CIVIL 2013 Jurisprudence

2013 Philippine Supreme Court Decisions on Civil Law
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JANUARY
Compromise Agreement; definition and nature; distinction between judicial and extrajudicial.Under Article 2028 of the Civil Code, a
compromise is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced.
Accordingly, a compromise is either judicial, if the objective is to put an end to a pending litigation, or extrajudicial, if the objective is to avoid
a litigation. As a contract, a compromise is perfected by mutual consent. However, a judicial compromise, while immediately binding between
the parties upon its execution, is not executory until it is approved by the court and reduced to a judgment. The validity of a compromise is
dependent upon its compliance with the requisites and principles of contracts dictated by law. Also, the terms and conditions of a compromise
must not be contrary to law, morals, good customs, public policy and public order. Land Bank of the Philippines vs. Heirs of Spouses Jorja
Rigor Soriano and Magin Soriano;G.R. No. 178312. January 30, 2013
Contract; contract of suretyship; definition; nature of liability of surety; suretys liability is direct, primary and absolute as well as joint and
several. A contract of suretyship is defined as an agreement whereby a party, called the surety, guarantees the performance by another
party, called the principal or obligor, of an obligation or undertaking in favor of a third party, called the obligee. It includes official
recognizances, stipulations, bonds or undertakings issued by any company by virtue of and under the provisions of Act No. 536, as amended
by Act No. 2206 (An Act Relative to Recognizances, Stipulations, Bonds and Undertakings, and to Allow Certain Corporations to be Accepted
as Surety Thereon). We have consistently held that a suretys liability is joint and several, limited to the amount of the bond, and determined
strictly by the terms of contract of suretyship in relation to the principal contract between the obligor and the obligee. It bears stressing,
however, that although the contract of suretyship is secondary to the principal contract, the suretys liability to the obligee is nevertheless
direct, primary, and absolute. The Manila Insurance Company, Inc. vs. Spouses Roberto and Aida Amurao; G.R. No. 179628. January 16,
2013
Contract; law between the parties; rules on interpretation; easement of right of way; just compensation; attorneys fees; exception rather
than the general rule. Indeed, the rule is settled that a contract constitutes the law between the parties who are bound by its stipulations
which, when couched in clear and plain language, should be applied according to their literal tenor. Courts cannot supply material stipulations,
read into the contract words it does not contain or, for that matter, read into it any other intention that would contradict its plain import.
Neither can they rewrite contracts because they operate harshly or inequitably as to one of the parties, or alter them for the benefit of one
party and to the detriment of the other, or by construction, relieve one of the parties from the terms which he voluntarily consented to, or
impose on him those which he did not.
Where the right of way easement, as in this case, similarly involves transmission lines which not only endangers life and limb but restricts as
well the owners use of the land traversed thereby, the ruling in Gutierrez remains doctrinal and should be applied. It has been ruled that the
owner should be compensated for the monetary equivalent of the land if, as here, the easement is intended
to perpetually or indefinitely deprive the owner of his proprietary rights through the imposition of conditions that affect the ordinary use, free
enjoyment and disposal of the property or through restrictions and limitations that are inconsistent with the exercise of the attributes of
ownership, or when the introduction of structures or objects which, by their nature, create or increase the probability of injury, death upon or
destruction of life and property found on the land is necessary. Measured not by the takers gain but the owners loss, just compensation is
defined as the full and fair equivalent of the property taken from its owner by the expropriator.
The determination of just compensation in eminent domain proceedings is a judicial function and no statute, decree, or executive order can
mandate that its own determination shall prevail over the courts findings. Any valuation for just compensation laid down in the statutes may
serve only as a guiding principle or one of the factors in determining just compensation, but it may not substitute the courts own judgment
as to what amount should be awarded and how to arrive at such amount. Hence, Section 3A of R.A. No. 6395, as amended (An Act Revising
the Charter of the National Power Corporation), is not binding upon this Court.
For want of a statement of the rationale for the award in the body of the RTCs 14 March 2000 Decision, we are constrained, however, to
disallow the grant of attorneys fees in favor of the Spouses Cabahug in an amount equivalent to 5% of the just compensation due as well as
the legal interest thereon. Considered the exception rather than the general rule, the award of attorneys fees is not due every time a party
prevails in a suit because of the policy that no premium should be set on the right to litigate. Jesus L. Cabahug and Coronacion M. Cabahug
vs. National Power Corporation; G.R. No. 186069. January 30, 2013
Contract; perfection of contracts; consent; offer and acceptance; contract of sale; consensual in nature. Contracts are perfected by mere
consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract. The requisite acceptance of the offer is expressed in Article 1319 of the Civil Code which states:
ART. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
In Palattao v. Court of Appeals, this Court held that if the acceptance of the offer was not absolute, such acceptance is insufficient to generate
consent that would perfect a contract. Thus:
Contracts that are consensual in nature, like a contract of sale, are perfected upon mere meeting of the minds. Once there is concurrence
between the offer and the acceptance upon the subject matter, consideration, and terms of payment, a contract is produced. The offer must
be certain. To convert the offer into a contract, the acceptance must be absolute and must not qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without variance of any sort from the proposal. A qualified acceptance, or one that involves a new proposal,
constitutes a counter-offer and is a rejection of the original offer. Consequently, when something is desired which is not exactly what is
proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer
annuls the offer.

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The acceptance must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. Where a party sets a
different purchase price than the amount of the offer, such acceptance was qualified which can be at most considered as a counter-offer; a
perfected contract would have arisen only if the other party had accepted this counteroffer. In Villanueva v. Philippine National Bank this
Court further elucidated on the meaning of unqualified acceptance, as follows:
While it is impossible to expect the acceptance to echo every nuance of the offer, it is imperative that it assents to those points in the offer
which, under the operative facts of each contract, are not only material but motivating as well. Anything short of that level of mutuality
produces not a contract but a mere counter-offer awaiting acceptance.More particularly on the matter of the consideration of the
contract, the offer and its acceptance must be unanimous both on the rate of the payment and on its term. An acceptance of an
offer which agrees to the rate but varies the term is ineffective. (Emphasis supplied)
A contract of sale is consensual in nature and is perfected upon mere meeting of the minds. When there is merely an offer by one party
without acceptance of the other, there is no contract. When the contract of sale is not perfected, it cannot, as an independent source of
obligation, serve as a binding juridical relation between the parties. Heirs of Fausto C. Ignacio vs. Home Bankers Savings and Trust Co., et
al.; G.R. No. 177783. January 23, 2013
Damages; moral damages; requisites; granted when rights of individuals are violated; exemplary damages; actual damages; nature; in the
absence of proof, temperate damages may be awarded; attorneys fees; exception rather than the general rule. Moral damages are awarded
to compensate the claimant for physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation and similar injury. Jurisprudence has established the following requisites for the award of moral damages: (1) there
is an injury whether physical, mental or psychological, which was clearly sustained by the claimant; (2) there is a culpable act or omission
factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and
(4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code.
Pertinent to the case at hand, Article 32 of the Civil Code provides for the award of moral damages in cases where the rights of individuals,
including the right against deprivation of property without due process of law, are violated. In Quisumbing v. Manila Electric Company, this
Court treated the immediate disconnection of electricity without notice as a form of deprivation of property without due process of law, which
entitles the subscriber aggrieved to moral damages. We stressed:
More seriously, the action of the defendant in maliciously disconnecting the electric service constitutes a breach of public policy. For public
utilities, broad as their powers are, have a clear duty to see to it that they do not violate nor transgress the rights of the consumers. Any act
on their part that militates against the ordinary norms of justice and fair play is considered an infraction that gives rise to an action for
damages. Such is the case at bar.
In addition to moral damages, exemplary damages are imposed by way of example or correction for the public good. In this case, to serve as
an example that before disconnection of electric supply can be effected by a public utility, the requisites of law must be complied with we
sustain the award of exemplary damages to respondents.
Actual damages are compensation for an injury that will put the injured party in the position where it was before the injury. They pertain to
such injuries or losses that are actually sustained and susceptible of measurement. Except as provided by law or by stipulation, a party is
entitled to adequate compensation only for such pecuniary loss as is duly proven. Basic is the rule that to recover actual damages, not only
must the amount of loss be capable of proof; it must also be actually proven with a reasonable degree of certainty premised upon competent
proof or the best evidence obtainable.
Actual or compensatory damages cannot be presumed, but must be duly proved with a reasonable degree of certainty. The award is
dependent upon competent proof of the damage suffered and the actual amount thereof. The award must be based on the evidence
presented, not on the personal knowledge of the court; and certainly not on flimsy, remote, speculative and unsubstantial proof.
Nonetheless, in the absence of competent proof on the amount of actual damages suffered, a party is entitled to temperate damages.
Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty. The amount
thereof is usually left to the discretion of the courts but the same should be reasonable, bearing in mind that temperate damages should be
more than nominal but less than compensatory.
An award of attorneys fees has always been the exception rather than the rule. Attorneys fees are not awarded every time a party prevails
in a suit. The policy of the Court is that no premium should be placed on the right to litigate. The trial court must make express findings of
fact and law that bring the suit within the exception. What this demands is that factual, legal or equitable justifications for the award must be
set forth not only in the fallo but also in the text of the decision, or else, the award should be thrown out for being speculative and
conjectural. Manila Electric Company (MERALCO) vs. Atty. P.M. Castillo, doing business under the trade name and style of Permanent Light
Manufacturing Enterprises, et al.; G.R. No. 182976. January 14, 2013
Damages; moral damages; when awarded. The Court has awarded moral damages in termination cases when bad faith, malice or fraud
attend the employees dismissal or where the act oppresses labor, or where it was done in a manner contrary to morals, good customs or
public policy. General Milling Corporation vs. Violeta L. Viajar; G.R. No. 181738. January 30, 2013
Effectivity of laws; generally, no retroactive effect; exception, when law is procedural. As a general rule, laws shall have no retroactive effect.
However, exceptions exist, and one such exception concerns a law that is procedural in nature. The reason is that a remedial statute or a
statute relating to remedies or modes of procedure does not create new rights or take away vested rights but only operates in furtherance of
the remedy or the confirmation of already existing rights. A statute or rule regulating the procedure of the courts will be construed as

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applicable to actions pending and undetermined at the time of its passage. All procedural laws are retroactive in that sense and to that
extent. The retroactive application is not violative of any right of a person who may feel adversely affected, for, verily, no vested right
generally attaches to or arises from procedural laws. Spouses Augusto G. Dacudao and Ofelia R. Dacudao vs. Secretary of Justice Raul M.
Gonzales of the Department of Justice; G.R. No. 188056. January 8, 2013
Ejectment; unlawful detainer; estoppel against tenants; conclusive presumption; foreclosure of mortgage; title to land remains in the
mortgagor until expiration of redemption period; inchoate character of purchasers right. [T]he only question that the courts resolve in
ejectment proceedings is: who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the
possession de jure. It does not even matter if a partys title to the property is questionable.
In an unlawful detainer case, the sole issue for resolution is the physical or material possession of the property involved, independent of any
claim of ownership by any of the party litigants. Where the issue of ownership is raised by any of the parties, the courts may pass upon the
same in order to determine who has the right to possess the property. The adjudication is, however, merely provisional and would not bar or
prejudice an action between the same parties involving title to the property.
[I]n unlawful detainer, one unlawfully withholds possession thereof after the expiration or termination of his right to hold possession under
any contract, express or implied. In such case, the possession was originally lawful but became unlawful by the expiration or termination of
the right to possess; hence, the issue of rightful possession is decisive for, in such action, the defendant is in actual possession and the
plaintiffs cause of action is the termination of the defendants right to continue in possession.
The conclusive presumption found in Section 2 (b), Rule 131 of the Rules of Court, known asestoppel against tenants, provides as follows:
Sec. 2. Conclusive presumptions. The following are instances of conclusive presumptions:
(b) 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. (Emphasis supplied).
It is clear from the abovequoted provision that what a tenant is estopped from denying 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 settled that during the period of redemption, it cannot be said that the mortgagor is no longer the owner of the foreclosed property, since
the rule up to now is that the right of a purchaser at a foreclosure sale is merely inchoate until after the period of redemption has expired
without the right being exercised. The title to land sold under mortgage foreclosure remains in the mortgagor or his grantee until the
expiration of the redemption period and conveyance by the masters deed. Indeed, the rule has always been that it is only upon the
expiration of the redemption period, without the judgment debtor having made use of his right of redemption, that the ownership of the land
sold becomes consolidated in the purchaser.
Stated differently, under Act. No. 3135 (An Act to Regulate the Sale of Property Under Special Powers Inserted in or Annexed to Real Estate
Mortgages), the purchaser in a foreclosure sale has, during the redemption period, only an inchoate right and not the absolute right to the
property with all the accompanying incidents. He only becomes an absolute owner of the property if it is not redeemed during the redemption
period. Juanita Ermitao, represented by her Attorney-in-fact, Isabelo Ermitao vs. Lailanie M. Paglas; G.R. No. 174436. January 23, 2013
Interest; 12% interest rate doctrine in Eastern Shipping Lines vs. CA. [T]he imposition of 12% interest is still warranted in the case at bar,
not from the date of sale on November 9, 1994, as the respondents insist; but from the finality of the decision up to the satisfaction of
judgment in line with the doctrine laid down in Eastern Shipping Lines, Inc. v. Court of Appeals. [T]he payment of 12% interest from the
finality of judgment is in order pursuant to Eastern Shippings Lines, Inc. where the Court held that:
When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but
when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date
the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed
to be by then an equivalent to a forbearance of credit.
Spouses Ricardo and Elena Golez vs. Spouses Carlos and Amelita Navarro; G.R. No. 192532. January 30, 2013
Legal Compensation; mode of extinguishing obligations; difference with conventional compensation; requisites. Compensation is a mode of
extinguishing to the concurrent amount the obligations of persons who in their own right and as principals are reciprocally debtors and
creditors of each other. Legal compensation takes place by operation of law when all the requisites are present, as opposed to conventional
compensation which takes place when the parties agree to compensate their mutual obligations even in the absence of some requisites. Legal
compensation requires the concurrence of the following conditions:

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(1) That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if
the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the
debtor.
Mondragon Personal Sales, Inc. vs. Victoriano S. Sola, Jr.; G.R. No. 174882. January 21, 2013
Marriage; essential and formal requisites; marriage license; certification of non-issuance by civil registrar; diligent search requirement
compared to presumption of regularity in performance of official duties; effect of absence of marriage license. As the marriage of Gloria and
Syed was solemnized on January 9, 1993, Executive Order No. 209, or the Family Code of the Philippines, is the applicable law. The pertinent
provisions that would apply to this particular case are Articles 3, 4 and 35(3), which read as follows:
Art. 3. The formal requisites of marriage are:
(1) Authority of the solemnizing officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place with the appearance of the contracting parties before the solemnizing officer and their personal
declaration that they take each other as husband and wife in the presence of not less than two witnesses of legal age.
Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab initio, except as stated in Article 35(2).
A defect in any of the essential requisites shall render the marriage voidable as provided in Article 45.
An irregularity in the formal requisites shall not affect the validity of the marriage but the party or parties responsible for the irregularity shall
be civilly, criminally and administratively liable.
Art. 35. The following marriages shall be void from the beginning:
x x x x
(3) Those solemnized without a license, except those covered by the preceding Chapter.
Under Sec. 3(m), Rule 131 of the Rules of Court, it is a disputable presumption that an official duty has been regularly performed, absent
contradiction or other evidence to the contrary. We held, The presumption of regularity of official acts may be rebutted by affirmative
evidence of irregularity or failure to perform a duty. No such affirmative evidence was shown that the Municipal Civil Registrar was lax in
performing her duty of checking the records of their office, thus the presumption must stand. In fact, proof does exist of a diligent search
having been conducted, as Marriage License No. 996967 was indeed located and submitted to the court. The fact that the names in said
license do not correspond to those of Gloria and Syed does not overturn the presumption that the registrar conducted a diligent search of the
records of her office.
In the case of Cario v. Cario, following the case of Republic, it was held that the certification of the Local Civil Registrar that their office had
no record of a marriage license was adequate to prove the non-issuance of said license. The case of Cario further held that the presumed
validity of the marriage of the parties had been overcome, and that it became the burden of the party alleging a valid marriage to prove that
the marriage was valid, and that the required marriage license had been secured.
Article 4 of the Family Code is clear when it says, The absence of any of the essential or formal requisites shall render the marriage void ab
initio, except as stated in Article 35(2). Article 35(3) of the Family Code also provides that a marriage solemnized without a license is void
from the beginning, except those exempt from the license requirement under Articles 27 to 34, Chapter 2, Title I of the same Code. Syed
Azhar Abbas vs. Gloria Goo Abbas; G.R. No. 183896. January 30, 2013
Marriage; psychological incapacity; definition; burden of proof; sexual infidelity and abandonment do not necessarily constitute psychological
incapacity; psychological fitness as a wife not equated with professional relationship; doubts are resolved in favor of marriage.Article 36 of
the Family Code governs psychological incapacity as a ground for declaration of nullity of marriage. It provides that [a] marriage contracted
by any party who, at the time of the celebration, was psychologically incapacitated to comply with the essential marital obligations of
marriage, shall likewise be void even if such incapacity becomes manifest only after its solemnization. In interpreting this provision, we have
repeatedly stressed that psychological incapacity contemplates downright incapacity or inability to take cognizance of and to assume
the basic marital obligations; not merely the refusal, neglect or difficulty, much less ill will, on the part of the errant spouse. The plaintiff

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bears the burden of proving the juridical antecedence (i.e., the existence at the time of the celebration of marriage), gravity and incurability
of the condition of the errant spouse.
In any event, sexual infidelity and abandonment of the conjugal dwelling, even if true, do not necessarily constitute psychological incapacity;
these are simply grounds for legal separation. To constitute psychological incapacity, it must be shown that the unfaithfulness and
abandonment are manifestations of a disordered personality that completely prevented the erring spouse from discharging the essential
marital obligations.
Aside from the time element involved, a wifes psychological fitness as a spouse cannot simply be equated with her professional/work
relationship; workplace obligations and responsibilities are poles apart from their marital counterparts. While both spring from human
relationship, their relatedness and relevance to one another should be fully established for them to be compared or to serve as measures of
comparison with one another.
Once again, we stress that marriage is an inviolable social institution protected by the State. Any doubt should be resolved in favor of its
existence its existence and continuation and against its dissolution and nullity. It cannot be dissolved at the whim of the parties nor by
transgressions made by one party to the other during the marriage. Republic of the Philippines vs. Cesar Encelan; G.R. No. 170022. January
9, 2013
Possession; de jure vs. de facto nature of possession; elements of forcible entry. Ownership carries the right of possession, but the
possession contemplated by the concept of ownership is not exactly the same as the possession in issue in a forcible entry case. Possession in
forcible entry suits refers only to possession de facto, or actual or material possession, and not possession flowing out of ownership; these are
different legal concepts for which the law provides different remedies for recovery of possession. As the court explained in Pajuyo v. Court of
Appeals, and again in the more recent cases of Gonzaga v. Court of Appeals, De Grano v. Lacaba, and Lagazo v. Soriano, the word
possession in forcible entry suits refers to nothing more than prior physical possession or possession de facto, not possession de jure or
legal possession in the sense contemplated in civil law. Title is not the issue, and its absence is not a ground for the courts to withhold relief
from the parties in an ejectment case. Thus, in a forcible entry case, a party who can prove prior possession can recover such possession
even against the owner himself.
Whatever may be the character of his possession, if he has in his favor prior possession in time, he has the security that entitles him to
remain on the property until a person with a better right lawfully ejects him. He cannot be ejected by force, violence or terror not even by
its owners. For these reasons, an action for forcible entry is summary in nature aimed only at providing an expeditious means of protecting
actual possession. Ejectment suits are intended to prevent breach of x x x peace and criminal disorder and to compel the party out of
possession to respect and resort to the law alone to obtain what he claims is his. Thus, lest the purpose of these summary proceedings be
defeated, any discussion or issue of ownership is avoided unless it is necessary to resolve the issue of de facto possession.
Under Section 1, Rule 70 of the Rules of Court, for a forcible entry suit to prosper, the plaintiff must allege and prove: (1) prior physical
possession of the property; and (2) unlawful deprivation of it by the defendant through force, intimidation, strategy, threat or stealth. As in
any civil case, the burden of proof lies with the complainants (the respondents in this case) who must establish their case by preponderance
of evidence. Nenita Quality Foods Corporation vs. Crisostomo Galabo, et al.; G.R. No. 174191. January 30, 2013
Quasi-contracts; definition; requisites of solutio indebiti. A quasi-contract involves a juridical relation that the law creates on the basis of
certain voluntary, unilateral and lawful acts of a person, to avoid unjust enrichment. The Civil Code provides an enumeration of quasi-
contracts, but the list is not exhaustive and merely provides examples.
Article 2154 embodies the concept solutio indebiti which arises when something is delivered through mistake to a person who has no right
to demand it. It obligates the latter to return what has been received through mistake. Solutio indebiti, as defined in Article 2154 of the Civil
Code, has two indispensable requisites: first, that something has been unduly delivered through mistake; and second, that something was
received when there was no right to demand it. Metropolitan Bank & Trust Company vs. Absolute Management Corporation; G.R. No. 170498.
January 9, 2013
Torts; abuse of rights; elements; award of damages. While the Court mindfully notes that damages may be recoverable due to an abuse of
right under Article 21 in conjunction with Article 19 of the Civil Code of the Philippines, the following elements must, however, obtain: (1)
there is a legal right or duty; (2) exercised in bad faith; and (3) for the sole intent of prejudicing or injuring another. Records reveal that none
of these elements exists in the case at bar and thus, no damages on account of abuse of right may he recovered. Eleazar S. Padillo vs. Rural
Bank of Nabunturan, Inc., et al.; G.R. No. 199338. January 21, 2013
Torts; proximate cause; vicarious liability is not applicable in the absence of employer-employee or principal-agent relationship; contracts;
requisites of stipulation pour autrui; Lease; act of parking a vehicle in a garage upon payment of a fixed amount, is a lease; obligations of
lessor; contracts of adhesion; actual damages must be proved with reasonable degree of certainty. Proximate cause has been defined as that
cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury or loss, and without which
the result would not have occurred.
Neither will the vicarious liability of an employer under Article 2180 of the Civil Code apply in this case. It is uncontested that Pea and Gaddi
were assigned as security guards by AIB to BSP pursuant to the Guard Service Contract. Clearly, therefore, no employer-employee
relationship existed between BSP and the security guards assigned in its premises. Consequently, the latters negligence cannot be imputed
against BSP but should be attributed to AIB, the true employer of Pea and Gaddi. In the case of Soliman, Jr. v. Tuazon, the Court enunciated
thus:

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It is settled that where the security agency, as here, recruits, hires and assigns the work of its watchmen or security guards, the agency is
the employer of such guards and watchmen. Liability for illegal or harmful acts committed by the security guards attaches to the employer
agency, and not to the clients or customers of such agency. As a general rule, a client or customer of a security agency has no hand in
selecting who among the pool of security guards or watchmen employed by the agency shall be assigned to it; the duty to observe the
diligence of a good father of a family in the selection of the guards cannot, in the ordinary course of events, be demanded from the client
whose premises or property are instructions or directions to the security guards assigned to it, does not, by itself, render the client
responsible as an employer of the security guards concerned and liable for their wrongful acts or omissions. Those instructions or directions
are ordinarily no more than requests commonly envisaged in the contract for services entered into with the security agency.
Nor can it be said that a principal-agent relationship existed between BSP and the security guards Pea and Gaddi as to make the former
liable for the latters complained act. Article 1868 of the Civil Code states that [b]y the contract of agency, a person binds himself to render
some service or to do something in representation or on behalf of another, with the consent or authority of the latter. The basis for agency
therefore is representation, which element is absent in the instant case. Records show that BSP merely hired the services of AIB, which, in
turn, assigned security guards, solely for the protection of its properties and premises. Nowhere can it be inferred in the Guard Service
Contract that AIB was appointed as an agent of BSP. Instead, what the parties intended was a pure principal-client relationship whereby for a
consideration, AIB rendered its security services to BSP.
[I]n order that a third person benefited by the second paragraph of Article 1311, referred to as a stipulation pour autrui, may demand its
fulfillment, the following requisites must concur: (1) There is a stipulation in favor of a third person; (2) The stipulation is a part, not the
whole, of the contract; (3) The contracting parties clearly and deliberately conferred a favor to the third person the favor is not merely
incidental; (4) The favor is unconditional and uncompensated; (5) The third person communicated his or her acceptance of the favor before
its revocation; and (6) The contracting parties do not represent, or are not authorized, by the third party.
It has been held that the act of parking a vehicle in a garage, upon payment of a fixed amount, is a lease. Even in a majority of American
cases, it has been ruled that where a customer simply pays a fee, parks his car in any available space in the lot, locks the car and takes the
key with him, the possession and control of the car, necessary elements in bailment, do not pass to the parking lot operator, hence,
the contractual relationship between the parties is one of lease.
Article 1654 of the Civil Code provides that [t]he lessor (BSP) is obliged: (1) to deliver the thing which is the object of the contract in such a
condition as to render it fit for the use intended; (2) to make on the same during the lease all the necessary repairs in order to keep it
suitable for the use to which it has been devoted, unless there is a stipulation to the contrary; and (3) to maintain the lessee in the peaceful
and adequate enjoyment of the lease for the entire duration of the contract. In relation thereto, Article 1664 of the same Code states that
[t]he lessor is not obliged to answer for a mere act of trespass which a third person may cause on the use of the thing leased; but the lessee
shall have a direct action against the intruder.
[C]ontracts of adhesion are not void per se. It is binding as any other ordinary contract and a party who enters into it is free to reject the
stipulations in its entirety. If the terms thereof are accepted without objection, as in this case, where plaintiffs-appellants have been leasing
BSPs parking space for more or less 20 years, then the contract serves as the law between them.
It is axiomatic that actual damages must be proved with reasonable degree of certainty and a party is entitled only to such compensation for
the pecuniary loss that was duly proven. Thus, absent any competent proof of the amount of damages sustained, the CA properly deleted the
said awards. Spouses Benjamin C. Mamaril and Sonia P. Mamaril vs. The Boy Scout of the Philippines, et al.; G.R. No. 179382. January 14,
2013
Special laws
Usury Law; CB Circular No. 905; suspension of ceilings for interest rates does not authorize excessive and unconscionable interest rates;
effect of void stipulation of usurious interest.The power of the Central Bank to effectively suspend the Usury Law pursuant to P.D. No.
1684(Amending Further Act No. 2655, as amended, Otherwise Known As The Usury Law) has long been recognized and upheld in many
cases. As the Court explained in the landmark case of Medel v. CA, citing several cases, CB Circular No. 905 (Amendment of Books I to IV of
the Manual of Regulations for Banks and Other Financial Intermediaries) did not repeal nor in anyway amend the Usury Law but simply
suspended the latters effectivity; that a [CB] Circular cannot repeal a law, [for] only a law can repeal another law; that by virtue of CB
Circular No. 905, the Usury Law has been rendered ineffective; and Usury has been legally non-existent in our jurisdiction. Interest can now
be charged as lender and borrower may agree upon. [B]y lifting the interest ceiling, CB Circular No. 905 merely upheld the parties
freedom of contract to agree freely on the rate of interest. It cited Article 1306 of the New Civil Code, under which the contracting parties
may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals,
good customs, public order, or public policy.
It is settled that nothing in CB Circular No. 905 grants lenders a carte blanche authority to raise interest rates to levels which will either
enslave their borrowers or lead to a hemorrhaging of their assets. As held in Castro v. Tan:
The imposition of an unconscionable rate of interest on a money debt, even if knowingly and voluntarily assumed, is immoral and unjust. It is
tantamount to a repugnant spoliation and an iniquitous deprivation of property, repulsive to the common sense of man. It has no support in
law, in principles of justice, or in the human conscience nor is there any reason whatsoever which may justify such imposition as righteous
and as one that may be sustained within the sphere of public or private morals.
Stipulations authorizing iniquitous or unconscionable interests have been invariably struck down for being contrary to morals, if not against
the law. Indeed, under Article 1409 of the Civil Code, these contracts are deemed inexistent and void ab initio, and therefore cannot be
ratified, nor may the right to set up their illegality as a defense be waived.

7

Nonetheless, the nullity of the stipulation of usurious interest does not affect the lenders right to recover the principal of a loan, nor affect the
other terms thereof. Thus, in a usurious loan with mortgage, the right to foreclose the mortgage subsists, and this right can be exercised by
the creditor upon failure by the debtor to pay the debt due. The debt due is considered as without the stipulated excessive interest, and a
legal interest of 12% per annumwill be added in place of the excessive interest formerly imposed, following the guidelines laid down in the
landmark case of Eastern Shipping Lines, Inc. v. Court of Appeals, regarding the manner of computing legal interest. Advocates for Truth in
Lending, Inc. vs. Bangko Sentral Monetary Board, Represented by its Chairman, Governor Armando M. Tatangco, Jr., etc.; G.R. No. 192986.
January 15, 2013

FEBRUARY
Common Carrier; requisite before presumption of negligence arises; bill of lading; interpretation thereof; inherent nature of the subject
shipment or its packaging as ground for exempting common carrier from liability; failure to prove negligence does not entitle claimant for
damages. Though it is true that common carriers are presumed to have been at fault or to have acted negligently if the goods transported by
them are lost, destroyed, or deteriorated, and that the common carrier must prove that it exercised extraordinary diligence in order to
overcome the presumption, the plaintiff must still, before the burden is shifted to the defendant, prove that the subject shipment suffered
actual shortage. This can only be done if the weight of the shipment at the port of origin and its subsequent weight at the port of arrival have
been proven by a preponderance of evidence, and it can be seen that the former weight is considerably greater than the latter weight, taking
into consideration the exceptions provided in Article 1734 of the Civil Code.
The Berth Term Grain Bill of Lading states that the subject shipment was carried with the qualification Shippers weight, quantity and quality
unknown, meaning that it was transported with the carrier having been oblivious of the weight, quantity, and quality of the cargo. This
interpretation of the quoted qualification is supported by Wallem Philippines Shipping, Inc. v. Prudential Guarantee & Assurance, Inc., a case
involving an analogous stipulation in a bill of lading, wherein the Supreme Court held that:
Indeed, as the bill of lading indicated that the contract of carriage was under a said to weigh clause, the shipper is solely responsible for
the loading while the carrier is oblivious of the contents of the shipment. (Emphasis supplied)
Hence, the weight of the shipment as indicated in the bill of lading is not conclusive as to the actual weight of the goods. Consequently, the
respondent must still prove the actual weight of the subject shipment at the time it was loaded at the port of origin so that a conclusion may
be made as to whether there was indeed a shortage for which petitioner must be liable.
The shortage, if any, may have been due to the inherent nature of the subject shipment or its packaging since the subject cargo was shipped
in bulk and had a moisture content of 12.5%.
Considering that respondent was not able to establish conclusively that the subject shipment weighed 3,300 metric tons at the port of
loading, and that it cannot therefore be concluded that there was a shortage for which petitioner should be responsible; bearing in mind that
the subject shipment most likely lost weight in transit due to the inherent nature of Soya Bean Meal; assuming that the shipment lost weight
in transit due to desorption, the shortage of 199.863 metric tons that respondent alleges is a minimal 6.05% of the weight of the entire
shipment, which is within the allowable 10% allowance for loss; and noting that the respondent was not able to show negligence on the part
of the petitioner and that the weighing methods which respondent relied upon to establish the shortage it alleges is inaccurate, respondent
cannot fairly claim damages against petitioner for the subject shipments alleged shortage. Asian Terminals, Inc. vs. Simon Enterprises,
Inc.; G.R. No. 177116. February 27, 2013
Contract; contract to sell; sellers obligation to deliver the corresponding certificates of title is simultaneous and reciprocal to the buyers full
payment of the purchase price; rescission; effects; requires mutual restitution; Subdivision and Condominium Buyers Protective Decree (PD
957); intent of PD 957 to protect the buyer against unscrupulous developers, operators and/or sellers; damages; when moral damages may
be awarded; when exemplary damages may be awarded; propriety of award of attorneys fees. It is settled that in a contract to sell, the
sellers obligation to deliver the corresponding certificates of title is simultaneous and reciprocal to the buyers full payment of the purchase
price. In this relation, Section 25 of PD 957 (Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties for Violations
Thereof), which regulates the subject transaction, imposes on the subdivision owner or developer the obligation to cause the transfer of the
corresponding certificate of title to the buyer upon full payment, to wit:
Sec. 25. Issuance of Title. The owner or developer shall deliver the title of the lot or unit to the buyer upon full payment of the lot
or unit. No fee, except those required for the registration of the deed of sale in the Registry of Deeds, shall be collected for the issuance of
such title. In the event a mortgage over the lot or unit is outstanding at the time of the issuance of the title to the buyer, the owner or
developer shall redeem the mortgage or the corresponding portion thereof within six months from such issuance in order that the title over
any fully paid lot or unit may be secured and delivered to the buyer in accordance herewith. (Emphasis supplied.)
The long delay in the performance of GPIs obligation from date of demand on September 16, 2002 was unreasonable and unjustified. It
cannot therefore be denied that GPI substantially breached its contract to sell with Sps. Fajardo which thereby accords the latter the right to
rescind the same pursuant to Article 1191 of the Code, viz:

8

ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with articles 1385 and
1388 and the Mortgage Law.
Rescission does not merely terminate the contract and release the parties from further obligations to each other, but abrogates the contract
from its inception and restores the parties to their original positions as if no contract has been made. Consequently, mutual restitution, which
entails the return of the benefits that each party may have received as a result of the contract, is thus required.
To be sure, it has been settled that the effects of rescission as provided for in Article 1385 of the Code are equally applicable to cases under
Article 1191, to wit:
x x x Mutual restitution is required in cases involving rescission under Article 1191. This means bringing the parties back to their
original status prior to the inception of the contract. Article 1385 of the Civil Code provides, thus:
ART. 1385. Rescission creates the obligation to return the things which were the object of the contract, together with their
fruits, and the price with its interest; consequently, it can be carried out only when he who demands rescission can return
whatever he may be obligated to restore.
Neither shall rescission take place when the things which are the object of the contract are legally in the possession of third persons who did
not act in bad faith.
In this case, indemnity for damages may be demanded from the person causing the loss.
The Court has consistently ruled that this provision applies to rescission under Article 1191:
[S]ince Article 1385 of the Civil Code expressly and clearly states that rescission creates the obligation to return the things which were the
object of the contract, together with their fruits, and the price with its interest, the Court finds no justification to sustain petitioners position
that said Article 1385 does not apply to rescission under Article 1191. x x x (Emphasis supplied; citations omitted.)
As a necessary consequence, considering the propriety of the rescission as earlier discussed, Sps. Fajardo must be able to recover the price of
the property pegged at its prevailing market value consistent with the Courts pronouncement in Solid Homes, viz:
Indeed, there would be unjust enrichment if respondents Solid Homes, Inc. & Purita Soliven are made to pay only the purchase price plus
interest. It is definite that the value of the subject property already escalated after almost two decades from the time the petitioner paid for
it. Equity and justice dictate that the injured party should be paid the market value of the lot, otherwise, respondents Solid
Homes, Inc. & Purita Soliven would enrich themselves at the expense of herein lot owners when they sell the same lot at the
present market value. Surely, such a situation should not be countenanced for to do so would be contrary to reason and therefore,
unconscionable. Over time, courts have recognized with almost pedantic adherence that what is inconvenient or contrary to reason is not
allowed in law. (Emphasis supplied.)
On this score, it is apt to mention that it is the intent of PD 957 (Regulating the Sale of Subdivision Lots and Condominiums, Providing
Penalties for Violations Thereof) to protect the buyer against unscrupulous developers, operators and/or sellers who reneged on their
obligations. Thus, in order to achieve this purpose, equity and justice dictate that the injured party should be afforded full recompense and as
such, be allowed to recover the prevailing market value of the undelivered lot which had been fully paid for.
Furthermore, the Court finds that there is proper legal basis to accord moral and exemplary damages and attorneys fees, including costs of
suit. Verily, GPIs unjustified failure to comply with its obligations as above discussed caused Sps. Fajardo serious anxiety, mental anguish
and sleepless nights, thereby justifying the award of moral damages. In the same vein, the payment of exemplary damages remains in order
so as to prevent similarly minded subdivision developers to commit the same transgression. And finally, considering that Sps. Fajardo were
constrained to engage the services of counsel to file this suit, the award of attorneys fees must be likewise sustained. Gotesco Properties,
Inc., et al. vs. Sps. Eugenio and Angelina Fajardo; G.R. No. 201167. February 27, 2013
Contracts; interpretation thereof; intention of the parties; relativity of contracts; credit line; definition; trust receipt; characteristics;
coverage; contract of adhesion; generally not a one-sided document; interest rate; parties have the right to agree on rate of interest; interest
rate must not be excessive, iniquitous, unconscionable and exorbitant; attorneys fees; award must rest on a factual basis and legal
justification stated in the body of the decision under review. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. In determining their intention, their contemporaneous and subsequent
acts shall be principally considered.

