Sps. Ricardo and Elena Golez vs. Sps.

Carlos and Amelita Navarro

G.R. No. 192532, January 30, 2013
Facts: Petitioners, Spouses Ricardo and Elena Golez, entered into a written
agreement and appointed Amelita Navarro, a real estate dealer, for the sale of their
property in Molave, Zamboanga del Sur. Navarro found an interested buyer, the
Church of Jesus Christ of Latter Day Saints (Mormons). No sale between them,
however, transpired because they could not agree on the selling price. Upon
knowing this fact, the petitioners took over and continued negotiations with the
Mormons. Eventually, petitioners were able to sell their property to the Mormons for
the amount of P800,000. The respondent, Amelita Navarro, was not notified of the
sale. Upon her discovery of the said transaction, Navarro demanded to be paid of
her commission but petitioners refused. The repondents, Amelita Navarro, together
with her husband Carlos, instituted a civil case for collection of sum of money,
breach of contract, and damages against the petitioners at the RTC of Molave,
Zamboanga del Sur. Petitioners, in their answer and defense, denied any liability.
The RTC ruled in favor of the respondents. On appeal, the CA affirmed with
modifications the RTC Decision, ordering petitioners to pay, jointly and severally, to
respondents the amount P180,000 representing the commission for the sale of
appellants properties subject of the contract of agency plus "interest at the rate of
12% percent per annum", computed "from the sale of defendants property to the
Mormons Church on November 9, 1994, until the agents commission shall be fully
paid to the plaintiffs."
Issue/s: W/N the order of payment of interest from the date of the sale was proper?
Held: No. The Supreme Court ruled that the interest that was imposed must not be
from the date of sale but it must be from the finality of the decision up to the
satisfaction of judgment. According to article 1169 of the civil code, when the
demand is established with reasonable certainty, the interest shall begin to run from
the time the claim is made judicially or extrajudicially. But if when 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.
Sps. Ignacio and Alice Juico vs. China Banking Corporation
G.R. No. 187678, April 10, 2013
Facts: Petitioners Spouses Ignacio and Alice Juico obtained a loan from Respondent
China Banking Corporation, which was secured by a real estate mortgage. Petitioner
spouses failed to pay the said loan. The respondent, thereafter, demanded the full
payment of the outstanding balance with accrued monthly interest, but petitioner
refused to pay for the obligation. Respondent then filed a collection suit against the
spouses. Petitioner contends that the interest rates imposed by respondent were
not valid as they were not based under law or any Bangko Sentral ng Pilipinas
regulation. In addition, petitioner insists that the interest rates were in violation of
the principle of mutuality contracts and the escalation clause does not give the
respondent authority to increase the rate.
Issue/s: W/N the interest rates imposed upon the petitioners was proper?

Held: No. The Supreme Court ruled that any contract which appears to be
unilaterally weighed in favor of one of the parties, which could lead to an
unconscionable result is void. The escalation cause is void because it grants the
respondent the power to impose an increase rate without any notice to the
petitioners. Written consent is needed in order for the increase to be valid.
According to Article 1308 of the Civil Code, the contracts must bind both contracting
parties; its validity or compliance cannot be left to the will of one of them.
Sps. Florentino and Aurea Mallari vs. Prudential Bank
G.R. No. 197861, June 5, 2013
Facts: Petitioner Florentino Mallari obtained two loans, one of which had a
stipulation that the loan will bear twenty three percent (23%) interest, attorneys
fees of fifteen percent (15%) of the total amount due but not less than P200, and
penalty and collection charges of twelve percent (12%), from respondent Prudential
Bank. In addition to the loan, petitioner executed a deed of real estate mortgage to
answer for the said loan to the respondent. Petitioners failed to pay the obligation.
The respondent bank then sent a demand letter compelling petitioner to pay for the
full amount of the obligation. Petitioners then filed a complaint for annulment of
mortgage, deeds, injunction, preliminary injunction, temporary restraining order and
damages against the respondent bank. Petitioners contend that respondent bank
unilaterally imposed the increase in the charges and interest of the obligation from
the original terms initially agreed upon by them. RTC ruled in favor of the
respondent bank, holding that the interests imposed were not unconscionable.
Issue/s: W/N the interests stated in the loan agreements was unconscionable?
Held: No. The Supreme Court ruled that the interest stated in the loan agreements
were not unconscionable and is valid. The interest rate agreed upon the parties was
only 23% which are much lower than the interest rates from the cases petitioners
raised. According to Article 1306 of the Civil Code, 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. Parties are bound to comply with stipulations agreed by
them.
Heirs of Manuel Uy Ek Liong vs. Mauricia Meer Castillo
G.R. No. 176425, June 5, 2013
Facts: Alongside her husband, Felipe Castillo, respondent Mauricia Meer Castillo was
the owner of four parcels of land situated in Silangan Mayao, Lucena City and
registered in their names. With the death of Felipe, a deed of extrajudicial partition
over his estate was executed by his heirs. The properties were utilized as security
for the payment of a tractor purchased by Mauricias nephew, Santiago Rivera, from
Bormaheco, Inc. It appears, however, that the subject properties were subsequently
sold at a public auction where Insurance Corporation of the Philippines (ICP)
tendered the highest bid. Having consolidated its title, ICP likewise sold said parcels

in favor of Philippine Machinery Parts Manufacturing Co., Inc. (PMPMCI), which in

turn, caused the same to be titled in its name.
Respondents and Buenaflor then instituted a Complaint before the then CFI of
Quezon for the purpose of seeking the annulment of the transactions and/or
proceedings involving the subject parcels, as well as, the TCTs procured by PMPMCI.
Encountering financial difficulties in the prosecution of the civil case, respondents
and Buenaflor entered into an Agreement dated 20 September 1978 whereby they
procured the legal services of Atty. Edmundo Zepeda and the assistance of Manuel
Uy Ek Liong who, as financier, agreed to underwrite the litigation expenses entailed
by the case. In exchange, it was stipulated in the notarized Agreement that, in the
event of a favorable decision in Civil Case No. 8085, Atty. Zepeda and Manuel would
be entitled to "a share of forty (40%) percent of all the realties and/or monetary
benefits, gratuities or damages" which may be adjudicated in favor of respondents.
On the same date, respondents and Buenaflor entered into another notarized
agreement denominated as a Kasunduan whereby they agreed to sell their
remaining 60% share in the subject parcels in favor of Manuel for the sum of
P180,000. The parties stipulated that Manuel would pay a downpayment in the sum
ofP1,000 upon the execution of the Kasunduan, and that respondents and Buenaflor
would retain and remain the owners of a 1,750-square meter portion of said real
properties. It was likewise agreed that any party violating the Kasunduan would pay
the aggrieved party a penalty fixed in the sum of P50,000, together with the
attorneys fees and litigation expenses incurred should a case be subsequently filed
in court. The parties likewise agreed to further enter into such other stipulations as
would be necessary to ensure that the sale would push through and/or in the event
of illegality or impossibility of any part of the Kasunduan.
With his death on 19 August 1989, Manuel was survived by petitioners, Heirs of
Manuel Uy Ek Liong, who were later represented in the negotiations regarding the
subject parcels and in this suit by petitioner Belen Lim Vda. de Uy. The record of the
case showed that the proceedings in Civil Case No. 8085 culminated in favor of
respondents and Buenaflor. The remaining forty 40% was, in turn, registered in the
names of petitioners and Atty. Zepeda under TCT No. T-72026.
Issue/s: W/N the Agreement was void ab initio for being contrary to law and public
policy for being violative of Article 1491 (5) of the Civil Code of the Philippines,
which prohibits lawyers from acquiring properties which are the objects of the
litigation in which they have taken part?
Held: No. The Agreement did not violate Article 1491 (5) of the Civil Code.
Admittedly, Article 1491 (5) of the Civil Code prohibits lawyers from acquiring by
purchase or assignment the property or rights involved which are the object of the
litigation in which they intervene by virtue of their profession. The CA lost sight of
the fact, however, that the prohibition applies only during the pendency of the suit
and generally does not cover contracts for contingent fees where the transfer takes
effect only after the finality of a favorable judgment.
Viewed in the light of the autonomous nature of contracts enunciated under Article
1306 of the Civil Code, on the other hand, the Supreme Court held that the

Kasunduan was correctly found by the RTC to be a valid and binding contract
between the parties. As a notarized document that carries the evidentiary weight
conferred upon it with respect to its due execution, the Kasunduan was shown to
have been signed by respondents with full knowledge of its contents, as may be
gleaned from the testimonies elicited from Philip and Leovina.

