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UNIVERSITY OF SAN CARLOS

COL L E GE OF L AW
BAR OPERATIONS

WARRIORS NOTES

CIVIL
LAW
2018
Researchers:
Prepared by:
Ranielle Cagang
Civil Law Warrior Notes Team
Theamer Cañete
Hazel Makinano
Senior Adviser: Rosean Fontanosa
Atty. Waldemar Gravador
Layout:
Christia Sandee Suan
Junior Adviser:
Atty. Jonah Mark Avila Karol Grace G. Oroceo
WARRIOR NOTES CIVIL LAW REVIEWER INVICTUS (2018)

Table of Contents

I. PERSONS AND FAMILY RELATIONS ..................................................................... 2


III. PROPERTY................................................................................................................ 4
V. OBLIGATIONS AND CONTRACTS .......................................................................... 9
VI. SALES ...................................................................................................................... 13
VII. LEASE...................................................................................................................... 17
VIII. AGENCY .................................................................................................................. 17
IX. CREDIT TRANSACTIONS ...................................................................................... 18
VIII. SUCCESSION ......................................................................................................... 20
IX. LAND TITLES AND DEEDS .................................................................................... 20
X. TORTS AND DAMAGES ......................................................................................... 23

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Q & A ON JUSTICE MARIANO DEL


CASTILLO CASES
I. PERSONS AND FAMILY and that this marriage remained subsisting when he
married Estrellita in 1993.
RELATIONS Is the marriage between Estrellita and Sen. Tamano
void for being bigamous?

1. What is psychological incapacity?


Yes. The marriage between Sen. Tamano and
Zorayda was celebrated in 1958, under civil and
Psychological incapacity under Article 36 Muslim rights, and governed by the Civil Code of
contemplates of the incapacity or inability of a spouse 1950. The provisions of the said Code provide that
to take cognizance of and to assume basic marital only one marriage can exist at any given time. Despite
obligations and not merely difficulty, refusal, or the existence of PD 1083, the law that codified Muslim
neglect in the performance of marital obligations or ill personal laws, it cannot benefit Estrellita as [1] it only
will. applied to instances when both parties are Muslims
or where only the male party is Muslim and the
marriage is solemnized with Muslim law only, [2] the
This incapacity consists of the following:
said law took effect in 1977 and cannot retroact to
a. A true inability to commit oneself to the override the Civil Code which governed the marriage
essentials of marriage; of Sen. Tamano to Zorayda.
b. This inability to commit oneself must refer to
the essential obligations of marriage: the
In the case of subsequent marriage laws, no vested
conjugal act, the community of life and love,
rights shall be impaired that pertain to the protection
the rendering of mutual help, the procreation
of the legitimate union of a married couple. In view of
and education of offspring; and
Sen. Tamano’s prior marriage which subsisted at the
c. The inability must be tantamount to a time Estrellita married him, their subsequent marriage
psychological abnormality. is void ab initio. (Estrellita Juliano-Llave v. Republic of
the Philippines, et al [G.R. No. 169766, 30 March
Hence, mere showing of ‘irreconcilable differences’ 2011])
and ‘conflicting personalities’ in no wise constitutes
psychological incapacity. Nor does failure of the
parties to meet their responsibilities and duties as 3. What is the presumption regarding
married persons amount to psychological incapacity. ownership with regard to properties
(Maria Victoria Socorro Lontoc-Cruz V. Nilo Santos purchased during the marriage?
Cruz [G.R. No. 201988, 11 October 2017])
When property is purchased during the marriage,
2. What is the effect of subsequent there arises a presumption that it belongs to the
conjugal partnership according to Article 117 of the
marriage laws to a prior marriage? New Family Code.

11 months before his death, Senator Tamano married


Thus, there is no requirement to prove that the
Estrellita Juliano-Llave twice in 1993 - first, under
property was acquire with funds of the partnership.
Islamic laws and second, under a civil ceremony in an
Rather, the presumption applies even when the
RTC Judge. The marriage contracts indicate
manner in which the property was acquired does not
Tamano’s civil status as divorced. Respondents
Zorayda Tamano and her son Adib Tamano filed a appear. (Titan Construction v David, Sr. [G.R. No.
complaint for the declaration of nullity of marriage 169548. March 15, 2010])
between Estrellita and Sen. Tamano for being
bigamous. The complaint alleged that Sen. Tamano
and Zorayda were married in 1958 under civil rites

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4. What is the effect of a sale of conjugal Article 172. The filiation of legitimate children is
established by any of the following:
property without the consent of the
other spouse? (1) The record of birth appearing in the civil register
or a final judgment; or
(2) An admission of legitimate filiation in a public
Article 165 of the Civil Code expressly provides that document or a private handwritten instrument and
"the husband is the administrator of the conjugal signed by the parent concerned.
partnership". Likewise, Article 172 of the Civil Code
ordains that "(t)he wife cannot bind the conjugal
partnership without the husband's consent, except in In the absence of the foregoing evidence, the
cases provided by law". legitimate filiation shall be proved by:

Similarly, Article 124 of the Family Code requires that (1) The open and continuous possession of the status
any disposition or encumbrance of conjugal property of a legitimate child; or
must have the written consent of the other spouse, (2) Any other means allowed by the Rules of Court
otherwise, such disposition is void. (Titan and special laws.
Construction v David, Sr. [G.R. No. 169548. March
xxx xxx xxx
15, 2010])
Article 175. Illegitimate children may establish their
illegitimate filiation in the same way and on the same
5. Is a family home exempted from evidence as legitimate children. (Antonio Perla v.
execution? Exceptions? Mirasol Baring, G.R. No. 172471, 12 November
2012)]
As a rule, the family home is exempt from execution,
forced sale or attachment. However, Article 155 (3) of 7. Are certificate of live birth and
the Family Code explicitly allows the forced sale of a baptismal certificate sufficient in
family home “for debts secured by mortgages on the
premises before or after such constitution.” Thus, the establishing paternity or filiation
party claiming for such exemption has the burden of when both were not signed by the
proof to show that the property is exempt from forced putative father?
sale before it was sold at the public auction. (Spouses
Fortaleza v. Spouses Lapitan G.R. No. 178288, 15 No. It is settled that "[a] certificate of live birth
August 2012) purportedly identifying the putative father is not
competent evidence of paternity when there is no
showing that the putative father had a hand in the
6. What if the proof required for proving preparation of said certificate." Just like in a birth
paternity or filiation? certificate, the lack of participation of the supposed
father in the preparation of a baptismal certificate
An order for support must be issued only if paternity renders this document incompetent to prove
or filiation is established by clear and convincing paternity. And "while a baptismal certificate may be
evidence. Time and again, this Court has ruled that a considered a public document, it can only serve as
high standard of proof is required to establish evidence of the administration of the sacrament on
the date specified but not the veracity of the entries
paternity and filiation. An order for . . . support may
create an unwholesome situation or may be an irritant with respect to the child's paternity. Thus, baptismal
to the family or the lives of the parties so that it must certificates are per se inadmissible in evidence as
be issued only if paternity or filiation is established by proof of filiation and they cannot be admitted indirectly
clear and convincing evidence. as circumstantial evidence to prove the same.”
(Antonio Perla v. Mirasol Baring, [G.R. No. 172471,
12 November 2012])
The rules for establishing filiation are found in Articles
172 and 175 of the Family Code which provide as
follows:

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III. PROPERTY not start the running of the period of prescription.


(Lamsis, et.al v. Dong-E [G.R. No. 173021, 20
October 2010])
8. What are the two (2) modes of
prescription through which 10. Does a right to a Writ of Possession
immovables may be acquired? prescribe?

There are two modes of prescription through which The right to possess a property follows the right of
immovables may be acquired – (1) Ordinary ownership; consequently, it would be illogical to hold
acquisitive prescription which requires possession in that a person having ownership of a parcel of land is
good faith and just title for 10 years and, (2) barred from seeking possession thereof. Thus, the
extraordinary prescription wherein ownership and right to request for the issuance of the writ of
other real rights over immovable property are possession of the land never prescribes. (Sps. Edralin
acquired through uninterrupted adverse possession v Philippine Veterans Bank [G.R. No. 168523. March
for 30 years without need of title or of good faith. 9, 2011])
[Andres v. Sta. Lucia Realty, (G.R. No. 201405, 24
August 2015)]
If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a
9. What is possession in the concept of trustee of an implied trust for the benefit of the person
an owner? from whom the property comes." An action for
reconveyance based on implied trust prescribes in 10
years as it is an obligation created by law, to be
Possession in the concept of an owner, also referred counted from the date of issuance of the Torrens title
to as adverse possession, is one of the two concepts over the property. This rule, however, applies only
of possession provided under Article, 525 of the Civil when the person enforcing the trust is not in
Code. A possessor in the concept of an owner has in possession of the property. Thus, there is no
his favor the legal presumption that he possesses prescription when in action for reconveyance, the
with a just title and he cannot be obliged to show or claimant is in actual possession of the property
prove it. In the same manner, the law endows every because this in effect is an action for quieting of
possessor with the right to be respected in his title. (Philippine National Bank v Jumamoy [G.R. No.
possession. 169901. G.R. No. 2011])

It must be emphasized, however, that only things and


rights which are susceptible of being appropriated 11. What must be proven to recover
may be the object of possession. The following possession?
cannot be appropriated and hence, cannot be
possessed: property of the public dominion, common Yes. In order to recover possession, a person must
things (res communes) such as sunlight and air, and prove: [1] the identity of the land claimed, and [2] his
things specifically prohibited by law. [Republic v title. The one who holds a Torrens title over a lot is
Cortez (G.R. No. 197472. 7 September 2015)] the one entitled to its possession. (Jakosalem & Dulfo
v. Barangan [G.R. No. 175025, 15 February 2012])
A person occupying a parcel of land, by himself and
through his predecessors-in-interest, enjoys the
presumption of ownership. Anyone who desires to 12. Is the failure to allege the assessed
remove him from the property must overcome such value of the property fatal to an action
presumption by relying solely on the strength of his for recovery of possession of real
claims rather than on the weakness of the defense. property?
(Palali v. Awisan [G.R. No. 158385, 12 February
2010])
Yes. Jurisdiction over the subject matter is conferred
by law and is determined by the material allegations
Possession by tolerance is not adverse and such of the complaint. Article 434 also provides that “in an
possessory acts, no matter how long performed, do action to recover, the property must be identified, and

