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April 2012 Philippine Supreme Court Decisions on Civil Law

Here are select April 2012 rulings of the Supreme Court of the Philippines on civil law:
Civil Code
Compensation/set-off; requisites. The applicable provisions of law are Articles 1278,
1279 and 1290 of the Civil Code of the Philippines:
Art. 1278. Compensation shall take place when two persons, in their own right, are
creditors and debtors of each other.
Art. 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;
(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.
Art. 1290. When all the requisites mentioned in Article 1279 are present, compensation
takes effect by operation of law, and extinguishes both debts to the concurrent amount,
even though the creditors and debtors are not aware of the compensation.
Based on the foregoing, in order for compensation to be valid, the five requisites
mentioned in the above-quoted Article 1279 should be present, as in the case at
bench. Insular Investment and Trust Corporation vs. Capital One Equities Corp. and
Planters Development Bank; G.R. No. 183308, April 25, 2012
Contracts; double sales; possession; actual and physical delivery. A double sale calls
for the application of the rules in Article 1544 of the Civil Code, to wit:
If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.

Compiled by: Harold B. Lacaba


Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
Jurisprudence has interpreted possession in Article 1544 of the Civil Code to mean both
actual physical delivery and constructive delivery. Actual delivery of a thing sold occurs
when it is placed under the control and possession of the vendee. Delivery of a thing
sold may also be made constructively. Article 1498 of the Civil Code states that: When
the sale is made through a public instrument, the execution thereof shall be equivalent
to the delivery of the thing which is the object of the contract, if from the deed the
contrary does not appear or cannot clearly be inferred. The Roman Catholic Church vs.
Pante;G.R. No. 174118, April 11, 2012.
Contracts; mistake; voidable contract. For mistake as to the qualification of one of the
parties to vitiate consent, two requisites must concur:
the mistake must be either with regard to the identity or with regard to the
qualification of one of the contracting parties; and
the identity or qualification must have been the principal consideration for the
celebration of the contract.
The Roman Catholic Church vs. Pante; G.R. No. 174118, April 11, 2012.
Damages; interest in case of breach of contract; interest rate. Interest may be imposed
even in the absence of stipulation in the contract because Article 2210 of the Civil Code
expressly provides that [i]nterest may, in the discretion of the court, be allowed upon
damages awarded for breach of contract.
Anent the interest rate, the general rule is that the applicable rate of interest shall be
computed in accordance with the stipulation of the parties. Absent any stipulation, the
applicable rate of interest shall be 12% per annum when the obligation arises out of a
loan or a forbearance of money, goods or credits. In other cases, it shall be six percent
(6%). In this case, the parties did not stipulate as to the applicable rate of interest.
The contract involved in this case is admittedly not a loan but a Conditional Deed of
Sale. However, the contract provides that the seller must return the payment made by
the buyer if the conditions are not fulfilled. There is no question that they have in fact,
not been fulfilled as the seller has admitted this. Notwithstanding demand by the buyer,
the seller has failed to return the money and should be considered in default from the
time that demand was made.
Even if the transaction involved a Conditional Deed of Sale, can the stipulation
governing the return of the money be considered as a forbearance of money which
required payment of interest at the rate of 12%. Forbearance is a contractual obligation
of lender or creditor to refrain during a given period of time, from requiring the borrower
or debtor to repay a loan or debt then due and payable. Forbearance of money, goods
or credits refers to arrangements other than loan agreements, where a person
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acquiesces to the temporary use of his money, goods or credits pending happening of
certain events or fulfillment of certain conditions. Hermojina Estores vs. Spouses Arturo
and Laura Supangan:G.R. No. 175139, April 18, 2012.
Damages; liquidated damages. Article 2226 of the Civil Code allows the parties to a
contract to stipulate on liquidated damages to be paid in case of breach. It is attached to
an obligation in order to insure 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. As a general rule, contracts
constitute the law between the parties, and they are bound by its stipulations. For as
long as they are not contrary to law, morals, good customs, public order, or public policy,
the contracting parties may establish such stipulations, clauses, terms and conditions as
they may deem convenient. Philippine Charter Insurance Corporation vs. Petroleum
Distributors & Service Corporation; G.R. No. 180898. April 18, 2012.
Damages; negligence; proximate cause. PNBs act of releasing the proceeds of the
