SPOUSES RODRIGO AND ERLINDA MERCADO, Petitioners, v.

SECURITY BANK
AND TRUST COMPANY, Respondent.
G.R. No. 192934 | 2018-06-27

JARDELEZA, J.
This is a consolidated petition seeking to nullify the CA’s ruling and resolution which
modified the decision of the RTC of Batangas City, regarding the foreclosure sales of the
properties of the Spouses Mercado and the interest rates imposed by Security Bank
Corporation.

FACTS
In 1996, Security Bank granted the spouses Mercado a revolving line credit in the amount
of P 1,000,000.00, in accordance with the bank’s terms and conditions, along with the
stipulations on interest stated within.
In order to secure the credit line, the petitioners mortgaged five properties in
Batangas in favor of Security Bank; said properties include one property in Lipa City, one
San Jose, and three in Batangas City, all within the province of Batangas. Upon a
subsequent default in payment, respondent move to foreclose the said properties, with
notices of said foreclosure published in newspapers of general circulation once a week
for three weeks. Respondent bank also published an erratum of the technical descriptions
of the properties involved, but only did so once.
Upon the bidding for the foreclosure sale in October 1999, Security Bank was
awarded the properties as winning bidders. In September 2000, the spouses Mercado
offered to redeem the foreclosed properties for P10,000,000.00 which respondent refused
with a counter-offer of P15,000,000.00. A month later, spouses Mercado filed for the
annulment of the sale, alongside a temporary restraining order, with the RTC of Batangas
City, while Security Bank filed for an ex-parte petition for issuance of a writ of possession
over the parcels of land. Thereafter, the two cases were consolidated before Branch 84
of the RTC.
In February 2007, the RTC declared in its decision that the foreclosure sales to be
void, as well as the provision for interest rates in the credit line agreement for “potestative
or solely based on the will of Security Bank”, and the sum of P8,000,000.00 to be the true
and correct obligation of the spouses Mercado to Security Bank. Upon reconsideration,
the RTC amended its decision to exclude the parcel of land in Lipa City from its decision
as it was outside its jurisdiction and modifying the obligation of petitioners to
P7,500,000.00 with interest until fully paid.
On appeal, the Court of Appeals affirmed the RTC decision with modification,
ordering the spouses Mercado to pay P7,516,880.00 with interest until fully paid to
Security Bank.

ISSUE/S
1. Were the foreclosure sales in Batangas City and San Jose, Batangas valid?

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 2. Were the provision on interest rates in the credit line agreement violative of the
principle of mutuality of contracts?

RULING
1. NO, the foreclosure sales of the properties in Batangas City and San Jose,
Batangas are void for non-compliance with the publication requirement of the
notice of sale. Act No. 3135 provides for the statutory requirements for a valid
extrajudicial foreclosure sale, from which Security Bank deviated, constituting a
jurisdictional defect and rendering the contract voidable. The publication of a single
erratum in the technical description of the properties did not cure the defect, as
initially pointed out by the RTC, saying that the “act of making only one corrective
publication in the publication requirement, instead of three (3) corrections is a fatal
omission committed by the mortgagee bank."
2. YES, the interest provisions in the revolving credit line agreement and its
addendum violate the principle of mutuality of contracts. The authority to change
the interest rate was given to Security Bank alone as the lender, without need of
the written assent of the spouses Mercado. Also, the interest rate to be imposed
is determined solely by Security Bank for lack of a stated, valid reference rate.
This petition was denied, but modifications were made with regards to the decision of the
Court of Appeals. The petitioners were ordered to pay Security Bank Corporation the sum
of P8,317,756,71, representing the amount of deficiency, inclusive of interest and penalty.

The principle of mutuality of contracts was applied to the matter at hand, as found in
Article 1308 of the New Civil Code, which states that contracts must bind both contracting
parties, and its validity or compliance cannot be left to the will of one of them. The binding
effect of any agreement between parties to a contract is premised on two settled
principles: (I) that any obligation arising from contract has the force of law between the
parties; and (2) that there must be mutuality between the parties based on their essential
equality. As such, any contract which appears to be heavily weighted in favor of one of
the parties so as to lead to an unconscionable result is void. Likewise, any stipulation
regarding the validity or compliance of the contract that is potestative or is left solely to
the will of one of the parties is invalid. This holds true not only as to the original terms of
the contract but also to its modifications. Consequently, any change in a contract must be
made with the consent of the contracting parties, and must be mutually agreed upon.
Otherwise, it has no binding effect.

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SPOUSES CARLOS V. JUAN CRUZ TOLENTINO
G.R. No. 234533, June 27, 2018

Velasco;

Marriage celebrated before the effectivity of the Family Code on August 3, 1988,
there being no indication that they have adopted a different property regime, the
presumption is that their property relations is governed by the regime of conjugal
partnership of gains.

FACTS:
A parcel of land registered under the name of Juan Cruz Tolentino, without his
knowledge and consent, Mercedes and Kristoff, who were then residing in the subject
property, allegedly forged a Deed of Donation thereby making it appear that Juan and
Mercedes donated the subject property to Kristoff. Thus, by virtue of the alleged forged
Deed of Donation, Kristoff caused the cancellation of TCT No. RT-90764 (116229), and
in lieu thereof, TCT No. 004-2011003320 was issued under his name.

Then Kristoff and Julieta executed a Memorandum of Agreement (MOA) stating

that Kristoff is selling the subject property to Julieta in the amount of Two Million Three
Hundred Thousand Pesos (P2,300,000.00), payable in two (2) installments. Upon full
payment, a Deed of Absolute Sale was executed between Kristoff and Julieta.

Upon learning of the foregoing events Juan filed for a complaint for annulment of
title with damages filed by Juan Cruz Tolentino against his wife, Mercedes Tolentino, his
grandson, Kristoff M. Tolentino, herein petitioners Spouses Julieta B. Carlos and
Fernando P. Carlos and the Register of Deeds of Quezon City.

ISSUE: Do Spouses Carlos has the better to right to claim ownership over the subject
property?

RULING:
The Supreme Court speaking through Justice Velasco Jr. ruled that The donation
and subsequent sale of the subject property is declared NULL and VOID with respect to
the undivided 1/2 portion owned by Juan Cruz Tolentino, but VALID with respect to the
other undivided 1/2 portion belonging to Mercedes Tolentino. Accordingly, petitioners
Spouses Carlos and respondent Juan Cruz Tolentino are hereby declared as co-owners
of the subject property.

That Juan and Mercedes appear to have been married before the effectivity of the
Family Code on August 3, 1988. There being no indication that they have adopted a
different property regime, the presumption is that their property relations is governed by
the regime of conjugal partnership of gains. As absolute owners of the subject property
Juan and Mercedes may validly exercise rights of ownership by executing deeds which
transfer title thereto such as, in this case, the Deed of Donation in favor of their grandson,
Kristoff.

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 In consonance with justice and equity, we deem it proper to uphold the validity of
the Deed of Donation dated February 15, 2011 but only to the extent of Mercedes' one
half share in the subject property. Accordingly, the right of Kristoff, as donee, is limited
only to the one half undivided portion that Mercedes owned. The Deed of Donation insofar
as it covered the remaining one-half undivided portion of the subject property is null and
void, Juan not having consented to the donation of his undivided half.

Lastly, as a matter of fairness and in line with the principle that no person should
unjustly enrich himself at the expense of another, Kristoff should be liable to reimburse
Spouses Carlos of the amount corresponding to one-half of the purchase price of the
subject property.

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FEDERAL EXPRESS CORPORATION V. ANTONINO
G.R. No. 199455, June 27, 2018
Leonen, J.

Thesis:
Federal Express Corporation's (FedEx) was sued petitioned for counterclaim
against Luwalhati R. Antonino and Eliza Bettina Ricasa Antonino on the ground of
violating petitioner's Air Waybill.

Facts:

Eliza owned a condo unit located in New York, United States. In November 2003,
monthly common charges on the condo unit for the period of July 2003 to November 2003
become due totalling to US$9,742.81.81. On December 15, 2003, while in the Philippines,
Luwalhati and Eliza decided to send several Citibank checks allegedly amounting to
US$17,726.18 for the payment of monthly charges and US$11,619.35 for the payment of
real estate taxes. These were sent by Luwalhati through FedEx with Account No. x2546-
4948-1 and Tracking No. 8442 4588 4268. The package was addressed to Sison who
was tasked to deliver the checks payable to Maxwell-Kates, Inc. and to the New York
County Department of Finance. Sison allegedly did not receive the package, resulting in
the non-payment of Luwalhati and Eliza's obligations and the foreclosure of the unit.

Upon learning that the checks were sent on December 15, 2003, Sison contacted
FedEx on February 9, 2004 to inquire about the non-delivery. She was informed that the
package was delivered to her neighbor but there was no signed receipt.

On March 14, 2004, Luwalhati and Eliza, through their counsel, sent a demand
letter to FedEx for payment of damages due to the non-delivery of the package, but FedEx
refused to heed their demand. Hence, on April 5, 2004, they filed their Complaint for
damages.

FedEx claimed that Luwalhati and Eliza "ha[d] no cause of action against it
because [they] failed to comply with a condition precedent, that of filing a written notice
of claim within the 45 calendar days from the acceptance of the shipment." It added that
it was absolved of liability as Luwalhati and Eliza shipped prohibited items and
misdeclared these items as "documents." It pointed to conditions under its Air Waybill
prohibiting the "transportation of money (including but not limited to coins or negotiable
instruments equivalent to cash such as endorsed stocks and bonds).
Luwalhati counter argued that she and Sison promptly exerted efforts to trace the
whereabouts of the package. Despite several follow up with FedEX, there was no action
made by the latter resulting the issuance of the demand letter.

Issues:
1. Did Luwalhati and Sison fail to comply with the 45-day period for filing a formal
claim?

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 2. Did FedEx liable for damages for not observing extraordinary diligence under
Article 1733 of the Civil Code?
3. Did Luwalhati and Eliza violated the terms of the Air Waybill by shipping
checks?

Held:
1. No. Luwalhati and Sison did not fail to comply with the 45-day period for filing a
formal claim stated in the Airway Bill.

Pursuant to Article 1186 of the New Civil Code which provides that "[t]he condition
shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment", the Supreme
Court ruled in the case of Philippine Airlines, Inc. v. Court of Appeals that there was
substantial compliance with the period because of the zealous efforts demonstrated by
Mejia in following up her claim. These efforts coupled with Philippine Airlines' "tossing
around the claim and leaving it unresolved for an indefinite period of time" led this Court
to deem the requisite period satisfied.

The factual antecedents show Luwalhati and Sison's own eagerness to follow up
the claim. On the other hand, FedEx’s provided only ambiguous and evasive responses
which does not amount to proper handling of the respondents’ concerns. The Court ruled
that the respondents' inability to expediently file a formal claim can only be attributed to
petitioner hampering its fulfillment. Thus, respondents must be deemed to have
substantially complied with the requisite 45-day period for filing a formal claim.

2. Yes. FedEx is liable for damages for not observing extraordinary diligence under
Article 1733 of the Civil Code.

Under Article 1733 of the Civil Code, common carriers are mandated to observe
extraordinary diligence in caring for the goods they are transporting. Consistent with the
mandate of extraordinary diligence, the Civil Code stipulates that in case of loss or
damage to goods, common carriers are presumed to be negligent or at fault,

The Court ruled that FedEx was not able to prove unable to prove that it exercised
extraordinary diligence in ensuring delivery of the package to its designated consignee.
It claims to have made a delivery but it even admits that it was not to the designated
consignee. This act does cannot satisfy the requisite of extraordinary diligence required
by the law. Thus, the FedEx is liable for the loss incurred by the respondents.

3. No. Luwalhati and Eliza violated the terms of the Air Waybill by shipping checks.

It is settled in jurisprudence that checks, being only negotiable instruments, are

only substitutes for money and are not legal tender; more so when the check has a named
payee and is not payable to bearer. In Philippine Airlines, Inc. v. Court of Appeals, the
Supreme Court ruled that the payment of a check to the sheriff did not satisfy the judgment
debt as checks are not considered legal tender.

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 In the Air Waybill, FedEX states that they do not accept transportation of money
(including but not limited to coins or negotiable instruments equivalent to cash such as
endorsed stocks and bonds). Money as construed herewith refers to legal tender. In the
instant case, the checks issued by respondents are considered negotiable instruments
as they are payable to order of specific payees, Maxwell-Kates, Inc. and the New York
County Department of Finance. However, the Court ruled that this are not negotiable
instruments equivalent to cash, as contemplated in the example added to the Air Waybill's
prohibition. The Supreme Court added that since the contract between petitioner and
respondents is a contract of adhesion, where it was prepared solely by petitioner for
respondents to conform to, any ambiguity in the contract is construed strictly against the
party that prepared it. Thus, in shipping checks, respondents were not violating
petitioner's Air Waybill.

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RHODORA ILUMIN RACHO v. SEIICHI TANAKA
G.R. No. 199515, June 25, 2018 LEONEN, J.

FACTS:

Racho and Seiichi Tanaka (Tanaka) were married on April 20, 2001. They lived together
for nine (9) years in Saitama Prefecture, Japan and did not have any children. Racho
alleged that on December 16, 2009, Tanaka filed for divorce and the divorce was granted.
She secured a Divorce Certificate issued by Consul Kenichiro Takayama (Consul
Takayama) of the Japanese Consulate in the Philippines and had it authenticated. She
filed the Divorce Certificate with the Philippine Consulate General in Tokyo, Japan, where
she was informed that by reason of certain administrative changes, she was required to
return to the Philippines to report the documents for registration and to file the appropriate
case for judicial recognition of divorce. She tried to have the Divorce Certificate registered
with the Civil Registry of Manila but was refused by the City Registrar since there was no
court order recognizing it. She filed a Petition for Judicial Determination and Declaration
of Capacity to Marry.

The RTC rendered a Decision, finding that Racho failed to prove that Tanaka legally
obtained a divorce. It stated that while she was able to prove Tanaka's national law.

Petitioner argues that under the Civil Code of Japan, a divorce by agreement becomes
effective upon notification, whether oral or written, by both parties and by two (2) or more
witnesses. She contends that the Divorce Certificate stating "Acceptance Certification of
Notification of Divorce issued by the Mayor of Fukaya City, Saitama Pref., Japan" is
sufficient to prove that she and her husband have divorced by agreement and have
already effected notification of the divorce.

The Office of the Solicitor General (OSG) posits that a divorce by agreement is not the
divorce contemplated in Article 26 of the Family Code. Considering that Article 26 states
that divorce must be "validly obtained abroad by the alien spouse," OSG posits that only
the foreign spouse may initiate divorce proceedings.

ISSUE:

Is the Certificate of Acceptance of the Report of Divorce sufficient to prove the fact that a
divorce between petitioner Rhodora Ilumin Racho and respondent Seiichi Tanaka was
validly obtained by the latter according to his national law making the divorce obtained by
the parties valid?

RULING:

YES. Under Rule 132, Section 24 of the Rules of Court, the admissibility of official records
that are kept in a foreign country requires that it must be accompanied by a certificate
from a secretary of an embassy or legation, consul general, consul, vice consul, consular

8
agent or any officer of the foreign service of the Philippines stationed in that foreign
country.

The Certificate of Acceptance of the Report of Divorce was accompanied by an

Authentication issued by Consul Bryan Dexter B. Lao of the Embassy of the Philippines
in Tokyo, Japan, certifying that Kazutoyo Oyabe, Consular Service Division, Ministry of
Foreign Affairs, Japan was an official in and for Japan. The Regional Trial Court
established that according to the national law of Japan, a divorce by agreement "becomes
effective by notification." Considering that the Certificate of Acceptance of the Report of
Divorce was duly authenticated, the divorce between petitioner and respondent was
validly obtained according to respondent's national law.

Considering that Article 26 states that divorce must be "validly obtained abroad by the
alien spouse," the Office of the Solicitor General posits that only the foreign spouse may
initiate divorce proceedings.

The national law of Japan does not prohibit the Filipino spouse from initiating or
participating in the divorce proceedings. It would be inherently unjust for a Filipino woman
to be prohibited by her own national laws from something that a foreign law may allow.
Parenthetically, the prohibition on Filipinos from participating in divorce proceedings will
not be protecting our own nationals.

Thus, the Petition is GRANTED.

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LILY S. VILLAMIL, SUBSTITUTED BY HER HEIRS RUDY E. VILLAMIL, SOLOMON E.
VILLAMIL, TEDDY E. VILLAMIL, JR., DEBORAH E. VILLAMIL, FLORENCE E.
VILLAMIL, GENEVIEVE E. VILLAMIL, AND MARC ANTHONY E. VILLAMIL,
PETITIONER, V. SPOUSES JUANITO ERGUIZA AND MILA ERGUIZA,
RESPONDENTS.
G.R. No. 195999, June 20, 2018
MARTIRES, J.
FACTS:
Petitioner filed an action for recovery of possession against respondent spouses, alleging
the petitioner is the absolute and exclusive owner of that certain parcel of land situated in
the District of Pantal, City of Dagupan. On 20 September 1972, plaintiff together with her
deceased sister, Corazon Villamil, and deceased brother, Teddy Villamil, entered into an
agreement with Juanito Erguiza for the purpose of selling the above-described property
to the latter subject to the condition that plaintiff and her siblings would file a petition to
secure authorization for minor children from the proper courts. Likewise, that in case of
failure of the plaintiff and her siblings to obtain said authority, the partial payment made
by the defendant Juanito Erguiza shall be applied as rent for twenty (20) years of the
premises. Sometime in 1992 or after the lapse of twenty (20) years and the expiration of
the twenty (20) years lease, plaintiff demanded from the defendants to return possession
of the property but the latter failed and refused, and still fails and refuses to return
possession of the property to the damage and prejudice of the plaintiff.

ISSUE: IS THE PARTIES ENTERED INTO A CONTRACT TO SELL?

HELD: Yes, A contract to sell is defined as a bilateral contract whereby the prospective
seller, while expressly reserving the ownership of the subject property despite delivery
thereof to the prospective buyer, binds himself to sell the said property exclusively to the
latter upon his fulfillment of the conditions agreed upon, i.e., the full payment of the
purchase price and/or compliance with the other obligations stated in the contract to sell.
Given its contingent nature, the failure of the prospective buyer to make full payment
and/or abide by his commitments stated in the contract to sell prevents the obligation of
the prospective seller to execute the corresponding deed of sale to affect the transfer of
ownership to the buyer from arising. A contract to sell is akin to a conditional sale where
the efficacy or obligatory force of the vendor's obligation to transfer title is subordinated
to the happening of a future and uncertain event, so that if the suspensive condition does
not take place, the parties would stand as if the conditional obligation had never existed.
In a contract to sell, the fulfillment of the suspensive condition will not automatically
transfer ownership to the buyer although the property may have been previously delivered
to him. The prospective seller still has to convey title to the prospective buyer by entering
into a contract of absolute sale. On the other hand, in a conditional contract of sale, the
fulfillment of the suspensive condition renders the sale absolute and the previous delivery
of the property has the effect of automatically transferring the seller's ownership or title to
the property to the buyer.

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G.R. No. 217781 SAN MIGUEL COMPANY, INC., PURE FOODS Petitioner, versus -
FOODSPHERE, INC., Respondent.

x-------------------------x

G.R. No. .217788 FOODSPHERE, INC., Petitioner, - versus - SAN MIGUEL PURE
FOODS COMPANY, INC.,

PERALTA, J.:

Facts:

The parties are engaged in he business of the manufacture, sale, and distribution of food
products, with SMPFCI owning the trademark "PUREFOODS FIESTA HAM" while
Foodsphere, Inc. products (Foodsphere) bear the "CDO" brand. SMPFCI claims that
Foodsphere is guilty of unfair competition and trademark infringement. SMPFCI sells
“Fiesta” and Foodsphere introduced “Pista” to the market. according to SMPFCI, the
striking similarities between the marks and products of Foodsphere with those of SMPFCI
warrant its claim of trademark infringement and unfair competition. Foodsphere denies
imitating the “Fiesta” and claims it has no intention to deceive the public and defraud
SMPFCI and further alleges that it is SMPFCI that compied the former’s trademark
“Holiday” and just translated it to “Fiesta”.

Issue:

Is Foodsphere guilty of unfair competition?

Ruling:

First of all, there exists a substantial and confusing similarity in the packaging of
Foodsphere's product with that of SMPECI, which, as the records reveal, was changed
by Foodsphere from a paper box· to· a paper ham bag that is significantly similar to
SMPFCI's paper ham bag. the Court is of the opinion that the case records readily
supports the findings of fact made by the Director General as to Foodsphere's
commission of unfair competition.

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HEIRS OF PAZ MACALALAD, PETITIONERS, VS. RURAL BANK OF POLA, INC. AND
REGISTER OF DEEDS OF ORIENTAL MINDORO, RESPONDENTS.
G.R. No. 200899, June 20, 2018
Peralta, J:

FACTS
Paz Macaladlad filed with the RTC of Calapan a Complaint for Declaration of
Nullity of TCT No. T-117484 alleging that: she is the sole surviving legal heir of one
Leopoldo Constantino, Jr. who died intestate. Leopoldo owned a parcel of land with
TCT no. RT-124. After the death of Leopoldo it was made to appear that the latter sold
the subject lot to spouses Pimentel in whose names a new TCT (No. T096953) was
issued. After the sale, Spouses Pimentel obtained a loan from the Rural Bank of Pola
with the subject property as a collateral evidenced by a contract of mortgage.
Petitioners in the instant case alleged that the Deed of Sale executed between
Leopoldo and spouses Pimentel is a complete nullity, despite bearing the former’s
signature, because the Deed of Sale was executed in July 14, 1998 and Leopoldo died
three years earlier on November 13, 1995.

ISSUE
Did the Bank act in bad faith in accepting the subject property as collateral,
hence making the mortgage contract invalid?

RULING
No, when the bank accepted the property as collateral, it did so as an innocent
purchaser for value. It is a well settled principle that no one can give what one does not
have. Granting that the deed of sale in favor of the Spouses Pimentel was forged, they
could not have acquired ownership as well as legal title over the same. However, there
is an exception to the rule that a forged deed cannot be the root of a valid title – that is
when an innocent purchaser for value intervenes. A purchaser for good faith and for
value is one who buys the property of another without notice that some other person
has a right to or interest in such property and pays a full price for the same, at the time
of such purchase, or before he has notice of the claims or interest of some other person
in the property. Good faith will entitle respondent bank to protection such that its
mortgage contract with the Spouses Pimentel, as well as respondent bank’s consequent
purchase of the subject lot, may no longer be nullified. It is likewise a settled principle
that every person dealing with registered land need not go beyond what the Torrens
Title upon its face indicates when there is nothing in the certificate of title indicate any
cloud or vice in the ownership of the property. However, as a mortgagee-bank it is
expected to exercise greater care and prudence in its dealings, including those involving
registered lands. A banking institution is expected to exercise due diligence before
entering into a mortgage contract. The respondent was able to successfully discharge
its burden of proving its status as a mortgagor and subsequent purchaser in good faith
and for value.

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PHILIPPINE NATIONAL BANK, Petitioner, v. ANTONIO BACANI, RODOLFO BACANI,
ROSALIA VDA. DE BAYAUA, JOSE BAYAUA AND JOVITA VDA. DE
BAYAUA, Respondent.
G.R. No. 194983, June 20, 2018
REYES, JR., J.:

FACTS:
Rodolfo was the registered owner of a parcel of land located in Isabela, covered
by Transfer Certificate of Title. The subject property was used to secure the Php
80,000.00 loan that Rodolfo and his wife, Nellie Bacani (Spouses Bacani) obtained from
PNB. When the Spouses Bacani failed to pay their loan, PNB extrajudicially foreclosed
the subject property. It was awarded to PNB as the highest bidder. The Spouses Bacani
failed to redeem the property after 1 year. Consequently, Rodolfo's title was cancelled,
and in its place, TCT was issued in the name of PNB. PNB issued a Circular, revising its
policy on the disposition of acquired assets. Subject to certain conditions, former owners
or their heirs, as the case may be, were given priority in the re-acquisition of their
foreclosed assets '"on negotiated basis without public bidding. The Spouses Bacani
initiated negotiations with PNB regarding the re-acquisition of their property. Their
intention to buy back the subject property was manifested at the earliest through a written
offer. However, due to their low offer, PNB informed the Spouses Bacani that the request
for repurchase was refused and instead, the subject property would be sold in a public
auction. PNB had begun to accept offers for the purchase of various properties, including
the subject property. Prior to the public bidding, PNB sold the subject property through a
negotiated sale to Renato de Leon and a TCT in favor of the latter was issued.
The respondents filed a complaint for the annulment of the sale and Renato's title
over the subject property. The respondents alleged that PNB schemed to prevent the
Spouses Bacani from buying back the subject property. PNB alleged that as the
registered owner, PNB may dispose of the subject property in accordance with its own
terms and conditions. The RTC ruled in favor of the spouses Bacani. The CA then
affirmed the decision of the RTC.
ISSUE:
Do the spouses Bacani have the right to redeem the property despite the lapse of
1 year from the date of purchase by PNB?
HELD:
No. Upon the expiration of the period to redeem, the Spouses Bacani do not have
an enforceable right to repurchase the subject property. In extrajudicial foreclosures of
real estate mortgage, the debtor, his or her successors-in-interest, or any judicial creditor
or judgment creditor of said debtor, is granted a period of one (l) year within which to
redeem the property The redemption period is reckoned from the registration of the
certificate of sale with the Register of Deeds. When the debtor, or the successors-
ininterest as the case may be, fails to redeem the property within the prescribed statutory
period, the consolidation of ownership in favor of the purchaser becomes a matter of right.
At that point, the purchaser becomes the absolute owner of the property, and may, as a
necessary consequence, exercise all the essential attributes of ownership.
PNB's certificate of sale was registered and one (1) year lapsed from the date of
its registration without the Spouses Bacani exercising their right to redeem the subject

13
property. Due to the unfortunate failure of the Spouses Bacani to exercise their
redemption right, the title of Rodolfo over the subject property was cancelled and TCT
was issued in the name of PNB. At this point, PNB became the absolute owner of the
property and Rodolfo, as well as his wife, lost all their rights and interests over it. Verily,
PNB not only had the right to its possession, but also all the other rights considered as
essential attributes of ownership—including the right to dispose or alienate the subject
property.

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G.R. No. 190512 June 20, 2018
D.M. RAGASA ENTERPRISES, INC., Petitioner, v. BANCO DE ORO, INC.
(FORMERLY EQUITABLE PCI BANK, INC.), Respondent.
CAGUIOA, J.
Ragasa filed a petition against the bank for payment of monthly rentals of the
remaining term of the lease contract pre-terminated by the bank.
FACTS:
Ragasa and then Equitable Banking Corporation (Equitable Bank) executed a
Contract of Lease, as lessor and lessee, respectively, over a commercial building for a
period of five years. Pursuant to the lease contract, Equitable Bank paid amounts
representing three months advance rentals and another three months rentals as security
deposit.
Equitable Bank entered into a merger with Philippine International Bank thereby
forming Equitable PCI Bank, Inc., which eventually, pending the present case, merge with
Banco de Oro, Inc. to form the respondent bank.
As a result of this merger, the bank closed and joined branches of its constituents
which were in close proximity, including the branch located in the subject premises. The
bank sent notice, informing Ragasa that the former was pre-terminating their lease
contract. Ragasa responded with a demand letter for payment of monthly rentals of
remaining term of the lease contract, inasmuch as there is no express provision allowing
pre-termination. The bank countered that its only liability is the forfeiture of its security
deposit pursuant to the provision in their contract, and thereafter vacated the subject
premises.
Ragasa filed with the RTC for the collection of the sum and damages, arguing that
the forfeiture of the bank’s security deposit did not exempt it from payment of rentals of
the remaining term of the lease because the act of pre-terminating was a major breach of
its terms. Bank replied that the provision Ragasa was pertaining was actually a penal
clause, which replaced the damages and interests in case of breach. The RTC ruled in
favour of Ragasa. The CA however reversed for lack of legal basis, stating that bank
indeed breached the provision of the contract, but to allow Ragasa to collect the value of
the unexpired term would constitute unjust enrichment.
ISSUE:
Is the bank liable for its act of pre-terminating the Contract of Lease?
RULING:
The Court ruled that Ragasa is not entitled to the rental for the unexpired period of
the lease contract, and it is only entitled to the forfeiture of the full deposit and the amount
stipulated as attorney’s fees pursuant to the provisions in the contract.
Entitlement to rentals after the termination of the lease pursuant to an automatic
rescission or termination clause is possible in the case where the lessor invokes the
clause and the lessee refuses to vacate the premises. The lessee shall then be liable for
damages of its possession from the termination of the lease until he vacates the premises.
The bank did not continue to possess the leased premises after its automatic termination,
as it vacated the same.

15
NORMA M. BALEARES, Et Al. v. FELIPE B. ESPANTO, rep. by MARCELA B.
BALAERAS
GR NO. 229645, June 6, 2018
VELASCO, JR., J.:
FACTS:
The Baleares siblings mortgaged the subject property to Arnold Maranan. The subject
property was apparently foreclosed and sold at public auction where Arnold appeared to
be the highest bidder without the petitioners’ knowledge. Petitioners, believing that Arnold
failed to enforce his mortgaged right over the subject property within the 10-year
prescriptive period lodged a Complaint for the Cancellation of the Mortgage Inscription
during its pendency, however, a Certificate of Sale. It was allegedly issued to Arnold. TCT
No. 9482 was consequently cancelled and a new one, TCT No. 225363, was issued in
his favor. Arnold was able to sell the subject property to none other than the respondent
himself. Later, TCT No. 225428 was issued in respondent's name.
After some time, the respondent sent a demand letter to the petitioners for them to vacate
the subject property as he wanted to construct an apartment thereon but they refused. In
so refusing, the petitioners maintained that they have a better right of possession over
the subject property being the heirs of its original owners.
In their Verified Answer with Motion to Dismiss and Counterclaim, the petitioners averred
that the MeTC has no jurisdiction over the instant action, as it is one for recovery of
possession and not for unlawful detainer.
The MeTC ruled for the respondent and granted the Complaint. It found the complaint to
be sufficient for an unlawful detainer case and upheld that the case should not be
dismissed on the ground of litis pendentia, as the issues in the alleged two pending cases
before the RTC-Makati City do not abate ejectment suit.
The RTC affirmed in its entirety the MeTC ruling. On further appeal, The CA affirmed both
the Decision and the Order of the RTC. The CA also ordered the petitioners to pay six
percent (6%) interest rate of the outstanding obligation from finality of judgment until fully
satisfied. The CA rejected the petitioners' argument that the RTC Decision in Civil Case
No. 98-1360 binds the respondent for being a mere transferee of Arnold under the
doctrine of res judicata.

ISSUE:

Did the CA erred in ruling that the respondent's ejectment complaint is not barred by the
final and executory Decision in Civil Case No. 98-1360 against Arnold, his transferor, with
respect to the subject property?

RULING:

No, CA did not erred in ruling that the respondent's ejectment complaint is not barred by
the final and executory Decision in Civil Case No. 98-1360 against Arnold, his transferor,

16
with respect to the subject property. The factual findings of the trial courts, especially
when affirmed on appeal by the CA, are binding and conclusive upon this Court.

This rule, however, admits of several exceptions and one of which is when the CA
manifestly overlooked certain relevant facts not disputed by the parties, which, if properly
considered, would justify a different conclusion. In which case, this Court can go over the
records and re-examine the evidence presented by the parties in order to arrive at a much
better and just resolution of the case.

An action for unlawful detainer is summary in nature and the only issue that needs to be
resolved is who is entitled to physical possession of the premises, possession referring
to possession de facto, and not possession de jure. Nonetheless, where the parties to an
ejectment case raise the issue of ownership and such is inseparably linked to that of
possession, the courts may pass upon that issue to determine who between the parties
has the better right to possess the property.

17
SUPREMA T. DUMO, Petitioner, v. REPUBLIC OF THE PHILIPPINES, Respondent
G.R. No. 218269, June 06, 2018

Facts:
Petitioner Suprema T. Dumo filed an application for registration of two parcels of
land, covered by Advance Plan of Lot Nos. 400398 and 400399with a total area of 1,273
square meters (LRC Case No. 270-Bg). Dumo alleged that the lots belonged to her
mother Bernarda M. Trinidad, and that she and her siblings inherited them upon their
mother's death. She further alleged that through a Deed of Partition with Absolute Sale
dated 6February 1987, she acquired the subject lots from her siblings. Dumo traces her
title from her mother, Trinidad, who purchased the lots from their maternal grandfather in
August 1951.
Mabalay was Dumo's maternal grandfather. Mabalay, on the other hand,
purchased the properties from Carlos Calica. The heirs of Marcelino Espinas opposed
Dumo's application for land registration on the ground that the properties sought to be
registered by Dumo are involved in the accion reivindicatoria case. Thus, the RTC
consolidated the land registration case with the Complaint for Recovery of Ownership,
Possession and Damages .On 2 July 2010, the RTC rendered its Joint Decision, finding
that the subject property was owned by the heirs of Espinas. The RTC ordered the
dismissal of Dumo's land registration application on the ground of lack of registerable title,
and ordered Dumo to restore ownership and possession of the lots to the heirs
of Espinas.
Issues:
Are the requirement that documents to prove the status of land based on the land
classification approved by the DENR Secretary is not a mere superfluity?
Ruling:
No. The requirement that documents to prove the status of land shall be based on
the land classification approved by the DENR Secretary are not mere superfluities. This
requirement stems from the fact that the alienable and disposable classification of
agricultural land may be made by the President or DENR Secretary. And while the DENR
Secretary may perform this act in the regular course of business, this does not extend to
the CENRO or PENRO – the DENR Secretary may no longer delegate the power to issue
such certification as the power to classify lands of the public domain as alienable and
disposable lands is in itself a delegated power under CA No. 141 and PD No. 705
Moreover, we have repeatedly stated that a CENRO or PENRO certification is not
enough to prove the alienable and disposable nature of the property sought to be
registered because the only way to prove the classification of the land is through the
original classification approved by the DENR Secretary or the President himself. This
Court has clearly held:
Further, it is not enough for the PENRO or CENRO to certify that a land is
alienable and disposable. The applicant for land registration must prove that the
DENR Secretary had approved the land classification and released the land of the
public domain as alienable and disposable, and that the land subject of the
application for registration falls within the approved area per verification through
survey by the PENRO or CENRO. In addition, the applicant for land registration
must present a copy of the original classification approved by the DENR Secretary

18
 and certified as a true copy by the legal custodian of the official records. These
facts must be established to prove that the land is alienable and disposable.
Respondent failed to do so because the certifications presented by respondent do
not, by themselves, prove that the land is alienable and disposable.
In this case, Dumo failed to submit any of the documents required to prove that the
land she seeks to register is alienable and disposable land of the public domain.

19
HEIRS OF ERNESTO MORALES, NAMELY: ROSARIO M. DANGSALAN, EVELYN M.
SANGALANG, NENITA M. SALES, ERNESTO JOSE MORALES, JR., RAYMOND
MORALES, AND MELANIE MORALES, PETITIONERS, VS. ASTRID MORALES
AGUSTIN, REPRESENTED BY HER ATTORNEY-IN-FACT, EDGARDO TORRES,
RESPONDENT.
2018-06-06 | G.R. No. 224849

REYES, JR., J:

FACTS
The respondent, Astrid Morales Agustin, is a grandchild of Jayme Morales (Jayme), who
was the registered owner of a parcel of land with improvements, designated as Lot No.
9217-A, and located at Barangay Sto. Tomas, Laoag City.
The respondent initiated the instant complaint, originally together with Lydia Morales,
another one of Jayme's grandchildren and the respondent's cousin, for the partition of
Jayme's property. They alleged that they, together with the petitioners and their other
cousins, were co-owners of the subject property by virtue of their successional rights as
heirs of Jayme.
The RTC ruled that: (1) the estate of a deceased who died intestate may be partitioned
without need of any settlement or administration proceeding;[15] and (2) the RTC properly
and lawfully rendered summary judgment despite the absence of any motion from any of
the parties praying for the application of the rules thereon.
Aggrieved, the petitioners elevated the case to the CA, which thereafter dismissed the
appeal and affirmed the RTC Decision on August 13, 2015. Morales thus filed a petition
for certiorari.

ISSUE
 Is the partition of the subject property proper despite the absence of the settlement
of the estate of the deceased registered owner thereof?
 Could the RTC motu proprio apply the rule on Summary Judgment?
 Could the RTC validly render a decision even in the absence of proof of proper
service of summons to some of the real parties in interest in a quasi in rem
proceeding?

RULING
 the Court rules against the petitioner and in favor of the findings of the RTC and
the CA.
The partition of real estate is an action quasi in rem. Jurisprudence is replete with
pronouncements that, for the court to acquire jurisdiction in actions quasi in rem, it
is necessary only that it has jurisdiction over the res. the filing of the complaint
before the RTC which sought to partition the subject property effectively placed the
latter under the power of the court. On this front, none of the parties
challenged the RTC's jurisdiction.

20
 But more than this, in compliance with De Pedro, there is in this case proper
service of summons to the defendants. In no uncertain terms, the CA found that:
(1) the heirs of Vicente Morales received summons, filed an Answer, and actively
participated in the trial; (2) the heirs of Jose Morales filed their Answer and
admitted to the allegations in the complaint; and (3) the heirs of Martina Morales
were duly served with summons, copies of the complaint, and actively participated
in the trial.

 A summary judgment in this jurisdiction is allowed by Rule 35 of the Rules of Court.

According to the case of Wood Technology Corporation, et al. vs. Equitable
Banking Corporation, it is a procedure aimed at weeding out sham claims or
defenses at an early stage of the litigation. It is granted to settle expeditiously a
case if, on motion of either party, there appears from the pleadings, depositions,
admissions, and affidavits that no important issues of fact are involved, except the
amount of damages.

The trial court rendered a summary judgment despite the absence of any motion
calling for itsapplication was in clear contravention of the established rules of
procedure. To be sure, on the strength of the Court's unequivocal pronouncements
in previous jurisprudence which require the observance of the procedural
guidelines for the rendition of summary judgments, the RTC committed reversible
error, and the RTC and CA decisions must perforce be annulled and set aside.

 the law does not prohibit partial partition. In fact, the Court, in administration
proceedings, have allowed partition for special instances. But the Court should
caution that this power should be exercised sparingly. This is because a partial
partition and distribution of the estate does not put to rest the question of the
division of the entire estate.

the Court is of the opinion that there is no cogent reason to render the partition of
one of Jayme's properties and totally ignore the others, if any. Absent any
circumstance that would warrant the partial partition and distribution of Jayme's
estate, the prudent remedy is to settle the entirety of the estate in the partition
proceedings in the court a quo. Besides, as stated by the Court in Gulang, it is
quite unnecessary to require the plaintiff to file another action, separate and
independent from that of partition originally instituted. This would entail wastage of
additional time and resources, which could already be avoided through
consolidated proceedings in the court a quo.

In sum, the factual milieu of this case presents questions of facts which are crucial
in the complete resolution of the controversy. The Court finds sufficiency in the trial
court's decision with regard to the summons directed against the warring heirs—
as submitted by the respondent, but also finds error in the trial court's refusal to
delve into the genuine issue concerning the partition of the subject property—as
submitted by the petitioners. In the end, only a full-blown trial on the merits of each

21
 of the parties' claims—and not a mere summary judgment—could write finis on
this family drama.

G.R. No. 204131, June 04, 2018

SPOUSES JAIME AND CATHERINE BASA, SPOUSES JUAN AND ERLINDA OGALE
REPRESENTED BY WINSTON OGALE, SPOUSES ROGELIO AND LUCENA
LAGASCA REPRESENTED BY LUCENA LAGASCA, AND SPOUSES CRESENCIO
AND ELEADORA APOSTOL, Petitioners, v. ANGELINE LOY VDA. DE SENLY LOY,
HEIRS OF ROBERT CARANTES, THE REGISTER OF DEEDS FOR BAGUIO CITY,
AND THE CITY ASSESSOR'S OFFICE OF BAGUIO CITY, Respondents.
DEL CASTILLO, J.:
Facts:
Basa Carantes, the predecessor-in-interest of Manuel Carantes and herein
respondent Robert Carantes, owns a 496 square meter residential lot in New Lucban,
Baguio City. The subject property was mortgaged to respondent Angeline Loy and her
husband in 1994; they foreclosed on the mortgaged and were the highest bidder during
the auction sale. After consolidating ownership over the subject property on March 31,
2006, a writ of possession was issued in their favor.
On May 30, 2006, herein petitioners filed a petition for quieting of title with prayer
for injunctive relief and damages against the respondents. Petitioners claimed that in
1992 and 1993, 351 square meters of the subject property have already been sold to
them by the respondent Robert Carantes by virtue of deed of sale executed in their favor
and that they took possession of the 351 square meter portion sold to them. Thus,
petitioners prayed that the documents, instruments, and proceedings relative to the sale
of the subject property to respondent Angeline Loy be cancelled and annulled, and that
they be awarded damages.
Issue: Is the submitted preponderant evidence by the petitioner has proved their case for
quieting of title?
Ruling:
No. The preponderant evidence has not proved their case for quieting of title
because the plaintiffs did not presented the original copies of the purported deeds.
The Supreme Court held that in order that an action for quieting of title may
prosper, it is essential that the plaintiff must have equitable title to, or interest in the
property which is the subject matter of the action.
Section 3, Rule 130 of the Rules of Court provides that original document must be
produced; exceptions. — When the subject of inquiry is the contents of a document, no
evidence shall be admissible other than the original document itself, except in the
following cases:

22
 (a) When the original has been lost or destroyed, or cannot be produced in court,
without bad faith on the part of the offeror;
(b) When the original is in the custody or under the control of the party against
whom the evidence is offered, and the latter fails to produce it after reasonable
notice;
(c) When the original consists of numerous accounts or other documents which
cannot be examined in court without great loss of time and the fact sought to be
established from them is only the general result of the whole; and
(d) When the original is a public record in the custody of a public officer or is
recorded in a public office. (2a)
In the present case, the petitioners failed to present the original copies of the
purported deeds of sale in their favor, the case for quieting of title did not have a leg to
stand on. Petitioners were unable to show their claimed right or title to the disputed
property, which is an essential element in a suit for quieting of title. Their belated
presentation of the supposed originals of the deeds of sale by attaching the same to their
motion for reconsideration does not deserve consideration as well; the documents hardly
qualify as evidence.

23
G.R. No. 230751, April 25, 2018

ESTRELLITA TADEO-MATIAS, Petitioner, v. REPUBLIC OF THE PHILIPPINES,

Respondent.
Facts:
On April 10, 2012, petitioner Estrellita Tadeo-Matias filed before the Regional Trial
Court (RTC) of Tarlac City a petition for the declaration of presumptive death of her
husband, Wilfredo N. Matias.
The petitioner and Wilfredo entered into a lawful marriage on January 7, 1968 in
Imbo, Anda, Pangasinan. Wilfredo continued to serve the Philippines and on September
15, 1979, he set out from their conjugal home to again serve as a member of the
Philippine Constabulary. Wilfredo never came back from his tour of duty in Arayat,
Pampanga since 1979 and he never made contact or communicated with the petitioner
nor to his relatives, that according to the service record of Wilfredo issued by the National
Police Commission, Wilfredo was already declared missing since 1979.
Petitioner constantly pestered the Philippine Constabulary for any news regarding
her husband Wilfredo, but the Philippine Constabulary had no answer to his whereabouts,
neither did they have any news of him going AWOL, all they know was he was assigned
to a place frequented by the New People's Army.
The petitioner never gave up hope, and after more than three decades of waiting,
the petitioner is still hopeful, but the times had been tough on her, specially with a meager
source of income coupled with her age, it is now necessary for her to request for the
benefits that rightfully belong to her in order to survive
One of the requirements to attain the claim of benefits is for a proof of death or at
least a declaration of presumptive death by the Honorable Court. This petition is being
filed not for any other purpose but solely to claim for the benefit under P.D. No. 1638 as
amended. The petition was docketed as Spec. Proc. No. 4850 and was raffled to Branch
65 of the Tarlac City RTC. A copy of the petition was then furnished to the Office of the
Solicitor General (OSG). Subsequently, the OSG filed its notice of appearance on behalf
of herein respondent Republic of the Philippines.

On January 15, 2012, the RTC issued a Decision in Spec. Proc. No. 4850 granting the
petition.
Issue:
Whether or not the decision of the Regional Trial court is correct?
Held:
No, the decision of the RTC is not correct.
The petition for the declaration of presumptive death filed by the petitioner is not
an authorized suit and should have been dismissed by the RTC. The RTC's decision must
be set aside. RTC Erred in Declaring the Presumptive Death of Wilfredo under Article 41
of the FC, the petitioner's Petition for the Declaration of Presumptive Death is not based
on Article 41 of the FC, but on the Civil Code. Article 41 of the FC does not apply to the
instant petition as it was clear that petitioner does not seek to remarry. If anything, the

24
petition was invoking the presumption of death established under Articles 390 and 391 of
the Civil Code, and not that provided for under Article 41 of the FC. The RTC is without
authority to take cognizance of a petition whose sole purpose is to have a person declared
presumptively dead under either Article 390 or Article 391 of the Civil Code. As been held
by jurisprudence, Articles 390 and 391 of the Civil Code merely express rules of evidence
that allow a court or a tribunal to presume that a person is dead—which presumption may
be invoked in any action or proceeding, but itself cannot be the subject of an independent
action or proceeding.

25
Pablo C. Hidalgo V. Sonia Velasco
G.R. No. 202217
TIJAM, J.

FACTS:
Pablo C. Hidalgo filed a complaint against Sonia Velasco before the Municipal
Circuit Trial Court (MCTC), for Unlawful Detainer with damages, praying that the latter
vacate the property at suit and to pay the former for moral damages.
Petitioner claims that on the year 2000, the late Juana H. Querubin, executed a
Deed of Donation in his favor, donating three (3) parcels of land including Cadastral Lot
No. 77, which is the land in controversy. On January 2005, Pablo visited said property
and was surprised to see that the respondent was in possession of the property. Following
this event, petitioner sent several letters to Sonia Velasco demanding her to vacate the
property, to which she refused, informing the petitioner that under the instructions of a
certain Josefina Reintegrado Baron, whom respondent claimed to be the property’s
owner, was not to allow the petitioner to take possession of the land. This resulted in the
complain filed before the MCTC, wherein the trial court ruled in favor of the petitioner.
Respondent then contended that the MCTC lacked jurisdiction over the complaint and
raised additional defenses.

ISSUE/S: Did the Municipal Circuit Trial Court have jurisdiction over the complaint?

RULING:
No. The Supreme Court states that, in agreement with the Regional Trial Court
and Court of Appeals, the complaint fails to satisfy the jurisdictional requirements of an
action for unlawful detainer but rather that of forcible entry, following which, the MCTC
could not exercise jurisdiction over That even if the subject complaint were to be treated
as an action for forcible entry, the same would still be applicable.
In consideration of these causes, the Court denied the petition and affirmed the
Decision and Resolution of the Court of Appeals.

26
REPUBLIC OF THE PHILIPPINES vs. MARELYN TANEDO MANALO
G.R. No. 221029
April 24, 2018

FACTS:
Marelyn Tanedo Manalo was previously married in the Philippines to a Japanese national
named Yoshino Minoro. A case for divorce was filed by the petitioner Manalo in Japan
and after due proceedings, a divorce decree dated December 6, 2011 was rendered by
the Japanese Court.
Manalo filed a petition for cancellation of entry of marriage in the civil registry of San Juan,
Metro Manila, by virtue of a judgment of divorce rendered by a japanese court and that
she be allowed to return and use her maiden surname, Manalo.

Ruling of the RTC:

RTC denied the petition for lack of merit. It ruled that the divorce obtained by Manalo in
Japan should not be recognized based on Article 15 of
the New Civil Code which does not afford Filipinos the right to file for a divorce, whether
they are in the country or living abroad, whether married to a filipino or to foreigners or if
they celebrated they marriage in the Philippines or in another country and that unless
Filipinos are naturalized citizens of another country, Philippine laws shall have conrol over
issues related to Filipinos’ family rights and duties, together with the determination of the
condition and legal capacity to enter into contracts and civil relations including marriages.

Ruling of the CA
The Court of Appeals overturned the RTC decision and held that Article 26 of the Family
code of the Philippines is applicable even if it was Manalo
who filed for Divorce against her Japanese husband because the Decree they obtained
makes the latter no longer maried to the former, capacitating him to remarry; that the fact
that it was Manalo who filed the divorce case is
inconsequetial. CA ruled that the meaning of the law should be based on the intent of the
lawmakers and in view of the legislative intent behind Article 26, it would be the height of
injustice to consider Manalo as still married to the
Japanese National, who in turn is no longer married to her.

ISSUE: WHETHER OR NOT UNDER ARTICLE 26 OF THE FAMILY CODE OF THE

PHILIPPINES A FILIPINO CITIZEN HAS THE CAPACITY TO REMARRY AFTER
INITIATING A DIVORCE PROCEEDING ABROAD AND OBTAINING A FAVORABLE
JUDGMENT AGAINST HIS OR HER ALIEN SPOUSE.

RULING:
Yes, the filipina spouse who initiated the divorce and has succesfully obtained a divorce
decree against an alien spouse may remarry under Art. 26 of the Family Code of the
Philippines.

27
Laws should be construed as not to defeat but to carry out its intent and purposes. The
Purpose of Article 26 (2) of the Family code of the Philippines is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after a
foreign divorce decree that is effective in the country where it was rendered is no longer
married to the Filipino spouse. Even if the word obtained should be interpreted to mean
that the
divorce proceeding must be actually initiated by the alien spouse, still the court will not
follow the letter of the statute when to do so would depart from the true intent of the
legislature or would otherwise yield conclusions inconsistent with the general purpose of
the act. Indeed, where the interpretion of a statute according to its exact and
literal import would lead to mischievous results or contravene the clear purpose of the
legilature, it should be construed according to the spirit and
reason, disregarding as far as necessary the letter of the law. A statute may, therefore be
extended to cases not within the literal meaning of its terms, so long as they come within
its spirt or intent.

Whether the filipino spouse initiated the foreign divorce proceeding or not, a favorable
decree dissolving the marriage bond and capacitating his or her alien spouse to remarry
will have the same result. Therefore, the subject provision shall not make a distinction.

The Nationality Principle is not absolute and unbending rule. The existence of Article 26
(2) of the Family Code of the Philippines is a testament that the state may provide for an
exception thereto. Moreover, blind adherence to the nationality principle must be
disallowed if it would cause unjust discrimination and oppression to certain classes of
individuals whose rights are equally protected by law. The courts have the duty to enforce
the laws of divorce as written by the Legislature only if they are constitutional.

Article 26(2) of the Family Code violates one of

the essential requisites of the equal protection. The limitation of the provision only to a
foreign divorce decree initiated by the alien spouse is unreasonable as it is based on
superficial, arbitrary and whimsical classification.
There is no real and substantial difference between a filipino who initiated a foreign
divorce proceedings and a filipino who obtained a divorce decree upon the instance of
his or her alien spouse. To make a distinction between them based merely on superficial
difference of whether they initiated the

28
REPUBLIC OF THE PHILIPPINES, PETITIONER, V. HON. SANDIGANBAYAN,
ROMEO G. PANGANIBAN, FE L. PANGANIBAN, GERALDINE L. PANGANIBAN,
ELSA P. DE LUNA AND PURITA P. SARMIENTO, RESPONDENTS.
G.R. No. 189590 April 23, 2018
LEONARDO-DE CASTRO, J.:

FACTS:

The Republic, petitioner, filed before public respondent Sandiganbayan a petition for the
forfeiture of unlawfully acquired properties of private respondents Romeo through the
Office of the Ombudsman for the forfeiture of unlawfully acquired properties of private
respondents Romeo, et al., including Geraldine Labunos Panganiban, pursuant to
Section 2 of Republic Act No. 1379, entitled "An Act Declaring Forfeiture In Favor Of The
State Any Property Found To Have Been Unlawfully Acquired By Any Public Officer Or
Employee And Providing For The Proceedings Therefor."

The petitioner particularly sought the forfeiture of five real properties which are claimed
to be valued at not less than P40,766,300.00. This includes residential houses, residential
lot and commercial building. There were also additional properties amounting to
P10,236,771.60.

Petitioner alleged that the properties were unlawfully acquired during his incumbency as
Regional Director of Department of Public Works and National Highways. He based his
allegations in the 1986 statement of assets and net worth of the private respondent where
the bloat of his assets could not be explained.

Private respondent Romeo denied the allegations, and claimed that his wife and his
sisters had the financial capacity to purchase the real estate properties registered in their
names.

The Sagindanbayan partly granted the Demurrer to Evidence and the respondents are
directed to present proofs to fully explain how other resources were acquired. With
respect to the other properties alleged in the Petition, Respondents' Demurrer to Evidence
is affirmed.

ISSUE:

Did the public respondent, Sandiganbayan acted with grave abuse of discretion when it
disregarded the judicial admission of private respondent, Romeo in his answer to the
petition that the properties were jointly acquired by his daughter and wife and making him
a co-owner?

RULING:

29
Court settled that judicial admissions may be made: (a) in the pleadings filed by the
parties; (b) in the course of the trial either by verbal or written manifestations or
stipulations; or (c) in other stages of judicial proceedings, as in the pre-trial of the case.

Though the title to the property was initially filed in court through the Joint Answer,
however, petitioner Republic failed to refute the same, and even marked it during pre-
trial. Hence, petitioner Republic already admitted its genuineness and due execution.
Such judicial admission was correctly considered by public respondent Sandiganbayan
in resolving the demurrer to evidence. When the due execution and genuineness of an
instrument are deemed admitted because of the adverse party's failure to make a specific
verified denial thereof, the instrument need not be presented formally in evidence for it
may be considered an admitted fact.

This Court finds that the pieces of evidence adduced by petitioner insufficient to support
the allegations of the petition for forfeiture in Civil Case No. 0192.

Thus, for failure of petitioner Republic to show any right to the relief sought, this Court
partly affirms the assailed resolutions.

30
THE IGLESIA DE JESUCRISTO JERUSALEM NUEVA OF MANILA, PHILIPPINES,
INC., REPRESENTED BY ITS PRESIDENT,
FRANCISCO GALVEZ
v.
LOIDA DELA CRUZ USING THE NAME CHURCH OF JESUS CHRIST, "NEW
JERUSALEM"
AND ALL PERSONS CLAIMING RIGHTS UNDER HER

G.R. No. 208284 / April 23, 2018 / DEL CASTILLO, J.

Even as the registered owner generally has the right of possession as an attribute
of: ownership, nevertheless the dismissal of the complaint for unlawful detainer is justified
where proof of preponderant evidence of material possession of the disputed premises
has not been convincingly adduced. [Corpuz v. Spouses Agustin]

FACTS

Petitioner sued for the possession of property under litigation on the ground that
the possession was by mere tolerance of the petitioner. Petitioner argues that being the
registered owner of the disputed property, it has the right to possess, enjoy, dispose of
the same, and to initiate the appropriate action to recover the same under Article 428 of
the Civil Code, as in the instant case; that it filed the action for unlawful detainer against
respondents in accordance. Dela Cruz argues that petitioner's title was obtained only
because Dela Cruz filed an action or motion for the issuance of a reconstituted copy
allegedly because the original title had been lost although it was not in fact lost; and that
above all the MeTC itself adverted to petitioner's declaration before the SEC that it does
not in fact own any real property, whether land or building.

ISSUE

Did the petitioner substantiate its claim that it merely tolerated respondents'
possession of the disputed property?

RULING

No. In Corpuz v. Spouses Agustin, this Court recognized that even as the
registered owner generally has the right of possession as an attribute of: ownership,
nevertheless the dismissal of the complaint for unlawful detainer is justified where proof
of preponderant evidence of material possession of the disputed premises has not been
convincingly adduced. In the case at bench, petitioner miserably failed to substantiate its
claim that it merely tolerated respondents' possession of the disputed property. Indeed,
with the averment here that the respondents' possession was by mere tolerance of the
petitioner, the acts of tolerance must be proved, for bare allegation of tolerance did not
suffice. It is thus quite evident from the allegations and evidence presented by petitioner

31
that its claim that it merely tolerated respondents' entry into and possession of the
disputed property, is baseless and unsubstantiat.

BANCO DE ORO UNIBANK, INC., Petitioner, v. VTL REALTY, INC., Respondent.

G.R. No. 193499, April 23, 2018

REYES, JR., J.

Facts:
Victor Bollozos is the registered owner of a parcel of land with a building which is situated
in Barangay Guizo, Mandaue City. He mortgaged his property to Banco De Oro Unibank,
Inc to secure the loan of World’s Arts and Crafts Inc.
Bollozos sold the property to VTL Realty Corporation on August 12, 1994, and A Deed
of Definite Sale with Assumption of Mortgage was executed between the parties.
However, BDO denied the payment of VTL because they do not recognize VTL to be the
new owner of the property. For BDO, the loan obligation made between Bollozos and
World’s Arts and crafts should be settled prior to any change in the ownership of the
mortgaged property. This led VTL to institute an action for specific performance with
damages against BDO with the Regional Trial Court (RTC) of Cebu City. In the course of
the proceedings, the obligation remained unpaid, prompting BDO to foreclose the real
estate mortgage on March 29, 1995. A Certificate of Sale was issued to BDO as the lone
bidder at the auction sale. Upon the expiration of the redemption period with no
redemption being made, BDO consolidated ownership over the property.

On January 6, 1997, the RTC rendered a Decision directing BDO to furnish VTL with
Bollozos and/or World's Arts and Crafts Inc.'s new Statement of Account based on the
Statement of Account dated August 12, 1994, plus the corresponding interests and
penalty charges that have accrued thereafter. By the same token, VTL was directed to
assume and pay Bollozos' obligation to BDO upon receipt of such Statement of Account.
VTL appealed the RTC judgment to the Court of Appeals (CA), which affirmed the same
in a Decision dated May 26, 2004. Thereafter, an Entry of Judgment was issued.

Separate motions for execuion were filed by BDO and VTL. During the hearing set on
March 28, 2007, BDO submitted a Statement of Account showing that the total obligation
of Victor Bollozos and/or World's Arts & Crafts, Inc. amounted to P41,769,596.94 as of
March 16, 2007.

VTL filed a Motion to Order Defendant to Correct Statement of Account,8 praying that
BDO be ordered to compute interests and penalties due only up to April 28, 1995, which
is the date of registration of the Certificate of Sale.
Issue:
Is respondent liable for interests from the date of the foreclosure to the date of sale of the
property
Ruling:
The Petition is given merit.

