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SURVEY OF 2010-2012 SC DECISIONS IN CIVIL LAW Dean ED VINCENT S.

ALBANO Note: These questions are patterned from the sample questions by the SC in this years Bar Examination. The answers were intended to be lengthen inorder that the reason behind the law and the decision may be reflected to guide the Bar Candidates. The candidates can shorten the answers to make it convenient for the examiners to correct. FAMILY LAW Adultery of a woman. Q Is the adultery of the woman a ground to declare the marriage void on the ground of psychological incapacity? Explain. Answer: No. The adulterous acts of a woman do not even rise to the level of the psychological incapacity that the law requires. Her act of living an adulterous life cannot automatically be equated wit h a psychological disorder, especially when no specific evidence was shown that promiscuity was a trait already existing at the inception of marriage. The husband must be able to establish that the wife's unfaithfulness is a manifestation of a disordered personality, which makes her completely unable to discharge the essential obligations of the marital state. The root cause of the psychological incapacity must be identified as a psychological illness, its incapacitating nature fully explained and established by the totality of the evidence presented during trial. Doubtless, the woman was far from being a perfect wife and a good mother. She certainly had some character flaws. But these imperfections do not warrant a conclusion that she had a psychological malady at the time of the marriage that rendered her incapable of fulfilling her marital and family duties and obligations. (Navales v. Navales, G.R. No. 167523, June 27, 2008, 556 SCRA 272; Silvino A. Ligeralde v. May Ascension A. Patalinhug, et al., G.R. No. 168796, April 15, 2010; Ochocoso v. Alano, et al., G.R. No. 167459, January 26, 2011; Villalon v. Villalon; Rosalino Marable v. Myrna Marable, G.R. No. 178741, January 17, 2011). Refusal to have sex with husband. Q A and B are married. The man contended that the wife refused to consummate their marriage by refusing to have sexual intercourse with him during the marriage. He alleged that their last intercourse was prior to their marriage. He contended that the wife was suffering from psychological incapacity. Is the contention correct? Explain. Answer: No. The husbands evidence merely established that the wife refused to have sexual intercourse with him after their marriage, and that she left him after their quarrel when he confronted her about her alleged miscarriage. He failed to prove the root cause of the alleged psychological incapacity and establish the requirements of gravity, juridical antecedence, and incurability. There must be proof that the psychological disorder renders her truly incognitive of the basic marital covenants that concomitantly must be assumed and discharged by the parties to the marriage. Psychological incapacity must be more than just a difficulty, a refusal, or a neglect in the performance of some marital obligati ons. An unsatisfactory marriage is not a null and void marriage. In Marcos v. Marcos, it was ruled that Article 36 of the Family Code, we stress, is not to be confused with a divorce law that cuts the marital bond at the time the causes therefor manifest themselves. It refers to a serious psychological illness afflicting a party even before the celebration of the marriage. It is a malady so grave and so permanent as to deprive one of awareness of the duties and responsibilities of the matrimonial bond one is about to assume. (Noel Baccay v. Maribel Baccay, et al., G.R. No. 173138, December 1, 2010).

Effect of a foreign divorce. Q A former Filipino citizen got married to a Filipina. Due to work and other personal commitments, the man returned to Canada after the wedding. He returned to the Philippines to surprise his wife, but he was shocked to discover that his wife was having an affair with another man. He filed a petition for divorce in Canada which was granted. Wanting to marry his girlfriend, he registered the Canadian divorce with the Civil Registry of Pasig but despite the registration of the same, the Local Civil Registrar refused to issue a license for him to remarry. He filed a petition for judicial recognition of the foreign judgment which was denied by the RTC, holding that he was not the proper party to file the petition as he is a naturalized Canadian citizen. It ruled that only Filipinos can avail of the remedy under the second paragraph of Article 26, Family Codeand in accordance with the legislative intent as determined by the Court in Republic v. Orbecido III, 472 SCRA 114 (2005), to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. He contended that the second paragraph of Article 26 of the Family Code extends to aliens the right to petition a court of this jurisdiction for the recognition of a foreign divorce decree. Is the contention correct? Explain. Answer: No. The alien spouse can claim no right under the second paragraph of Article 26 of the Family Code as the substantive right established is in favor of the Filipino spouse. As held in Van Dorn v. Romillo, G.R. No. L-68470, October 8, 1985, 139 SCRA 139 and Pilapil v. Somera, G.R. No. 80116, June 30, 1989, 74 SCRA 653: To maintain x x x that, under our laws, [the Filipino spouse] has to be considered still married to [the alien spouse] and still subject to a wife's obligations x x x cannot be just. [The Filipino spouse] should not be obliged to live together with, observe respect and fidelity, and render support to [the alien spouse]. The latter should not continue to be one of her heirs with possible rights to conjugal property. She should not be discriminated against in her own country if the ends of justice are to be served. The provision was included in the law to avoid the absurd situation where the Filipino spouse remains married to the alien spouse who, after obtaining a divorce, is no longer married to the Filipino spouse. The legislative intent is for the benefit of the Filipino spouse, by clarifying his or her marital status, settling the doubts created by the divorce decree. Essentially, the second paragraph of Article 26 of the Family Code provided the Filipino spouse a substantive right to have his or her marriage to the alien spouse considered as dissolved, capacitating him or her to remarry. The capacity of the Filipino spouse to remarry, however, depends on whether the foreign divorce decree capacitated the alien spouse to do so. Without the second paragraph of Article 26 of the Family Code, the judicial recognition of the foreign decree of divorce, whether in a proceeding instituted precisely for that purpose or as a related issue in another proceeding, would be of no significance to the Filipino spouse since our laws do not recognize divorce as a mode of severing the marital bond; (Art. 17, NCC) Article 17 of the Civil Code provides that the policy against absolute divorces cannot be subverted by judgments promulgated in a foreign country. The inclusion of the second paragraph in Article 26 of the Family Code provides the direct exception to this rule and serves as basis for recognizing the dissolution of the marriage between the Filipino spouse and his or her alien spouse. (Gilbert B. Corpus v. Daisylyn Tirol Sto. Tomas, et al., G.R. No. 186571, August 11, 2010). Judgment declaring a spouse presumptively dead is immediately final and executory; remedy is Rule 65, not Rule 45. Q Yolanda Granada and Cyrus Granada got married in 1991. In 1994, Cyrus went to Taiwan to seek employment but since then, he never communicated with Yolanda. After nine (9) years of waiting, she filed a Petition to have Cyrus declared presumptively dead which the RTC granted. The Republic of the Philippines appealed from the decision contending that Yolanda failed to prove earnest efforts to locate Cyrus and thus, failed to prove well-founded belief that he was

already dead. Yolanda moved to dismiss the appeal contending that the Petition for Declaration of Presumptive Death based under Art. 41, Family Code was a summary judicial proceedings in which the judgment is immediately final and executory and, thus, not appealable. The CA granted the motion. Is the dismissal of the appeal correct? Explain. Answer: The CA is correct. The RTC decision is immediately final and executory and not subject to ordinary appeal. Since a petition for declaration of presumptive death is a summary proceeding, the judgment of the court therein shall be immediately final and executory. The appropriate remedy is a special civil action for certiorari if there is a showing of grave abuse of discretion amounting to lack or excess of jurisdiction. (Rep. v. Yolanda Granada, G.R. No. 187512, July 13, 2012). By express provision of law, (Art. 247, F.C.), the judgment of the court in a summary proceeding shall be immediately final and executory. As a matter of course, it follows that no appeal can be had of the trial court's judgment in a summary proceeding for the declaration of presumptive death of an absent spouse under Article 41 of the Family Code. It goes without saying, however, that an aggrieved party may file a petition for certiorari to question abuse of discretion amounting to lack of jurisdiction. Such petition should be filed in the Court of Appeals in accordance with the Doctrine of Hierarchy of Courts. To be sure, even if the Court's original jurisdiction to issue a writ of certiorari is concurrent with the RTCs and the Court of Appeals in certain cases, such concurrence does not sanction an unrestricted freedom of choice of court forum. From the decision of the Court of Appeals, the losing party may then file a petition for review on certiorari under Rule 45 of the Rules of Court with the Supreme Court. This is because the errors which the court may commit in the exercise of jurisdiction are merely errors of judgment which are the proper subject of an appeal. In sum, under Article 41 of the Family Code, the losing party in a summary proceeding for the declaration of presumptive death may file a petition for certiorari with the CA on the ground that, in rendering judgment thereon, the trial court committed grave abuse of discretion amounting to lack of jurisdiction. From the decision of the CA, the aggrieved party may elevate the matter to this Court via a petition for review on certiorari under Rule 45 of the Rules of Court. (Rep. v. Yolanda C. Granada, G.R. No. 187512, July 13, 2012, Sereno, J). Mortgage of conjugal property without consent of spouse is void; subsequent execution of SPA perfects the contract. Q - On October 31, 1995, the woman obtained a loan secured by a Real Estate Mortgage over a real proper under their names but without the consent of the husband. She issued checks as partial payments but the same were dishonoured, hence, the creditor filed a complaint for Foreclosure of the Mortgage with damages. The RTC dismissed the case as the mortgage was executed without the consent of the husband even as it noted that he executed a Special Power of Attorney for the wife to execute the mortgage on November 4, 1995. The RTC however ruled that the subsequent execution of the SPA cannot be made to retroact to the date of the execution of the real estate mortgage. Is the ruling correct? Why? Answer: No, because the execution of the SPA can be considered as acceptance of the mortgage by the other spouse that perfected the contract or continuing offer. Both Article 96 and Article 124 of the Family Code provide that the powers of the administration do not include disposition or encumbrance without the written consent of the other spouse. Any disposition or encumbrance without the written consent shall be void. However, both provisions also state that the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse x x x before the offer is withdrawn by either or both offerors. (Arturo Sarte Flores v. Sps. Enrico & Edna Lindo, G.R. No. 183984, April 13, 2011).

