to the DAR, but the
DAR Secretary dismissed the appeal. Respondents moved for the
reconsideration of the Order, but the DAR Secretary denied their motion for
lack of merit. Respondents filed an appeal with the Office of the President (OP).
In its Decision, the OP granted the appeal and denied the application for
retention of Isabel as substituted by petitioner. Petitioner thus appealed to the
CA. The CA affirmed the OP Decision

ISSUE: Whether or not the petitioner is a buyer in good faith.

HELD: NO. A purchaser m good faith is one who buys a property without
notice that some other person has a right to, or interest in, the property and
pays full and fair price at the time of purchase or before he has notice of the
claim or interest of other persons in the property.

A certificate of title cannot always be considered as conclusive evidence of

ownership.

SPOUSES ARCHIBAL LATOJA AND CHARITO LATOJA v. HONORABLE

ELVIE LIM, PRESIDING JUDGE, BRANCH 1, REGIONAL TRIAL COURT,
BORONGAN, EASTERN SAMAR, ATTY. JESUS APELADO, REGISTER OF
DEEDS, BORONGAN, EASTERN SAMAR, ALVARO CAPITO, AS SHERIFF,
BRANCH 2, REGIONAL TRIAL COURT, BORONGAN, EASTERN SAMAR,
AND TERESITA CABE, REPRESENTED BY ADELINA ZAMORA
G.R. No. 198925, July 13, 2016 SERENO, C.J.:

FACTS: On 21 May 1997, respondent Cabe, together with Donato A. Cardona

II (Cardona II), executed a Deed of Sale with Pacto de Retro3 over a parcel of
land covered by OCT No. 41, registered under the "Heirs of Donato Cardona
represented by Jovita T. Cardona." The sale was with the conformity of Jovita
Cardona and spouses Rhodo and Myrna Cardona (Spouses Cardona), who are
Cardona II's grandmother and parents, respectively. For failure of Cardona II to
repurchase the property from her within one year as agreed upon in the deed,
Cabe filed a Petition for Consolidation of Ownership over OCT No. 41 pursuant
to Article 1607 of the Civil Code. Docketed as Civil Case No. 3488
(consolidation case) and assigned to RTC-Br. 2, the Petition was granted by the
trial court through a Decision dated 20 May 2002. Cardona II questioned the
trial court's Decision by filing with the Court of Appeals (CA) a Rule 65 Petition
for Certiorari8 which was dismissed by the CA. Cardona II further appealed to
the Supreme Court, but his appeal was also denied and, on 13 July 2005, an
Entry of Judgment issued. Pursuant to this Court's Resolution denying
Cardona IPs appeal, respondent Cabe filed a motion for execution of the RTC
Decision in the consolidation case which was granted. RTC-Br. 2 then issued a
Writ of Execution. Pursuant thereto, the Register of Deeds cancelled OCT No.
41 and issued, in lieu thereof, Transfer Certificate of Title No. 114-2011000028
under the name of respondent Cabe. Thereafter, Cabe prayed for the issuance
of a Writ of Possession. This was granted through the assailed Order15 of
Judge Lim as acting Presiding Judge of RTC-Br. 2.16 In accordance with the
assailed Order, a Writ of Possession was issued in favor of Cabe.17
Subsequently, a Notice of Demand to Vacate18 was issued by the court sheriff
of RTC-Br. 2 pursuant to the Writ of Possession.

ISSUE: Whether or not the Pacto De Retro Sale is to be applied

HELD: YES. The consolidation of title prescribed in Article 1607 of the Civil
Code is merely for the purpose of registering and consolidating title to the
property in case of a vendor a retro’s failure to redeem.

It is basic that in a pacto de retro sale, the title and ownership of the property
sold are immediately vested in the vendee a retro.

PHILIPPINE NATIONAL OIL COMPANY AND PNOC DOCKYARD &

ENGINEERING CORPORATION v. KEPPEL PHILIPPINES HOLDINGS, INC.
G.R. No. 202050, July 25, 2016 BRION, J.:

FACTS: The 1976 Lease Agreement and Option to Purchase almost 40 years
ago or on 6 August 1976, the respondent Keppel Philippines Holdings, Inc.
(Keppel) entered into a lease agreement (the agreement) with Luzon Stevedoring
Corporation (Lusteveco) covering 11 hectares of land located in Bauan,
Batangas. The lease was for a period of 25 years for a consideration of P2.1
million. At the option of Lusteveco, the rental fee could be totally or partially
converted into equity shares in Keppel. At the end of the 25-year Jease period,
Keppel was given the "firm and absolute option to purchase the land for P4.09
million, provided that it had acquired the necessary qualification to own land
under Philippine laws at the time the option is exercised. Apparently, when the
lease agreement was executed, less than 60% of Keppel's shareholding was
Filipino-owned, hence, it was not constitutionally qualified to acquire private
lands in the country. If, at the end of the 25-year lease period (or in 2001),
Keppel remained unqualified to own private lands, the agreement provided that
the lease would be automatically renewed for another 25 years. Keppel was
further allowed to exercise the option to purchase the land up to the 30th year
of the lease (or in 2006), also on the condition that, by then, it would have
acquired the requisite qualification to own land in the Philippines. Together
with Keppel's lease rights and option to purchase, Lusteveco warranted not to
sell the land or assign its rights to the land for the duration of the lease unless
with the prior written consent of Keppel. Accordingly, when the petitioner
Philippine National Oil Corporation (PNOC) acquired the land from Lusteveco
and took over the rights and obligations under the agreement, Keppel did not
object to the assignment so long as the agreement was annotated on PNOC's
title. With PNOC's consent and cooperation, the agreement was recorded as
Entry No. 65340 on PNOC's Transfer of Certificate of Title No. T-50724. To
compel PNOC to comply with the Agreement, Keppel instituted a complaint for
specific performance with the RTC on 26 September 2003 against PNOC. PNOC
countered Keppel's claims by contending that the agreement was illegal for
circumventing the constitutional prohibition against aliens holding lands in the
Philippines. It further asserted that the option contract was void, as it was
unsupported by a separate valuable consideration. It also claimed that it was
not privy to the agreement. After due proceedings, the RTC rendered a decision
in favour of Keppel and ordered PNOC to execute a deed of absolute sale upon
payment by Keppel of the purchase price of P4.09 million. PNOC elevated the
case to the CA to appeal the RTC decision. Affirming the RTC decision in toto,
the CA upheld Keppel's right to acquire the land. It found that since the option
contract was embodied in the agreement - a reciprocal contract - the
consideration was the obligation that each of the contracting party assumed.
Since Keppel was already a Filipino-owned corporation, it satisfied the
condition that entitled it to purchase the land. Failing to secure a
reconsideration of the CA decision, PNOC filed the present Rule 45 petition
before this Court to assail the CA rulings.

ISSUE: Validity of the option contract, i.e., whether the option to purchase the
land given to Keppel is supported by a separate valuable consideration.

HELD: An option contract is a contract where one (1) person (the

offeror/promissor) grants to another person (the offeree/promisee) the right or
privilege to buy (or to sell) a determinate thing at a fixed price, if he or she
chooses to do so within an agreed period.

The consideration for an option contract does not need to be monetary and
may be anything of value.he When the written agreement itself does not state
the consideration for the option contract, the offeree or promisee bears the
burden of proving the existence of a separate consideration for the option.

For uniformity and consistency in contract interpretation, the better rule to

follow is that the consideration for the option contract should be clearly
specified as such in the option contract or clause.second An option
unsupported by a separate consideration stands as an unaccepted offer to buy
(or to sell) which, when properly accepted, ripens into a contract to sell.

When an offer is supported by a separate consideration, a valid option contract

exists, i.e., there is a contracted offer which the offeror cannot withdraw from
without incurring liability in damages. On the other hand, when the offer is not
supported by a separate consideration, the offer stands but, in the absence of a
binding contract, the offeror may withdraw it any time.

When an option to buy or to sell is not supported by a consideration separate

from the purchase price, the option constitutes as an offer to buy or to sell,
which may be withdrawn by the offeror at any time prior to the communication
of the offeree’s acceptance.

THELMA RODRIGUEZ, JOINED BY HER HUSBAND v. SPOUSES JAIME

SIOSON AND ARMI SIOSON, ET AL.
G.R. No. 199180, July 27, 2016

FACTS: This petition is the aftermath of a series of sales transactions entered

into by Neri delos Reyes (Neri) over a portion of a property formerly identified as
Lot 398, with an area of 22,398 square meters, covered by Transfer Certificate
of Title (TCT) No. T-86275 and registered in the name of "Neri delos Reyes,
married to Violeta Lacuata." Sometime in 1997, the Municipality of Orani,
Bataan (Municipality) purchased from Neri an area of about 1.7 hectare of Lot
398, to be used for the extension of the Municipality's public market. Among
other things, it was agreed that upon full payment of the purchase price, Neri
will surrender the mother title to the Municipality for subdivision of the
property on the condition that Neri will equitably share in the expense
thereof.6chanrobleslaw Lot 398 was subsequently subdivided into 5 lots: Lot
398-A, Lot 398-B, Lot 398-C, Lot 398-D, and Lot 398-E. Lots 398-C and 398-D
pertain to the portions that were sold to the Municipality, while Lot 398-E is a
road lot. Consequently, only Lots 398-A and 398-B were left as the remaining
portions over which Neri retained absolute title. TCT Nos. T-209894 and T-
209895 were then respectively issued over Lots 398-A and 398-B and were
both registered in the name of "Neri delos Reyes, married to Violeta Lacuata."
The owner's duplicate copies of TCT Nos. T-209894 and T-209895, however,
were retained by the Municipality pending Neri's payment of his share in the
expenses incurred for the subdivision of Lot 398. These were placed under the
custody of the Municipal Treasurer, where they continue to remain. Neri,
however, alleged that then Municipal Mayor Mario Zuñiga suggested that he
sell Lot 398-A to his aunt, petitioner Thelma Rodriguez (Thelma). The
Municipality would then expropriate the same from Thelma. Neri agreed to the
suggestion. After agreeing to the amount of P1, 243,000.00 as the selling price,
Thelma, on March 20, 1997, issued a check for said amount payable to Neri.
When it fell due, no sufficient funds were available to cover the check.
Consequently, it was agreed that Thelma would pay the purchase price in
installments from March 20, 1997 to September 4, 1997. Thelma, however,
was only able to pay P442, 293.50. On November 12, 2001, Thelma caused the
annotation of an adverse claim on TCT No. T-209894. At about the same time,
Thelma saw an announcement that a new Orani Common Terminal would be
built on Lot 398-A. As she has not yet entered into any agreement regarding
the utilization of said lot, Thelma filed a Complaint for Injunction docketed as
Civil Case No. 7394 against then incumbent mayor Efren Pascual, Jr. (Mayor
Pascual), and the Municipality under claim of ownership. To support her claim,
Thelma incorporated in her complaint a copy of an undated and unnotarized
deed of absolute sale allegedly executed by Neri in her favor. In their joint
verified answer, Mayor Pascual and the Municipality acknowledged that
Thelma became the owner of Lot 398-A by way of purchase from Neri. In 2002,
Neri executed an affidavit claiming that the owner's copies of TCT No. T-209894
(covering Lot 398-A) and TCT No. T-209895 (covering Lot 398-B) were lost,
which was annotated on the original copy of TCT No. T-209894 on May 8,
2002. Two days after, or on May 10, 2002, Neri caused the cancellation of
Thelma's adverse claim. Neri also caused the reconstitution of new owner's
copies of TCT Nos. T-209894 and T-209895. Thereafter, new copies of TCT Nos.
T-209894 and T-209895 were issued, and Neri then sold Lot 398-A to Spouses
Jaime and Armi Sioson, Spouses Joan and Joseph Camacho, and Agnes
Samonte (respondents) - in a deed of sale dated November 27, 2002. A special
power of attorney was executed by Violeta delos Reyes (Violeta) in favor of Neri
for the purpose. Consequently, TCT No. T-209894 was cancelled, and TCT No.
T-226775 was thus issued in the respondents' names. Upon the issuance of
TCT No. T-226775, the respondents declared Lot 398-A for tax purposes and
paid them accordingly. They sought to take actual possession thereof by filling
it; however, after they filled said lot with about 40 truckloads of soil/fillings,
Thelma sent two armed blue guards who entered the premises and set up a
tent therein. The respondents brought the matter to the attention of barangay
authorities who referred them to the municipal mayor. As the municipal mayor
did not take any action, the respondents filed a forcible entry case against
Thelma before the Municipal Circuit Trial Court of Orani-Samal, Bataan,
docketed as Civil Case No. 843. The said ejectment case is still pending.

After Thelma learned of the second sale of Lot 398-A, she filed against the
respondents a complaint for the Declaration of Nullity of the Second Sale and
TCT No. T-226775 on February 11, 2003, docketed as Civil Case No. 7664. In
support of her claim, Thelma once again presented a deed of absolute sale
executed by Neri in her favor. This time, the deed of sale she presented was
duly signed by her and Neri, witnessed, notarized and dated April 10, 1997.
The respondents countered that they are innocent purchasers for value having
bought Lot 398-A at the time when Thelma's adverse claim was already
cancelled. While they admit Thelma's possession of the subject property, they,
however, qualify that possession is being contested in a separate action for
forcible entry. The respondents also filed a verified answer-in-intervention in
Civil Case No. 7394 (injunction case) contending that they are the present
registered owners of Lot 398-A, and as such, Thelma is not entitled to any
relief.

ISSUE: Whether the transaction between Neri and Thelma is a contract of sale
or a contract to sell.

HELD: The real character of the contract is not the title given, but the intention
of the parties.
A contract to sell, which is a “bilateral contract whereby the prospective seller,
while expressly reserving the ownership of the property despite delivery thereof
to the prospective buyer, binds himself to sell the property exclusively to the
prospective buyer upon fulfillment of the condition agreed upon, i.e., the full
payment of the purchase price.”

Tax declarations, by themselves, are not conclusive evidence of ownership of

real property.

The alleged delivery of the property, even if true, is irrelevant considering that
in a contract to sell, ownership is retained by the registered owner in spite of
the partial payment of the purchase price and delivery of possession of the
property.

BONIFACIO DANAN v. SPOUSES GREGORIO SERRANO AND ADELAIDA

REYES
G.R. No. 195072, August 01, 2016 PERALTA, J.:

FACTS: Respondents Gregorio Serrano and Adelaida Reyes (Spouses Serrano)

are the registered owners of a parcel of land. Sometime in the years 1940 and
1950, when the property was still co-owned by respondent Gregorio and his
siblings, Gregorio's sisters, Marciana and Felicidad, gave petitioner Bonifacio
Danan and a certain Artemio Vitug permission to possess 400 square meters
each of the total estate and to build their homes thereon in exchange for one
cavan of palay every year. Thereafter, in separate documents denominated as
"Agreement in Receipt Form" dated June 27, 1976, Gregorio sold to Bonifacio
and Artemio their respective 400-square-meter portions of the property. The
documents of sale provide for the purchase price of P6,000 payable in three
equal payments of P2,000 with the first installment to be paid upon execution
of Conditional Deed of Sale on July 2, 1976. The succeeding installments were
due on or before June 30, 1977 and June 30, 1978. It is further agreed that in
June 1978, upon the completion of the full payment of the agreed price, the
vendor will deliver to the vendee a title corresponding to the lot or portion sold.
While Bonifacio and Artemio paid the P2,000.00 upon the signing of the
Agreement, they were both unable to pay the balance of the purchase price
when they fell due on June 30, 1977 and June 30, 1978. Nevertheless, they
remained in possession of their respective lots.

On September 10, 1998, the Spouses Serrano instituted ejection proceedings

against Bonifacio and Artemio. The complaint, however, was dismissed on the
ground of lack of jurisdiction by the Municipal Trial Court. On November 3,
1998, a complaint for Specific Performance was filed by Bonifacio and Artemio
alleging that they purchased their respective portions of land via the Agreement
in Receipt Form dated June 27, 1976 and since then, stopped paying the yearly
rental of one cavan of palay. While they admitted to their failure to pay the
remaining balance of the purchase price in the amount of P4,000.00, they
claimed that such was due to the continuous absence of the Spouses Serrano.
As special and administrative defenses, the Spouses Serrano raised
prescription, alleging that any right of action, if any, arising from the
agreements dated June 27, 1976, had long prescribed when the complaint was
filed in 1998.

The RTC granted the Complaint of Bonifacio and Artemio and ordered the
Spouses Serrano to execute and sign the proper Deed of Sale, deliver the
corresponding titles after receiving the P4,000.00 balance. The CA, however,
reversed and set aside the RTC Decision finding that the trial court seemed to
have failed to properly determine the true nature of the agreement between the
parties. This is because by the express terms of the agreement, the title was
reserved and remained with the Spouses Serrano, to be transferred only when
Bonifacio and Artemio paid the last installment of the purchase price in June
1978. The failure by Bonifacio and Artemio to pay prevented the obligation of
the Spouses Serrano to convey the title from acquiring binding force. In the
instant petition, Bonifacio argues that since he did not receive any formal
demand from the Spouses Serrano, he did not incur delay. In addition,
Bonifacio also raises the provisions of Republic Act (RA) No. 6552, otherwise
known as the Realty Installment Buyer Protection Act, insofar as his rights as a
buyer of real property are concerned.

ISSUE: Whether or not the cancellation of Contract to Sell made by Spouses

Serrano conforms to the requirement prescribed under RA 6552.

HELD: NO. In a contract of sale, the title to the property passes to the vendee
upon the delivery of the thing sold whereas in a contract to sell, the ownership
is, by agreement, retained by the vendor and is not to pass to the vendee until
full payment of the purchase price.

In conditional sales of all kinds of real estate, Republic Act (RA) No. 6552
recognizes the right of the seller to cancel the contract upon nonpayment of an
installment by the buyer, it also provides for the rights of the buyer in case of
such cancellation.

Failure on the part of the seller to comply with the requirements prescribed by
Republic Act (RA) No. 6552.

TAINA MANIGQUE-STONE v. CATTLEYA LAND, INC., AND SPOUSES

TROADIO B. TECSON AND ASUNCION ORTALIZ-TECSON
G.R. No. 195975, September 05, 2016 DEL CASTILLO, J.:

FACTS: Sometime in July 1992, Cattleya Land, Inc. (Cattleya) sent its legal
counsel, Atty. Federico C. Cabilao, Jr. (Atty. Cabilao, Jr.), to Tagbilaran City to
investigate at the Office of the Register of Deeds in that city the status of the
properties of spouses Col. Troadio B. Tecson (Col. Tecson) and Asuncion
Tecson (collectively, Tecson spouses), which Cattleya wanted to purchase. One
of these properties, an 8,805-square meter parcel of land located at Doljo,
Panglao, Bohol, is registered in the name of the Tecson spouses, and covered
by Transfer Certificate of Title (TCT) No. 17655 (henceforth, the subject
property). Atty. Cabilao, Jr. found that no encumbrances or liens on the
subject property had been annotated on the TCT thereof, except for an
attachment issued in connection with Civil Case No. 3399 entitled "Tantrade
Corporation vs. Bohol Resort Hotel, Inc., et al."

On November 6, 1992, Cattleya entered into a Contract of Conditional Sale

with the Tecson spouses covering nine parcels of land, including the subject
property. In this transaction the Tecson spouses were represented by Atty.
Salvador S. Pizarras (Atty. Pizarras). The Contract of Conditional Sale was
entered in the Primary Book of the Office of the Register of Deeds of Bohol that
same day, per Entry No. 83422. On August 30, 1993, the parties executed a
Deed of Absolute Sale covering the subject property. This Deed of Absolute Sale
was also entered in the Primary Book on October 4, 1993, per Entry No.
87549. However, neither the Contract of Conditional Sale nor the Deed of
Absolute Sale could be annotated on the certificate of title covering the subject
property because the then Register of Deeds of Bohol, Atty. Narciso S. De la
Serna (Atty. De la Serna) refused to annotate both deeds. According to Atty. De
la Serna it was improper to do so because of the writ of attachment that was
annotated on the certificate of title of the subject property, in connection with
the said Civil Case No. 3399.

On December 1, 1993, Atty. Cabilao, Jr. and Atty. Pizarras, in representation of

their respective clients, again requested Atty. De la Serna to annotate the Deed
of Absolute Sale and all other pertinent documents on the original certificate of
title covering the subject property. But Atty. De la Serna refused anew – this
time saying that he would accede to the request only if he was presented with a
court order to that effect. Atty. De la Serna still refused the request to
annotate, even after Atty. Cabilao, Jr. had told him that all that he (Atty.
Cabilao, Jr.) was asking was for the Deed of Absolute Sale to be annotated on
the original certificate of title, and not for Atty. De la Serna to issue a new
transfer of title to the subject property.

The writ of attachment on the certificate of title to the subject property was,
however, lifted, after the parties in Civil Case No. 3399 reached an amicable
settlement or compromise agreement. Even then, however, Cattleya did not still
succeed in having the aforementioned Deed of Absolute Sale registered, and in
having title to the subject property transferred to its name, because it could not
surrender the owner's copy of TCT No. 17655, which was in possession of the
Tecson spouses. According to Cattleya, the Tecson spouses could not deliver
TCT No. 17655 to it, because according to the Tecson spouses this certificate of
title had been destroyed in a fire which broke out in Sierra Bullones, Bohol.

This claim by the Tecson spouses turned out to be false, however, because
Atty. Cabilao, Jr. came to know, while following up the registration of the
August 30, 1993 Deed of Absolute Sale at the Office of the Register of Deeds of
Bohol, that the owner's copy of TCT No. 17655 had in fact been presented by
Taina at the Office of the Register of Deeds of Bohol, along with the Deed of
Sale that was executed by the Tecson spouses, in favor of Taina covering the
subject property.

It appears that when Taina's then common-law husband, Michael (Mike) Stone,
visited Bohol sometime in December 1985, he fell in love with the place and
decided to buy a portion of the beach lot in Doljo, Panglao, Bohol. They met
with Col. Tecson, and the latter agreed to sell them a portion of the beach lot
for US$8,805.00. Mike and Taina made an initial downpayment of
US$1,750.00 (or equivalent P35,000.00 at that time) for a portion of a beach
lot, but did not ask for a receipt for this initial downpayment. On June 1, 1987,
a Deed of Absolute Sale covering the subject portion was executed by Col.
Tecson in Taina's favor. Subsequent payments were made by Mike totalling
P40,000.00, as of August 29, 1986, although another payment of P5,000.00
was made sometime in August 1987. The last payment in the amount of
P32,000.00, was made in September 1987.10 In 1990, Troadio Tecson, Jr., the
son of Col. Tecson and Taina's brother-in-law, delivered to Taina the owner's
copy of TCT No. 17655.

In the meantime, in October 1986, Taina and Mike got married.

On April 25, 1994, Taina filed a Notice of Adverse Claim covering the subject
portion, after she learned that Col. Tecson and his lawyer had filed a petition
for the issuance of a second owner's copy over TCT No. 17655.

On February 8, 1995, Taina sought to have her Deed of Absolute Sale

registered with the Office of the Register of Deeds of Bohol, and on that
occasion presented the owner's copy of TCT No. 17655. Taina also caused a
Memorandum of Encumbrance to be annotated on this certificate of title. The
result was that on February 10, 1995, a new certificate of title, TCT No. 21771,
was issued in the name of Taina, in lieu of TCT No. 17655, in the name of the
Tecson spouses. Whereupon, Cattleya instituted against Taina a civil action for
quieting of title and/or recovery of ownership and cancellation of title with
damages. Taina likewise filed a motion for leave to admit a third-party
complaint against the Tecson spouses; this motion was granted by the RTC.
After due proceedings, the RTC of Bohol gave judgment for Cattleya.

ISSUE: Whether or not there is a double sale that transpired.

HELD: It bears stressing that if the deed of sale at all proclaimed that she
(Taina) was the purchaser or buyer of the subject property and this subject
property was placed under her name, it was simply because she and Mike
wanted to skirt or circumvent the constitutional prohibition barring or
outlawing foreigners or aliens from acquiring or purchasing lands in the
Philippines.

Given the fact that the sale by the Tecson spouses to Taina as Mike’s dummy
was totally abhorrent and repugnant to the Philippine Constitution, and is
thus, void ab initio, it stands to reason that there can be no double sale to
speak of here.

HEIRS OF ZOSIMO MARAVILLA vs. PRIVALDO TUPAS

G.R. No. 192132, September 14, 2016, 803 SCRA 1

FACTS: Privaldo, along with the other heirs of the late Asisclo, has
maintained their occupation and possession of the subject property located in
Boracay Island. The heirs of the late Zosimo claimed ownership over10,000
square meters of said property by a virtue of a Deed of Sale dated February 8,
1975 betweem Zosimo and Asiclo. The heirs of Zosimo filed a case for quieting
of title with recovery of possession and the RTC ruled in their favor. While the
motion for execution was pending, the Supreme Court declared Boracay
Island as government property. The CA ordered the decision of the RTC
granting the motion for execution as null and void and ruled that the Boracay
decision was a supervening event and the RTC erred in not declaring null
and void the sale of unregistered land considering that Boracay Island has
been classified as an inalienable land. The heirs of Zosimo argued that the
Boracay decision is not a supervening event and the settled dispute between
the parties as to who has the better right to the property is distinct and
separate from the issue of titling sought in the Boracay decision.

ISSUE: Whether private individual may acquire vested right of ownership

over the Boracay island, considering that they have been in open and
continuous possession for several years.

HELD: NO. The Supreme Court (SC) in The Secretary of the Department of
Environment and Natural Resources (DENR), et al. v. Yap, et al. and Sacay, et
al. v. The Secretary of the DENR, et al., 568 SCRA 164 (2008), ruled that the
entire island of Boracay as state-owned except for lands already covered by
existing titles

All lands that have not been acquired from the government, either by purchase
or by grant, belong to the State as part of the inalienable public domain.

One cannot dispose of a thing he does not own.