32
There is no redemption price present since there is no right of redemption exercised in
the first place. The RTC erred in its proceedings that VTL made no tender of payment nor
did it deposit any amount to speak of to stop the running of interest and imposition of
penalty charges. VTL also did not make any effort during the redemption period to redeem
the property from BDO. Since the redemption period has already lapsed we have
deduced that VTL’s aim is not to redeem the property but to purchase it from BDO. The
cases of DBP vs Zaragoza and PNB vs CA is not applicable to the case of VTL.
Apart from the said facts above, we must take note that VTL did not appeal from the CA
decision which affirmed the disposition of the RTC that the charges to VTL shall be based
on the Statement of Account dated August 12, 1994, plus the corresponding interests and
penalty charges that have accrued afterwards.

33
Moral and Exemplary Damages

TERESA GUTIERREZ YAMAUCHI v. ROMEO F. SUÑIGA

G.R. No. 199513, April 18, 2018

MARTIRES, J.

FACTS:

Teresa Gutierrez Yamauchi (Yamauchi) filed a complaint against Romeo F. Suñiga

(Suñiga) for rescission with prayer for damages.

[Yamauchi] owns a house. Sometime in September 2000, [Yamauchi] consulted [Suñiga],

the husband of her cousin, regarding the renovation of the subject house. After
[Yamauchi] gave [Suñiga] a sketch of her intended renovations, the latter apprised her of
the estimated cost that it would entail. [Yamauchi] gave partial payments to [Suñiga],
however the renovation stopped. [Suñiga] gave [Yamauchi] a Billing Summary and
Accomplishment Billing stating the percentage of the work done. [Yamauchi] inquired
from [Suñiga] as to when the renovation would be completed and the latter asked for
additional funds. [Yamauchi] requested [Suñiga] to advance the expenses and proposed
and that she will pay him later, but [Suñiga] replied that he had no money. In the interim,
[Yamauchi] consulted her neighbor, a certain Engr. Froilan Thomas, who told her that the
amount stated on the Bill of Materials could actually build a new house. Feeling
shortchanged and deceived, [Yamauchi] asked [Suñiga] to explain why she should pay
the additional amount he was demanding. [Yamauchi], through counsel, sent a letter to
[Suñiga] stating that due to the bloated amount of the cost of renovation and [Suñiga's]
stubborn refusal to complete the project, she was constrained to terminate their contract.
Suñiga filed his answer with counterclaims denying Yamuchi's allegations.
The RTC rendered its decision warranting rescission and payment of damages in favor
of Yamauchi.
Suñiga appealed to the CA, which affirmed the RTC's ruling to rescind the contract
between Yamauchi and Suñiga under Article 1191 of the Civil Code. The CA held
however, that the RTC erred in its award for damages. The CA reducted and deleted the
award for damages.
Yamauchi filed a partial motion for reconsideration questioning the reduction and deletion
of the award for damages.

34
ISSUE:
1. Is the CA correct in reducing the amount of actual damages awarded to Yamauchi?
2. Is the CA correct in deleting the award for moral and exemplary damages,
attorney’s fees and costs of litigation?
RULING:

1. No, Actual or compensatory damages are those damages which the injured
party is entitled to recover for the wrong done and injuries received when none
were intended. These are compensation for an injury and will supposedly put the
injured party in the position in which he was before he was injured. 18 Since actual
damages are awarded to compensate for a pecuniary loss, the injured party is
required to prove two things: (1) the fact of the injury or loss and (2) the actual
amount of loss with reasonable degree of certainty premised upon competent proof
and on the best evidence available.

In the instant case, the CA reduced the award for damages because Suñiga had already
completed 47.02% of the renovations on the subject house; thus, awarding full
compensation would result in unjust enrichment for Yamauchi. However, the CA failed to
consider the fact that the house became uninhabitable because the renovation was left
unfinished. Yamauchi took pictures showing the physical condition of the house nine (9)
months after the supposed renovation.20 True enough, these photographs confirmed that
the house was no longer habitable since the renovated portions left the entire house open
and exposed to the elements of nature. Contrary to the position of the CA, Yamauchi did
not gain anything from the incomplete renovation of her house. She, in fact, lost it in its
entirety.

2. No, with regard to moral damages, we find it proper to reinstate the award
as we find Suñiga had dealt with Yamauchi in bad faith. Moral damages are
recoverable only if the party from whom it is claimed has acted fraudulently or in
bad faith or in wanton disregard of his contractual obligations. 28 In Adriano v.
Lasala,29the Court said:

Bad faith does not simply connote bad judgment or negligence. It imports a dishonest
purpose or some moral obliquity and conscious doing of a wrong, a breach of known duty
through some motive or interest or ill will that partakes of the nature of fraud. It is,
therefore, a question of intention, which can be inferred from one's conduct and/or
contemporaneous statements.30

In the case at bar, Suñiga acted in bad faith when he misrepresented himself to be a
licensed architect and bloated the figures of the renovation expenses. Gathered from the
records is Suñiga's admission that he never took the licensure exam for architects, yet he
signed documents pertaining to the renovation as if he was an architect.

35
MAKATI TUSCANY CONDOMINIUM CORPORATION v. MULTI-REALTY
DEVELOPMENT CORPORATION
G.R. No. 185530, April 18, 2018

LEONEN, J.:
Respondent Development Corporation (Multi-Realty) filed a complaint for
damages and/or reformation of instrument with prayer for temporary restraining order
and/or preliminary injunction against Petitioner Makati Tuscany Condominium
Corporation (MATUSCO).
FACTS:
Sometime in 1977, pursuant to Republic Act No. 4726, or the Condominium Act,
Multi-Realty created and incorporated Makati Tuscany Condominium Corporation
(MATUSCO) to hold title over and manage Makati Tuscany's common areas. That same
year, Multi-Realty executed a Deed of Transfer of ownership of Makati Tuscany's
common areas to MATUSCO.
Multi-Realty alleged in its complaint that of the 106 parking slots designated in the
Master Deed and Declaration of Restrictions as part of the common areas, only eight (8)
slots were intended to be guest parking slots. Respondent retained that its ownership
over the remaining 98 parking slots were mistakenly not reflected in the Master Deed
"since the documentation and the terms and conditions therein were all of first
impression,” considering that Makati Tuscany was one of the first condominium
developments in the Philippines.
ISSUE:
Is there a need to reform the Master Deed and the Deed of Transfer?
RULING:
The Supreme Court, speaking through Justice Leonen declared that, Petitioner
MATUSCO failed to prove the mistake in good faith to explain its seeming recognition of
respondent's ownership of the 72 remaining parking slots, showing its acquiescence to
respondent's sale of the 26 parking slots and its issuance of the Certificates of
Management for the sold condominium units and parking slots.
In Philippine National Bank v. Court of Appeals, the doctrine of estoppel is based
upon the grounds of public policy, fair dealing, good faith and justice, and its purpose is
to forbid one to speak against his own act, representations, or commitments to the injury
of one to whom they were directed and who reasonably relied thereon. In this case, except
for the words in the contract, all of respondent's acts were consistent with its position in
the case.
Based on these reasons, the Supreme Court ruled that petitioner cannot claim the
benefits of estoppel.

36
ARCH. EUSEBIO B. BERNAL, DOING BUSINESS UNDER THE NAME AND STYLE
CONTEMPORARY BUILDERS, Petitioner
V.
DR. VIVENCIO VILLAFLOR and DRA. GREGORIA VILLAFLOR, Respondents

G.R. No. 213617 April 18, 2018

REYES, JR., J.

Facts

Eusebio B. Bernal, herein petitioner, filed a petition for review assailing the decision of
the CA in declaring Dr. Vivencio Villaflor and Dra. Gregoria Villaflor, herein petitioners,
liable for interests on a monetary award of ₱1,710,271.21 at a rate of only six percent
(6%) per annum, to be counted from the date of finality of judgment until full satisfaction.
Petitioner argues that the interest should be computed at the rate of 6% per annum from
the time of either the last extrajudicial demand on July 5, 1998 or judicial demand on
November 16, 1998, plus 12% per annum interest from the date of judgment until full
payment.

Issue

W/O the petition should be granted

Held

The Court partially grants the petition.

In Eastern Shipping Lines, Inc. vs. Court of Appeals, the Court made the following
pronouncement, which was intended to be the guidelines in the proper determination of
awards of interest:
1. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion
of the court at the rate of 6% per annum. No interest, however, shall be adjudged
on unliquidated claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand is
established with reasonable certainty, the interest shall begin to run from the time
the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court is made (at
which time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in any
case, be on the amount finally adjudged.

37
In this case, the award of interest is discretionary on the part of the court.1âwphi1 The
petitioner's original demand does not equate to a loan or forbearance of money but
pertains to the cost of construction and services, the amount of which has not yet been
determined with certainty even up to the time of the complaint's filing with the RTC.
Petitioner's original claim was in fact thereafter limited by the RTC after a consideration
of the evidence presented during trial, and ultimately further reduced by the CA. The
uncertainty was brought about by the numerous change orders that happened while the
subject Medical Arts Building was being constructed. Clearly, at the time of the petitioner's
judicial and extrajudicial demands, the amount of the respondents' obligation remained
uncertain.

Once this judgment becomes final and executory, the award equates to a loan or
forbearance of money and from such time, the legal rate of interest begins to apply.
Petitioner's insistence on an increase in the interest rate from such time to 12% per
annum is erroneous; his reference to jurisprudence prior to 2013 is misplaced. In Circular
No. 799 issued on June 21, 2013 by the Bangko Sentral ng Pilipinas, the legal rate of
interest on loans and forbearance of money was reduced from 12% to 6% per annum
from the time of the circular's effectivity on July 1, 2013

38
MANILA ELECTRIC COMPANY, VICENTE MONTERO, MR. BONDOC, AND MR.
BAYONA, Petitioners, v. NORDEC PHILIPPINES AND/OR MARVEX INDUSTRIAL
CORP. REPRESENTED BY ITS PRESIDENT, DR. POTENCIANO R.
MALVAR, Respondents.

G.R. No. 196020, April 18, 2018

LEONEN, J.:

Meralco filed a petition seeking to reverse the ruling that Meralco is guilty of tampering
Nordec’s metring devices.

Under an Agreement for Sale of Electric Energy, petitioner installed metering devices at
Marvex's premises. Meralco inspected Marvex's electric metering facilities and found that
the installments had been tampered with. Subsequently, Meralco assessed Marvex a
differential billing in the total amount of P496,386.29. Meralco sent demand letters, and
disconnected Marvex's electric service when it did not pay.

Nordec sued Meralco for damages. It alleged that Meralco's service inspectors conducted
the 1985 inspections without its consent or approval. In its defense, Meralco claimed that
the 1985 inspections had been conducted in the presence of Nordec's representatives.
The RTC issued a writ of preliminary injunction directing Meralco to restore Nordec's
electric supply.

Meralco conducted another inspection. The inspecting group observed that the metering
devices continued to register power consumption even though its entire power supply
equipment was turned off. Meralco offered to reimburse Nordec's excess bill of
P5,625.10, but Nordec rejected this offer.

Nordec filed a second supplemental complaint on January 4, 1991, praying that Meralco
be declared guilty of tampering, and be made to refund its excess bill of not less than
P5,625.10. The RTC dismissed Nordec's original complaint and second supplemental
complaint, while the CA reversed and set aside the RTC’s Decision.

Issues:

1. Was Manila Electric Company inexcusably negligent when it disconnected Nordec

Philippines' electric supply?

2. Is Nordec Philippines entitled to actual, temperate, moral or exemplary damages,

attorney's fees, and legal interest?

39
I

The records show that the unpaid charges covered approximately three months and nine
months. On such basis, we take judicial notice that during those periods, personnel
representing MERALCO inspected and examined the electric meters of petitioners
regularly.

Notice of a defect need not be direct and express. Hence, MERALCO's failure to discover
the defect, if any, considering the length of time, amounts to inexcusable negligence.
Furthermore, as a public utility, MERALCO has the obligation to discharge its functions
with utmost care and diligence.

The Ridjo doctrine states that the public utility has the duty to make a reasonable and
proper inspection of its apparatus and equipment to ensure that they do not malfunction.
Meralco argues that Commonwealth Act No. 349 lowers the required degree of diligence.
It claims that under this law, it is only required to test metering devices once every two (2)
years. However, the two (2)-year period prescribed under Commonwealth Act No. 349
does not pertain to distribution utilities inspections of the metering devices installed in
their consumers' premises.

Further, the duty imposed upon it pursuant to Ridjo is not beyond the standard of care
imposed by law. Distribution utilities are public utilities vested with public interest, and
thus, are held to a higher degree of diligence.

Being vested with vital public interest, MERALCO is impressed with certain obligations
towards its customers and any omission on its part to perform such duties would be
prejudicial to its interest. Should a distribution utility not exercise the standard of care
required of it, then it can no longer recover the amounts of allegedly used but uncharged
electricity.

Here, Meralco itself claimed that the irregularities in the electricity consumption recorded
in Nordec's metering devices covered January 18, 1985 to May 29, 1985. However, the
alleged tampering was only discovered during the May 29, 1985 inspection. Considering
that Nordec's meters were read monthly, Meralco's belated discovery of the cause of the
alleged irregularities, or four (4) months after they purportedly started, can only lead to a
conclusion of negligence. Notice of a defect may be constructive when it has
conspicuously existed for a considerable length of time. During a third inspection on
November 23, 1987, further irregularities in Nordec's metering devices were observed,
showing electricity consumption even when Nordec's entire power supply equipment was
switched off. Clearly, Meralco had been remiss in its duty as required by law and
jurisprudence of a public utility.

II

In this case, the Court of Appeals' failure to apply the applicable law and jurisprudence

40
by awarding damages to Nordec prompts this Court's review.

Exemplary damages, which cannot be recovered as a matter of right, may not be awarded
if no moral, temperate, or compensatory damages have been granted, so the award of
attorney's fees should likewise be deleted.

Moral damages are also not proper. As a rule, a corporation is not entitled to moral
damages because, not being a natural person, it cannot experience physical suffering or
sentiments like wounded feelings, serious anxiety, mental anguish and moral shock. The
only exception to this rule is when the corporation has a reputation that is debased.
Moreover, contrary to Nordec's claim, it cannot be awarded temperate or moderate
damages. No pecuniary loss has been established in this case, apart from the claim in
Nordec's complaint that the "serious anxiety" of the disconnection had caused Nordec's
president to cancel business appointments, purchase orders, and fail to fulfill contractual
obligations, among others.98

Nominal damages may be awarded to vindicate the violation of a right suffered by a party,
in an amount considered by the courts reasonable under the circumstances. Meralco's
negligence in not providing Nordec sufficient notice of disconnection of its electric supply,
especially when there was an ongoing dispute between them concerning the
recomputation of the electricity bill to be paid, violated Nordec's rights. Because of this,
Nordec is entitled to nominal damages in the amount of P30,000.00.

41
Doctrine: The psychological incapacity of a spouse must be characterized by (a) gravity;
(b) juridical antecedence; and (c) incurability

REPUBLIC OF THE PHILIPPINES, PETITIONER, V. MARTIN NIKOLAI Z. JAVIER AND

MICHELLE K. MERCADO-JAVIER, RESPONDENTS
G.R. No. 210518 | 2018-04-18

REYES, JR., J:

Facts:

Martin filed a Petition for Declaration of Nullity of Marriage and Joint Custody of Common
Minor Child under Article 36 of the Family Code.[5] Martin alleged that both he and
Michelle were psychologically incapacitated to comply with the essential obligations of
marriage.[6] He thus prayed for the declaration of nullity of their marriage, and for the joint
custody of their minor child.

Martin testified on his own behalf,[8] and presented the psychological findings of Dr. Elias
D. Adamos. In the Psychological Impression Report on Michelle, Dr. Adamos diagnosed
her with Narcissistic Personality Disorder.[10] Likewise, Dr. Adamos concluded in the
Psychological Evaluation Report that Martin suffered from the same disorder

RTC dismissed the petition for failure to establish a sufficient basis for the declaration of
nullity of the respondents' marriage. CA reversed RTC ruling.

Issue:

Is the CA correct in its ruling that Martin and Michelle are psychologically incapacitated
based in the Psychological Impression Report?

Ruling:

Martin, as the petitioner in this case, submitted several pieces of evidence to support his
petition for declaration of nullity of marriage. He testified as to his own psychological
incapacity and that of his spouse, Michelle. In particular, he stated that Michelle was
confrontational even before their marriage.[36] He alleged that Michelle always challenged
his opinions on what he thinks is proper, which he insisted on because he witnessed the
abuse that his mother went through with his biological father

The psychological findings of Dr. Adamos were also presented in the trial court to
corroborate his claim. According to Dr. Adamos, Michelle suffered from Narcissistic
Personality Disorder as a result of childhood trauma and defective child-rearing
practices.[39] This disorder was supposedly aggravated by her marriage with Martin, who

42
she constantly lied to. It was also alleged in the Psychological Impression Report that
Michelle openly had extra-marital affairs.

The court disagreed on the Psychological Impression Report on Michelle. There were no
other independent evidence establishing the root cause or juridical antecedence of
Michelle's alleged psychological incapacity.

Thus, the marriage is null and void due to psychological incapacity on the part of Martin
alone.

43
REPUBLIC OF THE PHILIPPINES v. LUDYSON C. CATUBAG

G.R. No. 210580, April 18, 2018

REYES, JR., J.

Article 41. (Family Code) A marriage contracted by any person during the
subsistence of a previous marriage shall be null and void, unless before the celebration
of the subsequent marriage, the prior spouse had been absent for four consecutive years
and the spouse present has a well-founded belief that the absent spouse was already
dead.

Facts:

Ludyson C. Catubag, respondent, and Shanaviv G. Alvarez-Catubag had been

cohabiting with each other as husband and wife prior to the celebration of their marriage
in 2003 which was solemnized by Honorable Judge Tomas D. Lasam at the Office of the
Municipal Judge, Rizal, Cagayan. They were blessed with two children namely, Mark
Bryan A. Catubag and Rose Mae A. Catubag. In 2001, Ludyson worked overseas to meet
their family’s needs while Shanaviv stayed behind to tend to the needs of their children.

In 2006, Ludyson was informed that Shanaviv their conjugal home and never
returned. Their children were left in the care of his relatives. He immediately flew home
to look for his wife in Cagayan and Bicol where she was born. Moreover, he sought the
help of Bombo Radyo Philippines. He also searched various hospitals and funeral parlors
in Tuguegarao and Bicol, with no avail.

In 2012, after almost seven (7) years of waiting, Ludyson filed with the RTC a
petition to have his wife declared presumptively dead. In 2013, RTC granted the petition.
However, the Office of the Solicitor General (OSG) contented that private respondent
failed to establish a “well-founded belief that his missing wife was already dead” pursuant
to Article 41 of the Family Code.

Issue:

Was private respondent able to comply with all the essential requisites of a petition
for declaration of presumptive death under Article 41 of the Family Code?

Ruling:

No, the Supreme Court speaking through Justice Reyes, Jr., declared that, private
respondent was unable to comply with all the essential requisites for the declaration of
presumptive death. In seeking a declaration, it is the present spouse who has the burden
of proof of proving that all requisites under Article 41 of the Family Code are present.

44
 Notably, the records reveal that private respondent has complied with the first,
second, and fourth requisites. However, he failed to fulfill the requisite of establishing a
well-founded belief that the absentee spouse is dead. The present spouse’s bare
assertions, uncorroborated by any kind of evidence, falls short of the diligence required
to engender a well-founded belief that the absentee spouse is dead. The Court is of the
view that private respondent’s efforts in searching for his missing wife, Shanaviv, are
merely passive.

45
MARGIE SANTOS MITRA v. PERPETUA SABLAN-GUEVARRA, REMEDIO SABLAN,
ET AL.
G.R. No. 213994, April 18, 2018
REYES, JR., J.

On June 26, 2006, Margie Santos Mitra (petitioner) filed a petition for the probate of
the notarial will of Remedios Legaspi y Reyes (Legaspi) with prayer for issuance of letters
testamentary before the RTC for the distribution and liquidation of Legaspi’s estate.

FACTS:

It was alleged that Mitra is the de facto adopted daughter of Legaspi; that Legaspi,
single, died on December 22, 2004 in Caloocan City; that Legaspi left a notarial will,
instituting Mitra, Orlando Castro, Perpetua Sablan Guevarra, and Remigio Legaspi
Sablan, as her heirs, legatees and devisees; that Legaspi left real and personal properties
with the approximate total value of P1,032,237.00; and that Legaspi named Mary Ann
Castro as the executor of the will.

Perpetua L. Sablan-Guevarra and Remegio L. Sablan (respondents), who claim to be

Legaspi's legal heirs, opposed the petition. They aver that the will was not executed in
accordance with the formalities required by law; that since the last page of the will, which
contained the Acknowledgement, was not signed by Legaspi and her instrumental
witnesses, the will should be declared invalid; that the attestation clause failed to state
the number of pages upon which the will was written; and that the will was executed under
undue and improper pressure, thus, Legaspi could not have intended the document to be
her last will and testament.

ISSUE:

1. Did the instrumental witnesses to the will failed to sign on each and every page
thereof on the left margin, except the last, as required under Article 805 of the Civil
Code?

2. Does the failure to state the number of pages comprising the will on the attestation
clause render such will defective?

RULING:

First, no, the instrumental witnesses were able to sign. Article 805 of the Civil Code
states:

Article 805. Every will, other than a holographic will, must be subscribed at the end
thereof by the testator himself or by the testator's name written by some other

46
 person in his presence, and by his express direction, and attested and subscribed
by three or more credible witnesses in the presence of the testator and of one
another.

The testator or the person requested by him to write his name and the
instrumental witnesses of the will, shall also sign, as aforesaid, each and
every page thereof, except the last, on the left margin, and all the pages shall
be numbered correlatively in letters placed on the upper part of each page.

xxxx

It is uncontested and can be readily gleaned that the instrumental witnesses signed
on each and every page of the will, except the last page. There is no doubt that the
requirement under the Article 805 of the Civil Code, which calls for the signature of the
testator and of the instrumental witnesses on each and every page of the will on the left
margin, except the last, was complied with.

It should also be mentioned that Perpetua and Remegio take a skewed stance in
insisting that the testator Legaspi and the instrumental witnesses should have signed on
the last page of the subject will. When Article 805 of the Civil Code requires the testator
to subscribe at the end of the will, it necessarily refers to the logical end thereof, which is
where the last testamentary disposition ends. As the probate court correctly appreciated,
the last page of the will does not contain any testamentary disposition; it is but a mere
continuation of the Acknowledgment.

Second, no, the failure to state the number of pages of the will does not render the
will defective. The substantial compliance rule is embodied in the Civil Code as Article
809 thereof, which provides that:

Article 809. In the absence of bad faith, forgery, or fraud, or undue and improper
pressure and influence, defects and imperfections in the form of attestation or in
the language used therein shall not render the will invalid if it is proved that the will
was in fact executed and attested in substantial compliance with all the
requirements of Article 805.

An examination of the will in question reveals that the attestation clause indeed failed
to state the number of pages comprising the will. However, this omission was supplied in
the Acknowledgment. It was specified therein that the will is composed of four pages, the
Acknowledgment included.

In sum, Legaspi's last will and testament has substantially complied with all the
formalities required of a notarial will. It has been proven that Legaspi and the instrumental
witnesses signed on every page of the will, except on the last, which refers to the
Acknowledgment page. With regard to the omission of the number of pages in the
attestation clause, this was supplied by the Acknowledgment portion of the will itself

47
without the need to resort to extrinsic evidence. Contrary to the CA conclusion, such
omission does not in any way serve as hindrance to probate.
ABIGAEL AN EPINA-DAN v. MARCO DAN
G.R. No. 209031
DEL CASTILLO, J.:

Facts

Petitioner Abigael An Espina-Dan and respondent Marco Dan - an Italian national - met
"in a chatroom on the internet" sometime in May, 2005. Their exchanging letters lead to
them being emotionally closer and eventually married each other on January 23, 2006.
The couple lived together in Italy a month after their wedding.

During their honeymoon, petitioner noticed that the respondent was not circumcised,
respondent also asked her where to find marijuana since he had to sniff some. After a
few days, respondent started displaying traits, character and attitude different from the
Marco she knew through the internet. He was also very dependent on his mother, who
decided where they lived and managed the household. The respondent was also addicted
to video games, which was the reason why they did not have quality time together.
Sometime in May 2006, she caught him in their house while using marijuana. When
confronted, he get mad and pushed her hard] and hit her in the arm, and told her to go
back to the Philippines.

On 18 April 2007. she flew back to the Philippines. Since then, there was no
communication between them. Petitioner took this as lack of interest on his part to save
their marriage, reason why she decided to file this petition for the ground of psychological
incapacity.

NEDY TAYAG, a clinical psychologist, testified in her direct-examination that petitioner

as subjected to a series of psychological tests, written and oral form. She likewise
subjected the mother of the petitioner to clarificatory analysis.

In her evaluation, she found no sign or symptom of major psychological incapacity of the
petitioner, while respondent is suffering from a Dependent Personality Disorder with
Underlying Anti-Social Trait, by his parasitic attitude, allowing other people to be the
handler of his own personal sustenance, even hygienic wise, which somehow distorted
the notion on how to handle marital obligations in terms of mutual understanding,
communication and emotional intent. She was able to arrive at these findings on
respondent although he did not submit himself for the same psychological tests, through
clinical assessments and information supplied by the petitioner, and the description of the
petitioner's mother regarding how she perceived the respondent.

in this case, the only proof which bears on the claim that respondent-appellee is
psychologically incapacitated, is his allegedly being irresponsible, childish, overly
dependent on his mother, addicted to video games, addicted to drugs, lazy, had poor
hygiene, and his refusal or unwillingness to assume the essential obligations of marriage.
It is worthy to emphasize that Article 36 contemplates downright incapacity or inability to

48
take cognizance of and to assume the basic marital obligations; not a mere refusal,
neglect or difficulty, much less, ill will, on the part of the errant spouse.

Petitioner moved for reconsideration, but in its assailed August 29, 2013 Resolution, the
CA stood its ground. Hence, the instant Petition.

Issue

Is the totality of petitioner’s evidence established the psychological incapacity

of the respondent?

Ruling

The Court denies the petition.

Both the trial and appellate courts dismissed the petition on the ground that petitioner's
evidence failed to sufficiently prove that respondent was psychologically incapacitated to
enter marriage at the time. They held that while petitioner alleged such condition, she was
unable to establish its existence, gravity, juridical antecedence, and incurability based
solely on her testimony, which is insufficient, self-serving, unreliable, and uncorroborated,
as she did not know respondent very well enough - having been with him only for a short
period of time; Dr. Tayag's psychological report - which is practically one sided for the
latter's failure to include respondent in the study; and the account of petitioner's mother,
which is deemed biased and thus of doubtful credibility.

Petitioner's evidence consists mainly of her judicial affidavit and testimony; the judicial
affidavits and testimonies of her mother and Dr. Tayag; and Dr. Tayag's psychological
evaluation report on the psychological condition of both petitioner and respondent. The
deterınination of respondent's alleged psychological incapacity was based solely on
petitioner's account and that of her mother, since respondent was presumably in Italy and
did not participate in the proceedings.

With the declared insufficiency of the testimonies of petitioner and her witness, the weight
of proving psychological incapacity shifts to Dr. Tayag's expert findings. However, her
determinations were not based on actual tests or interviews conducted on respondent
himself - but on personal accounts of petitioner alone. This will not do as well.

Concomitantly, the rulings of the trial and appellate courts - identical in most respects -
are entitled to respect and finality.1âwphi1 The same being correct, this Court finds no
need to disturb them.

The issue of whether or not psychological incapacity exists in a given case calling
for annulment of marriage depends crucially, more than in any field of the law, on
the facts of the case. Such factual issue, however, is beyond the province of this
Court to review. It is not the function of the Court to analyze or weigh all over again
the evidence or premises supportive of such factual determination. It is a well-
established principle that factual findings of the trial court, when affirmed by the

49
Court of Appeals, are binding on this Court, save for the most compelling and cogent
reasons.

With petitioner's failure to prove her case, her petition for declaration of nullity of her
marriage was correctly dismissed by the courts below.

50
COCA-COLA BOTTLERS PHILS., INC., Petitioner, v. SPOUSES EFREN AND LOLITA
SORIANO, Respondents.

G.R. No. 211232, April 11, 2018

TIJAM, J.

FACTS:
Plaintiffs-appellees spouses Efren and Lolita Soriano are engaged in the business
of selling defendant-appellant Coca-Cola products in Tuguegarao City, Cagayan.
Sometime in 1999, defendant-appellant thru Cipriano informed plaintiffs-appellees that
the former required security for the continuation of their business. Plaintiffs-appellees
were convinced to hand over two (2) certificates of titles over their property and were
made to sign a document. Defendant Cipriano assured plaintiffs-appellees that it will be
a mere formality and will never be notarized.
Subsequently, plaintiffs-appellees informed defendant-appellant Coca-Cola of
their intention to stop selling Coca-Cola products due to their advanced age. Thus,
plaintiffs-appellees verbally demanded from defendant-appellant the return of their
certificates of titles. However, the titles were not given back to them.
When plaintiffs-appellees were contemplating on filing a petition for the issuance
of new titles, they discovered for the first time that their land was mortgaged in favor of
defendant-appellant Coca-Cola. Worse, the mortgage land was already foreclosed.
Hence, plaintiffs-appellees filed a complaint for annulment of sheriffs foreclosure sale.
They alleged that they never signed a mortgaged document and that they were never
notified of the foreclosure sale. In addition, plaintiffs-appellees aver that they never had
monetary obligations or debts with defendant-appellant. They always paid their product
deliveries in cash.
Furthermore, plaintiffs-appellees claimed that they merely signed a document in
Tuguegarao. They never signed any document in Ilagan, lsabela nor did they appear
before a certain Atty. Reymundo Ilagan on 06 January 2000 for the notarization of the
said mortgage document.
On their part, defendant-appellant alleged that plaintiffs-appellees are indebted to
them. Plaintiffs-appellees' admission that they signed the real estate mortgage document
in Tuguegarao, Cagayan indicates that the mortgage agreement was duly executed. The
failure of the parties to appear before the notary public for the execution of the document
does not render the same null and void or unenforceable.

ISSUE:
Was the real estate mortgage valid?

RULING:
Yes, the real estate mortgage was valid. The registration of a REM deed is not essential
to its validity.

51
Art. 2085 of the Civil Code of the Philippines is clear on the requisites for the validity of a
mortgage, to wit:
Art. 2085. The following requisites are essential to the contracts of pledge and
mortgage:
(1) That they be constituted to secure the fulfillment of a principal obligation;
(2) That the pledgor or mortgagor be the absolute owner of the thing pledged or
mortgaged;
(3) That the persons constituting the pledge or mortgage have the free disposal of
their property, and in the absence thereof, that they be legally authorized for the
purpose.
Third persons who are not parties to the principal obligation may secure the latter by
pledging or mortgaging their own property.
In relation thereto, Article 2125 provides:
Article 2125. In addition to the requisites stated in Article 2085, it is indispensable,
in order that a mortgage may be validly constituted, that the document in which it
appears be recorded in the Registry of Property. If the instrument is not recorded,
the mortgage is nevertheless binding between the parties.
Thus, as between the parties to a mortgage, the non-registration of a REM deed is
immaterial to its validity. In the case of Paradigm Development Corporation of the
Philippines, v. Bank of the Philippine Islands, the mortgagee allegedly represented that it
will not register one of the REMs signed by the mortgagor. In upholding the validity of the
questioned REM between the said parties, the Court ruled that "with or without the
registration of the REMs, as between the parties thereto, the same is valid and [the
mortgagor] is bound thereby." The Court, thus, cited its ruling in the case of Mobil Oil
Philippines, Inc., v. Ruth R. Diocares, et al. a portion of which reads:
Xxx. The codal provision is clear and explicit. Even if the instrument were not
recorded, "the mortgage is nevertheless binding between the parties." The law
cannot be any clearer. Effect must be given to it as written. The mortgage subsists;
the parties are bound. As between them, the mere fact that there is as yet no
compliance with the requirement that it be recorded cannot be a bar to foreclosure.
Moreover to rule as the lower court did would be to show less than fealty to the
purpose that animated the legislators in giving expression to their will that the
failure of the instrument to be recorded does not result in the mortgage being any
the less "binding between the parties." In the language of the Report of the Code
Commission: "In Article [2125] an additional provision is made that if the instrument
of mortgage is not recorded, the mortgage, is nevertheless binding between the
parties." We are not free to adopt then an interpretation, even assuming that the
codal provision lacks the forthrightness and clarity that this particular norm does
and therefore requires construction that would frustrate or nullify such legislative
objective.

52
REPUBLIC OF THE PHILIPPINES
vs.
NORTHERN CEMENT CORPORATION
G.R. No. 200256
April 11, 2018

CAGUIOA, J.:

THESIS STATEMENT

Northern Cement filed an application for the registration of title over the Subject Lot - a
Fifty Eight Thousand Six Hundred Seventeen point Ninety Six (58,617.96) square meters
lot in Barangay Labayug, Sison, Pangasinan - pursuant to Presidential Decree No. 1529
(PD 1529) and to have the title thereto registered and confirmed under its name.

FACTS

On June 16, 2000, Northern Cement alleged in its application that they are occupying the
lot by acquiring the Deed of sale from Rodolfo Chichioco, who is the former owner of the
subject lot by paying an amount of P17, 630.00 per Tax Declaration No. 023-01677.
These alleges are supported by multiple documents, one of them are seven (7) Tax
Declarations14 for various years from 1971 to 2003 in the name of Northern Cement and
a Tax Declaration15 for year 1970 in the name of Chichioco. Likewise, they’ve reported
the information concerning the subject lot, stating that it is an agricultural land; never been
earmarked for public purposes; it is within the alienable and disposable zone; and North
Cement is the actual occupant of the subject lot with the improvement: “cogon”.
Respondents adduced in evidence the witnesses Angelita Cabana testifying that Northen
Cement acquired said ownership over the subject lot from Chichioco by virtue of deed of
sale dated December 28, 1968 through payment of realty taxes. She added that no other
person is interested on claiming same lot. Other witnesses named Lilia Macanlalay and
Macaria Lopez Jr., who are investigators, added that an investigation was conducted over
the subject lot and that the records relative thereto are complete. The officer of the solicitor
General (OSG) filed a notice of appearance for the republic, deputizing the city prosecutor
of Urdaneta City to appear in the case.

The ruling of the RTC granted the application for registration of Northern Cement due to
proving its claim of ownership over the subject lot through preponderance of evidence.
The republic appealed to the CA, alleging that the RTC erred in granting the application
for registration despite the failure of respondent to observe the requisites for original
registration of title under PD 1529. Republic pointed out that the reports and approved
plan submitted in evidence by Northern Cement hardly suffice to prove that that the
subject is an alienable portion of the land.

53
The CA denied the Republic’s appeal and affirmed in toto the decision of the RTC.
Republic filed a Motion for Reconsideration but was denied in the assailed CA resolution
for raising no additional arguments to warrant reconsideration of the assailed the decision.

ISSUE

The Republic raised the sole issue of whether the CA erred in affirming the RTC's
Decision granting the application for registration of title in favor of Northern Cement
despite non-compliance with the requirements under PD 1529.

HELD
YES. The petition is meritorious. Section 14 of PD 1529 provides the ones who may file
an application for the registration of title to land, which are:
(1) Those who by themselves or through their predecessors-in-interest have been in
open, continuous, exclusive and notorious possession and occupation of alienable and
disposable lands of the public domain under a bona fide claim of ownership since June
12, 1945, or earlier.

(2) Those who have acquired ownership over private lands by prescription under the
provisions of existing laws.

Northern Cement failed to enlighten as to whether it was filed under section 14(1) or
section 12(2) of PD 1592. Respondents made no allegation nor presented evidence that
it had been in possession of the subject property since June 12, 1945 or earlier, which
does not meet the requirements of section 14(1) of PD 1592. However, the evidence
presented, the allegations in the pleadings as well as the discussion of the CA and the
RTC in their decisions, reveal that the present controversy was filed and tried based on
section 14(2) of PD 1592. Thus petition shall be resolved on respondent’s proof of its
acquisition of the subject lot by prescription. Section 14(2) is silent as to the nature and
period of such possession and occupation necessary, provided by article 1336 and 1118
of the Civil Code. Meaning that burden of proof is on the person seeking original
registration of land to prove by clear, positive and convincing evidence that his possession
was of the nature for thirty years without the need of title or good faith.

Applying the foregoing to the present case, the court finds the evidences submitted by
respondent to prove compliance with the requirement of possession under section 14(2)
of PD 1952 unconvincing because: (1) 7 tax declaration in the name of respondent and 1
tax declaration in the name of Chiochioco for a claimed possession of 32 years do not
qualify as competent evidence to prove the required possession for it does not prove
open, continuous, exclusive and notorious possession and occupation. (2) Witnesses
merely made a uniform and sweeping claim that the subject property “is owned and
possessed by Northern Cement.” Which is a mere conclusion of the law. Testimonies are
tenuous. (3) Northern Cement miserably failed to prove possession of the Subject Lot in
the concept of an owner with the records bare as to any acts of occupation, development,

54
cultivation or maintenance by it over the property.

SPOUSES GODFREY and MA. TERESA TEVES, Petitioners

v.
INTEGRATED CREDIT & CORPORATE SERVICES, CO. (now CAROL AQUI),
Respondents
G.R. No. 216714, APRIL 4, 2018
(DEL CASTILLO, J.)

This Petition for Review on Certiorari assails the March 28, 2014 Decision of the Court of
Appeals (CA) dismissing the Petition for Certiorari in CA-G.R. SP. No. 05483, as well as
its January 7, 2015 Resolution denying herein petitioners' Motion for Reconsideration.

FACTS: In 1996, Standard Chartered Bank (Standard) extended various loans to

petitioners Godfrey and Ma. Teresa Teves. As security, petitioners mortgaged their
property covered by Transfer Certificate of Title No. 107520(the subject property). They
secured their loan payments. Standard extrajudicially foreclosed on the mortgage, and
the property was sold to ICCS. A new certificate of was issued in favor of ICCS after
petitioners failed to redeem the subject property upon the expiration of the redemption
period on May 23, 2007. ICCS filed a petition for the issuance of a writ of possession. The
RTC issued a Decision ordering the issuance of a writ of possession over the subject
property in favor of ICCS. In the first order, the RTC denied the motion of consideration
of the respondents. In the second, Sps. Godfrey Teves and Teresa Teves are hereby
ordered to deliver to petitioner and/or deposit with the Court the monthly rentals of the
subject property in the amount of ₱50,000.00. The respondents filed for reconsideration
but it was still denied.
In 2006, petitioners filed a case for annulment of contract against Standard before the
Makati Regional Trial Court, docketed as Civil Case No. 06-227, The parties entered into
a compromise agreement, after which the Makati trial court (Branch 149) issued a
Judgment (Based on Compromise Agreement) on July 23, 2010, declaring among others
that petitioners shall drop Civil Case No. 06-227 and surrender possession of the subject
property to Standard, in consideration of the latter's waiver of a deficiency claim against
the former. Thus, in September, 2010, petitioners surrendered possession over the
subject property to Aqui. Thus, this petition for certiorari.

ISSUE: Can collection of back rentals be awarded in an ex parte application for writ of
possession under act 3135?

HELD: No. When the redemption period expired on May 23, 2007, ICCS became the
owner of the subject property and was, from then on, entitled to the fruits thereof.
Petitioners ceased to be the owners of the subject property, and had no right to the same
as well as to its fruits. Under Section 32, Rule 39 of the Rules, as on Execution,
Satisfaction and Effect of Judgments, all rents, earnings and income derived from the

55
property pending redemption shall belong to the judgment obligor, but only until the
expiration of his period of redemption.

DESIDERIO DALISAY INVESTMENTS, INC., petitioner, v. SOCIAL SECURITY

SYSTEM, respondent.
G.R. No. 231053, April 04, 2018
VELASCO JR., J.
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in
money. The debtor delivers and transmits to the creditor the former's ownership over a
thing as an accepted equivalent of the payment or performance of an outstanding debt.

This case involves an action for quieting of title by petitioner Desiderio Dalisay
Investments, Inc. (DDLI) against respondent Social Security System (SSS) which hinges
on the question of whether or not the proposed dacion en pago was indeed perfected,
thereby vesting unto SSS a legitimate title and interest over the properties in question.
Since it can be proved that the proposed dacion was perfected, or even consummated,
then SSS' claim which allegedly casts a cloud on DDII's title is valid and operative, and
consequently, the action for quieting of title filed by DDII will not prosper.

The Antecedent Facts

The case controversy involved a parcel of land covered by Transfer Certificate of Title
(TCT) including the building erected thereon, situated in Agdao, Davao City. Sometime in
the year 1976, respondent Social Security System (SSS) filed a case before the Social
Security Commission (SSC) against the Dalisay Group of Companies (DGC) for the
collection of unremitted SSS premium contributions of the latter's employees.

Desiderio Dalisay, then President of petitioner Desiderio Dalisay Investments, Inc. (DDII)
offered SSS the subject land and building to offset DGC's liabilities subject of the
aforementioned cases at P3,500,000. The parties, however, failed to arrive at an
agreement as to the appraised value thereof. Thus, no negotiation took place. Desiderio
Dalisay sent another Letter seeking further negotiation with SSS by recommending that
the appraisal be done by Asian Appraisal, Co. Inc. SSS agreed, but it later turned out that
Asian Appraisal, Inc. did not respond to Dalisay's request.

DDII's total liabilities with SSS covering unpaid premium contributions, inclusive of
penalties and salary/calamity loan amortizations, amounted to P4,421,321.62. The SSS
issued Resolution No. 849 - s. 82. accepting DDII's proposed dacion en pago.

The SSC then informed DDII of its acceptance of the proposed dacion in payment,
including its specified terms and conditions through letter. The RTC resolved the case in
favor of DDII, holding that there was no perfected dacion in payment between the parties.
Consequently, SSS has no legal personality to own, possess, and occupy the property.
The CA reversed the RTC’s ruling in that the records establish that DGC has an
outstanding obligation in favor of SSS that it proposed to pay the amount via dacion en

56
pago, said offer was categorically accepted by SSS, and the agreement was
consummated by DDII's delivery of the property to SSS.

The Issue

Is the Dacion en pago perfected and consequently, will warrant the action for quieting of
title filed by DDLI?

Ruling of the Court

For an action to quiet title to prosper, two indispensable requisites must concur, namely:
(1) the plaintiff or complainant has a legal or an equitable title to or interest in the real
property subject of the action; and (2) the deed, claim, encumbrance, or proceeding
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.

The negotiation stage covers the period from the time the prospective contracting parties
indicate interest in the contract to the time the contract is perfected. This then includes
the making of an offer by one party to another and ends when both parties agree on the
object and the price. While petitioner is correct that there is no evidence of Atty.
Cabarroguis' authority to represent the company in said meeting, this however is
outweighed by the fact that no one questioned Atty. Cabarroguis' representations and
authority after the conclusion of the negotiations; and that a few days after the said
meeting, the company immediately arranged for the property's turnover through Dalisay-
Tirol, Acting President and General Manager, and eventually delivered possession
thereof to SSS.

The Court agrees with the appellate court that there was a perfected dation in payment.
In the present case, SSC Resolution No. 849 — s. 82 constitutes an absolute and
unequivocal acceptance which perfected the offered dacion. Thus, when possession of
the subject property was delivered to SSS, this signified a transfer of ownership thereon,
consistent with the supposedly perfected agreement.

Within the purview of the law on sales, a contract of sale is perfected by mere consent,
upon a meeting of the minds on the offer and the acceptance thereof based on subject
matter, price and terms of payment. Applying said principles to the case, the SSS'
acceptance of the offer at P2,000,000 resulted in a perfected dation. The offer was validly
reduced from P3,500,000 to P2,000,000. Consequently, SSS' agreement to the
P2,000,000 offer was not a counter-offer as petitioner would have it, but an acceptance
of the new reduced offer communicated by the company's representative, Atty.
Cabarroguis, which acceptance perfected the proposed dation in payment. DDII has the
onus of proving that the P2,000,000 offer made to SSS was invalid which would result in
SSS' acceptance at said amount to be different from the price offered. Petitioner,
however, failed to discharge said burden.

57
Agreeing with SSS, the Court agrees that the agreement on dacion en pago was
consummated by DDII's delivery of the property to SSS. The turnover of the properties
to SSS was tantamount to delivery or "tradition" which effectively transferred the real right
of ownership over the properties from DDII to SSS. Even after a review of the records of
the case, the Court is unable to find any indication that when they turned over the
properties to SSS, the company reserved its ownership over the property and only
transferred the jus possidendi thereon to SSS.

Ergo, the Court finds that SSS has validly and in good faith acquired title to the property
subject of the dispute, making the action to quiet title filed by DDII improper.

58
Eversley Childs Sanitarium, Represented By Dr. Gerardo M. Aquino, Jr. (Now Dr.
Primo Joel S. Alvez) Chief of Sanitarium
V.
Spouses Anastacio and Perla Barbarona
G.R. No. 195814 | 2018-04-04
Leonen, J.
Thesis:
Eversly files a petition assailing the CA Decision which orders Eversley Childs
Sanitarium to vacate the disputed property allegedly owned by the Barbarona Spouses.
Eversly bases its petition on the grounds that the property was beyond the jurisdiction of
the Municipal Trial Court (MTC), the Spouses Barbarona were guilty of laches, and that
the certificate of title of the Barbaronas was void .
Facts:
Eversley is a public health facility that administers care and treatment to patients
suffering from Hansen's disease (leprosy), and to provide basic health services to non-
Hansen's cases. Since 1930, it has occupied a portion of a parcel of land denominated
as Lot No. 1936 in Jagobiao, Mandaue City, Cebu.

The Spouses Barbarona allege that they are the owners of Lot No. 1936 by virtue
of Transfer Certificate of Title. They claim that they have acquired the property from the
Spouses Gonzales. On May 6, 2005, the Spouses Barbarona filed a Complaint for
Ejectment (Complaint) before the MTC in Cities of Mandaue City against the occupants
of Lot No. 1936, Eversley and Jagobiao National High School among others. The
Spouses Barbarona alleged that they had sent demand letters and that the occupants
were given until April 15, 2005 to vacate the premises.

In their Answer, the occupants alleged that since they had been in possession of
the property for more than 70 years, the case was effectively one for recovery of
possession, which was beyond the jurisdiction of the MTC. They claimed that the
Spouses Barbarona were guilty of laches since it took more than 60 years for them to
seek the issuance of a Torrens title. They also averred that the their certificate of title was
void since they, the actual inhabitants were never notified of its issuance.

In its September 29, 2005 Decision, the MTC in Cities ordered the occupants to
vacate the property, finding that the action was one for unlawful detainer, and thus, within
its jurisdiction. It likewise found that the Spouses Barbarona were the lawful owners of
Lot No. 1936 and that the occupants were occupying the property by mere tolerance.
Issue:
Was the Spouses Barbarona's complaint against Eversley Childs Sanitarium
for accion publiciana or for unlawful detainer?

59
Ruling:
No it is not.
A requisite for a valid cause of action in an unlawful detainer case is that
possession must be originally lawful, and such possession must have turned unlawful
only upon the expiration of the right to possess. It must be shown that the possession
was initially lawful; hence, the basis of such lawful possession must be established. If, as
in this case, the claim is that such possession is by mere tolerance of the plaintiff, the
acts of tolerance must be proved.

In addition, plaintiff must also show that the supposed acts of tolerance have been
present right from the very start of the possession — from entry to the property.
Otherwise, if the possession was unlawful from the start, an action for unlawful detainer
would be an improper remedy. Notably, no mention was made in the complaint of how
entry by respondents was effected or how and when dispossession started. Neither was
there any evidence showing such details.

Thus, because of the Spouses’ failure to prove so, the complaint does not qualify
for accion publiciana or for unlawful detainer.

Issue:
Does the MTC have jurisdiction over the said case?

Ruling:
No.

The petitioner argument that the Municipal Trial Court has no jurisdiction over the
case since respondents' cause of action makes a case for accion publiciana and not
ejectment through unlawful detainer is tenable.

Therefore, since the respondents filed the improper case before the Municipal Trial
Court, it had no jurisdiction over the case. Any disposition made, therefore, was void. The
subsequent judgments of the Regional Trial Court and the Court of Appeals, which
proceeded from the void Municipal Trial Court judgment, are likewise void.

60
Republic of the Philippines v. Spouses Javier
Gr. No. 214367, April 4, 2018
LEONEN, J.

Facts:
A.) Laureana and Iden's application for registration of land title over a parcel situated in
Barangay Tranca, Talisay, Batangas filed in June 2009 before the Municipal Circuit Trial
Court of Talisay-Laurel, Batangas. The land, regarded as Lot No. 1591, Cad. 729, Talisay
Cadastre, had an area of 9,629 square meters.
B.) On September 10, 2009, Republic of the Philippines (Republic) filed an Opposition
to the application based on the following grounds:
(1) Ne[i]ther the applicants nor their predecessors-in-interest have been in open,
continuous, exclusive and notorious possession and occupation of the land in question in
the concept of an owner since June 12, 1945 or earlier; (2) The tax declarations relied
upon by appellees do not constitute competent and sufficient evidence of a bona fide
acquisition of the land by the appellees; and (3) The parcel of land applied for is a land of
public domain and, as such, not subject to private appropriation
C.) An initial hearing was scheduled on January 19, 2010. During the hearing, several
documents were marked to show compliance with the necessary jurisdictional
requirements. Since nobody appeared to oppose Laureana and Iden's application, the
trial court issued an Order of General Default against the whole world except the Republic.
D.) In the subsequent hearings, Laureana and Iden presented testimonial and
documentary evidence to establish their ownership claim. In her testimony, Laureana
alleged that she was married to Cecilio Javier (Cecilio) and that Iden was their son. She
claimed that she and Cecilio (the Spouses Javier) purchased the property from Spouses
Antonio Lumbres and Leonisa Manaig (the Spouses Lumbres) on October 10, 1985. A
Deed of Absolute Sale was executed to facilitate the transaction. They had the property
fenced and planted with coconut, antipolo, and duhat. She also claimed that they had
paid its property taxes since 1986.
E.) Banawa, a resident of Barangay Tranca, Talisay, Batangas since her birth on March
8, 1929,14 testified that Cito Paison (Cito) and Juan Paison (Juan) owned the property
as early as 1937. The half portion owned by Cito was later transferred to his daughter,
Luisa Paison (Luisa). Both portions owned by Luisa and Juan were then transferred to
the Spouses Lumbres, until half was finally sold to the Spouses Javier and the other half
to their son, Iden.
F.) Hernandez, who was a Special Land Investigator I of the Department of Environment
and Natural Resources-Comnunity Environment and Natural Resources Office (DENR-
CENRO), testified that he was the one who conducted an ocular inspection on the land.
He found that the land "ha[d] not been forfeited in favor of the government for non-
payment of taxes [or] . . . confiscated as bond in connection with any civil or criminal
case." Moreover, the land was outside a reservation or forest zone.

61
G.) Maglinao, Forester I of DENR-CENRO,22 also testified that she inspected the
property before issuing a certification, which stated that the land "[was] within the
alienable and disposable zone under Project No. 39, Land Classification Map No. 3553
certified on September 10, 1997."
H.) Meanwhile, Canarias, the Municipal Assessor of Talisay, Batangas, attested that the
property was covered by Tax Declaration Nos. 014-01335 and 014-00397 under the
names of Laureana and Cecilio, and of Iden.
I.) On May 5, 2011, the trial court rendered a Decision granting Laureana and Iden's
application for registration of title. It held that they were able to establish that the property
was alienable and disposable since September 10, 1997 and that " [they] and their
predecessors-in-interest ha[ d] been in open, continuous, exclusive, and notorious
possession of the subject property, in the concept of an owner, even prior to 12 June
1945.
J.) The Republic moved for reconsideration, which was denied by the trial court in its
December 9, 2011 Order.
It averred that there should be "(1) [a] CENRO or [Provincial Environment and Natural
Resources Office] Certification; and (2) a copy of the original classification approved by
the DENR Secretary and certified as a true copy by the legal custodian of the official
records" attached to the application for title registration. They also failed to prove under a
Bona Fide claim of Ownership.
K.) On September 15, 2014, the Court of Appeals promulgated a Decision dismissing the
Republic's appeal and affirming the Decision and Order of the Municipal Circuit Trial
Court. It ruled that although Laureana and Iden failed to present a copy of the DENR
Secretary-approved original classification stating that the property was alienable and
disposable, "there [was] substantial compliance to the requirement[s]. Finally, the Court
of Appeals found that Laureana and Iden were able to prove their predecessors-in-
interest's possession of property since 1937 and their possession since 1985 as
evidenced by the tax declarations.
L.) On November 25, 2014, the Republic filed a Petition for Review39 before this Court
against Laureana and Iden. Petitioner argues that the application for land registration
should have been dismissed by the trial court considering that it was not accompanied by
"a copy of the original classification approved by the Department of Environment and
Natural Resources (DENR) Secretary and certified as true copy by its legal custodian."It
avers that a CENRO Certification is not sufficient to prove the land's classification as
alienable and disposable.
Petitioner contends that 1.) Respondents' acts of fencing and planting transpired only
after they purchased the property in 1985. 2.) Banawa also failed to mention in her
testimony that respondents' predecessors-in-interest occupied, developed, maintained,
or cultivated the property, which could have shown that the former owners possessed the
property by virtue of a bona fide ownership claim. 3.) The tax declarations presented by
respondents only date back to 1948 as the earliest year of possession

Issue:
Whether or not the trial court and the Court of Appeals erred in granting Laureana Malijan-
Javier and Iden Malijan-Javier's application for registration of property?

62
Ruling:
In this case, although respondents were able to present a CENRO certification, a DENR-
CENRO report with the testimony of the DENR officer who made the report, and the
survey plan showing that the property is already considered alienable and disposable,
these pieces of evidence are still not sufficient to prove that the land sought to be
registered is alienable and disposable. Absent the DENR Secretary's issuance declaring
the land alienable and disposable, the land remains part of the public domain.
Thus, even if respondents have shown, through their testimonial evidence, that they and
their predecessors-in-interest have been in open, continuous, exclusive, and notorious
possession and occupation of the property since June 12, 1945, they still cannot register
the land for failing to establish that the land is alienable and disposable.
All things considered, this Court finds that the Court of Appeals committed a reversible
error in affirming the May 5, 2011 Decision and December 9, 2011 Order of the Municipal
Circuit Trial Court of Talisay-Laurel, Batangas, which granted the land registration
application of respondents.
WHEREFORE, the Petition is GRANTED. The Court of Appeals September 15, 2014
Decision in CA-G.R. CV No. 98466, which affirmed the May 5, 2011 Decision and
December 9, 2011 Order of the Municipal Circuit Trial Court, is REVERSED and SET
ASIDE. Laureana Malijan-Javier and Iden Malijan-Javier's application for registration of
Lot No. 1591, Cad. 729, Talisay Cadastre is DENIED for lack of merit.

63
LEVISTE MANAGEMENT SYSTEM, INC., Petitioner V. LEGASPI TOWERS 200, INC.,
and VIVAN Y. LOCSIN and PITONG MARCORDE, Respondents
G.R. No. 199353, April 4, 2018
Leonardo-De Castro, J:

FACTS

Leviste Management System, Inc. Filed a complaint with the RTC praying among
others that a writ of injunction be issued to allow the completion of the construction of a
condominium unit on top of the roof deck of Consession 3 of Legaspi Towers. Legaspi
Towers is a condominium building located at Paseo de Roxas, Makati City. It consists of
seven floors with a unit on the roof deck and two levels above said unit called
Consession 2 and Consession 3. The use and occupancy of the condominium building
is governed by the Master deed of Legaspi Towers. Legaspi sent notices to petitioners
saying that building Concession 4 on top of the roof deck of Concession 3 of Legaspi
Towers is illegal. Despite this, petitioner refused to stop its construction. Legaspi then
forbade the entry of petitioner’s construction materials. Legaspi insists that it owns the
air space above concession 3 since the air space wherein Concession 4 was built is not
only above Concession 3 but above the entire condominium building. As such Article
448, applies.

Issue
Does Article 448 of the civil code apply in the case?

Ruling
No, Article 448 of the Civil Code on builders in good faith are in applicable in
cases covered by the Condominium Act where the owner of the land and the builder are
already bound by specific legislation on the subject property, and by contract. Upon
acquisition of a condominium unit, the purchaser not only affixes his conformity to the
sale; he also binds himself to a contract with other unit owners. The land belongs to a
condominium corporation, wherein the builder, as a unit owner, is considered a stock
holder or member. The builder is therefore already in a co-ownership with other unit
owners as members or stockholders of the condominium corporation, whose legal
relationship is governed by a special law, the Condominium Act. The provisions of the
Civil Code, a general law, should give way to the Condominium Act, a special law. It is
basic tenet in statutory construction that between a general law and a special law, the
special law prevails.

64
LOURDES VALDERAMA, Petitioner, v. SONIA ARGUELLES AND LORNA
ARGUELLES, Respondents.
G.R. No. 223660, April 02, 2018
TIJAM, J.:
FACTS:
Respondents filed a petition to cancel adverse claim involving a parcel of land
covered by Transfer Certificate of Title (TCT) No. 266311. Respondents alleged that
Conchita, who was the registered owner of a parcel of land consisting of 1000 sqm located
in Sampaloc, Manila freely and voluntarily executed an absolute deed of sale of the
subject property in favor of respondents. The subject property was subsequently
registered in the names of respondents under TCT No. 266311.

Conchita filed an affidavit of adverse claim which was registered and annotated on
TCT No. 266311. On January 24, 2008, Conchita died. As registered owners of the
subject property, respondents prayed for the cancellation of the adverse claim in the
petition subject of this controversy.

On February 10, 2010, petitioner and Tarcila, as full blooded sisters of Conchita,
filed an opposition to the petition. They claimed that upon Conchita's death, the latter's
claims and rights against the subject property were transmitted to her heirs by operation
of law. They also argued that the sale of the subject property to the respondents was
simulated as evidenced by the following, among others: (1) Conchita had continuous
physical and legal possession over the subject property; (2) Conchita was the one paying
for the real estate taxes for the subject property; and (3) Conchita had in her possession,
up to the time of her death, the Owner's Duplicate Copy of the TCT No. 266311.

Meanwhile, on September 24, 2013, while the petition to cancel adverse claim was
pending before the RTC, respondents filed a complaint for recovery of ownership and
physical possession of a piece of realty and its improvements with damages and with
prayer for the issuance of temporary restraining order and/or writ of preliminary injunction
against petitioner and Tarcila, among others. Respondents filed a manifestation and
motion praying for the outright cancellation of the adverse claim annotated on the TCT
No. 266311 on the ground that petitioner's subsequent filing of notice of lis
pendens rendered the issue moot and academic.