Note: This is an example of a void contract that can be ratified. (See: Art. 5, NCC). Sale of conjugal property by a spouse without consent of the other; void, even if separated in fact. Q In a case, there was an action for legal separation. It was ruled by the CA that the undivided share of the offending spouse in the property was already forfeited in favor of their daughter based on the ruling of the RTC that the offending spouse in an action for legal separation is deprived of his share in the net profits of the conjugal properties. Is the ruling correct? Why? Answer: No. If there is a decree of legal separation, under Article 63 of the Family Code, the absolute community or the conjugal partnership shall be dissolved and liquidated but the offending spouse shall have no right to any share of the net profits earned by the absolute community or the conjugal partnership, which shall be forfeited in accordance with the provisions of Article 43(2). Thus, among the effects of the decree of legal separation is that the conjugal partnership is dissolved and liquidated and the offending spouse would have no right to any share of the net profits earned by the conjugal partnership. It is only the share in the net profits which is forfeited in favor of their daughter. Article 102(4) of the Family Code provides that [f]or purposes of computing the net profits subject to forfeiture in accordance with Article 43, No. (2) and 63, No. (2), the said profits shall be the increase in value between the market value of the community property at the time of the celebration of the marriage and the market value at the time of its dissolution. Clearly, what is forfeited in favor of their daughter is not his share in the conjugal partnership property but merely in the net profits of the conjugal partnership property. (Siochi v. Gozon, et al., G.R. No. 169900; Interdimensional Realty, Inc. v. Siochi, et al., G.R. No. 169977, March 18, 2010). The family homes exemption from execution must be set u p and proved to the Sheriff before the sale of the property at public auction. Q A and B are married. They have a family home, A issued a check which was dishonored. He was convicted with civil indemnity. The family home was levied upon and sold where C, the judgment creditor was the purchaser in sheriffs sale. They did not invoked the exemption from levy of the family home. They however renamed as lessees but for failure to pay the rentals, they were sued for ejectment where judgment was rendered. In the execution, they invoked the exemption of the family home from levy but the plaintiff contended that the spouses did not assert and prove that their house and lot was a family home prior to the public auction conducted by the sheriff. State the effect of such failure. Explain. Answer: Their failure to invoke and prove that the house and lot was a family home is a waiver of such defense or right. In Honrado v. CA,512 Phil. 657 (2005), it was said that at no other time can the status of a residential house as a family home can be set up and proved and its exemption from execution be claimed but before the sale thereof at public auction: While it is true that the family home is constituted on a house and lot from the time it is occupied as a family residence and is exempt from execution or forced sale under Article 153 of the Family Code, such claim for exemption should be set up and proved to the Sheriff before the sale of the property at public auction. Failure to do so would estop the party from later claiming the exemption. The settled rule is that the right to exemption or forced sale under Article 153 of the Family Code is a personal privilege granted to the judgment debtor and as such, it must be claimed not by the sheriff, but by the debtor himself before the sale of the property at public auction. It is not sufficient that the person claiming exemption merely alleges that such property is a family home. This claim for exemption must be set up and proved to the Sheriff. Having failed to set up and prove to the sheriff the supposed exemption of the subject property before the sale thereof at public action, they now are barred from raising the same. Failure to do so estop them from

later claiming the said exemption. (De Mesa v. Acero, et al., G.R. No. 185064, January 16, 2012, Reyes, J). A child must establish filiation before support may be granted. Q Petitioner filed a petition with prayer for the issuance of a temporary protection order against the respondent for alleged woman and child abuse under RA 9262 and asked for financial support. She alleged that respondent is the father of her child. He denied being the father of the child and that the signature appearing in the child Certificate of Live Birth is not his signature. The RTC dismissed the petition on the ground that there is no prior judgment establishing the filiation of the child hence, there is no basis to order support. Is the dismissal correct? Why? Answer: Yes. Dolina evidently filed the wrong action to obtain support for her child. The object of RA 9262 under which she filed the case is the protection and safety of women and children who are victims of abuse or violence. Although the issuance of a protection order against the respondent in the case can include the grant of legal support for the wife and the child, this assumes that both are entitled to a protection order and to legal support. Dolinas remedy is to file for the benefit of her child an action against Vallecera for compulsory recognition in order to establish filiation and then demand support. Alternatively, she may directly file an action for support, where the issue of compulsory recognition may be integrated and resolved. To be entitled to legal support, petitioner must, in proper action, first establish the filiation of the child, if the same is not admitted or acknowledged. Since Dolinas demand for support for her son is based on her claim that he is Valleceras illegitimate child, the latter is not entitled to such support if he had not acknowledged him, until Dolina shall have proved his relation to him. (Art. 195, Family Code). The childs remedy is to file through her mother a judicial action for compulsory recognition. (Tayag v. Tayag-Gallor, G.R. No. 174680, March 24, 2008, 549 SCRA 68). If filiation is beyond question, support follows as matter of obligation. (Montefalcon v. Vasquez, G.R. No. 165016, June 17, 2008, 554 SCRA 513). In short, illegitimate children are entitled to support and successional rights but their filiation must be duly proved. (De la Puerta v. CA, G.R. No. 77867, February 6, 1990, 181 SCRA 861; Dolina v. Vallecera, G.R. No. 182367, December 15, 2010). Q In a complaint for support alleging that a child is an illegitimate child of the alleged father, the bases were the record of birth although unsigned by the alleged father and the baptismal certificate identifying the alleged father, as the father of the child without the signature of the alleged father. The RTC granted the support based on those documents. Is the decision correct? Why? Answer: No, because the two (2) documents are not proofs of filiation. Before a child may be entitled to support, he must be recognized by the alleged father. Time and again, this Court has ruled that a high standard of proof is required to establish paternity and filiation. An order for x x x support may create an unwholesome situation or may be an irritant to the family or the lives of the parties so that it must be issued only if paternity or filiation is established by clear and convincing evidence. The Rules for establishing filiation are found in Articles 172 and 175 of the Family Code. One such proof is the record of birth appearing in the civil register, Article 172(1) and any other means allowed by the Rules of Court and special laws, (Art. 172(2)(2), Family Code. It is settled that [a] certificate of live birth purportedly identifying the putative father is not competent evidence of paternity when there is no showing that the putative father had a hand in the preparation of said certificate. The baptismal certificate is not a good proof paternity. Just like in a birth certificate, the lack of participation of the supposed father in the preparation of a baptismal certificate renders this document incompetent to prove paternity. And while a baptismal certificate may be considered a public document,

it can only serve as evidence of the administration of the sacrament on the date specified but not the veracity of the entries with respect to the childs paternity. Thus, x x x baptismal certificates are per se inadmissible in evidence as proof of filiation and they cannot be admitted indirectly as circumstantial evidence. (Antonio Perla v. Mirasol Baring, et al., G.R. No. 172471, November 12, 2012, Brion, J; See: Gotardo v. Buling, G.R. No. 165166, August 15, 2010, Brion, J). PROPERTY Oral partition is invalid. Q A, B, and C are the co-owners of a real property having inherited from their parents. They orally partitioned the same. Is the agreement valid? Explain. Answer: Yes. The validity of an oral partition is already well-settled. It is not required that the partition agreement be registered or annotated in the title to be valid. After exercising acts of ownership over their respective portions of the contested estate, they are estopped from denying the existence of an oral partition. Regardless of whether a parol partition or agreement to partition is valid or enforceable at law, equity will in proper cases, where the parol partition has actually been consummated by the taking of possession in severalty and the exercise of ownership by the parties of their respective portions set off to each other, recognize and enforce such parol partition and the rights of the parties thereunder. (Hernandez v. Andal, 78 Phil. 196 (1947); Tan v. Lim, G.R. No. 128004, September 25, 1998, 296 SCRA 445; Notarte, et al. v. Notarte, G.R. No. 180614, August 29, 2012). Existence of partnership necessary in cases of partition. Q Parties lived together as husband and wife without the benefit of marriage despite the fact that respondent was legally married. During their coverture, they were able to organize a manpower services company where petitioner owned 3.33%. Five (5) properties were acquired by them and registered under their names ostensibly as husband and wife. But the relationship did not last long, hence, they agreed to divide the properties. Petitioner demanded for some more, but respondent refused, hence, an action for partition was filed. Respondent contended that the properties were acquired out of his personal funds. At the trial, petitioner admitted that the properties were acquired from the income of the manpower services company, hence, the RTC ruled that respondent was the sole owner. On appeal, she contended that she was a pro indiviso owner of one-half of the properties and that the courts decision subjected the certificates of title to collateral attack. She further contended that it is improper to thresh out the issue on ownership in an action for partition. Decide. Answer: The contentions are not correct. The determination as to the existence of co-ownership is necessary in the resolution of an action for partition. (Municipality of Bian v. Garcia, G.R. No. 69260, December 22, 1989, 180 SCRA 576). While it is true that the complaint involved here is one for partition, the same is premised on the existence or non-existence of co-ownership between the parties. Petitioner insists she is a co-owner pro indiviso of the five real estate properties based on the transfer certificates of title (TCTs) covering the subject properties. Respondent maintains otherwise. Indubitably, therefore, until and unless this issue of coownership is definitely and finally resolved, it would be premature to effect a partition of the disputed properties. (Fabrica v. CA, 146 SCRA 250 (1986). More importantly, the complaint will not even lie if the claimant, or petitioner in this case, does not even have any rightful interest over the subject properties. (Catapusan v. CA, G.R. No. 109262, November 21, 1996, 264 SCRA 534; Betty Lacbayan v. Bayani Samoy, Jr., G.R. No. 165427, March 21, 2011).

