J. Bersamin - Civil Law

CIVIL LAW
J. BERSAMIN
PERSONS AND FAMILY RELATIONS
SOLEDAD L. LAVADIA vs. HEIRS OF JUAN LUCES LUNA, represented by GREGORIO Z.

LUNA and EUGENIA ZABALLERO-LUNA
G.R. No. 171914, FIRST DIVISION, July 23, 2014, BERSAMIN, J.:*
Divorce between Filipinos is void and ineffectual under the nationality rule adopted by
Philippine law. Hence, any settlement of property between the parties of the first marriage
involving Filipinos submitted as an incident of a divorce obtained in a foreign country lacks
competent judicial approval, and cannot be enforceable against the assets of the husband who
contracts a subsequent marriage.
Civil Law; Conflict of Laws; Nationality Rule; The Civil Code continued to follow the
nationality rule, to the effect that Philippine laws relating to family rights and duties, or to the
status, condition and legal capacity of persons were binding upon citizens of the Philippines,
although living abroad.The first marriage between Atty. Luna and Eugenia, both Filipinos, was
solemnized in the Philippines on September 10, 1947. The law in force at the time of the
solemnization was the Spanish Civil Code, which adopted the nationality rule. The Civil Code
continued to follow the nationality rule, to the effect that Philippine laws relating to family
rights and duties, or to the status, condition and legal capacity of persons were binding upon
citizens of the Philippines, although living abroad. Pursuant to the nationality rule, Philippine
laws governed this case by virtue of both Atty. Luna and Eugenio having remained Filipinos until
the death of Atty. Luna on July 12, 1997 terminated their marriage.
Same; Same; Same; Divorce; The nonrecognition of absolute divorce between Filipinos
has remained even under the Family Code, even if either or both of the spouses are residing
abroad.From the time of the celebration of the first marriage on September 10, 1947 until the
present, absolute divorce between Filipino spouses has not been recognized in the Philippines.
The nonrecognition of absolute divorce between Filipinos has remained even under the Family
Code, even if either or both of the spouses are residing abroad. Indeed, the only two types of
defective marital unions under our laws have been the void and the voidable marriages. As such,
the remedies against such defective marriages have been limited to the declaration of nullity of
the marriage and the annulment of the marriage.
Same; Same; Same; Same; The nonrecognition of absolute divorce in the Philippines is a
manifestation of the respect for the sanctity of the marital union especially among Filipino
citizens.It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in
the Dominican Republic issued the Divorce Decree dissolving the first marriage of Atty. Luna
and Eugenia. Conformably with the nationality rule, however, the divorce, even if voluntarily
obtained abroad, did not dissolve the marriage between Atty. Luna and Eugenia, which subsisted
up to the time of his death on July 12, 1997. This finding conforms to the Constitution, which
characterizes marriage as an inviolable social institution, and regards it as a special contract of
permanent union between a man and a woman for the establishment of a conjugal and family
life. The nonrecognition of absolute divorce in the Philippines is a manifestation of the respect
for the sanctity of the marital union especially among Filipino citizens. It affirms that the
extinguishment of a valid marriage must be grounded only upon the death of either spouse, or
upon a ground expressly provided by law. For as long as this public policy on marriage between
Filipinos exists, no divorce decree dissolving the marriage between them can ever be given legal
or judicial recognition and enforcement in this jurisdiction.
Same; Same; Same; Property Relations; Conjugal Partnership of Gains; Considering that
Atty. Luna and Eugenia had not entered into any marriage settlement prior to their marriage on
September 10, 1947, the system of relative community or conjugal partnership of gains governed
their property relations.Considering that Atty. Luna and Eugenia had not entered into any
marriage settlement prior to their marriage on September 10, 1947, the system of relative
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community or conjugal partnership of gains governed their property relations. This is because
the Spanish Civil Code, the law then in force at the time of their marriage, did not specify the
property regime of the spouses in the event that they had not entered into any marriage
settlement before or at the time of the marriage. Article 119 of the Civil Code clearly so provides,
to wit: Article 119. The future spouses may in the marriage settlements agree upon absolute or
relative community of property, or upon complete separation of property, or upon any other
regime. In the absence of marriage settlements, or when the same are void, the system of relative
community or conjugal partnership of gains as established in this Code, shall govern the
property relations between husband and wife.
Same; Same; Same; Marriages; In the Philippines, marriages that are bigamous,
polygamous, or incestuous are void.In the Philippines, marriages that are bigamous,
polygamous, or incestuous are void. Article 71 of the Civil Code clearly states: Article 71. All
marriages performed outside the Philippines in accordance with the laws in force in the country
where they were performed, and valid there as such, shall also be valid in this country, except
bigamous, polygamous, or incestuous marriages as determined by Philippine law. Bigamy is an
illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared
presumptively dead by means of a judgment rendered in the proper proceedings. A bigamous
marriage is considered void ab initio.
Same; Same; Property Relations; Co-Ownership; Due to the second marriage between
Atty. Luna and the petitioner being void ab initio by virtue of its being bigamous, the properties
acquired during the bigamous marriage were governed by the rules on co-ownership,
conformably with Article 144 of the Civil Code.Due to the second marriage between Atty. Luna
and the petitioner being void ab initio by virtue of its being bigamous, the properties acquired
during the bigamous marriage were governed by the rules on co-ownership, conformably with
Article 144 of the Civil Code, viz.: Article 144. When a man and a woman live together as
husband and wife, but they are not married, or their marriage is void from the beginning, the
property acquired by either or both of them through their work or industry or their wages and
salaries shall be governed by the rules on co-ownership. (n) In such a situation, whoever alleges
co-ownership carried the burden of proof to confirm such fact. To establish co-ownership,
therefore, it became imperative for the petitioner to offer proof of her actual contributions in the
acquisition of property. Her mere allegation of co-ownership, without sufficient and competent
evidence, would warrant no relief in her favor.
FACTS:
ATTY. LUNA initially married in a civil ceremony on September 10, 1947 and later
solemnized in a church ceremony at the Pro-Cathedral in San Miguel, Bulacan on September 12,
1948. After almost two (2) decades of marriage, ATTY. LUNA and EUGENIA eventually
agreed to live apart from each other in February 1966 and agreed to separation of property, to
which end, they entered into a written agreement entitled "AGREEMENT FOR SEPARATION
AND PROPERTY SETTLEMENT" dated November 12, 1975, whereby they agreed to live
separately and to dissolve and liquidate their conjugal partnership of property.
On January 12, 1976, ATTY. LUNA obtained a divorce decree of his marriage with
EUGENIA from the Civil and Commercial Chamber of the First Circumscription of the Court of
First Instance of Sto. Domingo, Dominican Republic. Also in Sto. Domingo, Dominican
Republic, on the same date, ATTY. LUNA contracted another marriage, this time with
SOLEDAD.
Sometime in 1977, ATTY. LUNA organized a new law firm named LUPSICON where
ATTY. LUNA was the managing partner. LUPSICON through ATTY. LUNA purchased the 6th
Floor of Kalaw-Ledesma Condominium Project (condominium unit).
Sometime in 1992, LUPSICON was dissolved and the condominium unit was
partitioned by the partners but the same was still registered in common under CCT No. 21716.
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The parties stipulated that the interest of ATTY. LUNA over the condominium unit would be
25/100 share. ATTY. LUNA thereafter established and headed another law firm with Atty. Renato
G. Dela Cruz and used a portion of the office condominium unit as their office. The said law firm
lasted until the death of ATTY. JUAN on July 12, 1997.
After the death of ATTY. JUAN, his share in the condominium unit including the
lawbooks, office furniture and equipment found therein were taken over by Gregorio Z.
Luna, ATTY. LUNAs son of the first marriage. Gregorio Z. Luna then leased out the 25/100
portion of the condominium unit belonging to his father to Atty. Renato G. De la Cruz who
established his own law firm named Renato G. De la Cruz & Associates.
The 25/100 pro-indiviso share of ATTY. Luna in the condominium unit as well as
the law books, office furniture and equipment became the subject of the complaint filed
by SOLEDAD against the heirs of ATTY. JUAN with the RTC of Makati City. The complaint
prayed that SOLEDAD be declared the owner of the portion of the subject properties; that the
same be partitioned; that an accounting of the rentals on the condominium unit pertaining to
the share of SOLEDAD be conducted; that a receiver be appointed to preserve ad administer the
subject properties; and that the heirs of ATTY. LUNA be ordered to pay attorneys fees and costs
of the suit to SOLEDAD.
ISSUE:
1. WON the divorce between Atty. Luna and Eugenia Zaballero-Luna (Eugenia) had validly
dissolved the first marriage; and NO.
2. WON the second marriage entered into by the late Atty. Luna and the petitioner entitled
the latter to any rights in property. NO.
RULING
1. Atty. Lunas first marriage with Eugenia subsisted up to the time of his death.
The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in
the Philippines on September 10, 1947. The law in force at the time of the solemnization was the
Spanish Civil Code, which adopted the nationality rule. Pursuant to the nationality rule,
Philippine laws governed this case by virtue of both Atty. Luna and Eugenio having remained
Filipinos until the death of Atty. Luna on July 12, 1997 terminated their marriage.
From the time of the celebration of the first marriage on September 10, 1947 until
the present, absolute divorce between Filipino spouses has not been recognized in the
Philippines. The non-recognition of absolute divorce between Filipinos has remained even
under the Family Code, even if either or both of the spouses are residing abroad.
It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in the
Dominican Republic issued the Divorce Decree dissolving the first marriage of Atty. Luna and
Eugenia. Conformably with the nationality rule, however, the divorce, even if voluntarily
obtained abroad, did not dissolve the marriage between Atty. Luna and Eugenia, which
subsisted up to the time of his death on July 12, 1997. This finding conforms to the Constitution,
which characterizes marriage as an inviolable social institution, and regards it as a special
contract of permanent union between a man and a woman for the establishment of a conjugal
and family life. The non-recognition of absolute divorce in the Philippines is a
manifestation of the respect for the sanctity of the marital union especially among
Filipino citizens. It affirms that the extinguishment of a valid marriage must be grounded only
upon the death of either spouse, or upon a ground expressly provided bylaw. For as long as this
public policy on marriage between Filipinos exists, no divorce decree dissolving the marriage
between them can ever be given legal or judicial recognition and enforcement in this
jurisdiction.
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The Agreement for Separation and Property Settlement was void for lack of court
approval. Considering that Atty. Luna and Eugenia had not entered into any marriage
settlement prior to their marriage on September 10, 1947, the system of relative
community or conjugal partnership of gains governed their property relations. This is
because the Spanish Civil Code, the law then in force at the time of their marriage, did not
specify the property regime of the spouses in the event that they had not entered into any
marriage settlement before or at the time of the marriage.
The mere execution of the Agreement by Atty. Luna and Eugenia did not per se
dissolve and liquidate their conjugal partnership of gains. The approval of the Agreement
by a competent court was still required under Article 190 and Article 191 of the Civil Code.
But was not the approval of the Agreement by the CFI of Sto. Domingo in the Dominican
Republic sufficient in dissolving and liquidating the conjugal partnership of gains between the
late Atty. Luna and Eugenia?
The query is answered in the negative. There is no question that the approval took
place only as an incident of the action for divorce instituted by Atty. Luna and Eugenia,
for, indeed, the justifications for their execution of the Agreement were identical to the grounds
raised in the action for divorce. With the divorce not being itself valid and enforceable under
Philippine law for being contrary to Philippine public policy and public law, the approval of the
Agreement was not also legally valid and enforceable under Philippine law. Consequently, the
conjugal partnership of gains of Atty. Luna and Eugenia subsisted in the lifetime of their
marriage.
2. Atty. Lunas marriage with Soledad, being bigamous, was void; properties
acquired during their marriage were governed by the rules on co-ownership.
The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on

January 12, 1976 was void for being bigamous, on the ground that the marriage between Atty.
Luna and Eugenia had not been dissolved by the Divorce Decree rendered by the CFI of Sto.
Domingo in the Dominican Republic but had subsisted until the death of Atty. Luna on July 12,
1997. The Court concurs with the CA.
In the Philippines, marriages that are bigamous, polygamous, or incestuous are void.
Article 71 of the Civil Code clearly states that all marriages performed outside the Philippines in
accordance with the laws in force in the country where they were performed, and valid there as
such, shall also be valid in this country, except bigamous, polygamous, or incestuous marriages
as determined by Philippine law.
Due to the second marriage between Atty. Luna and the petitioner being void ab
initio by virtue of its being bigamous, the properties acquired during the bigamous
marriage were governed by the rules on co-ownership, conformably with Article 144 of the
Civil Code.
In such a situation, whoever alleges co-ownership carried the burden of proof to

confirm such fact. To establish co-ownership, therefore, it became imperative for the petitioner
to offer proof of her actual contributions in the acquisition of property. Her mere allegation of
co-ownership, without sufficient and competent evidence, would warrant no relief in her favor.
In the cases which involved the issue of co-ownership of properties acquired by the
parties to a bigamous marriage and an adulterous relationship, respectively, we ruled that proof
of actual contribution in the acquisition of the property is essential. The claim of co-ownership
of the petitioners therein who were parties to the bigamous and adulterous union is without
basis because they failed to substantiate their allegation that they contributed money in the
purchase of the disputed properties. Also the fact that the controverted property was titled in
the name of the parties to an adulterous relationship is not sufficient proof of coownership
absent evidence of actual contribution in the acquisition of the property.
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Did the petitioner discharge her burden of proof on the co-ownership? The CA entirely
debunked the petitioners assertions on her actual contributions.
SOLEDADs claim that she made a cash contribution of P100,000.00 is

unsubstantiated. Clearly, there is no basis for SOLEDADs claim of co-ownership over the
25/100 portion of the condominium unit and the trial court correctly found that the same was
acquired through the sole industry of ATTY. LUNA.
The Court upholds the foregoing findings and conclusions by the CA both
because they were substantiated by the records and because we have not been shown
any reason to revisit and undo them. Indeed, the petitioner, as the party claiming the co-
ownership, did not discharge her burden of proof. Her mere allegations on her contributions,
not being evidence, did not serve the purpose. In contrast, given the subsistence of the first
marriage between Atty. Luna and Eugenia, the presumption that Atty. Luna acquired the
properties out of his own personal funds and effort remained. It should then be justly
concluded that the properties in litislegally pertained to their conjugal partnership of gains as of
the time of his death. Consequently, the sole ownership of the 25/100 pro indivisoshare of Atty.
Luna in the condominium unit, and of the lawbooks pertained to the respondents as the lawful
heirs of Atty. Luna.
Marriage
ARABELLE J. MENDOZA v. REPUBLIC OF THE PHILIPPINES and DOMINIC C. MENDOZA

G.R. No. 157649, November 12, 2012, BERSAMIN, J.
To entitle petitioner spouse to a declaration of the nullity of his or her marriage, the
totality of the evidence must sufficiently prove that respondent spouse's psychological incapacity
was grave, incurable and existing prior to the time of the marriage.
Even if the expert opinions of psychologists are not conditions sine qua non in the granting
of petitions for declaration of nullity of marriage. What was essential, we should emphasize herein,
was the "presence of evidence that can adequately establish the partys psychological condition," as
the Court said in Marcos.
But where, like here, the parties had the full opportunity to present the professional and
expert opinions of psychiatrists tracing the root cause, gravity and incurability of the alleged
psychological incapacity, then the opinions should be presented and be weighed by the trial courts
in order to determine and decide whether or not to declare the nullity of the marriages. It bears
repeating that the trial courts, as in all the other cases they try, must always base their judgments
not solely on the expert opinions presented by the parties but on the totality of evidence adduced in
the course of their proceedings.
In this case, however, we find the totality of the evidence adduced by petitioner insufficient
to prove that Dominic was psychologically unfit to discharge the duties expected of him as a
husband, and that he suffered from such psychological incapacity as of the date of the marriage.
Accordingly, the CA did not err in dismissing the petition for declaration of nullity of marriage.
FACTS:
Petitioner and Dominic had been next-door neighbors in the appartelle they were
renting while they were still in college. After a month of courtship, they became intimate and
their intimacy ultimately led to her pregnancy with their daughter. They got married on her 8th
month of pregnancy in civil rites. After the marriage, they remain dependent on their parents for
support as the respondent remained jobless until he finished his college course. Meanwhile, the
petitioner took on various jobs to meet the familys needs. Being the one with the fixed income,
she shouldered all of the familys expenses.
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On his part, Dominic sold Encyclopedia after his graduation from college before he
started working as a car salesman for Toyota Motors. Ironically, he spent his first sales
commission on a celebratory bash with his friends. After sometime, the petitioner discovered the
illicit relationship of the respondent with his co-employee.
In November 1995, Dominic gave her a car as a birthday present. But she soon found out
that the checks given by her to the respondent were not paid for the cars insurance coverage but
for his personal needs. Worse, she also found out that he did not pay for the car itself, forcing
her to rely on her father-in-law to pay part of the cost of the car. To make matters worse,
Dominic was fired from his employment after he ran away with money belonging to his
employer. He was criminally charged with violation of B.P. 22, for which he was arrested and
incarcerated. After petitioner and her mother bailed him out of jail, petitioner discovered that he
had also swindled many clients.
On October 15, 1997, Dominic abandoned the conjugal abode because petitioner asked
him for time and space to think things over. A month later, he threatened to commit suicide
after she refused his attempt at reconciliation. At that, she and her family immediately left the
house to live in another place concealed from him.
On August 5, 1998, petitioner filed in the RTC her petition for the declaration of the
nullity of her marriage based on his psychological incapacity under Article 36 of the Family
Code.
The RTC declared the marriage between petitioner and Dominic an absolute nullity.
However, the CA reversed the judgment of the RTC. Specifically, it refused to be bound by the
findings and conclusions of the petitioners expert witness establishing psychological incapacity
of the respondent.
Hence, this appeal by petitioner.
ISSUE:
Whether or not a medical experts testimony is a requirement for declaration of nullity of

marriage (NO)
RULING:
We consider the CAs refusal to accord credence and weight to the psychiatric report.
The CA correctly indicated the findings of the expert witness of the petitioner were one-sided
because Dominic was not himself subjected to an actual psychiatric evaluation and that he also
did not participate in the proceedings. The findings and conclusions on his psychological profile
were solely based on the self-serving testimonial descriptions and characterizations of him
rendered by petitioner and her witnesses. In fine, the failure to examine and interview Dominic
himself naturally cast serious doubt on Dr. Samsons findings.
It was not the absence of the medical experts testimony alone that was crucial but rather
petitioners failure to satisfactorily discharge the burden of showing the existence of
psychological incapacity at the inception of the marriage. In other words, the totality of the
evidence proving such incapacity at and prior to the time of the marriage was the crucial
consideration, as the Court has reminded in Ting v. Velez-Ting:
By the very nature of cases involving the application of Article 36, it is logical and
understandable to give weight to the expert opinions furnished by psychologists regarding the
psychological temperament of parties in order to determine the root cause, juridical
antecedence, gravity and incurability of the psychological incapacity. However, such opinions,
while highly advisable, are not conditions sine qua non in granting petitions for declaration of
nullity of marriage. At best, courts must treat such opinions as decisive but not indispensable
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evidence in determining the merits of a given case. In fact, if the totality of evidence presented is
enough to sustain a finding of psychological incapacity, then actual medical or psychological
examination of the person concerned need not be resorted to. The trial court, as in any other
given case presented before it, must always base its decision not solely on the expert opinions
furnished by the parties but also on the totality of evidence adduced in the course of the
proceedings.
In light of the foregoing, even if the expert opinions of psychologists are not conditions
sine qua non in the granting of petitions for declaration of nullity of marriage, the actual medical
examination of Dominic was to be dispensed with only if the totality of evidence presented was
enough to support a finding of his psychological incapacity. This did not mean that the
presentation of any form of medical or psychological evidence to show the psychological
incapacity would have automatically ensured the granting of the petition for declaration of
nullity of marriage. What was essential, we should emphasize herein, was the "presence of
evidence that can adequately establish the partys psychological condition".
We find the totality of the evidence adduced by petitioner insufficient to prove that
Dominic was psychologically unfit to discharge the duties expected of him as a husband, and
that he suffered from such psychological incapacity as of the date of the marriage.
PROPERTY
HECTOR L. UY v. VIRGINIA G. FULE

G.R. No. 164961, FIRST DIVISION, June 30, 2014, BERSAMIN, J.
The decisive question here is whether or not the petitioner was a purchaser in good
faith of the property in litis. The standard is that for one to be a purchaser in good faith in the
eyes of the law, he should buy the property of another without notice that some other person has a
right to, or interest in, such property, and should pay a full and fair price for the same at the time
of such purchase, or before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he receives the property
was the owner and could convey title to the property. Indeed, a purchaser cannot close his eyes to
facts that should put a reasonable man on his guard and still claim he acted in good faith.
Civil Law; Sales; Buyer in Good Faith; In determining whether or not a buyer of property
is a purchaser in good faith, he must show that he has bought the property without notice that
some other person had a right to, or interest in, such property, and he should pay a full and fair
price for the same at the time of his purchase, or before he had notice of the claim or interest of
some other persons in the property.We stated at the start that in determining whether or not
a buyer of property is a purchaser in good faith, he must show that he has bought the property
without notice that some other person had a right to, or interest in, such property, and he
should pay a full and fair price for the same at the time of his purchase, or before he had notice
of the claim or interest of some other persons in the property. He must believe that the person
from whom he receives the property was the owner and could convey title to the property, for he
cannot close his eyes to facts that should put a reasonable man on his guard and still claim he
acted in good faith.
Same; Same; Same; It is a well-settled rule that a purchaser cannot close his eyes to facts
which should put a reasonable man upon his guard, and then claim that he acted in good faith
under the belief that there was no defect in the title of the vendor.The foregoing
circumstances negated the third element of good faith cited in Bautista v. Silva, 502 SCRA 334
(2006), i.e., that at the time of sale, the buyer was not aware of any claim or interest of some
other person in the property, or of any defect or restriction in the title of the seller or in his
capacity to convey title to the property. As we have ruled in Bautista v. Silva, the absence of the
third condition put the petitioner on notice and obliged him to exercise a higher degree of
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diligence by scrutinizing the certificates of title and examining all factual circumstances in order
to determine the sellers title and capacity to transfer any interest in the lots. Consequently, it is
not sufficient for him to insist that he relied on the face of the certificates of title, for he must
further show that he exercised reasonable precaution by inquiring beyond the certificates of
title. Failure to exercise such degree of precaution rendered him a buyer in bad faith. It is a well-
settled rule that a purchaser cannot close his eyes to facts which should put a reasonable man
upon his guard, and then claim that he acted in good faith under the belief that there was no
defect in the title of the vendor.
FACTS:
Upon the death of Conrado Garcia, his heirs entered into an extrajudicial settlement of
his estate, including the vast track of land. Thereafter, his heirs caused the registration of the
vast track of land.
The Department of Agrarian Reform (DAR) engaged Geodetic Engr. Sales to conduct a survey of
the disputed land. Engr. Sales issued a joint certification to the effect that the disputed land was
an untitled property owned by Conrado Garcia. The joint certification was buttressed by the
certification issued by the Office of the Register of Deeds of Camarines Sur to the effect that no
title covering Lot 562, Cad. 291 (Csd-05-003874) appeared on record. As a result, the disputed
land was included in the Operation Land Transfer (OLT) program of the DAR pursuant to
Presidential Decree No. 27.
In 1988, the DAR and the Office of the Register of Deeds of Camarines Sur respectively issued
emancipation patents (EPs) and original certificates of title (OCTs) covering the disputed land to
the farmers-beneficiaries.
In the interim, farmer-beneficiary Mariano Ronda sold his portion to Chisan Uy who
then registered his title to the Registry of Deeds of Camarines Sur. On the other hand, the heirs
of farmer-beneficiary Mariano Ronda (Isabel Ronda, et al.) sold their land to petitioner Hector
Uy for P10 million. The petitioner registered his title both of the Registry of Deeds of
Camarines Sur.
In 1997, TCT No. RT-8922 (16498) was cancelled following the partition of the property covered
therein. Subsequently, TCT No. 30136 and TCT No. 30111 were issued in the names of respondents
heirs of the late Conrado Garcia. TCT No. 30111 covered the disputed land. In 1998, the President,
acting through the DAR Secretary, issued EPs to the farmers-beneficiaries pursuant to P.D. No.
27 and P.D. No. 266.
On December 21, 1998, the respondents filed a complaint for cancellation of titles,
quieting of title, recovery of possession, and damages against the DAR Secretary; the
Municipal Agrarian Reform Officer of Pili, Camarines Sur; DAR Technologist Carmen Sorita;
DAR Team Leader Julian Israel; Engr. Sales; and Regional Director Antonio Nuesa of DAR
Regional Office No. V (public defendants) and the farmer-beneficiaries (private defendants) in
the Regional Trial Court (RTC) in Pili, Camarines Sur, alleging that they had been denied due
process; and that the titles of the defendants (who included the petitioner) in the disputed land
constituted clouds on their own title. They prayed that the private defendants certificates
of title, including those of their purchasers Chisan Uy and the petitioner, be cancelled;
that the private defendants be ordered to surrender the possession of the disputed land to them;
and that in default thereof the private defendants be ordered to pay the fair market value of the
property, with reparation for damages in either case.
The RTC resolved in favor of the respondents. Isabel Ronda, et al. (heirs of deceased
farmer-beneficiary Mariano S. Ronda), Catalino Alcaide, Julia Casaysayan, Chisan Uy, and the
petitioner appealed to the CA. The defendant public officials did not appeal. The CA ruled in
favor of respondents. Hence, the petitioner has appealed, along with Chisan Uy, Catalino Alcaide
and Julia Casaysayan.
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ISSUE:
WON the petitioner was a purchaser in good faith of the property in litigation
RULING:
NO. The petitioner was not an innocent purchaser for value; hence, he cannot be
awarded the disputed land.
A buyer for value in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in, such property and pays full and fair price for the
same, at the time of such purchase, or before he has notice of the claim or interest of some other
persons in the property. He buys the property with the well-founded belief that the person
from whom he receives the thing had title to the property and capacity to convey it.
To prove good faith, a buyer of registered and titled land need only show that he relied on the
face of the title to the property. He need not prove that he made further inquiry for he is not
obliged to explore beyond the four corners of the title. Such degree of proof of good faith,
however, is sufficient only when the following conditions concur: first, the seller is the registered
owner of the land; second, the latter is in possession thereof; and third, at the time of the sale,
the buyer was not aware of any claim or interest of some other person in the property, or of any
defect or restriction in the title of the seller or in his capacity to convey title to the property.
Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and
obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title
and examining all factual circumstances in order to determine the sellers title and capacity to
transfer any interest in the property. Under such circumstance, it was no longer sufficient
for said buyer to merely show that he had relied on the face of the title; he must now
also show that he had exercised reasonable precaution by inquiring beyond the
title. Failure to exercise such degree of precaution makes him a buyer in bad faith.
An examination of the deed of sale executed between Isabel Ronda, et al. and the
petitioner respecting the portions covered by TCT No. 31120 and TCT No. 31121 indicates
that the TCTs were issued only on August 17, 1998 but the deed of sale was executed on
July 31, 1998. While it is true, as the petitioner argues, that succession occurs from the moment
of death of the decedent pursuant to Article 777 of the Civil Code, his argument did not extend to
whether or not he was a buyer in good faith, but only to whether or not, if at all, Isabel Ronda, et
al., as the heirs of Mariano Ronda, held the right to transfer ownership over their predecessors
property. The argument did not also address whether or not the transfer to the petitioner was
valid.
Evidently, the petitioner entered into the deed of sale without having been able to
inspect TCT No. 31120 and TCT No. 31121 by virtue of such TCTs being not yet in existence
at that time. If at all, it was OCT No. 9852 and OCT No. 9853 that were available at the time of
the execution of the deed of sale, and such OCTs were presumably inspected by petitioner before
he signed the deed of sale. It is notable that said OCTs categorically stated that they were
entered pursuant to an emancipation patent of the Ministry of Agrarian Reform
pursuant to the Operation Land Transfer (OLT) Program of the government.
Furthermore, said OCTs plainly recited the following prohibition: it shall not be transferred
except by hereditary succession or to the Government in accordance with the provisions of
Presidential Decree No. 27, Code of Agrarian Reforms of the Philippines and other existing laws
and regulations.
The foregoing circumstances negated the third element of good faith that at the
time of sale, the buyer was not aware of any claim or interest of some other person in the
property, or of any defect or restriction in the title of the seller or in his capacity to convey title to
the property. The absence of the third condition put the petitioner on notice and obliged him to
exercise a higher degree of diligence by scrutinizing the certificates of title and examining all
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factual circumstances in order to determine the sellers title and capacity to transfer any interest
in the lots. Consequently, it is not sufficient for him to insist that he relied on the face of
the certificates of title, for he must further show that he exercised reasonable precaution
by inquiring beyond the certificates of title. Failure to exercise such degree of precaution
rendered him a buyer in bad faith. It is a well-settled rule that a purchaser cannot close his eyes
to facts which should put a reasonable man upon his guard, and then claim that he acted in good
faith under the belief that there was no defect in the title of the vendor.
Ownership
PEDRO ANGELES v. ESTELITA B. PASCUAL, et al.

G.R. No. 157150, 21 September 2011, FIRST DIVISION (Bersamin, J.)
Good faith consists in the belief of the builder that the land he is building on is his
and in his ignorance of a defect or flaw in his title.
Neighbors Regidor Pascual (Pascual) and Pedro Angeles (Angeles) were registered
owners of adjacent parcels of land located in Cabanatuan City. Each of them built a house
on his respective lot, believing all the while that his respective lot was properly
delineated. It was not until Metropolitan Bank and Trust Company (Metrobank), as the
highest bidder in the foreclosure sale of an adjacent, caused the relocation survey of
foreclosed lot that the geodetic engineer discovered that Pascuals house had encroached
on said foreclosed lot. As a consequence, Metrobank successfully ejected Pascual.
In turn, Pascual caused the relocation survey of his own Lot 4 and discovered that
Angeles house in turn encroached on his lot. Of the 318 square meters comprising Lot 4,
Angeles occupied 252 square meters, leaving Pascual with only about 66 square meters.
Pascual demanded rentals for the use of the encroached area from Angeles, or the
removal of Angeles house. Angeles refused the demand. Accordingly, Pascual sued Angeles
for recovery of possession and damages in the Regional Trial Court (RTC). In the course
of the trial, Pascual presented Clarito Fajardo (Fajardo), the geodetic engineer who had
conducted the relocation survey and had made the relocation plan of Pascuals lot;
Fajardo testified that Angeles house was erected on aforesaid lot. On the other hand,
Angeles presented Juan Fernandez (Fernandez), the geodetic engineer who had prepared
the sketch plan relied upon by Angeles to support his claim that there had been no
encroachment. However, Fernandez explained that he had performed only a table work,
that is, he did not actually go to the site but based the sketch plan on the descriptions
and bearings appearing on the TCTs of the lots in question and recommended the conduct
of a relocation survey.
The RTC ruled that the ownership of the lots is not the issue, rather what was disputed
between them was the location of their respective lots; that Pascual proved Angeles
encroachment on his lot by preponderant evidence; and that Pascual was entitled to relief.
Thus the RTC ordered the Angeles or persons claiming right through him to cause the
removal of his house insofar as the same occupies the portion of Pascuals lot, of an area of
252 square meters. Angeles then appealed the case to the Court of Appeals (CA). The CA
affirmed the RTC, and held that as between the findings of the Fajardo who had actually
gone to the site and those of Fernandez who had based his findings on the TCTs of the
owners of the three lots; those of the former should prevail. However, the CA modified the
ruling of the RTC stating that Angels is a builder in good faith as provided for in Article 448
of the Civil Code. Thus the CA ordered Angeles to vacate, appropriate, or pay rent for the
occupied portion of Pascuals property. Moreover, Angeles may opt to sell his property
instead. Angeles sought for reconsideration but CA denied the motion.
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ISSUE:
Whether or not the decision of the CA with respect to the options given was contrary
to its finding of good faith.
RULING:
NO. The Supreme Court affirmed the findings of the RTC and the CA that Angeles
is a builder in good faith which can easily be drawn from the fact that Angeles insisted that
he built his house entirely on his own lot. Good faith consists in the belief of the builder that
the land he is building on is his and in his ignorance of a defect or flaw in his title.
Furthermore, the Court affirmed the application of the CA of the provisions of Article 448 of
the Civil Code which spells out the rights and obligations of the owner of the land as well as
of the builder. Consequently, the land being the principal and the building the accessory,
preference is given to Pascual as the owner of the land to make the choice as between
appropriating the building or obliging Angeles as the builder to pay the value of the land.
Contrary to the insistence of Angeles, therefore, no inconsistency exists between the finding
of good faith in his favor and the grant of the reliefs set forth in Article 448 of the Civil
Code.
Co-ownership
THE HEIRS OF PROTACIO GO, SR., et al. v. ESTER L. SERVACIO, et al.

A sale of the entire property by one co-owner without the consent of the other co-
owners is not null and void. However, only the rights of the co-owner-seller are transferred,
thereby making the buyer a co-owner of the property.
Jesus B. Gaviola and Protacio B. Go, Jr. (Protacio Jr.) entered into a contract of sale
of a parcel of land. 23 years later, Protacio Jr. executed an Affidavit of Renunciation and
Waiver affirming under oath that it was his father, Protacio Go, Sr. (Protacio Sr.) who
purchased the said property. Subsequently, Protacio Sr. together with his son Rito Go (Rito)
sold a portion of the property to herein Ester Servacio (Servacio). On March 2, 2001, the
heirs of Protacio (heirs) demanded the return of the property, but Servacio refused to heed
their demand; hence this case for the annulment of sale of the property. The contention of
the heirs was that following Protacio, Jr.s renunciation, the property became conjugal
property; and that the sale of the property to Servacio without the prior liquidation of
the community property between Protacio, Sr. and Marta Go was null and void pursuant to
Article 130 of the Family Code. Servacio and Rito countered that Article 130 of the Family
Code was inapplicable; that the want of the liquidation prior to the sale did not render the
sale invalid, because the sale was valid to the extent of the portion that was finally allotted
to the vendors as his share; and that the sale did not also prejudice any rights of the
petitioners as heirs, considering that what the sale disposed of was within the aliquot portion
of the property that the vendors were entitled to as heirs.
The Regional Trial Court (RTC) declared that the property was the conjugal property of
Protacio, Sr. and Marta Go, not the exclusive property of Protacio, Sr. Nonetheless, the RTC
affirmed the validity of the sale of the property. Aggrieved, the heirs went all the way up
to the Supreme Court.
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ISSUE:
Whether or not Article 130 of the Family Code is applicable.
RULING:
NO. Under Article 130 in relation to Article 105 of the Family Code, any disposition
of the conjugal property after the dissolution of the conjugal partnership must be made only
after the liquidation; otherwise, the disposition is void. Upon Marta Gos death in 1987,
the conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil Code, and an
implied ordinary co- ownership ensued among Protacio Sr. and the other heirs of Marta
with respect to her share in the assets of the conjugal partnership pending a liquidation
following its liquidation.
Protacio Sr., although becoming a co-owner with his children in respect of Martas
share in the conjugal partnership, could not yet assert or claim title to any specific portion
of Martas share without an actual partition of the property being first done either by
agreement or by judicial decree. Until then, all that he had was an ideal or abstract quota
in Martas share. Nonetheless, a co- owner could sell his undivided share; hence, Protacio
Sr. had the right to freely sell and dispose of his undivided interest, but not the interest of
his co-owners. Consequently, the sale by Protacio, Sr. and Rito as co-owners without the
consent of the other co-owners was not necessarily void, for the rights of the selling co-
owners were thereby effectively transferred, making the buyer (Servacio) a co-owner of
Martas share. Article 105 of the Family Code, supra, expressly provides that the applicability
of the rules on dissolution of the conjugal partnership is without prejudice to vested rights
already acquired in accordance with the Civil Code or other laws.
The proper action in cases like this is not for the nullification of the sale or for the
recovery of possession of the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their shares, but the division of the
common property as if it continued to remain in the possession of the co-owners who
possessed and administered it. In the meanwhile, Servacio would be a trustee for the benefit
of the co-heirs of her vendors in respect of any portion that might not be validly sold to
her.
HEIRS OF JOSE REYES, JR. v. AMANDA S. REYES, et al.