Reman Recio vs. Heirs of Sps. Aguedo and Maria Altamirano

G.R. No. 182349, July 24, 2013
Facts: Nena Recio, the mother of Reman Recio, leased from the respondents
Alejandro, Adelaida, Catalina, Alfredo, Francisco, all surnamed Altamirano, Violeta
Altamirano Olfato, and Loreto Altamirano Vda. De Maralit a parcel of land with
improvements, situated at Lipa City, Batangas. The petitioner claimed that in 1988,
the Altamiranos offered to sell the subject property to Nena for P500,000. The latter
accepted such offer, which prompted the Altamiranos to waive the rentals for the
subject property. However, the sale did not materialize at that time due to the fault
of the Altamiranos. Nonetheless, Nena continued to occupy and use the property
with the consent of the Altamiranos.
In the latter part of 1994, the petitioner renewed Nenas option to buy the subject
property. The petitioner conducted a series of negotiations with respondent
Alejandro who introduced himself as representing the other heirs. After the said
negotiations, the Altamiranos through Alejandro entered into an oral contract of sale
with the petitioner over the subject property. Petitioner made partial payments to
the Altamiranos in the total amount of P100,000. Alejandro duly received and
acknowledged these partial payments as shown in a receipt. Petitioner made
another payment in the amount of P50,000, which Alejandro again received and
acknowledged through a receipt of the same date. Subsequently, the petitioner
offered in many instances to pay the remaining balance of the agreed purchase
price of the subject property, but Alejandro kept on avoiding the petitioner. Because
of this, the petitioner demanded from the Altamiranos, through Alejandro, the
execution of a Deed of Absolute Sale in exchange for the full payment of the agreed
price. Thus, the petitioner filed a complaint for Specific Performance with Damages.
The petitioner discovered that the subject property has been subsequently sold to
respondents Spouses Lajarca while the case was still pending. On August 23, 2005,
the trial court rendered a decision in favor of plaintiff and against defendants.
Aggrieved, the Spouses Lajarca filed an appeal. The CA affirmed RTC's decision.
Hence, this petition.
Issue/s:
W/N the verbal contract of sale between Alejandro and the petitioner was valid?
W/N Alejandro has the authority to sell the property to Spouses Lajarca?
Held:
Yes. A valid contract of sale requires: (a) a meeting of minds of the parties to
transfer ownership of the thing sold in exchange for a price; (b) the subject matter,
which must be a possible thing; and (c) the price certain in money or its equivalent.

In the instant case, all these elements were present. The records disclosed that the
Altamiranos were the ones who offered to sell the property to Nena but the
transaction did not push through due to the fault of the respondents. Thereafter, the
petitioner renewed Nenas option to purchase the property to which Alejandro, as
the representative of the Altamiranos verbally agreed. The determinate subject
matter is parcel of land with improvements, situated at Lipa City, Batangas. The
price agreed for the sale of the property was P500,000. It cannot be denied that the
oral contract of sale entered into between the petitioner and Alejandro was valid.
No. The CA found that it was only Alejandro who agreed to the sale. There is no
evidence to show that the other co-owners consented to Alejandros sale
transaction with the petitioner. Hence, for want of authority to sell the subject parcel
of land, the CA ruled that Alejandro only sold his aliquot share of the subject
property to the petitioner. In Alcantara v. Nido, the Court emphasized the
requirement of a SPA before an agent may sell an immovable property. Thus, the
Court declared the sale of the said land null and void under Articles 1874 and 1878
of the Civil Code.
Moreover, the fact that Alejandro allegedly represented a majority of the co-owners
in the transaction with the Spouses Lajarca, is of no moment. The Court cannot just
simply assume that Alejandro had the same authority when he transacted with the
petitioner. In Woodchild Holdings, Inc. v. Roxas Electric and Construction Company,
Inc. the Court stated that persons dealing with an assumed agency, whether the
assumed agency be a general or special one, are bound at their peril, if they would
hold the principal liable, to ascertain not only the fact of agency but also the nature
and extent of authority, and in case either is controverted, the burden of proof is
upon them to establish it. In other words, when the petitioner relied only on the
words of respondent Alejandro without securing a copy of the SPA in favor of the
latter, the petitioner is bound by the risk accompanying such trust on the mere
assurance of Alejandro.
The same Woodchild case stressed that apparent authority based on estoppel can
arise from the principal who knowingly permit the agent to hold himself out with
authority and from the principal who clothe the agent with indicia of authority that
would lead a reasonably prudent person to believe that he actually has such
authority. Apparent authority of an agent arises only from acts or conduct on the
part of the principal and such acts or conduct of the principal must have been
known and relied upon in good faith and as a result of the exercise of reasonable
prudence by a third person as claimant and such must have produced a change of
position to its detriment. In the instant case, the sale to the Spouses Lajarca and
other transactions where Alejandro allegedly represented a considerable majority of
the co-owners transpired after the sale to the petitioner; thus, the petitioner cannot
rely upon these acts or conduct to believe that Alejandro had the same authority to
negotiate for the sale of the subject property to him. The petitioner can only apply
the principle of apparent authority if he is able to prove the acts of the Altamiranos
which justify his belief in Alejandros agency; that the Altamiranos had such
knowledge thereof; and if the petitioner relied upon those acts and conduct,
consistent with ordinary care and prudence.

The instant case shows no evidence on record of specific acts which the Altamiranos
made before the sale of the subject property to the petitioner, indicating that they
fully knew of the representation of Alejandro. Absent the consent of Alejandros coowners, the Court holds that the sale between the other Altamiranos and the
petitioner is null and void. But as held by the appellate court, the sale between the
petitioner and Alejandro is valid insofar as the aliquot share of respondent Alejandro
is concerned. Being a co-owner, Alejandro can validly and legally dispose of his
share even without the consent of all the other co-heirs. Since the balance of the full
price has not yet been paid, the amount paid shall represent as payment to his
aliquot share. This then leaves the sale of the lot of the Altamiranos to the Spouses
Lajarca valid only insofar as their shares are concerned, exclusive of the aliquot part
of Alejandro, as ruled by the CA.
Rogelio Dantis vs. Julio Maghinang, Jr.
G.R. No. 191696, April 10, 2013
Facts: A complaint for quieting of title and recovery of possession with damages
filed by petitioner Rogelio Dantis against respondent Julio Maghinang, Jr. before the
RTC of Bulacan. Rogelio alleged that he was the registered owner of a parcel of land
covered by Transfer Certificate of Title (TCT) No. T-125918 located in Sta. Rita, San
Miguel, Bulacan. He acquired ownership of the property through a deed of
extrajudicial partition of the estate of his deceased father. Julio, Jr. occupied and
built a house on a portion of his property without any right at all. Demands were
made upon Julio, Jr. that he vacate the premises but the same fell on deaf ears.
Thus, Dantis prayed that judgment be rendered declaring him to be the true and
real owner of the parcel of land covered by TCT No. T-125918 and ordering Julio, Jr.
to deliver the possession of that portion of the land he was occupying and to pay
rentals for his occupation thereon.
In his Answer, Julio, Jr. denied the material allegations of the complaint and claimed
that he was the actual owner of the subject lot, where he was living. He claimed
that he had been in open and continuous possession of the property for almost
thirty (30) years and the subject lot was once tenanted by his ancestral relatives
until it was sold by Dantis father (Emilio) to his father (Julio, Sr.). He succeeded to
the ownership of the subject lot after his father died and that he was entitled to a
separate registration of the subject lot on the basis of the documentary evidence of
sale and his open and uninterrupted possession of the property.
The RTC rendered its decision declaring Rogelio as the true owner of the entire lot
located in Sta. Rita, San Miguel, Bulacan, as evidenced by his TCT over the same.
The RTC did not lend any probative value on the documentary evidence of sale
adduced by Julio, Jr. consisting of: 1) an affidavit allegedly executed by Ignacio
Dantis, Rogelios grandfather, whereby said affiant attested, among others, to the
sale of the subject lot made by his son, Emilio, to Julio, Sr. and 2) an undated
handwritten receipt of initial down payment in the amount of 100.00 supposedly
issued by Emilio to Julio, Sr. in connection with the sale of the subject lot. The RTC
ruled that even if these documents were adjudged as competent evidence, they
would only serve as proofs that the purchase price for the subject lot had not yet

been completely paid and, hence, Rogelio was not duty-bound to deliver the
property to Julio, Jr. The RTC found Julio, Jr. to be a mere possessor by tolerance.
On appeal, the CA reversed the decision of the trial court. It ruled that ruled that the
partial payment of the purchase price, coupled with the delivery of the res, gave
efficacy to the oral sale and brought it outside the operation of the statute of frauds.
It also declared that Julio, Jr. and his predecessors-in-interest had an equitable claim
over the subject lot, which imposed on Rogelio and his predecessors-in-interest a
personal duty to convey what had been sold after full payment of the selling price.
Issue/s: W/N there was a perfected oral contract of sale between Emilio and Julio, Sr.
regarding the subject parcel of land?
Held: The Supreme Court held that there was no valid and perfected oral contract
for failure of Julio, Jr. to prove the concurrence of the essential requisites of a
contract of sale by adequate and competent evidence.
By the contract of sale, one of the contracting parties obligates himself to transfer
the ownership of, and to deliver, a determinate thing, and the other to pay therefor
a price certain in money or its equivalent. A contract of sale is a consensual contract
and, thus, is perfected by mere consent which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to constitute the
contract. Until the contract of sale is perfected, it cannot, as an independent source
of obligation, serve as a binding juridical relation between the parties.
The essential elements of a contract of sale are: a) consent or meeting of the minds,
that is, consent to transfer ownership in exchange for the price; b) determinate
subject matter; and c) price certain in money or its equivalent. The absence of any
of the essential elements shall negate the existence of a perfected contract of sale.
Julio, Jr. wanted to prove the sale by a receipt when it should be the receipt that
should further corroborate the existence of the sale. At best, his testimony only
alleges but does not prove the existence of the verbal agreement. Julio, Jr. miserably
failed to establish by preponderance of evidence that there was a meeting of the
minds of the parties as to the subject matter and the purchase price. The purported
receipt does not specify a determinate subject matter. Nowhere does it provide a
description of the property subject of the sale, including its metes and bounds, as
well as its total area. The Court notes that while Julio, Jr. testified that the land
subject of the sale consisted of 352 square meters, the receipt, however, states that
its more than 400 square meters. Moreover, the receipt does not categorically
declare the price certain in money. Neither does it state the mode of payment of the
purchase price and the period for its payment.
Therefore, it cannot be said that a definite and firm sales agreement between the
parties had been perfected over the lot in question. The Court had ruled in several
cases that a definite agreement on the manner of payment of the purchase price is
an essential element in the formation of a binding and enforceable contract of sale.
The fact, therefore, that the petitioners delivered to the respondent the sum of
P10,000 as part of the down payment that they had to pay cannot be considered as
sufficient proof of the perfection of any purchase and sale agreement between the