Action publiciana or reinvindicatoria is the remedy if a property is encroached upon. Q In a case, there was a complaint for a writ of demolition filed by the owners of a property alleging that they discovered that their lot was encroached upon by the structures built by the adjacent owner without their knowledge and consent. Such encroachment was confirmed by the relocation survey of the property. Despite demands, the other party refused to remove the structures hence, the complaint was filed. The trial court rendered a judgment in favor of the plaintiff directing the removal of the structures. The CA reversed holding that a complaint for recovery of possession should have been filed. The writ of demolition can be granted only as an effect of a final judgment or order hence, dismissed the same. Is the dismissal correct? Why? Answer: No. While inaccurately captioned as an action for a Writ of Demolition with Damages is in reality an action to recover a parcel of land or an accion reivindicatoria under Article 434 of the Civil Code which provides that in an action to recover, the property must be identified, and the plaintiff must rely on the strength of his title and not on the weakness of the defendan ts claim. Accion reivindicatoria seeks the recovery of ownership and includes the jus utendi and the jus fruendi brought in the proper regional trial court. Accion reivindicatoria is an action whereby plaintiff alleges ownership over a parcel of land and seeks recovery of its full possession. (Javier v. Veridiano II, G.R. No. 48050, 10 October 1994, 237 SCRA 565; Sps. Elegio and Dolia Caezo v. Sps. Bautista, G.R. No. 170189, September 1, 2010). DONATION Designation of donation as mortis causa is not controlling. Q There was a donation by the spouses to their children and granddaughter denominated as Donation Mortis Causa stating that it is irrevocable. It had no attestation clause, and had only two (2) witnesses. The donees accepted the donation. After the death of one of the donors, the donation was submitted to probate but the RTC ruled it to be a donation inter vivos due to its irrevocability. The CA, on appeal, ruled it to be one of mortis causa and since it did not comply with the formalities of a will, it is void. Is the ruling of the CA correct? Why? Answer: No. The designation that it is a Donation Mortis Causa is not controlling. If a donation by its terms is inter vivos, this character is not altered by the fact that the donor styles it mortis causa. (Concepcion v. Concepcion, 91 Phil. 823 (1952)). In Austria-Magat v. Court of Appeals, 426 SCRA 263 (2002), it was held that irrevocability is a quality absolutely incompatible with the idea of conveyances mortis causa, where revocability is precisely the essence of the act. A donation mortis causa has the following characteristics: 1. It conveys no title or ownership to the transferee before the death of the transferor; or, what amounts to the same thing, that the transferor should retain the ownership (full or naked) and control of the property while alive; 2. That before his death, the transfer should be revocable by the transferor at will, ad nutum; but revocability may be provided for indirectly by means of a reserved power in the donor to dispose of the properties conveyed; and 3. That the transfer should be void if the transferor should survive the transferee. (Aluad v. Aluad, G.R. No. 176943, October 17, 2008, 569 SCRA 697; Del Rosario v. Ferrer, et al., G.R. No. 187056, September 20, 2010). Since the donation in this case was one made inter vivos, it was immediately operative and final. The reason is that such kind of donation is deemed perfected from the moment the donor learned of the donees acceptance of the donation. The acceptance makes the donee the absolute owner of the property donated. (Heirs of Sevilla v. Sevilla, 450 SCRA 598 (2003)).

Donation inter vivos; when is it one. Q The petitioner filed an action to recover a property claiming that they purchased it from Casimiro Vere in July 1971, who bought it from Alvegia Rodrigo in August 1970. The respondents answered and claimed that they purchased the property from Eufracia Rodriguez to whom Rodrigo donated in May 1965. The deed of donation stated among others: (1) a property was given to the done, his heirs and successors; (2) the Deed of Donation or that ownership be vested on her upon my demise. (3) if the Donee predeceases me, the same land will not be reverted to the Donor, but will be inherited by the heirs of EUFRACIA RODRIGUEZ; (4) The done accepted the land donated; What is the nature of the donation? Explain. Answer: It is immediately apparent that Rodrigo passed naked title to Rodriguez under a perfected donation inter vivos. First. Rodrigo stipulated that if the Donee predeceases me, the [Property] will not be reverted to the Donor, but will be inherited by the heirs of x x x Rodriguez, signaling the irrevocability of the passage of title to Rodriguezs estate, waiving Rodrigos right to reclai m title. This transfer of title was perfected the moment Rodrigo learned of Rodriguezs acceptance of the disposition (Art. 734, NCC) which, being reflected in the Deed, took place on the day of its execution on 3 May 1965. Rodrigos acceptance of the transfer underscores its essence as a gift in presenti, not in futuro, as only donations inter vivos need acceptance by the recipient. (Alejandro v. Geraldez, 168 Phil 404; Concepcion v. Concepcion, 91 Phil. 823; Laureta v. Mata, 44 Phil. 668). Indeed, had Rodrigo wished to retain full title over the property, she could have easily stipulated, as the testator did in another case, that the donor, may transfer, sell, or encumber to any person or entity the properties here donated x x x (Puig v. Peaflorida) or used words to that effect. Instead, Rodrigo expressly waived title over the Property in case Rodriguez predeceases her. (Gonzalo Villanueva represented by his heirs v. Sps. Branoco, G.R. No. 172804, January 24, 2011). NUISANCE A structure if declared illegal does not mean it is a nuisance per se. Q MMDA claimed that the wing walls of a building constructed by Justice Gancayco on his property was a nuisance per se. In 1996 the City Council gave him an exemption from constructing an arcade. Is it a nuisance per se? Why? Answer: No. The fact that he was given an exemption from constructing an arcade is an indication that the wing walls of the building are not nuisance per se. The wing walls do not per se immediately and adversely affect the safety of persons and property. The fact that an ordinance may declare a structure illegal does not necessarily make that structure a nuisance. Article 694 of the Civil Code defines nuisance as any act, omission, establishment, business, condition or property, or anything else that (1) injures or endangers the health or safety of others; (2) annoys or offends the senses; (3) shocks, defies or disregards decency or morality; (4) obstructs or interferes with the free passage of any public highway or street, or any body of water; or, (5) hinders or impairs the use of property. A nuisance may be per se or per accidens. A nuisance per se is that which affects the immediate safety of persons and property and may summarily be abated under the undefined law of necessity. (Tolentino v. Bustamante, G.R. No. 182567, July 13, 2009, 592 SCRA 552; Tayabas v. People, 517 SCRA 448 (2007)). Clearly, when Justice Gancayco was given a permit to construct the building, the city council or the city engineer did not consider the building, or its demolished portion, to be a threat to the safety of persons and property. This fact alone should have warned the MMDA against summarily demolishing the structure. (Emilio Gancayco v. City Govt. of Quezon City, et al., G.R. No. 177807; MMDA v. Gancayco, G.R. No. 177933, October 11, 2011).

SUCCESSION Effect if will provides for indivision of property among heirs; contrary to public policy. Q The will of Basilio Santiago stated that a house and lot in the City of Manila shall be transferred in the names of Maria Pilar and Clemente, the children, for purposes of administration only but no one shall be the owner of the same. Is the condition in the will valid? Why? Answer: No, it is contrary to law and public policy. When a will provides for indivision of a property, it is subject to statutory limitation as the law provides that the prohibition to divide a property in a coownership can only last for twenty (20) years. (Arts. 494, 870 and 1083, NCC). While the Civil Code is silent as to the effect of the indivision of a property for more than 20 years, it would be contrary to public policy to sanction co-ownership beyond the period expressly mandated by the Civil Code. (In Re: Petition for Probate of Last Will & Testament of Basilio Santiago, Ma. Pilar Santiago, et al. v. Zoilo Santiago, et al., G.R. No. 179859, August 9, 2010). Forgetfulness is not equivalent to being unsound mind. Q After the will was admitted to probate, petitioners appealed and contended that the testator was magulyan or forgetful, so much so that it effectively stripped her of her testamentary capacity. She was likewise suffering from paranoia. Petitioners, however, did not present medical evidence to show that she was of unsound mind. There was no showing that she was one month or less, before making the will, she was publicly known to be insane. Is the admission of the will to probate correct? Explain. Answer: Yes. The state of being forgetful does not necessarily make a person mentally unsound so as to render him unfit to execute a will. (Torres & Lopez de Bueno v. Lopez, 48 Phil. 772 (1926); Sancho v. Abella, 728 Phil. 728 (1933)). Forgetfulness is not equivalent to being of unsound mind. Besides, Article 799 of the New Civil Code states that to be of sound mind, it is not necessary that the testator be in full possession of all his reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by disease, injury or other cause. It shall be sufficient if the testator was able at the time of making the will to know the nature of the estate to be disposed of, the proper objects of his bounty, and the character of the testamentary act. The testimony of subscribing witnesses to a will concerning the testators mental condition is entitled to great weight where they are truthful and intelligent. More importantly, a testator is presumed to be of sound mind at the time of the execution of the will (Art. 800, NCC) and the burden to prove otherwise lies on the oppositor. Article 800 of the New Civil Code states: The burden of proof to show that the testator was of unsound mind at the time of the execution of the will lies in the oppositors. (Baltazar, et al. v. Laxa, G.R. No. 174489, April 11, 2012, Del Castillo, J). PRESCRIPTION 10-year prescriptive period for reconveyance does not apply if the contract is void. Q - There was an application for a renewal and increase in their loan using a title but the bank disapproved it without returning the title. Yet, there was foreclosure and sale of the property. Title was issued. The owner filed an action for reconveyance. The bank contended that it has already prescribed since 30 years have already lapsed. Is the contention correct? Why? Answer: No. The prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years from the date of the issuance of the certificate of title. But while this is true, the 10-year prescriptive period applies only when the reconveyance is based on fraud which makes a contract voidable (and that the aggrieved party is not in possession of the land whose title is to be actually reconveyed). It does not apply to an action to nullify a contract which is void ab initio. Article 1410 of the