GR No. 158377, 13 August 2010, THIRD DIVISION (Bersamin, J.)
The existence of any one of the conditions enumerated under Article 1602, not a
concurrence of all or of a majority thereof, suffices to give rise to the presumption that the
contract is an equitable mortgage.
The acceptance of the payments beyond the 10-year period of redemption estopped the
mortgagee-heirs from insisting that the period to redeem the property had already expired.
Their actions impliedly recognized the continued existence of the equitable mortgage.
Antonio Reyes and his wife, Leoncia Mag-isa Reyes, were owners of a parcel of
residential land in Pulilan, Bulacan. The couple had four children, namely: Jose Reyes, Sr.
(Jose, Sr.), Teofilo Reyes (Teofilo), Jose Reyes, Jr. (Jose, Jr.) and Potenciana Reyes-Valenzuela
(Potenciana). Antonio Reyes died intestate, and was survived by Leoncia and their three
sons, Potenciana having predeceased her father. Potenciana also died intestate, survived by
her children, namely: Gloria Reyes Valenzuela, Maria Reyes Valenzuela, and Alfredo Reyes
Valenzuela. Jose, Jr., and his family resided in the house of the parents, but Teofilo
constructed on the property his own house, where he and his family resided.
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On July 9, 1955, Leoncia and her three sons, through a Kasulatan ng Biling Mabibili
Muli, sold the land and its existing improvements to the Spouses Benedicto Francia and Monica
Ajoco (Spouses Francia), subject to the vendors right to repurchase for the same amount sa
oras na sila'y makinabang. Potencianas heirs did not agree to this but nonetheless, Teofilo
and Jose, Jr. and their respective families remained in possession of the property and paid its
realty taxes.
Spouses Francia died intestate. It was Alejandro, the son of Jose Sr., who paid for the
obligation of Leoncia and the land was conveyed to his name. Alejandro acknowledged the
right of Leoncia, Jose, Jr., and Jose, Sr. to repurchase the property at any time. On October
22, 1970, Leoncia died intestate. She was survived by Jose, Sr., Teofilo, Jose, Jr. and the heirs
of Potenciana. Even after Leoncias death, Teofilo and Jose, Jr., with their respective families,
continued to reside in the property. All of Leoncias sons eventually died intestate, survived
by their respective heirs.
On September 2, 1993, Alejandro also died intestate. Surviving him were his wife,
Amanda Reyes, and their children, namely: Consolacion Reyes, Eugenia Reyes-Elvambuena,
Luciana Reyes- Mendoza, Pedrito S. Reyes, Merlinda Reyes-Famodulan, Eduardo Reyes and
June S. Reyes, herein respondents. In 1994, respondent Amanda Reyes asked the heirs of
Teofilo and Jose, Jr., to vacate the property.
On September 28, 1994, the respondents initiated this suit for quieting of title and
reconveyance in the Regional Trial Court. The RTC ruled in favor of the heirs of Jose Reyes Jr.,
declaring that Alejandro had acquired ownership of the property in 1965 by operation of law
upon the failure of the petitioners predecessors to repurchase the property.
The Court of Appeals ruled that the transaction covered by the Kasulatan ng Biling
Mabibiling Muli was not a pacto de retro sale but an equitable mortgage under Article
1602 of the Civil Code. Even after the deeds execution, Leoncia, Teofilo, Jose, Jr. and their
families had remained in possession of the property and continued paying realty taxes for
the property. However, failure to file an action for the reformation of the Kasulatan ng
Biling Mabibiling Muli to reflect the true intention of the parties within ten years from the
deeds execution on July 9, 1955, pursuant to Article 1144 of the Civil Code, already barred
them from claiming that the transaction executed between Leoncia and her children, on one
hand, and the Spouses Francia, on the other hand, was an equitable mortgage.
ISSUES:
1. Whether or not Amanda Reyes, et al. are barred from claiming that the transaction
entered into by their predecessors-in-interest was an equitable mortgage and not a
pacto de retro sale.
2. Whether or not Alejandro and his heirs (respondents herein) acquired the mortgaged
property through prescription.
RULING:
1. NO. The CA correctly concluded that the true agreement of the parties was an
equitable mortgage and not a pacto de retro sale. There was no dispute that the vendors had
continued in the possession of the property even after the execution of the agreement; and
that the property had remained declared for taxation purposes under Leoncias name, with
the realty taxes due being paid by Leoncia. Such established circumstances are among the
badges of an equitable mortgage enumerated in Article 1602, paragraphs 2 and 5 of the Civil
Code. The existence of any one of the conditions enumerated under Article 1602, not a
concurrence of all or of a majority thereof, suffices to give rise to the presumption that the
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contract is an equitable mortgage.
Considering that the phrase sa oras na silay makinabang signified that no definite
period had been stated, the period to redeem should be ten years from the execution of
the contract, pursuant to Articles 1142 and 1144 of the Civil Code. Thus, the full redemption
price should have been paid by July 9, 1955; and upon the expiration of said 10-year period,
mortgagees Spouses Francia or their heirs should have foreclosed the mortgage, but they did
not do so. Instead, they accepted Alejandros payments, until the debt was fully satisfied by
August 11, 1970.
The acceptance of the payments even beyond the 10-year period of redemption
estopped the mortgagee-heirs from insisting that the period to redeem the property had
already expired. Their actions impliedly recognized the continued existence of the
equitable mortgage. Neither did the petitioners failure to initiate an action for reformation
within ten years from the execution of the Kasulatan ng Biling Mabibiling Muli bar them
from insisting on their rights in the property. The records show that the parties in the
Kasulatan ng Biling Mabibiling Muli had abided by their true agreement under the deed, to
the extent that they and their successors-ininterest still deemed the agreement as an
equitable mortgage despite the lapse of 15 years from the execution of the purported pacto
de retro sale. Alejandros being an assignee of the mortgage did not authorize him or his
heirs to appropriate the mortgaged property for himself without violating the prohibition
against pactum commissorium contained in Article 2088 of the Civil Code, to the effect
that the creditor cannot appropriate the things given by way of pledge or mortgage, or
dispose of them, any stipulation to the contrary is null and void.
2. NO. It is true that Alejandro became a co-owner of the property by right of

representation upon the death of his father, Jose Sr. As a co-owner, however, his possession
was like that of a trustee and was not regarded as adverse to his co-owners but in fact
beneficial to all of them. In order that a co-owners possession may be deemed adverse to
that of the cestui que trust or the other co-owners, the following elements must concur:
1. The co-owner has performed unequivocal acts of repudiation of the
co- ownership amounting to an ouster of the cestui que trust or the other co-
owners;
2. Such positive acts of repudiation have been made known to the cestui
que trust or the other co-owners;
3. The evidence on the repudiation is clear and conclusive; and
4. His possession is open, continuous, exclusive, and notorious.
The concurrence of the foregoing elements was not established. For one, Alejandro
did not have adverse and exclusive possession of the property, as, in fact, the other co-owners
had continued to possess it, with Alejandro and his heirs occupying only a portion of it.
Neither did the cancellation of the previous tax declarations in the name of Leoncia, the
previous co-owner, and the issuance of a new one in Alejandros name, and Alejandros
payment of the realty taxes constitute repudiation of the co-ownership. The sole fact of a co-
owner declaring the land in question in his name for taxation purposes and paying the land
taxes did not constitute an unequivocal act of repudiation amounting to an ouster of the other
co-owner and could not constitute adverse possession as basis for title by prescription.
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OBLIGATIONS AND CONTRACTS
INTERNATIONAL HOTEL CORPORATION, petitioner, vs. FRANCISCO B. JOAQUIN, JR.

and RAFAEL SUAREZ, respondents.
G.R. No. 158361 April 10, 2013, FIRST DIVISION, BERSAMIN, J.
To avoid unjust enrichment to a party from resulting out of a substantially performed

contract, the principle of quantum meruit may be used to determine his compensation in the
absence of a written agreement for that purpose. The principle of quantum meruit justifies the
payment of the reasonable value of the services rendered by him.
Civil Law; Obligations; Suspensive Condition; Article 1186 of the Civil Code refers to the
constructive fulfillment of a suspensive condition, whose application calls for two requisites,
namely: (a) the intent of the obligor to prevent the fulfillment of the condition, and (b) the actual
prevention of the fulfillment.Article 1186 of the Civil Code reads: Article 1186. The condition
shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. This provision
refers to the constructive fulfillment of a suspensive condition, whose application calls for two
requisites, namely: (a) the intent of the obligor to prevent the fulfillment of the condition, and
(b) the actual prevention of the fulfillment. Mere intention of the debtor to prevent the
happening of the condition, or to place ineffective obstacles to its compliance, without actually
preventing the fulfillment, is insufficient.
Same; Contracts; Breach of Contract; It is well to note that Article 1234 applies only when
an obligor admits breaching the contract after honestly and faithfully performing all the material
elements thereof except for some technical aspects that cause no serious harm to the obligee.
The CA applied Article 1234 of the Civil Code, which states: Article 1234. If the obligation has
been substantially performed in good faith, the obligor may recover as though there had been a
strict and complete fulfillment, less damages suffered by the obligee. It is well to note that
Article 1234 applies only when an obligor admits breaching the contract after honestly and
faithfully performing all the material elements thereof except for some technical aspects that
cause no serious harm to the obligee. IHC correctly submits that the provision refers to an
omission or deviation that is slight, or technical and unimportant, and does not affect the real
purpose of the contract.
Same; Obligations; Conditional Obligations; The existing rule in a mixed conditional

obligation is that when the condition was not fulfilled but the obligor did all in his power to comply
with the obligation, the condition should be deemed satisfied.To secure a DBP-guaranteed
foreign loan did not solely depend on the diligence or the sole will of the respondents because it
required the action and discretion of third personsan able and willing foreign financial
institution to provide the needed funds, and the DBP Board of Governors to guarantee the loan.
Such third persons could not be legally compelled to act in a manner favorable to IHC. There is
no question that when the fulfillment of a condition is dependent partly on the will of one of the
contracting parties, or of the obligor, and partly on chance, hazard or the will of a third person,
the obligation is mixed. The existing rule in a mixed conditional obligation is that when the
condition was not fulfilled but the obligor did all in his power to comply with the obligation, the
condition should be deemed satisfied.
Same; Same; Quantum Meruit; Considering the absence of an agreement, and in view of
respondents constructive fulfillment of their obligation, the Court has to apply the principle of
quantum meruit in determining how much was still due and owing to respondents. Under the
principle of quantum meruit, a contractor is allowed to recover the reasonable value of the services
rendered despite the lack of a written contract.It is notable that the confusion on the amounts
of compensation arose from the parties inability to agree on the fees that respondents should
receive. Considering the absence of an agreement, and in view of respondents constructive
fulfillment of their obligation, the Court has to apply the principle of quantum meruit in
determining how much was still due and owing to respondents. Under the principle of quantum
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meruit, a contractor is allowed to recover the reasonable value of the services rendered despite
the lack of a written contract. The measure of recovery under the principle should relate to the
reasonable value of the services performed. The principle prevents undue enrichment based on
the equitable postulate that it is unjust for a person to retain any benefit without paying for it.
Being predicated on equity, the principle should only be applied if no express contract was
entered into, and no specific statutory provision was applicable.
FACTS:
Respondent Francisco B. Joaquin, Jr. submitted a proposal to the Board of Directors of

the International Hotel Corporation (IHC) for him to render technical assistance in securing a
foreign loan for the construction of a hotel, to be guaranteed by the Development Bank of the
Philippines (DBP). The IHC Board of Directors approved the proposal. Joaquin presented to the
IHC Board of Directors the results of his negotiations with potential foreign financiers. He
narrowed the financiers to Roger Dunn & Company and Materials Handling Corporation. He
recommended that the Board of Directors consider Materials Handling Corporation based on
the more beneficial terms it had offered. Negotiations with Materials Handling Corporation and,
later on, with its principal, Barnes International (Barnes), ensued.
While the negotiations with Barnes were ongoing, Joaquin and Jose Valero, the Executive
Director of IHC, met with another financier, the Weston International Corporation (Weston), to
explore possible financing. When Barnes failed to deliver the needed loan, IHC informed DBP
that it would submit Weston for DBPs consideration. IHC entered into an agreement with
Weston. However, DBP denied the application for guaranty.
Due to Joaquins failure to secure the needed loan, IHC, through its President Bautista,
canceled the 17,000 shares of stock previously issued to Joaquin and Suarez as payment for their
services. Consequently, Joaquin and Suarez commenced this action for specific performance,
annulment, damages and injunction in the Regional Trial Court. RTC and CA upheld IHCs
liability under Article 1186 of the Civil Code. It ruled that in the context of Article 1234 of the
Civil Code, Joaquin had substantially performed his obligations and had become entitled to be
paid for his services.
ISSUE:
1. Whether Article 1186 and Article 1234 of the Civil Code can be the source of IHCs obligation
to pay respondents.
2. Whether the respondents is entitled to any compensation.
RULING:
1. Article 1186 and Article 1234 of the Civil Code cannot be the source of IHCs
obligation to pay respondents.
Article 1186 of the Civil Code reads: The condition shall be deemed fulfilled when the
obligor voluntarily prevents its fulfillment.
This provision refers to the constructive fulfillment of a suspensive condition, whose

application calls for two requisites, namely: (a) the intent of the obligor to prevent the fulfillment
of the condition, and (b) the actual prevention of the fulfillment.
The error lies in the CAs failure to determine IHCs intent to preempt Joaquin from
meeting his obligations. The minutes of IHCs special board meeting discloses that Joaquin
impressed upon the members of the Board that Materials Handling was offering more favorable
terms for IHC. IHC only relied on the opinion of its consultant in deciding to transact with
Materials Handling and, later on, with Barnes. In negotiating with Barnes, IHC had no intention,
willful or otherwise, to prevent Joaquin and Suarez from meeting their undertaking. Such
absence of any intention negated the basis for the CAs reliance on Article 1186 of the Civil Code.
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Article 1234 does not likewise apply which provides: If the obligation has been
substantially performed in good faith, the obligor may recover as though there had been a strict
and complete fulfillment, less damages suffered by the obligee.
It is well to note that Article 1234 applies only when an obligor admits breaching the
contract after honestly and faithfully performing all the material elements thereof except for
some technical aspects that cause no serious harm to the obligee. IHC correctly submits that the
provision refers to an omission or deviation that is slight, or technical and unimportant, and
does not affect the real purpose of the contract. By reason of the inconsequential nature of the
breach or omission, the law deems the performance as substantial, making it the obligees duty
to pay.
Conversely, the principle of substantial performance is inappropriate when the

incomplete performance constitutes a material breach of the contract. A contractual breach is
material if it will adversely affect the nature of the obligation that the obligor promised to
deliver, the benefits that the obligee expects to receive after full compliance, and the extent that
the nonperformance defeated the purposes of the contract. Accordingly, for the principle
embodied in Article 1234 to apply, the failure of Joaquin and Suarez to comply with their
commitment should not defeat the ultimate purpose of the contract. The primary objective of
the parties in entering into the services agreement was to obtain a foreign loan to finance the
construction of IHCs hotel project.
Finding the foreign financier that DBP would guarantee was the essence of the parties
contract, so that the failure to completely satisfy such obligation could not be characterized as
slight and unimportant as to have resulted in Joaquin and Suarezs substantial performance that
consequentially benefitted IHC. Whatever benefits IHC gained from their services could only be
minimal, and were even probably outweighed by whatever losses IHC suffered from the delayed
construction of its hotel. Consequently, Article 1234 did not apply.
2. IHC is nonetheless liable to pay under the rule on constructive fulfillment of a

mixed conditional obligation.
Notwithstanding the inapplicability of Article 1186 and Article 1234 of the Civil Code, IHC
was liable based on the nature of the obligation. Considering that the agreement between the
parties was not circumscribed by a definite period, its termination was subject to a
conditionthe happening of a future and uncertain event.
To secure a DBP-guaranteed foreign loan did not solely depend on the diligence or the
sole will of the respondents because it required the action and discretion of third personsan
able and willing foreign financial institution to provide the needed funds, and the DBP Board of
Governors to guarantee the loan. Such third persons could not be legally compelled to act in a
manner favorable to IHC. There is no question that when the fulfillment of a condition is
dependent partly on the will of one of the contracting parties, or of the obligor, and partly on
chance, hazard or the will of a third person, the obligation is mixed. The existing rule in a mixed
conditional obligation is that when the condition was not fulfilled but the obligor did all in his
power to comply with the obligation, the condition should be deemed satisfied.
Considering that the respondents were able to secure an agreement with Weston, and
subsequently tried to reverse the prior cancellation of the guaranty by DBP, we rule that they
thereby constructively fulfilled their obligation. Considering the absence of an agreement, and in
view of respondents constructive fulfillment of their obligation, the Court has to apply the
principle of quantum meruit in determining how much was still due and owing to respondents.
Under the principle of quantum meruit, a contractor is allowed to recover the reasonable value
of the services rendered despite the lack of a written contract. The measure of recovery under
the principle should relate to the reasonable value of the services performed. The principle
prevents undue enrichment based on the equitable postulate that it is unjust for a person to
retain any benefit without paying for it. Being predicated on equity, the principle should only be
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applied if no express contract was entered into, and no specific statutory provision was
applicable.
VECTOR SHIPPING CORPORATION vs. AMERICAN HOME ASSURANCE COMPANY

G.R. No. 159213, FIRST DIVISION, July 3, 2013, Bersamin, J.
Subrogation under Article 2207 of the Civil Code gives rise to a cause of action created by
law. For purposes of the law on the prescription of actions, the period of limitation is ten years.
FACTS:
Vector was the operator of the motor tanker M/T Vector, while Soriano was the
registered owner of the M/T Vector.
On September 30, 1987, Caltex entered into a contract of Affreightment with Vector for
the transport of Caltexs petroleum cargo through the M/T Vector. Caltex insured the petroleum
cargo with American Home Assurance Company under Marine Open Policy. In the evening of
December 20, 1987, M/T Vector and M/V Dona Paz (owned by Sulpicio Lines) collided in the
open sea near Tablas Strait. The collision led to the sinking of both vessels. The entire petroleum
cargo on board M/T Vector perished and American Home Assurance indemnified Caltex for the
loss.
On March 5, 1992, American Home Assurance filed a complaint against Vector, Soriano
and Sulpicio Lines to recover the full amount it paid to Caltex.
The RTC dismissed the case because the action is based upon a quasi-delict and which
must be commenced within 4 years from the day the quasi-delict occurred. The tort complained
of occurred on December 20, 1987. The case, on the other hand, was filed on March 5, 1992.
Clearly, 5 years has passed since the tort occurred prior to the filing of the complaint.
The CA, wherein the decision of the RTC was reversed and absolved Sulpicio Lines from
liability. Accordingly, Vector Shipping Corporation and Francisco Soriano are held jointly and
severally liable to American Home Assurance Company.
Furthermore, the CA opined that the resolution of this case is primarily anchored on the
determination of what kind of relationship existed between Caltex and M/V Dona Paz and
between Caltex and M/T Vector for purposes of applying the laws on prescription. After a careful
perusal of the factual milieu and the evidence adduced by the parties, the CA is constrained to
rule that the relationship that existed between Caltex and M/V Dona Paz is that of a quasi-delict
while that between Caltex and M/T Vector is culpa contractual based on a Contract of
Affreightment or a charter party.
ISSUE:
Whether the action was already barred by prescription for bringing it only on March 5,
1992, almost 5 years after the collision.
HELD:
No. Article 1144. The following actions must be brought within ten years from the time the
cause of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment.
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American Home Assurance Companys action did not yet prescribe. However, this Court
cannot adopt the CAs characterization of the cause of action as based on the contract of
affreightment between Caltex and Vector, with the breach of contract being the failure of Vector
to make the M/T Vector seaworthy, as to make this action come under Article 1144 (1). Instead,
we find and hold that that the present action was not upon a written contract, but upon
an obligation created by law. Hence, it came under Article 1144 (2) of the Civil Code. This is
because the subrogation of respondent to the rights of Caltex as the insured was by virtue of the
express provision of law embodied in Article 2207 of the Civil Code.
Article 2207 of the Civil Code is founded on the well-settled principle of subrogation. If
the insured property is destroyed or damaged through the fault or negligence of a party other
than the assured, then the insurer, upon payment to the assured, will be subrogated to the rights
of the assured to recover from the wrongdoer to the extent that the insurer has been obligated to
pay. Payment by the insurer to the assured operates as an equitable assignment to the former of
all remedies which the latter may have against the third party whose negligence or wrongful act
caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any
privity of contract or upon written assignment of claim. It accrues simply upon payment of the
insurance claim by the insurer.
Verily, the contract of affreightment that Caltex and Vector entered into did not give rise
to the legal obligation of Vector and Soriano to pay the demand for reimbursement by
respondent because it concerned only the agreement for the transport of Caltexs petroleum
cargo. As the Court has aptly put it in Pan Malayan Insurance Corporation v. Court of Appeals,
supra, respondents right of subrogation pursuant to Article 2207, supra, was "not dependent
upon, nor did it grow out of, any privity of contract or upon written assignment of claim but
accrued simply upon payment of the insurance claim by the insurer."
LINA CALILAP-ASMERON v. DEVELOPMENT BANK OF THE PHILIPPINES, et al.

G.R. No. 157330, 23 November 2011, FIRST DIVISION (Bersamin, J.)
Article 1332 of the Civil Code does not apply when the party invoking it is found to
have a distinctive ability to understand written and spoken English, the language in which the
terms of the contract she signed had been written.
The thrust of the Lina Calilap-Asmerons (Calilap) suit is that Development Bank of the
Philippines (DBP) accorded to her a preferential right to repurchase the property covered by
TCT No. 164117. In August 1982, Calilap negotiated with DBP to buy back the property
covered by TCT No. 164117 by offering P15,000.00 as downpayment. Her offer was rejected by
an executive officer of DBPs Acquired Assets Department, who required her to pay the full
purchase price of P55,500.00 for the property within ten days. She returned to DBP with the
amount, only to be told that DBP would not sell back only one lot. Being made to
believe that the lot covered by TCT No. 164117 would be released after paying two
amortizations for the other lot (TCT No. 160929), however, she signed the deed of
conditional sale covering both lots for the total consideration of P157,000.00. When she later
on requested the release of the property under TCT No. 164117 after paying two quarterly
amortizations, DBP did not approve the release. She continued paying the amortizations
until she had paid P40,000.00 in all, at which point she sought again the release of the lot
under TCT No. 164117.
DBP still denied her request, warning that it would rescind the contract
should her remaining amortizations contracts be still not paid. On August 7, 1985, DBP
rescinded the deed of conditional sale over her objections. On November 25, 1987, DBP sold
the lot covered by TCT No. 164117 to respondent Pablo Cruz (Cruz) via Deed of Absolute Sale.
Calilap consequently filed a complaint for the rescission of the sale to Cruz on January 30,
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1987. Notwithstanding their knowledge of her pending suit against Cruz, respondents
Emerenciana Cabantog (Cabantog) and Eni S.P. Atienza (Atienza) still bought the property
from Cruz. Hence, Cabantog and Atienza were impleaded as additional defendants by
amendment.
Finding Calilaps complaint lacking in merit, the Regional Trial Court (RTC)
dismissed the case. It observed that the stipulations in the Deed of Conditional Sale and the
tenor of Calilaps communications to DBP clearly indicated that she had intended to
repurchase both foreclosed properties, not just the property covered by TCT No. T-164117. The
Court of Appeals (CA) affirmed the decision of the RTC, pointing out that Calilap had not
presented testimonial or documentary evidence to support or corroborate her claim that she
had been misled into signing the deed of conditional sale. It ruled that DBP could rescind the
contract pursuant to the terms of the deed of conditional sale itself, and that DBP exercised
its right to rescind only after she had failed to pay her quarterly amortizations.
ISSUE:
Whether or not Article 1332 of the Civil Code is applicable to the acts of Calilap.
RULING:
NO. Calilap would have the Court consider that she had not given her full consent
to the deed of conditional sale on account of her lack of legal and technical knowledge. In
effect, she pleads for the application of Article 1332 of the Civil Code, which provides:
Article 1332. When one of the parties is unable to read, or if the

contract is in a language not understood by him, and mistake or fraud is
alleged, the person enforcing the contract must show that the terms
thereof have been fully explained to the former.
It is quite notable that Calilap did not specify which of the stipulations of the Deed of
Conditional Sale she had difficulty or deficiency in understanding. Her generalized averment
of having been misled should, therefore, be brushed aside as nothing but a last attempt to
salvage a hopeless position. Our impression is that the stipulations of the Deed of
Conditional Sale were simply worded and plain enough for even one with a slight knowledge
of English to easily understand. Calilap was not illiterate. She had appeared to the trial
court to be educated, its cogent observation of her as being based on how she had composed
her correspondences to DBP.
Her testimony also revealed that she had no difficulty understanding English. Thereby
revealed was her distinctive ability to understand written and spoken English, the
language in which the terms of the contract she signed had been written. Clearly, Article
1332 of the Civil Code does not apply to her.
PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION (now

TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES) v.
AMALGAMATED MANAGEMENT AND DEVELOPMENT CORPORATION, et al.
In a solidary obligation, each debtor is liable for the entire obligation. The petitioner
could compel any of the solidary obligors to perform the entire obligation.
Trade and Investment Development Corporation of the Philippines (TIDCP) is a

government-owned and controlled-corporation created by virtue of Presidential Decree No.
Page 20 of 95
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1080, as amended by Republic Act No. 8497. Its primary purpose is to guarantee the foreign
loans, in whole or in part, granted to any domestic entity, enterprise, or corporation,
majority of the capital of which is owned by Filipino citizens. Amalgamated Management and
Development Corporation (AMDC), a domestic corporation, had as its main business the
hauling of different commodities within the Middle East countries. Its co-respondents
Felimon R. Cuevas (Cuevas) and Jose A. Saddul, Jr. (Saddul) were, respectively, its President
and Vice-President. In early 1982, AMDC obtained from the National Commercial Bank of
Saudi Arabia (NCBSA) a loan amounting to SR 3,300,000 (PhP 9,000,000) to finance the
working capital requirements and the down payment for the trucks to be used in AMDC's
hauling project in the Middle East. On April 21, 1982, AMDC executed in favor of TIDCP a
deed of undertaking, with Cuevas and Saddul as its co-obligors. In the deed of undertaking,
AMDC, Cuevas, and Saddul jointly and severally bound themselves to pay to TIDCP, as
obligee, whatever damages or liabilities that TIDCP would incur by reason of the guaranty.
On April 23, 1982, TIDCP issued a letter of guaranty in favor of NCBSA as the lending bank
upon the request of AMDC. Amalgamated Motors Philippines Incorporated (AMPI) acted as
an accommodation mortgagor, and executed in favor of TIDCP a real estate mortgage over 2
parcels of land located in Dasmarias, Cavite. AMDC defaulted on the obligation. Upon
demand, TIDCP paid the obligation to NCBSA. By subrogation and pursuant to the Deed of
Undertaking, TIDCP then demanded that AMDC, Cuevas and Saddul should pay the
obligation, but its demand was not complied with. Hence, it extra-judicially foreclosed the
real estate mortgage.
The Provincial Sheriff of Cavite conducted a public auction, in which TIDCP acquired
the mortgaged properties as the highest bidder for P4,688,482.00 and P69,518.00. The
proceeds of the foreclosure sale were not sufficient to cover the guaranty because a balance
of P45,839,219.95 plus interest and other charges remained unpaid. TIDCP sued AMDC,
Cuevas and Saddul in the Regional Trial Court (RTC) to collect the deficiency. AMDC and
Cuevas admitted the existence of the real estate mortgage and deed of undertaking, but
raised defenses, as follows:
a) that they did not receive from TIDCP any demand for the payment of the loan;
b) that the interests, penalties, fees, charges, and attorney's fees were
usurious, exorbitant, unconscionable, and in violation of law;
c) that the value of the foreclosed properties was more than sufficient to pay the
loan;
d) that the deficiency claim was unconscionable and unilaterally computed by
TIDCP; and
e) that they made several payments to TIDCP in the form of rental or otherwise.
Saddul submitted a separate answer, averring that he was not liable to TIDCP for any
amount because he did not benefit from the guaranty. The RTC rendered its decision.
Cuevas and Saddul were rendered absolved from the obligation as well as from the deficiency
claim as a consequence. The cross-claim of defendant/cross-claimant defendant Saddul
against defendant AMDC was dismissed for lack of sufficient basis. TIDCP appealed to the
Court of Appeals, asserting that Cuevas and Saddul should be held jointly and severally liable
with AMDC on its deficiency claim; and that the rates of interest and penalty charges on
the deficiency claim should each be at 16% per annum instead of only 6% per annum. CA
affirmed the decision of the RTC.
ISSUES:
1. Whether or not the CA erred in affirming the RTCs ruling that Cuevas and Saddul
were absolved of personal liability on TIDCPs deficiency claim.
2. Whether or not the CA erred in ruling that Cuevas and Saddul had not been notified of
the guaranty period extension, and had been thereby exonerated from liability on the
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J. BERSAMIN
deficiency claim.
RULING:
1. NO. TIDCP posits that based on the RTCs pre-trial order, the only issue to be resolved
was whether there was a deficiency claim after the foreclosure of the real estate mortgage;
that the liability of Cuevas and Saddul on the deficiency claim was already an admitted
fact under the pre-trial order; and that the RTC improperly considered and determined their
liability. The pre- trial order nowhere stated that Cuevas and Saddul already admitted
their liability on TIDCPs deficiency claim. Their admission appearing in the pre-trial order
referred only to the fact that they and AMDC had received advances in large amounts
from TIDCP, and that the real estate mortgage securing the loan had already been
foreclosed.
However, a pre-trial order is not intended to be a detailed catalogue of each and

every issue that is to be taken during the trial, for it is unavoidable that there are issues that
are impliedly included among those listed or that may be inferable from those listed by
necessary implication which are as much integral parts of the pre-trial order as those
expressly listed. At any rate, it remains that TIDCP impleaded Cuevas and Saddul as
defendants, and adduced against them evidence to prove their liabilities. With Cuevas and
Saddul being parties to be affected by the judgment, it was only appropriate for the RTC to
inquire into and determine their liability for the purpose of arriving at a complete
determination of the suit. Thereby, the RTC acted in conformity with the avowed reason
for which the courts are organized, which was to put an end to controversies, to decide the
questions submitted by the litigants, and to settle the rights and obligations of the parties.
2. YES. The records indicate that on several occasions, Cuevas and Saddul, as President
and Vice- President, respectively, of AMDC, separately wrote to TIDCP to request the
extension of the guaranty period because AMDC could not pay the obligation on its due date
and that TIDCP granted each request and correspondingly sent letters to NCBSA informing
it of the extensions of the guaranty period. The letters granting the requests for extension
of the guaranty period bore the approval and signatures of Cuevas and Saddul as President
and Vice-President, respectively, of AMDC. Having thus admitted their letters on the
extension of the guaranty period, Cuevas and Saddul could not anymore feign ignorance
of the guaranty extension. The stipulation, which was not illegal or immoral, necessarily
bound Cuevas and Saddul. A solidary obligation existed among AMDC, Cuevas and Saddul
because they had assented to be jointly and severally liable to TIDCP for whatever damages
or liabilities that it might incur by virtue of the guaranty. In a solidary obligation, each
debtor was liable for the entire obligation. TIDCP could compel any of the solidary obligors
to perform the entire obligation.
Obligations
MEGAWORLD PROPERTIES AND HOLDINGS, INC., EMPIRE EAST LAND HOLDINGS,

INC., and ANDREW L. TAN v. MAJESTIC FINANCE AND INVESTMENT CO., INC.
G.R. No. 169694, DECEMBER 9, 2015, BERSAMIN, J., FIRST DIVISION
The obligations of the parties under the JVA were unquestionably reciprocal. Reciprocal
obligations are those that arise from the same cause, and in which each party is a debtor and a
creditor of the other at the same time, such that the obligations of one are dependent upon the
obligations of the other. They are to be performed simultaneously, so that the performance by one
is conditioned upon the simultaneous fulfilment by the other.
Civil Law; Obligations; Reciprocal Obligations; Reciprocal obligations are those that arise
from the same cause, and in which each party is a debtor and a creditor of the other at the same
Page 22 of 95
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time, such that the obligations of one are dependent upon the obligations of the other.The
obligations of the parties under the JVA were unquestionably reciprocal. Reciprocal obligations
are those that arise from the same cause, and in which each party is a debtor and a creditor of
the other at the same time, such that the obligations of one are dependent upon the obligations
of the other. They are to be performed simultaneously, so that the performance by one is
conditioned upon the simultaneous fulfillment by the other.
Same; Same; Conditional Obligations; Suspensive Conditions; According to Article 1184 of

the Civil Code, the condition that some event happen at a determinate time shall extinguish the
obligation as soon as the time expires, or if it has become indubitable that the event will not take
place.According to Article 1184 of the Civil Code, the condition that some event happen at a
determinate time shall extinguish the obligation as soon as the time expires, or if it has become
indubitable that the event will not take place. Here, the common cause of the parties in entering
into the joint venture was the development of the joint venture property into the residential
subdivision as to eventually profit therefrom. Consequently, all of the obligations under the JVA
were subject to the happening of the complete development of the joint venture property, or if it
would become indubitable that the completion would not take place, like when an obligation,
whether continuous or activity, was not performed. Should any of the obligations, whether
continuous or activity, be not performed, all the other remaining obligations would not ripen
into demandable obligations while those already performed would cease to take effect. This is
because every single obligation of each party under the JVA rested on the common cause of
profiting from the developed subdivision.
FACTS:
Megaworld Properties and Holdings, Inc. (developer) entered into a Joint Venture
Agreement (JVA) with Majestic Finance and Investment Co., (owner) for the development of the
residential subdivision located in Brgy. Alingaro, General Trias, Cavite. According to the JVA, the
development of the 215 hectares of land belonging to the owner (joint venture property) would
be for the sole account of the developer; and that upon completion of the development of the
subdivision, the owner would compensate the developer in the form of saleable residential
subdivision lots. The JVA further provided that the developer would advance all the costs for the
relocation and resettlement of the occupants of the joint venture property, subject to
reimbursement by the owner, and that the developer would deposit the initial amount of
P10,000,000.00 to defray the expenses for the relocation and settlement, and the costs for
obtaining from the Government the exemptions and conversion permits, and the required
clearances.
The developer and owner agreed, through the addendum to the JVA, to increase the
initial deposit for the settlement of claims and the relocation of the tenants from P10,000,000.00
to P60,000,000.00.
The developer, by deed of assignment, transferred, conveyed and assigned to Empire East
Land Holdings, Inc. (developer/assignee) all its rights and obligations under the JVA including
the addendum.
The owner filed in the RTC a complaint for specific performance with damages against
the developer, the developer/assignee, and Andrew Tan. The complaint was mainly based on the
failure of the petitioner to comply with their obligations under the JVA.
The owner filed in RTC a manifestation and motion, praying therein that the petitioners
be directed to provide round-the-clock security for the joint venture property in order to defend
and protect it from the invasion of unauthorized persons. The manifestation and motion were
opposed, pointing out that: (1) the move to have them provide security in the properties was
premature; and (2) under the principle of reciprocal obligations, the owner could not compel
them to perform their obligations under the JVA if the owner itself refused to honor its
obligations under the JVA and the addendum.
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RTC issued an order directing the developer to provide the sufficient round-the-clock
security for the protection of the joint venture property.
A special civil action for certiorari was instituted in the CA, claiming that RTC gravely
abused its discretion amounting to lack or excess of jurisdiction in issuing the order. CA,
however, dismissed the petition for lack of merit.
ISSUE:
WON either party of a joint venture agreement to develop property into a residential
subdivision has already performed its obligation as to entitle it to demand the performance of
the others reciprocal obligation.
RULING:
NO. The obligations of the parties under the JVA were unquestionably reciprocal.
Reciprocal obligations are those that arise from the same cause, and in which each party is a
debtor and a creditor of the other at the same time, such that the obligations of one are
dependent upon the obligations of the other. They are to be performed simultaneously, so that
the performance by one is conditioned upon the simultaneous fulfilment by the other.
The determination of default on the part of either of the parties depends on the terms of
the JVA that clearly categorized the parties several obligations into two types.
The first type related to the continuous obligations that would be continuously
performed from the moment of the execution of the JVA until the parties shall achieved the
purpose of their joint venture. The continuous obligations under the JVA were as follows: (1) the
developer would secure the joint venture property from unauthorized occupants; (2) the owner
would allow the developer to take possession of the joint venture property; (3) the owner would
deliver any and all documents necessary for the accomplishments of each activity; and (4) both
the developer and the owner would pay the real estate taxes.
The second type referred to the activity obligations. The activities under the JVA fell into
seven major categories, specifically: (1) the relocation of the occupants; (2) the completion of the
development plan; (3) the securing of exemption and conversion permits; (4) the obtention of
the development permits from government agencies; (5) the development of the subject land;
(6) the issuance of titles for the subdivided lots; and (7) the selling of the subdivided lots and the
reimbursement of the advances.
In each activity, the obligation of each party was dependent upon the obligation of the
other. Although their obligations were to be performed simultaneously, the performance of
an activity obligation was still conditioned upon the fulfillment of the continuous
obligation, and vice versa. Should either party cease to perform a continuous obligation,
the other's subsequent activity obligation would not accrue. Conversely, if an activity
obligation was not performed by either party, the continuous obligation of the other
would cease to take effect. The performance of the continuous obligation was subject to
the resolutory condition that the precedent obligation of the other party, whether
continuous or activity, was fulfilled as it became due. Otherwise, the continuous obligation
would be extinguished.
According to Article 1184 of the Civil Code, the condition that some event happen at
a determinate time shall extinguish the obligation as soon as the time expires, or if it has
become indubitable that the event will not take place. Here, the common cause of the
parties in entering into the joint venture was the development of the joint venture
property into the residential subdivision as to eventually profit therefrom. Consequently,
all of the obligations under the JVA were subject to the happening of the complete
development of the joint venture property, or if it would become indubitable that the
completion would not take place, like when an obligation, whether continuous or activity, was
Page 24 of 95
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J. BERSAMIN
not performed. Should any of the obligations, whether continuous or activity, be not
performed, all the other remaining obligations would not ripen into demandable
obligations while those already performed would cease to take effect. This is because every
single obligation of each party under the JVA rested on the common cause of profiting from
the developed subdivision.
Being reciprocal in nature, their respective obligations as the owner and the developer
were dependent upon the performance by the other of its obligations; hence, any claim of delay
or non-performance against the other could prosper only if the complaining party had faithfully
complied with its own correlative obligation.
Yet, the record is bereft of the proof to support the lower courts unanimous conclusion
that the owner had already performed its correlative obligation under the JVA as to place itself in
the position to demand that the developer should already perform its obligation of providing the
round-the-clock security on the property. In issuing its order, therefore, the RTC acted
whimsically because it did not first ascertain whether or not the precedent reciprocal
obligation of the owner upon which the demanded obligation of the developer was
dependent had already been performed. Without such showing that the developer had
ceased to perform a continuous obligation to provide security over the joint venture property
despite complete fulfilment by the owner of all its accrued obligations, the owner had no right to
demand from the developer the round-the-clock security over the 215 hectares of land.
Novation
INTERPORT RESOURCES CORPORATION vs. SECURITIES SPECIALIST, INC., and R.C.