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the plaintiff must rely on the strength of his title and by Alipio's CLT. (Raul Palomata v. Nestor
not on the weakness of the defendant’s claim.” Colmenares and Teresa Gurrea [G.R. No. 174251, 15
Jurisdiction cannot be acquired through, or waived December 2010]
by, any act or omission of the parties; nor can it be
cured by their silence, acquiescence or even express
consent. (Heirs of Julao v. Spouses De Jesus [G.R. 16. What is Accion Publiciana?
No. 176020, 29 September 2014])
Accion publiciana is an ordinary civil proceeding to
determine the better right of possession of realty
13. What is the principle behind ejectment independently of title. It refers to an ejectment suit
proceedings? filed after the expiration of the one ear from the
accrual of the cause of action or from the unlawful
Regardless of the actual condition of the title to the withholding of possession of the realty. The objective
property, the party in peaceable quiet possession of the plaintiff is to recover possession only, not
shall not be thrown out by a strong hand, violence, or ownership. (Aguilar v Alfaro [G.R. No. 164402. July
terror. Neither is the unlawful withholding of property 5, 2010])
allowed. Courts will always uphold respect for prior
possession. (Villondo v Quijano [G.R. No. 173606.
December 3, 2012])
17. May the court rule on the issue of
ownership in a proceeding of accion
publiciana?
14. Who has a better right to possess in
ejectment cases? However, where the parties raise the issue of
ownership, the courts may pass upon the issue to
It is a legal principle that in resolving the issue of determine who between the parties has the right to
possession in an ejectment case, the registered possess, but such determination is merely provisional
owner of the property is preferred over the transferee and is not a bar to an action between the same parties
under an unregistered deed of sale. It is settled that a involving title to the property. (Aguilar v Alfaro [G.R.
Torrens Certificate of title is indefeasible and binding No. 164402. July 5, 2010])
upon the whole world unless and until it has been
nullified by a court of competent jurisdiction. As
opposed to the unregistered deeds of sale, the 18. What must be proven in forcible entry
certificate of title certainly deserves more probative cases?
value. Thus, as the registered owner, petitioner had a
right to the possession of the property, which is one
of the attributes of his ownership. (Endaya v Villaos For a court to restore possession, two things must be
proven in a forcible entry case: [1] prior physical
[G.R. No. 202426. January 27, 2016])
possession of the property and [2] deprivation of the
property by means of force, intimidation, threat,
15. Is an order of ejectment proper only strategy, or stealth. "Possession de facto, [i.e., the
physical possession of a property,] and not
when the same is expressly prayed possession de jure is the only issue in a forcible entry
for? case. This rule holds true regardless of the character
of a party's possession, provided that he has in his
No. An order of ejectment is necessary when a prayer favor priority in time. . . ." As used in forcible entry and
for the annulment of the CLT or the exclusion of the unlawful detainer cases, 'possession' refers to
subject property from the CLT's coverage, is granted. "physical possession, not legal possession in the
While the Colmenareses' prayer does not expressly sense contemplated in civil law.” (Villondo v Quijano
include the ejectment of the Palomatas, it does [G.R. No. 173606, 3 December 2012])
include a prayer for the court to declare that the
subject property was excluded from Alipio's CLT. A
necessary consequence to the exclusion of the 19. May Public lands may be the subject
subject property from Alipio's CLT is the ejectment of of forcible entry cases?
the Palomatas therefrom. The Palomatas have no
right to stay on the subject property if it is not covered

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Even public lands can be the subject of forcible entry payment of rent. It therefore follows that the cause of
cases as it has already been held that ejectment action for unlawful detainer in this case must
proceedings may involve all kinds of land. Thus, in the necessarily arise before the termination of the
case at bench, while the parties are fighting over the contract and not the other way around. (Spouses
possession of a government land, the courts below Manzanilla v. Waterfields Industries Corporation
are not deprived of jurisdiction to render judgment [G.R. No. 177484, 18 July 2014])
thereon. Courts must resolve the issue of possession
even if the parties to the ejectment suit are mere
informal settlers. (Villondo v Quijano [G.R. No. 23. What is to be alleged and proven in a
173606, 3 December 2012]) complaint for replevin?

20. What are the requisites for an action "In a complaint for replevin, the claimant must
to quiet title to prosper? convincingly show that he is either the owner or
clearly entitled to the possession of the object sought
to be recovered, and that the defendant, who is in
Quieting of title is an available remedy when two actual or legal possession thereof, wrongfully detains
indispensable requisites are present, namely: (1) The the same." It is not only the owner who can institute a
plaintiff or complainant has a legal or an equitable title replevin suit. A person "entitled to the possession" of
to or interest in the real property subject of the action; the property also can. (Siy v. Tomlin [G.R. 205998,
and (2) The deed, claim, encumbrance, or proceeding 24 May 2017)
claimed to be casting cloud on his title must be shown
to be in fact invalid or inoperative despite its prima
facie appearance of validity or legal efficacy. Heirs as co-owners
(Residents of Lower Atab Teacher’s Village v. Sta.
Monica [G.R. No. 198878, 15 October 2014]) Having succeeded to the property as heirs of
Gregoria and Romana, petitioners and respondents
The remedy of Quieting of Title is not available to became co-owners thereof. As co-owners, they may
Macalino since they do not have a legal or equitable use the property owned in common, provided they do
title, or interest in, the property subject matter of the so in accordance with the purpose for which it is
action. (Macalino, Jr. v. Pis-An [G.R. No. 204056, 1 intended and in such a way as not to injure the
interest of the co-ownership or prevent the other co-
June 2016])
owners from using it according to their rights. They
have the full ownership of their parts and of the fruits
21. Do Regional Trial Courts (RTCs) have and benefits pertaining thereto, and may alienate,
assign or mortgage them, and even substitute
jurisdiction over an action to quiet title another person in their enjoyment, except when
to real property or remove clouds personal rights are involved. Each co-owner may
therefrom? 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
Yes. Under Rule 63 of the Rules of Court, an action against the others so long as he expressly or impliedly
for quieting of title may be instituted in the RTCs,
recognizes the co-ownership. (Ining v Vega [G.R. No.
regardless of the assessed value of the real property
174727. August 12, 2013])
in dispute. (Sps. Sabitsana v. Muertegui [G.R. No.
181359, 05 August 2013])
24. What is the effect of repudiation in co-
22. What must be proven in Unlawful ownership?
Detainer cases?
A co-owner cannot acquire by prescription the share
of the other co-owners, absent any clear repudiation
In order to ascertain whether there is cause of action of the co-ownership. In order that the title may
for unlawful detainer, courts must inquire to [a] the prescribe in favor of a co-owner, the following
existence of the lease contract and [b] violation of that requisites must concur: (1) the co-owner has
lease by the lessee. Failure to pay the rent must performed unequivocal acts of repudiation amounting
precede termination of the contract due to non-

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to an ouster of the other co-owners; (2) such positive 27. Who may legally demand for an
acts of repudiation have been made known to the
other co-owners; and (3) the evidence thereof is clear
easement of right-of-way?
and convincing.
Under the Family Code, family relations, which is the Not all may demand for an easement of right-of-way.
primary basis for succession, exclude relations by Under the law, an easement of right-of-way may only
affinity. As such, while the son-in-law had performed be demanded by the owner of an immovable property
acts that may be characterized as repudiation of the or by any person who by virtue of a real right may
co-ownership, the fact is, he is not a co-owner of the cultivate or use the same. (Andres v. Sta. Lucia
property. Consequently, he cannot validly effect a Realty, (G.R. No. 201405, 24 August 2015])
repudiation of the co-ownership, which he was never
part of. Since there was no valid repudiation of the
existing co-ownership, a partition of the property 28. If the purported dominant estate is an
could be sought any time. (Ining v Vega [G.R. No. unregistered public agricultural land,
174727. August 12, 2013]) may the alleged owners, who failed to
controvert the nature of such as land
25. What are the requisites to an of the public domain, legally demand
easement of right of way? for an easement of right-of-way?

To be entitled to an easement of right of way, all of No. Since they failed to prove their claim of ownership
the following requisites should be met: (1) The estate over the subject property, they cannot demand an
is surrounded by other immovable and is without easement of right-of-way for lack of personality.
adequate outlet to public highway; (2) Payment of (Andres v. Sta. Lucia Realty, (G.R. No. 201405, 24
proper indemnity; (3) Isolation of the immovable is August 2015])
not due to its owner’s acts; and (4) Right-of-way
claimed is at a point least prejudicial to the servient
estate. (Naga Centrum, Inc. v. Orzales [G.R. No. 29. How should the width of passage be
203576, 14 September 2016]) determined?