RCBC SAVINGS BANK v. NOEL M. ODRADA G.R. No. 219037, October 19,
2016, CARPIO, J.:

FACTS: Respondent Noel M. Odrada (Odrada) sold a secondhand Mitsubishi

Montero (Montero) to Teodoro L. Lim (Lim) for One Million Five Hundred Ten
Thousand Pesos (P1,510,000), (P610,000) was initially paid by Lim and the
balance of Nine Hundred Thousand Pesos (P900,000) was financed by
petitioner RCBC Savings Bank (RCBC) through a car loan. RCBC required Lim
to submit the original copies of the Certificate of Registration (CR) and Official
Receipt (OR) in his name. Unable to produce the Montero's OR and CR, Lim
requested RCBC to execute a letter addressed to Odrada informing the latter
that his application for a car loan had been approved. Odrada executed a Deed
of Absolute Sale on 9 April 2002 in favor of Lim and the latter took possession
of the Montero. When RCBC received the documents, RCBC issued two
manager's checks for Nine Hundred Thousand Pesos (P900,000) and Thirteen
Thousand Five Hundred Pesos (P13,500). After the issuance of the manager's
checks and their turnover to Odrada but prior to the checks' presentation, Lim
notified Odrada in a letter dated 15 April 2002 that there was an issue
regarding the roadworthiness of the Montero. When you open its engine cover
there is a trace of a head-on collision. The 4-wheel drive shift is not functioning
because the odometer has still an original mileage data but found tampered.
Represented the vehicle as model 1998 however; it is indicated in the front left
A-pillar inscribed at the identification plate [as] model 1997. With a note,
“Please show your sincerity by personally inspecting the said vehicle at RCBC,
Pacific Bldg. Pearl Drive, Ortigas Center, Pasig City”, Odrada did not go to the
slated meeting and instead deposited the manager's checks were dishonored
both times apparently upon Lim's instruction to RCBC. Odrada filed a
collection suit against Lim and RCBC Lim claimed that the cancellation was
not done ex parte but through a letter that was delivered to Odrada prior to the
presentation of the manager's checks to RCBC. RCBC contended that the
manager's checks were dishonored because Lim had cancelled the loan. Prior
to the presentation of the manager's checks, RCBC also sent a formal notice of
cancellation of the loan on 18 April 2002 to both Odrada and Lim. The trial
court ruled in favor of Odrada.

Odrada was the proper party to ask for rescission. The right of rescission is
implied in reciprocal obligations where one party fails to perform what is
incumbent upon him when the other is willing and ready to comply. It was not
proper for Lim to exercise the right of rescission since Odrada had already
complied with the contract of sale by delivering the Montero while Lim
remained delinquent in payment. The defective condition of the Montero was
not a supervening event that would justify the dishonor of the manager's
checks. A manager's check is equivalent to cash and is really the bank's own
check. It may be treated as a promissory note with the bank as maker
constitutes a written promise to pay on demand. Being the party primarily
liable, the trial court ruled that RCBC was liable to Odrada for the value of the
manager's checks. Court of Appeals dismissed the appeal... when RCBC issued
the manager's checks in favor of Odrada, RCBC admitted the existence of the
payee and his then capacity to endorse, and undertook that on due
presentment the checks which were negotiable instruments would be accepted
or paid, or both according to its tenor. RCBC alone filed this petition before the
Court. Thus, the decision of the Court of Appeals became final and executory
as to Lim.

ISSUE: Whether or not there is a misrepresentation as to the Montero's

roadworthiness constitutes a breach of warranty against hidden defects.

HELD: YES. Under the law on sales, a contract of sale is perfected the moment
there is a meeting of the minds upon the thing which is the object of the
contract and upon the price which is the consideration.

The law fixes the liability of the vendor for hidden defects whether known or
unknown to him at the time of the sale.

The law defines a hidden defect as one which would render the thing sold unfit
for the use for which it is intended, or would diminish its fitness for such use
to such an extent that, had the vendee been aware thereof, he would not have
acquired it or would have given a lower price for it.

UNIVERSAL INTERNATIONAL INVESTMENT (BVI) LIMITED v. RAY

BURTON DEVELOPMENT CORPORATION G.R. No. 182201, November 14,
2016 SERENO, C.J.:

UNIVERSAL INTERNATIONAL INVESTMENT (BVI) LIMITED v. RAY

BURTON DEVELOPMENT CORPORATION G.R. No. 185815, November 14,
2016 SERENO, C.J.:

FACTS: Ray Burton Development Corp (RBDC) owned and developed Elizabeth
Place, a condominium located at Salcedo Village, Makati City. Universal
International Investment (Universal) and RBDC entered into separate Contracts
to Sell covering the purchase of ten condominium units and ten parking slots.
Universal paid RBDC the full purchase price of the properties amounting to
₱52,836,781.50. Universal demanded RBDC the cancellation of the sale after
RBDC failed to deliver possession of the properties and reneged on its
obligation to transfer the Condominium Certificates o f Title (CCT) to
Universal’s name. Universal subsequently discovered that the mother title to
the lot of Elizabeth Place is mortgaged to China Banking Corporation (China
Bank). The securities were foreclosed by China Bank. Universal filed a
Complaint for Specific Performance or Rescission of Contract and Damages
with the Expanded National Capital Region Field Office (ENCRFO) of the
HLURB. The ENCRFO rendered a decision in favor of Universal. When the case
reached the Court of Appeals (CA), Universal manifested that China Bank had
released the subject properties and Universal had already obtained their CCTs.
When RBDC moved for dismissal of the case, Universal claimed that it is RBDC
is still liable for damages and compensation for property losses supposedly to
cover the depreciation costs and expenses it had incurred for the release of the
properties from China Bank under Section 6 of the Contract to Sell. Section 6
reads: SECTION 6. BREACH AND/OR VIOLATIONS OF THE CONTRACT. This
agreement shall be deemed cancelled, at the option of the BUYER, in the event
that SELLER, for the reasons of force majeure, decide not to continue with the
Project or the Project has been substantially delayed. In such a case, the
BUYER shall be entitled to refund all the payments made with interest at one-
and-a- half (1½) percent per month on the amount paid computed from the
date of cancellation until the payments have been fully refunded. Substantial
delay is defined as six (6) months from date of estimated date of completion.
The parties agree that the estimated date of completion shall be December 31,
1998.

ISSUES:
- Whether the CA gravely erred in denying the demand of petitioner for the
liquidated damages specified in Section 6 of the Contracts to Sell
- Whether petitioner is entitled to damages on account of the contractual
breaches committed by respondent

HELD: If the terms of the contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of its stipulations shall
control.

In order to recover damages, the claimant must prove (1) an injury or a wrong
sustained (2) as a consequence of a breach of contract or tort and (3) caused by
the party chargeable with a wrong

To justify a grant of compensatory damages, it is necessary that the actual

amount of loss to be proved with a reasonable certainty, premised upon
competent proof and the best evidence obtainable by the injured party.

Proximate cause is that cause which, in natural and continuous sequence,

unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred.

In order that the debtor may be held to be in default, the following requisite
conditions must be present: (1) the obligation is demandable and already
liquidated; (2) the debtor delays performance of the obligation; and (3) the
creditor requires the performance judicially or extrajudicially.
Temperate Damages may be recovered when the court finds that some
pecuniary loss has been suffered but the amount cannot be proven with
certainty.

Exemplary damages are corrective damages imposed by way of example or

correction for the public good.

Article 2232 of the Civil Code of the Philippines provides that in contracts, the
court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner.

SALES 2017

January 18, 2017

G.R. No. 192602
SPOUSES MAY S. VILLALUZ and JOHNNY VILLALUZ, JR., vs. LAND BANK
OF THE PHILIPPINES and the REGISTER OF DEEDS FOR DAVAO CITY.

FACTS: The Spouses Villaluz filed a complaint with the Regional Trial Court
(RTC) of Davao City seeking the annulment of the foreclosure sale. They argue
that the Real Estate Mortgage was void because there was no loan yet when the
mortgage contract was executed and that the Special Power of Attorney was
extinguished when Milflores Cooperative assigned its produce and inventory to
Land Bank as additional collateral. In response, Land Bank maintains that the
CA and RTC did not err in applying Article 1892, that the Real Estate Mortgage
can only be extinguished after the amount of the secured loan has been paid,
and that the additional collateral was executed because the deed of assignment
was meant to cover any deficiency in the Real Estate Mortgage.

ISSUE: Whether or not an agent may appoint a substitute if the principal has
not prohibited him from doing so.

HELD: The law creates a presumption that an agent has the power to appoint a
substitute. The consequence of the presumption is that, upon valid
appointment of a substitute by the agent, there ipso jure arises an agency
relationship between the principal and the substitute, i.e., the substitute
becomes the agent of the principal. As a result, the principal is bound by the
acts of the substitute as if these acts had been performed by the principal's
appointed agent. Concomitantly, the substitute assumes an agent's obligations
to act within the scope of authority, to act in accordance with the principal's
instructions, and to carry out the agency, among others. In order to make the
presumption inoperative and relieve himself from its effects, it is incumbent
upon the principal to prohibit the agent from appointing a substitute.
Under Articles 1461 and 1462, things having a potential existence and "future
goods," i.e., those that are yet to be manufactured, raised, or acquired, may be
the objects of contracts of sale.

In order to give effect to Articles 134 7, 1461, and 1462, Article 1409(3) must
be interpreted as referring to contracts whose cause or object is impossible of
existing at the time of the transaction.

In loan transactions, it is customary for the lender to require the borrower to

execute the security contracts prior to initial drawdown.

"Dation in payment extinguishes the obligation to the extent of the value of the
thing delivered, either as agreed upon by the parties or as may be proved,
unless the parties by agreement-express or implied, or by their silence-consider
the thing as equivalent to the obligation, in which case the obligation is totally
extinguished."

January 18, 2017

G.R. No. 211175
ATTY. REYES G. GEROMO, FLORENCIO BUENTIPO, JR., ERNALDO
YAMBOT and LYDIA BUSTAMANTE vs. LA PAZ HOUSING AND
DEVELOPMENT CORPORATION and GOVERNMENT SERVICE INSURANCE
SYSTEM

FACTS: Petitioners filed a complaint for breach of contract with damages

against respondents asserting that La Paz was liable for implied warranty
against hidden defects and that it was negligent in building their houses on
unstable land. La Paz, in its Answer, averred that it had secured the necessary
permits and licenses for the subdivision project; that the houses thereon were
built in accordance with the plans and specifications of the National Building
Code and were properly delivered to the petitioners; that it did not violate
Presidential Decree (P.D.) No. 957 as it was issued compliance documents,
such as development permits, approved alteration plan, license to sell, and
certificate of completion by HLURB; that the Philippine Institute of Volcanology
and Seismology (PHILVOLCS), based on the serial photo interpretation of its
field surveyors in 1996, reported that a portion of the topography of the
subdivision developed an active fault line; and lastly, that there were
unauthorized, irregular renovation/alteration and additional construction in
the said units. Hence, it argued that it should not be held liable for any
damage incurred and that the same should be for the sole account of the
petitioners.

In its defense, GSIS moved for the dismissal of the complaint for lack of cause
of action. It asserted that the deeds of conditional sale were executed between
La Paz and the petitioners only and that its only participation in the
transactions was to grant loans to the petitioners for the purchase of their
respective properties.

ISSUE: Whether or not La Paz should be held liable for the structural defects
on its implied warranty against hidden defects.

HELD: Under the Civil Code, the vendor shall be answerable for warranty
against hidden defects on the thing sold.

For the implied warranty against hidden defects to be applicable, the following
conditions must be met:
a. Defect is Important or Serious
i. The thing sold is unfit for the use which it is intended
ii. Diminishes its fitness for such use or to such an extent that the buyer would
not have acquired it had he been aware thereof
b. Defect is Hidden
c. Defect Exists at the time of the sale
d. Buyer gives Notice of the defect to the seller within reasonable time

One of the purposes of P.D. No. 957, also known as The Subdivision and
Condominium Buyers' Protective Decree, is to discourage and prevent
unscrupulous owners, developers, agents, and sellers from reneging on their
obligations and representations to the detriment of innocent purchasers.

In this case, the subdivision plan/layout was prepared and approved by La

Paz. The actual excavation, filling and levelling of the subdivision grounds were
exclusively done under its supervision and control. There being no contributory
fault on the part of the petitioner, there can be no other conclusion except that
it was the fault of La Paz for not properly compacting the soil, which used to be
an old creek.

January 23, 2017

G.R. No. 200009
SPRING HOMES SUBDIVISION CO., INC., SPOUSES PEDRO L. LUMBRES
and REBECCA T. ROARING vs. SPOUSES PEDRO TABLADA, JR. and
ZENAIDA TABLADA

FACTS: Spring Homes entered into a Contract to Sell with respondents,

Spouses Pedro Tablada, Jr. and Zenaida Tablada, for the sale of a parcel of
land. Spouses Lumbres filed with the RTC of Calamba City a complaint for
Collection of Sum of Money, Specific Performance and Damages with prayer for
the issuance of a Writ of Preliminary Attachment against Spring Homes for its
alleged failure to comply with the terms of the Joint Venture
Agreement. Unaware of the pending action, the Spouses Tablada began
constructing their house on the subject lot and thereafter occupied the same.
Spring Homes executed a Deed of Absolute Sale in favor of the Spouses
Tablada.

Subsequently, the Spouses Tablada discovered that the subject property was
mortgaged as a security for a loan in the amount of over ₱4,000,000.00 with
Premiere Development Bank as mortgagee and Spring Homes as mortgagor. In
fact, since the loan remained unpaid, extrajudicial proceedings were
instituted. Meanwhile, without waiting for trial on the specific performance
and sum of money complaint, the Spouses Lumbres and Spring Homes entered
into a Compromise Agreement, wherein Spring Homes conveyed the subject
property, as well as several others, to the Spouses Lumbres. By virtue of said
agreement, the Spouses Lumbres were authorized to collect Spring Homes'
account receivables arising from the conditional sales of several properties, as
well as to cancel said sales, in the event of default in the payment by the
subdivision lot buyers. In its capacity as mortgagee, Premiere Development
Bank was included as a party in the Compromise Agreement.

Spouses Lumbres caused the cancellation of the Contract to Sell previously

executed by Spring Homes in favor of the Spouses Tablada. Spouses Lumbres
and Spring Homes executed a Deed of Absolute Sale over the subject property.

Spouses Tablada filed a complaint for Nullification of Title, Reconveyance and

Damages against Spring Homes and the Spouses Lumbres praying for the
nullification of the second Deed of Absolute Sale executed in favor of the
Spouses Lumbres, as well as the title issued as a consequence thereof, the
declaration of the validity of the first Deed of Absolute Sale executed in their
favor, and the issuance of a new title in their name.

Interestingly, on even date, the Spouses Lumbres filed an ejectment suit of

their own before the MTCC of Calamba City demanding that the Spouses
Tablada vacate the subject property and pay rentals due thereon.

ISSUE: Whether or not the Sps. Lumbres registered their title over the subject
property in bad faith.

HELD: 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.

Knowledge gained by the first buyer of the second sale cannot defeat the first
buyer's rights except only as provided by law, as in cases where the second
buyer first registers in good faith the second sale ahead of the first.

In order for the Spouses Lumbres to obtain priority over the Spouses Tablada,
the law requires a continuing good faith and innocence or lack of knowledge of
the first sale that would enable their contract to ripen into full ownership
through prior registration.

January 30, 2017

G.R. No. 181596
JENESTOR B. CALDITO and MARIA FILOMENA T. CALDITO vs.
ISAGANI V. OBANDO and GEREON V. OBANDO
REYES, J.:

FACTS: Spouses Caldito filed a complaint against respondents for quieting of

ownership over a parcel of land covering the 272.33 square meters eastern
portion of Lot No. 1633 situated at Barangay No. 5, San Vicente, Sarrat, Ilocos
Norte.

The record showed that as early as 1921, Lot No. 1633 was declared for
taxation purposes in the name of Felipe Obado (Felipe). After Felipe's death,
Paterno Obado (Paterno), whom Felipe treated like his own son, subsequently
occupied Lot No. 1633 and continued to pay the realty taxes of the same.

Sometime in 1995, Antonio Ballesteros (Antonio) executed an Affidavit of

Ownership dated February 23, 1995 narrating his claim over the subject parcel
of land.· In his affidavit, Antonio claimed that Lot No. 1633 was co-owned by
Felipe with his five siblings, namely: Eladia, Estanislao, Maria, Severino and
Tomasa, all surnamed Obado.

On the next day following the execution of the said affidavit or on February 24,
1995, Antonio and Elena Ballesteros (Spouses Ballesteros) sold the subject
parcel of land to the petitioners for the sum of P70,000.000 evidenced by a
Deed of Absolute Sale. Thereafter, the petitioners declared the subject lot for
taxation purposes and paid the realty taxes thereon.

In 2002, the petitioners attempted to build a house on the subject parcel of

land but the respondents prevented them from completing the same.
Petitioners instituted a complaint for quieting of ownership against the
respondents before the RTC, as well as an injunctive writ to prevent the
respondents from interfering with the construction of their house.

Respondents averred that the Spouses Ballesteros were not the owners and
possessors of the subject parcel of land. They maintained that Lot No. 1633
was inherited by their father, Paterno, from its original owner Felipe, and they
have been paying the real property taxes for the entire property. They asserted
that the petitioners are buyers in bad faith since their family had been in
possession of the entire Lot No. 1633 since 1969 and had been in open,
peaceful and uninterrupted possession of the whole property up to the present
or for more than 30 years in the concept of an owner.
ISSUE: Whether or not the petitioners were able to prove ownership over the
subject parcel of land.

HELD: Although tax declarations or realty tax payment of property are not
conclusive evidence of ownership, as in the instant case, they are good indicia
of possession in the concept of owner, for no one in his right mind would be
paying taxes for a property that is not in his actual or constructive possession.

The Court had already ruled that the issue of good faith or bad faith of a buyer
is relevant only where the subject of the sale is a registered land but not where
the property is an unregistered land. One who purchases an unregistered land
does so at his peril.

January 30, 2017

G.R. No. 214303
DELFIN C. GONZALES, JR. vs. MAGDALENO M. PEÑA, ALABANG COUNTRY
CLUB, INC., and MS. ARSENIA VERA
SERENO, CJ.:

FACTS: RTC refused to restore to Urban Bank, Eric L. Lee, and Delfin C.
Gonzales, Jr. the actual ownership of their respective club shares on the
pretext that these had already been transferred to third parties.

Aggrieved, he came directly to this Court and asked for the reversal of the
ruling of the trial court's ruling, as well as for the cancellation of the shares in
the name of Vera.

Petitioner points out that Peña obtained the property at a public auction that
has been declared void by this Court. He then asserts that Vera, as successor-
in-interest, has no right over those shares. He further claims that the trial
court erred in concluding that the actual restitution of the club shares to him
was impossible, since the transfer of the property could have simply been
recorded in the club's stock and transfer books.

ACCI claims that because the subject property has been transferred to a third
person, its return to petitioner is no longer possible.

ISSUE: Whether or not the RTC faithfully complied with our directive to restore
to Urban Bank and the latter's officers their properties illegally obtained by
Peña.

HELD: Void transactions do not produce any legal or binding effect, and any
contract directly resulting from that illegality is likewise void and inexistent.
Article 1505 of the Civil Code instructs that "x x x where goods are sold by a
person who is not the owner thereof, and who does not sell them under
authority or with the consent of the owner, the buyer acquires no better title to
the goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the seller's authority to sell. x x x."

February 15, 2017

G.R. No. 196444
DASMARIÑAS T. ARCAINA and MAGNANI T. BANTA vs.
NOEMI L. INGRAM, represented by MA. NENETTE L. ARCHINUE
JARDELEZA, J.:

FACTS: Arcaina entered into a contract with Ingram for the sale of the
property, described as follows:

A parcel of land Lot No. 3230, situated at Salvacion, Sto. Domingo, Albay,
Bounded on the NE-by Lot 3184 on the SE-by Seashore on the SW-Lot No.
3914 and on the NW-by Road with an area of SIX THOUSAND TWO
HUNDRED (6,200) sq. meters more or less.

Subsequently, Ingram caused the property to be surveyed and discovered that

Lot No. 3230 has an area of 12,000 sq. m. Upon learning of the actual area of
the property, Banta allegedly insisted that the difference of 5,800 sq. m.
remains unsold. This was opposed by Ingram who claims that she owns the
whole lot by virtue of the sale. Thus, Archinue, on behalf of Ingram, instituted
the recovery case.

In her Complaint, Ingram alleged that upon discovery of the actual area of the
property, Banta insisted on fencing the portion which she claimed to be
unsold. Ingram further maintained that she is ready to pay the balance of
₱145,000.00 as soon as petitioners recognize her ownership of the whole
property. After all, the sale contemplated the entire property as in fact the
boundaries of the lot were clearly stated in the deeds of sale.

In their Answer with Counterclaim, petitioners denied that the sale

contemplates the entire property and contended that the parties agreed that
only 6,200 sq. m. shall be sold at the rate of ₱300.00 per sq. m. This, according
to petitioners, is consistent with the contemporaneous acts of the parties:
Ingram declared only 6,200 sq. m. of the property for tax purposes, while
Arcaina declared the remaining portion under her name with no objection from
Ingram. Petitioners averred that since Ingram failed to show that that she has a
right over the unsold portion of the property, the complaint for recovery of
possession should be dismissed.
Having apparently sold the entire Lot No. 3230 for a lump sum, Arcaina, as the
vendor, is obligated to deliver all the land included in the boundaries of the
property, regardless of whether the real area should be greater or smaller than
what is recited in the deeds of sale.

Petitioners assail that the sale of the property was made for a lump sum. They
insist that they sold the property on a per-square-meter basis, at the rate of
₱300.00 per sq. m. They further claim that they were aware that the property
contains more than 6,200 sq. m. According to petitioners, this is the reason
why the area sold is specifically stated in the deeds of sale. Unfortunately, in
the drafting of the deeds, the word "portion" was omitted. They allege that
contemporaneously with the execution of the formal contract of sale, they
delivered the area sold and constructed a fence delineating the unsold portion
of the property. Ingram allegedly recognized the demarcation because she
introduced improvements confined to the area delivered. Since the sale was on
a per-square-meter basis, petitioners argue that it is Article 1539, and not
Article 1542 of the Civil Code, which governs.

ISSUE: Whether or not the sale was made on a lump sum or per-square-meter
basis.

HELD: Where both the area and the boundaries of the immovable are declared
in a sale of real estate for a lump sum, the area covered within the boundaries
of the immovable prevails over the stated area.

In a lump sum contract, a vendor is generally obligated to deliver all the land
covered within the boundaries, regardless of whether the real area should be
greater or smaller than that recited in the deed.

The use of 'more or less' or similar words in designating quantity covers only a
reasonable excess or deficiency.

G.R. No. 220785, March 01, 2017

MA. LORENA TICONG vs. MANUEL A. MALIM, MINDA ABANGAN AND MAY
MACAL
G.R. NO. 222887
PATROCINIO S. TICONG AND WILMA T. LAO vs. MANUEL A. MALIM,
MINDA ABANGAN AND MAY MACAL
MENDOZA, J.:

FACTS: These consolidated cases originated from a complaint filed by

respondents against petitioners for collection of sum of money alleging that
Malim was a realty broker/dealer while Abangan and Macal were his
associates; that the Ticongs were the registered owners of several parcels of
land; that Malim, presenting himself as the authorized representative of the
Ticongs, sent a letter of "formal intent to sell" to Jainus C. Perez (Perez), the
real estate field supervisor of the Church of Jesus Christ of Latter-Day Saints
(Buyer), offering to sell the subject properties for P2,000.00 per square meter;
and that below Malim's signature were inscribed the words,
"NOTED/CONFORMED" with the signature of Lorenzo Ticong above "Lorenzo
Ticong, Lot Owner."

Malim, Abangan and Macal (Malim, et al.) further averred that on February 11,
2000, they signed the Memorandum of Agreement (MOA) authorizing them to
"look, negotiate, and sell to any prospective buyer" for their properties on a
commission basis; that they were also authorized by the Ticongs to charge an
"overprice" on top of the P900.00 per square meter price; that the subject
properties were eventually sold at P1,460.00 per square meter or for the total
amount of P7,300,000.00; that the sale was made possible due to their efforts
which should entitle them to an overprice commission of P2,800,000.00 based
on the P560.00 per square meter overprice; and that the Ticongs, however,
paid them only P50,000.00 and refused to pay the remaining balance despite
demands.

The Ticongs, on the other hand, stressed that Malim, et al. were not entitled to
the overprice commission; that the MOA was crafted and solely prepared by
Malim, et al. and that they signed the same without comprehending the salient
aspects thereof due to their limited education; that the sale of their properties
prospered through their own active, direct and personal efforts and was
eventually attained when they sued the Buyer; and that Malim, et al. had
received not only the amount of P50,000.00 but a total of P225,000.00. The
Ticongs denied that Malim, et al. offered to sell their properties to the Buyer.
They pointed out that Malim, et al. were not even licensed realty brokers and
considering the questionable and anomalous nature of the MOA, the provision
therein with respect to the overprice commission and 5% finders' fee were not
valid, binding and enforceable against them.

ISSUE: Whether or not Malim, et al. were entitled to the payment of their
brokers' overprice commission for being the procuring cause of the sale.

HELD: The term "procuring cause," in describing a broker's activity, refers to a

cause originating a series of events which, without break in their continuity,
results in the accomplishment of the prime objective of employing the broker -
to produce a purchaser ready, willing and able to buy real estate on the
owner's terms.

When there is a close, proximate and causal connection between the agent's
efforts and the sale of the property, the agents are entitled to their commission.
Basic is the principle that a contract (the MOA in this case) is the law between
the parties, and its stipulations are binding on them, unless the contract is
contrary to law, morals, good customs, public order or public policy.

March 20, 2017

G.R. No. 200285
FELIX B. TIU vs. SPOUSES JACINTO JANGAS AND PETRONILA
MERTOJANGAS, MARIA G. ORTIZ, MELENCIO ORTIZ, MERLA M. KITANE,
PACITO KITANE, CANDELARIA RUSIANA, RODRIGO RUSIANA, JUANA T.
JALANDONI, ADELAIDA P. RAGAY and TEOFISTO RAGAY, SR.
REYES, J.:

FACTS: Spouses Jangas filed a Complaint for reconveyance of property against

Felix Tiu (petitioner) and Rural Bank of Amlan, Inc. (RBAI).