LEE SECURITIES INC.
G .R. No. 154069, June 6, 2016, BERSAMIN, J.
Novation extinguished an obligation between two parties. Clearly, the effect of the
assignment of the subscription agreements to SSI was to extinguish the obligation of R.C. Lee to
Oceanic, now Interport, to settle the unpaid balance on the subscription. As a result of the
assignment, Interport was no longer obliged to accept any payment from R.C. Lee because the
latter had ceased to be privy to Subscription Agreements. On the other hand, Interport was legally
bound to accept SSI's tender of payment for the 75% balance on the subscription price because SSI
had become the new debtor under Subscription Agreements. As such, the issuance of the stock
certificates in the name of R.C. Lee had no legal basis in the absence of a contractual agreement
between R. C. Lee and Interport.
FACTS:
In January 1977, Oceanic Oil & Mineral Resources, Inc. (Oceanic) entered into a
subscription agreement with R.C. Lee, a domestic corporation engaged in the trading of stocks
and other securities, covering 5,000,000 of its shares. Thereupon, R.C. Lee paid 25% of the
subscription, leaving 75% unpaid. Oceanic issued Subscription Agreements Nos. 1805, 1808, 1809,
1810, and 1811 to R.C. Lee.
Oceanic merged with Interport, with the latter as the surviving corporation. Interport
was a publicly-listed domestic corporation whose shares of stocks were traded in the stock
exchange. Under the terms of the merger, each share of Oceanic was exchanged for a share of
Interport.
SSI, a domestic corporation registered as a dealer in securities, received in the ordinary

course of business Oceanic Subscription Agreements Nos. 1805, 1808 to 1811, all outstanding in
the name of R.C. Lee, and Oceanic official receipts showing that 25% of the subscriptions had
been paid. The Oceanic subscription agreements were duly delivered to SSI through stock
assignments indorsed in blank by R.C. Lee.
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Later on, R.C. Lee requested Interport for a list of subscription agreements and stock
certificates issued in the name of R.C. Lee and other individuals named in the request. In
response, Interport's Corporate Secretary, provided the requested list of all subscription
agreements of Interport and Oceanic, as well as the requested stock certificates of Interport.
Upon finding no record showing any transfer or assignment of the Oceanic subscription
agreements and stock certificates of Interport as contained in the list, R.C. Lee paid its unpaid
subscriptions and was accordingly issued stock certificates corresponding thereto.
On February 8, 1989, Interport issued a call for the full payment of subscription
receivables, setting March 15, 1989 as the deadline. SSI tendered payment prior to the deadline.
However, the stockbrokers reported to SSI that Interport refused to honor the Oceanic
subscriptions.
SSI learned that Interport had issued the 5,000,000 shares to R.C. Lee, relying on the
latter's registration as the owner of the subscription agreements in the books of the former, and
on the affidavit executed by the President of R.C. Lee stating that no transfers or encumbrances
of the shares had ever been made.
SSI made demands upon Interport and R.C. Lee for the cancellation of the shares issued
to R.C. Lee and for the delivery of the shares to SSI. On October 6, 1989, after its demands were
not met, SSI commenced this case in the SEC to compel the respondents to deliver the 5,000,000
shares and to pay damages. It alleged fraud and collusion between Interport and R.C. Lee in
rejecting the tendered payment and the transfer of the shares covered by the subscription
agreements.
SEC ordered the respondent Interport to deliver the corresponding shares previously
covered by Oceanic Oil Mineral Resources Inc. subscription agreements Nos. 1805-1811 to
petitioner SSI, to the extent only of 25% thereof, as duly paid by petitioner SSI; and if the same
will not be possible, to deliver the value thereof at the market price as of the date of judgment.
CA affirmed the SEC.
ISSUE:
Whether or not Interport was liable to deliver to SSI the Oceanic shares of stock, or the
value thereof, under Subscriptions Agreement.
RULING:
YES, Interport is liable to deliver to SSI the Oceanic shares of stock, or the value thereof,
under Subscriptions Agreement.
The SEC correctly categorized the assignment of the subscription agreements as a form
of novation by substitution of a new debtor and which required the consent of or notice to the
creditor. Under the Civil Code, obligations may be modified by: ( l) changing their object or
principal conditions; or (2) substituting the person of the debtor; or (3) subrogating a third
person in the rights of the creditor.
In this case, the change of debtor took place when R.C. Lee assigned the Oceanic shares
under Subscription Agreement Nos. 1805, and 1808 to 1811 to SSI so that the latter became
obliged to settle the 75% unpaid balance on the subscription. Interport was duly notified of
the assignment when SSI tendered its payment for the 75% unpaid balance, and it could
not anymore refuse to recognize the transfer of the subscription that SSI sufficiently
established by documentary evidence.
It should be stressed that novation extinguished an obligation between two parties.

Clearly, the effect of the assignment of the subscription agreements to SSI was to extinguish the
obligation of R.C. Lee to Oceanic, now Interport, to settle the unpaid balance on the
subscription. As a result of the assignment, Interport was no longer obliged to accept any
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J. BERSAMIN
payment from R.C. Lee because the latter had ceased to be privy to Subscription Agreements
Nos. 1805, and 1808 to 1811 for having been extinguished insofar as it was concerned. On the
other hand, Interport was legally bound to accept SSI's tender of payment for the 75% balance
on the subscription price because SSI had become the new debtor under Subscription
Agreements Nos. 1805, and 1808 to 1811. As such, the issuance of the stock certificates in the
name of R.C. Lee had no legal basis in the absence of a contractual agreement between R. C. Lee
and Interport.
Interport issued the shares without respondent R.C. Lee having anything to show for the
same. On the other hand, respondent Interport refused to recognize complainant SSI's claim to five
(5) millions (sic) shares inspite of the fact that its claim was fully supported by duly issued
subscription agreements, stock assignment and receipts of payment of the initial subscription.
Subscription Agreements Nos. 1805, and 1808 to 1811 were now binding between Interport
and SSI only, and only such parties were expected to comply with the terms thereof. Hence, the
Court modify the decision of SEC and ordered Interport Resources Corporation: (a) To accept
the tender of payment of Securities Specialist, Inc. corresponding to the 75% unpaid balance of
the total subscription price under Subscription Agreements Nos. 1805, 1808, 1809, 1810 and 1811;
(b) To deliver 5,000,000 shares of stock and to issue the corresponding stock certificates to
Securities Specialist, Inc. upon receipt of the payment of the latter; (c) In the alternative, if the
foregoing is no longer possible, Interport Resources Corporation shall pay Securities Specialist,
Inc. the market value of the 5,000,000 shares of stock at the time of promulgation of this
decision.
Contracts
DOMINGO GONZALO, petitioner, vs. JOHN TARNATE, JR., respondent.

G.R. No. 160600, January 15, 2014, FIRST DIVISION, BERSAMIN, J.*
The doctrine of in pari delicto, which stipulates that the guilty parties to an illegal contract
are not entitled to any relief, cannot prevent a recovery if doing so violates the public policy against
unjust enrichment.
Civil Law; Subcontracting; There is no question that every contractor is prohibited from
subcontracting with or assigning to another person any contract or project that he has with the
Department of Public Works and Highways (DPWH) unless the DPWH Secretary has approved
the subcontracting or assignment.There is no question that every contractor is prohibited from
subcontracting with or assigning to another person any contract or project that he has with the
DPWH unless the DPWH Secretary has approved the subcontracting or assignment. This is
pursuant to Section 6 of Presidential Decree No. 1594. Gonzalo, who was the sole contractor of
the project in question, subcontracted the implementation of the project to Tarnate in violation
of the statutory prohibition. Their subcontract was illegal, therefore, because it did not bear the
approval of the DPWH Secretary. Necessarily, the deed of assignment was also illegal, because it
sprung from the subcontract.
Same; Contracts; In Pari Delicto; According to Article 1412 (1) of the Civil Code, the guilty
parties to an illegal contract cannot recover from one another and are not entitled to an
affirmative relief because they are in pari delicto or in equal fault.According to Article 1412 (1) of
the Civil Code, the guilty parties to an illegal contract cannot recover from one another and are
not entitled to an affirmative relief because they are in pari delicto or in equal fault. The doctrine
of in pari delicto is a universal doctrine that holds that no action arises, in equity or at law, from
an illegal contract; no suit can be maintained for its specific performance, or to recover the
property agreed to be sold or delivered, or the money agreed to be paid, or damages for its
violation; and where the parties are in pari delicto, no affirmative relief of any kind will be given
to one against the other.
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Same; Same; Same; The application of the doctrine of in pari delicto is not always rigid. An
accepted exception arises when its application contravenes well-established public policy.
Same; Unjust Enrichment; Unjust enrichment exists, according to Hulst v. PR Builders,

Inc., 532 SCRA 74 (2007), when a person unjustly retains a benefit at the loss of another, or when a
person retains money or property of another against the fundamental principles of justice, equity
and good conscience. The prevention of unjust enrichment is a recognized public policy
of the State, for Article 22 of the Civil Code explicitly provides that [e]very person who
through an act of performance by another, or any other means, acquires or comes into
possession of something at the expense of the latter without just or legal ground, shall
return the same to him. It is well to note that Article 22 is part of the chapter of the Civil
Code on Human Relations, the provisions of which were formulated as basic principles to be
observed for the rightful relationship between human beings and for the stability of the social
order; designed to indicate certain norms that spring from the fountain of good conscience;
guides for human conduct that should run as golden threads through society to the end that law
may approach its supreme ideal which is the sway and dominance of justice.
FACTS:
After the Department of Public Works and Highways (DPWH) had awarded the contract
for the improvement of the Sadsadan-Maba-ay Section of the Mountain Province-Benguet Road
to his company, Gonzalo Construction, petitioner Domingo Gonzalo (Gonzalo) subcontracted to
respondent John Tarnate, Jr. (Tarnate) the supply of materials and labor for the project under
the latters business known as JNT Aggregates.
In furtherance of their agreement, Gonzalo executed a deed of assignment whereby he,

as the contractor, was assigning to Tarnate an amount equivalent to 10% of the total collection
from the DPWH for the project. This 10% retention fee was the rent for Tarnates equipment that
had been utilized in the project. The deed of assignment was submitted to the DPWH. During
the processing of the documents for the retention fee, however, Tarnate learned that Gonzalo
had unilaterally rescinded the deed of assignment by means of an affidavit of cancellation of
deed of assignment filed in the DPWH and that the disbursement voucher for the 10% retention
fee had then been issued in the name of Gonzalo, and the retention fee released to him.
Tarnate demanded the payment of the retention fee from Gonzalo, but to no avail. Thus,
he brought this suit against Gonzalo in the Regional Trial Court (RTC) in Mountain Province to
recover the retention fee.
RTC ruled in facor of Tarnate which was affirmed by CA on appeal.
ISSUE:
Whether the doctrine of in pari delicto should not be applied and thereby giving
affirmative relief in favor of respondent Tarnate.
RULING:
The doctrine of in pari delicto does not apply in this case. There is no question that
every contractor is prohibited from subcontracting with or assigning to another person any
contract or project that he has with the DPWH unless the DPWH Secretary has approved the
subcontracting or assignment. This is pursuant to Section 6 of Presidential Decree No. 1594.
Gonzalo, who was the sole contractor of the project in question, subcontracted the
implementation of the project to Tarnate in violation of the statutory prohibition. Their
subcontract was illegal, therefore, because it did not bear the approval of the DPWH Secretary.
Necessarily, the deed of assignment was also illegal, because it sprung from the subcontract.
According to Article 1412 (1) of the Civil Code, the guilty parties to an illegal contract
cannot recover from one another and are not entitled to an affirmative relief because they are in
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pari delicto or in equal fault. The doctrine of in pari delicto is a universal doctrine that holds that
no action arises, in equity or at law, from an illegal contract; no suit can be maintained for its
specific performance, or to recover the property agreed to be sold or delivered, or the money
agreed to be paid, or damages for its violation; and where the parties are in pari delicto, no
affirmative relief of any kind will be given to one against the other.
Nonetheless, the application of the doctrine of in pari delicto is not always rigid. An
accepted exception arises when its application contravenes well-established public policy. The
prevention of unjust enrichment is a recognized public policy of the State, for Article 22 of the
Civil Code explicitly provides that [e]very person who through an act of performance by
another, or any other means, acquires or comes into possession of something at the expense of
the latter without just or legal ground, shall return the same to him.
There is no question that Tarnate provided the equipment, labor and materials for the
project in compliance with his obligations under the subcontract and the deed of assignment;
and that it was Gonzalo as the contractor who received the payment for his contract with the
DPWH as well as the 10% retention fee that should have been paid to Tarnate pursuant to the
deed of assignment. Considering that Gonzalo refused despite demands to deliver to Tarnate the
stipulated 10% retention fee that would have compensated the latter for the use of his equipment
in the project, Gonzalo would be unjustly enriched at the expense of Tarnate if the latter was to
be barred from recovering because of the rigid application of the doctrine of in pari delicto. The
prevention of unjust enrichment called for the exception to apply in Tarnates favor.
Consequently, the RTC and the CA properly adjudged Gonzalo liable to pay Tarnate the
equivalent amount of the 10% retention fee.
LAND BANK OF THE PHILIPPINES vs. HEIRS OF SPOUSES JORJA RIGOR-SORIANO AND
MAGIN SORIANO
G.R. No. 178312, January 30, 2013, FIRST DIVISION, BERSAMIN, J.
Civil Law; Compromise Agreements; Under Article 2028 of the Civil Code, a compromise is
a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end
to one already commenced. Accordingly, a compromise is either judicial, if the objective is to put
an end to a pending litigation, or extrajudicial, if the objective is to avoid a litigation.Under
Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by making
reciprocal concessions, avoid a litigation or put an end to one already commenced. Accordingly,
a compromise is either judicial, if the objective is to put an end to a pending litigation, or
extrajudicial, if the objective is to avoid a litigation. As a contract, a compromise is perfected by
mutual consent. However, a judicial compromise, while immediately binding between the
parties upon its execution, is not executory until it is approved by the court and reduced to a
judgment. The validity of a compromise is dependent upon its compliance with the requisites
and principles of contracts dictated by law. Also, the terms and conditions of a compromise
must not be contrary to law, morals, good customs, public policy and public order.
FACTS:
The respondents are the children of the late Spouses Jorja Rigor-Soriano and Magin
Soriano, the owners of the two parcels of land. The properties became subject to Operation Land
Transfer (OLT) and were valued by the Land Bank and the Department of Agrarian Reform
(DAR) at P10,000.00/hectare. Contending, however, that such valuation was too low compared
to existing valuations of agricultural lands, the respondents commenced this action for just
compensation, claiming that the properties were irrigated lands that usually yielded 150 cavans
per hectare per season at a minimum of two seasons per year. They asked that a final valuation
of the properties be pegged at P1,800,000.00, based on Administrative Order No. 61, Series of
1992 and Republic Act No. 6657. Land Bank disagreed. It prayed that the valuation by the DAR
be retained or that a valuation be made judicially.
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The RTC ordered the defendant Land Bank of the Philippines to pay petitioner. Land
Bank and the respondents filed separate motions for reconsideration, but the RTC denied their
motions. Land Bank appealed the decision to the CA, which sustained the RTC and denied Land
Banks motion for reconsideration. Hence, Land Bank appeals via petition for review on
certiorari.
Land Bank submitted to the Court a so-called Joint Manifestation and Motion. The Court
required the respondents to comment on Land Banks submission of the Joint Manifestation and
Motion. Land Bank submitted a Manifestation, informing the Court that the parties had filed by
registered mail their Joint Motion to Approve the Attached Agreement, submitting therewith
their Agreement.
The Court received the Joint Motion to Approve the Attached Agreement and the
Agreement. Thereby, the parties prayed that the Court consider and approve the Agreement as
its disposition of the petition for review on certiorari, and render its judgment in accordance
with the terms of the Agreement.
ISSUE:
WON the herein agreement is a compromise?
RULING:
YES. There is no question that the foregoing Agreement was a compromise that the
parties freely and voluntarily entered into for the purpose of finally settling their dispute in this
case. Under Article 2028 of the Civil Code, a compromise is a contract whereby the parties, by
making reciprocal concessions, avoid a litigation or put an end to one already commenced.
Accordingly, a compromise is either judicial, if the objective is to put an end to a pending
litigation, or extrajudicial, if the objective is to avoid a litigation. As a contract, a compromise is
perfected by mutual consent. However, a judicial compromise, while immediately binding
between the parties upon its execution, is not executory until it is approved by the court and
reduced to a judgment. The validity of a compromise is dependent upon its compliance with the
requisites and principles of contracts dictated by law. Also, the terms and conditions of a
compromise must not be contrary to law, morals, good customs, public policy and public order.
A review of the terms of the Agreement, particularly paragraph 6 and paragraph 7,

indicates that it is a judicial compromise because the parties intended it to terminate their
pending litigation by fully settling their dispute. Indeed, with the respondents thereby expressly
signifying their "unconditional or absolute acceptance and full receipt of the foregoing amounts
as just compensation for subject properties the First Party and the Second Party hereby consider
the case titled "Land Bank of the Philippines v. Heirs of Spouses Jorja Rigor-Soriano and Magin
Soriano, namely: Marivel S. Carandang and Joseph Soriano (G.R. No. 178312) pending before the
Supreme Court, closed and terminated," the ultimate objective of the action to determine just
compensation for the landowners was achieved.
WHEREFORE, finding the Agreement to have been validly and voluntarily executed by
the parties in compliance with the requirements of law, the Court hereby APPROVES it.
Considering that the Agreement shows that the payment of just compensation was
already fully executed, and that the affected properties were already delivered to Land Bank of
the Philippines, thereby leaving nothing further to be complied with by the parties, the Court
declares this appeal CLOSED and TERMINATED, without pronouncements as to costs of suit.
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ASSET POOL A (SPV-AMC), INC., v. CLARK DEVELOPMENT CORPORATION

G.R. No. 205915, NOVEMBER 10, 2015, BERSAMIN, J., FIRST DIVISION
(Judgment Based on Compromise Agreement)
Civil Law; Contracts; Compromise Agreements; Words and Phrases; A compromise

agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation
or put an end to one already commenced.A compromise agreement is a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced. According to Article 2029 of the Civil Code, the court shall endeavor to persuade
the parties in a civil case to agree upon some fair compromise. The contracting parties may
establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided such stipulations, clauses, terms and conditions are not contrary to law, morals, good
customs, public order, or public policy. Once the parties have entered into a compromise, their
agreement has the effect and authority of res judicata, but there shall be no execution except in
compliance with a judicial compromise. Such means of dispute settlement is an accepted, even
desirable and encouraged, practice in courts of law and administrative tribunals.
FACTS:
The petitioner was the transferee and successor-in-interest of UCPB and Metrobank who
were the secured creditors of Mondragon Leisure and Resorts Corporation (MLRC) for its
working capital requirements in the development and operation of the Tourism Estate Phase I
that eventually became known as the Mimosa Leisure Estate (MLE).
This case was the appeal of the petitioner of the adverse decision of the CA in its petition
for certiorari assailing the order issued by the RTC in Angeles City, Pampanga in a civil action for
specific performance and damages brought by the petitioner to compel the respondent to
include the claims of the secured creditors in the documents attendant to the bidding for the
privatization of the MLE.
During the pendency of the appeal, the respondent announced that the privatization of
MLE would again be open for public bidding.
On November 6, 2015, the parties submitted their Urgent Joint Motion to Render
Judgment Based on a Compromise Agreement and Lift the Temporary Restraining Order dated
October 21, 2015 for the purpose of terminating their pending disputes. They attached the
compromise agreement and its annexes.
ISSUE:
Whether the appeal shall proceed.
RULING:
The appeal shall no longer proceed. A compromise agreement is a contract whereby the
parties, by making reciprocal concessions, avoid a litigation or put an end to one already
commenced. According to Article 2029 of the Civil Code, the court shall endeavour to persuade
the parties in a civil case to agree upon some fair compromise. The contracting parties may
establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided such stipulations, clauses, terms and conditions are not contrary to law, morals, good
customs, public order, or public policy. Once the parties have entered into a compromise, their
agreement has the effect and authority of res judicata, but there shall be no execution except in
compliance with a judicial compromise, even desirable and encouraged, practice in courts of law
and administrative tribunals.
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Wherefore, in light of the foregoing, the Court APPROVES the Compromise Agreement;
renders judgment in accordance with its terms and stipulations and enjoins the parties to
comply with its terms and stipulations in utmost good faith.
ASB REALTY CORPORATION v. ORTIGAS & COMPANY LIMITED PATNERSHIP

G.R. No. 202947, DECEMBER 9, 2015, BERSAMIN, J., FIRST DIVISION
The doctrine of estoppel was based on public policy, fair dealing, good faith and justice, and
its purpose was to forbid a party to speak against his own act or omission, representation, or
commitment to the injury of another to whom the act, omission, representation, or commitment
was directed and who reasonably relied thereon. The doctrine sprang from equitable principles and
the equities in the case, and was designed to aid the law in the administration of justice where
without its aid injustice would result. Estoppel had been applied by the Court wherever and
whenever special circumstances of the case so demanded.
Civil Law; Contracts; Contractual obligations, unlike contractual rights or benefits, are
generally not assignable. But there are recognized means by which obligations may be transferred,
such as by sub-contract and novation.To be clear, contractual obligations, unlike contractual
rights or benefits, are generally not assignable. But there are recognized means by which
obligations may be transferred, such as by sub-contract and novation. In this case, the
substitution of the petitioner in the place of Amethyst did not result in the novation of the Deed
of Sale. To start with, it does not appear from the records that the consent of Ortigas to the
substitution had been obtained despite its essentiality to the novation. Secondly, the petitioner
did not expressly assume Amethysts obligations under the Deed of Sale, whether through the
Deed of Assignment in Liquidation or another document. And thirdly, the consent of the new
obligor (i.e., the petitioner), which was as essential to the novation as that of the obligee (i.e.,
Ortigas), was not obtained.
FACTS
Ortigas & Company Limited Partnership (Ortigas) entered into a Deed of Sale with
Amethyst Pearl Corporation (Amethyst) involving the parcel of land situated in Barrio Oranbo,
Pasig City for the consideration of P2,024,000.00. As a result, the Register of Deeds of Rizal
cancelled the TCT and issued a new one in the name of Amethyst. The conditions contained in
the Deed of Sale were also annotated as encumbrances.
Amethyst assigned the subject property to its stockholder, ASB Realty Corporation (the
petitioner), under a so-called Deed of Assignment in Liquidation in consideration of 10,000
shares of the petitioners outstanding capital stock. Thus, the property was transferred to the
petitioner free from any liens or encumbrances except those duly annotated on TCT. The
Register of Deeds of Rizal issued a new TCT in the name of petitioner with the same
encumbrances annotated.
Ortigas filed its complaint for specific performance against the petitioner by virtue of the
clause in the contract containing, Any of the afore-described violations committed by the
defendant empower the plaintiff to sue under paragraph N. Unilateral Cancellation, plaintiff
may have the Deed of Absolute Sale cancelled and the property reverted to it by paying the
defendant the amount it has paid less the items indicated therein. Ortigas alleged that the
petitioner has violated the terms of the Deed of Absolute Sale. For reliefs, Ortigas prayed for the
reconveyance of the subject property, or, alternatively, for the demolition of the structure and
improvements thereon, plus the payment of penalties, attorneys fees and costs of suit.
RTC rendered its decision and dismissed the complaint. CA reversed the decision of RTC.
It ruled that the mere assignment or transfer of the subject property from Amethyst to ASB does
not serve to defeat the vested right of Ortigas to avail of remedies to enforce the subject
restriction within the applicable prescriptive period.
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ISSUES:
I. WON Ortigas action for rescission could prosper.

II. WON the covenants annotated on the TCT bound the petitioner to the performance of
the obligations assumed by Amethyst under the Deed of Sale.
III. WON rescission is the proper remedy for Ortigas to recover the subject property from
the petitioner.
RULING:
I. NO. Ortigas action for rescission could not prosper.
The Court holds that Ortigas could not validly demand the reconveyance of the property,
or the demolition of the structures thereon through rescission.
The express terms of the Deed of Assignment in Liquidation indicate that Amethyst
transferred to the petitioner only the tangible asset consisting of the parcel of land registered in
the name of Amethyst. By no means did Amethyst assign the rights or duties it had assumed
under the Deed of Sale. The petitioner thus became vested with the ownership of the parcel of
land free from any lien or encumbrance except those that are duly annotated on the title from
the time Amethyst executed the Deed of Assignment in Liquidation.
Ortigas apparently recognized without any reservation the issuance of the new certificate
of title in the name of Amethyst and the subsequent transfer by assignment from Amethyst to
the petitioner that resulted in the issuance of the new certificate of title under the name of the
petitioner. As such, Ortigas was estopped from assailing the petitioners acquisition and
ownership of the property.
The application of estoppel was appropriate. The doctrine of estoppel was based on
public policy, fair dealing, good faith and justice, and its purpose was to forbid a party to speak
against his own act or omission, representation, or commitment to the injury of another to
whom the act, omission, representation, or commitment was directed and who reasonably relied
thereon. The doctrine sprang from equitable principles and the equities in the case, and was
designed to aid the law in the administration of justice where without its aid injustice would
result. Estoppel had been applied by the Court wherever and whenever special circumstances of
the case so demanded.
II. YES. The annotations bound the petitioner but not to the extent that rendered the
petitioner liable for the non-performance of the covenants stipulated on the Deed of Sale.
Section 39 of Act No. 496 (The Land Registration Act) requires that every person
receiving a certificate of title in pursuance of a decree of registration, and every subsequent
purchaser of registered land who takes a certificate of title for value in good faith shall hold the
same free of all encumbrances except those noted on said certificate.
By acquiring the parcel of land with notice of the covenants contained in the Deed of
Sale between Ortigas and Amethyst, the petitioner bound itself to acknowledge and respect the
encumbrance. Even so, the petitioner did not step into the shoes of Amethyst as a party in the
Deed of Sale. Thus, the annotation of the covenants contained in the Deed of Sale did not give
rise to a liability on the part of the petitioner as the purchaser/successor-in-interest without its
express assumption of the duties or obligations subject of the annotation. As stated, the
annotation was only the notice to the purchaser/successor-in-interest of the burden, claim or
lien subject of the annotation.
To be clear, contractual obligations, unlike contractual rights or benefits, are generally

not assignable. But there are recognized means by which obligations may be transferred, such as
by sub-contract and novation. In this case, the substitution of the petitioner in the place of
Amethyst did not result in the novation of the Deed of Sale. To start with, it does not appear
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from the records that the consent of Ortigas to the substitution had been obtained despite its
essentiality to the novation. Secondly, the petitioner did not expressly assume Amethysts
obligations under the Deed of Sale, whether through the Deed of Assignment in Liquidation or
another document. And, thirdly, the consent of the new obligor (the petitioner) which was as
essential to the novation as that of the obligee (Ortigas), was not obtained.
The burden to perform the covenants under the Deed of Sale, or the liability for the non-
performance thereof, remained with Amethyst.
III. NO. The Civil Code uses rescission in two different contexts, namely: (1) rescission on
account of breach of contract under Article 1191; and (2) rescission by reason of lesion or
economic prejudice under Article 1381.
The rescission on account of breach of stipulations is not predicated on injury to

economic interest of the party plaintiff but on the breach of faith by the defendant, that violates
the reciprocity between the parties. It is not a subsidiary action, and Article 1191 may be
scanned without disclosing anywhere that the action for rescission thereunder is subordinated
to anything; other than the culpable breach of his obligations by the defendant. This
rescission is in principal action retaliatory in character, it being unjust that a party be held
bound to fulfil his promises when the other violates his, as expressed in the old Latin aphorism:
Non servant fidem, non est fides servanda. Hence, the reparation of damages for breach is
purely secondary.
On the contrary, in the rescission by reason of lesion or economic prejudice, the cause of
action is subordinated to the existence of that prejudice, because it is the raison detre as well as
the measure of the right to rescind. Hence, where the defendant makes good of the damages
caused, the action cannot be maintained or continued, as expressly provided in Articles 1383 and
1384. But the operation of these two articles is limited to the cases of rescission for lesion
enumerated in Article 1381 of the Civil Code of the Philippines, and does not apply to cases under
Article 1191.
Ortigas complaint was predicated on Article 1191 of the Civil Code. Considering the
foregoing, Ortigas did not have a cause of action against the petitioner for the rescission
of the Deed of Sale. Under Section 2, Rule 2 of the Rules of Court, a cause of action is the act or
omission by which a party violates a right of another. The essential elements of a cause of action
are: (1) a right in favor of the plaintiff by whatever means and under whatever law it arises or is
created; (2) an obligation on the part of the defendant not to violate such right; and (3) an act or
omission on the part of the defendant in violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which the latter may maintain an
action for recovery of damages or other relief. It is only upon the occurrence of the last element
that the cause of action arises, giving the plaintiff the right to file an action in court for the
recovery of damages or other relief.
The second and third elements were absent herein. The petitioner was not privy to
the Deed of Sale because it was not the party obliged thereon. Not having come under
the duty not to violate any covenant in the Deed of Sale when it purchased the
subject property despite the annotation on the title, its failure to comply with the
covenants in the Deed of Sale did not constitute a breach of contract that gave rise
to Ortigas' right of rescission. It was rather Amethyst that defaulted on the
covenants under the Deed of Sale; hence, the action to enforce the provisions of the
contract or to rescind the contract should be against Amethyst. In other words, rescission
could not anymore take place against the petitioner once the subject property legally came
into the juridical possession of the petitioner, who was a third party to the Deed of Sale.
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SALES
ROBERTO R. DAVID, petitioner, vs. EDUARDO C. DAVID, respondent.

Civil Law; Sales; Sale With Right to Repurchase; The seller given the right to repurchase
may exercise his right of redemption by paying the buyer: (a) the price of the sale, (b) the expenses
of the contract, (c) legitimate payments made by reason of the sale, and (d) the necessary and
useful expenses made on the thing sold.A sale with right to repurchase is governed by Article
1601 of the Civil Code, which provides that: Conventional redemption shall take place when the
vendor reserves the right to repurchase the thing sold, with the obligation to comply with the
provisions of Article 1616 and other stipulations which may have been agreed upon.
Conformably with Article 1616, the seller given the right to repurchase may exercise his right of
redemption by paying the buyer: (a) the price of the sale, (b) the expenses of the contract, (c)
legitimate payments made by reason of the sale, and (d) the necessary and useful expenses made
on the thing sold.
Civil Law; Mortgages; Redemption; The redemption within the period allowed by law is not
a matter of intent but of payment or valid tender of the full redemption price within the period.
Verily, the tender of payment is the sellers manifestation of his desire to repurchase the property
with the offer of immediate performance.In Metropolitan Bank and Trust Company v. Tan, 569
SCRA 814 (2008), the Court ruled that a redemption within the period allowed by law is not a
matter of intent but of payment or valid tender of the full redemption price within the period.
Verily, the tender of payment is the sellers manifestation of his desire to repurchase the
property with the offer of immediate performance. As we stated in Legaspi v. Court of Appeals,
142 SCRA 82 (1986), a sincere tender of payment is sufficient to show the exercise of the right to
repurchase. Here, Eduardo paid the repurchase price to Roberto by depositing the proceeds of
the sale of the Baguio City lot in the latters account. Such payment was an effective exercise of
the right to repurchase.
Same; Sales; Sale With Right to Repurchase; In sales with the right to repurchase, the title
and ownership of the property sold are immediately vested in the vendee, subject to the resolutory
condition of repurchase by the vendor within the stipulated period.In sales with the right to
repurchase, the title and ownership of the property sold are immediately vested in the vendee,
subject to the resolutory condition of repurchase by the vendor within the stipulated period.
Accordingly, the ownership of the affected properties reverted to Eduardo once he complied
with the condition for the repurchase, thereby entitling him to the possession of the other motor
vehicle with trailer.
FACTS:
Respondent Eduardo and his brother, acting on their own and in behalf of their co-heirs,
sold their inherited properties to Roberto, specifically: (a) a parcel of land located in Baguio City
(Baguio City lot); and (b) two units International CO 9670 Truck Tractor with two Mi-Bed
Trailers. A deed of sale with right to repurchase embodied the terms of their agreement,
stipulating that the consideration for the sale was P6,000,000.00.
Roberto and Edwin executed a memorandum of agreement (MOA) with the Spouses
Marquez and Soledad Go (Spouses Go), by which they agreed to sell the Baguio City lot to the
latter for a consideration of P10,000,000.00. The MOA stipulated that in order to save payment
of high and multiple taxes considering that the x x x subject matter of this sale is sold to Roberto,
Edwin will execute the necessary Deed of Absolute Sale in favor of the Spouses Go, in lieu of
Roberto. The Spouses Go then deposited the amount of P10,000,000.00 to Robertos account.
After the execution of the MOA, Roberto gave Eduardo P2,800,000.00 and returned to
him one of the truck tractors and trailers subject of the deed of sale. Eduardo demanded for the
return of the other truck tractor and trailer, but Roberto refused to heed the demand.
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Thus, Eduardo initiated this replevin suit against Roberto, alleging that he was exercising
the right to repurchase under the deed of sale; and that he was entitled to the possession of the
other motor vehicle and trailer.
The RTC rendered judgment in favor of Eduardo. CA promulgated its decision affirming
the RTC. It opined that although there was no express exercise of the right to repurchase, the
sum of all the relevant circumstances indicated that there was an exercise of the right to
repurchase pursuant to the deed of sale, that the findings of the RTC to the effect that the
conditions for the exercise of the right to repurchase had been adequately satisfied by Eduardo.
ISSUE:
Whether respondent Eduardo has exercised his right to repurchase.
RULING:
Yes, Eduardo exercised his right to repurchase. In Metropolitan Bank and Trust
Company v. Tan, the Court ruled that a redemption within the period allowed by law is not a
matter of intent but of payment or valid tender of the full redemption price within the period.
Verily, the tender of payment is the sellers manifestation of his desire to repurchase the
property with the offer of immediate performance. As stated in Legaspi v. Court of Appeals, a
sincere tender of payment is sufficient to show the exercise of the right to repurchase. Here,
Eduardo paid the repurchase price to Roberto by depositing the proceeds of the sale of the Baguio
City lot in the latters account. Such payment was an effective exercise of the right to repurchase.
In sales with the right to repurchase, the title and ownership of the property sold are
immediately vested in the vendee, subject to the resolutory condition of repurchase by the
vendor within the stipulated period. Accordingly, the ownership of the affected properties
reverted to Eduardo once he complied with the condition for the repurchase, thereby entitling
him to the possession of the other motor vehicle with trailer.
FIRST UNITED CONSTRUCTORS CORPORATION and BLUE STAR CONSTRUCTION