parties herein under Art. 1482 of the new Civil Code, as the petitioners themselves
admit that some essential matter - the terms of payment - still had to be mutually
covenanted.
Sps. Lehner and Ludy Martires vs. Menelia Chua
G.R. No. 174240, March 20, 2013
Facts: Respondent Menelia Chua borrowed from Petitioner Spouses the amount of
P150,000. The loan was secured by a real estate mortgage over the twenty-four
memorial lots located at the Holy Cross Memorial Park respondent co-owned with
her mother. Respondent failed to fully settle her obligation. Subsequently, without
foreclosure of the mortgage, ownership of the subject lots was transferred in the
name of petitioners via a Deed of Transfer. On June 23, 1997, respondent filed with
the RTC of Quezon City a Complaint against the petitioners, Manila Memorial Park
Inc. (the company which owns the Holy Cross Memorial Park), and the Register of
Deeds of Quezon City, praying for the annulment of the contract of mortgage
between her and petitioners on the ground that ownership of the subject lots was
transferred in the name of petitioners by virtue of a forged Deed of Transfer and
Affidavit of Warranty.
After trial, the RTC of Quezon City rendered a Decision in favor of the petitioners and
Manila Memorial Park Cemetery, Inc. On appeal, the CA affirmed the decision of the
trial court. The CA ruled that respondent voluntarily entered into a contract of loan
and that the execution of the Deed of Transfer is sufficient evidence of petitioners'
acquisition of ownership of the subject property. However, the CA subsequently
reversed its decision on ground that the Deed of Transfer which, on its face,
transfers ownership of the subject property to petitioners was, in fact, an equitable
mortgage. The CA held that the true intention of respondent was merely to provide
security for her loan and not to transfer ownership of the property to petitioners.
Issue/s:
W/N contract is an equitable mortgage?
W/N ownership of the subject lots may be transferred without foreclosure of the
mortgage?
Held: The Supreme Court held that the contract is an equitable mortgage. The
subject lots, however, may not be transferred without foreclosure due to a forged
Deed of Transfer and Affidavit of Warranty.
An equitable mortgage has been defined as one which, although lacking in some
formality, or form or words, or other requisites demanded by a statute, nevertheless
reveals the intention of the parties to charge real property as security for a debt,
there being no impossibility nor anything contrary to law in this intent.
One of the circumstances provided for under Article 1602 of the Civil Code, where a
contract shall be presumed to be an equitable mortgage, is "where it may be fairly
inferred that the real intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation." In the instant case,
it has been established that the intent of both petitioners and respondent is that the
subject property shall serve as security for the latter's obligation to the former. As
correctly pointed out by the CA, the circumstances surrounding the execution of the
disputed Deed of Transfer would show that the said document was executed to

circumvent the terms of the original agreement and deprive respondent of her
mortgaged property without the requisite foreclosure.
Since the original transaction between the parties was a mortgage, the subsequent
assignment of ownership of the subject lots to petitioners without the benefit of
foreclosure proceedings, partakes of the nature of a pactum commissorium, as
provided for under Article 2088 of the Civil Code. Pactum commissorium is a
stipulation empowering the creditor to appropriate the thing given as guaranty for
the fulfilment of the obligation in the event the obligor fails to live up to his
undertakings, without further formality, such as foreclosure proceedings, and a
public sale.
In the instant case, evidence points to the fact that the sale of the subject property,
as proven by the disputed Deed of Transfer, was simulated to cover up the
automatic transfer of ownership in petitioners' favor. While there was no stipulation
in the mortgage contract which provides for petitioners' automatic appropriation of
the subject mortgaged property in the event that respondent fails to pay her
obligation, the subsequent acts of the parties and the circumstances surrounding
such acts point to no other conclusion than that petitioners were empowered to
acquire ownership of the disputed property without need of any foreclosure.
Furthermore, the Court cannot fathom why respondent would agree to transfer
ownership of the subject property, whose value is much higher than her outstanding
obligation to petitioners. Considering that the disputed property was mortgaged to
secure the payment of her obligation, the most logical and practical thing that she
could have done, if she is unable to pay her debt, is to wait for it to be foreclosed.
She stands to lose less of the value of the subject property if the same is foreclosed,
rather than if the title thereto is directly transferred to petitioners. This is so
because in foreclosure, unlike in the present case where ownership of the property
was assigned to petitioners, respondent can still claim the balance from the
proceeds of the foreclosure sale, if there be any. In such a case, she could still
recover a portion of the value of the subject property rather than losing it
completely by assigning its ownership to petitioners.
Ali Akang vs. Municipality of Isulan, Sultan Kudarat Province
G.R. No. 186014, June 26, 2013
Facts: Ali Akang, herein petitioner, is a member of the national and cultural
community belonging to the Maguindanaon tribe of Sultan Kudarat. Sometime in
1962, he sold his two hectare portion of his property to the Municipality of Isulan,
Province of Sultan Kudarat through then Mayor Datu Ampatuan under a Deed of
Sale executed on July 18, 1962. Herein respondent immediately took possession of
the property and began construction of the municipal building. 39 years later, or on
October 26, 2001, petitioner together with his wife, filed at the RTC of Isulan,
Sultan Kudarat a Complaint for Recovery of Possession of Subject Property and/or
Quieting of Title thereon and damages. According to petitioner, the agreement was
a contract to sell and not a contract of sale and since there was allegedly, no
payment of the purchase price, the contract to sell has not been consummated.
The RTC held that it was a contract to sell while the CA held that the Deed of Sale is
not a mere contract to sell but a perfected contract of sale and that said Deed of

Sale already transferred ownership of the subject land to the Municipality of

Sultan Kudarat. Hence, this petition.
Issue/s: W/N the contract in this present case was to sell and not of sale?
Held: The SC held that the Deed of Sale is a valid contract of sale, and hence,
petitioner is not entitled to recover the subject land. Accordingly, the SC
differentiated the contract of sale from a contract to sell. A contract of sale is
defined under Article 1458 of the NCC as By the contract of sale, one of the parties
obligates himself to transfer the ownership of and to deliver a determinate thing,
and the other to pay therefore a price certain in money or its equivalent. The
elements being: 1) consent or meeting of the minds, that is, consent to transfer
ownership in exchange for the price; 2) determinate subject matter; and 3) price
certain in money or its equivalent. On the other hand, a contract to sell is defined
under Article 1479 of the NCC as A bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite
delivery thereof to the prospective buyer, binds himself to sell the said property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon,
that is, full payment of the purchase price.
In a contract of sale, title to the property passes to the buyer upon the delivery of
the thing sold, whereas in a contract to sell, the ownership is, by agreement,
retained by the seller and is not to pass to the vendee until full payment of the
purchase price. The deed of sale executed by the petitioner and the respondent is a
perfected contract of sale, all its elements being present. With regard to the
allegation of non-payment, it is immaterial and has no effect on the validity of the
contract of sale, assuming arguendo that there was indeed non- payment, for the
reason that a contract of sale is a consensual contract and what is required is the
meeting of the minds on the object and the price for its perfection and validity. In
this case, the contract was perfected the moment the petitioner and the respondent
agreed on the object of the sale (the 2 hectare parcel of a land) and the price
(P3000). Non-payment of the purchase price merely gave rise to a right in favor of
the petitioner to either demand specific performance or rescission of the contract of
sale.

Moldex Realty Inc. vs. Flora Saberon

G.R. No. 176289, April 8, 2013
Facts: Petitioner, Moldex Realty Inc., was requested by Respondent Saberon to
reserve a lot in Cavite, which was supported by a reservation application.
Respondent paid the necessary monthly amortizations with interests and surcharges
upon delays and made periodical payments from 1992-1996. Moldex sent Flora a
notarized Notice of Cancellation of Reservation Application and Contract to Sell
upon finding out that the latter has an unpaid account which amounted to
P576,569.89. Flora then filed before the Housing and Land Use Regulatory Board
(HLURB) a complaint for the annulment of the contract to sell, recovery of her
interests, damages, and cancellation of Moldexs license to sell. Flora contended
that Moldex violated Section 5 of PD No. 957 when it sold to her the subject lot

before it was issued a license to sell. On the other hand, Moldex contended that it
exercised its right under the Maceda Law since Flora was unable to settle her
account. Moldex cancelled the reservation agreement and forfeited all the
payments made. HLURB Arbiter ruled that the Contract to Sell was void because of
the lack of license to sell by Moldex. On appeal, the Office of the President affirmed
the HLURB Arbiters decision. The CA also agreed with the findings of the HLURB
Arbiter that contract to sell was void for non-observance of the mandatory provision
of Section 5 of PD No. 957.
Issue/s: W/N the contract to sell entered by the parties was valid and binding?
Held: Yes. The Supreme Court ruled that the contract to sell is valid. The lack of a
certificate of registration and a license to sell does not result to the nullification or
invalidation of the contract to sell entered into with a buyer. However, respondent
Flora is entitled to a fifty percent (50%) refund under the Maceda Law. According to
the law, a buyer who has paid at least two years of instalments has the right of
either to avail the grace period to pay or the cash surrender value.