The subject of this petition is a parcel of land designated as Lot No. 480-A,
originally owned by Gregorio Pajulas (Gregorio). He then gave a portion of the
land (Lot No. 480-B) to his granddaughter Lulihala Pajulas who took care of
him; Gregorio died and Pajulas sisters adjudicated the remaining portion of the
land (Lot No. 480-A) equally among themselves; Upon the death of Isabel
(sister), her share was inherited by her heirs, namely: her husband and
children Iluminada Gadiane (Iluminada), Norma Gadiane (Norma) and Maria
Gadiane-Ortiza (Maria) (Gadiane sisters); Norma sold to Spouses Jangas a
portion of her share with an area of 1,462 sq m, which the latter declared in
the name of Petronila; Iluminada and Norma sold to the Spouses Jangas
another portion with an area of 912 sq m, which was later also declared in the
name of Petronila; Thereafter, Iluminada made subsequent sales as follows: (1)
288 sq m to Candelaria Rusiana (Candelaria); (2) 3,243 sq m to Merla
Macalipay-Kitane (Merla); and (3) 288 sq m to Juana Jalandoni (Juana);
Sometime, Bruna sold her one-third-share of Lot No. 480-A to Spouses
Gaudencio Delayco (Gaudencio) and Lucia Amigo-Delayco (Spouses Delayco);
The heirs of Gaudencio, represented by Bridiana Delayco (Bridiana), applied for
and was ·granted a free patent over the entire Lot No. 480-A. Consequently,
OCT under Free Patent was issued in the name of the heirs of Gaudencio;
Subsequently, Bridiana transferred the title over Lot No. 480-A to her name
alone, and was issued TCT; Bridiana sold the subject property to the
petitioner; and TCT was issued to Spouses Tiu, who also had the subject
property declared in their names. Then, Spouses Tiu mortgaged the subject
property with the RBAI.

The trial court dismissed the petitioner's claim of ownership over the subject
property taking note that the sale and transfer effected by Bruna in favor of the
Spouses Delayco was merely her one-third-share of the subject property.
In the instant case, Bruna owned 1/3 of Lot 480-A, the same 1/3 share is what
she can validly transfer to [S]pouses Delayco and not the whole lot. Nemo dat
quad non habet - no one can give what one does not have. Accordingly, one can
sell only what one owns or is authorized to sell, and the buyer can acquire no
more than what the seller can transfer legally. Such being the case, the
Delaycos could not validly transfer the whole of Lot 480-A to themselves and
sell the same to [S]pouses Tiu.

Although the fact of sale of Bruna's share to the [S]pouses Delaycos was not an
issue, this Court however, could not actually determine the extent of the
property sold by Bruna to them as there was no deed of sale found in the
records. Even assuming arguendo that Bruna sold the entire Lot 480-A to the
Delaycos, the said sale is not null and void. This only made the Delaycos co-
owner of the property which pertains to the share of Bruna.

ISSUE: Whether or not petitioner is entitled to the reconveyance of the subject

property.

HELD: 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.

The alleged incontrovertibility of title cannot be successfully invoked by the

petitioner because certificates of title merely confirm or record title already
existing and cannot be used as a shield for the commission of fraud.

June 7, 2017
G.R. No. 206008
DELFIN DOMINGO DADIS vs. SPOUSES MAGTANGGOL DE GUZMAN and
NORA Q. DE GUZMAN, and THE REGISTER OF DEEDS OF TALAVERA,
NUEVA ECIJA,
PERALTA, J.:

FACTS: Petitioner filed a Complaint for reconveyance and damages against

respondents alleging that: he and his deceased wife were the registered owners
of a 33,494-square meter parcel of land; That their daughter, Marissa P.
Dadis (Marissa), entered into a contract of real estate mortgage (REM) over the
subject property in favor of Magtanggol to secure a loan obligation of
1,210,000.00.; the Spouses De Guzman made it appear that Marissa was
authorized by the Spouses Dadis by virtue of a forged SPA.

Spouses De Guzman countered that they have no knowledge as regards the

supposed falsity of the SPA presented by Marissa and Corazon at the time the
latter pleaded to accommodate them into entering a mortgage contract; Delfin
defaulted in paying the obligation despite several repeated demand, they were
constrained to cause the registration of the REM with the RD; it was only after
three years from the time the obligation became due that they pursued and
effected the foreclosure of the property with them (Spouses De Guzman) as the
highest bidder; they were in good faith from the time the property was
mortgaged until it was foreclosed and they were able to help Delfin's family,
who was financially distressed at the time; and, an action to annul the SPA
executed in 1996 already prescribed.

ISSUE: Whether or not Magtanggol is a mortgagee in good faith.

HELD: The doctrine of mortgagee in good faith presupposes that the

mortgagor, who is not the rightful owner of the property, has already succeeded
in obtaining a Torrens title over the property in his or her name and that, after
obtaining the said title, he or she succeeds in mortgaging the property to
another who relies on what appears on the said title.

Similar to a buyer, the status of a mortgagee in good faith is never presumed

but must be proven by the person invoking it.

A person who deliberately ignores a significant fact that could create suspicion
in an otherwise reasonable person is not an innocent mortgagee for value.

The sale (or encumbrance) of conjugal property without the consent of the
husband was not merely voidable but void; hence, it could not be ratified.

June 19, 2017

G.R. No. 206114
DOLORES ALEJO vs. SPOUSES ERNESTO CORTEZ and PRISCILLA SAN
PEDRO, SPOUSES JORGE LEONARDO and JACINTA LEONARDO and THE
REGISTER OF DEEDS OF BULACAN
TIJAM, J.:

FACTS: At the heart of the instant controversy is a parcel of land belonging to

the conjugal property/absolute community of property of the respondent
Spouses Leonardo and upon which their residential house was built.

It appears that sometime in March 1996, Jorge's father, Ricardo, approached

his sister, herein petitioner Dolores Alejo (Dolores), to negotiate the sale of the
subject property. Accordingly, Jacinta executed a Kasunduan with Dolores for
the sale of the property for a purchase price of PhP500,000. Under
the Kasunduan, Dolores was to pay PhP70,000 as down payment,, while
PhP230,000 is to be paid on April 30, 1996 and the remaining balance of
PhP200,000 was to be paid before the end of the year
1996. The Kasunduan was signed by Jacinta and Ricardo as witness. Jorge,
however, did not sign the agreement.

Jorge filed cases for ejectment and annulment of sale, reconveyance and
recovery of possession, however, during the pendency of said cases, the subject
property was sold by Jorge and Jacinta to respondents Spouses Cortez under a
Deed of Absolute Sale. At the time of said sale, Dolores was in possession of the
subject property.

Dolores filed the case a quo for annulment of deed of sale and damages against
the Spouses Cortez and the Spouses Leonardo.

ISSUE: Whether or not the Kasunduan is a perfected and binding contract as it

was accepted by Jorge through his overt acts.

Whether or not Spouses Cortez were not buyers in good faith as they knew that
the property was being occupied by other persons.

HELD: The disposition of conjugal property of one spouse sans the written
consent of the other is void.

Article 526 of the Civil Code provides that she is deemed a possessor in good
faith, who is not aware that there exists in her title or mode of acquisition any
flaw that invalidates it.

G.R. No. 219500, August 09, 2017

MAMERTO DY vs. MARIA LOURDES ROSELL ALDEA
MENDOZA, J.:

FACTS: Petitioner is the owner of Lot 5158 located in Vito, Minglanilla, Cebu.
He agreed to sell the subject land to his brothers Nelson Dy (Nelson) and
Sancho Dy, Jr. (Sancho). Nelson found out that the subject land had gone
through a series of anomalous transactions. The owner's duplicate copy of TCT
was declared lost. As a result, a new owner's duplicate copy of the same TCT
was issued and the subject land was subsequently mortgaged.

Mamerto, through his lawyer, sent a letter to the Register of Deeds of Cebu
informing the said office that his owner's duplicate copy was never lost and
that he never mortgaged his property to anyone.

When Mamerto discovered that the subject land was being fenced upon the
instruction of respondent Maria Lourdes Rosell Aldea (Lourdes), he
immediately filed a complaint against the latter before the barangay office of
Minglanilla.
For her part, Lourdes countered that in 2004, a certain Mila Labang (Mila) was
introduced to her by her aunt Luz Aldea (Luz). Mila told her that several
parcels of land in Minglanilla, including the subject land, were purportedly for
sale.

On June 20, 2004, Lourdes met with the person impersonating Mamerto (the
impostor) at a hotel in Cebu City. She gave the impostor P1,010,700.00 as
payment for the 3,369 square meter-portion of the subject land. Thereafter,
they signed the Deed of Sale in the presence of Mila, Fatima and Zenon
Aldea (Zenon), Lourdes' uncle. Afterwards, Lourdes, Fatima and the impostor
went to the office of Atty. Lim to pay the mortgage loan.

ISSUE: Whether or not Lourdes is an innocent purchaser for value.

HELD: In Spouses Paulino v. CA, the Court reiterated the rule that when the
owner's duplicate certificate of title was not actually lost or destroyed, but is in
fact in the possession of another person, the reconstituted title is void because
the court that rendered the order of reconstitution had no jurisdiction over the
subject matter of the case.

The mirror doctrine provides 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.

An ordinary prudent buyer of real property who would be relinquishing a

significant amount of money would want to meet the seller of the property and
would exhaust all means to ensure that the seller is the real owner thereof.

A Torrens title does not furnish a shield for fraud, notwithstanding the long-
standing rule that registration is a constructive notice of title binding upon the
whole world. The legal principle is that if the registration of the land is
fraudulent, the person in whose name the land is registered holds it as a mere
trustee.

GR NO. 191914, August 09, 2017

AGNES V. GUISON v. HEIRS OF LOREÑO TERRY
SERENO, C.J.:

FACTS: A Deed of Absolute Sale of an agricultural land was executed in favor

of respondent Terry by Angeles Vargas, the father of petitioner.
Terry sold certain parts of the lot to third parties, namely, Jose U. Alberto III
(583 square meters), Alona M. Guerrero (400 square meters) and respondent
Lino Gianan (200 square meters). Gianan is a respondent in this case.

Vargas and Terry executed an Agreement of Revocation of Sale (Revocation

Agreement) relating to the same parcel of land. The instrument stated that
Vargas had erroneously sold the entire area of Lot 10628-pt to Terry. The
parties, however, averred that their true intention was only to convey a 3,000-
square-meter portion of the land to Terry, considering that there was no
monetary consideration for the transaction. Consequently, they agreed to
revoke the earlier Deed of Absolute Sale to the extent of 1.0894 hectares, while
affirming the validity of the conveyance to Terry of a 3,000-square-meter
potion, whose actual location would later be determined by both parties in a
separate document.

Vargas died with no agreement executed regarding the actual location of the
land conveyed to Terry.

A Partition Agreement was entered into by the Heirs of Angeles Vargas,

represented by petitioner, and respondent Terry for the purpose of physically
segregating the 3,000-square-meter portion allotted to Terry.

Thereafter, Terry sold other portions of the property to third parties. All the
foregoing transactions left Terry with ownership of only 17 square meters of the
lot.

The heirs of Vargas executed an Extrajudicial Settlement of Estate among

Heirs. In that instrument, Lot 10628-pt was allotted to petitioner as part of her
share of the estate.

Petitioner filed a Complaint for annulment of contracts, accion publiciana, and

damages against Terry and all those who had allegedly purchased portions of
Lot 10628-pt from him arguing that the original Deed of Absolute Sale and the
Agreement of Revocation of Sale should be considered void for lack of
consideration. She then contended that the nullity of those earlier instruments
led to the invalidity of the Partition Agreement, because it was signed in the
mistaken belief that Terry had a right to the property.

Terry insisted that the 3,000-square-meter lot was conveyed to him by Vargas.
Terry explained that the property was in fact originally owned by his
grandfather, but incorrectly registered in the name of Fernando Vargas, who
was petitioner's predecessor-in-interest. The original Deed of Absolute Sale was
purportedly executed to rectify the error in registration and restore the property
to its rightful owner. Terry further alleged that he had only signed the
Agreement of Revocation of Sale in consideration of his closeness to the Vargas
family and in order to avoid litigation. He pointed out that petitioner herself
confirmed the validity of the instruments of sale by executing the Partition
Agreement after the death of Vargas.

For their part, respondents Laynes, Spouses Francisco, Alcantara, Gianan, De

Leon, Sarmiento and Fe Alberto all claimed to be buyers in good faith that they
had merely relied upon the Partition Agreement; in particular, the statements
made by petitioner acknowledging Terry's entitlement to the property. These
declarations, it was argued, estopped petitioner from now seeking recovery of
the portions of the property sold to third persons.

ISSUE: Whether or not the Revocation Agreement and the Partition Agreement
are invalid.

Whether or not petitioner’s claims were barred by estoppel and laches.

HELD: Article 1458 of the Civil Code describes a contract of sale as a

transaction by which "one of the contracting parties obligates himself to
transfer the ownership of and to deliver a determinate thing, and the other to
pay therefore a price certain in money or its equivalent."

This lack of consensus as to the price prevented the perfection of the sale.

Laches does not merely concern the lapse of time.

Estoppel in pais arises when one, by his acts, representations or admissions,

or by his own silence when he ought to speak out, intentionally or through
culpable negligence, induces another to believe certain facts to exist and such
other rightfully relies and acts on such belief, so that he will be prejudiced if
the former is permitted to deny the existence of such facts.

"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."
August 9, 2017
G.R. No. 211845
PEN DEVELOPMENT CORPORATION and LAS BRISAS RESORT
CORPORATION vs. MARTINEZ LEYBA, INC.
DEL CASTILLO, J.:

FACTS: Martinez is a corporation and the registered owner of three (3)

contiguous parcels of land. Pen Development Corporation and Las Brisas
Resorts Corporation are also domestic corporations. Las Brisas is the
registered owner of a parcel of land which is situated adjacent to the lands
owned by Martinez. Las Brisas occupied the said land in 1967 and fenced the
same.

Martinez noticed that the construction of Las Brisas' fence seemed to encroach
on its land. Martinez sought the services of a licensed geodetic engineer to
survey the boundaries of its land. Martinez filed a Complaint for Quieting of
Title, Cancellation of Title and Recovery of Ownership with Damages against
Las Brisas.

Las Brisas countered that it bought the land from Republic Bank; that it took
possession thereof in good faith that very same year; and that it is actually
Martinez that was encroaching upon its land.

ISSUE: Whether or not petitioners were possessors/builders in bad faith.

HELD: Although "in overlapping of titles disputes, it has always been the
practice for the trial court to appoint a surveyor from the government land
agencies such as the Land Registration Authority or the DENR to act as
commissioner," this is not mandatory procedure; the trial court may rely on
the parties' respective evidence to resolve the case.

On the issue of being a builder in had faith, there is no question that

petitioners should be held liable to respondent for their obstinate refusal to
abide by the latter's repeated demands to cease and desist from continuing
their construction upon the encroached area.

Under Article 452 of the Civil Code, the builder, planter or sower in bad faith is
entitled to reimbursement for the necessary expenses of preservation of the
land. However, in this case, respondent's lands were not preserved: petitioners'
construction and use thereof in fact caused damage, which must be undone or
simply endured by respondent by force of law and circumstance. Respondent
did not in any way benefit from petitioners' occupation of its lands.

Under Section 47 of the Property Registration Decree, or Presidential Decree

No. 1529, "no title to registered land in derogation of the title of the registered
owner shall be acquired by prescription or adverse possession."

G.R. No. 208185, September 06, 2017

PRISCILLA ZAFRA ORBE vs. FILINVEST LAND, INC.
LEONEN, J.:

FACTS: Orbe entered into a purchase agreement with respondent Filinvest

over a 385-square-meter lot in Taytay, Rizal for P2,566,795.00, payable on
installment basis. Orbe was unable to make further payments allegedly on
account of financial difficulties. Filinvest sent a notice of cancellation.
Orbe filed against Filinvest a Complaint for refund with damages before the
HLURB Field Office emphasizing that she had made payments "beginning
June, 2001 up to October, 2004."

Filinvest asserted that Orbe failed to make 24 monthly amortization

payments on her account, and thus, could not benefit from Section 3 of
Republic Act No. 6552. Filinvest appealed to the HLURB Board of
Commissioners.

ISSUE: Whether or not petitioner Priscilla Zafra Orbe is entitled to a refund or

to any other benefit under Republic Act No. 6552.

HELD: Republic Act No. 6552, the Realty Installment Buyer Act or more
popularly refered to as the Maceda Law, named after its author, the late Sen.
Ernesto Maceda, was adopted with the purpose of "protecting buyers of real
estate on installment payments against onerous and oppressive conditions."

Sections 3 and 4 of the Maceda Law spell out the rights of defaulting buyers on
installment payments, depending on the extent of payments made.

Section 4 governs situations "where less than two years of installments were
paid".

When Section 3 speaks of paying "at least two years of installments," it refers to
the equivalent of the totality of payments diligently or consistently made
throughout a period of two (2) years.

Laws should never be so interpreted as to produce results that are absurd or

unreasonable. Sustaining petitioner's contention that specifically falls within
Section 3's protection just because she has been paying for more than two (2)
years goes beyond a justified, liberal construction of the Maceda Law.

This Court reckons petitioner's satisfaction of the requisite two (2) years' or 24
months' worth of installments using as divisor the monthly amortizations due
from petitioner.

For cancellations under Section 4 to be valid, three (3) requisites must concur.
First, the buyer must have been given a 60-day grace period but failed to utilize
it. Second, the seller must have sent a notice of cancellation or demand for
rescission by notarial act. And third, the cancellation shall take effect only after
30 days of the buyer's receipt of the notice of cancellation

In a great number of cases, the sellers of real property shall be juridical

persons acting through representatives. In these cases, it is imperative that the
officer signing for the seller indicate that he or she is duly authorized to effect
the cancellation of an otherwise perfected contract.

Since R.A. 6552 mandates cancellation by notarial act - among other

requirements before any cancellation of a contract may be effected, petitioners'
precipitate cancellation of its contract with private respondent without
observing the conditions imposed by the said law was invalid and improper."

With the Maceda Law's avowed purpose of extending benefits to disadvantaged

buyers and liberating them from onerous and oppressive conditions, it
necessarily follows that the Maceda Law's permission for sellers to cancel
contracts becomes available only when its conditions are heedfully satisfied.

In view of Nacar v. Gallery Frames, this amount shall be subject to legal

interest at the rate of twelve percent (12%) per annum reckoned from the filing
of petitioner's Complaint until June 30, 2013; and six percent (6%) per annum
from July 1, 2013 until fully paid.

October 4, 2017
G.R. No. 196419
PILIPINAS MAKRO, INC. vs. COCO CHARCOAL PHILIPPINES, INC. and LIM
KIM SAN
MARTIRES, J.:

FACTS: Makro and respondent Coco Charcoal Phils., Inc. executed a notarized
Deed of Absolute Sale for 1,000 square meters parcel of land amounting
₱8,500,000.00. On the same date, Makro entered into another notarized Deed
of Absolute Sale with respondent Lim for the sale of the latter's land, with a
total area of 1,000 square meters for the same consideration.

Coco Charcoal and Lim's parcels of land are contiguous and parallel to each
other. Aside from the technical descriptions of the properties in question, both
deeds of sale contained identical provisions, similar terms, conditions, and
warranties.

It was discovered that 131 square meters of the lot purchased from Coco
Charcoal had been encroached upon by the Department of Public Works and
Highways (DPWH) for its road widening project and construction of a drainage
canal to develop and expand the Davao-Cotabato National Highway. On the
other hand, 130 square meters of the land bought from Lim had been
encroached upon by the same DPWH project.

Makro informed the representatives of Coco Charcoal and Lim about the
supposed encroachment on the parcels of land due to the DPWH project.
Initially, Makro offered a compromise agreement in consideration of a refund of
75% of the value of the encroached portions. Thereafter, Makro sent a final
demand letter to collect the refund of the purchase price corresponding to the
area encroached upon by the road widening project, seeking to recover
₱1,113,500.00 from Coco Charcoal and ₱1,105,000.00 from Lim. Failing to
recover such, Makro filed separate complaints against Coco Charcoal and Lim
to collect the refund sought.

ISSUE: Whether or not Makro was entitled for refund.

HELD: A warranty is a collateral undertaking in a sale of either real or personal

property, express or implied; that if the property sold does not possess certain
incidents or qualities, the purchaser may either consider the sale void or claim
damages for breach of warranty.

November 8, 2017
G.R. No. 164482
LOURDES J. ESTRELLADO; THE HEIRS OF EUGENIO ESTRELLADO,
represented by LOURDES J. ESTRELLADO; NARCISA T. ESTRELLADO;
THE HEIRS OF NICOLAS ESTRELLADO, represented by CLARITA E.
MAINAR; PILAR E. BARREDO-FUENTES; and THE HEIRS OF VIVINA
ESTRELLADO-BARREDO and ALIPIO BARREDO, represented by PILAR E.
BARREDO-FUENTES vs. THE PRESIDING JUDGE OF THE
MUNICIPALTRIAL COURT IN CITIES, llTH JUDICIAL REGION, BRANCH 3,
DAVAO CITY; J.S. FRANCISCO,AND SONS, INC., represented by its
PRESIDENT, JOSELITO C. FRANCISCO; and THE HEIRS OF DR. JOVITO S.
FRANCISCO, represented by JOSELITO C. FRANCISCO
x-----------------------x
G.R. No. 211320
LOURDES C.FRANCISCO-MADRAZO; ROMEO C. FRANCISCO;
CONCEPCION C. FRANCISCO; GATCHALIAN; and RENE JOSE C.
FRANCISCO vs. PILAR BARREDO-FUENTES; JORGE BARREDO; OSCAR
BARREDO; RODOLFO BARREDO; ERNESTO BARREDO; ARMANDO
BARREDO; DANILO BARREDO; TERESITA BARREDO-MCMAHON; LETICIA
BARREDO-CUARIO; and ESPERANZA BARREDO-TUL-ID
BERSAMIN, J.:

FACTS: These consolidated appeals originated from special civil actions for
forcible entry involving three adjacent parcels of land.

The Spouses Eugenio and Lourdes Estrellado were the former owners of the
parcel of land with an area of 15,465 square meters located in Barangay
Matina-Aplaya, Davao City. The Spouses and Nicolas and Narcisa Estrellado
were the former owners of the parcel of land also located in Barangay Matina-
Aplaya, Davao City with an area of 15,466 square meters. The late Spouses
Alipio and Vivina Barredo were the former owners of the parcel of land
containing an area of 15,465 square meters located in the same area. The
landowners herein mentioned were related to one another either by
consanguinity or by affinity.

The petitioners in G.R. No. 164482 are the successors-in-interest and heirs of
the above-named landowners. The respondents in G.R. No. 211320 are the
heirs of the late Spouses Alipio and Vivina Barredo. For ease of reference, they
are collectively referred herein as the Estrellados unless otherwise indicated.

Each of the three parcels of land herein mentioned was subdivided into two
portions - the smaller portion containing 5,000 square meters, and the bigger
portion with an area of about 10,465 square meters.

Spouses Eugene and Lourdes Estrellado sold their 5,000-square meter lot for
₱l0,000.00 to Dr. Jovito S. Francisco, the owner of J.S. Francisco & Sons, Inc.
and the predecessor-in-interest of the respondents in G.R. No. 164482 and
petitioners in G.R. No. 211320.

Spouses Alipio and Vivina Barredo likewise sold their 5,000- square meter lot
to Dr. Francisco for ₱l0,000.00 under the deed of absolute sale.

After selling the smaller lots to Dr. Francisco, the Estrellados separately sold
the bigger portions of their respective lots to Spouses Eugene and Lourdes
Estrellado; the Spouses Nicolas and Narcisa Estrellado; and the late Spouses
Alipio and Vivina Barredo. Dr. Francisco and his successors-in-interest
(collectively referred to as the Franciscos) immediately started their
uninterrupted possession of the entire landholdings of the Estrellados.
However, the Franciscos could not produce the formal deeds of sale relevant to
the subsequent sales. They only had a book of accounts evidencing their
installments to the Estrellados.

The three bigger lots became the subject of the three forcible entry cases
commenced by J.S. Francisco & Sons, Inc. against the Estrellados. The
Estrellados, as the defendants in the three cases, denied selling the bigger lots
to Dr. Francisco.

ISSUE: Whether or not CA erred in holding that the RTC did not make its own
determination on who owned the property.

HELD: Under Article 1475 of the Civil Code, the contract of sale is perfected at
the moment there is a meeting of minds not only upon the thing that is the
object of the contract but also upon the price.
Despite the document embodying the agreement on the sale not being
acknowledged before a notary public, the nonobservance of the form prescribed
by Article 1358(1) of the Civil Code did not render the sale invalid.

November 22, 2017

G.R. No. 222031
EMILIO CALMA vs. ATTY. JOSE M. LACHICA, JR.
TIJAM, J.:

FACTS: Respondent Atty. Jose M. Lachica, Jr. filed a complaint for Annulment
of Void Deeds of Sale, Annulment of Titles, Reconveyance, and Damages
originally against Ricardo Tolentino (Ricardo) and petitioner Emilio Calma, and
later on, Pablo Tumale (Pablo) was impleaded as additional defendant in a
Second Amended Complaint.

Respondent, in his complaint, alleged that he was the absolute owner and
actual physical possessor of the subject property, having acquired the same for
PhP15,000 through sale from Ceferino Tolentino (Ceferino) married to Victoria
Calderon, who are Ricardo's parents. Allegedly, he and his tenant/helper Oscar
Justo (Oscar) has been in actual physical possession and cultivation of the said
land continuously since its acquisition up to present.

Unfortunately, however, the Deed of Sale was allegedly lost. Hence, respondent
and Ceferino agreed to execute another deed of sale. Spouses Tolentino
allegedly took advantage of the situation and demanded an additional
PhP15,000 from respondent to which the latter heeded. Thus, in the new Deed
of Sale executed, the consideration for the sale of the subject property was
increased to PhP30,000.