It is the needs of the dominant tenement which


26. What is the easement of right of way? ultimately determines the width of the passage
according to Article 651 of the Civil Code. Further, it
Right of way pertains to the more adequate and less may be changed from time to time. (De Guzman v
prejudicial route pursuant to the requirement of the Filinvest Development Corporation [G.R. No.
law. 191710. January 14, 2015])
In easement of right of way, there is no alienation of
the land occupied. Thus, payment of the value of the
land for permanent use of the easement does not 30. Are courts strictly bound by the
mean an alienation of the and occupied. In fact under statute of limitations and doctrine of
the law and unlike in purchase of a property, should laches?
the right of way no longer be necessary because the
owner of the dominant estate has joined it to another
abutting on a public highway, and the servient estate It is a better rule that courts, under the principle of
demands that the easement be extinguished, the equity, will not be guided or bound strictly by the
value of the property received by the servient estate statute of limitations or the doctrine of laches when to
by way of indemnity shall be returned in full to the do so, manifest wrong or injustice would result. It must
dominant estate. This only reinforces the concept that also be emphasized that the statute of limitations has
the payment of indemnity is merely for the use of the been devised to operate primarily against those who
right of way and not for its alienation. (De Guzman v slept on their rights and not against those desirous to
act but cannot do so for causes beyond their control.
Filinvest Development Corporation [G.R. No.
(Coderias v Estate of Juan Chioco [G.R. 180476, 26
191710. January 14, 2015])
June 2013])

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V. OBLIGATIONS AND 35. What is the effect of refusal to abide


CONTRACTS by the compromise?

If one of the parties fails or refuses to abide by the


31. What is meant by Vinculum Juris? compromise, the other party may either enforce the
compromise or regard it as rescinded and insist upon
his original demand. Thus, no action for rescission is
Juridical or legal tie, or efficient cause which binds or required and the party aggrieved by the breach of a
connects the parties to the obligation [Note: definition compromise agreement regard the compromise
from De Leon, 2003] (Coderias v Estate of Juan agreement already rescinded.
Chioco [G.R. 180476. June 26, 2013])
Certainly, a compromise agreement becomes the law
32. What is fraud or malice (dolo)? between the parties and should be complied with in
good faith once perfected. Should a party fail or
refuse to comply with the terms of a compromise or
Fraud or malice (dolo) has been defined as a amicable settlement, the other party could either
"conscious and intentional design to evade the enforce the compromise by a writ of execution or
normal fulfillment of existing obligations" and is, thus, regard it as rescinded and so insist upon his/her
incompatible with good faith. (Sps. Tumibay v. Sps. original demand. (Sonley v Anchor Savings [G.R. No.
Lopez [G.R. No. 171692, 03 June 2013]) 205623. August 10, 2016])

33. What are reciprocal obligations? No court should shield a party from compliance with
valid obligations based on wholly unsubstantiated
claims of mistake or fraud. Having refused to abide by
Reciprocal obligations are those which arise from the a compromise agreement, the aggrieved party may
same cause, and which each party is a debtor and either enforce it or regard it as rescinded and insist
creditor of the other, such that the obligation of one is upon the original demand. (Pasco and Pasco v. Heirs
dependent upon the obligation of another.
of Filomena De Guzman [G.R. No. 165554, 26 July
Concededly, parties may validly stipulate the
unilateral rescission of a contract. When it cannot be 2010])
said who violated the terms of the contract first, each
shall bear his own damages according to Article
36. What is the liability for breach of
1192. (Goldloop Properties, Inc v. GSIS [G.R. No.
171076, 1 August 2012]) obligation in good faith?

In contracts and quasi-contracts, the damages for


34. What is the effect of a compromise which the obligor who acted in good faith is liable shall
agreement? be those that are the 'natural and probable
consequences of the breach of the obligation’. (Adrian
A judicially approved compromise agreement has the Wilson International Associates v TMX Philippines,
effect and authority of res judicata. It is final, binding Inc. [G.R. No. 162608. July 26, 2010])
on the parties, and enforceable through a writ of
execution. Article 2041 of the Civil Code, however,
allows the aggrieved party to rescind the compromise 37. What is the consequence when both
agreement and insist upon his original demand upon parties are in pari delicto?
failure and refusal of the other party to abide by the
compromise agreement. (Inutan, et.al v. Napar When both parties are in pari delicto or in equal fault,
Contracting & Allied Services [G.R. No. 195654, 25 none of them may expect positive relief from the
November 2015]) courts in the interpretation of their agreement;
instead, they shall be left as they were at the time the
case was filed. (Nicolas v. Mariano [G.R. No.
201070, 1 August 2016])

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38. What is a Penalty clause? 42. What are the kinds of interest?

Under Article 1226 of the Civil Code, the penalty There are two kinds of interest – monetary and
clause takes the place of indemnity for damages and compensatory. Monetary interest refers to the
the payment of interests in case of non-compliance compensation set by the parties for the use or
with the obligation, unless there is a stipulation to the forbearance of money. No such interest shall be due
contrary. (Continental Cement Corporation v Asea unless it has been expressly stipulated in writing. On
Brown Boveri, Inc. et al. [G.R. No. 171660, October the other hand, compensatory interest refers to the
17, 2011]) penalty or indemnity for damages imposed by law or
by the courts. The interest mentioned in Articles 2209
and 2212 of the Civil Code applies to compensatory
39. When is interest due? interest. (Meyr Enterprises v. Cordero [G.R. No.
197335, 03 September 2014])

Under Article 1956 of the Civil Code, no interest shall


be due unless it has been expressly stipulated in 43. Is the interest on the premium to be
writing. Jurisprudence on the matter also holds that refunded a monetary interest?
for interest to be due and payable, two conditions
must concur: a) express stipulation for the payment of
interest; and b) the agreement to pay interest is No. First, there is no use or forbearance of money
reduced in writing. involved. Second, the subject interest was not one
which was agreed upon by the parties in writing, but
an interest imposed by the Court of Appeals. The
Thus, the lack of a written stipulation to pay interest interest imposed is in the nature of a compensatory
on the loaned amount disallows a creditor from interest. (Meyr Enterprises v. Cordero [G.R. No.
charging monetary interest. (Dela Paz v L & J 197335, 03 September 2014])
Development Company [G.R. No. 183360.
September 8, 2014])
44. When is imposition of compensatory
interest proper?
40. Is it proper to impose interest
notwithstanding the absence of
As a form of damages, compensatory interest is due
stipulation in the contract? only if the obligor is proven to have failed to comply
with his obligation. (Meyr Enterprises v. Cordero
Yes. Article 2210 of the Civil Code expressly provides [G.R. No. 197335, 03 September 2014])
that "[i]nterest may, in the discretion of the court, be
allowed upon damages awarded for breach of
contract. (Estores v. Sps Supangan [G.R. No. 45. What is Moratory interest?
175139, 18 April 2012])
Article 2209 provides that if the debtor incurs delay in
the performance of an obligation consisting of the
41. When should interest begin to run? payment of a sum of money, he shall be liable to pay
the interest agreed upon, and in the absence of
Under Article 1169 of the Civil Code, when the stipulation, the legal interest at 6% per annum. (PNB
demand is established with reasonable certainty, the v Chan [G.R. No. 206037, 13 March 2017])
interest shall begin to run from the time the claim is
made judicially or extrajudicially, but when such
certainty cannot be so reasonably established at the 46. What is the effect of unconscionable
time the demand is made, the interest shall begin to interest rates?
run only from the date the judgment of the court is
made. (Landbank v. Oñate [G.R. No. 192371, 15
January 2014]) Although the Usury Law has been effectively
repealed, courts may still reduce iniquitous or
unconscionable rates charged for the use of money.
Furthermore, excessive interests, penalties and other

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charges not revealed in disclosure statements issued appear in a final judgment in order that it can be
by banks, even if stipulated in the promissory notes, considered as liquidated; it is enough that its exact
cannot be given effect under the Truth in Lending Act. amount is known. And a debt is considered liquidated,
(Sps. Silos v PNB [G.R. No. 181045, 2 July 2014]) not only when it is expressed already in definite
Time and again, it has been ruled in a plethora of figures which do not require verification, but also
cases that stipulated interest rates of 3% per month when the determination of the exact amount depends
and higher, are excessive, iniquitous, unconscionable only on a simple arithmetical operation. (Jesus
and exorbitant. Such stipulations are void for being Montemayor v. Vicente Millora [G.R. No. 168251, 27
contrary to morals, if not against the law. July 2011])

The Court, however, stresses that these rates shall One important requisite for legal compensation to be
be invalidated and shall be reduced only in cases proper is that the debts are liquidated and
where the terms of the loans are open-ended, and demandable. A claim is liquidated when the amount
where the interest rates are applied for an indefinite and time of payment is fixed. (Lao & Manansala v.
period. Hence, the imposition of a specific sum of Special Plans, Inc. (SPI) [G.R. No. 164791, 29 June
P40,000.00 a month for six months on a 2010])
P1,000,000.00 loan is not considered
unconscionable. In the case at bench, there is no
specified period as to the payment of the loan. Hence, 48. What is consignation?
levying 6% monthly or 72% interest per annum is
definitely outrageous and inordinate.
Consignation is the act of depositing the thing due
with the court or judicial authorities whenever the
Furthermore, the imposition of an unconscionable creditor cannot accept or refuses to accept payment.
rate of interest on a money debt, even if knowingly It generally requires a prior tender of payment.
and voluntarily assumed, is immoral and unjust. It is
tantamount to a repugnant spoliation and an
iniquitous deprivation of property, repulsive to the Under Article 1256 of the Civil Code, consignation
common sense of man. Indeed, voluntariness does alone is sufficient even without a prior tender of
not make the stipulation on an unconscionable payment, when a) when the creditor is absent or
interest valid. (Dela Paz v L & J Development unknown or does not appear at the place of payment;
b)when he is incapacitated to receive the payment at
Company [G.R. No. 183360. September 8, 2014])
the time it is due; c) when, without just cause, he
refuses to give a receipt; d) when two or more
persons claim the same right to collect; and e) when
47. Can there be legal compensation
the title of the obligation has been lost.
between the specific amount of award
mentioned in the decision in favour of
the petitioner and the award of For consignation to be valid, the debtor must comply
with the following requirements under the law:
respondent’s counterclaim in the form
1. there was a debt due;
of attorney’s fees, which is merely
based on quantum meruit and its 2. valid prior tender of payment, unless the
consignation was made because of some
exact amount is not specified in the legal cause provided in Article 1256;
decision? 3. previous notice of the consignation has been
given to the persons interested in the
Yes. The amount of attorney's fees is ascertainable performance of the obligation;
from the RTC Decision. Thus, compensation is 4. the amount or thing due was placed at the
possible. For legal compensation to take place, the disposal of the court; and,
requirements set forth in Articles 1278 and 1279 of
5. after the consignation had been made, the
the Civil Code, must be present.
persons interested were notified thereof

