Valencia vs Locquiao

Facts: On May 22, 1944, Herminigildo and

Raymunda Locquiao executed a deed of
donation propter nuptias which was written
in
the Ilocano dialect,
denominated
[9]
as Inventario Ti Sagut in favor of their son,
respondent Benito Locquiao (hereafter,
respondent Benito) and his prospective
bride, respondent Tomasa Mara (hereafter,
respondent Tomasa). By the terms of the
deed, the donees were gifted with four (4)
parcels of land, including the land in
question, as well as a male cow and onethird (1/3) portion of the conjugal house of
the donor parents, in consideration of the
impending marriage of the donees.
The donees took their marriage vows on
June 4, 1944 and the fact of their marriage
was inscribed at the back of O.C.T. No.
18383.[10]
Herminigildo and Raymunda died on
December 15, 1962 and January 9, 1968,
respectively, leaving as heirs their six (6)
children, namely: respondent Benito,
Marciano, Lucio, Emeteria, Anastacia, and
petitioner
Romana,
all
surnamed
[11]
Locquiao . With
the
permission
of
respondents Benito and Tomasa, petitioner
Romana Valencia (hereinafter, Romana)
took possession and cultivated the subject
land.[12] When
respondent
Romanas
husband got sick sometime in 1977, her
daughter petitioner Constancia Valencia
(hereafter, petitioner Constancia) took over,
and since then, has been in possession of
the land.[13]
Meanwhile,
respondents
Benito
and
Tomasa
registered
the Inventario
Ti
Sagut with the Office of the Register of
Deeds of Pangasinan on May 15, 1970.
[14]
In due course, the original title was
cancelled and in lieu thereof Transfer

Certificate of Title No. 84897[15] was issued

in the name of the respondents Benito and
Tomasa.
On March 18, 1973, the heirs of the
Locquiao spouses, including respondent
Benito and petitioner Romana, executed
a Deed of Partition with Recognition of
Rights,[16] wherein they distributed among
only three (3) of them, the twelve (12)
parcels of land left by their common
progenitors, excluding the land in question
and other lots disposed of by the Locquiao
spouses earlier. Contained
Later on,
disagreements among five (5) heirs or
groups of heirs, including petitioner
Romana, concerning the distribution of two
(2) of the lots covered by the deed of
partition which are Lots No. 2467 and 5567
of the Urdaneta Cadastral Survey
surfaced. As their differences were settled,
the heirs concerned executed a Deed of
Compromise Agreement[18] on June 12,
1976, which provided for the re-distribution
of the two (2) lots.Although not directly
involved in the discord, Benito signed the
compromise agreement together with his
feuding
siblings,
nephews
and
nieces.Significantly, all the signatories to the
compromise agreement, including petitioner
Romana, confirmed all the other stipulations
and provisions of the deed of partition.[19]
Sometime in 1983, the apparent calm
pervading among the heirs was disturbed
when petitioner Constancia filed an action
for annulment of title against the
respondents before the Regional Trial Court
of Pangasinan.[20] The record shows that the
case was dismissed by the trial court but it
does not indicate the reason for the
dismissal.[21]
On December 13, 1983, respondent Benito
filed with the Municipal Trial Court of

Urdaneta,
Pangasinan
[22]
a Complaint seeking the ejectment of
petitioner Constancia from the subject
property.
On November 25, 1985, the Municipal Trial
Court rendered a Decision,[23] ordering the
defendant
in
the
case,
petitioner
Constancia, to vacate the land in question.
Petitioners Romana and Constancia
countered with a Complaint[24] for the
annulment of Transfer Certificate of Title No.
84897 against respondents Benito and
Tomasa [25] which they filed with the
Regional Trial Court of Pangasinan on
December 23, 1985. Petitioners alleged that
the issuance of the transfer certificate of title
was fraudulent; that the Inventario Ti
Sagut is spurious; that the notary public who
notarized the document had no authority to
do so, and; that the donation did not
observe the form required by law as there
was no written acceptance on the document
itself or in a separate public instrument.
ISSUE: 1) whether the donation propter
nuptias is authentic; (2) whether acceptance
of the donation by the donees is required;
(3) if so, in what form should the acceptance
appear, and; (4) whether the action is
barred by prescription and laches.
Ruling: Ruling of the CA was affirmed.
Held:
1. The certification is not sufficient to
prove the alleged inexistence or
spuriousness of the challenged
document. The appellate court is
correct in pointing out that the mere
absence of the notarial record does
not prove that the notary public does
not have a valid notarial commission
and neither does the absence of a

file copy of the document with the

archives effect evidence of the
falsification of the document.[33] This
Court ruled that the failure of the
notary public to furnish a copy of the
deed to the appropriate office is a
ground for disciplining him, but
certainly not for invalidating the
document or for setting aside the
transaction therein involve.
2. Concerning the issue of form,
petitioners insist that based on a
provision[43] of the Civil Code of
Spain (Old Civil Code), the
acceptance by the donees should be
made in a public instrument. This
argument was rejected by the RTC
and the appellate court on the theory
that the implied acceptance of the
donation had flowed from the
celebration of the marriage between
the respondents, followed by the
registration of the fact of marriage at
the back of OCT No. 18383.
The petitioners, the appellate court
and the trial court all erred in
applying the requirements on
ordinary donations to the present
case instead of the rules on donation
propter nuptias. Underlying the
blunder is their failure to take into
account the fundamental dichotomy
between the two kinds of donations.
Unlike ordinary donations, donations
propter nuptias or donations by
reason of marriage are those made
before
its
celebration,
in
consideration of the same and in
favor of one or both of the future
spouses.[44] The distinction is
crucial because the two classes of
donations are not governed by
exactly the same rules, especially as