9

Under the notion of relativity of contracts embodied in Article 1311 of the Civil Code, contracts take effect only between the parties, their
assigns and heirs. Hence, the farmer-participants, not being themselves parties to the contractual documents signed by Gloria, were not to be
thereby liable.
A credit line is really a loan agreement between the parties. According to Rosario Textile Mills Corporation v. Home Bankers Savings and Trust
Co.:
x x x [A] credit line is that amount of money or merchandise which a banker, a merchant, or supplier agrees to supply to a person on credit
and generally agreed to in advance. It is a fixed limit of credit granted by a bank, retailer, or credit card issuer to a customer, to the full
extent of which the latter may avail himself of his dealings with the former but which he must not exceed and is usually intended to cover a
series of transactions in which case, when the customers line of credit is nearly exhausted, he is expected to reduce his indebtedness by
payments before making any further drawings.
A trust receipt is a security transaction intended to aid in financing importers and retail dealers who do not have sufficient funds or resources
to finance the importation or purchase of merchandise, and who may not be able to acquire credit except through utilization, as collateral, of
the merchandise imported or purchased. It is a security agreement that secures an indebtedness and there can be no such thing as security
interest that secures no obligation.
The contract, its label notwithstanding, was not a trust receipt transaction in legal contemplation or within the purview of the Trust Receipts
Law (Presidential Decree No. 115) such that its breach would render Gloria criminally liable for estafa. Under Section 4 of theTrust Receipts
Law, the sale of goods by a person in the business of selling goods for profit who, at the outset of the transaction, has, as against the buyer,
general property rights in such goods, or who sells the goods to the buyer on credit, retaining title or other interest as security for the
payment of the purchase price, does not constitute a trust receipt transaction and is outside the purview and coverage of the law.
In Land Bank v. Perez, the Court has elucidated on the coverage of Section 4 (of the Trust Receipts Law), to wit:
There are two obligations in a trust receipt transaction. The first is covered by the provision that refers to money under the obligation to
deliver it (entregarla) to the owner of the merchandise sold. The second is covered by the provision referring to merchandise received under
the obligation to return it (devolverla) to the owner. Thus, under the Trust Receipts Law, intent to defraud is presumed when (1) the
entrustee fails to turn over the proceeds of the sale of goods covered by the trust receipt to the entruster; or (2) when the entrustee fails to
return the goods under trust, if they are not disposed of in accordance with the terms of the trust receipts.
In all trust receipt transactions, both obligations on the part of the trustee exist in the alternative the return of the proceeds of the sale or
the return or recovery of the goods, whether raw or processed. When both parties enter into an agreement knowing that the return of
the goods subject of the trust receipt is not possible even without any fault on the part of the trustee, it is not a trust receipt
transaction penalized under Section 13 of P.D. 115; the only obligation actually agreed upon by the parties would be the return
of the proceeds of the sale transaction. This transaction becomes a mere loan, where the borrower is obligated to pay the bank
the amount spent for the purchase of the goods. (Bold emphasis supplied)
A contract of adhesion prepared by one party, usually a corporation, is generally not a one-sided document as long as the signatory is not
prevented from studying it before signing. At any rate, the social stature of the parties, the nature of the transaction, and the amount
involved were also factors to be considered in determining whether the aggrieved party exercised adequate care and diligence in studying
the contract prior to its execution. Thus, [u]nless a contracting party cannot read or does not understand the language in which the
agreement is written, he is presumed to know the import of his contract and is bound thereby.
The Usury Law allowed the parties in a loan agreement to exercise discretion on the interest rate to be charged. Once a judicial demand for
payment has been made, however, Article 2212 of the Civil Code should apply, that is: Interest due shall earn legal interest from the time it
is judicially demanded, although the obligation may be silent upon this point.
The Central Bank circulars on interest rates granted to the parties leeway on the rate of interest agreed upon. In this regard, the Court has
said:
The Usury Law had been rendered legally ineffective by Resolution No. 224 dated 3 December 1982 of the Monetary Board of the Central
Bank, and later by Central Bank Circular No. 905 (Amendment of Books I to IV of the Manual of Regulations for Banks and Other Financial
Intermediaries) which took effect on 1 January 1983. These circulars removed the ceiling on interest rates for secured and unsecured loans
regardless of maturity. The effect of these circulars is to allow the parties to agree on any interest that may be charged on a loan. The virtual
repeal of the Usury Law is within the range of judicial notice which courts are bound to take into account. Although interest rates are no
longer subject to a ceiling, the lender does not have an unbridled license to impose increased interest rates. The lender and the borrower
should agree on the imposed rate, and such imposed rate should be in writing.
Accordingly, the interest rate agreed upon should not be excessive, iniquitous, unconscionable and exorbitant; otherwise, the Court may
declare the rate illegal.
The award of attorneys fees must rest on a factual basis and legal justification stated in the body of the decision under review. Absent the
statement of factual basis and legal justification, attorneys fees are to be disallowed. In Abobon v. Abobon, the Court has expounded on the
requirement for factual basis and legal justification in order to warrant the grant of attorneys fees to the winning party, viz:

10

As to attorneys fees, the general rule is that such fees cannot be recovered by a successful litigant as part of the damages to be assessed
against the losing party because of the policy that no premium should be placed on the right to litigate. Indeed, prior to the effectivity of the
present Civil Code, such fees could be recovered only when there was a stipulation to that effect. It was only under the present Civil
Code that the right to collect attorneys fees in the cases mentioned in Article 2208 of the Civil Codecame to be recognized. Such fees are now
included in the concept of actual damages.
Even so, whenever attorneys fees are proper in a case, the decision rendered therein should still expressly state the factual basis
and legal justification for granting them. Granting them in the dispositive portion of the judgment is not enough; a discussion of
the factual basis and legal justification for them must be laid out in the body of the decision.
Sps. Dela Cruz vs. Planters Products, Inc.; G.R. No. 158649. February 18, 2013
Contract; rescission under Article 1191; recognizes an implied resolutory condition in reciprocal obligations; effects thereof. The action for the
rescission of the deed of sale on the ground that Advanced Foundation did not comply with its obligation actually seeks one of the alternative
remedies available to a contracting party under Article 1191 of the Civil Code, to wit:
Article 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation, with the payment of damages in either case. He
may also seek rescission, even after he has chosen fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing, in accordance with Articles 1385 and
1388 and the Mortgage Law.
Article 1191 of the Civil Code recognizes an implied or tacit resolutory condition in reciprocal obligations. The condition is imposed by law, and
applies even if there is no corresponding agreement thereon between the parties. The explanation for this is that in reciprocal obligations a
party incurs in delay once the other party has performed his part of the contract; hence, the party who has performed or is ready and willing
to perform may rescind the obligation if the other does not perform, or is not ready and willing to perform.
It is true that the rescission of a contract results in the extinguishment of the obligatory relation as if it was never created, the
extinguishment having a retroactive effect. The rescission is equivalent to invalidating and unmaking the juridical tie, leaving things in their
status before the celebration of the contract. However, until the contract is rescinded, the juridical tie and the concomitant obligations
subsist. Teodoro A. Reyes vs. Ettore Rossi; G.R. No. 159823. February 18, 2013.
Ejectment; distinction between a summary action of ejectment and a plenary action for recovery of possession and/or ownership of the land;
power of the inferior courts to rule on the question of ownership in ejectment suits; partition; validity of oral partition; actual possession and
exercise of dominion over definite portions of the property are considered strong proof of an oral partition; ownership; tax declarations and
tax receipts alone are not conclusive evidence. It is well to be reminded of the settled distinction between a summary action of ejectment and
a plenary action for recovery of possession and/or ownership of the land. What really distinguishes an action for unlawful detainer from a
possessory action (accion publiciana) and from a reinvindicatory action (accion reinvindicatoria) is that the first is limited to the question
of possession de facto. Unlawful detainer suits (accion interdictal) together with forcible entry are the two forms of ejectment suit that may be
filed to recover possession of real property. Aside from the summary action of ejectment, accion publiciana or the plenary action to recover
the right of possession and accion reinvindicatoria or the action to recover ownership which also includes recovery of possession, make up the
three kinds of actions to judicially recover possession.
Under Section 3 of Rule 70 of the Rules of Court, the Summary Procedure governs the two forms of ejectment suit, the purpose being to
provide an expeditious means of protecting actual possession or right to possession of the property. They are not processes to determine the
actual title to an estate. If at all, inferior courts are empowered to rule on the question of ownership raised by the defendant in such suits,
only to resolve the issue of possession and its determination on the ownership issue is not conclusive.
The validity of an oral partition is well-settled in our jurisdiction. In Vda. de Espina v. Abaya,this Court declared that an oral partition is valid:
Anent the issue of oral partition, We sustain the validity of said partition. An agreement of partition may be made orally or in writing. An oral
agreement for the partition of the property owned in common is valid and enforceable upon the parties. The Statute of Frauds has no
operation in this kind of agreements, for partition is not a conveyance of property but simply a segregation and designation of the part of the
property which belong to the co-owners.
In Maestrado v. CA, the Supreme Court upheld the partition after it found that it conformed to the alleged oral partition of the heirs, and that
the oral partition was confirmed by the notarized quitclaims executed by the heirs subsequently. In Maglucot-Aw v. Maglucot, the Supreme
Court elaborated on the validity of parol partition:
On general principle, independent and in spite of the statute of frauds, courts of equity have enforce [sic] oral partition when it has been
completely or partly performed.

11

Regardless of whether a parol partition or agreement to partition is valid and 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 the
respective portions set off to each, recognize and enforce such parol partition and the rights of the parties thereunder. Thus, it has been held
or stated in a number of cases involving an oral partition under which the parties went into possession, exercised acts of ownership, or
otherwise partly performed the partition agreement, that equity will confirm such partition and in a proper case decree title in accordance with
the possession in severalty.
In numerous cases it has been held or stated that parol partition may be sustained on the ground of estoppel of the parties to assert the
rights of a tenant in common as to parts of land divided by parol partition as to which possession in severalty was taken and acts of individual
ownership were exercised. And a court of equity will recognize the agreement and decree it to be valid and effectual for the purpose of
concluding the right of the parties as between each other to hold their respective parts in severalty.
A parol partition may also be sustained on the ground that the parties thereto have acquiesced in and ratified the partition by taking
possession in severalty, exercising acts of ownership with respect thereto, or otherwise recognizing the existence of the partition.
A number of cases have specifically applied the doctrine of part performance, or have stated that a part performance is necessary, to take a
parol partition out of the operation of the statute of frauds. It has been held that where there was a partition in fact between tenants in
common, and a part performance, a court of equity would have regard to and enforce such partition agreed to by the parties.
It is settled that tax declarations and tax receipts alone are not conclusive evidence of ownership. They are merely indicia of a claim of
ownership,61 but when coupled with proof of actual possession of the property, they can be the basis of claim of ownership through
prescription. In the absence of actual, public and adverse possession, the declaration of the land for tax purposes does not prove
ownership. Casilang vs. Casilang-Dizon, et al.; G.R. No. 180269. February 20, 2013
Mortgage; accommodation mortgage; sanctioned under Article 2085 of the Civil Code; accommodation mortgagor is ordinarily not the
recipient of the loan; reasonable promptness in attacking the validity of a mortgage; unreasonable delay may delay may amount to
ratification. The validity of an accommodation mortgage is allowed under Article 2085 of the Civil Code which provides that [t]hird persons
who are not parties to the principal obligation may secure the latter by pledging or mortgaging their own property. An accommodation
mortgagor, ordinarily, is not himself a recipient of the loan, otherwise that would be contrary to his designation as such.
It bears stressing that an accommodation mortgagor, ordinarily, is not himself a recipient of the loan, otherwise that would be contrary to his
designation as such. We have held that it is not always necessary that the accommodation mortgagor be apprised beforehand of the entire
amount of the loan nor should it first be determined before the execution of the Special Power of Attorney in favor of the debtor. This is
especially true when the words used by the parties indicate that the mortgage serves as a continuing security for credit obtained as well as
future loan availments.
Mortgagors desiring to attack a mortgage as invalid should act with reasonable promptness, and unreasonable delay may amount to
ratification. Spouses Ramos vs. Raul Obispo and Far East Bank and Trust Co.; G.R. No. 193804. February 27, 2013
Tort; Doctrine of Last Clear Chance; definition and characteristics; contributory negligence; definition; effect; apportionment of damages
between parties who are both negligent involving banking transactions; highest degree of diligence is required for banks. The doctrine of last
clear chance, stated broadly, is that the negligence of the plaintiff does not preclude a recovery for the negligence of the defendant where it
appears that the defendant, by exercising reasonable care and prudence, might have avoided injurious consequences to the plaintiff
notwithstanding the plaintiffs negligence. The doctrine necessarily assumes negligence on the part of the defendant and contributory
negligence on the part of the plaintiff, and does not apply except upon that assumption. Stated differently, the antecedent negligence of the
plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant, who had the last fair chance
to prevent the impending harm by the exercise of due diligence. Moreover, in situations where the doctrine has been applied, it was
defendants failure to exercise such ordinary care, having the last clear chance to avoid loss or injury, which was the proximate cause of the
occurrence of such loss or injury.
A collecting bank is guilty of contributory negligence when it accepted for deposit a post-dated check notwithstanding that said check had
been cleared by the drawee bank which failed to return the check within the 24-hour reglementary period.
In the cited case of Philippine Bank of Commerce v. Court of Appeals, while the Court found petitioner bank as the culpable party under the
doctrine of last clear chance since it had, thru its teller, the last opportunity to avert the injury incurred
by its client simply by faithfully observing its own validation procedure, it nevertheless ruled that the plaintiff depositor (private respondent)
must share in the loss on account of itscontributory negligence. Thus:
The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was likewise negligent in not checking its monthly
statements of account. Had it done so, the company would have been alerted to the series of frauds being committed against RMC by its
secretary. The damage would definitely not have ballooned to such an amount if only RMC, particularly Romeo Lipana, had exercised even a
little vigilance in their financial affairs. This omission by RMC amounts to contributory negligence which shall mitigate the damages
that may be awarded to the private respondent under Article 2179 of the New Civil Code, to wit:
x x x. When the plaintiffs own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his
negligence was only contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may
recover damages, but the courts shall mitigate the damages to be awarded.

12

In view of this, we believe that the demands of substantial justice are satisfied byallocating the damage on a 60-40 ratio. Thus, 40% of
the damage awarded by the respondent appellate court, except the award of P25,000.00 attorneys fees, shall be borne by private respondent
RMC; only the balance of 60% needs to be paid by the petitioners. The award of attorneys fees shall be borne exclusively by the petitioners.
(Italics in the original; emphasis supplied)
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls
below the standard to which he is required to conform for his own protection. Admittedly, petitioners acceptance of the subject check for
deposit despite the one year postdate written on its face was a clear violation of established banking regulations and practices. In such
instances, payment should be refused by the drawee bank and returned through the PCHC within the 24-hour reglementary period. As aptly
observed by the CA, petitioners failure to comply with this basic policy regarding post-dated checks was a telling sign of its lack of due
diligence in handling checks coursed through it.
It bears stressing that the diligence required of banks is more than that of a Romanpaterfamilias or a good father of a family. The highest
degree of diligence is expected, considering the nature of the banking business that is imbued with public interest. While it is true that
respondents liability for its negligent clearing of the check is greater, petitioner cannot take lightly its own violation of the long-standing rule
against encashment of post-dated checks and the injurious consequences of allowing such checks into the clearing system. Allied Banking
Corporation vs. Bank of the Philippine Islands; G.R. No. 188363. February 27, 2013
Special Laws
Torrens system; curtain principle; right to rely on the Torrens certificate of title; exception, when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry; purchaser in good faith; definition. Under the Torrens
system of land registration, the registered owner of realty cannot be deprived of her property through fraud, unless a transferee acquires the
property as an innocent purchaser for value. A transferee who acquires the property covered by a reissued owners copy of the certificate of
title without taking the ordinary precautions of honest persons in doing business and examining the records of the proper Registry of Deeds,
or who fails to pay the full market value of the property is not considered an innocent purchaser for value.
Under the Torrens system of land registration, the State is required to maintain a register of landholdings that guarantees indefeasible title to
those included in the register. The system has been instituted to combat the problems of uncertainty, complexity and cost associated with old
title systems that depended upon proof of an unbroken chain of title back to a good root of title. The State issues an official certificate of title
to attest to the fact that the person named is the owner of the property described therein, subject to such liens and encumbrances as thereon
noted or what the law warrants or reserves.
One of the guiding tenets underlying the Torrens system is the curtain principle, in that one does not need to go behind the certificate of title
because it contains all the information about the title of its holder. This principle dispenses with the need of proving ownership by long
complicated documents kept by the registered owner, which may be necessary under a private conveyancing system, and assures that all the
necessary information regarding ownership is on the certificate of title. Consequently, the avowed objective of the Torrens system is to
obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and, as a rule, to dispense with
the necessity of inquiring further; on the part of the registered owner, the system gives him complete peace of mind that he would be
secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.
The Philippines adopted the Torrens system through Act No. 496, also known as the Land Registration Act, which was approved on November
6, 1902 and took effect on February 1, 1903. In this jurisdiction, therefore, a person dealing in registered land has the right to rely on the
Torrens certificate of title and to dispense with the need of inquiring further, exceptwhen the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry.
Good faith is the honest intention to abstain from taking unconscientious advantage of another. It means the freedom from knowledge and
circumstances which ought to put a person on inquiry. Given this notion of good faith, therefore, a purchaser in good faith is one who buys
the property of another without notice that some other person has a right to, or interest in, such property and pays full and fair price for the
same. Spouses Cusi vs. Lilia V. De Vera, et al.; G.R. Nos. 195825/195871. February 27, 2013
Torrens System; right to rely on Torrens title. [It is a] settled principle that one who deals with property registered under the Torrens System
need not go beyond the same, but only has to rely on the title. Moreover, since the subject property was already covered by a Torrens title
at the time that respondents bought the same, the law does not require them to go beyond what appears on the face of the title. The lot has,
thus, passed to respondents, who are presumed innocent purchasers for value, in the absence of any allegation to the contrary.Mercado, et
al. vs. Sps. Espina; G.R. No. 173987. February 25, 2013

MARCH
Contracts; contract of sale; perfection; essential elements; stages. A contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price. Thus, for a contract of sale to be valid, all of the following essential
elements must concur: a) consent or meeting of the minds; b) determinate subject matter; and c) price certain in money or its equivalent.
As for the price, fixing it can never be left to the decision of only one of the contracting parties. But a price fixed by one of the contracting
parties, if accepted by the other, gives rise to a perfected sale.

13

As regards consent, when there is merely an offer by one party without acceptance of the other, there is no contract. The decision to accept a
bidders proposal must be communicated to the bidder. However, a binding contract may exist between the parties whose minds have met,
although they did not affix their signatures to any written document, as acceptance may be expressed or implied. It can be inferred from the
contemporaneous and subsequent acts of the contracting parties. Thus, the Supreme Court has held:
x x x The rule is that except where a formal acceptance is so required, although the acceptance must be affirmatively and clearly made and
must be evidenced by some acts or conduct communicated to the offeror, it may be made either in a formal or an informal manner, and may
be shown by acts, conduct, or words of the accepting party that clearly manifest a present intention or determination to accept the offer to
buy or sell. Thus, acceptance may be shown by the acts, conduct, or words of a party recognizing the existence of the contract of sale.
Contracts undergo three stages: (a) negotiation that begins from the time the prospective contracting parties indicate interest in the contract
and ends at the moment of their agreement; (b) perfection or birth that which takes place when the parties agree upon all the essential
elements of the contract; and (c) consummation that occurs when the parties fulfill or perform the terms agreed upon, culminating in the
extinguishment thereof. Robern Development Corporation, et al. vs. Peoples Landless Association represented by Florida Ramos, et al.; G.R.
No. 173622. March 11, 2013
Contracts; obligatory nature of contracts; interpretation; Joint Affidavit of Undertaking may be a contract in itself; due execution; default,
elements; judicial demand; computation of interest. Contracts are obligatory no matter what their forms may be, whenever the essential
requisites for their validity are present. In determining whether a document is an affidavit or a contract, the Court looks beyond the title of
the document, since the denomination or title given by the parties in their document is not conclusive of the nature of its contents. In the
construction or interpretation of an instrument, the intention of the parties is primordial and is to be pursued. If the terms of the document
are clear and leave no doubt on the intention of the contracting parties, the literal meaning of its stipulations shall control. If the words
appear to be contrary to the parties evident intention, the latter shall prevail over the former.
A simple reading of the terms of the Joint Affidavit of Undertaking readily discloses that it contains stipulations characteristic
of a contract. The Joint Affidavit of Undertaking contained a stipulation where Cruz and Leonardo promised to replace the damaged car of
Gruspe, 20 days from October 25, 1999 or up to November 15, 1999, of the same model and of at least the same quality. In the event that
they cannot replace the car within the same period, they would pay the cost of Gruspes car in the total amount of P350,000, with interest at
12% per month for any delayed payment after November 15, 1999, until fully paid.
An allegation of vitiated consent must be proven by preponderance of evidence. Although the undertaking in the affidavit appears to
be onerous and lopsided, this does not necessarily prove the alleged vitiation of consent. They, in fact, admitted the genuineness and due
execution of the Joint Affidavit and Undertaking when they said that they signed the same to secure possession of their vehicle.
In order that the debtor may be in default, it is necessary that the following requisites be present: (1) that the obligation be demandable and
already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance judicially and extrajudicially.
Default generally begins from the moment the creditor demands the performance of the obligation. Rodolfo G. Cruz and Esperanza Ibias vs.
Atty. Delfin Gruspe; G.R. No. 191431. March 13, 2013
Contracts; parties may establish any agreement, term, and condition they may deem advisable, provided they are not contrary to law, morals
or public policy; if the language used is clear, there is no need for construction; mortgage; courts duty, merely to interpret the intent of the
parties; even if not expressly so stated, the mortgage extends to the improvements; machineries and equipment are considered real
properties. As held inGateway Electronics Corp. v. Land Bank of the Philippines, the rule in this jurisdiction is that the contracting parties may
establish any agreement, term, and condition they may deem advisable, provided they are not contrary to law, morals or public policy. The
right to enter into lawful contracts constitutes one of the liberties guaranteed by the Constitution.
It has been explained by the Supreme Court in Norton Resources and Development Corporation v. All Asia Bank Corporation in reiteration of
the ruling in Benguet Corporation v. Cabildo that:
A courts purpose in examining a contract is to interpret the intent of the contracting parties, as objectively manifested by them. The process
of interpreting a contract requires the court to make a preliminary inquiry as to whether the contract before it is ambiguous. A contract
provision is ambiguous if it is susceptible of two reasonable alternative interpretations. Where the written terms of the contract are not
ambiguous and can only be read one way, the court will interpret the contract as a matter of law.
Then till now the pronouncement has been that if the language used is as clear as day and readily understandable by any ordinary reader,
there is no need for construction.
Law and jurisprudence provide and guide that even if not expressly so stated, the mortgage extends to the improvements.
Article 2127 of the Civil Code provides:
Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or income not yet received
when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the
estate remains in the possession of the mortgagor, or it passes into the hands of a third person.
In the early case of Bischoff v. Pomar and Cia. General de Tabacos, the Court ruled that even if the machinery in question was not included in
the mortgage expressly, Article 111 of the [old] Mortgage Law provides that chattels permanently located in a building, either useful or

14

ornamental, or for the service of some industry even though they were placed there after the creation of the mortgage shall be considered as
mortgaged with the estate, provided they belong to the owner of said estate.
The real estate mortgage over the machineries and equipment is even in full accord with the classification of such properties by the Civil Code
of the Philippines as immovable property. Thus:
Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to the soil;
xxxx
(5) Machinery, receptacles, instruments or implements intended by the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend directly to meet the needs of the said industry or works.
Star Two (SPV-AMC), Inc. vs. Paper City Corporation of the Philippines; G.R. No. 169211. March 6, 2013
Property; encroachment on property; builder in bad faith; options available to owner of the land; rules in the determining the reckoning
period for valuing the property. Under Article 448 pertaining to encroachments in good faith, as well as Article 450 referring to encroachments
in bad faith, the owner of the land encroached upon petitioner herein has the option to require respondent builder to pay the price of the
land.
Although these provisions of the Civil Code do not explicitly state the reckoning period for valuing the property, Ballatan v. Court of
Appeals already specifies that in the event that the seller elects to sell the lot, the price must be fixed at the prevailing market value at the
time of payment.
More recently, Tuatis v. Spouses Escol illustrates that the present or current fair value of the land is to be reckoned at the time that the
landowner elected the choice, and not at the time that the property was purchased. In Sarmiento v. Agana, we reckoned the valuation of
the property at the time that the real owner of the land asked the builder to vacate the property encroached upon. Moreover, the oft-cited
case Depra v. Dumlao likewise ordered the courts of origin to compute the current fair price of the land in cases of encroachment on real
properties. Vda. de Roxas v. Our Ladys Foundation, Inc.; G.R. No. 182378. March 6, 2013
Special Laws
Agrarian Reform; land ownership; mere issuance of the Certificate of Land Transfer does not vest full ownership on the holder and does not
automatically operate to divest the land owner of all of his rights over the landholding; requirements to effect a transfer of ownership;
agricultural lands; any sale or disposition of agricultural lands made after the effectivity of R.A. No. 6657 which has been found contrary to its
provisions shall be null and void; procedures for the reallocation of farmholdings covered by P.D. No. 27 by reason of abandonment or the
refusal to become a beneficiary; requisites of abandonment. The mere issuance of the Certificate of Land Transfer (CLT) does not vest full
ownership on the holder and does not automatically operate to divest the landowner of all of his rights over the landholding. The holder must
first comply with certain mandatory requirements to effect a transfer of ownership. Under R.A. No. 6657 (Comprehensive Agrarian Reform
Law of 1988) in relation with P.D. No. 27 (Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring to Them the
Ownership of the Land they Till and Providing the Instruments and Mechanism Therefor) and E.O. No. 228 (Declaring Full Land Ownership to
Qualified Farmer Beneficiaries Covered by P.D. No. 27: Determining the Value of Remaining Unvalued Rice and Corn Lands Subject to P.D.
No. 27; and Providing for the Manner of Payment by the Farmer Beneficiary and Mode of Compensation to the Landowner), the title to the
landholding shall be issued to the tenant-farmer only upon the satisfaction of the following requirements: (1) payment in full of the just
compensation for the landholding, duly determined by final judgment of the proper court; (2) possession of the qualifications of a farmer-
beneficiary under the law; (3) full-pledged membership of the farmer-beneficiary in a duly recognized farmers cooperative; and (4) actual
cultivation of the landholding. We explained in several cases that while a tenant with a CLT is deemed the owner of a landholding, the CLT
does not vest full ownership on him. The tenant-holder of a CLT merely possesses an inchoate right that is subject to compliance with
certain legal preconditions for perfecting title and acquiring full ownership.
Pursuant to R.A. No. 6657 (Comprehensive Agrarian Reform Law of 1988) in relation with P.D. No. 27 (Decreeing the Emancipation of
Tenants from the Bondage of the Soil, Transferring to Them the Ownership of the Land they Till and Providing the Instruments and
Mechanism Therefor), any sale or disposition of agricultural lands made after the effectivity of R.A. No. 6657 which has been found contrary
to its provisions shall be null and void. The proper procedure for the reallocation of the disputed lot must be followed to ensure that
there indeed exist grounds for the cancellation of the CLT or for forfeiture of rights under it, and that the lot is subsequently awarded to a
qualified farmer-tenant pursuant to the law.
Under Ministry Memorandum Circular No. 04-83 (Supplemental Guidelines to Govern Transfer Action of Areas Covered by P.D. 27 by Reason
of Abandonment, Waiver of Rights and Illegal Transactions) in relation with Ministry Memorandum Circular No. 08-80 (Guidelines in the
Disposition and Reallocation of Farmholdings of Tenant-Farmers who Refuses to Become Beneficiaries of P.D. No. 27) and Ministry
Memorandum Circular No. 07-79 (Rules and Regulations Governing Transactions Involving Lands Covered by P.D. No. 27), the following
procedures must be observed for the reallocation of farmholdings covered by P.D. No. 27 by reason of abandonment or the refusal to become
a beneficiary, among others:
I. Investigation Procedure

15

1. The conduct of verification by the concerned Agrarian Reform Team Leader (ARTL) to ascertain the reasons for the refusal. All efforts
shall be exerted to convince the tenant-farmer to become a beneficiary and to comply with his obligations as such beneficiary.
2. If the tenant-farmer still refuses, the ARTL shall determine the substitute. The ARTL shall first consider the immediate member of the
tenant-farmers family who assisted in the cultivation of the land, and who is willing to be substituted to all the rights and obligations of the
tenant-farmer. In the absence or refusal of such member, the ARTL shall choose one from a list of at least three qualified tenants
recommended by the President of the Samahang Nayon or, in default, any organized farmer association, subject to the award limits under
P.D. No. 27.
3. Formal notice of the report shall be given to the concerned farmer-beneficiary together with all the pertinent documents and evidences.
4. The ARTL shall submit the records of the case with his report and recommendation to the District Officer within 5 days from the
ARTLs determination of the substitute. The District Officer shall likewise submit his report and recommendation to the Regional Director and
the latter to the Bureau of Agrarian Legal Assistance, for review, evaluation, and preparation of the final draft decision for final approval.
5. The decision shall declare the cancellation of the CLT if issued.
In the event of the farmer-beneficiarys death, the transfer or reallocation of his landholding to his heirs shall be governed by Ministry
Memorandum Circular No. 19-78 (Rules and Regulations In Case of Death of a Tenant-Beneficiary).
For abandonment to exist, the following requisites must concur: (1) a clear intent to abandon; and (2) an external act showing such intent.
The term is defined as the willful failure of the ARB, together with his farm household, to cultivate, till, or develop his land to produce any
crop, or to use the land for any specific economic purpose continuously for a period of two calendar years. It entails, among others, the
relinquishment of possession of the lot for at least two (2) calendar years and the failure to pay the amortization for the same period. What is
critical in abandonment is intent which must be shown to be deliberate and clear. The intent must be established by the factual failure to work
on the landholding absent any valid reason as well as a clear intent, which is shown as a separate element. Heirs of Lorenzo Buensuceso vs.
Perez; G.R. No. 173926. March 6, 2013
General Banking Law and Act No. 3135; right of redemption; period; juridical entities; General Banking Law of 2000 merely modified the time
for the exercise of such right by reducing the one-year period originally provided in Act No. 3135; right of redemption, being statutory, it
must be exercised in the manner prescribed by the statute, and within the prescribed time limit to make it effective. The law governing cases
of extrajudicial foreclosure of mortgage is Act No. 3135 (An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed
to Real-Estate Mortgages), as amended by Act No. 4118 (An Act to Amend Act No. 3135). Section 6 thereof provides:
SEC. 6. In all cases in which an extrajudicial sale is made under the special power hereinbefore referred to, the debtor, his successors-in
interest or any judicial creditor or judgment creditor of said debtor, or any person having a lien on the property subsequent to the mortgage
or deed of trust under which the property is sold, may redeem the same at any time within the term of one year from and after the date of
the sale; and such redemption shall be governed by the provisions of sections four hundred and sixty-four to four hundred and sixty-six,
inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provisions of this Act.
The one-year period of redemption is counted from the date of the registration of the certificate of sale. In this case, the parties provided in
their real estate mortgage contract that upon petitioners default and the latters entire loan obligation becoming due, respondent may
immediately foreclose the mortgage judicially in accordance with the Rules of Court, or extrajudicially in accordance with Act No. 3135, as
amended (An Act to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate Mortgages).
However, Section 47 of R.A. No. 8791 otherwise known as The General Banking Law of 2000 which took effect on June 13, 2000, amended
Act No. 3135. Said provision reads:
SECTION 47. Foreclosure of Real Estate Mortgage. In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on real
estate which is security for any loan or other credit accommodation granted, the mortgagor or debtor whose real property has been sold for
the full or partial payment of his obligation shall have the right within one year after the sale of the real estate, to redeem the property by
paying the amount due under the mortgage deed, with interest thereon at the rate specified in the mortgage, and all the costs and expenses
incurred by the bank or institution from the sale and custody of said property less the income derived therefrom. However, the purchaser at
the auction sale concerned whether in a judicial or extrajudicial foreclosure shall have the right to enter upon and take possession of such
property immediately after the date of the confirmation of the auction sale and administer the same in accordance with law. Any petition in
court to enjoin or restrain the conduct of foreclosure proceedings instituted pursuant to this provision shall be given due course only upon the
filing by the petitioner of a bond in an amount fixed by the court conditioned that he will pay all the damages which the bank may suffer by
the enjoining or the restraint of the foreclosure proceeding.
Notwithstanding Act 3135, juridical persons whose property is being sold pursuant to an extrajudicial foreclosure, shall have the right to
redeem the property in accordance with this provision until, but not after, the registration of the certificate of foreclosure sale with
the applicable Register of Deeds which in no case shall be more than three (3) months after foreclosure, whichever is
earlier. Owners of property that has been sold in a foreclosure sale prior to the effectivity of this Act shall retain their redemption rights until
their expiration. (Emphasis supplied.)
Under the new law, an exception is thus made in the case of juridical persons which are allowed to exercise the right of redemption only
until, but not after, the registration of the certificate of foreclosure sale and in no case more than three (3) months after foreclosure,
whichever comes first.