Respondent argued that the sale between Ceferino and Ricardo was null and
void for being executed with fraud, deceit, breach of trust, and also for lack of
lawful consideration. Respondent emphasized that not only was Ricardo in full
knowledge of the sale of the subject property to him by Ceferino, but also his
adverse claim was evidently annotated in the latter's title and carried over to
Ricardo's title. Respondent also alleged that petitioner is an alien, a full-
blooded Chinese citizen, hence, not qualified to own lands in the Philippines,
and is likewise a buyer in bad faith.

Petitioner is a buyer in good faith and for value, having acquired the subject
property on July 10, 1998 through sale from Ricardo. They argued, among
others, that petitioner, despite merely relying on the correctness of Ricardo's
TCT, is duly protected by the law. It was stated in Ricardo's title that
respondent's adverse claim had already been cancelled more than four years
before the sale or on April 26, 1994. Thus, defendants argued that petitioner
had no notice of any defect in Ricardo's title before purchase of the subject
property.

ISSUE: Who between the petitioner and the respondent has better right over
the subject property.

HELD: Petitioner. 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.

It is basic that an allegation of fraud must be substantiated. Section 5, Rule 8

provides that in all averments of fraud, the circumstances constituting the
same must be stated with particularity.

It is settled that a defective title may still be the source of a completely legal
and valid title in the hands of an innocent purchaser for value.

Under Article 1544 of the Civil Code, petitioner's right as an innocent

purchaser for value who was able to register his acquisition of the subject
property should prevail over the unregistered sale of the same to the
respondent.

November 29, 2017

G.R. No. 205838
JOSEPH HARRY WALTER POOLE-BLUNDEN vs. UNION BANK OF THE
PHILIPPINES
LEONEN, J.:

FACTS: Poole-Blunden filed his Complaint for Rescission of Contract and

Damages against UnionBank.

Poole-Blunden charges UnionBank with fraud in failing to disclose to him that

the advertised 95 square meters was inclusive of common areas. With the
vitiation of his consent as to the object of the sale, he asserts that the Contract
to Sell may be voided. He insists that UnionBank is liable for breach of
warranty despite the "as-is-where-is" clause in the Contract to Sell. Finally, he
assails the Court of Appeals' application of Article 1542 of the Civil Code.

ISSUE: Whether or not respondent Union Bank of the Philippines committed

such a degree of fraud as would entitle petitioner Joseph Harry Walter Poole-
Blunden to the voiding of the Contract to Sell the condominium unit identified
as Unit 2C, T-Tower Condominium, 5040 P. Burgos corner Calderon Streets,
Makati City.
HELD: Section 6(a) of the Condominium Act specifies the reckoning of a
condominium unit's bounds. It also specifies that areas of common use "are
not part of the unit"

Article 1390 of the Civil Code stipulates that a contract is voidable or

annullable even if there is no damage to the contracting parties where "consent
is vitiated by mistake, violence, intimidation, undue influence or fraud."

A seller is generally responsible for warranty against hidden defects of the thing
sold.

A buyer cannot be considered to have agreed "to take possession of the things
sold 'in the condition where they are found and from the place where they are
located" if the critical defect is one which he or she cannot even readily sense.

A person not equipped with technical knowledge and expertise to survey real
property could not reasonably be expected to recognize deficiencies in
measurement at the first instance especially if that property was of "irregular
shape," "neither square nor rectangle," and having a "circular terrace."

A condominium unit's bounds are reckoned by "the interior surfaces of its

perimeter walls, floors, ceilings, windows and doors." It excludes common
areas.

Fraud presupposes bad faith or malicious intent.

PARTNERSHIP
DR. RESTITUTO C. BUENVIAJE vs. SPOUSES JOVITO R. and LYDIA B.
SALONGA, JEBSON HOLDINGS CORPORATION and FERDINAND JUAT
BAÑEZ
G.R. No. 216023 October 5, 2016

FACTS: On May 29, 1997, Jebson, through its Executive Vice President, Bañez,
entered into a Joint Venture Agreement (JVA) with Sps. Salonga. Under the
JVA, Sps. Salonga, who owned three (3) parcels of land situated in Tagaytay,
agreed for Jebson to construct 10 high-end single detached residential units
(Brentwoods).

On June 9, 1997, Jebson entered into a Contract to Sell (CTS) with Buenviaje
over Unit 5 for P10,500,000.00, without the conformity of Sps. Salonga. Out of
the purchase price, P7,800,000.00 was paid through a “swapping arrangement.”

However, despite full payment of the contract price, Jebson was unable to
complete Unit 5 in violation of its contractual stipulation to finish the same
within twelve (12) months from the date of issuance of the building permit.
Thus, Buenviaje demanded the completion and delivery of Unit 5. On May 27,
2002, Buenviaje filed before the HLURB Regional Field Office IV (HLURB-RIV) a
Complaint for Specific Performance against herein respondents, where he
argued that Sps. Salonga may be held solidarily liable with Jebson under
Articles 1822 and 1824 of the Civil Code.

Sps. Salonga averred that they were not liable to the complainants since there
was no privity of contract between them, adding that the contracts to sell were
unenforceable against them as they were entered into by Jebson without their
conformity, in violation of the JVA.

The HLURB-RIV found Sps. Salonga solidarily liable with Jebson and Bañez as
joint venture partners liable to the general buying public. The spouses
appealed to the HLURB-Board of Commissioners (BOC), which reversed the
ruling of the HLURB-RIV, finding no basis to hold Sps. Salonga solidarily liable
with Jebson and Bañez under the subject CTS. Dissatisfied, Buenviaje elevated
the matter to the Office of the President (OP), which affirmed the ruling of the
HLURB-BOC. On petition for review, the CA affirmed the ruling of the OP.
Hence, this present petition.

ISSUE: Whether the spouses Salonga can be held solidarily liable under
Articles 1822 and 1824 of the Civil Code.

HELD: No. Specific performance and “rescission” (more accurately referred to

as resolution) are alternative remedies available to a party who is aggrieved by
a counterparty’s breach of a reciprocal obligation.

Specific performance is defined as “the remedy of requiring exact performance

of a contract in the specific form in which it was made, or according to the
precise terms agreed upon.”

Resolution under Article 1191 of the Civil Code 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.

Under Article 1311of the Civil Code, it is a basic principle in civil law on
relativity of contracts, that contracts can only bind the parties who had entered
into it and it cannot favor or prejudice third persons.

Articles 1822 and 1824 of the Civil Code pertain to the obligations of a
copartner in the event that the partnership to which he belongs is held liable.

Rescission (as contemplated in Articles 1380 to 1389 of the Civil Code) is a

remedy granted by law to the contracting parties and even to third persons, to
secure the reparation of damages caused to them by a contract, even if this
should be valid, by restoration of things to their condition at the moment prior
to the celebration of the contract. It implies a contract, which even if initially
valid, produces a lesion or a pecuniary damage to someone.

MICHAEL C. GUY vs. ATTY. GLENN C. GACOTT

G.R. No. 206147 January 13, 2016

FACTS: Gacott purchased two brand new transreceivers from Quantech

Systems Corporation (QSC) in Manila through its employee Rey Medestomas.
Due to major defects, Gacott returned the transreceivers to QSC and requested
that they be replaced. Medestomas received the returned transreceivers and
promised to send him the replacement units within two weeks.

Time passed and Gacott did not receive the replacement units as promised.
QSC informed him that there were no available units and that it could not
refund the purchased price. Despite several demands, both oral and written,
Gacott was never given a replacement or a refund. Thus, Gacott filed a
complaint for damages. The RTC ruled in favor of Gacott. During the execution
stage, Gacott learned that QSC was not a corporation, but was in fact a general
partnership registered with the SEC, where Guy was appointed as General
Manager of QSC. Sheriff Felizarte went to the main office of DOTC-LTO and
verified whether Medestomas, QSC and Guy had personal properties registered
therein. Upon learning that Guy had vehicles registered in his name, Gacott
instructed the sheriff to proceed with the attachment of one of the motor
vehicles of Guy based on the certification issued by the DOTC-LTO. Sheriff
Felizarte then attached Guy’s vehicle by virtue of the Notice of
Attachment/Levy upon Personalty served upon the record custodian of the
DOTC-LTO of Mandaluyong City. A similar notice was served to at his
residence.
Guy filed his Motion to Lift Attachment Upon Personalty, arguing that he was
not a judgment debtor and, therefore, his vehicle could not be attached. The
RTC denied Guy’s motion. It explained that considering QSC was not a
corporation, but a registered partnership, Guy should be treated as a general
partner pursuant to Section 21 of the Corporation Code, and he may be held
jointly and severally liable with QSC and Medestomas pursuant to Articles
1822 and 1823 of the Civil Code. On appeal, the CA affirmed the ruling of the
RTC. Hence, this present petition.

ISSUE: Whether petitioner Guy may be held solidarily liable with the
partnership GSC.

HELD: No. Article 1816 provides that the partners’ obligation to third
persons with respect to the partnership liability is pro rata or joint.
CARMELITA T. BORLONGAN vs.BANCO DE ORO (formerly EQUITABLE PCI
BANK)
G.R. No. 217617 April 5, 2017
VELASCO, JR, J.:

FACTS: When Eliseo and his wife Carmelita went to the Registry of Deeds of
Pasig to obtain a copy of the TCT of their property in Pasig in preparation for a
prospective sale of the property, they were surprised that the title contained an
annotation that their property was the subject of an execution sale pending
with the Makati RTC. Carmelita found out that BDO filed a complaint for sum
of money against Tancho Corporation, the principal debtor of loan obligations
obtained from BDO. Also impleaded in the case was Carmelita, who supposedly
signed four (4) security agreements to guarantee the obligations of Tancho
Corporation.

The Makati RTC ruled in favor of BDO, which filed a Motion to Conduct
Auction of the property. The motion was granted by the Makati RTC and the
subject property was sold to BDO, as the highest bidder.

Following the discovery of the sale of their property, Eliseo executed an affidavit
of adverse claim and, filed a Complaint for Annulment of Surety Agreements,
Notice of Levy on Attachment, Auction Sale and Other Documents with the
Pasig RTC, alleging that the subject property is a family home that belongs to
the conjugal partnership of gains he established with his wife. He further
averred that the alleged surety agreements upon which the attachment of the
property was anchored were signed by his wife without his consent and did not
redound to benefit their family. Thus, he prayed that the surety agreements
and all other documents including the attachment, levy and execution sale be
nullified. The RTC of Pasig held in favor of Eliseo.

Carmelita filed a Petition for Annulment of Judgment of the Makati RTC which
ordered the issuance of a Writ of Possession and the issuance of a new TCT
covering the subject property in favor of the BDO. (With Urgent Prayer for
Issuance of TRO) with the CA. The CA denied the same. Hence, this petition.

ISSUE: Whether Eliseo may file a separate and independent action for the
annulment of the levy on their conjugal property.

HELD: In Buado v. Court of Appeals, 586 SCRA 397 (2009), the Supreme
Court (SC) had the opportunity to clarify that, to resolve the issue, it must first
be determined whether the debt had redounded to the benefit of the conjugal
partnership or not. In the negative, the spouse is a stranger to the suit who can
file an independent separate action, distinct from the action in which the writ
was issued.
In Spouses Ching v. Court of Appeals, 423 SCRA 356 (2004), the Supreme
Court (SC) elucidated that there is no presumption that the conjugal
partnership is benefited when a spouse enters into a contract of surety.

ANICETO G. SALUDO, JR. vs.PHILIPPINE NATIONAL BANK

G.R. No. 193138 August 20, 2018
JARDELEZA, J.:

FACTS: Saludo, Agpalo, Fernandez and Aquino Law Office (SAFA) entered into
a contract of lease with PNB. When the said contract has expired, SAFA
remained occupying the leased premises but has not paid its payable rentals to
PNB. When SAFA vacated the leased premises, PNB sent a demand letter to
SAFA requiring the firm to pay its rental arrears. In response, SAFA Law Office
sent a letter proposing a settlement by providing a range of suggested
computations of its outstanding rental obligations, with deductions for the
value of improvements it introduced in the premises, professional fees due from
Macroasia Corporation, and the 50% discount allegedly promised by Dr. Lucio
Tan. PNB, however, declined the settlement stating that it was not amenable to
the settlement's terms. PNB then made a final demand for SAFA Law Office to
pay its outstanding rental obligations. Saludo, in his capacity as managing
partner of SAFA Law Office, filed a complaint for accounting and/or
recomputation of unpaid rentals and damages against PNB in relation to the
Contract of Lease. PNB filed a motion to include an indispensable party as
plaintiff, praying that Saludo be ordered to amend his complaint to include
SAFA Law Office as principal plaintiff. PNB argued that the lessee in the
Contract of Lease is not Saludo but SAFA Law Office, and that Saludo merely
signed the Contract of Lease as the managing partner of the law firm. Thus,
SAFA Law Office must be joined as a plaintiff in the complaint because it is
considered an indispensable party under Section 7, Rule 3 of the Rules of
Court.

Saludo filed his motion to dismiss counterclaims arguing that SAFA Law Office
is neither a legal entity nor party litigant, as it is only a relationship or
association of lawyers in the practice of law and a single proprietorship which
may only be sued through its owner or proprietor, no valid counterclaims may
be asserted against it. The RTC of Makati denied PNB’s motion. Upon denial of
its Motion for Reconsideration, PNB filed a Petition for Certiorari with the CA,
which held that a partnership for the practice of law is not a legal entity but a
mere relationship or association for a particular purpose, thus, SAFA Law
Office cannot file an action in court. Hence, this petition.

ISSUE: Whether SAFA is a partnership for the practice of law which, having
acquired a juridical personality, may sue and may be sued in court.
HELD: Article 1767 of the Civil Code provides that by a contract of
partnership, two or more persons bind themselves to contribute money,
property, or industry to a common fund, with the intention of dividing the
profits among themselves. Two or more persons may also form a partnership
for the exercise of a profession. Under Article 1771, a partnership may be
constituted in any form, except where immovable property or real rights are
contributed thereto, in which case a public instrument shall be necessary.
Article 1784, on the other hand, provides that a partnership begins from the
moment of the execution of the contract, unless it is otherwise stipulated.

Here, absent evidence of an earlier agreement, SAFA Law Office was

constituted as a partnership at the time its partners signed the Articles of
Partnership45 wherein they bound themselves to establish a partnership for the
practice of law, contribute capital and industry for the purpose, and receive
compensation and benefits in the course of its operation.
Having settled that SAFA Law Office is a partnership, we hold that it acquired
juridical personality by operation of law. The perfection and validity of a
contract of partnership brings about the creation of a juridical person separate
and distinct from the individuals comprising the partnership.
It is this juridical personality that allows a partnership to enter into business
transactions to fulfill its purposes. Article 46 of the Civil Code provides that
"[j]uridical persons may acquire and possess property of all kinds, as well as
incur obligations and bring civil or criminal actions, in conformity with the
laws and regulations of their organization."

SAFA Law Office entered into a contract of lease with PNB as a juridical person
to pursue the objectives of the partnership.1awp++i1The terms of the contract
and the manner in which the parties implemented it are a glaring recognition of
SAFA Law Office's juridical personality. Thus, the contract stated that it is
being executed by PNB as the lessor and "SALUDO AGPALO FERNANDEZ &
AQUINO, a partnership organized and existing under the laws of the Republic
of the Philippines," as the lessee.55 It also provided that the lessee, i.e., SAFA
Law Office, shall be liable in case of default. 56 Furthermore, subsequent
communications between the parties have always been made for or on behalf of
PNB and SAFA Law Office, respectively.

In view of the above, we see nothing to support the position of the RTC and the
CA, as well as Saludo, that SAFA Law Office is not a partnership and a legal
entity. Saludo's claims that SAFA Law Office is his sole proprietorship and not
a legal entity fail in light of the clear provisions of the law on partnership. To
reiterate, SAFA Law Office was created as a partnership, and as such, acquired
juridical personality by operation of law. Hence, its rights and obligations, as
well as those of its partners, are determined by law and not by what the
partners purport them to be.
Having settled that SAPA Law Office is a juridical person, we hold that it is also
the real party-in-interest in the case filed by Saludo against PNB.

SAFA Law Office is the party that would be benefited or injured by the
judgment in the suit before the RTC. Particularly, it is the party interested in
the accounting and/or recomputation of unpaid rentals and damages in
relation to the contract of lease. It is also the party that would be liable for
payment to PNB of overdue rentals, if that claim would be proven. This is
because it is the one that entered into the contract of lease with PNB. As an
entity possessed of a juridical personality, it has concomitant rights and
obligations with respect to the transactions it enters into. Equally important,
the general rule under Article 1816 of the Civil Code is that partnership assets
are primarily liable for the contracts entered into in the name of the
partnership and by a person authorized to act on its behalf. All partners,
including industrial ones, are only liable pro rata with all their property after
all the partnership assets have been exhausted.

AGENCY 2016

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY vs. HEIRS OF

GAVINA IJORDAN, namely, JULIAN CUISON, FRANCISCA CUISON,
DAMASINA CUISON, PASTOR CUISON, ANGELINA CUISON, MANSUETO
CUISON, BONIFACIA CUISON, BASILIO CUISON, MOISES CUISON, and
FLORENCIO CUISON
G.R. No. 173140 January 11, 2016
BERSAMIN, J.:

FACTS: Julian Chizon executed a Deed of Extrajudicial Settlement and Sale a

lot situated in Ibo, Municipality of Opon (now Lapu-Lapu City) in favor of the
Civil Aeronautics Administration (CAA), the predecessor-in-interest of petitioner
Manila Cebu International Airport Authority (MCIAA). The subject lot was
transferred and conveyed to MCIAA by virtue of Republic Act No. 6958. In
1980, the respondents caused the judicial reconstitution of the original
certificate of title covering the subject lot. They asserted that they had not sold
their shares in the subject lot, and had not authorized Julian to sell their
shares to MCIAA's predecessor in-interest. The failure of the respondents to
surrender the owner's copy of OCT No. R0-2431 prompted MCIAA to sue them
for the cancellation of title in the RTC alleging in its complaint that the
certificate of title conferred no right in favor of the respondents because the lot
had already been sold to the Government in 1957; that the subject lot had then
been declared for taxation purposes under Tax Declaration No. 00387 in the
name of the BAT; and that by virtue of the Deed, the respondents came under
the legal obligation to surrender the certificate of title for cancellation to enable
the issuance of a new one in its name. The RTC dismissed MCIAA's complaint
insofar as it pertained to the shares of the respondents in Lot No. 4539 but
recognized the sale as to the 1/22 share of Julian. The CA denied MCIAA’s
appeal, hence this petition.

ISSUE: May a co-owned property be sold in its entirety by one of the co-owners
without the express authority of the other co-owners?

HELD: Article 1317 of the Civil Code provides that no person could
contract in the name of another without being authorized by the latter, or
unless he had by law a right to represent him; the contract entered into in the
name of another by one who has no authority or legal representation, or who
has acted beyond his powers, is unenforceable, unless it is ratified, expressly
or impliedly, by the person on whose behalf it has been executed, before it is
revoked by the other contracting party.

Under the Torrens System, no adverse possession could deprive the registered
owners of their title by prescription; thus, once 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.

SIGUION REYNA MONTECILLO AND ONGSIAKO LAW OFFICES vs.

HON. NORMA CHIONLO-SIA, in her Capacity as Presiding Judge of Branch
56 of the Regional Trial Court of Lucena City, and the TESTATE ESTATE
OF DECEASED SUSANO RODRIGUEZ, Represented by the Special
Administratrix
G.R. No. 181186 February 3, 2016
JARDELEZA, J.:

FACTS: SRMO Law Offices represented Remigio M. Gerardo in a case involving

the estate of one Susano R. Rodriguez, where the RTC directed SRMO to
reimburse the Estate the amount if P315,000.00 representing Remedios’
(widow of Susano) widow’s allowance. SRMO moved to be excused from
reimbursing the Estate arguing that, when it sought the payment of the
widow's allowance, it was merely seeking the enforcement of a judgment credit
in favor of its client, Remedios, who had, in turn, sold her interests to Gerardo,
also represented by SRMO. The RTC denied SMRO’s motion. The CA likewise
denied SMRO’s petition for certiorari. Hence, this case. Petitioner argues that it
received said allowance only in favor of Gerardo as buyer of Remedios' interests
pursuant to the Deed of Sale.

ISSUE: Whether the RTC is correct in holding SRMO personally liable as agent
of Gerardo for the reimbursement of the widow’s allowances to the estate of
Susano.

HELD:
 Under the law of agency, an agent is not personally liable for the
obligations of the principal unless he performs acts outside the scope of his
authority or he expressly binds himself to be personally liable.
The right to support is a purely personal right essential to the life of the
recipient, so that it cannot be subject to attachment or execution.

BANK OF THE PHILIPPINE ISLANDS AND FGU INSURANCE CORPORATION

(PRESENTLY KNOWN AS BPI/MS INSURANCE CORPORATION) YOLANDA
LAINGO
G.R. No. 205206, March 16, 2016
CARPIO, J.:

FACTS: Rheozel Laingo opened a savings account with coverage of an

insurance policy against disability or death issued by petitioner FGU Insurance
(now BPI/MS Insurance Coproration), wherein Yolanda Laingo (Laingo) was
named as beneficiary. Rheozel died due to a vehicular accident. More than 2
years later, Rheozel’s sister found the Personal Accident Insurance Coverage
issued by FGU Insurance. Laingo requested the processing of her claim as
beneficiary in the said policy with FGU. The latter denied the former’s claim
stating that Laingo should have filed the claim within 3 calendar months from
the death of Rheozel as required under the Insurance Policy. Laingo filed an
action for specific performance against FGU with the RTC. The same was
denied. Laingo filed an appeal before the CA. The CA reversed the RTC’s
decision, ruling that Laingo could not be expected to do an obligation which
she did not know existed. The appellate court added that Laingo was not a
party to the insurance contract entered into between Rheozel and petitioners.
Thus, she could not be bound by the 90-day stipulation. Hence, this petition
filed by BPI and FGU.

ISSUE: Is respondent Laingo bound by the 90-day period stipulation in the

insurance policy?

HELD: No. Under the law, an agent is one who binds himself to render some
service or to do something in representation of another.Laingo is not bound by
the 90-day period. As the main he relationship existing between principal and
agent is a fiduciary one, demanding conditions of trust and confidence.

There is a rationale in the contract of agency, which flows from the “doctrine of
representation,” that notice to the agent is notice to the principal.

DRA. MERCEDES OLIVER vs. PHILIPPINE SAVINGS BANK and LILIA

CASTRO
G.R. No. 214567 April 4, 2016
FACTS: Petitioner Mercedes Oliver (Oliver) was a depositor of respondent
Philippine Savings Bank (PSBank). Respondent Lilia Castro (Castro) was the
Assistant Vice President of the Acting Branch Manager of PSBank San Pedro,
Laguna. Castro convinced her to loan out her deposit as interim or bridge
financing for the approved loans of bank borrowers who were waiting for the
actual release of their loan proceeds, to which Oliver agreed. Their arrangement
went on smoothly for months. Due to the frequency of bank transactions,
Oliver even entrusted her passbook to Castro. Because Oliver earned
substantial profit, she was further convinced by Castro to avail of an additional
credit line in the amount of P10 million. Beginning September 1998, Castro
stopped rendering an accounting for Oliver. The latter then demanded the
return of her passbook. When Castro showed her the passbook sometime in
late January or early February 1995, she noticed several erasures and
superimpositions therein. She became very suspicious of the many erasures
pertaining to the December 1998 entries so she requested a copy of her
transaction history register from PSBank, where she was surprised to discover
that the amount of P4,491,250.00 (estimated at P4.5 million) was entered into
her account on December 21, 1998. While a total of P7 million was withdrawn
from her account on the same day, Oliver asserted that she neither applied for
an additional loan of P4.5 million nor authorized the withdrawal of P7 million.
She also discovered another loan for P1,396,310.45, acquired on January 5,
1999 and allegedly issued in connection with the P10 million credit line.

She filed a complaint against Castro and PS Bank before the RTC. The RTC
dismissed the complaint but later on reversed its Decision on the ground that
Castro and PS Bank failed to provide withdrawal slips signed by Castro
evidencing the withdrawal of the P7 million. On appeal by respondents, the CA
reversed the RTC’s Decision. Hence, this petition.

ISSUE: Whether Castro may be held liable for damages on account of the fraud
she employed against Oliver.

HELD: Agency can be express or implied from the acts of the principal,
from his silence or lack of action, or his failure to repudiate the agency
knowing that another person is acting on his behalf without authority.

As long as the agent acts within the scope of the authority given by his
principal, the actions of the former shall bind the latter.

AGENCY 2017

SPOUSES MAY S. VILLALUZ and JOHNNY VILLALUZ, JR.

vs. LAND BANK OF THE PHILIPPINES and the REGISTER OF DEEDS FOR
DAVAO CITY
G.R. No. 192602 January 18, 2017
JARDELEZA, J.:
FACTS: Spouses Villaluz executed a Special Power of Attorney in favor of
Agbisit authorizing Paula Agbisit to, among others, "negotiate for the sale
mortgage, or other forms of disposition their land and "sign in our behalf all
documents relating to the sale, loan or mortgage, or other disposition of the
aforementioned property. " The one-page power of attorney neither specified the
conditions under which the special powers may be exercised nor stated the
amounts for which the subject land may be sold or mortgaged.

Agbisit executed her own Special Power of Attorney, appointing Milflores

Cooperative as attorney-in-fact in obtaining a loan from and executing a real
mortgage in favor of Land Bank of the Philippines (Land Bank). Milflores
Cooperative, in a representative capacity, executed a Real Estate Mortgage in
favor of Land Bank in consideration of the ₱3,000,000 loan to be extended by
the latter.

Milflores Cooperative was unable to pay its obligations to Land Bank. Thus,
Land Bank filed a petition for extra-judicial foreclosure sale with the Office of
the Clerk of Court of Davao City. The Spouses Villaluz learned that an auction
sale covering their land had been set for October 2, 2003. Land Bank won the
auction sale as the sole bidder.