Heirs of Fausto Igancio, et. al. vs. Home Bankers Savings and Trust Co, et. al.
G.R. No. 177783, January 23, 2013
Facts: In August 1991, Petitioner Fausto mortgaged two parcels of land to Home
Savings Bank and Trust Company, as security for the P500,000 loan extended to
him by the respondent bank. When petitioner defaulted in the payment of his loan,
respondent bank proceeded to foreclose the real estate mortgage. Foreclosure sale
was held on January 26,1983. The respondent bank was the highest bidder during
the foreclosure sale and purchased the subject property for the sum of P764,984.
On February 2, 1983, a certificate of foreclosure sale issued to respondent bank was
registered with the Registry of Deeds in Calamba Laguna.
Petitioner failed to redeem property within one year. Despite the lapse of the
redemption period, petitioner offered to repurchase property. While respondent
considered the offer of repurchase, there was no repurchase contract executed
between them. Petitioner, in a letter, expressed his willingness to pay the amount of
P600,000 in full as balance of repurchase price and requested respondent bank to
release to him the remaining parcel of lands. Respondent bank turned down the
offer, which made petitioner to cause the annotation of an adverse claim on the title
on September 18,1989.
Prior to the annotation, respondent bank sold subject property to respondent
spouses Philip and Thelma Rodriguez, without informing petitioner. On December
27, 1989, petitioner filed an action for specific performance and damages in the RTC
against respondent bank, claiming that there was a verbal agreement regarding the
repurchase between himself and the banks collection agent, Universal Properties
Inc. (UPI). He argued that there was implied acceptance of the counter-offer of the
sale through the receipt of the terms by representatives of UPI. The bank denied
that it gave its consent to the counter-offer of petitioner. It countered that it did not
approve the unilateral amendments placed by the petitioner.

Issue/s: W/N contract for the repurchase of the foreclosed properties was perfected?
Held: No. The Supreme Court declared that the Bank as a corporation can only
exercise its powers and transact business through its board of directors or officers
and agents authorized by a board resolution or its by-laws. A person representing
the corporation in negotiations must be authorized by the corporation to accept the
counter-offer to a sale. Since the respondent bank did not accede to the counter
proposal of the petitioner, there was no valid acceptance of the offer.
Section 23 of the Corporation Code mandates that a corporation shall only act
through a board of directors. An agent cannot bind a corporation in any contract
without delegation of powers from the board. Mere communication of modified
terms to a bank agent who gave his assent has no effect on the corporation.
A contract of sale is perfected only when there is consent validly given. There is no
consent when a party merely negotiates a qualified acceptance or a counter-offer.
An acceptance must reflect all aspects of the offer to amount to a meeting of the
minds between the parties.
In this case, while it is apparent that petitioner proposed new terms and conditions
to the repurchase agreement, there was no showing that the Bank approved the
modified offer. The negotiations between petitioner and UPI, the collection agent,
were merely preparatory to the repurchase agreement and, therefore, was not
binding on the respondent bank. Petitioner could not compel the bank to accede to
the repurchase of the property.

Sps. Esmeraldo and Arsenia Allido vs. Sps. Elmer and Juliet Pono,
and Purificacion Cernapong
G.R. No. 200173, April 15, 2013
Facts: Martino Danan, the registered owner of a parcel of land in Kananga Leyte,
sold a portion of the property to respondent Purificacion Cernapong. Upon execution
of the Deed of Absolute Sale, Martino gave Purificacion the owners copy of OCT No.
P-429. The transfer, however, was not recorded in the Registry of Deeds.
Purificacion Cernapong subsequently sold the property to Marianito Pono. Marianito
registered the portion he bought for taxation purposes, paid its taxes, took
possession, and allowed his son respondent Elmer Pono (Elmer) and daughter-inlaw, Juliet Pono (Juliet), to construct a house thereon. Marianito kept OCT No. P-429.
The transfer, however, was also not recorded in the Registry of Deeds. When
Martino Dandan left Leyte, he sold the whole property to his grandson, petitioner
Esmeraldo Allido. Martino Danan was able to request for a duplicate title and gave it
to Esmeraldo in which he registered the deed of sale in the Registry of Deeds and a
Transfer of Certificate of Title was issued under petitioners name. Petitioners,
thereafter, filed a complaint of quieting of title, recovery of possession of real
property and damages against the respondents.

RTC promulgated a decision favoring the petitioners. The trial court held that there
was a double sale under Article 1544 of the Civil Code. The respondents were the
first buyers while the petitioners were the second buyers. The trial court deemed
the petitioners as buyers in good faith because during the sale the tile of the subject
property was clean and free from all liens. The petitioners were also deemed
registrants in good faith because at the time of the registration of the deed of sale,
both OCT No. P-429 and TCT No. TP-13294 did not bear any annotation or mark of
any lien or encumbrance. The trial court concluded that because the petitioners
registered the sale in the Register of Deeds, they had a better right over the
respondents.
Upon appeal, the CA ruled in favor of the respondents. The CA agreed that there
was a double sale. It, however, held that the petitioners were neither buyers nor
registrants in good faith. The respondents indisputably were occupying the subject
land. It wrote that where the land sold was in the possession of a person other than
the vendor, the purchaser must go beyond the certificate of title and make inquiries
concerning the rights of the actual possessors. It further stated that mere
registration of the sale was not enough as good faith must concur with the
registration. Thus, it ruled that the petitioners failed to discharge the burden of
proving that they were buyers and registrants in good faith. Accordingly, the CA
concluded that because the sale to Purificacion took place in 1960, thirty (30) years
prior to Esmeraldos acquisition in 1990, the respondents had a better right to the
property. Hence, this petition.
Issue/s: W/N petitioner spouses were buyers and registrants in good faith?
Held: No. The Supreme Court ruled that there was a double sale in this case and
that the respondents are the first buyers while the petitioners are the second
buyers. The burden of proving good faith lies with the second buyer, petitioners
herein, which they failed to discharge. Based on the privity between petitioner
Esmeraldo and Martino, the petitioner as a second buyer is charged with
constructive knowledge of prior dispositions or encumbrances affecting the subject
property. The second buyer who has actual or constructive knowledge of the prior
sale cannot be a registrant in good faith.
Although it is a recognized principle that a person dealing on a registered land need
not go beyond its certificate of title, it is also a firmly settled rule that where there
are circumstances which would put a party on guard and prompt him to investigate
or inspect the property being sold to him, such as the presence of
occupants/tenants thereon, it is expected from the purchaser of a valued piece of
land to inquire first into the status or nature of possession of the occupants. As in
the common practice in the real estate industry, an ocular inspection of the
premises involved is a safeguard that a cautious and prudent purchaser usually
takes. Should he find out that the land he intends to buy is occupied by anybody
else other than the seller who, as in this case, is not in actual possession, it would
then be incumbent upon the purchaser to verify the extent of the occupants
possessory rights.
The failure of a prospective buyer to take such precautionary steps would mean
negligence on his part and would preclude him from claiming or invoking the rights
of a "purchaser in good faith." In this case, petitioners, as prospective buyers,
should have investigated the land. There were evidences that should have

prompted the petitioners that land is occupied by respondent before. Petitioners

admitted that there were improvements on the land such as a house erected with
permanent materials. Therefore, petitioners cannot be considered buyers in good
faith, having not shown any diligence in protecting their rights.

Sps. Deo and Maricon Agner vs. BPI Family Savings Bank Inc.
G.R. No. 182963, June 3, 2013
Facts: Petitioner spouses Agner executed a promissory note and attached a 2001
Mitsubishi Adventure Super Sport car as chattel mortgage in favor of Citimotors Inc.
Under the contract, petitioners obliged themselves to pay P17,391 on the 15 th of
every succeeding month until fully paid. Citimotors Inc. assigned all its rights, title,
and interests of the promissory note with chattel mortgage to ABN AMRO Savings
Bank Inc., which the latter assigned to respondent BPI Family Savings Bank.
Petitioners failed to pay four successive instalments which prompted the respondent
bank to send a demand letter declaring the entire obligation due and demandable.
Despite the demand letter, petitioners still refused to pay the obligation.
Respondent bank then filed an action for replevin and damages at the RTC of
Manila.
Despite of the writ of replevin issued by the RTC, the vehicle was not seized. The
trial court ruled for the respondent and ordered petitioners to jointly and severally
pay the amount of Php576,664.04 plus interest at the rate of 72% per annum from
August 20, 2002 until fully paid, and the costs of suit. Petitioners appealed the
decision to the CA, which only affirmed the lower court's decision.
Issue/s: W/N action for replevin and collection of sum of money is contrary to the
Recto Law?
Held: No. The Supreme Court held that the remedies provided in Article 1484 of the
Civil Code or the Recto Law are alternative, and not cumulative. The vehicle subject
matter of this case was never recovered and delivered to respondent despite the
issuance of a writ of replevin. As there was no seizure that transpired, it cannot be
said that petitioners were deprived of the use and enjoyment of the mortgaged
vehicle or that respondent pursued, commenced or concluded its actual foreclosure.
The trial court, therefore, rightfully granted the alternative prayer for sum of money,
which is equivalent to the remedy of "[e]xact[ing] fulfilment of the obligation."

