FIRST DIVISION

[ G.R. No. 113564, June 20, 2001 ]

INOCENCIA YU DINO AND HER HUSBAND DOING BUSINESS UNDER THE
TRADE NAME "CANDY CLAIRE FASHION GARMENTS", PETITIONERS, VS.
COURT OF APPEALS AND ROMAN SIO, DOING BUSINESS UNDER THE NAME
"UNIVERSAL TOY MASTER MANUFACTURING", RESPONDENTS.
D E C I S I O N*
PUNO, J.:
Though people say, "better late than never", the law frowns upon those who assert their rights past
the eleventh hour. For failing to timely institute their action, the petitioners are forever barred from
claiming a sum of money from the respondent.
This is a petition for review on certiorari to annul and set aside the amended decision of the
respondent court dated January 24, 1994 reversing its April 30, 1993 decision and dismissing the
plaintiff-petitioners' Complaint on the ground of prescription.
The following undisputed facts gave rise to the case at bar:
Petitioners spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are
engaged in the business of manufacturing and selling shirts.[1] Respondent Sio is part owner and
general manager of a manufacturing corporation doing business under the trade name "Universal
Toy Master Manufacturing."[2]
Petitioners and respondent Sio entered into a contract whereby the latter would manufacture for the
petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in
accordance with the sample approved by the petitioners. These frogs and mooseheads were to be
attached to the shirts petitioners would manufacture and sell.[3]
Respondent Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The
last delivery was made on September 28, 1988. Petitioner fully paid the agreed price.
[4]
Subsequently, petitioners returned to respondent 29,772 pieces of frogs and mooseheads for
failing to comply with the approved sample. [5] The return was made on different dates: the initial one
on December 12, 1988 consisting of 1,720 pieces,[6] the second on January 11, 1989, [7] and the last
on January 17, 1989.[8]
Petitioners then demanded from the respondent a refund of the purchase price of the returned goods
in the amount of P208,404.00. As respondent Sio refused to pay, [9] petitioners filed on July 24, 1989
an action for collection of a sum of money in the Regional Trial Court of Manila, Branch 38.
The trial court ruled in favor of the petitioners, viz:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Vicente and Inocencia Dino
and against defendant Toy Master Manufacturing, Inc. ordering the latter to pay the former:
1. The amount of Two Hundred Eight Thousand Four Hundred Four (P208,404.00) Pesos with legal

interest thereon from July 5, 1989, until fully paid; and

2. The amount of Twenty Thousand (P20,000.00) Pesos as attorney's fees and the costs of this suit.
The counterclaim on the other hand is hereby dismissed for lack of merit." [10]
Respondent Sio sought recourse in the Court of Appeals. In its April 30, 1993 decision, the
appellate court affirmed the trial court decision. Respondent then filed a Motion for Reconsideration
and a Supplemental Motion for Reconsideration alleging therein that the petitioners' action for
collection of sum of money based on a breach of warranty had already prescribed. On January 24,
1994, the respondent court reversed its decision and dismissed petitioners' Complaint for having
been filed beyond the prescriptive period. The amended decision read in part, viz:
"Even if there is failure to raise the affirmative defense of prescription in a motion to dismiss or in an
appropriate pleading (answer, amended or supplemental answer) and an amendment would no
longer be feasible, still prescription, if apparent on the face of the complaint may be favorably
considered (Spouses Matias B. Aznar, III, et al. vs. Hon. Juanito A. Bernad, etc., supra, G.R. 81190,
May 9, 1988). The rule in Gicano vs. Gegato (supra) was reiterated in Severo v. Court of Appeals,
(G.R. No. 84051, May 19, 1989).
WHEREFORE the Motion For Reconsideration is granted. The judgment of this Court is set aside
and judgment is hereby rendered REVERSING the judgment of the trial court and dismissing
plaintiff's complaint."[11]
Hence, this petition with the following assignment of errors:
I.
The respondent Court of Appeals seriously erred in dismissing the complaint of the Petitioners on
the ground that the action had prescribed.
II.
The respondent Court of Appeals seriously erred in holding that the defense of prescription would
still be considered despite the fact that it was not raised in the answer, if apparent on the face of the
complaint.
We first determine the nature of the action filed in the trial court to resolve the issue of prescription.
Petitioners claim that the Complaint they filed in the trial court on July 24, 1989 was one for the
collection of a sum of money. Respondent contends that it was an action for breach of warranty as
the sum of money petitioners sought to collect was actually a refund of the purchase price they paid
for the alleged defective goods they bought from the respondent.
We uphold the respondent's contention.
The following provisions of the New Civil Code are apropos:
"Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary
course of his business manufactures or procures for the general market, whether the same is on
hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the general market, it is a contract for a piece of
work."

"Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or compensation. The contractor may
either employ only his labor or skill, or also furnish the material."
As this Court ruled in Engineering & Machinery Corporation v. Court of Appeals, et al.,[12] "a
contract for a piece of work, labor and materials may be distinguished from a contract of sale by the
inquiry as to whether the thing transferred is one not in existence and which would never have
existed but for the order of the person desiring it. In such case, the contract is one for a piece of
work, not a sale. On the other hand, if the thing subject of the contract would have existed and been
the subject of a sale to some other person even if the order had not been given then the contract is
one of sale."[13] The contract between the petitioners and respondent stipulated that respondent
would manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of
vinyl mooseheads according to the samples specified and approved by the petitioners. Respondent
Sio did not ordinarily manufacture these products, but only upon order of the petitioners and at the
price agreed upon.[14] Clearly, the contract executed by and between the petitioners and the
respondent was a contract for a piece of work. At any rate, whether the agreement between the
parties was one of a contract of sale or a piece of work, the provisions on warranty of title against
hidden defects in a contract of sale apply to the case at bar, viz:
"Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall
deliver the thing produced to the employer and transfer dominion over the thing. This contract shall
be governed by the following articles as well as by the pertinent provisions on warranty of title and
against hidden defects and the payment of price in a contract of sale."
"Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing
sold may have, should they render it unfit for the use for which it is intended, or should they 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; but said vendor shall not be answerable for patent
defects or those which may be visible, or for those which are not visible if the vendee is an expert
who, by reason of his trade or profession, should have known them."
Petitioners aver that they discovered the defects in respondent's products when customers in their
(petitioners') shirt business came back to them complaining that the frog and moosehead figures
attached to the shirts they bought were torn. Petitioners allege that they did not readily see these
hidden defects upon their acceptance. A hidden defect is one which is unknown or could not have
been known to the vendee.[15] Petitioners then returned to the respondent 29,772 defective pieces of
vinyl products and demanded a refund of their purchase price in the amount of P208,404.00. Having
failed to collect this amount, they filed an action for collection of a sum of money.
Article 1567 provides for the remedies available to the vendee in case of hidden defects, viz:
"Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and demanding a proportionate reduction of the price, with
damages in either case."
By returning the 29,772 pieces of vinyl products to respondent and asking for a return of their
purchase price, petitioners were in effect "withdrawing from the contract" as provided in Art. 1567.
The prescriptive period for this kind of action is provided in Art. 1571 of the New Civil Code, viz:
"Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six
months from the delivery of the thing sold." (Emphasis supplied)
There is no dispute that respondent made the last delivery of the vinyl products to petitioners on

September 28, 1988. It is also settled that the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989, [16] more than nine months from the
date of last delivery. Petitioners having filed the action three months after the six-month period for
filing actions for breach of warranty against hidden defects stated in Art. 1571, [17]the appellate court
dismissed the action.
Petitioners fault the ruling on the ground that it was too late in the day for respondent to raise the
defense of prescription. The law then applicable to the case at bar, Rule 9, Sec. 2 of the Rules of
Court, provides:
"Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action . . . "

Thus, they claim that since the respondent failed to raise the defense of prescription in a motion to
dismiss or in its answer, it is deemed waived and cannot be raised for the first time on appeal in a
motion for reconsideration of the appellate court's decision.
As a rule, the defense of prescription cannot be raised for the first time on appeal. Thus, we held
in Ramos v. Osorio,[18] viz:
"It is settled law in this jurisdiction that the defense of prescription is waivable, and that if it was not
raised as a defense in the trial court, it cannot be considered on appeal, the general rule being that
the appellate court is not authorized to consider and resolve any question not properly raised in the
lower court (Subido vs. Lacson, 55 O.G. 8281, 8285; Moran, Comments on the Rules of Court, Vol.
I, p. 784, 1947 Edition)."
However, this is not a hard and fast rule. In Gicano v. Gegato,[19] we held:
". . .(T)rial courts have authority and discretion to dimiss an action on the ground of prescription
when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v.
Robles, Feb, 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961;
Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v.
Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1,f, Rule 16,
Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule
16), or even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted
at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA
250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil.
821); or where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What is
essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period
be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of
the plaintiff's complaint, or otherwise established by the evidence."(emphasis supplied)
In Aldovino, et al. v. Alunan, et al.,[20] the Court en banc reiterated the Garcia v. Mathis doctrine
cited in the Gicano case that when the plaintiff's own complaint shows clearly that the action has
prescribed, the action may be dismissed even if the defense of prescription was not invoked by the
defendant.
It is apparent in the records that respondent made the last delivery of vinyl products to the petitioners
on September 28, 1988. Petitioners admit this in their Memorandum submitted to the trial court and
reiterate it in their Petition for Review. [21] It is also apparent in the Complaint that petitioners instituted
their action on July 24, 1989. The issue for resolution is whether or not the respondent Court of

Appeals could dismiss the petitioners' action if the defense of prescription was raised for the first
time on appeal but is apparent in the records.
Following the Gicano doctrine that allows dismissal of an action on the ground of prescription even
after judgment on the merits, or even if the defense was not raised at all so long as the relevant
dates are clear on the record, we rule that the action filed by the petitioners has prescribed. The
dates of delivery and institution of the action are undisputed. There are no new issues of fact arising
in connection with the question of prescription, thus carving out the case at bar as an exception from
the general rule that prescription if not impleaded in the answer is deemed waived. [22]
Even if the defense of prescription was raised for the first time on appeal in respondent's
Supplemental Motion for Reconsideration of the appellate court's decision, this does not militate
against the due process right of the petitioners. On appeal, there was no new issue of fact that
arose in connection with the question of prescription, thus it cannot be said that petitioners were not
given the opportunity to present evidence in the trial court to meet a factual issue. Equally important,
petitioners had the opportunity to oppose the defense of prescription in their Opposition to the
Supplemental Motion for Reconsideration filed in the appellate court and in their Petition for Review
in this Court.
This Court's application of the Osorio and Gicano doctrines to the case at bar is confirmed and now
enshrined in Rule 9, Sec. 1 of the 1997 Rules of Civil Procedure, viz:
"Section 1. Defense and objections not pleaded. - Defenses and objections not pleaded whether in
a motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings that the court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim." (Emphasis supplied)
WHEREFORE, the petition is DENIED and the impugned decision of the Court of Appeals dated
January 24, 1994 isAFFIRMED. No costs.
SO ORDERED.

warranty against hidden defects: moles v iac

SECOND DIVISION
[ G.R. No. 96271, June 26, 1992 ]
NATIVIDAD VILLOSTAS, PETITIONER, VS. THE HON. COURT OF APPEALS,
SECOND DIVISION, THE HON. SALVADOR S. TENSUAN AS PRESIDING
JUDGE OF RTC, MAKATI, BRANCH 146 AND ELECTROLUX
MARKETING, INCORPORATED, RESPONDENTS.
DECISION
PARAS, J.:
This is a petition for review on certiorari seeking the annulment of the resolution [1] of the respondent
Court of Appeals, dated November 16, 1990, in CA-G.R. Sp. No. 23178 denying the petitioner's
appeal which in effect affirms the decision[2] of the Regional Trial Court in Civil Case No. 90-1420

sustaining the decision[3] of the Metropolitan Trial Court, Branch 64, Makati, Metro Manila, dated
November 15, 1989 ordering herein petitioner to pay private respondent, among others, the amount
of P14,540.00.
The established facts of the case are as follows:
Desiring to have safe drinking water at home, herein petitioner Villostas and her husband decided to
buy a water purifier. At about this time, private respondent's Eletrolux sales agents were making door
to door selling of its products in the subdivision where petitioner has her residence. Because private
respondent's sales agents had assured petitioner of the very special features of their brand of water
purifier, petitioner Villostas placed an order for one (1) unit of said water purifier. On September 13,
1986, an Electrolux Aqua Guard water purifier was delivered and installed at petitioner's residence
(Rollo, p. 38; 49). Consequently, petitioner signed the Sales Order (Annex "B", p. 31) and the
Contract of Sale with Reservation of Title (Annex "A", p. 31) in October 1986 (Rollo, p. 38, 22). A
warranty certificate, Exhibit "1", was issued by private respondent which provides that:
"ELECTROLUX MARKETING, INCORPORATED WARRANTS THIS QUALITY ELECTROLUX
PRODUCT TO PERFORM EFFICIENTLY FOR ONE FULL YEAR FROM DATE OF ORIGINAL
PURCHASE." (Rollo, p. 49)
The purchase of said unit was on installment basis under which petitioner would pay the amount of
P16,190.00 in 20 monthly installments of P635.00 a month.
After two (2) weeks, petitioner verbally complained for the first time about the impurities, dirtiness
and bad odor coming out of the unit (Rollo, p. 22). On October 21, 1986, private respondent
Electrolux sent its service technician to examine and test the water purifier. The water which came
out was dirty so the unit was shut off automatically (Ibid.). The technician changed the filter of the
unit on said date without charge with an instruction that the filter should be changed every 6 months
otherwise the unit will not last long as the water in the area was dirty (Ibid.).
After the filter was replaced, petitioner paid the amount of P1,650.00 on November 18, 1986 which
included the first amortization of P700.00 (Ibid.).
Petitioner complained for the second and third time when dirty water still came out of the water
purifier after the replacement of the filter. It was on the third complaint of petitioner Villostas when the
service technician gave advise that the filter should be changed every six (6) months costing about
P300.00 which was considered to be uneconomical by the former (Rollo, pp. 22-23).
On December 9, 1986, petitioner sent a letter to the private respondent's branch manager stating
therein her complaint that the actual performance of the carbon filter was only for a month instead of
the private respondent's claim that the replacement of such filter will be only once every six (6)
months. The petitioner, citing the above incident as uneconomical, decided to return the unit and
demand a refund for the amount paid (Rollo, p. 76). Electrolux's branch manager offered to change
the water purifier with another brand of any of its appliance of the unit in her favor. Petitioner did not
accept it as she was disappointed with the original unit which did not perform as warranted.
Consequently, petitioner did not pay any more the subsequent installments in the amount of
P14,540.00 exclusive of interests. (Rollo, p. 23, 120).
What transpired next was an exchange of demand letter and reply between petitioner and private
respondent.

Ultimately, respondent Electrolux Marketing, Inc. filed a complaint against petitioner Villostas with the
MTC of Makati for the recovery of the sum of P14,540.00 representing the unpaid balance of the
purchase price of one (1) Electrolux Water Purifier plus interest thereon at the rate of 42% per
annum in accordance with the Sales Contract with Reservation of Title (Rolo, pp. 28-30).
In her amended answer, petitioner Villostas asserted that by reason of private respondent's breach
of warranty she was availing of the remedy of rescission of the contract of sale and offered to return
the water purifier to the seller as in fact, it was already being offered for return as early as December
9, 1986, aside from claiming for the refund of her payments. Petitioner prayed that the contract of
sale be declared rescinded and the payments refunded to her together with the full grant of the
claims asserted in her counterclaims (Rollo, pp. 35-36).
After trial on the merits, the MTC of Makati rendered its decision, the dispositive portion of which
reads:
"WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiff as follows:
1)

the amount of P14,540.00 representing the unpaid outstanding balance of the aforesaid unit,

plus interest thereon at the rate of P42% per annum until fully paid;
2)

the amount of P1,000.00 as attorney's fees and

3)

dismissing the counterclaim of defendant.

"SO ORDERED." (Rollo, pp. 38-44)

The petitioner, thereafter, filed a notice of appeal from the judgment of said lower court. The
Regional Trial Court of Makati rendered its judgment affirming the disputed decision (Rollo, pp. 2124).
A motion for reconsideration having been denied, petitioner elevated the case to the Court of
Appeals and was given an inextendible period of 15 days to file a petition for review. Anticipating that
she would fail to comply with the deadline, herein petitioner filed a second extension to file a petition
for review which, however, was denied.
Herein, petitioner comes to this Court via petition for review on certiorari.
Petitioner assigns the following errors:
I
WHETHER OR NOT THE PETITION MADE BY THE PETITIONER TO THE SUPREME COURT IS
PROPER AND RIPE FOR JUDICIAL REVIEW.
II
WHETHER OR NOT PETITIONER IS ENTITLED TO RESCIND THE CONTRACT IN VIOLATION
OF THE WARRANTY FOR HIDDEN DEFECT OF THE ARTICLE DELIVERED BY THE
RESPONDENT.
III

WHETHER OR NOT PETITIONER IS BOUND TO PAY RESPONDENT HER REMAINING

BALANCE OF P14,540.00 PLUS INTEREST THEREON PURSUANT TO THE CONTRACT OF
SALE.
IV
WHETHER OR NOT PETITIONER IS LIABLE TO PAY RESPONDENT ATTORNEY'S FEES
PURSUANT TO THE CONTRACT PLUS COSTS OF SUIT.
The main issue in the instant case is whether or not the petitioner is entitled to rescind the contract
on the basis of a violation of the warranty of the article delivered by the respondent.
Petitioner contends that the Regional Trial Court erred when it ruled that its claim for rescission had
prescribed inasmuch as she had formally notified the seller within a reasonable time, that is, 2
months and 26 days, from the delivery of water purifier on September 13, 1986 of her election to
rescind.
Private respondent counters that the petitioner is not entitled to rescission vis-a-vis alleged violation
of the warranty for hidden defects for the reason that rescission of contract sought by petitioner was
beyond the jurisdictional competence of the trial court. It adds that petitioner could no longer avail of
rescission because said legal recourse was time barred judging from delivery of the water purifier on
September 13, 1986 pursuant to Art. 1571 of the New Civil Code.
The petition is impressed with merit.
Anent the jurisdictional competence of the Metropolitan Trial Court to order rescission of contract,
suffice it to say that the action was initiated by herein private respondent Electrolux when it filed a
complaint for collection of a sum of money worth P14,540.00, against petitioner Villostas. Said
amount is indubitably within the jurisdiction of the Metropolitan Trial Court since it does not exceed
P20,000.00 exclusive of interest and costs but inclusive of damages of whatever (Maceda v. CA,
G.R. No. 83545, 176 SCRA 440 [1989]). Moreover, the jurisdiction of the court over the subject
matter is determined by the allegations of the complaint irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein (Caparros v. CA, G.R. No. 56803,
170 SCRA 758 [1989]). When the petitioner, therefore, raised rescission of contract in her answer,
the court is not divested of its jurisdiction over the case on account of defenses raised by the answer.
The court is then merely authorized to receive evidence thereon (Dela Cruz v. Bautista, G.R. No.
39692, 186 SCRA 517, [1990]). Clearly, the jurisdiction of the court cannot be made to depend upon
the defenses set up in the answer or upon the motion to dismiss. Otherwise, the question of
jurisdiction would depend almost entirely upon the defendant (Caparros v. CA, supra).
As regards the contention that the action for rescission is barred by prescription under Art. 1571 of
the Civil Code, the same is bereft of merit. It must be pointed out that at the time the Electrolux Aqua
Guard water purifier was delivered and installed at petitioner Villostas' residence, a Warranty
Certificate was issued by private respondent Electrolux which reads:
"ELECTROLUX MARKETING, INCORPORATED WARRANTS THIS QUALITY ELECTROLUX
PRODUCT TO PERFORM EFFICIENTLY FOR ONE FULL YEAR FROM DATE OF ORIGINAL
PURCHASE."

The foregoing is clearly an express warranty regarding the efficiency of the water purifier. On this
regard the court said that while it is true that Article 1571 of the Civil Code provides for a prescriptive
period of six months for a redhibitory action, a cursory reading of the ten preceding articles to which
it refers will reveal that said rule may be applied only in case of implied warranties. The present case
involves one with an express warranty. Consequently, the general rule on rescission of contract,
which is four years (Article 1389, Civil Coded) shall apply (Moles v. IAC, G.R. No. 73913, 169 SCRA
777 [1989]). Inasmuch as the instant case involves an express warranty, the filing of petitioner's
amended answer on September 30, 1988 is well within the four-year prescriptive period for
rescission of contract from September 13, 1986, which was the delivery date of the unit.
PREMISES CONSIDERED, the decision appealed from is REVERSED and SET ASIDE and the
complaint of private respondent is DISMISSED. The sale of the water purifier is hereby
RESCINDED.
SO ORDERED.

mcq in civil law with answers

(1)When does a declaration of absence of a missing person take effect?
(A) Immediately from the issuance of the declaration of absence.
(B) 3 months after the publication of the declaration of absence.
(C) 6 months after the publication of the declaration of absence.
(D) 15 days from the issuance of the declaration of absence.
(2) The authority that school administrators exercise over school children under their supervision,
instruction, or custody is called
(A) legal parental authority.
(B) substitute parental authority.
(C) ordinary parental authority.
(D) special parental authority.
(3) Can future inheritance be the subject of a contract of sale?
(A) No, since it will put the predecessor at the risk of harm from a tempted buyer, contrary to
public policy.
(B) Yes, since the death of the decedent is certain to occur.
(C) No, since the seller owns no inheritance while his predecessor lives.
(D) Yes, but on the condition that the amount of the inheritance can only be ascertained after
the obligations of the estate have been paid.
(4) Upon the proposal of a third person, a new debtor substituted the original debtor without the
latters consent. The creditor accepted the substitution. Later, however, the new debtor became

insolvent and defaulted in his obligation. What is the effect of the new debtors default upon the
original debtor?
(A) The original debtor is freed of liability since novation took place and this relieved him of
his obligation.
(B) The original debtor shall pay or perform the obligation with recourse to the new debtor.
(C) The original debtor remains liable since he gave no consent to the substitution.
(D) The original debtor shall pay or perform 50% of the obligation to avoid unjust enrichment
on his part.
(5) Lennie bought a business class ticket from Alta Airlines. As she checked in, the manager
downgraded her to economy on the ground that a Congressman had to be accommodated in the
business class. Lennie suffered the discomfort and embarrassment of the downgrade. She sued the
airlines for quasi-delict but Alta Airlines countered that, since her travel was governed by a contract
between them, no quasi-delict could arise. Is the airline correct?
(A) No, the breach of contract may in fact be tortious as when it is tainted as in this case with
arbitrariness, gross bad faith, and malice.
(B) No, denying Lennie the comfort and amenities of the business class as provided in the
ticket is a tortious act.
(C) Yes, since the facts show a breach of contract, not a quasi-delict.
(D) Yes, since quasi-delict presupposes the absence of a pre-existing contractual relation
between the parties.
(6) Which of the following is an indispensable requirement in an action for "quieting of title" involving
real property? The plaintiff must
(A) be in actual possession of the property.
(B) be the registered owner of the property.
(C) have legal or equitable title to the property.
(D) be the beneficial owner of the property.
(7) X and Y were to marry in 3 months. Meantime, to express his affection, X donated a house and
lot to Y, which donation X wrote in a letter to Y. Y wrote back, accepting the donation and took
possession of the property. Before the wedding, however, Y suddenly died of heart attack. Can Ys
heirs get the property?
(A) No, since the marriage did not take place.
(B) Yes, since all the requisites of a donation of an immovable are present.
(C) No, since the donation and its acceptance are not in a public instrument.
(D) Yes, since X freely donated the property to Y who became its owner.

(8) Rene and Lily got married after a brief courtship. After one month, Lily discovered that while
Rene presented himself as a macho man he was actually gay. He would not go to bed with her. He
kept obscene magazines of nude men and always sought the company of handsome boys. What
legal remedy does Lily have?
(A) She can file an action for annulment of marriage on ground of fraud.
(B) She can seek a declaration of nullity of the marriage based on Renes psychological
incapacity.
(C) She can go abroad and file for divorce in a country that can grant it.
(D) She has none since she had the opportunity to examine the goods and freely entered
into the marriage.
(9) Lucio executed a simple deed of donation of P50 million on time deposit with a bank in favor of A,
B, C, D, and E, without indicating the share of each donee. All the donees accepted the donation in
writing. A, one of the donees, died. Will B, C, D, and E get As share in the money?
(A) Yes, accretion will automatically apply to the joint-donees in equal shares.
(B) Yes, since the donors intention is to give the whole of P50 million to the jointdonees in
equal shares.
(C) No, A"s share will revert to the donor because accretion applies only if the joint-donees
are spouses.
(D) No, As share goes to his heirs since the donation did not provide for reversion to donor.
(10) Raul, Ester, and Rufus inherited a 10-hectare land from their father. Before the land could be
partitioned, however, Raul sold his hereditary right to Raffy, a stranger to the family, for P5 million. Do
Ester and Rufus have a remedy for keeping the land within their family?
(A) Yes, they may be subrogated to Raffys right by reimbursing to him within the required
time what he paid Raul.
(B) Yes, they may be subrogated to Raffys right provided they buy him out before he
registers the sale.
(C) No, they can be subrogated to Raffys right only with his conformity.
(D) No, since there was no impediment to Raul selling his inheritance to a stranger.
(11) When one exercises a right recognized by law, knowing that he thereby causes an injustice to
another, the latter is entitled to recover damages. This is known as the principle of
(A) res ipsa loquitur.
(B) damnum absque injuria.
(C) vicarious liability.
(D) abuse of rights.

(12) Which of the following is NOT a basis for rendering a disinheritance defective or imperfect?
(A) Its cause comes from the guilt of a spouse in a legal separation case, the innocentspouse having died.
(B) The truth of its cause is denied and not sufficiently proved by evidence.
(C) Its cause is not authorized by the law.
(D) Its cause is not specified.
(13) Manuel came to Manila and married Marianne. Unknown to Marianne, Manuel had been
previously convicted in Palawan of theft and served time for it. After Marianne learned of his previous
conviction, she stopped living with him. Can Marianne seek the annulment of the marriage based on
Manuels nondisclosure of his previous crime?
(A) No, since the assumption is that marriage forgives all past wrongs.
(B) Yes, since the non-disclosure of that crime is the equivalent of fraud, which is a ground
for annulment.
(C) No, in case of doubt, the law must be construed to preserve the institution of marriage.
(D) No, since Manuel already served the penalty for his crime.
(14) Arthur and Helen, both Filipinos, got married and had 2 children. Arthur later worked in Rome
where he acquired Italian citizenship. He got a divorce from Helen in Rome but, on returning to the
Philippines, he realized his mistake, asked forgiveness of his wife, and resumed living with her. They
had 2 more children. What is the status of their 4 children?
(A) The children born before the divorce are legitimate but those born after it are not since
Arthur got the divorce when he had ceased to be a Filipino.
(B) The divorce rendered illegitimate the children born before it since the marriage that begot
them had been nullified.
(C) The children born before and after the divorce are all legitimate since Philippine law does
not recognize divorce.
(D) All the children are legitimate since they were born of the same father and mother.
(15) Who can make a donation?
(A) All persons who can enter into contracts and dispose of their property.
(B) All persons who are of legal age and suffer from no civil interdiction.
(C) All persons who can make a last will and testament.
(D) All persons, whether natural or artificial, who own property.
(16) The liability of the partners, including industrial partners for partnership contracts entered into in
its name and for its account, when all partnership assets have been exhausted is

(A) Pro-rata.
(B) Joint.
(C) Solidary.
(D) Voluntary.
(17) When can a missing person who left someone to administer his property be declared an
absentee by the court? When he has been missing for
(A) 2 years from the receipt of the last news about him.
(B) 7 years from the receipt of the last news about him.
(C) 10 years from the receipt of the last news about him.
(D) 5 years from the receipt of the last news about him.
(18) Which of the following claims against the debtor enjoys preference over the others with respect
to his specific immovable property and real rights?
(A) Unpaid price of real property sold, upon the immovable property.
(B) Mortgage credits recorded in the registry of property, upon the mortgaged real estate.
(C) Taxes due, upon the land or building.
(D) Expenses for the preservation and improvement of property, when the law authorizes
reimbursement, upon the preserved or improved immovable.
(19) When bilateral contracts are vitiated with vices of consent, they are rendered
(A) rescissible.
(B) void.
(C) unenforceable.
(D) voidable.
(20) An agent, authorized by a special power of attorney to sell a land belonging to the principal
succeeded in selling the same to a buyer according to the instructions given the agent. The agent
executed the deed of absolute sale on behalf of his principal two days after the principal died, an
event that neither the agent nor the buyer knew at the time of the sale. What is the standing of the
sale?
(A) Voidable.
(B) Valid.
(C) Void.
(D) Unenforceable.

(21) Spouses A and B leased a piece of land belonging to B's parents for 25 years. The spouses
built their house on it worth P300,000.00. Subsequently, in a case that C filed against A and B, the
court found the latter liable to C for P200,000.00. When the sheriff was attaching their house for the
satisfaction of the judgment, A and B claimed that it was exempt from execution, being a family
home. Is this claim correct?
(A) Yes, because while Bs parents own the land, they agreed to have their daughter build
her family home on it.
(B) No, because there is no judicial declaration that it is a family home.
(C) No, since the land does not belong to A and B, it cannot qualify as a family home.
(D) Yes, because the A and Bs family actually lives in that house.
(22) Solomon sold his coconut plantation to Aragon, Inc. for P100 million, payable in installments of
P10 million per month with 6% interest per annum. Solomon married Lorna after 5 months and they
chose conjugal partnership of gains to govern their property relations. When they married, Aragon
had an unpaid balance of P50 million plus interest in Solomons favor. To whom will Aragons
monthly payments go after the marriage?
(A) The principal shall go to the conjugal partnership but the interests to Solomon.
(B) Both principal and interests shall go to Solomon since they are his exclusive properties.
(C) Both principal and interests shall go to the conjugal partnership since these become due
after the marriage.
(D) The principal shall go to Solomon but the interests to the conjugal partnership.
(23) X and Y, although not suffering from any impediment, cohabited as husband and wife without
the benefit of marriage. Following the birth of their child, the couple got married. A year after,
however, the court annulled the marriage and issued a decree of annulment. What is the present
status of the child?
(A) Legitimated.
(B) Illegitimate.
(C) Natural child.
(D) Legitimate.
(24) When A and B married, they chose conjugal partnership of gains to govern their property
relations. After 3 years, B succeeded in getting her marriage to A annulled on ground of the latters
psychological incapacity. What liquidation procedure will they follow in disposing of their assets?
(A) They will follow the rule governing the liquidation of a conjugal partnership of gains where
the party who acted in bad faith forfeits his share in the net profits.
(B) Since the marriage has been declared void, the rule for liquidation of absolute community
of property shall be followed.

(C) The liquidation of a co-ownership applies since the annulment brought their property
relation under the chapter on property regimes without marriage.
(D) The law on liquidation of partnerships applies.
(25) X and Y agreed verbally before their marriage (a) on the paternity of the illegitimate child of Y
and (b) on the economic regime that will govern X and Ys property relations. Is the verbal
agreement valid?
(A) No, because a marriage settlement to be valid should be in writing.
(B) Yes, since ante-nuptial agreements need not be in writing.
(C) No, because a marriage settlement cannot include an agreement on the paternity of an
illegitimate child.
(D) Yes, since even if it is not a valid marriage settlement, it is a valid verbal contract.
(26) Spouses X and Y have a minor daughter, Z, who needs support for her education. Both X and Y,
who are financially distressed, could not give the needed support to Z. As it happens, Zs other
relatives are financially capable of giving that support. From whom may Z first rightfully demand
support? From her
(A) grandfather.
(B) brother.
(C) uncle.
(D) first cousin.
(27) Fidel, a Filipino with fair complexion, married Gloria. Before the marriage, Gloria confessed to
Fidel that she was two-month pregnant with the child of a black African who had left the country for
good. When the child was born, Fidel could not accept it being too black in complexion. What is the
status of the child?
(A) Illegitimate, because Gloria confessed that the child is not Fidels.
(B) Illegitimate, because by the color of its skin, the child could not possibly be that of Fidel.
(C) Legitimate, because the child was born within a valid marriage.
(D) Legitimate, because Fidel agreed to treat the child as his own after Gloria told him who
the father was.
(28) The husbands acts of forcibly ejecting his wife without just cause from the conjugal dwelling and
refusing to take her back constitutes
(A) desertion.
(B) recrimination.
(C) constructive abandonment.

(D) de facto separation.

(29) In his will, the testator designated X as a legatee to receive P2 million for the purpose of buying
an ambulance that the residents of his Barangay can use. What kind of institution is this?
(A) a fideicomissary institution.
(B) a modal institution.
(C) a conditional institution.
(D) a collective institution.
(30) X insured himself for P5 million, designating Y, his wife, as his sole beneficiary. The designation
was irrevocable. A few years later, X had their marriage annulled in court on the ground that Y had
an existing prior marriage. X subsequently died, Is Y entitled to the insurance benefits?
(A) Yes, since the insurance was not dependent on the marriage.
(B) Yes, since her designation as beneficiary was irrevocable.
(C) No, Xs designation of Y is revoked by operation of law upon the annulment of their
marriage based on Ys fault.
(D) Yes, since without judicial revocation, Xs designation of Y remains valid and binding.
(31) May a spouse freely donate communal or conjugal property without the consent of the other?
(A) Absolutely not, since the spouses co-own such property.
(B) Yes, for properties that the family may spare, regardless of value.
(C) Yes, provided the donation is moderate and intended for charity or family rejoicing.
(D) Yes, in a donation mortis causa that the donor may still revoke in his lifetime.
(32) The decedent died intestate leaving an estate of P10 million. He left the following heirs: a)
Marlon, a legitimate child and b) Cecilia, the legal spouse. Divide the estate.
(A) Marlon gets 1/4 and Cecilia gets 3/4.
(B) Marlon gets 2/3 and Cecilia 1/3.
(C) Marlon gets 1/2 and Cecilia gets 1/2.
(D) Marlon gets 3/4 and Cecilia 1/4.
(33) Contracts take effect only between the parties or their assigns and heirs, except where the
rights and obligations arising from the contract are not transmissible by their nature, by stipulation, or
by provision of law. In the latter case, the assigns or the heirs are not bound by the contracts. This is
known as the principle of
(A) Relativity of contracts.
(B) Freedom to stipulate.

(C) Mutuality of contracts.

(D) Obligatory force of contracts.
(34) A buyer ordered 5,000 apples from the seller at P20 per apple. The seller delivered 6,000
apples. What are the rights and obligations of the buyer?
(A) He can accept all 6,000 apples and pay the seller at P20 per apple.
(B) He can accept all 6,000 apples and pay a lesser price for the 1,000 excess apples.
(C) He can keep the 6,000 apples without paying for the 1,000 excess since the seller
delivered them anyway.
(D) He can cancel the whole transaction since the seller violated the terms of their
agreement.
(35) Lino entered into a contract to sell with Ramon, undertaking to convey to the latter one of the
five lots he owns, without specifying which lot it was, for the price of P1 million. Later, the parties
could not agree which of five lots he owned Lino undertook to sell to Ramon. What is the standing of
the contract?
(A) Unenforceable.
(B) Voidable.
(C) Rescissible.
(D) Void.
(36) Knowing that the car had a hidden crack in the engine, X sold it to Y without informing the latter
about it. In any event, the deed of sale expressly stipulated that X was not liable for hidden defects.
Does Y have the right to demand from X a reimbursement of what he spent to repair the engine plus
damages?
(A) Yes. X is liable whether or not he was aware of the hidden defect.
(B) Yes, since the defect was not hidden; X knew of it but he acted in bad faith in not
disclosing the fact to Y.
(C) No, because Y is in estoppel, having changed engine without prior demand.
(D) No, because Y waived the warranty against hidden defects.
(37) Acme Cannery produced sardines in cans known as "Sards." Mylene bought a can of Sards
from a store, ate it, and suffered from poisoning caused by a noxious substance found in the
sardines. Mylene filed a case for damages against Acme. Which of the following defenses will hold?
(A) The expiry date of the "Sards" was clearly printed on its can, still the store sold and
Mylene bought it.
(B) Mylene must have detected the noxious substance in the sardines by smell, yet she still
ate it.

(C) Acme had no transaction with Mylene; she bought the "Sards" from a store, not directly
from Acme.
(D) Acme enjoys the presumption of safeness of its canning procedure and Mylene has not
overcome such presumption.
(38) Fernando executed a will, prohibiting his wife Marina from remarrying after his death, at the pain
of the legacy of P100 Million in her favor becoming a nullity. But a year after Fernandos death,
Marina was so overwhelmed with love that she married another man. Is she entitled to the legacy,
the amount of which is well within the capacity of the disposable free portion of Fernandos estate?
(A) Yes, since the prohibition against remarrying is absolute, it is deemed not written.
(B) Yes, because the prohibition is inhuman and oppressive and violates Marinas rights as a
free woman.
(C) No, because the nullity of the prohibition also nullifies the legacy.
(D) No, since such prohibition is authorized by law and is not repressive; she could remarry
but must give up the money.
(39) X, the owner, constituted a 10-year usufruct on his land as well as on the building standing on it
in Ys favor. After flood totally destroyed the building 5 years later, X told Y that an act of God
terminated the usufruct and that he should vacate the land. Is X, the owner of the land, correct?
(A) No, since the building was destroyed through no fault of Y.
(B) No, since Y still has the right to use the land and the materials left on it.
(C) Yes, since Y cannot use the land without the building.
(D) Yes, since the destruction of the building without the Xs fault terminated the usufruct.
(40) In gratitude, the grooms parents made a donation of a property in writing to the brides parents
shortly before their childrens wedding. The donation was accepted. What is the nature of the
donation?
(A) It is an ordinary donation since it was not given to the bride or groom.
(B) It is donation propter nuptias since it was given with the marriage in mind.
(C) It is an indirect donation propter nuptias since the bride would eventually inherit the
property from her parents.
(D) It is a remunatory donation.
(41) X and Y, both Filipinos, were married and resided in Spain although they intend to return to the
Philippines at some future time. They have not executed any marriage settlements. What law
governs their property relations?
(A) They may choose between Spanish law and Philippine law.
(B) Philippine law since they are both Filipinos.

(C) No regime of property relations will apply to them.

(D) Spanish law since they live in Spain.
(42) Birth determines personality. Death extinguishes it. Under what circumstances may the
personality of a deceased person continue to exist?
(A) In case of re-appearance of a missing person presumed dead.
(B) In protecting the works of a deceased under intellectual property laws.
(C) In case of declaration of presumptive death of a missing spouse.
(D) In the settlement of the estate of a deceased person.
(43) Six tenants sued X, the landowner, for willfully denying them water for their farms, which water
happened to flow from land under Xs control, his intention being to force them to leave his
properties. Is X liable for his act and why?
(A) No, because the tenants must be content with waiting for rainfall for their farms.
(B) No, since X owns both the land and the water.
(C) Yes, because the tenants farms have the natural right of access to water wherever it is
located.
(D) Yes, since X willfully caused injury to his tenants contrary to morals, good customs or
public policy.
(44) Illegitimate brothers and sisters, whether of full or half-blood, are bound to support each other,
EXCEPT when
(A) the brother or sister who needs support lives in another place.
(B) such brothers and sisters are not recognized by their father.
(C) the brother or sister in need stops schooling without valid reason.
(D) the need for support of a brother or sister, already of age, is due to the latter's fault.
(45) Virgilio owned a bare and simple swimming pool in his garden. MB, a 7-year old child,
surreptitiously entered the garden and merrily romped around the ledges of the pool. He accidentally
tripped, fell into the pool, and drowned. MBs parents sued Virgilio for damages arising from their
childs death, premised on the principle of "attractive nuisance". Is Virgilio liable for the death of MB?
(A) No, the child was 7 years old and knew the dangers that the pool offered.
(B) Yes, being an attractive nuisance, Virgilio had the duty to prevent children from coming
near it.
(C) No, since the pool was bare and had no enticing or alluring gadgets, floats, or devices in
it that would attract a 7-year old child.

(D) Yes, since Virgilio did not cover the swimming pool while not in use to prevent children
from falling into it.
(46) The term of a 5-year lease contract between X the lessor and Y the lessee, where rents were
paid from month to month, came to an end. Still, Y continued using the property with Xs consent. In
such a case, it is understood that they impliedly renewed the lease
(A) from month to month under the same conditions as to the rest.
(B) under the same terms and conditions as before.
(C) under the same terms except the rent which they or the court must fix.
(D) for only a year, with the rent raised by 10% pursuant to the rental control law.
(47) Rex, a philanthropist, donated a valuable lot to the municipality on the condition that it will build
a public school on such lot within 2 years from its acceptance of the donation. The municipality
properly accepted the donation but did not yet build the public school after 2 years. Can Rex revoke
the donation?
(A) Yes, since the donation is subject to a resolutory condition which was not fulfilled.
(B) No, but Rex is entitled to recover the value of the land from the municipality.
(C) No, the transfer of ownership has been completed.
(D) Yes, the donation is not deemed made until the suspensive condition has been fulfilled.
(48) Illegitimate children, those not recognized by their biological fathers, shall use the surname of
their
(A) biological father subject to no condition.
(B) mother or biological father, at the mothers discretion.
(C) mother.
(D) biological father unless he judicially opposes it.
(49) Asiong borrowed P1 million from a bank, secured by a mortgage on his land. Without his
consent, his friend Boyong paid the whole loan. Since Asiong benefited from the payment, can
Boyong compel the bank to subrogate him in its right as mortgagee of Asiong's land?
(A) No, but the bank can foreclose and pay Boyong back.
(B) No, since Boyong paid for Asiongs loan without his approval.
(C) Yes, since a change of creditor took place by novation with the banks consent.
(D) Yes, since it is but right that Boyong be able to get back his money and, if not, to
foreclose the mortgage in the manner of the bank.

(50) Congress passed a law imposing taxes on income earned out of a particular activity that was
not previously taxed. The law, however, taxed incomes already earned within the fiscal year when the
law took effect. Is the law valid?
(A) No, because laws are intended to be prospective, not retroactive.
(B) No, the law is arbitrary in that it taxes income that has already been spent.
(C) Yes, since tax laws are the lifeblood of the nation.
(D) Yes, tax laws are an exception; they can be given retroactive effect.
(51) Rudolf borrowed P1 million from Rodrigo and Fernando who acted as solidary creditors. When
the loan matured, Rodrigo wrote a letter to Rudolf, demanding payment of the loan directly to him.
Before Rudolf could comply, Fernando went to see him personally to collect and he paid him. Did
Rudolf make a valid payment?
(A) No, since Rudolf should have split the payment between Rodrigo and Fernando.
(B) No, since Rodrigo, the other solidary creditor, already made a prior demand for payment
from Rudolf.
(C) Yes, since the payment covers the whole obligation.
(D) Yes, since Fernando was a solidary creditor, payment to him extinguished the obligation.
(52) What happens to the property regimes that were subsisting under the New Civil Code when the
Family Code took effect?
(A) The original property regimes are immutable and remain effective.
(B) Those enjoying specific regimes under the New Civil Code may adopt the regime of
absolute community of property under the Family Code.
(C) Those that married under the New Civil Code but did not choose any of its regimes shall
now be governed by the regime of absolute community of property.
(D) They are superseded by the Family Code which has retroactive effect.
(53) The testator executed a will following the formalities required by the law on succession without
designating any heir. The only testamentary disposition in the will is the recognition of the testator's
illegitimate child with a popular actress. Is the will valid?
(A) Yes, since in recognizing his illegitimate child, the testator has made him his heir.
(B) No, because the non-designation of heirs defeats the purpose of a will.
(C) No, the will comes to life only when the proper heirs are instituted.
(D) Yes, the recognition of an illegitimate heir is an ample reason for a will.
(54) A left B, his wife, in the Philippines to work in Egypt but died in that country after a years
continuous stay. Two months after As death, B gave birth to a child, claiming it is As child. Who can
assail the legitimacy of the child?

(A) As other heirs apart from B.

(B) The State which has interest in the welfare of overseas contract workers.
(C) Any one who is outraged by Bs claim.
(D) No one since A died.
(55) QR and TS who had a marriage license requested a newly appointed Judge in Manila to marry
them on the beach of Boracay. Since the Judge maintained Boracay as his residence, he agreed.
The sponsors were all public officials. What is the status of the marriage.
(A) Valid, since the improper venue is merely an irregularity; all the elements of a valid
marriage are present.
(B) Void, because the couple did not get local permit for a beach wedding.
(C) Voidable, because the Judge acted beyond his territorial jurisdiction and is
administratively liable for the same.
(D) Void, because the Judge did not solemnize the marriage within the premises of his court.
(56) X and Y, Filipinos, got married in Los Angeles, USA, using a marriage license issued by the
Philippine consul in Los Angeles, acting as Civil Registrar. X and Y did not know that they were first
cousins because their mothers, who were sisters, were separated when they were quite young.
Since X did not want to continue with the relation when he heard of it, he left Y, came to the
Philippines and married Z. Can X be held liable for bigamy?
(A) No since Xs marriage to Y is void ab initio or did not exist.
(B) No since X acted in good faith, conscious that public policy did not approve of marriage
between first cousins.
(C) Yes since he married Z without first securing a judicial declaration of nullity of his
marriage to Y.
(D) Yes since his first marriage to Y in Los Angeles is valid.
(57) Allan bought Billys property through Carlos, an agent empowered with a special power of
attorney (SPA) to sell the same. When Allan was ready to pay as scheduled, Billy called, directing
Allan to pay directly to him. On learning of this, Carlos, Billy's agent, told Allan to pay through him as
his SPA provided and to protect his commission. Faced with two claimants, Allan consigned the
payment in court. Billy protested, contending that the consignation is ineffective since no tender of
payment was made to him. Is he correct?
(A) No, since consignation without tender of payment is allowed in the face of the conflicting
claims on the plaintiff.
(B) Yes, as owner of the property sold, Billy can demand payment directly to himself.
(C) Yes, since Allan made no announcement of the tender.
(D) Yes, a tender of payment is required for a valid consignation.

(58) X sold Y 100 sacks of rice that Y was to pick up from Xs rice mill on a particular date. Y did not,
however, appear on the agreed date to take delivery of the rice. After one week, X automatically
rescinded the sale without notarial notice to Y. Is the rescission valid?
(A) Yes, automatic rescission is allowed since, having the character of movables and
consumables, rice can easily deteriorate.
(B) No, the buyer is entitled to a customary 30-day extension of his obligation to take delivery
of the goods.
(C) No, since there was no express agreement regarding automatic rescission.
(D) No, the seller should first determine that Y was not justified in failing to appear.
(59) The wife filed a case of legal separation against her husband on the ground of sexual infidelity
without previously exerting earnest efforts to come to a compromise with him. The judge dismissed
the case for having been filed without complying with a condition precedent. Is the dismissal proper?
(A) No, efforts at a compromise will only deepen the wifes anguish.
(B) No, since legal separation like validity of marriage is not subject to compromise
agreement for purposes of filing.
(C) Yes, to avoid a family feud that is hurtful to everyone.
(D) Yes, since the dispute could have been settled with the parties agreeing to legal
separation.
(60) An Australian living in the Philippines acquired shares of stock worth P10 million in food
manufacturing companies. He died in Manila, leaving a legal wife and a child in Australia and a livein partner with whom he had two children in Manila. He also left a will, done according to Philippine
laws, leaving all his properties to his live-in partner and their children. What law will govern the
validity of the disposition in the will?
(A) Australia law since his legal wife and legitimate child are Australians and domiciled in
Australia.
(B) Australian law since the intrinsic validity of the provisions of a will is governed by the
decedents national law.
(C) Philippine law since the decedent died in Manila and he executed his will according to
such law.
(D) Philippine law since the decedents properties are in the Philippines.
(61) X bought a land from Y, paying him cash. Since they were friends, they did not execute any
document of sale. After 7 years, the heirs of X asked Y to execute a deed of absolute sale to
formalize the verbal sale to their father. Unwilling to do so, Xs heirs filed an action for specific
performance against Y. Will their action prosper?
(A) No, after more than 6 years, the action to enforce the verbal agreement has already
elapsed.

(B) No, since the sale cannot under the Statute of Frauds be enforced.
(C) Yes, since X bought the land and paid Y for it.
(D) Yes, after full payment, the action became imprescriptible.
(62) A court declared Ricardo, an old bachelor, an absentee and appointed Cicero administrator of
his property. After a year, it was discovered that Ricardo had died abroad. What is the effect of the
fact of his death on the administration of his property?
(A) With Ricardo no longer an absentee but a deceased person, Cicero will cease to be
administrator of his properties.
(B) The administration shall be given by the court having jurisdiction over the intestate
proceedings to a new administrator whom it will appoint.
(C) Cicero automatically becomes administrator of Ricardos estate until judicially relieved.
(D) Ciceros alienations of Ricardo's property will be set aside.
(63) Baldo, a rejected suitor, intimidated Judy into marrying him. While she wanted to question the
validity of their marriage two years after the intimidation ceased, Judy decided in the meantime to
freely cohabit with Baldo. After more than 5 years following their wedding, Judy wants to file a case
for annulment of marriage against Baldo on ground of lack of consent. Will her action prosper?
(A) Yes, the action for annulment is imprescriptible.
(B) No, since the marriage was merely voidable and Judy ratified it by freely cohabiting with
Baldo after the force and intimidation had ceased .
(C) No, since the action prescribed 5 years from the date of the celebration of the marriage.
(D) Yes, because the marriage was celebrated without Judy's consent freely given.
(64) Is the wife who leaves her husband without just cause entitled to support?
(A) No, because the wife must always be submissive and respectful to the husband.
(B) Yes. The marriage not having been dissolved, the husband continues to have an
obligation to support his wife.
(C) No, because in leaving the conjugal home without just cause, she forfeits her right to
support.
(D) Yes, since the right to receive support is not subject to any condition.
(65) In the order of intestate succession where the decedent is legitimate, who is the last intestate
heirs or heir who will inherit if all heirs in the higher level are disqualified or unable to inherit?
(A) Nephews and nieces.
(B) Brothers and sisters.
(C) State.

(D) Other collateral relatives up to the 5th degree of consanguinity.

(66) Roy and Carlos both undertook a contract to deliver to Sam in Manila a boat docked in Subic.
Before they could deliver it, however, the boat sank in a storm. The contract provides that fortuitous
event shall not exempt Roy and Carlos from their obligation. Owing to the loss of the motor boat,
such obligation is deemed converted into one of indemnity for damages. Is the liability of Roy and
Carlos joint or solidary?
(A) Neither solidary nor joint since they cannot waive the defense of fortuitous event to which
they are entitled.
(B) Solidary or joint upon the discretion of Sam.
(C) Solidary since Roy and Carlos failed to perform their obligation to deliver the motor boat.
(D) Joint since the conversion of their liability to one of indemnity for damages made it joint.
(67) Joanne married James, a person with no known relatives. Through James' hard work, he and
his wife Joane prospered. When James died, his estate alone amounted to P100 million. If, in his
will, James designates Joanne as his only heir, what will be the free portion of his estate.
(A) Joanne gets all; estate has no free portion left.
(B) Joanne gets 1/2; the other half is free portion.
(C) Joanne gets 1/3; the remaining 2/3 is free portion.
(D) Joanne gets 1/4; the remaining 3/4 is free portion.
(68) A warranty inherent in a contract of sale, whether or not mentioned in it, is known as the
(A) warranty on quality.
(B) warranty against hidden defects.
(C) warranty against eviction.
(D) warranty in merchantability.
(69) The doctrine of stare decisis prescribes adherence to precedents in order to promote the
stability of the law. But the doctrine can be abandoned
(A) When adherence to it would result in the Governments loss of its case.
(B) When the application of the doctrine would cause great prejudice to a foreign national.
(C) When necessary to promote the passage of a new law.
(D) When the precedent has ceased to be beneficial and useful.
(70) Ric and Josie, Filipinos, have been sweethearts for 5 years. While working in a European
country where the execution of joint wills are allowed, the two of them executed a joint holographic
will where they named each other as sole heir of the other in case either of them dies. Unfortunately,
Ric died a year later. Can Josie have the joint will successfully probated in the Philippines?

(A) Yes, in the highest interest of comity of nations and to honor the wishes of the deceased.
(B) No, since Philippine law prohibits the execution of joint wills and such law is binding on
Ric and Josie even abroad.
(C) Yes, since they executed their joint will out of mutual love and care, values that the
generally accepted principles of international law accepts.
(D) Yes, since it is valid in the country where it was executed, applying the principle of "lex
loci celebrationis."
(71) ML inherited from his father P5 million in legitime but he waived it in a public instrument in favor
of his sister QY who accepted the waiver in writing. But as it happened, ML borrowed P6 million from
PF before the waiver. PF objected to the waiver and filed an action for its rescission on the ground
that he had the right to MLs P5 million legitime as partial settlement of what ML owed him since ML
has proved to be insolvent. Does PF, as creditor, have the right to rescind the waiver?
(A) No, because the waiver in favor of his sister QY amounts to a donation and she already
accepted it.
(B) Yes, because the waiver is prejudicial to the interest of a third person whose interest is
recognized by law.
(C) No, PF must wait for ML to become solvent and, thereafter, sue him for the unpaid loan.
(D) Yes, because a legitime cannot be waived in favor of a specific heir; it must be divided
among all the other heirs.
(72) While engaged to be married, Arnold and Josephine agreed in a public instrument to adopt out
the economic regime of absolute community of property. Arnold acknowledged in the same
instrument that Josephines daughter Mary, is his illegitimate child. But Josephine died before the
marriage could take place. Does the marriage settlement have any significance?
(A) None, since the instrument containing the marriage settlement is essentially void for
containing an unrelated matter.
(B) Yes, insofar as Arnold acknowledged Mary as his illegitimate child.
(C) None, since the marriage did not take place.
(D) Yes, if they acquired properties while living together as husband and wife.
(73) Joseph, a 17-year old Filipino, married Jenny, a 21-year old American in Illinois, USA, where the
marriage was valid. Their parents gave full consent to the marriage of their children. After three
years, Joseph filed a petition in the USA to promptly divorce Jenny and this was granted. When
Joseph turned 25 years, he returned to the Philippines and married Leonora. What is the status of
this second marriage?
(A) Void, because he did not cause the judicial issuance of declaration of the nullity of his
first marriage to Jenny before marrying Leonora.

(B) Valid, because Joseph's marriage to Jenny is void, he being only 17 years of age when
he married her.
(C) Valid, because his marriage to Leonora has all the elements of a valid marriage.
(D) Void, because Joseph is still considered married to Jenny since the Philippines does not
recognize divorce.
(74) T died intestate, leaving an estate of P9,000,000. He left as heirs three legitimate children,
namely, A, B, and C. A has two children, D and E. Before he died, A irrevocably repudiated his
inheritance from T in a public instrument filed with the court. How much, if any, will D and E, as As
children, get from Ts estate?
(A) Each of D and E will get P1,500,000 by right of representation since their father
repudiated his inheritance.
(B) Each of D and E will get P2,225,000 because they will inherit from the estate equally with
B and C.
(C) D and E will get none because of the repudiation; "B" and "C" will get As share by right of
accretion.
(D) Each of D and E will get P2,000,000 because the law gives them some advantage due to
the demise of "A".
(75) No decree of legal separation can be issued
(A) unless the childrens welfare is attended to first.
(B) without prior efforts at reconciliation shown to be futile.
(C) unless the court first directs mediation of the parties.
(D) without prior investigation conducted by a public prosecutor.
(76) X, who was abroad, phoned his brother, Y, authorizing him to sell Xs parcel of land in Pasay. X
sent the title to Y by courier service. Acting for his brother, Y executed a notarized deed of absolute
sale of the land to Z after receiving payment. What is the status of the sale?
(A) Valid, since a notarized deed of absolute sale covered the transaction and full payment
was made.
(B) Void, since X should have authorized agent Y in writing to sell the land.
(C) Valid, since Y was truly his brother Xs agent and entrusted with the title needed to effect
the sale.
(D) Valid, since the buyer could file an action to compel X to execute a deed of sale.
(77) In a true pacto de retro sale, the title and ownership of the property sold are immediately vested
in the vendee a retro subject only to the resolutory condition of repurchase by the vendor a retro
within the stipulated period. This is known as

(A) equitable mortgage.

(B) conventional redemption.
(C) legal redemption.
(D) equity of redemption.
(78) A natural obligation under the New Civil Code of the Philippines is one which
(A) the obligor has a moral obligation to do, otherwise entitling the obligee to damages.
(B) refers to an obligation in writing to do or not to do.
(C) the obligee may enforce through the court if violated by the obligor.
(D) cannot be judicially enforced but authorizes the obligee to retain the obligors payment or
performance.
(79) The husband assumed sole administration of the familys mango plantation since his wife
worked abroad. Subsequently, without his wifes knowledge, the husband entered into an antichretic
transaction with a company, giving it possession and management of the plantation with power to
harvest and sell the fruits and to apply the proceeds to the payment of a loan he got. What is the
standing of the contract?
(A) It is void in the absence of the wifes consent.
(B) It is void absent an authorization from the court.
(C) The transaction is void and can neither be ratified by the wife nor authorized by the court.
(D) It is considered a continuing offer by the parties, perfected only upon the wifes
acceptance or the courts authorization.
(80) When the donor gives donations without reserving sufficient funds for his support or for the
support of his dependents, his donations are
(A) Rescissible, since it results in economic lesion of more than 25% of the value of his
properties.
(B) Voidable, since his consent to the donation is vitiated by mindless kindness.
(C) Void, since it amounts to wanton expenditure beyond his means.
(D) Reducible to the extent that the donations impaired the support due to himself and his
dependents.
(81) Anne owed Bessy P1 million due on October 1, 2011 but failed to pay her on due date. Bessy
sent a demand letter to Anne giving her 5 days from receipt within which to pay. Two days after
receipt of the letter, Anne personally offered to pay Bessy in manager's check but the latter refused
to accept the same. The 5 days lapsed. May Annes obligation be considered extinguished?
(A) Yes, since Bessys refusal of the managers check, which is presumed funded, amounts
to a satisfaction of the obligation.

(B) No, since tender of payment even in cash, if refused, will not discharge the obligation
without proper consignation in court.
(C) Yes, since Anne tendered payment of the full amount due.
(D) No, since a managers check is not considered legal tender in the Philippines.
(82) The residents of a subdivision have been using an open strip of land as passage to the highway
for over 30 years. The owner of that land decided, however, to close it in preparation for building his
house on it. The residents protested, claiming that they became owners of the land through
acquisitive prescription, having been in possession of the same in the concept of owners, publicly,
peacefully, and continuously for more than 30 years. Is this claim correct?
(A) No, the residents have not been in continuous possession of the land since they merely
passed through it in going to the highway.
(B) No, the owner did not abandon his right to the property; he merely tolerated his
neighbors use of it for passage.
(C) Yes, residents of the subdivision have become owners by acquisitive prescription.
(D) Yes, community ownership by prescription prevails over private claims.
(83) The owner of a thing cannot use it in a way that will injure the right of a third person. Thus, every
building or land is subject to the easement which prohibits its proprietor or possessor from
committing nuisance like noise, jarring, offensive odor, and smoke. This principle is known as
(A) Jus vindicandi.
(B) Sic utere tuo ut alienum non laedas.
(C) Jus dispondendi.
(D) Jus abutendi.
(84) Janice and Jennifer are sisters. Janice sued Jennifer and Laura, Jennifers business partner for
recovery of property with damages. The complaint did not allege that Janice exerted earnest efforts
to come to a compromise with the defendants and that such efforts failed. The judge dismissed the
complaint outright for failure to comply with a condition precedent. Is the dismissal in order?
(A) No, since Laura is a stranger to the sisters, Janice has no moral obligation to settle with
her.
(B) Yes, since court should promote amicable settlement among relatives.
(C) Yes, since members of the same family, as parties to the suit, are required to exert
earnest efforts to settle their disputes before coming to court.
(D) No, the family council, which would ordinarily mediate the dispute, has been eliminated
under the Family Code.

(85) X borrowed money from a bank, secured by a mortgage on the land of Y, his close friend. When
the loan matured, Y offered to pay the bank but it refused since Y was not the borrower. Is the banks
action correct?
(A) Yes, since X, the true borrower, did not give his consent to Ys offer to pay.
(B) No, since anybody can discharge Xs obligation to his benefit.
(C) No, since Y, the owner of the collateral, has an interest in the payment of the obligation.
(D) Yes, since it was X who has an obligation to the bank.
(86) The right of a mortgagor in a judicial foreclosure to redeem the mortgaged property after his
default in the performance of the conditions of the mortgage but before the sale of the mortgaged
property or confirmation of the sale by the court, is known as
(A) accion publiciana.
(B) equity of redemption.
(C) pacto de retro.
(D) right of redemption.
(87) When does the regime of conjugal partnership of gains begin to exist?
(A) At the moment the parties take and declare each other as husband and wife before
officiating officer.
(B) At the time the spouses acquire properties through joint efforts.
(C) On the date the future spouses executed their marriage settlements because this is the
starting point of their marital relationship.
(D) On the date agreed upon by the future spouses in their marriage settlements since their
agreement is the law between them.
(88) Josie, 18, married Dante, 25, without her parents knowledge and consent, and lived with him.
After a year, Josie returned to her parents home, complained of the unbearable battering she was
getting from Dante, and expressed a desire to have her marriage with him annulled. Who may bring
the action?
(A) Dante.
(B) Her parents.
(C) Josie herself.
(D) The State.
(89) X, a married man, cohabited with Y, an unmarried woman. Their relation bore them BB, a baby
boy. Subsequently, after X became a widower, he married Y. Was BB legitimated by that marriage?
(A) Yes, since his parents are now lawfully married.

(B) Yes, since he is an innocent party and the marriage rectified the wrong done him.
(C) No, since once illegitimate, a child shall always remain illegitimate.
(D) No, since his parents were not qualified to marry each other when he was conceived.
(90) The presence of a vice of consent vitiates the consent of a party in a contract and this renders
the contract
(A) Rescissible.
(B) Unenforceable.
(C) Voidable.
(D) Void.
(91) Can common-law spouses donate properties of substantial value to one another?
(A) No, they are only allowed to give moderate gifts to each other during family rejoicing.
(B) No, they cannot give anything of value to each other to prevent placing their legitimate
relatives at a disadvantage.
(C) Yes, unlike the case of legally married spouses, such donations are not prohibited.
(D) Yes, as long as they leave sufficient property for themselves and for their dependents.
(92) X owed Y P1.5 million. In his will, X gave Y legacy of P1 million but the will provided that this
legacy is to be set off against the P1.5 million X owed Y. After the set off, X still owed Y P500,000.
Can Y still collect this amount?
(A) Yes, because the designation of Y as legatee created a new and separate juridical
relationship between them, that of testator-legatee.
(B) It depends upon the discretion of the probate court if a claim is filed in the testate
proceedings.
(C) No, because the intention of the testator in giving the legacy is to abrogate his entire
obligation to Y.
(D) No, because X had no instruction in his will to deliver more than the legacy of P1 million
to Y.
(93) Josie owned a lot worth P5 million prior to her marriage to Rey. Subsequently, their conjugal
partnership spent P3 million for the construction of a house on the lot. The construction resulted in
an increase in the value of the house and lot to P9 million. Who owns the house and the lot?
(A) Josie and the conjugal partnership of gains will own both on a 50-50 basis.
(B) Josie will own both since the value of the house and the increase in the propertys value
is less than her lots value; but she is to reimburse conjugal partnership expenses.

(C) Josie still owns the lot, it being her exclusive property, but the house belongs to the
conjugal partnership.
(D) The house and lot shall both belong to the conjugal partnership, with Josie entitled to
reimbursement for the value of the lot.
(94) An action for reconveyance of a registered piece of land may be brought against the owner
appearing on the title based on a claim that the latter merely holds such title in trust for the plaintiff.
The action prescribes, however, within 10 years from the registration of the deed or the date of the
issuance of the certificate of title of the property as long as the trust had not been repudiated. What
is the exception to this 10-year prescriptive period?
(A) When the plaintiff had no notice of the deed or the issuance of the certificate of title.
(B) When the title holder concealed the matter from the plaintiff.
(C) When fortuitous circumstances prevented the plaintiff from filing the case sooner.
(D) When the plaintiff is in possession of the property.
(95) Conrad and Linda, both 20 years old, applied for a marriage license, making it appear that they
were over 25. They married without their parents knowledge before an unsuspecting judge. After the
couple has been in cohabitation for 6 years, Lindas parents filed an action to annul the marriage on
ground of lack of parental consent. Will the case prosper?
(A) No, since only the couple can question the validity of their marriage after they became 21
of age; their cohabitation also convalidated the marriage.
(B) No, since Lindas parents made no allegations that earnest efforts have been made to
come to a compromise with Conrad and Linda and which efforts failed.
(C) Yes, since the marriage is voidable, the couple being below 21 years of age when they
married.
(D) Yes, since Lindas parents never gave their consent to the marriage.
(96) Pepito executed a will that he and 3 attesting witnesses signed following the formalities of law,
except that the Notary Public failed to come. Two days later, the Notary Public notarized the will in his
law office where all signatories to the will acknowledged that the testator signed the will in the
presence of the witnesses and that the latter themselves signed the will in the presence of the
testator and of one another. Was the will validly notarized?
(A) No, since it was not notarized on the occasion when the signatories affixed their
signatures on the will.
(B) Yes, since the Notary Public has to be present only when the signatories acknowledged
the acts required of them in relation to the will.
(C) Yes, but the defect in the mere notarization of the will is not fatal to its execution.
(D) No, since the notary public did not require the signatories to sign their respective
attestations again.

(97) Venecio and Ester lived as common-law spouses since both have been married to other
persons from whom they had been separated in fact for several years. Hardworking and bright, each
earned incomes from their respective professions and enterprises. What is the nature of their
incomes?
(A) Conjugal since they earned the same while living as husband and wife.
(B) Separate since their property relations with their legal spouses are still subsisting.
(C) Co-ownership since they agreed to work for their mutual benefit.
(D) Communal since they earned the same as common-law spouses.
(98) What is the prescriptive period for filing an action for revocation of a donation based on acts of
ingratitude of the donee?
(A) 5 years from the perfection of the donation.
(B) 1 year from the perfection of the donation.
(C) 4 years from the perfection of the donation.
(D) Such action does not prescribe.
(99) Before Karen married Karl, she inherited P5 million from her deceased mother which amount
she brought into the marriage. She later used part of the money to buy a new Mercedes Benz in her
name, which Karen and her husband used as a family car. Is the car a conjugal or Karens exclusive
property?
(A) It is conjugal property since the spouses use it as a family car.
(B) It is Karens exclusive property since it is in her name.
(C) It is conjugal property having been bought during the marriage.
(D) It is Karens exclusive property since she bought it with her own money.
(100) Because of Xs gross negligence, Y suffered injuries that resulted in the abortion of the foetus
she carried. Y sued X for, among other damages, P1 million for the death of a family member. Is Y
entitled to indemnity for the death of the foetus she carried?
(A) Yes, since the foetus is already regarded as a child from conception, though unborn.
(B) No, since Xs would not have known that the accident would result in Ys abortion.
(C) No, since birth determines personality, the accident did not result in the death of a person.
(D) Yes, since the mother believed in her heart that she lost a ch

G.R. No. L-67888 October 8, 1985 IMELDA ONG, ET AL.,

petitioners, vs. ALFREDO ONG, ET AL., respondents.

Article 741 of
the Civil Code provides that the requirement of the
acceptance of the donation in favor of minor by
parents of legal representatives applies only to
onerous and conditional donations where the
donation may have to assume certain charges or
burdens (Article 726, Civil Code). The acceptance by a legal guardian of a simple or pure
Moreover, even granting that the Quitclaim deed in question is a donation,

donation does not seem to be necessary (Perez vs. Calingo, CA-40 O.G. 53). Thus, Supreme Court

that the donation

to an incapacitated donee does not need the
acceptance by the lawful representative if said
donation does not contain any condition. In simple
and pure donation, the formal acceptance is not
important for the donor requires no right to be
protected and the donee neither undertakes to do
anything nor assumes any obligation. The Quitclaim now in
ruled in Kapunan vs. Casilan and Court of Appeals, (109 Phil. 889)

question does not impose any condition.

G.R. No. 97477 May 8, 1992 RTC JUDGE CAMILO E. TAMIN,

Presiding Judge, Regional Trial Court, Branch 23, Molave,
Zamboanga del Sur and the MUNICIPALITY OF DUMINGAG,
ZAMBOANGA DEL SUR; represented by MAYOR DOMICIANO
E. REAL, petitioners, vs. COURT OF APPEALS, VICENTE
MEDINA and FORTUNATA ROSELLON, respondents

A public plaza is outside the commerce of man and

constructions thereon can be abated summarily by the
municipality. We ruled in the case of Villanueva
v. Castaeda, Jr. (154 SCRA 142 [1987]):
Exactly in point is Espiritu v. Municipal Council of
Pozorrubio, (102 Phil. 869-870) where the
Supreme Court declared:

There is absolutely no question that the

town plaza cannot be used for the
construction of market stalls, specially of
residences, and that such structures
constitute a nuisance subject to
abatement according to law. Town
plazas are properties of public dominion,
to be devoted to public use and to be
made available to the public in general.
They are outside the commerce of man
and cannot be disposed of or even
leased by the municipality to private
parties.
Applying this well-settled doctrine, we rule that
petitioners had no right in the first place to
occupy the disputed premises and cannot insist
in remaining there now on the strength of their
alleged lease contracts. They should have
realized and accepted this earlier, considering
that even before Civil Case No. 2040 was
decided, the municipal council of San Fernando
had already adopted Resolution No. 29, series of
1964, declaring this area as the parking place
and public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the
said resolution of the municipal council of San
Fernando that respondent Macalino was seeking
to enforce when he ordered the demolition of the
stalls constructed in the disputed area. As officerin-charge of the office of the mayor, he had the
duty to clear the area and restore it to its
intended use as a parking place and public plaza

of the municipality of San Fernando, conformably

to the aforementioned orders from the court and
the council. It is, therefore, not correct to say that
he had acted without authority or taken the law
into his hands in issuing his order.
xxx xxx xxx
The Court observes that even without such
investigatiom and recommendation, the
respondent mayor was justified in ordering the
area cleared on the strength alone of its status as
a public plaza as declared by the judicial and
legislative authorities. . . .
G.R. No. 95279 July 25, 1991 ESTATE OF GREGORIA
FRANCISCO, herein represented by SILVESTRE F. TAN,
Administrator, petitioner, vs. HON. COURT OF APPEALS,
HON. SALVADOR A. MEMORACION, in his capacity as
Presiding Judge of the Regional Trial Court of Isabela, Basilan
Province, Branch 2, MUNICIPALITY OF ISABELA, Basilan
Province, herein represented by BENJAMIN VALENCIA, in his
capacity as Municipal Mayor, Isabela, Basilan Province,
ROGELIO L. IGOT, FELICISIMO PIOQUINTO, DANIEL
PADINAS, ANTONIO CABANGON, FELIX ROXAS, BENJAMIN
FERRER, GREGORIO TABADA, EFREN DELOS REYES,
FLORENCIO HUGO, JESUS FRANCISCO, ALFREDO TUBILAG,
PABLO ANDRES, respondents.
Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial
remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be
instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code,
Sec. 141 [2] [t]).
Respondents can not seek cover under the general welfare clause authorizing the abatement of
nuisances without judicial proceedings. That tenet applies to a nuisance per se or one which affects the
immediate safety of persons and property and may be summarily abated under the undefined law of
necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is
a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of

comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for
that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention.
The provincial governor, district engineer or district health officer is not authorized to
destroy private property consisting of dams and fishponds summarily and without any
judicial proceedings whatever under the pretense that such private property constitutes a
nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A
dam or fishpond may be a nuisance per accidens where it endangers or impairs the
health or depreciates property by causing water to become stagnant. (Monteverde v.
Generoso, supra).
While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code,
Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The
nuisance can only be so adjudged by judicial determination.
[Municipal councils] do not have the power to find as a fact that a particular thing is a
nuisance when such thing is not a nuisance per se nor can they authorize the extra
judicial condemnation and destruction of that as a nuisance which, in its nature, situation
or use is not such. These things must be determined in the ordinary courts of law. In the
present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate
industry . . . . If it be in fact a nuisance due to the manner of its operation, that question
cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair
and impartial heating before a judicial tribunal. (Iloilo Cold Storage v. Municipal Council,
24 Phil. 47 [1913]).
Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine
Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its
property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to
decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity
for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan,
transcended their authority in abating summarily petitioner's quonset building. They had deprived
petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and
was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the
demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial
order being a prejudicial issue.

G.R. No. L-18390 August 6, 1971 PEDRO J. VELASCO, plaintiffappellant, vs. MANILA ELECTRIC CO., WILLIAM SNYDER, its
President; JOHN COTTON and HERMENEGILDO B. REYES, its
Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of
Quezon City, defendants-appellees.
The conclusion must be that, contrary to the finding of the trial court, the noise continuously emitted, day
and night, constitutes an actionable nuisance for which the appellant is entitled to relief, by requiring the
appellee company to adopt the necessary measures to deaden or reduce the sound at the plaintiff's
house, by replacing the interlink wire fence with a partition made of sound absorbent material, since the
relocation of the substation is manifestly impracticable and would be prejudicial to the customers of the
Electric Company who are being

G.R. No. 28491 September 29, 1928 TOMAS MONTEVERDE,

plaintiff-appellant, vs. SEBASTIAN T. GENEROSO, Provincial
Governor of Davao, ET AL., defendants-appellees
Nuisances are of two classes: Nuisances per se and per accidens. As to the first, since they affect
the immediate safety of persons and property, they may be summarily abated under the undefined

law of necessity. But if the nuisance be of the second class, even the municipal authorities, under
their power to declare and abate nuisances, would not have the right to compel the abatement of a
particular thing or act as a nuisance without reasonable notice to the person alleged to be
maintaining or doing the same of the time and place of hearing before a tribunal authorized to decide
whether such a thing or act does in law constitute a nuisance. Such in effect was the holding in Iloilo
Ice and Cold Storage Co. vs. Municipal Council of Iloilo ([1913], 24 Phil., 471), applied here, it is selfevident that a dam or a fishery constructed in a navigable stream is not a nuisance per se. Of
course, a dam or a fishpond may be found to be a nuisance where it endangers or impairs the health
or depreciates property by causing water to become stagnant. The public health may be conserved
but conserved only in a legal manner. Due process of law must be observed before the citizens'
property or personal rights or liberty can be interfered with. Conceding without deciding that article
24 of the Law of Waters is in force, we reiterate that it can only be made use of by conforming to the
provisions of the organic law.

G.R. No. L-3422 June 13, 1952 HIDALGO ENTERPRISES, INC.,

petitioner, vs. GUILLERMO BALANDAN, ANSELMA ANILA and
THE COURT OF APPEALS, respondents
The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as
well as natural, in the absence of some unusual condition or artificial feature other than the
mere water and its location.
There are numerous cases in which the attractive nuisance doctrine has not been held not to
be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts,
drains, cesspools or sewer pools, . . . (65 C.J.S., p. 476 et seg. citing decisions of California,
Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma,
Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin.)
In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris
Secundum was published in 1950, whereas its decision was promulgated on September 30, 1949.
The reason why a swimming pool or pond or reservoir of water is not considered an attractive
nuisance was lucidly explained by the Indiana Appellate Court as follows:
Nature has created streams, lakes and pools which attract children. Lurking in their waters is
always the danger of drowning. Against this danger children are early instructed so that they
are sufficiently presumed to know the danger; and if the owner of private property creates an
artificial pool on his own property, merely duplicating the work of nature without adding any
new danger, . . . (he) is not liable because of having created an "attractive nuisance."
Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 112 Ind. App., 170.

JOSE "PEPITO" TIMONER, petitioner, vs. THE PEOPLE OF THE

PHILIPPINES AND THE HONORABLE COURT OF APPEALS, IV
DIVISION, respondents.

G.R. No. L-62050 November 25, 1983

JOSE "PEPITO" TIMONER, petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES AND THE HONORABLE COURT OF APPEALS, IV
DIVISION, respondents.

The barbershop occupied a portion of the sidewalk of the poblacion's main thoroughfare and had
been recommended for closure by the Municipal Health Officer. In fact, the Court of First Instance of
Camarines Norte, in its decision in Civil Case No. 2257, declared said barbershop as a
nuisance per-se. Thus: t.hqw
Under the facts of the case, as well as the law in point, there is no semblance of any
legality or right that exists in favor of the defendants to build a stall and conduct their
business in a sidewalk, especially in a highway where it does not only constitute a
menace to the health of the general public passing through the street and also of the
unsanitary condition that is bred therein as well as the unsightly and ugly structures
in the said place. Moreover, even if it is claimed and pretended that there was a
license, permit or toleration of the defendants' makeshift store and living quarters for
a number of years does not lend legality to an act which is a nuisance per se. Such
nuisance affects the community or neighborhood or any considerable number of
persons and the general public which posed a danger to the people in general
passing and using that place, for in addition, this is an annoyance to the public by the
invasion of its rights the fact that it is in a public place and annoying to all who
come within its sphere [Baltazar vs. Carolina Midland, Ry, Co., 54 S.C. 242, 32 SB
258, cited in 11 Tolentino's Civil Code of the Philippines, p. 375; Kapisanan Lingkod
ng Bayan, Inc. vs. Lacson, CA-G.R. No. 27260R, March 25, 1964; 61 O.G. 2487].
xxx xxx xxx
... IN VIEW OF THE FOREGOING, the Court hereby declares that the structures
subject of this complaint as well as those occupied by the impleaded defendants are
nuisances per se and therefore orders the defendants to demolish the stall and
vacate the premises immediately ...
But even without this judicial pronouncement, petitioner could not have been faulted for having
fenced off said barbershop. Paragraph 3, Article 699 of the Civil Code authorizes the abatement of a
public nuisance without judicial proceedings. t.hqw
ART. 699. The remedies against a public nuisance are:
[l] A prosecution under the Penal Code or any local ordinance; or
[2] A civil action; or
[3] Abatement, without judicial proceedings.
In the case at bar, petitioner, as mayor of the town, merely implemented the aforesaid
recommendation of the Municipal Health Officer. Having then acted in good faith in the
performance of his duty, petitioner incurred no criminal liability.

an action to quiet title to property in the possession of a plaintiff

is imprescriptible.
It is an established rule that an action to quiet title to property in the possession of a plaintiff
is imprescriptible.[10]Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has
been in possession of the property since 1945 up to the present or for a period of 30 years, her
cause of action for reconveyance, which in effect seeks to quiet her title to the property, falls within
that rule. If at all, the period of prescription began to run against Felipa Fajaonly from the time she
was served with copy of the complaint in 1975 giving her notice that the property she was occupying
was titled in the name of Indalecio Frial. There is settled jurisprudence that one who is in actual
possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain
and determine the nature of the adverse claim of a third party and its effect on his own title, which
right can be claimed only by one who is in possession.[11] No better situation can be conceived at the
moment for Us to apply this rule on equity than that of herein petitioners whose mother, Felipa Faja,
was in possession of the litigated property for no less than 30 years and was suddenly confronted
with a claim that the land she had been occupying and cultivating all these years, was titled in the
name of a third person. We hold that in such a situation the right to quiet title to the property, to seek
its reconveyance and annul any certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that the statutory
period of prescription commences to run against such possessor.

FIRST DIVISION
[ G.R. No. L-45045, February 28, 1977 ]
FELIPA FAJA, SUBSTITUTED BY: NEMESIO GARDOSE, ANICIA GARDOSE
AND EUFROSINO GARDOSE, PETITIONERS, VS. HON. COURT OF
APPEALS, HON. TOMAS R. LEONIDAS, JUDGE OF THE COURT OF
FIRST INSTANCE OF CAPIZ, BRANCH III, AND LEVINE FRIAL,
RESPONDENTS.

An action for quieting of title is essentially a common law remedy

grounded on equity.
An action for quieting of title is essentially a common law remedy grounded on equity.

The

competent court is tasked to determine the respective rights of the complainant and other claimants,
not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would
see every cloud of doubt over the property dissipated, and he could afterwards without fear introduce
the improvements he may desire, to use, and even to abuse the property as he deems best. But for
an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff

or complainant has a legal or an equitable title to or interest in the real property subject of the action;
and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.[7]
Contrary to petitioners stand, the issue relating to the grant of rights, title or award by the NHA
determines whether the case for quieting of title may be maintained. If the petitioners are legitimate
successors to or beneficiaries of Iluminardo upon his death under the certificate of title, award, or
grant, or under the special law or specific terms of the NHA program/project then they possess the
requisite interest to maintain suit; if not, then Civil Case No. 2741-MN must necessarily be
dismissed.
From the evidence adduced below, it appears that the petitioners have failed to show their
qualifications or right to succeed Iluminardo in his rights under the NHA program/project. They failed
to present any title, award, grant, document or certification from the NHA or proper government
agency which would show that Iluminardo and Prescilla have become the registered
owners/beneficiaries/ awardees of Lots 18 and 19, or that petitioners are qualified successors or
beneficiaries under the Dagat-Dagatan program/project, taking over Iluminardos rights after his
death. They did not call to the witness stand competent witnesses from the NHA who can attest to
their rights as successors to or beneficiaries of Lots 18 and 19. They failed to present proof, at the
very least, of the specific law, provisions, or terms that govern the Tondo Dagat-Dagatan Foreshore
Development Project which would indicate a modicum of interest on their part. For this reason, their
rights

or

interest

in

the

property

could

not

be

established.

It was erroneous, however, for the CA to assume that Iluminardo and Prescilla may have violated the
conditions of the NHA grant under the Tondo Dagat-Dagatan Foreshore Development Project by
transferring their rights prior to the issuance of a title or certificate awarding Lots 18 and 19 to them.
In the absence of proof, a ruling to this effect is speculative. Instead, in resolving the case, the trial
court and the CA on appeal should have required proof that petitioners had, either: 1) a
certificate of title, award, or grant from the proper agency (NHA or otherwise) in the name of their
predecessor Iluminardo, or, in the absence thereof, 2) a right to succeed to Iluminardos rights to
Lots 18 and 19, not only as his heirs, but also as qualified legitimate successors/beneficiaries under
the Tondo Dagat-Dagatan Foreshore Development Project terms and conditions as taken over by the
NHA.[8] Petitioners should have shown, to the satisfaction of the courts, that under the NHA
program/project governing the grant of Lots 18 and 19, they are entitled and qualified to succeed or
substitute for Iluminardo in his rights upon his death. As earlier stated, this takes the form of
evidence apart from proof of heirship, of course of the specific law, regulation or terms covering
the program/project which allows for a substitution or succession of rights in case of death; the
certificate of title, award or grant itself; or the testimony of competent witnesses from the NHA.

DIONISIO MANANQUIL, LAUDENCIA MANANQUIL- VILLAMOR, ESTANISLAO

MANANQUIL, AND DIANITA MANANQUIL-RABINO, REPRESENTED BY

OTILLO RABINO, PETITIONERS, VS. ROBERTO MOICO,

RESPONDENT.**SECOND DIVISION[ G.R. No. 180076, November 21, 2012
]

Quieting of Title Not Proper Remedy For Settling Boundary

Dispute
First

Issue: Quieting of Title Not

Proper

Remedy

For

Settling

Boundary

Dispute

We agree with respondent Court. The facts presented unmistakably constitute a clear case of
boundary

dispute,

which

is

not

cognizable

in

special

civil

action

to

quiet title.

Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty
with

respect

to titleto

real

property.[9]

The Civil Code authorizes the said remedy in the following language:
"Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in
truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an

action

may

be

brought

to

remove

such

cloud

or

to

quiet

the title.

An action may also be brought to prevent a cloud from being cast upon a title to real property of any
interest therein."
In fine, to avail the remedy of quieting of title, a plaintiff must show that there is an instrument, record,
claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow
upon the owners title to or interest in real property. Thus, petitioners have wholly misapprehended
the import of the foregoing rule by claiming that respondent Court erred in holding that there was
"no xxx evidence of any muniment of title, proceeding, written contract, xxx", and that there were, as
a matter of fact, two such contracts, viz., (i) the Agreement of Partition executed by private
respondent and his brothers (including the petitioners father and predecessor-in-interest), in which
their respective shares in the inherited property were agreed upon, and (ii) the Deed of Sale
evidencing the redemption by petitioner Anastacia Vda. de Aviles of the subject property in a
foreclosure sale. However, these documents in no way constitute a cloud or cast a doubt upon
the title of petitioners. Rather, the uncertainty arises from the parties failure to situate and fix the
boundary between their respective properties.

THIRD DIVISION[ 95748, November 21, 1996 ]

ANASTACIA
VDA.
DE
AVILES,
ET
AL.,
PETITIONERS, VS. COURT OF APPEALS AND
CAMILO AVILES, RESPONDENTS.
EN BANC

G.R. No. L-3144

November 19, 1907
CARMEN AYALA DE ROXAS and PEDRO P. ROXAS, plaintiffs,
vs.
THE CITY OF MANILA and ROBERT G. DIECK, as city engineer, defendants.
Del-Pan, Ortigas and Fisher, for plaintiffs.
Modesto Reyes, for defendants.
ARELLANO, C.J.:
The defendants' demurred to the amended complaint having been overruled, an answer was
presented, and the trial of the case proceeded with.
Briefly, the subject of this action may be stated as follows:
1. That on the 15th of January, 1906, the plaintiff, as owner of the property situated on the Escolta,
district of Binondo, city of Manila, the eastern boundary of which adjoins the canal of San Jacinto or
Sibacon to the extent of 23.50 meters, the total area of the ground being 658.19 square meters,
applied to the city engineer, Robert G. Dieck, the defendant herein, for a license to construct a
terrace over "the strip of land 3 meters in width between the main wall of her house and the edge of
the said canal of Sibacon or San Jacinto, which strip of land belongs exclusively to her"; but the
defendant refused to grant the license or authorize the plaintiff to build the terrace.
2. That a similar petition was addressed to the Municipal Board of the city of Manila on the 30th of
said month and year, and it also was denied.
3. That, as the plaintiff has been informed, the sole reason wherefore the license was denied is
because "the said defendants pretend to compel the plaintiff to leave vacant and without any
construction whatever thereon the said strip of 3 meters in width which is a portion of the ground
belonging to her, in order to use the same as the wharf or public way so that the plaintiff will only be
able to use the said strip in the same manner and for the same purposes as the public in general,
thus losing the enjoyment, use, and exclusive possession of the said strip of the property which the
plaintiff and the former owners thereof have enjoyed quietly and peacefully during more than seventy
years."
4. That the strip in question was occupied by a two-storey building constructed more than seventy
years ago.
It appears from the evidence:
First. That the plaintiff's ownership of the whole ground and of the strip in question is beyond all
doubt, both by reason of her title thereto and the entry thereof in the registry of property, and by the
acknowledgment thereof made by the city itself when obtaining by means of condemnation
proceedings a portion of the same property adjoining the public road.
Second. That as a matter of fact, the license which the plaintiff, using her right of ownership,
requested for the construction of a terrace on the strip of 3 meters adjoining the canal of San Jacinto
or Sibacon, was denied; both parties agreeing that the denial was due to the intent to reserve the
said strip for the establishment of a public easement, although the opposing witnesses did not agree
as to the special easement intended to be established.
Third. That it was agreed between both parties that the strip above referred to had not been
expropriated in whole or in part by the municipality of Manila, and that neither had the latter offered
any compensation for the same to the owner thereof.
Fourth. That according to Engineer Dieck, a defendant, the purpose of the city was to use the said
strip of 3 meters as a place for discharging and landing goods, and as a place of shelter for
shipwrecked persons and for fishermen, and to devote it also, together with other strips along the
canal, by the gradual acquisition of land, to a towpath for craft passing through the canal; that a
building line has been established by the Municipal Board along the Sibacon Creek leaving a strip of
3 meters within which, according to ordinances, no constructions would be permitted; that such is the
purpose and the intent on which the existing ordinances are based. But John Tuther, the secretary of
the Municipal Board, declares that, when Ordinance No. 78 was under discussion, he does not recall
having heard any of the members of the board make reference to a towpath nor did he ever hear

anything said with reference to the purpose to which the strip of 3 meters mentioned in Ordinance
No. 78 was to be devoted, though he believes that, by thus leaving a strip of 3 meters, it would be
easier to prevent collisions; that it would facilitate navigation, and that it had never been the intention
of the Board to indemnify the owners of such strips of 3 meters by reason of the use which parties
landing thereon may make of the same.
Fifth. That, as stated in the brief of the defendants, "the intention of the Municipal Board, when
denying the permit asked for by the plaintiff, has never been to establish any way whatever along the
Sibacon Creek so that said plaintiff could, if she chose to, close her property with walls or the like
perpendicularly to said creek, that is, over the two lines perpendicular to said creek, provided she
does not close or build over the 3-meter space running along the creek," which space is subject, as
stated in the evidence submitted by the defendants, to the "easement of public use for the general
interest of navigation, flotation, fishing, and salvage," citing the Law of Waters and the Civil Code.
Sixth. And that the result is, according to No. 19 of the statement of facts of the complaint, "that the
plaintiff shall only be able to use said strip in the same manner and for the same purposes as the
general public, thus losing the enjoyment, use, and exclusive possession of said strip of the ground
which the plaintiff and the former owners of the same have enjoyed as such owners quietly and
peacefully during more than seventy years."
What the defendants have therefore done is to prevent the plaintiffs from continuing to enjoy, use,
and freely dispose of such strip of their ground, as they had been doing up to the time when they
applied for a license to construct a terrace over said strip, and the defendants prevented it with the
intention of establishing a public easement provided for in an ordinance of their own which they
consider is pursuant to the provisions of the Law of Waters and of the Civil Code in force.
In the decision entered by this court on the 5th of May, 1906, regarding the demurrer, the following
was set forth:
The easement of a zone for public use, authorized by article 73 of the Law of Waters of
1866, is developed in articles 160 and 161, inclusive, of said law; the general interest on
behalf of which the easement is supported is determined, for navigation, by articles 160 and
161; for flotation, by article 162; for salvage, by article 163; and for fishing, by article 164; in
all of them the owner of the riverside property supports the easement "upon being previously
indemnified for loss and damage." (Folio 41.)
Said zone for public use, the same as a towpath, is solely available for the purposes of
navigation, flotation, fishing, and salvage, being closed to any other use which be attempted;
therefore, it is erroneous to pretend that the right of the owner of the property bordering upon
the stream can be reduced to the level of the public right; on the contrary he should only be
called upon to bear those burdens which are in the general interest, but not without prior, or
subsequently indemnity. (Folio 43.)
If as affirmed in statement No. 4, and accepted by the defendants, the Sibacon Creek is a canal
let us grant that it is navigable, because it has been held by competent authority and that under
the name of a public wharf, which is the largest in area, it is desired to establish a towpath, which is
the smallest, it must be remembered that the law does not grant it along navigable canals (art. 157),
and, at all events, the establishment thereof must be preceded by the corresponding indemnity.
(Arts. 154 and 157.)
The matter at issue herein being the enforcement of the Law of Waters and of the Civil Code, it is not
out of place nor untimely, even now, to point out the administrative law which ought to have been
applied had this act of the city of Manila been carried out by the late ayuntamiento during the former
sovereignty; an administrative law which, owing to its having been so often repeated, is now raised to
the rank of an incontrovertible principle of law on the matter.
The powers of the administration do not extend to the establishment of new easements upon
private property but simply to preserve old ones, whenever a recent and easily proven
usurpation exists. (Decision of January 23, 1866.) lawphil.net

Ayuntamientos are not authorized to impose an easement upon private property; therefore,
any order thus given can not be held to have been issued in the exercise of their lawful
powers. (Decision of July 28, 1866.)
Administrative action for the recovery of a public easement which has been usurped by a
constructive work of private ownership can only be taken when such usurpation is of recent
date and easily proven.
When real rights are concerned an ayuntamiento may prosecute such actions as it may
consider itself entitled to, for the possession or ownership in accordance with law. (Decision
of October 26, 1866.)
This doctrine will be found far more vigorous at present upon reference to the principles of the law
now in force.
According to article 349 of the Civil Code, no one shall be deprived of his property, except by
competent authority and with sufficient cause of public utility, always after proper indemnity; if this
requisite has not been fulfilled the courts must protect, and eventually restore possession to the
injured party.
Under section 5 of the act of Congress of July 1, 1902, no legislation shall be enacted in the
Philippine Islands which shall deprive any person of life, liberty, or property without due process of
law; and the due process of law in order to deprive a person of his property is, according to the Code
of Civil Procedure, reserved to the judicial authority. The refusal to grant a license or the enactment
of an ordinance whereby a person may be deprived of property or rights, or an attempt thereat is
made, without previously indemnifying him therefor, is not, nor can it be, due process of
law.1awphil.net
And, considering that the easement intended to be established, whatever may be the object thereof,
is not merely a real right that will encumber the property, but is one tending to prevent the exclusive
use of one portion of the same, by expropriating it for a public use which, be it what it may, can not
be accomplished unless the owner of the property condemned or seized be previously and duly
indemnified, it is proper to protect the appellant by means of the remedy employed in such cases, as
it is the only adequate remedy when no other legal action can be resorted to, against an intent which
is nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with
which the same is invested. The question involved here is not the actual establishment of an
easement which might be objected to by an action in court, but a mere act of obstruction, a refusal
which is beyond the powers of the city of Manila, because it is not simply a measure in connection
with building regulations, but is an attempt to suppress, without due process of law, real rights which
are attached to the right of ownership.
When . . . any corporation, board, or person unlawfully neglects the performance of an act
which the law specially enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes the plaintiff from the use and enjoyment of a right or office to which he is
entitled and from which he is unlawfully precluded by such inferior tribunal, corporation,
board, or person, and the court, on trial, finds the allegations of the complaint to be true, it
may, if there is no other plain, speedy, and adequate remedy in the ordinary courts of law,
render a judgment granting a peremptory order against the defendant, commanding him,
immediately after the receipt of such order, or at some other specified time, to do the act
required to be done to protect the rights of the plaintiff. (Code of Civil Procedure, sec 222.)
Therefore, we hereby command the defendants, the city of Manila, and Robert G. Dieck, as city
engineer, or whomsoever may now be acting as such, to immediately issue a license in favor of the
plaintiff herein, Doa Carmen Ayala de Roxas, to construct the terrace as aforesaid in accordance
with the plan and specification as per Exhibit A, the said defendants to pay the costs of these
proceedings. So ordered.
G.R. No. L-46963 March 14, 1994
GLORIA A. FERRER, petitioner,
vs.
HON. ANTONIO BAUTISTA, MARIANO BALANAG, AND MAGDALENA DOMONDON, respondents.

Fortunato F.L. Viray, Jr. for petitioner.

Agaton D. Yaranon, Jr., for private respondent.
VITUG, J.:
This petition for review on certiorari seeks to reverse and set aside the order, dated 11 December 1976, of the Court of First Instance (now
Regional Trial Court) of La Union, Branch III, dismissing petitioner's complaint for Quieting of Title to Real Property, as well as its order of 03
May 1977, denying the motion for reconsideration.
Pursuant to this Court's Resolution, dated 19 August 1977 (p. 4, Rollo), petitioner was allowed to file the instant petition under Republic Act
No. 5440 considering that only questions of law had been raised.
On 03 August 1978, the Court dismissed the petition for lack of interest due to the failure of petitioner's counsel to submit the requisite
memorandum in support of the petition (p. 58,Rollo). In a Resolution, dated 28 September 1978 (p. 63, Rollo), however, the Court resolved to
reconsider the dismissal and to reinstate the petition.
Under controversy is a strip of land south of Lot 1980 of the Cadastral survey of Aringay, La Union. Petitioner claims its ownership by virtue
of accretion, she being the owner of Lot 1980 covered by TCT No. T-3280, which is immediately north of the land in question. On the other
hand, private respondents equally assert ownership over the property on account of long occupation and by virtue of Certificate of Title No.
P-168, in the name of respondent Magdalena Domondon, pursuant to Free Patent No. 309504 issued on 24 January 1966 (p. 29, Rollo).
On 23 March 1976, petitioner Gloria A. Ferrer filed a complaint with Branch III of the then Court of First Instance of La Union to "Quiet Title to
Real Property" against herein respondents Mariano Balanag and Magdalena Domondon. The case was denominated Civil Case No. A-514.
Prior to Civil Case No. A-514, petitioner had also filed with the Court of First Instance of La Union, Branch III, a complaint
for reivindicacion (Civil Case No. A-86), dated 25 November 1965, against private respondents. Herein respondent Judge, who also handled
the case, dismissed, on 10 February 1976, the complaint, without prejudice, on the ground that the court had no authority to cancel or annul
the decree and the title issued by the Director of Lands on the basis of a mere collateral attack (pp. 22-23, Rollo).
On 11 March 1976, private respondents also moved for the dismissal of Civil Case No. 514-A on the following grounds, to wit:
1) Gloria A. Ferrer's lack of personality to file and prosecute Civil Case No.
514-A;
2) Civil Case 514-A is barred by prior judgment;
3) Lack of sufficient averments to constitute a cause of action; and
4) Civil Case No. 514-A, is a collateral attack on the Free Patent Decree
No. 309504 and O.C. of Title No. F-168 (Annex "B," pp. 17-21). (p.
66, Rollo.)
On 07 December 1976, Judge Antonio G. Bautista issued an order
(pp. 23-24, Record on Appeal), dismissing petitioner's complaint, ratiocinating, thus
This has reference to the Motion to Dismiss filed by the defendants, through counsel. The plaintiff filed an Answer to the
Motion to Dismiss also through counsel.
The subject of the present action for Quieting of Title to Real Property, is covered by Free Patent No. 309504 and
Original Certificate of Title No. P-168, in the names of the defendants. However, the plaintiff alleged in her Complaint
that said Free Patent and Original Certificate of Title were secured through fraud, etc., on January 24, 1966, for which
reason, they are null and void. In view thereof, while the plaintiff filed the present action ostensibly to Quiet Title of her
alleged real property, it is in reality for the annulment or revocation of the Free Patent and Original Certificate of Title of
the defendants. The observation of the Court is clinched by prayer (a) of the plaintiff's complaint, i.e., "That Patent Title
No. 168 be declared revoked and cancelled as null and void from the Records of the Office of the Register of Deeds of
San Fernando, La Union, etc." Consequently, the present action is untenable because it constitute a collateral or
indirect attach on the Free Patent and Original Certificate of Title of the defendants. That is so, because it was held in
the case of Samonte, et al. vs. Sambelon, et al., L-12964, February 29, 1960, that like a decree, a Patent cannot be
attacked collaterally.
Furthermore, the plaintiff has no cause of action against the defendants because the Patent title issued in favor of the
Firmalos (defendants here) by the Director of Lands is by now already indefeasible due to the lapse of one year
following the entry of the decree of registration in the records of the register of deeds (Firmalos vs. Tutaan, No. L35408, October 27, 1973).
WHEREFORE, the Court is constrained to order dismissal of the plaintiff's complaint. There is no pronouncement as to
damages and costs. (p. 33, Rollo.)
Petitioner's motion for reconsideration was denied by the court in its order of 03 May 1977 (p. 38, Record on Appeal).
Hence this petition.
Petitioner submits the following assignment of errors on the part of respondent judge:
I. In not finding and declaring that Gloria A. Ferrer has legal personality to
prosecute Civil Case No. 514-A;
II. In not finding and declaring that Civil Case No. 514-A has stated
sufficient cause of action;
III. In not finding and declaring that petitioner Gloria A. Ferrer's title to the
land is beclouded by the contrary claim of the private respondents thereto;
and
IV. In outright dismissing Civil Case No. 514-A on the ground of collateral
attack on Free Patent Decree No. 309504 being an abuse of judicial
discretion and an excess of his jurisdiction. (p. 13, Rollo.)
The petition has merit.
Article 457 of the Civil Code, under which petitioner claims ownership over the dispute parcel of land, provides:
Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from
the effects of the current of the waters.
Undoubtedly, plaintiff is the lawful owner of the accretion, she being the registered owner of Lot 1980 which adjoins the alluvial property.
Parenthetically, the same finding has also been made by the trial court in Civil Case No. A-86 (p. 29, Rollo).
Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is gradually received from the effects of the
current of waters (Art. 457, Civil Code; Tuason vs. Court of Appeals, 147 SCRA 37; Cureg vs. IAC, 177 SCRA 313). The rationale for the rule
is to provide some kind of compensation to owners of land continually exposed to the destructive force of water and subjected to various
easements (Agustin vs. IAC, 187 SCRA 218; Binalay vs. Manalo, 195 SCRA 374).
The Director of Lands has no authority to grant a free patent over land that has passed to private ownership and which has thereby ceased
to be public land. Any title thus issued or conveyed by him would be null and void (Tuason vs. Court of Appeals, 147 SCRA 37). The nullity
arises, not from fraud or deceit, but from the fact that the land is no longer under the jurisdiction of the Bureau of Lands, the latter's authority
being limited only to lands of public dominion and not those that are privately owned (Agne vs. Director of Lands, 181 SCRA 793).
Herein private respondents, therefore, acquired no right or title over the disputed land by virtue of the free patent since at the time it was
issued in 1966, it was already private property and not a part of the disposable land of the public domain.
Although, ordinarily, a title becomes incontrovertible one year after it is issued pursuant to a public grant, the rule does not apply when such
issuance is null and void. An action to declare the nullity of that void title does not prescribe (Agne vs. Director of Lands, supra); in fact, it is
susceptible to direct, as well as to collateral, attack (Estoesta, Sr. vs. Court of Appeals, 179 SCRA 203).
Private respondents contend that an action for reconveyance prescribes in ten years. The ten-year prescriptive period is applicable to an
action for reconveyance if, indeed, it is based on an implied or constructive trust. Article 1456 of the Civil Code, upon which a constructive
trust can be predicated, cannot be invoked, however, since the public grant and the title correspondingly issued to private respondents that
can create that juridical relationship is a patent nullity. Even assuming, nonetheless, that a constructive trust did arise, the running of the
prescriptive period is to be deemed interrupted when an action is filed in court (Art. 1155, Civil Code) or, obviously, when one is already there
pending.
Here, to recall, the Free Patent was issued on 24 January 1966 and OCT P-168 was transcribed in the Registration Book of La Union on 08
February 1966 (pp. 38-39, Rollo). At that time, Civil Case No. A-86 for reivindicacion between the parties was still pending in court. After Civil

Case No. A-86 was dismissed, without prejudice, on 10 February 1976 (p. 32,Rollo), petitioner, on 22 March 1976 (p. 1, Record on Appeal),
promptly filed Civil Case No. A-514 (now on appeal in this instance).
Neither can private respondents claim ownership of the disputed property by acquisitive prescription. Ownership and other real rights over
immovable property are acquired by ordinary prescription through possession of ten years if the adverse possession is with a just title and
the possession is in good faith. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, this time without need of title or of good faith. (See Art. 1134, Civil Code.)
Given the settings in this case at bench, the applicable period of acquisitive prescription, if at all, would be thirty years. Even assuming, then,
that private respondents were in adverse possession of the property from 1966 when the free patent was obtained, or even at the inception
of their alleged adverse possession in 1954 ("Comment on Petition for Review," p. 35, Rollo), that possession, for purposes of acquisitive
prescription, was deemed interrupted upon their receipt of summons (Art. 1123, Civil Code) in Civil Case No. A-86 pending since 1965, as
well as Civil Case No. A-514 filed in 1976 following the dismissal the month previous of Civil Case No. A-86. The prescriptive period of
prescription may not be held to commence anew during the pendency of said cases.
The instant petition has merely prayed that respondent court be directed to continue hearing Civil Case No. 514-A. We have repeatedly
ruled, however, that where the determinative facts are before this Court, and it is in a position to finally resolve the dispute, the expeditious
administration of justice will be subserved by the resolution of the case and thereby obviate the needless protracted proceedings consequent
to the remand of the case to the trial court (Heirs of Crisanta Almoradie, et al. vs. Court of Appeals, et al., G.R. No. 91385, January 4, 1994;
Lianga Bay Logging Co., et al. vs. Court of Appeals, 157 SCRA 357; Escudero vs. Dulay, 158, SCRA 69). Clearly, the records support the
finding that herein petitioner is the true owner of the land subject of the free patent issued to private respondents. The court then, in the
exercise of its equity jurisdiction. may, instead of remanding the case to the trial court, direct the owner to reconvey the disputed parcel to its
lawful owner (Limaza vs. IAC, 182 SCRA 855; Agne vs. Director of Lands, supra). Considering, moreover, the length of time that this case
has been pending between the parties, not counting petitioner's original action for reivindicacion in Civil Case No.
A-86 filed on 25 November 1956, an order from this Court requiring such reconveyance can certainly be just and warranted.
WHEREFORE, the questioned order of dismissal of the trial court in its Civil Case No. 514-A is REVERSED and SET ASIDE, and judgment
is hereby rendered DECLARING petitioner to be the owner of the disputed parcel of land and ORDERING private respondents to reconvey
the same to said petitioner. No costs.
SO ORDERED.

G.R. No. 82220 July 14, 1995

PABLITO MENESES and LORENZO MENESES, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING
(Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla, Josefina, Napoleon, Honorato,
Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores
and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma.
Victoria, Elsa and Oscar, all surnamed Quisumbing), all represented by Atty. Galileo Brion, respondents.
G.R. No. 82251 July 14, 1995
CESAR ALMENDRAL, petitioner,
vs.
EDUARDO QUISUMBING, respondent.
G.R. No. 83059 July 14, 1995
EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed
Quisumbing), HEIRS OF FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed
Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing)
and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), petitioners,
vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C. DARUM, respondents.
QUIASON, J.:
For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of Appeals in CA-G.R. CV No. 07049 affirming
the Decision dated March 26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil Case No. 474-83-C which declared as
null and void the original certificates of title and free patents issued to Pablito Meneses over lots found by the court to be accretion lands
forming parts of the bigger accretion land owned by Ciriaca Arguelles Vda. de Quisumbing.
I
On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baos, Laguna, issued to Pablito Meneses Free Patent No. (IV-5)
P-12807 and Original Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square meters, and Free Patent No (IV-5) 12808
and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square meters. Both lots are located in Los Baos, Laguna.
Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and Transfer of Rights executed on May 5, 1975 in
consideration of Bautista's "love and affection" for and "some monetary obligations" in favor of Pablito Meneses (Rollo, p. 45). After the
execution of said document, Pablito Meneses took possession of the land, introduced improvements thereon, declared the land as his own
for tax purposes and paid the corresponding realty taxes. In turn, Bautista acquired the 900-square-meter land from his aunt, Sergia
(Gliceria) M. Almeda. He had been occupying the land since 1956.
On the other hand, the Quisumbing family traces ownership of the land as far back as September 6, 1919 when their matriarch, Ciriaca
Arguelles Vda. de Quisumbing was issued Original Certificate of Title No. 989 covering a lot with an area of 859 square meters located in
Los Baos, Laguna with the Laguna de Bay as its northwestern boundary. The same parcel of land was registered on August 14, 1973 under
Transfer Certificate of Title No. T-33393 in the names of Ciriaca's heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon,
Honorato, Remedios and Alfonso, all surnamed Quisumbing.
In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of Bian, Laguna to recover possession over a
portion of the property from Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350. On January 3, 1966, the case was
decided in favor of the Quisumbings. On appeal, the Court of Appeals sustained the Quisumbings' right over the property.
In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over an additional area of 2,387 square meters
which had gradually accrued to their property by the natural action of the waters of Laguna de Bay. In its Decision of September 28, 1978,
the Court of First Instance of Bian confirmed the Quisumbings' title thereto which, after it was duly surveyed, was identified as Psu-208327.
The additional area was divided into two lots in the survey plan approved by the Director of Lands on November 16, 1964. In ordering the
confirmation and registration of title on favor of the Quisumbings, the land registration court said:
. . . There is no doubt that the applicants' right to the property was bolstered by the unappealed decision of the Court of
Appeals in Civil Case No. B-350 of this Court when the properties applied for were classified as accretions made by the
waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).
On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance of Laguna, Branch VI, Calamba against
Lorenzo and Pablito Meneses, Braulio C. Darum and Cesar B. Almendral for nullification of the free patents and titles issued to Pablito
Meneses. They alleged that Lorenzo Menesis, then the Mayor of Los Baos, using his brother Pablito as a "tool and dummy," illegally
occupied their "private accretion land" an August 6, 1976, and, confederating with District Land Officer Darum and Land Inspector Cesar
Almendral, obtained free patents and original certificates of title to the land.
On March 26, 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers are accretion lands to
which the Quisumbings have a valid right as owners of the riparian land to which nature had gradually deposited the disputed lots. In so

holding, the trial court relied heavily on the decision of the Court of Appeals in Civil Case No. B-350, and quoted the following portions of the
appellate court's decision:
Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under TCT No. 25978 of the Laguna Land
Registry, the northwest boundary of which is the Laguna de Bay.
It is ascertained that the northwest portion of Quisumbing's lot is bounded by the Laguna de Bay. The nature of the
Laguna de Bay has long been settled in the case of Government of the Philippines v. Colegio de San Jose (55 Phil.
423) when it held that:
Laguna de Bay is a body of water formed in depression of the earth; it contains fresh water
coming from rivers and brooks and springs, and is connected with Manila Bay by the Pasig River.
According to the definition first quoted, Laguna de Bay is a lake.
Consequently, since Laguna de Bay is a lake, the authorities cited by the appellants referring to seashore would not
apply. The provision of the law on waters will govern in determining the natural bed or basin of the lake. And
accordingly, to Art. 84 of the Law of Waters of August 3, 1866:
Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakes by
accessions or sediments from the waters thereof, belong to the owners of such lands.
Since the title indicate(s) that the northwest portion of the property is bounded by Laguna de Bay, which is a lake, even
if the area where Lanuza's house and Villamor's house for that matter is located is not included within the title, it must
necessarily be an accretion upon appellees' land by accessions or sediments from the waters thereof which should
belong to the owner of the adjacent land. The authorities cited by the appellants treat of the ownership of accretions by
water of the sea under Title I. Lakewaters being terrestrial waters, their ownership is governed by Title II of the Law of
Waters. As held in the Colegio de San Jose case, the provisions of the Law of Waters regulating the ownership and use
of sea water are not applicable to the ownership and use of lakes which are governed by different provisions. As
pointed out by the lower court, no act of appropriation is necessary in order to acquire ownership of the alluvial
formation as the law does not require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals, et al., G.R. No. L17652, June 30, 1962 citing Roxas vs. Tuazon, 9 Phil. 408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C.
pp. 321-326, pp. 4-5) (Records, pp. 80-84).
The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and bad faith, citing the
following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of
Pablito Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses
who had no authority to notarize deeds of conveyances; (3) Although the lots subject of the deed of conveyance were placed in his brother's
name, Mayor Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously
prepared the documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms, signed
them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980 despite orders from
the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio Darum approved the free patent applications and
issued the questioned titles without the required cadastral survey duly approved by the Director of Lands and despite the pendency of LRC
Case No. B-327 involving the contested lots; (7) Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the
Director of Lands and after he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance
of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the free
patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in
his letter to the Land Registration Commission that the contested lots are portions of the land being claimed by the Quisumbings contrary to
his later representation in the joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327 owned by the
Quisumbings. Accordingly, the trial court disposed of the case as follows:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the lands covered by Pablito Meneses' Original Certificate of Title No. P-1268/Free Patent No. 12807
(Exh. "J"), covering Lot No. 1585, consisting of 417 square meters and Original Certificate of Title No. P-1269/Free
Patent No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square meters, both located at Los Baos,
Laguna, as accretion lands forming parts of a bigger accretion land owned by plaintiffs as declared in a final judgment
(Exh. "A"), rendered by the Court of First Instance of Bian, Laguna, in LRC Case No. B-327, which bigger accretion
land is directly adjacent to or at the back of plaintiffs' riparian land, and consequently, declaring as null and void and
cancelled Original Certificate of Title No. P-1268/Free Patent No. 12807 and Original Certificate of Title No. P1269/Free Patent No. 12808;
2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba, Laguna, to make the corresponding
entries of cancellation in his Registry of the above mentioned Original Certificate of Titles/Free Patents;
3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons acting in their behalves to vacate the
subject lands and surrender the possession thereof to the plaintiffs immediately; and
4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:
a) P20,000.00, plus P500.00 per month from January, 1977, until the subject property is
completely vacated, as actual and compensatory damages;
b) P350,000.00, as moral damages;
c) P70,000.00 as exemplary damages;
d) P40,000.00, as attorney's fees; and
e) the costs (Rollo, pp. 41-42).
Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court granted in its Order of September 7, 1984
subject to the posting by the Quisumbings of a bond in the amount of P500,000.00. The defendants unsuccessfully moved for the
reconsideration of said order.
The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses, Silverio Bautista, Pablo Silva, Virgilio Cruz and
Cesar Almendral for violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for conspiring in the approval and grant of the
free patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of Ciriaca Arguelles Vda. de Quisumbing. In due course, the
Sandiganbayan rendered a decision finding the defendants guilty as charged. The case was elevated to this Court but on August 27, 1987,
the judgment of conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).
Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to the Court of Appeals. On August 31, 1987,
the Court of Appeals found the appeal to be without merit and affirmed in toto the lower court's decision.
The defendants-appellants filed two motions for the reconsideration of the appellate court's decision but it was denied in the Resolution of
February 23, 1988 which in pertinent part stated:
However, for humanitarian considerations, and considering the appeal of the defendants-appellants for a reduction of
the moral and exemplary damages, We favor the reduction of the moral damages from P350,000.00 to P50,000.00 and
the exemplary damages from P70,000.00 to P5,000.00. In all other respects, We find no justification for modifying the
dispositive portion of the decision of the lower court (G.R. No. 82220, Rollo, p. 67).
Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was docketed as G.R. No. 82220. Cesar Almendral filed
a motion in G.R. No. 82251 for a 45-day extension within which to file a petition for review on certiorari. After this Court had granted them a
30-day extension, Almendral still failed to file any petition. The Quisumbings also filed a petition for review on certiorari, docketed as G.R. No.
83059, solely on the issue of the propriety of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23,
1988. Upon motion of petitioners in G.R. No. 83059, the three petitions were consolidated in the Resolution of August 1, 1988.

Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of Appeals, contending in the main: (1) that the lands in
question were not accretion lands but lands of the public domain; (2) that no conspiracy to commit fraud, deceit and bad faith attended the
issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed of Waiver and Transfer of Rights was founded on a valid
consideration.
As regards the issue of whether the lands in question are accretion lands, petitioners relied on the Decision of the Court of Appeals
in Republic of the Philippines v. Braga, CA-G.R. No. 55390-R, October 23, 1980, holding that the property involved therein was part of the
natural bed of the Laguna de Bay and therefore what had to be determined was whether said property was covered by water when the lake
was at its highest depth.
Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and settled both by the
trial court and the appellate court. Factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court
(Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994]) and they carry even more weight when the Court of Appeals
affirms the factual findings of the trial court (Binalay v. Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to
reviewing errors of law unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so
glaringly erroneous as to constitute serious abuse of discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We find
no such showing in this case.
Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case No. B-350 has a bearing in the resolution of
this case for while the lots occupied by Villamor and Lanuzo may not be the very same lots petitioners are claiming here, the two cases refer
to the same accretion lands northwest of the original land owned by the Quisumbings.
In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the confirmation and registration of title in favor
of the Quisumbings over 2,387 square meters of accretion land is binding on petitioners in G.R. No. 82220. As correctly pointed out by the
Court of Appeals, said decision, being the result of a proceeding in rem, binds the whole world, more so because it became final and
executory upon the Bureau of Lands' failure to interpose an appeal.
Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585 are part of Laguna de Bay" and therefore the
Quisumbings "have no legal right to claim the same as accretion land," we quote the following pertinent portions of the decision in Republic
v. Court of Appeals, 131 SCRA 532 (1984) which, although the case deals with the registration of a reclaimed land along the Laguna de Bay,
is nonetheless enlightening:
Laguna de Bay is a lake. While the waters of a lake are also subject to the same gravitational forces that cause the
formation of tides in seas and oceans, this phenomenon is not a regular daily occurrence in the case of lakes. Thus,
the alternation of high tides and low tides, which is an ordinary occurrence, could hardly account for the rise in the
water level of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it is the rains
which bring about the inundation of a portion of the land in question. Since the rise in the water level which causes the
submersion of the land occurs during a shorter period (four to five months a year) than the level of the water at which
the land is completely dry, the latter should be considered as the "highest ordinary depth" of Laguna de Bay. Therefore,
the land sought to be registered is not part of the bed or basin of Laguna de Bay. Neither can it be considered as
foreshore land. The Brief for the Petitioner Director of Lands cites an accurate definition of a foreshore land, to wit:
. . . . that part of (the land) which is between high and low water and left dry by the flux and reflux
of the tides.
The strip of land that lies between the high and low water marks and that is alternately wet and
dry according to the flow of the tide.
As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains
"falling directly on or flowing into Laguna de Bay from different sources." Since the inundation of a portion of the land is
not due to "flux and reflux of tides" it cannot be considered a foreshore land within the meaning of the authorities cited
by petitioner Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay,
nor a foreshore land as claimed by the Director of Lands, it is not a public land and therefore capable of registration as
private property provided that the applicant proves that he has a registerable title (at pp. 538-539).
Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of these requisites: (1) that the
deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3)
that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). While the trial court mainly relied on the
findings in Civil Case No. B-350 that the lands in controversy are accretion lands and it has not determined on its own the presence of said
requisites, it is too late now for petitioners in G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion lands could
only benefit the Quisumbings, who own the property adjacent to the lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).
Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor them as the one-year period provided for by
law to impugn their title had elapsed. They also urged that, having been granted by the state, their title is superior to that of the Quisumbings.
We hold, however, that in the light of the fraud attending the issuance of the free patents and titles of Pablito Meneses, said assertions
crumble. Such fraud was confirmed by this Court in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for
violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free patents and titles.
Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction of the damages awarded to the Quisumbings
by the Court of Appeals in the Resolution of February 23, 1988) is meritorious. The task of fixing the amount of damages is primarily with the
trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the appellate court's duty to review the same, a reduction of the award
of damages must pass the test of reasonableness. The Court of Appeals can only modify or change the amount awarded as damages when
they are palpably or scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423 [1993]; Prudenciano
v. Alliance Transport System, Inc., 148 SCRA 440 [1987]).
There is no justification for the radical reduction by the Court of Appeals of the damages awarded by the trial court. Its action was premise
merely on "humanitarian considerations" and the plea of the defendants-appellants. We may agree with the Court of Appeals in reducing the
award after scrutinizing its factual findings only if such findings are diametrically opposed to that of the trial court (Prudenciado v. Alliance
Transport System, Inc., supra). But as it is, the Court of Appeals affirmed point by point the factual findings if the lower court upon which the
award of damages had been based.
We, therefore, see no reason to modify the award of damages made by the trial court. Respondent Braulio C. Darum in G.R. No. 83059 must
also be solidarily liable for said damages in his capacity as a public officer. A public official is by law not immune from damages in his
personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity
for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA 271 [1993]).
WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is GRANTED. The Decision dated August 31,
1987 of the Court of Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it reduces the amount of damages awarded
to the Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No. 82220 and respondent Braulio Darum in G.R. No. 83059.
SO ORDERED.

G.R. No. L-15398

December 29, 1962
J. M. TUAZON & CO., INC., represented by its Managing Partner, Gregorio Araneta,
Inc., plaintiff-appellee,

vs.
TEODOSIO MACALINDONG, defendant-appellant.
Araneta and Araneta for plaintiff-appellee.
Leandro Sevilla and Ramon S. Aquino for defendant- appellant.
PAREDES, J.:
On September 9, 1958, plaintiff instituted Civil Case No. Q-3303 in the Court of First Instance of
Rizal, against Teodosio Macalindong, alleging therein that it is the registered owner of a parcel of
land, commonly known as the Sta. Mesa Heights Subdivision, located at Quezon City and Covered
by Transfer Certificate of Title No. 1267 (37686-Rizal) of the Registry of Deeds of Quezon City; that
on or about December 5, 1955, the defendant, thru force, strategy and stealth, unlawfully entered
into the possession of some 200 square meters, within said parcel of land, situated at Bo. North
Tatalon, Quezon City, and constructed his house thereon; and that because of this act it suffered and
will continue to suffer damages at the rate of P60.00 monthly, representing the fair rental value of the
portion occupied. Defendant answering, stated among others, that
. . . prior to 1955 and since time immemorial, he and his predecessors-in-interest have been
in open, adverse, public, continuous and actual possession of the lot in question in the
concept of owner and, by reason of such possession, he had made improvement thereon
valued at P9,000.00.
As a counterclaim, he asked an award of P25,000.00 for moral and exemplary damages and
P600.00 as attorney's fees.
Defendant presented documents tending to show that the portion in question was acquired by him on
June 28, 1954, thru purchase from Graciano M. Flores (Exh. 1), who in turn acquired the same from
Lucia T. Teotico on April 27, 1954 (Exh. 2). The latter bought the same from Agustin de Torres on
April 1, 1950 (Exh. 3), who allegedly derived his title from Telesforo Deudor, a party in the
Compromise Agreement, which formed the basis of the joint decisions in Civil Cases Nos. Q-135,
139, 174, 177 and 186, of same court.
The court a quo rendered judgment, the pertinent portions of which read
. . . In the first place, the Court takes judicial notice of the fact that this property has been
registered under the Torrens System, in the name of plaintiff since 1914, hence, the claim of
possession of defendant cannot defeat the efficacy of the title of the plaintiff; in the second
place, as testified to by the defendant himself when he was trying to declare the property in
question in the Office of the City Assessor he could not . . . so because he was told that there
was a question to that. In fine, the documents presented by the defendant cannot be
considered by the Court as to vest in him any rights over the property in question as against
the title of the plaintiff which has been issued since 1914. . . .
WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendant
by declaring the defendant to have no valid right of possession and title whatever in plaintiff's
premises; ordering him and all persons claiming under him to vacate the premises in
question and to remove his house and other construction therefrom; ordering him to pay the
plaintiff the sum of P30.00 a month from the date of usurpation in 1955 until the plaintiff is
restored to the possession of the same; and for him to pay the costs.
Defendant presented a Motion to Reconsider and/or to Set Aside Decision, alleging that the said
decision is contrary to the evidence and law. It was contended that while the plaintiff secured title
over the land, the portion in question, however, had been in the adverse, open, public and
continuous possession of the defendant's predecessor-in-interest, since 1893. Defendant
reproduced portions of the Compromise Agreement used in the Civil Cases earlier enumerated, to
show the possession of his predecessors-in-interest, to wit: lawphil.net
SECOND. That within the perimeter of said land is an area measuring fifty (50) quiones
over which the DEUDORS have claimed possessory rights by virtue of what purports to be
an abstract of an "informacion posesoria" covering the latter property, which recites that at
the time of issuance thereof in 1893, the Records of the Registry of Deeds of Manila (South

District) showed that said property was registered in the name of the old Telesforo Deudor,
predecessor-in-interest of the present Deudors who are parties hereto. . . .
THIRD. That said DEUDORS have been in possession of the land in question and claim
to be the owners thereof and during the period of possession have sold their possessory
rights to various third persons;
FOURTH. That in the middle of 1950, DEUDORS, under a mistaken impression of the
nature of their rights in said property, began the following suits against the OWNERS in the
Court of First Instance of Quezon City: . . . .
The motion for reconsideration having been denied February 21, 1959, defendant appealed directly
to this Court, claiming that the court a quo erred
(1) In not holding that plaintiff-appellee's Torrens Certificate of Title is Null and Void insofar as
the property controversy is concerned;
(2) In not holding the plaintiff-appellee's action has ready prescribed or is already barred by
laches;
(3) In not holding that defendant-appellant is a possess in good faith and is entitled to
retention until reimbursed the value of his improvements;
(4) In ordering defendant-appellant to pay rentals in the sum of P30 per month from 1955
until plaintiff-appellee is restored to the possession of the land in controversy; and
(5) In not dismissing the complaint.
The appellee's cause of action is based on its ownership of the subject land, evidenced by TCT No.
1267 of the Register of Deeds of Quezon City (Exhibit A), which was issued in appellee's name on
May 29, 1939 (Decree No. 17431 G.L.R.O. No. 7681), and was traceable O.C.T. No. 735 (Rizal,
issued on July 8, 1914). Appellant's defense is that he is the owner of the subject premises. His only
counter-claim is for attorney's fees a moral and exemplary damages, for appellee's supposedly
malicious and frivolous presentation of the complain Nullity of appellee's title and reconveyance were
never set up, either as defenses or as counter-claims. Neither prescription of appellee's claim or bar
of the action recovery due to laches was averred in appellant's defenses. Appellant cannot raise
them now for the first time on appeal. Verily the failure to raise the issue of prescription and laches,
amounts to a waiver of such defense (Sec. 10, Rule 9; Maxilim v. Tabotabo, 9 Phil. 39 Domingo v.
Osorio, 7 Phil. 405). Moreover, the right of the appellee to file an action to recover possession based
on its Torrens Title is imprescriptible and not barred under doctrine of laches (Art. 348, Civil Code;
Francisco et al. v. Cruz, et al., 43 O.G. 5105). On the contra the laws on prescription of actions and
on estoppel an laches presently operate against appellant. After many years of inaction - forty-four
years, from July 8, 1914 (issuance of O.C.T. No. 735, Rizal), or nineteen (19) years from May 29,
1939 (issuance of T.C.T. No. 1267), appellant should be completely barred from assailing the decree
of registration of the subject property (Tiburcio v. PHHC, G.R. NO. L-13429, Oct. 31, 1959; See also
J.M. Tuason & Co., Inc. v. Bolanos, L-4935, May 28, 1954, and J.M. Tuason & Co., Inc. v. Santiago,
G.R. No. L-5079, July 31, 1956, involving the same Decree).
We are in accord with appellant's contention that Act No. 496 is not intended to shield fraud and that
registration thereunder merely confirms title but does not vest any, when there is none, because
registration under the Torrens system is not a mode of acquiring ownership. We are not, however,
justified to apply these principle to the facts of the case and partially annul appellee's Torrens Title,
which, as stated above, is traceable to an original certificate of title issued way back in 1914, or over
44 years ago, and which is now incontrovertible and conclusive against the whole world (sec. 38, Act
496) To sustain an action for annulment of a Torrens Title, for being void ab initio, it must be shown
that the land Court which had issued the pertinent decree of registration, did not acquire jurisdiction
over the case; and to succeed is an action for reconveyance after the lapse of one year from the
decree of registration, actual fraud in securing the title must be proved (Bernardo v. Siojo, 58 Phil. 89
102). The pleadings filed by appellant before the trial court, alleged no such lack of jurisdiction and
no evidence whatsoever was adduced or attempted to be adduced on the question of jurisdiction of
the said land court and the record also fails to show fraudulent acts or and knowledge of others'

adverse rights by the original Tuason registrants in G.L.R.O. Rec. No. 7681, or that the latter knew of
Telesforo Deudor's or Agustin de Torres' sup posed right of ownership.
Appellant mentions an informacion posesoria, subject of Compromise Agreement dated March 16,
1953, between Deudor and Tuason & Co., Inc., allegedly issued in 1893 to Telesforo Deudor, who
sold a portion of his land to Agustin de Torres, who possessed it until it passed to Lucia T. Teotico, to
show that he had a previous title to the land, before the appellee had obtained a Torrens title in 1914.
In the first place, the compromise agreement had already been rescinded (Deudor et al. v. J.M.
Tuason & Co., Inc., L-13768, May 30, 1961). In the second place, the records do not indicate that
either Telesforo Deudor or Agustin de Torres was in possession of the subjected lot, at the time
appellee's predecessor-interest had obtained a Torrens Title thereto in 1914, or at any time before
World War II. And there is no finding of the trial court to this effect. On the contrary, it is a fact that in
December 1955, appellant entered a portion of 200 square meters of appellee's land, without the
consent and knowledge of appellee, and on September 9, 1958, appellee commenced the present
action for recovery of possession. To this finding of fact, the parties are bound, because the appeal,
according to appellant, would only raise questions of law. Moreover, if We were to give due weight to
the compromise agreement which by the way, was not presented in evidence in the case at bar, the
appellant will have to concede that "The Deudors had a wrong impression of the nature of their
rights" in the subject property, and perforce admit that Telesforo Deudor and Agustin de Torres had
no dominical title to the property in question.
Appellant claims that he should have been declared a builder in good faith, that he should have been
ordered to pay rentals; and that the complaint should have been dismissed. Again this question is
being raised for the first time on appeal. It was not alleged as a defense or counter-claim and the trial
court did not make any finding on this factual issue. From the documents submitted, however, it
appears that appellant was not a builder in good faith. From the initial certificate of title of appellee's
predecessors-in-interest issued on July 8, 1914, there is a presumptive knowledge by appellant of
appellees Torrens Title (which is a notice to the whole world) over the subject premises and
consequently appellant can not, in good conscience, say now that he believed his vendor (Flores),
his vendor's vendor (Teotico) and the latter's seller (De Torres) had rights of ownership over said lot
(Francisco, et al. v. Cruz, supra). Appellant, had likewise, a sufficient warning from the fact that the
lot, subject of his purchase, is described in his Exhibits 1, 2 and 3, to be a portion of
an unnumbered and, therefore, unapproved subdivision plan. Had he investigated before buying and
before building his house on the questioned lot, he would have been informed that the land is
registered under the Torrens system in the name of J.M. Tuason & Co., Inc. If he failed to make the
necessary inquiry, appellant is now bound conclusively to appellee's Torrens Title (Sec. 51, Act 496;
Emas v. Zuzuarregui, 35 Phil. 144). Moreover, when appellant was trying to declare the property, the
Office of the City Assessor told him he could not do so, because there was "a question to that".
Lastly, appellant's remedy in this regard, should have been directed against his predecessors-ininterest.
The decision appealed from, is therefore, affirmed, with costs against the defendant-appellant.
Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera and Makalintal,
JJ., concur.
G.R. No. L-40411
August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as
set forth by counsel for the parties on appeal, involves the determination of the nature of the
properties described in the complaint. The trial judge found that those properties were personal in

nature, and as a consequence absolved the defendants from the complaint, with costs against the
plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of
Davao, Province of Davao. However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which housed the machinery
used by it. Some of the implements thus used were clearly personal property, the conflict concerning
machines which were placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and buildings
introduced and erected by the party of the second part shall pass to the exclusive ownership
of the party of the first part without any obligation on its part to pay any amount for said
improvements and buildings; also, in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated, the improvements and buildings
shall likewise pass to the ownership of the party of the first part as though the time agreed
upon had expired: Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first part on the expiration or
abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw,
Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action
against the defendant in that action; a writ of execution issued thereon, and the properties now in
question were levied upon as personalty by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein.
Indeed the bidder, which was the plaintiff in that action, and the defendant herein having
consummated the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has
on a number of occasions treated the machinery as personal property by executing chattel
mortgages in favor of third persons. One of such persons is the appellee by assignment from the
original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property
consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx
xxx
xxx
5. Machinery, liquid containers, instruments or implements intended by the owner of any
building or land for use in connection with any industry or trade being carried on therein and
which are expressly adapted to meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain
no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing
from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest
before or at the time of the sale of this property. It must further be pointed out that while not
conclusive, the characterization of the property as chattels by the appellant is indicative of intention
and impresses upon the property the character determined by the parties. In this connection the
decision of this court in the case of Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil.,
630), whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues.
It is machinery which is involved; moreover, machinery not intended by the owner of any building or
land for use in connection therewith, but intended by a lessee for use in a building erected on the
land by the latter to be returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme
Court, it was held that machinery which is movable in its nature only becomes immobilized when

placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as the agent of
the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well
known, it was in part said:
To determine this question involves fixing the nature and character of the property from the
point of view of the rights of Valdes and its nature and character from the point of view of
Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived
by them from the execution levied on the machinery placed by the corporation in the plant.
Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not
only land and buildings, but also attributes immovability in some cases to property of a
movable nature, that is, personal property, because of the destination to which it is applied.
"Things," says section 334 of the Porto Rican Code, "may be immovable either by their own
nature or by their destination or the object to which they are applicable." Numerous
illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery,
vessels, instruments or implements intended by the owner of the tenements for the industrial
or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq.
to and inclusive of article 534, recapitulating the things which, though in themselves movable,
may be immobilized.) So far as the subject-matter with which we are dealing machinery
placed in the plant it is plain, both under the provisions of the Porto Rican Law and of the
Code Napoleon, that machinery which is movable in its nature only becomes immobilized
when placed in a plant by the owner of the property or plant. Such result would not be
accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary
or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit.
2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed.
Code Napoleon under articles 522 et seq.) The distinction rests, as pointed out by
Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property
belonging to him so as to deprive him of it by causing it by an act of immobilization to
become the property of another. It follows that abstractly speaking the machinery put by the
Altagracia Company in the plant belonging to Sanchez did not lose its character of movable
property and become immovable by destination. But in the concrete immobilization took
place because of the express provisions of the lease under which the Altagracia held, since
the lease in substance required the putting in of improved machinery, deprived the tenant of
any right to charge against the lessor the cost such machinery, and it was expressly
stipulated that the machinery so put in should become a part of the plant belonging to the
owner without compensation to the lessee. Under such conditions the tenant in putting in the
machinery was acting but as the agent of the owner in compliance with the obligations
resting upon him, and the immobilization of the machinery which resulted arose in legal effect
from the act of the owner in giving by contract a permanent destination to the machinery.
xxx
xxx
xxx
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property, it
follows that they had the right to levy on it under the execution upon the judgment in their
favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes,
since as to him the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed separately
against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of
this instance to be paid by the appellant.

Municipal trial court judges cannot notarize affidavits of

cohabitation of parties whose marriage they will
solemnize.
x xx
A marriage license is issued by the local civil registrar to parties who have all the qualifications and
none of the legaldisqualifications to contract marriage. [27] Before performing the marriage ceremony,
the
judge
must
personally
examine
the
marriage
license
presented. [28]
If the contracting parties have cohabited as husband and wife for at least five years and have
no legal impediment tomarry, they are exempt from the marriage license requirement. [29] Instead, the
parties must present an affidavit of cohabitation sworn to before any person authorized by law to
administer oaths.[30] The judge, as solemnizing officer, must personally examine the affidavit of
cohabitation as to the parties having lived together as husband and wife for at least five years and
the absence of any legal impediment to marry each other.[31] The judge must also execute a sworn
statement that he personally ascertained the parties qualifications to marry and found
no legal impediment to the marriage.[32] Article 34 of the Family Code of the Philippines provides:
Art. 34. No license shall be necessary for the marriage of a man and a woman who have lived
together as husband and wife for at least five years and without any legal impediment to marry each
other. The contracting parties shall state the foregoing facts in an affidavit before any person
authorized by law to administer oaths. The solemnizing officer shall also state under oath that he
ascertained the qualifications of the contracting parties and found no legal impediment to the
marriage.
Section 5 of the Guidelines on the Solemnization of Marriage by the Members of the Judiciary also
provides:
Sec. 5. Other duties of solemnizing officer before the solemnization of the marriage
in legal ratification of cohabitation. In the case of a marriage effecting legal ratification of
cohabitation, the solemnizing officer shall (a) personally interview the contracting parties to
determine their qualifications to marry; (b) personally examine the affidavit of the contracting parties
as to the fact of having lived together as husband and wife for at least five [5] years and the absence
of any legal impediments to marry each other; and (c) execute a sworn statement showing
compliance with (a) and (b) and that the solemnizing officer found no legal impediment to the
marriage.
Based on law and the Guidelines on the Solemnization of Marriage by the Members of the Judiciary,
the person who notarizes the contracting parties affidavit of cohabitation cannot be the judge who
will solemnize the parties marriage.
As a solemnizing officer, the judges only duty involving the affidavit of cohabitation is to examine
whether the parties have indeed lived together for at least five years without legal impediment
to marry. The Guidelines does not state that the judge can notarize the parties affidavit of
cohabitation.
Thus, affidavits of cohabitation are documents not connected with the judges official function and
duty to solemnize marriages. Notarizing affidavits of cohabitation is inconsistent with the duty to
examine the parties requirements for marriage. If the solemnizing officer notarized the affidavit of

cohabitation, he cannot objectively examine and review the affidavits statements before performing
the marriage ceremony. Should there be any irregularity or false statements in the affidavit of
cohabitation he notarized, he cannot be expected to admit that he solemnized the marriage despite
the irregularity or false allegation.

THIRD DIVISION
[ A.M. No. MTJ-14-1842 [Formerly OCA IPI No. 12-2491-MTJ],
February 24, 2014 ]
REX M. TUPAL, COMPLAINANT, VS. JUDGE REMEGIO V. ROJO, BRANCH 5,
MUNICIPAL TRIAL COURT IN CITIES (MTCC), BACOLOD CITY, NEGROS
OCCIDENTAL, RESPONDENT.

xxx
[63]

Since 1922 in Adong v. Cheong Seng Gee, Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the rules of
[64]

evidence. Divorce involves the dissolution of a marriage, but the recognition of a foreign divorce
decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the rules of
ordinary trial. While the Philippines does not have a divorce law, Philippine courts may, however,
recognize a foreign divorce decree under the second paragraph of Article 26 of the Family Code, to
capacitate a Filipino citizen to remarry when his or her foreign spouse obtained a divorce decree
abroad.

[65]

There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family Court
judgment nullifying the marriage between Marinay and Maekara on the ground of bigamy. While the
Philippines has no divorce law, the Japanese Family Court judgment is fully consistent with
Philippine public policy, as bigamous marriages are declared void from the beginning under Article
35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised Penal Code. Thus,
Fujiki can prove the existence of the Japanese Family Court judgment in accordance with Rule 132,
Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court.
xxx
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a foreign
divorce decree to a Filipino spouse without undergoing trial to determine the validity of the
dissolution of the marriage. The second paragraph of Article 26 of the Family Code provides that
[w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino
[88]

spouse shall have capacity to remarry under Philippine law. In Republic v. Orbecido, this Court
recognized the legislative intent of the second paragraph of Article 26 which is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after obtaining a
[89]

divorce, is no longer married to the Filipino spouse under the laws of his or her country. The
second paragraph of Article 26 of the Family Code only authorizes Philippine courts to adopt the
effects of a foreign divorce decree precisely because the Philippines does not allow divorce.
Philippine courts cannot try the case on the merits because it is tantamount to trying a case for
divorce.

The second paragraph of Article 26 is only a corrective measure to address the anomaly that results
from a marriage between a Filipino, whose laws do not allow divorce, and a foreign citizen, whose
laws allow divorce. The anomaly consists in the Filipino spouse being tied to the marriage while the
foreign spouse is free to marry under the laws of his or her country. The correction is made by
extending in the Philippines the effect of the foreign divorce decree, which is already effective in the
country where it was rendered. The second paragraph of Article 26 of the Family Code is based on
this Courts decision in Van Dorn v. Romillo

[90]

which declared that the Filipino spouse should not be

discriminated against in her own country if the ends of justice are to be served.

[91]

The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a foreign
citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy. The Filipino
spouse may file a petition abroad to declare the marriage void on the ground of bigamy. The principle
in the second paragraph of Article 26 of the Family Code applies because the foreign spouse, after
the foreign judgment nullifying the marriage, is capacitated to remarry under the laws of his or her
country. If the foreign judgment is not recognized in the Philippines, the Filipino spouse will be
discriminatedthe foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered to
correct a situation where the Filipino spouse is still tied to the marriage while the foreign spouse is
free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine courts already
have jurisdiction to extend the effect of a foreign judgment in the Philippines to the extent that the
foreign judgment does not contravene domestic public policy. A critical difference between the case
of a foreign divorce decree and a foreign judgment nullifying a bigamous marriage is that bigamy, as
a ground for the nullity of marriage, is fully consistent with Philippine public policy as expressed in
Article 35(4) of the Family Code and Article 349 of the Revised Penal Code. The Filipino spouse has
the option to undergo full trial by filing a petition for declaration of nullity of marriage under A.M. No.
02-11-10-SC, but this is not the only remedy available to him or her. Philippine courts have
jurisdiction to recognize a foreign judgment nullifying a bigamous marriage, without prejudice to a
criminal prosecution for bigamy.

SECOND DIVISION
[ G.R. No. 196049, June 26, 2013 ]
MINORU FUJIKI, PETITIONER, VS. MARIA PAZ GALELA MARINAY,
SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR OF QUEZON CITY,
AND THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF
THE NATIONAL STATISTICS OFFICE, RESPONDENTS.
Similarly, we are not impressed by the ratiocination of the Republic that as a marriage under a
license is not invalidated by the fact that the license was wrongfully obtained, so must a marriage not
be invalidated by a fabricated statement that the parties have cohabited for at least five years as
required by law. The contrast is flagrant. The former is with reference to an irregularity of the
marriage license, and not to the absence of one. Here, there is no marriage license at all.
Furthermore, the falsity of the allegation in the sworn affidavit relating to the period of Jose and
Felisa's cohabitation, which would have qualified their marriage as an exception to the requirement
for a marriage license, cannot be a mere irregularity, for it refers to a quintessential fact that the law

precisely required to be deposed and attested to by the parties under oath. If the essential matter in
the sworn affidavit is a lie, then it is but a mere scrap of paper, without force and effect. Hence, it is
as if there was no affidavit at all.

An action for nullity of marriage is imprescriptible

[ G.R. No. 175581, March 28, 2008 ]REPUBLIC OF THE PHILIPPINES,Petitioner,vs. JOSE A. DAYOT,
Respondent. FELISA TECSON-DAYOT, Petitioner,vs. JOSE A. DAYOT, Respondent.

An action for nullity of marriage is imprescriptible.[56] Jose

and Felisa's marriage was celebrated sans a marriage
license. No other conclusion can be reached except that it
is voidab initio. In this case, the right to impugn a void
marriage does not prescribe, and may be raised any time.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of the
Family Code was not submitted together with the application for a marriage license.
According to her, its absence is proof that respondent did not have legal capacity to
remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by the
national law of the party concerned. The certificate mentioned in Article 21 of the
Family Code would have been sufficient to establish the legalcapacity of respondent,
had he duly presented it in court. A duly authenticated and admitted certificate is
prima facie evidence of legal capacity to marry on the part of the alien applicant for
a marriage license.[50]
As it is, however, there is absolutely no evidence that proves
respondent's legal capacity to marry petitioner. A review of the records before this
Court shows that only the following exhibits were presented before the lower court:
(1) for petitioner: (a) Exhibit "A" - Complaint; [51] (b) Exhibit "B" - Certificate of
Marriage Between Rederick A. Recio (Filipino-Australian) and Grace J. Garcia
(Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija; [52] (c) Exhibit "C"
-Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha D. Samson
(Australian) on March 1, 1987 in Malabon, Metro Manila; [53] (d) Exhibit "D" - Office of
the City Registrar of Cabanatuan City Certification that no information of annulment
between Rederick A. Recio and Editha D. Samson was in its records; [54] and (e)
Exhibit "E" -Certificate of Australian Citizenship of Rederick A. Recio; [55] (2) for
respondent: (a) Exhibit "1" -- Amended Answer; [56](b) Exhibit "2" - Family Law Act
1975 Decree Nisi of Dissolution of Marriage in the Family Court of Australia; [57] (c)
Exhibit "3" - Certificate of Australian Citizenship of Rederick A. Recio; [58] (d) Exhibit
"4" - Decree Nisi of Dissolution of Marriage in the Family Court of

Australia Certificate;[59] and Exhibit "5" -- Statutory Declaration of

the Legal Separation Between Rederick A. Recio and Grace J. Garcia Recio since
October 22, 1995.[60]

GRACE J. GARCIA, A.K.A. GRACE J. GARCIA-RECIO, PETITIONER,VS.

REDERICK A. RECIO, RESPONDENT. THIRD DIVISION[ G.R. No. 138322,
October 02, 2001 ]
A divorce obtained abroad by an alien may be recognized in our jurisdiction,
provided such decree is valid according to the national law of the foreigner.
However, the divorce decree and the governing personal law of the alien
spouse who obtained the divorce must be proven. Our courts do not take
judicial notice of foreign laws and judgments; hence, like any other facts,
both the divorce decree and the national law of the alien must be alleged
and proven according to our law on evidence.

certificate of legal capacity to marry

In People v. Jansen,

[124]

this Court held that:

the solemnizing officer is not duty-bound to investigate whether or not a marriage license has been
duly and regularly issued by the local civil registrar. All the solemnizing officer needs to know is that
the license has been issued by the competent official, and it may be presumed from the issuance of
the license that said official has fulfilled the duty to ascertain whether the contracting parties had
fulfilled the requirements of law.
However, this Court also said in Sevilla v. Cardenas,[125] that the presumption of regularity of official
acts may be rebutted by affirmative evidence of irregularity or failure to perform a duty. The visible
superimpositions on the marriage licenses should have alerted the solemnizing judges to the
irregularity
of
the
issuance.
It follows also that although Article 21 of the Family Code requires the submission of
the certificate from the embassy of the foreign party to the local registrar for acquiring a marriage
license, the judges should have been more diligent in reviewing the parties documents and
qualifications. As noted by the OCA, the absence of the required certificates coupled with the
presence of mere affidavits should have aroused suspicion as to the regularity of the marriage
license
issuance.
The judges gross ignorance of the law is also evident when they solemnized marriages under Article
34 of the Family Code without the required qualifications and with the existence of legal impediments
such as minority of a party. Marriages of exceptional character such as those made under Article 34
are, doubtless, the exceptions to the rule on the indispensability of the formal requisite of a marriage
license.[126] Under the rules of statutory construction, exceptions as a general rule should be strictly
but reasonably construed. [127] The affidavits of cohabitation should not be issued and accepted pro
forma particularly in view of the settled rulings of the Court on this matter. The five-year period of
cohabitation should be one of a perfect union valid under the law but rendered imperfect only by the
absence of the marriage contract. [128] The parties should have been capacitated to marry each other

during

the

entire

period

and

not

only

at

the

time

of

the

marriage. [129]

To elaborate further on the gravity of the acts and omissions of the respondents, the Family Code
provides the requisites for a valid marriage:
Art.

3.

The

formal

requisites

of

marriage

are:

(1)
Authority
of
the
solemnizing
officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place with the appearance of the contracting parties before the
solemnizing officer and their personal declaration that they take each other as husband and wife in
the
presence
of
not
less
than
two
witnesses
of legal age.
(53a,
55a)
Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab
initio,except
as
stated
in
Article
35
(2).
A defect in any of the essential requisites shall not affect the validity of the marriage but the party or
parties responsible for the irregularity shall be civilly, criminally and administratively liable. (n)
The absence of a marriage license will clearly render a marriage void ab initio.[130] The actions of the
judges have raised a very alarming issue regarding the validity of the marriages they solemnized
since they did not follow the proper procedure or check the required documents and qualifications.
In Aranes v. Judge Salvador Occiano, [131] the Court said that a marriage solemnized without a
marriage license is void and the subsequent issuance of the license cannot render valid or add even
an iota of validity to the marriage. It is the marriage license that gives the solemnizing officer the
authority to solemnize a marriage and the act of solemnizing the marriage without a license
constitutes
gross
ignorance
of
the
law.
As held by this Court in Navarro v. Domagtoy:
The judiciary should be composed of persons who, if not experts are at least proficient in the law
they are sworn to apply, more than the ordinary layman. They should be skilled and competent in
understanding and applying the law. It is imperative that they be conversant with
basic legal principles like the ones involved in the instant case. It is not too much to expect them to
know and apply the law intelligently.
xxx
WHEREFORE, the Court finds respondents:
Judge Anatalio S. Necessario, Presiding Judge, Municipal Trial Court in Cities, Branch 2,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
he be DISMISSED FROM THE SERVICE with forfeiture of his retirement benefits, except leave
credits, if any, and that he be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
2.
Judge Gil R. Acosta, Presiding Judge, Municipal Trial Court in Cities, Branch 3, Cebu
City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that he
be DISMISSED FROM THE SERVICEwith forfeiture of his retirement benefits, except leave credits, if
any, and that he be disqualified from reinstatement or appointment to any public office, including
government-owned or -controlled corporation;
1.

3.

4.

5.

6.

7.

8.

9.

Judge Rosabella M. Tormis, Presiding Judge, Municipal Trial Court in Cities, Branch 4,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
she would have been DISMISSED FROM THE SERVICE with forfeiture of her retirement benefits,
except leave credits, if any, and disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation, had she not been previously dismissed
from service in A.M. No. MTJ-12-1817 (Formerly A.M. No. 09-2-30-MTCC);
Judge Edgemelo C. Rosales, Presiding Judge, Municipal Trial Court in Cities, Branch 8,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
he be DISMISSED FROM THE SERVICE with forfeiture of his retirement benefits, except leave
credits, if any, and that he be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
Helen Mongaya, Court Interpreter, Municipal Trial Court in Cities, Branch 4, Cebu
City, GUILTY of violating Section 2, Canon I of the Code of Conduct for Court Personnel and that
she be DISMISSED FROM THE SERVICEwith forfeiture of her retirement benefits, except leave
credits, if any, and that she be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
Rhona F. Rodriguez, Administrative Officer I, Office of the Clerk of Court, Regional Trial
Court, Cebu City,GUILTY of gross misconduct for Section 2, Canon I of the Code of Conduct for
Court Personnel and for inducing Maricel Albater to falsify the application for marriage and that she
be DISMISSED FROM THE SERVICE with forfeiture of her retirement benefits, except leave credits,
if any, and that she be disqualified from reinstatement or appointment to any public office, including
government-owned or -controlled corporation;
Desiderio S. Aranas, Process Server, Municipal Trial Court in Cities, Branch 3, Cebu
City, GUILTY of conduct prejudicial to the best interest of the service and that he
be SUSPENDED without pay for a period of six (6) months with a warning that a similar offense shall
be dealt with more severely;
Rebecca Alesna, Court Interpreter, Municipal Trial Court in Cities, Branch 1, Cebu
City, GUILTY of conduct prejudicial to the best interest of the service and of violating Section 2(b),
Canon III of the Code of Conduct for Court Personnel and that she be SUSPENDED without pay for
a period of six (6) months with a warning that a similar offense shall be dealt with more severely;
Celeste Retuya, Clerk III, Municipal Trial Court in Cities, Branch 6, Cebu City, and Emma
Valencia, Stenographer III, Regional Trial Court, Branch 18, Cebu City, GUILTY of conduct
prejudicial to the best interest of the service and of violating Section 2(b), Canon III of the Code of
Conduct for Court Personnel and that they beADMONISHED with a warning that a similar offense
shall be dealt with more severely;
The complaints against Judge Geraldine Faith A. Econg, Presiding Judge, Regional Trial Court,
Branch 9, Cebu City; Corazon P. Retuya, Court Stenographer, Municipal Trial Court in Cities,
Branch 6, Cebu City; and Marilou Cabaez, Court Stenographer, Municipal Trial Court in Cities, are
DISMISSED for lack of merit.
The case against Judge Rosabella M. Tormis, including the sworn statements of Celerina Plaza and
Crisanto dela Cerna, should be REFERRED to the Office of the Bar Confidant for the purpose of
initiating disbarment proceedings against the judge.
The Honorable Mayors of Barili, Cebu and Liloan, Cebu, are to be furnished copies of the
Supplemental Report dated 14 August 2007 and are ADVISED to conduct an investigation with
respect to the statements of Filomena C. Lopez, Civil Registrar of Barili, Cebu, and Bonita I. Pilones,
Civil Registrar of Liloan, Cebu, regarding the processing of marriage licenses and to take the
necessary action as the findings of the investigation may warrant.
Let a copy of this Decision be included in the respondents files that are with the Office of the Bar

Confidant and distributed to all courts and to the Integrated Bar of the Philippines.
SO ORDERED.

EN BANC
[ A.M. No. MTJ-07-1691 [Formerly A.M. No. 07-7-04-SC], April 02, 2013 ]
OFFICE OF THE COURT ADMINISTRATOR, PETITIONER, VS. JUDGE ANATALIO S. NECESSARIO,
BRANCH 2; JUDGE GIL R. ACOSTA, BRANCH 3; JUDGE ROSABELLA M. TORMIS,
BRANCH 4; AND JUDGE EDGEMELO C. ROSALES, BRANCH 8; ALL OF MTCC-CEBU CITY;
CELESTE P. RETUYA, CLERK III, MTCC BRANCH 6, CEBU CITY; CORAZON P. RETUYA,
COURT STENOGRAPHER, MTCC, BRANCH 6, CEBU CITY; RHONA F. RODRIGUEZ,
ADMINISTRATIVE OFFICER I, OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL
COURT (RTC) CEBU CITY; EMMA D. VALENCIA, COURT STENOGRAPHER III, RTC,
BRANCH 18, CEBU CITY; MARILOU CABANEZ, COURT STENOGRAPHER, MTCC, BRANCH
4, CEBU CITY; DESIDERIO S. ARANAS, PROCESS SERVER, MTCC, BRANCH 3, CEBU
CITY; REBECCA ALESNA, COURT INTERPRETER, MTCC, BRANCH 1, CEBU CITY; AND
HELEN MONGGAYA, COURT STENOGRAPHER, MTCC, BRANCH 4, CEBU CITY.
RESPONDENTS.

not a prejudicial question

In the light of Article 40 of the Family Code, respondent,

without first having obtained the judicial declaration of
nullity of the first marriage, can not be said to have validly
entered into the second marriage. Per current
jurisprudence, a marriage though void still needs a judicial
declaration of such fact before any party can marry again;
otherwise the second marriage will also be void.19 The
reason is that, without a judicial declaration of its nullity,
the first marriage is presumed to be subsisting. In the case
at bar, respondent was for all legal intents and purposes
regarded as a married man at the time he contracted his
second marriage with petitioner.20 Against this legal
backdrop, any decision in the civil action for nullity would
not erase the fact that respondent entered into a second
marriage during the subsistence of a first marriage. Thus,

a decision in the civil case is not essential to the

determination of the criminal charge. It is, therefore, not a
prejudicial question. As stated above, respondent cannot
be permitted to use his own malfeasance to defeat the
criminal action against him.

G.R. No. 138509

July 31, 2000

IMELDA MARBELLA-BOBIS, petitioner,

vs.
ISAGANI D. BOBIS, respondent.

It is not enough that the respondent, alleged to be

psychologically incapacitated, had difficulty in complying
with his marital obligations, or was unwilling to perform
these obligations. Proof of a natal or supervening disabling
factor an adverse integral element in the respondents
personality structure that effectively incapacitated him from
complying with his essential marital obligations must be
shown. Mere difficulty, refusal or neglect in the
performance of marital obligations or ill will on the part of
the spouse is different from incapacity rooted in some
debilitating psychological condition or illness; irreconcilable
differences, sexual infidelity or perversion, emotional
immaturity and irresponsibility and the like, do not by
themselves warrant a finding of psychological incapacity
under Article 36, as the same may only be due to a
persons refusal or unwillingness to assume the essential
obligations of marriage.
The only fact established here, which Catalina even
admitted in her Answer, was her abandonment of the

conjugal home to live with another man. Yet, abandonment

was not one of the grounds for the nullity of marriage
under the Family Code. It did not also constitute
psychological incapacity, it being instead a ground for legal
separation under Article 55(10) of the Family Code. On the
other hand, her sexual infidelity was not a valid ground for
the nullity of marriage under Article 36 of the Family Code,
considering that there

should be a showing that

such marital infidelity was a manifestation
of a disordered personality that made her
completely unable to discharge the
essential obligations of marriage.33 Needless to
state, Eduardo did not adduce such evidence, rendering
even his claim of her infidelity bereft of factual and legal
basis.
G.R. No. 159594

November 12, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs. THE HON. COURT OF APPEALS (NINTH DIVISION), AND EDUARDO C. DE QUINTOS,
.JR., Respondents.

ELEMENTS OF PSYCHOLOGICAL INCAPACITY

Article 36 of the Family Code governs psychological incapacity as a ground for declaration of nullity
of marriage. It provides that "a marriage contracted by any party who, at the time of the celebration,
was psychologically incapacitated to comply with the essential marital obligations of marriage, shall
likewise be void even if such incapacity becomes manifest only after its solemnization."
In interpreting this provision, we have repeatedly stressed that psychological incapacity
contemplates "downright incapacity or inability to take cognizance of and to assume the basic marital
obligations";21 not merely the refusal, neglect or difficulty, much less ill will, on the part of the errant
spouse.22

The plaintiff bears the burden of proving the

1. juridical antecedence (i.e., the existence at the time of the celebration of

marriage),

2. gravity and

3.incurability of the condition of the errant spouse.

23

distinction between a resulting trust and a constructive trust

resulting trust n. a trust implied by law (as determined by a court) that a person
who holds title or possession was intended by agreement (implied by the circumstances) with the
intended owner to hold the property for the intended owner. Thus, the holder is considered a trustee
of a resulting trust for the proper owner as beneficiary. Although a legal fiction, the resulting trust
forces the holder to honor the intention and prevents unjust enrichment. Example: Mahalia leaves
$100,000 with her friend, Albert, while she is on a trip to Europe, asking him "to buy the old Barsallo
place if it comes on the market." Albert buys the property, but has title put in his own name, which
the court will find is held in a resulting trust for Mahalia.

Distinguish a resulting trust from a constructive trust

A resulting trust differs from a

"constructive trust" which comes

about when someone comes into possession by accident, misunderstanding or dishonesty

of property belonging to another

What is a resulting trust? Give an example

Resulting Trust
An arrangement whereby one person holds property for the benefit of another, which is implied by a
court in certain cases where a person transfers property to another and gives him or her legal title to
it but does not intend him or her to have an equitable or beneficial interest in the property.
Since this beneficial interest is not given to anyone else, it is said to "result" to the person who
transferred the property.
A resulting trust arises when an express trust fails. A settlor, one who creates a trust, transfers his
property to a trustee, one appointed, or required by law, to execute a trust, to hold in trust for a
beneficiary, one who profits from the act of another. If, without the settlor's knowledge, the
beneficiary died before the trust was created, the express trust would fail for want of a beneficiary.
The trustee holds the property in resulting trust for the settlor.
When an express trust does not use or exhaust all the trust property, a resulting trust arises. For
example, the settlor transfers $200,000 in trust to pay the beneficiary during her lifetime $2,000 a
month from principal, trust property, as opposed to income generated by investment of the principal.
No other disposition is specified. The beneficiary dies after having received $20,000. The trustee
holds the unexpended funds in a resulting trust for the settlor.
A purchase money resulting trust arises when one person purchases and pays for property and the
name of another person is on the title. For example, a person purchases a farm for $100,000 and
directs the seller to make the deed out to a third person. Nothing further appears concerning the
purchaser's intention, and no relationship exists between the purchaser and the third person. In this

situation, a resulting trust is created. The purchaser's intention is inferred from the absence of
expressed intention that she intends the third person to have an interest in the farm. This occurs
because a person usually does not intend to dispose of property without receiving something in
return for it, unless she makes an express statement to the contrary, such as announcing an
intention to make a gift or loan. If the purchaser is the spouse or parent of the third person, which is
not the case here, it is presumed that a gift is intended. In this case, the third person holds a
purchase money resulting trust for the purchaser.
A purchase money resulting trust does not arise, however, if the person who pays the purchase price
manifests an intention that no resulting trust should arise. Purchase money resulting trusts have
been abolished or restricted in a number of states.
The resulting trust attempts to dispose of the property in the manner the person who transferred it
would have wanted if he had anticipated the situation. The court will order that the person with legal
title to the trust property hold it in a resulting trust for the person who transferred it. When a
charitable trusta trust designed for the benefit of a class or the public generallyfails, a resulting
trust will be invoked only if the doctrine of Cy Pres is deemed not to apply. This doctrine implements
the intention of a person as nearly as possible when giving the intent literal effect would be illegal or
impossible.

WHAT IS A CONSTRUCTIVE TRUST?

A constructive trust is an equitable remedy resembling a trust imposed by a court to benefit a
party that has been wrongfully deprived of its rights due to either a person obtaining or holding legal
right to property which they should not possess due to unjust enrichment or interference

In a constructive trust the defendant breaches a duty owed to the plaintiff. The most common such
breach is a breach of fiduciary duty. A controversial example is the case of Attorney-General for
Hong Kong v Reid,[3] in which a seniorprosecutor took bribes not to prosecute certain offenders. With
the bribe money, he purchased property in New Zealand. His employer, the Attorney-General, sought
a declaration that the property was held on constructive trust for it, on the basis of breach of fiduciary
duty. The Privy Council awarded a constructive trust. The case is different fromRegal
(Hastings) because there was no interference with a profit-making opportunity that properly belonged
to the prosecutor.
This area is highly controversial and may not represent the law in England because of the
previous Court of Appealcase of Lister v Stubbs[4] which held the opposite, partially because a trust
is a very strong remedy that gives proprietary rights to the claimant not enjoyed by the defendant's
other creditors. In the event of the defendant's insolvency, the trust assets are untouchable by the
general creditors. Supporters of Lister v Stubbs suggest that there is no good reason to put the
victim of wrongdoing ahead of other creditors of the estate. However, being a Privy Council decision
Reid's case did not overrule the decision in Lister v Stubbs, which is still good law in England and
Wales, but not in some of its former colonies, such as Australia. There is a tension in English law
between Lister and Reid which has been highlighted in the recent cases such as Sinclair
Investments (UK) Ltd v Versailles Trade Finance Ltd.[5]

Unjust enrichment
In Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [7] one bank paid another bank a
large sum of money by mistake (note that the recipient Bank did not do anything wrong - it just
received money not owed to it). Goulding J held that the money was held on (constructive) trust for
the first bank. The reasoning in this case has been doubted, and in Westdeutsche Landesbank
Girozentrale v Islington London Borough Council the House of Lords distanced itself from the idea
that unjust enrichment raises trusts in the claimant's favour. This remains an area of intense
controversy.
These type of trusts are called '"institutional" constructive trusts'. They arise the moment the relevant
conduct (breach of duty, unjust enrichment etc.) occurs. They can be contrasted with '"remedial"
constructive trusts', which arise on the date of judgment as a remedy awarded by the court to do
justice in the particular case.
An example is the Australian case Muschinski v Dodds.[8] A de facto couple lived in a house owned
by the man. They agreed to make improvements to the property by building a pottery shed for the
woman to do arts and crafts work in. The woman paid for part of this. They then broke up. The High
Court held that the man held the property on constructive trust for himself and the woman in the
proportions in which they had contributed to the improvements to the land. This trust did not arise the
moment the woman commenced improvements - that conduct did not involve a breach of duty or an
unjust enrichment etc. The trust arose at the date of judgment, to do justice in the case.
Remedial constructive trusts do not exist in England and Wales, and the High Court of Australia has
also distanced itself from Muschinski v Dodds in the later case of Bathurst City Council v PWC
Properties.[9]

Usefulness of constructive trusts

For example, if the defendant steals $100,000 from the plaintiff and uses that money to buy a house,
the court can trace the house back to the plaintiff's money and deem the house to be held in trust for
the plaintiff. The defendant must then convey title to the house to the plaintiff, even if rising property
values had appreciated the value of the house to $120,000 by the time the transaction occurred. If
the value of the house had instead depreciated to $80,000, the plaintiff could demand a remedy at
law (money damages equal to the amount stolen) instead of an equitable remedy.
The situation would be different if the defendant had mixed his own property with that of the plaintiff,
for example, adding $50,000 of his own money to the $100,000 stolen from the plaintiff and buying a
$150,000 house or using plaintiff's $100,000 to add a room to defendant's existing house. The
constructive trust would still be available but in proportion to the contributions, not wholly in the
claimant's favour. Alternatively, the claimant could elect for an equitable lien instead, which is like a
mortgage over the asset to secure repayment.
Because a constructive trust is an equitable device, the defendant can raise all of the available
equitable defenses against it, including unclean hands, laches, detrimental reliance, and undue
hardship.

sale of whole property made by a co-owner

Petitioners herein filed a case for recovery of property and

damages
against
the
defendant
and
herein
private respondent, Celestino Afable.
Rosalia Bailon and Gaudencio Bailon sold a portion of the
said land consisting of 16,283 square meters to Donato
Delgado. On May 13, 1949, Rosalia Bailon alone sold the
remainder of the land consisting of 32,566 square meters
to Ponciana V. Aresgado de Lanuza. On the same date,
Lanuza acquired from Delgado the 16,283 square meters
of land which the latter had earlier acquired from Rosalia
and gaudencio. On December 3, 1975, John Lanuza,
acting under a special power of attorney given by his wife,
Ponciana V. Aresgado de Lanuza, sold the two parcels of
land to Celestino Afable, Sr. In all these transfers, it was
stated in the deeds of sale that the land was not
registered.
Afable claimed that he had acquired the land in question
through prescription and contended that the petitioners
were guilty of laches.
Issue:

What is the effect of a sale by one or more co-owners of

the entire property held in common without the consent of
all the co-owners and of the appropriate remedy of the
aggrieved co-owners?
Held:

The Court has ruled that even if a co-owner sells the

whole property as his, the sale will affect only his own
share but not those of the other co-owners who did not
consent to the sale. The sale or other disposition affects
only what would correspond to his grantor in the partition

of the thing owned in common. Consequently, by virtue of

the sales made by Rosalia and Gaudencio Bailon which
are valid with respect to their proportionate shares, and
the subsequent transfers which culminated in the sale to
private respondent Celestino Afable thereby became a coowner of the disputed parcel of land as correctly held by
the lower court since the sales produced the effect of
substituting the buyers in the enjoyment thereof.
It may be deduced that since a co-owner is entitled to sell
his undivided share, a sale of the entire property by one
co-owner without the consent of the other co-owner is not
null and void. However, only the rights of the co-ownerseller are transferred, thereby making the buyer a coowner of the property.
The proper action in cases like this is not for the
nullification of the sale or for the recovery of possession of
the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their
shares, but the DIVISION of the common property as if
itcontinued to remain in the possession of the co-owners
who possessed and administered it.
The action to demand partition is imprescriptible or cannot
be barred by laches, absent a clear repudiation of the coownership by a co-owner clearly communicated to the
other co-owners.
COMMUNITIES CAGAYAN, INC., vs. SPOUSES ARSENIO
(Deceased) and ANGELES NANOL AND ANYBODY CLAIMING
RIGHTS UNDER THEM
COMMUNITIES
CAGAYAN,
INC.,
vs.
SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS
UNDER THEM
Facts:
Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to
Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to
respondent-spouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision,

Cagayan de Oro City, for the price of P368,000.00 (P368T). They obtained a loan from Capitol
Development Bank (CDB), using the property as collateral. To facilitate the loan, a simulated sale
over the property was executed by petitioner in favor of respondent-spouses. Accordingly, titles (TCT
Nos. 105202 and 105203) were transferred in the names of respondent-spouses and submitted to
CDB for loan processing. The bank collapsed and closed before it could release the loan.
On November 30, 1997, respondent-spouses entered into another Contract to Sell with
petitioner over the same property for the same price. This time, they availed of petitioners in-house
financing thus, undertaking to pay the loan over four years, from 1997 to 2001.