regards
the
formal
essential
requisites.
Under the Old Civil Code, donations
propter nuptias must be made in a
public instrument in which the
property
donated
must
be
specifically described.[45] However,
Article 1330 of the same Code
provides that acceptance is not
necessary to the validity of such
gifts. In other words, the celebration
of the marriage between the
beneficiary couple, in tandem with
compliance with the prescribed form,
was enough to effectuate the
donation propter nuptias under the
Old Civil Code.
Under the New Civil Code, the rules
are different. Article 127 thereof
provides that the form of donations
propter nuptias are regulated by the
Statute of Frauds. Article 1403,
paragraph 2, which contains the
Statute of Frauds requires that the
contracts mentioned thereunder
need be in writing only to be
enforceable. However, as provided
in Article 129, express acceptance is
not necessary for the validity of
these
donations.Thus,
implied
acceptance is sufficient.
The pivotal question, therefore, is
which formal requirements should be
applied with respect to the donation
propter nuptias at hand. Those
under the Old Civil Code or the New
Civil Code?
It is settled that only laws existing at
the time of the execution of a
contract are applicable thereto and
not later statutes, unless the latter

are specifically intended to have

retroactive effect.[46]
Consequently, it is the Old Civil
Code which applies in this case
since the donation propter nuptias
was executed in 1944 and the New
Civil Code took effect only on August
30, 1950.[47] The fact that in 1944
the Philippines was still under
Japanese occupation is of no
consequence. It is a well-known rule
of the Law of Nations that municipal
laws, as contra-distinguished from
laws of political nature, are not
abrogated
by
a
change
of
sovereignty.[48]
This
Court
specifically held that during the
Japanese occupation period, the Old
Civil Code was in force.[49] As a
consequence, applying Article 1330
of the Old Civil Code in the
determination of the validity of the
questioned donation, it does not
matter whether or not the donees
had accepted the donation. The
validity of the donation is unaffected
in either case.
3. Viewing petitioners action for
reconveyance
from
whatever
feasible legal angle, it is definitely
barred by prescription. Petitioners
right to file an action for the
reconveyance of the land accrued in
1944,
when
the Inventario
Ti
Sagut was executed. It must be
remembered
that
before
the
effectivity of the New Civil Code in
1950, the Old Code of Civil
Procedure (Act No. 190) governed
prescription.[52] Under the Old Code
of Civil Procedure, an action for
recovery of the title to, or possession
of, real property, or an interest

therein, can only be brought within

ten years after the cause of such
action accrues.[53] Thus, petitioners
action, which was filed on December
23, 1985, or more than forty (40)
years from the execution of the deed
of donation on May 22, 1944, was
clearly time-barred.

all obligations and claims, whether past or

present, from any creditors or third persons.
On the same day, the Spouses Flores
executed a deed of absolute sale over the
two parcels of land for the price
of P5,700,000.00 in favor of TATIC.[4] The
Spouses Flores, thereafter, turned over the
custody of the owners copy of their titles to
the Bank.[5]

Vive Eagle Land vs CA

Facts:
The Spouses Raul and Rosalie Flores were
the owners of two parcels of land situated
along Aurora Boulevard, Cubao, Quezon
City, covered by Transfer Certificates of Title
(TCT) Nos. 241845 and 241846, with an
area of 1,026 and 2,963 square meters,
respectively. On October 10, 1987, the
Spouses
Flores
and
Tatic
Square
International Corporation (TATIC) executed
an Agreement to Sell in which the said
spouses bound and obliged themselves to
sell the properties to TATIC. The latter then
applied for a loan with the Capital Rural
Bank of Makati, Inc. (Bank) to finance its
purchase of the said lots. The Bank agreed
to grant the application of TATIC in the
amount of P5,757,827.63 provided that the
torrens titles over the subject properties
would be registered under the name of the
latter as the subject lots would be used as
collateral for the payment of the said loan.[2]

On April 13, 1988, the Spouses Flores,

TATIC, Isidro S. Tobias (who acted as
broker), and the Bank executed a
Memorandum
of Agreement
(MOA),
wherein the Spouses Flores, as vendeesowners, warranted that the titles of the two
properties were free and clear from any and

Although the torrens titles over the lots were

still in the custody of the Bank, TATIC, as
vendor, and petitioner VELI, as vendee,
executed a deed of absolute sale[6] on April
14, 1988, in which TATIC sold the properties
to the petitioner for P6,295,224.88, receipt
of which was acknowledged in the said
deed by TATIC. The latter warranted in the
said deed that there were valid titles to the
property and that it would deliver
possession thereof to the petitioner. The
parties executed a deed entitled Addendum.