Civil Code categorically states that an action for the declaration of the inexistence of a contract does not prescribe. (Abalos, et al. v. Sps. Darapa, G.R. No. 164693, March 23, 2011). In this case, the action was an action for Annulment of Tile, Recovery of Possession and Damages, grounded on the theory that the DBP foreclosed their land covered by TCT No. T-1,997 without any legal right to do so, rendering the sale and the subsequent issuance of TCT in DBPs name void ab initio and subject to attack at any time conformably to the rule in Article 1410 of the Civil Code. OBLIGATIONS AND CONTRACTS Rescission is the remedy for reparation of the damage done. Q After the death of their predecessor-in-interest, the heirs became the co-owners of several parcels of land. Some of them took possession of the properties hence, there was a complaint for partition filed by one of the heirs as the other refused to partition the properties. While the action was pending, one of them donated a property belonging to the co-ownership to one of her nephews, without approval of the court, hence, after learning that there was a Donation Inter Vivos, they filed a Supplemental Pleading praying that the donation be rescinded in accordance with Article 1381(4) of the Civil Code. The donee opposed the Supplemental Pleading contending that rescission under Article 1384(1), NCC applies only when there is already a prior judicial decree on who between the contending parties actually owned the properties under litigation. The RTC ordered the rescission of the deed of donation as it was done without the knowledge and approval of the other parties or plaintiffs or the Court. On appeal, the CA reversed the judgment on the ground that before an action for rescission may be filed there must first be a judicial determination that the same actually belonged to the estate of the donor. Hence, the petition raising such issue. Decide. Answer: Rescission is a remedy granted by law to the contracting parties and even to third persons, to secure the reparation of damages caused to them by a contract, even if it should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract. It is a remedy to make ineffective a contract, validly entered into and therefore obligatory under normal conditions, by reason of external causes resulting in a pecuniary prejudice to one of the contracting parties or their creditors. Contracts which are rescissible are valid contracts having all the essential requisites of a contract, but by reason of injury or damage caused to either of the parties therein or to third persons are considered defective and, thus, may be rescinded. The assertion that rescission may only be had after the RTC had finally determined that the parcels of land belonged to the estate of Spouses Baylon does not intrinsically amiss. The petitioners right to institute the action for rescission pursuant to Article 1381(4) of the Civil Code is not preconditioned upon the RTCs determination as to the ownership of the said parcels of land. The right to ask for the rescission of a contract under Article 1381(4) of the Civil Code is not contingent upon the final determination of the ownership of the thing subject of litigation. The primordial purpose of Article 1381(4) of the Civil Code is to secure the possible effectivity of the impending judgment by a court with respect to the thing subject of litigation. It seeks to protect the binding effect of a courts impending adjudication vis--vis the thing subject of litigation regardless of which among the contending claims therein would subsequently be upheld. Accordingly, a definitive judicial determination with respect to the thing subject of litigation is not a condition sine qua non before the rescissory action contemplated under Article 1381(4) of the Civil Code may be instituted. Moreover, conceding that the right to bring the rescissory action pursuant to Article 1381(4) of the Civil Code is preconditioned upon a judicial determination with regard to the thing subject litigation, this would only bring about the very predicament that the said provision of law seeks to obviate. Assuming arguendo that a rescissory action under Article 1381(4) of the Civil Code could only be instituted after the dispute with respect to the thing subject of litigation is judicially determined, there is the possibility that the same may had already been conveyed to third persons acting in good faith, rendering

any judicial determination with regard to the thing subject of litigation illusory. Surely, this paradoxical eventuality is not what the law had envisioned. (Lilia Ada, et al. v. Florante Baylon, G.R. No. 182435, August 13, 2012, Reyes, J). Provision in contract of lease granting the lessee exclusive right to renew; valid; principle of mutuality of contracts. Q The parties entered into a lease contract over a parcel of land granting unto the lessee the exclusive option to renew the contract subject to the condition that it should comply with a 60-day notice of the intention to exercise the option to renew the contract which the lessee did. The lessor refused to renew the contract, hence, a complaint to compel the lessor to renew it was filed. The lessor argued that the renewal of the contract cannot be made to depend upon the sole will of the lessee, otherwise, the same would be void for being a potestative condition. Will the action prosper? Why? Answer: Yes, because of the principle of mutuality of contracts. An express agreement which gives the lessee the sole option to renew the lease is frequent and subject to statutory restrictions, valid and binding on the parties. This option, which is provided in the same lease agreement, is fundamentally part of the consideration in the contract and is no different from any other provision of the lease carrying an undertaking on the part of the lessor to act conditioned on the performance by the lessee. It is a purely executory contract and at most confers a right to obtain a renewal if there is compliance with the conditions on which the right is made to depend. The right of renewal constitutes a part of the lessee's interest in the land and forms a substantial and integral part of the agreement. The fact that such option is binding only on the lessor and can be exercised only by the lessee does not render it void for lack of mutuality. After all, the lessor is free to give or not to give the option to the lessee. And while the lessee has a right to elect whether to continue with the lease or not, once he exercises his option to continue and the lessor accepts, both parties are thereafter bound by the new lease agreement. Their rights and obligations become mutually fixed, and the lessee is entitled to retain possession of the property for the duration of the new lease, and the lessor may hold him liable for the rent therefor. The lessee cannot thereafter escape liability even if he should subsequently decide to abandon the premises. Mutuality obtains in such a contract and equality exists between the lessor and the lessee since they remain with the same faculties in respect to fulfillment. (MIAA v. Ding Velayo Sports Center, Inc., G.R. No. 161718, December 14, 2011). Foreclosure of mortgage void for lack of demand; no default. Q An obligation was contracted secured by a mortgage, but it was foreclosed even as there was no demand for payment. What was done was for GMC to request the debtors to go to their office and discuss the settlement of their account. Thereafter, GMC proceeded to foreclose the mortgage. There was no provision on extrajudicial foreclosure of the mortgage without need of demand. When it was foreclosed, the mortgagor contended that it was void. Is the foreclosure valid? Why? Answer: No, because there was no delay. There are three requisites necessary for a finding of default. First, the obligation is demandable and liquidated; second, the debtor delays performance; and third, the creditor judicially or extrajudicially requires the debtors performance. As the contract carries no such provision on demand not being necessary for delay to exist, GMC should have first made a demand on the spouses before proceeding to foreclose the real estate mortgage. The act of asking to go to the office for a possible settlement of the account is not the demand required. In Development Bank of the Philippines v. Licuanan it was ruled that demand made before the foreclosure is effected is essential. If demand was made and duly received by the respondents and the latter still did not pay, then they were already in default and foreclosure was proper. However, if demand

was not made, then the loans had not yet become due and demandable. This meant that respondents had not defaulted in their payments and the foreclosure by petitioner was premature. Foreclosure is valid only when the debtor is in default in the payment of his obligation . (G.R. No. 150097, February 26, 2007, 516 SCRA 644; General Milling Corp. v. Sps. Ramos, G.R. No. 193723, July 20, 2011). Substantial breach, like sale of property within the prohibitory period is a ground for rescission. Q NHA sought to rescind the sale made by housing beneficiaries of a property they bought from it within the prohibited period of five (5) years from the date of release of the mortgage without prior written consent of the NHA. The beneficiaries sold the same to their son, within the prohibitory period. The beneficiaries contended that as owners, they have the right to dispose of the same. Is the sale valid? Why? Answer: No. The resale without the NHAs consent is a substantial breach, hence, void. The restriction clause is more of a condition on the sale of the property to the beneficiaries rather than a condition on the mortgage constituted on it. Indeed, the prohibition against resale remained even after the land had been released from the mortgage. The five-year restriction against resale, counted from the release of the property from the NHA mortgage, measures out the desired hold that the government felt it needed to ensure that its objective of providing cheap housing for the homeless is not defeated by wily entrepreneurs. The essence of the governments socialized housing program is to preserve the beneficiarys ownerships for a reasonable length of time, here at least within five years from the time he acquired it free from any encumbrance. (Lalicon, et al. V. NHA, G.R. No. 185440, July 1, 2011). Period to file action for rescission under Article 1191, NCC. Q It was claimed that under Article 1389 of the Civil Code the action to claim rescission m ust be commenced within four years from the time of the commission of the cause for it. The NHA filed the action after four (4) years, hence, the contention is that it has already prescribed. Is the contention correct? Why? Answer: No. NHA sought annulment/rescission of the sale because they violated the five-year restriction against such sale provided in their contract. Such violation comes under Article 1191 where the applicable prescriptive period is that provided in Article 1144 which is 10 years from the time the right of action accrues. The NHAs right of action accrued on February 18, 1992 when it learned of the forbidden sale of the property. Since the NHA filed its action for annulment of sale on April 10, 1998, it did so well within the 10-year prescriptive period. (Lalicon, et al. V. NHA, G.R. No. 185440, July 1, 2011). STATUTE OF FRAUDS Statute of frauds is inapplicable if oral compromise has been performed. Q The property of the respondent was declared condemned for public use to expand the Lahug International Airport. On appeal, there was a compromise to stop the respondent from pursuing with the appeal, but with an oral assurance that if the purpose would not be pursued, the property would be resold to him. The public use was not pursued, hence, there was a demand for the resale of the property, especially so that it has been converted to a commercial area, but the petitioner contended that it is not bound by the oral assurance that it would be resold, using the Statute of Frauds as defense. Is the defense proper? Why? Answer: No. The Statute of Frauds operates only with respect to executory contracts, and does not apply to contracts which have been completely or partially performed. The reason is that, in executory contracts there is a wide field for fraud because unless they be in writing there is no palpable evidence of the intention of the contracting parties. The statute has precisely been enacted to prevent fraud. However, if a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or

bad faith, for it would enable the defendant to keep the benefits already delivered by him from the transaction in litigation, and, at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby. (Mactan-Cebu International Airport Authority v. Tudtud, G.R. No. 174012, November 14, 2008, 571 SCRA 165). The Statute of Frauds cannot apply, the oral compromise settlement having been partially performed. By reason of such assurance made in their favor, respondents relied on the same by not pursuing their appeal before the CA. (Mactan-Cebu International Airport Authority, et al. v. Lozada, Sr., et al., G.R.No. 176625, February 25, 2010). Effect if document states that there was consideration, but no money was involved. Q The contract provided for a consideration of P2,000.00 in the sale of 6 parcels of land, but no money was involved. Is the sale valid? Why? Answer: No, it is void, for, while it appears to be supported by a valuable consideration, there was no money involved in the sale, hence, a simulated contract, which is void. It is well-settled that where a deed of sale states that the purchase price has been paid but in fact has never been paid, the deed of sale is null and void for lack of consideration. (Montecillo v. Reyes, 434 Phil. 456 (2002)). Thus, although the contract states that the purchase price of P2,000.00 was paid to the seller for the subject properties, it has been proven that such was never in fact paid as there was no money involved. It must, therefore, follow that the Deed of Sale is void for lack of consideration. (Heirs of Policronio Ureta, Sr., et al. v. Heirs of Liberato Ureta, et al., G.R. No. 165748). Even third persons may file an action for nullity if they directly affected. Q In a case, the heirs of an owner of a property whose signature was forged in a contract of sale filed an action to declare it void. It was contended that since the heirs of a party were not privies to the contract of sale, they have no personality to question its validity. It was further contended that defense of illegality of a contract is not available to third persons whose interests are not directly affected (Art. 1421, NCC). Is the contention correct? Why? Answer: No. Article 1311 and Article 1421 of the Civil Code provide that contracts take effect only between the parties, their assigns and heirs, x x x and the defense of illegality of contracts is not available to third persons whose interests are not directly affected, respectively. The right to set up the nullity of a void or non-existent contract is not limited to the parties, as in the case of annullable or voidable contracts; it is extended to third persons who are directly affected by the contract. Thus, where a contract is absolutely simulated, even third persons who may be prejudiced thereby may set up its inexistent. (Arsenal v. IAC, 227 Phil. 36 (1986)). In this case, the parties are not strangers to the parties to the contract, but heirs, hence, they have the right to question the same. (Heirs of Ureta, Sr., et al. v. Heirs of Ureta, et al., G.R. No. 165748, and other cases, September 14, 2011). A forged deed is a nullity; it passes no right; it is held in trust. Q In a case, the heirs of a decedent sought the annulment or nullity of a deed of extrajudicial settlement and sale upon a claim that the signatures of some of the heirs had been falsified and that the remaining signatories could not have signed the deed as they were already dead. May the action prosper? Why? Answer: Yes, because the deed is void, for lack of consent, hence, subject to attack anytime. It is recognized in our jurisprudence that a forged deed is a nullity and conveys no title. An action to declare the inexistence of a void contract does not prescribe.