CORPORATION, petitioners, vs. BAYANIHAN AUTOMOTIVE CORPORATION,
respondent.
Civil Law; Sales; Recoupment; Words and Phrases; Recoupment (reconvencion) is the act of
rebating or recouping a part of a claim upon which one is sued by means of a legal or equitable
right resulting from a counterclaim arising out of the same transaction.Recoupment
(reconvencion) is the act of rebating or recouping a part of a claim upon which one is sued by
means of a legal or equitable right resulting from a counterclaim arising out of the same
transaction. It is the setting up of a demand arising from the same transaction as the plaintiffs
claim, to abate or reduce that claim. The legal basis for recoupment by the buyer is the first
paragraph of Article 1599 of the Civil Code.
Same; Same; Same; Recoupment must arise out of the contract or transaction upon which
the plaintiffs claim is founded.It was improper for petitioners to set up their claim for repair
expenses and other spare parts of the dump truck against their remaining balance on the price of
the prime mover and the transit mixer they owed to respondent. Recoupment must arise out of
the contract or transaction upon which the plaintiffs claim is founded. To be entitled to
recoupment, therefore, the claim must arise from the same transaction, i.e., the purchase of the
prime mover and the transit mixer and not to a previous contract involving the purchase of the
dump truck. That there was a series of purchases made by petitioners could not be considered as
a single transaction, for the records show that the earlier purchase of the six dump trucks was a
separate and distinct transaction from the subsequent purchase of the Hino Prime Mover and
the Isuzu Transit Mixer. Consequently, the breakdown of one of the dump trucks did not grant
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to petitioners the right to stop and withhold payment of their remaining balance on the last two
purchases.
Same; Same; Same; Legal Compensation; Legal compensation takes place when the
requirements set forth in Article 1278 and Article 1279 of the Civil Code are present.Legal
compensation takes place when the requirements set forth in Article 1278 and Article 1279 of the
Civil Code are present, to wit: Article 1278. Compensation shall take place when two persons, in
their own right, are creditors and debtors of each other. Article 1279. In order that compensation
may be proper, it is necessary: (1) That each of the obligors be bound principally, and that he be
at the same time a principal creditor of the other; (2) That both debts consists in a sum of
money, or if the things due are consumable, they be of the same kind, and also of the same
quality if the latter has been stated; (3) That the two debts be due; (4) That they be liquidated
and demandable; (5) That over neither of them there be any retention or controversy,
commenced by third persons and communicated in due time to the debtor.
Same; Same; Same; Article 1290 of the Civil Code provides that when all the requisites
mentioned in Article 1279 of the Civil Code are present, compensation takes effect by operation of
law, and extinguishes both debts to the concurrent amount.A debt is liquidated when its
existence and amount are determined. Accordingly, an unliquidated claim set up as a
counterclaim by a defendant can be set off against the plaintiffs claim from the moment it is
liquidated by judgment. Article 1290 of the Civil Code provides that when all the requisites
mentioned in Article 1279 of the Civil Code are present, compensation takes effect by operation
of law, and extinguishes both debts to the concurrent amount. With petitioners expenses for the
repair of the dump truck being already established and determined with certainty by the lower
courts, it follows that legal compensation could take place because all the requirements were
present. Hence, the amount of P71,350.00 should be set off against petitioners unpaid obligation
of P735,000.00, leaving a balance of P663,650.00, the amount petitioners still owed to
respondent.
FACTS:
Petitioner First United Constructors Corporation (FUCC) and petitioner Blue Star
Construction Corporation (Blue Star) were associate construction firms sharing financial
resources, equipment and technical personnel on a case-to-case basis. From May 27, 1992 to July
8, 1992, they ordered six units of dump trucks from the respondent, a domestic corporation
engaged in the business of importing and reconditioning used Japan-made trucks.
On September 19, 1992, FUCC ordered from the respondent one unit of Hino Prime
Mover that the respondent delivered on the same date. On September 29, 1992, FUCC again
ordered from the respondent one unit of Isuzu Transit Mixer that was also delivered to the
petitioners. For the two purchases, FUCC partially paid in cash, and the balance through post-
dated checks.
Upon presentment of the checks for payment, the respondent learned that FUCC had
ordered the payment stopped. The respondent immediately demanded the full settlement of
their obligation from the petitioners, but to no avail. Instead, the petitioners informed the
respondent that they were withholding payment of the checks due to the breakdown of one of
the dump trucks they had earlier purchased from respondent, specifically the second dump
truck delivered on May 27, 1992.
Due to the refusal to pay, the respondent commenced this action for collection seeking
payment of the unpaid balance in the amount of P735,000.00 represented by the two checks. In
their answer, petitioners prayed that the respondent return the price of the defective dump truck
minus the amounts of their two checks worth P735,000.00; that the respondent should also
reimburse them their expenses for the repair of the dump truck.
Both RTC and CA held that the remedy of recoupment could not be properly invoked by
the petitioners because the transactions were different; that the expenses incurred for the repair
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and spare parts of the second dump truck were not a proper subject of recoupment because they
did not arise out of the purchase of the Hino Prime Mover and the Isuzu Transit Mixer; and that
the petitioners claim could not also be the subject of legal compensation or set-off, because the
debts in a set-off should be liquidated and demandable.
ISSUES:
1. Whether or not the petitioners validly exercised the right of recoupment through the
withholding of payment of the unpaid balance of the purchase price of the Hino Prime
Mover and the Isuzu Transit Mixer;
2. Whether or not the costs of the repairs and spare parts for the second dump truck
delivered to FUCC on May 27, 1992 could be offset for the petitioners obligations to the
respondent.
RULING:
1. Petitioners could not validly resort to recoupment against respondent.
Recoupment (reconvencion) is the act of rebating or recouping a part of a claim upon

which one is sued by means of a legal or equitable right resulting from a counterclaim arising
out of the same transaction. It is the setting up of a demand arising from the same transaction as
the plaintiffs claim, to abate or reduce that claim. The legal basis for recoupment by the buyer is
the first paragraph of Article 1599 of the Civil Code.
It was improper for petitioners to set up their claim for repair expenses and other spare
parts of the dump truck against their remaining balance on the price of the prime mover and the
transit mixer they owed to respondent. Recoupment must arise out of the contract or
transaction upon which the plaintiffs claim is founded. To be entitled to recoupment, therefore,
the claim must arise from the same transaction, i.e., the purchase of the prime mover and the
transit mixer and not to a previous contract involving the purchase of the dump truck. That
there was a series of purchases made by petitioners could not be considered as a single
transaction, for the records show that the earlier purchase of the six dump trucks was a separate
and distinct transaction from the subsequent purchase of the Hino Prime Mover and the Isuzu
Transit Mixer. Consequently, the breakdown of one of the dump trucks did not grant to
petitioners the right to stop and withhold payment of their remaining balance on the last two
purchases.
2. Legal compensation was permissible.
As to whether petitioners could avail themselves of compensation, both the RTC and CA
ruled that they could not because the claims of petitioners against respondent were not
liquidated and demandable. The Court cannot uphold the CA and the RTC.
The RTC already found that petitioners were entitled to the amount of P71,350.00 stated
in their counterclaim for the cost of repairs incurred, and the CA concurred in this finding.
Considering that preponderant evidence showing that petitioners had spent the amount of
P71,350.00 for the repairs and spare parts of the second dump truck within the warranty period
of three months supported the finding of the two lower courts, the Court accepts their finding.
A debt is liquidated when its existence and amount are determined. Accordingly, an
unliquidated claim set up as a counterclaim by a defendant can be set off against the plaintiffs
claim from the moment it is liquidated by judgment. Article 1290 of the Civil Code provides that
when all the requisites mentioned in Article 1279 of the Civil Code are present, compensation
takes effect by operation of law, and extinguishes both debts to the concurrent amount. With
petitioners expenses for the repair of the dump truck being already established and determined
with certainty by the lower courts, it follows that legal compensation could take place because
all the requirements were present. Hence, the amount of P71,350.00 should be set off against
petitioners unpaid obligation of P735,000.00, leaving a balance of P663,650.00, the amount
petitioners still owed to respondent.
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LEASE
EMILIA G. PEA, AMELIA C. MAR and CARMEN REYES v. SPOUSES ARMANDO

TOLENTINO and LETICIA TOLENTINO
G.R. No. 155227-28, 9 February 2011, THIRD DIVISION (Bersamin, J.)
A lessor is prohibited from selling the leased premises to any person other than his
lessee, without securing the latters written renunciation of his right of first refusal to
purchase the leased property; and that Section 2 of P.D. 2016 likewise protected them. However
in this case, it is inferable from the lessees silence, therefore, that they had neither the interest
nor the enthusiasm to assert the right of first refusal.
Emilia Pea (Pea), Amelia Mar (Mar) and Carmen Reyes (Reyes), are lessees of three
distinct and separate parcels of land owned by Spouses Armando and Leticia Tolentino.
Based on the parties oral lease agreements, Pea, Mar and Reyes agreed to pay monthly
rents as of October 9, 1995. On August 15, 1995, Spouses Tolentino wrote a demand letter to
Pea, Mar and Reyes, informing that they were terminating the respective month-to-month
lease contracts effective September 15, 1995 demanding to vacate and remove the lessees
houses from their respective premises, with warning that they would be charged
P3,000.00/month each as reasonable compensation for the use and occupancy of the
premises from October 1, 1995 until they would actually vacate. After the lessees refused to
vacate, Spouses Tolentino filed three distinct complaints for ejectment against Pea, Mar
and Reyes in the Metropolitan Trial Court (MeTC) of Manila. MeTC ruled in favor of
Spouses Tolentino. On appeal, the Regional Trial Court (RTC) affirmed MeTCs decision
holding that the leases expired at the end of every month, upon demand to vacate by the
respondents; but decreed based on the authority of the court to fix a longer term that the
leases were for two years reckoned from the date of its decision, unless extended by the
parties pursuant to the law. The Court of Appeals then denied the motion for
reconsideration and granted Spouses Tolentinos motion for execution pending appeal and
ordered MeTC to issue a writ of execution.
ISSUE:
Whether or not the ejectment of the lessees from the leased premises is valid.
RULING:
YES. Lessees reliance of P.D. No. 20 is futile and misplaced because that law had no
application to their cause. Batas Pambansa Blg. 25 expressly repealed P.D. No. 20. B.P.
When the extension of B.P. Blg. 25 ended, a new rental law, B.P. Blg. 877, was enacted. B.P.
Blg. 877 was the controlling rental law when the complaints against the petitioners were
filed. Section 6 of B.P. Blg. 877 did not suspend the effects of Article 1687 of the Civil
Code; and that the only effect of the suspension of paragraph 1, Article 1673 of the Civil
Code was that, independently of the grounds for ejectment enumerated in B.P. Blg. 877, the
owner/lessor could not eject the tenant by reason of the expiration of the period of lease as
fixed or determined under Article 1687 of the Civil Code. Consequently, the determination of
the period of the lease could still be made in accordance with Article 1687.
The expiration of the period of the lease is among the grounds for judicial
ejectment of a lessee. In this case, because no definite period was agreed upon by the
parties, their contracts of lease being oral, the leases were deemed to be for a definite period,
considering that the rents agreed upon were being paid monthly, and terminated at the end
of every month, pursuant to Article 1687. Further, the lessees appear to have known of their
supposed right of first refusal even before the respondents came to acquire the leased
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premises by purchase. Yet, the petitioners did not invoke their supposed right of first
refusal from the time when Spouses Tolentino filed their complaints for ejectment against
them. It is inferable from the petitioners silence, therefore, that they had neither the
interest nor the enthusiasm to assert the right of first refusal.
AGENCY
MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA) v. HEIRS OF GAVINA

IJORDAN
G.R. No. 173140, January 11, 2016, BERSAMIN, J., FIRST DIVISION
A sale of jointly owned real property by a co-owner without the express authority of the
others is unenforceable against the latter, but valid and enforceable against the seller.
Civil Law; Contracts; Agency; Article 1317 of the Civil Code provides that no person could
contract in the name of another without being authorized by the latter, or unless he had by law a
right to represent him; the contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, is unenforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is
revoked by the other contracting party.Article 1317 of the Civil Code provides that no person
could contract in the name of another without being authorized by the latter, or unless he had
by law a right to represent him; the contract entered into in the name of another by one who has
no authority or legal representation, or who has acted beyond his powers, is unenforceable,
unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed,
before it is revoked by the other contracting party. But the conveyance by Julian through the
Deed had full force and effect with respect to his share of 1/22 of the entire property consisting of
546 square meters by virtue of its being a voluntary disposition of property on his part.
Same; Land Registration; Torrens System; Under the Torrens System, no adverse
possession could deprive the registered owners of their title by prescription; Thus, once title is
registered, the owner may rest secure, without the necessity of waiting in the portals of the court,
or sitting on the mirador su casa to avoid the possibility of losing his land.MCIAAs contention
on acquisitive prescription in its favor must fail. Aside from the absence of the satisfactory
showing of MCIAAs supposed possession of the subject lot, no acquisitive prescription could
arise in view of the indefeasibility of the respondents Torrens title. Under the Torrens System,
no adverse possession could deprive the registered owners of their title by prescription. The real
purpose of the Torrens System is to quiet title to land and to stop any question as to its legality
forever. Thus, once title is registered, the owner may rest secure, without the necessity of waiting
in the portals of the court, or sitting on the mirador su casa to avoid the possibility of losing his
land.
FACTS:
In 1957, Julian Cuizon executed a Deed of Extrajudicial Settlement and Sale (Deed)
covering the subject lot situated in Lapu-Lapu City in favor of the Civil Aeronautics
Administration (CAA), the predecessor-in-interest of MCIAA. Since then until present, MCIAA
remained in material, continuous, uninterrupted and adverse possession of the subject lot
through the CAA, presently known as Air Transportation Office (ATO). The subject lot was
transferred and conveyed to MCIAA by virtue of RA No. 6958.
In 1980, the respondents caused the judicial reconstitution of the original certificate of
title covering the subject lot. Consequently, OCT of the RD of Cebu was reconstituted for the
subject lot in the names of the respondents predecessors-in-interest, all surnamed Cuison. The
respondents ownership of the subject lot was evidenced by OCT. They asserted that they had
not sold their shares in the subject lot, and had not authorized Julian to sell their shares to
MCIAAs predecessor-in-interest.
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The failure of the respondents to surrender the owners copy of OCT prompted MCIAA
to sue them for the cancellation of title in the RTC, alleging that the certificate of title conferred
no right in favor of the respondents because the lot had already been sold to the Government in
1957; that the subject lot had been declared for taxation purposes under in the name of MCIAA.
The RTC dismissed MCIAAs complaint insofar as it pertained to the shares if the
respondents in the subject lot but recognized the sale as to the 1/22 share of Julian. The CA
affirmed the orders of the RTC.
ISSUE:
WON the subject lot was validly conveyed in its entirety to MCIAA.
RULING:
NO. Firstly, both CA and RTC found the Deed and the Tax Declaration with which
MCIAA would buttress its right to the possession and ownership of the subject lot insufficient to
substantiate the right of MCIAA to the relief sought. Considering that possession was a factual
matter that the lower courts had thoroughly examined and based their findings on, we cannot
undo their findings. The well established rule is that the findings of fact of the trial court, when
affirmed by the CA, are final and conclusive. The Court is not a trier of facts.
Secondly, the CA and RTC concluded that the Deed was void as far as the
respondents shares in the subject lot were concerned, but valid as to Julians share.
Their conclusion was based on the absence of the authority from his co-heirs in favor of Julian to
convey their shares in the subject lot. We have no reason to overturn the affirmance of the CA
on the issue of the respondents co-ownership with Julian. Hence, the conveyance by Julian of
the entire property pursuant to the Deed did not bind the respondents for lack of heir consent
and authority in his favor. As such, the Deed had no legal effect as to their shares in the
property. Article 1317 of the Civil Code provides that no person could contract in the name of
another without being authorized by the latter, or unless he had by law a right to represent him;
the contract entered into the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, is unenforceable, unless it is ratified,
expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked
by the other contracting party. But the conveyance by Julian through the Deed had full force and
effect with respect to his share of 1/22 of the entire property by virtue of its being a voluntary
disposition of property on his part.
even if a co-owner sells the whole property as his, the sale will affect only his own
share but not those of the other co-owners who did not consent to the sale. This
because the sale or other disposition of a co-owner affects only his undivided share
and the transferee gets only what would correspond to his grantor in the partition
of the thing owned in common.
Lastly, MCIAA's contention on acquisitive prescription in its favor must fail. Aside from
the absence of the satisfactory showing of MCIAA's supposed possession of the subject lot,
no acquisitive prescription could arise in view of the indefeasibility of the respondents'
Torrens title. Under the Torrens System, no adverse possession could deprive the
registered owners of their title by prescription. The real purpose of the Torrens System is
to quiet title to land and to stop any question as to its legality forever. Thus, once title is
registered, the owner may rest secure, without the necessity of waiting in the portals of the
court, or sitting on the mirador su casa to avoid the possibility of losing his land.
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TRUSTS
SPOUSES CELSO DICO, SR. AND ANGELES DICO vs. VIZCAYA MANAGEMENT
CORPORATION
G.R. No. 161211; FIRST DIVISION; July 17, 2013; BERSAMIN, J.:
The prescription of actions for the reconveyance of real property based on implied trust is
10 years.
Civil Law; Trusts; The person obtaining property through mistake or fraud is considered by
force of law a trustee of an implied trust for the benefit of the person from whom the property
comes.The CA correctly pointed out that under Article 1456 of the Civil Code, the person
obtaining property through mistake or fraud is considered by force of law a trustee of an implied
trust for the benefit of the person from whom the property comes. Under Article 1144, Civil
Code, an action upon an obligation created by law must be brought within 10 years from the
time the right of action accrues. Consequently, an action for reconveyance based on implied or
constructive trust prescribes in 10 years.
FACTS:
In 1967, VMC, then newly formed, caused the consolidation and subdivision of Lot No.
29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C. On July 26, 1967, LRC Commissioner
Antonio L. Noblejas approved the consolidation-subdivision plan. In all, the total landholding of
VMC after the consolidation was 481,583 square meters.
VMC proceeded to develop the Don Eusebio Subdivision project. Subsequently, VMC
also developed the Cristina Village Subdivision project. Under PSD-12746 of the subdivision plan
for Cristina Village Subdivision, consolidated Lots Nos. 2, 3, and 4 were subdivided into 348
small lots. Starting 1971, VMC sold lots in its Don Eusebio Subdivision and Cristina Village
Subdivision.
In 1981, VMC filed against the Dicos a complaint for unlawful detainer. On April 24, 1981,
the City Court of Cadiz rendered its decision in favor of VMC, ordering the Dicos to demolish
the concrete water gate or sluice gate inside Lot No. 1, Block 3 of the Cristina Village Subdivision.
Inasmuch as the Dicos did not appeal, the decision attained finality. On July 3, 1981, the City
Court of Cadiz issued a writ of execution. On November 11, 1985, a second alias writ of execution
was issued.
On May 12, 1986, the Dicos commenced an action for the annulment and cancellation of
the titles of VMC. On March 12, 1987, the Dicos amended the complaint. They averred, among
others, that they were the registered owners of Lot No. 486 and the possessors-by-succession of
Lot No. 1412 (formerly Lot No. 1118) and Lot No. 489; that VMC had land-grabbed a portion of
their Lot No. 486 totaling 111,966 square meters allegedly brought about by the expansion of
Cristina Village Subdivision; and that on May 30, 1964 they had filed free patent applications in
the Bureau of Lands for Lot No. 1412 and Lot No. 489. They prayed that the possession of Lot No.
486, Lot No. 1412, and Lot No. 489 be restored to them; and that the judgment in Civil Case No.
649 be annulled.
The RTC ruled in favor of the Dicos. On appeal the CA reversed the RTC. The CA denied
the Dicos motion for reconsideration.
ISSUES:
WON prescription already barred petitioners cause of action?
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J. BERSAMIN
RULING:
YES. We find and hold that the action of the Dicos for reconveyance was properly
dismissed. The CA correctly pointed out that under Article 1456 of the Civil Code, the person
obtaining property through mistake or fraud is considered by force of law a trustee of an implied
trust for the benefit of the person from whom the property comes. Under Article 1144, Civil
Code, an action upon an obligation created by law must be brought within 10 years from the
time the right of action accrues. Consequently, an action for reconveyance based on implied or
constructive trust prescribes in 10 years.
Here, the CA observed that even granting that fraud intervened in the issuance of the
transfer certificates of title, and even assuming that the Dicos had the personality to demand the
reconveyance of the affected property on the basis of implied or constructive trust, the filing of
their complaint for that purpose only on May 12, 1986 proved too late for them.
That observation was correct and in accord with law and jurisprudence. Verily, the
reckoning point for purposes of the Dicos demand of reconveyance based on fraud was their
discovery of the fraud. Such discovery was properly pegged on the date of the registration of the
transfer certificates of title in the adverse parties names, because registration was a constructive
notice to the whole world. The long period of 29 years that had meanwhile lapsed from the
issuance of the pertinent transfer certificate of title on September 30, 1934 (the date of recording
of TCT No. RT-9933 (16739) in the name of the Lopezes) or on November 10, 1956 (the date of
recording of TCT No. T-41835 in VMCs name) was way beyond the prescriptive period of 10
years.
And, lastly, the insistence of the Dicos that prescription could not be used by the CA to
bar their claim for reconveyance by virtue of VMCs failure to aver them in a motion to dismiss
or in the answer was unwarranted.
We agree with VMC's contention to the contrary. Although defenses and objections not
pleaded in a motion to dismiss or in an answer are deemed waived, it was really incorrect for the
Dicos to insist that prescription could not be appreciated against them for that reason. Their
insistence was contrary to Section l, Rule 9 of the Rules of Court.
CREDIT TRANSACTION
Pledge, Mortgage, Antichresis, and Chattel Mortgage
PRIETO vs. COURT OF APPEALS

G.R. No. 158597, FIRST DIVISION, June 18, 2012, Bersamin J.
Ratification or confirmation may validate an act done in behalf of another without

authority from the latter. The effect is as if the latter did the act himself.
FACTS:
Marcos Prieto narrated that in January 1996, they had executed a SPA to authorize
Antonio Prieto to borrow money from FEBTC, using as collateral their real property consisting of
a parcel of land located in Calumbaya, Bauang, La Union. Spouses Antonio Prieto, using the
property as collateral, had thereafter obtained from FEBTC a series of loans totaling
P5,000,000.00 and they failed to pay the loans, leading FEBTC to initiate the extra-judicial
foreclosure of the mortgages.
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Marcos Prieto averred that the promissory notes and the real estate mortgage contracts
were in the name of Spouses Antonio Prieto themselves alone, who had incurred the obligations,
rendering the promissory notes and the mortgage contracts null and void ab initio.
On October 27, 1997, the Spouses Marcos Prieto filed in the RTC Bauang, La Union a
complaint against FEBTC and the Spouses Antonio Prieto to declare the nullity of several real
estate mortgage contracts.
RTC rendered its decision dismissing the complaint ruling that although the name of
plaintiff Marcos (as registered owner) did not appear in the real estate mortgage contracts,
Marcos could not be absolved of liability because he had no right of action against the person
with whom his agent had contracted; that the mortgage contracts, even if entered into in the
name of the agent, should be deemed made in his behalf as the principal because the things
involved belonged to the principal; and that even assuming that Antonio had exceeded his
authority as agent, Marcos had ratified Antonios action by executing the letter of
acknowledgement dated September 12, 1996, making himself liable under the premises.
Spouses Marcos Prieto filed a petition for certiorari before the CA which was dismissed
by the CA, holding that Marcos had failed to perfect his appeal on time, and that, consequently,
the RTC did not commit any error or grave abuse of discretion in issuing the challenged orders.
ISSUE:
Whether the real estate mortgage and the subsequent foreclosure of the same is valid.
HELD:
Yes. Ratification or confirmation may validate an act done in behalf of another without
authority from the latter. The effect is as if the latter did the act himself.
The complaint was anchored on the supposed failure of FEBTC to duly investigate the
authority of Antonio in contracting the exceptionally and relatively immense loans amounting to
P5,000,000.00. Marcos alleged therein that his property had thereby become unlawfully
burdened by unauthorized real estate mortgage contracts, because the loans and the mortgage
contracts had been incurred by Antonio and his wife only for themselves, to the exclusion of
petitioner. Yet, Marcos could not deny that under the express terms of the SPA, he had precisely
granted to Antonio as his agent the authority to borrow money, and to transfer and convey the
property by way of mortgage to FEBTC; to sign, execute and deliver promissory notes; and to
receive the proceeds of the loans on the formers behalf.
In other words, the mortgage contracts were valid and enforceable against Marcos, who
was consequently fully bound by their terms. Moreover, even if it was assumed that Antonios
obtaining the loans in his own name, and executing the mortgage contracts also in his own name
had exceeded his express authority under the SPA, Marcos was still liable to FEBTC by virtue of
his express ratification of Antonios act.
Under Article 1898 of the Civil Code, the acts of an agent done beyond the scope of his
authority do not bind the principal unless the latter expressly or impliedly ratifies the same. In
agency, ratification is the adoption or confirmation by one person of an act performed on his
behalf by another without authority. The substance of ratification is the confirmation after the
act, amounting to a substitute for a prior authority. Here, there was such a ratification by
Marcos, as borne out by his execution of the letter of acknowledgement affirming the said loan.
The Court is confounded by Marcos dismissal of his own express written ratification of
Antonios act. Being himself a lawyer, Marcos was aware of the import and consequences of the
letter of acknowledgment. The Court cannot agree with his insistence that the letter was
worthless due to its being a contract of adhesion. The letter was not a contract, to begin with,
because it was only a unilateral act of his.
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RABAT vs. PHILIPPINE NATIONAL BANK

G.R. No. 158755, FIRST DIVISION, June 18, 2012, BERSAMIN, J.
The inadequacy of the bid price in an extrajudicial foreclosure sale of mortgaged properties
will not per se invalidate the sale. Additionally, the foreclosing mortgagee is not precluded from
recovering the deficiency should the proceeds of the sale be insufficient to cover the entire debt.
FACTS:
Spouses Francisco and Merced Rabat were granted on January 14, 1980 a medium-term
loan of P4.0 Million to mature three years from the date of implementation.
Subsequently, the RABATs signed a Credit Agreement and executed a Real Estate
Mortgage over 12 parcels of land which stipulated that the loan would be subject to interest at
the rate of 17% per annum, plus the appropriate service charge and penalty charge of 3% per
annum on any amount remaining unpaid or not renewed when due.
Spouses Rabat executed another document denominated as "Amendment to the Credit

Agreement" purposely to increase the interest rate from 17% to 21% per annum, inclusive of
service charge and a penalty charge of 3% per annum to be imposed on any amount remaining
unpaid or not renewed when due and another Real Estate Mortgage over 9 parcels of land as
additional security for their medium-term loan.
Spouses Rabat failed to pay their outstanding balance on due date amounting to
P3,517,380.00. Spouses Rabat requested for more time within which to settle their account but
PNB denied the same.
For failure to pay their obligation, the PNB filed a petition for the extrajudicial
foreclosure of the real estate mortgage executed by Spouses Rabat. After due notice and
publication, the mortgaged parcels of land were sold at a public auction and the PNB was the
lone and highest bidder with a bid of P3,874,800.00.
As the proceeds of the public auction were not enough to satisfy the entire obligation,
the PNB sent anew demand letters at 197 Wilson Street, San Juan, Metro Manila and also in Mati,
Davao Oriental.
Upon failure to comply with the demand to settle their remaining outstanding obligation
which then stood at P14,745,398.25, including interest, penalties and other charges, PNB
eventually filed a complaint for a sum of money before the RTC of Manila
Spouses Rabat admitted their loan availments from PNB and their default in the payment
thereof. However, they assailed the validity of the auction sales for want of notice to them before
and after the foreclosure sales. They further added that as residents of Mati, Davao Oriental
since 1970 up to the present, they never received any notice nor heard about the foreclosure
proceeding in spite of the claim of PNB that the foreclosure proceeding had been duly published
in the San Pedro Times, which is not a newspaper of general circulation.
ISSUES:
1. Whether the inadequacy of the bid price of PNB invalidated the forced sale of the
properties. (No)
2. Whether PNB was entitled to recover any deficiency from the Spouses Rabat. (No)
HELD:
The inadequacy of the bid price in an extrajudicial foreclosure sale of mortgaged

properties will not per se invalidate the sale. Additionally, the foreclosing mortgagee is not
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precluded from recovering the deficiency should the proceeds of the sale be insufficient to cover
the entire debt.
We have consistently held that the inadequacy of the bid price at a forced sale, unlike
that in an ordinary sale, is immaterial and does not nullify the sale; in fact, in a forced sale, a low
price is considered more beneficial to the mortgage debtor because it makes redemption of the
property easier.
When there is a right to redeem, inadequacy of price should not be material because the
judgment debtor may re-acquire the property or else sell his right to redeem and thus recover
any loss he claims to have suffered by reason of the price obtained at the execution sale. Thus,
respondent stood to gain rather than be harmed by the low sale value of the auctioned
properties because it possesses the right of redemption.
Resolving the second issue, we rule that PNB had the legal right to recover the deficiency
amount. In Philippine National Bank v. Court of Appeals, it was settled that if the proceeds of the
sale are insufficient to cover the debt in an extrajudicial foreclosure of the mortgage, the
mortgagee is entitled to claim the deficiency from the debtor. Act No. 3135, which governs the
extrajudicial foreclosure of mortgages, while silent as to the mortgagees right to recover, does
not, on the other hand, prohibit recovery of deficiency. Accordingly, it has been held that a
deficiency claim arising from the extrajudicial foreclosure is allowed.
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. GUARIA AGRICULTURAL

AND REALTY DEVELOPMENT CORPORATION, respondent.
The foreclosure of a mortgage prior to the mortgagors default on the principal obligation is
premature, and should be undone for being void and ineffectual. The mortgagee who has been
meanwhile given possession of the mortgaged property by virtue of a writ of possession issued to it
as the purchaser at the foreclosure sale may be required to restore the possession of the property to
the mortgagor and to pay reasonable rent for the use of the property during the intervening period.
Civil Law; Contracts; Loans; Under the law, a loan requires the delivery of money or any
other consumable object by one party to another who acquires ownership thereof, on the condition
that the same amount or quality shall be paid.The agreement between DBP and Guaria
Corporation was a loan. Under the law, a loan requires the delivery of money or any other
consumable object by one party to another who acquires ownership thereof, on the condition
that the same amount or quality shall be paid. Loan is a reciprocal obligation, as it arises from
the same cause where one party is the creditor, and the other the debtor. The obligation of one
party in a reciprocal obligation is dependent upon the obligation of the other, and the
performance should ideally be simultaneous. This means that in a loan, the creditor should
release the full loan amount and the debtor repays it when it becomes due and demandable.
Same; Same; Mortgages; By its nature, a mortgage remains an accessory contract