Respondent Arsenio demolished the original house and constructed a three-story house
allegedly valued at P3.5 million, more or less. (Respondent Arsenio died, leaving his wife, herein
respondent Angeles, to pay for the monthly amortizations.)
On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of
Delinquency and Cancellation of Contract to Sell due to the latters failure to pay the monthly
amortizations. Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful
detainer against respondent-spouses.
In her Answer, respondent Angeles averred that the Deed of Absolute Sale is valid.
Issues
1) Whether petitioner is obliged to refund to respondent-spouses all the monthly
installments paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new
house minus the cost of the original house.
Ruling
The petition is partly meritorious.
Respondent-spouses are entitled to the cash surrender value of the payments
on the property equivalent to 50% of the total payments made under the Maceda Law.
Respondent-spouses are entitled to reimbursement of the improvements
made on the property.
In view of the special circumstances obtaining in this case, we are constrained to rely on
the presumption of good faith on the part of the respondent-spouses which the petitioner failed
to rebut. Thus, respondent-spouses being presumed builders in good faith, we now rule on the
applicability of Article 448 of the Civil Code. Article 448 on builders in good faith does not apply
where there is a contractual relation between the parties, such as in the instant case. We went
over the records of this case and we note that the parties failed to attach a copy of the Contract
to Sell. As such, we are constrained to apply Article 448 of the Civil Code, which provides viz:
ART. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the
land is in accord with the principle of accession, i.e., that the accessory follows the principal and
not the other way around. Even as the option lies with the landowner, the grant to him,
nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel
instead the owner of the building to remove it from the land. The raison detre for this provision
has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict
of rights arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the impracticability of
creating a state of forced co-ownership, the law has provided a just solution by giving the owner
of the land the option to acquire the improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse
to exercise either option. It is the owner of the land who is authorized to exercise the option,
because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing.
In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has
two options. It may appropriate the new house by reimbursing respondent Angeles the current
market value thereof minus the cost of the old house. Under this option, respondent Angeles would
have "a right of retention which negates the obligation to pay rent." In the alternative, petitioner may
sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if
the value of the lots is considerably more than the value of the improvement, respondent Angeles
cannot be compelled to purchase the lots. She can only be obliged to pay petitioner reasonable rent.

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO

VILLAFLORES, Respondent.
G.R. No. 185020

October 6, 2010 SECOND DIVISION

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO VILLAFLORES, Respondent.

Facts
In 1980, Maria Villaflores (Maria) sold a portion of Lot 2-A to her nephew, respondent Antonio
Villaflores (Antonio). Antonio then took possession of the portion sold to him and constructed a
house thereon. Twelve (12) years later, or on August 15, 1992, Maria executed in favor of Antonio a
Kasulatan ng Bilihang Tuluyan covering the entire Lot 2-A. However, Antonio did not register the sale
or pay the real property taxes for the subject land.

On August 31, 1994, Maria sold the same Lot 2-A to Filomena, evidenced by a Kasulatan ng
Bilihang Tuluyan. Filomena registered the sale on September 6, 1994. Since then Filomena paid the
real property taxes for the subject parcel of land.

After trial, the RTC sustained Filomenas ownership who was the one who registered the sale in good
faith. It rejected Antonios allegation of bad faith on the part of Filomena because no sufficient evidence
was adduced to prove it. This finding was affirmed by the CA.

Issue

Whether Antonio is a possessor in good faith.

Ruling
The Court sustained the finding that Antonio is a builder in good faith.

Under Article 448, a landowner is given the option to either appropriate the improvement as his own upon
payment of the proper amount of indemnity, or sell the land to the possessor in good faith. Anent to this,
Article 546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and
useful expenses incurred; it also gives him right of retention until full reimbursement is made. The
objective of Article 546 of the Civil Code is to administer justice between the parties involved. Guided by
this precept, it is therefore the current market value of the improvements which should be made the basis
of reimbursement.

However, in spite of its finding of good faith on the part of Antonio by the RTC it did not order the
reimbursement of the necessary and useful expenses he incurred. Hence, the CA correctly ordered the
remand of the case for further proceedings.

TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL

TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL
G.R. No. 175399

October 27, 2009

FACTS:
Visminda Escol, the seller and Ophelia Tuatis, the buyer entered into a Deed of Sale by Installments, the
subject matter of which is a parcel of land in Sindangan. It provided that upon the failure of the buyer to
pay the remaining balance within the time stipulated, he shall return the land to the seller, and the seller
shall return all the amounts paid by the buyer. Tuatis took possession of the land and constructed a
residential building. Tuatis asserted that she paid Visminda the remaining balance of P3000 in the
presence of one Erik Selda and thereafter requested Visminda to sign the absolute deed of sale.
Visminda refused contending that the purchase price has not been fully paid. The RTC dismissed Tuatiss
complaint and also ruled that Tuatis constructed the building in bad faith for she had knowledge of the fact
that Visminda is still the absolute owner of the land and there was also bad faith on the part of Visminda
since she allowed the construction of the building without opposition on her part.The rights of the parties
must, therefore, be determined as if they both had acted in bad faith. Their rights in such cases are
governed by Article 448 of the Civil Code. The Court of Appeals dismissed the appeal by Tuatis which
resulted to the finality of the appealed decision. Visminda filed a writ of execution. Tuatis then moved that
the RTC issue an order allowing her to buy the subject property and maintained that she has the right to
choose between being indemnified for the value of her building or buying from Visminda the parcel of
land. During the pendency of the motion, the writ of execution was enforced. Tuatis filed with the CA a
petition for certiorari, prohibition and mandamus but the same was denied hence this petition.
ISSUE:
Whether or not Tuatis is entitled to exercise the options granted in Art. 448 of the Civil Code.
RULING:
No, Tuatis is not entitled to exercise the options granted in Article 448 of the Civil Code.

Article 448 provides that the owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of
the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
According to the provision, the landowner can choose between appropriating the building by paying the
proper indemnity for the same, as provided for in Articles 546 and 548 of the Civil Code; or obliging the
builder to pay the price of the land, unless its value is considerably more than that of the structures, in
which case the builder in good faith shall pay reasonable rent.
Under the first option, Visminda may appropriate for herself the building on the subject property after
indemnifying Tuatis for the necessary and useful expenses the latter incurred for said building, as provided
in Article 546 of the Civil Code. Until Visminda appropriately indemnifies Tuatis for the building
constructed by the latter, Tuatis may retain possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige Tuatis
to pay the present or current fair value of the land.The P10,000.00 price of the subject property, as stated
in the Deed of Sale on Installment executed in November 1989, shall no longer apply, since Visminda will
be obliging Tuatis to pay for the price of the land in the exercise of Vismindas rights under Article 448 of
the Civil Code, and not under the said Deed. Tuatis obligation will then be statutory, and not contractual,
arising only when Visminda has chosen her option under Article 448 of the Civil Code
Still under the second option, if the present or current value of the land, the subject property herein, turns
out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to pay for the
subject property, but she must pay Visminda reasonable rent for the same. Visminda and Tuatis must
agree on the terms of the lease; otherwise, the court will fix the terms.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis demand that, since the value of the building she constructed
is considerably higher than the subject property, she may choose between buying the subject property
from Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for
Visminda, not Tuatis, to make. And, depending on Vismindas choice, Tuatis rights as a builder under
Article 448 are limited to the following: (a) under the first option, a right to retain the building and subject
property until Visminda pays proper indemnity; and (b) under the second option, a right not to be obliged
to pay for the price of the subject property, if it is considerably higher than the value of the building, in
which case, she can only be obliged to pay reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord
with the principle of accession, i.e., that the accessory follows the principal and not the other way around.
Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel instead the owner of the building to remove it from the
land.
The raison detre for this provision has been enunciated thus: Where the builder, planter or sower has
acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect
the owner of the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving
the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to
exercise either option. It is the owner of the land who is authorized to exercise the option, because his
right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory
thing.

Vismindas Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to
recover possession of the subject property under the first option, since the options under Article 448 of the
Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999
Decision of the RTC. She must then be given the opportunity to make a choice between the options
available to her after being duly informed herein of her rights and obligations under both.

QUIZ IN CIVIL LAW REVIEW

1. Within what time should an action for reconveyance of registered land based on an implied
trust be filed? Why? (p. 545)

2. Give the concept of implied and constructive trusts. How do they arise?

3. Give an example of resulting trust? (535)

4. There was an action for reconveyance of a real property allegedly sold but without
consideration. IT WAS contended that the action has prescribed since 16 years have already
elapsed. Is the contention correct? Why? Will the action be barred by laches? Explain. (p. 521)

5. A bought a building together with the land upon which it is built from B. One of the conditions
is that upon the payment of of its value, B would assign his rights over the lease to which B
did not comply. A demanded he refund of this money and since B refused, he filed a suit for
collection of a sum of money. B filed a motion to dismiss on the ground that the contract if
unenforceable since it is only an oral one. Is the contention correct? Why?(p. 515)

6. X mortgaged his land and building to GSIS as security of the payment of his obligation. Since
he failed to pay his obligation, GSIS foreclosed the mortgage. Centertown Tower Inc. was the
highest bidder. Since the GSIS was not authorized to engage in the real estate business, it
organized a corporation known as Towers Inc. The Tenants Association sued the GSIS,
Centertown and Towers for the annulment of the title on the ground that it is void because it is
ulta vires. Will the action prosper? Why? (p. 509)

7. A is the owner of a house which is being verbally leased to B for five years. A orally promised
B that the lease would be renewed only to refuse it later. Can B go to court and enforce his right
that the contract be renewed after the expiration of the contract? Why?
(p. 514)

8. The widow, in her own behalf, and that of her children, as natural guardian, sold properties
belonging to her husband. After a sister of the husband obtained guardianship over the persons
and properties of the minors, an action to annul the sale together with a prayer that they be
allowed to redeem the properties of the minor was filed. The trial court rendered judgment in
favor of the plaintiffs. On appeal, if you were the ponente, how would you decide? Explain.

9. May a trustee acquire title over a property held in trust? State the general rule. In order that
he may acquire title by acquisitive prescription, what requisites must be present? ( 542)

10. Give examples of constructive trusts. (537)

CASE DIGESTS
Cortes v. Yu-Tibo
GR No. 911, March 12, 1903
Facts:
The house No.65 Calle Rosario, property of the wife of the plaintiff, has certain windows therein,
through which it receives light and air, said windows opening on the adjacent house, No. 63 of the
same street; that these windows have been in existence since the year 1843, and that the defendant,
the tenant of the said house No. 63, has commenced certain work with the view to raising the roof of
the house in such a manner that one-half of one of the windows in said house No. 65 has been
covered, thus depriving the building of a large part of the air and light formerly received through the
window. The court practically finds the preceding facts, and further finds that the plaintiff has not
proven that he has, by any formal act, prohibited the owner of house No. 63 from making
improvements of any kind therein at any time prior to the complaint.
The contention of the plaintiff is that by the constant and uninterrupted use of the windows during a
period of fifty-nine years he acquired by prescription an easement of light in favor of the house
No.65, and as a servitude upon house No.63, and, consequently, has acquired the right to restrain
the making of any improvements in the latter house which might in any manner be prejudicial to the
enjoyment of the easement. He contends that the easement of light is positive; and that therefore the
period of possession for the purposes of the acquisition of a prescriptive title is to begin from the date
on which the enjoyment of the same commenced, or, in other words, applying the doctrine to this
case, from the time that said windows were opened with the knowledge of the owner of the house
No.63, and without opposition on his part. However, the defendant contends that the easement is
negative, and that therefore the time for the prescriptive acquisition thereof must begin from the date
on which the owner of the dominant estate may have prohibited, by a formal act, the owner of the
servient estate from doing something which would be lawful but for the existence of the easement.
The court ruled that the easement of light is negative.
Issue:
Whether or not the easement of light in the case of windows opened in ones own wall is negative.
Held:
Yes. The Supreme Court said that the case involves windows opened in a wall belonging to the wife
of the plaintiff and it is of their opinion that the windows opened in ones own wall is of negative
character, and, as such, can not be acquired by prescription under Art.538 of the Civil Code, except

by counting the time of possession from the date on which the owner of the dominant estate may, by
a formal act, have prohibited the owner of the servient estate from doing something which it would be
lawful for him to do were it not for the easement. That, in consequence thereof, the plaintiff, not
having executed any formal act of opposition to the right of the owner of house No.63 Calle Rosario
(of which the defendant is tenant), to make therein improvements which might obstruct the light of
house No.65 of the same street, the property of the wife of the appellant, at any time prior to the
complaint, as found by the court below in the judgment assigned as error, he has not acquired, nor
could he acquire by prescription, such easement of light, no matter how long a time might have
elapsed since the windows were opened in the wall of the said house no.65, because the period
which the law demands for such prescriptive acquisition could not have commenced to run, the act
with which it must necessarily commence not having been performed.
When a person open windows in his own building he does nothing more than exercise an act of
ownership inherent in the right of property with no limitations other than those established by law. By
reason of the fact that such an act is performed wholly on a thing which is wholly the property of the
one opening the window, it does not in itself establish any easement, because the property is used
by its owner in the exercise of dominion, and not as the exercise of an easement. It is that the use if
the windows opened in a wall on ones own property, in the absence of some covenant or express
agreement to the contrary, is regarded as an act of mere tolerance on the part of the owner of the
abutting property and does not create any right to maintain the windows to the prejudice of the latter.
The mere toleration of such an act does not imply on the part of the abutting owner a waiver of his
right to freely build upon his land as high as he may see fit, nor does it avail the owner of the
windows for the effects of possession according to Art.1942 of the Civil Code, because it is a mere
possession at will. From all this it follows that the easement of light with respect to the openings
made in ones own edifice does not consist precisely in the fact of opening them or using them. The
easement really consists in prohibiting or restraining the adjacent owner from doing anything which
may tend to cut off or interrupt the light; in short, it is limited to the obligation of not impeding the light.
Saenz v. Hermanos

13 Phil. 667
Facts:
Plaintiff intends to build a house in his lot for business purposes and had already deposited some
lumber in the said lot. Defendants, on the other hand, have constructed a two-story house wherein
they use the ground floor for stores and the upper as dwelling. The house was erected at a distance
of 71 cm from the dividing line in the fround and 70 cm at the rear. Defendants have opened
three windows on the ground floor of their house, in the part that overlooks the lot of the plaintiff,
each window being 1 meter and 20 centimeters wide and 2 meters high; on the upper floor they have
opened 5 windows, each 2 meters and 11 centimeters high and 1 meter and 60 centimeters wide;
they have also constructed a balcony at the front part of the house above the ground floor,
opening directly upon the lot of the plaintiff, and another balcony at the rear part of the house, which
up to the present time opens directly upon the plaintiffs lot, although the defendants state that,
according to the plan, said part is to be closed with boards. All of said windows and balconies are at
a distance of less than one meter from the dividing line of the plaintiffs lot and that of the defendants,
and are looking directly over the same.
Plaintiff was claiming that defendant is prohibited from constructing his house and opening the
windows and balconies looking directly upon his property. However, the court ruled in favor of the
defendant.
Issue:

Whether or not defendant is entitled to the easement of light and view.

Held:
No. Defendant is not entitled to the easement of light and view which the windows and openings,
which he was made in the house in question, give him, and, because of the fact that he has
constructed his houses nearer than 2 meters to the dividing line between his property and the
property of the plaintiff, he is only entitled to the easement of light and view provided for in article
581. Article 581 provides for the character of the windows or openings in the walls of adjoining
property when it its constructed nearer the dividing line contrary to the requirement of 2 meters. In
the present case the defendant constructed his house so that the wall looking upon the property of
the plaintiff was less than 2 meters from the dividing line. Therefore he can only construct such
windows as are provided for in said article. It was the duty of the defendant to construct his house in
accordance with the provisions of the law. The plaintiff was not obliged to stand by for the purpose of
seeing that the defendant had not violated the law.
Juana Pichay v. Eulalo Querol
G.R. No. L-4452, October 1, 1908
Facts:
The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided one-third interest
in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment of a debt of P1,500
which she owed them. The defendants and appellants claim that their agreement gave plaintiff no
right of usufruct in the land, saying that it appears that she only asked for this right and it does not
appear that the defendants gave it to her. On the 10th of August, 1905, the owners of the twenty- five
parcels of land made a partition thereof among themselves, in which the plaintiff took no part, and in
this partition certain specific tracts of land were assigned to the defendants as the third to which they
were entitled by reason of the conveyance from the plaintiff to them. They have been in possession
of the tracts so assigned to them in partition since the date thereof, and are now in such possession,
and have refused to recognized in the plaintiff any right of usufruct therein.
Issue:
Whether or not the usufructuary is bound by the partition made by the owners of the undivided
property although he took no part therein.
Held:
The usufructuary shall be bound by the partition made by the owners of the undivided property
although he took no part in the partition but the naked owner to whom the part held in usufruct has
been alloted must respect the usufruct. The right of the usufructuary is not affected by
the division but is limited to the fruits of said part alloted to the co-owner.
Fabie v. Lichauco
G.R. No. L-3598, July 24, 1908
Facts:
Petitioner Miguel Fabie applied for the registration of his property in Manila free from any
encumbrances except the easement of right of way in favor of respondents Julita Lichauco and Hijos
de Roxas. In addition to the said right of way, respondents also claim that of light and view and
drainage. However, the claim was later reduce only to that of the light and view.

Lichauco cliamed that when Juan Bautista Coloma, the original owner of both estates, established
not only an easement of right of way but also that of light and view and that when both the properties
were alienated, the apparent signs were not removed. The apparent sign allegedly consists of a
gallery with windows through which light is admitted. It was supported on columns erected on the
ground belonging to the petitioner and the balcony on Lichaucos property is supported by uprights
erected on the land by petitioner. The parties admitted the existence of such gallery. The house was
now a frontage of 18 meters and 60 centimeters, of which 16 meters and 60 centimeters correspond
to the main part of the same, and 1 meter and 90 centimeters to the gallery in question. It results,
therefore, that at the present day, the house has nearly 2 meters more frontage than when it was
alienated by Coloma. Therefore, at the present day the house is erected partly on the land belonging
to the owner and partly, the gallery, over a lot belonging to another; that is, over that of the petitioner.
When it was sold in October, 1848, no portion of the house occupied the lot last mentioned, but the
entire building was erected over a lot belonging to the owner as set forth in the instrument of sale.
The lower court held that the right of way and drainage exist in favor of the respondents respective
properties. The claim as to the easement of light and view was dismissed by the court.
Issue:
Whether or not Respondents are entitled to the easement of light and view.
Held:
No. The burden is not on the petitioner to prove on what time the gallery in controversy was
constructed inasmuch as he limits himself to sustaining nad defending the freedom of his property,
denying the easement o flight and view of the respondent pretends to impose over it. A property is
assumed to be from all encumbrance unless the contrary is proved. Respondent who claims the said
easement is obliged to prove the aforementioned gallery, in which the apparent sign of the easement
is made to consist in the present case, existed at the time of ownership of her property and that of
the petitioner were separated. And inasmuch as this issue has not been proved, the claim of the
respondents as to the easements of the light and view which the petitioner does not admit, must of
necessity be dismissed.
Therefore, it does not appear from the agreement of the parties that the respondents has
balconies over the land of the petitioner; and as it is, since it has been positively shown that the said
balconies exceed the limit of the lot owned by the former, nor less that they invade the
atmospheric area of the lot belonging to the latter, it follows that, even in accordance with the theory
maintained by the respondents with which on account of its lack of basis, we consider it unnecessary
to deal herein as to its other aspect, the easement of view, which might result in such case from the
existence of the balconies alluded to, would be negative and not a positive one, because the erection
of the same would not constitute, according to their own statement, an invasion of the right of
another, but the lawful exercise of the right inherent to the dominion of the respondents to construct
within their own lot. And as said easement is negative, it cannot have prescribed in favor of the
property of the respondents in the absence of any act of opposition, according to the agreement, by
which they or their principals would have prohibited the petitioner or his principals to do any work
which obstruct the balconies in question, inasmuch as said act of opposition is what constitutes the
necessary and indispensable point of departure for computing the time required by law for the
prescription of negative easements. Thus, the judgment appealed from was affirmed in toto by the
Court.
Ferrer v. Bautista
231 SCRA 257
Facts:

Gloria Ferrer claims ownership a strip of land south of Lot 1980 of the Cadastral survey of Aringay,
La Union by virtue of accretion, she being the owner of Lot 1980 covered by TCT T-3280, which
is immediately north of the land in question. On the other hand, Balanag and Domondon equally
assert ownership over the property on account of long occupation and by virtue of Certificate of Title
P-168, in the name of Magdalena Domondon, pursuant to Free Patent 309504 issued on 24 January
1966.
On 23 March 1976, Ferrer filed a complaint with the CFI La Union to Quiet Title to Real Property
against Balanag and Domondon. On 07 December 1976, Judge Bautista issued an order dismissing
Ferrers complaint; because it constitutes a collateral or indirect attack on the Free Patent and
Original Certificate of Title. Ferrer filed a motion for reconsideration but was denied. Pursuant to the
SCs Resolution, Ferrer was allowed to file the petition for review on certiorari under RA 5440
considering that only questions of law had been raised. The Court dismissed the petition for lack of
interest due to the failure of Ferrers counsel to submit the requisite memorandum in support of the
petition. In a Resolution dated 28 September 1978, however, the Court resolved to reconsider the
dismissal and to reinstate the petition.
The Supreme Court reversed and set aside the questioned order of dismissal of the trial court, and
rendered judgment declaring Ferrer to be the owner of the disputed parcel of land and ordering
Balanag and Domondon to reconvey the same to Ferrer; without costs.
Issue:
Whether or not Ferrer the lawful owner of the questioned property.
Held:
Article 457 of the Civil Code provides that to the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects of the current of the waters.
Undoubtedly, Ferrer is the lawful owner of the accretion, she being the registered owner of Lot 1980
which adjoins the alluvial property.
Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is
gradually received from the effects of the current of waters The rationale for the rule is to provide
some kind of compensation to owners of land continually exposed to the destructive force
of water and subjected to various easements
The Director of Lands has no authority to grant a free patent over land that has passed to private
ownership and which has thereby ceased to be public land. Any title thus issued or conveyed by him
would be null and void. The nullity arises, not from fraud or deceit, but from the fact that the land is
no longer under the jurisdiction of the Bureau of Lands, the latters authority being limited only to
lands of public dominion and not those that are privately owned. In the present case, Balanag and
Domondon acquired no right or title over the disputed land by virtue of the free patent since at the
time it was issued in 1966, it was already private property and not a part of the disposable land of the
public domain.
Preysler, Jr. v. Court of Appeals
G.R. No. 158141, July 11, 2006
Facts:
Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner Fausto
Preysler, Jr. and his wife owned lots therein and also two parcels of land adjacent to the subdivision.
These two parcels were bounded on the North and West by the China Sea and on the East and
South by the subdivision. To gain access to the two parcels petitioner has to pass through private

respondents subdivision. Petitioner offered P10,000 for the easement of right of way but private
respondent refused it for being grossly inadequate. Private respondent then barricaded the front gate
of petitioners property to prevent petitioner and his family from using the subdivision roads to access
said parcels.
The petitioner filed, with the Regional Trial Court a Complaint for Right of Way with prayer for
preliminary prohibitiveinjunction against private respondent. After due hearing, the trial court, in an
Order dated November 5, 1996, held that barricading the property to prevent the petitioner
from entering it deprived him of his ownership rights and caused irreparable damage and injuries.
Accordingly, the writ of preliminary injunction was issued on December 12, 1996.
On July 8, 1998, petitioner used the subdivision road to transport heavy equipment and construction
materials to develop his property. Consequently, private respondent moved to dissolve the writ
claiming that the petitioner violated its right to peaceful possession and occupation of Tali Beach
Subdivision when petitioner brought in heavy equipment and construction materials. Private
respondent maintained that the damages that may be caused to it far outweigh the alleged damages
sought to be prevented by the petitioner.
Issue:
Whether or not the appellate court exceeded its jurisdiction and authority in restricting or limiting a
passage over the Tali Beach Subdivision roads to ingress and egress of petitioner and members of
the latters household in violation of the law on legal easement of right of way.
Held:
Under Article 656 of the New Civil Code, if the right of way is indispensable for the construction,
repair, improvement, alteration or beautification of a building, a temporary easement is granted
after payment of indemnity for the damage caused to the servient estate. In our view, however,
indispensable in this instance is not to be construed literally. Great inconvenience is sufficient. In
the present case, the trial court found that irrespective of which route petitioner used in gaining
access to his property, he has to pass private respondents subdivision. Thus the Court agrees that
petitioner may be granted a temporary easement. This temporary easement in the original writ differs
from the permanent easement of right of way now being tried in the main case.
The law provides that temporary easement is allowed only after the payment of the proper indemnity.
As there are neither sufficient allegations nor established facts in the record to help this
Court determine the proper amount of indemnity, it is best to remand the case to the trial court for
such determination.
Additionally, the Court finds the installation of electric power lines a permanent easement not
covered by Article 656. Article 656 deals only with the temporary easement of passage. Neither casn
installation of electric power lines be subject to a preliminary injunction for it is not part of the status
quo. Besides, more damage would be done to both parties if the power lines are installed only to be
removed later upon a contrary judgment of the court in the main case.
Encarnacion v. Court of Appeals
195 SCRA 72
Facts:
Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to
the nationalhighway just crossed the servient estate at no particular point. However, in 1960 when
private respondentsconstructed a fence around the servient estate, a road path measuring 25

meters long and about a meter wide was constituted to provide access to the highway. One-half
meter width of the path was taken from the servient estate and the other one-half meter portion was
taken from another lot owned by Mamerto Magsino. No compensation was asked and non was given
for the portions constituting the pathway.
Petitioners plant nursery business through sheer hard work flourished and with that, it became more
and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the
highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep
which he could use for transporting his plants. However, that jeep could not pass through the road
path and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena Romero
Vda. de Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their property
to be added to the existing pathway so as to allow passage for his jeepney. To his utter
consternation, his request was turned down by the two widows and further attempts at negotiation
proved futile.
Issue:
Whether or not petitioner entitled to additional right of way?
Held:
Petitioner Tomas Encarnacion is hereby declared entitled to an additional easement of right of way of
twenty-five (25) meters long by one and one-half (1 1/2) meters wide over the servient estate or a
total area of 62.5 square meters after payment of the proper indemnity.
Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any immovable,
which issurrounded by other immovables pertaining to other persons and without adequate outlet to
a public highway, is entitled to demand a right of way through the neighboring estates, after payment
of the proper indemnity.
Should this easement be established in such a manner that its use may be continuous for all the
needs of thedominant estate, establishing a permanent passage, the indemnity shall consist of the
value of the land occupied and the amount of the damage caused to the servient estate.

SAMPLE PROBLEMS WITH ANSWERS

1. What are the four requisites to be established by an owner of an estate for him to claim a
compulsory right of way?

By express provision of Articles 649 and 650 of the New Civil Code, the owner of an estate may claim a
compulsory right of way only after he has established the existence of four (4) requisites, namely, (1) the
estate is surrounded by other immovables and is without adequate outlet to a public highway; (2) after
payment of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) the
right of way claimed is at a point least prejudicial to the servient estate, and in so far as consistent with
this rule, where the distance from the dominant estate to a public highway may be the shortest. [U1]

2. Petitioners herein filed a case for recovery of property and damages against the defendant
and herein private respondent, Celestino Afable.

Rosalia Bailon and Gaudencio Bailon sold a portion of the said land consisting of 16,283
square meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone sold the remainder
of the land consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza. On the
same date, Lanuza acquired from Delgado the 16,283 square meters of land which the latter
had earlier acquired from Rosalia and gaudencio. On December 3, 1975, John Lanuza, acting
under a special power of attorney given by his wife, Ponciana V. Aresgado de Lanuza, sold
the two parcels of land to Celestino Afable, Sr. In all these transfers, it was stated in the
deeds of sale that the land was not registered.
Afable claimed that he had acquired the land in question through prescription and contended
that the petitioners were guilty of laches.
Question:What is the effect of a sale by one or more co-owners of the entire property held in
common without the consent of all the co-owners and of the appropriate remedy of the
aggrieved co-owners?

Answer:Bailon-Casilao v. Court of Appeals

160 SCRA 739
Facts:
Petitioners herein filed a case for recovery of property and damages against the defendant and
herein privaterespondent, Celestino Afable.
Rosalia Bailon and Gaudencio Bailon sold a portion of the said land consisting of 16,283 square
meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone sold the remainder of the land
consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza. On the same date, Lanuza
acquired from Delgado the 16,283 square meters of land which the latter had earlier acquired from
Rosalia and gaudencio. On December 3, 1975, John Lanuza, acting under a special power of
attorney given by his wife, Ponciana V. Aresgado de Lanuza, sold the two parcels of land to
Celestino Afable, Sr. In all these transfers, it was stated in the deeds of sale that the land was not
registered.
Afable claimed that he had acquired the land in question through prescription and contended that the
petitioners were guilty of laches.
Issue:
What is the effect of a sale by one or more co-owners of the entire property held in common without
the consent of all the co-owners and of the appropriate remedy of the aggrieved co-owners?
Held:
The Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only
his own share but not those of the other co-owners who did not consent to the sale. The sale or other
disposition affects only what would correspond to his grantor in the partition of the thing owned in
common. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which
are valid with respect to their proportionate shares, and the subsequent transfers which culminated
in the sale to private respondent Celestino Afable thereby became a co-owner of the disputed parcel
of land as correctly held by the lower court since the sales produced the effect of substituting the
buyers in the enjoyment thereof.

It may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner without the consent of the other co-owner is not null and void. However,
only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property.
The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner or coowners who alienated their shares, but the DIVISION of the common property as if it continued to
remain in the possession of the co-owners who possessed and administered it.
The action to demand partition is imprescriptible or cannot be barred by laches, absent a clear
repudiation of the co-ownership by a co-owner clearly communicated to the other co-owners.

3. The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided onethird interest in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment
of a debt of P1,500 which she owed them. The defendants and appellants claim that their
agreement gave plaintiff no right of usufruct in the land, saying that it appears that she only
asked for this right and it does not appear that the defendants gave it to her. On the 10th of
August, 1905, the owners of the twenty- five parcels of land made a partition thereof among
themselves, in which the plaintiff took no part, and in this partition certain specific tracts of
land were assigned to the defendants as the third to which they were entitled by reason of
the conveyance from the plaintiff to them. They have been in possession of the tracts so
assigned to them in partition since the date thereof, and are now in such possession, and
have refused to recognized in the plaintiff any right of usufruct therein.
QUESTION:Whether or not the usufructuary is bound by the partition made by the owners of
the undivided property although he took no part therein.

ANSWER:Juana

Pichay v. Eulalo QuerolG.R. No. L-4452, October 1, 1908

Facts:
The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided one-third interest
in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment of a debt of P1,500
which she owed them. The defendants and appellants claim that their agreement gave plaintiff no
right of usufruct in the land, saying that it appears that she only asked for this right and it does not
appear that the defendants gave it to her. On the 10th of August, 1905, the owners of the twenty- five
parcels of land made a partition thereof among themselves, in which the plaintiff took no part, and in
this partition certain specific tracts of land were assigned to the defendants as the third to which they
were entitled by reason of the conveyance from the plaintiff to them. They have been in possession
of the tracts so assigned to them in partition since the date thereof, and are now in such possession,
and have refused to recognized in the plaintiff any right of usufruct therein.
Issue:
Whether or not the usufructuary is bound by the partition made by the owners of the undivided
property although he took no part therein.
Held:

The usufructuary shall be bound by the partition made by the owners of the undivided property
although he took no part in the partition but the naked owner to whom the part held in usufruct has
been alloted must respect the usufruct. The right of the usufructuary is not affected by
the division but is limited to the fruits of said part alloted to the co-owner.
4. Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on
March 5, 1921, and was afterwards duly admitted to probate. The pertinent clause of that will
provided that certain properties should be given in life usufruct to his son Jacinto del Saz
Orozco y Mortera, with the obligation on his part to preserve said properties in favor of the
other heirs who were declared the naked owners thereof. Among these properties were 5,714
shares of stock of the Benguet Consolidated Mining Company and 94 shares of stock of the
Manila Electric Company, according to the project of partition executed pursuant to said will
and duly approved by the court. On September 11, 1934, the Benguet Consolidated Mining
Company declared and distributed stock dividends out of its surplus profits, the plaintiff
receiving his proportionate portion of 11,428 shares. On November 17, 1939, said Mining
Company again declared stock dividends out of its surplus profits, of which the plaintiff
received 17,142 shares, making a total of 28,570 shares.
QUESTION:Whether the stock dividend is part of the capital which should be preserved in
favor of the owners or an income or fruits of the capital which should be given to and
enjoyed by the life usufructuary, the plaintiff herein, as his own exclusive property.

ANSWER:Jacinto Orozco v. Salvador Araneta

G.R. No. L-3691, November 21, 1951
Facts:
Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on March 5,
1921, and was afterwards duly admitted to probate. The pertinent clause of that will provided that
certain properties should be given in life usufruct to his son Jacinto del Saz Orozco y Mortera, with
the obligation on his part to preserve said properties in favor of the other heirs who were declared
the naked owners thereof. Among these properties were 5,714 shares of stock of the Benguet
Consolidated Mining Company and 94 shares of stock of the Manila Electric Company, according to
the project of partition executed pursuant to said will and duly approved by the court. On September
11, 1934, the Benguet Consolidated Mining Company declared and distributed stock dividends out of
its surplus profits, the plaintiffreceiving his proportionate portion of 11,428 shares. On November 17,
1939, said Mining Company again declared stock dividends out of its surplus profits, of which the
plaintiff received 17,142 shares, making a total of 28,570 shares.
Issue:
Whether the stock dividend is part of the capital which should be preserved in favor of the owners or
an income or fruits of the capital which should be given to and enjoyed by the life usufructuary, the
plaintiff herein, as his ownexclusive property.
Held:
A dividend, whether in the form of cash or stock, is income and, consequently, should go to the
usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be
declared only out of profits of the corporation, for if it were declared out of the capital it would be a
serious violation of the law. With regard to the sum of P3,428.40 which is alleged to have been

received by the plaintiff from the Benguet Consolidated Mining Company, as a result of the reduction
of its capital in January, 1926, it appears that it has not been proven that the plaintiff has received
said sum; on the contrary, it was denied by him as soon as he arrived in the Philippines from Spain.
There is no ground, therefore, for ordering the plaintiff to deliver such sum to the defendants. The
stock dividends amounting to 28,570 shares, above mentioned, belongs to Jacinto del Saz Orozco y
Mortera exclusively and in absolute ownership.
5. In her complaint the plaintiff alleges that she is a natural child of Juana Narag and the late
Jose Cecilio who, at the time of her concepcion, were both free to marry; that in a public
instrument entitled "donacionmortis-causa" executed of 26 July 1924 by the late Jose Cecilio
he acknowledge her to be his natural child and donated to her two parcels of land, one
agricultural and the other residential, together with the improvements thereon; that in the
agricultural land coconuts and palay valued P1,760 were harvested yearly, and from the
residential an annual rent of P360 was collected, or a total of P12,710 from 1950 to the filing
of the complaint; that subsequently the two parcels of land were declared in her name for tax
purposes; that upon the demise of Jose Cecilio of 10 February 1950 the defendants Salvador
and Antonio surnamed Cecilio, two legitimate children of the deceased, entered upon, took
possession of, and claimed ownership over, the parcels of land; and that since then they
refused and still refuse to deliver or return to her the two parcels of land. In addition to her
two prayers stated at the beginning of this opinion, the plaintiff prayed that jointly and
severally the defendants be ordered to pay her the sum of P12,710 representing the value of
the natural and civil fruits of the parcels of land. On 24 August 1956 the defendants filed an
answer setting up affirmative defenses and counterclaim for P5,000 as actual and moral
damages arising from the false and frivolous complaint of the plaintiff and praying for the
dismissal of the complaint. On 27 August, the plaintiff answered the counterclaim. Without
filing any formal motion to dismiss, on 13 September 1957 the defendants served notice on
the plaintiff that they would submit on 14 September 1957 at 8:30 o'clock in the morning, or
as soon as they may be heard, their prayer for the dismissal of her complaint. In an order
dated 16 September, the Court declared submitted the motion for the dismissal of the
complaint and granted each party ten days within which to file a memorandum. On 20
September, the plaintiff filed an objection to the motion for dismissal which may be
considered her memorandum. On 24 September the defendants filed their memorandum
followed on 25 September by a supplemental memorandum. On 13 November, the Court
entered an order dismissing the complaint, from which dismissal, as heretofore stated, the
7 3 plaintiff appealed.
The five errors assigned by the appellant claimed to have been committed by the trial court
narrow down to main issues, namely: (1) has the action of the plaintiff Dolores Narag to be
declared natural child of daughter of the late Jose Cecilio already prescribed? and (2) is the
donation mortis causa executed not in accordance with the formalities of a will invalid?
Resolve the two issues.
Answer:There is no doubt that the plaintiff's action to be declared natural child of the late
Jose Cecilio has already prescribed, because it was not brought during the lifetime of the
putative or presumed father. And her case does not fall within the exceptions provided for in
article 137 of the old Civil Code, now article 285 of the new Civil Code, which allows the filling
of such action even after the death of the alleged parents, to wit:
1. If the father or mother died during the minority of the child, in which case the latter may be
commence the action within the four years next following the attainment of its majority.
2. If, after the death of the father or mother, some document, before unknown, should be
discovered in which the child is expressly acknowledged.

In this case the action must be commenced within six months next following the discovery of
such document.1
When the presumed or putative father Jose Cecilio died on 10 February 1950, the plaintiff was
already far above the age of majority, it appearing in her baptismal certificate issued on 12
April 1953 by the parish priest of Saint John the Evangelist of Naga City that she was born on
5 January 1899. The document entitled "donacion mortis-causa" was known to, and in
possession of, the appellant since 26 July 1924, the date of its execution, because on that
date she signed the document. Counted from 26 July 1924 to the filing of the complaint on 6
August 1956, about 32 years had elapsed. It is, therefore, clear that whether under the
provisions of the old or of the new Civil Code the appellant's action fro acknowledgment as
natural child of the late Jose Cecilio is barred by the statute.
The donation of the two parcels of land is a donation mortis causa as admitted by the
appellant herself. Nevertheless, she contends that while article 620 of the old Civil Code, now
article 728 of the new, provides that donation mortis causa is governed by the rules
established for testamentary succession, yet such provision refers to property disposition as
governed by the law on succession and not to solemnities or formalities of a will to
substance, not to form. The contention cannot be accepted. In the case of Cario vs. Abaya,
70 Phil., 182, this Court had that donations mortis causa can only be made with the
formalities of a will. And as to the donation mortis causa in the present case appears not to
have the formal requisites of a will such as the attestation clause, the signatures of three
instrumental witnesses and that of the donor, which must appear on every page of the
document, the donation is invalid.
The contention that the complaint may not be dismissed upon the grounds pleaded as
affirmative defenses in the answer without any formal or separate motion to dismiss is
untenable, for the reason that section 5, Rule 8, allows such dismissal.
6. Guillermo Ceniza died intestate on July 11, 1951, leaving a parcel of land at Poblacion, Mandaue
City. Twenty years later on July 17, 1973 his children Benedicta, Guillermo, Jr., Victoria, Eduardo,
and Carlos executed an extrajudicial declaration of heirs and partition, adjudicating and dividing the
land among themselves as follows:
1. To Benedicta T. Cabahug, Lot A subject to a perpetual and grat[u]itous road right of way
1.50 m. wide along its NW. boundary in favor of Lots B, E, and D, of the subdivision;
2. To Eduardo Ceniza, Lot B subject to a perpetual and grat[u]itous road right of way 1.50 m.
wide along its SW. boundary in favor of Lots A, D & E of the subdivision;
3. To Carlos Ceniza, Lot C;
4. To Guillermo Ceniza Jr., Lot D subject to a perpetual and grat[u]itous road right of way 1.50
m. wide along its NE. boundary in favor of Lot B and E of the subdivision; and
5. To Victoria Ceniza, Lot E, subject to a perpetual and grat[u]itous road right of way 1.50 m.
wide along its SW. boundary in favor of Lot D of the subdivision.1
Lots A, B, and C were adjacent to a city street. But Lots D and E were not, they being interior lots. To
give these interior lots access to the street, the heirs established in their extrajudicial partition an
easement of right of way consisting of a 3-meter wide alley between Lots D and E that continued on
between Lots A and B and on to the street. The partition that embodied this easement of right of way
was annotated on the individual titles issued to the heirs.
Roughly, the lots including the easement of right of way would take the following configurations, 2 not
drawn here to accurate size and proportion but illustrative of their relative locations:

But, realizing that the partition resulted in an unequal division of the property, the heirs modified their
agreement by eliminating the easement of right of way along Lots A, D, and E, and in its place,
imposed a 3-meter wide alley, an easement of right of way, that ran exclusively along the southwest
boundary of Lot B from Lots D and E to the street.3Thus:

Victoria (now petitioner Victoria Salimbangon) later swapped lots with Benedicta with the result that
Victoria became the owner of Lot A, one of the three lots adjacent to the city street. Victoria and her
husband (the Salimbangons) constructed a residential house on this lot and built two garages on it.
One garage abutted the street while the other, located in the interior of Lot A, used the alley or
easement of right of way existing on Lot B to get to the street. Victoria had this alley cemented and
gated.
Subsequently, however, respondent spouses Santos and Erlinda Tan (the Tans) bought Lots B, C, D,
and E from all their owners. The Tans built improvements on Lot B that spilled into the easement
area. They also closed the gate that the Salimbangons built. Unable to use the old right of way, the
Salimbangons lodged a complaint with the City Engineer of Mandaue against the Tans. For their
part, the Tans filed an action with the Regional Trial Court (RTC) of Mandaue against the
Salimbangons in Civil Case MAN-3223 for the extinguishment of the easement on Lot B and
damages with application for preliminary injunction. 4 The Salimbangons filed their answer with
counterclaims.
After hearing or on February 9, 2001 the RTC rendered judgment, upholding the Salimbangons
easement of right of way over the alley on Lot B, the lot that belonged to the Tans. The court pointed
out that the easement in this case was established by agreement of the parties for the benefit of Lots

A, D, and E. Consequently, only by mutual agreement of the parties could such easement be
extinguished. The RTC declined, however, to award damages to the Salimbangons.
Both parties appealed to the Court of Appeals (CA) in CA-G.R. CV 73468. On July 27, 2007
the CA5 reversed the RTC decision, extinguished the easement of right of way established on the
alley in Lot B of the Tans, and denied the Salimbangons claim for damages. The court ruled that
based on the testimony of one of the previous owners, Eduardo Ceniza, the true intent of the parties
was to establish that easement of right of way for the benefit of the interior lots, namely, Lots D and
E. Consequently, when ownership of Lots B, D, and E was consolidated into the Tans, the easement
ceased to have any purpose and became extinct. The Salimbangons filed a motion for
reconsideration but the CA denied the same in its resolution of October 14, 2008. This prompted
them to file the present petition.
Questions Presented
Two questions are presented:
1. Whether or not the CA erred in admitting in evidence contrary to the parol evidence rule Eduardo
Cenizas testimony respecting the true intent of the heirs in establishing the easement of right of way
as against what they stated in their written agreement; and
2. Whether or not the CA erred in ruling that the easement of right of way established by the partition
agreement among the heirs for the benefit of Lot A has been extinguished.
Rule on the two questions:

Answer: SPS. MANUEL AND VICTORIA SALIMBANGON, Petitioners,

vs.SPS. SANTOS AND ERLINDA TAN, Respondents. G.R. No. 185240

January 20, 2010

7.Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda de
Sagun are the owners of two adjacent estates situated in Buco, Talisay, Batangas. ** Petitioner owns
the dominant estate which has an area of 2,590 square meters and bounded on the North by
Eusebio de Sagun and Mamerto Magsino, on the south by Taal Lake, on the East by Felino
Matienzo and on the West by Pedro Matienzo. Private respondents co-own the 405-square-meter
servient estate which is bounded on the North by the National Highway (Laurel-Talisay Highway), on
the South by Tomas Encarnacion, on the East by Mamerto Magsino and on the West by Felipe de
Sagun. In other words, the servient estate stands between the dominant estate and the national
road.
Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to
the national highway just crossed the servient estate at no particular point. However, in 1960 when
private respondents constructed a fence around the servient estate, a roadpath measuring 25
meters long and about a meter wide was constituted to provide access to the highway. One-half
meter width of the path was taken from the servient estate and the other one-half meter portion was
taken from another lot owned by Mamerto Magsino. No compensation was asked and non was given
for the portions constituting the pathway. 1
It was also about that time that petitioner started his plant nursery business on his land where he
also had his abode. He would use said pathway as passage to the highway for his family and for his
customers.
Petitioner's plant nursery business through sheer hard work flourished and with that, it became more
and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the
highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep
which he could use for transporting his plants. However, that jeep could not pass through the

roadpath and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena
Romero Vda. de Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their
property to be added to the existing pathway so as to allow passage for his jeepney. To his utter
consternation, his request was turned down by the two widows and further attempts at negotiation
proved futile.
Petitioner then instituted an action before the Regional Trial Court of Batangas, Branch 6 (Tanauan)
to seek the issuance of a writ of easement of a right of way over an additional width of at least
two (2) meters over the De Saguns' 405-square-meter parcel of land. 2
During the trial, the attention of the lower court was called to the existence of another exit to the
highway, only eighty (80) meters away from the dominant estate. On December 2, 1985, the lower
court rendered judgment dismissing petitioner's complaint. It ruled:
It is clear, therefore, that plaintiff at present has two outlets to the highway: one, through the defendants'
land on a one meter wide passageway, which is bounded on both sides by concrete walls and second,
through the dried river bed eighty meters away. The plaintiff has an adequate outlet to the highway
through the dried river bed where his jeep could pass.
The reasons given for his claim that the one-meter passageway through defendants' land be widened to
two and one-half meters to allow the passage of his jeep, destroying in the process one of the concrete
fences and decreasing defendants' already small parcel to only about 332.5 square meters, just because
it is nearer to the highway by 25 meters compared to the second access of 80 meters or a difference of
only 65 meters and that passage through defendants' land is more convenient for his (plaintiffs) business
and family use are not among the conditions specified by Article 649 of the Civil Code to entitle the
plaintiff to a right of way for the passage of his jeep through defendant's land. 3

Question: If you were the Judge, will you grant an additional width of at least two meters?
Explain.
Answer:TOMAS ENCARNACION, petitioner,
vs.THE HONORABLE COURT OF APPEALS and THE INTESTATE ESTATE OF THE LATE
EUSEBIO DE SAGUN and THE HEIRS OF THE LATE ANICETA MAGSINO VIUDA DE
SAGUN,* respondents. G.R. No. 77628 March 11, 1991

7. In the deed of donation it was stated that the same was made in consideration of the services
rendered to the donor by the donee; that "title" to the donated properties would not pass to the
donee during the donor's lifetime, and that it would be only upon the donor's death that the donee
would become the "true owner" of the donated properties. However, there was the stipulation that
the donor bound herself to answer to the donee for the property donated and that she warranted that
nobody would disturb or question the donee's right.
(a) Is this a donation inter vivos or mortis causa? Explain. (b) Cite at least five distinctions between a
donation mortis causa and a donation inter vivos.

Answer.. In the Balaqui case, it was provided in the deed that the donation was made in
consideration of the services rendered to the donor by the donee; that "title" to the donated
properties would not pass to the donee during the donor's lifetime, and that it would be only upon the
donor's death that the donee would become the "true owner" of the donated properties. However,
there was the stipulation that the donor bound herself to answer to the donee for the property
donated and that she warranted that nobody would disturb or question the donee's right. [U2]

Notwithstanding the provision in the deed that it was only after the donor's death when the 'title' to
the donated properties would pass to the donee and when the donee would become the owner
thereof, it was held in the Balaqui case that the donation was inter vivos.
It was noted in that case that the donor, in making a warranty, implied that the title had already been
conveyed to the donee upon the execution of the deed and that the donor merely reserved to herself
the "possesion and usufruct" of the donated properties.
8. In that clause it is stated that, in consideration of the affection and esteem of the donors for the
donees and the valuable services rendered by the donees to the donors, the latter, by means of the
deed of donation, wholeheartedly transfer and unconditionally give to the donees the lots mentioned
and described in the early part of the deed, free from any kind of liens and debts:
Na dahil at alang-alang sa pagmamahal at masuyong pagtingin na taglay ng NAGKAKALOOB
(DONORS) sa Pinagkakalooban (DONEES) gayun din sa tapat at mahalagang paglilingkod noong mga
lumipas na panahon na ginawa ng huli sa una ang nabanggit na nagkakaloob sa pamagitan ng
kasulatang ito ng pagkakaloob (Donation) ay buong pusong inililipat at lubos na ibinibigay sa nasabing
pinagkakalooban ang lupang binabanggit at makikilala sa unahan nito, laya sa ano mang sagutin at
pagkakautang, katulad nito:
Xxx
(3) Gayun din samantalang kaming mag-asawang Gabino Diaz at Severa Mendoza ay buhay, patuloy
and aming pamamahala, karapatan, at pagkamayari sa mga nasabing pagaari na sinasaysay sa unahan
nito na pagaari namin; ngunit sakaling kami ay bawian ng buhay ng Panginoong Dios at mamatay na, ang
mga karapatan at pagkamayari ng bawa't pinagkalooban (Donatorios) sa bawa't pagaari nauukol sa
bawa't isa ay may lubos na kapangyarihan.

QUESTION: Gleaning from said tagalog provisions is there a donation inter vivos or mortis causa?
Explain.

9. Distinguish a nuisance per se and a nuisance per accidens, with respect to its (a) nature
(b) manner of its abatement.

: nuisance per se and nuisance per accidens. The first is recognized as a nuisance under any
and all circumstances, because it constitutes a direct menace to public health or safety, and,
for that reason, may be abated summarily under the undefined law of necessity. The second
is that which depends upon certain conditions and circumstances, and its existence being a
question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to
decide whether such a thing does in law constitute a nuisance

10. In the trial the following facts were admitted without contradiction:
(1) That house No. 65 Calle Rosario, this city, property of the wife of the plaintiff, has certain
windows therein, through which it receives light and air, said windows opening on the adjacent
house, No. 63 of the same street; (2) that these windows have been in the existence since the year
1843 and (3) that the defendant, the tenant of the said house No. 63, has commenced certain work
with the view to raising the roof of the house in such a manner that one-half of the windows in said
house No. 65 has been covered, thus depriving the building of a large part of the air and light

formerly received through the window. In its decision the court below practically finds the preceding
facts, and further finds that the plaintiff has not proven that he has, by any formal act, prohibited the
owner of house No. 63, from making improvements of any kind therein at any time prior to the
complaint.
The contention of the plaintiff is that by the constant and uninterrupted use of the windows referred to
above during a period of fifty-nine years he acquired from prescription an easement of light in favor
of the house No. 65, and as a servitude upon house No. 63, and, consequently, has acquired the
right to restrain the making of any improvements in the latter house which might in any manner be
prejudicial to the enjoyment of the said easement. He contends that the easement of light is positive;
and that therefore the period of possession for the purposes of the acquisition of a prescriptive title is
to begin from the date on which the enjoyment of the same commenced, or, in other words, applying
the doctrine to this case, from the time that said windows were opened with the knowledge of the
owner of the house No. 63, and without opposition on this part.
The defendant, on the contrary, contends that the easement is negative, and that therefore the time
for the prescriptive acquisition thereof must begin from the date on which the owner of the dominant
estate may have prohibited, by a formal act, the owner of the servient estate from doing something
which would be lawful but for the existence of the easement.
The court below in its decision held in the easement of light is negative, and this ruling has been
assigned by the plaintiff as error to be corrected by this court.
Question: Is the easement negative or positive? Explain.

Answer: As a result of the opinion above expressed, we hold:

1. That the easement of light which is the object of this litigation is of a negative character, and
therefore pertains to the class which can not be acquired by prescription as provided by article 538 of
the Civil Code, except by counting the time of possession from the date on which the owner of the
dominant estate has, in a formal manner, forbidden the owner of the servient estate to do an act
which would be lawful were it not for the easement.
2. That, in consequence thereof, the plaintiff, not having executed any formal act of opposition to the
right of the owner of the house No. 63 Calle Rosario (of which the defendant is tenant), to make
therein improvements which might obstruct the light of the house No. 65 of the same street, the
property of the wife of the appellant, at any time prior to the complaint, as found by the court below in
the judgment assigned as error, he has not acquired, nor could he acquire by prescription, such
easement of light, no matter how long a time have elapsed since the windows were opened in the
wall of the said house No. 65, because the period which the law demands for such prescriptive
acquisition could not have commenced to run, the act with which it must necessarily commence not
having been performed.
MAXIMO CORTES, plaintiff-appellant, vs.JOSE PALANCA YU-TIBO, defendant-appellant. G.R. No.
911
March 12, 1903

SAMPLE PROBLEMS

PROBLEM NO. 1.A

hectare of rice land in Cabatuan, Iloilo, is the subject of this

controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio
Chichirita for P30, reserving for himself the right to repurchase it within six years. The deed
of sale, written in the Ilongo dialect, is contained in a private instrument, the English
translation of which reads:

"I, Teodoro Husain, single, of legal age, native and resident of the Municipality of
Cabatuan, Province of Iloilo, Philippine Islands, because of the amount of Thirty Pesos
(P30.00), Philippine currency, that was paid to me by Serapio Chichirita, married to
Florentina Muyuela, of legal age, native and resident of this Municipality of Cabatuan,
Province of Iloilo, Philippine Islands, hereby declare that I am selling to the
aforementioned vendee Serapio Chichirita, his heirs, and the heirs of the latter, my one
parcel of rice land at Barrio Salacay of this Municipality of Cabatuan, and its descriptions
are as follows:
One parcel of rice land that has a seedling of one cavan of palay, legal measure,
bounded on the North, land of Juan Alcayaga, on the East, land of Agapito Suero, on the
South, land of Elias Gallar and on the West, land of Juan Mina. The said land was
inherited by me from my father who is now dead, Clemente Husain.
"I also declare that we have agreed that if the vendor shall have repaid to the
vendee the aforementioned amount of P30.00 within six years from this date, the vendee
or his heirs shall execute a document of repurchase in my favor, but if after the said term
that he cannot return the aforementioned amount, this document shall be considered
absolute and irrevocably consummated and in the meantime the vendee shall be the one
to make use of the aforementioned land in accordance with the Ley Hipotecaria.
"In truth whereof, I have signed this document at Cabatuan, 9th day of January, 1919.
(Sgd.) TEODORO HUSAIN
"Signed in the presence of:
"(Sgd.) TOMAS JILOCA

(Sgd.) EUSEBIO JOCANO"

Teodoro Husain did not redeem the land, although shortly after
the execution of the deed of sale, that is, on January 28, 1919, the
vendee a retro, Chichirita, transferred his right to Graciana Husain,
sister of the vendor a retro, in what purports to be a resale of the land.
The following annotation appears on the reverse side of the deed of
pacto de retro sale:
"NOTA: The amount stated above was received by me from
Graciana Husain and on my own voluntary will as redemption (gawad)
of the same land, and because of this, I am transferring my rights as
stated above to Graciana Husain in the presence of her husband
Manuel Catalan, and in truth whereof I have signed at Cabatuan, 28
January, 1919.
Thumb marked

Serapio Chichirita"
(English translation)
Graciana Husain subsequently transferred her rights to the land
to appellee Elias Gallar in exchange for one cow. The transaction is
recorded in a second note added on the reverse side of the deed of
sale. The note reads:
"OTRA NOTA:
"The undersigned Graciana Husain, with the consent end knowledge of her
husband Manuel Catalan, has agreed with Elias Gallar that all the rights that belongs to
her, or she, Graciana Husain, is transferring to the said Elias Gallar in accordance with
that stated in the original with the difference that this transfer is definite because it is
their agreement in exchange of one head of cow described in the Certificate of Large
Cattle existing in the Office or the Municipal Treasurer of this town. And in truth whereof,
Graciana Husain signed hereunder together with her husband Manuel Catalan.
Cabatuan, April 2, 1919.
"(Sgd.) MANUEL CATALAN

(Sgd.) GRACIANA HUSAIN"

(English translation)
Possession of the land, together with the owner's duplicate of
the certificate of title of Teodoro Husain, was delivered on the same
occasion to appellee who since then has been in possession of the
land.
Questions: (1) Teodoro Husain wants to recover ownership and
possession of the land, will his action be successful?(2) He alleges
that the sale based on private documents are not valid, is he correct
on this matter?

Answer: ELIAS GALLAR, plaintiff-appellee, vs. HERMENEGILDA

HUSAIN, ET AL., defendants. BONIFACIO HUSAIN, defendantappellant. EN BANC [G.R. No. L-20954. May 29, 1967.] Now, when
Teodoro Husain failed to redeem the land within the stipulated period,
i.e., January 9, 1925, its ownership became consolidated in the
appellee. True the successive sales are in a private instrument, but
they are valid just the same. 5 By the delivery of possession of the
land on April 2, 1919 the sale was consummated and title was
transferred to the appellee. Indeed, this action is not for specific
performance; all it seeks is to quiet title, 6 to remove the cloud cast
on appellee's ownership as a result of appellant's refusal to recognize
the sale made by the predecessor. And, as plaintiff-appellee is in
possession of the land, the action is imprescriptible. 7 Appellant's
argument that the action has prescribed would be correct if they were
in possession as the action to quiet title would then be an action for
recovery of real property which must be brought within the statutory
period of limitation governing such actions.

PROBLEM NO. 2 What is remission? What is its essential

characteristic? Distinguish it from dation in payment, novation, and
compromise?

ANSWER:As a mode of extinguishing an obligation, [55] condonation or remission of

debt[56] is defined as:an act of liberality, by virtue of which, without receiving
anyequivalent, the creditor renounces the enforcement of the obligation,which is
extinguished in its entirety or in that part or aspect of the same to which
the remission refers. It is an essential characteristicof remission that it be
gratuitous,
that
there
is
no
equivalent
received for the benefit given; once such equivalent exists, the nature of the act
changes. It may become dation in payment when the creditor receives a thing
different from that stipulated; or novation, when the object or principal conditions
of the obligation should be changed; or compromise, when the matter renounced is
in litigation or dispute and in exchange of some concession which the creditor
receives.[57]RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P. FERNANDEZ,
PETITIONER, VS. COURT OF TAX APPEALS AND COMMISSIONER OF INTERNAL
REVENUE, RESPONDENTS. [ G.R. No. 140944, April 30, 2008 ]

PROBLEM NO. 3. Sometime in April 1999, [petitioner] Religious of the Virgin Mary (RVM for
brevity), acting through its local unit and specifically through Sr. Fe Enhenco, local Superior of the St.
Marys Academy of Capiz and [respondents] met to discuss the sale of the latters property adjacent
to St. Marys Academy. Said property is denominated as Lot 159-B-2 and was still registered in the
name of [respondents] predecessor-in-interest, Manuel Laserna.
In May of 1999, [respondent] Josephine Orola went to Manila to see the Mother Superior
General of the RVM, in the person of Very Reverend Mother Ma. Clarita Balleque [VRM Balleque]
regarding the sale of the property subject of this instant case.
A contract to sell dated June 2, 1999 made out in the names of herein [petitioner] and
[respondents] as parties to the agreement was presented in evidence pegging the total consideration
of the property at P5,555,000.00 with 10% of the total consideration payable upon the execution of
the contract, and which was already signed by all the [respondents] and Sr. Ma. Fe Enhenco, R.V.M.
[Sr. Enhenco] as witness.
On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged receipt of
RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of P555,500.00 as 10% down
payment for Lot 159-B-2 from the RVM Congregation (St. Marys Academy of Cadiz [SMAC]) with
the conforme signed by Sister Fe Enginco (sic), Mother Superior, SMAC.
[Respondents] executed an extrajudicial settlement of the estate of Trinidad Andrada
Laserna dated June 21, 1999 adjudicating unto themselves, in pro indiviso shares, Lot 159-B-2, and
which paved the transfer of said lot into their names under Transfer Certificate of Title No. T-39194
with an entry date of August 13, 1999.
Thereafter, respondents, armed with an undated Deed of Absolute Sale which they had
signed, forthwith scheduled a meeting with VRM Balleque at the RVM Headquarters in Quezon City
to finalize the sale, specifically, to obtain payment of the remaining balance of the purchase price in

the amount of P4,999,500.00. However, VRM Balleque did not meet with respondents. Succeeding
attempts by respondents to schedule an appointment with VRM Balleque in order to conclude the
sale were likewise rebuffed.
In an exchange of correspondence between the parties respective counsels, RVM denied
respondents demand for payment because: (1) the purported Contract to Sell was merely signed by
Sr. Enhenco as witness, and not by VRM Balleque, head of the corporation sole; and (2) as
discussed by counsels in their phone conversations, RVM will only be in a financial position to pay
the balance of the purchase price in two years time. Thus, respondents filed with the RTC a
complaint with alternative causes of action of specific performance or rescission.
Q: (1) If you were the judge, will you grant rescission? (2) Or will you grant specific performance
instead? (3) Under the civil code, there are two provisions concerning rescission, one under Art.
1191 and 1381. Is there a distinction between the two rescissions? State if there is any? (RVM v.
Orola GR No. 169790 April 30, 2008)

PROBLEM NO. 4. On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso
Iringan, an undivided portion of Lot No. 992 of the Tuguegarao Cadastre, located at the Poblacion of
Tuguegarao and covered by Transfer Certificate of Title No. T-5790. The parties executed a Deed of
Sale on the same date with the purchase price of P295,000.00, payable as follows:
(a) P10,000.00 upon the execution of this instrument, and for this purpose, the vendor
acknowledges having received the said amount from the vendee as of this date;
(b) P140,000.00 on or before April 30, 1985;
(c) P145,000.00 on or before December 31, 1985.
When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985,
Palao sent a letter to Iringan stating that he considered the contract as rescinded and that he would
not accept any further payment considering that Iringan failed to comply with his obligation to pay the
full amount of the second installment.
On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, replied that they
were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the
following amounts:
(a) P50,000.00 cash received by you;
(b) P3,200.00 geodetic engineers fee;
(c) P500.00 attorneys fee;
(d) the current interest on P53,700.00.
In response, Palao sent a letter dated January 10, 1986, to Atty. Aquino, stating that he was
not amenable to the reimbursements claimed by Iringan.
On February 21, 1989, Iringan, now represented by a new counsel Atty. Carmelo Z.
Lasam, proposed that the P50,000 which he had already paid Palao be reimbursed or Palao could
sell to Iringan, an equivalent portion of the land.
Palao instead wrote Iringan that the latters standing obligation had reached P61,600,
representing payment of arrears for rentals from October 1985 up to March 1989. The parties failed
to arrive at an agreement.

On July 1, 1991, Palao filed a Complaint for Judicial Confirmation of Rescission of Contract
and Damages against Iringan and his wife.
In their Answer, the spouses alleged that the contract of sale was a consummated contract,
hence, the remedy of Palao was for collection of the balance of the purchase price and not
rescission. Besides, they said that they had always been ready and willing to comply with their
obligations in accordance with said contract.
QUESTIONS (1) Is recission proper under the circumstances? (2) IF you were the court will you
award damages?(3) In the case at bar what is the prescriptive period for rescission? (4) Rule on the
contention of the parties. (ALFONSO L. IRINGAN, petitioner, vs. HON. COURTOF APPEALS

and ANTONIO PALAO, represented by his Attorney-in-Fact, FELISA P. DELOS

SANTOS, respondents. SECOND DIVISION[G.R. No. 129107. September 26, 2001]

PROBLEM No. 5: Sometime in the first half of 1992, representatives from Pryce
Properties Corporation (PPC for brevity) made representations with the Philippine
Amusement and Gaming Corporation (PAGCOR) on the possibility of setting up a casino
in Pryce Plaza Hotel in Cagayan de Oro City. [A] series of negotiations followed.
PAGCOR representatives went to Cagayan de Oro City to determine the pulse of the
people whether the presence of a casino would be welcomed by the residents. Some
local government officials showed keen interest in the casino operation and expressed
the view that possible problems were surmountable. Their negotiations culminated with
PPCs counter-letter proposal dated October 14, 1992.
On November 11, 1992, the parties executed a Contract of Lease x x x involving
the ballroom of the Hotel for a period of three (3) years starting December 1, 1992 and
until November 30, 1995. On November 13, 1992, they executed an addendum to the
contract x x x which included a lease of an additional 1000 square meters of the hotel
grounds as living quarters and playground of the casino personnel. PAGCOR advertised
the start of their casino operations on December 18, 1992.
Way back in 1990, the Sangguniang Panlungsod of Cagayan de Oro City passed
Resolution No. 2295 x x x dated November 19, 1990 declaring as a matter of policy to
prohibit and/or not to allow the establishment of a gambling casino in Cagayan de Oro
City. Resolution No. 2673 x x x dated October 19, 1992 (or a month before the contract
of lease was executed) was subsequently passed reiterating with vigor and vehemence
the policy of the City under Resolution No. 2295, series of 1990, banning casinos in
Cagayan de Oro City. On December 7, 1992, the Sangguniang Panlungsod of Cagayan
de Oro City enacted Ordinance No. 3353 x x x prohibiting the issuance of business
permits and canceling existing business permits to any establishment for using, or
allowing to be used, its premises or any portion thereof for the operation of a casino.
In the afternoon of December 18, 1992 and just hours before the actual formal
opening of casino operations, a public rally in front of the hotel was staged by some
local officials, residents and religious leaders. Barricades were placed [which]
prevented some casino personnel and hotel guests from entering and exiting from the
Hotel. PAGCOR was constrained to suspend casino operations because of the rally. An
agreement between PPC and PAGCOR, on one hand, and representatives of the rallyists,
on the other, eventually ended the rally on the 20th of December, 1992.
On January 4, 1993, Ordinance No. 3375-93 x x x was passed by the
Sangguniang Panlungsod of Cagayan de Oro City, prohibiting the operation of casinos
and providing for penalty for violation thereof. On January 7, 1993, PPC filed a Petition
for Prohibition with Preliminary Injunction x x x against then public respondent Cagayan

de Oro City and/or Mayor Pablo P. Magtajas x x x before the Court of Appeals, docketed
as CA G.R. SP No. 29851 praying inter alia, for the declaration of unconstitutionality of
Ordinance No. 3353. PAGCOR intervened in said petition and further assailed Ordinance
No. 4475-93 as being violative of the non-impairment of contracts and equal protection
clauses. On March 31, 1993, the Court of Appeals promulgated its decision x x x, the
dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, Ordinance No. 3353 and Ordinance No. 337593 are hereby DECLARED UNCONSTITUTIONAL and VOID and the respondents and all
other persons acting under their authority and in their behalf are PERMANENTLY
ENJOINED from enforcing those ordinances.
SO ORDERED.
Aggrieved by the decision, then public respondents Cagayan de Oro City, et al.
elevated the case to the Supreme Court in G.R. No. 111097, where, in an En Banc
Decision dated July 20, 1994 x x x, the Supreme Court denied the petition and affirmed
the decision of the Court of Appeals.
In the meantime, PAGCOR resumed casino operations on July 15, 1993, against which,
however, another public rally was held. Casino operations continued for some time, but
were later on indefinitely suspended due to the incessant demonstrations. Per verbal
advice x x x from the Office of the President of the Philippines, PAGCOR decided to stop
its casino operations in Cagayan de Oro City. PAGCOR stopped its casino operations in
the hotel prior to September, 1993. In two Statements of Account dated September 1,
1993 x x x, PPC apprised PAGCOR of its outstanding account for the quarter September
1 to November 30, 1993. PPC sent PAGCOR another Letter dated September 3, 1993 x
x x as a follow-up to the parties earlier conference. PPC sent PAGCOR another Letter
dated September 15, 1993 x x x stating its Board of Directors decision to collect the full
rentals in case of pre-termination of the lease.
PAGCOR sent PPC a letter dated September 20, 1993 x x x [stating] that it was not
amenable to the payment of the full rentals citing as reasons unforeseen legal and other
circumstances which prevented it from complying with its obligations. PAGCOR further
stated that it had no other alternative but to pre-terminate the lease agreement due to
the relentless and vehement opposition to their casino operations. In a letter dated
October 12, 1993 x x x, PAGCOR asked PPC to refund the total of P1,437,582.25
representing the reimbursable rental deposits and expenses for the permanent
improvement of the Hotels parking lot. In a letter dated November 5, 1993 x x x,
PAGCOR formally demanded from PPC the payment of its claim for reimbursement.
On November 15, 1993 x x x, PPC filed a case for sum of money in the Regional
Trial Court of Manila docketed as Civil Case No. 93-68266. On November 19, 1993,
PAGCOR also filed a case for sum of money in the Regional Trial Court of Manila
docketed as Civil Case No. 93-68337.
In a letter dated November 25, 1993, PPC informed PAGCOR that it was terminating the
contract of lease due to PAGCORs continuing breach of the contract and further stated
that it was exercising its rights under the contract of lease pursuant to Article 20 (a) and
(c) thereof.
On February 2, 1994, PPC filed a supplemental complaint x x x in Civil Case No.
93-68266, which the trial court admitted in an Order dated February 11, 1994. In an
Order dated April 27, 1994, Civil Case No. 93-68377 was ordered consolidated with Civil
Case No. 93-68266. These cases were jointly tried by the court a quo. On August 17,
1995, the court a quo promulgated its decision. Both parties appealed.[5]

In its appeal, PPC faulted the trial court for the following reasons: 1) failure of the
court to award actual and moral damages; 2) the 50 percent reduction of the amount
PPC was claiming; and 3) the courts ruling that the 2 percent penalty was to be
imposed from the date of the promulgation of the Decision, not from the date stipulated
in the Contract.
On the other hand, PAGCOR criticized the trial court for the latters failure to rule
that the Contract of Lease had already been terminated as early as September 21,
1993, or at the latest, on October 14, 1993, when PPC received PAGCORs letter dated
October 12, 1993. The gaming corporation added that the trial court erred in 1) failing
to consider that PPC was entitled to avail itself of the provisions of Article XX only when
PPC was the party terminating the Contract; 2) not finding that there were valid,
justifiable and good reasons for terminating the Contract; and 3) dismissing the
Complaint of PAGCOR in Civil Case No. 93-68337 for lack of merit, and not finding PPC
liable for the reimbursement of PAGCORS cash deposits and of the value of
improvements.

QUESTIONS: (1) Rule on the contentions of the parties . (PRYCE CORPORATION (formerly
PRYCE PROPERTIES CORPORATION), petitioner, vs. PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondent. THIRD DIVISION
[G.R. No. 157480. May 6, 2005])

PROBLEM NO. 6. In a contract to sell on commission basis, which is actually a form of agency, it
there a need for the contract to be in writing?
( ROSA LIM, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents. FIRST DIVISION [G.R. No. 102784. February 28, 1996])
PROBLEM NO. 7. AS a general rule, what is the form of a contract in order that it will be of
obligatory force? What are the exceptions to the rule? What are the different kinds of formalities
which are prescribed by law for certain contracts? (p. 601 jurado).

PROBLEM NO. 8. C, husband of D, sold her paraphernal property in her name without her
consent. Was such sale valid, void, voidable, rescissible or unenforceable? Why? (p. 621JUrado)

PROBLEM NO. 9.The Board of Liquidators of the Postal Savings Bank authorized the sale
by public auction of a parcel of land it owned at Navotas. The Board expressly reserved the right to
reject any and all bids.The auction notice also contained such reservation. Leoquinco offered the
highest bid but this was rejected by the Board. He then sued the bank to compel it to execute and
deliver the deed of sale, with damages. Will the action prosper?
PROBLEM NO. 10.What is it that extinguishes the action to annul a voidalbe contract?

SAMPLE PROBLEMS

PROBLEM NO. 1.A

hectare of rice land in Cabatuan, Iloilo, is the subject of this

controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio
Chichirita for P30, reserving for himself the right to repurchase it within six years. The deed
of sale, written in the Ilongo dialect, is contained in a private instrument, the English
translation of which reads:

"I, Teodoro Husain, single, of legal age, native and resident of the Municipality of
Cabatuan, Province of Iloilo, Philippine Islands, because of the amount of Thirty Pesos
(P30.00), Philippine currency, that was paid to me by Serapio Chichirita, married to
Florentina Muyuela, of legal age, native and resident of this Municipality of Cabatuan,
Province of Iloilo, Philippine Islands, hereby declare that I am selling to the
aforementioned vendee Serapio Chichirita, his heirs, and the heirs of the latter, my one
parcel of rice land at Barrio Salacay of this Municipality of Cabatuan, and its descriptions
are as follows:
One parcel of rice land that has a seedling of one cavan of palay, legal measure,
bounded on the North, land of Juan Alcayaga, on the East, land of Agapito Suero, on the
South, land of Elias Gallar and on the West, land of Juan Mina. The said land was
inherited by me from my father who is now dead, Clemente Husain.
"I also declare that we have agreed that if the vendor shall have repaid to the
vendee the aforementioned amount of P30.00 within six years from this date, the vendee
or his heirs shall execute a document of repurchase in my favor, but if after the said term
that he cannot return the aforementioned amount, this document shall be considered
absolute and irrevocably consummated and in the meantime the vendee shall be the one
to make use of the aforementioned land in accordance with the Ley Hipotecaria.
"In truth whereof, I have signed this document at Cabatuan, 9th day of January, 1919.
(Sgd.) TEODORO HUSAIN
"Signed in the presence of:
"(Sgd.) TOMAS JILOCA

(Sgd.) EUSEBIO JOCANO"

Teodoro Husain did not redeem the land, although shortly after
the execution of the deed of sale, that is, on January 28, 1919, the
vendee a retro, Chichirita, transferred his right to Graciana Husain,
sister of the vendor a retro, in what purports to be a resale of the land.
The following annotation appears on the reverse side of the deed of
pacto de retro sale:
"NOTA: The amount stated above was received by me from
Graciana Husain and on my own voluntary will as redemption (gawad)
of the same land, and because of this, I am transferring my rights as
stated above to Graciana Husain in the presence of her husband
Manuel Catalan, and in truth whereof I have signed at Cabatuan, 28
January, 1919.
Thumb marked

Serapio Chichirita"
(English translation)
Graciana Husain subsequently transferred her rights to the land
to appellee Elias Gallar in exchange for one cow. The transaction is
recorded in a second note added on the reverse side of the deed of
sale. The note reads:
"OTRA NOTA:
"The undersigned Graciana Husain, with the consent end knowledge of her
husband Manuel Catalan, has agreed with Elias Gallar that all the rights that belongs to
her, or she, Graciana Husain, is transferring to the said Elias Gallar in accordance with
that stated in the original with the difference that this transfer is definite because it is
their agreement in exchange of one head of cow described in the Certificate of Large
Cattle existing in the Office or the Municipal Treasurer of this town. And in truth whereof,
Graciana Husain signed hereunder together with her husband Manuel Catalan.
Cabatuan, April 2, 1919.
"(Sgd.) MANUEL CATALAN

(Sgd.) GRACIANA HUSAIN"

(English translation)
Possession of the land, together with the owner's duplicate of
the certificate of title of Teodoro Husain, was delivered on the same
occasion to appellee who since then has been in possession of the
land.
Questions: (1) Teodoro Husain wants to recover ownership and
possession of the land, will his action be successful?(2) He alleges
that the sale based on private documents are not valid, is he correct
on this matter?

Answer: ELIAS GALLAR, plaintiff-appellee, vs. HERMENEGILDA

HUSAIN, ET AL., defendants. BONIFACIO HUSAIN, defendantappellant. EN BANC [G.R. No. L-20954. May 29, 1967.] Now, when
Teodoro Husain failed to redeem the land within the stipulated period,
i.e., January 9, 1925, its ownership became consolidated in the
appellee. True the successive sales are in a private instrument, but
they are valid just the same. 5 By the delivery of possession of the
land on April 2, 1919 the sale was consummated and title was
transferred to the appellee. Indeed, this action is not for specific
performance; all it seeks is to quiet title, 6 to remove the cloud cast
on appellee's ownership as a result of appellant's refusal to recognize
the sale made by the predecessor. And, as plaintiff-appellee is in
possession of the land, the action is imprescriptible. 7 Appellant's
argument that the action has prescribed would be correct if they were
in possession as the action to quiet title would then be an action for
recovery of real property which must be brought within the statutory
period of limitation governing such actions.

PROBLEM NO. 2 What is remission? What is its essential

characteristic? Distinguish it from dation in payment, novation, and
compromise?

ANSWER:As a mode of extinguishing an obligation, [55] condonation or remission of

debt[56] is defined as:an act of liberality, by virtue of which, without receiving
anyequivalent, the creditor renounces the enforcement of the obligation,which is
extinguished in its entirety or in that part or aspect of the same to which
the remission refers. It is an essential characteristicof remission that it be
gratuitous,
that
there
is
no
equivalent
received for the benefit given; once such equivalent exists, the nature of the act
changes. It may become dation in payment when the creditor receives a thing
different from that stipulated; or novation, when the object or principal conditions
of the obligation should be changed; or compromise, when the matter renounced is
in litigation or dispute and in exchange of some concession which the creditor
receives.[57]RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P. FERNANDEZ,
PETITIONER, VS. COURT OF TAX APPEALS AND COMMISSIONER OF INTERNAL
REVENUE, RESPONDENTS. [ G.R. No. 140944, April 30, 2008 ]

PROBLEM NO. 3. Sometime in April 1999, [petitioner] Religious of the Virgin Mary (RVM for
brevity), acting through its local unit and specifically through Sr. Fe Enhenco, local Superior of the St.
Marys Academy of Capiz and [respondents] met to discuss the sale of the latters property adjacent
to St. Marys Academy. Said property is denominated as Lot 159-B-2 and was still registered in the
name of [respondents] predecessor-in-interest, Manuel Laserna.
In May of 1999, [respondent] Josephine Orola went to Manila to see the Mother Superior
General of the RVM, in the person of Very Reverend Mother Ma. Clarita Balleque [VRM Balleque]
regarding the sale of the property subject of this instant case.
A contract to sell dated June 2, 1999 made out in the names of herein [petitioner] and
[respondents] as parties to the agreement was presented in evidence pegging the total consideration
of the property at P5,555,000.00 with 10% of the total consideration payable upon the execution of
the contract, and which was already signed by all the [respondents] and Sr. Ma. Fe Enhenco, R.V.M.
[Sr. Enhenco] as witness.
On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged receipt of
RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of P555,500.00 as 10% down
payment for Lot 159-B-2 from the RVM Congregation (St. Marys Academy of Cadiz [SMAC]) with
the conforme signed by Sister Fe Enginco (sic), Mother Superior, SMAC.
[Respondents] executed an extrajudicial settlement of the estate of Trinidad Andrada
Laserna dated June 21, 1999 adjudicating unto themselves, in pro indiviso shares, Lot 159-B-2, and
which paved the transfer of said lot into their names under Transfer Certificate of Title No. T-39194
with an entry date of August 13, 1999.
Thereafter, respondents, armed with an undated Deed of Absolute Sale which they had
signed, forthwith scheduled a meeting with VRM Balleque at the RVM Headquarters in Quezon City
to finalize the sale, specifically, to obtain payment of the remaining balance of the purchase price in

the amount of P4,999,500.00. However, VRM Balleque did not meet with respondents. Succeeding
attempts by respondents to schedule an appointment with VRM Balleque in order to conclude the
sale were likewise rebuffed.
In an exchange of correspondence between the parties respective counsels, RVM denied
respondents demand for payment because: (1) the purported Contract to Sell was merely signed by
Sr. Enhenco as witness, and not by VRM Balleque, head of the corporation sole; and (2) as
discussed by counsels in their phone conversations, RVM will only be in a financial position to pay
the balance of the purchase price in two years time. Thus, respondents filed with the RTC a
complaint with alternative causes of action of specific performance or rescission.
Q: (1) If you were the judge, will you grant rescission? (2) Or will you grant specific performance
instead? (3) Under the civil code, there are two provisions concerning rescission, one under Art.
1191 and 1381. Is there a distinction between the two rescissions? State if there is any? (RVM v.
Orola GR No. 169790 April 30, 2008)

PROBLEM NO. 4. On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso
Iringan, an undivided portion of Lot No. 992 of the Tuguegarao Cadastre, located at the Poblacion of
Tuguegarao and covered by Transfer Certificate of Title No. T-5790. The parties executed a Deed of
Sale on the same date with the purchase price of P295,000.00, payable as follows:
(a) P10,000.00 upon the execution of this instrument, and for this purpose, the vendor
acknowledges having received the said amount from the vendee as of this date;
(b) P140,000.00 on or before April 30, 1985;
(c) P145,000.00 on or before December 31, 1985.
When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985,
Palao sent a letter to Iringan stating that he considered the contract as rescinded and that he would
not accept any further payment considering that Iringan failed to comply with his obligation to pay the
full amount of the second installment.
On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, replied that they
were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the
following amounts:
(a) P50,000.00 cash received by you;
(b) P3,200.00 geodetic engineers fee;
(c) P500.00 attorneys fee;
(d) the current interest on P53,700.00.
In response, Palao sent a letter dated January 10, 1986, to Atty. Aquino, stating that he was
not amenable to the reimbursements claimed by Iringan.
On February 21, 1989, Iringan, now represented by a new counsel Atty. Carmelo Z.
Lasam, proposed that the P50,000 which he had already paid Palao be reimbursed or Palao could
sell to Iringan, an equivalent portion of the land.
Palao instead wrote Iringan that the latters standing obligation had reached P61,600,
representing payment of arrears for rentals from October 1985 up to March 1989. The parties failed
to arrive at an agreement.

On July 1, 1991, Palao filed a Complaint for Judicial Confirmation of Rescission of Contract
and Damages against Iringan and his wife.
In their Answer, the spouses alleged that the contract of sale was a consummated contract,
hence, the remedy of Palao was for collection of the balance of the purchase price and not
rescission. Besides, they said that they had always been ready and willing to comply with their
obligations in accordance with said contract.
QUESTIONS (1) Is recission proper under the circumstances? (2) IF you were the court will you
award damages?(3) In the case at bar what is the prescriptive period for rescission? (4) Rule on the
contention of the parties. (ALFONSO L. IRINGAN, petitioner, vs. HON. COURTOF APPEALS

and ANTONIO PALAO, represented by his Attorney-in-Fact, FELISA P. DELOS

SANTOS, respondents. SECOND DIVISION[G.R. No. 129107. September 26, 2001]

PROBLEM No. 5: Sometime in the first half of 1992, representatives from Pryce
Properties Corporation (PPC for brevity) made representations with the Philippine
Amusement and Gaming Corporation (PAGCOR) on the possibility of setting up a casino
in Pryce Plaza Hotel in Cagayan de Oro City. [A] series of negotiations followed.
PAGCOR representatives went to Cagayan de Oro City to determine the pulse of the
people whether the presence of a casino would be welcomed by the residents. Some
local government officials showed keen interest in the casino operation and expressed
the view that possible problems were surmountable. Their negotiations culminated with
PPCs counter-letter proposal dated October 14, 1992.
On November 11, 1992, the parties executed a Contract of Lease x x x involving
the ballroom of the Hotel for a period of three (3) years starting December 1, 1992 and
until November 30, 1995. On November 13, 1992, they executed an addendum to the
contract x x x which included a lease of an additional 1000 square meters of the hotel
grounds as living quarters and playground of the casino personnel. PAGCOR advertised
the start of their casino operations on December 18, 1992.
Way back in 1990, the Sangguniang Panlungsod of Cagayan de Oro City passed
Resolution No. 2295 x x x dated November 19, 1990 declaring as a matter of policy to
prohibit and/or not to allow the establishment of a gambling casino in Cagayan de Oro
City. Resolution No. 2673 x x x dated October 19, 1992 (or a month before the contract
of lease was executed) was subsequently passed reiterating with vigor and vehemence
the policy of the City under Resolution No. 2295, series of 1990, banning casinos in
Cagayan de Oro City. On December 7, 1992, the Sangguniang Panlungsod of Cagayan
de Oro City enacted Ordinance No. 3353 x x x prohibiting the issuance of business
permits and canceling existing business permits to any establishment for using, or
allowing to be used, its premises or any portion thereof for the operation of a casino.
In the afternoon of December 18, 1992 and just hours before the actual formal
opening of casino operations, a public rally in front of the hotel was staged by some
local officials, residents and religious leaders. Barricades were placed [which]
prevented some casino personnel and hotel guests from entering and exiting from the
Hotel. PAGCOR was constrained to suspend casino operations because of the rally. An
agreement between PPC and PAGCOR, on one hand, and representatives of the rallyists,
on the other, eventually ended the rally on the 20th of December, 1992.
On January 4, 1993, Ordinance No. 3375-93 x x x was passed by the
Sangguniang Panlungsod of Cagayan de Oro City, prohibiting the operation of casinos
and providing for penalty for violation thereof. On January 7, 1993, PPC filed a Petition
for Prohibition with Preliminary Injunction x x x against then public respondent Cagayan

de Oro City and/or Mayor Pablo P. Magtajas x x x before the Court of Appeals, docketed
as CA G.R. SP No. 29851 praying inter alia, for the declaration of unconstitutionality of
Ordinance No. 3353. PAGCOR intervened in said petition and further assailed Ordinance
No. 4475-93 as being violative of the non-impairment of contracts and equal protection
clauses. On March 31, 1993, the Court of Appeals promulgated its decision x x x, the
dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, Ordinance No. 3353 and Ordinance No. 337593 are hereby DECLARED UNCONSTITUTIONAL and VOID and the respondents and all
other persons acting under their authority and in their behalf are PERMANENTLY
ENJOINED from enforcing those ordinances.
SO ORDERED.
Aggrieved by the decision, then public respondents Cagayan de Oro City, et al.
elevated the case to the Supreme Court in G.R. No. 111097, where, in an En Banc
Decision dated July 20, 1994 x x x, the Supreme Court denied the petition and affirmed
the decision of the Court of Appeals.
In the meantime, PAGCOR resumed casino operations on July 15, 1993, against which,
however, another public rally was held. Casino operations continued for some time, but
were later on indefinitely suspended due to the incessant demonstrations. Per verbal
advice x x x from the Office of the President of the Philippines, PAGCOR decided to stop
its casino operations in Cagayan de Oro City. PAGCOR stopped its casino operations in
the hotel prior to September, 1993. In two Statements of Account dated September 1,
1993 x x x, PPC apprised PAGCOR of its outstanding account for the quarter September
1 to November 30, 1993. PPC sent PAGCOR another Letter dated September 3, 1993 x
x x as a follow-up to the parties earlier conference. PPC sent PAGCOR another Letter
dated September 15, 1993 x x x stating its Board of Directors decision to collect the full
rentals in case of pre-termination of the lease.
PAGCOR sent PPC a letter dated September 20, 1993 x x x [stating] that it was not
amenable to the payment of the full rentals citing as reasons unforeseen legal and other
circumstances which prevented it from complying with its obligations. PAGCOR further
stated that it had no other alternative but to pre-terminate the lease agreement due to
the relentless and vehement opposition to their casino operations. In a letter dated
October 12, 1993 x x x, PAGCOR asked PPC to refund the total of P1,437,582.25
representing the reimbursable rental deposits and expenses for the permanent
improvement of the Hotels parking lot. In a letter dated November 5, 1993 x x x,
PAGCOR formally demanded from PPC the payment of its claim for reimbursement.
On November 15, 1993 x x x, PPC filed a case for sum of money in the Regional
Trial Court of Manila docketed as Civil Case No. 93-68266. On November 19, 1993,
PAGCOR also filed a case for sum of money in the Regional Trial Court of Manila
docketed as Civil Case No. 93-68337.
In a letter dated November 25, 1993, PPC informed PAGCOR that it was terminating the
contract of lease due to PAGCORs continuing breach of the contract and further stated
that it was exercising its rights under the contract of lease pursuant to Article 20 (a) and
(c) thereof.
On February 2, 1994, PPC filed a supplemental complaint x x x in Civil Case No.
93-68266, which the trial court admitted in an Order dated February 11, 1994. In an
Order dated April 27, 1994, Civil Case No. 93-68377 was ordered consolidated with Civil
Case No. 93-68266. These cases were jointly tried by the court a quo. On August 17,
1995, the court a quo promulgated its decision. Both parties appealed.[5]

In its appeal, PPC faulted the trial court for the following reasons: 1) failure of the
court to award actual and moral damages; 2) the 50 percent reduction of the amount
PPC was claiming; and 3) the courts ruling that the 2 percent penalty was to be
imposed from the date of the promulgation of the Decision, not from the date stipulated
in the Contract.
On the other hand, PAGCOR criticized the trial court for the latters failure to rule
that the Contract of Lease had already been terminated as early as September 21,
1993, or at the latest, on October 14, 1993, when PPC received PAGCORs letter dated
October 12, 1993. The gaming corporation added that the trial court erred in 1) failing
to consider that PPC was entitled to avail itself of the provisions of Article XX only when
PPC was the party terminating the Contract; 2) not finding that there were valid,
justifiable and good reasons for terminating the Contract; and 3) dismissing the
Complaint of PAGCOR in Civil Case No. 93-68337 for lack of merit, and not finding PPC
liable for the reimbursement of PAGCORS cash deposits and of the value of
improvements.

QUESTIONS: (1) Rule on the contentions of the parties . (PRYCE CORPORATION (formerly
PRYCE PROPERTIES CORPORATION), petitioner, vs. PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondent. THIRD DIVISION
[G.R. No. 157480. May 6, 2005])

PROBLEM NO. 6. In a contract to sell on commission basis, which is actually a form of agency, it
there a need for the contract to be in writing?
( ROSA LIM, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents. FIRST DIVISION [G.R. No. 102784. February 28, 1996])
PROBLEM NO. 7. AS a general rule, what is the form of a contract in order that it will be of
obligatory force? What are the exceptions to the rule? What are the different kinds of formalities
which are prescribed by law for certain contracts? (p. 601 jurado).

PROBLEM NO. 8. C, husband of D, sold her paraphernal property in her name without her
consent. Was such sale valid, void, voidable, rescissible or unenforceable? Why? (p. 621JUrado)

PROBLEM NO. 9.The Board of Liquidators of the Postal Savings Bank authorized the sale
by public auction of a parcel of land it owned at Navotas. The Board expressly reserved the right to
reject any and all bids.The auction notice also contained such reservation. Leoquinco offered the
highest bid but this was rejected by the Board. He then sued the bank to compel it to execute and
deliver the deed of sale, with damages. Will the action prosper?
PROBLEM NO. 10.What is it that extinguishes the action to annul a voidable contract?

SAMPLE PROBLEM

PROBLEM.On August 30, 1976, an action for collection of a sum of money was filed by
the Philippine National Bank (PNB, for brevity) against Fil-Eastern Wood Industries, Inc.
(Fil-Eastern, for short) in its capacity as principal debtor and against Cayetano Ferreria,
Pedro Atienza, Vicente O. Novales, Antonio R. Agra, and Napoleon M. Gamo in their
capacity as sureties.
In its complaint, plaintiff PNB alleged that on July 17, 1967 Fil-Eastern was granted a
loan in the amount of [t]wo [m]illion [f]ive [h]undred [t]housand [p]esos (P2,500,000.00)
with interest at twelve percent (12%) per annum. Drawings from said demand loan were
made on different dates as evidenced by several promissory notes and were credited to
the account of Fil-Eastern. To secure the payment of the said loan Fil-Eastern as
principal and sureties Ferreria, Atienza, Novales, Agra, and Gamo executed a Surety
Agreement whereby the sureties, jointly and severally with the principal, guaranteed and
warranted to PNB, its successors or assigns, prompt payment of subject obligation
including notes, drafts, bills of exchange, overdrafts and other obligations of every kind,
on which Fil-Eastern was indebted or may thereafter become indebted to PNB. It was
further alleged that as of May 31, 1976 the total indebtedness of Fil-Eastern and its
sureties on subject loan amounted to [f]ive [m]illion [t]wo [h]undred [n]inety-[s]even
[t]housand, [n]ine [h]undred [s]eventy-[s]ix [p]esos and [s]eventeen [c]entavos
(P5,297,976.17), excluding attorneys fees. Notwithstanding repeated demands, the
defendants refused and failed to pay their loans.
The defendants (herein sureties) filed separate answers (pp. 49, 68, 205, 208 and 231).
Collating these, We drew the following: All of them claimed that they only signed the
Surety Agreement with the understanding that the same was a mere formality required of
the officers of the corporation. They did not in any way or manner receive a single cent
from the proceeds of said loan and/or derive any profit therefrom. Neither did they
receive any consideration valuable or otherwise, from defendant Fil-Eastern. They
further claim that the loan in question was negotiated and approved under highly
irregular, anomalous and suspicious circumstances to the point that the Surety
Agreement executed thereafter is invalid, null and void and without force and effect. The
extension of time of payment of the loan in question released and discharged the
answering defendants from any liability under the Surety Agreement. The Surety
Agreement is null and void from the beginning due to a defect in the consent of the
defendants and that their liabilities under the Surety Agreement, if any, has been
extinguished by novation. The cause of action of the complainant is barred by laches
and estoppel in that the plaintiff with full knowledge of the deteriorating financial
condition of Fil-Eastern did not take steps to collect from said defendant corporation
while still solvent. They also maintained that if anyone is liable for the payment of said
loan, it is Felipe Ysmael, Jr. and not them or it is only Fil-Eastern and the controlling
officers who profited and made use of the proceeds of the loan. Defendant Agra likewise
said that he was made to sign the Surety Agreement and he did it because of the moral
influence and pressure exerted upon him by Felipe Ysmael, Jr. (their employer at the time
of signing), thereby arousing strong fears of losing a much needed employment to
support his family should he refuse to sign as Surety.
Rule on the allegations of the parties. (1) Has the collection suit prescribed? (2) Is
the principle of laches applicable in the case at bar?

ANSWER: ANTONIO R. AGRA, CAYETANO FERRERIA, NAPOLEON M. GAMO and

VICENTE O. NOVALES, petitioners, vs.PHILIPPINE NATIONAL BANK, respondent. THIRD
DIVISION [G.R. No. 133317. June 29, 1999] There are no absolute rules in the application
of equity, and each case must be examined in the light of its peculiar facts. In PNB v.
CA, there was a mistake, an inexcusable one, on the part of petitioner bank in making an

overpayment and repeating the same error fourteen days later. If the bank could not
immediately discover the mistake despite all its agents and employees, the beneficiary of
the amount could not be expected to do so. It is, thus, inequitable to allow PNB to collect
the amount, after such a long delay, from the beneficiary who had assumed, after all
those years, that the amount really belonged to it.
In the present case, there is no showing of any mistake or any inequity. The fact alone
that seven years had lapsed before PNB filed the collection suit does not mean that it
discovered the obligation of the sureties only then. There was a Surety Arrangement,
and the law says that the said contract can be enforced by action within ten years. The
bank and the sureties all knew that the action to enforce the contract did not have to be
filed immediately. In other words, the bank committed no mistake or inequitable conduct
that needed correction, and the sureties had no misconception about their liabilities
under the contract.
Clearly, petitioners have no recourse in equity, because they failed to show any inequity
on the part of PNB.
As pointed out by the Court of Appeals, petitioners failed to challenge their consent to
the Agreement within the prescriptive period. Article 1391 of the Civil Code provides that
the action to annul a contract vitiated by intimidation, violence or undue influence shall
be filed within four years from the cessation of such defects. In this case, Petitioners
Agra, Gamo and Novales resigned from Fil-Eastern in 1967, 1968 and 1969, respectively.
It was only in 1976, when PNB sought to enforce the contract, that they alleged a defect
in their consent. By their inaction, their alleged cause of action based on vitiated
consent had precribed. There was no question that petitioners, in their capacity as
sureties, were answerable for the obligations of Fil-Eastern to PNB.

PROBLEM: The instant controversy revolves around a parcel of land located at Tuburan Sur,
Danao City, originally owned by Hilarion Derecho. When Hilarion died long before World War
II, his eight children -- Leonardo, Apolinar, Andres, Honorata, Dolores, Gerardo, Agaton, and
Oliva -- became pro indiviso co-owners of the subject property by intestate succession.
Subsequently, Tax Declaration No. 00267[5] was issued under the name Heirs of Hilarion.
On July 16, 1921, five of the co-owners -- Leonardo, Apolinar, Andres, Honorata, and Dolores
-- sold the inherited property to Francisco Lacambra, subject to a five-year redemption
clause.[6] Notably, the three other Derecho heirs -- Gerardo, Agaton, and Oliva -- were not
parties to the pacto de retro sale.
Sometime in 1928, two years after the period for redemption expired, Dolores -together with her husband, Leandro Rigonan -- purchased[7] the land from Lacambra and
immediately occupied it.[8]
More than five decades passed without any controversy. On April 24, 1980, Leandro
Rigonan executed the assailed Affidavit of Adjudication in favor of his son, Teodoro Rigonan
(the deceased husband of Petitioner Delfina vda. de Rigonan).[9] Under this instrument,
Leandro declared himself to be the sole heir of Hilarion,[10] while Teodoro obtained the
cancellation of Tax Declaration No. 00267,[11] and acquired Tax Declaration No. 00667 in his
own name.[12]
During the same year, Teodoro mortgaged the subject property to the Rural Bank of
Compostela of Cebu. Dreading foreclosure, he settled his obligations with the bank[13] by

securing the aid of Spouses Valerio and Visminda Laude. On April 5, 1984, Teodoro executed
the assailed Deed of Absolute Sale of Unregistered Land in favor of Valerio Laude, [14] who
then obtained Tax Declaration No. 00726 under the latters name on May 10, 1984.[15]
On November 10, 1993, respondents -- as the alleged heirs of Hilarion and pro
indiviso owners of the subject realty -- brought an action before the Regional Trial Court
(RTC) of Danao City (Branch 25), first, to recover the property; and,second, to annul the Deed
of Sale in favor of Laude[16] and the Affidavit of Adjudication, whose validity and authenticity
they assailed on the ground of fraud. They likewise maintained that the subject property had
not been partitioned among the heirs; thus, it was still co-owned at the time it was conveyed
to Petitioner Laude.[17]
Petitioners did not deny the imputed fraud in the execution of the Affidavit of Adjudication.
They, however, averred that the document had no bearing on their claim of ownership, which
had long pertained to the Rigonan spouses following the 1928 conveyance from the absolute
owner, Lacambra.[18] They theorized that the co-ownership over the property endedwhen the
period for redemption lapsed without any action on the part of the co-owners.[19] Therefore,
the Rigonan spouses bought the property as legitimate vendees for value and in good faith,
not in the capacity of redeeming co-owners.[20]
Petitioners likewise argued that they and their predecessors-in-interest had continuously
owned and possessed the subject property for 72 years. Accordingly, acquisitive
prescription had allegedly set in, in their favor, when the case was filed in 1993.[21]
Lastly, petitioners maintained that they were entitled to the equitable defense of laches.
Respondents and their forebears were rebuked for not asserting their rights over the
property for the past 72 years. They supposedly did so only after finding that the land had
been developed, and that it had appreciated in value.[22]

Questions: (1) Who is the rightful owner of the property, the petitioners or respondents? (2)
Whether at the time of the purchase in 1928, co-ownership still subsisted among the heirs of
Hilarion Derecho
(3) Whether an implied trust was created
(4). Whether the action in the RTC was barred by prescription and laches

Answer: Owners who, for a long period of time, fail to assert their rights to unregistered real
property may be deprived of it through prescription. Although the present respondents
initially owned part of the subject property by virtue of succession, their inaction for several
decades bars them from recovering it from petitioners who have possessed it as owners
since 1928. The purpose of prescription is to protect the diligent and vigilant, not those who
sleep on their rights.DELFINA Vda. de RIGONAN , vs. ZOROASTER DERECHO R [G.R. No.
159571. July 15, 2005]

What are the four elements to be shown in order to

use laches as a defense?
It was held in Go Chi Gun v. Co Cho[75] that four elements had to be shown in order to use
laches as a defense:
(1) conduct on the part of the defendant, or of one under whom a claim is made, giving rise
to a situation for which a complaint is filed and a remedy sought;
(2) delay in asserting the rights of the complainant, who has knowledge or notice of the
defendants conduct and has been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant will assert
the right on which the latter has based the suit; and
(4) injury or prejudice to the defendant in the event that the complainant is granted a relief or
the suit is not deemed barred.

PROBLEM: The original owner of the property in dispute, Faustino Maningo, is the son-in-law
of the original defendant, Jose Deguilmo. The former is married to Quirina Deguilmo,
daughter of said defendant.
On September 21, 1948, Faustino Maningo sold by pacto de retro the subject property
to spouses Pedro and Teresa Villamor (Exhibit 1).
After the sale, Faustino and Quirina Maningo left for Mindanao. Sometime in January,
1950, Faustino returned to Cebu because the Villamor spouses needed money. However,
since Faustino had no money, he requested his father-in-law, Jose Deguilmo, to buy the land
from the Villamors. On January 10, 1950, the Villamor spouses allegedly sold the land in
dispute to defendant Jose Deguilmo in a private document of sale (Exhibit 2). Immediately
thereafter, Jose Deguilmo took possession of the property, introduced improvements and
paid taxes thereon.
Meantime, in 1953, Faustino Maningo abandoned his wife and lived with a concubine. His
wife and their children had to return to Cebu where they lived and were supported by Jose
Deguilmo. Faustino did not return to Cebu for more than twenty (20) years. A case for
concubinage was filed against him but it was somehow dismissed.
In 1973, Faustino Maningo returned to Cebu and allegedly tried to forcibly take possession of
the property from his father-in-law although he did not succeed. Nevertheless, Faustino
proceeded to execute a deed of sale in favor of plaintiff (now petitioner) Marcelino Kiamco.
The latter, a resident of Carmen, Cebu, allegedly knew, at the time of the sale, that defendant,
Jose Deguilmo, had already been in possession of the disputed property for more than
twenty (20) years. After the said sale, Marcelino Kiamco attempted to take possession of the
property but was not successful because of defendant's refusal to give up the land. He,
however, did not file yet any action for ejectment or unlawful detainer against the defendant.
Seven (7) months after the execution of the alleged sale, Marcelino Kiamco filed a complaint
for quieting of title and recovery of possession with damages against Jose Deguilmo before
the Regional Trial Court of Cebu.

The trial court ruled, among other things, that Faustino Maningo was still the owner of the
subject property on October 2, 1973, when he executed the deed of sale in favor of Marcelino
Kiamco; that the deed of sale executed by the Villamor spouses in favor of Jose Deguilmo is
null and void; and that Jose Deguilmo had not acquired the subject property by acquisitive
prescription.
Question: (1)Is the trial court correct?
(2) When did the New Civil Code take effect?
(3) Under the old code, what is the period of acquisitive prescription?

It is undisputed that after the Deed of Sale (Exh. 2) was executed on January 10, 1950,
Jose Deguilmo immediately took possession of the property in dispute in the concept of an
owner, exercised acts of dominion and introduced improvements thereon, and enjoyed the
fruits thereof, continuously, peacefully, and adversely for more than twenty years. It is
therefore, clear, that such adverse possession started on January 10, 1950, which is before
the effectivity of the New Civil Code (August 30, 1950). Pursuant to Art. 1116 of the New Civil
Code, which provides for transitional rules on prescription, and which reads: "Prescription
already running before the effectivity of this Code shall be governed by laws previously in
force; but if since the time this Code took effect the entire period herein required for
prescription should lapse, the present Code shall be applicable, even though by the former
laws a longer period might be required," the law to be applied is the Code of Civil Procedure
(Act 190). Inasmuch as here the prescription was already running before August 30, 1950, it
follows that only ten (10) years would be required, because under the Code of Civil
Procedure, regardless ofgood faith or bad faith, the period for acquiring land by prescription
was only ten (10) years (Sec. 41, Act 190, Code of Civil Procedure; Osorio vs. Tan Jongko, 51
O.G. 6221). It therefore follows necessarily that in 1960, Jose Deguilmo had already acquired
the subject property by acquisitive prescription. Thus, Marcelino Kiamco should have lost
the case, unless of course, the land was covered by a Torrens Certificate of Title. As found
by the respondent Court, the evidence shows that the land is not a titled property.
The period of ten (10) years must necessarily start from January, 1950, and not from August
1950, since here, the prescriptive period under the old law was shorter. Had the period under
the old law been longer, it is the shorter period under the New Civil Code that should apply,
but this time, the period should commence from the date of effectivity of the New Civil Code
August 30, 1950 in view of the clause "but if since the time this Code took effect ..."
With the facts obtaining in the present case, it is immaterial whether the property in dispute
was possessed by Jose Deguilmo in good or bad faith. His adverse possession for more
than twenty years is more than sufficient for purposes of acquisitive prescription under the
Code of Civil Procedure. Thus, even if the alleged Deed of Sale executed on January 10, 1950
(Exh. 2) was void ab initio, as claimed by petitioner (because Faustino Maningo could still
repurchase the property until 1951, thus the Villamor spouses were not yet the owners
thereof), what is important is that Jose Deguilmo immediately took possession of the
property and continuously and adversely possessed and enjoyed it for more than twenty
years. Besides, as correctly found by the respondent court, if Faustino claims that the Deed
of Sale of January 10, 1950 was not authentic and valid, why did he not disturb Jose
Deguilmo from 1950 until 1973; it is hardly the actuation of an owner for Faustino Maningo
to do what he did for the last 24 years, if as the Villamor spouses said Faustino Maningo had
already repurchased the property in 1949."
Jose Deguilmo (and now his heirs, the private respondents), no doubt, had already acquired
ownership of the subject property on the basis of acquisitive prescription. MARCELINO

KIAMCO, petitioner-movant, vs. THE HONORABLE COURT OF APPEALS, JUANA DEGUILMOGRAPE,

QUIRINA
DEGUILMO-MANINGO,
ANTONIA
DEGUILMO,
and
JUAN
DEGUILMO, respondents. SECOND DIVISION [G.R. No. 96865. July 3, 1992]

PROBLEM: On March 14, 1939, Pedro Tolentino,

claiming absolute ownership over Lot Nos. 572 and
579 of the Gattaran cadastre in Lapogan, Gattaran,
Cagayan, separately sold said lots to petitioners, the
spouses Bernardino Ramos and Rosalia Oli, in
consideration of the amount of eighty pesos (P80.00)
for each sale. The aforesaid conveyances were
allegedly evidenced by two documents both entitled
Escritura de Compra Venta and acknowledged
before a notary public.
Subsequently, however, petitioners instituted on
January 8, 1976 an action for reconveyance with
damages alleging that while they were in open,
public, adverse, peaceful and continuous possession
of the subject lots in good faith and with just title, for
not less than fifty (50) years, personally and through
their predecessors-in-interest, they were surprised to
discover in November 1975, that decrees of
registration covering Lot Nos. 572 and 579 were
already issued on January 7, 1940. They complained
further the subsequent issuance by the Register of
Deeds of Cagayan on March 11, 1941, Original
Certificates of Title Nos. 17811 and 17812 covering Lot
Nos. 572 and 579, respectively, in favor of Lucia
Bautista since the latter allegedly neither laid claim of
ownership nor took possession of them, either
personally or through another. Petitioners claimed
instead that they were the ones who acquired prior
ownership and possession over the lots to the
exclusion of the whole world. Thus, they concluded
that the original certificates of title as well as Transfer

Certificates of Title Nos. T-31698 and T-31699 obtained

by private respondent Rodolfo Bautista
who
adjudicated unto himself said lots on September 20,
1975, as sole heir of Lucia Bautista were null and
void. On the theory that they already acquired the
subject lots by acquisitive prescription, petitioners
demanded their return but private respondents
refused to do so, hence, compelling them to file a
complaint for reconveyance with damages.
On the other hand, herein private respondents,
the spouses Rodolfo Bautista and Felisa Lopez,
likewise claimed absolute ownership of the lots
covered by TCT Nos. T-31698 and T-31699. They
alleged that while the records of the Bureau of Lands
showed that during the cadastral survey in Gattaran in
1932, Pedro Tolentino was a claimant over lands in
the cadastre,the same was only with respect to Lot
No. 1399 which was eventually titled under his name
as OCT No. 16110. It just happened that Lot No. 1399
was adjacent to Lot No. 572, a portion of which was
occupied by petitioners upon the tolerance of the
original registrant Lucia Bautista.
By way of affirmative
defense, private
respondents maintained that the action for
reconveyance filed by petitioners was tantamount to a
reopening of the cadastral proceedings or a collateral
attack on the decrees of registration which cannot be
done without violating the rule on conclusiveness of
the decree of registration. Moreover, they argued that
since the lots were already under the operation of the
Torrens System, acquisitive prescription would no
longer be possible.
QUESTION: Who should be the rightful owner of the
property?
Section 38 of the Land Registration Act provides that a decree of registration duly
issued is subject to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the competent Court of First

Instance (now the Regional Trial Court) a petition for review within one year after entry of the
decree, provided no innocent purchaser for value has acquired an interest. The same law
provides that upon the expiration of the term of one year, every decree or certificate of title x
x x shall be imprescriptible.
Under the law, an action for reconveyance of real property resulting from fraud
prescribes in four (4) years from the discovery of the fraud. Discovery of the fraud must be
deemed to have taken place when Lucia Bautista was issued OCT Nos. 178111 and 17812
because registration of real property is considered a constructive notice to all persons and
it shall be counted from the time of such registering, filing or entering. An action based on
implied or constructive trust prescribes in ten (10) years. This means that petitioners should
have enforced the trust within ten (10) years from the time of its creation or upon the alleged
fraudulent registration of the property. But as it is, petitioners failed to avail of any of the
aforementioned remedies within the prescribed periods. With no remedy in view, their claims
should forever be foreclosed.
The Court, however, subscribes to petitioners argument that the courts a quo incorrectly
held that private respondents are third persons to whom ownership of the properties had
been transmitted. But this error alone may not save the day for petitioners. They have, in a
sense, slept on whatever rights they claimed to have over the properties and by the time they
were roused, the law had stepped in to bar their claims. On the other hand, private
respondents inattention to the property from the time of Lucia Bautistas death until private
respondent Rodolfo Bautistas retirement from the military should not be construed as an
abandonment thereof. Private respondents have in their favor the law that protects holders
of title under the Torrens System of land registration. As this Court so eloquently
pronounced in 1915:
Once a title is registered, the owner may rest secure, without the necessity of waiting in the
portals of the court, or sitting in the `mirador de su casa, to avoid the possibility of losing his
land. BERNARDINO RAMOS and ROSALIA OLI,petitioners, vs. COURT OF APPEALS,
RODOLFO BAUTISTA and FELISA LOPEZ, respondents. THIRD DIVISION [G.R. No. 111027.
February 3, 1999]

SAMPLE QUESTIONS IN CIVIL LAW

Is an action for partition prescriptible? Can it be

barred by laches? Is there an exception to this?
An action for
partition by its very nature is imprescriptible and
cannot be barred by laches x x x. The only exception to the rule on
the imprescriptibility of an action for partition is provided in a
case where the co-ownership of the properties sought to be partitioned
had been properly repudiated by a co-owner at which instance the

remedy available to the aggrieved heirs lies not in action for

partition but for reconveyance which is subject to the rules on
extinctive
prescription

PROBLEM: What is the prescriptive period for

reconveyance of registered property based on
constructive trust?
ANSWER: Ten years.
An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. A long line of decisions
of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on
an implied or constructive trust prescribes in ten years from the issuance of
the Torrens title over the property. The only discordant note, it seems, is
Balbin v. Medalla, which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained
by the erroneous reliance on Gerona v. de Guzman. But in Gerona, the fraud
was discovered on June 25, 1948, hence Section 43(3) of Act No. 190 was
applied, the New Civil Code not coming into effect until August 30, 1950 as
mentioned earlier. It must be stressed, at this juncture, that Article 1144 and
Article 1456, are new provisions. They have no counterparts in the old Civil
Code or in the old Code of Civil Procedure, the latter being then resorted to
as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of
Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder of the decree of registration
on the original petition or application, x x x.
This provision should be read in conjunction with Article 1456 of the Civil Code,
which provides:
Article 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for
the benefit of the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property
and the title thereto in favor of the true owner. Correlating Section 53,
paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
Code with Article 1144 (2) of the Civil Code, supra, the prescriptive period
for the reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of title. In
the present case, therefore, inasmuch as Civil Case No. 10235 was filed on
June 4, 1975, it was well-within the prescriptive period of ten (10) years
from the date of the issuance of Original Certificate of Title No. 0-6836 on
September 17, 1970.

WHAT ACTIONS PRESCRIBE WITHIN TEN YEARS?

Article 1144.
The following actions must be brought within ten years from
the time the right of action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment;
PURITA SALVATIERRA, ELENITA SALVATIERRA NUNEZ, ANSELMO
SALVATIERRA,
JR.,
EMELITA
SALVATIERRA,
and
ROMEL
SALVATIERRA, petitioners, vs. THE HONORABLE COURT OF APPEALS
and SPS. LINO LONGALONG and PACIENCIA MARIANO, respondents.
FIRST DIVISION[G.R. No. 107797. August 26, 1996]

tuatis v. escol (2009)

G.R. No. 175399

October 27, 2009

OPHELIA L. TUATIS, Petitioner,

vs.
SPOUSES ELISEO ESCOL and VISMINDA ESCOL; HONORABLE COURT OF APPEALS, 22nd
DIVISION, CAGAYAN DE ORO CITY; REGIONAL TRIAL COURT, BRANCH 11, SINDANGAN,
ZAMBOANGA DEL NORTE; and THE SHERIFF OF RTC, BRANCH 11, SINDANGAN,
ZAMBOANGA DEL NORTE, Respondents.
DECISION
CHICO-NAZARIO, J.:
This Petition for Certiorari and Mandamus1 under Rule 65 of the Rules of Court seeks the annulment
of the following Resolutions of the Court of Appeals in CA-G.R. SP No. 00737-MIN: (a)
Resolution2 dated 10 February 2006 dismissing the Petition for Certiorari, Prohibition and Mandamus
with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction
of herein petitioner Ophelia L. Tuatis (Tuatis); (b) Resolution 3 dated 25 July 2006 denying Tuatis
Motion for Reconsideration of the Resolution dated 10 February 2006; and (c) Resolution 4 dated 9
October 2006 denying Tuatis Motion for Leave to File a Second Motion for Reconsideration. The
instant Petition further prays for the annulment of the Order 5 dated 26 September 2005 of the
Regional Trial Court (RTC) of Sindangan, Zamboanga del Norte, Branch 11, in Civil Case No. S-618,
ordering the Sheriff to immediately serve the Writ of Execution issued on 7 March 2002.
The dispute arose from the following factual and procedural antecedents:
On 18 June 1996, Tuatis filed a Complaint for Specific Performance with Damages 6 against herein
respondent Visminda Escol (Visminda) before the RTC, docketed as Civil Case No. S-618.
Tuatis alleged in her Complaint that sometime in November 1989, Visminda, as seller, and Tuatis, as
buyer, entered into a Deed of Sale of a Part of a Registered Land by Installment 7 (Deed of Sale by
Installment). The subject matter of said Deed was a piece of real property situated in Poblacion,
Sindangan, Zamboanga del Norte and more particularly described as "[a] part of a registered land
being known as Lot No. 251, Pls-66 covered under OCT [Original Certificate of Title] No. P-5421; x x
x with an area of THREE HUNDRED (300) square meters, more or less" (subject property).
The significant portions of the Deed of Sale by Installment stated:

That for and in consideration of the sum of TEN THOUSAND PESOS (P10,000.00), Philippine
currency, the SELLER [Visminda8] hereby SELLS to the BUYER [Tuatis], the above-described parcel
of land under the following terms and conditions:
1. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of THREE
THOUSAND PESOS (P3,000.00), as downpayment;
2. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of FOUR
THOUSAND PESOS (P4,000.00), on or before December 31, 1989;
3. That the remaining balance of THREE THOUSAND PESOS (P3,000.00) shall be paid by
the BUYER [Tuatis] to the SELLER [Visminda] on or before January 31, 1990;
4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three
months from the period stipulated above, then the BUYER [Tuatis] shall return the land
subject of this contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise
return all the amount paid by the BUYER [Tuatis]. 9
Tuatis claimed that of the entire purchase price of P10,000.00, she had paid Visminda P3,000.00 as
downpayment. The exact date of said payment was not, however, specified. Subsequently, Tuatis
paid P3,000.00 as installment on 19 December 1989, and another P1,000.00 installment on 17
February 1990. Tuatis averred that she paid Visminda the remaining P3,000.00 on 27 February 1990
in the presence of Eric Selda (Eric), a clerk in the law office of one Atty. Alanixon Selda. In support of
this averment, Tuatis attached to her Complaint a certification 10 executed by Eric on 27 May 1996.
In the meantime, Tuatis already took possession of the subject property and constructed a
residential building thereon.
In 1996, Tuatis requested Visminda to sign a prepared absolute deed of sale covering the subject
property, but the latter refused, contending that the purchase price had not yet been fully paid. The
parties tried to amicably settle the case before the Lupon Barangay, to no avail. 11
Tuatis contended that Visminda failed and refused to sign the absolute deed of sale without any valid
reason. Thus, Tuatis prayed that the RTC order Visminda to do all acts for the consummation of the
contract sale, sign the absolute deed of sale and pay damages, as well as attorneys fees.
In her Answer,12 Visminda countered that, except for the P3,000.00 downpayment and P1,000.00
installment paid by Tuatis on 19 December 1989 and 17 February 1990, 13 respectively, Tuatis made
no other payment to Visminda. Despite repeated verbal demands, Tuatis failed to comply with the
conditions that she and Visminda agreed upon in the Deed of Sale by Installment for the payment of
the balance of the purchase price for the subject property. Visminda asked that the RTC dismiss
Tuatis Complaint, or in the alternative, order Tuatis to return the subject property to Visminda after
Vismindas reimbursement of the P4,000.00 she had received from Tuatis.
After trial, the RTC rendered a Decision14 on 29 April 1999 in Civil Case No. S-618 in Vismindas
favor. The RTC concluded:
Under the facts and circumstances, the evidence for [Tuatis] has not established by satisfactory proof
as to (sic) her compliance with the terms and conditions setforth (sic) in [the Deed of Sale by
Installment] x x x.

xxxx
In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment,
such payment, as we said, is a positive suspensive condition, the failure of which is not a breach,
casual or serious, but simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force x x x.
xxxx
As the contract x x x is clear and unmistakable and the terms employed therein have not been shown
to belie or otherwise fail to express the true intention of the parties, and that the deed has not been
assailed on the ground of mutual mistake which would require its reformation, [the] same should be
given its full force and effect.
EVIDENCE (sic) at hand points of no full payment of the price, hence No. 4 of the stipulation
applies[,] which provides:
"That failure (sic) of the Buyer [Tuatis] to pay the remaining balance within the period of three months
from the period stipulated above, then the Buyer [Tuatis] shall return the land subject of this Contract
to the Seller [Visminda] and the Seller [Visminda] [shall] likewise return all the (sic) amount paid by
the Buyer [Tuatis]."
This stipulation is the law between the [Buyer] and [Seller], and should be complied with in good faith
x x x.
[Tuatis] constructed the building x x x in bad faith for, (sic) she had knowledge of the fact that the
Seller [Visminda] is still the absolute owner of the subject land. There was bad faith also on the part
of [Visminda] in accordance with the express provisions of Article 454 [of the New Civil Code] 15 since
[she] allowed [Tuatis] to construct the building x x x without any opposition on [her] part and so
occupy it. The rights of the parties must, therefore, be determined as if they both had acted in bad
faith. Their rights in such cases are governed by Article 448 of the New Civil Code of the
Philippines.16
The RTC decreed the dismissal of Tuatis Complaint for lack of merit, the return by Tuatis of physical
possession of the subject property to Visminda, and the return by Visminda of the P4,000.00 she
received from Tuatis.
Tuatis filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 65037. In a
Resolution17 dated 29 August 2000, however, the appellate court dismissed the appeal for failure of
Tuatis to serve and file her appellants brief within the second extended period for the same. An
Entry of Judgment18 was made in CA-G.R. CV No. 65037 on 29 September 2000, as a result of
which, the appealed RTC Decision dated 29 April 1999 in Civil Case No. S-618 became final and
executory.
Visminda filed a Motion for Issuance of a Writ of Execution 19 before the RTC on 14 January 2002.
The RTC granted Vismindas Motion in a Resolution dated 21 February 2002, and issued the Writ of
Execution20 on 7 March 2002.
Tuatis thereafter filed before the RTC on 22 April 2002 a Motion to Exercise Right under Article 448
of the Civil Code of the Philippines.21 Tuatis moved that the RTC issue an order allowing her to buy

the subject property from Visminda. While Tuatis indeed had the obligation to pay the price of the
subject property, she opined that such should not be imposed if the value of the said property was
considerably more than the value of the building constructed thereon by Tuatis. Tuatis alleged that
the building she constructed was valued at P502,073.00,22 but the market value of the entire piece of
land measuring 4.0144 hectares, of which the subject property measuring 300 square meters formed
a part, was only about P27,000.00.23 Tuatis maintained that she then had the right to choose
between being indemnified for the value of her residential building or buying from Visminda the
parcel of land subject of the case. Tuatis stated that she was opting to exercise the second option.
On 20 December 2004, Visminda deposited the amount of P4,000.00 to the office of the Clerk of
Court of the RTC, pursuant to the Decision of the trial court dated 29 April 1999. 24
In the intervening time, the Writ of Execution issued on 7 March 2002 was yet to be served or
implemented by the Sheriff. This prompted Visminda to write a letter to the Office of the Court
Administrator (OCA) to complain about the said delay. The OCA endorsed the letter to the RTC.
On 26 September 2005, the RTC issued an Order25 directing the Sheriff to immediately serve or
enforce the Writ of Execution previously issued in Civil Case No. S-618, and to make a report and/or
return on the action taken thereon within a period of fifteen (15) days from receipt of the order.
On 10 October 2005, Tuatis filed before the RTC a Motion for Reconsideration 26 of the Order dated
26 September 2005, praying that the same be set aside in view of the pendency of her previous
Motion to Exercise Right under Article 448 of the Civil Code of the Philippines. However, before the
RTC could rule upon Tuatis Motion for Reconsideration, the Sheriff enforced the Writ of Execution on
27 October 2005 and submitted his Return to the RTC on 2 November 2005, reporting that the
subject writ was fully satisfied.
Tuatis immediately filed with the Court of Appeals a Petition for Certiorari, Prohibition
and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction,27 which was docketed as CA-G.R. No. 00737-MIN. Tuatis sought in said
Petition the annulment of the RTC Order dated 26 September 2005, as well as the issuance of an
order commanding the RTC and the Sheriff to desist from undertaking any further proceedings in
Civil Case No. S-618, and an order directing the RTC to determine the rights of the parties under
Article 448 of the Civil Code.
In a Resolution28 dated 10 February 2006, the Court of Appeals dismissed outright Tuatis Petition for
failure to completely pay the required docket fees, to attach a certified true or authenticated copy of
the assailed RTC Order dated 26 September 2005, and to indicate the place of issue of her
counsels IBP and PTR Official Receipts.
Tuatis filed a Motion for Reconsideration 29 of the Resolution dated 10 February 2006, but said Motion
was denied by the appellate court in another Resolution dated 25 July 2006 on the ground that
Tuatis had not taken any action to rectify the infirmities of her Petition.
Tuatis subsequently filed a Motion for Leave to File a Second Motion for Reconsideration, 30 but it was
similarly denied by the Court of Appeals in a Resolution dated 9 October 2006, as Section 2, Rule
5231 of the Rules of Court proscribes the filing of a second motion for reconsideration.

Hence, Tuatis filed the instant Petition, principally arguing that Article 448 of the Civil Code must be
applied to the situation between her and Visminda.
According to Tuatis, grave abuse of discretion, amounting to lack or excess of their jurisdiction, was
committed by the RTC in issuing the Order dated 26 September 2005, and by the Sheriff in enforcing
the Writ of Execution on 27 October 2005. Tuatis insists that the Motion for Reconsideration of the
Order dated 26 September 2005 that she filed on 10 October 2005 legally prevented the execution of
the RTC Decision dated 29 April 1999, since the rights of the parties to the case had yet to be
determined pursuant to Article 448 of the Civil Code.32 Tuatis reiterates that the building she
constructed is valued at P502,073.00, per assessment of the Municipal Assessor of Sindangan,
Zamboanga del Norte; while the entire piece of land, which includes the subject property, has a
market value of only about P27,000.00, based on Tax Declaration No. 12464 issued in the year
2000.33 Such being the case, Tuatis posits that she is entitled to buy the land at a price to be
determined by the Court or, alternatively, she is willing to sell her house to Visminda in the amount
of P502,073.00.
In addition, Tuatis attributes grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the Court of Appeals for dismissing outright her Petition for Certiorari, Prohibition
and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, and subsequently denying her Motion for Reconsideration and Motion for
Leave to File a Second Motion for Reconsideration.
The Court grants the present Petition but for reasons other than those proffered by Tuatis.
Procedural deficiencies of Tuatis Petition before the Court of Appeals
It is true that Tuatis committed several procedural faux pas that would have, ordinarily, warranted the
dismissal of her Petition in CA-G.R. No. 00737-MIN before the Court of Appeals.
In its Resolution dated 10 February 2006, the Court of Appeals dismissed outright the Petition
for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction filed by Tuatis for failure to comply with the following
requirements for such a petition: (a) to completely pay the required docket fees, (b) to attach a
certified true or authenticated copy of the assailed RTC Order dated 26 September 2005, and (c) to
indicate the place of issue of her counsels IBP and PTR Official Receipts.
Section 3, Rule 46 of the Rules of Court lays down the requirements for original cases filed before
the Court of Appeals and the effect of non-compliance therewith, relevant portions of which are
reproduced below:
SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. x x x.
xxxx
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and shall
be accompanied by a clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto. The certification shall be accomplished
by the proper clerk of court or by his duly authorized representative, or by the proper officer of the

court, tribunal, agency or office involved or by his duly authorized representative. The other requisite
number of copies of the petition shall be accompanied by clearly legible plain copies of all
documents attached to the original.
xxxx
The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court
and deposit the amount of P500.00 for costs at the time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition. (Emphases ours.)
The sound reason behind the policy of the Court in requiring the attachment to the petition
for certiorari, prohibition,mandamus, or quo warranto of a clearly legible duplicate original or certified
true copy of the assailed judgment or order, is to ensure that the said copy submitted for review is a
faithful reproduction of the original, so that the reviewing court would have a definitive basis in its
determination of whether the court, body, or tribunal which rendered the assailed judgment or order
committed grave abuse of discretion.34 Also, the Court has consistently held that payment of docket
fees within the prescribed period is jurisdictional and is necessary for the perfection of an appeal. 35
Indeed, the last paragraph of Section 3, Rule 46 states that non-compliance with any of the
requirements stated therein shall constitute sufficient ground for the dismissal of the petition.
However, the Court, in several cases,36 also declared that said provision must not be taken to mean
that the petition shall be automatically dismissed in every instance of non-compliance. The power
conferred upon the Court of Appeals to dismiss an appeal, or even an original action, as in this case,
is discretionary and not merely ministerial. With that affirmation comes the caution that such
discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play,
having in mind the circumstances obtaining in each case. 37
It must be borne in mind that the rules of procedure are intended to promote, rather than frustrate,
the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it,
nevertheless, must not be met at the expense of substantial justice. Technical and procedural rules
are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid
enforcement of the rules may be allowed to attain that prime objective for, after all, the dispensation
of justice is the core reason for the existence of courts. 38
Hence, technicalities must be avoided. The law abhors technicalities that impede the cause of
justice. The court's primary duty is to render or dispense justice. A litigation is not a game of
technicalities. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it
deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy,
deserves scant consideration from courts. Litigations must be decided on their merits and not on
technicality. Every party-litigant must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of
appeals purely on technical grounds is frowned upon where the policy of the court is to encourage
hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid,
technical sense; rules of procedure are used only to help secure, not override, substantial justice. It
is a far better and more prudent course of action for the court to excuse a technical lapse and afford
the parties a review of the case on appeal to attain the ends of justice rather than dispose of the

case on technicality and cause a grave injustice to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more delay, if not a miscarriage, of justice. 39
In this case, the Court finds that the Court of Appeals committed grave abuse of discretion in
focusing on the procedural deficiencies of Tuatis Petition and completely turning a blind eye to the
merits of the same. The peculiar circumstances of the present case and the interest of substantial
justice justify the setting aside, pro hac vice, of the procedural defects of Tuatis Petition in CA-G.R.
No. 00737-MIN.
Perusal of the RTC Decision dated 29 April 1999
The RTC, in the body of its Decision dated 29 April 1999 in Civil Case No. S-618, found that Tuatis
breached the conditions stipulated in the Deed of Sale by Installment between her and Visminda; but
since both Tuatis and Visminda were guilty of bad faith, "[t]heir rights in such cases are governed by
Article 448 of the New Civil Code of the Philippines." 40
Article 448 of the Civil Code, referred to by the RTC, provides:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (Emphases supplied.)
According to the aforequoted provision, the landowner can choose between appropriating the
building by paying the proper indemnity for the same, as provided for in Articles 546 41 and 54842 of
the Civil Code; or obliging the builder to pay the price of the land, unless its value is considerably
more than that of the structures, in which case the builder in good faith shall pay reasonable rent. 43
The Court notes, however, that the RTC, in the dispositive portion of its 29 April 1999 Decision,
which exactly reads
WHEREFORE, premises studiedly considered, judgment is hereby rendered as follows:
(1) DISMISSING the Complaint for lack of merit;
(2) ORDERING [Tuatis] to return the physical possession of the land in question to
[Visminda]; and,
(3) ORDERING [Visminda] to return the P4,000.00 she received as evidenced by Exhibit "B"
and Exhibit "C" 44 to [Tuatis].45
utterly failed to make an adjudication on the rights of Tuatis and Visminda under Article 448 of the
Civil Code. It would seem that the decretal part of said RTC judgment was limited to implementing
the following paragraph in the Deed of Sale by Installment:
4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three months
from the period stipulated above, then the BUYER [Tuatis] shall return the land subject of this

contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise return all the amount
paid by the BUYER [Tuatis].46
without considering the effects of Article 448 of the Civil Code.
It was this apparent incompleteness of the fallo of the RTC Decision dated 29 April 1999 that resulted
in the present controversy, and that this Court is compelled to address for a just and complete
settlement of the rights of the parties herein.
Finality of the RTC Decision dated 19 April 1999
The Court has not lost sight of the fact that the RTC Decision dated 29 April 1999 in Civil Case No.
S-618 already became final and executory in view of the dismissal by the appellate court of Tuatis
appeal in CA-G.R. CV No. 650307 and the entry of judgment made on 29 September 2000.
Nothing is more settled in law than that when a final judgment is executory, it thereby becomes
immutable and unalterable. The judgment may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the court rendering it or by the
highest Court of the land. The doctrine is founded on considerations of public policy and sound
practice that, at the risk of occasional errors, judgments must become final at some definite point in
time. The only recognized exceptions are the corrections of clerical errors or the making of the socalled nunc pro tunc entries, in which case there is no prejudice to any party, and, of course, where
the judgment is void.47
Equally well-settled is the rule that the operative part in every decision is the dispositive portion or
the fallo, and where there is conflict between the fallo and the body of the decision, the fallo controls.
This rule rests on the theory that thefallo is the final order, while the opinion in the body is merely a
statement, ordering nothing.48
Jurisprudence also provides, however, that where there is an ambiguity caused by an omission or a
mistake in the dispositive portion of the decision, the Court may clarify such an ambiguity by an
amendment even after the judgment has become final. In doing so, the Court may resort to the
pleadings filed by the parties and the findings of fact and the conclusions of law expressed in the text
or body of the decision.49 Therefore, even after the RTC Decision dated 29 April 1999 had already
become final and executory, this Court cannot be precluded from making the necessary amendment
thereof, so that the fallo will conform to the body of the said decision.
If the Court does not act upon the instant Petition, Tuatis loses ownership over the building she
constructed, and in which she has been residing, allegedly worth P502,073.00, without any
recompense therefor whatsoever; while Visminda, by returning Tuatis previous payments
totaling P4,000.00, not just recovers the subject property, but gains the entire building without paying
indemnity for the same. Hence, the decision of the Court to give due course to the Petition at bar,
despite the finality of the RTC Decision dated 29 April 1999, should not be viewed as a denigration of
the doctrine of immutability of final judgments, but a recognition of the equally sacrosanct doctrine
that a person should not be allowed to profit or enrich himself inequitably at another's expense.
Furthermore, the Court emphasizes that it is not even changing or reversing any of the findings of
fact and law of the RTC in its Decision dated 29 April 1999. This Court is still bound by said RTC

judgment insofar as it found that Tuatis failed to fully pay for the price of the subject property; but
since both Tuatis and Visminda were in bad faith, Article 448 of the Civil Code would govern their
rights. The Court herein is simply clarifying or completing the obviously deficient decretal portion of
the decision, so that said portion could effectively order the implementation of the actual ruling of the
RTC, as clearly laid down in the rationale of the same decision.
Applying Article 448 and other related provisions of the Civil Code
Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the
Civil Code, Visminda has the following options:
Under the first option, Visminda may appropriate for herself the building on the subject property after
indemnifying Tuatis for the necessary50 and useful expenses51 the latter incurred for said building, as
provided in Article 546 of the Civil Code.
It is worthy to mention that in Pecson v. Court of Appeals, 52 the Court pronounced that the amount to
be refunded to the builder under Article 546 of the Civil Code should be the current market value of
the improvement, thus:
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In
this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila [40
Phil. 717 (1920)] that the said provision was formulated in trying to adjust the rights of the owner and
possessor in good faith of a piece of land, to administer complete justice to both of them in such a
way as neither one nor the other may enrich himself of that which does not belong to him. Guided by
this precept, it is therefore the current market value of the improvements which should be made the
basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would
otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a
measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the
present market value of the apartment building upon which the trial court should base its finding as
to the amount of reimbursement to be paid by the landowner. (Emphasis ours.)
Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis may
retain possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige
Tuatis to pay the present or current fair value of the land. 53 The P10,000.00 price of the subject
property, as stated in the Deed of Sale on Installment executed in November 1989, shall no longer
apply, since Visminda will be obliging Tuatis to pay for the price of the land in the exercise of
Vismindas rights under Article 448 of the Civil Code, and not under the said Deed. Tuatis obligation
will then be statutory, and not contractual, arising only when Visminda has chosen her option under
Article 448 of the Civil Code.1avvphi1
Still under the second option, if the present or current value of the land, the subject property herein,
turns out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to
pay for the subject property, but she must pay Visminda reasonable rent for the same. Visminda and
Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms.
Necessarily, the RTC should conduct additional proceedings before ordering the execution of the
judgment in Civil Case No. S-618. Initially, the RTC should determine which of the aforementioned

options Visminda will choose. Subsequently, the RTC should ascertain: (a) under the first option, the
amount of indemnification Visminda must pay Tuatis; or (b) under the second option, the value of the
subject property vis--vis that of the building, and depending thereon, the price of, or the reasonable
rent for, the subject property, which Tuatis must pay Visminda.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis demand that, since the value of the building she
constructed is considerably higher than the subject property, she may choose between buying the
subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the
choice of options is for Visminda, not Tuatis, to make. And, depending on Vismindas choice, Tuatis
rights as a builder under Article 448 are limited to the following: (a) under the first option, a right to
retain the building and subject property until Visminda pays proper indemnity; and (b) under the
second option, a right not to be obliged to pay for the price of the subject property, if it is considerably
higher than the value of the building, in which case, she can only be obliged to pay reasonable rent
for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive.54 The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land.55
The raison detre for this provision has been enunciated thus: Where the builder, planter or sower
has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to
protect the owner of the improvements without causing injustice to the owner of the land. In view of
the impracticability of creating a state of forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing. 56
Vismindas Motion for Issuance of Writ of Execution cannot be deemed as an expression of her
choice to recover possession of the subject property under the first option, since the options under
Article 448 of the Civil Code and their respective consequences were also not clearly presented to
her by the 19 April 1999 Decision of the RTC. She must then be given the opportunity to make a
choice between the options available to her after being duly informed herein of her rights and
obligations under both.
As a final note, the directives given by the Court to the trial court in Depra v. Dumlao 57 may prove
useful as guidelines to the RTC herein in ensuring that the additional proceedings for the final
settlement of the rights of the parties under Article 448 of the Civil Code shall be conducted as
thoroughly and promptly as possible.
WHEREFORE, premises considered, the Court:
(1) GRANTS the instant Petition;

(2) ANNULS AND SETS ASIDE (a) the Resolution dated 21 February 2002 of the Regional
Trial Court of Sindangan, Zamboanga del Norte, Branch 11, ordering the issuance of a writ
for the execution of the Decision dated 19 April 1999 of the said trial court in Civil Case No.
S-618; (b) the Writ of Execution issued on 7 March 2002; and (c) the actions undertaken by
the Sheriff to enforce the said Writ of Execution;
(3) DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch 11, to
conduct further proceedings to determine with deliberate dispatch: (a) the facts essential to
the proper application of Article 448 of the Civil Code, and (b) respondent Visminda Escols
choice of option under the same provision; and
(4) Further DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch
11, to undertake the implementation of respondent Visminda Escols choice of option under
Article 448 of the Civil Code, as soon as possible.
No costs.
SO ORDERED.

MIDTERM EXAMINATION IN CIVIL LAW REVIEW

1. A Chinese citizen, who is domiciled in Argentina, is on his way to Manila. The boat
where he is riding, is docking for five days in Japan. In Japan can he make a will? IF so,
what countrys formalities should he observe?
2. Tony made a will making Antonia his heir. Tony later learned that Antonia was dead,
so he revokes his first will and made another one instituting Berto as heir. If A turns out
to be still alive, who inherits?
3. On September 24, 1977, petitioner donated unto respondent a parcel of land at
Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its
name under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which
also bears the acceptance of the donee recites the considerations therefor and the
conditions thereto attached, to wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee
shall not use the land except for the purpose as provided above in paragraph 1
hereof, nor sell or dispose the land for any reason whatsoever, nor convey any portion
of the same except in lease for commercial use as provided above in paragraph 3
hereof, otherwise the said land with all real improvements thereon shall revert in trust
to the Donor for prompt disposition in favor of some other charitable organization that
Donor may deem best suited to the care of the aged.xxx

Thereafter, or sometime in 1980, the donee, for purposes of generating funds to

build the perimeter fence on the donated property and the construction of a nucleus
building for the aged and the infirm, leased a portion of the donated property to one
Martin Gomez who planted said portion with sugar cane. There is no dispute that the
lease agreement was entered into by the donee without the prior written consent of the
donor, as required in the deed of donation. The lease to Gomez ended in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and
the donee ordered to return and/or reconvey the property donated reason of said
violation of the attached condition? What law shall govern the said matter? Explain.

4. According to purpose or cause, state the four (4) kinds of donation and explain each.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,

Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private
respondents are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd
floor of Syvel's Department Store, Makati City. CRISELDA was signing her credit card
slip at the payment and verification counter when she felt a sudden gust of wind
and heard a loud thud. She looked behind her. She then beheld her daughter
ZHIENETH on the floor, her young body pinned by the bulk of the store's giftwrapping counter/structure. ZHIENETH was crying and screaming for help.
Although shocked, CRISELDA was quick to ask the assistance of the people around
in lifting the counter and retrieving ZHIENETH from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth?
(b) What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a
parcel of land containing 888 square meters, with the buildings and improvements
thereon, situated in the poblacion of Romblon. He subdivided the lot into three and
then sold each portion to different persons. One portion was purchased by Guillermo
Tengtio who subsequently sold it to Vicente Uy Veza. Another portion, with the
house of strong materials thereon, was sold in 1927 to Tan Yanon, respondent
herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with thecamarin and small building thereon, after
passing through several hands, was finally acquired by Juan Gargantos, petitioner
herein.
On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the oldcamarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his house,

unless such building is erected at a distance of not less than three meters from the
boundary line between the lots of plaintiff and defendant, and to enjoin the members of
the Municipal Council of Romblon from issuing the corresponding building permit to
defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7.
(a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already
repaired, unknown to Mr. X, the latter sold the piano to Mr. Z, who paid P30k. Mr. Y left
the place and took away the said money. What kind of possession has Mr. Y, and what
criminal case shall he be made liable of?
(b) Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua
so that the same can be deposited in his account. Miss Chua however took the money
and misappropriated the same. What kind of possession has Miss Chua, and what crime
shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana

Vda. De Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna
(represented by the then Municipal Mayor Crisostomo P. Manalang) entered into a
lease contract whereby the Municipality allowed the use and enjoyment of property
comprising of a lot and a store located at the corner of Coronado and E. Fernandez
Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents mother for a
period of twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a
firewall on her rented property which must be at least as high as the store; and in
case of modification of the public market, she or her heir/s would be given
preferential rights.
Visitacion took over the store when her mother died sometime in 1984.From
then on up to January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
Visitacions request for inspection on 15 May 1986, District Engineer Marcelino B.
Gorospe (Engineer Gorospe) of the then Ministry of Public Works and
Highways,Regional Office No. IV-A, found that the store of Visitacion remained intact
and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October
1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador
directing her to demolish her store within five (5) days from notice. Attached to the
letter were copies of Sangguniang Bayan Resolution No. 156 dated 30 August 1993
and a Memorandum issued by Asst. Provincial Prosecutor Marianito Sasondoncillo of
Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a
letter to Visitacion ordering her to vacate the portion of the public market she was

occupying within 15 days from her receipt of the letter; else, a court action will be
filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued
Resolution No. 183 authorizing Mayor Comendador to demolish the store being
occupied by Visitacion using legal means
On 15 October 1993, Mayor Comendador relying on the strength of
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the demolition of the
store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer,
estimated the cost of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor
Comendador liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of
Visitacion as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various
parcels of real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in
Mandaue City, Cebu, which lot allegedly belonged originally to Claudio Ermac. Upon the
latter's death, the said Lot No. 666 was inherited and partitioned by his children,
namely, Esteban, Pedro and Balbina. Siblings Pedro and Balbina requested their brother
Esteban to have their title over the property registered. Esteban, however, was unable
to do so, and the task of registration fell to his son, Clemente. Clemente applied
for registration of the title, but did so in his own name, and did not include his father's
brother and sister, nor his cousins. Despite having registered the lot in his name,
Clemente did not disturb or claim ownership over those portions occupied by his uncle,
aunt and cousins even up to the time of his death. Among the occupants of Lot No. 666
are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot
No. 666 now occupied by them by right of succession as direct descendants of the
original owner, Claudio Ermac. [Respondents] Luisa Del Castillo and Estaneslao Dionson
allegedly derived their title by purchase from the children of Claudio Ermac.
[Respondent] Vicente Dionson, on the other hand, bought his land from the heirs of
Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived their
ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and
possession had been peaceful and undisturbed, until recently when the [petitioners]heirs of Clemente Ermac filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the
[respondents'] ownership over their respective parcels of land, prompting them to file
this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the
[respondents], and claimed that the [respondents] have no cause of action against
them. It is essentially claimed that it was Clemente Ermac and not his grandfather
Claudio Ermac who is the original claimant of dominion over Lot No. 666. During his
lifetime, Clemente Ermac was in actual, peaceful, adverse and continuous possession in
the concept of an owner of the entire Lot No. 666. With the help of his children, he
cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death,

[petitioners] inherited Lot No. 666, and they constructed their residential houses
thereon. [Petitioners] claim that [respondents'] recent occupation of some portions of
Lot No. 666 was only tolerated by Clemente Ermac and the [petitioners]. [Petitioners] in
fact had never surrendered ownership or possession of the property to the
[respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original
owner of the lot in question was Claudio Ermac, and therefore, the property was
inherited upon his death by his children Esteban, Balbina and Pedro. All the heirs of
Claudio Ermac, therefore, should share in the ownership over Lot No. 666, by right of
succession. The ruling [was] supported by the admissions of Irene[a] Seno, witness for
the [petitioners] and daughter of Clemente Ermac, establishing facts which show that
[petitioners] and their predecessor Clemente did not own the entire property, but that
the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot. Since the
entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of
the [respondents], are being held in trust by the [petitioners] in favor of their actual
occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was
used by the court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac
[and] Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat
the title over the property in the names of petitioner's predecessors-in-interest
[Spouses] Clemente Ermac and Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of
Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746

Epifanio delos Santos Avenue (EDSA), Quezon City with an area of 375 square
meters and covered by Transfer Certificate of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904,
entitled "An Ordinance Requiring the Construction of Arcades, for Commercial
Buildings to be Constructed in Zones Designated as Business Zones in the Zoning
Plan of Quezon City, and Providing Penalties in Violation Thereof."
An arcade is defined as any portion of a building above the first floor
projecting over the sidewalk beyond the first storey wall used as protection for
pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an
arcade with a width of 4.50 meters and height of 5.00 meters along EDSA, from the
north side of Santolan Road to one lot after Liberty Avenue, and from one lot before
Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?

(b) Gancayco did not construct an arcade; will you consider his building a
nuisance for not complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square meters.
The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a
10,000-square-meter portion of their property in favor of the Ministry of Education and
Culture (now the Department of Education, Culture and Sports [DECS]).
The deed provided, among others: xxx That for and in consideration of the
benefits that may be derived from the use of the above described property which is
intended for school purposes, the said DONORS do by these presents TRANSFER AND
CONVEY by way of DONATION unto the DONEE, its successors and assigns, the above
property to become effective upon the signing of this document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT)
No. T-143337 covering the portion identified as Lot 8858-A was issued in the name of
the Ministry of Education and Culture, represented by Laurencio C. Ramel, the
Superintendent of Schools of Isabela. However, the property was not used for school
purposes and remained idle. Sometime in 1988, the DECS, through its Secretary, started
construction of the Rizal National High School building on a parcel of land it acquired
from Alejandro Feliciano. The school site was about 2 kilometers away from the land
donated by the spouses Dulay. In a letter to the DECS Secretary dated August 19, 1994,
the spouses Dulay requested that the property be returned to them considering that the
land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition
imposed in the Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of Donation
barred already by prescription and laches?

1.When one exercises a right recognized by law, knowing that he thereby

causes an injustice to another, the latter is entitled to recover damages. This
is known as the principle of
A. res ipsa loquitur.
B. damnum absque injuria.
C. vicarious liability.
D. abuse of rights.
2.The liability of the partners, including industrial partners for partnership
contracts entered into in its name and for its account, when all partnership
assets have been exhausted is
A. Pro-rata.
B. Joint.
C. Solidary.
D. Voluntary.
3. When can a missing person who left someone to administer his property be
declared an absentee by the court? When he has been missing for
A. 2 years from the receipt of the last news about him.
B. 7 years from the receipt of the last news about him.
C. 10 years from the receipt of the last news about him.

D. 5 years from the receipt of the last news about him.

4.An agent, authorized by a special power of attorney to sell a land belonging
to the principal succeeded in selling the same to a buyer according to the
instructions given the agent. The agent executed the deed of absolute sale on
behalf of his principal two days after the principal died, an event that neither
the agent nor the buyer knew at the time of the sale. What is the standing of
the sale?
A.Voidable.
B. Valid.
C. Void.
D. Unenforceable.
5.Spouses A and B leased a piece of land belonging to B's parents for 25
years. The spouses built their house on it worth P300,000.00. Subsequently,
in a case that C filed against A and B, the court found the latter liable to C for
P200,000.00. When the sheriff was attaching their house for the satisfaction
of the judgment, A and B claimed that it was exempt from execution, being a
family home. Is this claim correct?
A. Yes, because while Bs parents own the land, they agreed to have their
daughter build her family home on it.
B. No, because there is no judicial declaration that it is a family home.
C. No, since the land does not belong to A and B, it cannot qualify as a family
home.
D. Yes, because the A and Bs family actually lives in that house.
6.Contracts take effect only between the parties or their assigns and heirs,
except where the rights and obligations arising from the contract are not
transmissible by their nature, by stipulation, or by provision of law. In the
latter
case, the assigns or the heirs are not bound by the contracts. This is known as
the principle of
A. Relativity of contracts.
B. Freedom to stipulate.
C. Mutuality of contracts.
D. Obligatory force of contracts
7.X and Y, both Filipinos, were married and resided in Spain although they
intend to return to the Philippines at some future time. They have not
executed any marriage settlements. What law governs their property
relations?
A. They may choose between Spanish law and Philippine law.
B. Philippine law since they are both Filipinos.
C. No regime of property relations will apply to them.
D. Spanish law since they live in Spain.
8.Virgilio owned a bare and simple swimming pool in his garden. MB, a 7-year
old child, surreptitiously entered the garden and merrily romped around the
ledges of the pool. He accidentally tripped, fell into the pool, and drowned.
MBs parents sued Virgilio for damages arising from their childs death,
premised on the principle of attractive nuisance. Is Virgilio liable for the
death of MB?
A. No, the child was 7 years old and knew the dangers that the pool offered.
B. Yes, being an attractive nuisance, Virgilio had the duty to prevent children
from coming near it.
C. No, since the pool was bare and had no enticing or alluring gadgets, floats,
or devices in it that would attract a 7-year old child.
D. Yes, since Virgilio did not cover the swimming pool while not in use to
prevent children from falling into it.
9.X and Y, Filipinos, got married in Los Angeles, USA, using a marriage license
issued by the Philippine consul in Los Angeles, acting as Civil Registrar. X and
Y did not know that they were first cousins because their mothers, who were
sisters, were separated when they were quite young. Since X did not want to
continue with the relation when he heard of it, he left Y, came to the
Philippines and married Z. Can X be held liable for bigamy?

A. No since Xs marriage to Y is void ab initio or did not exist.

B. No since X acted in good faith, conscious that public policy did not approve
of marriage between first cousins.
C. Yes since he married Z without first securing a judicial declaration of nullity
of his marriage to Y.
D. Yes since his first marriage to Y in Los Angeles is valid.
10.An Australian living in the Philippines acquired shares of stock worth P10
million in food manufacturing companies. He died in Manila, leaving a legal
wife and a child in Australia and a live-in partner with whom he had two
children in Manila. He also left a will, done according to Philippine laws,
leaving all his
properties to his live-in partner and their children. What law will govern the
validity of the disposition in the will?
A. Australia law since his legal wife and legitimate child are Australians and
domiciled in Australia.
B. Australian law since the intrinsic validity of the provisions of a will is
governed by the decedents national law.
C. Philippine law since the decedent died in Manila and he executed his will
according to such law.
D. Philippine law since the decedents properties are in the Philippines.
11.X bought a land from Y, paying him cash. Since they were friends, they did
not execute any document of sale. After 7 years, the heirs of X asked Y to
execute a deed of absolute sale to formalize the verbal sale to their father.
Unwilling to do so, Xs heirs filed an action for specific performance against Y.
Will their action prosper?
A. No, after more than 6 years, the action to enforce the verbal agreement
has already elapsed.
B. No, since the sale cannot under the Statute of Frauds be enforced.
C. Yes, since X bought the land and paid Y for it.
D. Yes, after full payment, the action became imprescriptible.
12.A warranty inherent in a contract of sale, whether or not mentioned in it, is
known as the
A. warranty on quality.
B. warranty against hidden defects.
C. warranty against eviction.
D. warranty in merchantability.
13.X, who was abroad, phoned his brother, Y, authorizing him to sell Xs parcel
of land in Pasay. X sent the title to Y by courier service. Acting for his brother,
Y executed a notarized deed of absolute sale of the land to Z after receiving
payment. What is the status of the sale?
A. Valid, since a notarized deed of absolute sale covered the transaction and
full payment was made.
B. Void, since X should have authorized agent Y in writing to sell the land.
C. Valid, since Y was truly his brother Xs agent and entrusted with the title
needed to effect the sale.
D. Valid, since the buyer could file an action to compel X to execute a deed of
sale.
14.In a true pacto de retro sale, the title and ownership of the property sold
are immediately vested in the vendee a retro subject only to the resolutory
condition of repurchase by the vendor a retro within the stipulated period.
This is known as
A. equitable mortgage.
B. conventional redemption.
C. legal redemption.
D. equity of redemption.
15.Anne owed Bessy P1 million due on October 1, 2011 but failed to pay her
on due date. Bessy sent a demand letter to Anne giving her 5 days from
receipt within which to pay. Two days after receipt of the letter, Anne

personally offered to pay Bessy in manager's check but the latter refused to
accept the same. The 5 days lapsed. May Annes obligation be considered
extinguished?
A. Yes, since Bessys refusal of the managers check, which is presumed
funded, amounts to a satisfaction of the obligation.
B. No, since tender of payment even in cash, if refused, will not discharge the
obligation without proper consignation in court.
C. Yes, since Anne tendered payment of the full amount due.
D. No, since a managers check is not considered legal tender in the
Philippines.
16.The residents of a subdivision have been using an open strip of land as
passage to the highway for over 30 years. The owner of that land decided,
however, to close it in preparation for building his house on it. The residents
protested, claiming that they became owners of the land through acquisitive
prescription, having been in possession of the same in the concept of
owners,publicly, peacefully, and continuously for more than 30 years. Is this
claim correct?
A. No, the residents have not been in continuous possession of the land since
they merely passed through it in going to the highway.
B. No, the owner did not abandon his right to the property; he merely
tolerated his neighbors use of it for passage.
C. Yes, residents of the subdivision have become owners by acquisitive
prescription.
D. Yes, community ownership by prescription prevails over private claims.
17.Janice and Jennifer are sisters. Janice sued Jennifer and Laura, Jennifers
business partner for recovery of property with damages. The complaint did
not allege that Janice exerted earnest efforts to come to a compromise with
the defendants and that such efforts failed. The judge dismissed the
complaint outright for failure to comply with a condition precedent. Is the
dismissal in order?
A. No, since Laura is a stranger to the sisters, Janice has no moral obligation
to settle with her.
B. Yes, since court should promote amicable settlement among relatives.
C. Yes, since members of the same family, as parties to the suit, are required
to exert earnest efforts to settle their disputes before coming to court.
D. No, the family council, which would ordinarily mediate the dispute, has
been eliminated under the Family Code.
18.Because of Xs gross negligence, Y suffered injuries that resulted in the
abortion of the foetus she carried. Y sued X for, among other damages, P1
million for the death of a family member. Is Y entitled to indemnity for the
death
of the foetus she carried?
A. Yes, since the foetus is already regarded as a child from conception,
though unborn.
B. No, since Xs would not have known that the accident would result in Ys
abortion.
C. No, since birth determines personality, the accident did not result in the
death of a person.
D. Yes, since the mother believed in her heart that she lost a child.
19. Which phrase most accurately completes the statement - If at the time the
contract of sale is perfected, the thing which is the object of the contract has
been entirely lost:
a) the buyer bears the risk of loss.
b) the contract shall be without any effect.
c) the seller bears the risk of loss.
d) the buyer may withdraw from the contract
20. Any disposition made upon the condition that the heir shall make some
provision in his will in favor of the testator or of any other person shall be
void. Here, both the condition and the disposition are void. What principle is
being referred to?

a) reserva troncal
b) preterition
c) fideicommissary
d) disposicion captatoria
21.It is the omission in the testator's will of one; some or all of the
compulsory heirs in direct line, whether living at the time of execution of the
will or born after the death of the testator. What principle isbeing referred to?
a) reserva troncal
b) preterition
c) fideicommissary
d) disposicion captatoria
22.An obligation which is based on equity and natural law is known as:
a) pure
b) quasi-contract
c) civil
d) natural
23.The borrower in a contract of loan or mutuum must pay interest to the
lender.
a) If there is an agreement in writing to that effect.
b) As a matter of course.
c) If the amount borrowed is very large.
d) If the lender so demands at the maturity date
24.The following are solemn contracts (Contracts which must appear in
writing), except:
a) Donations of real estate or of movables if the value exceeds P5,000.00.
b) Stipulation to pay interest in loans.
c) Sale of land through an agent (authority must be in writing)
d) Construction contract of a building.
25.It is a principle which holds that contracts must be binding to both parties
and its validity and effectivity can never be left to the will of one of the
parties.
a) Obligatory force of contracts
b) Mutuality of contracts
c) Autonomy of contracts
d) Relativity of contracts

exam

1. State if the probate court has the power to determine :(a) the due execution of a
holographic will (b) whether the testator is of sound mind (c) whether the last will is freely
executed (d) whether the solemnities and formalities are observed (e) whether the property in
question is part of the estate of the decedent or not.

ANSWER: Petitioner should realize that the allowance of her husbands will is conclusive only as to
its due execution.[11] The authority of the probate court is limited to ascertaining whether the testator,
being of sound mind, freely executed the will in accordance with the formalities prescribed by law.

Thus, petitioners claim of title to the properties forming part of her husbands estate should be
settled in an ordinary action before the regular courts.
[12]

2. If a decedent is an inhabitant of the Philippines at the time of his death, what court shall
have jurisdiction of the probate of his will? If he is an inhabitant of a foreign country, will
your answer be the same?

ANSWER: If the decedent is an inhabitant of the Philippines at the time of his death, whether a
citizen or an alien, his will shall be proved, or letters of administration granted, and his estate
settled, in the Court of First Instance (now Regional Trial Court) in the province in which he
resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First
Instance (now Regional Trial Court) of any province in which he had estate.

3. On September 24, 1977, petitioner donated unto respondent a parcel of land at

Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its name
under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which also bears the
acceptance of the donee recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee shall not use
the land except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land
for any reason whatsoever, nor convey any portion of the same except in lease for commercial use
as provided above in paragraph 3 hereof, otherwise the said land with all real improvements thereon
shall revert in trust to the Donor for prompt disposition in favor of some other charitable organization
that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the
perimeter fence on the donated property and the construction of a nucleus building for the aged and
the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion
with sugar cane. There is no dispute that the lease agreement was entered into by the donee without
the prior written consent of the donor, as required in the deed ofdonation. The lease to Gomez ended
in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and the donee
ordered to return and/or reconvey the property donated reason of said violation of the attached
condition?

4. According to purpose or cause, state the four (4) kinds of donation and explain each.
Answer: Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation
is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other
hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the
donee for past services, which services do not amount to a demandable debt. A conditional or

modal donation is one where the donation is made in consideration of future services or where the
donor imposes certain conditions, limitations or charges upon the donee, the value of which is
inferior than that of the donation given. Finally, an onerous donation is that which imposes upon the
donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable
consideration, the cost of which is equal to or more than the thing donated.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,

Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private respondents
are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of
Syvel's Department Store, Makati City. CRISELDA was signing her credit card slip at the
payment and verification counter when she felt a sudden gust of wind and heard a loud
thud. She looked behind her. She then beheld her daughter ZHIENETH on the floor, her
young body pinned by the bulk of thestore's gift-wrapping counter/structure.
ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and retrieving ZHIENETH
from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth? (b)
What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to Vicente Uy
Veza. Another portion, with the house of strong materials thereon, was sold in 1927 to Tan Yanon,
respondent herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with the camarin and small building thereon, after passing through
several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the old camarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his
house, unless such building is erected at a distance of not less than three meters
from the boundary line between the lots of plaintiff and defendant, and to enjoin the
members of the Municipal Council of Romblon from issuing the corresponding
building permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7. (a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already repaired, unknown to
Mr. X, the latter sold the piano to Mr. Z, who paid 30k. Mr. Y left the place and took away the said
money. What kind of possession has Mr. Y, and what criminal case shall he be made liable of? (b)
Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua so that the same
can be deposited in his account. Miss Chua however took the money and misappropriated the
same. What kind of possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De

Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then
Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store located at the corner of
Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents
mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998, extendible
for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a firewall on her
rented property which must be at least as high as the store; and in case of modification of the public
market, she or her heir/s would be given preferential rights.
Visitacion took over the store when her mother died sometime in 1984.From then on up to
January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for
inspection on 15 May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then
Ministry of Public Works and Highways,Regional Office No. IV-A, found that the store of Visitacion
remained intact and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October 1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador directing her to
demolish her store within five (5) days from notice. Attached to the letter were copies of Sangguniang
Bayan Resolution No. 156 dated 30 August 1993 and a Memorandum issued by Asst. Provincial
Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to
Visitacion ordering her to vacate the portion of the public market she was occupying within 15 days
from her receipt of the letter; else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No.
183 authorizing Mayor Comendador to demolish the store being occupied by Visitacion using legal
means
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan
Resolution Nos. 183 and 156 authorized the demolition of the store with Asilo and Angeles
supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost
of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor Comendador
liable for damages in the case at bar?

(2) What principle of law is applicable in this case?

(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of Visitacion
as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various parcels of
real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in Mandaue City, Cebu,
which lot allegedly belonged originally to Claudio Ermac. Upon the latter's death, the said Lot No.
666 was inherited and partitioned by his children, namely, Esteban, Pedro and Balbina. Siblings
Pedro and Balbina requested their brother Esteban to have their title over the property registered.
Esteban, however, was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name, and did not include his
father's brother and sister, nor his cousins. Despite having registered the lot in his name, Clemente
did not disturb or claim ownership over those portions occupied by his uncle, aunt and cousins even
up to the time of his death. Among the occupants of Lot No. 666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot No. 666 now
occupied by them by right of succession as direct descendants of the original owner, Claudio Ermac.
[Respondents] Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by purchase
from the children of Claudio Ermac. [Respondent] Vicente Dionson, on the other hand, bought his
land from the heirs of Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and possession
had been peaceful and undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac
filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the [respondents'] ownership
over their respective parcels of land, prompting them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the [respondents], and
claimed that the [respondents] have no cause of action against them. It is essentially claimed that it
was Clemente Ermac and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in actual, peaceful, adverse
and continuous possession in the concept of an owner of the entire Lot No. 666. With the help of his
children, he cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death, [petitioners]
inherited Lot No. 666, and they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only tolerated by Clemente
Ermac and the [petitioners]. [Petitioners] in fact had never surrendered ownership or possession of
the property to the [respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original owner of the lot in
question was Claudio Ermac, and therefore, the property was inherited upon his death by his
children Esteban, Balbina and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was] supported by the
admissions of Irene[a] Seno, witness for the [petitioners] and daughter of Clemente Ermac,
establishing facts which show that [petitioners] and their predecessor Clemente did not own the

entire property, but that the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot.
Since the entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of the
[respondents], are being held in trust by the [petitioners] in favor of their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was used by the
court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac [and]
Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat the title over
the property in the names of petitioner's predecessors-in-interest [Spouses] Clemente Ermac and
Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746 Epifanio delos Santos
Avenue (EDSA), Quezon City with an area of 375 square meters and covered by Transfer Certificate
of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled "An
Ordinance Requiring the Construction of Arcades, for Commercial Buildings to be Constructed in
Zones Designated as Business Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor projecting over the
sidewalk beyond the first storey wall used as protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an arcade with a width
of 4.50 meters and height of 5.00 meters along EDSA, from the north side of Santolan Road to one
lot after Liberty Avenue, and from one lot before Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade, will you consider his building a nuisance for not
complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square
meters. The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a 10,000-squaremeter portion of their property in favor of the Ministry of Education and Culture (now the Department
of Education, Culture and Sports [DECS]).