check prior to the lapse of the 15-day clearing period was the proximate cause of the
loss. Here, while PNB highlights Ofelias fault in accommodating a strangers check and
depositing it to the bank, it remains mum in its release of the proceeds thereof without
exhausting the 15-day clearing period, an act which contravened established banking
rules and practice. It is worthy of notice that the 15-day clearing period alluded to is
construed as 15 banking days. It bears stressing that the diligence required of banks is
more than that of a Roman pater familias or a good father of a family. The highest
degree of diligence is expected. PNB miserably failed to do its duty of exercising
extraordinary diligence and reasonable business prudence. The disregard of its own
banking policy amounts to gross negligence, which the law defines as 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 wilfully and intentionally with a
conscious indifference to consequences in so far as other persons may be affected.
With regard to collection or encashment of checks, suffice it to say that the law imposes
on the collecting bank the duty to scrutinize diligently the checks deposited with it for the
purpose of determining their genuineness and regularity. The collecting bank, being
primarily engaged in banking, holds itself out to the public as the expert on this field,
and the law thus holds it to a high standard of conduct. A bank is expected to be an
expert in banking procedures and it has the necessary means to ascertain whether a
check, local or foreign, is sufficiently funded. Philippine National Bank vs. Spouses
Cheah Chee Chong and Ofelia Camacho Cheah/Spouses Cheah Chee Chong and
Ofelia Camacho Chea vs. Philippine National Bank; G.R. Nos. 170865/G.R. No.
170892, April 25, 2012.
Damages; requisites. License to operate a cockpit is a mere privilege, and even if he
was able to get a business permit from the mayor, this did not give him a license to
operate a cockpit. Without any legal right to operate a cockpit in the municipality,
petitioner is not entitled to damages. Injury alone does not give petitioner the right to
recover damages; he must also have a right of action for the legal wrong inflicted by the
respondents. We need not belabor that in order that the law will give redress for an act
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causing damage, there must be damnum et injuria that act must be not only hurtful,
but wrongful. Danilo A. Du vs. Venancio R. Jayoma, et al.; G.R. No. 175042, April 23,
Damages; res ipsa loquitur; elements; liability of employer. Under the doctrine of res
ipsa loquitur, [w]here the thing that caused the injury complained of is shown to be
under the management of the defendant or his servants; and the accident, in the
ordinary course of things, would not happen if those who had management or control
used proper care, it affords reasonable evidence in the absence of a sufficient,
reasonable and logical explanation by defendant that the accident arose from or was
caused by the defendants want of care. Res ipsa loquitur is merely evidentiary, a
mode of proof, or a mere procedural convenience, since it furnishes a substitute for, and
relieves a plaintiff of, the burden of producing a specific proof of negligence. It
recognizes that parties may establish prima facie negligence without direct proof, thus,
it allows the principle to substitute for specific proof of negligence. It permits the plaintiff
to present along with proof of the accident, enough of the attending circumstances to
invoke the doctrine, create an inference or presumption of negligence and thereby place
on the defendant the burden of proving that there was no negligence on his part. The
doctrine is based partly on the theory that the defendant in charge of the instrumentality
which causes the injury either knows the cause of the accident or has the best
opportunity of ascertaining it while the plaintiff has no such knowledge, and is therefore
compelled to allege negligence in general terms.
The requisites of the doctrine of res ipsa loquitur as established by jurisprudence are as
1) the accident is of a kind which does not ordinarily occur unless someone is negligent;
2) the cause of the injury was under the exclusive control of the person in charge and
3) the injury suffered must not have been due to any voluntary action or contribution on
the part of the person injured.
The aforementioned requisites having been met, there now arises a presumption of
negligence which he could have overcome by evidence that he exercised due care and
diligence in preventing strangers from using his jeep. Unfortunately, he failed to do so.
The operator on record of a vehicle is primarily responsible to third persons for the
deaths or injuries consequent to its operation, regardless of whether the employee
drove the registered owners vehicle in connection with his employment. Absent the
circumstance of unauthorized use48 or that the subject vehicle was stolen which are
valid defenses available to a registered owner, he cannot escape liability for quasi-delict
resulting from his jeeps use. Oscar Del Carmen, Jr. vs. Geronimo Bacoy, guradian and
representing the children, namely, Mary Marjorie B. Monsalud, et al.; G.R. No. 173870,
April 25, 2012.