Joselito Borromeo vs. Juan Mina

G.R. No. 193747, June 5, 2013
Facts: Petitioner Borromeo allegedly purchased a property which was previously
owned by Serafin Garcia as evidenced by a deed of sale notarized on February 19,
1982. Petitioner was unable to effect the transfer the title to his name for an
unknown reason. Thereafter, he discovered that an emancipation patent was issued
to respondent Mina without any notice to him. After an investigation conducted, it

was discovered that the property was erroneously identified by the office as the
property of petitioners father, Cipriano Borromeo. It was never owned by
petitioners father as the true owner was Serafin M. Garcia. Department of Agrarian
Reform (DAR) Regional Director, upon discovering the error, did not order the
cancellation of respondents emancipation patent. He merely directed the petitioner
to institute a proceeding before the DAR Adjudication Board. The DAR Secretary
affirmed the decision of the Regional Director but the CA reversed and set aside the
ruling. The CA found the said sale to be null and void for being a prohibited
transaction under PD 27, which forbids the transfers or alienation of covered
agricultural lands after October 21, 1972 except to the tenant-beneficiaries thereof,
of which petitioner was not.
Issue/s: W/N the CA erred in declaring the sale between petitioner and Garcia null
and void?
Held: No. The Supreme Court held that the transfer of ownership over the lands
after October 21, 1972 is allowed only in favor of the actual tenant-tillers. Records
revealed that the subject landholding fell under the coverage of PD 27 on October
21, 1972, and as such, could have been subsequently sold only to the tenant
thereof, i.e., the respondent. On the other hand, Garcia sold the property in 1982 to
the petitioner who is evidently not the tenant-beneficiary of the same, the said
transaction is null and void for being contrary to law.
In consequence, petitioner cannot assert any right over the subject landholding,
such as his present claim for landholding exemption, because his title springs from
a null and void source. A void contract is equivalent to nothing; it produces no civil
effect; and it does not create, modify or extinguish a juridical relation. Hence,
notwithstanding the erroneous identification of the subject landholding by the MARO
as owned by Cipriano Borromeo, the fact remains that petitioner had no right to file
a petition for landholding exemption since the sale of the said property to him by
Garcia in 1982 is null and void.

Sps. Purificacion and Ruperto Estanislao vs. Sps. Norma and Damiano Gudito
G.R. No. 173166, March 13, 2013
Facts: Respondents (Gudito spouses) are the owners of a residential lot being leased
by petitioners Estanislao spouses) on a month-to-month basis. Petitioners had been
renting and occupying the subject lot since 1934 and were the ones who built the
house on the subject lot in accordance with their lease agreement with one Gaspar
Vasquez. When Gaspar Vasquez died, the portion of the lot on which petitioners
house was erected was inherited by his son Victorino Vasquez. The Vasquez spouses
then wanted the Estanislao family and the other tenants to vacate the said
property, but the tenants refused. Therefore, the Vasquez spouses refused to accept
their rental payments. Petitioner Purificacion Estanislao, with due notice to Ester
Vasquez, deposited the amount of her monthly rentals at Allied Banking Corporation
under a savings account in the name of Ester Vasquez as lessor.

Meanwhile, a Deed of Donation was executed by the Vasquez spouses in favor of

respondent Norma Vasquez Gudito. Respondents then notified petitioners to remove
their house and vacate the premises within three months because of their urgent
need of the residential lot. However, petitioners failed to comply. Respondents then
filed a Complaint for Unlawful Detainer/Ejectment against petitioners before the
MeTC of Manila. The trial court rendered a Decision in favor of respondents. On
appeal, the RTC of Manila rendered a Decision reversing the MeTCs decision.
Dissatisfied, respondents interposed an appeal before the CA. The CA annulled and
set aside the RTCs decision and reinstated the MeTCs decision. Hence, this
petition.
Issue/s: W/N Estanislao spouses right of first refusal over the land they have leased
is a valid defense to deny the Gudito spouses of their inherent right to possess the
subject property?
Held: The Supreme Court held that Petitioners cannot use P.D. 1517 as a shield to
deny respondents of their inherent right to possess the subject property.
Furthermore, the Gudito spouses have overwhelmingly established their right of
possession by virtue of the Deed of Donation made in their favour, and therefore,
had the right to eject the Estanislao spouses from the subject residential lot.
The Gudito spouses have complied with the provisions of the law in order for them
to legally eject the petitioners. Section 5 (c) of Batas Pambansa Blg. 25 states:
Sec. 5. Grounds for judicial ejectment. Ejectment shall be allowed on the following
grounds:
xxxx
(c) Legitimate need of owner/ lessor to repossess his property for his own use or for
the use of any immediate member of his family as a residential unit, such owner or
immediate member not being the owner of any other available residential unit
within the same city or municipality: Provided, however, that the lease for a definite
period has expired: Provided, further, that the lessor has given the lessee formal
notice within three (3) months in advance of the lessors intention to repossess the
property: Provided, finally, that the owner/ lessor is prohibited from leasing the
residential unit or allowing its use by a third party for at least one year.
They have urgent need of the same to build their own house to be used as their
residence. Also, petitioners had already been asked to leave the premises as early
as 1982, but sternly refused, hence, its former owners refused to accept their rental
payments. When the same property was donated to respondents, petitioners were
allowed to continue occupying the subject lot since respondents did not as yet have
the money to build a house of their own. But now that respondents have sufficient
money to build their own house, petitioners still rebuff respondents demand to
vacate the premises and to remove or demolish their house. Clearly, since
respondents have complied with the requirements of the law, their right to possess
the subject property for their own use as family residence cannot be denied.
Furthermore, petitioners have failed to prove that the transfer of the subject
property was merely a ploy designed to defeat and circumvent their right of first
refusal under the law. As emphasized by the CA, the Deed of Donation executed in

favor of respondents was signed by the parties and their witnesses, and was even
notarized by a notary public.
By the same token, this Court is not persuaded with petitioners insistence that they
cannot be evicted in view of Section 6 of P.D. 1517, which states
SECTION 6. Land Tenancy in Urban Land Reform Areas. Within the Urban Zones
legitimate tenants who have resided on the land for ten years or more who have
built their homes on the land and residents who have legally occupied the lands by
contract, continuously for the last ten years shall not be dispossessed of the land
and shall be allowed the right of first refusal to purchase the same within a
reasonable time and at reasonable prices, under terms and conditions to be
determined by the Urban Zone Expropriation and Land Management Committee
created by Section 8 of this Decree. (Emphasis and underscoring supplied)
Under P.D. 1517, in relation to P.D. 2016, the lessee is given the right of first refusal
over the land they have leased and occupied for more than ten years and on which
they constructed their houses. But the right of first refusal applies only to a case
where the owner of the property intends to sell it to a third party. If the owner of the
leased premises do not intend to sell the property in question but seeks to eject the
tenant on the ground that the former needs the premises for residential purposes,
the tenant cannot invoke the land reform law."
Clearly, the circumstances required for the application of P.D. 1517 are lacking in
this case, since respondents had no intention of selling the subject property to third
parties, but seek the eviction of petitioners on the valid ground that they need the
property for residential purposes.

Sps. Alberto and Susan Castro vs. Amparo Palenzuela, et. al.
G.R. No. 184698, January 21, 2013
Facts: Respondents are owners of several fishponds in Bulacan, which were leased
to Spouses Alberto and Susan Castro for a period of five years. The petitioners,
spouses Castro, only vacated the fishponds forty-one days after the expiration date
of the contract. Previously, or on July 22, 1999, respondents sent a letter to
petitioners declaring the latter as trespassers and demanding the settlement of the
latters outstanding obligations, including rent for petitioners continued stay within
the premises, in the amount of P378,451, which was unheeded. This led the
respondents to file a case for collection of sum of money with damages.
Respondents contended that petitioners violated their lease agreement; which
terms were the following: non-payment of rents, failure to maintain the warehouses,
subletting the fishponds, and refusal to vacate the premises on the expiration of the
lease stipulated in the contract.
The RTC of Quezon City issued its Decision holding that petitioners violated the
terms of the lease agreement, and thus, liable to the respondents. On appeal, the
CA held that the preponderance of evidence, which remained uncontroverted by
petitioners, points to the fact that petitioners indeed failed to pay rent in full,
considering that their postdated checks bounced upon presentment, and their

unauthorized extended stay from July 1 until August 11, 1999. It added that
petitioners were undeniably guilty of violating several provisions of the lease
agreement, as it has also been shown that they failed to pay rent on time and
illegally subleased the property to one Cynthia Reyes, who even made direct
payments of rentals to respondents on several occasions.
Issue/s: W/N respondents were authorized to charge additional rents for petitioners
extended stay beyond the period for the lease agreement, even though it was
stipulated in the agreement itself?
Held: Yes. The Supreme Court ruled that the fact that petitioners accepted the
demand letter dated July 22, 1999, which was a charge for additional rent, this was
an admitted liability on their part. Petitioners could have rejected the demand letter.
The court also ruled in the contention of respondents that when the petitioners
continued enjoying the premises when the lease expired, there was an implied new
lease that was created which they have the obligation to pay additional rent.
According to Article 1670 of the Civil Code, if at the end of the contract the lessee
should continue enjoying the thing leased for fifteen days with the acquiescence of
the lessor, and unless a notice to the contrary by either party has previously been
given, it is understood that there is an implied new lease, not for the period of the
original contract, but for the time established in Articles 1682 and 1687 of the Civil
Code.
Sps. Benjamin and Sonia Mamaril vs. The Boy Scout of the Philippines, AIB Security
Agency, Inc., Cesario Pena, and Vicente Gaddi
G.R. No. 179382, January 14, 2013
Facts: Spouses Benjamin and Sonia Mamaril are jeepney operators. The spouses
owned six passengers jeepneys, which they would park every night at the Boy Scout
of the Philippines (BSP) for a fee of P300 per month for each unit. On May 26, 1995
at 8 oclock in the evening, all of the vehicles were parked inside the BSP
compound. However, the following morning, one of the vehicles was missing and
was never recovered. According to the security guards, Cesario Pena and Vincente
Gaddi, of AIB Security Agency Inc, with whom BSP contracted for security and
protection, it was a male person who took the vehicle out of the compound. They
claimed he looked familiar.
Thereafter, the spouses Mamaril filed a complaint for damages before the RTC of
Manila against BSP, AIB, Pena and Gaddi. The spouses contended that the loss was
due to the gross negligence of the security guards. However, BSP and AIB refused to
be liable. BSP contended that the parking ticket itself expressly stated that the
Management shall not be responsible for loss of vehicle or any of its accessories or
article left therein. It also contended that spouses wrongfully relied on the guard
service contract, which they are not parties to, because the provision only covers
BSPs properties. AIB, on the other hand, contended that it observed due diligence
in the selection, training and supervision of its security guards. Therefore, they were
not liable to the petitioners.