ISSUE:
Shall the adverse claim caused to be annotated by a person on a title be cancelled
merely because another person caused the annotation of a notice of lis pendens on the
same title?
HELD:
No. A subsequent annotation of a notice of lis pendens on a certificate of title does not
necessarily render a petition for cancellation of adverse claim on the same title moot and

65
academic. A notice of lis pendens is a mere incident of an action which does not create
any right nor lien. It may be cancelled without a court hearing. In contrast, an adverse
claim constitutes a lien on a property. As such, the cancellation of an adverse claim is still
necessary to render it ineffective; otherwise, the inscription will remain annotated and
shall continue as a lien upon the property.
Given the different attributes and characteristics of an adverse claim vis-a-vis a notice
of lis pendens, this Court is led to no other conclusion but that the said two remedies may
be availed of at the same time. In fact, in a later case this Court ruled that the annotation
of a notice of lis pendens at the back of a certificate of title does not preclude the
subsequent registration on the same certificate of title of an adverse claim.

66
G.R. No. 200383 March 19, 2018
Norma M. Diampoc, petitioner, vs. Jessie Buenaventura and the Register of Deeds
of the City of Taguig, respondents.
Del Castillo, J.

Norma and her husband, the Diampocs, filed a complaint for annulment of deed of
sale and recovery of duplicate original copy of title, with damages, against Buenaventura.
FACTS:
The Diampocs alleged that they owned a parcel of land, and Buenaventura, a
friend, asked to borrow the owner’s copy of the certificate title of the land to be used as
security for a loan she wished to secure. They acceded, on the condition that she should
not sell the property and that she should give them a portion of the amount out of the loan
proceeds. Buenaventura allegedly caused them to sign a folded document without giving
them the opportunity to read its contents. They soon found out that Buenaventura became
the owner of one-half portion of the property by virtue of a supposed deed of sale in her
favour.
ISSUE:
Is there a valid contract of sale between the parties?
RULING:
The Supreme Court ruled that there was a valid contract of sale. It is a well settled
rule that the deed of sale suffering from defects relative to its notarization does not
invalidate the transaction, but merely reduces the evidentiary value of a document to that
of a private document. Although Article 1358 of the Civil Code requires that the form of a
contracts that transmits or extinguishes real rights over immovable property should be in
public document, the sale is nevertheless valid and binding, for the formalities required is
not essential for the validity of the contract but is simply for its greater efficacy or
convenience. The Court of Appeals even found that the Diampocs received an amount in
full consideration for the sale.
Moreover, the Diampocs conceded that there was such a deed of sale, but they
were only induced to sign. The document was folded according to Norma when she
signed, and when her husband signed the same, it was dark. The failure to observe the
care and circumspect expected of them precludes the courts from lending a helping a
hand and must bear the consequences from their negligence. One who signs a contract
is presumed to know its contents has been applied even to illiterate persons such that
they are negligent if they fail to have the contract read to them. One’s failure to obtain an
understanding of a contract is such gross negligence as will estop him from avoiding it on
the ground that he was ignorant of its contents.
The Court did not relieve the Diampocs from the obligations they voluntarily assumed all
because of disastrous deals or unwise investments.

67
REPUBLIC OF THE PHILIPPINES v. FLORIE GRACE M. COTE
GR NO. 212860, March 14, 2018
REYES, JR., J.:
FACTS:
Rhomel Gagarin Cote and respondent Florie Grace Cote Manongdo-Cote got married in
Quezon City. Rhomel filed a petition for Divorce before the Family Court of the First Circuit
of Hawaii on the ground that their marriage was irretrievably broken. A decree of absolute
divorce was hereby granted and the bonds of matrimony between them are hereby
dissolved.
Seven years later, Florie commenced the petition for recognition of foreign judgement
granting the divorce before the Reginal Trial Court and prayed for cancellation of Marriage
Contract. The RTC granted the petition and declared Florie to be capacitated to remarry
after the RTC’s decision attained finality and has been issued. The RTC ruled that Rhomel
was already an American citizen when he obtained the divorce decree.
Petitioner then filed a petition for certiorari with the CA claiming that RTC committed a
grave abuse of discretion.
The CA denied the petition. The CA ruled that petitioner's omission, by itself, is a ground
for dismissing the petition.
ISSUE:
1.Did CA erred in finding that the Trial Court Judge did not commit grave abuse of
discretion in applying procedural rules for nullity of Marriage Proceedings under AM No.
02-11-10-SC in a proceeding for recognition of foreign decree of divorce?
2.Did CA erred in affirming the Trial Court’s Decision granting Florie’s petition for
recognition of foreign decree of divorce despite lack of showing that her former Filipino
husband was already American citizen at the time he procured the divorce?
RULING:
1. No, The Trial Court did not commit grave abuse of discretion. Although the Court
agrees with petitioner that the RTC erroneously misapplied A.M. No. 02-11-10-SC,
such error does not automatically equate to grave abuse of discretion.

The Court finds no indication from the records that the RTC acted arbitrarily, capriciously
and whimsically in arriving at its decision. A petition for certiorari will prosper only
if grave abuse of discretion is alleged and proved to exist. The burden is on the
part of the petitioner to prove not merely reversible error on the part of private
respondent, but grave abuse of discretion amounting to lack or excess of
jurisdiction.

2. No, the Court ruled that the reckoning point is not the citizenship of the parties at
the time of the celebration of the marriage, but their citizenship at the time a valid
divorce is obtained abroad by the alien spouse capacitating the latter to remarry.

Although the Court has already laid down the rule regarding foreign divorce involving
Filipino citizens, the Filipino spouse who likewise benefits from the effects of the

68
 divorce cannot automatically remarry. Before the divorced Filipino spouse can
remarry, he or she must file a petition for judicial recognition of the foreign divorce.

The starting point in any recognition of a foreign divorce judgment is the acknowledgment
that our courts do not take judicial notice of foreign judgments and laws

The RTC, in its Decision ruled that Florie had sufficiently established that she is married
to an American citizen and having proven compliance with the legal requirements,
is declared capacitated to remarry.

The CA’s Decision is hereby affirmed.

69
JEROME K. SOLCO, PETITIONER, VS. MEGAWORLD CORPORATION,
RESPONDENT
2018-03-05 | G.R. No. 213669

TIJAM, J.:

FACTS:
CA Decision was assailed for reversing RTC ruling, which upheld the validity of transfer
of ownership by tax delinquency sale in favor of Petitioner Solco.
Allegedly, respondent failed to real property taxes on said parking lots in Makati from the
year 2000 to 2008. Consequently, the City Government issued a Warrant of Levy over
the subject properties. Thereafter, they were sold at a public auction, wherein Jerome
Solco (Solco) emerged as the highest bidder in the amount of P33,080.03 for the Two
Lafayette property and P32,356.83 for the Manhattan property. Subsequently, the City
Government of Makati issued the certificates of sale to Solco.
However, Respondent contended, there was a separate Contract to Sell and Buy made
with Dimaporo (in Lafayette) and with Delos Santos (one in Manhattan) covering a unit in
the condominium. By virtue of such transfers, the buyers assumed all the respective
obligations, assessments, and taxes on the property from the time of delivery pursuant to
their agreements. Hence, starting year 2000, Megaworld admittedly did not pay the real
property taxes thereon.
Further, Respondent averred that the auction proceedings were tainted with fatal
anomalies, to wit:
(1) Megaworld nor Dimaporo or Delos Santos were notified of the warrants of levy
purportedly issued by the city government; (2) the Notice of Deliquency was not
posted in a conspicuous place in each barangay of Makati; (3) the published notice
did not state the necessary recitals prescribed in Section 254 of the Republic Act No.
7160 or The Local Government Code (RA 7160); (4) the purported warrants of levy
were not properly served upon the Register of Deeds and the City Assessor as the
same were not annotated by the Register of Deeds in the CCTs and by the City
Assessor in the tax declarations in violation of Section 258 of the RA 7160; (5) the
levying officer did not verify receipt by Megaworld of the alleged warrants of levy and
did not submit a written report on the completion of the service warrants to the City
Council; (6) the City Treasurer proceeded with the advertisement of the public sale of
the subject properties despite the absence of due notice to Megaworld and the service
to the Register of Deeds and the City Assessor of the warrants of levy; (7) the subject
properties were auctioned off at measly amounts; (8) that Solco as the lone bidder
was also suspicious considering the prime location and marketability of the subject
properties; (9) stenographic notes and minutes of the purported auction proceedings
were not taken down and prepared; and, (10) an examination of the CCTs reveals
that the warrants of levy were annotated only on January 5, 2006, on the same date
that the Certificates of Sale were annotated only upon the instance of Solco's
representative.

70
Delos Santos settled the issue with petitioned through a Compromise Agreement. Thus,
this issue only concerned the property in Two Lafeyette.
CA Ruling: The CA held that strict adherence to the statutes governing tax sales is
imperative not only for the protection of taxpayers but also to allay any possible suspicion
of collusion between the buyer and the public officials called upon to enforce the laws. It
held that the notice of sale to the delinquent land owners and to the public in general is
an essential and indispensable requirement of law, the non-fulfillment of which vitiates
the sale. The CA further held that the auction sale of land to satisfy alleged delinquencies
in the payment of real estate taxes derogates property rights and due process, ruling
thus that steps prescribed by law for the sale, particularly the notices of delinquency and
of sale, must be followed strictly.

ISSUE:
Whether or not the infirmities attendant the tax delinquency sale invalidated the transfer
of title over the disputed property.

HELD: Yes. We find no cogent reason to deviate from the findings and conclusion of the
CA.
The record is barren of any proof that the warrant of levy was served upon Megaworld or
Dimaporo as the beneficial owner/possessor, either personally or by registered mail. As
correctly observed by the CA, the acknowledgment portion of the warrant of levy is blank
and does not indicate any signature or printed name of Megaworld's representative or
Dimaporo to prove the receipt of the same. Also, the warrant of levy on its face shows
that it was issued on December 20, 2005, which was also the date of the auction sale.
Indeed, it is highly irregular that the warrant of levy was issued on the same date of the
auction sale.
It is essential that there be an actual notice to the delinquent taxpayer, otherwise, the sale
is null and void even if it be preceded by proper advertisement or publication.
There was likewise no evidence presented and offered that a written notice of levy with
the attached warrant was mailed to or served upon the assessor and the Register of
Deeds for the latter to be able to annotate the levy on the tax declaration and the title,
respectively. In this case, the inscription of the Notice of Levy on the CCT No. 593823
was dated January 5, 2006 or 16 days after the auction sale. Such annotation was done
on the same date that the Certificate of Sale was inscribed on the title. Further, the
reportorial requirements to the Sanggunian to be done by the levying officer and the local
treasurer, respectively, were not proven to be complied with. Clearly, these are violation
of RA 7160's provisions above-cited.
For these reasons, We are constrained to affirm the CA's ruling, which is to strike down
the tax sale as null and void. We cannot deny that there is insufficiency of evidence to
prove compliance with the above-cited mandatory requirements under RA 7160 for a valid
tax delinquency sale.
In arguing that he was a buyer in good faith, Solco merely relied upon the presumption of
good faith under Section 3(a), Rule 13155 of the Rules of Court and also averred that he
merely relied on the presumption of regularity of the acts of public officials in the conduct
of the tax sale.

71
Foremost, in consonance with the strict and mandatory character of the requirements for
validity of a tax delinquency sale, well-established is the rule that the presumption of
regularity in the performance of a duty enjoyed by public officials, cannot be applied to
those involved in the conduct of a tax sale. In the case of Camo above-cited, it was written
that no presumption of regularity exists in any administrative action which resulted in
depriving a citizen or taxpayer of his property. This is an exception to the rule that
administrative proceedings are presumed to be regular.
Secondly, good faith is a question of intention, determined by outward acts and proven
conduct. The circumstances of the case restrain Us from ruling that Solco was a buyer in
good faith. Records show that the subject property had been in Dimaporo's possession
since 1999. Notably, this fact has never been refuted by Solco in the entire proceedings
even up to the instant petition. Settled is the rule that one who purchases a real property
which is in possession of another should at least make some inquiry beyond the face of
the title. A purchaser cannot close his eyes to facts which should put a reasonable man
upon his guard, and then claim that he acted in good faith under the belief that there was
no defect in the title of the vendor. Admittedly, in this case, Solco never made any inquiry
to such a significant fact.

72
G.R. No. 211153, February 28, 2018
AMPARO S. CRUZ; ERNESTO HALILI; ALICIA H. FLORENCIO; DONALD HALILI;
EDITHA H. RIVERA; ERNESTO HALILI, JR.; AND JULITO
HALILI, Petitioners, v. ANGELITO S. CRUZ, CONCEPCION S. CRUZ, SERAFIN S.
CRUZ, AND VICENTE S. CRUZ, Respondents.
DEL CASTILLO, J.:
Facts:
An Amended Complaint was filed on April 6, 1999 against respondents Angelito S.
Cruz, Concepcion S. Cruz, and Serafin S. Cruz alleging that they - together with their
siblings, petitioner Amparo S. Cruz and Antonia Cruz inherited a 940-square-meter parcel
of land from their late parents, spouses Felix and Felisa Cruz. Deed of Extrajudicial
Settlement was executed, that each heir was to receive an equal portion of the subject
property as mandated by law; they discovered that Antonia was allocated two lots, as
against one each for the respondents; that Antonia's allocation of two lots contravened
the agreement among the heirs receiving equal shares in the subject property; that
Amparo and Antonia were able to perpetrate the fraud by inducing Concepcion - who was
illiterate - to sign the deed of extrajudicial settlement of estate, which was written in the
English language, without previously reading and explaining the contents thereof to the
latter; that Amparo and Antonia fraudulently took advantage of Concepcion's ignorance
and mental weakness, deceiving and cajoling her into signing the deed of extrajudicial
settlement, to her damage and injury.
Issue: Does the CA erred in ruling that the respondents' cause of action for annulment
has not prescribed, and that it ignored contemporaneous and subsequent acts of
respondents indicating the absence of fraud or vitiation of consent in the execution of the
deed of extrajudicial settlement of the estate of Felix Cruz?
Ruling:
Yes. The Court of Appeals erred in ruling that the respondents' cause of action for
annulment has not prescribed, and that it ignored contemporaneous and subsequent acts
of respondents indicating the absence of fraud or vitiation of consent in the execution of
the deed of extrajudicial settlement of the estate of Felix Cruz.
The Supreme Court denied the petition and held that the present action involves a
situation where one heir was able - through the expedient of an extrajudicial settlement
that was written in a language that is not understood by one of her co-heirs - to secure a
share in the estate of her parents that was greater than that of her siblings, in violation of
the principle in succession that heirs should inherit in equal shares.
Thus, Antonia - represented in this case by her surviving heirs - received two lots
as against her siblings, including respondent Concepcion, who respectively received only
one lot each in the subject 940 square-meter property. This she was able to achieve
through the subject 1986 deed of extrajudicial settlement - which was written in English,
a language that was not known to and understood by Concepcion given that he finished
only Grade 3 elementary education. With the help of Amparo, Antonia was able to secure
Concepcion's consent and signature without the benefit of explaining the contents of the
subject deed of extrajudicial settlement. For this reason, Concepcion did not have
adequate knowledge of the contents and ramifications of the subject deed of extrajudicial

73
settlement; he was left unaware of the sharing arrangement contained therein, and
realized it only when Antonia attempted to subdivide the subject property in 1998, and the
plan of subdivision survey was shown to Concepcion- which revealed that Antonia
obtained two lots.
In short, this is a simple case of exclusion in legal succession, where co-heirs were
effectively deprived of their rightful share to the estate of their parents who died without a
will - by virtue of a defective deed of extrajudicial settlement or partition which granted a
bigger share to one of the heirs and was prepared in such a way that the other heirs would
be effectively deprived of discovering and knowing its contents.
Under the law, "the children of the deceased shall always inherit from him in their own
right, dividing the inheritance in equal shares." In this case, two of Concepcion's co-heirs
renounced their shares in the subject property; their shares therefore accrued to the
remaining co-heirs, in equal shares as well.

74
G.R. No. 214587, February 26, 2018

JOSEPHINE P. DELOS REYES AND JULIUS C. PERALTA, REPRESENTED BY

THEIR ATTORNEY-IN-FACT, J.F. JAVIER D. PERALTA, Petitioners, v.
MUNICIPALITY OF KALIBO, AKLAN, ITS SANGGUNIANG BAYAN AND MAYOR
RAYMAR A. REBALDO, Respondents.

Case Digest
Facts:
Lot No. 2076 of the Kalibo Cadastre was covered by Original Certificate of Title
No. 24435 RO-831, and registered in the name of Ana O. Peralta. Upon her demise, her
property passed on to her brother, Jose Peralta, who caused registration of the same in
his name under Transfer Certificate of Title No. T-5547, issued on January 13, 1975. Jose
later had the property divided into Lots 2076-A and 2076-B, and sold the latter portion.
Lot 2076-A, on the other hand, remained in Jose's name and was registered under TCT
No. 6166 on November 17, 1975.
Allegedly through accretion, land was added to Lot No. 2076. Said area was first
occupied by and declared for taxation purposes (Tax Declaration No. 6466) in the name
of Ambrocio Ignacio in 1945. He was the Peraltas' tenant, but he later executed a
Quitclaim of Real Property in Jose's favor for the amount of P70.44 on March 14, 1955.
When Jose died, Lot 2076-A, together with the supposed area of accretion, was
transferred to his son, Juanito Peralta. While TCT T-13140 was issued for Lot 2076-A on
September 1, 1983, the area of accretion was apportioned and registered under Tax
Declaration Nos. 21162-A, 21163-A, 21164-A, and 21165-A in the names of siblings
Juanito, Javier Peralta, Josephine delos Reyes, and Julius Peralta. Subsequently, Juanito
likewise died.
Mayor Diego Luces and the members of its Sangguniang Bayan, sought to convert
more or less four hectares of said area of accretion into a garbage dumpsite. On
November 10, 1992, Juanito, in his capacity as his siblings' representative, opposed said
project in a letter. For failure to get a favorable response from the mayor's office, he wrote
a formal protest to the Secretary of the Department of Environment and Natural
Resources on October 2, 1997.
Despite the Peraltas' opposition, the Municipality of Kalibo continued the project
under the justification that the contested property is actually part of the public domain.
Moreover, the DENR's Environmental Compliance Certificate (ECC) showed that the
project would not harm the dumpsite's neighboring areas, including the water systems.
Thus, the municipality built a retaining wall on the property facing the Aklan river in 1996.
More of the structures were built on the area from 1997 to 1998. Later, the area was
enclosed with a perimeter fence.
Peraltas filed a Complaint4 for quieting of title over the two (2) portions of accretion
declared in their names for taxation purposes.

Issue:

75
 Whether or not the CA committed an error when it reversed the RTC, which
declared the subject parcels of land as accretion and not part of the public domain?
Held:
The Court rules in negative
The petitioners in the instant case, are not even registered owners of the area
adjacent to the increment claimed, much less of the subject parcels of land. Only the late
Juanito became the registered owner of Lot 2076-A, the lot next to the supposed
accretion. Assuming that the petitioners are Juanito's rightful successors, they still did not
register the subject increment under their names. It is settled that an accretion does not
automatically become registered land just because the lot that receives such accretion is
covered by a Torrens Title. Ownership of a piece of land is one thing; registration under
the Torrens system of that ownership is another. Ownership over the accretion received
by the land adjoining a river is governed by the Civil Code; imprescriptibility of registered
land is provided in the registration law. Registration under the Land Registration and
Cadastral Act does not vest or give title to the land, but merely confirms and, thereafter,
protects the title already possessed by the owner, making it imprescriptible by occupation
of third parties. But to obtain this protection, the land must be placed under the operation
of the registration laws, wherein certain judicial procedures have been provided.

76
Spouses Cipriano Pamplona and Bibiana Intac V. Spouses Lilia I. Cueto and
Vedasto Cueto
G.R. No 204735
BERSAMIN, J

Facts:
Allegedly, Petitioners are the registered owners of Lot No. 1419-C (LRC) Psd-
66901, having an area of approximately 476 sq. m., situated in Batangas City. On January
10, 1989, plaintiff and defendants (Lilia) mutually agreed that the latter would buy the Lot
from the former for the total sum of US$ 25,000, payable in monthly installments of US$
300.
Due to the close relationship of the parties this agreement of sale on the
aforementioned immovable property was made verbally, the only physical evidence being
a notebook possessing a personal inscription by Bibiana, affirming their oral agreement
and wherein the list of remittances would be entered. This was sent to Lilia’s address in
Italy. Subsequently, petitioners peacefully transferred the property to the defendants and
from the date of agreement Lilia had remitted to the former an initial payment of
US$14,000 to date, leaving a balance of US$11,000. Lilia allowed her son Rolando to
reside at the subject property as she had to work in Italy, she had been religiously paying
the annual taxes, as well as electric and water bills, through her son.
On August 13, 1997, petitioners filed a case for unlawful indigent against spouses
Rolando and Liza Cueto, this filing was made with malicious intent and to the prejudice
of the other party. Unfortunately, they failed to defend themselves and were evicted off
the property on January 1998.
Issue/s:
(1) Was there sufficient evidence showing that the existence of a partially executed
contract to sell?
(2) Was there a violation of Article 1491 of the Civil Code in the Deed of Transfer of
Rights from the respondents to Redima?
Ruling:
 Was there sufficient evidence showing that the existence of a partially executed
contract to sell?

Yes. It is uncontested that Lilia sent money to Bibiana, for the latter did not
deny the receipt of such money. Moreover, the records showed that the parties
further agreed for Vedasto and Roilan to occupy the property during the period
when Lilia was remitting money to Bibiana; and that Lilia immediately took steps
to protect her interests in the property once the petitioners started to deny the
existence of the oral contract to sell by annotating her adverse claim on the
petitioners' title and instituting this action against the latter.
Although petitioners contended that the sum of money received from
respondent were payments of prior obligations; that the admission of Roilan and

77
 his wife that petitioners owned the property negated the absence of the contract to
sell; and that the admission of Vedasto that the petitioners owned the property was
an admission against interest that likewise belied the contract to sell between Lilia
and Bibiana, the same were declared by the court as factually and legally
unwarranted.
This is due to the fact that alllegations as to the intent for the payment of
money was not proven by the petitioners; that under the oral contract to sell, the
ownership of the property had yet to pass to Lilia, and Bibiana retained ownership
pending the full payment of the purchase price agreed upon, which are
characteristics of a contract to sell as indicated in the case of Sing Yee v. Santos;
and that the failure of Roilan to raise as a defense in the unlawful detainer suit
against him the existence of the contract to sell between Bibiana and Lilia could
not be properly construed as an admission by silence on the part of Lilia.

 Was there a violation of Article 1491 of the Civil Code in the Deed of Transfer of
Rights from the respondents to Redima?

In the instant case, the Supreme Court refuses or avoids discussing and
resolving the issue regarding the validity of the deed of transfer of interest between
Redima and the petitioners because this case, as the Supreme Court held would
not be the proper occasion to do so without violating the right to due process of
Redima and Atty. Dimayacyac.

78
REPUBLIC OF THE PHILIPPINES, PETITIONER, VS. CLARO YAP, RESPONDENT.
G.R. No. 231116 February 7, 2018
VELASCO JR., J.:

FACTS:

A petition for review on Rule 45 of the Rules of Court assailing the March 16, 2017
Decision of the Court of Appeals in CA-G.R. CV No. 05491 which affirmed the October
20, 2011 Decision of the Regional Trial Court (RTC) of Cebu City, Branch 6, granting
respondent's petition for registration of a parcel of land located in Carcar, Cebu.

On July 28, 2010, respondent Claro Yap filed a petition for cancellation and re-issuance
of Decree No. 99500 covering Lot No. 922 of the Carcar Cadastre, and for the issuance
of the corresponding Original Certificate of Title pursuant to the re-issued decree.

Finding the petition sufficient in form and substance, the RTC issued an Order dated
August 3, 2010 setting the case for hearing on August 3, 2011 and ordering the requisite
publication thereof. Since no oppositors appeared before the court during the said
scheduled hearing, the RTC issued another Order setting the case for hearing on
petitioner's presentation of evidence.

In its September 20, 2011 Order, the RTC admitted petitioner's evidence and deemed the
case submitted for decision.

The RTC found that Yap had sufficiently established his claims and was able to prove his
ownership and possession over Lot No. 922. As such, it granted the petition and ordered
the Register of Deeds of the Province of Cebu to cancel Decree No. 99500, re-issue a
new copy thereof, and on the basis of such new copy, issue an Original Certificate of Title
in the name of Andres Abellana, as administrator of the Estate of Juan Rodriguez.

The CA upheld the RTC's ruling finding that the pieces of evidence submitted by Yap
were sufficient to support the petition. It ruled that since it has been established that no
certification of title or patent had been issued over Lot No. 922, the RTC did not err in
ordering the re-issuance of Decree No. 99500 in the name of Andres Abellana, as
Administrator of the Estate of Juan Rodriguez.

ISSUE:

Did the RTC correctly ordered the cancellation of Decree No. 99500, the re-issuance
thereof, and the issuance of the corresponding Original Certificate of Title covering Lot
No. 922?

79
RULING:

The RTC correctly ordered the cancellation of Decree No. 99500, the re-issuance thereof,
and the issuance of the corresponding OCT covering Lot No. 922 in the name of its
original adjudicate, Andres Abellana, as Administrator of the Estate of Juan Rodriguez.

This Court sees no reason to overturn the factual findings and the ruling of the CA.
Petitioner failed to show that the CA's decision was arbitrarily made or that evidence on
record was disregarded.

Thus, the petition is denied. The Decision dated March 16, 2017 of the Court of Appeals
in CA-G.R. CV No. 05491 is hereby affirmed.

80
IN THE MATTER OF THE INTESTATE OF REYNALDO GUZMAN RODRIGUEZ;
ANITA ONG TAN
v.
ROLANDO RODRIGUEZ, RACQUEL R. GEGAJO, ROSALINDA R. LANDON,
REYNALDO C. RODRIGUEZ, JR., ESTER R. FULGENCIO, RAFAEL C. RODRIGUEZ
AND REYNEST C. RODRIGUEZ

G.R. No. 230404 / January 31, 2018 / TIJAM, J.

The share of the co-owners, in the benefits as well as in the charges, shall be
proportional to their respective interests. Any stipulation to the contrary shall be void.
The portions belonging to the co-owners in the co-ownership shall be presumed equal,
unless the contrary is provided. [Art. 485 NCC]

FACTS

Anita Ong Tan filed for petition that her BPI joint account with Reynaldo Rodriguez,
father of the respondents, is her sole ownership. Anita contends that the money in the
BPI joint account amounting to P1,021,868.30 came from her personal account with East
West Bank as evidenced by a Debit Memo from East West Bank and testified by its
Branch Manager. The respondents, however, submitted documents to BPI for the release
of half of the funds deposited in said joint account. The RTC held that Anita sufficiently
adduced evidence to rebut presumption that the funds under the BPI joint account were
co-owned. CA reversed the ruling of RTC opining that Anita failed to prove that she is
indeed the sole owner of the funds therein.

ISSUE

What constitutes the share of co-owners?

RULING

Article 485 (1) of the NCC states that the share of the co-owners, in the benefits
as well as in the charges, shall be proportional to their respective interests; the portions
belonging to the co-owners in the co-ownership shall be presumed equal, unless the
contrary is provided. While the rule is that the shares of the owners of the joint account
holders are equal, the same may be overturned by evidence to the contrary. On this note,
the Court agrees with the findings of the lower court that Anita sufficiently proved that she
owns the funds in the BPI joint account exclusively as evidenced by a Debit Memo from
East West Bank and testified by its Branch Manager. With all these, it is apparent that
Anita owned the funds exclusively as she sufficiently overturned the presumption under
the law. Respondents failed to refute her evidence, other that their bare allegations that

81
Anita and Reynaldo had an amorous relationship and that Anita had no source of income
to sustain the funds in a bank.

G.R. No. 189609, January 29, 2018

VICTORIA N. RACELIS, IN HER CAPACITY AS ADMINISTRATOR, Petitioner, v.
SPOUSES GERMIL JAVIER AND REBECCA JAVIER, Respondents.
LEONEN, J.:

Facts:
Padre Nacu Sr, the father of petitioner Victoria Racelis, appointed petitioner to administer
the former’s properties. Among the said properties was a residential house and lot located
in Marikina City. Naku requested his heirs to sell the property first. Therefore, Racelis
acted on the said request and advertised it for sale.
In August 2001, the Spouses Javier offered to purchase the Marikina property. However,
they could not afford to pay the price of P3,500,000.00. So in exchange, they offered to
lease the property while they save up enough money to pay the said price of
P3,500,000.00. Petitioner hesitated at first but then so agreed afterwards. The parties
agreed on a month-to-month lease and rent of P10,000.00 per month which was later
increased to P11,000.00. The Spouses Javier used the property as their residence and
as the site of their tutorial school, the Niño Good Shepherd Tutorial Center.
By July 2002, Racelis inquired if the spouses were still interested in buying the property
in which the spouses reassured her of their purchase and even promised to pay P100,000
to give them more time to pay the overall payment for the property.
On several occasions, the spouses payed small sums of money in lieu of the promised
P100,000. But by 2003 they only delivered a total of P78,000 while still leasing the
property. They consistently paid the rent but then started to fall short at around February
2004.
Realizing that the Spouses Javier had no genuine intention of purchasing the property,
Racelis wrote to inform them that her family had decided to terminate the lease agreement
and to offer the property to other interested buyers while demanding that they vacate the
property by May 30, 2004.
Spouses refused to vacate the property due to the ongoing business of their tutorial
center. They wrote Racelis on March 16, 2004, informing her of their inability to pay the
said P3,500,000. Because Mrs Javier’s plan for overseas employment did not materialize.
They insisted that the sum of P78,000.00 was advanced rent and proposed that this
amount be applied to their outstanding liability until they vacate the premises
Racelis brought the matter to the barangay for conciliation as she disagrees with the
application of the P78,000 statement. No settlement was reached throughout the
proceedings however. Again, Racelis demanded that the spouses vacate the property by
April 30, 2004 yet the spouses Javier still refused to vacate the property and even refused
to pay rent for the succeeding months.
By May 12, 2004, Racelis caused the disconnection of electricity of the said property
which forced the Javier Spouses to buy a generator. The matter became a subject for
complaint of damages which the spouses filed against Racelis. Racelis however, was
dissolved from this liability. Meanwhile, Racelis filed a complaint for ejectment against the

82
Spouses Javier before the Metropolitan Trial Court in Marikina City. The case was
docketed as Civil Case No. 04-7710.
During trial, the Spouses Javier vacated the property and moved to their new residence
at Green heights Subdivision on September 26, 2004. The Metropolitan Trial Court then
determined that the only issue left to be resolved was the amount of damages in the form
of unpaid rentals to which Racelis was entitled.
On August 19, 2005 the MTC dismissed the complaint. The Trial court erred that due to
Racelis act of disconnecting the electricity extinguished the spouses obligation to pay and
did not characterize the P78,000.00 as advanced rent but as earnest money. Accordingly,
Racelis was ordered to return the P78,000.00 due to her waiver in the Letter dated March
4, 2004.
Racelis moved for reconsideration but her motion was denied in the Court of Appeals
September 17, 2009 Resolution. On November 25, 2009, Racelis filed a Petition for
Review before this Court to which the Spouses Javier filed a Comment.
Petitioner claims that she was justified in causing the temporary disconnection of
electrical service over the property because respondents were remiss in paying rent.
However, assuming that respondents were entitled to suspend the payment of rent
pursuant to Article 1658 of the Civil Code, petitioner argues that the suspension should
only be temporary or for an intervening period.
Petitioner likewise claims that she did not expressly waive her right over the initial
payment of P78,000.00 but merely extended an offer to reimburse this amount, which
respondents rejected. Hence, she is entitled to retain it and it cannot be used to offset
respondents' accrued rent.
Respondents do not dispute their liability to pay accrued rent. However, they insist that
their liability should be offset by the initial payment of P78,000.00. Respondents argue
that petitioner waived her right over this, amount. Hence, it can be applied to pay their
obligation.

Issues:
Can respondents Spouses Javier invoke their right to suspend the payment of rent under
Article 1658 of the Civil Code?

Ruling:
No. The Respondents cannot invoke their right to suspend the payment of rent under Art
1658 of the civil code. Article 1658 of the Civil Code allows a lessee to postpone the
payment of rent if the lessor fails to either (1) "make the necessary repairs" on the property
or (2) "maintain the lessee in peaceful and adequate enjoyment of the property leased."
In the case at bar, Racelis act of disconnecting the electric power was not only a
disturbance but one that is meant to remove the respondents from the premises and
disturb their legal possession as lessees. This alone gives the respondents entitlement
to invoke Art 1658 of the civil code. However, this rule will not apply in the present case
because the lease had already expired when petitioner requested for the temporary
disconnection of electrical service. Petitioner demanded respondents to vacate the
premises by May 30, 2004 Respondents continued to stay at the premises while
unlawfully withholding possession of the property. At that point, petitioner was no longer
obligated to maintain respondents in the "peaceful and adequate enjoyment of the lease

83
for the entire duration of the contract." Therefore, respondents cannot use the
disconnection of electrical service as justification to suspend the payment of rent.
The petition for review was granted. The resolution was reversed and set aside and
respondents spuses Javier are ordered to pay petitioner the amount due

SPOUSES FRANCISCO ONG and BETTY LIM ONG, and SPOUSES JOSEPH ONG
CHUAN and ESPERANZA ONG CHUAN
vs.
BPI FAMILY SAVINGS BANK, INC.
G.R. No. 208638 January 24, 2018

REYES, JR., J.:

Petitioners instituted an action for damages with Temporary Restraining Order and
Preliminary Injunction against BPI praying for ₱23,570,881.32 as actual damages;
₱1,000,000.00 as moral damages; ₱500,000.00 as attorney's fees, litigation expenses
and costs of suit.
FACTS:
Spouses Francisco Ong and Betty Lim Ong and Spouses Joseph Ong Chuan and
Esperanza Ong Chuan, the petitioners, are engaged in the business of printing under the
name and style "MELBROS PRINTING CENTER" an in view of petitioners' business
expansion plans and the assurances made by BSA's managers, they applied for the credit
facilities offered by the latter.
Thereafter, sometime in April 1997, they executed a real estate mortgage over
their property situated in Paco, Manila, covered by Transfer Certificate of Title No.
143457, in favor of BSA as security for a ₱15,000,000.00 term loan and ₱5,000,000.00
credit line or a total of ₱20,000,000.00.
Regarding the term loan, only ₱10,444,271.49 was released by BSA, then with
regards to the ₱5,000,000.00 credit line, only ₱3,000,000.00 was released. BSA
promised to release the remaining ₱2,000,000.00 conditioned upon the payment of the
₱3,000,000.00 initially released to petitioners but when petitioners paid the amount, BSA
still refused to release the remaining ₱2,000,000.00. Petitioners then refused to pay the
amortizations due on their term loan.
Later on, BPI Family Savings Bank (BPI) merged with BSA, thus, acquired all the
latter's rights and assumed its obligations. BPI filed a petition for extrajudicial foreclosure
of the REM for petitioners' default in the payment of their term loan.
ISSUE:
Is there an existing and binding contract between petitioners and BSA regarding
the omnibus credit line?
RULING:
Yes, the Court speaking through Justice Reyes declared that there is no doubt that
when BSA approved and released the ₱3,000,000.00 out of the original ₱5,000,000.00
credit facility, the contract was perfected.
In this case, BSA did not only incur delay in releasing the pre-agreed credit line of
₱5,000,000.00 but likewise violated the terms of its agreement with petitioners when it
deliberately failed to release the amount of ₱2,000,000.00 after petitioners complied with

84
their terms and paid the first ₱3,000,000.00 in full. The default attributed to petitioners
when they stopped paying their amortizations on the term loan cannot be sustained by
this Court because long before they sent a Letter to BSA informing the latter of their
refusal to continue paying amortizations, BSA had already reneged on its obligation to
release the amount previously agreed upon, i.e., the ₱5,000,000.00 covered by the credit
line.
Therefore, Respondent BPI Family Savings Bank, Inc. is hereby ordered to pay
petitioners Spouses Francisco Ong and Betty Lim Ong and spouses Joseph Ong Chuan
and Esperanza Ong Chuan the amount of ₱2,772,000.00 as actual or compensatory
damages; ₱100,000.00 as exemplary damages; ₱300,000.00 as attorney's fees; and
interest of six percent (6%) per annum on all the amounts of damages reckoned from the
finality of this decision.

85
HEIRS OF ALFONSO YUSINGCO
V.
AMELITA BUSILAK, COSCA NAVARRO, FLAVIA CURAYAG AND LIXBERTO
CASTRO, RESPONDENTS.

GR No. 210504 January 24, 2018

PERALTA, J.:

Facts

The heirs of Alfonso Yusingco, herein petitioners, filed a complaint for recovery of
possession against respondents and Reynaldo Peralta. They alleged that they are
owners of 3 parcels of land all located at Barangay Taft in Surigao City and that these
parcels of land were occupied illegally by people. They filed a case for accion
reivindicatoria and during the pendency of these cases, respondents entered different
portions of the same properties and occupied them without the knowledge or consent of
petitioners. After the case for accion reivindicatoria were settled in petitioner’s favor and
declared owners of the property, petitioners demanded respondents to vacate the
properties but they refused.

Respondents contend that they have been in possession of the subject properties for
more than thirty (30) years; petitioners never actually possessed the said parcels of land
and that they never had title over the same; thus, petitioners' claim would be in conflict
with and inferior to respondents' claim of possession.

The MTCC decided in favor of petitioners, the RTC affirmed the decision of the MTCC,
the CA set aside the decision of the MTCC and RTC thus petitioners filed a petition for
certiorari contending the decision of the CA.

Issue

W/O the final and executory decisions rendered in a previous accion reivindicatoria,
finding petitioners to be the lawful owners of the subject properties, are binding upon
respondents.

Held

At the outset, the Court finds it proper to look into the nature of the actions filed by
petitioners against respondents. A perusal of the complaints filed by petitioners shows
that the actions were captioned as "Accion Publiciana and/or Recovery of Possession."
However, the Court agrees with the ruling of the lower courts that the complaints filed
were actually accion reivindicatoria.

86
Proceeding to the main issue in the instant petition, there is no dispute that the RTC
Decision in Civil Case No. 1645 and the CA Decision in CA-G.R. CV No. 66508-R used
by the MTCC in the present case as bases in holding that herein petitioners are the
owners of the subject properties and are, thus, entitled to legal possession thereof, are
judgments on a previous case for accion reivindicatoria, which was filed by petitioners
against persons other than herein respondents. In the instant case, the Court finds no
cogent reason to depart from the findings and conclusions of the MTCC, as affirmed by
the RTC, that respondents are mere intruders or trespassers who do not have a right to
possess the subject lots.

On the basis of the foregoing, the CA erred in ruling that the judgments of the RTC (in
Civil Case No. 1645) and the CA (in CA-GR. CV No. 66508-R) on the suit for accion
reivindicatoria filed by petitioners against persons other than herein respondents are not
binding upon the latter. Respondents, being trespassers on the subject lots are bound by
the said judgments, which find petitioners to be entitled to the possession of the subject
lots as owners thereof.

87
G.R. No. 225929, January 24, 2018

JOSE V. GAMBITO, Petitioner, v. ADRIAN OSCAR Z. BACENA, Respondent.

REYES, JR., J.:

Facts:

Jose V. Gambito (Gambito) filed a complaint for quieting of title, declaration of nullity of
title, specific performance and damages. Gambito registered owner of a certain parcel of
land located in La Torre South, Bayombong, Nueva Vizcaya under Transfer Certificate of
Title (TCT) No. T-149954. The land was acquired by him through a Deed of Donation by
his mother, Luz V. Gambito (Luz), who acquired the same property from Dominga
Pascual (Pascual) and her co-owner, Rosalina Covita (Covita), through a Deed of Sale
dated December 16, 1994 which finds its origin from Original Certificate of Title (OCT)
No. R-578 issued on March 30, 1916.

Gambito discovered that Bacena secured before the Community Environment and
Natural Resources Office (CENRO), a patent title, Katibayan ng Orihinal na Titulo
Bilang P-21362 which was a part and portion of the same lot registered in Gambito's
name under TCT No. T-149954. Thus there is a need to clear up the cloud cast by the
title of Bacena over his ancient title.

Bacena alleged that the folder of Petronila Castriciones (Castriciones), survey claimant
of Lot No. 1331, Cad 45, La Torre, Bayombong, Nueva Vizcaya, is supported by the
records of the CENRO, Bayombong, Nueva Vizcaya. On the other hand, the title of
Gambito's predecessor-in-interest is void ab initio because it was derived from a Deed of
Sale, dated December 16, 1994 which supposedly signed by vendor Pascual although
she was already dead. Moreover, the signatory-vendor, Covita denied that she ever
signed the Deed of Sale which is supposedly that of her husband, Mariano G. Mateo,
supposedly signifying his conformity to the sale, is likewise a fake signature of her
husband because he was already dead at the time of the execution of the document
having died on June 14, 1980.6

Issues:

1. Was the issue on laches properly addressed?

2. Is the concept of transferee in good faith misapplied?
3. Is the award of damages proper?

Ruling:

88
On the issue of laches, Bacena has no reason to doubt his own ownership and
possession of Lot No. 1331, as established in this case obtained through the right of
Castriciones. Bacena is not expected to assert his right for having possession and title to
the land in dispute.

Private ownership of land—as when there is prima facie proof of ownership like a duly
registered possessory information or a clear showing of open continuous, exclusive, and
notorious possession, by present or previous occupants—is not affected by the issuance
of a free patent over the same land.

While Gambito assails the decision on the principle of laches, it was certain that when the
cadastral survey was conducted in 1913 to 1914, there were already two survey
claimants, one of which is Castriciones. Thus, there was already a supervening event that
transpired from the time it was applied for until the title was issued. Moreover, here it
established that Castriciones is the previous occupant with open continuous, exclusive,
and notorious possession as above contemplated. Hence, free patent OCT No. R-578
cannot affect Castriciones' previous occupation with open continuous, exclusive, and
notorious possession.

On the issue of transferee in good faith, Gambito argues that the CA misapplied the
concept of transferee in good faith for the reason that bad faith has died when Pascual
inherited the property from Venancio Pascual.

Under Section 53 of Presidential Decree No. 1529, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice, however, to
the rights of any innocent holder for value of a certificate of title.

In this case, Gambito is not an innocent holder for value for the reason that he is a donee
acquiring the property gratuitously by a Deed of Donation and not by purchase. Hence,
the concept of an innocent purchaser for value cannot apply to him.

It is an established fact that the fraud referred to by the CA is the fraud on the transfer of
the property from Pascual and Covita to Luz on the basis of fake signatures considering
that the vendor signatories therein are all dead. As such, by applicability of the foregoing
jurisprudence, the deed is considered a forged deed and hence null and void. Thus, Luz's
title is null and void which transferred nothing by Deed of Donation to her son Gambito,
the petitioner herein.

On the award for damages, Gambito's argument that he cannot be in bad faith deserves
scant consideration.

The CA in its resolve as to the award of damages referred to the RTC's basis of the
awards. The RTC in its Decision, laid down its basis in concluding the award for damages
finding absence of good faith on the part of Gambito by taking a second hard look into
the facts and circumstances obtaining on the manner by which the appellee, who was the
notary public who notarized the Last Will and Testament and who as expected fully knew

89
the rights of the appellant over the lot in question. Hence, Gambito's claim that the CA
decision misappreciated the objection on the award for damages is incorrect.

ESMERALDO GATCHALIAN, duly represented by SAMUEL GATCHALIAN, v.

CESAR FLORES, JOSE LUIS ARANETA, CORAZON QUING, and CYNTHIA FLORES

G.R. No. 225176, January 19, 2018

TIJAM, J.

It is well-settled that an "owner of a registered land does not lose his rights over a
property on the ground of laches as long as the opposing claimant's possession was
merely tolerated by the owner."

Facts:

Esmeraldo Gatchalian, represented by Samuel C. Gatchalian (petitioner), is a co-

owner of a parcel of land (Road 23) covered by Transfer Title No. 79180 located at
Barangay Vitalez, Parañaque City. He filed a Complaint of Ejectment with damages
against respondents Cesar Flores, Jose Paolo Araneta, Corazon Quing and Cynthia
Flores.

The respondents denied that they usurped the property of the owner and insisted
that Road Lot 23 is a public road. They believed that petitioner has no cause of action
against them and has no authority to file the instant case because it is the City
Government of Parañaque which has the right to do so.

Issue:

Should the ejectment case filed by petitioners be granted?

Ruling:

Yes, the Supreme Court speaking through Justice Tijam declared that, the
complaint for ejectment case against respondents shall be granted. In ejectment
proceedings, the only issue for the Court’s resolution is who between the parties is entitled
to the physical or material possession of the subject property.
In the instant case, the petitioner is entitled to the possession of the subject
property since it is registered under the name of petitioner's parents. It is also undisputed
that the municipal government has not undertaken any expropriation proceedings to
acquire the subject property neither did the petitioner donate or sell the same to the
municipal government. Therefore, absence of any expropriation proceedings and without
any evidence that the petitioner donated or sold the subject property to the municipal
government, the same is still private property.

90
 As such, the ejectment case against herein respondents who encroached upon a
portion of petitioner’s property shall be granted.

LINDA CACHO, MINORS SARAH JANE, JACQUELINE, FIRE RINA AND MARK
LOUISE ALL SURNAMED CACHO, ALL REPRESENTED BY THEIR MOTHER AND
GUARDIAN AD LITEM LINDA CACHO
v. GERARDO MANAHAN, DAGUPAN BUS CO., INC., AND RENATO DE VERA
DOING BUSINESS UNDER THE NAME R. M. DE VERA CONSTRUCTION
G.R. No. 203081, January 17, 2018
MARTIRES, J.

The petitioners, the wife and children of Bismark Cacho (Cacho), filed a complaint for
damages against Gerardo Manahan (Manahan), Dagupan Bus Co., Inc. (Dagupan Bus),
and Renato de Vera (De Vera), the owner of R.M. De Vera Construction (De Vera
Construction).

FACTS:

On 30 June 1999 a vehicular accident occurred along the national highway at Pogo,
Alaminos, Pangasinan, near the Embarcadero Bridge. At around 5:00 A.M. on the said
date, Cacho was driving a Nissan Sentra when it collided with a Dagupan Bus traversing
on the opposite lane. The car had already crossed the bridge when it collided with the
bus which was just about to enter the bridge. The collision caused heavy damage to the
front of the bus, the total wreckage of the Nissan Sentra, Cacho's instant death, and
multiple injuries to three (3) passengers inside the car.

The complaint alleged that Cacho's car was hit by the bus because the latter swerved
to the left lane as it tried to avoid a pile of boulders placed on the shoulder of the road.
These boulders were negligently placed by De Vera Construction contracted by the local
government to do some work on the Embarcadero Bridge. Dagupan Bus, the owner and
operator of the bus, and Manahan, the bus driver, claimed that it was Cacho who drove
fast coming from the bridge and bumped into the bus that was on full stop; and that Cacho
had to swerve to the left because there were boulders of rocks scattered on his lane.

ISSUE:

1. Is Manahan negligent as the driver of the bus?

2. Is Dagupan Bus solidarily liable with Manahan?

RULING:

First, yes, Manahan is negligent. The RTC gave much credence to Camba's testimony
as he was a passenger of the bus during the accident. Camba testified that the bus was
travelling at a high speed even if it was nearing the Embarcadero Bridge. On the other

91
hand, although Dagupan Bus offered the testimony of one of its bus conductors to
contradict Camba's version, his testimony duly established the fact that Manahan was
driving the bus at a high speed before they entered the bridge.

The bus was not on full stop upon entering the bridge as this is based on speculation
and contrary to evidence. Borne by the record, the impact of the collision resulted in the
car being thrown about ninety (90) degrees counter-clockwise to the opposite lane before
resting perpendicular to the road. The resulting position of the vehicle after the collision
is incompatible with the conclusion that the bus was at full stop.

Negligence on the part of Manahan was also established by the photographs showing
that he occupied Cacho's lane. The front wheels of the bus were turned to the left. Both
the front and rear left wheels of the bus already occupied a portion of the opposite lane;
leaving a smaller space for Cacho to safely exit the bridge. There also was enough space
on the right side of the road because a man extending his two hands could fit between
the right side of the bus and the shoulder of the road.

Moreover, Manahan was legally presumed negligent under Article 2185 of the Civil
Code. Based on the place and time of the accident, Manahan was actually violating the
speed limit rule found in R.A. No. 4136, otherwise known as the Land Transportation and
Traffic Code.

Second, yes, Dagupan is solidarily liable with Manahan. Article 2180, in relation to
Article 2176, of the Civil Code provides that the employer of a negligent employee is liable
for the damages caused by the latter. When an injury is caused by the negligence of an
employee there instantly arises a presumption of the law that there was negligence on
the part of the employer either in the selection of his employee or in the supervision over
him after such selection. The presumption, however, may be rebutted by a clear showing
on the part of the employer that it had exercised the care and diligence of a good father
of a family in the selection and supervision of his employee.

A closer scrutiny of the evidence presented to overcome this presumption would show
that Dagupan Bus failed in this regard. It would seem that Manahan applied with Dagupan
Bus sometime in April 1999. In his application form, he stated that prior to his employment
with Dagupan Bus, he was a truck driver. Along with his application, Manahan was
required to submit a number of documents.

Finding his requirements to be complete, Manahan was cleared for actual driving and
a written examination. On 10 May 1999, Manahan passed his driving examination, but
the examiner noted his slow reaction in stopping. Manahan's written examination also
points out that he cannot recognize traffic signs indicating a narrow road. After undergoing
shop training, Manahan underwent a seven (7)-day apprentice training which he
completed on 7 June 1999. A few days after, or on 21 June 1999, Dagupan Bus gave
Manahan clearance to report for duty as a bus driver.

92
 On this point, Dagupan Bus promptly allowed Manahan to drive one of its buses
considering he had no prior experience driving one. The only time he was actually able
to drive a bus was probably during his driving examination and a few more times while
undergoing apprenticeship. This is negligence on its part.

In addition, Manahan's apprenticeship record indicate that he is not fit to drive aircon
buses nor to drive at night. That the accident happened early in the morning, when the
visibility conditions are the same as driving at night, Manahan should not have been
driving in the first place. Once more, Dagupan Bus' negligence is clear.
GR 207074

93
AAA, Petitioner, v. BBB, Respondent.
G.R. No. 212448, January 11, 2018
TIJAM, J.:

FACTS:
AAA and BBB were married on August 1, 2006 in Quezon City. Their union
produced two children: CCC was born on March 4, 2007 and DDD on October 1, 2009.
BBB started working in Singapore as a chef, where he acquired permanent
resident status. BBB sent little to no financial support, compelled her to fly extra hours
and take on additional jobs to augment her income as a flight attendant, mistreating her
and their son CCC, and physical and sexual violence. To make matters worse, BBB
supposedly started having an affair with a Singaporean woman. AAA and BBB had a
violent altercation at a hotel room in Singapore during her visit with their kids. AAA was
also able to secure a Hold-Departure Order against BBB who continued to evade the
warrant of arrest. Granting the motion to quash on the ground of lack of jurisdiction and
thereby dismissing the case, the trial court.

ISSUES:
Are the Philippine courts deprived of territorial jurisdiction over a criminal charge of
psychological abuse under R.A. No. 9262 when committed through marital infidelity and
the alleged illicit relationship took place outside the Philippines?

RULING:
There is merit in the petition.
Physical violence is only the most visible form of abuse. Psychological abuse,
particularly forced social and economic isolation of women, is also common. In this
regard, Section 3 of R.A. No. 9262 made it a point to encompass in a non-limiting manner
the various forms of violence that may be committed against women and their children...
what R.A. No. 9262 criminalizes is not the marital infidelity per se but the psychological
violence causing mental or emotional suffering on the wife.
Marital infidelity as cited in the law is only one of the various acts by which
psychological violence may be committed... the mental or emotional suffering of the victim
is an essential and distinct element in the commission of the offense.
Section 7 of R.A. No. 9262 is that the law contemplates that acts of violence
against women and their children may manifest as transitory or continuing crimes.
We say that even if the alleged extra- marital affair causing the offended wife
mental and emotional anguish is committed abroad, the same does not place a
prosecution under R.A. No. 9262 absolutely beyond the reach of Philippine courts.

94
REPUBLIC OF THE PHILIPPINES, Petitioner
v.
ROVENCY REALTY AND DEVELOPMENT CORPORATION, Respondent
G.R. No. 190817, January 10, 2018
(MARTIRES, J.)

This is a petition for review on certiorari seeking to reverse and set aside the 10 March
2009 Decision and the 3 December 2009 Resolution of the Court of Appeals (CA) in CA-
G.R. CV No. 00651, which affirmed the 7 November 2003 Decision of the Regional Trial
Court (RTC), Branch 41, Cagayan de Oro City, in LRA Case No. N-2000-084, which
granted the application for original registration of title to land by respondent Rovency
Realty and Development Corporation (RRDC).
FACTS: On 22 March 2001, RRDC filed before the RTC an Amended Application for
Registration covering a parcel of land. RRDC alleged that it is the absolute owner in fee
simple of the subject land having acquired the same from its previous owner, P.N. Roa
Enterprises, Inc., by virtue of a notarized deed of absolute sale executed on 05 March
1997. On 16 July 2001, an opposition to the application was filed by the Heirs of Paulino
Avancena. They alleged, that the subject land was already claimed and owned by the late
Atty. Paulino Avancena (Paulino), their father and predecessor-in-interest, as early as
1926. Paulino and Rizalina Neri (Rizalina), their parents, merely allowed and tolerated
Pedro N. Roa's (Pedro, one of RRDC's predecessors-in-interest) possession of the
subject land after the latter approached them and requested that he be allowed to use
the subject land for his businesses. Rizalina demanded the return of the subject land from
the heirs of Pedro, to no avail. Both parents died never reacquiring the land. The RTC
granted RRDC’s application for registration, which was affirmed by the CA. The trial court
further brushed aside the opposition interposed by the heirs of Paulino Avanceña. It was
not convinced that the evidence they presented were sufficient to grant the application in
their favor. The deeds of sale presented by RRDC in support of their claim were notarized
by Paulino himself.
ISSUE: Did the court err in granting the application for registration?
HELD: Yes. as the same has a total land area of 31.8 hectares, which is way beyond the
12-hectare limit under Section 3, Article XII of the 1987 Constitution. This provision only
applies to lands of the public domain. Private lands are, therefore, outside of the
prohibitions and limitations stated therein. Thus, the appellate court correctly declared
that the 12-hectare limitation on the acquisition of lands under Section 3, Article XII of the
1987 Constitution has no application to private lands. In this case, RRDC did not present
any evidence which would show that the subject land was expressly declared as no longer
intended for public service or the development of the national wealth, or that the property
has been converted into patrimonial. Hence, it failed to prove that acquisitive prescription

95
has begun to run against the State, and that it has acquired title to the subject land by
virtue thereof.
The petition is GRANTED. The Application for Registration of Lot No. 3009 filed by
Rovency Realty and Development Corporation is DENIED.

FLORO MERCENE, petitioner, v. GOVERNMENT SERVICE INSURANCE SYSTEM,

respondent.
G.R. No. 192971, January 10, 2018
MARTIRES, J.

Prescription commences from the time the cause of action accrues: from the time the
obligation becomes due and demandable, or upon demand by the creditor/mortgagor.

This case involves an action for quieting of title filed by petitioner Floro
Mercene (Mercene) against Government Service Insurance System (GSIS) alleging that
until the time the complaint was filed, GSIS never exercised its rights as a mortgagee; the
real estate mortgage over his property constituted a cloud on the title; GSIS' right to
foreclose had prescribed.

The Antecedent Facts

Petitioner Mercene obtained a loan from respondent GSIS in the amount of ₱29,500.00.
As security, a real estate mortgage was executed over Mercene's property in Quezon
City, registered under Transfer Certificate of Title No. 90535. The mortgage was
registered and annotated on the title.

Mercene contracted another loan with GSIS for the amount of ₱14,500.00. The loan was
likewise secured by a real estate mortgage on the same parcel of land. The following day,
the loan was registered and duly annotated on the title. Mercene opted to file a complaint
for Quieting of Title against GSIS. He alleged that: since 1968 until the time the complaint
was filed, GSIS never exercised its rights as a mortgagee; the real estate mortgage over
his property constituted a cloud on the title; GSIS' right to foreclose had prescribed. In its
answer, GSIS assailed that the complaint failed to state a cause of action and that
prescription does not run against it because it is a government entity.

The Issue

Did prescription set in against respondent GSIS for its failure to make a demand to
petitioner Mercene?

Ruling of the Court

An action to enforce a right arising from a mortgage should be enforced within ten (10)
years from the time the right of action accrues, i.e., when the mortgagor defaults in the

96
payment of his obligation to the mortgagee; otherwise, it will be barred by prescription
and the mortgagee will lose his rights under the mortgage. However, mere delinquency
in payment does not necessarily mean delay in the legal concept.

Applying the pronouncement of the Court regarding prescription on the right to foreclose
mortgages, the Court finds that the CA did not err in concluding that Mercene's complaint
failed to state a cause of action. It is undisputed that his complaint merely stated the dates
when the loan was contracted and when the mortgages were annotated on the title of the
lot used as a security. Conspicuously lacking were allegations concerning: the maturity
date of the loan contracted and whether demand was necessary under the terms and
conditions of the loan.

Ergo, the RTC erred in ruling that GSIS' right to foreclose had prescribed because the
allegations in Mercene's complaint were insufficient to establish prescription against
GSIS. The only information the trial court had were the dates of the execution of the loan,
and the annotation of the mortgages on the title.