The Spouses Villaluz filed a complaint with the Regional Trial Court (RTC) of
Davao City seeking the annulment of the foreclosure sale. The sole question
presented before the RTC was whether Agbisit could have validly delegated her
authority as attorney-in-fact to Milflores Cooperative. Citing Article 1892 of the
Civil Code, the RTC held that the delegation was valid since the Special Power
of Attorney executed by the Spouses Villaluz had no specific prohibition against
Agbisit appointing a substitute. Accordingly, the RTC dismissed the complaint.
On appeal, the CA affirmed the RTC Decision. After the CA denied their motion
for reconsideration, the Spouses Villaluz filed this petition for review.

ISSUE: Whether Agbisit may validly appoint Milflores Cooperative as a

substitute.

HELD: Yes. The law creates a presumption that an agent has the power to
appoint a substitute. The consequence of the presumption is that, upon valid
appointment of a substitute by the agent, there ipso jure arises an agency
relationship between the principal and the substitute, i.e., the substitute
becomes the agent of the principal.

G.R. No. 205998 April 24, 2017

WILLIAM ANGIDAN SIY vs. ALVIN TOMLIN
DEL CASTILLO, J.:

FACTS:
William Siy alleged that he is the owner of a 2007 model Range Rover which he
purchased from Alberto Lopez III (Lopez) on July 22, 2009; that in 2010, he
entrusted the said vehicle to Ong, a businessman who owned a second-hand
car sales showroom, after the latter claimed that he had a prospective buyer
therefor; that Ong failed to remit the proceeds of the purported sale nor return
the vehicle. Petitioner later found out that the vehicle had been transferred to
Chua; that in December, 2010, petitioner filed a complaint before the Quezon
City Police District's Anti-Carnapping Section; that Ong, upon learning of the
complaint, met with petitioner to arrange the return of the vehicle; that Ong
still failed to surrender the vehicle; that petitioner learned that the vehicle was
being transferred to respondent; and that the vehicle was later impounded and
taken into custody by the PNP-Highway Patrol Group after respondent
attempted to process a PNP clearance of the vehicle with a view to transferring
ownership thereof. Petitioner thus prayed that a writ of replevin be issued for
the return of the vehicle to him. However, respondent claimed that he is the
lawful and registered owner of the subject vehicle, having bought the same and
caused registration thereof in his name on March 7, 2011; that the Complaint
is defective for failing to allege the correct and material facts as to ownership,
possession/detention by defendant, warranty against distraint/levy/seizure,
and actual value of the vehicle.

ISSUE: Whether the Writ of Replevin be issued for the return of the vehicle to
petitioner.

HELD: No. In many cases as well, busy vehicle owners selling their vehicles
actually leave them, together with all the documents of title, spare keys, and
deeds of sale signed in blank, with secondhand car traders they know and
trust, in order for the latter to display these vehicles for actual viewing and
inspection by prospective buyers at their lots, warehouses, garages, or
showrooms, and to enable the traders to facilitate sales on-the-spot, as-is-
where-is, without having to inconvenience the owners with random viewings
and inspections of their vehicles. For this kind of arrangement, an agency
relationship is created between the vehicle owners, as principals, and the car
traders, as agents.

The basis of agency is representation and the same may be constituted

expressly or impliedly. In an implied agency, the principal can be bound by the
acts of the implied agent. The same is true with an oral agency.

AGENCY 2018
August 1, 2018 G.R. No. 193782
DALE STRICKLAND vs. ERNST & YOUNG LLP
JARDELEZA, J.:

FACTS: Strickland was intentionally removed from the NHMFC Engagement

Team, however, the latter would like to retain the services of Strickland, thus,
the parties entered into negotiations to define Strickland's possible continued
participation in the UHLP Project. No actual written and final agreement among
the parties amending the original engagement letter of materialized.
Subsequently, conflict on Strickland's actual participation and concurrent
designation on the project arose among PA, NHMFC, and Strickland as
reflected in the proposed revisions to the "Draft Financial Advisory Services"
initially prepared by PA. PA objected to Strickland's proposed amendments,
specifically on the terms of compensation, which now contemplated PA's
engagement of Strickland as subcontractor for the closing of the UHLP Project.
The counsel for Strickland wrote PA asking for "equitable compensation for
professional services" rendered to NHMFC on the UHLP Project from the time of
his separation from EYLLP and/or EYAPFS in July 2004 "up and through the
recent Signing and Closing Ceremony held on 22 April 2004 and his continued
provision of]services as the final closing approaches. Thus, Stickland filed a
Complaint directing defendants, either jointly or severally or solidarity, or one
or some or all defendants as may be deemed appropriate after trial, to pay
Strickland P18,000,000.00 as equitable compensation for services rendered.

ISSUE: Whether Strickland has distinct causes of action against other

defendants such as NHMFC.

HELD: We do not agree. We do not find the designation of Strickland in the

Engagement Team of the FASA as a stipulation pour atrui. Article 1311,
paragraph 2 of the Civil Code reads:
Art. 1311. If a contract should contain some stipulation in favor of a third
person, he may demand its fulfillment provided he communicated his
acceptance to the obligor before its revocation. A mere incidental benefit or
interest of a person is not sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third person.
Considering the clear applicability of the Partnership Agreement and the terms
of the arbitration clause, and absent a clear right-duty correlative which
supports Strickland's causes of action, the CA certainly did not err in
suspending the proceedings in CA-G.R. SP No. 120897.
In all, while we do not preclude Strickland from pursuing all remedies available
to him, we point out that the factual circumstances obtaining here, given that
Strickland was then partner of the global company EYLLP, the Philippines is
not automatically the law of the place of performance of the contract nor is it
the only factor to be considered in the ultimate choice-of-law final analysis.

G.R. No. 226587, November 21, 2018

DONABELLE V. GONZALES-SALDANA, Petitioner, v. SPOUSES GORDON R.
NIAMATALI AND AMY V. NIAMATALI, Respondents.
J. REYES, JR., J.:
FACTS: Respondent-spouses Niamatala were residing in the USA in 2002,
made known to petitioner Saldana who was working in DOLE, their intention
to acquire real properties in Metro Manila through public auction. Thus, the
respondents sent P3,000,000 to petitioner to participate in public auction on
their behalf to purchase certain properties in Las Piñas. However, respondent
received the TCT of properties located in Manila and Parañaque contrary to
their agreement that petitioner would purchase the Las Piñas property.
Petitioner explained to them that the auction sale of the Las Piñas property did
not push through because of a third-party claim, but the judgment creditor
agreed to sell to her the Parañaque and Manila properties which were also
levied on execution. Thus, respondent-spouses informed petitioner that they
were no longer interested in acquiring the Las Piñas property and asked for the
return of the P3,000,000.00, to which petitioner acceded. She even sent to
respondent-spouses a letter wherein she acknowledged receipt of the
P3,000,000.00 and promised to return said amount on or before September 14,
2002. Despite several demands from respondent-spouses, petitioner failed to
return the P3,000,000.00, the respondent-spouses filed a case for collection of
sum of money. The RTC ruled that respondents failed to comply with the Best
Evidence Rule, hence, the case was dismissed. To which, appealed to the CA, it
held that respondent spouses need not prove the fact that they sent money to
petitioner because the latter's admission that the amount of P3,000,000.00
was transmitted to her.

ISSUE: Whether petitioner should return the P3,000,000.00 she received from
respondent spouses for the purchase of the Las Piñas property

HELD: Yes. There is an implied agency between petitioner and respondent-

spouses. In this case, respondent-spouses communicated with petitioner as
regards the purchase of the Las Piñas property and they remitted
P3,000,000.00 to petitioner's account for such purpose. For her part, petitioner
made inquiries with the DOLE Sheriff's Office and even talked to the judgment
creditor for the purchase of the said property. Also, she received P3,000,000.00
from respondent-spouses to finalize the transaction. Thus, it is beyond dispute
that an implied agency existed between petitioner and respondent-spouses for
the purpose of purchasing the Las Piñas property.

Further, the parties never agreed on a substitute property to be purchased in

case the bidding of the Las Piñas property failed to materialize. When petitioner
was informed that certain properties in Manila and Parañaque were to be
auctioned for the same judgment creditor, she proceeded to participate in the
bidding and decided not to wait for respondent-spouses' approval. Thus, even
though petitioner may have been motivated by good intentions and by a sincere
belief that the purchase of the Manila and Parañaque properties would benefit
respondent-spouses, it cannot be gainsaid that she acted outside the scope of
the authority given to her. Hence, petitioner's failure to fulfill her obligation
entitles respondent-spouses to the return of the P3,000,000.00 which they
remitted to her account.

TRUST 2016
G.R. No. 185757, March 02, 2016
SPOUSES VIRGILIO DE GUZMAN, JR. [SUBSTITUTED BY HIS WIFE, LYDIA
S. DE GUZMAN, AND CHILDREN, NAMELY, RUEL S. DE GUZMAN, ET AL.
AND LYDIA S. DE GUZMAN v. COURT OF APPEALS, MINDANAO STATION,
LAMBERTO BAJAO, HEIR OF SPOUSES LEONCIO*BAJAO AND ANASTACIA
Z. BAJAO
JARDELEZA, J.:

FACTS: Petitioners acquired the property in two transactions by buying the

200 square meters for 1000 and 280 square meters for P1400 on different
dates from Spouses Bajao which are evidenced by swparate Deed of Absolute
Sale. Spouses Bajao allegedly promised to segregate the property from the
remaining area of Lot No. 532 and to deliver a separate title to petitioners
covering it.However, because the promise was not forthcoming, petitioner Lydia
S. de Guzman executed an Affidavit of Adverse Claim, which was later
annotated on the OCT. petitioners initiated the segregation of the property
through survey and acquired possession over the land, fenced the area,
introduced improvements, and planted it with fruit-bearing trees. After the
death of Leoncio Bajao, respondent executed an Extrajudicial Settlement
Among Heirs which subdivided Lot No. 532 into three parts. Respondent
further caused the cancellation of annotated adverse claim and later obtained
TCT, Thus, petitioner filed a Complaint for Reconveyance with Writ of
Preliminary Mandatory Injunction and Damages. They alleged that they were
innocent purchasers for value who took possession of the property after the
sale and religiously paid its real property taxes. Petitioners also alleged that
respondent was in bad faith since he knew about the sale of the property
between them and his parents, and the existing survey and segregation over
the area, yet he fraudulently included the same in his share. Respondent
argued that the action is time barred and there is no more trust to speak of.

ISSUE: Whether the complaint of reconveyance should prosper in favor of the

petitioner.

HELD: No. Article 1456 of the Civil Code provides that a person acquiring
property through mistake or fraud becomes, by operation of law, a trustee of
an implied trust for the benefit of the real owner of the property. An action for
reconveyance based on an implied trust generally prescribes in ten (10) years,
the reckoning point of which is the date of registration of the deed or the date
of issuance of the certificate of title over the property.

THIRD DIVISION
G.R. Nos. 185857-58, June 29, 2016
TRIFONIA D. GABUTAN, DECEASED, HEREIN REPRESENTED BY HER
HEIRS, NAMELY: ERLINDA LLAMES, ELISA ASOK, PRIMITIVO GABUTAN,
VALENTINA YANE; BUNA D. ACTUB, FELISIA TROCIO, CRISANTA D.
UBAUB, AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED
BY HIS HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY
DALONDONAN, MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES
NICOLAS & EVELYN DAILO v. DANTE D. NACALABAN, HELEN N.
MAANDIG, SUSAN N. SIAO, AND CAGAYAN CAPITOL COLLEGE

G.R. NOS. 194314-15

DANTE D. NACALABAN, HELEN N. MAANDIG, AND SUSAN N. SIAO, AS
HEIRS OF BALDOMERA D. VDA. DE NACALABAN v. TRIFONIA D.
GABUTAN, BUNA D. ACTUB, FELISIA D. TROCIO, CRISANTA D. UBAUB,
AND TIRSO DALONDONAN, DECEASED, HEREIN REPRESENTED BY HIS
HEIRS, NAMELY: MADELYN D. REPOSAR AND JERRY DALONDONAN,
MARY JANE GILIG, ALLAN UBAUB, AND SPOUSES NICOLAS & EVELYN
DAILO, CAGAYAN CAPITOL COLLEGE, REPRESENTED BY ITS PRESIDENT,
ATTY. CASIMIRO B. SUAREZ, JR.

HON. LEONCIA R. DIMAGIBA (ASSOCIATE JUSTICE), HON. PAUL L.

HERNANDO (ASSOCIATE JUSTICE), HON. NINA G. ANTONIO-VALENZUELA
(ASSOCIATE JUSTICE), HON. EDGARDO T. LLOREN (ASSOCIATE
JUSTICE), HON. MICHAEL P. ELBINIAS (ASSOCIATE JUSTICE), AND HON.
JANE AURORA C. LANTION (ASSOCIATE JUSTICE, ACTING CHAIRMAN),
COURT OF APPEALS, CAGAYAN DE ORO CITY (FORMER SPECIAL
TWENTY-SECOND DIVISION), PUBLIC
JARDELEZA, J.:

FACTS: Godofredo purchased the 800 square meter parcel of land from the
Daamo family. He died and was survived by his wife and children. His wife
issued a certification in favor of her mother, Melecia, allowing to build and
occupy the house. The tax declaration showed that Melecia owned th building
on the land owned by Godofredo. Baldomera died, her children executed an
Extrajudicial Settlement, where they adjudicated unto themselves the property
and sold it to the College. Melecia died and survived by her children, where the
latter occupied the house on the property, where the College demanded to
vacate the premises. However, Gabutan, et al. filed a Complaint for
Reconveyance of Real Property, against Nacalaban, et al. and the College. They
alleged that: (1) Melecia bought the property using her own money but
Godofredo had the Deed of Absolute Sale executed in his name instead of his
mother-in-law; (2) Godofredo and Baldomera were only trustees of the property
in favor of the real owner and beneficiary, Melecia; (3) they only knew about the
Extrajudicial Settlement with Sale upon verification with the Registry of
Deeds; and (4) the College was a buyer in bad faith, being aware they were co-
owners of the property.

ISSUE: To whom the land should be appropriated

HELD: Article 1448 of the Civil Code provides in part that there is an implied
trust when property is sold, and the legal estate is granted to one party but the
price is paid by another for the purpose of having the beneficial interest of the
property.

An action for reconveyance is a legal and equitable remedy granted to the

rightful landowner, whose land was wrongfully or erroneously registered in the
name of another, to compel the registered owner to transfer or reconvey the
land to him.

An action for reconveyance based on an implied or a constructive trust

prescribes ten (10) years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property. 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.

Whether one is a buyer in good faith and whether due diligence and prudence
were exercised are question of fact.

TRUST 2017
January 30, 2017 G.R. No. 219345
SECURITY BANK CORPORATION vs. GREAT WALL COMMERCIAL PRESS
COMPANY, INC., ALFREDO BURIEL ATIENZA, FREDINO CHENG ATIENZA
and SPS. FREDERICK CHENG ATIENZA and MONICA CU ATIENZA
Mendoza, J.:

FACTS: Security Bank filed a Complaint for Sum of Money against

respondents Great Wall Commercial Press Company, Inc. (Great Wall) and its
sureties herein defendant before the RTC. The complaint sought to recover
from respondents their unpaid obligations under a credit facility covered by
several trust receipts and surety agreements, as well as interests. Security
Bank argued that in spite of the lapse of the maturity date of the obligations
from December 11, 2012 to May 7, 2013, respondents failed to pay their
obligations. The total principal amount sought was ₱10,000,000.00. After due
hearing, the RTC granted the application for a writ of preliminary attachment
of Security Bank, which then posted a bond in the amount of ₱10,000,000.00.
Dissatisfied, respondents filed a petition for certiorari before the CA seeking to
reverse and set aside the RTC orders denying their motion to lift the writ of
preliminary attachment issued. The appellate court explained that the
allegations of Security Bank were insufficient to warrant the provisional
remedy of preliminary attachment. It pointed out that fraudulent intent could
not be inferred from a debtor's inability to pay or comply with its obligations.
The CA opined that the non-return of the proceeds of the sale and/or the goods
subject of the trust receipts did not, by itself, constitute fraud and that, at
most, these were only averments for the award of damages once substantiated
by competent evidence. It also stressed that respondents' act of offering a
repayment proposal negated the allegation of fraud.

ISSUE: Whether the Court of Appeals erred in nullifying the Writ of Preliminary
Attachment issued by the Regional Trial Court.

HELD: Yes. A trust receipt transaction is one where the entrustee has the
obligation to deliver to the entruster the price of the sale, or if the merchandise
is not sold, to return the merchandise to the entruster.

MANUEL L. BAUTISTA, SPOUSES ANGEL SAHAGUN and CARMELITA

BAUTISTA, and ANIANO L. BAUTISTA vs. MARGARITO L. BAUTISTA
G.R. No. 202088 March 8, 2017

FACTS: The Bautista siblings (Margarito, Manuel, Carmelita, Aniano,

Florencia, and Ester) established a lending business through which they
acquired several properties in San Pablo, Laguna. In 1198, Amelia Mendoza
obtained a loan from Florencia and secured the same with the Sta. Monica
property. Several renewals and cancellations of the loan has been made, and
was ultimately sold to the Bautista siblings. However, the TCT was issued
under the name of herein respondent Margarito, who claims that the subject
property was acquired through his own money. The other siblings filed an
action for partition and accounting alleging, among others, that the Sta.
Monica property was acquired through their common fund. The RTC found for
the petitioners-siblings. On appeal, the CA reversed the RTC’s decision and
ruled in favor of Margarito. Hence, this petition.

ISSUE: Whether the Sta. Monica property is co-owned by the Bautista siblings.

HELD: There is an implied trust when a property is sold and the legal estate is
granted to one party but the price is paid by another for the purpose of having
the beneficial interest of the property.

JOSE S. OCAMPO vs. RICARDO S. OCAMPO, SR.

G.R. No. 227894 July 5, 2017

FACTS: Petitioner Jose S. Ocampo and respondent Ricardo S. Ocampo are full-
blooded brothers who both lives at the conjugal property of their late parents.
The present case arose from a complaint filed by respondent Ricardo against
petitioner Jose for partition and annulment of Transfer Certificate of Title
alleging that petitioner and his wife, Andrea Mejia Ocampo, conspired in
falsifying his signature on a notarized Extra-Judicial Settlement with Waiver
("ESW"), and effecting the transfer of the property in the name of petitioner.
Based on a finding by the National Bureau of Investigation (NBI) that
respondent's signature was forged, an Information was filed against petitioner,
the notary public, and two others. Respondent requested for partition of the
property, but petitioner refused to do so. The RTC ruled in favor of Ricardo
Ocampo ordering the partition of the property. On appeal, the CA affirmed the
decision of the RTC. Hence, this petition. Petitioner claims that the ESW, being
a notarized document, enjoys a prima facie presumption of authenticity and
due execution. He claims that there was no clear and convincing evidence to
overcome this presumption.
Even assuming that the ESW is void or inexistent, petitioner argues that the
action filed by respondent is barred by the doctrine of estoppel by laches. The
ESW was executed and notarized on September 30, 1970. However, it was only
on July 1, 1992 that respondent filed the present case for partition and
annulment of title, claiming that the ESW was forged. Thus, petitioner argues
that there was an unreasonable delay on respondent's part to assert his rights
and pursue his claims against petitioner.

ISSUE: Whether the action filed by Ricardo should be dismissed on the ground
of prescription.

HELD: No. Wrongful registration gives occasion to the creation of an implied or

constructive trust under Article 1456 of the New Civil Code. An action for
reconveyance based on an implied trust generally prescribes in ten (10) years.
However, if the plaintiff remains in possession of the property, the prescriptive
period to recover title of possession does not run against him.

Quieting of title is a common law remedy for the removal of any cloud, doubt,
or uncertainty affecting title to real property.

Jurisprudence has defined laches as the failure or neglect, for an unreasonable

and unexplained length of time, to do that which — by the exercise of due
diligence — could or should have been done earlier.

Time and again, the Supreme Court (SC) has ruled that courts, under the
principle of equity, will not be guided or bound strictly by the statute of
limitations or the doctrine of laches when to do so, manifest wrong or injustice
would result.

G.R. No. 190286, January 11, 2018

RAMON E. REYES AND CLARA R. PASTOR v. BANCOM DEVELOPMENT
CORP.
SERENO, C.J.:

FACTS: The dispute in this case originated from a Continuing

Guaranty executed in favor of respondent Bancom by the petitioners herein. In
the instrument, the Reyes Group agreed to guarantee the full and due payment
of obligations incurred by Marbella under an Underwriting Agreement with
Bancom. These obligations included certain Promissory Notes issued by
Marbella in favor of Bancom for the aggregate amount of P2,828,140.32.
However, Marbella failed to fulfill its obligation at the time of their maturity
despite of many replacement maturity and repeated demands. Thus, Bancom
filed a Complaint for Dum of Money. On the contrary, Marbella and the Reyes
Group argued that they had been forced to execute the Promissory Notes and
the Continuing Guaranty against their will. They further argued that the
Promissory Notes were not meant to be binding, given that the funds released
to Marbella by Bancom were not loans, but merely additional financing.
Petitioners also contended that the action must be considered abated pursuant
to Section 122 of the Corporation Code. They pointed out that the Certificate of
Registration issued to Bancom had been revoked by the Securities and
Exchange Commission (SEC) on 31 May 2004, and that no trustee or receiver
had been appointed to continue the suit; in fact, even Bancom's former counsel
was compelled to withdraw its appearance from the case, as it could no longer
contact the corporation.

ISSUE: Whether the present suit should be deemed abated by the revocation
by the SEC of the Certificate of Registration issued to Bancom.

HELD: The revocation of Bancom's Certificate of Registration does not justify

the abatement of these proceedings. Here, it appears that the SEC revoked the
Certificate of Registration issued to Bancom on 26 May 2003.Despite this
revocation, however, Bancom does not seem to have conveyed its assets to
trustees or to its stockholders and creditors. The corporation has also failed to
appoint a new counsel after the law firm formerly representing it was allowed to
withdraw its appearance on 1 June 2004. Citing these circumstances,
petitioners assert that these proceedings should be considered abated. We
disagree.

It is evident from the foregoing discussion of law and jurisprudence that the
mere revocation of the charter of a corporation does not result in the
abatement of proceedings. Since its directors are considered trustees by legal
implication, the fact that Bancom did not convey its assets to a receiver or
assignee was of no consequence. It must also be emphasized that the
dissolution of a creditor-corporation does not extinguish any right or remedy in
its favor.
The terms of the promissory notes and "Continuing Guaranty" are clear and
unequivocal, leaving no room for interpretation. For not being contrary to law,
morals, good customs, public order and public policy, defendants' obligation
has the force of law and should be complied with in good faith.

VICARIOUS LIABILITY; DAMAGES

CARAVAN TRAVEL AND TOURS INTERNATIONAL, INC.v. ERMILINDA R.
ABEJAR
G.R. No. 170631, February 10, 2016
LEONEN, J.:

FACTS: A Mitsubishi L-300 van was travelling along the east-bound lane on
July 13, 2000, opposite is Jesmariane R. Reyes who was walking along the
west-bound lane of Sampaguita Street, United Parañaque Subdivision IV,
Parañaque City. To avoid an incoming vehicle, the van swerved to its left and
hit Reyes. A witness named Alex Espinosa went to her aid and loaded her in
the back of the van and he told the driver of the van, Jimmy Bautista, to bring
Reyes to the hospital. Instead of doing so, Bautista appeared to have left the
van parked inside a nearby subdivision with Reyes still in the van. Fortunately
for Reyes, an unidentified civilian came to help and drove Reyes to the hospital.
Upon investigation, it was found that the registered owner of the van was
Caravan, a corporation engaged in the business of organizing travels and tours.
Bautista was Caravan's employee assigned to drive the van as its service driver.
Despite medical attendance, Reyes died two (2) days after the accident.

Respondent Ermilinda R. Abejar, Reyes' paternal aunt and the person who
raised her since she was nine (9) years old, filed before the Regional Trial Court
of Parañaque a Complaint for damages against Bautista and Caravan. In her
Complaint, Abejar alleged that Bautista was an employee of Caravan and that
Caravan is the registered owner of the van that hit Reyes. Summons could not
be served on Bautista. Thus, Abejar moved to drop Bautista as a defendant.
The Regional Trial Court granted her Motion. After trial, the Regional Trial
Court found that Bautista was grossly negligent in driving the vehicle. The
Court of Appeals affirmed with modification the Regional Trial Court's July 31,
2003 Decision and October 20, 2003 Order. Caravan filed a Motion for
Reconsideration, but it was denied in the Court of Appeals' assailed November
29, 2005 Resolution. Hence, this petition.

ISSUE: Whether petitioner should be held liable as an employer, pursuant to

Article 2180 of the Civil Code.

HELD: YES. Article 233 of the Family Code provides for the extent of authority
of persons exercising substitute parental authority, that is, the same as those
of actual parents.

In interpreting Article 1902 of the old Civil Code, which is substantially similar
to the first sentence of Article 2176 of the Civil Code, the Supreme Court (SC)
in The Receiver For North Negros Sugar Company, Inc. v. Ybañez, et al., 24
SCRA 979 (1968), ruled that brothers and sisters may recover damages, except
moral damages, for the death of their sibling.The Civil Article 2180 requires
proof of two (2) things: first, an employment relationship between the driver
and the owner; and second, that the driver acted within the scope of his or her
assigned tasks.

The source of a registered owner’s liability is not a distinct statutory provision,

but remains to be Articles 2176 and 2180 of the Civil Code.

The appropriate approach is that in cases where both the registered-owner rule
and Article 2180 apply, the plaintiff must first establish that the employer is
the registered owner of the vehicle in question.

Employing a person holding a nonprofessional driver’s license to operate

another’s motor vehicle violates Section 24 of the Land Transportation and
Traffic Code.

The liability imposed on the registered owner is direct and primary.

Like natural parents, persons exercising substitute parental authority are

required to, among others, keep their wards in their company, provide for their
upbringing, show them love and affection, give them advice and counsel, and
provide them with companionship and understanding.

Given the policy underlying Articles 216 and 220 of the Family Code as well as
the purposes for awarding moral damages, a person exercising substitute
parental authority is rightly considered an ascendant of the deceased, within
the meaning of Article 2206(3) of the Civil Code.

As exemplary damages have been awarded and as respondent was compelled to

litigate in order to protect her interests, she is rightly entitled to attorney’s fees.