dependent on the principal obligation, such that enforcement of the mortgage contract will depend
on whether or not there has been a violation of the principal obligation.DBPs actuations were
legally unfounded. It is true that loans are often secured by a mortgage constituted on real or
personal property to protect the creditors interest in case of the default of the debtor. By its
nature, however, a mortgage remains an accessory contract dependent on the principal
obligation, such that enforcement of the mortgage contract will depend on whether or not there
has been a violation of the principal obligation. While a creditor and a debtor could regulate the
order in which they should comply with their reciprocal obligations, it is presupposed that in a
loan the lender should perform its obligation the release of the full loan amount before it
could demand that the borrower repay the loaned amount. In other words, Guaria Corporation
would not incur in delay before DBP fully performed its reciprocal obligation.
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FACTS:
Guaria Corporation applied for a loan from DBP to finance the development of its resort
complex. Guaria Corporation executed a real estate mortgage and chattel mortgage as security
for the repayment of the loan. The loan was released in several instalments, and Guaria
Corporation used the proceeds to defray the cost of additional improvements in the resort
complex. Guaria Corporation demanded the release of the balance of the loan, but DBP
refused.
DBP found upon inspection of the resort project, its developments and improvements
that Guaria Corporation had not completed the construction works. In a letter dated February
27, 1978, and a telegram dated June 9, 1978, DBP thus demanded that Guaria Corporation
expedite the completion of the project, and warned that it would initiate foreclosure proceedings
should Guaria Corporation not do so.Unsatisfied with the non-action and objection of Guaria
Corporation, DBP initiated extrajudicial foreclosure proceedings.
Guaria Corporation sued DBP in the RTC to demand specific performance of the latters
obligations under the loan agreement, and to stop the foreclosure of the mortgages (Civil Case
No. 12707). However, DBP moved for the dismissal of the complaint, stating that the mortgaged
properties had already been sold to satisfy the obligation of Guaria Corporation at a public
auction. Due to this, Guaria Corporation amended the complaint to seek the nullification of the
foreclosure proceedings and the cancellation of the certificate of sale.
In the meantime, DBP applied for the issuance of a writ of possession by the RTC. The
RTC granted DBPs motion. Aggrieved, Guaria Corporation assailed the granting of the
application before the CA on certiorari (C.A.-G.R. No. 12670-SP). After the CA dismissed the
petition for certiorari, DBP sought the implementation of the order for the issuance of the writ
of possession.
The RTC rendered its judgment in the main case (Civil Case No. 12707) finding the extra-
judicial sales of the mortgaged properties null and void. It is also resolved that defendant give
back to the plaintiff or its representative the actual possession and enjoyment of all the
properties foreclosed and possessed by it. CA sustained the RTCs judgment.
ISSUES:
1. Whether DBPs foreclosure of the mortgage and the sale of the mortgaged properties were
valid.
2. Whether the doctrine of the law of the case is applicable under the circumstances.
RULING:
1. DBPs foreclosure of the mortgage and the sale of the mortgaged properties at its
instance were premature, and, therefore, void and ineffectual.
The agreement between DBP and Guaria Corporation was a loan. Loan is a reciprocal
obligation, as it arises from the same cause where one party is the creditor, and the other the
debtor. The obligation of one party in a reciprocal obligation is dependent upon the obligation of
the other, and the performance should ideally be simultaneous. This means that in a loan, the
creditor should release the full loan amount and the debtor repays it when it becomes due and
demandable.
By its failure to release the proceeds of the loan in their entirety, DBP had no right yet to
exact on Guaria Corporation the latters compliance with its own obligation under the loan.
Indeed, if a party in a reciprocal contract like a loan does not perform its obligation, the other
party cannot be obliged to perform what is expected of it while the others obligation remains
unfulfilled. In other words, the latter party does not incur delay.
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Still, DBP called upon Guaria Corporation to make good on the construction works
pursuant to the acceleration clause written in the mortgage contract (i.e., Stipulation No.
26),[32] or else it would foreclose the mortgages. DBPs actuations were legally unfounded. By its
nature, a mortgage remains an accessory contract dependent on the principal obligation, such
that enforcement of the mortgage contract will depend on whether or not there has been a
violation of the principal obligation. While a creditor and a debtor could regulate the order in
which they should comply with their reciprocal obligations, it is presupposed that in a loan the
lender should perform its obligation the release of the full loan amount before it could
demand that the borrower repay the loaned amount. In other words, Guaria Corporation would
not incur in delay before DBP fully performed its reciprocal obligation. Considering that it had
yet to release the entire proceeds of the loan, DBP could not yet make an effective demand for
payment upon Guaria Corporation to perform its obligation under the loan.
2. The doctrine of law of the case is not applicable.
DBP insists that the decision of the CA in C.A.-G.R. No. 12670-SP already constituted the
law of the case. Hence, the CA could not decide the appeal in C.A.-G.R. CV No. 59491 differently.
The doctrine of law of the case simply means, therefore, that when an appellate court has
once declared the law in a case, its declaration continues to be the law of that case even on a
subsequent appeal, notwithstanding that the rule thus laid down may have been reversed in
other cases. For practical considerations, indeed, once the appellate court has issued a
pronouncement on a point that was presented to it with full opportunity to be heard having
been accorded to the parties, the pronouncement should be regarded as the law of the case and
should not be reopened on remand of the case to determine other issues of the case, like
damages. But the law of the case, as the name implies, concerns only legal questions or issues
thereby adjudicated in the former appeal.
The foregoing understanding of the concept of the law of the case exposes DBPs
insistence to be unwarranted.
To start with, the ex parte proceeding on DBPs application for the issuance of the writ of
possession was entirely independent from the judicial demand for specific performance herein.
In fact, C.A.-G.R. No. 12670-SP, being the interlocutory appeal concerning the issuance of
the writ of possession while the main case was pending, was not at all intertwined with any
legal issue properly raised and litigated in C.A.-G.R. CV No. 59491, which was the appeal to
determine whether or not DBPs foreclosure was valid and effectual. And, secondly, the
ruling in C.A.-G.R. No. 12670-SP did not settle any question of law involved herein because this
case for specific performance was not a continuation of C.A.-G.R. No. 12670-SP (which was
limited to the propriety of the issuance of the writ of possession in favor of DBP), and vice versa.
SPOUSES ROBERTO and ADELAIDA PEN v. SPOUSES SANTOS and LINDA JULIAN
G.R. No. 160408, January 11, 2016, BERSAMIN, J., FIRST DIVISION
Civil Law; Pledge; Mortgage; Pactum Commissorium; Article 2088 of the Civil Code
prohibits the creditor from appropriating the things given by way of pledge or mortgage, or from
disposing of them; any stipulation to the contrary is null and void.Article 2088 of the Civil
Code prohibits the creditor from appropriating the things given by way of pledge or mortgage, or
from disposing of them; any stipulation to the contrary is null and void. The elements
for pactum commissorium to exist are as follows, to wit: (a) that there should be a pledge or
mortgage wherein property is pledged or mortgaged by way of security for the payment of the
principal obligation; and (b) that there should be a stipulation for an automatic appropriation by
the creditor of the thing pledged or mortgaged in the event of nonpayment of the principal
obligation within the stipulated period. The first element was present considering that the
property of the respondents was mortgaged by Linda in favor of Adelaida as security for the
formers indebtedness. As to the second, the authorization for Adelaida to appropriate the
property subject of the mortgage upon Lindas default was implied from Lindas having signed
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the blank deed of sale simultaneously with her signing of the real estate mortgage. The haste
with which the transfer of property was made upon the default by Linda on her obligation, and
the eventual transfer of the property in a manner not in the form of a valid dacion en pago
ultimately confirmed the nature of the transaction as a pactum commissorium.
Same; Sales; Dacion en Pago; Dacion en pago is in the nature of a sale because property is
alienated in favor of the creditor in satisfaction of a debt in money.The petitioners have
theorized that their transaction with the respondents was a valid dacion en pago by highlighting
that it was Linda who had offered to sell her property upon her default. Their theory cannot
stand scrutiny. Dacion en pago is in the nature of a sale because property is alienated in favor of
the creditor in satisfaction of a debt in money. For a valid dacion en pago to transpire, however,
the attendance of the following elements must be established, namely: (a) the existence of a
money obligation; (b) the alienation to the creditor of a property by the debtor with the consent
of the former; and (c) the satisfaction of the money obligation of the debtor. To have a valid
dacion en pago, therefore, the alienation of the property must fully extinguish the debt. Yet, the
debt of the respondents subsisted despite the transfer of the property in favor of Adelaida.
Same; Same; In a sale, the contract is perfected at the moment when the seller obligates
herself to deliver and to transfer ownership of a thing or right to the buyer for a price certain, as to
which the latter agrees.In a sale, the contract is perfected at the moment when the seller
obligates herself to deliver and to transfer ownership of a thing or right to the buyer for a price
certain, as to which the latter agrees. The absence of the consideration from Lindas copy of the
deed of sale was credible proof of the lack of an essential requisite for the sale. In other words,
the meeting of the minds of the parties so vital in the perfection of the contract of sale did not
transpire. And, even assuming that Lindas leaving the consideration blank implied the authority
of Adelaida to fill in that essential detail in the deed of sale upon Lindas default on the loan, the
conclusion of the CA that the deed of sale was a pactum commissorium still holds, for, as earlier
mentioned, all the elements of pactum commissorium were present.
Same; Same; Monetary Interest; Pursuant to Article 1956 of the Civil Code, no interest shall
be due unless it has been expressly stipulated in writing.The CA correctly deleted the monetary
interest from the judgment. Pursuant to Article 1956 of the Civil Code, no interest shall be due
unless it has been expressly stipulated in writing. In order for monetary interest to be imposed,
therefore, two requirements must be present, specifically: (a) that there has been an express
stipulation for the payment of interest; and (b) that the agreement for the payment of interest
has been reduced in writing. Considering that the promissory notes contained no stipulation on
the payment of monetary interest, monetary interest cannot be validly imposed.
FACTS:
The Julians obtained loans from Adelaida Pen. The initial interests were deducted in
advance from the loan by Adelaida. Two (2) promissory notes were executed by the Julians in
favor of Adelaida to evidence the loans. As security, the Julians executed a Real Estate Mortgage
over their property registered under the name of Santos Julina, Jr. The owners duplicate of TCT
was delivered to the Sps. Pen.
Linda averred that at the time the mortgage was executed, they were likewise required by
Adelaida to sign a document purportedly an Absolute Deed of Sale. Said document did not
contain any consideration, and was undated, unfilled and unauthorized. Linda Julian offered to
pay Adelaida the amount. The latter refused to accept the offer. Linda desisted from the offer
and requested that she be shown the land title which she conveyed to Adelaida, but the latter
refuse. Upon verification with the RD of QC, she was informed that the title to the mortgaged
property had already been registered in the name of Adelaida.
Linda filed an Affidavit of Adverse Claim. Her counsel formally demanded the
reconveyance of the title and/or the property to them, but Adelaida refused. RTC ruled in favor
of the Julians. CA affirmed the decision of RTC. The CA pronounced the deed of sale as void
because of the deed of sale having been executed at the same time as the real estate mortgage,
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which rendered the sale as a prohibited pactum commissorium in light of the fact that the deed
of sale was a blank as to the consideration and the date, which details would be filled out upon
the default by the respondents; that the promissory notes contained no stipulation on the
payment of interest on the obligation, for which reason no monetary interest could be imposed
for the use of money; and that the compensatory interest should instead be imposed as a form of
damages arising from Lindas failure to pay the outstanding obligation.
ISSUES:
I. WON the deed of sale between parties is void for being a pactum commissorium.
II. WON no monetary interest was due for Lindas use of Adelaidas money.
RULING:
I. YES.
Article 2088 of the Civil Code prohibits the creditor from appropriating the things given
by way of pledge or mortgage, or from disposing of them; any stipulation to the contrary is null
and void. The elements for pactum commssorium to exist are as follows, to wit: (a) that there
should be a pledge or mortgage wherein property is pledged or mortgaged by way of security for
the payment of the principal obligation; and (b) that there should be a stipulation for an
automatic appropriation by the creditor of the thing pledged or mortgaged in the event of non-
payment of the principal obligation within the stipulated period. The first element was present
considering that the property of the respondents was mortgaged by Linda in favor of Adelaida as
security for the formers indebtedness. As to the second, the authorization for Adelaida to
appropriate the property subject of the mortgage upon Lindas default was implied from
Lindas having signed the blank deed of sale simultaneously with her signing of the real
estate mortgage. The haste with which the transfer of property was made upon default by
Linda on her obligation, and the eventual transfer of the property in a manner not in the form of
a valid dacion en pago ultimately confirmed the nature of the transaction as a pactum
commissorium.
The petitioners have theorized that their transaction with the respondents was a valid
dacion en pago by highlighting that it was Linda who had offered to sell her property upon her
default. Their theory cannot stand scrutiny. Dacion en pago is in the nature of a sale because
property is alienated in favor of the creditor in satisfaction of a debt in money. For a valid dacion
en pago to transpire, however, the attendance of the following elements must be established,
namely: (a) the existence of a money obligation; (b) the alienation to the creditor of a property
by the debtor with the consent of the former; and (c) the satisfaction of the money obligation of
the debtor, to have a valid dacion en pago, therefore, the alienation of the property must
fully extinguish the debt. Yet, the debt of the respondents subsisted despite the transfer
of the property in favor of Adelaida.
In a sale, the contract is perfected at the moment when the seller obligates herself to
deliver and to transfer ownership of a thing or right to the buyer for a price certain, as to which
the latter agrees. The absence of the consideration from Lindas copy of the deed of sale was
credible proof of the lack of essential requisite for the sale. In other words, the meeting of the
minds of the parties so vital in the perfection of the contract of sale did not transpire. And, even
assuming that Lindas leaving the consideration blank implied the authority of Adelaida to fill in
that essential detail in the deed of sale upon Lindas default on the loan, the conclusion of the
CA that the deed of sale was a pactum commissorium still holds, for all the elements of pactum
commissorium were present.
II. YES.
Interest that is the compensation fixed by the parties for the use or forbearance of money
is referred to as monetary interest. On the other hand, interest that may be imposed by law or by
the courts as penalty or indemnity for damages is called compensatory interest. In other words,
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the right to recover interest arises only either by virtue of a contract or as damages for delay or
failure to pay the principal loan on which the interest is demanded.
The CA correctly deleted the monetary interest from the judgment. Pursuant to Article
1956 of the Civil Code, no interest shall be due unless it has been expressly stipulated in writing.
In order for monetary interest to be imposed, therefore, two requirements must be present,
specifically: (a) that there has been an express stipulation for the payment of interest; and (b)
that the agreement for the payment of interest has been reduced in writing. Considering
that the promissory notes contained no stipulation on the payment of monetary
interest, monetary interest cannot be validly imposed.
The CA properly imposed compensatory interest to offset the delay in the respondents'
performance of their obligation. Nonetheless, the imposition of the legal rate of interest should
be modified to conform to the prevailing jurisprudence. The rate of 12% per annum imposed by
the CA was the rate set in accordance with Eastern Shipping Lines, Inc., v. Court of Appeals. In
the meanwhile, Bangko Sentral ng Pilipinas Monetary Board Resolution No. 796 dated May 16,
2013, amending Section 2 of Circular No. 905, Series of 1982, and Circular No. 799, Series of 2013,
has lowered to 6% per annum the legal rate of interest for a loan or forbearance of
money, goods or credit starting July 1, 2013. This revision is expressly recognized in Nacar v.
Gallery Frames. It should be noted, however, that imposition of the legal rate of interest
at 6% per annum is prospective in application.
RURAL BANK OF MALASQUI, INC., v. ROMEO M. CERALDE

and EDUARDO M. CERALDE, JR.
G.R. No. 162032, NOVEMBER 25, 2015, BERSAMIN, J., FIRST DIVISION
Remedial Law; Special Civil Actions; Foreclosure of Mortgage; The phrase mortgage action
used in Article 1142 refers to an action to foreclose a mortgage, and has nothing to do with an
action to annul the foreclosure of the mortgage.The petitioner is correct about the erroneous
reliance on Article 1142 of the Civil Code, a legal provision on prescription that states: A
mortgage action prescribes after ten years. The phrase mortgage action used in Article 1142
refers to an action to foreclose a mortgage, and has nothing to do with an action to annul the
foreclosure of the mortgage, like this one. Nonetheless, we find to be untenable the petitioners
contention in its motion for reconsideration that Article 1149 of the Civil Code (All other actions
whose periods are not fixed in this Code or in other laws must be brought within five years from
the time the right of action accrues.) was instead applicable. This action to annul the
foreclosure of the mortgage was not yet barred by prescription because the applicable period of
prescription was 10 years from the time the right of action accrued by virtue of the action being
upon a written contract. Indeed, the reckoning of the period of prescription should start from
July 12, 1983, when the foreclosure of the mortgage was made, indicating that this action, being
commenced on July 12, 1993, was not barred by prescription.
Civil Law; Statute of Limitations; Laches; The courts, under the principle of equity, are not
to be guided strictly by the statute of limitations or the doctrine of laches when a manifest wrong
or injustice would result from doing so.Similarly, the petitioners argument that the
respondents were already barred by laches had no substance. It would be wrong and unjust to
bar the respondents from recovering what was rightfully and legally theirs. In this regard, we
adopt with approval the CAs declaration to the effect that the rule on laches, being an equitable
doctrine whose application was controlled by equitable considerations, could not be applied to
defeat justice or to perpetrate fraud. Indeed, the Court should implement the better rule, which
is that the courts, under the principle of equity, are not to be guided strictly by the statute of
limitations or the doctrine of laches when a manifest wrong or injustice would result from doing
so.
Same; Estoppel; Elements of.Estoppel is applied when the following elements concur,
namely: x x x first, the actor who usually must have knowledge, notice or suspicion of the true
facts, communicates something to another in a misleading way, either by words, conduct or
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silence; second, the other in fact relies, and relies reasonably or justifiably, upon that
communication; third, the other would be harmed materially if the actor is later permitted to
assert any claim inconsistent with his earlier conduct; and fourth, the actor knows, expects or
foresees that the other would act upon the information given or that a reasonable person in the
actors position would expect or foresee such action.
Agrarian Reform; Section 80 of Republic Act (RA) No. 3844 remained in effect after the
effectivity of RA No. 6657.Contrary to the petitioners claim, Section 80 of Republic Act No.
3844 remained in effect after the effectivity of Republic Act No. 6657. The latter law expressly
repealed only the following provisions, namely: Section 35 of Republic Act No. 3834; Presidential
Decree No. 316; the last two paragraphs of Section 12 of Presidential Decree No. 946; and
Presidential Decree No. 1038. Worthy to note, too, is that the repealed laws did not concern the
subject matter of Section 80 of Republic Act No. 3844; hence, the catch-all repeal or amendment
of all other laws, decrees, executive orders, rules and regulations, issuances or parts thereof
inconsistent with Republic Act No. 6657 did not affect Section 80 of Republic Act No. 3844.
FACTS
This appeal resolves the question of which between the parties on one hand, the
petitioner, the rural bank that foreclosed the mortgage constituted on the agricultural lands
earlier expropriated under the land reform program of the State, and acquired the lands under
mortgage as the highest bidder in the ensuing foreclosure sale; and, on the other, the
respondents, the registered owners and mortgagors of the lands in favor of the petitioner was
entitled to the payment of the just compensation for the lands.
Romeo M. Ceralde and Eduardo M. Ceralde, Jr., are the owners of the parcels of land
covered by TCT Nos. 111647 and 111648 respectively, of RD Pangasinan. They mortgaged these
properties in favor of Rural Bank of Malasqui, Inc., as security for agricultural loans obtained
from the bank. At the time, however, the land had already been placed under the coverage of
Operation Land Transfer and corresponding Certificates of Land Transfer were already issued to
the tenants thereon. Nevertheless, the rural bank, through its president, adviced the Ceraldes to
submit an Affidavit of Non-Tenancy, which the latter complied with. The mortgages were then
approved by the rural bank.
After the respondents did not pay the loans at maturity, the petitioner caused the
extrajudicial foreclosure of the mortgages. In the ensuing foreclosure sale, the petitioner
acquired the mortgaged properties for being the highest bidder.
The respondents filed an action in the RTC to recover the net value of the just
compensation of the lands subject of the mortgages, averring that their right to receive the
payment for just compensation either directly from the tenants or from the Land Bank of the
Philippines could not be the subject of the foreclosure proceedings; and that their equitable
interest in the right to receive the just compensation was protected under Section 80 of the R.A.
No. 3844 (Agricultural Land Reform Code), as amended, based on Opinion No. 92, Series of 1978,
issued by the Secretary of Justice. They prayed that the extrajudicial foreclosure of the mortgages
constituted over the two parcels of land be annulled.
The petitioner contended, among others, that it had foreclosed the mortgages because of
the failure of the respondents to pay their loans upon maturity and despite repeated demands;
that the respondents had misrepresented to it the untenanted status of the properties; and that
the claim of the respondents was already barred by laches.
The RTC dismissed the complaint of the respondents. It opined that the petitioner only
enforced the mortgage contract upon the default of the respondents; that the respondents were
guilty of misrepresentation from the very beginning in obtaining the loan; and that the
respondents were barred by estoppel on account of their misrepresentation, as well as by laches
in view of the fact that their objection came too late and only after the properties had already
been transferred in the names of the tenant-beneficiaries.
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CA reversed and set aside the decision of the RTC and ordered the appellee to pay the
appellants the sum of P119,912.00 plus interest.
ISSUES:
I. WON the action was barred by prescription, laches or estoppel.

II. WON the Rural Bank violated RA 3844 (Agrarian Laws).
III. WON the respondents were entitled to the net value of their landholdings.
RULING:
I. NO.
As to prescription
The reliance on Article 1142 of the Civil Code, a legal provision on prescription that states:
A mortgage action prescribes after ten years, is erroneous. The phrase mortgage action used in
Article 1142 refers to an action to foreclose a mortgage, and has nothing to do with an action to
annul the foreclosure of the mortgage.
Article 1149 of the Civil Code (All other actions whose periods are not fixed in this Code or
in other laws must be brought within five years from the time the right of action accrues.) is also
inapplicable. This action to annul the foreclosure of the mortgages was not yet barred by
prescription because the applicable period of prescription was 10 years from the time the
right of action accrued by virtue of the action being upon a written contract. Indeed, the
reckoning of the period of prescription should start from July 12, 1983, when the foreclosure of
the mortgage was made, indicating that this action, being commenced on July 12, 1993, was not
bared by prescription.
As to laches
Similarly, the petitioners argument that the respondents were already barred by laches
had no substance. It would be wrong and unjust to bar the respondents from recovering what
was rightfully and legally theirs. In this regard, we adopt with approval the CAs declaration to
the effect that the rule on laches, being an equitable doctrine whose application was controlled
by equitable considerations, could not be applied to defeat justice or to perpetrate fraud. Indeed,
the Court should implement the better rule, which is that the courts, under the principle of
equity, are not to be guided strictly by the statute of limitations or the doctrine of laches when a
manifest wrong or injustice would result from doing so.
As to estoppel
Estoppel is applied when the following elements concur, namely:

X x x first, the actor who usually jave knowledge, notice, or suspicion of
the true facts, communicates something to another in a misleading way, either by
words, conduct or silence; second, the other in fact relies, and relies reasonably
or justifiably, upon that communication; third, the other would be harmed
materially if the actor is later permitted to assert any claim inconsistent with his
earlier conduct; and fourth, the actor knows, expects or foresees that the other
would act upon the information given or that a reasonable person in the actors
position would expect or foresee such action.
The established circumstances of the case rendered the doctrine of estoppel absolutely
inapplicable. There was no question that the petitioner had not been misled by any
misrepresentation on the status of tenancy on the lands. The submission of the affidavit of non-
tenancy by the respondents had been at the behest of its president who was then acting in its
behalf. It is plain, moreover, that because its business of rural banking involved the duty and
responsibility to investigate the conditions of the lands being tendered as collaterals, the
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petitioner should have discovered the presence of the tenants in due time and quickly enough by
its exercise of due diligence.
II. Yes. Section 80 of RA No. 3844 and Section 71 of RA No. 6657 were not inconsistent with
each other, but actually complemented each other. Section 80, as amended by PD No. 251, only
stated that the Land Bank of the Philippines would be the institution to pay the private lending
institutions. Equally relevant was that Section 75 of RA No. 6657 stipulated that the provisions of
RA No. 3844 would have suppletory effect to RA No. 6577. Absent the inconsistency between
Section 80 of RA No. 3844 and Section 71 of RA No. 6657, the bases of the CA in declaring the
petitioner to have violated RA No. 3844 remained.
Without passing judgment on the merits of MOJ Opinion 092, Series of 1978, the Court
only needs to remind that the legal opinion remained good only insofar as it was not
inconsistent with the law it purported to interpret. It remains beyond question that Section 80 of
RA No. 3844, supra, did not prohibit the foreclosure of the mortgage of agricultural
landholdings. It clearly only provided that the Land Bank of the Philippines would pay the
landowners the net value of the land minus the outstanding balance of the obligations in favor of
the lending institutions in the event of an existing lien or encumbrance on the land in favor of
private parties or institutions. Hence, the opinion of the then Minister of Justice to the effect
that banks were not allowed to foreclose lands covered by PD No. 27, as amended, became
legally untenable. Conformably with the tenets of the statutory construction, the law as written
should be applied absent any ambiguity.
What is quite clear and uncontroverted is that both the petitioner and the respondents
were guilty of bad faith. Although the coverage of the lands in question under the OLT was
made known to the petitioner only after the execution of the mortgages albeit prior to the
foreclosure, the latter was already put on notice of the coverage under the OLT, and should have
desisted from proceeding with the foreclosure in accordance with law.
Section 80 of RA No. 3844 remained in effect after the effectivity of RA No. 6657. The
latter law expressly repealed only the following provisions, namely: Section 35 of RA No. 3834;
PD No. 316; the last two paragraphs of Section 12 of PD No. 946; and PD No. 1038. Worthy note,
too, is that the repealed laws did not concern the subject matter of Section 80 of RA No. 3844;
hence, the catch-all repeal or amendment of all other laws, decrees, executive orders, rules and
regulations, issuances or parts thereof inconsistent with RA 6657 did not affect Section 80 of RA
No. 3844.
In view of the foregoing, Section 80 of RA No. 3844 and Section 71 of Section No. 6657
must be given equal application.
III. YES. The respondents were entitled to the net value of the lands not only by law but also
by equity. As to equity, we need only to point out that when the parties are both at fault, the
mistake of one is negated by the others, and they are then returned to their previous status
where the law will look at the facts as if neither is at fault. In such event, we can only apply the
law, particularly Section 80 of RA No. 3844, as amended, and such application favors the
respondents, as we have already explained.
SUCCESSION
SPOUSES NICANOR TUMBOKON v. APOLONIA LEGASPI

and PAULINA DE MAGTANUM
GR No. 153736, 4 August 2010, THIRD DIVISION (Bersamin, J.)
A son-in-law is not amongst those enumerated as compulsory heir under the law.
A land situated in Barangay Buenavista, Ibajay, Aklan was owned by the late
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Alejandra Sespee who had two marriages. The first marriage was to Gaudencio Franco, by
whom she bore Ciriaca Franco, whose husband was Victor Miralles. The second marriage was
to Jose Garcia, by whom she bore respondent Apolonia Garcia, who married Primo
Legaspi. Alejandra died without a will in 1935, and was survived by Apolonia and Crisanto
Miralles, the son of Ciriaca (who had predeceased Alejandra in 1924) and Victor Miralles;
hence, Crisanto Miralles was Alejandras grandson.
The ownership and possession of the parcel of land became disputed after Spouses
Nicanor Tumbokon and Rosario Sespee, herein petitioners, asserted their right in it by virtue
of their purchase from Cresenciana Inog who purportedly bought it from Victor Miralles. The
Spouses Nicanor Tumbokon and Rosario Sespee filed a criminal complaint for qualified theft
against respondents Apolonia and Paulina S. Magtanum and others not parties herein, namely:
Rosendo Magtanum, Antonio Magtanum, Ulpiano Mangilaya, charging them with stealing
coconut fruits from the subject land. The Court of First Instance and Court of Appeals
both held Apolonia and co- accused guilty.
However, prior to the promulgation of the CAs decision in the criminal case, Spouses
Tumbokon and Sespee commenced a suit for recovery of possession of ownership and
possession of real property with damages against Apolonia, et al. The CFI ruled in favor of
Spouses Tumbokon and Sespee. The CA on the other hand reversed this decision.
ISSUES:
1. Whether or not the decision of the CA was supported by law and evidence on record.
2. Whether or not the decision in the criminal case had the effect of res judicata on
the issue of ownership of the land considering that the land in the criminal and civil
case is the same.
RULING:
1. YES. The petitioners adduced no competent evidence to establish that Victor
Miralles, the transferor of the land to Cresenciana Inog had any legal right in the first place
to transfer ownership. Victor was not himself an heir of Alejandra, being only her son-in-law.
Thus, the statement in the deed of absolute sale entered into between Victor Miralles and
Cresenciana Inog, stating that the parcel of land was inherited from the deceased Alejandra
Sespee by Victor Miralles being the sole heir of Alejandra Sespee, having no other brothers
or sisters, was outrightly false.
The decedents compulsory heirs in whose favor the law reserves a part of the
decedents estate are exclusively the persons enumerated in Article 887 of the Civil Code.
Here, only two forced heirs survived Alejandra upon her death, namely: respondent
Apolonia, her daughter, and Crisanto Miralles, her grandson. The latter succeeded
Alejandra by right of representation because his mother, Ciriaca, had predeceased Alejandra.
Herein, the representative Crisanto Miralles was called to the succession by law and not by
the person represented, Ciriaca; he thus succeeded Alejandra, not Ciriaca. Also, Victor
Miralles supposed acquisition of the land by oral sale from Alejandra had no competent
factual support in the records.
2. NO. Res judicata means a matter adjudged, a thing judicially acted upon or
decided; a thing or matter settled by judgment. Under the doctrine of res judicata, a final
judgment or decree on the merits rendered by a court of competent jurisdiction is
conclusive of the rights of the parties or their privies in all later suits and on all points and
matters determined in the previous suit.
This action is not barred by the doctrine of res judicata. The causes of action in the
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civil and the criminal actions were different and distinct from each other. The civil action is
for the recovery of ownership of the land filed by the petitioners, while the criminal action was
to determine whether the act of the respondents of taking the coconut fruits from the trees
growing within the disputed land constituted the crime of qualified theft. In the former, the
main issue is the legal ownership of the land, but in the latter, the legal ownership of the
land was not the main issue.
LAND TITLES AND DEEDS
SPOUSES ALFONSO AND MARIA ANGELES CUSI v. LILIA V. DOMINGO

G.R. No. 19582, February 27, 2013, BERSAMIN, J.
Under the Torrens system of land registration, the registered owner of realty cannot be
deprived of her property through fraud, unless a transferee acquires the property as an innocent
purchaser for value. A transferee who acquires the property covered by a reissued owner's copy of
the certificate of title without taking the ordinary precautions of honest persons in doing business
and examining the records of the proper Registry of Deeds, or who fails to pay the full market value
of the property is not considered an innocent purchaser for value.
FACTS:
The property in dispute was a vacant unfenced lot situated in White Plains, Quezon City
and covered a TCT issued in the name of respondent Lilia V. Domingo. In July 1999, Domingo
learned that construction activities were being undertaken on her property without her consent.
She soon unearthed the series of anomalous transactions affecting her property.
On July 18, 1997, one Radelia Sy (Sy), representing herself as the owner of the property,
petitioned the RTC for the issuance of a new owners copy of Domingos TCT appending to her
petition a deed of absolute sale purportedly executed in her favor by Domingo and an affidavit of
loss whereby she claimed that her bag containing the owners copy of the TCT had been
snatched from her while she was at the SM City in North EDSA. The RTC granted Sys petition
and the Registry of Deeds of Quezon City then issued a new owners duplicate copy of the TCT,
and which was later cancelled by virtue of the deed of absolute sale, and in its stead the Registry
of Deeds issued a TCT in Sys name.
Sy subsequently subdivided the property into two, and sold each half by way of contract
to sell to Spouses De Vera and to Spouses Cusi. The consideration of the sale was P1,000,000.00
for each set of buyer that had an actual worth of not less than P14,000,000.00.
All the while, the transactions were unknown to Domingo, whose TCT remained in her
undisturbed possession. It turned out that the construction activities taking place on the
property that Domingo learned about were upon the initiative of the De Veras.
Domingo commenced this action in the RTC seeking the annulment/cancellation of

titles. The RTC rendered judgment declaring the sale between Domingo and Sy void and Sps. De
Vera and Sps. Cusi to be not purchasers in good faith and for value. On appeal, the CA affirmed
the decision of the RTC.
ISSUE:
Whether or not Sps. Cusi and Sps. De Vera are buyers in good faith and for value (NO)
RULING:
The Court concurs with the finding by the CA that the Cusis and De Vera were not
purchasers for value and in good faith.
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The petitioners were shown to have been deficient in their vigilance as buyers of the
property. It was not enough for them to show that the property was unfenced and vacant nor
was it safe for them to simply rely on the face of Sys TCT in view of the fact that they were aware
that her TCT was derived from a duplicate owners copy reissued by virtue of the loss of the
original duplicate owners copy. That circumstance should have already alerted them to the need
to inquire beyond the face of Sys TCT. There were other circumstances, like the almost
simultaneous transactions affecting the property within a short span of time, as well as the gross
undervaluation of the property in the deeds of sale when the true market value was then in the
aggregate of at least P14,000,000.00, ostensibly at the behest of Sy to minimize her liabilities for
the capital gains tax, that also excited suspicion, and required them to be extra-cautious in
dealing with Sy on the property.
The records also show that the forged Deed of Sale from Domingo to Sy appeared to be
executed on July 14, 1997; that the Affidavit of Loss by which Sy would later on support her
petition for the issuance of the duplicate owners copy of Domingos TCT was executed on July
17, 1997, the very same day in which Sy registered the Affidavit of Loss in the Registry of Deeds;
that Sy filed the petition for the issuance of the duplicate owners copy of Domingos TCT; that
the RTC granted her petition on August 26, 1997; and that on October 31, 1997, a real estate
mortgage was executed in favor of one Emma Turingan, with the mortgage being annotated on
November 10, 1997.
Being the buyers of the registered realty, the Cusis and the De Veras were aware of the
aforementioned several almost simultaneous transactions affecting the property. Their
awareness, if it was not actual, was at least presumed, and ought to have put them on their
guard, for, as the CA pointed out, the RTC observed that these almost simultaneous
transactions, particularly the date of the alleged loss of the TCT and the purported Deed of Sale,
sufficed to arouse suspicion on the part of any person dealing with the subject property. But they
still went on with their respective purchase of the property without making the deeper inquiries.
In that regard, they were not acting in good faith. Furthermore, that they did not also appear to
have paid the full price for their share of the property evinced their not having paid true value.
REPUBLIC vs. DE GUZMAN VDA. DE JOSON

G.R. No. 163767, FIRST DIVISION, March 10, 2014, BERSAMIN, J.
Under Section 14(1), of the Property Registration Decree, the respondent had to prove that:
(1) the land formed part of the alienable and disposable land of the public domain; and (2) she, by
herself or through her predecessors-in-interest, had been in open, continuous, exclusive, and
notorious possession and occupation of the subject land under a bona fide claim of ownership from
June 12, 1945, or earlier. It is the applicant who carries the burden of proving that the two
requisites have been met. Failure to do so warrants the dismissal of the application.
Land of the public domain, to be the subject of appropriation, must be declared alienable
and disposable either by the President or the Secretary of the Department of Environment and
Natural Resources (DENR). In Republic v. T.A.N. Properties, Inc., 555 SCRA 477 (2008), we
explicitly ruled: The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain as alienable and
disposable, and that the land subject of the application for registration falls within the approved
area per verification through survey by the PENRO or CENRO. In addition, the applicant for
land registration must present a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the official records. These facts
must be established to prove that the land is alienable and disposable. This doctrine unavoidably
means that the mere certification issued by the CENRO or PENRO did not suffice to support the
application for registration, because the applicant must also submit a copy of the original
classification of the land as alienable and disposable as approved by the DENR Secretary and
certified as a true copy by the legal custodian of the official records.
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The period of possession prior to the reclassification of the land as alienable and disposable
land of the public domain is not considered in reckoning the prescriptive period in favor of the
possessor. As pointedly clarified also in Heirs of Mario Malabanan v. Republic, 587 SCRA 172
(2009): Should public domain lands become patrimonial because they are declared as such in a
duly enacted law or duly promulgated proclamation that they are no longer intended for public
service or for the development of the national wealth, would the period of possession prior to
the conversion of such public dominion into patrimonial be reckoned in counting the
prescriptive period in favor of the possessors? We rule in the negative. The limitation imposed
by Article 1113 dissuades us from ruling that the period of possession before the public domain
land becomes patrimonial may be counted for the purpose of completing the prescriptive period.
Possession of public dominion property before it becomes patrimonial cannot be the object of
prescription according to the Civil Code. As the application for registration under Section 14(2)
falls wholly within the framework of prescription under the Civil Code, there is no way that
possession during the time that the land was still classified as public dominion property can be
counted to meet the requisites of acquisitive prescription and justify registration.
FACTS:
Rosario De Guzman, filed her application for land registration in the CFI in Bulacan. On
June 2, 1977, at the initial hearing of the application, Fiscal Liberato L. Reyes interposed an
opposition in behalf of the Director of Lands and the Bureau of Public Works.
The records show that the land subject of the application was a rice land with an area of
12,342 square meters; that the rice land had been originally owned and possessed by one
Mamerto Dionisio since 1907 that on May 13, 1926, Dionisio, by way of a deed of sale, had sold
the land to Romualda Jacinto that upon the death of Romualda Jacinto, her sister Maria Jacinto
(mother of the respondent) had inherited the land that upon the death of Maria Jacinto
in 1963, Rosario De Guzman had herself inherited the land, owning and possessing it
openly, publicly, uninterruptedly, adversely against the whole world, and in the concept of
owner since then that the land had been declared in her name for taxation purposes and that
the taxes due thereon had been paid.
In their opposition filed by Fiscal Reyes, the Director of Lands and the Director of Forest
Development averred that whatever legal and possessory rights De Guzman had acquired by
reason of any Spanish government grants had been lost, abandoned or forfeited for failure to
occupy and possess the land for at least 30 years immediately preceding the filing of the
application and that the land applied for, being actually a portion of the Labangan
Channel operated by the Pampanga River Control System, could not be subject of
appropriation or land registration.
The OSG also filed in behalf of the Government an opposition to the application,
insisting that the land was within the unclassified region of Paombong, Bulacan that areas
within the unclassified region were denominated as forest lands and thus fell under the
exclusive jurisdiction, control and authority of the Bureau of Forest Development (BFD)
and that the CFI did not acquire jurisdiction over the application considering that: (1) the land
was beyond the commerce of man (2) the payment of taxes vested no title or ownership in the
declarant or taxpayer.
The RTC ruled in favor of Rosario on the ground that she had sufficiently established her
open, public, continuous, and adverse possession in the concept of an owner for more than 30
years, which was affirmed by the CA.
ISSUE:
Whether the land subject of the application for registration is susceptible of private
acquisition.
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RULING:
No. The determination of the issue hinges on whether or not the land was public if so,
whether the respondent satisfactorily proved that the land had already been declared as
alienable and disposable land of the public domain and that she and her predecessors in interest
had been in open, peaceful, continuous, uninterrupted and adverse possession of the land in the
concept of owner since June 12, 1945, or earlier.
It is the applicant who carries the burden of proving that the two requisites have been
met. Failure to do so warrants the dismissal of the application. Rosario unquestionably complied
with the second requisite by virtue of her having been in open, continuous, exclusive and
notorious possession and occupation of the land since June 12, 1945, or earlier.
Nonetheless, what is left wanting is the fact that Rosario did not discharge her burden to
prove the classification of the land as demanded by the first requisite. She did not present
evidence of the land, albeit public, having been declared alienable and disposable by the State.
Belatedly realizing the failure to prove the alienable and disposable classification of the
land, Rosario attached as Annex A to her appellees brief the certification dated March 8, 2000
issued by the Department of Environment and Natural ResourcesCommunity
Environment and Natural Resources Office (DENR-CENRO), to the effect that the land falls
within the Alienable or Disposable Land Project No. 19 of Paombong, Bulacan.
We reiterate the standing doctrine that land of the public domain, to be the subject of
appropriation, must be declared alienable and disposable either by the President or the Secretary
of the DENR. This doctrine unavoidably means that the mere certification issued by the
CENRO or PENRO did not suffice to support the application for registration, because the
applicant must also submit a copy of the original classification of the land as alienable
and disposable as approved by the DENR Secretary and certified as a true copy by the
legal custodian of the official records.
Yet, even assuming that the DENR-CENRO certification alone would have sufficed, the
respondents application would still be denied considering that the reclassification of the land as
alienable or disposable came only after the filing of the application in court in 1976. The
certification itself indicated that the land was reclassified as alienable or disposable only on
October 15, 1980.
The period of possession prior to the reclassification of the land as alienable and
disposable land of the public domain is not considered in reckoning the prescriptive
period in favor of the possessor. In other words, the period of possession prior to the
reclassification of the land, no matter how long, was irrelevant because prescription did not
operate against the State before then.
REPUBLIC vs. ZURBARAN DEVELOPMENT AND REALTY CORPORATION