97
Civil Law
Mayuga vs Atienza
Gr no. 208197, January 10, 2018
CAGUIOA, J:
Facts:
On May 4, 2000, Araceli Mayuga (Araceli, for short), as plaintiff, instituted a
petition for Cancellation and Recall of Free Patent Application (FPA) No. 11636 and FPA
No. 11637 [and Reconveyance] against Antonio Atienza, representing the heirs of
Armando Atienza, Benjamin Atienza, Jr., representing the heirs of Benjamin Atienza, Sr.,
Community Environment and Natural Resource Officer and Register of Deeds of
Romblon, as defendants. The petition, docketed as Civil Case No. OD-489, was raffled
to the Regional Trial Court (RTC) of Odiongan, Romblon, Branch 82[.]
In her Petition, Araceli, alleged, that [she, Benjamin A. Atienza, Sr. and Armando
A. Atienza are the surviving legitimate, legal and forced heirs of the late Perfecto Atienza
who died intestate on June 1, 1978[7], and:]
3.) That the said deceased Perfecto Atienza left estates, to wit:
(a) Lot 9819 Csd 341-D (known as Lot 61-A) with an area of 294 square meters, and
(b) Lot 9820 Csd 341-D (known as Lot 61-B) with an area of 280 square meters, or a total
area of 574 square meters, both lots are located at Budiong, Odiongan, Romblon to which
the three (3) compulsory/forced heirs are entitled to an equal share of 1/3 [each].
4.) That through manipulation and misrepresentation with intent to defraud a co-
heir, respondent Antonio L. Atienza[, son of deceased Armando Atienza,[8]] was able to
secure Free [P]atent (NRDN-21) 11636 while respondent Benjamin A. Atienza was able
to secure Free Patent (NRDN- 21) 11637, both patents dated February 28, 1992. 5.) That
Petitioner was not notified of the application filed with public respondent Community
Environment & Natural Resource Officer nor any notice of hearings of proceedings as
required by law, being a co-heir and party- in-interest.
Thus, she prayed [for],
1.) The recall and cancellation of FPA (NRD-IV-21) 11636 dated February 28, 1992
issued to Antonio L. Atienza. 2.) The recall and cancellation of FPA (NRD-IV-21) 11637
dated February 28, 1992 issued to Benjamin A. Atienza. 3.) [The division of] the two lots
into three (3) equal parts among the three (3) forced heirs, namely: the Petitioner,
Benjamin A. Atienza and Armando A. Atienza.
On June 19, 2000, defendants filed a motion for bill of particulars because the
allegations of manipulation and misrepresentation were general, vague and ambiguous
on which they could not make an intelligent answer.
On August 18, 2000, the RTC issued an Order admitting the Reply to Bill of
Particulars.

98
 In their Answer, defendants denied the material allegations of the complaint,
and by way of affirmative defenses, averred that, the petition is moot and academic; the
Free Patent Titles have become indefeasible after the lapse of one year from its issuance
in 1992; fraud as a ground for review of title under Section 38 of Act 496 is not applicable
to a case where a certificate of title was issued in pursuance of a patent application;
Defendant Community Environment and Natural Resources Officer (CENRO,
for short) also filed an Answer, alleging that, Free Patent No. 045909-92-141P was issued
by then Provincial Environment and Natural Resources Officer (PENRO), Dionico F.
Gabay on February 28, 1992 by virtue of the Free Patent Application No. (NRD-IV-21)-
11636 filed by Antonio L. Atienza at the CENRO Office in Odiongan, Romblon covering
Lot No. 9819, Cad. 341-D, Odiongan Cadastre which is identical to Lot 61-A, Csd-04-
008722-D; while Free Patent Application No. (NRD-IV-21)11637 filed by Benjamin A.
Atienza with the CENRO Office covering Lot 9820, Cad. 341-D, Odiongan Cadastre which
is identical to Lot 61-B, Csd-04-008722-D; it has no participation whatsoever in the
processing and issuance of free patents and/or titles in the names of Antonio L. Atienza
and Benjamin A. Atienza. It also prayed that it be excluded as a defendant in the case.
Defendants moved to dismiss the original petition for failure of the plaintiff’s
counsels to state their IBP No. and P.T.R. No. and the amended complaint for failure to
attach a verification and certification against forum-shopping but on September 13, 2001,
he RTC issued an Order denying the motion to dismiss for lack of merit.
On April 27, 2010, the RTC ruled in favor of Plaintiff Araceli. It ruled that the
application by the defendants for a Free Patent with the CENRO is tainted with fraud
because said application was processed without the plaintiff’s knowledge nor a notice of
hearing of any proceeding was sent to her. In fact, the defendants took advantage while
the latter was in the United States. Moreover, the titling of the fraudulently registered real
property will not bar the action for reconveyance.
Defendants filed a motion for reconsideration but the same was denied in the
Order dated July 29, 2010.
Aggrieved, defendants interposed an appeal [before the Court of Appeals]
assailing the decision of the RTC.[9]
The CA granted the appeal. It reversed and set aside the RTC Decision dated
April 27, 2010, and dismissed the Amended Complaint for Recall and Cancellation of Free
Patent Application (FPA) No. 11636 and FPA No. 11637 and Action for Reconveyance.

Issue:
1.) Whether the CA erred in reversing the RTC Decision and dismissing the
amended complaint of the petitioner for cancellation of free patent and reconveyance?
2.) W/o there is fraud according to the petitoner?
Ruling: The Petition lacks merit.
1.) An ordinary civil action for declaration of nullity of free patents and certificates of
title is not the same as an action for reversion. The difference between them lies in the
allegations as to the character of ownership of the realty whose title is sought to be
nullified. In an action for reversion, the pertinent allegations in the complaint would admit
State ownership of the disputed land.
On the other hand, a cause of action for declaration of nullity of free patent and
certificate of title would require allegations of the plaintiffs ownership of the contested lot

99
prior to the issuance of such free patent and certificate of title as well as the defendant's
fraud or mistake; as the case may be, in successfully obtaining these documents of title
over the parcel of land claimed by plaintiff. In such a case, the nullity arises strictly not
from the fraud or deceit but from the fact that the land is beyond the jurisdiction of the
Bureau of Lands to bestow and whatever patent or certificate of title obtained therefor is
consequently void ab initio. The real party in interest is x x x the plaintiff who alleges a
pre-existing right of ownership over the parcel of land in question even before the grant
of title to the defendant.
With respect to the purported cause of action for reconveyance, it is settled that in
this kind of action the free patent and the certificate of title are respected as
incontrovertible. What is sought instead is the transfer of the property, in this case the title
thereof, which has been wrongfully or erroneously registered in the defendant's name. All
that must be alleged in the complaint are two (2) facts which admitting them to be true
would entitle the plaintiff to recover title to the disputed land, namely, (1) that the plaintiff
was the owner of the land and, (2) that the defendant had illegally dispossessed him of
the same.
Given the foregoing differences, an action for reconveyance and an action for
declaration of nullity of the free patent cannot be pursued simultaneously. The former
recognizes the certificate of title issued pursuant to the free patent as indefeasible while
the latter does not. They may, however, be pursued alternatively pursuant to Section 2,
Rule 8 of the Rules of Court on alternative causes of action or defenses.
The action for declaration of nullity of the free patents issued in favor of the
respondents must fail, as the CA correctly ruled.
2.) Regarding the petitioner's allegation of fraud, the CA correctly dismissed the
same. The bottom line here is that, fraud and misrepresentation, as grounds for
cancellation of patent and annulment of title, should never be presumed, but must be
proved by clear and convincing evidence, with mere preponderance of evidence not being
adequate. Fraud is a question of fact which must be proved. In this case, the allegations
of fraud were never proven. There was no evidence at all specifically showing actual fraud
or misrepresentation (Lopez v CA).
WHEREFORE, the Petition is hereby DENIED for lack of merit. The Court of Appeals
Decision dated July 8, 2013 in CA-G.R. CV No. 95599 is hereby AFFIRMED.
SO ORDERED.

100
MARIA CONCEPCION N. SINGSON a.k.a. CONCEPCION N. SINGSON v. BENJAMIN
L. SINGSON
G.R. No. 210766, January 8, 2018
DEL CASTILLO, J.:

Facts:
It was alleged therein that on July 6, 1974, petitioner and Benjamin L. Singson
(respondent) were married before the Rev. Fr. Alfonso L. Casteig at St. Francis Church,
Mandaluyong, Rizal; that said marriage produced four children, all of whom are now of
legal age; that when they started living together, petitioner noticed that respondent was
"dishonest, unreasonably extravagant at the expense of the family's welfare, extremely
vain physically and spiritually," and a compulsive gambler; that respondent was immature,
and was w1ab1e to perform his paternal duties; that respondent was also irresponsible,
an easy-going man, and guilty of infidelity; that respondent's abnormal behavior made
him completely unable to render any help, support, or assistance to her; and that because
she could expect no help or assistance at all from respondent she was compelled to work
doubly hard to support her family as the sole breadwinner.

Petitioner also averred that at the time she filed this Petition, respondent was
confined at Metro Psych Facility, a rehabilitation institution in Pasig City; and that
respondent's attending psychiatrist, Dr. Benita Sta. Ana-Ponio (Dr. Sta. Ana-Ponio),
made the following diagnosis on respondent.

Finally, petitioner claimed that she and respondent did not enter into any ante-
nuptial agreement to govern their prope1ty relations as husband and wife and that they
had no conjugal assets or debts.

Traversing petitioner's allegations, respondent claimed that "psychological

incapacity" must be characterized by gravity, juridical antecedence, and incurability,
which are not present in the instant case because petitioner's allegations are not
supported by facts.

Respondent furthermore claimed that he and petitioner had conjugal assets and
debts; that the land where their family home is built came from his earnings, hence the
101
family home is their conjugal property; that he and petitioner also have a house and lot in
Tagaytay City, as well as bank accounts that are in petitioner's name only; and he and
petitioner also have investments in shares of stocks, cars, household appliances,
furniture, and jewelry; and that these are conjugal assets because they came from
petitioner's salaries and his (respondent's) own inheritance money.

Hence, this Petition wherein notably the petitioner insists that this Court can take
judicial notice of the fact that personality disorders are generally incurable and permanent,
and must continuously be treated medically; that in this case the Clinical Summary; had
pointed out that respondent's understanding of his gambling problem is only at the surface
level; and that in point of fact Dr. Sta. Ana-Ponio had affirmed that personality disorders
are incurable.

Issues:
(1) Is respondent psychologically incapacitated to comply with the essential marital
obligations?
(2) Is the testimonies of Dr. Sta. Ana-Ponio and son Jose are meritorious?

Ruling:

(1)
The CA affirms that the evidence on record does not establish that respondent's
psychological incapacity was grave and serious as defined by jurisprudential parameters
since the respondent had a job; provided money for the family from the sale of his
property; provided the land where the family home was built on; and lived in the family
home with petitioner-appellee and their children.

It is significant to note moreover that petitioner also submitted as part of her

evidence a notarized summary dated February 18, 2010 which enumerated expenses
paid for by the proceeds of respondent's share in the sale of his parents' home in
Magallanes, Makati City which amounted to around ₱2.9 million. Although petitioner was
insinuating that this amount was insufficient to cover the family expenses from 1999 to
2008, we note that she admitted under oath that the items for their family budget, such
as their children's education, the payments for association dues, and for electric bills
came from this money.

(2)
No, the testimonies of Dr. Sta. Ana-Ponio and son Jose is with no merit as
heretofore mentioned, the medical basis or evidence adverted to by the RTC did not
specifically identify the root cause of respondent's alleged psychological incapacity.
102
 Equally bereft of merit is petitioner's claim that respondent's alleged psychological
incapacity could be attributed to the latter's family or childhood, which are circumstances
prior to the parties' marriage; no evidence has been adduced to substantiate this fact. Nor
is there basis for upholding petitioner's contention that respondent's family was
"distraught" and that respondent's conduct was "dysfunctional"; again, there is no
evidence to attest to this.

Needless to say, petitioner cannot lean upon her son Jose's testimony that his
father's psychological incapacity existed before or at the time of marriage.1âwphi1 It has
been held that the parties' child is not a very reliable witness in an Article 36 case as "he
could not have been there when the spouses were married and could not have been
expected to know what was happening between his parents until long after his birth."

WHEREFORE, the Petition is DENIED. The August 29, 2013 Decision and
January 6, 2014 Resolution of the Court of Appeals in CA-G.R. CV No. 96662 are
AFFIRMED.

103
SPOUSES JUAN and ANTONINA CANO, ROLANDO CANO and JOSEPHINE
"JOSIE" CANOAQUINO, vs.SPOUSES ARTURO and EMERENCIANA CANO
G.R. No. 188666, December 14,2017
Sereno. C.J.:

Facts:

These are consolidated petitions for review over a dispute over ownership and
possession of a land located in Palaming, San Carlos City, Pangasinan between
petitioner Juan and Antonina Cano who claims that the subject property were allegedly
donated to them by Feliza on 1962 and the respondents who claim that they purchased
the land from Feliza in 1982 in a Deed of Absolute Sale annotated in the Original
Certificate of Title (OCT) No. 62276 which covered the property.

The petitioner assails that Decision of the Court of Appeals which affirms the Resolution
of the Regional Trial Court, ordering the petitioner to vacate the parcel of land located in
Barrio of Palaming, City of San Carlos, Pangasinan and surrender it to the respondents.

In the ejectment case, respondent filed a Complaint for Ejectment with Prayer for
Injunction against the petitioner on 16 October 1999 with the basis of a Deed of Absolute
Sale executed by Feliza and after took possession of the land, employed a relative as
caretakers and received the fruits of the mango trees planted thereon.

The respondents asserted that they allowed the petitioners to take actual possession of
the land because they were blood relatives and this arrangement lasted until 3 October
1999 for in the same day, they threw stones and harassed the individuals hired by
respondents to spray the mango trees. The incident prompted the respondents to file an
ejectment complaint before the Municipal Trail Court in Cities (MTCC) of San Carlos City
Pangasinan and prayed for an order directing the petitioners to vacate the land and pay
for moral damages and attorney’s fees and an injunction that would restrain the
petitioners to any acts that would harass the respondents and the latter’s agents.

Petitioners denied the allegations and asserted that their basis for the claim for ownership
is the donation propter nuptias executed by Feliza on 30 May 1962, that they had
continuous possession of the property for 63 years, and that the Deed of Absolute Sale
of the respondents are falsified instruments.

Issues:
Whether or not the donation propter nuptias invalid? Whether or not the respondents are
the rightful owner of the subject land?

Ruling:

104
The MTCC dismissed the petition citing the Ocular Inspection Report submitted by the
sheriff who investigated the property and noted the improvements of three semi-concrete
houses owned by petitioners and several mango trees which were considered as
evidence the laches of the respondents. Also, the failure to raise a restraining arm to
introduction of improvements for almost 18 years is contrary to the claim of ownership.
It upheld the validity of the donation propter because of their payment of the realty taxes
on the property, the continued registration of the tile in the name of their mother Feliza
and the execution of the donation propter nuptias is prior to the Deed of Sale.

The RTC affirmed the decision of the MTCC considering the fact that the respondents
were barred by laches, but later on they reversed their own ruling, declaring the
respondents to be the true owner of the property. It favored the Deed of Sale executed
over the unregistered donation propter nuptias.

The CA upheld the RTC ruling and declared that the registered transaction should prevail
over the unregistered right.

The Supreme Court denied the petition. The Court disagreed to the pronouncement of
the CA about the validity of the donation propter nuptias, but affirms that the respondents
are the rightful owner of the property and entitled to its possession.

The CA argues that in a donaton of immovable property, the law requires that the donation
be made in public document and the acceptance be made in the same or in a separate
instrument. It is mandated that the donor be notified thereof in an authentic form, and it
to be noted in both instruments. The acceptance of the donation by the donee is
indispensable. When the deed of donation fails to show the acceptance, or the formal
notice of the acceptance in a separate instrument, is either not given or not noted in the
deed of donation and in the separate acceptance, the donation is null and void.

In the present case, the donation propter nuptias did not show that the donees accepted
the parcel of land as a gift from the donor. They failed to show any document that would
evidence such acceptance. In the absence of the acceptance required by law, the
ownership over the property did not pass. As a consequence, Felisa retained the
ownership of the land. She, then, can validly sell the property in 1982, to the respondents.

However, the petitioner insists that the acceptance of the gift was not required under the
Civil Code and the CA erred in applying the ordinary rules of donations.

With regards to this matter the Supreme Court agreed to the assertion of the petitioner
that the donation propter nuptias was governed by the Civil Code, for the Family Code
only took effect on August 3, 1988. Therefore, the validity of the donation should be
determined according to the provisions of the Civil Code, particularly in the following
provisions:

105
ARTICLE 126. Donations by reason of marriage are those which are made before its
celebration, in consideration of the same and in favor of one or both of the future spouses.

ARTICLE 127. These donations are governed by the rules on ordinary donations
established in Title III of Book III, except as to their form which shall be regulated by the
Statute of Frauds; and insofar as they are not modified by the following articles.

ARTICLE 129. Express acceptance is not necessary for the validity of these donations.

Therefore, the old rule applies in the present case where implied acceptance is sufficient
for it is stated in Article 129 of the Civil Code that, express acceptance is not necessary
for the validity of the said donations.

With regards to the ownership of the property, the Supreme Court affirmed the ruling of
the Court of Appeals that the respondents are the rightful owners of the subject property
because the prior unregistered donation does not bind the respondents who are innocent
purchasers for value. Article 709 of the Civil Code provides that “all rights must be duly
inscribed of annotated in the Registry of Deeds before they can affect the rights of a
person.”

The Ruling is rooted in the general principle that persons dealing with registered land
have the right to completely rely on the Torrens title issued over the property. Buyers are
not required to go beyond what the certificate of title indicates on its face, provided the
acquisition of the land is made in good faith, that is, without notice that some other person
has a right to, or interest.

106
JOSE DIAZ JR. (here in substituted by his legal heirs Veronica Bolagot-Diaz and
Rio Angela Bolagot-Diaz) and Adelina D McMullen, Petitioners V. SALVADOR
VALENCIANO, JR. (deceased) substituted by Madline A. Valenciao, Rosemarie V.
Serrano, Shiela Valenciano-Molo and John-Lyn Valenciano-Vargas
GR NO 209376 DECEMBER 6, 2017
PERALTA, J

FACTS:
Jose Diaz Jr. filed a complaint for unlawful detainer against Salvador Valenciano
SR., the father of Salvador Valenciano Jr. Petioners alleged that they are the lawful and
registered owners of parcel of land. Years later, Jose Diaz Jr., filed another complaint for
unlawful detainer against Salvador valenciano Jr. on the ground that the latter refused to
vacate the property despite the notice of execution.

ISSUE:
Is the petitioner’s subsequent unlawful detainer case against Salvador Jr. involving
the same property is barred by res judicata and estoppel by latches due to a previous
unlawful detainer case thay had filed against hi father, which was subject of a judicially
approved compromise agreement that was never executed by mere tolerance of
Petitioners?

RULING:
No. The Rules of Court defines cause of action as an act or omission by which a
party violates a right of another. One of the tests to determine the identity of causes of
action so as to warrant application of res judicata is the “same evidence rule.” In
ascertaining the identity of causes of action, the test is to look into whether or not the
same evidence fully supports and establisges both causes of action, the test is to look
into whether or not the same evidence fully supports and establishes both the present
and the former causes of action. If the answer is in the affirmative, the former judgment
would be a bar; otherwise, that prior judgment would not establish the cause of action
would be the lease contract and the violation of that lease. However, in this case where
a person occupies the land of another at the latter’s the tolerance, and that there was a
breach of implied promise to vacate the land upon demand.
Under Article 1144(3), in relation to article 1152 of the New Civil Code and Section
6, Rule 39 of the Rules of Court, once a judment becomes final and executory, the
prevailing party may have it executed as a matter of right by mere motion for five years
from the date of entry of judgment. If such party fails to have the decision enforced by a
motion after the lapse of 5years, the same judgement is reduced to a right of action which
must be enforced by the institution of a petition in a regular court within ten years from
the time the judgment becomes final; otherwise, the judgment can no loner be executed,
for being barred by laches. Verily, the said provisions on enforcement and revival of
judment do not apply to the filing of a subsequent action which is based on a different
cause of action.

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SPOUSES LANTONIO VS. MCGEORGE FOOD INDUSTRIES
G.R. No. 206184, December 6, 2017
PERALTA, J.

This case is a petition for review of the decision dated September 28, 2012 and resolution
dated January 31, 2013 of Court of Appeals which reversed and set aside the decision of
the RTC Branch 22, Cebu City, and denied the motion for reconsideration, respectively.

Facts:
 On September 17, 2000, the petitioners, spouses Ed Dante (Ed) and Mary Ann
Latonio (Mary Ann); accompanied their eight-month-old child Ed Christian to a
birthday party at the McDonald's Restaurant, Ayala Center, Cebu City.
 During the party and as part of the birthday package, McDonald's presented two
mascots wherein respondent Tyke Philip Lomibao (Lomibao )5 was the person
inside the "Birdie" mascot suit. As photos were about to be taken, Mary Ann
released her hold of Ed Christian. Seconds later, the child fell head first from the
chair onto the floor. Employees of respondent gave first aid to the child. Petitioners
left after the party was over.
 At 9:30PM of the said day, petitioners called Mcdo Cebu that their child has to go
through an x-ray. Respondent assured her to pay the expenses and later on
reimbursed the x-ray fee and even offered to pay for the CT scan.
 Later on, the respondents even gave further examinations for the child, but instead
Lantonios sent a letter to the respondents demanding for compensation amounting
to P15,000,000.00.
 On March 3, 2009, RTC rendered a decision wherein Cebu Golden Foods Inc. and
Lomibao to pay the plantiffs P1,250,000.00.
 On Spetember 28, 2012, CA reversed the decision of the RTC and said that the
trial court overlooked substantial facts and circumstances.
Issue:
Did the Court of Appeals erred in ruling that the proximate cause of the child’s fall was
the negligence of the petitioner?
Held:

No. Court of Appeals reversed the trial court's decision and held that Ed Christian’s
mother, Mary Ann, is liable because the proximate cause of the child's fall was Mary Ann's
act of leaving her eightmonth- old child, Ed Christian, in the "hands" of Lomibao who was
at the time wearing the Birdie mascot costume. Despite Mary Ann’s insistence that she
made sure that her baby was safe and secured before she released her grasp on Ed
Christian, her own testimony revealed that she had, in fact, acted negligently and
carelessly. Thus, all the aforementioned circumstances lead us to no other conclusion
than that the proximate cause of the injury sustained by Ed Christian was due to Mary
Ann's own negligence.

108
All told, in the absence of negligence on the part of respondents Cebu Golden Foods and
Lomibao, as well as their management and staff, they cannot be made liable to pay for
the damages prayed for by the petitioners

HEIRS OF VICTOR AMISTOSO, namely: VENEZUELA A. DELA CRUZ, FLORA A.

TULIO, WILFREDO D. AMISTOSO, RUFINO D. AMISTOSO, VICENTE D. AMISTOSO,
MAXIMO D. AMISTOSO, AND ZENAIDA D. AMISTOSO, petitioners v. ELMER T.
VALLECER, represented by EDGAR VALLECER, respondent

G.R. No. 227124, December 06, 2017 SECOND DIVISION | PERLAS BERNABE, J.

Facts:

This is a petition for review on certiorari on the decision and resolution of the Court of
Appeals (CA) denying the Motion to Hear and Resolve Affirmative Defenses filed by
petitioners.

Docketed as Civil Case No. S-606, respondent Elmer Vallecer through his brother had
filed a complaint for recovery of possession and damages against petitioners involving a
parcel of land that he purchased after confirming with the Department of Agrarian Reform
(DAR) that the property was not tenanted. The RTC then ruled in the respondent’s favour
and is declared as the absolute owner of the subject property under his name.

However, in his preparations for constructing a commercial building, petitioners, with the
aid of their workers barred him with force, threats, and intimidation. Petitioners claimed
that they have been in actual, peaceful, and continuous possession of the land as
evidenced by their Certificate of Land Transfer (CLT) by their predecessor, Victor
Amistoso. Although respondent claims that the CLT does not contain the technical
description of the property which it purportedly covers.

Docketed as Civil Case No. L-298, respondent then prayed to the court for the petitioners
to be prohibited from usurping his real rights on the property.

Petitioners, for their part, filed an Answer with Counterclaim and Affirmative Defenses
invoking res judicata, prescription and laches.

The RTC ruled in favour of respondent. The CA affirms the RTC’s decision.

Issue/s:

(1) Did the court classify Civil Case No. S-606 correctly?

(2) Did Civil Case No. S-606 bar the filing of Civil Case No. L-298 on the ground of res
judicata?

Ruling:

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(1) NO. The CA erroneously classified Civil Case No. S-606 as an accion reivindicatoria,
when it should have been instead classified as an accion publiciana.

As plaintiff in Civil Case No. S-606, respondent never asked that he be declared the owner
of the land in question, but only prayed that he be allowed to recover possession thereof
from petitioners. As such, Civil Case No. S-606 should have instead, been properly
classified as an accion publiciana, or a plenary action to recover the right of possession
of land.

Accion publiciana is an ordinary civil proceeding to determine the better right of

possession of realty independently of title. It refers to an ejectment suit filed after the
expiration of one year from the accrual of the cause of action or from the unlawful
withholding of possession of the realty.

The objective of the plaintiffs in accion publiciana is to recover possession only, not
ownership. When parties, however, raise the issue of ownership, the court may pass upon
the issue to determine who between the parties has the right to possess the property.
This adjudication, nonetheless, is not a final and binding determination of the issue of
ownership; it is only for the purpose of resolving the issue of possession, where the issue
of ownership is inseparably linked to the issue of possession. The adjudication of the
issue of ownership, being provisional, is not a bar to an action between the same parties
involving title to the property. The adjudication, in short, is not conclusive on the issue of
ownership.

(2) NO. Civil Case No. S-606 did not bar the filing of Civil Case No. L-298 on the ground
of res judicata as the causes of action in the two cases are not the same.

In Civil Case No. L-298, respondent asserted his ownership over the property by virtue of
his Torrens title, and alleged that petitioners' tenancy relationship actually pertains to the
portion of the adjacent land that belongs to Maria Kho Young with whom petitioners
admittedly have the tenancy relationship.

Whereas in Civil Case No. S-606, respondent never asked that he be declared the owner
of the land in question, but only prayed that he be allowed to recover possession thereof
from petitioners.

Based on the foregoing, it is clear that the causes of action in Civil Case Nos. S-606 and
L- 298 are different from each other. And thus, the ruling in the former would not operate
as res judicata on the latter.

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ERMA INDUSTRIES, INC., ERNESTO B. MARCELO AND FLERIDA O. MARCELO,
Petitioners, vs. SECURITY BANK CORPORATION AND SERGIO ORTIZ-LUIS, JR.,
Respondents.
G.R. No. 191274 | 2017-12-06

LEONEN, J.
This is a petition for review of a decision of the Court of Appeals, which affirmed in toto
the decision of Branch 64 Regional Trial Court of Makati City regarding the conditions in
a credit agreement executed among the petitioners and respondents.

FACTS
In May 1992, Erma Industries, Inc. (Erma) obtained from Security Bank Corporation
(Security Bank) a credit facility, conditions of which were embodied in the Credit
Agreement executed between the parties, along with the execution of a Continuing
Suretyship agreement in favour of Security Bank, signed by Spouses Marcelo and
Spouses Ortiz-Luis, in agreement to being bound by the provisions of the credit
agreement and to be jointly and severally liable with Erma should it default in its payments
to Security Bank.
From May 1992 to July 1993, Erma obtained various peso and dollar loans from
Security Bank, totalling US$310,000.00 and P20,529,000.00, evidenced by promissory
notes with uniform stipulations. Following a default in payment, Erma, through its
President, petitioner Ernesto Marcelo, requested a restructuring of all its obligations and
converting it into a five-year load, offering a property, registered in the name of Marcelo,
valued at P12,000,000.00 as security. Security Bank responded in April 1994 with an
approval of a partial restructuring of the loans up to P5,000,000.00 only.
In May 1994, Erma reiterated its request for the restructuring of the entire
obligation, stating that the property they offered as collateral could answer for a far bigger
amount than what Security Bank had recommended, though at the same time, Erma
suggested that it could add another property as additional security so long as the entire
obligation is covered.
In January 1995, Security Bank filed a complaint with the RTC of Makati for the
payment of Erma’s outstanding loan obligation plus interest and penalties. Erma then, in
June 1996, requested the return of the property offered as security upon the filing, as "it
became clear that the Bank would agree only to partial restructuring". Security Bank,
however, retained possession of the property.
In June 1999, Security Bank filed an amended complaint for sum of money, praying
that Erma, Spouses Marcelo, and Spouses Ortiz be compelled to execute a mortgage for
the property. Erma and Spouses Marcelo responded with an amended answer, with a
counterclaim against Security Bank for the return of the property. Spouses Ortiz denied
liability, claiming his signature in the Surety Agreement was only as an accommodation

111
party and nominal surety, and that his obligation was extinguished by novation when the
loan was restructured without his knowledge and consent.
The RTC rendered its decision in May 2004, adjudging Erma liable to pay Security
Bank the amounts of P17,995,214.47 and US$289,730.10, inclusive of the stipulated
interest and penalty, plus legal interests until full payment is made. Ernesto Marcelo and
Sergio Ortiz-Luis were also held liable to Security Bank as sureties, whereas their
spouses were not held liable as their signatures in the agreement only signified their
marital consent. It held that there was no novation of Ortiz-Luis’ liability because the
restructuring of Erma's loan obligation whether total or partial, did not materialize. Security
Bank was ordered to return the property of Marcelo.
The Court of Appeals affirmed the RTC’s Decision in toto.

ISSUE/S
1. Did the CA and RTC err in finding petitioners liable to pay respondent Bank the
amounts above stated, inclusive of interest and penalty charges, alongside legal
interests until full payment?
2. Did the CA err in holding Sergio Ortiz-Luis Jr liable with petitioners?

RULING
3. NO, there was no error in the trial court’s decision, as it acted in accordance with
Article 1229 of the Civil Code, which allows judges to equitably reduce the penalty
when there is partial or irregular compliance with the principal obligation, or when
the penalty is iniquitous or unconscionable. Furthermore, the promissory notes
provide for monthly compounding of interest: "Interest not paid when due shall be
compounded monthly from due date." What the trial court did was to stop the
continued accrual of the 2% monthly penalty charges on October 1994, and to
thereafter impose instead a straight 12% per annum on the total outstanding
amounts due.
4. NO, there was no error in the CA’s decision to hold Ortiz-Luis liable to the
payments to be made to Security Bank, owing to his execution of a Continuing
Suretyship agreement wherein he guaranteed the "due and full payment and
performance" of all credit accommodations granted to Erma and bound himself
solidarily liable with Ernesto Marcelo for the obligations of Erma, as clearly stated
in Sections 3 and 11 of the said agreement.
The court has denied this petition and affirmed the decisions of both CA and RTC.

The court elucidated on the distinction between an accommodation and a compensated

surety and the reasons for treating them differently in the case at hand. The law has
authorized the formation of corporations for the purpose of conducting surety business,
and the corporate surety differs significantly from the individual private surety. The courts
distinguish between the individual gratuitous surety and the vocational corporate surety.
In the case of the corporate surety, the rule of strictissimi juris is not applicable, and courts
apply the rules of interpretation appertaining to contracts of insurance. The rationale of
this doctrine is reasonable; an accommodation surety acts without motive of pecuniary

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gain and, hence, should be protected against unjust pecuniary impoverishment by
imposing on the principal duties akin to those of a fiduciary.
GR 217426 Untal

LONTOC-CRUZ VS. CRUZ

G.R. No. 201988 October 11, 2017
DEL CASTILLO, J.:

Thesis:
Maria Victoria Socorro Lontoc-Cruz (Marivi) filed a petition for declaration of nullity
of marriage against Nilo Santo Cruz on the ground of psychological incapacity.
Facts:
Marivi, 22 years old, and Nilo, 28 years old, met sometime in March 1986. Nilo,
who was working in Hong Kong as Administrative Assistant of the President of IBM, asked
Marivi for marriage in August of the same year so she could join him there the soonest.
They married in a civil ceremony on October 21, 1986 followed by a church wedding on
February 8, 1987.In April 1988, they were blessed with their first son, Antonio Manuel. In
July of the same year, they all moved back to Philippines where Nilo was to assume a
new role as manager of general marketing. In September 1992, their second child was
born, Jose.
After 18 years of marriage, on July 7, 2005, Marivi filed with the RTC of Muntinlupa
City a petition for declaration of nullity of marriage based on psychological incapacity.
Among others, Marivi insists that Nilo failed to provide her with the necessary
emotional, psychological, and physical support. She accused him of infidelity, lack of
quality time with family due to peers, mistrust on financial matters, lack of sexual
intercourse for more than a decade, vanity, and homosexuality, On the other hand, Nilo
claims that he was madly in love with Marivi. He asserts that both of them were suffering
from psychological incapacity and responsible for the breakdown of their marriage.
In support of her claim that she and Nilo were suffering from psychological
incapacity, Marivi presented Dr. Villegas, a psychiatrist, and Dr. Encarnacion, a clinical
psychologist, who have both concluded that Marivi and Nilo are suffering from
psychological incapacity. However, Dr. Encarnacion himself acknowledged that Marivi’s
so-called psychological incapacity is in fact, curable.
Issue:
Can the marriage be declared null and void on the ground of psychological
incapacity?
Held:
No. The Supreme Court decided that the marriage cannot be declared null and
void based on psychological incapacity.
Article 36 of the Family Code which states that “A marriage contracted by any party
who, at the time of the celebration, was psychologically incapacitated to comply with the
essential marital obligations of marriage, shall likewise be void even if such incapacity
becomes manifest only after its solemnization.”
In relation thereto, the Supreme Court reiterated the doctrine in Santos v. Court of
Appeals that psychological incapacity must be characterized by: (a) gravity, (b) juridical,
and (c) incurability. The Court also stated that mere showing of ‘irreconcilable differences’

113
and ‘conflicting personalities’ does not constitute psychological incapacity. “Nor does
failure of the parties to meet their responsibilities and duties as married persons” amount
to psychological incapacity.
The Supreme Court ruled that based on the evidence on record, Nilo’s challenge
to sexually perform only happened immediately after the birth of the eldest son and is
closely linked to him getting always accused of infidelity which Marivi confides to her
family. His failure to provide quality time for the family was due to his having a taxing and
demanding job as marketing and sales manager. On the other hand, Marivi failed to prove
that Nilo’s failure to comply with his sexual obligation was due to some psychological
condition or makeup, as this could very well be explained by the stress brought about by
Marivi’s negative attitude toward Nilo. It does also logically follow that Nilo’s inability to
sexually perform according to Marivi’s standard means he is a gay or homosexual. Marivi
also failed to substantiate Nilo’s penchant for womanizing as a manifestation of his
psychological incapacity. Finally it is significant to note that Dr. Encarnacion even
admitted that the psychological disorder experience by Marivi is curable given a proper
well-functioning, supportive, and emotionally healthy family environment.
The Supreme Court explained that Marivi and Nilo are in reality simply unwilling to
work out a solution for each other’s personality differences, and have thus become
overwhelmed by feelings of disappointment or disillusionment toward one another. Sadly,
a marriage, even if unsatisfactory, is not a null and void marriage.

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FGU INSURANCE CORPORATION v. ROSENDO P. DOMINGUEZ
GR No. 189526, Aug 09, 2017
LEONEN, J.

FACTS:
The liability of a surety is determined strictly in accordance with the actual terms
of the performance bond it issued. It may, however, set up compensation against the
amount owed by the creditor to the principal.
The Spouses Roxas entered into a Contract of Building Construction dated May
22, 1979 with Rosendo P. Dominguez, Jr. (Dominguez) and Philtrust Bank to complete
the construction of their housing project known as "Vista Del Mar Executive Houses." The
project was located at Cabcaben, Mariveles, Bataan and was estimated to cost
P1,200,000.00
From the terms of the Contract, Philtrust Bank would finance the cost of materials
and supplies to the extent of P 900,000.00, while Dominguez would undertake the
construction works for P300,000.00. It was provided that in case of Dominguez's non-
compliance of the terms and conditions of the Contract, he would pay Philtrust Bank
and/or the Spouses Roxas liquidated damages of P1,000.00 per day until he has
complied with his obligation.
Also on May 24, 1979, pursuant to the Contract of Building Construction,
Dominguez secured a performance bond, FIC Bond No. G(23) 5954 (Surety Bond), with
face amount of P450,000.00, from FGU. FGU and Dominguez bound themselves to jointly
and severally pay Floro Roxas (Floro) and Philtrust Bank the agreed amount in the event
of Dominguez's non-performance of his obligation under the Contract.
Dominguez averred that on September 20, 1979, he requested an upward
adjustment of the contract price from the Spouses Roxas due to the rising costs of
materials and supplies. But the Spouses Roxas did not heed his request.
He added that the Spouses Roxas also failed to make the three (3) payments of
P30,000.00 each as agreed upon. Thus, on October 22, 1979, he formally demanded that
they pay the amounts due plus the stipulated interest of 14% per annum, with a warning
that he would stop further work and withdraw his workers unless payment was received
on or before October 31, 1979. On November 9, 1979, Dominguez sent another demand
letter to the Spouses Roxas, this time, for the payment of P73,136.75, which they
allegedly borrowed from the funds allotted for the project for their personal use and
benefit. The Spouses Roxas were required to pay the amount within seven (7) days from
receipt of the letter. However, they refused to pay.
Dominguez also asked Philtrust Bank to release the remaining balance of
P24,000.00 but to no avail.
ISSUES:
The issues for this Court's resolution are as follows:
1. Did the Court of Appeals err in holding FGU Insurance Corporation liable for the
full amount of P450,000.00 of its Surety Bond rather than the cost overrun on
account of Rosendo P. Dominguez, Jr.'s non-completion of the project?

115
 2. Are the Spouses Floro and Eufemia Roxas entitled to liquidated damages under
the Contract for Building Construction?

3. Is there factual basis for the award of P90,000.00 with 14% stipulated interest and
P 73,146.75 with legal interest in favor of Rosendo P. Dominguez, Jr.?

4. May the liabilities of the Spouses Floro and Eufemia Roxas to Rosendo P.
Dominguez, Jr. be set off against any liability of FGU Insurance Corporation
pursuant to Articles 1280[52] and 1283[53] of the Civil Code?

5. Did the Court of Appeals err in remanding the case to the trial court for the
reception of evidence and computation of the other claims of the Philippine Trust
Company against the Spouses Floro and Eufemia Roxas?

6. Should Philtrust Bank be held liable for the unauthorized release of the remaining
construction funds?

RULING:
1. Under Section 175 of Presidential Decree No. 612 or the Insurance Code, a
contract of suretyship is defined as an agreement where "a party called the surety
guarantees the performance by another party called the principal or obligor of an
obligation or undertaking in favor of a third party called the obligee." A performance
bond is a kind of suretyship agreement. It is "designed to afford the project owner
security that the . . . contractor, will faithfully comply with the requirements of the
contract . . . and make good [on the] damages sustained by the project owner in
case of the contractor's failure to so perform." Pursuant to the foregoing provisions,
FGU, as surety, may be sued by the creditor separately or together with
Dominguez as principal, in view of the solidary nature of its liability.

2. This Court is not persuaded.

Liquidated damages are those that the parties agree to be paid in case of a breach.
As worded, the amount agreed upon answers for damages suffered by the owner
due to delays in the completion of the project. Under Philippine laws, these
damages take the nature of penalties. A penal clause is an accessory undertaking
to assume greater liability in case of a breach. It is attached to an obligation in
order to ensure performance.

If this Court goes by FGU's reasoning that the liquidated-damages clause does not
apply in case of abandonment, then, in effect, this Court diminishes or disregards
altogether the coercive force of this stipulation. Moreover, it is contrary to the
intention of the parties because it was clearly provided that liquidated damages
are recoverable for delay in the completion of the project; hence, there is more
reason in case of non-completion.

116
 Thus, this Court holds that Dominguez is bound to pay liquidated damages from
September 23, 1979, the scheduled date of completion, until October 31, 1979,
when he effectively abandoned the project. FGU cannot be held liable for it
because it is not a party to the Contract of Building Construction. Neither does the
Surety Bond contain any stipulation for liquidated damages on top of FGU's liability
to pay the face amount in case of Dominguez' non-performance.

3. The Regional Trial Court categorically ruled that the cash installments were not
given to Dominguez. Aside from this, the real properties promised were also
different from those shown to him. It also found sufficient evidence showing the
Spouses Roxas' debt to Dominguez in the amount of P73,136.75. In this case, the
factual findings of the trial court, which were affirmed by the Court of Appeals, were
based on substantial evidence and were not refuted with contrary proof by the
Spouses Roxas. Therefore, this Court finds no cogent reason to disturb the
consistent factual findings of the trial court and of the Court of Appeals.

4. Article 1280. Notwithstanding the provisions of the preceding article, the guarantor
may set up compensation as regards what the creditor may owe the principal
debtor.

While Article 1280 specifically pertains to a guarantor, the provision nonetheless

applies to a surety. Contracts of guaranty and surety are closely related in the
sense that In both, "there is a promise to answer for the debt or default of another."
The difference lies in that "a guarantor is the insurer of the solvency of the debtor
and thus binds himself to pay if the principal is unable to pay while a surety is the
insurer of the debt, and he obligates himself to pay if the principal does not pay."

Hence, FGU could offset its liability under the Surety Bond against Dominguez's
collectibles from the Spouses Roxas. His collectibles include the unpaid
contractor's fee of P 90,000.00 plus 14% interest per annum from October 31, 1979
until fully paid. Additionally, his collectibles cover the Spouses Roxas' advances
from the construction funds in the amount of P73,136.75 plus 6% legal interest
from November 16, 1979 until fully paid.

In the event of compensation, the Spouses Roxas shall be liable to Philtrust Bank
for the latter's share in the obligation.

5. Philtrust Bank, for its part, assails the Court of Appeals Decision and submits that
there is no need to remand the case to the trial court because it has already
presented several pieces of evidence to prove its other claims against the Spouses
Roxas. Philtrust Bank adds that during the proceedings in the trial court, the
Spouses Roxas did not deny the existence of their loan obligations and the
mortgage of several of their properties to secure these loan obligations.
Philtrust Bank further disputes the Court of Appeals' findings that the release of
the construction funds was without the conformity of the Spouses Roxas. Philtrust
Bank points to two (2) promissory notes executed by the Spouses Roxas dated

117
 April 11, 1979 and July 16, 1979 for P450,000.00 each, which the Spouses Roxas
allegedly admitted in their Answer. They also referred to the testimony of
Penafrancia Gabriel (Gabriel), the Senior Loan Clerk of Philtrust Bank-Limay
Branch in charge of the Spouses Roxas' account. These promissory notes and
Gabriel's testimony explained that "Philtrust [Bank] released the proceeds of the
loan as the need arose and [these] releases were reflected in a record to keep
track of the account."
Finally, Philtrust Bank avers that the claim of the Spouses Roxas for unrealized
rentals has not been proven and is "highly speculative."
6. The Spouses Roxas' contention is untenable. For one, the Regional Trial Court
found no evidence to prove the alleged diversion of funds. If at all, it was only the
amount of P73,136.75 that was advanced to the Spouses Roxas for their personal
use and benefit.

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FRANCISCA TAAR v. CLAUDIO LAWAN
GR No. 190922, Oct 11, 2017
LEONEN, J.

Facts: A judgment approving the subdivision of a parcel of land does not preclude other
parties with a better right from instituting free patent applications over it. Entitlement to
agricultural lands of the public domain requires a clear showing of compliance with the
provisions of Commonwealth Act No. 141, as amended, otherwise known as the Public
Land Act.
The present case involves two (2) free patent applications over a 71,014-square-meter
parcel of land (the Property) located in Barangay Parsolingan, Genova, Tarlac.
Narcisa Taar (Narcisa), Alipio Duenas (Alipio), Fortunata Duenas (Fortunata), and
Pantaleon Taar (Pantaleon) inherited two (2) vast tracts of land situated in Tarlac. One
(1) parcel of land was adjudicated exclusively in favor of Pantaleon while the other parcel
of land was given to Pantaleon, Narcisa, Alipio, and Fortunata.[7] Narcisa sold her share
to Spouses Primitive T. Adaoag and Pilar Tandoc (the Adaoag Spouses) and to Spouses
Ignacio Gragasin and Genoveva Adaoag (the Gragasin Spouses).
Private respondents filed their free patent applications before the Tarlac Community
Environment and Natural Resources Office. Their applications covered the Property,
which was also claimed by petitioners.
ISSUE: Is the February 18, 1948 Decision of the Court of First Instance bars Claudio
Lawan, Marcelino L. Gala, Artemio Abarquez, Augusto B. Lawan, and Adolfo L. Galo from
applying for free patents over the Property?
Held: The core of the controversy lies in whether or not private respondents are barred
by the principle of res judicata from instituting free patent applications over the Property
claimed by petitioners.
The rule on res judicata states that a "final judgment or decree rendered on the merits by
a court of competent jurisdiction is conclusive of the rights of the parties or their privies,
in all other [subsequent] actions or suits" and on all points and matters determined in the
first suit.
Res judicata has two (2) aspects. The first aspect refers to bar by prior judgment while
the second refers to conclusiveness of judgment.
Pursuant to the Administrative Code and the PLA, the DENR has exclusive jurisdiction
over the management and disposition of public lands. In the exercise of this jurisdiction,
the DENR has the power to resolve conflicting claims over public lands and determine an
applicant's entitlement to the grant of a free patent.
Petitioners, in choosing to apply for free patents, acknowledged that the land covered by
their application still belongs to the government and is still part of the public domain. Under
Section 44 of the Public Land Act as amended by Republic Act No. 6940, they are
required to prove continuous occupation and cultivation for 30 years prior to April 15, 1990
and payment of real estate taxes while the land has not been occupied by other persons.
Petitioners insist that the February 18, 1948 Decision of the Court of First Instance
automatically vests them with ownership over the property. This Decision cannot be used

119
as proof of compliance with the requirements of the Public Land Act. Again, the Court of
First Instance simply approved an agreement of partition. If at all, the February 18, 1948
Decision could only be used as the basis of a subdivision plan.

G.R. No. 196419. October 4, 2017.

PILIPINAS MAKRO, INC., petitioner, vs. COCO CHARCOAL PHILIPPINES, INC. and
LIM KIM SAN, respondents.

MARTIRES, J.:

FACTS:

Pilipinas Makro, Inc., bought from respondent Coco Charcoal Philippines, Inc. and Lim
Kim San a parcel of land in Davao City which were covered by Transfer Certificate of Title
(TCT) No. 208776, for the amount of P8,500,000.00. On the same date, Makro entered
into another notarized Deed of Absolute Sale with respondent Lim Kim San (Lim) for the
sale of the latter’s land, with a total area of 1,000 square meters and covered by TCT No.
282650, for the same consideration of P8,500,000.00 In December 1999, Makro engaged
the services of Engineer Josefino M. Vedua (Engr. Vedua), a geodetic engineer, to
conduct a resurvey and relocation of the two adjacent lots. As a result of the resurvey, it
was discovered that 131 square meters of the lot purchased from Coco Charcoal had
been encroached upon by the Department of Public Works and Highways (DPWH) for its
road widening project and construction of a drainage canal to develop and expand the
Davao-Cotabato National Highway. Makro informed respondents regarding the
encroaching and asked for a refund. Failing to recover the refund, Makro filed a case in
the RTC. The RTC ruled in favor of Makro and granted the petition for the refund,
attorney’s fees and exemplary damages. Aggrieved, Coco Charcoal and Lim appealed
before the CA. The CA reversed the RTC’s decision stating that Makro could not feign
ignorance of the ongoing road widening project. Hence, Makro Hence, this present
petition raising the following:

ISSUE:

Is Makro validly entitled to recover the payment for the encroached lands from sellers
Coco Charcoal Philippines, Inc. and Lim Kim San?

Ruling:

Pursuant to Section 2 of the deeds of sale, Makro engaged the services of a surveyor
which found that the DPWH project had encroached upon the properties purchased. After
demands for a refund had failed, it opted to file the necessary judicial action for redress.

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The courts a quo agree that the DPWH project encroached upon the properties Makro
had purchased from respondents. Nevertheless, the CA opined that Makro was not
entitled to a refund because it had actual knowledge of the ongoing road widening project.
The purchaser has been deprived of the whole or part of the thing sold. It is insufficient to
charge Makro with actual knowledge that the DPWH project

Had encroached upon respondent’s properties. The dimensions of the properties could
not have been accurately ascertained through the naked eye. It was only when the
geodetic engineer did a survey, when the petitioners discovered that 131sqm and 130
sqm of the purchased lots had been adversely affected by the DPWH project.

“WHEREFORE, the petition is GRANTED. The 30 December 2010 Decision and 7 April
2011 Resolution of the Court of Appeals in C.A.-G.R. CV No. 83836 are REVERSED and
SET ASIDE. Petitioner Pilipinas Makro, Inc. is entitled to recover P1,113,500.00 from
respondent Coco Charcoal Phils., Inc. and P1,105,000.00 from respondent Lim Kim San.
“

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DOCTRINE: When the deceased left no will and no debts and the heirs all of age, the
heirs may divide the estate among themselves without judicial administration. However,
this rule does not prevent the heirs from instituting administration proceedings if they have
“good reasons”.

JESUSA DUJALI BUOT, petitioner, vs. ROQUE RASAY DUJALI, respondent.

841 SCRA 376 , October 02, 2017
Jardeleza, J.:

Facts:
Buot filed a before the RTC of Panabo City, a petition for letters of administration
of the estate of deceased Gregorio Dujali. In her petition, Buot alleged that she was a
surviving heir, along with others, of Gregorio who died intestate. Roque Dujali, one of the
heirs of Gregorio purportedly continued to manage and control the properties to the
exclusion of all the other heirs. Buot prays that the estate of Gregorio be made to undergo
judicial administration. Her reasons are; that there has been no effort to partition the
estate, that Dujali challenges her status as an heir, that other heirs have been deprived
of the estate, these heirs are amenable to the appointment of an administrator.

Issue
Should the court grant the judicial administration of the estate?

Ruling
No, when a person dies intestate, his or her estate may generally be subject to
judicial administration proceedings. However, there are several exceptions such as one
provided for in Section 1, of Rule 74 of the Rules of Court. Under this provision, when the
deceased left no will and no debts and the heirs all of age, the heirs may divide the estate
among themselves without judicial administration. The heirs may do extrajudicially
through a public instrument filed in the office of the Register of Deeds. In case of
disagreement, they also have the option to file an action for partition. The rule however,
does not prevent the heirs from instituting administration proceedings if they have good
reasons for choosing not to file an action for partition. In Pereira V. Court of
Appeals, the court explains that the “good reason exception” does not include a case
where the only reason why the appointment of an administrator was sought so that one
heir can take possession of the estate from other heirs. It is not a compelling reason to
order judicial administration. In this case, the reasons which Buot proffers to warrant the
grant of her petition for letters of administration do not suffice to warrant the submission
of Gregorio’s estate to administration proceedings. Whether the extrajudicial settlement
covers the entire estate or only a portion thereof, do not automatically create a compelling
reason to order the administration of the estate. None of Buot’s allegations actually
prevent the filing of an ordinary action for partition.

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REPUBLIC OF THE PHILIPPINES, Petitioner vs. ROSARIO L. NICOLAS, Respondent
G.R. No. 181435 October 2, 2017
SERENO, CJ.:

FACTS:
Respondent filed a Petition before the RTC of San Mateo, Rizal, seeking to
register her title over Lot 2 located inRizal, with an area of 118,448 square meters. She
asserted that she was entitled to confirmation and registration oftitle, as she had been in
"natural, open, public, adverse, continuous, uninterrupted" possession of the land in
theconcept of an owner since October 1964.
This was opposed by the Republic saying that neither respondent and her
predecessors-in interest has been inopen, continuous, exclusive and notorious
possession of the land since June 12, 1945; she failed to register within6 months from
Feb 16, 1976 as required by PD 892 and that said land is part of public domain.
In compliance with jurisdictional requisites, RTC directed respondent to submit
documents that sad land is notcovered under CARP, No tenants in there, land is not
subject to homestead patent. CENRO also submitted reportverifying that said land is
not covered by any application but the entry as to whether it is within alienable
anddisposable zone was left blank with a notation that area was not projected due to
unavailability of coordinates.Also, the same with LRA.
During trial respondent presented 3 testimonial evidences: her daughter and
caretaker and a staff in LRA who identified the original tracing cloth plan for the property.
Also,survey plan, certificate and technical description of property, various tax declaration
and certificate issued by CENRO.
RTC and CA favoured respondent saying that she was able to prove her claim of
ownership since 1940 and thus entitled her to register her lot under Sec 14 (1) of PD
1529.Hence, Republic went to Supreme Court.

ISSUE:
Should the judicial confirmation of respondent's title to the property under Section
14 (1) and declaration that respondent is allowed to register her land by acquisitive
prescription under (2) of PD 1529 be allowed?

HELD:
No. The application filed by respondent before the RTC did not state the exact
legal basis of her request. At best, the pleading implied that her claim was one for
registration and confirmation of title based on her possession and occupation of the
property. It is unclear whether she sought judicial confirmation and registration of her title
pursuant to Section 14(1) of P.D. 1529, or of the registration of her title on the ground of
acquisitive prescription under Section 14(2) of the same law.
Respondent failed to establish the third requisite of Section 14(1), i.e., that the
property subject of the application is alienable and disposable agricultural land. To prove
that the property subject of an application for original registration is part of the alienable

123
and disposable lands of the public domain, applicants must "identify a positive act of the
government, such as an official proclamation, declassifying inalienable public land into
disposable land for agricultural or other purposes." To sufficiently establish this positive
act, they must submit (1) a certification from the CENRO or the Provincial Environment
and Natural Resources Office (PENRO); and (2) a copy of the original classification
approved by the DENR Secretary and certified as a true copy by the legal custodian of
the official records.
The records show that respondent has failed to allege or prove that the subject
land belongs to the patrimonial property of the State. As earlier discussed, the evidence
she has presented does not even show that the property is alienable and disposable
agricultural land. She has also failed to cite any government act or declaration converting
the land into patrimonial property of the State. Considering the absence of sufficient
evidence that the subject land is a patrimonial property of the State, we must consider it
part of public dominion and thus immune from acquisitive prescription.

124
G.R. No. 204663 September 27, 2017
Municipal Rural Bank of Libmanan, Camarines Sur, petitioner, vs. Virginia Ordoñez,
respondent
Peralta, J.
Respondent filed a complaint for Quieting of Title, a common law remedy for the
removal of any cloud upon or doubt or uncertainty with respect to title to real property,
against petitioner bank.
FACTS:
Virginia Ordoñez alleged that she is the owner of a parcel of land in Fundado,
Libamanan, Camarines Sur, which she acquired through inheritance, and, along with her
predecessors-in-interest, had been in open, peaceful, uninterrupted possession since
time immemorial.
On the other hand, petitioner bank contended that it is rather the true and absolute
owner of the subject land, and the property was previously owned by Roberto Hermita,
who mortgaged the said land to petitioner, but subsequently failed to satisfy his obligation
causing petitioner to foreclose the mortgage, and subsequently acquire the property and
transfer title over it in its name.
ISSUE:
Is Municipal Rural Bank the absolute owner of the subject land?
RULING:
The Supreme Court ruled that Virginia Ordoñez is the absolute owner of the
subject property.
Article 477 of the Civil Code provides that the plaintiff in action to quiet title must
have legal or equitable title to or interest in the real property, which is the subject matter
of the action, but need not be in possession of said property.
The act of respondent’s predecessors-in-interest designating Roman Zamudio as
caretaker, as early as 1975, is considered as evidence of respondent’s prior possession
such that one need not have actual or physical occupation of every area of the property
at all times to be considered in possession, whereas it was only in 1986 that petitioner’s
predecessors-in-interest started occupying the same property.
Moreover, settled is the rule that tax declaration of the disputed property and
payment of realty taxes thereon, which respondent’s predecessors-in-interest had been
doing so as early as 1949, as opposed to the declaration of Roberto’s father only in 1970,
are good indication of possession in the concept of owner for no one in his right mind
would be paying for a property not in his actual or at least constructive possession.
Petitioner even contended that Roberto acquired ownership of the subject property
through prescription, however it cannot be said that his possession was in good faith,
considering that prior the mortgaging, the mother of the respondent approached him and
claimed ownership over the subject property as well.
Therefore, Virginia Ordoñez was able to prove that she has legal or equitable title
or interest in the real property and the claim casting a cloud on her title is in fact invalid
and inoperative.

125
Heirs of Gilberto Roldan v. Heirs of Silvela Roldan
GR NO. 202578, September 27, 2017
Sereno, C.J.:

FACTS:
Natalia Magtulis owned an agricultural land in Kalibo, Aklan. After her death, Natalia left
her lot to her children. However, Gilberto and his heirs took possession of the property to
the exclusion of respondents. Respondents filed before the RTC complaint for partition
and damages against petitioners where latter refuse to yield the property. During trial,
petitioners failed to show any document evidencing the sale of Silvela’s share to Gilberto.
The RTC ruled that the heirs of Silvela remained co-owners of the property they had
inherited from Natalia.
On appeal, CA affirmed the ruling of the RTC that Gilberto, Silvela and Leopoldo remained
co-owners of the lot. Petitioner heirs of Gilberto moved for reconsideration, but to no avail.

ISSUE:

1. Does the CA err in affirming the RTC’s finding that Silvela did not sell her share of
the property to Gilberto?
2. Is prescription and laches bar respondents from claiming coownership over Lot
No. 4696?

RULING:

1. No, the CA did not erred in affirming the RTC’s finding that Silvela did not sell her
share of the property to Gilberto. The factual determination of court, when adopted
and confirmed by CA, is final and conclusive to court except when if unsupported
by evidence on record. In this case, the exception does not apply, as petitioners
merely alleged that Silvela "sold, transferred and conveyed her share in the land
in question to Gilberto Roldan for a valuable consideration" without particularizing
the details or referring to any proof of the transaction. Therefore, The Court
sustained the conclusion that she remains to be co-owner of the lot.