Issue/s: W/N BSP should be held liable based on the Guard Service Contract and the
parking ticket it issued?
Held: No. the Supreme Court held that BSP is not liable based on the Guard Service
Contract and parking agreement. The spouses are not parties to the Guard Service
Contract. The said contract is between BSP and AIB Security Agency, and there is
nothing which states that it will be responsible for third persons.
Court held that what the BSP and Spouses entered into was a contract of lease
according to Article 1643 of the Civil Code. It had been held by the court that the
act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease.
According to Article 1664 of the Civil Code, the lessor is not obliged to answer for a
mere act of trespass, which a third person may cause on the use of the thing leased
but the lessee shall have a direct action against the intruder. The spouses should
recover only from the tortfeasors, which are the security guards and their employer,
AIB.

Licomcen Inc. vs. Engr. Salvador Abainza

G.R. No. 199781, February 18, 2013
Facts: Respondent Engr. Salvador Abainza filed an action for sum of money and
damages against Liberty Commercial Center Inc. (Liberty) at the RTC of Legazpi City.
Respondent alleged that in 1997 and 1998, he was hired by LICOMCEN to various
projects in their commercial centers, mainly at the LCC Central Mall, Naga City, for
the supply, fabrication, and installation of air-conditioning ductworks. Respondent
completed the project, which included some changes and revisions of the original
plan at the behest of Liberty. However, despite several demands by respondent,
Liberty failed to pay the remaining balance due on the project in the sum of
P1,777,202.80.
Liberty denied the material allegations of the complaint and countered that the
collection suit was not filed against the real party-in-interest. Thus, respondent
amended his complaint to include petitioner as defendant. The HRD Administrative
Manager of Liberty testified that petitioner LICOMCEN, Inc. is a sister company of
Liberty and that the incorporators and directors of both companies are the same.
The RTC of Legazpi City held that LICOMCENs claim that it fully paid respondent the
total cost of the project in the amount of P6,700,000 is only to the cost of the
original plan, but the additional costs of P1,777,202.80 which pertains for labor,
materials, and equipment on the revised plan were not paid by LICOMCEN.
Issue/s: W/N petitioner is liable for the additional cost incurred that pertains to the
labor, materials, and equipment on the revised project?
Held: Yes. The Supreme Court held that petitioner is liable for the additional cost
incurred that pertains to the labor, materials, and equipment on the revised project.
The defense of petitioner invoking Article 1724 of the Civil Code is not applicable to
the case, which states that:

The contractor who undertakes to build a structure or any other work for a
stipulated price, in conformity with plans and specifications agreed upon with the
landowner, can neither withdraw from the contract nor demand an increase in the
price on account of the higher cost of labor or materials, save when there has been
a change in the plans and specifications, provided:
(1) Such change has been authorized by the proprietor in writing; and
(2) The additional price to be paid to the contractor has been determined in writing
by both parties.
The Court held that petitioner cannot invoke Article 1724 of the Civil Code to refuse
paying its obligation considering that the alleged original contract was never even
signed by both parties because of the various changes imposed by the petitioner on
the original plan.
Optima Realty Corporation vs. Hertz Philippines Exclusive Cars, Inc.
G.R. No. 183035, Januray 9, 2013
Facts: On December 12, 2002, Hertz Phil. Exclusive Cars Inc. entered into a contract
of lease with Petitioner Optima over a 131-square meters office unit and a parking
slot in the Optima Building for a period of three years, which began on March 1,
2003 and ended on February 28, 2006. On March 9, 2004, the parties amended
their lease contract by shortening lease period for two years and five months,
commencing on October 1, 2003 and ending on February 28, 2006. Renovations in
the Optima Building commenced in January and ended in November 2005, which
resulted in a 50% drop in the monthly sales of Hertz. This prompted them to request
a 50% discount on its rent. Optima granted the request of Hertz. However, Hertz
still failed to pay its rentals for a total of seven month. Hertz also failed to pay its
utility bills from November 2005 to February 2006. On December 8, 2005, Optima
wrote a letter reminding Hertz that the contract of lease could only be renewed only
by a new negotiation between the parties, and upon written notice by lessee to the
lessor at least 90 days prior to the termination of lease. Since no letter or response
was received from Hertz to re-negotiate, Optima informed that the lease will be
expiring on February 28, 2006 and would not be renewed. On December 21, 2005,
Hertz advised Optima to re-negotiate. However Optima no longer entertained the
request of Hertz since the renewal must be given by lessee at least 90 days prior to
expiration of contract.
Hertz, thereafter, filed a complaint for specific performance, injunction and
damages, and a sum of money with prayer for the issuance of a Temporary
Restraining Order and Writ of Preliminary Injunction against Optima. With Hertz
refusing to vacate the premises after the expiration of the lease, Optima, on the
other hand, filed a complaint for unlawful detainer and damages with prayer for the
issuance of a TRO and Preliminary Mandatory Injunction against Hertz. The MeTC
rendered a Decision, ruling that petitioner Optima had established its right to evict
Hertz from the subject premises due to non-payment of rentals and the expiration of
the period of lease. Finding no compelling reason to warrant the reversal of the
MeTCs Decision, the RTC affirmed it by dismissing the appeal in a Decision dated 16
March 2007. On appeal, the CA ruled that, due to the improper service of summons,
the MeTC failed to acquire jurisdiction over the person of respondent Hertz. The

appellate court, thereafter, reversed the RTC and remanded the case to the MeTC to
ensure the proper service of summons.
Issue/s: W/N the eviction of respondents was proper?
Held: Yes. The Supreme Court ruled that the eviction of the respondent Hertz was
proper. The Court held that Hertz failed to pay rental arrearages and utility bills to
Optima and the contract of lease expired without any request from Hertz for a
renegotiation at least 90 days prior to its expiration. The pertinent provision of the
Contract of Lease reads:
x x x The lease can be renewed only by a new negotiation between the parties upon
written notice by the LESSEE to be given to the LESSOR at least 90 days prior to
termination of the above lease period. x x x
As the lease was set to expire on 28 February 2006, Hertz had until 30 November
2005 within which to express its interest in negotiating an extension of the lease
with Optima.
However, Hertz failed to communicate its intention to negotiate for an extension of
the lease within the time agreed upon by the parties. Thus, by its own provisions,
the Contract of Lease expired on 28 February 2006. Under the Civil Code, failure of
the lessee to pay timely rentals and utility charges entitles the lessor to judicially
eject lessee. The expiry of the period agreed upon by parties is a valid ground for
judicial ejectment.
People vs. Benjamin Peteluna and Abundio Binondo
G.R. No. 187048, January 23, 2013
Facts: On April 30, 1996, Romeo Pialago, then 16 years old and Pablo Estomo, herein
murder victim, watched a cockfight during the Fiesta of Barangay Lamak, Barili,
Cebu. On their way home at about 5:00pm, Pablo followed by Peteluna and Binondo,
herein suspects respectively, followed by Romeo behind them, walked along the
road of Sitio Liki in Cebu. Romeo who knew herein appellants because they used to
pass by his house, noticed the two whispering to each other. He saw the
appellants place their arms around Pablos shoulder, after which they struck Pablo
with stones each of which was as big as a size of a fist. Pablo pleaded to them to
stop but they did not. When Pablo fell to the ground, Benjamin smashed his
head with a stone as big as Pablos head. Afterwards, they dragged the body
downhill towards the farm of one Efren Torion. Romeo did not know what happened
next as he ran to seek help. Pablo died of cerebral hemorrhage due to laceration
and contusion of the head.
The RTC of Cebu found suspects guilty of the crime of murder punishable by
reclusion perpetua, and held them liable to the heirs of Pablo in the amount of
P100,000 as indemnity. On appeal, the CA affirmed the judgment with modification
on the damages in the amount of P50,000, as civil indemnity, and P25,000, as
exemplary damages, to be paid by the appellants solidarily.
Issue/s: W/N the heirs of Pablo are entitled to moral damages as well?
Held: Yes. The heirs of Pablo are entitled not only to receive civil indemnity,
exemplary damages but also moral damages. The Supreme Court affirmed the

award by the CA of P50,000 as civil indemnity but increased the amount of

exemplary damages from P25,000 to P30,000 to conform to existing jurisprudence.
In addition, the victims heirs shall also be entitled to moral damages. According to
the SC, even in the absence of proof that his heirs suffered mentally and
emotionally, a violent death invariably and necessarily brings about emotional pain
and anguish on the part of the victims family. Hence, the award of moral
damages was proper, plus 6% interest on all the monetary awards for damages to
be reckoned from the date of finality of the judgment until fully paid.