16

Section 47 (of the General Banking Law of 2000) did not divest juridical persons of the right to redeem their foreclosed properties but only
modified the time for the exercise of such right by reducing the one-year period originally provided in Act No. 3135 (An Act to Regulate the
Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate Mortgages). The new redemption period commences from the
date of foreclosure sale, and expires upon registration of the certificate of sale or three months after foreclosure, whichever is earlier. There is
likewise no retroactive application of the new redemption period because Section 47 (of the General Banking Law of 2000) exempts from its
operation those properties foreclosed prior to its effectivity and whose owners shall retain their redemption rights under Act No. 3135 (An Act
to Regulate the Sale of Property Under Special Powers Inserted In or Annexed to Real-Estate Mortgages).
The right of redemption being statutory, it must be exercised in the manner prescribed by the statute, and within the prescribed time limit, to
make it effective. Furthermore, as with other individual rights to contract and to property, it has to give way to police power exercised for
public welfare. Goldenway Merchandising Corporation vs. Equitable PCI Bank; G.R. No. 195540. March 13, 2013

APRIL
Contract; Rescission; effect. Rescission entails a mutual restitution of benefits received. An injured party who has chosen rescission is also
entitled to the payment of damages. Sandoval Shipyards, Inc. v. Philippine Merchant Marine Academy (PMMA); G.R. No. 188633. April 10,
2013
Obligation; Extinguishment of obligations; consignation; when tender of payment not necessary; judicial in character; difference between
consignation and tender of payment. Under Article 1256 of the Civil Code, the debtor shall be released from responsibility by the consignation
of the thing or sum due, without need of prior tender of payment, when the creditor is absent or unknown, or when he is incapacitated to
receive the payment at the time it is due, or when two or more persons claim the same right to collect, or when the title to the obligation has
been lost.
Consignation is necessarily judicial. Article 1258 of the Civil Code specifically provides that consignation shall be made by depositing the thing
or things due at the disposal of judicialauthority. The said provision clearly precludes consignation in venues other than the courts.
Elsewhere, what may be made is a valid tender of payment, but not consignation. The two, however, must be distinguished.
Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation, that is, an act preparatory to the
consignation, which is the principal, and from which are derived the immediate consequences which the debtor desires or seeks to obtain.
Tender of payment may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police Mutual Benefit Association, Inc.; G.R. No. 171298. April 15, 2013
Property; Ejectment; only issue is who is entitled to physical possession; forcible entry; prior physical possession is vital; judgment conclusive
between the parties and their successors-in-interest; effects if prevailing party is a usufructuary; usufruct; death of usufructuary extinguishes
usufruct. Ejectment cases forcible entry and unlawful detainer are summary proceedings designed to provide expeditious means to
protect actual possession or the right to possession of the property involved. The only question that the courts resolve in ejectment
proceedings is: who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de
jure. It does not even matter if a partys title to the property is questionable. Thus, an ejectment case will not necessarily be decided in favor
of one who has presented proof of ownership of the subject property.
Indeed, possession in ejectment cases means nothing more than actual physical possession, not legal possession in the sense
contemplated in civil law. In a forcible entry case, prior physical possession is the primary consideration[.] A party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his
favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects
him. [T]he party in peaceable, quiet possession shall not be thrown out by a strong hand, violence, or terror.
The judgment in an ejectment case is conclusive between the parties and their successors-in interest by title subsequent to the
commencement of the action; hence, it is enforceable by or against the heirs of the deceased. This judgment entitles the winning party to:
(a) the restitution of the premises, (b) the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the
premises, and (c) attorneys fees and costs.
[T]he right to the usufruct is now rendered moot by the death of Wilfredo since death extinguishes a usufruct under Article 603(1) of the Civil
Code. This development deprives the heirs of the usufructuary the right to retain or to reacquire possession of the property even if the
ejectment judgment directs its restitution.
Thus, what actually survives under the circumstances is the award of damages, by way of compensation. Rivera-Calingasan v. Rivera; G.R.
No. 171555. April 17, 2013

17

Property; Public property; public plaza forms part of the public dominion; cannot be the object of appropriation, lease, any other contractual
undertaking; void contracts. A pPublic plaza is for public use and therefore forms part of the public dominion. Accordingly, it cannot be the
object of appropriation either by the State or by private persons. Nor can it be the subject of lease or any other contractual undertaking.
In Villanueva v. Castaeda, Jr., citingEspiritu v. Municipal Council of Pozorrubio, the Court pronounced that:
x x x Town plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are
outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties.
In this relation, Article 1409(1) of the Civil Code provides that a contract whose purpose is contrary to law, morals, good customs, public
order or public policy is considered void and as such, creates no rights or obligations or any juridical relations. Land Bank of the Philippines v.
Cacayurin; G.R. No. 191667. April 17, 2013
Special Laws
Foreclosure of Mortgage pursuant to P.D. No. 385; when its purpose is served; when hearing is necessary before issuance of writ of
possession; foreclosure of mortgage under Section 33, Rule 39 of the Rules on Civil Procedure; when issuance of writ of possession is not
ministerial.Indeed, while the Court had already declared in Philippine National Bank v. Adil that once the property of a debtor is foreclosed
and sold to a GFI, it would be mandatory for the court to place the GFI in the possession and control of the propertypursuant to Section 4 of
P.D. No. 385 (Requiring Government Financial Institutions to Foreclose Mandatorily All Loans with Arrearages, Including Interest and Charges
Amounting to at Least Twenty (20%) of the Total Outstanding Obligation) this rule should not be construed as absolute or without
exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing foreclosure proceedings initiated by GFIs to continue until a
judgment therein becomes final and executory, without a restraining order, temporary or permanent injunction against it being issued. But if
a parcel of land is occupied by a party other than the judgment debtor, the proper procedure is for the court to order a hearing to determine
the nature of said adverse possession before it issues a writ of possession. This is because a third party, who is not privy to the debtor, is
protected by the law. Such third party may be ejected from the premises only after he has been given an opportunity to be heard, to comply
with the time honored principle of due process.
In the same vein, under Section 33 of Rule 39 of the Rules on Civil Procedure, the possession of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure, unless a third party is actually holding the property adversely vis--vis the judgment debtor.
The obligation of a court to issue a writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial,
once it appears that there is a third party who is in possession of the property and is claiming a right adverse to that of the debtor/mortgagor.
The Supreme Court explained in Philippine National Bank v. Austria that the foregoing doctrinal pronouncements are not without support in
substantive law:
x x x. Notably, the Civil Code protects the actual possessor of a property, to wit:
Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true owner must resort to judicial
process for the recovery of the property.
Under the aforequoted provision, one who claims to be the owner of a property possessed by another must bring the appropriate judicial
action for its physical recovery. The term judicial process could mean no less than an ejectment suit or reivindicatory action, in which the
ownership claims of the contending parties may be properly heard and adjudicated.
Royal Savings Bank v. Asia, et al.; G.R. No. 183658. April 10, 2013
Family Code; Declaration of Presumptive Death; judgment is immediately final and executory; proper remedy is a special civil action for
certiorari filed in the Court of Appeals; decision of Court of Appeals reviewable by the Supreme Court via certiorari under Rule 45. It is
improper to avail of an ordinary appeal as a vehicle for questioning a trial courts decision in a summary proceeding for the declaration of
presumptive death under Article 41 of the Family Code.
As explained in Republic v. Tango, the remedy of a losing party in a summary proceeding is not an ordinary appeal, but a petition
for certiorari, to wit:
By express provision of law, 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 courts 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 Courts 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.

18

When the OSG filed its notice of appeal under Rule 42, it availed itself of the wrong remedy. As a result, the running of the period for filing of
a Petition for Certiorari continued to run and was not tolled. Upon lapse of that period, the Decision of the RTC could no longer be
questioned. Republic of the Philippines v. Narceda; G.R. No. 182760. April 10, 2013.

Contract; Rescission; effect. Rescission entails a mutual restitution of benefits received. An injured party who has chosen rescission is also
entitled to the payment of damages. Sandoval Shipyards, Inc. v. Philippine Merchant Marine Academy (PMMA); G.R. No. 188633. April 10,
2013
Obligation; Extinguishment of obligations; consignation; when tender of payment not necessary; judicial in character; difference between
consignation and tender of payment.Under Article 1256 of the Civil Code, the debtor shall be released from responsibility by the consignation
of the thing or sum due, without need of prior tender of payment, when the creditor is absent or unknown, or when he is incapacitated to
receive the payment at the time it is due, or when two or more persons claim the same right to collect, or when the title to the obligation has
been lost.
Consignation is necessarily judicial. Article 1258 of the Civil Code specifically provides that consignation shall be made by depositing the thing
or things due at the disposal of judicialauthority. The said provision clearly precludes consignation in venues other than the courts.
Elsewhere, what may be made is a valid tender of payment, but not consignation. The two, however, are to be distinguished.
Tender of payment must be distinguished from consignation. Tender is the antecedent of consignation, that is, an act preparatory to the
consignation, which is the principal, and from which are derived the immediate consequences which the debtor desires or seeks to obtain.
Tender of payment may be extrajudicial, while consignation is necessarily judicial, and the priority of the first is the attempt to make a private
settlement before proceeding to the solemnities of consignation. (8 Manresa 325).
Sps. Cacayorin v. Armed Forces and Police Mutual Benefit Association, Inc.; G.R. No. 171298. April 15, 2013
Property; Ejectment; only issue is who is entitled to physical possession; forcible entry; prior physical possession is vital; judgment conclusive
between the parties and their successors-in-interest; effects if prevailing party is a usufructuary; usufruct; death of usufructuary extinguishes
usufruct. Ejectment cases forcible entry and unlawful detainer are summary proceedings designed to provide expeditious means to
protect actual possession or the right to possession of the property involved. The only question that the courts resolve in ejectment
proceedings is: who is entitled to the physical possession of the premises, that is, to the possession de facto and not to the possession de
jure. It does not even matter if a partys title to the property is questionable. Thus, an ejectment case will not necessarily be decided in favor
of one who has presented proof of ownership of the subject property.
Indeed, possession in ejectment cases means nothing more than actual physical possession, not legal possession in the sense
contemplated in civil law. In a forcible entry case, prior physical possession is the primary consideration[.] A party who can prove prior
possession can recover such possession even against the owner himself. Whatever may be the character of his possession, if he has in his
favor prior possession in time, he has the security that entitles him to remain on the property until a person with a better right lawfully ejects
him. [T]he party in peaceable, quiet possession shall not be thrown out by a strong hand, violence, or terror.
The judgment in an ejectment case is conclusive between the parties and their successors-in interest by title subsequent to the
commencement of the action; hence, it is enforceable by or against the heirs of the deceased. This judgment entitles the winning party to:
(a) the restitution of the premises, (b) the sum justly due as arrears of rent or as reasonable compensation for the use and occupation of the
premises, and (c) attorneys fees and costs.
[T]he right to the usufruct is now rendered moot by the death of Wilfredo since death extinguishes a usufruct under Article 603(1) of the Civil
Code. This development deprives the heirs of the usufructuary the right to retain or to reacquire possession of the property even if the
ejectment judgment directs its restitution.
Thus, what actually survives under the circumstances is the award of damages, by way of compensation. Rivera-Calingasan v. Rivera; G.R.
No. 171555. April 17, 2013
Property; Public property; public plaza forms part of the public dominion; cannot be the object of appropriation, lease, any other contractual
undertaking; void contracts. [Public plaza is for] public use and thereby, forming part of the public dominion. Accordingly, it cannot be the
object of appropriation either by the State or by private persons. Nor can it be the subject of lease or any other contractual undertaking.
In Villanueva v. Castaeda, Jr., citingEspiritu v. Municipal Council of Pozorrubio, the Court pronounced that:
x x x Town plazas are properties of public dominion, to be devoted to public use and to be made available to the public in general. They are
outside the commerce of man and cannot be disposed of or even leased by the municipality to private parties.
In this relation, Article 1409(1) of the Civil Code provides that a contract whose purpose is contrary to law, morals, good customs, public
order or public policy is considered void and as such, creates no rights or obligations or any juridical relations. Land Bank of the Philippines v.
Cacayurin; G.R. No. 191667. April 17, 2013
Special Laws

19

Foreclosure of Mortgage pursuant to P.D. No. 385; when its purpose is served; when hearing is necessary before issuance of writ of
possession; foreclosure of mortgage under Section 33, Rule 39 of the Rules on Civil Procedure; when issuance of writ of possession is not
ministerial.While the Supreme Court had already declared in Philippine National Bank v. Adil that once the property of a debtor is foreclosed
and sold to a GFI, it would be mandatory for the court to place the GFI in the possession and control of the propertypursuant to Section 4 of
P.D. No. 385 (Requiring Government Financial Institutions to Foreclose Mandatorily All Loans with Arrearages, Including Interest and Charges
Amounting to at Least Twenty (20%) of the Total Outstanding Obligation) this rule should not be construed as absolute or without
exception.
The evident purpose underlying P.D. 385 is sufficiently served by allowing foreclosure proceedings initiated by GFIs to continue until a
judgment therein becomes final and executory, without a restraining order, temporary or permanent injunction against it being issued. But if
a parcel of land is occupied by a party other than the judgment debtor, the proper procedure is for the court to order a hearing to determine
the nature of said adverse possession before it issues a writ of possession. This is because a third party, who is not privy to the debtor, is
protected by the law. Such third party may be ejected from the premises only after he has been given an opportunity to be heard, to comply
with the time honored principle of due process.
In the same vein, under Section 33 of Rule 39 of the Rules on Civil Procedure, the possession of a mortgaged property may be awarded to a
purchaser in the extrajudicial foreclosure, unless a third party is actually holding the property adversely vis--vis the judgment debtor.
[T]he obligation of a court to issue a writ of possession in favor of the purchaser in an extrajudicial foreclosure sale ceases to be ministerial,
once it appears that there is a third party who is in possession of the property and is claiming a right adverse to that of the debtor/mortgagor.
We explained in Philippine National Bank v. Austria that the foregoing doctrinal pronouncements are not without support in substantive law, to
wit:
x x x. Notably, the Civil Code protects the actual possessor of a property, to wit:
Art. 433. Actual possession under claim of ownership raises a disputable presumption of ownership. The true owner must resort to judicial
process for the recovery of the property.
Under the aforequoted provision, one who claims to be the owner of a property possessed by another must bring the appropriate judicial
action for its physical recovery. The term judicial process could mean no less than an ejectment suit or reivindicatory action, in which the
ownership claims of the contending parties may be properly heard and adjudicated.
Royal Savings Bank v. Asia, et al.; G.R. No. 183658. April 10, 2013
Family Code; Declaration of Presumptive Death; judgment is immediately final and executory; proper remedy is a special civil action for
certiorari filed in the Court of Appeals; decision of Court of Appeals reviewable by the Supreme Court via certiorari under Rule 45. [It is
improper to avail of] an ordinary appeal as a vehicle for questioning a trial courts decision in a summary proceeding for the declaration of
presumptive death under Article 41 of the Family Code.
As explained in Republic v. Tango, the remedy of a losing party in a summary proceeding is not an ordinary appeal, but a petition
for certiorari, to wit:
By express provision of law, 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 courts 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 Courts 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.
When the OSG filed its notice of appeal under Rule 42, it availed itself of the wrong remedy. As a result, the running of the period for filing of
a Petition for Certiorari continued to run and was not tolled. Upon lapse of that period, the Decision of the RTC could no longer be
questioned. Republic of the Philippines v. Narceda; G.R. No. 182760. April 10, 2013
The Subdivision and Condominium Buyers Protective Decree; contract to sell; validity is not affected by lack of certificate of registration of
subdivision developer and failure to register the contract before the Register of Deeds; Maceda Law. In Spouses Co Chien v. Sta. Lucia Realty
and Development Corporation, Inc. this Court has already ruled that the lack of a certificate of registration and a license to sell on the part of
a subdivision developer does not result to the nullification or invalidation of the contract to sell it entered into with a buyer. The contract to
sell remains valid and subsisting. In said case, the Court upheld the validity of the contract to sell notwithstanding violations by the developer
of the provisions of PD 957. We held that nothing in PD 957 provides for the nullity of a contract validly entered into in cases of violation of
any of its provisions such as the lack of a license to sell.
Moreover, Flora claims that the contract she entered into with Moldex is void because of the latters failure to register the contract to
sell/document of conveyance with the Register of Deeds, in violation of Section 1730 of PD 957. However, just like in Section 5 which did not
penalize the lack of a license to sell with the nullification of the contract, Section 17 similarly did not mention that the developers or Moldexs
failure to register the contract to sell or deed of conveyance with the Register of Deeds resulted to the nullification or invalidity of the said

20

contract or deed [T]hus, non-registration of an instrument of conveyance will not affect the validity of a contract to sell. It will remain valid
and effective between the parties thereto as under PD 1529 or The Property Registration Decree, registration merely serves as a constructive
notice to the whole world to bind third parties.
Under the Maceda Law, the defaulting buyer who has paid at least two years of installments has the right of either to avail of the grace period
to pay or, the cash surrender value of the payments made:
Section 3. In all transactions or contracts involving the sale or financing of real estate on installment payments, including residential
condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight
Hundred Forty-four, as amended by Republic Act Numbered Sixty-three Hundred Eighty-nine, where the buyer has paid at least two years of
installments, the buyer is entitled to the following rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the
rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer
only once in every five years of the life of the contract and its extensions, if any.
(b) If the contract is canceled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to
fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety
per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments made.
Moldex Realty, Inc. v. Saberon; G.R. No. 176289. April 8, 2013

MAY (none listed)
JUNE
Contract; contract of carriage; definition; common carrier; definition; breach of contract of carriage; entitlement to damages; contract of
services; standard of care required; damages; when recoverable; quasi-delict; solidary liability of joint tortfeasors. A contract of carriage is
defined as one whereby a certain person or association of persons obligate themselves to transport persons, things, or news from one place
to another for a fixed price. On its face, the airplane ticket is a valid written contract of carriage. This Court has held that when an airline
issues a ticket to a passenger confirmed on a particular flight, on a certain date, a contract of carriage arises, and the passenger has every
right to expect that he would fly on that flight and on that date. If he does not, then the carrier opens itself to a suit for breach of contract of
carriage.
Under Article 1732 of the Civil Code, this persons, corporations, firms, or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air, for compensation, offering their services to the public is called a common carrier.
In contrast, the contractual relation between Sampaguita Travel and respondents is a contract for services. Since the contract between the
parties is an ordinary one or services, the standard of care required of respondent is that of a good father of a family under Article 1173 of
the Civil Code. This connotes reasonable care consistent with that which an ordinarily prudent person would have observed when confronted
with a similar situation. The test to determine whether negligence attended the performance of an obligation is: did the defendant in doing
the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If
not, then he is guilty of negligence.
For one to be entitled to actual damages, it is necessary to prove the actual amount of loss with a reasonable degree of certainty, premised
upon competent proof and the best evidence obtainable by the injured party. To justify an award of actual damages, there must be
competent proof of the actual amount of loss. Credence can be given only to claims which are duly supported by receipts.
Under Article 2220 of the Civil Code of the Philippines, an award of moral damages, in breaches of contract, is in order upon a showing that
the defendant acted fraudulently or in bad faith. What the law considers as bad faith which may furnish the ground for an award of moral
damages would be bad faith in securing the contract and in the execution thereof, as well as in the enforcement of its terms, or any other
kind of deceit. In the same vein, to warrant the award of exemplary damages, defendant must have acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner.
Nominal damages are recoverable where a legal right is technically violated and must be vindicated against an invasion that has produced no
actual present loss of any kind or where there has been a breach of contract and no substantial injury or actual damages whatsoever have

21

been or can be shown. Under Article 2221 of the Civil Code, nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, not for indemnifying the plaintiff for any loss suffered.
The amount to be awarded as nominal damages shall be equal or at least commensurate to the injury sustained by respondents considering
the concept and purpose of such damages. The amount of nominal damages to be awarded may also depend on certain special reasons
extant in the case. The amount of such damages is addressed to the sound discretion of the court and taking into account the relevant
circumstances, such as the failure of some respondents to board the flight on schedule and the slight breach in the legal obligations of the
airline company to comply with the terms of the contract, i.e., the airplane ticket and of the travel agency to make the correct bookings.
Cathay Pacific and Sampaguita Travel acted together in creating the confusion in the bookings which led to the erroneous cancellation of
respondents bookings. Their negligence is the proximate cause of the technical injury sustained by respondents. Therefore, they have
become joint tortfeasors, whose responsibility for quasi-delict, under Article 2194 of the Civil Code, is solidary. Cathay Pacific Airways v.
Juanita Reyes, et al., G.R. No. 185891, June 26, 2013
Contract; contract of sale; disputable presumptions; failure to pay the price; effect of; double sale; effect; registration in good faith; buyer in
good faith; duty of a buyer when a piece of land is in the actual possession of third persons. Under Section 3, Rule 131 of the Rules of Court,
the following are disputable presumptions: (1) private transactions have been fair and regular; (2) the ordinary course of business has been
followed; and (3) there was sufficient consideration for a contract. These presumptions operate against an adversary who has not introduced
proof to rebut them. They create the necessity of presenting evidence to rebut theprima facie case they created, and which, if no proof to the
contrary is presented and offered, will prevail. The burden of proof remains where it is but, by the presumption, the one who has that burden
is relieved for the time being from introducing evidence in support of the averment, because the presumption stands in the place of evidence
unless rebutted.
Granting that there was no delivery of the consideration, the seller would have no right to sell again what he no longer owned. His remedy
would be to rescind the sale for failure on the part of the buyer to perform his part of their obligation pursuant to Article 1191 of the New Civil
Code. In the case of Clara M. Balatbat v. Court Of Appeals and Spouses Jose Repuyan and Aurora Repuyan, it was written:
The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the bilateral
contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code. Non-payment only creates a right to
demand the fulfillment of the obligation or to rescind the contract. [Emphases supplied]
[O]wnership of an immovable property which is the subject of a double sale shall be transferred: (1) to the person acquiring it who in good
faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in
default thereof, to the person who presents the oldest title, provided there is good faith. The requirement of the law then is two-fold:
acquisition in good faith and registration in good faith. Good faith must concur with the registration. If it would be shown that a buyer was in
bad faith, the alleged registration they have made amounted to no registration at all.
When a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should investigate the rights of
those in possession. Without making such inquiry, one cannot claim that he is a buyer in good faith. When a man proposes to buy or deal with
realty, his duty is to read the public manuscript, that is, to look and see who is there upon it and what his rights are. A want of caution and
diligence, which an honest man of ordinary prudence is accustomed to exercise in making purchases, is in contemplation of law, a want of
good faith. The buyer who has failed to know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith.
[I]f a vendee in a double sale registers the sale after he has acquired knowledge of a previous sale, the registration constitutes a registration
in bad faith and does not confer upon him any right. If the registration is done in bad faith, it is as if there is no registration at all, and the
buyer who has first taken possession of the property in good faith shall be preferred. Hospicio D. Rosaroso, et al. v. Lucila Laborte Soria, et
al., G.R. No. 194846, June 19, 2013
Contract; contract of sale; elements; contract to sell; elements; difference between a contract of sale and a contract to sell; effect of non-
payment in a contract of sale; laches; definition; Torrens system; exception to general rule that action to recover registered land covered by
the Torrens System may not be barred by laches. A contract of sale is defined under Article 1458 of the Civil Code:
By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and
the other to pay therefore a price certain in money or its equivalent.
The elements of a contract of sale are: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price;
(b) determinate subject matter; and (c) price certain in money or its equivalent.
A contract to sell, on the other hand, is defined by Article 1479 of the Civil Code:
[A] bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof
to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed
upon, that is, full payment of the purchase price.
In a contract of sale, the title to the property passes to the buyer upon the delivery of the thing sold, whereas in a contract to sell, the
ownership is, by agreement, retained by the seller and is not to pass to the vendee until full payment of the purchase price.

22

Even assuming, arguendo, that the petitioner was not paid, such non payment is immaterial and has no effect on the validity of the contract
of sale. A contract of sale is a consensual contract and what is required is the meeting of the minds on the object and the price for its
perfection and validity. In this case, the contract was perfected the moment the petitioner and the respondent agreed on the object of the
sale the two-hectare parcel of land, and the price Three Thousand Pesos (P3,000.00). Non-payment of the purchase price merely gave
rise to a right in favor of the petitioner to either demand specific performance or rescission of the contract of sale.
Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due
diligence could or should have been done earlier. It should be stressed that laches is not concerned only with the mere lapse of time. As a
general rule, an action to recover registered land covered by the Torrens System may not be barred by laches. Neither can laches be set up
to resist the enforcement of an imprescriptible legal right. In exceptional cases, however, the Court allowed laches as a bar to recover a titled
property. Thus, in Romero v. Natividad, the Court ruled that laches will bar recovery of the property even if the mode of transfer was invalid.
Likewise, in Vda. de Cabrera v. CA, the Court ruled:
In our jurisdiction, it is an enshrined rule that even registered owners of property may be barred from recovering possession of
property by virtue of laches. Under the Land Registration Act (now the Property Registration Decree), no title to registered land in
derogation to that of the registered owner shall be acquired by prescription or adverse possession. The same is not true with regard to laches.
More particularly, laches will bar recovery of a property, even if the mode of transfer used by an alleged member of a cultural minority lacks
executive approval. Thus, in Heirs of Dicman v. Cario, the Court upheld the Deed of Conveyance of Part Rights and Interests in Agricultural
Land executed by Ting-el Dicman in favor of Sioco Cario despite lack of executive approval. The Court stated that despite the judicial
pronouncement that the sale of real property by illiterate ethnic minorities is null and void for lack of approval of competent authorities, the
right to recover possession has nonetheless been barred through the operation of the equitable doctrine of laches. Ali Akang v. Municipality
of Isulan, Sultan Kudarat Province, G.R. No. 186014, June 26, 2013
Contract; contract of sale; disqualification of a lawyer to buy under Article 1491; elements of a contract; autonomous nature; obligatory
nature of contract; interpretation; courts have no authority to alter a contract by construction or to make a new contract for the parties;
penal clause; generally substitutes the indemnity for damages and the payment of interests in case of non-compliance. Admittedly, Article
1491 (5) of the Civil Code prohibits lawyers from acquiring by purchase or assignment the property or rights involved which are the object of
the litigation in which they intervene by virtue of their profession. The CA lost sight of the fact, however, that the prohibition applies only
during the pendency of the suit and generally does not cover contracts for contingent fees where the transfer takes effect only after the
finality of a favorable judgment.
Defined as a meeting of the minds between two persons whereby one binds himself, with respect to the other to give something or to render
some service, a contract requires the concurrence of the following requisites: (a) consent of the contracting parties; (b) object certain which
is the subject matter of the contract; and, (c) cause of the obligation which is established.
Viewed in the light of the autonomous nature of contracts enunciated under Article 1306 of the Civil Code, on the other hand, we find that
the Kasunduan was correctly found by the RTC to be a valid and binding contract between the parties.
Obligations arising from contracts, after all, have the force of law between the contracting parties who are expected to abide in good faith
with their contractual commitments, not weasel out of them. Moreover, when the terms of the contract are clear and leave no doubt as to the
intention of the contracting parties, the rule is settled that the literal meaning of its stipulations should govern. In such cases, courts have no
authority to alter a contract by construction or to make a new contract for the parties. Since their duty is confined to the interpretation of the
one which the parties have made for themselves without regard to its wisdom or folly, it has been ruled that courts cannot supply material
stipulations or read into the contract words it does not contain. Indeed, courts will not relieve a party from the adverse effects of an unwise or
unfavorable contract freely entered into.
An accessory undertaking to assume greater liability on the part of the obligor in case of breach of an obligation, the foregoing stipulation is a
penal clause which serves to strengthen the coercive force of the obligation and provides for liquidated damages for such breach. The obligor
would then be bound to pay the stipulated indemnity without the necessity of proof of the existence and the measure of damages caused by
the breach.
In obligations with a penal clause, the penalty generally substitutes the indemnity for damages and the payment of interests in case of non-
compliance. Usually incorporated to create an effective deterrent against breach of the obligation by making the consequences of such breach
as onerous as it may be possible, the rule is settled that a penal clause is not limited to actual and compensatory damages. Heirs of Manuel
Uy Ek Liong v. Mauricia Meer Castillo, Heirs of Buenaflor C. Umali, represented by Nancy Umali, et al., G.R. No. 176425, June 5, 2013.
Contract; default of debtor; definition; requisites; liquidated damages; stipulation therefor; double function; penalty clause; definition;
function. Default or mora on the part of the debtor is the delay in the fulfillment of the prestation by reason of a cause imputable to the
former. It is the nonfulfillment of an obligation with respect to time.
It is a general rule that one who contracts to complete certain work within a certain time is liable for the damage for not completing it within
such time, unless the delay is excused or waived.
In this jurisdiction, the following requisites must be present in order that the debtor may be in default: (1) that the obligation be demandable
and already liquidated; (2) that the debtor delays performance; and (3) that the creditor requires the performance judicially or extrajudicially.