2. No, Prescription and laches does not bar respondents from claiming co-ownership
over Lot No. 4696. For a prescription to be appreciated, there is a need to
determine the factual matters such as date when the period to bring the action
commenced to run. The court considered the determination as factual in nature.
The same goes with regards to determining laches. Besides, the petitioners have
alleged prescription and laches only before this court. Raising a new ground for
the first time on appeal contravenes due process, as an act deprives the adverse
party of the opportunity to contest the assertion party of the claimant. Since the
respondents were not able to refute the issue of prescription and laches, the SC
has denied the newly raised contention of the petitioners

126
G. Holdings, INC. v. Cagayan Electric Power and Light Company, INC. (CEPALCO)
and Ferrochrome Philippines, INC.
G.R. No. 226213, September 27, 2017

FACTS:

From March 1990, CEPALCO, which operates a light and power distribution system in
Cagayan de Oro City, supplied power to the ferro-alloy smelting plant of Ferrochrome
Philippines, Inc. (FPI) at the PHlVIDEC Industrial Estate in Misamis Oriental. FPI paid
CEPALCO on three separate dates however, it failed to pay the subsequent ones. Hence,
CEPALCO filed a collection suit (Civil Case No. 65789) against FPI in July 1996 before
the Regional Trial Court of Pasig City. A Decision was rendered in favor of CEPALCO,
ordering FPI to pay CEPALCO P25,608,579.98. In the meantime, Sheriff Renato B. Baron
of RTC-Pasig issued notices of levy and notices of sale on execution upon personal and
real properties.
On April 5, 2004, G HoIdings Inc. (GHI) filed a case (Civil Case No. 2004-111) against
Sheriff Baron, CEPALCO and FPI for Nullification of Sheriffs Levy on Execution and
Auction Sale, Recovery of Possession of Properties and Damages before the RTC-CDO.
GHI claimed that the levied ferro-alloy smelting facility, properties and equipment are
owned by it as evidenced by a Deed of Assignment dated March 11, 2003 (the Deed of
Assignment) executed by FPI in consideration of P50,366,926.71.
In the unilateral Deed of Assignment, FPI, as the assignor, through its stockholders and
Board of Directors' duly authorized representative and Acting President, Figueroa, in
consideration of obligations amounting to P50,366,926.71 as of December 31, 2002,
inclusive of the interest charges, assigned, transferred, ceded and conveyed absolutely
in favor of GHI, as the assignee, "all of the [assignor's! properties, equipment and
facilities, located in Phividec Industrial Estate, Tagoloan, Misamis Oriental.
CEPALCO filed its answer with compulsory counterclaim and cross-claim. In its
counterclaim, CEPALCO assailed the validity of the Deed of Assignment executed by FPI
in favor of GHI in payment of alleged advances from GHI (sister company of FPI) from
1998 to 2002 amounting to P50,366,926.71, inclusive of interest, as of December 2002.
CEPALCO contended that the Deed of Assignment was null and void for being absolutely
simulated and, as a dacion en pago, it did not bear the conformity of the creditor. GHI and
FPI have substantially the same directors. The Deed of Assignment was in fraud of FPFs
creditors as it was made after the RTC-Pasig had already rendered a partial judgment in
favor of CEPALCO and was, therefore, rescissible

ISSUE:
Is the Deed of Assignment void for being absolutely simulated?

RULING:

127
The Supreme Court through Justice Caguioa held that the Deed of Assignment dated
March 11, 2003 executed by respondent Ferrochrome Philippines, Inc. in favor of
petitioner G. Holdings, Inc. is declared inexistent for being absolutely simulated.
The lack of intention on the part of FPI to divest its ownership and control of "all of [its]
properties, equipment and facilities, located in Phividec Industrial Estate, Tagoloan,
Misamis Oriental" — in spite of the wordings in the Deed of Assignment that FPI
"assigned, transferred, ceded and conveyed [them] x x x absolutely in favor of [GHI]" —
is evident from the letter dated February 28, 2003 which reveals the true intention of FPI
and GHI.
In the letter dated February 28, 2003, it is there provided that the right to the work process,
otherwise known as "Outokumpo," was to be retained by FPI and would only be made
available to GHI under two options. One option even gave FPI the option to operate the
assigned assets with the obligation to pay GHI a guaranteed revenue. While GHI was
given the first crack to choose which of the two options to take, such chosen option would
only last for three years, and subsequently, FPI would make the choice and the option
chosen by FPI would last for the next three years. The cycle would then be repeated if
the ferro-alloy plant would not be operated for six years from assignment. What is evident,
therefore, in the delineation of the different options available to FPI and GHI in the
settlement of FPI's obligations to the latter is that FPI did not intend to really assign its
assets "absolutely" to GHI. Stated differently, this letter belies the wordings of the Deed
of Assignment that, it should be emphasized, was executed a mere 11 days after the
letter, that is, on March 11, 2003.
That there was no intention to absolutely assign to GHI all of FPI's assets was confirmed
by the finding of the RTC-CDO that, according to FPI's Acting President, Juanito E.
Figueroa, "GHI cannot operate the [equipment, machinery and smelting facilities] without
the patented 'Outokumpo' process and GHI has not been operating the same."74
Moreover, the equipment and machinery remain physically in the plant premises, slowly
depreciating with the passage of time, and, worse, there also appears to be no effective
delivery as the premises on which these are located remain under the control of FPI which
continues to employ the security and skeletal personnel in the plant premises.
Thus, in executing the Deed of Assignment, FPI's intention was not to transfer absolutely
the assigned assets (admittedly valued at about P280 Million) to GHI in payment of FPI's
obligations to GHI amounting to P50,366,926.71. FPI, as shown above, did not really
intend to divest itself of its title and control of the assigned properties. FPI's real intention
was, borrowing the words of Justice J.B.L Reyes in Rodriguez, to place them beyond the
reach of its creditor CEPALCO.

128
VICENTE L. LUNTAO AND NANETTE L. LUNTAO, PETITIONERS, V. BAP CREDIT
GUARANTY CORPORATION AND EFREN M. PINEDA, RESPONDENTS.
2017-09-20 | G.R. No. 204412

LEONEN, J.:

FACTS
Vicente was the owner of a real property covered by TCT in Davao City. He executed a
Special Power of Attorney in favor of his sister Nanette. According to Nanette, she was
introduced to the lending institution by her sister Eleanor Luntao who allegedly had a
personal loan with it and whose office was located in the same building where BAP's
office was. Nanette then applied for a loan with BAP and used Vicente's property as
collateral. The amount of P900,000.00, representing the loan proceeds, was ordered to
be released through Security Bank. When the loan became due, BAP sent demand
letters. In their letter, Nanette and Eleanor's brother Jesus Luntao wrote BAP, asking for
additional time to settle his sisters’ accounts. Nanette's loan was still left unpaid. As a
result, BAP applied for Extra-Judicial Foreclosure of Vicente's property. Vicente and
Nanette filed a Complaint for Declaration of Nullity of Real Estate Mortgage with a prayer
for the issuance of a Temporary Restraining Order and Writ of Preliminary Injunction
against BAP. Nanette narrated that BAP appraised the collateral to determine the
loanable amount. They told her that she could borrow P900,000.00, Thereafter, a BAP
personnel visited her to get her signature. The documents brought to her were all blank
forms. She alleged that she signed the forms on the understanding that it was part of the
bank's standard operating procedure.

Nanette stated that she had received four (4) letters from BAP, all addressed to Eleanor.
She gave the letters to Eleanor since the letters were about Eleanor's alleged loan with
BAP and the post-dated checks she issued to secure it. Vicente and Nanette claimed that
Eleanor's alleged debt with BAP was separate from Nanette's debt and was not secured
by Vicente's property. The Regional Trial Court dismissed the complaint. The trial court
gave weight to Jesus' letter. It held that Jesus admitted the existence of the debt, that the
loan was obtained in behalf of the clinic, and that the money was used according to its
intended purpose. The statements of Jesus were not rebutted by Vicente or Eleanor. The
trial court also found that Vicente and Nanette failed to present evidence that Eleanor
used the loan proceeds for her personal use. Vicente and Nanette elevated the case to
the Court of Appeals. The CA denied the appeal.

ISSUE
Are the elements of a valid contract present in the case?

RULING
Yes. As an accessory contract, a mortgage contract's validity depends on the loan
contract's validity. It is, thus, imperative for this Court to determine if the contract of loan

129
between petitioners and private respondent is valid. This Court held in Pentacapital
Investment Corporation v. Mahinay that "like any other contract, a contract of loan is
subject to the rules governing the requisites and validity of contracts in general."
The elements of a valid contract are enumerated in Article 1318 of the Civil Code:
ARTICLE 1318.
There is no contract unless the following requisites concur:
(1)Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.

All elements should be present in a contract; otherwise, it cannot be perfected. In this

case, petitioners insist that they did not receive the loan proceeds, which is the object of
the loan contract.

130
REPUBLIC OF THE PHILIPPINES, Petitioner, v. SPOUSES JOEL AND ANDREA
NOVAL, ELLEN N. DELOS REYES, DALE Y. NOVAL, WINNIE T. REFI, ZENAIDA
LAO, AND DAISY N. MORALES,Respondents.
G.R. No. 170316, September 18, 2017
LEONEN, J.:

Facts:
On September 8, 1999, the applicants sought the registration of their titles over the
subdivided portions of a land in Barangay Casili, Consolacion, Cebu, designated as Lot
4287 of Consolacion Cadastre. They alleged to have acquired their respective portions
of this land by "purchase, coupled with continuous, public, notorious, exclusive and
peaceful possession in the concept of an owner for more than 30 years including the
possession of their predecessors-in-interest." They also alleged that they were in actual
possession of their respective portions of the property. However, The Republic opposed
on the ground that the applicants failed to prove open, continuous, exclusive, and
notorious possession of the property. Hence, declaring that the subject property os a
public domain.
Issue: Does the CA err in affirming the trial court decision to allow the Spouses Joel and
Andrea Noval to register their respective portions of Lot 4287?
Ruling:
No. The CA did not err in approving the registration of the property.
The Court of Appeals found that the required period of possession in land
registration cases was satisfied. It noted that Cecilia was already 73 years old when she
testified in 2000 that the property had already been owned and possessed by Cecilia's
grandmother since Cecilia was 15 years old. It held that at 15 years of age, she was
already competent to perceive that her grandmother's possession was in the concept of
an owner.
Under the Public Land Act, public lands may be disposed of through confirmation
of imperfect or incomplete titles. Confirmation of title may be done judicially or through
the issuance of a free patent. The process for judicial confirmation of title is outlined in
Section 48 of the Public Land Act, as amended by Presidential Decree No. 1073:

Section 48. The following described citizens of the Philippines, occupying lands
of the public domain or claiming to own any such lands or an interest therein. but whose
titles have not been perfected or completed, may apply to the Court of First Instance of
the province where the land is located for confirmation of their claims and the issuance of
a certificate of title therefor, under the Land Registration Act, to wit:
...
(b) Those who by themselves or through their predecessors in interest have been in the
open, continuous, exclusive, and notorious possession and occupation of agricultural
131
lands of the public domain, under a bona fide claim of acquisition or ownership, except
as against the government, since July twenty-sixth, eighteen hundred and ninety-four,
except when prevented by war or force majeure. These shall be conclusively presumed
to have performed all the conditions essential to a Government grant and shall be entitled
to a certificate of title under the provisions of this chapter.

The Court of Appeals also found that while the applicants did not submit a
Department of Environment and Natural Resources report showing that the property had
been declared alienable and disposable, the Republic was not relieved of the duty to
present evidence that the land belongs to the public domain. It ruled that the burden is
upon the State to prove that land is public domain when it has been possessed and
cultivated by an applicant and his or her predecessors-in-interest for a considerable
number of years without action from the State. The Court of Appeals added that the open,
continuous, adverse, and public possession of land from time immemorial confers an
effective title to the possessor.
The Court of Appeals likewise recognized that while tax declarations are not
conclusive evidence of ownership, they may give weight to a claim of ownership when
coupled with open, adverse, and continuous possession.

132
G.R. No. 191652, September 13, 2017

TEAM IMAGE ENTERTAINMENT, INC., AND FELIX S. CO., Petitioners, v. SOLAR

TEAM ENTERTAINMENT, INC., Respondent.

Case Digest
Facts:
Solar Team owned movies, films, telenovelas, television series, programs, and
coverage specials that it aired over block times in several television stations. It derived
profits by selling advertising spots to interested business enterprises. On April 24, 1996,
Solar Team entered into a Marketing Agreement with Team Image, which agreed to act
as Solar Team's exclusive marketing agent by selling advertising spots to business
enterprises on behalf of Solar Team.
According to Solar Team, Team Image breached their Marketing Agreement by
failing to disclose the names of the entities to which Team Image sold advertising spots.
Further, Team Image allegedly represented itself as the owner of Solar Team's television
programs, series, and telenovelas, hence collecting the proceeds of the sale without
remitting them to Solar Team. For these reasons, Solar Team demanded that Team
Image render an accounting of all the transactions the latter had entered into pursuant to
the Marketing Agreement and that it remit all the proceeds it had received in selling Solar
Team's television programs, series, and telenovelas.

When Team Image refused to render an accounting, Solar Team filed against
Team Image and its President, Co, a Complaint for Accounting and Damages before the
Regional Trial Court of Makati. The case was raffled to Branch 59, presided by Judge
Winlove M. Dumayas (Judge Dumayas).
On January 17, 2002, the trial court rendered a Decision, finding that Team Image
breached the Marketing Agreement. According to the trial court, Team Image only had
the authority to sell advertisement spots on behalf of Solar Team, not to collect any sales
proceeds. Thus, it ordered Team Image to render an accounting of all its transactions and
collections under the Marketing Agreement.

Issue:
Whether or not the Court of Appeals erred in finding no grave abuse of discretion
on the part of the trial court when the latter declared Team Image Entertainment, Inc. in
default for failing to resume payments from November 23, 2004 to November 3, 2005?

Held:
Team Image argues that the Court of Appeals erred in affirming the trial court's
May 19, 2008 Order declaring Team Image to have defaulted in paying its obligation
under the Compromise Agreement. Team Image maintains that the trial court, in its own
November 3, 2005 Order, stated that Team Image was entitled to suspend payments
under the Compromise Agreement because Solar Team did not withdraw the complaint-

133
in-intervention it had earlier filed against Team Image. Team Image's liability under the
Compromise Agreement, if any, only became due and demandable on April 7, 2006 when
the trial court set aside the November 3, 2005 Order, not on February 19, 2005 as
erroneously found by the trial court in its subsequent May 19, 2008 Order.

134
SPOUSES AGUINALDO V. TORRES, JR.
G.R. No. 225808
PERLAS-BERNABE, J.

FACTS:
Petitioners filed a complaint for annulment of sale, cancellation of title, and
damages against respondent before the RTC. They claimed that they are the registered
owners of three (3) lots in Tanza, Cavite. Sometime in December 2000, they discovered
that the titles to the subject properties were transferred to respondent who, in bad faith,
and through fraud, deceit, and stealth, caused the execution of a Deed of Absolute
Sale8 dated July 21, 1979 (1979 deed of sale), purportedly selling the subject properties
to him.
Respondent filed his Answer with Counterclaim,10 denying participation in the
execution of the 1979 deed of sale, and averring that the subject properties were validly
sold by petitioners to him through a Deed of Absolute Sale11 dated March 10, 1991 (1991
deed of sale).12 He claimed that petitioners caused the registration of the 1979 deed of
sale with the Register of Deeds of Trece Martires City, and the transfer of title in his name,
hence, they are estopped from impugning the validity of his title. Moreover, the action has
prescribed, having been filed beyond four (4) years from discovery of the averred fraud,
reckoned from the registration of the said deed on March 26, 1991.13 He further alleged
that petitioners only filed the instant baseless suit to harass him in view of their
acrimonious relationship, and thus, interposed a counterclaim for moral damages and
attorney's fees.

ISSUE/S:
Did the CA committed reversible error in ruling that there was a valid
conveyance of the subject properties to respondent and directing petitioners to
execute a registrable deed of conveyance in his favor within thirty (30) days from
the finality of the decision?
RULING:
No. The Court held that central to the resolution of the instant controversy
is the determination of the authenticity of the 1991 deed of sale which, however, is
a question of fact rather than of law. It bears to stress that it is not the function of
the Court to re-examine, winnow, and weigh anew the respective sets of evidence
of the parties, absent a showing that they fall under certain recognized
exceptions, none of which are present here. In this case, the CA made an
independent examination of petitioners' signatures on the 1991 deed of sale
(questioned signatures), and concluded that they are the same signatures found
on other pertinent documents (standard/sample signatures),51 which is the same
conclusion arrived at by the NBI.
The due execution and authenticity of the said deed having been ostensibly
established by the finding that the signatures of petitioners thereon were genuine,
the burden was shifted upon the latter to prove by contrary evidence that the
subject properties were not so transferred53 - especially in light of Nelia's

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admission of the sale54 in her November 12, 1998 letter to respondent, as well as
respondent's payment of the real property taxes for the same55 - which petitioners,
however, failed to discharge convincingly.
The Court has held in a number of cases that forgery cannot be presumed
and must be proved by clear, positive, and convincing evidence, and the burden
of proof lies on the party alleging forgery to establish his case by a preponderance
of evidence, or evidence which is of greater weight or more convincing than that
which is offered in opposition to it.56 In this case, the claimed forgery was ruled
out by a comparison of petitioners' questioned signatures with their
standard/sample signatures, but other than their own declaration that their
signatures on the 1991 deed of sale were forged, petitioners failed to present any
evidence to corroborate their claim.
Although the improper notarization of the 1991 deed of sale did not affect
the validity of the sale of the subject properties to respondent, the same, however,
rendered the said deed unregistrable, since notarization is essential to the
registrability of deeds and conveyances.
Bearing in mind that the legal requirement that the sale of real property must
appear in a public instrument is merely a coercive means granted to the contracting
parties to enable them to reciprocally compel the observance of the prescribed
form, and considering that the existence of the sale of the subject properties in
respondent's favor had been duly established, the Court upholds the CA's directive
for petitioners to execute a registrable deed of conveyance in respondent's favor
within thirty (30) days from finality of the decision, in accordance with the
prescribed form under Articles 1357 and 1358 (1) of the Civil Code.
Notably, if petitioners fail to comply with this directive within the said period,
respondent has the option to file the proper motion before the court a quo to issue
an order divesting petitioners' title to the subject properties under the parameters
of Section 10 (a), Rule 39 of the Rules of Court.

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GERONIMO SACLOLO, JOSEFINO SACLOLO AND RODRIGO SACLOLO,
PETITIONERS, V. COURT OF APPEALS, TRINIDAD DIAZ-ENRIQUEZ AND
DIRECTOR OF LANDS, RESPONDENTS.
G.R. No. 168065 September 6, 2017
Marites, J.

FACTS:

These consolidated petitions for review seek to reverse and set aside the 26 May 2004
Decision and 13 May 2005 Resolution of the Court of Appeals which nullified the 6 July
1995 Decision and the 30 January 1996 Order of the Regional Trial Court, Branch 15,
Naic, Cavite (RTC), in LRC Case No. TM-95, a case for application of registration of title.

On 27 December 1974, Geronimo, Josefino, and Rodrigo, all surnamed Saclolo filed
before the then Court of First Instance, now Regional Trial Court, Naic, Cavite, a joint
application for registration of title over three (3) parcels of land, with a total area of
3,752,142 square meters and located at Sitio Sinalam, Bario Sapang, Ternate, Cavite.
The Saclolos averred that they had acquired title to the subject lands through purchase
and that together with their predecessors-in-interest, they had been in actual and
exclusive possession, occupation, and cultivation of the subject lands since time
immemorial.

The government, through the Director of Lands filed oppositions to the application.The
Director of Lands argued that the subject lands are not alienable and disposable because:
they are located within the Calumpang Point Naval Reservation, segregated from the
public domain by Proclamation No. 307, dated November 20, 1967; that by virtue of
Republic Act (R.A.) No. 6236, the right to judicial confirmation of imperfect title under
Section 48 of the Public Land Law, with respect to lands having an area of more than 144
hectares, has expired; that the Saclolos had not acquired title over the subject lands
through any recognized mode of acquisition of title; that the Saclolos and their
predecessors-in-interest had not been in open, continuous, exclusive, and notorious
possession and occupation of the subject lands for at least 30 years immediately
preceding the filing of the application; and that PSU 68, 69, and 70, the plans which cover
the subject lands, have not been verified by the Bureau of Lands as required by
Presidential Decree (P.D.) No. 239.

On 27 December 1993, Trinidad Diaz-Enriquez filed a motion for intervention alleging that
the Saclolos had sold to her all their interests and rights over the subject lands on 19
September 1976. The RTC allowed Enriquez's claim to be litigated.

In its Order, dated 30 January 1996, the RTC modified its earlier decision by ordering the
issuance of the decree of registration to Enriquez. CA declared that the subject lands are
all within the Calumpang Point Naval Resevation, as testified to by the Survey Division of
the Bureau of Lands-Region 4; thus, the said lands could not be privately titled. It held
that even if Proclamation No. 307 qualifies the reservation as being subject to private

137
rights, the Saclolos have not established by adequate proof their open, continuous,
exclusive, and notorious possession over the subject lands. The January 30, 1996 order
of the trial court is reversed and set aside, and a new judgment is entered dismissing the
applications for registration of title.

ISSUE:

Can the appellate court resolve issues which are not raised as errors on appeal?

RULING:

Citing the case of Carrion v. CA, avers that the appellate court committed a reversible
error when it modified the decision of the trial court and granted to the Director of Lands,
who did not appeal from such decision, affirmative reliefs other than those granted to
them by the trial court's judgment; that Proclamation No. 1582-A excluded the private
occupants from the coverage of the Calumpang Point Naval Reservation; that based on
uncontroverted evidence, it has been established that the Saclolos' predecessors-in-
interest have declared the subject lands for taxation purposes as early as 1945; and that
the Director of Lands should have raised the plans' lack of verification during the trial of
the case.

The May 26 2004 decision and May 13 2005 Resolution of the Court of Appeals in CA-
G.R. CV No. 53838 are affirmed.

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PRISCILLA ZAFRA ORBE v. FILINVEST LAND, INC.

G.R. No. 208185 / September 6, 2017 / LEONEN, J.

Having been adopted with the explicit objective of protecting buyers against what
it recognizes to be disadvantageous and onerous conditions, the Maceda Law’s
provisions must be liberally construed in favor of buyers.

FACTS

Petitioner sued for refund from Filinvest Land, Inc basing on the Maceda Law.
Petitioner entered into a purchase agreement with respondent Filinvest Land, Inc. Orbe
entered into a purchase agreement with respondent Filinvest Land, Inc. Filinvest sent a
notice of cancellation. Noting that “efforts . . . to seek for a reconsideration of said
cancellation . . . proved futile,” and that the parcel had since been sold by Filinvest to a
certain Ruel Ymana “in evident bad faith,” Orbe emphasized that she had made payments
“beginning June, 2001 up to October, 2004.” She further asserted that the October 4,
2004 Notice did not amount to an “effective cancellation bynotarial act.” In its Answer with
Counterclaim, Filinvest asserted that Orbe failed to make 24 monthly amortization
payments on her account, and thus, could not benefit from Section 3 of Republic Act No.
6552.

ISSUE

Is the petitioner entitled to a refund or to any other benefit under Republic Act No.
6552?

RULING

Yes. Petitioner was not entitled to benefits under Section 3 of Republic Act No.
6552 as she had failed to pay two (2) years’ worth of installments pursuant to the terms
of her original agreement with respondent. With the shortage in petitioner’s payment, what
applies is Section 4, instead of Section 3. This means that respondent could cancel the
contract since petitioner failed to pay within the 60-day grace period. However, failing to
satisfy all of Section 4’s requisites for a valid cancellation - notice of cancellation made by
respondent was an invalid notarial act., respondent’s cancellation was ineffectual.
Considering that it did not validly cancel its contract with petitioner and has also sold the
lot to another person, it is proper that respondent be ordered to refund petitioner.

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G.R. No. 202364, August 30, 2017
ARTURO C. CALUBAD, Petitioner, v. RICARCEN DEVELOPMENT CORPORATION,
Respondent.
LEONEN, J.:
Facts:
Respondent Ricarcen Development Corporation was a domestic corporation engaged in
renting out real estate. It was the registered owner of a parcel of land located at 53 Linaw
St., Sta. Mesa Heights, Quezon City.6 This parcel of land was covered by Transfer
Certificate of Title (TCT) No. RT-84937 (166018)7 and was subdivided into two lots.
Ricarcen was a family corporation with Marilyn Soliman being its president from 2001 to
2003. Its board of directors were also family relatives and members as well. On October
15, 2001, Marilyn, acting on Ricarcen's behalf as its president, took out a P4,000,000.00
loan from Calubad. This loan was secured by a real estate mortgage over Ricarcen's
Quezon City property covered by TCT No. RT-84937 (166018), as evidenced by a Deed
of Real Estate Mortgage.
On December 6, 2001, Ricarcen, through Marilyn, and Calubad amended and increased
the loan to P5,000,000.00 in the Amendment of Deed of Mortgage (Additional Loan of
P1,000,000.00), with the same property used as security and under the same terms and
conditions as those of the original Deed of Real Estate Mortgage. On May 8, 2002,
Ricarcen, again acting through Marilyn, took out an additional loan of 2,000,000.00 from
Calubad, as evidenced by the executed Second Amendment of Deed of Mortgage
(Additional Loan of P2,000,000.00).
Sometime in 2003, after Ricarcen failed to pay its loan, Calubad initiated extrajudicial
foreclosure proceedings on the real estate mortgage. The auction sale was set on March
19, 2003. Calubad was the highest bidder during the scheduled auction sale; thus, on
March 27, 2003, he was issued a Certificate of Sale. On April 10, 2003, the Certificate of
Sale was annotated.
Sometime in July 2003, Ricarcen claims that it had only just discovered or Marilyn’s
transactions with Calubad. Ricarcen later filed a complaint for Annulment of Real Estate
Mortgage and Extrajudicial Foreclosure of Mortgage and Sale with Damages against
Marilyn, Calubad, and employees of the Registry of Deeds of Quezon City and of the
Regional Trial Court of Quezon City claiming that it never authorized its former president
Marilyn to obtain loans from Calubad or use the Quezon City property as collateral for the
loans
On the other hand, Calubad insisted that the incidents which led to the foreclosure and
sale of the Quezon City property were all above board and were not marked with
irregularity. Furthermore, he asserted that he exercised the necessary diligence required
under the circumstances by requiring Marilyn to submit the necessary documents to prove
her authority from Ricarcen. Calubad likewise argued that even if Ricarcen did not
authorize Marilyn, it was already estopped from denying her authority since the loan
proceeds had been released and Ricarcen had benefited from them. For their part,
spouses Marilyn and Napoleon Soliman denied any knowledge of or participation in the
allegedly falsified documents and claimed that the falsification was perpetrated by their
broker, Nena leo, and Calubad's broker, a certain Malou, without their permission.

140
Issue: Is Ricarcen Development Corporation estopped from denying or disowning the
authority of Marilyn R. Soliman, its former President, from entering into a contract of loan
and mortgage with Arturo C. Calubad?

Ruling: No.
The Rules of Court categorically state that a review of appeals filed before this Court is
"not a matter of right, but of sound judicial discretion. Petitioner claims that his case falls
under the exceptions to the general rule on a Rule 45 appeal since the findings of the
lower courts are contradicted by the evidence on record. After a careful study of the
records, this Court is convinced that this case falls under the exceptions cited in Medina,
particularly in that "the inference made is manifestly mistaken," making a Rule 45 appeal
proper.
As a corporation, Ricarcen exercises its powers and conducts its business through its
board of directors, as provided for by Section 23 of the Corporation Code. However, the
board of directors may validly delegate its functions and powers to its officers or agents.
As the former president of Ricarcen, it was within Marilyn's scope of authority to act for
and enter into contracts in Ricarcen's behalf. Her broad authority from Ricarcen can be
seen with how the corporate secretary entrusted her with blank yet signed sheets of paper
to be used at her discretion. She also had possession of the owner's duplicate copy of
the land title covering the property mortgaged to Calubad, further proving her authority
from Ricarcen.
Calubad could not be faulted for continuing to transact with Marilyn, even agreeing to give
out additional loans, because Ricarcen clearly clothed her with apparent authority.
Likewise, it reasonably appeared that Ricarcen's officers knew of the mortgage contracts
entered into by Marilyn in Ricarcen's behalf as proven by the issued Banco De Oro checks
as payments for the monthly interest and the principal loan. Ricarcen claimed that it never
granted Marilyn authority to transact with Calubad or use the Quezon City property as
collateral for the loans, but its actuations say otherwise. It appears as if Ricarcen and its
officers gravely erred in putting too much trust in Marilyn. However, Calubad, as an
innocent third party dealing in good faith with Marilyn, should not be made to suffer
because of Ricarcen's negligence in conducting its own business affairs.
Petitioner failed to allege that Ricarcen acted fraudulently or wantonly when it breached
the loan Md mortgage contract. Neither is this Court convinced that fraud, bad faith, or
wanton disregard of its obligation can be imputed to Ricarcen due to its bad business
judgment and negligence in putting too much trust in Marilyn.
Therefore Ricarcen’s complaint was dismissed for lack of merit.

141
NORMA I. BARING v. ELENA LOAN AND CREDIT COMPANY, INC.

G.R. No. 224225, August 14, 2017

PERALTA, J.

FACTS:

Norma Baring (now petitioner Baring), Esmeraldo Hernaez (Hernaez) and the Spouses
Virgilio and Rosario Bernardino (Spouses Bernardino) obtained a series of loans and
other credit accommodations in the initial amount of three hundred thousand pesos
(P300,000.00) from herein petitioner-appellee Elena Loan and Credit Company, Inc.
(herein respondent Elena Loan), a duly organized lending investor. As a security for the
said loan, Baring executed a Deed of Real Estate Mortgage over a parcel of land, with
improvements. The subject property was covered by Transfer Certificate of Title No. T-
95109 (TCT No. T-95109) of the Register of Deeds of Las Piñas City and was registered
in the name of Baring. In the Real Estate Mortgage, the parties agreed that Elena Loan,
as the mortgagee, may foreclose the mortgage extrajudicially in accordance with Act No.
3135 should Baring, the mortgagor, default in the payment of her obligation. The Real
Estate Mortgage was duly registered with the Register of Deeds. The debtors failed to
pay their obligations under the promissory notes despite repeated demands.

Elena Loan filed a Petition for Foreclosure under Act No. 3135, as amended, before the
Office of the Clerk of Court and Ex-Officio Sheriff of Las Piñas City. Acting on the
application, the Ex-Officio Sheriff issued a Notice of Extrajudicial Sale, scheduling the
public auction. Later on, Elena Loan participated in the public auction and emerged as
the highest bidder. Later on, the sale was registered in the ROD.
Eventually, the period of redemption expired without Baring exercising her right of
redemption. Thus, Elena Loan filed an Affidavit of Consolidation of Ownership. The title
was transferred in the name of Elena loan as the owner of the subject property, then sent
a demand letter to Baring and Hernaez requesting them to vacate the subject property.
However, the demand remained unheeded.
Elena Loan filed an Ex-Parte Petition for the Issuance of a Writ of Possession. In its
Petition, Elena Loan prayed for the issuance of a writ of possession directing the sheriff
to eject the mortgagor Baring and place it in complete possession of the subject property,
free from any adverse occupants.
RTC ruled in favour of the respondent. Petitioner filed an appeal in the CA which affirmed
the decision of the RTC.
Petitioner filed a Manifestation with motion for reconsideration where she claimed that
respondent is not authorized by the Securities and Exchange Commission (SEC) to act
as a lending company and, accordingly, it is devoid of any authority and personality to file
the petition for foreclosure of the real estate mortgage and to request for the issuance of
an ex-parte writ of possession in its favor.

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The CA issued a Resolution denying the motion for reconsideration saying that the
question laid by petitioner regarding the legal personality and authority of respondent to
file the petition for issuance of a writ of possession is clearly misplaced and cannot work
to defeat the latter's right to the issuance of the writ of possession as the absolute owner
of the subject property.

ISSUE:
1. Is Elena Loan authorized to conduct its business as a lending company under R.A
No. 9474?

RULING:

YES. Petitioner reiterates her contention that per the Certification issued by the SEC,
respondent has not been issued a secondary franchise to operate as a lending company
pursuant to Republic Act (RA) No. 9474, otherwise known as the Lending Company
Regulation Act of 2007; that at the time the petition for foreclosure was filed on August
28, 2007, as well as the extrajudicial foreclosure of property, the public auction and the ex-
parte petition for the issuance of a writ of possession on December 4, 2009, respondent
had not been granted any authorization by the SEC to operate and conduct business as
a lending company; and, that it cannot be a party to a civil action, therefore, it is not
entitled to the issuance of a writ of possession. Petitioner also assails the interest rates
charged on her loans for being unconscionable, exorbitant, excessive and contrary to
morals which made it impossible for her to extinguish and pay those loans.

The CA correctly affirmed the RTC's issuance of the writ of possession over the subject
property.

Section 7 of Act No. 3135, as amended by Act 4118, 8 governs the issuance of a writ of
possession in cases of extrajudicial foreclosure sales of real estate mortgage

In this case, respondent foreclosed the subject property after petitioner and her co-debtors
failed to pay their obligation under the promissory notes despite repeated demands. Upon
compliance with the legal requirements, a public auction was held where respondent
emerged as the highest bidder. A certificate of sale was issued in respondent's favor and
was registered with the Office of the Register of Deeds of Las Piñas City on November 27,
2007. As petitioner did not exercise her right of redemption over the foreclosed property,
the title to the property was consolidated in the name of respondent as evidenced by TCT
No. 117238.

143
MANUEL R. BAKUNAWA III, Petitioner vs. NORA REYES BAKUNAWA, Respondent.
G.R. No. 217993 August 9, 2017

REYES, JR, J.:

On June 19, 2008, Manuel filed a petition for declaration of nullity of marriage with
the Regional Trial Court (RTC) of Quezon City, on the ground that he and Nora are
psychologically incapacitated to comply with the essential obligations of marriage.
FACTS:
It was during the time when Manuel and Nora lived separately from the former’s
parents in 1975, that he first observed Nora's passiveness and laziness. Thus, Manuel
became more irritated with Nora and their verbal quarrels escalated to physical violence.
Manuel presented a psychiatrist, Dr. Cecilia Villegas (Dr. Villegas), who testified
that Manuel has Intermittent Explosive Disorder, characterized by irritability and
aggressive behavior that is not proportionate to the cause. Dr. Villegas diagnosed Nora
with Passive Aggressive Personality Disorder, marked by a display of negative attitude
and passive resistance in her relationship with Manuel. Her findings were based on her
interview with Manuel and the parties' eldest son, Moncho, because Nora did not
participate in the psychological assessment.
ISSUE:
Is the psychological incapacity of the wife a convincing evidence to declare the
nullity of Manuel and Nora’s marriage?
RULING:
No, the Supreme Court, speaking through Justice Reyes Jr. declared that, the
psychological incapacity of the wife is not a convincing evidence to declare the nullity of
Manuel and Nora’s marriage because under Article 36 of the Family Code, their diagnosis
that are based on Dr. Villegas’ interviews with Manuel and the parties' eldest child,
Moncho, who could not be considered as a reliable witness to establish the psychological
incapacity of his parents, since he could not have been there at the time his parents were
married.
The Court also notes that Dr. Villegas did not administer any psychological tests
on Manuel despite having had the opportunity to do so. While the Court has declared that
there is no requirement that the person to be declared psychologically incapacitated
should be personally examined by a physician, much less be subjected to psychological
tests, this rule finds application only if the totality of evidence presented is enough to
sustain a finding of psychological incapacity. In this case, the supposed personality
disorder of Manuel could have been established by means of psychometric and
neurological tests which are objective means designed to measure specific aspects of
people's intelligence, thinking, or personality.
Based on the reasons, the Supreme Court ruled the marriage of Manuel and Nora
annulled.

144
MAMERTO DY V. MARIA LOURDES ROSELL ALDEA, RESPONDENT.

G.R. No. 219500 August 09, 2017

MENDOZA, J.:

Facts

Memerto Dy, herein petitioner, filed a complaint for declaration of nullity of deed of sale
and TCT No. T-134753, and recovery of real property with injunction and damages
against Maria Liurdes Aldea, herein respondent. Memerto alleged that he is the rightful
owner of Lot 5158 since he never lost the TCT and never mortgaged his property to
anyone. He also alleged that he never executed a deed of sale in favor of Lourdes and
that the signature appearing on the purported deed of sale was not his authentic
signature. The fact that the title was reconstituted should have urged Lourdes to conduct
further investigation on the identity of the vendor; that even though Fatima, Uy and the
purported overseers assured Lourdes that the person she was dealing with was the real
owner of the subject land, she should have taken into consideration that these persons
might have been lying and that a possible syndicated sale might have been planned; that
the impostor did not accompany her when she visited the subject land; that she should
have asked for other documents to establish the identity of the seller; and that the market
value of the subject land ranges from P800.00 to P1,000.00, thus, Lourdes should have
wondered why the purchase price was inexpensive.

Respondent contended that she was told about properties for sale in Minglanilla and after
visiting the lots she signified her intention to buy them. That she was an innocent
purchaser for value and that she exercised ordinary prudence because during the signing
of the deed of sale, she asked for an ID and she was given a senior citizen’s ID showing
that the person she was dealing with was a “Mamerto Dy.” Respondent could not be
blamed for believing that she was dealing with the real owner of the land. That while it
may be true that an impostor had fraudulently acquired a void reconstituted title over the
subject land, such circumstances did not necessarily invalidate her own title; that a valid
transfer could issue from a void reconstituted title if an innocent purchaser for value
intervenes; and that where innocent third persons rely on the correctness of the certificate
of title issued and acquire rights over the property, courts cannot disregard such right and
order the total cancellation of the certificate of title for that would impair public confidence
in the certificate of title.

The RTC decided in favor of Memerto, the CA reversed the decision and favored Lourdes.
Aggrieved Memerto moved for reconsideration but his motion was denied by the CA.
Hence this petition.

Issue

(1) Whether the reconstituted title, from which TCT No. T-134753 in the name of Lourdes
was derived, is valid

145
(2) Whether Lourdes is an innocent purchaser for value who is entitled to the application
of the mirror doctrine.

Held

The petition is meritorious. When the Owner's Duplicate Certificate of Title has not been
lost, the reconstituted certificate is void. The governing law for judicial reconstitution of
title is Republic Act (R.A.) No. 26, Section 15 of which provides when reconstitution of a
title should be allowed. The following requisites must be complied with for an order for
reconstitution to be issued: (a) that the certificate of title had been lost or destroyed; (b)
that the documents presented by petitioner are sufficient and proper to warrant
reconstitution of the lost or destroyed certificate of title; (c) that the petitioner is the
registered owner of the property or had an interest therein; (d) that the certificate of title
was in force at the time it was lost and destroyed; and (e) that the description, area and
boundaries of the property are substantially the same as those contained in the lost or
destroyed certificate of title.

In this case, Mamerto asserted that he never lost his owner's duplicate copy of TCT No.
T-24829 and that he had always been in possession thereof. Moreover, it is beyond doubt
that another person impersonated Mamerto and represented before the court that the
owner's duplicate copy of TCT No. T-24829 was lost in order to secure a new copy which
was consequently used to deceive Lourdes into purchasing the subject land. Hence, the
fact of loss or destruction of the owner's duplicate certificate of title, which is the primordial
element in the validity of reconstitution proceedings, is clearly missing. Accordingly, the
RTC never acquired jurisdiction over the reconstitution proceedings initiated by the
impostor, and its judgment rendered thereafter is null and void. This alone is sufficient to
declare the reconstituted title null and void.

Only an innocent purchaser for value may invoke the mirror doctrine. Every registered
owner and every subsequent purchaser for value in good faith holds the title to the
property free from all encumbrances except those noted in the certificate. As such, a
defective title, or one the procurement of which is tainted with fraud and misrepresentation
— may be the source of a completely legal and valid title, provided that the buyer is an
innocent third person who, in good faith, relied on the correctness of the certificate of title,
or an innocent purchaser for value. Thus, in order to resolve whether Lourdes holds an
indefeasible title to the subject land, it becomes necessary to determine whether she is
an innocent purchaser for value.

Lourdes cannot be considered a purchaser in good faith. In the case at bench, Lourdes
was deficient in her vigilance as buyer of the subject land.

During cross-examination, Lourdes admitted that she did not conduct a thorough
investigation and that she merely instructed her uncle to check with the Register of Deeds
whether the subject land is free from any encumbrance. Further, it must be noted that
Lourdes met the seller only during the signing of the two deeds of sale. Yet, she did not
call into question why the seller refused to see her during the negotiation. For sure, an

146
ordinary prudent buyer of real property who would be relinquishing a significant amount
of money would want to meet the seller of the property and would exhaust all means to
ensure that the seller is the real owner thereof. In sum, the Court rules that Lourdes is not
an innocent purchaser for value.

147
PEN DEVELOPMENT CORPORATION and LAS BRISAS RESORT
CORPORATION, Petitioners,
vs.
MARTINEZ LEYBA, INC.,, Respondent

August 9, 2017 G.R. No. 211845

DEL CASTILLO, J.:

Facts

Plaintiff-Appellee Martinez is the registered owner of three (3) contiguous parcels of land
situated in Antipolo, Rizal, which were surveyed and identified. Las Brisas is the
registered owner of a parcel of land which is adjacent to the lands owned by Martinez.
Las Brisas occupied the said land in 1967 and fenced the same.

In l968, Martinez noticed that the construction of Las Brisas' fence seemed to encroach
on its land. Upon verification by surveyors, Martinez was informed that Las Brisas
overlaps its property. Martinez sent a letters informing Las Brisas. Las Brisas only
responded to Martinez's last letter claiming that it 'can not [sic] trace the origin of these
titles' (pertaining to Martinez's land).

Martinez sought the services of a licensed geodetic engineer. The verification survey
plan, approved by the DENR, revealed that the building and improvements constructed
by Las Brisas occupied portions of Martinez's lands.

Martinez sent a letter to Las Brisas, but to no avail.

Martinez filed a Complaint against Las Brisas before the Regional Trial Court of Antipolo
City. Las Brisas countered in its Answer that it bought the land covered by TCT 153101
(consisting of 3,606 square meters) on May 18, 1967 from Republic Bank; that it took
possession thereof in good faith that very same year; and that it is actually Martinez that
was encroaching upon its land.

Issues

A. Is petitioner a possessor/builder in bad faith?

B. Did the respondent incur laches in enforcing its putative rights.

Ruling

The Verification Survey Plan revealed that petitioners encroached on respondent's land.
Respondent's Verification Survey Plan Vs-04-000394 remains unrefuted. Petitioners' sole

148
objection to this piece of evidence that it was not authenticated during trial is of no
significance considering that the said documentary evidence is a public document.

In this case, respondent presented the results of a verification survey conducted on its
lands. On the other hand, petitioners did not present proof, nor did they move for the
appointment by the trial court of government or private surveyors to act as
commissioners. Their sole defense is that they acquired their land in good faith and for
value; but this does not squarely address respondent's claim of overlapping.

As a public document containing the certification and approval by the Regional Technical
Director of Lands, Verification Survey Plan Vs-Q4-000394 can be relied upon as proof of
the encroachment over respondent's lands. More so when petitioners could not present
contradictory proof.

On the issue of being a builder in bad faith, petitioners should be held liable to respondent
for their obstinate refusal to abide by the latter's repeated demands to cease and desist
from continuing their construction upon the encroached area. The defense of good faith
and purchase for value does not squarely address the issue of encroachment or
overlapping. Despite being apprised of the encroachment, petitioners continued to
construct on the disputed area. They did not bother to conduct their own survey to put the
issue to rest, and to avoid the possibility of being adjudged as builders in bad faith upon
land that did not belong to them.

Under the Civil Code, it has been declared, that the right of the owner of the land to
recover damages from a builder in bad faith is clearly provided for in Article 451 of the
Civil Code. Although said Article 451 does not elaborate on the basis for damages, the
Court perceives that it should reasonably correspond with the value of the properties lost
or destroyed as a result of the occupation in bad faith, as well as the fruits (natural,
industrial or civil) from those properties that the owner of the land reasonably expected to
obtain.

For their part, petitioners are not entitled to reimbursement for necessary expenses.
Indeed, under Article 452 of the Civil Code, the builder, planter or sower in bad faith is
entitled to reimbursement for the necessary expenses of preservation of the land.
However, in this case, respondent's lands were not preserved: petitioners' construction
and use thereof in fact caused damage, which must be undone or simply endured by
respondent by force of law and circumstance.

Finally, on the question of laches, the CA correctly held that as owners of the subject
property, respondent has the imprescriptible right to recover possession thereof from any
person illegally occupying its lands.

Jurisprudence consistently holds that ‘prescription and laches cannot apply to registered
land covered by the Torrens system' because 'under the Property Registration Decree,
no title to registered land in derogation to that of the registered owner shall be acquired
by prescription or adverse possession.

149
GUISON v. HEIRS OF TERRY

G.R. No. 191914, August 9, 2017

SERENO, C.J.

Estoppel in pais arises when one, by his acts, representations or admissions, or

by his own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other rightfully relies
and acts on such belief, so that he will be prejudiced if the former is permitted to deny the
existence of such facts. The principle of estoppel would step in to prevent one party from
going back on his or her own acts and representations to the prejudice of the other party
who relied upon them.

Facts:

A Deed of Absolute Sale was executed in favor of Terry, herein respondent, by

Angeles Vargas, the father of the petitioner. The subject of the sale was Lot No. 10628-
pt located in Moonwalk, Danicop, Catanduanes, with an area of 1.3894 hectares. In the
deed, Vargas acknowledged receipt of the payment for the lot in the amount of ₱5,557.60.

Vargas and Terry executed an Agreement of Revocation of Sale (Revocation

Agreement) relating to the same parcel of land. The instrument stated that Vargas had
erroneously sold the entire area of Lot 10628-pt to Terry. They agreed to revoke the
earlier Deed of Absolute Sale to the extent of 1.0894 hectares, while affirming the validity
of the conveyance to Terry of a 3,000-square-meter potion, whose actual location would
later be determined by both parties in a separate document.

Thereafter, Terry sold other portions of the property to third parties. In 2006,
petitioner filed a Complaint for annulment of contracts, accion publiciana, and damages
against Terry and all those who had allegedly purchased portions of Lot 10628-pt from
him. Petitioner argued that the original Deed of Absolute Sale and the Agreement of
Revocation of Sale should be considered void for lack of consideration. She then
contended that the nullity of those earlier instruments led to the invalidity of the Partition
Agreement, because it was signed in the mistaken belief that Terry had a right to the
property.

Terry refuted the assertions in the Complaint, insisting that the 3,000-square-meter
lot was conveyed to him by Vargas. Terry further alleged that he had only signed the
Agreement of Revocation of Sale in consideration of his closeness to the Vargas family
and in order to avoid litigation. He pointed out that petitioner herself confirmed the validity
of the instruments of sale by executing the Partition Agreement after the death of Vargas.
For respondents, Laynes, Spouses Francisco, Alcantara, Gianan, De Leon, Sarmiento
and Fe Alberto all claimed to be buyers in good faith.

Issues:

150
 1) Are the Revocation Agreement and the Partition Agreement valid?

2) Are the respondents, Laynes, Spouses Francisco, Alcantara, Gianan, De Leon,

Sarmiento and Fe Alberto buyers in good faith?

3) Are the petitioners claims barred by estoppel and laches?

Ruling:

1) Yes, the Supreme Court speaking through Justice Sereno declared that, the
Revocation Agreement and the Partition Agreement are null and void because of
the absence of the purchase price for the sale of the lot. The lack of consensus as
to the price prevented the perfection of the sale.
In the instant case, however, what is dramatically clear from the evidence is that
there was no meeting of mind as to the price, expressly or impliedly, directly or
indirectly. The price must be certain, otherwise there is no true consent between
the parties. There can be no sale without a price.
2) Respondents clearly relied in good faith on the Partition Agreement. Since there
was no evidence that they knew of the true state of the transaction between
petitioner and Terry, it was reasonable for them to rely on the statement of
petitioner alone, who unconditionally recognized Terry's right to the property.
3) This Court does not agree that the doctrine of laches is applicable here. The
interval of six years between the date of execution of the Partition Agreement and
that of the institution of the Complaint in this case does not, by itself, render the
demands of petitioner stale. However, we do find sufficient basis to utilize the
doctrine of estoppel in pais to bar the claims of petitioner against respondents.

All the requisites of Estoppel have been fulfilled in this case. When petitioner
signed the Partition Agreement, she clearly recognized Terry's right as absolute
owner of the portion of the property assigned to him, with no reservation
whatsoever. She recognized that right despite her doubts about the validity of the
sale made by her father and the knowledge that Terry had not yet paid for the land.
Moreover, she could not have been oblivious to the fact that the document might
be used to influence others to buy the land, because she knew that Terry had
previously sold portions of the property to third persons.
Moreover, while petitioner is barred by estoppel from recovering the lot from
Sarmiento and Alberto, her right to enforce claims against Terry remained
unaffected. Under the circumstances, it is only fair and reasonable to allow her to
recover the payments received by Terry for the lot. Given that Terry died in 2012,
his heirs are liable for the reimbursement of these amounts.

151
HEIRS OF PEÑAFLOR, NAMELY: JOSE PEÑAFLOR, JR. AND VIRGINIA AGATEP,
REPRESENTED BY JESSICA AGATEP v. HEIRS OF ARTEMIO AND LYDIA DELA
CRUZ, NAMELY: MARILOU, JULIET, ROMEO, RYAN, AND ARIEL, ALL SURNAMED
DELA CRUZ
G.R. No. 197797, August 9, 2017
PERLAS-BERNABE, J.

Seeking to enforce his right to possess the subject property, Peñaflor filed a petition
for the ex parte issuance of a writ of possession before the RTC. In April 1998 (and thus
after the mortgage of the subject property in April 1991), Artemio filed a separate
complaint for ejectment against Carmelita before the Municipal Trial Court in Cities.

FACTS:

Heirs of Artemio are the successors-in-interest of the late Artemio dela Cruz (Artemio),
who is the son of Nicolasa dela Cruz, the original owner of a parcel of land, including a
two-storey building erected thereon (subject property).

On April 15, 1991, Nicolasa authorized her daughter, Carmelita C. Guanga

(Carmelita), Artemio's sister, to mortgage the subject property to Jose R. Peñaflor
(Peñaflor), the predecessor-in-interest of Jose Peñaflor, Jr. and Virginia P. Agatep
(collectively, petitioners) in order to secure a loan in the amount of P112,000.00. As
Nicolasa failed to settle her loan obligation when it fell due, Peñaflor filed an application
for extra-judicial foreclosure of mortgage before the RTC. After the requirements of
posting, notices, and publication were complied with, the subject property was sold at a
public auction, where Peñaflor emerged as the highest bidder. A Certificate of Sale was
thus issued in his favor. The period of redemption expired without the subject property
being redeemed; hence, a Final Bill of Sale was issued and registered in Peñaflor's name.
Thereafter, the latter executed an Affidavit of Consolidation of Ownership. This
notwithstanding, Nicolasa persisted in her occupancy of the subject property and refused
to deliver possession to Peñaflor.

ISSUE:

1. Is Peñaflor entitled to possession of the property?

RULING:

Yes, he is entitled to possession of the property. "It is well-settled that the purchaser
in an extrajudicial foreclosure of real property becomes the absolute owner of the property
if no redemption is made within one year from the registration of the certificate of sale by
those entitled to redeem. As absolute owner, he is entitled to all the rights of ownership
over a property recognized in Article 428 of the New Civil Code, not least of which is
possession, or jus possidendi."

152
 However, Section 33, Rule 39 of the Rules of Court - which is applied to extrajudicial
foreclosure of mortgages per Section 6 of Act No. 3135 - provides that upon the expiration
of the redemption period, the possession of the property shall be given to the purchaser
or last redemptioner, unless a third party is actually holding the property adversely to the
judgment obligor.

In this case, the heirs of Artemio submitted their claim that "Artemio Dela Cruz
validated his ownership of the subject property, including the [two-story] house erected
thereon and other improvements, through a deed of waiver and transfer of possessory
rights executed by his mother, Nicolasa Dela Cruz in May 3, 1989 which is attached and
made [an] integral part hereof."

However, it is apparent from the face of this document that the same was not an
effective mode of transferring Nicolasa's ownership to Artemio, which could have thus
given the latter an independent right over the subject property prior to its mortgage to
Peñaflor. By virtue thereof, Nicolasa supposedly waived, renounced, transferred, and
quitclaimed all her rights, interests, and participation over the subject property to Artemio.
However, a mere waiver of rights is not an effective mode of transferring ownership under
the Civil Code.

By its terms, the May 3, 1989 Waiver cannot be classified as any of the kinds of
contracts under Article 712 of the Civil Code from which Artemio could derive ownership
of the subject property. It cannot be classified as a sale (because there is no price certain
in money or its equivalent); as a barter (because of the lack of any other thing given as
consideration); a donation (because of the lack of animus donandi and even a formal
acceptance); an assignment (because of the lack of price); and/or a mutuum (because it
is not a loan). Neither can it be considered as an assignment either by onerous or
gratuitous title so as to conclude that Nicolasa had already lost her right to possess the
subject property to Artemio prior to its mortgage. Thus, Artemio cannot claim any
independent right over the subject property by virtue of a document that does not even
purport to be an effective mode of transfer.

In addition, records are replete with circumstances which diminish the veracity of
Artemio's claim against Peñaflor:

(1) In the annulment of judgment case, Artemio claimed that he applied for a sales
patent in 1960; he likewise claimed in that same case that his mother Nicolasa
does not own the property.

(2) Yet, Artemio (and his heirs) asserted that Nicolasa transferred her rights over
the property in 1989 by virtue of the May 3, 1989 Waiver.

(3) Sotero, Mario, and Clarita (siblings of Artemio), and Charlie Guanga
(Carmelita's son) filed two (2) separate motions to quash the writ of possession,
wherein they claimed that they, with Artemio and Nicolasa, co-owned the subject
property. They alleged that said property was part of the conjugal partnership of

153
 Sps. dela Cruz. When Ireneo died in 1985, they became pro-indiviso heirs of
Ireneo's share to the property.

(4) Mario, however, testified for Artemio in the annulment of judgment case, stating
that Nicolasa does not own the subject property.

Taken together, these events would show that: (a) Artemio's claim over the subject
property is riddled with material inconsistencies; and (b) Nicolasa's children appear to
have been taking several steps to prevent Peñaflor from taking possession of the subject
property and defeating his consolidated ownership rights thereto. In fact, it deserves
mentioning that Artemio filed the ejectment suit in Civil Case No. 4065 only in April 1998,
or seven (7) long years after the property had already been mortgaged to Peñaflor in April
1991; thus, it is equally doubtful that he even had possession of the subject property at
the time it was mortgaged to Peñaflor.

Hence, for all these reasons, Artemio cannot be considered as a "third party who is
actually holding the property adversely to the judgment obligor," so as to defeat Peñaflor's
right to possess the subject property, which is but an incident to the consolidation of his
ownership over the same.

154
CE CONSTRUCTION CORPORATION v. ARANETA CENTER INC.
G.R. No. 192725 August 09, 2017
LEONEN, J.
Facts
Petitioner CECON was a construction contractor, which, for more than 25 years, had been
doing business with respondent ACI, the developer of Araneta Center, Cubao, Quezon
City. In June 2002, ACI sent invitations to different construction companies, including
CECON, for them to bid on a project identified as "Package #4 Structure/Mechanical,
Electrical, and Plumbing/Finishes (excluding Part A Substructure)," a part of its
redevelopment plan for Araneta Center Complex.[9] The project would eventually be the
Gateway Mall.

As the details of the project had yet to be finalized, ACI and CECON pursued further
negotiations. ACI and CECON subsequently agreed to include in the project the
construction of an office tower atop the portion identified as Part A of the project. This
escalated CECON's project cost to P1,582,810,525.00. After further negotiations, the
project cost was again adjusted to P1,613,615,244.00. Still later, CECON extended to
ACI a P73,615,244.00 discount, thereby"reducing its offered project cost to
P1,540,000.00.[19]

Despite these developments, ACI still failed to formally award the project to CECON. The
parties had yet to execute a formal contract. This prompted CECON to write a letter to
ACI, dated December 27, 2002,[20] emphasizing that the project cost quoted to ACI was
"based upon the prices prevailing on December 26, 2002" price levels. By January 2003
and with the project yet to be formally awarded, the prices of steel products had increased
by 5% and of cement by P5.00 per bag. On January 8, 2003, CECON again wrote ACI
notifying it of these increasing costs and specifically stating that further delays may affect
the contract sum.

Subsequently, ACI informed CECON that it was taking upon itself the design component
of the project, removing from CECON's scope of work the task of coming up with designs.

On June 2, 2003, ACI finally wrote a letter to CECON indicating its acceptance of
CECON's August 30, 2002 tender for an adjusted contract sum of P1,540,000.00 only.
As negotiations seemed futile, on December 29, 2004, CECON filed with the CIAC a
Motion to Proceed with arbitration proceedings. ACI filed an Opposition. After its
Opposition was denied, ACI filed its Answer dated January 26, 2005. It attributed liability
for delays to CECON and sought to recover counterclaims totalling P180,752 297.84.
This amount covered liquidated damages for CECON's supposed delays, the cost of
defective works which had to be rectified, the cost of procuring permits and licenses, and
ACI's other advances.

ACI filed a Motion for Reconsideration of the CIAC March 16, 2005 Order. This was
denied in the Order dated March 30, 2005.

155
At the initial hearing, the CIAC Arbitral Tribunal resolved to exclude the amount of
P20,483,505.12 from CECON's claims as these pertained to unpaid accomplishments
that did not relate to the issue of cost adjustments attributed to ACI, as originally pleaded
by CECON.

Issue

Was CEACON entitled to costs of litigation?

Ruling

No.

The Court of Appeals noted that CECON was not entitled to time extensions because the
arrangement between ACI and CECON had never been altered. Consequently, it was not
entitled to acceleration costs, additional overhead, ru1d reimbursement for extending the
Contractor's All Risk Insurance.[81] Conversely, the Court of Appeals held CECON liable
for delays thereby entitling ACI to liquidated damages corresponding to 10% of the
supposed contract sum of P1,540,000,000.00, or P15,400,000.00. Regarding attendance
fees, the Court of Appeals proffered that the work attributed to subcontractors was merely
work done by CECON itself, thereby negating the need for attendance fees.

Concerning take-out costs, the Court of Appeals stated that CECON was in no position
to propose its own take-out costs as the tender documents issued along with ACI's
invitation to bidders stated that take-out costs must be based exclusively on the rates
provided in the Contract Cost Breakdown. Nevertheless, as ACI had previously
undertaken to pay the variance in take-out costs amounting to P3,811,289.70, the Court
of Appeals concluded that an award for take-out costs in that amount was proper.

On the CIAC Arbitral Tribunal's award for overhead costs and profits under day work, the
Court of Appeals held that it was improper to grant this award based on stipulations on
day works pertaining "only to 'materials' and not to equipment."

Finally, the Court of Appeals held that CECON was not entitled to costs of litigation
considering that "no premium is to be placed on the right to litigate" and since ACI could
not be faulted for delays.