A debt is liquidated when its existence and amount


Failure in any of these requirements is enough
are determined. It is not necessary that it be admitted
ground to render a consignation Ineffective.
by the debtor. Nor is it necessary that the credit

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Thus, deposit of the subject monthly rentals in a non- which are to constitute the contract. The offer must be
drawing savings account is not the consignation certain and the acceptance absolute. A qualified
contemplated by law, precisely because it does not acceptance constitutes a counter-offer. (Roberto
place the same at the disposal of the court. Tuazon v. Lourdes Del-Rosario-Suarez [G.R. No.
Consignation is necessarily judicial; it is not allowed 168325, 13 December 2010])
in venues other than the courts. (PNB v Chan [G.R.
No. 206037, 13 March 2017])
53. Can the parties agree that the prior
free consent of one party to an
49. When is tender of payment valid? agreement be withheld or
suppressed?
Tender of payment takes effect only if accompanied
by actual payment or followed by consignation of the
sum due with the proper court. The valid tender of No. An agreement where the prior free consent of one
payment will discharge the debtor of the obligation to party thereto is withheld or suppressed will be struck
pay and will suspend the accrual of interest from the down, and the Court shall always endeavor to protect
date of such tender. (Spouses Bontostro v. Spouses a property owner's rights against devious practices
that put his property in danger of being lost or unduly
Luna [G.R. No. 172346, 24 July 2013])
disposed without his prior knowledge or consent. As
this ponente has held before, "[t]his Court cannot
50. Is there a need of prior tender of presume the existence of a sale of land, absent any
direct proof of it.” (First Optima Realty Corporation v.
payment before the consignation?
Securitron Security Services [G.R. No. 199648, 28
January 2015])
Article 1256 of the Civil Code authorizes consignation
alone, without need of prior tender of payment, when
the creditor is unknown or when two or more persons 54. Who may demand fulfillment of the
claim the same right to collect. (Spouses Cacayorin obligations arising from contracts?
v. AFPMBAI [G.R. No. 171298, 15 April 2013])
As a general rule, a contract affects only the parties
51. What are the three stages of a to it, and cannot be enforced by or against a person
contract? who is not a party thereto. (Manlar Rice Mill v. Deyto
[doing business as “J.D. Grains Center” and Ang
[G.R. No. 191189, 29 January 2014])
The three stages of a contract are the following: a)
negotiation, which begins from the time the
prospective contracting parties indicate interest in the Under Article 1311 of the Civil Code, contracts take
contract and ends at the moment of their agreement; effect only between the parties, their assigns and
b) perfection or birth, which takes place when the heirs. Thus, only parties to a contract can maintain an
parties agree upon all the essential elements of the action to enforce the obligations arising under
contract; and c) consummation, which occurs when contract, unless if the contract contains a stipulation
the parties fulfill or perform the terms agreed upon, pour autrui or stipulation for the benefit of third parties.
culminating in the extinguishment thereof. (Robern (Heirs of Mario Pacres v. Heirs of Cecilia Ygoña [G.R.
Development Corporation v. People’s Landless No. 174719, 5 May 2010])
Association [G.R. No. 173622. March 11, 2013])
55. How can the conditions in the contract
52. Is the giving of a counter-offer be modified?
considered an acceptance which
would then result to consent between It is basic that there can be no contract in the true
the parties? sense in the absence of the element of agreement, or
of mutual assent of the parties. In order that
obligations arising from contracts may have the force
No. Consent is manifested by the meeting of the offer of law between the parties, there must be mutuality
and the acceptance upon the thing and the cause between the parties based on their essential equality.

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Similarly, contract changes must be made with the 59. What are the essential elements of a
consent of the contracting parties. The minds of all
the parties must meet as to the proposed
contract of sale?
modification, especially when it affects an important
aspect of the agreement. (Sps. Silos v. PNB [G.R. A contract of sale is perfected at the moment there is
No. 181045, July 2, 2014]) 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
56. Is there a unilateral alteration of the elements must concur: a) consent or meeting of the
terms and conditions of a contract minds; b) determinate subject matter; and c) price
between persons when the court certain in money or its equivalent.
validly declared stipulated interest to As for the price, fixing it can never be left to the
decision of only one of the contracting parties. But a
be void for being unconscionable and price fixed by one of the contracting parties, if
equitably reducing the interest to the accepted by the other, gives rise to a perfected sale.
legal rate? As regards consent, when there is merely an offer by
one party without acceptance of the other, there is no
No. The freedom of contract is not absolute. The contract. The decision to accept a bidder's proposal
same is understood to be subject to reasonable must be communicated to the bidder. However, a
legislative regulation aimed at the promotion of public binding contract may exist between the parties whose
health, morals, safety and welfare. One such minds have met, although they did not affix their
legislative regulation is found in Article 1306 of the signatures to any written document, as acceptance
Civil Code which allows the contracting parties to may be expressed or implied. It can be inferred from
"establish such stipulations, clauses, terms and the contemporaneous and subsequent acts of the
conditions as they may deem convenient, provided contracting parties. (Robern Development
they are not contrary to law, morals, good customs, Corporation v. People’s Landless Association [G.R.
public order or public policy". (Sps. Castro v. Tan No. 173622. March 11, 2013])
[G.R. No. 168940, 24 November 2009])

60. Where the parties merely exchanged


57. Do contracts which are simulated vest offers and counter-offers, does one
title? have the right to deliver earnest
money to another in order to bind the
Contracts which are absolutely simulated or fictitious latter to a sale?
are inexistent and void from the beginning, an action
or defense for the declaration of the nullity or
No. Where the parties merely exchanged offers and
inexistence of such contract is imprescriptible.
counter-offers, no contract is perfected since they did
(Campos v. Pastrana [G.R. No. 175994, 8 not yet give their consent to such offers. Since there
December 2009]) is no perfected sale between the parties, respondent
had no obligation to make payment through the
check; nor did it possess the right to deliver earnest
58. Does the Statute of Frauds apply to a money to petitioner in order to bind the latter to a sale.
partially executed contract? As contemplated under Art. 1482 of the Civil Code,
"there must first be a perfected contract of sale before
No. The Statute of Frauds does not apply in the we can speak of earnest money." Earnest money
present case as this provision applies only to applies to a perfected sale. In a potential sale
executory, and not to completed, executed or partially transaction, the prior payment of earnest money even
before the property owner can agree to sell his
executed contracts. (Duarte v. Duran [G.R. No.
property is irregular, and cannot be used to bind the
173038, 14 September 2011]) owner to the obligations of a seller under an otherwise
perfected contract of sale; to cite a well-worn cliché,
the carriage cannot be placed before the horse. (First
VI. SALES Optima Realty Corporation v. Securitron Security
Services [G.R. No. 199648, 23 January 2015])

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A contract to sell is one where the prospective seller


reserves the transfer of title to the prospective buyer
61. Is an option contract the same as a until the happening of an event, such as full payment
contract of a right of first refusal? of the purchase price. In a contract to sell, payment of
the price is a positive suspensive condition, failure of
No. An option contract is simply a contract by which which is not a breach of contract warranting
the owner of property agrees with another person that rescission but rather just an event that prevents the
he shall have the right to buy his property at a fixed prospective buyer from compelling the prospective
price within a certain time. On the other hand, in a seller to convey title. In other words, the non-
right of first refusal, while the object might be made fulfillment of the condition of full payment renders the
determinate, the exercise of the right, however, would contract to sell ineffective and without force and
be dependent not only on the grantor's eventual effect. (Sps. Domingo v Manzano [G.R. No. 201883.
intention to enter into a binding juridical relation with November 16, 2016])
another but also on terms, including the price, that
obviously are yet to be later firmed up. From the A contract to sell has been defined as "a bilateral
foregoing, it is thus clear that an option contract is contract whereby the prospective seller, while
entirely different and distinct from a right of first expressly reserving the ownership of the subject
refusal in that in the former, the option granted to the property despite delivery thereof to the prospective
offeree is for a fixed period and at a determined price. buyer, binds himself to sell the said property
Lacking these two essential requisites, what is exclusively to the prospective buyer upon fulfillment
involved is only a right of first refusal. (Roberto of the condition agreed upon, that is, full payment of
Tuazon v. Lourdes Del-Rosario-Suarez [G.R. No. the purchase price." In a contract to sell, "ownership
168325, 13 December 2010]) is retained by the seller and is not to pass until the full
payment of the price . . . ." It is "commonly entered
into so as to protect the seller against a buyer who
62. What is the difference, if any, between intends to buy the property in installment[s] by
the effect of an option which is withholding ownership over the property until the
without a consideration and one buyer effects full payment therefor.” (Sps. Tumibay v.
which is founded upon a Sps. Lopez [G.R. No. 171692, 03 June 2013])
consideration?
64. Is an agreement which stipulates that
If the option is without any consideration, the offeror the seller shall execute a deed of sale
may withdraw his offer by communicating such only upon or after full payment of the
withdrawal to the offeree at any time before
acceptance; if it is founded upon a consideration, the
purchase price a contract of sale?
offeror cannot withdraw his offer before the lapse of
the period agreed upon. (Roberto Tuazon v. Lourdes No. The stipulation to execute a deed of sale upon full
Del-Rosario-Suarez [G.R. No. 168325, 13 payment of the purchase price is a unique and
December 2010]) distinguishing characteristic of a contract to sell. The
aforecited stipulation shows that the vendors
reserved title to the subject property until full payment
Does the absence of a written contract of sale negate of the purchase price. "[w]here the vendor promises
the fact that indeed there was a contract of sale to execute a deed of absolute sale upon the
between the parties? completion by the vendee of the payment of the
No. A contract of sale is perfected the moment the price," indicates that the parties entered into a
parties agree upon the object of the sale, the price, contract to sell. (Diego v. Diego [G.R. No. 179965,
and the terms of payment. Once perfected, the 20 February 2013])
parties are bound by it whether the contract is verbal
or in writing because no form is required. (Duarte v.
Duran) 65. Does a mere receipt acknowledging
partial payment an indication that the
agreement between the parties is a
63. What is a contract to sell? contract to sell?