The deed provided, among others:That for and in consideration of the benefits that may be
derived from the use of the above described property which is intended for school purposes, the said
DONORS do by these presents TRANSFER AND CONVEY by way of DONATION unto the DONEE,
its successors and assigns, the above property to become effective upon the signing of this
document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT) No. T143337 covering the portion identified as Lot 8858-A was issued in the name of the Ministry of
Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and remained idle. Sometime in
1988, the DECS, through its Secretary, started construction of the Rizal National High School
building on a parcel of land it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to the DECS Secretary dated
August 19, 1994, the spouses Dulay requested that the property be returned to them considering
that the land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition imposed in the
Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of Donation barred already
by prescription and laches?

Hermojina Estores vs Spouses Arturo and Laura Sapangan,

G.R. No. 175139, dated April 18, 2012,
Interest may be imposed even in the absence of stipulation in the contract.
We sustain the ruling of both the RTC and the CA that it is proper to impose interest notwithstanding
the absence of stipulation in the contract. Article 2210 of the Civil Code expressly provides that
"[i]nterest may, in the discretion of the court, be allowed upon damages awarded for breach of
contract." In this case, there is no question that petitioner is legally obligated to return the P3.5
million because of her failure to fulfill the obligation under the Conditional Deed of Sale, despite
demand. She has in fact admitted that the conditions were not fulfilled and that she was willing to
return the full amount of P3.5 million but has not actually done so. Petitioner enjoyed the use of the
money from the time it was given to her30 until now. Thus, she is already in default of her obligation
from the date of demand, i.e., on September 27, 2000.
The interest at the rate of 12% is applicable in the instant case.
Anent the interest rate, the general rule is that the applicable rate of interest "shall be computed in
accordance with the stipulation of the parties."31 Absent any stipulation, the applicable rate of interest
shall be 12% per annum "when the obligation arises out of a loan or a forbearance of money, goods
or credits. In other cases, it shall be six percent (6%)."32 In this case, the parties did not stipulate as
to the applicable rate of interest. The only question remaining therefore is whether the 6% as
provided under Article 2209 of the Civil Code, or 12% under Central Bank Circular No. 416, is due.
The contract involved in this case is admittedly not a loan but a Conditional Deed of Sale. However,
the contract provides that the seller (petitioner) must return the payment made by the buyer

(respondent-spouses) if the conditions are not fulfilled. There is no question that they have in fact,
not been fulfilled as the seller (petitioner) has admitted this. Notwithstanding demand by the buyer
(respondent-spouses), the seller (petitioner) has failed to return the money and
should be considered in default from the time that demand was made on September 27, 2000.
Even if the transaction involved a Conditional Deed of Sale, can the stipulation governing the return
of the money be considered as a forbearance of money which required payment of interest at the
rate of 12%? We believe so.
In Crismina Garments, Inc. v. Court of Appeals,33 "forbearance" was defined as a "contractual
obligation of lender or creditor to refrain during a given period of time, from requiring the borrower or
debtor to repay a loan or debt then due and payable." This definition describes a loan where a debtor
is given a period within which to pay a loan or debt. In such case, "forbearance of money, goods or
credits" will have no distinct definition from a loan. We believe however, that the phrase "forbearance
of money, goods or credits" is meant to have a separate meaning from a loan, otherwise there would
have been no need to add that phrase as a loan is already sufficiently defined in the Civil
Code.34Forbearance of money, goods or credits should therefore refer to arrangements other than
loan agreements, where a person acquiesces to the temporary use of his money, goods or credits
pending happening of certain events or fulfillment of certain conditions. In this case, the respondentspouses parted with their money even before the conditions were fulfilled. They have therefore
allowed or granted forbearance to the seller (petitioner) to use their money pending fulfillment of the
conditions. They were deprived of the use of their money for the period pending fulfillment of the
conditions and when those conditions were breached, they are entitled not only to the return of the
principal amount paid, but also to compensation for the use of their money. And the compensation
for the use of their money, absent any stipulation, should be the same rate of legal interest applicable
to a loan since the use or deprivation of funds is similar to a loan.
Petitioners unwarranted withholding of the money which rightfully pertains to respondent-spouses
amounts to forbearance of money which can be considered as an involuntary loan. Thus, the
applicable rate of interest is 12% per annum. In Eastern Shipping Lines, Inc. v. Court of
Appeals,35cited in Crismina Garments, Inc. v. Court of Appeals,36the Court suggested the following
guidelines:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on Damages of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of
the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with

reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.37
Eastern Shipping Lines, Inc. v. Court of Appeals 38and its predecessor case, Reformina v.
Tongol39 both involved torts cases and hence, there was no forbearance of money, goods, or credits.
Further, the amount claimed (i.e., damages) could not be established with reasonable certainty at the
time the claim was made. Hence, we arrived at a different ruling in those cases.
Since the date of demand which is September 27, 2000 was satisfactorily established during trial,
then the interest rate of 12% should be reckoned from said date of demand until the principal amount
and the interest thereon is fully satisfied.1wphi1
The award of attorneys fees is warranted.
Under Article 2208 of the Civil Code, attorneys fees may be recovered:
xxxx
(2) When the defendants act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
xxxx
(11) In any other case where the court deems it just and equitable that attorneys fees and
expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
Considering the circumstances of the instant case, we find respondent-spouses entitled to recover
attorneys fees. There is no doubt that they were forced to litigate to protect their interest, i.e., to
recover their money. However, we find the amount of P50,000.00 more appropriate in line with the
policy enunciated in Article 2208 of the Civil Code that the award of attorneys fees must always be
reasonable.
WHEREFORE, the Petition for Review is DENIED. The May 12, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 83123 is AFFIRMED with MODIFICATIONS that the rate of interest shall
be twelve percent (12%) per annum, computed from September 27, 2000 until fully satisfied. The
award of attorneys fees is further reduced to P50,000.00.

sales problems

1.

A contract of sale of real property, without consideration, and executed by a person of low
intelligence is (a) void (b) voidable (c) rescissible (d) valid because there is consent and sale is
consensual.

2.

Which of the following is NOT a characteristic of a contract of sale? (a) onerous (b) bilateral (c)
cumulative (d) nominate.

3.

When the object of the contract of sale is delivered and the price is paid, the contract is said to be
(a) generated (b) negotiated (c) perfected (d) consummated.

4.

Which is a natural element of sale ? (a) consent or meeting of the minds (b) price certain in money
(c) determinate subject matter (d) warranty against hidden defects.

5.

If during the 5-year period when a homestead cannot be sold, it is promised to be sold (in a
compromise agreement), this promise is (a) valid when the sale is actually made after the 5-year
period (b) void even if the sale is actually made after the 5-year period (c) valid if the sale is
approved by the Secretary of Agriculture (d) voidable when consent is finally given.

6.

Nemo dat quod none habet literally means (a) one cannot sell what he does not possess (b) no
one can dispose what he cannot own (c) no one can give more than what he has (d) no one can
sell what he does not own.

7.

Maria owes me P200,000. If I accept Marias offer to take her car as payment, what contract is
generated? (a) a contract of sale because it is as if she sold her car to me for P200,000 (b) a
contract of barter or exchange (c) dacion en pago (d) a contract of cession since she ceded the car
to me in payment of her obligation.

8.

Which of the following is considered as illicit per accidens? (a) sale of human flesh (b) sale of land
to a balikbayan (c) sale of shabu (d) sale of illegal lottery tickets.

9.

A mortgaged his land to B, but sold the land to C. Which of the following is true or valid? (a) A
cannot sell the property since it is still mortgaged (b) A, being the owner, can sell the land to C, who
after delivery became the owner, subject to Bs right of redemption (c) the land sold is always
subject to Bs right to foreclose the mortgage upon the non-payment of the mortgage credit
(d) the sale here is voidable.

10. Which of the following is NOT correct under the Maceda law? (a) in case where less than 2 years of
installments were paid, the seller shall give the buyer the grace period of not less than 60 days (b)
the buyer shall have the right to sell his rights or assign the same to another person (c) the buyer
shall have the right to pay in advance any installment (d) the law gives the buyer if he has already
paid at least two installments.
PART II. (10% each)Essay Type. Answer the following problems. Always explain your answer. A
mere yes or no answer earns no points.

1. A parcel of land measuring 81,524 square meters (Subject Land) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. The registered
owners of the Subject Land were petitioner spouses, Godofredo Alfredo
(Godofredo) and Carmen Limon Alfredo (Carmen). The Subject Land is covered
by Original Certificate of Title No. 284 (OCT No. 284) issued to Godofredo and
Carmen under Homestead Patent No. V-69196.

On 7 March 1994, the private respondents, spouses Armando Borras

(Armando) and Adelia Lobaton Borras (Adelia), filed a complaint for specific
performance against Godofredo and Carmen before the Regional Trial Court of
Bataan, Branch 4. The case was docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that Godofredo and Carmen
mortgaged the Subject Land for P7,000.00 with the Development Bank of the
Philippines (DBP). To pay the debt, Carmen and Godofredo sold the Subject Land
to Armando and Adelia for P15,000.00, the buyers to pay the DBP loan and its
accumulated interest, and the balance to be paid in cash to the sellers.
Armando and Adelia gave Godofredo and Carmen the money to pay the loan
to DBP which signed the release of mortgage and returned the owners duplicate
copy of OCT No. 284 to Godofredo and Carmen. Armando and Adelia subsequently
paid the balance of the purchase price of the Subject Land for which Carmen issued
a receipt dated 11 March 1970. Godofredo and Carmen then delivered to Adelia the
owners duplicate copy of OCT No. 284, with the document of cancellation of
mortgage, official receipts of realty tax payments, and tax declaration in the name
of Godofredo. Godofredo and Carmen introduced Armando and Adelia, as the new
owners of the Subject Land, to the Natanawans, the old tenants of the Subject
Land. Armando and Adelia then took possession of the Subject Land.
In January 1994, Armando and Adelia learned that hired persons had entered
the Subject Land and were cutting trees under instructions of allegedly new owners
of the Subject Land. Subsequently, Armando and Adelia discovered that Godofredo
and Carmen had re-sold portions of the Subject Land to several persons.
On 8 February 1994, Armando and Adelia filed an adverse claim with the
Register of Deeds of Bataan. Armando and Adelia discovered that Godofredo and
Carmen had secured an owners duplicate copy of OCT No. 284 after filing a petition
in court for the issuance of a new copy. Godofredo and Carmen claimed in their
petition that they lost their owners duplicate copy. Armando and Adelia wrote
Godofredo and Carmen complaining about their acts, but the latter did not reply.
Thus, Armando and Adelia filed a complaint for specific performance.
On 28 March 1994, Armando and Adelia amended their complaint to include
the following persons as additional defendants: the spouses Arnulfo Savellano and
Editha B. Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu, Jr. and
Estela S. Espiritu, and Elizabeth Tuazon (Subsequent Buyers). The Subsequent
Buyers, who are also petitioners in this case, purchased from Godofredo and
Carmen the subdivided portions of the Subject Land. The Register of Deeds of
Bataan issued to the Subsequent Buyers transfer certificates of title to the lots they
purchased.
In their answer, Godofredo and Carmen and the Subsequent
Buyers (collectively petitioners) argued that the action is unenforceable
under the Statute of Frauds. Petitioners pointed out that there is no written
instrument evidencing the alleged contract of sale over the Subject Land in favor of
Armando and Adelia. Petitioners objected to whatever parole evidence Armando
and Adelia introduced or offered on the alleged sale unless the same was in writing
and subscribed by Godofredo. Petitioners asserted that the Subsequent Buyers
were buyers in good faith and for value. As counterclaim, petitioners sought
payment of attorneys fees and incidental expenses.
Questions:

(1) Is there a perfected contract of sale between the spouses Armando and
Adelia and the Spouses Godofredo and Carmen ? Explain.
(2) Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid
and enforceable, where (a) it was orally entered into and not in writing; (b) Carmen did not
obtain the consent and authority of her husband, Godofredo, who was the sole owner of the
Subject Land in whose name the title thereto (OCT No. 284) was issued; and (c) it was entered
into during the 25-year prohibitive period for alienating the Subject Land without the approval of
the Secretary of Agriculture and Natural Resources.
(3)Whether the action to enforce the alleged oral contract of sale brought after 24 years
from its alleged perfection had been barred by prescription and by laches.
(4)Whether the deeds of absolute sale and the transfer certificates of title over the
portions of the Subject Land issued to the Subsequent Buyers, innocent purchasers in good
faith and for value whose individual titles to their respective lots are absolute and indefeasible,
are valid.

Answer: (1) All the characteristics and elements of sale being present, thus the
contract is perfected. (2) (a) enforceable, because the Statute of Frauds does not apply
here, it being that the contract is already executed or consummated (b) valid, since the
sale was entered before Aug. 3, 1988 (c) still enforceable, the consent of the Sec. is not
really applicable in the case at bar. (3) Not barred by prescription or laches. Laches is a
remedy in equity which is not applicable here, and the action has not prescribed yet (4)
The indefeasibility of title as a principle applies only when there is no fraud involved.
(REFER to: Alfredo v. Borras (2003) below

2. What is the effect if at the time the contract of sale is perfected the object
of the contract has been entirely lost? If part of it is only lost, what are the
rights of the vendee?

Art. 1493. If at the time the contract of sale is perfected, the thing which
is the object of the contract has been entirely lost, the contract shall be
without any effect.
But if the thing should have been lost in part only, the vendee may choose
between withdrawing from the contract and demanding the remaining
part, paying its price in proportion to the total sum agreed upon. (1460a)

3.When is ownership of the thing sold transferred to the vendee? Can there
be other stipulations possible?

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it
is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to
the vendee.

4.Art. 1465. Things subject to a resolutory condition may be the object of the
contract of sale. Give at least two examples of things which are subject to a
resolutory condition.
ANSWER: PACTO DE RETRO SALE; RESERVA TRUNCAL

5. Generally, when is the thing sold understood as delivered? What if the

object of the sale is (a) movable and (b) immovable?

Art. 1497. The thing sold shall be understood as delivered, when it is

placed in the control and possession of the vendee. (1462a)
Art. 1498. When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is
the object of the contract, if from the deed the contrary does not appear
or cannot clearly be inferred.
With regard to movable property, its delivery may also be made by the
delivery of the keys of the place or depository where it is stored or kept.
(1463a)
Art. 1499. The delivery of movable property may likewise be made by the
mere consent or agreement of the contracting parties, if the thing sold
cannot be transferred to the possession of the vendee at the time of the
sale, or if the latter already had it in his possession for any other reason.
(1463a)
Art. 1500. There may also be tradition constitutum possessorium. (n)
Art. 1501. With respect to incorporeal property, the provisions of the first
paragraph of article 1498 shall govern. In any other case wherein said
provisions are not applicable, the placing of the titles of ownership in the
possession of the vendee or the use by the vendee of his rights, with the
vendor's consent, shall be understood as a delivery. (1464)

1.(a) What do you understand by the hypothecary nature of maritime law?

(b) What is the general rule concerning said principle? (c) What are the
exceptions to the rule?
Answer: The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement. It has its
origin by reason of the conditions and risks attending maritime trade in its earliest years when
such trade was replete with innumerable and unknown hazards since vessels had to go through
largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and
to encourage people and entities to venture into maritime commerce despite the risks and the
prohibitive cost of shipbuilding. Thus, the liability of the vessel owner and agent arising from the
operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance,
if any, which limitation served to induce capitalists into effectively wagering their resources
against the consideration of the large profits attainable in the trade.x x xNonetheless, there are
exceptional circumstances wherein the ship agent could still be held answerable despite the
abandonment of the vessel, as where the loss or injury was due to the fault of the
shipowner and the captain . The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's liability, does not apply to cases
where the injury or average was occasioned by the shipowner's own fault. [38] Likewise, the
shipowner may be held liable for injuries to passengers notwithstanding the exclusively real
and hypothecary nature of maritime law if fault can be attributed to the shipowner x x x As a
general rule, a ship owner's liability is merely co-extensive with his interest in the

except

vessel,
where actual fault is attributable to the shipowner. Thus, as an
exception to the limited liability doctrine, a shipowner or ship agent may be held liable
for damages when the sinking of the vessel is attributable to the actual fault

or negligence of the shipowner

or its

failure to ensure the

seaworthiness of the vessel. X x x The limited liability rule, however, is

not without exceptions, namely:
(1) where the injury or death to a passenger is due either to the fault of the shipowner,
or to the concurring negligence of the shipowner and the captain (Manila Steamship
Co., Inc. vs. Abdulhaman, supra);
(2) where the vessel is insured; and
(3) in workmen's compensation claims (Abueg vs. San Diego, supra). In this case,
there is nothing in the records to show that the loss of the cargo was due to the fault of
the private respondents as shipowners, or to their concurrent negligence with the
captain of the vessel.

2. Petitioner is a duly licensed copra dealer based at Puerta Galera,

Oriental Mindoro, while private respondents are the owners of the vessel,
"M/V Luzviminda I," a common carrier engaged in coastwise trade from the
different ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra, valued at
P101,227.40, on board the vessel "M/V Luzviminda I" for shipment from
Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not
reach Manila because somewhere between Cape Santiago and Calatagan,
Batangas, the vessel capsized and sank with all its cargo.
On 30 March 1979, petitioner instituted before the then Court of First
Instance of Oriental Mindoro, a Complaint for damages based on breach of
contract of carriage against private respondents (Civil Case No. R-3205).

In their Answer, private respondents averred that even assuming that

the alleged cargo was truly loaded aboard their vessel, their liability had
been extinguished by reason of the total loss of said vessel.
Question: Who is correct on this matter: the petitioner or respondent?
Explain your answer.
Answer: In sum, it will have to be held that since the ship agents or shipowner's
liability is merely co-extensive with his interest in the vessel such that a total loss thereof
results in its extinction. (Yangco vs. Laserna, supra), and none of the exceptions to the
rule on limited liability being present, the liability of private respondents for the loss of
the cargo of copra must be deemed to have been extinguished. There is no showing
that the vessel was insured in this case. (CHUA YEK HONG, PETITIONER, VS.
INTERMEDIATE APPELLATE COURT, MARIANO GUNO, AND DOMINADOR OLIT,
RESPONDENTS. SECOND DIVISION[ G.R. No. 74811, September 30, 1988 ])

3. On July 18, 1990, petitioner entrusted for repair his Nissan pick-up car 1988
model to private respondent - which is engaged in the sale, distribution and repair
of motor vehicles. Private respondent undertook to return the vehicle on July 21,
1990 fully serviced and supplied in accordance with the job contract. After
petitioner paid in full the repair bill in the amount ofP1,397.00,[3] private
respondent issued to him a gate pass for the release of the vehicle on said date.
But came July 21, 1990, the latter could not use the vehicle as its battery was
weak and was not yet replaced. Left with no option, petitioner himself bought a
new battery nearby and delivered it to private respondent for installation on the
same day. However, the battery was not installed and the delivery of the car was
rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to
reclaim his car in the afternoon of July 24, 1990, he was told that it was
carnapped earlier that morning while being road-tested by private respondents
employee along Pedro Gil and Perez Streets in Paco, Manila. Private respondent
said that the incident was reported to the police. Having failed to recover his car
and its accessories or the value thereof, petitioner filed a suit for damages
against private respondent anchoring his claim on the latters alleged negligence.
For its part, private respondent contended that it has no liability because the car
was lost as a result of a fortuitous event - the carnapping.
Questions: (a) Is carnapping a fortuitous event? (b) Can the repair shop be made
liable for the value of the car and pay damages? (c) What do you understand by
the assumption of risk? (d) Is this principle applicable in the case at bar?
Answer: It is a not a defense for a repair shop of motor vehicles to escape liability simply
because the damage or loss of a thing lawfully placed in its possession was due to carnapping.
Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was
unlawfully and forcefully taken from anothers rightful possession, as in cases of carnapping,
does not automatically give rise to a fortuitous event. To be considered as such, carnapping
entails more than the mere forceful taking of anothers property. It must be proved and
established that the event was an act of God or was done solely by third parties and that neither
the claimant nor the person alleged to be negligent has any participation. [9] In accordance with
the Rules of evidence, the burden of proving that the loss was due to a fortuitous event rests on
him who invokes it[10]- which in this case is the private respondent. However, other than the
police report of the alleged carnapping incident, no other evidence was presented by private
respondent to the effect that the incident was not due to its fault. A police report of an alleged
crime, to which only private respondent is privy, does not suffice to established the carnapping.
Neither does it prove that there was no fault on the part of private respondent notwithstanding
the parties agreement at the pre-trial that the car was carnapped. Carnapping does not
foreclose the possibility of fault or negligence on the part of private respondent.
Even assuming arguendo that carnapping was duly established as a fortuitous event,
still private respondent cannot escape liability. Article 1165[11] of the New Civil Code makes an
obligor who is guilty of delay responsible even for a fortuitous event until he has effected the
delivery. In this case, private respondent was already in delay as it was supposed to deliver
petitioners car three (3) days before it was lost. Petitioners agreement to the rescheduled

delivery does not defeat his claim as private respondent had already breached its obligation.
Moreover, such accession cannot be construed as waiver of petitioners right to hold private
respondent liable because the car was unusable and thus, petitioner had no option but to leave
it.
Assuming further that there was no delay, still working against private respondent is the
legal presumption under Article 1265 that its possession of the thing at the time it was lost was
due to its fault.[12] This presumption is reasonable since he who has the custody and care of the
thing can easily explain the circumstances of the loss. The vehicle owner has no duty to show
that the repair shop was at fault. All that petitioner needs to prove, as claimant, is the simple fact
that private respondent was in possession of the vehicle at the time it was lost. In this case,
private respondents possession at the time of the loss is undisputed. Consequently, the burden
shifts to the possessor who needs to present controverting evidence sufficient enough to
overcome that presumption. Moreover, the exempting circumstances - earthquake, flood, storm
or other natural calamity - when the presumption of fault is not applicable [13]do not concur in this
case. Accordingly, having failed to rebut the presumption and since the case does not fall under
the exceptions, private respondent is answerable for the loss.
It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil
Code, liability attaches even if the loss was due to a fortuitous event if the nature of the
obligation requires the assumption of risk.[14] Carnapping is a normal business risk for those
engaged in the repair of motor vehicles. For just as the owner is exposed to that risk so is the
repair shop since the car was entrusted to it. That is why, repair shops are required to first
register with the Department of Trade and Industry (DTI) [15] and to secure an insurance policy for
the shop covering the property entrusted by its customer for repair, service or maintenance as
a pre-requisite for such registration/accreditation. [16] Violation of this statutory duty constitutes
negligence per se.[17] Having taken custody of the vehicle, private respondent is obliged not only
to repair the vehicle but must also provide the customer with some form of security for his
property over which he loses immediate control. An owner who cannot exercise the seven
(7)juses or attributes of ownership the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits -[18] is a
crippled owner. Failure of the repair shop to provide security to a motor vehicle owner would
leave the latter at the mercy of the former. Moreover, on the assumption that private
respondents repair business is duly registered, it presupposes that its shop is covered by
insurance from which it may recover the loss. If private respondent can recover from its insurer,
then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be
attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies.

4. State the formula for computing the net earning capacity.

Answer: Net Earning Capacity = life expectancy* x (gross annual income - reasonable
living expenses),[53]
*
Life expectancy = 2/3 (80 - age of the deceased)

5. In case a passenger dies by reason of the negligence of the driver what

are the four possible damages that may be recovered by the heirs of the
victim?
Answer: ART. 2206. The amount of damages for death caused by a crime or quasidelict shall be at least three thousand pesos ( now fifty thousand pesos), even though there may
have been mitigating circumstances. In addition:(1) The defendant shall be liable for the loss

of the earning capacity of the deceased, and the indemnity shall be paid
to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;(2) If the deceased was obliged to
give support according to the provisions of article 291, the recipient who is not an heir called to
the decedents inheritance by the law of testate or intestate succession, may demand support

from the person causing the death, for a period not exceeding five years, the
exact duration to be fixed by the court;(3) The spouse, legitimate and illegitimate descendants

and ascendants of the deceased may demand moral

reason of the death of the deceased.

damages for mental anguish by

6. What do you mean by the doctrine of last clear chance? When is it not
applicable? What is its effect to a liability?
Answer: The doctrine of last clear chance applies to a situation where the plaintiff was guilty of
prior or antecedent negligence, but the defendant who had the last fair chance to avoid the
impending harm and failed to do so is made liable for all the consequences of the accident,
notwithstanding the prior negligence of the plaintiff.[39]However, the doctrine does not apply
where the party charged is required to act instantaneously, and the injury cannot be
avoided by the application of all means at hand after the peril is or should have been discovered.
[40]

7. Petitioner-spouses Samuel and Chinita Parilla and their co-petitioner-son

Deodato Parilla, as dealers[4] of Pilipinas Shell Petroleum Corporation (Pilipinas
Shell), have been in possession of a parcel of land (the property) located at the
poblacion of Bantay, Ilocos Sur which was leased to it by respondent Dr.
Prospero Pilar under a 10-year Lease Agreement [5] entered into in 1990.When the
lease contract between Pilipinas Shell and respondent expired in 2000,
petitioners remained in possession of the property on which they built
improvements consisting of a billiard hall and a restaurant, maintained a sarisari store managed by Leonardo Dagdag, Josefina Dagdag and Edwin Pugal, and
allowed Flor Pelayo, Freddie Bringas and Edwin Pugal to use a portion thereof as
parking lot.[6]Despite demands to vacate, petitioners [7] and the other
occupants[8] remained in the property.Hence, respondent who has been residing
in the United States,[9]through his attorney-in-fact Marivic Paz Padre, filed on
February 4, 2002 a complaint for ejectment before the Bantay MTC with prayer for
the issuance of a writ of preliminary injunction with damages [10] against
petitioners and the other occupants of the property.After trial, the MTC, by
Decision of February 3, 2003, ordered herein petitioners and their co-defendants
and all persons claiming rights under them to vacate the property and to pay the
plaintiff-herein respondent the amount of P50,000.00 as reasonable compensation
for the use of the property and P10,000.00 as attorney's fees and to pay the cost
of
suit.
And
it
ordered
theplaintiffherein respondent to reimburse defendants Samuel Parilla, Chinita Parilla and
Deodato Parilla the amount of Two Million Pesos (P2,000,000.00) representing the
value of the improvements introduced on the property.
QUESTION: Is the decision for reimbursement correct? In you opinion,
what should be the correct ruling on the matter? What principle of law is
applicable? Explain.

Answer: Petitioners' claim for reimbursement of the alleged entire value of the
improvements does not thus lie under Article 1678. Not even for one-half of such alleged value,
there being no substantial evidence, e.g., receipts or other documentary evidence detailing costs
of construction. Besides, by petitioners' admission, of the structures they originally built the
billiard hall, restaurant, sari-sari store and a parking lot, only the "bodega-like" sari-saristore
and the parking lot now exist.[27]
At all events, under Article 1678, it is the lessor who is given the option, upon termination of the
lease contract, either to appropriate the useful improvements by paying one-half of their value at
that time, or to allow the lessee to remove the improvements. This option solely belongs to the
lessor as the law is explicit that "[s]hould the lessor refuse to reimburse said amount, the lessee
may remove the improvements, even though the principal thing may suffer damage thereby." It
appears that the lessor has opted not to reimburse.

8. What is the effect if the lessor refuses to pay the lessee one-half of the value of the
useful improvements introduced to a land leased?
Answer:The refusal of the lessor to pay the lessee one-half of the val
ue of the usefulimprovements gives rise to the right of removal.
9. Sometime in 1956, Francisca Cardente, for and on behalf of her grandson, petitioner Ignacio
Cardente, who was then a minor, and now married to his co-petitioner, purchased from Isidro
Palanay one hectare of land. The property purchased is a part of a 9.2656-hectare parcel of land
covered by Original Certificate of Title (O.C.T., for short) No. P-1380 in Palanay's name. Immediately
after the purchase, the Cardentes took possession of the land and planted various crops and trees
thereon. They have been in continuous possession ever since, adverse to the whole world.
Unfortunately, however, the private document evidencing the sale of the one-hectare lot to petitioner
Ignacio Cardente was lost and never found despite diligent efforts exerted to locate the same.
Some four years later, on August 18, 1960, Isidro Palanay sold the entire property covered by
O.C.T. No. P-1380, including the one-hectare portion already sold to Cardente, this time to the
private respondents, Ruperto Rubin and his wife. The deed of sale was registered and a new title,
Transfer Certificate of Title (T.C.T., for short) No. 1173, was issued in favor of the Rubin spouses.
Notwithstanding the second sale, or because of it, Isidro Palanay, with the written conforme of his
wife, Josepha de Palanay, on December 9, 1972, executed a public document in favor of petitioner
Ignacio Cardente confirming the sale to him (Cardente) in 1956 of the one hectare portion. The
deed of confirmation likewise states that the subsequent vendee, respondent Ruperto Rubin, was
informed by Palanay of the first sale of the one-hectare portion to Cardente.
By virtue of having the property titled in the name of Ruperto Rubin, he now claims that he is
the owner of the whole property in question. Question: (a) Is the claim of Rubin correct? (b) Is this a
case of double sale? (c) In case it is, what principle of law will you apply regarding double sale?
Explain.
Answer: Admittedly, this case involves a double sale. While the private respondents allegedly bought
from Isidro Palanay on August 18, 1960 the entire property comprising 9.2656 hectares and covered
by O.C.T. No. P-1380, the petitioners, on the other hand, lay claim to one hectare thereof which they
undeniably purchased from the same vendor earlier, in 1956. The conflict, therefore, falls under, and
can be resolved by, Article 1544 of the Civil Code which sets the rules on double sales.

ART. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should
be movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.
It is undisputed that the private respondents, the second vendees, registered the sale in their favor
whereas the petitioners, the first buyers, did not. But mere registration of the sale is not enough.
Good faith must concur with the registration. Bad faith renders the registration nothing but an
exercise in futility. The law and jurisprudence are very clear on this score.

The heart of the problem is whether or not the private respondents acted in good faith when they
registered the deed of sale dated August 18, 1960 more than six months later, on March 7, 1961.
Inextricably, the inquiry must be directed on the knowledge, or lack of it, of the previous sale of the
one-hectare portion on the part of the second buyers at the time of registration. The trial court found
that the second vendees had such knowledge.
It is true that good faith is always presumed while bad faith must be proven by the party alleging it. In
this case, however, viewed in the light of the circumstances obtaining, we have no doubt that the
private respondents' presumed good faith has been sufficiently overcome and their bad faith amply
established.
The "Confirmation Of A Deed Of Absolute Sale Of A Portion Of A Registered Agricultural Land"
executed by the late Ignacio Palanay on December 9, 1972 and which was exhibited in the trial court
below, admitted the sale of the one hectare portion to the petitioners sometime in 1956. The same
deed likewise explicitly stated that the "fact of the previous sale, was well known and acknowledged
by Mr. Ruperto Rubin (the private respondent)." These recitals were further buttressed by
Concepcion Salubo, a daughter of Isidro Palanay, who testified that she knew of the previoussale of
the one-hectare portion to petitioner Ignacio Cardente and that private respondent Ruperto Rubin
was properly informed of the said sale. On this regard, no ill-motive had been attributed to the vendor
Isidro Palanay and to his daughter Concepcion Salubo for testifying the way they did -- against the
private respondents. They were disinterested persons who stood to gain nothing except, perhaps,
the satisfaction of setting the record straight, or, in the words of the seller, "for the purpose of giving
efficacy to the Deed of Sale I made to Ignacio Cardente which was made in a private document x x
x."
Further, the notorious and continuous possession and full enjoyment by petitioners of the disputed
one-hectare property long (four years) before the private respondents purchased the same from
Palanay bolsters the petitioners' position. That possession would have been enough to arouse the
suspicion of the private respondents as to the ownership of the entire area which they were about to
purchase. Their failure to inquire and to investigate the basis of the petitioners' actual occupation of
the land forming a substantial part of what they were buying militates against their posited lack of
knowledge of the first sale. "A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard and then claim that he acted in good faith under the belief that there
was no defect in the title of the vendor." We have warned time and again that a buyer of real property
which is in the possession of persons other than the seller must be wary and should investigate the
rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as
a buyer in good faith.
The private respondents' avowals that they had never known of the prior sale until the issues were
joined at the trial court, for, before that, they merely tolerated the continued presence of the original
occupants, Francisca and Eugenia Cardente, and Ignacio, in the premises, out of simple pity for the
two old women, is too pat to be believed. For if these were so, the reason why the private
respondents' continued to tolerate the occupation by the petitioners of the contested property even
after the demise of the two old women escapes us. Rubin's allegation that this was because they
were still in good terms with the petitioners is too lame an excuse to deserve even a scant
consideration. The private respondents' total lack of action against the actual occupants of a good
portion of the land described in their torrens title can only be construed as acceptance on their part
of the existence of the prior sale and their resignation to the fact that they did not own the onehectare portion occupied by the petitioners. Present these facts, the foisted ignorance of the
respondents as to the first sale is an empty pretense. Their seventeen years of inaction and silence
eloquently depict a realization of lack of right.

10.The factual antecedents of the case are summarized by the Court of Appeals in this wise:
On June 13, 1990, CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky
arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four

(4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in
their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading
Corporation
declared
the
same
as
total
loss.
Despite receipt of a formal demand, defendants-appellees refused to submit to the consignees
claim. Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six
& 50/100 pesos (P506,086.50), and was subrogated to the latters rights and causes of action
against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.
Impugning the propriety of the suit against them, defendants-appellees imputed that the damage
and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods,
or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act
or omission of the shipper of the goods or their representatives. In addition thereto, defendantsappellees argued that their liability, if there be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred
that, in any event, they exercised due diligence and foresight required by law to prevent any
damage/loss to said shipment.
Question: Is the argument of the defendants-appellees correct? Explain your answer.

Answer: Well-settled is the rule that common carriers, from the nature of their
business and for reasons of public policy, are bound to observe extraordinary diligence and
vigilance with respect to the safety of the goods and the passengers they transport.
[13]
Thus, common carriers are required to render service with the greatest skill and foresight and
to use all reason[a]ble means to ascertain the nature and characteristics of the goods tendered
for shipment, and to exercise due care in the handling and stowage, including such methods as
their nature requires.[14]The extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for transportation by the carrier until
they are delivered, actually or constructively, to the consignee or to the person who has a right to
receive them.[15]
This strict requirement is justified by the fact that, without a hand or a voice in the preparation of
such contract, the riding public enters into a contract of transportation with common carriers.
[16]
Even if it wants to, it cannot submit its own stipulations for their approval.[17] Hence, it merely
adheres to the agreement prepared by them.
Owing to this high degree of diligence required of them, common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got lost
or destroyed.[18] That is, unless they prove that they exercised extraordinary diligence in
transporting the goods.[19] In order to avoid responsibility for any loss or damage, therefore, they
have the burden of proving that they observed such diligence.[20]
However, the presumption of fault or negligence will not arise[21] if the loss is due to any of the
following causes:

(1) flood, storm, earthquake, lightning, or other natural disaster or

calamity;
(2) an act of the public enemy in war, whether international or
civil;
(3) an act or omission of the shipper or owner of the goods; (4)
the character of the goods or defects in the packing or the
container; or
(5) an order or act of competent public authority.[22] This is a closed list.
If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then
the carrier is liable therefor.[23]

Corollary to the foregoing, mere proof of delivery of the goods in good order to
a common carrier and of their arrival in bad order at their destination constitutes a prima facie
case of fault or negligence against the carrier. If no adequate explanation is given as to how the
deterioration, the loss or the destruction of the goods happened, the transporter shall be held
responsible.[24]

xxx
A bill of lading serves two functions. First, it is a receipt for the goods shipped.
Second, it is a contract by which three parties -- namely, the shipper, the carrier, and the
consignee -- undertake specific responsibilities and assume stipulated obligations.[56] In a
nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that it constituted a perfected and
binding contract.[57]
[55]

Further, a stipulation in the bill of lading limiting to a certain sum the common carriers liability
for loss or destruction of a cargo -- unless the shipper or owner declares a greater value[58] -- is
sanctioned by law.[59] There are, however, two conditions to be satisfied: (1) the contract is
reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by
the parties.[60] The rationale for, this rule is to bind the shippers by their agreement to the value
(maximum valuation) of their goods.[61]
It is to be noted, however, that the Civil Code does not limit the liability of the common carrier to
a fixed amount per package.[62] In all matters not regulated by the Civil Code, the right and the
obligations of common carriers shall be governed by the Code of Commerce and special laws.
[63]
Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the
latter by establishing a statutory provision limiting the carriers liability in the absence of a
shippers declaration of a higher value in the bill of lading.[64] The provisions on limited liability
are as much a part of the bill of lading as though physically in it and as though placed there by
agreement of the parties.[65]
In the case before us, there was no stipulation in the Bill of Lading[66] limiting the carriers
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words L/C No. 90/02447 cannot be the basis for
petitioners liability.
First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained
by the shipper for the importation of steel sheets did not effect a declaration of the value of the
goods as required by the bill.[67] That notation was made only for the convenience of the shipper
and the bank processing the Letter of Credit.[68]
Second, in Keng Hua Paper Products v. Court of Appeals,[69] we held that a bill of lading was
separate from the Other Letter of Credit arrangements. We ruled thus:
(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be
treated independently of the contract of sale between the seller and the buyer, and the contract of
issuance of a letter of credit between the amount of goods described in the commercial invoice in
the contract of sale and the amount allowed in the letter of credit will not affect the validity and
enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be
expected to look beyond the documents presented to it by the seller pursuant to the letter of
credit, neither can the carrier be expected to go beyond the representations of the shipper in the
bill of lading and to verify their accuracy vis--vis the commercial invoice and the letter of
credit. Thus, the discrepancy between the amount of goods indicated in the invoice and the
amount in the bill of lading cannot negate petitioners obligation to private respondent arising
from the contract of transportation.[70]
In the light of the foregoing, petitioners liability should be computed based on US$500
per package and not on the per metric ton price declared in the Letter of Credit. [71] In Eastern
Shipping Lines, Inc. v. Intermediate Appellate Court[72] we explained the meaning of package:

When what would ordinarily be considered packages are shipped in a container supplied
by the carrier and the number of such units is disclosed in the shipping documents, each of those
units and not the container constitutes the package referred to in the liability limitation
provision of Carriage of Goods by Sea Act.
Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of
Lading clearly disclosed the contents of the containers, the number of units, as well as the nature
of the steel sheets, the four damaged coils should be considered as the shipping unit subject to
the US$500 limitation.(BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. AND
JARDINE DAVIES TRANSPORT SERVICES, INC., PETITIONERS, VS. PHILIPPINE FIRST
INSURANCE CO., INC., RESPONDENT THIRD DIVISION[ G.R. No. 143133, June 05, 2002 ]

problems in civil law

1. State if the probate court has the power to determine :(a) the due execution of a
holographic will (b) whether the testator is of sound mind (c) whether the last will is freely
executed (d) whether the solemnities and formalities are observed (e) whether the property in
question is part of the estate of the decedent or not.

ANSWER: Petitioner should realize that the allowance of her husbands will is conclusive only as to
its due execution.[11] The authority of the probate court is limited to ascertaining whether the testator,
being of sound mind, freely executed the will in accordance with the formalities prescribed by law.
[12]
Thus, petitioners claim of title to the properties forming part of her husbands estate should be
settled in an ordinary action before the regular courts.

2. If a decedent is an inhabitant of the Philippines at the time of his death, what court shall
have jurisdiction of the probate of his will? If he is an inhabitant of a foreign country, will
your answer be the same?

ANSWER: If the decedent is an inhabitant of the Philippines at the time of his death, whether a
citizen or an alien, his will shall be proved, or letters of administration granted, and his estate
settled, in the Court of First Instance (now Regional Trial Court) in the province in which he
resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First
Instance (now Regional Trial Court) of any province in which he had estate.

3. On September 24, 1977, petitioner donated unto respondent a parcel of land at

Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its name
under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which also bears the

acceptance of the donee recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee shall not use
the land except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land
for any reason whatsoever, nor convey any portion of the same except in lease for commercial use
as provided above in paragraph 3 hereof, otherwise the said land with all real improvements thereon
shall revert in trust to the Donor for prompt disposition in favor of some other charitable organization
that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the
perimeter fence on the donated property and the construction of a nucleus building for the aged and
the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion
with sugar cane. There is no dispute that the lease agreement was entered into by the donee without
the prior written consent of the donor, as required in the deed ofdonation. The lease to Gomez ended
in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and the donee
ordered to return and/or reconvey the property donated reason of said violation of the attached
condition?

4. According to purpose or cause, state the four (4) kinds of donation and explain each.
Answer: Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation
is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other
hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the
donee for past services, which services do not amount to a demandable debt. A conditional or
modal donation is one where the donation is made in consideration of future services or where the
donor imposes certain conditions, limitations or charges upon the donee, the value of which is
inferior than that of the donation given. Finally, an onerous donation is that which imposes upon the
donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable
consideration, the cost of which is equal to or more than the thing donated.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,

Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private respondents
are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of
Syvel's Department Store, Makati City. CRISELDA was signing her credit card slip at the
payment and verification counter when she felt a sudden gust of wind and heard a loud
thud. She looked behind her. She then beheld her daughter ZHIENETH on the floor, her
young body pinned by the bulk of thestore's gift-wrapping counter/structure.
ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and retrieving ZHIENETH
from the floor.
Eventually, Zhieneth died.

Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth? (b)
What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to Vicente Uy
Veza. Another portion, with the house of strong materials thereon, was sold in 1927 to Tan Yanon,
respondent herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with the camarin and small building thereon, after passing through
several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the old camarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his
house, unless such building is erected at a distance of not less than three meters
from the boundary line between the lots of plaintiff and defendant, and to enjoin the
members of the Municipal Council of Romblon from issuing the corresponding
building permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7. (a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already repaired, unknown to
Mr. X, the latter sold the piano to Mr. Z, who paid 30k. Mr. Y left the place and took away the said
money. What kind of possession has Mr. Y, and what criminal case shall he be made liable of? (b)
Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua so that the same
can be deposited in his account. Miss Chua however took the money and misappropriated the
same. What kind of possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De

Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then
Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store located at the corner of
Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents
mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998, extendible
for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a firewall on her
rented property which must be at least as high as the store; and in case of modification of the public
market, she or her heir/s would be given preferential rights.

Visitacion took over the store when her mother died sometime in 1984.From then on up to
January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for
inspection on 15 May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then
Ministry of Public Works and Highways,Regional Office No. IV-A, found that the store of Visitacion
remained intact and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October 1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador directing her to
demolish her store within five (5) days from notice. Attached to the letter were copies of Sangguniang
Bayan Resolution No. 156 dated 30 August 1993 and a Memorandum issued by Asst. Provincial
Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to
Visitacion ordering her to vacate the portion of the public market she was occupying within 15 days
from her receipt of the letter; else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No.
183 authorizing Mayor Comendador to demolish the store being occupied by Visitacion using legal
means
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan
Resolution Nos. 183 and 156 authorized the demolition of the store with Asilo and Angeles
supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost
of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor Comendador
liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of Visitacion
as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various parcels of
real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in Mandaue City, Cebu,
which lot allegedly belonged originally to Claudio Ermac. Upon the latter's death, the said Lot No.
666 was inherited and partitioned by his children, namely, Esteban, Pedro and Balbina. Siblings
Pedro and Balbina requested their brother Esteban to have their title over the property registered.
Esteban, however, was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name, and did not include his
father's brother and sister, nor his cousins. Despite having registered the lot in his name, Clemente
did not disturb or claim ownership over those portions occupied by his uncle, aunt and cousins even
up to the time of his death. Among the occupants of Lot No. 666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot No. 666 now
occupied by them by right of succession as direct descendants of the original owner, Claudio Ermac.

[Respondents] Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by purchase
from the children of Claudio Ermac. [Respondent] Vicente Dionson, on the other hand, bought his
land from the heirs of Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and possession
had been peaceful and undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac
filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the [respondents'] ownership
over their respective parcels of land, prompting them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the [respondents], and
claimed that the [respondents] have no cause of action against them. It is essentially claimed that it
was Clemente Ermac and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in actual, peaceful, adverse
and continuous possession in the concept of an owner of the entire Lot No. 666. With the help of his
children, he cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death, [petitioners]
inherited Lot No. 666, and they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only tolerated by Clemente
Ermac and the [petitioners]. [Petitioners] in fact had never surrendered ownership or possession of
the property to the [respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original owner of the lot in
question was Claudio Ermac, and therefore, the property was inherited upon his death by his
children Esteban, Balbina and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was] supported by the
admissions of Irene[a] Seno, witness for the [petitioners] and daughter of Clemente Ermac,
establishing facts which show that [petitioners] and their predecessor Clemente did not own the
entire property, but that the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot.
Since the entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of the
[respondents], are being held in trust by the [petitioners] in favor of their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was used by the
court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac [and]
Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat the title over
the property in the names of petitioner's predecessors-in-interest [Spouses] Clemente Ermac and
Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746 Epifanio delos Santos
Avenue (EDSA), Quezon City with an area of 375 square meters and covered by Transfer Certificate
of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled "An
Ordinance Requiring the Construction of Arcades, for Commercial Buildings to be Constructed in
Zones Designated as Business Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor projecting over the
sidewalk beyond the first storey wall used as protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an arcade with a width
of 4.50 meters and height of 5.00 meters along EDSA, from the north side of Santolan Road to one
lot after Liberty Avenue, and from one lot before Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade, will you consider his building a nuisance for not
complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square
meters. The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a 10,000-squaremeter portion of their property in favor of the Ministry of Education and Culture (now the Department
of Education, Culture and Sports [DECS]).
The deed provided, among others:That for and in consideration of the benefits that may be
derived from the use of the above described property which is intended for school purposes, the said
DONORS do by these presents TRANSFER AND CONVEY by way of DONATION unto the DONEE,
its successors and assigns, the above property to become effective upon the signing of this
document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT) No. T143337 covering the portion identified as Lot 8858-A was issued in the name of the Ministry of
Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and remained idle. Sometime in
1988, the DECS, through its Secretary, started construction of the Rizal National High School
building on a parcel of land it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to the DECS Secretary dated
August 19, 1994, the spouses Dulay requested that the property be returned to them considering
that the land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition imposed in the
Deed of Donation?
(b) Shall the deed of donation be revoked?

(c) Is the respondents right to have the revocation of the Deed of Donation barred already
by prescription and laches?

problems in civil law

1. A Chinese citizen, who is domiciled in Argentina, is on his way to Manila.

The boat where he is riding, is docking for five days in Japan. In Japan can
he make a will? IF so, what countrys formalities should he observe?

2. Tony made a will making Antonia his heir. Tony later learned that
Antonia was dead, so he revokes his first will and made another one
instituting Berto as heir. If A turns out to be still alive, who inherits?

3. On September 24, 1977, petitioner donated unto respondent a parcel of

land at Canlubang, Calamba, Laguna with an area of 41,117 square meters
and registered in its name under Transfer Certificate of Title (TCT) No. T82803. The deed of donation which also bears the acceptance of the donee
recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor,
the Donee shall not use the land except for the purpose as provided above
in paragraph 1 hereof, nor sell or dispose the land for any reason
whatsoever, nor convey any portion of the same except in lease for
commercial use as provided above in paragraph 3 hereof, otherwise the
said land with all real improvements thereon shall revert in trust to the
Donor for prompt disposition in favor of some other charitable
organization that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of
generating funds to build the perimeter fence on the donated property
and the construction of a nucleus building for the aged and the infirm,
leased a portion of the donated property to one Martin Gomez who
planted said portion with sugar cane. There is no dispute that the lease
agreement was entered into by the donee without the prior written
consent of the donor, as required in the deed of donation. The lease to
Gomez ended in 1985.
Question: Will the subject deed of donation be adjudged revoked
and void and the donee ordered to return and/or reconvey the property
donated reason of said violation of the attached condition? What law shall
govern the said matter? Explain.

4. According to purpose or cause, state the four (4) kinds of donation and
explain each.
5. Petitioner Jarco Marketing Corporation is the owner of Syvel's
Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and
Elisa Panelo are the store's branch manager, operations manager, and
supervisor, respectively. Private respondents are spouses and the parents
of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the
2nd floor of Syvel's Department Store, Makati City. CRISELDA was signing
her credit card slip at the payment and verification counter when she felt
a sudden gust of wind and heard a loud thud. She looked behind her. She
then beheld her daughter ZHIENETH on the floor, her young body pinned
by the bulk of thestore's gift-wrapping counter/structure. ZHIENETH was
crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and
retrieving ZHIENETH from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of
Zhieneth? (b) What principle of law is applicable in deciding this matter?
Explain your answer.

6. The record discloses that the late Francisco Sanz was the former
owner of a parcel of land containing 888 square meters, with the buildings
and improvements thereon, situated in the poblacion of Romblon. He
subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who
subsequently sold it to Vicente Uy Veza. Another portion, with the house
of strong materials thereon, was sold in 1927 to Tan Yanon, respondent
herein. This house has on its northeastern side, doors and windows
overlooking the third-portion, which, together with the camarin and small
building thereon, after passing through several hands, was finally
acquired by Juan Gargantos, petitioner herein.
On April 23, 1955, Gargantos applied to the Municipal Mayor of
Romblon for a permit to demolish the roofing of the oldcamarin. The
permit having been granted, Gargantos tore down the roof of the camarin.
On May 11,1955, Gargantos asked the Municipal Council of Romblon for
another permit, this time in order to construct a combined residential
house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon
filed against Gargantos an action to restrain him from constructing a
building that would prevent plaintiff from receiving light and enjoying the
view through the windows of his house, unless such building is erected at
a distance of not less than three meters from the boundary line between

the lots of plaintiff and defendant, and to enjoin the members of the
Municipal Council of Romblon from issuing the corresponding building
permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon
acquire the easement of light and view against the property of Gargantos?
Explain.

7.
(a) Mr. X delivered his piano for repair to Mr. Y. When the piano
was already repaired, unknown to Mr. X, the latter sold the piano to Mr. Z,
who paid P30k. Mr. Y left the place and took away the said money. What
kind of possession has Mr. Y, and what criminal case shall he be made
liable of?
(b) Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k
to Miss Chua so that the same can be deposited in his account. Miss Chua
however took the money and misappropriated the same. What kind of
possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother

Marciana Vda. De Coronado (Vda. De Coronado) and the Municipality of
Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo
P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store
located at the corner of Coronado and E. Fernandez Sts. at Poblacion,
Nagcarlan, Laguna, in favor of the respondents mother for a period of
twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.
The lease contract provided that the late Vda. De Coronado could
build a firewall on her rented property which must be at least as high as
the store; and in case of modification of the public market, she or her
heir/s would be given preferential rights.
Visitacion took over the store when her mother died sometime in
1984.From then on up to January 1993, Visitacion secured the yearly
Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
Visitacions request for inspection on 15 May 1986, District Engineer
Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public
Works and Highways,Regional Office No. IV-A, found that the store of
Visitacion remained intact and stood strong. This finding of Engineer
Gorospe was contested by the Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15
October 1993.
On 1 September 1993, Visitacion received a letter from Mayor
Comendador directing her to demolish her store within five (5) days from
notice. Attached to the letter were copies of Sangguniang Bayan

Resolution No. 156 dated 30 August 1993 and a Memorandum issued by

Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser
sent a letter to Visitacion ordering her to vacate the portion of the public
market she was occupying within 15 days from her receipt of the letter;
else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna
issued Resolution No. 183 authorizing Mayor Comendador to demolish the
store being occupied by Visitacion using legal means
On 15 October 1993, Mayor Comendador relying on the strength of
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the
demolition of the store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil
engineer, estimated the cost of the demolished property as amounting
to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or
(b) Mayor Comendador liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the
structure of Visitacion as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners

of the various parcels of real property that form part of Lot No. 666, (plan
II-5121 Amd.2) situated in Mandaue City, Cebu, which lot allegedly
belonged originally to Claudio Ermac. Upon the latter's death, the said Lot
No. 666 was inherited and partitioned by his children, namely, Esteban,
Pedro and Balbina. Siblings Pedro and Balbina requested their brother
Esteban to have their title over the property registered. Esteban, however,
was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name,
and did not include his father's brother and sister, nor his cousins. Despite
having registered the lot in his name, Clemente did not disturb or
claim ownership over those portions occupied by his uncle, aunt and
cousins even up to the time of his death. Among the occupants of Lot No.
666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the
portions of Lot No. 666 now occupied by them by right of succession as
direct descendants of the original owner, Claudio Ermac. [Respondents]
Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by
purchase from the children of Claudio Ermac. [Respondent] Vicente
Dionson, on the other hand, bought his land from the heirs of Pedro
Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon.
[respondents'] ownership and possession had been peaceful and

undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac

filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the
[respondents'] ownership over their respective parcels of land, prompting
them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of
the [respondents], and claimed that the [respondents] have no cause of
action against them. It is essentially claimed that it was Clemente Ermac
and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in
actual, peaceful, adverse and continuous possession in the concept of an
owner of the entire Lot No. 666. With the help of his children, he
cultivated the said lot, and planted corn, peanuts, cassava and fruit
products. Clemente also effected the registration of the subject lot in his
name. Upon Clemente's death, [petitioners] inherited Lot No. 666, and
they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only
tolerated by Clemente Ermac and the [petitioners]. [Petitioners] in fact
had never surrendered ownership or possession of the property to the
[respondents]. [Petitioners] also set up the defense of prescription and
laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the
original owner of the lot in question was Claudio Ermac, and therefore, the
property was inherited upon his death by his children Esteban, Balbina
and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was]
supported by the admissions of Irene[a] Seno, witness for the
[petitioners] and daughter of Clemente Ermac, establishing facts which
show that [petitioners] and their predecessor Clemente did not own the
entire property, but that the other heirs of Claudio Ermac are entitled to
two-thirds (2/3) of the lot. Since the entire lot is now registered in the
name of Clemente Ermac, the shares belonging to the other heirs of
Claudio Ermac, some of which have already been purchased by some of
the [respondents], are being held in trust by the [petitioners] in favor of
their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of
law was used by the court in adjudicating the rights of the parties?
Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses]
Clemente Ermac [and] Anunciacion Suyco is indefeasible and
incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are
sufficient to defeat the title over the property in the names of petitioner's

predecessors-in-interest [Spouses] Clemente Ermac and Anunciacion

Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on
portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at

746 Epifanio delos Santos Avenue (EDSA), Quezon City with an area of 375
square meters and covered by Transfer Certificate of Title (TCT) No.
RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No.
2904, entitled "An Ordinance Requiring the Construction of Arcades, for
Commercial Buildings to be Constructed in Zones Designated as Business
Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor
projecting over the sidewalk beyond the first storey wall used as
protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to
construct an arcade with a width of 4.50 meters and height of 5.00 meters
along EDSA, from the north side of Santolan Road to one lot after Liberty
Avenue, and from one lot before Central Boulevard to the Botocan
transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade; will you consider his
building a nuisance for not complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the
owners of a parcel of land located in Rizal, Santiago, Isabela, with an area
of 29,002 square meters. The lot was covered by Original Certificate of
Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation
over a 10,000-square-meter portion of their property in favor of the
Ministry of Education and Culture (now the Department of Education,
Culture and Sports [DECS]).
The deed provided, among others: xxx That for and in consideration
of the benefits that may be derived from the use of the above described
property which is intended for school purposes, the said DONORS do by
these presents TRANSFER AND CONVEY by way of DONATION unto the
DONEE, its successors and assigns, the above property to become
effective upon the signing of this document.
The property was subdivided. On April 13, 1983, Transfer Certificate
of Title (TCT) No. T-143337 covering the portion identified as Lot 8858-A
was issued in the name of the Ministry of Education and Culture,
represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and

remained idle. Sometime in 1988, the DECS, through its Secretary, started
construction of the Rizal National High School building on a parcel of land
it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to
the DECS Secretary dated August 19, 1994, the spouses Dulay requested
that the property be returned to them considering that the land was never
used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the
condition imposed in the Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of
Donation barred already by prescription and laches?

mcq in civil law

1.(A) Dation in payment (B) Barter (C) Exchange (D) Commodatum (E)
Antichresis ---whereby property is alienated to the creditor in
satisfaction of a debt in money, shall be governed by the law of
sales.
2.Payment shall be made to (a) the person in whose favor the
obligation has been constituted (b) his successor in interest (c)
any person authorized to receive it (d) any of the above(e) all of the
above
3. Payment made by a (a) surety (b) guarantor (c) third person (d)
all of the above (e) none of the above ----who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires
the debtor's consent.
4 When the obligee accepts the performance, knowing its incompleteness
or irregularity, and without expressing any protest or objection, the
obligation is deemed (a) extinguished (b) fully complied with (c)
completed (d) satisfied (e) complete without prejudice to damages as
the case may be.
5 Which of the following is incorrect? (a) no title to registered land
in derogation of that of the registered owner shall be acquired by
prescription or adverse possession (b) Neither can prescription be
allowed against the hereditary successors of the registered owner,
because they merely step into the shoes of the decedent and are merely
the continuation of the personality of their predecessor in interest
(c) the disputed land covered by a certificate of title cannot be
acquired by prescription regardless of petitioner's good faith (d)
Laches is based upon equity and the public policy of discouraging

stale claims (e) Article 1145 of the New Civil Code provides that
real actions over immovable propertiesprescribe after thirty years

6. Which of the following is not correct? (a) Actions for the

annulment of contracts prescribe in four years (b) If the ground for
annulment is vitiation of consent by intimidation, the four-year
period starts from the time such defect ceases (c) The running of this
prescriptive period cannot be interrupted by an extrajudicial demand
made by the party whose consent was vitiated.(d) a complaint may be
dismissed when the facts showing the lapse of the prescriptive period
are apparent from the records (e) none of the above.
7. Which of the following is correct? (a) In actions for reconveyance
of property predicated on the fact that the conveyance complained of
was null and void ab initio, a claim of prescription of action would
be unavailing (b) The action or defense for the declaration of the
inexistence of a contract does not prescribe (c) Equity, which has
been aptly described as justice outside legality, can be applied
against a statutory law (d) Laches is a doctrine in equity and our
courts are basically courts of law and not courts of equity (d) laches
cannot be set up to resist the enforcement of an imprescriptible legal
right
8.Which of the following is a complete statement? (A) The power to
rescind obligations is implied in reciprocal ones (B) The injured
party may choose between the fulfillment and the rescission of the
obligation (c) The right to rescind a contract arises once the other
party defaults in the performance of his obligation (d) Those obliged
to deliver or to do something incur in delay from the time the obligee
judicially demands from them the fulfillment of their obligation (e)
When the obligation or the law expressly so declares demand shall not
be necessary in order that delay may exist.
9.Which of the following is INCORRECT? (A) In reciprocal obligations,
as in a contract of sale, the general rule is that the fulfillment of
the parties respective obligations should be simultaneous (B) No
demand is generally necessary because, once a party fulfills his
obligation and the other party does not fulfill his, the latter
automatically incurs in delay.(C) when different dates for performance
of the obligations are fixed, the default for each obligation must be
determined by the rules given in the first paragraph of Art. 1169,
that is, the other party would incur in delay only from the moment the
other party demands fulfillment of the formers obligation (D) even in
reciprocal obligations, if the period for the fulfillment of the
obligation is fixed, demand upon the obligee is no longer necessary
before the obligor can be considered in default and before a cause of
action for rescission will accrue.(E)
From the moment one of the
parties fulfills his obligation, delay by the other begins.

10. Which of the following is not CORRECT? (A) in the absence of a

stipulation to the contrary, the power to rescind must be invoked
judicially (B) The power to rescind can be exercised solely on a
party's own judgment that the other has committed a breach of the

obligation (C) as there is nothing in the contract of lease empowering

the defendants to rescind it without resort to the courts, the
defendants' action in unilaterally terminating the contract is
unjustified. (D) the right to resolve reciprocal obligations, in case
one of the obligors shall fail to comply with that which is incumbent
upon him, is deemed to be implied (E) Rescission will be ordered only
where the breach complained of is substantial as to defeat the object
of the parties in entering into the agreement
11. A was supposed to pay B P1,000,000 on Dec. 31, 2005. But believing
that the obligation was due and demandable already on Dec. 31, 2004, A
paid B the P1,000,000 on said date. How much may A recover from B, say
on June 30, 2005? (a) P1,000,000 only (b) P1,000,000 plus 1% per
annum (c) P1,000,000 plus interest of 6% per annum
(d) he cannot
recover any amount (e) P1,600,000
12. Suppose in the preceding problem, A had paid prematurely the whole
amount knowing fully well of the existence of the term, how much can A
recover? (a) P1,000,000 only
(b) P1,000,000 plus 1% per annum (c)
P1,000,000 plus interest of 6% per annum (d) he cannot recover any
amount (e) P1,600,000

13. On March 1, A sold to B a particular automobile. It was agreed

that payment and delivery were to be made on March 31, but on March
15, A delivered the car and B paid for said car. Pending the arrival
of March 31, should B return the car plus damages and should A return
the price plus interest? (a) There should be no returning (b) It can
be returned (c) there can be returning because by their actions both
parties implicitly agreed changing the date (d) there can be returning
because the problem deals with two unilateral obligations (e) both c &
d
14. A borrowed money from B and pledged a medal with diamonds as
security. It was agreed that A was to pay the money loaned with
interest at the end of one year. Before the expiration of the one-year
period, is A allowed to pay his debt and recover the medal pledged?
(a) No, unless B consents (b) Yes, it is right to do so (c) No,
because B would be deprived unnecessarily of his right to use the
medal (d) Yes, because the principal obligation is already paid (e)
No, the consent of B must first be obtained because the one-year
period was established for their benefit.
15.A sold B some properties during the Japanese occupation. A received
war notes as payment. After liberation, A sought to recover the
properties on ground that the money paid to him was worthless. Is A
correct? (a) Yes, A is correct because there was no payment at all (b)
A is wrong, because he willingly sold the properties (c) A is not
correct, because he was compelled to receive such notes (d) A is not
correct because A willingly sold said properties and benefited with
the use of the purchase money (e) A is not correct and he must suffer
the worthlessness of the notes.
16. Legal tender means (a) valid payment (b) currency stipulated (c)
that which a debtor may compel a creditor to accept in payment (d)
notes and coins (e) money used during the transaction.

17. Which of the following statements is CORRECT about judicial costs?

(a) the civil code governs costs (b) the rules of court is the
reference for costs (c) the state is not exempt from payment of costs
(d) none of the above (e) all of the above.

18.Which of the following applies to DATION IN PAYMENT? (A)

giving of the price may generally end the obligation of the buyer
there is no pre-existing credit (c) the cause or consideration is
price (d) there is greater freedom in the determination of
price(e) there is a pre-existing credit which extinguishes
obligation.

the
(b)
the
the
the

19. The proceeding by which a debtors creditor is subjected to the

payment of his own debt to another is known as (a) dation in payment
(B) sale (c) garnishment (d) interpleader (e) injunction.
20.Is payment to a person incapacitated to manage or administer his
property valid ? (a) no, because the law says so (b) yes if he kept
the thing delivered to him (c) no, even if the payment benefited him
(d) yes, if he is benefited (e) both b and d.
21. A owes B P 1,000,000. When A paid B, the latter was already
insane. However, the money was never spent, and A is still in the
bankbook of B. Is the obligation extinguished? (a) no, because the
payment was Invalid (b) No, because B was incapacitated to administer
his property (c) Yes, because B has kept the money (d) both a & c
(E) yes, because the payment was valid.

22. Suppose in the preceding problem, a swindler had asked B for

P1,000,000 in exchange for a ring worth P500,000, does As payment to
B remain valid? (a) yes, but up to P500,000 only (b) yes, up to
P1,000,000 because he actually received it.(c) yes, the whole amount
since he benefited to the same (d) Yes, As payment is valid only
insofar as the payment has benefited him, (e) both a & d.
23. A borrowed P1 million from B. The loan was secured by a mortgage
of As land in favor of B. Without the knowledge of A, C paid B the
sum of P1m for As debt. A benefited to the amount of P1M. Which of
the following statements is correct? (a) C can claim reimbursement fro
A inasmuch as C paid As debt (b) C can recover the whole amount of
P1M inasmuch as he benefited up to that amount (c) If A cannot pay, C
cannot foreclose the mortgage on As land because there was really no
subrogation (d) none of the above (e) all of the above.
24. A owes B the sum of P1M. C is the guarantor of A. A was able to
pay B the sum of P400,000. D thinking that A still owed B P1M paid P1M
to be against the will of A. Which of the following is not
correct? (a) D cannot recover from A. (B) D may recover from A (C) D
can recover only P600,000 because this is the only amount which

benefited A. (D) If A cannot pay, D cannot ordinarily proceed against

the guarantor C because D, having paid against the will of A, is not
entitled to subrogation (E) both D and C.
25. Plaintiff, a seller in Japan sold to defendant-buyer some coal.
While delivery was being made, the Philippine Congress imposed a
specific tax of P10/metric ton of coal. So that the coal could enter
Manila, the plaintiff-seller paid this tax. When defendant was asked
for reimbursement, defendant refused to pay. Which of the statements
below is CORRECT? (A) the buyer shall pay the tax. (b) the seller
shall pay the tax (c) the seller shall pay the tax pursuant to the
revenue system (d) the seller shall pay the tax since he merely paid
in behalf of the buyer (e) although the Act provides that the seller
may pay the tax, as is practiced under our revenue system, still the
ultimate liability should fall upon the buyer.
26. A promises to deliver to B 100 bottles of wine on a certain day
when a banquet will be held. The contract states that failure of a to
do so on that day will result in forfeiture of P100,000. On that day,
A was able to deliver only 90 bottles of wine. Which of the following
is correct? (a) B can forfeit the P100,000 since there was no complete
delivery (b) B need not pay the 100 bottles of wine since there was a
violation of the agreement (c) B must pay the 90 bottles since he was
benefited (d) there was an irregular performance of As obligation,
hence he must be liable for damages (e) B need not pay for the 90
bottles because A is even liable still for damages for failure to
deliver the 100 bottles.
27. A was obliged under a contract a contract with B, not to sell
shares of stock for one year. A penal clause was provided. But A sold
shares of stock within the period specified but damages were not
proved by B to have been suffered by him. May A recover the penalty?
(a) Yes, B may recover the penalty because the contract has a
suspensive condition and it is voluntarily agreed (b) No. B may not
recover the penalty because at any rate there was no damage done
anyway (c) No, B cannot recover because the prohibition to sell his
own shares is contrary to law (d) Yes, B may recover the penalty
because the damage is
not a relevant issue (e) No, B cannot recover
the penalty because he has to prove the damage due to the breach.

28. A, B and C solidarily owe X P3M. X remitted Cs share. A,

therefore paid later only P2M. Can A recover reimbursement? (a) Yes,
but only from B and not from C (B) Yes, from both B and C (C) No, he
cannot from anyone at all (d) Yes, but only from C (E) Yes, but only
from B because Cs share was remitted and the remission was previous
to the payment.
29. Which of the following is a modification of an obligation? (a)
compensation (b) novation(c) confusion (d) remission (e) merger
30. Which of the following is best described as waiver?
compensation (b) novation (c) confusion (d) remission (e)merger

(a)

31. A and B are solitary debtors of X and Y, solidary creditors to the

amount of P400,000. But X owes A P400,000 on account of a different
obligation. Here we have what we call a ------ (a) compensation (b)
novation (c) confusion (d) remission (e)merger

32. A and B
the payment
P800,000, A
compensation

are solidarily liable to X and Y, solidary creditors, for

of P800,000. A and X agreed that instead of paying
will just paint Xs house. What happens here is -----(a)
(b) novation (c) confusion (d) remission (e)merger

33. A and B are solidary debtors of X and Y, solidary creditors to the

amount of P4M. X tells A that he was waiving the whole obligation.
What happens here is an example of ---------(a) compensation (b)
novation (c) confusion (d) remission (e)merger

34.In 2004, A, B, and C bound themselves in solidum to give X p300,000

subject to the following stipulations: A to pay in 2005, B, if he
passes the bar, and C in 2007. In 2005, how much can X demand from A?
(A) p300,000 (B) p100,000 (C) p200,000 (D) X has a right to P300,000
MINUS Bs share (e) X can collect but minus Cs share.
35.Two people borrowed money and signed a promissory note promising to
pay juntos o separademente. What is the nature of their liability?
(a) joint (b) solidary (c) joint and solidary (d) pro rata (e)
proportionate
36.Which of the following is
an alternative obligation? (a) an
insurance contract which stipulates that if the house is damaged B may
either pay for the damage or rebuild the house(b) D is obliged to
give C, at Ds option, either Object 1 or object 2 or object 3. (c)D
promised to give C his diamond ring but it was stipulated that D could
give his Toyota car as substitute (d)if the principal obligation is
void, there is no necessity of giving the substitute (e) the right to
choose is given only to the debtor.

37. Which of the following describes facultative obligation? (a)

Various things are due but the giving of one is sufficient (b) if one
of the prestations is illegal, the others may be valid and the
obligation remains (c) if the principal obligation is void, there is
no necessity of giving the substitute(d) none of the above (e) all of
the above.
38.In which situation can the Court fix the period? (a) when my means
permit me to do so (b) as soon as possible (c) in partial payment (d)
none of the above (e) all of the above.
39. IN which of the situation can a period be inferred? (a) a contract
to build a house (b) conditional donation (c) payment of a
subscription of shares of stocks (d) none of the above(e) all of the
above.

40.IN which of the following instances where the law imposes solidary
liability? (a) obligations arising from tort (b) obligations arising
from quasi-contracts (c) obligations of devisees and legatees (d) all
of the above (e) only a & b.
41. The defendants
X and Y, as partners in the management of a
bakery, owed plaintiff
Z the amount of P40,000. The trial court
ordered each defendant liable for the whole amount (in solidum). Which
of the following is correct? (a) the presumption is that they jointly
liable(b) X and Y is liable only for P20,000 (c) Each is liable for
the whole amount (d) the liability is solidary (e) both c and d.

42. To guaranty the obligation incurred by Felix Lafuente, a group of

men, executed a bond in favor of the Oriental Commercial Company,
where they promised to answer individually and collectively for the
total amount. Which is best correct? (a) they are sureties and they
are jointly liable (b) they are not sureties and therefore they are
only solidarily liable (c) they are jointly liable and everyone is
responsible for the whole amount (d) they are solidarily liable and
everyone is individually responsible for the full payment of the
obligation (e) they are jointly and severally liable.
43. Which obligation is demandable at once? (a)
pure (c) resolutory (d) suspensive (e) facultative

conditional (b)

44. Which of the following best describes a resolutory condition? (a)

demandable at once (b) happening of the event gives rise to the
obligation (c) not demandable at once (d) happening of the event
extinguishes the obligation (e) both C and B.
45. If the obligation depends upon the sole will of the debtor, then
(a) one can go to court and ask the court to fix the period (b) the
obligation is void (c) only voidable (d) the obligation is deemed to
be one with a period (e) contract is valid.
46. The contract provides: that the term or period of this contract
shall be as long as the party of the first part has need for the
electric light posts of the party of the second part. Which statement
is best correct? (a) the contract contains a potestative condition
hence the whole contract is void (b) the contract is valid, subject
to court action (c) the contract depends upon the sole will of the
debtor, in which case, the conditional obligation is void (d) it is
valid because the conditions imposed are casual conditions as it
depends upon a third person (e) the contract is subject to mixed
conditions hence void.
47 Within what period should the action to fix the period be filed?
(a) 4 years (b) 8 years(c) 10 years (d) 1 year only (e) none of the
above.
48. If the contract does not provide for a period, can the creditor
demand its fulfillment? (a) no, because the period has to be fixed
first (b) No, because the obligation is void (c) Yes, because after
all, it is still a valid obligation (d) No, because an action for the
court to fix the period has yet to be filed (e) yes, because the
parties may agree on the period themselves.

49. Which does not belong to the group? (a) compensation (b) novation
(c) confusion or merger (d) loss of thing due (e) fulfillment of
suspensive condition.
50. X owes Y P10,000. Because the obligation was due and demandable,
X delivered a parcel of land to Y who agreed to receive the land.
Prior to the delivery, however, X mortgaged the land to Z. Which
statement below is at best correct? (a) there is a dacion en pago
hence the obligation is extinguished (b) The obligation is not
extinguished since dacion en pago is invalid here (c) the dacion is
valid since it was with the consent of the creditor (d) the debtor is
not declared insolvent hence the dacion is valid (e) dation is invalid
because the encumbrance (mortgage) is prejudicial to the creditor

ANTONIA TORRES assisted by her husband, ANGELO TORRES;

and EMETERIA BARING, petitioners, vs. COURT OF APPEALS
and MANUEL TORRES,
THIRD DIVISION

G.R. No. 134559 December 9, 1999

ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA
BARING, petitioners,
vs.
COURT OF APPEALS and MANUEL TORRES, respondents.

PANGANIBAN, J.:
Courts may not extricate parties from the necessary consequences of their acts. That the terms of a
contract turn out to be financially disadvantageous to them will not relieve them of their obligations
therein. The lack of an inventory of real property will not ipso facto release the contracting partners
from their respective obligations to each other arising from acts executed in accordance with their
agreement.
The Case
The Petition for Review on Certiorari before us assails the March 5, 1998 Decision 1 of the Court of
Appeals 2 (CA) in CA-GR CV No. 42378 and its June 25, 1998 Resolution denying reconsideration.
The assailed Decision affirmed the ruling of the Regional Trial Court (RTC) of Cebu City in Civil Case
No. R-21208, which disposed as follows:
WHEREFORE, for all the foregoing considerations, the Court, finding for the defendant
and against the plaintiffs, orders the dismissal of the plaintiffs complaint. The
counterclaims of the defendant are likewise ordered dismissed. No pronouncement as to
costs. 3

The Facts
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture
agreement" with Respondent Manuel Torres for the development of a parcel of land into a
subdivision. Pursuant to the contract, they executed a Deed of Sale covering the said parcel of land
in favor of respondent, who then had it registered in his name. By mortgaging the property,
respondent obtained from Equitable Bank a loan of P40,000 which, under the Joint Venture

Agreement, was to be used for the development of the subdivision. 4 All three of them also agreed to
share the proceeds from the sale of the subdivided lots.
The project did not push through, and the land was subsequently foreclosed by the bank.
According to petitioners, the project failed because of "respondent's lack of funds or means and
skills." They add that respondent used the loan not for the development of the subdivision, but in
furtherance of his own company, Universal Umbrella Company.
On the other hand, respondent alleged that he used the loan to implement the Agreement. With the
said amount, he was able to effect the survey and the subdivision of the lots. He secured the Lapu
Lapu City Council's approval of the subdivision project which he advertised in a local newspaper. He
also caused the construction of roads, curbs and gutters. Likewise, he entered into a contract with
an engineering firm for the building of sixty low-cost housing units and actually even set up a model
house on one of the subdivision lots. He did all of these for a total expense of P85,000.
Respondent claimed that the subdivision project failed, however, because petitioners and their
relatives had separately caused the annotations of adverse claims on the title to the land, which
eventually scared away prospective buyers. Despite his requests, petitioners refused to cause the
clearing of the claims, thereby forcing him to give up on the project. 5
Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, who were
however acquitted. Thereafter, they filed the present civil case which, upon respondent's motion,
was later dismissed by the trial court in an Order dated September 6, 1982. On appeal, however, the
appellate court remanded the case for further proceedings. Thereafter, the RTC issued its assailed
Decision, which, as earlier stated, was affirmed by the CA.
Hence, this Petition. 6
Ruling of the Court of Appeals
In affirming the trial court, the Court of Appeals held that petitioners and respondent had formed a
partnership for the development of the subdivision. Thus, they must bear the loss suffered by the
partnership in the same proportion as their share in the profits stipulated in the contract. Disagreeing
with the trial court's pronouncement that losses as well as profits in a joint venture should be
distributed equally, 7 the CA invoked Article 1797 of the Civil Code which provides:
Art. 1797 The losses and profits shall be distributed in conformity with the agreement.
If only the share of each partner in the profits has been agreed upon, the share of each in
the losses shall be in the same proportion.

The CA elucidated further:

In the absence of stipulation, the share of each partner in the profits and losses shall be
in proportion to what he may have contributed, but the industrial partner shall not be
liable for the losses. As for the profits, the industrial partner shall receive such share as
may be just and equitable under the circumstances. If besides his services he has
contributed capital, he shall also receive a share in the profits in proportion to his capital.

The Issue
Petitioners impute to the Court of Appeals the following error:
. . . [The] Court of Appeals erred in concluding that the transaction
. . . between the petitioners and respondent was that of a joint venture/partnership,
ignoring outright the provision of Article 1769, and other related provisions of the Civil
Code of the Philippines. 8

The Court's Ruling

The Petition is bereft of merit.

Main Issue:
Existence of a Partnership
Petitioners deny having formed a partnership with respondent. They contend that the Joint Venture
Agreement and the earlier Deed of Sale, both of which were the bases of the appellate court's
finding of a partnership, were void.
In the same breath, however, they assert that under those very same contracts, respondent is liable
for his failure to implement the project. Because the agreement entitled them to receive 60 percent
of the proceeds from the sale of the subdivision lots, they pray that respondent pay them damages
equivalent to 60 percent of the value of the property. 9
The pertinent portions of the Joint Venture Agreement read as follows:
KNOW ALL MEN BY THESE PRESENTS:
This AGREEMENT, is made and entered into at Cebu City, Philippines, this 5th day of
March, 1969, by and between MR. MANUEL R. TORRES, . . . the FIRST PARTY,
likewise, MRS. ANTONIA B. TORRES, and MISS EMETERIA BARING, . . . the SECOND
PARTY:

WITNESSETH:
That, whereas, the SECOND PARTY, voluntarily offered the FIRST PARTY, this property
located at Lapu-Lapu City, Island of Mactan, under Lot No. 1368 covering TCT No. T0184 with a total area of 17,009 square meters, to be sub-divided by the FIRST PARTY;
Whereas, the FIRST PARTY had given the SECOND PARTY, the sum of: TWENTY
THOUSAND (P20,000.00) Pesos, Philippine Currency upon the execution of this contract
for the property entrusted by the SECOND PARTY, for sub-division projects and
development purposes;
NOW THEREFORE, for and in consideration of the above covenants and promises
herein contained the respective parties hereto do hereby stipulate and agree as follows:
ONE: That the SECOND PARTY signed an absolute Deed of Sale . . . dated March 5,
1969, in the amount of TWENTY FIVE THOUSAND FIVE HUNDRED THIRTEEN &
FIFTY CTVS. (P25,513.50) Philippine Currency, for 1,700 square meters at ONE [PESO]
& FIFTY CTVS. (P1.50) Philippine Currency, in favor of the FIRST PARTY, but the
SECOND PARTY did not actually receive the payment.
SECOND: That the SECOND PARTY, had received from the FIRST PARTY, the
necessary amount of TWENTY THOUSAND (P20,000.00) pesos, Philippine currency, for
their personal obligations and this particular amount will serve as an advance payment
from the FIRST PARTY for the property mentioned to be sub-divided and to be deducted
from the sales.
THIRD: That the FIRST PARTY, will not collect from the SECOND PARTY, the interest
and the principal amount involving the amount of TWENTY THOUSAND (P20,000.00)
Pesos, Philippine Currency, until the sub-division project is terminated and ready for sale
to any interested parties, and the amount of TWENTY THOUSAND (P20,000.00) pesos,
Philippine currency, will be deducted accordingly.
FOURTH: That all general expense[s] and all cost[s] involved in the sub-division project
should be paid by the FIRST PARTY, exclusively and all the expenses will not be
deducted from the sales after the development of the sub-division project.
FIFTH: That the sales of the sub-divided lots will be divided into SIXTY PERCENTUM
60% for the SECOND PARTY and FORTY PERCENTUM 40% for the FIRST PARTY, and
additional profits or whatever income deriving from the sales will be divided equally
according to the . . . percentage [agreed upon] by both parties.

SIXTH: That the intended sub-division project of the property involved will start the work
and all improvements upon the adjacent lots will be negotiated in both parties['] favor and
all sales shall [be] decided by both parties.
SEVENTH: That the SECOND PARTIES, should be given an option to get back the
property mentioned provided the amount of TWENTY THOUSAND (P20,000.00) Pesos,
Philippine Currency, borrowed by the SECOND PARTY, will be paid in full to the FIRST
PARTY, including all necessary improvements spent by the FIRST PARTY, and-the
FIRST PARTY will be given a grace period to turnover the property mentioned above.
That this AGREEMENT shall be binding and obligatory to the parties who executed same
freely and voluntarily for the uses and purposes therein stated. 10

A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership
pursuant to Article 1767 of the Civil Code, which provides:
Art. 1767. By the 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.

Under the above-quoted Agreement, petitioners would contribute property to the partnership in the
form of land which was to be developed into a subdivision; while respondent would give, in addition
to his industry, the amount needed for general expenses and other costs. Furthermore, the income
from the said project would be divided according to the stipulated percentage. Clearly, the contract
manifested the intention of the parties to form a partnership. 11
It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title
to the land to facilitate its use in the name of the respondent. On the other hand, respondent caused
the subject land to be mortgaged, the proceeds of which were used for the survey and the
subdivision of the land. As noted earlier, he developed the roads, the curbs and the gutters of the
subdivision and entered into a contract to construct low-cost housing units on the property.
Respondent's actions clearly belie petitioners' contention that he made no contribution to the
partnership. Under Article 1767 of the Civil Code, a partner may contribute not only money or
property, but also industry.
Petitioners Bound by
Terms of Contract
Under Article 1315 of the Civil Code, contracts bind the parties not only to what has been expressly
stipulated, but also to all necessary consequences thereof, as follows:
Art. 1315. Contracts are perfected by mere consent, and from that moment the parties
are bound not only to the fulfillment of what has been expressly stipulated but also to all
the consequences which, according to their nature, may be in keeping with good faith,
usage and law.

It is undisputed that petitioners are educated and are thus presumed to have understood the terms
of the contract they voluntarily signed. If it was not in consonance with their expectations, they
should have objected to it and insisted on the provisions they wanted.
Courts are not authorized to extricate parties from the necessary consequences of their acts, and
the fact that the contractual stipulations may turn out to be financially disadvantageous will not
relieve parties thereto of their obligations. They cannot now disavow the relationship formed from
such agreement due to their supposed misunderstanding of its terms.
Alleged Nullity of the
Partnership Agreement

Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code,
which provides:
Art. 1773. A contract of partnership is void, whenever immovable property is contributed
thereto, if an inventory of said property is not made, signed by the parties, and attached
to the public instrument.

They contend that since the parties did not make, sign or attach to the public instrument an inventory
of the real property contributed, the partnership is void.
We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent
Arturo M. Tolentino states that under the aforecited provision which is a complement of Article
1771, 12 "The execution of a public instrument would be useless if there is no inventory of the
property contributed, because without its designation and description, they cannot be subject to
inscription in the Registry of Property, and their contribution cannot prejudice third persons. This will
result in fraud to those who contract with the partnership in the belief [in] the efficacy of the guaranty
in which the immovables may consist. Thus, the contract is declared void by the law when no such
inventory is made." The case at bar does not involve third parties who may be prejudiced.
Second, petitioners themselves invoke the allegedly void contract as basis for their claim that
respondent should pay them 60 percent of the value of the property. 13 They cannot in one breath
deny the contract and in another recognize it, depending on what momentarily suits their purpose.
Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate, much
less approve, such practice.
In short, the alleged nullity of the partnership will not prevent courts from considering the Joint
Venture Agreement an ordinary contract from which the parties' rights and obligations to each other
may be inferred and enforced.
Partnership Agreement Not the Result
of an Earlier Illegal Contract
Petitioners also contend that the Joint Venture Agreement is void under Article 1422 14 of the Civil
Code, because it is the direct result of an earlier illegal contract, which was for the sale of the land
without valid consideration.
This argument is puerile. The Joint Venture Agreement clearly states that the consideration for the
sale was the expectation of profits from the subdivision project. Its first stipulation states that
petitioners did not actually receive payment for the parcel of land sold to respondent. Consideration,
more properly denominated as cause, can take different forms, such as the prestation or promise of
a thing or service by another. 15
In this case, the cause of the contract of sale consisted not in the stated peso value of the land, but
in the expectation of profits from the subdivision project, for which the land was intended to be used.
As explained by the trial court, "the land was in effect given to the partnership as [petitioner's]
participation therein. . . . There was therefore a consideration for the sale, the [petitioners] acting in
the expectation that, should the venture come into fruition, they [would] get sixty percent of the net
profits."
Liability of the Parties
Claiming that rerpondent was solely responsible for the failure of the subdivision project, petitioners
maintain that he should be made to pay damages equivalent to 60 percent of the value of the
property, which was their share in the profits under the Joint Venture Agreement.
We are not persuaded. True, the Court of Appeals held that petitioners' acts were not the cause of
the failure of the project. 16 But it also ruled that neither was respondent responsible therefor. 17 In
imputing the blame solely to him, petitioners failed to give any reason why we should disregard the
factual findings of the appellate court relieving him of fault. Verily, factual issues cannot be resolved

in a petition for review under Rule 45, as in this case. Petitioners have not alleged, not to say shown,
that their Petition constitutes one of the exceptions to this doctrine. 18 Accordingly, we find no
reversible error in the CA's ruling that petitioners are not entitled to damages.
WHEREFORE, the Perition is hereby DENIED and the challenged Decision AFFIRMED. Costs
against petitioners.
SO ORDERED

OBLIGATORINESS * CONSENSUALITY OF CONTRACTS

More than anything else, the parties, by a solemn document freely and voluntarily agreed upon by
them, agreed to be bound by the report of the commission and approved by the trial court. The
agreement is a contract between the parties. It has the force of law between them and should be
complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly provides:

Art. 1159. Obligations arising from contracts have

the force of law between the contracting parties
and should be complied with in good faith.
Art. 1315. Contracts are perfected by mere
consent, and from that moment the parties are
bound not only to the fulfillment of what has been
expressly stipulated but also to all the
consequences which, according to their nature,
may be in keeping with good faith, usage and law.
Furthermore, during the hearing on 22 November 1996, petitioner did not interpose a serious
objection.11 It is therefore too late for petitioner to question the valuation now without violating the
principle of equitable estoppel. 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.12 Records show that petitioner consented to conform with the valuation recommended by the
commissioners. It cannot detract from its agreement now and assail correctness of the
commissioners' assessment.1wphi1.nt
Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be
determined at the time of the filing of the complaint for expropriation, 13 such law cannot prevail over
R.A. 7160, which is a substantive law. 14

AUTONOMY OF CONTRACTS

ART. 1306. The contracting parties may establish such

stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public
policy.
The subordinate position of the individual employee vis-a-vis management renders him especially
vulnerable to its blandishments and importunings, and even intimidations, that may result in his
improvidently if reluctantly signing over benefits to which he is clearly entitled. Recognizing this
danger, we have consistently held that quitclaims of the workers' benefits win not estop them from
asserting them just the same on the ground that public policy prohibits such waivers.

That the employee has signed a satisfaction receipt does not result in a waiver; the law
does not consider as valid any agreement to receive less compensation than what a
worker is entitled to recover. A deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled. 8
Release and quitclaim is inequitable and incongruous to the declared public policy of the
State to afford protection to labor and to assure the rights of workers to security of tenure.

MUTUALITY OF CONTRACTS

MUTUALITY OF CONTRACTS
In Philippine National Bank v. Court of Appeals, et al., 196
SCRA 536, 544-545 (1991) we held
. . . The unilateral action of the PNB in increasing
the interest rate on the private respondent's loan
violated the mutuality of contracts ordained in
Article 1308 of the Civil Code:
Art. 1308. The contract must bind both
contracting parties; its validity or
compliance cannot be left to the will of
one of them.
In order that obligations arising from contracts
may have the force or law between the parties,
there must be mutuality between the parties

based on their essential equality. A contract

containing a condition which makes its fulfillment
dependent exclusively upon the uncontrolled will
of one of the contracting parties, is void . . . .
Hence, even assuming that
the . . . loan agreement between the PNB and the
private respondent gave the PNB a license
(although in fact there was none) to increase the
interest rate at will during the term of the loan,
that license would have been null and void for
being violative of the principle of mutuality
essential in contracts. It would have invested the
loan agreement with the character of a contract
of adhesion, where the parties do not bargain on
equal footing, the weaker party's (the debtor)
participation being reduced to the alternative "to
take it or leave it" . . . . Such a contract is a
veritable trap for the weaker party whom the
courts of justice must protect against abuse and
imposition. (Citation omitted.)
RELATIVITY OF CONTRACTS
Art. 1311 of the Civil Code provides, as follows

Art. 1311. Contracts take effect only between the

parties, their assigns and heirs, except in case
where the rights and obligations arising from the
contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is
not liable beyond the value of the property he
received from the decedent.
xxx

xxx

xxx

The general rule, therefore, is that heirs are bound by contracts entered into by their predecessorsin-interest except when the rights and obligations arising therefrom are not transmissible by (1) their
nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making the rights and
obligations under the contract intransmissible. More importantly, the nature of the rights and
obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as
follows:

Among contracts which are intransmissible are those which are purely personal, either by
provision of law, such as in cases of partnerships and agency, or by the very nature of the
obligations arising therefrom, such as those requiring special personal qualifications of the
obligor. It may also be stated that contracts for the payment of money debts are not
transmitted to the heirs of a party, but constitute a charge against his estate. Thus, where the
client in a contract for professional services of a lawyer died, leaving minor heirs, and the
lawyer, instead of presenting his claim for professional services under the contract to the
probate court, substituted the minors as parties for his client, it was held that the contract
could not be enforced against the minors; the lawyer was limited to a recovery on the basis
of quantum meruit.9

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special
knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal
qualification of one or both parties, the agreement is of a personal nature, and terminates on the
death of the party who is required to render such service."

10

It has also been held that a good measure for determining whether a contract terminates upon the
death of one of the parties is whether it is of such a character that it may be performed by the
promissor's personal representative. Contracts to perform personal acts which cannot be as well
performed by others are discharged by the death of the promissor. Conversely, where the service or
act is of such a character that it may as well be performed by another, or where the contract, by its
terms, shows that performance by others was contemplated, death does not terminate the contract
or excuse nonperformance.

11

In the case at bar, there is no personal act required from the late Encarnacion Bartolome. Rather, the
obligation of Encarnacion in the contract to deliver possession of the subject property to petitioner
upon the exercise by the latter of its option to lease the same may very well be performed by her heir
Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs."

12

In 1952, it

was ruled that if the predecessor was duty-bound to reconvey land to another, and at his death the
reconveyance had not been made, the heirs can be compelled to execute the proper deed for
reconveyance. This was grounded upon the principle that heirs cannot escape the legal

consequence of a transaction entered into by their predecessor-in-interest because they have

inherited the property subject to the liability affecting their common ancestor.

13

It is futile for Victor to insist that he is not a party to the contract because of the clear provision of
Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there is privity of interest
between him and his deceased mother. He only succeeds to what rights his mother had and what is
valid and binding against her is also valid and binding as against him.
from Paraaque Kings Enterprises vs. Court of Appeals,

15

14

This is clear

where this Court rejected a similar

defense

With respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have
violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the
shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the
obligations of the lessor under the lease contract. Moreover, he received benefits in the form
of rental payments. Furthermore, the complaint, as well as the petition, prayed for the
annulment of the sale of the properties to him. Both pleadings also alleged collusion between
him and respondent Santos which defeated the exercise by petitioner of its right of first
refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a necessary,
if not indispensable, party to the case. A favorable judgment for the petitioner will necessarily
affect the rights of respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.

In the case at bar, the subject matter of the contract is likewise a lease, which is a property right. The
death of a party does not excuse nonperformance of a contract which involves a property right, and
the rights and obligations thereunder pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other party has a property
interest in the subject matter of the contract. 16
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the subject
Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had complied with its obligations
under the contract and with the requisites to exercise its option. The payment by petitioner of the
reservation fees during the two-year period within which it had the option to lease or purchase the
property is not disputed. In fact, the payment of such reservation fees, except those for February and
March, 1990 were admitted by Victor. 17 This is clear from the transcripts, to wit

ATTY. MOJADO:

One request, Your Honor. The last payment which was allegedly made in January 1990 just
indicate in that stipulation that it was issued November of 1989 and postdated January 1990
and then we will admit all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There was no payment with respect to payment of rentals.

18

Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing the
same in China Bank Savings Account No. 1-04-02558-I-1, in the name of Victor as the sole heir of
Encarnacion Bartolome, 19 for the months of March to July 30, 1990, or a total of five (5) months,
despite the refusal of Victor to turn over the subject property.

20

Likewise, petitioner complied with its duty to inform the other party of its intention to exercise its
option to lease through its letter dated Match 12, 1990,

21

well within the two-year period for it to

exercise its option. Considering that at that time Encarnacion Bartolome had already passed away, it
was legitimate for petitioner to have addressed its letter to her heir.1wphi1
It appears, therefore, that the exercise by petitioner of its option to lease the subject property was
made in accordance with the contractual provisions. Concomitantly, private respondent Victor
Bartolome has the obligation to surrender possession of and lease the premises to petitioner for a
period of six (6) years, pursuant to the Contract of Lease with Option to Buy.
Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the present
petition. We note that the Motion to Intervene and to Dismiss of the alleged tenant, Andres Lanozo,
was denied by the lower court and that such denial was never made the subject of an appeal. As the
lower court stated in its Order, the alleged right of the tenant may well be ventilated in another
proceeding in due time.
WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional Trial Court of Valenzuela
in Civil Case No. 3337-V-90 are both SET ASIDE and a new one rendered ordering private
respondent Victor Bartolome to:

(a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of
Title No. V-14249 by way of lease to petitioner and to perform all obligations of his
predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease with
Option to Buy;

(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent
Register of Deeds for registration and annotation thereon of the subject Contract of Lease
with Option to Buy;
(c) pay costs of suit.

Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject Contract
of Lease with Option to Buy at the back of Transfer Certificate of Title No. V-14249 upon submission
by petitioner of a copy thereof to his office.
SO ORDERED.

reciprocal obligations
In our view, the crucial issues for resolution in this case are as follows:

(1) Whether or not private respondent violated the order agreement, and;
(2) Whether or not private respondent is liable for petitioner's breach of contract with
Philacor.

Petitioner's contention lacks factual and legal basis, hence, bereft of merit.
Petitioner contends, firstly, that private respondent violated the order agreement when the latter failed
to deliver the balance of the printing paper on the dates agreed upon.
The transaction between the parties is a contract of sale whereby private respondent (seller)
obligates itself to deliver printing paper to petitioner (buyer) which, in turn, binds itself to pay therefor
a sum of money or its equivalent (price).6Both parties concede that the order agreement gives rise to
a reciprocal obligations7 such that the obligation of one is dependent upon the obligation of the

Reciprocal obligations are to be performed

simultaneously, so that the performance of one is
conditioned upon the simultaneous fulfillment of the
other.8Thus, private respondent undertakes to deliver printing paper of various quantities subject
other.

to petitioner's corresponding obligation to pay, on a maximum 90-day credit, for these materials. Note
that in the contract, petitioner is not even required to make any deposit, down payment or advance
payment, hence, the undertaking of private respondent to deliver the materials is conditional upon
payment by petitioner within the prescribed period. Clearly, petitioner did not fulfill its side of the
contract as its last payment in August 1981 could cover only materials covered by delivery invoices
dated September and October 1980.
There is no dispute that the agreement provides for the delivery of printing paper on different dates
and a separate price has been agreed upon for each delivery. It is also admitted that it is the
standard practice of the parties that the materials be paid within a minimum period of thirty (30) days
and a maximum of ninety (90) days from each delivery. 9Accordingly, the private respondent's

suspension of its deliveries to petitioner whenever the latter failed to pay on time, as in this case, is
legally justified under the second paragraph of Article 1583 of the Civil Code which provides that:

When there is a contract of sale of goods to be delivered by stated installments, which are to
be separately paid for, and the seller makes defective deliveries in respect of one or more
installments, or the buyer neglects or refuses without just cause to take delivery of or pay for
one or more installments, it depends in each case on the terms of the contract and the
circumstances of the case, whether the breach of contract is so material as to justify the
injured party in refusing to proceed further and suing for damages for breach of the entire
contract, or whether the breach is severable, giving rise to a claim for compensation but not
to a right to treat the whole contract as broken. (Emphasis supplied)

In this case, as found a quo petitioner's evidence failed to establish that it had paid for the printing
paper covered by the delivery invoices on time. Consequently, private respondent has the right to
cease making further delivery, hence the private respondent did not violate the order agreement. On
the contrary, it was petitioner which breached the agreement as it failed to pay on time the materials
delivered by private respondent. Respondent appellate court correctly ruled that private respondent
did not violate the order agreement.
On the second assigned error, petitioner contends that private respondent should be held liable for
petitioner's breach of contract with Philacor. This claim is manifestly devoid of merit.
As correctly held by the appellate court, private respondent cannot be held liable under the contracts
entered into by petitioner with Philacor. Private respondent is not a party to said agreements.

It is

also not a contract pour autrui. Aforesaid contracts could not affect third
persons like private respondent because of the basic civil law principle of relativity of contracts which
provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice
a third person, 10 even if he is aware of such contract and has acted with knowledge thereof. 11
Indeed, the order agreement entered into by petitioner and private respondent has not been shown
as having a direct bearing on the contracts of petitioner with Philacor. As pointed out by private
respondent and not refuted by petitioner, the paper specified in the order agreement between
petitioner and private respondent are markedly different from the paper involved in the contracts of
petitioner with Philacor. 12 Furthermore, the demand made by Philacor upon petitioner for the latter to
comply with its printing contract is dated February 15, 1984, which is clearly made long after private
respondent had filed its complaint on August 14, 1981. This demand relates to contracts with
Philacor dated April 12, 1983 and May 13, 1983, which were entered into by petitioner after private
respondent filed the instant case.lawphi1
To recapitulate, private respondent did not violate the order agreement it had with petitioner.
Likewise, private respondent could not be held liable for petitioner's breach of contract with Philacor.
It follows that there is no basis to hold private respondent liable for damages. Accordingly, the
appellate court did not err in deleting the damages awarded by the trial court to petitioner.
The rule on compensatory damages is well established. True, indemnification for damages
comprehends not only the loss suffered, that is to say actual damages (damnum emergens), but also
profits which the obligee failed to obtain, referred to as compensatory damages (lucrum cessans).
However, to justify a grant of actual or compensatory damages, it is necessary to prove with a
reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable

by the injured party, the actual amount of loss. 13 In the case at bar, the trial court erroneously
concluded that petitioner could have sold books to Philacor at the quoted selling price of
P1,850,750.55 and by deducting the production cost of P1,060,426.20, petitioner could have earned
profit of P790,324.30. Admittedly, the evidence relied upon by the trial court in arriving at the amount
are mere estimates prepared by petitioner. 14 Said evidence is highly speculative and manifestly
hypothetical. It could not provide sufficient legal and factual basis for the award of P790,324.30 as
compensatory damages representing petitioner's self-serving claim of unrealized profit.
Further, the deletion of the award of moral damages is proper, since private respondent could not be
held liable for breach of contract. Moral damages may be awarded when in a breach of contract the
defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligation. 15 Finally, since the award of moral damages is eliminated, so
must the award for attorney's fees be also deleted. 16
WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals is AFFIRMED.
Costs against petitioner.

G.R. No. 115117

June 8, 2000

INTEGRATED PACKAGING CORP., petitioner,

vs. COURT OF APPEALS and FIL-ANCHOR PAPER CO., INC., respondents.

CONTRACTS

Stages in the life of a contract:

1.

Preparation/Generation

2.

Perfection/Birth

3.

Consummation/Death

Characteristics of Contracts: (ROMA)

1. Relativity (Art. 1311)

2. Obligatoriness & Consensuality (Art. 1315)
3. Mutuality (Art. 1308)
4. Autonomy (Art. 1306)

Stipulation pour Autrui - stipulation in favor of a 3rd party.

Requisites:
1. The stipulation must be part, not whole of the contract;
2. the contracting parties must have clearly and deliberately conferred a favor upon a 3 rd person;
3. the 3rd person must have communicate his acceptance;
4. neither of the contracting parties bears the legal representation of the 3rd party.

General Rule: Contracts (except real contracts) are perfected from the moment there is a
manifestation of concurrence between the offer and the acceptance regarding the object and the
cause.
Except: Acceptance by letter or telegram which does not bind the offerror except from the time it
came to his knowledge.

Theories applied to perfection of contracts:

1.

Manifestation theory - the contract is perfected from the moment the acceptance is declared or
made;

2.

Expedition theory - the contract is perfected from the moment the offeree transmits the notification
of acceptance to the offerror;

3.

Reception theory - the contract is perfected from the moment that the notification of acceptance is in
the hands of the offerror;

4.

Cognition theory - the contract is perfected from the moment the acceptance comes to the
knowledge of the offerror. This is the theory adopted in the Philippines.

Persons incapacitated to give consent:

1.

Unemancipated minors;

Except:

Contracts for necessaries;

Contracts by guardians or legal representatives;

Contracts where the minor is estopped to urge minority through his own misrepresentation;

Contracts of deposit with the Postal Savings Bank provided that the minor is over 7 years of age.

2.

Insane or demented persons unless the contract was entered into during a lucid interval;

3.

Deaf-mutes who do not know how to write.

The following may not acquire by purchase, even by public or judicial auction, in person
of though the mediation of another:

1. the guardian, with respect to the property of his ward;

2. agents, with respect to the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
3. executor or administrator, the property of the estate under administration;
4. public officers and employees, with respect to the properties of the government, its political
subdivisions, GOCCs, that are entrusted to them;
5. judges, justices, prosecuting atty.s, clerks of courts, etc., the property in custogia legis; and
6. any other person specially disqualified by law.

Simulation of a contract

Kinds of simulation:

1.

Absolute - no real transaction is intended;

Effect: simulated contract is

2.

inexistent.

Relative - the real transaction is hidden;

Effect: the apparent contract is void, but the hidden contract is valid if it is lawful and has the
necessary requisites.
: as to third persons without notice - the apparent contract is valid on the principle of
estoppel.

Effect of:
Absence of cause the contract confers
no right and
produces no legal
effect
Failure of cause

does not render the

contract void

Illegality of cause the contract is null

and void
Falsity of cause

the contract is void

unless the parties
can show that there
is another cause
which is true and

lawful
Lesion

does not invalidate

the contract unless:
there is fraud,
mistake or undue
influence
when the parties
intended a donation
or some other
contract.

Form of Contracts

Rules:

1. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the
essential requisites for their validity are present.
2. Contracts must be in a certain form when the law requires that a contract be in some form to be:

valid;

enforceable;

for the convenience of the parties.

3. The parties may compel each other to reduce the verbal agreements to writing except:

Solemn contracts such as the following:

a. Donations of real estate or of movables if exceeding Ps 5,000;

b. Transfer of large cattle
c. Stipulation to pay interest in loans
d. Sale of land through an agent (authority must be in writing)
e. Partnership to which immovables are contributed
f.

Stipulation limiting carriers liability to less than extra-ordinary diligence

g. Contracts of antichresis
h. Sale of vessels

Note: in such case, if the contract

is not in writing it is VOID

Real contracts that require delivery for perfection.

In contracts under the Statute of Frauds where the party sued makes a timely objection to the
absence of a written memorandum.

Reformation of instruments:

Requisites:

1.
2.
3.

Meeting of the minds to the contract;

The true intention is not expressed in the instrument by reason of mistake, accident, relative
simulation, fraud, inequitable conduct (MARFI).
Clear and convincing proof of MARFI.

Cases when there can be no reformation:

1.

Simple, unconditional donations inter vivos;

2.

Wills;

3.

When the agreement is void.

Classes of Defective Contracts: (RUVI)

1.

Rescissible

2.

Unenforceable

3.

Voidable

4.

Void or Inexistent

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS:

VOID
1.

defect is caused by

VOIDABLE
defect is caused by

RESCISSIBLE
defect is caused by

UNENFORCE-ABLE
defect is caused by

lack of essential
vice of consent
elements or illegality
2.

not cured by
prescription

3.

cannot be ratified

4.

not binding

injury/ damage either lack of form, authority,

to one of the parties of or capacity of both
to a 3rdperson
parties

cured by prescription not cured by

prescription
need not be ratified
can be ratified
cured by prescription binding unless
rescinded
can be ratified

binding until annulled

binding unless the

defect is raised
against enforcement.

RESCISSIBLE CONTRACTS

Contracts which may be rescinded:

1.

those entered into by guardians where the ward suffers lesion of more than of the value of the
things which are objects thereof;

2.

those agreed upon in representation of absentees, if the latter suffer lesion by more than of the
value of the things which are subject thereof;

3.

those undertaken in fraud of creditors when

the latter cannot in any manner claim what are due them;

4.

those which refer to things under litigation if they have been entered into by the defendant without
the knowledge and approval of the litigants and the court;

5.

all other contracts especially declared by law to be subject to rescission;

6.

payments made in a state of insolvency on account of obligations not yet enforceable;

Circumstances denominated as badges of fraud:

1.

consideration of the conveyance is inadequate or fictitious;

2.

transfer was made by a debtor after a suit has been begun and while it is pending against him;

3.

sale upon credit by an insolvent debtor;

4.

transfer of all his property by a debtor when he is financially embarrassed or insolvent;

5. transfer is made between father and son, where there are present some or any of the above
circumstances;
6. failure of the vendee to take exclusive possession of the property;

Distinctions:

RESCISSION

RESOLUTION
(Art. 1191)

1. Action by the
Action only by the
contracting parties injured party;
even by a 3rd party;
2. based on
lesion/fraud of
creditors;

based on nonfulfillment of the

obligation;

3. courts cannot grant

courts may grant
periods for
periods
compliance

VOIDABLE CONTRACTS

Causes of extinction of action to annul:

1.

Prescription

the action must be commenced within 4 years from:

the time the incapacity ends;

the time the violence, intimidation or undue influence ends;

the time the mistake or fraud is discovered.

2. Ratification

Requisites:

a. there must be knowledge of the reason which renders the contract voidable;
b. such reason must have ceased;
c. the injured party must have executed an act which expressly or impliedly conveys an intention to
waive his right.
3. By loss of the thing which is the object of the contract through fraud or fault of the person who is
entitled to annul the contract.
UNENFORCEABLE CONTRACTS

Kinds of unenforceable contracts:

1. those entered into in the name of another by one without or acting in excess of authority;
2. those where both parties are incapable of giving consent;
3. those which do not comply with the Statute of Frauds.

Agreements within the scope of the Statute of Frauds:

1. Agreements not to be performed within one year from the making thereof;
2. Promise to answer for the debt, default or miscarriage of another;
3. Agreement in consideration of marriage other than a mutual promise to marry;
4. Agreement for the sale of goods, etc. at a price not less than Ps500.00
5. Contracts of lease for a period longer than one year;
6. Agreements for the sale of real property or interest therein;
7. Representation as to the credit of a 3rd person.

Modes of Ratification:
1. For contracts infringing the Statute of Frauds:

expressly

impliedly - by failure to object to the presentation of oral evidence to prove the contract, or by the
acceptance of benefits under the contract.

2. If both parties are incapacitated, ratification by their parents or guardians shall validate the contract
retroactively.

VOID OR INEXISTENT CONTRACTS

The following contracts are void:

1.

Those whose cause, object or purpose is contrary to law, morals good customs, public order or
public policy;

2.

Those whose object is outside the commerce of men;

3.

Those which contemplate an impossible service;

4.
5.

Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
Those expressly prohibited or declared void by law;

The following contracts are inexistent:

1.

Those which are absolutely simulated or fictitious;

2.

Those whose cause or object did not exist at the time of the transaction.

CONTRACTS

Art 1305

ELEMENTS OF A CONTRACT

1.

Essential Elements
1.Consent
2.Subject Matter
3.Cause or Consideration

2.

Natural Elements- presumed to exist, unless the contrary is stipulated

Ex. Warrants against eviction and against hidden defects

3.

Accidental Elements existence of such is dependent on the agreement of the parties.

Classification of Contracts
1.
1.
2.
3.

According to perfection or formation

Consensual
Real-perfected by delivery
Formal or Solemn

2.
1.
2.
3.

According to cause of equivalence of the value of prestations:

Onerous
Gratuitous or Lucrative
Remunerative

3.
1.
2.
3.

According to Importance or dependence of one upon another

Principal can stand alone
Accessory depends upon the existence of another contract
Preparatory here, the parties do not consider the contract as an end by itself, but
as a means thru which future transaction or contracts may be made
Ex. Agency, partnership

4.
1.
2.

According to the parties obligated

Unilateral
Bilateral

5.
1.
2.

According to their Name or Designation

Nominate
Innominate

6.
1.
2.

According to the risk of fulfillment

Commutative
Alienatory

7.
1.
2.

According to the time of performance or fulfillment

Executed- one completed at the time the contract is entered into
Executory one where the prestations are to be complied with at some future time

8.
1.
2.
3.

According to subject matter

Contracts involving things
Contracts involving rights or credit
Contracts involving services

9.
1.
2.

According to obligations imposed and required by law

Ordinary
Institutional-like contract of marriage

10.
1.
2.

According to the evidence required for its proof

Those requiring merely oral or parol evidence
Those requiring written proof

11.
1.
2.

According to the number of persons actually and physically entering into the contracts
Ordinary two parties are represented by different persons
Auto Contracts where only one person represents two opposite parties, but in
different capacities

12.
1.
2.

According to the number of persons who participated in the drafting of the contract
Ordinary
Contract of Adherence

13.
1.
2.

According to the nature of the contract

Personal
Impersonal

STAGES OF A CONTRACT
1.
2.
3.

Preparation
Perfection
Consummation (or death or termination)

Basic Principles or Characteristics of a Contract

1.
2.
3.
4.
5.

Freedom to stipulate
Obligatory force and compliance in good faith
Perfection by mere consent
Both parties are mutually bound
Relativity

Art 1306 Freedom or autonomy of contract

Art 1307

Four Kinds of Innominate Contracts

1.
2.
3.
4.

Du ut des (I give that you may give)

Do ut facias (I give that you may do)
Facio ut des (I do that you may give)
Facio ut facias (I do that you may do)
Art 1308-1310

MUTUALITY OF CONTRACTS

The validity or fulfillment of a contract cannot be left to the will of one of the contracting
parties.

The validity or fulfillment may be left to the will of a third person.

The validity or fulfillment may be left to chance.
Art 1311

This principle stresses the Principle of Relativity.

Contracts are generally effective only between the parties, their assigns and their heirs.

Exceptions:
1.
2.
3.
4.
5.

Where the obligation arising from the contract are not transmissible by their nature, by
stipulation, or by provision of law.
Where there is stipulation pour atrui (a stipulation in favor of a third party)
Where a third person induces another to violate his contract
Where, in some cases, third persons may be adversely affected by a contract where they did
not participate.
Where the law authorizes the creditor to sue on a contract entered into by his debtor.
Art 1312

A real right binds the property over which it is exercised.

Exception to the general rule that a contract binds only the parties.

Art 1313

Right of defrauded creditor.

Art 1314
Requisites before a third person in this article can be held for damages

1.
2.
3.

Existence of a valid contract

Knowledge on the part of the third person of the existence of the contract
Interference by the third person without legal justification or excuse
Art 1315-1316

Perfection of contracts

Art 1317

Requisites for a Person to Contract in the Name of Another

a.

2.
3.

He must be duly authorized (expressly or impliedly)

Or he must have by law a right to represent him

Or the contract must be subsequently ratified
Art 1318

Requisites of Contracts
1.
2.
3.

Consent (Art 1319-46)

Object (Art 1347-1349)
Cause (Art 1350-55)
Art 1319

Definition of Consent
-Art 1319,first paragraph

Requisite of Consent
1.
2.
3.
4.

There must be two or more parties

The parties must be capable or incapacitated
There must be no vitiation of consent
There must be no conflict between what was expressly declared and what was really
intended
5.
The intent must be declared properly

Requisites for the meeting of minds

1.
2.

An offer that must be certain

And an acceptance must be unqualified and absolute

Concurrence of offer and acceptance (Art 1319-26)

Legal capacity of contracting parties (Art 1327-29)

Characteristics of Consent (Art 1330-46)
Art 1320

Forms of Acceptance

Art 1322
Acceptance of an Offer made thru an agent

Art 1323

Other instances when the offer becomes ineffective

a.

When the offeree expressly or impliedly rejects the offer

b.

When the offer is accepted with qualification or condition

c.

When before acceptance is communicated, the subject matter becomes illegal or impossible

d.

e.

When the period of time given to the offeree within which he must signify his acceptance has
already lapsed
When the offer is rejected in due tome

Art 1324

Option Contract
Option- it is a contract granting a person the privilege to buy or not to buy certain objects at anytime
within the agreed period at a fixed price

Perfection of Option
When there is a meeting of minds on the option

Art 1325-1326
If the advertisement contains all the specific particular needed in a contract, it is a definite
offer.
If important details are left out, the advertisement is not a definite offer, but a mere
invitation to make an offer.

Art 1327 in relation to Art 1329

Who cannot give consent.

Art 1328
Voidable contracts by reason of incapacity

Art 1330
This article enumerates causes or vices of consent.

Art 1331 in relation to Art 1333

Mistake
It is a false belief about something.

Requisites for mistake to vitiate consent

1.
2.
3.
4.
5.

Object of the contract

The condition which principally proved or induced one of the parties
Identify or qualifications, but only if such was the principal cause of the contract.
The error must be excusable
The error must be a mistake of fact

Kinds of Mistake
1.
1.
2.
3.
4.

Mistake as to the object

Mistake as the identity of the thing
Mistake as to the substance of the thing
Mistake as to the conditions of the thing
Mistake as to the quantity of the thing

2.
1.

Mistake as to person
Mistake must be either with regards to the identify or with regard to the qualification
of one of the contracting parties
2.
Such identity or qualification must have been the principal consideration for the
celebration of the contract

Art 1332
Burden of proof in case of mistake

Art 1333
Effect of knowledge of risk

Art 1334

Mistake of Law
Is that which arises from an ignorance of some provision of law, or from an erroneous
interpretation of its meaning, or from an erroneous conclusion as to the legal effect of the
agreement, on the part of one of the parties.

Requisites:
1.
2.
3.

There must be mutual error

The error must refer to the legal effect of the agreement
The real purpose of the parties is frustrated

Art 1335-1336
Violation refer to physical coercion
Intimidation refers to moral coercion

Requisites for violence to vitiate consent

1.
2.

Employment of serious or irresistible force

It must have been the reason why the contract was entered into

Requisites for intimidation to vitiate consent

1.
2.
3.

Reasonable and well-grounded fear

Of an imminent and grave evil
Upon his person, property, or upon the person of property of his spouse, descendents or
ascendants
4.
It must have been the reason why the contract was entered into
5.
The threat must be an unjust act, an actionable wrong

Art 1337
Requisites for undue influence to vitiate consent

1.
2.
3.

Improper advantage
Power over the will of another
Deprivation of the latters will of a reasonable freedom of choice

Art 1338-1341
Kinds of Fraud
1.
1.

Fraud in the celebration of the contract

Dolo Causante or causal fraud (Art 1338)

2.

Dolo Incidente of incidental fraud

2.

Fraud in the performance of the obligations stipulated in the contract

Requisites of Dolo Causante

1.
2.

The fraud must be material and serious

The fraud must have been employed by one of the contracting parties, because if
both committed fraud, the contract would remain valid
3.
There must be a deliberate intent to deceive to induce
4.
The other party must have relied on the untrue statement, and must himself not be
guilty of negligence in ascertaining the truth

Art 1342-1344
Speaks about misrepresentation

Art 1345-1346
Simulation

Simulation of a Contract defined

It is the process of intentionally deceiving others by producing the appearance of a contract that
really does not exist (absolute simulation)
Or which is different from the true agreement relative simulation.

Kinds
a.

Absolute; Effect; the contract is void

b.

Relative; Effect; the parties are bound to the real or true agreement except-

a.

If the contract should prejudice third persons

b.

Or if the purpose is contrary to law, morals, public order, policy or good customs

Requisites
a.

An outward declaration of will difference from the will of the parties

b.

The false appearance must have been intended by mutual agreement

c.

The purpose is to deceive third persons

Art 1347-1349
Objects (Subject Matter) of a contract
-

A thing or a service

Requisites
1.
2.
3.
4.
5.

The thing or service must be within the commerce of man

Must be transmissible
Must not be contrary to law, morals, good customs, public order, or public policy
Must not be impossible
Must be determinate as to its kind or determinate without the need of a new contract or
agreement

CAUSE OF CONTRACTS
Art 1350
Cause defined
-It is the essential and impelling reason why a party assumes an obligation

Art 1351
Motive is the purely personal or private reason which a party has in entering into a contract

Motive vs. Cause

Motive
1.
2.
3.

May vary although he enters into the same kind of contract

May be unknown to the other
The presence of motive

Cause
1.
2.
3.

Always the same

Always known
Cannot cure the absence of cause

Art 1352-1355
Requisites for cause
1.
2.
3.

It must be present
It must be true
It must be lawful
CHAPTER 3

FORM OF CONTRACTS

Art 1356
Meaning of form of contracts
-Refers to the manner in which a contract is executed or manifested

Rules regarding from of contracts (Art 1356)

Art 1357-1358
Principles regarding formalities for the efficacy of a contract

1.

2.
3.

4.
5.

Art 1357 and Art 1358 do not require the execution of a contract either in a public or private
instrument in order to validate enforce it but only to ensure its efficacy, so after its existence has
been admitted, the party bound may be compelled to execute the necessary document
Even where the contract has not been reduced to the required form, it is still valid and
binding as far as the parties are concerned
From the moment one of the contracting parties invokes the provisions of Art 1357 and
1358by means of a proper action, the effect is to place the existence of the contract in issue, which
must be resolved by the ordinary rules of evidence
Art 1357 does not require that the action to compel the execution of the necessary document
must precede the action upon the contract
However, although the provisions of Art 1357 in connection with those of Art 1358, do not
operate against the validity of the contract nor the validity of the acts voluntarily performed by the
parties for the fulfillment thereof, yet from the moments when any of the contracting parties invokes
said provisions, it is evident that under them the execution of the required document must precede
the determination of the other obligations derived from the contract

CHAPTER 4

REFORMATION OF INSTRUMENT

Reformation is that remedy by means of which a written instrument is amended or rectified so as

to express or conform to the real agreement or intention of the parties when by reason of mistake,
fraud, or inequitable contract, or accident the instrument fails to express such agreement or
intention.

Requisites for reformation

1.
2.
3.

There is a meeting of minds of the parties to the contract

The written instrument does not express the true agreement or intention of the parties
The failure to express the true intentions is due to mistake, fraud, inequitable conduct or
accident

4.

The facts upon which relief by way of reformation of the instrument is sought are put in issue
by the pleadings
5.
There is clear and convincing evidence of the mistake, fraud, inequitable conduct, or
accident

Reformation vs. Annulment

In reformation, there has been a meeting of the minds of the parties, hence, a contract
exists while in annulment, there has been none, the consent of one of the parties being vitiated by
mistake, etc.

Art 1360-69

Art 1360
Rule in case of conflict

Art 1366
Instances when reformation is not allowed

CHAPTER 5

INTERPRETATION OF A CONTRACT

Art 1370
Definition of interpretation of contract
-Is the determination of the meaning of the terms or words used by the parties in their
contract

Art 1371-79 (provisions)

Kinds of defective contracts

1.
2.
3.
4.

Rescissible (Art 1380-89)

Voidable (Art 1390-1402)
Unenforceable (Art 1403-1408)
Void or Inexistent (Art 1409-1422)

Art 1381 in relation to Art 1382

Meaning of rescissible contracts

-Those validly agreed upon because all the essential elements exists but in some cases
established by law, the remedy of rescission is granted in the interest of equity

Requisites of rescission
1.
2.
3.
4.
5.

The contracts must be validly agreed upon

There must be lesion or pecuniary prejudice to one of the parties or to a third person
The rescission must be based upon a case especially provided by law
There must be no other legal remedy to obtain reparation of the damages
The party asking for rescission must be able to return what he is obliged to restore by reason
of the contract
6.
The object of the contract must not legally
7.
The object of the contract must not legally be in the possession of third persons who did not
act in bad faith
8.
The period for filing the action of rescission must have not prescribed

Meaning of Rescission
-Remedy granted by law to the contracting parties and sometimes even to third persons in
order to secure reparation of damages caused by them by a valid contract, by means of the
restoration of things to their condition in which they were prior to the celebration of the said contract.

Art 1385
Effects of rescission

Art 1324

Prescription

VOIDABLE CONTRACTS

Definition
-Are those which possess all the essential requisites of a valid contract but one of the
parties is incapable of giving consent, or consent is vitiated by mistake, violence, intimidation, undue
influence, or fraud

Characteristics
1.

Their defect consist in the vitiation of consent of one of the contracting parties

2.
3.

They are binding until they are annulled by competent court

They are susceptible of convalidation by ratification or by prescription

Voidable vs. Rescissible Contracts

Voidable
1.
2.
3.
4.
5.

Defect is intrinsic
Contract is voidable even if there is no damage or prejudice
Annulability of the contract is based on law
Susceptible of ratification
The causes of annulment
The causes of rescission

Rescissible
1.
2.
3.
4.
5.

Defect is extrinsic
Contract is not rescissible id there is no damage or prejudice
Rescissibility of the contract is based on equity
Not susceptible of ratification
Are different form
Art 1390

Voidable contracts

Art 1391
Prescription

Art 1392-96

Concept of Ratification
-By virtue of which efficacy is given to a contract which suffers from a vice of curable nullity

Requisites for ratification

1.
2.
3.
4.

The contract should be tainted with a vice which is susceptible of being cured
The confirmation should be effected by the person who is entitled to do so under the law
It should be effected with knowledge of the vice or defect of the contract
The cause of the nullity or defect should have already disappeared

Art 1397 in relation to Art 1391

-Who and when may an action for annulment of contract be instituted
Art 1398-99

Effects of annulment

Art 1400-02
- Effect pf failure to make restitution
-Where loss is due to fault of plaintiff
-Where loss is due to fault of defendant
-Where loss is due to fortuitous event

CHAPTER 8
UNENFORCEABLE CONTRACTS

Meaning of unenforceable contracts

-Those that san not be enforced in court or sued upon by reason of defects provided by
law until and unless they are ratified according to law.

Kinds:
1.
2.
3.

Those entered into in the name of another by one without or acting in excess of authority
Those that do not comply with the statute of fraud
Those where both parties are incapacitated of giving consent

Unauthorized contracts
-Those entered into in the name of another person by one who has been given no
authority or legal representation on who has acted beyond his powers.

Characteristics of Unenforceable Contracts

1.
2.
3.

They can not be enforced by a proper action in court

They are susceptible of ratification
They can not be assailed by third persons

Unenforceable vs. Rescissible

1.

An unenforceable contract cannot be enforced by a proper action in court, while a rescissible

contract can be enforced, unless it is rescinded
2.
The causes for the unenforceable character of the former are different from the causes fro
the rescissible character of the latter
3.
The former is susceptible of ratification, while the latter is not
4.
The former cannot be assailed by third persons, while the latter may be assailed by third
persons who are prejudiced

Unenforceable vs. Voidable

1.

An unenforceable contract cannot be enforced by a proper action in court, while a voidable

contract can be enforced, unless it is annulled
2.
The causes for the unenforceable character of the former are different from the causes for
the voidable character of the latter

STATUTE OF FRAUDS

Purpose
-Not only to prevent fraud but also to guard against the mistakes of honest men by
requiring that certain agreement specified must be in writing.

Application
1.
2.
3.
4.
5.
6.
7.
8.

Not applicable in actions which are neither for damages because of a violation of a contract,
nor for the specific performance thereof
Applicable only to executory contracts and not to contracts which are totally or partially
performed
Not applicable where the contract is admittedly expressly, or impliedly by the failure to deny
specifically its existence, no further evidence thereof being required in such case.
Applicable only to the agreements enumerated therein
Not applicable where a writing does not express the true agreement of the parties
It does not declare the contracts infringing it are void but merely unenforceable
The defense of the statute of frauds may be waived
The defense of the statute of frauds is personal to the parties and cannot be enforced by
strangers to the contract

Effect of Non-Compliance
-The contract or agreement is unenforceable by action

Ratification of Unenforceable Contracts

Either by: a. the failure of object to the presentation of oral existence to prove the same
3.

The acceptance of benefits under them

Art 1404-1408 (provisions)

CHAPTER 9

VOID OR INEXISTENT CONTRACTS

Void Contracts
-Those, which of certain defects generally produce no effect at all

Inexistent Contracts
-Refer to agreements which lack one or some or all the elements or do not comply with the
formalities which are essential for the existence of a contract

Characteristics of a Void or Inexistent Contracts

1.
2.
3.
4.
5.

Generally, it produces no effect

It cannot be ratified
The right to set up the defense of legality cannot be waived
The action or defense for the declaration of its inexistence does not prescribe
The defense of illegality is not available to third persons whose interests are not directly
affected
6.
It cannot give rise to a valid contract

Art 1410
-Imprescriptibility of void or inexistent contract

Art 1411-1412
Where both parties are in pari delicto
1.
2.
3.

The parties shall have no action against each other

Both shall be prosecuted
The things or the price of the contract, as the effects of the crime shall be confiscated in
favor of the government

Where only one party is guilty

-The rule in paragraph 1 of Art 1411 applies only to the guilty party or the more guilty party
Exceptions to the principle of pari delicto
Art 1413-1419

HT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA

PAYAM, petitioners, vs. THE COURT OF APPEALS and
MAURICE McLOUGHLIN
SECOND DIVISION
G.R. No. 126780

February 17, 2005

YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA PAYAM, petitioners,

vs.
THE COURT OF APPEALS and MAURICE McLOUGHLIN, respondents.
DECISION
TINGA, J.:
The primary question of interest before this Court is the only legal issue in the case: It is whether a
hotel may evade liability for the loss of items left with it for safekeeping by its guests, by having these
guests execute written waivers holding the establishment or its employees free from blame for such
loss in light of Article 2003 of the Civil Code which voids such waivers.
Before this Court is a Rule 45 petition for review of the Decision1 dated 19 October 1995 of the Court
of Appeals which affirmed the Decision2 dated 16 December 1991 of the Regional Trial Court (RTC),
Branch 13, of Manila, finding YHT Realty Corporation, Brunhilda Mata-Tan (Tan), Erlinda Lainez
(Lainez) and Anicia Payam (Payam) jointly and solidarily liable for damages in an action filed by
Maurice McLoughlin (McLoughlin) for the loss of his American and Australian dollars deposited in the
safety deposit box of Tropicana Copacabana Apartment Hotel, owned and operated by YHT Realty
Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian businessman-philanthropist, used to stay at Sheraton
Hotel during his trips to the Philippines prior to 1984 when he met Tan. Tan befriended McLoughlin
by showing him around, introducing him to important people, accompanying him in visiting
impoverished street children and assisting him in buying gifts for the children and in distributing the
same to charitable institutions for poor children. Tan convinced McLoughlin to transfer from Sheraton
Hotel to Tropicana where Lainez, Payam and Danilo Lopez were employed. Lopez served as
manager of the hotel while Lainez and Payam had custody of the keys for the safety deposit boxes of
Tropicana. Tan took care of McLoughlin's booking at the Tropicana where he started staying during
his trips to the Philippines from December 1984 to September 1987. 3
On 30 October 1987, McLoughlin arrived from Australia and registered with Tropicana. He rented a
safety deposit box as it was his practice to rent a safety deposit box every time he registered at
Tropicana in previous trips. As a tourist, McLoughlin was aware of the procedure observed by
Tropicana relative to its safety deposit boxes. The safety deposit box could only be opened through
the use of two keys, one of which is given to the registered guest, and the other remaining in the
possession of the management of the hotel. When a registered guest wished to open his safety

deposit box, he alone could personally request the management who then would assign one of its
employees to accompany the guest and assist him in opening the safety deposit box with the two
keys.4
McLoughlin allegedly placed the following in his safety deposit box: Fifteen Thousand US Dollars
(US$15,000.00) which he placed in two envelopes, one envelope containing Ten Thousand US
Dollars (US$10,000.00) and the other envelope Five Thousand US Dollars (US$5,000.00); Ten
Thousand Australian Dollars (AUS$10,000.00) which he also placed in another envelope; two (2)
other envelopes containing letters and credit cards; two (2) bankbooks; and a checkbook, arranged
side by side inside the safety deposit box.5
On 12 December 1987, before leaving for a brief trip to Hongkong, McLoughlin opened his safety
deposit box with his key and with the key of the management and took therefrom the envelope
containing Five Thousand US Dollars (US$5,000.00), the envelope containing Ten Thousand
Australian Dollars (AUS$10,000.00), his passports and his credit cards. 6 McLoughlin left the other
items in the box as he did not check out of his room at the Tropicana during his short visit to
Hongkong. When he arrived in Hongkong, he opened the envelope which contained Five Thousand
US Dollars (US$5,000.00) and discovered upon counting that only Three Thousand US Dollars
(US$3,000.00) were enclosed therein.7 Since he had no idea whether somebody else had tampered
with his safety deposit box, he thought that it was just a result of bad accounting since he did not
spend anything from that envelope.8
After returning to Manila, he checked out of Tropicana on 18 December 1987 and left for Australia.
When he arrived in Australia, he discovered that the envelope with Ten Thousand US Dollars
(US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He also noticed that the jewelry
which he bought in Hongkong and stored in the safety deposit box upon his return to Tropicana was
likewise missing, except for a diamond bracelet.9
When McLoughlin came back to the Philippines on 4 April 1988, he asked Lainez if some money
and/or jewelry which he had lost were found and returned to her or to the management. However,
Lainez told him that no one in the hotel found such things and none were turned over to the
management. He again registered at Tropicana and rented a safety deposit box. He placed therein
one (1) envelope containing Fifteen Thousand US Dollars (US$15,000.00), another envelope
containing Ten Thousand Australian Dollars (AUS$10,000.00) and other envelopes containing his
traveling papers/documents. On 16 April 1988, McLoughlin requested Lainez and Payam to open his
safety deposit box. He noticed that in the envelope containing Fifteen Thousand US Dollars
(US$15,000.00), Two Thousand US Dollars (US$2,000.00) were missing and in the envelope
previously containing Ten Thousand Australian Dollars (AUS$10,000.00), Four Thousand Five
Hundred Australian Dollars (AUS$4,500.00) were missing. 10
When McLoughlin discovered the loss, he immediately confronted Lainez and Payam who admitted
that Tan opened the safety deposit box with the key assigned to him. 11 McLoughlin went up to his
room where Tan was staying and confronted her. Tan admitted that she had stolen McLoughlin's key
and was able to open the safety deposit box with the assistance of Lopez, Payam and
Lainez.12 Lopez also told McLoughlin that Tan stole the key assigned to McLoughlin while the latter
was asleep.13

McLoughlin requested the management for an investigation of the incident. Lopez got in touch with
Tan and arranged for a meeting with the police and McLoughlin. When the police did not arrive,
Lopez and Tan went to the room of McLoughlin at Tropicana and thereat, Lopez wrote on a piece of
paper a promissory note dated 21 April 1988. The promissory note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount of AUS$4,000.00 and US$2,000.00 or its
equivalent in Philippine currency on or before May 5, 1988. 14
Lopez requested Tan to sign the promissory note which the latter did and Lopez also signed as a
witness. Despite the execution of promissory note by Tan, McLoughlin insisted that it must be the
hotel who must assume responsibility for the loss he suffered. However, Lopez refused to accept the
responsibility relying on the conditions for renting the safety deposit box entitled "Undertaking For the
Use Of Safety Deposit Box,"15 specifically paragraphs (2) and (4) thereof, to wit:
2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from any liability
arising from any loss in the contents and/or use of the said deposit box for any cause whatsoever,
including but not limited to the presentation or use thereof by any other person should the key be
lost;
...
4. To return the key and execute the RELEASE in favor of TROPICANA APARTMENT HOTEL upon
giving up the use of the box.16
On 17 May 1988, McLoughlin went back to Australia and he consulted his lawyers as to the validity
of the abovementioned stipulations. They opined that the stipulations are void for being violative of
universal hotel practices and customs. His lawyers prepared a letter dated 30 May 1988 which was
signed by McLoughlin and sent to President Corazon Aquino. 17 The Office of the President referred
the letter to the Department of Justice (DOJ) which forwarded the same to the Western Police District
(WPD).18
After receiving a copy of the indorsement in Australia, McLoughlin came to the Philippines and
registered again as a hotel guest of Tropicana. McLoughlin went to Malacaang to follow up on his
letter but he was instructed to go to the DOJ. The DOJ directed him to proceed to the WPD for
documentation. But McLoughlin went back to Australia as he had an urgent business matter to
attend to.
For several times, McLoughlin left for Australia to attend to his business and came back to the
Philippines to follow up on his letter to the President but he failed to obtain any concrete assistance. 19
McLoughlin left again for Australia and upon his return to the Philippines on 25 August 1989 to
pursue his claims against petitioners, the WPD conducted an investigation which resulted in the
preparation of an affidavit which was forwarded to the Manila City Fiscal's Office. Said affidavit
became the basis of preliminary investigation. However, McLoughlin left again for Australia without
receiving the notice of the hearing on 24 November 1989. Thus, the case at the Fiscal's Office was
dismissed for failure to prosecute. Mcloughlin requested the reinstatement of the criminal charge for
theft. In the meantime, McLoughlin and his lawyers wrote letters of demand to those having
responsibility to pay the damage. Then he left again for Australia.

Upon his return on 22 October 1990, he registered at the Echelon Towers at Malate, Manila.
Meetings were held between McLoughlin and his lawyer which resulted to the filing of a complaint for
damages on 3 December 1990 against YHT Realty Corporation, Lopez, Lainez, Payam and Tan
(defendants) for the loss of McLoughlin's money which was discovered on 16 April 1988. After filing
the complaint, McLoughlin left again for Australia to attend to an urgent business matter. Tan and
Lopez, however, were not served with summons, and trial proceeded with only Lainez, Payam and
YHT Realty Corporation as defendants.
After defendants had filed their Pre-Trial Brief admitting that they had previously allowed and assisted
Tan to open the safety deposit box, McLoughlin filed an Amended/Supplemental Complaint20 dated
10 June 1991 which included another incident of loss of money and jewelry in the safety deposit box
rented by McLoughlin in the same hotel which took place prior to 16 April 1988. 21 The trial court
admitted the Amended/Supplemental Complaint.
During the trial of the case, McLoughlin had been in and out of the country to attend to urgent
business in Australia, and while staying in the Philippines to attend the hearing, he incurred
expenses for hotel bills, airfare and other transportation expenses, long distance calls to Australia,
Meralco power expenses, and expenses for food and maintenance, among others. 22
After trial, the RTC of Manila rendered judgment in favor of McLoughlin, the dispositive portion of
which reads:
WHEREFORE, above premises considered, judgment is hereby rendered by this Court in favor of
plaintiff and against the defendants, to wit:
1. Ordering defendants, jointly and severally, to pay plaintiff the sum of US$11,400.00 or its
equivalent in Philippine Currency of P342,000.00, more or less, and the sum of
AUS$4,500.00 or its equivalent in Philippine Currency of P99,000.00, or a total
of P441,000.00, more or less, with 12% interest from April 16 1988 until said amount has
been paid to plaintiff (Item 1, Exhibit CC);
2. Ordering defendants, jointly and severally to pay plaintiff the sum of P3,674,238.00 as
actual and consequential damages arising from the loss of his Australian and American
dollars and jewelries complained against and in prosecuting his claim and rights
administratively and judicially (Items II, III, IV, V, VI, VII, VIII, and IX, Exh. "CC");
3. Ordering defendants, jointly and severally, to pay plaintiff the sum of P500,000.00 as moral
damages (Item X, Exh. "CC");
4. Ordering defendants, jointly and severally, to pay plaintiff the sum of P350,000.00 as
exemplary damages (Item XI, Exh. "CC");
5. And ordering defendants, jointly and severally, to pay litigation expenses in the sum
of P200,000.00 (Item XII, Exh. "CC");
6. Ordering defendants, jointly and severally, to pay plaintiff the sum of P200,000.00 as
attorney's fees, and a fee of P3,000.00 for every appearance; and
7. Plus costs of suit.

SO ORDERED.23
The trial court found that McLoughlin's allegations as to the fact of loss and as to the amount of
money he lost were sufficiently shown by his direct and straightforward manner of testifying in court
and found him to be credible and worthy of belief as it was established that McLoughlin's money,
kept in Tropicana's safety deposit box, was taken by Tan without McLoughlin's consent. The taking
was effected through the use of the master key which was in the possession of the management.
Payam and Lainez allowed Tan to use the master key without authority from McLoughlin. The trial
court added that if McLoughlin had not lost his dollars, he would not have gone through the trouble
and personal inconvenience of seeking aid and assistance from the Office of the President, DOJ,
police authorities and the City Fiscal's Office in his desire to recover his losses from the hotel
management and Tan.24
As regards the loss of Seven Thousand US Dollars (US$7,000.00) and jewelry worth approximately
One Thousand Two Hundred US Dollars (US$1,200.00) which allegedly occurred during his stay at
Tropicana previous to 4 April 1988, no claim was made by McLoughlin for such losses in his
complaint dated 21 November 1990 because he was not sure how they were lost and who the
responsible persons were. But considering the admission of the defendants in their pre-trial brief that
on three previous occasions they allowed Tan to open the box, the trial court opined that it was
logical and reasonable to presume that his personal assets consisting of Seven Thousand US
Dollars (US$7,000.00) and jewelry were taken by Tan from the safety deposit box without
McLoughlin's consent through the cooperation of Payam and Lainez. 25
The trial court also found that defendants acted with gross negligence in the performance and
exercise of their duties and obligations as innkeepers and were therefore liable to answer for the
losses incurred by McLoughlin.26
Moreover, the trial court ruled that paragraphs (2) and (4) of the "Undertaking For The Use Of Safety
Deposit Box" are not valid for being contrary to the express mandate of Article 2003 of the New Civil
Code and against public policy.27Thus, there being fraud or wanton conduct on the part of
defendants, they should be responsible for all damages which may be attributed to the nonperformance of their contractual obligations.28
The Court of Appeals affirmed the disquisitions made by the lower court except as to the amount of
damages awarded. The decretal text of the appellate court's decision reads:
THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED but modified as
follows:
The appellants are directed jointly and severally to pay the plaintiff/appellee the following amounts:
1) P153,200.00 representing the peso equivalent of US$2,000.00 and AUS$4,500.00;
2) P308,880.80, representing the peso value for the air fares from Sidney [sic] to Manila and
back for a total of eleven (11) trips;
3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Apartment
Hotel;
4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;

5) One-half of P179,863.20 or P89,931.60 for the taxi xxx transportation from the residence
to Sidney [sic] Airport and from MIA to the hotel here in Manila, for the eleven (11) trips;
6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses;
7) One-half of P356,400.00 or P178,000.00 representing expenses for food and
maintenance;
8) P50,000.00 for moral damages;
9) P10,000.00 as exemplary damages; and
10) P200,000 representing attorney's fees.
With costs.
SO ORDERED.29
Unperturbed, YHT Realty Corporation, Lainez and Payam went to this Court in this appeal
by certiorari.
Petitioners submit for resolution by this Court the following issues: (a) whether the appellate court's
conclusion on the alleged prior existence and subsequent loss of the subject money and jewelry is
supported by the evidence on record; (b) whether the finding of gross negligence on the part of
petitioners in the performance of their duties as innkeepers is supported by the evidence on record;
(c) whether the "Undertaking For The Use of Safety Deposit Box" admittedly executed by private
respondent is null and void; and (d) whether the damages awarded to private respondent, as well as
the amounts thereof, are proper under the circumstances.30
The petition is devoid of merit.
It is worthy of note that the thrust of Rule 45 is the resolution only of questions of law and any
peripheral factual question addressed to this Court is beyond the bounds of this mode of review.
Petitioners point out that the evidence on record is insufficient to prove the fact of prior existence of
the dollars and the jewelry which had been lost while deposited in the safety deposit boxes of
Tropicana, the basis of the trial court and the appellate court being the sole testimony of McLoughlin
as to the contents thereof. Likewise, petitioners dispute the finding of gross negligence on their part
as not supported by the evidence on record.
We are not persuaded.l^vvphi1.net We adhere to the findings of the trial court as affirmed by the
appellate court that the fact of loss was established by the credible testimony in open court by
McLoughlin. Such findings are factual and therefore beyond the ambit of the present
petition.1awphi1.nt
The trial court had the occasion to observe the demeanor of McLoughlin while testifying which
reflected the veracity of the facts testified to by him. On this score, we give full credence to the
appreciation of testimonial evidence by the trial court especially if what is at issue is the credibility of
the witness. The oft-repeated principle is that where the credibility of a witness is an issue, the
established rule is that great respect is accorded to the evaluation of the credibility of witnesses by
the trial court.31 The trial court is in the best position to assess the credibility of witnesses and their

testimonies because of its unique opportunity to observe the witnesses firsthand and note their
demeanor, conduct and attitude under grilling examination. 32
We are also not impressed by petitioners' argument that the finding of gross negligence by the lower
court as affirmed by the appellate court is not supported by evidence. The evidence reveals that two
keys are required to open the safety deposit boxes of Tropicana. One key is assigned to the guest
while the other remains in the possession of the management. If the guest desires to open his safety
deposit box, he must request the management for the other key to open the same. In other words,
the guest alone cannot open the safety deposit box without the assistance of the management or its
employees. With more reason that access to the safety deposit box should be denied if the one
requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of any item
deposited in the safety deposit box, it is inevitable to conclude that the management had at least a
hand in the consummation of the taking, unless the reason for the loss is force majeure.
Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had custody of the
master key of the management when the loss took place. In fact, they even admitted that they
assisted Tan on three separate occasions in opening McLoughlin's safety deposit box. 33 This only
proves that Tropicana had prior knowledge that a person aside from the registered guest had access
to the safety deposit box. Yet the management failed to notify McLoughlin of the incident and waited
for him to discover the taking before it disclosed the matter to him. Therefore, Tropicana should be
held responsible for the damage suffered by McLoughlin by reason of the negligence of its
employees.
The management should have guarded against the occurrence of this incident considering that
Payam admitted in open court that she assisted Tan three times in opening the safety deposit box of
McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still asleep. 34 In light of the
circumstances surrounding this case, it is undeniable that without the acquiescence of the
employees of Tropicana to the opening of the safety deposit box, the loss of McLoughlin's money
could and should have been avoided.
The management contends, however, that McLoughlin, by his act, made its employees believe that
Tan was his spouse for she was always with him most of the time. The evidence on record, however,
is bereft of any showing that McLoughlin introduced Tan to the management as his wife. Such an
inference from the act of McLoughlin will not exculpate the petitioners from liability in the absence of
any showing that he made the management believe that Tan was his wife or was duly authorized to
have access to the safety deposit box. Mere close companionship and intimacy are not enough to
warrant such conclusion considering that what is involved in the instant case is the very safety of
McLoughlin's deposit. If only petitioners exercised due diligence in taking care of McLoughlin's safety
deposit box, they should have confronted him as to his relationship with Tan considering that the
latter had been observed opening McLoughlin's safety deposit box a number of times at the early
hours of the morning. Tan's acts should have prompted the management to investigate her
relationship with McLoughlin. Then, petitioners would have exercised due diligence required of them.
Failure to do so warrants the conclusion that the management had been remiss in complying with the
obligations imposed upon hotel-keepers under the law.
Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are
guilty of negligence, are liable for damages. As to who shall bear the burden of paying damages,
Article 2180, paragraph (4) of the same Code provides that the owners and managers of an

establishment or enterprise are likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the occasion of their functions. Also,
this Court has ruled that if an employee is found negligent, it is presumed that the employer was
negligent in selecting and/or supervising him for it is hard for the victim to prove the negligence of
such employer.35 Thus, given the fact that the loss of McLoughlin's money was consummated
through the negligence of Tropicana's employees in allowing Tan to open the safety deposit box
without the guest's consent, both the assisting employees and YHT Realty Corporation itself, as
owner and operator of Tropicana, should be held solidarily liable pursuant to Article 2193. 36
The issue of whether the "Undertaking For The Use of Safety Deposit Box" executed by McLoughlin
is tainted with nullity presents a legal question appropriate for resolution in this petition. Notably, both
the trial court and the appellate court found the same to be null and void. We find no reason to
reverse their common conclusion. Article 2003 is controlling, thus:
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect
that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper
and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 37 is
suppressed or diminished shall be void.
Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to
apply to situations such as that presented in this case. The hotel business like the common carrier's
business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not
only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes
the essence of the business. The law in turn does not allow such duty to the public to be negated or
diluted by any contrary stipulation in so-called "undertakings" that ordinarily appear in prepared
forms imposed by hotel keepers on guests for their signature.
In an early case,38 the Court of Appeals through its then Presiding Justice (later Associate Justice of
the Court) Jose P. Bengzon, ruled that to hold hotelkeepers or innkeeper liable for the effects of their
guests, it is not necessary that they be actually delivered to the innkeepers or their employees. It is
enough that such effects are within the hotel or inn. 39With greater reason should the liability of the
hotelkeeper be enforced when the missing items are taken without the guest's knowledge and
consent from a safety deposit box provided by the hotel itself, as in this case.
Paragraphs (2) and (4) of the "undertaking" manifestly contravene Article 2003 of the New Civil Code
for they allow Tropicana to be released from liability arising from any loss in the contents and/or use
of the safety deposit box forany cause whatsoever.40 Evidently, the undertaking was intended to bar
any claim against Tropicana for any loss of the contents of the safety deposit box whether or not
negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the
responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the
guests even if caused by servants or employees of the keepers of hotels or inns as well as by
strangers, except as it may proceed from any force majeure.41 It is the loss through force
majeure that may spare the hotel-keeper from liability. In the case at bar, there is no showing that the
act of the thief or robber was done with the use of arms or through an irresistible force to qualify the
same as force majeure.42
Petitioners likewise anchor their defense on Article 2002 43 which exempts the hotel-keeper from
liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the

provision would lead us to reject petitioners' contention. The justification they raise would render
nugatory the public interest sought to be protected by the provision. What if the negligence of the
employer or its employees facilitated the consummation of a crime committed by the registered
guest's relatives or visitor? Should the law exculpate the hotel from liability since the loss was due to
the act of the visitor of the registered guest of the hotel? Hence, this provision presupposes that the
hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the
occurrence of the loss. A depositary is not responsible for the loss of goods by theft, unless his
actionable negligence contributes to the loss.44
In the case at bar, the responsibility of securing the safety deposit box was shared not only by the
guest himself but also by the management since two keys are necessary to open the safety deposit
box. Without the assistance of hotel employees, the loss would not have

Thus, Tropicana was guilty of concurrent

negligencein allowing Tan, who was not the registered
guest, to open the safety deposit box of McLoughlin,
even assuming that the latter was also guilty of
negligence in allowing another person to use his key.
To rule otherwise would result in undermining the
safety of the safety deposit boxes in hotels for the
management will be given imprimatur to allow any
person, under the pretense of being a family member
or a visitor of the guest, to have access to the safety
deposit box without fear of any liability that will attach
thereafter in case such person turns out to be a
complete stranger. This will allow the hotel to evade
responsibility for any liability incurred by its
employees in conspiracy with the guest's relatives
and visitors.
occurred.

Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the trial court
and the appellate court upheld the grant of the claims of the latter on the basis of tort. 45 There is
nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a
jurisprudential rule that tort liability can exist even if there are already contractual relations. The act
that breaks the contract may also be tort.46
As to damages awarded to McLoughlin, we see no reason to modify the amounts awarded by the
appellate court for the same were based on facts and law. It is within the province of lower courts to
settle factual issues such as the proper amount of damages awarded and such finding is binding
upon this Court especially if sufficiently proven by evidence and not unconscionable or excessive.
Thus, the appellate court correctly awarded McLoughlin Two Thousand US Dollars (US$2,000.00)
and Four Thousand Five Hundred Australian dollars (AUS$4,500.00) or their peso equivalent at the

time of payment,47 being the amounts duly proven by evidence.48 The alleged loss that took place
prior to 16 April 1988 was not considered since the amounts alleged to have been taken were not
sufficiently established by evidence. The appellate court also correctly awarded the sum
of P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a
total of eleven (11) trips;49 one-half of P336,207.05 orP168,103.52 representing payment to
Tropicana;50 one-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;51 onehalf of P179,863.20 or P89,931.60 for the taxi or transportation expenses from McLoughlin's
residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; 52 onehalf of P7,801.94 or P3,900.97 representing Meralco power expenses;53 one-half of P356,400.00
or P178,000.00 representing expenses for food and maintenance. 54
The amount of P50,000.00 for moral damages is reasonable. Although trial courts are given
discretion to determine the amount of moral damages, the appellate court may modify or change the
amount awarded when it is palpably and scandalously excessive.l^vvphi1.net Moral damages are not
intended to enrich a complainant at the expense of a defendant.l^vvphi1.net They are awarded only
to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of defendants' culpable action. 55
The awards of P10,000.00 as exemplary damages and P200,000.00 representing attorney's fees are
likewise sustained.
WHEREFORE, foregoing premises considered, the Decision of the Court of Appeals dated 19
October 1995 is hereby AFFIRMED. Petitioners are directed, jointly and severally, to pay private
respondent the following amounts:
(1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of payment;
(2) P308,880.80, representing the peso value for the air fares from Sydney to Manila and
back for a total of eleven (11) trips;
(3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Copacabana
Apartment Hotel;
(4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;
(5) One-half of P179,863.20 or P89,931.60 for the taxi or transportation expense from
McLoughlin's residence to Sydney Airport and from MIA to the hotel here in Manila, for the
eleven (11) trips;
(6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses;
(7) One-half of P356,400.00 or P178,200.00 representing expenses for food and
maintenance;
(8) P50,000.00 for moral damages;
(9) P10,000.00 as exemplary damages; and
(10) P200,000 representing attorney's fees.
With costs.
SO ORDERED.

CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner, vs.

THE HONORABLE COURT OF APPEALS and SECURITY
BANK AND TRUST COMPANY, respondents.
G.R. No. 90027 March 3, 1993
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner,
vs.
THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST
COMPANY, respondents.
Dolorfino & Dominguez Law Offices for petitioner.
Danilo B. Banares for private respondent.

DAVIDE, JR., J.:

Is the contractual relation between a commercial bank and

another party in a contract of rent of a safety deposit box
with respect to its contents placed by the latter one of
bailor and bailee or one of lessor and lessee?
This is the crux of the present controversy.
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses Ramon and Paula
Pugao entered into an agreement whereby the former purchased from the latter two (2) parcels of
land for a consideration of P350,625.00. Of this amount, P75,725.00 was paid as downpayment
while the balance was covered by three (3) postdated checks. Among the terms and conditions of
the agreement embodied in a Memorandum of True and Actual Agreement of Sale of Land were that
the titles to the lots shall be transferred to the petitioner upon full payment of the purchase price and
that the owner's copies of the certificates of titles thereto, Transfer Certificates of Title (TCT) Nos.
284655 and 292434, shall be deposited in a safety deposit box of any bank. The same could be
withdrawn only upon the joint signatures of a representative of the petitioner and the Pugaos upon
full payment of the purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then rented
Safety Deposit Box No. 1448 of private respondent Security Bank and Trust Company, a domestic
banking corporation hereinafter referred to as the respondent Bank. For this purpose, both signed a
contract of lease (Exhibit "2") which contains, inter alia, the following conditions:
13. The bank is not a depositary of the contents of the safe and it has neither the
possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly
provided, and it assumes absolutely no liability in connection therewith. 1

After the execution of the contract, two (2) renter's keys were given to the renters one to Aguirre
(for the petitioner) and the other to the Pugaos. A guard key remained in the possession of the
respondent Bank. The safety deposit box has two (2) keyholes, one for the guard key and the other
for the renter's key, and can be opened only with the use of both keys. Petitioner claims that the
certificates of title were placed inside the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the two (2) lots at a
price of P225.00 per square meter which, as petitioner alleged in its complaint, translates to a profit
of P100.00 per square meter or a total of P280,500.00 for the entire property. Mrs. Ramos
demanded the execution of a deed of sale which necessarily entailed the production of the
certificates of title. In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the
respondent Bank on 4 October 1979 to open the safety deposit box and get the certificates of title.

However, when opened in the presence of the Bank's representative, the box yielded no such
certificates. Because of the delay in the reconstitution of the title, Mrs. Ramos withdrew her earlier
offer to purchase the lots; as a consequence thereof, the petitioner allegedly failed to realize the
expected profit of P280,500.00. Hence, the latter filed on 1 September 1980 a complaint 2 for
damages against the respondent Bank with the Court of First Instance (now Regional Trial Court) of
Pasig, Metro Manila which docketed the same as Civil Case No. 38382.
In its Answer with Counterclaim, 3 respondent Bank alleged that the petitioner has no cause of action
because of paragraphs 13 and 14 of the contract of lease (Exhibit "2"); corollarily, loss of any of the
items or articles contained in the box could not give rise to an action against it. It then interposed a
counterclaim for exemplary damages as well as attorney's fees in the amount of P20,000.00.
Petitioner subsequently filed an answer to the counterclaim. 4
In due course, the trial court, now designated as Branch 161 of the Regional Trial Court (RTC) of
Pasig, Metro Manila, rendered a decision 5 adverse to the petitioner on 8 December 1986, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing plaintiff's
complaint.
On defendant's counterclaim, judgment is hereby rendered ordering plaintiff to pay
defendant the amount of FIVE THOUSAND (P5,000.00) PESOS as attorney's fees.
With costs against plaintiff. 6

The unfavorable verdict is based on the trial court's conclusion that under paragraphs 13 and 14 of
the contract of lease, the Bank has no liability for the loss of the certificates of title. The court
declared that the said provisions are binding on the parties.
Its motion for reconsideration 7 having been denied, petitioner appealed from the adverse decision to
the respondent Court of Appeals which docketed the appeal as CA-G.R. CV No. 15150. Petitioner
urged the respondent Court to reverse the challenged decision because the trial court erred in (a)
absolving the respondent Bank from liability from the loss, (b) not declaring as null and void, for
being contrary to law, public order and public policy, the provisions in the contract for lease of the
safety deposit box absolving the Bank from any liability for loss, (c) not concluding that in this
jurisdiction, as well as under American jurisprudence, the liability of the Bank is settled and (d)
awarding attorney's fees to the Bank and denying the petitioner's prayer for nominal and exemplary
damages and attorney's fees. 8
In its Decision promulgated on 4 July 1989, 9 respondent Court affirmed the appealed decision
principally on the theory that the contract (Exhibit "2") executed by the petitioner and respondent
Bank is in the nature of a contract of lease by virtue of which the petitioner and its co-renter were
given control over the safety deposit box and its contents while the Bank retained no right to open
the said box because it had neither the possession nor control over it and its contents. As such, the
contract is governed by Article 1643 of the Civil Code 10 which provides:
Art. 1643. In the lease of things, one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and for a period which may be definite or
indefinite. However, no lease for more than ninety-nine years shall be valid.

It invoked Tolentino vs. Gonzales 11 which held that the owner of the property loses his
control over the property leased during the period of the contract and Article 1975 of the
Civil Code which provides:
Art. 1975. The depositary holding certificates, bonds, securities or instruments which earn
interest shall be bound to collect the latter when it becomes due, and to take such steps
as may be necessary in order that the securities may preserve their value and the rights
corresponding to them according to law.
The above provision shall not apply to contracts for the rent of safety deposit boxes.

and then concluded that "[c]learly, the defendant-appellee is not under any duty to maintain
the contents of the box. The stipulation absolving the defendant-appellee from liability is in
accordance with the nature of the contract of lease and cannot be regarded as contrary to
law, public order and public policy." 12 The appellate court was quick to add, however, that
under the contract of lease of the safety deposit box, respondent Bank is not completely free
from liability as it may still be made answerable in case unauthorized persons enter into the
vault area or when the rented box is forced open. Thus, as expressly provided for in
stipulation number 8 of the contract in question:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any
rented safe and beyond this, the Bank will not be responsible for the contents of any safe
rented from it. 13

Its motion for reconsideration 14 having been denied in the respondent Court's Resolution of 28
August 1989, 15petitioner took this recourse under Rule 45 of the Rules of Court and urges Us to
review and set aside the respondent Court's ruling. Petitioner avers that both the respondent Court
and the trial court (a) did not properly and legally apply the correct law in this case, (b) acted with
grave abuse of discretion or in excess of jurisdiction amounting to lack thereof and (c) set a
precedent that is contrary to, or is a departure from precedents adhered to and affirmed by decisions
of this Court and precepts in American jurisprudence adopted in the Philippines. It reiterates the
arguments it had raised in its motion to reconsider the trial court's decision, the brief submitted to the
respondent Court and the motion to reconsider the latter's decision. In a nutshell, petitioner
maintains that regardless of nomenclature, the contract for the rent of the safety deposit box (Exhibit
"2") is actually a contract of deposit governed by Title XII, Book IV of the Civil Code of the
Philippines. 16 Accordingly, it is claimed that the respondent Bank is liable for the loss of the
certificates of title pursuant to Article 1972 of the said Code which provides:
Art. 1972. The depositary is obliged to keep the thing safely and to return it, when
required, to the depositor, or to his heirs and successors, or to the person who may have
been designated in the contract. His responsibility, with regard to the safekeeping and the
loss of the thing, shall be governed by the provisions of Title I of this Book.
If the deposit is gratuitous, this fact shall be taken into account in determining the degree
of care that the depositary must observe.

Petitioner then quotes a passage from American Jurisprudence

expound on the prevailing rule in the United States, to wit:

17

which is supposed to

The prevailing rule appears to be that where a safe-deposit company leases a safedeposit box or safe and the lessee takes possession of the box or safe and places
therein his securities or other valuables, the relation of bailee and bail or is created
between the parties to the transaction as to such securities or other valuables; the fact
that the
safe-deposit company does not know, and that it is not expected that it shall know, the
character or description of the property which is deposited in such safe-deposit box or
safe does not change that relation. That access to the contents of the safe-deposit box
can be had only by the use of a key retained by the lessee ( whether it is the sole key or
one to be used in connection with one retained by the lessor) does not operate to alter
the foregoing rule. The argument that there is not, in such a case, a delivery of exclusive
possession and control to the deposit company, and that therefore the situation is entirely
different from that of ordinary bailment, has been generally rejected by the courts, usually
on the ground that as possession must be either in the depositor or in the company, it
should reasonably be considered as in the latter rather than in the former, since the
company is, by the nature of the contract, given absolute control of access to the
property, and the depositor cannot gain access thereto without the consent and active
participation of the company. . . . (citations omitted).

and a segment from Words and Phrases 18 which states that a contract for the rental of a
bank safety deposit box in consideration of a fixed amount at stated periods is a bailment for
hire.

Petitioner further argues that conditions 13 and 14 of the questioned contract are contrary to law and
public policy and should be declared null and void. In support thereof, it cites Article 1306 of the Civil
Code which provides that parties to a contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy.
After the respondent Bank filed its comment, this Court gave due course to the petition and required
the parties to simultaneously submit their respective Memoranda.
The petition is partly meritorious.

We agree with the petitioner's contention that the contract

for the rent of the safety deposit box is not an ordinary
contract of lease as defined in Article 1643 of the Civil
Code. However,We do not fully subscribe to its view that
the same is a contract of deposit that is to be strictly
governed by the provisions in the Civil Code on
deposit; 19 the contract in the case at bar is a

special

kind of deposit. It cannot be characterized as an

ordinary contract of lease under Article 1643 because the
full and absolute possession and control of the safety
deposit box was not given to the joint renters the
petitioner and the Pugaos. The guard key of the box
remained with the respondent Bank; without this key,
neither of the renters could open the box. On the other
hand, the respondent Bank could not likewise open the
box without the renter's key. In this case, the said key had
a duplicate which was made so that both renters could
have access to the box.
Hence, the authorities cited by the respondent Court 20 on this point do not apply. Neither could
Article 1975, also relied upon by the respondent Court, be invoked as an argument against the
deposit theory. Obviously, the first paragraph of such provision cannot apply to a depositary of
certificates, bonds, securities or instruments which earn interest if such documents are kept in a
rented safety deposit box. It is clear that the depositary cannot open the box without the renter being
present.
We observe, however, that the deposit theory itself does not altogether find unanimous support even
in American jurisprudence. We agree with the petitioner that under the latter, the prevailing rule is
that the relation between a bank renting out safe-deposit boxes and its customer with respect to the

bail or and bailee, the bailment being for hire and mutual

contents of the box is that of a

benefit. 21 This is just the prevailing view because:

There is, however, some support for the view that the relationship in question might be
more properly characterized as that of landlord and tenant, or lessor and lessee. It has
also been suggested that it should be characterized as that of licensor and licensee. The
relation between a bank, safe-deposit company, or storage company, and the renter of a
safe-deposit box therein, is often described as contractual, express or implied, oral or
written, in whole or in part. But there is apparently no jurisdiction in which any rule other
than that applicable to bailments governs questions of the liability and rights of the parties
in respect of loss of the contents of safe-deposit boxes. 22 (citations omitted)

In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is
clear that in this jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of
the General Banking Act 23pertinently provides:
Sec. 72. In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the following
services:
(a) Receive in custody funds, documents, and valuable objects, and rent
safety deposit boxes for the safeguarding of such effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and (c) of this
section as depositories or as agents. . . . 24 (emphasis supplied)

Note that the primary function is still found within the parameters of a contract of deposit, i.e., the
receiving in custody of funds, documents and other valuable objects for safekeeping. The renting out
of the safety deposit boxes is not independent from, but related to or in conjunction with, this
principal function. A contract of deposit may be entered into orally or in writing 25 and, pursuant to
Article 1306 of the Civil Code, the parties thereto may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The depositary's responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the
depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay
or contravention of the tenor of the agreement. 26 In the absence of any stipulation prescribing the
degree of diligence required, that of a good father of a family is to be observed. 27 Hence, any
stipulation exempting the depositary from any liability arising from the loss of the thing deposited on
account of fraud, negligence or delay would be void for being contrary to law and public policy. In the
instant case, petitioner maintains that conditions 13 and 14 of the questioned contract of lease of the
safety deposit box, which read:
13. The bank is not a depositary of the contents of the safe and it has neither the
possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly
provided, and it assumes absolutely no liability in connection therewith. 28

are void as they are contrary to law and public policy. We find Ourselves in agreement with
this proposition for indeed, said provisions are inconsistent with the respondent Bank's
responsibility as a depositary under Section 72(a) of the General Banking Act. Both exempt
the latter from any liability except as contemplated in condition 8 thereof which limits its duty
to exercise reasonable diligence only with respect to who shall be admitted to any rented
safe, to wit:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any
rented safe and beyond this, the Bank will not be responsible for the contents of any safe
rented from it. 29

Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice
of the Bank. It is not correct to assert that the Bank has neither the possession nor control of
the contents of the box since in fact, the safety deposit box itself is located in its premises

and is under its absolute control; moreover, the respondent Bank keeps the guard key to the
said box. As stated earlier, renters cannot open their respective boxes unless the Bank
cooperates by presenting and using this guard key. Clearly then, to the extent above stated,
the foregoing conditions in the contract in question are void and ineffective. It has been said:
With respect to property deposited in a safe-deposit box by a customer of a safe-deposit
company, the parties, since the relation is a contractual one, may by special contract
define their respective duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or public policy. It must clearly
appear that there actually was such a special contract, however, in order to vary the
ordinary obligations implied by law from the relationship of the parties; liability of the
deposit company will not be enlarged or restricted by words of doubtful meaning. The
company, in renting
safe-deposit boxes, cannot exempt itself from liability for loss of the contents by its own
fraud or negligence or that of its agents or servants, and if a provision of the contract may
be construed as an attempt to do so, it will be held ineffective for the purpose. Although it
has been held that the lessor of a safe-deposit box cannot limit its liability for loss of the
contents thereof through its own negligence, the view has been taken that such a lessor
may limits its liability to some extent by agreement or stipulation. 30 (citations omitted)

Thus, we reach the same conclusion which the Court of Appeals arrived at, that is, that the petition
should be dismissed, but on grounds quite different from those relied upon by the Court of Appeals.
In the instant case, the respondent Bank's exoneration cannot, contrary to the holding of the Court of
Appeals, be based on or proceed from a characterization of the impugned contract as a contract of
lease, but rather on the fact that no competent proof was presented to show that respondent Bank
was aware of the agreement between the petitioner and the Pugaos to the effect that the certificates
of title were withdrawable from the safety deposit box only upon both parties' joint signatures, and
that no evidence was submitted to reveal that the loss of the certificates of title was due to the fraud
or negligence of the respondent Bank. This in turn flows from this Court's determination that the
contract involved was one of deposit. Since both the petitioner and the Pugaos agreed that each
should have one (1) renter's key, it was obvious that either of them could ask the Bank for access to
the safety deposit box and, with the use of such key and the Bank's own guard key, could open the
said box, without the other renter being present.
Since, however, the petitioner cannot be blamed for the filing of the complaint and no bad faith on its
part had been established, the trial court erred in condemning the petitioner to pay the respondent
Bank attorney's fees. To this extent, the Decision (dispositive portion) of public respondent Court of
Appeals must be modified.
WHEREFORE, the Petition for Review is partially GRANTED by deleting the award for attorney's
fees from the 4 July 1989 Decision of the respondent Court of Appeals in CA-G.R. CV No. 15150. As
modified, and subject to the pronouncement We made above on the nature of the relationship
between the parties in a contract of lease of safety deposit boxes, the dispositive portion of the said
Decision is hereby AFFIRMED and the instant Petition for Review is otherwise DENIED for lack of
merit.
No pronouncement as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave.