When there is a showing of such illegality, the property registered is deemed to be simply held in trust for the real owner by the person in whose name it is registered, and the former then has the right to sue for the reconveyance of the property. The action for the purpose is also imprescriptible, and as long as the land wrongfully registered under the Torrens system is still in the name of the person who caused such registration, an action in personam will lie to compel him to reconvey the property to the real owner. While a certificate of title was issued in respondents favor, such title could not vest upon them ownership of the entire property; neither could it validate a deed which is null and void. Registration does not vest title; it is merely the evidence of such title. Our land registration laws do not give the holder any better title than what he actually has. (Sps. Fernando, et al. v. Fernando, G.R. No. 191889, January 31, 2011) ESTOPPEL Tenant cannot deny the title of the lessor due to estoppel; exception. Q There was a contract of lease over a property but the lessor did not inform the lessee that there was a mortgage over the property subject of the lease contract. For failure of the lessor to pay the loan, the bank foreclosed the mortgage and eventually the property was transferred to the bank. For failure to pay the rentals, demand was made to pay and vacate, but the lessee contended that since the lessor was no longer the owner, he had not right to sue for ejectment. The lessor contended that the lessee is stopped from questioning the title of the lessor. Is the contention of the lessee correct? Explain. Answer: Yes. The conclusive presumption found in Sec. 2(b), Rule 131 of the Rules of Court known as estoppel against tenants provides the tenant is not permitted to deny the title of his landlord at the time of the commencement of the relation of landlord and tenant between them. The rule is not absolute. What a tenant is estopped from denying x x x is the title of his landlord at the time of the commencement of the landlord-tenant relation. If the title asserted is one that is alleged to have been acquired subsequent to the commencement of that relation, the presumption will not apply. Hence, the tenant may show that the landlords title has expired or been conveyed to another or himself; and he is not estopped to deny a claim for rent, if he has been ousted or evicted by title paramount. It is true that the tenant cannot assert ownership of the property by a third person. However, a tenant in proper cases such as this, may show that the landlords title has been conveyed to another. In order to do this, the tenant must essentially assert that title to the leased premises already belongs to a third person who need not be a party to the ejectment case, as what the tenant did in this case. (Enrico Santos v. National Statistic Office, G.R. No. 171129, April 6, 2011). TRUST Fraudulent acquisition of property; same held in trust; action for reconveyance; except if passed to an innocent purchaser for value. Q A property was wrongfully included in the title of another. The titled owner even acknowledged such error. The owner filed an action to recover the erroneously included property. He alleged that he was in possession of the property all the time even if registered under the name of the other party, who contended that the action has already prescribed. Will the action prosper? Why? Answer: Yes, because he is holding it under the rule of implied trust for the benefit of the true owner. Under Article 1456, NCC, if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

The party thus aggrieved has the right to recover his or their title over the property by way of reconveyance while the same has not yet passed to an innocent purchaser for value. (Huang v. A, 236 SCRA 420 (1994)). The contention that he action has already prescribed because of the lapse of ten (10) years is not correct. An action for reconveyance of registered land based on implied trust prescribes in ten (10) years, the point of reference being the date of registration of the deed or the date of the issuance of the certificate of title over the property. The ten-year prescriptive period applies only when the person enforcing the trust is not in possession of the property, the right to seek reconveyance, which in effect seeks to quiet title to the property, does not prescribe. The reason is that the one who is in actual possession of the land claiming to be its owner may wait until his possession is disturbed or his title is attacked before taking steps to vindicate his right. (Fernando, Jr., et al. v. Acua, et al., G.R. No. 161030, September 30, 2010). SALES Q In a foreclosure sale of a property worth P5M, it was sold for only P900,000.00. It was contended that the sale is void. is the contention correct? Why? Answer: No. Unlike in an ordinary sale, inadequacy of the price at a forced sale is immaterial and does not nullify a sale since, in a forced sale, a low price is more beneficial to the mortgage debtor for it makes redemption of the property easier. (New Sampaguita Builders Construction, Inc. v. PNB, 479 Phil. 453 (2004); The National Loan and Investment Board v. Meneses, 67 Ph il. 498 (1939)). The fact that a property is sold at public auction for a price lower than its alleged value, is not of itself sufficient to annul said sale, where there has been strict compliance with all the requisites marked out by law to obtain the highest possible price, and where there is no showing that a better price is obtainable. (Government of the Philippines vs. De Asis, G. R. No. 45483, April 12, 1939; Guerrero vs. Guerrero, 57 Phil., 442; La Urbana vs. Belando, 54 Phil., 930; Bank of the Philippine Islands v . Green, 52 Phil., 491; Hulst v. PR Builders, Inc., G.R. No. 156364, September 3, 2007, 532 SCRA 747; Bank of PI v. Reyes, G.R. No. 182769, February 1, 2012). Written notice to prospective redemption is mandatory. Q The owner of a real property offered the sale to the adjoining owners and one of them agreed to the sale to take place after the harvest season. But he later sold the same to another. The heirs of one of the adjoining owners learned about the sale a day after it was sold and conveyed their intention to redeem the property but the seller answered, saying that there was already a contract of sale executed with the buyer and that they never tendered the redemption amount. A complaint for legal redemption was filed but it was opposed on the ground that he complied with the requirement of notice under Article 1623, NCC but they failed to exercise the right of redemption. There was likewise no need to comply with the written notice requirement since they already knew of the sale. Is the contention correct? Why? Answer: No, because of the lack of written notice to the prospective redemption. (Art. 1623, NCC). Such written notice is mandatory. Without a written notice, the period of thirty days within which the right of legal pre-emption may be exercised, does not start. The indispensability of a written notice had long been discussed in the early case of Conejero v. Court of Appeals, 123 Phil. 695 (1966) where the SC said that such notice is indispensable, and that, in view of the terms in which Article of the Philippine Civil Code is couched, mere knowledge of the sale, acquired in some other manner by the redemptioner, does not satisfy the statute. The written notice was obviously exacted by the Code to remove all uncertainty as to the sale, its terms and its validity, and to quiet any doubts that the alienation is not definitive. The statute not having provided for any alternative, the method of notification prescribed remains exclusive. (Barcellano v. Banas, et al., G.R. No. 165287, September 14, 2011).

Obligation of seller to transfer ownership. Q There was contract of sale where the seller sold properties in a manner absolute and irrevocable requiring the buyer to pay P415,000.00 upon the execution of the deed of sale with the balance payable directly to the mortgagee bank within a reasonable time. Nothing in the contract showed that the seller reserved the right of ownership. There was a conflict between the buyer and seller since the seller sold it again on the contention that the first contract was a contract to sell. The buyer contended that it was a contract of absolute sale. Whose contention is correct? Why? Answer: The contention of the buyer is correct that it is a contract of absolute sale. The terms and conditions of the contract only affected the manner of payment, not the immediate transfer of ownership upon the execution of the notarized contract. The terms and conditions pertained to the performance of the contract and not the perfection therefore or the transfer of ownership. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer. In this regard, Article 1498 of the Civil Code provides that, as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold. (De Leon v. Ong, G.R. No. 170405, February 2, 2010). Mirror doctrine once again applied. Q Real properties were sold by Ines Ouano to Salvador Cobarde although the same was never registered and titles were never obtained by the latter. Cobarde made representations that he owned the lots and sold the same to Cabigas, although no title was shown to him. Ouano sold the lots to National Airport Authority for the use of the Cebu-Lahug Airport but when the use fell, Ouanos heirs were able to get back the properties. After obtaining titles, they sold the same to several buyers. The heirs of Cabigas sought to recover the properties, alleging that their predecessor bought the properties from Cobarde. They never alleged that NAA was in bad faith in purchasing the same from Ouano. Are the heirs of Cabigas entitled to recover the properties from the buyers from NAA? Why? Answer: No, because their predecessors in-interest are not buyers in good faith and for value. At the time of the sale to the Cabigas spouses, however, the land was registered not in Cobardes name, but in Ouanos name. By itself, this fact should have put the Cabigas spouses on guard and prompted them to check with the Registry of Deeds as to the most recent certificates of title to discover if there were any liens, encumbrances, or other attachments covering the lots in question. In Abad v. Sps. Guimba, it was said that the law protects to a greater degree a purchaser who buys from the registered owner himself. Corollarily, its requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land object of the transaction is registered. While one who buys from the registered owner does not need to look behind the certificate of title, one who buys from one who is not the registered owner is expected to examine not only the certificate of title but all factual circumstances necessary for one to determine if there are any flaws in the title of the transferor, or in the capacity to transfer the land. (503 Phi. 321, (2005); Revilla v. Galindez, 07 Phil. 480 (1960)). Instead, the Cabigas spouses relied completely on Cobardes representation that he owned the properties in question, and did not even bother to perform the most perfunctory of investigations by checking the properties titles with the Registry of Deeds. Had the Cabigas spouses only done so, they would easily have learned that Cobarde had no legal right to the properties they were acquiring since the lots had already been registered in the name of the National Airports Corporation in 1952. Their failure to exercise the plain common sense expected of real estate buyers bound them to the consequences of their own inaction. (Heirs of Nicolas Cabigas, et al. v. Limbaco, et al., G.R. No. 175291, July 27, 2011).