156
FGU INSURANCE CORPORATION v. ROSENDO P. DOMINGUEZ
GR No. 189526, Aug 09, 2017
LEONEN, J.

FACTS:
The liability of a surety is determined strictly in accordance with the actual terms
of the performance bond it issued. It may, however, set up compensation against the
amount owed by the creditor to the principal.
The Spouses Roxas entered into a Contract of Building Construction dated May
22, 1979 with Rosendo P. Dominguez, Jr. (Dominguez) and Philtrust Bank to complete
the construction of their housing project known as "Vista Del Mar Executive Houses." The
project was located at Cabcaben, Mariveles, Bataan and was estimated to cost
P1,200,000.00
From the terms of the Contract, Philtrust Bank would finance the cost of materials
and supplies to the extent of P 900,000.00, while Dominguez would undertake the
construction works for P300,000.00. It was provided that in case of Dominguez's non-
compliance of the terms and conditions of the Contract, he would pay Philtrust Bank
and/or the Spouses Roxas liquidated damages of P1,000.00 per day until he has
complied with his obligation.
Also on May 24, 1979, pursuant to the Contract of Building Construction,
Dominguez secured a performance bond, FIC Bond No. G(23) 5954 (Surety Bond), with
face amount of P450,000.00, from FGU. FGU and Dominguez bound themselves to jointly
and severally pay Floro Roxas (Floro) and Philtrust Bank the agreed amount in the event
of Dominguez's non-performance of his obligation under the Contract.
Dominguez averred that on September 20, 1979, he requested an upward
adjustment of the contract price from the Spouses Roxas due to the rising costs of
materials and supplies. But the Spouses Roxas did not heed his request.
He added that the Spouses Roxas also failed to make the three (3) payments of
P30,000.00 each as agreed upon. Thus, on October 22, 1979, he formally demanded that
they pay the amounts due plus the stipulated interest of 14% per annum, with a warning
that he would stop further work and withdraw his workers unless payment was received
on or before October 31, 1979. On November 9, 1979, Dominguez sent another demand
letter to the Spouses Roxas, this time, for the payment of P73,136.75, which they
allegedly borrowed from the funds allotted for the project for their personal use and
benefit. The Spouses Roxas were required to pay the amount within seven (7) days from
receipt of the letter. However, they refused to pay.
Dominguez also asked Philtrust Bank to release the remaining balance of
P24,000.00 but to no avail.
ISSUES:
The issues for this Court's resolution are as follows:
7. Did the Court of Appeals err in holding FGU Insurance Corporation liable for the
full amount of P450,000.00 of its Surety Bond rather than the cost overrun on
account of Rosendo P. Dominguez, Jr.'s non-completion of the project?

8. Are the Spouses Floro and Eufemia Roxas entitled to liquidated damages under
the Contract for Building Construction?

157
 9. Is there factual basis for the award of P90,000.00 with 14% stipulated interest and
P 73,146.75 with legal interest in favor of Rosendo P. Dominguez, Jr.?

10. May the liabilities of the Spouses Floro and Eufemia Roxas to Rosendo P.
Dominguez, Jr. be set off against any liability of FGU Insurance Corporation
pursuant to Articles 1280[52] and 1283[53] of the Civil Code?

11. Did the Court of Appeals err in remanding the case to the trial court for the
reception of evidence and computation of the other claims of the Philippine Trust
Company against the Spouses Floro and Eufemia Roxas?

12. Should Philtrust Bank be held liable for the unauthorized release of the remaining
construction funds?

RULING:
7. Under Section 175 of Presidential Decree No. 612 or the Insurance Code, a
contract of suretyship is defined as an agreement where "a party called the surety
guarantees the performance by another party called the principal or obligor of an
obligation or undertaking in favor of a third party called the obligee." A performance
bond is a kind of suretyship agreement. It is "designed to afford the project owner
security that the . . . contractor, will faithfully comply with the requirements of the
contract . . . and make good [on the] damages sustained by the project owner in
case of the contractor's failure to so perform." Pursuant to the foregoing provisions,
FGU, as surety, may be sued by the creditor separately or together with
Dominguez as principal, in view of the solidary nature of its liability.

8. This Court is not persuaded.

Liquidated damages are those that the parties agree to be paid in case of a breach.
As worded, the amount agreed upon answers for damages suffered by the owner
due to delays in the completion of the project. Under Philippine laws, these
damages take the nature of penalties. A penal clause is an accessory undertaking
to assume greater liability in case of a breach. It is attached to an obligation in
order to ensure performance.

If this Court goes by FGU's reasoning that the liquidated-damages clause does not
apply in case of abandonment, then, in effect, this Court diminishes or disregards
altogether the coercive force of this stipulation. Moreover, it is contrary to the
intention of the parties because it was clearly provided that liquidated damages
are recoverable for delay in the completion of the project; hence, there is more
reason in case of non-completion.

Thus, this Court holds that Dominguez is bound to pay liquidated damages from
September 23, 1979, the scheduled date of completion, until October 31, 1979,
when he effectively abandoned the project. FGU cannot be held liable for it

158
 because it is not a party to the Contract of Building Construction. Neither does the
Surety Bond contain any stipulation for liquidated damages on top of FGU's liability
to pay the face amount in case of Dominguez' non-performance.

9. The Regional Trial Court categorically ruled that the cash installments were not
given to Dominguez. Aside from this, the real properties promised were also
different from those shown to him. It also found sufficient evidence showing the
Spouses Roxas' debt to Dominguez in the amount of P73,136.75. In this case, the
factual findings of the trial court, which were affirmed by the Court of Appeals, were
based on substantial evidence and were not refuted with contrary proof by the
Spouses Roxas. Therefore, this Court finds no cogent reason to disturb the
consistent factual findings of the trial court and of the Court of Appeals.

10. Article 1280. Notwithstanding the provisions of the preceding article, the guarantor
may set up compensation as regards what the creditor may owe the principal
debtor.

While Article 1280 specifically pertains to a guarantor, the provision nonetheless

applies to a surety. Contracts of guaranty and surety are closely related in the
sense that In both, "there is a promise to answer for the debt or default of another."
The difference lies in that "a guarantor is the insurer of the solvency of the debtor
and thus binds himself to pay if the principal is unable to pay while a surety is the
insurer of the debt, and he obligates himself to pay if the principal does not pay."

Hence, FGU could offset its liability under the Surety Bond against Dominguez's
collectibles from the Spouses Roxas. His collectibles include the unpaid
contractor's fee of P 90,000.00 plus 14% interest per annum from October 31, 1979
until fully paid. Additionally, his collectibles cover the Spouses Roxas' advances
from the construction funds in the amount of P73,136.75 plus 6% legal interest
from November 16, 1979 until fully paid.

In the event of compensation, the Spouses Roxas shall be liable to Philtrust Bank
for the latter's share in the obligation.

11. Philtrust Bank, for its part, assails the Court of Appeals Decision and submits that
there is no need to remand the case to the trial court because it has already
presented several pieces of evidence to prove its other claims against the Spouses
Roxas. Philtrust Bank adds that during the proceedings in the trial court, the
Spouses Roxas did not deny the existence of their loan obligations and the
mortgage of several of their properties to secure these loan obligations.
Philtrust Bank further disputes the Court of Appeals' findings that the release of
the construction funds was without the conformity of the Spouses Roxas. Philtrust
Bank points to two (2) promissory notes executed by the Spouses Roxas dated
April 11, 1979 and July 16, 1979 for P450,000.00 each, which the Spouses Roxas
allegedly admitted in their Answer. They also referred to the testimony of
Penafrancia Gabriel (Gabriel), the Senior Loan Clerk of Philtrust Bank-Limay

159
 Branch in charge of the Spouses Roxas' account. These promissory notes and
Gabriel's testimony explained that "Philtrust [Bank] released the proceeds of the
loan as the need arose and [these] releases were reflected in a record to keep
track of the account."
Finally, Philtrust Bank avers that the claim of the Spouses Roxas for unrealized
rentals has not been proven and is "highly speculative."
12. The Spouses Roxas' contention is untenable. For one, the Regional Trial Court
found no evidence to prove the alleged diversion of funds. If at all, it was only the
amount of P73,136.75 that was advanced to the Spouses Roxas for their personal
use and benefit.

160
RICHELLE P. ABELLA, FOR AND IN BEHALF OF HER MINOR DAUGHTER, MARL
JHORYLLE ABELLA
vs.
POLICARPIO CABAÑERO
G.R. 206647
August 09, 2017
LEONEN, J.:

THESIS STATEMENT
Petitioner Richelle P. Abella, for and in behalf of her minor daughter, Marl Jhorylle
Abella, filed an action for support against respondent Policarpio Cabañero on the
grounds of respondent allegedly committing multiple sexual abuse to petitioner back
when she was still a minor in the years 2000 to 2002.

FACTS
In the complaint for support filed on April 22, 2005, Petitioner alleged that she was
repeatedly sexually abused by the respondent inside his rest house back when she
was a minor in the years 2000 to 2002. As a result, she allegedly gave birth to a
child on August 21, 2002. She added that on February 27, 2002, she filed a criminal
case of rape against Cabañero, but was dismissed. She filed another case for child
abuse under R.A. No. 7610, which was also dismissed. Petitioner prayed or the child’s
monthly allowance in the amount of P3,000.00. Respondent replied by denying having
sexual relations with Richelle, Thus, asserting that he is not the biological father of her
child.
The RTC dismissed Richelle’s complaint without prejudice, on account of her failure to
implead her minor child as plaintiff. Respondent filed a petition for certiorari and
mandamus before the CA.
The CA sustained the decision of the RTC, but disagreed to the reason why the
RTC dismissed the complaint. Its affirmation was on the basis of the fact that the
filiation and paternity of the child had not been previously established, and no
concrete evidence supports the alleged filiation and paternity of Jhoyrylle.
Therefore, Petitioner’s action for support could not prosper.

ISSUE
Whether the Court of Appeals erred in ruling that filiation proceedings should have first
been separately instituted to ascertain the minor child's paternity and that without these
proceedings having first been resolved in favor of the child's paternity claim, petitioner
Richelle P. Abella's action for support could not prosper.

HELD
YES. The obligation to give support shall only be demandable from the time the person
entitled to it needs it for maintenance, but it shall not be paid except from the date of
judicial or extrajudicial demand, a manner stipulated by the rules of court. Applying this
to the case, It is erred on the part of CA to dismiss the petitioner’s action for support
without remanding the case to the Regional Trial court before coming to a
resolution. Had this happened, Petitioner and her daughter should have been

161
enabled to present evidence to establish their cause of action, including of their
underlying claim of paternal relations against respondent.
ORIENT FREIGHT INTERNATIONAL, INC., PETITIONER, V. KEIHIN-EVERETT
FORWARDING COMPANY, INC., RESPONDENT.
G.R. No. 191937, August 09, 2017
(LEONEN, J.)

This resolves a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
assailing the January 21, 2010 Decision and April 21, 2010 Resolution of the Court of
Appeals, which affirmed the Regional Trial Court February 27, 2008 Decision. The
Regional Trial Court found that petitioner Orient Freight International, Inc.'s (Orient
Freight) negligence caused the cancellation of Keihin-Everett Forwarding Company,
Inc.'s (Keihin-Everett) contract with Matsushita Communication Industrial Corporation of
the Philippines (Matsushita).
FACTS: On October 16, 2001, Keihin-Everett entered into a Trucking Service Agreement
with Matsushita where he would provide services for Matsushita's trucking requirements.
When the Trucking Service Agreement between Keihin-Everett and Matsushita expired
on December 31, 2001, Keihin-Everett continued to retain the services of Orient Freight,
which sub-contracted its work to Schmitz Transport and Brokerage Corporation.
In April 2002, Matsushita called Keihin-Everett's Sales Manager, Salud Rizada, about a
column in the April 19, 2002 issue of the tabloid newspaper Tempo. This news narrated
the April 17, 2002 interception by Caloocan City police of a stolen truck filled with
shipment of video monitors and CCTV systems owned by Matsushita. Orient Freight
stated that the tabloid report had blown the incident out of proportion. Orient Freight
reiterated that the truck merely broke down and had to be towed. Keihin-Everett
independently investigated the incident. During its investigation, it obtained a police report
stating Cudas told Aquino to report engine trouble to Orient Freight. After Aquino made
the phone call, he informed Orient Freight that the truck had gone missing.
When confronted, Orient Freight wrote back on May 15, 2002 to admit that its previous
report was erroneous and that pilferage was apparently proven. In its June 6, 2002 letter,
Matsushita terminated its In-House Brokerage Service Agreement with Keihin-Everett,
effective July 1, 2002, stating that Keihin-Everett did not handle the situation well. Keihin-
Everett then asked for P2,500,000.00 as indemnity for lost income. When Orient Freight
refused to pay, Keihin-Everett filed a complaint dated October 24, 2002 for damages.
The Regional Trial Court rendered its February 27, 2008 Decision, in favor of Keihin-
Everett. It found that Orient Freight was "negligent in failing to investigate properly the
incident and make a factual report to Keihin[-Everett] and Matsushita," despite having
enough time to properly investigate the incident, which was affirmed by the CA, applying
Article 2176 of the Civil Code.
ISSUE: Did the CA err in its decision in applying Article 2176 of the Civil Code?
HELD: No. Article 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done.

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IN THE MATTER OF PETITION FOR CANCELLATION OF CERTIFICATES OF LIVE
BIRTH OFYUHARES JAN BARCELOTE TINITIGAN AND AVEE KYNNA NOELLE
BARCELOTE TINITIGAN JONNA KARLA BAGUIO BARCELOTE, petitioner, v.
REPUBLIC OF THE PHILIPPINES, RICKY O. TINITIGAN, and LOCAL CIVIL
REGISTRAR, DAVAO CITY, respondents.
G.R. No. 222095, August 7, 2017
CARPIO, J.
It is mandatory that the mother of an illegitimate child signs the birth certificate of her child
in all cases, irrespective of whether the father recognizes the child as his or not.

This case involves an action filed by Jonna Karla Baguio Barcelote (Barcelote) for
cancellation of the subject birth certificates registered by named Ricky O. Tinitigan
(Tinitigan) without her knowledge and participation, and for containing erroneous entries.
.
The Antecedent Facts

Barcelote bore a child out of wedlock with a married man named Ricky O. Tinitigan
(Tinitigan) in her relative's residence in Sibulan, Santa Cruz, Davao del Sur. She was not
able to register the birth of their child, whom she named Yohan Grace Barcelote, because
she did not give birth in a hospital. To hide her relationship with Tinitigan, she remained
in Santa Cruz, Davao del Sur while Tinitigan lived with his legitimate family in Davao City
and would only visit her. She bore another child with Tinitigan, whom she named as
Joshua Miguel Barcelote. Again, she did not register his birth to avoid humiliation, ridicule,
and possible criminal charges. Thereafter, she lost contact with Tinitigan and she returned
to Davao City.

When her first child needed a certificate of live birth for school admission, Barcelote finally
decided to register the births of both children. The Local Civil Registrar of Santa Cruz
approved the late registration of the births of Yohan Grace Barcelote and Joshua Miguel
Barcelote, with Registry Nos. 2012-1344 and 2012-1335, respectively, after submitting
proof that the National Statistics Office (NSO) has no record of both births on file.
However, upon submission of the copies of the late registration of the births to the NSO,
Barcelote was informed that there were two certificates of live birth (subject birth
certificates) with the same name of the mother and the years of birth of the children in
their office. Thus, Barcelote filed a petition with the RTC for the cancellation of the subject
birth certificates registered by Tinitigan without her knowledge and participation, and for
containing erroneous entries.

The Issue

Are the certificates of live birth registered by Tinitigan which were not signed by mother
Barcelote void?

163
Ruling of the Court

The undisputed facts show that the children were born outside a valid marriage after 3
August 1988, specifically in June 2008 and August 2011, respectively, then they are the
illegitimate children of Tinitigan and Barcelote. The children shall use the surname of their
mother, Barcelote. The entry in the subject birth certificates as to the surname of the
children is therefore incorrect; their surname should have been "Barcelote" and not
"Tinitigan."

Act No. 3753, Section 5(3) otherwise known as the Civil Registry Law, states:

In case of an illegitimate child, the birth certificate shall be signed and sworn to jointly by
the parents of the infant or only the mother if the father refuses.

Thus, it is mandatory that the mother of an illegitimate child signs the birth certificate of
her child in all cases, irrespective of whether the father recognizes the child as his or not.
The only legally known parent of an illegitimate child, by the fact of illegitimacy, is the
mother of the child who conclusively carries the blood of the mother. Thus, this provision
ensures that individuals are not falsely named as parents.

Since it appears on the face of the subject birth certificates that the mother did not sign
the documents, the local civil registrar had no authority to register the subject birth
certificates. Under the IRR of Act No. 3753, the civil registrar shall see to it that the
Certificate of Live Birth presented for registration is properly and completely filled up, and
the entries are correct. In case the entries are found incomplete or incorrect, the civil
registrar shall require the person concerned to fill up the document completely or to
correct the entries, as the case may be.

Clearly, the subject birth certificates were not executed consistent with the provisions of
the law respecting the registration of birth of illegitimate children. Aside from the fact that
the entry in the subject birth certificates as to the surname of the children is incorrect since
it should have been that of the mother, the subject birth certificates are also incomplete
as they lacked the signature of the mother.

Ergo, the Court declares the subject birth certificates void and order their cancellation for
being registered against the mandatory provisions of the Family Code requiring the use
of the mother's surname for her illegitimate children and Act No. 3753 requiring the
signature of the mother in her children's birth certificates.

164
Spouses Reyes vs. Doctolero, Avila, Grandeur Security and Services Corporation,
and Makati Square
Gr No. 185597, August 2, 2017
JARDELEZA, J.:

Facts:
The case arose from an altercation between respondent Orico Doctolero, a security
guard of respondent Grandeur Security and Services Corporation and petitioners John
E.R. Reyes and Merwin Joseph Reyes in the parking area of respondent Makati Cinema
Square. The respondents shot the petitioners but both parties alleged different version of
the incident.
Petitioners filed with the Regional Trial Court a complaint for damages against
respondents Doctolero and Avila and their employer Grandeur, charging the latter with
negligence in the selection and supervision of its employees. They likewise impleaded
MCS on the ground that it was negligent in getting Grandeur’s services. In their complaint,
petitioners prayed that respondents be ordered, jointly and severally, to pay them actual,
moral, and exemplary damages, attorney’s fees and litigation costs.
Respondents Doctolero and Avila failed to file an answer despite service of summons
upon them. Thus, they were declared in default in an Order dated December 12, 1997.
For its part, Grandeur asserted that it exercised the required diligence in the selection
and supervision of its employees. It likewise averred that the shooting incident was
caused by the unlawful aggression of petitioners who took advantage of their “martial arts”
skills.
On the other hand, MCS contends that it cannot be held liable for damages simply
because of its ownership of the premises where the shooting incident occurred. It argued
that the injuries sustained by petitioners were caused by the acts of respondents
Doctolero and Avila, for whom respondent Grandeur should be solely responsible.
On January 18, 1999, the RTC rendered judgment against respondents Doctolero and
Avila, finding them responsible for the injuries sustained by petitioners. In reconsidering
its Decision, the RTC held that it re-evaluated the tacts and the attending circumstances
of the present case and was convinced that Grandeur has sufficiently overcome the
presumption of negligence. It gave credence to the testimony of Grandeur’s witness,
Eduardo Ungui, the head of the Human Resources Department (HRD) of Grandeur, as
regards the various procedures in its selection and hiring of security guards.
Issue:
Whether Grandeur and MCS may be held vicariously liable for the damages caused by
respondents Doctolero and Avila to petitioners John and Mervin Reyes.
Ruling:
MCS is not liable to petitioners. As a general rule, one is only responsible for his own act
or omission. This general rule is laid down in Article 2176 of the Civil Code, which
provides:
Art. 2176. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no
pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.

165
The law, however, provides for exceptions when it makes certain persons liable for the
act or omission of another. One exception is an employer who is made vicariously liable
for the tort committed by his employee under paragraph 5 of Article 2180. Here, although
the employer is not the actual tortfeasor, the law makes him vicariously liable on the basis
of the civil law principle of pater familias for failure to exercise due care and vigilance over
the acts of one’s subordinates to prevent damage to another.
It must be stressed, however, that the above rule is applicable only if there is an employer-
employee relationship. This employer-employee relationship cannot be presumed but
must be sufficiently proven by the plaintiff. The plaintiff must also show that the employee
was acting within the scope of his assigned task when the tort complained of was
committed. It is only then that the defendant, as employer, may find it necessary to
interpose the defense of due diligence in the selection and supervision of employees. In
the absence of such relationship, vicarious liability under Article 2180 of the Civil Code
cannot be applied. We find no employer-employee relationship between MCS and
respondent guards. The guards were merely assigned by Grandeur to secure MCS’
premises pursuant to their Contract of Guard Services. Thus, MCS cannot be held
vicariously liable for damages caused by these guards’ acts or omissions. Neither can it
be said that a principal-agency relationship existed between MCS and Grandeur.
On the other hand, paragraph 5 of Article 2180 of the Civil Code may be applicable to
Grandeur, it being undisputed that respondent guards were its employees. When the
employee causes damage due to his own negligence while performing his own duties,
there arises the juris tantum presumption that the employer is negligent, rebuttable only
by proof of observance of the diligence of a good father of a family. The “diligence of a
good father” referred to in the last paragraph of Article 2180 means diligence in the
selection and supervision of employees.
To rebut the presumption of negligence, Grandeur must prove two things: first, that it had
exercised due diligence in the selection of respondents Doctolero and Avila, and second,
that after hiring Doctolero and Avila, Grandeur had exercised due diligence in supervising
them.
Here, both the RTC and the CA found that Grandeur was able to sufficiently prove,
through testimonial and documentary evidence, that it had exercised the diligence of a
good father of a family in the selection and hiring of its security guards. As testified to by
its HRD head Ungui, and corroborated by documentary evidence including clearances
from various government agencies, certificates, and favorable test results in medical and
psychiatric examinations.
The question of diligent supervision, however, depends on the circumstances of
employment. Ordinarily, evidence demonstrating that the employer has exercised diligent
supervision of its employee during the performance of the latter’s assigned tasks would
be enough to relieve him of the liability imposed by Article 2180 in relation to Article 2176
of the Civil Code.
Considering all the evidence borne by the records, we find that Grandeur has sufficiently
exercised the diligence of a good father of a family in the selection and supervision of its
employees. Hence, having successfully overcome the legal presumption of negligence, it
is relieved of liability from the negligent acts of its employees, respondents Doctolero and
Avila.

166
PIONEER INSURANCE v. APL CO. PTE. LTD.
G.R. No. 226345, Aug 02, 2017

MENDOZA, J.:
Facts:
On January 13, 2012, the shipper, Chillies Export House Limited turned over to
respondent APL Co. Pte. Ltd. 250 bags of chili pepper for transport from the port of
Chennai, India, to Manila. The shipment was loaded on board MN Wan Hai 262. In tum,
BSFIL Technologies, Inc., as consignee, insured the cargo with petitioner Pioneer
Insurance and Surety Corporation.

On February 2, 2012, the shipment arrived at the port of Manila and was
temporarily stored at North Harbor, Manila. On February 6, 2012, the bags of chili were
withdrawn and delivered to BSFIL. Upon receipt thereof, it discovered that 76 bags were
wet and heavily infested with molds. The shipment was declared unfit for human
consumption and was eventually declared as a total loss. As a result, BSFIL made a
formal claim against APL and Pioneer Insurance. The latter hired an independent
insurance adjuster, which found that the shipment was wet because of the water which
seeped inside the container van APL provided. Pioneer Insurance paid BSFIL Pl
95,505.65 after evaluating the claim. Having been subrogated to all the rights and cause
of action of BSFIL, Pioneer Insurance sought payment from APL, but the latter refused.
This prompted Pioneer Insurance to file a complaint for sum of money against APL.

Issues:
Is the nine months prescriptive period stipulated shall be the basis in considering
the prescriptive period instead of the one year prescriptive stated by the law?

Ruling:
No, the nine months prescriptive period stipulated shall not be the sole basis in
considering the prescriptive period. It is true that in Philippine American General
Insurance Co., Inc. v. Sweet Lines, Inc. (Philippine American), the Court recognized that
stipulated prescriptive periods shorter than their statutory counterparts are generally valid
because they do not affect the liability of the carrier but merely affects the shipper’s
remedy. The CA, nevertheless, erred in applying Philippine American in the case at bench
as it does not fall squarely with the present circumstances.

167
 The cardinal rule in the interpretation of contracts is embodied in the first paragraph
of Article 1370 of the Civil Code: if the terms of a contract are clear and leave no doubt
upon the intention of the contracting parties, the literal meaning of its stipulations shall
control.

A contract provision is ambiguous if it is susceptible of two reasonable alternative

interpretations. Where the written terms of the contract are not ambiguous and can only
be read one way, the court will interpret the contract as a matter of law. If the contract is
determined to be ambiguous, then the interpretation of the contract is left to the court, to
resolve the ambiguity in the light of the intrinsic evidence.

After a closer persual of the the Bill of Lading, the Court finds that its provisions
are clear and unequivocal leaving no room for interpretation. In the Bill of Lading, it was
categorically stated that the carrier shall in any event be discharged from all liability
whatsoever in respect of the goods, unless suit is brought in the proper forum within nine
(9) months after delivery of the goods or the date when they should have been delivered.

The same, however, is qualified in that when the said nine-month period is contrary
to any law compulsory applicable, the period prescribed by the said law shall apply. The
present case involves lost or damaged cargo. It has long been settled that in case of loss
or damage of cargoes, the one-year prescriptive period under the COOSA applies.

168
JOSE G. TAN and ORENCIO C. LUZURIAGA vs. ROMEO H. VALERIANO
G.R. No. 185559, August 2, 2017
Martires, J.

Facts:

The case aroused when the respondent filed a damages suit against the petitioners.

On 4 January 2001, a multi-sectoral consultative conference was held by the Holy Name
Society of Bulan, Sorsogon, having Valerio, the President of the said religious
organization, as the person to deliver the welcome address. It was alleged that in his
speech he criticized certain local officials of Bulan, Sorsogon, including the petitioners
Gilana and Vice Mayor Gonzales.

The next day, petitioners filed before the Civil Service Commission an administrative
against the respondent, who was currently an incumbent auditor in Commission on Audit
believing that the purpose of the conference is to choose candidates that will be endorsed
by the said organization in 2001 elections. They charged him with acts of electioneering
and engaging in partisan politics. With his opening remarks, the respondents are
convinced that the petitioner had set the political tone.

The COA furnished a copy of the administrative complaint but did not take any action
because of its pendency in the Civil Service Commission. Later on, the CSC dismissed
the complaint due to a procedural defect.

On 22 March 2001, petitioner filed another administrative complaint before the Office of
the Ombudsman, for violation of Republic Act. Aggrieved, the respondent filed a
complaint for damages against the petitioner.

Issue:

Whether or not the petitioners acted with malice, vindictiveness and bad faith in filing
administrative complaints against the respondent?

Ruling:
The Regional trial court ruled that the petitioners’ act of filing numerous cases before the
CSC, COA and the Ombudsman against the respondents was attended by malice,
vindictiveness, and bad faith, which cases were subsequently found to be unstantiated
and is reflective of ill will and desire for revenge.

The Court of Appeals however, reversed the ruling of the RTC of that the petitioners acted
with malice, vindictiveness, and bad faith. However it affirmed that they should be held
liable for damages for they refiled their complaint with the CSC while the case in the
Ombudsman was pending.

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The Supreme Court petitioners did not act with malice, vindictiveness and bad faith
because they observed that the act of criticizing the local officials through the speech, is
an act of engaging in partisan political campaign, which that Constitution expressly
prohibits, particularly in:

Section 2. (4) No officer or employee in the civil service shall engage, directly or indirectly,
in any electioneering or partisan political campaign.

However, there is no showing that the defendants-apellants Gonzales and Gilana acted
with malice or sinister design to vex or humiliate plaintiff-appellee Valeriano by the mere
act of initiating and administrative case.

The Court disagrees that the mere re-filing of complaint with the CSC is a reason to hold
the petitioners liable for damages for it was borne out on a reasonable belief of the
illegality of respondent acts. It is a well-entrenched doctrine in jurisprudence that the mere
act of submitting a case to the prosecution, does not make one liable for malicious
prosecution, for the law could not have meant to impose a penalty on the right to litigate.

Petitioner failed to prove that the complaints against him are motivated by a sinister
design.

Therefore, the Court dismissed the petition.

170
REPUBLIC OF THE PHILIPPINES , petitioner V. SPOUSES DANILO GO and
AMORLINA GO, resondents
GR NO. 197297 AUGUST 2 2017
LEONEN, J

FACTS:
Republic of the Philippines opposed spouses Danilo and Amorlina Go’s application
for registration for the following reasons: 1) Lot No. 4699-B was part of the public domain;
2) neither the Spouses Go nor their predecessors-in-interest had been in open,
continuous, exclusive, and notorious possession and occupation of the property since
June 12, 1945 or even before then; 3) the tax declaration and payment were not
competent or sufficient proof of ownership, especially considering that these were
relatively recent.

ISSUE:
Did the Court of Appeals erred in issuing the spouses Go a Decree of Registration
over lot no. 4699-B?

RULING:
Yes. Any application for confirmation of title under Commenwealth Act No. 141
already concedes that the land is previously public. For a person to perfect one’s title to
the land, he or she may apply with the proper court for the confirmation of the claim of
ownership and the issuance of a certificate of title over the property. This process is
known as judicial confirmation of title.
Under section 48(b) of Commonwealth Act 141, a amended, and Section 14(1) of
presidential decree No. Filipino citizens applying for the judicial confirmation and
registration of an imperfect title must prove several requisited. First, they must prove that
they, by themselves or through their predecessors-in-interest, have been in open,
continuous, exclusivr, and nototious possession of the property. Second, it must be
settled that the applicant’s occupation is under a bona fide claim of acquisition or
ownership since June 12, 1945 or earlier, immediately beofre the the application was
filed. Third, it should be established that the land is an agricultural land of public domain.
Finally, it haas to be shown that the land has been alienbale and disposable.
Although not adequate to establish ownership, a tax declaration may be a basis to
infer possession. This court has highlighted that where tax declaration was preseented,
it must be the 1945 tax declaration because June 12, 1945 is material to the case.

171
YOLANDA E. GARLET, PETITIONER, VS. VENCIDOR T. GARLET, RESPONDENT.
G.R. No. 193544, August 2, 2017
LEONARDO-DE CASTRO, J.

This case is a petition for review on Certiorari on the decision by Court of Appeals dated
June 21, 2010 which reversed the decision of the RTC dated November 27, 2006 in Pasig
City; Resolution dated August 24, 2010 of the appellate court in the same case, which
denied Petitioner’s motion for reconsideration.

Facts:

 Yolanda and Vencidor Garlet met each other sometime in 1988 where they
became intimately involved resulting to Yolanda’s pregnancy.
 They got married and had another child.
 Respondent is aware that Yolanda is working as an entertainer in Japan. There
was no ante-nuptial agreement before their marriage and no separation of
properties during marriage.
 After some time, they got into marital problems which led to their separation;
Yolanda having the custody of both children and was also the one supporting them.
 Yolanda then filed for a Declaration on Nullity of marriage on the grounds of
Psychological Incapacity (Article 36 of Family Code).
 The respondent didn’t undergo any psychological examination as he didn’t appear
to the invitation by the petitioner.
 The Clinical Psychologist found the respondent suffering from Narcissistic type of
Personality Disorder.
 RTC rendered their marriage null and void.
 CA reversed the decision of RTC.

Issue:

Is the marriage of Yolanda and Vencidor null and void due to Psychological Incapacity?

Held:

No. The Supreme Court agrees with CA that the totality of evidences (in relation to Molina
Doctrine) is insufficient to establish that respondent is psychologically incapacitated to do
his marital obligations.

Wherefore, the petition for review on Certiorari is DENIED.

172
NATIONAL TRANSMISSION CORPORATION, petitioner v. OROVILLE
DEVELOPMENT CORPORATION, respondent

G.R. No. 223366, August 01, 2017 EN BANC | MENDOZA, J.

In 1995, respondent Oroville Development Corporation (Oroville) bought two (2) parcels
of land in Puerto, Cagayan de Oro City. Traversing the same property is the existing
Tagoloan-Pulangi 138 kV transmission line (Tagoloan-Pulangi) constructed by petitioner
National Transmission Corporation (TransCo) in 1983. Then by 2006 TransCo offered to
buy said properties from Oroville to be used for the construction of the proposed Abaga-
Kirahon 230kV transmission line (Abaga-Kirahon).

Oroville requested to reroute the proposed transmission line because it one of TransCo’s
transmission line is already traversing its property. It also informed TransCo that Oroville
has not been paid just compensation for the construction of Tagoloan- Pulangi in its
property. TransCo refuses, stating that the two transmission lines must be parallel to each
other.

TransCo then manifested that it would file the required expropriation proceedings against
Oroville in order to acquire the latter’s properties for the Abaya-Kirahon project.
Subsequently, Oroville filed an omnibus petition to convert the proceedings into an
expropriation case, to which TransCo made no objections.

However, after the imposition of a 12% interest for compensation towards Oroville,
petitioner TransCo argues that based on Section 4, Rule 67 of the Rules of Court, just
compensation for expropriated property shall be determined based on its fair market value
at the time of its taking.

Oroville, on the other hand states that this would sow immeasurable injustice, as TransCo
had been earning billions of pesos from transmission charges since 1983 and that the
delay in the payment of just compensation justified the payment of 12% interest per
annum.

TransCo contended that this case is not an exception to the settled rule that just
compensation should be based on the property’s value at the time of its taking.

Issue/s:

(1) Should the computation of just compensation for the expropriated property be based
on its value at the time of the taking of the property?

(2) Is the imposition of a legal interest of 12% unjustified?

Ruling:

173
(1) YES. The doctrine of stare decisis constrains the Court to follow the ruling laid down
in Tecson and similar cases. "Time and again, the court has held that it is a very desirable
and necessary judicial practice that when a court has laid down a principle of law as
applicable to a certain state of facts, it will adhere to that principle and apply it to all future
cases in which the facts are substantially the same.

To reiterate, the facts of the instant case are substantially the same with Tecson and
similar cases cited therein. A government agency took possession of private property for
the benefit of the public without, however, initiating expropriation proceedings, which thus,
constrained the landowner to file actions to recover their properties or to demand payment
of just compensation. Hence, in the absence of any compelling reason to deviate from
the rulings in the aforecited cases, the Court, in the case at bench, must adhere to the
doctrines established therein.

(2) YES. The final compensation must include interest[s] on its just value to be computed
from the time the property is taken to the time when compensation is actually paid or
deposited with the court. In fine, between the taking of the property and the actual
payment, legal interest[s] accrue in order to place the owner in a position as good as (but
not better than) the position he was in before the taking occurred.

In the case at bench, Transco made a provisional deposit of P7,647,200.00 on January

21, 2011. Consequently, from 1983 to January 21, 2011, Oroville is entitled to twelve
percent (12%) interest per annum which is the prevailing rate during such period pursuant
to Central Bank Circular No. 905, effective from December 22, 1982 to June 30, 2013.

174
NATIONAL HOUSING AUTHORITY, Petitioner, v. DOMINADOR LAURITO,
HERMINIA Z. LAURITO, NIEVES A. LAURITO, NECITAS LAURITO VDA. DE DE
LEON, ZENAIDA D. LAURITO, CORNELIA LAURITO VDA. DE MANGA, AGRIPINA T.
LAURITO, VITALIANA P. LAURITO, REPRESENTED BY: DOMINADOR LAURITO,
Respondents.
G.R. No. 191657 | 2017-07-31

TIJAM, J.
This Petition for Review seeks to reverse the Decision of the Court of Appeals which
affirmed the Decision of the Regional Trial Court (RTC) of Bacoor, Cavite, which
confirmed respondents' ownership of a parcel of land located at Carmona, Cavite.

FACTS
At the core of the instant controversy is a parcel of land situated in Carmona, Cavite with
an area of 224,287 square meters. Petitioner National Housing Authority (NHA) and
respondents heirs of the Spouses Domingo Laurito and Victorina Manarin (Spouses
Laurito) claim conflicting rights of ownership over the subject property based on different
transfer certificates of title, registered on likewise varying dates.
In the initial complaint, respondents allege that their parents Spouses Laurito were
the registered owners of the subject property, covered by Transfer Certificate of Title
(TCT) No. T-9943 with the Registry of Deeds for the Province of Cavite in September
1956. The Spouses Laurito mortgaged said property in September 1956 to the Philippine
National Bank (PNB) but was able to redeem the same, securing the release of the
mortgage in January 1977. When the RD was gutted by fire in 1959, the Spouses Laurito
caused the administrative reconstitution of their title, using the duplicate certificate of title
in their possession. Upon the spouses’ death, respondents, as surviving children,
continued paying real estate taxes on the property.
NHA, in its answer, argued that it is not required to look beyond the derivative titles
by which it came into possession of said property, having acquired them from their
previous owners.
Upon examination of the documents presented before it, the RTC discovered that
the title of the Spouses Laurito was issued by the RD of Cavite in September 1956 and
that it has not been cancelled and was certified to be existing and intact in the registry.
The RTC also found that the derivative titles upon which NHA based its titles were
registered on dates subsequent to the dates found on the title in possession of the
Spouses Laurito.
The RTC further observed that the certificates of title from which NHA claims to
have derived its title over the subject property, have been administratively reconstituted
in 1960 and 1961, or at a time when the owner's duplicate certificate of title in the names
of the Spouses Laurito was in the possession of PNB as mortgagee. The RTC held that
while the same property was covered by different titles, preference should be given to the
title of the Spouses Laurito as it was registered earlier in time, compared to the earliest
derivative titles of NHA which were issued on February 1961. Finally, the RTC noted that

175
while NHA claims to be a buyer in good faith, it nonetheless failed to demonstrate how it
acquired the subject property.
The NHA appealed, arguing that the RTC failed to take into account that the
reconstitution of the title of the Spouses Laurito took place in March 1962. In discrediting
NHA's appeal, the CA held that as between respondents' transfer certificate of title and
NHA's derivative titles which were administratively reconstituted, more weight should be
given to the former. The CA further held that the reconstitution of the title of the Spouses
Laurito in March 1962 does not afford preference in favor of NHA's derivative titles, as
the fact remains that the title of the Spouses Laurito was registered earlier in time, i.e. on
September 1956.As regards the valuation of the property, the CA found no reason to
reverse the ruling of the RTC as the same was based on the testimony of one of the
respondents heirs engaged in real estate business whose testimony was never refuted
by NHA.

ISSUE/S
Does the NHA have better right over the subject property?

RULING
NO, the NHA does not have better right over the subject property. There can be no
argument that the claimant whose transfer certificate of title was issued earlier in time,
absent any anomaly or irregularity in the registration, prevails. The issue is not entirely
novel but which has been jurisprudentially settled.
The title of the Spouses Laurito was registered in 1956 while the earliest derivative
titles of NHA were registered in 1960. To be precise, the title of the Spouses Laurito
preceded those presented by the NHA. Therefore, as between the respective sources of
NHA's titles and the title of the Spouses Laurito, that of the latter prevails.
The rule is that where two certificates of title are issued to different persons
covering the same parcel of land in whole or in part, the earlier in date must prevail as
between the original parties and, in case of successive registration where more than one
certificate is issued over the land, the person holding title under the prior certificate is
entitled to the property as against the person who relies on the second certificate.

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DELA CRUZ V. OCTAVIANO
G.R. No. 219649, 26 July 2017

Peralta;

Rule 133 of the rules of court mandates that in civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence.

FACTS:
Renato Octaviano, a military dentist, and his mother and sister were all riding a
tricycle when it was suddenly bumped from behind by a car, which was being driven by
Dela Cruz, friend of the actual owner of the car. It caused the tricycle to spin around.
Renato was thrown from the tricycle and landed on the ground a couple of meters away.
He suffered extreme pain and lapsed into unconsciousness, and his injuries were so
severe that his leg had to be amputated below the knee. He later suffered bone infections,
requiring further medical treatment through multiple operations and a prosthetic leg. He
ultimately spent P623,268.00 for medical expenses.
Renato and his family filed a civil complaint for damages with the RTC against the
driver and owner of the car which bumped the tricycle.
The RTC dismissed the complaint, stating that the driver was cautious and did
everything expected of him by law. But the CA overturned the decision on appeal, relying
on the police report and witness accounts of the incident, which stated that the driver had
been drunk at the time of the collision with the tricycle. The CA awarded moral damages,
exemplary damages, and attorneys’ fees to Renato.
The driver denied everything and contended that the police report should not have
been used because the police officer who wrote it had not been presented as a witness
in court.

ISSUES:
1. Was the driver of the car negligent and thus liable for the incident?
2. Was Renato contributorily negligent and thus in estoppel?
RULING:
1. Yes. Rule 133 of the rules of court mandates that in civil cases, the party having
the burden of proof must establish his case by a preponderance of evidence. Generally,
the party who denies has no burden to prove, but in civil cases, the burden of proof is on
the party who would be defeated if no evidence is given on either side. The burden of
proof is on the plaintiff if the defendant denies the factual allegations of the complaint in
the manner required by the Rules of Court, but it may rest on the defendant if he admits
expressly or impliedly the essential allegations but raises affirmative defense or defenses,
which if proved, will exculpate him from liability.

The court ruled that the contents of the police report, were corroborated by the
testimonies of the other witnesses presented by Renato. It were more believable than the
version of what transpired of the driver and as to the denial of petitioner that he was drunk
at the time of the accident, whether or not he was in a state of inebriation is
inconsequential given the above findings. His being sober does not and will not erase the

177
fact that he was still negligent and that the proximate cause of the collision was due to his
said negligence.

And because of Renato's actual suffering and losses, exemplary damages

because the driver acted with gross disregard and insensitivity to the suffering of Renato,
and attorneys’ fees because exemplary damages were already awarded.

2. No, he was not. Negligence is contributory only when it contributes proximately

to the injury, and not simply a condition for its occurrence. The causal link between the
alleged negligence of the tricycle driver and respondent Renato was not established.
Negligence per se, arising from the mere violation of a traffic statute, need not be sufficient
in itself in establishing liability for damages.

YU HWA PING v. AYALA LAND, INC.,

G.R. No. 173120, July 26, 2017

DIAZ VS AYALA LAND, INC.

G.R. No. 173141, July 26, 2017

MENDOZA, J.:

Thesis:
Spouses Yu Hwa Ping and Mary Gaw filed an action for reconveyance against
Ayala Land Inc. (ALI) on the ground that the land titles obtained by the latter is based on
a void contract.

Facts:

Spouses Diaz

On May 26, 1921, the Director of Lands approved the survey plan submitted by
petitioners Spouses Andres Diaz and Josefa Mia (Spouses Diaz). The survey plan
designated as Psu-25909 covered a parcel of land located at Sitio of Kay Monica, Barrio
PugadLawin, Las Piñas, Rizal, with an aggregate area of 460,626 square meters covered
by Lot 1.

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 Thereafter there were three other survey plans designated as Psu-47035, Psu-
80886, Psu-80886/SW0-20609 that were understaken under certain individuals for the
same parcel of land. Each survey plan indicates a different address in Las Pinas, Rizal.

In May 1950, Original Certificate of Title (OCT) No. 242 was issued in favor of
Yaptinchay covering Lots 2 and 3 pursuant to Psu-80886/SWO-20609 while OCT No.
244 was also issued to Yaptinchay. Eight years after in 1958, CT No. 1609 covering Lot
3 pursuant to Psu-47035 was issued in favor of Mayuga. In May 1967, some of properties
were sold to CPJ Corporation resulting in the issuance of Transfer Certificate Title (TCT)
No. 190713 in its name.

In February 1968, Andres Diaz filed a petition for original registration before the
Court of First Instance (CFI) of Pasay for Lot No. 1 of Psu-25909 in which favourable
judgment was rendered. In May 1970, OCT No. 8510 was issued in the name of Spouses
Diaz who subdivided thereafter the same property into ten (10) lots, described as Lots
No. 1-A to 1-J and conveyed to different third parties.

On May 1971, CPJ Corporation, then owner of the land covered by TCT No.
190713, which originated from OCT No. 242, filed a case before RTC Pasig against
Spouses Diaz and other named respondents. It sought to review OCT No. 8510 in the
names of Spouses Diaz on the ground that the interested persons were not notified of the
application.

In August and December 1976, Andres Diaz sold to Cabautan some parcels of
land which originated from OCT No. 8510 under Psu-25909. In May 1993, spouses Yu
Hwa Ping and Mary Gaw (Spouses Yu) acquired ownership over 67,813 square meters
representing the undivided half-portion of Lot 1-A originating from OCT No. 8510 of
Spouses Diaz. In January 1994, Spouses Yu acquired ownership over Lot 1-B originating
from OCT No. 8510 of Spouses Diaz with an area of 135,000 square meters. Pursuant to
the transfers of land to Spouses Yu, TCT Nos. 39408 and 64549 were issued in their
names.

On the other hand, in May 1980, CPJ Corporation transferred their interest in the
subject properties to third persons. Later, in 1988, Ayala Corporation obtained the subject
properties from Goldenrod, Inc.

In August 1995, Spouses Yu visited their lot and were surprised to discover that
ALI had already clandestinely fenced the area and posted guards thereat and they were
prevented from entering and occupying the same. They also discovered that the transfer
of certificates of titles covering parcels of land overlapping their claim were in the name
of ALI under TCT Nos. 41325, 41263, 41262, and 41261.

In December 1996, Spouses Yu filed a complaint before the RTC of Las Piñas City
against ALI for declaration of nullity of the TCTs issued in the name of the latter.

179
 Spouses Yu principally alleged that the titles of ALI originated from OCT Nos. 242,
244, and 1609, which were covered by Psu-80886 and Psu-47035. The said surveys were
merely copied from Psu-25909, which was prepared at an earlier date, and the Director
of Lands had no authority to approve one or more surveys by different claimants over the
same parcel of land. They asserted that OCT No. 8510 and its transfer certificates, which
covered the Psu-25909, must be declared valid against the titles of ALI.

ALI argues that the complaint of Yu is barred by prescription because it was filed
beyond the one-year reglementary period under Section 38 of Act No. 496 and these titles
were entitled to the presumption of regularity. On the other hand, Spouses Yu assert that
their action was imprescriptible because they sought to set aside the titles that were
obtained through void surveys and they assert that the principle of indefeasibility of a
Torrens title does not apply where fraud attended the issuance of the title.

Issue:
1. Is the complaint of the spouses Yu barred by prescription?

Held:

No. The Court finds that the complaint of spouses Yu is not barred by prescription.

Citing the case of Uy v. Court of Appeals, the Supreme Court explained the
prescriptive periods of an action for reconveyance depending on the ground relied upon,
to wit:

The law creates the obligation of the trustee to reconvey the property and its title
in favor of the true owner. Correlating Section 53, paragraph 3 of PD No. 1529 and
Article 1456 of the Civil Code with Article 1144(2) of the Civil Code, the prescriptive
period for the reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of title. This ten-
year prescriptive period begins to run from the date the adverse party repudiates
the implied trust, which repudiation takes place when the adverse party registers
the land. An exception to this rule is when the party seeking reconveyance based
on implied or constructive trust is in actual, continuous and peaceful possession of
the property involved. Prescription does not commence to run against him because
the action would be in the nature of a suit for quieting of title, an action that is
imprescriptible.

In the instant case, the spouses Yu petitioned to declare void ab initio the titles of
ALI and their predecessors-in-interest as these were based on spurious, manipulated and
void surveys. Moreover, they allege that their predecessors, Spouses Diaz, had open,
uninterrupted and adverse possession of the property covered by ALI’s title from 1921
until it was transferred to Cabautan in 1976. They also claim that Cabautan possessed
the said land until it was sold to them in 1994. Given the preceding circumstances, the
action for reconveyance files by spouses Yu based on a void deed or contract obtained
by ALI is is imprescriptible under Article 1410 of the New Civil Code.

180
GOTESCO PROPERTIES, INC. v SOLIDBANK CORPORATION
G.R. No. 209452, July 26, 2017 LEONEN, J.

FACTS:

In 1995, Gotesco obtained from Solidbank a term loan of P300M through its President,
Mr. Jose Go (Mr. Go), covered by 3 promissory notes. To secure the loan, Gotesco was
required to execute a Mortgage Trust Indenture (Indenture). The indenture obligated
Gotesco to mortgage several parcels of land in favor of Solidbank. One of which was a
property located in San Fernando, Pampanga. Gotesco also agreed to "at all times
maintain the Sound Value of the Collateral."
When the loan was about to mature, Gotesco found it difficult to meet its obligation due
to the 1997 Asian Financial Crisis. So Gotesco sent a letter to Solidbank proposing to
restructure the loan obligation, extending the payment period to 7 years with a 2 year
grace period. But Solidbank informed Gotesco that there was a substantial reduction in
the appraised value of its mortgaged properties and required Gotesco to replace or add
to the mortgaged properties. However, Gotesco found it unnecessary to address the
alleged deficiency in the collateral.

So Solidbank sent a demand letter to Gotesco as the loan became due but Gotesco
failed to pay the outstanding obligation. Thus, Solidbank filed a Petition for the
Extrajudicial Foreclosure of the lot in Pampanga. A Notice of Sale was published in
Remate (based in Metro Manila) and posted on August 15, 2000 and a public auction
was scheduled for August 31, 2000. Solidbank won as the highest bidder.

Gotesco filed a complaint RTC for Annulment of Foreclosure Proceedings, against

Solidbank, assailing the validity of the foreclosure proceeding claiming that it was
premature and without legal basis and that the jurisdictional requirements
prescribed under Act No. 3135 were not complied with. Solidbank answered that it
never entered into a restructuring agreement with Gotesco. Solidbank further claimed
that it complied with the publication and posting requirements. Solidbank then filed an
Ex-Parte Petition for the Issuance of a Writ of Possession. The two cases were
consolidated.

RTC: Dismissed Gotesco’s complaint and granted Solidbank’s petition for the issuance
of a Writ of Possession.

CA: Affirmed the RTC decision. The CA held that there was no perfected restructuring
agreement between the parties because under Article 1319 of the Civil Code of the
Philippines, absolute acceptance of the offer is necessary before it can be considered
a binding contract. CA also held that Gotesco was actually in default as it failed to
comply with the conditions of the indenture. CA ruled that the posting and publication
requirements were met even though the notice was published in Remate in Metro
Manila since it was still a newspaper of general circulation.

181
Hence, this Petition for Review on Certiorari. Gotesco mainly argues that it was not
in default as it was not sent any notice of default. Also, it argued that the publication of
the Notice was defective as it should have been published in a newspaper in the same
city or province where the property was located (in Pampanga).

ISSUES:
1. Is the foreclosure premature?
2. Is the requirements under Section 3 of Act No. 3135 complied with?

HELD:

1. No. The foreclosure was not premature. Petitioner defaulted in its obligation
twice. First, when it failed to pay the loan according to the terms of the promissory
note and second, when it failed to provide the additional collateral demanded by
respondent (which was required by the indenture agreement).
Also, petitioner never refuted that it defaulted in its payment of the loan. Petitioner
had admitted to proposing the loan restructuring because of its inability to meet
the loan payments.
The CA also correctly held that there was no perfected restructuring agreement
between the parties. Sending a proposal for restructuring the agreement is not
enough. There must be proof that respondent expressly accepted the offer.
Without an absolute acceptance, there is no concurrence of minds.
Since the loan restructuring which Gotesco proposed was not accepted, there is
no question that petitioner defaulted on the payment of its loan and petitioner's
failure to provide the additional collateral as stipulated in the indenture
constituted another Event of Default. This gave respondent enough reason to
foreclose the property.

2. Yes. The requirements under section 3 of Act No. 3135 were satisfactorily met.
Section 3 of Act No. 3135 requires that the Notice of Sale be:
a. physically posted in three (3) public places and
b. be published once a week for at least three (3) consecutive weeks in a
newspaper of general circulation in the city where the property is situated.
The CA is correct in its ruling. If notices are only published in newspapers printed
in the city where the property is located, even newspapers that are circulated
nationwide will be disqualified from announcing auction sales outside their city of
publication. This runs contrary to the spirit of the law which is to attain wide
enough publicity so all parties interested in acquiring the property can be
informed of the upcoming sale. Further, the court held that what was important
is not where the newspaper is printed but whether the newspaper is being
circulated in the city where the property is located. What the law requires is the
publication of the Notice of Sale in a "newspaper of general circulation," which is
defined as one that is published for the dissemination of local news and general
information; xxx
Hence, there is clear emphasis on the audience reached by the paper; the place
of printing is not even considered. As to Petitioner’s claim that the posting

182
 requirement was defective as the notice of sale was posted less than the required
20 days, the court held that since this issue was raised for the first time in its
petition for review in the SC.
Further, such issue is superficial since even though the notice of sale was posted
for only 16 days (less than 4 days than what the law requires), the object of a
Notice of Sale in an extrajudicial foreclosure proceeding is to inform the public of
the nature and condition of the property to be sold and the time, place, and terms
of the auction sale. Thus, Mistakes or omissions that do not impede this objective
will not invalidate the Notice of Sale. (On failure to receive notice by Gotesco)
The SC held that the argument is without merit as documentary evidence will
generally prevail over testimonial evidence. There is a return card submitted by
Solidbank showing that the demand letter was received by Gotesco.

The petition was DENIED.

183
LAND BANK OF THE PHILIPPINES v. RURAL BANK OF HERMOSA (BATAAN), INC.
G.R. No. 181953, July 25, 2017
PERLAS-BERNABE, J.

Facts: Respondent is the registered owner of two (2) parcels of agricultural land situated
in Saba, Hermosa, Bataan, with a total area of 2.1718 hectares, covered by Transfer
Certificate of Title (TCT) Nos. T-114713 and T-114714. Respondent voluntarily offered to
sell (VOS) the same to the government but only the subject land was acquired, and placed
under CARP. LBP valued the subject land at P28,282.09 using the DAR AO 17, Series
of 1989, as amended but respondent rejected the said valuation, prompting the LBP to
deposit the said amount in the latter's name. After the summary administrative
proceedings for the determination of just compensation, the Office of the Provincial
Adjudicator of Dinalupihan, Bataan rendered a Decision adopting the same valuation.
Respondent moved from reconsideration but was denied. When the case was brought
before RTC, it found the LBP's valuation as too low and unrealistic, and based on a mere
government valuation policy and not on its market value as reflected on the tax
declarations for the two (2) parcels of land. Consequently, it fixed the just compensation
for the subject land at P30.00 per sq. m. CA affirmed.

ISSUE: Is CA committed reversible error in upholding the RTC's valuation fixing the just
compensation for the subject land at P30.00 per sq. m.?

Held: Yes, for the purposes of determining just compensation, the fair market value of an
expropriated property is determined by its character and its price at the time of taking, or
the time when the landowner was deprived of the use and benefit of his property, such
as when title is transferred in the name of the Republic of the Philippines, or certificates
of land ownership (CLOAs) are issued in favor of the farmer beneficiaries. In addition, the
factors enumerated under Section 17 of RA 6657, as amended, i.e., (a)the acquisition
cost of the land, (b) the current value of like properties, (c) the nature and actual use of
the property, and in the income therefrom, (d) the owner’s sworn valuation, (e) the tax
declarations, (f) the assessment made by government assessors, (g) the social and
economic benefits contributed by the farmers and farmworkers, and by the government
to the property, and (h) the non-payment of taxes or loan secured from any government
financing institution on the said land, if any, must be equally considered.

184
G.R. No. 203902. July 19, 2017.*

SPOUSES DIONISIO ESTRADA and JOVITA R. ESTRADA, petitioners, vs.

PHILIPPINE RABBIT BUS LINES, INC. and EDUARDO R. SAYLAN, respondents.

Del Castillo, J.:

FACTS:

Petitioners filed a complaint for damages against Philippine RabBit Bus Lines, Inc. in RTC
Urdaneta and respondent Eduardo Saylan. A collision happened with the bus owned by
Philippine Rabbit and driven by Eduardo and one Isuzu truck. Petitioner Dionisio is a
passenger of the bus. Petitioner’s right arm was amputated due to the mishap. Petitioner
filed a complaint wherein he prayed for the following awards: moral damages of Php
500,000, actual damages of Php 60,000, and attorney’s fees of Php 25,000. The claim
for moral damages was based on the loss of the use of his right arm and the humiliation
of being tagged in the public eye as a person with only one arm would certainly be borne
by him for the rest of his life. The RTC granted his petition. Aggrieved, Philippine Rabbit
appealed to the CA arguing that moral damages are not recoverable in action for
damages predicated on breach of contract except when death results or when the carrier
is guilty of fraud or bad faith. Accordingly, the CA modified the RTC decision and declared
Philippine Rabbit exclusively liable to Dioniso for actual damages and deleted the award
of moral damages and attorney’s fees.

ISSUE:
Is Dionisio entitled to his claim for moral damages amounting to Php 500,000.00 provided
that a breach of contract of carriage is not one of the items enumerated in Article 2219 of
the Civil Code given that the carrier did not act fraudulently or in bad faith?

RULING:
The court affirmed with modifications the CA ruling and agreed that moral damages are
not recoverable in this case. The court awards temperate damages. Unfortunately, there
was no documentary evidence to support Dionisio’s claim for actual damages.
Nonetheless, temperate damages may be recovered since actual damages by way of
medical expenses must be supported by official receipts. Hence,the award are as follows:
(1) petitioners are entitiled to temperate damages of Php 500,000; (2) actual damages of
Php 57,658.25; (3) all damages are subject to 6% per annum from finality of this decision
until full satisfaction.

185
DOCTRINE: The temporary easement of right-of-way under Article 656 of the Civil
Code, similar to the permanent easement of right-of-way pursuant to its Articles 649 and
650, can only be granted after proof of compliance with the prerequisites set forth in the
articles duly adduced during a full--blown trial.

AMA LAND, INC., petitioner, vs. WACK WACK RESIDENTS’ ASSOCIATION, INC.,
respondent.
G.R. No. 202342, July 19, 2017
Caguioa, J.:

FACTS
A commercial and residential building project located at EDSA corner Fordham
Street in Wack Wack Village (WWRAI), Mandaluyong City, was proposed by AMALI.
AMALI notified WWRAI of its intention to use Fordham Street as an access road and
staging area of the project. AMALI received no response from WWRAI. WWRAI claimed
however that AMALI already converted part of the said street as barrack site and
staging area. AMALI filed a petition before the RTC seeking the temporary use of
Fordham Street belonging to WWRAI as an access road to AMALI’s construction site.

ISSUE
Is AMALI entitled to the temporary use of Fordham Street belonging to WWRAI
as an access road to AMALI’s construction site?

RULING
Article 656 of the Civil Code provides that entitlement to a temporary easement
of right of way can be granted only after the payment of the proper indemnity by AMALI,
the owner of the dominant estate; and only if AMALI has established that the easement
is indispensable for the construction of its AMA Tower Project. Article 656 requires proof
of indispensability and receipt of payment of the proper indemnity for the damage
caused by the owner of the dominant estate before the owner of the servient estate can
be compelled to grant a temporary easement of right-of-way. The court finds that AMALI
presented no witnesses to establish these prerequesites. Being preconditions, they are
akin to suspensive conditions that must be fulfilled before the obligation on the part of
WWRAI to allow the easements can arise. Until the preconditions are met, AMALI has
no legal basis to use a portion of Fordham Street as an access road and staging area of
its AMA Tower project. To allow AMALI to do so would be in contravention of the legal
provisions on the establishment and grant of the legal easement of right-of-way under
the Civil Code.