People vs. Jonathan Uto Veloso y Rama

G.R. No. 188849, February 13, 2013
Facts: Appellant Jonathan Veloso was convicted of two counts of rape committed
against a 12 year old minor (AAA). The information was filed by the victims mother
(BBB). On April 4, 2000, at around 12:00pm, appellant went looking for BBBs
brother. He went to BBBs house asking her to accompany him to her brothers
house. Since she was busy, she declined. Appellant then insisted that AAA
accompany him instead, to which BBB consented. Thus, AAA together with her
cousin (CCC) left the house with appellant. Instead of taking a padyak or a trike,
appellant opted to take a boat. While in the middle of the river,
appellant threatened to hit CCC with a paddle if he would not jump off the boat.
Immediately after CCC jumped off, appellant steered the boat towards the riverbank
and made AAA lie in the water lily and grass covered banks. There he proceeded to
violate her, all the while threatening to drown her. After raping AAA twice, appellant
boxed AAA on her face, lips, stomach and thighs. Appellant then kicked AAA on the
stomach, slapped and smashed her face to the ground, and choked her until she
became unconscious.
The RTC found herein appellant guilty beyond reasonable doubt of the crime of rape
and sentenced him to imprisonment plus payment of moral and exemplary
damages, civil indemnity and costs. Upon appeal, the CA affirmed the conviction
and the awards except award of exemplary damages.
Issue/s: W/N the exclusion of the award of exemplary damages by the CA was
proper?
Held: No. The Supreme Court did not agree with the CAs deletion of exemplary
damages citing the case of People v. Alfredo. In that case, the Court explained the
nature of exemplary damages. Exemplary damages, also known as punitive or
vindictive damages, are intended to serve as a deterrent to serious wrong doings,
and as a vindication of undue sufferings and wanton invasion of the rights of an
injured or a punishment for those guilty of outrageous conduct. In common law,
exemplary damages account for injury to feelings and for the sense of indignity and
humiliation suffered by a person as a result of an injury that has been maliciously
and wantonly inflicted, the theory being that there should be compensation for the
hurt caused by the highly reprehensible conduct of the defendant--associated with
such circumstances as willfulness, wantonness, malice, gross negligence or

recklessness, oppression, insult or fraud or gross fraud-- that intensifies the

injury. This type of damages is directed to a person to punish him for his outrageous
conduct. This is intended in good measure to deter the wrongdoer and others like
him from doing the same thing again in the future.
Furthermore, being corrective in nature, exemplary damages can be awarded not
only in the presence of an aggravating circumstance but also where the
circumstances of the case show the highly reprehensible or outrageous conduct of
the offender. In much the same way as Article 2233 of the Civil Code prescribes an
instance when exemplary damages may be awarded, Article 2229 of the Civil Code,
the main provision, lays down the very basis of the award: to set a public example
or correction for the public good. Hence, appeal was dismissed and appellant was
ordered to pay for each count of rape, civil indemnity, moral damages, exemplary
damages and interest at 6% legal rate per annum from date of finality of the SC
decision.

People vs. Rey Monticalvo y Magno

G.R. No. 193507, January 30, 2013
Facts: This case is an appeal from the CA decision affirming in toto the RTC Branch
19 of Cataman, Northern Samar, finding herein appellant guilty beyond reasonable
doubt of the crime of rape of a demented person committed against AAA, a 12 year
old girl. The facts of the case are as follows, AAA is a mental retardate and at the
time was exactly 12 years and 11 months old. She and appellant who was then 17
years old are neighbors. In the afternoon of December 9, 2002, the victim and her
friend Analiza were in front of the sari-sari store of AAAs mother, BBB, while
appellant was inside the fence of their house adjacent to the said store. Shortly
thereafter, appellant invited AAA to go with him to the kiln at the back of their
house. AAA acceded and went ahead. Analiza followed without the appellant
noticing her and hid under a papaya tree. From there she saw appellant undress
AAA by removing the latters shorts and panty. Appellant, however, glanced and
saw Analiza. Frightened, Analiza ran away and went back to the sari-sari store of
BBB without telling BBB what she saw. When AAA arrived at their house at around
7:30 pm, BBB asked her why she came late and there learned the horrifying story of
such sexual intercourse at the back of their house. AAA herself testified in court
against herein appellant. The SC considered the minority of appellant herein at the
time of the commission and by virtue of the promulgation of RA 9344 otherwise
known as Juvenile Justice and Welfare Act of 2006 on May 200, 2006 remanded
the case to the lower court for appropriate disposition in accordance with Section 51
of RA 9344 which is the confinement of convicted children in agricultural camps and
other training facilities. It was noted that RA 9344 is retroactive and may apply to
convicts whether they are already of age at the time of their conviction, provided,
were still minors at the time of the commission of the offense.
Issue/s: W/N RA 9344 will affect the award of damages of a convicted minor?
Held: No. The civil liability resulting from the commission of the offense is not
affected by the appropriate disposition measures and shall be enforced in

accordance with law. The SC affirmed both the civil indemnity and moral damages
of P50,000 each respectively awarded by the lower courts in favor of AAA. Civil
indemnity, according to the Court, is actually in the nature of actual or
compensatory damages. It is mandatory upon the finding of fact of rape. Case law
also requires automatic award of moral damages to a rape victim without need of
proof because from the nature of the crime, it can be assumed that she has suffered
moral injuries entitling her to such award. Such award is separate and distinct from
civil indemnity. Moreover, exemplary damages are awarded to set a public example
and to protect hapless individuals from sexual molestation. The Court affirmed the
award of exemplary damages only that it was increased from P25,000 to P30,000 to
conform to recent jurisprudence.

People vs. Ramil Rarugal alais Amay Bisaya

G.R. No. 188603, January 16, 2013
Facts: On the night of October 19, 1998 at around 9:45 pm, while
victim Arnel Florendo was cycling along Sampaguita St., Brgy. Capari, Novaliches,
QC, herein appellant stabbed Florendo. After being stabbed twice on the chest, the
victim went home and under labored breathing, told his brother Renato that it was
appellant who stabbed him. Florendo died 7 days later in the hospital due to a cut or
puncture in his lungs caused by the stabbing. On May 29, 2006 the RTC of Quezon
City found appellant guilty beyond reasonable doubt of the crime of murder as
defined under Article 248 of the Revised Penal Code and was ordered to pay for
actual damages, civil indemnity, as well as, moral damages in the amounts of
P28,124.00, P50,000 and P50,000 respectively. Upon appeal, the CA affirmed with
modification the RTC decision on the amount of damages, wherein, herein appellant
was ordered to pay the heirs of the victim the amount of P27,896 as actual
damages and P25,000 as exemplary damages.
Issue/s: W/N the modification of the award actual and exemplary damages was
proper?
Held: Yes. The award of damages, according to the Supreme Court, when death
occurs due to a crime, the following may be recovered: 1) civil indemnity
ex delicto for the death of the victim; 2) actual or compensatory damages; 3) moral
damages; 4) exemplary damages; 5) attorneys fees and expenses of litigation; and
6) interest, in proper cases. The SC agreed with the CA that the heirs of the victim
were able to prove the actual damages based on the receipts they submitted.
Moreover, the award of exemplary damages was also held proper in this case
relative to the civil aspect, an aggravating circumstance, whether ordinary or
qualifying, should entitle the offended party to an award of exemplary damages
within the unbridled meaning of Article 2230 of the NCC. However, it was increased
by the SC to P30,000 and the award of civil indemnity to P75,000 in order to
conform to recent jurisprudence. Lastly, the SC sustained the RTC award of moral
damages in the amount of P50,000 even in the absence of proof of mental and
emotional suffering of the victims heirs. As borne out by human nature and
experience, a violent death invariably and necessarily brings about emotional pain

and anguish on the part of the victims family. Plus, 6% legal rate per annum from
date of finality of the Decision until fully paid.

Philippine National Construction Corporation vs. APAC Marketing Corportion

G.R. No. 190957, June 5, 2013
Facts: Respondent APAC Marketing Corp. filed a complaint against petitioner
Philippine National Construction Corporation (PNCC) for collection of sum of money
with damages arising from a simple purchase transaction for the delivery of crushed
basalt rock to PNCC. The RTC of Quezon City rendered a decision in favor of PNCC
ordering the ordering respondent to pay attorneys fees. The CA affirmed the ruling
of RTC. On 29 July 2009, herein petitioner filed a Motion for Reconsideration, which
raised the lone issue of the propriety of the award of attorneys fees in favor of
respondent. In said motion, petitioner fully agreed with the CA Decision imposing
6% legal interest per annum on the principal obligation and absolving Rogelio
Espiritu and Rolando Macasaet from any liability, as members of the board of
directors of PNCC. However, the petitioner the awarding attorneys fees in favor of
respondent.
Issue/s: W/N awarding of attorneys fees was proper?
Held: No. The Supreme Court agreed with the petitioners contention that the RTC
has no finding that would fall under any of the exceptions under Article 2208 of the
Civil code. Article 2208 of the civil code states the policy that should guide the
courts when awarding attorneys fees. According to the law, as a general rule,
parties may stipulate the recovery of attorneys fees. In the absence of such
stipulation, the article exclusively enumerates the instances when the fees may be
recovered.
Art. 2208. In the absence of stipulation, attorney's fees and expenses of litigation,
other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendant's act or omission has compelled the plaintiff to litigate with
third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiff's plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and skilled
workers;
(8) In actions for indemnity under workmen's compensation and employer's liability
laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorney's
fees and expenses of litigation should be recovered.

In all cases, the attorney's fees and expenses of litigation must be reasonable.
Award of attorneys fees under Article 2208 demands factual, legal, and equitable
justification to avoid speculation and conjecture surrounding the grant thereof. Due
to the special nature of the award of attorneys fees, a rigid standard is imposed on
the courts before these fees could be granted. Hence, it is imperative that they
clearly and distinctly set forth in their decisions the basis for the award thereof. It is
not enough that they merely state the amount of the grant in the dispositive portion
of their decisions.
The award of attorneys fees is an exception rather than the general rule; thus,
there must be compelling legal reason to bring the case within the exceptions
provided under Article 2208 of the Civil Code to justify the award.