LUZAN SIA, petitioner, vs. COURT OF APPEALS

G.R. No. 102970 May 13, 1993

LUZAN SIA, petitioner,

vs.
COURT OF APPEALS and SECURITY BANK and TRUST
COMPANY, respondents.
Asuncion Law Offices for petitioner.
Cauton, Banares, Carpio & Associates for private
respondent.
DAVIDE, JR., J.:
The Decision of public respondent Court of Appeals in
CA-G.R. CV No. 26737, promulgated on 21 August
1991, 1 reversing and setting aside the Decision, dated
19 February 1990, 2 of Branch 47 of the Regional Trial
Court (RTC) of Manila in Civil Case No. 87-42601,
entitled "LUZAN SIA vs. SECURITY BANK and TRUST
CO.," is challenged in this petition for review
on certiorari under Rule 45 of the Rules Court.
Civil Case No. 87-42601 is an action for damages
arising out of the destruction or loss of the stamp
collection of the plaintiff (petitioner herein) contained
in Safety Deposit Box No. 54 which had been rented
from the defendant pursuant to a contract
denominated as a Lease Agreement. 3 Judgment
therein was rendered in favor of the dispositive
portion of which reads:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of the
plaintiff and against the defendant, Security
Bank & Trust Company, ordering the
defendant bank to pay the plaintiff the sum of

a) Twenty Thousand Pesos (P20,000.00),

Philippine Currency, as actual damages;
b) One Hundred Thousand Pesos
(P100,000.00), Philippine Currency, as moral
damages; and
c) Five Thousand Pesos (P5,000.00),
Philippine Currency, as attorney's fees and
legal expenses.
The counterclaim set up by the defendant are
hereby dismissed for lack of merit.
No costs.
SO ORDERED. 4
The antecedent facts of the present controversy are
summarized by the public respondent in its
challenged decision as follows:
The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the
defendant bank at its Binondo Branch located at the Fookien Times Building, Soler
St., Binondo, Manila wherein he placed his collection of stamps. The said safety
deposit box leased by the plaintiff was at the bottom or at the lowest level of the
safety deposit boxes of the defendant bank at its aforesaid Binondo Branch.
During the floods that took place in 1985 and 1986, floodwater entered into the
defendant bank's premises, seeped into the safety deposit box leased by the plaintiff
and caused, according to the plaintiff, damage to his stamps collection. The
defendant bank rejected the plaintiff's claim for compensation for his damaged
stamps collection, so, the plaintiff instituted an action for damages against the
defendant bank.
The defendant bank denied liability for the damaged stamps collection of the plaintiff
on the basis of the "Rules and Regulations Governing the Lease of Safe Deposit
Boxes" (Exhs. "A-1", "1-A"), particularly paragraphs 9 and 13, which reads (sic):
"9. The liability of the Bank by reason of the lease, is limited to the exercise of the
diligence to prevent the opening of the safe by any person other than the Renter, his
authorized agent or legal representative;
xxx xxx xxx

"13. The Bank is not a depository of the contents of the safe and it has neither the
possession nor the control of the same. The Bank has no interest whatsoever in said
contents, except as herein provided, and it assumes absolutely no liability in
connection therewith."
The defendant bank also contended that its contract with the plaintiff over safety
deposit box No. 54 was one of lease and not of deposit and, therefore, governed by
the lease agreement (Exhs. "A", "L") which should be the applicable law; that the
destruction of the plaintiff's stamps collection was due to a calamity beyond obligation
on its part to notify the plaintiff about the floodwaters that inundated its premises at
Binondo branch which allegedly seeped into the safety deposit box leased to the
plaintiff.
The trial court then directed that an ocular inspection on (sic) the contents of the
safety deposit box be conducted, which was done on December 8, 1988 by its clerk
of court in the presence of the parties and their counsels. A report thereon was then
submitted on December 12, 1988 (Records, p. 98-A) and confirmed in open court by
both parties thru counsel during the hearing on the same date (Ibid., p. 102) stating:
"That the Safety Box Deposit No. 54 was opened by both plaintiff
Luzan Sia and the Acting Branch Manager Jimmy B. Ynion in the
presence of the undersigned, plaintiff's and defendant's counsel. Said
Safety Box when opened contains two albums of different sizes and
thickness, length and width and a tin box with printed word 'Tai Ping
Shiang Roast Pork in pieces with Chinese designs and character."

Condition of the above-stated Items

"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in
length, 8 inches in width and 3/4 in thick. The
leaves of the album are attached to every page
and cannot be lifted without destroying it, hence
the stamps contained therein are no longer
visible.
2. The second album measure 12 1/2 inches in
length, 9 3/4 in width 1 inch thick. Some of its
pages can still be lifted. The stamps therein can

still be distinguished but beyond restoration.

Others have lost its original form.
3. The tin box is rusty inside. It contains an album
with several pieces of papers stuck up to the
cover of the box. The condition of the album is
the second abovementioned album." 5
The SECURITY BANK AND TRUST COMPANY,
hereinafter referred to as SBTC, appealed the trial
court's decision to the public respondent Court of
Appeals. The appeal was docketed as CA-G.R. CV No.
26737.
In urging the public respondent to reverse the
decision of the trial court, SBTC contended that the
latter erred in (a) holding that the lease agreement is a
contract of adhesion; (b) finding that the defendant
had failed to exercise the required diligence expected
of a bank in maintaining the safety deposit box; (c)
awarding to the plaintiff actual damages in the amount
of P20,000.00, moral damages in the amount of
P100,000.00 and attorney's fees and legal expenses in
the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its
decision the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby REVERSED and instead the
appellee's complaint is hereby DISMISSED. The appellant bank's counterclaim is
likewise DISMISSED. No costs. 6

In reversing the trial court's decision and absolving

SBTC from liability, the public respondent found and
ruled that:

a) the fine print in the "Lease Agreement " (Exhibits

"A" and "1" ) constitutes the terms and conditions of
the contract of lease which the appellee (now
petitioner) had voluntarily and knowingly executed
with SBTC;
b) the contract entered into by the parties regarding
Safe Deposit Box No. 54 was not a contract of deposit
wherein the bank became a depositary of the subject
stamp collection; hence, as contended by SBTC, the
provisions of Book IV, Title XII of the Civil Code on
deposits do not apply;
c) The following provisions of the questioned lease
agreement of the safety deposit box limiting SBTC's
liability:
9. The liability of the bank by reason of the lease, is limited to the exercise of the
diligence to prevent the opening of the Safe by any person other than the Renter, his
authorized agent or legal representative.
xxx xxx xxx
13. The bank is not a depository of the contents of the Safe and it has neither the
possession nor the control of the same. The Bank has no interest whatsoever in said
contents, except as herein provided, and it assumes absolutely no liability in
connection therewith.

are valid since said stipulations are not contrary to

law, morals, good customs, public order or public
policy; and
d) there is no concrete evidence to show that SBTC
failed to exercise the required diligence in maintaining
the safety deposit box; what was proven was that the
floods of 1985 and 1986, which were beyond the
control of SBTC, caused the damage to the stamp
collection; said floods were fortuitous events which
SBTC should not be held liable for since it was not

shown to have participated in the aggravation of the

damage to the stamp collection; on the contrary, it
offered its services to secure the assistance of an
expert in order to save most of the stamps, but the
appellee refused; appellee must then bear the lose
under the principle of "res perit domino."
Unsuccessful in his bid to have the above decision
reconsidered by the public respondent, 7petitioner filed the
instant petition wherein he contends that:
I
IT WAS A GRAVE ERROR OR AN ABUSE OF
DISCRETION ON THE PART OF THE
RESPONDENT COURT WHEN IT RULED THAT
RESPONDENT SBTC DID NOT FAIL TO
EXERCISE THE REQUIRED DILIGENCE IN
MAINTAINING THE SAFETY DEPOSIT BOX OF
THE PETITIONER CONSIDERING THAT
SUBSTANTIAL EVIDENCE EXIST (sic)
PROVING THE CONTRARY.
II
THE RESPONDENT COURT SERIOUSLY
ERRED IN EXCULPATING PRIVATE
RESPONDENT FROM ANY LIABILITY
WHATSOEVER BY REASON OF THE
PROVISIONS OF PARAGRAPHS 9 AND 13 OF
THE AGREEMENT (EXHS. "A" AND "A-1").

III
THE RESPONDENT COURT SERIOUSLY
ERRED IN NOT UPHOLDING THE AWARDS OF
THE TRIAL COURT FOR ACTUAL AND MORAL
DAMAGES, INCLUDING ATTORNEY'S FEES
AND LEGAL EXPENSES, IN FAVOR OF THE
PETITIONER. 8
We subsequently gave due course the petition and
required both parties to submit their respective
memoranda, which they complied with. 9
Petitioner insists that the trial court correctly ruled
that SBTC had failed "to exercise the required
diligence expected of a bank maintaining such safety
deposit box . . . in the light of the environmental
circumstance of said safety deposit box after the
floods of 1985 and 1986." He argues that such a
conclusion is supported by the evidence on record, to
wit: SBTC was fully cognizant of the exact location of
the safety deposit box in question; it knew that the
premises were inundated by floodwaters in 1985 and
1986 and considering that the bank is guarded twentyfour (24) hours a day , it is safe to conclude that it was
also aware of the inundation of the premises where
the safety deposit box was located; despite such
knowledge, however, it never bothered to inform the
petitioner of the flooding or take any appropriate
measures to insure the safety and good maintenance
of the safety deposit box in question.

SBTC does not squarely dispute these facts; rather, it relies on the rule that findings of facts of the
Court of Appeals, when supported by substantial exidence, are not reviewable on appeal
by certiorari. 10

The foregoing rule is, of course, subject to certain

exceptions such as when there exists a disparity
between the factual findings and conclusions of the
Court of Appeals and the trial court. 11 Such a disparity
obtains in the present case.
As We see it, SBTC's theory, which was upheld by the
public respondent, is that the "Lease Agreement "
covering Safe Deposit Box No. 54 (Exhibit "A and "1")
is just that a contract of lease and not a contract
of deposit, and that paragraphs 9 and 13 thereof,
which expressly limit the bank's liability as follows:
9. The liability of the bank by reason of the lease,
is limited to the exercise of the diligence to
prevent the opening of the Safe by any person
other than the Renter, his autliorized agent or
legal representative;
xxx xxx xxx
13. The bank is not a depository of the contents
of the Safe and it has neither the possession nor
the control of the same. The Bank has no interest
whatsoever said contents, except as herein
provided, and it assumes absolutely no liability in
connection therewith. 12
are valid and binding upon the parties. In the
challenged decision, the public respondent further

avers that even without such a limitation of liability,

SBTC should still be absolved from any responsibility
for the damage sustained by the petitioner as it
appears that such damage was occasioned by a
fortuitous event and that the respondent bank was
free from any participation in the aggravation of the
injury.
We cannot accept this theory and ratiocination.
Consequently, this Court finds the petition to be
impressed with merit.
In the recent case CA Agro-Industrial Development
Corp. vs. Court of Appeals, 13 this Court explicitly
rejected the contention that a contract for the use of a
safety deposit box is a contract of lease governed by
Title VII, Book IV of the Civil Code. Nor did We fully
subscribe to the view that it is a contract of deposit to
be strictly governed by the Civil Code provision on
deposit; 1 it is, as We declared, a special kind of deposit. The
prevailing rule in American jurisprudence that the
relation between a bank renting out safe deposit boxes
and its customer with respect to the contents of the box is
4

that of a bailor and bailee, the bailment for hire and

mutual benefit 15 has been adopted in this jurisdiction, thus:
In the context of our laws which authorize banking institutions to rent out safety
deposit boxes, it is clear that in this jurisdiction, the prevailing rule in the United
States has been adopted. Section 72 of the General Banking Act [R.A. 337, as
amended] pertinently provides:
"Sec. 72. In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the
following services:
(a) Receive in custody funds, documents, and valuable objects, and
rent safety deposit boxes for the safequarding of such effects.
xxx xxx xxx

The banks shall perform the services permitted

under subsections (a), (b) and (c) of this section
as depositories or as agents. . . ."(emphasis supplied)
Note that the primary function is still found within the parameters of a contract
of deposit, i.e., the receiving in custody of funds, documents and other valuable
objects for safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this principal function. A
contract of deposit may be entered into orally or in writing (Art. 1969, Civil Code] and,
pursuant to Article 1306 of the Civil Code, the parties thereto may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or public policy. The
depositary's responsibility for the safekeeping of the objects deposited in the case at
bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary
would be liable if, in performing its obligation, it is found guilty of fraud, negligence,
delay or contravention of the tenor of the agreement [Art. 1170, id.]. In the absence of
any stipulation prescribing the degree of diligence required, that of a good father of a
family is to be observed [Art. 1173, id.]. Hence, any stipulation exempting the
depositary from any liability arising from the loss of the thing deposited on account of
fraud, negligence or delay would be void for being contrary to law and public policy.
In the instant case, petitioner maintains that conditions 13 and l4 of the questioned
contract of lease of the safety deposit box, which read:
"13. The bank is a depositary of the contents of the safe and it has neither the
possession nor control of the same.
"14. The bank has no interest whatsoever in said contents, except as herein
expressly provided, and it assumes absolutely no liability in connection therewith."
are void as they are contrary to law and public policy. We find Ourselves in
agreement with this proposition for indeed, said provisions are inconsistent with the
respondent Bank's responsibility as a depositary under Section 72 (a) of the General
Banking Act. Both exempt the latter from any liability except as contemplated in
condition 8 thereof which limits its duty to exercise reasonable diligence only with
respect to who shall be admitted to any rented safe, to wit:
"8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank will
not be responsible for the contents of any safe rented from it."
Furthermore condition 13 stands on a wrong premise and is contrary to the actual
practice of the Bank. It is not correct to assert that the Bank has neither the
possession nor control of the contents of the box since in fact, the safety deposit box
itself is located in its premises and is under its absolute control; moreover, the
respondent Bank keeps the guard key to the said box. As stated earlier, renters
cannot open their respective boxes unless the Bank cooperates by presenting and

using this guard key. Clearly then, to the extent above stated, the foregoing
conditions in the contract in question are void and ineffective. It has been said:
"With respect to property deposited in a safe-deposit box by a
customer of a safe-deposit company, the parties, since the relation is
a contractual one, may by special contract define their respective
duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or public
policy. It must clearly appear that there actually was such a special
contract, however, in order to vary the ordinary obligations implied by
law from the relationship of the parties; liability of the deposit
company will not be enlarged or restricted by words of doubtful
meaning. The company, in renting safe-deposit boxes, cannot exempt
itself from liability for loss of the contents by its own fraud or
negligence or that, of its agents or servants, and if a provision of the
contract may be construed as an attempt to do so, it will be held
ineffective for the purpose. Although it has been held that the lessor
of a safe-deposit box cannot limit its liability for loss of the contents
thereof through its own negligence, the view has been taken that
such a lessor may limit its liability to some extent by agreement or
stipulation ."[10 AM JUR 2d., 466]. (citations omitted) 16

It must be noted that conditions No. 13 and No. 14 in

the Contract of Lease of Safety Deposit Box in CA
Agro-Industrial Development Corp. are strikingly
similar to condition No. 13 in the instant case. On the
other hand, both condition No. 8 in CA Agro-Industrial
Development Corp. and condition No. 9 in the present
case limit the scope of the exercise of due diligence
by the banks involved to merely seeing to it that only
the renter, his authorized agent or his legal
representative should open or have access to the
safety deposit box. In short, in all other situations, it
would seem that SBTC is not bound to exercise
diligence of any kind at all. Assayed in the light of Our
aforementioned pronouncements in CA Agrolndustrial Development Corp., it is not at all difficult to
conclude that both conditions No. 9 and No. 13 of the
"Lease Agreement" covering the safety deposit box in
question (Exhibits "A" and "1") must be stricken down

for being contrary to law and public policy as they are

meant to exempt SBTC from any liability for damage,
loss or destruction of the contents of the safety
deposit box which may arise from its own or its
agents' fraud, negligence or delay. Accordingly, SBTC
cannot take refuge under the said conditions.
Public respondent further postulates that SBTC
cannot be held responsible for the destruction or loss
of the stamp collection because the flooding was a
fortuitous event and there was no showing of SBTC's
participation in the aggravation of the loss or injury. It
states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by
the law, or when it is otherwise declared
by stipulation, or when the nature of the
obligation requires the assumption of
risk, no person shall be responsible for
those events which could not be
foreseen, or which, though foreseen,
were inevitable.'
In its dissertation of the phrase "caso
fortuito" the Enciclopedia Jurisdicada
Espaola 17 says: "In a legal sense and,
consequently, also in relation to contracts,
a "caso fortuito" prevents (sic) 18 the following
essential characteristics: (1) the cause of the

unforeseen ands unexpected occurrence, or of

the failure of the debtor to comply with his
obligation, must be independent of the human
will; (2) it must be impossible to foresee the event
which constitutes the "caso fortuito," or if it can be
foreseen, it must be impossible to avoid; (3) the
occurrence must be such as to render it
impossible for one debtor to fulfill his obligation in
a normal manner; and (4) the obligor must be
free from any participation in the aggravation of
the injury resulting to the creditor." (cited in
Servando vs. Phil., Steam Navigation
Co., supra).19
Here, the unforeseen or unexpected inundating
floods were independent of the will of the
appellant bank and the latter was not shown to
have participated in aggravating damage (sic) to
the stamps collection of the appellee. In fact, the
appellant bank offered its services to secure the
assistance of an expert to save most of the then
good stamps but the appelle refused and let (sic)
these recoverable stamps inside the safety
deposit box until they were ruined. 20
Both the law and authority cited are clear enough and
require no further elucidation. Unfortunately, however,
the public respondent failed to consider that in the

instant case, as correctly held by the trial court, SBTC

was guilty of negligence. The facts constituting
negligence are enumerated in the petition and have
been summarized in this ponencia. SBTC's
negligence aggravated the injury or damage to the
stamp collection. SBTC was aware of the floods of
1985 and 1986; it also knew that the floodwaters
inundated the room where Safe Deposit Box No. 54
was located. In view thereof, it should have lost no
time in notifying the petitioner in order that the box
could have been opened to retrieve the stamps, thus
saving the same from further deterioration and loss. In
this respect, it failed to exercise the reasonable care
and prudence expected of a good father of a family,
thereby becoming a party to the aggravation of the
injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent Article
1170 of the Civil Code, which reads:
Those who in the performance of their obligation are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for
damages,

thus comes to the succor of the petitioner. The

destruction or loss of the stamp collection which was,
in the language of the trial court, the "product of 27
years of patience and diligence" 21 caused the
petitioner pecuniary loss; hence, he must be
compensated therefor.
We cannot, however, place Our imprimatur on the trial
court's award of moral damages. Since the
relationship between the petitioner and SBTC is based
on a contract, either of them may be held liable for
moral damages for breach thereof only if said party

had acted fraudulently or in bad faith. 22 There is here

no proof of fraud or bad faith on the part of SBTC.
WHEREFORE, the instant petition is hereby
GRANTED. The challenged Decision and Resolution of
the public respondent Court of Appeals of 21 August
1991 and 21 November 1991, respectively, in CA-G.R.
CV No. 26737, are hereby SET ASIDE and the Decision
of 19 February 1990 of Branch 47 of the Regional Trial
Court of Manila in Civil Case No. 87-42601 is hereby
REINSTATED in full, except as to the award of moral
damages which is hereby set aside.
Costs against the private respondent.
SO ORDERED.
MERCEDES MORALIDAD, Petitioner, vs. SPS. DIOSDADO
PERNES and ARLENE PERNES, Respondents
SECOND DIVISION
G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to
nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610,
to wit:
1. Decision dated September 27, 2001, 1 affirming an earlier decision of the Regional Trial Court
(RTC) of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao City,
Branch 1, in an action for unlawful detainer thereat commenced by the petitioner against the herein
respondents; and
2. Resolution dated February 28, 2002, 2 denying petitioners motion for reconsideration.
At the heart of this controversy is a parcel of land located in Davao City and registered in the name of
petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T-123125 of the Registry
of Deeds of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in
Manila, she had the good fortune of furthering her studies at the University of Pennsylvania, U.S.A.
While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese, which she did
for seven (7) years. Thereafter, she worked at the Mental Health Department of said University for
the next seventeen (17) years.
During those years, she would come home to the Philippines to spend her two-month summer
vacation in her hometown in Davao City. Being single, she would usually stay in Mandug, Davao City,
in the house of her niece, respondent Arlene Pernes, a daughter of her younger sister, Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of
Davao City was infested by NPA rebels and many women and children were victims of crossfire
between government troops and the insurgents. Shocked and saddened about this development,
she immediately sent money to Araceli, Arlenes older sister, with instructions to look for a lot in
Davao City where Arlene and her family could transfer and settle down. This was why she bought the
parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to
Davao City proper but later she wanted the property to be also available to any of her kins wishing to
live and settle in Davao City. Petitioner made known this intention in a document she executed on
July 21, 1986. 3 The document reads:
I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th day of
January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania,
U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village
Subdivision, Bajada, Davao City, 9501, and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay
as long as they like;
2. That anybody of my kins who wishes to stay on the aforementioned real property should maintain
an atmosphere of cooperation, live in harmony and must avoid bickering with one another;
3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof.
Provided, however, that the same is not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the
freedom to look for his own;
5. That any proceeds or income derived from the aforementioned properties shall be allotted to my
nearest kins who have less in life in greater percentage and lesser percentage to those who are
better of in standing.
xxx xxx xxx
Following her retirement in 1993, petitioner came back to the Philippines to stay with the
respondents on the house they build on the subject property. In the course of time, their relations
turned sour because members of the Pernes family were impervious to her suggestions and
attempts to change certain practices concerning matters of health and sanitation within their
compound. For instance, Arlenes eldest son, Myco Pernes, then a fourth year veterinary medicine

student, would answer petitioner back with clenched fist and at one time hurled profanities when she
corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the local barangay
lupon where she lodged a complaint for slander, harassment, threat and defamation against the
Pernes Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate
petitioners property but not after they are reimbursed for the value of the house they built thereon.
Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between
them.
Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the petitioner
narrating that, at one occasion in July 1998, she sustained cuts and wounds when Arlene pulled her
hair, hit her on the face, neck and back, while her husband Diosdado held her, twisting her arms in
the process.
Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal
complaint before the Regional Office of the Ombudsman for Mindanao, charging the respondent
spouses, who were both government employees, with conduct unbecoming of public servants. This
administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit
against the respondent spouses. Petitioner alleged that she is the registered owner of the land on
which the respondents built their house; that through her counsel, she sent the respondent spouses
a letter demanding them to vacate the premises and to pay rentals therefor, which the respondents
refused to heed.
In their defense, the respondents alleged having entered the property in question, building their
house thereon and maintaining the same as their residence with petitioners full knowledge and
express consent. To prove their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses to build their house on her
property and stay thereat for as long as they like.
The MTCC, resolving the ejectment suit in petitioners favor, declared that the respondent spouses,
although builders in good faith vis--vis the house they built on her property, cannot invoke their
bona fides as a valid excuse for not complying with the demand to vacate. To the MTCC,
respondents continued possession of the premises turned unlawful upon their receipt of the demand
to vacate, such possession being merely at petitioners tolerance, and sans any rental. Accordingly,
in its decision dated November 17, 1999, 4 the MTCC rendered judgment for the petitioner, as plaintiff
therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the defendants,
as follows:
a) Directing the defendants, their agents and other persons acting on their behalf to vacate the
premises and to yield peaceful possession thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they vacate
premises;
c) Sentencing defendants to pay the sum of P120,000.00 5 as attorneys fees and to pay the cost of
suit.

Defendants counterclaim are hereby dismissed except with respect to the claim for reimbursement of
necessary and useful expenses which should be litigated in an ordinary civil actions. (sic)
Dissatisfied, the respondent spouses appealed to the RTC of Davao City.
In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially
granted by the RTC in its Order of February 29, 2000, but the Order was later withdrawn and vacated
by its subsequent Order dated May 9, 2000 6 on the ground that immediate execution of the
appealed decision was not the prudent course of action to take, considering that the house the
respondents constructed on the subject property might even be more valuable than the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the MTCC, holding
that respondents possession of the property in question was not, as ruled by the latter court, by
mere tolerance of the petitioner but rather by her express consent. It further ruled that Article 1678 of
the Civil Code on reimbursement of improvements introduced is inapplicable since said provision
contemplates of a lessor-lessee arrangement, which was not the factual milieu obtaining in the case.
Instead, the RTC ruled that what governed the parties relationship are Articles 448 and 546 of the
Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly possessors of the property by
permission from plaintiff [petitioner], and builders in good faith, they have the right to retain
possession of the property subject of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and this right is superior to the
procedural right to [sic] plaintiff to immediately ask for their removal by a writ of execution by virtue of
a decision which as we have shown is erroneous, and therefore invalid. (Words in brackets supplied),
and accordingly dismissed petitioners appeal, as follows:
WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and declared
invalid. Consequently, the motion for execution pending appeal is likewise denied.
Counter-claims of moral and exemplary damages claimed by defendants are likewise dismissed.
However, attorneys fees in the amount of fifteen thousand pesos is hereby awarded in favor of
defendants-appellants, and against plaintiffs.
SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the Civil
Code to the case, ruled that it is still premature to apply the same considering that the issue of
whether respondents right to possess a portion of petitioners land had already expired or was
already terminated was not yet resolved. To the CA, the unlawful detainer suit presupposes the
cessation of respondents right to possess. The CA further ruled that what governs the rights of the
parties is the law on usufruct but petitioner failed to establish that respondents right to possess had
already ceased. On this premise, the CA concluded that the ejectment suit instituted by the petitioner
was premature. The appellate court thus affirmed the appealed RTC decision, disposing:

WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of merit.
Accordingly, the petitioners complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its Resolution of February 28, 2002,
petitioner is now before this Court raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL
DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES 448 AND 546
AND THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE
CIVIL CODE.
The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was

constituted between the parties herein is one
of usufruct over a piece of land, with the petitioner being
the owner of the property upon whom the naked title
thereto remained and the respondents being two (2)
among other unnamed usufructuaries who were simply
referred to as petitioners kin. The Court, however, cannot go along with the
CAs holding that the action for unlawful detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:
ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its
form and substance, unless the title constituting it or the law otherwise provides.
Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property. 9 It is also
defined as the right to enjoy the property of another temporarily, including both the jus utendi and the
jus fruendi, 10 with the owner retaining the jus disponendi or the power to alienate the same.

11

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her intention
to give respondents and her other kins the right to use and to enjoy the fruits of her property. There
can also be no quibbling about the respondents being given the right "to build their own house" on
the property and to stay thereat "as long as they like." Paragraph #5 of the same document earmarks
"proceeds or income derived from the aforementioned properties" for the petitioners "nearest kins
who have less in life in greater percentage and lesser percentage to those who are better of (sic) in
standing." The established facts undoubtedly gave respondents not only the right to use the property
but also granted them, among the petitioners other kins, the right to enjoy the fruits thereof. We have
no quarrel, therefore, with the CAs ruling that usufruct was constituted between petitioner and
respondents. It is thus pointless to discuss why there was no lease contract between the parties.

However, determinative of the outcome of the ejectment case is the resolution of the next issue, i.e.,
whether the existing usufruct may be deemed to have been extinguished or terminated. If the
question is resolved in the affirmative, then the respondents right to possession, proceeding as it did
from their right of usufruct, likewise ceased. In that case, petitioners action for ejectment in the
unlawful detainer case could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx
xxx xxx xxx
From the foregoing provision, it becomes apparent that for an action for unlawful detainer to prosper,
the plaintiff [petitioner] needs to prove that defendants [respondents] right to possess already
expired and terminated. Now, has respondents right to possess the subject portion of petitioners
property expired or terminated? Let us therefore examine respondents basis for occupying the
same.
It is undisputed that petitioner expressly authorized respondents o occupy portion of her property on
which their house may be built. Thus "it is my desire that Mr. and Mrs. Diosdado M. Pernes may
build their house therein and stay as long as they like." From this statement, it seems that petitioner
had given the respondents the usufructuary rights over the portion that may be occupied by the
house that the latter would build, the duration of which being dependent on how long respondents
would like to occupy the property. While petitioner had already demanded from the respondents the
surrender of the premises, this Court is of the opinion that the usufructuary rights of respondents had
not been terminated by the said demand considering the clear statement of petitioner that she is
allowing respondents to occupy portion of her land as long as the latter want to. Considering that
respondents still want to occupy the premises, petitioner clearly cannot eject respondents.

12

We disagree with the CAs conclusion of law on the matter. The term or period of the usufruct
originally specified provides only one of the bases for the right of a usufructuary to hold and retain
possession of the thing given in usufruct. There are other modes or instances whereby the usufruct
shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other
modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless a contrary intention clearly appears;
(2) By expiration of the period for which it was constituted, or by the fulfillment of any resolutory
condition provided in the title creating the usufruct;
(3) By merger of the usufruct and ownership in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the person constituting the usufruct;
(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets
forth the conditions of, the usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins may enjoy
the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not
inimical to the purpose thereof" (Emphasis supplied). What may be inimical to the purpose
constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it
abundantly clear "that anybody of my kins who wishes to stay on the aforementioned property should
maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another."
That the maintenance of a peaceful and harmonious relations between and among kin constitutes an
indispensable condition for the continuance of the usufruct is clearly deduced from the succeeding
Paragraph #4 where petitioner stated "[T]hat anyone of my kins who cannot conform with the wishes
of the undersigned may exercise the freedom to look for his own." In fine, the occurrence of any of
the following: the loss of the atmosphere of cooperation, the bickering or the cessation of
harmonious relationship between/among kin constitutes a resolutory condition which, by express
wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before the
MTCC indicated that the relations between the parties "have deteriorated to almost an irretrievable
level." 13 There is no doubt then that what impelled petitioner to file complaints before the local
barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful
detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes
family and vice versa.
Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and
the violence and humiliation she was made to endure, despite her advanced age and frail condition,
are enough factual bases to consider the usufruct as having been terminated.
To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement of the
improvements they introduced on the property during the effectivity of the usufruct should be
governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with
approval what Justice Edgardo Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the
terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216; se also
Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for
the improvements they may have introduced on the property. We quote Articles 579 and 580 of the
Civil Code:
Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or
expenses for mere pleasure as he may deem proper, provided he does not alter its form or

substance; but he shall have no right to be indemnified therefor. He may, however, remove such
improvements, should it be possible to do so without damage to the property. (Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he may have made on the property against
any damage to the same.

Given the foregoing perspective, respondents will

have to be ordered to vacate the premises without any
right of reimbursement. If the rule on reimbursement
or indemnity were otherwise, then the usufructuary
might, as an author pointed out, improve the owner
out of his property. 15 The respondents may, however,
remove or destroy the improvements they may have
introduced thereon without damaging the petitioners
property.
Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and
enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a noble
gesture with unkindness. At the end of the day, therefore, they really cannot begrudge their aunt for
putting an end to their right of usufruct. The disposition herein arrived is not only legal and called for
by the law and facts of the case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are
REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with
MODIFICATION that all of respondents counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.
No pronouncement as to costs.
SO ORDERED.

COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and

EDDIE GUEVARRA
FIRST DIVISION
G.R. No. 146364

June 3, 2004

COLITO T. PAJUYO, petitioner,

vs.
COURT OF APPEALS and EDDIE GUEVARRA, respondents.
DECISION
CARPIO, J.:
The Case

Before us is a petition for review 1 of the 21 June 2000 Decision2 and 14 December 2000 Resolution
of the Court of Appeals in CA-G.R. SP No. 43129. The Court of Appeals set aside the 11 November
1996 decision3 of the Regional Trial Court of Quezon City, Branch 81,4 affirming the 15 December
1995 decision5 of the Metropolitan Trial Court of Quezon City, Branch 31.6
The Antecedents
In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez for the rights
over a 250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house made
of light materials on the lot. Pajuyo and his family lived in the house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed
a Kasunduan or agreement. Pajuyo, as owner of the house, allowed Guevarra to live in the house for
free provided Guevarra would maintain the cleanliness and orderliness of the house. Guevarra
promised that he would voluntarily vacate the premises on Pajuyos demand.
In September 1994, Pajuyo informed Guevarra of his need of the house and demanded that
Guevarra vacate the house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City,
Branch 31 ("MTC").
In his Answer, Guevarra claimed that Pajuyo had no valid title or right of possession over the lot
where the house stands because the lot is within the 150 hectares set aside by Proclamation No.
137 for socialized housing. Guevarra pointed out that from December 1985 to September 1994,
Pajuyo did not show up or communicate with him. Guevarra insisted that neither he nor Pajuyo has
valid title to the lot.
On 15 December 1995, the MTC rendered its decision in favor of Pajuyo. The dispositive portion of
the MTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff and
against defendant, ordering the latter to:
A) vacate the house and lot occupied by the defendant or any other person or
persons claiming any right under him;
B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300.00) monthly as
reasonable compensation for the use of the premises starting from the last demand;
C) pay plaintiff the sum of P3,000.00 as and by way of attorneys fees; and
D) pay the cost of suit.
SO ORDERED.7
Aggrieved, Guevarra appealed to the Regional Trial Court of Quezon City, Branch 81 ("RTC").
On 11 November 1996, the RTC affirmed the MTC decision. The dispositive portion of the RTC
decision reads:

WHEREFORE, premises considered, the Court finds no reversible error in the decision
appealed from, being in accord with the law and evidence presented, and the same is hereby
affirmed en toto.
SO ORDERED.8
Guevarra received the RTC decision on 29 November 1996. Guevarra had only until 14 December
1996 to file his appeal with the Court of Appeals. Instead of filing his appeal with the Court of
Appeals, Guevarra filed with the Supreme Court a "Motion for Extension of Time to File Appeal by
Certiorari Based on Rule 42" ("motion for extension"). Guevarra theorized that his appeal raised pure
questions of law. The Receiving Clerk of the Supreme Court received the motion for extension on 13
December 1996 or one day before the right to appeal expired.
On 3 January 1997, Guevarra filed his petition for review with the Supreme Court.
On 8 January 1997, the First Division of the Supreme Court issued a Resolution 9 referring the motion
for extension to the Court of Appeals which has concurrent jurisdiction over the case. The case
presented no special and important matter for the Supreme Court to take cognizance of at the first
instance.
On 28 January 1997, the Thirteenth Division of the Court of Appeals issued a Resolution 10 granting
the motion for extension conditioned on the timeliness of the filing of the motion.
On 27 February 1997, the Court of Appeals ordered Pajuyo to comment on Guevaras petition for
review. On 11 April 1997, Pajuyo filed his Comment.
On 21 June 2000, the Court of Appeals issued its decision reversing the RTC decision. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the assailed Decision of the court a quo in Civil Case
No. Q-96-26943 isREVERSED and SET ASIDE; and it is hereby declared that the ejectment
case filed against defendant-appellant is without factual and legal basis.
SO ORDERED.11
Pajuyo filed a motion for reconsideration of the decision. Pajuyo pointed out that the Court of
Appeals should have dismissed outright Guevarras petition for review because it was filed out of
time. Moreover, it was Guevarras counsel and not Guevarra who signed the certification against
forum-shopping.
On 14 December 2000, the Court of Appeals issued a resolution denying Pajuyos motion for
reconsideration. The dispositive portion of the resolution reads:
WHEREFORE, for lack of merit, the motion for reconsideration is hereby DENIED. No costs.
SO ORDERED.12
The Ruling of the MTC
The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is the house and not
the lot. Pajuyo is the owner of the house, and he allowed Guevarra to use the house only by

tolerance. Thus, Guevarras refusal to vacate the house on Pajuyos demand made Guevarras
continued possession of the house illegal.
The Ruling of the RTC
The RTC upheld the Kasunduan, which established the landlord and tenant relationship between
Pajuyo and Guevarra. The terms of the Kasunduan bound Guevarra to return possession of the
house on demand.
The RTC rejected Guevarras claim of a better right under Proclamation No. 137, the Revised
National Government Center Housing Project Code of Policies and other pertinent laws. In an
ejectment suit, the RTC has no power to decide Guevarras rights under these laws. The RTC
declared that in an ejectment case, the only issue for resolution is material or physical possession,
not ownership.
The Ruling of the Court of Appeals
The Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra
illegally occupied the contested lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was also a squatter. Perez had no right or
title over the lot because it is public land. The assignment of rights between Perez and Pajuyo, and
the Kasunduan between Pajuyo and Guevarra, did not have any legal effect. Pajuyo and Guevarra
are in pari delicto or in equal fault. The court will leave them where they are.
The Court of Appeals reversed the MTC and RTC rulings, which held that the Kasunduan between
Pajuyo and Guevarra created a legal tie akin to that of a landlord and tenant relationship. The Court
of Appeals ruled that theKasunduan is not a lease contract but a commodatum because the
agreement is not for a price certain.
Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the appellate court held
that Guevarra has a better right over the property under Proclamation No. 137. President Corazon C.
Aquino ("President Aquino") issued Proclamation No. 137 on 7 September 1987. At that time,
Guevarra was in physical possession of the property. Under Article VI of the Code of Policies
Beneficiary Selection and Disposition of Homelots and Structures in the National Housing Project
("the Code"), the actual occupant or caretaker of the lot shall have first priority as beneficiary of the
project. The Court of Appeals concluded that Guevarra is first in the hierarchy of priority.
In denying Pajuyos motion for reconsideration, the appellate court debunked Pajuyos claim that
Guevarra filed his motion for extension beyond the period to appeal.
The Court of Appeals pointed out that Guevarras motion for extension filed before the Supreme
Court was stamped "13 December 1996 at 4:09 PM" by the Supreme Courts Receiving Clerk. The
Court of Appeals concluded that the motion for extension bore a date, contrary to Pajuyos claim that
the motion for extension was undated. Guevarra filed the motion for extension on time on 13
December 1996 since he filed the motion one day before the expiration of the reglementary period
on 14 December 1996. Thus, the motion for extension properly complied with the condition imposed
by the Court of Appeals in its 28 January 1997 Resolution. The Court of Appeals explained that the
thirty-day extension to file the petition for review was deemed granted because of such compliance.

The Court of Appeals rejected Pajuyos argument that the appellate court should have dismissed the
petition for review because it was Guevarras counsel and not Guevarra who signed the certification
against forum-shopping. The Court of Appeals pointed out that Pajuyo did not raise this issue in his
Comment. The Court of Appeals held that Pajuyo could not now seek the dismissal of the case after
he had extensively argued on the merits of the case. This technicality, the appellate court opined,
was clearly an afterthought.
The Issues
Pajuyo raises the following issues for resolution:
WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND
DISCRETION TANTAMOUNT TO LACK OF JURISDICTION:
1) in GRANTING, instead of denying, Private Respondents Motion for an Extension
of thirty days to file petition for review at the time when there was no more period to
extend as the decision of the Regional Trial Court had already become final and
executory.
2) in giving due course, instead of dismissing, private respondents Petition for
Review even though the certification against forum-shopping was signed only by
counsel instead of by petitioner himself.
3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact
a commodatum, instead of a Contract of Lease as found by the Metropolitan Trial
Court and in holding that "the ejectment case filed against defendant-appellant is
without legal and factual basis".
4) in reversing and setting aside the Decision of the Regional Trial Court in Civil Case
No. Q-96-26943 and in holding that the parties are in pari delicto being both
squatters, therefore, illegal occupants of the contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called Code of Policies of
the National Government Center Housing Project instead of deciding the same under
the Kasunduan voluntarily executed by the parties, the terms and conditions of which
are the laws between themselves.13
The Ruling of the Court
The procedural issues Pajuyo is raising are baseless. However, we find merit in the substantive
issues Pajuyo is submitting for resolution.
Procedural Issues
Pajuyo insists that the Court of Appeals should have dismissed outright Guevarras petition for review
because the RTC decision had already become final and executory when the appellate court acted
on Guevarras motion for extension to file the petition. Pajuyo points out that Guevarra had only one
day before the expiry of his period to appeal the RTC decision. Instead of filing the petition for review
with the Court of Appeals, Guevarra filed with this Court an undated motion for extension of 30 days
to file a petition for review. This Court merely referred the motion to the Court of Appeals. Pajuyo

believes that the filing of the motion for extension with this Court did not toll the running of the period
to perfect the appeal. Hence, when the Court of Appeals received the motion, the period to appeal
had already expired.
We are not persuaded.
Decisions of the regional trial courts in the exercise of their appellate jurisdiction are appealable to
the Court of Appeals by petition for review in cases involving questions of fact or mixed questions of
fact and law.14 Decisions of the regional trial courts involving pure questions of law are appealable
directly to this Court by petition for review. 15 These modes of appeal are now embodied in Section 2,
Rule 41 of the 1997 Rules of Civil Procedure.
Guevarra believed that his appeal of the RTC decision involved only questions of law. Guevarra thus
filed his motion for extension to file petition for review before this Court on 14 December 1996. On 3
January 1997, Guevarra then filed his petition for review with this Court. A perusal of Guevarras
petition for review gives the impression that the issues he raised were pure questions of law. There is
a question of law when the doubt or difference is on what the law is on a certain state of
facts.16 There is a question of fact when the doubt or difference is on the truth or falsity of the facts
alleged.17
In his petition for review before this Court, Guevarra no longer disputed the facts. Guevarras petition
for review raised these questions: (1) Do ejectment cases pertain only to possession of a structure,
and not the lot on which the structure stands? (2) Does a suit by a squatter against a fellow squatter
constitute a valid case for ejectment? (3) Should a Presidential Proclamation governing the lot on
which a squatters structure stands be considered in an ejectment suit filed by the owner of the
structure?
These questions call for the evaluation of the rights of the parties under the law on ejectment and the
Presidential Proclamation. At first glance, the questions Guevarra raised appeared purely legal.
However, some factual questions still have to be resolved because they have a bearing on the legal
questions raised in the petition for review. These factual matters refer to the metes and bounds of the
disputed property and the application of Guevarra as beneficiary of Proclamation No. 137.
The Court of Appeals has the power to grant an extension of time to file a petition for review.
In Lacsamana v. Second Special Cases Division of the Intermediate Appellate Court,18 we
declared that the Court of Appeals could grant extension of time in appeals by petition for review.
In Liboro v. Court of Appeals,19 we clarified that the prohibition against granting an extension of
time applies only in a case where ordinary appeal is perfected by a mere notice of appeal. The
prohibition does not apply in a petition for review where the pleading needs verification. A petition for
review, unlike an ordinary appeal, requires preparation and research to present a persuasive
position.20The drafting of the petition for review entails more time and effort than filing a notice of
appeal.21 Hence, the Court of Appeals may allow an extension of time to file a petition for review.
In the more recent case of Commissioner of Internal Revenue v. Court of Appeals,22 we held
that Liborosclarification of Lacsamana is consistent with the Revised Internal Rules of the Court of
Appeals and Supreme Court Circular No. 1-91. They all allow an extension of time for filing petitions
for review with the Court of Appeals. The extension, however, should be limited to only fifteen days
save in exceptionally meritorious cases where the Court of Appeals may grant a longer period.

A judgment becomes "final and executory" by operation of law. Finality of judgment becomes a fact
on the lapse of the reglementary period to appeal if no appeal is perfected. 23 The RTC decision could
not have gained finality because the Court of Appeals granted the 30-day extension to Guevarra.
The Court of Appeals did not commit grave abuse of discretion when it approved Guevarras motion
for extension. The Court of Appeals gave due course to the motion for extension because it complied
with the condition set by the appellate court in its resolution dated 28 January 1997. The resolution
stated that the Court of Appeals would only give due course to the motion for extension if filed on
time. The motion for extension met this condition.
The material dates to consider in determining the timeliness of the filing of the motion for extension
are (1) the date of receipt of the judgment or final order or resolution subject of the petition, and (2)
the date of filing of the motion for extension. 24 It is the date of the filing of the motion or pleading, and
not the date of execution, that determines the timeliness of the filing of that motion or pleading. Thus,
even if the motion for extension bears no date, the date of filing stamped on it is the reckoning point
for determining the timeliness of its filing.
Guevarra had until 14 December 1996 to file an appeal from the RTC decision. Guevarra filed his
motion for extension before this Court on 13 December 1996, the date stamped by this Courts
Receiving Clerk on the motion for extension. Clearly, Guevarra filed the motion for extension exactly
one day before the lapse of the reglementary period to appeal.
Assuming that the Court of Appeals should have dismissed Guevarras appeal on technical grounds,
Pajuyo did not ask the appellate court to deny the motion for extension and dismiss the petition for
review at the earliest opportunity. Instead, Pajuyo vigorously discussed the merits of the case. It was
only when the Court of Appeals ruled in Guevarras favor that Pajuyo raised the procedural issues
against Guevarras petition for review.
A party who, after voluntarily submitting a dispute for resolution, receives an adverse decision on the
merits, is estopped from attacking the jurisdiction of the court. 25 Estoppel sets in not because the
judgment of the court is a valid and conclusive adjudication, but because the practice of attacking the
courts jurisdiction after voluntarily submitting to it is against public policy. 26
In his Comment before the Court of Appeals, Pajuyo also failed to discuss Guevarras failure to sign
the certification against forum shopping. Instead, Pajuyo harped on Guevarras counsel signing the
verification, claiming that the counsels verification is insufficient since it is based only on "mere
information."
A partys failure to sign the certification against forum shopping is different from the partys failure to
sign personally the verification. The certificate of non-forum shopping must be signed by the party,
and not by counsel.27 The certification of counsel renders the petition defective. 28
On the other hand, the requirement on verification of a pleading is a formal and not a jurisdictional
requisite.29 It is intended simply to secure an assurance that what are alleged in the pleading are true
and correct and not the product of the imagination or a matter of speculation, and that the pleading is
filed in good faith.30 The party need not sign the verification. A partys representative, lawyer or any
person who personally knows the truth of the facts alleged in the pleading may sign the verification. 31

We agree with the Court of Appeals that the issue on the certificate against forum shopping was
merely an afterthought. Pajuyo did not call the Court of Appeals attention to this defect at the early
stage of the proceedings. Pajuyo raised this procedural issue too late in the proceedings.
Absence of Title over the Disputed Property will not Divest the Courts of Jurisdiction to
Resolve the Issue of Possession
Settled is the rule that the defendants claim of ownership of the disputed property will not divest the
inferior court of its jurisdiction over the ejectment case.32 Even if the pleadings raise the issue of
ownership, the court may pass on such issue to determine only the question of possession,
especially if the ownership is inseparably linked with the possession. 33 The adjudication on the issue
of ownership is only provisional and will not bar an action between the same parties involving title to
the land.34 This doctrine is a necessary consequence of the nature of the two summary actions of
ejectment, forcible entry and unlawful detainer, where the only issue for adjudication is the physical
or material possession over the real property.35
In this case, what Guevarra raised before the courts was that he and Pajuyo are not the owners of
the contested property and that they are mere squatters. Will the defense that the parties to the
ejectment case are not the owners of the disputed lot allow the courts to renounce their jurisdiction
over the case? The Court of Appeals believed so and held that it would just leave the parties where
they are since they are in pari delicto.
We do not agree with the Court of Appeals.
Ownership or the right to possess arising from ownership is not at issue in an action for recovery of
possession. The parties cannot present evidence to prove ownership or right to legal possession
except to prove the nature of the possession when necessary to resolve the issue of physical
possession.36 The same is true when the defendant asserts the absence of title over the property.
The absence of title over the contested lot is not a ground for the courts to withhold relief from the
parties in an ejectment case.
The only question that the courts must resolve in ejectment proceedings is - who is entitled to the
physical possession of the premises, that is, to the possession de facto and not to the possession de
jure.37 It does not even matter if a partys title to the property is questionable, 38 or when both parties
intruded into public land and their applications to own the land have yet to be approved by the proper
government agency.39 Regardless of the actual condition of the title to the property, the party in
peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. 40 Neither is
the unlawful withholding of property allowed. Courts will always uphold respect for prior possession.
Thus, a party who can prove prior possession can recover such possession even against the owner
himself.41Whatever may be the character of his possession, if he has in his favor prior possession in
time, he has the security that entitles him to remain on the property until a person with a better right
lawfully ejects him.42 To repeat, the only issue that the court has to settle in an ejectment suit is the
right to physical possession.
In Pitargue v. Sorilla,43 the government owned the land in dispute. The government did not
authorize either the plaintiff or the defendant in the case of forcible entry case to occupy the land.
The plaintiff had prior possession and had already introduced improvements on the public land. The
plaintiff had a pending application for the land with the Bureau of Lands when the defendant ousted

him from possession. The plaintiff filed the action of forcible entry against the defendant. The
government was not a party in the case of forcible entry.
The defendant questioned the jurisdiction of the courts to settle the issue of possession because
while the application of the plaintiff was still pending, title remained with the government, and the
Bureau of Public Lands had jurisdiction over the case. We disagreed with the defendant. We ruled
that courts have jurisdiction to entertain ejectment suits even before the resolution of the application.
The plaintiff, by priority of his application and of his entry, acquired prior physical possession over the
public land applied for as against other private claimants. That prior physical possession enjoys legal
protection against other private claimants because only a court can take away such physical
possession in an ejectment case.
While the Court did not brand the plaintiff and the defendant in Pitargue44 as squatters, strictly
speaking, their entry into the disputed land was illegal. Both the plaintiff and defendant entered the
public land without the owners permission. Title to the land remained with the government because
it had not awarded to anyone ownership of the contested public land. Both the plaintiff and the
defendant were in effect squatting on government property. Yet, we upheld the courts jurisdiction to
resolve the issue of possession even if the plaintiff and the defendant in the ejectment case did not
have any title over the contested land.
Courts must not abdicate their jurisdiction to resolve the issue of physical possession because of the
public need to preserve the basic policy behind the summary actions of forcible entry and unlawful
detainer. The underlying philosophy behind ejectment suits is to prevent breach of the peace and
criminal disorder and to compel the party out of possession to respect and resort to the law alone to
obtain what he claims is his.45 The party deprived of possession must not take the law into his own
hands.46 Ejectment proceedings are summary in nature so the authorities can settle speedily actions
to recover possession because of the overriding need to quell social disturbances. 47
We further explained in Pitargue the greater interest that is at stake in actions for recovery of
possession. We made the following pronouncements in Pitargue:
The question that is before this Court is: Are courts without jurisdiction to take cognizance of
possessory actions involving these public lands before final award is made by the Lands
Department, and before title is given any of the conflicting claimants? It is one of utmost
importance, as there are public lands everywhere and there are thousands of settlers,
especially in newly opened regions. It also involves a matter of policy, as it requires the
determination of the respective authorities and functions of two coordinate branches of the
Government in connection with public land conflicts.
Our problem is made simple by the fact that under the Civil Code, either in the old, which
was in force in this country before the American occupation, or in the new, we have a
possessory action, the aim and purpose of which is the recovery of the physical possession
of real property, irrespective of the question as to who has the title thereto. Under the
Spanish Civil Code we had the accion interdictal, a summary proceeding which could be
brought within one year from dispossession (Roman Catholic Bishop of Cebu vs. Mangaron,
6 Phil. 286, 291); and as early as October 1, 1901, upon the enactment of the Code of Civil
Procedure (Act No. 190 of the Philippine Commission) we implanted the common law action
of forcible entry (section 80 of Act No. 190), the object of which has been stated by this Court

to be "to prevent breaches of the peace and criminal disorder which would ensue from
the withdrawal of the remedy, and the reasonable hope such withdrawal would create
that some advantage must accrue to those persons who, believing themselves
entitled to the possession of property, resort to force to gain possession rather than
to some appropriate action in the court to assert their claims." (Supia and Batioco vs.
Quintero and Ayala, 59 Phil. 312, 314.) So before the enactment of the first Public Land Act
(Act No. 926) the action of forcible entry was already available in the courts of the country.
So the question to be resolved is, Did the Legislature intend, when it vested the power and
authority to alienate and dispose of the public lands in the Lands Department, to exclude the
courts from entertaining the possessory action of forcible entry between rival claimants or
occupants of any land before award thereof to any of the parties? Did Congress intend that
the lands applied for, or all public lands for that matter, be removed from the jurisdiction of the
judicial Branch of the Government, so that any troubles arising therefrom, or any breaches of
the peace or disorders caused by rival claimants, could be inquired into only by the Lands
Department to the exclusion of the courts? The answer to this question seems to us evident.
The Lands Department does not have the means to police public lands; neither does it have
the means to prevent disorders arising therefrom, or contain breaches of the peace among
settlers; or to pass promptly upon conflicts of possession. Then its power is clearly limited
to disposition and alienation, and while it may decide conflicts of possession in order
to make proper award, the settlement of conflicts of possession which is recognized
in the court herein has another ultimate purpose, i.e., the protection of actual
possessors and occupants with a view to the prevention of breaches of the peace.
The power to dispose and alienate could not have been intended to include the power
to prevent or settle disorders or breaches of the peace among rival settlers or
claimants prior to the final award. As to this, therefore, the corresponding branches of the
Government must continue to exercise power and jurisdiction within the limits of their
respective functions. The vesting of the Lands Department with authority to administer,
dispose, and alienate public lands, therefore, must not be understood as depriving the
other branches of the Government of the exercise of the respective functions or
powers thereon, such as the authority to stop disorders and quell breaches of the
peace by the police, the authority on the part of the courts to take jurisdiction over
possessory actions arising therefrom not involving, directly or indirectly, alienation
and disposition.
Our attention has been called to a principle enunciated in American courts to the effect that
courts have no jurisdiction to determine the rights of claimants to public lands, and that until
the disposition of the land has passed from the control of the Federal Government, the courts
will not interfere with the administration of matters concerning the same. (50 C. J. 10931094.) We have no quarrel with this principle. The determination of the respective rights of
rival claimants to public lands is different from the determination of who has the actual
physical possession or occupation with a view to protecting the same and preventing
disorder and breaches of the peace. A judgment of the court ordering restitution of the
possession of a parcel of land to the actual occupant, who has been deprived thereof by
another through the use of force or in any other illegal manner, can never be "prejudicial
interference" with the disposition or alienation of public lands. On the other hand, if courts
were deprived of jurisdiction of cases involving conflicts of possession, that threat of

judicial action against breaches of the peace committed on public lands would be
eliminated, and a state of lawlessness would probably be produced between
applicants, occupants or squatters, where force or might, not right or justice, would
rule.
It must be borne in mind that the action that would be used to solve conflicts of possession
between rivals or conflicting applicants or claimants would be no other than that of forcible
entry. This action, both in England and the United States and in our jurisdiction, is a
summary and expeditious remedy whereby one in peaceful and quiet possession may
recover the possession of which he has been deprived by a stronger hand, by violence or
terror; its ultimate object being to prevent breach of the peace and criminal disorder. (Supia
and Batioco vs. Quintero and Ayala, 59 Phil. 312, 314.) The basis of the remedy is mere
possession as a fact, of physical possession, not a legal possession. (Mediran vs.
Villanueva, 37 Phil. 752.) The title or right to possession is never in issue in an action of
forcible entry; as a matter of fact, evidence thereof is expressly banned, except to prove the
nature of the possession. (Second 4, Rule 72, Rules of Court.) With this nature of the action
in mind, by no stretch of the imagination can conclusion be arrived at that the use of the
remedy in the courts of justice would constitute an interference with the alienation,
disposition, and control of public lands. To limit ourselves to the case at bar can it be
pretended at all that its result would in any way interfere with the manner of the alienation or
disposition of the land contested? On the contrary, it would facilitate adjudication, for the
question of priority of possession having been decided in a final manner by the courts, said
question need no longer waste the time of the land officers making the adjudication or award.
(Emphasis ours)
The Principle of Pari Delicto is not Applicable to Ejectment Cases
The Court of Appeals erroneously applied the principle of pari delicto to this case.
Articles 1411 and 1412 of the Civil Code48 embody the principle of pari delicto. We explained the
principle of pari delicto in these words:
The rule of pari delicto is expressed in the maxims ex dolo malo non eritur actio and in pari
delicto potior est conditio defedentis. The law will not aid either party to an illegal agreement.
It leaves the parties where it finds them.49
The application of the pari delicto principle is not absolute, as there are exceptions to its application.
One of these exceptions is where the application of the pari delicto rule would violate wellestablished public policy.50
In Drilon v. Gaurana,51 we reiterated the basic policy behind the summary actions of forcible entry
and unlawful detainer. We held that:
It must be stated that the purpose of an action of forcible entry and detainer is that,
regardless of the actual condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by strong hand, violence or terror. In affording this remedy
of restitution the object of the statute is to prevent breaches of the peace and criminal
disorder which would ensue from the withdrawal of the remedy, and the reasonable hope
such withdrawal would create that some advantage must accrue to those persons who,

believing themselves entitled to the possession of property, resort to force to gain possession
rather than to some appropriate action in the courts to assert their claims. This is the
philosophy at the foundation of all these actions of forcible entry and detainer which are
designed to compel the party out of possession to respect and resort to the law alone to
obtain what he claims is his.52
Clearly, the application of the principle of pari delicto to a case of ejectment between squatters is
fraught with danger. To shut out relief to squatters on the ground of pari delicto would openly invite
mayhem and lawlessness. A squatter would oust another squatter from possession of the lot that the
latter had illegally occupied, emboldened by the knowledge that the courts would leave them where
they are. Nothing would then stand in the way of the ousted squatter from re-claiming his prior
possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery
of possession seek to prevent.53 Even the owner who has title over the disputed property cannot take
the law into his own hands to regain possession of his property. The owner must go to court.
Courts must resolve the issue of possession even if the parties to the ejectment suit are squatters.
The determination of priority and superiority of possession is a serious and urgent matter that cannot
be left to the squatters to decide. To do so would make squatters receive better treatment under the
law. The law restrains property owners from taking the law into their own hands. However, the
principle of pari delicto as applied by the Court of Appeals would give squatters free rein to
dispossess fellow squatters or violently retake possession of properties usurped from them. Courts
should not leave squatters to their own devices in cases involving recovery of possession.
Possession is the only Issue for Resolution in an Ejectment Case
The case for review before the Court of Appeals was a simple case of ejectment. The Court of
Appeals refused to rule on the issue of physical possession. Nevertheless, the appellate court held
that the pivotal issue in this case is who between Pajuyo and Guevarra has the "priority right as
beneficiary of the contested land under Proclamation No. 137." 54 According to the Court of Appeals,
Guevarra enjoys preferential right under Proclamation No. 137 because Article VI of the Code
declares that the actual occupant or caretaker is the one qualified to apply for socialized housing.
The ruling of the Court of Appeals has no factual and legal basis.
First. Guevarra did not present evidence to show that the contested lot is part of a relocation site
under Proclamation No. 137. Proclamation No. 137 laid down the metes and bounds of the land that
it declared open for disposition to bona fide residents.
The records do not show that the contested lot is within the land specified by Proclamation No. 137.
Guevarra had the burden to prove that the disputed lot is within the coverage of Proclamation No.
137. He failed to do so.
Second. The Court of Appeals should not have given credence to Guevarras unsubstantiated claim
that he is the beneficiary of Proclamation No. 137. Guevarra merely alleged that in the survey the
project administrator conducted, he and not Pajuyo appeared as the actual occupant of the lot.
There is no proof that Guevarra actually availed of the benefits of Proclamation No. 137. Pajuyo
allowed Guevarra to occupy the disputed property in 1985. President Aquino signed Proclamation

No. 137 into law on 11 March 1986. Pajuyo made his earliest demand for Guevarra to vacate the
property in September 1994.
During the time that Guevarra temporarily held the property up to the time that Proclamation No. 137
allegedly segregated the disputed lot, Guevarra never applied as beneficiary of Proclamation No.
137. Even when Guevarra already knew that Pajuyo was reclaiming possession of the property,
Guevarra did not take any step to comply with the requirements of Proclamation No. 137.
Third. Even assuming that the disputed lot is within the coverage of Proclamation No. 137 and
Guevarra has a pending application over the lot, courts should still assume jurisdiction and resolve
the issue of possession. However, the jurisdiction of the courts would be limited to the issue of
physical possession only.
In Pitargue,55 we ruled that courts have jurisdiction over possessory actions involving public land to
determine the issue of physical possession. The determination of the respective rights of rival
claimants to public land is, however, distinct from the determination of who has the actual physical
possession or who has a better right of physical possession. 56 The administrative disposition and
alienation of public lands should be threshed out in the proper government agency. 57
The Court of Appeals determination of Pajuyo and Guevarras rights under Proclamation No. 137
was premature. Pajuyo and Guevarra were at most merely potential beneficiaries of the law. Courts
should not preempt the decision of the administrative agency mandated by law to determine the
qualifications of applicants for the acquisition of public lands. Instead, courts should expeditiously
resolve the issue of physical possession in ejectment cases to prevent disorder and breaches of
peace.58
Pajuyo is Entitled to Physical Possession of the Disputed Property
Guevarra does not dispute Pajuyos prior possession of the lot and ownership of the house built on it.
Guevarra expressly admitted the existence and due execution of the Kasunduan.
The Kasunduan reads:
Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City, ay nagbibigay
pahintulot kay G. Eddie Guevarra, na pansamantalang manirahan sa nasabing bahay at lote ng
"walang bayad." Kaugnay nito, kailangang panatilihin nila ang kalinisan at kaayusan ng bahay at lote.
Sa sandaling kailangan na namin ang bahay at lote, silay kusang aalis ng walang reklamo.
Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and lot free of rent, but
Guevarra was under obligation to maintain the premises in good condition. Guevarra promised to
vacate the premises on Pajuyos demand but Guevarra broke his promise and refused to heed
Pajuyos demand to vacate.
These facts make out a case for unlawful detainer. Unlawful detainer involves the withholding by a
person from another of the possession of real property to which the latter is entitled after the
expiration or termination of the formers right to hold possession under a contract, express or
implied.59
Where the plaintiff allows the defendant to use his property by tolerance without any contract, the
defendant is necessarily bound by an implied promise that he will vacate on demand, failing which,

an action for unlawful detainer will lie.60 The defendants refusal to comply with the demand makes
his continued possession of the property unlawful. 61 The status of the defendant in such a case is
similar to that of a lessee or tenant whose term of lease has expired but whose occupancy continues
by tolerance of the owner.62
This principle should apply with greater force in cases where a contract embodies the permission or
tolerance to use the property. The Kasunduan expressly articulated Pajuyos forbearance. Pajuyo did
not require Guevarra to pay any rent but only to maintain the house and lot in good condition.
Guevarra expressly vowed in the Kasunduan that he would vacate the property on demand.
Guevarras refusal to comply with Pajuyos demand to vacate made Guevarras continued
possession of the property unlawful.
We do not subscribe to the Court of Appeals theory that the Kasunduan is one of commodatum.
In a contract of commodatum, one of the parties delivers to another something not consumable so
that the latter may use the same for a certain time and return it. 63 An essential feature
of commodatum is that it is gratuitous. Another feature of commodatum is that the use of the thing
belonging to another is for a certain period.64 Thus, the bailor cannot demand the return of the thing
loaned until after expiration of the period stipulated, or after accomplishment of the use for which
the commodatum is constituted.65 If the bailor should have urgent need of the thing, he may demand
its return for temporary use.66 If the use of the thing is merely tolerated by the bailor, he can demand
the return of the thing at will, in which case the contractual relation is called a precarium. 67 Under the
Civil Code, precarium is a kind of commodatum.68
The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not
essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to

Theimposition of this obligation

makes the Kasunduan a contract different from
acommodatum. The effects of the Kasunduan are also
different from that of acommodatum. Case law on
ejectment has treated relationship based on tolerance
as one that is akin to a landlord-tenant relationship
where the withdrawal of permission would result in
the termination of the lease.69 The tenants withholding
of the property would then be unlawful. This is settled
jurisprudence.
maintain the property in good condition.

Even assuming that the relationship between Pajuyo

and Guevarra is one ofcommodatum, Guevarra as
bailee would still have the duty to turn over
possession of the property to Pajuyo, the bailor. The
obligation to deliver or to return the thing received

attaches to contracts for safekeeping, or contracts of

commission, administration and
commodatum.70 These contracts certainly involve the
obligation to deliver or return the thing received.71
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a
squatter. Squatters, Guevarra pointed out, cannot enter into a contract involving the land they illegally
occupy. Guevarra insists that the contract is void.
Guevarra should know that there must be honor even between squatters. Guevarra freely entered
into theKasunduan. Guevarra cannot now impugn the Kasunduan after he had benefited from it.
The Kasunduan binds Guevarra.
The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a
right to physical possession of the contested property. The Kasunduan is the undeniable evidence of
Guevarras recognition of Pajuyos better right of physical possession. Guevarra is clearly a
possessor in bad faith. The absence of a contract would not yield a different result, as there would
still be an implied promise to vacate.
Guevarra contends that there is "a pernicious evil that is sought to be avoided, and that is allowing
an absentee squatter who (sic) makes (sic) a profit out of his illegal act."72 Guevarra bases his
argument on the preferential right given to the actual occupant or caretaker under Proclamation No.
137 on socialized housing.
We are not convinced.
Pajuyo did not profit from his arrangement with Guevarra because Guevarra stayed in the property
without paying any rent. There is also no proof that Pajuyo is a professional squatter who rents out
usurped properties to other squatters. Moreover, it is for the proper government agency to decide
who between Pajuyo and Guevarra qualifies for socialized housing. The only issue that we are
addressing is physical possession.
Prior possession is not always a condition sine qua non in ejectment.73 This is one of the distinctions
between forcible entry and unlawful detainer.74 In forcible entry, the plaintiff is deprived of physical
possession of his land or building by means of force, intimidation, threat, strategy or stealth. Thus, he
must allege and prove prior possession.75 But in unlawful detainer, the defendant unlawfully
withholds possession after the expiration or termination of his right to possess under any contract,
express or implied. In such a case, prior physical possession is not required. 76
Pajuyos withdrawal of his permission to Guevarra terminated the Kasunduan. Guevarras transient
right to possess the property ended as well. Moreover, it was Pajuyo who was in actual possession
of the property because Guevarra had to seek Pajuyos permission to temporarily hold the property
and Guevarra had to follow the conditions set by Pajuyo in the Kasunduan. Control over the property
still rested with Pajuyo and this is evidence of actual possession.
Pajuyos absence did not affect his actual possession of the disputed property. Possession in the
eyes of the law does not mean that a man has to have his feet on every square meter of the ground
before he is deemed in possession.77One may acquire possession not only by physical occupation,

but also by the fact that a thing is subject to the action of ones will. 78 Actual or physical occupation is
not always necessary.79
Ruling on Possession Does not Bind Title to the Land in Dispute
We are aware of our pronouncement in cases where we declared that "squatters and intruders who
clandestinely enter into titled government property cannot, by such act, acquire any legal right to said
property."80 We made this declaration because the person who had title or who had the right to legal
possession over the disputed property was a party in the ejectment suit and that party instituted the
case against squatters or usurpers.
In this case, the owner of the land, which is the government, is not a party to the ejectment case.
This case is between squatters. Had the government participated in this case, the courts could have
evicted the contending squatters, Pajuyo and Guevarra.
Since the party that has title or a better right over the property is not impleaded in this case, we
cannot evict on our own the parties. Such a ruling would discourage squatters from seeking the aid
of the courts in settling the issue of physical possession. Stripping both the plaintiff and the
defendant of possession just because they are squatters would have the same dangerous
implications as the application of the principle of pari delicto. Squatters would then rather settle the
issue of physical possession among themselves than seek relief from the courts if the plaintiff and
defendant in the ejectment case would both stand to lose possession of the disputed property. This
would subvert the policy underlying actions for recovery of possession.
Since Pajuyo has in his favor priority in time in holding the property, he is entitled to remain on the
property until a person who has title or a better right lawfully ejects him. Guevarra is certainly not that
person. The ruling in this case, however, does not preclude Pajuyo and Guevarra from introducing
evidence and presenting arguments before the proper administrative agency to establish any right to
which they may be entitled under the law. 81
In no way should our ruling in this case be interpreted to condone squatting. The ruling on the issue
of physical possession does not affect title to the property nor constitute a binding and conclusive
adjudication on the merits on the issue of ownership. 82 The owner can still go to court to recover
lawfully the property from the person who holds the property without legal title. Our ruling here does
not diminish the power of government agencies, including local governments, to condemn, abate,
remove or demolish illegal or unauthorized structures in accordance with existing laws.
Attorneys Fees and Rentals
The MTC and RTC failed to justify the award of P3,000 attorneys fees to Pajuyo. Attorneys fees as
part of damages are awarded only in the instances enumerated in Article 2208 of the Civil
Code.83 Thus, the award of attorneys fees is the exception rather than the rule. 84 Attorneys fees are
not awarded every time a party prevails in a suit because of the policy that no premium should be
placed on the right to litigate.85 We therefore delete the attorneys fees awarded to Pajuyo.
We sustain the P300 monthly rentals the MTC and RTC assessed against Guevarra. Guevarra did
not dispute this factual finding of the two courts. We find the amount reasonable compensation to
Pajuyo. The P300 monthly rental is counted from the last demand to vacate, which was on 16
February 1995.

WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and Resolution dated 14
December 2000 of the Court of Appeals in CA-G.R. SP No. 43129 are SET ASIDE. The Decision
dated 11 November 1996 of the Regional Trial Court of Quezon City, Branch 81 in Civil Case No. Q96-26943, affirming the Decision dated 15 December 1995 of the Metropolitan Trial Court of Quezon
City, Branch 31 in Civil Case No. 12432, is REINSTATEDwith MODIFICATION. The award of
attorneys fees is deleted. No costs.
SO ORDERED.

RAMON RALLOS, Administrator of the Estate of CONCEPCION

RALLOS, petitioner, vs. FELIX GO CHAN & SONS REALTY
CORPORATION and COURT OF APPEALS,
G.R. No. L-24332 January 31, 1978
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS, petitioner,
vs.
FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF APPEALS, respondents.
Seno, Mendoza & Associates for petitioner.
Ramon Duterte for private respondent.
MUOZ PALMA, J.:
This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal,
Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of
attorney which the principal had executed in favor. The administrator of the estate of the went to
court to have the sale declared uneanforceable and to recover the disposed share. The trial court
granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity of the sale and
the complaint.
Hence, this Petition for Review on certiorari.
The following facts are not disputed. Concepcion and Gerundia both surnamed Rallos were sisters
and registered co-owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu
covered by Transfer Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him
to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion Rallos died. On September 12,
1955, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 5983
to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled, and a new transfer
certificate of Title No. 12989 was issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a
complaint docketed as Civil Case No. R-4530 of the Court of First Instance of Cebu, praying (1) that
the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be d unenforceable,
and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of
Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of
the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that
plaintiff be indemnified by way of attorney's fees and payment of costs of suit. Named party
defendants were Felix Go Chan & Sons Realty Corporation, Simeon Rallos, and the Register of
Deeds of Cebu, but subsequently, the latter was dropped from the complaint. The complaint was
amended twice; defendant Corporation's Answer contained a crossclaim against its co-defendant,
Simon Rallos while the latter filed third-party complaint against his sister, Gerundia Rallos While the
case was pending in the trial court, both Simon and his sister Gerundia died and they were
substituted by the respective administrators of their estates.
After trial the court a quo rendered judgment with the following dispositive portion:

A. On Plaintiffs Complaint
(1) Declaring the deed of sale, Exh. "C", null and void insofar as the onehalf pro-indiviso share of Concepcion Rallos in the property in question,
Lot 5983 of the Cadastral Survey of Cebu is concerned;
(2) Ordering the Register of Deeds of Cebu City to cancel Transfer
Certificate of Title No. 12989 covering Lot 5983 and to issue in lieu
thereof another in the names of FELIX GO CHAN & SONS REALTY
CORPORATION and the Estate of Concepcion Rallos in the proportion
of one-half (1/2) share each pro-indiviso;
(3) Ordering Felix Go Chan & Sons Realty Corporation to deliver the
possession of an undivided one-half (1/2) share of Lot 5983 to the herein
plaintiff;
(4) Sentencing the defendant Juan T. Borromeo, administrator of the
Estate of Simeon Rallos, to pay to plaintiff in concept of reasonable
attorney's fees the sum of P1,000.00; and
(5) Ordering both defendants to pay the costs jointly and severally.
B. On GO CHANTS Cross-Claim:
(1) Sentencing the co-defendant Juan T. Borromeo, administrator of the
Estate of Simeon Rallos, to pay to defendant Felix Co Chan & Sons
Realty Corporation the sum of P5,343.45, representing the price of onehalf (1/2) share of lot 5983;
(2) Ordering co-defendant Juan T. Borromeo, administrator of the Estate
of Simeon Rallos, to pay in concept of reasonable attorney's fees to Felix
Go Chan & Sons Realty Corporation the sum of P500.00.
C. On Third-Party Complaint of defendant Juan T. Borromeo administrator of Estate of
Simeon Rallos, against Josefina Rallos special administratrix of the Estate of Gerundia
Rallos:
(1) Dismissing the third-party complaint without prejudice to filing either a complaint
against the regular administrator of the Estate of Gerundia Rallos or a claim in the
Intestate-Estate of Cerundia Rallos, covering the same subject-matter of the third-party
complaint, at bar. (pp. 98-100, Record on Appeal)

Felix Go Chan & Sons Realty Corporation appealed in due time to the Court of Appeals from the
foregoing judgment insofar as it set aside the sale of the one-half (1/2) share of Concepcion Rallos.
The appellate tribunal, as adverted to earlier, resolved the appeal on November 20, 1964 in favor of
the appellant corporation sustaining the sale in question. 1 The appellee administrator, Ramon
Rallos, moved for a reconsider of the decision but the same was denied in a resolution of March 4,
1965. 2
What is the legal effect of an act performed by an agent after the death of his principal? Applied
more particularly to the instant case, We have the query. is the sale of the undivided share of
Concepcion Rallos in lot 5983 valid although it was executed by the agent after the death of his
principal? What is the law in this jurisdiction as to the effect of the death of the principal on the
authority of the agent to act for and in behalf of the latter? Is the fact of knowledge of the death of the
principal a material factor in determining the legal effect of an act performed after such death?
Before proceedings to the issues, We shall briefly restate certain principles of law relevant to the
matter tinder consideration.
1. It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name of
another without being authorized by the latter, or unless he has by law a right to represent him. 3 A
contract entered into in the name of another by one who has no authority or the legal representation

or who has acted beyond his powers, shall be 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. 4 Article 1403 (1) of the same Code also provides:
ART. 1403. The following contracts are unenforceable, unless they are justified:
(1) Those entered into in the name of another person by one who hi - been given no
authority or legal representation or who has acted beyond his powers; ...

Out of the above given principles, sprung the creation and acceptance of the relationship of
agency whereby one party, caged the principal (mandante), authorizes another, called the agent
(mandatario), to act for and in his behalf in transactions with third persons. The essential elements of
agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2)
the object is the execution of a juridical act in relation to a third person; (3) the agents acts as a
representative and not for himself, and (4) the agent acts within the scope of his authority. 5
Agency is basically personal representative, and derivative in nature. The authority of the agent to
act emanates from the powers granted to him by his principal; his act is the act of the principal if
done within the scope of the authority.Qui facit per alium facit se. "He who acts through another acts
himself". 6
2. There are various ways of extinguishing agency, 7 but her We are concerned only with one cause
death of the principal Paragraph 3 of Art. 1919 of the Civil Code which was taken from Art. 1709
of the Spanish Civil Code provides:
ART. 1919. Agency is extinguished.
xxx xxx xxx
3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent; ...
(Emphasis supplied)

By reason of the very nature of the relationship between Principal and agent, agency is extinguished
by the death of the principal or the agent. This is the law in this jurisdiction. 8
Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the rationale for the law is
found in thejuridical basis of agency which is representation Them being an in. integration of the
personality of the principal integration that of the agent it is not possible for the representation to
continue to exist once the death of either is establish. Pothier agrees with Manresa that by reason of
the nature of agency, death is a necessary cause for its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso jure upon the death of either without necessity
for the heirs of the fact to notify the agent of the fact of death of the former. 9
The same rule prevails at common law the death of the principal effects instantaneous and
absolute revocation of the authority of the agent unless the Power be coupled with an
interest. 10 This is the prevalent rule in American Jurisprudence where it is well-settled that a power
without an interest confer. red upon an agent is dissolved by the principal's death, and any attempted
execution of the power afterward is not binding on the heirs or representatives of the deceased. 11
3. Is the general rule provided for in Article 1919 that the death of the principal or of the agent
extinguishes the agency, subject to any exception, and if so, is the instant case within that
exception? That is the determinative point in issue in this litigation. It is the contention of respondent
corporation which was sustained by respondent court that notwithstanding the death of the principal
Concepcion Rallos the act of the attorney-in-fact, Simeon Rallos in selling the former's sham in the
property is valid and enforceable inasmuch as the corporation acted in good faith in buying the
property in question.
Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore-mentioned.

ART. 1930. The agency shall remain in full force and effect even after the death of the
principal, if it has been constituted in the common interest of the latter and of the agent,
or in the interest of a third person who has accepted the stipulation in his favor.
ART. 1931. Anything done by the agent, without knowledge of the death of the principal or
of any other cause which extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have contracted with him in good. faith.

Article 1930 is not involved because admittedly the special power of attorney executed in favor of
Simeon Rallos was not coupled with an interest.
Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of
his principal is valid and effective only under two conditions, viz: (1) that the agent acted without
knowledge of the death of the principal and (2) that the third person who contracted with the agent
himself acted in good faith. Good faith here means that the third person was not aware of the death
of the principal at the time he contracted with said agent. These two requisites must concur the
absence of one will render the act of the agent invalid and unenforceable.
In the instant case, it cannot be questioned that the agent, Simeon Rallos, knew of the death of his
principal at the time he sold the latter's share in Lot No. 5983 to respondent corporation. The
knowledge of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the
trial court. 12 That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact
of the court a quo 13 and of respondent appellate court when the latter stated that Simon Rallos 'must
have known of the death of his sister, and yet he proceeded with the sale of the lot in the name of
both his sisters Concepcion and Gerundia Rallos without informing appellant (the realty corporation)
of the death of the former. 14
On the basis of the established knowledge of Simon Rallos concerning the death of his principal
Concepcion Rallos,Article 1931 of the Civil Code is inapplicable. The law expressly requires for its
application lack of knowledge on the part of the agent of the death of his principal; it is not enough
that the third person acted in good faith. Thus in Buason & Reyes v. Panuyas, the Court applying
Article 1738 of the old Civil rode now Art. 1931 of the new Civil Code sustained the validity , of a sale
made after the death of the principal because it was not shown that the agent knew of his principal's
demise. 15 To the same effect is the case of Herrera, et al., v. Luy Kim Guan, et al., 1961, where in
the words of Justice Jesus Barrera the Court stated:
... even granting arguemendo that Luis Herrera did die in 1936, plaintiffs presented no
proof and there is no indication in the record, that the agent Luy Kim Guan was aware of
the death of his principal at the time he sold the property. The death 6f the principal does
not render the act of an agent unenforceable, where the latter had no knowledge of such
extinguishment of the agency. (1 SCRA 406, 412)

4. In sustaining the validity of the sale to respondent consideration the Court of Appeals reasoned
out that there is no provision in the Code which provides that whatever is done by an agent having
knowledge of the death of his principal is void even with respect to third persons who may have
contracted with him in good faith and without knowledge of the death of the principal. 16
We cannot see the merits of the foregoing argument as it ignores the existence of the general rule
enunciated in Article 1919 that the death of the principal extinguishes the agency. That being the
general rule it follows a fortiori that any act of an agent after the death of his principal is void ab
initio unless the same fags under the exception provided for in the aforementioned Articles 1930 and
1931. Article 1931, being an exception to the general rule, is to be strictly construed, it is not to be
given an interpretation or application beyond the clear import of its terms for otherwise the courts will
be involved in a process of legislation outside of their judicial function.
5. Another argument advanced by respondent court is that the vendee acting in good faith relied on
the power of attorney which was duly registered on the original certificate of title recorded in the
Register of Deeds of the province of Cebu, that no notice of the death was aver annotated on said
certificate of title by the heirs of the principal and accordingly they must suffer the consequences of
such omission. 17

To support such argument reference is made to a portion in Manresa's Commentaries which We

quote:
If the agency has been granted for the purpose of contracting with certain persons, the
revocation must be made known to them. But if the agency is general iii nature, without
reference to particular person with whom the agent is to contract, it is sufficient that the
principal exercise due diligence to make the revocation of the agency publicity known.
In case of a general power which does not specify the persons to whom represents' on
should be made, it is the general opinion that all acts, executed with third persons who
contracted in good faith, Without knowledge of the revocation, are valid. In such case, the
principal may exercise his right against the agent, who, knowing of the revocation,
continued to assume a personality which he no longer had. (Manresa Vol. 11, pp. 561
and 575; pp. 15-16, rollo)

The above discourse however, treats of revocation by an act of the principal as a mode of
terminating an agency which is to be distinguished from revocation by operation of law such as
death of the principal which obtains in this case. On page six of this Opinion We stressed that by
reason of the very nature of the relationship between principal and agent, agency is
extinguished ipso jure upon the death of either principal or agent. Although a revocation of a power
of attorney to be effective must be communicated to the parties concerned, 18 yet a revocation by
operation of law, such as by death of the principal is, as a rule, instantaneously effective inasmuch
as "by legal fiction the agent's exercise of authority is regarded as an execution of the
principal's continuing will. 19 With death, the principal's will ceases or is the of authority is
extinguished.
The Civil Code does not impose a duty on the heirs to notify the agent of the death of the principal
What the Code provides in Article 1932 is that, if the agent die his heirs must notify the principal
thereof, and in the meantime adopt such measures as the circumstances may demand in the
interest of the latter. Hence, the fact that no notice of the death of the principal was registered on the
certificate of title of the property in the Office of the Register of Deeds, is not fatal to the cause of the
estate of the principal
6. Holding that the good faith of a third person in said with an agent affords the former sufficient
protection, respondent court drew a "parallel" between the instant case and that of an innocent
purchaser for value of a land, stating that if a person purchases a registered land from one who
acquired it in bad faith even to the extent of foregoing or falsifying the deed of sale in his favor
the registered owner has no recourse against such innocent purchaser for value but only against the
forger. 20
To support the correctness of this respondent corporation, in its brief, cites the case of Blondeau, et
al., v. Nano and Vallejo, 61 Phil. 625. We quote from the brief:
In the case of Angel Blondeau et al. v. Agustin Nano et al., 61 Phil. 630, one Vallejo was a
co-owner of lands with Agustin Nano. The latter had a power of attorney supposedly
executed by Vallejo Nano in his favor. Vallejo delivered to Nano his land titles. The power
was registered in the Office of the Register of Deeds. When the lawyer-husband of
Angela Blondeau went to that Office, he found all in order including the power of attorney.
But Vallejo denied having executed the power The lower court sustained Vallejo and the
plaintiff Blondeau appealed. Reversing the decision of the court a quo, the Supreme
Court, quoting the ruling in the case of Eliason v. Wilborn, 261 U.S. 457, held:
But there is a narrower ground on which the defenses of the defendantappellee must be overruled. Agustin Nano had possession of Jose
Vallejo's title papers. Without those title papers handed over to Nano with
the acquiescence of Vallejo, a fraud could not have been perpetuated.
When Fernando de la Canters, a member of the Philippine Bar and the
husband of Angela Blondeau, the principal plaintiff, searched the
registration record, he found them in due form including the power of
attorney of Vallajo in favor of Nano. If this had not been so and if

thereafter the proper notation of the encumbrance could not have been
made, Angela Blondeau would not have sent P12,000.00 to the
defendant Vallejo.' An executed transfer of registered lands placed by the
registered owner thereof in the hands of another operates as a
representation to a third party that the holder of the transfer is authorized
to deal with the land.
As between two innocent persons, one of whom must suffer the
consequence of a breach of trust, the one who made it possible by his
act of coincidence bear the loss. (pp. 19-21)

The Blondeau decision, however, is not on all fours with the case before Us because here We are
confronted with one who admittedly was an agent of his sister and who sold the property of the latter
after her death with full knowledge of such death. The situation is expressly covered by a provision
of law on agency the terms of which are clear and unmistakable leaving no room for an interpretation
contrary to its tenor, in the same manner that the ruling in Blondeau and the cases cited therein
found a basis in Section 55 of the Land Registration Law which in part provides:
xxx xxx xxx
The production of the owner's duplicate certificate whenever any voluntary instrument is
presented for registration shall be conclusive authority from the registered owner to the
register of deeds to enter a new certificate or to make a memorandum of registration in
accordance with such instruments, and the new certificate or memorandum Shall be
binding upon the registered owner and upon all persons claiming under him in favor of
every purchaser for value and in good faith: Provided however, That in all cases of
registration provided by fraud, the owner may pursue all his legal and equitable remedies
against the parties to such fraud without prejudice, however, to the right, of any innocent
holder for value of a certificate of title. ... (Act No. 496 as amended)

7. One last point raised by respondent corporation in support of the appealed decision is an 1842
ruling of the Supreme Court of Pennsylvania in Cassiday v. McKenzie wherein payments made to an
agent after the death of the principal were held to be "good", "the parties being ignorant of the
death". Let us take note that the Opinion of Justice Rogers was premised on the statement that
the parties were ignorant of the death of the principal. We quote from that decision the following:
... Here the precise point is, whether a payment to an agent when the Parties are ignorant
of the death is a good payment. in addition to the case in Campbell before cited, the
same judge Lord Ellenboruogh, has decided in 5 Esp. 117, the general question that a
payment after the death of principal is not good. Thus, a payment of sailor's wages to a
person having a power of attorney to receive them, has been held void when the principal
was dead at the time of the payment. If, by this case, it is meant merely to decide the
general proposition that by operation of law the death of the principal is a revocation of
the powers of the attorney, no objection can be taken to it. But if it intended to say that his
principle applies where there was 110 notice of death, or opportunity of twice I must be
permitted to dissent from it.
... That a payment may be good today, or bad tomorrow, from the accident circumstance
of the death of the principal, which he did not know, and which by no possibility could he
know? It would be unjust to the agent and unjust to the debtor. In the civil law, the acts of
the agent, donebona fide in ignorance of the death of his principal are held valid and
binding upon the heirs of the latter. The same rule holds in the Scottish law, and I cannot
believe the common law is so unreasonable... (39 Am. Dec. 76, 80, 81; emphasis
supplied)

To avoid any wrong impression which the Opinion in Cassiday v. McKenzie may evoke, mention may
be made that the above represents the minority view in American jurisprudence. Thus in Clayton v.
Merrett, the Court said.
There are several cases which seem to hold that although, as a general principle, death
revokes an agency and renders null every act of the agent thereafter performed, yet that

where a payment has been made in ignorance of the death, such payment will be good.
The leading case so holding is that of Cassiday v. McKenzie, 4 Watts & S. (Pa) 282, 39
Am. 76, where, in an elaborate opinion, this view ii broadly announced. It is referred to,
and seems to have been followed, in the case of Dick v. Page, 17 Mo. 234, 57 AmD 267;
but in this latter case it appeared that the estate of the deceased principal had received
the benefit of the money paid, and therefore the representative of the estate might well
have been held to be estopped from suing for it again. . . . These cases, in so far, at least,
as they announce the doctrine under discussion, are exceptional. The Pennsylvania
Case, supra (Cassiday v. McKenzie 4 Watts & S. 282, 39 AmD 76), is believed to stand
almost, if not quite, alone in announcing the principle in its broadest scope. (52, Misc.
353, 357, cited in 2 C.J. 549)

So also in Travers v. Crane, speaking of Cassiday v. McKenzie, and pointing out that the opinion,
except so far as it related to the particular facts, was a mere dictum, Baldwin J. said:
The opinion, therefore, of the learned Judge may be regarded more as an extrajudicial
indication of his views on the general subject, than as the adjudication of the Court upon
the point in question. But accordingly all power weight to this opinion, as the judgment of
a of great respectability, it stands alone among common law authorities and is opposed
by an array too formidable to permit us to following it. (15 Cal. 12,17, cited in 2 C.J. 549)

Whatever conflict of legal opinion was generated by Cassiday v. McKenzie in American

jurisprudence, no such conflict exists in our own for the simple reason that our statute, the Civil
Code, expressly provides for two exceptions to the general rule that death of the principal revokes
ipso jure the agency, to wit: (1) that the agency is coupled with an interest (Art 1930), and (2) that the
act of the agent was executed without knowledge of the death of the principal and the third person
who contracted with the agent acted also in good faith (Art. 1931). Exception No. 2 is the doctrine
followed in Cassiday, and again We stress the indispensable requirement that the agent acted
without knowledge or notice of the death of the principal In the case before Us the agent Ramon
Rallos executed the sale notwithstanding notice of the death of his principal Accordingly, the agent's
act is unenforceable against the estate of his principal.
IN VIEW OF ALL THE FOREGOING, We set aside the ecision of respondent appellate court, and
We affirm en toto the judgment rendered by then Hon. Amador E. Gomez of the Court of First
Instance of Cebu, quoted in pages 2 and 3 of this Opinion, with costs against respondent realty
corporation at all instances.
So Ordered.

DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitionersappellants, vs. THE COURT OF APPEALS, TOURIST WORLD
SERVICE, INC., ELISEO S.CANILAO, and SEGUNDINA
NOGUERA, respondents-appe
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants,
vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA,respondents-appellees.
SARMIENTO , J.:
The petitioners invoke the provisions on human relations of the Civil Code in this appeal by
certiorari. The facts are beyond dispute:

xxx xxx xxx

On the strength of a contract (Exhibit A for the appellant Exhibit 2 for the appellees)
entered into on Oct. 19, 1960 by and between Mrs. Segundina Noguera, party of the first
part; the Tourist World Service, Inc., represented by Mr. Eliseo Canilao as party of the
second part, and hereinafter referred to as appellants, the Tourist World Service, Inc.
leased the premises belonging to the party of the first part at Mabini St., Manila for the
former-s use as a branch office. In the said contract the party of the third part held herself
solidarily liable with the party of the part for the prompt payment of the monthly rental
agreed on. When the branch office was opened, the same was run by the herein
appellant Una 0. Sevilla payable to Tourist World Service Inc. by any airline for any fare
brought in on the efforts of Mrs. Lina Sevilla, 4% was to go to Lina Sevilla and 3% was to
be withheld by the Tourist World Service, Inc.
On or about November 24, 1961 (Exhibit 16) the Tourist World Service, Inc. appears to
have been informed that Lina Sevilla was connected with a rival firm, the Philippine
Travel Bureau, and, since the branch office was anyhow losing, the Tourist World Service
considered closing down its office. This was firmed up by two resolutions of the board of
directors of Tourist World Service, Inc. dated Dec. 2, 1961 (Exhibits 12 and 13), the first
abolishing the office of the manager and vice-president of the Tourist World Service, Inc.,
Ermita Branch, and the second,authorizing the corporate secretary to receive the
properties of the Tourist World Service then located at the said branch office. It further
appears that on Jan. 3, 1962, the contract with the appellees for the use of the Branch
Office premises was terminated and while the effectivity thereof was Jan. 31, 1962, the
appellees no longer used it. As a matter of fact appellants used it since Nov. 1961.
Because of this, and to comply with the mandate of the Tourist World Service, the
corporate secretary Gabino Canilao went over to the branch office, and, finding the
premises locked, and, being unable to contact Lina Sevilla, he padlocked the premises
on June 4, 1962 to protect the interests of the Tourist World Service. When neither the
appellant Lina Sevilla nor any of her employees could enter the locked premises, a
complaint wall filed by the herein appellants against the appellees with a prayer for the
issuance of mandatory preliminary injunction. Both appellees answered with
counterclaims. For apparent lack of interest of the parties therein, the trial court ordered
the dismissal of the case without prejudice.
The appellee Segundina Noguera sought reconsideration of the order dismissing her
counterclaim which the court a quo, in an order dated June 8, 1963, granted permitting
her to present evidence in support of her counterclaim.
On June 17,1963, appellant Lina Sevilla refiled her case against the herein appellees and
after the issues were joined, the reinstated counterclaim of Segundina Noguera and the
new complaint of appellant Lina Sevilla were jointly heard following which the court a quo
ordered both cases dismiss for lack of merit, on the basis of which was elevated the
instant appeal on the following assignment of errors:
I. THE LOWER COURT ERRED EVEN IN APPRECIATING THE NATURE OF
PLAINTIFF-APPELLANT MRS. LINA O. SEVILLA'S COMPLAINT.
II. THE LOWER COURT ERRED IN HOLDING THAT APPELLANT MRS. LINA 0.
SEVILA'S ARRANGEMENT (WITH APPELLEE TOURIST WORLD SERVICE, INC.) WAS
ONE MERELY OF EMPLOYER-EMPLOYEE RELATION AND IN FAILING TO HOLD
THAT THE SAID ARRANGEMENT WAS ONE OF JOINT BUSINESS VENTURE.
III. THE LOWER COURT ERRED IN RULING THAT PLAINTIFF-APPELLANT MRS.
LINA O. SEVILLA IS ESTOPPED FROM DENYING THAT SHE WAS A MERE
EMPLOYEE OF DEFENDANT-APPELLEE TOURIST WORLD SERVICE, INC. EVEN AS
AGAINST THE LATTER.
IV. THE LOWER COURT ERRED IN NOT HOLDING THAT APPELLEES HAD NO
RIGHT TO EVICT APPELLANT MRS. LINA O. SEVILLA FROM THE A. MABINI OFFICE
BY TAKING THE LAW INTO THEIR OWN HANDS.

V. THE LOWER COURT ERRED IN NOT CONSIDERING AT .ALL APPELLEE

NOGUERA'S RESPONSIBILITY FOR APPELLANT LINA O. SEVILLA'S FORCIBLE
DISPOSSESSION OF THE A. MABINI PREMISES.
VI. THE LOWER COURT ERRED IN FINDING THAT APPELLANT APPELLANT MRS.
LINA O. SEVILLA SIGNED MERELY AS GUARANTOR FOR RENTALS.

On the foregoing facts and in the light of the errors asigned the issues to be resolved are:
1. Whether the appellee Tourist World Service unilaterally disco the telephone line at the
branch office on Ermita;
2. Whether or not the padlocking of the office by the Tourist World Service was actionable
or not; and
3. Whether or not the lessee to the office premises belonging to the appellee Noguera
was appellees TWS or TWS and the appellant.
In this appeal, appealant Lina Sevilla claims that a joint bussiness venture was entered
into by and between her and appellee TWS with offices at the Ermita branch office and
that she was not an employee of the TWS to the end that her relationship with TWS was
one of a joint business venture appellant made declarations showing:
1. Appellant Mrs. Lina 0. Sevilla, a prominent figure and wife of an
eminent eye, ear and nose specialist as well as a imediately columnist
had been in the travel business prior to the establishment of the joint
business venture with appellee Tourist World Service, Inc. and appellee
Eliseo Canilao, her compadre, she being the godmother of one of his
children, with her own clientele, coming mostly from her own social circle
(pp. 3-6 tsn. February 16,1965).
2. Appellant Mrs. Sevilla was signatory to a lease agreement dated 19
October 1960 (Exh. 'A') covering the premises at A. Mabini St., she
expressly warranting and holding [sic] herself 'solidarily' liable with
appellee Tourist World Service, Inc. for the prompt payment of the
monthly rentals thereof to other appellee Mrs. Noguera (pp. 14-15, tsn.
Jan. 18,1964).
3. Appellant Mrs. Sevilla did not receive any salary from appellee Tourist
World Service, Inc., which had its own, separate office located at the
Trade & Commerce Building; nor was she an employee thereof, having
no participation in nor connection with said business at the Trade &
Commerce Building (pp. 16-18 tsn Id.).
4. Appellant Mrs. Sevilla earned commissions for her own passengers,
her own bookings her own business (and not for any of the business of
appellee Tourist World Service, Inc.) obtained from the airline companies.
She shared the 7% commissions given by the airline companies giving
appellee Tourist World Service, Lic. 3% thereof aid retaining 4% for
herself (pp. 18 tsn. Id.)
5. Appellant Mrs. Sevilla likewise shared in the expenses of maintaining
the A. Mabini St. office, paying for the salary of an office secretary, Miss
Obieta, and other sundry expenses, aside from desicion the office
furniture and supplying some of fice furnishings (pp. 15,18 tsn. April
6,1965), appellee Tourist World Service, Inc. shouldering the rental and
other expenses in consideration for the 3% split in the co procured by
appellant Mrs. Sevilla (p. 35 tsn Feb. 16,1965).
6. It was the understanding between them that appellant Mrs. Sevilla
would be given the title of branch manager for appearance's sake only
(p. 31 tsn. Id.), appellee Eliseo Canilao admit that it was just a title for

dignity (p. 36 tsn. June 18, 1965- testimony of appellee Eliseo Canilao
pp. 38-39 tsn April 61965-testimony of corporate secretary Gabino
Canilao (pp- 2-5, Appellants' Reply Brief)
Upon the other hand, appellee TWS contend that the appellant was an employee of the
appellee Tourist World Service, Inc. and as such was designated manager. 1
xxx xxx xxx

The trial court 2 held for the private respondent on the premise that the private respondent, Tourist
World Service, Inc., being the true lessee, it was within its prerogative to terminate the lease and
padlock the premises. 3 It likewise found the petitioner, Lina Sevilla, to be a mere employee of said
Tourist World Service, Inc. and as such, she was bound by the acts of her employer. 4 The
respondent Court of Appeal 5 rendered an affirmance.
The petitioners now claim that the respondent Court, in sustaining the lower court, erred. Specifically,
they state:
I
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN HOLDING THAT "THE PADLOCKING OF THE PREMISES BY TOURIST WORLD
SERVICE INC. WITHOUT THE KNOWLEDGE AND CONSENT OF THE APPELLANT LINA
SEVILLA ... WITHOUT NOTIFYING MRS. LINA O. SEVILLA OR ANY OF HER EMPLOYEES AND
WITHOUT INFORMING COUNSEL FOR THE APPELLANT (SEVILIA), WHO IMMEDIATELY
BEFORE THE PADLOCKING INCIDENT, WAS IN CONFERENCE WITH THE CORPORATE
SECRETARY OF TOURIST WORLD SERVICE (ADMITTEDLY THE PERSON WHO PADLOCKED
THE SAID OFFICE), IN THEIR ATTEMP AMICABLY SETTLE THE CONTROVERSY BETWEEN
THE APPELLANT (SEVILLA) AND THE TOURIST WORLD SERVICE ... (DID NOT) ENTITLE THE
LATTER TO THE RELIEF OF DAMAGES" (ANNEX "A" PP. 7,8 AND ANNEX "B" P. 2) DECISION
AGAINST DUE PROCESS WHICH ADHERES TO THE RULE OF LAW.
II
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING APPELLANT SEVILLA RELIEF BECAUSE SHE HAD "OFFERED TO
WITHDRAW HER COMP PROVIDED THAT ALL CLAIMS AND COUNTERCLAIMS LODGED BY
BOTH APPELLEES WERE WITHDRAWN." (ANNEX "A" P. 8)
III
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING-IN FACT NOT PASSING AND RESOLVING-APPELLANT SEVILLAS
CAUSE OF ACTION FOUNDED ON ARTICLES 19, 20 AND 21 OF THE CIVIL CODE ON
RELATIONS.
IV
THE COURT OF APPEALS ERRED ON A QUESTION OF LAW AND GRAVELY ABUSED ITS
DISCRETION IN DENYING APPEAL APPELLANT SEVILLA RELIEF YET NOT RESOLVING HER
CLAIM THAT SHE WAS IN JOINT VENTURE WITH TOURIST WORLD SERVICE INC. OR AT
LEAST ITS AGENT COUPLED WITH AN INTEREST WHICH COULD NOT BE TERMINATED OR
REVOKED UNILATERALLY BY TOURIST WORLD SERVICE INC. 6
As a preliminary inquiry, the Court is asked to declare the true nature of the relation between Lina
Sevilla and Tourist World Service, Inc. The respondent Court of see fit to rule on the question, the
crucial issue, in its opinion being "whether or not the padlocking of the premises by the Tourist World
Service, Inc. without the knowledge and consent of the appellant Lina Sevilla entitled the latter to the
relief of damages prayed for and whether or not the evidence for the said appellant supports the
contention that the appellee Tourist World Service, Inc. unilaterally and without the consent of the
appellant disconnected the telephone lines of the Ermita branch office of the appellee Tourist World

Service, Inc. 7 Tourist World Service, Inc., insists, on the other hand, that Lina SEVILLA was a mere
employee, being "branch manager" of its Ermita "branch" office and that inferentially, she had no say
on the lease executed with the private respondent, Segundina Noguera. The petitioners contend,
however, that relation between the between parties was one of joint venture, but concede
that "whatever might have been the true relationship between Sevilla and Tourist World Service," the
Rule of Law enjoined Tourist World Service and Canilao from taking the law into their own hands, 8 in
reference to the padlocking now questioned.
The Court finds the resolution of the issue material, for if, as the private respondent, Tourist World
Service, Inc., maintains, that the relation between the parties was in the character of employer and
employee, the courts would have been without jurisdiction to try the case, labor disputes being the
exclusive domain of the Court of Industrial Relations, later, the Bureau Of Labor Relations, pursuant
to statutes then in force. 9
In this jurisdiction, there has been no uniform test to determine the evidence of an employeremployee relation. In general, we have relied on the so-called right of control test, "where the person
for whom the services are performed reserves a right to control not only the end to be achieved but
also the means to be used in reaching such end." 10Subsequently, however, we have considered, in
addition to the standard of right-of control, the existing economic conditions prevailing between the
parties, like the inclusion of the employee in the payrolls, in determining the existence of an
employer-employee relationship. 11
The records will show that the petitioner, Lina Sevilla, was not subject to control by the private
respondent Tourist World Service, Inc., either as to the result of the enterprise or as to the means
used in connection therewith. In the first place, under the contract of lease covering the Tourist
Worlds Ermita office, she had bound herself in solidum as and for rental payments, an arrangement
that would be like claims of a master-servant relationship. True the respondent Court would later
minimize her participation in the lease as one of mere guaranty, 12 that does not make her an
employee of Tourist World, since in any case, a true employee cannot be made to part with his own
money in pursuance of his employer's business, or otherwise, assume any liability thereof. In that
event, the parties must be bound by some other relation, but certainly not employment.
In the second place, and as found by the Appellate Court, '[w]hen the branch office was opened, the
same was run by the herein appellant Lina O. Sevilla payable to Tourist World Service, Inc. by any
airline for any fare brought in on the effort of Mrs. Lina Sevilla. 13 Under these circumstances, it
cannot be said that Sevilla was under the control of Tourist World Service, Inc. "as to the means
used." Sevilla in pursuing the business, obviously relied on her own gifts and capabilities.
It is further admitted that Sevilla was not in the company's payroll. For her efforts, she retained 4% in
commissions from airline bookings, the remaining 3% going to Tourist World. Unlike an employee
then, who earns a fixed salary usually, she earned compensation in fluctuating amounts depending
on her booking successes.
The fact that Sevilla had been designated 'branch manager" does not make her, ergo, Tourist
World's employee. As we said, employment is determined by the right-of-control test and certain
economic parameters. But titles are weak indicators.
In rejecting Tourist World Service, Inc.'s arguments however, we are not, as a consequence,
accepting Lina Sevilla's own, that is, that the parties had embarked on a joint venture or otherwise, a
partnership. And apparently, Sevilla herself did not recognize the existence of such a relation. In her
letter of November 28, 1961, she expressly 'concedes your [Tourist World Service, Inc.'s] right to
stop the operation of your branch office 14 in effect, accepting Tourist World Service, Inc.'s control
over the manner in which the business was run. A joint venture, including a partnership,
presupposes generally a of standing between the joint co-venturers or partners, in which each party
has an equal proprietary interest in the capital or property contributed 15 and where each party
exercises equal rights in the conduct of the business. 16 furthermore, the parties did not hold
themselves out as partners, and the building itself was embellished with the electric sign "Tourist
World Service, Inc. 17in lieu of a distinct partnership name.

It is the Court's considered opinion, that when the petitioner, Lina Sevilla, agreed to (wo)man the
private respondent, Tourist World Service, Inc.'s Ermita office, she must have done so pursuant to a
contract of agency. It is the essence of this contract that the agent renders services "in
representation or on behalf of another. 18 In the case at bar, Sevilla solicited airline fares, but she did
so for and on behalf of her principal, Tourist World Service, Inc. As compensation, she received 4%
of the proceeds in the concept of commissions. And as we said, Sevilla herself based on her letter of
November 28, 1961, pre-assumed her principal's authority as owner of the business undertaking.
We are convinced, considering the circumstances and from the respondent Court's recital of facts,
that the ties had contemplated a principal agent relationship, rather than a joint managament or a
partnership..
But unlike simple grants of a power of attorney, the agency that we hereby declare to be compatible
with the intent of the parties, cannot be revoked at will. The reason is that it is one coupled with an
interest, the agency having been created for mutual interest, of the agent and the principal. 19 It
appears that Lina Sevilla is a bona fide travel agent herself, and as such, she had acquired an
interest in the business entrusted to her. Moreover, she had assumed a personal obligation for the
operation thereof, holding herself solidarily liable for the payment of rentals. She continued the
business, using her own name, after Tourist World had stopped further operations. Her interest,
obviously, is not to the commissions she earned as a result of her business transactions, but one
that extends to the very subject matter of the power of management delegated to her. It is an agency
that, as we said, cannot be revoked at the pleasure of the principal. Accordingly, the revocation
complained of should entitle the petitioner, Lina Sevilla, to damages.
As we have stated, the respondent Court avoided this issue, confining itself to the telephone
disconnection and padlocking incidents. Anent the disconnection issue, it is the holding of the Court
of Appeals that there is 'no evidence showing that the Tourist World Service, Inc. disconnected the
telephone lines at the branch office. 20 Yet, what cannot be denied is the fact that Tourist World
Service, Inc. did not take pains to have them reconnected. Assuming, therefore, that it had no hand
in the disconnection now complained of, it had clearly condoned it, and as owner of the telephone
lines, it must shoulder responsibility therefor.
The Court of Appeals must likewise be held to be in error with respect to the padlocking incident. For
the fact that Tourist World Service, Inc. was the lessee named in the lease con-tract did not accord it
any authority to terminate that contract without notice to its actual occupant, and to padlock the
premises in such fashion. As this Court has ruled, the petitioner, Lina Sevilla, had acquired a
personal stake in the business itself, and necessarily, in the equipment pertaining thereto.
Furthermore, Sevilla was not a stranger to that contract having been explicitly named therein as a
third party in charge of rental payments (solidarily with Tourist World, Inc.). She could not be ousted
from possession as summarily as one would eject an interloper.
The Court is satisfied that from the chronicle of events, there was indeed some malevolent design to
put the petitioner, Lina Sevilla, in a bad light following disclosures that she had worked for a rival
firm. To be sure, the respondent court speaks of alleged business losses to justify the closure '21 but
there is no clear showing that Tourist World Ermita Branch had in fact sustained such reverses, let
alone, the fact that Sevilla had moonlit for another company. What the evidence discloses, on the
other hand, is that following such an information (that Sevilla was working for another company),
Tourist World's board of directors adopted two resolutions abolishing the office of 'manager" and
authorizing the corporate secretary, the respondent Eliseo Canilao, to effect the takeover of its
branch office properties. On January 3, 1962, the private respondents ended the lease over the
branch office premises, incidentally, without notice to her.
It was only on June 4, 1962, and after office hours significantly, that the Ermita office was padlocked,
personally by the respondent Canilao, on the pretext that it was necessary to Protect the interests of
the Tourist World Service. " 22 It is strange indeed that Tourist World Service, Inc. did not find such a
need when it cancelled the lease five months earlier. While Tourist World Service, Inc. would not
pretend that it sought to locate Sevilla to inform her of the closure, but surely, it was aware that after
office hours, she could not have been anywhere near the premises. Capping these series of

"offensives," it cut the office's telephone lines, paralyzing completely its business operations, and in
the process, depriving Sevilla articipation therein.
This conduct on the part of Tourist World Service, Inc. betrays a sinister effort to punish Sevillsa it
had perceived to be disloyalty on her part. It is offensive, in any event, to elementary norms of justice
and fair play.
We rule therefore, that for its unwarranted revocation of the contract of agency, the private
respondent, Tourist World Service, Inc., should be sentenced to pay damages. Under the Civil Code,
moral damages may be awarded for "breaches of contract where the defendant acted ... in bad
faith. 23
We likewise condemn Tourist World Service, Inc. to pay further damages for the moral injury done to
Lina Sevilla from its brazen conduct subsequent to the cancellation of the power of attorney granted
to her on the authority of Article 21 of the Civil Code, in relation to Article 2219 (10) thereof
ART. 21. Any person who wilfully causes loss or injury to another in a manner that is
contrary to morals, good customs or public policy shall compensate the latter for the
damage. 24
ART. 2219. Moral damages 25 may be recovered in the following and analogous cases:
xxx xxx xxx
(10) Acts and actions refered into article 21, 26, 27, 28, 29, 30, 32, 34, and 35.

The respondent, Eliseo Canilao, as a joint tortfeasor is likewise hereby ordered to respond for the
same damages in a solidary capacity.
Insofar, however, as the private respondent, Segundina Noguera is concerned, no evidence has
been shown that she had connived with Tourist World Service, Inc. in the disconnection and
padlocking incidents. She cannot therefore be held liable as a cotortfeasor.
The Court considers the sums of P25,000.00 as and for moral damages,24 P10,000.00 as
exemplary damages, 25 and P5,000.00 as nominal 26 and/or temperate 27 damages, to be just, fair,
and reasonable under the circumstances.
WHEREFORE, the Decision promulgated on January 23, 1975 as well as the Resolution issued on
July 31, 1975, by the respondent Court of Appeals is hereby REVERSED and SET ASIDE. The
private respondent, Tourist World Service, Inc., and Eliseo Canilao, are ORDERED jointly and
severally to indemnify the petitioner, Lina Sevilla, the sum of 25,00.00 as and for moral damages, the
sum of P10,000.00, as and for exemplary damages, and the sum of P5,000.00, as and for nominal
and/or temperate damages.
Costs against said private respondents.
SO ORDERED.

NELITA M. BACALING, represented by her attorney-in-fact JOSE

JUAN TONG, and JOSE JUAN TONG, in his personal capacity,
petitioners, vs. FELOMINO MUYA, CRISPIN AMOR, WILFREDO
JEREZA, RODOLFO LAZARTE and NEMESIO TONOCANTE
SECOND DIVISION
G.R. Nos. 148404-05

April 11, 2002

NELITA M. BACALING, represented by her attorney-in-fact JOSE JUAN TONG, and JOSE JUAN
TONG, in his personal capacity, petitioners,

vs.
FELOMINO MUYA, CRISPIN AMOR, WILFREDO JEREZA, RODOLFO LAZARTE and NEMESIO
TONOCANTE,respondents.
DE LEON, JR., J.:
Before us is a Petition for Review of the consolidated Decision1 dated January 31, 2001 of the Court
of Appeals2 in CA-G.R. SP No. 54413,3 and in CA-G.R. SP No. 54414,4 and of its Resolution5 dated
June 5, 2001 reversing the Decision6 dated May 22, 1998 and Resolution July 22, 1999 of the Office
of the President.
The facts of the case are as follows:
Petitioner Nelita M. Bacaling and her spouse Ramon Bacaling were the owners of three (3) parcels
of land, with a total area of 9.9631 hectares, located in Barangay Cubay, Jaro, Iloilo City, and
designated as Lot No. 2103-A (Psd-24069), Lot No. 2103-B-12 (Psd 26685) and Lot No. 2295.
These lots were duly covered by Transfer Certificates of Title Nos. T-5801, T-5833 and T-5834,
respectively. In 1955 the landholding was subdivided into one hundred ten (110) sub-lots covered by
TCT Nos. T-10664 to T-10773, inclusive of the Registry of Deeds of the City of Iloilo. On May 16,
1955, the landholding was processed and approved as "residential" or "subdivision" by the National
Urban Planning Commission (NUPC).7 On May 24, 1955 the Bureau of Lands approved the
corresponding subdivision plan for purposes of developing the said property into a low-cost
residential community which the spouses referred to as the Bacaling-Moreno Subdivision.8
In 1957, a real estate loan of Six Hundred Thousand Pesos (P600,000.00) was granted to the
spouses Nelita and Ramon Bacaling by the Government Service Insurance System (GSIS) for the
development of the subdivision.9 To secure the repayment of the loan, the Bacalings executed in
favor of the GSIS a real estate mortgage over their parcels of land including the one hundred ten
(110) sub-lots.10 Out of the approved loan of Six Hundred Thousand Pesos (P600,000.00), only Two
Hundred Forty Thousand Pesos (P240,000.00) was released to them.11 The Bacalings failed to
pay the amortizations on the loan and consequently the mortgage constituted on the one hundred
ten (110) sub-lots was foreclosed by the GSIS.12 After a court case that reached all the way to this
Court,13Nelita Bacaling (by then a widow) in 1989 was eventually able to restore to herself ownership
of the one hundred ten (110) sub-lots.14
According to the findings of the Office of the President, in 1972 and thereafter, respondents Felomino
Muya, Crispin Amor, Wilfredo Jereza, Rodolfo Lazarte and Nemesio Tonocante clandestinely entered
and occupied the entire one hundred ten (110) sub-lots (formerly known as Lot No. 2103-A, Lot No.
2103-B-12 and Lot No. 2295) and grabbed exclusively for themselves the said 9.9631 hectare
landholding.15 Apparently, respondents took advantage of the problematic peace and order situation
at the onset of martial law and the foreclosure of the lots by GSIS. 16 They sowed the lots as if the
same were their own, and altered the roads, drainage, boundaries and monuments established
thereon.17
Respondents, on the other hand, claim that in 1964 they were legally instituted by Bacaling's
administrator/overseer as tenant-tillers of the subject parcels of land on sharing basis with two and a
half (2) hectares each for respondents Muya, Amor, Tonocante and Lazarte, and one and a half
(1) hectares for respondent Jereza. In 1974, their relationship with the landowner was changed to

one of leasehold. They religiously delivered their rental payments to Bacaling as agricultural lessor.
In 1980, they secured certificates of land transfer in their names for the one hundred ten (110) sublots. They have made various payments to the Land Bank of the Philippines as amortizing ownerscultivators of their respective tillage.
In 1977, however, the City Council of Iloilo enacted Zoning Ordinance No. 212 declaring the one
hundred ten (110) sub-lots as "residential" and "non-agricultural," which was consistent with the
conversion effected in 1955 by the NUPC and the Bureau of Lands. In 1978, Nelita Bacaling was
able to register the subject property as the Bacaling-Moreno Subdivision with the National Housing
Authority and to obtain therefrom a license to sell the subject one hundred ten (110) sub-lots
comprising the said subdivision to consummate the original and abiding design to develop a low-cost
residential community.
In August 21, 1990, petitioner Jose Juan Tong, together with Vicente Juan and Victoria Siady, bought
from Nelita Bacaling the subject one hundred ten (110) sub-lots for One Million Seven Hundred
Thousand Pesos (P1,700,000.00).18 The said sale was effected after Bacaling has repurchased the
subject property from the Government Service Insurance System. To secure performance of the
contract of absolute sale and facilitate the transfer of title of the lots to Jose Juan Tong, Bacaling
appointed him in 1992 as her attorney-in-fact, under an irrevocable special power of attorney with the
following mandate1. To file, defend and prosecute any case/cases involving lots nos. 1 to 110 covered by TCT
Nos. T-10664 to T-10773 of the Register of Deeds of the City of Iloilo;
2. To assume full control, prosecute, terminate and enter into an amicable settlement and
compromise agreement of all cases now pending before the DARAB, Region VI, Iloilo City,
which involved portion of Lots 1 to 110, covered by TCT Nos. T-10664 to T-10773 of the
Register of Deeds of Iloilo City, which were purchased by Jose Juan Tong, Vicente Juan
Tong and Victoria Siady;
3. To hire a lawyer/counsel which he may deem fit and necessary to effect and attain the
foregoing acts and deeds; handle and prosecute the aforesaid cases;
4. To negotiate, cause and effect a settlement of occupation and tenants on the aforesaid
lots;
5. To cause and effect the transfer of the aforesaid lots in the name of the VENDEES;
6. To execute and deliver document/s or instrument of whatever nature necessary to
accomplish the foregoing acts and deeds.19
It is significant to note that ten (10) years after the perfection and execution of the sale, or on April
26, 2000, Bacaling filed a complaint to nullify the contract of sale. The suit was, however, dismissed
with prejudice and the dismissal has long become final and executory. 20
Following the sale of the one hundred ten (110) sub-lots and using the irrevocable special power of
attorney executed in his favor, petitioner Tong (together with Bacaling) filed a petition for cancellation
of the certificates of land transfer against respondents and a certain Jaime Ruel with the Department
of Agrarian Reform (DAR) Region VI Office in Iloilo City.21 The DAR, however, dismissed the petition
on the ground that there had been no legitimate conversion of the classification of the 110 sub-lots

from agricultural to residential prior to October 21, 1972 when Operation Land Transfer under P.D.
No. 72 took effect.22 Bacaling and Tong appealed to the DAR Central Office but their appeal was
similarly rejected.23 The motion for reconsideration failed to overturn the ruling of the Central Office
Order.24
On September 19, 1997, Bacaling and Tong appealed the adverse DAR Orders to the Office of the
President which reversed them in toto in a Decision 25 dated May 22, 1998 (OP Decision, for brevity),
the dispositive portion of which reads:
WHEREFORE, premises [considered], the assailed order of the Regional Director, DAR
Region VI, dated April 3, 1996, as well as the orders of the DAR Secretary dated December
12, 1996 and September 4, 1997, are hereby REVERSED AND SET ASIDE and subject
landholdings declared exempt from coverage of the CARL. The Certificates of Land Transfer
(CLTs) issued to the appellees are hereby cancelled and the Department of Agrarian Reform
directed to implement the voluntary offer made by appellant with respect to the payment of
disturbance compensation and relocation of the affected parties. 1wphi1.nt
SO ORDERED.26
The OP Decision found that the one hundred ten (110) parcels of land had been completely
converted from agricultural to residential lots as a result of the declarations of the NUPC and the
Bureau of Lands and the factual circumstances, i.e., the GSIS loan with real estate mortgage, the
division of the original three (3) parcels of land into one hundred ten (110) sub-lots under individual
certificates of title, and the establishment of residential communities adjacent to the subject property,
which indubitably proved the intention of Nelita and Ramon Bacaling to develop a residential
subdivision thereon. The OP Decision also categorically acknowledged the competence of the NUPC
and the Bureau of Lands to classify the one hundred ten (110) sub-lots into residential areas. On
July 22, 1999, separate motions for reconsideration thereof were denied. 27
Respondents elevated the OP Decision to the Court of Appeals on a petition for review under Rule
43 of the Rules of Civil Procedure.28 Before the petition was resolved, or on December 2, 1999,
Nelita Bacaling manifested to the appellate court that she was revoking the irrevocable power of
attorney in favor of Jose Juan Tong and that she was admitting the status of respondents as her
tenants of the one hundred ten (110) sub-lots which allegedly were agricultural in character. The
manifestation was however characterized by an obvious streak of ambivalence when her prayer
therein urged the Court of Appeals to decide the case, curiously, "on the basis of the clear intent of
Private Respondent" and "in accordance with the perception of this Honorable Court." 29
On January 31, 2001 the Court of Appeals reversed the OP Decision and validated the certificates of
land transfers in favor of respondents without however promulgating a ruling on petitioner Tong's
supposedly ensuing lack of material interest in the controversy as a result of the manifestation. 30 The
dispositive portion of the decision reads:
WHEREFORE, premises considered, petition is GRANTED; and the May 22, 1998 Decision
of the Office of the President is hereby REVERSED and SET ASIDE. The April 3, 1996
Order of the Regional Director, DARAB, Region VI, is REINSTATED. 31
The appellate court refused to recognize the 1955 NUPC and Bureau of Lands classification of the
subject lots as residential subdivision. Tong moved for reconsideration of the CA Decision which

Bacaling did not oppose despite her manifestation. On June 5, 2001, again without a single
reference to Bacaling's alleged repudiation of Tong's actions, the Court of Appeals denied
reconsideration of its decision,32 Hence, this petition for review on certiorari based on the following
assignment of errors:
I
SUBJECT LANDHOLDINGS ARE EXEMPT FROM THE COVERAGE OF P.D. 27 AND
OPERATION LAND TRANSFER (1972, AS WELL (sic) THE COMPREHENSIVE AGRARIAN
REFORM LAW (1988) AS THEY WERE CLASSIFIED AS RESIDENTIAL WAY BACK IN
1955 BY THE THEN NATIONAL PLANNING COMMISSION AND THE SUBDIVSION PLAN
WAS APPROVED BY THE BUREAU OF LANDS. AS A CONSEQUENCE, THE CLTs
ISSUED TO PRIVATE RESPONENTS IN OCTOBER, 1980 ARE INVALID AS HAVING
BEEN ISSUED WITHOUT JURISDICTION.
II
PRIVATE RESPONDENTS ARE NOT BONA FIDE TENANTS OF THE LANDS INVOLVED.
PUBLIC REPSONDENT'S RULING THAT THE LATTER ARE SUCH IS CONTRARY TO
LAW AS IT IGNORED THE FACT THAT THE LANDHOLDINGS ARE RESIDENTIAL AND
NO COMPETENT PROOF OF CONSENT OF THE OWNER WAS EVER PRESENTED BY
PRIVATE RESPONDENTS.
III
APPROVAL OF THE SECRETARY OF AGRARIAN REFORM IS NOT NECESSARY FOR
THE VALID CLASSIFICATION OF THE LANDS INVOLVED INTO RESIDENTIAL BECAUSE
THE CARL, AS ALSO THE RELATED AGRARIAN LAWS, HAVE NO RETROACTIVE
APPLICATION.33
Long after issues were joined in the instant proceedings, or on October 8, 2001, petitioner Nelita
Bacaling resurrected her manifestation with the Court of Appeals and moved to withdraw/dismiss the
present petition on the ground that the irrevocable power of attorney in favor of petitioner Jose Juan
Tong had been nullified by her and that Tong consequently lacked the authority to appear before this
Court.34 She also manifested that, contrary to the arguments of petitioner Tong, respondents
were bona fide tenants of the one hundred ten (110) sub-lots which were allegedly agricultural and
not residential pieces of realty.35 Accordingly, petitioner Tong was left all alone to pursue the instant
case.
The issues in this case can be summarized as follows: (1) Does petitioner Tong have the requisite
interest to litigate this petition for review on certiorari?; (2) Are the respondents agricultural lessees?;
and (3) Are the one hundred ten (110) sub-lots admittedly classified for residential use by the
National Urban Planning Commission and the Bureau of Lands prior to October 21, 1972 36 covered
by the Operation Land Transfer under P.D. No. 72?
We hold that petitioner Jose Juan Tong possesses adequate and legitimate interest to file the instant
petition. Under our rules of procedure, interest means material interest, that is, an interest in issue
and to be affected by the judgment, 37 while a real party in interest is the party who would be
benefited or injured by the judgment or the party entitled to the avails of the suit. 38 There should be

no doubt that as transferee of the one hundred ten (110) sub-lots through a contract of sale and as
the attorney-in-fact of Nelita Bacaling, former owner of the subject lots, under an irrevocable special
power of attorney, petitioner Tong stands to be benefited or injured by the judgment in the instant
case as well as the orders and decisions in the proceedings a quo. The deed of sale categorically
states that petitioner Tong and his co-sellers have fully paid for the subject parcels of land. The said
payment has been duly received by Bacaling. Hence, it stands to reason that he has adequate and
material interest to pursue the present petition to finality.
Respondents put too much weight on the motion to dismiss/withdraw filed by Nelita Bacaling. Under
the facts obtaining in this case, the motion should be treated cautiously, and more properly, even
skeptically. It is a matter of law that when a party adopts a certain theory in the court below, he will
not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair
to the other party but it would also be offensive to the basic rules of fair play, justice and due
process.39 Bacaling's motion to dismiss the instant petition comes at the heels of her admission that
she had immensely benefited from selling the said one hundred ten (110) sub-lots to petitioner Tong
and of the dismissal with prejudice of the civil case which she had earlier filed to nullify the sale. 40 It
appears that the motion to dismiss is a crude and belated attempt long after the dismissal of the civil
case to divest Tong of his indubitable right of ownership over the one hundred ten (110) sub-lots
through the pretext of revoking the irrevocable special power of attorney which Bacaling had
executed in his favor hoping that in the process that her act would cause the assailed orders of the
DAR to become final and executory.
The records also bear out the fact that Bacaling's design to dispossess petitioner Tong of material
interest in the subject matter of the instant petition appears to be subtly coordinated with
respondents' legal maneuvers when it began as a side pleading (a mere Manifestation) in the
proceedings before the Court of Appeals (CA-G.R. SP No. 54413 and CA-G.R. SP No. 54414) but
which was never pursued to its ultimate conclusion until it again surfaced before this Court long after
respondents' voluminous comment to the instant petition had been filed. Under these circumstances,
we certainly cannot place our trust upon such an unsolicited motion having dubious roots, character
and purpose.

Substantively, we rule that Bacaling cannot revoke at her

whim and pleasure the irrevocable special power of
attorney which she had duly executed in favor of petitioner
Jose Juan Tong and duly acknowledged before a notary
public. The agency, to stress, is one coupled with interest
which is explicitly irrevocable since the deed of agency
was prepared and signed and/or accepted by petitioner
Tong and Bacaling with a view to completing the
performance of the contract of sale of the one hundred ten
(110) sub-lots. It is for this reason that the mandate of the
agency constituted Tong as the real party in interest to

remove all clouds on the title of Bacaling and that, after all
these cases are resolved, to use the irrevocable special
power of attorney to ultimately "cause and effect the
transfer of the aforesaid lots in the name of the vendees
[Tong with two (2) other buyers] and execute and deliver
document/s or instrument of whatever nature necessary to
accomplish the foregoing acts and deeds."41 The fiduciary
relationship inherent in ordinary contracts of agency is
replaced by material consideration which in the type of
agency herein established bars the removal or dismissal
of petitioner Tong as Bacaling's attorney-in-fact on the
ground of alleged loss of trust and confidence.
While Bacaling alleges fraud in the performance of the contract of agency to justify its revocation, it
is significant to note that allegations are not proof, and that proof requires the intervention of the
courts where both petitioners Tong and Bacaling are heard. Stated otherwise, Bacaling cannot vest
in herself just like in ordinary contracts the unilateral authority of determining the existence and
gravity of grounds to justify the rescission of the irrevocable special power of attorney. In Sevilla v.
Court of Appeals42 we thus heldBut unlike simple grants of a power of attorney, the agency that we hereby declare to be
compatible with the intent of the parties, cannot be revoked at will. The reason is that it is one
coupled with an interest, the agency having been created for the mutual interest of the agent
and the principal xxx [Petitioner's] interest, obviously, is not limited to the commissions she
earned as a result of her business transactions, but one that extends to the very subject
matter of the power of management delegated to her. It is an agency that, as we said, cannot
be revoked at the pleasure of the principal. Accordingly, the revocation complained of should
entitle the petitioner x x x to damages.
The requirement of a judicial process all the more assumes significance in light of the dismissal with
prejudice, hence,res judicata, of Bacaling's complaint to annul the contract of sale which in turn gave
rise to the irrevocable special power of attorney. It is clear that prima facie there are more than
sufficient reasons to deny the revocation of the said special power of attorney which is coupled with
interest. Inasmuch as no judgment has set aside the agency relationship between Bacaling and
Tong, we rule that petitioner Tong maintains material interest to prosecute the instant petition with or
without the desired cooperation of Bacaling.
On the issue of whether the private respondents are agricultural tenants and entitled to the benefits
accorded by our agrarian laws, we rule in the negative. The requisites in order to have a valid
agricultural leasehold relationship are: (1) The parties are the landowner and the tenant or
agricultural lessee; (2) The subject matter of the relationship is agricultural land; (3) There is consent
between the parties to the relationship; (4) the purpose of the relationship is to bring about

agricultural production; (5) There is personal cultivation on the part of the tenant or agricultural
lessee; and (6) The harvest is shared between the landowner and the tenant or agricultural lessee.
We find that the first, third and sixth requisites are lacking in the case at bar. One legal conclusion
adduced from the facts in Government Service Insurance System v. Court of Appeals 43 provides that
GSIS, not Bacaling, was the owner of the subject properties from 1961 up to 1989 as a result of the
foreclosure and confirmation of the sale of the subject properties. Although the confirmation only
came in 1975, the ownership is deemed to have been vested to GSIS way back in 1961, the year of
the sale of the foreclosed properties. This is due to the fact that the date of confirmation by the trial
court of the foreclosure sale retroacts to the date of the actual sale itself. 44
Thus, the respondents cannot validly claim that they are legitimate and recognized tenants of the
subject parcels of land for the reason that their agreement to till the land was not with GSIS, the real
landowner. There is no showing that GSIS consented to such tenancy relationship nor is there proof
that GSIS received a share in the harvest of the tenants. Consequently, the respondents cannot
claim security of tenure and other rights accorded by our agrarian laws considering that they have
not been validly instituted as agricultural lessees of the subject parcels of land. And from the time
Bacaling recovered the subject properties from GSIS up to the time the former changed her legal
position in the instant case, Bacaling has consistently disclaimed respondents as her alleged
tenants. Bacaling's current legal posture cannot also overturn our finding since, as earlier mentioned,
the said change of mind of Bacaling has little or no evidentiary weight under the circumstances.
The respondents argue that GSIS cannot be considered as the owner of the said properties from
1961 up to 1989 inasmuch as the foreclosure proceedings that started in 1957 only attained finality
during its promulgation by this Court in 1989. Respondents contend that GSIS was the owner of the
said parcels of land only from 1989.
We disagree. The pendency of the GSIS case cannot be construed as a maintenance of status
quo with Bacaling as the owner from 1957 up to 1989 for the reason that what was appealed to this
Court was only the issue of redemption, and not the validity of the foreclosure proceedings including
the public auction sale, the confirmation of the public auction sale and the confirmation and transfer
of ownership of the foreclosed parcels of land to GSIS. The ownership of GSIS over the subject
parcels of land was not disputed. It was the existence of the right to redeem in a judicial foreclosure
that was the subject of the controversy. We ruled that there was no longer any right of redemption in
a judicial foreclosure proceeding after the confirmation of the public auction. Only foreclosures of
mortgages in favor of banking institutions and those made extrajudicially are subject to legal
redemption. Since GSIS is not a banking institution and the procedure of the foreclosure is not
extrajudicial in nature, no right of redemption exists after the judicial confirmation of the public
auction sale of the said lots.
With respect to the third issue, we find that the one hundred ten (110) sub-lots are indeed residential.
In Tiongson v. Court of Appeals45 we held that if the lot in question is not an agricultural land then the
rules on agrarian reform do not apply since the "key factor in ascertaining whether there is a
landowner-tenant relationship xxx is the nature of the disputed property." 46 We reiterated this rule
in Natalia Realty, Inc. v. Department of Agrarian Reform 47 where we excluded lands not devoted to
agricultural activity, i.e., lands previously converted to non-agricultural or residential uses prior to the
effectivity of the 1988 agrarian reform law (R.A. No. 6657) by agencies other than the DAR, from the
coverage of agrarian reform. The statement of the rule is buttressed by P.D. No. 27 which by its

terms applies only to "tenant-farmers of private agricultural lands primarily devoted to rice and corn
under a system of shared-crop or lease tenancy, whether classified as landed estate or not." 48
In the case at bar, the indubitable conclusion from established facts is that the one hundred ten (110)
sub-lots, originally three (3) parcels of land, have been officially classified as residential since 1955.
The classification began when the NUPC and the Bureau of Lands approved the subdivision of the
original three (3) parcels of land into one hundred ten (110) sub-lots each covered with transfer
certificates of title. To build the subdivision project, Nelita Bacaling then obtained a real estate
mortgage loan from the GSIS which she used to fund the project but he was unfortunately unable to
complete it due to the immensity of the project cost. Bacaling undertook to complete the sale of the
subdivision when in 1978 she obtained the registration thereof with the National Housing Authority
as well as a license to sell individually the one hundred ten (110) sub-lots. Earlier, in 1977, the City
Council of Iloilo also recognized the residential classification of the same one hundred ten (110) sublots when it passed the Land Use Plan and Zoning Ordinance. In 1990, Bacaling sold the same
parcels of land to petitioner Tong who obviously wanted to pursue the development of the subdivision
project. It is clear that Tong bought the property for residential and not agricultural purposes upon the
strong assurance of Bacaling that the one hundred ten (110) sub-lots were legally available for such
prospect. To be sure, the subject lots were valuable in the buyer's market only for residential use as
shown by the example of adjacent lots which had long been utilized for building subdivisions and the
implausibility of believing that Tong would buy the lands only to lose them at a bargain to agrarian
reform.49
Clearly, both intention and overt actions show the classification of the one hundred ten (110) sub-lots
for residential use. There can be no other conclusion from the facts obtaining in the instant case.
Indeed, one cannot imagine Nelita Bacaling borrowing the substantial amount of Six Hundred
Thousand Pesos (P600,000.00) from the GSIS and spending Two Hundred Fifty Thousand Pesos
(P250,000.00) for the purpose of developing and subdividing the original three (3) parcels of land
into one hundred ten (110) homelots, with individual transfer certificates of title ready and available
for sale, if her purported desire were to keep the landholding for agricultural purposes. It also makes
no sense that petitioner Tong would invest so much money, time and effort in these sub-lots for
planting and cultivating agricultural crops when all the mechanisms are already in place for building a
residential community. One cannot likewise deny the consistent official government action which
decreed the said one hundred ten (110) sub-lots as most appropriate for human settlements
considering that for several times beginning in 1955 and in accordance with relevant laws and
regulations, the said landholding was categorically reserved as a residential subdivision.
It is also grave error to gloss over the NUPC action since its declarations have long been recognized
in similar cases as the present one as clear and convincing evidence of residential classification.
In Magno-Adamos v. Bagasao50 we found the endorsements of the NUPC approving albeit tentatively
a subdivision plan to be a very strong evidence of conversion of the disputed parcels of land into a
residential subdivision which would contradict the alleged tenancy relationship. We found nothing
objectionable in the trial court's ruling in Santos v. de Guzman51 ejecting an alleged tenant from the
landholding "because the same was included in a homesite subdivision duly approved by the
National Planning Commission."52 In Republic v. Castellvi53 we gave great weight to the certification
of the NUPC that the subject parcels of land were classified as residential areas and ordered their
appraisal as residential and not agricultural lands -

The lower court found, and declared, that the lands of Castellvi and Toledo-Gozun are
residential lands. The finding of the lower court is in consonance with the unanimous opinion
of the three commissioners who, in their report to the court, declared that the lands are
residential lands. The Republic assails the finding that the lands are residential, contending
that the plans of the appellees to convert the lands into subdivision for residential purposes
were only on paper, there being no overt acts on the part of the appellees which indicated
that the subdivision project had been commenced xxx. We find evidence showing that the
lands in question had ceased to be devoted to the production of agricultural crops, that they
had become adaptable for residential purposes, and that the appellees had actually taken
steps to convert their lands into residential subdivisions xxx. The evidence shows that
Castellvi broached the idea of subdividing her land into residential lots as early as July 11,
1956 in her letter to the Chief of Staff of the Armed Forces of the Philippines xxx. As a matter
of fact, the layout of the subdivision plan was tentatively approved by the National Planning
Commission on September 7, 1956 xxx. The land of Castellvi had not been devoted to
agriculture since 1947 when it was leased to the Philippine Army. In 1957 said land was
classified as residential, and taxes based on its classification as residential had been paid
since then xxx. The location of the Castellvi land justifies its suitability for a residential
subdivision.
The NUPC was created under EO 98, s. of 194654 to "prepare general plans, zoning ordinances, and
subdivision regulations, to guide and accomplish a coordinated, adjusted, harmonious reconstruction
and future development of urban areas which will in accordance with present and future needs, best
promote health, safety, morals, order, convenience, prosperity, and general welfare, as well as
efficiency and economy in the process of development; including among other things adequate
provisions for traffic, the promotion of safety from fire and other dangers, adequate provision for light
and air, the promotion of healthful and convenient distribution of populations xxx." 55 Under the
express terms of its mandate, the NUPC was therefore duty-bound to act only upon realty projects
which would be used for human settlements and not for agricultural purposes. It is in this light that
we must take stock of the 1955 NUPC conversion of the one hundred ten (110) sub-lots from
agricultural to residential classification.
To bolster the exclusive role of the NUPC over developmental projects for residential and industrial
purposes, the term "subdivision" (which NUPC was mandated to review and if properly executed to
approve) was defined in EO 98 as "the division of a tract or parcel of land into two (2) or more lots,
sites or other divisions for the purpose, whether immediate or future, of sale or building development,
and includes resubdivision, and when appropriate to the context, relates to the process of
subdividing or to the land or area subdivided."56 The Subdivision Regulations57 (which the NUPC
adopted pursuant to EO 98) decreed as mandatory the NUPC approval of all subdivisions of land in
the Philippines intended for residential, commercial and industrial purposes, before lots comprising
the subdivision could be legally sold or building development therein could validly commence Any owner of land wishing to subdivide land shall submit to the Director of Planning [who
was the head of NUPC] a plat of the subdivision which shall conform to the requirements set
forth in these Regulations. No subdivider shall proceed with the sale of lots of a subdivision
and no plat of a subdivision shall be filed with the Director of Lands for approval or recorded
in the Office of the Register of Deeds until such plat shall have been approved by the Director
of Planning. Applications for plat approval submitted to the District or City Engineer of a town

or city in the Philippines shall be forwarded to the Director of Planning together with the
District or City Engineer's recommendations (underscoring supplied).
We are convinced that the 1955 approval by the NUPC of the subdivision of the subject three (3)
parcels of land owned by Nelita Bacaling and her spouse into one hundred ten (110) sub-lots caused
the conversion, if not outright classification, of the entire landholding into a residential community for
sale to interested buyers. This is an official classification of the sub-lots as residential units and
constitutes the only objective and effectual means of obtaining in 1955 the classification and
reservation of private land for non-agricultural use, i.e. residential, industrial or commercial, since
neither P.D. No. 27 nor R.A. No. 6657 58 (together with the specified formal mechanisms stipulated
therein for converting a piece of agricultural land into a residential lot) were then binding and
effective. The assignment or conversion of the one hundred ten (110) sub-lots for residential
purposes was not abrogated by P.D. No. 27 under which respondents invalidly secured their
certificates of land transfer since the decree was only prospectively effective 59 and its coverage was
limited only to agricultural lands which clearly do not include the residential sub-lots in question. 60
By virtue of the official classification made by NUPC and the other circumstances convincingly
proved herein, the only fair and legally acceptable decision in the instant case would be to declare,
as we now indeed rule, that the one hundred ten (110) sub-lots are truly residential in character as
well as in purpose and are thus excluded from the coverage of P.D. No. 27.
Verily, the Certificates of Land Transfer (CLT) issued in respondents' names are not valid and do not
change our ruling. The respondents cannot rely on said CLTS as proof of security of tenure. It is well
settled that the certificates of land transfer are not absolute evidence of ownership of the subject
lots61 and consequently do not bar the finding that their issuance is void from inception since they
cover residential lands contrary to the mandate of P.D. No. 27. It follows from the fact of nullity of the
certificates of land transfer in respondents' names that the respondents are not entitled to occupy
and possess the one hundred ten (110) sub-lots or portions thereof without the consent of the owner,
herein petitioner Tong.1wphi1.nt
While not raised as issues in the instant petition, we nevertheless rule now (conformably with Gayos
v. Gayos62 that it is a cherished rule of procedure that a court should always strive to settle the entire
controversy in a single proceeding leaving no root or branch to bear the seeds of future litigation)
that respondents cannot claim disturbance compensation for the reason that the sub-lots are not and
have never been available for agrarian reform. In the same vein, respondents also have no right to
be reimbursed by petitioner Jose Juan Tong for the value of or expenses for improvements which
they might have introduced on the one hundred ten (110) sub-lots since they did not allege nor prove
the existence of such improvements and their right to compensation thereto, if any. 63
WHEREFORE, the Petition for Review is GRANTED. It is further ordered and adjudged that:
1. The certificates of land transfer over the one hundred ten (110) sub-lots located in Barangay
Cubay, Jaro, Iloilo City, in the name of respondents and/or their successors in interest are
hereby DECLARED VOID AB INITIO. The said one hundred ten (110) sub-lots, covered by TCT
Nos. T-10664 to T-10773 of the Registry of Deeds of the City of Iloilo, are declared outside the
coverage and operation of P.D. No. 27 and other land reform laws.

2. The consolidated Decision of the Court of Appeals in CA-G.R. SP No. 54413 ("Felomino Muya
and Crispin Amor v. Nelita Bacaling, represented by her attorney-in-fact, Jose Juan Tong, and the
Executive Secretary, Office of the President") and in CA-G.R. SP No. 54414, ("Wilfredo Jereza,
Rodolfo Lazarte and Nemesio Tonocante v. Hon. Executive Secretary, Office of the President and
Nelita Bacaling") and its Resolution dated June 5, 2001 denying petitioners' Motion for
Reconsideration are REVERSED AND SET ASIDE.
3. The Decision dated May 22, 1998 and the Resolution dated July 22, 1999 of the Office of the
President in OP Case No. 98-K-8180 are REINSTATED with the modification in that the respondents
are not entitled to disturbance compensation; and
4. Respondents Felomino Muya, Crispin Amor, Wilfredo Jereza, Rodolfo Lazarte and Nemesio
Tonocante together with their assigns and successors in interest are ordered to vacate and surrender
peacefully the possession of the one hundred ten (110) sub-lots, covered by TCT Nos. T-10664 to T10773-Iloilo City, to petitioner Jose Juan Tong within thirty (30) days from notice of this Decision.
No pronouncement as to costs.
SO ORDERED.

PHILEX MINING CORPORATION, petitioner, vs. COMMISSIONER

OF INTERNAL REVENUE
THIRD DIVISION
G.R. No. 148187

April 16, 2008

PHILEX MINING CORPORATION, petitioner,

vs.
COMMISSIONER OF INTERNAL REVENUE, respondent.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari of the June 30, 2000 Decision 1 of the Court of Appeals in
CA-G.R. SP No. 49385, which affirmed the Decision2 of the Court of Tax Appeals in C.T.A. Case No.
5200. Also assailed is the April 3, 2001 Resolution 3 denying the motion for reconsideration.
The facts of the case are as follows:
On April 16, 1971, petitioner Philex Mining Corporation (Philex Mining), entered into an
agreement4 with Baguio Gold Mining Company ("Baguio Gold") for the former to manage and
operate the latters mining claim, known as the Sto. Nino mine, located in Atok and Tublay, Benguet
Province. The parties agreement was denominated as "Power of Attorney" and provided for the
following terms:
4. Within three (3) years from date thereof, the PRINCIPAL (Baguio Gold) shall make
available to the MANAGERS (Philex Mining) up to ELEVEN MILLION PESOS
(P11,000,000.00), in such amounts as from time to time may be required by the MANAGERS
within the said 3-year period, for use in the MANAGEMENT of the STO. NINO MINE. The
said ELEVEN MILLION PESOS (P11,000,000.00) shall be deemed, for internal audit

purposes, as the owners account in the Sto. Nino PROJECT. Any part of any income of the
PRINCIPAL from the STO. NINO MINE, which is left with the Sto. Nino PROJECT, shall be
added to such owners account.
5. Whenever the MANAGERS shall deem it necessary and convenient in connection with the
MANAGEMENT of the STO. NINO MINE, they may transfer their own funds or property to
the Sto. Nino PROJECT, in accordance with the following arrangements:
(a) The properties shall be appraised and, together with the cash, shall be carried by
the Sto. Nino PROJECT as a special fund to be known as the MANAGERS account.
(b) The total of the MANAGERS account shall not exceed P11,000,000.00, except
with prior approval of the PRINCIPAL; provided, however, that if the compensation of
the MANAGERS as herein provided cannot be paid in cash from the Sto. Nino
PROJECT, the amount not so paid in cash shall be added to the MANAGERS
account.
(c) The cash and property shall not thereafter be withdrawn from the Sto. Nino
PROJECT until termination of this Agency.
(d) The MANAGERS account shall not accrue interest. Since it is the desire of the
PRINCIPAL to extend to the MANAGERS the benefit of subsequent appreciation of
property, upon a projected termination of this Agency, the ratio which the
MANAGERS account has to the owners account will be determined, and the
corresponding proportion of the entire assets of the STO. NINO MINE, excluding the
claims, shall be transferred to the MANAGERS, except that such transferred assets
shall not include mine development, roads, buildings, and similar property which will
be valueless, or of slight value, to the MANAGERS. The MANAGERS can, on the
other hand, require at their option that property originally transferred by them to the
Sto. Nino PROJECT be re-transferred to them. Until such assets are transferred to
the MANAGERS, this Agency shall remain subsisting.
xxxx
12. The compensation of the MANAGER shall be fifty per cent (50%) of the net profit of the
Sto. Nino PROJECT before income tax. It is understood that the MANAGERS shall pay
income tax on their compensation, while the PRINCIPAL shall pay income tax on the net
profit of the Sto. Nino PROJECT after deduction therefrom of the MANAGERS
compensation.
xxxx
16. The PRINCIPAL has current pecuniary obligation in favor of the MANAGERS and, in the
future, may incur other obligations in favor of the MANAGERS. This Power of Attorney has
been executed as security for the payment and satisfaction of all such obligations of the
PRINCIPAL in favor of the MANAGERS and as a means to fulfill the same. Therefore, this
Agency shall be irrevocable while any obligation of the PRINCIPAL in favor of the
MANAGERS is outstanding, inclusive of the MANAGERS account. After all obligations of the

PRINCIPAL in favor of the MANAGERS have been paid and satisfied in full, this Agency shall
be revocable by the PRINCIPAL upon 36-month notice to the MANAGERS.
17. Notwithstanding any agreement or understanding between the PRINCIPAL and the
MANAGERS to the contrary, the MANAGERS may withdraw from this Agency by giving 6month notice to the PRINCIPAL. The MANAGERS shall not in any manner be held liable to
the PRINCIPAL by reason alone of such withdrawal. Paragraph 5(d) hereof shall be operative
in case of the MANAGERS withdrawal.
x x x x5
In the course of managing and operating the project, Philex Mining made advances of cash and
property in accordance with paragraph 5 of the agreement. However, the mine suffered continuing
losses over the years which resulted to petitioners withdrawal as manager of the mine on January
28, 1982 and in the eventual cessation of mine operations on February 20, 1982. 6
Thereafter, on September 27, 1982, the parties executed a "Compromise with Dation in
Payment"7 wherein Baguio Gold admitted an indebtedness to petitioner in the amount of
P179,394,000.00 and agreed to pay the same in three segments by first assigning Baguio Golds
tangible assets to petitioner, transferring to the latter Baguio Golds equitable title in its Philodrill
assets and finally settling the remaining liability through properties that Baguio Gold may acquire in
the future.
On December 31, 1982, the parties executed an "Amendment to Compromise with Dation in
Payment"8 where the parties determined that Baguio Golds indebtedness to petitioner actually
amounted to P259,137,245.00, which sum included liabilities of Baguio Gold to other creditors that
petitioner had assumed as guarantor. These liabilities pertained to long-term loans amounting to
US$11,000,000.00 contracted by Baguio Gold from the Bank of America NT & SA and Citibank N.A.
This time, Baguio Gold undertook to pay petitioner in two segments by first assigning its tangible
assets for P127,838,051.00 and then transferring its equitable title in its Philodrill assets for
P16,302,426.00. The parties then ascertained that Baguio Gold had a remaining outstanding
indebtedness to petitioner in the amount of P114,996,768.00.
Subsequently, petitioner wrote off in its 1982 books of account the remaining outstanding
indebtedness of Baguio Gold by charging P112,136,000.00 to allowances and reserves that were set
up in 1981 and P2,860,768.00 to the 1982 operations.
In its 1982 annual income tax return, petitioner deducted from its gross income the amount of
P112,136,000.00 as "loss on settlement of receivables from Baguio Gold against reserves and
allowances."9 However, the Bureau of Internal Revenue (BIR) disallowed the amount as deduction for
bad debt and assessed petitioner a deficiency income tax of P62,811,161.39.
Petitioner protested before the BIR arguing that the deduction must be allowed since all requisites for
a bad debt deduction were satisfied, to wit: (a) there was a valid and existing debt; (b) the debt was
ascertained to be worthless; and (c) it was charged off within the taxable year when it was
determined to be worthless.
Petitioner emphasized that the debt arose out of a valid management contract it entered into with
Baguio Gold. The bad debt deduction represented advances made by petitioner which, pursuant to

the management contract, formed part of Baguio Golds "pecuniary obligations" to petitioner. It also
included payments made by petitioner as guarantor of Baguio Golds long-term loans which legally
entitled petitioner to be subrogated to the rights of the original creditor.
Petitioner also asserted that due to Baguio Golds irreversible losses, it became evident that it would
not be able to recover the advances and payments it had made in behalf of Baguio Gold. For a debt
to be considered worthless, petitioner claimed that it was neither required to institute a judicial action
for collection against the debtor nor to sell or dispose of collateral assets in satisfaction of the debt. It
is enough that a taxpayer exerted diligent efforts to enforce collection and exhausted all reasonable
means to collect.
On October 28, 1994, the BIR denied petitioners protest for lack of legal and factual basis. It held
that the alleged debt was not ascertained to be worthless since Baguio Gold remained existing and
had not filed a petition for bankruptcy; and that the deduction did not consist of a valid and subsisting
debt considering that, under the management contract, petitioner was to be paid fifty percent (50%)
of the projects net profit.10
Petitioner appealed before the Court of Tax Appeals (CTA) which rendered judgment, as follows:
WHEREFORE, in view of the foregoing, the instant Petition for Review is hereby DENIED for
lack of merit. The assessment in question, viz: FAS-1-82-88-003067 for deficiency income
tax in the amount of P62,811,161.39 is hereby AFFIRMED.
ACCORDINGLY, petitioner Philex Mining Corporation is hereby ORDERED to PAY
respondent Commissioner of Internal Revenue the amount of P62,811,161.39, plus, 20%
delinquency interest due computed from February 10, 1995, which is the date after the 20day grace period given by the respondent within which petitioner has to pay the deficiency
amount x x x up to actual date of payment.
SO ORDERED.11
The CTA rejected petitioners assertion that the advances it made for the Sto. Nino mine were in the
nature of a loan. It instead characterized the advances as petitioners investment in a partnership
with Baguio Gold for the development and exploitation of the Sto. Nino mine. The CTA held that the
"Power of Attorney" executed by petitioner and Baguio Gold was actually a partnership agreement.
Since the advanced amount partook of the nature of an investment, it could not be deducted as a
bad debt from petitioners gross income.
The CTA likewise held that the amount paid by petitioner for the long-term loan obligations of Baguio
Gold could not be allowed as a bad debt deduction. At the time the payments were made, Baguio
Gold was not in default since its loans were not yet due and demandable. What petitioner did was to
pre-pay the loans as evidenced by the notice sent by Bank of America showing that it was merely
demanding payment of the installment and interests due. Moreover, Citibank imposed and collected
a "pre-termination penalty" for the pre-payment.
The Court of Appeals affirmed the decision of the CTA.12 Hence, upon denial of its motion for
reconsideration,13petitioner took this recourse under Rule 45 of the Rules of Court, alleging that:
I.

The Court of Appeals erred in construing that the advances made by Philex in the
management of the Sto. Nino Mine pursuant to the Power of Attorney partook of the nature of
an investment rather than a loan.
II.
The Court of Appeals erred in ruling that the 50%-50% sharing in the net profits of the Sto.
Nino Mine indicates that Philex is a partner of Baguio Gold in the development of the Sto.
Nino Mine notwithstanding the clear absence of any intent on the part of Philex and Baguio
Gold to form a partnership.
III.
The Court of Appeals erred in relying only on the Power of Attorney and in completely
disregarding the Compromise Agreement and the Amended Compromise Agreement when it
construed the nature of the advances made by Philex.
IV.
The Court of Appeals erred in refusing to delve upon the issue of the propriety of the bad
debts write-off.14
Petitioner insists that in determining the nature of its business relationship with Baguio Gold, we
should not only rely on the "Power of Attorney", but also on the subsequent "Compromise with
Dation in Payment" and "Amended Compromise with Dation in Payment" that the parties executed in
1982. These documents, allegedly evinced the parties intent to treat the advances and payments as
a loan and establish a creditor-debtor relationship between them.
The petition lacks merit.
The lower courts correctly held that the "Power of Attorney" is the instrument that is material in
determining the true nature of the business relationship between petitioner and Baguio Gold. Before
resort may be had to the two compromise agreements, the parties contractual intent must first be
discovered from the expressed language of the primary contract under which the parties business
relations were founded. It should be noted that the compromise agreements were mere collateral
documents executed by the parties pursuant to the termination of their business relationship created
under the "Power of Attorney". On the other hand, it is the latter which established the juridical
relation of the parties and defined the parameters of their dealings with one another.
The execution of the two compromise agreements can hardly be considered as a subsequent or
contemporaneous act that is reflective of the parties true intent. The compromise agreements were
executed eleven years after the "Power of Attorney" and merely laid out a plan or procedure by which
petitioner could recover the advances and payments it made under the "Power of Attorney". The
parties entered into the compromise agreements as a consequence of the dissolution of their
business relationship. It did not define that relationship or indicate its real character.
An examination of the "Power of Attorney" reveals that a partnership or joint venture was indeed
intended by the parties. Under 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.15 While a corporation, like petitioner, cannot generally enter into a contract of

partnership unless authorized by law or its charter, it has been held that it may enter into a joint
venture which is akin to a particular partnership:
The legal concept of a joint venture is of common law origin. It has no precise legal definition,
but it has been generally understood to mean an organization formed for some temporary
purpose. x x x It is in fact hardly distinguishable from the partnership, since their elements
are similar community of interest in the business, sharing of profits and losses, and a
mutual right of control. x x x The main distinction cited by most opinions in common law
jurisdictions is that the partnership contemplates a general business with some degree of
continuity, while the joint venture is formed for the execution of a single transaction, and is
thus of a temporary nature. x x x This observation is not entirely accurate in this jurisdiction,
since under the Civil Code, a partnership may be particular or universal, and a particular
partnership may have for its object a specific undertaking. x x x It would seem therefore that
under Philippine law, a joint venture is a form of partnership and should be governed by the
law of partnerships. The Supreme Court has however recognized a distinction between these
two business forms, and has held that although a corporation cannot enter into a partnership
contract, it may however engage in a joint venture with others. x x x (Citations omitted)

16

Perusal of the agreement denominated as the "Power of Attorney" indicates that the parties had
intended to create a partnership and establish a common fund for the purpose. They also had a joint
interest in the profits of the business as shown by a 50-50 sharing in the income of the mine.
Under the "Power of Attorney", petitioner and Baguio Gold undertook to contribute money, property
and industry to the common fund known as the Sto. Nio mine. 17 In this regard, we note that there is
a substantive equivalence in the respective contributions of the parties to the development and
operation of the mine. Pursuant to paragraphs 4 and 5 of the agreement, petitioner and Baguio Gold
were to contribute equally to the joint venture assets under their respective accounts. Baguio Gold
would contribute P11M under its owners account plus any of its income that is left in the project, in
addition to its actual mining claim. Meanwhile, petitioners contribution would consist of
its expertise in the management and operation of mines, as well as the managers account which is
comprised of P11M in funds and property and petitioners "compensation" as manager that cannot
be paid in cash.
However, petitioner asserts that it could not have entered into a partnership agreement with Baguio
Gold because it did not "bind" itself to contribute money or property to the project; that under
paragraph 5 of the agreement, it was only optional for petitioner to transfer funds or property to the
Sto. Nio project "(w)henever the MANAGERS shall deem it necessary and convenient in connection
with the MANAGEMENT of the STO. NIO MINE."18
The wording of the parties agreement as to petitioners contribution to the common fund does not
detract from the fact that petitioner transferred its funds and property to the project as specified in
paragraph 5, thus rendering effective the other stipulations of the contract, particularly paragraph
5(c) which prohibits petitioner from withdrawing the advances until termination of the parties
business relations. As can be seen, petitioner became bound by its contributions once the transfers
were made. The contributions acquired an obligatory nature as soon as petitioner had chosen to
exercise its option under paragraph 5.

There is no merit to petitioners claim that the prohibition in paragraph 5(c) against withdrawal of
advances should not be taken as an indication that it had entered into a partnership with Baguio
Gold; that the stipulation only showed that what the parties entered into was actually a contract of
agency coupled with an interest which is not revocable at will and not a partnership.

In an agency coupled with interest, it is the agency

that cannot be revoked or withdrawn by the principal
due to an interest of a third party that depends upon it,
or the mutual interest of both principal and agent.19 In
this case, the non-revocation or non-withdrawal under
paragraph 5(c) applies to the advances made by
petitioner who is supposedly the agent and not the
principal under the contract. Thus, it cannot be
inferred from the stipulation that the parties relation
under the agreement is one of agency coupled with an
interest and not a partnership.
Neither can paragraph 16 of the agreement be taken as an indication that the relationship of the
parties was one of agency and not a partnership. Although the said provision states that "this Agency
shall be irrevocable while any obligation of the PRINCIPAL in favor of the MANAGERS is
outstanding, inclusive of the MANAGERS account," it does not necessarily follow that the parties
entered into an agency contract coupled with an interest that cannot be withdrawn by Baguio Gold.
It should be stressed that the main object of the "Power of Attorney" was not to confer a power in
favor of petitioner to contract with third persons on behalf of Baguio Gold but to create a business
relationship between petitioner and Baguio Gold, in which the former was to manage and operate the
latters mine through the parties mutual contribution of material resources and industry. The essence
of an agency, even one that is coupled with interest, is the agents ability to represent his principal
and bring about business relations between the latter and third persons. 20 Where representation for
and in behalf of the principal is merely incidental or necessary for the proper discharge of ones
paramount undertaking under a contract, the latter may not necessarily be a contract of agency, but
some other agreement depending on the ultimate undertaking of the parties. 21
In this case, the totality of the circumstances and the stipulations in the parties agreement
indubitably lead to the conclusion that a partnership was formed between petitioner and Baguio
Gold.
First, it does not appear that Baguio Gold was unconditionally obligated to return the advances made
by petitioner under the agreement. Paragraph 5 (d) thereof provides that upon termination of the
parties business relations, "the ratio which the MANAGERS account has to the owners account will
be determined, and the corresponding proportion of the entire assets of the STO. NINO MINE,
excluding the claims" shall be transferred to petitioner. 22 As pointed out by the Court of Tax Appeals,
petitioner was merely entitled to a proportionate return of the mines assets upon dissolution of the

parties business relations. There was nothing in the agreement that would require Baguio Gold to
make payments of the advances to petitioner as would be recognized as an item of obligation or
"accounts payable" for Baguio Gold.
Thus, the tax court correctly concluded that the agreement provided for a distribution of assets of the
Sto. Nio mine upon termination, a provision that is more consistent with a partnership than a
creditor-debtor relationship. It should be pointed out that in a contract of loan, a person who receives
a loan or money or any fungible thing acquires ownership thereof and is bound to pay the creditor an
equal amount of the same kind and quality. 23 In this case, however, there was no stipulation for
Baguio Gold to actually repay petitioner the cash and property that it had advanced, but only the
return of an amount pegged at a ratio which the managers account had to the owners account.
In this connection, we find no contractual basis for the execution of the two compromise agreements
in which Baguio Gold recognized a debt in favor of petitioner, which supposedly arose from the
termination of their business relations over the Sto. Nino mine. The "Power of Attorney" clearly
provides that petitioner would only be entitled to the return of a proportionate share of the mine
assets to be computed at a ratio that the managers account had to the owners account. Except to
provide a basis for claiming the advances as a bad debt deduction, there is no reason for Baguio
Gold to hold itself liable to petitioner under the compromise agreements, for any amount over and
above the proportion agreed upon in the "Power of Attorney".
Next, the tax court correctly observed that it was unlikely for a business corporation to lend hundreds
of millions of pesos to another corporation with neither security, or collateral, nor a specific deed
evidencing the terms and conditions of such loans. The parties also did not provide a specific
maturity date for the advances to become due and demandable, and the manner of payment was
unclear. All these point to the inevitable conclusion that the advances were not loans but capital
contributions to a partnership.
The strongest indication that petitioner was a partner in the Sto Nio mine is the fact that it would
receive 50% of the net profits as "compensation" under paragraph 12 of the agreement. The entirety
of the parties contractual stipulations simply leads to no other conclusion than that petitioners
"compensation" is actually its share in the income of the joint venture.
Article 1769 (4) of the Civil Code explicitly provides that the "receipt by a person of a share in the
profits of a business is prima facie evidence that he is a partner in the business." Petitioner asserts,
however, that no such inference can be drawn against it since its share in the profits of the Sto Nio
project was in the nature of compensation or "wages of an employee", under the exception provided
in Article 1769 (4) (b).24
On this score, the tax court correctly noted that petitioner was not an employee of Baguio Gold who
will be paid "wages" pursuant to an employer-employee relationship. To begin with, petitioner was the
manager of the project and had put substantial sums into the venture in order to ensure its viability
and profitability. By pegging its compensation to profits, petitioner also stood not to be remunerated
in case the mine had no income. It is hard to believe that petitioner would take the risk of not being
paid at all for its services, if it were truly just an ordinary employee.
Consequently, we find that petitioners "compensation" under paragraph 12 of the agreement actually
constitutes its share in the net profits of the partnership. Indeed, petitioner would not be entitled to an

equal share in the income of the mine if it were just an employee of Baguio Gold. 25 It is not surprising
that petitioner was to receive a 50% share in the net profits, considering that the "Power of Attorney"
also provided for an almost equal contribution of the parties to the St. Nino mine. The
"compensation" agreed upon only serves to reinforce the notion that the parties relations were
indeed of partners and not employer-employee.
All told, the lower courts did not err in treating petitioners advances as investments in a partnership
known as the Sto. Nino mine. The advances were not "debts" of Baguio Gold to petitioner inasmuch
as the latter was under no unconditional obligation to return the same to the former under the "Power
of Attorney". As for the amounts that petitioner paid as guarantor to Baguio Golds creditors, we find
no reason to depart from the tax courts factual finding that Baguio Golds debts were not yet due
and demandable at the time that petitioner paid the same. Verily, petitioner pre-paid Baguio Golds
outstanding loans to its bank creditors and this conclusion is supported by the evidence on record. 26
In sum, petitioner cannot claim the advances as a bad debt deduction from its gross income.
Deductions for income tax purposes partake of the nature of tax exemptions and are strictly
construed against the taxpayer, who must prove by convincing evidence that he is entitled to the
deduction claimed.27 In this case, petitioner failed to substantiate its assertion that the advances
were subsisting debts of Baguio Gold that could be deducted from its gross income. Consequently, it
could not claim the advances as a valid bad debt deduction.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals in CA-G.R. SP No.
49385 dated June 30, 2000, which affirmed the decision of the Court of Tax Appeals in C.T.A. Case
No. 5200 is AFFIRMED. Petitioner Philex Mining Corporation is ORDERED to PAY the deficiency
tax on its 1982 income in the amount of P62,811,161.31, with 20% delinquency interest computed
from February 10, 1995, which is the due date given for the payment of the deficiency income tax, up
to the actual date of payment.
SO ORDERED.