23

Liability for liquidated damages is governed by Articles 2226 to 2228 of the Civil Code. A stipulation for liquidated damages is attached to an
obligation in order to ensure performance and has a double function: (1) to provide for liquidated damages, and (2) to strengthen the
coercive force of the obligation by the threat of greater responsibility in the event of breach. The amount agreed upon answers for damages
suffered by the owner due to delays in the completion of the project. As a precondition to such award, however, there must be proof of the
fact of delay in the performance of the obligation.
A penalty clause, expressly recognized by law, is an accessory undertaking to assume greater liability on the part of the obligor in case of
breach of an obligation. It functions to strengthen the coercive force of obligation and to provide, in effect, for what could be the liquidated
damages resulting from such a breach. The obligor would then be bound to pay the stipulated indemnity without the necessity of proof on the
existence and on the measure of damages caused by the breach. It is well-settled that so long as such stipulation does not contravene law,
morals, or public order, it is strictly binding upon the obligor. J Plus Asia Development Corporation v. Utility Assurance Corporation, G.R. No.
199650, June 26, 2013
Contract; rescission under Article 1191; mutual restitution; contracts; definition. Mutual restitution is required in cases involving rescission
under Article 1191 of the Civil Code; such restitution is necessary to bring back the parties to their original situation prior to the inception of
the contract.
As a general rule, a contract is a meeting of minds between two persons. The Civil Code upholds the spirit over the form; thus, it deems an
agreement to exist, provided the essential requisites are present. A contract is upheld as long as there is proof of consent, subject matter and
cause. Moreover, it is generally obligatory in whatever form it may have been entered into. From the moment there is a meeting of minds
between the parties, [the contract] is perfected. Fil-Estate Gold and Development, Inc., et al. v. Vertex Sales and Trading, Inc., G.R. No.
202079, June 10, 2013.
Contract; void contracts; effect. A void contract is equivalent to nothing; it produces no civil effect; and it does not create, modify or
extinguish a juridical relation. Joselito C. Borromeo v. Juan T. Mina, G.R. No. 193747, June 5, 2013.
Credit; concurrence and preference of credit; tax clearance is not required for the approval of a project of partition. The position of the BIR,
insisting on prior compliance with the tax clearance requirement as a condition for the approval of the project of distribution of the assets of a
bank under liquidation, is contrary to both the letter and intent of the law on liquidation of banks by the PDIC.
The law expressly provides that debts and liabilities of the bank under liquidation are to be paid in accordance with the rules on concurrence
and preference of credit under the Civil Code. Duties, taxes, and fees due the Government enjoy priority only when they are with reference to
a specific movable property, under Article 2241(1) of the Civil Code, or immovable property, under Article 2242(1) of the same Code.
However, with reference to the other real and personal property of the debtor, sometimes referred to as free property, the taxes and
assessments due the National Government, other than those in Articles 2241(1) and 2242(1) of the Civil Code, such as the corporate income
tax, will come only in ninth place in the order of preference. On the other hand, if the BIRs contention that a tax clearance be secured first
before the project of distribution of the assets of a bank under liquidation may be approved, then the tax liabilities will be given absolute
preference in all instances, including those that do not fall under Articles 2241(1) and 2242(1) of the Civil Code. In order to secure a tax
clearance which will serve as proof that the taxpayer had completely paid off his tax liabilities, PDIC will be compelled to settle and pay first
all tax liabilities and deficiencies of the bank, regardless of the order of preference under the pertinent provisions of the Civil Code. Following
the BIRs stance, therefore, only then may the project of distribution of the banks assets be approved and the other debts and claims
thereafter settled, even though under Article 2244 of the Civil Code such debts and claims enjoy preference over taxes and assessments due
the National Government. Philippine Deposit Insurance Corporation v. Bureau of Internal Revenue, G.R. No. 172892, June 13, 2013
Damages; Attorneys fees; dual concept of attorneys fees; an award of attorneys fees under Article 2208 demands factual, legal, and
equitable justification. Article 2208 of the New Civil Code of the Philippines states the policy that should guide the courts when awarding
attorneys fees to a litigant. As a general rule, the parties may stipulate the recovery of attorneys fees. In the absence of such stipulation,
this article restrictively enumerates the instances when these fees may be recovered.
In ABS-CBN Broadcasting Corp. v. CA, this Court had the occasion to expound on the policy behind the grant of attorneys fees as actual or
compensatory damages:
(T)he law is clear that in the absence of stipulation, attorneys fees may be recovered as actual or compensatory damages under any of the
circumstances provided for in Article 2208 of the Civil Code. The general rule is that attorneys fees cannot be recovered as part of damages
because of the policy that no premium should be placed on the right to litigate. They are not to be awarded every time a party wins a suit.
The power of the court to award attorneys fees under Article 2208 demands factual, legal, and equitable justification. Even when a claimant
is compelled to litigate with third persons or to incur expenses to protect his rights, still attorneys fees may not be awarded where no
sufficient showing of bad faith could be reflected in a partys persistence in a case other than an erroneous conviction of the righteousness of
his cause.
We have consistently held that an award of attorneys fees under Article 2208 demands factual, legal, and equitable justification to avoid
speculation and conjecture surrounding the grant thereof. Due to the special nature of the award of attorneys fees, a rigid standard is
imposed on the courts before these fees could be granted. Hence, it is imperative that they clearly and distinctly set forth in their decisions
the basis for the award thereof. It is not enough that they merely state the amount of the grant in the dispositive portion of their decisions. It
bears reiteration that the award of attorneys fees is an exception rather than the general rule; thus, there must be compelling legal reason to
bring the case within the exceptions provided under Article 2208 of the Civil Code to justify the award. Philippine National Construction
Corporation v. Apac Marketing Corporation, represented by Cesar M. Ong, Jr.,G.R. No. 190957, June 5, 2013.

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Damages; nominal damages; when warranted in labor cases. [W]hile Van Doorn has a just and valid cause to terminate the respondents
employment, it failed to meet the requisite procedural safeguards provided under Article 283 of the Labor Code. In the termination of
employment under Article 283, Van Doorn, as the employer, is required to serve a written notice to the respondents and to the DOLE of the
intended termination of employment at least one month prior to the cessation of its fishing operations. Poseidon could have easily filed this
notice, in the way it represented Van Doorn in its dealings in the Philippines. While this omission does not affect the validity of the termination
of employment, it subjects the employer to the payment of indemnity in the form of nominal damages. Poseidon International Maritime
Services, Inc. v. Tito R. Tamala, et al., G.R. No. 186475, June 26, 2013
Damages; temperate damages; when warranted. Article 2224 of the New Civil Code provides that (t)emperate or moderate damages, which
are more than nominal but less than compensatory damages may be recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, proved with certainty.People of the Philippines v. Reggie Bernardo, G.R. No.
198789, June 3, 2013.
Interest rates; a stipulated interest of 24% per annum is not unconscionable; surcharge on principal loan; a surcharge of 1% per month on
the principal loan is valid; surcharge or penalty partakes of the nature of liquidated damages; different from interest payment. InVillanueva v.
Court of Appeals, where the issue raised was whether the 24% p.a. stipulated interest rate is unreasonable under the circumstances, we
answered in the negative and held:
In Spouses Zacarias Bacolor and Catherine Bacolor v. Banco Filipino Savings and Mortgage Bank, Dagupan City Branch, this Court held that
the interest rate of 24% per annum on a loan of P244,000.00, agreed upon by the parties, may not be considered as unconscionable and
excessive. As such, the Court ruled that the borrowers cannot renege on their obligation to comply with what is incumbent upon them under
the contract of loan as the said contract is the law between the parties and they are bound by its stipulations.
Also, in Garcia v. Court of Appeals, this Court sustained the agreement of the parties to a 24% per annum interest on an P8,649,250.00 loan
finding the same to be reasonable and clearly evidenced by the amended credit line agreement entered into by the parties as well as two
promissory notes executed by the borrower in favor of the lender.
Based on the above jurisprudence, the Court finds that the 24% per annum interest rate, provided for in the subject mortgage contracts for a
loan of P225,000.00, may not be considered unconscionable. Moreover, considering that the mortgage agreement was freely entered into by
both parties, the same is the law between them and they are bound to comply with the provisions contained therein.
In Ruiz v. CA, we held:
The 1% surcharge on the principal loan for every month of default is valid. This surcharge or penalty stipulated in a loan agreement in case
of default partakes of the nature of liquidated damages under Art. 2227 of the New Civil Code, and is separate and distinct from interest
payment. Also referred to as a penalty clause, it is expressly recognized by law. It is an accessory undertaking to assume greater liability on
the part of an obligor in case of breach of an obligation. The obligor would then be bound to pay the stipulated amount of indemnity without
the necessity of proof on the existence and on the measure of damages caused by the breach.
Spouses Florentino T. Mallari and Aurea V. Mallari v. Prudential Bank of the Philippines, G.R. No. 197861, June 5, 2013
Tort; collateral source rule; unjust enrichment; elements. As part of American personal injury law, the collateral source rule was originally
applied to tort cases wherein the defendant is prevented from benefiting from the plaintiffs receipt of money from other sources. Under this
rule, if an injured person receives compensation for his injuries from a source wholly independent of the tortfeasor, the payment should not
be deducted from the damages which he would otherwise collect from the tortfeasor. In a recent Decision by the Illinois Supreme Court, the
rule has been described as an established exception to the general rule that damages in negligence actions must be compensatory. The
Court went on to explain that although the rule appears to allow a double recovery, the collateral source will have a lien or subrogation right
to prevent such a double recovery. In Mitchell v. Haldar, the collateral source rule was rationalized by the Supreme Court of Delaware:
The collateral source rule is predicated on the theory that a tortfeasor has no interest in, and therefore no right to benefit from monies
received by the injured person from sources unconnected with the defendant. According to the collateral source rule, a tortfeasor has no
right to any mitigation of damages because of payments or compensation received by the injured person from an independent source. The
rationale for the collateral source rule is based upon the quasi-punitive nature of tort law liability. It has been explained as follows:
The collateral source rule is designed to strike a balance between two competing principles of tort law: (1) a plaintiff is entitled to
compensation sufficient to make him whole, but no more; and (2) a defendant is liable for all damages that proximately result from his
wrong. A plaintiff who receives a double recovery for a single tort enjoys a windfall; a defendant who escapes, in whole or in part, liability for
his wrong enjoys a windfall. Because the law must sanction one windfall and deny the other, it favors the victim of the wrong rather than the
wrongdoer.
Thus, the tortfeasor is required to bear the cost for the full value of his or her negligent conduct even if it results in a windfall for the innocent
plaintiff. (Citations omitted)
As seen, the collateral source rule applies in order to place the responsibility for losses on the party causing them. Its application is justified
so that the wrongdoer should not benefit from the expenditures made by the injured party or take advantage of contracts or other relations
that may exist between the injured party and third persons. Thus, it finds no application to cases involving no-fault insurances under which
the insured is indemnified for losses by insurance companies, regardless of who was at fault in the incident generating the l osses.

25

To constitute unjust enrichment, it must be shown that a party was unjustly enriched in the sense that the term unjustly could mean illegally
or unlawfully. A claim for unjust enrichment fails when the person who will benefit has a valid claim to such benefit. Mitsubishi Motors
Philippines Salaried Employees Union v. Mitsubishi Motors Philippines Corporation, G.R. No. 175773, June 17, 2013.
Unjust enrichment; definition; elements. Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for
property or benefits received under circumstances that give rise to legal or equitable obligation to account for them. To be entitled to
remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconveyance.
Rather, it is a prerequisite for the enforcement of the doctrine of restitution. There is unjust enrichment when:
1. A person is unjustly benefited; and
2. Such benefit is derived at the expense of or with damages to another.
Philippine Transmarine Carriers, Inc. v. Leandro Legaspi, G.R. No. 202791, June 10, 2013.
Special Laws
Family Code; support; in proportion to the resources or means of the giver and to the needs of the recipient; support pendente lite in cases of
legal separation and petitions for declaration of nullity or annulment of marriage; judicial determination is guided by the Rule on Provisional
Orders; support in arrears; deductions from accrued support pendente lite;judgment for support does not become final. As a matter of law,
the amount of support which those related by marriage and family relationship is generally obliged to give each other shall be in proportion to
the resources or means of the giver and to the needs of the recipient. Such support comprises everything indispensable for sustenance,
dwelling, clothing, medical attendance, education and transportation, in keeping with the financial capacity of the family.
Upon receipt of a verified petition for declaration of absolute nullity of void marriage or for annulment of voidable marriage, or for legal
separation, and at any time during the proceeding, the court, motu proprio or upon verified application of any of the parties, guardian or
designated custodian, may temporarily grant support pendente lite prior to the rendition of judgment or final order. Because of its provisional
nature, a court does not need to delve fully into the merits of the case before it can settle an application for this relief. All that a court is
tasked to do is determine the kind and amount of evidence which may suffice to enable it to justly resolve the application. It is enough that
the facts be established by affidavits or other documentary evidence appearing in the record.
Judicial determination of support pendente lite in cases of legal separation and petitions for declaration of nullity or annulment of marriage are
guided by the provisions of the Rule on Provisional Orders.
On the issue of crediting of money payments or expenses against accrued support, we find as relevant the following rulings by US courts.
In Bradford v. Futrell, appellant sought review of the decision of the Circuit Court which found him in arrears with his child support payments
and entered a decree in favor of appellee wife. He complained that in determining the arrearage figure, he should have been allowed full
credit for all money and items of personal property given by him to the children themselves, even though he referred to them as gifts. The
Court of Appeals of Maryland ruled that in the suit to determine amount of arrears due the divorced wife under decree for support of minor
children, the husband (appellant) was not entitled to credit for checks which he had clearly designated as gifts, nor was he entitled to credit
for an automobile given to the oldest son or a television set given to the children. Thus, if the children remain in the custody of the mother,
the father is not entitled to credit for money paid directly to the children if such was paid without any relation to the decree.
In Martin, Jr. v. Martin, the Supreme Court of Washington held that a father, who is required by a divorce decree to make child support
payments directly to the mother, cannot claim credit for payments voluntarily made directly to the children. However, special considerations
of an equitable nature may justify a court in crediting such payments on his indebtedness to the mother, when such can be done without
injustice to her.
Suffice it to state that the matter of increase or reduction of support should be submitted to the trial court in which the action for declaration
for nullity of marriage was filed, as this Court is not a trier of facts. The amount of support may be reduced or increased proportionately
according to the reduction or increase of the necessities of the recipient and the resources or means of the person obliged to support. As we
held in Advincula v. Advincula:
Judgment for support does not become final. The right to support is of such nature that its allowance is essentially provisional; for during the
entire period that a needy party is entitled to support, his or her alimony may be modified or altered, in accordance with his increased or
decreased needs, and with the means of the giver. It cannot be regarded as subject to final determination.
Susan Lim-Lua v. Danilo Y. Lua, G.R. Nos. 175279-80, June 5, 2013.
Family Code; Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages; not applicable in an action for
recognition of foreign judgment; foreign judgment relating to the marital status of a person; special proceeding for cancellation or correction
of entries in the civil registry under Rule 108 of the Rules of Court; the first husband has a right to file the petition; effect of a foreign divorce
decree to a Filipino spouse; Article 26 of the Family Code. The Rule on Declaration of Absolute Nullity of Void Marriages and Annulment of
Voidable Marriages (A.M. No. 02-11-10-SC) does not apply in a petition to recognize a foreign judgment relating to the status of a marriage
where one of the parties is a citizen of a foreign country. Moreover, in Juliano-Llave v. Republic, this Court held that the rule in A.M. No. 02-
11-10-SC that only the husband or wife can file a declaration of nullity or annulment of marriage does not apply if the reason behind the
petition is bigamy.

26

A foreign judgment relating to the status of a marriage affects the civil status, condition and legal capacity of its parties. However, the effect
of a foreign judgment is not automatic. To extend the effect of a foreign judgment in the Philippines, Philippine courts must determine if the
foreign judgment is consistent with domestic public policy and other mandatory laws. Article 15 of the Civil Code provides that [l]aws relating
to family rights and duties, or to the status, condition and legal capacity of persons are binding upon citizens of the Philippines, even though
living abroad. This is the rule of lex nationalii in private international law. Thus, the Philippine State may require, for effectivity in the
Philippines, recognition by Philippine courts of a foreign judgment affecting its citizen, over whom it exercises personal jurisdiction relating to
the status, condition and legal capacity of such citizen.
A petition to recognize a foreign judgment declaring a marriage void does not require relitigation under a Philippine court of the case as if it
were a new petition for declaration of nullity of marriage. Philippine courts cannot presume to know the foreign laws under which the foreign
judgment was rendered. They cannot substitute their judgment on the status, condition and legal capacity of the foreign citizen who is under
the jurisdiction of another state. Thus, Philippine courts can only recognize the foreign judgment as a fact according to the rules of evidence.
Since the recognition of a foreign judgment only requires proof of fact of the judgment, it may be made in a special proceeding for
cancellation or correction of entries in the civil registry under Rule 108 of the Rules of Court. Rule 1, Section 3 of the Rules of Court provides
that [a] special proceeding is a remedy by which a party seeks to establish a status, a right, or a particular fact. Rule 108 creates a remedy
to rectify facts of a persons life which are recorded by the State pursuant to the Civil Register Law or Act No. 3753. These are facts of public
consequence such as birth, death or marriage, which the State has an interest in recording. There is no doubt that the prior spouse has a
personal and material interest in maintaining the integrity of the marriage he contracted and the property relations arising from it. There is
also no doubt that he is interested in the cancellation of an entry of a bigamous marriage in the civil registry, which compromises the public
record of his marriage. The interest derives from the substantive right of the spouse not only to preserve (or dissolve, in l imited instances) his
most intimate human relation, but also to protect his property interests that arise by operation of law the moment he contracts marriage.
These property interests in marriage include the right to be supported in keeping with the financial capacity of the family and preserving the
property regime of the marriage.
Section 2(a) of A.M. No. 02-11-10-SC does not preclude a spouse of a subsisting marriage to question the validity of a subsequent marriage
on the ground of bigamy. On the contrary, when Section 2(a) states that [a] petition for declaration of absolute nullity of void marriage may
be filed solely by the husband or the wife it refers to the husband or the wife of the subsisting marriage. Under Article 35(4) of the
Family Code, bigamous marriages are void from the beginning. Thus, the parties in a bigamous marriage are neither the husband nor the wife
under the law. The husband or the wife of the prior subsisting marriage is the one who has the personality to file a petition for declaration of
absolute nullity of void marriage under Section 2(a) of A.M. No. 02-11-10-SC.
[A] Filipino citizen cannot dissolve his marriage by the mere expedient of changing his entry of marriage in the civil registry. However, this
does not apply in a petition for correction or cancellation of a civil registry entry based on the recognition of a foreign judgment annulling a
marriage where one of the parties is a citizen of the foreign country. There is neither circumvention of the substantive and procedural
safeguards of marriage under Philippine law, nor of the jurisdiction of Family Courts under R.A. No. 8369. A recognition of a foreign judgment
is not an action to nullify a marriage. It is an action for Philippine courts to recognize the effectivity of a foreign judgment, which
presupposes a case which was already tried and decided under foreign law. The procedure in A.M. No. 02-11-10-SC does not apply
in a petition to recognize a foreign judgment annulling a bigamous marriage where one of the parties is a citizen of the foreign country.
Neither can R.A. No. 8369 define the jurisdiction of the foreign court.
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a foreign divorce decree to a Filipino spouse
without undergoing trial to determine the validity of the dissolution of the marriage. The second paragraph of Article 26 of the Family Code
provides that [w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is thereafter validly obtained
abroad by the alien spouse capacitating him or her to remarry, the Filipino spouse shall have capacity to remarry under Philippine law. The
second paragraph of Article 26 of the Family Code only authorizes Philippine courts to adopt the effects of a foreign divorce decree precisely
because the Philippines does not allow divorce. Philippine courts cannot try the case on the merits because it is tantamount to trying a case
for divorce. Minoru Fujiki v. Maria Paz Galela Marinay, et al., G.R. No. 196049, June 26, 2013.
Family Courts Act of 1997; Violence Against Women and Children Act of 2004; Family Courts; jurisdiction; a special court of the same level as
RTC; RTCs designated as family courts remain possessed of authority as courts of general original jurisdiction. At the outset, it must be
stressed that Family Courts are special courts, of the same level as Regional Trial Courts. Under R.A. 8369, otherwise known as the Family
Courts Act of 1997, family courts have exclusive original jurisdiction to hear and decide cases of domestic violence against women and
children. In accordance with said law, the Supreme Court designated from among the branches of the Regional Trial Courts at least one
Family Court in each of several key cities identified. To achieve harmony with the first mentioned law, Section 7 of R.A. 9262 now provides
that Regional Trial Courts designated as Family Courts shall have original and exclusive jurisdiction over cases of VAWC defined under the
latter law.
Inspite of its designation as a family court, the RTC of Bacolod City remains possessed of authority as a court of general original jurisdiction to
pass upon all kinds of cases whether civil, criminal, special proceedings, land registration, guardianship, naturalization, admiralty or
insolvency. It is settled that RTCs have jurisdiction to resolve the constitutionality of a statute, this authority being embraced in the general
definition of the judicial power to determine what are the valid and binding laws by the criterion of their conformity to the fundamental law.
The Constitution vests the power of judicial review or the power to declare the constitutionality or validity of a law, treaty, international or
executive agreement, presidential decree, order, instruction, ordinance, or regulation not only in this Court, but in all RTCs. Jesus C. Garcia v.
The Hon. Ray Alan T. Drilon, et al., G.R. No. 179267, June 25, 2013
Torrens system; purpose. Torrens title; generally conclusive evidence of the ownership of the land; not subject to collateral attack; Land
Registration Authority; functions. The real purpose of the Torrens system is to quiet title to land and to stop forever any question as to its
legality. Once a title is registered, the owner may rest secure, without the necessity of waiting in the portals of the court, or sitting on the
mirador su casa, to avoid the possibility of losing his land. A Torrens title is generally a conclusive evidence of the ownership of the land
referred to therein. A strong presumption exists that Torrens titles are regularly issued and that they are valid.

27

Section 48 of Presidential Decree No. 1529, otherwise known as the Property Registration Decree, explicitly provides that [a] certificate of
title shall not be subject to collateral attack. It cannot be altered, modified, or cancelled except in a direct proceeding in accordance with law.
The duty of LRA officials to issue decrees of registration is ministerial in the sense that they act under the orders of the court and the decree
must be in conformity with the decision of the court and with the data found in the record. They have no discretion in the matter. However, if
they are in doubt upon any point in relation to the preparation and issuance of the decree, these officials ought to seek clarification from the
court. They act, in this respect, as officials of the court and not as administrative officials, and their act is the act of the court. They are
specifically called upon to extend assistance to courts in ordinary and cadastral land registration proceedings. Deogenes O. Rodriguez v.
Hon. Court of Appeals and Philippine Chinese Charitable Association, Inc., G.R. No. 184589, June 13, 2013

JULY
Agency; apparent authority of an agent based on estoppel; concept. In Woodchild Holdings, Inc. v. Roxas Electric and Construction Company,
Inc. the Court stated that persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at
their peril, if they would hold the principal liable, to ascertain not only the fact of agency but also the nature and extent of authority, and in
case either is controverted, the burden of proof is upon them to establish it. In other words, when the petitioner relied only on the words of
respondent Alejandro without securing a copy of the SPA in favor of the latter, the petitioner is bound by the risk accompanying such trust on
the mere assurance of Alejandro.
The same Woodchild case stressed that apparent authority based on estoppel can arise from the principal who knowingly permit the agent to
hold himself out with authority and from the principal who clothe the agent with indicia of authority that would lead a reasonably prudent
person to believe that he actually has such authority. Apparent authority of an agent arises only from acts or conduct on the part of the
principal and such acts or conduct of the principal must have been known and relied upon in good faith and as a result of the exercise of
reasonable prudence by a third person as claimant and such must have produced a change of position to its detriment. In the instant case,
the sale to the Spouses Lajarca and other transactions where Alejandro allegedly represented a considerable majority of the co-owners
transpired after the sale to the petitioner; thus, the petitioner cannot rely upon these acts or conduct to believe that Alejandro had the same
authority to negotiate for the sale of the subject property to him. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.
Agency; definition under the Civil Code; form of contract. Article 1868 of the Civil Code defines a contract of agency as a contract whereby a
person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of
the latter. It may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the
agency, knowing that another person is acting on his behalf without authority.
As a general rule, a contract of agency may be oral.
However, it must be written when the law requires a specific form. Specifically, Article 1874 of the Civil Code provides that the contract of
agency must be written for the validity of the sale of a piece of land or any interest therein. Otherwise, the sale shall be void. A related
provision, Article 1878 of the Civil Code, states that special powers of attorney are necessary to convey real rights over immovable
properties. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.
Agency; general power of attorney; an agency couched in general terms comprises only acts of administration. The certification is a mere
general power of attorney which comprises all of Joy Trainings business. Article 1877 of the Civil Code clearly states that [a]n agency
couched in general terms comprises only acts of administration, even if the principal should state that he withholds no power or that
the agent may execute such acts as he may consider appropriate, or even though the agency should authorize a general and
unlimited management. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.

Agency; sale of property by a supposed agent is unenforceable if there is really no agency to sell such property; persons dealing with an
agent must ascertain not only the fact of agency, but also the nature and extent of the agents authority. Necessarily, the absence of a
contract of agency renders the contract of sale unenforceable; Joy Training effectively did not enter into a valid contract of sale with the
spouses Yoshizaki. Sally cannot also claim that she was a buyer in good faith. She misapprehended the rule that persons dealing with a
registered land have the legal right to rely on the face of the title and to dispense with the need to inquire further, except when the party
concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. This rule
applies when the ownership of a parcel of land is disputed and not when the fact of agency is contested. Sally Yoshizaki v. Joy Training Center
of Aurora, Inc., G.R. No. 174978, July 31, 2013.
Agency; special power of attorney; must express the powers of the agent in clear and unmistakable language; when there is any reasonable
doubt that the language so used conveys such power, no such construction shall be given the document. We unequivocably declared
in Cosmic Lumber Corporation v. Court of Appeals that a special power of attorneymust express the powers of the agent in clear and
unmistakable language for the principal to confer the right upon an agent to sell real estate. When there is any reasonable doubt that the
language so used conveys such power, no such construction shall be given the document. The purpose of the law in requiring a special power
of attorney in the disposition of immovable property is to protect the interest of an unsuspecting owner from being prejudiced by the
unwarranted act of another and to caution the buyer to assure himself of the specific authorization of the putative agent. Sally Yoshizaki v.
Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.

28

Agency; special power of attorney for sale of property; must expressly mention a sale or include a sale as a necessary ingredient of the
authorized act. The special power of attorney mandated by law must be one that expressly mentions a sale or that includes a sale as
a necessary ingredient of the authorized act. We unequivocably declared in Cosmic Lumber Corporation v. Court of Appeals that a special
power of attorney must express the powers of the agent in clear and unmistakable language for the principal to confer the right upon
an agent to sell real estate. When there is any reasonable doubt that the language so used conveys such power, no such construction shall be
given the document. The purpose of the law in requiring a special power of attorney in the disposition of immovable property is to protect the
interest of an unsuspecting owner from being prejudiced by the unwarranted act of another and to caution the buyer to assure himself of the
specific authorization of the putative agent. Sally Yoshizaki v. Joy Training Center of Aurora, Inc., G.R. No. 174978, July 31, 2013.
Agency; special power of attorney; required for an agent to sell an immovable property; authority must be in writing, otherwise sale is
void. In Alcantara v. Nido, the Court emphasized the requirement of an SPA before an agent may sell an immovable property. In the said
case, Revelen was the owner of the subject land. Her mother, respondent Brigida Nido accepted the petitioners offer to buy Revelens land at
Two Hundred Pesos (P200.00) per sq m. However, Nido was only authorized verbally by Revelen. Thus, the Court declared the sale of the said
land null and void under Articles 1874 and 1878 of the Civil Code. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R.
No.182349, July 24, 2013.

Arrastre operator; functions; duty to take good care of goods and to turn them over to the party entitled to their possession. The functions of
an arrastre operator involve the handling of cargo deposited on the wharf or between the establishment of the consignee or shipper and the
ships tackle. Being the custodian of the goods discharged from a vessel, an arrastre operators duty is to take good care of the goods and to
turn them over to the party entitled to their possession. Handling cargo is mainly the arrastre operators principal work so its
drivers/operators or employees should observe the standards and measures necessary to prevent losses and damage to shipments under its
custody. Asian Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis
Philippines Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance
Co., Inc. and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.
Attorneys fees; dual concept. In order to resolve the issues in this case, it is necessary to discuss the two concepts of attorneys fees
ordinary and extraordinary. In its ordinary sense, it is the reasonable compensation paid to a lawyer by his client for legal services rendered.
In its extraordinary concept, it is awarded by the court to the successful litigant to be paid by the losing party as indemnity for
damages. Francisco L. Rosario, Jr. v. Lellani De Guzman, Arleen De Guzman, et al., G.R. No. 191247, July 10, 2013.
Attorneys fees for professional services rendered; may be claimed in the very action itself or in a separate action; prescription for oral
contract of attorneys fees is 6 years; concept of quantum meruit; guidelines under the Code of Professional Responsibility. The Court now
addresses two important questions: (1) How can attorneys fees for professional services be recovered? (2) When can an action for attorneys
fees for professional services be filed? The case of Traders Royal Bank Employees Union-Independent v. NLRC is instructive:
As an adjunctive episode of the action for the recovery of bonus differentials in NLRC-NCR Certified Case No. 0466, private respondents
present claim for attorneys fees may be filed before the NLRC even though or, better stated, especially after its earlier decision had been
reviewed and partially affirmed. It is well settled that a claim for attorneys fees may be asserted either in the very action in which the
services of a lawyer had been rendered or in a separate action.
With respect to the first situation, the remedy for recovering attorneys fees as an incident of the main action may be availed of only when
something is due to the client. Attorneys fees cannot be determined until after the main litigation has been decided and the subject of the
recovery is at the disposition of the court. The issue over attorneys fees only arises when something has been recovered from which the fee
is to be paid. While a claim for attorneys fees may be filed before the judgment is rendered, the determination as to the propriety of the fees
or as to the amount thereof will have to be held in abeyance until the main case from which the lawyers claim for attorneys fees may arise
has become final. Otherwise, the determination to be made by the courts will be premature. Of course, a petition for attorneys fees may be
filed before the judgment in favor of the client is satisfied or the proceeds thereof delivered to the client.
It is apparent from the foregoing discussion that a lawyer has two options as to when to file his claim for professional fees. Hence, private
respondent was well within his rights when he made his claim and waited for the finality of the judgment for holiday pay differential, instead
of filing it ahead of the awards complete resolution. To declare that a lawyer may file a claim for fees in the same action only before the
judgment is reviewed by a higher tribunal would deprive him of his aforestated options and render ineffective the foregoing pronouncements
of this Court.
In this case, petitioner opted to file his claim as an incident in the main action, which is permitted by the rules. As to the timeliness of the
filing, this Court holds that the questioned motion to determine attorneys fees was seasonably filed.
The records show that the August 8, 1994 RTC decision became final and executory on October 31, 2007. There is no dispute that petitioner
filed his Motion to Determine Attorneys Fees on September 8, 2009, which was only about one (1) year and eleven (11) months from the
finality of the RTC decision. Because petitioner claims to have had an oral contract of attorneys fees with the deceased spouses, Article 1145
of the Civil Code16 allows him a period of six (6) years within which to file an action to recover professional fees for services rendered.
Respondents never asserted or provided any evidence that Spouses de Guzman refused petitioners legal representation. For this reason,
petitioners cause of action began to run only from the time the respondents refused to pay him his attorneys fees, as similarly held in the
case of Anido v. Negado.
With respect to petitioners entitlement to the claimed attorneys fees, it is the Courts considered view that he is deserving of it and that the
amount should be based on quantum meruit. Quantum meruit literally meaning as much as he deserves is used as basis for determining
an attorneys professional fees in the absence of an express agreement. The recovery of attorneys fees on the basis of quantum meruit is a
device that prevents an unscrupulous client from running away with the fruits of the legal services of counsel without paying for it and also

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avoids unjust enrichment on the part of the attorney himself. An attorney must show that he is entitled to reasonable compensation for the
effort in pursuing the clients cause, taking into account certain factors in fixing the amount of legal fees.
Rule 20.01 of the Code of Professional Responsibility lists the guidelines for determining the proper amount of attorney fees, to wit:
Rule 20.1 A lawyer shall be guided by the following factors in determining his fees:
a) The time spent and the extent of the services rendered or required;
b) The novelty and difficulty of the questions involved;
c) The importance of the subject matter;
d) The skill demanded;
e) The probability of losing other employment as a result of acceptance of the proffered case;
f) The customary charges for similar services and the schedule of fees of the IBP chapter to which he belongs;
g) The amount involved in the controversy and the benefits resulting to the client from the service;
h) The contingency or certainty of compensation;
i) The character of the employment, whether occasional or established; and
j) The professional standing of the lawyer.
Francisco L. Rosario, Jr. v. Lellani De Guzman, Arleen De Guzman, et al., G.R. No. 191247, July 10, 2013.
Attorneys fees; recoverable in actions for indemnity under workmens compensation and employers liability laws. However, the Court finds
that the petitioner is entitled to attorneys fees pursuant to Article 2208(8) of the Civil Code which states that the award of attorneys fees is
justified in actions for indemnity under workmens compensation and employers liability laws. Camilo A. Esguerra v. United Philippines Lines,
Inc., et al., G.R. No. 199932, July 3, 2013.
Attorneys fees; when recoverable. The Court of Appeals rightfully upheld the NLRCs affirmance of the grant of attorneys fees to San Miguel.
Thereby, the NLRC did not commit any grave abuse of its discretion, considering that San Miguel had been compelled to litigate and to incur
expenses to protect his rights and interest. In Producers Bank of the Philippines v. Court of Appeals, the Court ruled that attorneys fees could
be awarded to a party whom an unjustified act of the other party compelled to litigate or to incur expenses to protect his interest. It was plain
that petitioners refusal to reinstate San Miguel with backwages and other benefits to which he had been legally entitled was unjustified,
thereby entitling him to recover attorneys fees. Zuellig Freight and Cargo Systems v. National Labor Relations Commission, et al., G.R. No.
157900, July 22, 2013
Attorneys fees; when recoverable. With respect to the award of attorneys fees, Article 2208 of the Civil Code provides, among others, that
such fees may be recovered when exemplary damages are awarded, when the defendants act or omission has compelled the plainti ff to
litigate with third persons or to incur expenses to protect his interest, and where the defendant acted in gross and evident bad faith in
refusing to satisfy the plaintiffs plainly valid, just and demandable claim. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide,G.R.
No. 161921, July 17, 2013.
Common carriers; extraordinary diligence in vigilance of goods transported; cargoes while being unloaded generally remain under the custody
of the carrier. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary
diligence in the vigilance over the goods transported by them. Subject to certain exceptions enumerated under Article 1734 of the Civil Code,
common carriers are responsible for the loss, destruction, or deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the possession of, and received by the carrier for transportation until the
same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them. Asian
Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines
Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc.
and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.
Contract; absolutely simulated contracts; void from the beginning. The Court is in accord with the observation and findings of the (RTC,
Kalibo, Aklan) thus:
The amplitude of foregoing undisputed facts and circumstances clearly shows that the sale of the land in question was purely simulated. It is
void from the very beginning (Article 1346, New Civil Code). If the sale was legitimate, defendant Glenda should have immediately taken
possession of the land, declared in her name for taxation purposes, registered the sale, paid realty taxes, introduced improvements therein
and should not have allowed plaintiff to mortgage the land. These omissions properly militated against defendant Glendas submission that
the sale was legitimate and the consideration was paid.