G.R. No. 164408, FIRST DIVISION, March 24, 2014, Bersamin, J.
An application for original registration of land of the public domain under Section 14(2) of
Presidential Decree (PD) No. 1529 must show not only that the land has previously been declared
alienable and disposable, but also that the land has been declared patrimonial property of the State
at the onset of the 30year or 10year period of possession and occupation required under the law
on acquisitive prescription. Once again, the Court applies this ruleas clarified in Heirs of Mario
Malabanan v. Republicin reviewing the decision promulgated on June 10, 2004, whereby the
Court of Appeals (CA) granted the petitioners application for registration of land.
Civil Law; Land Registration; Property Registration Decree (Presidential Decree [P.D.] No.
1529); Section 14 of Presidential Decree (P.D.) No. 1529 enumerates those who may file an
application for registration of land based on possession and occupation of a land of the public
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domain.The following persons may file in the proper Court of First Instance an application for
registration of title to land, whether personally or through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of alienable and disposable lands
of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier. (2)
Those who have acquired ownership of private lands by prescription under the provision of
existing laws.
Same; Same; Same; Under Section 14(1), it is not necessary that the land must have been
declared alienable and disposable as of June 12, 1945, or earlier, because the law simply requires the
property sought to be registered to be alienable and disposable at the time the application for
registration of title is filed.An application for registration under Section 14(1) of P.D. No. 1529
must establish the following requisites, namely: (a) the land is alienable and disposable property
of the public domain; (b) the applicant and its predecessors-in-ihnterest have been in open,
continuous, exclusive and notorious possession and occupation of the land under a bona fide
claim of ownership; and (c) the applicant and its predecessors-in-interest have possessed and
occupied the land since June 12, 1945, or earlier. The Court has clarified in Malabanan that under
Section 14(1), it is not necessary that the land must have been declared alienable and disposable
as of June 12, 1945, or earlier, because the law simply requires the property sought to be
registered to be alienable and disposable at the time the application for registration of title is
filed. The Court has explained that a contrary interpretation would absurdly limit the
application of the provision to the point of virtual inutility.
Same; Same; Same; Registration under Section 14(1) of Presidential Decree (P.D.) No. 1529
is based on possession and occupation of the alienable and disposable land of the public domain
since June 12, 1945 or earlier, without regard to whether the land was susceptible to private
ownership at that time.
Same; Same; Same; An application under Section 14(2) of Presidential Decree (P.D.) No.
1529 is based on acquisitive prescription and must comply with the law on prescription as provided
by the Civil Code.An application under Section 14(2) of P.D. No. 1529 is based on acquisitive
prescription and must comply with the law on prescription as provided by the Civil Code. In that
regard, only the patrimonial property of the State may be acquired by prescription pursuant to
the Civil Code. For acquisitive prescription to set in, therefore, the land being possessed and
occupied must already be classified or declared as patrimonial property of the State. Otherwise,
no length of possession would vest any right in the possessor if the property has remained land
of the public dominion. Malabanan stresses that even if the land is later converted to
patrimonial property of the State, possession of it prior to such conversion will not be counted to
meet the requisites of acquisitive prescription. Thus, registration under Section 14(2) of P.D. No.
1529 requires that the land had already been converted to patrimonial property of the State at
the onset of the period of possession required by the law on prescription.
Same; Same; Same; Requisites of an application for registration based on Section 14(2) of
Presidential Decree (P.D.) No. 1529.An application for registration based on Section 14(2) of
P.D. No. 1529 must, therefore, establish the following requisites, to wit: (a) the land is an
alienable and disposable, and patrimonial property of the public domain; (b) the applicant and
its predecessors-in-interest have been in possession of the land for at least 10 years, in good faith
and with just title, or for at least 30 years, regardless of good faith or just title; and (c) the land
had already been converted to or declared as patrimonial property of the State at the beginning
of the said 10-year or 30-year period of possession.
FACTS:
On May 28, 1993, respondent Zurbaran Realty and Development Corporation filed in the
RTC in San Pedro, Laguna an application for original registration covering a 1,520 square meter
parcel of land situated in Barrio Banlic, Municipality of Cabuyao, Province of Laguna alleging
that it had purchased the land on March 9, 1992 from Jane de Castro Abalos, married to Jose
Abalos, for P300,000.00.
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The Republic, represented by the Director of Lands, opposed the application, arguing
that the applicant and its predecessorsininterest had not been in open, continuous, exclusive
and notorious possession and occupation of the land since June 12, 1945; that the muniments of
title and tax declaration presented did not constitute competent and sufficient evidence of
a bona fide acquisition of the land; and that the land was a portion of the public domain, and,
therefore, was not subject to private appropriation.
The RTC held that the respondent and its predecessorsininterest had been in open,
public, peaceful, continuous, exclusive and adverse possession and occupation of the land under
a bona fide claim of ownership even prior to 1960 and, accordingly, granted the application for
registration. The Republic appealed and the CA promulgated its judgment affirming the RTC.
Hence, this appeal.
The Republic contends that the respondent did not establish the time when the land
covered by the application for registration became alienable and disposable; that such detail was
crucial because the possession of the respondent and its predecessorsininterest, for the
purpose of determining whether it acquired the property by prescription, should be reckoned
from the time when the land was declared alienable and disposable; and that prior to the
declaration of the land of the public domain as alienable and disposable, it was not susceptible
to private ownership, and any possession or occupation at such time could not be counted as
part of the period of possession required under the law on prescription.
The respondent counters that whether it established when the property was declared
alienable and disposable and whether it complied with the 30year required period of possession
should not be entertained anymore by the Court because: (a) these issues had not been raised in
the trial court and were being raised for the first time on appeal; and (b) factual findings of the
trial court, especially when affirmed by the CA, were binding and conclusive on this Court. At
any rate, the respondent insists that it had been in open, public, peaceful, continuous, and
adverse possession of the property for the prescribed period of 30 years as evidenced by the fact
that the property had been declared for taxation purposes in 1960 in the name of its
predecessorsininterest, and that such possession had the effect of converting the land into
private property and vesting ownership upon the respondent.
In reply, the Republic asserts that it duly opposed the respondents application for
registration; that it was only able to ascertain the errors committed by the trial court after the
latter rendered its decision; and that the burden of proof in land registration cases rested on the
applicant who must prove its ownership of the property being registered. The Republic
maintains that the Court had the authority to review and reverse the factual findings of the
lower courts when the conclusion reached was not supported by the evidence on record, as in
this case.
ISSUE:
WON the application for original registration, despite the absence of evidence that
respondent and its predecessorsininterest have complied with the period of possession and
occupation required by law, shall be granted?
RULING:
NO. An application for registration under Section14(1) of P.D. No. 1529 must establish the
following requisites, namely: (a) the land is alienable and disposable property of the public
domain; (b) the applicant and its predecessors in interest have been in open, continuous,
exclusive and notorious possession and occupation of the land under a bona fide claim of
ownership; and (c) the applicant and its predecessorsininterest have possessed and occupied
the land since June 12, 1945, or earlier. The Court has clarified in Malabanan that under
Section14(1), it is not necessary that the land must have been declared alienable and disposable
as of June 12, 1945, or earlier, because the law simply requires the property sought to be
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registered to be alienable and disposable at the time the application for registration of title is filed.
The Court has explained that a contrary interpretation would absurdly limit the application of
the provision to the point of virtual inutility.
To properly appreciate the respondents case, we must ascertain under what provision its
application for registration was filed. If the application was filed under Section 14(1) of P.D. No.
1529, the determination of the particular date when the property was declared alienable and
disposable would be unnecessary, inasmuch as proof showing that the land had already been
classified as such at the time the application was filed would be enough. If the application was
filed under Section 14(2) of P.D. No. 1529, the determination of the issue would not be crucial for,
as earlier clarified, it was not the declaration of the land as alienable and disposable that would
make it susceptible to private ownership by acquisitive prescription.
Article 422 of the Civil Code states that [p]roperty of public dominion, when no longer
intended for public use or for public service, shall form part of the patrimonial property of the
State.
Accordingly, there must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial. Without such
express declaration, the property, even if classified as alienable or disposable, remains property
of the public dominion, pursuant to Article 420(2), and thus incapable of acquisition by
prescription. It is only when such alienable and disposable lands are expressly declared by the
State to be no longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration shall be in the form
of a law duly enacted by Congress or a Presidential Proclamation in cases where the President is
duly authorized by law.
The respondents application does not enlighten as to whether it was filed under Section 14(1) or
Section 14(2) of P.D. No. 1529. The application alleged that the respondent and its predecessors
ininterest had been in open, continuous and exclusive possession and occupation of the
property in the concept of an owner, but did not state when possession and occupation
commenced and the duration of such possession. At any rate, the evidence presented by the
respondent and its averments in the other pleadings reveal that the application for registration
was filed based on Section 14(2), not Section 14(1) of P.D. No. 1529. The respondent did not make
any allegation in its application that it had been in possession of the property since June 12, 1945,
or earlier, nor did it present any evidence to establish such fact.
With the application of the respondent having been filed under Section 14(2) of P.D. No.
1529, the crucial query is whether the land subject of the application had already been
converted to patrimonial property of the State. In short, has the land been declared by
law as no longer intended for public service or the development of the national wealth?
The respondent may perhaps object to a determination of this issue by the Court for the
same reason that it objects to the determination of whether it established when the land was
declared alienable and disposable, that is, the issue was not raised in and resolved and by the
trial court. But the objection would be futile because the issue was actually raised in the trial
court, as borne out by the Republics allegation in its opposition to the application to the effect
that the land is a portion of the public domain not subject to prescription. In any case, the
interest of justice dictates the consideration and resolution of an issue that is relevant to another
that was specifically raised. The rule that only theories raised in the initial proceedings may be
taken up by a party on appeal refers only to independent, not concomitant, matters to support
or oppose the cause of action.
Here, there is no evidence showing that the land in question was within an area expressly
declared by law either to be the patrimonial property of the State, or to be no longer intended
for public service or the development of the national wealth. The Court is left with no alternative
but to deny the respondents application for registration.
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AZNAR BROTHERS REALTY COMPANY v. SPOUSES JOSE AND MAGDALENA YBAEZ

G.R. No. 161380, FIRST DIVISION, April 21, 2014, BERSAMIN, J.
The Deed of Absolute Sale in favor of plaintiff-appellant Aznar was registered

under Act 3344, as amended, with the Register of Deeds of Cebu City. The registration of said deed
gave constructive notice to the whole world including defendant-appellees of the existence of said
deed of conveyance. (Gerona v. Guzman, 11 SCRA 153) Defendant-appellees cannot, therefore,
claim to be buyers in good faith of the land in question. Resultantly, they merely stepped into
the shoes of their sellers vis a vis said land. Since their sellers were not owners of the property
in question, there was nothing that they could have sold to defendant-appellees.
Civil Law; Land Registration; Although a deed or instrument affecting unregistered lands
would be valid only between the parties thereto, third parties would also be affected by the
registered deed or instrument on the theory of constructive notice once it was further registered.
As ruled in Gutierrez v. Mendoza-Plaza, 607 SCRA 807 (2009): The non-registration of the
aforesaid deed does not also affect the validity thereof. Registration is not a requirement for
validity of the contract as between the parties, for the effect of registration serves chiefly to bind
third persons. The principal purpose of registration is merely to notify other persons not parties
to a contract that a transaction involving the property has been entered into. The conveyance of
unregistered land shall not be valid against any person unless registered, except (1) the grantor,
(2) his heirs and devisees, and (3) third persons having actual notice or knowledge thereof. As
held by the Court of Appeals, petitioners are the heirs of Ignacio, the grantor of the subject
property. Thus, they are bound by the provisions of the deed of donation inter vivos.
Same; Same; Constructive Notice; The only exception to the rule on constructive notice by
registration of the deed or instrument affecting unregistered realty exists in favor of a third party
with a better right.The only exception to the rule on constructive notice by registration of the
deed or instrument affecting unregistered realty exists in favor of a third party with a better
right. This exception is provided in Section 194, as amended by Act No. 3344, to the effect that
the registration shall be understood to be without prejudice to a third party with a better right;
and in paragraph (b) of Section 113 of P.D. No. 1529, to the effect that any recording made under
this section shall be without prejudice to a third party with a better right. As to who is a third
party with better right under these provisions is suitably explained in Hanopol v. Pilapil, 7 SCRA
452 (1963), a case where the sale of unregistered land was registered under Act No. 3344 but the
land was sold twice, as follows: It thus appears that the better right referred to in Act No. 3344
is much more than the mere prior deed of sale in favor of the first vendee. In the Lichauco case
just mentioned, it was the prescriptive right that had supervened. Or, as also suggested in that
case, other facts and circumstances exist which, in addition to his deed of sale, the first vendee
can be said to have better right than the second purchaser.
Same; Land Registration; An action to declare the nullity of a void title does not prescribe
and is susceptible to direct, as well as to collateral, attack.The principle of indefeasibility of the
Torrens title does not protect OCT No. 2150 because the free patent on which the issuance of the
title was based was null and void. A direct attack as well as a collateral attack are proper, for, as
the Court declared in De Guzman v. Agbagala, 546 SCRA 278 (2008): x x x. An action to declare
the nullity of a void title does not prescribe and is susceptible to direct, as well as to collateral,
attack. OCT No. P-30187 was registered on the basis of a free patent which the RTC ruled was
issued by the Director of Lands without authority. The petitioners falsely claimed that the land
was public land when in fact it was not as it was private land previously owned by Carmen who
inherited it from her parents.
FACTS:
Casimiro Ybaez (Casimiro), with the marital consent of Maria Daclan, executed a Deed
of Absolute Sale in favor of Aznar Brothers conveying for P2,500.00 the 17,575-square-meter
unregistered agricultural land in Banika-Bulacao, Pardo, Cebu City. Saturnino Tanuco sold to
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Aznar Brothers for P2,528.00 the 15,760-square-meter parcel of corn and cogon land planted with
17 coconut trees situated in Candawawan, Pardo, Cebu City, bounded on the North by Alfonso
Pacaa. The parties agreed to register the parcel of land under Act No. 3344.
Casimiro died intestate leaving as heirs his wife Maria. The heirs of Casimiro executed an
Extrajudicial Declaration of Heirs with an Extrajudicial Settlement of Estate of Deceased Person
and Deed of Absolute Sale, whereby they divided and adjudicated among themselves the lot with
an area of 16,050 square meters situated in Banika, Bulacao, Pardo Cebu City. By the same
document, they sold the entire lot for P1,000.00 to their co-heir, Adriano D. Ybaez (Adriano).
Adriano sold Lot No. 18563 to Jose R. Ybaez for P60,000.00. Lot No. 18563 is described in
their deed of sale as containing an area of 16,050 square meters. Jose R. Ybaez filed Free Patent
Application in respect of the land he had bought from Adriano. In due course, Original
Certificate of Title was issued to Jose R. Ybaez.
Aznar Brothers filed in the RTC a complaint against Jose R. Ybaez claiming
absolute ownership of Lot No. 18563 by virtue of the Deed of Absolute Sale dated March 21,
1964 executed in its favor by Casimiro. Alleging that the free patent issued in favor of Jose R.
Ybaez covered the same property already adjudicated as private property, Jose R. Ybaez
moved to dismiss the complaint of Aznar Brothers on the ground of lack of cause of action,
lack of jurisdiction over the nature of the action, and estoppel by laches.
ISSUE:
WON the petitioner AZNAR BROTHERS REALTY COMPANY is the sole and exclusive
owner of the unregistered parcel of land
RULING:
YES. CA correctly concluded that Aznar Brothers owned Lot No. 18563; and that the
Spouses Ybaez were not buyers in good faith.
The Deed of Absolute Sale in favor of plaintiff-appellant Aznar was registered

under Act 3344, as amended, with the Register of Deeds of Cebu City. The registration of said
deed gave constructive notice to the whole world including defendant-appellees of the existence
of said deed of conveyance. (Gerona v. Guzman, 11 SCRA 153) Defendant-appellees cannot,
therefore, claim to be buyers in good faith of the land in question. Resultantly, they merely
stepped into the shoes of their sellers vis a vis said land. Since their sellers were not owners
of the property in question, there was nothing that they could have sold to defendant-
appellees.
We sustain the CAs conclusion that the Spouses Ybaez were guilty of bad faith, and
that they acquired Lot No. 18563 from sellers who were not the owners. Accordingly, we resolve
the second error raised herein in favor of Aznar Brothers.
The Spouses Ybaez held no right to Lot No. 18563 because Adriano, their seller,
and his siblings were not the owners of Lot No. 18563. Indeed, Casimiro had absolutely
conveyed his interest in Lot No. 18563 to Aznar Brothers under the Deed of Absolute Sale of
March 21, 1964 with the marital consent of Maria Daclan, Casimiros surviving spouse and the
mother of Adriano and his siblings. Considering that such conveyance was effective and binding
on Adriano and his siblings, there was no valid transmission of Lot No. 18563 upon Casimiros
death to any of said heirs, and they could not legally adjudicate Lot No. 18563 unto themselves,
and validly transfer it to Adriano. The conveyance by Adriano to Jose R. Ybaez on June 21, 1978
was absolutely void and ineffectual.
There is also no question that the Spouses Ybaez were aware of the conveyance of
Lot No. 18563 by Casimiro to Aznar Brothers considering that the Deed of Absolute Sale of
March 21, 1964 between Casimiro and Aznar Brothers was registered in the book of registry of
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unregistered land on the same day pursuant to their agreement. Such registration constituted a
constructive notice of the conveyance on the part of the Spouses Ybaez pursuant to Section 194
of the Revised Administrative Code of 1917
Although a deed or instrument affecting unregistered lands would be valid only

between the parties thereto, third parties would also be affected by the registered deed
or instrument on the theory of constructive notice once it was further registered in
accordance with Section 194.
ESTOPPEL BY LACHES DID NOT BAR AZNAR BROTHERS RIGHT OVER LOT NO. 18563
Plaintiff-appellant was never in possession of the land which it bought. Even after buying
the land from Casimiro Ybaez, plaintiff-appellant did not take possession of it. On the other
hand, the heirs of Casimiro Ybaez took possession of said land upon the latters death. Said
heirs sold their shares on said land to one of their co-heirs, Adriano Ybaez, who in turn, sold
the whole land to defendant appellees, the spouses Jose and Magdalena Ybaez. The latter
continued possessing said land, tax declared it, paid realty taxes thereon and finally secured a
free patent and title over it. Up to the present, defendant-appellees are in possession of the land
as owners thereof.
There is absolutely no doubt that in law, plaintiff-appellant had lost its dominical and
possessory claim over the land for its inaction from 1964 when it bought the land up to 1989
when it filed the Complaint in the trial court or a long period of 25 years. This is
called estoppel by laches.
Aznar Brothers now assails this adverse ruling under its first assigned error by pointing
out that the CA erred in relying on estoppel by laches, a rule of equity, to bar its dominical
claim over Lot No. 18563. The Spouses Ybaez counter that the CA was correct because Aznar
Brothers did not assert possession and ownership over the land for 25 yearsWe hold and declare
that the CAs ruling in favor of the Spouses Ybaez was devoid of legal and factual support, and
should be rightfully reversed.
The CA incorrectly barred the claim of Aznar Brothers to Lot No. 18563 because of
laches. For one, Aznar Brothers immediately registered the purchase in accordance with Act No.
3344, the law then governing the registration of unregistered land. Its action in that regard
ensured the protection of the law as to its ownership of the land, and evinced that it did not
abandon its ownership. Verily, its maintaining Lot No. 18563 as an unregistered land from then
on should not prejudice its rights; otherwise, its registration pursuant to law would be set at
naught. Secondly, the supposed acts of possession of Lot No. 18563 exercised by the Spouses
Ybaez from the time of their purchase from Adriano, including causing it to be surveyed for
purposes of the application for free patent, did not prejudice Aznar Brothers interest because
the registration under Act No. 3344 had given constructive notice to the Spouses Ybaez of its
prior acquisition of the land. Thereby, the Spouses Ybaez became bound by the sale from
Casimiro to Aznar Brothers, and rendered them incapable of acquiring the land in good faith
from Adriano. Consequently, Jose R. Ybaezs intervening application for the free patent, the
grant of the free patent and the issuance of OCT No. 2150 thereafter did not supplant the
superior rights and interest of Aznar Brothers in Lot No. 18563. And, lastly, the Spouses Ybaez
would not suffer any prejudice should Aznar Brothers prevail herein, for Adriano, their
predecessor-in-interest, did not transmit to them any kind or degree of right or interest in Lot
No. 18563.
LOT NO. 18563, NOT BEING LAND OF THE PUBLIC DOMAIN, WAS NOT SUBJECT TO THE
FREE PATENT ISSUED TO THE SPOUSES YBAEZ
The Spouses Ybaezs position rests on their having been issued the free patent and OCT
No. 2150. The records do not support the position of the Spouses Ybaez.
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In contrast, Aznar Brothers acquired Lot No. 18563 as the private land of Casimiro.
In their Deed of Absolute Sale of March 21, 1964, Casimiro expressly warranted that the land was
his own exclusive property. With the ownership of Aznar Brothers being thus established, the
free patent issued to Jose R. Ybaez by the Government was invalid for the reason that the
Government had no authority to dispose of land already in private ownership. The invalidity of
the free patent necessarily left OCT No. 2150 a patent nullity.
The principle of indefeasibility of the Torrens title does not protect OCT No. 2150
because the free patent on which the issuance of the title was based was null and void. A direct
attack as well as a collateral attack are proper, for an action to declare the nullity of a void title
does not prescribe and is susceptible to direct, as well as to collateral, attack.
Nonetheless, it appears that Aznar Brothers actually mounted a direct attack on the title
of the Spouses Ybaez. In the original complaint, Aznar Brothers sought judgment ordering
them to [s]urrender all the documents pertaining to the Free Patent for cancellation. Such
relief was predicated on the allegation that the land in question was already adjudicated as
private property of the plaintiff through the Deed of Absolute Sale of March 21, 1964. Aznar
Brothers reiterated the relief in the amended complaint. In its second amended complaint, it
expressly prayed for the cancellation and annulment of OCT No. 2150. By such pleadings, it
directly attacked OCT No. 2150, because their object was to nullify the title, and thus challenge
the judgment or proceeding pursuant to which the title was decreed.
REPUBLIC OF THE PHILIPPINES v. JOSE ALBERTO ALBA

G.R. No. 169710, AUGUST 19, 2015, BERSAMIN, J., FIRST DIVISION
The intent behind the laws use of the terms possession and occupation is to emphasize the
need for actual and not just constructive or fictional possession.
The law speaks of possession and occupation. Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and notorious,
the word occupation serves to highlight the fact that for an applicant to qualify, his possession
must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of
dominion over it of such a nature as a party would naturally exercise over his own property.
Civil Law; Land Registration; Property Registration Decree; Requisites for the Filing of an
Application for Registration of Title Under Section 14(1) of Presidential Decree (PD) No. 1529.
There are three requisites for the filing of an application for registration of title under Section
14(1) of PD 1529, namely: (1) that the property in question is alienable and disposable land of the
public domain; (2) that the applicant by himself or through his predecessors-in-interest have
been in open, continuous, exclusive and notorious possession and occupation; and (3) that such
possession is under a bona fide claim of ownership since June 12, 1945, or earlier. In short, the
right to file the application for original registration derives from a bona fide claim of ownership
dating back to June 12, 1945, or earlier, by reason of the claimants open, continuous, exclusive
and notorious possession of alienable and disposable land of the public domain.
Same; Ownership; Tax Declarations; In Cequea v. Bolante, 330 SCRA 217 (2000), the
Supreme Court (SC) has pointed out that only when tax declarations were coupled with proof of
actual possession of the property could they become the basis of a claim of ownership.The
respondents claim of ownership on the basis of the tax declarations alone did not also suffice.
In Cequea v. Bolante, 330 SCRA 217 (2000), the Court has pointed out that only when tax
declarations were coupled with proof of actual possession of the property could they become the
basis of a claim of ownership. Indeed, in the absence of actual public and adverse possession, the
declaration of the land for tax purposes did not prove ownership. It is well-settled that tax
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declarations are not conclusive proof of possession or ownership, and their submission will not
lend support in proving the nature of the possession required by the law.
FACTS:
Jose Alberto Alba was the purchaser for value of the parcels of land and applied for the
original registration of title over the parcels of land in the MCTC.
The OSG opposed the application for original registration of title, contending that Jose
Alba and his predecessors-in-interest had not been in open, continuous, exclusive and notorious
possession and occupation of the lands in question.
After trial, the MCTC granted the application for registration of the parcel of land. This
was affirmed by the CA.
ISSUES:
I. WON requirement for the submission of the approved tracing cloth plan may be
excused.
II. WON Jose Alba established his required possession.
RULING:
I. YES. Requirement for the submission of the approved tracing cloth plan may be excused
if other competent means of proving identity and location of the lands subject of the application
are available and produced in court.
Section 17 of P.D. No. 1529 shows that it is mandatory for the applicant for original
registration to submit to the trial court not only the original or duplicate copies of the
muniments of title but also the copy of the duly approved survey plan of the land sought to be
registered. The survey plan is crucial because it provides reference of the propertys exact
identity and location.
The Court has relaxed the requirement for the submission of the tracing cloth plan by
holding that yet if the reason for requiring an applicant to adduce in evidence the original
tracing cloth plan is merely to provide a convenient and necessary means to afford certainty as
to the exact identity of the property applied for registration and to ensure that the same does not
overlap with the boundaries of the adjoining lots, there stands to be no reason why a registration
application must be denied for failure to present the original tracing cloth plan, especially where
it is accompanied by pieces of evidence such as a duly executed blueprint of the survey plan
and a duly executed technical description of the property which may likewise substantially
and with as much certainty prove the limits and extent of the property sought to be registered.
Although the best means to identify a piece of land for registration purposes is the original
tracing cloth plan approved by the Bureau of Lands (now the Lands Management Services of the
Department of Environment and Natural Resources), other evidence could provide sufficient
identification. The submission of the approved plan and technical description of the lot constituted
a substantial compliance with the legal requirement of ascertaining the identity or location of
the lands subject of the application for registration.
II. NO. Jose Alba did not establish his required possession.
There are three requisites for the filing of an application for registration of title under
Section 14(1) of PD 1529, namely: (1) that the property in question is alienable and disposable
land of the public domain; (2) that the applicant by himself or through his predecessors-in-
interest have been in open, continuous, exclusive and notorious possession and occupation; and
(3) that such possession is under a bona fide claim of ownership since June 12, 1945, or earlier. In
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short, the right to file the application for original registration derives from a bona fide claim of
ownership dating back to June 12, 1945, or earlier, by reason of the claimants open, continuous,
exclusive and notorious possession of alienable and disposable land of the public domain.
The respondent did not satisfactorily demonstrate that his or his predecessors-in-
interests possession and occupation were of the nature and character contemplated by the law.
None of his witnesses testified about any specific acts of ownership exercised by him or his
predecessors-in-interest on the lands. The general statements of his witnesses on the possession
and occupation were mere conclusions of law that did not qualify as competent and sufficient
evidence of his open, continuous, exclusive and notorious possession and occupation. His
witnesses did not testify on the specific acts of possession of the respondent or of his
predecessors-in-interest.
The intent behind the laws use of the terms possession and occupation is to emphasize
the need for actual and not just constructive or fictional possession.
The law speaks of possession and occupation. Since these words are separated by the
conjunction and, the clear intention of the law is not to make one synonymous with the other.
Possession is broader than occupation because it includes constructive possession. When,
therefore, the law adds the word occupation, it seeks to delimit the all encompassing effect of
constructive possession. Taken together with the words open, continuous, exclusive and
notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his
possession must not be a mere fiction. Actual possession of a land consists in the manifestation
of acts of dominion over it of such a nature as a party would naturally exercise over his own
property.
The claim of ownership on the basis of the tax declarations alone did not also suffice. Only when
the tax declarations were coupled with proof of actual possession of the property could they
become the basis of a claim of ownership. In the absence of actual public and adverse possession,
the declaration of the land for tax purposes did not prove ownership. It is well-settled that tax
declarations are not conclusive proof of possession or ownership, and their submission will not
lend support in proving the nature of the possession required by the law.
ROBLES vs. YAPCINCO

G.R. No. 169568, FIRST DIVISION, October 22, 2014, Bersamin, J.
The dispute involves the ownership of a judicially-foreclosed parcel of land sold at a public
auction, but which sale was not judicially confirmed. On one side is the petitioner, the successor in
interest of the purchaser in the public auction, and, on the other, the heirs of the mortgagor, who
never manifested interest in redeeming the property from the time of the foreclosure.
The judicial confirmation operated only "to divest the rights of all the parties to the action
and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by
law."
FACTS:
The property in litigation was originally registered in the name of Fernando F. Yapcinco,
married to Maxima Alcedo. In 1994, Yapcinco constituted a mortgage on the property in favor of
Jose Marcelo to secure the performance of his obligation. In turn, Marcelo transferred his rights
as the mortgagee to Apolinario Cruz. When Yapcinco was not able to pay the obligation, Cruz
brought an action for judicial foreclosure of the mortgage. During the pendency of the action,
Yapcinco died and Patrocinio Kelly was appointed as administratix of the estate of Yapcinco.
The CFI (now RTC) of Tarlac rendered a decision ordering Kelly to pay Cruz the
indebtedness secured by the mortgage plus interest, and failure to pay after 90 days from the
date of the decision, the property would be sold at a public auction.
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Cruz was adjudged the highest bidder in the public auction. He was issued the certificate
of absolute sale and took possession of the property in due course. However, he did not
register the certificate of sale nor a judicial confirmation of sale was issued.
After sometime, Cruz donated the property to his grandchildren, namely: Carlos Dela
Rosa, Apolinario Bernabe, Ferdinand Cruz and Rolando Robles. Apolinario Bernabe falsified a
deed of absolute sale where he made it appear that Yapcinco had sold the property to him, Ma.
Teresita Escopete, Orlando Santos and Oliver Puzon. As a result of which, the Register of Deeds
cancelled Yapcincos title and issued in the names of Bernabe and others as co-vendees.
Dela Rosa, and Cruz, the other donees, filed a complaint in the RTC for the nullification
of the contract of sale, cancellation of title and reconveyance against Bernabe and his co-vendees
but the case was not aggressively pursued.
After sometime, all the heirs of Spouses Yapcinco instituted an action against Benabe and
his co-vendees for the annulment of the TCT issued to Bernabe, document restoration,
reconveyance and damages. They claimed that although the property had been mortgaged,
the mortgage had not been forecloses judicially or extra-judicially and that the deed of
absolute sale between Yapcinco and Bernabe was void because Yapcinco had already
been dead as of the date of the sale.
The RTC rendered its judgment declaring the TCT and deed of absolute sale null and
void and restored the TCT in the name of Yapcinco.
Rolando Robles then filed an action for the nullification of the document, cancellation of
title reconveyance and damages against the Heirs of Yapcinco alleging that the heirs acted in bad
faith because they had fully known that the property had long been excluded from the estate of
Yapcinco and that a certificate of absolute sale was issued in the name of Apolinario Cruz and
that he had a vested right in the property pursuant to the deed of donation executed in his favor
by Cruz.
The RTC rendered decision in favor of Robles declaring the subject land to be owned by
the late Apolinario Cruz and is part of his estate.
The CA reversed the judgment of the RTC holding that due to the non-
registration of the certificate of sale, the period of redemption did not commence to run.
It also held that Cruz never acquired title to the property and could not have conveyed
and transferred ownership to his grandchildren through a deed of donation.
ISSUE:
Whether Apolinario Cruz is entitled to the disputed property?
HELD:
Yes. It was not denied that Fernando Yapcinco, as the mortgagor, did not pay his
obligation and that his default led to the filing of the action for judicial foreclosure against him.
In the end, the decision in the action for the judicial foreclosure called for the holding of the
public sale of the mortgaged property. Due to the subsequent failure of the estate of Fernando
Yapcinco to exercise the equity of redemption, the property was sold at a public sale where
Apolinario Cruz was declared the highest bidder.
The effect of the failure of Apolinario Cruz to obtain the judicial confirmation was only
to prevent the title to the property from being transferred to him. Such failure did not give
rise to any right in favor of the mortgagor or the heirs of Yapcinco to take back the
property already validly sold through public auction. Nor such failure invalidate the
foreclosure proceedings. To maintain otherwise would render nugatory the judicial
foreclosure and foreclosure sale.
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The non-transfer of the title notwithstanding, Apolinario Cruz as the purchaser should not
be deprived of the property purchased at the foreclosure sale. With the foreclosure and
subsequent public sale known to the heirs of Yapcinco and in view of the unquestioned
possession by Apolinario Cruz and his grandchildren from the time of the foreclosure sale until
the present, the heirs of Yapcinco could not assert any better right to the property on the basis of
lack of judicial confirmation of the sale. The judicial confirmation operated only "to divest the
rights of all the parties to the action and to vest their rights in the purchaser, subject to such
rights of redemption as may be allowed by law."
SPOUSES NESTOR and FELICIDAD DADIZON v. HON. COURT OF APPEALS and

SPOUSES DOMINADOR and ELSA MOCORRO
G.R. No. 159116, 30 September 2009, FIRST DIVISION (BERSAMIN, J.)
The mere execution of a deed of sale covering an unregistered parcel of land is not
enough to bind third persons. A succeeding step - the registration of the sale - has to be
taken. Indeed, registration is the operative act to convey or affect the unregistered land
insofar as third persons are concerned.
Spouses Dominador and Elsa Mocorro (Mocorros) bought a 224 square meter land from
Brigido Caneja, Sr. to which Tax Declaration No. 4518 was issued in the name of Dominador
Morocco. In 1979, Tax Declaration No. 4518 was superseded by Tax Declaration No. 3478, still
covering the same area of 224 square meters. Tax Declaration No. 3478 carried an annotation
of the mortgage on the land constituted by the Mocorros in favor of the Rural Bank of
Naval. In 1984, as borne out in Tax Declaration No. 607, the area of 224 square meters
was reduced by 78 square meters to only 146 square meters, with the western boundary
being now described as Cadastral Lot No. 523, Assessors Lot No. 049, owned by the Spouses
Nestor and Felicidad Dadizon (Dadizons). The Dadizons were issued their own tax
declaration for the first time only in 1980, through Tax Declaration No. 535 in the name of
Felicidad Dadizon, covering an area of 147 square meters. The dorsal side of Tax Declaration
No. 535 of the Dadizons contained the following note:
Note: Previous Tax Declaration was unidentified it is subject for further

verification Cad. Lot No. 523 in the name of Felicidad Dadizon is
denominated has no previous tax declaration and or assessed as NEW
under the Tax Mapping revision.
Based on the tax declarations, the area of the land of the Mocorros had always
been 224 square meters until 1984, when the area was reduced to 146 square meters following
the exclusion of a part thereof measuring 78 square meters to adjust the area to that
declared in the name of the Dadizons in Tax Declaration No. 535. Hence, Mocorros initiated
a case in the Municipal Trial Court to recover the parcel of land with an area of 78 square
meters. The MTC rendered judgment in favor of the Mocorros which was affirmed by the
RTC on appeal. The Dadizons subsequently filed a notice of appeal to the Court of
Appeals but was dismissed on the ground that the mode of appeal was erroneous.
ISSUE:
Whether or not the Dadizons own the 78-square meter portion of the subject
property by virtue of an unnotarized and unregistered deed of absolute sale.
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RULING:
NO. There is no question that the 78-square meter portion subject of this suit was
part of the lot with an area of 224 square meters that the Mocorros had acquired from their
predecessors- in-interest, starting from Ignacia Bernal. The Mocorros had possessed the land
since their purchase of it on June 2, 1973 from Caneja, Sr. After their acquisition from
Caneja, Sr., they had been issued Tax Declaration No. 4518, which had been their tax
declaration for the property until its cancellation in 1979 and the issuance to them of Tax
Declaration No. 3478. Up to then, no other persons, the Dadizons included, had challenged
their ownership of the 78-square meter lot. A further proof of their ownership was the
fact that they had constituted a mortgage on the entire area of 224 square meters on July
23, 1975 in favor of the Rural Bank of Naval to secure an obligation. The mortgage lien was
annotated on their Tax Declaration No. 3478.
In contrast, the Dadizons declared the 78-square meter portion for the first time
only in 1980 under Tax Declaration No. 535. Their declaration was suspect, however,
considering that the Office of the Provincial Assessor had no previous record of any
declaration in the name of the Dadizons or of their predecessors-in-interest. Thus, that office
issued the certification to the effect that the preceding tax declaration of the property of
Felicidad Dadizon was unidentified and still subject to further verification, which could only
mean that the Dadizons had filed no earlier tax declaration on their property. In fact,
Cadastral Lot No. 523 in the name of Felicidad Dadizon was described as: ha(ving) no previous
tax declaration and or assessed as NEW under the Tax Mapping revision. Given such
antecedents, the reduction of the area of the landholding of the Mocorros to adjust the area in
favor of the land of the Dadizons under Tax Declaration No. 535 was questionable.
The conclusion of the MTC that the Dadizons supposed acquisition on March 10,
1976 by means of a private document of the 78-square meter portion from Eustaquia
Bernadas, Felicidad Dadizons own mother, had been feigned to make it appear that the
documents were executed on the dates mentioned therein; and that Dominador Mocorro
had been misled into fencing their residential land as to its correct boundary upon
misrepresentation of one Eustaquia Bernadas in the absence of Elsa Mocorro was upheld
by the RTC as the appellate court for the reason that the Dadizons had not presented any
fact or circumstance that the MTC as the trial court had failed to appreciate, but if
considered would change the result.
The reliance of the Dadizons on the unnotarized and unregistered deed of absolute
sale of real property executed by Bernadas in their favor was misplaced and unwarranted, for
the non- registration of the deed meant that the sale could not bind third parties like the
respondents. The transaction affecting unregistered lands covered by an unrecorded
contract, if legal, might be valid and binding on the parties themselves, but not on third
parties. In the case of third parties, it was necessary for the contract to be registered.
Sec. 113 of Presidential Decree No. 1529, also known as the Property Registration
Decree, provides, viz:
Section 113. Recording of instruments relating to unregistered lands.-

No deed, conveyance, mortgage, lease, or other voluntary instrument
affecting land not registered under the Torrens system shall be valid,
except as between the parties thereto, unless such instrument shall have
been recorded in the manner herein prescribed in the office of the
Register of Deeds for the province or city where the land lies.
Bernadas execution on March 10, 1976 of the deed of absolute sale of real property in
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favor of the Dadizons, standing alone, did not suffice to bind and conclude the Mocorros.
Pursuant to Sec. 113, Presidential Decree No. 1529, the recording of the sale was necessary.
Besides, the deed, being the unilateral act of Bernadas, did not adversely affect the Mocorros,
who were not her privies. Otherwise stated, the deed was res inter alios acta as far as they
were concerned. Neither would the affidavit of adjoining owners support the Dadizons
cause, considering that such affidavit, aside from its being self-serving and unilateral, had
been executed only for the purpose of facilitating Felicidad Dadizons application for the low
cost housing loan from the Development Bank of the Philippines.
CASIMIRO DEVELOPMENT CORPORATION v. RENATO L. MATEO

G.R. No. 175485, 27 July 2011, FIRST DIVISION (Bersamin, J.)
A purchaser in good faith is one who buys property of another, without notice that
some other person has a right to, or interest, in such property and pays a full and fair price
for the same, at the time of such purchase, or before he has notice of the claim or interest
of some other persons in the property. He buys the property with the belief that the person
from whom he receives the thing was the owner and could convey title to the property.
In 1988, Casimiro Development Corporation (CDC) purchased from China Bank the
land in question which was previously sold by the mother of Renato L. Mateo (Mateo)
to Rodolfo Pe (Pe) who in turn constituted a mortgage on the property in favor of China
Bank as security for a loan. China Bank foreclosed the mortgage and consolidated its
ownership of the property after Pe failed to redeem. A Transfer Certificate of Title (TCT) was
issued in the name of China Bank.
On June 6, 1991, CDC brought an action for unlawful detainer in the Metropolitan
Trial Court (MeTC) against Mateos siblings. The defendants maintained that the MeTC did
not have jurisdiction over the action because the land was classified as agricultural; that the
jurisdiction belonged to the Department of Agrarian Reform Adjudication Board (DARAB);
that they had been in continuous and open possession of the land even before World War II
and had presumed themselves entitled to a government grant of the land; and that CDCs
title was invalid, considering that the land had been registered before its being declared
alienable.
On October 19, 1992, the MeTC ruled in favor of CDC .The decision of the MeTC was
assailed in the Regional Trial Court (RTC) via petition for certiorari and prohibition. The
RTC resolved against CDC, and held that the MeTC had acted without jurisdiction because
the land, being a fishpond, was agricultural; hence, the dispute was within the exclusive
jurisdiction of the DARAB pursuant to Republic Act No. 6657 (Comprehensive Agrarian
Reform Law of 1988). CDC appealed to the Court of Appeals (CA), which found in favor of
CDC, declaring that the MeTC had jurisdiction. On appeal, the CA promulgated its decision,
reversing the RTC and declaring CDC to be not a buyer in good faith due to its being
charged with notice of the defects and flaws of the title at the time it acquired the property
from China Bank. CDC argues that it was a buyer in good faith; and that the CA did not
rule on matters that fortified its title in the property. Mateo counters that CDC acquired the
property from China Bank in bad faith, because it had actual knowledge of the possession of
the property by Mateo and his siblings; that CDC did not actually accept delivery of the
possession of the property from China Bank; and that CDC ignored the failure of China Bank
to warrant its title.
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ISSUE:
Whether or not CDC is an innocent purchaser of value.
RULING:
YES. CDC, having paid the full and fair price of the land, was an innocent purchaser
for value. The TCT in the name of CDC was declared valid and subsisting. One who deals
with p r o p e r t y registered under the Torrens system need not go beyond the certificate of
title, but only has to rely on the certificate of title. He is charged with notice only of such
burdens and claims as are annotated on the title. China Banks TCTs was a clean title, that is,
it was free from any lien or encumbrance, CDC had the right to rely, when it purchased the
property, solely upon the face of the certificate of title in the name of China Bank.
Section 44 of the Property Registration Decree provides that:
Every registered owner receiving a certificate of title in pursuance

of a decree of registration, and every subsequent purchaser of registered
land taking a certificate of title for value and in good faith, shall hold the
same free from all encumbrances except those noted on said certificate
and any of the following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws

and Constitution of the Philippines which are not by law required to
appear of record in the Registry of Deeds in order to be valid against
subsequent purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two
years immediately preceding the acquisition of any right over the land by
an innocent purchaser for value, without prejudice to the right of the
government to collect taxes payable before that period from the delinquent
taxpayer alone.
Third. Any public highway or private way established or recognized

by law, or any government irrigation canal or lateral thereof, if the
certificate of title does not state that the boundaries of such highway or
irrigation canal or lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use

thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any
other law or regulations on agrarian reform.
The CAs ascribing of bad faith to CDC based on its knowledge of the adverse
possession of Mateos siblings at the time it acquired the property from China Bank was
absolutely unfounded and unwarranted. That possession did not translate to an adverse
claim of ownership that should have put CDC on actual notice of a defect or flaw in the China
Banks title, for Mateos siblings themselves, far from asserting ownership in their own right,
even characterized their possession only as that of mere agricultural tenants. Under no law
was possession grounded on tenancy a status that might create a defect or inflict a flaw in
the title of the owner. Consequently, due to his own admission in his complaint that
Mateos own possession was not any different from that of his siblings, there was really
nothing factually or legally speaking that ought to have alerted CDC or, for that matter,
China Bank and its predecessors-in-interest, about any defect or flaw in the title.
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LUCIANO P. PAZ v. REPUBLIC OF THE PHILIPPINES, et al.