FEDERICO VALERA, plaintiff-appellant, vs. MIGUEL VELASCO

G.R. No. L-28050

March 13, 1928

FEDERICO VALERA, plaintiff-appellant,

vs.
MIGUEL VELASCO, defendant-appellee.
Jose Martinez San Agustin for appellant.
Vicente O. Romualdez, Crispulo T. Manubay and Placido P. Reyes for appellee.
VILLA-REAL, J.:
This is an appeal taken by Federico Valera from the judgment of the Court of First Instance of Manila
dismissing his complaint against Miguel Velasco, on the ground that he has not satisfactorily proven
his right of action.
In support of his appeal, the appellant assigns the following alleged as committed by the trial court in
its judgment, to wit: (1) The lower court erred in holding that one of the ways of terminating an
agency is by the express or tacit renunciation of the agent; (2) the lower court erred in holding that
the institution of a civil action and the execution of the judgment obtained by the agent against his
principal is but renunciation of the powers conferred on the agent; (3) the lower erred in holding that,

even if the sale by Eduardo Hernandez to the plaintiff Federico Valera be declared void, such a
declaration could not prevail over the rights of the defendant Miguel Velasco inasmuch as the right
redemption was exercised by neither Eduardo Hernandez nor the plaintiff Federico Valera; (4) the
lower court erred in not finding that the defendant Miguel Velasco was, and at present is, an
authorized representative of the plaintiff Federico Valera; (5) the lower court erred in not annulling the
sale made by the sheriff at public auction to defendant Miguel Velasco, Exhibit K; (6) the lower court
erred in failing to annul the sale executed by Eduardo Hernandez to the plaintiff Federico Valera,
Exhibit C; (7) the lower court erred in not annulling Exhibit L, that is, the sale at public auction of the
right to repurchase the land in question to Salvador Vallejo; (8) the lower court erred in not declaring
Exhibit M null and void, which is the sale by Salvador Vallejo to defendant Miguel Velasco; (9) the
lower court erred in not ordering the defendant Miguel Velasco to liquidate his accounts as agent of
the plaintiff Federico Valera; (10) the lower court erred in not awarding plaintiff the P5,000 damages
prayed for.
The pertinent facts necessary for the solution of the questions raised by the above quoted
assignments of error are contained in the decision appealed from and are as follows:
By virtue of the powers of attorney, Exhibits X and Z, executed by the plaintiff on April 11,
1919, and on August 8, 1922, the defendant was appointed attorney-in-fact of the said
plaintiff with authority to manage his property in the Philippines, consisting of the usufruct of
a real property located of Echague Street, City of Manila.
The defendant accepted both powers of attorney, managed plaintiff's property, reported his
operations, and rendered accounts of his administration; and on March 31, 1923 presented
exhibit F to plaintiff, which is the final account of his administration for said month, wherein it
appears that there is a balance of P3,058.33 in favor of the plaintiff.
The liquidation of accounts revealed that the plaintiff owed the defendant P1,100, and as
misunderstanding arose between them, the defendant brought suit against the plaintiff, civil
case No. 23447 of this court. Judgment was rendered in his favor on March 28, 1923, and
after the writ of execution was issued, the sheriff levied upon the plaintiff's right of usufruct,
sold it at public auction and adjudicated it to the defendant in payment of all of his claim.
Subsequently, on May 11, 1923, the plaintiff sold his right of redemption to one Eduardo
Hernandez, for the sum of P200 (Exhibit A). On September 4, 1923, this purchaser conveyed
the same right of redemption, for the sum of P200, to the plaintiff himself, Federico Valera
(Exhibit C).
After the plaintiff had recovered his right of redemption, one Salvador Vallejo, who had an
execution upon a judgment against the plaintiff rendered in a civil case against the latter,
levied upon said right of redemption, which was sold by the sheriff at public auction to
Salvador Vallejo for P250 and was definitely adjudicated to him. Later, he transferred said
right of redemption to the defendant Velasco. This is how the title to the right of usufruct to
the aforementioned property later came to vest the said defendant.
As the first two assignments of error are very closely related to each other, we will consider them
jointly.
Article 1732 of the Civil Code reads as follows:

Art. 1732. Agency is terminated:

1. By revocation;
2. By the withdrawal of the agent;
3. By the death, interdiction, bankruptcy, or insolvency of the principal or of the agent.
And article 1736 of the same Code provides that:
Art. 1736. An agent may withdraw from the agency by giving notice to the principal. Should
the latter suffer any damage through the withdrawal, the agent must indemnify him therefore,
unless the agent's reason for his withdrawal should be the impossibility of continuing to act
as such without serious detriment to himself.
In the case of De la Pea vs. Hidalgo (16 Phil., 450), this court said laid down the following rule:
1. AGENCY; ADMINISTRATION OF PROPERTY; IMPLIED AGENCY. When the agent
and administrator of property informs his principal by letter that for reasons of health and
medical treatment he is about to depart from the place where he is executing his trust and
wherein the said property is situated, and abandons the property, turns it over to a third party,
renders accounts of its revenues up to the date on which he ceases to hold his position and
transmits to his principal statement which summarizes and embraces all the balances of his
accounts since he began the administration to the date of the termination of his trust, and,
without stating when he may return to take charge of the administration of the said property,
asks his principal to execute a power of attorney in due form in favor of a transmit the same
to another person who took charge of the administration of the said property, it is but
reasonable and just to conclude that the said agent had expressly and definitely renounced
his agency and that such agency duly terminated, in accordance with the provisions of article
1732 of the Civil Code, and, although the agent in his aforementioned letter did not use the
words "renouncing the agency," yet such words, were undoubtedly so understood and
accepted by the principal, because of the lapse of nearly nine years up to the time of the
latter's death, without his having interrogated either the renouncing agent, disapproving what
he had done, or the person who substituted the latter.
The misunderstanding between the plaintiff and the defendant over the payment of the balance of
P1,000 due the latter, as a result of the liquidation of the accounts between them arising from the
collections by virtue of the former's usufructuary right, who was the principal, made by the latter as
his agent, and the fact that the said defendant brought suit against the said principal on March 28,
1928 for the payment of said balance, more than prove the breach of the juridical relation between
them; for, although the agent has not expressly told his principal that he renounced the agency, yet
neither dignity nor decorum permits the latter to continue representing a person who has adopted
such an antagonistic attitude towards him. When the agent filed a complaint against his principal for
recovery of a sum of money arising from the liquidation of the accounts between them in connection
with the agency, Federico Valera could not have understood otherwise than that Miguel Velasco
renounced the agency; because his act was more expressive than words and could not have caused
any doubt. (2 C. J., 543.) In order to terminate their relations by virtue of the agency the defendant,
as agent, rendered his final account on March 31, 1923 to the plaintiff, as principal.

Briefly, then, the fact that an agent institutes an action against his principal for the recovery of the
balance in his favor resulting from the liquidation of the accounts between them arising from the
agency, and renders and final account of his operations, is equivalent to an express renunciation of
the agency, and terminates the juridical relation between them.
If, as we have found, the defendant-appellee Miguel Velasco, in adopting a hostile attitude towards
his principal, suing him for the collection of the balance in his favor, resulting from the liquidation of
the agency accounts, ceased ipso facto to be the agent of the plaintiff-appellant, said agent's
purchase of the aforesaid principal's right of usufruct at public auction held by virtue of an execution
issued upon the judgment rendered in favor of the former and against the latter, is valid and legal,
and the lower court did not commit the fourth and fifth assignments of error attributed to it by the
plaintiff-appellant.
In regard to the third assignment of error, it is deemed unnecessary to discuss the validity of the sale
made by Federico Valera to Eduardo Hernandez of his right of redemption in the sale of his
usufructuary right made by the sheriff by virtue of the execution of the judgment in favor of Miguel
Velasco and against the said Federico Valera; and the same thing is true as to the validity of the
resale of the same right of redemption made by Eduardo Hernandez to Federico Valera; inasmuch
as Miguel Velasco's purchase at public auction held by virtue of an execution of Federico Valera's
usufructuary right is valid and legal, and as neither the latter nor Eduardo Hernandez exercised his
right of redemption within the legal period, the purchaser's title became absolute.
Moreover, the defendant-appellee, Miguel Velasco, having acquired Federico Valera's right of
redemption from Salvador Vallejo, who had acquired it at public auction by virtue of a writ of
execution issued upon the judgment obtained by the said Vallejo against the said Valera, the latter
lost all right to said usufruct.
And even supposing that Eduardo Hernandez had been tricked by Miguel Velasco into selling
Federico Valera's right of repurchase to the latter so that Salvador Vallejo might levy an execution on
it, and even supposing that said resale was null for lack of consideration, yet, inasmuch as Eduardo
Hernandez did not present a third party claim when the right was levied upon for the execution of the
judgment obtained by Vallejo against Federico Vallera, nor did he file a complaint to recover said
right before the period of redemption expired, said Eduardo Hernandez, and much less Federico
Valera, cannot now contest the validity of said resale, for the reason that the one-year period of
redemption has already elapsed.
Neither did the trial court err in not ordering Miguel Velasco to render a liquidation of accounts from
March 31, 1923, inasmuch as he had acquired the rights of the plaintiff by purchase at the execution
sale, and as purchaser, he was entitled to receive the rents from the date of the sale until the date of
the repurchase, considering them as part of the redemption price; but not having exercised the right
repurchase during the legal period, and the title of the repurchaser having become absolute, the
latter did not have to account for said rents.
Summarizing, the conclusion is reached that the disagreements between an agent and his principal
with respect to the agency, and the filing of a civil action by the former against the latter for the
collection of the balance in favor of the agent, resulting from a liquidation of the agency accounts, are
facts showing a rupture of relations, and the complaint is equivalent to an express renunciation of the
agency, and is more expressive than if the agent had merely said, "I renounce the agency."

By virtue of the foregoing, and finding no error in the judgment appealed from, the same is hereby
affirmed in all its parts, with costs against the appellant. So ordered.
.

A contract of sale of real property, without consideration, and executed by a person of low
intelligence is (a) void (b) voidable (c) rescissible (d) valid because there is consent and sale is
consensual.
2. Which of the following is NOT a characteristic of a contract of sale? (a) onerous (b) bilateral (c)
cumulative (d) nominate.
3. When the object of the contract of sale is delivered and the price is paid, the contract is said to be
(a) generated (b) negotiated (c) perfected (d) consummated.
4. Which is a natural element of sale ? (a) consent or meeting of the minds (b) price certain in money
(c) determinate subject matter (d) warranty against hidden defects.
5. If during the 5-year period when a homestead cannot be sold, it is promised to be sold (in a
compromise agreement), this promise is (a) valid when the sale is actually made after the 5-year
period (b) void even if the sale is actually made after the 5-year period (c) valid if the sale is
approved by the Secretary of Agriculture (d) voidable when consent is finally given.
6. Nemo dat quod none habet literally means (a) one cannot sell what he does not possess (b) no one
can dispose what he cannot own (c) no one can give more than what he has (d) no one can sell
what he does not own.
7. Maria owes me P200,000. If I accept Marias offer to take her car as payment, what contract is
generated? (a) a contract of sale because it is as if she sold her car to me for P200,000 (b) a
contract of barter or exchange (c) dacion en pago (d) a contract of cession since she ceded the car
to me in payment of her obligation.
8. Which of the following is considered as illicit per accidens? (a) sale of human flesh (b) sale of land
to a balikbayan (c) sale of shabu (d) sale of illegal lottery tickets.
9. A mortgaged his land to B, but sold the land to C. Which of the following is true or valid? (a) A
cannot sell the property since it is still mortgaged (b) A, being the owner, can sell the land to C, who
after delivery became the owner, subject to Bs right of redemption (c) the land sold is always
subject to Bs right to foreclose the mortgage upon the non-payment of the mortgage credit
(d) the sale here is voidable.
10. Which of the following is NOT correct under the Maceda law? (a) in case where less than 2 years of
installments were paid, the seller shall give the buyer the grace period of not less than 60 days (b)
the buyer shall have the right to sell his rights or assign the same to another person (c) the buyer
shall have the right to pay in advance any installment (d) the law gives the buyer if he has already
paid at least two installments.
PART II. (10% each)Essay Type. Answer the following problems. Always explain your answer. A
mere yes or no answer earns no points.
1. A parcel of land measuring 81,524 square meters (Subject Land) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. The registered
owners of the Subject Land were petitioner spouses, Godofredo Alfredo
(Godofredo) and Carmen Limon Alfredo (Carmen). The Subject Land is covered
by Original Certificate of Title No. 284 (OCT No. 284) issued to Godofredo and
Carmen under Homestead Patent No. V-69196.
On 7 March 1994, the private respondents, spouses Armando Borras
(Armando) and Adelia Lobaton Borras (Adelia), filed a complaint for specific
performance against Godofredo and Carmen before the Regional Trial Court of
Bataan, Branch 4. The case was docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that Godofredo and Carmen
mortgaged the Subject Land for P7,000.00 with the Development Bank of the
Philippines (DBP). To pay the debt, Carmen and Godofredo sold the Subject Land
to Armando and Adelia for P15,000.00, the buyers to pay the DBP loan and its
accumulated interest, and the balance to be paid in cash to the sellers.

Armando and Adelia gave Godofredo and Carmen the money to pay the loan
to DBP which signed the release of mortgage and returned the owners duplicate
copy of OCT No. 284 to Godofredo and Carmen. Armando and Adelia subsequently
paid the balance of the purchase price of the Subject Land for which Carmen issued
a receipt dated 11 March 1970. Godofredo and Carmen then delivered to Adelia the
owners duplicate copy of OCT No. 284, with the document of cancellation of
mortgage, official receipts of realty tax payments, and tax declaration in the name
of Godofredo. Godofredo and Carmen introduced Armando and Adelia, as the new
owners of the Subject Land, to the Natanawans, the old tenants of the Subject
Land. Armando and Adelia then took possession of the Subject Land.
In January 1994, Armando and Adelia learned that hired persons had entered
the Subject Land and were cutting trees under instructions of allegedly new owners
of the Subject Land. Subsequently, Armando and Adelia discovered that Godofredo
and Carmen had re-sold portions of the Subject Land to several persons.
On 8 February 1994, Armando and Adelia filed an adverse claim with the
Register of Deeds of Bataan. Armando and Adelia discovered that Godofredo and
Carmen had secured an owners duplicate copy of OCT No. 284 after filing a petition
in court for the issuance of a new copy. Godofredo and Carmen claimed in their
petition that they lost their owners duplicate copy. Armando and Adelia wrote
Godofredo and Carmen complaining about their acts, but the latter did not reply.
Thus, Armando and Adelia filed a complaint for specific performance.
On 28 March 1994, Armando and Adelia amended their complaint to include
the following persons as additional defendants: the spouses Arnulfo Savellano and
Editha B. Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu, Jr. and
Estela S. Espiritu, and Elizabeth Tuazon (Subsequent Buyers). The Subsequent
Buyers, who are also petitioners in this case, purchased from Godofredo and
Carmen the subdivided portions of the Subject Land. The Register of Deeds of
Bataan issued to the Subsequent Buyers transfer certificates of title to the lots they
purchased.
In their answer, Godofredo and Carmen and the Subsequent
Buyers (collectively petitioners) argued that the action is unenforceable
under the Statute of Frauds. Petitioners pointed out that there is no written
instrument evidencing the alleged contract of sale over the Subject Land in favor of
Armando and Adelia. Petitioners objected to whatever parole evidence Armando
and Adelia introduced or offered on the alleged sale unless the same was in writing
and subscribed by Godofredo. Petitioners asserted that the Subsequent Buyers
were buyers in good faith and for value. As counterclaim, petitioners sought
payment of attorneys fees and incidental expenses.
Questions:
(1) Is there a perfected contract of sale between the spouses Armando and
Adelia and the Spouses Godofredo and Carmen ? Explain.
(2) Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid
and enforceable, where (a) it was orally entered into and not in writing; (b) Carmen did not
obtain the consent and authority of her husband, Godofredo, who was the sole owner of the
Subject Land in whose name the title thereto (OCT No. 284) was issued; and (c) it was entered
into during the 25-year prohibitive period for alienating the Subject Land without the approval of
the Secretary of Agriculture and Natural Resources.
(3)Whether the action to enforce the alleged oral contract of sale brought after 24 years
from its alleged perfection had been barred by prescription and by laches.
(4)Whether the deeds of absolute sale and the transfer certificates of title over the
portions of the Subject Land issued to the Subsequent Buyers, innocent purchasers in good
faith and for value whose individual titles to their respective lots are absolute and indefeasible,
are valid.

Answer: (1) All the characteristics and elements of sale being present, thus the
contract is perfected. (2) (a) enforceable, because the Statute of Frauds does not apply
here, it being that the contract is already executed or consummated (b) valid, since the
sale was entered before Aug. 3, 1988 (c) still enforceable, the consent of the Sec. is not
really applicable in the case at bar. (3) Not barred by prescription or laches. Laches is a
remedy in equity which is not applicable here, and the action has not prescribed yet (4)
The indefeasibility of title as a principle applies only when there is no fraud involved.
(REFER to: Alfredo v. Borras (2003) below

2. What is the effect if at the time the contract of sale is perfected the object
of the contract has been entirely lost? If part of it is only lost, what are the
rights of the vendee?

Art. 1493. If at the time the contract of sale is perfected, the thing
which is the object of the contract has been entirely lost, the
contract shall be without any effect.
But if the thing should have been lost in part only, the vendee may
choose between withdrawing from the contract and demanding the
remaining part, paying its price in proportion to the total sum
agreed upon. (1460a)
3.When is ownership of the thing sold transferred to the vendee? Can there
be other stipulations possible?

Art. 1496. The ownership of the thing sold is acquired by the vendee from the
moment it is delivered to him in any of the ways specified in Articles 1497 to 1501,
or in any other manner signifying an agreement that the possession is transferred
from the vendor to the vendee.

4.Art. 1465. Things subject to a resolutory condition may be the object of the
contract of sale. Give at least two examples of things which are subject to a
resolutory condition.
ANSWER: PACTO DE RETRO SALE; RESERVA TRUNCAL
5. Generally, when is the thing sold understood as delivered? What if the
object of the sale is (a) movable and (b) immovable?

Art. 1497. The thing sold shall be understood as delivered, when it

is placed in the control and possession of the vendee. (1462a)
Art. 1498. When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary
does not appear or cannot clearly be inferred.
With regard to movable property, its delivery may also be made by
the delivery of the keys of the place or depository where it is stored
or kept. (1463a)
Art. 1499. The delivery of movable property may likewise be made
by the mere consent or agreement of the contracting parties, if the
thing sold cannot be transferred to the possession of the vendee at
the time of the sale, or if the latter already had it in his possession
for any other reason. (1463a)
Art. 1500. There may also be tradition constitutum possessorium.
(n)

Art. 1501. With respect to incorporeal property, the provisions of

the first paragraph of article 1498 shall govern. In any other case
wherein said provisions are not applicable, the placing of the titles
of ownership in the possession of the vendee or the use by the
vendee of his rights, with the vendor's consent, shall be understood
as a delivery. (1464)

END OF THE EXAMINATION

FIRST DIVISION
[G.R. No. 144225. June 17, 2003]
SPOUSES GODOFREDO ALFREDO and CARMEN LIMON ALFREDO, SPOUSES ARNULFO
SAVELLANO and EDITHA B. SAVELLANO, DANTON D. MATAWARAN, SPOUSES DELFIN F.
ESPIRITU, JR. and ESTELA S. ESPIRITU and ELIZABETH TUAZON, petitioners, vs. SPOUSES
ARMANDO BORRAS and ADELIA LOBATON BORRAS, respondents.
DECISION
CARPIO, J.:
The Case
Before us is a petition for review assailing the Decision[1][1] of the Court of Appeals
dated 26 November 1999 affirming the decision[2][2] of the Regional Trial Court of Bataan,
Branch 4, in Civil Case No. DH-256-94. Petitioners also question the Resolution of the Court
of Appeals dated 26 July 2000 denying petitioners motion for reconsideration.
The Antecedent Facts
A parcel of land measuring 81,524 square meters (Subject Land) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. The registered owners of
the Subject Land were petitioner spouses, Godofredo Alfredo (Godofredo) and Carmen
Limon Alfredo (Carmen). The Subject Land is covered by Original Certificate of Title No.
284 (OCT No. 284) issued to Godofredo and Carmen under Homestead Patent No. V69196.
On 7 March 1994, the private respondents, spouses Armando Borras (Armando)
and Adelia Lobaton Borras (Adelia), filed a complaint for specific performance against
Godofredo and Carmen before the Regional Trial Court of Bataan, Branch 4. The case was
docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that Godofredo and Carmen
mortgaged the Subject Land for P7,000.00 with the Development Bank of the Philippines
(DBP). To pay the debt, Carmen and Godofredo sold the Subject Land to Armando and
Adelia for P15,000.00, the buyers to pay the DBP loan and its accumulated interest, and the
balance to be paid in cash to the sellers.
Armando and Adelia gave Godofredo and Carmen the money to pay the loan to DBP
which signed the release of mortgage and returned the owners duplicate copy of OCT No.
284 to Godofredo and Carmen. Armando and Adelia subsequently paid the balance of the
purchase price of the Subject Land for which Carmen issued a receipt dated 11 March
1970. Godofredo and Carmen then delivered to Adelia the owners duplicate copy of OCT
No. 284, with the document of cancellation of mortgage, official receipts of realty tax
payments, and tax declaration in the name of Godofredo. Godofredo and Carmen
introduced Armando and Adelia, as the new owners of the Subject Land, to the Natanawans,
the old tenants of the Subject Land. Armando and Adelia then took possession of the
Subject Land.
In January 1994, Armando and Adelia learned that hired persons had entered the
Subject Land and were cutting trees under instructions of allegedly new owners of the
Subject Land. Subsequently, Armando and Adelia discovered that Godofredo and Carmen
had re-sold portions of the Subject Land to several persons.
On 8 February 1994, Armando and Adelia filed an adverse claim with the Register of
Deeds of Bataan. Armando and Adelia discovered that Godofredo and Carmen had secured
an owners duplicate copy of OCT No. 284 after filing a petition in court for the issuance of a
new copy. Godofredo and Carmen claimed in their petition that they lost their owners
duplicate copy. Armando and Adelia wrote Godofredo and Carmen complaining about their
acts, but the latter did not reply. Thus, Armando and Adelia filed a complaint for specific
performance.
On 28 March 1994, Armando and Adelia amended their complaint to include the
following persons as additional defendants: the spouses Arnulfo Savellano and Editha B.
Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu, Jr. and Estela S. Espiritu, and

Elizabeth Tuazon (Subsequent Buyers). The Subsequent Buyers, who are also petitioners
in this case, purchased from Godofredo and Carmen the subdivided portions of the Subject
Land. The Register of Deeds of Bataan issued to the Subsequent Buyers transfer certificates
of title to the lots they purchased.
In their answer, Godofredo and Carmen and the Subsequent Buyers (collectively
petitioners) argued that the action is unenforceable under the Statute of
Frauds. Petitioners pointed out that there is no written instrument evidencing the alleged
contract of sale over the Subject Land in favor of Armando and Adelia. Petitioners objected
to whatever parole evidence Armando and Adelia introduced or offered on the alleged sale
unless the same was in writing and subscribed by Godofredo. Petitioners asserted that the
Subsequent Buyers were buyers in good faith and for value. As counterclaim, petitioners
sought payment of attorneys fees and incidental expenses.
Trial then followed. Armando and Adelia presented the following witnesses: Adelia,
Jesus Lobaton, Roberto Lopez, Apolinario Natanawan, Rolando Natanawan, Tomas
Natanawan, and Mildred Lobaton. Petitioners presented two witnesses, Godofredo and
Constancia Calonso.
On 7 June 1996, the trial court rendered its decision in favor of Armando and
Adelia. The dispositive portion of the decision reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiffs,
the spouses Adelia Lobaton Borras and Armando F. Borras, and against the defendantspouses Godofredo Alfredo and Carmen Limon Alfredo, spouses Arnulfo Sabellano and
Editha B. Sabellano, spouses Delfin F. Espiritu, Jr. and Estela S. Espiritu, Danton D.
Matawaran and Elizabeth Tuazon, as follows:
1.
Declaring the Deeds of Absolute Sale of the disputed parcel of land
(covered by OCT No. 284) executed by the spouses Godofredo Alfredo and Camen Limon
Alfredo in favor of spouses Arnulfo Sabellano and Editha B. Sabellano, spouses Delfin F.
Espiritu, Danton D. Matawaran and Elizabeth Tuazon, as null and void;
2.
Declaring the Transfer Certificates of Title Nos. T-163266 and T-163267 in
the names of spouses Arnulfo Sabellano and Editha B. Sabellano; Transfer Certificates of
Title Nos. T-163268 and 163272 in the names of spouses Delfin F. Espiritu, Jr. and Estela S.
Espiritu; Transfer Certificates of Title Nos. T-163269 and T-163271 in the name of Danton D.
Matawaran; and Transfer Certificate of Title No. T-163270 in the name of Elizabeth Tuazon,
as null and void and that the Register of Deeds of Bataan is hereby ordered to cancel said
titles;
3.
Ordering the defendant-spouses Godofredo Alfredo and Carmen Limon
Alfredo to execute and deliver a good and valid Deed of Absolute Sale of the disputed parcel
of land (covered by OCT No. 284) in favor of the spouses Adelia Lobaton Borras and
Armando F. Borras within a period of ten (10) days from the finality of this decision;
4.
Ordering defendant-spouses Godofredo Alfredo and Carmen Limon Alfredo
to surrender their owners duplicate copy of OCT No. 284 issued to them by virtue of the
Order dated May 20, 1992 of the Regional Trial Court of Bataan, Dinalupihan Branch, to the
Registry of Deeds of Bataan within ten (10) days from the finality of this decision, who, in
turn, is directed to cancel the same as there exists in the possession of herein plaintiffs of
the owners duplicate copy of said OCT No. 284 and, to restore and/or reinstate OCT No. 284
of the Register of Deeds of Bataan to its full force and effect;
5.
Ordering the defendant-spouses Godofredo Alfredo and Carmen Limon
Alfredo to restitute and/or return the amount of the respective purchase prices and/or
consideration of sale of the disputed parcels of land they sold to their co-defendants within
ten (10) days from the finality of this decision with legal interest thereon from date of the
sale;
6.
Ordering the defendants, jointly and severally, to pay plaintiff-spouses the
sum of P20,000.00 as and for attorneys fees and litigation expenses; and
7.
Ordering defendants to pay the costs of suit.
Defendants counterclaims are hereby dismissed for lack of merit.
SO ORDERED.[3][3]
Petitioners appealed to the Court of Appeals.
On 26 November 1999, the Court of Appeals issued its Decision affirming the
decision of the trial court, thus:
WHEREFORE, premises considered, the appealed decision in Civil Case No. DH-25694 is hereby AFFIRMED in its entirety. Treble costs against the defendants-appellants.
SO ORDERED.[4][4]
On 26 July 2000, the Court of Appeals denied petitioners motion for reconsideration.
The Ruling of the Trial Court
The trial court ruled that there was a perfected contract of sale between the spouses
Godofredo and Carmen and the spouses Armando and Adelia. The trial court found that all
the elements of a contract of sale were present in this case. The object of the sale was
specifically identified as the 81,524-square meter lot in Barrio Culis, Mabigas, Hermosa,

Bataan, covered by OCT No. 284 issued by the Registry of Deeds of Bataan. The purchase
price was fixed at P15,000.00, with the buyers assuming to pay the sellers P7,000.00 DBP
mortgage loan including its accumulated interest. The balance of the purchase price was to
be paid in cash to the sellers. The last payment of P2,524.00 constituted the full settlement
of the purchase price and this was paid on 11 March 1970 as evidenced by the receipt
issued by Carmen.
The trial court found the following facts as proof of a perfected contract of sale: (1)
Godofredo and Carmen delivered to Armando and Adelia the Subject Land; (2) Armando and
Adelia treated as their own tenants the tenants of Godofredo and Carmen; (3) Godofredo
and Carmen turned over to Armando and Adelia documents such as the owners duplicate
copy of the title of the Subject Land, tax declaration, and the receipts of realty tax payments
in the name of Godofredo; and (4) the DBP cancelled the mortgage on the Subject Property
upon payment of the loan of Godofredo and Carmen. Moreover, the receipt of payment
issued by Carmen served as an acknowledgment, if not a ratification, of the verbal sale
between the sellers and the buyers. The trial court ruled that the Statute of Frauds is not
applicable because in this case the sale was perfected.
The trial court concluded that the Subsequent Buyers were not innocent
purchasers. Not one of the Subsequent Buyers testified in court on how they purchased
their respective lots. The Subsequent Buyers totally depended on the testimony of
Constancia Calonso (Calonso) to explain the subsequent sale. Calonso, a broker,
negotiated with Godofredo and Carmen the sale of the Subject Land which Godofredo and
Carmen subdivided so they could sell anew portions to the Subsequent Buyers.
Calonso admitted that the Subject Land was adjacent to her own lot. The trial court
pointed out that Calonso did not inquire on the nature of the tenancy of the Natanawans and
on who owned the Subject Land. Instead, she bought out the tenants for P150,000.00. The
buy out was embodied in a Kasunduan. Apolinario Natanawan (Apolinario) testified that he
and his wife accepted the money and signed the Kasunduan because Calonso and the
Subsequent Buyers threatened them with forcible ejectment. Calonso brought Apolinario to
the Agrarian Reform Office where he was asked to produce the documents showing that
Adelia is the owner of the Subject Land. Since Apolinario could not produce the documents,
the agrarian officer told him that he would lose the case. Thus, Apolinario was constrained
to sign the Kasunduan and accept the P150,000.00.
Another indication of Calonsos bad faith was her own admission that she saw an
adverse claim on the title of the Subject Land when she registered the deeds of sale in the
names of the Subsequent Buyers. Calonso ignored the adverse claim and proceeded with
the registration of the deeds of sale.
The trial court awarded P20,000.00 as attorneys fees to Armando and Adelia. In
justifying the award of attorneys fees, the trial court invoked Article 2208 (2) of the Civil
Code which allows a court to award attorneys fees, including litigation expenses, when it is
just and equitable to award the same. The trial court ruled that Armando and Adelia are
entitled to attorneys fees since they were compelled to file this case due to petitioners
refusal to heed their just and valid demand.
The Ruling of the Court of Appeals
The Court of Appeals found the factual findings of the trial court well supported by
the evidence. Based on these findings, the Court of Appeals also concluded that there was
a perfected contract of sale and the Subsequent Buyers were not innocent purchasers.
The Court of Appeals ruled that the handwritten receipt dated 11 March 1970 is
sufficient proof that Godofredo and Carmen sold the Subject Land to Armando and Adelia
upon payment of the balance of the purchase price. The Court of Appeals found the recitals
in the receipt as sufficient to serve as the memorandum or note as a writing under the
Statute of Frauds.[5][5] The Court of Appeals then reiterated the ruling of the trial court
that the Statute of Frauds does not apply in this case.
The Court of Appeals gave credence to the testimony of a witness of Armando and
Adelia, Mildred Lobaton, who explained why the title to the Subject Land was not in the
name of Armando and Adelia. Lobaton testified that Godofredo was then busy preparing to
leave for Davao. Godofredo promised that he would sign all the papers once they were
ready. Since Armando and Adelia were close to the family of Carmen, they trusted
Godofredo and Carmen to honor their commitment. Armando and Adelia had no reason to
believe that their contract of sale was not perfected or validly executed considering that
they had received the duplicate copy of OCT No. 284 and other relevant
documents. Moreover, they had taken physical possession of the Subject Land.
The Court of Appeals held that the contract of sale is not void even if only Carmen
signed the receipt dated 11 March 1970. Citing Felipe v. Heirs of Maximo Aldon,[6][6]
the appellate court ruled that a contract of sale made by the wife without the husbands
consent is not void but merely voidable. The Court of Appeals further declared that the sale
in this case binds the conjugal partnership even if only the wife signed the receipt because

the proceeds of the sale were used for the benefit of the conjugal partnership. The
appellate court based this conclusion on Article 161[7][7] of the Civil Code.
The Subsequent Buyers of the Subject Land cannot claim that they are buyers in
good faith because they had constructive notice of the adverse claim of Armando and
Adelia. Calonso, who brokered the subsequent sale, testified that when she registered the
subsequent deeds of sale, the adverse claim of Armando and Adelia was already annotated
on the title of the Subject Land. The Court of Appeals believed that the act of Calonso and
the Subsequent Buyers in forcibly ejecting the Natanawans from the Subject Land
buttresses the conclusion that the second sale was tainted with bad faith from the very
beginning.
Finally, the Court of Appeals noted that the issue of prescription was not raised in the
Answer. Nonetheless, the appellate court explained that since this action is actually based
on fraud, the prescriptive period is four years, with the period starting to run only from the
date of the discovery of the fraud. Armando and Adelia discovered the fraudulent sale of
the Subject Land only in January 1994. Armando and Adelia lost no time in writing a letter to
Godofredo and Carmen on 2 February 1994 and filed this case on 7 March 1994. Plainly,
Armando and Adelia did not sleep on their rights or lose their rights by prescription.
The Court of Appeals sustained the award of attorneys fees and imposed treble
costs on petitioners.
The Issues
Petitioners raise the following issues:
I
Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid
and enforceable, where (1) it was orally entered into and not in writing; (2) Carmen did not
obtain the consent and authority of her husband, Godofredo, who was the sole owner of the
Subject Land in whose name the title thereto (OCT No. 284) was issued; and (3) it was
entered into during the 25-year prohibitive period for alienating the Subject Land without
the approval of the Secretary of Agriculture and Natural Resources.
II
Whether the action to enforce the alleged oral contract of sale brought after 24 years
from its alleged perfection had been barred by prescription and by laches.
III
Whether the deeds of absolute sale and the transfer certificates of title over the
portions of the Subject Land issued to the Subsequent Buyers, innocent purchasers in good
faith and for value whose individual titles to their respective lots are absolute and
indefeasible, are valid.
IV
Whether petitioners are liable to pay Armando and Adelia P20,0000.00 as attorneys
fees and litigation expenses and the treble costs, where the claim of Armando and Adelia is
clearly unfounded and baseless.
V
Whether petitioners are entitled to the counterclaim for attorneys fees and litigation
expenses, where they have sustained such expenses by reason of institution of a clearly
malicious and unfounded action by Armando and Adelia.[8][8]
The Courts Ruling
The petition is without merit.
In a petition for review on certiorari under Rule 45, this Court reviews only errors of
law and not errors of facts.[9][9] The factual findings of the appellate court are generally
binding on this Court.[10][10] This applies with greater force when both the trial court and
the Court of Appeals are in complete agreement on their factual findings.[11][11] In this
case, there is no reason to deviate from the findings of the lower courts. The facts relied
upon by the trial and appellate courts are borne out by the record. We agree with the
conclusions drawn by the lower courts from these facts.
Validity and Enforceability of the Sale
The contract of sale between the spouses Godofredo and Carmen and the spouses
Armando and Adelia was a perfected contract. A contract is perfected once there is consent
of the contracting parties on the object certain and on the cause of the obligation.[12][12]
In the instant case, the object of the sale is the Subject Land, and the price certain
is P15,000.00. The trial and appellate courts found that there was a meeting of the minds
on the sale of the Subject Land and on the purchase price of P15,000.00. This is a finding of
fact that is binding on this Court. We find no reason to disturb this finding since it is
supported by substantial evidence.
The contract of sale of the Subject Land has also been consummated because the
sellers and buyers have performed their respective obligations under the contract. In a
contract of sale, the seller obligates himself to transfer the ownership of the determinate
thing sold, and to deliver the same, to the buyer who obligates himself to pay a price certain
to the seller.[13][13] In the instant case, Godofredo and Carmen delivered the Subject Land

to Armando and Adelia, placing the latter in actual physical possession of the Subject
Land. This physical delivery of the Subject Land also constituted a transfer of ownership of
the Subject Land to Armando and Adelia.[14][14] Ownership of the thing sold is transferred
to the vendee upon its actual or constructive delivery.[15][15] Godofredo and Carmen also
turned over to Armando and Adelia the documents of ownership to the Subject Land,
namely the owners duplicate copy of OCT No. 284, the tax declaration and the receipts of
realty tax payments.
On the other hand, Armando and Adelia paid the full purchase price as evidenced by
the receipt dated 11 March 1970 issued by Carmen. Armando and Adelia fulfilled their
obligation to provide the P7,000.00 to pay the DBP loan of Godofredo and Carmen, and to
pay the latter the balance of P8,000.00 in cash. The P2,524.00 paid under the receipt dated
11 March 1970 was the last installment to settle fully the purchase price. Indeed, upon
payment to DBP of the P7,000.00 and the accumulated interests, the DBP cancelled the
mortgage on the Subject Land and returned the owners duplicate copy of OCT No. 284 to
Godofredo and Carmen.
The trial and appellate courts correctly refused to apply the Statute of Frauds to this
case. The Statute of Frauds[16][16] provides that a contract for the sale of real property
shall be unenforceable unless the contract or some note or memorandum of the sale is in
writing and subscribed by the party charged or his agent. The existence of the receipt
dated 11 March 1970, which is a memorandum of the sale, removes the transaction from
the provisions of the Statute of Frauds.
The Statute of Frauds applies only to executory contracts and not to contracts either
partially or totally performed.[17][17] Thus, where one party has performed ones
obligation, oral evidence will be admitted to prove the agreement.[18][18] In the instant
case, the parties have consummated the sale of the Subject Land, with both sellers and
buyers performing their respective obligations under the contract of sale. In addition, a
contract that violates the Statute of Frauds is ratified by the acceptance of benefits under
the contract.[19][19] Godofredo and Carmen benefited from the contract because they paid
their DBP loan and secured the cancellation of their mortgage using the money given by
Armando and Adelia. Godofredo and Carmen also accepted payment of the balance of the
purchase price.
Godofredo and Carmen cannot invoke the Statute of Frauds to deny the existence of
the verbal contract of sale because they have performed their obligations, and have
accepted benefits, under the verbal contract. [20][20] Armando and Adelia have also
performed their obligations under the verbal contract. Clearly, both the sellers and the
buyers have consummated the verbal contract of sale of the Subject Land. The Statute of
Frauds was enacted to prevent fraud.[21][21] This law cannot be used to advance the very
evil the law seeks to prevent.
Godofredo and Carmen also claim that the sale of the Subject Land to Armando and
Adelia is void on two grounds. First, Carmen sold the Subject Land without the marital
consent of Godofredo. Second, the sale was made during the 25-year period that the law
prohibits the alienation of land grants without the approval of the Secretary of Agriculture
and Natural Resources.
These arguments are without basis.
The Family Code, which took effect on 3 August 1988, provides that any alienation or
encumbrance made by the husband of the conjugal partnership property without the
consent of the wife is void. However, when the sale is made before the effectivity of the
Family Code, the applicable law is the Civil Code.[22][22]
Article 173 of the Civil Code provides that the disposition of conjugal property
without the wifes consent is not void but merely voidable. Article 173 reads:
The wife may, during the marriage, and within ten years from the transaction
questioned, ask the courts for the annulment of any contract of the husband entered into
without her consent, when such consent is required, or any act or contract of the husband
which tends to defraud her or impair her interest in the conjugal partnership
property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of
the marriage, may demand the value of property fraudulently alienated by the husband.
In Felipe v. Aldon,[23][23] we applied Article 173 in a case where the wife sold
some parcels of land belonging to the conjugal partnership without the consent of the
husband. We ruled that the contract of sale was voidable subject to annulment by the
husband. Following petitioners argument that Carmen sold the land to Armando and Adelia
without the consent of Carmens husband, the sale would only be voidable and not void.
However, Godofredo can no longer question the sale. Voidable contracts are
susceptible of ratification.[24][24] Godofredo ratified the sale when he introduced Armando
and Adelia to his tenants as the new owners of the Subject Land. The trial court noted that
Godofredo failed to deny categorically on the witness stand the claim of the complainants
witnesses that Godofredo introduced Armando and Adelia as the new landlords of the
tenants.[25][25] That Godofredo and Carmen allowed Armando and Adelia to enjoy

possession of the Subject Land for 24 years is formidable proof of Godofredos acquiescence
to the sale. If the sale was truly unauthorized, then Godofredo should have filed an action to
annul the sale. He did not. The prescriptive period to annul the sale has long
lapsed. Godofredos conduct belies his claim that his wife sold the Subject Land without his
consent.
Moreover, Godofredo and Carmen used most of the proceeds of the sale to pay their
debt with the DBP. We agree with the Court of Appeals that the sale redounded to the
benefit of the conjugal partnership. Article 161 of the Civil Code provides that the conjugal
partnership shall be liable for debts and obligations contracted by the wife for the benefit of
the conjugal partnership. Hence, even if Carmen sold the land without the consent of her
husband, the sale still binds the conjugal partnership.
Petitioners contend that Godofredo and Carmen did not deliver the title of the
Subject Land to Armando and Adelia as shown by this portion of Adelias testimony on crossexamination:
Q -- No title was delivered to you by Godofredo Alfredo?
A -- I got the title from Julie Limon because my sister told me.[26][26]
Petitioners raise this factual issue for the first time. The Court of Appeals could have
passed upon this issue had petitioners raised this earlier. At any rate, the cited testimony of
Adelia does not convincingly prove that Godofredo and Carmen did not deliver the Subject
Land to Armando and Adelia. Adelias cited testimony must be examined in context not only
with her entire testimony but also with the other circumstances.
Adelia stated during cross-examination that she obtained the title of the Subject
Land from Julie Limon (Julie), her classmate in college and the sister of Carmen. Earlier,
Adelias own sister had secured the title from the father of Carmen. However, Adelias
sister, who was about to leave for the United States, gave the title to Julie because of the
absence of the other documents. Adelias sister told Adelia to secure the title from Julie,
and this was how Adelia obtained the title from Julie.
It is not necessary that the seller himself deliver the title of the property to the buyer
because the thing sold is understood as delivered when it is placed in the control and
possession of the vendee.[27][27] To repeat, Godofredo and Carmen themselves introduced
the Natanawans, their tenants, to Armando and Adelia as the new owners of the Subject
Land. From then on, Armando and Adelia acted as the landlords of the
Natanawans. Obviously, Godofredo and Carmen themselves placed control and possession
of the Subject Land in the hands of Armando and Adelia.
Petitioners invoke the absence of approval of the sale by the Secretary of Agriculture
and Natural Resources to nullify the sale. Petitioners never raised this issue before the trial
court or the Court of Appeals. Litigants cannot raise an issue for the first time on appeal, as
this would contravene the basic rules of fair play, justice and due process.[28][28] However,
we will address this new issue to finally put an end to this case.
The sale of the Subject Land cannot be annulled on the ground that the Secretary did
not approve the sale, which was made within 25 years from the issuance of the homestead
title. Section 118 of the Public Land Act (Commonwealth Act No. 141) reads as follows:
SEC. 118.
Except in favor of the Government or any of its branches, units,
or institutions or legally constituted banking corporation, lands acquired under free patent
or homestead provisions shall not be subject to encumbrance or alienation from the date of
the approval of the application and for a term of five years from and after the date of the
issuance of the patent or grant.
xxx
No alienation, transfer, or conveyance of any homestead after 5 years and before
twenty-five years after the issuance of title shall be valid without the approval of the
Secretary of Agriculture and Commerce, which approval shall not be denied except on
constitutional and legal grounds.
A grantee or homesteader is prohibited from alienating to a private individual a land
grant within five years from the time that the patent or grant is issued.[29][29] A violation
of this prohibition renders a sale void.[30][30] This prohibition, however, expires on the fifth
year. From then on until the next 20 years[31][31] the land grant may be alienated
provided the Secretary of Agriculture and Natural Resources approves the alienation. The
Secretary is required to approve the alienation unless there are constitutional and legal
grounds to deny the approval. In this case, there are no apparent constitutional or legal
grounds for the Secretary to disapprove the sale of the Subject Land.
The failure to secure the approval of the Secretary does not ipso facto make a sale
void.[32][32] The absence of approval by the Secretary does not nullify a sale made after
the expiration of the 5-year period, for in such event the requirement of Section 118 of the
Public Land Act becomes merely directory[33][33] or a formality.[34][34] The approval may
be secured later, producing the effect of ratifying and adopting the transaction as if the sale
had been previously authorized.[35][35] As held in Evangelista v. Montano:[36][36]

Section 118 of Commonwealth Act No. 141, as amended, specifically enjoins that the
approval by the Department Secretary "shall not be denied except on constitutional and
legal grounds." There being no allegation that there were constitutional or legal
impediments to the sales, and no pretense that if the sales had been submitted to the
Secretary concerned they would have been disapproved, approval was a ministerial duty,
to be had as a matter of course and demandable if refused. For this reason, and if
necessary, approval may now be applied for and its effect will be to ratify and adopt the
transactions as if they had been previously authorized. (Emphasis supplied)
Action Not Barred by Prescription and Laches
Petitioners insist that prescription and laches have set in. We disagree.
The Amended Complaint filed by Armando and Adelia with the trial court is captioned
as one for Specific Performance. In reality, the ultimate relief sought by Armando and Adelia
is the reconveyance to them of the Subject Land. An action for reconveyance is one that
seeks to transfer property, wrongfully registered by another, to its rightful and legal owner.
[37][37] The body of the pleading or complaint determines the nature of an action, not its
title or heading.[38][38] Thus, the present action should be treated as one for
reconveyance.[39][39]
Article 1456 of the Civil Code provides that a person acquiring property through fraud
becomes by operation of law a trustee of an implied trust for the benefit of the real owner of
the property. The presence of fraud in this case created an implied trust in favor of Armando
and Adelia. This gives Armando and Adelia the right to seek reconveyance of the property
from the Subsequent Buyers.[40][40]
To determine when the prescriptive period commenced in an action for
reconveyance, plaintiffs possession of the disputed property is material. An action for
reconveyance based on an implied trust prescribes in ten years.[41][41] The ten-year
prescriptive period applies only if there is an actual need to reconvey the property as when
the plaintiff is not in possession of the property.[42][42] However, if the plaintiff, as the real
owner of the property also remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him.[43][43] In such a
case, an action for reconveyance, if nonetheless filed, would be in the nature of a suit for
quieting of title, an action that is imprescriptible.[44][44]
In this case, the appellate court resolved the issue of prescription by ruling that the
action should prescribe four years from discovery of the fraud. We must correct this
erroneous application of the four-year prescriptive period. In Caro v. Court of Appeals,
[45][45] we explained why an action for reconveyance based on an implied trust should
prescribe in ten years. In that case, the appellate court also erroneously applied the fouryear prescriptive period. We declared in Caro:
We disagree. The case of Liwalug Amerol, et al. v. Molok Bagumbaran, G.R. No. L33261, September 30, 1987,154 SCRA 396 illuminated what used to be a gray area on the
prescriptive period for an action to reconvey the title to real property and, corollarily, its
point of reference:
xxx It must be remembered that before August 30, 1950, the date of the effectivity
of the new Civil Code, the old Code of Civil Procedure (Act No. 190) governed prescription. It
provided:
SEC. 43. Other civil actions; how limited.- Civil actions other than for the recovery of
real property can only be brought within the following periods after the right of action
accrues:
xxx
xxx
xxx
3.
Within four years: xxx An action for relief on the ground of fraud, but the
right of action in such case shall not be deemed to have accrued until the discovery of the
fraud;
xxx
xxx
xxx
In contrast, under the present Civil Code, we find that just as an implied or
constructive trust is an offspring of the law (Art. 1456, Civil Code), so is the corresponding
obligation to reconvey the property and the title thereto in favor of the true owner. In this
context, and vis-a-vis prescription, Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time
the right of action accrues:
(1)
Upon a written contract;
(2)
Upon an obligation created by law;
(3)
Upon a judgment.
xxx
xxx
xxx
(Emphasis supplied).
An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. A long line of decisions of this
Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is now wellsettled that an action for reconveyance based on an implied or constructive trust

prescribes in ten years from the issuance of the Torrens title over the
property. The only discordant note, it seems, is Balbin vs. Medalla which states that the
prescriptive period for a reconveyance action is four years. However, this variance can be
explained by the erroneous reliance on Gerona vs. de Guzman. But in Gerona, the fraud was
discovered on June 25,1948, hence Section 43(3) of Act No. 190, was applied, the new Civil
Code not coming into effect until August 30, 1950 as mentioned earlier. It must be stressed,
at this juncture, that article 1144 and article 1456, are new provisions. They have no
counterparts in the old Civil Code or in the old Code of Civil Procedure, the latter being then
resorted to as legal basis of the four-year prescriptive period for an action for reconveyance
of title of real property acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential
Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal and
equitable remedies against the parties to such fraud without prejudice, however, to the
rights of any innocent holder of the decree of registration on the original petition or
application, xxx
This provision should be read in conjunction with Article 1456 of the Civil Code, which
provides:
Article 1456. If property is acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust for the benefit of the person from
whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property and
the title thereto in favor of the true owner. Correlating Section 53, paragraph 3 of
Presidential Decree No. 1529 and Article 1456 of the Civil Code with Article 1144(2) of the
Civil Code, supra, the prescriptive period for the reconveyance of fraudulently registered
real property is ten (10) years reckoned from the date of the issuance of the certificate of
title xxx (Emphasis supplied)[46][46]
Following Caro, we have consistently held that an action for reconveyance based on
an implied trust prescribes in ten years.[47][47] We went further by specifying the
reference point of the ten-year prescriptive period as the date of the registration of the deed
or the issuance of the title.[48][48]
Had Armando and Adelia remained in possession of the Subject Land, their action for
reconveyance, in effect an action to quiet title to property, would not be subject to
prescription. Prescription does not run against the plaintiff in actual possession of the
disputed land because such plaintiff has a right to wait until his possession is disturbed or
his title is questioned before initiating an action to vindicate his right.[49][49] His
undisturbed possession gives him the continuing right to seek the aid of a court of equity to
determine the nature of the adverse claim of a third party and its effect on his title.[50][50]
Armando and Adelia lost possession of the Subject Land when the Subsequent
Buyers forcibly drove away from the Subject Land the Natanawans, the tenants of Armando
and Adelia.[51][51] This created an actual need for Armando and Adelia to seek
reconveyance of the Subject Land. The statute of limitation becomes relevant in this
case. The ten-year prescriptive period started to run from the date the Subsequent Buyers
registered their deeds of sale with the Register of Deeds.
The Subsequent Buyers bought the subdivided portions of the Subject Land on 22
February 1994, the date of execution of their deeds of sale. The Register of Deeds issued
the transfer certificates of title to the Subsequent Buyers on 24 February 1994. Armando
and Adelia filed the Complaint on 7 March 1994. Clearly, prescription could not have set in
since the case was filed at the early stage of the ten-year prescriptive period.
Neither is the action barred by laches. We have defined laches as the failure or
neglect, for an unreasonable time, to do that which, by the exercise of due diligence, could
or should have been done earlier.[52][52] It is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.[53][53] Armando and Adelia discovered in January
1994 the subsequent sale of the Subject Land and they filed this case on 7 March
1994. Plainly, Armando and Adelia did not sleep on their rights.
Validity of Subsequent Sale of Portions of the Subject Land
Petitioners maintain that the subsequent sale must be upheld because the
Subsequent Buyers, the co-petitioners of Godofredo and Carmen, purchased and registered
the Subject Land in good faith. Petitioners argue that the testimony of Calonso, the person
who brokered the second sale, should not prejudice the Subsequent Buyers. There is no
evidence that Calonso was the agent of the Subsequent Buyers and that she communicated
to them what she knew about the adverse claim and the prior sale. Petitioners assert that
the adverse claim registered by Armando and Adelia has no legal basis to render defective
the transfer of title to the Subsequent Buyers.
We are not persuaded. Godofredo and Carmen had already sold the Subject Land to
Armando and Adelia. The settled rule is when ownership or title passes to the buyer, the

seller ceases to have any title to transfer to any third person.[54][54] If the seller sells the
same land to another, the second buyer who has actual or constructive knowledge of the
prior sale cannot be a registrant in good faith.[55][55] Such second buyer cannot defeat the
first buyers title.[56][56] In case a title is issued to the second buyer, the first buyer may
seek reconveyance of the property subject of the sale.[57][57]
Thus, to merit protection under the second paragraph of Article 1544[58][58] of the
Civil Code, the second buyer must act in good faith in registering the deed. [59][59] In this
case, the Subsequent Buyers good faith hinges on whether they had knowledge of the
previous sale. Petitioners do not dispute that Armando and Adelia registered their adverse
claim with the Registry of Deeds of Bataan on 8 February 1994. The Subsequent Buyers
purchased their respective lots only on 22 February 1994 as shown by the date of their
deeds of sale. Consequently, the adverse claim registered prior to the second sale charged
the Subsequent Buyers with constructive notice of the defect in the title of the sellers,[60]
[60] Godofredo and Carmen.
It is immaterial whether Calonso, the broker of the second sale, communicated to the
Subsequent Buyers the existence of the adverse claim. The registration of the adverse claim
on 8 February 1994 constituted, by operation of law, notice to the whole world.[61][61]
From that date onwards, the Subsequent Buyers were deemed to have constructive notice
of the adverse claim of Armando and Adelia. When the Subsequent Buyers purchased
portions of the Subject Land on 22 February 1994, they already had constructive notice of
the adverse claim registered earlier.[62][62] Thus, the Subsequent Buyers were not buyers
in good faith when they purchased their lots on 22 February 1994. They were also not
registrants in good faith when they registered their deeds of sale with the Registry of Deeds
on 24 February 1994.
The Subsequent Buyers individual titles to their respective lots are not absolutely
indefeasible. The defense of indefeasibility of the Torrens Title does not extend to a
transferee who takes the certificate of title with notice of a flaw in his title.[63][63] The
principle of indefeasibility of title does not apply where fraud attended the issuance of the
titles as in this case.[64][64]
Attorneys Fees and Costs
We sustain the award of attorneys fees. The decision of the court must state the
grounds for the award of attorneys fees. The trial court complied with this requirement.
[65][65] We agree with the trial court that if it were not for petitioners unjustified refusal to
heed the just and valid demands of Armando and Adelia, the latter would not have been
compelled to file this action.
The Court of Appeals echoed the trial courts condemnation of petitioners fraudulent
maneuverings in securing the second sale of the Subject Land to the Subsequent
Buyers. We will also not turn a blind eye on petitioners brazen tactics. Thus, we uphold the
treble costs imposed by the Court of Appeals on petitioners.
WHEREFORE, the petition is DENIED and the appealed decision is AFFIRMED. Treble
costs against petitioners.
SO ORDERED.

BENJAMIN YU, petitioner, vs. NATIONAL LABOR RELATIONS

COMMISSION
G.R. No. 97212 June 30, 1993
BENJAMIN YU, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION and JADE MOUNTAIN PRODUCTS COMPANY
LIMITED, WILLY CO, RHODORA D. BENDAL, LEA BENDAL, CHIU SHIAN JENG and CHEN HOFU, respondents.
Jose C. Guico for petitioner.
Wilfredo Cortez for private respondents.

FELICIANO, J.:
Petitioner Benjamin Yu was formerly the Assistant General Manager of the marble quarrying and
export business operated by a registered partnership with the firm name of "Jade Mountain Products
Company Limited" ("Jade Mountain"). The partnership was originally organized on 28 June 1984
with Lea Bendal and Rhodora Bendal as general partners and Chin Shian Jeng, Chen Ho-Fu and Yu

Chang, all citizens of the Republic of China (Taiwan), as limited partners. The partnership business
consisted of exploiting a marble deposit found on land owned by the Sps. Ricardo and Guillerma
Cruz, situated in Bulacan Province, under a Memorandum Agreement dated 26 June 1984 with the
Cruz spouses. 1 The partnership had its main office in Makati, Metropolitan Manila.
Benjamin Yu was hired by virtue of a Partnership Resolution dated 14 March 1985, as Assistant
General Manager with a monthly salary of P4,000.00. According to petitioner Yu, however, he
actually received only half of his stipulated monthly salary, since he had accepted the promise of the
partners that the balance would be paid when the firm shall have secured additional operating funds
from abroad. Benjamin Yu actually managed the operations and finances of the business; he had
overall supervision of the workers at the marble quarry in Bulacan and took charge of the
preparation of papers relating to the exportation of the firm's products.
Sometime in 1988, without the knowledge of Benjamin Yu, the general partners Lea Bendal and
Rhodora Bendal sold and transferred their interests in the partnership to private respondent Willy Co
and to one Emmanuel Zapanta. Mr. Yu Chang, a limited partner, also sold and transferred his
interest in the partnership to Willy Co. Between Mr. Emmanuel Zapanta and himself, private
respondent Willy Co acquired the great bulk of the partnership interest. The partnership now
constituted solely by Willy Co and Emmanuel Zapanta continued to use the old firm name of Jade
Mountain, though they moved the firm's main office from Makati to Mandaluyong, Metropolitan
Manila. A Supplement to the Memorandum Agreement relating to the operation of the marble quarry
was entered into with the Cruz spouses in February of 1988. 2 The actual operations of the business
enterprise continued as before. All the employees of the partnership continued working in the
business, all, save petitioner Benjamin Yu as it turned out.
On 16 November 1987, having learned of the transfer of the firm's main office from Makati to
Mandaluyong, petitioner Benjamin Yu reported to the Mandaluyong office for work and there met
private respondent Willy Co for the first time. Petitioner was informed by Willy Co that the latter had
bought the business from the original partners and that it was for him to decide whether or not he
was responsible for the obligations of the old partnership, including petitioner's unpaid salaries.
Petitioner was in fact not allowed to work anymore in the Jade Mountain business enterprise. His
unpaid salaries remained unpaid. 3
On 21 December 1988. Benjamin Yu filed a complaint for illegal dismissal and recovery of unpaid
salaries accruing from November 1984 to October 1988, moral and exemplary damages and
attorney's fees, against Jade Mountain, Mr. Willy Co and the other private respondents. The
partnership and Willy Co denied petitioner's charges, contending in the main that Benjamin Yu was
never hired as an employee by the present or new partnership. 4
In due time, Labor Arbiter Nieves Vivar-De Castro rendered a decision holding that petitioner had
been illegally dismissed. The Labor Arbiter decreed his reinstatement and awarded him his claim for
unpaid salaries, backwages and attorney's fees. 5
On appeal, the National Labor Relations Commission ("NLRC") reversed the decision of the Labor
Arbiter and dismissed petitioner's complaint in a Resolution dated 29 November 1990. The NLRC
held that a new partnership consisting of Mr. Willy Co and Mr. Emmanuel Zapanta had bought the
Jade Mountain business, that the new partnership had not retained petitioner Yu in his original
position as Assistant General Manager, and that there was no law requiring the new partnership to
absorb the employees of the old partnership. Benjamin Yu, therefore, had not been illegally
dismissed by the new partnership which had simply declined to retain him in his former managerial
position or any other position. Finally, the NLRC held that Benjamin Yu's claim for unpaid wages
should be asserted against the original members of the preceding partnership, but these though
impleaded had, apparently, not been served with summons in the proceedings before the Labor
Arbiter. 6
Petitioner Benjamin Yu is now before the Court on a Petition for Certiorari, asking us to set aside and
annul the Resolution of the NLRC as a product of grave abuse of discretion amounting to lack or
excess of jurisdiction.

The basic contention of petitioner is that the NLRC has overlooked the principle that a partnership
has a juridical personality separate and distinct from that of each of its members. Such independent
legal personality subsists, petitioner claims, notwithstanding changes in the identities of the partners.
Consequently, the employment contract between Benjamin Yu and the partnership Jade Mountain
could not have been affected by changes in the latter's membership. 7
Two (2) main issues are thus posed for our consideration in the case at bar: (1) whether the
partnership which had hired petitioner Yu as Assistant General Manager had been extinguished and
replaced by a new partnerships composed of Willy Co and Emmanuel Zapanta; and (2) if indeed a
new partnership had come into existence, whether petitioner Yu could nonetheless assert his rights
under his employment contract as against the new partnership.
In respect of the first issue, we agree with the result reached by the NLRC, that is, that the legal
effect of the changes in the membership of the partnership was the dissolution of the old partnership
which had hired petitioner in 1984 and the emergence of a new firm composed of Willy Co and
Emmanuel Zapanta in 1987.
The applicable law in this connection of which the NLRC seemed quite unaware is found in the
Civil Code provisions relating to partnerships. Article 1828 of the Civil Code provides as follows:
Art. 1828. The dissolution of a partnership is the change in the relation of the
partners caused by any partner ceasing to be associated in the carrying on as
distinguished from the winding up of the business. (Emphasis supplied)

Article 1830 of the same Code must also be noted:

Art. 1830. Dissolution is caused:
(1) without violation of the agreement between the partners;
xxx xxx xxx
(b) by the express will of any partner, who must act in
good faith, when no definite term or particular
undertaking is specified;
xxx xxx xxx
(2) in contravention of the agreement between the
partners, where the circumstances do not permit a
dissolution under any other provision of this article, by
the express will of any partner at any time;
xxx xxx xxx
(Emphasis supplied)

In the case at bar, just about all of the partners had sold their partnership interests (amounting to
82% of the total partnership interest) to Mr. Willy Co and Emmanuel Zapanta. The record does not
show what happened to the remaining 18% of the original partnership interest. The acquisition of
82% of the partnership interest by new partners, coupled with the retirement or withdrawal of the
partners who had originally owned such 82% interest, was enough to constitute a new partnership.
The occurrence of events which precipitate the legal consequence of dissolution of a partnership do
not, however, automatically result in the termination of the legal personality of the old partnership.
Article 1829 of the Civil Code states that:
[o]n dissolution the partnership is not terminated, but continues until the winding up of
partnership affairs is completed.

In the ordinary course of events, the legal personality of the expiring partnership persists for the
limited purpose of winding up and closing of the affairs of the partnership. In the case at bar, it is

important to underscore the fact that the business of the old partnership was simply continued by the
new partners, without the old partnership undergoing the procedures relating to dissolution and
winding up of its business affairs. In other words, the new partnership simply took over the business
enterprise owned by the preceeding partnership, and continued using the old name of Jade
Mountain Products Company Limited, without winding up the business affairs of the old partnership,
paying off its debts, liquidating and distributing its net assets, and then re-assembling the said assets
or most of them and opening a new business enterprise. There were, no doubt, powerful tax
considerations which underlay such an informal approach to business on the part of the retiring and
the incoming partners. It is not, however, necessary to inquire into such matters.
What is important for present purposes is that, under the above described situation, not only the
retiring partners (Rhodora Bendal, et al.) but also the new partnership itself which continued the
business of the old, dissolved, one, are liable for the debts of the preceding partnership. In Singson,
et al. v. Isabela Saw Mill, et al, 8 the Court held that under facts very similar to those in the case at
bar, a withdrawing partner remains liable to a third party creditor of the old partnership. 9 The liability
of the new partnership, upon the other hand, in the set of circumstances obtaining in the case at bar,
is established in Article 1840 of the Civil Code which reads as follows:
Art. 1840. In the following cases creditors of the dissolved partnership are also creditors
of the person or partnership continuing the business:
(1) When any new partner is admitted into an existing partnership, or when any partner
retires and assigns (or the representative of the deceased partner assigns) his rights in
partnership property to two or more of the partners, or to one or more of the partners and
one or more third persons, if the business is continued without liquidation of the
partnership affairs;
(2) When all but one partner retire and assign (or the representative of a deceased
partner assigns) their rights in partnership property to the remaining partner,
who continues the business without liquidation of partnership affairs, either alone or with
others;
(3) When any Partner retires or dies and the business of the dissolved partnership is
continued as set forth in Nos. 1 and 2 of this Article, with the consent of the retired
partners or the representative of the deceased partner, but without any assignment of his
right in partnership property;
(4) When all the partners or their representatives assign their rights in partnership
property to one or more third persons who promise to pay the debts and who continue
the business of the dissolved partnership;
(5) When any partner wrongfully causes a dissolution and remaining partners continue
the business under the provisions of article 1837, second paragraph, No. 2, either alone
or with others, and without liquidation of the partnership affairs;
(6) When a partner is expelled and the remaining partners continue the business either
alone or with others without liquidation of the partnership affairs;
The liability of a third person becoming a partner in the partnership continuing the
business, under this article, to the creditors of the dissolved partnership shall be satisfied
out of the partnership property only, unless there is a stipulation to the contrary.
When the business of a partnership after dissolution is continued under any conditions
set forth in this article the creditors of the retiring or deceased partner or the
representative of the deceased partner, have a prior right to any claim of the retired
partner or the representative of the deceased partner against the person or partnership
continuing the business on account of the retired or deceased partner's interest in the
dissolved partnership or on account of any consideration promised for such interest or for
his right in partnership property.

Nothing in this article shall be held to modify any right of creditors to set assignment on
the ground of fraud.
xxx xxx xxx
(Emphasis supplied)

Under Article 1840 above, creditors of the old Jade Mountain are also creditors of the new Jade
Mountain which continued the business of the old one without liquidation of the partnership affairs.
Indeed, a creditor of the old Jade Mountain, like petitioner Benjamin Yu in respect of his claim for
unpaid wages, is entitled to priority vis-a-vis any claim of any retired or previous partner insofar as
such retired partner's interest in the dissolved partnership is concerned. It is not necessary for the
Court to determine under which one or mare of the above six (6) paragraphs, the case at bar would
fall, if only because the facts on record are not detailed with sufficient precision to permit such
determination. It is, however, clear to the Court that under Article 1840 above, Benjamin Yu is
entitled to enforce his claim for unpaid salaries, as well as other claims relating to his employment
with the previous partnership, against the new Jade Mountain.
It is at the same time also evident to the Court that the new partnership was entitled to appoint and
hire a new general or assistant general manager to run the affairs of the business enterprise take
over. An assistant general manager belongs to the most senior ranks of management and a new
partnership is entitled to appoint a top manager of its own choice and confidence. The non-retention
of Benjamin Yu as Assistant General Manager did not therefore constitute unlawful termination, or
termination without just or authorized cause. We think that the precise authorized cause for
termination in the case at bar was redundancy. 10 The new partnership had its own new General
Manager, apparently Mr. Willy Co, the principal new owner himself, who personally ran the business
of Jade Mountain. Benjamin Yu's old position as Assistant General Manager thus became
superfluous or redundant. 11 It follows that petitioner Benjamin Yu is entitled to separation pay at the
rate of one month's pay for each year of service that he had rendered to the old partnership, a
fraction of at least six (6) months being considered as a whole year.
While the new Jade Mountain was entitled to decline to retain petitioner Benjamin Yu in its employ,
we consider that Benjamin Yu was very shabbily treated by the new partnership. The old partnership
certainly benefitted from the services of Benjamin Yu who, as noted, previously ran the whole marble
quarrying, processing and exporting enterprise. His work constituted value-added to the business
itself and therefore, the new partnership similarly benefitted from the labors of Benjamin Yu. It is
worthy of note that the new partnership did not try to suggest that there was any cause consisting of
some blameworthy act or omission on the part of Mr. Yu which compelled the new partnership to
terminate his services. Nonetheless, the new Jade Mountain did not notify him of the change in
ownership of the business, the relocation of the main office of Jade Mountain from Makati to
Mandaluyong and the assumption by Mr. Willy Co of control of operations. The treatment (including
the refusal to honor his claim for unpaid wages) accorded to Assistant General Manager Benjamin
Yu was so summary and cavalier as to amount to arbitrary, bad faith treatment, for which the new
Jade Mountain may legitimately be required to respond by paying moral damages. This Court,
exercising its discretion and in view of all the circumstances of this case, believes that an indemnity
for moral damages in the amount of P20,000.00 is proper and reasonable.
In addition, we consider that petitioner Benjamin Yu is entitled to interest at the legal rate of six
percent (6%) per annum on the amount of unpaid wages, and of his separation pay, computed from
the date of promulgation of the award of the Labor Arbiter. Finally, because the new Jade Mountain
compelled Benjamin Yu to resort to litigation to protect his rights in the premises, he is entitled to
attorney's fees in the amount of ten percent (10%) of the total amount due from private respondent
Jade Mountain.
WHEREFORE, for all the foregoing, the Petition for Certiorari is GRANTED DUE COURSE, the
Comment filed by private respondents is treated as their Answer to the Petition for Certiorari, and the
Decision of the NLRC dated 29 November 1990 is hereby NULLIFIED and SET ASIDE. A new
Decision is hereby ENTERED requiring private respondent Jade Mountain Products Company
Limited to pay to petitioner Benjamin Yu the following amounts:

(a) for unpaid wages which, as found by the Labor Arbiter, shall be
computed at the rate of P2,000.00 per month multiplied by thirty-six
(36) months (November 1984 to December 1987) in the total amount
of P72,000.00;
(b) separation pay computed at the rate of P4,000.00 monthly pay
multiplied by three (3) years of service or a total of P12,000.00;
(c) indemnity for moral damages in the amount of P20,000.00;
(d) six percent (6%) per annum legal interest computed on items (a)
and (b) above, commencing on 26 December 1989 and until fully
paid; and
(e) ten percent (10%) attorney's fees on the total amount due from
private respondent Jade Mountain.
Costs against private respondents.

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.

WILLIAM J. SUTER and THE COURT OF TAX APPEALS,
EN BANC
G.R. No. L-25532

February 28, 1969

COMMISSIONER OF INTERNAL REVENUE, petitioner,

vs.
WILLIAM J. SUTER and THE COURT OF TAX APPEALS, respondents.
Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Felicisimo R. Rosete
and Special Attorneys B. Gatdula, Jr. and T. Temprosa Jr. for petitioner.
A. S. Monzon, Gutierrez, Farrales and Ong for respondents.
REYES, J.B.L., J.:
A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed on 30
September 1947 by herein respondent William J. Suter as the general partner, and Julia Spirig and
Gustav Carlson, as the limited partners. The partners contributed, respectively, P20,000.00,
P18,000.00 and P2,000.00 to the partnership. On 1 October 1947, the limited partnership was
registered with the Securities and Exchange Commission. The firm engaged, among other activities,
in the importation, marketing, distribution and operation of automatic phonographs, radios, television
sets and amusement machines, their parts and accessories. It had an office and held itself out as a
limited partnership, handling and carrying merchandise, using invoices, bills and letterheads bearing
its trade-name, maintaining its own books of accounts and bank accounts, and had a quota
allocation with the Central Bank.
In 1948, however, general partner Suter and limited partner Spirig got married and, thereafter,
on 18 December 1948, limited partner Carlson sold his share in the partnership to Suter and his
wife. The sale was duly recorded with the Securities and Exchange Commission on 20 December
1948.
The limited partnership had been filing its income tax returns as a corporation, without
objection by the herein petitioner, Commissioner of Internal Revenue, until in 1959 when the latter, in
an assessment, consolidated the income of the firm and the individual incomes of the partners-

spouses Suter and Spirig resulting in a determination of a deficiency income tax against respondent
Suter in the amount of P2,678.06 for 1954 and P4,567.00 for 1955.
Respondent Suter protested the assessment, and requested its cancellation and withdrawal,
as not in accordance with law, but his request was denied. Unable to secure a reconsideration, he
appealed to the Court of Tax Appeals, which court, after trial, rendered a decision, on 11 November
1965, reversing that of the Commissioner of Internal Revenue.
The present case is a petition for review, filed by the Commissioner of Internal Revenue, of the
tax court's aforesaid decision. It raises these issues:
(a) Whether or not the corporate personality of the William J. Suter "Morcoin" Co., Ltd. should
be disregarded for income tax purposes, considering that respondent William J. Suter and his wife,
Julia Spirig Suter actually formed a single taxable unit; and
(b) Whether or not the partnership was dissolved after the marriage of the partners,
respondent William J. Suter and Julia Spirig Suter and the subsequent sale to them by the remaining
partner, Gustav Carlson, of his participation of P2,000.00 in the partnership for a nominal amount of
P1.00.
The theory of the petitioner, Commissioner of Internal Revenue, is that the marriage of Suter
and Spirig and their subsequent acquisition of the interests of remaining partner Carlson in the
partnership dissolved the limited partnership, and if they did not, the fiction of juridical personality of
the partnership should be disregarded for income tax purposes because the spouses have exclusive
ownership and control of the business; consequently the income tax return of respondent Suter for
the years in question should have included his and his wife's individual incomes and that of the
limited partnership, in accordance with Section 45 (d) of the National Internal Revenue Code, which
provides as follows:
(d) Husband and wife. In the case of married persons, whether citizens, residents or
non-residents, only one consolidated return for the taxable year shall be filed by either
spouse to cover the income of both spouses; ....
In refutation of the foregoing, respondent Suter maintains, as the Court of Tax Appeals held,
that his marriage with limited partner Spirig and their acquisition of Carlson's interests in the
partnership in 1948 is not a ground for dissolution of the partnership, either in the Code of
Commerce or in the New Civil Code, and that since its juridical personality had not been affected
and since, as a limited partnership, as contra distinguished from a duly registered general
partnership, it is taxable on its income similarly with corporations, Suter was not bound to include in
his individual return the income of the limited partnership.
We find the Commissioner's appeal unmeritorious.
The thesis that the limited partnership, William J. Suter "Morcoin" Co., Ltd., has been
dissolved by operation of law because of the marriage of the only general partner, William J. Suter to
the originally limited partner, Julia Spirig one year after the partnership was organized is rested by
the appellant upon the opinion of now Senator Tolentino in Commentaries and Jurisprudence on
Commercial Laws of the Philippines, Vol. 1, 4th Ed., page 58, that reads as follows:

A husband and a wife may not enter into a contract of general copartnership, because
under the Civil Code, which applies in the absence of express provision in the Code of
Commerce, persons prohibited from making donations to each other are prohibited from
entering into universal partnerships. (2 Echaverri 196) It follows that the marriage of partners
necessarily brings about the dissolution of a pre-existing partnership. (1 Guy de Montella 58)
The petitioner-appellant has evidently failed to observe the fact that William J. Suter "Morcoin"
Co., Ltd. was not a universal partnership, but a particular one. As appears from Articles 1674 and
1675 of the Spanish Civil Code, of 1889 (which was the law in force when the subject firm was
organized in 1947), a universal partnership requires either that the object of the association be all
the present property of the partners, as contributed by them to the common fund, or else "all that the
partners may acquire by their industry or work during the existence of the partnership". William J.
Suter "Morcoin" Co., Ltd. was not such a universal partnership, since the contributions of the
partners were fixed sums of money, P20,000.00 by William Suter and P18,000.00 by Julia Spirig and
neither one of them was an industrial partner. It follows that William J. Suter "Morcoin" Co., Ltd. was
not a partnership that spouses were forbidden to enter by Article 1677 of the Civil Code of 1889.
The former Chief Justice of the Spanish Supreme Court, D. Jose Casan, in his Derecho Civil,
7th Edition, 1952, Volume 4, page 546, footnote 1, says with regard to the prohibition contained in
the aforesaid Article 1677:
Los conyuges, segun esto, no pueden celebrar entre si el contrato de sociedad
universal, pero o podran constituir sociedad particular? Aunque el punto ha sido muy
debatido, nos inclinamos a la tesis permisiva de los contratos de sociedad particular entre
esposos, ya que ningun precepto de nuestro Codigo los prohibe, y hay que estar a la norma
general segun la que toda persona es capaz para contratar mientras no sea declarado
incapaz por la ley. La jurisprudencia de la Direccion de los Registros fue favorable a esta
misma tesis en su resolution de 3 de febrero de 1936, mas parece cambiar de rumbo en la
de 9 de marzo de 1943.
Nor could the subsequent marriage of the partners operate to dissolve it, such marriage not
being one of the causes provided for that purpose either by the Spanish Civil Code or the Code of
Commerce.
The appellant's view, that by the marriage of both partners the company became a single
proprietorship, is equally erroneous. The capital contributions of partners William J. Suter and Julia
Spirig were separately owned and contributed by them before their marriage; and after they were
joined in wedlock, such contributions remained their respective separate property under the Spanish
Civil Code (Article 1396):
The following shall be the exclusive property of each spouse:
(a) That which is brought to the marriage as his or her own; ....
Thus, the individual interest of each consort in William J. Suter "Morcoin" Co., Ltd. did not
become common property of both after their marriage in 1948.
It being a basic tenet of the Spanish and Philippine law that the partnership has a juridical
personality of its own, distinct and separate from that of its partners (unlike American and English

law that does not recognize such separate juridical personality), the bypassing of the existence of the
limited partnership as a taxpayer can only be done by ignoring or disregarding clear statutory
mandates and basic principles of our law. The limited partnership's separate individuality makes it
impossible to equate its income with that of the component members. True, section 24 of the Internal
Revenue Code merges registered general co-partnerships (compaias colectivas) with the
personality of the individual partners for income tax purposes. But this rule is exceptional in its
disregard of a cardinal tenet of our partnership laws, and can not be extended by mere implication to
limited partnerships.
The rulings cited by the petitioner (Collector of Internal Revenue vs. University of the Visayas,
L-13554, Resolution of 30 October 1964, and Koppel [Phil.], Inc. vs. Yatco, 77 Phil. 504) as authority
for disregarding the fiction of legal personality of the corporations involved therein are not applicable
to the present case. In the cited cases, the corporations were already subject to tax when the fiction
of their corporate personality was pierced; in the present case, to do so would exempt the limited
partnership from income taxation but would throw the tax burden upon the partners-spouses in their
individual capacities. The corporations, in the cases cited, merely served as business conduits
or alter egos of the stockholders, a factor that justified a disregard of their corporate personalities for
tax purposes. This is not true in the present case. Here, the limited partnership is not a mere
business conduit of the partner-spouses; it was organized for legitimate business purposes; it
conducted its own dealings with its customers prior to appellee's marriage, and had been filing its
own income tax returns as such independent entity. The change in its membership, brought about by
the marriage of the partners and their subsequent acquisition of all interest therein, is no ground for
withdrawing the partnership from the coverage of Section 24 of the tax code, requiring it to pay
income tax. As far as the records show, the partners did not enter into matrimony and thereafter buy
the interests of the remaining partner with the premeditated scheme or design to use the partnership
as a business conduit to dodge the tax laws. Regularity, not otherwise, is presumed.
As the limited partnership under consideration is taxable on its income, to require that income
to be included in the individual tax return of respondent Suter is to overstretch the letter and intent of
the law. In fact, it would even conflict with what it specifically provides in its Section 24: for the
appellant Commissioner's stand results in equal treatment, tax wise, of a general copartnership
(compaia colectiva) and a limited partnership, when the code plainly differentiates the two. Thus,
the code taxes the latter on its income, but not the former, because it is in the case ofcompaias
colectivas that the members, and not the firm, are taxable in their individual capacities for any
dividend or share of the profit derived from the duly registered general partnership (Section 26,
N.I.R.C.; Araas, Anno. & Juris. on the N.I.R.C., As Amended, Vol. 1, pp. 88-89).lawphi1.nt
But it is argued that the income of the limited partnership is actually or constructively the
income of the spouses and forms part of the conjugal partnership of gains. This is not wholly correct.
As pointed out in Agapito vs. Molo 50 Phil. 779, and People's Bank vs. Register of Deeds of Manila,
60 Phil. 167, the fruits of the wife's parapherna become conjugal only when no longer needed to
defray the expenses for the administration and preservation of the paraphernal capital of the wife.
Then again, the appellant's argument erroneously confines itself to the question of the legal
personality of the limited partnership, which is not essential to the income taxability of the
partnership since the law taxes the income of even joint accounts that have no personality of their
own. 1 Appellant is, likewise, mistaken in that it assumes that the conjugal partnership of gains is a
taxable unit, which it is not. What is taxable is the "income of both spouses" (Section 45 [d] in their

individual capacities. Though the amount of income (income of the conjugal partnership vis-a-vis the
joint income of husband and wife) may be the same for a given taxable year, their consequences
would be different, as their contributions in the business partnership are not the same.
The difference in tax rates between the income of the limited partnership being consolidated
with, and when split from the income of the spouses, is not a justification for requiring consolidation;
the revenue code, as it presently stands, does not authorize it, and even bars it by requiring the
limited partnership to pay tax on its own income.
FOR THE FOREGOING REASONS, the decision under review is hereby affirmed. No costs.
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Fernando, Capistrano and
Teehankee, JJ., concur.
Barredo, J., took no part.
Footnotes
1

V. Evangelists vs. Collector of Internal Revenue, 102 Phil 140; Collector vs. Batangas

Transportation Co., 102 Phil. 822.

SANTIAGO SYJUCO, INC., petitioner, vs. HON. JOSE P. CASTRO,

G.R. No. 70403 July 7, 1989
SANTIAGO SYJUCO, INC., petitioner,
vs.
HON. JOSE P. CASTRO, AS PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF THE
NATIONAL CAPITAL JUDICIAL REGION, BRANCH LXXXV, QUEZON CITY, THE CITY SHERIFF
OF THE CITY OF MANILA, THE CITY REGISTER OF DEEDS OF THE CITY OF MANILA,
EUGENIO LIM, ARAMIS LIM, MARIO LIM, PAULINO LIM, LORENZO LIM, NILA LIM and/ or THE
PARTNERSHIP OF THE HEIRS OF HUGO LIM and ATTORNEY PATERNO P.
CANLAS, respondents.
Doroteo B. Daguna and Felix D. Carao for petitioner.
Paterno Canlas for private respondents.
NARVASA, J.:
This case may well serve as a textbook example of how judicial processes, designed to promote the
swift and efficient disposition of disputes at law, can be so grossly abused and manipulated as to
produce precisely the opposite result; how they can be utilized by parties with small scruples to
forestall for an unconscionably long time so essentially simple a matter as making the security given
for a just debt answer for its payment.
The records of the present proceedings and of two other cases already decided by this Court expose
how indeed the routine procedure of an extrajudicial foreclosure came by dint of brazen forum
shopping and other devious maneuvering to grow into a veritable thicket of litigation from which the
mortgagee has been trying to extricate itself for the last twenty years.
Back in November 1964, Eugenio Lim, for and in his own behalf and as attorney-in-fact of his
mother, the widow Maria Moreno (now deceased) and of his brother Lorenzo, together with his other
brothers, Aramis, Mario and Paulino, and his sister, Nila, all hereinafter collectively called the Lims,
borrowed from petitioner Santiago Syjuco, Inc. (hereinafter, Syjuco only) the sum of P800,000.00.
The loan was given on the security of a first mortgage on property registered in the names of said
borrowers as owners in common under Transfer Certificates of Title Numbered 75413 and 75415 of
the Registry of Deeds of Manila. Thereafter additional loans on the same security were obtained by
the Lims from Syjuco, so that as of May 8, 1967, the aggregate of the loans stood at P2,460,000.00,
exclusive of interest, and the security had been augmented by bringing into the mortgage other

property, also registered as owned pro indiviso by the Lims under two titles: TCT Nos. 75416 and
75418 of the Manila Registry.

There is no dispute about these facts, nor about the additional circumstance that as stipulated in the
mortgage deed the obligation matured on November 8, 1967; that the Lims failed to pay it despite
demands therefor; that Syjuco consequently caused extra-judicial proceedings for the foreclosure of
the mortgage to be commenced by the Sheriff of Manila; and that the latter scheduled the auction
sale of the mortgaged property on December 27, 1968. 1 The attempt to foreclose triggered off a
legal battle that has dragged on for more than twenty years now, fought through five (5) cases in the
trial courts, 2 two (2) in the Court of Appeals, 3 and three (3) more in this Court, 4 with the end only
now in sight.
1. CIVIL CASE NO. 75180, CFI MANILA, BR.5; CA-G.R. NO. 00242R; G.R. NO. L-34683
To stop the foreclosure, the Lims through Atty. Marcial G. Mendiola, who was later joined by Atty.
Raul Correa filed Civil Case No. 75180 on December 24,1968 in the Court of First Instance of
Manila (Branch 5). In their complaint they alleged that their mortgage was void, being usurious for
stipulating interest of 23% on top of 11 % that they had been required to pay as "kickback." An order
restraining the auction sale was issued two days later, on December 26,1968, premised inter alia on
the Lims' express waiver of "their rights to the notice and re-publication of the notice of sale which
may be conducted at some future date." 5
On November 25,1970, the Court of First Instance (then presided over by Judge Conrado M.
Vasquez 6 rendered judgment finding that usury tained the mortgage without, however, rendering it
void, declaring the amount due to be only Pl,136,235.00 and allowing the foreclosure to proceed for
satisfaction of the obligation reckoned at only said amount . 7
Syjuco moved for new trial to enable it to present additional evidence to overthrow the finding of
usury, and the Court ordered the case reopened for that purpose. The Lims tried to negate that order
of reopening in the Court of Appeals, the proceedings being docketed as CA-G.R. No. 00242-R.
They failed. The Court of Appeals upheld the Trial Court. The Lims then sought to nullify this action
of the Appellate Court; towards that end, they filed with this Court a petition for certiorari and
prohibition, docketed as G.R. No. L-34683. But here, too, they failed; their petition was dismissed. 8
Thereafter, and on the basis of the additional evidence adduced by Syjuco on remand of the case
from this Court, the Trial Court promulgated an amended decision on August 16, 1972, reversing its
previous holding that usury had flawed the Lims' loan obligation. It declared that the principal of said
obligation indeed amounted to P2,460,000.00, exclusive of interest at the rate of 12% per annum
from November 8, 1967, and, that obligation being already due, the defendants (Syjuco and the
Sheriff of Manila) could proceed with the extrajudicial foreclosure of the mortgage given to secure its
satisfaction. 9
2. APPEAL FROM CIVIL CASE NO. 75180; CA-G.R. NO. 51752;
G.R. NO. L-45752
On September 9, 1972, Atty. Paterno R. Canlas entered his appearance in Civil Case No. 75180 as
counsel for the Lims in collaboration with Atty. Raul Correa, and on the same date appealed to the
Court of Appeals from the amended decision of August 16, 1972. 10 In that appeal, which was
docketed as CA G.R. No. 51752, Messrs. Canlas and Correa prayed that the loans be declared
usurious; that the principal of the loans be found to be in the total amount of Pl,269,505.00 only, and
the interest thereon fixed at only 6% per annum from the filing of the complaint; and that the
mortgage be also pronounced void ab initio. 11
The appeal met with no success. In a decision promulgated on October 25,1976, the Court of
Appeals affirmed in totothe Trial Court's amended decision. 12

The Lims came to this Court seeking reversal of the appellate Court's decision. However, their
petition for review-filed in their behalf by Canlas, and Atty. Pio R. Marcos, and docketed as G.R. No.
L-45752-was denied for lack of merit in a minute resolution dated August 5, 1977. The Lims' motion
for reconsideration was denied and entry of judgment was made on September 24,1977. 13 Here the
matter should have ended; it marked only the beginning of Syjuco's travails.
3. CIVIL CASE NO.112762, CFI MANILA BRANCH 9
Syjuco then resumed its efforts to proceed with the foreclosure. It caused the auction sale of the
mortgaged property to be scheduled on December 20, 1977, only to be frustrated again by another
action filed by the Lims on December 19, 1977, docketed as Civil Case No. 112762 of the Court of
First Instance of Manila. 14 The action sought to stop the sale on the ground that the notice of
foreclosure had not been republished; this, notwithstanding that as earlier stressed, the restraining
order of December 26, 1968 issued in Civil Case No 75180 explicitly declared itself to be predicated
on the Lims' waiver of "their rights to the notice and republication of the notice of sale which may be
conducted at some future date." 15 An order restraining the sale issued in the case, although the
petition for preliminary injunction was subsequently denied. A supplemental complaint was also filed
by the Lims seeking recovery of some Pl million in damages allegedly suffered by reason of said
lack of republication. 16
4. CIVIL CASE NO. 75180
That very same claim that there had been no republication of the notice of sale, which was the
foundation of the Lims' action in Civil Case No. 112762 as aforesaid was made by the Lims the
basis of an urgent motion filed on December 15, 1977 in Civil Case No. 75180, in which, as earlier
narrated, the judgement authorizing the foreclosure had been affirmed by both the Court of Appeals
and this Court, and had become final and executory. And that motion sought exactly the same
remedy prayed for in Civil Case No. 112762 (filed by the Lims four [4] days later, on December 19,
1977), i.e., the prevention of the auction sale. The Court -- Branch 5, then presided over by Judge
Jose H. Tecson granted the restraining order on December 19, 1977, 17 the very same day that
the Lims commenced Civil Case No. 112762 in the same Court and in which subsequent action they
asked for and obtained a similar restraining order.
The Lims' counsel thus brought about the anomalous situation of two (2) restraining orders directed
against the same auction sale, based on the same ground, issued by different courts having
cognizance of two (2) separate proceedings instituted for identical objectives. This situation lasted
for all of three (3) years, despite the republication of the notice of sale caused by Syjuco in January,
1978 in an effort to end all dispute about the matter, and despite Judge Tecson's having been made
aware of Civil Case No. 112762. It should have been apparent to Judge Tecson that there was
nothing more to be done in Civil Case No. 75180 except to enforce the judgment, already final and
executory, authorizing the extrajudicial foreclosure of the mortgage, a judgment sanctioned, to
repeat, by both the Court of Appeals and the Supreme Court; that there was in truth no need for
another publication of the notice since the Lims had precisely waived such republication, this waiver
having been the condition under which they had earlier obtained an order restraining the first
scheduled sale; that, in any event, the republication effected by Syjuco had removed the only
asserted impediment to the holding of the same; and that, finally, the Lims were acting in bad faith:
they were maintaining proceedings in two (2) different courts for essentially the same
relief. 18 Incredibly, not only did Judge Tecson refuse to allow the holding of the auction sale, as was
the only just and lawful course indicated by the circumstances, 19 he authorized the Lims to sell the
mortgaged property in a private sale, 20 with the evident intention that the proceeds of the sale, which
he directed to be deposited in court, would be divided between Syjuco and the Lims; this, in line with
the patently specious theory advocated by the Lims' counsel that the bond flied by them for the
postponement of the sale, set at P6 million by the Court (later increased by P 3 million) had
superseded and caused novation of the mortgage. 21 The case lay fallow for a year, certain other,
incidents arising and remaining unresolved on account of numerous postponements.
5. G.R. No. L-56014

Finally, on January 28, 1981, Syjuco betook itself to this Court, presumably no longer disposed to
await Judge Tecson's pleasure or the Lims' convenience. It filed a petition for certiorari and
prohibition, docketed as G.R. No. L-56014, alleging that in Civil Case No. 75180, Judge Tecson had
gravely abused discretion in:
(1) unreasonably delaying the foreclosure of the mortgage;
(2) entertaining the Lims' motion to discharge said mortgage grounded on the theory
that it had been superseded and novated by the Lims' act of filing the bond required
by Judge Tecson in connection with the postponement of the foreclosure sale, and
unreasonably delaying resolution of the issue; and
(3) authorizing the Lims to negotiate and consummate the private sale of the
mortgaged property and motu proprio extending the period granted the Lims for the
purpose, in disregard of the final and executory judgment rendered in the case.
By judgment rendered on September 21, 1982, after due proceedings, this
Court 22 issued the writ prayed for and nullified the orders and actuations of Judge
Tecson in Civil Case No. 75180. The judgment declared that:
(1) the republication by Syjuco of the notice of foreclosure sale rendered the
complaint in Civil Case No. 112762 moot and academic; hence, said case could not
operate to bar the sale;
(2) the Lims' bonds (of P 6 million and P 3 million), having by the terms thereof been
given to guarantee payment of damages to Syjuco and the Sheriff of Manila resulting
from the suspension of the auction sale, could not in any sense and from any aspect
have the effect of superseding the mortgage or novating it;
(3) in fact, the bonds had become worthless when, as shown by the record, the
bondsman's authority to transact non-life insurance business in the Philippines was
not renewed, for cause, as of July 1, 1981.
The decision consequently decreed that the Sheriff of Manila should proceed with the mortgage
sale, there being no further impediment thereto. 23
Notice of the decision was served on the Lims, through Atty. Canlas, on October 2, 1982. A motion
for reconsideration was filed, 24 but the same was denied with finality for lack of merit and entry of
final judgment was made on March 22,1983. 25
6. THE SECRET ACTION CIVIL CASE NO. Q-36845 OF THE
REGIONAL TRIAL COURT, QUEZON CITY, JUDGE JOSE P.
CASTRO, PRESIDING
Twelve (12) days after the Lims were served, as above mentioned, with notice of this Court's
judgment in G.R. No. 56014, or on October 14,1982, they caused the filing with the Regional Trial
Court of Quezon City of still another action, the third, also designed, like the first two, to preclude
enforcement of the mortgage held by Syjuco.
This time the complaint was presented, not in their individual names, but in the name of a
partnership of which they themselves were the only partners: "Heirs of Hugo Lim." The complaint
advocated the theory that the mortgage which they, together with their mother, had individually
constituted (and thereafter amended during the period from 1964 to 1967) over lands standing in
their names in the Property Registry as owners pro indiviso, in fact no longer belonged to them at
that time, having been earlier deeded over by them to the partnership, "Heirs of Hugo Lim", more
precisely, on March 30, 1959, hence, said mortgage was void because executed by them without
authority from the partnership.
The complaint was signed by a lawyer other than Atty. Canlas, but the records disclose that Atty.
Canlas took over as counsel as of November 4,1982. The case, docketed as Civil Case No. Q-

39295, was assigned to Branch 35 of the Quezon City Regional Trial Court, then presided over by
Judge Jose P. Castro.
Judge Castro issued a restraining order on October 15, 1982. Then, Sheriff Perfecto G. Dalangin
submitted a return of summons to the effect that on December 6, 1982 he
.. served personally and left a copy of summons together with a copy of Complaint and its
annexes x x upon defendant's office formerly at 313 Quirino Ave., Paranaque, MetroManila and now at 407 Dona Felisa Syjuco Building, Remedios St., corner Taft Avenue,
Manila, through the Manager, a person of sufficient age and discretion duly authorized to
receive service of such nature, but who refused to accept service and signed receipt
thereof. 26

A vaguer return will be hard to find. It is impossible to discern from it where precisely the summons
was served, whether at Quirino Avenue, Paranaque, or Taft Avenue, Manila; and it is inexplicable
that the name of the person that the sheriff had been able to identify as the manager is not stated,
the latter being described merely as "a person of sufficient age and discretion." In any event, as it
was to claim later, Syjuco asserts that it was never so served with summons, or with any other
notice, pleading, or motion relative to the case, for that matter.
On February 10, 1983, Atty. Canlas filed an ex-parte motion to declare Syjuco in default. The order
of default issued the next day, also directing the plaintiff partnership to present evidence ex parte
within three (3) days. On February 22, 1983, judgment by default was rendered, declaring void the
mortgage in question because executed by the Lims without authority from the partnership which
was and had been since March 30,1959 the exclusive owner of the mortgaged property, and making
permanent an injunction against the foreclosure sale that had issued on January 14,1983. 27 Service
of notice of the default judgment was, according to the return of the same Sheriff Perfecto Dalangin,
effected on the following day, February 23, 1983. His return is a virtual copy of his earlier one
regarding service of summons: it also states the place of service as the defendant's office, either at
its former location, 313 Quirino Avenue, Paranaque, or at the later address, 407 Dona Felisa, Syjuco
Building, Taft Avenue, Manila; and it also fails to identify the person on whom service was made,
describing him only as "the clerk or person in charge" of the office. 28
Unaccountably, and contrary to what might be expected from the rapidity with which it was decidedtwelve (12) days from February 10, 1983, when the motion to declare defendant Syjuco in default
was filed-the case was afterwards allowed by Atty. Canlas to remain dormant for seventeen (17)
months. He made no effort to have the judgment executed, or to avail of it in other actions instituted
by him against Syjuco. The judgment was not to be invoked until sometime in or after July, 1984,
again to stop the extrajudicial mortgage sale scheduled at or about that time at the instance of
Syjuco, as shall presently be recounted.
7. Other Actions in the Interim:
a. CIVIL CASE No. 83-19018, RTC MANILA
While the Lims, through their partnership ("Heirs of Hugo Lim"), were prosecuting their action in the
sala of Judge Castro, as above narrated, Syjuco once again tried to proceed with the foreclosure
after entry of judgment had been made in G.R. No. 56014 on March 22, 1983. It scheduled the
auction sale on July 30, 1983. But once again it was frustrated. Another obstacle was put up by the
Lims and their counsel, Atty. Canlas. This was Civil Case No. 83-19018 of the Manila Regional Trial
Court. The case was filed to stop the sale on the theory that what was sought to be realized from the
sale was much in excess of the judgment in Civil Case No. 75180, and that there was absence of
the requisite notice. It is significant that the judgment by default rendered by Judge Castro in Civil
Case No. Q-36485 was not asserted as additional ground to support the cause of action. Be this as
it may, a restraining order was issued on July 20,1983 in said Civil Case No. 83-9018. 29
b. CIVIL CASE NO. Q-32924, RTC QUEZON CITY
What the outcome of this case, No. 83-19018, is not clear. What is certain is (1) that the auction sale
was re-scheduled for September 20, 1983, (2) that it was aborted because the Lims managed to

obtain still another restraining order in another case commenced by their lawyer, Atty. Canlas: Civil
Case No. Q-32924 of the Court of First Instance of Quezon City, grounded on the proposition that
the publication of the notice of sale was defective; and (3) that the action was dismissed by the
Regional Trial Court on February 3, 1984. 30
No other salient details about these two (2) cases are available in the voluminous records before the
Court, except that it was Atty. Canlas who had filed them. He admits having done so unequivocally:
"Thus, the undersigned counsel filed injunction cases in Civil Case No. 83-19018 and Civil Case No.
39294, Regional Trial Courts of Manila and Quezon City. ... " 31
7. RE-ACTIVATION OF CIVIL CASE NO. Q-36485, RTC, Q QUEZON
CITY, BRANCH XXXV
Upon the dismissal of Civil Case No. 39294, Syjuco once more resumed its efforts to effect the
mortgage sale which had already been stymied for more than fifteen (15) years. At its instance, the
sheriff once again set a date for the auction sale. But on the date of the sale, a letter of Atty. Canlas
was handed to the sheriff drawing attention to the permanent injunction of the sale embodied in the
judgment by default rendered by Judge Castro in Civil Case No. Q- 36485. 32 Syjuco lost no time in
inquiring about Civil Case No. Q-36485, and was very quickly made aware of the judgment by
default therein promulgated and the antecedent events leading thereto. It was also made known that
on July 9, 1984, Judge Castro had ordered execution of the judgment; that Judge Castro had on July
16, 1984 granted Atty. Canlas' motion to declare cancelled the titles to the Lims' mortgaged
properties and as nun and void the annotation of the mortgage and its amendments on said titles,
and to direct the Register of Deeds of Manila to issue new titles, in lieu of the old, in the name of the
partnership, "Heirs of Hugo Lim." 33
On July 17,1984, Syjuco filed in said Civil Case No. Q-36485 a motion for reconsideration of the
decision and for dismissal of the action, alleging that it had never been served with summons; that
granting arguendo that service had somehow been made, it had never received notice of the
decision and therefore the same had not and could not have become final; and that the action
should be dismissed on the ground of bar by prior judgment premised on the final decisions of the
Supreme Court in G.R. No. L-45752 and G.R. No. 56014.
Two other motions by Syjuco quickly followed. The first, dated July 20, 1984, prayed for abatement
of Judge Castro's order decreeing the issuance of new certificates of title over the mortgaged lands
in the name of the plaintiff partnership. 34 The second, filed on July 24, 1984, was a supplement to
the motion to dismiss earlier filed, asserting another ground for the dismissal of the action, i.e.,
failure to state a cause of action, it appearing that the mortgaged property remained registered in the
names of the individual members of the Lim family notwithstanding that the property had supposedly
been conveyed to the plaintiff partnership long before the execution of the mortgage and its
amendments,-and that even assuming ownership of the property by the partnership, the mortgage
executed by all the partners was valid and binding under Articles 1811 and 1819 of the Civil Code. 35
The motions having been opposed in due course by the plaintiff partnership, they remained pending
until January 31, 1985 when Syjuco moved for their immediate resolution. Syjuco now claims that
Judge Castro never acted on the motions. The latter however states that that he did issue an order
on February 22, 1985 declaring that he had lost jurisdiction to act thereon because, petitio principii,
his decision had already become final and executory.
8. G.R.NO.L-70403; THE PROCEEDING AT BAR
For the third time Syjuco is now before this Court on the same matter. It filed on April 3, 1985 the
instant petition for certiorari, prohibition and mandamus. It prays in its petition that the default
judgment rendered against it by Judge Castro in said Civil Case No. Q-36485 be annulled on the
ground of lack of service of summons, res judicata and laches, and failure of the complaint to state a
cause of action; that the sheriff be commanded to proceed with the foreclosure of the mortgage on
the property covered by Transfer Certificates of Title Numbered 75413, 75415, 75416 and 75418 of
the Manila Registry; and that the respondents the Lims, Judge Castro, the Sheriff and the Register of
Deeds of Manila, the partnership known as "Heirs of Hugo Lim," and Atty. Paterno R. Canlas,

counsel for-the Lims and their partnership-be perpetually enjoined from taking any further steps to
prevent the foreclosure.
The comment filed for the respondents by Atty. Canlas in substance alleged that (a) Syjuco was
validly served with summons in Civil Case No. Q-36485, hence, that the decision rendered by
default therein was also valid and, having been also duly served on said petitioner, became final by
operation of law after the lapse of the reglementary appeal period; (b) finality of said decision
removed the case from the jurisdiction of the trial court, which was powerless to entertain and act on
the motion for reconsideration and motion to dismiss; (c) the petition was in effect an action to annul
a judgment, a proceeding within the original jurisdiction of the Court of Appeals; (d) the plea of res
judicata came too late because raised after the decision had already become final; moreover, no
Identity of parties existed between the cases invoked, on the one hand, and Civil Case No. Q-36485,
on the other, the parties in the former being the Lims in their personal capacities and in the latter, the
Lim Partnership, a separate and distinct juridical entity; and the pleaded causes of action being
different, usury in the earlier cases and authority of the parties to encumber partnership property in
the case under review; (e) the plea of laches also came too late, not having been invoked in the
lower court; and (f) the property involved constituted assets of the Lim partnership, being registered
as such with the Securities and Exchange Commission. 36
On his own behalf Atty. Canlas submitted that he had no knowledge of the institution of Civil Case
No. Q-36485 (though he admitted being collaborating counsel in said case); that he did not
represent the Lims in all their cases against Syjuco, having been counsel for the former only since
1977, not for the last seventeen years as claimed by Syjuco; and that he had no duty to inform
opposing counsel of the pendency of Civil Case No. Q-36485. 37
Respondent Judge Castro also filed a comment 38 disclaiming knowledge of previous controversies
regarding the mortgaged property. He asserted that Syjuco had been properly declared in default for
having failed to answer the complaint despite service of summons upon it, and that his decision in
said case which was also properly served on Syjuco became final when it was not timely appealed,
after which he lost jurisdiction to entertain the motion for reconsideration and motion to dismiss. He
also denied having failed to act on said motions, adverting to an alleged order of February 22, 1985
where he declared his lack of jurisdiction to act thereon.
The respondent Register of Deeds for his part presented a comment wherein he stated that by virtue
of an order of execution in Civil Case No. Q-36485, he had cancelled TCTs Nos. 75413, 75415,
75416 and 75418 of his Registry and prepared new certificates of title in lieu thereof, but that
cancellation had been held in abeyance for lack of certain registration requirements and by reason
also of the motion of Syjuco's Atty. Formoso to hold in abeyance enforcement of the trial court's
order of July 16, 1984 as well as of the temporary restraining order subsequently issued by the
Court. 39
It is time to write finis to this unedifying narrative which is notable chiefly for the deception,
deviousness and trickery which have marked the private respondents' thus far successful attempts
to avoid the payment of a just obligation. The record of the present proceeding and the other records
already referred to, which the Court has examined at length, make it clear that the dispute should
have been laid to rest more than eleven years ago, with entry of judgment of this Court (on
September 24, 1977) in G.R. No. L-45752 sealing the fate of the Lims' appeal against the amended
decision in Civil Case No. 75180 where they had originally questioned the validity of the mortgage
and its foreclosure. That result, the records also show, had itself been nine (9) years in coming, Civil
Case No. 75180 having been instituted in December 1968 and, after trial and judgment, gone
through the Court of Appeals (in CA-G.R. No. 00242-R) and this Court (in G.R. No. 34683), both at
the instance of the Lims, on the question of reopening before the amended decision could be issued.
Unwilling, however, to concede defeat, the Lims moved (in Civil Case No. 75180) to stop the
foreclosure sale on the ground of lack of republication. On December 19,1977 they obtained a
restraining order in said case, but this notwithstanding, on the very same date they filed another
action (Civil Case No. 117262) in a different branch of the same Court of First Instance of Manila to

enjoin the foreclosure sale on the same ground of alleged lack of republication. At about this time,
Syjuco republished the notice of sale in order, as it was later to manifest, to end all further dispute.
That move met with no success. The Lims managed to persuade the judge in Civil Case No. 75180,
notwithstanding his conviction that the amended decision in said case had already become final, not
only to halt the foreclosure sale but also to authorize said respondents to dispose of the mortgaged
property at a private sale upon posting a bond of P6,000,000.00 (later increased by P3,000,000.00)
to guarantee payment of Syjuco's mortgage credit. This gave the Lims a convenient excuse for
further suspension of the foreclosure sale by introducing a new wrinkle into their contentions-that the
bond superseded the mortgage which should, they claimed, therefore be discharged instead of
foreclosed.
Thus from the final months of 1977 until the end of 1980, a period of three years, Syjuco found itself
fighting a legal battle on two fronts: in the already finally decided Civil Case No. 75180 and in Civil
Case No. 117262, upon the single issue of alleged lack of republication, an issue already mooted by
the Lims' earlier waiver of republication as a condition for the issuance of the original restraining
order of December 26,1968 in Civil Case No. 75180, not to mention the fact that said petitioner had
also tried to put an end to it by actually republishing the notice of sale.
With the advent of 1981, its pleas for early resolution having apparently fallen on deaf ears, Syjuco
went to this Court (in G.R. No. L-56014) from which, on September 21, 1982, it obtained the decision
already referred to holding, in fine, that there existed no further impediment to the foreclosure sale
and that the sheriff could proceed with the same.
Said decision, instead of deterring further attempts to derail the foreclosure, apparently gave the
signal for the clandestine filing this time by the Partnership of the Heirs of Hugo Lim -on October
14,1982 of Civil Case No. Q-36485, the subject of the present petition, which for the first time
asserted the claim that the mortgaged property had been contributed to the plaintiff partnership long
before the execution of the Syjuco's mortgage in order to defeat the foreclosure.
Syjuco now maintains that it had no actual knowledge of the existence and pendency of Civil Case
No. Q-36485 until confronted, in the manner already adverted to, with the fait accompli of a "final"
judgment with permanent injunction therein, and nothing in the record disabuses the Court about the
truth of this disclaimer. Indeed, considering what had transpired up to that denouement, it becomes
quite evident that actuations of the Lims and their lawyer had been geared to keeping Syjuco in the
dark about said case. Their filing of two other cases also seeking to enjoin the foreclosure sale (Civil
Case No. 83-19018, Regional Trial Court of Manila in July 1983, and Civil Case No. Q-32924,
Regional Trial Court of Quezon City in September of the same year) after said sale had already been
permanently enjoined by default judgment in Civil Case No. Q-36485, appears in retrospect to be
nothing but a brace of feints calculated to keep Syjuco in that state of ignorance and to lull any
apprehensions it mat may have harbored about encountering further surprises from any other
quarter.
Further credence is lent to this appraisal by the unusually rapid movement of Civil Case No. Q36485 itself in its earlier stages, which saw the motion to declare Syjuco in default filed, an order of
default issued, evidence ex parte for the plaintiffs received and judgment by default rendered, all
within the brief span of twelve days, February 10-22, 1983. Notice of said judgment was "served" on
February 23, 1983, the day after it was handed down, only to be followed by an unaccountable lull of
well over a year before it was ordered executed on July 9, 1984 unaccountable, considering that
previous flurry of activity, except in the context of a plan to rush the case to judgment and then divert
Syjuco's attention to the Lims' moves in other directions so as to prevent discovery of the existence
of the case until it was too late.
The Court cannot but condemn in the strongest terms this trifling with the judicial process which
degrades the administration of justice, mocks, subverts and misuses that process for purely dilatory
purposes, thus tending to bring it into disrepute, and seriously erodes public confidence in the will
and competence of the courts to dispense swift justice.

Upon the facts, the only defense to the foreclosure that could possibly have merited the full-blown
trial and appeal proceedings it actually went through was that of alleged usury pleaded in Civil Case
No. 75180 and finally decided against the respondent Lims in G.R. No. L-45752 in September 1977.
The other issues of failure to republish and discharge of mortgage by guarantee set up in
succeeding actions were sham issues, questions without substance raised only for purposes of
delay by the private respondents, in which they succeeded only too well. The claim urged in this
latest case: that the mortgaged property had been contributed to the respondent partnership and
was already property of said partnership when the individual Lims unauthorizedly mortgaged it to
Syjuco, is of no better stripe, and this, too, is clear from the undisputed facts and the legal
conclusions to be drawn therefrom.
The record shows that the respondent partnership is composed exclusively of the individual Lims in
whose name all the cases herein referred to, with the sole exception of Civil Case No. Q-36485,
were brought and prosecuted, their contribution to the partnership consisting chiefly, if not solely, of
the property subject of the Syjuco mortgage. It is also a fact that despite its having been contributed
to the partnership, allegedly on March 30, 1959, the property was never registered with the Register
of Deeds in the name of the partnership, but to this date remains registered in the names of the Lims
as owners in common. The original mortgage deed of November 14,1964 was executed by the Lims
as such owners, as were all subsequent amendments of the mortgage. There can be no dispute that
in those circumstances, the respondent partnership was chargeable with knowledge of the mortgage
from the moment of its execution. The legal fiction of a separate juridical personality and existence
will not shield it from the conclusion of having such knowledge which naturally and irresistibly flows
from the undenied facts. It would violate all precepts of reason, ordinary experience and common
sense to propose that a partnership, as commonly known to all the partners or of acts in which all of
the latter, without exception, have taken part, where such matters or acts affect property claimed as
its own by said partnership.
If, therefore, the respondent partnership was inescapably chargeable with knowledge of the
mortgage executed by all the partners thereof, its silence and failure to impugn said mortgage within
a reasonable time, let alone a space of more than seventeen years, brought into play the doctrine of
estoppel to preclude any attempt to avoid the mortgage as allegedly unauthorized.

The principles of equitable estoppel, sometimes called estoppel in pais, are made part of
our law by Art. 1432 of the Civil Code. Coming under this class is estoppel by silence,
which obtains here and as to which it has been held that:
... an estoppel may arise from silence as well as from words. 'Estoppel by
silence' arises where a person, who by force of circumstances is under a
duty to another to speak, refrains from doing so and thereby leads the
other to believe in the existence of a state of facts in reliance on which he
acts to his prejudice. Silence may support an estoppel whether the failure
to speak is intentional or negligent.
Inaction or silence may under some circumstances amount to a misrepresentation
and concealment of the facts, so as to raise an equitable estoppel. When the silence
is of such a character and under such circumstances that it would become a fraud on
the other party to permit the party who has kept silent to deny what his silence has
induced the other to believe and act on, it will operate as an estoppel. This doctrine
rests on the principle that if one maintains silence, when in conscience he ought to
speak, equity will debar him from speaking when in conscience he ought to remain
silent. He who remains silent when he ought to speak cannot be heard to speak
when he should be silent. 40

And more to the point:

A property owner who knowingly permits another to sell or encumber the
property, without disclosing his title or objecting to the transaction, is

estopped to set up his title or interest as against a person who has been
thereby misled to his injury.
xxx
An owner of real property who stands by and sees a third person selling or
mortgaging it under claim of title without asserting his own title or giving the
purchaser or mortgagee any notice thereof is estopped, as against such purchaser or
mortgagee, afterward to assert his title; and, although title does not pass under these
circumstances, a conveyance will be decreed by a court of equity. Especially is the
rule applicable where the party against whom the estoppel is claimed, in addition to
standing by, takes part in malting the sale or mortgage. 41

More specifically, the concept to which that species of estoppel which

results from the non-disclosure of an estate or interest in real property has
ordinarily been referred is fraud, actual or constructive. ... Although fraud is
not an essential element of the original conduct working the estoppel, it
may with perfect property be said that it would be fraudulent for the party
to repudiate his conduct, and to assert a right or claim in contravention
thereof. 42
Equally or even more preclusive of the respondent partnership's claim to the mortgaged property is
the last paragraph of Article 1819 of the Civil Code, which contemplates a situation duplicating the
circumstances that attended the execution of the mortgage in favor of Syjuco and therefore applies
foursquare thereto:
Where the title to real property is in the names of all the partners a conveyance executed
by all the partners passes all their rights in such property.

The term "conveyance" used in said provision, which is taken from Section 10 of the American
Uniform Partnership Act, includes a mortgage.
Interpreting Sec. 10 of the Uniform Partnership Act, it has been held that the right to
mortgage is included in the right to convey. This is different from the rule in agency that a
special power to sell excludes the power to mortgage (Art. 1879). 43

As indisputable as the propositions and principles just stated is that the cause of action in Civil Case
No. Q-36485 is barred by prior judgment. The right subsumed in that cause is the negation of the
mortgage, postulated on the claim that the parcels of land mortgaged by the Lims to Syjuco did not
in truth belong to them but to the partnership. Assuming this to be so, the right could have been
asserted at the time that the Lims instituted their first action on December 24, 1968 in the Manila
Court of First Instance, Civil Case No. 75180, or when they filed their subsequent actions: Civil Case
No. 112762, on December 19, 1977; Civil Case No. 83-19018, in 1983, and Civil Case No. Q-39294,
also in 1983. The claim could have been set up by the Lims, as members composing the
partnership, "Heirs of Hugo Lim." It could very well have been put forth by the partnership itself, as
co-plaintiff in the corresponding complaints, considering that the actions involved property
supposedly belonging to it and were being prosecuted by the entire membership of the partnership,
and therefore, the partnership was in actuality, the real party in interest. In fact, consistently with the
Lims' theory, they should be regarded, in all the actions presented by them, as having sued for
vindication, not of their individual rights over the property mortgaged, but those of the partnership.
There is thus no reason to distinguish between the Lims, as individuals, and the partnership itself,
since the former constituted the entire membership of the latter. In other words, despite the
concealment of the existence of the partnership, for all intents and purposes and consistently with
the Lims' own theory, it was that partnership which was the real party in interest in all the actions; it
was actually represented in said actions by all the individual members thereof, and consequently,
those members' acts, declarations and omissions cannot be deemed to be simply the individual acts
of said members, but in fact and in law, those of the partnership.

What was done by the Lims or by the partnership of which they were the only members-was to
split their cause of action in violation of the well known rule that only one suit may be instituted for a
single cause of action. 44 The right sought to be enforced by them in all their actions was, at bottom,
to strike down the mortgage constituted in favor of Syjuco, a right which, in their view, resulted from
several circumstances, namely that the mortgage was constituted over property belonging to the
partnership without the latter's authority; that the principal obligation thereby secured was usurious;
that the publication of the notice of foreclosure sale was fatally defective, circumstances which had
already taken place at the time of the institution of the actions. They instituted four (4) actions for the
same purpose on one ground or the other, making each ground the subject of a separate action.
Upon these premises, application of the sanction indicated by law is caned for, i.e., the judgment on
the merits in any one is available as a bar in the others. 45
The first judgment-rendered in Civil Case No. 75180 and affirmed by both the Court of Appeals (CAG.R. No. 51752) and this Court (G.R. No. L-45752) should therefore have barred all the others, all
the requisites of res judicata being present. The judgment was a final and executory judgment; it had
been rendered by a competent court; and there was, between the first and subsequent cases, not
only identity of subject-matter and of cause of action, but also of parties. As already pointed out, the
plaintiffs in the first four (4) actions, the Lims, were representing exactly the same claims as those of
the partnership, the plaintiff in the fifth and last action, of which partnership they were the only
members, and there was hence no substantial difference as regards the parties plaintiff in all the
actions. Under the doctrine of res judicata, the judgment in the first was and should have been
regarded as conclusive in all other, actions not only "with respect to the matter directly adjudged,"
but also "as to any other matter that could have been raised in relation thereto. " 46 It being
indisputable that the matter of the partnership's being the owner of the mortgaged properties "could
have been raised in relation" to those expressly made issuable in the first action, it follows that that
matter could not be re-litigated in the last action, the fifth.
Though confronted with the facts thus precluding the respondent partnership's claim to the property
under both the principle of estoppel and the provisions of Article 1819, last paragraph, of the Civil
Code, as well as the familiar doctrine of res judicata, the respondent Judge refused to act on
Syjuco's motions on the ground that he no longer had jurisdiction to do so because they were filed
after judgment by default against Syjuco, which failed to answer the complaint despite valid service
of summons, had been rendered and become final. The sheriffs return, however, creates grave
doubts about the correctness of the Judge's basic premise that summons had been validly served on
Syjuco. For one thing, the return 47 is unspecific about where service was effected. No safe
conclusion about the place of service can be made from its reference to a former and a present
office of Syjuco in widely separate locations, with nothing to indicate whether service was effected at
one address or the other, or even at both. A more serious defect is the failure to name the person
served who is, with equal ambiguity, identified only as "the Manager" of the defendant corporation
(petitioner herein). Since the sheriffs return constitutes primary evidence of the manner and incidents
of personal service of a summons, the Rules are quite specific about what such a document should
contain:
SEC. 20. Proof of service. The proof of service of a summons shall be made in writing
by the server and shall set forth the manner, place and date of service; shall specify any
papers which have been served with the process and the name of the person who
received the same; and shall be sworn to when made by a person other than a sheriff or
his deputy. 48

In the case of Delta Motor Sales Corporation vs. Mangosing

49

it was held that:"

(a) strict compliance with the mode of service is necessary to confer jurisdiction of the court over a
corporation. The officer upon whom service is made must be one who is named in the statute;
otherwise the service is insufficient. So, where the statute requires that in the case of a domestic
corporation summons should be served on 'the president or head of the corporation, secretary,
treasurer, cashier or managing agent thereof, service of summons on the secretary's wife did not
confer jurisdiction over the corporation in the foreclosure proceeding against it. Hence, the decree of

foreclosure and the deficiency judgment were void and should be vacated (Reader vs. District Court,
94 Pacific 2nd 858).
The purpose is to render it reasonably certain that the corporation will receive prompt and
proper notice in an action against it or to insure that the summons be served on a
representative so integrated with the corporation that such person will know what to do
with the legal papers served on him. In other words, 'to bring home to the corporation
notice of the filing of the action'. (35 A C.J.S. 288 citing Jenkins vs. Lykes Bros. S.S. Co.,
48 F. Supp. 848; MacCarthy vs. Langston, D.C. Fla., 23 F.R.D. 249).
The liberal construction rule cannot be invoked and utilized as a substitute for the plain
legal requirements as to the manner in which summons should be served on a domestic
corporation (U.S. vs. Mollenhauer Laboratories, Inc., 267 Fed. Rep. 2nd 260).'

The rule cannot be any less exacting as regards adherence to the requirements of proof of service, it
being usually by such proof that sufficiency of compliance with the prescribed mode of service is
measured. Here the only proof of service of summons is the questioned sheriff's return which, as
already pointed out, is not only vague and unspecific as to the place of service, but also neglects to
Identify by name the recipient of the summons as required by Rule 20, Section 14, of the Rules of
Court. Where the sheriffs return is defective the presumption of regularity in the performance of
official functions will not lie. 50 The defective sheriffs return thus being insufficient and incompetent to
prove that summons was served in the manner prescribed for service upon corporations, there is no
alternative to affirming the petitioner's claim that it had not been validly summoned in Civil Case No.
Q-36485. It goes without saying that lacking such valid service, the Trial Court did not acquire
jurisdiction over the petitioner Syjuco, rendering null and void all subsequent proceedings and
issuances in the action from the order of default up to and including the judgment by default and the
order for its execution. 51
The respondents' contention that the petition is in effect an action to annul a judgment which is within
the exclusive original jurisdiction of the Court of Appeals 52 has already been answered
in Matanguihan vs. Tengco 53 where, by declaring that an action for annulment of judgment is not a
plain, speedy and adequate remedy, this Court in effect affirmed that certiorari is an appropriate
remedy against judgments or proceedings alleged to have been rendered or had without valid
service of summons. 54
Respondent Judge Castro begged the question when, instead of resolving on the merits the issue of
the invalidity of his default judgment and of the proceedings leading thereto because of absence of
valid service of summons on the defendant, which had been expressly raised in the defendant's
motion for reconsideration, he simply refused to do so on the excuse that he had lost jurisdiction
over the case. This refusal was, in the premises, a grave abuse of judicial discretion which must be
rectified.
What has been said makes unnecessary any further proceedings in the Court below, which might
otherwise be indicated by the consideration that two of the postulates of petitioner's unresolved
motions which the Court considers equally as decisive as res judicata, to wit: estoppel by silence
and Article 1819, last paragraph, of the Civil Code, do not constitute grounds for a motion to dismiss
under rule 16, of the Rules of Court. Such a step would only cause further delay. And delay has been
the bane of petitioner's cause, defying through all these years all its efforts to collect on a just debt.
The undenied and undisputable facts make it perfectly clear that the claim to the mortgaged property
belatedly and in apparent bad faith pressed by the respondent partnership is foreclosed by both law
and equity. Further proceedings will not make this any clearer than it already is. The Court is clothed
with ample authority, in such a case, to call a halt to all further proceedings and pronounce judgment
on the basis of what is already manifestly of record.
So much for the merits; the consequences that should attend the inexcusable and indefensible
conduct of the respondents Lims, the respondent partnership and their counsel, Atty. Paterno R.
Canlas, should now be addressed. That the Lims and their partnership acted in bad faith and with
intent to defraud is manifest in the record of their actuations, presenting as they did, piecemeal and

in one case after another, defenses to the foreclosure or claims in derogation thereof that were
available to them from the very beginning actuations that were to stave off the liquidation of an
undenied debt for more than twenty years and culminated in the clandestine filing and prosecution of
the action subject of the present petition.
What has happened here, it bears repeating, is nothing less than an abuse of process, a trifling with
the courts and with the rights of access thereto, for which Atty. Canlas must share responsibility
equally with his clients. The latter could not have succeeded so well in obstructing the course of
justice without his aid and advice and his tireless espousal of their claims and pretensions made in
the various cases chronicled here. That the cause to which he lent his advocacy was less than just
or worthy could not have escaped him, if not at the start of his engagement, in the years that
followed when with his willing assistance, if not instigation, it was shuttled from one forum to another
after each setback. This Court merely stated what is obvious and cannot be gainsaid when,
in Surigao Mineral Reservation Board vs. Cloribel, 55 it held that a party's lawyer of record has control
of the proceedings and that '(w)hatever steps his client takes should be within his knowledge and
responsibility."
In Prudential Bank vs. Castro, 56 strikingly similar actuations in a case, which are described in the
following paragraph taken from this Court's decision therein:
Respondents' foregoing actuations reveal an 'unholy alliance' between them and a clear
indication of partiality for the party represented by the other to the detriment of the
objective dispensation of justice. Writs of Attachment and Execution were issued and
implemented with lightning speed; the case itself was railroaded to a swift conclusion
through a similar judgment; astronomical sums were awarded as damages and attorney's
fees; and topping it all, the right to appeal was foreclosed by clever maneuvers," and
which, the Court found, followed a pattern of conduct in other cases of which judicial
notice was taken, were deemed sufficient cause for disbarment.

Atty. Canlas even tried to mislead this Court by claiming that he became the Lims' lawyer only in
1977, 57 when the record indubitably shows that he has represented them since September 9, 1972
when he first appeared for them to prosecute their appeal in Civil Case No. 75180. 58 He has also
quite impenitently disclaimed a duty to inform opposing counsel in Civil Case No. Q-39294 of the
existence of Civil Case No. Q-36485, as plaintiffs' counsel in both actions, even while the former,
which involved the same mortgage, was already being litigated when the latter was filed, although in
the circumstances such disclosure was required by the ethics of his profession, if not indeed by his
lawyer's oath.
A clear case also exists for awarding at least nominal damages to petitioner, though damages are
not expressly prayed for, under the general prayer of the petition for "such other reliefs as may be
just and equitable under the premises," and the action being not only of certiorari and prohibition, but
also of mandamus-in which the payment of "damages sustained by the petitioner by reason of the
wrongful acts of the defendant' is expressly authorized. 59
There is no question in the Court's mind that such interests as may have accumulated on the
mortgage loan will not offset the prejudice visited upon the petitioner by the excruciatingly long delay
in the satisfaction of said debt that the private respondents have engineered and fomented.
These very same considerations dictate the imposition of exemplary damages in accordance with
Art. 2229 of the Civil Code.
WHEREFORE, so that complete justice may be dispensed here and, as far as consistent with that
end, all the matters and incidents with which these proceedings are concerned may be brought to a
swift conclusion:
(1) the assailed judgment by default in Civil Case No.Q-36485, the writ of execution
and all other orders issued in implementation thereof, and all proceedings in the case
leading to said judgment after the filing of the complaint are DECLARED null and
void and are hereby SET ASIDE; and the complaint in said case is DISMISSED for
being barred by prior judgment and estoppel, and for lack of merit;

(2) the City Sheriff of Manila is ORDERED, upon receipt of this Decision, to schedule
forthwith and thereafter conduct with all due dispatch the sale at public auction of the
mortgaged property in question for the satisfaction of the mortgage debt of the
respondents Lims to petitioner, in the principal amount of P2,460,000.00 as found in
the amended decision in Civil Case No. 75180 of the Court of First Instance of
Manila, interests thereon at the rate of twelve (12%) percent per annum from
November 8, 1967 until the date of sale, plus such other and additional sums for
commissions, expenses, fees, etc. as may be lawfully chargeable in extrajudicial
foreclosure and sale proceedings;
(3) the private respondents, their successors and assigns, are PERPETUALLY
ENJOINED from taking any action whatsoever to obstruct, delay or prevent said
auction sale;
(4) the private respondents (the Lims, the Partnership of the Heirs of Hugo Lim and
Atty. Paterno R. Canlas) are sentenced, jointly and severally, to pay the petitioner
P25,000.00 as nominal damages and P100,000.00 as exemplary damages, as well
as treble costs; and
(5) let this matter be referred to the Integrated Bar of the Philippines for investigation,
report, and recommendation insofar as the conduct of Atty. Canlas as counsel in this
case and in the other cases hereinabove referred to is concerned.
SO ORDERED.

ANTONIO C. GOQUIOLAY, ET AL., plaintiffs-appellants, vs.

WASHINGTON Z. SYCIP, ET AL., defendants-appellees.
EN BANC
G.R. No. L-11840

December 10, 1963

ANTONIO C. GOQUIOLAY, ET AL., plaintiffs-appellants,

vs.
WASHINGTON Z. SYCIP, ET AL., defendants-appellees.
Norberto J. Quisumbing and Sycip, Salazar and Associates for defendants-appellees.
Jose C. Calayco for plaintiffs-appellants..
RESOLUTION
REYES, J.B.L., J.:
The matter now pending is the appellant's motion for reconsideration of our main decision, wherein
we have upheld the validity of the sale of the lands owned by the partnership Goquiolay & Tan Sin
An, made in 1949 by the widow of the managing partner, Tan Sin An (Executed in her dual capacity
as Administratrix of the husband's estate and as partner in lieu of the husband), in favor of the
buyers Washington Sycip and Betty Lee for the following consideration:

Cash paid

P37,000.00

Debts assumed by
purchaser:
To Yutivo

62,415.91

To Sing Yee Cuan & Co.,

TOTAL

54,310.13

P153,726.0
4

Appellant Goquiolay, in his motion for reconsideration, insist that, contrary to our holding, Kong Chai
Pin, widow of the deceased partner Tan Sin An, never became more than a limited partner,
incapacitated by law to manage the affairs of partnership; that the testimony of her witness Young
and Lim belies that she took over the administration of the partnership property; and that, in any
event, the sale should be set aside because it was executed with the intent to defraud appellant of
his share in the properties sold.
Three things must be always held in mind in the discussion of this motion to reconsider, being basic
and beyond controversy:
(a) That we are dealing here with the transfer of partnership property by one partner, acting in behalf
of the firm, to astranger. There is no question between partners inter se, and this aspect to the case
was expressly reserved in the main decision of 26 July 1960;
(b) That partnership was expressly organized: "to engage in real estate business, either by buying
and selling real estate". The Articles of co-partnership, in fact, expressly provided that:
IV. The object and purpose of the copartnership are as follows:
1. To engage in real estate business, either by buying and selling real estates; to subdivide
real estates into lots for the purpose of leasing and selling them.;
(c) That the properties sold were not part of the contributed capital (which was in cash) but land
precisely acquired to be sold, although subject to a mortgage in favor of the original owners, from
whom the partnership had acquired them.
With these points firmly in mind, let us turn to the points insisted upon by appellant.
It is first averred that there is "not one iota of evidence" that Kong Chai Pin managed and retained
possession of the partnership properties. Suffice it to point out that appellant Goquiolay himself
admitted that
... Mr. Yu Eng Lai asked me if I can just let Mrs. Kong Chai Pin continue to manage the
properties (as) she had no other means of income. Then I said, because I wanted to help
Mrs. Kong Chai Pin, she could just do it and besides I am not interested in agricultural
lands. I allowed her to take care of the properties in order to help her and because I believe
in God and wanted to help her.
Q So the answer to my question is you did not take any steps?
A I did not.
Q And this conversation which you had with Mrs. Yu Eng Lai was few months after
1945?

A In the year 1945. (Emphasis supplied).

The appellant subsequently ratified this testimony in his deposition of 30 June 1956, pages 8-9,
wherein he stated:
that plantation was being occupied at that time by the widow, Mrs. Tan Sin An, and of course
they are receivingquiet a lot benefit from the plantation.
Discarding the self-serving expressions, these admissions of Goquiolay are certainly entitled to
greater weight than those of Hernando Young and Rufino Lim, having been made against the party's
own interest.
Moreover, the appellant's reference to the testimony of Hernando Young, that the witness found the
properties "abandoned and undeveloped", omits to mention that said part of the testimony started
with the question:
Now, you said that about 1942 or 1943 you returned to Davao. Did you meet Mrs. Kong Chai
Pin there in Davao at that time?
Similarly, the testimony of Rufino Lim, to the effect that the properties of the partnership were
undeveloped, and the family of the widow (Kong Chai Pin) did not receive any income from the
partnership properties, was given in answer to the question:
According to Mr. Goquiolay, during the Japanese occupation Tan Sin an and his family lived
on the plantation of the partnership and derived their subsistence from that plantation. What
can you say to that? (Dep. 19 July 1956, p. 8).
And also
What can you say as to the development of these other properties of the partnership which
you saw during the occupation? (Dep. p. 13, Emphasis supplied).
to which witness gave the following answer:
I saw the properties in Mamay still undeveloped. The third property which is in Tigato is
about eleven (11) hectares and planted with abaca seedlings planted by Mr. Sin An. When I
went there with Hernando Young we saw all the abaca destroyed. The place was occupied
by the Japanese Army. They planted camotes and vegetables to feed the Japanese Army. Of
course they never paid any money to Tan Sin An or his family. (Dep., Lim, pp. 13-14.
Emphasis supplied).
Plainly, both Young and Lim's testimonies do not belie, or contradict, Goquiolay's admission that he
told Mr. Yu Eng Lai that the widow "could just do it" (i.e., continue to manage the properties).
Witnesses Lim and Young referred to the period of Japanese occupation; but Goquiolay's authority
was, in fact, given to the widow in 1945, after the occupation.
Again, the disputed sale by the widow took place in 1949. That Kong Chai Pin carried out no acts of
management during the Japanese occupation (1942-1944) does not mean that she did not do so
from 1945 to 1949.

We thus find that Goquiolay did not merely rely on reports from Lim and Young; he actually
manifested his willingness that the widow should manage the partnership properties. Whether or not
she complied with this authority is a question between her and the appellant, and is not here
involved. But the authority was given, and she did have it when she made the questioned sale,
because it was never revoked.
It is argued that the authority given by Goquiolay to the widow Kong Chai Pin was only
to manage the property, and that it did not include the power to alienate, citing Article 1713 of the
Civil Code of 1889. What this argument overlooks is that the widow was not a mere agent, because
she had become a partner upon her husband's death, as expressly provided by the articles of
copartnership. Even more, granting that by succession to her husband, Tan Sin An, the widow only
became a limited partner,

Goquiolay's authorization to manage

the partnership property was proof that he considered

and recognized her as general partner, at least since
1945. The reason is plain: Under the law (Article 148, last paragraph, Code of Commerce),
appellant could not empower the widow, if she were only a limited partner, to administer the
properties of the firm, even as a mere agent:
Limited partners may not perform any act of administration with respect to the interests of the
copartnership, not even in the capacity of agents of the managing partners. (Emphasis
supplied).
By seeking authority to manage partnership property, Tan Sin An's widow showed that she desired to
be considered ageneral partner. By authorizing the widow to manage partnership property (which a
limited partner could not be authorized to do), Goquiolay recognized her as such partner, and is now
in estoppel to deny her position as a general partner, with authority to administer and alienate
partnership property.
Besides, as we pointed out in our main decision, the heir ordinarily (and we did not say "necessarily")
becomes a limited partner for his own protection, because he would normally prefer to avoid any
liability in excess of the value of the estate inherited so as not to jeopardize his personal assets. But
this statutory limitation of responsibility being designed to protect the heir, the latter may disregard it
and instead elect to become a collective or general partner, with all the rights and privileges of one,
and answering for the debts of the firm not only with the inheritance but also with the heir's personal
fortune. This choice pertains exclusively to the heir, and does not require the assent of the surviving
partner.
It must be remember that the articles of co-partnership here involved expressly stipulated that:
In the event of the death of any of the partners at any time before the expiration of said term,
the co-partnership shall not be dissolved but will have to be continued and the deceased
partner shall be represented by his heirs or assigns in said co-partnership (Art. XII, Articles
of Co-Partnership).
The Articles did not provide that the heirs of the deceased would be merely limited partners; on the
contrary, they expressly stipulated that in case of death of either partner "the co-partnership ... will

have to be continued" with the heirs or assigns. It certainly could not be continued if it were to be
converted from a general partnership into a limited partnership, since the difference between the two
kinds of associations is fundamental; and specially because the conversion into a limited association
would have the heirs of the deceased partner without a share in the management. Hence, the
contractual stipulation does actually contemplate that the heirs would become general
partners rather than limited ones.
Of course, the stipulation would not bind the heirs of the deceased partner should they refuse to
assume personal and unlimited responsibility for the obligations of the firm. The heirs, in other
words, can not be compelled to become general partners against their wishes. But because they are
not so compellable, it does not legitimately follow that they may not voluntarily choose to become
general partners, waiving the protective mantle of the general laws of succession. And in the latter
event, it is pointless to discuss the legality of any conversion of a limited partner into a general one.
The heir never was a limited partner, but chose to be, and became, a general partner right at the
start.
It is immaterial that the heir's name was not included in the firm name, since no conversion of status
is involved, and the articles of co-partnership expressly contemplated the admission of the partner's
heirs into the partnership.
It must never be overlooked that this case involved the rights acquired by strangers, and does not
deal with the rights existing between partners Goquiolay and the widow of Tan Sin An. The issues
between the partners inter se were expressly reserved in our main decision. Now, in determining
what kind of partner the widow of partner Tan Sin an Had elected to become, strangers had to be
guided by her conduct and actuations and those of appellant Goquiolay. Knowing that by law a
limited partner is barred from managing the partnership business or property, third parties (like the
purchasers) who found the widow possessing and managing the firm property with the acquiescence
(or at least without apparent opposition) of the surviving partners were perfectly justified in assuming
that she had become a general partner, and, therefore, in negotiating with her as such a partner,
having authority to act for, and in behalf of the firm. This belief, be it noted, was shared even by the
probate court that approved the sale by the widow of the real property standing in the partnership
name. That belief was fostered by the very inaction of appellant Goquiolay. Note that for seven long
years, from partner Tan Sin An's death in 1942 to the sale in 1949, there was more than ample time
for Goquiolay to take up the management of these properties, or at least ascertain how its affairs
stood. For seven years Goquiolay could have asserted his alleged rights, and by suitable notice in
the commercial registry could have warned strangers that they must deal with him alone, as sole
general partner. But he did nothing of the sort, because he was not interested (supra), and he did not
even take steps to pay, or settle the firm debts that were overdue since before the outbreak of the
last war. He did not even take steps, after Tan Sin An died, to cancel, or modify, the provisions of the
partnership articles that he (Goquiolay) would have no intervention in the management of the
partnership. This laches certainly contributed to confirm the view that the widow of Tan Sin An had,
or was given, authority to manage and deal with the firm's properties apart from the presumption that
a general partner dealing with partnership property has to requisite authority from his co-partners
(Litton vs. Hill and Ceron, et al., 67 Phil. 513; quoted in our main decision, p. 11).
The stipulation in the articles of partnership that any of the two managing partners may
contract and sign in the name of the partnership with the consent of the other, undoubtedly

creates on obligation between the two partners, which consists in asking the other's consent
before contracting for the partnership. This obligation of course is not imposed upon a third
person who contracts with the partnership. Neither it is necessary for the third person to
ascertain if the managing partner with whom he contracts has previously obtained the
consent of the other. A third person may and has a right to presume that the partner with
whom he contracts has, in the ordinary and natural course of business, the consent of his
copartner; for otherwise he would not enter into the contract. The third person would
naturally not presume that the partner with whom he enters into the transaction is violating
the articles of partnership, but on the contrary is acting in accordance therewith. And this
finds support in the legal presumption that the ordinary course of business has been followed
(No. 18, section 334, Code of Civil Procedure), and that the law has been obeyed (No. 31,
section 334). This last presumption is equally applicable to contracts which have the force of
law between the parties. (Litton vs. Hill & Ceron, et al., 67 Phil. 409, 516). (Emphasis
supplied.)
It is next urged that the widow, even as a partner, had no authority to sell the real estate of the firm.
This argument is lamentably superficial because it fails to differentiate between real estate acquired
and held as stock-in-trade and real estate held merely as business site (Vivante's "taller o banco
social") for the partnership. Where the partnership business is to deal in merchandise and goods,
i.e., movable property, the sale of its real property (immovables) is not within the ordinary powers of
a partner, because it is not in line with the normal business of the firm. But where the express and
avowed purpose of the partnership is to buy and sell real estate (as in the present case), the
immovables thus acquired by the firm from part of its stock-in-trade, and the sale thereof is in
pursuance of partnership purposes, hence within the ordinary powers of the partner. This distinction
is supported by the opinion of Gay de Montella1 , in the very passage quoted in the appellant's
motion for reconsideration:
La enajenacion puede entrar en las facultades del gerante, cuando es conforme a los fines
sociales. Pero esta facultad de enajenar limitada a las ventas conforme a los fines sociales,
viene limitada a los objetos de comercio o a los productos de la fabrica para explotacion de
los cuales se ha constituido la Sociedad. Ocurrira una cosa parecida cuando el objeto de la
Sociedad fuese la compra y venta de inmuebles, en cuyo caso el gerente estaria facultado
para otorgar las ventas que fuere necesario. (Montella) (Emphasis supplied).
The same rule obtains in American law.
In Rosen vs. Rosen, 212 N.Y. Supp. 405, 406, it was held:
a partnership to deal in real estate may be created and either partner has the legal right to
sell the firm real estate.
In Chester vs. Dickerson, 54 N. Y. 1, 13 Am. Rep. 550:
And hence, when the partnership business is to deal in real estate, one partner has ample power, as
a general agent of the firm, to enter into an executory contract for the sale of real estate.
And in Revelsky vs. Brown, 92 Ala. 522, 9 South 182, 25 Am. St. Rep. 83:

If the several partners engaged in the business of buying and selling real estate can not bind
the firm by purchases or sales of such property made in the regular course of business, then
they are incapable of exercising the essential rights and powers of general partners and their
association is not really a partnership at all, but a several agency.
Since the sale by the widow was in conformity with the express objective of the partnership, "to
engage ... in buying and selling real estate" (Art. IV, No. 1 Articles of Copartnership), it can not be
maintained that the sale was made in excess of her power as general partner.
Considerable stress is laid by appellant in the ruling of the Supreme Court of Ohio in McGrath, et al.,
vs. Cowen, et al.,49 N.E., 338. But the facts of that case are vastly different from the one before us.
In the McGrath case, the Court expressly found that:
The firm was then, and for some time had been, insolvent, in the sense that its property was
insufficient to pay its debts, though it still had good credit, and was actively engaged in the
prosecution of its business. On that day, which was Saturday, the plaintiff caused to be
prepared, ready for execution, the four chattel mortgages in question, which cover all the
tangible property then belonging to the firm, including the counters, shelving, and other
furnishings and fixtures necessary for, and used in carrying on, its business, and signed the
same in this form: "In witness whereof, the said Cowen & McGrath, a firm, and Owen
McGrath, surviving partner, of said firm, and Owen McCrath, individually, have hereunto set
their hands, this 20th day of May, A.D. 1893. Cowen & Mcgrath, by Owen McGrath. Owen
McGrath, Surviving partner of Cowen & McGrath. Owen McGrath." At the same time,
the plaintiff had prepared, ready for filing, the petition for the dissolution of the partnership
and appointment of a receiver which he subsequently filed, as hereinafter stated. On the day
the mortgages were signed, they were placed in the hands of the mortgagees, which was the
first intimation to them that there was any intention to make them. At the time none of the
claims secured by the mortgages were due, except, it may be, a small part of one of them,
and none of the creditors to whom the mortgages were made had requested security, or
were pressing for the payment of their debts. ... The mortgages appear to be without a
sufficient condition of defiance, and contain a stipulation authorizing the mortgagees to take
immediate possession of the property, which they did as soon as the mortgages were filed
through the attorney who then represented them, as well as the plaintiff; and the stores were
at once closed, and possession delivered by them to the receiverappointed upon the filing of
the petition. The avowed purposes of the plaintiff, in the course pursued by him, was to
terminate the partnership, place its properly beyond the control of the firm, and insure the
preference of the mortgagees, all of which was known to them at the time; .... (Cas cit., p.
343, Emphasis supplied).
It is natural that form these facts the Supreme Court of Ohio should draw the conclusion that the
conveyances were made with intent to terminate the partnership, and that they were not within the
powers of McGrath as a partner. But there is no similarity between those acts and the sale by the
widow of Tan Sin An. In the McGrath case, the sale included even the fixtures used in the business;
in our case, the lands sold were those acquired to be sold. In the McGrath case, none of the
creditors were pressing for payment; in our case, the creditors had been unpaid for more than seven
years, and their claims had been approved by the probate court for payment. In the McGrath case,
the partnership received nothing beyond the discharge of its debts; in the present case, not only

were its debts assumed by the buyers, but the latter paid, in addition, P37,000.00 in cash to the
widow, to the profit of the partnership. Clearly, the McGrath ruling is not applicable.
We will now turn to the question of fraud. No direct evidence of it exists; but appellant point out, as
indicia thereof, the allegedly low price paid for the property, and the relationship between the buyers,
the creditors of the partnership, and the widow of Tan Sin An.
First, as to the price: As already noted, this property was actually sold for a total of P153,726.04, of
which P37,000.00 was in cash, and the rest in partnership debts assumed by the purchaser. These
debts (62,415.91 to Yutivo, and P54,310.13 to Sing Ye Cuan & Co.) are not questioned; they were
approved by the court, and its approval is now final. The claims were, in fact, for the balance on the
original purchase price of the land sold (sue first to La Urbana, later to the Banco Hipotecario) plus
accrued interests and taxes, redeemed by the two creditors-claimants. To show that the price was
inadquate, appellant relies on the testimony of the realtor Mata, who is 1955, six years after the sale
in question, asserted that the land was worth P312,000.00. Taking into account the continued rise of
real estate values since liberation, and the fact that the sale in question was practically a forced sale
because the partnership had no other means to pay its legitimate debts, this evidence certainly does
not show such "gross inadequacy" as to justify recission of the sale. If at the time of the sale (1949)
the price of P153,726.04 was really low, how is it that appellant was not able to raise the amount,
even if the creditor's representative, Yu Khe Thai, had already warned him four years before (1945)
that the creditors wanted their money back, as they were justly entitled to?
It is argued that the land could have been mortgaged to raise the sum needed to discharge the
debts. But the lands were already mortgaged, and had been mortgaged since 1940, first to La
Urbana, and then to the Banco Hipotecario. Was it reasonable to expect that other persons would
loan money to the partnership when it was unable even to pay the taxes on the property, and the
interest on the principal since 1940? If it had been possible to find lenders willing to take a chance on
such a bad financial record, would not Goquiolay have taken advantage of it? But the fact is clear on
the record that since liberation until 1949 Goquiolay never lifted a finger to discharge the debts of the
partnership. Is he entitled now to cry fraud after the debts were discharged with no help from him.
With regard to the relationship between the parties, suffice it to say that the Supreme Court has ruled
that relationship alone is not a badge of fraud (Oria Hnos. vs. McMicking, 21 Phil. 243; also
Hermandad del Smo. Nombre de Jesus vs. Sanchez, 40 Off. Gaz., 1685). There is no evidence that
the original buyers, Washington Sycip and Betty Lee, were without independent means to purchase
the property. That the Yutivos should be willing to extend credit to them, and not to appellant, is
neither illegal nor immoral; at the very least, these buyers did not have a record of inveterate defaults
like the partnership "Tan Sin An & Goquiolay".
Appellant seeks to create the impression that he was the victim of a conspiracy between the Yutivo
firm and their component members. But no proof is adduced. If he was such a victim, he could have
easily defeated the conspirators by raising money and paying off the firm's debts between 1945 and
1949; but he did not; he did not even care to look for a purchaser of the partnership assets. Were it
true that the conspiracy to defraud him arose (as he claims) because of his refusal to sell the lands
when in 1945 Yu Khe Thai asked him to do so, it is certainly strange that the conspirators should
wait 4 years, until 1949, to have the sale effected by the widow of Tan Sin An, and that the sale
should have been routed through the probate court taking cognizance of Tan Sin An's estate, all of
which increased the risk that the supposed fraud should be detected.

Neither was there any anomaly in the filing of the claims of Yutivo and Sing Yee Cuan & Co., (as
subrogees of the Banco Hipotecario) in proceedings for the settlement of the estate of Tan Sin An.
This for two reasons: First, Tan Sin An and the partnership "Tan Sin An & Goquiolay"
were solidary (Joint and several)debtors (Exhibits "N", mortgage to the Banco Hipotecario), and Rule
87, section 6 is the effect that:
Where the obligation of the decedent is joint and several with another debtor, the claim shall
be filed against thedecedent as if he were the only debtor, without prejudice to the right of the
estate to recover contribution from the other debtor. (Emphasis supplied).
Secondly, the solidary obligation was guaranteed by a mortgage on the properties of the partnership
and those of Tan Sim An personally, and a mortgage is indivisible, in the sense that each and every
parcel under mortgage answers for the totality of the debt (Civ. Code of 1889, Article 1860; New Civil
Code, Art. 2089).
A final and conclusive consideration: The fraud charged not being one used to obtain a party's
consent to a contract (i.e., not being deceit or dolus in contrahendo), if there is fraud at al, it can only
be a fraud of creditors that gives rise to a rescission of the offending contract. But by express
provision of law (Article 1294, Civil Code of 1889; Article 1383, New Civil Code) "the action for
rescission is subsidiary; it can not be instituted except when the party suffering damage has no other
legal means to obtain reparation for the same". Since there is no allegation, or evidence, that
Goquiolay can not obtain reparation from the widow and heirs of Tan Sin An, the present suit to
rescind the sale in question is not maintainable, even if the fraud charged actually did exist.
PREMISES CONSIDERED, the motion for reconsideration is denied.
Bengzon, C.J., Padilla, Concepcion, Barrera and Dizon, JJ., concur.
Regala, J., took no part.

Separate Opinions
BAUTISTA ANGELO, J., dissenting:
This is an appeal from a decision of the Court of First Instance of Davao dismissing the complaint
filed by Antonio C. Goquiolay, et al., seeking to annul the sale made Z. Sycip and Betty Y. Lee on the
ground that it was executed without proper authority and under fraudulent circumstances. In a
decision rendered on July 26, 1960 we affirmed this decision although on grounds different from
those on which the latter is predicted. The case is once more before us on a motion for
reconsideration filed by appellants raising both questions of fact and of law.
On May 29, 1940, Tan Sin An and Antonio C. Goquiolay executed in Davao City a commercial
partnership for a period of ten years with a capital of P30,000.00 of which Goquiolay contributed
P18,000.00 representing 60% while Tan Sin An P12,000.00 representing 40%. The business of the
partnership was to engage in buying real estate properties for subdivision, resale and lease. The
partnership was duly registered, and among the conditions agreed upon in the partnership
agreement which are material to this case are: (1) that Tan Sin An would be the exclusive managing

partner, and (2) in the event of the death of any of the partners the partnership would continue, the
deceased to be represented by his heirs. On May 31, 1940, Goquiolay executed a general power of
attorney in favor of Tan Sin An appointing the latter manager of the partnership and conferring upon
him the usual powers of management.
On May 29, 1940, the partnership acquired three parcels of land known as Lots Nos. 526, 441 and
521 of the cadastral survey of Davao, the only assets of the partnership, with the capital orginally
invested, financing the balance of the purchase price with a mortgage in favor of "La Urbana
Sociedad Mutua de Construccion Prestamos" in the amount of P25,000.00, payable in ten years. On
the same date, Tan Sin An, in his individual capacity, acquired 46 parcels of land executing a
mortgage thereon in favor of the same company for the sum of P35,000.00. On September 25, 1940,
these two mortgage obligations were consolidated and transferred to the Banco Hipotecario de
Filipinas and as a result Tan Sin An, in his individual capacity, and the partnership bound themselves
to pay jointly and severally the total amount of P52,282.80, with 8% annual interest thereon within a
period of eight years mortgaging in favor of said entity the 3 parcels of land belonging to the
partnership and the 46 parcels of land belonging individually to Tan Sin An.
Tan Sin An died on June 26, 1942 and was survived by his widow, defendant Kong Chai Pin, and
four children, all of whom are minors of tender age. On March 18, 1944, Kong Chai Pin, was
appointed administratrix of the intestate estate of Tan Sin An. And on the same date, Sing, Yee and
Cuan Co., Inc. paid to the Banco Hipotecario the remaining unpaid balance of the mortgage
obligation of the partnership amounting to P46,116.75 in Japanese currency.
Sometimes in 1945, after the liberation of Manila, Yu Khe Thai, president and general manager of
Yutivo Sons Hardware Co. and Sing, Yee and Cuan Co., Inc., called for Goquiolay and the two had a
conference in the office of the former during which he offered to buy the interest of Goquiolay in the
partnership. In 1948, Kong Chai Pin, the widow, sent her counsel, Atty. Dominador Zuo, to ask
Goquiolay to execute in her favor a power of attorney. Goquiolay refused both to sell his interest in
the partnership as well as to execute the power of attorney.
Having failed to get Goquiolay to sell his share in the partnership, Yutivo Sons Hardware Co. and
Sing, Yee and Cuan Co., Inc. filed in November, 1946 a claim each in the intestate proceedings of
Tan Sin An for the sum of P84,705.48 and P66,529.91, respectively, alleging that they represent
obligations of both Tan Sin An and the partnership. After first denying any knowledge of the claims,
Kong Chai Pin, as administratrix, admitted later without qualification the two claims in an amended
answer she filed on February 28, 1947. The admission was predicted on the ground that she and the
creditors were closely related by blood, affinity and business ties. In due course, these two claims
were approved by the court.
On March 29, 1949, more than two years after the approval of the claims, Kong Chai Pin filed a
petition in the probate court to sell all the properties of the partnership as well as some of the
conjugal properties left by Tan Sin An for the purpose of paying the claims. Following approval by the
court of the petition for authority to sell, Kong Chai Pin, in her capacity as administratrix, and
presuming to act as managing partner of the partnership, executed on April 4, 1949 a deed of sale of
the properties owned by Tan Sin An and by the partnership in favor of Betty Y. Lee and Washington
Z. Sycip in consideration of the payment to Kong Chai Pin of the sum of P37,000.00, and the
assumption by the buyers of the claims filed by Yutivo & Sons Hardware Co. and Sing, Yee and
Cuan Co., Inc. in whose favor the buyers executed a mortgage on the properties purchased. Betty Y.

Lee and Washington Z. Zycip subsequently executed a deed of sale of the same properties in favor
of their co-defendant Insular Development Company, Inc. It should be noted that these transactions
took place without the knowledge of Goquiolay and it is admitted that Betty Lee and Washington Z.
Sycip bought the properties on behalf of the ultimate buyer, the Insular Development Company, Inc.,
with money given by the latter.
Upon learning of the sale of the partnership properties, Goquiolay filed on July 25, 1949 in the
intestate proceedings a petition to set aside the order of the court approving the sale. The court
granted the petition. While the order was pending appeal in the Supreme Court, Goquiolay filed the
present case on January 15, 1953 seeking to nullify the sale as stated in the early part of this
decision. In the meantime, the Supreme Court remanded the original case to the probate court for
rehearing due to lack of necessary parties.
The plaintiffs in their complaint challenged the authority of Kong Chai Pin to sell the partnership
properties on the ground that she had no authority to sell because even granting that she became a
partner upon the death of Tan Sin An the power of attorney granted in favor of the latter expired after
his death.
Defendants, on the other hand, defended the validity of the sale on the theory that she succeeded to
all the rights and prerogatives of Tan Sin an as managing partner.
The trial court sustained the validity of the sale on the ground that under the provisions of the articles
of partnership allowing the heirs of the deceased partner to represent him in the partnership after his
death Kong Chai Pin became a managing partner, this being the capacity held by Tan Sin an when
he died.
In the decision rendered by this Court on July 26, 1960, we affirmed this decision but on different
grounds, among which the salient points are: (1) the power of attorney given by Goquiloay to Tan Sin
An as manager of the partnership expired after his death; (2) his widow Kong Chai Pin did not inherit
the management of the partnership, it being a personal right; (3) as a general rule, the heirs of a
deceased general partner come into the partnership in the capacity only of limited partners; (4) Kong
Chai Pin, however, became a general partner because she exercised certain alleged acts of
management; and (5) the sale being necessary to pay the obligations of the partnership properties
without the consent of Goquiolay under the principle of estoppel the buyers having the right to rely on
her acts of management and to believe her to be in fact the managing partner.
Considering that some of the above findings of fact and conclusions of law are without legal or
factual basis, appellants have in due course filed a motion for reconsideration which because of the
importance of the issues therein raised has been the subject of mature deliberation.
In support of said motion, appellants advanced the following arguments:
1. If the conclusion of the Court is that heirs as a general rule enter the partnership as limited
partners only, therefore Kong Chai Pin, who must necessarily have entered the partnership
as a limited partner originally, could have not chosen to be a general partner by exercising
the alleged acts of management, because under Article 148 of the Code of Commerce a
limited partner cannot intervene in the management of the partnership, even if given a power
of attorney by the general partners. An Act prohibited by law cannot given rise to any right
and is void under the express provisions of the Civil Code.

2. The buyers were not strangers to Kong Chai Pin, all of them being members of the Yu
(Yutivo) family, the rest, members of the law firm which handles the Yutivo interests and
handled the papers of sale. They did not rely on the alleged acts of management they
believed (this was the opinion of their lawyers) that Kong Chai Pin succeeded her husband
as a managing partner and it was on this theory alone that they submitted the case in the
lower court.
3. The alleged acts of management were denied and repudiated by the very witnesses
presented by the defendants themselves.
The arguments advanced by appellants are in our opinion well-taken and furnish sufficient to
reconsider our decision if we want to do justice to Antonio C. Goquiolay. And to justify this
conclusion, it is enough that we lay stress on the following points: (1) there is no sufficient factual
basis to conclude that Kong Chai Pin executed acts of management to give her the character of
general manager of the partnership, or to serve as basis for estoppel that may benefit the
purchasers of the partnership properties; (92) the alleged acts of management, even if proven, could
not give Kong Chai Pin the character of general manager for the same contrary to law and wellknown authorities; (3) even if Kong Chai Pin acted as general manager she had no authority to sell
the partnership properties as to make it legal and valid; and (4) Kong Chai Pin had no necessity to
sell the properties to pay the obligation of the partnership and if she did so it was merely to favor the
purchasers who were close relatives to the prejudice of Goquiolay.
1. This point is pivotal for if Kong Chai Pin did not execute the acts of management imputed to her
our ruling cannot be sustained. In making our aforesaid ruling we apparently gave particular
importance to the fact that it was Goquiolay himself who tried to prove the acts of management.
Appellants, however, have emphasized the fact, and with reason, the appellees themselves are the
ones who denied and refuted the so-called acts of management imputed to Kong Chai Pin. To have
a clear view of this factual situation, it becomes necessary that we analyze the evidence of record.
Plaintiff Goquiolay, it is intimated, testified on cross-examination that he had a conversation with one
Hernando Young in Manila in the year 1945 who informed him that Kong Chai Pin "was attending to
the properties and deriving some income therefrom and she had no other means of livelihood except
those properties and some rentals derived from the properties." He went on to say by way of remark
that she could continue doing this because he wanted to help her. One point that he emphasized
was that he was "no interested in agricultural lands."
On the other hand, defendants presented Hernando Young, the same person referred to by
Goquiolay, who was a close friend of the family of Kong Chai Pin, for the purpose of denying the
testimony of Goquiolay. Young testified that in 1945 he was still in Davao, and insisted no less than
six times during his testimony that he was not in Manila in 1945, the year when he allegedly gave the
information to Goquiolay, stating that he arrived in Manila for the first time in 1947. He testified
further that he had visited the partnership properties during the period covered by the alleged
information given by him to Goquiolay and that he found them "abandoned and underdeveloped,"
and that Kong Chai Pin was not deriving any income from them.
The other witness for the defendants, Rufino Lim, also testified that he had seen the partnership
properties and corroborated the testimony of Hernando Young in all respects: "the properties in
Mamay were underdeveloped, the shacks were destroyed in Tigato, and the family of Kong Chai Pin

did not receive my income from the partnership properties." He specifically rebutted the testimony of
Goquiolay, in his deposition given on June 30, 1956 that Kong Chai Pin and her family were living in
the partnership properties, and stated that the "family never actually lived in the properties of the
partnership even before the war or after the war."
It is unquestionable that Goquiolay was merely repeating an information given to him by a third
person, Hernando Young he stressed this point twice. A careful analysis of the substance of
Goquiolay's testimony will show that he merely had no objection to allowing Kong Chai Pin to
continue attending to the properties in order to give her some means of livelihood, because,
according to the information given him by Hernando Young, which he assumed to be true, Kong Chai
Pin had no other means of livelihood. But certainly he made it very clear that he did not allow her
tomanage the partnership when he explained his reason for refusing to sign a general power of
attorney for Kong Chai Pin which her counsel, Atty. Zuo, brought with him to his house in 1948. He
said:
... Then Mr. Yu Eng Lai told me that he brought with him Atty. Zuo and he asked me if I
could execute a general power of attorney for Mrs. Kong Chai Pin. Then I told Atty. Zuo
what is the use of executing a general power of attorney for Mrs. Kong Chai Pin when Mrs.
Kong Chai Pin had already got that plantation for agricultural purposes, I said for agricultural
purposes she can use that plantation ... (T.S.N. p. 9, Hearing on May 5, 1955).
It must be noted that in his testimony Goquiolay was categorically stating his opposition to the
management of the partnership by Kong Chai Pin and carefully made the distinction that his
conformity was for her to attend to the partnership properties in order to give her merely a means of
livelihood. It should be stated that the period covered by the testimony refers to the period of
occupation when living condition was difficult and precarious. And Atty. Zuo, it should also be
stated, did not deny the statement of Goquiolay.
It can therefore be seen that the question as to whether Kong Chai Pin exercised certain acts of
management of the partnership properties is highly controverted. The most that we can say is that
the alleged acts are doubtful more so when they are disputed by the defendants themselves who
later became the purchasers of the properties, and yet these alleged acts, if at all, only refer
to management of the properties and not to management of the partnership, which are two different
things.
In resume, we may conclude that the sale of the partnership properties by Kong Chai Pin cannot be
upheld on the ground of estoppel, first, because the alleged acts of management have not been
clearly proven; second, because the record clearly shows that the defendants, or the buyers, were
not misled nor did they rely on the acts of management, but instead they acted solely on the opinion
of their counsel, Atty. Quisumbing, to the effect that she succeeded her husband in the partnership
as managing partner by operation of law; and third, because the defendants are themselves
estopped to invoke a defense which they tried to dispute and repudiate.
2. Assuming arguendo that the acts of management imputed to Kong Chai Pin are true, could such
acts give as we have concluded in our decision?
Our answer is in the negative because it is contrary to law and precedents. Garrigues, a well-known
commentator, is clearly of the opinion that mere acceptance of the inheritance does not maked the

heir of a general partner a general partner himself. He emphasized that heir must declare that he is
entering the partnership as a general partner unless the deceased partner has made it an express
condition in his will that the heir accepts the condition of entering the partnership as a prerequisite of
inheritance, in which case acceptance of the inheritance is enough. 1 But here Tan Sin An died
intestate.
Now, could Kong Chai Pin be deemed to have declared her intention to become a general partner by
exercising acts of management? We believe not, for, in consonance with our ruling that as a general
rule the heirs of a deceased partner succeed as limited partners only by operation of law, it is
obvious that the heirs, upon entering the partnership, must make a declaration of his characters,
otherwise he should be deemed as having succeeded as limited partner by the mere acceptance of
the inheritance. And here Kong Chai Pin did not make such declaration. Being then a limited partner
upon the death of Tan Sin An by operation of law, the peremptory prohibition contained in Article
1482 of the Code of Commerce became binding upon her and as a result she could not change her
status by violating its provisions not only under the general principle that prohibited acts cannot
produce any legal effect, but also because under the provisions of Article 147 3 of the same Code she
was precluded from acquiring more rights than those pertaining to her as a limited partner. The
alleged acts of management, therefore, did not give Kong Chai Pin the character of general manager
to authorized her to bind the partnership.
Assuming also arguendo that the alleged acts of management imputed to Kong Chai Pin gave her
the character of a general partner, could she sell the partnership properties without authority from
the other partners?
Our answer is also in the negative in the light of the provisions of the articles of partnership and the
pertinent provisions of the Code of Commerce and the Civil Code. Thus, Article 129 of the Code of
Commerce says:
If the management of the general partnership has not been limited by special agreement to
any of the members, all shall have the power to take part in the direction and management of
the common business, and the members present shall come to an agreement for all
contracts or obligations which may concern the association.
And the pertinent portions of the articles of partnership provides:
VII. The affairs of the co-partnership shall be managed exclusively by the managing partner
or by his authorized agent, and it is expressly stipulated that the managing partner may
delegate the entire management of the affairs of the co-partnership by irrevocable power of
attorney to any person, firm or corporation he may select, upon such terms as regards
compensation as he may deem proper, and vest in such person, firm or corporation full
power and authority, as the agent of the co-partnership and in his name, place and stead to
do anything for it or on his behalf which he as such managing partner might do or cause to
be done. (Page 23, Record on Appeal).
It would thus be seen that the powers of the managing partner are not defined either under the
provisions of the Code of Commerce or in the articles of partnership, a situation which, under Article
2 of the same Code, renders applicable herein the provisions of the Civil Code. And since, according
to well-known authorities, the relationship between a managing partner and the partnership is

substantially the same as that of the agent and his principal, 4 the extent of the power of Kong Chai
Pin must, therefore, be determined under the general principles governing agency. And, on this point,
the law says that an agency created in general terms includes only acts of administrations, but with
regard to the power to compromise, sell mortgage, and other acts of strict ownership, an express
power of attorney is required.5 Here Kong Chai Pin did not have such power when she sold the
properties of the partnership.
Of course, there is authority to the effect that a managing partner, even without express power of
attorney may perform acts affecting ownership if the same are necessary to promote or accomplish a
declared object of the partnership, but here the transaction is not for this purpose. It was effected not
to promote any avowed object of the partnership. 6 Rather, the sale was affected to pay an obligation
of the partnership by selling its real properties which Kong Chai Pin could not do without express
authority. The authorities supporting this view are overwhelming.
La enajenacion puede entrar en las facultades del gerente, cuando es conforme a los fines
sociales. Pero esta facultad de enajenar limitada a las ventas conforme a los fines sociales,
viene limitada a los objetos de comercio, o a los productos de la fabrica para explotacion de
los cauale se ha constituido la Sociedad. Ocurrira una cosa parecida cuando el objeto de la
Sociedad fuese la compra y venta de inmuebles, en cuyo caso el gerente estaria facultado
para otorgar las ventas que fuere necesario. Por el contrario el generente no tiene
attribuciones para vender las instalaciones del comercio, ni la fabrica, ni las maquinarias,
vehiculos de transporte, etc. que forman parte de la explotacion social. En todos estas
casos, equalmente que sisse tratase de la venta de una marca o procedimiento mecanico o
quimico, etc., siendo actos de disposicion, seria necesario contar con la conformidad
expresa de todos los socios. (R. Gay de Montella, id., pp. 223-224; Emphasis supplied).
Los poderes de los Administradores no tienen ante el silencio del contrato otros limites que
los sealados por el objeto de la Sociedad y, por consiguiente, pueden llevar a cabo todas
las operaciones que sirven para aquel ejercicio, incluso cambiando repetidas veces los
propios acuerdos segun el interest convenido de la Sociedad. Pueden contratar y despedir a
los empleados. tomar en arriendo almacenes y tiendas; expedir cambiales, girarlas,
avalarlas, dar en prenda o en hipoteca los bienes de la sociedad y adquirir inmuebles
destinados a su explotacion o al empleo, estable de sus capitales. Pero no podran ejecutar
los actos que esten en contradiccion con la explotacion que les fue confiada; no podran
cambiar el objeto, el domicilio, la razon social; fundir a la Sociedad en otro; ceder la accion, y
por tanto, el uso de la firma social a otro, renunciar definitivamente el ejercicio de uno de
otro ramo comercio que se les haya confiado y enajenar o pignorar el taller o el banco
social, excepto que la venta o pignoracion tengan por el objeto procurar los medios
necesarios para la continuacion de la empresa social. (Cesar Vivante, Tratado de Derecho
Mercantil, pp. 124-125, Vol. II, 1a. ed.; Emphasis supplied).
The act of one partner, to bind the firm, must be necessary for the carrying one of its
business. If all that can be said of it was that it was convenient, or that it facilitated the
transaction of the business of the firm, that is not sufficient, in the absence of evidence of
sanction by other partners. Nor, it, seems, will necessity itself be sufficient if it be an
extraordinary necessity. What is necessary for carrying on the business of the firm under
ordinary circumstances and in the usual way, is the test. Lindl. Partn. Sec. 126. While, within

this rule, one member of a partnership may, in the usual and ordinary course of its business,
make a valid sale or pledge, by way of mortgage or otherwise, of all or part of its effects
intended for sale, to a bona fide purchaser of mortgagee, without the consent of the other
members of the firm, it is not within the scope of his implied authority to make a final
disposition of al of its effects, including those employed as the means of carrying on its
business, the object and effect of which is to immediately terminate the partnership, and
place its property beyond its control. Such a disposition, instead of being within the scope of
the partnership business, or in the usual and ordinary way of carrying it on, is necessarily
subversive of the object of the partnership, and contrary to the presumed intention of the
partnership in its formation. (McGrath, et al. vs. Cowen, et al., 49 N.E., 338, 343; Emphasis
supplied).
Since Kong Chai Pin sold the partnership properties not in line with the business of the partnership
but to pay its obligation without first obtaining the consent of the other partners the sale is invalid in
excess of her authority.
4. Finally, the sale under consideration was effected in a suspicious manner as may be gleaned from
the following circumstances:
(a) The properties subject of the instant sale which consist of three parcels of land situated in the
City of Davao have an area of 200 hectares more or less, or 2,000,000 square meters. These
properties were purchased by the partnership for purposes of subdivision. According to realtor Mata,
who testified in court, these properties could command at the time he testified a value of not less
than P312,000.00, and according to Dalton Chen, manager of the firm which took over the
administration, since the date of sale no improvement was ever made thereon precisely because of
this litigation. And yet, for said properties, aside from the sum of P37,000.00 which was paid for the
properties of the deceased and the partnership, only the paltry sum of P66,529.91 was paid as a
consideration therefor, of which the sum of P46,116.75 was even paid in Japanese currency.
(b) Considering the area of the properties Kong Chai Pin had no valid reason to sell them if her
purpose was only to pay the partnership obligation. She could have negotiated a loan if she wanted
to pay it by placing the properties as security, but preferred to sell them even at such low price
because of her close relationship with the purchasers and creditors who conveniently organized a
partnership to exploit them, as may be seen from the following relationship of their pedigree:
KONG CHAI PIN, the administratrix, was a grandaughter of Jose P. Yutivo, founder of the
defendant Yutivo Sons Hardware Co. YUTIVO SONS HARDWARE CO. and SING, YEE &
CUAN CO., INC., alleged creditors, are owned by the heirs of Jose P. Yutivo (Sing, Yee &
Cuan are the three children of Jose). YU KHE THAI is a grandson of the same Jose P.
Yutivo, and president of the two alleged creditors. He is the acknowledged head of the Yu
families. WASHINGTON Z. SYCIP, one of the original buyers, is married to Ana Yu, a
daughter of Yu Khe Thai. BETTY Y. LEE, the other original buyer is also a daughter of Yu
Khe Thai. The INSULAR DEVELOPMENT CO., the ultimate buyer, was organized for the
specific purpose of buying the partnership properties. Its incorporators were: Ana Yu and
Betty Y. Lee, Attys. Quisumbing and Salazar, the lawyers who studied the papers of the sale
and have been counsel for the Yutivo interests; Dalton Chen, a brother-in-law of Yu Khe Thai
and an executive of Sing, Yee & Cuan Co; Lillian Yu, daughter of Yu Eng Poh, an executive
of Yutivo Sons Hardware, and Simeon Daguiwag, a trusted employee of the Yutivos.