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Dr. Lorna C. Formaran v. Dr. Glenda B. Ong and Solomon S. Ong, G.R. No. 186264, July 8, 2013.
Contract of sale; elements. A valid contract of sale requires: (a) a meeting of minds of the parties to transfer ownership of the thing sold in
exchange for a price; (b) the subject matter, which must be a possible thing; and (c) the price certain in money or its equivalent. Reman
Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24, 2013.
Contract to sell; payment of the price; positive suspension condition; effect of failure to pay. Clearly, the RTC arrived at the above-quoted
conclusion based on its mistaken premise that rescission is applicable to the case. Hence, its determination of whether there was substantial
breach. As may be recalled, however, the CA, in its assailed Decision, found the contract between the parties as a contract to sell, specifically
of a real property on installment basis, and as such categorically declared rescission to be not the proper remedy. This is considering that in a
contract to sell, payment of the price is a positive suspensive condition, failure of which is not a breach of contract warranting rescission
under Article 1191 of the Civil Code but rather just an event that prevents the supposed seller from being bound to convey title to the
supposed buyer. Also, and as correctly ruled by the CA, Article 1191 cannot be applied to sales of real property on installment since they are
governed by the Maceda Law.
There being no breach to speak of in case of non-payment of the purchase price in a contract to sell, as in this case, the RTCs factual finding
that Lourdes was willing and able to pay her obligation a conclusion arrived at in connection with the said courts determination of whether
the non-payment of the purchase price in accordance with the terms of the contract was a substantial breach warranting rescission
therefore loses significance. The spouses Bonrostros reliance on the said factual finding is thus misplaced. They cannot invoke their readiness
and willingness to pay their obligation on November 24, 1993 as an excuse from being made liable for interest beyond the said date. Sps.
Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24, 2013.
Damages; damages for loss of earning capacity; must be duly proven by documentary evidence; exceptions. The Supreme Court agrees with
the Court of Appeals when it removed the RTCs award respecting the indemnity for the loss of earning capacity. As it has already previously
ruled that damages for loss of earning capacity is in the nature of actual damages, which as a rule must be duly proven by documentary
evidence, not merely by the self-serving testimony of the widow.
By way of exception, damages for loss of earning capacity may be awarded despite the absence of documentary evidence when (1) the
deceased is self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in
the deceaseds line of work no documentary evidence is available; or (2) the deceased is employed as a daily wage worker earning less than
the minimum wage under current labor laws. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No.
177763, July 3, 2013
Damages; exemplary damages; concept. As for exemplary damages, Article 2229 provides that exemplary damages may be imposed by way
of example or correction for the public good. Nonetheless, exemplary damages are imposed not to enrich one party or impoverish another,
but to serve as a deterrent against or as a negative incentive to curb socially deleterious actions. In the instant case, the Court agrees with
the CA in sustaining the award of exemplary damages, although it reduced the amount granted, considering that respondent spouses were
deprived of their water supply for more than nine (9) months, and such deprivation would have continued were it not for the relief granted by
the RTC. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.
Damages; exemplary damages; awarded if there is an aggravating circumstance, whether ordinary or qualifying. Unlike the criminal liability
which is basically a State concern, the award of exemplary damages, however, is likewise, if not primarily, intended for the offended party
who suffers thereby. It would make little sense for an award of exemplary damages to be due the private offended party when the
aggravating circumstance is ordinary but to be withheld when it is qualifying. Withal, the ordinary or qualifying nature of an aggravating
circumstance is a distinction that should only be of consequence to the criminal, rather than to the civil, liability of the offender. In fine,
relative to the civil aspect of the case, an aggravating circumstance, whether ordinary or qualifying, should entitle the offended party to an
award of exemplary damages within the unbridled meaning of Article 2230 of the Civil Code. People of the Philippines v. Garry Vergara y Oriel
and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013.
Damages; interest thereon; where obligation does not constitute a loan or forbearance of money. The CA erred in imposing an interest rate of
12% on the award of damages. Under Article 2209 of the Civil Code, when an obligation not constituting a loan or forbearance of money is
breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. In the
similar case of Belgian Overseas Chartering and Shipping NV v. Philippine First Insurance Co., lnc., the Court reduced the rate of interest on
the damages awarded to the carrier therein to 6% from the time of the filing of the complaint until the finality of the decision. Asian
Terminals, Inc. v. Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines
Insurance Inc.) v. Westwind Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc.
and Asian Terminals, Inc., G.R. Nos. 181163/181262/181319, July 24, 2013.
Damages; moral damages; when recoverable. In Philippine National Bank v. Spouses Rocamora,the Supreme Court said that:
Moral damages are not recoverable simply because a contract has been breached. They are recoverable only if the defendant acted
fraudulently or in bad faith or in wanton disregard of his contractual obligations. The breach must be wanton, reckless, malicious or in bad
faith, and oppressive or abusive. Likewise, a breach of contract may give rise to exemplary damages only if the guilty party acted in a
wanton, fraudulent, reckless, oppressive or malevolent manner.
Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.
Damages; moral damages; awarded where the victim of a crime suffered a violent death, even in the absence of proof of mental and
emotional suffering of the victims heirs. The Supreme Court sustained the RTCs award for moral damages in the amount of P50,000.00 even

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in the absence of proof of mental and emotional suffering of the victims heirs. As borne out by human nature and experience, a violent death
invariably and necessarily brings about emotional pain and anguish on the part of the victims family. While no amount of damages may
totally compensate the sudden and tragic loss of a loved one it is nonetheless awarded to the heirs of the deceased to at least assuage
them. People of the Philippines v. Garry Vergara y Oriel and Joseph Incencio y Paulino, G.R. No. 177763, July 3, 2013
Damages; moral and exemplary damages in claims for disability benefits; not recoverable where employer was not negligent in affording the
employee with medical treatment, and employer did not forsake employee during the period of disability. The CA correctly denied an award of
moral and exemplary damages. The respondents were not negligent in affording the petitioner with medical treatment neither did they
forsake him during his period of disability. Camilo A. Esguerra v. United Philippines Lines, Inc., et al., G.R. No. 199932, July 3, 2013.

Human Relations; abuse of rights; Article 19 of the Civil Code; concept; damages as reliefs. The principle of abuse of rights as enshrined in
Article 19 of the Civil Code provides that every 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.
In this regard, the Courts ruling in Yuchengco v. The Manila Chronicle Publishing Corporation is instructive, to wit:
xxxx
This provision of law sets standards which must be observed in the exercise of ones rights as well as in the performance of its duties, to wit:
to act with justice; give everyone his due; and observe honesty and good faith.
In Globe Mackay Cable and Radio Corporation v. Court of Appeals, it was elucidated that while Article 19 lays down a rule of conduct for the
government of human relations and for the maintenance of social order, it does not provide a remedy for its violation. Generally, an action for
damages under either Article 20 or Article 21 would be proper. The Court said:
One of the more notable innovations of the New Civil Code is the codification of some basic principles that are to be observed for the rightful
relationship between human beings and for the stability of the social order. [REPORT ON THE CODE COMMISSION ON THE PROPOSED CIVIL
CODE OF THE PHILIPPINES, p. 39]. The framers of the Code, seeking to remedy the defect of the old Code which merely stated the effects of
the law, but failed to draw out its spirit, incorporated certain fundamental precepts which were designed to indicate certain norms that spring
from the fountain of good conscience and which were also meant to serve as guides for human conduct [that] should run as golden threads
through society, to the end that law may approach its supreme ideal, which is the sway and dominance of justice. (Id.) Foremost among
these principles is that pronounced in Article 19 x x x.
xxxx
This article, known to contain what is commonly referred to as the principle of abuse of rights, sets certain standards which must be observed
not only in the exercise of ones rights, but also in the performance of ones duties. These standards are the following: to act with justice; to
give everyone his due; and to observe honesty and good faith. The law, therefore, recognizes a primordial limitation on all rights; that in their
exercise, the norms of human conduct set forth in Article 19 must be observed. A right, though by itself legal because recognized or granted
by law as such, may nevertheless become the source of some illegality. When a right is exercised in a manner which does not conform with
the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be
held responsible. But while Article 19 lays down a rule of conduct for the government of human relations and for the maintenance of social
order, it does not provide a remedy for its violation. Generally, an action for damages under either Article 20 or Article 21 would be
proper. Joyce V. Ardiente v. Spouses Javier and Ma. Theresa Pastofide, G.R. No. 161921, July 17, 2013.
Human Relations; civil case for fraud; Article 33 of the Civil Code provides that a civil case for damages based on fraud may proceed
independently of the criminal case therefor; said civil case will not operate as a prejudicial question that will justify the suspension of a
criminal case. It is well settled that a civil action based on defamation, fraud and physical injuries may be independently instituted pursuant to
Article 33 of the Civil Code, and does not operate as a prejudicial question that will justify the suspension of a criminal case. This was
precisely the Courts thrust in G.R. No. 148193, thus:
Moreover, neither is there a prejudicial question if the civil and the criminal action can, according to law, proceed independently of each other.
Under Rule 111, Section 3 of the Revised Rules on Criminal Procedure, in the cases provided in Articles 32, 33, 34 and 2176 of the Civil Code,
the independent civil action may be brought by the offended party. It shall proceed independently of the criminal action and shall require only
a preponderance of evidence. In no case, however, may the offended party recover damages twice for the same act or omission charged in
the criminal action.
In the instant case, Civil Case No. 99-95381, for Damages and Attachment on account of the alleged fraud committed by respondent and his
mother in selling the disputed lot to PBI is an independent civil action under Article 33 of the Civil Code. As such, it will not operate as a
prejudicial question that will justify the suspension of the criminal case at bar. Rafael Jose Consing, Jr. v. People of the Philippines, G.R. No.
161075, July 15, 2013.
Letter of credit; definition; nature. A letter of credit is a financial device developed by merchants as a convenient and relatively safe mode of
dealing with sales of goods to satisfy the seemingly irreconcilable interests of a seller, who refuses to part with his goods before he is paid,
and a buyer, who wants to have control of his goods before paying. However, letters of credit are employed by the parties desiring to enter
into commercial transactions, not for the benefit of the issuing bank but mainly for the benefit of the parties to the original transaction, in
these cases, Nichimen Corporation as the seller and Universal Motors as the buyer. Hence, the latter, as the buyer of the Nissan CKD parts,

32

should be regarded as the person entitled to delivery of the goods. Accordingly, for purposes of reckoning when notice of loss or damage
should be given to the carrier or its agent, the date of delivery to Universal Motors is controlling. Asian Terminals, Inc. v. Philam Insurance
Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping
Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos.
181163/181262/181319, July 24, 2013.
Mortgage; includes all natural or civil fruits and improvements found on the mortgaged property when the secured obligation becomes due; in
case of non-payment of the secured debt, foreclosure proceedings shall cover not only the hypothecated property but all its accessions and
accessories as well; indispensable requisite that mortgagor be the absolute owner of the encumbered property. Rent, as an accessory, follows
the principal. In fact, when the principal property is mortgaged, the mortgage shall include all natural or civil fruits and improvements found
thereon when the secured obligation becomes due as provided in Article 2127 of the Civil Code, viz:
Art. 2127. The mortgage extends to the natural accessions, to the improvements, growing fruits, and the rents or income not yet received
when the obligation becomes due, and to the amount of the indemnity granted or owing to the proprietor from the insurers of the property
mortgaged, or in virtue of expropriation for public use, with the declarations, amplifications and limitations established by law, whether the
estate remains in the possession of the mortgagor, or it passes into the hands of a third person.
Consequently, in case of non-payment of the secured debt, foreclosure proceedings shall cover not only the hypothecated property but all its
accessions and accessories as well. This was illustrated in the early case of Cu Unjieng e Hijos v. Mabalacat Sugar Co. where the Court held:
That a mortgage constituted on a sugar central includes not only the land on which it is built but also the buildings, machinery, and
accessories installed at the time the mortgage was constituted as well as the buildings, machinery and accessories belonging to the
mortgagor, installed after the constitution thereof x x x [.]
Applying such pronouncement in the subsequent case of Spouses Paderes v. Court of Appeals,the Court declared that the improvements
constructed by the mortgagor on the subject lot are covered by the real estate mortgage contract with the mortgagee bank and thus included
in the foreclosure proceedings instituted by the latter.
However, the rule is not without qualifications. In Castro, Jr. v. CA the Court explained that Article 2127 is predicated on the presumption that
the ownership of accessions and accessories also belongs to the mortgagor as the owner of the principal. After all, it is an indispensable
requisite of a valid real estate mortgage that the mortgagor be the absolute owner of the encumbered property. Philippine National Bank v.
Sps. Bernard and Cresencia Maraon, G.R.No. 189316, July 1, 2013.
Mortgage; mortgagee in good faith; right to have mortgage lien carried over and annotated on the new certificate of title. The protection
afforded to PNB as a mortgagee in good faith refers to the right to have its mortgage lien carried over and annotated on the new certificate of
title issued to Spouses Maraon as so adjudged by the RTC. Thereafter, to enforce such lien thru foreclosure proceedings in case of non-
payment of the secured debt, as PNB did so pursue. The principle, however, is not the singular rule that governs real estate mortgages and
foreclosures attended by fraudulent transfers to the mortgagor. Philippine National Bank v. Sps. Bernard and Cresencia Maraon, G.R.No.
189316, July 1, 2013.
Obligations; conditions; fulfillment thereof; deemed fulfilled when obligor voluntarily prevents it fulfillment; requisites. The spouses Bonrostro
want to be relieved from paying interest on the amount of P214,492.62 which the spouses Luna paid to Bliss as amortizations by asserting
that they were prevented by the latter from fulfilling such obligation. They invoke Art. 1186 of the Civil Code which provides that the
condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment.
However, the Court finds Art. 1186 inapplicable to this case. The said provision explicitly speaks of a situation where it is the obligor who
voluntarily prevents fulfillment of the condition. Here, Constancia is not the obligor but the obligee. Moreover, even if thi s significant detail is
to be ignored, the mere intention to prevent the happening of the condition or the mere placing of ineffective obstacles to its compliance,
without actually preventing fulfillment is not sufficient for the application of Art. 1186. Two requisites must concur for its application, to wit:
(1) intent to prevent fulfillment of the condition; and, (2) actual prevention of compliance. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan
and Constacia Luna, G.R. No.172346, July 24, 2013.
Obligations; constructive fulfillment; Article 1186 of the Civil Code; requisites. As aptly pointed out by the CA, Article 1186 of the Civil Code,
which states that the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment, does not apply in this case, viz:
Article 1186 enunciates the doctrine of constructive fulfillment of suspensive conditions, which applies when the following three (3) requisites
concur, viz: (1) The condition is suspensive; (2) The obligor actually prevents the fulfillment of the condition; and (3) He acts voluntarily.
Suspensive condition is one the happening of which gives rise to the obligation. It will be irrational for any Bank to provide a suspensive
condition in the Promissory Note or the Restructuring Agreement that will allow the debtor-promissor to be freed from the duty to pay the
loan without paying it.
Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.

Obligations; if an obligation consists of payment of money, and the debtor incurs in delay, the indemnity for damages, there being no
stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the legal interest. Under
Article 2209 ofthe Civil Code, [i]fthe obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity for
damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the absence of stipulation, the

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legal interest x x x. There being no stipulation on interest in case ofdelay in the payment ofamortization, the CA thus correctly imposed
interest at the legal rate which is now 12%perannum. Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346,
July 24, 2013.
Penalties and interest rates; penalties and interest rates should be expressly stipulated in writing. As to the imposition of additional interest
and penalties not stipulated in the Promissory Notes, this should not be allowed. Article 1956 of the Civil Code specifically states that no
interest shall be due unless it has been expressly stipulated in writing. Thus, the payment of interest and penalties in loans is allowed only if
the parties agreed to it and reduced their agreement in writing. Carlos Lim, et al. v. Development Bank of the Philippines, G.R. No. 177050,
July 1, 2013.
Prescription; Article 1144 of the Civil Code. We concur with the CAs ruling that respondents action did not yet prescribe. The legal provision
governing this case was not Article 1146 of the Civil Code, but Article 1144 of the Civil Code, which states:
Article 1144. The following actions must be brought within ten years from the time the cause of action accrues:
(1)Upon a written contract; (2) Upon an obligation created by law; (3)Upon a judgment.
Vector Shipping Corporation, et al. v. American Home Assurance Co., et al., G.R. No. 159213, July 3, 2013.
Property; co-ownership; sale of co-owned property; if only one co-owner agreed to the sale, said co-owner only sold his aliquot share in the
subject property. But as held by the appellate court, the sale between the petitioner and Alejandro is valid insofar as the aliquot share of
respondent Alejandro is concerned. Being a co-owner, Alejandro can validly and legally dispose of his share even without the consent of all
the other co-heirs. Since the balance of the full price has not yet been paid, the amount paid shall represent as payment to hisaliquot share.
This then leaves the sale of the lot of the Altamiranos to the Spouses Lajarca valid only insofar as their shares are concerned, exclusive of
the aliquot part of Alejandro, as ruled by the CA. Reman Recio v. Heirs of Spouses Aguego and Maria Altamirano, G.R. No.182349, July 24,
2013.
Property; patrimonial property and property of public dominion; patrimonial property of the State may be the object of prescription, however,
those intended for some public service or the development of national wealth are property of public dominion, which are not susceptible to
acquisition by prescription; public domain lands become patrimonial property only if there is a declaration that these are alienable or
disposable, together with an express government manifestation that the property is already patrimonial or no longer retained for public
service or the development of national wealth. Under Article 422 of the Civil Code, public domain lands become patrimonial property only if
there is a declaration that these are alienable or disposable, together with an express government manifestation that the property is already
patrimonial or no longer retained for public service or the development of national wealth. Only when the property has become patrimonial
can the prescriptive period for the acquisition of property of the public dominion begin to run. Also under Section 14(2) of Presidential Decree
(P.D.) No. 1529, it is provided that before acquisitive prescription can commence, the property sought to be registered must not only be
classified as alienable and disposable, it must also be expressly declared by the State that it is no longer intended for public service or the
development of the national wealth, or that the property has been converted into patrimonial. Absent such an express declaration by the
State, the land remains to be property of public dominion. Dream Village Neighborhood Association, Inc., represented by its Incumbent
President Greg Seriego v. Bases Conversion Development Authority,G.R. No.192896, July 24, 2013.
Rent; civil fruit; rightful recipient. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. The rightful
recipient of the disputed rent in this case should thus be the owner of the subject lot at the time the rent accrued. Philippine National Bank v.
Sps. Bernard and Cresencia Maraon, G.R.No. 189316, July 1, 2013.
Subrogation; basis; definition. Consistent with the pertinent law and jurisprudence, therefore, Exhibit I was already enough by itself to prove
the payment of P7,455,421.00 as the full settlement of Caltexs claim. The payment made to Caltex as the insured being thereby duly
documented, respondent became subrogated as a matter of course pursuant to Article 2207 of the Civil Code. In legal contemplation,
subrogation is the substitution of another person in the place of the creditor, to whose rights he succeeds in relation to the debt; and is
independent of any mere contractual relations between the parties to be affected by it, and is broad enough to cover every instance in which
one party is required to pay a debt for which another is primarily answerable, and which in equity and conscience ought to be discharged by
the latter. Vector Shipping Corporation, et al. v. American Home Assurance Co., et al., G.R. No. 159213, July 3, 2013.
Subrogation in insurance cases; accrues simply upon payment by the insurance company of the insurance claim; payment by the insurer to
the insured operates as an equitable assignment to the insurer of all remedies that the insured may have against the third party whose
negligence or wrongful act caused the loss. The Court holds that petitioner Philam has adequately established the basis of its claim against
petitioners ATI and Westwind. Philam, as insurer, was subrogated to the rights of the consignee, Universal Motors Corporation, pursuant to
the Subrogation Receipt executed by the latter in favor of the former. The right of subrogation accrues simply upon payment by the insurance
company of the insurance claim. Petitioner Philams action finds support in Article 2207 of the Civil Code, which provides as follows:
Art. 2207. If the plaintiffs property has been insured, and he has received indemnity from the insurance company for the injury or loss
arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against
the wrongdoer or the person who has violated the contract. x x x.
Yet, even with the exclusion of Marine Certificate No. 708-8006717-4, the Subrogation Receipt, on its own, is adequate proof that petitioner
Philam paid the consignees claim on the damaged goods. Petitioners ATI and Westwind failed to offer any evidence to controvert the same.
In Malayan Insurance Co., Inc. v. Alberto, the Court explained the effect of payment by the insurer of the insurance claim in this wise:

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We have held that payment by the insurer to the insured operates as an equitable assignment to the insurer of all the remedies that the
insured may have against the third party whose negligence or wrongful act caused the loss. The right of subrogation is not dependent upon,
nor does it grow out of, any privity of contract. It accrues simply upon payment by the insurance company of the insurance claim. The
doctrine of subrogation has its roots in equity. It is designed to promote and accomplish justice; and is the mode that equity adopts to compel
the ultimate payment of a debt by one who, in justice, equity, and good conscience, ought to pay. Asian Terminals, Inc. v. Philam Insurance
Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind Shipping
Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R. Nos.
181163/181262/181319, July 24, 2013.
Tender of payment; concept; tender of payment, if refused without just cause, will discharge the debtor only after a valid consignation with
the court; when tender of payment is not accompanied by the means of payment, and the debtor did not take any immediate step to make a
consignation, then interest is not suspended from the time of such tender. Tender of payment is the manifestation by the debtor of a desire
to comply with or pay an obligation. If refused without just cause, the tender of payment will discharge the debtor of the obligation to pay but
only after a valid consignation of the sum due shall have been made with the proper court. Consignation is the deposit of the [proper
amount with a judicial authority] in accordance with rules prescribed by law, after the tender of payment has been refused or because of
circumstances which render direct payment to the creditor impossible or inadvisable.
Tender of payment, without more, produces no effect. [T]o have the effect of payment and the consequent extinguishment of the
obligation to pay, the law requires the companion acts of tender of payment and consignation.
As to the effect of tender of payment on interest, noted civilist Arturo M. Tolentino explained as follows:
When a tender of payment is made in such a form that the creditor could have immediately realized payment if he had accepted the tender,
followed by a prompt attempt of the debtor to deposit the means of payment in court by way of consignation, the accrual of interest on the
obligation will be suspended from the date of such tender. But when the tender of payment is not accompanied by the means of
payment, and the debtor did not take any immediate step to make a consignation, then interest is not suspended from the time
of such tender. x x x x (Emphasis supplied) Sps. Nameal and Lourdes Bonrostro v. Sps. Juan and Constacia Luna, G.R. No.172346, July 24,
2013.
Special Laws
Act No. 3135; foreclosure sale; personal notice to the mortgagor in extrajudicial foreclosure proceedings is necessary where there is a
stipulation to this effect, and failure to comply with the stipulated notice requirement is a contractual breach sufficient to render the
foreclosure sale null and void. It has been consistently held that unless the parties stipulate, personal notice to the mortgagor in extrajudicial
foreclosure proceedings is not necessary because Section 3117 of Act 3135 only requires the posting of the notice of sale in three public
places and the publication of that notice in a newspaper of general circulation.
In this case, the parties stipulated in paragraph 11 of the Mortgage that:
11. All correspondence relative to this mortgage, including demand letters, summons, subpoenas, or notification of any judicial or extra-
judicial action shall be sent to the Mortgagor at xxx or at the address that may hereafter be given in writing by the Mortgagor or the
Mortgagee;
However, no notice of the extrajudicial foreclosure was sent by DBP to petitioners about the foreclosure sale scheduled on July 11, 1994. The
letters dated January 28, 1994 and March 11, 1994 advising petitioners to immediately pay their obligation to avoid the impending
foreclosure of their mortgaged properties are not the notices required in paragraph 11 of the Mortgage. The failure of DBP to comply with
their contractual agreement with petitioners, i.e., to send notice, is a breach sufficient to invalidate the foreclosure sale. Carlos Lim, et al. v.
Development Bank of the Philippines, G.R. No. 177050, July 1, 2013.
Bases Conversion Development Authority (BCDA); BCDA holds title to Fort Bonifacio; Dream Village sits on the abandoned C-5 Road, which
lies outside the areas declared in Proclamation Nos. 2476 and 172 as alienable and disposable. That the BCDA has title to Fort Bonifacio has
long been decided with finality. In Samahan ng Masang Pilipino sa Makati, Inc. v. BCDA, it was categorically ruled as follows:
First, it is unequivocal that the Philippine Government, and now the BCDA, has title and ownership over Fort Bonifacio. The case of Acting
Registrars of Land Titles and Deeds of Pasay City, Pasig and Makati is final and conclusive on the ownership of the then Hacienda deMaricaban
estate by the Republic of the Philippines. Clearly, the issue on the ownership of the subject lands in Fort Bonifacio is laid to rest. Other than
their view that the USA is still the owner of the subject lots, petitioner has not put forward any claim of ownership or interest in them. Dream
Village Neighborhood Association, Inc., represented by its Incumbent President Greg Seriego v. Bases Conversion Development
Authority, G.R. No.192896, July 24, 2013.
Common Carrier; Carriage of Goods by Sea Act (COGSA); prescriptive period for filing an action for loss or damage of goods. The prescriptive
period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of
discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage maybe endorsed upon the

35

receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the
time of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year
after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either
apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should have been delivered. Asian Terminals, Inc. v. Philam
Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind
Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R.
Nos. 181163/181262/181319, July 24, 2013.
Common Carrier; Carriage of Goods by Sea Act (COGSA); prescriptive period for filing an action for loss or damage of goods. The prescriptive
period for filing an action for the loss or damage of the goods under the COGSA is found in paragraph (6), Section 3, thus:
(6) Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of
discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of
carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or
damage is not apparent, the notice must be given within three days of the delivery. Said notice of loss or damage maybe endorsed upon the
receipt for the goods given by the person taking delivery thereof. The notice in writing need not be given if the state of the goods has at the
time of their receipt been the subject of joint survey or inspection.
In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year
after delivery of the goods or the date when the goods should have been delivered: Provided, That if a notice of loss or damage, either
apparent or concealed, is not given as provided for in this section, that fact shall not affect or prejudice the right of the shipper to bring suit
within one year after the delivery of the goods or the date when the goods should have been delivered. Asian Terminals, Inc. v. Philam
Insurance Co., Inc. (now Chartis Philippines Insurance Inc.)/ Philam Insurance Co., Inc. (now Chartis Philippines Insurance Inc.) v. Westwind
Shipping Corporation and Asian Terminals, Inc./ Westwind Shipping Corporation v. Philam Insurance Co., Inc. and Asian Terminals, Inc., G.R.
Nos. 181163/181262/181319, July 24, 2013.
Family Code; marriage; void ab initio for lack of a marriage license; no inconsistency in finding the marriage null and void ab initio and, at the
same time, non-existent; contracts which are absolutely simulated or fictitious are inexistent and void from the beginning. There is no
inconsistency in finding the marriage between Benjamin and Sally null and void ab initioand, at the same time, non-existent. Under Article 35
of the Family Code, a marriage solemnized without a license, except those covered by Article 34 where no license is necessary, shall be void
from the beginning. In this case, the marriage between Benjamin and Sally was solemnized without a license. It was duly established that no
marriage license was issued to them and that Marriage License No. N-07568 did not match the marriage license numbers issued by the local
civil registrar of Pasig City for the month of February 1982. The case clearly falls under Section 3 of Article 3520 which made their marriage
void ab initio. The marriage between Benjamin and Sally was also non-existent. Applying the general rules on void or inexistent contracts
under Article 1409 of the Civil Code, contracts which are absolutely simulated or fictitious are inexistent and void from the beginning. Thus,
the Court of Appeals did not err in sustaining the trial courts ruling that the marriage between Benjamin and Sally was null and void ab
initio and non-existent. Sally Go-Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061, July 3, 2013.
Family Code; marriage license; certification from the local civil registrar is adequate to prove the non-issuance of a marriage license and,
absent any suspicious circumstance, the certification enjoys probative value. The certification from the local civil registrar is adequate to
prove the non-issuance of a marriage license and absent any suspicious circumstance, the certification enjoys probative value, being issued
by the officer charged under the law to keep a record of all data relative to the issuance of a marriage license. Sally Go-Bangayan v. Benjamin
Bangayan, Jr., G.R. No. 201061, July 3, 2013.
Family Code; property relations in cases of cohabitation without the benefit of marriage; rules. The Court of Appeals correctly ruled that the
property relations of Benjamin and Sally is governed by Article 148 of the Family Code which states:
Art. 148. In cases of cohabitation not falling under the preceding Article, only the properties acquired by both of the parties through their
actual joint contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. In
the absence of proof to the contrary, their contributions and corresponding shares are presumed to be equal. The same rule and presumption
shall apply to joint deposits of money and evidences of credit.
If one of the parties is validly married to another, his or her share in the co-ownership shall accrue to the absolute community of conjugal
partnership existing in such valid marriage. If the party who acted in bad faith is not validly married to another, his or her share shall be
forfeited in the manner provided in the last paragraph of the preceding Article.
The foregoing rules on forfeiture shall likewise apply even if both parties are in bad faith.
Benjamin and Sally cohabitated without the benefit of marriage. Thus, only the properties acquired by them through their actual joint
contribution of money, property, or industry shall be owned by them in common in proportion to their respective contributions. Sally Go-
Bangayan v. Benjamin Bangayan, Jr., G.R. No. 201061, July 3, 2013.
Land ownership; decree of registration for which an OCT was issued is accorded greater weight as against tax declarations and tax receipts in
the name of another; tax declarations and tax receipts only become the basis of a claim of ownership when coupled with proof of actual
possession of property. In the case of Ferrer-Lopez v. CA, the Court ruled that as against an array of proofs consisting of tax declarations
and/or tax receipts which are not conclusive evidence of ownership nor proof of the area covered therein, an original certificate of title, which

36

indicates true and legal ownership by the registered owners over the disputed premises, must prevail. Accordingly, respondents Decree No.
98992 for which an original certificate of title was issued should be accorded greater weight as against the tax declarations and tax receipts
presented by petitioners in this case. Besides, tax declarations and tax receipts may only become the basis of a claim for ownership when
they are coupled with proof of actual possession of the property. Heirs of Alejandra Delfin, namely, Leopoldo Delfin, et al. v. Avelina
Rabadon, G.R. No. 165014, July 31, 2013.
Land registration; decree of registration bars all claims and rights which arose or may have existed prior to the decree of registration. It is an
elemental rule that a decree of registration bars all claims and rights which arose or may have existed prior to the decree of registration. By
the issuance of the decree, the land is bound and title thereto quieted, subject only to certain exceptions under the property registration
decree. Heirs of Alejandra Delfin, namely, Leopoldo Delfin, et al. v. Avelina Rabadon, G.R. No. 165014, July 31, 2013.
Republic Act No. 26; reconstitution of title; nature of proceeding; Torrens system; sources of reconstitution; mandatory requirements of
publication, posting, and notice. At the outset, the Court notes that the present amended petition for reconstitution is anchored on the
owners duplicate copy of TCT No. 8240 a source for reconstitution of title under Section 3(a)29 of RA 26 which, in turn, is governed by the
provisions of Section 10 in relation to Section 9 of RA 26 with respect to the publication, posting, and notice requirements. Section 10 reads:
SEC. 10. Nothing hereinbefore provided shall prevent any registered owner or person in interest from filing the petition mentioned in section
five of this Act directly with the proper Court of First Instance, based on sources enumerated in sections 2(a), 2(b), 3(a), 3(b), and/or 4(a) of
this Act: Provided, however, That the court shall cause a notice of the petition, before hearing and granting the same, to be published in the
manner stated in section nine hereof: And, provided, further, That certificates of title reconstituted pursuant to this section shall not be
subject to the encumbrance referred to in section seven of this Act.
Corollarily, Section 9 reads in part:
SEC. 9. x x x Thereupon, the court shall cause a notice of the petition to be published, at the expense of the petitioner, twice in successive
issues of the Official Gazette, and to be posted on the main entrance of the provincial building and of the municipal building of the
municipality or city in which the land lies, at least thirty days prior to the date of hearing, and after hearing, shall determine the petition and
render such judgment as justice and equity may require. x x x.
The foregoing provisions, therefore, clearly require that (a) notice of the petition should be published in two (2) successive issues of the
Official Gazette; and (b) publication should be made at least thirty (30) days prior to the date of hearing. Substantial compliance with this
jurisdictional requirement is not enough; it bears stressing that the acquisition of jurisdiction over a reconstitution case is hinged on a strict
compliance with the requirements of the law.Republic of the Philippines v. Ricordito N. De Asis, Jr., G.R. No. 193874, July 24, 2013.
Torrens system; the issue on the validity of title necessitates a remand of the case. The Court recognizes the importance of protecting the
countrys Torrens system from fake land titles and deeds. Considering that there is an issue on the validity of the title of petitioner VSD,
which title is alleged to be traceable to OCT No. 994 registered on April 19, 1917, which mother title was held to be inexistent
in Manotok Realty, Inc. v. CLT Realty Development Corporation, in the interest of justice, and to safeguard the correct titling of
properties, a remand is proper to determine which of the parties derived valid title from the legitimateOCT No. 994 registered on May 3,
1917. Since this Court is not a trier of facts and not capacitated to appreciate evidence of the first instance, the Court may remand this case
to the Court of Appeals for further proceedings, as it has been similarly tasked in Manotok Realty, Inc. v. CLT Realty Development
Corporation. VSD Realty & Development Corporation v. Uniwide Sales, Inc. and Dolores Baello Tejada, G.R. No. 170677, July 31, 2013
Torrens system; Torrens title; lands under a Torrens title cannot be acquired by prescription or adverse possession. Moreover, it is a settled
rule that lands under a Torrens title cannot be acquired by prescription or adverse possession. Section 47 of P.D. No. 1529, the Property
Registration Decree, expressly provides that no title to registered land in derogation of the title of the registered owner shall be acquired by
prescription or adverse possession. And, although the registered landowner may still lose his right to recover the possession of his registered
property by reason of laches, nowhere has Dream Village alleged or proved laches,which has been defined as such neglect or omission to
assert a right, taken in conjunction with lapse of time and other circumstances causing prejudice to an adverse party, as will operate as a bar
in equity. Put any way, it is a delay in the assertion of a right which works disadvantage to another because of the inequity founded on some
change in the condition or relations of the property or parties. It is based on public policy which, for the peace of society, ordains that relief
will be denied to a stale demand which otherwise could be a valid claim.Dream Village Neighborhood Association, Inc., represented by its
Incumbent President Greg Seriego v. Bases Conversion Development Authority, G.R. No.192896, July 24, 2013.