G.R. No. 157367, 23 November 2011, FIRST DIVISION (Bersamin, J.)
An action, which in reality is seeking for the reconveyance of property, filed under Sec.
108 of P.D. 1529 is not contemplated under any of the instances wherein cancellation of title is
proper, and should thus be dismissed.
In his petition, Paz averred that he owned parcels of land situated in Paraaque City,
Pasay City, Taguig City, San Pedro, Laguna, Alabang, Muntinlupa, and Las Pias City that
totaled in approximately 14,310 hectares. The Original Certificate of Title (OCT) No. 684 was
registered in the name of the Republic, which included the 244-hectare Lot 392 of the
Muntinlupa Estate. Lot 392 was segregated from OCT No. 684, resulting in Transfer
Certificate of Title (TCT) No. 185552, also in the name of the Republic.
Filinvest Development Corporation (FDC) and Filinvest Alabang, Inc. (FAI) developed
Lot 392 into a subdivision through their joint venture agreement with the government.
Thereafter, Lot 392 was further subdivided, cancelling TCT No. 185552 and from which TCTs
were issued in the name of the Republic and FAI. The subdivision lots were then sold to third
parties.
Paz then brought a petition impleading the Republic, FDC, and FAI under Sec. 108 of
Presidential Decree (P.D.) 1529 (Property Registration Decree) to cancel OCT No. 684 and all
subsequent titles derived from TCT No. 185552, praying that a new certificate of title be
issued to Paz free from all liens and encumbrances.
FDC and FAI moved to dismiss the petition because the petition for cancellation of
title is litigable in an ordinary action outside the special and limited jurisdiction of land
registration courts. The petition is thus removed from the ambit of Sec. 108 of the Property
Registration Decree, which requires either unanimity of the parties or absence of serious
controversy or adverse claim, and authorizes only amendment and alteration of certificates
of title, not cancellation. They added that the court lacked jurisdiction because summons
were not served, docket fees were not paid, and a certificate of non-forum shopping was not
filed.
Paz countered that his petition for cancellation was not an initiatory pleading that
must comply with the regular rules of civil procedure but a mere incident of a past
registration proceeding; that unlike in an ordinary action, land registration was not
commenced by complaint or petition, and did not require summons to bring the persons of
the Republic, FDC, and FAI within the jurisdiction of the trial court; thus a mere service of
the petition is sufficient.
The Regional Trial Court (RTC) granted the motion to dismiss because the petition
bears all the elements of an action for recovery with all the components of a regular
complaint, that is in fact an initiatory pleading that should be filed pursuant to Sec. 2 of PD
1529. In a special civil action for certiorari to the Court of Appeals (CA), Pazs petition was
likewise dismissed for failure to prove that the RTC acted with grave abuse of discretion.
ISSUE:
Whether or not Pazs petition should be dismissed because it is in fact an original
action for reconveyance, not a mere cancellation of title contemplated under Sec. 108 of P.D.
1529.
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RULING:
YES. The proceeding for the amendment and alteration of a certificate of title under
Sec. 108 of P.D. 1529 is applicable in seven instances or situations, namely: (a) when
registered interests of any description, whether vested, contingent, expectant, or inchoate,
have terminated and ceased; (b) when new interests have arisen or been created which do
not appear upon the certificate; (c) when any error, omission or mistake was made in
entering a certificate or any memorandum thereon or on any duplicate certificate; (d) when
the name of any person on the certificate has been changed; (e) when the registered owner
has been married, or, registered as married, the marriage has been terminated and no right
or interest of heirs or creditors will thereby be affected; (f) when a corporation, which owned
registered land and has been dissolved, has not conveyed the same within three years after
its dissolution; and (g) when there is reasonable ground for the amendment or alteration
of title.
SC agrees with both the CA and the RTC that Paz was in reality seeking the
reconveyance of the property covered by OCT No. 684, not the cancellation of a certificate of
title as contemplated by Sec. 108. Thus, his petition did not fall under any of the situations
covered by Sec. 108, and was for that reason rightly dismissed.
Moreover, the filing of the petition would have the effect of reopening the decree of
registration, and could thereby impair the rights of innocent purchasers in good faith and for
value. To reopen the decree of registration was no longer permissible, considering that the
one-year period to do so had long ago lapsed, and the properties covered by OCT No. 684
had already been subdivided into smaller lots whose ownership had passed to third persons.
Thusly, the petition tended to violate the proviso in Sec. 108 that the court is not given
authority to reopen the judgment or decree of registration, and that nothing shall be done or
ordered by the court which shall impair the title or other interest of a purchaser holding a
certificate for value in good faith, or his heirs and assigns without his or their written consent.
The petition was not a mere continuation of a previous registration proceeding. Shorn
of the thin disguise Paz gave to it, the petition was exposed as a distinct and independent
action to seek the reconveyance of realty and to recover damages. Accordingly, he should
perform jurisdictional acts, like paying the correct amount of docket fees for the filing of an
initiatory pleading, causing the service of summons on the adverse parties in order to vest
personal jurisdiction over them in the trial court, and attaching a certification against forum
shopping (as required for all initiatory pleadings).
TORTS AND DAMAGES
MAKATI SHANGRI-LA HOTEL AND RESORT, INC., petitioner, vs. ELLEN JOHANNE
HARPER, JONATHAN CHRISTOPHER HARPER, and RIGOBERTO GILLERA, respondents.
G.R. No. 189998 August 29, 2012, FIRST DIVISION, BERSAMIN J.
The hotel owner is liable for civil damages to the surviving heirs of its hotel guest whom
strangers murder inside his hotel room.
Civil Law; Hotelkeepers; The hotel business is imbued with public interest. Catering to the
public, hotelkeepers are bound to provide not only lodging for their guests but also security to the
persons and belongings of their guests. The twin duty constitutes the essence of the business.The
hotel business is imbued with public interest. Catering to the public, hotelkeepers are bound to
provide not only lodging for their guests but also security to the persons and belongings of their
guests. The twin duty constitutes the essence of the business. Applying by analogy Article 2000,
Article 2001 and Article 2002 of the Civil Code (all of which concerned the hotelkeepers degree
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of care and responsibility as to the personal effects of their guests), we hold that there is much
greater reason to apply the same if not greater degree of care and responsibility when the lives
and personal safety of their guests are involved. Otherwise, the hotelkeepers would simply stand
idly by as strangers have unrestricted access to all the hotel rooms on the pretense of being
visitors of the guests, without being held liable should anything untoward befall the unwary
guests. That would be absurd, something that no good law would ever envision.
FACTS:
In the first week of November 1999, Christian Harper, a Norwegian national, came to
Manila on a business trip. He checked in at the Shangri-La Hotel and was billeted at Room 1428.
He was due to check out on November 6, 1999. In the early morning of that date, however, he
was murdered inside his hotel room by still unidentified malefactors.
Respondents commenced this suit in the RTC to recover various damages from petitioner
alleging that the murderer succeeded to trespass into the area of the hotels private rooms area
and into the room of the said deceased on account of the hotels gross negligence in providing
the most basic security system of its guests, the lack of which owing to the acts or omissions of
its employees was the immediate cause of the tragic death of said deceased. Both the RTC and
CA awarded damages in favor of the respondents.
ISSUE:
Petitioner seeks the review of the judgment of the CA, submitting the following issues for
consideration and determination, namely:
1. Whether or not the plaintiffs-appellees were able to prove with competent evidence that
they are the widow and son of Mr. Christian Harper.
2. Whether or not the appellees were able to prove that there was negligence on the part of the
appellant and its said negligence was the proximate cause of the death of Mr. Christian
Harper.
RULING:
1. The respondents were able to prove that they are widow and son of Mr. Christian
Harper and therefore entitled to seek damages.
Respondents presented the following documents to prove their heirship: birth

certificates of Mr. Harper as well as those of the respondents; marriage certificate; certificate
from the Oslo Probate Court, a Norwegian court, stating that Ellen Harper was married to the
deceased, Christian Fredrick Harper and listed Ellen Harper and Jonathan Christopher Harper as
the heirs of Christian Fredrik Harper.
Petitioner assails the CAs ruling that respondents substantially complied with the rules
on the authentication of the proofs of marriage and filiation set by Section 24 and Section 25 of
Rule 132 of the Rules of Court, because the legal custodian did not duly attest that documents
presented by respondents were the correct copies of the originals on file, and because no
certification accompanied the documents stating that such officer has custody of the originals.
It contends that respondents did not competently prove their being Harpers surviving heirs by
reason of such documents being hearsay and incompetent.
Although the documents were not attested by the officer having the legal custody of the
record or by his deputy in the manner required in Section 25 of Rule 132, and said documents did
not comply with the requirement under Section 24 of Rule 132 to the effect that if the record was
not kept in the Philippines a certificate of the person having custody must accompany the copy
of the document that was duly attested stating that such person had custody of the documents,
the deviation was not enough reason to reject the utility of the documents for the purposes they
were intended to serve.
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The official participation in the authentication process of Tanja Sorlie of the Royal
Ministry of Foreign Affairs of Norway and the attachment of the official seal of that office on each
authentication indicated that the documents presented by respondents were of a public
nature in Norway, not merely private documents. Consequently, the objective of ensuring
the authenticity of the documents prior to their admission as evidence was substantially
achieved.
2. Petitioner was liable for damages due to its own negligence.
The records revealed that the management practice prior to the murder of Harper had
been to deploy only one security or roving guard for every three or four floors of the building;
that such ratio had not been enough considering the L-shape configuration of the hotel that
rendered the hallways not visible from one or the other end.
Furthermore, the hotel business is imbued with public interest. Catering to the public,
hotelkeepers are bound to provide not only lodging for their guests but also security to the
persons and belongings of their guests. The twin duty constitutes the essence of the business.
Applying by analogy Article 2000, Article 2001 and Article 2002 of the Civil Code (all of which
concerned the hotelkeepers degree of care and responsibility as to the personal effects of their
guests), we hold that there is much greater reason to apply the same if not greater degree of care
and responsibility when the lives and personal safety of their guests are involved. Otherwise, the
hotelkeepers would simply stand idly by as strangers have unrestricted access to all the hotel
rooms on the pretense of being visitors of the guests, without being held liable should anything
untoward befall the unwary guests. That would be absurd, something that no good law would
ever envision.
SOLIDUM vs. PEOPLE

G.R. No. 192123, FIRST DIVISION, March 10, 2014, BERSAMIN, J.*
Civil Law; Quasi-Delicts; Res Ipsa Loquitur; The doctrine res ipsa loquitur means that
where the thing which causes injury is shown to be under the management of the defendant,
and the accident is such as in the ordinary course of things does not happen if those who have
the management use proper care, it affords reasonable evidence, in the absence of an
explanation by the defendant, that the accident arose from want of care.Res ipsa loquitur is
literally translated as the thing or the transaction speaks for itself. The doctrine res ipsa
loquitur means that where the thing which causes injury is shown to be under the management
of the defendant, and the accident is such as in the ordinary course of things does not happen if
those who have the management use proper care, it affords reasonable evidence, in the absence
of an explanation by the defendant, that the accident arose from want of care. It is simply a
recognition of the postulate that, as a matter of common knowledge and experience, the very
nature of certain types of occurrences may justify an inference of negligence on the part of the
person who controls the instrumentality causing the injury in the absence of some explanation
by the defendant who is charged with negligence. It is grounded in the superior logic of ordinary
human experience and on the basis of such experience or common knowledge, negligence may
be deduced from the mere occurrence of the accident itself. Hence, res ipsa loquitur is applied in
conjunction with the doctrine of common knowledge.
Same; Same; Same; Same; In the medical profession, specific norms or standards to
protect the patient against unreasonable risk, commonly referred to as standards of care, set the
duty of the physician to act in respect of the patient.In the medical profession, specific norms
or standards to protect the patient against unreasonable risk, commonly referred to as standards
of care, set the duty of the physician to act in respect of the patient. Unfortunately, no clear
definition of the duty of a particular physician in a particular case exists. Because most medical
malpractice cases are highly technical, witnesses with special medical qualifications must
provide guidance by giving the knowledge necessary to render a fair and just verdict. As a result,
the standard of medical care of a prudent physician must be determined from expert testimony
in most cases; and in the case of a specialist (like an anesthesiologist), the standard of care by
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which the specialist is judged is the care and skill commonly possessed and exercised by similar
specialists under similar circumstances. The specialty standard of care may be higher than that
required of the general practitioner.
FACTS:
Gerald Albert Gercayo (Gerald) was born on June 2, 19922 with an imperforate anus. Two
days after his birth, Gerald underwent colostomy, a surgical procedure to bring one end of the
large intestine out through the abdominal wall, enabling him to excrete through a colostomy bag
attached to the side of his body.
On May 17, 1995, Gerald, then three years old, was admitted at the Ospital ng Maynila for
a pull-through operation. Dr. Leandro Resurreccion headed the surgical team, and was assisted
by several doctors and the anesthesiologists included Dr. Fernando Solidum (Dr. Solidum).
During the operation, Gerald experienced bradycardia, and went into a coma. His coma lasted
for two weeks, but he regained consciousness only after a month but he could no longer see,
hear or move.
Agitated by her sons helpless and unexpected condition, Ma. Luz Gercayo (Luz) lodged a
complaint for reckless imprudence resulting in serious physical injuries with the City
Prosecutors Office of Manila against the attending physicians.
Upon a finding of probable cause, the City Prosecutors Office filed an information solely
against Dr. Solidum, alleging that Dr. Solidum failed and neglected to use the care and diligence
as the best of his judgment would dictate under said circumstance, by failing to monitor and
regulate properly the levels of anesthesia administered to said GERALD ALBERT GERCAYO and
using 100% halothane and other anesthetic medications, causing as a consequence of his said
carelessness and negligence, said GERALD ALBERT GERCAYO suffered a cardiac arrest and
consequently a defect called hypoxic encephalopathy meaning insufficient oxygen supply in the
brain, thereby rendering said GERALD ALBERT GERCAYO incapable of moving his body, seeing,
speaking or hearing, to his damage and prejudice.
The RTC convicted Dr. Solidum. The CA affirmed the conviction and ruled that the case
appears to be a textbook example of res ipsa loquitur.
Prior to the operation, the child was evaluated and found fit to undergo a major
operation. As noted by the OSG, the accused himself testified that pre-operation tests were
conducted to ensure that the child could withstand the surgery. Except for his imperforate anus,
the child was healthy. The tests and other procedures failed to reveal that he was suffering from
any known ailment or disability that could turn into a significant risk. There was not a hint that
the nature of the operation itself was a causative factor in the events that finally led to hypoxia.
Where common knowledge and experience teach that a resulting injury would not have
occurred to the patient if due care had been exercised, an inference of negligence may be drawn
giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which
is ordinarily required to show not only what occurred but how and why it occurred. When the
doctrine is appropriate, all that the patient must do is prove a nexus between the particular act
or omission complained of and the injury sustained while under the custody and management of
the defendant without need to produce expert medical testimony to establish the standard of
care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and
ordinary conditions, by which the patient can obtain redress for injury suffered by him.
ISSUES:
1. Whether ipsa liquitor is applicable. (No)

2. Whether Dr. Solidum is liable for medical negligence. (No)
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HELD:
The doctrine of res ipsa loquitur is inappropriate in this case.
Res ipsa loquitur is literally translated as "the thing or the transaction speaks for itself."
The doctrine res ipsa loquitur means that "where the thing which causes injury is shown to be
under the management of the defendant, and the accident is such as in the ordinary course of
things does not happen if those who have the management use proper care, it affords reasonable
evidence, in the absence of an explanation by the defendant, that the accident arose from want
of care."
The doctrine is not a rule of substantive law, but merely a mode of proof or a mere
procedural convenience. The doctrine, when applicable to the facts and circumstances of a given
case, is not meant to and does not dispense with the requirement of proof of culpable negligence
against the party charged. It merely determines and regulates what shall be prima facie evidence
thereof, and helps the plaintiff in proving a breach of the duty. The doctrine can be invoked
when and only when, under the circumstances involved, direct evidence is absent and not
readily available.
In order to allow resort to the doctrine, therefore, the following essential requisites must
first be satisfied, to wit: (1) the accident was of a kind that does not ordinarily occur unless
someone is negligent; (2) the instrumentality or agency that caused the injury was under the
exclusive control of the person charged; and (3) the injury suffered must not have been due to
any voluntary action or contribution of the person injured.
The Court considers the application here of the doctrine of res ipsa loquitur
inappropriate. Although it should be conceded without difficulty that the second and third
elements were present, considering that the anesthetic agent and the instruments were
exclusively within the control of Dr. Solidum, and that the patient, being then unconscious
during the operation, could not have been guilty of contributory negligence, the first element
was undeniably wanting.
Luz delivered Gerald to the care, custody and control of his physicians for a pull-through
operation. Except for the imperforate anus, Gerald was then of sound body and mind at the time
of his submission to the physicians. Yet, he experienced bradycardia during the operation,
causing loss of his senses and rendering him immobile. Hypoxia, or the insufficiency of
oxygen supply to the brain that caused the slowing of the heart rate, scientifically
termed as bradycardia, would not ordinarily occur in the process of a pull-through
operation, or during the administration of anesthesia to the patient, but such fact alone
did not prove that the negligence of any of his attending physicians, including the
anesthesiologists, had caused the injury.
Dr. Solidum is not liable for medical negligence.
No. Negligence is defined as the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance that the circumstances justly
demand, whereby such other person suffers injury. Reckless imprudence, on the other hand,
consists of voluntarily doing or failing to do, without malice, an act from which material damage
results by reason of an inexcusable lack of precaution on the part of the person to perform or
failing to perform such act.
Dr. Solidums conviction by the RTC was primarily based on his failure to monitor and
properly regulate the level of anesthetic agent administered on Gerald by overdosing at 100%
halothane.
On the witness stand, Dr. Vertido made a significant turnaround. He affirmed the
findings and conclusions in his report except for an observation which, to all intents and
purposes, has become the storm center of this dispute. He wanted to correct one piece of
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information regarding the dosage of the anesthetic agent administered to the child. He declared
that he made a mistake in reporting a 100% halothane and said that based on the records it
should have been 100% oxygen.
Dr. Solidum was criminally charged for "failing to monitor and regulate properly the
levels of anesthesia administered to said Gerald Albert Gercayo and using 100% halothane and
other anesthetic medications." However, the foregoing circumstances, taken together, did not
prove beyond reasonable doubt that Dr. Solidum had been recklessly imprudent in
administering the anesthetic agent to Gerald. Indeed, Dr. Vertidos findings did not preclude the
probability that other factors related to Geralds major operation, which could or could not
necessarily be attributed to the administration of the anesthesia, had caused the hypoxia and
had then led Gerald to experience bradycardia. Dr. Vertido revealingly concluded in his report,
instead, that "although the anesthesiologist followed the normal routine and precautionary
procedures, still hypoxia and its corresponding side effects did occur."
The existence of the probability about other factors causing the hypoxia has engendered
in the mind of the Court a reasonable doubt as to Dr. Solidums guilt, and moves us to acquit
him of the crime of reckless imprudence resulting to serious physical injuries.
The negligence must be the proximate cause of the injury. For, negligence no matter in
what it consists, cannot create a right of action unless it is the proximate cause of the injury
complained of.
In the medical profession, specific norms on standard of care to protect the patient
against unreasonable risk, commonly referred to as standards of care, set the duty of the
physician in respect of the patient. The standard of care is an objective standard which conduct
of a physician sued for negligence or malpractice may be measured, and it does not depend
therefore, on any individuals physicians own knowledge either. In attempting to fix a standard
by which a court may determine whether the physician has properly performed the requisite
duty toward the patient, expert medical testimony from both plaintiff and defense experts is
required.
The doctrine of res ipsa loquitur means that where the thing which causes injury is
shown to be under the management of the defendant, and the accident is such as in ordinary
course of things does not happen if those who have management use proper care, it affords
reasonable evidence, in the absence of an explanation by defendant that the accident arose from
want of care.
Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably
enlarged, it does not automatically apply to all cases of medical negligence as to mechanically
shift the burden of proof to the defendant to show that he is not guilty of the ascribed
negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a
rule to be cautiously applied, depending upon the circumstances of each case. It is generally
restricted to situations in malpractice cases where a layman is able to say, as a matter of
common knowledge and observation, that the consequences of professional care were not as
such as would ordinarily have followed if due care had been exercised. A distinction must be
made between the failure to secure results, and the occurrence of something more unusual and
not ordinarily found if the service or treatment rendered followed the usual procedure of those
skilled in that particular practice. It must be conceded that the doctrine of res ipsa liquitor can
have no application in a suit against a physician or surgeon which involves the merits of a
diagnosis or of a scientific treatment. The physician or surgeon is not required at his peril to
explain why any particular diagnosis was not correct, or why any particular scientific treatment
did not produce the desired results.
Thus, res ipsa liquitor is not available in a malpractice suit if the only showing is that the
desired result of an operation or treatment was not accomplished. The real question, therefore,
is whether or not in the process of the operation any extraordinary incident or unusual event
outside the routine performance occurred which is beyond the regular scope of customary
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professional activity in such operations, which if unexplained would themselves reasonably

speak to the average man as the negligent case or causes of the untoward consequence. If there
was such extraneous intervention, the doctrine of res ipsa liquitor may be utilized and the
dependent is called upon to explain the matter, by evidence of exculpation, if he could.
RAUL H. SESBREO v. HONORABLE COURT OF APPEALS

G.R. No. 160689, FIRST DIVISION, March 26, 2014, BERSAMIN, J.:
Civil Law; Human Relations; Abuse of Rights; The concept of abuse of rights prescribes that
a person should not use his right unjustly or in bad faith; otherwise, he may be liable to another
who suffers injury.Clearly, Sesbreo did not establish his claim for damages if the respondents
were not guilty of abuse of rights. To stress, the concept of abuse of rights prescribes that a
person should not use his right unjustly or in bad faith; otherwise, he may be liable to another
who suffers injury. The rationale for the concept is to present some basic principles to be
followed for the rightful relationship between human beings and the stability of social order.
Moreover, according to a commentator, the exercise of right ends when the right disappears,
and it disappears when it is abused, especially to the prejudice of others[;] [i]t cannot be said
that a person exercises a right when he unnecessarily prejudices another. Article 19 of the Civil
Code sets the standards to be observed in the exercise of ones rights and in the performance of
ones duties, namely: (a) to act with justice; (b) to give everyone his due; and (c) to observe
honesty and good faith. The law thereby recognizes the primordial limitation on all rights
that in the exercise of the rights, the standards under Article 19 must be observed.
Same; Same; Same; In order that liability may attach under the concept of abuse of rights,
the following elements must be present, to wit: (a) the existence of a legal right or duty, (b) which
is exercised in bad faith, and (c) for the sole intent of prejudicing or injuring another.
FACTS:
VECO was a public utility corporation organized and existing under the laws of the
Philippines. VECO engaged in the sale and distribution of electricity within Metropolitan Cebu.
Sesbreo was one of VECOs customers under the metered service contract. To ensure that its
electric meters were properly functioning, and that none of it meters had been tampered with,
VECO employed respondents Engr. Felipe Constantino and Ronald Arcilla as violation of
contract (VOC) inspectors.
The VOC Team conducted a routine inspection of the houses at La Paloma Village, Labangon,
Cebu City, including that of plaintiffappellant Sesbreo, for illegal connections, meter
tampering, seals, conduit pipes, jumpers, wiring connections, and meter installations. After
Bebe Baledio, plaintiffappellant Sesbreos maid, unlocked the gate, they inspected the
electric meter and found that it had been turned upside down. Defendantappellant Arcilla
took photographs of the upturned electric meter. With Chuchie Garcia, Peter Sesbreo and
one of the maids present, they removed said meter and replaced it with a new one. At
that time, plaintiffappellant Sesbreo was in his office and no one called to inform him of the
inspection. The VOC Team then asked for and received Chuchie Garcias permission to
enter the house itself to examine the kind and number of appliances and light fixtures in
the household and determine its electrical load. Afterwards, Chuchie Garcia signed the
Inspection Division Report, which showed the condition of the electric meter on May 11, 1989
when the VOC Team inspected it, with notice that it would be subjected to a laboratory test. She
also signed a Load Survey Sheet that showed the electrical load of plaintiffappellant Sesbreo.
Sesbreo accused the VOC inspection team dispatched by the VECO to check his electric
meter with conducting an unreasonable search in his residential premises. The RTC
rendered judgment dismissing the claim; and the CA affirmed the dismissal. Hence, this appeal
by Sesbreo.
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The respondents assert that the VOC team had the continuing authority from Sesbreo
as the consumer to enter his premises at all reasonable hours to conduct an inspection of the
meter without being liable for trespass to dwelling. The authority emanated from paragraph 9 of
the metered service contract entered into between VECO and each of its consumers.
Sesbreo contends, however, that paragraph 9 did not give Constantino, Arcilla and Balicha
the blanket authority to enter at will because the only property VECO owned in his premises was
the meter; hence, Constantino and Arcilla should enter only the garage. He denies that they had
the right to enter the main portion of the house and inspect the various rooms and the
appliances therein because those were not the properties of VECO. He posits that Balicha, who
was not an employee of VECO, had no authority whatsoever to enter his house and conduct a
search. He concludes that their search was unreasonable, and entitled him to damages in light of
their admission that they had entered and inspected his premises without a search warrant.
ISSUE:
WON Sesbreo is entitled to recover damages for abuse of rights?
RULING:
NO. Sesbreos insistence has no legal and factual basis.
We do not accept Sesbreos conclusion. Paragraph 9 clothed the entire VOC team
with unquestioned authority to enter the garage to inspect the meter. The members of the
team obviously met the conditions imposed by paragraph 9 for an authorized entry. Firstly, their
entry had the objective of conducting the routine inspection of the meter. Secondly, the entry
and inspection were confined to the garage where the meter was installed. Thirdly, the entry was
effected at around 4 oclock p.m., a reasonable hour. And, fourthly, the persons who inspected
the meter were duly authorized for the purpose by VECO.
Although Balicha was not himself an employee of VECO, his participation was to
render police assistance to ensure the personal security of Constantino and Arcilla
during the inspection, rendering him a necessary part of the team as an authorized
representative. Under the circumstances, he was authorized to enter considering that
paragraph 9 expressly extended such authority to properly authorized employees or
representatives of VECO.
The constitutional guaranty against unlawful searches and seizures is intended as

a restraint against the Government and its agents tasked with law enforcement. It is to
be invoked only to ensure freedom from arbitrary and unreasonable exercise of State
power.
It is worth noting that the VOC inspectors decided to enter the main premises only
after finding the meter of Sesbreo turned upside down, hanging and its disc not
rotating. Their doing so would enable them to determine the unbilled electricity consumed by
his household. The circumstances justified their decision, and their inspection of the main
premises was a continuation of the authorized entry. There was no question then that their
ability to determine the unbilled electricity called for them to see for themselves the usage of
electricity inside. Not being agents of the State, they did not have to first obtain a search warrant
to do so.
Balichas presence participation in the entry did not make the inspection a search
by an agent of the State within the ambit of the guaranty. As already mentioned, Balicha
was part of the team by virtue of his mission order authorizing him to assist and escort the team
during its routine inspection. Consequently, the entry into the main premises of the house by the
VOC team did not constitute a violation of the guaranty.
Our holding could be different had Sesbreo persuasively demonstrated the intervention
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of malice or bad faith on the part of Constantino and Arcilla during their inspection of
the main premises, or any excessiveness committed by them in the course of the
inspection. But Sesbreo did not. On the other hand, the CA correctly observed that the
inspection did not zero in on Sesbreos residence because the other houses within the
area were similarly subjected to the routine inspection. This, we think, eliminated any
notion of malice or bad faith.
Clearly, Sesbreo did not establish his claim for damages if the respondents were
not guilty of abuse of rights. To stress, the concept of abuse of rights prescribes that a person
should not use his right unjustly or in bad faith; otherwise, he may be liable to another who
suffers injury. The rationale for the concept is to present some basic principles to be followed for
the rightful relationship between human beings and the stability of social order.
Although the act is not illegal, liability for damages may arise should there be an abuse of
rights, like when the act is performed without prudence or in bad faith. In order that liability
may attach under the concept of abuse of rights, the following elements must be present, to wit:
(a) the existence of a legal right or duty, (b) which is exercised in bad faith, and (c) for the sole
intent of prejudicing or injuring another. There is no hard and fast rule that can be applied to
ascertain whether or not the principle of abuse of rights is to be invoked. The resolution of the
issue depends on the circumstances of each case.
Sesbreo asserts that he did not authorize Baledio or Chuchie Garcia to let anyone enter
his residence in his absence; and that Baledio herself confirmed that the members of the VOC
team had intimidated her into letting them in.
The assertion of Sesbreo is improper for consideration in this appeal. The RTC and the
CA unanimously found the testimonies of Sesbreos witnesses implausible because of
inconsistencies on material points; and even declared that the nonpresentation of Garcia as a
witness was odd if not suspect. Considering that such findings related to the credibility of the
witnesses and their testimonies, the Court cannot review and undo them now because it is not a
trier of facts, and is not also tasked to analyze or weigh evidence all over again. Verily, a review
that may tend to supplant the findings of the trial court that had the firsthand opportunity to
observe the demeanor of the witnesses themselves should be undertaken by the Court with
prudent hesitation. Only when Sesbreo could make a clear showing of abuse in their
appreciation of the evidence and records by the trial and the appellate courts should the Court
do the unusual review of the factual findings of the trial and appellate courts. Alas, that showing
was not made here.
Nor should the Court hold that Sesbreo was denied due process by the refusal of the
trial judge to inhibit from the case. Although the trial judge had issued an order for his voluntary
inhibition, he still rendered the judgment in the end in compliance with the instruction of the
Executive Judge, whose exercise of her administrative authority on the matter of the inhibition
should be respected. In this connection, we find to be apt the following observation of the CA.
SPOUSES MOISES and CLEMENCIA ANDRADA v. PILHINO SALES CORPORATION,

represented by its Branch Manager, JOJO S. SAET
G.R. No. 156448, 23 February 2011 (Bersamin, J.)
No remedy was available for any damages that was sustained because the law
affords no remedy for such damages resulting from an act which does not amount to a legal
injury or wrong.
On December 28, 1990, Pilhino Sales Corporation (Pilhino) sued Jose Andrada, Jr.
(Jose) and his wife, Maxima, in the Regional Trial Court (RTC) to recover the principal
sum of P240,863.00, plus interest and incidental charges (Civil Case No. 20,489-90). Upon
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Pilhinos application, the RTC issued a writ of preliminary attachment, which came to be
implemented against a Hino truck and a Fuso truck both owned by Jose. However, the levies
on attachment were lifted after Jose filed a counter-attachment bond. RTC rendered a decision
against Jose and his wife. Pilhino opted to enforce the writ of execution against the
properties of the Andradas instead of claiming against the counter-attachment bond. As a
result, the sheriff seized the Hino truck and sold it at the ensuing public auction, with
Pilhino as the highest bidder. However, the Hino truck could not be transferred to Pilhinos
name due to its having been already registered in the name of Moises Andrada (Moises). It
appears that the Hino truck had been meanwhile sold by Jose to Moises, which sale was
unknown to Pilhino, and that Moises had mortgaged the truck to BA Finance Corporation
(BA Finance) to secure his own obligation. BA Finance sued Moises for his failure to pay
the loan. After a decision was rendered in the action in favor of BA Finance, a writ of
execution issued, by which the sheriff levied upon and seized the Hino truck while it was in
the possession of Pilhino and sold it at public auction, with BA Finance as the highest
bidder. Consequently, Pilhino instituted this action in the RTC against Spouses Jose and
Maxima Andrada and Spouses Moises, Clemencia Andrada and BA Finance. RTC dismissed
the case, citing the compromise agreement between Pilhino and Jose. On appeal, CA
affirmed RTC decision.
ISSUE:
Whether or not Pilhino should be held liable for the damages Spouses Moises and
Clemencia Andrada sustained from Pilhinos levy on execution upon the Hino truck under
Civil Case No. 20,489-90.
RULING:
NO. Article 21 of the Civil Code, in conjunction with Article 19 of the Civil Code, is
part of the cause of action known in this jurisdiction as abuse of rights. The elements of
abuse of rights are: (a) there is a legal right or duty; (b) exercised in bad faith; and (c) for the
sole intent of prejudicing or injuring another. Spouses Moises and Celmencia Andradss
insistence as to the second and third elements of abuse of rights were not established, it
required the consideration and review of factual issues. Hence, the appeal cannot succeed,
for an appeal by petition for review on certiorari cannot determine factual issues. Moreover,
it is well accepted in this jurisdiction that no premium should be placed on the right to
litigate and that not every winning party is entitled to an automatic grant of attorneys fees.
Herein, the element of bad faith on the part of Pilhino in commencing and prosecuting Civil
Case No. 21,898-93, which was necessary to predicate the lawful grant of attorneys fees
based on Article 2208 (4) of the Civil Code, was not established. Accordingly, the petitioners
demand for attorneys fees must also fail.
Damages
PHILTRANCO SERVICE ENTERPRISES, INC. vs. PARAS