(c) Lastly, even since Tan Sin An died in 1942 the creditors, who were close relatives of Kong Chai
Pin, have already conceived the idea of possessing the lands for purposes of subdivision, excluding
Goquilolay from their plan, and this is evident from the following sequence of events;lawphil.net
Tan Sin An died in 1942 and intestate proceedings were opened in 1944. In 1946, the
creditors of the partnership filed their claim against the partnership in the intestate
proceedings. The creditors studied ways and means of liquidating the obligation of the
partnership, leading to the formation of the defendant Insular Development Co., composed of
members of the Yutivo family and the counsel of record of the defendants, which
subsequently bought the properties of the partnership and assumed the obligation of the
latter in favor of the creditors of the partnership, Yutivo Sons Hardware and Sing, Yee &
Cuan, also of the Yutivo family. The buyers took time to study the commercial potentialities of
the partnership properties and their lawyers carefully studied the document and other papers
involved in the transaction. All these steps led finally to the sale of the three partnership
properties.
UPON THE STRENGTH OF THE FOREGOING CONSIDERATIONS, I vote to grant the motion for
reconsideration.
Labrador, Paredes, and Makalintal, JJ., concur.

Footnotes

ATTY. VICENTE E. SALUMBIDES, JR.,

G.R. No. 180917

April 23, 2010

ATTY. VICENTE E. SALUMBIDES, JR., and GLENDA ARAA, Petitioners,

vs.
OFFICE OF THE OMBUDSMAN, RICARDO AGON, RAMON VILLASANTA, ELMER DIZON,
SALVADOR ADUL, and AGNES FABIAN, Respondents,
DECISION
CARPIO MORALES, J.:
Petitioners Vicente Salumbides, Jr. (Salumbides) and Glenda Araa (Glenda) challenge the October
11, 2007 Decision and the December 13, 2007 Resolution of the Court of Appeals 1 in CA-G.R. SP
No. 96889 affirming the Office of the Ombudsman's decision finding them guilty of Simple Neglect of
Duty.
Salumbides and Glenda were appointed in July 2001 as Municipal Legal Officer/Administrator and
Municipal Budget Officer, respectively, of Tagkawayan, Quezon.
Towards the end of 2001, Mayor Vicente Salumbides III (the mayor) saw the urgent need to construct
a two-classroom building with fence (the projects) for the Tagkawayan Municipal High
School2 (TMHS) since the public school in the poblacion area would no longer admit high school
freshmen starting school year 2002-2003. On how to solve the classroom shortage, the mayor
consulted Salumbides who suggested that the construction of the two-classroom building be charged
to the account of the Maintenance and Other Operating Expenses/ Repair and Maintenance of

Facilities (MOOE/RMF) and implemented "by administration," as had been done in a previous
classroom building project of the former mayor.
Upon consultation, Glenda advised Salumbides in December 2001, that there were no more
available funds that could be taken from the MOOE/RMF, but the savings of the municipal
government were adequate to fund the projects. She added, however, that the approval by
the Sangguniang Bayan of a proposed supplemental budget must be secured.
The members of the Sangguniang Bayan having already gone on recess for the Christmas holidays,
Glenda and Salumbides advised the mayor to source the funds from the P1,000,000 MOOE/RMF
allocation in the approved Municipal Annual Budget for 2002. 3
The mayor thus ordered on January 8, 2002 Municipal Engineer Jose Aquino (Aquino) to proceed
with the construction of the projects based on the program of work and bill of materials he (Aquino)
prepared with a total cost estimate of P222,000.
Upon advice of Municipal Planning and Development Officer Hernan Jason (Jason), the mayor
included the projects in the list of local government projects scheduled for bidding on January 25,
2002 which, together with the January 31, 2002 public bidding, failed.
The mayor was to admit later his expectation or assumption of risk on reimbursement:
x x x It was my thinking that even if a bidder emerges and gets these 2 projects which were at the
time on-going (although it was also my thinking then that no bidder would possibly bid for these 2
projects as these were cost-estimated very low-P150,000 for the 2-room school building P72,000 for
the fencing) he (bidder) would be reasonable enough to reimburse what I had so far spen[t] for the
project. I said "I" because up to the time of the failed 2 biddings I have shouldered the "vale" of the
laborers and I requisitioned some materials on credit on my own personal account, and not a single
centavo was at the time disbursed by our municipal treasury until all requirements for negotiated
purchase of the materials for the project had been accomplished. As a matter of fact, payments for
the expenses on these 2 projects have been made only starting 19 March 2002. x x x4 (underscoring
supplied)
The construction of the projects commenced without any approved appropriation and ahead of the
public bidding. Salumbides was of the opinion that the projects were regular and legal, based on an
earlier project that was "implemented in the same manner, using the same source of fund and for the
same reason of urgency" which was allowed "because the building was considered merely
temporary as the TMHS is set to be transferred to an 8-hectare lot which the municipal government
is presently negotiating to buy."5
Meanwhile, Aquino suggested to the Sangguniang Bayan the adoption of "model guidelines" in the
implementation of infrastructure projects to be executed "by administration," while Councilor Coleta
Sandro (Coleta) sponsored a Resolution to ratify the projects and to authorize the mayor to enter into
a negotiated procurement. Both actions did not merit the approval of the Sangguniang Bayan.
On May 13, 2002, herein respondents Ricardo Agon, Ramon Villasanta, Elmer Dizon, Salvador Adul
and Agnes Fabian, all members of the Sangguniang Bayan of Tagkawayan, filed with the Office of
the Ombudsman a complaint6against Salumbides and Glenda (hereafter petitioners), the mayor,
Coleta, Jason and Aquino.

The administrative aspect of the case, docketed as Case No. OMB-L-A-02-0276-E, charged
petitioners et al. with Dishonesty, Grave Misconduct, Gross Neglect of Duty, Conduct Prejudicial to
the Best Interest of the Service, and violation of the Commission on Audit (COA) Rules and the Local
Government Code.
By Order of June 14, 2002, the Office of the Ombudsman, denied the prayer to place petitioners et
al. under preventive suspension pending investigation. By Order dated February 1, 2005, approved
on April 11, 2005, it denied the motion for reconsideration but dropped the mayor and Coleta, both
elective officials, as respondents in the administrative case, the 2004 elections having mooted the
case. The parties were thereupon directed to submit their respective verified position papers to which
petitioners, Jason and Aquino complied by submitting a consolidated position paper on May 19,
2005.
Meanwhile, in response to the subpoena duces tecum issued by the Office of the Ombudsman on
February 18, 2005 requiring the regional officer of the COA to submit the post-audit report on the
projects, Celerino Alviar, COA State Auditor II claimed by Affidavit of May 23, 2005 that the required
documents were among those razed by fire on April 14, 2004 that hit the Office of the Municipal
Accountant where they were temporarily stored due to lack of space at the Provincial Auditor's
Office.1avvphi1
On October 17, 2005, the Office of the Ombudsman approved the September 9, 2005
Memorandum absolving Jason and Aquino, and finding petitioners guilty of Simple Neglect of Duty,
for which they were meted the penalty of suspension from office for a maximum period of six months
with a stern warning against a similar repetition. It also approved on November 2, 2006 the March
27, 2006 Order7 denying the motion for reconsideration.
Their recourse to the appellate court having failed, petitioners come before this Court via Rule 45 of
the Rules of Court.
For non-compliance with the rule on certification against forum shopping, the petition merits outright
dismissal. The verification portion of the petition does not carry a certification against forum
shopping.8
The Court has distinguished the effects of non-compliance with the requirement of verification and
that of certification against forum shopping. A defective verification shall be treated as an unsigned
pleading and thus produces no legal effect, subject to the discretion of the court to allow the
deficiency to be remedied, while the failure to certify against forum shopping shall be cause for
dismissal without prejudice, unless otherwise provided, and is not curable by amendment of the
initiatory pleading.9
Petitioners' disregard of the rules was not the first. Their motion for extension of time to file petition
was previously denied by Resolution of January 15, 2008 10 for non-compliance with the required
showing of competent proof of identity in the Affidavit of Service. The Court, by Resolution of March
4, 2008,11 later granted their motion for reconsideration with motion to admit appeal (Motion with
Appeal) that was filed on February 18, 2008 or the last day of filing within the extended period.
Moreover, in their Manifestation/Motion12 filed a day later, petitioners prayed only for the admission of
nine additionalcopies of the Motion with Appeal "due to honest inadvertence" in earlier filing an
insufficient number of copies. Petitioners were less than candid when they surreptitiously submitted a

Motion with Appeal which is different from the first set they had submitted. The second set of Appeal
includes specific Assignment of Errors13 and already contains a certification against forum
shopping14 embedded in the Verification. The two different Verifications were notarized by the same
notary public and bear the same date and document number. 15 The rectified verification with
certification, however, was filed beyond the reglementary period.
Its lapses aside, the petition just the same merits denial.
Petitioners urge this Court to expand the settled doctrine of condonation 16 to cover coterminous
appointive officials who were administratively charged along with the reelected official/appointing
authority with infractions allegedly committed during their preceding term.
The Court rejects petitioners' thesis.
More than 60 years ago, the Court in Pascual v. Hon. Provincial Board of Nueva Ecija17 issued the
landmark ruling that prohibits the disciplining of an elective official for a wrongful act committed
during his immediately preceding term of office. The Court explained that "[t]he underlying theory is
that each term is separate from other terms, and that thereelection to office operates as a
condonation of the officer's previous misconduct to the extent of cutting off the right to remove him
therefor."18
The Court should never remove a public officer for acts done prior to his present term of office. To do
otherwise would be to deprive the people of their right to elect their officers. When the people
elect[e]d a man to office, it must be assumed that they did this with knowledge of his life and
character, and that they disregarded or forgave his faults or misconduct, if he had been guilty of any.
It is not for the court, by reason of such faults or misconduct[,] to practically overrule the will of the
people.19 (underscoring supplied)
Lizares v. Hechanova, et al.20 replicated the doctrine. The Court dismissed the petition in that case
for being moot, the therein petitioner "having been duly reelected, is no longer amenable to
administrative sanctions."21
Ingco v. Sanchez, et al.22 clarified that the condonation doctrine does not apply to a criminal
case.23 Luciano v. The Provincial Governor, et al.,24 Olivarez v. Judge Villaluz,25 and Aguinaldo v.
Santos26 echoed the qualified rule that reelection of a public official does not bar prosecution for
crimes committed by him prior thereto.
Consistently, the Court has reiterated the doctrine in a string of recent jurisprudence including two
cases involving a Senator and a Member of the House of Representatives. 27
Salalima v. Guingona, Jr.28 and Mayor Garcia v. Hon. Mojica29 reinforced the doctrine. The
condonation rule was applied even if the administrative complaint was not filed before the reelection
of the public official, and even if the alleged misconduct occurred four days before the elections,
respectively. Salalima did not distinguish as to the date of filing of the administrative complaint, as
long as the alleged misconduct was committed during the prior term, the precise timing or period of
which Garcia did not further distinguish, as long as the wrongdoing that gave rise to the public
official's culpability was committed prior to the date of reelection.
Petitioners' theory is not novel.

A parallel question was involved in Civil Service Commission v. Sojor30 where the Court found no
basis to broaden the scope of the doctrine of condonation:
Lastly, We do not agree with respondent's contention that his appointment to the position of
president of NORSU, despite the pending administrative cases against him, served as a condonation
by the BOR of the alleged acts imputed to him. The doctrine this Court laid down in Salalima v.
Guingona, Jr. and Aguinaldo v. Santos are inapplicable to the present circumstances. Respondents
in the mentioned cases are elective officials, unlike respondent here who is an appointed official.
Indeed, election expresses the sovereign will of the people. Under the principle of vox populi est
suprema lex, the re-election of a public official may, indeed, supersede a pending
administrative case. The same cannot be said of a re-appointment to a non-career
position. There is no sovereign will of the people to speak of when the BOR re-appointed
respondent Sojor to the post of university president. 31 (emphasis and underscoring supplied)lawph!l
Contrary to petitioners' asseveration, the non-application of the condonation doctrine to appointive
officials does not violate the right to equal protection of the law.
In the recent case of Quinto v. Commission on Elections,32 the Court applied the four-fold test in an
equal protection challenge33 against the resign-to-run provision, wherein it discussed the material
and substantive distinctions between elective and appointive officials that could well apply to the
doctrine of condonation:
The equal protection of the law clause is against undue favor and individual or class privilege, as well
as hostile discrimination or the oppression of inequality. It is not intended to prohibit legislation which
is limited either in the object to which it is directed or by territory within which it is to operate. It does
not demand absolute equality among residents; it merely requires that all persons shall be treated
alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced.
The equal protection clause is not infringed by legislation which applies only to those persons falling
within a specified class, if it applies alike to all persons within such class, and reasonable grounds
exist for making a distinction between those who fall within such class and those who do not.
Substantial distinctions clearly exist between elective officials and appointive officials. The
former occupy their office by virtue of the mandate of the electorate. They are elected to an office for
a definite term and may be removed therefrom only upon stringent conditions. On the other
hand, appointive officials hold their office by virtue of their designation thereto by an appointing
authority. Some appointive officials hold their office in a permanent capacity and are entitled to
security of tenure while others serve at the pleasure of the appointing authority.
xxxx
An election is the embodiment of the popular will, perhaps the purest expression of the sovereign
power of the people. It involves the choice or selection of candidates to public office by popular vote.
Considering that elected officials are put in office by their constituents for a definite term, x x x
complete deference is accorded to the will of the electorate that they be served by such officials until
the end of the term for which they were elected. In contrast, there is no such expectation insofar as
appointed officials are concerned. (emphasis and underscoring supplied)
The electorate's condonation of the previous administrative infractions of the reelected official cannot
be extended to that of the reappointed coterminous employees, the underlying basis of the rule being

to uphold the will of the people expressed through the ballot. In other words, there is neither
subversion of the sovereign will nor disenfranchisement of the electorate to speak of, in the case of
reappointed coterminous employees.
It is the will of the populace, not the whim of one person who happens to be the appointing authority,
that could extinguish an administrative liability. Since petitioners hold appointive positions, they
cannot claim the mandate of the electorate. The people cannot be charged with the presumption of
full knowledge of the life and character of each and every probable appointee of the elective official
ahead of the latter's actual reelection.
Moreover, the unwarranted expansion of the Pascual doctrine would set a dangerous precedent as it
would, as respondents posit, provide civil servants, particularly local government employees, with
blanket immunity from administrative liability that would spawn and breed abuse in the bureaucracy.
Asserting want of conspiracy, petitioners implore this Court to sift through the evidence and reassess the factual findings. This the Court cannot do, for being improper and immaterial.
Under Rule 45 of the Rules of Court, only questions of law may be raised, since the Court is not a
trier of facts.34 As a rule, the Court is not to review evidence on record and assess the probative
weight thereof. In the present case, the appellate court affirmed the factual findings of the Office of
the Ombudsman, which rendered the factual questions beyond the province of the Court.
Moreover, as correctly observed by respondents, the lack of conspiracy cannot be appreciated in
favor of petitioners who were found guilty of simple neglect of duty, for if they conspired to act
negligently, their infraction becomes intentional.35 There can hardly be conspiracy to commit
negligence.36
Simple neglect of duty is defined as the failure to give proper attention to a task expected from an
employee resulting from either carelessness or indifference. 37 In the present case, petitioners fell
short of the reasonable diligence required of them, for failing to exercise due care and prudence in
ascertaining the legal requirements and fiscal soundness of the projects before stamping their
imprimatur and giving their advice to their superior.
The appellate court correctly ruled that as municipal legal officer, petitioner Salumbides "failed to
uphold the law and provide a sound legal assistance and support to the mayor in carrying out the
delivery of basic services and provisions of adequate facilities when he advised [the mayor] to
proceed with the construction of the subject projects without prior competitive bidding." 38 As pointed
out by the Office of the Solicitor General, to absolve Salumbides is tantamount to allowing with
impunity the giving of erroneous or illegal advice, when by law he is precisely tasked to advise the
mayor on "matters related to upholding the rule of law." 39 Indeed, a legal officer who renders a legal
opinion on a course of action without any legal basis becomes no different from a lay person who
may approve the same because it appears justified.
As regards petitioner Glenda, the appellate court held that the improper use of government funds
upon the direction of the mayor and prior advice by the municipal legal officer did not relieve her of
liability for willingly cooperating rather than registering her written objection 40 as municipal budget
officer.

Aside from the lack of competitive bidding, the appellate court, pointing to the improper itemization of
the expense, held that the funding for the projects should have been taken from the "capital outlays"
that refer to the appropriations for the purchase of goods and services, the benefits of which extend
beyond the fiscal year and which add to the assets of the local government unit. It added that current
operating expenditures like MOOE/RMF refer to appropriations for the purchase of goods and
services for the conduct of normal local government operations within the fiscal year. 41
In Office of the Ombudsman v. Tongson,42 the Court reminded the therein respondents, who were
guilty of simple neglect of duty, that government funds must be disbursed only upon compliance with
the requirements provided by law and pertinent rules.
Simple neglect of duty is classified as a less grave offense punishable by suspension without pay for
one month and one day to six months. Finding no alleged or established circumstance to warrant the
imposition of the maximum penalty of six months, the Court finds the imposition of suspension
without pay for three months justified.
When a public officer takes an oath of office, he or she binds himself or herself to faithfully perform
the duties of the office and use reasonable skill and diligence, and to act primarily for the benefit of
the public. Thus, in the discharge of duties, a public officer is to use that prudence, caution, and
attention which careful persons use in the management of their affairs. 43
Public service requires integrity and discipline. For this reason, public servants must exhibit at all
times the highest sense of honesty and dedication to duty. By the very nature of their duties and
responsibilities, public officers and employees must faithfully adhere to hold sacred and render
inviolate the constitutional principle that a public office is a public trust; and must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty and efficiency. 44
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals in CA-G.R. SP No.
96889 are AFFIRMEDwith MODIFICATION, in that petitioners, Vicente Salumbides, Jr. and Glenda
Araa, are suspended from office for three (3) months without pay.
SO ORDERED.

THE ILOCOS NORTE ELECTRIC COMPANY, petitioner, vs.

HONORABLE COURT OF APPEALS, (First Division) LILIAN
JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA
JUAN CARAG, and PURISIMA JUAN, respondents.
G.R. No. L-53401 November 6, 1989
THE ILOCOS NORTE ELECTRIC COMPANY, petitioner,
vs.
HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS, JANE JUAN YABES,
VIRGINIA JUAN CID, GLORIA JUAN CARAG, and PURISIMA JUAN, respondents.
Herman D. Coloma for petitioner.
Glicerio S. Ferrer for private respondents.
PARAS, J.:
Sought to be reversed in this petition is the Decision * of the respondent Court of Appeals' First Division,
setting aside the judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the following
dispositive portion:

WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby defendant is
hereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages of P50,000.00; exemplary
damages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p. 27 Rollo)

Basically, this case involves a clash of evidence whereby both patties strive for the recognition of their
respective versions of the scenario from which the disputed claims originate. The respondent Court of
Appeals (CA) summarized the evidence of the parties as follows:
From the evidence of plaintiffs it appears that in the evening of June 28 until the early morning of June 29, 1967 a
strong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy rains and consequent
flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the typhoon had abated and when the
floodwaters were beginning to recede the deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of the
house of her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and proceeded northward towards the
direction of the Five Sisters Emporium, of which she was the owner and proprietress, to look after the merchandise
therein that might have been damaged. Wading in waist-deep flood on Guerrero, the deceased was followed by Aida
Bulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo Estavillo, a ticket
seller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda walked side by side at a distance of
between 5 and 6 meters behind the deceased, Suddenly, the deceased screamed "Ay" and quickly sank into the water.
The two girls attempted to help, but fear dissuaded them from doing so because on the spot where the deceased sank
they saw an electric wire dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help,
Ernesto dela Cruz came out of the house of Antonio Yabes. Ernesto tried to go to the deceased, but at four meters
away from her he turned back shouting that the water was grounded. Aida and Linda prodded Ernesto to seek help
from Antonio Yabes at the YJ Cinema building which was four or five blocks away.
When Antonio Yabes was informed by Ernesto that his mother-in law had been electrocuted, he acted immediately.
With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the City Hall of Laoag to request the
police to ask the people of defendant Ilocos Norte Electric Company or INELCO to cut off the electric current. Then the
party waded to the house on Guerrero Street. The floodwater was receding and the lights inside the house were out
indicating that the electric current had been cut off in Guerrero. Yabes instructed his boys to fish for the body of the
deceased. The body was recovered about two meters from an electric post.
In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power Plant Engineer
of the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meter
which indicated such abnormalities as grounded or short-circuited lines. Between 6:00 and 6:30 A.M., he set out of the
Laoag NPC Compound on an inspection. On the way, he saw grounded and disconnected lines. Electric lines were
hanging from the posts to the ground. Since he could not see any INELCO lineman, he decided to go to the INELCO
Office at the Life Theatre on Rizal Street by way of Guerrero. As he turned right at the intersection of Guerrero and
Rizal, he saw an electric wire about 30 meters long strung across the street "and the other end was seeming to play
with the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing no
lineman therein, he returned to the NPC Compound.
At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having learned of the death
of Isabel Lao Juan, he passed by the house of the deceased at the corner of Guerrero and M.H. del Pilar streets to
which the body had been taken. Using the resuscitator which was a standard equipment in his jeep and employing the
skill he acquired from an in service training on resuscitation, he tried to revive the deceased. His efforts proved
futile.Rigor mortis was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to
the INELCO Office, he met two linemen on the way. He told them about the grounded lines of the INELCO In the
afternoon of the same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire
he saw on Guerrero early in the morning of June 29, 1967 was no longer there.
Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the deceased had been
electrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Upon
the request of the relatives of the deceased, Dr. Castro examined the body at about 8:00 A.M. on June 29, 1967. The
skin was grayish or, in medical parlance, cyanotic, which indicated death by electrocution. On the left palm, the doctor
found an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base of
the thumb on the left hand was a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr.
Castro stated the cause of' death as ,'circulatory shock electrocution" (Exh. I; p. 103, Ibid.).
In defense and exculpation, defendant presented the testimonies of its officers and employees, namely, Conrado Asis,
electric engineer; Loreto Abijero, collector-inspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager of
INELCO Through the testimonies of these witnesses, defendant sought to prove that on and even before June 29,
1967 the electric service system of the INELCO in the whole franchise area, including Area No. 9 which covered the
residence of Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might constitute a hazard to
life and property. The service lines, devices and other INELCO equipment in Area No. 9 had been newly-installed prior
to the date in question. As a public service operator and in line with its business of supplying electric current to the
public, defendant had installed safety devices to prevent and avoid injuries to persons and damage to property in case
of natural calamities such as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the duty of
making a round-the-clock check-up of the areas respectively assigned to them.
Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967, putting to
streets of Laoag City under water, only a few known places in Laoag were reported to have suffered damaged electric
lines, namely, at the southern approach of the Marcos Bridge which was washed away and where the INELCO lines
and posts collapsed; in the eastern part near the residence of the late Governor Simeon Mandac; in the far north near
the defendant's power plant at the corner of Segundo and Castro Streets, Laoag City and at the far northwest side,
near the premises of the Ilocos Norte National High School. Fabico Abijero, testified that in the early morning before 6
o'clock on June 29, 1967 he passed by the intersection of Rizal and Guerrero Streets to switch off the street lights in

Area No. 9. He did not see any cut or broken wires in or near the vicinity. What he saw were many people fishing out
the body of Isabel Lao Juan.
A witness in the person of Dr. Antonio Briones was presented by the defense to show that the deceased could not have
died of electrocution Substantially, the testimony of the doctor is as follows: Without an autopsy on the cadaver of the
victim, no doctor, not even a medicolegal expert, can speculate as to the real cause of death. Cyanosis could not have
been found in the body of the deceased three hours after her death, because cyanosis which means lack of oxygen
circulating in the blood and rendering the color of the skin purplish, appears only in a live person. The presence of the
elongated burn in the left palm of the deceased (Exhibits C-1 and C-2) is not sufficient to establish her death by
electrocution; since burns caused by electricity are more or less round in shape and with points of entry and exit. Had
the deceased held the lethal wire for a long time, the laceration in her palm would have been bigger and the injury more
massive. (CA Decision, pp. 18-21, Rollo)

An action for damages in the aggregate amount of P250,000 was instituted by the heirs of the deceased
with the aforesaid CFI on June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo), petitioner
advanced the theory, as a special defense, that the deceased could have died simply either by drowning
or by electrocution due to negligence attributable only to herself and not to petitioner. In this regard, it was
pointed out that the deceased, without petitioner's knowledge, caused the installation of a burglar
deterrent by connecting a wire from the main house to the iron gate and fence of steel matting, thus,
charging the latter with electric current whenever the switch is on. Petitioner then conjectures that the
switch to said burglar deterrent must have been left on, hence, causing the deceased's electrocution
when she tried to open her gate that early morning of June 29, 1967. After due trial, the CFI found the
facts in favor of petitioner and dismissed the complaint but awarded to the latter P25,000 in moral
damages and attorney's fees of P45,000. An appeal was filed with the CA which issued the controverted
decision.
In this petition for review the petitioner assigns the following errors committed by the respondent CA:
1. The respondent Court of Appeals committed grave abuse of discretion and error in considering
the purely hearsay alleged declarations of Ernesto de la Cruz as part of the res gestae.
2. The respondent Court of Appeals committed grave abuse of discretion and error in holding that
the strong typhoon "Gening" which struck Laoag City and Ilocos Norte on June 29, 1967 and the
flood and deluge it brought in its wake were not fortuitous events and did not exonerate
petitioner-company from liability for the death of Isabel Lao Juan.
3. The respondent Court of Appeals gravely abused its discretion and erred in not applying the
legal principle of "assumption of risk" in the present case to bar private respondents from
collecting damages from petitioner company.
4. That the respondent Court of Appeals gravely erred and abused its discretion in completely
reversing the findings of fact of the trial court.
5. The findings of fact of the respondent Court of Appeals are reversible under the recognized
exceptions.
6. The trial court did not err in awarding moral damages and attorney's fees to defendant
corporation, now petitioner company.
7. Assuming arguendo that petitioner company may be held liable from the death of the late
Isabel Lao Juan, the damages granted by respondent Court of Appeals are improper and
exhorbitant. (Petitioners Memorandum, p. 133, Rollo)

Basically, three main issues are apparent: (1) whether or not the deceased died of electrocution; (2)
whether or not petitioner may be held liable for the deceased's death; and (3) whether or not the
respondent CA's substitution of the trial court's factual findings for its own was proper.
In considering the first issue, it is Our view that the same be resolved in the affirmative. By a
preponderance of evidence, private respondents were able to show that the deceased died of
electrocution, a conclusion which can be primarily derived from the photographed burnt wounds (Exhibits
"C", "C-1", "C-2") on the left palm of the former. Such wounds undoubtedly point to the fact that the
deceased had clutched a live wire of the petitioner. This was corroborated by the testimony of Dr.
Jovencio Castro who actually examined the body of the deceased a few hours after the death and
described the said burnt wounds as a "first degree burn" (p. 144, TSN, December 11, 1972) and that they
were "electrically charged" (p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo
Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank into the water, they
tried to render some help but were overcome with fear by the sight of an electric wire dangling from an
electric post, moving in the water in a snake-like fashion (supra). The foregoing therefore justifies the
respondent CA in concluding that "(t)he nature of the wounds as described by the witnesses who saw
them can lead to no other conclusion than that they were "burns," and there was nothing else in the street

where the victim was wading thru which could cause a burn except the dangling live wire of defendant
company" (CA Decision, p. 22, Rollo).
But in order to escape liability, petitioner ventures into the theory that the deceased was electrocuted, if
such was really the case when she tried to open her steel gate, which was electrically charged by an
electric wire she herself caused to install to serve as a burglar deterrent. Petitioner suggests that the
switch to said burglar alarm was left on. But this is mere speculation, not backed up with evidence. As
required by the Rules, "each party must prove his own affirmative allegations." (Rule 131, Sec. 1).
Nevertheless, the CA significantly noted that "during the trial, this theory was abandoned" by the petitioner
(CA Decision, p. 23, Rollo).
Furthermore the CA properly applied the principle of res gestae. The CA said:
Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the deceased during that fateful morning
of June 29, 1967. This Court has not been offered any sufficient reason to discredit the testimonies of these two young
ladies. They were one in the affirmation that the deceased, while wading in the waist-deep flood on Guerrero Street five
or six meters ahead of them, suddenly screamed "Ay" and quickly sank into the water. When they approached the
deceased to help, they were stopped by the sight of an electric wire dangling from a post and moving in snake-like
fashion in the water. Ernesto dela Cruz also tried to approach the deceased, but he turned back shouting that the water
was grounded. These bits of evidence carry much weight. For the subject of the testimonies was a startling occurrence,
and the declarations may be considered part of the res gestae. (CA Decision, p. 21, Rollo)

For the admission of the res gestae in evidence, the following requisites must be present: (1) that the
principal act, the res gestae, be a startling occurrence; (2) that the statements were made before the
declarant had time to contrive or devise; (3) that the statements made must concern the occurrence in
question and its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs. Balbas,
122 SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction of said
requisites in the case at bar.
The statements made relative to the startling occurrence are admitted in evidence precisely as an
exception to the hearsay rule on the grounds of trustworthiness and necessity. "Trustworthiness" because
the statements are made instinctively (Wesley vs. State, 53 Ala. 182), and "necessity" because such
natural and spontaneous utterances are more convincing than the testimony of the same person on the
stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the fact that the declarant, Ernesto de la Cruz, was not
presented to testify does not make the testimony of Linda Alonzo Estavillo and Aida Bulong hearsay since
the said declaration is part of the res gestae. Similarly, We considered part of the res gestae a
conversation between two accused immediately after commission of the crime as overheard by a
prosecution witness (People vs. Reyes, 82 Phil. 563).
While it may be true that, as petitioner argues (vide petitioner's Memorandum, p. 135, Rollo), Ernesto de
la Cruz was not an actual witness to the instant when the deceased sank into the waist-deep water, he
acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with the knowledge of, and
immediately after, the sinking of the deceased. In fact the startling event had not yet ceased when
Ernesto de la Cruz entered the scene considering that the victim remained submerged. Under such a
circumstance, it is undeniable that a state of mind characterized by nervous excitement had been
triggered in Ernesto de la Cruz's being as anybody under the same contingency could have experienced.
As such, We cannot honestly exclude his shouts that the water was grounded from theres gestae just
because he did not actually see the sinking of the deceased nor hear her scream "Ay."
Neither can We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We concede
to the submission that the statement must be one of facts rather than opinion, We cannot agree to the
proposition that the one made by him was a mere opinion. On the contrary, his shout was a translation of
an actuality as perceived by him through his sense of touch.
Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was suppressed by the private
respondents, thus, is presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the
application of said Rule as against a party to a case, it is necessary that the evidence alleged to be
suppressed is available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The
presumption does not operate if the evidence in question is equally available to both parties
(StaplesHowe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that
petitioner could have called Ernesto de la Cruz to the witness stand. This, precisely, was Linda Alonzo
Estavillo's suggestion to petitioner's counsel when she testified on cross examination:
Q. And that Erning de la Cruz, how far did he reach from the gate of the house?

A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30, 26 Sept. 1972)

The foregoing shows that petitioner had the opportunity to verify the declarations of Ernesto de la Cruz
which, if truly adverse to private respondent, would have helped its case. However, due to reasons known
only to petitioner, the opportunity was not taken.
Coming now to the second issue, We tip the scales in the private respondents' favor. The respondent CA
acted correctly in disposing the argument that petitioner be exonerated from liability since typhoons and
floods are fortuitous events. While it is true that typhoons and floods are considered Acts of God for which
no person may be held responsible, it was not said eventuality which directly caused the victim's death. It
was through the intervention of petitioner's negligence that death took place. We subscribe to the
conclusions of the respondent CA when it found:
On the issue whether or not the defendant incurred liability for the electrocution and consequent death of the late Isabel
Lao Juan, defendant called to the witness-stand its electrical engineer, chief lineman, and lineman to show exercise of
extraordinary diligence and to negate the charge of negligence. The witnesses testified in a general way about their
duties and the measures which defendant usually adopts to prevent hazards to life and limb. From these testimonies,
the lower court found "that the electric lines and other equipment of defendant corporation were properly maintained by
a well-trained team of lineman, technicians and engineers working around the clock to insure that these equipments
were in excellent condition at all times." (P. 40, Record on Appeal) The finding of the lower court, however, was based
on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the datein
question, and not on the occasion of the emergency situation brought about by the typhoon.
The lower court made a mistake in assuming that defendant's employees worked around the clock during the
occurrence of the typhoon on the night of June 28 and until the early morning of June 29, 1967, Engr. Antonio Juan of
the National Power Corporation affirmed that when he first set out on an inspection trip between 6:00 and 6:30 A.M. on
June 29, 1967, he saw grounded and disconnected electric lines of the defendant but he saw no INELCO lineman. The
INELCO Office at the Life theatre on Rizal Street was still closed. (pp. 63-64, TSN, Oct. 24, 1972) Even the witnesses
of defendant contradict the finding of the lower court. Conrado Asis, defendant's electrical engineer, testified that he
conducted a general inspection of the franchise area of the INELCO only on June 30, 1967, the day following the
typhoon. The reason he gave for the delay was that all their vehicles were submerged. (p. 337, TSN, July 20, 1973)
According to Asis, he arrived at his office at 8:00 A.M. on June 30 and after briefing his men on what to do they started
out. (p. 338, lbid) One or two days after the typhoon, the INELCO people heard "rumors that someone was
electrocuted" so he sent one of his men to the place but his man reported back that there was no damaged wire. (p.
385, Id.) Loreto Abijero, chief lineman of defendant, corroborated Engr. Juan. He testified that at about 8:00 A.M. on
June 29, 1967 Engr. Juan came to the INELCO plant and asked the INELCO people to inspect their lines. He went with
Engr. Juan and their inspection lasted from 8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28, 1975) Fabico Abijero
lineman of defendant, testified that at about 6:00 on June 29, 1967 the typhoon ceased. At that time, he was at the
main building of the Divine Word College of Laoag where he had taken his family for refuge. (pp. 510-511, Ibid.)
In times of calamities such as the one which occurred in Laoag City on the night of June 28 until the early hours of
June 29, 1967, extraordinary diligence requires a supplier of electricity to be in constant vigil to prevent or avoid any
probable incident that might imperil life or limb. The evidence does not show that defendant did that. On the contrary,
evidence discloses that there were no men (linemen or otherwise) policing the area, nor even manning its office. (CA
Decision, pp. 24-25, Rollo)

Indeed, under the circumstances of the case, petitioner was negligent in seeing to it that no harm is done
to the general public"... considering that electricity is an agency, subtle and deadly, the measure of care
required of electric companies must be commensurate with or proportionate to the danger. The duty of
exercising this high degree of diligence and care extends to every place where persons have a right to
be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may
not now absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event.
"When an act of God combines or concurs with the negligence of the defendant to produce an injury, the
defendant is liable if the injury would not have resulted but for his own negligent conduct or omission" (38
Am. Jur., p. 649).

Likewise, the maxim

"volenti non fit injuria" relied upon by petitioner finds

no application in the case at bar. It is imperative to note the surrounding circumstances which impelled the
deceased to leave the comforts of a roof and brave the subsiding typhoon. As testified by Linda Alonzo
Estavillo (see TSN, p. 5, 26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased,
accompanied by the former two, were on their way to the latter's grocery store "to see to it that the goods
were not flooded." As such, shall We punish her for exercising her right to protect her property from the
floods by imputing upon her the unfavorable presumption that she assumed the risk of personal injury?
Definitely not. For it has been held that a person is excused from the force of the rule, that when he
voluntarily assents to a known danger he must abide by the consequences, if an emergency is found to
exist or if the life or property of another is in peril (65A C.S.C. Negligence(174(5), p. 301), or when he
seeks to rescue his endangered property (Harper and James, "The Law of Torts." Little, Brown and Co.,
1956, v. 2, p. 1167). Clearly, an emergency was at hand as the deceased's property, a source of her

livelihood, was faced with an impending loss. Furthermore, the deceased, at the time the fatal incident
occurred, was at a place where she had a right to be without regard to petitioner's consent as she was on
her way to protect her merchandise. Hence, private respondents, as heirs, may not be barred from
recovering damages as a result of the death caused by petitioner's negligence (ibid., p. 1165, 1166).
But petitioner assails the CA for having abused its discretion in completely reversing the trial court's
findings of fact, pointing to the testimonies of three of its employees its electrical engineer, collectorinspector, lineman, and president-manager to the effect that it had exercised the degree of diligence
required of it in keeping its electric lines free from defects that may imperil life and limb. Likewise, the said
employees of petitioner categorically disowned the fatal wires as they appear in two photographs taken
on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting that said wires were just hooked to the
electric post (petitioner's Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of
the lower court ... was based on what the defendant's employees were supposed to do, not on what they
actually did or failed to do on the date in question, and not on the occasion of the emergency
situation brought about by the typhoon" (CA Decision, p. 25, Rollo). And as found by the CA, which We
have already reiterated above, petitioner was in fact negligent. In a like manner, petitioner's denial of
ownership of the several wires cannot stand the logical conclusion reached by the CA when it held that
"(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion
than that they were 'burns', and there was nothing else in the street where the victim was wading thru
which could cause a burn except the dangling live wire of defendant company" (supra).
"When a storm occurs that is liable to prostrate the wires, due care requires prompt efforts to discover and
repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer Antonio Juan of
the National Power Corporation set out in the early morning of June 29, 1967 on an inspection tour, he
saw grounded and disconnected lines hanging from posts to the ground but did not see any INELCO
lineman either in the streets or at the INELCO office (vide, CA Decision, supra). The foregoing shows that
petitioner's duty to exercise extraordinary diligence under the circumstance was not observed, confirming
the negligence of petitioner. To aggravate matters, the CA found:
. . .even before June 28 the people in Laoag were already alerted about the impending typhoon, through radio
announcements. Even the fire department of the city announced the coming of the big flood. (pp. 532-534, TSN, March
13, 1975) At the INELCO irregularities in the flow of electric current were noted because "amperes of the switch volts
were moving". And yet, despite these danger signals, INELCO had to wait for Engr. Juan to request that defendant's
switch be cut off but the harm was done. Asked why the delay, Loreto Abijero answered that he "was not the machine
tender of the electric plant to switch off the current." (pp. 467-468, Ibid.) How very characteristic of gross inefficiency!
(CA Decision, p. 26, Rollo)

From the preceding, We find that the CA did not abuse its discretion in reversing the trial court's findings
but tediously considered the factual circumstances at hand pursuant to its power to review questions of
fact raised from the decision of the Regional Trial Court, formerly the Court of First Instance (see sec. 9,
BP 129).
In considering the liability of petitioner, the respondent CA awarded the following in private respondent's
favor: P30,229.45 in actual damages (i.e., P12,000 for the victim's death and P18,229.45 for funeral
expenses); P50,000 in compensatory damages, computed in accordance with the formula set in the VillaRey Transit case (31 SCRA 511) with the base of P15,000 as average annual income of the deceased;
P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the award of
P12,000 as compensation for the victim's death, We affirm the respondent CA's award for damages and
attorney's fees. Pusuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196; People vs. Traya,
147 SCRA 381), We increase the said award of P12,000 to P30,000, thus, increasing the total actual
damages to P48,229.45.
The exclusion of moral damages and attorney's fees awarded by the lower court was properly made by
the respondent CA, the charge of malice and bad faith on the part of respondents in instituting his case
being a mere product of wishful thinking and speculation. Award of damages and attorney's fees is
unwarranted where the action was filed in good faith; there should be no penalty on the right to litigate
(Espiritu vs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it
is

damnum absque injuria (Auyong Hian vs. CTA, 59 SCRA 110).

WHEREFORE, the questioned decision of the respondent, except for the slight modification that actual
damages be increased to P48,229.45 is hereby AFFIRMED.

SO ORDERED.

What is the "assumption of the risk" doctrine?

By: LawInfo
If you have knowingly and voluntarily assumed the risk inherent in a particular action that caused an
accident, you cannot sue the other person for negligence if you get hurt. For example, if you see a
sign that says do not touch hot but you touch the object anyway and burn your hand, you may be
found to have assumed the risk. This would prevent you from recovering any money. Another
common example of assumption of risk is participation in a sport in which certain risks are inherent
to the game. For instance, if you are playing football and you get tackled and break an arm, you may
not sue the person who tackled you. On the other hand, if you are playing tennis and a fight breaks
out and you are hit in the head with a racket, you may be able to sue the person who hit you, since
the assumption of risk does not cover any injury that was intentionally inflicted and not an inherent
part of the game.

Assumption of risk
Assumption of risk is a defense in the law of torts, which bars a plaintiff from recovery against a
negligent tortfeasorif the defendant can demonstrate that the plaintiff voluntarily and knowingly
assumed the risks at issue inherent to the dangerous activity in which he was participating at the
time of his injury.
What is usually meant by assumption of risk is more precisely termed primary assumption of risk. It
occurs when the plaintiff has either expressly or implicitly relieved the defendant of the duty to
mitigate or relieve the risk causing the injury from which the cause of action arises. It operates as a
complete bar to liability on the theory that upon assumption of the risk, there is no longer a duty of
care running from the defendant to the plaintiff; without a duty owed by the defendant, there can be
no negligence on his part. [1] However, primary assumption of risk is not a blanket exemption from
liability for the operators of a dangerous activity. The specific risk causing the injury must have been
known to, and appreciated by, the plaintiff in order for primary assumption of risk to apply. Also,
assumption of risk does not absolve a defendant of liability for reckless conduct. [2]
This defense is commonly used in cases of injuries occurring during risky recreational activities, such
as skiing, paragliding, and scuba diving.
Secondary assumption of risk is a rather different doctrine akin in some respects to comparative
negligence. The difference was explained by the Supreme Court of California as follows:

In cases involving primary assumption of riskwhere, by virtue of the nature

of the activity and the parties' relationship to the activity, the defendant owes
no legal duty to protect the plaintiff from the particular risk of harm that
caused the injurythe doctrine continues to operate as a complete bar to the
plaintiff's recovery. In cases involving secondary assumption of riskwhere
the defendant does owe a duty of care to the plaintiff, but the plaintiff proceeds
to encounter a known risk imposed by the defendant's breach of dutythe

doctrine is merged into the comparative fault scheme, and the trier of fact, in
apportioning the loss resulting from the injury, may consider the relative
responsibility of the parties.[3]

COMPUTATION OF LOSS OF EARNING CAPACITY

On the contrary, we find said certification sufficient basis for the court to make a fair
and reasonable estimate of Jose Marcial's loss of earning capacity just like
in Tamayo v. Seora[52] where we based the victim's gross annual income on his pay
slip from the Philippine National Police. Hence, we uphold the trial court's award for
Jose Marcial's loss of earning capacity.
While the trial court applied the formula generally used by the courts to determine
net earning capacity which is, to wit:
Net Earning Capacity = life expectancy* x (gross annual income - reasonable
living expenses),[53]
*

Life expectancy = 2/3 (80 - age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at. The award
should be P6,611,634.59 as borne out by the following computation:
Net earning capacity

= 2 (80-36[54]) x 450, 844.49[55]-50%[56]

3
= 88 x 225,422.25
3
= 29.33 x 225,422.25
= P6, 611,634.59

[ G.R. No. 170071, March 09, 2011 ]

HEIRS OF JOSE MARCIAL K. OCHOA NAMELY: RUBY B. OCHOA, MICAELA B.
OCHOA AND JOMAR B. OCHOA, PETITIONERS, VS.G & S TRANSPORT
CORPORATION, RESPONDENT.

the final exam

Final examination in civil law, October 17, 2012 ;5:30pm

INSTRUCTION: The test consists of 50 questions. Choose what you think is the best answer among
the five choices. Write the letter of your choice in the given answer sheet. Do not make marks or
write anything on the questionnaire.

1.

Where the reservatario was survived by eleven nephews and nieces of the praepositus in the line
of origin, four of whole blood and seven of half blood(A) all eleven were not entitled to the reversionary property
(b) they are entitled in equal shares
(c) the principles of intestacy are controlling
(d) the nephews and nieces of whole blood were each entitled to a share double that of each of the
nephews and nieces of half
(e) reserve troncal is not applicable.

2.

The reserva troncal is a special rule designed primarily to assure the return of the reservable
property to the
(a) third degree from the reservor
(b) third degree from the reservatarios
( c) third degree relatives
(d) third degree from reservista
(e) third degree from descendant
belonging to the line from which the property originally came, and avoid its being dissipated into and
by the relatives of the inheriting ascendant.

3.

The reservable property should pass, not to all the reservatarios as a class but only to those
nearest in degree to the
(A)descendant (prepositus) excluding those reservatarios of more remote degree (B) reservista (c)
reservor (d) ascendant (prepositus) (e) descendant of the direct line

4.

Should brothers and sisters or their children survive with the widow or widower, the latter shall be
entitled to (a) one-half (b) 1/8 (c) 1/3 (d) (e) all of the inheritance .

5.

Should the only survivors be brothers and sisters of the full blood, they shall inherit in (a) equal
shares (b)nothing (c) per stirpes (d) per capita (e) all the property.

6.

Should there be neither brothers nor sisters, nor children of brothers or sisters, the other
collateral relatives shall succeed to the estate as (a) a whole (b)only on-half of the estate (c) of the
estate (d) one-third (e) only 1/3 of the estate.

7.

In the absence of brothers or sisters and of nephews or nieces, children of the former, whether of
the whole blood or not, the surviving spouse, if not separated by a final decree of divorce shall
succeed to (a) the entire (b) (c) 1/3 (d) (e) 1/8 estate of the deceased

8.

Should there be neither brothers nor sisters, nor children of brothers or sisters, nor a surviving
spouse, who shall inherit? (a) the other collateral relatives (b) the state (c) the uncles and aunts (d)
the maternal parents (e) grandparents shall succeed to the estate of deceased.

9.

It is likewise clear that the reservable property is (a) not a part of the estate of the reservista (b)
he may not dispose of it by will (c) he returns it to the reservatarios existing (d) all of the above
(e)none of the above.

10.

Which of the following statements is NOT correct concerning the reservatarios? They-

(a) inherit from the reservista

(b) do not inherit from the reservista
(c) inherit from the descendant prepositus
(d) are the heirs mortis causa
(e) are subject to the condition that they must survive the reservista

11.

Which statement is correct? (a) The reservatario is not the reservista's successor mortis causa
(b) nor is the reservable property part of the reservista's estate (c) the reservatario receives the
property as a conditional heir of the descendant (prepositus) (d) all of the above (e) none of the
above

12.

That which results from the designation of an heir, made in a will executed in the form
prescribed by law is known as (a) testamentary succession (b) accretion (c) respresentation
(d) collation (e) substitution

13.

The words of a will are to be taken in their (a) ordinary sense (b) grammatical sense (c)
technical sense (d) ordinary and grammatical sense (e) depends on the clear intention
of the testator

14.

The invalidity of one of several dispositions contained in a will (a) invalidate the other
dispositions (b) does not result in the invalidity of the other dispositions (c) invalidates only
some (D) depends on the will of the testator (e) depends on the result of the probate

15.

The validity of a will as to its form depends upon the observance of the law (a) where he
resides (b) where the will is made (c) in force at the time it is made (d) all of the above (e)
none of the above

116. Which of the following cannot make a will? (a) a Filipino residing in the U.S. (B) a boy who
just turned 18 (c) a woman who is sick with diabetes (d) a dying old man (e) a demented
grandmother

17.

A died without a will survived by (a) his widow w (b) his legitimate brothers, B and C
and (c)his nephews E and F who are the children of a deceased sister D. The net remainder
of the estate is P24,000.
Which of the following statement is correct? (a) W gets 4,000 (b) W gets 8,000 (c) E gets 2,000
(d) C gets 2,000 (e) F gets 4,000

18.

Who can demand the partition of the decedents estate after his death? (a) any compulsory
heir (b) a legatee (c) a devisee (d) a voluntary heir (d) a creditor (e) all of the above

19.

Which of the statement is NOT correct? (a)Every will must be subscribed at the end
thereof by the testator himself (b) or by the testator's name written by some other person in
his presence (c) and by his express direction (d) and attested and subscribed by three or
more credible witnesses in the presence of the testator and of one another (e) to include a
holographic will.

20.

There can be no partition when (a)prohibited by the testator for more than 20 years (b)
prohibited by the testator for 10 years (c) when the co-heirs agreed not to partition for 30
years (d) the law cannot prohibit partition (e) the heirs cannot agree

21.

Can a thing or an entity which is neither a natural nor a juridical person inherit in a will? (a)
yes they can generally (b) no they cannot as a general rule as it is prohited by law (c) no, and
this applies to a religious organization (d) yes the poor as a class not being identified
specifically cannot be heirs (e) no because a heir has to be living in order to inherit.

222. Every will must be acknowledged before a (a) judge (b) lawyer (c) notary public (d) at
least three witness (e) a person authorized to administer oath by the testator and the
witnesses.
23.

If the testator is blind, the will shall be read to him twice; once, by one of the subscribing
witnesses, and again, by (a) the lawyer who prepared the document (b) by the notary public
before whom the will is acknowledged (c) either of the two will do (d) a judge of the probate
court (e) the Clerk of Court.

24.

Which is CORRECT about a holographic will? (A) A person may execute a holographic
will which must be written, dated by the hand of the testator himself. It is subject to (b) it is

subject to no other form, (b) must be made only in the Philippines (c) be witnessed by at least
one person (d) acknowledged before a notary public (e) need not be probated if not
contested.
25.

Which is NOT correct about a holographic will? (a)In the probate of a holographic will, it
shall be necessary that at least one witness who knows the handwriting and signature of the
testator explicitly declare that the will and the signature are in the handwriting of the testator
(b) If the will is contested, at least one of such witnesses shall be required (c) In case of any
insertion, cancellation, erasure or alteration in a holographic will, the testator must
authenticate the same by his full signature (d) When a Filipino is in a foreign country, he is
authorized to make a will in any of the forms established by the law of the country in which
he may be. Such will may be probated in the Philippines (e) ) If the will is contested, at
least three of such witnesses shall be required
==================================================================Problem 26:
X died intestate survived by (1) A,B, C, D and E his legitimate children (2) F and G, legitimate
children of C, a legitimate son of X who predeceased him (3) H and I legitimate children of D
and (4) J and K, legitimate children of E. D, however is incapacitated to inherit from X
because of an act of unworthiness, while E repudiated his inheritance. The net value of the
estate is P120,000.
Questions 26, 27, 28, 29, and 30 will be based on the above problem.

26.

A by his right of accretion gets (a) P24,000 (b) 12,000 (c) 12,000 in his own right (d) 36,000
(e) 6,000 only.

27.

By right of representation G gets (a) 12,000 (b) 24,000 (c) 6,000 (d) 4,000 (e) 36,000

28.

IN totality who should get P36,000 (a) A only (b) B only (c) A and B (D) F and I (E) I only

29.

Which of the following shares are rendered vacant? (a) C only (b) D only (c) E and C (d) C,
D, and E (e) G

30.

Which of the following statement is NOT correct (a) F and G can represent C (b) H and I
can represent their father D (C) J and K cannot represent their father E (d) none of the above
(e) all of the above.
==========================================================
Problem 31: X an employee of the Department of Foreign affairs died intestate in 1976
survived by his widow W, legitimate child A, and two illegitimate children B and C. The record
shows that he failed to state in his GSIS application for membership the beneficiaries of his
retirement benefits which amounted to P80,000. Questions 31, 32, 33 and 34 shall be based
on the above problem.

31.

W shall get (a) P20,000 (B) 40,000 (C) 10,000 (D) 5,000 (E) 4,000

32.

C shall be entitled to (a) (b) (c) 1/8 (d) 1/3 (e) 1/6

33.

A shall be entitled to (a) 20,000 (b) 40,000 (c) 10,000 (d) 5,000 (e) 4,000

34. The free portion in this problem is actually (a) (b) (c) 1/3 (d) 1/8 (e) 1/6 of the remaining
estate.

==================================================================

35.

The will of an alien who is abroad produces effect in the Philippines if (a) made with the
formalities prescribed by the law of the place in which he resides, (b) or according to the
formalities observed in his country,(c) or in conformity with those which this Code prescribes
(d) all of the above (e) none of the above

36.

Which of the following is correct? (a) Two or more persons cannot make a will jointly
(b) they can make a joint will but in another instrument (c) two persons cannot make a
will for their reciprocal benefit (d) two persons can make a will for the benefit of a third
person (e) Two persons can make a will for their joint benefit.

37.

Which of the following CANNOT be a witness to a will? Any person of (a) sound mind
(b) of the age of eighteen years or more, (c) not bind ( d) not deaf (e) a dumb person

38.

Who of the following is disqualified to witness a holographic will? (a) Any person not
domiciled in the Philippines (b)Those who have been convicted of falsification of a document
(c) convicted of perjury (d) convicted of false testimony (e) none of the above.

39.

A will may be revoked outside the Philippine (a) by a person who does not have his domicile in
this country, is valid when it is done according to the law of the place where the will was
made, (b) or according to the law of the place in which the testator had his domicile at the
time (c) and if the revocation takes place in this country, when it is in accordance with the
provisions of the Code(d) all of the above (e) none of the above

40.

A will shall be valid (a) even though it should not contain an institution of an heir, (b) or
such institution should not comprise the entire estate, (c) and even though the person so
instituted should not accept the inheritance or should be incapacitated to succeed (d) all of
the above (e) none of the above

41.

Which of the following is NOT correct? (a) Every disposition in favor of an unknown
person shall be void (b) unless by some event or circumstance his identity becomes certain.
(c) a disposition in favor of a definite class is invalid (d) a disposition to a group of persons
shall be valid (e) a disposition to an unknown person may be validated.

42.

Which of the following is CORRECT? The preterition

(A)or omission of a compulsory heir
(b) of an heir of the direct line
(c) of a voluntary heir of the direct line
(d) one or some of the compulsory heirs
(e) of a compulsory heir of the direct line

whether living at the time of the execution of the will or born after the death of the testator,
shall annul the institution of heir.
=============================================================
PROBLEM : The testator, an illegitimate person,is survived by (1) his parents by nature, F and
M and (2) his widow W. The net value of his estate is P80,000. Questions No. 43, 44, and 45 shall
be based on the above problem:

43.

The legitimes of F and M shall be (a) 40,000 (b) P20,000 (c) of the estate (d) 10,000 (e) not
entitled at all

44.

The free disposal shall be (a) P40,000 (b) 20,000 (c) 10,000 (d) 30,000 (e) none

45.

The legitime of W is (a) 40,000 (b) P20,000 (c) of the estate (d) 10,000 (e) not entitled at all
=============================================================

46.

Which of the following statements is NOT correct?

(A)A voluntary heir who dies before the testator transmits nothing to his heirs. (B) The
legitime of legitimate children and descendants consists of one-half of the hereditary estate
of the father and of the mother
(C) The legitime reserved for the legitimate parents shall be divided between them equally; if
one of the parents should have died, the whole shall pass to the survivor
(D) If only one legitimate child or descendant of the deceased survives, the widow or widower
shall be entitled to one-fourth of the hereditary estate. In case of a legal separation, the
surviving spouse may inherit if it was the deceased who had given cause for the same.
(E) If the testator leaves no legitimate descendants, but leaves legitimate ascendants, the
surviving spouse shall have a right to one-half of the hereditary estate which shall be taken
from the free portion of the estate

47.

Which of the following is CORRECT? (A) Illegitimate children who may survive with
legitimate parents or ascendants of the deceased shall be entitled to one-fourth of the
hereditary estate to be taken from the portion at the free disposal of the testator (B) If the
only survivor is the widow or widower, she or he shall be entitled to one-half of the hereditary
estate of the deceased spouse, and the testator may freely dispose of the other half (C) When
the widow or widower survives with legitimate parents or ascendants and with illegitimate
children, such surviving spouse shall be entitled to one-eighth of the hereditary estate of the
deceased which must be taken from the free portion, and the illegitimate children shall be
entitled to one-fourth of the estate which shall be taken also from the disposable portion. The
testator may freely dispose of the remaining one-eighth of the estate (D) When the testator
dies leaving illegitimate children and no other compulsory heirs, such illegitimate children
shall have a right to one-fourth of the hereditary estate of the deceased. (E) Disinheritance
can be effected only through a will wherein the legal cause therefor shall be specified

48.

(a) Representation (b) Accretion (c) Succession (d) collation (e)Reserva troncal is a right
created by fiction of law, by virtue of which a person is raised to the place and the degree of
the person represented, and acquires the rights which the latter would have if he were living
or if he could have inherited.

49.

Which of the following statements is NOT correct? (a)Heirs who repudiate their share may
not be represented (b)In the absence of legitimate descendants or ascendants, the
illegitimate children shall succeed to the entire estate of the deceased (c)An illegitimate child
can inherit ab intestato from the legitimate children and relatives of his father or mother (d) If
a widow or widower and legitimate children or descendants are left, the surviving spouse has
in the succession the same share as that of each of the children (e) In order to be capacitated
to inherit, the heir, devisee or legatee must be living at the moment the succession opens,
except in case of representation, when it is proper.

50.

(a) Representation (b) Reversion (c) Collation (d) Succession (e) Accretion is a right by
virtue of which, when two or more persons are called to the same inheritance, devise or
legacy, the part assigned to the one who renounces or cannot receive his share, or who died
before the testator, is added or incorporated to that of his co-heirs, co-devisees, or colegatees.

Part 2: Essay type. Rule on the issue presented after reading the given facts.

1. Don Vicente Madrigal, a resident of 47 Balete Drive, Quezon City, died on June 6,
1972. For the settlement of his estate, Special Proceedings No. Q-916962 was filed with
the Court of First Instance, now Regional Trial Court, of Quezon City.
The probate court required the parties to show cause why the case should not be
transferred to the Quezon City Regional Trial Court pursuant to the Administrative Order
issued by the Supreme Court, limiting the territorial jurisdiction of the Regional Trial
Court of Pasay City.
Two of the seven heirs, i.e., the heirs of Pacita Madrigal Vazquez and Mrs. Vazquez,
manifested their desire that the case be retained by the respondent probate court.
Petitioner did not give its conformity, in effect, objecting to the retention by the Pasay
City probate court of the case for further proceedings.The Court of Appeals
subsequently rendered the disputed decision, upholding due process in the instant case,
and waiver of venue since the lapse from the time the case was heard at Pasay City to
the present amounted to a waiver on the part of petitioner to raise the question of
venue. As regards Mrs. Vazquez claim of P5,833,333.33, the Court of Appeals denied
the same since payment thereof would, in effect amount to a partial distribution of the
estate of the deceased, Don Vicente Madrigal, during the pendency of the intestate
proceedings, which may not be allowed prior to the delivery to any beneficiary of his/her
distributive share of the estate and before the payment of estate taxes, pursuant to Sec.
107 of the National Internal Revenue Code. Private respondents motion for accounting
was likewise denied and directed to betaken up in the settlement proceedings before
the respondent court. Petitioner maintains that the probate proceedings should properly
have been retained by the Quezon City Regional Trial Court, pursuant to Rule 73,
Section 1 of the Revised Rules of Court Petitioner argues that their failure to object to
the proceedings conducted at Pasay City Regional Trial Court, should not be taken as a
waiver on their part as to venue because they believed that the proceedings were only
temporary and that the case would subsequently be returned to Quezon City for further
proceedings.Likewise, the heirs indicated their willingness to have the probate court at
Pasay City continue with the proceedings. Petitioners contention that only two heirs
agreed to the retention by the probate court is misplaced. Private respondent has
pointed out: It is incorrect for petitioner to declare that the other heirs of the late Don
Vicente Madrigal never manifested their willingness to have the probate court continue
with the proceedings.

ISSUES:
a.Whether or not there was waiver of venue by inaction on the part of petitioner.
b..Whether or not the venue, of the probate proceedings including that taken by the
Court of Appeals was proper.

2. Rufina Dizon, who was married to Vicente Galang and by whom she had a son named
Francisco, inherited from her parents the three parcels of land described in the
complaint. On October 4, 1904, Rufina Dizon and her son Francisco inherited from her
the said three parcels of land. Francisco Galang died on December 8, 1904, and his
father Vicente Galang, by operation of law, inherited from him the said land. In
accordance with article 811 of the Civil Code these three parcels of land are considered
as reservable property although they do not appear as such in the registry of deeds. In
1913, Vicente Galang sold the first two parcels to Juan Medina and in 1909 the third to
Teodoro Jurado, without informing them that they were reservable property.
The plaintiffs Pedro and Severino Dizon, brother and sister of the deceased Rufina Dizon,
being related to her within the third degree, brought this action against Vicente Galang,
Juan Medina and Teodoro Jurado. The complaint prays that the sales of this land by
Vicente Galang to Juan Medina and Teodoro Jurado be ordered to return the said parcels
of land; that Vicente Galang be compelled to record in the registry of deeds the
reservable character of this land and to execute a mortgage to secure its value.

ISSUE:
Whether or not reservation by the widowed spouse constitutes reserve troncal.

3. In 1969, Eduvigis J. Cruz, a childless widow, donated a 235.5 sq.m residential lot in
San Isidro, Taytay Rizal together with the two-door apartment erected thereon to her
grandnieces private respondents herein, in a deed of donation entitled "Kasulatan Sa
Kaloobpala". The property was accordingly transferred to the names of private
respondents.
In 1974, Eduvigis Cruz judicially adopted Cresencia Ocreto, a minor, after which she
extrajudicially tried to revoke the donation, but the donees resisted, alleging that
(a) the property in question was co-owned by Eduvigis Cruz and her brother. the late
Maximo Cruz, grandfather of the donees, hence the latter own 1/2 of the property by
inheritance; and
(b) Eduvigis Cruz owns another property, an agricultural land of more than two hectares
situated in Barrio Dolores, Taytay, Rizal, hence the donation did not impair the
presumptive legitime of the adopted child.
Issue: Can Eduvigis Cruz revoke the donation?

4. Fernandez and Juan Melgar entered into a partnership involving parcels of lands and
carabaos, to be administered by Mr. Fernandez. During Melgars lifetime, he executed a
deed of gift of parcel of land together with the work animals therein, in favor of Cesar
Mercader and his wife Isabel Noel. Before Melgar died, Mercader had a conversation
with Fernandez and as a result of the conversation agreed in writing to continue the
partnership between Fernandez and Melgar under the new name of MercaderFernandez. When Fernandez filed an action for the partition of the parcels of land,
alleging that the property he seeks to have partitioned is owned by him in common with
the defendants, the latter denied the allegations of Fernandez complaint, asserting that

they have acquired title in fee simple to the entire property through a donation made by
Juan Melgar and his wife.
ISSUE: Whether or not Fernandez has a right to one-half of the property in question

5. Sometime in 1963, Guillermo Maglucot rented a portion of Lot No. 1639-D(subject lot).
Subsequently, Leopoldo and Severo, both surnamed Maglucot, rentedportions of subject lot in 1964
and 1969, respectively, and each paying rentals therefor.Said respondents built houses on their
corresponding leased lots. They paid the rentalamount of P100.00 per annum to Mrs. Ruperta Salma,
who represented the heirs ofRoberto Maglucot, petitioners predecessor-in-interest. In December
1992, however,said respondents stopped paying rentals claiming ownership over the subject
lot.Petitioners thus filed the complainta quo .Petitioners maintain that Lot No. 1639 was mutually
partitioned and physicallysubdivided among the co-owners and that majority of them participated in
the actualexecution of the subdivision. Further, the co-owners accepted their designated shares
in1946 as averred by Tomas Maglucot in his petition for partition. Petitioners opine that in1952, Tomas
Maglucot himself initiated a court proceeding for a formal subdivision ofLot No. 1639. In said petition,
he averred that only Hermogenes Olis and the heirs ofPascual Olis were not agreeable to the
partition. Petitioners further contend thatrespondents admitted in their tax declarations covering their
respective houses that theyare "constructed on the land of Roberto Maglucot. Simply put, petitioners
vigorouslyassert that respondents are estopped from claiming to be co-owners of the subject lot
inview of the mutual agreement in 1946, judicial confirmation in 1952, and respondentsacquiescence
because they themselves exclusively exercised ownership over Lot No.1639-A beginning 1952 up to
the present.

Issue:
Whether or not there has been a valid oral partition

velera v. inserto (1987)

FIRST DIVISION
[ G.R. No. L-56504, May 07, 1987 ]
POMPILLO
VALERA
AND
EUMELIA
VALERA
CABADO,
PETITIONERS, VS. HON. JUDGE SANCHO Y. INSERTO, IN HIS
CAPACITY AS PRESIDING JUDGE, COURT OF FIRST INSTANCE
OF ILOILO, BRANCH I, AND MANUEL R. FABIANA,
RESPONDENTS.
[G.R.

NO.

59867-68.

MAY

7,

1987]

EUMELIA V. CABADO, POMPILLO VALERA AND HON.

MIDPANTAO L. ADIL, PETITIONERS-APPELLANTS, VS. MANUEL
FABIANA, JOSE GARIN, AND HON. COURT OF APPEALS (TENTH
DIVISION),
RESPONDENTS-APPELLANTS.
DECISION

NARVASA, J.:
Conflicting claims over a fishpond asserted by the administrators of the estate of
deceased spouses, on the one hand, and by the heirs of a daughter of said spouses
and their lessee, on the other, have given rise to the proceedings now docketed in
this Court as (1) G.R. No. 56504 and (2) G.R. Nos. 59867-68.
Sp. Proc. No. 2223, CFI, Iloilo
In the proceedings for the settlement of the intestate estate of the decedent
spouses, Rafael Valera and Consolacion Sarrosa [1] -- in which Eumelia Cabado and
Pompillo Valera had been appointed administrators [2] -- the heirs of a deceased
daughter of the spouses, Teresa Garin, filed a motion asking that the Administratrix,
Cabado, be declared in contempt for her failure to render an accounting of her
administration.[3] Cabado replied that no accounting could be submitted unless Jose
Garin, Teresa's husband and the movant heirs' father, delivered to the
administrators an 18-hectare fishpond in Baras, Barotoc Nuevo, Iloilo, belonging to
the estate;[4] and she in turn moved for the return thereof to the estate, so that it
might be partitioned among the decedents' heirs. Jose Garin opposed the plea for
the fishpond's return to the estate, asserting that the property was owned by his
children and this was why it had never been included in any inventory of the estate.
The Court, presided over by Hon. Judge Midpantao Adil, viewed the Garin Heirs'
motion for contempt, as well as Cabado's prayer for the fishpond's return to the
estate, as having given rise to a claim for the recovery of an asset of the estate
within the purview of Section 6, Rule 87 of the Rules of Court. [5] It accordingly set
said incidents for hearing during which the parties presented evidence in
substantiation of their positions.[6] Thereafter, the Court issued an Order dated
September 17, 1980 commanding the Heirs of Teresa Garin "to reconvey
immediately the fishpond in question ** to the Intestate Estate of the Spouses." [7]
The Order was predicated upon the Court's factual findings mainly derived from the
testimony of the two administrators that:
1) the fishpond originally belonged to the Government, and had been given in lease
to Rafael Valera in his lifetime;
2) Rafael Valera ostensibly sold all his leasehold rights in the fishpond to his
daughter, Teresa Garin; but the sale was fictitious, having been resorted to merely
so that she might use the property to provide for her children's support and
education, and was subject to the resolutory term that the fishpond should revert to
Rafael Valera upon completion of the schooling of Teresa Garin's children; and
3) with the income generated by the fishpond, the property was eventually
purchased from the Government by the Heirs of Teresa Garin, collectively named as
such in the Original Certificate of Title issued in their favor.
Upon these facts, Judge Adil ruled that an implied trust had been created, obligating
Teresa Garin's heirs to restore the property to the Valera Spouses' Estate, in
accordance with Articles 1453 and 1455 of the Civil Code providing as follows:
"Article 1453. When property is conveyed to a person in reliance upon his declared
intentions to hold it for, or transfer it to another or the grantor, there is an implied
trust in favor of the person for whose benefit it is contemplated."

"Article 1455. When any trustee, guardian or other person holding a fiduciary
relationship uses trust funds for the purchase of property and causes a conveyance
to be made to him or to a third person, a trust is established by operation of law in
favor of the person to whom the fund belongs."
The Court also held that the action for reconveyance based on constructive trust
had not yet prescribed, Cabado's motion for the fishpond's reversion to the estate
having been filed well within ten (10) years from June 30, 1980, the date on which
Teresa Garin's heirs allegedly acquired title over it. [8]
There seems little doubt, however, that the Court's pronouncement regarding the
estate's title to the fishpond was merely provisional in character, made solely to
determine whether or not the fishpond should be included in the inventory of estate
assets. So it was evidently understood by the administrators who have more than
once asserted that "the probate court has jurisdiction to determine the ownership of
the fishpond for purposes of inclusion in the inventory of the properties."[9] So it was
made clear by the Probate Court itself which, at the outset, stated that the hearing
on the matter[10] was meant "merely to determine whether or not the fishpond
should be included as part of the estate and whether or not the person holding it
should be made to deliver and/or return ** (it) to the estate." [11]And so it was
emphasized in another Order, denying reconsideration of the Order of September
17, 1980, which states that:
"** (i)t is never the intendment of this court to write a finis to the issue of ownership
of the fishpond in dispute. The movants may pursue their claim of ownership over
the same in an ordinary civil action. Meanwhile, however, it is the finding of
this probate court that the fishpond must be delivered to the estate.
"Clearly, there is no incompatibility between the exercise of the power of
this probate court under Section 6 in relation to Section 7, both of Rule 87, and the
contention of the movants that the proper forum to settle the issue of ownership
should be in a court of general jurisdiction." [12]
Judge Adil afterwards granted the administrators' motion for execution of the order
pending appeal, and directed the sheriff to enforce the direction for the Garin Heirs
to reconvey the fishpond to the estate. [13] The corresponding writ was served on
Manuel Fabiana, the supposed encargado or caretaker. Voicing no objection to the
writ, and declaring to the sheriff that he was a mere lessee, [14] Fabiana voluntarily
relinquished possession of the fishpond to the sheriff. The latter, in turn, delivered
it to the administrators. [15]
Later however, Fabiana filed a complaint-in-intervention with the Probate Court
seeking vindication of his right to the possession of the fishpond, based on a
contract of lease between himself, as lessee, and Jose Garin, as lessor. [16]But Judge
AdiI dismissed his complaint on the following grounds, to wit:
1) it was filed out of time because not only had judgment been rendered, but
execution as regards transfer of possession had already taken place; and
2) the lease contract had not been registered and hence was not binding as against
the estate.[17]
G.R. No. 56504
Fabiana thereupon instituted a separate action for injunction and damages, with
application for a preliminary injunction. This was docketed as Civil Case No. 13742
and assigned to Branch I of the Iloilo CFI, Hon. Sancho Y. Inserto, presiding. [18] Judge

Inserto issued a temporary restraining order enjoining the estate administrators

from disturbing Fabiana in the possession of the fishpond, as lessee. [19]
The estate administrators filed a motion to dismiss the complaint and to dissolve
the temporary restraining order, averring that the action was barred by
the Probate Court's prior judgment which had exclusive jurisdiction over the issue of
the lease, and that the act sought to be restrained had already been accomplished,
Fabiana having voluntarily surrendered possession of the fishpond to the sheriff.
[20]
When Judge Inserto failed to act on their motion within what the administrators
believed to be a reasonable time, considering the circumstances of the case, the
administrators filed with the Supreme Court a special civil action
for certiorari and mandamus, with a prayer for preliminary mandatory injunction
and temporary restraining order, which was docketed as G.R. No. 56504. [21] In their
petition, the administrators contented that Branch I of the Iloilo CFI (Judge Inserto,
presiding) could not and should not interfere with the Probate Court (Branch II,
Judge Adil, presiding) in the legitimate exercise of its jurisdiction over the
proceedings for the settlement of the estate of the Valera Spouses.
G.R. Nos. 59867-68
In the meantime, Jose Garin -- having filed a motion for reconsideration of the above
mentioned order of Judge Adil (declaring the estate to be the owner of the
fishpond), in which he asserted that the Probate Court, being of limited jurisdiction,
had no competence to decide the ownership of the fishpond, [22] which motion had
been denied[23] -- filed a notice of appeal from said Order. [24] But he quickly abandoned
the appeal when, as aforestated, [25] Judge Adil authorized execution of the order
pending appeal, instead, he initiated a special action for certiorari, prohibition
andmandamus (with prayer for preliminary injunction) in the Court of Appeals,
therein docketed as CA-G.R. No. SP-1154-R
Fabiana followed suit. He instituted in the same Court of Appeals his own action
for certiorari and injunction, docketed as CA-G.R. NO. SP-11577-R; this,
notwithstanding the pendency in Judge Inserto's sala of the case he had earlier
filed.[26]
These two special civil actions were jointly decided by the Court of Appeals. The
Court granted the petitions and ruled in substance that:
1. The Probate Court indeed possessed no jurisdiction to resolve the issue of
ownership based merely on evidence adduced at the hearing of a "counter-motion"
conducted under Section 6, Rule 87;
2. The original and transfer certificates of title covering the fishpond stand in the
names of the Heirs of Teresa Garin as registered owners, and therefore no
presumption that the estate owns the fishpond is warranted to justify return of the
property on the theory that it had merely been borrowed; and
3. Even assuming the Probate Court's competence to resolve the ownership
question, the estate administrators would have to recover possession of the
fishpond by separate action, in view of the lessee's claim of right to superior
possession, as lessee thereof.
From this joint judgment, the administrators have taken separate appeals to this
Court by certiorari[27], docketed as G.R. Nos. 59867 and 59868. They ascribe to the
Appellate Court the following errors, viz:

1) in holding that the Probate Court (Judge Adil, presiding) had no jurisdiction to
take cognizance of and decide the issue of title covering a fishpond being claimed
by an heir adversely to the decedent spouses;
2) in ruling that it was needful for the administrators to file a separate action for the
recovery of the possession of the fishpond then in the hands of a third person; and
3) in sanctioning the act of a CFI Branch in interfering with and overruling the final
judgment of another branch, acting as Probate Court, and otherwise frustrating and
inhibiting the enforcement and implementation of said judgment.
Jurisdiction of Probate Court
As regards the first issue, settled is the rule that a Court of First Instance (now
Regional Trial Court), acting as aProbate Court, exercises but limited jurisdiction,
[28]
and thus has no power to take cognizance of and determine the issue of title to
property claimed by a third person adversely to the decedent, unless the claimant
and all the other parties having legal interest in the property consent, expressly or
impliedly, to the submission of the question to theProbate Court for adjudgment, or
the interests of third persons are not thereby prejudiced, [29] the reason for the
exception being that the question of whether or not a particular matter should be
resolved by the Court in the exercise of its general jurisdiction or of its limited
jurisdiction as a special court (e.g., probate, land registration, etc.), is in reality not
a jurisdictional but in essence a procedural one, involving a mode of practice which
may be waived.[30]
The facts obtaining in this case, however, do not call for the application of the
exception to the rule. As already earlier stressed, it was at all times clear to the
Court as well as to the parties that if cognizance was being taken of the question of
title over the fishpond, it was not for the purpose of settling the issue definitely and
permanently, and writing "finis" thereto, the question being explicitly left for
determination "in an ordinary civil action", but merely to determine whether it
should or should not be included in the inventory. [31] This function of resolving
whether or not property should be included in the estate inventory is, to be sure,
one clearly within the Probate Court's competence, although the Court's
determination is only provisional in character, not conclusive, and is subject to the
final decision in a separate action that may be instituted by the parties. [32]
The same norm governs the situation contemplated in Section 6, Rule 87 of the
Rules of Court, expressly invoked by the Probate Court in justification of its holding a
hearing on the issue arising from the parties conflicting claims over the fishpond.
[33]
The examination provided in the cited section is intended merely to elicit
evidence relevant to property of the decedent from persons suspected of having
possession or knowledge thereof, or of having concealed, embezzled, or conveyed
away the same. Of course, if the latter lays no claim to the property and manifests
willingness to turn it over to the estate, no difficulty arises; the Probate Court simply
issues the appropriate direction for the delivery of the property to the estate. On
the other hand, if the third person asserts a right to the property contrary to the
decedent's, the Probate Court would have no authority to resolve the issue; a
separate action must be instituted by the administrator to recover the property. [34]
Parenthetically, in the light of the foregoing principles, the Probate Court could have
admitted and taken cognizance of Fabiana's complaint in intervention, after
obtaining the consent of all interested parties to its assumption of jurisdiction over
the question of title to the fishpond, or ascertaining the absence of objection

thereto. But it did not. It dismissed the complaint in intervention instead. And all
this is now water under the bridge.
Possession of Fishpond Pending
Determination of Title Thereto
Since the determination by the Probate Court of the question of title to the fishpond
was merely provisional, not binding on the property with any character of authority,
definiteness or permanence, having been made only for purposes of inclusion in the
inventory and upon evidence adduced at the hearing of a motion, it cannot and
should not be subject of execution, as against its possessor who has set up title in
himself (or in another) adversely to the decedent, and whose right to possess has
not been ventilated and adjudicated in an appropriate action. These considerations
assume greater cogency where, as here, the Torrens title to the property is not in
the decedents' names but in others, a situation on which this Court has already had
occasion to rule.
"In regard to such incident of inclusion or exclusion, We hold that if a property
covered by Torrens title is involved, the presumptive conclusiveness of such title
should be given due weight, and in the absence of strong compelling evidence to
the contrary, the holder thereof should be considered as the owner of the property
in controversy until his title is nullified or modified in an appropriate ordinary action,
particularly, when as in the case at bar, possession of the property itself is in the
persons named in the title."[35]
Primary Jurisdiction over Title Issue in
Court Taking Cognizance of Separate Action
Since, too, both the Probate Court and the estate administrators are one in the
recognition of the proposition that title to the fishpond could in the premises only be
appropriately determined in a separate action, [36] the actual filing of such a separate
action should have been anticipated, and should not therefore have come as a
surprise, to the latter. And since moreover, implicit in that recognition is also the
acknowledgment of the superiority of the authority of the court in which the
separate action is filed over the issue of title, the estate administrators may not
now be heard to complain that in such a separate action, the court should have
issued orders necessarily involved in or flowing from the assumption of that
jurisdiction. Those orders cannot in any sense be considered as undue interference
with the jurisdiction of the Probate Court. Resulting from the exercise of primary
jurisdiction over the question of ownership involving estate property claimed by the
estate, they must be deemed superior to otherwise contrary orders issued by
the Probate Court in the exercise of what may be regarded as merely secondary, or
provisional, jurisdiction over the same question.
WHEREFORE, the petition in G.R. No. 56504 is DISMISSED, for lack of merit. The
petitions in G.R. No. 59867 and G.R. No. 59868 are DENIED, and the judgment of the
Appellate Court, subject thereof, is affirmed in toto. The temporary restraining
order dated April 1, 1981 is lifted. Costs against petitioners.

SECOND DIVISION
[ G.R. Nos. 69757-58, January 29, 1988 ]
CIRCA NILA DEVELOPMENT CORPORATION, TEODORO K. KATIGBAK
AND JENNIFER EVIDENTE BAERTGES, PETITIONERS, VS. HON.

SALVADOR J. BAYLEN, JUDGE, REGIONAL TRIAL COURT, BRANCH

CXXI, CALOOCAN CITY, INTESTATE ESTATE OF SOLEDAD BALATBAT
AND TESTATE ESTATE OF RICARDO BALATBAT, RESPONDENTS.
DECISION
SARMIENTO, J.:
The lone issue in these cases is whether or not the Regional Trial Court, sitting as
a probate court, may compel performance under a contract it had approved incidental to its office
as such a special court.
There is no dispute as to the facts.
On February 21, 1984, the Estates of Soledad and Ricardo Balatbat, subject of a settlement
proceeding pending with respondent Judge, entered into a "Property Management and Exchange
Contract" with the petitioners Circa Nila Development Corporation, represented by petitioner
Teodoro Katigbak, and Jennifer Baertges, both real estate developers. The contract charged the
petitioners with the development of two parcels of real property, located in Valenzuela, Bulacan,
owned by the Balatbat Estates, and called upon them to pay a total consideration of TWO
MILLION SIX HUNDRED THOUSAND (P2,600,000.00) PESOS.
On May 9, 1984, the respondent Judge approved the contract.
Subsequently, the Estates presented an "Omnibus Motion" praying that the petitioners be
compelled to pay the sum of P456,100.00 representing the alleged balance of the contract price
they had allegedly refused to pay. The petitioners opposed the motion on the ground, in essence,
that the respondent Court, as a probate court, had no jurisdiction to grant the relief sought.
On October 18, 1984, the respondent Judge issued an order directing the petitioners to pay the
sum demanded. The petitioners sought a reconsideration. On January 23, 1985 the respondent
Judge issued an order denying reconsideration. He likewise ordered the petitioner to pay the
additional sum of P500,000.00 on motion of the Estates. The petitioners then came to this Court.
We rule for the petitioners.
A probate court is a tribunal of limited jurisdiction. It acts on matters pertaining to the estate but
never on rights to property arising from contract. It approves contracts entered into for and on
behalf of the estate or the heirs to it but this is by fiat of the Rules of Court. In that case, judicial
approval is necessary for the validity of such contracts. It cannot, however, adjudicate the rights
and obligations of the parties thereto. Compliance with the terms and conditions thereof may be
compelled by specific performance, jurisdiction over which is vested in the Regional Trial Court,
acting as a court of general jurisdiction.
The fact that the petitioners "participated in the formulation and in the eventual execution of
the "Property Management and Exchange Contract" does not bar them from raising this
jurisdictional challenge. The petitioners never contended that the contract cannot be enforced
against them nor denied its validity. What they dispute is the jurisdiction of the respondent court
to hear the incident in its capacity as a probate court.
Neither does estoppel preclude the petitioners from questioning the respondent Court's
assumption of jurisdiction. Estoppel occurs where a party invokes the jurisdiction of a court, say,
by seeking affirmative relief, and denies it later following an adverse judgment. Here, however,
the petitioners never invoked the jurisdiction of the respondent Court. They took part in the
preparation of the "Property Management and Exchange Contract," they being parties thereto,
but that did not make them parties to the case, or give the respondent Court the jurisdiction to
adjudicate on the rights of the parties under that contract. The jurisdiction of a probate court is
"merely the settlement of the estate and may not be extended beyond."
The respondent Judge's reliance on our ruling in Pio Barretto Realty Development, Inc. vs.
Court of Appeals is not well-taken. Pio Barreto did not broaden the jurisdiction of
a probate court. On the contrary, it underscored the limited character of its jurisdiction ("the
limited jurisdiction of a probate court prohibits it from determining rights to property left by a
decedent which depends on the contract") thus:
xxx
xxx
xxx
[1]

[2]

[3]

[4]

[5]

[6]

[7]

Since the probate court has no jurisdiction over the question of title and ownership of the
properties, the respondents may bring a separate action if they wish to question the petitioner's
titles and ownership (Vda. de Rodriguez v. Court of Appeals, 91 SCRA 540). Though an order
of the probate court approving the sale of the decedent's property is final, the respondent may file
a complaint in the proper court for the rescission of the sale. (Pizarro v. Court of Appeals, 99
SCRA 72). Likewise, the initial question of respondent regarding the propriety of including the
properties in question in the inventory of the probate court as he claims ownership thereof may
therein be finally and conclusively settled (Vda. de Rodriguez v. Court of Appeals, supra;
Lachenal v. Salas, 71 SCRA 202). The respondent has ample protection of his rights for the
province of the probate court remains merely the settlement of the estate and may not be
extended beyond (Pizarro v. Court of Appeals, supra).
xxx
xxx
xxx
In that case, however, we noted that the respondent had "bound himself under an agreement with
the court separate and distinct from that which he had with the decedent." In other words, what
the court had sought to enforce was not the contract executed on behalf of the estate but the
respondent's agreement with the court itself to obtain the best terms for the estate, and
consequently, his authority to enter into such a contract. But far from repealing the longstanding rule that a probate court is one of limited jurisdiction, Pio Barretto, in fact, reinforced
it.
In fine, we hold that the respondent Judge acted without jurisdiction in issuing the assailed orders
of October 18, 1984 (Annex "H") and of January 23, 1985 (Annex "P") that warrants the
corrective hand of certiorari.
WHEREFORE, the petition is GRANTED. The Orders dated October 18, 1984 and January
23, 1985 are declared NULL and VOID. The Temporary Restraining Order given in these cases
on February 6, 1985 is hereby made permanent. Costs against the private respondents.
[8]

[9]

SECOND DIVISION
[ G.R. NO. 160530, November 20, 2007 ]
CYNTHIA V. NITTSCHER, PETITIONER, VS. DR. WERNER KARL
JOHANN NITTSCHER (DECEASED), ATTY. ROGELIO P. NOGALES AND
THE REGIONAL TRIAL COURT OF MAKATI (BRANCH 59),
RESPONDENTS.
DECISION
QUISUMBING, J.:
For review on certiorari are the Decision [1] dated July 31, 2003 and Resolution[2] dated October
21, 2003 of the Court of Appeals in CA-G.R. CV No. 55330, which affirmed the Order [3] dated
September 29, 1995 of the Regional Trial Court (RTC), Branch 59, Makati City, in SP Proc. No.
M-2330
for
the probate of
a
will.
The

facts

are

as

follows.

On January 31, 1990, Dr. Werner Karl Johann Nittscher filed with the RTC of Makati City a
petition for the probateof his holographic will and for the issuance of letters testamentary to
herein
respondent
Atty.
Rogelio
P.
Nogales.
On September 19, 1991, after hearing and with due notice to the compulsory heirs,
the probate court issued an order allowing the said holographic will, thus:
WHEREFORE, premises considered, the Holographic Will of the petitioner-testator Dr. Werner
J. Nittscher executed pursuant to the provision of the second paragraph of Article 838 of the
Civil Code of the Philippines on January 25, 1990 in Manila, Philippines, and proved in
accordance with the provision of Rule 76 of the Revised Rules of Court is hereby allowed.

SO ORDERED.[4]
On September 26, 1994, Dr. Nittscher died. Hence, Atty. Nogales filed a petition for letters
testamentary for the administration of the estate of the deceased. Dr. Nittschers surviving
spouse, herein petitioner Cynthia V. Nittscher, moved for the dismissal of the said petition.
However, the court in its September 29, 1995 Order denied petitioners motion to dismiss, and
granted respondents petition for the issuance of letters testamentary, to wit:
In view of all the foregoing, the motion to dismiss is DENIED. The petition for the issuance of
Letters
Testamentary,
being
in
order,
is
GRANTED.
Section 4, Rule 78 of the Revised Rules of Court, provides when a will has been proved and
allowed, the court shall issue letters testamentary thereon to the person named as executor
therein, if he is competent, accepts the trust and gives a bond as required by these rules. In the
case at bar, petitioner Atty. Rogelio P. Nogales of the R.P. Nogales Law Offices has been named
executor under the Holographic Will of Dr. Werner J. Nittscher. As prayed for, let Letters
Testamentary be issued to Atty. Rogelio P. Nogales, the executor named in the Will, without a
bond.
SO ORDERED.[5]
Petitioner moved for reconsideration, but her motion was denied for lack of merit. On May 9,
1996, Atty. Nogales was issued letters testamentary and was sworn in as executor.
Petitioner appealed to the Court of Appeals alleging that respondents petition for the issuance of
letters testamentary should have been dismissed outright as the RTC had no jurisdiction over the
subject
matter
and
that
she
was
denied
due
process.
The appellate court dismissed the appeal, thus:
WHEREFORE, the foregoing considered, the appeal is hereby DISMISSED and the assailed
Order isAFFIRMED in toto. The court a quo is ordered to proceed with dispatch in the
proceedings
below.
SO ORDERED.[6]
Petitioners motion for reconsideration of the aforequoted decision was denied for lack of merit.
Hence, the present petition anchored on the following grounds:
I.
BOTH THE CA AND THE LOWER COURT ERRED IN NOT DISMISSING OUTRIGHT THE
PETITION FOR LETTERS TESTAMENTARY FILED BY ATTY. NOGALES WHEN,
OBVIOUSLY, IT WAS FILED IN VIOLATION OF REVISED CIRCULAR NO. 28-91 AND
ADMINISTRATIVE CIRCULAR NO. 04-94 OF THIS HONORABLE COURT.
II.
THE CA ERRED IN NOT DECLARING THAT THE LOWER COURT [HAS] NO
JURISDICTION OVER THE SUBJECT MATTER OF THE PRESENT SUIT.
III.
THE CA ERRED IN CONCLUDING THAT SUMMONS WERE PROPERLY ISSUED TO
THE PARTIES AND ALL PERSONS INTERESTED IN THE PROBATE OF THE
HOLOGRAPHIC WILL OF DR. NITTSCHER.
IV.
THE CA ERRED IN CONCLUDING THAT THE PETITIONER WAS NOT DEPRIVED OF
DUE PROCESS OF LAW BY THE LOWER COURT.[7]
Petitioner contends that respondents petition for the issuance of letters testamentary lacked a
certification against forum-shopping. She adds that the RTC has no jurisdiction over the subject

matter of this case because Dr. Nittscher was allegedly not a resident of the Philippines; neither
did he leave real properties in the country. Petitioner claims that the properties listed for
disposition in her husbands will actually belong to her. She insists she was denied due process of
law because she did not receive by personal service the notices of the proceedings.
Respondent Atty. Nogales, however, counters that Dr. Nittscher did reside and own real
properties in Las Pias, Metro Manila. He stresses that petitioner was duly notified of
the probate proceedings. Respondent points out that petitioner even appeared in court to oppose
the petition for the issuance of letters testamentary and that she also filed a motion to dismiss the
said petition. Respondent maintains that the petition for the issuance of letters testamentary need
not contain a certification against forum-shopping as it is merely a continuation of the original
proceeding
for
the probate of
the
will.
We

resolve

to

deny

the

petition.

As to the first issue, Revised Circular No. 28-91[8] and Administrative Circular No. 04-94[9] of the
Court require a certification against forum-shopping for all initiatory pleadings filed in court.
However, in this case, the petition for the issuance of letters testamentary is not an initiatory
pleading, but a mere continuation of the original petition for the probate of Dr. Nittschers will.
Hence, respondents failure to include a certification against forum-shopping in his petition for
the issuance of letters testamentary is not a ground for outright dismissal of the said petition.
Anent the second issue, Section 1, Rule 73 of the Rules of Court provides:
SECTION 1. Where estate of deceased persons settled. If the decedent is an inhabitant of
the Philippines at the time of his death, whether a citizen or an alien, his will shall be proved,
or letters of administration granted, and his estate settled, in the Court of First Instance
(now Regional Trial Court) in the province in which he resides at the time of his death, and
if he is an inhabitant of a foreign country, the Court of First Instance (now Regional Trial Court)
of any province in which he had estate. (Emphasis supplied.)
In this case, the RTC and the Court of Appeals are one in their finding that Dr. Nittscher was a
resident of Las Pias, Metro Manila at the time of his death. Such factual finding, which we find
supported by evidence on record, should no longer be disturbed. Time and again we have said
that reviews on certiorari are limited to errors of law. Unless there is a showing that the findings
of the lower court are totally devoid of support or are glaringly erroneous, this Court will not
analyze
or
weigh
evidence
all
over
again. [10]
Hence, applying the aforequoted rule, Dr. Nittscher correctly filed in the RTC of Makati City,
which then covered Las Pias, Metro Manila, the petition for the probate of his will and for the
issuance
of
letters
testamentary
to
respondent.
Regarding the third and fourth issues, we note that Dr. Nittscher asked for the allowance of his
own will. In this connection, Section 4, Rule 76 of the Rules of Court states:
SEC. 4. Heirs, devisees, legatees, and executors to be notified by mail or personally.
If the testator asks for the allowance of his own will, notice shall be sent only to his compulsory
heirs.
In this case, records show that petitioner, with whom Dr. Nittscher had no child, and Dr.
Nittschers children from his previous marriage were all duly notified, by registered mail, of
the probate proceedings. Petitioner even appeared in court to oppose respondents petition for the
issuance of letters testamentary and she also filed a motion to dismiss the said petition. She
likewise filed a motion for reconsideration of the issuance of the letters testamentary and of the
denial of her motion to dismiss. We are convinced petitioner was accorded every opportunity to
defend her cause. Therefore, petitioners allegation that she was denied due process in
the probate proceedings
is
without
basis.
As a final word, petitioner should realize that the allowance of her husbands will is conclusive
only as to its due execution.[11] The authority of the probate court is limited to ascertaining

whether the testator, being of sound mind, freely executed the will in accordance with the
formalities prescribed by law.[12] Thus, petitioners claim of title to the properties forming part of
her husbands estate should be settled in an ordinary action before the regular courts.
WHEREFORE, the petition is DENIED for lack of merit. The assailed Decision dated July 31,
2003 and Resolution dated October 21, 2003 of the Court of Appeals in CA-G.R. CV No. 55330,
which affirmed the Order dated September 29, 1995 of the Regional Trial Court, Branch 59,
Makati
City,
in
SP
Proc.
No.
M-2330
areAFFIRMED.
No

pronouncement

as

to

costs.

SO ORDERED.

FIRST DIVISION
[G.R. No. 62952. October 9, 1985]
SOFIA J. NEPOMUCENO, petitioner, vs. THE HONORABLE COURT OF
APPEALS, RUFINA GOMEZ, OSCAR JUGO AND CARMELITA
JUGO, respondents.

DECISION
GUTIERREZ, JR., J.:
This is a petition for certiorari to set aside that portion of the decision of the respondent Court of
Appeals (now Intermediate Appellate Court) dated June 3, 1982, as amended by the resolution
dated August 10, 1982, declaring as null and void the devise in favor of the petitioner and the
resolution dated December 28, 1982 denying petitioner's motion for reconsideration.
Martin Jugo died on July 16, 1974 in Malabon, Rizal. He left a last Will and Testament duly signed
by him at the end of the Will on page three and on the left margin of pages 1, 2 and 4 thereof in the
presence of Celestina Alejandro, Myrna C. Cortez, and Leandro Leao, who in turn, affixed their
signatures below the attestation clause and on the left margin of pages 1, 2 and 4 of the Will in the
presence of the testator and of each other and the Notary Public. The Will was acknowledged
before the Notary Public Romeo Escareal by the testator and his three attesting witnesses.
In the said Will, the testator named and appointed herein petitioner Sofia J. Nepomuceno as his sole
and only executor of his estate. It is clearly stated in the Will that the testator was legally married to a
certain Rufina Gomez by whom he had two legitimate children, Oscar and Carmelita, but since 1952,
he had been estranged from his lawfully wedded wife and had been living with petitioner as husband
and wife. In fact, on December 5, 1952, the testator Martin Jugoand the petitioner herein, Sofia
J. Nepomuceno were married in Victoria, Tarlac before the Justice of the Peace. The testator
devised to his forced heirs, namely, his legal wife Rufina Gomez and his children Oscar and
Carmelita his entire estate and the free portion thereof to herein petitioner. The Will reads in part:
"Art. III. That I have the following legal heirs, namely: my aforementioned legal wife, Rufina Gomez,
and our son, Oscar, and daughter Carmelita, both surnamed Jugo, whom I declare and admit to be
legally and properly entitled to inherit from me; that while have been estranged from my abovenamed wife for so many years, I cannot deny that I was legally married to her or that we have been
separated up to the present for reasons and justifications known fully well by them;
"Art. IV. That since 1952, I have been living, as man and wife, with one Sofia J. Nepomuceno, whom
I declare and avow to be entitled to my love and affection, for all the things which she has done for
me, now and in the past; that while Sofia J. Nepomuceno has with my full knowledge and consent,
did comport and represent myself as her own husband, in truth and in fact, as well as in the eyes of
the law, I could not bind her to me in the holy bonds of matrimony because of my aforementioned
previous marriage;"
On August 21, 1974, the petitioner filed a petition for the probate of the last Will and Testament of the
deceased MartinJugo in the Court of First Instance of Rizal, Branch XXXIV, Caloocan City and asked
for the issuance to her of letters testamentary.

On May 13, 1975, the legal wife of the testator, Rufina Gomez and her children filed an opposition
alleging inter aliathat the execution of the Will was procured by undue and improper influence on the
part of the petitioner; that at the time of the execution of the Will, the testator was already very sick
and that petitioner having admitted her living inconcubinage with the testator, she is wanting in
integrity and thus letters testamentary should not be issued to her.
On January 6, 1976, the lower court denied the probate of the Will on the ground that as the testator
admitted in his Will to cohabiting with the petitioner from December 1952 until his death on July 16,
1974, the Will's admission toprobate will be an idle exercise because on the face of the Will, the
invalidity of its intrinsic provisions is evident.
The petitioner appealed to the respondent-appellate court.
On June 2, 1982, the respondent court set aside the decision of the Court of First Instance
of Rizal denying theprobate of the Will. The respondent court declared the Will to be valid except
that the devise in favor of the petitioner is null and void pursuant to Article 739 in relation with Article
1028 of the Civil Code of the Philippines. The dispositiveportion of the decision reads:
"WHEREFORE, the decision a quo is hereby set aside, the will in question declared valid except the
devise in favor of the appellant which is declared null and void. The properties so devised are
instead passed on in intestacy to the appellant in equal shares, without pronouncement as to costs."
On June 15, 1982, oppositors Rufina Gomez and her children filed a "Motion for Correction of
Clerical Error" praying that the word "appellant" in the last sentence of the dispositive portion of the
decision be changed to "appellees" so as to read: "The properties so devised are instead passed on
intestacy to the appellees in equal shares, without pronouncement as to costs." The motion was
granted by the respondent court on August 10, 1982.
On August 23, 1982, the petitioner filed a motion for reconsideration. This was denied by the
respondent court in a resolution dated December 28, 1982.
The main issue raised by the petitioner is whether or not the respondent court acted in excess of its
jurisdiction when after declaring the last Will and Testament of the deceased Martin Jugo validly
drawn, it went on to pass upon the intrinsic validity of the testamentary provision in favor of herein
petitioner.
The petitioner submits that the validity of the testamentary provision in her favor cannot be passed
upon and decided in the probate proceedings but in some other proceedings because the only
purpose of the probate of a Will is to establish conclusively as against everyone that a Will was
executed with the formalities required by law and that the testator has the mental capacity to execute
the same. The petitioner further contends that even if the provisions of paragraph 1 of Article 739 of
the Civil Code of the Philippines were applicable, the declaration of its nullity could only be made by
the proper court in a separate action brought by the legal wife for the specific purpose of obtaining a
declaration of the nullity of the testamentary provision in the Will in favor of the person with whom the
testator was allegedly guilty of adultery or concubinage.
The respondents on the other hand contend that the fact that the last Will and Testament itself
expressly admits indubitably on its face the meretricious relationship between the testator and the
petitioner and the fact that petitioner herself initiated the presentation of evidence on her alleged
ignorance of the true civil status of the testator, which led private respondents to present contrary
evidence, merits the application of the doctrine enunciated in Nuguid v. FelixNuguid, et al. (17 SCRA
449) and Felix Balanay, Jr. v. Hon. Antonio Martinez, et al (G.R. No. L-39247, June 27, 1975).
Respondents also submit that the admission of the testator of the illicit relationship between him and
the petitioner put in issue the legality of the devise.
We agree with the respondents.
The respondent court acted within its jurisdiction when after declaring the Will to be validly drawn, it
went on to pass upon the intrinsic validity of the Will and declared the devise in favor of the petitioner
null and void.
The general rule is that in probate proceedings, the court's area of inquiry is limited to an
examination and resolution of the extrinsic validity of the Will. The rule is expressed thus:
xxx
xxx
xxx

"x x x It is elementary that a probate decree finally and definitively settles all questions concerning
capacity of the testator and the proper execution and witnessing of his last Will and testament,
irrespective of whether its provisions are valid and enforceable or otherwise." (Fernandez
v. Dimagiba, 21 SCRA 428)
"The petition below being for the probate of a Will, the court's area of inquiry is limited to the extrinsic
validity thereof. The testator's testamentary capacity and the compliance with the formal requisites
or solemnities prescribed by law are the only questions presented for the resolution of the court. Any
inquiry into the intrinsic validity or efficacy of the provisions of the will or the legality of any devise or
legacy is premature.
xxx
xxx
xxx
"True or not, the alleged sale is no ground for the dismissal of the petition for probate. Probate is
one thing; the validity of the testamentary provisions is another. The first decides the execution of
the document and the testamentary capacity of the testator; the second relates to descent and
distribution." (Sumilang v. Ramagosa, 21 SCRA 1369)
xxx
xxx
xxx
"To establish conclusively as against everyone, and once for all, the facts that a will was executed
with the formalities required by law and that the testator was in a condition to make a will, is the only
purpose of the proceedings under the new code for the probate of a will. (Sec. 625). The judgment
in such proceedings determines and can determine nothing more. In them the court has no power to
pass upon the validity of any provisions made in the will. It can not decide, for example, that a
certain legacy is void and another one valid. x x x" (Castaeda v. Alemany, 3 Phil. 426)
The rule, however, is not inflexible and absolute. Given exceptional circumstances, the probate court
is not powerless to do what the situation constrains it to do and pass upon certain provisions of the
Will.
In Nuguid v. Nuguid (17 SCRA 449) cited by the trial court, the testator instituted the petitioner as
universal heir and completely preterited her surviving forced heirs. A will of this nature, no matter
how valid it may appear extrinsically, would be null and void. Separate or later proceedings to
determine the intrinsic validity of the testamentary provisions would be superfluous.
Even before establishing the formal validity of the will, the Court in Balanay, Jr. v. Martinez (64 SCRA
452) passed upon the validity of its intrinsic provisions.
Invoking "practical considerations", we stated:
"The basic issue is whether the probate court erred in passing upon the intrinsic validity of the will,
before ruling on its allowance or formal validity, and in declaring it void.
"We are of the opinion that in view of certain unusual provisions of the will, which are of dubious
legality, and because of the motion to withdraw the petition for probate (which the lower court
assumed to have been filed with the petitioner's authorization), the trial court acted correctly in
passing upon the will's intrinsic validity even before its formal validity had been established.
The probate of a will might become an idle ceremony if on its face it appears to be intrinsically void.
Where practical considerations demand that the intrinsic validity of the will be passed upon, even
before it is probated, the court should meet the issue (Nuguid v. Nuguid, 64 O.G. 1527, 17 SCRA
449. Compare withSumilang v. Ramagosa, L-23135, December 26, 1967, 21 SCRA
1369; Cacho v. Udan, L-19996, April 30, 1965, 13 SCRA 693)."
There appears to be no more dispute at this time over the extrinsic validity of the Will. Both parties
are agreed that the Will of Martin Jugo was executed with all the formalities required by law and that
the testator had the mental capacity to execute his Will. The petitioner states that she completely
agrees with the respondent court when in resolving the question of whether or not the probate court
correctly denied the probate of Martin Jugo's last Will and Testament, it ruled:
"This being so, the will is declared validly drawn." (Page 4, Decision, Annex A of Petition.)
On the other hand the respondents pray for the affirmance of the Court of Appeals' decision in toto.
The only issue, therefore, is the jurisdiction of the respondent court to declare the testamentary
provision in favor of the petitioner as null and void.
We sustain the respondent court's jurisdiction. As stated in Nuguid v. Nuguid, (supra):

"We pause to reflect. If the case were to be remanded for probate of the will, nothing will be gained.
On the contrary, this litigation will be protracted. And for aught that appears in the record, in the
event of probate or if the court rejects the will, probability exists that the case will come up once
again before us on the same issue of the intrinsic validity or nullity of the will. Result: waste of time,
effort, expense, plus added anxiety. These are the practical considerations that induce us to a belief
that we might as well meet head-on the issue of the validity of the provisions of the will in question.
(Section 2, Rule 1, Rules of Court. Case, et al. v. Jugo, et al., 77 Phil. 517, 522). After all, there
exists ajusticiable controversy crying for solution."
We see no useful purpose that would be served if we remand the nullified provision to the proper
court in a separate action for that purpose simply because, in the probate of a will, the court does not
ordinarily look into the intrinsic validity of its provisions.
Article 739 of the Civil Code provides:
"The following donations shall be void:
(1) Those made between persons who were guilty of adultery or concubinage at the time of the
donation;
(2)
Those made between persons found guilty of the same criminal offense, in consideration
thereof;
(3)
Those made to a public officer or his wife, descendants and ascendants, by reason of his
office.
"In the case referred to in No. 1, the action for declaration of nullity may be brought by the spouse of
the donor ordonee; and the guilt of the donor and donee may be proved by preponderance of
evidence in the same action.
Article 1028 of the Civil Code provides:
"The prohibitions mentioned in Article 739, concerning donations inter vivos shall apply to
testamentary provisions."
In Article III of the disputed Will, executed on August 15, 1968, or almost six years before the
testator's death on July 16, 1974, Martin Jugo stated that respondent Rufina Gomez was his legal
wife from whom he had been estranged "for so many years." He also declared that respondents
Carmelita Jugo and Oscar Jugo were his legitimate children. In Article IV, he stated that he had
been living as man and wife with the petitioner since 1952. Testator Jugo declared that the petitioner
was entitled to his love and affection. He stated that Nepomuceno represented Jugo as her own
husband but "in truth and in fact, as well as in the eyes of the law, I could not bind her to me in the
holy bonds of matrimony because of my aforementioned previous marriage."
There is no question from the records about the fact of a prior existing marriage when
Martin Jugo executed his Will. There is also no dispute that the petitioner and Mr. Jugo lived
together in an ostensible marital relationship for 22 years until his death.
It is also a fact that on December 2, 1952, Martin Jugo and Sofia J. Nepomuceno contracted a
marriage before the Justice of the Peace of Victoria, Tarlac. The man was then 51 years old while
the woman was 48. Nepomuceno now contends that she acted in good faith for 22 years in the
belief that she was legally married to the testator.
The records do not sustain a finding of innocence or good faith. As argued by the private
respondents:
"First. The last will and testament itself expressly admits indubitably on its face the meretricious
relationship between the testator and petitioner, the devisee.
"Second. Petitioner herself initiated the presentation of evidence on her alleged ignorance of the true
civil status of the testator, which led private respondents to present contrary evidence.
"In short, the parties themselves dueled on the intrinsic validity of the legacy given in the will to
petitioner by the deceased testator at the start of the proceedings.
"Whether or not petitioner knew that testator Martin Jugo, the man he had lived with as man and
wife, was already married was an important and specific issue brought by the parties before the trial
court, and passed upon by the Court of Appeals.

"Instead of limiting herself to proving the extrinsic validity of the will, it was petitioner who opted to
present evidence on her alleged good faith in marrying the testator. (Testimony of Petitioner, TSN of
August 1, 1982, pp. 56-57 and pp. 62-64).
"Private respondents, naturally, presented evidence that would refute the testimony of petitioner on
the point.
"Sebastian Jugo, younger brother of the deceased testator, testified at length on the meretricious
relationship of his brother and petitioner. (TSN of August 18, 1975).
"Clearly, the good faith of petitioner was by option of the parties made a decisive issue right at the
inception of the case.
"Confronted by the situation, the trial court had to make a ruling on the question.
"When the court a quo held that the testator Martin Jugo and petitioner 'were deemed guilty of
adultery orconcubinage', it was a finding that petitioner was not the innocent woman she pretended
to be."
xxx
xxx
xxx
"3' If a review of the evidence must be made nonetheless, then private respondents respectfully offer the
following analysis:
"FIRST:
The secrecy of the marriage of petitioner with the deceased testator in a town in Tarlac where neither
she nor the testator ever resided. If there was nothing to hide from, why the concealment? Of
course, it maybe argued that the marriage of the deceased with private respondent Rufina Gomez
was likewise done in secrecy. But it should be remembered thatRufina Gomez was already in the
family way at that time and it would seem that the parents of Martin Jugo were not in favor of the
marriage so much so that an action in court was brought concerning the marriage. (Testimony of
Sebastian Jugo, TSN of August 18, 1975, pp. 29-30)
"SECOND: Petitioner was a sweetheart of the deceased testator when they were still both single. That would be
in 1922 as Martin Jugo married respondent Rufina Gomez on November 29, 1923 (Exh. 3).
Petitioner married the testator only on December 5, 1952. There was a space of about 30 years inbetween. During those 30 years, could it be believed that she did not even wonder why
Martin Jugo did not marry her nor contact her anymore after November, 1923 - facts that should
impel her to ask her groom before she married him in secrecy, especially so when she was already
about 50 years old at the time of marriage.
"THIRD:
The fact that petitioner broke off from Martin Jugo in 1923 is by itself conclusive demonstration that
she knew that the man she had openly lived for 22 years as man and wife was a married man with
already two children.
"FOURTH: Having admitted that she knew the children of respondent Rufina Gomez, is it possible that she
would not have asked Martin Jugo whether or not they were his illegitimate or legitimate children and
by whom? That is un-Filipino.
"FIFTH:
Having often gone to Pasig to the residence of the parents of the deceased testator, is it possible that
she would not have known that the mother of private respondent Oscar Jugo and
Carmelita Jugo was respondent Rufina Gomez, considering that the houses of the parents of
Martin Jugo (where he had lived for many years) and that of respondent Rufina Gomez were just a
few meters away?
"Such pretentions of petitioner Sofia Nepomuceno are unbelievable. They are, to say the least,
inherently improbable, for they are against the experience in common life and the ordinary instincts
and promptings of human nature that a woman would not bother at all to ask the man she was going
to marry whether or not he was already married to another, knowing that her groom had children. It
would be a story that would strain human credulity to the limit if petitioner did not know that
Martin Jugo was already a married man in view of the irrefutable fact that it was precisely his
marriage to respondent Rufina Gomez that led petitioner to break off with the deceased during their
younger years."
Moreover, the prohibition in Article 739 of the Civil Code is against the making of a donation between
persons who are living in adultery or concubinage. It is the donation which becomes void. The giver
cannot give even assuming that the recipient may receive. The very wordings of the Will invalidate

the legacy because the testator admitted he was disposing the properties to a person with whom he
had been living in concubinage.
WHEREFORE, the petition is DISMISSED for lack of merit. The decision of the Court of Appeals,
now Intermediate Appellate Court, is AFFIRMED. No costs.
SO ORDERED.

SECOND DIVISION
[ G.R. No. 106720, September 15, 1994 ]
SPOUSES ROBERTO AND THELMA AJERO, PETITIONERS, VS. THE
COURT OF APPEALS AND CLEMENTE SAND, RESPONDENTS.
DECISION
PUNO, J.:
This is an appeal by certiorari from the Decision of the Court of Appeals in CA-G.R. CV No.
22840, dated March 30, 1992, the dispositive portion of which reads:
PREMISES CONSIDERED, the questioned decision of November 19, 1988 of the trial court
is herebyREVERSED and SET ASIDE, and the petition for probate is hereby DISMISSED. No
costs."
[1]

The earlier Decision was rendered by the RTC of Quezon City, Branch 94, in Sp. Proc. No. Q37171, and the instrument submitted for probate is the holographic will of the late Annie Sand,
who died on November 25, 1982.
In the will, decedent named as devisees, the following: petitioners Roberto and Thelma Ajero,
private respondent Clemente Sand, Meriam S. Arong, Leah Sand, Lilia Sand, Edgar Sand, Fe
Sand, Lisa S. Sand, and Dr. Jose Ajero, Sr., and their children.
On January 20, 1983, petitioners instituted Sp. Proc. No. Q-37171, for allowance of decedent's
holographic will. They alleged that at the time of its execution, she was of sound and disposing
mind, not acting under duress, fraud or undue influence, and was in every respect capacitated to
dispose of her estate by will.
Private respondent opposed the petition on the grounds that: neither the testament's body nor the
signature therein was in decedent's handwriting; it contained alterations and corrections which
were not duly signed by decedent; and, the will was procured by petitioners through improper
pressure and undue influence. The petition was likewise opposed by Dr. Jose Ajero. He contested
the disposition in the will of a house and lot located in Cabadbaran, Agusan Del Norte. He
claimed that said property could not be conveyed by decedent in its entirety, as she was not its
sole owner.
Notwithstanding the oppositions, the trial court admitted the decedent's holographic will
to probate. It found, inter alia:
"Considering then that the probate proceedings herein must decide only the question of identity
of the will, its due execution and the testamentary capacity of the testatrix, this probate court
finds no reason at all for the disallowance of the will for its failure to comply with the formalities
prescribed by law nor for lack of testamentary capacity of the testatrix.
[2]

"For one, no evidence was presented to show that the will in question is different from the will
actually executed by the testatrix. The only objections raised by the oppositors xxx are that the
will was not written in the handwriting of the testatrix which properly refers to the question of its
due execution, and not to the question of identity of will. No other will was alleged to have been
executed by the testatrix other than the will herein presented. Hence, in the light of the evidence
adduced, the identity of the will presented forprobate must be accepted, i.e., the will submitted in
Court must be deemed to be the will actually executed by the testatrix.
"xxx

xxx

xxx

"While the fact that it was entirely written, dated and signed in the handwriting of the testatrix
has been disputed, the petitioners, however, have satisfactorily shown in Court that the

holographic will in question was indeed written entirely, dated and signed in the handwriting of
the testatrix. Three (3) witnesses who have convincingly shown knowledge of the handwriting of
the testatrix have been presented and have explicitly and categorically identified the handwriting
with which the holographic will in question was written to be the genuine handwriting and
signature of the testatrix. Given then the aforesaid evidence, the requirement of the law that the
holographic will be entirely written, dated and signed in the handwriting of the testatrix has been
complied with.
"xxx

xxx

xxx

"As to the question of the testamentary capacity of the testatrix, (private respondent) Clemente
Sand himself has testified in Court that the testatrix was completely in her sound mind when he
visited her during her birthday celebration in 1981, at or around which time the holographic will
in question was executed by the testatrix. To be of sound mind, it is sufficient that the testatrix, at
the time of making the will, knew the valueof the estate to be disposed of, the proper object of
her bounty, and the character of the testamentary act xxx. The will itself shows that the testatrix
even had detailed knowledge of the nature of her estate. She even identified the lot number and
square meters of the lots she had conveyed by will. The objects of her bounty were likewise
identified explicitly. And considering that she had even written a nursing book which contained
the law and jurisprudence on will and succession, there is more than sufficient showing that she
knows the character of the testamentary act.
"In this wise, the question of identity of the will, its due execution and the testamentary capacity
of the testatrix has to be resolved in favor of the allowance of probate of the will submitted
herein.
"Likewise, no evidence was presented to show sufficient reason for the disallowance of herein
holographic will. While it was alleged that the said will was procured by undue and improper
pressure and influence on the part of the beneficiary or of some other person, the evidence
adduced have not shown any instance where improper pressure or influence was exerted on the
testatrix. (Private respondent) Clemente Sand has testified that the testatrix was still alert at the
time of the execution of the will, i.e., at or around the time of her birth anniversary celebration in
1981. It was also established that she is a very intelligent person and has a mind of her own. Her
independence of character and to some extent, her sense of superiority, which has been testified
to in Court, all show the unlikelihood of her being unduly influenced or improperly pressured to
make the aforesaid will. It must be noted that the undue influence or improper pressure in
question herein only refer to the making of a will and not as to the specific testamentary
provisions therein which is the proper subject of another proceeding. Hence, under the
circumstances, this Court cannot find convincing reason for the disallowance of the will herein.
"Considering then that it is a well-established doctrine in the law on succession that in case of
doubt, testate succession should be preferred over intestate succession, and the fact that no
convincing grounds were presented and proven for the disallowance of the holographic will of
the late Annie Sand, the aforesaid will submitted herein must be admitted to probate." (Citations
omitted.)
[3]

On appeal, said Decision was reversed, and the petition for probate of decedent's will was
dismissed. The Court of Appeals found that, "the holographic will fails to meet the requirements
for its validity." It held that the decedent did not comply with Articles 813 and 814 of the New
Civil Code, which read, as follows:
"Article 813: When a number of dispositions appearing in a holographic will are signed without
being dated, and the last disposition has a signature and date, such date validates the dispositions
preceding it, whatever be the time of prior dispositions."
[4]

"Article 814: In case of insertion, cancellation, erasure or alteration in a holographic will, the
testator must authenticate the same by his full signature."
It alluded to certain dispositions in the will which were either unsigned and undated, or signed
but not dated. It also found that the erasures, alterations and cancellations made thereon had not
been authenticated by decedent.
Thus, this appeal which is impressed with merit.

Section 9, Rule 76 of the Rules of Court provides that wills shall be disallowed in any of the
following cases:
"(a) If not executed and attested as required by law;
(b) If the testator was insane, or otherwise mentally incapable to make a will, at the time of its
execution;
(c) If it was executed under duress, or the influence of fear, or threats;
(d) If it was procured by undue and improper pressure and influence, on the part of the
beneficiary, or of some other person for his benefit;
(e) If the signature of the testator was procured by fraud or trick, and he did not intend that the
instrument should be his will at the time of fixing his signature thereto."
In the same vein, Article 839 of the New Civil Code reads:
"Article 839: The will shall be disallowed in any of the following cases:
(1) If the formalities required by law have not been complied with;
(2) If the testator was insane, or otherwise mentally incapable of making a will, at the time of its
execution;
(3) If it was executed through force or under duress, or the influence of fear, or threats;
(4) If it was procured by undue and improper pressure and influence, on the part of the
beneficiary or of some other person;
(5) If the signature of the testator was procured by fraud;
(6) If the testator acted by mistake or did not intend that the instrument he signed should be his
will at the time of affixing his signature thereto."
These lists are exclusive; no other grounds can serve to disallow a will. Thus, in a petition to
admit a holographic will to probate, the only issues to be resolved are: (1) whether the instrument
submitted is, indeed, the decedent's last will and testament; (2) whether said will was executed in
accordance with the formalities prescribed by law; (3) whether the decedent had the necessary
testamentary capacity at the time the will was executed; and, (4) whether the execution of the
will and its signing were the voluntary acts of the decedent.
In the case at bench, respondent court held that the holographic will of Anne Sand was not
executed in accordance with the formalities prescribed by law. It held that Articles 813 and 814
of the New Civil Code, ante, were not complied with, hence, it disallowed the probate of said
will. This is erroneous.
We reiterate what we held in Abangan vs. Abangan, 40 Phil. 476, 479 (1919), that:
"The object of the solemnities surrounding the execution of wills is to close the door against bad
faith and fraud, to avoid substitution of wills and testaments and to guaranty their truth and
authenticity. Therefore, the laws on this subject should be interpreted in such a way as to attain
these primordial ends. But, on the other hand, also one must not lose sight of the fact that it is not
the object of the law to restrain and curtail the exercise of the right to make a will. So when an
interpretation already given assures such ends, any other interpretation whatsoever, that adds
nothing but demands more requisites entirely unnecessary, useless and frustrative of the testator's
last will, must be disregarded."
[5]

[6]

For purposes of probating non-holographic wills, these formal solemnities include the
subscription, attestation, and acknowledgment requirements under Articles 805 and 806 of the
New Civil Code.
In the case of holographic wills, on the other hand, what assures authenticity is the requirement
that they be totally autographic or handwritten by the testator himself, as provided under Article
810 of the New Civil Code, thus:
"A person may execute a holographic will which must be entirely written, dated, and signed by
the hand of the testator himself. It is subject to no other form, and may be made in or out of the
Philippines, and need not be witnessed." (Italics supplied.)
[7]

Failure to strictly observe other formalities will not result in the disallowance of a holographic
will that is unquestionably handwritten by the testator.

A reading of Article 813 of the New Civil Code shows that its requirement affects the validity of
the dispositionscontained in the holographic will, but not its probate. If the testator fails to sign
and date some of the dispositions, the result is that these dispositions cannot be effectuated. Such
failure, however, does not render the whole testament void.
Likewise, a holographic will can still be admitted to probate, notwithstanding non-compliance
with the provisions of Article 814. In the case of Kalaw vs. Relova, 132 SCRA 237, 242 (1984),
this Court held:
"Ordinarily, when a number of erasures, corrections, and interlineations made by the testator in a
holographic Will have not been noted under his signature, xxx the Will is not thereby invalidated
as a whole, but at most only as respects the particular words erased, corrected or interlined.
Manresa gave an identical commentary when he said la omision de la salvedad no anula el
testamento, segun la regla de jurisprudencia establecida en la sentencia de 4 de Abril de
1895." (Citations omitted.)
[8]

Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date of
the holographic will or on testator's signature, their presence does not invalidate the will itself.
The lack of authentication will only result in disallowance of such changes.
It is also proper to note that the requirements of authentication of changes and signing and dating
of dispositions appear in provisions (Articles 813 and 814) separate from that which provides for
the necessary conditions for the validity of the holographic will (Article 810). The distinction can
be traced to Articles 678 and 688 of the Spanish Civil Code, from which the present provisions
covering holographic wills are taken. They read as follows:
"Article 678: A will is called holographic when the testator writes it himself in the form and with
the requisites required in Article 688."
[9]

[10]

"Article 688: Holographic wills may be executed only by persons of full age.
"In order that the will be valid it must be drawn on stamped paper corresponding to the year of
its execution, written in its entirety by the testator and signed by him, and must contain a
statement of the year, month and day of its execution.
"If it should contain any erased, corrected, or interlined words, the testator must identify them
over his signature.
"Foreigners may execute holographic wills in their own language."
This separation and distinction adds support to the interpretation that only the requirements of
Article 810 of the New Civil Code -- and not those found in Articles 813 and 814 of the same
Code -- are essential to the probate of a holographic will.
The Court of Appeals further held that decedent Annie Sand could not validly dispose of the
house and lot located in Cabadbaran, Agusan del Norte, in its entirety. This is correct and must
be affirmed.
As a general rule, courts in probate proceedings are limited to pass only upon the extrinsic
validity of the will sought to be probated. However, in exceptional instances, courts are not
powerless to do what the situation constrains them to do, and pass upon certain provisions of the
will. In the case at bench, decedent herself indubitably stated in her holographic will that the
Cabadbaran property is in the name of her late father, John H. Sand (which led oppositor Dr. Jose
Ajero to question her conveyance of the same in its entirety). Thus, as correctly held by
respondent court, she cannot validly dispose of the whole property, which she shares with her
father's other heirs.
IN VIEW WHEREOF, the instant petition is GRANTED. The Decision of the Court of Appeals
in CA-G.R. CV No. 22840, dated March 30, 1992, is REVERSED and SET ASIDE, except with
respect to the invalidity of the disposition of the entire house and lot in Cabadbaran, Agusan del
Norte. The Decision of the Regional Trial Court of Quezon City, Branch 94 in Sp. Proc. No. Q37171, dated November 19, 1988, admitting to probate the holographic will of decedent Annie
Sand, is hereby REINSTATED, with the above qualification as regards the Cabadbaran property.
No costs.
SO ORDERED.
[11]

FIRST DIVISION
[ G.R. No. 75017, June 03, 1991 ]
THE CONSOLIDATED BANK AND TRUST CORPORATION (SOLIDBANK),
PETITIONER, VS. HON. INTERMEDIATE APPELLATE COURT AND
MARIA
LUISA
MADRIGAL
VAZQUEZ,
RESPONDENTS.
DECISION
MEDIALDEA, J.:
This petition seeks to set aside the decision of respondent Court of Appeals dated September 24,
1985 (Annex A, Petition) and its resolution dated June 23, 1986 (Annex C, Petition) denying
petitioners motion for reconsideration of the decision of the Court of Appeals, insofar as it gave
due course to the order of respondent Judge dated March 23, 1984 (Annex E, Petition)
keeping the probate proceedings in Pasay City, Court of First Instance, instead of directing its
transfer to the court of origin, i.e., the Court of First Instance, Quezon City, and requiring
petitioner Administrator SOLIDBANK to render an accounting.
The issue raised in this petition is whether or not there was waiver of venue by inaction on the
part of petitioner.
The facts of the case are as follows:
Don Vicente Madrigal, a resident of 47 Balete Drive, Quezon City, died on June 6, 1972. For the
settlement of his estate, Special Proceedings No. Q-916962 was filed with the Court of First
Instance, now Regional Trial Court, of Quezon City.
Judge Enrique Agana whose place of assignment was in Pasay City was then temporarily
detailed in Quezon City and was assigned to the sala where Special Proceedings No. 916962 was
pending. After his temporary detail, Judge Agana returned to his place of assignment at Pasay
City, bringing with him the records in Special Proceedings No. Q-916962.
Judge Agana was later replaced by Judge Sofronio G. Sayo, upon the reorganization of the
Judiciary in 1980.
On April 21, 1982, private respondent Mrs. Vazquez filed with the Probate Court a Motion for
Payment of Lien, attaching a First Supplemental Agreement executed by and among the heirs
of the late Vicente Madrigal, dated August 17, 1981, with the following terms and conditions:
[1]

FIRST SUPPLEMENTAL AGREEMENT

We, the undersigned, have mutually agreed, as and by way of First Supplement to the
Memorandum of Agreement dated August 17, 1981, to the following terms and conditions:
1. That all expenses incurred by Maria Luisa Madrigal Vazquez in the prosecution/defense of
all the cases filed by one against the other, in the United States and in the Philippines, in the
agreed amount of FIVE MILLION PESOS (P5,000,000.00), Philippine Currency, shall be
reimbursed by the Estate of Vicente Madrigal, or from the proceeds of the settlement of the claim
of Madrigal & Co., Inc. against said Estate;
2. That the heirs shall honor and respect the claim of Madrigal & Co., Inc. filed against the
Estate of Vicente Madrigal and immediate steps shall be taken to settle, close and partition said
estate;
3. That we will abide by the majority decision of the heirs of Don Vicente Madrigal in the
settlement of the latters Estate; and,
4. That we undertake to execute such documents or papers as may be required and necessary in
order to implement our mutual agreement.
Manila, Philippines, August 17, 1981.
(SGD) ANTONIO P. MADRIGAL

(SGD) MA. LUISA MADRIGAL-VAZQUEZ

CONFORME:
(SGD) CONSUELO MADRIGAL
(SGD) MACARIA MADRIGAL DE LEON

(SGD) DR. DANIEL VAZQUEZ

(SGD) PACITA MADRIGAL-GONZALES

BY: MACARIO RUFINO

(SGD) JOSE P. MADRIGAL

Atty.-in-Fact
(SGD) JOSEFINA MADRIGAL BAYOT
BY: SUSANA BAYOT ORTIGAS
Atty.-in-Fact
(pp. 24-25, Rollo)
Petitioner failed to appear at the scheduled hearing on April 23, 1982. On October 20, 1983,
the probate court granted the motion and directed the petitioner to pay Mrs. Vazquez the sum of
P5,833,333.33 from the assets of the estate of Vicente Madrigal in its possession as follows:
O R D E R

PENDING resolution by this Court is a Motion for payment of lien dated April 19, 1982 filed
by one of the heirs, Maria Luisa Madrigal Vazquez, in the sum of P5,833,333.33.
During the hearing of said motion on April 23, 1982 at which Dr. Daniel Vazquez testified in
support thereof, the parties were all represented by counsel. No one cross-examined Dr.
Vazquez; neither did any party present any opposition to the motion.
WHEREFORE, the Motion for payment of lien is hereby granted and the Administrator is
hereby ordered to pay Maria Luisa Madrigal Vazquez the sum of P5,833,333.33 from the assets
of the estate of Vicente Madrigal in its possession. (p. 26, Rollo)
Petitioner moved to reconsider the said order, based on the following grounds:
x x x (1) the said Order is null and void for having been issued beyond the limited, special
jurisdiction of the Court, it being only a Probate Court; (2) that the same was issued in violation
of the due process of law; (3) that the Order has the compelled the petitioner-administrator to
violate the provisions of the Internal Revenue Code on the payment of the estate taxes and the
rule on preference of credits under the Civil Code x x x. (p. 26, Rollo)
Mrs. Vazquez countered by pointing out that the P5,833,333.33 is not a liability of the deceased
nor a claim that may be classified under Rule 86 of the Rules of Court to be paid from the assets
of the state. (p. 26, Rollo)
On December 8, 1983, the probate court issued an order amending its order dated October 20,
1983, as follows:
O R D E R

A motion for reconsideration of the Order of this Court dated October 20, 1983 was filed by the
Administrator, thru counsel based on three grounds, namely:
a. that the order was issued beyond the limited and special jurisdiction of the Court;
b. that the Order was issued in violation of the due process of law; and
c. that the Order is violative of the provisions of the Internal Revenue Code on payment of estate
taxes.
With respect to the first ground, while admittedly the amount to be paid Maria Luisa Madrigal
Vazquez is not, strictly speaking, a claim against the estate, nevertheless, all the heirs have
agreed on August 17, 1981 that the amount shall be reimbursed by the Estate of Vicente
Madrigal, or from the proceeds of the settlement of the claim of Madrigal & Co., Inc. against
said Estate. The Court has ordered the Administrator to pay the amount out of the assets of the
estate in its possession in compliance with the aforesaid agreement among the heirs.
As regards the second ground, the records reveal that the Administrator was furnished a copy of
the motion for payment of lien on April 20, 1982, which motion was set for hearing on April 23,
1982. While the counsel of record for the Administrator may have been out of town on the date
of hearing, it should have sent another representative or should have requested for its
postponement. For failure to do so, the Administrator may not now complaint (sic) that it was
deprived of its day in Court.
There is merit, however, in the third ground alleged in the motion for reconsideration that the
challenged Order has not made provisions for the payment of estate taxes. The court believes

that part of the approved amount should be withheld by the Administrator sufficient to answer for
the payment of taxes due thereon.
WHEREFORE, the Order of this Court dated October 20, 1983 is hereby amended and/or
modified in the sense that, of the approved claim of P5,833,333.33 of Ma. Luisa Madrigal
Vasquez, the amount of P833,333.33 shall be withheld by the Administrator to answer for any
obligations or liabilities due from said claim while the amount of P5,000,000.00 shall be paid
forthwith by the Administrator to Maria Luisa Madrigal Vazquez. The approved claim of
P5,833,333.33 shall be chargeable to the approved claim of Madrigal & Co., Inc. (pp. 40-41,
id.). (pp. 27-28, Rollo)
On April 11, 1983, the probate court required the parties to show cause why the case should not
be transferred to the Quezon City Regional Trial Court pursuant to the Administrative Order
issued by the Supreme Court, limiting the territorial jurisdiction of the Regional Trial Court of
Pasay City.
Two of the seven heirs, i.e., the heirs of Pacita Madrigal Vazquez and Mrs. Vazquez, manifested
their desire that the case be retained by the respondent probate court. Petitioner did not give its
conformity, in effect, objecting to the retention by the Pasay City probate court of the case for
further proceedings.
On December 27, 1983, petitioner filed an omnibus motion praying for the return of the case to
the court of origin, or the Quezon City Regional Trial Court, and to strike out the motion for
accounting since an accounting had already been rendered by the probate court presided over by
the now retired Judge Enrique A. Agana, Sr. The motion was denied in an order dated March 23,
1984 (Annex E, Petition).
The Court of Appeals subsequently rendered the disputed decision, upholding due process in the
instant case, and waiver of venue since the lapse from the time the case was heard at Pasay City
to the present amounted to a waiver on the part of petitioner to raise the question of venue. As
regards Mrs. Vazquez claim of P5,833,333.33, the Court of Appeals denied the same since
payment thereof would, in effect amount to a partial distribution of the estate of the deceased,
Don Vicente Madrigal, during the pendency of the intestate proceedings, which may not be
allowed prior to the delivery to any beneficiary of his/her distributive share of the estate and
before the payment of estate taxes, pursuant to Sec. 107 of the National Internal Revenue Code.
Private respondents motion for accounting was likewise denied and directed to betaken up in the
settlement proceedings before the respondent court.
Before Us, petitioner raises only the issue on improper venue, insisting as a result, on the nullity
of the probateproceedings including that taken by the Court of Appeals.
Petitioner maintains that the probate proceedings should properly have been retained by the
Quezon City Regional Trial Court, pursuant to Rule 73, Section 1 of the Revised Rules of Court,
as follows:
SECTION 1. Where estate of deceased persons settled. -If the decedent is an inhabitant of the
Philippines at the time of his death, whether a citizen or an alien, his will shall be proved, or
letters of administration granted and his estate settled, in the Court of First Instance in the
province in which he resides at the time of his death, and if he is an inhabitant of a foreign
country, the Court of First Instance of any province in which he had estate. The court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to the
exclusion of all other, courts. The jurisdiction assumed by a court, so far as it depends on the
place of residence of the decedent, or of the location of his estate, shall not be contested in a suit
or proceeding, except in an appeal from that court, in the original case, or when the want of
jurisdiction appears on the record.
Petitioner argues that their failure to object to the proceedings conducted at Pasay City Regional
Trial Court, should not be taken as a waiver on their part as to venue because they believed that
the proceedings were only temporary and that the case would subsequently be returned to
Quezon City for further proceedings.
A perusal of the records of the case, however, reveal that petitioner never objected when then
Judge Enrique Agana brought the case to Pasay City, his place of assignment, upon the
expiration of his detail in Quezon City.
The following manifestation of private respondent remains unrebutted by petitioner:

The records will readily show that since the case below was transferred to Pasay City, petitioner
itself had filed no less than four (4) motions and pleadings with the court a quo, thereby
recognizing its jurisdiction, to wit:
1. Motion for Declaration of Heirs - February 20, 1982;
2. Amended Inventory - February 20, 1982
3. Urgent Motion for Authority to Pay Estates Income Tax Obligations - March 12, 1982; and
4. Motion for Authority to Reimburse Real Estate Tax Payments - May 24, 1982.
(Vide, Comment, Annexes 3, 4, 5 and 6).
It was actually only after the Honorable Court a quo issued the December 8, 1983 Order that
petitioner vigorously challenged the jurisdiction of the Probate Court.
As correctly stated by petitioner, on April 11, 1983, the Probate Court a quo ordered all parties
to show proof why the case should not be transferred to Quezon City. All the parties, including
the private respondent, except the petitioner herein, manifested their willingness to have the case
retained by the court aquo. Petitioner did not respond. The court a quo issued an Order on June
14, 1983 stating that it shall continue hearing the case. Petitioner did not then move for a
reconsideration of said Order. Its contention that it did not conform thereto is not borne by the
records. It is an utter falsity. As a matter of fact, it continued attending all subsequent
proceedings and its counsel, as earlier stated, was even later to verbally manifest its agreement to
have the case retained by the Pasay branch. (pp. 245-246, Rollo)
Likewise, the heirs indicated their willingness to have the probate court at Pasay City continue
with the proceedings. And petitioners contention that only two heirs agreed to the retention by
the probate court is misplaced. Private respondent has pointed out:
It is incorrect for petitioner to declare that the other heirs of the late Don Vicente Madrigal
never manifested their willingness to have the probate court continue with the proceedings
below. The fact remains that the other heirs of Don Vicente Madrigal were (as they continue to
be) represented by the law firm of Bausa, Ampil and Suarez, and this is evident from the Motion
for Extension of Time of said firm dated May 24,1983, a copy of which is attached as Annex 4
hereof, wherein said other heirs specifically asked for an extension of fifteen days (from May 25,
1983 - and therefore up to June 10, 1983) within which to file their common desire to have
the probate court continue with the proceedings. This is the same law firm that filed the
Manifestation (Annex 9 of Comment of private respondent) dated June 10, 1983, precisely
expressing the consent of all the other heirs, as well as Pacita Madrigal-Gonzales, that
the probate court continue with the proceedings. (pp. 249-250, Rollo)
Petitioner appears unable to distinguish between jurisdiction and venue. Chief Justice Marcelo
Fernan lays down the distinction between the two, as follows:
Questions or issues relating to venue of actions are basically governed by Rule 4 of the Revised
Rules of Court. It is said that the laying of venue is procedural rather than substantive. It relates
to the jurisdiction of the court over the person rather than the subject matter. Provisions relating
to venue establish a relation between the plaintiff and the defendant and not between the court
and the subject matter. Venue relates to trial not to jurisdiction, touches more of the convenience
of the parties rather than the substance of the case. (Jesus Dacoycoy v. Hon. IAC, et al., G.R.
No. 74854, April 2, 1991, citing Manila Railroad, Co. v. Attorney General, 20 Phil. 523)
The action in the present case pertains to the probate of the intestate estate of the late Don
Vicente Madrigal, in which case a regional trial court properly has jurisdiction over the case,
both under the Judiciary Act of 1948, Sec. 44 (e) and under BP 129, Sec. 19(4).
Objection to improper venue should be made in a motion to dismiss. Until this is done, venue
cannot truly be said to have been improperly laid.
We, of course note that petitioner had, in fact, filed an Omnibus Motion to Dismiss, questioning
the venue of theprobate proceedings at Pasay City. This motion was however, filed quite late in
the day, petitioner having already submitted his person to the jurisdiction of the court.
Moreover, it would appear that petitioner was motivated by some other reasons for belatedly
questioning the venue. Thus, private respondents observations:

Contrary to petitioners pretense, it never sounded off its vigorous objection that venue was
improperly laid nor against the jurisdiction of the probate court until said court issued the order
of December 8, 1983. It was only after its receipt of said order, wherein the probate court
directed petitioner to pay herein private respondent the total amount of P5,833,333.33 that
petitioner commenced its mindless and baseless attack against the jurisdiction of
the probate court below claiming now, that venue, which it has for a long time waived, should be
with the Quezon City Regional Trial Court. (p. 250, Rollo)
Regrettably, therefore, while We agree with the petitioner that venue in this case should have
been laid in Quezon City, petitioners inaction has worked against it:
It is well-settled in this jurisdiction that wrong venue is merely a waiveable procedural defect,
and such waiver may occur by laches. x x x. (Uriarte v. CFI of Negros Occ., G.R. Nos. L21938-39, October 29, 1970, 33 SCRA 252 at p. 261)
Foregoing considered, We agree with the Court of Appeals that indeed, petitioner has waived its
right to contest the question of venue.
We quote from the decision of the Court of Appeals:
x x x.
Noted is that as per Order of April 11, 1983 (p. 130, id.), this case was brought to the Regional
Trial Court of Pasay City by the former presiding Judge after his temporary detail with the
Quezon City branch, the former Court of First Instance, now the Regional Trial Court. When
that detail was terminated, it follows that the provisions of the Judiciary Reorganization Act of
1980 or the Batas Pambansa Blg. 129 and the Resolution en banc of the Supreme Court dated
February 10, 1983 on pending cases as of February 14, 1983, limiting the territorial jurisdiction
of Pasay City, Regional Trial Court to Pasay City cases only is operative already and should have
been followed. Or, in other words, Special Proceedings No. Q-16962 (sic) should have been sent
to the Regional Trial Court of Quezon City which was pointed out by the respondent court earlier
but which position was not pursued. And, neither did the petitioner raise this question, to
emphasize. The foregoing resolution, however is merely directory. The herein Ponente had
come across similar instances where cases were brought along by an incumbent RTC Judge who
is re-assigned to another place but within the same district or province, despite the opposition
from
one
litigant.
In
the
case
at
bar,
it
can
be
again
said that the lapse of time from the time the case was heard at Pasay City to the present, has amo
untedto another waiver on the part of the petitioner to contest the question of venue which he has
been questioning after the issuance of the questioned Orders of October 20, 1983 and December
8, 1983, apparently adversed (sic) to its liking due to some legal grounds like the non-payment of
taxes which will be discussed below. (Underscoring supplied)
At this juncture, We are not prepared to rule that all the proceedings in the past are null and void
because of venue and send back the proceedings to the Quezon City Regional Trial Court, try the
case anew from the very beginning to where this incident came about which proceedings might
take more than five (5) years again. We are not prone to do this, conscious of the fact that one of
the primordial objections of Batas Pambansa Blg. 129 is the speedy administration of justice but
within the framework of the rule of law. We are not inclined to give our affirmance to the
petitioners desire for the said transfer because the procedure will only militate against the
interest of all parties considering that everybody is desirous to terminate the proceedings as early
as possible and the continuance of the proceedings before the respondent court has not caused
any damage against the parties and there is no damage as well against public interest. (pp. 3536,Rollo)
ACCORDINGLY, the petition is DENIED and the decision of the Court of Appeals, dated
September 24, 1985 is AFFIRMED in all respects. No costs.
SO ORDERED.

NATALIA CARPENA OPULENCIA, PETITIONER, VS. COURT OF

APPEALS, ALADIN SIMUNDAC AND MIGUEL OLIVAN,
RESPONDENTS. (1998)

FIRST DIVISION
[ G.R. No. 125835, July 30, 1998 ]
NATALIA CARPENA OPULENCIA, PETITIONER, VS. COURT OF
APPEALS, ALADIN SIMUNDAC AND MIGUEL OLIVAN,
RESPONDENTS.
DECISION
PANGANIBAN, J.
Is a contract to sell a real property involved in testate proceedings valid and binding
without the approval of theprobate court?
Statement of the Case
This is the main question raised in this petition for review before us, assailing the
Decision[1] of the Court of Appeals[2] in CA-GR CV No. 41994 promulgated on February
6, 1996 and its Resolution[3] dated July 19, 1996. The challenged Decision disposed
as follows:
WHEREFORE, premises considered, the order of the lower court dismissing the
complaint is SET ASIDE and judgment is hereby rendered declaring the CONTRACT
TO SELL executed by appellee in favor of appellants as valid and binding, subject to
the result of the administration proceedings of the testate Estate of Demetrio
Carpena.
SO ORDERED. [4]
Petitioners Motion for Reconsideration was denied in the challenged Resolution. [5]
The Facts
The antecedent facts, as succinctly narrated by Respondent Court of Appeals are:
In a complaint for specific performance filed with the court a quo [herein private
respondents] Aladin Simundac and Miguel Oliven alleged that [herein petitioner]
Natalia Carpena Opulencia executed in their favor a CONTRACT TO SELL Lot 2125
of the Sta. Rosa Estate, consisting of 23,766 square meters located in Sta. Rosa,
Laguna at P150.00 per square meter; that plaintiffs paid a downpayment
of P300,000.00 but defendant, despite demands, failed to comply with her
obligations under the contract. [Private respondents] therefore prayed that
[petitioner] be ordered to perform her contractual obligations and to further pay
damages, attorneys fee and litigation expenses.
In her traverse, [petitioner] admitted the execution of the contract in favor of
plaintiffs and receipt ofP300,000.00 as downpayment. However, she put forward the
following affirmative defenses: that the property subject of the contract formed part

of the Estate of Demetrio Carpena (petitioners father), in respect of which a petition

for probate was filed with the Regional Trial Court, Branch 24, Bian, Laguna; that at
the time the contract was executed, the parties were aware of the pendency of
the probate proceeding; that the contract to sell was not approved by
the probate court; that realizing the nullity of the contract [petitioner] had offered to
return the downpayment received from [private respondents], but the latter refused
to accept it; that [private respondents] further failed to provide funds for the tenant
who demanded P150,00.00 in payment of his tenancy rights on the land; that
[petitioner] had chosen to rescind the contract.
At the pre-trial conference the parties stipulated on [sic] the following facts:
1.
That on February 3, 1989, [private respondents] and [petitioner] entered
into a contract to sell involving a parcel of land situated in Sta. Rosa, Laguna,
otherwise known as Lot No. 2125 of the Sta. Rosa Estate.
2.
That the price or consideration of the said sell [sic] is P150.00 per square
meters;
3.
That the amount of P300,000.00 had already been received by
[petitioner];
4.
That the parties have knowledge that the property subject of the contract
to sell is subject of the probateproceedings;
5.
That [as] of this time, the probate Court has not yet issued an order either
approving or denying the said sale. (p. 3, appealed Order of September 15, 1992,
pp. 109-112, record).
[Private respondents] submitted their evidence in support of the material
allegations of the complaint. In addition to testimonies of witnesses, [private
respondents] presented the following documentary evidences: (1) Contract to Sell
(Exh A); (2) machine copy of the last will and testament of Demetrio Carpena
(defendants father) to show that the property sold by defendant was one of those
devised to her in said will (Exh B); (3) receipts signed by defendant for the
downpayment in the total amount of P300,000.00 (Exhs C, D & E); and (4) demand
letters sent to defendant (Exhs F & G).
It appears that [petitioner], instead of submitting her evidence, filed a Demurrer to
Evidence. In essence, defendant maintained that the contract to sell was null and
void for want of approval by the probate court. She further argued that the contract
was subject to a suspensive condition, which was the probate of the will of
defendants father Demetrio Carpena. An Opposition was filed by [private
respondents]. It appears further that in an Order dated December 15, 1992 the
court a quo granted the demurrer to evidence and dismissed the complaint. It
justified its action in dismissing the complaint in the following manner:
It is noteworthy that when the contract to sell was consummated, no petition was
filed in the Court with notice to the heirs of the time and place of hearing, to show
that the sale is necessary and beneficial. A sale of properties of an estate as
beneficial to the interested parties must comply with the requisites provided by law,
(Sec. 7, Rule 89, Rules of Court) which are mandatory, and without them, the
authority to sell, the sale itself, and the order approving it, would be null and void
ab initio. (Arcilla vs. David, 77 Phil. 718, Gabriel, et al., vs. Encarnacion, et al., L6736, May 4, 1954; Bonaga vs. Soler, 2 Phil. 755) Besides, it is axiomatic that where
the estate of a deceased person is already the subject of a testate or intestate

proceeding, the administrator cannot enter into any transaction involving it without
prior approval of the probate Court. (Estate of Obave, vs. Reyes, 123 SCRA 767).
As held by the Supreme Court, a decedents representative (administrator) is not
estopped from questioning the validity of his own void deed purporting to convey
land. (Bona vs. Soler, 2 Phil, 755). In the case at bar, the [petitioner,] realizing the
illegality of the transaction[,] has interposed the nullity of the contract as her
defense, there being no approval from the probate Court, and, in good faith offers to
return the money she received from the [private respondents]. Certainly, the
administratrix is not estop[ped] from doing so and the action to declare the
inexistence of contracts do not prescribe. This is what precipitated the filing of
[petitioners] demurrer to evidence.[6]
The trial courts order of dismissal was elevated to the Court of Appeals by private
respondents who alleged:
1.
The lower court erred in concluding that the contract to sell is null and void,
there being no approval of the probate court.
2.
The lower court erred in concluding that [petitioner] in good faith offers to
return the money to [private respondents].
3.
The lower court erred in concluding that [petitioner] is not under estoppel to
question the validity of the contract to sell.
4.
The lower court erred in not ruling on the consideration of the contract to sell
which is tantamount to plain unjust enrichment of [petitioner] at the expense of
[private respondents].[7]
Public Respondents Ruling
Declaring the Contract to Sell valid, subject to the outcome of the testate
proceedings on Demetrio Carpenas estate, the appellate court set aside the trial
courts dismissal of the complaint and correctly ruled as follows:
It is apparent from the appealed order that the lower court treated the contract to
sell executed by appellee as one made by the administratrix of the Estate of
Demetrio Carpena for the benefit of the estate. Hence, its main reason for voiding
the contract in question was the absence of the probate courts approval.
Presumably, what the lower court had in mind was the sale of the estate or part
thereof made by the administrator for the benefit of the estate, as authorized under
Rule 89 of the Revised Rules of Court, which requires the approval of
the probate court upon application therefor with notice to the heirs, devisees and
legatees.
However, as adverted to by appellants in their brief, the contract to sell in question
is not covered by Rule 89 of the Revised Rules of Court since it was made by
appellee in her capacity as an heir, of a property that was devised to her under the
will sought to be probated. Thus, while the document inadvertently stated that
appellee executed the contract in her capacity as executrix and administratrix of
the estate, a cursory reading of the entire text of the contract would unerringly
show that what she undertook to sell to appellants was one of the other properties
given to her by her late father, and more importantly, it was not made for the
benefit of the estate but for her own needs. To illustrate this point, it is apropos to
refer to the preambular or preliminary portion of the document, which reads:

WHEREAS, the SELLER is the lawful owner of a certain parcel of land, which is more
particularly described as follows:
xxx

xxx
xxx

xxx

xxx
xxx

xxx

xxx
xxx

WHEREAS, the SELLER suffers difficulties in her living and has forced to offer the
sale of the above-described property, which property was only one among the
other properties given to her by her late father, to anyone who can wait for
complete clearance of the court on the Last Will Testament of her father.
WHEREAS, the SELLER in order to meet her need of cash, has offered for sale the
said property at ONE HUNDRED FIFTY PESOS (150.00) Philippine Currency, per
square meter unto the BUYERS, and with this offer, the latter has accepted to buy
and/or purchase the same, less the area for the road and other easements indicated
at the back of Transfer Certificate of Title No. 2125 duly confirmed after the survey
to be conducted by the BUYERs Licensed Geodetic Engineer, and whatever area [is]
left. (Emphasis added).
To emphasize, it is evident from the foregoing clauses of the contract that appellee
sold Lot 2125 not in her capacity as executrix of the will or administratrix of the
estate of her father, but as an heir and more importantly as owner of said lot which,
along with other properties, was devised to her under the will sought to be
probated. That being so, the requisites stipulated in Rule 89 of the Revised Rules of
Court which refer to a sale made by the administrator for the benefit of the estate
do not apply.
xxx

xxx
xxx

It is noteworthy that in a Manifestation filed with this court by appellants, which is

not controverted by appellee, it is mentioned that the last will and testament of
Demetrio Carpena was approved in a final judgment rendered in Special Proceeding
No. B-979 by the Regional Trial Court, Branch 24 Binan, Laguna. But of course such
approval does not terminate the proceeding[s] since the settlement of the estate
will ensue. Such proceedings will consist, among others, in the issuance by the court
of a notice to creditors (Rule 86), hearing of money claims and payment of taxes
and estate debts (Rule 88) and distribution of the residue to the heirs or persons
entitled thereto (Rule 90). In effect, the final execution of the deed of sale itself
upon appellants payment of the balance of the purchase price will have to wait for
the settlement or termination of the administration proceedings of the Estate of
Demetrio Carpena. Under the foregoing premises, what the trial court should have
done with the complaint was not to dismiss it but to simply put on hold further
proceedings until such time that the estate or its residue will be distributed in
accordance with the approved will.
The rule is that when a demurrer to the evidence is granted by the trial court but
reversed on appeal, defendant loses the right to adduce his evidence. In such a
case, the appellate court will decide the controversy on the basis of plaintiffs
evidence. In the case at bench, while we find the contract to sell valid and binding

between the parties, we cannot as yet order appellee to perform her obligations
under the contract because the result of the administration proceedings of the
testate Estate of Demetrio Carpena has to be awaited. Hence, we shall confine our
adjudication to merely declaring the validity of the questioned Contract to Sell.
Hence, this appeal.[8]
The Issue
Petitioner raises only one issue:
Whether or not the Contract to Sell dated 03 February 1989 executed by the
[p]etitioner and [p]rivate [r]espondent[s] without the requisite probate court
approval is valid.
The Courts Ruling
The petition has no merit.
Contract to Sell Valid
In a nutshell, petitioner contends that where the estate of the deceased person is
already the subject of a testate or intestate proceeding, the administrator cannot
enter into any transaction involving it without prior approval of
theProbate Court.[9] She maintains that the Contract to Sell is void because it was
not approved by the probate court, as required by Section 7, Rule 89 of the Rules of
Court:
SEC. 7. Regulations for granting authority to sell, mortgage, or otherwise
encumber estate. The court having jurisdiction of the estate of the deceased may
authorize the executor or administrator to sell, mortgage, or otherwise encumber
real estate, in cases provided by these rules and when it appears necessary or
beneficial, under the following regulations:
xxx
Insisting that the above rule should apply to this case, petitioner argues that the
stipulations in the Contract to Sell require her to act in her capacity as an executrix
or administratrix. She avers that her obligation to eject tenants pertains to the
administratrix or executrix, the estate being the landlord of the said tenants.
[10]
Likewise demonstrating that she entered into the contract in her capacity as
executor is the stipulation that she must effect the conversion of subject land from
irrigated rice land to residential land and secure the necessary clearances from
government offices. Petitioner alleges that these obligations can be undertaken only
by an executor or administrator of an estate, and not by an heir. [11]
The Court is not persuaded. As correctly ruled by the Court of Appeals, Section 7 of
Rule 89 of the Rules of Court is not applicable, because petitioner entered into the
Contract to Sell in her capacity as an heiress, not as an executrix or administratrix
of the estate. In the contract, she represented herself as the lawful owner and
seller of the subject parcel of land.[12] She also explained the reason for the sale to be
difficulties in her living conditions and consequent need of cash. [13] These
representations clearly evince that she was not acting on behalf of the estate
under probate when she entered into the Contract to Sell. Accordingly, the
jurisprudence cited by petitioner has no application to the instant case.
We emphasize that hereditary rights are vested in the heir or heirs from the
moment of the decedents death.[14]Petitioner, therefore, became the owner of her

hereditary share the moment her father died. Thus, the lack of judicial approval
does not invalidate the Contract to Sell, because the petitioner has the substantive
right to sell the whole or a part of her share in the estate of her late father. [15] Thus,
in Jakosalem vs. Rafols,[16] the Court resolved an identical issue under the old Civil
Code and held:
Article 440 of the Civil Code provides that the possession of hereditary property is
deemed to be transmitted to the heir without interruption from the instant of the
death of the decedent, in case the inheritance be accepted. And Manresa with
reason states that upon the death of a person, each of his heirs becomes the
undivided owner of the whole estate left with respect to the part or portion which
might be adjudicated to him, a community of ownership being thus formed among
the coowners of the estate while it remains undivided. xxx And according to article
399 of the Civil Code, every part owner may assign or mortgage his part in the
common property, and the effect of such assignment or mortgage shall be limited to
the portion which may be allotted him in the partition upon the dissolution of the
community. Hence, where some of the heirs, without the concurrence of the others,
sold a property left by their deceased father, this Court, speaking thru its then Chief
Justice Cayetano Arellano, said that the sale was valid, but that the effect thereof
was limited to the share which may be allotted to the vendors upon the partition of
the estate.
Administration of the Estate Not Prejudiced by the Contract to Sell
Petitioner further contends that [t]o sanction the sale at this stage would bring
about a partial distribution of the decedents estate pending the final termination of
the testate proceedings.[17] This becomes all the more significant in the light of the
trial courts finding, as stated in its Order dated August 20, 1997, that the legitime
of one of the heirs has been impaired. [18]
Petitioners contention is not convincing. The Contract to Sell stipulates that
petitioners offer to sell is contingent on the complete clearance of the court on the
Last Will Testament of her father.[19] Consequently, although the Contract to Sell was
perfected between the petitioner and private respondents during the pendency of
the probateproceedings, the consummation of the sale or the transfer of ownership
over the parcel of land to the private respondents is subject to the full payment of
the purchase price and to the termination and outcome of the testate proceedings.
Therefore, there is no basis for petitioners apprehension that the Contract to Sell
may result in a premature partition and distribution of the properties of the estate.
Indeed, it is settled that the sale made by an heir of his share in an inheritance,
subject to the pending administration, in no wise stands in the way of such
administration.[20]
Estoppel
Finally, petitioner is estopped from backing out of her representations in her valid
Contract to Sell with private respondents, from whom she had already
received P300,000 as initial payment of the purchase price. Petitioner may not
renege on her own acts and representations, to the prejudice of the private
respondents who have relied on them.[21] Jurisprudence teaches us that neither the
law nor the courts will extricate a party from an unwise or undesirable contract he
or she entered into with all the required formalities and with full awareness of its
consequences.[22]
WHEREFORE, the petition is hereby DENIED and the assailed Decision of the Court
of Appeals AFFIRMED. Costs against petitioner.

SO ORDERED.