AUGUST
ompensation; Concept; Requisites. Compensation is a mode of extinguishing to the concurrent amount, the debts of persons who in their own
right are creditors and debtors of each other. The object of compensation is the prevention of unnecessary suits and payments through the
mutual extinction by operation of law of concurring debts. Article 1279 of the Civil Code provides for the requisites for compensation to take
effect:
Article 1279. In order that compensation may be proper, it is necessary:
(1)That each one of the obligors be bound principally, and that he be at the same time a principal creditor of the other;

37

(2)That both debts consist in a sum of money, or if the things due are consumable, they be of the same kind, and also of the same quality if
the latter has been stated;
(3)That the two debts be due;
(4)That they be liquidated and demandable;
(5)That over neither of them there be any retention or controversy, commenced by third persons and communicated in due time to the
debtor.
Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14, 2013.
Compensation; when both debts are liquidated and demandable. A debt is liquidated when the amount is known or is determinable by
inspection of the terms and conditions of relevant documents. Adelaida Soriano v. People of the Philippines, G.R. No. 181692, August 14,
2013.
Contracts; determination of nature of contract. In determining the nature of a contract, courts are not bound by the title or name given by
the parties. The decisive factor in evaluating such agreement is the intention of the parties, as shown not necessarily by the terminology used
in the contract but by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement. As such,
therefore, documentary and parol evidence may be submitted and admitted to prove such intention. Hur Tin Yang v. People of the
Philippines, G.R. No. 195117, August 14, 2013.
Co-ownership; rights of co-owners. Having succeeded to the property as heirs of Gregoria and Romana, petitioners and respondents became
co-owners thereof. As co-owners, they may use the property owned in common, provided they do so in accordance with the purpose for
which it is intended and in such a way as not to injure the interest of the co-ownership or prevent the other co-owners from using it according
to their rights. They have the full ownership of their parts and of the fruits and benefits pertaining thereto, and may alienate, assign or
mortgage them, and even substitute another person in their enjoyment, except when personal rights are involved. Each co-owner may
demand at any time the partition of the thing owned in common, insofar as his share is concerned. Finally, no prescription shall run in favor of
one of the co-heirs against the others so long as he expressly or impliedly recognizes the co-ownership. Antipolo Ining (deceased), survived
by Manuel Villanueva, Teodora Villanueva-Francisco, Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr., Milagros Francisco,Celedonio
Francisco, Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (deceased) survived by Edilberto Ibea, Josefa
Ibea, Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz and Pastor Ruiz; Dolores Ining-Rimon (deceased)
survived by Jesus Rimon, Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro Ining (deceased) survived by Elisa Tan Ining
(wife) and Pedro Ining, Jr. v. Leonardo R. Vega, substituted by Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega, Milbuena Vega-Restituto
and Lenard Vega, G.R. No. 174727, August 12, 2013.
Co-ownership; prescription; for prescription to set in, the repudiation must be done by a co-owner; requisites. Time and again, it has been
held that a co-owner cannot acquire by prescription the share of the other co-owners, absent any clear repudiation of the co-ownership. In
order that the title may prescribe in favor of a co-owner, the following requisites must concur: (1) the co-owner has performed unequivocal
acts of repudiation amounting to an ouster of the other co-owners; (2) such positive acts of repudiation have been made known to the other
co-owners; and (3) the evidence thereof is clear and convincing. In fine, since none of the co-owners made a valid repudiation of the existing
co-ownership, Leonardo could seek partition of the property at any time. Antipolo Ining (deceased), survived by Manuel Villanueva, Teodora
Villanueva-Francisco, Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr., Milagros Francisco,Celedonio Francisco, Herminigildo
Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (deceased) survived by Edilberto Ibea, Josefa Ibea, Martha Ibea,
Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz and Pastor Ruiz; Dolores Ining-Rimon (deceased) survived by Jesus Rimon,
Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro Ining (deceased) survived by Elisa Tan Ining (wife) and Pedro Ining, Jr. v.
Leonardo R. Vega, substituted by Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega, Milbuena Vega-Restituto and Lenard Vega, G.R. No.
174727, August 12, 2013.
Damages; actual damages; requires competent proof of the actual amount of loss. To justify an award for actual damages, there must be
competent proof of the actual amount of loss. Credence can be given only to claims duly supported by receipts. Respondents did not submit
any documentary proof, like receipts, to support their claim for actual damages.Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and
Estrella Capistrano, G.R. No. 170942, August 28, 2013.
Damages; attorneys fees; allowed when exemplary damages are awarded or where the plaintiff has incurred expenses to protect his interest
by reason of defendants act or omission. Article 2208 of the Civil Code allows recovery of attorneys fees when exemplary damages are
awarded or where the plaintiff has incurred expenses to protect his interest by reason of defendants act or omission. Considering that
exemplary damages were properly awarded here, and that respondents hired a private lawyer to litigate its cause, the Supreme Court agrees
with the RTC and CA that the P30,000.00 allowed as attorneys fees were appropriate and reasonable. Comsavings Bank (now GSIS Family
Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942, August 28, 2013.

Damages; Award of attorneys fees and litigation expenses and costs; justified when there is bad faith. Even granting that Atty. Sabitsana has
ceased to act as the Muertegui familys lawyer, he still owed them his loyalty. The termination of attorney-client relation provides no
justification for a lawyer to represent an interest adverse to or in conflict with that of the former client on a matter involving confidential
information which the lawyer acquired when he was counsel. The clients confidence once reposed should not be divested by mere expiration
of professional employment. This is underscored by the fact that Atty. Sabitsana obtained information from Carmen which he used to his
advantage and to the detriment of his client.

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[F]rom the foregoing disquisition, it can be seen that petitioners are guilty of bad faith in pursuing the sale of the lot despite being apprised of
the prior sale in respondents favor. Moreover, petitioner Atty. Sabitsana has exhibited a lack of loyalty toward his clients, the Muerteguis, and
by his acts, jeopardized their interests instead of protecting them. Over and above the trial courts and the CAs findings, this provides further
justification for the award of attorneys fees, litigation expenses and costs in favor of the respondent. Spouses Celemencio C. Sabitsana, Jr.
and Ma. Rosario M. Sabitsana v. Juanito F. Muertegui, represented by his attorney-in-fact, Domingo A. Muertegui, Jr., G.R. No. 181359,
August 5, 2013.
Damages; Attorneys fees; what constitute bad faith. There was no gross and evident bad faith on the part of Asian Construction in filing its
complaint against Sumitomo since it was merely seeking payment of its unpaid works done pursuant to the Agreement. Neither can its
subsequent refusal to accept Sumitomos offered compromise be classified as a badge of bad faith since it was within its right to either accept
or reject the same owing to its contractual nature. Absent any other just or equitable reason to rule otherwise, these incidents are clearly off-
tangent with a finding of gross and evident bad faith which altogether negates Sumitomos entitlement to attorneys fees. Asian Construction
and Development Corporation v. Sumitomo Corporation / Sumitomo Corporation v. Asia Construction and Development Corporation,G.R. No.
196723 / G.R. No. 196728, August 28, 2013.
Damages; Attorneys fees; when awarded. Jurisprudence dictates that in the absence of a governing stipulation, attorneys fees may be
awarded only in case the plaintiffs action or defendants stand is so untenable as to amount to gross and evident bad faith. This is embodied
in Article 2208 of the Civil Code which states:
Article 2208. In the absence of stipulation, attorneys fees and expenses of litigation, other than judicial costs, cannot be recovered, except:
x x x x
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs plainly valid, just and demandable claim;
x x x x
Asian Construction and Development Corporation v. Sumitomo Corporation / Sumitomo Corporation v. Asia Construction and Development
Corporation, G.R. No. 196723 / G.R. No. 196728, August 28, 2013.
Damages; Exemplary damages; the law allows the grant of exemplary damages to set an example for the public good. The law allows the
grant of exemplary damages to set an example for the public good. The business of a bank is affected with public interest; thus, it makes a
sworn profession of diligence and meticulousness ingiving irreproachable service. For this reason, the bank should guard against injury
attributable to negligence or bad faith on its part. The banking sector must at all times maintain a high level of meticulousness. The grant of
exemplary damages is justified by the initial carelessness of petitioner, aggravated by its lack of promptness in repairing its
error. Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942, August 28, 2013.
Damages; Moral damages; recoverable for acts or actions referred to in Article 20 of the Civil Code. In their amended complaint, respondents
claimed that the acts of GCB Builders and Comsavings Bank had caused them to suffer sleepless nights, worries and anxieties. The claim was
well founded. Danilo worked in Saudi Arabia in order to pay the loan used for the construction of their family home. His anxiety and anguish
over the incomplete and defective construction of their house, as well as the inconvenience he and his wife experienced because of this suit
were not easily probable. On her part, Estrella was a mere housewife, but was the attorney-in-fact of Danilo in matters concerning the loan
transaction. With Danilo working abroad, she was alone in overseeing the house construction and the progress of the present case. Given her
situation, she definitely experienced worries and sleepless nights. The award of moral damages of P100,000.00 awarded by the CA as
exemplary damages is proper. Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942, August
28, 2013.
Damages; Temperate damages; may be recovered when the court finds that some pecuniary loss was suffered but its amount cannot be
proved with certainty. Nonetheless, it cannot be denied that they had suffered substantial losses. Article 2224 of the Civil Code allows the
recovery of temperate damages when the court finds that some pecuniary loss was suffered but its amount cannot be proved with certainty.
In lieu of actual damages, therefore, temperate damages of P25,000.00 are awarded. Such amount, in the courts view, is reasonable under
the circumstances. Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942, August 28, 2013.

Damages; Interests; Eastern Shipping Lines guidelines as modified by BSP-MB Circular No. 799. The Supreme Court set out the following
guidelines on damages and interest due:
1. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can
be held liable for damages. The provisions under Title XVIII on Damages of the Civil Code govern in determining the measure of recoverable
damages.
2. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the
accrual thereof, is imposed, as follows:
(a) When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of of stipulation, the rate of interest shall be 6% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 the Civil Code.

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(b) When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or
damages, except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with
reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code), but
when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date
the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The
actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged.
(c) When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 6% per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit. Dario Nacar v. Gallery Frames and/or Felipe Borde, Jr., G.R. No. 189871, August 13,
2013.
Gross negligence; concept. Based on the provisions, a banking institution like Comsavings Bank is obliged to exercise the highest degree of
diligence as well as high standards of integrity and performance in all its transactions because its business is imbued with public interest. As
aptly declared in Philippine National Bank v. Pike: [T]he stability of banks largely depends on the confidence of the people in the honesty and
efficiency of banks. Gross negligence connotes want of care in the performance of ones duties; it is a negligence characterized by the want
of even slight care, acting or omitting to act in a situation where there is duty to act, not inadvertently but willfully and intentionally, with a
conscious indifference to consequences insofar as other persons may be affected. It evinces a thoughtless disregard of consequences without
exerting any effort to avoid them. Comsavings Bank (now GSIS Family Bank) v. Sps. Danilo and Estrella Capistrano, G.R. No. 170942, August
28, 2013.
Interest; Legal rate of interest effective July 1, 2013; pursuant to BSP Circular 799, series of 2013, the legal rate of interest shall be 6% per
annum. The Court held that [P]ursuant to Circular No. 799, series of 2013 of the Bangko Sentral ng Pilipinas which took effect July 1, 2013,
the amount of P6,000.00, erroneously paid by Petitioner to the bank, shall earn interest at the rate of 6% per annum computed from the
filing of the Petition in Civil Case No. 5535 up to its full satisfaction. Virginia M. Venzon v. Rural Bank of Buenavista, Inc., represented by
Lourdesita E. Parajes, G.R. No. 178031, August 28, 2013.
Interest; legal rate of interest; interest at 6% per annum imposed on award in favor of illegally dismissed employees. Interest at the rate of
6% per annum must be imposed on the award for separation pay, back wages, and attorneys fees to illegally dismissed employees in
accordance with Circular No. 799, Series of 2013 of the Bangko Sentral ng Pilipinas which took effect July 1, 2013. Vicente Ang v. Seferino
San Joaquin, Jr., and Diosdado Fernandez, G.R. No. 185549, August 7, 2013.
Interest; legal interest; where obligation constitutes a loan or forbearance of money, goods or credit; legal rate allowed in judgments. In the
absence of an express stipulation as to the rate of interest that would govern the parties, the rate of legal interest for loans or forbearance of
any money, goods or credits and the rate allowed in judgments shall no longer be 12% per annum. As reflected in the case of Eastern
Shipping Lines and Subsection X305.1 of the Manual of Regulations for Banks and Sections 4305Q.1, 4305S.3 and 4303P.1 of the Manual of
Regulations for Non-Bank Financial Institutions, before its amendment by BSP-MB Circular No. 799, the interest rate will now be 6% per
annum effective July 1, 2013. Dario Nacar v. Gallery Frames and/or Felipe Borde, Jr., G.R. No. 189871, August 13, 2013.
Interest; Legal interest; prospective application. It should be noted that the new rate could only be applied prospectively and not
retroactively. Consequently, the 12% per annum legal interest shall apply only until June 30, 2013. Come July 1, 2013 the new rate of 6%
per annum shall be the prevailing rate of interest when applicable. Nonetheless, with regard to those judgments that have become final and
executory prior to July 1, 2013, said judgments shall not be disturbed and shall continue to be implemented applying the rate of interest fixed
therein. Dario Nacar v. Gallery Frames and/or Felipe Borde, Jr., G.R. No. 189871, August 13, 2013.

Laches; definition. The Court observes that laches had already set in, thereby precluding the Andrades from pursuing their claim. Case law
defines laches as the failure to assert a right for an unreasonable and unexplained length of time, warranting a presumption that the party
entitled to assert it has either abandoned or declined to assert it. Bobby Tan v. Grace Andrade, et al./Grace Andrade, et al. v. Bobby
Tan, G.R. Nos. 171904 & 172017, August 7, 2013.

Quasi-contracts; solutio indebiti; concept. In a controversy over payment made after the foreclosure of the mortgaged property, the Court
held: Since respondent was not entitled to receive the said amount, as it is deemed fully paid from the foreclosure of petitioners property
since its bid price at the auction sale covered all that petitioner owed it by way of principal, interest, attorneys fees and charges, it must
return the same to petitioner. If something is received when there is no right to demand it, and it was unduly delivered through mistake, the
obligation to return it arises. Virginia M. Venzon v. Rural Bank of Buenavista, Inc., represented by Lourdesita E. Parajes, G.R. No. 178031,
August 28, 2013.

Sales; double sale involving unregistered land; Article 1544 of the Civil Code does not apply; prior sale, even if made through an unnotarized
deed of sale, prevails; registration of second sale is unavailing as registration does not vest title; Under Act 3344, registration if instruments
affecting unregistered lands is without prejudice to a third party with a better right; actual and prior knowledge of the first sale makes the
subsequent buyers purchasers in bad faith. Article 1544 of the Civil Code does not apply to sales involving unregistered land. Both the trial
court and the CA are, however, wrong in applying Article 1544 of the Civil Code. Both courts seem to have forgotten that the provision does
not apply to sales involving unregistered land. Suffice it to state that the issue of the buyers good or bad faith is relevant only where the
subject of the sale is registered land, and the purchaser is buying the same from the registered owner whose title to the land is clean. In such
case, the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value.

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The sale to respondent Juanito was executed on September 2, 1981 via an unnotarized deed of sale, while the sale to petitioners was made
via a notarized document only on October 17, 1991, or ten years thereafter. Thus, Juanito who was the first buyer has a better right to the
lot, while the subsequent sale to petitioners is null and void, because when it was made, the seller Garcia was no longer the owner of the
lot. Nemo dat quod non habet.
The fact that the sale to Juanito was not notarized does not alter anything, since the sale between him and Garcia remains valid nonetheless.
Notarization, or the requirement of a public document under the Civil Code, is only for convenience, and not for validity or enforceability. And
because it remained valid as between Juanito and Garcia, the latter no longer had the right to sell the lot to petitioners, for his ownership
thereof had ceased.
Nor can petitioners registration of their purchase have any effect on Juanitos rights. The mere registration of a sale in ones favor does not
give him any right over the land if the vendor was no longer the owner of the land, having previously sold the same to another even if the
earlier sale was unrecorded. Neither could it validate the purchase thereof by petitioners, 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.
Under Act No. 3344, registration of instruments affecting unregistered lands is without prejudice to a third party with a better right. The
aforequoted phrase has been held by the Court to mean that the mere registration of a sale in ones favor does not give him any right over
the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was
unrecorded.
Petitioners defense of prescription, laches and estoppel are unavailing since their claim is based on a null and void deed of sale. The fact that
the Muerteguis failed to interpose any objection to the sale in petitioners favor does not change anything, nor could it give rise to a right in
their favor; their purchase remains void and ineffective as far as the Muerteguis are concerned. Spouses Celemencio C. Sabitsana, Jr. and Ma.
Rosario M. Sabitsana v. Juanito F. Muertegui, represented by his attorney-in-fact, Domingo A. Muertegui, Jr., G.R. No. 181359, August 5,
2013.

Sales; actual and prior knowledge of the first sale makes the subsequent buyers purchasers in bad faith. Petitioners actual and prior
knowledge of the first sale to Juanito makes them purchasers in bad faith. It also appears that petitioner Atty. Sabitsana was remiss in his
duties as counsel to the Muertegui family. Instead of advising the Muerteguis to register their purchase as soon as possible to forestall any
legal complications that accompany unregistered sales of real property, he did exactly the opposite: taking advantage of the situation and the
information he gathered from his inquiries and investigation, he bought the very same lot and immediately caused the registration thereof
ahead of his clients, thinking that his purchase and prior registration would prevail. The Court cannot tolerate this mercenary attitude. Instead
of protecting his clients interest, Atty. Sabitsana practically preyed on him. Spouses Celemencio C. Sabitsana, Jr. and Ma. Rosario M.
Sabitsana v. Juanito F. Muertegui, represented by his attorney-in-fact, Domingo A. Muertegui, Jr., G.R. No. 181359, August 5, 2013.

Succession; siblings are heirs of decedent who died without issue. Since Leon died without issue, his heirs are his siblings, Romana and
Gregoria, who thus inherited the property in equal shares. In turn, Romanas and Gregorias heirs the parties herein became entitled to
the property upon the sisters passing. Under Article 777 of the Civil Code, the rights to the succession are transmitted from the moment of
death. Antipolo Ining (deceased), survived by Manuel Villanueva, Teodora Villanueva-Francisco, Camilo Francisco, Adolfo Francisco, Lucimo
Francisco, Jr., Milagros Francisco,Celedonio Francisco, Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad Ining-Ibea
(deceased) survived by Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz and Pastor
Ruiz; Dolores Ining-Rimon (deceased) survived by Jesus Rimon, Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro Ining
(deceased) survived by Elisa Tan Ining (wife) and Pedro Ining, Jr. v. Leonardo R. Vega, substituted by Lourdes Vega, Restonil o I. Vega,
Crispulo M. Vega, Milbuena Vega-Restituto and Lenard Vega, G.R. No. 174727, August 12, 2013.
Special Laws
Correction of name; adversary proceeding; impleading and notice to affected and interested parties; when failure to implead and notify is
cured by publication of notice of hearing; strict compliance with the Rules of Court mandated when petition involves substantial and
controversial alterations. Respondents birth certificate shows that her full name is Anita Sy, that she is a Chinese citizen and a legitimate
child of Sy Ton and Sotera Lugsanay. In filing the petition, however, she seeks the correction of her first name and surname, her status from
legitimate to illegitimate and her citizenship from Chinese to Filipino. Thus, respondent should have impleaded and notified not only
the Local Civil Registrar but also her parents and siblings as the persons who have interest and are affected by the changes or corrections
respondent wanted to make.
The fact that the notice of hearing was published in a newspaper of general circulation and notice thereof was served upon the State will not
change the nature of the proceedings taken. A reading of Sections 4 and 5, Rule 108 of the Rules of Court shows that the Rules mandate two
sets of notices to different potential oppositors: one given to the persons named in the petition and another given to other persons who are
not named in the petition but nonetheless may be considered interested or affected parties. Summons must, therefore, be served not for the
purpose of vesting the courts with jurisdiction but to comply with the requirements of fair play and due process to afford the person
concerned the opportunity to protect his interest if he so chooses.
While there may be cases where the Court held that the failure to implead and notify the affected or interested parties may be cured by the
publication of the notice of hearing, earnest efforts were made by petitioners in bringing to court all possible interested parties. Such failure
was likewise excused where the interested parties themselves initiated the corrections proceedings; when there is no actual or presumptive
awareness of the existence of the interested parties; or when a party is inadvertently left out.

41

It is clear from the foregoing discussion that when a petition for cancellation or correction of an entry in the civil register involves substantial
and controversial alterations, including those on citizenship, legitimacy of paternity or filiation, or legitimacy of marriage, a strict compliance
with the requirements of Rule 108 ofthe Rules of Court is mandated. If the entries in the civil register could be corrected or changed through
mere summary proceedings and not through appropriate action wherein all parties who may be affected by the entries are notified or
represented, the door to fraud or other mischief would be set open, the consequence of which might be detrimental and far reaching. Republic
of the Philppines v. Dr. Norma S. Lugsanay Uy, G.R. No. 198010, August 12, 2013.
Correction of name; Appropriate adversary proceeding; definition. What is meant by appropriate adversary proceeding? Blacks Law
Dictionary defines adversary proceeding as follows:
One having opposing parties; contested, as distinguished from an ex parte application, one of which the party seeking relief has given legal
warning to the other party, and afforded the latter an opportunity to contest it. Excludes an adoption proceeding. Republic of the Philppines v.
Dr. Norma S. Lugsanay Uy, G.R. No. 198010, August 12, 2013.
Correction of name; errors in a civil registry and facts established in an appropriate adversary proceeding. It has been settled in a number of
cases starting with Republic v. Valencia that even substantial errors in a civil registry may be corrected and the true facts established
provided the parties aggrieved by the error avail themselves of the appropriate adversary proceeding. The pronouncement of the Court in that
case is illuminating:
It is undoubtedly true that if the subject matter of a petition is not for the correction of clerical errors of a harmless and innocuous nature,
but one involving nationality or citizenship, which is indisputably substantial as well as controverted, affirmative relief cannot be granted in a
proceeding summary in nature. However, it is also true that a right in law may be enforced and a wrong may be remedied as long as the
appropriate remedy is used. This Court adheres to the principle that even substantial errors in a civil registry may be corrected and the true
facts established provided the parties aggrieved by the error avail themselves of the appropriate adversary proceeding. Republic of the
Philppines v. Dr. Norma S. Lugsanay Uy,G.R. No. 198010, August 12, 2013.
Family Relations; Conjugal property; presumption that all property of the marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the wife; for presumption to apply, party invoking the same must preliminarily
prove that the property was indeed acquired during the marriage; presumption cannot apply where there is no showing as to when the
property alleged to be conjugal was acquired. Pertinent to the resolution of this second issue is Article 160 of the Civil Code which states that
[a]ll property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the
husband or to the wife. For this presumption to apply, the party invoking the same must, however, preliminarily prove that the property was
indeed acquired during the marriage. As held in Go v. Yamane:
x x As a condition sine qua non for the operation of [Article 160] in favor of the conjugal partnership, the party who invokes the presumption
must first prove that the property was acquired during the marriage.
In other words, the presumption in favor of conjugality does not operate if there is no showing of when the property alleged to be conjugal
was acquired. Moreover, the presumption may be rebutted only with strong, clear, categorical and convincing evidence. There must be strict
proof of the exclusive ownership of one of the spouses, and the burden of proof rests upon the party asserting it.
In this case, there is no evidence to indicate when the property was acquired by petitioner Josefina. Thus, we agree with petitioner Josefi nas
declaration in the deed of absolute sale she executed in favor of the respondent that she was the absolute and sole owner of the
property. Bobby Tan v. Grace Andrade, et al./Grace Andrade, et al. v. Bobby Tan, G.R. Nos. 171904 & 172017, August 7, 2013.
Family relations. Under the Family Code, family relations, which is the primary basis for succession, exclude relations by affinity. Antipolo
Ining (deceased), survived by Manuel Villanueva, Teodora Villanueva-Francisco, Camilo Francisco, Adolfo Francisco, Lucimo Francisco, Jr.,
Milagros Francisco,Celedonio Francisco, Herminigildo Francisco; Ramon Tresvalles, Roberto Tajonera, Natividad Ining-Ibea (deceased)
survived by Edilberto Ibea, Josefa Ibea, Martha Ibea, Carmen Ibea, Amparo Ibea-Fernandez, Henry Ruiz, Eugenio Ruiz and Pastor Ruiz;
Dolores Ining-Rimon (deceased) survived by Jesus Rimon, Cesaria Rimon Gonzales and Remedios Rimon Cordero; and Pedro Ining (deceased)
survived by Elisa Tan Ining (wife) and Pedro Ining, Jr. v. Leonardo R. Vega, substituted by Lourdes Vega, Restonilo I. Vega, Crispulo M. Vega,
Milbuena Vega-Restituto and Lenard Vega, G.R. No. 174727, August 12, 2013.
Land titles; indefeasibility of certificate of title to public land issued pursuant to a grant or patent; false statement exception; reversion of
land. The certificate of title issued pursuant to any grant or patent involving public lands is as conclusive and indefeasible as any other
certificate of title issued to private lands in the ordinary or cadastral registration proceedings. It is not subject to collateral attack. However,
Section 91 of Commonwealth Act No. 141 (The Public Land Act) provides for the cancellation of the concession, title or permit granted for any
false statement in the application or omission of facts in the application.
Once a patent is registered and the corresponding certificate of title is issued, the land covered by it ceases to be part of the public domain
and becomes private property, and the Torrens Title issued pursuant to the patent becomes indefeasible upon the expiration of one year from
the date of issuance of such patent. However, as held in The Director of Lands v. De Luna, et al., even after the lapse of one year, the State
may still bring an action under Section 101 of Commonwealth Act No. 141 for the reversion to the public domain of land which has been
fraudulently granted to private individuals. The burden of proof rests on the party who asserts the affirmative of an issue. Republic of the
Philippines v. Angeles Bellate, and Spouses Jesus Cabanto and Marieta Juanerio, G.R. No. 175685, August 7, 2013.
Land titles; Fraud in an application for grant of title to public land or patent; definition. It was held on Libudan v. Gil that [t]he fraud must
consist in an intentional omission of facts required by law to be stated in the application or a willful statement of a claim against the truth. It
must show some specific acts intended to deceive and deprive another of his right. The fraud must be actual and extrinsic, not merely

42

constructive or intrinsic; the evidence thereof must be clear, convincing and more than merely preponderant, because the proceedings which
are assailed as having been fraudulent are judicial proceedings which by law, are presumed to have been fair and regular. Republic of the
Philippines v. Angeles Bellate, and Spouses Jesus Cabanto and Marieta Juanerio, G.R. No. 175685, August 7, 2013.
Trust receipts; purpose. To emphasize, the Trust Receipts Law was created to to aid in financing importers and retail dealers who do not
have sufficient funds or resources to finance the importation or purchase of merchandise, and who may not be able to acquire credit except
through utilization, as collateral, of the merchandise imported or purchased.Hur Tin Yang v. People of the Philippines, G.R. No. 195117,
August 14, 2013.
Trust receipts; when not a trust receipts transaction. Nonetheless, when both parties enter into an agreement knowing fully well that the
return of the goods subject of the trust receipt is not possible even without any fault on the part of the trustee, it is not a trust receipt
transaction penalized under Sec. 13 of PD 115 in relation to Art. 315, par. 1(b) of the RPC, as the only obligation actually agreed upon by the
parties would be the return of the proceeds of the sale transaction. This transaction becomes a mere loan, where the borrower is obligated to
pay the bank the amount spent for the purchase of the goods. Hur Tin Yang v. People of the Philippines, G.R. No. 195117, August 14, 2013.

SEPTEMBER
Civil registry; nature of civil register books; books making up the civil register and all documents relating thereto are public documents and
shall be prima facie evidence of the facts therein contained; as public documents, they are admissible in evidence even without further proof
of their due execution and genuineness.There is no question that the documentary evidence submitted by petitioner are all public documents.
As provided in the Civil Code:
ART. 410. The books making up the civil register and all documents relating thereto shall be considered public documents and shall be prima
facie evidence of the facts therein contained.
As public documents, they are admissible in evidence even without further proof of their due execution and genuineness. Thus, the RTC erred
when it disregarded said documents on the sole ground that the petitioner did not present the records custodian of the NSO who issued them
to testify on their authenticity and due execution since proof of authenticity and due execution was not anymore necessary. Moreover, not
only are said documents admissible, they deserve to be given evidentiary weight because they constitute prima facie evidence of the facts
stated therein. And in the instant case, the facts stated therein remain unrebutted since neither the private respondent nor the public
prosecutor presented evidence to the contrary. In Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. Felisa Gangan Arambulo and Felisa
Gangan Iwasawa), et al., G.R. No. 204169, September 11, 2013.
Contracts; contract to sell distinguished from contract of sale; in a contract to sell, ownership remains with the vendor and does not pass to
the vendee until full payment of the purchase price; a deed of sale is absolute when there is no stipulation in the contract that title to the
property remains with the seller until the full payment of the purchase price. In a conditional sale, as in a contract to sell, ownership remains
with the vendor and does not pass to the vendee until full payment of the purchase price. The full payment of the purchase price partakes of
a suspensive condition, and non-fulfillment of the condition prevents the obligation to sell from arising. To differentiate, a deed of sale is
absolute when there is no stipulation in the contract that title to the property remains with the seller until full payment of the purchase
price. Ramos v. Heruela held that Articles 1191 and 1592 of the Civil Code are applicable to contracts of sale, while R.A. No. 6552 applies to
contracts to sell. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.
Contracts; lease contracts; lease contracts survive the death of the parties and continue to bind the heirs except if the contract states
otherwise; the provision in the lease contract stating that this contract is nontransferable unless prior written consent of the lessor is
obtained in writing refers to transfers inter vivos and not transmissions mortis causa. The Supreme Court has previously ruled that lease
contracts, by their nature, are not personal. The general rule, therefore, is lease contracts survive the death of the parties and continue to
bind the heirs except if the contract states otherwise. In Sui Man Hui Chan v. Court of Appeals, we held that: A lease contract is not
essentially personal in character. Thus, the rights and obligations therein are transmissible to the heirs. The general rule, therefore, is that
heirs are bound by contracts entered into by their predecessors-in-interest except when the rights and obligations arising therefrom are not
transmissible by (1) their nature, (2) stipulation or (3) provision of law. In the subject Contract of Lease, not only were there no stipulations
prohibiting any transmission of rights, but its very terms and conditions explicitly provided for the transmission of the rights of the lessor and
of the lessee to their respective heirs and successors. The contract is the law between the parties. The death of a party does not excuse
nonperformance of a contract, which involves a property right, and the rights and obligations thereunder pass to the successors or
representatives of the deceased. Similarly, nonperformance is not excused by the death of the party when the other party has a property
interest in the subject matter of the contract. Section 6 of the lease contract provides that [t]his contract is nontransferable unless prior
consent of the lessor is obtained in writing. Section 6 refers to transfers inter vivos and not transmissions mortis causa. What Section 6
seeks to avoid is for the lessee to substitute a third party in place of the lessee without the lessors consent. Manuel Uy & Sons, Inc. v.
Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.
Contracts; lease contracts; sublease arrangement; concept. Assignment or transfer of lease, which is covered by Article 1649 of the Civil
Code, is different from a sublease arrangement, which is governed by Article 1650 of the same Code. In a sublease, the lessee becomes in
turn a lessor to a sub-lessee. The sub-lessee then becomes liable to pay rentals to the original lessee. However, the juridical relation between
the lessor and lessee is not dissolved. The parties continue to be bound by the original lease contract. Thus, in a sublease arrangement, there
are at least three parties and two distinct juridical relations. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September
11, 2013.