On November 11, 1988, VELI, as vendor,

through its president, petitioner Virgilio
Cervantes, and respondent Genuino Ice
Co., Inc., as vendee, executed a deed of
absolute sale[8] over the parcel of land
covered by TCT No. 241846 for the price
of P4,000,000.00, receipt of which was
acknowledged by petitioner VELI. On the
same day, the respondent and petitioner
VELI executed a deed of assignment of
rights in which the latter assigned in favor of
the respondent, for and in consideration
of P4,000,000.00, all its rights and interests
under the Deed of Absolute Sale executed
on April 13, 1988 by the Spouses Flores
and the deed of absolute sale executed by
TATIC in its favor, insofar as that lot covered
by TCT No. 241846 only was concerned.

On June 24, 1990, the respondent filed a

Complaint against petitioner VELI and its
president, Virgilio Cervantes, for specific
performance and damages in the Regional
Trial Court (RTC) of Quezon City. The
respondent alleged, inter alia, that petitioner
VELI failed (a) to transfer title to and in the
name of the respondent over the property
covered by TCT No. 241846 despite the
lapse of a reasonable time; (b) to cause the
eviction/removal of the squatters/occupants
on the property; and (c) to pay the capital
gains tax and other assessments due to
effectuate the transfer of the titles of the
property to and in its name.
Issue: (a) whether or not petitioner VELI is
obliged to pay for the expenses for transfer
of the property and the issuance of the titles
to and under the name of the respondent;
(b) whether or not the petitioners are liable
for the capital gains tax for the sale between
petitioner VELI and the respondent; and (c)
whether or not the petitioners are obliged to
evict the remaining squatters from the land.
Held:
a. Under Article 1495[18] of the New Civil
Code, petitioner VELI, as the vendor, is
obliged to transfer title over the property
and deliver the same to the vendee.
While Article 1498[19] of the New Civil
Code provides that the execution of a
notarized deed of absolute sale shall be
equivalent to the delivery of the property
subject of the contract, the same shall
not apply if, from the deed, the contrary
does not appear or cannot clearly be
inferred. In the present case, the
respondent and petitioner VELI agreed
that the latter would cause the eviction
of the tenants/occupants and deliver
possession of the property. It is clear
that at the time the petitioner executed

the deed of sale in favor of the

respondent,
there
were
tenants/occupants in the property. It
cannot, thus, be concluded that, through
the execution of the third deed of sale,
the property was thereby delivered to the
respondent.

Petitioner VELI is obliged to cause the

eviction of the tenants/occupants unless
there is a contrary agreement of the
parties. Indeed, under the addendum
executed by petitioner VELI and the
respondent, the latter was given the right
to withhold P300,000.00 of the purchase
price until after petitioner VELI cleared
the property of squatters.

While it is true that the respondent

acquired the rights and interests of
TATIC under the first deed of sale and
that of petitioner VELI under the second
deed of sale by virtue of the deed of
assignment of rights executed by the
petitioners and the respondent, the latter
cannot enforce the terms and conditions
of the said deeds. It must be stressed
that there is no showing in the records
that the Spouses Flores, Tobias and
TATIC conformed to the said deed of
assignment of rights or that the same
was registered in the office of the
Register of Deeds in accordance with
Article 1625[20] of the New Civil Code.

Moreover, the execution, by petitioner

VELI and the respondent, of such deed
of assignment of rights did not relieve
the said petitioner of its obligation to
clear the property of tenants/occupants.

This is because the following agreement

was embodied in their addendum:
NOW THEREFORE, for and in consideration of the
foregoing premises, the Transferee hereby retains
and holds from the Transferor the amount of Three
Hundred Thousand & 00/100 Pesos (P300,000.00),
from the purchase price due the Transferor until after
the premises have been rid of and cleared from
squatters occupying therein.

b. Petitioner VELI is Not Liable for

Payment of the Capital Gains Tax for the
Third Sale

It is settled that only laws existing at the

time of the execution of a contract are
applicable thereto and not later statutes,
unless the latter are specifically intended to
have retroactive effect.[23] When the first and
second deeds of absolute sale took place in
1988, the 1977 National Internal Revenue
Code (NIRC), as amended by Batas
Pambansa Blg. 37 and Executive Order No.
237 was still in effect. Under Sections 21(e)
[24]
and 34(h)[25] of the 1977 NIRC, as
amended, the Spouses Flores, as vendors,
were liable for the payment of capital gains
tax. In the second sale, however, TATIC was
not similarly liable because while Article
1487 of the Civil Code provides that the
seller is obliged to pay the capital gains tax
based on its obligation to transfer title over
the property to the vendee under Sections
21(e) and 34(h) of the 1977 NIRC, the
payment of capital gains tax from the sale,
exchange of disposition of real property
devolved only upon individual taxpayers. In
fact, the Bureau of Internal Revenue (BIR),
in response to the queries of several
corporations which had sold, exchanged or
disposed of their real properties, more
particularly in BIR Ruling Nos. 159
(September 13, 1985), 127 (July 12, 1983),
191 (November 15, 1983), 195 (November
15, 1983), 60 (May 12, 1986), 177
(September 17, 1986), and 415-87
(December 23, 1987), definitely ruled that
the corporations were exempt from the
payment of capital gains tax. Their income
from the sale or exchange or disposition of
real property was treated as ordinary
income, and was taxed as such.