G.R. No. 161909, FIRST DIVISION, April 25, 2012, BERSAMIN, J.
In an action for breach of contract of carriage commenced by a passenger against his

common carrier, the plaintiff can recover damages from a third-party defendant brought into the
suit by the common carrier upon a claim based on tort or quasi-delict. The liability of the third-
party defendant is independent from the liability of the common carrier to the passenger.
Civil Law; Damages; Moral Damages; Generally, moral damages are not recoverable in an
action predicated on a breach of contract because such an action is not included in Article 2219
of the Civil Code as one of the actions in which moral damages may be recovered; Exceptions.
As a general rule, indeed, moral damages are not recoverable in an action predicated on a breach
of contract. This is because such action is not included in Article 2219 of the Civil Code as one of
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the actions in which moral damages may be recovered. By way of exception, moral damages are
recoverable in an action predicated on a breach of contract: (a) where the mishap results in the
death of a passenger, as provided in Article 1764, in relation to Article 2206, (3), of the Civil
Code; and (b) where the common carrier has been guilty of fraud or bad faith, as provided in
Article 2220 of the Civil Code.
FACTS:
Felix Paras (Paras), is engaged in the buy and sell of fish products. On his way home to
Manila from Bicol Region, on February 8, 1987, he boarded a bus owned and operated by Inland
Trailways, Inc. (Inland) and driven by its driver Calvin Coner (Coner).
At approximately 3:50 oclock in the morning of 09 February 1987, while the said bus was
travelling along Maharlika Highway, Tiaong, Quezon, it was bumped at the rear by another bus
owned and operated by Philtranco Service Enterprises, Inc. (Philtranco). As a result of the strong
and violent impact, the Inland bus was pushed forward and smashed into a cargo truck parked
along the outer right portion of the highway and the shoulder thereof. Consequently, the said
accident bought considerable damage to the vehicles involved and caused physical injuries to
the passengers and crew of the two buses, including the death of Coner who was the driver of
the Inland Bus at the time of the incident.
Paras was found and diagnosed by Dr. Antonio Tanchuling, Jr. to be affected with the
following injuries: a) contusion/hematoma; b) dislocation of hip upon fracture of the fibula on
the right leg; c) fractured small bone on the right leg; and d) close fracture on the tibial plateau
of the left leg. He underwent 2 operations affecting the fractured portions of his body.
Paras filed a complaint for damages based on breach of contract of carriage against
Inland. Inland denied responsibility, by alleging, among others, that its driver Coner had
observed an utmost and extraordinary care and diligence to ensure the safety of its passengers.
In support of its disclaimer of responsibility, Inland invoked the Police Investigation Report
which established the fact that the Philtranco bus driver of Apolinar Miralles was the one which
violently bumped the rear portion of the Inland bus, and therefore, the direct and proximate
cause of Paras injuries.
Inland filed a third-party complaint against Philtranco and Apolinar Miralles seeking for
exoneration of its liabilities to Paras, asserting that the latters cause of action should be directed
against Philtranco considering that the accident was caused by Miralles lack of care, negligence
and reckless imprudence.
RTC ruled against Philtranco and Apolinar Miralles (third-party defendants); which was
affirmed by the CA. In its appeal to the SC, Philtranco contends that Paras could not recover
moral damages because his suit was based on breach of contract of carriage, pursuant to which
moral damages could be recovered only if he had died, or if the common carrier had been guilty
of fraud or bad faith.
ISSUE:
Whether Paras can recover moral damages in a suit based on quasi-delict.
HELD:
Yes. In an action for breach of contract of carriage commenced by a passenger against his
common carrier, the plaintiff can recover damages from a third-party defendant brought into
the suit by the common carrier upon a claim based on tort or quasi-delict. The liability of the
third-party defendant is independent from the liability of the common carrier to the passenger.
As a general rule, indeed, moral damages are not recoverable in an action predicated on a
breach of contract. By way of exception, moral damages are recoverable in an action predicated
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on a breach of contract: (a) where the mishap results in the death of a passenger; and (b) where
the common carrier has been guilty of fraud or bad faith.
Although this action does not fall under either of the exceptions, the award of moral
damages to Paras was nonetheless proper and valid. There is no question that Inland filed its
third-party complaint against Philtranco and its driver in order to establish in this action that
they, instead of Inland, should be directly liable to Paras for the physical injuries he had
sustained because of their negligence.
To be precise, Philtranco and its driver were brought into the action on the theory of
liability that the proximate cause of the collision between Inlands bus and Philtrancos bus had
been the negligent, reckless and imprudent manner defendant Apolinar Miralles drove and
operated his driven unit, owned and operated by third-party defendant Philtranco Service
Enterprises, Inc. The apparent objective of Inland was not to merely subrogate the third-
party defendants for itself, as Philtranco appears to suggest, but, rather, to obtain a
different relief whereby the third-party defendants would be held directly, fully and
solely liable to Paras and Inland for whatever damages each had suffered from the
negligence committed by Philtranco and its driver. In other words, Philtranco and its driver
were charged here as joint tortfeasors who would be jointly and severally be liable to Paras and
Inland.
Paras cause of action against Inland (breach of contract of carriage) did not need to be
the same as the cause of action of Inland against Philtranco and its driver (tort or quasi-delict) in
the impleader. It is settled that a defendant in a contract action may join as third-party
defendants those who may be liable to him in tort for the plaintiffs claim against him, or even
directly to the plaintiff.
It is worth adding that allowing the recovery of damages by Paras based on quasi-delict,
despite his complaint being upon contractual breach, served the judicial policy of avoiding
multiplicity of suits and circuity of actions by disposing of the entire subject matter in a single
litigation.
DR. ENCARNACION C. LUMANTAS, M.D., petitioner, vs. HANZ CALAPIZ, REPRESENTED

BY HIS PARENTS, HILARIO CALAPIZ, JR. and HERLITA CALAPIZ, respondent.
Criminal Law; Civil Liability; It is axiomatic that every person criminally liable for a felony
is also civilly liable. Nevertheless, the acquittal of an accused of the crime charged does not
necessarily extinguish his civil liability.It is axiomatic that every person criminally liable for a
felony is also civilly liable. Nevertheless, the acquittal of an accused of the crime charged does
not necessarily extinguish his civil liability. In Manantan v. Court of Appeals, 350 SCRA 387
(2001), the Court elucidates on the two kinds of acquittal recognized by our law as well as on the
different effects of acquittal on the civil liability of the accused, viz.: Our law recognizes two
kinds of acquittal, with different effects on the civil liability of the accused. First is an acquittal
on the ground that the accused is not the author of the act or omission complained of. This
instance closes the door to civil liability, for a person who has been found to be not the
perpetrator of any act or omission cannot and can never be held liable for such act or omission.
There being no delict, civil liability ex delicto is out of the question, and the civil action, if any,
which may be instituted must be based on grounds other than the delict complained of. This is
the situation contemplated in Rule 111 of the Rules of Court. The second instance is an acquittal
based on reasonable doubt on the guilt of the accused. In this case, even if the guilt of the
accused has not been satisfactorily established, he is not exempt from civil liability which may be
proved by preponderance of evidence only.
Same; Same; Every person is entitled to the physical integrity of his body. Although we have
long advocated the view that any physical injury, like the loss or diminution of the use of any part
of ones body, is not equitable to a pecuniary loss, and is not susceptible of exact monetary
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estimation, civil damages should be assessed once that integrity has been violated.Every person
is entitled to the physical integrity of his body. Although we have long advocated the view that
any physical injury, like the loss or diminution of the use of any part of ones body, is not
equitable to a pecuniary loss, and is not susceptible of exact monetary estimation, civil damages
should be assessed once that integrity has been violated. The assessment is but an imperfect
estimation of the true value of ones body. The usual practice is to award moral damages for the
physical injuries sustained. In Hanzs case, the undesirable outcome of the circumcision
performed by the petitioner forced the young child to endure several other procedures on his
penis in order to repair his damaged urethra. Surely, his physical and moral sufferings properly
warranted the amount of P50,000.00 awarded as moral damages.
Same; Same; Interest Rates; Interest of 6% per annum should then be imposed on the
award as a sincere means of adjusting the value of the award to a level that is not only reasonable
but just and commensurate; For that purpose, the reckoning of interest should be from the filing of
the criminal information.Many years have gone by since Hanz suffered the injury. Interest of
6% per annum should then be imposed on the award as a sincere means of adjusting the value of
the award to a level that is not only reasonable but just and commensurate. Unless we make the
adjustment in the permissible manner by prescribing legal interest on the award, his sufferings
would be unduly compounded. For that purpose, the reckoning of interest should be from the
filing of the criminal information on April 17, 1997, the making of the judicial demand for the
liability of the petitioner.
FACTS:
Spouses Calapiz brought their 8-year-old son, Hanz Calapiz (Hanz), to the Misamis
Occidental Provincial Hospital, Oroquieta City, for an emergency appendectomy. Hanz was
attended to by the petitioner, who suggested to the parents that Hanz also undergo circumcision
at no added cost to spare him the pain. With the parents consent, the petitioner performed the
coronal type of circumcision on Hanz after his appendectomy. On the following day, Hanz
complained of pain in his penis, which exhibited blisters. On January 30, 1995, Hanz was
discharged from the hospital over his parents protestations, and was directed to continue taking
antibiotics. On February 8, 1995, Hanz was confined in a hospital because of the abscess
formation between the base and the shaft of his penis. Dr. Henry Go, an urologist diagnosed the
boy to have a damaged urethra. Thus, Hanz underwent cystostomy, and thereafter was operated
on three times to repair his damaged urethra.
When his damaged urethra could not be fully repaired and reconstructed, Hanzs parents
brought a criminal charge against the petitioner for reckless imprudence resulting to serious
physical injuries. In its decision, the RTC acquitted the petitioner of the crime charged for
insufficiency of the evidence. Nonetheless, the RTC ruled that the petitioner was liable for moral
damages because there was a preponderance of evidence showing that Hanz had received the
injurious trauma from his circumcision by the petitioner. CA affirmed the RTC, sustaining the
award of moral damages.
ISSUE:
Whether the CA erred in affirming the petitioners civil liability despite his acquittal of
the crime of reckless imprudence resulting in serious physical injuries.
RULING:
The CA did not err in holding the petitioner civilly liable despite acquittal of the
crime charged.
It is axiomatic that every person criminally liable for a felony is also civilly liable.
Nevertheless, the acquittal of an accused of the crime charged does not necessarily extinguish
his civil liability.
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The Rules of Court requires that in case of an acquittal, the judgment shall state
whether the evidence of the prosecution absolutely failed to prove the guilt of the accused or
merely failed to prove his guilt beyond reasonable doubt. In either case, the judgment shall
determine if the act or omission from which the civil liability might arise did not exist.
Conformably with the foregoing, therefore, the acquittal of an accused does not prevent
a judgment from still being rendered against him on the civil aspect of the criminal case unless
the court finds and declares that the fact from which the civil liability might arise did not exist.
The petitioners contention that he could not be held civilly liable because there was no
proof of his negligence deserves scant consideration. The failure of the Prosecution to prove his
criminal negligence with moral certainty did not forbid a finding against him that there was
preponderant evidence of his negligence to hold him civilly liable.
Many years have gone by since Hanz suffered the injury. Interest of 6% per annum
should then be imposed on the award as a sincere means of adjusting the value of the award to a
level that is not only reasonable but just and commensurate. Unless we make the adjustment in
the permissible manner by prescribing legal interest on the award, his sufferings would be
unduly compounded. For that purpose, the reckoning of interest should be from the filing of the
criminal information on April 17, 1997, the making of the judicial demand for the liability of the
petitioner.
PHILIPPINE NATIONAL BANK vs. MANALO

G.R. No. 174433, FIRST DIVISION, February 24, 2014, BERSAMIN, J.
Although banks are free to determine the rate of interest they could impose on their
borrowers, they can do so only reasonably, not arbitrarily. They may not take advantage of the
ordinary borrowers lack of familiarity with banking procedures and jargon. Hence, any stipulation
on interest unilaterally imposed and increased by them shall be struck down as violative of the
principle of mutuality of contracts.
Same; Interest Rates; Interest should be computed from the time of the judicial or
extrajudicial demand.Indeed, the Court said in Eastern Shipping Lines, Inc. v. Court of
Appeals, 234 SCRA 78 (1994), that interest should be computed from the time of the judicial or
extrajudicial demand. However, this case presents a peculiar situation, the peculiarity being that
the Spouses Manalo did not demand interest either judicially or extrajudicially. In the RTC, they
specifically sought as the main reliefs the nullification of the foreclosure proceedings brought by
PNB, accounting of the payments they had made to PNB, and the conversion of their loan into a
long term one. In its judgment, the RTC even upheld the validity of the interest rates imposed by
PNB. In their appellants brief, the Spouses Manalo again sought the nullification of the
foreclosure proceedings as the main relief. It is evident, therefore, that the Spouses Manalo made
no judicial or extrajudicial demand from which to reckon the interest on any amount to be
refunded to them. Such demand could only be reckoned from the promulgation of the CAs
decision because it was there that the right to the refund was first judicially recognized.
Nevertheless, pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, 234 SCRA 78 (1994),
the amount to be refunded and the interest thereon should earn interest to be computed from
the finality of the judgment until the full refund has been made.
FACTS:
PNB granted an All-Purpose Credit Facility to the Spouses Manalo in the amount of
P1,000,000.00. The spouses executed a Real Estate Mortgage in favor of PNB as a security for the
loan. The credit facility was renewed and increased several times over the years.
It was agreed upon that the Spouses Manalo would make monthly payments on the
interest but the spouses defaulted. After the spouses still failed to settle their unpaid account
Page 88 of 95
CIVIL LAW
J. BERSAMIN
despite the two demand letters, PNB foreclosed the mortgage. PNB was the highest bidder;
hence the Certificate of Sale was issued to PNB.
After more than a year after the Certificate of Sale had been issued to PNB, the Spouses
Manalo instituted an action for the nullification of the foreclosure proceedings and damages.
They alleged that they had obtained a loan for P1,000,000.00 from a certain Benito Tan upon
arrangements made by Antoninus Yuvienco, then the General Manager of PNBs Bangkal Branch
where they had transacted that they had been made to understand and had been assured that
the P1,000,000.00 would be used to update their account, and that their loan would be
restructured and converted into a longterm loan that they had been surprised to learn,
therefore, that they had been declared in default of their obligations, and that the mortgage on
their property had been foreclosed and their property had been sold and that PNB did not
comply with Section 3 of Act No. 3135, as amended.
Central to this case is the allegation made in the Judicial Affidavit of Enrique
Manalo that PNB imposed a rate of interest which ranges from 19% to as high as 28% and
which changes from time to time. Enrique Manalo was cross-examined on the matter by the
counsel of PNB notwithstanding the failure of Spouses Manalo to raise the issue on interest rate
before the RTC.
PNB claims that the Spouses Manalos continuous payment of interest without protest
indicated their assent to the interest rates imposed, as well as to the subsequent increases of the
rates.
The RTC ruled in favor of PNB, but on appeal to the CA, the CA declared that the interest
rates and subsequent increases in the rates were invalid for lack of mutuality between the
contracting parties. The CA imposed a 12% interest rate against Spouses Manalo, to be reckoned
from default.
ISSUES:
I. Whether the imposition of interest by PNB in the absence of stipulation as to rate was
proper.
II. Whether or not the CA was correct in nullifying the interest rates imposed and in fixing
the same at 12% from default, despite the fact that (i) the same was raised only for the
first time on appeal, (ii) it was never part of the complaint (iii) was excluded as an issue
during pre-trial, and worse, (iv) there was no formally offered pertaining to the same
during trial.
RULING:
I. No.
The credit agreement executed succinctly stipulated that the loan would be subjected to
interest at a rate determined by the Bank to be its prime rate plus applicable spread,
prevailing at the current month. This stipulation was carried over to or adopted by the
subsequent renewals of the credit agreement. PNB thereby arrogated unto itself the sole
prerogative to determine and increase the interest rates imposed on the Spouses Manalo. Such a
unilateral determination of the interest rates contravened the principle of mutuality of
contracts embodied in Article 1308 of the Civil Code.
A contract where there is no mutuality between the parties partakes of the nature of a
contract of adhesion, and any obscurity will be construed against the party who prepared the
contract, the latter being presumed the stronger party to the agreement, and who caused the
obscurity. PNB should then suffer the consequences of its failure to specifically indicate the rates
of interest in the credit agreement.
Page 89 of 95
CIVIL LAW
J. BERSAMIN
We rule that the CA, citing Philippine National Bank v. Court of Appeals, rightly
concluded that a borrower is not estopped from assailing the unilateral increase in the interest
made by the lender since no one who receives a proposal to change a contract, to which he is a
party, is obliged to answer the same and said partys silence cannot be construed as an
acceptance thereof.
In failing to notify the Spouses Manalo before imposing the increased rates of interest,
therefore, PNB violated the stipulations of the very contract that it had prepared.
Conformably with Nacar v. Gallery Frames and S.C. Megaworld Construction v. Parada,
therefore, the proper interest rates to be imposed in the present case are as follows:
1. Any amount to be refunded to the Spouses Manalo shall bear interest of 12% per
annum computed from March 28, 2006, the date of the promulgation of the CA
decision, until June 30, 2013 and 6% per annum computed from July 1, 2013 until
finality of this decision and
2. The amount to be refunded and its accrued interest shall earn interest of 6% per
annum until full refund.
II. No. It is settled that even if the complaint be defective, but the parties go to trial
thereon, and the plaintiff, without objection, introduces sufficient evidence to constitute the
particular cause of action which it intended to allege in the original complaint, and the
defendant voluntarily produces witnesses to meet the cause of action thus established, an issue
is joined as fully and as effectively as if it had been previously joined by the most perfect
pleadings. Likewise, when issues not raised by the pleadings are tried by express or implied
consent of the parties, they shall be treated in all respects as if they had been raised in the
pleadings.
The RTC did not need to direct the amendment of the complaint by the Spouses Manalo.
Section 5, Rule 10 of the Rules of Court specifically declares that the failure to amend
does not affect the result of the trial of these issues.
The failure of a party to amend a pleading to conform to the evidence adduced

during trial does not preclude an adjudication by the court on the basis of such evidence
which may embody new issues not raised in the pleadings, or serve as a basis for a higher
award of damages. Although the pleading may not have been amended to conform to the
evidence submitted during trial, judgment may nonetheless be rendered, not simply on the basis
of the issues alleged but also on the basis of issues discussed and the assertions of fact proved in
the course of trial. The court may treat the pleading as if it had been amended to conform to the
evidence, although it had not been actually so amended. Former Chief Justice Moran put the
matter in this way:
When evidence is presented by one party, with the expressed or implied

consent of the adverse party, as to issues not alleged in the pleadings, judgment may
be rendered validly as regards those issues, which shall be considered as if they have
been raised in the pleadings. There is implied, consent to the evidence thus
presented when the adverse party fails to object thereto.
Clearly, a court may rule and render judgment on the basis of the evidence before it even
though the relevant pleading had not been previously amended, so long as no surprise or
prejudice is thereby caused to the adverse party. Put a little differently, so long as the basic
requirements of fair play had been met, as where litigants were given full opportunity to support
their respective contentions and to object to or refute each others evidence, the court may
validly treat the pleadings as if they had been amended to conform to the evidence and proceed
to adjudicate on the basis of all the evidence before it.
Page 90 of 95
CIVIL LAW
J. BERSAMIN
BJDC CONSTRUCTION vs. NENA E. LANUZO

G.R. No. 161151, FIRST DIVISION, March 24, 2014, BERSAMIN, J.
The party alleging the negligence of the other as the cause of injury has the burden to
establish the allegation with competent evidence. If the action based on negligence is civil in
nature, the proof required is preponderance of evidence.
Civil Law; Damages; Negligence; In order that a party may be held liable for damages for
any injury brought about by the negligence of another, the claimant must prove that the negligence
was the immediate and proximate cause of the injury.
Civil Law; Damages; Negligence; Res Ipsa Loquitur; For the doctrine of res ipsa loquitur to
apply, the following requirements must be shown to exist, namely: (a) the accident is of a kind that
ordinarily does not occur in the absence of someones negligence; (b) it is caused by an
instrumentality within the exclusive control of the defendant or defendants; and (c) the possibility
of contributing conduct that would make the plaintiff responsible is eliminated.
FACTS:
On January 5, 1998, Nena E. Lanuzo (Nena) filed a complaint for damages against BJDC
Construction (company), a single proprietorship engaged in the construction business under its
Manager/Proprietor Janet S. de la Cruz. The company was the contractor of the reblocking
project to repair the damaged portion of one lane of the national highway at San Agustin, Pili,
Camarines Sur from September 1997 to November 1997.
Nena alleged that she was the surviving spouse of the late Balbino Los Baos Lanuzo
(Balbino) who figured in the accident that transpired at the site of the reblocking work at about
6:30 p.m. on October 30, 1997; that Balbinos Honda motorcycle sideswiped the road barricade
placed by the company in the right lane portion of the road, causing him to lose control of his
motorcycle and to crash on the newly cemented road, resulting in his instant death; and that the
companys failure to place illuminated warning signs on the site of the project, especially during
night time, was the proximate cause of the death of Balbino. She prayed that the company be
held liable for damages.
In its answer, the company denied Nenas allegations of negligence, insisting that it had
installed warning signs and lights along the highway and on the barricades of the project; that at
the time of the incident, the lights were working and switched on; that its project was duly
inspected by the Department of Public Works and Highways (DPWH), the Office of the Mayor
of Pili, and the Pili Municipal Police Station; and that it was found to have satisfactorily taken
measures to ensure the safety of motorists.
The company further alleged that since the start of the project in September 1997, it
installed several warning signs. The company insisted that the death of Balbino was an accident
brought about by his own negligence, as confirmed by the police investigation report that stated,
among others, that Balbino was not wearing any helmet at that time, and the accident occurred
while Balbino was overtaking another motorcycle; and that the police report also stated that the
road sign/barricade installed on the road had a light. Thus, it sought the dismissal of the
complaint and prayed, by way of counterclaim, that the Nena be ordered to pay P100,000.00 as
attorneys fees, as well as moral damages to be proven in the course of trial.
The RTC rendered judgment in favor of the company. The Lanuzo heirs appealed to the
CA which reversed the judgment of the RTC ordering the defendantappellee to pay the
plaintiffappellants, heirs of the victim Balbino L. B. Lanuzo, the sums of P50,000.00 as death
indemnity, P20,000.00 by way of temperate damages and P939,736.50 as loss of earning capacity
of the deceased Balbino L.
Page 91 of 95
CIVIL LAW
J. BERSAMIN
ISSUE:
WON the respondents had satisfactorily presented a prima facie case of negligence which
the appellee had not overcome with an adequate explanation and which alleged negligence is the
proximate cause of death of Lanuzo?
RULING:
The Court affirms the findings of the RTC, and rules that the Lanuzo heirs, the parties
carrying the burden of proof, did not establish by preponderance of evidence that the negligence
on the part of the company was the proximate cause of the fatal accident of Balbino.
The test by which to determine the existence of negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care
and caution which an ordinarily prudent person would have used in the same situation? If not,
then he is guilty of negligence.
First of all, we note that the Lanuzo heirs argued in the trial and appellate courts that
there was a total omission on the part of the company to place illuminated warning signs on the
site of the project, especially during night time, in order to warn motorists of the project. In
contrast, the company credibly refuted the allegation of inadequate illumination. Zamora, its
flagman in the project, rendered an eyewitness account of the accident by stating that the site
had been illuminated by light bulbs and gas lamps, and that Balbino had been in the process of
overtaking another motorcycle rider at a fast speed when he hit the barricade placed on the
newly cemented road. On his part, SPO1 Corporal, the police investigator who arrived at the
scene of the accident on October 30, 1997, recalled that there were light bulbs on the other side
of the barricade on the lane coming from Naga City; and that the light bulb on the lane where
the accident had occurred was broken because it had been hit by the victims motorcycle.
Witnesses Gerry Alejo and Engr. Victorino del Socorro remembered that light bulbs and gas
lamps had been installed in the area of the project.
Secondly, the company presented as its documentary evidence the investigation report
dated December 3, 1997 of SPO1 Corporal (Annex 1), the relevant portions of which indicated the
finding of the police investigator on the presence of illumination at the project site. Additionally,
the company submitted the application for lighting permit covering the project site (Annex 7) to
prove the fact of installation of the electric light bulbs in the project site.
In our view, the RTC properly gave more weight to the testimonies of Zamora and SPO1
Corporal than to those of the witnesses for the Lanuzo heirs. There was justification for doing so,
because the greater probability pertained to the former. Moreover, the trial courts assessment of
the credibility of the witnesses and of their testimonies is preferred to that of the appellate
courts because of the trial courts unique firsthand opportunity to observe the witnesses and
their demeanor as such.
Absent any showing that the trial courts calibration of the credibility of the witnesses
was flawed, we are bound by its assessment. This Court will sustain such findings unless it can
be shown that the trial court ignored, overlooked, misunderstood, misappreciated, or misapplied
substantial facts and circumstances, which, if considered, would materially affect the result of
the case.
The Court observes, too, that SPO1 Corporal, a veteran police officer detailed for more
than 17 years at the Pili Police Station, enjoyed the presumption of regularity in the performance
of his official duties. The presumption, although rebuttable, stands because the Lanuzo heirs did
not adduce evidence to show any deficiency or irregularity in the performance of his official duty
as the police investigator of the accident. They also did not show that he was impelled by any ill
motive or bias to testify falsely.
Page 92 of 95
CIVIL LAW
J. BERSAMIN
Thirdly, the CA unreasonably branded the testimonies of Zamora and SPO1 Corporal as
selfserving. They were not. Selfserving evidence refers to outofcourt statements that favor
the declarants interest; it is disfavored mainly because the adverse party is given no opportunity
to dispute the statement and their admission would encourage fabrication of testimony. But
court declarations are not selfserving considering that the adverse party is accorded the
opportunity to test the veracity of the declarations by crossexamination and other methods.
There is no question that Zamora and SPO1 Corporal were thoroughly crossexamined by
the counsel for the Lanuzo heirs. Their recollections remained unchallenged by superior
contrary evidence from the Lanuzo heirs.
Fourthly, the doctrine of res ipsa loquitur had no application here. For the doctrine to
apply, the following requirements must be shown to exist, namely: (a) the accident is of a kind
that ordinarily does not occur in the absence of someones negligence; (b) it is caused by an
instrumentality within the exclusive control of the defendant or defendants; and (c) the
possibility of contributing conduct that would make the plaintiff responsible is eliminated.
Based on the evidence adduced by the Lanuzo heirs, negligence cannot be fairly ascribed
to the company considering that it has shown its installation of the necessary warning signs and
lights in the project site. In that context, the fatal accident was not caused by any
instrumentality within the exclusive control of the company. In contrast, Balbino had the
exclusive control of how he operated and managed his motorcycle. The records disclose that he
himself did not take the necessary precautions. As Zamora declared, Balbino overtook another
motorcycle rider at a fast speed, and in the process could not avoid hitting a barricade at the site,
causing him to be thrown off his motorcycle onto the newly cemented road. SPO1 Corporals
investigation report corroborated Zamoras declaration. This causation of the fatal injury went
uncontroverted by the Lanuzo heirs.
Moreover, by the time of the accident, the project, which had commenced in September
1997, had been going on for more than a month and was already in the completion stage.
Balbino, who had passed there on a daily basis in going to and from his residence and the school
where he then worked as the principal, was thus very familiar with the risks at the project site.
Nor could the Lanuzo heirs justly posit that the illumination was not adequate, for it cannot be
denied that Balbinos motorcycle was equipped with headlights that would have enabled him at
dusk or night time to see the condition of the road ahead. That the accident still occurred surely
indicated that he himself did not exercise the degree of care expected of him as a prudent
motorist.
According to Dr. Abilay, the cause of death of Balbino was the fatal depressed fracture at
the back of his head, an injury that Dr. Abilay opined to be attributable to his head landing on
the cemented road after being thrown off his motorcycle. Considering that it was shown that
Balbino was not wearing any protective head gear or helmet at the time of the accident, he was
guilty of negligence in that respect. Had he worn the protective head gear or helmet, his
untimely death would not have occurred.
The RTC was correct on its conclusions and findings that the company was not negligent
in ensuring safety at the project site. All the established circumstances showed that the
proximate and immediate cause of the death of Balbino was his own negligence. Hence, the
Lanuzo heirs could not recover damages.
CITYTRUST BANKING CORPORATION (NOW BANK OF THE PHILIPPINE ISLANDS) v.

CARLOS ROMULO N. CRUZ
G.R. No. 157049, 11 August 2010, THIRD DIVISION (Bersamin, J.)
Page 93 of 95
CIVIL LAW
J. BERSAMIN
Banks have a fiduciary relationship with their depositors and should exercise the
highest degree of care. Failure to observe that obligation and degree of care will make them
liable for damages.
Carlos Romulo Cruz (Cruz), an architect and businessman, maintained savings and
checking accounts at the Citytrust Banking Corporations (CBC) Loyola Heights Branch. The
savings account was considered closed due to the oversight committed by one of the latters
tellers. The closure resulted in the extreme embarrassment of Cruz, for the checks that he had
issued could not be honored although his savings account was sufficiently funded and the
accounts were maintained under his check-o-matic arrangement. Unmoved by the CBCs
apologies and the adjustment made on his accounts by its employees, he sued CBC to claim
damages.
The Regional Trial Court (RTC) ruled in Cruz favor and ordered the CBC to pay
him moral damages, exemplary damages, and attorneys fees. The RTC found that the CBC
had failed to properly supervise its teller; and that its negligence had made Cruz suffer serious
anxiety, embarrassment and humiliation, entitling him to damages. The same was affirmed
by the Court of Appeals (CA) as the fiduciary relationship and the extent of diligence is to be
expected from a banking institution.
ISSUE:
Whether or not CBC is liable to Cruz for damages.
RULING:
YES. CBC, being a banking institution, had the direct obligation to supervise very
closely the employees handling its depositors accounts, and should always be mindful of
the fiduciary nature of its relationship with the depositors. Such relationship required it and
its employees to record accurately every single transaction, and as promptly as possible,
considering that depositors accounts should always reflect the amounts of money the
depositors could dispose of as they saw fit, confident that, as a bank, it would deliver the
amounts to whomever they directed. If it fell short of that obligation, it should bear the
responsibility for the consequences to the depositors, who, like Cruz, suffered particular
embarrassment and disturbed peace of mind from the negligence in the handling of the
accounts. The banks, like CBC, were also made liable for negligence, even without
sufficient proof of malice or bad faith on their part, and the Supreme Court awarded moral
damages of P100,000.00 each time to the suing depositors in proper consideration of their
reputation and their social standing. Cruz should be similarly awarded for the damage to his
reputation as an architect and businessman. The award of exemplary damages and attorneys
fees is also proper. It is never overemphasized that the public always relies on a banks
profession of diligence and meticulousness in rendering irreproachable service. Its failure to
exercise diligence and meticulousness warranted its liability for exemplary damages and for
reasonable attorneys fees.
SULPICIO LINES INC. v. DOMINGO E. CURSO, et al.

G.R. No. 157009, 17 March 2010, FIRST DIVISION (Bersamin, J.)
Brothers and sisters of a deceased passenger in a case of breach of contract of carriage

are not entitled to an award of moral damages against the carrier.
Page 94 of 95
CIVIL LAW
J. BERSAMIN
Dr. Curso is a resident physician at the Naval District Hospital in Naval, Biliran. On
October 23, 1988, he boarded MV Doa Marilyn, an inter-island vessel operated by Sulpcio
Lines, Inc., bound for Tacloban City. On the afternoon of October 24, it sank due to the
inclement sea and the weather conditions brought about by Typhon Unsang. Dr. Cursos
body was never found. Because of this, Dr. Cursos brothers and sisters sued Sulpicio Lines
Inc., to claim damages based on breach of contract of carriage by sea. Among their
averments is that Sulpicio Lines was negligent in transporting its passengers; and that they
act as Dr. Cursos surviving heirs since the latter died without any children. Sulpicio Lines,
on the other hand, claims that the sinking of the vessel was due to force majeure which
exempts them from liability and that MV Doa Marilyn was sea-worthy in all respects and was
in fact cleared by the Philippine Coast Guard.
The Regional Trial Court dismissed the complaint upon finding that the sinking of the
vessel was due to force majeure and that the officers of MV Doa Marilyn acted with the
diligence required of a common carrier. The Court of Appeals, however, set aside the decision
of the RTC and awarded death indemnity, loss of earning capacity, moral damages and costs
of suit.
ISSUE:
Whether or not the brothers and sisters of a deceased passenger in a case of breach of
contract of carriage are entitled to an award of moral damages against the carrier.
RULING:
NO. As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract, unless there is fraud or bad faith. As an exception,
moral damages may be awarded in case of contract of carriage that results in the death of a
passenger, in accordance with Article 1764, in relation to Article 2206(3), of the Civil Code.
The omission from Article 2206(3), of the brothers and sisters of the deceased passenger
revels the legislative intent to exclude them from the recovery of moral damages. Thus,
the CA erred in awarding moral damages to Domingo Curso, et al.
Moreover, while it is true that under Article 1003 of the Civil Code, they succeeded
to the entire estate of the late Dr. Curso in the absence of the latters descendants,
ascendants, illegitimate children and surviving spouse, they are not among the persons
entitled to recover moral damages, as enumerated under Article 2219 of the Civil Code. The
said article does not include succession in the collateral line as a source of the right to
recover moral damages.
Page 95 of 95

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CIVIL LAW

PERSONS AND FAMILY RELATIONS

SOLEDAD L. LAVADIA vs. HEIRS OF JUAN LUCES LUNA, represented by GREGORIO Z.

The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on

In such a situation, whoever alleges co-ownership carried the burden of proof to

SOLEDADs claim that she made a cash contribution of P100,000.00 is

ARABELLE J. MENDOZA v. REPUBLIC OF THE PHILIPPINES and DOMINIC C. MENDOZA

Hence, this appeal by petitioner.

Whether or not a medical experts testimony is a requirement for declaration of nullity of

HECTOR L. UY v. VIRGINIA G. FULE

PEDRO ANGELES v. ESTELITA B. PASCUAL, et al.

THE HEIRS OF PROTACIO GO, SR., et al. v. ESTER L. SERVACIO, et al.

HEIRS OF JOSE REYES, JR. v. AMANDA S. REYES, et al.

contract is an equitable mortgage.

2. NO. It is true that Alejandro became a co-owner of the property by right of

OBLIGATIONS AND CONTRACTS

INTERNATIONAL HOTEL CORPORATION, petitioner, vs. FRANCISCO B. JOAQUIN, JR.

To avoid unjust enrichment to a party from resulting out of a substantially performed

Same; Obligations; Conditional Obligations; The existing rule in a mixed conditional

Respondent Francisco B. Joaquin, Jr. submitted a proposal to the Board of Directors of

This provision refers to the constructive fulfillment of a suspensive condition, whose

Conversely, the principle of substantial performance is inappropriate when the

2. IHC is nonetheless liable to pay under the rule on constructive fulfillment of a

VECTOR SHIPPING CORPORATION vs. AMERICAN HOME ASSURANCE COMPANY

LINA CALILAP-ASMERON v. DEVELOPMENT BANK OF THE PHILIPPINES, et al.

Article 1332. When one of the parties is unable to read, or if the

PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE CORPORATION (now

Trade and Investment Development Corporation of the Philippines (TIDCP) is a

However, a pre-trial order is not intended to be a detailed catalogue of each and

MEGAWORLD PROPERTIES AND HOLDINGS, INC., EMPIRE EAST LAND HOLDINGS,

Same; Same; Conditional Obligations; Suspensive Conditions; According to Article 1184 of

INTERPORT RESOURCES CORPORATION vs. SECURITIES SPECIALIST, INC., and R.C.

SSI, a domestic corporation registered as a dealer in securities, received in the ordinary

It should be stressed that novation extinguished an obligation between two parties.

DOMINGO GONZALO, petitioner, vs. JOHN TARNATE, JR., respondent.

Same; Unjust Enrichment; Unjust enrichment exists, according to Hulst v. PR Builders,

In furtherance of their agreement, Gonzalo executed a deed of assignment whereby he,

RTC ruled in facor of Tarnate which was affirmed by CA on appeal.

WON the herein agreement is a compromise?

A review of the terms of the Agreement, particularly paragraph 6 and paragraph 7,

ASSET POOL A (SPV-AMC), INC., v. CLARK DEVELOPMENT CORPORATION

Civil Law; Contracts; Compromise Agreements; Words and Phrases; A compromise

Whether the appeal shall proceed.

ASB REALTY CORPORATION v. ORTIGAS & COMPANY LIMITED PATNERSHIP

I. WON Ortigas action for rescission could prosper.

I. NO. Ortigas action for rescission could not prosper.

To be clear, contractual obligations, unlike contractual rights or benefits, are generally

The rescission on account of breach of stipulations is not predicated on injury to

ROBERTO R. DAVID, petitioner, vs. EDUARDO C. DAVID, respondent.

Whether respondent Eduardo has exercised his right to repurchase.

FIRST UNITED CONSTRUCTORS CORPORATION and BLUE STAR CONSTRUCTION

1. Petitioners could not validly resort to recoupment against respondent.

Recoupment (reconvencion) is the act of rebating or recouping a part of a claim upon

2. Legal compensation was permissible.

EMILIA G. PEA, AMELIA C. MAR and CARMEN REYES v. SPOUSES ARMANDO

MACTAN CEBU INTERNATIONAL AIRPORT AUTHORITY (MCIAA) v. HEIRS OF GAVINA

WON prescription already barred petitioners cause of action?

Pledge, Mortgage, Antichresis, and Chattel Mortgage

PRIETO vs. COURT OF APPEALS

Ratification or confirmation may validate an act done in behalf of another without

RABAT vs. PHILIPPINE NATIONAL BANK

Spouses Rabat executed another document denominated as "Amendment to the Credit

The inadequacy of the bid price in an extrajudicial foreclosure sale of mortgaged