Compiled by: Harold B. Lacaba


Property; acquisition by prescription; confirmation of incomplete or imperfect titles;

requirements. There must be an express declaration by the State that the public
dominion property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial. Without such
express declaration, the property, even if classified as alienable or disposable, remains
property of the public dominion, pursuant to Article 420(2), and thus incapable of
acquisition by prescription. It is only when such alienable and disposable lands are
expressly declared by the State to be no longer intended for public service or for the
development of the national wealth that the period of acquisitive prescription can begin
to run. Such declaration shall be in the form of a law duly enacted by Congress or a
Presidential Proclamation in cases where the President is duly authorized by law.
For one to invoke the provisions of Section 14(2) and set up acquisitive prescription
against the State, it is primordial that the status of the property as patrimonial be first
established. Furthermore, the period of possession preceding the classification of the
property as patrimonial cannot be considered in determining the completion of the
prescriptive period.
Adverse, continuous, open, public possession in the concept of an owner is a
conclusion of law and the burden to prove it by clear, positive and convincing evidence
is on the applicant. A claim of ownership will not proper on the basis of tax declarations
if unaccompanied by proof of actual possession.
The counting of the thirty (30)-year prescriptive period for purposes of acquiring
ownership of a public land under Section 14(2) can only start from the issuance of
DARCO Conversion Order. Before the property was declared patrimonial by virtue of
such conversion order, it cannot be acquired by prescription. Jean Tan, et al. vs.
Republic of the Philippines; G.R. No. 193443, April 16, 2012.
Sale; rescission for breach of obligation to deliver; constructive delivery, execution of
public instrument. A party is entitled to demand for the rescission of their contract for the
failure to deliver the physical possession of the subject property and the certificate of
title covering the same notwithstanding the absence of stipulations in the agreement
expressly indicating the consequences of such omission, pursuant to Article 1191 of the
NCC, which states that 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.
Article 1498 of the NCC generally considers the execution of a public instrument as
constructive delivery by the seller to the buyer of the property subject of a contract of
sale. The case at bar, however, falls among the exceptions to the foregoing rule since a
mere presumptive and not conclusive delivery is created as the respondent failed to
take material possession of the subject property.
There is symbolic delivery of the property subject of the sale by the execution of the
public instrument, unless from the express terms of the instrument, or by clear inference
therefrom, this was not the intention of the parties. Such would be the case, for
instance, where the vendor has no control over the thing sold at the moment of the sale,
and, therefore, its material delivery could not have been made.
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As a general rule, the execution of a public instrument amounts to a constructive