Execution of public instrument is equivalent to delivery. Q The owner of a titled property sold it twice to different buyers. There was no inscription of both documents, but respondent took possession of the property, but petitioner did not because of the presence of tenants. Petitioner however, contended that upon execution of the public instrument, she already acquired possession and thus, considering that the execution thereof took place ahead of the actual possession by the respondent, she has a better right. Is petitioner correct? Why? Answer: No. Indeed, the execution of a public instrument shall be equivalent to the delivery of the thing that is the object of the contract. However, the execution of a public instrument gives rise only to a prima facie presumption of delivery. It is deemed negated by the failure of the vendee to take actual possession of the land sold. (Ten Forty Realty & Dev. Corp. v. Cruz, 457 Phil. 603 (2003)). Admittedly, the two sales were not registered with the Registry of Property. Since there was no inscription, the next question is who, between petitioner and respondent, first took possession of the subject property in good faith. As aptly held by the trial court, it was respondent who took possession of the subject property and, therefore, has a better right. (Beatingo v. Gasis, G.R. No. 179641, February 9, 2011). LEASE Extension of lease cannot be done if lessee committed grounds for ejectment; extension is a matter of equity. Q The lessee failed to pay the rentals for fourteen (14) months. Yet, it was asking the court to extend the lease. Is the contention correct? Why? Answer: No. In asking for an extension of lease under Article 1687, the lessee lost sight of the restriction provided in Article 1675 of the Civil Code. It states that a lessee that commits any of the grounds for ejectment cited in Article 1673, including non-payment of lease rentals and devoting the leased premises to uses other than those stipulated, cannot avail of the periods established in Article 1687. (LL & Co. Dev. & Agro-Industrial Corp. v. Huang Chao Chun. 428 Phil. 665 (2002) Moreover, the extension in Article 1687 is granted only as a matter of equity. The law simply recognizes that there are instances when it would be unfair to abruptly end the lease contract causing the eviction of the lessee. It is only for these clearly unjust situations that Article 1687 grants the court the discretion to extend the lease. An extension will only benefit the wrongdoer and punish the long-suffering property owner. (Lo Chua v. CA, 408 Phil. 877 (2001); Guiang v. Samano, G.R. No. 50501, April 22, 1991, 196 SCRA 114; Umale, et al. v. ASB Realty Corp., G.R. No. 181126, June 15, 2011). Lease with option to buy. Q There was a contract of lease with option to buy, the price to be negotiated and determined at the time the option to purchase is exercised. The property was however sold to PUP by NDC upon order of the President. Before however the sale was made, the lessee wrote a letter to the lessor manifesting the exercise of the option to buy. There was, however, no action on the offer to buy, hence, the contract expired without exercising the right. The lessee contended that NDC, the lessor violated its right of first refusal by the sale of the property to PUP. It was contended on the other hand by the lessor that since the contract has already expired, with the right of first refusal not being carried over into the impliedly renewed contract, there was no violation. Is the contention correct? Why? Answer: No, because the right of first refusal was exercised before the contract of lease expired and before it was sold to PUP by the lessor.

An option is a contract by which the owner of the property agrees with another person that the latter shall have the right to buy the formers property at a fixed price within a certain time. It is a condition offered or contract by which the owner stipulates with another that the latter shall have the right to buy the property at a fixed price within a certain time, or under, or in compliance with certain terms and conditions; or which gives to the owner of the property the right to sell or demand a sale. (Eulogio v. Apeles, G.R. No. 167884, January 20, 2009, 576 SCRA 561, citing Tayag v. Lacson, G.R. No. 134971, March 25, 2004, 426 SCRA 282, 304). It binds the party, who has given the option, not to enter into the principal contract with any other person during the period designated, and, within that period, to enter into such contract with the one to whom the option was granted, if the latter should decide to use the option. (Carcellar v. Court of Appeals, G.R. No. 124791, February 10, 1999, 302 SCRA 718, 724; Polytechnic Univ. of the Phils. v. Golden Horizon Realty Corp., G.R. No. 183612; National Dev. Co. v. Golden Horizon Realty Corp., G.R. No. 184260, March 15, 2010). Q It was contended that the right of first refusal was not impliedly renewed when the lease contract expired. Is the contention correct? Why? Answer: No, because the right was exercised before the contract of lease expired. Hence, whether it was carried over into the impliedly renewed contract is irrelevant. As the right was still existing when it was exercised and when the property was sold to PUP, the lessor violated the right of first refusal. When a lease contract contains a right of first refusal, the lessor has the legal duty to the lessee not to sell the leased property to anyone at any price until after the lessor has made an offer to sell the property to the lessee and the lessee has failed to accept it. Only after the lessee has failed to exercise his right of first priority could the lessor sell the property to other buyers under the same terms and conditions offered to the lessee, or under terms and conditions more favorable to the lessor. (Polytechnic Univ. of the Phils. v. Golden Horizon Realty Corp., G.R. No. 183612; National Dev. Co. v. Golden Horizon Realty Corp., G.R. No. 184260, March 15, 2010). Q There was a contract of lease with right of first refusal. The lessor however sold the property to another without offering the property first to the lessee. Sued, he contended that the right of first refusal provision is not binding upon him as there was no consideration. Is there a consideration in the grant of a right of first refusal such that it cannot be withdrawn at any time? Explain. Answer: Yes. Basic is the rule that a party to a contract cannot unilaterally withdraw a right of first refusal that stands upon valuable consideration. It is not correct to say that there is no consideration for the grant of the right of first refusal if such grant is embodied in the same contract of lease. Since the stipulation forms part of the entire lease contract, the consideration for the lease includes the consideration for the grant of the right of first refusal. In entering into the contract, the lessee is in effect stating that it consents to lease the premises and to pay the price agreed upon provided the lessor also consents that, should it sell the leased property, then, the lessee shall be given the right to match the offered purchase price and to buy the property at that price. Not even the avowed public welfare or the constitutional priority accorded to education, invoked by petitioner PUP in the Firestone case, would serve as license for the Court, and any party for that matter, to destroy the sanctity of binding obligations. While education may be prioritized for legislative and budgetary purposes, it is doubtful if such importance can be used to confiscate private property such as the right of first refusal granted to a lessee. (Polytechnic Univ. of the Phils. v. Golden Horizon Realty Corp., G.R. No. 183612; National Dev. Co. v. Golden Horizon Realty Corp., G.R. No. 184260, March 15, 2010). Prohibition against subleasing of land does not include the building constructed by the lessee. Q In a lease contract over a parcel of land, the agreement was that the lessee shall establish a sports center and parking area to ease the parking congestion at the Domestic Airport. There was an exclusive option to renew the contract of lease granted to the lessee, but the lessor refused to

renew on the ground that it violated the prohibition against subleasing of the premises. Is the contention correct? Why? Answer: No, because the prohibition against subleasing the premises refers only to the subject property, the land. Being the builder of the improvements on the subject property, said improvements are owned by it until the turn over to the lessor at the end of the contract. The lessee was not leasing the improvements from the lessor, thus; then it is not subleasing the same to third persons. (MIAA v. Ding Velayo Sports Center, Inc., supra.) When there is implied renewal of a contract of lease. Q The contract of lease between the parties commenced on January 1, 1997 and expired on December 31, 1997. The lessor did not give a notice to vacate the premises upon the expiration of the lease and the lessee continued to possess the same for more than 15 days without objection from the lessor. The notice to vacate was given only on August 5, 1998. What is the effect of the inaction of the lessor? Explain. Answer: By the inaction of the lessor, there can be no inference that it intended to discontinue the lease contract (Bowe v. CA, G.R. No. 95771, March 19, 1993, 220 SCRA 158). There was an impliedly renewed contract. An implied new lease or tacita reconcluccion will set in when the following requisites are found to exist: (a) the term of the original contract of lease has expired; (b) the lessor has not given the lessee a notice to vacate; (c) the lessee continued enjoying the thing leased for fifteen days with the acquiescence of the lessor. (Paterno v. CA, 339 Phil. 154 (1997); Samelo v. Manotok Services, Inc., G.R. No. 170509, June 27, 2012, Brion, J). Q In case of an impliedly renewed contract, the lessee contended that the period is the same as that of the original. It was contended otherwise by the lessor. Whose contention is correct? Explain. Answer: The contention of the lessor is correct. Since the rent is paid on a monthly basis, the period of lease is considered to be from month to month, in accordance with Article 1687 of the Civil Code. A lease from month to month is considered to be one with a definite period which expires at the end of each month upon a demand to vacate by the lessor. (Arquelda v. Phil. Veterans Bank, 385 Phil. 1200 (2000)). When the lessor sent a notice to vacate to the lessee on August 5, 1998, the tacita reconduccion was aborted, and the contract is deemed to have expired at the end of that month. A notice to vacate constitutes an express act on the part of the lessor that it no longer consents to the continued occupation by the lessee of its property. (Tagbilaran Integrated Sellers Assn. v. CA, 486 Phil. 386 (2004)). After such notice, the lessees right to continue in possession ceases and her possession becomes one of detainer. (Lim v. CA, G.R. Nos. 84154-55, July 20, 2010; Samelo v. Manotok Services, Inc., G.R. No. 170509, June 27, 2012, Brion, J). In a complaint for ejectment, the lessor may simultaneously eject the lessee and demand for rescission of the contracts. Q General Milling Corporation is the owner of a property which was leased to Cebu Autometic Motors, Inc. It was stipulated that it shall be used as garage and repair shop for vehicles, but allegedly, it was subleased without the consent of the lessor. The lessor contended that the lessee violated the contract by subleasing and for failure to deliver the required advance rental and deposit. This was denied by the lessee. The lessor sent a letter to the lessee terminating the contract and demanding the vacation of the premises and settlement of unpaid accounts. Later, it filed a complaint for unlawful detainer alleging that it terminated the contract for violation of the terms of the same and continued to do so despite repeated demands and reminders for compliance that the lessee refused to vacate the premises. The MTC rendered a judgment ordering the lessee to vacate, but the RTC reversed the judgment holding that the lessor failed to comply with the requisite demand under Rule 70, Sec. 2. The CA ruled that the claim of failure to comply with Sec. 2, Rule 70 is belated, hence, it cannot be entertained anymore. Before the SC, it