SCHOOL; TORTS AND DAMAGES

ST. LUKE'S COLLEGE OF MEDICINE-WILLIAM H. QUASHA MEMORIAL

FOUNDATION, DR. BRIGIDO L. CARANDANG, AND DR. ALEJANDRO P.
ORTIGASv. SPOUSES MANUEL AND ESMERALDA PEREZ AND SPOUSES
ERIC AND JURISITA QUINTOS
G.R. No. 222740, September 28, 2016
PEREZ, J.:

FACTS: In February 2010, St. Luke's sent four (4) of its 4 th year medical
students to the clinic, namely: Spouses Perez's daughter Jessa, Spouses
Quintos' daughter Cecille, Jerillie Ann Murillo and Miguel Rafael Ramos. They
were tasked to complete a four-week clerkship rotation at the clinic and were
housed in the second floor of the clinic. According to Ramos, he and his
groupmates reported for duty at the Cabiao clinic at approximately 10:00AM of
February 8, 2010. When their shift ended at 5:00PM, the group went for a jog
and returned to the clinic in the evening. They again went out at 9:00PM to
buy beverages, cooking oil and other items. Ramos admitted that one of the
beverages they bought was The Bar and he only drank it with Cecille which
they mixed it with the soda but did not consume the whole bottle. Ramos was
awakened sometime between 3:00 and 3:30 AM of February 9, 2010 when he
heard Murillo shouting from the other side of the room that there was a fire.
Ramos immediately ran to the door which led to the living room and when he
opened the same, he saw thick smoke coming from the left portion of the living
room where there was a glow. He also felt extreme heat, prompting him to run
to the bathroom to get a pail of water with which he tried to extinguish the fire.
The girls, who had followed him to the bathroom, stayed behind. When Ramos'
attempt to put out the fire proved to be futile, he went back to the bathroom
and poured water on the girls in an attempt to alleviate the extreme heat
coming from the fire. Unfortunately, the fire resulted in the deaths of the
female medical students, including the daughters of plaintiffs-appellants due to
smoke inhalation resulting" to asphyxia.

As a result of the deaths, defendant-appellee St. Luke's compensated the

parents of the three deceased students in the amount of PhP300,000.00 each
from insurance proceeds. The Bureau of Fire Protection (BFP) conducted an
investigation on the incident, and in a Certification, it certified that the fire was
purely accidental in nature due to unattended cooking.
Offended and still unconvinced, respondent Spouses Manuel and Esmeralda
Perez, the parents of Jessa, and respondent Spouses Eric and Jurisita Quintos,
the parents of Cecille, sought the help of the National Bureau of Investigation
(NBI). In its Resolution, the NBI declared that the construction of the Cabiao
Community Clinic building was in violation of the provisions of Republic Act
No. 9514 or the Revised Fire Code of the Philippines, that the cause of the fire
was due to faulty electrical wiring, and that St. Luke's negligence is criminal in
nature.

Respondents filed a Complaint for damages against petitioners St. Luke's

College of Medicine-William H. Quasha Memorial Foundation, Dean of Medicine
Brigido L. Carandang, and Associate Dean for Faculty and Student Affairs
Alejandro P. Ortigas, claiming that their negligence caused the deaths of
respondents' daughters. Respondents maintained that, as a learning
institution which sends out its medical students to rural areas to comply with
its curriculum requirement, St. Luke's has the contractual duty and legal
responsibility to see to it that the premises to where it sends its students are
safe and that, in the case at bar, St. Luke's refused to recognize its
obligations/liabilities.

The RTC dismissed the complaint for lack of merit. Upon appeal, the CA
reversed the RTC Decision and remanded the case to the RTC for reception of
evidence on the amount of damages to be awarded. Hence, the present petition
for review on certiorari.

ISSUE: Whether or not the school shall be held liable for the breach of contract
through negligence for the death of the medical students.

HELD: YES. Institutions of learning have the “built-in” obligation of providing a

conducive atmosphere for learning, an atmosphere where there are no constant
threats to life and limb, and one where peace and order are maintained.The
Although away from the main campus of the St. Luke’s, the students were still
under the same protective and supervisory custody of petitioners as the ones
detailed in the main campus.

The victims were in the Cabiao Community Clinic because it was a requirement
of petitioners. The students were complying with an obligation under the
enrollment contract — they were rendering medical services in a community
center as required by petitioners. It was thus incumbent upon petitioners to
comply with their own obligations under the enrollment contract — to ensure
that the community center where they would designate their students is safe
and secure, among others.

As held in Saludaga v. FEU, et al., 553 SCRA 741 (2008), a learning institution
should not be allowed to completely relinquish or abdicate matters of safety
and security to a third party as to do so would result to contracting away its
inherent obligation of ensuring a safe learning environment for its students.

It is settled that in culpa contractual, the mere proof of the existence of the
contract and the failure of its compliance justify, prima facie, a corresponding
right of relief.

INTERFERENCE WITH CONTRACTUAL RELATIONS; ELEMENTS OF

TORTIOUS INTERFERENCE

FERRO CHEMICALS, INC. v. ANTONIO M. GARCIA, ROLANDO NAVARRO,

JAIME Y. GONZALES AND CHEMICAL INDUSTRIES OF THE PHILIPPINES,
INC.
G.R. No. 168134, October 05, 2016
JAIME Y. GONZALESv. HON. COURT OF APPEALS AND FERRO
CHEMICALS, INC.
G.R. NO. 168183
ANTONIO M. GARCIAv. FERRO CHEMICALS, INC.
G.R. NO. 168196
PEREZ, J.:

FACTS: Ferro Chemicals Incorporated is a domestic corporation duly

authorized by existing law to engage in business in the Philippines. It is
represented in this action by its President, Ramon M. Garcia. Chemical
Industries of the Philippines Inc., is also a domestic corporation duly organized
and existing by virtue of Philippine laws. Antonio Garcia, one of the parties in
the instant case, is the Chairman of the Board of Directors (BOD) of Chemical
Industries and a brother of Ferro Chemical's President, Ramon Garcia. Rolando
Navarro is the Corporate Secretary of Chemical Industries while Jaime
Gonzales is a close financial advisor of Antonio Garcia. Antonio Garcia and
Ferro Chemicals entered into a Deed of Absolute Sale and Purchase of Shares
of Stock over 1,717,678 shares of capital stock of Chemical Industries
registered under the name of Antonio Garcia. Antonio, being the judgment
creditor of various banks (consortium), entered into a compromise
agreement with the consortium involving said shares of stocks.
The consortium was then awarded through a judgment of the court of a notice
of garnishment for said shares of stocks which led to Antonio and
Ferro to enter another agreement for the former to have the right to repurchase
the said shares of stocks from the latter. Antonio sent written notices to Ferro
for him to exercise his right of repurchase of the said shares of stocks; the
shares were however already transferred to Chemphil Export Inc.
Subsequently, Antonio was able to recover the shares through an action of
Specific Performance against Ferro. The consortium was then able to garnish
1,000,000 of the said shares for partial satisfaction of Antonio’s obligation with
them. Chemphil, feeling aggrieved then filed a collection suit against Ferro for
the value of the garnished shares. Ferro then filed an action for recovery of
sum of money and damages for the amount of the 1,000,000 shares. The lower
courts then found Chemical and Antonio, solidarily liable for the amount of the
1,000,000 shares in favour of Ferro.
ISSUE: Whether or not Rolando Navarro committed tortious acts.

HELD: NO. Fraud, in its general sense, is deemed to comprise anything

calculated to deceive, including all acts, omissions, and concealment involving
a breach of legal or equitable duty, trust or confidence justly reposed, resulting
in the damage to another, or by which an undue and unconscionable
advantage is taken of another.

Fraud has been defined to include an inducement through insidious

machination.

The basic principle of relativity of contracts is that contracts can only bind the
parties who entered into it, and cannot favor or prejudice a third person, even
if he is aware of such contract and has acted with knowledge thereof.
Under Article 1314 of the New Civil Code, any third person who induces
another to violate his contract shall be liable for damages to the other
contracting party.

The Supreme Court (SC), in the case of So Ping Bun v. Court of Appeals, et
al., 314 SCRA 751 (1999), laid down the elements of tortious interference with
contractual relations: (1) existence of a valid contract; (2) knowledge on the
part of the third person of the existence of the contract; and (3) interference on
the part of the third person without legal justification or excuse.

Whoever alleges fraud affecting a transaction must substantiate his allegation,

because a person is always presumed to take ordinary care of his concerns,
and private transactions are similarly presumed to have been fair and regular.

CONTRIBUTORY NEGLIGENCE
TRAVEL & TOURS ADVISERS, INCORPORATED v. ALBERTO CRUZ, SR.,
EDGAR HERNANDEZ AND VIRGINIA MUÑOZ
G.R. No. 199282, March 14, 2016
PERALTA, J.:

FACTS: Respondent Hernandez was driving an Isuzu Passenger Jitney

(jeepney) that he owns along Angeles-Magalang Road, Barangay San Francisco,
Magalang, Pampanga, on January 9, 1998, around 7:50 p.m. Meanwhile, a
Daewoo passenger bus (RCJ Bus Lines) owned by petitioner Travel and Tours
Advisers, Inc. and driven by Edgar Calaycay travelled in the same direction as
that of respondent Edgar Hernandez vehicle. Thereafter, the bus bumped the
rear portion of the jeepney causing it to ram into an acacia tree which resulted
in the death of Alberto Cruz, Jr. and the serious physical injuries of Virginia
Muñoz. Thus, respondents Edgar Hernandez, Virginia Muñoz and Alberto Cruz,
Sr., father of the deceased Alberto Cruz, Jr., filed a complaint for damages
before the RTC claiming that the collision was due to the reckless, negligent
and imprudent manner by which Edgar Calaycay was driving the bus, in
complete disregard to existing traffic laws, rules and regulations, and praying
that judgment be rendered ordering Edgar Calaycay and petitioner Travel &
Tours Advisers, Inc. to pay the damages.

RTC rendered judgment in favor of the respondents. Petitioner filed its appeal
with the CA, and the appellate court rendered its decision which PARTLY
GRANTED the petition.

ISSUE: Whether the petitioner exercised extraordinary diligence of a good

father of a family in its selection and supervision of driver Calaycay.
HELD: NO. A public utility vehicle can and may veer away from its usual route
as long as it does not go beyond its allowed route in its franchise.
When an injury is caused by the negligence of an employee there instantly
arises a presumption of the law that there was negligence on the part of the
employer either in the selection of his employee or in the supervision over him
after such selection.
In the selection of prospective employees, employers are required to examine
them as to their qualifications, experience, and service records. On the other
hand, due diligence in the supervision of employees includes the formulation of
suitable rules and regulations for the guidance of employees, the issuance of
proper instructions intended for the protection of the public and persons with
whom the employer has relations through his or its employees
and the imposition of necessary disciplinary measures upon employees in case
of breach or as may be warranted to ensure the performance of acts
indispensable to the business of and beneficial to their employer.

The proximate cause of the death of Alberto Cruz, Jr. is the negligence of
petitioner’s bus driver, with the contributory negligence of respondent Edgar
Hernandez, the driver and owner of the jeepney, hence, the heirs of Alberto
Cruz, Jr. shall recover damages of only fifty percent (50%) of the award from
petitioner and its driver.

VICARIOUS LIABILITY; NEGLIGENCE; DILIGENCE OF COMMON CARRIERS

GREENSTAR EXPRESS, INC. AND FRUTO L. SAYSON, JR., v. UNIVERSAL

ROBINA CORPORATION AND NISSIN UNIVERSAL ROBINA CORPORATION
G.R. No. 205090, October 17, 2016
DEL CASTILLO, J.:

FACTS: Petitioner Greenstar Express, Inc. (Grepistar) is a domestic corporation

engaged in the business of public transportation, while petitioner Fruto L.
Sayson, Jr. (Sayson) is one of its bus drivers. Respondents Universal Robina
Corporation (URC) and Nissin Universal Robina Corporation (NURC) are
domestic corporations engaged in the food business. NURC is a subsidiary of
URC. URC is the registered owner of a Mitsubishi L-300 van (URC van).

At about 6:50 a.m. on February 25, 2003, which was then a declared national
holiday, petitioner's bus, which was then being driven toward the direction of
Manila by Sayson, collided head-on with the URC van, which was then being
driven by NURC's Operations Manager, Renante Bicomong. The incident
occurred along Km. 76, Maharlika Highway, Brgy. San Agustin, Alaminos,
Laguna. Bicomong died on the spot, while the colliding vehicles sustained
considerable damage.

Thus, petitioners filed a Complaint against NURC to recover damages sustained

during the collision, premised on negligence. An Amended Complaint was later
filed, wherein URC was impleaded as additional defendant.

On April 4, 2011, the RTC issued its Decision dismissing the complaint.
Petitioners filed an appeal before the CA and the latter affirmed the decision of
RTC. Petitioners filed a Motion for Reconsideration, which the CA denied in its
subsequent December 28, 2012 Resolution. Hence, the present Petition.
ISSUE: Whether or not petitioners can recover damages during the collision
based on the negligence of NURC.

HELD: When by evidence the ownership of the van and Bicomong’s

employment were proved, the presumption of negligence on respondents’ part
attached, as the registered owner of the van and as Bicomong’s employer.
When the van began to swerve toward his bus, he did not reduce speed nor
swerve his bus to avoid collision. Instead, he maintained his current speed and
course, and for this reason, the inevitable took place. An experienced driver
who is presented with the same facts would have adopted an attitude
consistent with a desire to preserve life and property; for common carriers, the
diligence demanded is of the highest degree.
The collision was certainly foreseen and avoidable but Sayson took no
measures to avoid it.
The doctrine of last clear chance provides that where both parties are negligent
but the negligent act of one is appreciably later in point of time than that of the
other, or where it is impossible to determine whose fault or negligence brought
about the occurrence of the incident, the one who had the last clear
opportunity to avoid the impending harm but failed to do so, is chargeable with
the consequences arising therefrom.

TEST OF NEGLIGENCE; PROXIMATE CAUSE; EXEMPLARY DAMAGES

ROMULO ABROGAR and ERLINDA ABROGAR, vs
COSMOS BOTTLING COMPANY and INTERGAMES, INC.,
G.R. No. 164749, March 15, 2017
BERSAMIN, J.:
FACTS: To promote the sales of "Pop Cola", defendant Cosmos, jointly with
Intergames, organized an endurance running contest billed as the "1st Pop
Cola Junior Marathon" scheduled to be held on June 15, 1980. The organizers
plotted a 10-kilometer course starting from the premises of the Interim
Batasang Pambansa (IBP for brevity), through public roads and streets, to end
at the Quezon Memorial Circle. Plaintiffs' son Rommel applied with the
defendants to be allowed to participate in the contest and after complying with
defendants' requirements, his application was accepted and he was given an
official number. Consequently, on June 15, 1980 at the designated time of the
marathon, Rommel joined the other participants and ran the course plotted by
the defendants. As it turned out, the plaintiffs' further alleged, the defendants
failed to provide adequate safety and precautionary measures and to exercise
the diligence required of them by the nature of their undertaking, in that they
failed to insulate and protect the participants of the marathon from the
vehicular and other dangers along the marathon route. Rommel was bumped
by a jeepney that was then running along the route of the marathon on Don
Mariano Marcos A venue (DMMA for brevity), and in spite of medical treatment
given to him at the Ospital ng Bagong Lipunan, he died later that same day
due to severe head injuries.
On October 28, 1980, the petitioners sued the respondents in the then Court of
First Instance of Rizal (Quezon City) to recover various damages for the
untimely death of Rommel.
RTC rendered its decision in favor of plaintiffs-spouses Romulo Abrogar and
Erlinda Abrogar and against defendants Cosmos Bottling Company, Inc. and
Intergames, Inc. All the parties appealed to the CA. The judgment appealed
from is hereby REVERSED and SET ASIDE, and another
entered DISMISSING the complaint a quo.
ISSUE: Whether or not Cosmos and lntergames were liable for the death of
Rommel because of negligence in conducting the marathon.
HELD: Negligence is the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance which the
circumstances justly demand, whereby such other person suffers injury.
To determine the existence of negligence, the following time-honored test
has been set in Picart v. Smith, 37 Phil. 809 (1918): the test by which to
determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have
used in the same situation? If not, then he is guilty of negligence.

Intergames had full awareness of the higher risks involved in staging the race
alongside running vehicles, and had the option to hold the race in a route
where such risks could be minimized, if not eliminated

Another failing on the part of Intergames was the patent inadequacy of the
personnel to man the routeof Intergames since The evidence presented
undoubtedly established that Intergames’ notion of coordination only involved
informing the cooperating agencies of the date of the race, the starting and
ending points of the route, and the places along the route to man.
Proper coordination in the context of the event did not consist in the mere
presence of the volunteers, but included making sure that they had been
properly instructed on their duties and tasks in order to ensure the safety of
the young runners.
As the Supreme Court (SC) has emphasized in Corliss v. The Manila Railroad
Company, 27 SCRA 674 (1969), where the danger is great, a high degree of
care is necessary, and the failure to observe it is a want of ordinary care under
the circumstances.
In order for liability from negligence to arise, there must be not only proof of
damage and negligence, but also proof that the damage was the consequence of
the negligence.
Proximate cause is “that which, in natural and continuous sequence, unbroken
by any new cause, produces an event, and without which the event would
not have occurred.”
To be considered the proximate cause of the injury, the negligence need not be
the event closest in time to the injury; a cause is still proximate, although
farther in time in relation to the injury, if the happening of it set other
foreseeable events into motion resulting ultimately in the damage.
The negligence of Intergames was the proximate cause of the death of Rommel;
and that the negligence of the jeepney driver was not an efficient intervening
cause.
The doctrine of assumption of risk means that one who voluntarily exposes
himself to an obvious, known and appreciated danger assumes the risk of
injury that may result therefrom.
Cosmos’ mere sponsorship of the race was, legally speaking, too remote to be
the efficient and proximate cause of the injurious consequences.
Article 2231 of the Civil Code stipulates that exemplary damages are to be
awarded in cases of quasi-delict if the defendant acted with gross negligence.
Damages for loss of earning capacity may be awarded to the heirs of a deceased
nonworking victim simply because earning capacity, not necessarily actual
earning, may be lost.
The basis for the computation of earning capacity is not what he would have
become or what he would have wanted to be if not for his untimely death, but
the minimum wage in effect at the time of his death.
Life expectancy is equivalent to two-thirds (2/3) multiplied by the difference of
eighty (80) and the age of the deceased.
Article 2211 of the Civil Code expressly provides that interest, as a part of
damages, may be awarded in crimes and quasi-delicts at the discretion of the
court.
Article 2208 of the Civil Code expressly allows the recovery of attorney’s fees
and expenses of litigation when exemplary damages have been awarded.
MEDICAL NEGLIGENCE; VICARIOUS LIABILITY

OUR LADY OF LOURDES HOSPITAL vs

SPOUSES ROMEO AND REGINA CAPANZANA
G.R. No. 189218 March 22, 2017
SERENO, CJ.:
FACTS: Regina Capanzana, a 40-year-old nurse and clinical instructor
pregnant with her third child, was scheduled for her third caesarean section on
2 January 1998. However, a week earlier, she went into active labor and was
brought to petitioner hospital for an emergency C-section. She first underwent
a preoperative physical examination by Dr. Miriam Ramos (Dr. Ramos) and Dr.
Milagros Joyce Santos, (Dr. Santos) the same attending physicians in her prior
childbirths. She was found fit for anesthesia after she responded negatively to
questions about tuberculosis, rheumatic fever, and cardiac diseases. On that
same day, she gave birth to a baby boy. When her condition stabilized, she was
discharged from the recovery room and transferred to a regular hospital room.
At 2:30 a.m. the following day, or 13 hours after her operation, Regina who was
then under watch by her niece, Katherine L. Balad, complained of a headache,
a chilly sensation, restlessness, and shortness of breath. She asked for oxygen
and later became cyanotic. After undergoing an x-ray, she was found to be
suffering from pulmonary edema. She was eventually transferred to the
Intensive Care Unit, where she was hooked to a mechanical ventilator. The
impression then was that she was showing signs of amniotic fluid embolism.
On 2 January 1998, when her condition still showed no improvement, Regina
was transferred to the Cardinal Santos Hospital. The doctors thereat found
that she was suffering from rheumatic heart disease mitral stenosis with mild
pulmonary hypertension, which contributed to the onset of fluid in her lung
tissue (pulmonary edema). This development resulted in cardiopulmonary
arrest and, subsequently, brain damage. Regina lost the use of her speech,
eyesight, hearing and limbs. She was discharged, still in a vegetative state, on
19January 1998.
Respondent spouses Capanzana filed a complaint for damages against
petitioner hospital, along with co-defendants: Dr. Miriam Ramos, an
obstetrician/gynecologist; Dr. Milagros Joyce Santos, an anesthesiologist; and
Jane Does, the nurses on duty stationed on the second floor of petitioner
hospital on 26-27 December 1997.
On 29 December 2006, the RTC rendered judgment, finding no negligence on
the part of Dr. Ramos or Dr. Santos. On the issue of whether petitioner
hospital could be held liable for the negligence of its nurses, the RTC ruled that
the hospital was able to discharge the burden of proof that it had exercised the
diligence of a good father of a family in the selection and supervision of its
employees.
The trial court arrived at this finding on the basis of the testimony of the
assistant nursing director, Lourdes Nicolas. She stated that the selection and
hiring of their nurses was a rigorous process, whereby the applicants
underwent a series of procedures - examination, orientation, training, on-the-
job observation, and evaluation - before they were hired as regular employees.
The nurses were supervised by their head nurses and the charge nurse. The
nurses were also inspected by their clinical supervisor and nursing director.
Consequently, only the nurses were held liable to pay damages. However, since
the trial court acquired jurisdiction only over Ballano among those on duty on
that day, she was the only one held liable.
Respondents Capanzana filed their appeal before the CA, and rendered the
assailed decision affirming the RTC ruling with modification.
ISSUE: Whether petitioner hospital could be held liable for negligence
committed by its nurses.
HELD: YES. In order to successfully pursue a claim in a medical negligence
case, the plaintiff must prove that a health professional either failed to do
something which a reasonably prudent health professional would have or have
not done; and that the action or omission caused injury to the patient.
The Supreme Court (SC) has emphasized that a higher degree of caution and
an exacting standard of diligence in patient management and health care are
required of a hospital’s staff, as they deal with the lives of patients who seek
urgent medical assistance.

There was a delay in the administration of oxygen to the patient, caused by the
delayed response of the nurses of petitioner hospital.

The records also show another instance of negligence, such as the delay in the
removal of Regina’s consumed dextrose, a condition that was already causing
her discomfort.
A failure to act may be the proximate cause if it plays a substantial part in
bringing about an injury.

For the negligence of its nurses, petitioner is thus liable under Article 2180 in
relation to Article 2176 of the Civil Code. Under Article 2180, an employer like
petitioner hospital may be held liable for the negligence of its employees based
on its responsibility under a relationship of patria potestas.