delivery of the thing subject of a contract of sale. However, exceptions exist, among
which is when mere presumptive and not conclusive delivery is created in cases where
the buyer fails to take material possession of the subject of sale. A person who does not
have actual possession of the thing sold cannot transfer constructive possession by the
execution and delivery of a public instrument. Villamar vs. Mangaoil;G.R. No. 188661,
April 11, 2012.
Surety; novation. A contract of suretyship is 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 another party, called the obligee. Although the
contract of a surety is secondary only to a valid principal obligation, the surety becomes
liable for the debt or duty of another although it possesses no direct or personal interest
over the obligations nor does it receive any benefit therefrom. The suretys obligation is
not an original and direct one for the performance of his own act, but merely accessory
or collateral to the obligation contracted by the principal. Nevertheless, although the
contract of a surety is in essence secondary only to a valid principal obligation, his
liability to the creditor or promisee of the principal is said to be direct, primary and
absolute; in other words, he is directly and equally bound with the principal.
A surety is released from its obligation when there is a material alteration of the principal
contract in connection with which the bond is given, such as a change which imposes a
new obligation on the promising party, or which takes away some obligation already
imposed, or one which changes the legal effect of the original contract and not merely
its form. In this case, however, no new contract was concluded and perfected as only
the revision of the work schedule originally agreed upon was the subject thereof. There
was no new contract/agreement which could be considered to have substituted the
Building Contract. Philippine Charter Insurance Corporation vs. Petroleum Distributors
& Service Corporation; G.R. No. 180898. April 18, 2012.
Will, extrinsic validity. The state of being forgetful does not necessarily make a person
mentally unsound so as to render him unfit to execute a Will. Forgetfulness is not
equivalent to being of unsound mind. Besides, Article 799 of the New Civil Code states:
To be of sound mind, it is not necessary that the testator be in full possession of all his
reasoning faculties, or that his mind be wholly unbroken, unimpaired, or unshattered by
disease, injury or other cause. It shall be sufficient if the testator was able at the time of
making the will to know the nature of the estate to be disposed of, the proper objects of
his bounty, and the character of the testamentary act. Bare allegations of duress or
influence of fear or threats, undue and improper influence and pressure, fraud and
trickery cannot be used as basis to deny the probate of a will. Baltazar, et. al. vs.
Laxa; G.R. No. 174489, April 11, 2012.
Special Laws
Torrens System; registration; action for reconveyance; acquisitive prescription.
Registration of a piece of land under the Torrens System does not create or vest title,
because it is not a mode of acquiring ownership. A certificate of title is merely an
evidence of ownership or title over the particular property described therein. Thus,
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notwithstanding the indefeasibility of the Torrens title, the registered owner may still be
compelled to reconvey the registered property to its true owners.
In an action for reconveyance, the decree of registration is respected as
incontrovertible. What is sought instead is the transfer of the property or its title which
has been wrongfully or erroneously registered in another persons name, to its rightful or
legal owner, or to the one with a better right. An action for annulment of title or
reconveyance based on fraud is imprescriptible where the plaintiff is in possession of
the property subject of the acts.
Acquisitive prescription is a mode of acquiring ownership by a possessor through the
requisite lapse of time. In order to ripen into ownership, possession must be in the
concept of an owner, public, peaceful and uninterrupted. Possession is open when it is
patent, visible, apparent, notorious and not clandestine. It is continuous when
uninterrupted, unbroken and not intermittent or occasional; exclusive when the adverse
possessor can show exclusive dominion over the land and an appropriation of it to his
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. The party who asserts
ownership by adverse possession must prove the presence of the essential elements of
acquisitive prescription.
For civil interruption to take place, the possessor must have received judicial
summons. Heirs of Tanyag vs. Gabriel, et. al.; G.R. No. 175763, April 11, 2012.
Free patent; prohibition against alienation. Section 118 of CA 141 requires that before
the five year prohibition applies, there should be an alienation or encumbrance of the
land acquired under free patent or homestead.
In real property law, alienation is defined as the transfer of the property and possession
of lands, tenements, or other things from one person to another. It is the act by which
the title to real estate is voluntarily resigned by one person to another and accepted by
the latter, in the forms prescribed by law. In this case, Comia did not transfer, convey or
cede the property; but rather, he relinquished, renounced and quitclaimed the property
considering that the property already belonged to the spouses. The voluntary
renunciation by Comia of that portion was not an act of alienation, but an act of
correcting the inclusion of the property in his free patent.
In support of the fact that the alienation transpired prior to the grant of a free patent, it is
remarkable that Comia never contested that the spouses had been in actual possession
of the subject portion even before his patent application. The private ownership of land
as when there is a prima facie proof of ownership like a duly registered possessory
information or a clear showing of open, continuous, exclusive, and notorious possession
is not affected by the issuance of a free patent over the same land. Jose Abelgas, Jr.,
et al. vs. Servilliano Comia, et al.; G.R. No. 163125, April 18, 2012.
Emancipation patents; cancellation; land titles; tax declarations; mere tax declarations
not conclusive evidence of ownership or possession. Under DAR Administrative Order
No. 02, Series of 1994, emancipation patents may be cancelled by the PARAD or the
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DARAB for violations of agrarian laws, rules and regulations. The same administrative
order further states that administrative corrections may include non-identification of
spouse, correction of civil status, corrections of technical descriptions and other matters
related to agrarian reform; and that the DARABs decision may include cancellation of
registered EP/CLOA, reimbursement of lease rental as amortization to ARBs,
reallocation of the land to qualified beneficiary, perpetual disqualification to become an
ARB, and other ancillary matters related to the cancellation of the EP or CLOA.
However, the DARs issuance of an Emancipation Patent and the corresponding OCT
covering the contested lot carries with it a presumption of regularity. The Petition to
correct/cancel Pablos Emancipation Patent can prosper only if petitioners are able to
present substantial evidence that a portion of their lot was erroneously covered by the
patent. Substantial evidence refers to such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.
Well settled is the rule that tax declarations and receipts are not conclusive evidence of
ownership or of the right to possess land when not supported by any other evidence.
The fact that the disputed property may have been declared for taxation purposes in the
names of the applicants for registration or of their predecessors-in-interest does not
necessarily prove ownership. They are merely indicia of a claim of ownership. Sps.
Magno v. Heirs of Parulan; G.R. No. 183916, April 25, 2012.

Compiled by: Harold B. Lacaba