was contended that there was no proper demand since the letter merely stated that the lessor expected the lessee to vacate the premises and pay the unsettled accounts. The letter did not demand compliance with the terms of the contract, hence, the lessee cannot be considered in default and the lessor had no cause to terminate the lease. It contended that since the lessor never sent a proper demand letter, it cannot be considered in delay invoking Article 1169, NCC. Rule on the contention of the lessee. Explain. Answer: The lessee is correct. The lessor did not send the proper demand letter. The lessee, in invoking Article 1169, apparently overlooked that what is involved is not a mere mora or delay in the performance of a generic obligation to give or to do that would eventually lead to the remedy of rescission or specific performance. What is involved in the case is a contract of lease and the twin remedies of rescission and judicial ejectment after either the failure to pay rent or to comply with the conditions of the lease. This situation calls for the application, not of Article 1169 of the Civil Code but, of Article 1673 in relation to Section 2, Rule 70 of the Rules of Court. Article 1673 states that the lessor may judicially eject the lessee for any violation of any of the conditions agreed upon in the contract. Based on this provision, a lessor may judicially eject (and thereby likewise rescind the contract of lease) the lessee if the latter violates any of the conditions agreed upon in the lease contract. Implemented in accordance with Section 2, Rule 70, the lessor is not required to first bring an action for rescission, but may ask the court to do so and simultaneously seek the ejecment of the lessee in a single action for unlawful detainer. (Abaya Investments Corp. v. Merit Phils., Inc., G.R. No. 176324, April 14, 2008, 551 SCRA 646). Section 2, Rule 70 of the Rules of Court provides that unless otherwise stipulated, such action by the lessor shall be commenced only after demand to pay or comply with the conditions of the lease and to vacate is made upon the lessee, or by serving written notice of such demand upon the person found on the premises, or by posting such notice on the premises if no person be found thereon, and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5) days in the case of buildings. (Cebu Autometic Motors, Inc., et al. v. General Milling Corp., G.R. No. 151168, August 25, 2012, Brion, J). DEPOSIT Nature of liability of banks; one imbued with public interest. Q Petitioner had a credit line with the bank. Due to failure to pay the interest on the loan, the bank terminated the credit line but without notice to petitioner. Hence, a check was dishonoured resulting in great embarrassment and humiliation especially that he had a heated argument with a friend and their falling out. He sued for damages for the unjust dishonour of the check but the RTC found no fault of the bank in the termination of the credit line as the dishonour of the check was proper considering that the credit line had already been terminated or revoked before the presentment of the check. Was the termination of the credit line proper? Why? Answer: No. It was not enough to apprise petitioner of his default and outstanding dues. It must inform the client of the aggregate amount due and the dates they became due. The business of banking is impressed with public interest and great reliance is made on the banks sworn profession of diligence and meticulousness in giving irreproachable service. Like a common carrier whose business is imbued with public interest, a bank should exercise extraordinary diligence to negate its liability to the depositors. (Solidbank Corporation/Metropolitan Bank and Trust Company v. Tan, G.R. No. 167346, April 2, 2007, 520 SCRA 123, 129-130). In this instance, the bank is sorely remiss in the diligence required in treating with its client, Gonzales. It may not wantonly exercise its rights without respecting and honoring the rights of its clients. Art. 19 of the New Civil Code clearly provides that [e]very person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. This is the basis of the principle of abuse of right which, in turn, is based upon the maxim suum jus

summa injuria (the abuse of right is the greatest possible wrong). (Arlegui v. CA, 378 SCRA 322 (2002); Gonzales v. PCIB, et al., G.R. No. 180257, February 23, 2011). Deposit in hotels. Q Upon arrival of guest at City Garden Hotel, the guest gave notice to the doorman and parking attendant of the hotel when he entrusted the ignition of his car to the latter. The attendant issued a valet parking customer claim stab and parked the car at the Equitable PCI Bank parking area which the latter allowed as parking space for vehicles of the hotel guests in the evening after banking hours. Is the hotel management is liable for damages for the loss of the car? Explain. Answer: Yes, because there was a contract of deposit with the hotelkeeper. The contract of deposit was perfected from the owners delivery, when he handed over the keys to his vehicle with the parking attendant with the obligation of safely keeping and returning it. Hence, it is liable for damages for the loss of the car. (Durban Apartments Corp. v. Pioneer Insurance & Surety Corp., G.R. No. 179419, January 12, 2011, (Abad, J)). A deposit is constituted from the moment a person receives a thing belonging to another, with the obligation of safety keeping it and returning the same. If the safekeeping of the thing delivered is not the principal purpose of the contract, there is no deposit but some other contract. (Art. 1962, NCC). The deposit of effects made by travellers in hotels or inns shall also be regarded as necessary. The keepers of hotels or inns shall be responsible for them as depositaries, provided that notice was given to them, or to their employees, of the effects brought by the guests and that, on the part of the latter, they take the precautions which said hotel-keepers or their substitutes advised relative to the care and vigilance of their effects. (Art. 1998, NCC). GUARANTY/MORTGAGE Indivisibility of mortgage does not apply after it is extinguished by complete foreclosure; there can be piecemeal redemption. Q After the foreclosure of a mortgage, where the amount of the auction sale was P216,040.93 there was tender of P40,000.00 to redeem a property. The mortgagee contended that there must be complete tender of the amount of the price since mortgage is indivisible, hence, the entire auction price must be paid. Is the contention correct? Why? Answer: No. As held in the case of Philippine National Bank v. De los Reyes, G.R. No. 46898-99, November 28, 1989, 179 SCRA 619, the doctrine of indivisibility of mortgage does not apply once the mortgage is extinguished by a complete foreclosure thereof. It provides that a pledge or mortgage is indivisible, even though the debt may be divided among the successors in interest of the debtor or of the creditor. (Art. 2089, NCC; Sps. Yap v. Sps. Dy, Sr., G.R. No. 171868; Dumaguete Rural Bank, Inc. v. Sps. Dy, Sr., G.R. No. 171991, July 27, 2011). Q - What is the meaning of the indivisibility of a mortgage? Explain. Answer: What the law proscribes is the foreclosure of only a portion of the property or a number of the several properties mortgaged corresponding to the unpaid portion of the debt where before foreclosure proceedings partial payment was made by the debtor on his total outstanding loan or obligation. This also means that the debtor cannot ask for the release of any portion of the mortgaged property or of one or some of the several lots mortgaged unless and until the loan thus, secured has been fully paid, notwithstanding the fact that there has been a partial fulfillment of the obligation. Hence, it is provided that the debtor who has paid a part of the debt cannot ask for the proportionate extinguishment of the mortgage as long as the debt is not completely satisfied. ( Sps. Yap v. Sps. Dy, Sr., G.R. No. 171868;Dumaguete Rural Bank, Inc. v. Sps. Dy, Sr., G.R. No. 171991, July 27, 2011).

Q May the mortgagor sell the property mortgaged without the consent of the mortgage? Explain. Answer: Yes, but, when a mortgagor sells the mortgaged property to a third person, the creditor may demand from such third person the payment of the principal obligation. The reason for this is that the mortgage credit is a real right, which follows the property wherever it goes, even if its ownership changes. Article 2129 of the Civil Code gives the mortgagee, the option of collecting from the third person in possession of the mortgaged property in the concept of owner. (Teoco v. Metrobank, G.R. No. 162333, December 23, 2008, 575 SCRA 82) More, the mortgagor-owners sale of the property does not affect the right of the registered mortgagee to foreclose on the same even if its ownership had been transferred to another person. The latter is bound by the registered mortgage on the title he acquired. The contract cannot absolutely forbid the mortgagor, as owner of the mortgaged property, from selling the same while her loan remained unpaid. Such stipulation contravenes public policy, being an undue impediment or interference on the transmission of property. (Cinco v. CA, G.R. No. 151903, October 9, 2009, 603 SCRA 108; Sps. Antonio & Leticia Vega v. SSS, et al., G.R. No. 181672, September 20, 2010; Pablo Garcia v. Yolanda Villar, G.R. No. 158891, June 27, 2012). Pactum commissorium Q In a mortgage contract there was a stipulation appointing the mortgagee as the mortgagors attorney-in-fact, to sell the property in case of default in the payment of the loan. It was contended that there was a violation of the prohibition on pactum commissorium. Is the contention correct? Why? Answer: No, as there was no automatic appropriation of the thing mortgaged. Instead, it was sold to her. The following are the elements of pactum commissorium: (1) There should be a property mortgaged by way of security for the payment of the principal obligation; and (2) There should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period. (DBP v. CA, 348 Phil. 15 (1998)). Mortgagees purchased of the subject property did not violate the prohibition on pactum commissorium. The power of attorney provision did not provide that the ownership over the subject property would automatically pass to mortgagee upon the mortgagors failure to pay the loan on time. What it granted was the mere appointment of Villar as attorney-in-fact, with authority to sell or otherwise dispose of the subject property, and to apply the proceeds to the payment of the loan. This provision is customary in mortgage contracts, and is in conformity with Article 2087 of the Civil Code, which reads: Art. 2087. It is also of the essence of these contracts that when the principal obligation becomes due, the things in which the pledge or mortgage consists may be alienated for the payment to the creditor. (Garcia v. Villar, G.R. No. 158891, June 27, 2012, Del Castillo, J). QUASI-DELICT and DAMAGES Employer is liable for the loss of cargo due to acts of its employees. Q A and B entered into a contract for the delivery of cargo, but there was failure to deliver because the employees were instrumental in the hijacking or robbery of the shipment. A sued B for damages, but B contended that the employees alone are liable. Rule on the contention. Explain. Answer: Bs contention is not correct. The employer should be made answerable for damages. Whenever an employees negligence causes damage or injury to another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees. (Tan v. Jam Transit, Inc., G.R. No. 183198, November 25, 2009, 605 SCRA 659, 675, citing Delsan Transport Lines, Inc. v. C & A Construction,