SECOND DIVISION
[ G.R. No. L-35367, April 09, 1987 ]
MANOTOK REALTY, INC., PETITIONER, VS. THE HONORABLE COURT
OF
APPEALS
AND
APOLONIO
SIOJO,
RESPONDENTS.
DECISION
GUTIERREZ, JR., J.:
This is an appeal by way of certiorari seeking to set aside the decision of the Court of Appeals
which reversed the decision of the trial court and upheld the sale of the disputed lot in favor of
the private respondent.
Wayback on November 21, 1951, the Court of First Instance of Manila, acting as a probate court
in the special proceedings of the testate estate of Clara Tambunting de Legarda, authorized
Vicente Legarda, as special co-administrator, to sell the Legarda Tambunting Subdivision. The
order of the probate court partly states:
xxx
xxx
xxx
"The co-administrators herein are hereby authorized to sell the 'Legarda Tambunting Subdivision'
covered by Transfer Certificate of Title Nos. 62042, 45149, 29578, 40957, and 59585, with a
total area of 80,238.90 square meters, more or less, at a price of P50.00 per square meter,
executing the necessary document or documents and submitting the same to this Court for
approval."
xxx
xxx
xxx
On December 10, 1952, Vicente Legarda as co-administrator allegedly sold an area of about 280
square meters of the subdivision denominated as Lot 6, Block 4 situated at Dinalupihan, Tondo,
Manila at P30.00 per square meter to Abelardo Lucero, The sale was on an installment basis and
Lucero paid an initial amount of P200.00 by virtue of which a receipt was issued by Legarda.
On the same day, Lucero took possession of the lot.
In 1953, Lucero leased the lot to six persons, one of whom is herein private respondent. Like the
other tenants, respondent constructed a house on an area of 73 square meters of the lot now
denominated as Lot III, Block 2, and paid P15.00 as monthly rentals.
On July 31, 1956, the probate court issued another order authorizing the Philippine Trust
Company as administrator, to sell the subdivision at the earliest possible time at the best
obtainable price.
Sometime in 1957, the lessees of Lucero, including the private respondent, defaulted in their
payment of rentals. Separate actions for ejectment were filed against them. However, a
compromise agreement was concluded and the tenants resumed the payment of rentals. Up until
1966, the private respondent continued paying monthly rentals to Lucero.
In the meantime, Lucero accordingly awaited the sending by Legarda of the formal contract but
as none came, he could not make further payments. In 1957-58, he, therefore, went to the
Philippine Trust Company to make further payments, showing it the receipt evidencing the down
payment but the latter refused either to receive payment or to issue a formal contract because the
Legarda-Tambunting Subdivision was involved in litigation.
The petitioner was subsequently awarded the sale of the entire subdivision. On March 13, 1959,
the deed of sale was executed by and between petitioner and Philippine Trust Company and the
same was approved by the probatecourt. The petitioner obtained Transfer Certificate of Title
Numbers 62042, 45149, 29578, 40957 and 59585 which covered the whole Legarda-Tambunting
estate including the lot sold to Lucero.
On January 1966, the petitioner caused to be published in the Manila Times and Taliba notices
addressed to "all squatter-occupants" of the subdivision advising them to surrender the material
and actual possession of the portions occupied by them otherwise judicial action would be taken.
On March 4, 1966, the petitioner filed the complaint below for ejectment against the private
respondent. On March 11, 1966, summons was served on the latter. These circumstances,

notwithstanding, on May 23, 1966, Lucero executed a deed of assignment of the lot in question
in favor of his lessees, including the private respondent.
After hearing, the trial court rendered judgment in favor of the petitioner, the dispositive portion
of which reads:
"WHEREFORE, judgment is hereby rendered declaring the plaintiff (petitioner) to be the owner
and entitled to the possession of the land described as Lot III, Block 2, located at 1286
Dinalupihan, Tondo, Manila, and defendant (private respondent) is hereby ordered to deliver the
possession thereof to the plaintiff, to pay a monthly rental at the rate of P.50 centavos a square
meter per month from March 20, 1959 until the land is delivered to the plaintiff, and to pay the
cost." (pp. 44-47, Rec. on Appeal).
On appeal, the Court of Appeals reversed the decision of the trial court and held that the sale
made by Legarda to Lucero was valid because the former acted within his authority as special
co-administrator and that there was no need for the approval of the probate court of such sale.
According to the appellate court, where the co-administrator sold the estate pursuant to an
authority granted him by the probate court, and where, the administrator acted in obedience to
the court's directive and within the scope of his authority, the sale could well be considered the
act of the probate court itself. Therefore, the approval of the probate court, if wanting, cannot
affect the validity of the administrator's act.
The appellate court also ruled that there was a consummated sale between Legarda and Lucero
because they had agreed on the subject matter and the purchase price and that the latter paid part
of the purchase price while the former delivered the land.
In this petition, the petitioner contends the appellate court committed an error of law when: a) it
upheld the validity of the contract of sale between Legarda and Lucero; and b) it ruled that the
approval of the probate court was not necessary for the validity of the said sale.
The petitioner argues that the receipt evidencing the alleged sale by Legarda to Lucero does not
conform to the legal requirements of contracts of sale and that when the law requires that a
contract be in a public document in order that it may be valid or enforceable, such as contracts
which have for their object the creation or transmission of real rights over immovable property,
that requirement is absolute and indispensable. Therefore, the questioned sale cannot be
enforced against third persons such as petitioner by the private respondent who only derived his
right to the property from Lucero. Furthermore, the alleged sale was on an installment basis and
thus, necessitated court approval because the same was patently not in accordance with the
express terms and conditions specified in the authorization to sell by the probate court.
We find merit in the petition.
The alleged sale made by Legarda to Lucero should have been embodied in a public instrument
in accordance with Article 1358 of the Civil Code and should have been duly registered with the
Register of Deeds to make it binding against third persons. The authority given by
the probate court to Legarda specifically required the execution of necessary documents. Lucero
not only failed to obtain a deed of sale from Legarda but also failed to secure any kind of writing
evidencing the contract of sale other than the receipt issued by Legarda acknowledging the
amount of P200.00. No explanation was offered by the private respondent as to why there was
no effort on the part of Lucero to pay the balance of the purchase price during the time that
Legarda was the special co-administrator. The private respondent merely alleged that Lucero
awaited the sending of the formal contract by Legarda but as none came, he could not make
further payments. It was only after about five years that Lucero allegedly went to the
administrator and offered to pay the balance. By this time, Philippine Trust Company was
already the administrator of the Legarda-Tambunting estate and it refused to accept further
payments from Lucero who had only the receipt in the amount of P200.00 and nothing more as
proof that more than five years earlier a piece of real property was sold to him by a special
administrator acting under court orders.
We, therefore, rule that the alleged sale made by Legarda to Lucero did not bind the LegardaTambunting estate, much less, the petitioner who acquired the property in dispute with the
approval of the probate court and in a sole reliance on the clean title of the said property. As
correctly ruled by the trial court:
"The plaintiff (petitioner), as the registered owner of the property, is entitled to the possession
thereof, unless the defendant (private respondent) could show that he is entitled to its possession
or to purchase the same. The property was advertised for sale, but neither Abelardo Lucero nor

the defendant herein appeared in the testate proceedings of Clara Tambunting de Legarda to
claim their right to the particular lot in question. The records of the testate proceedings of Clara
Tambunting de Legarda did not show that any claim was made by Dr. Abelardo Lucero or by the
defendant herein. The alleged sale made by Vicente Legarda in favor of Dr. Lucero did not bind
the estate, for aside from the fact that no formal deed of sale was executed by Vicente Legarda
specifying the terms thereof, it was never approved by the Court. Sales of immovable properties
by the administrators did not bind the estate and have no validity unless they are approved by the
Court. Moreover, the alleged receipt issued by Vicente Legarda does not constitute even a
memorandum of sale, because it did not specify the price of the land and the manner of payment
x x x."
We also find that the appellate court committed an error of law when it held that the sale of the
lot in question did not need the approval of the probate court.
Although the Rules of Court do not specifically state that the sale of an immovable property
belonging to an estate of a decedent, in a special proceeding, should be made with the approval
of the court, this authority is necessarily included in its capacity as a probate court.
An administrator under the circumstances of this case cannot enjoy blanket authority to dispose
of real estate as he pleases, especially where he ignores specific directives to execute proper
documents and get court approval for the sale's validity.
In the case of Estate of Olave v. Reyes (123 SCRA 767, 772), we ruled:
"Section 1, Rule 73 of the Rules of Court, expressly provides that 'the court first taking
cognizance of the settlement of the estate of a decedent, shall exercise jurisdiction to
the exclusion of all other courts.' (Italics supplied). The law is clear that where the estate of the
deceased person is already the subject of a testate or intestate proceeding, the administrator
cannot enter into any transaction involving it without prior approval of the probate court."
Also, in Vda. de Gil v. Cancio (14 SCRA 796, 800), we ruled:
xxx
xxx
xxx
"x x x And bearing in mind this situation of the two heirs which happened during the Japanese
occupation, theprobate court did not hesitate in approving the agreement thereby giving to the
administratrix the necessary authority to execute the deed of sale covering the two properties of
the deceased in favor of Agustin Cancio provided that the deed of sale be submitted to the court
for its approval. And this matter is sanctioned by Section 4, Rule 89 of the Rules of Court, which
provides:
'When it appears that the sale of the whole or a part of the real or personal estate will be
beneficial to the heirs, devisees, legatees, and other interested persons, the court may, upon
application of the executor or administrator and on written notice to the heirs, devisees, and
legatees who are interested in the estate to be sold, authorize the executor or administrator to sell
the whole or a part of said estate, although not necessary to pay debts, legacies, or expenses of
administration; x x x.'"
Moreover the authority granted by the probate court in the case at bar specifically ordered
Legarda to submit the document of sale for its approval.
Thus, as stated earlier, the sale made by Legarda to Lucero, having been done without the
approval of the probatecourt and without the execution of the necessary documents did not bind
the Legarda-Tambunting estate and could not have affected the rights of the petitioner over the
disputed lot. Furthermore, the private respondent is only a transferee of Lucero. At the time of
the transfer of rights, the private respondent already had notice of the petitioner's ownership
because he was served with a summons in the ejectment case filed against him by the petitioner.
More importantly, the private respondent is deemed to have constructive notice of such
ownership from the time the petitioner was able to secure a title over the said property in 1959.
The controversies and litigations over the estate, the problems with numerous squatters, and
other aspects of the acquisition of the property attracted wide public attention and anybody in the
subdivision could not have avoided being involved or aware. Therefore, the private respondent
cannot even be considered a possessor and builder in good faith.
Again, as correctly held by the trial court:
"After this case had been filed on March 4, 1966, Dr. Abelardo Lucero, on May 23, 1966,
executed a deed of sale of the lot in question in favor of his lessees, including the defendant.
This deed of sale did not confer upon the defendant the character of a builder in good faith. He
built his house at the time when he was a mere lessee of Dr. Abelardo Lucero. The fact that he

subsequently bought the rights of Dr. Lucero did not change the character of his possession to a
possessor in good faith. Moreover, it is apparent that the deed of sale was executed in bad faith
with the intention of giving the defendant the character of a possessor in good faith. The records
show that the defendant was served with summons on March 11, 1966. At the time of the
execution of the deed of sale (Exh. C) on March 26, 1966, defendant already knew, or had been
informed, that the plaintiff claims to be the owner of the land in question, and that plaintiff's
ownership is evidenced by Transfer Certificate of Title Nos. 62042, 45149, 29578, 40957 and
59585. The alleged sale made by Vicente Legarda to Abelardo Lucero was not annotated in the
certificate of title of the plaintiff, and therefore, was not binding upon it. When Dr. Abelardo
Lucero executed the deed of sale in favor of the defendant, he already knew of the plaintiff's
claim of ownership."
WHEREFORE, IN VIEW OF THE FOREGOING, the questioned decision of the Court of
Appeals is REVERSED and SET ASIDE. The decision of the then Court of First Instance of
Manila in Civil Case No. 64559 is REINSTATED.
SO ORDERED.

SECOND DIVISION
[ G.R. No. 118671, January 29, 1996 ]
THE ESTATE OF HILARIO M. RUIZ, EDMOND RUIZ, EXECUTOR,
PETITIONER, VS. THE COURT OF APPEALS (FORMER SPECIAL SIXTH
DIVISION), MARIA PILAR RUIZ-MONTES, MARIA CATHRYN RUIZ,
CANDICE ALBERTINE RUIZ, MARIA ANGELINE RUIZ AND THE
PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF PASIG,
BRANCH
156,
RESPONDENTS.
DECISION
PUNO, J.:
This petition for review on certiorari seeks to annul and set aside the decision dated November
10, 1994 and the resolution dated January 5, 1995 of the Court of Appeals in CA-G.R. SP No.
33045.
The facts show that on June 27, 1987, Hilario M. Ruiz [1] executed a holographic will naming as
his heirs his only son, Edmond Ruiz, his adopted daughter, private respondent Maria Pilar Ruiz
Montes, and his three granddaughters, private respondents Maria Cathryn, Candice Albertine and
Maria Angeline, all children of Edmond Ruiz. The testator bequeathed to his heirs substantial
cash, personal and real properties and named Edmond Ruiz executor of his estate. [2]
On April 12, 1988, Hilario Ruiz died. Immediately thereafter, the cash component of his estate
was distributed among Edmond Ruiz and private respondents in accordance with the decedents
will. For unbeknown reasons, Edmond, the named executor, did not take any action for
the probate of
his
fathers
holographic
will.
On June 29, 1992, four years after the testators death, it was private respondent Maria Pilar Ruiz
Montes who filed before the Regional Trial Court, Branch 156, Pasig, a petition for
the probate and approval of Hilario Ruizs will and for the issuance of letters testamentary to
Edmond Ruiz.[3]Surprisingly, Edmond opposed the petition on the ground that the will was
executed
under
undue
influence.
On November 2, 1992, one of the properties of the estate - the house and lot at No. 2 Oliva
Street, Valle Verde IV, Pasig which the testator bequeathed to Maria Cathryn, Candice Albertine
and Maria Angeline[4]-- was leased out by Edmond Ruiz to third persons.

On January 19, 1993, the probate court ordered Edmond to deposit with the Branch Clerk of
Court the rental deposit and payments totalling P540,000.00 representing the one-year lease of
the Valle Verde property. In compliance, on January 25, 1993, Edmond turned over the amount of
P348,583.56, representing the balance of the rent after deducting P191,416.14 for repair and
maintenance
expenses
on
the
estate.[5]
In March 1993, Edmond moved for the release of P50,000.00 to pay the real estate taxes on the
real properties of the estate. The probate court approved the release of P7,722.00.[6]
On May 14, 1993, Edmond withdrew his opposition to the probate of the will. Consequently,
the probate court, on May 18, 1993, admitted the will to probate and ordered the issuance of
letters testamentary to Edmond conditioned upon the filing of a bond in the amount of
P50,000.00.
The
letters
testamentary
were
issued
on
June
23,
1993.
On July 28, 1993, petitioner Testate Estate of Hilario Ruiz as executor, filed an "Ex-Parte Motion
for Release of Funds." It prayed for the release of the rent payments deposited with the Branch
Clerk of Court. Respondent Montes opposed the motion and concurrently filed a "Motion for
Release of Funds to Certain Heirs" and Motion for Issuance of Certificate of Allowance
of Probate Will." Montes prayed for the release of the said rent payments to Maria Cathryn,
Candice Albertine and Maria Angeline and for the distribution of the testators properties,
specifically the Valle Verde property and the Blue Ridge apartments, in accordance with the
provisions
of
the
holographic
will.
On August 26, 1993, the probate court denied petitioners motion for release of funds but
granted respondent Montes motion in view of petitioners lack of opposition. It thus ordered the
release of the rent payments to the decedents three granddaughters. It further ordered the
delivery of the titleds to and possession of the properties bequeathed to the three granddaughters
and
respondent
Montes
upon
the
filing
of
a
bond
of
P50,000.00.
Petitioner moved for reconsideration alleging that he actually filed his opposition to respondent
Montes motion for release of rent payments which opposition the court failed to consider.
Petitioner likewise reiterated his previous motion for release of funds.
On November 23, 1993, petitioner, through counsel, manifested that he was withdrawing his
motion for release of funds in view of the fact that the lease contract over Valle Verde property
had
been
renewed
for
another
year.[7]
Despite petitioners manifestation, the probate court, on December 22, 1993, ordered the release
of the funds to Edmond but only "such amount as may be necessary to cover the espenses of
administration and allowanceas for support" of the testators three granddaughters subject to
collation and deductible from their share in the inheritance. The court, however, held in
abeyance the release of the titles to respondent Montes and the three granddaughters until the
lapse of six months from the date of firast publication of the notice to creditors. [8] The Court
stated thus:
"xxx

xxx

xxx

After consideration of the arguments set forth thereon by the parties, the court resolves to allow
Administrator Edmond M. Ruiz to take possession of the rental payments deposited with the
Clerk of Court, Pasig Regional Trial Court, but only such amount as may be necessary to cover
the expenses of administration and allowances for support of Maria Cathryn Veronique, Candice
Albertine and Maria Angeli, which are subject to collation and deductible from the share in the
inheritance of said heirs and insofar as they exceed the fruits or rents pertaining to them.
As to the release of the titles bequeathed to petitioner Maria Pilar Ruiz-Montes and the abovenamed heirs, the same is hereby reconsidered and held in abeyance until the lapse of six (6)

months

from

the

date

of

first

publication

of

Notice

to

Creditors.

WHEREFORE, Administrator Edmond M. Ruiz is hereby ordered to submit an accounting of the

expenses necessary for administration including provisions for the support Of Maria Cathryn
Veronique Ruiz, Candice Albertine Ruiz and Maria Angeli Ruiz before the amount required can
be withdrawn and cause the publication of the notice to creditors with reasonable dispatch.[9]
Petitioner assailed this order before the Court of Appeals. Finding no grave abuse of discretion
on the part of respondent judge, the appellate court dismissed the petition and sustained
the probate courts order in a decision dated November 10, 1994 [10] and a resolution dated
January
5,
1995.[11]
Hence, this petition.
Petitioner

claims

that:

"THE PUBLIC RESPONDENT COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN AFFIRMING
AND CONFIRMING THE ORDER OF RESPONDENT REGIONAL TRIAL COURT OF
PASIG, BRANCH 156, DATED DECEMBER 22, 1993, WHICH WHEN GIVEN DUE
COURSE
AND
IS
EFFECTED
WOULD:
(1)
DISALLOW
THE
EXECUTOR/ADMINISTRATOR OF THE ESTATE OF THE LATE HILARIO M. RUIZ TO
TAKE POSSESSION OF ALL THE REAL AND PERSONAL PROPERTIES OF THE ESTATE;
(2) GRANT SUPPORT, DURING THE PENDENCY OF THE SETTLEMENT OF AN
ESTATE, TO CERTAIN PERSONS NOT ENTITLED THERETO; AND (3) PREMATURELY
PARTITION AND DISTRIBUTE THE ESTATE PURSUANT TO THE PROVISIONS OF THE
HOLOGRAPHIC WILL EVEN BEFORE ITS INTRINSIC VALIDITY HAS BEEN
DETERMINED, AND DESPITE THE EXISTENCE OF UNPAID DEBTS AND
OBLIGATIONS OF THE ESTATE."[12]
The issue for resolution is whether the probate court, after admitting the will to probate but
before payment of the estates debts and obligations, has the authority: (1) to grant an allowance
from the funds of the estate for the support of the testators grandchildren; (2) to order the release
of the titles to certain heirs; and (3) to grant possession of all properties of the estate to the
executor
of
the
will.
On the matter of allowance, Section 3 of Rule 83 of the Revised Rules of Court provides:
"Sec. 3. Allowance to widow and family. - The widow and minor or incapacitated children of a
deceased person, during the settlement of the estate, shall receive therefrom under the direction
of the court, such allowance as are provided by law."
Petitioner alleges that this provision only gives the widow and the minor or incapacitated
children of the deceased the right to receive allowances for support during the settlement of
estate proceedings. He contends that the testators three granddaughters do not qualify for an
allowance because they are not incapacitated and are no longer minors but of legal age, married
and gainfully employed. In addition, the provision expressly states "children" of the deceased
which
excludes
the
latters
grandchildren.
It is settled that allowances for support under Section 3 of Rule 83 should not be limited to the
"minor or incapacitated" children of the deceased. Article 188[13]of the Civil Code of the
Philippines, the substantive law in force at the time of the testators death, provides that during
the liquidation of the conjugal partnership, the deceaseds legitimate spouse and children,
regardless of their age, civil status or gainful employment, are entitled to provisional support

from the funds of the estate.[14] The law is rooted on the fact that the right and duty to support,
especially the right to education, subsist even beyond the age of majority. [15]
Be that as it may, grandchildren are not entitled to provisional support from the funds of the
decedents estate. The law clearly limits the allowance to "widow and children" and does not
extend it to the deceaseds grandchildren, regardless of their minority or incapacity. [16] It was
error, therefore, for the appellate court to sustain the probatecourts order granting an allowance
to the grandchildren of the testator pending settlement of his estate.
Respondent courts also erred when they ordered the release of the titles of the bequeathed
properties to private respondents six months after the date of first publication of notice to
creditors. An order releasing titles to properties of the estate amounts to an advance distribution
of the estate which is allowed only under the following conditions:
"Sec. 2. Advance distribution in special proceedings. - Nothwithstanding a pending controversy
or appeal in proceedings to settle the estate of a decedent, the court may, in its discretion and
upon such terms as it may deem proper and just, permit that such part of the estate as may not be
affected by the controversy or appeal be distributed among the heirs or legatees, upon
compliance with the conditions set forth in Rule 90 of these Rules."[17]
And

Rule

90

provides

that:

"Sec. 1. When order for distribution of residue made. - When the debts, funeral charges, and
expenses of administration, the allowance to the widow, and inheritance tax, if any,
chargeable to the estate in accordance with law, have been paid, the court, on the
application of the executor or administrator, or of a person interested in the estate, and
after hearing upon notice, shall assign the residue of the estate to the persons entitled to the
same, naming them and the proportions, or parts, to which each is entitled, and such persons may
demand and recover their respective shares from the executor or administrator, or any other
person having the same in his possession. If there is a controversy before the court as to who are
the lawful heirs of the deceased person or as to the distributive shares to which each person is
entitled under the law, the controversy shall be heard and decided as in ordinary cases.
No distribution shall be allowed until the payment of the obligations above-mentioned has been
made or provided for, unless the distributees, or any of them, give a bond, in a sum to be fixed by
the court, conditioned for the payment of said obligations within such time as the court directs.
[18]
In settlement of estate proceedings, the distribution of the estate properties can only be made: (1)
after all the debts, funeral charges, expenses of administration, allowance to the widow, and
estate tax have been paid; or (2) before payment of said obligations only if the distributees or any
of them gives a bond in a sum fixed by the court conditioned upon the payment of said
obligations within such time as the court directs, or when provision is made to meet those
obligations.[19]
In the case at bar, the probate court ordered the release of the titles to the Valle Verde property
and the Blue Ridge apartments to the private respondents after the lapse of six months from the
date of first publication of the notice to creditors. The questioned order speaks of "notice" to
creditors, not payment of debts and obligations. Hilario Ruiz allegedly left no debts when he died
but the taxes on his estate had not hitherto been paid, much less ascertained. The estate tax is one
of those obligations that must be paid before distribution of the estate. If not yet paid, the rule
requires that the distributees post a bond or make such provisions as to meet the said tax
obligation in proportion to their respective shares in the inheritance. [20] Notably, at the time the
order was issued the properties of the estate had not yet been inventoried and appraised.

It was also too early in the day for the probate court to order the release of the titles six months
after admitting the will to probate. The probate of a will is conclusive as to its due execution and
extrinsic validity[21] and settles only the question of whether the testator, being of sound mind,
freely executed it in accordance with the formalities prescribed by law.[22] Questions as to the
intrinsic validity and efficacy of the provisions of the will, the legality of any devise or legacy
may
be
raised
even
after
the
will
has
been
authenticated. [23]
The intrinsic validity of Hilarios holographic will was controverted by petitioner before
the probate court in his Reply to Montes Opposition to his motion for release of funds [24] and his
motion for reconsideration of the August 26, 1993 order of the said court. [25] Therein, petitioner
assailed the distributive shares of the devisees and legatees inasmuch as his fathers will included
the estate of his mother and allegedly impaired his legitime as an intestate heir of his mother. The
Rules provide that if there is a controversy as to who are the lawful heirs of the decedent and
their distributive shares in his estate, the probate court shall proceed to hear and decide the same
as
in
ordinary
cases.[26]
Still and all, petitioner cannot correctly claim that the assailed order deprived him of his right to
take possession of all the real and personal properties of the estate. The right of an executor or
administrator to the possession and management of the real and personal properties of the
deceased is not absolute and can only be exercised "so long as it is necessary for the payment of
the debts and expenses of administration,"[27] Section 3 of Rule 84 of the Revised Rules of Court
explicitly provides:
"Sec. 3. Executor or administrator to retain whole estate to pay debts, and to administer estate not
willed. - An executor or administrator shall have the right to the possession and management of
the real as well as the personal estate of the deceased so long as it is necessary for the payment
of the debts and expenses for administration."[28]
When petitioner moved for further release of the funds deposited with the clerk of court, he had
been previously granted by the probate court certain amounts for repair and maintenance
expenses on the properties of the estate, and payment of the real estate taxes thereon. But
petitioner moved again for the release of additional funds for the same reasons he previously
cited. It was correct for the probate court to require him to submit an accounting of the
necessary expenses for administration before releasing any further money in his favor.
It was relevantly noted by the probate court that petitioner had deposited with it only a portion of
the one-year rental income from the Valle Verde property. Petitioner did not deposit its
succeeding rents after renewal of the lease.[29]Neither did he render an accounting of such funds.
Petitioner must be reminded that his right of ownership over the properties of his father is merely
inchoate as long as the estate has not been fully settled and partitioned. [30] As executor, he is a
mere trustee of his fathers estate. The funds of the estate in his hands are trust funds and he is
held to the duties and responsibilities of a trustee of the highest order.[31] He cannot unilaterally
assign to himself and possess all his parents properties and the fruits thereof without first
submitting an inventory and appraisal of all real and personal properties of the deceased,
rendering a true account of his administration, the expenses of administration, the amount of the
obligations and estate tax, all of which are subject to a determination by the court as to their
veracity,
propriety
and
justness.[32]
IN VIEW WHEREOF, the decision and resolution of the Court of Appeals in CA-G.R. SP No.
33045 affirming the order dated December 22, 1993 of the Regional Trial Court, Branch 156,
Pasig in SP Proc. No. 10259 are affirmed with the modification that those portions of the order
granting an allowance to the testators grandchildren and ordering the release of the titles to the
private respondents upon notice to creditors are annulled and set aside.
Respondent judge is ordered to proceed with dispatch in the proceedings below.

SO ORDERED.

N THE MATTER OF THE PETITION TO APPROVE THE WILL OF

RUPERTA PALAGANAS (2011)

SECOND DIVISION
[ G.R. No. 169144, January 26, 2011 ]
IN RE: IN THE MATTER OF THE PETITION TO APPROVE THE
WILL OF RUPERTA PALAGANAS WITH PRAYER FOR THE
APPOINTMENT OF SPECIAL ADMINISTRATOR, MANUEL
MIGUEL PALAGANAS AND BENJAMIN GREGORIO PALAGANAS,
PETITIONERS, VS. ERNESTO PALAGANAS, RESPONDENT.
DECISION
ABAD, J.:
This case is about the probate before Philippine court of a will executed abroad by a
foreigner although it has not been probated in its place of execution.
The Facts and the Case
On November 8, 2001 Ruperta C. Palaganas (Ruperta), a Filipino who became a
naturalized United States (U.S.) citizen, died single and childless. In the last will and
testament she executed in California, she designated her brother, Sergio C.
Palaganas (Sergio), as the executor of her will for she had left properties in the
Philippines
and
in
the
U.S.
On May 19, 2003 respondent Ernesto C. Palaganas (Ernesto), another brother of
Ruperta, filed with the Regional Trial Court (RTC) of Malolos, Bulacan, a petition for
the probate of Ruperta's will and for his appointment as special administrator of her
estate.[1] On October 15, 2003, however, petitioners Manuel Miguel Palaganas
(Manuel) and Benjamin Gregorio Palaganas (Benjamin), nephews of Ruperta,
opposed the petition on the ground that Ruperta's will should not be probated in the
Philippines but in the U.S. where she executed it. Manuel and Benjamin added that,
assuming Ruperta's will could be probated in the Philippines, it is invalid
nonetheless for having been executed under duress and without the testator's full
understanding of the consequences of such act. Ernesto, they claimed, is also not
qualified
to
act
as
administrator
of
the
estate.
Meantime, since Ruperta's foreign-based siblings, Gloria Villaluz and Sergio, were on
separate occasions in the Philippines for a short visit, respondent Ernesto filed a
motion with the RTC for leave to take their deposition, which it granted. On April, 13,
2004 the RTC directed the parties to submit their memorandum on the issue of
whether or not Ruperta's U.S. will may be probated in and allowed by a court in the
Philippines.

On June 17, 2004 the RTC issued an order: [2] (a) admitting to probate Ruperta's last
will; (b) appointing respondent Ernesto as special administrator at the request of
Sergio, the U.S.-based executor designated in the will; and (c) issuing the Letters of
Special
Administration
to
Ernesto.
Aggrieved by the RTC's order, petitioner nephews Manuel and Benjamin appealed to
the Court of Appeals (CA), [3]arguing that an unprobated will executed by an
American citizen in the U.S. cannot be probated for the first time in the Philippines.
On July 29, 2005 the CA rendered a decision, [4] affirming the assailed order of the
RTC,[5] holding that the RTC properly allowed the probate of the will, subject to
respondent Ernesto's submission of the authenticated copies of the documents
specified in the order and his posting of required bond. The CA pointed out that
Section 2, Rule 76 of the Rules of Court does not require prior probate and
allowance of the will in the country of its execution, before it can be probated in the
Philippines. The present case, said the CA, is different from reprobate, which refers
to a will already probated and allowed abroad. Reprobate is governed by different
rules or procedures. Unsatisfied with the decision, Manuel and Benjamin came to
this Court.
The Issue Presented
The key issue presented in this case is whether or not a will executed by a foreigner
abroad may be probated in the Philippines although it has not been previously
probated and allowed in the country where it was executed.
The Court's Ruling

Petitioners Manuel and Benjamin maintain that wills

executed by foreigners abroad must first be probated
and allowed in the country of its execution before it can
be probated here. This, they claim, ensures prior
compliance with the legal formalities of the country of
its execution. They insist that local courts can only
allow probate of such wills if the proponent proves
that: (a) the testator has been admitted for probate in
such foreign country, (b) the will has been admitted
to probate there under its laws, (c) the probate court
has jurisdiction over the proceedings, (d) the law
on probate procedure in that foreign country and proof
of compliance with the same, and (e) the legal
requirements for the valid execution of a will.
But our laws do not prohibit the probate of wills
executed by foreigners abroad although the same have
not as yet been probated and allowed in the countries
of their execution. A foreign will can be given legal
effects in our jurisdiction. Article 816 of the Civil Code
states that the will of an alien who is abroad produces
effect in the Philippines if made in accordance with the
formalities prescribed by the law of the place where he
resides, or according to the formalities observed in his
country.[6]
In this connection, Section 1, Rule 73 of the 1997 Rules
of Civil Procedure provides that if the decedent is an
inhabitant of a foreign country, the RTC of the province
where he has an estate may take cognizance of the
settlement of such estate. Sections 1 and 2 of Rule 76
further state that the executor, devisee, or legatee
named in the will, or any other person interested in the
estate, may, at any time after the death of the testator,
petition the court having jurisdiction to have the will
allowed, whether the same be in his possession or not,
or is lost or destroyed.
Our rules require merely that the petition for the
allowance of a will must show, so far as known to the
petitioner: (a)the jurisdictional facts; (b) the names,

ages, and residences of the heirs, legatees, and

devisees of the testator or decedent; (c) the probable
value and character of the property of the estate; (d)
the name of the person for whom letters are prayed;
and (e) if the will has not been delivered to the court,
the name of the person having custody of
it. Jurisdictional facts refer to the fact of death of the
decedent, his residence at the time of his death in the
province where the probate court is sitting, or if he is
an inhabitant of a foreign country, the estate he left in
such province.[7] The rules do not require proof that the
foreign will has already been allowed and probated in
the country of its execution.
In insisting that Ruperta's will should have been first
probated and allowed by the court of California,
petitioners Manuel and Benjamin obviously have in
mind the procedure for the reprobate of will before
admitting it here. But, reprobate or re-authentication
of a will already probated and allowed in a foreign
country is different from thatprobate where the will is
presented for the first time before a competent court.
Reprobate is specifically governed by Rule 77 of the
Rules of Court. Contrary to petitioners' stance, since
this latter rule applies only to reprobate of a will, it
cannot be made to apply to the present case. In
reprobate, the local court acknowledges as binding the
findings of the foreign probate court provided its
jurisdiction over the matter can be established.
Besides, petitioners' stand is fraught with
impractically. If the instituted heirs do not have the
means to go abroad for the probate of the will, it is as
good as depriving them outright of their inheritance,
since our law requires that no will shall pass either real
or personal property unless the will has been proved
and allowed by the proper court.[8]
Notably, the assailed RTC order of June 17, 2004 is
nothing more than an initial ruling that the court can
take cognizance of the petition for probate of Ruperta's
will and that, in the meantime, it was designating

Ernesto as special administrator of the estate. The

parties have yet to present evidence of the due
execution of the will, i.e. the testator's state of mind at
the time of the execution and compliance with the
formalities required of wills by the laws of California.
This explains the trial court's directive for Ernesto to
submit the duly authenticated copy of Ruperta's will
and the certified copies of the Laws of Succession
and Probate of Will of California.
WHEREFORE, the Court DENIES the petition
and AFFIRMS the Court of Appeals decision in CA-G.R. CV
83564 dated July 29, 2005.
SO ORDERED.

testate estate of alipio abada (2005)

FIRST DIVISION
[ G.R. NO. 147145, January 31, 2005 ]
TESTATE ESTATE OF THE LATE ALIPIO ABADA, BELINDA
CAPONONG-NOBLE, PETITIONER, VS. ALIPIO ABAJA AND
NOEL
ABELLAR,
RESPONDENTS.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review [1] assailing the Decision[2] of the Court of
Appeals of 12 January 2001 in CA-G.R. CV No. 47644. The Court of Appeals
sustained the Resolution[3] of the Regional Trial Court of Kabankalan, Negros
Occidental, Branch 61 ( RTC-Kabankalan ), admitting to probate the last will and
testament of Alipio Abada ( Abada ).
The Antecedent Facts
Abada died sometime in May 1940. [4] His widow Paula Toray ( Toray ) died sometime
in
September
1943.
Both
died
without
legitimate
children.
On 13 September 1968, Alipio C. Abaja ( Alipio ) filed with the then Court of First
Instance of Negros Occidental (now RTC-Kabankalan) a petition, [5] docketed as SP
No. 070 (313-8668), for the probate of the last will and testament ( will ) of Abada.

Abada allegedly named as his testamentary heirs his natural children Eulogio Abaja
( Eulogio ) and Rosario Cordova.
Alipio is the son of Eulogio.
Nicanor Caponong ( Caponong ) opposed the petition on the ground that Abada left
no will when he died in 1940. Caponong further alleged that the will, if Abada really
executed it, should be disallowed for the following reasons: (1) it was not executed
and attested as required by law; (2) it was not intended as the last will of the
testator; and (3) it was procured by undue and improper pressure and influence on
the part of the beneficiaries. Citing the same grounds invoked by Caponong, the
alleged intestate heirs of Abada, namely, Joel, Julian, Paz, Evangeline, Geronimo,
Humberto, Teodora and Elena Abada ( Joel Abada, et al. ), and Levi, Leandro,
Antonio, Florian, Hernani and Carmela Tronco ( Levi Tronco, et al. ), also opposed the
petition. The oppositors are the nephews, nieces and grandchildren of Abada and
Toray.
On 13 September 1968, Alipio filed another petition [6] before the RTC-Kabankalan,
docketed as SP No. 071 (312-8669), for the probate of the last will and testament of
Toray. Caponong, Joel Abada, et al., and Levi Tronco, et al. opposed the petition on
the
same
grounds
they
cited
in
SP
No.
070
(313-8668).
On 20 September 1968, Caponong filed a petition[7] before the RTC-Kabankalan,
docketed as SP No. 069 (309), praying for the issuance in his name of letters of
administration
of
the
intestate
estate
of
Abada
and
Toray.
In an Order dated 14 August 1981, the RTC-Kabankalan admitted to probate the will
of Toray. Since the oppositors did not file any motion for
reconsideration, the
order allowing the probate of Toray s will became final and executory. [8]
In an order dated 23 November 1990, the RTC-Kabankalan designated Belinda
Caponong-Noble ( Caponong-Noble ) Special Administratrix of the estate of Abada
and Toray.[9] Caponong-Noble moved for the dismissal of the petition for probate of
the will of Abada. The RTC-Kabankalan denied the motion in an Order dated 20
August
1991.[10]
Sometime in 1993, during the proceedings, Presiding Judge Rodolfo S. Layumas
discovered that in an Order dated 16 March 1992, former Presiding Judge Edgardo
Catilo had already submitted the case for decision. Thus, the RTC-Kabankalan
rendered a Resolution dated 22 June 1994, as follows:
There having been sufficient notice to the heirs as required by law; that there is
substantial compliance with the formalities of a Will as the law directs and that the
petitioner through his testimony and the deposition of Felix Gallinero was able to
establish the regularity of the execution of the said Will and further, there being no
evidence of bad faith and fraud, or substitution of the said Will, the Last Will and
Testament of Alipio Abada dated June 4, 1932 is admitted and allowed probate.
As prayed for by counsel, Noel Abbellar [11] is appointed administrator of the estate of
Paula Toray who shall discharge his duties as such after letters of administration
shall have been issued in his favor and after taking his oath and filing a bond in the
amount
of
Ten
Thousand
(P10,000.00)
Pesos.
Mrs. Belinda C. Noble, the present administratrix of the estate of Alipio Abada shall
continue discharging her duties as such until further orders from this Court.

SO ORDERED.[12]
The RTC-Kabankalan ruled on the only issue raised by the oppositors in their
motions to dismiss the petition forprobate, that is, whether the will of Abada has an
attestation clause as required by law. The RTC-Kabankalan further held that the
failure of the oppositors to raise any other matter forecloses all other issues.
Not satisfied with the Resolution, Caponong-Noble filed a notice of appeal.
In a Decision promulgated on 12 January 2001, the Court of Appeals affirmed the
Resolution of the RTC-Kabankalan. The appellate court found that the RTCKabankalan
properly
admitted
to probate the
will
of
Abada.
Hence, the present recourse by Caponong-Noble.
The Issues
The petition raises the following issues:
1.

What laws apply to the probate of the last will of Abada;

2.

Whether the will of Abada requires acknowledgment before a notary public; [13]

3.

Whether the will must expressly state that it is written in a language or

dialect known to the testator;

4.

Whether the will of Abada has an attestation clause, and if so, whether the
attestation clause complies with the requirements of the applicable laws;

5.

Whether Caponong-Noble is precluded from raising the issue of whether the

will of Abada is written in a language known to Abada;

6.

Whether evidence aliunde may be resorted to in the probate of the will of

Abada.
The Ruling of the Court
The Court of Appeals did not err in sustaining the RTC-Kabankalan in admitting
to probate the will of Abada.
The Applicable Law
Abada executed his will on 4 June 1932. The laws in force at that time are the Civil
Code of 1889 or the Old Civil Code, and Act No. 190 or the Code of Civil
Procedure[14] which governed the execution of wills before the enactment of the New
Civil
Code.
The matter in dispute in the present case is the attestation clause in the will of
Abada. Section 618 of the Code of Civil Procedure, as amended by Act No. 2645,
[15]
governs the form of the attestation clause of Abada s will. [16]Section 618 of the
Code of Civil Procedure, as amended, provides:
SEC. 618. Requisites of will. No will, except as provided in the preceding section,
[17]
shall be valid to pass any estate, real or personal, nor charge or affect the same,
unless it be written in the language or dialect known by the testator and signed by

him, or by the testator s name written by some other person in his presence, and by
his express direction, and attested and subscribed by three or more credible
witnesses in the presence of the testator and of each other. The testator or the
person requested by him to write his name and the instrumental witnesses of the
will, shall also sign, as aforesaid, each and every page thereof, on the left margin,
and said pages shall be numbered correlatively in letters placed on the upper part
of each sheet. The attestation shall state the number of sheets or pages used, upon
which the will is written, and the fact that the testator signed the will and every
page thereof, or caused some other person to write his name, under his express
direction, in the presence of three witnesses, and the latter witnessed and signed
the will and all pages thereof in the presence of the testator and of each other.
Requisites of a Will under the Code of Civil Procedure
Under Section 618 of the Code of Civil Procedure, the requisites of a will are the
following:
(1)

The will must be written in the language or dialect known by the testator;

(2) The will must be signed by the testator, or by the testator s name written by
some other person in his presence, and by his express direction;
(3)
in

The will must be attested and subscribed by three or more credible witnesses
the
presence
of
the
testator
and
of
each
other;

(4) The testator or the person requested by him to write his name and the
instrumental witnesses of the will must sign each and every page of the will on the
left
margin;
(5) The pages of the will must be numbered correlatively in letters placed on the
upper
part
of
each
sheet;
(6) The attestation shall state the number of sheets or pages used, upon which the
will is written, and the fact that the testator signed the will and every page of the
will, or caused some other person to write his name, under his express direction, in
the presence of three witnesses, and the witnesses witnessed and signed the will
and all pages of the will in the presence of the testator and of each other.
Caponong-Noble asserts that the will of Abada does not indicate that it is written in
a language or dialect known to the testator. Further, she maintains that the will is
not acknowledged before a notary public. She cites in particular Articles 804 and
805 of the Old Civil Code, thus:
Art. 804. Every will must be in writing and executed in [a] language or dialect
known
to
the
testator.
Art. 806. Every will must be acknowledged before a notary public by the testator
and the witnesses. xxx[18]
Caponong-Noble actually cited Articles 804 and 806 of the New Civil Code. [19] Article
804 of the Old Civil Code is about the rights and obligations of administrators of the
property of an absentee, while Article 806 of the Old Civil Code defines a legitime.
Articles 804 and 806 of the New Civil Code are new provisions. Article 804 of the

New Civil Code is taken from Section 618 of the Code of Civil Procedure. [20] Article
806 of the New Civil Code is taken from Article 685 of the Old Civil Code [21] which
provides:
Art. 685. The notary and two of the witnesses who authenticate the will must be
acquainted with the testator, or, should they not know him, he shall be identified by
two witnesses who are acquainted with him and are known to the notary and to the
attesting witnesses. The notary and the witnesses shall also endeavor to assure
themselves that the testator has, in their judgment, the legal capacity required to
make
a
will.
Witnesses authenticating a will without the attendance of a notary, in cases falling
under Articles 700 and 701, are also required to know the testator.
However, the Code of Civil Procedure [22] repealed Article 685 of the Old Civil Code.
Under the Code of Civil Procedure, the intervention of a notary is not necessary in
the execution of any will.[23] Therefore, Abada s will does not require
acknowledgment
before
a
notary
public.
Caponong-Noble points out that nowhere in the will can one discern that Abada
knew the Spanish language. She alleges that such defect is fatal and must result in
the disallowance of the will. On this issue, the Court of Appeals held that the matter
was not raised in the motion to dismiss, and that it is now too late to raise the issue
on appeal. We agree with Caponong-Noble that the doctrine of estoppel does not
apply in probate proceedings.[24] In addition, the language used in the will is part of
the requisites under Section 618 of the Code of Civil Procedure and the Court deems
it
proper
to
pass
upon
this
issue.
Nevertheless, Caponong-Noble s contention must still fail. There is no statutory
requirement to state in the will itself that the testator knew the language or dialect
used in the will.[25] This is a matter that a party may establish by proof aliunde.
[26]
Caponong-Noble further argues that Alipio, in his testimony, has failed, among
others, to show that Abada knew or understood the contents of the will and the
Spanish language used in the will. However, Alipio testified that Abada used to
gather Spanish-speaking people in their place. In these gatherings, Abada and his
companions would talk in the Spanish language. [27] This sufficiently proves that
Abada speaks the Spanish language.
The Attestation Clause of Abada s Will
A scrutiny of Abada s will shows that it has an attestation clause. The attestation
clause of Abada s will reads:
Suscrito y declarado por el testador Alipio Abada como su ultima voluntad y
testamento en presencia de nosotros, habiendo tambien el testador firmado en
nuestra presencia en el margen izquierdo de todas y cada una de las hojas del
mismo. Y en testimonio de ello, cada uno de nosotros lo firmamos en presencia de
nosotros y del testador al pie de este documento y en el margen izquierdo de todas
y cada una de las dos hojas de que esta compuesto el mismo, las cuales estan
paginadas correlativamente con las letras UNO y DOS en la parte superior de la
carrilla.[28]
Caponong-Noble proceeds to point out several defects in the attestation clause.
Caponong-Noble alleges that the attestation clause fails to state the number of

pages

on

which

the

will

is

written.

The allegation has no merit. The phrase en el margen izquierdo de todas y cada
una de las dos hojas de que esta compuesto el mismo which means in the left
margin of each and every one of the two pages consisting of the same shows that
the will consists of two pages. The pages are numbered correlatively with the
letters ONE and TWO as can be gleaned from the phrase las cuales estan paginadas
correlativamente
con
las
letras
UNO
y
DOS.
Caponong-Noble further alleges that the attestation clause fails to state expressly
that the testator signed the will and its every page in the presence of three
witnesses. She then faults the Court of Appeals for applying to the present case the
rule on substantial compliance found in Article 809 of the New Civil Code. [29]
The first sentence of the attestation clause reads: Suscrito y declarado por el
testador Alipio Abada como su ultima voluntad y testamento en presencia de
nosotros, habiendo tambien el testador firmado en nuestra presencia en el margen
izquierdo de todas y cada una de las hojas del mismo. The English translation is:
Subscribed and professed by the testator Alipio Abada as his last will and testament
in our presence, the testator having also signed it in our presence on the left margin
of each and every one of the pages of the same.
The attestation clause clearly
states that Abada signed the will and its every page in the presence of the
witnesses.
However, Caponong-Noble is correct in saying that the attestation clause does not
indicate the number of witnesses. On this point, the Court agrees with the appellate
court in applying the rule on substantial compliance in determining the number of
witnesses. While the attestation clause does not state the number of witnesses, a
close inspection of the will shows that three witnesses signed it.
This Court has applied the rule on substantial compliance even before the effectivity
of the New Civil Code. InDichoso de Ticson v. De Gorostiza,[30] the Court
recognized that there are two divergent tendencies in the law on wills, one being
based on strict construction and the other on liberal construction. In Dichoso, the
Court noted thatAbangan v. Abangan,[31] the basic case on the liberal construction,
is
cited
with
approval
in
later
decisions
of
the
Court.
In Adeva vda. De Leynez v. Leynez,[32] the petitioner, arguing for liberal
construction of applicable laws, enumerated a long line of cases to support her
argument while the respondent, contending that the rule on strict construction
should apply, also cited a long series of cases to support his view. The Court, after
examining the cases invoked by the parties, held:
x x x It is, of course, not possible to lay down a general rule, rigid and inflexible,
which would be applicable to all cases. More than anything else, the facts and
circumstances of record are to be considered in the application of any given rule. If
the surrounding circumstances point to a regular execution of the will, and the
instrument appears to have been executed substantially in accordance with the
requirements of the law, the inclination should, in the absence of any suggestion of
bad faith, forgery or fraud, lean towards its admission to probate, although the
document may suffer from some imperfection of language, or other non-essential
defect.
x
x
x.
An attestation clause is made for the purpose of preserving, in permanent form, a

record of the facts attending the execution of the will, so that in case of failure of
the memory of the subscribing witnesses, or other casualty, they may still be
proved. (Thompson on Wills, 2d ed., sec. 132.) A will, therefore, should not be
rejected where its attestation clause serves the purpose of the law. x x x [33]
We rule to apply the liberal construction in the probate of Abada s will. Abada s will
clearly shows four signatures: that of Abada and of three other persons. It is
reasonable to conclude that there are three witnesses to the will. The question on
the number of the witnesses is answered by an examination of the will itself and
without the need for presentation of evidence aliunde. The Court explained the
extent and limits of the rule on liberal construction, thus:
[T]he so-called liberal rule does not offer any puzzle or difficulty, nor does it open
the door to serious consequences. The later decisions do tell us when and where to
stop; they draw the dividing line with precision. They do not allow
evidence aliunde to fill a void in any part of the document or supply
missing details that should appear in the will itself. They only permit a
probe into the will, an exploration within its confines, to ascertain its
meaning or to determine the existence or absence of the requisite
formalities of law. This clear, sharp limitation eliminates uncertainty and ought to
banish any fear of dire results. [34] (Emphasis supplied)
The phrase en presencia de nosotros or in our presence coupled with the signatures
appearing on the will itself and after the attestation clause could only mean that:
(1) Abada subscribed to and professed before the three witnesses that the
document was his last will, and (2) Abada signed the will and the left margin of each
page
of
the
will
in
the
presence
of
these
three
witnesses.
Finally, Caponong-Noble alleges that the attestation clause does not expressly state
the circumstances that the witnesses witnessed and signed the will and all its
pages in the presence of the testator and of each other. This Court has ruled:
Precision of language in the drafting of an attestation clause is desirable. However,
it is not imperative that a parrot-like copy of the words of the statute be made. It is
sufficient if from the language employed it can reasonably be deduced that the
attestation clause fulfills what the law expects of it. [35]

The last part of the attestation clause states en

testimonio de ello, cada uno de nosotros lo firmamos
en presencia de nosotros y del testador. In English,
this means in its witness, every one of us also signed in
our presence and of the testator. This clearly shows
that the attesting witnesses witnessed the signing of
the will of the testator, and that each witness signed
the will in the presence of one another and of the
testator.
WHEREFORE, we AFFIRM the Decision of the Court of
Appeals of 12 January 2001 in CA-G.R. CV No. 47644.
SO ORDERED.

dizon v. court of tax appeals (2008)

THIRD DIVISION
[ G.R. No. 140944, April 30, 2008 ]
RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P.
FERNANDEZ, PETITIONER, VS. COURT OF TAX APPEALS AND
COMMISSIONER OF INTERNAL REVENUE, RESPONDENTS.
DECISION
NACHURA, J.:
Before this Court is a Petition for Review on Certiorari[1] under Rule 45 of the Rules of
Civil Procedure seeking the reversal of the Court of Appeals (CA) Decision [2] dated
April 30, 1999 which affirmed the Decision[3] of the Court of Tax Appeals (CTA) dated
June 17, 1997.[4]
The Facts
On November 7, 1987, Jose P. Fernandez (Jose) died. Thereafter, a petition for
the probate of his will[5] was filed with Branch 51 of the Regional Trial Court (RTC) of
Manila (probate court).[6] The probate court then appointed retired Supreme Court
Justice Arsenio P. Dizon (Justice Dizon) and petitioner, Atty. Rafael Arsenio P. Dizon
(petitioner) as Special and Assistant Special Administrator, respectively, of the
Estate of Jose (Estate). In a letter [7]dated October 13, 1988, Justice Dizon informed
respondent Commissioner of the Bureau of Internal Revenue (BIR) of the special
proceedings
for
the
Estate.
Petitioner alleged that several requests for extension of the period to file the

required estate tax return were granted by the BIR since the assets of the estate, as
well as the claims against it, had yet to be collated, determined and identified.
Thus, in a letter[8] dated March 14, 1990, Justice Dizon authorized Atty. Jesus M.
Gonzales (Atty. Gonzales) to sign and file on behalf of the Estate the required estate
tax return and to represent the same in securing a Certificate of Tax Clearance.
Eventually, on April 17, 1990, Atty. Gonzales wrote a letter [9] addressed to the BIR
Regional Director for San Pablo City and filed the estate tax return [10] with the same
BIR Regional Office, showing therein a NIL estate tax liability, computed as follows:
COMPUTATION OF TAX

Conjugal Real Property (Sch. 1)

P10,855,020.00

Conjugal Personal Property (Sch.2)

3,460,591.34

Taxable Transfer (Sch. 3)

Gross Conjugal Estate

14,315,611.34

Less: Deductions (Sch. 4)

187,822,576.06

Net Conjugal Estate

NIL

Less: Share of Surviving Spouse

NIL.

Net Share in Conjugal Estate

NIL

xxx
Net Taxable Estate

NIL.

Estate Tax Due

NIL.[11]

On April 27, 1990, BIR Regional Director for San Pablo City, Osmundo G. Umali
issued Certification Nos. 2052[12] and 2053[13] stating that the taxes due on the
transfer of real and personal properties[14] of Jose had been fully paid and said
properties may be transferred to his heirs. Sometime in August 1990, Justice Dizon
passed away. Thus, on October 22, 1990, the probate court appointed petitioner as
the
administrator
of
the
Estate.[15]
Petitioner requested the probate court's authority to sell several properties forming
part of the Estate, for the purpose of paying its creditors, namely: Equitable Banking
Corporation (P19,756,428.31), Banque de L'Indochine et. de Suez (US$4,828,905.90
as of January 31, 1988), Manila Banking Corporation (P84,199,160.46 as of February
28, 1989) and State Investment House, Inc. (P6,280,006.21). Petitioner manifested
that Manila Bank, a major creditor of the Estate was not included, as it did not file a
claim with the probate court since it had security over several real estate properties
forming
part
of
the
Estate. [16]
However, on November 26, 1991, the Assistant Commissioner for Collection of the
BIR, Themistocles Montalban, issued Estate Tax Assessment Notice No. FAS-E-87-91003269,[17] demanding the payment of P66,973,985.40 as deficiency estate tax,
itemized as follows:
Deficiency Estate Tax- 1987

Estate tax

P31,868,414.48

25% surcharge- late filing

7,967,103.62

late payment

7,967,103.62

Interest

19,121,048.68

Compromise-non filing

25,000.00

non payment

25,000.00

no notice of death

15.00

no CPA Certificate

300.00

Total amount due & collectible

P66,973,985.40[18]

In his letter[19] dated December 12, 1991, Atty. Gonzales moved for the
reconsideration of the said estate tax assessment. However, in her letter [20] dated
April 12, 1994, the BIR Commissioner denied the request and reiterated that the
estate is liable for the payment of P66,973,985.40 as deficiency estate tax. On May
3, 1994, petitioner received the letter of denial. On June 2, 1994, petitioner filed a
petition for review[21] before respondent CTA. Trial on the merits ensued.
As found by the CTA, the respective parties presented the following pieces of
evidence, to wit:
In the hearings conducted, petitioner did not present testimonial evidence but
merely documentary evidence consisting of the following:

1.

Nature of Document (sic)

Exhibits

Letter dated October 13, 1988 from Arsenio P.

Dizon addressed to the Commissioner of Internal
Revenue informing the latter of the special
proceedings for the settlement of the estate (p.
126, BIR records);

"A"

2.

Petition for the probate of the will and issuance of

letter of administration filed with the Regional Trial
Court (RTC) of Manila, docketed as Sp. Proc. No.
87-42980 (pp. 107-108, BIR records);
"B" & "B-1"

3.

Pleading entitled "Compliance" filed with

the probate Court submitting the final inventory of
all the properties of the deceased (p. 106, BIR
records);
"C"

4.

Attachment to Exh. "C" which is the detailed and

complete listing of the properties of the deceased
(pp. 89-105, BIR rec.);
"C-1" to "C-17"

5.

Claims against the estate filed by Equitable

Banking Corp. with theprobate Court in the
amount of P19,756,428.31 as of March 31, 1988,
together with the Annexes to the claim (pp. 64-88,
BIR records);
"D" to "D-24"

6.

Claim filed by Banque de L' Indochine et de Suez

with the probateCourt in the amount of US
$4,828,905.90 as of January 31, 1988 (pp. 262265, BIR records);

"E" to "E-3"

Claim of the Manila Banking Corporation (MBC)

which as of November 7, 1987 amounts to
P65,158,023.54, but recomputed as of February
28, 1989 at a total amount of P84,199,160.46;
together with the demand letter from MBC's
lawyer (pp. 194-197, BIR records);

"F" to "F-3"

7.

8.

Demand letter of Manila Banking Corporation

prepared by Asedillo, Ramos and Associates Law
Offices addressed to Fernandez Hermanos, Inc.,
represented by Jose P. Fernandez, as mortgagors,
in the total amount of P240,479,693.17 as of
February 28, 1989 (pp. 186-187, BIR records);
"G" & "G-1"

9.

Claim of State Investment House, Inc. filed with

the RTC, Branch VII of Manila, docketed as Civil
Case No. 86-38599 entitled "State Investment
House, Inc., Plaintiff, versus Maritime Company
Overseas, Inc. and/or Jose P. Fernandez,
Defendants," (pp. 200-215, BIR records);

"H" to "H-16"

10. Letter dated March 14, 1990 of Arsenio P. Dizon

addressed to Atty. Jesus M. Gonzales, (p. 184, BIR
records);
"I"

11. Letter dated April 17, 1990 from J.M. Gonzales

addressed to the Regional Director of BIR in San
Pablo City (p. 183, BIR records);

12. Estate Tax Return filed by the estate of the late

Jose P. Fernandez through its authorized
representative, Atty. Jesus M. Gonzales, for
Arsenio P. Dizon, with attachments (pp. 177-182,

"J"

"K" to "K-5"

BIR records);

13. Certified true copy of the Letter of Administration

issued by RTC Manila, Branch 51, in Sp. Proc. No.
87-42980 appointing Atty. Rafael S. Dizon as
Judicial Administrator of the estate of Jose P.
Fernandez; (p. 102, CTA records) and
"L"

14. Certification of Payment of estate taxes Nos. 2052

and 2053, both dated April 27, 1990, issued by
the Office of the Regional Director, Revenue
Region No. 4-C, San Pablo City, with attachments
(pp. 103-104, CTA records.).
"M" to "M-5"
Respondent's [BIR] counsel presented on June 26, 1995 one witness in the
person of Alberto Enriquez, who was one of the revenue examiners who
conducted the investigation on the estate tax case of the late Jose P.
Fernandez. In the course of the direct examination of the witness, he
identified the following:
Documents/Signatures

BIR Record

1.

Estate Tax Return prepared by the BIR;

p. 138

2.

Signatures of Ma. Anabella Abuloc and Alberto

Enriquez, Jr. appearing at the lower Portion of Exh.
"1";
-do-

3.

Memorandum for the Commissioner, dated July

19, 1991, prepared by revenue examiners, Ma.
Anabella A. Abuloc, Alberto S. Enriquez and
Raymund S. Gallardo; Reviewed by Maximino V.
Tagle

pp. 143-144

4.

Signature of Alberto S. Enriquez appearing at the

lower portion on p. 2 of Exh. "2";
-do-

5.

Signature of Ma. Anabella A. Abuloc appearing at

the lower portion on p. 2 of Exh. "2";
-do-

6.

Signature of Raymund S. Gallardo appearing at

the Lower portion on p. 2 of Exh. "2";

-do-

7.

Signature of Maximino V. Tagle also appearing on

p. 2 of Exh. "2";
-do-

8.

Summary of revenue Enforcement Officers Audit

Report, dated July 19, 1991;

9.

p. 139

Signature of Alberto Enriquez at the lower portion

of Exh. "3";
-do-

10. Signature of Ma. Anabella A. Abuloc at the lower

portion of Exh. "3";

-do-

11. Signature of Raymond S. Gallardo at the lower

portion of Exh. "3";

-do-

12. Signature of Maximino V. Tagle at the lower

portion of Exh. "3";

-do-

13. Demand letter (FAS-E-87-91-00), signed by the

Asst. Commissioner for Collection for the
Commissioner of Internal Revenue, demanding
payment of the amount of P66,973,985.40; and

p. 169

14. Assessment Notice FAS-E-87-91-00

pp. 169-170[22]

The CTA's Ruling

On June 17, 1997, the CTA denied the said petition for review. Citing this Court's
ruling in Vda. de Oate v. Court of Appeals,[23] the CTA opined that the
aforementioned pieces of evidence introduced by the BIR were admissible in
evidence. The CTA ratiocinated:
Although the above-mentioned documents were not formally offered as evidence for
respondent, considering that respondent has been declared to have waived the
presentation thereof during the hearing on March 20, 1996, still they could be
considered as evidence for respondent since they were properly identified during
the presentation of respondent's witness, whose testimony was duly recorded as
part of the records of this case. Besides, the documents marked as respondent's
exhibits formed part of the BIR records of the case. [24]
Nevertheless, the CTA did not fully adopt the assessment made by the BIR and it
came up with its own computation of the deficiency estate tax, to wit:
Conjugal Real Property

P 5,062,016.00

Conjugal Personal Prop.

33,021,999.93

Gross Conjugal Estate

38,084,015.93

Less: Deductions

26,250,000.00

Net Conjugal Estate

P 11,834,015.93

Less: Share of Surviving

Spouse

5,917,007.96

Net Share in Conjugal Estate P 5,917,007.96

Add: Capital/Paraphernal
Properties - P44,652,813.66
Less: Capital/Paraphernal
Deductions

44,652,813.66

Net Taxable Estate

P 50,569,821.62

Estate Tax Due P

29,935,342.97
Add: 25% Surcharge for Late 7,483,835.74
Filing
Add: Penalties for-No notice
of death

15.00

No CPA certificate

300.00

Total deficiency estate tax

P 37,419,493.71

exclusive of 20% interest from due date of its payment until full payment thereof
[Sec. 283 (b), Tax Code of 1987].[25]
Thus, the CTA disposed of the case in this wise:
WHEREFORE, viewed from all the foregoing, the Court finds the petition
unmeritorious and denies the same. Petitioner and/or the heirs of Jose P. Fernandez
are hereby ordered to pay to respondent the amount of P37,419,493.71 plus 20%
interest from the due date of its payment until full payment thereof as estate tax
liability of the estate of Jose P. Fernandez who died on November 7, 1987.
SO ORDERED.[26]
Aggrieved, petitioner, on March 2, 1998, went to the CA via a petition for review. [27]
The CA's Ruling
On April 30, 1999, the CA affirmed the CTA's ruling. Adopting in full the CTA's
findings, the CA ruled that the petitioner's act of filing an estate tax return with the
BIR and the issuance of BIR Certification Nos. 2052 and 2053 did not deprive the BIR
Commissioner of her authority to re-examine or re-assess the said return filed on
behalf
of
the
Estate.[28]

On May 31, 1999, petitioner filed a Motion for Reconsideration [29] which the CA
denied
in
its
Resolution[30] dated
November
3,
1999.
Hence, the instant Petition raising the following issues:
1.

Whether or not the admission of evidence which were not formally offered by
the respondent BIR by the Court of Tax Appeals which was subsequently
upheld by the Court of Appeals is contrary to the Rules of Court and rulings of
this Honorable Court;

2.

Whether or not the Court of Tax Appeals and the Court of Appeals erred in
recognizing/considering the estate tax return prepared and filed by
respondent BIR knowing that the probate court appointed administrator of
the estate of Jose P. Fernandez had previously filed one as in fact, BIR
Certification Clearance Nos. 2052 and 2053 had been issued in the estate's
favor;

3.

Whether or not the Court of Tax Appeals and the Court of Appeals erred in
disallowing the valid and enforceable claims of creditors against the estate,
as lawful deductions despite clear and convincing evidence thereof; and

4.

Whether or not the Court of Tax Appeals and the Court of Appeals erred in
validating erroneous double imputation of values on the very same estate
properties in the estate tax return it prepared and filed which effectively
bloated the estate's assets.[31]
The petitioner claims that in as much as the valid claims of creditors against the
Estate are in excess of the gross estate, no estate tax was due; that the lack of a
formal offer of evidence is fatal to BIR's cause; that the doctrine laid down in Vda.
de Oate has already been abandoned in a long line of cases in which the Court
held that evidence not formally offered is without any weight or value; that Section
34 of Rule 132 of the Rules on Evidence requiring a formal offer of evidence is
mandatory in character; that, while BIR's witness Alberto Enriquez (Alberto) in his
testimony before the CTA identified the pieces of evidence aforementioned such
that the same were marked, BIR's failure to formally offer said pieces of evidence
and depriving petitioner the opportunity to cross-examine Alberto, render the same
inadmissible in evidence; that assuming arguendo that the ruling in Vda. de
Oate is still applicable, BIR failed to comply with the doctrine's requisites because
the documents herein remained simply part of the BIR records and were not duly
incorporated in the court records; that the BIR failed to consider that although the
actual payments made to the Estate creditors were lower than their respective
claims, such were compromise agreements reached long after the Estate's liability
had been settled by the filing of its estate tax return and the issuance of BIR
Certification Nos. 2052 and 2053; and that the reckoning date of the claims against
the Estate and the settlement of the estate tax due should be at the time the estate
tax return was filed by the judicial administrator and the issuance of said BIR
Certifications and not at the time the aforementioned Compromise Agreements
were
entered
into
with
the
Estate's
creditors. [32]
On the other hand, respondent counters that the documents, being part of the
records of the case and duly identified in a duly recorded testimony are considered
evidence even if the same were not formally offered; that the filing of the estate tax
return by the Estate and the issuance of BIR Certification Nos. 2052 and 2053 did
not deprive the BIR of its authority to examine the return and assess the estate tax;
and that the factual findings of the CTA as affirmed by the CA may no longer be
reviewed by this Court via a petition for review. [33]
The Issues

There

are

two

ultimate

issues

which

require

resolution

in

this

case:

First. Whether or not the CTA and the CA gravely erred in allowing the admission of
the pieces of evidence which were not formally offered by the BIR; and
Second. Whether or not the CA erred in affirming the CTA in the latter's
determination of the deficiency estate tax imposed against the Estate.
The Court's Ruling
The

Petition

is

impressed

with

merit.

Under Section 8 of RA 1125, the CTA is categorically described as a court of record.

As cases filed before it are litigated de novo, party-litigants shall prove every minute
aspect of their cases. Indubitably, no evidentiary value can be given the pieces of
evidence submitted by the BIR, as the rules on documentary evidence require that
these documents must be formally offered before the CTA. [34] Pertinent is Section 34,
Rule 132 of the Revised Rules on Evidence which reads:
SEC. 34. Offer of evidence. -- The court shall consider no evidence which has not
been formally offered. The purpose for which the evidence is offered must be
specified.
The CTA and the CA rely solely on the case of Vda. de Oate, which reiterated this
Court's previous rulings inPeople v. Napat-a[35] and People v. Mate[36] on the
admission and consideration of exhibits which were not formally offered during the
trial. Although in a long line of cases many of which were decided after Vda.
de Oate, we held that courts cannot consider evidence which has not been
formally offered,[37] nevertheless, petitioner cannot validly assume that the doctrine
laid down in Vda. de Oate has already been abandoned. Recently, in Ramos v.
Dizon,[38] this Court, applying the said doctrine, ruled that the trial court judge
therein committed no error when he admitted and considered the respondents'
exhibits in the resolution of the case, notwithstanding the fact that the same were
not formally offered. Likewise, in Far East Bank & Trust Company v. Commissioner of
Internal Revenue,[39] the Court made reference to said doctrine in resolving the
issues therein. Indubitably, the doctrine laid down in Vda. De Oate still subsists in
this jurisdiction. In Vda. de Oate, we held that:
From the foregoing provision, it is clear that for evidence to be considered, the same
must be formally offered. Corollarily, the mere fact that a particular document is
identified and marked as an exhibit does not mean that it has already been offered
as part of the evidence of a party. In Interpacific Transit, Inc. v. Aviles [186 SCRA
385], we had the occasion to make a distinction between identification of
documentary evidence and its formal offer as an exhibit. We said that the first is
done in the course of the trial and is accompanied by the marking of the evidence
as an exhibit while the second is done only when the party rests its case and not
before. A party, therefore, may opt to formally offer his evidence if he believes that
it will advance his cause or not to do so at all. In the event he chooses to do the
latter, the trial court is not authorized by the Rules to consider the same.
However, in People v. Napat-a [179 SCRA 403] citing People v. Mate [103 SCRA
484], we relaxed the foregoing rule and allowed evidence not formally
offered to be admitted and considered by the trial court provided the

following requirements are present, viz.: first, the same must have been
duly identified by testimony duly recorded and, second, the same must
have been incorporated in the records of the case.[40]
From the foregoing declaration, however, it is clear that Vda. de Oate is merely an
exception to the general rule. Being an exception, it may be applied only when
there is strict compliance with the requisites mentioned therein; otherwise, the
general rule in Section 34 of Rule 132 of the Rules of Court should prevail.
In this case, we find that these requirements have not been satisfied. The assailed
pieces of evidence were presented and marked during the trial particularly when
Alberto took the witness stand. Alberto identified these pieces of evidence in his
direct testimony.[41] He was also subjected to cross-examination and re-cross
examination by petitioner.[42] But Alberto's account and the exchanges between
Alberto and petitioner did not sufficiently describe the contents of the said pieces of
evidence presented by the BIR. In fact, petitioner sought that the lead examiner,
one Ma. Anabella A. Abuloc, be summoned to testify, inasmuch as Alberto was
incompetent to answer questions relative to the working papers. [43] The lead
examiner never testified. Moreover, while Alberto's testimony identifying the BIR's
evidence was duly recorded, the BIR documents themselves were not incorporated
in
the
records
of
the
case.
A common fact threads through Vda. de Oate and Ramos that does not exist at all
in the instant case. In the aforementioned cases, the exhibits were marked at the
pre-trial proceedings to warrant the pronouncement that the same were duly
incorporated in the records of the case. Thus, we held in Ramos:
In this case, we find and so rule that these requirements have been satisfied. The
exhibits in question were presented and marked during the pre-trial of the
case thus, they have been incorporated into the records.Further, Elpidio
himself explained the contents of these exhibits when he was interrogated by
respondents'
counsel...
x

But what further defeats petitioner's cause on this issue is that respondents'
exhibits were marked and admitted during the pre-trial stage as shown by the PreTrial Order quoted earlier. [44]
While the CTA is not governed strictly by technical rules of evidence, [45] as rules of
procedure are not ends in themselves and are primarily intended as tools in the
administration of justice, the presentation of the BIR's evidence is not a mere
procedural technicality which may be disregarded considering that it is the only
means by which the CTA may ascertain and verify the truth of BIR's claims against
the Estate.[46] The BIR's failure to formally offer these pieces of evidence, despite
CTA's directives, is fatal to its cause.[47] Such failure is aggravated by the fact that
not even a single reason was advanced by the BIR to justify such fatal omission.
This,
we
take
against
the
BIR.
Per the records of this case, the BIR was directed to present its evidence [48] in the
hearing of February 21, 1996, but BIR's counsel failed to appear. [49] The CTA denied
petitioner's motion to consider BIR's presentation of evidence as waived, with a
warning to BIR that such presentation would be considered waived if BIR's evidence
would not be presented at the next hearing. Again, in the hearing of March 20,

1996, BIR's counsel failed to appear. [50] Thus, in its Resolution[51] dated March 21,
1996, the CTA considered the BIR to have waived presentation of its evidence. In
the same Resolution, the parties were directed to file their respective memorandum.
Petitioner complied but BIR failed to do so. [52] In all of these proceedings, BIR was
duly notified. Hence, in this case, we are constrained to apply our ruling in Heirs of
Pedro Pasag v. Parocha:[53]
A formal offer is necessary because judges are mandated to rest their findings of
facts and their judgment only and strictly upon the evidence offered by the parties
at the trial. Its function is to enable the trial judge to know the purpose or purposes
for which the proponent is presenting the evidence. On the other hand, this allows
opposing parties to examine the evidence and object to its admissibility. Moreover,
it facilitates review as the appellate court will not be required to review documents
not
previously
scrutinized
by
the
trial
court.
Strict adherence to the said rule is not a trivial matter. The Court in Constantino v.
Court of Appeals ruled that the formal offer of one's evidence is deemed
waived after failing to submit it within a considerable period of time. It
explained that the court cannot admit an offer of evidence made after a
lapse of three (3) months because to do so would "condone an inexcusable
laxity if not non-compliance with a court order which, in effect, would
encourage needless delays and derail the speedy administration of
justice."
Applying the aforementioned principle in this case, we find that the trial court had
reasonable ground to consider that petitioners had waived their right to make a
formal offer of documentary or object evidence. Despite several extensions of time
to make their formal offer, petitioners failed to comply with their commitment and
allowed almost five months to lapse before finally submitting it. Petitioners'
failure to comply with the rule on admissibility of evidence is anathema to
the efficient, effective, and expeditious dispensation of justice.
Having disposed of the foregoing procedural issue, we proceed to discuss the merits
of
the
case.
Ordinarily, the CTA's findings, as affirmed by the CA, are entitled to the highest
respect and will not be disturbed on appeal unless it is shown that the lower courts
committed gross error in the appreciation of facts. [54] In this case, however, we find
the decision of the CA affirming that of the CTA tainted with palpable error.
It is admitted that the claims of the Estate's aforementioned creditors have been
condoned. As a mode of extinguishing an obligation, [55] condonation or remission of
debt[56] is defined as:
an act of liberality, by virtue of which, without receiving any equivalent, the creditor
renounces the enforcement of the obligation, which is extinguished in its entirety or
in that part or aspect of the same to which the remission refers. It is an essential
characteristic of remission that it be gratuitous, that there is no equivalent received
for the benefit given; once such equivalent exists, the nature of the act changes. It
may become dation in payment when the creditor receives a thing different from
that stipulated; or novation, when the object or principal conditions of the obligation
should be changed; or compromise, when the matter renounced is in litigation or
dispute and in exchange of some concession which the creditor receives. [57]

Verily, the second issue in this case involves the construction of Section 79 [58] of the
National Internal Revenue Code[59] (Tax Code) which provides for the allowable
deductions from the gross estate of the decedent. The specific question is whether
the actual claims of the aforementioned creditors may be fully allowed as
deductions from the gross estate of Jose despite the fact that the said claims were
reduced or condoned through compromise agreements entered into by the Estate
with
its
creditors.
"Claims against the estate," as allowable deductions from the gross estate under
Section 79 of the Tax Code, are basically a reproduction of the deductions allowed
under Section 89 (a) (1) (C) and (E) of Commonwealth Act No. 466 (CA 466),
otherwise known as the National Internal Revenue Code of 1939, and which was the
first codification of Philippine tax laws. Philippine tax laws were, in turn, based on
the federal tax laws of the United States. Thus, pursuant to established rules of
statutory construction, the decisions of American courts construing the federal tax
code are entitled to great weight in the interpretation of our own tax laws. [60]
It is noteworthy that even in the United States, there is some dispute as to whether
the deductible amount for a claim against the estate is fixed as of the decedent's
death which is the general rule, or the same should be adjusted to reflect postdeath developments, such as where a settlement between the parties results in the
reduction of the amount actually paid.[61] On one hand, the U.S. court ruled that the
appropriate deduction is the "value" that the claim had at the date of the
decedent's death.[62] Also, as held in Propstra v. U.S., [63] where a lien claimed
against the estate was certain and enforceable on the date of the decedent's death,
the fact that the claimant subsequently settled for lesser amount did not preclude
the estate from deducting the entire amount of the claim for estate tax purposes.
These pronouncements essentially confirm the general principle that post-death
developments are not material in determining the amount of the deduction.
On the other hand, the Internal Revenue Service (Service) opines that post-death
settlement should be taken into consideration and the claim should be allowed as a
deduction only to the extent of the amount actually paid. [64]Recognizing the dispute,
the Service released Proposed Regulations in 2007 mandating that the deduction
would
be
limited
to
the
actual
amount
paid. [65]
In announcing its agreement with Propstra,[66] the U.S. 5th Circuit Court of Appeals
held:
We are persuaded that the Ninth Circuit's decision...in Propstra correctly apply
the Ithaca Trust date-of-death valuation principle to enforceable claims against the
estate. As we interpret Ithaca Trust, when the Supreme Court announced the dateof-death valuation principle, it was making a judgment about the nature of the
federal estate tax specifically, that it is a tax imposed on the act of transferring
property by will or intestacy and, because the act on which the tax is levied occurs
at a discrete time, i.e., the instance of death, the net value of the property
transferred should be ascertained, as nearly as possible, as of that time. This
analysis supports broad application of the date-of-death valuation rule. [67]

We express our agreement with the date-of-death

valuation rule, made pursuant to the ruling of the U.S.
Supreme Court in Ithaca Trust Co. v. United States.
[68]
First. There is no law, nor do we discern any
legislative intent in our tax laws, which disregards the
date-of-death valuation principle and particularly
provides that post-death developments must be
considered in determining the net value of the estate.
It bears emphasis that tax burdens are not to be
imposed, nor presumed to be imposed, beyond what
the statute expressly and clearly imports, tax statutes
being construed strictissimi juris against the
government.[69] Any doubt on whether a person, article
or activity is taxable is generally resolved against
taxation.[70] Second. Such construction finds relevance
and consistency in our Rules on Special Proceedings
wherein the term "claims" required to be presented
against a decedent's estate is generally construed to
mean debts or demands of a pecuniary nature which
could have been enforced against the deceased in his
lifetime, or liability contracted by the deceased before
his death.[71] Therefore, the claims existing at the time
of death are significant to, and should be made the
basis of, the determination of allowable deductions.
WHEREFORE, the instant Petition is GRANTED.
Accordingly, the assailed Decision dated April 30, 1999
and the Resolution dated November 3, 1999 of the
Court of Appeals in CA-G.R. S.P. No. 46947
are REVERSED andSET ASIDE. The Bureau of Internal
Revenue's deficiency estate tax assessment against the
Estate of Jose P. Fernandez is hereby NULLIFIED. No
costs.
SO ORDERED.

ralla v. untalan (1989)

SECOND DIVISION
[ G.R. Nos. 63253-54, April 27, 1989 ]

PABLO RALLA, PETITIONER, VS. HON. ROMULO P. UNTALAN,

HON. DOMINGO CORONEL REYES, AND LEONIE RALLA, PETER
RALLA
AND
MARINELLA
RALLA,
RESPONDENTS.
DECISION
SARMIENTO, J.:
This petition seeks the nullification of the Order of respondent Judge Romulo P.
Untalan,[1] dated July 16, 1981, excluding from the probate proceedings sixty-three
parcels of land, as well as the Orders issued by respondent Judge Domingo Coronel
Reyes,[2] denying the petitioner's motions for reconsideration of the same Order of
Judge Untalan dated July 16, 1981.
The petition's beginnings are traced to January 27, 1959, when Rosendo Ralla, a
widower, filed a petition for theprobate of his own will in the then Court of First
Instance (now Regional Trial Court) of Albay, which was docketed as Special
Proceedings No. 564. In his will, he left his entire estate to his son, Pablo (the
petitioner herein who, upon his death during the pendency of this petition, was
substituted by his heirs), leaving nothing to his other son, Pedro.
In the same year, Pedro Ralla filed an action for the partition of the estate of their
mother, Paz Escarella; this was docketed as Civil Case No. 2023.
In the course of the hearing of the probate case (Special Proceedings No. 564),
Pablo Ralla filed a motion to dismiss the petition for probate on the ground that he
was no longer interested in the allowance of the will of his late father, Rosendo
Ralla, for its probate would no longer be beneficial and advantageous to him. This
motion was denied, and the denial was affirmed by the Court of Appeals. (The latter
court agreed with the lower court's conclusion that, indeed, the petitioner stood to
gain if the testate proceedings were to be dismissed because then he would not be
compelled to submit for inclusion in the inventory of the estate of Rosendo Ralla
149 parcels of land from which he alone had been collecting rentals and receiving
income, to the exclusion and prejudice of his brother, Pedro Ralla, who was being
deprived of his successional rights over the said properties.) The denial of this
motion to dismiss was likewise affirmed by this Court (in G.R. No. L-26253). [3] On the
scheduled hearing on November 3, 1966, the petitioner reiterated his lack of
interest in the probate of the subject will. Consequently, the court, through Judge
Perfecto Quicho, declared Pedro and Pablo Ralla the only heirs of Rosendo Ralla who
should share equally upon the division of the latter's estate, and thereupon
converted the testate proceedings into one of intestacy.
Meanwhile, the brothers agreed to compromise in the partition case (Civil Case No.
2023). On December 18, 1967, they entered into a project of partition whereby
sixty-three parcels of land, apparently forming the estate of their deceased mother,
Paz Escarella, were amicably divided between the two of them. This project of
partition was approved on December 19, 1967 by Judge Ezekiel Grageda.
Eleven years later, or on February 28, 1978, Joaquin Chancoco, brother-in-law of the
petitioner (Pablo) filed a petition, docketed as Special Proceedings No. 1106, for
the probate of the same will of Rosendo Ralla on the ground that the decedent owed
him P5,000.00. Pablo Ralla then filed a manifestation stating that he had no
objections to theprobate; thereafter, he filed a "Motion to Intervene as Petitioner for
the Probate of the Will." This motion was heard ex parte and granted despite the

written opposition of the heirs of Pedro Ralla. Likewise, the petition for probatewas
granted; Teodorico Alimine, son-in-law of the petitioner, was appointed special
administrator, again, over and above the objection of the heirs of Pedro Ralla.
However, in taking possession of the properties belonging to the estate of Rosendo
Ralla. Teodorico Almine also took possession of the sixty-three parcels of land
covered by the project of partition mentioned earlier. Consequently, the heirs of
Pedro Ralla (the private respondents herein) moved to exclude from the estate of
Rosendo Ralla the aforesaid parcels of land.
In an Omnibus Order dated August 3, 1979, [4] respondent Judge Romulo P. Untalan
ruled, inter alia, that the sixty-three parcels of land should be included in the
proceedings for the settlement of the estate of Rosendo Ralla and that said
proceedings (both Special Proceedings No. 564 and Special Proceedings No. 1106,
which
were
ordered
consolidated
by
this
Court)
should
proceed
as probate proceedings.
About two years later, or on June 11, 1981, the private respondents filed a "Petition
To Submit Anew For Consideration Of The Court The Exclusion Of 67 (sic) Parcels Of
Land Subject Of The Project Of Partition In Civil Case No. 2023." [5] ln his Order of July
16, 1981, Judge Untalan reconsidered his earlier Order, to wit:
Premises considered, Order is hereby issued reconsidering the Omnibus Order of
this Court dated August 3, 1979, more particularly paragraph 3 of the dispositive
portion thereof. The Project of Partition should, therefore, be respected and upheld.
Hence, the sixty three (63) parcels referred to therein should be excluded from
the probate proceedings and, likewise from the administration of Special
Administrator Teodorico Almine, Jr.
SO ORDERED.[6]
Thereafter, the petitioner filed a motion for reconsideration of the foregoing order
but the same was denied[7] by respondent Judge Domingo Coronel Reyes, to whose
sala Special Proceedings No. 564 and No. 1106 were apparently transferred. Still, a
second motion for reconsideration was filed the same, however, was also denied. [8]
In assailing the aforesaid Order of July 16, 1981, the following arguments are raised
in the present special civil action for certiorari.
The first argument is stated as follows:
x x x The extra judicial partition of the 63 parcels made after the filing of the
petition for the probate of the Will, and before said Will was probated, is a NULLITY,
considering that as already decided by this Court in the case or Ernesto M. Guevara,
vs. Rosario Guevara et al., Vol. 74 Phil. Reports, there can be no valid partition
among the heirs till after the Will had been probated. x x x[9]
The above argument is obviously flawed and misleading for the simple reason that
the aforementioned partition was made in the civil case for partition or the estate of
Paz Escarella, which is distinct from, and independent of, the special proceedings for
the probate of the will of Rosendo Ralla.
Verily, the rule is that there can be no valid partition among the heirs till after the
will has been probated. This, of course, presupposes that the properties to be
partitioned are the same properties embraced in the will. Thus, the rule invoked is
inapplicable in this instance where there are two separate cases (Civil Case No.
2023 for partition, and Special Proceedings No. 564 originally for the probate of a

will), each involving the estate of a different person (Paz Escarella and Rosendo
Ralla, respectively) comprising dissimilar properties.
In his second and third arguments,[10] the petitioner claims that the Order of August
3, 1979 mentioned earlier could no longer be validly reversed by the court two
years after it was issued. Thus, it is alleged that by flip-flopping, Judge Untalan
committed a grave abuse of discretion.
An examination of the August 3, 1979 Order would reveal that the same resolved a
number of divergent issues (ten as enumerated) [11] springing from four separate
special proceedings,[12] all of which were pending in Branch I of the then Court of First
Instance of Albay; accordingly, there are at least nine [13] specific directives contained
therein. However, a distinction must be made between those directives that
partake of final orders and the other directives that are in the nature of interlocutory
orders.
Two closely related orders are the following quoted portions of the said August 3,
1979 Order of respondent Judge Untalan:
xxx
2.
The 149 parcels referred to in our elucidation on issue No. 2 as well as the 63
lots also mentioned therein all of which may be summed up to 212 parcels, except
those already validly disposed, conveyed, or transferred to third persons, should be
submitted, at least provisionally, to the probate or testate proceedings. Hence, the
Motion to exclude the 149 parcels filed on June 2, 1979, by petitioner intervenor
Pablo Ralla thru counsel in Special Proceeding 1106 and the motion for exclusion
filed by the heirs of Pedro Ralla thru counsel in Special Proceedings 564 and 1106
are hereby Denied; (Emphasis supplied.)
3.
The Project of partition, for purposes of these proceedings, is hereby stripped
of its judicial recognition;[14]
xxx
As regards the abovequoted paragraph 2, this Court finds that the same is
interlocutory in character because it did not decide the action with finality and left
substantial proceedings still to be had. [15] The foregoing order of inclusion of the
subject parcels of land was a mere incident that arose in the settlement of the
estate of Rosendo Ralla. It is elementary that interlocutory orders, prior to the
rendition of the final judgment, are, at any time, subject to such corrections or
amendments as the court may deem proper. Thus, in issuing the questioned Order
dated July 16, 1981, which reversed the aforementioned interlocutory order and
upheld the project of partition, respondent Judge Untalan acted well within his
jurisdiction and without grave abuse of discretion.
There is, however, a more important reason why we do not find any grave abuse of
discretion in the issuance of the questioned Order dated July 16, 1981. Consider the
following undisputed facts: the properties involved in the present petition were the
subject of the project of partition signed by both the petitioner, Pablo Ralla, and
Pedro Ralla in Civil Case No. 2023; the lower court approved the said project of
partition on December 19, 1967; subsequently, Pablo and Pedro Ralla jointly
manifested that they had already received "the ownership and possession of the
respective parcels of land adjudicated to them in the said project of
partition,"[16] and upon their motion Judge Ezekiel Grageda declared the partition
case closed and terminated in its Order of December 29, 1967; there was no appeal

made from this decision within the reglementary period to do so, consequently, it
attained finality.
Furthermore, the Court had occasion to rule that:
Where a partition had not only been approved and thus become a judgment of the
court, but distribution of the estate in pursuance of such partition had fully been
carried out, and the heirs had received the property assigned to them, they are
precluded from subsequently attacking its validity or any part of it. [17]
Likewise:
Where a piece of land has been included in a partition and there is no allegation
that the inclusion was effected through improper means or without the petitioners'
knowledge, the partition barred any further litigation on said title and operated to
bring the property under the control and jurisdiction of the court for proper
disposition according to the tenor of the partition ... They can not attack the
partition collaterally, as they are trying to do in this case. [18] (Emphasis supplied.)
Based on the foregoing pronouncements, the Order of August 3, 1979 setting aside
the project of partition was clearly erroneous. Realizing this and the fact that it was
not yet too late for him to correct his mistake, respondent Judge Untalan issued the
questioned Order of July 16, 1981.
In fine, the partition in Civil Case No. 2023 is valid and binding upon the petitioner
and Pedro Ralla, as well as upon their heirs, especially as this was accompanied by
delivery of possession to them of their respective shares in the inheritance from
their mother, the late Paz Escarella. They are duty bound to respect the division
agreed upon by them and embodied in the document of partition.
Thus, the petitioner could no longer question the exclusion of the lands subject of
the partition from the proceedings for the settlement of the estate of Rosendo
Ralla. Could it be that the petitioner's keen interest in including these lands in the
estate proceedings is directly related to the fact that his son-in-law is the
administrator of the said estate of Rosendo Ralla?
WHEREFORE, the petition is hereby DISMISSED. Costs against the petitioner.

SO ORDERED.

ortega v. valmonte (2005)

THIRD DIVISION
[ G.R. NO. 157451, December 16, 2005 ]
LETICIA VALMONTE ORTEGA, PETITIONER, VS. JOSEFINA C.
VALMONTE,
RESPONDENT.
DECISION
PANGANIBAN, J.:

The law favors the probate of a will. Upon those who oppose it rests the burden of
showing why it should not be allowed. In the present case, petitioner has failed to
discharge this burden satisfactorily. For this reason, the Court cannot attribute any
reversible error on the part of the appellate tribunal that allowed the probate of the
will.
The Case
Before the Court is a Petition for Review [1] under Rule 45 of the Rules of Court,
seeking to reverse and set aside the December 12, 2002 Decision [2] and the March
7, 2003 Resolution[3] of the Court of Appeals (CA) in CA-GR CV No. 44296. The
assailed Decision disposed as follows:
"WHEREFORE, the appeal is GRANTED, and the Decision appealed from
is REVERSED and SET ASIDE. In its place judgment is rendered approving and
allowing probate to the said last will and testament of Placido Valmonte and
ordering the issuance of letters testamentary to the petitioner Josefina Valmonte.
Let this case be remanded to the court a quo for further and concomitant
proceedings."[4]
The assailed Resolution denied petitioner's Motion for Reconsideration.
The Facts
The facts were summarized in the assailed Decision of the CA, as follows:
"x x x: Like so many others before him, Placido toiled and lived for a long time in the
United States until he finally reached retirement. In 1980, Placido finally came home
to stay in the Philippines, and he lived in the house and lot located at #9200
Catmon St., San Antonio Village, Makati, which he owned in common with his sister
Ciriaca Valmonte and titled in their names in TCT 123468. Two years after his arrival
from the United States and at the age of 80 he wed Josefina who was then 28 years
old, in a ceremony solemnized by Judge Perfecto Laguio, Jr. on February 5, 1982. But
in a little more than two years of wedded bliss, Placido died on October 8, 1984 of a
cause
written
down
as COR
PULMONALE.
"Placido executed a notarial last will and testament written in English and consisting
of two (2) pages, and dated June 15, 1983 but acknowledged only on August 9,
1983. The first page contains the entire testamentary dispositions and a part of the
attestation clause, and was signed at the end or bottom of that page by the testator
and on the left hand margin by the three instrumental witnesses. The second page
contains the continuation of the attestation clause and the acknowledgment, and
was signed by the witnesses at the end of the attestation clause and again on the
left hand margin. It provides in the body that:
"LAST WILL AND TESTAMENT OF PLACIDO VALMONTE IN THE NAME OF THE LORD
AMEN:
"I, PLACIDO VALMONTE, of legal age, married to Josefina Cabansag Valmonte, and a
resident of 9200 Catmon Street, Makati, Metro Manila, 83 years of age and being of
sound and disposing mind and memory, do hereby declare this to be my last will
and testament:
1. It is my will that I be buried in the Catholic Cemetery, under the auspices of
the Catholic Church in accordance with the rites and said Church and that a

suitable monument to be erected and provided my by executrix (wife) to

perpetuate my memory in the minds of my family and friends;
2. I give, devise and bequeath unto my loving wife, JOSEFINA C. VALMONTE, one
half (1/2) portion of the follow-described properties, which belongs to me as
[co-owner]:
1.

Lot 4-A, Block 13 described on plan Psd-28575, LRC, (GLRO), situated

in Makati, Metro Manila, described and covered by TCT No. 123468 of the
Register of Deeds of Pasig, Metro-Manila registered jointly as co-owners with
my deceased sister (Ciriaca Valmonte), having share and share alike;

2.

2-storey building standing on the above-described property, made of

strong and mixed materials used as my residence and my wife and located at
No. 9200 Catmon Street, Makati, Metro Manila also covered by Tax
Declaration No. A-025-00482, Makati, Metro-Manila, jointly in the name of my
deceased sister, Ciriaca Valmonte and myself as co-owners, share and share
alike or equal co-owners thereof;

3. All the rest, residue and remainder of my real and personal properties,
including my savings account bank book in USA which is in the possession of
my nephew, and all others whatsoever and wherever found, I give, devise
and bequeath to my said wife, Josefina C. Valmonte;
4. I hereby appoint my wife, Josefina C. Valmonte as sole executrix of my last
will and testament, and it is my will that said executrix be exempt from filing
a
bond;
IN WITNESS WHEREOF, I have hereunto set my hand this 15 th day of June
1983 in Quezon City, Philippines."
"The allowance to probate of this will was opposed by Leticia on the grounds that:
1.

Petitioner failed to allege all assets of the testator, especially those found in the
USA;

2.

Petitioner failed to state the names, ages, and residences of the heirs of the
testator; or to give them proper notice pursuant to law;

3.

Will was not executed and attested as required by law and legal solemnities and
formalities were not complied with;

4.

Testator was mentally incapable to make a will at the time of the alleged execution
he being in an advance sate of senility;

5.

Will was executed under duress, or the influence of fear or threats;

6.

Will was procured by undue and improper influence and pressure on the part of the
petitioner and/or her agents and/or assistants; and/or

7.

Signature of testator was procured by fraud, or trick, and he did not intend that the
instrument should be his will at the time of affixing his signature thereto;"
and she also opposed the appointment as Executrix of Josefina alleging her want of
understanding
and
integrity.
"At the hearing, the petitioner Josefina testified and called as witnesses the notary
public Atty. Floro Sarmiento who prepared and notarized the will, and the
instrumental witnesses spouses Eugenio Gomez, Jr. and Feliza Gomez and Josie
Collado. For the opposition, the oppositor Leticia and her daughter Mary Jane Ortega

testified.
"According to Josefina after her marriage with the testator they lived in her parents
house at Salingcob, Bacnotan, La Union but they came to Manila every month to get
his $366.00 monthly pension and stayed at the said Makati residence. There were
times though when to shave off on expenses, the testator would travel alone. And it
was in one of his travels by his lonesome self when the notarial will was made. The
will was witnessed by the spouses Eugenio and Feliza Gomez, who were their
wedding sponsors, and by Josie Collado. Josefina said she had no knowledge of the
existence of the last will and testament of her husband, but just serendipitously
found it in his attache case after his death. It was only then that she learned that
the testator bequeathed to her his properties and she was named the executrix in
the said will. To her estimate, the value of property both real and personal left by
the testator is worth more or less P100,000.00. Josefina declared too that the
testator never suffered mental infirmity because despite his old age he went alone
to the market which is two to three kilometers from their home cooked and cleaned
the kitchen and sometimes if she could not accompany him, even traveled to Manila
alone to claim his monthly pension. Josefina also asserts that her husband was in
good health and that he was hospitalized only because of a cold but which
eventually
resulted
in
his
death.
"Notary Public Floro Sarmiento, the notary public who notarized the testator's will,
testified that it was in the first week of June 1983 when the testator together with
the three witnesses of the will went to his house cum law office and requested him
to prepare his last will and testament. After the testator instructed him on the terms
and dispositions he wanted on the will, the notary public told them to come back on
June 15, 1983 to give him time to prepare it. After he had prepared the will the
notary public kept it safely hidden and locked in his drawer. The testator and his
witnesses returned on the appointed date but the notary public was out of town so
they were instructed by his wife to come back on August 9, 1983, and which they
did. Before the testator and his witnesses signed the prepared will, the notary public
explained to them each and every term thereof in Ilocano, a dialect which the
testator spoke and understood. He likewise explained that though it appears that
the will was signed by the testator and his witnesses on June 15, 1983, the day
when it should have been executed had he not gone out of town, the formal
execution was actually on August 9, 1983. He reasoned that he no longer changed
the typewritten date of June 15, 1983 because he did not like the document to
appear dirty. The notary public also testified that to his observation the testator was
physically and mentally capable at the time he affixed his signature on the will.
"The attesting witnesses to the will corroborated the testimony of the notary public,
and testified that the testator went alone to the house of spouses Eugenio and
Feliza Gomez at GSIS Village, Quezon City and requested them to accompany him to
the house of Atty. Floro Sarmiento purposely for his intended will; that after giving
his instructions to Atty. Floro Sarmiento, they were told to return on June 15, 1983;
that they returned on June 15, 1983 for the execution of the will but were asked to
come back instead on August 9, 1983 because of the absence of the notary public;
that the testator executed the will in question in their presence while he was of
sound and disposing mind and that he was strong and in good health; that the
contents of the will was explained by the notary public in the Ilocano and Tagalog
dialect and that all of them as witnesses attested and signed the will in the
presence of the testator and of each other. And that during the execution, the
testator's
wife,
Josefina
was
not
with
them.

"The oppositor Leticia declared that Josefina should not inherit alone because aside
from her there are other children from the siblings of Placido who are just as entitled
to inherit from him. She attacked the mental capacity of the testator, declaring that
at the time of the execution of the notarial will the testator was already 83 years old
and was no longer of sound mind. She knew whereof she spoke because in 1983
Placido lived in the Makati residence and asked Leticia's family to live with him and
they took care of him. During that time, the testator's physical and mental condition
showed deterioration, aberrations and senility. This was corroborated by her
daughter Mary Jane Ortega for whom Placido took a fancy and wanted to marry.
"Sifting through the evidence, the court a quo held that [t]he evidence adduced,
reduces the opposition to two grounds, namely:
1.

Non-compliance with the legal solemnities and formalities in the execution and
attestation of the will; and

2.

Mental incapacity of the testator at the time of the execution of the will as he was
then in an advanced state of senility
"It then found these
disallowed probate."[5]

grounds

extant

and

proven,

and

accordingly

Ruling of the Court of Appeals

Reversing the trial court, the appellate court admitted the will of Placido Valmonte
to probate. The CA upheld the credibility of the notary public and the subscribing
witnesses who had acknowledged the due execution of the will. Moreover, it held
that the testator had testamentary capacity at the time of the execution of the will.
It added that his "sexual exhibitionism and unhygienic, crude and impolite
ways"[6] did
not
make
him
a
person
of
unsound
mind.
Hence, this Petition.[7]
Issues
Petitioner raises the following issues for our consideration:
"I.
Whether or not the findings of the probate court are entitled to great respect.
"II.
Whether or not the signature of Placido Valmonte in the subject will was procured by
fraud or trickery, and that Placido Valmonte never intended that the instrument
should be his last will and testament.
"III.
Whether or not Placido Valmonte has testamentary capacity at the time he allegedly
executed
the
subject
will."[8]
In short, petitioner assails the CA's allowance of the probate of the will of Placido
Valmonte.

This Court's Ruling

The Petition has no merit.
Main Issue:
Probate of a Will
At the outset, we stress that only questions of law may be raised in a Petition for
Review under Section 1 of Rule 45 of the Rules of Court. As an exception, however,
the evidence presented during the trial may be examined and the factual matters
resolved by this Court when, as in the instant case, the findings of fact of the
appellate
court
differ
from
those
of
the
trial
court. [9]
The fact that public policy favors the probate of a will does not necessarily mean
that every will presented forprobate should be allowed. The law lays down the
procedures and requisites that must be satisfied for the probate of a will.[10] Verily,
Article 839 of the Civil Code states the instances when a will may be disallowed, as
follows:
"Article 839. The will shall be disallowed in any of the following cases:
(1)

If

the

formalities

required

by

law

have

not

been

complied

with;

(2) If the testator was insane, or otherwise mentally incapable of making a will, at
the
time
of
its
execution;
(3) If it was executed through force or under duress, or the influence of fear, or
threats;
(4) If it was procured by undue and improper pressure and influence, on the part of
the
beneficiary
or
of
some
other
person;
(5)

If

the

signature

of

the

testator

was

procured

by

fraud;

(6) If the testator acted by mistake or did not intend that the instrument he signed
should be his will at the time of affixing his signature thereto."
In the present case, petitioner assails the validity of Placido Valmonte's will by
imputing fraud in its execution and challenging the testator's state of mind at the
time.
Existence
Execution

of

Fraud
of

in
a

the
Will

Petitioner does not dispute the due observance of the formalities in the execution of
the will, but maintains that the circumstances surrounding it are indicative of the
existence of fraud. Particularly, she alleges that respondent, who is the testator's
wife and sole beneficiary, conspired with the notary public and the three attesting
witnesses in deceiving Placido to sign it. Deception is allegedly reflected in the
varying
dates of the execution
and the
attestation
of
the
will.
Petitioner contends that it was "highly dubious for a woman at the prime of her

young life [to] almost immediately plunge into marriage with a man who [was]
thrice her age x x x and who happened to be [a] Fil-American pensionado," [11] thus
casting doubt on the intention of respondent in seeking the probate of the will.
Moreover, it supposedly "defies human reason, logic and common experience" [12] for
an old man with a severe psychological condition to have willingly signed a last will
and
testament.
We are not convinced. Fraud "is a trick, secret device, false statement, or pretense,
by which the subject of it is cheated. It may be of such character that the testator is
misled or deceived as to the nature or contents of the document which he executes,
or it may relate to some extrinsic fact, in consequence of the deception regarding
which the testator is led to make a certain will which, but for the fraud, he would not
have
made."[13]
We stress that the party challenging the will bears the burden of proving the
existence of fraud at the time of its execution. [14] The burden to show otherwise
shifts to the proponent of the will only upon a showing of credible evidence of fraud.
[15]
Unfortunately in this case, other than the self-serving allegations of petitioner, no
evidence
of
fraud
was
ever
presented.
It is a settled doctrine that the omission of some relatives does not affect the due
execution of a will.[16] That the testator was tricked into signing it was not sufficiently
established by the fact that he had instituted his wife, who was more than fifty
years his junior, as the sole beneficiary; and disregarded petitioner and her family,
who were the ones who had taken "the cudgels of taking care of [the testator] in his
twilight
years."[17]
Moreover, as correctly ruled by the appellate court, the conflict between the dates
appearing on the will does not invalidate the document, "because the law does not
even require that a [notarial] will x x x be executed and acknowledged on the same
occasion."[18] More important, the will must be subscribed by the testator, as well as
by three or more credible witnesses who must also attest to it in the presence of the
testator and of one another.[19]Furthermore, the testator and the witnesses must
acknowledge the will before a notary public. [20] In any event, we agree with the CA
that "the variance in the dates of the will as to its supposed execution and
attestation was satisfactorily and persuasively explained by the notary public and
the
instrumental
witnesses."[21]
The pertinent transcript of stenographic notes taken on June 11, 1985, November
25, 1985, October 13, 1986, and October 21, 1987 -- as quoted by the CA -- are
reproduced respectively as follows:
"Atty. Floro Sarmiento:

You typed this document exhibit C, specifying the date June 15 when the
testator and his witnesses were supposed to be in your office?

Yes sir.

On June 15, 1983, did the testator and his witnesses come to your house?

They did as of agreement but unfortunately, I was out of town.

xxx

xxx

xxx

The document has been acknowledged on August 9, 1983 as per

acknowledgement appearing therein. Was this the actual date when the
document was acknowledged?

Yes sir.

What about the date when the testator and the three witnesses affixed their
respective signature on the first and second pages of exhibit C?

On that particular date when it was acknowledged, August 9, 1983.

Why did you not make the necessary correction on the date appearing on the
body of the document as well as the attestation clause?

Because I do not like anymore to make some alterations so I put it in my own

handwriting August 9, 1983 on the acknowledgement. (tsn, June 11, 1985, pp.
8-10)

Eugenio Gomez:

It appears on the first page Mr. Witness that it is dated June 15, 1983, whereas
in the acknowledgement it is dated August 9, 1983, will you look at this
document and tell us this discrepancy in the date?

We went to Atty. Sarmiento together with Placido Valmonte and the two
witnesses; that was first week of June and Atty. Sarmiento told us to return on
the 15th of June but when we returned, Atty. Sarmiento was not there.

When you did not find Atty. Sarmiento on June 15, 1983, did you again go back?

We returned on the 9th of August and there we signed.

This August 9, 1983 where you said it is there where you signed, who were your
companions?

The two witnesses, me and Placido Valmonte. (tsn, November 25, 1985, pp. 7-8)

Felisa Gomez on cross-examination:

Why did you have to go to the office of Atty. Floro Sarmiento, three times?

xxx

xxx

xxx

The reason why we went there three times is that, the first week of June was
out first time. We went there to talk to Atty. Sarmiento and Placido Valmonte
about the last will and testament. After that what they have talked what will be
placed in the testament, what Atty. Sarmiento said was that he will go back on
the 15th of June. When we returned on June 15, Atty. Sarmiento was not there so
we were not able to sign it, the will. That is why, for the third time we went
there on August 9 and that was the time we affixed our signature. (tsn, October
13, 1986, pp. 4-6)

Josie Collado:

When you did not find Atty. Sarmiento in his house on June 15, 1983, what
transpired?

The wife of Atty. Sarmiento told us that we will be back on August 9, 1983.

And on August 9, 1983 did you go back to the house of Atty. Sarmiento?

Yes, Sir.

For what purpose?

Our purpose is just to sign the will.

Were you able to sign the will you mentioned?

Yes sir. (tsn, October 21, 1987, pp. 4-5)" [22]

Notably, petitioner failed to substantiate her claim of a "grand conspiracy" in the

commission of a fraud. There was no showing that the witnesses of the proponent
stood to receive any benefit from the allowance of the will. The testimonies of the
three subscribing witnesses and the notary are credible evidence of its due
execution.[23] Their testimony favoring it and the finding that it was executed in
accordance with the formalities required by law should be affirmed, absent any
showing
of
ill
motives.[24]
Capacity

to

Make

Will

In determining the capacity of the testator to make a will, the Civil Code gives the
following guidelines:
"Article 798. In order to make a will it is essential that the testator be of sound mind
at
the
time
of
its
execution.
"Article 799. To be of sound mind, it is not necessary that the testator be in full
possession of all his reasoning faculties, or that his mind be wholly unbroken,
unimpaired,
or
shattered
by
disease,
injury
or
other
cause.

"It shall be sufficient if the testator was able at the time of making the will to know
the nature of the estate to be disposed of, the proper objects of his bounty, and the
character
of
the
testamentary
act.
"Article 800. The law presumes that every person is of sound mind, in the absence
of
proof
to
the
contrary.
"The burden of proof that the testator was not of sound mind at the time of making
his dispositions is on the person who opposes the probate of the will; but if the
testator, one month, or less, before making his will was publicly known to be insane,
the person who maintains the validity of the will must prove that the testator made
it during a lucid interval."
According to Article 799, the three things that the testator must have the ability to
know to be considered of sound mind are as follows: (1) the nature of the estate to
be disposed of, (2) the proper objects of the testator's bounty, and (3) the character
of the testamentary act. Applying this test to the present case, we find that the
appellate court was correct in holding that Placido had testamentary capacity at the
time
of
the
execution
of
his
will.
It must be noted that despite his advanced age, he was still able to identify
accurately the kinds of property he owned, the extent of his shares in them and
even their locations. As regards the proper objects of his bounty, it was sufficient
that he identified his wife as sole beneficiary. As we have stated earlier, the
omission of some relatives from the will did not affect its formal validity. There being
no showing of fraud in its execution, intent in its disposition becomes irrelevant.
Worth reiterating in determining soundness of mind is Alsua-Betts v. CA,[25] which
held thus:
"Between the highest degree of soundness of mind and memory which
unquestionably carries with it full testamentary capacity, and that degrees of
mental aberration generally known as insanity or idiocy, there are numberless
degrees of mental capacity or incapacity and while on one hand it has been held
that mere weakness of mind, or partial imbecility from disease of body, or from age,
will not render a person incapable of making a will; a weak or feebleminded person
may make a valid will, provided he has understanding and memory sufficient to
enable him to know what he is about to do and how or to whom he is disposing of
his property. To constitute a sound and disposing mind, it is not necessary that the
mind be unbroken or unimpaired or unshattered by disease or otherwise. It has
been held that testamentary incapacity does not necessarily require that a person
shall actually be insane or of unsound mind." [26]

WHEREFORE, the Petition is DENIED, and the assailed

Decision and Resolution of the Court of Appeals
areAFFIRMED. Costs against petitioner.
SO ORDERED.

lim v. auto truck (200)

SECOND DIVISION

[ G.R. No. 124715, January 24, 2000 ]

RUFINA LUY LIM PETITIONER, VS. COURT OF APPEALS, AUTO
TRUCK TBA CORPORATION, SPEED DISTRIBUTING, INC.,
ACTIVE
DISTRIBUTORS,
ALLIANCE
MARKETING
CORPORATION, ACTION COMPANY, INC. RESPONDENTS.
DECISION
BUENA, J.:
May a corporation, in its universality, be the proper subject of and be included in the
inventory
of
the
estate
of
a
deceased
person?
Petitioner disputes before us through the instant petition for review on certiorari,
the decision[1] of the Court of Appeals promulgated on 18 April 1996, in CA-GR SP
No. 38617, which nullified and set aside the orders dated 04 July 1995 [2], 12
September 1995[3] and 15 September 1995[4] of the Regional Trial Court of Quezon
City,
Branch
93,
sitting
as
a probate court.
Petitioner Rufina Luy Lim is the surviving spouse of the late Pastor Y. Lim whose
estate is the subject of probateproceedings in Special Proceedings Q-95-23334,
entitled, "In Re: Intestate Estate of Pastor Y. Lim Rufina Luy Lim, represented by
George
Luy,
Petitioner".
Private respondents Auto Truck Corporation, Alliance Marketing Corporation, Speed
Distributing, Inc., Active Distributing, Inc. and Action Company are corporations
formed, organized and existing under Philippine laws and which owned real
properties
covered
under
the
Torrens
system.
On 11 June 1994, Pastor Y. Lim died intestate. Herein petitioner, as surviving spouse
and duly represented by her nephew George Luy, filed on 17 March 1995, a joint
petition[5] for the administration of the estate of Pastor Y. Lim before the Regional
Trial
Court
of
Quezon
City.
Private respondent corporations, whose properties were included in the inventory of
the estate of Pastor Y. Lim, then filed a motion [6] for the lifting of lis pendens and
motion[7] for exclusion of certain properties from the estate of the decedent.
In an order[8] dated 08 June 1995, the Regional Trial Court of Quezon City, Branch
93, sitting as a probate court, granted the private respondents twin motions, in this
wise:
"Wherefore, the Register of Deeds of Quezon City is hereby ordered to lift, expunge
or delete the annotation of lis pendens on Transfer Certificates of Title Nos. 116716,
116717, 116718, 116719 and 5182 and it is hereby further ordered that the
properties covered by the same titles as well as those properties by (sic) Transfer
Certificate of Title Nos. 613494, 363123, 236236 and 263236 are excluded from
these
proceedings.
SO ORDERED."

Subsequently, Rufina Luy Lim filed a verified amended petition [9] which contained
the following averments:
"3. The late Pastor Y. Lim personally owned during his lifetime the following business
entities, to wit:
Business Entity
X

Address:

Alliance Marketing ,Inc.

X X

Block 3, Lot 6, Dacca

BF Homes,
Paraaque,
Metro Manila.

Speed Distributing Inc.

910 Barrio Niog,

Aguinaldo Highway,
Bacoor, Cavite.

Auto Truck TBA Corp.

X

2251 Roosevelt Avenue,

Quezon City.

Active Distributors, Inc.

Block 3, Lot 6, Dacca BF

Homes, Paraaque,
Metro Manila.

Action Company

100 20th Avenue Murphy,

Quezon City
or
92-D Mc-Arthur Highway
Valenzuela Bulacan.

"3.1 Although the above business entities dealt and engaged in business with the
public as corporations, all their capital, assets and equity were however, personally
owned by the late Pastor Y Lim. Hence the alleged stockholders and officers
appearing in the respective articles of incorporation of the above business entities
were mere dummies of Pastor Y. Lim, and they were listed therein only for purposes
of
registration
with
the
Securities
and
Exchange
Commission.
"4. Pastor Lim, likewise, had Time, Savings and Current Deposits with the following
banks: (a) Metrobank, Grace Park, Caloocan City and Quezon Avenue, Quezon City
Branches and (b) First Intestate Bank (formerly Producers Bank), Rizal Commercial
Banking Corporation and in other banks whose identities are yet to be determined.
"5. That the following real properties, although registered in the name of the above
entities, were actually acquired by Pastor Y. Lim during his marriage with petitioner,
to wit:
Corporation

Title

Location

k. Auto Truck

TCT No. 617726

Sto. Domingo Cainta, Rizal

TCT No. 27896

Prance, Metro Manila

TBA Corporation
q. Alliance Marketing

Copies of the above-mentioned Transfer Certificate of Title and/or Tax Declarations

are hereto attached as Annexes "C" to "W".
X X X X
"7. The aforementioned properties and/or real interests left by the late Pastor Y. Lim,
are all conjugal in nature, having been acquired by him during the existence of his
marriage
with
petitioner.
"8. There are other real and personal properties owned by Pastor Y. Lim which
petitioner could not as yet identify. Petitioner, however will submit to this Honorable
Court the identities thereof and the necessary documents covering the same as
soon as possible."
On 04 July 1995, the Regional Trial Court acting on petitioners motion issued an
order[10], thus:
"Wherefore, the order dated 08 June 1995 is hereby set aside and the Registry of
Deeds of Quezon City is hereby directed to reinstate the annotation of lis pendens in
case said annotation had already been deleted and/or cancelled said TCT Nos.
116716,
116717,
116718,
116719
and
51282.
Further more (sic), said properties covered by TCT Nos. 613494, 365123, 236256
and 236237 by virtue of the petitioner are included in the instant petition.
SO ORDERED."
On 04 September 1995, the probate court appointed Rufina Lim as special
administrator[11] and Miguel Lim and Lawyer Donald Lee, as co-special
administrators of the estate of Pastor Y. Lim, after which letters of administration
were
accordingly
issued.
In an order[12] dated 12 September 1995, the probate court denied anew private
respondents motion for exclusion, in this wise:
"The issue precisely raised by the petitioner in her petition is whether the
corporations are the mere alter egos or instrumentalities of Pastor Lim, Otherwise
(sic) stated, the issue involves the piercing of the corporate veil, a matter that is
clearly within the jurisdiction of this Honorable Court and not the Securities and
Exchange Commission. Thus, in the case of Cease vs. Court of Appeals, 93 SCRA
483, the crucial issue decided by the regular court was whether the corporation
involved therein was the mere extension of the decedent. After finding in the
affirmative, the Court ruled that the assets of the corporation are also assets of the
estate.

A reading of P.D. 902, the law relied upon by oppositors, shows that the SECs
exclusive (sic) applies only to intra-corporate controversy. It is simply a suit to settle
the intestate estate of a deceased person who, during his lifetime, acquired several
properties
and
put
up
corporations
as
his
instrumentalities.
SO ORDERED."
On 15 September 1995, the probate court acting on an ex parte motion filed by
petitioner, issued an order[13] the dispositive portion of which reads:
"Wherefore, the parties and the following banks concerned herein under
enumerated are hereby ordered to comply strictly with this order and to produce
and submit to the special administrators , through this Honorable Court within (5)
five days from receipt of this order their respective records of the savings/current
accounts/time deposits and other deposits in the names of Pastor Lim and/or
corporations above-mentioned, showing all the transactions made or done
concerning savings /current accounts from January 1994 up to their receipt of this
court order.
XXX

XXX

XXX

SO ORDERED."
Private respondent filed a special civil action for certiorari [14], with an urgent prayer
for a restraining order or writ of preliminary injunction, before the Court of Appeals
questioning the orders of the Regional Trial Court, sitting as aprobate court.
On 18 April 1996, the Court of Appeals, finding in favor of herein private
respondents, rendered the assailed decision [15], the decretal portion of which
declares:
"Wherefore, premises considered, the instant special civil action for certiorari is
hereby granted, The impugned orders issued by respondent court on July 4,1995
and September 12, 1995 are hereby nullified and set aside. The impugned order
issued by respondent on September 15, 1995 is nullified insofar as petitioner
corporations"
bank
accounts
and
records
are
concerned.
SO ORDERED."
Through the expediency of Rule 45 of the Rules of Court, herein petitioner Rufina
Luy Lim now comes before us with a lone assignment of error [16]:
"The respondent Court of Appeals erred in reversing the orders of the lower court
which merely allowed the preliminary or provisional inclusion of the private
respondents as part of the estate of the late deceased (sic) Pastor Y. Lim with the
respondent Court of Appeals arrogating unto itself the power to repeal, to disobey or
to ignore the clear and explicit provisions of Rules 81,83,84 and 87 of the Rules of
Court and thereby preventing the petitioner, from performing her duty as special
administrator of the estate as expressly provided in the said Rules."
Petitioners

contentions

tread

on

perilous

grounds.

In the instant petition for review, petitioner prays that we affirm the orders issued
by the probate court which were subsequently set aside by the Court of Appeals.

Yet, before we delve into the merits of the case, a review of the rules on jurisdiction
over probate proceedings
is
indeed
in
order.
The provisions of Republic Act 7691 [17], which introduced amendments to Batas
Pambansa Blg. 129, are pertinent:
"Section 1. Section 19 of Batas Pambansa Blg. 129, otherwise known as the
"Judiciary Reorganization Act of 1980", is hereby amended to read as follows:
Section 19. Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive
jurisdiction:
xxx

xxx

xxx

(4) In all matters of probate, both testate and intestate, where the gross value of
the estate exceeds One Hundred Thousand Pesos (P100,000) or, in probate matters
in Metro Manila, where such gross value exceeds Two Hundred Thousand Pesos
(P200,000);
xxx

xxx

xxx

Section 3. Section 33 of the same law is hereby amended to read as follows:

Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and
Municipal Circuit Trial Courts in Civil Cases.-Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts shall exercise:
1.

Exclusive original jurisdiction over civil actions and probate proceedings, testate
and intestate, including the grant of provisional remedies in proper cases, where the
value of the personal property, estate or amount of the demand does not exceed
One Hundred Thousand Pesos(P100,000) or, in Metro Manila where such personal
property, estate or amount of the demand does not exceed Two Hundred Thousand
Pesos (P200,000), exclusive of interest, damages of whatever kind, attorneys fees,
litigation expenses and costs, the amount of which must be specifically alleged,
Provided, that interest, damages of whatever kind, attorneys, litigation expenses
and costs shall be included in the determination of the filing fees, Provided further,
that where there are several claims or causes of actions between the same or
different parties, embodied in the same complaint, the amount of the demand shall
be the totality of the claims in all the causes of action, irrespective of whether the
causes of action arose out of the same or different transactions;
xxx

xxx

xxx"

Simply put, the determination of which court exercises jurisdiction over matters
of probate depends upon the gross value of the estate of the decedent.
As to the power and authority of the probate court, petitioner relies heavily on the
principle that a probate court may pass upon title to certain properties, albeit
provisionally, for the purpose of determining whether a certain property should or
should
not
be
included
in
the
inventory.
In a litany of cases, We defined the parameters by which the court may extend its
probing arms in the determination of the question of title in probate proceedings.

This Court, in PASTOR, JR. vs. COURT OF APPEALS,[18] held:

"X X X As a rule, the question of ownership is an extraneous matter which
the probate court cannot resolve with finality. Thus, for the purpose of determining
whether a certain property should or should not be included in the inventory of
estate properties, the Probate Court may pass upon the title thereto, but such
determination is provisional, not conclusive, and is subject to the final decision in a
separate action to resolve title."
We reiterated the rule in PEREIRA vs. COURT OF APPEALS[19]:
"X X X The function of resolving whether or not a certain property should be
included in the inventory or list of properties to be administered by the
administrator is one clearly within the competence of the probate court. However,
the courts determination is only provisional in character, not conclusive, and is
subject to the final decision in a separate action which may be instituted by the
parties."
Further, in MORALES vs. CFI OF CAVITE [20] citing CUIZON vs. RAMOLETE[21], We
made an exposition on the probate courts limited jurisdiction:
"It is a well-settled rule that a probate court or one in charge of proceedings
whether testate or intestate cannot adjudicate or determine title to properties
claimed to be a part of the estate and which are equally claimed to belong to
outside parties. All that the said court could do as regards said properties is to
determine whether they should or should not be included in the inventory or list of
properties to be administered by the administrator. If there is no dispute, well and
good; but if there is, then the parties, the administrator and the opposing parties
have to resort to an ordinary action for a final determination of the conflicting
claims of title because the probate court cannot do so."
Again, in VALERA vs. INSERTO[22], We had occasion to elucidate, through Mr.
Justice Andres Narvasa[23]:
"Settled is the rule that a Court of First Instance (now Regional Trial Court), acting as
a probate court, exercises but limited jurisdiction, and thus has no power to take
cognizance of and determine the issue of title to property claimed by a third person
adversely to the decedent, unless the claimant and all other parties having legal
interest in the property consent, expressly or impliedly, to the submission of the
question to the probate court for adjudgment, or the interests of third persons are
not thereby prejudiced, the reason for the exception being that the question of
whether or not a particular matter should be resolved by the court in the exercise of
its general jurisdiction or of its limited jurisdiction as a special court (e.g. probate,
land registration, etc.), is in reality not a jurisdictional but in essence of procedural
one, involving a mode of practice which may be waived. x x x
x x x. These considerations assume greater cogency where, as here, the
Torrens title is not in the decedents name but in others, a situation on
which this Court has already had occasion to rule x x x."(emphasis Ours)
Petitioner, in the present case, argues that the parcels of land covered under the
Torrens system and registered in the name of private respondent corporations
should be included in the inventory of the estate of the decedent Pastor Y. Lim,
alleging that after all the determination by the probate court of whether these
properties should be included or not is merely provisional in nature, thus, not

conclusive and subject to a final determination in a separate action brought for the
purpose
of
adjudging
once
and
for
all
the
issue
of
title.
Yet, under the peculiar circumstances, where the parcels of land are registered in
the name of private respondent corporations, the jurisprudence pronounced
in BOLISAY vs., ALCID[24] is of great essence and finds applicability, thus:
"It does not matter that respondent-administratrix has evidence purporting to
support her claim of ownership, for, on the other hand, petitioners have a Torrens
title in their favor, which under the law is endowed with incontestability until after it
has been set aside in the manner indicated in the law itself, which, of course, does
not include, bringing up the matter as a mere incident in special proceedings for the
settlement
of
the
estate
of
deceased
persons.
x
x
x"
"x x x. In regard to such incident of inclusion or exclusion, We hold that if a property
covered by Torrens title is involved, the presumptive conclusiveness of such title
should be given due weight, and in the absence of strong compelling evidence to
the contrary, the holder thereof should be considered as the owner of the property
in controversy until his title is nullified or modified in an appropriate ordinary action,
particularly, when as in the case at bar, possession of the property itself is in the
persons named in the title. x x x"
A perusal of the records would reveal that no strong compelling evidence was ever
presented by petitioner to bolster her bare assertions as to the title of the deceased
Pastor Y. Lim over the properties. Even so, P.D. 1529, otherwise known as, " The
Property Registration Decree", proscribes collateral attack on Torrens Title, hence:
"xxx

xxx

xxx

Section 48. Certificate not subject to collateral attack.

-

A certificate of title shall not be subject to collateral attack. It cannot be altered,

modified or cancelled except in a direct proceeding in accordance with law."

In CUIZON vs. RAMOLETE, where similarly as in the case at bar, the property
subject of the controversy was duly registered under the Torrens system, We
categorically stated:
"x x x Having been apprised of the fact that the property in question was in the
possession of third parties and more important, covered by a transfer certificate of
title issued in the name of such third parties, the respondent court should have
denied the motion of the respondent administrator and excluded the property in
question from the inventory of the property of the estate. It had no authority to
deprive such third persons of their possession and ownership of the property. x x x"
Inasmuch as the real properties included in the inventory of the estate of the late
Pastor Y. Lim are in the possession of and are registered in the name of private
respondent corporations, which under the law possess a personality separate and
distinct from their stockholders, and in the absence of any cogency to shred the veil
of corporate fiction, the presumption of conclusiveness of said titles in favor of
private
respondents
should
stand
undisturbed.
Accordingly, the probate court was remiss in denying private respondents motion
for exclusion. While it may be true that the Regional Trial Court, acting in a
restricted capacity and exercising limited jurisdiction as a probatecourt, is
competent to issue orders involving inclusion or exclusion of certain properties in

the inventory of the estate of the decedent, and to adjudge, albeit, provisionally the
question of title over properties, it is no less true that such authority conferred upon
by law and reinforced by jurisprudence, should be exercised judiciously, with due
regard and caution to the peculiar circumstances of each individual case.
Notwithstanding that the real properties were duly registered under the Torrens
system in the name of private respondents, and as such were to be afforded the
presumptive conclusiveness of title, the probate court obviously opted to shut its
eyes to this gleamy fact and still proceeded to issue the impugned orders.
By its denial of the motion for exclusion, the probate court in effect acted in utter
disregard of the presumption of conclusiveness of title in favor of private
respondents. Certainly, the probate court through such brazen act transgressed the
clear provisions of law and infringed settled jurisprudence on this matter.
Moreover, petitioner urges that not only the properties of private respondent
corporations are properly part of the decedents estate but also the private
respondent corporations themselves. To rivet such flimsy contention, petitioner
cited that the late Pastor Y. Lim during his lifetime, organized and wholly-owned the
five corporations, which are the private respondents in the instant case. [25] Petitioner
thus attached as Annexes "F"[26] and "G"[27] of the petition for review affidavits
executed by Teresa Lim and Lani Wenceslao which among others, contained
averments that the incorporators of Uniwide Distributing, Inc. included on the list
had no actual participation in the organization and incorporation of the said
corporation. The affiants added that the persons whose names appeared on the
articles of incorporation of Uniwide Distributing, Inc., as incorporators thereof, are
mere dummies since they have not actually contributed any amount to the capital
stock of the corporation and have been merely asked by the late Pastor Y. Lim to
affix
their
respective
signatures
thereon.
It is settled that a corporation is clothed with personality separate and distinct from
that of the persons composing it. It may not generally be held liable for that of the
persons composing it. It may not be held liable for the personal indebtedness of its
stockholders
or
those
of
the
entities
connected
with
it. [28]
Rudimentary is the rule that a corporation is invested by law with a personality
distinct and separate from its stockholders or members. In the same vein, a
corporation by legal fiction and convenience is an entity shielded by a protective
mantle and imbued by law with a character alien to the persons comprising it.
Nonetheless, the shield is not at all times invincible. Thus, in FIRST PHILIPPINE
INTERNATIONAL BANK vs. COURT OF APPEALS[29], We enunciated:
"x x x When the fiction is urged as a means of perpetrating a fraud or an illegal act
or as a vehicle for the evasion of an existing obligation, the circumvention of
statutes, the achievement or perfection of a monopoly or generally the perpetration
of knavery or crime, the veil with which the law covers and isolates the corporation
from the members or stockholders who compose it will be lifted to allow for its
consideration merely as an aggregation of individuals. x x x"
Piercing the veil of corporate entity requires the court to see through the protective
shroud which exempts its stockholders from liabilities that ordinarily, they could be
subject to, or distinguishes one corporation from a seemingly separate one, were it
not
for
the
existing
corporate
fiction. [30]

The corporate mask may be lifted and the corporate veil may be pierced when a
corporation is just but the alter ego of a person or of another corporation. Where
badges of fraud exist, where public convenience is defeated; where a wrong is
sought to be justified thereby, the corporate fiction or the notion of legal entity
should
come
to
naught.[31]
Further, the test in determining the applicability of the doctrine of piercing the veil
of corporate fiction is as follows: 1) Control, not mere majority or complete stock
control, but complete domination, not only of finances but of policy and business
practice in respect to the transaction attacked so that the corporate entity as to this
transaction had at the time no separate mind, will or existence of its own; (2) Such
control must have been used by the defendant to commit fraud or wrong, to
perpetuate the violation of a statutory or other positive legal duty, or dishonest and
unjust act in contravention of plaintiffs legal right; and (3) The aforesaid control and
breach of duty must proximately cause the injury or unjust loss complained of. The
absence of any of these elements prevent "piercing the corporate veil". [32]
Mere ownership by a single stockholder or by another corporation of all or nearly all
of the capital stock of a corporation is not of itself a sufficient reason for
disregarding
the
fiction
of
separate
corporate
personalities. [33]
Moreover, to disregard the separate juridical personality of a corporation, the
wrong-doing must be clearly and convincingly established. It cannot be presumed.
[34]

Granting arguendo that the Regional Trial Court in this case was not merely acting in
a limited capacity as a probatecourt, petitioner nonetheless failed to adduce
competent evidence that would have justified the court to impale the veil of
corporate fiction. Truly, the reliance reposed by petitioner on the affidavits executed
by Teresa Lim and Lani Wenceslao is unavailing considering that the aforementioned
documents possess no weighty probative value pursuant to the hearsay rule.
Besides it is imperative for us to stress that such affidavits are inadmissible in
evidence inasmuch as the affiants were not at all presented during the course of the
proceedings in the lower court. To put it differently, for this Court to uphold the
admissibility of said documents would be to relegate from Our duty to apply such
basic rule of evidence in a manner consistent with the law and jurisprudence.
Our pronouncement
in PEOPLE
LEONIDAS[35] finds pertinence:

BANK

AND

TRUST

COMPANY

vs.

"Affidavits are classified as hearsay evidence since they are not generally prepared
by the affiant but by another who uses his own language in writing the affiants
statements, which may thus be either omitted or misunderstood by the one writing
them. Moreover, the adverse party is deprived of the opportunity to cross-examine
the affiants. For this reason, affidavits are generally rejected for being hearsay,
unless the affiant themselves are placed on the witness stand to testify thereon."

As to the order[36] of the lower court, dated 15 September

1995, the Court of Appeals correctly observed that the
Regional Trial Court, Branch 93 acted without
jurisdiction in issuing said order; The probate court had
no authority to demand the production of bank
accounts in the name of the private respondent
corporations.
WHEREFORE, in view of the foregoing disquisitions, the
instant petition is hereby DISMISSED for lack of merit
and the decision of the Court of Appeals which nullified
and set aside the orders issued by the Regional Trial
Court, Branch 93, acting as a probate court, dated 04
July 1995 and 12 September 1995 is AFFIRMED.
SO ORDERED.

dillena v. carreon (1988)

THIRD DIVISION
[ G.R. No. 77660, July 28, 1988 ]
ELADIO DILLENA, PETITIONER, VS. COURT OF APPEALS AND
AURORA
CARREON,
RESPONDENTS.
DECISION
BIDIN, J.:
This is a petition for review on certiorari of the decision dated NOVEMBER 14, 1986
of the respondent Court of Appeals which dismissed the petition for certiorari (CAG.R. SP No. 08404) filed by herein petitioner Eladio Dillena to nullify the orders
dated August 10, 1984, September 13, 1984 and October 28, 1985 of the RTC,
Branch 84, Quezon City, sitting as a probate court in Sp. Proc. No. Q-19378. The
said orders annulled the sale of fishponds under administration, executed by private
respondent Aurora Carreon, as administratrix of the estate under administration in
favor of petitioner, for the reason that said sale was made without authority from
and/or approval of the probate court.
The facts of this case as found by the Court of Appeals are as follows:
Spouses Dolores Sebastian and Rufino Carreon died on March 7, 1974 and August
21, 1974, in Quezon City and Manila, respectively, leaving an adopted daughter
Aurora Carreon, private respondent herein. On October 21, 1974, Fausta Carreon
Herrera, sister of the deceased Rufino Carreon instituted Sp. Proc. No. Q-19378
entitled In the Matter of the Intestate Estate of the Deceased Spouses Rufino B.
Carreon and Dolores Sebastian - Petition for Letters of Administration" before the

then CFI, Branch XXXI, Quezon City. On November 7, 1974, the said court appointed
Fausta Carreon Herrera as Special Administratrix only for the purpose of receiving
and collecting all sums of money due and payable to the estate, in addition to the
powers and duties provided for under Section 2, Rule 80 of the Rules of Court.
On October 3, 1975, private respondent executed an Extra-Judicial Settlement of
the Estate of the deceased spouses, adjudicating to herself all the real properties of
the said spouses.
On October 14, 1975, private respondent filed a motion to revoke the letters of
administration issued to Fausta Carreon Herrera. Accordingly, the lower court, on
March 31, 1976, granted the motion and allowed private respondent to administer
the properties of the estate. Thereafter, private respondent acted as administratrix
of the estate although it was only on June 27, 1980 that the appointment of private
respondent was formalized and she was granted letters of administration on July 1,
1980.
Meanwhile, on November 8, 1978, private respondent, while being the
administratrix of the estate, executed an extra-judicial adjudication of the three (3)
fishpond properties of the deceased spouses in Hagonoy, Bulacan. By virtue of said
extra-judicial adjudication, Transfer Certificates of Title Nos. 140243, 140244 and
140245 in the names of the deceased spouses were cancelled and in lieu thereof,
Transfer Certificates of Title were issued in the name of private respondent.
On November 13, 1978, private respondent sold in favor of petitioner the three
fishponds in question without the knowledge and approval of the probate court.
Prior to the sale, petitioner had been leasing these fishponds for several years. As a
result of the sale, transfer certificates of title over the said properties were issued in
favor of petitioner.
Aside from the aforesaid sale, petitioner previously sold real properties of the estate
to Luisa S. Rodriguez on July 19, 1977 and to the Starlight Industrial Co., Inc. on
December 7, 1977. Both sales were likewise made without the approval of
the probate court. The said court, having learned of the aforesaid transfers of the
real properties without its approval, issued an order dated September 22, 1981
requiring the three vendees to appear on October 23, 1981 and to explain why the
deeds of sale, as well as the transfer certificates of title issued as a consequence
thereof, should not be cancelled for having been executed without court approval.
The aforesaid vendees were duly furnished with copies of the order dated
September 22, 1981. Only Starlight Industries, Co. Inc. appeared on October 23,
1981. Again, the vendees were required to submit their respective explanations
and the hearing on the incident was re-set to November 11, 1981. Petitioner was
again duly served with a copy of said order.
At the scheduled hearing, Starlight Industries Co., Inc. submitted an explanation,
thus, the sale in its favor was approved and confirmed by the probate court.
However, vendees Luisa S. Rodriguez and petitioner Eladio Dillena neither appeared
at the scheduled hearing nor submitted their explanations as to why the sales in
their favor should not be cancelled for having been executed without court
approval.
On August 10, 1984, acting on the claim of Atty. Eugenio Balatbat for attorney's fees
on account of his legal services rendered to private respondent and to the estate,
the probate court approved the payment of said fees to be paid out of the
properties of the estate. The same was ordered annotated as a lien on the transfer

certificates of title of the real properties of the estate, including those properties
transferred by private respondent without court approval.
On September 13, 1984, the lower court, on motion of Atty. Balatbat for a definitive
ruling as to the validity of the sale made by administratrix-private respondent to
Luisa S. Rodriguez and petitioner, declared that the transfers in favor of the
aforesaid vendees are null and void and without force and effect for having been
made without court authority and approval. Petitioner was served with a copy of
the said order on December 13, 1984.
On July 25, 1985, or after seven (7) months from the time the order of September
13, 1984 was received by petitioner, the latter filed a petition before
the probate court in the same Sp. Proc. No. Q-19378 by way of special appearance
alleging that said court, in view of its limited jurisdiction as a probate court, has no
power to annul the sale of the fishponds in question; that the orders annulling the
sale are void because he is not a party to Sp. Proc. No. Q-19378; that the lower
court has no jurisdiction over the res, which are located in Bulacan province.
After hearing the petition and the opposition therein, the lower court, on October
28, 1985, denied the petition and ordered petitioner to return physical possession of
the fishponds to private respondent. Petitioner sought reconsideration of the
aforesaid order which was denied.
On February 20, 1986, a petition for certiorari was instituted by petitioner before the
respondent Court of Appeals and as earlier mentioned, the said court, on November
14, 1986, dismissed the petition. Petitioner's motion for reconsideration was
likewise denied on March 2, 1987; hence, this petition.
In the present petition, petitioner sets forth as issues the following: 1) that the
Court of Appeals in upholding the order of the trial court, deprived him of his
property without due process of law because he was not a proper party in the
court a quo; 2) that the Court of Appeals violated the rule that the jurisdiction of a
court, when acting in the settlement of the estate, is limited and cannot encroach
upon questions of ownership; and 3) that the nullification and revocation of the
transfer certificates of title were brought about by the dictate of the probate court
to annotate an attorney's lien thereon, an order which is discordant with law and
jurisprudence.
After a careful examination of the entire record of the case, We find the instant
Petition devoid of merit.
Anent the first issue, petitioner postulates that he was deprived of the questioned
fishponds without due process; and that not being an original party before
the probate court, he was not summoned thereto.
We are not persuaded. The probate court in its order dated September 22, 1981
issued in the exercise of its probatejurisdiction (Sec. 3, Rule 73), required petitioner
to appear before it on October 23, 1981 to explain why the deed of sale in favor of
petitioner, as well as the transfer certificates of title issued as a consequence
thereof should not be cancelled for having been executed without authority from
and approval of the court. Petitioner, despite receipt of the aforesaid order, failed to
appear on the scheduled date. However, the probate court still gave him fifteen
(15) days to submit the required explanation and the case was re-set to November
11, 1981. But then again, petitioner, despite receipt of the second notice requiring
his appearance, chose not to appear and totally ignored the order of
theprobate court to submit the explanation. One who was given full opportunity to

present his evidence and who failed to do so cannot complain that he was denied
due process when the court rendered its decision (Ganadin vs. Ramos, 99 SCRA
613).
As found out by the Court of Appeals, petitioner was afforded every opportunity to
present his explanation but he repeatedly failed to appear on the two scheduled
hearings for the purpose. As said in Municipality of Daet vs. Hidalgo Enterprises,
138 SCRA 265, and re-echoed in Divine Word High School vs. NLRC, 143 SCRA 346,
there is no denial of due process where petitioner was afforded an opportunity to
present his case.
Moreover, petitioner, on July 25, 1985, filed a petition before the probate court, by
way of special appearance, precisely questioning the power of the said court to
declare null and void the sale of the fishponds involved herein. As has been stated,
the lower court after hearing the petition and the opposition thereto denied the
same.
Clearly, petitioner was given full opportunity to present his case. Thus, We give no
credence to petitioner's assertion that he was denied due process of law.
On the second issue, petitioner asseverates that the probate court, in view of its
limited jurisdiction, cannot declare as null and void, the sale of the questioned
properties.
At the outset, it must be emphasized that the questioned properties (fishponds)
were included in the inventory of properties of the estate submitted by then
administratrix Fausta Carreon Herrera on November 14, 1974. Private respondent
was appointed as administratrix of the estate on March 31, 1976 in lieu of Fausta
Carreon Herrera. On November 13, 1978, the questioned deed of sale of the
fishponds was executed between petitioner and private respondent without notice
to and approval of the probate court. Even after the said sale, administratrix Aurora
Carreon still included the three fishponds as among the real properties of the estate
in her inventory submitted on August 13, 1981. In fact, as stated by the Court of
Appeals, petitioner, at the time of the sale of the fishponds in question, knew that
the same were part of the estate under administration. Said the Court of Appeals:
"Moreover, Dillena himself had knowledge that the fishponds are included in the
inventory of properties in the estate of the deceased spouses and that they are
under special proceedings, hence, no singular act of Aurora Carreon could bind
these fishponds more so as Dillena had been leasing these fishponds for years."
(Court of Appeals Decision, p. 7).
The evidence shows that when the questioned properties were sold without court
approval by private respondent to petitioner, the same were under administration.
The subject properties therefore are under the jurisdiction of theprobate court which
according to our settled jurisprudence has the authority to approve any disposition
regarding properties under administration.
An administratrix of an estate already subject of a special proceeding pending
before the probate court cannot enjoy blanket authority to dispose of real properties
as she pleases. More emphatic is the declaration We made in Estate of Olave vs.
Reyes (123 SCRA 767) wherein We stated that when the estate of the deceased
person is already the subject of a testate or intestate proceeding, the administrator
cannot enter into any transaction involving it without prior approval of
the probate court.

Only recently, in Manotok Realty, Inc. vs. Court of Appeals (149 SCRA 174), We held
that the sale of an immovable property belonging to an estate of a decedent, in a
special proceeding, needs court approval, thus:
"Although the Rules of Court do not specifically state that the sale of an immovable
property belonging to an estate of a decedent, in a special proceeding, should be
made with the approval of the court, this authority is necessarily included in its
capacity as a probate court."
This pronouncement finds support in the previous case of Dolores Vda. de Gil vs.
Agustin Cancio (14 SCRA 797) wherein We emphasized that it is within the
jurisdiction of a probate court to approve the sale of properties of a deceased
person by his prospective heirs before final adjudication. Consequently, it is error to
say that this matter should be threshed out in a separate action.
It being settled that property under administration needs the approval of
the probate court before it can be disposed of, any unauthorized disposition does
not bind the estate and is null and void. As early as 1921 in the case of Godoy vs.
Orellano (42 Phil. 347), We laid down the rule that a sale by an administrator of
property of the deceased, which is not authorized by the probate court is null and
void and title does not pass to the purchaser.
There is hardly any doubt that the probate court can declare null and void the
disposition of the property under administration, made by private respondent, the
same having been effected without authority from the said court. It is
the probate court that has the power to authorize and/or approve the sale (Sections
4 and 7, Rule 89), hence, a fortiori, it is said court that can declare it null and void
for as long as the proceedings had not been closed or terminated. To uphold
petitioner's contention that the probate court cannot annul the unauthorized sale,
would render meaningless the power pertaining to the said court. Sales of
properties under administration which do not comply with the requisites under
sections 4 and 7 of Rule 89 are null and void (Bonaga vs. Soler, 2 SCRA 755).
On the third issue, petitioner questions the order of the probate court allowing the
annotation of an attorney's lien on the transfer certificate of title of the estate
subject of the special proceedings. Again, the issue raised does not deserve any
consideration because it is already settled that the application to fix attorney's fees
may be made before and passed upon by the probate court in the same
proceedings where attorney's services were rendered (Palanca vs. Pecson, et al., 94
Phil. 419).
Finally, it may not be amiss to point out that the order dated September 13, 1984 of
the probate court nullifying the deed of sale between petitioner and private
respondent was received by the former on December 17, 1984. However, petitioner
did not appeal from said order to the appellate court. Instead, on July 25, 1985 or
about seven (7) months thereafter, petitioner filed a petition before
the probate court questioning the power of the said court to nullify the deed of sale
which petition was likewise denied on October 25, 1985.
In view thereof, the order dated September 13, 1984, nullifying the deed of sale had
long become final and executory for failure of petitioner to appeal therefrom within
the reglementary period. On this score alone, the petition forcertiorari which was
belatedly filed by petitioner before the Court of Appeals on February 20, 1986
should have been dismissed outright because the remedy of certiorari does not lie
where appeal has been lost. Certiorari cannot take the place of an appeal (Santos,

Jr. vs. Court of Appeals, 152 SCRA 378; De la Cruz vs. Intermediate Appellate Court,
134 SCRA 417; Santiago vs. Castro, 128 SCRA 545).
WHEREFORE, the petition is DISMISSED and the assailed decision is hereby
AFFIRMED.

probate of alvarado (1993)

FIRST DIVISION
[ G.R. No. 74695, September 14, 1993 ]
IN THE MATTER OF THE PROBATE OF THE LAST WILL AND
TESTAMENT OF THE DECEASED BRIGIDO ALVARADO, CESAR
ALVARADO, PETITIONER, VS. HON. RAMON G. GAVIOLA, JR.,
PRESIDING JUSTICE, HON. MA. ROSARIO QUETULIO LOSA AND
HON.
LEONOR
INES
LUCIANO,
ASSOCIATE
JUSTICES,
INTERMEDIATE APPELLATE COURT, FIRST DIVISION (CIVIL
CASES),
AND
BAYANI
MA.
RINO,
RESPONDENTS.
DECISION
BELLOSILLO, J.:
Before us is an appeal from the Decision dated 11 April 1986 [1] of the First Civil Cases
Division of the then Intermediate Appellate Court, now Court of Appeals, which
affirmed the Order dated 27 June 1983[2] of the Regional Trial Court of Sta. Cruz,
Laguna, admitting to probate the last will and testament [3] with codicil[4] of the late
Brigido Alvarado.
On 5 November 1977, the 79-year old Brigido Alvarado executed a notarial will
entitled "Huling Habilin" wherein he disinherited an illegitimate son (petitioner) and
expressly revoked a previously executed holographic will at the time
awaiting probate before Branch of the Regional Trial Court of Sta. Cruz, Laguna.
As testified to by the three instrumental witnesses, the notary public and by private
respondent who were present at the execution, the testator did not read the final
draft of the will himself. Instead, private respondent, as the lawyer who drafted the
eight-paged document, read the same aloud in the presence of the testator, the
three instrumental witnesses and the notary public. The latter four followed the
reading with their own respective copies previously furnished them.
Meanwhile, Brigido's holographic will was subsequently admitted to probate on 9
December 1977. On the 29th day of the same month, a codicil entitled "Kasulatan
ng Pagbabago sa Ilang Pagpapasiya na Nasasaad sa Huling Habilin na May Petsa
Nobiembre 5, 1977 ni Brigido Alvarado" was executed changing some dispositions
in the notarial will to generate cash for the testator's eye operation. Brigido was
then suffering from glaucoma. But the disinheritance and revocatory clauses were
unchanged. As in the case of the notarial will, the testator did not personally read
the final draft of the codicil. Instead, it was private respondent who read it aloud in
his presence and in the presence of the three instrumental witnesses (same as

those of the notarial will) and the notary public who followed the reading using their
own copies.
A petition for the probate of the notarial will and codicil was filed upon the testator's
death on 3 January 1979 by private respondent as executor with the Court of First
Instance, now Regional Trial Court, of Siniloan, Laguna. [5]Petitioner, in turn, filed an
Opposition on the following grounds: that the will sought to be probated was not
executed and attested as required by law; that the testator was insane or otherwise
mentally incapacitated to make a will at the time of its execution due to senility and
old age; that the will was executed under duress, or influence of fear or threats; that
it was procured by undue and improper pressure and influence on the part of the
beneficiary who stands to get the lion's share of the testator's estate; and lastly,
that the signature of the testator was procured by fraud or trick.
When the oppositor (petitioner) failed to substantiate the grounds relied upon in the
Opposition, a Probate Order was issued on 27 June 1983 from which an appeal was
made to respondent court. The main thrust of the appeal was that the deceased
was blind within the meaning of the law at the time his "Huling Habilin" and the
codicil attached thereto were executed; that since the reading required by Art. 808
of the Civil Code was admittedly not complied with, probate of the deceased's last
will and codicil should have been denied.
On 11 April 1986, the Court of Appeals rendered the decision under review with the
following findings: that Brigido Alvarado was not blind at the time his last will and
codicil were executed; that assuming his blindness, the reading requirement of Art.
808 was substantially complied with when both documents were read aloud to the
testator with each of the three instrumental witnesses and the notary public
following the reading with their respective copies of the instruments. The appellate
court then concluded that although Art. 808 was not followed to the letter, there
was substantial compliance since its purpose of making known to the testator the
contents of the drafted will was served.
The issues now before us can be stated thus: Was Brigido Alvarado blind for
purposes of Art. 808 at the time his "Huling Habilin" and its codicil were executed? If
so, was the double-reading requirement of said article complied with?
Regarding the first issue, there is no dispute on the following facts: Brigido Alvarado
was not totally blind at the time the will and codicil were executed. However, his
vision on both eyes was only of "counting fingers at three (3) feet" by reason of the
glaucoma which he had been suffering from for several years and even prior to his
first consultation with an eye specialist on 14 December 1977.
The point of dispute is whether the foregoing circumstances would qualify Brigido as
a "blind" testator under Art. 808 which reads:
"Art. 808. If the testator is blind, the will shall be read to him twice; once, by one of the
subscribing witnesses, and again, by the notary public before whom the will is acknowledged.
Petitioner contends that although his father was not totally blind when the will and
codicil were executed, he can be so considered within the scope of the term as it is
used in Art. 808. To support his stand, petitioner presented before the trial court a
medical certificate issued by Dr. Salvador R. Salceda, Director of the Institute of
Opthalmology (Philippine Eye Research institute), [6] the contents of which were
interpreted in layman's terms by Dr. Ruperto Roasa, whose expertise was admitted
by private respondent.[7] Dr. Roasa explained that although the testator could

visualize fingers at three (3) feet, he could no longer read either printed or
handwritten matters as of 14 December 1977, the day of his first consultation. [8]
On the other hand, the Court of Appeals, contrary to the medical testimony, held
that the testator could still read on the day the will and the codicil were executed
but chose not to do so because of "poor eyesight." [9] Since the testator was still
capable of reading at that time, the court a quo concluded that Art. 808 need not be
complied with.
We agree with petitioner in this respect.
Regardless of respondent's staunch contention that the testator was still capable of
reading at the time his will and codicil were prepared, the fact remains and this was
testified to by his witnesses, that Brigido did not do so because of his
poor,[10] defective,[11] or blurred[12] vision making it necessary for private
respondent to do the actual reading for him.
The following pronouncement in Garcia vs. Vasquez[13] provides an insight into the
scope of the term "blindness" as used in Art. 808, to wit:
"The rationale behind the requirement of reading the will to the testator if he
is blind or incapable of reading the will himself (as when he is illiterate), is to make
the provisions thereof known to him, so that he may be able to object if they are not
in accordance with his wishes x x x x"
Clear from the foregoing is that Art. 808 applies not only to blind testators but also
to those who, for one reason or another, are "incapable of reading the(ir) will(s)."
Since Brigido Alvarado was incapable of reading the final drafts of his will and codicil
on the separate occasions of their execution due to his "poor," "defective," or
"blurred" vision, there can be no other course for us but to conclude that Brigido
Alvarado comes within the scope of the term "blind" as it is used in Art. 808. Unless
the contents were read to him, he had no way of ascertaining whether or not the
lawyer who drafted the will and codicil did so conformably with his instructions.
Hence, to consider his will as validly executed and entitled to probate, it is essential
that we ascertain whether Art. 808 had been complied with.
Article 808 requires that in case of testators like Brigido Alvarado, the will shall be
read twice; once, by one of the instrumental witnesses and, again, by the notary
public before whom the will was acknowledged. The purpose is to make known to
the incapacitated testator the contents of the document before signing and to give
him an opportunity to object if anything is contrary to his instructions.
That Art. 808 was not followed strictly is beyond cavil. Instead of the notary public
and an instrumental witness, it was the lawyer (private respondent) who drafted the
eight-paged will and the five-paged codicil who read the same aloud to the testator,
and read them only once, not twice as Art. 808 requires.
Private respondent however insists that there was substantial compliance and that
the single reading suffices for purposes of the law. On the other hand, petitioner
maintains that the only valid compliance is a strict compliance or compliance to the
letter and since it is admitted that neither the notary public nor an instrumental
witness read the contents of the will and codicil to Brigido, probate of the latter's
will and codicil should have been disallowed.
We sustain private respondent's stand and necessarily, the petition must be denied.

This Court has held in a number of occasions that substantial compliance is

acceptable where the purpose of the law has been satisfied, the reason being that
the solemnities surrounding the execution of wills are intended to protect the
testator from all kinds of fraud and trickery but are never intended to be so rigid
and inflexible as to destroy the testamentary privilege. [14]
In the case at bar, private respondent read the testator's will and codicil aloud in the
presence of the testator, his three instrumental witnesses, and the notary public.
Prior and subsequent thereto, the testator affirmed, upon being asked, that the
contents read corresponded with his instructions. Only then did the signing and
acknowledgement take place. There is no evidence, and petitioner does not so
allege, that the contents of the will and codicil were not sufficiently made known
and communicated to the testator. On the contrary, with respect to the Huling
Habilin, the day of the execution was not the first time that Brigido had affirmed
the truth and authenticity of the contents of the draft. The uncontradicted testimony
of Atty. Rino is that Brigido Alvarado already acknowledged that the will was drafted
in accordance with his expressed wishes even prior to 5 November 1977 when Atty.
Rino went to the testator's residence precisely for the purpose of securing his
conformity to the draft.[15]
Moreover, it was not only Atty. Rino who read the documents on 5 November and 29
December 1977. The notary public and the three instrumental witnesses likewise
read the will and codicil, albeit silently. Afterwards, Atty. Nonia de la Pena (the
notary public) and Dr. Crescente O. Evidente (one of the three instrumental
witnesses and the testator's physician) asked the testator whether the contents of
the documents were of his own free will. Brigido answered in the affirmative. [16] With
four persons following the reading word for word with their own copies, it can be
safely concluded that the testator was reasonably assured that what was read to
him (those which he affirmed were in accordance with his instructions), were the
terms actually appearing on the typewritten documents. This is especially true when
we consider the fact that the three instrumental witnesses were persons known to
the testator, one being his physician (Dr. Evidente) and another (Potenciano C.
Ranieses) being known to him since childhood.
The spirit behind the law was served though the letter was not. Although there
should be strict compliance with the substantial requirements of the law in order to
insure the authenticity of the will, the formal imperfections should be brushed aside
when they do not affect its purpose and which, when taken into account, may only
defeat the testator's will.[17]
As a final word to convince petitioner of the propriety of the trial
court's Probate Order and its affirmance by the Court of Appeals, we quote the
following pronouncement in Abangan v. Abangan,[18] to wit:
"The object of the solemnities surrounding the execution of wills is to close the door
against bad faith and fraud, to avoid the substitution of wills and testaments and to
guaranty their truth and authenticity. Therefore the laws on the subject should be
interpreted in such a way as to attain these primordial ends. But, on the other hand,
also one must not lose sight of the fact that it is not the object of the law to restrain
and curtail the exercise of the right to make a will. So when an interpretation
already given assures such ends, any other interpretation whatsoever, that adds
nothing but demands more requisites entirely unnecessary, useless and frustrative
of the testator's will, must be disregarded" (underscoring supplied).

Brigido Alvarado had expressed his last wishes in clear and unmistakable terms in
his "Huling Habilin" and the codicil attached thereto. We are unwilling to cast these
aside for the mere reason that a legal requirement intended for his protection was
not followed strictly when such compliance had been rendered unnecessary by the
fact that the purpose of the law, i.e., to make known to the incapacitated testator
the contents of the draft of his will, had already been accomplished. To reiterate,
substantial compliance suffices where the purpose has been served.
WHEREFORE, the petition is DENIED and the assailed Decision of respondent Court
of Appeals dated 11 April 1986 is AFFIRMED. Considering the length of time that this
case has remained pending, this decision is immediately executory. Costs against
petitioner.

SO ORDERED.

santiago probate (2010)

THIRD DIVISION
[ G.R. No. 179859, August 09, 2010 ]
IN RE: PETITION FOR PROBATE OF LAST WILL AND
TESTAMENT OF BASILIO SANTIAGO, MA. PILAR SANTIAGO
AND CLEMENTE SANTIAGO, PETITIONERS, VS. ZOILO S.
SANTIAGO,
FELICIDAD
SANTIAGO-RIVERA,
HEIRS
OF
RICARDO SANTIAGO, HEIRS OF CIPRIANO SANTIAGO, HEIRS
OF TOMAS SANTIAGO, RESPONDENTS. FILEMON SOCO,
LEONILA SOCO, ANANIAS SOCO, URBANO SOCO, GERTRUDES
SOCO AND HEIRS OF CONSOLACION SOCO, OPPOSITORS.
DECISION
CARPIO MORALES, J.:
Basilio Santiago (Basilio) contracted three marriages--the first to Bibiana Lopez, the
second to Irene Santiago, and the third to Cecilia Lomotan. Basilio and his first wife
bore two offsprings, Irene and Marta, the mother of herein oppositors Felimon,
Leonila, Consolacion, Ananias, Urbano, and Gertrudes, all surnamed Soco.
Basilio and his second wife had six offsprings, Tomas, Cipriano, Ricardo, respondents
Zoilo and Felicidad, and petitioner Ma. Pilar, all surnamed Santiago.
Basilio and his third wife bore three children, Eugenia herein petitioner Clemente,
and
Cleotilde,
all
surnamed
Santiago. [1]
After Basilio died testate on September 16, 1973, his daughter by the second
marriage petitioner Ma. Pilar filed before the Regional Trial Court (RTC) of
Bulacan[2] a petition for the probate of Basilio's will, docketed as SP No. 1549-M.
The will was admitted to probate by Branch 10 of the RTC and Ma. Pilar was
appointed
executrix.

The will contained the following provisions, among others:

4. Ang mga ari-arian ko na nasasaysay sa itaas ay INIWAN, IPINAGKAKALOOB,
IBINIBIGAY, at IPINAMAMANA ko sa aking mga nasabing tagapagmana sa ilalim ng
gaya
ng
sumusunod:
x

c) ang aking anak na si Ma. Pilar ang magpapalakad at mamamahala ng balutan na

nasa Santiago, Malolos, Bulacan, na nasasaysay sa itaas na 2(y);
d) Sa pamamahala ng bigasan, pagawaan ng pagkain ng hayop at lupa't bahay sa
Maynila, ang lahat ng solar sa danay ng daang Malolos-Paombong na nasa Malolos,
Bulacan, kasali at kasama ang palaisdaan na nasa likuran niyon, ay ililipat sa
pangalan nila Ma. Pilar at Clemente; nguni't ang kita ng palaisdaan ay siyang
gagamitin nila sa lahat at anomang kailangang gugol, maging majora o roperacion
[sic], sa lupa't bahay sa Lunsod ng Maynila na nasasaysay sa itaas na 2(c);
e) Ang lupa't bahay sa Lunsod ng Maynila na nasasaysay sa itaas na 2(c)
ay ililipat at ilalagay sa pangalan nila Ma. Pilar at Clemente hindi bilang
pamana ko sa kanila kundi upang pamahalaan at pangalagaan lamang
nila at nang ang sinoman sa aking mga anak sampu ng apo at
kaapuapuhan ko sa habang panahon ay may tutuluyan kung magnanais na
mag-aral
sa
Maynila
o
kalapit
na
mga
lunsod x
x
x.
f) Ang bigasan, mga makina at pagawaan ng pagkain ng hayop ay ipinamamana
ko sa aking asawa, Cecilia Lomotan, at mga anak na Zoilo, Ma. Pilar, Ricardo,
Cipriano, Felicidad, Eugenia, Clemente, at Cleotilde nang pare-pareho. Ngunit, sa
loob ng dalawampong (20) taon mula sa araw ng aking kamatayan, hindi
nila papartihin ito at pamamahalaan ito ni Clemente at ang maghahawak
ng salaping kikitain ay si Ma. Pilar na siyang magpaparte. Ang papartihin
lamang ay ang kita ng mga iyon matapos na ang gugol na kakailanganin niyon,
bilang reparacion, pagpapalit o pagpapalaki ay maawas na. Ninais ko ang ganito sa
aking pagmamahal sa kanila at pagaaring ibinubuhay ko sa kanila lahat, bukod sa
yaon
ay
sa
kanila
ding
kapakinabangan
at
kabutihan.
g) Ang lahat ng lupa, liban sa lupa't bahay sa Lunsod ng Maynila, ay
ipinapamana ko sa aking nasabing asawa, Cecilia Lomotan, at mga anak
na Tomas, Zoilo, Ma. Pilar, Ricardo, Cipriano, Felicidad, Eugenia, Clemente
at Cleotilde nang pare-pareho. Datapwa't, gaya din ng mga bigasan,
makina at gawaan ng pagkain ng hayop, ito ay hindi papartihin sa loob ng
dalawampong (20) taon mula sa aking pagpanaw, at pamamahalaan din
nila Ma. Pilar at Clemente. Ang mapaparte lamang ay ang kita o ani ng nasabing
mga pag-aari matapos bayaran ang buwis at/o patubig at iba pang mga gugol na
kailangan. Si Ma. Pilar din ang hahawak ng ani o salaping manggagaling dito.
(emphasis
and
underscoring
supplied)[3]
The oppositors-children of Marta, a daughter of Basilio and his first wife, were, on
their motion, allowed to intervene.[4]
After the executrix-petitioner Ma. Pilar filed a "Final Accounting, Partition and
Distribution in Accordance with the Will," [5] the probate court approved the will

by Order of August 14, 1978 and directed the registers of deeds of Bulacan and
Manila to register the certificates of title indicated therein. [6] Accordingly, the titles
to Lot Nos. 786, 837, 7922, 836 and 838 in Malolos, Bulacan and Lot No. 8-C in
Manila were transferred in the name of petitioners Ma. Pilar and Clemente. [7]
The oppositors thereafter filed a Complaint-in-Intervention [8] with the probate court,
alleging that Basilio's secondwife was not Irene but a certain Maria Arellano with
whom he had no child; and that Basilio's will violates Articles 979-981 of the Civil
Code.[9]
The probate court dismissed the Complaint-in-Intervention, citing its previous
approval of the "Final Accounting, Partition, and Distribution in Accordance with the
Will."[10]
The oppositors-heirs of the first marriage thereupon filed a complaint for
completion of legitime before the Bulacan RTC, docketed as Civil Case No.
562-M-90,[11] against the heirs of the second and third marriages.
In their complaint, oppositors-heirs of the first marriage essentially maintained that
they were partially preterited by Basilio's will because their legitime was reduced.
[12]
They thus prayed, inter alia, that an inventory and appraisal of all the properties
of Basilio be conducted and that Ma. Pilar and Clemente be required to submit a
fresh accounting of all the incomes of the properties from the time of Basilio's death
up
to
the
time
of
the
filing
of
Civil
Case
No.
562-M-90. [13]
RTC-Branch 17 decided Civil Case No. 562-M-90 (for completion of legitime) in favor
of
the
oppositors-heirs
of
the first marriage.
On appeal (docketed as CA G.R. No. 45801), the Court of Appeals, by Decision of
January 25, 2002,[14] annulledthe decision of RTC-Branch 17, holding that the RTC
Branch 17 dismissal of the Complaint-in-Intervention in SP No. 1549-M and its
August 14, 1978 Order approving the probate of the will constitute res judicata with
respect to Civil Case No. 562-M-90.[15] Thus the appellate court disposed:
WHEREFORE, premises considered, the Appeal is hereby GRANTED. The Decision
in Civil Case No. 562-M-90 is hereby ANNULLED on the ground of res
judicata. Let the Decree of Distribution of the Estate of Basilio Santiago
remain UNDISTURBED.
SO ORDERED.[16] (emphasis in the original; underscoring supplied)
Oppositors-heirs of the first marriage challenged the appellate court's decision in CA
G.R. No. 45801 by petition for review, docketed as G.R. No. 155606, which this Court
denied.[17] The denial became final and executory on April 9, 2003. [18]
In the interregnum, or on October 17, 2000, respondent-heirs of
the second marriage filed before the probate court (RTC-Branch 10) a Motion for
Termination of Administration, for Accounting, and for Transfer of Titles in
the Names of the Legatees.[19] Citing the earlier quoted portions of Basilio's will,
they alleged that:
x x x x the twenty (20) year period within which subject properties should be
under administration of [Ma.] Pilar Santiago and Clemente Santiago expired on

September

16,

1993.

Consequently, [Ma.] Pilar Santiago and Clemente Santiago should have ceased as
such administrator[s] way back on September 16, 1993 and they should have
transferred the above said titles to the named legatees in the Last Will and
Testament of the testator by then. Said named legatees in the Last Will and
Testament
are
no[ne]
other
than
the
following:
x

Said [Ma.] Pilar Santiago and Clemente Santiago should have also rendered an
accounting of their administration from such death of the testator up to the present
or until transfer of said properties and its administration to the said legatees.
x x x x[20]
Respondents prayed that petitioners be ordered:
1) To surrender the above-enumerated titles presently in their names to [the]
Honorable Court and to transfer the same in the names of the designated legatees
in the Last Will and Testament, to wit:
1)
asawa,
2)
3)
4)
5)
6)
7)
8)
9)
10) Cleotilde
(all

Cecilia

Lomotan,

Ma.

Clemente

surnamed

at

mga

anak

na
Tomas
Zoilo
Pilar
Ricardo
Cipriano
Felicidad
Eugenia
at

SANTIAGO)

2) To peacefully surrender possession and administration of subject properties,

including
any
and
all
improvements
thereon,
to
said
legatees.
3) To render an accounting of their administration of said properties and other
properties of the testator under their administration, from death of testator Basilio
Santiago on September 16, 1973 up to the present and until possession and
administration thereof is transferred to said legatees. [21]
Opposing the motion, petitioners argued that with the approval of the Final
Accounting, Partition and Distribution in Accordance with the Will, and with the
subsequent issuance of certificates of title covering the properties involved, the
case
had
long
since
been
closed
and
terminated. [22]
The probate court, finding that the properties in question would be transferred to
petitioners Ma. Pilar and Clemente for purposes of administration only, granted the
motion, by Order of September 5, 2003,[23] disposing as follows:

WHEREFORE, premises considered, the Motion for Termination of Administration,

for Accounting, and for Transfer of Titles in the Names of the Legatees dated
October 3, 2000 filed by some heirs of the testator Basilio Santiago xxx is
hereby GRANTED. Accordingly, the administratrix [sic] Ma. Pilar Santiago and Mr.
Clemente
Santiago
are
hereby DIRECTED, as
follows:
a.) To surrender the above-enumerated titles presently in their names to this
Honorable Court and to transfer the same in the names of the designated legatees
in the Last Will and Testament, to wit: 1.) asawa, Cecilia Lomotan at mga anak na
2.) Tomas 3). Zoilo 4.) Ma. Pilar 5.) Ricardo 6.) Cipriano 7.) Felicidad 8.) Eugenia 9.)
Clemente
and
10.)
Cleotilde
all
named
SANTIAGO.
b.) To peacefully surrender possession and administration of subject properties
including any and all improvements thereon, to said legatees; and
c.) To render an accounting of their administration of subject properties, including
any
and
all
improvements
thereon,
to
said
legatees;
and
d.) To submit an accounting of their administration of the above-mentioned estate of
the testator or all the above said lots including the rice mill, animal feeds factory,
and all improvements thereon from August 14, 1978 up to the present.
e.) To submit a proposed Project of Partition, indicating how the parties may actually
partition or adjudicate all the above said properties including the properties already
in
the
name
of
all
the
said
legatees
xxx.
x

x.

Further, the Register of Deeds of Bulacan are hereby DIRECTED to cancel and
consider as no force and effects Transfer Certificates of Title Nos. T-249177 (RT46294) [Lot No. 786], T-249175 (RT-46295) [Lot No. 837], T-249174 (RT-46296) [Lot
No. 7922], T-249173 (RT-46297) [Lot No. 836], and T-249176 (RT-46293) [Lot No.
838] in the names of Ma. Pilar Santiago and Clemente Santiago and to issue new
ones in the lieu thereof in the names of Cecilia Lomotan-Santiago, Tomas Santiago,
Zoilo Santiago, Ma. Pilar Santiago, Ricardo Santiago, Cipriano Santiago, Felicidad
Santiago, Eugenia Santiago, Clemente Santiago, and Cleotilde Santiago.
Moreover, the Register of Deeds of Manila is hereby DIRECTED to cancel and
consider as no force and effect Transfer Certificate of Title No. 131044 [Lot No. 8-C]
in the names of Ma. Pilar Santiago and Clemente Santiago and to issue new ones in
lieu thereof in the names of the Heirs of Bibiana Lopez, the Heirs of Irene Santiago,
and
the
Heirs
of
Cecilia
Lomotan.
The Motion to Suspend Proceedings filed by Filemon, Leonila, Ma. Concepcion,
Ananias, Urbano and Gertrudes, all surnamed Soco, dated December 3, 2002, is
hereby DENIED for lack of merit.[24]
Respecting petitioners' argument that the case had long been closed and
terminated, the trial court held:
x x x x [I]t is clear from the Last Will and Testament that subject properties cannot
actually be partitioned until after 20 years from the death of the testator Basilio
Santiago x x x x. It is, therefore, clear that something more has to be done after the

approval of said Final Accounting, Partition, and Distribution. The testator Basilio
Santiago died on September 16, 1973, hence, the present action can only be filed
after September 16, 1993. Movant's cause of action accrues only from the said
date
and
for
which
no
prescription
of
action
has
set
in.
The
principle
of
res
judicata
does
not
apply
in
the
present probate proceeding which is continuing in character, and
terminates only after and until the final distribution or settlement of the
whole estate of the deceased in accordance with the provision of the will
of the testator. The Order dated August 14, 1978 refers only to the accounting,
partition, and distribution of the estate of the deceased for the period covering from
the date of the filing of the petition for probate on December 27, 1973 up to August
14, 1978. And in the said August 14, 1978 order it does not terminate the
appointment of petitioner[s] Ma. Pilar Santiago and Clemente Santiago as executrix
and administrator, respectively, of the estate of the deceased particularly of those
properties which were prohibited by the testator to be partitioned within 20 years
from his death. Since then up to the present, Ma. Pilar Santiago and Clemente
Santiago remain the executor and administrator of the estate of the deceased and
as such, they are required by law to render an accounting thereof from August 14,
1978 up to the present; there is also now a need to partition and distribute the
aforesaid properties as the prohibition period to do so has elapsed. (emphasis and
underscoring supplied)[25]
Petitioners, together with the oppositors, filed a motion for reconsideration, [26] which
the probate court denied, drawing them to appeal to the Court of Appeals which
docketed
it
as CA
G.R.
No.
83094.
The Court of Appeals affirmed the decision of the probate court,[27] hence, the
petition[28] which raises the following grounds:
I.
"CAN

THE

HONORABLE

COURT

OF

APPEALS

REVERSE

ITSELF"

A. THE COURT OF APPEALS ERRED IN NOT BINDING ITSELF WITH ITS

PREVIOUS DECISION INVOLVING THE SAME PARTIES AND SAME
PROPERTIES;
B. THE COURT OF APPEALS ERRED IN AFFIRMING THE RTC AS IT AGREED
WITH THE RTC THAT THIS CASE IS NOT BARRED BY RES JUDICATA;
C. IN C.A.-G.R. NO. 45801, THE HONORABLE COURT OF APPEALS HELD
THAT THERE WAS RES JUDICATA; IN C.A.-G.R. CV NO. 83094, THERE WAS
NO RES JUDICATA.
II.