43

Contracts; lease contracts; lessees right upon the termination of the lease to (a) claim reimbursement from the lessor for half the value of
the useful improvements introduced by the lessee in good faith, or to (b) demolish of such improvements. The CA erred in not applying Article
1678 of the Civil Code which provides: Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use for
which the lease is intended, without altering the form or substance of the property leased, the lessor upon the termination of the lease shall
pay the lessee one-half of the value of the improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer damage thereby. He shall not, however, cause any more impairment
upon the property leased than is necessary. With regard to ornamental expenses, the lessee shall not be entitled to any reimbursement, but
he may remove the ornamental objects, provided no damage is caused to the principal thing, and the lessor does not choose to retain them
by paying their value at the time the lease is extinguished.
The foregoing provision applies if the improvements were: (1) introduced in good faith; (2) useful; and (3) suitable to the use for which the
lease is intended, without altering the form and substance. We find that the aforementioned requisites are satisfied in this case. The buildings
were constructed before Germans demise, during the subsistence of a valid contract of lease. It does not appear that HDSJ prohibited
German from constructing the buildings. Thus, HDSJ should have reimbursed German (or his estate) half of the value of the improvements as
of 2001. If HDSJ is not willing to reimburse the Inocencios, then the latter should be allowed to demolish the buildings. Manuel Uy & Sons,
Inc. v. Valbueco, Incorporated,G.R. No. 179594, September 11, 2013.
Contracts; tortious interference; elements; exception. As correctly pointed out by the Inocencios, tortious interference has the following
elements: (1) existence of a valid contract; (2) knowledge on the part of the third person of the existence of the contract; and (3)
interference of the third person without legal justification or excuse. In So Ping Bun v. Court of Appeals, we held that there was no tortious
interference if the intrusion was impelled by purely economic motives. In So Ping Bun, we explained that: Authorities debate on whether
interference may be justified where the defendant acts for the sole purpose of furthering his own financial or economic interest. One view is
that, as a general rule, justification for interfering with the business relations of another exists where the actors motive is to benefit himself.
Such justification does not exist where his sole motive is to cause harm to the other. Added to this, some authorities believe that it is not
necessary that the interferers interest outweighs that of the party whose rights are invaded, and that an individual acts under an economic
interest that is substantial, not merely de minimis, such that wrongful and malicious motives are negatived, for he acts in self-protection.
Moreover, justification for protecting ones financial position should not be made to depend on a comparison of his economic interest in the
subject matter with that of others. It is sufficient if the impetus of his conduct lies in a proper business interest rather than in wrongful
motives. Analita P. Inocencion, substituting for Ramon Inocencion (deceased) v. Hospicio de San Jose, G.R. No. 201787, September 25,
2013.
Damages; loss of earning capacity; compensation for lost income is in the nature of damages and as such requires due proof of the damages
suffered; there must be unbiased proof of the deceaseds income. In People v. Caraig, the Supreme Court had drawn two exceptions to the
rule that documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity, and have thus
awarded damages where there is testimony that the victim was either (1) self-employed earning less than the minimum wage under current
labor laws, and judicial notice may be taken of the fact that in the victims line of work no documentary evidence is available; or (2) employed
as a daily-wage worker earning less than the minimum wage under current labor laws. In People of the Philippines v. Edwin Ibanez y
Albante, et al., G.R. No. 197813, September 25, 2013.

Estoppel; requisites. For estoppel to take effect, there must be knowledge of the real facts by the party sought to be estopped and reliance by
the party claiming estoppel on the representation made by the former. In this case, petitioner cannot be estopped from asking for the return
of the vessel in the condition that it had been at the time it was seized by respondent because he had not known of the deteriorated condition
of the ship. Ernesto Dy v. Hon. Gina M. Bibat-Palamos, in her capacity as Presiding Judge of the RTC, Branch 64, Makati City, and Orix Metro
Leasing and Finance Corporation, G.R. No. 196200, September 11, 2013.
Interest; Judgment award; imposition of interests; under BSP Circular No. 799, effective on July 1, 2013, the interest rate to be imposed for
a loan or forbearance of money, goods or credits and the rate allowed in judgments in the absence of stipulation thereon, was changed from
12% to 6%. Notice must be taken that in Resolution No. 796 dated May 16, 2013, the Monetary Board of the Bangko Sentral ng Pilipinas
approved the revision of the interest rate to be imposed for the loan or forbearance of any money, goods or credits and the rate allowed in
judgments, in the absence of an express contract as to such rate of interest. Thus, under BSP Circular No. 799, issued on June 21, 2013 and
effective on July 1, 2013, the said rate of interest is now back at six percent (6%), S.C. Megaworld Construction and Development
Corporation v. Engr. Luis U. Parada, represented by Engr. Leonardo A. Parada of Genlite Industries,G.R. No. 183804, September 11, 2013.
Laches; concept; the question of laches is addressed to the sound discretion of the court and, being an equitable doctrine, its application is
controlled by equitable considerations. Laches has been defined as the failure or neglect for an unreasonable and unexplained length of time
to do that which, by exercising due diligence, could or should have been done earlier, thus, giving rise to a presumption that the party
entitled to assert it either has abandoned or declined to assert it.
On this score, it is a well-settled principle of law that laches is a recourse in equity, which is, applied only in the absence of statutory law. And
though laches applies even to imprescriptible actions, its elements must be proved positively. Ultimately, the question of laches is addressed
to the sound discretion of the court and, being an equitable doctrine, its application is controlled by equitable considerations. Citibank, N.A.
and the Citigroup Private Bank v. Ester H. Tanco-Gabaldon, et al./ Carol Lim v. Ester H. Tanco-Gabaldon, et al., G.R. No. 198444/G.R. No.
198469-70, September 4, 2013.
Obligations; novation; concept; elements. In novation, a subsequent obligation extinguishes a previous one through substitution either by
changing the object or principal conditions, by substituting another in place of the debtor, or by subrogating a third person into the rights of
the creditor. Novation requires (a) the existence of a previous valid obligation; (b) the agreement of all parties to the new contract; (c) the
extinguishment of the old contract; and (d) the validity of the new one. There cannot be novation in this case since the proposed substituted
parties did not agree to the PRAs supposed assignment of its obligations under the contract for the electrical and light works at Heritage Park
to the HPMC. The latter definitely and clearly rejected the PRAs assignment of its liability under that contract to the HPMC. Philippine

44

Reclamation Authority (formerly known as the Public Estates Authority v. Romago, Inc./Romago, Inc. Vs. Philippine Reclamation
Authority, G.R. Nos. 174665 and 175221, September 18, 2013.
Obligations; novation as a mode of extinguishing an obligation; concept; novation is never presumed but must be clearly and unequivocally
shown. Novation is a mode of extinguishing an obligation by changing its objects or principal obligations, by substituting a new debtor in place
of the old one, or by subrogating a third person to the rights of the creditor. It is the substitution of a new contract, debt, or obligation for an
existing one between the same or different parties. The settled rule is that novation is never presumed, but must be clearly and
unequivocally shown. In order for a new agreement to supersede the old one, the parties to a contract must expressly agree that they are
abrogating their old contract in favor of a new one. Thus, the mere substitution of debtors will not result in novation, and the fact that the
creditor accepts payments from a third person, who has assumed the obligation, will result merely in the addition of debtors and not
novation, and the creditor may enforce the obligation against both debtors. If there is no agreement as to solidarity, the first and new debtors
are considered obligated jointly. Philippine Reclamation Authority (formerly known as thePublic Estates Authority v. Romago, Inc./Romago,
Inc. Vs. Philippine Reclamation Authority,G.R. Nos. 174665 and 175221, September 18, 2013.
SPECIAL LAWS
Land registration; an applicant who seeks to have a land registered in his name has the burden of proving that he is its owner in fee
simple. As held in Republic v. Lee:
The most basic rule in land registration cases is that no person is entitled to have land registered under the Cadastral or Torrens system
unless he is the owner in fee simple of the same, even though there is no opposition presented against such registration by third persons. x x
x In order that the petitioner for the registration of his land shall be permitted to have the same registered, and to have the benefit resulting
from the certificate of title, finally, issued, the burden is upon him to show that he is the real and absolute owner, in fee simple.
In First Gas Power Corporation v. Republic of the Philippines, Represented by the Office of the Solicitor General, G.R. No. 169461, September
2, 2013.

Land registration; Nature of land registration proceedings; land registration proceedings are in rem in nature and, hence, by virtue of the
publication requirement, all claimants and occupants of the subject property are deemed to be notified of the existence of a cadastral case
involving the subject lots; parties are precluded from re-litigating the same issues already determined by final judgment. In this case, records
disclose that petitioner itself manifested during the proceedings before the RTC that there subsists a decision in a previous cadastral
case, i.e., Cad. Case No. 37, which covers the same lots it applied apprised of the existence of the foregoing decision even before the
rendition of the RTC Decision and Amended Order through the LRA Report dated as early as November 24, 1998 which, as above-quoted,
states that the subject lots were previously applied for registration of title in the [c]adastral proceedings and were both decided under [Cad.
Case No. 37], GLRO Record No. 1969, and are subject to the following annotation x x x: Lots 1298 (45-1) [and] 1315 (61-1) Pte. Nueva
doc. Since it had been duly notified of an existing decision which binds over the subject lots, it was incumbent upon petitioner to prove that
the said decision would not affect its claimed status as owner of the subject lots in fee simple. In First Gas Power Corporation v. Republic of
the Philippines, Represented by the Office of the Solicitor General, G.R. No. 169461, September 2, 2013.

Land registration proceedings; nature; being a proceeding in rem, there is no need to give personal notice to the owners or claimants of the
land sought to be registered in order to vest the courts with power and authority over the res. Since no issue was raised as to Antonia
Victorinos compliance with the prerequisites of notice and publication, she is deemed to have followed such requirements. As a consequence,
petitioner is deemed sufficiently notified of the hearing of Antonias application. Hence, she cannot claim that she is denied due process.
In Crisanta Guido-Enriquez v. Alicia I. Victorino, et al., G.R. No. 180427, September 30, 2013.

Land registration; requirement that the application for land registration must state the full names and addresses of all occupants of the land
and those of the adjoining owners, if known, and if not known, it must state the extent of the search made to find them. As to the alleged
denial of petitioners right to due process due to Antonia Victorinos failure to identify petitioner as indispensable party in her application for
registration, as well as to serve her with actual and personal notice, Section 15 of Presidential Decree No. 1529 simply requires that the
application for registration shall state the full names and addresses of all occupants of the land and those of the adjoining owners, if known,
and, if not known, it shall state the extent of the search made to find them. A perusal of Antonia Victorinos Application shows that she
enumerated the adjoining owners. She also indicated therein that, to the best of her knowledge, no person has any interest or is in
possession of the subject land. The fact that she did not identify petitioner as an occupant or an adjoining owner is not tantamount to denial
of petitioners right to due process and does not nullify the RTC Decision granting such application. In Crisanta Guido-Enriquez v. Alicia I.
Victorino, et al., G.R. No. 180427, September 30, 2013.

Land Registration; Torrens title; conclusive evidence of ownership of the land; the phrase married to is merely descriptive of the civil status
of the registered owner. A Torrens title is generally a conclusive evidence of the ownership of the land referred to, because there is a strong
presumption that it is valid and regularly issued.25 The phrase married to is merely descriptive of the civil status of the registered owner. In
Juan Sevilla Salas, Jr. v. Eden Villena Aguil, G.R. No. 202370, September 23, 2013.

Marriage; property regimes for marriages that are subsequently declared void under Article 36 of the Family Code; property acquired during
the marriage is presumed to have been obtained through the couples joint efforts and governed by the rules on co-ownership. InDio v.
Dio, the Supreme Court held that Article 147 of the Family Code applies to the union of parties who are legally capacitated and not barred

45

by any impediment to contract marriage, but whose marriage is nonetheless declared void under Article 36 of the Family Code, as in this
case. Article 147 of the Family Code provides:
ART. 147. When a man and a woman who are capacitated to marry each other, live exclusively with each other as husband and wife without
the benefit of marriage or under a void marriage, their wages and salaries shall be owned by them in equal shares and the property
acquired by both of them through their work or industry shall be governed by the rules on coownership.
In the absence of proof to the contrary, properties acquired while they lived together shall be presumed to have been obtained
by their joint efforts, work or industry, and shall be owned by them in equal shares. For purposes of this Article, a party who did not
participate in the acquisition by the other party of any property shall be deemed to have contributed jointly in the acquisition thereof if the
formers efforts consisted in the care and maintenance of the family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or her share in the property acquired during cohabitation and owned in
common, without the consent of the other, until after the termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the share of the party in bad faith in the co-ownership shall be forfeited in
favor of their common children. In case of default of or waiver by any or all of the common children or their descendants, each vacant share
shall belong to the respective surviving descendants. In the absence of descendants, such share shall belong to the innocent party. In all
cases, the forfeiture shall take place upon termination of the cohabitation. (Emphasis supplied)
Under this property regime, property acquired during the marriage is prima facie presumed to have been obtained through the couples joint
efforts and governed by the rules on co-ownership. In Juan Sevilla Salas, Jr. v. Eden Villena Aguil, G.R. No. 202370, September 23, 2013.

Marriage; nullity of marriage; a judicial declaration of nullity is required before a valid subsequent marriage can be contracted, or else, what
transpires is a bigamous marriage. The Supreme Court has consistently held that a judicial declaration of nullity is required before a valid
subsequent marriage can be contracted; or else, what transpires is a bigamous marriage, which is void from the beginning as provided in
Article 35(4) of the Family Code of the Philippines. In Yasuo Iwasawa v. Felisa Custodio Gangan (a.k.a. Felisa Gangan Arambulo and Felisa
Gangan Iwasawa), et al., G.R. No. 204169, September 11, 2013.
Realty Installment Buyer Act; right of buyer to refund on installments in case he defaults in the payments of succeeding installments accrues
only when he has paid at least two years of installments. Under R.A. No. 6552, the right of the buyer to refund accrues only when he has paid
at least two years of installments. In this case, respondent has paid less than two years of installments; hence, it is not entitled to a
refund. Manuel Uy & Sons, Inc. v. Valbueco, Incorporated, G.R. No. 179594, September 11, 2013.

OCTOBER (none listed)
NOVEMBER

Contracts; binding effect. It is hornbook doctrine in the law on contracts that the parties are bound by the stipulations, clauses, terms and
conditions they have agreed to provided that such stipulations, clauses, terms and conditions are not contrary to law, morals, public order or
public policy. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.
Contracts; breach of; when moral damages may be awarded. In Francisco v. Ferrer,this Court ruled that moral damages may be awarded on
the following bases:
To recover moral damages in an action for breach of contract, the breach must be palpably wanton, reckless, malicious, in bad faith,
oppressive or abusive.
Under the provisions of this law, in culpa contractual or breach of contract, moral damages may be recovered when the defendant acted in
bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of his contractual obligation and, exceptionally,
when the act of breach of contract itself is constitutive of tort resulting in physical injuries.
Moral damages may be awarded in breaches of contracts where the defendant acted fraudulently or in bad faith.
Bad faith does not simply connote bad judgment or negligence, it imports a dishonest purpose or some moral obliquity and conscious doing of
a wrong, a breach of known duty through some motive or interest or ill will that partakes of the nature of fraud.
The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always presumes
good faith. It is not enough that one merely suffered sleepless nights, mental anguish, serious anxiety as the result of the actuations of the

46

other party. Invariably such action must be shown to have been willfully done in bad faith or will ill motive. Mere allegations of besmirched
reputation, embarrassment and sleepless nights are insufficient to warrant an award for moral damages. It must be shown that the proximate
cause thereof was the unlawful act or omission of the [private respondent] petitioners.
An award of moral damages would require certain conditions to be met, to wit: (1) first, there must be an injury, whether physical, mental or
psychological, clearly sustained by the claimant; (2) second, there must be culpable act or omission factually established; (3) third, the
wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) fourth, the award of
damages is predicated on any of the cases stated in Article 2219 of the Civil Code. Alejandro V. Tankeh v. Development Bank of the
Philippines, et al., G.R. No. 171428, November 11, 2013.
Contracts; breach of; damages; exemplary damages; concept. Exemplary damages are discussed in Article 2229 of the Civil Code, as follows:
ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction of the public good, in addition to moral,
temperate, liquidated or compensatory damages.
Exemplary damages are further discussed in Articles 2233 and 2234, particularly regarding the pre-requisites of ascertaining moral damages
and the fact that it is discretionary upon this Court to award them or not:
ART. 2233. Exemplary damages cannot be recovered as a matter of right; the court will decide whether or not they should be adjudicated.
ART. 2234. While the amount of the exemplary damages need not be proven, the plaintiff must show that he is entitled to moral, temperate
or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded x x x
The purpose of exemplary damages is to serve as a deterrent to future and subsequent parties from the commission of a similar offense. The
case of People v. Rante citing People v. Dalisay held that:
Also known as punitive or vindictive damages, exemplary or corrective damages are intended to serve as a deterrent to serious wrong
doings, and as a vindication of undue sufferings and wanton invasion of the rights of an injured or a punishment for those guilty of
outrageous conduct. These terms are generally, but not always, used interchangeably. In common law, there is preference in the use of
exemplary damages when the award is to account for injury to feelings and for the sense of indignity and humiliation suffered by a person as
a result of an injury that has been maliciously and wantonly inflicted, the theory being that there should be compensation for the hurt caused
by the highly reprehensible conduct of the defendantassociated with such circumstances as willfulness, wantonness, malice, gross
negligence or recklessness, oppression, insult or fraud or gross fraudthat intensifies the injury. The terms punitive or vindictive damages
are often used to refer to those species of damages that may be awarded against a person to punish him for his outrageous conduct. In either
case, these damages are intended in good measure to deter the wrongdoer and others like him from similar conduct in the future.
To justify an award for exemplary damages, the wrongful act must be accompanied by bad faith, and an award of damages would be allowed
only if the guilty party acted in a wanton, fraudulent, reckless or malevolent manner. Alejandro V. Tankeh v. Development Bank of the
Philippines, et al., G.R. No. 171428, November 11, 2013.
Contracts; fraud; concept; dolo incidente distinguished from dolo causante. In Solidbank Corporation v. Mindanao Ferroalloy Corporation, et
al.,this Court elaborated on the distinction between dolo causante and dolo incidente: Fraud refers to all kinds of deception whether
through insidious machination, manipulation, concealment or misrepresentation that would lead an ordinarily prudent person into error
after taking the circumstances into account. In contracts, a fraud known as dolo causante or causal fraud is basically a deception used by one
party prior to or simultaneous with the contract, in order to secure the consent of the other. Needless to say, the deceit employed must be
serious. In contradistinction, only some particular or accident of the obligation is referred to by incidental fraud or dolo incidente, or that
which is not serious in character and without which the other party would have entered into the contract anyway. Alejandro V. Tankeh v.
Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.
Contracts; fraud; dolo incidente and dolo causante; effect on contracts.The distinction between fraud as a ground for rendering a contract
voidable or as basis for an award of damages is provided in Article 1344: In order that fraud may make a contract voidable, it should be
serious and should not have been employed by both contracting parties. Incidental fraud only obliges the person employing it to pay
damages. (1270) There are two types of fraud contemplated in the performance of contracts: dolo incidente or incidental fraud and dolo
causante or fraud serious enough to render a contract voidable.
This fraud or dolo which is present or employed at the time of birth or perfection of a contract may either be dolo causante or dolo incidente.
The first, or causal fraud referred to in Article 1338, are those deceptions or misrepresentations of a serious character employed by one party
and without which the other party would not have entered into the contract. Dolo incidente, or incidental fraud which is referred to in Article
1344, are those which are not serious in character and without which the other party would still have entered into the contract. Dolo causante
determines or is the essential cause of the consent, while dolo incidente refers only to some particular or accident of the obligation. The
effects of dolo causante are the nullity of the contract and the indemnification of damages, and dolo incidente also obliges the person
employing it to pay damages.

Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428, November 11, 2013.
Contracts; fraud; quantum of evidence required to prove existence of; clear and convincing evidence. Neither law nor jurisprudence
distinguishes whether it is dolo incidente or dolo causante that must be proven by clear and convincing evidence. It stands to reason that
both dolo incidente and dolo causante must be proven by clear and convincing evidence. The only question is whether this fraud, when
proven, may be the basis for making a contract voidable (dolo causante), or for awarding damages (dolo incidente), or both.

47

The standard of proof required is clear and convincing evidence. This standard of proof is derived from American common law. It is less than
proof beyond reasonable doubt (for criminal cases) but greater than preponderance of evidence (for civil cases). The degree of believability is
higher than that of an ordinary civil case. Civil cases only require a preponderance of evidence to meet the required burden of proof.
However, when fraud is alleged in an ordinary civil case involving contractual relations, an entirely different standard of proof needs to be
satisfied. The imputation of fraud in a civil case requires the presentation of clear and convincing evidence. Mere allegations will not suffice to
sustain the existence of fraud. The burden of evidence rests on the part of the plaintiff or the party alleging fraud. The quantum of evidence is
such that fraud must be clearly and convincingly shown. Alejandro V. Tankeh v. Development Bank of the Philippines, et al., G.R. No. 171428,
November 11, 2013.
Contracts; Reciprocal obligations; concept; for failing to perform all its correlative obligation under the reciprocal contract, a party cannot
unilaterally demand performance by the other party. Reciprocal obligations are those which arise from the same cause, and in which each
party is a debtor and a creditor of the other, such that the obligation of one is dependent upon the obligation of the other. They are to be
performed simultaneously, so that the performance of one is conditioned upon the simultaneous fulfillment of the other. In reciprocal
obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent
upon him. From the moment one of the parties fulfills his obligation, delay by the other begins.
In reciprocal obligations, before a party can demand the performance of the obligation of the other, the former must also perform its own
obligation. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.
Contracts; rescission; grounds. Rescission of a contract will not be permitted for a slight or casual breach, but only for such substantial and
fundamental violations as would defeat the very object of the parties in making the agreement. Whether a breach is substantial is largely
determined by the attendant circumstances. Consolidated Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13,
2013.
Damages; actual damages; concept; when awarded. For damages to be recovered, the best evidence obtainable by the injured party must be
presented. Actual or compensatory damages cannot be presumed, but must be proved with reasonable degree of certainty. The Court cannot
rely on speculation, conjecture or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have
been suffered and on evidence of the actual amount. If the proof is flimsy and unsubstantial, no damages will be awarded. Consolidated
Industrial Gases, Inc. v. Alabang Medical Center, G.R. No. 181983, November 13, 2013.
Estoppel; cannot be made to apply against the government. Granting that the persons representing the government was negligent, the
doctrine of estoppel cannot be taken against the Republic. It is a well-settled rule that the Republic or its government is not estopped by
mistake or error on the part of its officials or agents.
In any case, even granting that the said official was negligent, the doctrine of estoppel cannot operate against the State. It is a well-settled
rule in our jurisdiction that the Republic or its government is usually not estopped by mistake or error on the part of its officials or agents
(Manila Lodge No. 761 vs. CA, 73 SCRA 166, 186; Republic vs. Marcos, 52 SCRA 238, 244; Luciano vs. Estrella, 34 SCRA 769). Republic of
the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.
Sales; sale of real property; authority of the agent must be in writing; otherwise the sale is null and void. Articles 1874 of the Civil Code
provides:
Art. 1874. When a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise,
the sale shall be void.
Likewise, Article 1878 paragraph 5 of the Civil Code specifically mandates that the authority of the agent to sell a real property must be
conferred in writing, to wit:
Art. 1878. Special powers of attorney are necessary in the following cases:
(1) x x x
x x x
(5) To enter into any contract by which the ownership of an immovable is transmitted or acquired either gratuitously or for a valuable
consideration;
x x x.
The foregoing provisions explicitly require a written authority when the sale of a piece of land is through an agent, whether the sale is
gratuitously or for a valuable consideration. Absent such authority in writing, the sale is null and void. Spouses Eliseo R. Bautista and
Emperatriz C. Bautista v. Spouses Mila Jalandoni and Antonio Jalandoni and Manila Credit Corporation, G.R. No. 171464/G.R. No. 199341,
November 27, 2013.
Sales; sale of real property; buyer in good faith; conditions to prove good faith; failure to verify extent and nature of agents authority. A
buyer in good faith is one who buys the property of another without notice that some other person has a right to or interest in such property.
He is a buyer for value if he pays a full and fair price at the time of the purchase or before he has notice of the claim or interest of some other

48

person in the property. Good faith connotes an honest intention to abstain from taking unconscientious advantage of another.To prove good
faith, the following conditions must be present: (a) the seller is the registered owner of the land; (b) the owner is in possession thereof; and
(3) at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or
restriction in the title of the seller or in his capacity to convey title to the property. All these conditions must be present, otherwise, the buyer
is under obligation to exercise extra ordinary diligence by scrutinizing the certificates of title and examining all factual circumstances to enable
him to ascertain the sellers title and capacity to transfer any interest in the property. Spouses Eliseo R. Bautista and Emperatriz C. Bautista
v. Spouses Mila Jalandoni and Antonio Jalandoni and Manila Credit Corporation, G.R. No. 171464/G.R. No. 199341, November 27, 2013.
Sales; sale of real property on installment; grace period. Section 3(a) of R.A. 6552 provides that the total grace period corresponds to one
month for every one year of installment payments made, provided that the buyer may exercise this right only once in every five years of the
life of the contract and its extensions. The buyers failure to pay the installments due at the expiration of the grace period allows the seller to
cancel the contract after 30 days from the buyers receipt of the notice of cancellation or demand for rescission of the contract by a notarial
act.
Sale of real property on installment; cash surrender value; when the buyer is entitled thereto. Republic Act No. 6552, also known as the
Maceda Law, or the Realty Installment Buyer Protection Act, has the declared public policy of protecting buyers of real estate on installment
payments against onerous and oppressive conditions.
Section 3 of R.A. 6552 provides for the rights of a buyer who has paid at least two years of installments but defaults in the payment of
succeeding installments. Section 3 provides that in all transactions or contracts involving the sale or financing of real estate on installment
payments, including residential condominium apartments but excluding industrial lots, commercial buildings and sales to tenants under R.A.
No. 3844, as amended by R.A. No. 6389, where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period earned by him which is hereby fixed at the
rate of one month grace period for every one year of installment payments made: Provided, That this right shall be exercised by the buyer
only once in every five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of the payments on the property equivalent to
fifty per cent of the total payments made, and, after five years of installments, an additional five per cent every year but not to exceed ninety
per cent of the total payments made: Provided, That the actual cancellation of the contract shall take place after thirty days from receipt by
the buyer of the notice of cancellation or the demand for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the total number of installment payments
made. Gatchalian Realty, Inc. v. Evelyn Angeles, G.R. No. 202358, November 27, 2013.
Sales; sale of real property on installment; cancellation of; twin requirements of a notarized notice of cancellation and a refund of the cash
surrender value. The Court has been consistent in ruling that a valid and effective cancellation under R.A. 6552 must comply with the
mandatory twin requirements of a notarized notice of cancellation and a refund of the cash surrender value.
In Olympia Housing, Inc. v. Panasiatic Travel Corp., the Court ruled that the notarial act of rescission must be accompanied by the refund of
the cash surrender value.
The actual cancellation of the contract can only be deemed to take place upon the expiry of a 30-day period following the receipt by the buyer
of the notice of cancellation or demand for rescission by a notarial act and the full payment of the cash surrender value.
In Pagtalunan v. Dela Cruz Vda. De Manzano, the Court ruled that there is no valid cancellation of the Contract to Sell in the absence of a
refund of the cash surrender value. It stated that Sec. 3 (b) of R.A. No. 6552 requires refund of the cash surrender value of the payments on
the property to the buyer before cancellation of the contract. The provision does not provide a different requirement for contracts to sell which
allow possession of the property by the buyer upon execution of the contract like the instant case. Hence, petitioner cannot insist on
compliance with the requirement by assuming that the cash surrender value payable to the buyer had been applied to rentals of the property
after respondent failed to pay the installments due. Gatchalian Realty, Inc. v. Evelyn Angeles, G.R. No. 202358, November 27, 2013.
SPECIAL LAWS
Land registration; application for land registration requires that the names and addresses of all adjoining owners and occupants be stated, if
known, and if not known, to state the search made to find them; omission thereof constitutes fraud. The governing rule in the application for
registration of lands at that time was Section 21 of Act 496 which provided for the form and content of an application for registration, and it
provides that the application shall be in writing, signed and sworn to by applicant, or by some person duly authorized in his behalf. It shall
also state the name in full and the address of the applicant, and also the names and addresses of all adjoining owners and occupants, if
known; and, if not known, it shall state what search has been made to find them.
The reason behind the law was explained in the case of Fewkes vs. Vasquez,where it was noted that under Section 21 of the Land
Registration Act an application for registration of land is required to contain, among others, a description of the land subject of the
proceeding, the name, status and address of the applicant, as well as the names and addresses of all occupants of the land and of all
adjoining owners, if known, or if unknown, of the steps taken to locate them. When the application is set by the court for initial hearing, it is
then that notice (of the hearing), addressed to all persons appearing to have an interest in the lot being registered and the adjoining owners,
and indicating the location, boundaries and technical description of the land being registered, shall be published in the Official Gazette for two
consecutive times. It is this publication of the notice of hearing that is considered one of the essential bases of the jurisdiction of the court in

49

land registration cases, for the proceedings being in rem, it is only when there is constructive seizure of the land, effected by the publication
and notice, that jurisdiction over the res is vested on the court. Furthermore, it is such notice and publication of the hearing that would enable
all persons concerned, who may have any rights or interests in the property, to come forward and show to the court why the application for
registration thereof is not to be granted.Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.
Land registration; any title to inalienable public land is void ab initio; all proceedings of the Land Registration Court involving the such
property is without legal effect, hence cannot attain finality. In Collado v. Court of Appeals and the Republic, the Court declared that any title
to an inalienable public land is void ab initio. Any procedural infirmities attending the filing of the petition for annulment of judgment are
immaterial since the LRC never acquired jurisdiction over the property. All proceedings of the LRC involving the property are null and void
and, hence, did not create any legal effect. A judgment by a court without jurisdiction can never attain finality. The Land Registration Court
has no jurisdiction over non-registrable properties, such as public navigable rivers which are parts of the public domain, and cannot validly
adjudge the registration of title in favor of private applicant. Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November
20, 2013.
Land registration; confirmation and registration of imperfect and incomplete title; qualifications. C.A. No. 141 governs the classification and
disposition of lands of the public domain. Section 11 of C.A. No. 141 provides, as one of the modes of disposing public lands that are suitable
for agriculture, the confirmation of imperfect or incomplete titles. Section 48, on the other hand, enumerates those who are considered to
have acquired an imperfect or incomplete title over public lands and, therefore, entitled to confirmation and registration under the Land
Registration Act.
As amended by P.D. No. 1073 on January 25, 1977, Section 48(b) of C.A. No. 141 provides:
Section 48. The following described citizens of the Philippines, occupying lands of the public domain or claiming to own any such lands or an
interest therein, but whose titles have not been perfected or completed, may apply to the Court of First Instance [now Regional Trial Court] of
the province where the land is located for confirmation of their claims and the issuance of a certificate of title therefor, under the Land
Registration Act, to wit:
x x x x
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive, and notorious possession
and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, since June 12, 1945, or earlier,
immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under
the provisions of this chapter.
Prior to the amendment introduced by P.D. No. 1073, Section 48(b) of C.A. No. 141, then operated under the Republic Act (R.A.) No. 1942
(June 22, 1957) amendment, which reads:
(b) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession
and occupation of agricultural lands of the public domain, under a bona fide claim of acquisition or ownership, for at least thirty years,
immediately preceding the filing of the application for confirmation of title except when prevented by war or force majeure. These shall be
conclusively presumed to have performed all the conditions essential to a Government grant and shall be entitled to a certificate of title under
the provisions of this chapter.
xxx
In relation to C.A. No. 141, Section 14 of Presidential Decree P.D.) No. 1529 or the Property Registration Decree specifies those who are
qualified to register their incomplete title over an alienable and disposable public land under the Torrens system. P.D. No. 1529, which was
approved on June 11, 1978, superseded and codified all laws relative to the registration of property.
The pertinent portion of Section 14 of P.D. No. 1529 reads:
Section 14. Who may apply. The following persons may file in the proper Court of First Instance [now Regional Trial Court] an application for
registration of title to land, whether personally or through their duly authorized representatives:
(1) Those who by themselves or through their predecessors-in-interest have been in open, continuous, exclusive and notorious possession
and occupation of alienable and disposable lands of the public domain under a bona fide claim of ownership since June 12, 1945, or earlier.
Roman Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos, assisted by her husband, Ponciano Francisco, G.R. No. 179181,
November 18, 2013.
Land registration; confirmation and registration of imperfect and incomplete title; open, continuous, exclusive and notorious possession. The
possession contemplated by Section 48(b) of C.A. No. 141 is actual, not fictional or constructive. In Carlos v Republic of the Philippines,the
Court explained the character of the required possession, as follows:
The law speaks of possession and occupation. Since these words are separated by the conjunction and, the clear intention of the law is not to
make one synonymous with the other. Possession is broader than occupation because it includes constructive possession. When, therefore,