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Yes. As we ruled in San Lorenzo Development 68. When there is failure to fully pay the
Corporation v. Court of Appeals, the parties could
have executed a document of sale upon receipt of the
purchase price in a contract to sell, is
partial payment but they did not. This is thus an the contract to sell terminated or
indication that the seller did not intend to immediately cancelled?
transfer title over his share but only upon full payment
of the purchase price. Having thus reserved title over
Yes. "[S]ince the agreement . . . is a mere contract to
the property, the contract entered into is a contract to
sell, the full payment of the purchase price partakes
sell. [T]he absence of a formal deed of conveyance is
of a suspensive condition. The non-fulfillment of the
a strong indication that the parties did not intend
condition prevents the obligation to sell from arising
immediate transfer of ownership, but only a transfer
and ownership is retained by the seller without further
after full payment of the purchase price. (Diego v. remedies by the buyer." The obligation to sell the
Diego [G.R. No. 179965, 20 February 2013]) subject properties becomes demandable only upon
the happening of the positive suspensive condition,
which is the full payment of the purchase price.
66. Does nonpayment of the purchase Without respondent's full payment, there can be no
price in a contract to sell constitute a breach of contract to speak of because petitioner has
substantial breach? no obligation yet to turn over the title. (Diego v. Diego
[G.R. No. 179965, 20 February 2013])
In a contract to sell, payment of the price is a positive
suspension condition, the failure of which is not a
breach of contract warranting rescission under Article
69. Is the remedy of rescission under
1911 of the Civil Code, but rather just an event that Article 1592 available in contracts to
prevents the supposed seller from being bound to sell?
convey title to the supposed buyer. Further, Article
1911 cannot be applied, since sales of real property
No. In a contract to sell, title remains with the vendor
on installment are governed by the Maceda Law.
and does not pass on to the vendee until the purchase
(Spouses Bonrostro v. Spouses Luna [G.R. No. price is paid in full. Thus, in a contract to sell, the
172346, 24 July 2013]) payment of the purchase price is a positive
suspensive condition. Failure to pay the price agreed
upon is not a mere breach, casual or serious, but a
67. Can the seller in a contract to sell situation that prevents the obligation of the vendor to
rescind the contract when the buyer convey title from acquiring an obligatory force. This is
covertly usurps the former’s entirely different from the situation in a contract of
ownership of the property prior to the sale, where non-payment of the price is a negative
full payment of the price? resolutory condition. The effects in law are not
identical. In a contract of sale, the vendor has lost
ownership of the thing sold and cannot recover it,
Yes. In a contract to sell, the seller retains ownership unless the contract of sale is rescinded and set aside.
of the property until the buyer has paid the price in In a contract to sell, however, the vendor remains the
full. A buyer who covertly usurps the seller's owner for as long as the vendee has not complied
ownership of the property prior to the full payment of fully with the condition of paying the purchase price.
the price is in breach of the contract. As a general If the vendor should eject the vendee for failure to
rule, "rescission will not be permitted for a slight or meet the condition precedent, he is enforcing the
casual breach of the contract, but only for such contract and not rescinding it. (Diego v. Diego [G.R.
breaches as are substantial and fundamental as to No. 179965, 20 February 2013])
defeat the object of the parties in making the
agreement.” The seller is entitled to rescission
because the breach is substantial and fundamental 70. Does the vendee have a remedy in
as it defeats the very object of the parties in entering case eviction occurs?
into the contract to sell. (Sps. Tumibay v. Sps. Lopez
[G.R. No. 171692, 03 June 2013])
The gross negligence of the seller in defending its title
to the property subject matter of the sale, thereby
contravening the express undertaking under the deed

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of sale to protect its title against the claims of third 73. Does mere registration of a
persons resulting in the buyer’s eviction from the
property amounts to bad faith, and the buyer is
subsequent sale in one’s favour give
entitled to the remedies afforded under Article 1555 him any right over the land as against
of the Civil Code. (Bignay Ex-Inn v. Union Bank [G.R. a first buyer whose sale was
No. 171598 & 171590, 12 February 2014]) unrecorded?

71. Does double sale does not apply to a No. Nemo dat quod non habet. The mere registration
of a sale in one's favor does not give him any right
contract to sell? over the land if the vendor was no longer the owner
of the land, having previously sold the same to
Article 1544 of the Civil Code does not apply. There another even if the earlier sale was unrecorded.
is no double sale where one is a contract to sell and Neither could it validate the purchase thereof by
where the subject property was never surrendered to petitioners, which is null and void. Registration does
petitioners or they were never in possession thereof. not vest title; it is merely the evidence of such title.
Since failure to pay the price in full in a contract to sell Our land registration laws do not give the holder any
renders the same ineffective and without force and better title than what he actually has. (Sps. Sabitsana
effect, then there is no sale to speak of. Thus, there v. Muertegui [G.R. No. 181359, 05 August 2013])
could be no registration nor claim ownership of the
subject property, and as between the parties to the
instant case, there could be no double sale which 74. Is Article 1544 of the Civil Code
would justify the application of Article 1544. As far as applicable to sales involving
this Court is concerned, there is only one sale; as unregistered land?
such, the rule on double sales under Article 1544 of
the Civil Code does not apply. (Spouses Domingo v.
Manzano [G.R. No. 201883, 16 November 2016]) No. The issue of the buyer's good or bad faith is
relevant only where the subject of the sale is
registered land, and the purchaser is buying the same
72. Who has a better right over a property from the registered owner whose title to the land is
subjected to a double sale? 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. Act No. 3344
Under Art 1544 NCC, in case of a double sale of applies to sale of unregistered lands. Act No. 3344
immovables, ownership shall belong to: (1) The first expressly declares that any registration made shall be
registrant in good faith; or (2) The first possessor in without prejudice to a third party with a better right.
good faith; or (3) The buyer who in good faith presents (Sps. Sabitsana v. Muertegui [G.R. No. 181359, 05
the oldest title. Moreover, in order for the second August 2013])
buyer to displace the first buyer, the law requires that
he must have acquired and registered the immovable
property in good faith, and the following must be 75. Who is an innocent purchaser for
shown: (1) the second buyer must show that he acted value?
in good faith from the time of acquisition until title is
transferred to him by registration or failing
registration, by delivery of possession; and (2) the One who buys the property of another, without notice
second buyer must show continuing good faith and that some other person has. Right or interest in such
innocence or lack of knowledge of the first sale until property and pay the full price for the same, at the
his contract ripens into full ownership through prior time of such purchase or before he has notice of the
registration as provided by law. (Pudadera v. claims or interest of some other person in the
Magallanes [G.R. No. 170073, 18 October 2010]) property. An “innocent purchaser for value” includes
an innocent lessee, mortgagee, or other
encumbrancer for value. (PNB v. Jumamoy [G.R. No.
169901, 03 August 2011])

The burden of proof lies upon the party alleging the


same. (Heirs of Spouses Manguardia v. Heirs of

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Simplicio and Marta Valles [G.R. No. 177616, 27 78. Where the lessor makes an offer to
August 2014]) sell to the lessee a certain property at
a fixed price within a certain period,
76. May the rule on protection of innocent and the lessee fails to accept the offer
purchaser for value apply to persons or to purchase on time, can the owner
who allege to have been conveyed validly offer the same to another?
title pursuant to a forged instrument?
Yes. Where the lessor makes an offer to sell to the
No. In order that the holder of a certificate for value lessee a certain property at a fixed price within a
issued by virtue of the registration of a voluntary certain period, and the lessee fails to accept the offer
instrument may be considered a holder in good faith or to purchase on time, then the lessee loses his right
for value, the instrument registered should not be to buy the property and the owner can validly offer it
forged. When the instrument presented is forged, to another. (Roberto Tuazon v. Lourdes Del-Rosario-
even if accompanied by the owner's duplicate Suarez [G.R. No. 168325, 13 December 2010])
certificate of title, the registered owner does not
thereby lose his title, and neither does the assignee
in the forged deed acquire any right or title to the 79. May a third party who validly acquired
property. The innocent purchaser for value protected a property which was once subject to
by law is one who purchases a titled land by virtue of a lease agreement, be held liable for
a deed executed by the registered owner himself, not nominal damages for the alleged
by a forged deed. (Serrano Mahilum v. Sps Ilano violation of the lessee’s rights which
[G.R. No. 197923, 22 June 2015])
was done prior to the aforementioned
acquisition?
77. Is failure to allege bad faith in the
complaint a fatal defect in a case for No. A third party who did not commit a violation or
annulment of a simulated, fictitious, invasion of the plaintiff or aggrieved party's rights may
and forged deed of absolute sale not be held liable for nominal damages. The only time
when no new title was issued the third party may be implicated or found guilty is
when it took part in the commission of illegal acts.
pursuant to such document? (One Network Rural Bank, Inc. v. Baric [G.R. No.
193648, 5 March 2014])
No. The failure to state a cause of action if there is no
allegation in the complaint that respondents were VIII. AGENCY
purchasers in bad faith involved complaints for
annulment of new titles issued to the buyers. It cannot
apply to a case where the title remains in the name of
the registered owner. Since a new title was never
issued in respondents' favor and, instead, title
remained in petitioner's name, the former never came
within the coverage and protection of the Torrens
system, where the issue of good or bad faith becomes
relevant. (Serrano Mahilum v. Sps Ilano [G.R. No.
197923, 22 June 2015])
VII. LEASE