"GRANTING THAT THE COURT OF APPEALS HAS ALL THE COMPETENCE AND
JURISDICTION TO REVERSE ITSELF, STILL THE COURT OF APPEALS ERRED IN
AFFIRMING THE RTC'S ORDER TO TRANSFER THE MANILA PROPERTY
COVERED BY TCT NO. 131004 TO THE NAMES OF CECILIA LOMOTAN,

TOMAS, ZOILO, MA. PILAR, RICARDO, CIPRIANO FELICIDAD, EUGENIA,

CLEMENTE AND CLEOTILDE, ALL SURNAMED SANTIAGO." [29] (emphasis in the
original)
The

petition

lacks

merit.

Petitioners' argument that the decision of the appellate court in the earlier CA-G.R.
NO. 45801 (upheld by this Court in G.R. No. 155606) constitutes res judicata to the
subsequent CA G.R. No. 83094 (the subject of the present petition for review) fails.
Res judicata has two aspects, which are embodied in Sections 47 (b) and 47 (c) of
Rule 39 of the Rules of Civil Procedure. [30] The first, known as "bar by prior
judgment," proscribes the prosecution of a second action upon the same claim,
demand or cause of action already settled in a prior action. [31] The second, known as
"conclusiveness of judgment," ordains that issues actually and directly resolved in a
former suit cannot again be raised in any future case between the same parties
involving
a
different
cause
of
action. [32]
Both aspects of res judicata, however, do not find application in the present case.
The final judgment regarding oppositors' complaint on the reduction of their
legitime in CA-G.R. NO. 45801 does not dent the present petition, which solely
tackles the propriety of the termination of administration, accounting and transfer
of titles in the names of the legatees-heirs of the second and third marriages. There
is clearly no similarity of claim, demand or cause of action between the present
petition
and
G.R.
No.
155606.
While as between the two cases there is identity of parties, "conclusiveness of
judgment" cannot likewise be invoked. Again, the judgment in G.R. No. 155606
would only serve as an estoppel as regards the issue on oppositors' supposed
preterition and reduction of legitime, which issue is not even a subject, or at the
very
least
even
invoked,
in
the
present
petition.
What is clear is that petitioners can invoke res judicata insofar as the judgment in
G.R. No. 155606 is concernedagainst the oppositors only. The records reveal,
however, that the oppositors did not appeal the decision of the appellate court in
this
case
and
were
only
impleaded pro
forma parties.
Apparently, petitioners emphasize on the directive of the appellate court in CA G.R.
No. 45801 that the decree of distribution of the estate of Basilio should remain
undisturbed. But this directive goes only so far as to prohibit the interference of the
oppositors in the distribution of Basilio's estate and does not pertain to
respondents' superveningright to demand the termination of administration,
accounting
and
transfer
of
titles
in
their
names.
Thus, the Order of September 5, 2003 by the probate court granting respondents'
Motion for Termination of Administration, for Accounting, and for Transfer of Titles in
the Names of the Legatees is a proper and necessary continuation of the August 14,
1978 Order that approved the accounting, partition and distribution of Basilio's
estate. As did the appellate court, the Court notes that the August 14, 1978 Order
was yet to become final pending the whole settlement of the estate. And final
settlement of the estate, in this case, would culminate after 20 years or on
September 16, 1993, when the prohibition to partition the properties of the
decedent
would
be
lifted.

Finally, petitioners object to the inclusion of the house and lot in Manila, covered by
TCT No. 131044, among those to be transferred to the legatees-heirs as it would
contravene the testator's intent that no one is to own the same.
The Court is not persuaded. It is clear from Basilio's will that he intended the house
and lot in Manila to be transferred in petitioners' names for administration purposes
only, and that the property be owned by the heirs in common, thus:
e) Ang lupa't bahay sa Lunsod ng Maynila na nasasaysay sa itaas na 2(c) ay ililipat
at ilalagay sa pangalan nila Ma. Pilar at Clemente hindi bilang pamana ko sa
kanila kundi upang pamahalaan at pangalagaan lamang nila at nang ang
sinoman sa aking mga anak sampu ng apo at kaapuapuhan ko sa habang panahon
ay may tutuluyan kung magnanais na mag-aral sa Maynila o kalapit na mga lunsod
sa medaling salita, ang bahay at lupang ito'y walang magmamay-ari bagkus
ay gagamitin habang panahon ng sinomang magnanais sa aking kaapuapuhan na
tumuklas ng karunungan sa paaralan sa Maynila at katabing mga lunsod x x x
x[33] (emphasis and underscoring supplied)
But the condition set by the decedent on the property's indivisibility is subject to a
statutory limitation. On this point, the Court agrees with the ruling of the appellate
court, viz:
For this Court to sustain without qualification, [petitioners]'s contention, is to go
against the provisions of law, particularly Articles 494, 870, and 1083 of the Civil
Code, which provide that the prohibition to divide a property in a coownership can only last for twenty (20) years x x x x
xxxx
x x x x Although the Civil Code is silent as to the effect of the indivision of a
property for more than twenty years, it would be contrary to public policy to
sanction co-ownership beyond the period expressly mandated by the Civil Code x x
x x[34]

WHEREFORE, the petition is DENIED.

Costs against petitioners.
SO ORDERED.

republic v. villarama (1997)

THIRD DIVISION
[ G.R. No. 117733, September 05, 1997 ]
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. HON. JUDGE
MARTIN S. VILLARAMA, JR., REGIONAL TRIAL COURT, BRANCH

165, PASIG CITY; ROBERTO SWIFT; RODRIGO DOMINGO; AND

SPECIAL MASTERS OR OTHER PERSONS ACTING IN THEIR
STEAD,
RESPONDENTS.
DECISION
DAVIDE, JR., J.:
This is a special civil action for certiorari under Rule 65 of the Rules of Court to
reverse the 2 November 1994 Order [1] of the Regional Trial Court, Branch 156, Pasig
City (hereafter, probate court), in Special Proceedings No. 10279 entitled In the
Matter of the Probate of the Will of Ferdinand E. Marcos/Petition for Issuance of
Letters of Administration. The assailed order lifted the temporary restraining order
issued on 25 October 1994, and denied petitioner's (1) petition for the issuance of a
writ of preliminary injunction and (2) motion to cite Mr. Robert Swift, Atty. Rodrigo
Domingo,
and
other
persons
in
contempt
of
court.
Petitioner Republic of the Philippines is the petitioner in Special Proceedings No.
10279. The petition, filed on 16 October 1992, alleged that during his exile the late
President Ferdinand E. Marcos executed his last will and testament [2] in Hawaii,
United States of America, with his wife Imelda Trinidad R. Marcos and son Ferdinand
R. Marcos II as executors. Petitioner justified its action in filing the petition by
claiming neglect on the part of the testators heirs to initiate testate proceedings
and the need to protect the interest of the Philippine government in assessing and
collecting the taxes due the estate. It moved that Mrs. Marcos and Ferdinand II be
declared incompetent as executors and prayed that letters of administration be
issued
in
favor
of
petitioners
nominee.
Mrs. Imelda Marcos and Ferdinand Marcos II filed an Opposition/ Comment on the
petition. [3]
On
7
June
1993,
petitioner
sent
a
notice [4] of
Commencement
of Probate Proceedings in Philippine Court to the United States (U.S.) District Court
of Hawaii, where a class action [5] docketed as MDL No. 840 was previously filed
against former President Marcos. [6] The action sought damages against the latter
for human rights violations he allegedly committed during his authoritarian rule.
After establishing the jurisdictional facts and concluding its presentation of evidence
in the probate court, petitioner filed an Urgent Motion for Appointment of Special
Administrator/s [7] citing the following grounds in support thereof:
(1) The probate court has failed to appoint an administrator of the estate since the
filing
of
the
petition.
(2) The US District Court of Hawaii awarded in favor of the claimants the amount of
US$1.2 Billion as exemplary damages against the estate of Ferdinand E. Marcos.
(3) In its order of 19 November 1991 the said court granted a preliminary injunction
against the estate to prevent any transfer, encumbrance, conversion, or disposition
of
the
funds
and
assets
of
the
estate.
(4) On the premise that no probate proceeding was pending anywhere, said Court

modified on 16 November 1992 its preliminary injunction to include certain Swiss

Banks.
(5) In July 1994, the plaintiffs in MDL No. 840 filed with the Hawaii District Court a
motion to further modify the preliminary injunction to identify the Republic of the
Philippines as agent, representative, aide, and abettor of the defendant Estate,
notice of which was received by the Office of the Solicitor General on 25 July 1994.
(6) There was a need to preserve the estate, considering that it was the subject of
protracted litigation both here and abroad. Petitioner nominated Commissioner of
Internal Revenue Liwayway Vinzons-Chato as administrator of the estate.

Ferdinand R. Marcos II opposed the motion claiming that the Commissioner of

Internal Revenue was not a suitable person to act as administrator of the estate.
In its Order [8] of 9 September 1994, the probate court, per public respondent Judge
Villarama, granted the motion and appointed Commissioner Liwayway VinzonsChato as Special Administrator of the estate of Ferdinand E. Marcos. Citing Section 1
of Rule 73 of the Rules of Court, the order also declared that upon the filing of the
petition for probate of the will, the probate court acquired jurisdiction over the
estate to the exclusion of all other courts; and that the U.S. District Court of Hawaii
cannot assert its jurisdiction over the assets of the estate and exclude the
jurisdiction already vested in [the probate court]. He directed that a copy of the
order be furnished the U.S. District Court of Hawaii through the Department of
Foreign
Affairs.
On 24 October 1994, petitioner filed in the probate court a Petition for the Issuance
of a Writ of Preliminary Injunction with Urgent Ex-Parte Motion for a Temporary
Restraining Order. [9] It alleged that in the class action the U.S. District Court of
Hawaii issued sometime in October 1994 a Reference Order [10] appointing special
masters for the purpose of obtaining depositions in the Philippines on the following
matters: (1) whether the victims identified in the claim forms suffered torture,
summary execution, or disappearance; and (2) the extent of damages sustained.
The Reference Order prescribed the procedure, including the availment of local
court reporters and interpreters as might be required. Petitioner asserted that the
Reference Order impinged on the exclusive jurisdiction of the probate court and
disregarded the claim of the Philippine government against the Marcos estate. It
also contended that the claim against the estate should be filed before
the probate court and that the Philippine government should be accorded first
preference
in
the
priority
list
of
the
estates
creditors.
On 25 October 1994, respondent Judge Villarama issued a temporary restraining
order [11] against the special masters and persons acting in their stead, and set for
hearing the petition for the preliminary injunction. The sheriffs return [12] indicated
that service of the order was attempted upon the resident manager of New World
Hotel, Makati City, where Mr. Swift and the other special masters were billeted.
However, the sheriff was referred to the guest services manager, who refused to
accept
a
copy
of
the
order.
Before the hearing on the preliminary injunction could take place, petitioner filed an
urgent ex-parte motion [13] to cite herein private respondents, Mr. Robert Swift, Atty.
Rodrigo Domingo, and other concerned persons in contempt of court based on

media reports that they vowed to continue the taking of depositions

notwithstanding the issuance of a temporary restraining order. Petitioner also
questioned the legal practice in the Philippines of Mr. Swift, an American counsel
who
had
no
special
work
permit
and
license
to
practice.
On 28 October 1994, respondent Judge Villarama issued an order [14] directing
private respondents to comment on petitioner's motion and to show cause why they
should not be cited for contempt. The sheriffs return [15] confirmed that the order
was served upon Mr. Swift through the senior guest services officer of the New
World Hotel, Makati City, and personally upon Atty. Domingo at his office.
In the meantime, the Movement of Attorneys for Brotherhood, Integrity and
Nationalism, Inc., (MABINI) filed in SP Proc. No. 10279 a petition for leave to
intervene as amicus curiae and pro se ex abundanti cautela. [16] It noted the hostile,
if not indifferent, attitude the Philippine government continued to display towards its
citizens whose human rights were violated; and just when the victims had been
vindicated by the ruling of the U.S. Court District of Hawaii, it was the Philippine
government which would serve as an obstruction to their attainment of justice by
suppressing their freedom to express the ordeal they had suffered. MABINI
underscored that the taking of the depositions was a compassionate remedy
granted to the Filipino victims, who were spared the burden of testifying in a foreign
court.
Likewise, the Samahan ng Mga Ex-Detainees Laban sa Detensyon at Para sa
Amnestiya (SELDA), a human rights non-government organization, filed its special
appearance with motion to dissolve the temporary restraining order and to deny
writ
of
preliminary
injunction. [17]
In his Opposition [18] Atty. Domingo asserted that the real motive of petitioner was to
prevent the human rights victims from recovering what was due them and that it
forgot or conveniently chose not to remember that in February 1987, it asked the
U.S. Court of Appeals for the Ninth Circuit to allow the human rights suits against
Marcos to proceed to trial. He also contended that the motion for issuance of a writ
of preliminary injunction was grossly insufficient both in form and substance, since it
was not verified and was deficient and baseless.; and that petitioners reliance on
Section 1, Rule 73 of the Rules of Court is misplaced. The words exclusive
jurisdiction found therein should be limited to proceedings concerning
the probate of the will and settlement of the estate of the decedent and should not
include other litigation for or against the estate. He argued that MDL No. 840 is an
action for recovery of damages arising out of the late President's tortuous violation
of international law. The action is totally unrelated to the probate proceedings. He
reasoned that the probate court is of limited jurisdiction and that it can only
exercise jurisdiction over the property of the estate in the Philippines. Moreover,
the probate court failed to acquire jurisdiction over the special masters, since they
were
never
properly
summoned.
Anent petitioners motion to cite them in contempt of court, Atty. Domingo alleged
that said motion, which was litigious in nature, was a useless scrap of paper for lack
of the three-day notice for hearing. Besides, the temporary restraining order could
not be directed to him because he was neither a special master nor a representative
thereof.
He
was
a
lawyer
for
the
human
rights
claimants.
In his pleading [19] Mr. Swift joined Atty. Domingo in the latters opposition and
further alleged that the petition for preliminary injunction became moot and

academic, as the special masters voluntarily left the country on 26 October 1994,
without having been served a copy of the temporary restraining order. He also
raised the settled principle of comity, which required the probate court to avoid
interference in the conduct of judicial proceedings in a foreign country; warned that
petitioner was courting danger in encouraging the probate court to collaterally
attack the jurisdiction of the U.S. District Court of Hawaii in violation of said
principle; and claimed that the temporary restraining order could not be directed to
him, since he was neither a special master nor a representative thereof but a
counsel
of
the
human
rights
victims.
On 2 November 1994, public respondent Judge Villarama issued the assailed
Order [20] lifting the 25 October 1995 Temporary Restraining Order and denying the
motion for the issuance of a writ of preliminary injunction on the ground that
petitioner has failed to show by convincing proof the existence of a clear and
positive right which should be protected. The said order also denied, on equity
considerations, the motion to cite private respondents in contempt of court.
Petitioner no longer sought a reconsideration of the Order for the following reasons:
(a) such motion would serve no useful purpose because it would raise the same
points stated in the rejected motions; (b) the error committed by respondent Judge
was grave and patent as to make the questioned order void; (c) the relief sought in
this petition is extremely urgent because the Special Masters or the persons acting
in their stead were taking the depositions in furtherance and in implementation of
the foreign courts directive; and (d) the issue raised is purely a question of law. [21]
Instead, petitioner filed the instant petition for certiorari alleging that the trial court
committed grave abuse of discretion in failing to consider that the issuance and
implementation of the reference order of the Hawaii court violated the sovereignty
of the Philippines and impinged on the exclusive jurisdiction of the probate court.
In support thereof, petitioner invokes Section 1 of Rule 73 of the Rules of Court,
which provides in part as follows:
SEC. 1. Where estate of deceased person settled. xxx The court first taking
cognizance of the settlement of the estate of the decedent shall exercise jurisdiction
to the exclusion of all other courts. The jurisdiction assumed by a court, so far as it
depends on the place of residence of the decedent, or of the location of his estate,
shall not be contested in a suit or proceeding, except in an appeal from that court,
in the original case, or when the want of jurisdiction appears on the record.

It raises a contradiction in public respondent Judge Villaramas actuation in that in

his Order of 9 September 1994 he declared that the U.S. District Court of Hawaii
could not assert its jurisdiction over the assets of the estate and exclude the
jurisdiction vested in the probate court. Said respondent was aware that the
purpose of the reference order was to determine the amount of compensatory
damages to be charged against the estate; however, he chose to ignore that it is
the probate court which exercises exclusive jurisdiction over the estate. He cannot,
therefore, claim that petitioner failed to prove a clear and positive right which
should
be
protected.
Anent the issue of contempt, petitioner argues that the following documentary
evidence presented before the probatecourt proved that Messrs. Swift and Domingo

and other concerned persons defied the probate court's temporary restraining
order: (1) Special Master Order No. 4 issued by the Supervising Special Master,
which confirmed notice of the probate court's temporary restraining order; and (2)
letters [22] of Mr. Swift to Mr. James Linn, American counsel of Mrs. Marcos (a)
indicating that the plaintiffs in MDL No. 840 would proceed with the taking of the
depositions on 27 October 1994 at the office of Atty. Domingo and the New World
Hotel, (b) giving notice that he would take the depositions of some class members
on 28 October 1994, and (c) notifying the continuation of his taking of the
depositions on 29 October 1994. These notwithstanding, respondent Judge denied
petitioner's motion to cite Messrs. Swift and Domingo and other concerned persons
in contempt of court due to equity considerations. The denial was tainted with grave
abuse
of
discretion.
In his comment filed on his behalf and as counsel for the other private respondents,
Atty. Domingo argues that the petition is moot and academic and without merit. The
act primarily sought to be restrained, which was the taking of the depositions, was
accomplished as of 27 November 1994; and the transcripts had been submitted to
the U.S. District Court of Hawaii. Furthermore, the probate court had no jurisdiction
to adjudicate matters which had no reference or bearing to the probate, such as
MDL No. 840. Besides, there was no law which prohibited the taking of depositions
in the Philippines for evidentiary use in a pending case abroad. The estate of
Ferdinand E. Marcos even financed the taking of the depositions. Lastly, Atty.
Domingo reiterated that he could not be cited for contempt for not having been
served
a
copy
of
the
temporary
restraining
order.
Mrs. Marcos subsequently filed a motion for leave to intervene and to admit its
petition in intervention, citing that petitioner failed to defend the interest of the
estate of her late husband. She claims that the proceeding undertaken by the
special masters by virtue of the reference order was a continuation of the trial of
MDL No. 840, considering that (1) a reference is the trial and determination of
questions arising in litigation by a person appointed for that purpose by the court
wherein the case is pending; [23] (2) a special master is an officer of the appointing
court; and (3) the applicable law pertaining to a reference and a master is Section
53 of the U.S. Rules of Civil Procedure for the District Courts. Public respondent
Judge then erred in considering the proceeding as one for deposition as a mode of
discovery. Accordingly, in denying the petition for injunction he abdicated the
jurisdiction of the probate court in favor of the U.S. District Court of Hawaii; he even
made a turn-about since earlier, in his 9 September 1994 Order, he ruled that the
Hawaii Court could not assert jurisdiction over the Marcos assets.
In a Comment submitted on 5 September 1995 in compliance with our resolution,
petitioner offered no objection to the intervention of Mrs. Marcos.
On 4 December 1995, we required the parties to submit their respective
memoranda on why this petition should not be dismissed for having become moot
and academic considering that the taking of the depositions by the special masters
appointed pursuant to the Reference Order issued by the District Court of Hawaii
had
been
completed
on
27
November
1994.
Petitioner filed its Memorandum urging us to decide this case on the merits even if
the act to be enjoined had already been consummated in view of the transcendental
importance of the issues involved: sovereignty of the Philippines and the exclusive
jurisdiction of the probate court of the Philippines. There is a compelling need to
seek an incisive ruling from the highest tribunal of the land to uphold the exclusive

jurisdiction of the probate court and to protect this nations sovereignty from foreign
transgressions and preserve the same as supreme and inviolable. To buttress its
plea, it cites Salonga v. Cruz Pano [24] where we resolved the case on its merits even
if
the
issue
raised
had
become
moot
and
academic.
Private respondents in their memorandum, reiterate that the petition for the
issuance of a writ of preliminary injunction lacked the verification required under
Section 4, Rule 58 of the Rules of Court. They likewise submit that aside from the
undisputed fact that the act sought to be enjoined had already been completed, the
judgment in MDL No. 840 became final on 27 January 1995 and that the estate of
Ferdinand E. Marcos was adjudged to pay close to US$2 billion in damages.
We dismiss the petition not only on the ground of mootness which, generally, would
justify
dismissal. [25] We
dismiss
it
also
for
lack
of
merit.
It is settled that where the ground invoked in a special civil action for certiorari
under Rule 65 of the Rules of Court is abuse of discretion --as in this case -- the
abuse must be grave as where the power is exercised in an arbitrary or despotic
manner by reason of passion or personal hostility; or, it must be so patent and gross
as to amount to an evasion of positive duty or to a virtual refusal to perform the
duty enjoined or to act at all in contemplation of law. [26] This remedy then is
extraordinary, and its use is restricted to truly extraordinary cases. [27]
The pleadings of the parties in this case and the record of SP. Proc. No. 10279 fail to
show that respondent Judge Villarama had, as charged by petitioner, committed
grave abuse of discretion in denying the petition for a writ of preliminary injunction
against
the
special
masters.
In the first place, the petition for a writ of preliminary injunction was not verified.
Section 4 of Rule 58 of the Rules of Court is very explicit in its requirement that a
preliminary injunction may be granted only when the complaint is verified. Absence
of verification makes an application or petition for preliminary injunction patently
insufficient
both
in
form
and
substance. [28]
In the second place, even if we disregard the requirement of verification or consider
the adverse parties in estoppel from raising the issue when they allowed the
petitioner to present evidence on the petition, we find that respondent Judge
Villarama committed no error in holding that petitioner failed to prove that it had a
clear
and
positive
right
to
be
protected.
Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of
a preliminary injunction:
(a) That the plaintiff is entitled to the relief demanded, and the whole or part of such
relief consists in restraining the commission or continuance of the acts complained
of, or in the performance of an act or acts, either for a limited period or perpetually;
(b) That the commission or continuance of some act complained of during the
litigation or the non-performance thereof would probably work injustice to the
plaintiff;
or
(c) That the defendant is doing, threatens, or is about to do, or is procuring or
suffering to be done, some act probably in violation of the plaintiff's rights
respecting the subject of the action, and tending to render the judgment ineffectual.

Under this rule, a clear and positive right especially calling for judicial protection
must be shown. Injunction is not a remedy to protect or enforce contingent,
abstract, or future rights; it will not issue to protect a right not in esse and which
may never arise, or to restrain an act which does not give rise to a cause of action.
There
must
exist
an
actual
right. [29]
We fail to comprehend what clear and positive right petitioner has which may be
violated by the issuance and implementation of the Reference Order by the District
Court of Hawaii. Petitioner seeks to establish such a right by claiming that since
the probate court was the first to take cognizance of the settlement of the Marcos
estate then pursuant to Section 1 of Rule 73 of the Rules of Court, it exercises
jurisdiction thereon to the exclusion of all other courts; and that, accordingly, the
District Court of Hawaii cannot assert jurisdiction over the assets of said estate. The
argument
is
like
a
loose
cannon
ball

way
off
its
target.
For one, petitioner is unable to distinguish between the exclusive right on
jurisdiction of the probate court and the right contemplated by the law on
injunction. For another, Section 1 of Rule 73 refers to courts in the Philippines and
simply means that once a special proceeding for the settlement of the estate of a
decedent is filed in one of such courts, that court has exclusive jurisdiction over said
estate and no other special proceedings involving the same subject matter may be
filed before any other court. Since foreign courts are not contemplated in Section 1,
in no way then can it be validly maintained that the District Court of Hawaii has
encroached upon, or impinged on, the jurisdiction of the probate court by the
issuance of the Reference Order. The Reference Order cannot be construed as
concerning or affecting the Marcos estate within the exclusive jurisdiction of
the probate court. The duties of the special masters as defined in the Reference
Order were to prepare written findings for submission to the jury regarding (a)
whether the victims identified in the claim forms suffered torture, summary
execution or disappearance, and (b) the extent of the damages sustained. No
extravagant imagination can lead us to a conclusion that such duties do not involve
any
issue
cognizable
by
the probate court.
Neither is there merit to the claim that the issuance and implementation of the
Reference
Order
violated
the
sovereignty
of
the
Philippines.
It is noteworthy that petitioner was aware of the pendency of MDL No. 840 of the
District Court of Hawaii. In fact, it did not oppose the action; on the contrary, it
urged the U.S. Court of Appeals for the Ninth District to allow the trial of the human
rights litigation against the former strongman. Petitioner even exhorted the human
rights victims to pursue the justice which has eluded them for many years. In its
Amicus Curiae Brief [30] filed before the U.S. District Court of Hawaii, petitioner
declared:
The government of the Republic of the Philippines support of their claims. Because
the international law principles are clear and agreed upon by all nations, this judicial
action does not have the capacity of disrupting foreign relations between the
concerned countries. The Government of the Republic of the Philippines can state
without hesitation or reservation that its foreign relations with the United States will
not be adversely affected if these human rights claims against Ferdinand Marcos are
heard in U.S. courts; and, in fact, relations may well be improved if Filipino citizens
see that justice is available in U.S. courts. The Philippine Government has previously

expressed its deep concern to the U.S. Government about the need for a just
solution to the present suits against ex-President Marcos. See Opinion No. 34, s.
1986, Ministry of Justice, Republic of the Philippines, dated April 23, 1986, attached
hereto as Exhibit A. The Philippine Government now respectfully requests this
Honorable Court to allow the present suits to proceed to trial.

As regards the denial of the motion to cite Messrs. Swift and Domingo in contempt
of court, we rule that the same was not tainted with grave abuse of discretion. It
must be recalled that they were not served a copy of the temporary restraining
order
which
they
allegedly
defied.
WHEREFORE, the petition is hereby DISMISSED and the Order of 2 November 1992
of the Regional Trial Court, Branch 156, Pasig City, is AFFIRMED in toto.
SO
ORDERED.

THIRD DIVISION
[ G.R. NO. 127165, May 02, 2006 ]
SALONGA HERNANDEZ & ALLADO, PETITIONER, VS. OLIVIA SENGCO
PASCUAL AND THE HONORABLE COURT OF APPEALS, RESPONDENTS.
DECISION
TINGA, J.:
Petitioner, a professional law partnership, brings forth this Petition for Review assailing the
Decision[1] of the Court of Appeals dated 22 December 1995. The appellate court had affirmed
two orders promulgated by the Malabon Regional Trial Court (RTC), Branch 72 (Probate Court),
in Sp. Proc. No. 136-MN, entitled "In the Matter of Testate Estate of Doa Adela Pascual, Dr.
Olivia
S.
Pascual,
Executrix."
The case actually centers on two estate proceedings, that of Doa Adela Pascual (Doa Adela)
and the other, her husband Don Andres Pascual's (Don Andres), who predeceased her. Don
Andres died intestate, while Doa Adela left behind a last will and testament. The dispute over
the intestate estate of Don Andres has spawned at least two cases already settled by this Court. [2]
On 1 December 1973, an intestate proceeding for the settlement of the estate of Don Andres was
commenced by his widow Doa Adela before the then Court of First Instance, now Regional
Trial Court of Pasig, Branch 23 (Intestate Court), docketed as Sp. Proc. No. 7554. Apart from his
wife, who bore him no children, Don Andres was survived by several nephews and nieces from
his full-blood and half-blood brothers.[3] This proceeding proved to be the source of many
controversies, owing to the attempts of siblings Olivia and Hermes Pascual, acknowledged
natural children of Don Andres's brother, Eligio, to be recognized as heirs of Don Andres. Olivia
and Hermes Pascual procured the initial support of Doa Adela to their claims. However, on 16
October 1985, the other heirs of Don Andres entered into a Compromise Agreement over the
objections of Olivia and Hermes Pascual, whereby three-fourths (3/4) of the estate would go to
Doa Adela and one-fourth (1/4) to the other heirs of Don Andres, without prejudice to the final
determination by the court or another compromise agreement as regards the claims of Olivia and
Hermes Pascual.[4] Subsequently, the Intestate Court denied the claims of Olivia and Hermes
Pascual. Said denial was eventually affirmed by this Court in 1992 in Pascual v. PascualBautista,[5] applying
Article
992
of
the
Civil
Code.
In the meantime, Doa Adela died on 18 August 1987, leaving behind a last will and testament

executed in 1978, designating Olivia Pascual as the executrix, as well as the principal beneficiary
of her estate. The will also bequeathed several legacies and devises to several individuals and
institutions.
Olivia Pascual then engaged the services of petitioner in connection with the settlement of the
estate of Doa Adela. Their agreement as to the professional fees due to petitioner is contained in
a letter dated 25 August 1987, signed by Atty. Esteban Salonga in behalf of petitioner and Olivia
Pascual. It is stipulated therein, among others, that the final professional fee "shall be 3% of the
total gross estate as well as the fruits thereof based on the court approved inventory of the estate.
Fruits shall be reckoned from the time of [Olivia Pascual's] appointment as executrix of the
estate. The 3% final fee shall be payable upon approval by the court of the agreement for the
distribution of the properties to the court designated heirs of the estate." [6]
On 26 August 1987, private respondent, represented by petitioner, commenced a petition for
the probate of the last will and testament of Doa Adela before the Probate Court, docketed as
Sp. Proc. No. 136-MN and raffled to Branch 72 presided by Judge Benjamin M. Aquino, Jr. The
petition was opposed by a certain Miguel Cornejo, Jr. and his siblings, who in turn presented a
purported
will
executed
in
1985
by
Doa
Adela
in
their
favor. [7]
After due trial, on 1 July 1993, the Probate Court rendered a Decision[8] allowing probate of the
1978 Last Will and Testament of Doa Adela and disallowing the purported 1985 Will. Letters
testamentary were issued to Olivia Pascual.[9] Cornejo attempted to appeal this decision of
the Probate Court, but his notice of appeal was denied due course by the Probate Court, said
notice "not having been accompanied by any record on appeal as required under the Interim
Rules
and
by
Rule
109
of
the
Rules
of
Court." [10]
On 27 July 1993, petitioner filed a Notice of Attorney's Lien equivalent to three percent (3%) of
the total gross estate of the late Doa Adela S. Pascual as well as the fruits thereof based on the
court approved inventory of the estate, pursuant to the retainer agreement signed by and between
petitioner and Olivia S. Pascual, on 25 August 1987. In an Order dated 4 November 1993,
the Probate Court ruled that petitioner's "notice of attorney's lien, being fully supported by a
retainer's contract not repudiated nor questioned by his client Olivia S. Pascual, is hereby noted
as a lien that must be satisfied chargeable to the share of Olivia S. Pascual." [11] This was followed
by another Order, dated 11 November 1993, wherein it was directed "that notice be x x x given,
requiring all persons having claims for money against the decedent, Doa Adela S. Vda. de
Pascual, arising from contracts, express or implied, whether the same be due, not due, or
contingent, for funeral expenses and expenses of the last sickness of the said decedent, and
judgment for money against her, to file said claims with the Clerk of Court at Malabon, Metro
Manila,
within
six
(6)
months
from
November
4,
1993." [12]
Accordingly, on 22 November 1993, petitioner filed a Motion to Annotate Attorney's Lien on
Properties
of
the
Estate
of
Doa
Adela
Vda.
de
Pascual.[13]
It was at this stage, on 19 January 1994, that the Intestate Court rendered a Decision in Sp. Proc.
No. 7554, finally giving judicial approval to the aforementioned 1985 Compromise Agreement,
and partitioning the estate of Don Andres by adjudicating one-fourth (1/4) thereof to the heirs of
Don Andres and three-fourths (3/4) thereof to the estate of Doa Adela. The Intestate Court also
awarded attorney's fees to Atty. Jesus I. Santos, equivalent to 15% of the three-fourths (3/4) share
of the estate of Doa Adela.[14] Olivia Pascual filed a petition for annulment of the award of
attorney's fees with the Court of Appeals, but the same was denied, first by the appellate court,
then finally by this Court in its 1998 decision in Pascual v. Court of Appeals.[15]
On 26 April 1994, petitioner filed a Motion for Writ of Execution for the partial execution of
petitioner's attorney's lien estimated at P1,198,097.02. The figure, characterized as "tentative,"
was arrived at based on a Motion to Submit Project Partition dated 26 October 1993 filed by
Olivia Pascual, which alleged the gross appraised value of Doa Adela's estate at
P39,936,567.19. This sum was in turn derived from the alleged value of the total estate of Don

Andres, three-fourths (3/4) of which had been adjudicated to Doa Adela. At the same time,
petitioner noted that the stated values must be considered as only provisional, considering that
they were based on a July 1988 appraisal report; thus, the claim for execution was, according to
petitioner, without prejudice to an updated appraisal of the properties comprising the gross estate
of
Doa
Adela.[16]
On 29 April 1994, Olivia Pascual, through Atty. Antonio Ravelo, filed her comment and/or
opposition to the motion for the issuance of a writ of execution on attorney's fees. She argued
that a lawyer of an administrator or executor should charge the individual client, not the estate,
for professional fees. Olivia Pascual also claimed, citing jurisprudence [17], that the counsel
claiming attorney's fees should give sufficient notice to all interested parties to the estate, and
that such was not accomplished by petitioner considering that no notices were given to the
several legatees designated in Doa Adela's will.[18] It was further argued that the motion for
execution was premature, considering that the proceedings before the Intestate Court had not yet
been terminated; that the computation of the figure of P1,198,097.02 was erroneous; and that the
enforcement of the writ of execution on the undivided estate of Don Andres would prejudice his
other
heirs
entitled
to
one-fourth
(1/4)
thereof.
On 2 June 1994, the Probate Court issued the first assailed order denying the motion for writ of
execution in view of the fact that "the bulk of the estate of the late Doa Adela S. Vda. De
Pascual is still tied-up with the estate of the late Don Andres Pascual, the proceedings over which
and the final disposition thereof with respect to the partition and segregation of what is to form
part of the estate of the late Doa Adela S. Vda. De Pascual is pending with another court sitting
in
Pasig,
Metro
Manila,
and
for
having
been
prematurely
filed."[19]
On 14 November 1994, Olivia Pascual, filed with the Probate Court a Motion to Declare General
Default and Distribution of Testamentary Dispositions with Cancellation of Administrator's
Bond. It was noted therein that no creditor had filed a claim against the estate of Doa Adela
despite due notice published pursuant to Section 1, Rule 86 of the Rules of Court.
The Probate Court was also informed of the fact that the proceedings before the Intestate Court
had already been terminated by reason of the 14 January 1994 Decision rendered by the latter
court. It was also stated "that the corresponding estate taxes had been paid as evidenced by the
Estate Tax Return filed with the Bureau of Internal Revenue, and of the Certificate of Authority
issued by the said agency." [20] Interestingly, it was also manifested that two of the properties that
formed part of the estates of the spouses, "the Ongpin Property" and "the Valenzuela Property,"
had in fact already been partitioned between the estate of Doa Adela and the heirs of Don
Andres at the ratio of three-fourths (3/4) and one-fourth (1/4), respectively.
In response, petitioner filed a Comment/Manifestation praying that an order be issued:
(1) ordering the annotation of the attorney's lien on the properties comprising the estate of Doa
Adela Pascual;
(2) a writ of partial execution be issued for the satisfaction of the attorney's lien of the
undersigned counsel [herein petitioner] in relation to the Ongpin and Valenzuela properties for
the amount of P635,368.14, without prejudice to the issuance of a writ of execution after the reappraisal of the present market value of the estate and the determination of the amount due to
[petitioner] as attorney's fees;
(3) ordering the appointment of a reputable appraisal company to re-appraise the present market
value of the estate of Doa Adela Pascual including the fruits thereof for the purpose of
determining the value of the attorney's fees of [petitioner]; and
(4) after the re-appraisal of the estate of Doa Adela Pascual a writ of execution be issued for the
full satisfaction and settlement of the attorney's lien of [petitioner].[21]
On 17 March 1995, the Probate Court issued an order which denied petitioner's motion for a reappraisal of the property and the issuance of a partial writ of execution "for being prematurely
filed as there is no exact estate yet to be inventoried and re-appraised, assuming re-appraisal

would be proper, because the bulk of the estate subject of this case, as far as this court is
concerned, has not yet been turned over to the executrix or to the court itself." [22]
Through a petition for certiorari and mandamus, petitioner assailed the two orders of
the Probate Court denying its motion for the immediate execution, partial or otherwise, of its
claim for attorney's fees: the 2 June 1994 Order and the 17 March 1995 Order. Nonetheless, the
twin orders of the RTC were affirmed by the Court of Appeals, effectively precluding petitioner's
attempt to execute on its attorney's lien. The appellate court noted that the attorney's lien issued
by the Probate Court was chargeable only to the share of Olivia Pascual, and not to the estate of
Doa Adela, since it was Olivia Pascual who entered into the agreement with petitioner for the
payment of attorney's fees in connection with the settlement of the estate of Doa Adela.
Citing Lacson v. Reyes,[23] the Court of Appeals asserted that as a rule an administrator or
executor may be allowed fees for the necessary expenses he has incurred but he may not recover
attorney's
fees
from
the
estate.
The Court of Appeals likewise noted that in the retainer agreement between petitioner and Olivia
Pascual, it is stipulated that "the 3% final fee shall be payable upon approval by the court of the
agreement for the distribution of the properties to the court designated heirs of the estate." [24] On
this score, the Court of Appeals ruled that as the petition before it did not show "that an
agreement on the distribution of properties of the estate of Doa Adela S. Pascual has been
submitted and approved by the probate court,"[25] the filing of the motion for execution and that
of the motion for re-appraisal of the market value of the estate were both premature.
Petitioner sought to reconsider the Decision of the Court of Appeals, but in vain. [26] Hence this
petition.
Petitioner argues that as held in Occea v. Marquez,[27] the counsel seeking to recover attorney's
fees for legal services to the executor or administrator is authorized to file a petition in the testate
or intestate proceedings asking the court, after notice to all the heirs and interested parties, to
direct the payment of his fees as expenses of administration.[28] Lacson, it is alleged, was
inappropriately cited, since that case involved an executor who concurrently was a lawyer who
subsequently claimed attorney's fees as part of the expenses of administration. Petitioner also
claims that the decision of the probate court admitting Doa Adela's will to probate sufficiently
satisfies the condition in the Retainer Agreement that the final fee be payable "upon approval by
the court of the agreement for the distribution of the properties to the court designated heirs of
the estate," the court-approved will comprising the agreement referred to in the contract.
Petitioner also takes exception to the Probate Court's finding that "the bulk of the estate subject
of this case, as far as this [c]ourt is concerned, has not been turned over to the executrix or to the
[c]ourt itself," on which the appellate court predicated its ruling that the motion for a writ of
execution was premature. Petitioner submits that the ProbateCourt ineluctably has jurisdiction
over the estate of Doa Adela, and has necessarily assumed control over the properties belonging
to the said estate. Thus, petitioner continues, there is no longer need to await the turnover of the
properties involved in the intestate estate of Don Andres which constitute part of the testate
estate of Doa Adela since the Probate Court and the Intestate Court have concurrent jurisdiction
over these properties
as
they have not yet
been physically divided.
Petitioner refers to the averment made by Olivia Pascual before the Probate Court that the
proceedings before the Intestate Court had already been terminated, and that the proceeds of the
sale of the Ongpin Property and the Valenzuela Property had in fact been already divided based
on the three-fourths (3/4) to one-fourth (1/4) ratio between the estate of Doa Adela and the heirs
of Don Andres. Petitioner further points out that the Probate Court had authorized and approved
the sale of the Ongpin Property, yet refused to allow the partial execution of its claim for
attorney's
fees.
Finally, petitioner asserts that the Probate Court erred in refusing to grant the prayer seeking the
re-appraisal of the property of Doa Adela's estate. Such re-appraisal, so it claims, is necessary in

order to determine the three percent (3%) share in the total gross estate committed to petitioner
by
reason
of
the
Retainer
Agreement.
It appears that the thrust of the assailed Decision of the Court of Appeals is along these lines: that
petitioner may directly claim attorney's fees only against Olivia Pascual and not against the estate
of Doa Adela; and that petitioner's claim is also premature since contrary to the requisite
stipulated in the Retainer Agreement, there is no court-approved agreement for the distribution of
the
properties
of
the
estate
of
Doa
Adela
as
yet.
As an initial premise, we consider whether a lawyer who renders legal services to the executor or
administrator of an estate can claim attorney's fees against the estate instead of the executor or
administrator. Petitioner correctly citesOccea v. Marquez[29] as providing the governing rule on
that matter as previously settled in the 1905 case ofEscueta v. Sy-Juilliong,[30] to wit:
The rule is that when a lawyer has rendered legal services to the executor or administrator to
assist him in the execution of his trust, his attorney's fees may be allowed as expenses of
administration. The estate is, however, not directly liable for his fees, the liability for payment
resting primarily on the executor or administrator. If the administrator had paid the fees, he
would be entitled to reimbursement from the estate. The procedure to be followed by counsel in
order to collect his fees is to request the administrator to make payment, and should the latter fail
to pay, either to (a) file an action against him in his personal capacity, and not as administrator, or
(b) file a petition in the testate or intestate proceedings asking the court, after notice to all the
heirs and interested parties, to direct the payment of his fees as expenses of administration.
Whichever course is adopted, the heirs and other persons interested in the estate will have the
right to inquire into the value of the services of the lawyer and on the necessity of his
employment.[31]
We reiterate that as a general rule, it is the executor or administrator who is primarily liable for
attorney's fees due to the lawyer who rendered legal services for the executor or administrator in
relation to the settlement of the estate. The executor or administrator may seek reimbursement
from the estate for the sums paid in attorney's fees if it can be shown that the services of the
lawyer redounded to the benefit of the estate. [32] However, if the executor or administrator refuses
to pay the attorney's fees, the lawyer has two modes of recourse. First, the lawyer may file an
action against the executor or administrator, but in his/her personal capacity and not as
administrator or executor.Second, the lawyer may file a petition in the testate or intestate
proceedings, asking the court to direct the payment of attorney's fees as an expense of
administration. If the second mode is resorted to, it is essential that notice to all the heirs and
interested parties be made so as to enable these persons to inquire into the value of the services
of
the
lawyer
and
on
the
necessity
of
his
employment.
Lacson v. Reyes,[33] cited by the appellate court, involved an executor who also happened to be
the lawyer for the heirs who had filed the petition for probate. For that reason, that case is not
squarely in point to the case at bar. It was pronounced therein that the administrator or executor
of the estate cannot charge professional fees for legal services against the same estate, as
explicitly provided under Section 7, Rule 85 of the Rules of Court of 1985. [34]No such rule exists
barring direct recovery of professional legal fees from the estate by the lawyer who is not the
executor or administrator of the said estate. The limitations on such direct recovery are
nonetheless established by jurisprudence, as evinced by the rulings in Escueta and Occea.
The character of such claim for attorney's fees bears reiteration. As stated in Escueta, it partakes
the nature of an administration expense. Administration expenses include attorney's fees incurred
in connection with the administration of the estate. [35] It is an expense attending the
accomplishment of the purpose of administration growing out of the contract or obligation
entered into by the personal representative of the estate, and thus the claim for reimbursement
must
be
superior
to
the
rights
of
the
beneficiaries. [36]
Notwithstanding, there may be instances wherein the estate should not be charged with attorney's
fees. If the costs of counsel's fees arise out of litigation among the beneficiaries thereof
themselves or in the protection of the interests of particular persons, the estate generally cannot

be held liable for such costs, although when the administrator employs competent counsel on
questions which affect his/her duties as the administrator and on which he/she is in reasonable
doubt, reasonable expenses for such services may be charged against the estate subject to the
approval of the court.[37] It has also been held that an administrator who brings on litigation for
the deliberate purpose of defrauding the legitimate heirs and for his own benefit is not entitled to
reimbursement
for
counsel's
fees
incurred
in
such
litigation. [38]
Clearly then, while the direct recovery of attorney's fees from the estate may be authorized if the
executor refuses to pay such fees, and claimed through the filing of the proper petition with
the probate court, such claim remains controvertible. This is precisely why Escueta and its
progenies require that the petition be made with notice to all the heirs and interested parties.
It is these perspectives that we apply to the case at bar. Notably, petitioner had filed both a Notice
of Attorney's Lien and a Motion for Writ of Execution. These two pleadings have distinct
character
and
must
be
treated
as
such.
After Doa Adela's will had been admitted to probate, petitioner had initially filed a Notice of
Attorney's Lien wherein it identified itself as "the attorney for the executrix named in the said
will, Dra. Olivia S. Pascual", and sought to file its "claim and/or lien for attorney's fees
equivalent to Three Percent (3%) of the total gross estate," pursuant to the 1987 Retainer
Agreement. Copies of this Notice of Attorney's Lien were furnished Attys. Fortunato Viray, Jr.
and Crisanto Cornejo, who appear on record to have served as counsels for the various
oppositors to theprobate of the 1978 will of Doa Adela. This Notice of Attorney's Lien was
noted by the Probate Court in its Order of 4 November 1993, "as a lien that must be satisfied
chargeable
to
the
share
of
Olivia
S.
Pascual."
It may be so that petitioner, in filing this Notice of Attorney's Lien, initially intended to hold
Olivia Pascual, and not Doa Adela's estate, liable for the attorney's fees. It did identify itself as
the lawyer of Olivia Pascual, and theProbate Court did note that the lien be satisfied chargeable
to the share of the executor. Yet it must also be noted that such lien, as it is, is only contingent on
the final settlement of the estate of Doa Adela, at such time, since the Retainer Agreement on
which the lien is hinged provides that the final fee "be payable upon approval by the court of the
agreement for the distribution of the properties to the court designated heirs of the estate." [39] This
is also made clear by the order noting the lien, which qualified that said lien was chargeable only
to the share of Olivia Pascual, hence implying that at the very least, it may be claimed only after
her
share
to
Doa
Adela's
estate
is
already
determinate.
In rendering its assailed Decision, the Court of Appeals relied on this qualification made by
the Probate Court that the lien for attorney's fees was chargeable only to the share of Olivia
Pascual. Yet the Notice of Attorney's Lien only seeks to serve notice of the pendency of the
claim for attorney's fees, and not the payment of such fees itself. On its own, the Notice of
Attorney's Lien cannot serve as the basis for the Probate Court to authorize the payment to
petitioner
of
attorney's
fees.
On the other hand, Escueta and its kindred cases do explicitly recognize the recourse for
the lawyer to directly make the claim for attorney's fees against the estate, not the executor
or administrator. The filing of the Notice of Attorney's Lien and the qualificatory character
of the rulings thereon, do not preclude the resort to the mode of recovery against the estate
as authorized by jurisprudence. Clearly then, we disagree with the opinion of the Court of
Appeals that attorney's fees can be claimed only against the share of Olivia Pascual.
The instant case is rooted in an incomplete attempt to resort to the second mode of recovery of
attorney's fees as authorized in Escueta, originating as it did from the denial of petitioner's
Motion for Writ of Execution, and not the Notice of Attorney's Lien. The Motion did expressly
seek the payment of attorney's fees to petitioner. Escueta andOccea, among other cases, did
clearly lay down the manner under which such fees may be paid out even prior to the final
settlement of the estate as an administration expense directly chargeable to the estate itself. The

critical question in the present petition is thus whether this Motion for Writ of Execution satisfies
the requisites set inEscueta for a claim for attorney's fees directly chargeable against the estate. It
does
not.
The fact that the prayer for attorney's fees was cast in a motion and not a petition should not
impede such claim, considering that the motion was nonetheless filed with
the Probate Court. However, the record bears that the requisite notice to all heirs and
interested parties has not been satisfied. Doa Adela's will designated 19 other individuals
apart from Olivia Pascual, and four (4) different institutions as recipients of devises or legacies
consisting of real properties, jewelries, and cash amounts. Yet only Olivia Pascual was served
with a copy of the Motion for Writ of Execution, the motion which effectively sought the
immediate payment of petitioner's attorney's fees. As early as 29 April 1994, Olivia Pascual, in
opposing the Motion for Writ of Execution, already pointed out that petitioner had failed to give
sufficient notice to all interested parties to the estate, particularly the several devisees and
legatees
so
named
in
Doa
Adela's
will.
Such notice is material to the other heirs to Doa Adela's estate. The payment of attorney's fees,
especially in the amount of 3% of the total gross estate as sought for by petitioner, substantially
diminishes the estate of Doa Adela and may consequently cause the diminution of their devises
and legacies. Since these persons were so named in the very will itself and the action
for probate which was filed by petitioner itself, there is no reason why petitioner could not have
given due notice to these persons on its claim for attorney's fees.
The requisite notice to the heirs, devisees, and legatees is anchored on the constitutional principle
that no person shall be deprived of property without due process of law.[40] The fact that these
persons were designated in the will as recipients of the testamentary dispositions from the
decedent establishes their rights to the succession, which are transmitted to them from the
moment of the death of the decedent.[41] The payment of such attorney's fees necessarily
diminishes the estate of the decedent, and may effectively diminish the value of the testamentary
dispositions made by the decedent. These heirs, devisees, and legatees acquire proprietary rights
by reason of the will upon the moment of the death of the decedent, incipient or inchoate as such
rights may be. Hence, notice to these interested persons of the claims for attorney's fees is
integral, so as to allow them to pose any objections or oppositions to such claim which, after all,
could
lead
to
the
reduction
of
their
benefits
from
the
estate.
The failure to notify the other heirs, devisees or legatees, to the estate of Doa Adela likewise
deprives these interested persons of the right to be heard in a hearing geared towards determining
whether petitioner was entitled to the immediate payment of attorney's fees. Notably, petitioner,
in filing its Motion for Writ of Execution, had initially set the hearing on the motion on 29 April
1994, but one day prior to the scheduled hearing, gave notice instead that the motion was being
submitted for the consideration of the Probate Court without further argument.[42] Evidently,
petitioner did not intend a full-blown hearing to ensue on whether it was entitled to the payment
of attorney's fees. Yet the claim for attorney's fees is hardly incontrovertible.
That the Retainer Agreement set the attorney's fees at three percent (3%) of the gross estate does
not imply that the basis for attorney's fees is beyond controversy. Attorney's fees in this case are
in the nature of administration expenses, or necessary expenses in the first place. Any party
interested in the estate may very well, in theory, posit a myriad of objections to the attorney's
fees sought, such as for example, that these fees were not necessary expenses in the care,
management, and settlement of the estate. Whether or not such basis for valid objections exists in
this case is not evident, but the fact remains that all the parties interested in the estate, namely the
other devisees and legatees, were deprived of the opportunity to raise such objections as they
were
not
served
notice
of
the
Motion
for
Writ
of
Execution.
The instant claim for attorney's fees is thus precluded by the absence of the requisite notices by
petitioner to all the interested persons such as the designated heirs, devisees, legatees, as required
by the jurisprudential rule laid down in Escueta. However, the Court of Appeals held that it was

the prematurity of the claim for attorney's fees that served as the fatal impediment. On this point,
the
Court
does
not
agree.
Again,

the

remaining

peripheral

questions

warrant

clarification.

Escueta itself provides for two alternative approaches through which counsel may proceed with
his claim for attorney's fees. The first involves a separate suit against the executor or
administrator in the latter's personal capacity. The second approach is a direct claim against the
estate itself, with due notice to all interested persons, filed with the probate court.
In the same vein, the existence of the Retainer Agreement between petitioner and Olivia Pascual
allows petitioner two possible causes of action on which to claim attorney's fees in connection
with the administration of the estate of Doa Adela. The first possible cause of action pivots on
the Retainer Agreement, which establishes an obligation on the part of Olivia Pascual to pay the
final fee of 3% of the gross total estate of Doa Adela, payable upon approval by
the Probate Court of the agreement for the distribution of the properties to the court- designated
heirs of the estate. Necessarily, since the recovery of attorney's fees is premised on the Retainer
Agreement any award thereupon has to await the final ascertainment of value of the gross total
estate of Doa Adela, as well as the approval by theProbate Court of the agreement for the
distribution of the properties. The Retainer Agreement makes it clear that the final payment of
attorney's fees is contingent on these two conditions, [43] and the claim for attorney's fees based on
the
Retainer
Agreement
cannot
ripen
until
these
conditions
are
met.
Moreover, it cannot be escaped that the Retainer Agreement was entered into between petitioner
and Olivia Pascual prior to the filing of the probate petition, and that at such time, she had no
recognized right to represent the estate of Doa Adela yet. This circumstance further bolsters our
opinion that if petitioner insists on the judicial enforcement of the Retainer Agreement, its proper
remedy, authorized by law and jurisprudence, would be a personal action against Olivia Pascual,
and not against the estate of Doa Adela. If this were the recourse pursued by petitioner, and
Olivia Pascual is ultimately held liable under the Retainer Agreement for attorney's fees, she may
nonetheless seek reimbursement from the estate of Doa Adela if she were able to establish that
the attorney's fees paid to petitioner were necessary administration expenses.
The second or alternative recourse is the direct claim for attorney's fees against the estate, as
authorized underEscueta. The character of this claim is not contractual in nature, but rather,
as a reimbursement for a necessary expense of administration, and it will be allowed if it
satisfies the criteria for necessary expenses of administration. Its entitlement can be
established by the actual services rendered by the lawyer necessary to the accomplishment of the
purposes of administration, and not necessarily by the contract of engagement of the attorney's
services.
By filing their claim directly against the estate of Doa Adela, petitioner has clearly resorted to
this second cause of action. There are consequent advantages and disadvantages to petitioner.
Since the claim arises irrespective of the contingencies as stipulated in the Retainer Agreement,
the attorney's fees may be collected against the estate even before the final determination of its
gross total value or the final approval of the project of partition. As earlier stated, such claim for
reimbursement is superior to the right of the beneficiaries to the estate, and as such, there is need
to finally determine the respective shares of the beneficiaries before attorney's fees in the nature
of
administration
expenses
may
be
paid
out.
The one distinct disadvantage, however, is that the Retainer Agreement cannot be deemed
binding on the estate or the Probate Court since the estate is not a party to such contract. This
would not preclude the Probate Court from enforcing the provisions of the Retainer Agreement
if, in its sound discretion, the terms of payment therein are commensurate to the value of the
actual services necessary to the administration of the estate actually rendered by petitioner. Yet if
the Probate Court does choose to adopt the Retainer Agreement as binding on the estate of Doa
Adela, petitioner may again be precluded from immediate recovery of attorney's fees in view of

the necessity or precondition of ascertaining the gross total value of the estate, as well as the
judicial
approval
of
the
final
agreement
of
partition.
In any event, whether the claim for attorney's fees was pursued through a separate suit against
Olivia Pascual (in her personal capacity) for the enforcement of the Retainer Agreement, or
against the estate of Doa Adela as reimbursement for necessary administration expenses, it
remains essential that a hearing be conducted on the claim. In either case too, the hearing will
focus on the value of the services of the petitioner and the necessity of engaging petitioner as
counsel.
We reiterate that the direct claim against the estate for attorney's fees must be made with due
notice to the heirs, devisees, and legatees. The failure of petitioner to give such notice renders its
present claim inefficacious for now. Indeed, there is sufficient cause to dismiss outright
petitioner's Motion for Writ of Immediate Execution filed with the Probate Court, for its failure
to notify therein the other persons interested in the estate of Doa Adela. Nonetheless, to
authorize said outright denial at this stage could unduly delay the settlement of the estate of Doa
Adela, considering the likelihood that petitioner would again pursue such claim for attorney's
fees
as
the
right
to which
is
affirmed
by law
and
jurisprudence.
Hence, in order not to unduly protract further the settlement of the estate of Doa Adela, the
Court deems it proper instead to mandate the Probate Court to treat the Motion for Writ of
Immediate Execution as a petition seeking a court order to direct the payment of attorney's fees
as expenses of administration, but subject to the condition that petitioner give due notice to the
other designated devisees and legatees so designated in the will of the claim prior to the requisite
hearing thereon. Petitioner may as well seize such opportunity to formally amend or reconfigure
its motion to a petition to direct payment of attorney's fees. Once this step is accomplished, there
should be no impediment to petitioner's claim for recovery of attorney's fees as reimbursement
for necessary administration expenses, within the terms established by law, jurisprudence, and
this
decision.
One final note. Petitioner's final prayer before this court is that it be issued a partial writ of
execution, consistent with its position before the Probate Court that it is already entitled to at
least a partial payment of its attorney's fees. This prayer cannot obviously be granted at this stage
by the Court, considering the fatal absence of due notice to the other designated beneficiaries to
the estate of Doa Adela. Still, we do not doubt that the Probate Court, within its discretion, is
capacitated to render the award of attorney's fees as administration expenses either partially or
provisionally, depending on the particular circumstances and its ultimate basis for the
determination
of
the
appropriate
attorney's
fees.
WHEREFORE, the petition is GRANTED IN PART. The Decision of the Court of Appeals dated
22 December 1995 and the Orders of the Regional Trial Court of Malabon, Branch 72, dated 2
June 1994 and 17 March 1995 are hereby SET ASIDE insofar as said orders denied petitioner's
Motion for Writ of Immediate Execution dated 26 April 1994. Petitioner is hereby directed to set
for hearing its claim for attorneys fees, giving due notice thereof to all the heirs, devisees, and
legatees designated in the 1978 Last Will and Testament executed by Doa Adela Pascual. The
Regional Trial Court is directed to treat petitioner's aforesaid motion as a PETITION for the
payment of attorney's fees as expenses of administration, and after due hearing resolve the same
with DISPATCH, conformably with this decision. No pronouncement as to costs.
SO ORDERED.

memorandum problem
PART

TRIAL

MEMORANDUM:

Jonna Bueno filed an action for damages of P500,000.00 against Gloria Supermart, Inc.before the
Regional Trial Court of Quezon City for the injuries that her son, Ricky, suffered at its supermarket,
for the expense, and for the emotional pain that it brought to him and hismother.Consider the

following

testimonies

that

the

witnesses

from

either

side

presented

at

the

trial of the case. Assume that you are the lawyer either for Bueno or for Gloria Supermart andwrite a
trial memorandum for the side you have chosen to represent. You would want toconvince the trial
court

to

decide

the

case

in

your

clients

favor.

------------------------------------------------------------------------------------------------------------------------------Excerpts

from

Transcript

of

Stenographic

Notes

Bueno vs. Gloria Supermart, Inc., Civil Case No. 27-112011, Hearing of June 7, 2011.
DIRECT
COURT

EXAMINATION
STAFF:

(After

OF

swearing

in

the

PLAINTIFFS

witness)

State

your

WITNESS

name

and

personal

circumstances.
WITNESS: I am Jonna Bueno, 35 years old, married, and a resident of 89 Little
Baguio

St.,

San

Juan

City,

Metro

Manila.

am

an

accountant.

ATTY. REX BELTRAN: Your Honor, we are offering the testimony of Ms. Bueno to
prove that her son, Ricky, slipped on the wet floor of Gloria Supermart by reason of the gross
negligence of its management and employees, causing him to suffer excruciating pain from a
fractured arm and undergo great discomfort and depression. Ms. Bueno herself incurred an
enormous

medical

COURT:

expense

What

ATTY.

EMIL

and

suffered

do

SUNGA:

COURT:

from

you

Subject

mental

stress.

say

to

counsel?

cross,

Proceed,

Your

Honor.

Atty.

Beltran.

ATTY.
Q.

BELTRAN:
Ms.

Bueno,

do

you

know

A.

the

defendant

Gloria

Supermart?

Yes,

Q.

Why

sir.

do

you

know

it?

A. I have been buying our groceries and other things from Gloria Supermart for the
past

20

Q.
A.

Where
On

Ortigas

is

Avenue,

years.

Gloria

San

Juan,

Supermart

Metro

Manila,

just

two

located?
blocks

from

our

condominium.
Q.

Do

you

remember

where

you

A.

were

at

about

10

a.m.

on

May

11,

Yes,

Q.

Sir.

Where

A.

Q.

What

were

was

at
were

2010?
you?

Gloria
you

Supermart.

doing

there?

A. I was about to cook spaghetti for my son Ricky when I realized I didnt have any
tomato sauce so I went to Gloria Supermart to buy tomato sauce and some other things we
needed
Q.

in
Did

the

you

A.

have

Yes,

Q.

How

my
old

A.

His

birthday

Q.

How

did

you

house.

is

was
May

do

your

2,

Ricky
2005.

shopping

He
for

any

companion?

boy

Ricky.

at
was
groceries

that
years
with

time?
old

Ricky

already.
on

tag?

A. I had a cart. He would sometimes ride on it or walk along the aisles with me. At
times, I will ask him to pick safe things from the shelves and put them in the cart. He also grabs
goodies

that

he

likes.

Q.

Do

you

remember

picking
A.

anything

up

Yes,

Q.

unusual

that

happened

groceries

small

ball

Was

rolled

he

while

you

at

along

the

able

and

Ricky

the

aisle

and

to

were

shelves?

Ricky

ran

catch

after

the

it.
ball?

A. No. Although Ricky had gone some distance down the aisle from where I stood,
I

saw

him

Q.

slip

with

What

A.

He

Q.

What

heavy

bang

happened

shrieked
did

from
you

pain

do

on

to

in

after

his

wet

him

right

you

saw

after

wrist
Ricky

section

which
fall

the

he

he

down

of

used
the

to

slipped?
stop

floor,

aisle.

his

looking

fall.
hurt?

A. I immediately came to his side to help him. I also asked a store clerk who came
around to help me carry Ricky to my car so I could bring him to the hospital. I did not get to
finish

my

Q.
A.

Did
Yes,

Sir.

the

But

he

was

shopping.

store
not

very

Philippine

clerk

friendly.

help

Afterwards,

brought

you?
Ricky

to

Orthopedic

the

Hospital.

Q. You said that Ricky slipped on a wet floor section of the aisle. How did you know
that

the

A.

Q.

Did

A.

It

section
saw

the

you

was

you
puddle

get

syrup

to

that

referred
of

know

seeped

liquid

what

out

from

to

was
on

kind

of

leaking

the
liquid

bottle

wet?

in

floor.
it

was?

nearby

shelf.

Q. Was there any supermarket cleaner nearby when you came near that puddle of
syrup?
A.
Q.

None
Did

you

see

any

sir.

supermarket

grocery

clerk

around?

A. None, Sir. There should have been someone to warn people of that puddle of
syrup

on

the

floor.

Q. Did you see any sign near that puddle or around it, warning customers of the
danger

it

presents?

A. None, Sir, although I heard someone shout, Hoy, bata, ingat! May basa diyan!
ATTY.

SUNGA:

ATTY.

BELTRAN:

move

It

is

COURT:

to

strike

admissible

out

as

Strike

that
res

testimony.

gestae

out

It

statement,

is

hearsay.

Your

the

Honor.
answer.

Q. You said that you brought your son, Ricky, to the Philippine Orthopedic Hospital,
who

attended

to

your

son

at

the

hospital?

A. Dr. John D. Lim, an orthopedic surgeon. He was the physician at the emergency
room.

think

he

is

in

his

mid-forties.

Q. You said it was his right wrist that Ricky complained of. How did you know that?
A. He pointed to it while crying from pain. After we brought him to the Philippine
Orthopedic Hospital, I saw the doctor operate on his right wrist to restore the position of a
fractured bone. Later, the doctor showed me an x-ray picture of the wrist bone before and after
the
Q.

operation.
How

long

did

Ricky

stay

in

the

hospital?

A. The doctor required Ricky to stay overnight at the hospital for pain management
and

care.

He

ordered

his

release

on

the

following

day.

Q. Based on your observation, how long did it take for Ricky to recover the use of
his

right

A.

wrist?

About

Q.

How

did

your

six

son

take

these

weeks.

things

that

happened

to

him?

A. He complained of great pain at the beginning. Later, he moved with discomfort

and

difficulty,

Q.

How

unable

about

you,

Ms.

to

Bueno?

use

How

did

both

you

hands.

take

these

events?

A. He is my son. I mentally suffered more pain than he did. He is my only son. I

dont know what I would do if I lose him. My husband and I waited for years before we had
Ricky.
Q.

And

How

much

expense,

then
if

any,

did

you

incur

treatment
A.

this
for

the

happens.

hospitalization

and

medical

of

spent

P22,840.00

for

doctors

Ricky?

fee,

hospitalization,

and

medicine.

We

also

bought toys for Ricky to distract him from the pain that he suffered. We spent approximately
P5,000.00.
Q.

Do

A.

you

have

Yes,

[Note:

Assume

mentioned

Sir,
that

the

of

here

marking

above,

ATTY.

evidence
and

BELTRAN:

of the

omitted

That

expenses?

my

receipts

are

presentation

although

these
receipts

here,

is

for

were

all

for

the

expenses

done

right.]

the

witness.

COURT:

Cross.

CROSS-EXAMINATION

BY

ATTY.

SUNGA

ATTY.

SUNGA:

Q. Ms. Bueno, you said that you brought your son Ricky to Gloria Supermart on May
11,

2010.

A.

No,

Did
Sir,

you

need

but

him

did

to
not

be

there

have

whenever

anyone

you

to

leave

buy

your

him

groceries?

home

with.

Q. But when you took him there, you of course are aware that the supermarket did
not

have

leave-your-child

A.
Q.

service?

Yes,
Consequently,

you

were

aware

that

Sir.

the

responsibility

for

looking

after

Rickys

needs and safety while in the supermarket is primarily in your hands as his mother?
A. Yes, Sir, but supermarkets always expect children to come with their parents and
so

it

has

to

make

sure

that

the

place

is

safe

for

children.

Q. But do you agree that, as his mother, he is safer when he stays by your side in a
public

place

like

A.
Q.

supermarket?

Yes,
Still,

you

let

him

slip

away

from

your

Sir.
control,

when

he

ran

after

that

ball?

A. Yes, Sir, but the supermarket should keep their eyes open for things like loose
balls running down their aisles, drawing children away from their parents, and letting them slip
on

carelessly

spilled

liquids.

Q. But did you not notice that the aisles of Gloria Supermart have sales clerks that
attend

to

inquiries

and

needs

of

its

customers?

A. Not all the time. When my son had his accident, no one was around to prevent it
from

happening.

ATTY.

SUNGA:

Excerpts

That

from

is

all,

Transcript

of

Your

Honor.

Stenographic

Notes

Bueno vs. Gloria Supermart, Inc., Civil Case No. 27-112011, Hearing of June 14, 2011
DIRECT

EXAMINATION

COURT

STAFF:

(After

OF

swearing

in

the

DEFENDANTS
witness)

State

your

WITNESS

name

and

personal

circumstances.
WITNESS; I am Rene Castro, 55 years old, married, and a resident of 12 V.G. Cruz,
Sampaloc,

Manila.

am

supermarket

supervisor.

ATTY. EMIL SUNGA: Your Honor, we are offering the testimony of Mr. Castro to prove
that Gloria Supermart exercised proper diligence in making its premises safe for its customers;
that the accident involving Ricky was something it could not reasonably anticipate and so
beyond its control; that, in any event, Ricky and her mother contributed to Ricky slipping on the
floor and suffering physical injury and pain; and that Gloria Supermart provided immediate help
and

assistance

COURT:

to

Ricky

What

ATTY.

and

do

BELTRAN:

you

Subject

COURT:

her

mother.

say

to

counsel?

cross,

Proceed

Your

Honor.

Atty.

Sunga.

ATTY.

SUNGA:

Q. Mr. Castro, you said that you are a supermarket supervisor. For whom do you
work

as

A.

have

Q.

been

Do

A.

supermarket

with

Gloria

you

Yes,

Sir,

Supermart

know

she

has

for

the
been

supervisor?
5

years

plaintiff

already,

Jonna

customer

at

Sir.

Bueno?

our

supermarket.

Q. Do you recall seeing her at your supermarket about 10 a.m. on May 11, 2010?
A.

Yes,

Q.

Why

A.

do

you

Because

Q.

recall

seeing

son

Ricky

her

Did

you

her

Sir.

there

had

see

at

an

that

time

accident

how

and

and

the

on
I

that

date?

was

accident

around.
happened?

A. No, Sir, but I was just at the next aisle fixing the new stocks of instant noodles.
When I heard the commotion, I quickly walked down there and saw Ricky lying on the floor,
crying

with

pain.

Q.

Her

mother,

What

A.

Some

Bueno,

else

items

Q.

Ms.

from

was

trying

to

did

nearby

What

shelf

minister

to

you

had

were

fallen

him.
see?

down

the

floor.

these

items?

A. There were a couple of bottles of syrup, mostly in plastic bottles, except one
glass

bottle

Q.

that

had

To

broken

and

spilled

what

do

part

of

its

contents

you

on

the

account

floor.
this?

A. I could infer from the position of Ricky that he bumped into the shelf containing
syrup
Q.

bottles
Did

and
you

knocked

off

some

of

to

Ms.

Bueno

about

speak

them.
it?

A. I talked to her at the hospital while we were waiting for Rickys treatment to be
finished

and

Q.
A.

asked

What
She

said

that

Ricky

her

did
saw

ball

rolling

what

happened.

she
down

the

aisle

and

say?
he

ran

after

it.

Somehow,
Q.

he

slipped

Are

on

the

floor

children

and

hurt

his

allowed

arm.

She

in

was

so

your

flustered.

supermarket?

A. All supermarkets allow customers to bring their children into the store. It is often
a necessity for them. It is understood of course that their parents would look after them,
preventing them from misbehaving, causing damage to the merchandise, or getting injured.
Q. Ms. Bueno said that Ricky slid on the floor because some syrup seeped out of a
leaking

bottle

in

one

of

the

shelves.

Do

you

know

anything

about

it?

A. Yes, sir. What she said is not true. The syrup must have come from one of the
bottles that Ricky knocked off from the shelf when he ran wild down the aisle, supposedly
running

after

Q.

loose

ball.

What

There

can

did

be

no

other

you

explanation.

do

then?

A. I helped Ms. Bueno pick up Ricky, intending to bring him to a hospital but his
mom insisted that we take him to her car so she can drive him quickly to the hospital. I carried
Ricky

to

Q.

her

Did

A.

Ms.

She

car

Bueno

tell

was

Q.

and

accompanied

you

anything

blaming

Did

the

them

while

you

supermarket

you

to

the

were

in

for

hospital.
the

the

reply

car?

accident.

to

her?

A. No, Sir, I said nothing to upset her because she was driving and was worried
about

her

ATTY.

SUNGA:

That

child.

is

CROSS-EXAMINATION

all,

BY

Your

Honor.

ATTY.

BELTRAN

ATTY.

BELTRAN:

Q. Mr. Castro, You said that you did not actually see the accident when it happened,
is

that

A.

right?

Yes,

Q.

In

fact,

you

were

Sir.

in

A.

another

aisle

at

that

time?

Yes,

Sir.

Q. So when you said that Ricky bumped into the shelf containing syrup bottles and
knocked off some of them, you were merely speculating on what could have happened, right?
A.

Yes,

Sir,

but

the

scene

suggested

it.

Q. Since you did not see what actually happened at that aisle, is it possible for some
other

person

to

have

knocked

off

those

bottles?

A. Yes, Sir, that is possible but not likely since I did not see any person leave the
place

in

haste.

Q. So, it is also possible that the syrup on the floor, spilled by someone else, caused
Ricky

to

slip

as

A.

Yes,

that

is

Q.

Do

he

was

running

possible,

accidents

but

resulting

after

some

unlikely.
in

The

injury

ball

before

shelves

happen

you

are

in

showed

carefully

your

up?

stocked.

supermarkets?

A. Yes but not so often; about one accident a year, if I remember right. These
things are unavoidable because hundreds of people come to the supermarket everyday.
Q.
A.
Q.

How
Every
So

accidents
A.

about
now

naturally

you

shoplifting,
and
must

then,
have

does
Sir.

some
or
Yes,

Its
procedure

this
normal
for

dealing

happen
for

often?

supermarkets.
with

events

like

shoplifting?
Sir.

Q.

To

protect

your

rights

and

A.

interests,

is

that

correct?

Yes,

Sir.

Q. Since Ricky had this serious accident that you claim was not your fault as the
scene suggested, did your supermarket bother to take pictures of the puddle on the floor and
the

bottles

of

syrup

that

you

A.

said

Ricky

had

knocked

off?

No,

ATTY.

BELTRAN:

That

Sir.

is

LAWS

all

for

the

AND

witness.

JURISPRUDENCE

FAMILY

CODE

PARENTAL

AUTHORITY

ART. 209. Pursuant to the natural right and duty of parents over the person and
property of their unemancipated children, parental authority and responsibility shall include the
caring for and rearing of such children for civic consciousness and efficiency and the
development

of

their

moral,

mental

and

physical

character

and

well-being.

Art. 20. Parental authority and responsibility may not be renounced or transferred except
in

the

cases

authorized

by

law.

Art. 220. The parents and those exercising parental authority shall have with respect to
their

unemancipated

children

or

wards

the

following

rights

and

duties:

(1) To keep them in their company, to support, educate and instruct them by right
precept and good example, and to provide for their upbringing in keeping with their
means;
xxx

xxx

xxx

(8) To impose discipline on them as may be required under the circumstances; and
(9) To perform such other duties as are imposed by law upon parents and guardians.
Art. 221. Parents and other persons exercising parental authority shall be civilly liable for
the injuries and damages caused by the acts or omissions of their unemancipated children living
in their company and under their parental authority subject to the appropriate defenses provided
by

law.

CIVIL

CODE

PERSONAL

LIABILITY

Art. 20. Every person who, contrary to law, willfully or negligently causes damage to
another,

shall

indemnify

the

latter

for

the

same.

NUISANCE
Art. 694. A nuisance is any act, omission, establishment, business, condition of property,
or
(1)

anything
Injures

or

endangers

else
the

xxx

health

or

which:
safety

of

others;

xxx

or
xxx

Art. 697. The abatement of a nuisance does not preclude the right of any person injured
to

recover

damages

for

its

past

existence.

Attractive
One

who

appliances
exercise

Nuisance
maintains
of

ordinary

on

his

character

likely

care

prevent

to

to

premises
attract
children

dangerous

children
from

in

instrumentalities

play,

playing

and

therewith

who
or

fails

or
to

resorting

thereto, is liable to a child of tender years who is injured thereby, even if the child

is

technically

Balandan,

trespasser

et

al.,

in

the

L-3422,

premises.

June

(Hidalgo

13,

Enterprises,

1952,

91

Inc.,

v.

Phil.

488)

QUASI-DELICTS
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no prePage
existing contractual relation between the parties, is called a quasi-delict and is governed by the
provisions
An

of

accident

pertains

negligence
On

to

an

unforeseen

attaches

the

other

hand,

reasonable

man,

conduct

human

of

and

negligence

guided

by

affairs,

would

Accident

and

the

Accident

do

considerations

which

or

of

the

doing

when

the

no

fault

or

ordinarily

something

which

regulate

which

one

concerned

is

a
the

prudent

do.

contradictory;

person

xxx

something

not

intrinsically

occurs

to

would

are

which

defendant.

omission

man

negligence

other.

the

do,

in

the

is

those

Chapter.

event

to

reasonable

with

this

xxx

cannot

exercising

exist
ordinary

care, which is not caused by fault of any person and which could not have been
prevented

by

Corporation

any

v.

means

Court

of

suggested

Appeals,

by

G.R.

common

No.

prudence.

129792,

(Jarco

December

21,

Marketing
1999,

321

SCRA

375)

The

doctrine

such

character

except

for

of
as

the

by

an

the

person

not

have

to

or

charged
been

could

negligence

to

any

voluntary

or

whether

damage

results

to

the

position

attributed,

foresee

harm

to

the

person

of

Appeals,

G.R.

No.

v.

person

the

Court

must

of

the

(Philippine

accident

the

on

the

G.R.

control
part

of

must

of

No.

the

150920,

as

236)

negligent

in

doing

an

act

property

of

another

is

this:

or

negligence

is

reasonable

consequence

of

Construction

Corporation

v.

August

caused

SCRA

National

159270,

been

and

(3)

of

happened

or

person

injured

have

have

Tagorio,

is

person

was

management

contribution

Inc.

in

pursued?

of;

accident
not

476

man,

actually

accident

or

the

would

exclusive

action

Center,

(1)

it

complained

prudent

course

the

the

the

that

2005,

determining

injury

(2)

within

Learning

where

inference

the

(Child

for

an

negligence;

25,

test

whereby

warrant

applies

with

due

injured.

loquitor

instrumentality

November
The

ipsa

defendant's

agency

person

res

22,

to

whom

2005,

467

SCRA

569)

Art. 2179. When the plaintiff's own negligence was the immediate and proximate cause
of his injury, he cannot recover damages. But if his negligence was only contributory, the
immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff
may

recover

Contributory

damages,

but

negligence

the

is

courts
conduct

shall

mitigate

on

the

the
part

damages
of

to

the

be

awarded.

injured

party,

contributing as a legal cause to the harm he has suffered, which falls below the
standard

which

he

is

required

xxx
It
the

to

conform

for

his

own

protection.

xxx
is

an

act

person

proximate

or

omission

injured

cause

of

amounting

which,
the

concurring

injury.

to

xxx
want

with

(National

of

ordinary

care

the

defendants

Power

Corporation

on

the

negligence,
v.

Heirs

of

part

of

is

the
Noble

Casionan,

G.R.

No.

Proximate

cause

is

continuous

sequence,

injury,

and

Realty

165969,

November

defined

as

unbroken

without

which

Corporation,

G.R.

by

the

any

result

No.

that

27,
cause,

efficient

would

184905,

2008,

have

August

SCRA

71)

in

natural

and

produces

the

which,

intervening

not

572
cause,

occurred.

28,

(Ramos

2009,

597

v.

C.O.L.

SCRA

526)

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own
acts

or

omissions,

but

also

for

those

of

xxx

persons

for

whom

one

is

responsible.

xxx

xxx

The owners and managers of an establishment or enterprise are likewise responsible for
damages caused by their employees in the service of the branches in which the latter are
employed

or

on

the

occasion

xxx

of

their

functions.

xxx

xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove
that they observed all the diligence of a good father of a family to prevent damage.
DAMAGES
Art.

2197.

(1)

Damages

may

Actual

be:

or

compensatory;

(2)

Moral;

(3)

Nominal;

(4)

Temperate

or

(5)

moderate;

Liquidated;

(6)

or

Exemplary

or

corrective.

Art. 2199. Except as provided by law or by stipulation, one is entitled to an adequate

compensation only for such pecuniary loss suffered by him as he has duly proved. Such
compensation

is

referred

to

as

actual

or

compensatory

damages.

Art. 2203. The party suffering loss or injury must exercise the diligence of a good father
of a family to minimize the damages resulting from the act or omission in question.
Art. 2214. In quasi-delicts, the contributory negligence of the plaintiff shall reduce the
damages
The

that

underlying

precept

he

on

contributory

may

negligence

is

recover.

that

plaintiff

who

is

partly responsible for his own injury should not be entitled to recover damages in
full

but

must

bear

v.

Heirs

Corporation

the

consequences

of

Noble

of

Casionan,

572

his

own

G.R.

No.

negligence.
165969,

(National

November

Power

27,

2008,

SCRA

In

Phoenix

Construction,

held

that

was

the wrongful

found

the

Dionisio

allocated

to

to

award

bear
G.R.

Art.

Moral

of
the

20%
of

v.

proximate

and negligent

of

Bernardo,
2217.

and

guilty

most

Dionisio
the

legal

Inc.,

cause of the

contributory

of

the

exemplary
No.
damages

Intermediate

manner

damages

on

damages,

include

Appellate
accident

Court,

and

in which the dump

negligence

damages

144723,

71)

20-80
awarded

on

ratio.
by

attorneys

February
physical

the

27,

suffering,

the
fees

of Dionisios
of

said

the
case,

appellate
and

accident,
we

court,

costs.

we

injuries

truck was parked

night
In

where

but
we

required

except

as

(Estacion

v.

2006,

483

SCRA

222)

mental

anguish,

fright,

serious

anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar

injury. Though incapable of pecuniary computation, moral damages may be recovered if they
are

the

proximate

result

of

the

defendant's

wrongful

act

for

omission.

Art. 2219. Moral damages may be recovered in the following and analogous cases:
xxx

xxx

(2)

Quasi-delicts

xxx

causing

physical

injuries;

xxx

xxx

xxx

RULES

OF

COURT

EVIDENCE
Sec. 36.Testimony generally confined to personal knowledge; hearsay excluded. A
witness can testify only to those facts which he knows of his personal knowledge; that is, which
are

derived

Where

from

the

his

own

statements

perception,

or

writings

except

as

attributed

to

otherwise
a

provided

person

in

who

these

is

not

rules.

on

the

witness stand are being offered not to prove the truth of the facts stated therein
but

only

were

to

prove

executed,

rule.(Cornejo,

that

those

such

Sr.,

vs.

statements

evidence

is

Sandiganbayan,

were

not
G.R.

actually

covered
No.

made

by

58831,

or

the

July

those

writings

hearsay

evidence

31,

1987,

152

SCRA

statements,

only

the

falsity

thereof

559)
Under
that

the
such

statements

immaterial.
No.

doctrine

The

of

independently

were

hearsay

174056,

made

rule

is

does

relevant

relevant,
not

February

and

apply.

27,

the

truth

(People

v.

2007,

or

Gumimba
517

et

fact

al.,

is

G.R.

SCRA

25)

Sec. 42.Part of res gestae. Statements made by a person while a startling occurrence
is taking place or immediately prior or subsequent thereto with respect to the circumstances
thereof,
A

may

be

declaration

given

made

in

evidence

spontaneously

as

after

part

of

startling

res

gestae.

occurrence

is

xxx

deemed

as part of the res gestae when (1) the principal act, the res gestae is a startling
occurrence;

(2)

contrive

devise;

and

or

its

Branch

the

and

immediately
43,

statements

Gingoog

(3)

were

the

attending
City,

made

before

statements

concern

circumstances.

Misamis

Oriental,

the
the

(Zarate

G.R.

No.

declarant
v.

had

time

occurrence

in

Regional

Trial

152263,

July

3,

to

question
Court,

2009,

SCRA

591
510)

Sec. 48.General rule. The opinion of witness is not admissible, except as indicated in
the

following

Sec.

3.Disputable

uncontradicted,

presumptions.

but

may

be

The

sections.

following

contradicted

and

presumptions
overcome

are

by

satisfactory

other

evidence:

(d)That

person

(q)That

the

takes

ordinary

ordinary

course

of

if

care
business

of

his

concerns;

has

been

followed;

(y)That things have happened according to the ordinary course of nature and ordinary
nature
In

habits

every

prove

by

tort
a

case

filed

preponderance

under
of

of
Article

evidence:

2176
(1)

of
the

the

Civil

damages

life;
Code,
suffered

plaintiff

has

by

plaintiff;

the

to

(2) the fault or negligence of the defendant or some other person for whose act
he must respond; and (3) the connection of cause and effect between the fault or

negligence

and

the

damages

incurred.

(Child

Learning

Center,

Inc.

v.

Tagorio,

G.R. No. 150920, November 25, 2005, 476 SCRA 236)

top memorandum
PLAINTIFFS MEMORANDUM

THE CASE
Plaintiff Jonna Bueno (Jonna) filed an action for damages of P500,000 against Gloria Supermart,
Inc. for the injuries suffered by her son, Ricky, for the expense, and for the emotional pain that it
brought to him and Jonna.
THE FACTS
On May 11, 2010, at about 10 a.m., Jonna went to Gloria Supermart to buy groceries needed in their
house. She was accompanied by her 5-year old son, Ricky. While Jonna was shopping for groceries
a loose ball rolling along the aisle caught Rickys attention and went after it. He then slipped on a wet
section of the aisle from a spilled syrup.
Immediately, Jonna came to Rickys side to help him. No sign near the puddle warning customers of
the danger was present although she heard someone shouted Hoy, bata, ingat! May basa diyan!
She then asked a store clerk to help her carry Ricky so she could bring him to the hospital.
Dr. Lim, an orthopedic surgeon attended Ricky. The doctor operated him to restore the position of the
fractured bone. Ricky stayed overnight at the hospital for pain management and care. He was
released on the following day.
Defendant, Gloria Supermart, Inc., disclaims liability saying that it exercised proper diligence in
making its premises safe for its customers; that the accident was something it could not reasonably
anticipate and so beyond its control; that in any event Ricky and her mother contributed to Ricky
slipping on the floor and suffering physical injury and pain; and that Gloria Supermart provided
immediate help and assistance to Ricky and her mother.

ISSUES
I.
PROCEDURAL ISSUE
Whether the statement by someone not presented as witness warning Ricky, Hoy, bata, ingat! May
basa diyan. admissible in evidence.
II.
SUBSTANTIVE ISSUES
A.
Whether Gloria Supermarket is liable for damages in not making its premises safe for its customers.
B.
Whether Jonna is guilty of contributory negligence.

C.
Whether Gloria Supermart is liable for actual and moral damages.

THE ARGUMENTS
I.

The

declarants

statement

is

admissible

in

evidence

as

part

of

the

res

gestae.

During Jonnas testimony, she narrated that she heard someone shouted, Hoy, bata, ingat! May
basa diyan! before Ricky slipped. Gloria Supermart claims that such statement is hearsay.
As a rule, a witness can testify only to those facts which he has personal knowledge; that is, which
are derived from his own perception, except as otherwise provided in the Rules (Rules of Court).
One of the exceptions to the hearsay rule is the so-called res gestae statements.
Res gestae statement are those made by a person while a startling occurrence is taking place or
immediately prior or subsequent thereto with respect of the circumstances thereof. The statement
made by the stranger is considered as part of res gestae as it was made immediately prior to Rickys
slipping. The declarant warned Ricky of the impending danger the wet floor may bring. Immediately
after the precaution, Ricky slipped. The statement concerned the occurrence in question and its
immediately attending circumstances. The declarant had no opportunity to contrive or devise such
statement before Rickys slipping. Thus, declarants statement shows that the floor was wet when
Ricky slipped.

II. SUBSTANTIVE ISSUES

A. Gloria Supermart is negligent in not making its premises safe for its customers.
The Proximate Cause of the Injury
was the Syrup Spilled on the Floor
Proximate cause is defined as that cause, which, in natural and continuous sequence, unbroken by
any efficient intervening cause, produces the injury, and without which the result would not have
occurred (Ramos v. COL Realty Corporation). There is no iota of doubt that the proximate cause of
Rickys slipping is the wet portion on the floor. Ricky would not have slipped had the puddle been
cleaned by Gloria Supermarts employees.
Gloria failed to provide proper
safeguard measures; its employees
were negligent
As testified by Jonna, there was no supermarket cleaner to clean the wet area nor there was no sign
placed near the puddle or around it. Considering that Gloria Supermarkets
supervisor was just at the next aisle fixing the stocks, he should have heard the sound of an item that
was knocked off. It is quite impossible not to notice the fallen objects in such a short distance
especially the one that was broken was a glass bottle.
Gloria Supermarkets witness even testified that every now and then accidents and shoplifting do
occur. These things are unavoidable since hundreds of people come to the supermarket everyday.

Having known the fact that plenty of people do come to their supermart everyday, Gloria
Supermarket should have provided the proper safeguard measures to prevent the occurrence of
such events. It should have reasonably anticipated the happening of such events.
Gloria Supermarkets employees should always be alert not only for the safety of its customers but
also as to properly guard its products from thief or vandalizing. Store clerks should always be around
to attend to customers inquiry and needs.
B. No Contributory Negligence on the Part of Jonna and Ricky.
No negligence on Jonnas part
While it is true that the responsibility for looking after Rickys needs and safety while in the
supermarket is primarily the responsibility of Jonna, it cannot be denied that the accident could not
have happened if not for the spilled liquid on the floor. The evidence presented shows that the
negligence is on the part of Gloria Supermarket. She was beside Ricky in their shopping and if not
because of the loose ball, he would not have been running wild down the aisle.
No negligence on the part of Ricky
The bumping off the shelf containing the syrup bottles could not have been caused by Ricky. It could
have been caused by someone else. In fact, someone even told Ricky to be careful and keep off the
wet portion. This only suggests that the spilled syrup was caused by someone else and already been
there before the happening of the event.
Even assuming that it was Ricky who bumped the shelf, he could not be faulted under the doctrine of
attractive nuisance. Under the doctrine of attractive nuisance, one who maintains on his premises
dangerous instrumentalities or appliances of a character likely to attract children in play, and who
fails to exercise ordinary care to prevent children from playing therewith or resorting thereto, is liable
to a child of tender years who is injured thereby, even if the child is technically a trespasser in the
premises (Hidalgo Enterprises v. Balandan). There is no question that Ricky is a child of tender
years. He was attracted by the loose ball rolling down the aisle. The ball could have fallen from one
of Gloria Supermarkets shelf. Thus, Ricky would not have bumped the shelf if not for the loose ball.
C. Jonna is entitled to actual and moral damages.
Under Article 2176 of the New Civil Code, whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done. Gloria
Supermarket being negligent is liable to pay actual and moral damages. The actual or compensatory
damages includes the hospitalization and medicine expenses and also for toys bought to distract
Ricky from the pain that he suffered. Gloria Supermarket is liable for moral damages for the serious
anxiety suffered by Jonna and her husband. Under Article 2219 of the New Civil Code provides that
moral damages may be recovered for quasi delicts causing physical injuries.

CONCLUSION
Defendant Gloria Supermarket is liable for the negligent acts of its employees. Under the concept of
vicarious liability, the owners and managers of an establishment are likewise responsible for

damages caused by their employees. (Article 2180, NCC)

PRAYER

WHEREFORE, premises considered, it is respectfully prayed for that:

1) Actual damages in the amount of P22,840 for doctors fees, hospitalization and medicine and the
amount of P5,000 for toys bought to distract Ricky from the pain he suffered be awarded;
2) Moral damages in the amount of P500,000 be awarded for the emotional pain and sufferings
brought to Jonna and her family;
3) All other reliefs just and equitable under the circumstances are prayed for.
Manila for Quezon City, November 27, 2011
ATTY. REX BELTRAN
Counsel for Plaintiff
PTR No. 54815, 1/17/2011
IBP No. 589546
Roll of Attorneys No. 8147
MCLE Compliance No. II-843
Copy Furnished:
Atty. Emil Sunga
Counsel for defendant

top memorandum of the 2011 BAR EXAM

MEMORANDUM FOR THE PLAINTIFF

Plaintiff, through the undersigned counsel, unto this Honorable Court respectfully submits this
Memorandum to support her cause of action and alleges:
STATEMENT OF THE CASE
This is a case of quasi-delict with damages for the injuries sustained by a minor due to an accident
at the defendants supermarket on May 11, 2010.

STATEMENT OF THE FACTS

On

direct

examination,

the

plaintiff

testified

on

the

following,

to

wit:

1. Plaintiff is Jonna Bueno, 35 years old, married, and a resident of 89 Little Baguio St., San Juan
City,
2.

Metro
She

is

an

Manila;
accountant

by

profession;

3. On May 11, 2010 at 10:00 AM, plaintiff with her son Ricky, a 5 year old boy, went to Gloria

Supermart,

Inc.,

to

buy

some

groceries;

4. While picking some groceries, a small ball rolled along the aisle that caught the attention of Ricky
who

ran

after

the

ball

to

catch

it;

5. Upon trying to catch the ball, plaintiff saw Ricky slipped with a heavy bang on the wet section of
the

aisle;

6. Plaintiff immediately came to his rescue to help him as he shrieked from pain in his wrist which he
used

to

stop

his

fall;

7. Plaintiff testified that the cause of Rickys fall was due to the puddle of liquid on the floor that
seeped

out

from

leaking

bottle

in

nearby

shelf;

8. She testified further that there was no supermarket cleaner around during that time and no
warning
9.

sign

Furthermore,

had

she

heard

been
someone

placed

shout,

Hoy,

in
bata

the

ingat!

May

area;

basa

diyan!;

10. Plaintiff asked a store clerk to help her carry Ricky for her to bring him to the Philippine
Orthopedic

Hospital;

11. That her son Ricky was operated in his right wrist to restore the position of a fractured bone as
shown
12.

by

Ricky

was

able

the
to

recover

only

X-ray
after

six

(6)

weeks

picture;
from

the

accident;

13. That plaintiff incurred P22, 840.00 for doctors fee, hospitalization and medicine as shown by her
receipts;
14. She also spent P5, 000.00 for the toys she bought for Ricky to distract him from the pain he
suffered;
Moreover, on direct examination and on behalf of Gloria Supermart, Inc., their witness testified on the
following:
15. Defendants witness is Rene Castro, 55 years old and a resident of 12 V.G. Cruz, Sampaloc,
Manila;
16. He is a supervisor of Gloria Supermart, Inc., and works in the store for five (5) years;
17. He testified that on May 10, 2010, he heard a commotion and found out that Ricky was lying on
the

floor

in

pain;

18. He saw that couples of bottles of syrup in plastic containers, except one glass bottle was broken
and

spilled

part

of

its

contents

on

the

floor;

19. He speculated that Ricky must have been the one who bumped into the shelf that caused the
glass

container

Upon
20.

to

break

as

cross-examination,
He

did

not

accordingly

defendants
actually

see

inferred

witness
the

from

Rickys

stated

accident

position;

the

following:

it

happened;

when

21. There were already accidents resulting in injury in the supermart before as hundreds of people
are
22.

shopping
There

were

in

even

cases

the
of

shoplifting

store;
in

the

store;

23. During the accident of Ricky, the Supermart management did not bother to take pictures of the
puddle on the floor and the bottles of syrup that was the cause of Rickys accident.
STATEMENT OF THE ISSUE/S
1. IS GLORIA SUPERMART, INC., NEGLIGENT IN MAINTAINING ITS STORE PREMISES TO
MAKE

IT

SAFE

FOR

ITS

CUSTOMERS?

2. IS THE SUPERMART LIABLE TO PAY DAMAGES FOR THE INJURY SUSTAINED BY RICKYS
ACCIDENT?

ARGUMENTS AND DISCUSSION

1. Gloria Supermart, Inc., is negligent by not observing due diligence to keep their store safe from
possible accidents of its customers.
1.1 Based on the facts presented, it is very clear that defendant Gloria Supermart is negligent and
did not observe due diligence in maintaining its store safe and free from possible accidents as shown
by the absence of maintenance personnel who must see to it, from time to time, that there are wet
areas in the floor which might cause customers from slipping off.
1.2 The supermart was also negligent in not placing a warning sign to warn customers in areas
where items are in liquid form as there are tendencies that these items may seep or break.
1.3 The failure of the store personnel to check these things regularly constitutes negligence on their
part.
Negligence is the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do. (Jarco marketing Corporation v Court
of Appeals, G.R. No. 129792, Dec. 21, 1999, 321 SCRA 375)
1.4 Applying the said jurisprudence, the supermart has but failed to do its responsibility through its
personnel to act reasonably as a prudent man would do to maintain its premises safe from accident.
1.5 Aggravating the circumstances was the rolling of the ball that got the attention of Ricky to ran
after it. The ball rolling constitutes an attractive nuisance that will certainly catch the attention of a
child. That ball must have come from the store which is expected to be seeling as it caters the
general needs of its customers. The store management then should have also checked its goods
and have them secured especially if they are prone to accidents. In the case of a ball, it is not only
hazardous to children but also to adults especially the aged persons who might stepped on it,
although not hazardous if properly served.
One who maintains on his premises dangerous instrumentalities or appliances of a character likely
to attract children in play, and who fails to exercise ordinary care to prevent children from playing
therewith or resorting
thereto, is liable to a child of tender age/years who is injured thereby, even if the child is technically a
trespasser in the premises. (Hidalgo Enterprises, Inc. vs. Balandan, et al., L-3422, June 13, 1952, 91
Phil. 488).
1.6 The testimony of the plaintiff that she heard someone shouting, Hoy, bata, ingat! May basa
diyan! should not have striken out instead appreciated as it could not be considered hearsay
because it was directly heard by the plaintiff herself and not taken from other person.
1.7 That declaration must be appreciated as part of resgestal as it was made spontaneously that is
while a startling occurrence is taking place or immediately prior or subsequent thereto with respect to
the circumstances thereof, may be given in evidence.
1.8 In the case at bar, that statement only proves that indeed there was already a wet area in the
store where the boy slipped of which regates the defendants witness that it was Ricky who must
have bumped off the bottles causing one of them to break.
1.9 It could therefore be dedused from that circumstances that the supermart is negligent because
someone had already observed the wet floor to be accident prone.
2. The supermart is liable to pay damages for the injury sustained by Rickys accident.
2.1 The accident should not have happened without the fault and negligence of the supermart and its
employees as presented above. The law provides that:
Every person who, contrary to law, willfully or negligently causes damage to another, shall indemnity

the latter for the same (Art. 20, New Civil Code)
2.2 This is supported by Article 2176 which states that:
Whoever by act or omission causes damge to another, there being fault or negligence, is obliged to
pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the provision of this chapter.
2.3 In the instant case, the Supermart is liable to pay damages plus the expenses incurred during
the medication of Ricky because there should have been no such damage, injury and expenses
should the supermart been not negligent in observing due diligence to check their premises, as
inunciated by Art. 2180, which states that:
The obligation imposed by Art. 2176 is demandable not only for ones own acts or omissions but
also for those of persons for whom one is responsiblexxx. The owners and managers of an
establishment or enterprise are likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or in the occasion of their functions.
2.4 Applying this provision of law to the instant case, it is then the liability of the owner of Gloria
Supermart and his store employees who are neglect of their duties to observe due diligence. The
owner or employer is vicariously liable with his employees to pay damages to the plaintiff for the
injuries she sustained.
WHEREFORE, it is respectfully prayed that this Honorable Court will decide in favor of the plaintiff
and against defendant, Gloria Supermart, Inc., the following reliefs:
1. Payment of actual or compensatory damages in the amount of P27, 840.00;
2. Moral damages for the physical suffering of the victim and mental anguish, fright and serious
anxiety experienced by the plaintiff;
3. Exemplary or corrective damages;
4. Cost of litigation
Other measures of reliefs that are just and equitable under the premises are likewise prayed for.

(Sgd.) ATTY. REX BELTRAN

Counsel for the Plaintiff
Manila City
I.B.P. No. _______dated_____
Roll No. ________dated _____
PTR No. _______dated ______
MCLE No. ______dated _____

top memorandum
PLAINTIFFS MEMORANDUM
Plaintiff, by counsel, respectfully submits its memorandum in the case:
STATEMENT OF THE CASE

Plaintiff Jonna Bueno, filed an action for damages against Gloria Supermart, Inc., before the
Regional Trial Court of Quezon City. She claims P500,000.00 as damages for the injuries suffered by
her minor son, Ricky, caused by the negligence of the defendants employees and for the emotional
pain and suffering that it caused to them. Defendant Gloria Supermart denies her claim and asserts
that it was not negligent. Instead, it claims that the accident was caused by Jonnas negligence and
she alone should be made to suffer the consequences of her own actions. Both parties have
presented their evidences and witnesses. The case is now submitted for decision.
STATEMENT OF THE FACTS
At about ten in the morning of May 11, 2010, Jonna Bueno and her 5-year old son, Ricky, were
grocery shopping at Gloria Supermart located in Ortigas Avenue, San Juan, Metro Manila.
Supposedly, they were to buy tomato sauce for Rickys spaghetti along with other things. In the
middle of their shopping, a small ball rolled along the aisle and Ricky ran for it. However, he stepped
over a puddle of syrup and slipped. He fell so hard with a heavy bang that shrieked in pain.
Apparently, he hurt his wrist as he tried to stop his fall. Jonna immediately come to his sons aid. As
she attended him, she noticed that the syrup on the floor seeped out from a leaking bottle in a
nearby shelf. Meanwhile, Rene Castro, the supermarket supervisor, approached her. She asked him
to help her carry her son to her car, so that she can rush him to the hospital. She then brought Ricky
to the Philippine Orthopaedic Hospital, where he was handled by Dr. John D. Lim, the physician-onduty at the emergency room. Dr. Lim operated on Rickys right wrist. He had to restore the position of
his fractured bone. Thereafter, he required Ricky to stay overnight at the hospital for pain
management and care. Ricky was released the next day. At first, he complained that his wrist caused
him great pain. Later on, he moved with discomfort and difficulty. He was unable to use both hands.
It took him 6 weeks to fully recover. His mother spent P22,840.00 all in all for his doctors fee,
hospitalization and medication. Moreover, she experienced mental suffering as she witnessed her
only sons painful recovery.
On the other hand, Rene Castro, Glorias supermarket supervisor, testified for the defendant. He
claimed that at ten in the morning of May 11, 2010, he was fixing the new stock of instant noodles
when he heard a commotion at the next aisle. He quickly walked towards the noise and saw Ricky
lying on the floor and crying in pain. His mother, Jonna, was trying to minister him. He observed that
bottles of syrup from a nearby shelf fell from the floor, including a glass bottle that was broken and
spilled part of its contents to the floor. He assisted Jonna in rushing Ricky to the hospital. While
Ricky was undergoing surgery, he talked to Jonna and she said that her son slipped on the floor
because some syrup seeped out of a leaking bottle in one of the shelves. She blamed the
supermarket for the accident. Though he thought differently, Rene kept his silence.
ISSUES
The issues of the case, as determined by the court in its pre-trial order, are as
follows:
1. Whether or not Gloria Supermart is liable for damages for the injury suffered by Ricky Bueno; and
2. Whether or not Jonna Bueno was contributorily negligent for the accident, which calls for the
reduction in claimed damages.

ARGUMENTS
1. GLORIA SUPERMART IS LIABLE FOR DAMAGES SINCE ITS EMPLOYEES NEGLIGENCE
WAS THE PROXIMATE CAUSE OF THE ACCIDENT.
As it can be gleaned from the records, Ricky suffered from a fractured bone when he tried to stop his
fall as he slipped over a puddle of syrup. The syrup apparently seeped out from a broken bottle in a
nearby shelf. Ordinarily, the supermarkets employees should have detected the mess and cleaned
the area. At the very least, it should have placed a warning sign informing buyers to pass by with
caution. But it didnt. It failed to meet its responsibility to keep the premises neat and clear from
obstructions. It was negligent in maintaining cleanliness and should be held accountable if by reason
of such negligence, customers have suffered from mishaps.
In Jarco Marketing Corporation v. Court of Appeals (G.R. 129792, December 21, 1999), the Court
defined negligence as the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do. Following this definition, the test of
negligence is therefore this: could a prudent man, in the position of the person to whom negligence
is attributed, foresee harm to the person injured as a reasonable consequence of the course actually
pursued? Applying this question to the case, it is clear that Gloria Supermart was negligent. As a
supermarket, tons of customers pass by its aisles everyday to purchase something. It was the
responsibility of Gloria to keep those aisles clean and clear in order to ensure the safety and
continued patronage of its buyers. When a bottle of syrup got broken and its contents spilled on the
floor, it was the burden of Gloria to keep on eye out for these expected eventualities and to
immediately address the issue. It should have expected, like any ordinarily prudent and reasonable
man, that a hapless buyer would eventually step on it without noticing and slip because of it. After all,
buyers do not look on the floor when they buy their groceries. It is common knowledge that they look
sideways on the aisles as they search for the items they need. Gloria should have deployed
employees to regularly survey their aisles and see if they steered clear from obstructions.
This negligence was the proximate cause of Rickys injury. Proximate cause is defined as that
cause, which, in natural and continuous sequence unbroken by any efficient intervening
cause, produces the injury, and without which the result would not have occurred. (Ramos v. COL
Realty Corp., G.R. No. 184905, August 28, 2009). Had there been no syrup on the floor, Ricky would
not have slipped and suffered a bad fall. Even if, admittedly, Ricky was running at the time he
stepped on the puddle, he wouldnt have ordinarily fractured his bone had the floor been clear from
obstructions. Besides, syrups, by their very nature, are transparent. Only a scrutinizing eye can
detect its presence on the floor and buyers are not expected to act in this manner.
Considering that Gloria Supermarts employees were negligent and such negligence was the
proximate cause for Rickys injury, Gloria Supermart should be held accountable. Article 2180 of the
Civil Code supports this conclusion. It states,
The obligation imposed by Article 2176 is demandable not only
for ones own acts or omissions, but also for those persons for whom one is responsible.
xxx xxx xxx

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on the
occasion of their functions.
2. JONNA BUENO WAS NOT CONTRIBUTORILY NEGLIGENT FOR HER SONS INJURY
Jonna was not negligent in watching over her son, while they were grocery shopping. Indeed,
parents have the natural right and duty to take care and discipline their children. But Jonna did not
show lack of due care when she let Ricky run after the ball. The records show that she was watching
her son at that time. Furthermore, a child running after a ball does not necessarily mean that he is
engaged in play. The child may be actually trying to fetch the ball and return it to its rightful place or
owner. There was no reason for Jonna discipline nor closely monitor her child at that time. Also,
Jonna couldnt have reasonably foreseen her sons mishap. As mentioned earlier, the syrup was
presumably transparent and couldnt be detected unless scrutinized up close. She also had good
reason to believe that the supermarket regularly maintains the cleanliness of its store. There is no
basis to find her negligent.
3. GRANTING ARGUENDO THAT THERE IS NO PROOF AS TO WHO OR WHAT CAUSED THE
SYRUP TO FALL ON THE FLOOR, GLORIA SUPERMARKET IS STILL LIABLE UNDER RES
IPSA LOQUITOR.
In his testimony, Rene Castro made a baseless inference that the syrup on the
floor must have come from one of the bottles that Ricky knocked off from the shelf
when he ran wild down the aisle. This should not be given credence since Rene himself testified that
he did not see how the incident happened. Therefore, he did not have the competence to testify on
that matter. But granting, for the sake of argument, that there is no proof as to who or what caused
the spillage, Gloria Supermart should still be held liable based on the doctrine of res
ipsa loquitor. First of all, Rickys accident, as explained earlier, was due to the supermarket
employees negligence in failing to maintain the cleanliness of the store. Secondly, it is without a
doubt that the supermarkets premises is within exclusive management and control of Gloria
Supermart. Thirdly, it has been established that Ricky did not contribute to his injury. Any other
person would have slipped, had they stepped on the syrup-coated floor. All these three elements put
into operation the doctrine of res ipsa loquitor, which strengthens plaintiffs position that the
supermarket is liable for damages.
4. JONNA IS ENTITLED TO ACTUAL DAMAGES AND MORAL DAMAGES
Jonna has presented receipts proving that she incurred P22,840.00 in expenses for her sons over-all
treatment. Based on Art. 2199 of the Civil Code, she is entitled to actual damages. In addition, she is
entitled for moral damages for the mental suffering she experienced. Since this action is based on
Gloria Supermarts quasi-delict resulting in physical injuries, she should be allowed to recover it in
accordance with Art. 2219 of the Civil Code.
PRAYER
Wherefore, plaintiff prays that the court renders judgment:
1. finding Gloria Supermart liable for damages, and

2. ordering the defendant to pay P500,000.00 all-in-all as damages including P22,840.00 as

compensatory damages.
All other just and equitable reliefs are prayed for.
xxxx
Counsel for the Plaintiff
Address
Attorney Roll No.
IBP
MCLE No.

lajom v. leuterio (1960)

EN BANC
G.R. No. L-13557

April 25, 1960

DONATO LAJOM, petitioner,

vs.
HON. JOSE N. LEUTERIO, Judge of the Court of First Instance of Nueva Ecija, and RAFAEL
VIOLA,respondents.
M. Almario and J. T. Lajom for petitioner.
M. H. de Joya for respondents.
CONCEPCION, J.:
This is a petition for a writ of certiorari and mandamus to set aside certain orders, and reinstate
another order, of respondent Judge.
The factual background of this case may be found in our decision in G. R. No. L-6457, entitled
"Donato Lajom vs. Jose Viola, et al." (promulgated May 30, 1956), from which we quote:
Maximo Viola died on September 3, 1933. Judicial proceedings of his testate estate were
instituted in the Court of First Instance of Bulacan (Civil Case No. 4741) and closed on
March 17, 1937. An agreement of partition and distribution (dated October 25, 1935) was
executed by and between Jose P. Viola, Rafael Viola and Silvio Viola, legitimate children of
Maximo Viola and Juana Toura, whereby the properties left by their father, Maximo Viola,
were divided among themselves. On March 17, 1939, Donato Lajom (plaintiff-appellee
herein) filed in the Court of First Instance of Nueva Ecija a complaint, amended on May 16,
1939, praying, among other things, that he be declared a natural child of Maximo Viola,
impliedly recognized and acknowledged in accordance with the laws in force prior to the Civil
Code, thereby being a co-heir of Jose P. Viola, Rafael Viola and Silvio Viola (defendantsappellants); that the agreement of partition and distribution executed in 1935 by these three
legitimate children of Maximo Viola be declaired null and void after collation, payment of
debts and accounting of fruits, anew partition be ordered adjusdication one-seventh of the
estate left by Maximo Viola by Donato Lajom and two-seventh to each of the three
appellants. The latter filed a demurrer to the amended complaint which was sustained by the
Court of First Instance of Nueva Ecija in its order of July 31, 1939, holding that the allegation

of the amended complaint called for the exercise of probate jurisdication and that as the
complaint showed that the will of the deceased Maximo Viola had already been probated in
the Court of First Instance of Bulacan which had first taken cognizance of the settlement of
his estate, the Court of First Instance of Nueva Ecija could not subsequently assume the
same jurisdiction. Upon appeal to the Supreme Court by the plaintiff-appellee, the order
sustaining the demurrer was reversed and the case was remanded to the Court of First
Instance of Nueva Ecija for further proceeding.
On December 21, 1942, the defendants-appellants accordingly filed an answer to the
amended complaint containing specific denials and setting up the affirmative defenses that
the appellants are the sole heirs of Maximo Viola; that corresponding judicial proceedings of
his testate estate were duly instituted and terminated in the Court of First Instance of
Bulacan, of which plaintiff-appellee was fully aware; that the action was filed by the appellee
two years after the termination of said testate proceedings and almost six years after the
death of Maximo Viola, without having previously asserted any right whatsoever to any part
of said estate, and he is therefore now barred from doing so; and that assuming the appellee
to be an acknowledged natural child of Maximo Viola, his right of action had prescribed. After
trial, the Court of First Instance of Nueva Ecija rendered a decision in favor of the plaintiff, the
dispositive part of which reads as follows:
EN VISTA DE LAS CONSIDERACIONES ARRIBA EXPUESTAS, el Juzgado falla este
asunto a favor del demandante y contra de los demandados, declarando al demandante,
Donato Lajom, hijo natural, implicita y tacitamente, reconocido por su padre, el difundo Dr.
Maximo Viola, de acuerdo con la Ley de Toro; se declara la particion y distribucion hecha
por los demandados "Convenio de Particion y Adjudicacion de los Bienes Dejados por el
Difundo Dr. Maximo Viola, ilegal, nulo y de ningun valor; se ordena la colacion de los bienes
en cuestion, poniendo los mismos en manos de un administrador judicial; se ordena a todos
y cada uno de los aqui demandados a presentar una liquidacion de los frutos y ptoductos
provenientes de dichas propiedades asignadas a cada uno de ellos desde el Octubre 25,
1935, con el fin de una nueva distribucion; se ordena a los demandados Jose P. Viola y
Silvio Viola a someter una liquidacion de los frutos y productos de las tres parcelas de
terreno mencionadas en los parrafos 1 y 2 del Annex "A" que han sido puestas bajo su
administracion en el Procedimiento Especial No. 4741 del Juzgado de Primera Instancia de
Bulacan a partir del 3 del Septembre de 1933; y finalmente, se ordena la particion y
adjudicacion a favor del demandante de una septima (/ 7) parte de dichas propiedades y
productos; dos septimas (2/7) parbes a cada uno de los aqui demandados, cuando todas
esas propiedadespertenecientes al finado Dr. Maximo Viola sean colados, todas las deudas
pagodas y los frutos rendidos. Con costas.
Said decision of the Court of First Instance of Nueva Ecija was, on appeal, affirmed by this Court in
said case No. L-6457 on May 30, 1956.
When the decision of this Court became final, the records were remanded to the lower court where
plaintiff filed a motion for the execution of the judgment, the collation of all properties of the late Dr.
Maximo Viola and the redistribution of his estate as indicated in said judgment. Acting on the motion,
respondent Judge issued an order dated October 30, 1956, pertinent parts of which are of the
following tenor:

The decision annulled the partition entered into by the defendants and ordered the "collation
of all the properties in question", placing the same in the hands of a judicial administrator.
What the properties in question are, do not clearly appear. In the inventory attached to the
original complaint, 75 parcels of land were enumerated. In the agreement of partition which
was annulled, the inventory of the estate of the late Dr. Maximo Viola enumerates only 47
parcels of land. These 47 parcels, according to the agreement of partition, were all conjugal.
In the motion for execution, plaintiff now enumerates 84 parcels of land. The decision did not
state what properties belonged to the late Dr. Maximo Viola, but it did provide for the partition
of all the estate belonging to the late Dr. Viola after the same had been collated and all the
debts paid and the fruits me liquidated. It would he manifestly unfair to either party to
consider the 75 parcels of land enumerated in the inventory attached to the amended
complaint as the conjugal properties of the late Dr. Maximo Viola and his deceased wife, or
to limit the same to the 47 parcels enumerated in the inventory of the estate of the late Dr.
Maximo Viola attached to the agreement of partition. As a starting point, however, of the
47 parcels enumerated in the agreement of partition and marked, as Exhibit F-1, which is
Exhibit A of the deed of partition, are undoubtedly the properties of the late Maximo Viola
which must be partitioned among the plaintiff and the defendants in accordance with the
decision. Accordingly, the defendants, who are in possession of each and everyone of these
47 parcels, are hereby ordered to deliver the same to the judicial administrator to be
hereinafter appointed, for his administration until the final partition in accordance with the
decision of this Court. As there is a disagreement among the parties with respect to the other
properties, the plaintiff is hereby ordered to submit within 15 days upon receipt of this order a
list of such other properties which he believes belong to the late Dr. Maximo Viola. The
defendants shall file their opposition thereto within a like period after which the same shall be
set for hearing to determine whether or not such properties belong to he late Dr. Maximo
Viola and which should be partitioned among his heir's.
The decision ordering the defendants to collate is questioned by the defendants, first, on
ground that what has been left by will should not be collated, and second, that what has
been left by way of donation to some of the defendants should not also be collated. The
decision requires the defendants to collate all the properties of the late Dr. Maximo viola so
that they may be partitioned among the heirs. That decision is now final, and it is not for this,
Court to say that the Court rendering the decision had committed an error. If error there had
been, it is now beyond the power of this Court or any Court to correct the same. However,
the will having completely omitted the plaintiff who is a compulsory heir, and having disposed
of all the properties in favor of the defendants, it naturally encroached upon the legitime of
the plaintiff. Such testamentary dispositions may not impair the legitimate (Art. 1037, Spanish
Civil Code). In another sense, the plaintiff, being a compulsory heir in the direct line, and
having been preterited, the institution is annulled in its entirety (Art. 814, Spanish Civil Code
now Art. 854, N.C.C., Neri vs. Akutin, 72 Phil., 322).
With respect to the properties donated by the late Dr. Maximo Viola and his wife to some of
the defendants, the same must be collated, but the donation having been made jointly by the
spouses, only thereof must be brought into collation in accordance with Article 1046 of the
Spanish Civil Code. Moreover, the same things donated are not to be brought to collation and

partition, but only their value at the time of the donation in accordance with Article 1045 also
of the Spanish Code.
In accordance with the agreement of the parties, Mr. Manuel V. Gallego, Jr. is hereby
appointed administrator of the properties herein collated and may take his oath and assume
the performance of his duties upon the filing of a bond in the sum of P20,000.
In accordance with the dispositive part of the decisions, the defendants Jose P. Viola and
Silvio Viola are hereby ordered to submit a liquidation of the fruits and products of the three
parcels of land mentioned in paragraphs 1 and 2 of Annex A. Each and everyone of the
defendants is hereby ordered to submit a liquidation of the fruits and products of the
properties assigned to each and everyone of them from October 25, 1935, all within 15 days
from the receipt of this order.
When Rafael Viola filed the report required in this order, Donato Lajom noticed that nothing was said
in the aforementioned report concerning the fruits of a riceland, with an area of 215 hectares,
allegedly donated by Dr. Maximo Viola to said Rafael Viola. So, Lajom asked that Rafael Viola be
ordered to include the products of said riceland in his report, in order that the property may be
included in the redistribution of the Viola Estate. Rafael Viola objected thereto upon the ground that
said property was not "mentioned or included in the complaint filed in this case." The objection was
sustained and the petition was denied in an order dated October 30, 1957, stating that:
. . . In paragraph II of the amended complaint (p. 43 of the record) only the donation inter
vivos in favor of the defendants Jose Viola and Silvio Viola were questioned. The dispositive
part of the decision required the defendants to collate the properties in question. The
properties which were donated to Rafael Viola had not been put in issue by the pleadings
and they are not in question and, therefore, cannot be deemed to have been embraced in the
dispositive part of the decision requiring the defendants to collate the properties in question.
A motion for reconsideration of said order of October 30, 1957 was denied, on January 30, 1958,
upon the ground that:
The decision required the defendants to collate the properties in question. The properties
donated to Rafael Viola and which are sought to be collated by the plaintiff are not in
question, not having been put in issue by the pleadings. Neither are they mentioned in the
inventory of the 75 parcels which are annexed to the complaint. If the court, in its previous
orders, made mention of collation of all the properties of the deceased, the court had
committed an error, and, therefore, corrects that error in accordance with this order and in the
order of October 30, 1957.
Thereupon Lajom instituted the present case for certiorari and mandamus, with the prayer:
. . . that the respondent Judge be ordered to set aside his Order of October 30, 1957 and
January 30, 1958 and reinstate his original Order of October 30, 1956 requiring 'the
defendants to collate all the properties of the late Dr. Maxinio Viola so that they may be
partitioned among the heirs' and 'with respect to the property donated by the late Dr. Maximo
Viola and his wife to some of the defendants the same must be collated.

Petitioner maintains that the riceland aforementioned was involved in case G. R. No. L-6457,
because respondents maintained in their brief and in the motion for reconsideration filed by them in
the Supreme Court that the lower court had erred in ordering the collation of all the properties of the
deceased. Moreover, he urges that the order of respondent Judge of October 30, 1956, had already
declared that all properties of the deceased, including those donated by him, were subject to
collation; that said order became final and executory, no appeal having been taken therefrom; and
that, consequently, said order could not be validly modified or reversed by the aforementioned orders
of respondent Judge, dated October 30, 1957 and January 30, 1958.
We find no merit in this pretense. The decision affirmed by this Court in G. R. No. L-6457 ordained
the collation of the "properties in question". The properties in question were described in an
inventory attached to petitioner's original complaint in case No. 8077 and did not include the
aforementioned riceland, with an area of 215 hectares. Indeed, Lajom admits that he did not include,
and could not have included or mentioned it, in his complaint because, at the time of its filing, he did
not know of the existence of said property. Hence, the same was not in question in case No. 8077,
and was not covered by the decision therein rendered and subsequently affirmed by the Supreme
Court in Case No. L-6457.
It is not accurate to say that the order of October 30, 1956, had directed the collation of all property
of the deceased. It did not even require the collation of 75 parcels of land enumerated in the
inventory already adverted to. It expressed the view that one-half of the 47 parcels covered by the
agreement of partition therein nullified, should be delivered to the administrator to be hereinafter
appointed. Then it added:
. . . As there is a disagreement among the parties with respect to the other properties, the
plaintiff is hereby ordered to submit within 15 days upon receipt of this order a list of such
other properties which he believes belong to the late Dr. Maximo Viola. The defendants shall
file their opposition thereto within a like period after which the same shall be set for hearing
to determine whether or not such properties belong to the late Dr. Maximo Viola and which
should be partitioned among his heirs.
Thus, it left the question whether other properties should be collated or not open for future
determination. In any event, respondent Judge was merely enforcing a decision that had already
become final. Any order directing what was not required in said decision and the same contained
no pronouncement with respect to the riceland adverted to above would be in excess of his
jurisdiction and therefore, null and void.
It is next alleged that petitioner having been the victim of preterition, the institution of heirs made by
the deceased Dr. Maximo Viola became ineffective, and that Civil Case No. 8077 was thereby
converted into an intestate proceedings for the settlement of his estate. This contention is clearly
untenable. There might have been merit therein if we were dealing with a special proceedings for the
settlement of the testate estate of a deceased person, which, in consequence of said preterition,
would thereby acquire the character of a proceeding for the settlement of an intestate estate, with
jurisdiction over any and all properties of the deceased. But, Civil Case No. 8077 is an ordinary civil
action, and the authority of the court having jurisdiction over the same is limited to the properties
described in the pleadings, which admittedly do not include the aforementioned riceland.

Without prejudice, therefore, to the institution of the corresponding intestate proceedings by the
proper party, the petition herein should, therefore, be, as it is hereby, denied, with costs against the
petitioner. It is so ordered.
Paras, C.J., Bengzon, Montemayor, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, and Gutierrez
David, JJ.,concur.

agro v. balansag (2005)

SECOND DIVISION
[ G.R. NO. 141882, March 11, 2005 ]
J.L.T. AGRO, INC., REPRESENTED BY ITS MANAGER, JULIAN L. TEVES,
PETITIONER, VS. ANTONIO BALANSAG AND HILARIA CADAYDAY,
RESPONDENTS.
DECISION
TINGA, J.:
Once again, the Court is faced with the perennial conflict of property claims between two sets of
heirs, a conflict ironically made grievous by the fact that the decedent in this case had resorted to
great lengths to allocate which properties should go to which set of heirs.
This is a Rule 45 petition assailing the Decision[1] dated 30 September 1999 of the Court of Appeals
which reversed the Decision[2] dated 7 May 1993 of the Regional Trial Court (RTC), Branch 45, of
Bais City, Negros Oriental.
The factual antecedents follow.
Don Julian L. Teves (Don Julian) contracted two marriages, first with Antonia Baena (Antonia), and
after her death, with Milagros Donio Teves (Milagros Donio). Don Julian had two children with
Antonia, namely: Josefa Teves Escao (Josefa) and Emilio Teves (Emilio). He had also four (4)
children with Milagros Donio, namely: Maria Evelyn Donio Teves (Maria Evelyn), Jose Catalino Donio
Teves (Jose Catalino), Milagros Reyes Teves (Milagros Reyes) and Pedro Reyes Teves (Pedro). [3]
The present controversy involves a parcel of land covering nine hundred and fifty-four (954) square
meters, known as Lot No. 63 of the Bais Cadastre, which was originally registered in the name of the
conjugal partnership of Don Julian and Antonia under Original Certificate of Title (OCT) No. 5203 of
the Registry of Deeds of Bais City. When Antonia died, the land was among the properties involved
in an action for partition and damages docketed as Civil Case No. 3443 entitled Josefa Teves
Escao v. Julian Teves, Emilio B. Teves, et al.[4] Milagros Donio, the second wife of Don Julian,
participated as an intervenor. Thereafter, the parties to the case entered into a Compromise
Agreement[5]which embodied the partition of all the properties of Don Julian.

On the basis of the compromise agreement and approving the same, the Court of First Instance
(CFI) of Negros Oriental, 12th Judicial District, rendered a Decision [6] dated 31 January 1964. The
CFI decision declared a tract of land known as Hacienda Medalla Milagrosa as property owned in
common by Don Julian and his two (2) children of the first marriage. The property was to remain
undivided during the lifetime of Don Julian.[7] Josefa and Emilio likewise were given other properties
at Bais, including the electric plant, the movie property, the commercial areas, and the house where
Don Julian was living. The remainder of the properties was retained by Don Julian, including Lot No.
63.
Paragraph 13 of the Compromise Agreement, at the heart of the present dispute, lays down the
effect of the eventual death of Don Julian vis--vis his heirs:
13. That in the event of death of Julian L. Teves, the properties hereinafter adjudicated to Josefa
Teves EscaHo and Emilio B. Teves, (excluding the properties comprised as Hacienda Medalla
Milagrosa together with all its accessories and accessions) shall be understood as including not only
their one-half share which they inherited from their mother but also the legitimes and other
successional rights which would correspond to them of the other half belonging to their father, Julian
L. Teves. In other words, the properties now selected and adjudicated to Julian L. Teves (not
including his share in the Hacienda Medalla Milagrosa) shall exclusively be adjudicated to the
wife in second marriage of Julian L. Teves and his four minor children, namely, Milagros Donio
Teves, his two acknowledged natural children Milagros Reyes Teves and Pedro Reyes Teves and his
two legitimated children Maria Evelyn

Donio Teves and Jose Catalino Donio Teves. (Emphasis

supplied)
On 16 November 1972, Don Julian, Emilio and Josefa executed a Deed of Assignment of Assets
with Assumption of Liabilities[8] in favor of J.L.T. Agro, Inc. (petitioner). Less than a year later, Don
Julian, Josefa and Emilio also executed an instrument entitled Supplemental to the Deed of
Assignment of Assets with the Assumption of Liabilities (Supplemental Deed) [9] dated 31 July 1973.
This instrument which constitutes a supplement to the earlier deed of assignment transferred
ownership over Lot No. 63, among other properties, in favor of petitioner. [10] On 14 April 1974, Don
Julian died intestate.
On the strength of the Supplemental Deed in its favor, petitioner sought the registration of the subject
lot in its name. A court, so it appeared, issued an order[11] cancelling OCT No. 5203 in the name of
spouses Don Julian and Antonia on 12 November 1979, and on the same date TCT No. T-375 was
issued in the name of petitioner.[12] Since then, petitioner has been paying taxes assessed on the
subject lot.[13]
Meanwhile, Milagros Donio and her children had immediately taken possession over the subject lot
after the execution of the Compromise Agreement. In 1974, they entered into a yearly lease
agreement with spouses Antonio Balansag and Hilaria Cadayday, respondents herein. [14] On Lot No.
63, respondents temporarily established their home and constructed a lumber yard. Subsequently,
Milagros Donio and her children executed a Deed of Extrajudicial Partition of Real Estate[15] dated 18
March 1980. In the deed of partition, Lot No. 63 was allotted to Milagros Donio and her two (2)
children, Maria Evelyn and Jose Catalino. Unaware that the subject lot was already registered in the
name of petitioner in 1979, respondents bought Lot No. 63 from Milagros Donio as evidenced by

the Deed of Absolute Sale of Real Estate[16] dated 9 November 1983.

At the Register of Deeds while trying to register the deed of absolute sale, respondents discovered
that the lot was already titled in the name of petitioner. Thus, they failed to register the deed. [17]
Respondents, as vendees of Lot No. 63, filed a complaint before the RTC Branch 45 of Bais City,
seeking the declaration of nullity and cancellation of TCT No. T-375 in the name of petitioner and the
transfer of the title to Lot No. 63 in their names, plus damages. [18]
After hearing, the trial court dismissed the complaint filed by respondents. The dispositive portion of
the decision reads:
WHEREFORE, premises considered, by preponderance of evidence, this Court finds judgment in
favor of the defendant and against the plaintiff, and thus hereby orders:
(1) That complaint be dismissed;
(2) That plaintiffs vacate the subject land, particularly identified as Lot No. 63 registered under
Transfer Certificate of Title No. T-375;
(3) That plaintiffs pay costs.
Finding no basis on the counterclaim by defendant, the same is hereby ordered dismissed. [19]
The trial court ruled that the resolution of the case specifically hinged on the interpretation of
paragraph 13 of theCompromise Agreement.[20] It added that the direct adjudication of the properties
listed in the Compromise Agreementwas only in favor of Don Julian and his two children by the first
marriage, Josefa and Emilio.[21] Paragraph 13 served only as an amplification of the terms of the
adjudication in favor of Don Julian and his two children by the first marriage.
According to the trial court, the properties adjudicated in favor of Josefa and Emilio comprised their
shares in the estate of their deceased mother Antonia, as well as their potential share in the estate of
Don Julian upon the latters death. Thus, upon Don Julians death, Josefa and Emilio could not claim
any share in his estate, except their proper share in the Hacienda Medalla Milagrosa which was
adjudicated in favor of Don Julian in the Compromise Agreement. As such, the properties
adjudicated in favor of Don Julian, except Hacienda Medalla Milagrosa, were free from the forced
legitimary rights of Josefa and Emilio, and Don Julian was under no impediment to allocate the
subject lot, among his other properties, to Milagros Donio and her four (4) children. [22]
The trial court further stressed that with the use of the words shall be, the adjudication in favor of
Milagros Donio and her four (4) children was not final and operative, as the lot was still subject to
future disposition by Don Julian during his lifetime.[23] It cited paragraph 14[24] of the Compromise
Agreement in support of his conclusion.[25] With Lot No. 63 being the conjugal property of Don Julian
and Antonia, the trial court also declared that Milagros Donio and her children had no hereditary
rights thereto except as to the conjugal share of Don Julian, which they could claim only upon the
death of the latter.[26]

The trial court ruled that at the time of Don Julians death on 14 April 1974, Lot No. 63 was no longer
a part of his estate since he had earlier assigned it to petitioner on 31 July 1973. Consequently, the
lot could not be a proper subject of extrajudicial partition by Milagros Donio and her children, and not
being the owners they could not have sold it. Had respondents exercised prudence before buying
the subject lot by investigating the registration of the same with the Registry of Deeds, they would
have discovered that five (5) years earlier, OCT No. 5203 had already been cancelled and replaced
by TCT No. T-375 in the name of petitioner, the trial court added. [27]
The Court of Appeals, however, reversed the trial courts decision. The decretal part of the appellate
decision reads:
WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and SET
ASIDE and a new one is entered declaring the Transfer Certificate of Title No. T-375 registered in the
name of J.L.T. Agro, Inc. as null and void.
With costs against defendant J.L.T. Agro, Inc. represented by its Manager, Julian L. Teves.
SO ORDERED.[28]
Per the appellate court, the Compromise Agreement incorporated in CFI decision dated 31 January
1964, particularly paragraph 13 thereof, determined, adjudicated and reserved to Don Julians two
sets of heirs their future legitimes in his estate except as regards his (Don Julians) share in
Hacienda Medalla Milagrosa.[29] The two sets of heirs acquired full ownership and possession of the
properties respectively adjudicated to them in the CFI decision and Don Julian himself could no
longer dispose of the same, including Lot No. 63. The disposition in the CFI decision constitutes res
judicata.[30] Don Julian could have disposed of only his conjugal share in the Hacienda Medalla
Milagrosa.[31]
The appellate court likewise emphasized that nobody in his right judgment would preterit his legal
heirs by simply executing a document like the Supplemental Deed which practically covers all
properties which Don Julian had reserved in favor of his heirs from the second marriage. It also
found out that the blanks reserved for the Book No. and Page No. at the upper right corner of TCT
No. T-375, to identify the exact location where the said title was registered or transferred, were not
filled up, thereby indicating that the TCT is spurious and of dubious origin. [32]
Aggrieved by the appellate courts decision, petitioner elevated it to this Court via a petition for review
on certiorari, raising pure questions of law.
Before this Court, petitioner assigns as errors the following rulings of the appellate court, to wit: (a)
that future legitime can be determined, adjudicated and reserved prior to the death of Don Julian; (b)
that Don Julian had no right to dispose of or assign Lot No. 63 to petitioner because he reserved the
same for his heirs from the second marriage pursuant to the Compromise Agreement; (c) that
the Supplemental Deed was tantamount to a preterition of his heirs from the second marriage; and
(d) that TCT No. T-375 in the name of petitioner is spurious for not containing entries on the Book
No. and Page No.[33]

While most of petitioners legal arguments have merit, the application of the appropriate provisions of
law to the facts borne out by the evidence on record nonetheless warrants the affirmance of the
result reached by the Court of Appeals in favor of respondents.
Being the key adjudicative provision, paragraph 13 of the Compromise Agreement has to be quoted
again:
13. That in the event of death of Julian L. Teves, the properties herein adjudicated to Josefa Teves
Escao and Emilio B. Teves, (excluding the properties comprised as Hacienda Medalla Milagrosa
together with all its accessories and accessions) shall be understood as including not only their onehalf share which they inherited from their mother but also the legitimes and other successional rights
which would correspond to them of the other half belonging to their father, Julian L.Teves. In other
words, the properties now selected and adjudicated to Julian L. Teves (not including his
share in the Hacienda Medalla Milagrosa) shall exclusively be adjudicated to the wife in
second marriage of Julian L. Teves and his four minor children, namely, Milagros Donio
Teves, his two acknowledged natural children Milagros Reyes Teves and Pedro Reyes Teves
and his two legitimated children Maria Evelyn Donio Teves and Jose Catalino Donio
Teves. (Emphasis supplied)
With the quoted paragraph as basis, the Court of Appeals ruled that the adjudication in favor of the
heirs of Don Julian from the second marriage became automatically operative upon the approval of
the Compromise Agreement, thereby vesting on them the right to validly dispose of Lot No. 63 in
favor of respondents.
Petitioner argues that the appellate court erred in holding that future legitime can be determined,
adjudicated and reserved prior to the death of Don Julian. The Court agrees. Our declaration in Blas
v. Santos[34] is relevant, where we defined future inheritance as any property or right not in
existence or capable of determination at the time of the contract, that a person may in the future
acquire by succession. Article 1347 of the New Civil Code explicitly provides:
ART. 1347. All things which are not outside the commerce of men, including future things, may be
the object of a contract. All rights which are not intransmissible may also be the object of contracts.
No contract may be entered into upon future inheritance except in cases expressly authorized
by law.
All services which are not contrary to law, morals, good customs, public order or public policy may
likewise be the object of a contract.
Well-entrenched is the rule that all things, even future ones, which are not outside the commerce of
man may be the object of a contract. The exception is that no contract may be entered into with
respect to future inheritance, and the exception to the exception is the partition inter vivos referred to
in Article 1080.[35]
For the inheritance to be considered future, the succession must not have been opened at the time

of the contract.[36] A contract may be classified as a contract upon future inheritance, prohibited under
the second paragraph of Article 1347, where the following requisites concur:
(1) That the succession has not yet been opened;
(2) That the object of the contract forms part of the inheritance; and
(3) That the promissor has, with respect to the object, an expectancy of a right which is purely
hereditary in nature.[37]
The first paragraph of Article 1080, which provides the exception to the exception and therefore
aligns with the general rule on future things, reads:
ART. 1080. Should a person make a partition of his estate by an act inter vivos, or by will, such
partition shall be respected, insofar as it does not prejudice the legitime of the compulsory heirs.
....
In interpreting this provision, Justice Edgardo Paras advanced the opinion that if the partition is made
by an act inter vivos, no formalities are prescribed by the Article.[38] The partition will of course be
effective only after death. It does not necessarily require the formalities of a will for after all it is not
the partition that is the mode of acquiring ownership. Neither will the formalities of a donation be
required since donation will not be the mode of acquiring the ownership here after death; since no
will has been made it follows that the mode will be succession (intestate succession). Besides, the
partition here is merely the physical determination of the part to be given to each heir. [39]
The historical antecedent of Article 1080 of the New Civil Code is Article 1056 [40] of the old Civil
Code. The only change in the provision is that Article 1080 now permits any person (not a testator,
as under the old law) to partition his estate by act inter vivos. This was intended to abrogate the then
prevailing doctrine that for a testator to partition his estate by an act inter vivos, he must first make a
will with all the formalities provided by law. [41]
Article 1056 of the old Civil Code (now Article 1080) authorizes a testator to partition inter vivos his
property, and distribute them among his heirs, and this partition is neither a donation nor a
testament, but an instrument of a special character, sui generis, which is revocable at any time
by the causante during his lifetime, and does not operate as a conveyance of title until his
death. It derives its binding force on the heirs from the respect due to the will of the owner of the
property, limited only by his creditors and the intangibility of the legitime of the forced heirs. [42]
The partition inter vivos of the properties of Don Julian is undoubtedly valid pursuant to Article 1347.
However, considering that it would become legally operative only upon the death of Don Julian, the
right of his heirs from the second marriage to the properties adjudicated to him under the
compromise agreement was but a mere expectancy. It was a bare hope of succession to the
property of their father. Being the prospect of a future acquisition, the interest by its nature was
inchoate. It had no attribute of property, and the interest to which it related was at the time
nonexistent and might never exist.[43]

Evidently, at the time of the execution of the deed of assignment covering Lot No. 63 in favor of
petitioner, Don Julian remained the owner of the property since ownership over the subject lot would
only pass to his heirs from the second marriage at the time of his death. Thus, as the owner of the
subject lot, Don Julian retained the absolute right to dispose of it during his lifetime. His right cannot
be challenged by Milagros Donio and her children on the ground that it had already been adjudicated
to them by virtue of the compromise agreement.
Emerging as the crucial question in this case is whether Don Julian had validly transferred ownership
of the subject lot during his lifetime. The lower court ruled that he had done so through
the Supplemental Deed. The appellate court disagreed, holding that the Supplemental Deed is not
valid, containing as it does a prohibited preterition of Don Julians heirs from the second marriage.
Petitioner contends that the ruling of the Court of Appeals is erroneous. The contention is wellfounded.
Article 854 provides that the preterition or omission of one, some, or all of the compulsory heirs in
the direct line, whether living at the time of the execution of the will or born after the death of the
testator, shall annul the institution of heir; but the devises and legacies shall be valid insofar as they
are not inofficious. Manresa defines preterition as the omission of the heir in the will, either by not
naming him at all or, while mentioning him as father, son, etc., by not instituting him as heir without
disinheriting him expressly, nor assigning to him some part of the properties. [44] It is the total omission
of a compulsory heir in the direct line from inheritance. [45] It consists in the silence of the testator with
regard to a compulsory heir, omitting him in the testament, either by not mentioning him at all, or by
not giving him anything in the hereditary property but without expressly disinheriting him, even if he is
mentioned in the will in the latter case.[46] But there is no preterition where the testator allotted to a
descendant a share less than the legitime, since there was no total omission of a forced heir. [47]
In the case at bar, Don Julian did not execute a will since what he resorted to was a partition inter
vivos of his properties, as evidenced by the court approved Compromise Agreement. Thus, it is
premature if not irrelevant to speak of preterition prior to the death of Don Julian in the absence of a
will depriving a legal heir of his legitime. Besides, there are other properties which the heirs from the
second marriage could inherit from Don Julian upon his death. A couple of provisions in
the Compromise Agreement are indicative of Don Julians desire along this line. [48]Hence, the total
omission from inheritance of Don Julians heirs from the second marriage, a requirement
forpreterition to exist, is hardly imaginable as it is unfounded.
Despite the debunking of respondents argument on preterition, still the petition would ultimately rise
or fall on whether there was a valid transfer effected by Don Julian to petitioner. Notably, Don Julian
was also the president and director of petitioner, and his daughter from the first marriage, Josefa,
was the treasurer thereof. There is of course no legal prohibition against such a transfer to a family
corporation. Yet close scrutiny is in order, especially considering that such transfer would remove Lot
No. 63 from the estate from which Milagros and her children could inherit. Both the alleged transfer
deed and the title which necessarily must have emanated from it have to be subjected to incisive and
detailed examination.
Well-settled, of course, is the rule that a certificate of title serves as evidence of an indefeasible title

to the property in favor of the person whose name appears therein. [49] A certificate of title
accumulates in one document a precise and correct statement of the exact status of the fee held by
its owner. The certificate, in the absence of fraud, is the evidence of title and shows exactly the real
interest of its owner.[50]
To successfully assail the juristic value of what a Torrens title establishes, a sufficient and convincing
quantum of evidence on the defect of the title must be adduced to overcome the predisposition in law
in favor of a holder of a Torrens title. Thus, contrary to the appellate courts ruling, the appearance of
a mere thumbmark of Don Julian instead of his signature in the Supplemental Deed would not affect
the validity of petitioners title for this Court has ruled that a thumbmark is a recognized mode of
signature.[51]
The truth, however, is that the replacement of OCT No. 5203 in the name of Julian by T.C.T. No. T375 is marred by a grave irregularity which is also an illegality, as it contravenes the orthodox,
conventional and normal process established by law. And, worse still, the illegality is reflected on the
face of both titles. Where, as in this case, the transferee relies on a voluntary instrument to secure
the issuance of a new title in his name such instrument has to be presented to the Registry of
Deeds. This is evident from Sections 53 and 57 of Presidential Decree (P.D.) No. 1529 or
the Property Registration Decree. The sections read, thus:
SEC. 53. Presentation of owners duplicate upon entry of new certificate. No voluntary
instrumentshall be registered by the Register of Deeds unless the owners duplicate certificate
is presented with such instrument, except in cases expressly provided for in this Decree or upon
order of the court, for cause shown. (Emphasis supplied)
....
SEC. 57. Procedure in registration of conveyances. An owner desiring to convey his registered
land in fee simple shall execute and register a deed of conveyance in a form sufficient in law. The
Register of Deeds shall thereafter make out in the registration book a new certificate of title to the
grantee and shall prepare and deliver to him an owners duplicate certificate. The Register of Deeds
shall note upon the original and duplicate certificate the date of transfer, the volume and page of the
registration book in which the new certificate is registered and a reference by number to the last
preceding certificate. The original and the owners duplicate of the grantors certificate shall be
stamped cancelled. The deed of conveyance shall be filed and endorsed with the number and
the place of registration of the certificate of title of the land conveyed. (Emphasis supplied)
As petitioner bases its right to the subject lot on the Supplemental Deed, it should have presented it
to the Register of Deeds to secure the transfer of the title in its name. Apparently, it had not done
so. There is nothing on OCT No. 5203 or on the succeeding TCT No. T-375 either which shows that
it had presented the Supplemental Deed. In fact, there is absolutely no mention of a reference to
said document in the original and transfer certificates of title. It is in this regard that the finding of the
Court of Appeals concerning the absence of entries on the blanks intended for the Book No. and
Page No. gains significant relevance. Indeed, this aspect fortifies the conclusion that the
cancellation of OCT No. 5203 and the consequent issuance of TCT No. T-375 in its place are not
predicated on a valid transaction.

What appears instead on OCT No. 5203 is the following pertinent entry:
Entry No. 1374: Kind: Order: Executed in favor of J.L.T. AGRO, INC.
CONDITIONS: Lost owners duplicate is hereby cancelled, and null and void and a new
Certificate of Title No. 375 is issued per Order of the Court of First Instance on file in this office.
Date of Instrument: November 12, 1979
Date of Inscription: Nov. 12, 1979

4:00 P.M.
(SGD) MANUEL C. MONTESA
Acting Deputy Register of Deeds II
(Emphasis supplied)[52]

What the entry indicates is that the owners duplicate of OCT No. 5203 was lost, a petition for the
reconstitution of the said owners duplicate was filed in court, and the court issued an order for the
reconstitution of the owners duplicate and its replacement with a new one. But if the entry is to be
believed, the court concerned (CFI, according to the entry) issued an order for the issuance of a new
title which is TCT No. T-375 although the original of OCT No. 5203 on file with the Registry of Deeds
had not been lost.
Going by the legal, accepted and normal process, the reconstitution court may order the
reconstitution and replacement of the lost title only, nothing else. Since what was lost is the owners
copy of OCT No. 5203, only that owners copy could be ordered replaced. Thus, the Register of
Deeds exceeded his authority in issuing not just a reconstituted owners copy of the original
certificate of title but a new transfer certificate of title in place of the original certificate of title. But if
the court order, as the entry intimates, directed the issuance of a new transfer certificate of title
even designating the very number of the new transfer certificate of title itselfthe order would be
patently unlawful. A court cannot legally order the cancellation and replacement of the original of the
O.C.T. which has not been lost,[53]as the petition for reconstitution is premised on the loss merely of
the owners duplicate of the OCT
Apparently, petitioner had resorted to the court order as a convenient contrivance to effect the
transfer of title to the subject lot in its name, instead of the Supplemental Deed which should be its
proper course of action. It was so constrained to do because the Supplemental Deed does not
constitute a deed of conveyance of the registered land in fee simple in a form sufficient in law, as
required by Section 57 of P.D. No. 1529.
A plain reading of the pertinent provisions of the Supplemental Deed discloses that the assignment
is not supported by any consideration. The provision reads:
....
WHEREAS, in the Deed of Assignment of Assets with the Assumption of Liabilities executed by
Julian L. Teves, Emilio B. Teves and Josefa T. Escao at Dumaguete City on 16th day of November
1972 and ratified in the City of Dumaguete before Notary Public Lenin Victoriano, and entered in the

latters notarial register as Doc. No. 367; Page No. 17; Book No. V; series of 1972, Julian L. Teves,
Emilio B. Teves and Josefa T. Escao, transferred, conveyed and assigned unto J.L.T. AGRO, INC.,
all its assets and liabilities as reflected in the Balance Sheet of the former as of December 31, 1971.
WHEREAS, on the compromise agreement, as mentioned in the Decision made in the Court of First
Instance of Negros Oriental, 12th Judicial District Branch II, on Dec. 31, 1964 pertaining to Civil
Case No. 3443 the following properties were adjudicated to Don Julian L. Teves. We quote.
From the properties at Bais
Adjudicated to Don Julian L.Teves
....
Lot No. 63, Tax Dec. No. 33, Certificate of Title No. 5203, together with all improvements. Assessed
value - P2,720.00
....
WHEREAS, this Deed of Assignment is executed by the parties herein in order to effect the
registration of the transfer of the above corporation.
NOW, THEREFORE, for and in consideration of the above premises the ASSIGNOR hereby
transfers, conveys, and assigns unto J.L.T. AGRO, INC., the above described parcel of land[s] with
a fair market value of EIGHTY-FOUR THOUSAND PESOS (P84,000.00), Philippine Currency, and
which transfer, conveyance and assignment shall become absolute upon signing. [54] (Emphasis
supplied)
The amount of P84,000.00 adverted to in the dispositive portion of the instrument does not represent
the consideration for the assignment made by Don Julian. Rather, it is a mere statement of the fair
market value of all the nineteen (19) properties enumerated in the instrument, of which Lot No. 63 is
just one, that were transferred by Don Julian in favor of petitioner. Consequently, the testimony [55] of
petitioners accountant that the assignment is supported by consideration cannot prevail over the
clear provision to the contrary in the Supplemental Deed.
The Court of Appeals, on the other hand, apparently considered the 1948 mortgage which is
annotated on the back of the TCT No. T-375 as the consideration for the assignment. [56] However, the
said annotation[57] shows that the mortgage was actually executed in favor of Rehabilitation Finance
Corporation, not of petitioner.[58] Clearly, said mortgage, executed as it was in favor of the
Rehabilitation Finance Corporation and there being no showing that petitioner itself paid off the
mortgate obligation, could not have been the consideration for the assignment to petitioner.
Article 1318 of the New Civil Code enumerates the requisites of a valid contract, namely: (1)
consent of the contracting parties; (2) object certain which is the subject matter of the contract; and
(3) Cause of the obligation which is established.
Thus, Article 1352 declares that contracts without cause, or with unlawful cause produce no effect

whatsoever. Those contracts lack an essential element and they are not only voidable but void or
inexistent pursuant to Article 1409, paragraph (2).[59] The absence of the usual recital of
consideration in a transaction which normally should be supported by a consideration such as the
assignment made by Don Julian of all nineteen (19) lots he still had at the time, coupled with the fact
that the assignee is a corporation of which Don Julian himself was also the President and Director,
forecloses the application of the presumption of existence of consideration established by law. [60]
Neither could the Supplemental Deed validly operate as a donation. Article 749 of the New Civil
Code is clear on the point, thus:
Art. 749. In order that the donation of the immovable may be valid, it must be made in a public
document, specifying therein the property donated and the value of the charges which the donee
must satisfy.
The acceptance may be made in the same deed of donation or in a separate public document, but it
shall not take effect unless it is done during the lifetime of the donor.
If the acceptance is made in a separate instrument, the donor shall be notified thereof in an authentic
form, and this step shall be noted in both instruments.

In Sumipat, et al v. Banga, et al.,[61] this Court declared that title to immovable property does
not pass from the donor to the donee by virtue of a deed of donation until and unless it
has been accepted in a public instrument and the donor duly notified thereof. The
acceptance may be made in the very same instrument of donation. If the acceptance
does not appear in the same document, it must be made in another. Where the deed of
donation fails to show the acceptance, or where the formal notice of the acceptance,
made in a separate instrument, is either not given to the donor or else not noted in the
deed of donation and in the separate acceptance, the donation is null and void.
In the case at bar, although the Supplemental Deed appears in a public document,[62] the
absence of acceptance by the donee in the same deed or even in a separate document is
a glaring violation of the requirement.
One final note. From the substantive and procedural standpoints, the cardinal objectives
to write finis to a protracted litigation and avoid multiplicity of suits are worth pursuing at
all times.[63] Thus, this Court has ruled that appellate courts have ample authority to rule
on specific matters not assigned as errors or otherwise not raised in an appeal, if these
are indispensable or necessary to the just resolution of the pleaded issues.
[64]

Specifically, matters not assigned as errors on appeal but consideration of which are

necessary in arriving at a just decision and complete resolution of the case, or to serve
the interest of justice or to avoid dispensing piecemeal justice. [65]
In the instant case, the correct characterization of the Supplemental Deed, i.e., whether it
is valid or void, is unmistakably determinative of the underlying controversy. In other
words, the issue of validity or nullity of the instrument which is at the core of the
controversy is interwoven with the issues adopted by the parties and the rulings of the
trial court and the appellate court.[66] Thus, this Court is also resolute in striking down the
alleged deed in this case, especially as it appears on its face to be a blatant nullity.
WHEREFORE, foregoing premises considered, the Decision dated 30 September 1999 of
the Court of Appeals is hereby AFFIRMED. Costs against petitioner J.L.T. Agro, Inc.
SO ORDERED.

nuguid v. nuguid (1966)

[ G. R. No. L-23445, June 23, 1966 ]

REMEDIOS NUGUID, PETITIONER AND APPELLANT VS. FELIX NUGUID AND
PAZ SALONGA NUGUID, OPPOSITORS AND APPELLEES.
DECISION
SANCHEZ, J.:

Rosario Nuguid, a resident of Quezon City, died on December 30, 1962, single, without
descendants, legitimate or illegitimate. Surviving her were her legitimate parents, Felix Nuguid and
Paz Salonga Nuguid, and 6 brothers and sisters, namely: Alfredo, Federico, Remedios, Conrado,
Lourdes and Alberto, all surnamed Nuguid. On May 18, 1963, petitioner Remedios Nuguid filed in
the Court of First Instance of Rizal a holographic will allegedly executed by Rosario Nuguid on
November 17, 1951, some 11 years before her demise. Petitioner prayed that said will be admitted to
probate and that letters of administration with the will annexed be issued to her.
On June 25, 1963, Felix Nuguid and Paz Salonga Nuguid, concededly the legitimate father and
mother of the deceased Rosario Nuguid, entered their opposition to the probate of her will. Ground
therefor, inter alia, is that by the institution of petitioner Remedios Nuguid as universal heir of the
deceased, oppositors - who are compulsory heirs of the deceased in the direct ascending line - were
illegally preterited and that in consequence the institution is void.
On August 29, 1963, before a hearing was had on the petition for probate and objection thereto,
oppositors moved to dismiss on the ground of absolute preterition.
On September 6, 1963, petitioner registered her opposition to the motion to dismiss. The court's
order of November 8, 1963, held that "the will in question is a complete nullity and will perforce
create intestacy of the estate of the deceased Rosario Nuguid" and dismissed the petition without
costs. A motion to reconsider having been thwarted below, petitioner came to this Court on appeal.
1.

Right at the outset, a procedural aspect has engaged our attention. The case is for the
probate of a will. The court's area of inquiry is limited - to an examination of, and resolution on,
the extrinsic validity of the will. The due execution thereof, the testatrix's testamentary capacity, and
the compliance with the requisites or solemnities by law prescribed, are the questions solely to be
presented, and to be acted upon, by the court. Said court - at this stage of the proceedings - is not
called upon to rule on the intrinsic validity or efficacy of the provisions of the will, the legality of any
devise or legacy therein.[1]
A peculiar situation is here thrust upon us. The parties shunted aside the question of whether or not
the will should be allowed probate. For them, the meat of the case is the intrinsic validity of the will.
Normally, this comes only after the court has declared that the will has been duly authenticated. [2] But
petitioner and oppositors, in the court below and here on appeal, travelled on the issue of law, to wit:
Is the will intrinsically a nullity?
We pause to reflect. If the case were to be remanded for probate of the will, nothing will be gained.
On the contrary, this litigation will be protracted. And for aught that appears in the record, in the
event of probate or if the court rejects the will, probability exists that the case will come up once
again before us on the same issue of the intrinsic validity or nullity of the will. Result: waste of time,
effort, expense, plus added anxiety. These are the practical considerations that induce us to a belief
that we might as well meet head-on the issue of the nullity of the provisions of the will in question.
[3]

2.

After all, there exists a justiciable controversy crying for solution.

Petitioner's sole assignment of error challenges the correctness of the conclusion below that
the will is a complete nullity. This exacts from us a study of the disputed will and the applicable
statute.
Reproduced hereunder is the will:
"Nov. 17, 1951

I, ROSARIO NUGUID, being of sound and disposing mind and memory, having amassed a certain
amount of property, do hereby give, devise, and bequeath all of the property which I may have when
I die to my beloved sister Remedios Nuguid, age 34, residing with me at 38-B Iriga, Q.C. In
witness .whereof, I have signed my name this seventh day of November, nineteen hundred and fiftyone.
(Sgd.) Illegible
T/ ROSARIO NUOUID"
The statute we are called upon to apply is Article 854 of the Civil Code which, in part, provides:
"Art. 854. The preteritlon or omission of one, some, or all of the compulsory heirs in the direct line,
whether living at the time of the execution of the will or born after the death of the testator, shall annul
the institution of heir; the devises and legacies shall be valid insofar as they are not inofficious, ***"
Except for inconsequential variation in terms, the foregoing is a reproduction of Article 814 of the
Civil Code of Spain of 1889, which is similarly herein copied, thus "Art. 814. The preterition of one or all of the forced heirs in the direct line, whether living at tbe time
of the execution of the will or born after the death of the testator, shall void the institution of heir; but
the legacies and betterments[4] shall be valid, in so far as they are not inofficious, ***"
A comprehensive understanding of the term preterition employed in the law becomes a necessity. On
this point Manresa comments:
"La pretericion consists en omitir al heredero- en el testamento. 0 no se le nombra siquiera, o aun
nombrandole como padre, hijo, etc., no se le instituye heradero ni se le deshereda expresamente, ni
se le asigna parte alguna de los bienes, resultando privado de un raodo tacito de su derecho a
legitima.
Para que exista pretericitfn, con arreglo al articulo 814, basta que en el testamento omita el tastador
a uno cualquiera de aquellos a quienes por su muerte corresponds la herencia forssosa. Se
necesita, pues, a) Que la omision se refiera a un heredero forzoso. b) Que la omision sea completa;
que el heredero forzoso nada reciba en el testamento." [5]
It may now appear trite but nonetheless helpful in giving us a clear perspective of the problem before
us, to have on hand a clear-cut definition of the word annul:
"To 'annul' means to abrogate, to make vouid; In re Morrow's Estate, 54 A. 342, 204 Pa. 484." [6]
"The word 'annul' as used in statute requiring court to annul alimony provisions of divorce decree
upon wife's remarriage means to reduce to nothing; to annihilate; obliterate; blot out; to make void or
of no effect; to nullify; to abolish. N.J.S.A. 2:50 - 38 (now N.J.S.2A:34-25). Madden vs. Madden, 40
A.2d 611, 614, 136.N.J. Eq. 132."[7]
"ANNUL. To reduce to nothing; annihilate; obliterate; to make void or of no effect; to nullify; to
aboli3h; to do away with. Ex parte Mitchell, 123 W. Va. 283, 14 S.E. 2d. 771, 774." [8]
And now, back to the facts and the law. The deceased Rosario Nuguid left no descendants,
legitimate or illegitimate. But she left forced heirs in the direct ascending line - her parents, now
oppositors Felix Nuguid and Paz Salonga Nuguid. And, the will completely omits both of them: They
thus received nothing by the testament; tacitly, they were deprived of their legitime; neither were they

expressly disinherited. This is a clear case of preterition. Such preteritionin the words of
Manresa "anulara siempre la institucioin de heredero, dando caracter absoluto a este ordenamlento",
referring to the mandate of Article 814, now 854 of the Civil Code. [9] The one-sentence will here
institutes petitioner as the sole, universal heir - nothing more. No specific legacies or bequests are
therein provided for. It is in this posture that we say that the nullity is complete. Perforce, Rosario
Nuguid died intestate. Says Manresa:
"En cuanto a la institucitin de heredero, se anula. Lo que se anula deja de existir, en todo o en
parte? No se anade limitacion alguna, como en el artfculo 851, en el que se expresa que se anulara
la institucion de heredero en cuanto perjudique a la legitlma del desheredado. Debe, pues,
entenderse que la anulacio'n es completa o total, y que este artlculo como especial en el caso que
le motiva. rige con preferencia al 817."

[10]

The same view is expressed by Sanchoz Roman:"La eonsecuencfa de la anulacifn 6 nulidad de- la institucidn de heredero por pretericlin de uno,
varios 6 todos los forzosos en linea recta, es la apertura de la sucesidn intestada, total 6 parcial.
SerA total, cuando el testador que comets la pretericiin, hubiere dispuesto de todos los bienes por
tltulo universal de herencia en favor de los herederos institucion, cuya instituclon se anula, porque
asi lo exige la generalidad del precepto legal del art. 814, al determiner, como efecto de la
preterici6n, el de que anularA la institucion de heredero'.***" [11]
Really, as we analyze the word annul employed in the statute, there is no escaping the conclusion
that the universal institution of petitioner to the entire inheritance results in totally abrogating the will.
Because, the nul- lification of such institution of universal heir - without any other testamentary
disposition in the will - amounts to a declaration that nothing at all was written. Carefully worded and
in clear terms, Article 854 offers no leeway for inferential interpretation. Giving it an expansive
meaning will tear up by the roots the fabric of the statute. On this point, S&nchez RomSn cites the
"Memoria annual del Tribunal Supremo, correspondiente a 1908", which in our opinion expresses the
rule of interpretation, viz:
"*** El art. 814, que preceptiia en tales casos de preterici6n la nulidad de la institucion de heredero,
no consiente interpretacion alguna favorable a la persona instituida en el sentido antes expuesto,
aun cuando parezca, y en algun caso pudiera ser, mas 6 menos equitativa, porque una nulidad no
significa en Derecho sino la suposicion de que el hecho o el acto no se ha realizado, debiendo, por
lo tanto, procederse sobre tal base 6 supuesto, y consiguientemente, en un testamento donde falte
la institucion, es obllgado llamar a los herederos forzosos en todo caso, como habrfa que llamar a
los de otra clase, cuando el testador no hubiese distribufdo todos sus bienes en legados, siendo
tanto mas obllgada esta consecuencia legal cuanto que, en materia de testamentos, sabido es,
segun tiene declarado la jurisprudencia. con repeticion, que no basta que sea conocida la voluntad
de quien testa si esta voluntad no aparece en la forma y en las condiciones que la ley ha exigido
para que sea valido y eficaz, por lo que constituirfa una interpretacion arbitraria, dentro del derecho
positivo, reputar como legatario a un heredero cuya institucion fuese anulada con pretexto de que
esto se acomodaba mejor a la voluntad del testador, pues aun cuando asi fuese, sera esto razdn
para modificar la ley, pero que no autoriza a una interpretacion contraria a sus terminos y a los
principios que informan la testamentifaccion, pues no porque parezca mejor una cosa en el terreno
del Derecho constituyente, hay raz6n para convertir este juicio en regla de interpretaci6n,
desvirtuando y anulando por este procedimiento lo que el legislador quiere establecer." [12]

3.

We should not be led astray by the statement in Article 854 that, annulment notwithstanding,
"the devisees and legacies shall be valid insofar as they are not inofficious". Legacies and devises
merit consideration only when they are so expressly given as such in a will. Nothing in Article 854
suggests that the mere institution of a universal heir in a will - void because of preterition - would give
the heir so instituted a share in the inheritance. As to him, the will is inexistent. There must be, in
addition to such institution, a testamentary disposition granting him bequests or legacies apart and
separate from the nullified institution of heir, Sanchez Roman, speaking of the two component parts
of Article 814, now 854, states that preterition annuls the institution of the heir "totalmente por la
pretericion"; but added (in reference to legacies and bequests), "pero subsistiendo, x x x todas
aquellas otras disposiciones que no se refieren a la institucidn de heredero ***". [13] As Manreea puts
it, annulment throws open to intestate succession the entire inheritance including "la porcion libre
(que) no hubiese dispuesto en virtud de legado, mejora o donacidn." [14]
As aforesaid, there is no other provision in the will before us except the institution of petitioner as
universal heir. That institution, by itself, is null and void. And, intestate succession ensues,

4.

Petitioner's mainstay is that the present is "a case of ineffective disinheritance rather than
one of preterition".[15]From this, petitioner draws the conclusion that Article 854 "does not apply to the
case at bar". This argument fails to appreciate the distinction between preterition and disinheritance.
Preterltlon "consists in the omission in the testator's will of the forced heirs or anyone of them, either
because they are not mentioned therein, or, though mentioned, they are neither instituted as heirs
nor are expressly disinherited."

[16]

Disinheritance, in turn, "is a testamentary disposition depriving any

compulsory heir of his share in the legitime for a cause authorized by law." [17] In Manresa's own
words: "La privaciin expresa de la legitima constituye la desheredacio'n. La privacio'n tacita de la
misma se denomina pretericion.'[18] Sanchez Roman emphasizes the distinction by stating that
disinheritance "es siempre Yoluntarla": preterition, upon the other hand, is presumed to be
"involuntaria".[19] Express as disinheritance should be, the same must be supported by a legal cause
specified in the will itself.[20]
The will here does not explicitly disinherit the testatrix's parents, the forced heirs. It simply omits their
names altogether. Said will rather than be labeled ineffective disinheritance is clearly one in which
the said forced heirs suffer from preterition.
On top of this is the fact that the effects flowing from preterition are totally different from those of
disinheritance.Preterition under Article 854 of the Civil Code, we repeat, "shall annul the institution of
heir". This annulment is in toto, unless in the will there are, in addition, testamentary dispositions in
the form of devises or legacies. In ineffective disinheritance under Article 918 of the same Code,
such disinheritance shall also "annul the institution of heirs," but only "insofar as it may prejudice the
person disinherited", which last phrase was omitted in the ease of preterition.[21]Better stated yet, in
disinheritance the nullity is limited to that portion of the estate of which the disinherited heirs have
been illegally deprived. Manresa's expressive language, in commenting on the rights of the preterited
heirs in the case of preterition on the one hand and legal disinheritance on the other, runs thus:
"Preteridos, adquieren el derecho a todo; deshereda dos, solo les corresponde un tercio o dos
teroios,[22] segun el caso."[23]

5.

Petitioner insists that the compulsory heirs ineffectively disinherited are entitled to receive
their legitimes, but that the institution of heir "is not invalidated," although the inheritance of the heir
so instituted is reduced to the extent of said legitimes. [24]
This is best answered by a reference to the opinion of Mr. Chief Justice Koran in the Nerl case
heretofore cited, viz:

"But the theory is advanced that the bequest made by universal title in favor of the children by the
second marriage should be treated as legado and mejora and, accordingly, it must not be entirely
annulled but merely reduced. This theory, if adopted, will result in a complete abrogation of articles
814 and 851 of the Civil Code. If every case of institution of heirs may be made to fall into the
concept of legacies and betterments reducing the bequest accordingly, then the provisions of articles
814 and 851 regarding total or partial nullity of the institution, would be absolutely meaningless and
will never have any application at all. And the remaining provisions contained in said article
concerning the reduction of inofficious legacies or betterments would be a surplusage because they
would be absorbed by article 817. Thus, instead of construing, we would be destroying integral
provisions of the Civil Code.
The destructive effect of the theory thus advanced is due mainly to a failure to distinguish institution
of heirs from legacies and betterments, and a general from a special provision. With reference to
article 814, which is the only provision material to the disposition of this case, it must be observed
that the institution of heirs is therein dealt with as a thing separate and distinct from legacies or
betterment. And they are separate and distinct not only because they are distinctly and separately
treated in said article but because they are in themselves different. Institution of heirs is a bequest by
universal title of property that is undetermined. legacy refers to specific property bequeathed by a
particular or special title. *** But again an institution of heirs cannot be taken as a legacy," [25]
The disputed order, we observe, declares the will in question "a complete nullity". Article 854 of the
Civil Code in turn merely nullifies "the institution of heir." Considering, however, that the will before us
solely provides for the institution of petitioner as universal heir, and nothing more, the result is the
same. The entire will is null.
Upon the view we take of this case, the order of November 8, 1963 under review is hereby affirmed.
No costs allowed.
SO ORDERED.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ.,
concur.