University of the Philippines vs Philab

Industries

Facts: Sometime in 1979, the University of

the Philippines (UP) decided to construct an
integrated system of research organization
known as the Research Complex. As part of
the project, laboratory equipment and
furniture were purchased for the National
Institute of Biotechnology and Applied
Microbiology (BIOTECH) at the UP Los
Baos. Providentially, the Ferdinand E.
Marcos Foundation (FEMF) came forward
and agreed to fund the acquisition of the
laboratory furniture, including the fabrication
thereof.
Renato E. Lirio, the Executive Assistant of
the FEMF, gave the go-signal to BIOTECH
to contact a corporation to accomplish the
project. On July 23, 1982, Dr. William
Padolina, the Executive Deputy Director of
BIOTECH,
arranged
for
Philippine
Laboratory Industries, Inc. (PHILAB), to
fabricate the laboratory furniture and deliver
the same to BIOTECH for the BIOTECH
Building Project, for the account of the
FEMF. Lirio directed Padolina to give the
go-signal to PHILAB to proceed with the
fabrication of the laboratory furniture, and
requested Padolina to forward the contract
of the project to FEMF for its approval.
Padolina assured Lirio that the contract
would be prepared as soon as possible
before the issuance of the purchase orders
and the downpayment for the goods, and
would be transmitted to the FEMF as soon
as possible.
In a Letter dated July 23, 1982, Padolina
informed Hector Navasero, the President of
PHILAB, to proceed with the fabrication of
the laboratory furniture, per the directive of
FEMF Executive Assistant Lirio. Padolina
also requested for copies of the shop
drawings and a sample contract [5] for the
project, and that such contract and drawings

had to be finalized before the down

payment could be remitted to the PHILAB
the following week. However, PHILAB failed
to forward any sample contract.
Subsequently, PHILAB
made
partial
deliveries of office and laboratory furniture
to BIOTECH after having been duly
inspected by their representatives and
FEMF Executive Assistant Lirio.
On
August
24,
1982,
FEMF
remitted P600,000
to
PHILAB
as
downpayment for the laboratory furniture for
the BIOTECH project, for which PHILAB
issued Official Receipt No. 253 to FEMF. On
October 22, 1982, FEMF made another
partial payment of P800,000 to PHILAB, for
which the latter issued Official Receipt No.
256 to FEMF. The remittances were in the
form of checks drawn by FEMF and
delivered to PHILAB, through Padolina.
In the meantime, Navasero promised to
submit the contract for the installation of
laboratory furniture to BIOTECH, by
January 12, 1983. However, Navasero
failed to do so. In a Letter dated February 1,
1983, BIOTECH reminded Navasero of the
need to submit the contract so that it could
be submitted to FEMF for its evaluation and
approval.[8] Instead of submitting the said
contract, PHILAB submitted to BIOTECH an
accomplishment report on the project as of
February 28, 1983, and requested payment
thereon.[9]
President Marcos was ousted from office
during the February 1986 EDSA Revolution.
On March 26, 1986, Navasero wrote
BIOTECH requesting for its much-needed
assistance for the payment of the balance
already due plus interest of P295,234.55 for
its fabrication and supply of laboratory
furniture.[18]

Chancellor De Guzman wrote Navasero

requesting for a copy of the contract
executed between PHILAB and FEMF. In a
Letter dated October 20, 1987, Navasero
informed De Guzman that PHILAB and
FEMF did not execute any contract
regarding the fabrication and delivery of
laboratory furniture to BIOTECH.
Exasperated, PHILAB filed a complaint for
sum of money and damages against UP. In
its answer, UP denied liability and alleged
that PHILAB had no cause of action against
it
because
it
was
merely
the
donee/beneficiary of the laboratory furniture
in the BIOTECH; and that the FEMF, which
funded the project, was liable to the PHILAB
for the purchase price of the laboratory
furniture. UP specifically denied obliging
itself to pay for the laboratory furniture
supplied by PHILAB.
Issue: I. THE COURT OF APPEALS
ERRED WHEN IT FAILED TO APPLY THE
LAW ON CONTRACTS BETWEEN PHILAB
AND THE MARCOS FOUNDATION.
II. THE COURT OF APPEALS ERRED IN
APPLYING THE LEGAL PRINCIPLE OF
UNJUST ENRICHMENT WHEN IT HELD
THAT THE UNIVERSITY, AND NOT THE
MARCOS FOUNDATION, IS LIABLE TO
PHILAB.[26]
Held: We agree with the petitioner that,
based on the records, an implied-in-fact
contract of sale was entered into between
the respondent and FEMF.
A contract implied in fact is one implied from
facts and circumstances showing a mutual
intention to contract. It arises where the
intention of the parties is not expressed, but
an agreement in fact creating an obligation.
It is a contract, the existence and terms of
which are manifested by conduct and not by