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the law adds the word occupation, it seeks to delimit the all-encompassing effect of constructive possession. Taken together with the words
open, continuous, exclusive and notorious, the word occupation serves to highlight the fact that for an applicant to qualify, his possession
must not be a mere fiction. Actual possession of a land consists in the manifestation of acts of dominion over it of such a nature as a party
would naturally exercise over his own property.
Proof of actual possession of the property at the time of the filing of the application is required because the phrase adverse, continuous, open,
public, and in concept of owner, the RCAM used to describe its alleged possession, is a conclusion of law,not an allegation of fact. Possession
is open when it is patent, visible, apparent [and] notorious x x x continuous when uninterrupted, unbroken and not intermittent or occasional;
exclusive when [the possession is characterized by acts manifesting] exclusive dominion over the land and an appropriation of it to [the
applicant's] own use and benefit; and notorious when it is so conspicuous that it is generally known and talked of by the public or the people
in the neighborhood.Roman Catholic Archbishop of Manila v. Cresencia Sta. Teresa Ramos, assisted by her husband, Ponciano
Francisco, G.R. No. 179181, November 18, 2013.
Land registration; lands forming part of a military reservation are inalienable, hence not registrable. The law governing the applications was
Commonwealth Act (C.A.) No. 141,as amended by RA 1942, particularly Sec. 48(b) which provided that those who by themselves or through
their predecessors in interest have been in open, continuous, exclusive and notorious possession and occupation of agricultural lands of the
public domain, under a bona fide claim of acquisition of ownership, for at least thirty years immediately preceding the filing of the application
for confirmation of title except when prevented by war or force majeure. These shall be conclusively presumed to have performed all the
conditions essential to a Government grant and shall be entitled to a certificate of title under the provisions of this chapter.
As can be gleaned therefrom, the necessary requirements for the grant of an application for land registration are the following:
1. The applicant must, by himself or through his predecessors-in-interest, have been in possession and occupation of the subject land;
2. The possession and occupation must be open, continuous, exclusive and notorious;
3. The possession and occupation must be under a bona fide claim of ownership for at least thirty years immediately preceding the filing of
the application; and
4. The subject land must be an agricultural land of the public domain. As earlier stated, in 1938, President Quezon issued Presidential
Proclamation No. 265, which took effect on March 31, 1938, reserving for the use of the Philippine Army parcels of the public domain situated
in the barrios of Bulua and Carmen, then Municipality of Cagayan, Misamis Oriental. The subject parcels of land were withdrawn from sale or
settlement or reserved for military purposes, subject to private rights, if any there be.
Such power of the President to segregate lands was provided for in Section 64(e) of the old Revised Administrative Code and C.A. No. 141 or
the Public Land Act. Later, the power of the President was restated in Section 14, Chapter 4, Book III of the 1987 Administrative Code. When
a property is officially declared a military reservation, it becomes inalienable and outside the commerce of man.It may not be the subject of a
contract or of a compromise agreement. A property continues to be part of the public domain, not available for private appropriation or
ownership, until there is a formal declaration on the part of the government to withdraw it from being such. In the case of Republic v. Court
of Appeals and De Jesus, it was even stated that
Lands covered by reservation are not subject to entry, and no lawful settlement on them can be acquired.The claims of persons who have
settled on, occupied, and improved a parcel of public land which is later included in a reservation are considered worthy of protection and are
usually respected, but where the President, as authorized by law, issues a proclamation reserving certain lands and warning all persons to
depart therefrom, this terminates any rights previously acquired in such lands by a person who was settled thereon in order to obtain a
preferential right of purchase. And patents for lands which have been previously granted, reserved from sale, or appropriate, are
void. Republic of the Philippines v. Antonio Bacas, et al., G.R. No. 182913, November 20, 2013.
Trademark registration; not a mode of acquiring ownership but merely creates presumption of the validity of the registration, of the
registrants ownership of the trademark and of the exclusive right to the use thereof. It must be emphasized that registration of a trademark,
by itself, is not a mode of acquiring ownership.If the applicant is not the owner of the trademark, he has no right to apply for its registration.
Registration merely creates a prima facie presumption of the validity of the registration, of the registrants ownership of the trademark, and of
the exclusive right to the use thereof. Such presumption, just like the presumptive regularity in the performance of official functions, is
rebuttable and must give way to evidence to the contrary.
Clearly, it is not the application or registration of a trademark that vests ownership thereof, but it is the ownership of a trademark that
confers the right to register the same. A trademark is an industrial property over which its owner is entitled to property rights which cannot
be appropriated by unscrupulous entities that, in one way or another, happen to register such trademark ahead of its true and lawful owner.
The presumption of ownership accorded to a registrant must then necessarily yield to superior evidence of actual and real ownership of a
trademark.
The Courts pronouncement in Berris Agricultural Co., Inc. v. Abyadang is instructive on this point:
The ownership of a trademark is acquired by its registration and its actual use by the manufacturer or distributor of the goods made available
to the purchasing public. x x x A certificate of registration of a mark, once issued, constitutes prima facie evidence of the validity of the
registration, of the registrants ownership of the mark, and of the registrants exclusive right to use the same in connection with the goods or
services and those that are related thereto specified in the certificate. x x x In other words, the prima facie presumption brought about by the
registration of a mark may be challenged and overcome in an appropriate action, x x x by evidence of prior use by another person, i.e. , it will
controvert a claim of legal appropriation or of ownership based on registration by a subsequent user. This is because a trademark is a
creation of use and belongs to one who first used it in trade or commerce.

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Birkenstock Orthopaedi GmBH and Co. Kg, etc. v. Philippine Shoe Expo Marketing Corp., G.R. No. 194307, November 20, 2013.

DECEMBER
Contracts; concept of contracts. A contract is what the law defines it to be, taking into consideration its essential elements, and not what the
contracting parties call it. The real nature of a contract may be determined from the express terms of the written agreement and from the
contemporaneous and subsequent acts of the contracting parties. However, in the construction or interpretation of an instrument, the
intention of the parties is primordial and is to be pursued. The denomination or title given by the parties in their contract is not conclusive of
the nature of its contents. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd.,G.R. No. 200602, December 11, 2013.
Contracts; contract of loan; interest stipulated; reduced for being iniquitous and unconscionable. Parties to a loan contract have wide latitude
to stipulate on any interest rate in view of the Central Bank Circular No. 905 s. 1982 which suspended the Usury Law ceiling on interest
effective January 1, 1983. It is, however, worth stressing that interest rates whenever unconscionable may still be declared illegal. There is
nothing in the circular which grants lenders carte blanche authority to raise interest rates to levels which will either enslave their borrowers or
lead to a hemorrhaging of their assets.In Menchavez v. Bermudez, the interest rate of 5% per month, which when summed up would reach
60% per annum, is null and void for being excessive, iniquitous, unconscionable and exorbitant, contrary to morals, and the law. Florpina
Benvidez v. Nestor Salvador, G.R. No. 173331, December 11, 2013.
Damages; award of costs; when entitled. Costs shall be allowed to the prevailing party as a matter of course unless otherwise provided in the
Rules of Court. The costs Ramirez may recover are those stated in Section 10, Rule 142 of the Rules of Court. For instance, Ramirez may
recover the lawful fees he paid in docketing his action for annulment of sale before the trial court. The court adds thereto the amount of
P3,530 or the amount of docket and lawful fees paid by Ramirez for filing this petition before this Court. 35(35) The court deleted the award
of moral and exemplary damages; hence, the restriction under Section 7, Rule 142 of the Rules of Courtwould have prevented Ramirez to
recover any cost of suit. But the court certifies, in accordance with said Section 7, that Ramirezs action for annulment of sale involved a
substantial and important right such that he is entitled to an award of costs of suit. Needless to stress, the purpose of paragraph N of the real
estate mortgage is to apprise the mortgagor, Ramirez, of any action that the mortgagee-bank might take on the subject properties, thus
according him the opportunity to safeguard his rights. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11,
2013.
Damages; exemplary damages; when entitled. No exemplary damages can be awarded since there is no basis for the award of moral
damages and there is no award of temperate, liquidated or compensatory damages.Exemplary damages are imposed by way of example for
the public good, in addition to moral, temperate, liquidated or compensatory damages. Jose T. Ramirez v. The Manila Banking
Corporation, G.R. No. 198800, December 11, 2013.
Damages; moral damages; when entitled. Nothing supports the trial courts award of moral damages. There was no testimony of any physical
suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury
suffered by Ramirez. The award of moral damages must be anchored on a clear showing that Ramirez actually experienced mental anguish,
besmirched reputation, sleepless nights, wounded feelings or similar injury. Ramirezs testimony is also wanting as to the moral damages he
suffered. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Foreclosure; extrajudicial foreclosure; notice of extrajudicial foreclosure proceedings not necessary unless stipulated by the parties. In Carlos
Lim, et al. v. Development Bank of the Philippines, the court held that unless the parties stipulate, personal notice to the mortgagor in
extrajudicial foreclosure proceedings is not necessary because Section 3 of Act No. 3135 only requires the posting of the notice of sale in
three public places and the publication of that notice in a newspaper of general circulation. In this case, the parties stipulated in paragraph N
of the real estate mortgage that all correspondence relative to the mortgage including notifications of extrajudicial actions shall be sent to
mortgagor Ramirez at his given address. Respondent had no choice but to comply with this contractual provision it has entered into with
Ramirez. The contract is the law between them. Hence, the court cannot agree with the bank that paragraph N of the real estate mortgage
does not impose an additional obligation upon it to provide personal notice of the extrajudicial foreclosure sale to the mortgagor
Ramirez. Jose T. Ramirez v. The Manila Banking Corporation, G.R. No. 198800, December 11, 2013.
Foreclosure of mortgage; proceeds; obligations covered. The petitioner contends that there was no excess or surplus that needs to be
returned to the respondent because her other outstanding obligations and those of her attorney-in-fact were paid out of the proceeds.
The relevant provision, Section 4 of Rule 68 of the Rules of Civil Procedure, mandates that:
Section 4. Disposition of proceeds of sale. The amount realized from the foreclosure sale of the mortgaged property shall, after deducting
the costs of the sale, be paid to the person foreclosing the mortgage, and when there shall be any balance or residue, after paying off the
mortgage debt due, the same shall be paid to junior encumbrancers in the order of their priority, to be ascertained by the court, or if there be
no such encumbrancers or there be a balance or residue after payment to them, then to the mortgagor or his duly authorized agent, or to the
person entitled to it.
Thus, in the absence of any evidence showing that the mortgage also covers the other obligations of the mortgagor, the proceeds from the
sale should not be applied to them.Philippine Bank of Communication v. Mary Ann O. Yeung, G.R. No. 179691, December 4, 2013.

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Laches; concept of. Well settled is the rule that the elements of laches must be proven positively. Laches is evidentiary in nature, a fact that
cannot be established by mere allegations in the pleadings and cannot be resolved in a motion to dismiss. At this stage therefore, the
dismissal of the complaint on the ground of laches is premature. Those issues must be resolved at the trial of the case on the merits, wherein
both parties will be given ample opportunity to prove their respective claims and defenses. Modesto Sanchez v. Andrew Sanchez, G.R. No.
187661, December 4, 2013.
Mortgage; redemption period; reckoning of the period of redemption by the mortgagor or his successor-in-interest starts from the registration
of the sale in the Register of Deeds. The reckoning of the period of redemption by the mortgagor or his successor-in-interest starts from the
registration of the sale in the Register of Deeds. Although Section 6 of Act No. 3135, as amended, specifies that the period of redemption
starts from and after the date of the sale, jurisprudence has since settled that such period is more appropriately reckoned from the date of
registration.United Coconut Planters Bank v. Christopher Lumbo and Milagros Lumbo, G.R. No. 162757, December 11, 2013.
Obligations; force majeure; concept of force majeure. Anent petitioners reliance on force majeure, suffice it to state that Peakstars breach of
its obligations to Metro Concast arising from the MoA cannot be classified as a fortuitous event under jurisprudential formulation.
Fortuitous events by definition are extraordinary events not foreseeable or avoidable. It is therefore, not enough that the event should not
have been foreseen or anticipated, as is commonly believed but it must be one impossible to foresee or to avoid. The mere difficulty to
foresee the happening is not impossibility to foresee the same.
To constitute a fortuitous event, the following elements must concur: (a) the cause of the unforeseen and unexpected occurrence or of the
failure of the debtor to comply with obligations must be independent of human will; (b) it must be impossible to foresee the event that
constitutes the caso fortuito or, if it can be foreseen, it must be impossible to avoid; (c) the occurrence must be such as to render it
impossible for the debtor to fulfill obligations in a normal manner; and, (d) the obligor must be free from any participation in the aggravation
of the injury or loss. Metro Concast Steel Corp., Spouses Jose S. Dychiao and Tiu Oh Yan, et al. v. Allied Bank Corporation, G.R. No. 177921,
December 4, 2013.
Obligations; modes of extinguishment. Article 1231 of the Civil Code states that obligations are extinguished either by payment or
performance, the loss of the thing due, the condonation or remission of the debt, the confusion or merger of the rights of creditor and debtor,
compensation or novation. Metro Concast Steel Corp., Spouses Jose S. Dychiao and Tiu Oh Yan, et al. v. Allied Bank Corporation, G.R. No.
177921, December 4, 2013.
Obligations; novation; extinctive novation distinguished from modificatory novation.To be sure, novation, in its broad concept, may either be
extinctive or modificatory. It is extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the
former; it is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory agreement. In
either case, however, novation is never presumed, and the animus novandi, whether totally or partially, must appear by express agreement
of the parties, or by their acts that are too clear and unequivocal to be mistaken.ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R.
No. 200602, December 11, 2013.
Property; action for reconveyance; prescriptive period; exception. The Court likewise takes note that Paraguyas complaint is likewise in the
nature of an action for reconveyance because it also prayed for the trial court to order Sps. Crucillo to surrender ownership and possession of
the properties in question to [Paraguya], vacating them altogether . . . . Despite this, Paraguyas complaint remains dismissible on the same
ground because the prescriptive period for actions for reconveyance is ten (10) years reckoned from the date of issuance of the certificate of
title, except when the owner is in possession of the property, in which case the action for reconveyance becomes imprescripti ble. Laura F.
Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Property; possessor in good faith; reimbursement of necessary and useful expenses. Dionisio was well aware that this temporary
arrangement may be terminated at any time. Respondents cannot now refuse to vacate the property or eventually demand reimbursement of
necessary and useful expenses under Articles 448 and 546 of the New Civil Code, because the provisions apply only to a possessor in good
faith, i.e., one who builds on land with the belief that he is the owner thereof. Persons who occupy land by virtue of tolerance of the owners
are not possessors in good faith. Heirs of Cipriano Trazona, et al. v. Heirs of Dionisio Caada, et al., G.R. No. 175874, December 11, 2013.
Property; Spanish titles can no longer be used as evidence of ownership after six (6) months from the effectivity of PD 892. Based on Section
1 of PD 892, entitled Discontinuance of the Spanish Mortgage System of Registration and of the Use of Spanish Titles as Evidence in Land
Registration Proceedings, Spanish titles can no longer be used as evidence of ownership after six (6) months from the effectivity of the law,
or starting August 16, 1976. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and the Register of Deeds of
Sorsogon,G.R. No. 200265, December 2, 2013.
Property; waiver of interest; when absolute and unconditional.Lucila did not say, to put everything in proper order, I promise to waive my
right to the property, which is a future undertaking, one that is demandable only when everything is put in proper order. But she instead
said, to put everything in proper order, I hereby waive etc. The phrase hereby waive means that Lucila was, by executing the affidavit,
already waiving her right to the property, irreversibly divesting herself of her existing right to the same. After he and his co-owner Emelinda
accepted the donation, Isabelo became the owner of half of the subject property having the right to demand its partition.Isabelo C. Dela Cruz
v. Lucila C. Dela Cruz, G.R. No. 192383, December 4, 2013.
Quasi-contract; unjust enrichment; concept of; elements.In light of the foregoing, it is unfair to deny petitioner a refund of all his
contributions to the car plan. Under Article 22 of the Civil Code, [e]very person who through an act of performance by another, or any other
means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to
him. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.

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Quasi-contract; concept of quasi-contract. Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary and
unilateral acts which give rise to the juridical relation of quasi-contract, to the end that no one shall be unjustly enriched or benefited at the
expense of another. In the absence of specific terms and conditions governing the car plan arrangement between the petitioner and Mekeni, a
quasi-contractual relation was created between them. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
Quasi-delict; elements. Article 2176 of the Civil Code provides that [w]hoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between
the parties, is a quasi-delict. Under this provision, the elements necessary to establish a quasi-delict case are: (1) damages to the plaintiff;
(2) negligence, by act or omission, of the defendant or by some person for whose acts the defendant must respond, was guilty; and (3) the
connection of cause and effect between such negligence and the damages. These elements show that the source of obligation in a quasi-delict
case is the breach or omission of mutual duties that civilized society imposes upon its members, or which arise from non-contractual relations
of certain members of society to others. Dra. Leila A. Dela Llana v. Rebecca Biong, doing business under the name and style of Pongkay
Trading, G.R. No. 182356, December 4, 2013.
Quasi-delict; quantum of proof; preponderance of evidence. Based on these requisites, Dra. dela Llana must first establish by preponderance
of evidence the three elements of quasi-delict before we determine Rebeccas liability as Joels employer. She should show the chain of
causation between Joels reckless driving and her whiplash injury. Only after she has laid this foundation can the presumption that Rebecca
did not exercise the diligence of a good father of a family in the selection and supervision of Joel arise.Once negligence, the damages and
the proximate causation are established, this Court can then proceed with the application and the interpretation of the fifth paragraph of
Article 2180 of the Civil Code. Under Article 2176 of the Civil Code, in relation with the fifth paragraph of Article 2180, an action predicated
on an employees act or omission may be instituted against the employer who is held liable for the negligent act or omission committed by his
employee.The rationale for these graduated levels of analyses is that it is essentially the wrongful or negligent act or omission itself which
creates the vinculum juris in extra-contractual obligations. Dra. Leila A. Dela Llana v. Rebecca Biong, doing business under the name and
style of Pongkay Trading, G.R. No. 182356, December 4, 2013.
Sales; car plan benefit; contributions as installment payments distinguished from rental payments. From the evidence on record, it is seen
that the Mekeni car plan offered to petitioner was subject to no other term or condition than that Mekeni shall cover one-half of its value, and
petitioner shall in turn pay the other half through deductions from his monthly salary. Mekeni has not shown, by documentary evidence or
otherwise, that there are other terms and conditions governing its car plan agreement with petitioner. There is no evidence to suggest that if
petitioner failed to completely cover one-half of the cost of the vehicle, then all the deductions from his salary going to the cost of the vehicle
will be treated as rentals for his use thereof while working with Mekeni, and shall not be refunded. Indeed, there is no such stipulation or
arrangement between them. Thus, the CAs reliance on Elisco Tool is without basis, and its conclusions arrived at in the questioned decision
are manifestly mistaken. To repeat what was said in Elisco Tool, [P]etitioner does not deny that private respondent Rolando Lantan acquired
the vehicle in question under a car plan for executives of the Elizalde group of companies. Under a typical car plan, the company advances
the purchase price of a car to be paid back by the employee through monthly deductions from his salary. The company retains ownership of
the motor vehicle until it shall have been fully paid for. However, retention of registration of the car in the companys name is only a form of a
lien on the vehicle in the event that the employee would abscond before he has fully paid for it. There are also stipulations in car plan
agreements to the effect that should the employment of the employee concerned be terminated before all installments are fully paid, the
vehicle will be taken by the employer and all installments paid shall be considered rentals per agreement.
It was made clear in this pronouncement that installments made on the car plan may be treated as rentals only when there is an express
stipulation in the car plan agreement to such effect. It was therefore patent error for the appellate court to assume that, even in the absence
of express stipulation, petitioners payments. Antonio Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013.
Sales; contract of sale; elements; distinguished from contract to sell. Corollary thereto, a contract of sale is classified as a consensual
contract, which means that the sale is perfected by mere consent. No particular form is required for its validity. Upon perfection of the
contract, the parties may reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and
the vendor may require the vendee to pay the thing sold.
In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the
property despite delivery thereof to the prospective buyer, binds himself to sell the property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, i.e., the full payment of the purchase price. A contract to sell may not even be considered as a
conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive
condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur. ACE Foods, Inc. v. Micro Pacific Technologies Co., Ltd., G.R. No. 200602, December 11, 2013.
Sales; contract to sell; concept of.Verily, in a contract to sell, the prospective seller binds himself to sell the property subject of the
agreement exclusively to the prospective buyer upon fulfillment of the condition agreed upon which is the full payment of the purchase price
but reserving to himself the ownership of the subject property despite delivery thereof to the prospective buyer.The full payment of the
purchase price in a contract to sell is a suspensive condition, the non-fulfillment of which prevents the prospective sellers obligation to
convey title from becoming effective, as in this case. Optimum Development Bank v. Spouses Benigno v. Jovellanos and Lourdes R.
Jovellanos, G.R. No. 189145, December 4, 2013.
Sales; contract to sell; real property in installments; covered by Realty Installment Buyer Protection Act. Further, it is significant to note that
given that the Contract to Sell in this case is one which has for its object real property to be sold on an installment basis, the said contract is
especially governed by and thus, must be examined under the provisions of RA 6552, or the Realty Installment Buyer Protection Act,
which provides for the rights of the buyer in case of his default in the payment of succeeding installments. Optimum Development Bank v.
Spouses Benigno v. Jovellanos and Lourdes R. Jovellanos, G.R. No. 189145, December 4, 2013.
SPECIAL LAWS

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Property Registration Decree; alienable lands of public domain; proof of; to prove that the land subject of an application for registration is
alienable, an applicant must establish the existence of a positive act of the Government. The burden of proof in overcoming the presumption
of State ownership of lands of the public domain is on the person applying for registration, or in this case, for homestead patent. The
applicant must show that the land subject of the application is alienable or disposable. It must be stressed that incontrovertible evidence must
be presented to establish that the land subject of the application is alienable or disposable.
As the court pronounced in Republic of the Phils. v. Tri-Plus Corporation, to prove that the land subject of an application for registration is
alienable, an applicant must establish the existence of a positive act of the Government such as a presidential proclamation or an executive
order, an administrative action, investigation reports of Bureau of Lands investigators, and a legislative act or statute. The applicant may also
secure a certification from the Government that the lands applied for are alienable and disposable. Republic of the Philippines-Bureau of
Forest Development v. Vicente Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11,
2013.
Property Registration Decree; estoppel; the principle of estoppel does not operate against the Government for the act of its agents. Neither
can respondent Roxas successfully invoke the doctrine of estoppel against petitioner Republic. While it is true that respondent Roxas was
granted Homestead Patent No. 111598 and OCT No. P-5885 only after undergoing appropriate administrative proceedings, the Government is
not now estopped from questioning the validity of said homestead patent and certificate of title. It is, after all, hornbook law that the principle
of estoppel does not operate against the Government for the act of its agents. And while there may be circumstances when equitable estoppel
was applied against public authorities, i.e., when the Government did not undertake any act to contest the title for an unreasonable length of
time and the lot was already alienated to innocent buyers for value, such are not present in this case. More importantly, we cannot use the
equitable principle of estoppel to defeat the law. Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident
Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; homestead patent; once registered, the certificate of title issued by virtue of said patent has the force and
effect of a Torrens title issued under said registration laws; provided that the land covered by said certificate is a disposable public land within
the contemplation of the Public Land Law.It is true that once a homestead patent granted in accordance with the Public Land Act is registered
pursuant to Act 496, otherwise known as The Land Registration Act, or Presidential Decree No. 1529, otherwise known as The Property
Registration Decree, the certificate of title issued by virtue of said patent has the force and effect of a Torrens title issued under said
registration laws.We expounded in Ybaez v. Intermediate Appellate Court that:
The certificate of title serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein. After the
expiration of the one (1) year period from the issuance of the decree of registration upon which it is based, it becomes incontrovertible. The
settled rule is that a decree of registration and the certificate of title issued pursuant thereto may be attacked on the ground of actual fraud
within one (1) year from the date of its entry and such an attack must be direct and not by a collateral proceeding. The validity of the
certificate of title in this regard can be threshed out only in an action expressly filed for the purpose.
It must be emphasized that a certificate of title issued under an administrative proceeding pursuant to a homestead patent, as in the instant
case, is as indefeasible as a certificate of title issued under a judicial registration proceeding, provided the land covered by said certificate is a
disposable public land within the contemplation of the Public Land Law. Republic of the Philippines-Bureau of Forest Development v. Vicente
Roxas, et al./Provident Tree Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; reversion; nature of; grounds. We do not find evidence indicating that respondent Roxas committed fraud when
he applied for homestead patent over the subject property. It does not appear that he knowingly and intentionally misrepresented in his
application that the subject property was alienable and disposable agricultural land. Nonetheless, we recognized in Republic of the Phils. v.
Mangotara that there are instances when we granted reversion for reasons other than fraud:
Reversion is an action where the ultimate relief sought is to revert the land back to the government under the Regalian doctrine. Considering
that the land subject of the action originated from a grant by the government, its cancellation is a matter between the grantor and the
grantee. In Estate of the Late Jesus S. Yujuico v. Republic (Yujuico case), reversion was defined as an action which seeks to restore public
land fraudulently awarded and disposed of to private individuals or corporations to the mass of public domain. It bears to point out, though,
that the Court also allowed the resort by the Government to actions for reversion to cancel titles that were void for reasons other than fraud,
i.e., violation by the grantee of a patent of the conditions imposed by law; and lack of jurisdiction of the Director of Lands to grant a patent
covering inalienable forest land or portion of a river, even when such grant was made through mere oversight. In Republic v. Guerrero, the
Court gave a more general statement that the remedy of reversion can be availed of only in cases of fraudulent or unlawful inclusion of the
land in patents or certificates of title. Republic of the Philippines-Bureau of Forest Development v. Vicente Roxas, et al./Provident Tree
Farms, Inc. v. Vicente Roxas, et al., G.R. Nos. 157988/160640, December 11, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive proof of ownership. It is an established rule that a Torrens certificate
of title is not conclusive proof of ownership. Verily, a party may seek its annulment on the basis of fraud or misrepresentation. However, such
action must be seasonably filed, else the same would be barred. Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio Crucillo and
the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Property Registration Decree; Torrens certificate of title is not conclusive proof of ownership becomes incontrovertible and indefeasible after
one (1) year from the date of its entry. In this relation, Section 32 of PD 1529 provides that the period to contest a decree of registration
shall be one (1) year from the date of its entry and that, after the lapse of the said period, the Torrens certificate of title issued thereon
becomes incontrovertible and indefeasible, viz.:
Sec. 32. Review of decree of registration; Innocent purchaser for value. The decree of registration shall not be reopened or revised by
reason of absence, minority, or other disability of any person adversely affected thereby, nor by any proceeding in any court for reversing
judgments, subject, however, to the right of any person, including the government and the branches thereof, deprived of land or of any

55

estate or interest therein by such adjudication or confirmation of title obtained by actual fraud, to file in the proper Court of First Instance a
petition for reopening and review of the decree of registration not later than one year from and after the date of the entry of such decree of
registration, but in no case shall such petition be entertained by the court where an innocent purchaser for value has acquired the land or an
interest therein, whose rights may be prejudiced. Whenever the phrase innocent purchaser for value or an equivalent phrase occurs in this
Decree, it shall be deemed to include an innocent lessee, mortgagee, or other encumbrancer for value.
Upon the expiration of said period of one year, the decree of registration and the certificate of title issued shall become incontrovertible. Any
person aggrieved by such decree of registration in any case may pursue his remedy by action for damages against the applicant or any other
persons responsible for the fraud. (Emphases and underscoring supplied) Laura F. Paraguya v. Sps. Alma Escurel-Crucillo and Emeterio
Crucillo and the Register of Deeds of Sorsogon, G.R. No. 200265, December 2, 2013.
Implementing Rules and Regulations for Clerical Corrections in Date of Birth and Sex in the Civil Registry

The Office of the Civil Registrar General of the National Statistics Office promulgated Administrative Order No. 1 series of 2012 (AO 1) on October 24,
2012. The AO implements the provisions of Republic Act 10172, the amendatory law to Republic Act 9048, and supplements Administrative Order 1
series of 2001, which, in turn, implements RA 9048. Both statutes provide a means of correcting erroneous entries in the civil registry without need of
judicial action.
Prior to RA 10172, RA 9048 allowed changes in a persons first name or nickname as well as corrections to typographical entries through an
administrative petition to the local civil registry or the consul-general. RA 10172 expands RA 9048 and expressly allows corrections to entries concerning
a persons date of birth or sex. More specifically, the law amended Sections 1, 2, 5 and 8 of RA 9048, which respectively defined the scope of the powers
of the civil registry, the terms used in the Act, the form and contents of the petition and the authority to charge fees for the correction.
Only clerical or typographical errors are allowed to be corrected. For substantial amendments to any entry in the civil registry, except for change of first
name or nickname, an adversarial proceeding under Rule 108 of the Rules of Court is still required. These include petitions to change nationality, age or
status. Under the act, clerical or typographical errors are harmless and innocuousvisible to the eyes or obvious to the understanding, and can be
corrected or changed only by reference to other existing record or records.
As in RA 9048, a sworn affidavit with relevant supporting documents is required for the petition. These documents shall include a certified true copy of
the certificate containing the erroneous entry and at least two public or private documents containing the entries on which the civil registry will base its
correction. The AO also requires publication of the petition once a week for two consecutive weeks, the affidavit of publication and a copy of the
newspaper clipping, a certification that petitioner has no pending administrative, civil or criminal case or criminal record from the NBI, PNP and
petitioners employer, if any, and submission of the petitioners school records or school documents such as medical records, baptismal records and
other documents issued by religious authorities if the entry to be corrected pertains to the date of birth or sex of a person. Moreover, if the entry sought
to be corrected pertains to gender, the law, and the AO also requires a certification by a government physician that petitioner has not undergone sex
change or transplant. The Act also allows the city or municipal registrar to require other documents to support the petition.
The petition must be filed in triplicate in the local civil registry in which the erroneous entry was registered. If one is currently living outside the
Philippines or is residing in the Philippines but far from the civil registry where the entries are registered, then the petition may be filed with the consul-
general or the local civil registry of the place where petitioner is currently residing.
A stricter rule is imposed for petitions concerning changes in the entry as to sex. The IRR requires personal filing of the petition with the city or municipal
civil registry or consulate where the record to be corrected is registered.
Under the AO, the civil registry may collect PhP3,000 for every petition. Only indigent petitioners are exempt from payment. Indigency may be proved
by a certification to that effect from the city or municipal social welfare office. If the petition is filed with the consul-general, a filing fee of USD150, or its
equivalent, may be collected. Migrant petitions, or those filed with a civil registrar other than the one where the entries are registered, shall be charged
an additional service fee of PhP1,000. A petition that includes corrections under both RA 9048 and RA 10172 will only be charged a single filing fee of
PhP3,000.
While errors in the date of birth is now correctible administratively, the IRR clarifies that it excludes corrections to the year of birth since the law still
does not allow administrative corrections to entries pertaining to age. In relation to the medical certification required for changes in entries of a persons
sex, the IRR requires that the physician issuing such a certification must be registered with the Professional Regulations Commission and employed in a
government hospital, public health office or health institution.
The petition may be filed by the owner of the record sought to be corrected or by his or her representative, namely a spouse, child, parent, sibling,
grandparent, guardian or other person authorized by the owner or by law. Petitions on behalf of a minor or incapacitated person may be brought by
these same representatives.
Finally, while the AO generally adopts the procedures for processing, posting and publishing the petition as well as the duties of the civil registrar and
the civil registrar general outlined under AO 1 series of 2001 for petitions under RA 9048, it adds to the duties of the Civil Registrar by requiring it to
issue a certification as to the authenticity of the medical certification to be issued by the accredited government physician in cases where the petition
relates to changes in the entry on sex. This requirement was not provided for by law, prompting a petition by the local civil registrar of Quezon City for
the issuance of a temporary restraining order (TRO) against the implementation of the IRR on this issue. The petition also claims that the provision
requiring local governments (LGUs) to ratify the fees imposed under the AO unduly restricted the authority given by law to the civil registrar to impose
fees under the Act. Finally, the petition for TRO also claims that the AO was issued without consultation with the association of local civil registrars. The
Regional Trial Court of Quezon City denied the prayer for a TRO last December and the IRR remains effective as of this writing.

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