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80. What contract results from situations The elements of pactum commissorium, which
enable the mortgagee to acquire ownership of the
where vehicle owners leave their mortgaged property without the need of any
vehicles, together with all the foreclosure proceedings, are: (1) there should be a
documents of title, spare keys, and property mortgaged by way of security for the
deeds of sale signed in blank, with payment of the principal obligation, and (2) there
second-hand car traders for the should be a stipulation for automatic appropriation by
the creditor of the thing mortgaged in case of non-
purpose of selling the vehicles? Can payment of the principal obligation within the
such vehicle owner avail of the stipulated period. (Sps. Edralin v Philippine Veterans
remedy of replevin to recover the Bank [G.R. No. 168523. March 9, 2011])
vehicle which was already sold by the
second-hand car trader to a third
person who validly registered his 82. Who is a mortgagee in good faith?
ownership thereof, and no remittance
of the proceeds of the sale was made No valid mortgage will arise unless the mortgagor has
to the seller? a valid title or ownership over the mortgaged property.
By way of exception, a mortgagee can invoke that he
or she derived title even if the mortgagor's title on the
For this kind of arrangement, an agency relationship property is defective, if he or she acted in good faith.
is created between the vehicle owners, as principals, In such instance, the mortgagee must prove that no
and the car traders, as agents. The situation is akin to circumstance that should have aroused her suspicion
an owner of jewelry who sells the same through an on the veracity of the mortgagor's title on the property
agent, who receives the jewelry in trust and offers it was disregarded.
for sale to his/her regular clients; if a sale is made, the
agent takes payment under the obligation to remit the
same to the jewelry owner, minus the agreed The doctrine of mortgagee in good faith assumes that
commission or other compensation. the title to the subject property had already been
transferred or registered in the name of the impostor
who thereafter transacts with a mortgagee who acted
Since the agent/car trader was able to sell the subject in good faith. The burden of proof that one is a
vehicle to a third person, petitioner thus ceased to be mortgagee in good faith and for value lies with the
the owner thereof. Nor is he entitled to the possession person who claims such status. A mortgagee cannot
of the vehicle; together with his ownership, petitioner simply ignore facts that should have put a reasonable
lost his right of possession over the vehicle. Indeed, person on guard, and thereafter claim that he or she
his right of action is only against Ong, for collection of acted in good faith under the belief that the
the proceeds of the sale. mortgagor's title is not defective.

Considering that he was no longer the owner or In other words, in order for a mortgagee to invoke the
rightful possessor of the subject vehicle at the time he doctrine of mortgagee in good faith, the impostor
filed the case for replevin, petitioner may not seek a must have succeeded in obtaining a Torrens title in
return of the same through replevin. (Siy v. Tomlin his name and thereafter in mortgaging the property.
[G.R. No. 205998, 24 April 2017]) Where the mortgagor is an impostor who only
pretended to be the registered owner, and acting on
such pretense, mortgaged the property to another,
IX. CREDIT TRANSACTIONS the mortgagor evidently did not succeed in having the
property titled in his or her name, and the mortgagee
cannot rely on such pretense as what appears on the
81. What is Pactum Commissorium? title is not the impostor’s name but that of the
registered owner. (Ruiz v Dimailig [G.R. No. 204280.
Pactum commissorium is a stipulation empowering
November 9, 2016])
the creditor to appropriate the thing given as guaranty
for the fulfillment of the obligation in the event the
obligor fails to live up to his undertakings, without
further formality, such as foreclosure proceedings,
and a public sale.

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83. What is the rule on mortgage with


respect to banking institutions? 86. May a writ of possession be issued
during the period of redemption?
The ascertainment of the status or condition of a
property offered to it as security for a loan must be a As a general rule, the issuance of a writ of possession
standard and indispensable part of its operations. after the foreclosure sale and during the period of
Hence, the bank has the burden of evidence that it redemption is ministerial. Section 7 of Act 3135
acted in good faith from the time the land was offered explicitly authorizes the purchaser in a foreclosure
as collateral. However, if there was no showing at all sale to apply for a writ of possession during the
that it conducted an investigation; that it observed due redemption period by filing an ex parte motion under
diligence and prudence by checking for flaws in the oath for that purpose with the Registry of Deeds.
title; that it verified the identity of the true owner and Upon filing of such motion and the approval of the
possessor of the land; and, that it visited the subject corresponding bond, the law also directs in express
premises to determine its actual condition before terms the said court to issue the order for a writ of
accepting the same as collateral, then it cannot be a possession. However, this rule is not without
mortgagee in good faith. (Philippine National Bank v exception. The obligation of a court to issue an ex
Jumamoy [G.R. No. 169901. G.R. No. 2011]) parte 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 in
84. When can a bank or other financial possession of the property who is claiming a right
institutions be considered a adverse to that of the debtor/mortgagor. (Pta of St.
mortgagee in good faith? Mathew Christian Academy v. Metropolitan Bank
and Trust Co. [G.R. No. 176518, 2 March 2010])
A banking or financial institution is considered a
mortgagee in good faith when it conducts an ocular 87. Is it ministerial on the part of the trial
inspection of the property offered to be mortgaged
and verifies the genuineness of the title to determine court to issue a writ of possession?
the real owner or owners thereof before entering into
a mortgage contract, because the general rule that a Under Sec. 7, Act 3135, as amended by Act 4118, the
mortgagee need not look beyond the title does not purchaser at the foreclosure sale could file an ex
apply to banks and other financial institutions as parte petition for possession of the foreclosed
greater care and due diligence is required of them. property even during the redemption period. Hence,
(Armando Alano v. Planter’s Development Bank after consolidation of title, the issuance of a writ of
[G.R. No. 171628, 13 June 2011]) possession in favor of the purchaser, upon proper
application and proof of title becomes merely a
ministerial duty of the court. (Spouses Fortaleza v.
While the law recognizes the right of a bank to
foreclose a mortgage upon the mortgagor’s failure to Spouses Lapitan [G.R. No. 178288, 15 August
pay his obligation, it is imperative that such right be 2012])
exercised according to its clear mandate. Each and
every requirement of the law must be complied with,
lest, the valid exercise of the right would end. Lim v. 88. What is the remedy to compel the
DBP [G.R. No. 177050, 1 July 2013] issuance of a writ of possession?

When the redemption period expires without the


85. What is the mortgagee’s right mortgagor exercising his right of redemption, the
whenever there is a deficiency from mortgagor is deemed to have lost all interest over the
the foreclosure sale? foreclosed property, and the purchaser acquires
It is settled that a mortgagee has the right to recover absolute ownership of the property. The purchaser
the deficiency resulting from the difference between can demand possession at any time following the
the amount obtained in the sale at public auction and consolidation of ownership in his name and the
the outstanding obligation of the mortgagor at the issuance to him of a new TCT. At that point, the
time of the foreclosure proceedings. (PNB v Chan issuance of a writ of possession, upon proper
[G.R. No. 206037. March 13, 2017]) application and proof of title becomes merely a

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ministerial function. Effectively, the court cannot


exercise its discretion.
IX. LAND TITLES AND DEEDS
91. What is the Regalian doctrine?
The purpose of mandamus is to compel the
performance of a ministerial duty. A ministerial act is All lands of the public domain belong to the State. The
"one which an officer or tribunal performs in a given classification and reclassification of such lands are
state of facts, in a prescribed manner, in obedience to the prerogative of the Executive Department. The
the mandate of legal authority, without regard to or President may at any time transfer these public lands
the exercise of his own judgment upon the propriety from one class to another. (Republic v Dayaoen [G.R.
or impropriety of the act done. (Sps. Edralin v No. 200773. July 8, 2015])
Philippine Veterans Bank [G.R. No. 168523, 9 March
2011]
All lands of the public domain belong to the State, and
VIII. SUCCESSION the State is the source of any asserted right to
ownership in land and charged with the conservation
of such patrimony.
89. Is the state of being forgetful renders Thus, the well-entrenched rule is that all lands not
a person unfit to execute a will? appearing to be clearly of private dominion
presumably belong to the State. The onus to overturn,
by incontrovertible evidence, the presumption that the
Forgetfulness unsubstantiated with other evidence is land subject of an application for registration is
not equivalent of being unsound mind. There must be alienable and disposable rests with the applicant.
substantial evidence, medical or otherwise, that Unless public land is shown to have been reclassified
should show that a person was of unsound mind at or alienated to a private person by the State, it
the time of the execution of the will, since the law remains part of the inalienable public domain. Indeed,
presumes that every person is of sound mind, in the occupation thereof in the concept of owner, no matter
absence of proof to the contrary. (Baltazar v. Laxa how long, cannot ripen into ownership and be
[G.R. No. 174489, 11 April 2012]) registered as a title. (Republic v Sps. Benigno [G.R.
No. 205492. March 11, 2015])
90. Is a waiver of hereditary rights in favor
of another executed by a future heir 92. What is the effect of the Illegal acts of
while the parents are still living valid? government agents in land
registration cases?
No. Pursuant to the second paragraph of Article 1347
of the Civil Code, no contract may be entered into As a matter of doctrine, illegal acts of government
upon a future inheritance except in cases expressly agents do not bind the State, and the Government is
authorized by law. For the inheritance to be never estopped from questioning the acts of its
considered "future", the succession must not have officials, more so if they are erroneous, let alone
been opened at the time of the contract. A contract irregular. This principle applies in land registration
may be classified as a contract upon future cases. Certainly, the State will not be allowed to
inheritance, prohibited under the second paragraph of abdicate its authority over lands of the public domain
Article 1347, where the following requisites concur: just because its agents and officers have been
(a) That the succession has not yet been opened; (b)
negligent in the performance of their duties. (Republic
That the object of the contract forms part of the
inheritance; and, (c) That the promissor has, with v Sps. Benigno [G.R. No. 205492. March 11, 2015])
respect to the object, an expectancy of a right which
is purely hereditary in nature. (Atty. Ferrer v. Sps Diaz 93. What is the nature of a certificate of
[G.R. No. 165300, 23 April 2010])
title under the Torrens system?