186
AURELIA NARCISE, et al., Petitioners, v. VALBUECO, INC., Respondent.
G.R. No. 196888, July 19, 2017
TIJAM, J.:
FACTS:
Respondent Valbueco filed an action for Annulment on the Free Patents,
Certificates of Titles against petitioners Narcise, et. al., the Department of Natural
Resources and the Register of Deeds of Bataan. Valbueco claimed he is a
possessor of the subject lots in an actual, peaceful, and adverse possession since
1970. Respondent averred that from 1977 until 1999, Original Certificates of Title, Free
Patents and Transfer Certificates of Title covering the lots in question were issued in the
name of petitioners.
Instead of filing their respective Answer, petitioners filed several Motions to
Dismiss on the ground of lack of cause of action, failure to state cause of action, defect
in the certificate of non-forum shopping and prescription.
On December 7, 2006, the RTC issued an Order, granting petitioners' motions.
The RTC ruled that the instant case is an action for reversion because petitioners are not
qualified to be issued said free patents. As such, the land must revert back to the State.
Thus, it is the Office of the Solicitor General (OSG) who is the real party-in-interest, and
not the respondent.
ISSUE:
Is the instant case actually a reversion case, and not a case for annulment of free
patents and certificates of title?
RULING:
No. The action is one of annulment of patents and titles. The allegations in the
complaint show that respondent asserts its ownership over the subject properties by
acquisitive prescription.
Acquisitive prescription is a mode of acquiring ownership of a real or immovable
property by possessor through the requisite lapse of time. In order to ripen into ownership,
possession must be in the concept of an owner, public, peaceful and uninterrupted. The
possession contemplated as foundation for prescriptive right must be one under claim of
title or adverse to or in prescription.
Acquisitive prescription may either be extraordinary, which requires uninterrupted
adverse possession for 30 years, or ordinary, which requires possession in good faith
and with a just title for a period of ten years.
The SC holds that the allegations in the complaint sufficiently show that respondent
claims its ownership right by expounding on its uninterrupted possession of the same for
a period of at least 35 years. Also, respondent's claim of its possession in a public,
peaceful and uninterrupted manner constitutes an allegation of ownership by acquisitive
prescription.

Being an action for annulment of patents and titles, it is the respondent who is the
real party-in-interest for it is the one claiming title or ownership adverse to that of the
registered owner. Lastly, the defense of prescription is evidentiary in nature which could
not be established by mere allegations in the pleadings and must not be resolved in a
motion to dismiss. Such issue must be resolved at the trial of the case on the merits

187
wherein both parties will be given ample opportunity to prove their respective claims and
defenses.

188
G.R. No. 188057 July 12, 2017
Hilltop Market Fish Vendor’s Association, Inc., petitioner, vs. Hon. Braulio Yaranon,
City Mayor, Baguio City, Hon. Galo Weygan, City Councilor and Chairman Anti-Vice
Coordinating Task Force, and the City Government of Baguio, respondents.
Carpio, J.

Hilltop Market Fish Vendor’s Association, Inc., sought to prevent City of Baguio
from closing the leased property on the ground that the lease period had not yet
commenced there being no perfected lease contract.
FACTS:
Hilltop and City of Baguio entered into a Contract of Lease over a lot owned by the
City of Baguio, which provided the lease period of 25 years, renewable for the same
period at the option of both parties, and the annual rental of P25,000, with the first
payment commencing upon the issuance by the City Engineer’s Office of the Certificate
of Full Occupancy of the building constructed by Hilltop on the lot, which its ownership
shall transfer to the City of Baguio at the termination of the lease period.
In 1975, Hilltop constructed the Rillera Building and its members occupied it and
conducted business in it, even though the City Engineer’s Office did not issue a
Certificate. On October 16, 1980, the City Council of Baguio issued resolutions rescinding
the contract of lease with Hilltop for its continued failure to comply with its obligation to
complete the Rillera Building. Few floor levels were closed for failure to comply with the
minimum safety standards, and the entire building, on February 28, 2005, for its
completion and sanitation thereby preparing it for commercial use.
On March 7, 2005, Hilltop asked the lower courts to prevent it and order the City
Engineer’s Office to issue the Certificate to make the Contract of Lease effective. City of
Baguio argued that the issuance of the Certificate shall only signal the start of payment
of annual lease rental and not the effectivity of the contract.
ISSUE:
Is the contract of lease entered into by the parties already perfected, and, thus, the
period of lease has begun?
RULING:
Being a consensual contract, a lease is perfected at the moment there is meeting
of the minds upon the thing and the cause or consideration, from which point the parties
are bound to fulfill what they expressly stipulated. Article 1654 of the Civil Code provides
that the lessor is obliged to deliver the thing in such a condition as to render it fit for the
use intended, and the lesses, per Article 1657, is obliged to use the thing leased as a
diligent father of the family.
The subject matter of the contract is the lot where the Rillera building would be
constructed. The consideration were the annual lease rental and the ownership of the
building upon the termination of the lease period. Considering the parties agreed upon
these essential elements of the contract, the contract had been perfected, from which
point the parties are bound to fulfil what they expressly stipulated.
Further, Hilltop is estopped from claiming that the period of the lease has not yet
begun. Article 1653 of the Civil Code provides that the provisions governing warranty,
contained in the Tile of Sales, shall be applicable to the contract of lease, which as Article
1545, in turn, provides that where the obligation of either party is subject to any condition

189
which is not performed such party may refuse to proceed or may waive performance of
the condition.
Hilltop failed to distinguish between a condition imposed upon the perfection of the
contract and a condition imposed on the performance of the obligation. Failure to comply
with the first condition results in failure of the contract, while the second condition only
gives the other party to either to refuse to proceed or to waive the condition. Here, the
issuance of the Certificate was not a suspensive condition which determines the
perfection of the contract or its effectivity, but rather only a condition that will make Hilltop
start paying the annual lease rental to the City of Baguio. However, by Hilltop’s continued
silence, it has agreed that the issuance of the Certificate was not a condition to the
perfection of the lease contract, notwithstanding its non-issuance was due to Hilltop’s fault
for not completing the building.
Hence, the petition is dismissed.

190
RENE MICHAEL FRENCH v. COURT OF APPEALS
GR NO. 220057, July 12, 2017

CARPIO, J.:
The petitioner assails the 30 January 2015 decision and the 21 July 2015 Resolution of
the Court of Appeals Cebu City in CA-G.R. SP No. 07803. The Court of Appeals set aside
the 12 October 2012 Decision of the Regional Trial Court f P. D. Monfort North,
Dumangas, Iloilo, Branch 68, and reinstated the 27 January 2008 Judgment4 of the
Municipal Trial Court in Cities (MTCC), City of Passi, Province of Iloilo in Civil Case No.
437 for Ejectment.

FACTS:
Magdalena O'dell (Magdalena), an American citizen residing in Houston, Texas, United
States of America (U.S.A.), through her attorney-in-fact Thomas 0' dell (Thomas), filed a
complaint for ejectment against Rene Michael French (Rene). Magdalena alleged that
she is one of the owners of a parcel of land, Lot No. 6895, covered by TCT No. T-19522
and located in the City of Passi. Magdalena alleged that sometime in the 1980s, Henry
French (Henry), Rene's father, sought her permission to cultivate a portion of the land
without paying any rental. They have agreed that Henry will pay some of her loans and
vacate the land when she needs it, according to Magdalena but Rene took over the
possession of the land without her permission. Magdalena sent a letter demanding him
to vacate the land, but he then failed to comply prompting Magdalena to file against him.
The MTCC ruled that Rene's occupation of the land was by mere tolerance of the owner.
Aside from bare allegations made by Rene, the MTCC did not find any written proof of
the alleged assignment of fights between Magdalena and Henry. The MTCC ruled that
the payment of the loan and the real property taxes was not inconsistent with the concept
of tolerance of the owner and was in fact in compliance with the conditions set by
Magdalena and Thomas.
Rene filed an appeal before the RTC. In its Decision, the RTC set aside the MTCC's
decision. The RTC sustained the MTCC's finding that neither Rene nor his predecessor-
in-interest was the owner of the land. However, the RTC sustained Rene that the MTCC
had no jurisdiction over the action.
After Magdalena’s petition for review before the CA, in its decision, ruled in favor of
Magdalena. The Court of Appeals ruled that the allegations in the complaint comprise a
cause of action for unlawful detainer and not for forcible entry as claimed by Rene. The
Court of Appeals ruled that all the requisites for an action for unlawful detainer are present
in the complaint. The Court of Appeals also noted that Rene did not even challenge the
jurisdiction of the MTCC to try the case

ISSUE:

Did Court of Appeals commit a reversible error in ruling that the Municipal Trial Court in
Cities had jurisdiction over the case filed by Magdalena O'dell against Rene Michael
French?
RULING:

191
No, the CA did not commit a reversible error in ruling that the MTCC had jurisdiction over
the cases filed by Magdalena against Rene. The nature of an action and the jurisdiction
of the court over a case are determined by the allegations in the complaint. As pointed
out by the Court of Appeals, all the allegations in the complaint constitute a cause of
action for unlawful detainer.
The Court, likewise, cannot accept Rene's claim that there was transfer of ownership
between Magdalena and Henry. Rene failed to substantiate this claim. The MTCC found
that in the contract for easement and tower occupancy with the National Power
Corporation, Rene was a signatory as an administrator of the land. As such, Rene's
defense of open, continuous, notorious, and public possession of the land in the concept
of an owner must fail. In addition, the Court of Appeals correctly ruled that in an ejectment
case, the issue of ownership is only provisional.
. This court hereby denies the petition and affirmed the decision of Court of Appeals.

192
JOSE S. OCAMPO v. RICARDO S. OCAMPO, SR.

G.R. No. 227894, JULY 5, 2017

FACTS:

A complaint was filed by respondent Ricardo S. Ocampo against petitioner Jose S.

Ocampo who are full-blooded brothers for being sons of late Basilio Ocampo and Juliana
Sunglao.

The case arose from a complaint for partition and annulment of Transfer Certificate of
Title (TCT) No. 108822, consisting of a 150-square meter lot and improvements located
at 2227 Romblon Street. G. Tuazon, Sampaloc Manila. The respondent allege that he
and petitioner are co-owners of said property which is a conjugal property left by their
parents. Respondent also claims that the petitioner and his wife, Andrea Mejia Ocampo
conspired and falsified his signature on a Notarized Extra-Judicial Settlement with Waiver
effecting the transfer of the property in the name of the petitioner and at the same time
secretly mortgage the same for Php 200,000.00.

Petitioner and his wife argued that said property was donated to them in favor of their
marriage with a promise to demolish the old house and replace it with a new two-storey
house which they did and allowed the respondent to stay at the second floor. To build the
house, they also obtained a loan from Development Bank of the Philippines (DBP) in the
amount of Php 10,000.00 wherein the petitioners and his parents are the named
borrowers. He further argued that DBP loan was paid through a loan secured from Social
Security System (SSS) with the consent of his father and that the ESW executed by their
father was able to secure the signature of the respondent which led to the cancellation of
TCT No. 36869. He further argued that TCT No. 102822 became indefeasible and cannot
be annulled due to prescription since the action was only filed on June 29, 1992, 21 years
and 7 months from its issuance.

On September 30, 2011, the RTC issued a Decision in favor of the respondent ordering
the partition of the subject property, annulling TCT No. 102822 and ordering the Registry
of Deeds of the City of Manila to cancel the transfer certificate of Title No. 102822 issued
in the name of the defendant being null and void and ordering the defendant to pay the
costs of the suit. The case was then elevated to the Court of Appeals which affirmed the
RTC’s Decision in a decision dated June 20, 2016.

ISSUE:
1. Did the action already prescribe?
2. Is Jose correct in saying that the action to declare the nullity of ESW is not barred by
laches considering the unreasonable delay on the respondent’s part to assert his
rights?

RULING:

193
1. No. The Supreme Court through Justice Velasco held that considering both petitioner
and respondent were residing at the subject property and there was a qualified
admission by the petitioner since no denial was interposed in his Amended Answer,
actual possession of the disputed land at the time of filing of the complaint may be
treated as an action for quieting of title which is imprescriptible. The wrongful
registration gives occasion to the creation of implied or constructive trust under Article
1456 of the New Civil Code. An Action for reconveyance based on an implied trust
generally prescribes in ten (10) years, however, since the plaintiff remains in
possession of the property, the prescriptive period to recover title of possession does
not run against him.

Quieting of title is a common law remedy for the removal of cloud, doubt, or uncertainty
affecting title to real property and since it was already established that respondent’s
signature on the ESW was forged. The trial court’s order to cancel TCT No. 102822 and
uphold the parties’ co-ownership was proper.

2. The court also held that petitioner’s argument that the case is barred by laches has no
merit. Based on the facts presented, respondent proved that he did not sleep on his
rights considering that he filed several cases to assert his rights over the property.

Finally, the court denied the petition and affirmed the RTC Decision dated September 30,
2011 and CA’s Decision dated June 28, 2016.

194
SPOUSES MAXIMO ESPINOZA AND WINIFREDA DE VERA, PETITIONERS, VS.
SPOUSES ANTONIO MAYANDOC AND ERLINDA CAYABYAB MAYANDOC,
RESPONDENTS.
2017-07-03 | G.R. No. 211170

PERALTA, J.:

FACTS

A parcel of land located in Dagupan City was originally owned by Eusebio

Espinoza. After the death of Eusebio, the said parcel of land was divided among his heirs,
namely: Pastora Espinoza, Domingo Espinoza and Pablo Espinoza. Petitioner Maximo is
the son of Domingo Espinoza, who died on November 3, 1965, and Agapita Cayabyab,
who died on August 11, 1963.
Thereafter, on May 25, 1972, Pastora Espinoza executed a Deed of Sale conveying her
share of the same property to respondents and Leopoldo Espinoza. However, on that
same date, a fictitious deed of sale was executed by petitioner Maximo's father, Domingo
Espinoza, conveying the three-fourth (3/4) share in the
estate in favor of respondent Erlinda Cayabyab Mayandoc's parents; thus, TCT No.
28397 was issued in the names of the latter.
On July 9, 1977, a fictitious deed of sale was executed by Nemesio Cayabyab, Candida
Cruz, petitioners-spouses Maximo Espinoza and Winifreda De Vera and Leopoldo
Espinoza over the land in favor of respondents-spouses Antonio and Erlinda Mayandoc;
thus, TCT No. 37403 was issued under the names of the latter.
As a result of the foregoing, petitioners filed an action for annulment of document with
prayer for the nullification of TCT No. 37403 and, on August 16, 1999, the RTC, Branch
40, Dagupan City rendered a Decision in favor of petitioners and ordering respondents to
reconvey the land in dispute and to pay attorney's fees and the cost of the suit.
Respondents appealed, but the CA, in its Decision dated February 6, 2004, affirmed the
RTC with modifications that the award of attorney's fees and litigation expenses be
deleted for lack of factual basis. The said CA Decision became final and executory on
March 8, 2004.
Thus, respondents filed a complaint for reimbursement fox useful expenses, pursuant to
Articles 448 and 546 of the New Civil Code, alleging that the house in question was built
on the disputed land in good faith sometime in 1995 and was finished in 1996. According
to respondents, they then believed themselves to be the owners of the land with a claim
of title thereto and were never prevented by the petitioners in constructing the house.
They added that the new house was built after the old house belonging to respondent
Erlinda Mayandoc's father was torn down due to termite infestation and would not have
reconstructed the said house had they been aware of the defect in their title. As such,
they claimed that they are entitled to reimbursement of the construction cost of the house
in the amount of P800,000.00. They further asserted that at the time that their house was
constructed, they were possessors in good faith, having lived over the land in question
for many years and that petitioners questioned their ownership and possession only in
1997 when a complaint for nullity of documents was filed by the latter.

195
Petitioners, in their Answer, argued that respondents can never be considered as builders
in good faith because the latter were aware that the deeds of sale over the land in question
were fictitious and, therefore, null and void; thus, as builders in bad faith, they lose
whatever has been built over the land without right to indemnity.
Respondents, on January 5, 2011, manifested their option to buy the land where the
house stood, but petitioners expressed that they were not interested to sell the land or to
buy the house in question.

ISSUE

Did the Honorable Court of Appeals erred in ruling that the petitioners were not able to
prove bad faith on the part of the respondents?

RULING

No. The plaintiffs are builders in good faith. As asserted by plaintiffs and not rebutted by
defendants, the house of plaintiffs was built on the lot owned by defendants in 1995. The
complaint for nullity of documents and reconveyance was filed in 1997, about two years
after the subject conjugal house was constructed. Defendants-spouses believed that at
the time when they constructed their house on the lot of defendants, they have a claim of
title. Art. 526, New Civil Code, states that a possessor in good faith is one who has no
knowledge of any flaw or defect in his title or mode of acquisition. This determines whether
the builder acted in good faith or not. Surely, plaintiffs would not have constructed the
subject house which plaintiffs claim to have cost them P800,000.00 to build if they knew
that there is a flaw in their claim of title. Nonetheless, Art. 527, New Civil Code, states
clearly that good faith is always presumed, and upon him who alleges bad faith on the
part of the possessor lies the burden of proof. The records do not show that the burden
of proof was successfully discharged by the defendants.
Plaintiffs are in good faith in building their conjugal house in 1995 on the lot they believed
to be their own by purchase. They also have in their favor the legal presumption of good
faith. It is the defendants who had the burden to prove otherwise. They failed to discharge
such burden until the Regional Trial Court, Br. 40, Dagupan City, promulgated an adverse
ruling in Civil Case No. 97-0187-D. Thus, Art. 448 comes in to protect the plaintiffs-owners
of their improvement without causing injustice to the lot owner. Art. 448 comes in to
protect the plaintiff-owners of their improvement without causing injustice to the lot owner.

196
G.R. No. 224515 July 3, 2017
REMEDIOS V. GEÑORGA, Petitioner
vs.
HEIRS OF JULIAN MELITON, Represented by ROBERTO MELITON as Attorney-in-
Fact, IRENE MELITON, HENRY MELITON, ROBERTO MELITON, HAIDE* MELITON,
and MARIA FE MELITON ESPINOSA, Respondents
PERLAS-BERNABE, J.:
Facts:
The herein respondents Irene, Henry, Roberto, Haide, all surnamed Meliton, and
Ma. Fe Meliton Espinosa, are the registered owners of a 227,270-square meter parcel of
land, which is located in Concepcion Pequeña, Naga City. During his lifetime, Julian sold
portions of the subject land to various persons, among others, to petitioner Remedios V.
Geñorga and husband, Gaspar Geñorga, who took possession and introduced
improvements on the portions respectively sold to them.
However, Julian failed to surrender the owner's duplicate copy of TCT No. 8027 to
enable the buyers, including petitioner's husband, to register their respective deeds of
sale, which eventually led to the filing of a Petition for the surrender of the owner's
duplicate copy of TCT No. 8027 and/or annulment thereof, and the issuance of new titles
pursuant to Section 107 of Presidential Decree No. (PD) 1529.
Issue: Did the CA correctly affirmed the court a quo’s Decision directing the surrender
and delivery of possession of the subject owner's duplicate title to respondents?
Ruling:
YES. The CA did not err in affirming the court a quo’s Decision directing the
surrender and delivery of possession of the subject owner’s duplicate title to respondents.
Preliminarily, it is well to point out that the subject land was an undivided co-owned
property when Julian sold different portions thereof to various persons. However, a
perusal of the pertinent deeds of absolute sale reveals that definite portions of the subject
land were eventually sold, and the buyers took possession and introduced improvements
thereon, declared the same in their names, and paid the realty taxes thereon, all without
any objection from respondents who never disputed the sales in favor of the buyers.
Consequently, the Court finds that there is, in this case, a partial factual partition or
termination of the co-ownership, which entitles the buyers to the segregation of their
respective portions, and the issuance of new certificates of title in their names upon
compliance with the requirements of law.
Section 58 of PD 1529, otherwise known as the "Property Registration Decree," provides
the procedure for the registration of deeds or conveyances, and the issuance of new
certificates of titles involving only certain portions of a registered land, as in this case.
Said provision reads:
Section 58. Procedure Where Conveyance Involves Portion of Land. - If a deed
or conveyance is for a part only of the land described in a certificate of title, the Register
of Deeds shall not enter any transfer certificate to the grantee until a plan of such land
showing all the portions or lots into which it has been subdivided and the corresponding
technical descriptions shall have been verified and approved pursuant to Section 50 of
this Decree. Meanwhile, such deed may only be annotated by way of memorandum upon
the grantor's certificate of title, original and duplicate, said memorandum to serve as a
notice to third persons of the fact that certain unsegregated portion of the land described

197
therein has been conveyed, and every certificate with such memorandum shall be
effectual for the purpose of showing the grantee's title to the portion conveyed to him,
pending the actual issuance of the corresponding certificate in his name.
In this relation, Section 53 of PD 1529 requires the presentation of the owner's
duplicate title for the annotation of deeds of sale.
Notably, a considerable amount of time had passed from the time petitioner
received possession of the subject owner's duplicate title in 2009. But even up to the time
the respondents filed the instant petition before the Court on May 6, 2016, they failed to
show any sufficient justification for the continued failure of the concerned buyers to
comply with the requirements for the registration of their respective deeds of sale and the
issuance of certificates of title in their names to warrant a preferential right to the
possession of the subject owner's duplicate title as against respondents who undisputedly
own the bigger portion of the subject land. Consequently, the Court finds no reversible
error on the part of the CA in affirming the RTC Decision directing petitioner or the RD-
Naga to deliver or surrender the subject owner's duplicate title to respondents.
Moreover, it bears to stress that the function of a Register of Deeds with reference
to the registration of deeds is only ministerial in nature. Thus, the RD-Naga cannot be
expected to retain possession of the subject owner's duplicate title longer than what is
reasonable to perform its duty. In the absence of a verified and approved subdivision plan
and technical description duly submitted for registration on TCT No. 8027, it must return
the same to the presenter, in this case, petitioner who, as aforesaid, failed to establish a
better right to the possession of the said owner's duplicate title as against respondents.

198
G.R. No. 213088, June 28, 2017

LAND TRANSPORTATION FRANCHISING AND REGULATORY BOARD (LTFRB),

Petitioner, v. G.V. FLORIDA TRANSPORT, INC., Respondent.

Case Digest
Facts:
Around 7:20 in the morning of February 7, 2014, a vehicular accident occurred at
Sitio Paggang, Barangay Talubin, Bontoc, Mountain Province involving a public utility bus
coming from Sampaloc, Manila, bound for Poblacion Bontoc and bearing a "G.V. Florida"
body mark with License Plate No. TXT-872. The mishap claimed the lives of fifteen
passengers and injured thirty-two others. An initial investigation report, which came from
the Department of Transportation and Communications of the Cordillera Administrative
Region (DOTC-CAR), showed that based on the records of the Land Transportation
Office (LTO) and herein petitioner, License Plate No. TXT-872 actually belongs to a
different bus owned by and registered under the name of a certain Norberto Cue, Sr.
(Cue) under Certificate of Public Convenience (CPC) Case No. 2007-0407 and bears
engine and chassis numbers LX004564 and KN2EAM12PK004452, respectively; and
that the bus involved in the accident is not duly authorized to operate as a public
transportation.
Thus, on the same day of the accident, herein petitioner, pursuant to its regulatory
powers, immediately issued an Order2 preventively suspending, for a period not
exceeding thirty (30) days, the operations often (10) buses of Cue under its CPC Case
No. 2007-0407, as well as respondent's entire fleet of buses, consisting of two hundred
and twenty-eight (228) units, under its twenty-eight (28) CPCs.
On March 14, 2014, herein petitioner rendered its Decision canceling Cue's CPC
No. 2007-0407 and suspending the operation of respondent's 186 buses under 28 of its
CPCs for a period of six months.

Issue:
Whether or not petitioner is justified in suspending respondent's 28 CPCs for a
period of six months. In other words, is the suspension within the powers of the LTFRB
to impose and is it reasonable?

Held:
Yes, imposing of the suspension of the responden is reasonable.
According to Section 16 of Commonwealth Act. No. 146, otherwise known as the
Public Service Act, to suspend or revoke any certificate issued under the provisions of
this Act whenever the holder thereof has violated or willfully and contumaciously refused
to comply with any order rule or regulation of the Commission or any provision of this Act:
Provided, That the Commission, for good cause, may prior to the hearing suspend for a
period not to exceed thirty days any certificate or the exercise of any right or authority
issued or granted under this Act by order of the Commission, whenever such step shall
in the judgment of the Commission be necessary to avoid serious and irreparable damage
or inconvenience to the public or to private interests.

199
 The respondent is guilty of several violations of the law, to wit, lack of petitioner's
approval of the sale and transfer of the CPC which respondent bought from Cue;
operating the ill-fated bus under its name when the same is registered under the name of
Dagupan Bus Co., Inc., attaching a vehicle license plate to the ill-fated bus when such
plate belongs to a different bus owned by Cue, and operating the subject bus under the
authority of a different CPC and the respondent knowingly and blatantly committed these
violations.

200
MUNICIPALITY OF CAINTA v. CITY OF PASIG AND UNIWIDE SALES WAREHOUSE
CLUB, INC.
G.R. No. 176703
MARTIRES, J.

FACTS:
Pasig filed a case for collection of local business taxes, fees, and other legal
charges due for fiscal year 1997 against Uniwide with the RTC-Pasig on 28 January 1997.
Uniwide, in turn, filed a third-party complaint against Cainta for reimbursement of the
taxes, fees, and other charges it had paid to the latter in the event that Uniwide was
adjudged liable for payment of taxes to Pasig.
Uniwide conducted business in the buildings and establishments constructed on
the parcels of land in Pasig, they’ve applied for and was issued a building permit by Pasig
for its building. Uniwide also secured the requisite Mayor’s permit for its business from
Pasig and consequently paid thereto its business and realty taxes, fees, and other
charges from 1989 to 1996.
However, beginning 1997, Uniwide did not file any application for renewal of its
Mayor's Permit in Pasig nor paid the local taxes thereto. Instead, it paid local taxes to
Cainta after the latter gave it notice, supported by documentary proof of its claims, that
the subject properties were within Cainta's territorial jurisdiction. On 6 May 1999, Uniwide
sold the subject properties to Robinsons Land Corporation.

ISSUE/S:
(1) Were the RTC-Pasig and the CA were correct in deciding in favor of Pasig by
upholding the indefeasibility of the Torrens title over the subject properties, despite the
pendency of the boundary dispute case between Pasig and Cainta; and if so, whether
they properly decided the manner in settling the obligations due to Pasig; and
(2) Was the award of attorney's fees proper?

RULING:
 Were the RTC-Pasig and the CA were correct in deciding in favor of Pasig by
upholding the indefeasibility of the Torrens title over the subject properties, despite
the pendency of the boundary dispute case between Pasig and Cainta? and if so,
Did they properly decide the manner in settling the obligations due to Pasig?

The RTC-Pasig and the Court of Appeals were correct in deciding in favor
of Pasig. In the instance case the Supreme Court enumerated the elements of
forum shopping which are;
(a) identity of parties, or at least such parties as represent the same
interests in both actions;
(b) identity of rights asserted, and reliefs prayed for, the relief being founded
on the same facts; and
(c) the identity of the two preceding particulars, such that any judgment
rendered in the other action will, regardless of which party is successful, amount
to res judicata in the action under consideration

201
 As found by the RTC-Pasig and affirmed by the CA, the first and second
requisites are wanting. Uniwide is not a party to the boundary dispute case
between Cainta and Pasig, and the first action is for settlement of boundary dispute
while the second action is for collection of tax.
Moreover, the third requisite is also wanting, because regardless of which
party is successful, a judgment in the boundary dispute case will not amount to res
judicata in the tax collection case. As discussed above, the basis for determining
which LGU has the apparent right to collect local taxes is the location as appearing
on the certificate of title, unless an amendment thereto is duly made. It must be
noted that during the subject years, the TCTs show that the subject properties are
situated in Pasig, giving the latter the apparent right to collect taxes thereon, which
is precisely the subject of the action under consideration. For this same reason,
the Court cannot sustain Cainta's contention that the boundary dispute case
presented a prejudicial question warranting the suspension of the tax collection
case.

 Was the award of attorney’s fees proper?

The Court held that the award of attorney's fees is improper because the
RTC-Pasig automatically awarded the same in the dispositive portion of its
decision without stating the factual or legal basis therefor in the body of the
decision.
The award of attorney's fees is the exception rather than the general rule.
As such, it is necessary for the trial court to make findings of fact and law that
would bring the case within the exception and justify the grant of such award. The
matter of attorney's fees cannot be mentioned only in the dispositive portion of the
decision. They must be clearly explained and justified by the trial court in the body
of its decision. On appeal, the CA is precluded from supplementing the bases for
awarding attorney's fees when the trial court failed to discuss in its decision the
reasons for awarding the same. Consequently, the award of attorney's fees should
be deleted.

202
BDO UNIBANK, INC., PETITIONER, VS. ENGR. SELWYN LAO, DOING BUSINESS
UNDER THE NAME AND STYLE "SELWYN F. LAO CONSTRUCTION" AND "WING
AN CONSTRUCTION AND DEVELOPMENT CORPORATION" AND INTERNATIONAL
EXCHANGE BANK (NOW UNION BANK OF THE PHILIPPINES),RESPONDENTS.
G.R. No. 227005 June 19, 2017
MENDOZA, J.

FACTS:

Respondent Engineer Selwyn S. Lao filed before the RTC a complaint for collection of
sum of money on March 9, 1999 against Equitable Banking Corporation, Everlink Pacific
Ventures, Inc., Wu Hsieh, and now petitioner Banco de Oro Unibank.

Lao alleged that he was doing business under the name and style of "Selwyn Lao
Construction" and that he was a major stockholder of Wing An Construction and
Development Corporation where he entered into a transaction with Everlink which supply
him with "HCG sanitary wares". He issued two equitable crossed checks payable to
Everlink with check no. 0127-242249 amounting to P273,300.00 and P336,500.00 for
check no. 0127-242250 to serve as the downpayment.

Lao contacted Everlink for the immediate delivery of the sanitary wares upon the
encashment of the checks. However Everlink failed to perform its duty. There he learned
that the checks were deposited to two different bank accounts owned by Wu and a
company named New Plastic Wave. Lao was prompted to file a complaint against Everlink
and Wu for their failure to comply with their obligation and against BDO for allowing the
encashment of the two checks. He later withdrew his complaint against Everlink as the
corporation had ceased existing.

BDO asserted that it has no obligation to find the owner of the accounts where the checks
are deposited. They presented their witness and she testified that the Everlink was the
payee for the two checks and there was nothing wrong with the drawer’s signature and
availability of fund. The witness added that they wrote a letter to Union Bank to refund the
amount of the checks. Union Bank claimed that the checks were deposited to Everlink.

The RTC absolved BDO from liability and the decision was affirmed with modification. It
ordered BDO to pay Lao the amount of P336,500.00, with legal interest from the time of
filing of the complaint until its full satisfaction. The appellate court further directed Union
Bank to reimburse BDO the aforementioned amount. It concurred with the RTC that Union
Bank was liable because of its negligence and its guarantee on the validity of all prior
endorsements or lack of it.

ISSUE:

Was BDO liable for the nonreceipt of payment?

203
RULING:

The rule on the sequence of recovery has been deeply engrained in jurisprudence, there
may be exceptional circumstances which would justify its simplification. Stated differently,
the aggrieved party may be allowed to recover directly from the person which caused the
loss when circumstances warrant. In Associated Bank v. Court of Appeals, the person
who suffered the loss as a result of the unauthorized encashment of crossed checks was
allowed to recover the loss directly from the negligent bank despite the latter's contention
of lack of privity of contract. The Court said:

There being no evidence that the crossed checks were actually received by the private
respondent, she would have a right of action against the drawer companies, which in turn
could go against their respective drawee banks, which in turn could sue the herein
petitioner as collecting bank. In a similar situation, it was held that, to simplify proceedings,
the payee of the illegally encashed checks should be allowed to recover directly from the
bank responsible for such encashment regardless of whether or not the checks were
actually delivered to the payee. We approve such direct action in the case at bar.

In conclusion, Lao, the drawer of the subject check, has a right of action against BDO for
its failure to comply with its duty as the drawee bank. BDO, in turn, would have a right of
action against Union Bank because of the falsity of its warranties as the collecting bank.
Considering, however, that BDO was not made a party in the appeal, it could no longer
be held liable to Lao. Thus, following Associated Bank, the proceedings for recovery must
be simplified and Lao should be allowed to recover directly from Union Bank.

204
DOLORES ALEJO v.
SPOUSES ERNESTO CORTEZ AND PRISCILLA SAN PEDRO,
SPOUSES JORGE LEONARDO AND JACINTA LEONARDO
AND THE REGISTER OF DEEDS OF BULACAN

G.R. No. 206114 / June 19, 2017 / TIJAM, J.

The disposition of conjugal property of one spouse sans the written consent of the
other is void. [Pursuant to Article 124 of the Family Code]

FACTS

Alejo sued for Petition for Review on the decision that sale of conjugal property of
the spouses to her is void due to lack of spousal consent. The sale pertains to the
property belonging to the conjugal property/absolute community of property of the
respondents Spouses Jorge and Jacinta Leonardo (Spouses Leonardo) and upon which
their residential house was built. Alejo maintains that the Kasunduan is a perfected and
binding contract as it was accepted by Jorge through his overt acts. Respondents argue
that Jorge, however, did not sign the agreement and has not given his consent which is
required.

ISSUE

Does spousal consent need to be written in the disposition of conjugal property?

RULING

Yes. Spousal consent need to be written in the disposition of conjugal property.

As provided in Article 124 of the FC, the law is therefore unequivocal when it states that
the disposition of conjugal property of one spouse sans the written consent of the other
is void. Here, it is an established fact that the Kasunduan was entered into solely by
Jacinta and signed by her alone. By plain terms of the law therefore, the Kasunduan is
void. Nevertheless, the Court agrees with the RTC and the CA when it held that the
void Kasunduan constitutes a continuing offer from Jacinta and Dolores and that Jorge
had the option of either accepting or rejecting the offer before it was
withdrawn by either, or both, Jacinta and Dolores. The point of contention is whether
Jorge accepted such continuing offer. If so, then the Kasunduan is perfected as a binding
contract; otherwise, the Kasunduan remains void.

205
[ G.R. No. 206008, June 07, 2017 ]
DELFIN DOMINGO DADIS, PETITIONER, VS. SPOUSES MAGTANGGOL DE
GUZMAN AND NORA Q. DE GUZMAN, AND THE REGISTER OF DEEDS OF
TALAVERA, NUEVA ECIJA, RESPONDENTS.
PERALTA, J.:

Facts:

On September 8, 2003, petitioner Delfin Domingo Dadis (Delfin) filed a Complaint for
reconveyance and damages against respondents Spouses Magtanggol De Guzman
(Magtanggol) and Nora Q. De Guzman (Nora) and the Register of Deeds (RD) of
Talavera, Nueva Ecija.
Delfin alleged that he and his deceased wife Corazon were the registered owners of a
33,494-square meter parcel of land located at Guimba, Nueva Ecija. On December 11,
1996, their daughter Marissa P. Dadis entered into a contract of real estate mortgage
over the subject property in favor of Magtanggol to secure a loan obligation of
P210,000.00 that was payable on or before February 1997; the Spouses De Guzman
made it appear that Marissa was authorized by the Spouses Dadis by virtue of a Special
Power of Attorney (SPA) dated December 10, 1996. the SPA was forged because it was
never issued by him or Corazon as the signatures found in the document are not theirs,
especially so since he was in the United States of America at the time. In November 1999,
when Corazon died, that Magtanggol informed him of the transaction, but he could not
remedy the situation as he had to go back to the USA in December 1999. When he
returned to the Philippines in April 2002, he executed a SPA in favor of a friend, Eduardo
Gunsay, to look into the matter and make the necessary actions. In 2003, he was able to
procure copies of the documents pertaining to the mortgage, including the cancellation of
their title and the issuance of a new one, in favor of the Spouses De Guzman. After his
verification, he immediately caused the filing of an Affidavit of Adverse Claim, neither he
nor his family benefited from the loan secured by the mortgage; no demand letter, as well
as notices of the foreclosure proceedings and the consolidation of title, were sent to him;
and, in view of these, he is entitled to receive from the Spouses De Guzman the amounts
of P200,000.00 as moral damages, P500,000.00 as exemplary damages, P20,000.00
plus P1,000.00, per hearing as attorney's fees, interests, and other costs of suit.
Spouses De Guzman countered that Delfin has no cause of action against them, stating
that: they have no knowledge as regards the supposed falsity of the SPA presented by
Marissa and Corazon at the time the latter pleaded to accommodate them into entering a
mortgage contract; they have no knowledge that Delfin was not in the Philippines at the
time of the execution of the SPA, which, as a duly-notarized document, was presumed to
have been done regularly; Delfin defaulted in paying the obligation despite several
repeated demand, they were constrained to cause the registration of the REM with the
RD on May 21, 2001; to give him enough time and opportunity to reacquire the property,
it was only after three years from the time the obligation became due that they pursued
and effected the foreclosure of the property; considering that he still failed to pay the
obligation, the property was foreclosed on August 21, 2001, with them (Spouses De
Guzman) as the highest bidder; as the property was not redeemed, the title thereto was
consolidated in their names and was issued in their favor; they were in good faith from

206
the time the property was mortgaged until it was foreclosed and they were able to help
Delfin's family, who was financially distressed at the time; and, an action to annul the SPA
executed in 1996 already prescribed. By way of counterclaim, the Spouses De Guzman
pleaded that Delfin be ordered to pay them the amounts of P500,000.00 as moral
damages, P500,000.00 as exemplary damages, P20,000.00 as attorney's fees,
P20,000.00 as litigation expenses, and costs of suit.
After trial, the RTC established that Delfin was not in the Philippines on December 10,
1996 since, per his testimony that was corroborated by Martina Palaganas (Martina), he
was in the USA from November 24, 1995 until he went home on November 13, 1999
when Corazon died; thus, he could not have signed the SPA authorizing Marissa to
mortgage the property. Without his written consent, the mortgage is void since such act
is not merely an act of administration but of ownership or dominion on the part of Corazon.
Evidence on record, however, does not show that Magtanggol had a hand in the
preparation of the SPA. Being duly notarized, he had the right to rely on what such public
document purported to be. The presumption of good faith in his favor was not overcome.
The trial court ruled that while the mortgage is void, the obligation of Corazon to
Magtanggol is valid because the money she received redounded to the benefit of the
family.
On appeal, the CA reversed and set aside the RTC Decision and dismissed Delfin's
complaint for lack of merit. It conceded that, as found by the RTC and undisputed by the
parties, the SPA had been forged.

Issue: Is Magtanggol a mortgagee in good faith?

Ruling: No. Magtanggol is not a mortgagee in good faith.

The doctrine of mortgagee in good faith presupposes that the mortgagor, who is not the
rightful owner of the property, has already succeeded in obtaining a title over the property
in his or her name and that, after obtaining the said title, he or she succeeds in mortgaging
the property to another who relies on what appears on the said title.
In this case, Marissa is undoubtedly not the registered owner of the subject lot and the
certificate of title was in the name of her parents at the time of the mortgage transaction.
She merely acted as the attorney-in-fact of Corazon and Delfin by virtue of the falsified
SPA. The protection accorded by law to mortgagees in good faith cannot be extended to
mortgagees of properties that are not yet registered with the RD or registered but not
under the mortgagor's name.
When the mortgagee does not directly deal with the registered owner of the real property,
like an attorney-in-fact of the owner, it is incumbent upon the mortgagee to exercise
greater care and a higher degree of prudence in dealing with such mortgagor.
Here, Magtanggol maintained that he did not bother to inquire from Corazon and Marissa
the whereabouts of Delfin because, at the time the mortgage transaction was held, the
SPA presented was well-prepared, duly signed, and notarized and that it was them who
actually handed it together with their companions, Imelda Reyes and Roger Sumawang,
and that Corazon did not tell him the whereabouts of her husband, who, unknown to him,
was in the USA at the time.

207
Magtanggol could not be considered as a mortgagee in good faith because he had actual
notice of facts that should have put him on deeper inquiry into Marissa's capacity to sell.
He could not feign ignorance of Delfin's absence or whereabouts.
As the forged SPA and REM are void ab initio, the foreclosure proceedings conducted on
the strength thereof suffer from the same infirmity. Being not a mortgagee in good faith
and an innocent purchaser for value at the auction sale, Magtanggol is not entitled to the
protection of any right with respect to the subject property. Since it was not shown that
the property has been transferred to a third person who is an innocent purchaser for value
(because no intervention or third-party claim was interposed during the pendency of this
case), it is but proper that the ownership over the contested lot should be retained by
Delfin.

208
Just Compensation
Bartolata v Republic
G.R. No. 223334, June 07, 2017
VELASCO JR., J.

FACTS:
Petitioner Danilo Bartolata acquired ownership over a 400 square meter parcel of
land, it appears from the Order of Award that petitioner was the sole bidder for the
property during a public auction conducted on August 14, 1987, with the offer of P15 per
square meter or P6,000 total for the 400 square meter lot. Respondents acquired 223
square meters of petitioner's property for the development of the Metro Manila Skyway
Project. The parties agreed that in exchange for the acquisition, petitioner would be paid
just compensation for the appraised value of the property.
Since the date of initial payment, petitioner had, on numerous occasions,
demanded from respondents the balance, but the latter refused to settle their outstanding
obligation. This prompted petitioner to file, a Complaint for a sum of money with the
Regional Trial Court (RTC)
In their Supplemental Answer, dated July 9, 2009, respondents raised that the
Order of Award from the Bureau of Lands granting title to petitioner over the subject
property contained the following encumbrance: This award shall further be subject to the
provisions of the Public Land Law (Commonwealth Act No. 141, as amended).
Respondents, however, countered that petitioner could not have benefited from PD 2004
since the removal of restrictions and encumbrances contained in PD 2004 only applies to
public land sold by the government for residential purposes without public auction,
whereas petitioner was awarded the subject property through a public auction sale.

The RTC dismissed the case, it ruled that PD 2004 could not have removed the
encumbrances attached to petitioner's property since the law does not cover public lands
sold through auction. The RTC, therefore, ruled that the government is entitled to a 60-
meter width right of way on the property, for which it is not entitled to pay just
compensation under Sec. 112 of CA 141.

The appellate court affirmed the RTC's finding that the subject property is still
subject to the easement of right of way, which is free of any compensation, except only
for the value of the existing improvements that may have been affected. Echoing the
RTC's line of reasoning, the CA ruled that PD 2004 could not be extended to benefit
petitioner who acquired the subject property through an auction sale. The lot in issue is,
therefore, subject to the statutory lien embodied in Sec. 112 of CA 141.

ISSUE:

1. Is the subject property owned by petitioner is subject easement of right of way in favor
of the government?

209
 2. Are respondents are liable to pay just compensation to petitioner?

RULING:

1. NO. The Court rejects petitioner's claim that the subject property is no longer subject to
the 60-meter width easement of right of way in favor of the government.

First, no less than the Order of Award granting petitioner title over the subject property
reads that the parcel of land conferred to him is subject to the restrictions contained under
Sec. 109-114 of CA 141, which necessarily includes the easement provided in Sec. 112.
Notably, petitioner was awarded the subject property in 1987, while PD 2004, which
allegedly removed all encumbrances and restrictions from awarded properties, was
signed into law much earlier in 1985. This alone raises suspicion on the applicability of
PD 2004 to the subject property.

Second, the Court finds no reversible error in the RTC and CA's interpretation of the
coverage of PD 2004 and RA 730. The title of RA 730 itself supports the rulings of the
courts a quo that the laws petitioner relied upon only cover the sale of public lands for
residential purposes and to qualified applicants without public auction.

It can readily be inferred from the title of RA 730 that the definite ambit of the law could
not be extended to sales of public lands via public auction, through which mode of
disposition petitioner acquired the subject property. Consequently, when RA 730 was
amended by PD 2004 to the effect of removing encumbrances and restrictions on
purchased properties without public auction, petitioner could not have benefitted from the
same.

Lastly, even the contents of RA 730 belie petitioners claim. The foremost section of the
law reads:

Section 1. Notwithstanding the provisions of sections sixty-one and sixty-seven of

Commonwealth Act Numbered One hundred forty-one, as amended by Republic Act
Numbered Two hundred ninety-three, any Filipino citizen of legal age who is not the owner
of a home lot in the municipality or city in which he resides and who has in good faith
established his residence on a parcel of the public land of the Republic of the Philippines
which is not needed for the public service, shall be given preference to purchase at a
private sale of which reasonable notice shall be given to him not more than one thousand
square meters at a price to be fixed by the Director of Lands with the approval of the
Secretary of Agriculture and Natural Resources. It shall be an essential condition of this
sale that the occupants has constructed his house on the land and actually resided
therein. Ten per cent of the purchase price shall be paid upon the approval of the sale
and the balance may be paid in full, or in ten equal annual installments. (emphasis added)

210
By way of exception, however, RA 730 now allows the sale of public lands without public
auction to qualified applicants.[27] It is through this exceptional case of purchase of public
land without public auction wherein PD 2004 would apply.

Petitioner's assertion that both sales of public land with and without public auction are
subsumed under the coverage of PD 2004 is contrary to the very tenor of the law. Sec. 2
of RA 730, as amended by PD 2004, is clear and unambiguous:

SEC. 2. Lands acquired under the provisions of this Act shall not be subject to any
restrictions against encumbrance or alienation before and after the issuance of the
patents thereon. (emphasis added)

Under its plain meaning, only public lands acquired by qualified applicants without public
auction and for residential purposes are free from any restrictions against encumbrance
or alienation. The provision is inapplicable to petitioner's property which was awarded to
petitioner not in accordance with RA 730, but through public auction.

What is more, the easement of right of way under Sec. 112 of CA 141 is not subsumed
in the phrase "restrictions against encumbrance or alienation" appearing in the
amendment introduced by PD 2004. This becomes obvious upon examining the original
text of Sec. 2 of RA 730, before PD 2004 took effect:

Sec. 2. Except in favor of the Government or any of its branches, units, or institutions,
lands acquired under the provisions of this act shall not be subject to encumbrance or
alienation before the patent is issued and for a term of ten years from the date of the
issuance of such patent, nor shall they become liable to the satisfaction of any debt
contracted prior to the expiration of the said period. No transfer or alienation made after
the said period of ten years and within fifteen years from the issuance of such patent
except those made by virtue of the right of succession shall be valid unless when duly
authorized by the Secretary of Agriculture and Natural Resources and the transferee of
vendee is a Filipino citizen. Every convenyance made shall be subject to repurchase by
the original purchaser or his legal heirs within a period of five years from the date of
conveyance.

Any contract or agreement made or executed in violation of this section shall be void ab
initio.

Consequently, it was erroneous for petitioner to harp on Sec. 2 of RA 730, as amended

by PD 2004, in his bid to unshackle his property from its servient state, to release it from
the statutory lien prescribed under Sec. 112 of CA 141.

211
2. NO. The Court now determines how the subsisting easement of right of way in favor of the
government bears on petitioner's entitlement to just compensation. In resolving petitioner's
principal claim, we apply the doctrine in Republic v. Andaya (Andaya).[28]

The seminal case of Andaya likewise involved property subject to the statutory lien under
Sec. 112 of CA 141. As held in the case:

It is undisputed that there is a legal easement of right-of-way in favor of the Republic.

Andaya's transfer certificates of title contained the reservation that the lands covered
thereby are subject to the provisions of the Land Registration Act and the Public Land
Act. Section 112 of the Public Land Act provides that lands granted by patent shall
be subject to a right-of-way not exceeding 60 meters in width for public
highways, irrigation ditches, aqueducts, and other similar works of the government or
any public enterprise, free of charge, except only for the value of the
improvements existing thereon that may be affected. In view of this, the Court of Appeals
declared that all the Republic needs to do is to enforce such right without having to
initiate expropriation proceedings and without having to pay any just
compensation. Hence, the Republic may appropriate the 701 square meters
necessary for the construction of the floodwalls without paying for it. [29] (emphasis
added)

The Court affirmed the CA's interpretation of Sec. 112 of CA 141 and ruled that the
Republic was under no obligation to pay therein respondent Andaya just compensation
in enforcing its right of way. Be that as it may the Court did not foreclose the possibility of
the property owner being entitled to just compensation if the enforcement of the right of
way resulted in the "taking" of the portions not subject to the legal easement.

Jurisprudence teaches us that "taking, " in the exercise of the power of eminent
domain, "occurs not only when the government actually deprives or dispossesses the
property owner of his property or of its ordinary use, but also when there is a practical
destruction or material impairment of the value of his property." [30] As in Andaya, even
though the Republic was not legally bound to pay just compensation for enforcing its right
of way, the Court nevertheless found that its project to be undertaken—the construction
of floodwalls for Phase 1, Stage 1 of the Lower Agusan Development Project—would
prevent ingress and egress in Andayas private property and turn it into a catch basin for
the floodwaters coming from the Agusan River, effectively depriving him of the normal
use of the remainder of his property. To the mind of the Court, this resulted in a "taking" of
what was left of Andaya's property, entitling him to consequential damages, awarded by
the Court in the form of just compensation.

To recapitulate, two elements must concur before the property owner will be entitled to
just compensation for the remaining property under Sec. 112 of CA 141: (1) that the
remainder is not subject to the statutory lien of right of way; and (2) that the enforcement
of the right of way results in the practical destruction or material impairment of the value

212
of the remaining property, or in the property owner being dispossessed or otherwise
deprived of the normal use of the said remainder.

213
PARADIGM DEVELOPMENT CORPORATION OF THE PHILIPPINES v. BANK OF
THE PHILIPPINE ISLANDS
G.R. No. 191174 June 7, 2017

REYES, J., J.:

PDCP filed a Complaint for Annulment of Mortgage, Foreclosure, Certificate of
Sale and Damages with the RTC of Quezon City, against BPI, successor-in-interest of
FEB TC, alleging that the REMs and their foreclosure were null and void.
FACTS:
In its Amended Complaint, PDCP alleged that FEB TC assured it that the
mortgaged properties will only secure the Credit Line sub-facility of the Omnibus Line.
With this understanding, PDCP President Go allegedly agreed to sign on two separate
dates a pro-forma and blank REM, securing the amount of ₱42.4 Million and P8 Million,
respectively. PDCP, however, claimed that it had no intent to be bound under the second
REM, which was not intended to be a separate contract, but only a means to reduce
registration expenses.
ISSUE:
Is the validity of the REMs, as upheld by the CA, vitiated by the fact that BPI's
predecessor-in-interest violated the true intent and agreement of the parties thereto?
RULING:
Yes, the Court, speaking through Justice Reyes, finds the petition meritorious. The
registration of the REMs, even if contrary to the supposed intent of the parties, did not
affect the validity of the mortgage contracts.
According to PDCP, when FEBTC registered both REMs, even if the intent was
only to register one, the validity of both REMs was vitiated by lack of consent. PDCP
claims that said intent is supported by the fact that the REMs were constituted merely as
"partial security" for Sengkon's obligations and therefore there was really no intent to be
bound under both, but only in one REM.
To begin with, the registration of the REM contract is not essential to its validity
based on the requisites essential to contracts of pledge and mortgage provided in Article
2085 of the Civil Code provides. In relation thereto, Article 2125 of the Civil Code states
that these requisites are indispensable, in order that a mortgage may be validly
constituted, that the document in which it appears be recorded in the Registry of Property.
If the instrument is not recorded, the mortgage is nevertheless binding between the
parties.

214
CHIQUITA BRANDS, INC. and CHIQUITA BRANDS INTERNATIONAL, INC.,
Petitioners
V.
HON. GEORGE E. OMELIO, REGIONAL TRIAL COURT, DAVAO CITY, BRANCH 14,
SHERIFF ROBERTO C. ESGUERRA, CECILIO G. ABENION, and 1,842 OTHER
PLAINTIFFS IN CIVIL CASE NO. 95-45, Respondents

G.R. No. 189102 June 7, 2017

LEONEN, J.:

Facts

CHIQUITA BRANDS, INC. filed a petition for certiorari against Judge Omelio and other
respondents raising the validity of the following writs and orders: (1) Writ of Execution
dated April 23, 2003; (2) Omnibus Order dated December 14, 2006, which were both
issued by the Regional Trial Court of Panabo City; (3) Order dated July 10, 2009; (4)
Amended Order dated August 11, 2009; (5) Amended Writ of Execution dated July 31,
2009; and (6) Alias Writ of Execution dated August 12, 2009, which were rendered by the
Regional Trial Court, Davao City, in Civil Case No. 95-45.

On August 31, 1993 thousands of banana plantation workers from 14 countries instituted
class suits for damages against 11 foreign corporations with Chiquita being one of them.
The claim that the pesticide they used caused serious and permanent injuries to their
reproductive systems. On May 3, 1996, 1,843 Filipino claimants filed a complaint for
damages against the same foreign corporations before the Regional Trial Court in
Panabo City, Davao del Norte, Philippines.

Before pre-trial Chiquita entered into a worldwide settlement in the US with all the banana
plantation workers The parties executed a document denominated as the "Compromise
Settlement, Indemnity, and Hold Harmless Agreement." Due to the agreement Chiquita
moved to dismiss the civil case and the RTC of Panabo approved the dismissal.

Shortly after the dismissal of Civil Case No. 95-45, several claimants moved for the
execution of the judgment on compromise. They were represented by Atty. Oswaldo A.
Macadangdang. Chiquita opposed the execution on the grounds of mootness. The RTC
granted the Motion for Execution. Chiquita filed a motion to suspend judgement so they
can provide evidence coming from their US offices which would prove that they have
already fulfilled their duty. The claimants objected to the reception of the evidence as they
alleged that it is outside the jurisdiction of Judge Grageda. The documents were later
accepted and entered as evidence.

Thereafter, Chiquita requested for a change of venue from Panabo City to Davao City
due to security issues. This Court granted the request and ordered the transfer from
Panabo City to Davao City. The RTC ruled against Chiquita. Suspecting that presiding
Judge Omelio had prejudged the case, Shell moved for his inhibition. However, before
Shell's motion could be heard, the RTC, issued a Joint Order dated January 7, 2009

215
denying it. Shell moved for reconsideration. Chiquita also moved to inhibit Judge Omelio.
Both motions were denied.

On August 26, 2009, Chiquita instituted before this Court a Petition for Certiorari and
Prohibition with an application for the issuance of a temporary restraining order and writ
of preliminary prohibitory or mandatory injunction.

Issue

1. Whether this case falls under the exceptions to the doctrine on hierarchy of courts
2. Whether respondent court committed "grave abuse of discretion amounting to lack
or excess of its jurisdiction in issuing the assailed orders and writs”
3. Finally, whether Judge George E. Omelio of Branch 14, Regional Trial Court,
Davao City should inhibit himself from hearing Civil Case No. 95-45.

Held

1. The doctrine of hierarchy of courts prohibits "parties from directly resorting to this
Court when relief may be obtained before the lower courts." This rule is founded
upon judicial economy and practical considerations. On the one hand, it allows this
Court to devote its time and attention to those matters falling within its exclusive
jurisdiction. It also "prevent[s] the congestion of this Court's dockets." On the other
hand, it "ensure[s] that every level of the judiciary performs its designated roles in
an effective and efficient manner." The doctrine on hierarchy of courts was
designed to promote order and efficiency. We may take cognizance of this case
"in the interest of judicial economy and efficiency." The records of this case are
sufficient for this Court to decide on the issues raised by the parties. Any further
delay would unduly prejudice the parties.

2. The Writ of Execution ordering the collection of the settlement amount directly from
petitioners and its co-defendants in Civil Case No. 95- 45 is void. Under the
judicially approved Compromise Agreement, petitioners are obliged to deposit the
settlement amount in escrow within 10 business days after they receive a signed
Compromise Agreement from the counsel of the claimants.In this case, petitioners
cannot rely on the five (5) quitclaims for the trial court to quash or recall the writ of
execution. The quitclaims are insufficient to establish that petitioners complied with
their obligation under the Compromise Agreement. They only prove that five (5)
claimants received their respective share in the settlement amount but do not
establish that petitioners deposited the entire settlement amount in escrow. At the
very least, petitioners should have attached proof of actual deposit in their
Opposition to the Motion for Execution.

Judge Grageda was meted a penalty of suspension from service for a period of six
(6) months. Presiding Judge Grageda inhibited himself from further hearing the
case before the Regional Trial Court, Panabo City could act on the pending
incidents. The case was then transferred to Davao City due to the hostile

216
 environment in Panabo City. Succeeding events further delayed the proceedings.
Given the circumstances of this case, petitioner cannot be faulted for failing to
make a formal offer of evidence because they were denied the opportunity to do
so. Respondent court should have given petitioners the chance to offer the
deposition of Mr. Stubbs in evidence before acting on the pending incidents of the
case. Thus, respondent court gravely abused its discretion in issuing the Order
dated July 10, 2009, which affirmed execution against petitioners.

Respondent court also erred in issuing the Order dated July 10, 2009. Petitioners'
subsidiaries and affiliates cannot be adjudged solidarily liable.

3. Considering that respondent Judge Omelio has been dismissed from service in
2013, the last issue raised by petitioners has been rendered moot and academic.
It need not be tackled by this Court.

217
G.R. No. 194152, June 5, 2017

MAKILITO B. MAHINAY, Petitioner

vs.
DURA TIRE & RUBBER INDUSTRIES, INC., Respondent

LEONEN, J.:

Facts:

Petitioner filed the complaint stating that his redemption period is tolled by the filing of the
annulment of the foreclosure sale.

The parcel of land, located in Barrio Kiot, Cebu City, was covered by Transfer Certificate
of Title (TCT) No. 111078 under the name of A&A Swiss International Commercial, Inc.
(A&A Swiss). The property was mortgaged to Dura Tire and Rubber Industries, Inc. (Dura
Tire), as security for credit purchases to be made by Move Overland Venture and
Exploring, Inc. (Move Overland). Under the mortgage agreement, Dura Tire was given
the express authority to extrajudicially foreclose the property should Move Overland fail
to pay its credit purchases.

On June 5, 1992, A&A Swiss sold the property to Mahinay for the sum of ₱540,000.00. In
the Deed of Absolute Sale, Mahinay acknowledged that the property had been previously
mortgaged by A&A Swiss to Dura Tire, holding himself liable for any claims that Dura Tire
may have against Move Overland.

Mahinay sought to pay Move Overland's obligation to release the property from the
mortgage. Dura Tire, however, ignored Mahinay's request.

For Move Overland's failure to pay its credit purchases, Dura Tire applied for extrajudicial
foreclosure of the property on January 6, 1995. Sheriff Romeo Laurel (Sheriff Laurel)
proceeded with the sale and issued a Certificate of Sale in favor of Dura Tire, the highest
bidder at the sale.

On March 23, 1995, Mahinay filed a Complaint for specific performance and annulment
of auction sale before the Regional Trial Court of Cebu City.