While the question of diligent supervision depends on the circumstances of

employment, the Supreme Court (SC) finds that by the very nature of a
hospital, the proper supervision of the attendance of its nurses, who are its
frontline health professionals, is crucial considering that patients’ conditions
can change drastically in a matter of minutes.
DAMAGES (ACTUAL, TEMPERATE, MORAL)
SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA,
vs. PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SA YLAN,
G.R. No. 203902 July 19, 2017
DEL CASTILLO, J.:
FACTS: A mishap occurred on April 9, 2002 along the national highway in
Barangay Alipangpang, Pozorrubio, Pangasinan, between the passenger bus,
driven by respondent Eduardo Saylan and owned by Philippine Rabbit Bus,
Lines, Inc., and the Isuzu truck driven by Willy U. Urez and registered in the
name of Rogelio Cuyton, Jr.. At the time of the incident, the Philippine Rabbit
Bus was going towards the north direction, while the Isuzu truck was travelling
towards the south direction. The collision happened at the left lane or the lane
properly belonging to the Isuzu truck. The right front portion of the Isuzu
Truck appears to have collided with the right side portion of the body of the
Philippine Rabbit bus. Before the collision, the bus was following closely a
jeepney. When the jeepney stopped, the bus suddenly swerved to the left
encroaching upon the rightful lane of the Isuzu truck, which resulted in the
collision of the two (2) vehicles. The petitioner Dionisio Estrada, who was
among the passengers of the Philippine Rabbit bus, as evidenced by the ticket
issued to him, was injured on the right arm as a consequence of the accident.
His injured right arm was amputated at the Villaflor Medical Doctor's Hospital
in Dagupan City x x x. For the treatment of his injury, he incurred expenses as
evidenced by various receipts.
On April 13, 2004, petitioners filed with the Regional Trial Court (RTC) of
Urdaneta City, Pangasinan, a Complaint for Damages against Philippine Rabbit
and respondent Eduardo R. Saylan (Eduardo).
Treating petitioners' Complaint for damages as one predicated on breach of
contract of carriage, the RTC rendered its Decision ordering Philippine Rabbit
Bus Lines, Inc. and Eduardo Saylan to pay jointly and severally Dionisio
Estrada. Philippine Rabbit filed a Motion for Reconsideration but the same was
denied for lack of merit in an Order dated May 31, 2010.
On appeal, the CA modified the RTC Decision in that it declared Philippine
Rabbit as solely and exclusively liable to Dionisio for actual damages in the
amount of ₱57,766.25 and deleted the award of moral damages and attorney's
fees.
ISSUE: Whether or not Philippine Rabbit Bus Lines will be held liable for moral
and actual damages for loss/impairment
of earning capacity to Estrada.
HELD: NO. Though incapable of pecuniary computation, moral damages may
be recovered if they are the proximate result of the defendant’s wrongful act or
omission.
Since breach of contract is not one of the items enumerated under Article
2219, moral damages, as a general rule, are not recoverable in actions for
damages predicated on breach of contract.
Allegations of bad faith and fraud must be proved by clear and convincing
evidence.
Bad faith “does not simply connote bad judgment or negligence; it imports a
dishonest purpose or some moral obliquity and conscious doing of a wrong, a
breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud.”
It is settled that “damages for loss [or impairment] of earning capacity is in the
nature of actual damages.”
Under Article 2224, “[t]emperate 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 amounts of damages awarded are declared subject to legal interest of six
percent (6%) per annum from the finality of this Decision until full satisfaction.
QUASI-DELICTS; CONTRIBUTORY NEGLIGENCE

AL DELA CRUZ v. CAPT. RENATO OCTAVIANO

G.R. 219649, July 26, 2017
PERALTA, J.:
FACTS: Around 9:00 p.m. on April 1, 1999, respondent Captain Octaviano is a
military dentist assigned at the Office of the Chief Dental Service, Armed Forces
of the Philippines, Camp Aguinaldo, Quezon City, respondent Wilma Octaviano,
Renato's mother and Janet Octaviano, Renato's sister, rode a tricycle driven by
Eduardo Y. Padilla. Respondent Wilma and Janet were inside the sidecar of the
vehicle, while Renato rode at the back of the tricycle driver. They then
proceeded to Naga Road towards the direction of CAA and BF Homes. Renato
was asking his mother for a change to complete his P10.00 bill when he looked
at the road and saw a light from an oncoming car which was going too fast. The
car, driven by petitioner, hit the back portion of the tricycle where Renato was
riding. The force of the impact caused the tricycle to turn around and land on
the pavement near the gutter. Thus, Renato was thrown from the tricycle and
landed on the gutter about two meters away. Renato felt severe pain in his
lower extremities and went momentarily unconscious and when he regained
consciousness, he heard his sister shouting for help. A man came followed by
other people. The first man who answered Janet's call for help shouted to
another man at a distance saying: "Ikaw, dalhin mo yung sasakyan mo dito.
Ikaw ang nakabangga sa kanila. Dalhin mo sila sa ospital." They pulled Renato
out of the gutter and carried him to the car. Petitioner brought them to his
house and alighted thereat for two to three minutes and then he brought the
passengers to a clinic. Renato insisted on being brought to a hospital because
he realized the severity of his injuries. Thus, Renato, his mother, and Janet
were brought to Perpetual Help Medical Center where Renato's leg was
amputated from below the knee on that same night. After his treatment at
Perpetual Help Medical Center, Renato was brought to the AFP Medical Center
at V. Luna General Hospital and stayed there for nine months for
rehabilitation. Shortly before his discharge at V. Luna, he suffered bone
infection. He was brought to Fort Bonifacio Hospital where he was operated on
thrice for bone infection. Thereafter, he was treated at the same hospital for six
months. In the year 2000, he had a prosthesics attached to his leg at V. Luna
at his own expense. Renato spent a total of P623,268.00 for his medical bills
and prosthetics.
Thus, Renato and his mother Wilma filed with the RTC a civil case for damages
against petitioner and the owner of the vehicle. The RTC, in its Decision dated
February 24, 2009, dismissed the claim of respondents.
Respondents appealed the RTC decision to the CA and the CA reversed the
RTC's decision.
ISSUE: Whether or not the petitioner Dela Cruz was negligent while driving his
car.
HELD: Proximate cause is “that which, in natural and continuous sequence,
unbroken by any new cause, produces an event, and without which the event
would not have occurred.”
Contributory negligence is conduct on the part of the injured party,
contributing as a legal cause to the harm he has suffered, which falls below the
standard to which he is required to conform for his own protection.
Although incapable of exactness and no proof of pecuniary loss is necessary in
order that moral damages may be awarded, the amount of indemnity being left
to the discretion of the court, it is imperative, nevertheless, that (1) injury must
have been suffered by the claimant, and (2) such injury must have sprung from
any of the cases expressed in Article 2219 and Article 2220 of the Civil Code.
Also known as “punitive” or “vindictive” damages, exemplary or corrective
damages are intended to serve as a deterrent to serious wrongdoings, and as a
vindication of undue sufferings and wanton invasion of the rights of an injured
or a punishment for those guilty of outrageous conduct.
COMMON CARRIERS; BREACH OF CONTRACT

JUDITH D. DARINES AND JOYCE D. DARINES v. EDUARDO QUIÑONES

AND ROLANDO QUITAN
G.R. No. 206468, August 02, 2017
DEL CASTILLO, J.:

FACTS: Judith D. Darines and her daughter, Joyce, alleged in their

Complaint that on December 31, 2005, they boarded the Amianan Bus Line as
paying passengers enroute from Carmen, Rosales, Pangasinan to Baguio City.
Respondent Rolando M. Quitan was driving the bus at that time. While
travelling on Camp 3, Tuba, Benguet along Kennon Road, the bus crashed into
a truck which was parked on the shoulder of Kennon Road. As a result, both
vehicles were damaged; two passengers of the bus died; and the other
passengers, including petitioners, were injured. In particular, Joyce suffered
cerebral concussion while Judith had an eye wound which required an
operation.

On July 14, 2010, the RTC rendered its Decision ordering respondents to pay
petitioners moral, exemplary damages, attorney’s fees and costs of suit.
Aggrieved, respondents appealed to the CA. The CA reversed and set aside the
RTC Decision.

ISSUE: Whether or not the case of petitioners are entitled to moral and
exemplary damages as well as attorney's fees.

HELD: NO. In an action for breach of contract, moral damages may be

recovered only when a) death of a passenger results; or b) the carrier was guilty
of fraud and bad faith even if death does not result.

There being neither allegation nor proof that respondents acted in fraud or in
bad faith in performing their duties arising from their contract of carriage, they
are then not liable for moral damages.
Since petitioners are not entitled to either moral, temperate, liquidated, or
compensatory damages, then their claim for exemplary damages is bereft of
merit.

VICARIOUS LIABILITY

JOHN E.R. REYES and MERWIN JOSEPH REYES,

vs. ORICO DOCTOLERO, ROMEO A VILA, GRANDEUR SECURITY AND
SERVICES CORPORATION, and MAKATI CINEMA SQUARE,
G.R. No. 185597 August 2, 2017
JARDELEZA, J.:
FACTS: There was an altercation between respondent Orico Doctolero, a
security guard of respondent Grandeur Security and Services Corporation and
petitioners John E.R. Reyes and Mervin Joseph Reyes in the parking area of
respondent Makati Cinema Square (MCS). Grandeur advances a different
version, one based on the Initial Report conducted by Investigator Cosme
Giron. While Doctolero was on duty at the ramp of the exit driveway of MCS's
basement parking, John took over the left lane and insisted entry through the
basement parking's exit driveway. Knowing that this is against traffic rules,
Doctolero stopped John, prompting the latter to alight from his vehicle and
confront Doctolero. With his wife unable to pacify him, John punched and
kicked Doctolero, hitting the latter on his left face and stomach. Doctolero tried
to step back to avoid his aggressor but John persisted, causing Doctolero to
draw his service firearm and fire a warning shot. John ignored this and
continued his attack. He caught up with Doctolero and wrestled with him to
get the firearm. This caused the gun to fire off and hit John's leg. Mervin then
ran after Doctolero but was shot on the stomach by security guard Avila.
Petitioners filed with the Regional Trial Court (RTC) of Makati a complaint for
damages against respondents Doctolero and Avila and their employer
Grandeur, charging the latter with negligence in the selection and supervision
of its employees.
On January 18, 1999, the RTC rendered judgment against respondents
Doctolero and Avila, finding them responsible for the injuries sustained by
petitioners. On September 19, 2005, upon Grandeur's motion for
reconsideration, the RTC issued an Order granting the Motion for
Reconsideration and the decision is hereby modified.
Petitioners assailed the RTC Order dated September 19, 2005 before the CA.
The CA dismissed petitioners' appeal and affirmed the RTC's Order. Petitioners
filed a motion for reconsideration which the CA denied in its Resolution dated
December 5, 2008. Hence, the present petition.
ISSUE: Whether Grandeur and MCS may be held vicariously liable for the
damages caused by respondents Doctolero and Avila to petitioners John and
Mervin Reyes.
HELD: As a general rule, one is only responsible for his own act or omission;
One exception is an employer who is made vicariously liable for the tort
committed by his employee under paragraph 5 of Article 2180.
In the absence of employer-employee relationship, vicarious liability under
Article 2180 of the Civil Code cannot apply.
When the employee causes damage due to his own negligence while performing
his own duties, there arises the juris tantum presumption that the employer is
negligent, rebuttable only by proof of observance of the diligence of a good
father of a family. The “diligence of a good father” referred to in the last
paragraph of Article 2180 means diligence in the selection and supervision of
employees.
In Metro Manila Transit Corporation v. Court of Appeals, 223 SCRA 521
(1993),the Supreme Court (SC) found that “[p]etitioner’s attempt to prove
its diligentissimi patris familias in the selection and supervision of
employees through oral evidence must fail as it was unable to buttress the
same with any other evidence, object or documentary, which might obviate the
apparent biased nature of the testimony.”
Ordinarily, evidence demonstrating that the employer has exercised diligent
supervision of its employee during the performance of the latter’s assigned
tasks would be enough to relieve him of the liability imposed by Article 2180, in
relation to Article 2176 of the Civil Code.
DAMAGES
ORIENT FREIGHT INTERNATIONAL, INC., PETITIONER, V. KEIHIN-
EVERETT FORWARDING COMPANY, INC., RESPONDENT.
G.R. No. 191937, August 09, 2017
LEONEN, J.:

FACTS: On October 16, 2001, Keihin-Everett entered into a Trucking Service

Agreement with Matsushita. Under the Trucking Service Agreement, Keihin-
Everett would provide services for Matsushita's trucking requirements. These
services were subcontracted by Keihin-Everett to Orient Freight, through their
own Trucking Service Agreement executed on the same day.
When the Trucking Service Agreement between Keihin-Everett and Matsushita
expired on December 31, 2001, Keihin-Everett executed an In-House Brokerage
Service Agreement for Matsushita's Philippine Economic Zone Authority export
operations. Keihin-Everett continued to retain the services of Orient Freight,
which sub-contracted its work to Schmitz Transport and Brokerage
Corporation.
In April 2002, Matsushita called Keihin-Everett's Sales Manager, Salud Rizada,
about a column in the April 19, 2002 issue of the tabloid newspaper Tempo.
This news narrated the April 17, 2002 interception by Caloocan City police of a
stolen truck filled with shipment of video monitors and CCTV systems owned
by Matsushita.
When contacted by Keihin-Everett about this news, Orient Freight stated that
the tabloid report had blown the incident out of proportion. They claimed that
the incident simply involved the breakdown and towing of the truck, which was
driven by Ricky Cudas (Cudas), with truck helper, Rubelito Aquino (Aquino).
The truck was promptly released and did not miss the closing time of the vessel
intended for the shipment.
Keihin-Everett directed Orient Freight to investigate the matter. During its April
20, 2002 meeting with Keihin-Everett and Matsushita, as well as in its April
22, 2002 letter addressed to Matsushita, Orient Freight reiterated that the
truck merely broke down and had to be towed.
However, when the shipment arrived in Yokohama, Japan on May 8, 2002, it
was discovered that 10 pallets of the shipment's 218 cartons, worth
US$34,226.14, were missing.
Keihin-Everett independently investigated the incident. During its
investigation, it obtained a police report from the Caloocan City Police Station.
The report stated, among others, that at around 2:00 p.m. on April 17, 2002,
somewhere in Plaza Dilao, Paco Street, Manila, Cudas told Aquino to report
engine trouble to Orient Freight. After Aquino made the phone call, he informed
Orient Freight that the truck had gone missing. When the truck was
intercepted by the police along C3 Road near the corner of Dagat-Dagatan
Avenue in Caloocan City, Cudas escaped and became the subject of a
manhunt.
When confronted with Keihin-Everett's findings, Orient Freight wrote back on
May 15, 2002 to admit that its previous report was erroneous and that
pilferage was apparently proven.
In its June 6, 2002 letter, Matsushita terminated its In-House Brokerage
Service Agreement with Keihin-Everett, effective July 1, 2002. Matsushita cited
loss of confidence for terminating the contract, stating that Keihin-Everett's
way of handling the April 17, 2002 incident and its nondisclosure of this
incident's relevant facts "amounted to fraud and signified an utter disregard of
the rule of law."
Keihin-Everett, by counsel, sent a letter dated September 16, 2002 to Orient
Freight, demanding P2,500,000.00 as indemnity for lost income. It argued that
Orient Freight's mishandling of the situation caused the termination of Keihin-
Everett's contract with Matsushita.
When Orient Freight refused to pay, Keihin-Everett filed a complaint dated
October 24, 2002 for damages with Branch 10, Regional Trial Court, Manila.
The Regional Trial Court rendered its February 27, 2008 Decision, in favor of
Keihin-Everett.
Orient Freight appealed the Regional Trial Court Decision to the Court of
Appeals. On January 21, 2010, the Court of Appeals issued its Decision
affirming the trial court's decision. The Court of Appeals denied Orient
Freight's Motion for Reconsideration in its April 21, 2010 Resolution.
On June 9, 2010, Orient Freight filed this Petition for Review on Certiorari
under Rule 45 with this Court, arguing that the Court of Appeals incorrectly
found it negligent under Article 2176 of the Civil Code. As there was a
subsisting Trucking Service Agreement between Orient Freight itself and
Keihin-Everett, petitioner avers that there was a pre-existing contractual
relation between them, which would preclude the application of the laws on
quasi-delicts.
ISSUE: Whether Orient Freight, Inc. was negligent for failing to disclose the
facts surrounding the hijacking incident on April 17, 2002, which led to the
termination of the Trucking Service Agreement between Keihin-Everett
Forwarding Co., Inc. and Matsushita Communication Industrial Corporation of
the Philippines.
HELD: Negligence may either result in culpa aquiliana or culpa contractual.
Actions based on contractual negligence and actions based on quasi-delicts
differ in terms of conditions, defenses, and proof. They generally cannot
coexist.
There are instances when Article 2176 may apply even when there is a
preexisting contractual relation. A party may still commit a tort or quasi-delict
against another, despite the existence of a contract between them.
In situations where the contractual relation is indispensable to hold a party
liable, there must be a finding that the act or omission complained of was done
in bad faith and in violation of Article 21 of the Civil Code to give rise to an
action based on tort.

Under Article 1170 of the Civil Code, liability for damages arises when those in
the performance of their obligations are guilty of negligence, among others.
EXEMPLARY DAMAGES; MORAL DAMAGES; QUASI DELICTS
COCA-COLA BOTTLERS PHILS., INC., vs. ERNANI GUINGONA MEÑEZ
November 22, 2017 G.R. No. 209906
CAGUIOA, J.:

FACTS: Research scientist Ernani Guingona Meñez was a frequent customer

of Rosante Bar and Restaurant of Dumaguete City. On March 28, 1995, at
about 3:00 o'clock in the afternoon, Meñez went to Rosante and ordered two (2)
bottles of beer. Thereafter, he ordered pizza and a bottle of "Sprite". His
additional order arrived consisting of one whole pizza and a bottled softdrink
Sprite with a drinking straw, one end and about three-fourths of which was
submerged in the contents of the bottle, with the other and the remaining third
of the straw outside the bottle, as is the usual practice in eateries when one
orders a bottled softdrink.
Meñez then took a bite of pizza and drank from the straw the contents of the
Sprite bottle. He noticed that the taste of the softdrink was not one of Sprite
but of a different substance repulsive to taste. The substance smelled of
kerosene. He then felt a burning sensation in his throat and stomach and
could not control the urge to vomit. He left his table for the toilet to vomit but
was unable to reach the toilet room. Instead, he vomited on the lavatory found
immediately outside the said toilet.
Upon returning to the table, he picked up the bottle of Sprite and brought it to
the place where the waitresses were and angrily told them that he was served
kerosene. Meñez even handed the bottle to the waitresses who passed it among
themselves to smell it. All of the waitresses confirmed that the bottle smelled of
kerosene and not of Sprite.
Meñez then went out of the restaurant taking with him the bottle. He found a
person manning the traffic immediately outside the restaurant, whom he later
came to know as Gerardo Ovas, Jr. of the Traffic Assistant Unit. He reported
the incident and requested the latter to accompany him to the Silliman
University Medical Center (SUMC). Heading to SUMC for medical attention,
Ovas brought the bottle of Sprite with him.
While at the Emergency Room, Meñez again vomited before the hospital staff
could examine him. Meñez had to be confined in the hospital for three (3) days.
Later, [Meñez] came to know that a representative from Rosante came to the
hospital and informed the hospital staff that Rosante [would] take care of the
hospital and medical bills.
The incident was reported to the police and recorded in the Police Blotter. The
bottle of Sprite was examined by Prof. Chester Dumancas, a licensed chemist
of Silliman University. The analysis identified the contents of the liquid inside
the bottle as pure kerosene.
As a result of the incident, Meñez filed a complaint against CCBPI and Rosante
and prayed for actual damages, moral damages, exemplary damages, attorney's
fees and cost of Suit. The Regional Trial Court dismissed the complaint for
insufficiency of evidence.
Aggrieved, Meñez went to the CA on appeal. In its Decision dated April 22,
2013, the CA granted the appeal and reversed the Decision of the RTC. CCBPI
filed a motion for reconsideration, which was denied in the CA
Resolution dated October 11, 2013. Hence, this Petition.
ISSUE: Whether Meñez is entitled to moral damages and exemplary damages.
HELD: Exhaustion of Administrative Remedies; Quasi-delict being the source
of obligation upon which Meñez bases his cause of action for damages against
Coca-Cola Bottlers Phils., Inc. (CCBPI), the doctrine of exhaustion of
administrative remedies is not applicable. Such is not a condition precedent
required in a complaint for damages with respect to obligations arising from
quasi-delicts under Chapter 2, Title XVII on Extra-Contractual Obligations,
Article 2176, et seq. of the Civil Code which includes Article 2187.
Unless the case falls under the enumeration as provided in Article 2219, which
is exclusive, and Article 2220 of the Civil Code, moral damages may not be
awarded.
In the absence of sufficient evidence on physical injuries that Meñez sustained,
he is not entitled to moral damages.

As to exemplary or corrective damages, these may be granted in quasi-delicts if

the defendant acted with gross negligence pursuant to Article 2231of the Civil
Code.
ELEMENTS OF QUASI-DELICTS
ST. MARTIN POLYCLINIC, INC. v. LWV CONSTRUCTION CORPORATION
G.R. No. 217426, December 04, 2017
PERLAS-BERNABE, J.:
FACTS: Respondent is engaged in the business of recruiting Filipino workers
for deployment to Saudi Arabia. On the other hand, petitioner is an accredited
member of the Gulf Cooperative Council Approved Medical Centers Association
(GAMCA) and as such, authorized to conduct medical examinations of
prospective applicants for overseas employment.
On January 10, 2008, respondent referred prospective applicant Jonathan V.
Raguindin to petitioner for a pre-deployment medical examination in
accordance with the instructions from GAMCA. After undergoing the required
examinations, petitioner cleared Raguindin and found him "fit for employment,"
as evidenced by a Medical Report.
Based on the foregoing, respondent deployed Raguindin to Saudi Arabia,
allegedly incurring expenses in the amount of P84,373.41. Unfortunately, when
Raguindin underwent another medical examination with the General Care
Dispensary of Saudi Arabia (General Care Dispensary) on March 24, 2008, he
purportedly tested positive for HCV or the hepatitis C virus. The Ministry of
Health of the Kingdom of Saudi Arabia (Ministry of Health) required a re-
examination of Raguindin, which the General Care Dispensary conducted on
April 28, 2008. However, the results of the re-examination remained the
same, i.e., Raguindin was positive for HCV, which results were reflected in a
Certification dated April 28, 2008 (Certification). An undated HCV
Confirmatory Test Report likewise conducted by the Ministry of Health affirmed
such finding, thereby leading to Raguindin's repatriation to the Philippines.
Claiming that petitioner was reckless in issuing its Medical Report stating that
Raguindin is "fit for employment" when a subsequent finding in Saudi Arabia
revealed that he was positive for HCV, respondent filed a Complaint for sum of
money and damages against petitioner before the Metropolitan Trial Court of
Mandaluyong City, Branch 60 (MeTC). Respondent essentially averred that it
relied on petitioner's declaration and incurred expenses as a consequence.
Thus, respondent prayed for the award of damages in the amount of
P84,373.41 representing the expenses it incurred in deploying Raguindin
abroad.
In its Answer with compulsory counterclaim, petitioner denied liability and
claimed that: respondent was not a proper party in interest for lack of privity
of contract between them; the MeTC had no jurisdiction over the case as it
involves the interpretation and implementation of a contract of employment;
the action is premature as Raguindin has yet to undergo a post-employment
medical examination following his repatriation; and the complaint failed to
state a cause of action as the Medical Report issued by petitioner had already
expired on April 11, 2008, or three (3) months after its issuance on January
11, 2008.
The MeTC rendered judgment in favor of respondent and ordered petitioner to
pay the amount of P84,373.41 as actual damages, P20,000.00 as attorney's
fees, and the costs of suit.
Aggrieved, petitioner appealed to the RTC and it dismissed petitioner's appeal
and affirmed the MeTC Decision in its entirety.
Petitioner's motion for reconsideration was denied in an Order dated May 25,
2012. Dissatisfied, petitioner elevated the case to the CA.
In a Decision dated July 11, 2014, the CA affirmed the RTC Decision, with the
modification deleting the award of actual damages and instead, awarding
temperate damages in the amount of P50,000.00.
ISSUE: Whether or not petitioner was negligent in issuing the Medical Report
declaring Raguindin "fit for employment" and hence, should be held liable for
damages.
HELD: NO. As a general rule, any act or omission coming under the purview of
Article 2176 gives rise to a cause of action under quasi-delict.
Under the Civil Code, acts done in violation of Articles 19, 20, and 21 will also
give rise to damages.
Case law states that “[w]hen a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to
another, a legal wrong is thereby committed for which the wrongdoer must be
held responsible.
As claimed negligent act of petitioner was not premised on the breach of any
law, and not to mention the incontestable fact that no preexisting contractual
relation was averred to exist between the parties, Article 2176 — instead of
Articles 19, 20 and 21 — of the Civil Code should govern.
Negligence is defined as the failure to observe for the protection of the interests
of another person, that degree of care, precaution and vigilance which the
circumstances justly demand, whereby such other person suffers injury".

As early as the case of Picart v. Smith, 37 Phil. 809 (1918), the Supreme Court
(SC) elucidated that “the test by which to determine the existence of negligence
in a particular case is: Did the defendant in doing the alleged negligent act use
that reasonable care and caution which an ordinarily prudent person would
have used in the same situation? If not, then he is guilty of negligence.”
VICARIOUS LIABILITY; EXTRAORDINARY DILIGENCE
LINDA CACHO, MINORS SARAH JANE, JACQUELINE, FIRE RINA AND
MARK LOUISE ALL SURNAMED CACHO, ALL REPRESENTED BY THEIR
MOTHER AND GUARDIAN AD LITEM LINDA CACHO v. GERARDO
MANAHAN, DAGUPAN BUS CO., INC., AND RENATO DE VERA DOING
BUSINESS UNDER THE NAME R. M. DE VERA CONSTRUCTION
G.R. No. 203081, January 17, 2018
MARTIRES, J.:

FACTS: On 30 June 1999 a vehicular accident occurred along the national

highway at Pogo, Alaminos, Pangasinan, near the Embarcadero Bridge. At
around 5:00 A.M. on the said date, Cacho was driving a Nissan Sentra from
Alaminos, Pangasinan to Bani, Pangasinan, when it collided with a Dagupan
Bus, traversing on the opposite lane. The car had already crossed the bridge
when it collided with the bus which was just about to enter the bridge. The
collision caused heavy damage to the front of the bus, the total wreckage of the
Nissan Sentra, Cacho's instant death, and multiple injuries to three (3)
passengers inside the car.

The petitioners filed a complaint for damages against Gerardo Manahan,

Dagupan Bus Co., Inc. , and Renato de Vera, the owner of R.M. De Vera
Construction.

RTC held Dagupan Bus, Manahan, and De Vera jointly and severally liable to
pay the petitioners.

In the assailed decision, the CA reversed the trial court's ruling, effectively
dismissing the complaint for damages against Manahan, Dagupan Bus, and De
Vera.
ISSUE: Whether or not Dagupan Bus and Manangan shall be held jointly and
solidarily liable to petitioners.

HELD: YES. Given the nature of the business and for reasons of public policy,
the common carrier is bound “to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.”

When an injury is caused by the negligence of an employee there instantly

arises a presumption of the law that there was negligence on the part of the
employer either in the selection of his employee or in the supervision over him
after such selection.

That common carriers should carefully observe the statutory standard of

extraordinary diligence in respect of their passengers, such diligence should
similarly benefit pedestrians and the owners and passengers of other vehicles
who are equally entitled to the safe and convenient use of our roads and
highways.

Since the damages imposed were the result of a complaint for damages based
on a quasi-delict, the interest on these awards must be computed from the
date when the Regional Trial Court (RTC) rendered its decision in the civil case,
or on 26 January 2004, as it was at this time that a quantification of the
damages may be deemed to have been reasonably ascertained; To be consistent
with the foregoing, the interest on the monetary awards shall then be fixed at
six percent (6%) per annum, until the damages are fully paid.