direct or explicit words between parties but

is to be deduced from conduct of the
parties, language used, or things done by
them, or other pertinent circumstances
attending the transaction. To create
contracts implied in fact, circumstances
must warrant inference that one expected
compensation and the other to pay.[32] An
implied-in-fact contract requires the parties
intent to enter into a contract; it is a true
contract.[33] The conduct of the parties is to
be viewed as a reasonable man would view
it, to determine the existence or not of an
implied-in-fact contract.[34] The totality of the
acts/conducts of the parties must be
considered to determine their intention. An
implied-in-fact contract will not arise unless
the meeting of minds is indicated by some
intelligent conduct, act or sign.[35]
In this case, the respondent was aware,
from the time Padolina contacted it for the
fabrication and supply of the laboratory
furniture until the go-signal was given to it to
fabricate and deliver the furniture to
BIOTECH as beneficiary, that the FEMF
was to pay for the same. Indeed, Padolina
asked the respondent to prepare the draft of
the contract to be received by the FEMF
prior to the execution of the parties (the
respondent and FEMF), but somehow, the
respondent failed to prepare one. The
respondent knew that the petitioner was
merely the donee-beneficiary of the
laboratory furniture and not the buyer; nor
was it liable for the payment of the purchase
price thereof. From the inception, the FEMF
paid for the bills and statement of accounts
of the respondent, for which the latter
unconditionally issued receipts to and under
the name of the FEMF.

2. In order that accion in rem verso may

prosper, the essential elements must be
present: (1) that the defendant has been
enriched, (2) that the plaintiff has
suffered a loss, (3) that the enrichment of
the defendant is without just or legal
ground, and (4) that the plaintiff has no
other action based on contract, quasicontract, crime or quasi-delict.[43]
An accion in rem verso is considered merely
an auxiliary action, available only when
there is no other remedy on contract, quasicontract, crime, and quasi-delict. If there is
an obtainable action under any other
institution of positive law, that action must
be resorted to, and the principle of accion in
rem verso will not lie.[44]
The essential requisites for the application
of Article 22 of the New Civil Code do not
obtain in this case. The respondent had a
remedy against the FEMF via an action
based on an implied-in-fact contract with the
FEMF for the payment of its claim. The
petitioner legally acquired the laboratory
furniture under the MOA with FEMF; hence,
it is entitled to keep the laboratory furniture.

Ferrazini vs Gsell

Held: The contract under consideration,

tested by the law, rules and principles above
set forth, is clearly one in undue or
unreasonable restraint of trade and therefore
against public policy. It is limited as to time
and space but not as to trade. It is not
necessary for the protection of the defendant,
as this is provided for in another part of the
clause. It would force the plaintiff to leave the
Philippine Islands in order to obtain a
livelihood in case the defendant declined to
give him the written permission to work
elsewhere in this country.

Tiu vs Platinum Plans Phils. Inc

Facts:
Issue: WON the non-involvement clause
was valid
Held:
1. A non-involvement clause , a noninvolvement
clause
is
not
necessarily void for being in
restraint of trade as long as there
are reasonable limitations as to
time, trade, and place.
In this case, the non-involvement
clause has a time limit: two years
from
the
time
petitioners
employment with respondent ends. It
is also limited as to trade, since it
only
prohibits
petitioner
from
engaging in any pre-need business
akin
to
respondents.
More
significantly, since petitioner was the
Senior Assistant Vice-President and
Territorial Operations Head in charge
of respondents Hongkong and
Asean operations, she had been
privy to confidential and highly
sensitive marketing strategies of
respondents business. To allow her
to engage in a rival business soon
after she leaves would make
respondents
trade
secrets
vulnerable especially in a highly
competitive marketing environment.
In sum, we find the non-involvement
clause not contrary to public welfare
and not greater than is necessary to
afford a fair and reasonable
protection to respondent.13
2. Article 1306 of the Civil Code
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. Article
1159 of the same Code also
provides that obligations arising
from contracts have the force of
law between the contracting
parties and should be complied
with in good faith. Courts cannot
stipulate for the parties nor
amend their agreement where the
same does not contravene law,
morals, good customs, public
order or public policy, for to do so
would be to alter the real intent of
the parties, and would run
contrary to the function of the
courts to give force and effect
thereto.
Here, not being contrary to public
policy,
the
non-involvement
clause, which petitioner and
respondent freely agreed upon,
has the force of law between
them, and thus, should be
complied with in good faith.

Mamaril vs BSP
Facts: Spouses Benjamin C. Mamaril and
Sonia P. Mamaril (Sps. Mamaril) are
jeepney operators since 1971. They would
park their six (6) passenger jeepneys every
night at the Boy Scout of the Philippines'
(BSP)
compound
located
at
181
Concepcion Street, Malate, Manila for a fee
of P300.00 per month for each unit. On May
26, 1995 at 8 o'clock in the evening, all
these vehicles were parked inside the BSP
compound. The following morning, however,

one of the vehicles with Plate No. DCG 392

was
missing
and
was
never
recovered.4 According to the security guards
Cesario Pea (Pea) and Vicente Gaddi
(Gaddi) of AIB Security Agency, Inc. (AIB)
with whom BSP had contracted5 for its
security and protection, a male person who
looked familiar to them took the subject
vehicle out of the compound.
On November 20, 1996, Sps. Mamaril filed
a complaint6 for damages before the
Regional Trial Court (RTC) of Manila,
Branch 39, against BSP, AIB, Pea and
Gaddi. In support thereof, Sps. Mamaril
averred that the loss of the subject vehicle
was due to the gross negligence of the
above-named security guards on-duty who
allowed the subject vehicle to be driven out
by a stranger despite their agreement that
only authorized drivers duly endorsed by the
owners could do so. Pea and Gaddi even
admitted their negligence during the
ensuing investigation. Notwithstanding, BSP
and AIB did not heed Sps. Mamaril's
demands for a conference to settle the
matter. They therefore prayed that Pea
and Gaddi, together with AIB and BSP, be
held liable for: (a) the value of the subject
vehicle and its accessories in the aggregate
amount
of P300,000.00;
(b) P275.00
representing daily loss of income/boundary
reckoned from the day the vehicle was lost;
(c) exemplary damages; (d) moral
damages; (e) attorney's fees; and (f) cost of
suit.
In its Answer,7 BSP denied any liability
contending that not only did Sps. Mamaril
directly deal with AIB with respect to the
manner by which the parked vehicles would
be handled, but the parking ticket8 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 claimed that Sps. Mamaril