A certificate of title serves as evidence of an


indefeasible and incontrovertible title to the property
in favor of the person whose name appears therein.
The real purpose of the Torrens system of land

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registration is to quiet title to land and put a stop case. (Guntalilib v. Dela Cruz [G.R. No. 200042, 7
forever to any question as to the legality of the title.” July 2016])
(Serrano Mahilum v. Sps Ilano [G.R. No. 197923, 22
June 2015])
96. What is the rule when there are two
The Torrens system of land registration “merely
certificates of title that purport to
confirms ownership and does not create it. It cannot include the same land?
be used to divest a lawful owners of their title for the
purpose of transferring it to another one who has not The general rule is that where two certificates of title
acquired it by any of the modes allowed or recognized purport to include the same land, the earlier in date
by law.” (Nicolas v. Mariano [G.R. No. 201070, 1 prevails. (Jose Yulo Agricultural Corporation v.
August 2016]) Spouses Davis [G.R. No. 197709, 3 August 2015])

It is settled that a Torrens title is evidence of The rule that a Torrens Certificate of Title is
indefeasible title to property in favor of the person on conclusive evidence of ownership of the land
whose name it appears. It is conclusive evidence with described therein does not apply when such land, or
respect to ownership of the land describe therein. a potion thereof, was illegally or erroneously included
Even if a notarized but unregistered Kasulatan sa in said title. (Spouses Valenzuela vs. Spouses Mano
Bilihan had in its favor a juris tantum presumption of
[G.R. No. 172611, 9 July 2010])
authenticity and due execution, the same cannot
prevail over a Torrens title. Thus, the person who has
a Torrens title over a land is entitled to possession 97. What is the remedy of a land owner
thereof. (Aguilar v Alfaro [G.R. No. 164402. July 5,
whose property has been erroneously
2010])
registered in another’s name?

94. Is the Torrens certificate of title The incontrovertibility of a title does not preclude a
subject to a collateral attack? rightful claimant to a property from seeking other
remedies because it was never the intention of the
Torrens system to perpetuate fraud. The remedy of a
A collateral attach in an accion publiciana is one that
land owner whose property has been wrongfully or
is not a direct action whose main objective is to
erroneously registered in another’s name is, after one
impugn the validity of the judgment granting the title.
year from the date of the decree, not to set aside the
This cannot be allowed as under Section 48 of the
decree, but, respecting the decree as incontrovertible
Presidential Decree No. 1529, otherwise known as
and no longer open to review, to bring an ordinary
the Property Registration Decree, a certificate of title
action in the ordinary court of justice for
cannot be the subject of collateral attack. (Aguilar v reconveyance, or, if the property has passed into the
Alfaro [G.R. No. 164402. July 5, 2010]) hands of an innocent purchaser for value, for
damages. (Philippine National Bank v Jumamoy
95. Is a case for quieting of title [G.R. No. 169901, 3 August 2011])
considered as a prohibited attack on
the unnumbered OCT? 98. What must applicants for registration
of title prove?
It is settled that the validity of a certificate of title
cannot be subject to collateral attack, as in an action Applicants for registration of title under PD 1529 must
for quieting of title, except when the action, while prove: (1) that the subject land forms part of the
denominated as one for quieting of title, is in reality disposable and alienable lands of the public domain;
an action to annul and cancel a certificate of title as and (2) that they have been in open, continuous,
determined by the allegations and the prayer in the exclusive and notorious possession and occupation
complaint. Thus, if the underlying objectives or reliefs of the land under a bona fide claim of ownership since
sought in the quieting-of-title and the annulment-of- 12 June 1945 or earlier.
title cases are essentially the same, in this sense,
quieting of title is subsumed in the annulment of title Section 14 (1) of the law requires that the property
sought to be registered is already alienable and

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disposable at the time the application for registration


is filed. (Republic v Sps. Benigno [G.R. No. 205492. Thus, while judicial notice of Presidential
March 11, 2015]) Proclamation No. 209 [which declared particular
lands in Baguio City as alienable and disposable] may
be taken, the DENR certificate of land classification
99. What are the requirements to prove status or any other proof of the alienable and
that public land in alienable and disposable character of the land may not be
disposable? dispensed with, because it provides a more recent
appraisal of the classification of the land as alienable
and disposable, or that the land has not been re-
In order to prove that the land subject of the classified in the meantime. The applicable law —
application is alienable and disposable public land, Section 14 (1) of Presidential Decree No. 1529 —
the general rule remains: all applications for original requires that the property sought to be registered is
registration under the Property Registration Decree alienable and disposable at the time the application
must include both: (1) a CENRO or PENRO for registration of title is filed. (Republic v. Dayaoen
certification; and (2) a certified true copy of the [G.R. No. 200773, 8 July 2015])
original classification made by the DENR Secretary.
(Republic v Sps. Benigno [G.R. No. 205492. March
11, 2015]) 102. What is required to be proven in
land registration cases?
To prove that a land is alienable, the existence of a
positive act of the government, such as presidential In land registration cases, the applicant has the
proclamation or an executive order; an administrative burden to show that he or she is the real and absolute
action; investigation reports of Bureau of Lands owner in fee simple of the land sought to be
investigators; and a legislative act or a statute registered. It is also important to bear in mind that one
declaring the land as alienable and disposable must who sees registration of title must prove his or her
be established. (Republic v Cortez [G.R. No. 197472, claim with “well-night incontrovertible” evidence.
7 September 2015]) There must be open, continuous, exclusive and
notorious possession of the subject property The
possession must be in the concept of an owner such
100. May Injunction be issued to protect as acts of occupation, development, cultivation or
possession over inalienable public maintenance over the property. Mere “casual
land? cultivation” of coffee plants, without proof that the
applicant or her predecessors-in-interest actually and
deliberately cultivated them is not sufficient to support
An inalienable public land cannot be appropriated and a claim of title. (Wee v. Republic of the Philippines
thus may not be the proper object of possession. [G.R. No. 177384, 8 December 2009])
Hence, injunction cannot be issued in order to protect
one's alleged right of possession over the same. One
must first show that the subject area over which he A registration proceeding (such as the certification of
has a claim is not part of the public domain and ancestral lands) is not a conclusive adjudication of
therefore can be the proper object of possession. ownership. It will not constitute litis pendencia on a
(Republic v Cortez [G.R. No. 197472, 7 September reinvidicatory case where the issue is ownership.
2015]) (Lamsis, et.al v. Dong-E [G.R. No. 173021, 20
October 2010])

101. Are notations in survey plans


adequate proof of the alienable and 103. May unregistered public
disposable character of a land? agricultural land be acquired through
acquisitive prescription?
Such annotations in the survey plan do not constitute
the incontrovertible evidence required by law to No. An unregistered public agricultural land is a land
overcome the presumption that the subject properties of the public domain. In the Heirs of Mario Malabanan
remain part of the inalienable public domain. v. Republic of the Philippines, it was clarified that only
lands of the public domain subsequently classified or

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declared as no longer intended for public use or for acquire or perfect one’s title to land cannot justify a
the development of national wealth, or removed from resort to other remedies which are otherwise
the sphere of public dominion and are considered improper and do not provide for the full opportunity to
converted into patrimonial lands or lands of private prove his title, but instead require him to concede it
ownership, may be alienated or disposed through any before availment. Certificates of title issued covering
of the modes of acquiring ownership under the Civil inalienable and non-disposable public land, even in
Code. And if the mode of acquisition is prescription, the hands of an alleged innocent purchaser for value,
whether ordinary or extraordinary, it must first be should be cancelled. (Republic of the Philippines v.
shown that the land has already been converted to AFP Retirement and Separation Benefits System
private ownership prior to the requisite acquisitive (AFP-RSBS) [G.R. No. 180463; 16 January 2013])
prescriptive period. Otherwise, Article 1113 of the
Civil Code, which provides that property of the State
not patrimonial in character shall not be the subject of 106. What is the effect of an adverse
prescription, applies. (Andres v. Sta. Lucia Realty, claim based on an invalid waiver of
(G.R. No. 201405, 24 August 2015]) hereditary rights that is annotated on
the title?
104. Is documentary evidence such as
technical description or tax As provided in Section 70 of PD 1529, that it is
declarations sufficient to grant a necessary that the claimant has a right or interest in
Petition for Reconstitution? the registered land adverse to the registered owner
and that it must arise subsequent to registration
before an adverse claim may prosper. No right or
The survey plan and technical description are not interest flows from an invalid waiver of hereditary
competent and sufficient sources of reconstitution rights and thus, it not entitled to the registration of an
when the petition is based on Section 2(f) of RA 26. adverse claim. (Atty. Ferrer v. Sps Diaz [G.R. No.
They are mere additional documentary requirements. 165300, 23 April 2010])
Sec. 2 of R.A. No. 26 enumerates the sources from
which reconstitution of lost or destroyed OCTs may
be based, namely: (a) The owner’s duplicate of the 107. What are the rights of a transferee
certificate of title; (b) The co-owner’s, mortgagee’s, or pendente lite?
lessee’s duplicate of the certificate of title; (c) A
certified copy of the certificate of title, previously
issued by the register of deeds or by a legal custodian A transferee pendente lite of registered land, whose
thereof; (d) An authenticated copy of the decree of title bears a notice of a pending litigation involving his
registration or patent, as the case may be, pursuant transferor’s title to the said land, is bound by the
to which the original certificate of title was issued; (e) outcome of the litigation, whether it be for or against
A document, on file in the registry of deeds by which his transferor. The title obtained by the transferee
the property, the description of which is given in said pendente lite affords him no special protection; he
document, is mortgaged, leased or encumbered, or cannot invoke the rights of a purchaser in good faith
an authenticated copy of said document showing that and cannot acquire better rights than those of his
its original had been registered; and (f) Any other predecessor-in-interest. (Dela Merced v. GSIS and
document which, in the judgment of the court, is Manlongat [G.R. No. 167140, 23 November 2011])
sufficient and proper basis for reconstituting the lost
or destroyed certificate of title. (Republic v. Pasicolan
[G.R. No. 198543, 15 April 2015]) X. TORTS AND DAMAGES