DAMNUM ABSQUE INJURIA

THE CITY OF BACOLOD, HON. MAYOR EVELIO R. LEONARDIA, ATTY.
ALLAN L. ZAMORA and ARCH. LEMUEL D. REYNALDO, in their personal
capacities and in their capacities as Officials of the City of Bacolod
vs. PHUTURE VISIONS CO., INC.,
G.R. No. 190289, January 17, 2018
VELASCO, JR., J.:
FACTS: Phuture was incorporated in 2004. In May 2005, its Articles of
Incorporation (AOI) was amended to, among others, include the operation of
lotto betting stations and/or other gaming outlets as one of its secondary
purposes. Eventually, it applied with the Philippine Amusement and Gaming
Corporation (P AGCOR) for an authority to operate bingo games at the SM City
Bacolod Mall, as well as with SM Prime Holdings for the lease of a space in the
said building. Phuture was issued a provisional Grant of Authority on
December 5, 2006 by PAGCOR, subject to compliance with certain
requirements, and received an Award Notice from SM Prime on January 10,
2007.
Thereafter, Phuture processed, completed and submitted to the Permits and
Licensing Division of the City Mayor of Bacolod City its Application for Permit
to Engage in Business, Trade or Occupation to operate bingo games at SM
Bacolod and paid the fees therefor. It was then issued a claim slip for its permit
on February 19, 2007, which was to be claimed on March 16, 2007. In the
meantime, Phuture further amended its AOI on February 27, 2007 to reflect its
engagement in bingo operations as its primary purpose.
Phuture commenced bingo operations at SM Bacolod on March 2, 2007, prior
to the issuance of the actual hard copy of the mayor's permit. However, at
around 6:10 a.m. of March 3, 2007, respondent learned that its bingo outlet
was padlocked by agents of the Office of the City Legal Officer and that a copy
of a Closure Order dated March 2, 2007 was posted at the entrance of the
bingo outlet.
Phuture claimed that the closure of its bingo outlet at SM Bacolod is tainted
with malice and bad faith and that petitioners did not have the legal authority
to shut down said bingo operations, especially since PAGCOR itself had already
issued a provisional GOA in its favor.
RTC denied the prayer for the issuance of a temporary mandatory order and
dismissed the case for lack of merit. Phuture filed an Urgent Motion for Partial
Reconsideration on April 2, 2007, but the same was denied by the RTC in its
Order dated September 6, 2007. Thus, respondent elevated the matter to the
CA on appeal.
CA partially granted the appeal by affirming the trial court's denial of the
application for a temporary mandatory order but reversing the dismissal of the
suit for damages and ordering the case to be reinstated and remanded to the
court of origin for further proceedings.
ISSUE: Whether or not the City is liable for damages.

HELD: NO. The City of Bacolod has not given its consent to be sued by issuing
licenses. Under the 1987 Constitution, the state cannot be sued without its
consent. This is because government efficiency will suffer if its time and energy
is spent defending itself against suits. The state, as well as its political
subdivisions are open to suit only when they consent to it. Consent may either
be express or implied. An implied form of consent is the state’s or the
subdivision’s exercise of proprietary functions. Unfortunately for PV, while the
LGC, which permits mayors to grant licenses and business permits, vests
LGUs with corporate powers, such as that to be sued, the exercise of the
licensing power is not an exercise of a proprietary powers. Instead, the
licensing power is an exercise of police power. This is because such acts are
essentially regulatory in nature.

The City may put up the defense of lack of consent on appeal. Waiver from
immunity from suit is not lightly inferred as it is a derogation of sovereignty.
Also, the City of Bacolod, as a governmental agency or instrumentality, cannot
be estopped by the omission, mistake, or error of its officials or agents.
Estoppel does not lie against the government or any of its agencies from
unauthorized or illegal acts of public officers.
The City is not liable for damages. Based on the findings of the trial court, it
appears that PV had no clear and unmistakable legal right to operate its Bingo
Operations – respondents failed to establish that it had duly applied for the
proper permit for Bingo operations and not just their old permit referring to
professional services, band, and entertainment (the Claim Stub was found to
be dubious, the aforesaid application wasn’t actually for Bingo operations but
merely a renewal application)

That the claim of PV is dubious is further supported by the fact that they
themselves admit that they only amended their AOI AFTER applying for the
permit to operate Bingo operations.
The City, by imposing its laws, is merely exercising the delegated police power
of the state – Bingo is a form of gambling, and its operation is a mere privilege
and not a right.

As a privilege, it can not only be regulated but also be revoked/closed down

when public interests so require.
In this case, there is merely a damnum absque injuria – the act is hurtful, but
not wrongful. The mere suffering of losses does not give a rise to a right to
recover damages – to warrant recovery, there must be both a right of action for
a legal wrong, and damage.

DAMAGES

ARMANDO GO, vs. EAST OCEANIC LEASING and FINANCE CORPORATION,

G.R. No. 206841 January 19, 2018
DEL CASTILLO, J.:
FACTS: Petitioner Armando Go obtained a loan from respondent East Oceanic
Leasing and Finance Corporation (East Oceanic) in the amount of
₱4,062,888.00, payable in monthly installments of ₱169,287.00 until fully
paid, as evidenced by a Promissory Note that Go executed on the same day.
Notably, Go's loan application was approved on the basis of the report and
recommendation of Theodore Sy, then East Oceanic's Managing Director,
which specified that the purpose of the loan was for the upgrading of the bus
fleet and replacement of old units of Oriental Bus Lines, a bus company owned
by Go.

Go subsequently issued six post-dated checks in favor of East Oceanic, all

drawn from his account at the Development Bank of the Philippines - Ormoc
Branch (DBP).

Unfortunately, the checks were all dishonored by the DBP upon presentment
for payment with the reason "Account Under Garnished" stamped at the back
of the checks and as shown by the check return slips. East Oceanic duly
informed Go of the dishonor of said checks and demanded that he make good
or pay the same, but the latter failed to do so.

By reason of the dishonored checks, Go's loan became due and demandable
with an outstanding balance of ₱2,814,054.84, excluding interest and other
charges, based on a Statement of Account dated January 24, 1996.

Thus, on February 7, 1996, East Oceanic filed a Complaint against Go before

the RTC for collection of a sum of money with prayer for preliminary
attachment. The case was docketed as Civil Case No. CEB- 18366 (collection
case).

While the collection case was pending, East Oceanic filed a Complaint for
Damages dated April 14, 1998 with the RTC against Sy, alleging that the
corporation suffered a loss in the amount of ₱3,000,000.00 due to the latter's
false report and recommendation pertaining to the real purpose of Go's loan
application, i.e., to pay off an existing loan to Sto. Nifio de Cebu Finance
Corporation, as well as his financial status. The case was docketed as Civil
Case No. CEB-21918 (damages case).

Upon East Oceanic's motion, and finding the evidence adduced in the
collection case to be likewise pertinent to the damages case, the RTC ordered
the cases to be consolidated.
the RTC rendered judgment as follows:
1) Ordering defendant Theodore Sy to pay plaintiff the following: a)
₱3,000,000.00 as actual damages with 6% interest computed from the time of
the filing of the case; b) ₱300,000.00 as attorney's fees; and, c) ₱30,000.00 as x
x x litigation expenses.
2) Ordering defendant Armando Go to pay plaintiff the sum of ₱2,814,054.84
plus 6% interest to be computed from the time of the filing of the complaint.
Go moved for reconsideration, arguing that the RTC Decision is contrary to law
because it failed to cite any factual and/or legal basis as to his civil liability to
East Oceanic. The RTC, however, denied the motion in its Order dated April 8,
20l3.
As a consequence, Go filed the present Petition for Review on Certiorari before
the Court, assailing the RTC's July 16. 2012 Decision and April 8, 2013 Order.

ISSUE: Whether the assailed RTC Decision is void for having no basis in fact
and in law as regards his civil liability to East Oceanic.

HELD: We find that the assailed Decision is void insofar as the collection case
is concerned, as it contained neither an analysis of the evidence of East
Oceanic and Go as regards the outstanding balance of the latter's loan
obligation, nor a reference to any legal basis in reaching its conclusion as to
Go's civil liability to East Oceanic. Clearly, the RTC failed to meet the standard
set forth in Section 14, Article VIII of the Constitution, and in so doing,
deprived Go of his right to due process "since he was not accorded a fair
opportunity to be heard by a fair and responsible magistrate."
It is significant to note that the present case involves an appeal
by certiorari from the RTC (which rendered the assailed Decision and Order in
the exercise of its original jurisdiction) directly to the Supreme Court under
Section 1, Rule 45 of the Rules of Court. Since the Court's jurisdiction in this
case is limited to resolving only questions of law, or in particular, the issue on
the validity of the assailed RTC Decision and Order insofar as the collection
case is concerned, we cannot rule on the amount of Go's liability to East
Oceanic.
We thus deem it appropriate to remand the case to the R TC for further
proceedings to allow said court to come up with a decision in Civil Case No.
CEB-18366 that fully complies with Section 14, Article VIII of the Constitution,
taking into consideration the evidence on record and its ruling in Civil Case No.
CEB-21918.

RECOVERABLE DAMAGES
METROPOLITAN BANK AND TRUST COMPANY v. JUNNEL'S MARKETING
CORPORATION, PURIFICACION DELIZO, AND BANK OF COMMERCE
G.R. No. 235511, June 20, 2018

BANK OF COMMERCE v. JUNNEL'S MARKETING CORPORATION,

PURIFICACION DELIZO, AND METROPOLITAN BANK AND TRUST
COMPANY
G.R. No. 235565, June 20, 2018
VELASCO JR., J.:
FACTS: Respondent Junnel's Marketing Corporation (JMC) is a domestic
corporation engaged in the business of selling wines and liquors. It has a
current account with Metrobank from which it draws checks to pay its different
suppliers. Among JMC's suppliers are Jardine Wines and Spirits (Jardine) and
Premiere Wines (Premiere).

In 2000, during an audit of its financial records, JMC discovered an anomaly

involving eleven (11) checks (subject checks) it had issued to the orders of
Jardine and Premiere on various dates between October 1998 to May 1999. As
it was, the subject checks had already been charged against JMC's current
account but were, for some reason, not covered by any official receipt from
Jardine or Premiere. The subject checks, which are all crossed checks and
amounting to P1,481,292.00 in total.

Examination of the dorsal portion of the subject checks revealed that all had
been deposited with Bankcom, Dau branch, under Account No. 0015-32987-
7. Upon inquiring with Jardine and Premiere, however, JMC was able to
confirm that neither of the said suppliers owns Bankcom Account No. 0015-
32987-7.

Meanwhile, on 30 April 2000, respondent Purificacion Delizo (Delizo), a former

accountant of JMC, executed a handwritten letter addressed to one Nelvia Yusi,
President of JMC. In the said letter, Delizo confessed that, during her time as
an accountant for JMC, she stole several company checks drawn against JMC's
current account. She professed that the said checks were never given to the
named payees but were forwarded by her to one Lita Bituin (Bituin). Delizo
further admitted that she, Bituin and an unknown bank manager colluded to
cause the deposit and encashing of the stolen checks and shared in the
proceeds thereof.

JMC surmised that the subject checks are among the checks purportedly
stolen by Delizo.

On 28 January 2002, JMC filed before the Regional Trial Court (RTC) of Pasay
City a complaint for sum of money against Delizo, Bankcom and Metrobank.

On 28 May 2013, the RTC rendered a decision holding both Bankcom and
Metrobank liable to JMC on a 2/3 to 1/3 ratio, respectively-for the amount of
subject checks plus interest as well as attorney's fees, but absolving Delizo
from any liability. The trial court, in the same decision, also dismissed
Metrobank's cross-claim against Bankcom.

Bankcom and Metrobank filed their respective appeals with the CA.
On 22 March 2017, the CA rendered its decision affirming, albeit with
modification, the decision of the RTC.
ISSUE: Whether or not (1) Metrobank shall be held liable to return the entire
amount of the subject checks plus interest to JMC and whether or not (2)
Bankcom is liable to reimburse Metrobank the same amount plus interest.

HELD: Accordingly, we rule: (1) Metrobank is liable to return to JMC the entire
amount of the subject checks plus interest and (2) Bankcom liable to
reimburse Metrobank the same amount plus interest.

Metrobank, as drawee bank, is liable to return to JMC the amount of the

subject checks.

A drawee bank is contractually obligated to follow the explicit instructions of its

drawer-clients when paying checks issued by them. The drawer's instructions-
including the designation of the payee or to whom the check should be paid-are
reflected on the face and by the terms thereof. When a drawee bank pays a
person other than the payee named on the check, it essentially commits a
breach of its obligation and renders the payment it made unauthorized. In
such cases and under normal circumstances, the drawee bank may be held
liable to the drawer for the amount charged against the latter's account.

The liability of the drawee bank to the drawer in cases of unauthorized

payment of checks has been regarded in jurispn1dence to be strict by nature.
This means that once an unauthorized payment on a check has been made,
the resulting liability of the drawee bank to the drawer for such payment
attaches even if the former had acted merely upon the guarantees of a
collecting bank. Indeed, it is only when the unauthorized payment of a check
had been caused or was attended by the fault or negligence of the drawer
himself can the drawee bank be excused, whether wholly or partially, from
being held liable to the drawer for the said payment.

In the present case, it is apparent that Metrobank had breached JMC's

instructions when it paid the value of the subject checks to Bankcom for the
benefit of a certain Account No. 0015-32987-7. The payment to Account No.
0015-32987-7 was unauthorized as it was established that the said account
does not belong to Jardine or Premiere, the payees of the subject checks, or to
their indorsees. In addition, causal or concurring negligence on the part of JMC
had not been proven. Under such circumstances, Metrobank is clearly liable to
return to JMC the amount of the subject checks.

While Metrobank's reliance upon the guarantees of Bankcom does not excuse it
from being liable to JMC, such reliance does enable Metrobank to seek
reimbursement from Bankcom-the collecting bank.

A collecting or presenting bank-i.e., the bank that receives a check for deposit
and that presents the same to the drawee bank for payment-is an indorser of
such check. When a collecting bank presents a check to the drawee bank for
payment, the former thereby assumes the same warranties assumed by an
indorser of a negotiable instrument pursuant to Section 66 of the Negotiable
Instruments Law. These warranties are: (1) that the instrument is genuine and
in all respects what it purports to be; (2) that the indorser has good title to it;
(3) that all prior parties had capacity to contract; and (4) that the instrument
is, at the time of the indorsement, valid and subsisting. If any of the foregoing
warranties turns out to be false, a collecting hank becomes liable to the drawee
bank for payments made under such false warranty.

Here, it is clear that Bankcom had assumed the warranties of an indorser

when it forwarded the subject checks to PCHC for presentment to Metrobank.
By such presentment, Bankcom effectively guaranteed to Metrobank that the
subject checks had been deposited with it to an account that has good title to
the same. This guaranty, however, is a complete falsity because the subject
checks were, in truth, deposited to an account that neither belongs to the
payees of the subject checks nor to their indorsees. Hence, as the subject
checks were paid under Bankcom's false guaranty, the latter-as collecting
bank-stands liable to return the value of such checks to Metrobank.

Record shows that the pieces of evidence presented by JMC, particularly the 11
subject checks were endorsed and were allowed to be encashed by Bankcom,
as indicated in the dorsal portion of the checks where [PCHC] machine's tracer,
or the ID band of Bankcom was stamped. And this stamped tracer ID band of
[Bankcom] signifies that Bankcom certified that the checks were deposited to
Bankcom and Bankcom endorsed these checks and sent them to PCHC.
To begin with, jurisprudence has it that a collecting bank's mere act of
presenting a check for payment to the drawee bank is itself an assertion, on
the part of the former, that it had done its duty to ascertain the validity of prior
indorsements. Hence, in Banco De Oro v. Equitable Banking Corporation, we
stated:

Apropos the matter of forgery in endorsements, this Court has presently

succinctly emphasized that the collecting bank or last endorser generally
suffers the loss because it has the duty to ascertain the genuineness of all prior
endorsements considering that the act of presenting the check for payment to
the drawee is an assertion that the party making the presentment has done its
duty to ascertain the genuineness of the endorsements. This is laid down in the
case of PNB v. National City Bank. (Citations omitted. Emphasis supplied).

In the present case, all the subject checks have been transmitted by Bankcom
to the PCHC for clearing and presentment to Metrobank. As earlier adverted to,
all of the said checks also bear the PCHC machine sprayed tracer/ID band of
Bankcom. Such circumstances, pursuant to prevailing banking practices as
laid out under the PCHC Rules and Regulations, are enough to fix the liability
of Bankcom as an indorser of the subject checks even sans the stamp "ALL
PRIOR ENDORSEMENTS AND/OR LACK OF ENDORSEMENT GUARANTEED"
and "NON-NEGOTIABLE." As the stamping of such guarantees are not required
before the warranties of an indorser could attach against Bankcom, we find the
latter liable to reimburse Metrobank the value of all the subject checks.

JOHNNY GARCIA YAP @ "CHARLIE" A.K.A. JOHNNY YAP Y GARCIA@

"CHARLIE," v. PEOPLE OF THE PHILIPPINES
GR. No. 234217, November 14, 2018
PERALTA, J.:

FACTS: That on or about November 5, 2012, in the City of Manila, Philippines,

the said accused did then and there, willfully, unlawfully and feloniously, with
intent to kill, with treachery and evident premeditation, commence the
commission of the crime of Murder directly by overt acts, by then and there
forcing one GEORGE HAO ANG, to drink coffee which was laced with
benzodiazipines, a sleep-inducing psychoactive drug, without the knowledge of
the said GEORGE HAO ANG, which immediately made the latter fall asleep,
and while he was sleeping, the said accused repeatedly hit the said GEORGE
HAO ANG on the head with a rolling pin that caused profuse bleeding thereof,
but said accused did not perform all the acts of execution which would have
produced the crime of Murder as a consequence by reason of some cause other
than his own spontaneous desistance, that is said GEORGE HAO ANG was
able to walk away from the accused and ran fast for his safety.

Upon arraignment, Yap entered a plea of not guilty. However, during pre-trial,
he manifested that he invokes self-defense. As a consequence, trial on the
merits ensued whereby the defense presented its evidence-in-chief first.

The defense and the prosecution presented conflicting versions of the

antecedent facts.

After trial, the RTC rendered judgment finding Yap guilty as charged. The RTC
ruled that the essential elements of an attempted felony are present in the
instant case and there was intent to kill. The trial court also found the
circumstance of treachery to be present, but ruled that evident premeditation
was absent. Yap filed a Motion for Reconsideration essentially contending that
his conviction was not warranted by the evidence on record. However, the RTC
denied the Motion for Reconsideration in its Order dated May 3, 2016.

Aggrieved by the ruling of the RTC, Yap appealed to the CA arguing that: (1)
treachery was not proven because there was no direct or circumstantial
evidence to establish that he put a sleep-inducing substance in Ang's cup of
coffee; (2) the prosecution failed to prove his guilt beyond reasonable doubt;
and (3) the trial court erred in failing to appreciate his exculpatory theory, as it
constitutes not only self-defense but also denial. 10 Yap was allowed to continue
on provisional liberty under the same bail pending his appeal.

In its assailed Decision, the CA found no merit in Yap's appeal and affirmed the
judgment of the RTC. Yap filed a Motion for Reconsideration, but the CA denied
it in its Resolution of September 22, 2017.

Hence, the present petition for review on certiorari filed by Yap.

ISSUE: Whether or not Yap is entitled to moral damages.

HELD: YES. Under paragraph (1), Article 2219 of the Civil Code, moral
damages may be recovered in a criminal offense resulting in physical injuries.
Moral damages compensate for the mental anguish, serious anxiety, and moral
shock suffered by the victim and his family as being a proximate result of the
wrongful act. An award requires no proof of pecuniary loss. Pursuant to
previous jurisprudence, an award of Five Thousand Pesos (P5,000.00) moral
damages is appropriate for less serious, as well as slight physical injuries.

SPOUSES GILDARDO C. LOQUELLANO AND ROSALINA JULIET B.

LOQUELLANO, PETITIONERS, VS. HONGKONG AND SHANGHAI BANKING
CORPORATION, LTD., HONGKONG AND SHANGHAI BANKING
CORPORATION-STAFF RETIREMENT PLAN AND MANUEL ESTACION
G.R. No. 200553, December 10, 2018
PERALTA, J.:

FACTS: Petitioner Rosalina Juliet Loquellano used to be a regular employee in

the Financial Central Department of respondent Hongkong and Shanghai
Banking Corporation, Ltd.. As such, she became an automatic member of
respondent Hongkong and Shanghai Banking Corporation - Staff Retirement
Plan (HSBC-SRP) that provides retirement, disability and loan benefits to the
bank's employees. In 1988, petitioner Rosalina applied with respondent HSBC-
SRP a housing loan in the amount of P400,000.00 payable in twenty-five (25)
years at six percent (6%) per annum, through monthly salary deduction from
petitioner Rosalina's salary savings account with respondent HSBC. It was
provided in the loan application that the loan was secured by setting-off
petitioner Rosalina's retirement benefits and chattel mortgage. She executed a
promissory note for the payment of the said loan.

On September 5, 1990, petitioners spouses Gildardo and Rosalina Loquellano

and Manuel S. Estacion, the managing trustee for and in behalf of the
respondent HSBC-SRP, entered into a contract of real estate mortgage wherein
petitioners constituted a mortgage over their house and lot covered by TCT No.
95422 (44867) of the Register of Deeds of Pasay City to secure the payment of
their housing loan. Petitioner Rosalina had been religiously paying the monthly
installments and interests due on the housing loan through automatic salary
deductions.

Subsequently, a labor dispute arose between the respondent bank and the
bank union, to which petitioner Rosalina was a member, which culminated in a
strike staged on December 22, 1993. Petitioner Rosalina, together with other
bank employees, were dismissed from the service for abandonment, among
others. Petitioner Rosalina and the other dismissed employees filed with the
Labor Arbiter (LA) an illegal dismissal case against the respondent bank. The
LA declared the strike illegal and dismissed the complaint. The labor case had
reached us through a petition for review on certiorari filed by the dismissed
concerned employees and had already been decided by us on January 11,
2016. While we declared the strike illegal, we also held that the mere finding of
such did not justify the wholesale termination of the strikers from their
employment. We found that there was illegal dismissal and ordered the bank,
among others, to pay the backwages and separation pay of the 18 employees
named in the decision, which included petitioner Rosalina, in lieu of
reinstatement.

In the meantime, due to Rosalina’s termination from employment with

petitioner the bank on December 27, 1993, petitioners were unable to make
any payments of the amortizations due in Rosalina's salary savings account
beginning January 1994. Respondent HSBC-SRP sent demand letters to
petitioner Rosalina for the payment of her outstanding obligation in full.
Petitioner Rosalina offered to make partial payment of her housing loan arrears
in the amount of P69,205.99, which respondent HSBC-SRP rejected.

Subsequently, petitioner Rosalina received an Installment Due Reminder dated

July 26, 1995 issued by respondent HSBC-SRP on her housing loan, wherein it
was shown that the monthly installment overdue, the interest overdue and the
interest accrued on the overdue installment amounted to P55,681.85 and the
outstanding loan balance was P315,958.00. On August 11, 1995, petitioner
Rosalina, through her salary savings account which was still existing,
deposited the payments for all her monthly installment arrears and interests,
and penalties from January 1994 up to August 1995. Respondent bank
accepted the payments and credited them to her housing loan
account.Thereafter, petitioner Rosalina received an Installment Due
Reminder[14] dated August 28, 1995, wherein it already reflected the payments
she had made as her outstanding housing loan obligation was already reduced
to P289,945.00.

In a letter dated September 25, 1995 to petitioner Rosalina, respondent HSBC-

SRP demanded for the payment of the entire housing loan obligation in the
amount of P289,945.00. Notwithstanding, petitioner Rosalina received an
Installment Due Reminder dated September 27, 1995, reflecting the then
current monthly installment and interest due thereon. Petitioner Rosalina,
subsequently, received more installment due reminders showing a reduction in
the outstanding balance of her housing loan. She continuously made deposits
to her salary savings account with the respondent bank for the payment of her
monthly amortizations. Respondent bank debited petitioner Rosalina's savings
account and credited the payments to the balance of the installment and the
interest due on the housing loan up to June 1996.

On May 20, 1996, petitioners' mortgaged property was extrajudicially

foreclosed by respondent HSBC-SRP and was sold at public auction for the
amount of P324,119.59, with respondent Manuel S. Estacion as the highest
bidder. A Certificate of Sale dated June 5, 1996 was issued.

On August 22, 1996, petitioners filed with the Regional Trial Court (RTC) of
Parañaque City, Branch 274, a Complaint for Annulment of Sale with Damages
and Preliminary Injunction against Hongkong and Shanghai Banking
Corporation, Ltd; Manuel S. Estacion; Hongkong and Shanghai Banking
Corporation-Staff Retirement Plan, as represented by Atty. Manuel G.
Montecillo, Mr. Stuart P. Milne and Mr. Alejandro L. Custodio; Leonarda Leilani
Amurao and Benedicta G. Flebron, in their capacities as Clerk of Court/Ex-
Officio Sheriff and Sheriff-in-Charge of the RTC of Parañaque. On March 1,
2005, the RTC rendered its Decision in favor of the petitioners.

Respondent bank filed its appeal. Respondent HSBC-SRP and Estacion filed
their Motion for Reconsideration, which was denied by the RTC in an
Order dated November 8, 2005; thus, they also appealed the decision.

On August 11, 2011, the CA rendered its assailed Decision which grants the
instant appeal. Accordingly, the Decision of the RTC is hereby REVERSED and
SET ASIDE, and the complaint in said case is DISMISSED.

Hence, this petition for review on certiorari filed by petitioners.

ISSUE: Whether petitioners are entitled to the payment of damages as well as

attorney's fees.

HELD: We find that petitioners are entitled to damages for the invalid
foreclosure of their property. The RTC held respondent bank HSBC-SRP and
Estacion solidarily liable for the payment of damages. However, we only find
respondent HSBC-SRP liable as it was the one which illegally foreclosed
petitioners' mortgaged property. However, respondent HSBC, as correctly
pointed out by the CA, was not a party to the real estate mortgage executed
between respondent HSBC-SRP and petitioners nor it had participation in the
foreclosure proceedings. On the other hand, Estacion was only a trustee of
respondent HSBC-SRP acting within the scope of its authority. The RTC
awarded moral damages, exemplary damages, attorney's fees, plus P2,000.00
for every appearance, and costs of litigation.

Moral damages are meant to compensate the claimant for any physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injuries
unjustly caused. Petitioner Rosalina has adequately established the factual
basis for the award of moral damages when she testified that she felt shocked
and horrified upon knowing of the foreclosure sale. However, we find the RTC's
award of P2,000,000.00 excessive and unconscionable, and reduce the same to
P100,000.00.

Exemplary damages are imposed by way of example for the public good, in
addition to moral, temperate, liquidated or compensatory damages. We reduce
the RTC's award of P500,000.00 to P30,000.00.

Attorneys fees are allowed when exemplary damages are awarded and when the
party to a suit is compelled to incur expenses to protect his interest. We find
the RTC's award of attorney's fees in the amount of P100,000.00 proper.