erroneously relied on the Guard Service
Contract. Apart from not being parties
thereto, its provisions cover only the
protection of BSP's properties, its officers,
and employees.
In addition to the foregoing defenses, AIB
alleged that it has observed due diligence in
the selection, training and supervision of its
security guards while Pea and Gaddi
claimed that the person who drove out the
lost vehicle from the BSP compound
represented himself as the owners'
authorized driver and had with him a key to
the subject vehicle. Thus, they contended
that Sps. Mamaril have no cause of action
against them.

ISSUES: (1) BSP should be held liable for

the loss of their vehicle based on the Guard
Service Contract and the parking ticket it
issued; and (2) the CA erred in deleting the
RTC awards of damages and attorney's fees.

HELD:
1. BSP NOT IS NOT LIABLE.
Article 20 of the Civil Code provides
that every person, who, contrary to
law, willfully or negligently causes
damage to another, shall indemnify
the latter for the same. Similarly,
Article 2176 of the Civil Code states:
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 preexisting contractual relation
between the parties, is called a
quasi-delict and is governed by the
provisions of this Chapter.

In this case, it is undisputed that the

proximate cause of the loss of Sps.
Mamaril's vehicle was the negligent
act of security guards Pea and
Gaddi in allowing an unidentified
person to drive out the subject
vehicle. Proximate cause has been
defined as that cause, which, in
natural and continuous sequence,
unbroken by any efficient intervening
cause, produces the injury or loss,
and without which the result would
not have occurred
Nor can it be said that a principalagent relationship existed between
BSP and the security guards Pea
and Gaddi as to make the former
liable for the latter's complained act.
Article 1868 of the Civil Code states
that "by the contract of agency, a
person binds himself to render some
service or to do something in
representation or on behalf of
another, with the consent or
authority of the latter."
The basis for agency therefore is
representation,21which element is
absent in the instant case. Records
show that BSP merely hired the
services of AIB, which, in turn,
assigned security guards, solely for
the protection of its properties and
premises. Nowhere can it be inferred
in the Guard Service Contract that
AIB was appointed as an agent of
BSP. Instead, what the parties
intended was a pure principal-client
relationship
whereby
for
a
consideration, AIB rendered its
security services to BSP.

Article 1311 of the Civil Code states:

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.
If a contract should contain some
stipulation in favor of a third person,
he may demand its fulfillment
provided he communicated his
acceptance to the obligor before its
revocation. A mere incidental benefit
or interest of a person is not
sufficient. The contracting parties
must have clearly and deliberately
conferred a favor upon a third
person.
Thus, in order that a third person
benefited by the second paragraph
of Article 1311, referred to as a
stipulation pour autrui, may demand
its fulfillment, the following requisites
must concur: (1) There is a
stipulation in favor of a third person;
(2) The stipulation is a part, not the
whole, of the contract; (3) The
contracting parties clearly and
deliberately conferred a favor to the
third person - the favor is not merely
incidental;
(4) The favor is
unconditional and uncompensated;
(5) The third person communicated
his or her acceptance of the favor
before its revocation; and (6) The
contracting parties do not represent,
or are not authorized, by the third
party.22 However, none of the
foregoing elements obtains in this
case.

It is undisputed that Sps. Mamaril

are not parties to the Guard Service
Contract.1wphi1 Neither did the
subject agreement contain any
stipulation pour autrui. And even if
there was, Sps. Mamaril did not
convey any acceptance thereof.
Thus, under the principle of relativity
of contracts, they cannot validly
claim any rights or favor under the
said agreement.23 As correctly found
by the CA:

1974

lot on which it stood to Ramirez.

Ramirezs possession became a coowner with Mario and Vearanda,

who did not sell their shares in the
house and lot.

Rodrigo, Francisco, and

shares in Lot No. 9 to Ygoa.

1984, Ygoa filed a PETITION TO

to

his

heirs Margarita,

Simplicia, Rodrigo, Francisco, Mario

and Vearanda (petitioner).

o Mario objected on the ground that he

o Rodrigo also opposed on the ground

that he wanted to annul the sale
for failure of consideration.
o Margarita and the widow of Francisco
both

Petitioners admitted that at the time

already

occupying

front

portion

along

the

provincial highway was occupied by

the co-owned Pacres ancestral home,
the

the area occupied by the house"

to Hilario Ramirez.

issued

writ

of

Margaritas

Lot No. 9.
o Considering, however, the objections
of the 2 other Pacres siblings, the TC
subsequently dismissed the petition
so that the 2 issues could be
threshed

back of the ancestral house.

with a lot area of 300 sq ms including

court

Ygoa.

highway). Marios house stood at the

floor of the [ancestral home] together

to

o Ygoa built her house on a portion of

provincial

1968 - The heirs leased "the ground

assent

and Franciscos shares in favor of

and beside it stood Rodrigos hut

fronting

their

possession respecting

definite

portions of Lot No. 9.

manifested

Ygoas petition.
o The

of Pastors death in 1962, his heirs

SEGREGATE THE

9.