Camilo A. Esguerra vs. United Philippines Lines Inc. and Belships Management
(Singapore) PTE. LTD.
G.R. No. 199932, July 3, 2013
Facts: The petitioner, Camilo Esguerra, was hired by the Philippine registered
manning agency, in behalf of its principal Belships Management (Singapore) PTE.
LTD., to work as a fitter for a period of nine months or until July 2008 on board the
vessel M/V Jaco Triumph. This agreement was subject to a one month extension
upon mutual agreement of the parties. On August 21, 2008, petitioner was working
on the vessel and welding wedges inside. While welding, a manhole cover
accidentally fell on his head, which resulted to medically repatriating him to the
Philippines. Petitioner was claiming that he is entitled to the maximum permanent
disability compensation plus moral and exemplary damages pursuant to the
Philippine Seafarers Union/ International Transport Workers Federation Total Crew
Cost Agreement, which was in his employment contract.
Issue/s: W/N petitioner is entitled to the moral and exemplary damages pursuant to
the Philippine Seafarers Union/ International Transport Workers Federation Total
Crew Cost Agreement incorporated in his employment contract?
Held: No. The Supreme Court held that the respondents gave the proper and
sufficient medical treatment to the petitioner. Such support cannot constitute
negligence on the part of the respondent. However, the Court stated that the
petitioner is entitled to attorneys fees, which was covered under workmens
compensation and employers liability laws. According to Article 2208 (8) of the
Civil Code, the award of attorneys fees is justified in actions for indemnity under
workmens compensation and employers liability laws.

Cathay Pacific Airways vs. Juanita Reyes, et. al.

and Sampaguita Travel Corporation
G.R. No.185891, June 26, 2013

Facts: Wilfredo Reyes and his family scheduled a trip from April 12, 1997 to May 4,
1997 to Adelaide, Australia. They then made a travel reservation with Sampaguita
Travel Corp. Wilfredo paid for the airfare, and in return, was issued four round-trip
tickets. One week before the scheduled flight back home, Wilfredo reconfirmed with
Cathay Pacific their return flight and was confirmed that the reservation was still
okay. However, on the day of their flight, Cathay Pacific advised them that they do
not have a confirmed booking. Since there was no space in the plane, they were not
allowed to board. Wilfredo filed a complaint for damages against Sampaguita Travel
and Cathay Pacific. The trial court ruled in favor of the respondents. The decision of
the trail court was reversed by CA on appeal, absolving Sampaguita Travel of any
liability.
Issue/s: W/N Sampaguita Travel is liable?
Held: Yes. The Supreme Court ruled that Sampaguita Travel was solidarily liable with
Cathay Pacific as they were joint tortfeasors for a quasi-delict. Both parties acted
together in creating the confusion that led to their negligence. According to Article
2194 of the Civil Code, joint tortfeasors who are responsible for a quasi-delict shall
be liable solidarily.

People vs. Arnel Nocum,* Rey Johnny Ramos, Carlos Jun Posadas, Pandao Poling
Pangandag (all at large), Reynaldo Mallari
G.R. No. 179041, April 1, 2013
Facts: An Information was filed charging Mallari and co-accused Arnel Nocum
(Nocum), Rey Johnny Ramos (Ramos), Carlos Jun Posadas (Posadas) and Pandao
Poling Pangandag alias Rex Pangandag (Pangandag) with violation of Republic Act
(RA) No. 6539, otherwise known as the Anti-Carnapping Act of 1972, as amended by
RA 7659 and Homicide under Revised Penal Code. On December 15, 2003, the RTC
of Muntnlupa City rendered its Decision finding Mallari guilty beyond reasonable
doubt of carnapping with homicide. The trial court ruled that the testimony of
Mahilac that Mallari participated in the theft of the FX taxi and the killing of its
driver, Medel, cannot be negated by Mallaris denial and uncorroborated alibi. It also
found that the commission of the crime was a result of a planned operation with
Mallari and all the accused doing their assigned tasks to ensure the consummation
of their common criminal objective. The CA affirmed the decision of the lower court
and awarded damages to the heirs.
Issue/s: W/N damages may be awarded to the heirs of the victim Medel?
Held: Yes. For the killing of Medel, the Supreme Court awarded to his heirs the
amount of P50,000 as civil indemnity pursuant to prevailing jurisprudence. Said
heirs are also entitled to an award of moral damages in the sum of P50,000, as in all
cases of murder and homicide, without need of allegation and proof other than the
death of the victim. The Court cannot, however, award actual damages due to the
absence of receipts to substantiate the expenses incurred for Medels funeral.
The rule is that only duly receipted expenses can be the basis of actual damages.
"Nonetheless, under Article 2224 of the Civil Code, temperate damages may be

recovered as it cannot be denied that the heirs of the victim suffered pecuniary loss
although the exact amount was not proved." We therefore award the sum
of P25,000 as temperate damages in lieu of actual damages to the heirs of Medel.
"In addition, and in conformity with current policy, we also impose on all the
monetary awards for damages an interest at the legal rate of 6% from date of
finality of this Decision until fully paid."

Manila Electric Company vs. Atty. Pablito M. Castillo, doing business under the trade
name and style of Permanent Light Manufacturing Enterprises,
and Guia S. Castillo
G.R. No. 182976, January 14, 2013
Facts: Respondents Pablito M. Castillo and Guia S. Castillo are spouses engaged in
the business of manufacturing and selling among others fluorescent fixtures and
office steel under the name and style of Permanent Light Manufacturing Enterprises
(Permanent Light). Sometime in April 1994, Joselito Ignacio and Peter Legaspi, Fully
Phased Inspectors of petitioner Meralco, sought permission to inspect Permanent
Lights electric meter. Said inspection was carried out in the presence of Mike
Malikay, an employee of respondents. The results of the inspection, which are
contained in a Special Investigation Report, show that the meter was tampered with
and electric supply to Permanent Light was immediately disconnected.
By petitioner MERALCOs claim, it sustained losses in the amount of P126,319.92
over a 24-month period, on account of Permanent Lights tampered meter. The next
day, in order to secure the reconnection of electricity to Permanent Light,
respondents paid P50,000 as down payment on the differential bill to be rendered
by MERALCO. Thereafter respondent settled the bill charged by the petitioner.
However, respondent received significant increase in the bill as charged by the
petitioner thus contested those assessments and later filed against MERALCO a
Petition for Injunction, Recovery of a Sum of Money and Damages with Prayer for
the Issuance of a Temporary Restraining Order (TRO) and Writ of Preliminary
Injunction and was granted therafter by the RTC of Pasig City. However The RTC
rendered a decision in favor of the respondent and against the petitioner ordering
the latter to pay the former of the overpayment as well as the moral and exemplary
damages.
On appeal, the CA affirmed with modification the Decision of the RTC. It deleted the
award of P1,138,898.86 in favor of respondents and instead ordered petitioner to
pay temperate damages in the amount of P500,000. The CA held that petitioner
abused its right when it disconnected the electricity of Permanent Light. The
appellate court upheld the validity of the provision in petitioners service contract
which allows the utility company to disconnect service upon a customers failure to
pay the differential billing. It however stressed that under Section 97 of Revised
Order No. 1 of the Public Service Commission, the right of a public utility to
discontinue its service to a customer is subject to the requirement of a 48-hour

written notice of disconnection. Petitioners failure in this regard, according to the

appellate court, justifies the award of moral and exemplary damages to
respondents. However, instead of actual damages, the CA awarded respondents
temperate damages in the amount of P500,000.
Issue/s: W/N the CA erred in affirming the award of moral and exemplary damages,
as well as, temperate damages in favor of the respondents?
Held: Yes. Under the Revised Terms and Conditions of Service vis-a-vis Section 48 of
ERB Resolution No. 95-21, petitioner is obliged to furnish respondents with a 48hour notice of disconnection. Having failed in this regard, we find basis for the
award of moral and exemplary damages in favor of respondents for the
unceremonious disconnection of electricity to Permanent Light.
Moral damages are awarded to compensate the claimant for physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation and similar injury. Jurisprudence has established the
following requisites for the award of moral damages: (1) there is an injury whether
physical, mental or psychological, which was clearly sustained by the claimant; (2)
there is a culpable act or omission factually established; (3) the wrongful act or
omission of the defendant is the proximate cause of the injury sustained by the
claimant; and (4) the award of damages is predicated on any of the cases stated in
Article 2219 of the Civil Code.
Pertinent to the case at hand, Article 32 of the Civil Code provides for the award of
moral damages in cases where the rights of individuals, including the right against
deprivation of property without due process of law, are violated. Here, petitioner
failed to establish factual basis for the immediate disconnection of electricity to
Permanent Light and to comply with the notice requirement provided by law.
In addition to moral damages, exemplary damages are imposed by way of example
or correction for the public good. In this case, to serve as an example - that before
disconnection of electric supply can be effected by a public utility, the requisites of
law must be complied with - we sustain the award of exemplary damages to
respondents.
Actual damages are compensation for an injury that will put the injured party in the
position where it was before the injury. They pertain to such injuries or losses that
are actually sustained and susceptible of measurement. Except as provided by law
or by stipulation, a party is entitled to adequate compensation only for such
pecuniary loss as is duly proven. Basic is the rule that to recover actual damages,
not only must the amount of loss be capable of proof; it must also be actually
proven with a reasonable degree of certainty premised upon competent proof or the
best evidence obtainable.
In this case, we are convinced that respondents sustained damages from the
abnormal increase in Permanent Lights electric bills after petitioner replaced the
latters meter on April 19, 1994. However, respondents failed to establish the exact
amount thereof by competent evidence. Considering the attendant circumstances,
an award of temperate damages in the amount of P300,000 is just and reasonable.