108. What are the elements of malicious


105. What is the effect of certificates of prosecution?
title issued covering inalienable and
non-disposable land? For a malicious prosecution suit to prosper, all of the
elements must be present, namely: (1) prosecution
The processes of the State should not be trifled with. must have occurred, and the defendant either was the
The failure of a party to avail of the proper remedy to prosecutor or instigated its commencement; (2) the

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criminal action ended with an acquittal; (3) in bringing 111. When an employer is the
the action, the prosecutor acted without probable
cause; and (4) the prosecution was impelled by legal
registered owner of a vehicle, must it
malice. (Marsman & Co. v. Ligo [G.R. No. 198643, still be proven that there is employer-
19 August 2015]) employee relationship and that the
driver-employee acted within the
scope of his or her assigned tasks for
109. Does the filing a civil case for the employer-registered owner to be
specific performance and damages liable?
during the pendency of an appeal on
the civil aspect of the criminal case for
No, if it can be proven that employer is the registered
estafa constitute forum shopping? owner of the vehicle there arises a presumption that
there is employer-employee relationship between him
The civil case for specific performance and damages and the actual driver, and that the actual acted within
involves only the obligations arising from contract and the scope of his or her assigned tasks. In cases where
from tort, whereas the appeal in the estafa case both the registered-owner rule and Article 2180 apply,
involves only the civil obligations arising from the the plaintiff must first establish that the employer is
offense charged. Moreover, A single act or omission the registered owner of the vehicle in question. This
that causes damage to an offended party may give was established when respondent in this case
rise to two separate civil liabilities on the part of the presented a copy of the Certificate of Registration
offender (1) civil liability ex delicto, that is, civil liability which attested the petitioner’s ownership of the
arising from the criminal offense under Article 100 of subject van. Once the plaintiff successfully proves
the RPC and (2) independent civil liability, that is, civil ownership, there arises a disputable presumption that
liability that may be pursued independently of the the requirements of Article 2180 have been proven.
criminal proceedings. Because of the distinct and As a consequence, the burden of proof shifts to the
independent nature of the two kinds of civil liabilities, defendant to show that no liability under Article 2180
jurisprudence holds that the offended party may has arisen. The defendant therefore necessarily
pursue the two types of civil liabilities simultaneously needs to prove any of the following: first, that it had
or cumulatively, without offending the rules on forum no employment relationship with the actual driver;
shopping, litis pendentia, or res judicata. Therefore, second, that the actual driver acted outside the scope
both cases can proceed to their final adjudication, of his assigned tasks; or third, that it exercised the
subject to the prohibition on double recovery under diligence of a good father of a family in the selection
Article 2177 of the Civil Code. (Lim v. Kou Co Ping and supervision of the actual driver. (Greenstar
[G.R. No. 175256, 179160, 23 August 2012]) Express, Inc. v. Universal Robina Corp [G.R. No.
205090, 17 October 2016])

110. What is the “registered-owner


rule”? 112. What is the doctrine of res ipsa
loquitur?
The registered owners of the vehicle are liable for
death or injuries caused by the operation of their Under the doctrine of res ipsa loquitur, where the
vehicles. (Greenstar Express, Inc. v. Universal thing that caused the injury complained of is shown to
Robina Corp [G.R. No. 205090, 17 October 2016]) 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 hd
management or control used proper care, it affords
reasonable evidence that the accident arose from or
was cause by the defendant’s want of care. (Del
Carmen v. Bacoy [G.R. No. 173870, 25 April 2012])

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113. When should actual or of the same, such claim must be negated. (Sps.
compensatory damages be awarded? Estrada v. Philiipine Rabbit Bus Lines, Inc. [G.R. No.
203902, 19 July 2017])
Actual or compensatory damages may be awarded
when the amount of loss is proven with a reasonable
degree of certainty, based upon competent proof and 116. When may nominal damages be
the best evidence obtainable by the injured party.
(Calibre Traders Inc. v. Bayer Philippines Inc. [G.R.
recovered?
No. 161431, 13 October 2010])
Actual damages puts the claimant in the position in Nominal damages are recoverable where a legal right
which he had been before he was injured. The award is technically violated and must be vindicated against
thereof must be based on the evidence presented, an invasion that has produced no actual present loss
not on the personal knowledge of the court; and of any kind or where there has been a breach of
certainly not on flimsy, remote, speculative and contract and no substantial injury or actual damages
nonsubstantial proof. Under the Civil Code, one is whatsoever have been or can be shown. Under
entitled to an adequate compensation only for such Article 2221 of the Civil Code, nominal damages may
pecuniary loss suffered by him as he has duly proved. be awarded to a plaintiff whose right has been
(Adrian Wilson International Associates v TMX violated or invaded by the defendant, for the purpose
of vindicating or recognizing that right, not for
Philippines, Inc. [G.R. No. 162608. July 26, 2010])
indemnifying the plaintiff for any loss suffered.
Nominal damages are not for indemnification of loss
114. May actual damages for loss of suffered but for the vindication or recognition of a right
violated or invaded. (One Network Rural Bank, Inc. v.
earning capacity still be awarded
Baric [G.R. No. 193684, 05 March 2014])
where earning capacity is plainly
established but no evidence was
presented to support the allegation of 117. When may temperate damages be
the injured party's actual income? awarded?

No, but temperate damages may be awarded in lieu The Court reiterated the case of People v. Villanueva
thereof. Temperate damages in lieu of actual that “when actual damages proven by receipts during
damages for loss of earning capacity may be the trial amount to less than P25,000.00, the award of
awarded where earning capacity is plainly temperate damages of P25,000.00 is justified in lieu
established but no evidence was presented to of actual damages of a lesser amount.” (People of the
support the allegation of the injured party's actual Philippines v. Dilla [G.R. No. 200333, 21 January
income. Under Article 2224, "[t]emperate or moderate 2015])
damages, which are more than nominal but less than
compensatory damages, may be recovered when the
court finds that some pecuniary loss has been 118. When is one entitled to Attorney’s
suffered but its amount cannot, from the nature of the fees?
case, be proved with certainty.” (Sps. Estrada v.
Philiipine Rabbit Bus Lines, Inc. [G.R. No. 203902,
19 July 2017]) To be entitled to attorney’s fees, jurisprudence
requires that the factual basis for the award of
attorney's fees must be set forth in the body of the
115. Must actual damages by way of decision and not in the dispositive portion only.
(Continental Cement Corporation v Asea Brown
medical expenses, to be recovered, be Boveri, Inc. et al. [G.R. No. 171660, October 17,
supported by official receipts? 2011])

Yes. Actual proof of expenses incurred for medicines In all cases, the attorney's fees and expenses of
and other medical supplies necessary for treatment litigation must be reasonable. (Estores v. Sps
and rehabilitation must be presented by the claimant,
Supangan [G.R. 175139, 18 April 2012])
in the form of official receipts, to show the exact cost
of his medication and to prove that he indeed went
through medication and rehabilitation. In the absence

25
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119. How should indemnity for lost v. Quiñones & Quitan [G.R. No. 206468, 2 August
earnings be computed? 2017])

The formula that has gained acceptance over time 122. When may exemplary damages be
has limited recovery to net earning capacity, awarded?
meaning, less the necessary expense for his own
living. Indemnity for loss of earning capacity is in the
form of actual damages and thus, must be proved by Moral damages may be awarded when the breach of
competent proof. By way of exception, damages for contract is attended with bad faith. On the other hand,
loss of earning capacity may be awarded in two exemplary damages may be awarded when a
instances: [1] the victim was self-employed and wrongful act is accompanied by bad faith or when the
receiving less than the minimum wags under the defendant acted in a wanton, fraudulent, reckless,
current laws and no documentary evidence is oppressive, or malevolent manner. (Spouses Castro
available in the decedent’s line of business; and [2] v. Palenzuela [G.R. No. 184698, 21 January 2013])
the deceased was employed as a daily wage worker
and receiving less than the minimum wage. (People
of the Philippines v. Villar [G.R. No. 202708 123. When may consequential damages
(Resolution), 13 April 2015]) be recovered?

Consequential damages, such as loss of profits on


120. What are moral damages?
account of delay or failure of delivery, may be
recovered only if such damages were reasonably
Moral damages include physical suffering, mental foreseen or have been brought within the
anguish, fright, serious anxiety, besmirched contemplation of the parties as the probable result of
reputation, wounded feelings, moral shock, social a breach at the time of or prior to contracting.
humiliation, and similar injury. Though incapable of (Continental Cement Corporation v Asea Brown
pecuniary computation, moral damages may be Boveri, Inc. et al. [G.R. No. 171660, October 17,
recovered if they are the proximate result of the 2011])
defendant's wrongful act or omission. (Sps. Estrada
v. Philiipine Rabbit Bus Lines, Inc. [G.R. No. 203902,
19 July 2017])

121. May there be a recovery of moral


damages in cases of breach of
contract?

Moral damages, as a general rule, are not


recoverable in an action for damages predicated on
breach of contract. As an exception, such damages
are recoverable [in an action for breach of contract:]
(1) in cases in which the mishap results in the death
of a passenger; and (2) in cases in which the carrier
is guilty of fraud or bad faith. (Sps. Estrada v.
Philiipine Rabbit Bus Lines, Inc. [G.R. No. 203902,
19 July 2017])

In an action for breach of contract, moral damages,


according to Article 1764 in relation to Article 2206(3)
and 2220, may be recovered only when [a] death of a
passenger results; or [b] the carrier was guilty of fraud
and bad faith even if death does not result. (Darines

26

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