(petitioners predecessor-in-interest)

(also

AND

PORTIONS she bought from Lot No.

owner to redeem his siblings shares.

intestate

The

Simplicia

and Margarita sold their remaining

belonged to Pastor Pacres who left it

Francisco,

wanted to exercise his right as co-

Lot No. 9 (1,007 sq m) originally

were

Pacres

shares in the ancestral home and the

Facts:

the

Simplicia and Margarita) sold their

SURVEY

of

siblings (Rodrigo,

Heirs of Mario Pacres vs Heirs of

Ygona

four

out

in

the

proper

proceeding.

The COMPLAINT
REDEMPTION filed

FOR
by

LEGAL

Mario

and

Vearanda, was dismissed on the

ground ofimproper exercise of the
right. The decision was affirmed by
the CA and attained finality in the SC.

o The CA held that the complaint was

lot and should transfer to the rear of

filed beyond the 30-day period (NCC

Lot No. 9 where the lots of Ramirezs

1623) and failed to comply with the

vendors are located.

requirement of consignation. Ygoa

o The court dismissed Marios assertion

built her house on Lot No. 9 in good

that his siblings sold the rear lots to

faith and it would be unjust to require

Ramirez.
o Deeds of sale in favor of Ramirez

her to remove her house thereon.

DPWH, EXPROPRIATED THE FRONT

clearly described the object of the

PORTION of Lot No. 9. Ygoa moved

to withdraw her corresponding share

sale as the ancestral house and lot.

o Ramirez

in the expropriation payment which

right

to

continue

occupying the property he bought.

1993, the Pacres siblings (Margarita

indiviso shares in the house and lot,

and Francisco were already deceased

at the very least, the parties are co-

at

owners thereof.

that

time

and

were

only

represented by their heirs) executed

a

Confirmation

Partition/Settlement

of

The
Complaint
Performance

Oral

of

for

Specific

Estate of

Pastor.

1996, Vearanda and the heirs of

3. That after the death of Pastor

Mario filed the instant COMPLAINT

Pacres, the children and MADE AN

FOR

ORAL PARTITION;

PERFORMANCE against Ygoa and

4. That in that ORAL PARTITION, the

Ramirez.

shares or portion to be allotted to

allegations of co-ownership in the

Mario

legal redemption case, Marios heirs

and

Vearanda

shall

be

fronting the national highway.

SPECIFIC
Contrary

to

Marios

insist in the action for specific

5. heirs had the said lot surveyed to

performance that the heirs agreed on

determine

a partition prior to the sale.

specifically

their

respective locations in accordance

They seek compliance with such

with the oral partition made after the

agreement

death of Pastor Pacres;

vendees, Ygoa and Ramirez, on the

6. That a sketch of the subdivision

basis that the 2 were privy to these

plan

agreements. In compliance with such

is

attached

indicating

the

respective shares.

o Since Mario did not sell his pro-

remains unresolved.

has

Mario

filed

from

their

siblings

partition, Ygoa and Ramirez should

an EJECTMENT

desist from claiming any portion of

SUIT against Ramirez successor-in-

the expropriation payment for the

interest Vicentuan. Mario claimed

front lots.

sole ownership of the lot occupied by

Ramirez/Vicentuan

Also, Vearanda and Marios heirs

insist that Ygoa contracted with her

ancestral house) by virtue of the oral

vendors to assume all obligations

partition.

that

regarding the payment of estate

pay

taxes, survey, and obtain separate

Ramirez/Vicentuan

argued
should

of

the

He

(buyer

rentals to him for occupying the front

titles for each portion.

While these obligations were not

written

into

the

deeds

of

accordance

sale,

petitioners insist it is not subject to

were allegedly

Respondents

that no

the question regarding ownership of

the front lots and the expropriation

9; hence they are the ones entitled to

payment should be threshed out in

the expropriation payment.

the proper proceeding.

Respondents presented Exh No. 1,

Valentina

herself

executed

during her testimony. Exh No. 1

demonstrated Valentinas recollection
of the actual occupation of the
Pacres

siblings,

vendees.

The

their

heirs

sketch

and

undermined

petitioners allegation that the heirs

partitioned

the

property

allotted

lots/shares.

denied

ever

Ygoa

agreeing

to

also
the

additional obligations being imputed

against her.
Ruling of the RTC
Petitioners failed to prove partition
of the lot. TC held that the parties
actual occupation of their portions in
Lot

No.