Inc., 459 Phil. 156 (2003)). To avoid liability for a quasi-delict committed by its employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. In this regard, Loadmasters failed. (Loadmasters Customs Services, Inc. v. Glodel Brokerage Corp., et al., G.R. No. 179446, January 10, 2011). Effect if there are several causes for the resulting damages. Q There was a head-on collision of two (2) vehicles belonging to A and B resulting in the injuries to C who sued both A and B. A contended that B was negligent, hence, he alone should be liable. The RTC ruled in favor of B. What is the extent of the respective liabilities of several parties if the cause of loss is due to their negligence? Explain. Answer: Each wrongdoer is liable for the total damage suffered. Where there are several causes for the resulting damages, a party is not relieved from liability, even partially. It is sufficient that the negligence of a party is an efficient cause without which the damage would not have resulted. It is no defense to one of the concurrent tortfeasors that the damage would not have resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasor. As stated in the case of Far Eastern Shipping v. Court of Appeals, 357 Phil 703 (1998): x x x. Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the same. No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury. There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code. (Loadmasters Customs Services, Inc. v. Glodel Brokerage Corp., et al., G.R. No. 179446, January 10, 2011). The operator on record of a vehicle is primarily responsible to third persons for the deaths or injuries consequent to its operation, regardless of whether the employee drove the registered owners vehicle in connection with his employment. Q A is the owner of a motor vehicle which met an accident resulting in injuries to B. Sued for damages, the owner of the vehicle contended that Allan drove the jeep in his private capacity and thus, an employers vicarious liability for the employees fault under Article 2180 of the Civil Code cannot apply to him. Is the contention correct? Why? Answer: No. The contention is no longer novel. In Aguilar Sr. v. Commercial Savings Bank, 412 Phil. 834 (2001), where the car of the bank caused the death of a victim while being driven by its assistant vice president. The bank was made liable for damages for the accident as said provision should defer to the settled doctrine concerning accidents involving registered motor vehicles, i.e., that the registered owner of any vehicle, even if not used for public service, would primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle was being driven on the highways or streets. (St. Marys Academy v. Carpetanos, 426 Phil. 878 (2002); Aguilar v. Commercial Savings Bank, 412 Phil. 834 (2001); Erezo v. Jepte, 102 Phil. 103 (1957)). The court had already ratiocinated that:

The main aim of motor vehicle registration is to identify the owner so that if any accident happens, or that any damage or injury is caused by the vehicle on the public highways, responsibility therefor can be fixed on a definite individual, the registered owner. Instances are numerous where vehicles running on public highways caused accidents or injuries to pedestrians or other vehicles without positive identification of the owner or drivers, or with very scant means of identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public, that the motor vehicle registration is primarily ordained, in the interest of the determination of persons responsible for damages or injuries caused on public highways. (Erezo v. Jepte, 102 Phil. 103 (1957)). Absent the circumstance of unauthorized use (Doquillo v. Bayot, 67 Phil. 121 (1939)) or that the subject vehicle was stolen (Duavit v. CA, 255 Phil. 470 (1989)) which are valid defenses available to a registered owner, the vehicle owner cannot escape liability for quasi-delict resulting from his jeeps use. (Oscar Del Carmen, Jr. V. Geronimo Bacoy, et al., G.R. No. 173870, April 25, 2012). Liability of hotel for the death of a guest. Q A hotel guest of Makati Shangri-La Hotel & Resort, Inc. was murdered inside his room. When sued for damages, it contended that it was the guests fault for having allowed other people to enter his room, hence, his own negligence was the proximate cause of his own death as the hotel is not an insurer of the safety of its guests. The evidence shows that the management practice before the murder had been to deploy one security or roving guard every three or four floors of the building which its witness admitted to be inadequate considering the L-shape configuration of the hotel that rendered the hallways not visible from one or the other end and that despite his recommendation, the management did not approve it because the hotel was not doing well at that time as it was only half-booked. Is the contention of the defendant-hotel correct? Why? Answer: No. 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. (YHT Realty Corp. v. CA, G.R. No. 126780, February 17, 2005, 451 SCRA 638). 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), it was held 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. (Makati Shang-ri La Hotel & Resort, Inc. v. Harper, et al., G.R. No. 189998, August 29, 2012, Bersamin, J). Driving beyond required speed limit is negligence. Q There was a collision of a car and a shuttle bus along Katipunan Road (White Plains) in Quezon City resulting in the dragging of the car about 12 meters from the point of impact. The car burst into flames and burned the passengers to death beyond recognition. Actions for damages were filed against the defendants where the defendant employer proved that it exercised the diligence of a good father of a family in the selection and supervision of the employee. It showed the drivers proficiency and physical examinations as well as NBI Clearances as well as daily operational briefings. At the time of the accident the vehicle belonging to the petitioner was travelling at the speed of 70 kilometers per hour. After trial, judgment was rendered holding the defendants liable for damages, for failure to exercise the diligence of a good father of a family in the selection and supervision of the employee. Is the employer liable? Explain. Answer: Yes. It was well established that the driver was driving at a speed beyond the rate of speed required by law, (Section 35 of Republic Act No. (RA) 4136)). The allowed rate of speed for the vehicle was 50 kilometers per hour, he was driving at the speed of 70 kilometers per hour. Under the New Civil Code, unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been

negligent if at the time of the mishap, he was violating any traffic regulation. (Art. 2185, NCC) Apparently, the driver's violation of the traffic rules does not erase the presumption that he was the one negligent at the time of the collision. Even apart from statutory regulations as to speed, a motorist is nevertheless expected to exercise ordinary care and drive at a reasonable rate of speed commensurate with all the conditions encountered (Caminos, Jr. v. People, G.R. No. 147437, May 8, 2009, 587 SCRA 348, 361, citing Foster v. ConAgra Poultry Co., 670 So.2d 471) which will enable him to keep the vehicle under control and, whenever necessary, to put the vehicle to a full stop to avoid injury to others using the highway. (Nunn v. Financial Indem. Co., 694 So.2d 630; Filipinas Synthetic Fiber Corp. v. Wilfredo delos Santos, et al., G.R. No. 152033, March 16, 2011). Banks are required to exercise higher degree of diligence in dealing with the accounts of clients. Q Respondent issued PCIB check dated 5/3/0/92 in the amount of P34,588.72 in favour of Sulpicio Lines, Inc., hence, the bank debited the amount from the account of respondent leaving a balance of only P558.87. He subsequently issued two (2) checks but were dishonored because of insufficient funds. The respondent sued petitioner for damages contending that the check was postdated hence, it should not have debited the amount immediately. Petitioner contended that it was not postdated and in fact, he created confusion on the true date of the check by writing the date of the check as 5/3/0/92. Is the contention correct? Why? Answer: No. The proximate cause of the damage done was the banks negligence in debiting the account prior to the date as appearing in the check which resulted in the subsequent dishonour of several checks. If, indeed, petitioner was confused on whether the check was dated May 3 or May 30 because of the / which allegedly separated the number 3 from the 0, petitioner should have required respondent drawer to countersign the said / in order to ascertain th e true intent of the drawer before honoring the check. As a matter of practice, bank tellers would not receive nor honor such checks which they believe to be unclear, without the counter-signature of its drawer. Petitioner should have exercised the highest degree of diligence required of it by ascertaining from the respondent the accuracy of the entries therein, in order to settle the confusion, instead of proceeding to honor and receive the check. The diligence required of banks, therefore, is more than that of a good father of a family. (Samsung Construction Company Philippines, Inc. v. Far East Bank and Trust Company, G.R. No. 129015, August 13, 2004, 436 SCRA 402, 421) In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank will deliver it as and to whomever he directs. (Metropolitan Bank and Trust Company v. Cabilzo, G.R. No. 154469, December 6, 2006, 510 SCRA 259, 270) From the foregoing, it is clear that petitioner bank did not exercise the degree of diligence that it ought to have exercised in dealing with its client. (Equitable Bank v. Tan, G.R. No. 165339, August 23, 2010). In the absence of a positive duty there could be no breach; no liability for damages. Q The spouses Serfino invoke American common law that imposes a duty upon a bank receiving a notice of adverse claim to the fund in a depositors account to freeze the account for a reasonable length of time, sufficient to allow the adverse claimant to institute legal proceedings to enforce his right to the fund. In other words, the bank has a duty not to release the deposits unreasonably early after a third party makes known his adverse claim to the bank deposit. Acknowledging that no such duty is imposed by law in this jurisdiction, the spouses Serfino asked the Court to adopt this foreign rule. Is the contention correct? Why? Answer: No. To adopt the foreign rule, however, goes beyond the power of the Court to promulgate rules governing pleading, practice and procedure in all courts. (Art. VIII, Sec. 5(5), Constitution)). The rule reflects a matter of policy that is better addressed by the other branches of government ,

particularly, the Bangko Sentral ng Pilipinas, which is the agency that supervises the operations and activities of banks, and which has the power to issue rules of conduct or the establishment of standards of operation for uniform application to all institutions or functions covered. (Sec. 4.1, A 8791 , The General Banking Act of 2000). To adopt this rule will have significant implications on the banking industry and practices, as the American experience has shown. Recognizing that the rule imposing duty on banks to freeze the deposit upon notice of adverse claim adopts a policy adverse to the bank and its functions, and opens it to liability to both the depositor and the adverse claimant, many American states have since adopted adverse claim statutes that shifted or, at least, equalized the burden. Essentially, these statutes do not impose a duty on banks to freeze the deposit upon a mere notice of adverse claim; they first require either a court order or an indemnity bond. In the absence of a law or a rule binding on the Court, it has no option but to uphold the existing policy that recognizes the fiduciary nature of banking. It likewise rejects the adoption of a judicially-imposed rule giving third parties with unverified claims against the deposit of another a better right over the deposit. As current laws provide, the banks contractual relations are with its depositor, not with the third party; (Gendler v. Sibley State Bank, 62 F. Supp. 805 (1945) a bank is under obligation to treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its relationship with them. (Prudential Bank v. Lim, G.R. No. 136371, November 11, 2005, 511 SCRA 100). In the absence of any positive duty of the bank to an adverse claimant, there could be no breach that entitles the latter to moral damages. (Serfino v. FEBTC, et al., G.R. No. 171845, October 10, 2012, Brion, J).