Valentinas

9,

as

evidenced

sketch,

is

the

Issue: Whether petitioners were

able to prove the existence of the
alleged oral agreements such as
the partition and the additional
obligations of surveying and
titling

and

immediately took possession of their

by
real

agreement to which the parties are

bound.
Ruling of the CA

Valentinas sketch.

them were located in front of Lot No.

which

Reversed the TC on the order to

survey the lot in accordance with

such partition took place and that the

portions sold to and occupied by

Ygoas sole undertaking under the

purchase price.

maintained

oral

deeds of sale was the payment of the

partly

complied with by Ygoa.

their

agreement.

the Statute of Frauds since these

obligations

with

dismissed petitioners complaint for

Held:
Petitioners allege that when Ygoa
bought portions of Lot No. 9 from
petitioners four siblings, aside from
paying the purchase price, she also
bound herself to survey Lot No. 9
including the shares of the
petitioners (the non-selling siblings);
to deliver to petitioners, free of cost,
the titles corresponding to their
definite shares in Lot No. 9; and to
pay for all their past and present
estate and realty taxes.[45] According
to petitioners, Ygoa agreed to these
undertakings
as
additional
consideration for the sale, even
though they were not written in the
Deeds of Sale.

lack of evidence.

oral partition was not valid because

the heirs did not ratify it by taking
possession

of

their

shares

in

Like the trial and appellate courts,

we find that these assertions by

petitioners have not been sufficiently

established.
In the first place, under Article 1311
of the Civil Code, contracts take
effect only between the parties, their
assigns and heirs (subject to
exceptions
not
applicable
here). Thus, only a party to the
contract can maintain an action to
enforce the obligations arising under
said
contract.[46]Consequently,
petitioners, not being parties to the
contracts of sale between Ygona
and the petitioners siblings, cannot
sue for the enforcement of the
supposed obligations arising from
said contracts.
It is true that third parties may seek
enforcement of a contract under the
second paragraph of Article 1311,
which provides that if a contract
should contain some stipulation in
favor of a third person, he may
demand its fulfillment. This refers to
stipulations pour
autrui,
or
stipulations for the benefit of third
parties. However,
the
written
contracts of sale in this case
contain no such stipulation in
favor of the petitioners.
While petitioners claim that there
was an oral stipulation, it cannot be
proven under the Parol Evidence
Rule. Under this Rule, [w]hen the
terms of an agreement have been
reduced to writing, it is considered
as containing all the terms agreed
upon and there can be, between the
parties and their successors in
interest, no evidence of such terms
other than the contents of the written
agreement.[47] While the Rule admits

of exception, no such exception was

pleaded, much less proved, by
petitioners.
The PER applies to "the parties
and their successors in interest."
Conversely, it has no application
to a stranger to a contract. For
purposes of the PER, a person
who claims to be the beneficiary
of an alleged stipulation pour
autrui in a contract may be
considered a party to that
contract. This is why under Art
1311, a beneficiary of a stipulation
pour
autrui
is required
to
communicate his acceptance to
the obligor before its revocation.

To preclude the application of

PER, it must be shown that "at least
1 of the parties to the suit is not
party or a privy of a party to the
written instrument in question and
does not base a claim on the
instrument or assert a right
originating in the instrument or the
relation
established
thereby." A
beneficiary of a stipulation pour
autrui obviously bases his claim on
the contract. He therefore cannot
claim to be a stranger to the contract
and resist the application of the
PER.
RAMOS VS CA
FACTS: private respondents are the
children of Gregorio Valdez. In 1948,
Gregorio Valdez sold the subject
land to petitioners. The absolute
deed of sale was subsequently
annotated at the back of OCT NO. it
is the contention of private
respondents that as early as 1977
petitioners no longer owned subject

land as they had renounced their

rights thereto as evidenced by a
compromise agreement dated June
1997.
Sometime in 1991 gregorio died.
Private
respondents
allege
immediately after the death of their
father, petitioners disturbed their
possession of subject land by
cultivating the same and by
enclosing it with a fence. As
peititoners did not heed their
demands to vacate they filed a case
for quieting of title, ownership,
possession
plus damages with
prayers for injunction.
Petitioners maintain that they remain
owners of the land as the
compromise agreement being relied
by respondents refers to another
piece of land. They say that the
agreement constitute a cloud to their
title hence they pray to be adjudge d
as lawful owners.
The compromise agreement was
entered into between peititioners
and Felipe Cabero in connection
with petititoners application for
registration of a piece of untitled land
adjacent to the subject land filed with
the CFI of Pangasinan, this land was
purchased by petitiotners from
alejadro alcantar. Apparently cabero
was the actual occupant of the
southern portion of the land thus he

opposed the petitioners application

for
registration.
Petitioners
explained that the southern portion
occupied by cabero was purchased
by cabero from gregorio who sold it
by mistake as gregorio thought that
the land he was selling was part of
his titled land.
HELD:
Gregorio valdez not being a party to
the compromise agreement, his
heirs cannot sue for its performance.
Moreover, the reference to their
father made in the body of the
compromise agreement which they
claim as a proof of renunciation
seems to be more of a description of
the land being renounced. Nothing
the compromise agreement would
suggest tha the renunciation of the
subject land was made in Gregorio
valdezs favor.
To constitute a valid stipulation puor
autrie it must be the purpose and the
intent of the stipulating parties to
benefit the third person.
In herein case, from the testimony of
petitioner Segundo Ramos who is
undoubtedly a party to the
compromise agreement, and from
the rest of the evidence on hand,
any benefit which accrued to private
respondents father was merely
incidental.