Relying on the Court of Appeals' finding that he was a "substitute mortgagor," Mahinay
filed a Complaint for judicial declaration of right to redeem on August 24, 2007. Regional
Trial Court of Cebu City dismissed Mahinay's Complaint for judicial declaration of right to
redeem.

On a pure question of law, Mahinay directly filed a Petition for Review on Certiorari before
this Court. Dura Tire filed its Comment, to which Mahinay filed a Reply.

Issue:

218
Is the one (1)-year period of redemption tolled when Mahinay filed his Complaint for
annulment of foreclosure sale?

Ruling:

This Petition must be denied.

Mahinay’s right to redeem the mortgaged property did not arise from the Court of Appeals'
"judicial declaration”. By force of law, specifically, Section 6 of Act No. 3135, Mahinay's
right to redeem arose when the mortgaged property was extrajudicially foreclosed and
sold at public auction. There is no dispute that Mahinay had a lien on the property
subsequent to the mortgage. Consequently, he had the right to buy it back from the
purchaser at the sale, Dura Tire in this case, "from and at any time within the term of one
year from and after the date of the sale." Section 6 of Act No. 3135 provides that the "date
of the sale" referred to in Section 6 is the date the certificate of sale is registered with the
Register of Deeds. This is because the sale of registered land does not '"take effect as a
conveyance, or bind the land' until it is registered."

The right of redemption being statutory, the mortgagor may compel the purchaser to sell
back the property within the one (1 )-year period under Act No. 3135. If the purchaser
refuses to sell back the property, the mortgagor may tender payment to the Sheriff who
conducted the foreclosure sale. Here, Mahinay should have tendered payment to Sheriff
Laurel instead of insisting on directly paying Move Overland's unpaid credit purchases to
Dura Tire.

Since the period of redemption is fixed, it cannot be tolled or interrupted by the filing of
cases to annul the foreclosure sale or to enforce the right of redemption.

Mahinay, as the successor-in-interest of previous owner A&A Swiss, had one (1) year
from February 20, 1995, or on February 20, 1996, to exercise his right of redemption and
buy back the property from Dura Tire at the bid price of ₱950,000.00.

With Mahinay failing to redeem the property within the one (1)-year period of redemption,
his right to redeem had already lapsed. As discussed, the pendency of an action to annul
the foreclosure sale or to enforce the right to redeem does not toll the running of the
period of redemption. The trial court correctly dismissed the Complaint for judicial
declaration of right to redeem.

All told, the trial court correctly dismissed Mahinay's Complaint for judicial declaration of
right to redeem. To grant the Complaint would have extended the period of redemption
for Mahinay, in contravention of the fixed one (1)-year period provided in Act No. 3135.

219
LOADSTAR SHIPPING COMPANY, INCORPORATED AND LOADSTAR
INTERNATIONAL SHIPPING COMPANY, INCORPORATED v. MALAYAN
INSURANCE COMPANY, INCORPORATED

G.R. No. 185565, April 26, 2017

REYES, J.

An insurer indemnifies the insured based on the loss or injury the latter actually
suffered from. If there is no loss or injury, then there is no obligation on the part of the
insurer to indemnify the insured. Should the insurer pay the insured and it turns out that
indemnification is not due, or if due, the amount paid is excessive, the insurer takes the
risk of not being able to seek recompense from the alleged wrongdoer. This is because
the supposed subrogor did not possess the right to be indemnified and therefore, no right
to collect is passed on to the subrogee.

Facts:
The Philippine Associated Smelting and Refining Corporation (PASAR) entered
into a Contract of Affreightment with Loadstar International Shipping, Inc. (Loadstar
Shipping) for the transport of its copper concentrates from November 1, 1998 to October
31, 2000.
On September 10, 2000, 5,065.47 wet metric tons (WMT) of copper concentrates
were loaded in Cargo Hold Nos. 1 and 2 of MV "Bobcat", a marine vessel owned by
Loadstar International Shipping Co., Inc. (Loadstar International) and operated by
Loadstar Shipping under a charter party agreement. The shipper and consignee, under
the Bill of Lading, are Philex Mining Corporation (Philex) and PASAR, respectively. The
cargo was insured with Malayan Insurance Company, Inc. (Malayan) under Open Policy
No. M/OP/2000/001-582. P & I Association is the third party liability insurer of Loadstar
Shipping.
On September 12, 2000, the vessel’s chief officer found a crack on the starboard
side of the main deck which caused seawater to enter and wet the cargo inside Cargo
Hold No. 2 forward/aft. PASAR and Philex’s representatives boarded and inspected the
vessel and undertook sampling of the copper concentrates. PASAR rejected 750 MT of
the 2,300 MT copper concentrates discharged from Cargo Hold No.2 after the preliminary
report submitted by Elite Adjusters and Surveyor, Inc. confirmed that the samples were
contaminated with seawater.

Malayan paid PASAR the amount of ₱32,351,102.32 upon the recommendation of

Elite Surveyor. Malayan informed Loadstar Shipping, through a letter, that there was a
prospective buyer for the damaged copper concentrates and the opportunity to
nominate/refer other salvage buyers to PASAR. On November 29, 2000 Malayan
awarded the damaged copper concentrates to PASAR at $ 90,000.00. Loadstar Shipping
requested Malayan for the reversal of its decision and to allow it to match or top PASAR’s
bid by 10%, but the latter declined.

220
 On January 23, 2001, PASAR signed a subrogation receipt in favor of Malayan.
To recover the amount paid and in the exercise of its right of subrogation, Malayan
demanded reimbursement from Loadstar Shipping but it refused to comply.
Consequently, on September 19, 2001, Malayan instituted with the RTC a complaint for
damages. The complaint was later amended to include Loadstar International as party
defendant.
On October 30, 2002, Loadstar Shipping and Loadstar International filed their
answer with counterclaim denying plaintiff appellant’s allegations and averring that they
are not engaged in the business as common carriers but as private carriers. Moreover,
due to the inherent nature of the cargo and the use of water in its production process, the
same cannot be considered damaged or contaminated.

Issues:

1) Is Loadstar Shipping a common carrier?

2) Is the respondent entitled to the right of recovery by virtue of subrogation against
petitioners, on the basis of PASAR’s claim?

Ruling:

1) Yes, the Supreme Court speaking through Justice Reyes declared that,
LOADSTAR is a common carrier. It is not necessary that the carrier be issued a
certificate of public convenience, and this public character is not altered by the fact
that the carriage of the goods in question was periodic, occasional, episodic or
unscheduled.

2) Article 2207 of the Civil Code states that the rights of a subrogee cannot be
superior to the rights possessed by the subrogor. A subrogee in effect steps into
the shoes of the insured and can recover only if the insured likewise could have
recovered. Consequently, an insurer indemnifies the insured based on the loss or
injury the latter actually suffered rom.

In this case, Malayan, as the insurer of PASAR, neither stated nor proved that
the goods are rendered useless or unfit for the purposes intended by PASAR due
to the contamination with seawater. Notably, the PASAR bought back the
contaminated Copper concentrates from Malayan. The fact of repurchase is
enough to conclude that the contamination of the copper concentrates cannot be
considered as total loss on the part of PASAR.

Under Article 365 of the Code of Commerce, there is no basis for the goods’
rejection. It was erroneous for Malayan to reimburse PASAR as though the latter
suffered from total loss of goods in the absence of proof that PASAR sustained
such kind of loss.

SPOUSES CRISTINO AND EDNA CARBONELL v. METROPOLITAN BANK AND

TRUST COMPANY

221
G.R. No. 178467, April 26, 2017
BERSAMIN, J.

Spouses Carbonell initiated against Metrobank Civil Case No. 65725, an action for
damages, alleging that they had experienced emotional shock, mental anguish, public
ridicule, humiliation, insults and embarrassment during their trip to Thailand because of
the Metrobank’s release to them of five US$100 bills that later on turned out to be
counterfeit.

FACTS:

They claimed that they had travelled to Bangkok, Thailand after withdrawing
US$1,000.00 in US$100 notes from their dollar account at the Metrobank's Pateros
branch; that while in Bangkok, they had exchanged five US$100 bills into Baht, but only
four of the US$100 bills had been accepted by the foreign exchange dealer because the
fifth one was "no good;" that, they had asked a companion to exchange the same bill at
Norkthon Bank in Bangkok; that the bank teller thereat had then informed them and their
companion that the dollar bill was fake; that the teller had then confiscated the US$100
bill and had threatened to report them to the police if they insisted in getting the fake dollar
bill back.

The Spouses Carbonell claimed that later on, they had bought jewelry from a shop
owner by using four of the remaining US$100 bills as payment; that on the next day,
however, they had been confronted by the shop owner at the hotel lobby because their
four US$100 bills had turned out to be counterfeit; that the shop owner had shouted at
them: "You Filipinos, you are all cheaters!" and that the incident had occurred within the
hearing distance of fellow travelers and several foreigners.

The Spouses Carbonell continued that upon their return to the Philippines, they had
confronted the manager of the Metrobank's Pateros branch on the fake dollar bills, but
the latter had insisted that the dollar bills she had released to them were genuine
inasmuch as the bills had come from the head office; that in order to put the issue to rest,
the counsel of the Spouses Carbonell had submitted the subject US$100 bills to the
Bangko Sentral ng Pilipinas (BSP) for examination; that the BSP had certified that the
four US$100 bills were near perfect genuine notes; and that their counsel had explained
by letter their unfortunate experience caused by the Metrobank's release of the fake US
dollar bills to them, and had demanded moral damages of P10 Million and exemplary
damages.

The Metrobank's counsel wrote to the Spouses Carbonell on March 1996 expressing
sympathy with them on their experience but stressing that the Metrobank could not
absolutely guarantee the genuineness of each and every foreign currency note that
passed through its system; that it had also been a victim like them; and that it had
exercised the diligence required in dealing with foreign currency notes and in the selection
and supervision of its employees.

222
 Prior to the filing of the suit in the RTC, the Spouses Carbonell had two meetings with
the Metrobank's representatives. In the course of the two meetings, the latter's
representatives reiterated their sympathy and regret over the troublesome experience
that the Spouses Carbonell had encountered, and offered to reinstate US$500 in their
dollar account, and, in addition, to underwrite a round-trip all-expense-paid trip to Hong
Kong, but they were adamant and staged a walk-out.

ISSUE:

1. Is Metrobank liable for negligence, misrepresentation, and bad faith amounting to

fraud?

RULING:

No, Metrobank is not liable. The General Banking Act of 2000 demands of banks the
highest standards of integrity and performance. As such, the banks are under obligation
to treat the accounts of their depositors with meticulous care. However, the banks'
compliance with this degree of diligence is to be determined in accordance with the
particular circumstances of each case.

The CA and the RTC both found that the Metrobank had exercised the diligence
required by law in observing the standard operating procedure, in taking the necessary
precautions for handling the US dollar bills in question, and in selecting and supervising
its employees. In this connection, it is significant that the BSP certified that the falsity of
the US dollar notes in question, which were "near perfect genuine notes," could be
detected only with extreme difficulty even with the exercise of due diligence.

The relationship existing between the Spouses Carbonell and the Metrobank that
resulted from a contract of loan was that of a creditor-debtor. Even if the law imposed a
high standard on the latter as a bank by virtue of the fiduciary nature of its banking
business, bad faith or gross negligence amounting to bad faith was absent. Hence, there
simply was no legal basis for holding the Metrobank liable for moral and exemplary
damages.

With the foregoing, holding Metrobank liable for damages in favor of the Spouses
Carbonell would be highly unwarranted in the absence of proof of bad faith, malice or
fraud on its part. That it formally apologized to them and even offered to reinstate the
USD$500.00 in their account as well as to give them the all-expense-paid round trip ticket
to Hong Kong as means to assuage their inconvenience did not necessarily mean it was
liable. In civil cases, an offer of compromise is not an admission of liability, and is
inadmissible as evidence against the offeror.

Also, the Spouses Carbonell' allegation of misrepresentation on the part of the

Metrobank was factually unsupported. They had been satisfied with the services of the
Metrobank for about three years prior to the incident in question. The incident was but an
isolated one. It is true that the Spouses Carbonell suffered embarrassment and

223
humiliation in Bangkok. Yet, damage and injury should be distinguished from each other.
Although the Spouses Carbonell suffered humiliation resulting from their unwitting use of
the counterfeit US dollar bills, the Metrobank, by virtue of its having observed the proper
protocols and procedure in handling the US dollar bills involved, did not violate any legal
duty towards them. Being neither guilty of negligence nor remiss in its exercise of the
degree of diligence required by law or the nature of its obligation as a banking institution,
the latter was not liable for damages. Given the situation being one of damnum absque
injuria, they could not be compensated for the damage sustained.
GR 206023 Ocsio

224
RAFAEL C. UY (CABANGBANG STORE), Petitioner, v. ESTATE OF VIPA
FERNANDEZ, Respondent.
G.R. No. 200612, April 05, 2017
REYES, J.

FACTS:
Vipa Fernandez Lahaylahay (Vipa) is the registered owner of a parcel of land
situated in Lopez Jaena Street, Jaro, Iloilo City covered by Transfer Certificate of Title
No. T-26576 (subject property). Vipa and her husband, Levi Lahaylahay (Levi), have two
children – Grace Joy Somosierra (Grace Joy) and Jill Frances Lahaylahay (Jill Frances).
Sometime in 1990, a contract of lease was executed between Vipa and Rafael Uy
(Rafael) over the subject property and the improvements thereon, pursuant to which,
Rafael bound himself to pay Vipa, as consideration for the lease of the property, the
amount of P3,000.00 per month, with a provision for a 10% increase every year thereafter.
Vipa died leaving no will or testament whatsoever. Grace Joy became the de facto
administrator of the estate of Vipa. After Vipa's death, Levi lived in Aklan.
In June 1998, Rafael stopped paying the monthly rents.[8] Consequently, on June
12, 2003, the Estate of Vipa, through Grace Joy, filed a complaint[9] for unlawful detainer
with the Municipal Trial Court in Cities (MTCC) of Iloilo City against Rafael. It was alleged
therein that, as of June 1998, Rafael was already bound to pay rent at the amount of
P3,300.00 per month and that his last payment was made in May 1998. Accordingly, at
the time of the filing of the Complaint, Rafael's unpaid rents amounted to P271,150.00.
The Estate of Vipa claimed that despite repeated demands, Rafael refused to pay the
rents due

ISSUE:
Did the CA err in reversing the RTC's Decision dated April 15, 2009?

RULING:
The petition is partly meritorious.
Rafael's claim that the complaint below should have been dismissed since Grace
Joy has no authority to represent the Estate of Vipa and that there was lack of prior
barangay conciliation is untenable.
In any case, the issue of the supposed lack of authority of Grace Joy to represent
the Estate of Vipa had already been rendered moot with the RTC's appointment of Grace
Joy as the administrator of the Estate of Vipa. The sale of the one-half undivided share in
the subject property to Rafael was consummated only on December 29, 2005, more than
two years after Rafael filed with the MTCC his answer to the complaint for unlawful
detainer on July 18, 2003. Obviously, Rafael could not have raised his acquisition of Levi's
share in the subject property as an affirmative defense in the answer he filed with the
MTCC.
Upon Vipa's death, one half of the subject property was automatically reserved in
favor of the surviving spouse, Levi, as his share in the conjugal partnership. The other
half, which is Vipa's share, was transmitted to Vipa's heirs – Grace Joy, Jill Frances, and
her husband Levi, who is entitled to the same share as that of a legitimate child.

225
 Under the regime of conjugal partnership of gains, the husband and wife are co-
owners of all the property of the conjugal partnership. Thus, upon the termination of the
conjugal partnership of gains due to the death of either spouse, the surviving spouse has
an actual and vested one-half undivided share of the properties, which does not consist
of determinate and segregated properties until liquidation and partition of the conjugal
partnership. With respect, however, to the deceased spouse's share in the conjugal
partnership properties, an implied ordinary co-ownership ensues among the surviving
spouse and the other heirs of the deceased.

226
G.R. No. 194533

PHILIPPINE STEEL COATING CORP.

vs.
EDUARD QUINONES

G.R. No. 194533

April 19, 2017

SERENO, J:
THESIS STATEMENT
Respondent Eduard Quinones, owner of Amanian Motors, filed a complaint for damages
against Petitioner PhilSteel due to the fact that the latter offered Quinones a product with
hidden defects and incompatibility with Quinones product.
FACTS
Quinones alleged that in early 1994, Richard Lopez, a sales engineer of PhilSteel, offered
him their new product: Primer coated, long-span, rolled G.I. sheets. The latter asked if the
product were compatible with the Guilder acrylic paint process used by Amianan Motors
in the finishing of its assembled buses. Uncertain, Lopez referred the query to Ferdinand
Angbengco, PhilSteel’s sales manager. Angbengco assured the respondent of the
product’s superiority among other products, Inducing Quinones to purchase the product
and use it in the manufacture of bus units. However, sometime in 1995, Quinones
received complaints from costumers concerning the bus units, claiming that the paint
used on the vehicles was breaking. Respondent then sent a letter-complaint to PhilSteel
invoking the warranties given by the latter. According to respondent, there were hidden
defects of the products and showed incompatibility to his product. Petitioners argued that
Respondent himself offered to purchase the product directly from the former without being
induced by any of PhilSteel’s representitives.
The RTC rendered a decision in favour of Quinones due to PhilSteel breaching their
warranty. The court found that the assurance made by Angbengco constituted an express
warranty under article 1546 of the civil code.
Petitioners filed an appeal for the decision of the RTC, but the CA affirmed the ruling of
the RTC in toto, dismissing its appeal on November 19, 2010.
ISSUES
Whether vague oral statements made by seller on the characteristics of a generic good
can be considered warranties that may be invoked to warrant payment of damages.
Whether general warranties on the suitability of products sold prescribe in six (6) months
under Article 1571 of the Civil Code.
Whether non-payment of price is justified on allegations of breach of warranty.

HELD
1. YES. Article 1546 of the civil code provides that an express warranty can be oral
as long as it is not given a mere opinion or judgement. Rather, it is a positive
affirmation of a fact that the buyer rely upon, and that influences them to purchase
the product. The CA finds that through Angbengco, vague oral statements were

227
 not simply made on purported warranties. Petitioner expressly represented to
respondent that the primer-coated G.I. sheets were compatible with the acrylic
paint process used by the latter on his bus units. Angbengco was certain of the
compatibility that he eventually induced Respondent on purchasing the sheets.
These affirms the oral statements are considered warranties that may be invoked
to warrant payment of damages.
2. YES. Prescription period of the express warranty applies to the case. The
applicable prescription period is provided in the contract. If information is absent,
the period shall be based on the general rule of the rescission of the contracts: four
years. In this case, no prescription period specified in the contract between the
parties has been put forward. Quinones filed the case several months after the last
delivery of the thing sold. Therefore, Quinones’ action is not prescribed.
3. YES. The non-payment of the unpaid price was justified, since the breach of oral
warranty was proven by the ruling of the first issue. Article 1599 of the civil code
provides the reduction of extinction of the price of the same item which a plaintiff’s
claim is founded. Subsequently, Quinones used this article to opt for his reduction
in non-payment of the unpaid balance of the purchase price.

228
CARMELITA T. BORLONGAN, Petitioner,
vs.
BANCO DE ORO (formerly EQUITABLE PCI BANK), Respondent.
G.R. No. 217617, April 5, 2017
(VELASCO, JR, J.)
Before the Court are two consolidated petitions invariably assailing the foreclosure sale
of a property without properly serving the summons upon its owners.
FACTS: Elisio Borlongan, Jr (Elisio) and his wife Carmelita acquired a property located
at Pasig City (subject property).While processing the papers for the prospective sale of
the property, the property has become the subject of an execution sale in a civil case, to
their surprise. The civil case was initiated by BDO for a sum of money against Tancho
Corporation, the principal debtor wherein Carmelita was also impleaded being aboard of
director of the corporation and who supposedly signed security agreements to guarantee
the obligations of the corporation.
The summons was addressed to Tancho Corporation located at Fumakilla
Compound.The records of the case showed that BDO already foreclosed Fumakilla
Compound as early as August 21, 2000, following Tancho’s failure to pay its obligation.
The court then approved the motion by BDO to serve summons by PUBLICATION. The
next year, BDO filed an ex-parte Motion for the attachment against the defendants
including Carmelita which was granted by the court. The service of summons against
the subject property was unserved and so BDO caused the publication of the alias
summons. The case then proceeded without the participation of Carmelita. When the
property was subject to an auction, the property was sold to BDO, who was the highest
bidder.
Upon discovery of the sale of the property, Eliseo executed an affidavit of adverse
claim and filed a complaint for Annulment of Surety Agreements, Notice of Levy on
Attachment, Auction Sale and Other Documents. He alleged in his Complaint that the
subject property is a family home that belongs to the conjugal partnership of gains he
established and acquired with his wife. He further averred that the alleged surety
agreements upon which the attachment of the property was anchored were signed by his
wife without this consent and did not redound to benefit their family. Thus, he prayed that
the surety agreements and all other documents and processes, including the ensuing
attachment, levy and execution sale, based thereon be nullified. Carmelita also prayed
for a TRO and/or Writ of Preliminary Injunction.
ISSUE: Is the issuance of TRO/Writ of Preliminary Injunction appropriate in this case?
HELD: Yes. It is clear that a writ of preliminary injunction is warranted where there is a
showing that there exists a right to be protected and that the acts against which the writ
is to be directed violate an established right. Otherwise stated, for a court to decide on
the propriety of issuing a TRO and/or a WPI, it must only inquire into the existence of two
things: (1) a clear and unmistakable right that must be protected; and (2) an urgent and
paramount necessity for the writ to prevent serious damage. The primary prayer of the
Petition for Annulment before the appellate court is the declaration of the nullity of the
proceedings in the RTC and its Decision dated November 29, 2007; it is not merely
confined to the prevention of the issuance of the writ of possession and the consolidation
of the ownership of the subject property in BDO's name-the concerns of the prayer for the
TRO and/or WPI. Indeed, the petitioner's prayer for the issuance of a TRO and/or WPI

229
was intended to preserve the status quo ante, and not to pre-empt the appellate court's
decision on the merits of her petition for annulment. Thus, it was a grievous error on the
part of the CA to deny her of this provisional remedy.

230
WILLIAM C. LOUH, JR. and IRENE L. LOUH, petitioners, v. BANK OF THE
PHILIPPINE ISLANDS, respondent.
G.R. No. 225562, March 8, 2017
REYES, J.
Procedural rules should be followed except only when, for the most persuasive of
reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with
the degree of his thoughtlessness in not complying with the prescribed procedure.

The instant petition filed by William C. Louh, Jr. (William) and Irene L. Louh (Irene)
(collectively, the Spouses Louh) against respondent, Bank of the Philippine Islands (BPI)
prayed for the dismissal of BPI’s suit for collection of sum of money and the wrongful
declaration that the former is in default since by reason of William’s sickness, they were
entitled to a relaxation of the rules.

The Antecedent Facts

Respondent BPI issued a credit card in William's name, with Irene as the extension card
holder. Pursuant to the terms and conditions of the cards' issuance, 3.5% finance charge
and 6% late payment charge shall be imposed monthly upon unpaid credit availments.

The Spouses Louh made purchases from the use of the credit cards and paid regularly
based on the amounts indicated in the Statement of Accounts (SOAs). However, they
were remiss in their obligations. Their account was unsettled prompting BPI to send
written demand letters dated August 7, 2010, January 25, 2011 and May 19, 2011. By
September 14, 2010, they owed BPI the total amount of ₱533,836.27. Despite repeated
verbal and written demands, the Spouses Louh failed to pay BPI. BPI filed before the
Regional Trial Court (RTC) of Makati City a Complaint for Collection of a Sum of Money.

The RTC ruled that BPI had adduced preponderant evidence proving that the Spouses
Louh had in fact availed of credit accommodations from the use of the cards. However,
the RTC found the 3.5% finance and 6% late payment monthly charges imposed by BPI
as iniquitous and unconscionable. Hence, both charges were reduced to 1 % monthly.

CA affirmed in toto the RTC's judgment. The Spouses Louh further filed no motion to set
aside the order of default. The CA also found that BPI had offered ample evidence, to wit:
(1) delivery receipts pertaining to the credit cards and the terms and conditions governing
the use thereof signed by the Spouses Louh; (2) computer-generated authentic copies of
the SOAs; and (3) demand letters sent by BPI, which the Spouses Louh received but
ignored.

The Issue

Are Spouses Louh in default for their failure to file an answer within the reglementary
period?

231
Ruling of the Court

Procedural rules are tools designed to facilitate the adjudication of cases. Courts and
litigants alike are thus enjoined to abide strictly by the rules. And while the Court, in some
instances, allows a relaxation in the application of the rules, this, we stress, was never
intended to forge a bastion for erring litigants to violate the rules with impunity. The
liberality in the interpretation and application of the rules applies only in proper cases and
under justifiable causes and circumstances. While it is true that litigation is not a game of
technicalities, it is equally true that every case must be prosecuted in accordance with the
prescribed procedure to insure an orderly and speedy administration of justice.

The rules were instituted to be faithfully complied with, and allowing them to be ignored
or lightly dismissed to suit the convenience of a party like the petitioner was impermissible.
Such rules, often derided as merely technical, are to be relaxed only in the furtherance of
justice and to benefit the deserving.

In the case at bar, the CA aptly pointed out that the Spouses Louh filed their Answer with
the RTC only on July 20, 2012 or more than three months after the prescribed period,
which expired on March 4, 2012. When they were thereafter declared in default, they filed
no motion to set aside the RTC's order, a remedy which is allowed under Rule 9, Section
3 of the Rules of Civil Procedure. The Spouses Louh failed to show that they exerted due
diligence in timely pursuing their cause so as to entitle them to a liberal construction of
the rules, which can only be made in exceptional cases.

The Spouses Louh claimed as well that BPI's evidence were insufficient to prove the
amounts of the former's obligation. BPI had offered as evidence the (1) testimony of
Account Specialist Carlito M. Igos, who executed a Judicial Affidavit in connection with
the case, and (2) documentary exhibits, which included the (a) delivery receipts pertaining
to the credit cards and the terms and conditions governing the use thereof signed by the
Spouses Louh, (b) computer-generated authentic copies of the SOAs, and (c) demand
letters sent by BPI, which the Spouses Louh received. The Clerk of Court subsequently
prepared a Commissioner's Report, from which the RTC based its judgment.

Ergo, the Spouses Louh slept on their rights to refute BPI's evidence, including the receipt
of the SOAs and demand letters. BPI cannot be made to pay for the Spouses Louh 's
negligence, omission or belated actions.

232
Manuel L. Bautista, Spouses Angel Sahagun And Carmelita Bautista, and Aniano
L. Bautista
V.
Margarito L. Bautista
G.R. No. 202088 March 8, 2017
PERALTA, J.
Facts:

The present case stemmed from a Complaint for Partition and Accounting with
Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction filed by the
petitioners against Margarito and the other defendants over several properties allegedly
co-owned by them, which included the Sta. Monica property, the subject of this case.

The Bautista siblings - Margarito, Manuel L. Bautista, Carmelita Bautista

Sahagun (Carmelita), Aniano L. Bautista (Aniano), Florencia Bautista de
Villa (Florencia), and Ester Bautista Cabrera (Ester) - established a lending business
through a common fund from the proceeds of the sale of a parcel of coconut land they
inherited from their mother Consorcia Lantin Bautista. Through the said lending business,
the siblings acquired several real properties in San Pablo City.

On November 28, 2002, Amelia, one of the siblings, allegedly sold the subject
property to Margarito, herein respondent, through a Kasulatan ng Bilihang Tuluyan for
₱500,000.00. On the same date, Florencia filed a Petition for the Issuance of a Second
Owner's Duplicate of TCT No. T-2371 before the RTC of San Pablo City. She alleged that
she was the mortgagee of the subject property, and that she could not locate, despite
diligent search, the owner's duplicate title in her possession, which she misplaced
sometime in September 2002.

Herein petitioners tried to oppose the issuance, but on January 30, 2003, the RTC
granted the petition and TCT No. T-59882 was later issued in the name of Margarito. On
January 12, 2004, petitioners registered an Adverse Claim over the Sta. Monica property,
which was annotated on TCT No. T-59882. Failing to settle their differences, petitioners
subsequently instituted a Complaint for Partition and Accounting with Prayer for
Temporary Restraining Order and/or Writ of Preliminary Injunction docketed as Civil Case
No. SP-6064(04) before the RTC of San Pablo City over several properties against herein
respondent Margarito, the Spouses Marconi de Villa and Florencia Bautista, and the
Spouses Senen Cabrera and Ester Bautista.

Issues: Has the petitioners established their co-ownership of the property and are they
entitled to the relief they pray for?

Ruling:
Yes. The Supreme Court, speaking through Justice Peralta, is convinced that
petitioners satisfactorily established that they are co-owners of the property and are
entitled to the reliefs prayed for.

233
 From the foregoing, petitioners established the manner in which they acquired
several properties through their business and have them registered under their names.
Even the compromise agreement they entered into reflected their claim and admission
that they co-owned the properties although titled to only one of their siblings.
Although Margarito claims that he has the land title and that the certificate of title
is the best proof of ownership of a piece of land, the Supreme Court says that the mere
issuance does not foreclose the possibility that the real property may be under co-
ownership with persons not named in the certificate or that the registrant may only be a
trustee or that other parties may have acquired interest subsequent to the issuance of the
certificate of title.

234
GEORGIA OSMEÑA-JALANDONI v. CARMEN A. ENCOMIENDA
G.R. No. 205578, March 01, 2017

PERALTA, J.:
Facts:
Encomienda narrated that she met petitioner Georgia Osmeña-Jalandoni in Cebu
on October 24, 1995, when the former was purchasing a condominium unit and the latter
was the real estate broker. Thereafter, Encomienda and Jalandoni became close friends.
On March 2, 1997, Jalandoni called Encomienda to ask if she could borrow money for the
search and rescue operation of her children in Manila, who were allegedly taken by their
father, Luis Jalandoni. All in all, Encomienda spent around ₱3,245,836.02 and $6,638.20
for Jalandoni.

When Jalandoni came back to Cebu on July 14, 1997, she never informed
Encomienda. Encomienda then later gave Jalandoni six (6) weeks to settle her debts.
Despite several demands, no payment was made. Jalandoni insisted that the amounts
given were not in the form of loans. When they had to appear before the Barangay for
conciliation, no settlement was reached. Hence, Encomienda filed a complaint. She
impleaded Luis as a necessary party, being Georgia’s husband.

For her defense, Jalandoni claimed that there was never a discussion or even just
an allusion about a loan. She confirmed that Encomienda would indeed deposit money in
her bank account and pay her bills in Cebu. But when asked, Encomienda would tell her
that she just wanted to extend some help and that it was not a loan. When Jalandoni
returned to Cebu, Encomienda wanted to fetch her at the airport but the former refused.
This allegedly made Encomienda upset, causing her to eventually demand payment for
the amounts originally intended to be gratuitous.

Issue:
Is Encomienda entitled to be reimbursed for the amounts she defrayed for
Jalandoni considering that she claimed they were given without her knowledge?

Ruling:
Yes, Encomienda is entitled to be reimbursed for the amounts she defrayed.
Clearly, Jalandoni greatly benefited from the purportedly unauthorized payments. Thus,
even if she asseverates that Encomienda’s payment of her household bills was without
her knowledge or against her will, she cannot deny the fact that the same still inured to
her benefit.

235
 The second paragraph of Article 1236 of the Civil Code provides that whoever pays
for another may demand from the debtor what he has paid, except that if he paid without
the knowledge or against the will of the debtor, he can recover only insofar as the payment
has been beneficial to the debtor.

The principle of unjust enrichment finds application in this case. Unjust enrichment
exists when a person unfairly retains a benefit to the loss of another, or when a person
retains money or property of another against the fundamental principles of justice, equity,
and good conscience.

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ROMULO ABROGAR and ERLINDA ABROGAR vs. COSMOS BOTTLING COMPANY
and INTERGAMES, INC.
G.R. No. 164749, March 15, 2017
Bersamin, J.

Facts:
The defendant Cosmos organized an endurance running contest billed as “1 st Pop Cola
Junior Marathon”, held on June 15,1980. Rommel applied to the defendants and was
accepted after complying the requirements. During the marathon, while running in Don
Mariano Marcos Avenue, Rommel was bumped by a jeepney and died because of severe
head injuries caused by the accident. The plaintiff alleged that the defendants failed to
provide adequate safety and precautionary measures and to exercise the diligence
required of them by the nature of their undertaking, in that they failed to insulate and
protect the participants of the marathon from the vehicular and other dangers along the
marathon route.

The petitioners sued the respondents to recover various damages, namely, actual and
compensatory damages, loss of earning capacity, moral damages, exemplary damages
and attorney fees and expenses for the untimely death of Rommel.

Issue:
Whether or not the organizer and the sponsor of the marathon are guilty of negligence?
Whether or not the doctrine of assumption of risk is applicable to the fatality?

Ruling:
The RTC ruled in favor of the petitioners against Cosmos Bottling Company and
Intergames, Inc, ordering them to be jointly and severally pay the plaintiff the amounts of
Twenty Eight Thousand Sixty One Pesos and Sixty Three Centavos (₱28,061.63) as
actual damages; One Hundred Thousand Pesos (₱100,000.00) as moral damages; Fifty
Thousand Pesos (₱50,000.00) as exemplary damages and Ten Percent (10%) of the total
amount of One Hundred Seventy Eight Thousand Sixty One Pesos and Sixty Three
Centavos (₱178,061,63) or Seventeen Thousand Eight Hundred Six Pesos and Sixteen
Centavos (₱17,806.16) as attorney's fees.

The RTC observed that upon conducting the marathon, the safeguards allegedly
instituted by Intergames had fallen short of the yardstick to satisfy the requirements of
due diligence as called for by and appropriate under the circumstances and because of
inadequate preparation of the Intergames it failed to exercise due diligence that resulted
the accident to happen.

All the parties appealed to the Court of Appeals.

In the issue of negligence on the part of Intergames the definition of negligence was cited.

237
Negligence is the omission to do something which a reasonable man, guided upon those
considerations which ordinarily regulate the conduct to human affairs, would do, or doing
something which a prudent and reasonable man would not do.

With this the theory of negligence presuppose some uniform standard of behavior which
must be an external and objective one, rather than the individual judgment good or bad,
of the particular actor; it must be, as far as possible, the same for all persons; and at the
same time make proper allowance for the risk apparent to the actor for his capacity to
meet it, and for the circumstances under which he must act.

In the present case, the Court believe that no amount of precaution can prevent such an
accident. Even if there were fences or barriers to separate the lanes for the runners and
for the vehicles, it would not prevent such an accident if a negligent driver loses control
of his vehicle. And even if the road was blocked off from traffic, it would still not prevent
such an accident, if a jeepney driver on the other side of the road races with another
vehicle loses control of his wheel and as a result hits a person on the other side of the
road. Another way of saying this is: A defendant's tort cannot be considered a legal cause
of plaintiff’s damage if that damage would have occurred just the same even though the
defendant's tort had not been committed.

The Supreme Court ruled that review of factual issues is allowed because of the conflict
between the findings of fact by the RTC and the CA on the issue of negligence.

The negligence of Intergames as the organizer was the proximate cause of the death of
Rommel.

Intergames staunchly insists that it was not liable, maintaining that even
assuming arguendo that it was negligent, the negligence of the jeepney driver was the
proximate cause of the death of Rommel; hence, it should not be held liable.

In order for liability from negligence to arise, there must be not only proof of damage and
negligence, but also proof that the damage was the consequence of the negligence. The
Court held that the negligence of Intergames was the proximate cause despite the
intervening negligence of the jeepney driver.

The doctrine of assumption of risk had no application to Rommel because appellant

Romulo Abrogar himself admitted that his son, Rommel Abrogar, surveyed the route of
the marathon and even attended a briefing before the race. Consequently, he was aware
that the marathon would pass through a national road and that the said road would not
be blocked off from traffic. And considering that he was already eighteen years of age,
had voluntarily participated in the marathon, with his parents' consent, and was well aware
of the traffic hazards along the route, he thereby assumed all the risks of the race. This
is precisely why permission from the participant's parents, submission of a medical
certificate and a waiver of all rights and causes of action arising from the participation in
the marathon which the participant or his heirs may have against appellant Intergames
were required as conditions in joining the marathon.

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TANI-DELA FUENTE V. DELA FUENTE
G.R. No. 188400, March 8, 2017
Leonen, J.

Facts:
 On June 21, 1984, Maria Teresa and Rodolfo got married in Mandaluyong City.
They had two children: Maria Katharyn, who was born on May 23, 1985, and Maria
Kimberly, who was born on April 6, 1986.
 Rodolfo's attitude worsened as they went on with their marital life. Rodolfo's
jealousy was so severe that he once poked a gun at his own 15-year old cousin
who was staying at their house because he suspected his cousin of being Maria
Teresa's lover.
 Rodolfo treated Maria Teresa like a sex slave. Whenever Maria Teresa refused
Rodolfo's advances or suggestions, he would get angry and they would quarrel.
 On June 3, 1999, Maria Teresa filed a petition for declaration of nullity of marriage
before the Regional Trial Court of Quezon City. The case was initially archived
because Rodolfo failed to file a responsive pleading. Maria Teresa moved for the
revival of the Petition. The trial court granted the motion and referred the case to
the Office of the City Prosecutor for collusion investigation.
 Despite notice, Rodolfo failed to attend the scheduled pre-trial conference. The
pre-trial conference was declared closed and terminated, and Maria Teresa was
allowed to present her evidence.
 On June 26, 2002, the trial court directed the Office of the Solicitor General to
submit its comment on Maria Teresa's formal offer of evidence. The Office of the
Solicitor General was also directed to submit its certification. The Office of the
Solicitor General, however, failed to comply with the trial court's orders; thus, the
case was submitted for decision without the certification and comment from the
Office of the Solicitor General.
 While Dr. Lopez was not able to personally examine Rodolfo, the trial court gave
credence to his findings as they were based on information gathered from credible
informants. The trial court held that the marriage between Maria Teresa and
Rodolfo should be declared null and void because "[Rodolfo's] psychological
incapacity [was] grave, serious and incurable."
 On August 20, 2002, the Office of the Solicitor General filed a motion for
reconsideration. The Office of the Solicitor General explained that it was unable to
submit the required certification because it had no copies of the transcripts of
stenographic notes. On September 13, 2002, the trial court denied the motion for
reconsideration.
 The Court of Appeals ruled that the testimony of Dr. Lopez was unreliable for being
hearsay, thus, the trial court should not have given it weight. On July 24, 2009,
Maria Teresa filed a Petition for Review on Certiorari.
 Rodolfo filed a Comment stating that he was not opposing Maria Teresa's Petition
since "[h]e firmly believes that there is in fact no more sense in adjudging him and
petitioner as married."

239
ISSUE:
Did the Court of Appeals erred in denying the petition for Declaration of Nullity of
Marriage?

HELD:
Yes. We find that there was sufficient compliance with Molina. After she had exerted
efforts to save their marriage and their family, respondent simply refused to believe
that there was anything wrong with their marriage. This shows that the respondent
truly could not comprehend or perform his marital obligations.
The petition was granted.

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OUR LADY OF LOURDES HOSPITAL, petitioner,
v. SPOUSES ROMEO AND REGINA CAPANZANA, respondents

G.R. No. 189218, March 22, 2017 FIRST DIVISION | SERENO, C.J.

The case is an instant Petition for Review on Certiorari assailing the Decision and
Resolution rendered by the Court of Appeals.

Regina Capanzana went into active labor on 26 December 1997 and was brought to the
petitioner hospital for an emergency C-section; she gave birth to a baby boy.

The following day, Regina complained of a headache, a chilly sensation, restlessness,

and shortness of breath. She asked for oxygen, which was given to her by the nurses
twenty (20) minutes after Katherine Balad (niece and watcher of petitioner) requested.
Regina later became cyanotic, and upon discharge remained in a vegetative state.

Respondent spouses Capanzana filed a complaint for damages against petitioner

hospital, along with co-defendants: Dr. Miriam Ramos, an obstetrician/gynecologist; Dr.
Milagros Joyce Santos, an anesthesiologist; and Jane Does, the nurses on duty stationed
on the second floor of petitioner hospital on 26-27 December 1997

Both RTC and CA ruled that her condition is the result of negligence by the hospital’s
nurses in their delayed response to the oxygen request. The Supreme Court affirms the
decision and resolution with modification, making the petitioner liable for damages.

Issue: Can the petitioner hospital be held liable for the negligence of its nurses? Ruling:

YES. Under Article 2180, an employer like petitioner hospital may be held liable for the
negligence of its employees based on its responsibility under a relationship of patria
potestas.

The liability of the employer under this provision is "direct and immediate; it is not
conditioned upon a prior recourse against the negligent employee or a prior showing of
the insolvency of that employee." The employer may only be relieved of responsibility
upon a showing that it exercised the diligence of a good father of a family in the selection
and supervision of its employees. The rule is that once negligence of the employee is
shown, the burden is on the employer to overcome the presumption of negligence on the
latter's part by proving observance of the required diligence.

In the instant case, there is no dispute that petitioner was the employer of the nurses who
have been found to be negligent in the performance of their duties. This fact has never
been in issue. Hence, petitioner had the burden of showing that it exercised the diligence
of a good father of a family not only in the selection of the negligent nurses, but also in
their supervision.

241
ERLINDA DINGLASAN DELOS SANTOS AND HER DAUGHTERS, NAMELY,
VIRGINIA, AUREA, AND BINGBING, ALL SURNAMED DELOS SANTOS, Petitioners,
v. ALBERTO ABEJON AND THE ESTATE OF TERESITA DINGLASAN ABEJON,
Respondents.
G.R. No. 215820 | 2017-03-20

TIJAM, J.
Assailed in this petition for review on certiorari are the Decision and the Resolution of the
Court of Appeals (CA) affirming with modification the Decision of the Regional Trial Court
of Makati City, which accordingly ordered petitioners to pay respondents the aggregate
amount of P2,200,000.00 plus legal interest, among others, with regards to matters
revolving around a parcel of land in Makati CIty.

FACTS
A parcel of land was mortgaged by Erlinda (petitioner) and her late husband, Pedro Delos
Santos, to respondent Teresita (respondent) for a sum of P100,000.00, evidenced by a
promissory note. After Pedro’s death, petitioner was unable to pay the loan and agreed
to sell the subject property to respondent for P150,000.00, or the amount of the load plus
an additional P50,000.00. Upon execution of the deed of sale and the release of
mortgage, respondents proceeded to construct a three-storey building worth
P2,000,000.00 on the subject land. Despite the foregoing, petitioners refused to
acknowledge the sale, pointing out that since Pedro died in 1989, his signature in the
Deed of Sale executed in 1992 was definitely forged. As such, respondents demanded
from petitioners the amounts representing the sale of the subject land and the
construction cost of the three (3)-storey building, to no avail.
In defense, petitioners denied participation relative to the spurious Deed of Sale,
and maintained that it was Teresita who fabricated the same and caused its registration
before the Register of Deeds of Makati City. They assert that Erlinda and Pedro never
sold the subject land to Teresita for P150,000.00 and that they did not receive any
demand for the payment of P100,000.00 representing the loan, as well as the
P2,000,000.00 representing the construction cost of the building. Finally, they claimed
that the improvements introduced by Teresita on the subject land were all voluntary on
her part.
In pre-trial, the parties admitted that (1) the subject land was previously covered
by a title in the name of Erlinda and Pedro, but such title was cancelled and replaced by
another in the name of Teresita, (2) the Deed of Sale and Release of Mortgage executed
on July 8, 1992 were forged and should be cancelled, (3) the title in the name of Teresita
should be cancelled and the title in the name of Erlinda and Pedro be reinstated, (4) from
the time of execution of the spurious deed of sale, petitioners have occupied the subject
land and the improvements therein, including the three-storey building, and (5) the
P100,000.00 loan still subsists and that respondents paid for the improvements being
occupied by petitioners.
In its decision, the RTC ruled that respondents should be reimbursed for the
amount of the loan, as well as the expenses incurred for the construction of the three-

242
storey building in view of petitioners' categorical admission of their indebtedness to her,
as well as the construction of the building from which they derived benefit being the actual
occupants of the property, as well as attorney’s fees, totaling P2,200,000.00.
The Court of Appeals affirmed the RTC ruling with modifications, namely cancelling
the release of mortgage, adjusting the interest imposed on the load obligation, and
imposing an interest per annum on the construction cost of the three-storey building. It
also ruled that the children of Erlinda may still be held liable for the obligation of their
parents regarding the property.

ISSUE/S
Should the petitioners be held liable to respondents in the aggregate amount of
P2,200,000.00 of the property and costs of suit?

RULING
YES, the court rules that the issue at hand is partly with merit.
While petitioners admitted the existence of the loan, it does not necessarily follow
that respondents should collect the loan amount from petitioners, as it was contracted
between Erlinda and decedent Pedro who were married prior to the effectivity of the
Family Code. As their property relations were governed by the system of conjugal
partnership of gains, it is chargeable to Erlinda and Pedro's conjugal partnership as it was
a debt contracted by the both of them during their marriage; and should the conjugal
partnership be insufficient to cover the same, then Erlinda and Pedro (more particularly,
his estate as he is already deceased) shall be solidarity liable for the unpaid balance with
their separate properties. The heirs could not be held directly answerable for the same,
contrary to the CA's conclusion.
Pursuant to this rule, since the Deed of Sale involving the subject land stands to
be nullified in view of the parties' stipulation to this effect, it is incumbent upon the parties
to return what they have received from said sale. Accordingly, Erlinda and the rest of
petitioners (as Pedro's heirs) are entitled to the return of the subject land as stipulated
during the pre-trial.
For the purpose of determining the proper indemnity for the 3-storey building, the
case is remanded to the RTC of Makati City for further proceedings consistent with the
proper application of Articles 448, 453, 546, and 548 of the Civil Code, as applied in
existing jurisprudence.
The award of attorney's fees and litigation expenses in the amount of P100,000.00
is deleted.

243
PERALTA V. RAVAL
G.R. No. 188467, March 29, 2017

REYES, J.

The aggrieved party may ask for the rescission of the contract and indemnification
for damages, or only the latter, allowing the contract to remain in force.

FACTS:
The controversy involves a lease agreement for 40 years over two parcels of land
between Spouses Argaza and petitoner Peralta executed on Febuary 19,1974. Under the
lease contract, petitioner was to construct on the leased land a building that should
become property of the Spouses Argaza upon lease termination, to pay realty taxes for
both lots, and to develop a water system for the use of the both parties to the lease
contract. A Deed of Assignment was executed by Argaza transferring all his interests,
rights and participation in the subject properties for a consideration to respondent Raval.
Petitioner refused to recognized validity of the assignment, prompting him to still deposit
his rental payments in the account of Flaviano Jr., more specifically to the accounts that
were opened by Peralta's wife, Gloria, under the name “Gloria F. Peralta (in-trust-for):
Flaviano Arzaga Jr.” The respondent then started demanding petitioner's compliance with
lease contract's terms and conditions but the latter fails to do. Consequently, responded
filed an action for recission of the lease agreement based on Article 1191 for failure to
comply with his obligations under the contract. Petitioner then filed a counterclaim
assailing the action for recission has already prescribed based on Article 1389 and that
the deed of assignment is null and void.

ISSUE:
1. Is the Deed of Assignment valid?
2. Was the action for recission of lease agreement filed on time?

RULING:
1. Yes, it is valid. The Court sustains the validity of the deed of assignment
upon which Raval anchored his claims against the subject properties and
contract of lease. By being the assignee under the deed, Raval obtained
the rights, interests and privileges of his predecessors-in-interest over the
property, including the right to seek the rescission of the agreement, should
valid grounds exist to support it. Essentially, it is also a challenge upon the
TCTs that were already issued by the Register of Deeds. By law and
jurisprudence, these TCTs that have been issued by virtue of the
assignment, however, cannot be collaterally attacked by Peralta in this
case.
2. No. There are various provisions under the NCC that apply to rescissions
of contracts. It must be emphasized though that specifically on the matter
of rescission of lease agreements, Article 1659 of the NCC applies as a rule.
It reads: Article 1659. If the lessor or the lessee should not comply with the
obligations set forth in Articles 1654 and 1657, the aggrieved party may ask

244
for the rescission of the contract and indemnification for damages, or only
the latter, allowing the contract to remain in force. Given the rules that
exclusively apply to leases, the other provisions of the NCC that deal with
the issue of rescission may not be applicable to contracts of lease. Peralta's
reference to Article 1389, when he argued that Raval's action had already
prescribed for having been filed more than four years. after the execution of
the lease contract in 1974, is misplaced. For the same reason, Peralta erred
in arguing that Raval's action should only be deemed a subsidiary remedy,
such that it could not have been validly instituted if there were other legal
means for reparation. Article 1389 applies to rescissions in Articles 1380
and 1381, which are distinct from rescissions of lease under Article 1659.

245
INTERNATIONAL EXCHANGE BANK V. BRIONES
G.R. No. 205657 March 29, 2017
LEONEN, J

Thesis:
International Exchange Bank (now Union Bank of the Philippines) filed a complaint
for replevin and/or sum of money against the Spouses Jerome and Quinnie Briones and
a person named John Doe for defaulting in paying the monthly amortizations of the
mortgaged vehicle.
Facts:
In July 2003, the Spouses Jerome and Quinnie Briones (Spouses Briones) took
out a loan of P3,789,216.00 from International Exchange Bank (iBank) to purchase a
BMW Z4 Roadster. The Spouses Briones executed a promissory note with chattel
mortgage that required them to take out an insurance policy on the vehicle. The
promissory note also gave iBank, as the Spouses Briones’ attorney-in-fact, irrevocable
authority to file an insurance claim in case of loss or damage to the vehicle. The insurance
proceeds were to be made payable to iBank.
During the night of November 5, 2003, the mortgaged vehicle was carnapped by
three armed men in front of Metrobank Banlat Branch in Quezon City. Jerome Briones
immediately reported the incident to the Philippine National Police Traffic Management
Group.
The Spouses Briones declared the loss to iBank, which instructed them to continue
paying the next three monthly installments “as a sign of good faith,” a directive they
complied with. After finishing paying the three-month installment, in March 2004, Spouses
Briones received a letter from iBank demanding full payment of the lost vehicle. In April
2004, the Spouses Briones submitted a notice of claim with their insurance company,
which denied the claim in June 2004 due to the delayed reporting of the lost vehicle.
In May 2004, iBank filed a complaint for replevin and/or sum of money with
damages against the Spouses Briones and a person named John Doe based on the clear
wording the in executed promissory note. The Complaint alleged that the Spouses
Briones defaulted in paying the monthly amortizations of the mortgaged vehicle.
With regards to the insurance coverage, iBank asserts that it was the duty of the
respondents to file a claim with the insurance company. It also posits that respondent
Jerome’s direct dealing with the insurance company was a revocation of the agency
relationship between petitioner and respondents.
Respondents, on the other hand, insist that when the mortgaged vehicle was
carnapped, and iBank, as the agent, should have asserted its right “to collect, demand
and proceed against the [insurance company].” They also maintain that iBank failed to
exercise the “degree of diligence required [of it considering] the fiduciary nature of its
relationship with its client[s].”
Issue:
Is the agency relationship between iBank and Spouses Briones revoked and
terminated by the direct dealing of Jerome with the insurance company?
Held:

246
 No. The Supreme Court ruled that agency relationship between iBank and
Spouses Briones is not revoked and terminated by the direct dealing of Jerome with the
insurance company.
The Court explains that, in a contract of agency, “a person binds himself to render
some service or to do something in representation or on behalf of another, with the
consent or authority of the latter.” Furthermore, Article 1884 of the Civil Code provides
that “the agent is bound by his acceptance to carry out the agency, and is liable for the
damages which, through his nonperformance, the principal may suffer.”
Moreover revocation as a form of extinguishing an agency under Article 1924 of
the Civil Code only applies in cases of incompatibility, such as when the principal
disregards or bypasses the agent in order to deal with a third person in a way that
excludes the agent. Article 1924 states that “The agency is revoked if the principal
directly manages the business entrusted to the agent, dealing directly with third persons.”
In the instant case, the Spouses Briones were constrained to file a claim for loss
with the insurance company on April 30, 2004, precisely because petitioner failed to do
so despite being their agent and being authorized to file a claim under the insurance
policy. Not surprisingly, the insurance company declined the claim for belated filing. Thus,
the Spouses Briones’ claim for loss cannot be seen as an implied revocation of the agency
or their way of excluding petitioner. They did not disregard or bypass petitioner when they
made an insurance claim; rather, they had no choice but to personally do it because of
their agent’s negligence. This is not the implied termination or revocation of an agency
provided for under Article 1924 of the Civil Code.
While a contract of agency is generally revocable at will as it is primarily based on
trust and confidence, Article 1927 of the Civil Code provides that an agency cannot be
revoked if a bilateral contract depends upon it, or if it is the means of fulfilling an obligation
already contracted, or if a partner is appointed manager of a partnership in the contract
of partnership and his removal from the management is unjustifiable.
A bilateral contract that depends upon the agency is considered an agency
coupled with an interest, making it an exception to the general rule of revocability at will.
By virtue of the promissory note which authorized iBank to claim, collect, and apply
the insurance proceeds towards the full satisfaction of their loan if the mortgaged vehicle
were lost or damaged, a bilateral contract clearly exists between the parties making the
agency irrevocable.
Considering all the foregoing, the Supreme Court declared that there is no implied
revocation of agency between iBank and Spouses Briones.

247
DEVELOPMENT BANK OF THE PHILIPPINES v. STA. INES MELALE FOREST
PRODUCTS CORPORATION
G.R. No. 193068, February 01, 2017, LEONEN, J.

FACTS:

In 1977, Galleon, was organized to operate a liner service between the Philippines and
its trading partners." Galleon's major stockholders were respondents and the Philippine
National Construction Corporation (PNCC). Galleon experienced financial difficulties and
had to take out several loans from different sources such as foreign financial institutions,
its shareholders, and other entities "with whom it had ongoing commercial relationships."

DBP guaranteed Galleon's foreign loans. In return, Galleon and its stockholders
executed a Deed of Undertaking on October 10, 1979 and obligated themselves to
guarantee DBP's potential liabilities. To secure DBP's guarantee, Galleon undertook to
secure a first mortgage on its five new vessels and two second-hand vessels. However,
despite the loans extended to it, "[Galleon's] financial condition did not improve."

On August 10, 1981, pursuant to Letter of Instructions No. 1155, Galleon's stockholders,
represented by Cuenca, and NDC, through its then Chairman of the Board of Directors,
Roberto V. Ongpin (Ongpin) entered into a Memorandum of Agreement, where NDC and
Galleon undertook to prepare and sign a share purchase agreement covering 100% of
Galleon's equity. The purchase price was to be paid after five years from the execution of
the share purchase agreement. The share purchase agreement also provided for the
release of Sta. Ines, Cuenca, Tinio and Construction Development Corporation of the
Philippines from the personal counter-guarantees they issued in DBP's favor under the
Deed of Undertaking.

Acting as Galleon's guarantor, DBP paid off Galleon's debts to its foreign bank creditors
and, on January 25, 1982, pursuant to the Deed of Undertaking, Galleon executed a
mortgage contract over seven of its vessels in favor of DBP. NDC took over Galleon's
operations "even prior to the signing of a share purchase agreement.” However, despite
NDC's takeover, the share purchase agreement was never formally executed. On
February 10, 1982, or barely seven months from the issuance of Letter of Instructions No.
1155, President Marcos issued Letter of Instructions No. 1195.

On September 16, 2003, the Regional Trial Court upheld the validity of Letter of
Instructions No. 1155 and the Memorandum of Agreement executed by NDC and
Galleon's stockholders, pursuant to Letter of Instructions No. 1155. As regards NDC's
argument that Sta. Ines, Cuenca, Tinio, Cuenca Investment, and Universal Holdings had
no basis to compel it to pay Galleon's shares of stocks because no share purchase
agreement was executed, the Regional Trial Court held that the NDC was in estoppel
since it prevented the execution of the share purchase agreement and had admitted to
being Galleon's owner. The Regional Trial Court also ruled that Sta. Ines, Cuenca, Tinio,
Cuenca Investment, and Universal Holdings' liability to DBP under the Deed of

248
Undertaking had been extinguished due to novation, with NDC replacing them and PNCC
as debtors.

ISSUE:

Is the MOA novated the deed of undertaking executed between DBP and respondents?

RULING:

No, there is no novation, since there was no animus novandi between DBP and
respondents.

It should be noted that in order to give novation its legal effect, the law requires that the
creditor should consent to the substitution of a new debtor. This consent must be given
expressly for the reason that, since novation extinguishes the personality of the first
debtor who is to be substituted by a new one, it implies on the part of the creditor a waiver
of the right that he had before the novation, which waiver must be expressed under the
principle that renunciation non praesumitur, recognized by the law in declaring that a
waiver of right may not be performed unless the will to waive is indisputably shown by
him who holds the right.

The Court of Appeals erred when it ruled that DBP was privy to the Memorandum of
Agreement since Ongpin was concurrently Governor of DBP and chairman of NDC Board
of Directors at the time the Memorandum of Agreement was signed. Aside from Ongpin
being the concurrent head of DBP and NDC at the time the Memorandum of Agreement
was executed, there was no proof presented that Ongpin was duly authorized by the DBP
to give consent to the substitution by NDC as a co-guarantor of Galleon's debts. Ongpin
is not DBP, therefore, it is wrong to assume that DBP impliedly gave its consent to the
substitution simply by virtue of the personality of its Governor.

Novation is never presumed. The animus novandi, whether partial or total, "must appear
by express agreement of the parties, or by their acts which are too clear and unequivocal
to be mistaken."

There was no such animus novandi in the case at bar between DBP and respondents,
thus, respondents have not been discharged as Galleon's co-guarantors under the Deed
of Undertaking and they remain liable to DBP.

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SPOUSES ROMEO PAJARES and IDA T. PAJARES vs. REMARKABLE LAUNDRY
AND DRY CLEANING, represented by ARCHEMEDES G. SOLIS
G.R. No. 212690, February 20, 2017
DEL CASTILLO, J.

Facts: On September 3, 2012, Remarkable Laundry and Dry Cleaning (respondent) filed
a Complaint denominated as “Breach of Contract and Damages” against spouses Romeo
and Ida Pajares (petitioners) before the RTC, which was docketed as Civil Case No. CEB-
39025. Respondent alleged that it entered into a Remarkable Dealer Outlet Contract with
petitioners whereby the latter, acting as a dealer outlet, shall accept and receive items or
materials for laundry which are then picked up and processed by the former in its main
plant or laundry outlet; that petitioners violated Article IV (Standard Required Quota &
Penalties) of said contract, which required them to produce at least 200 kilos of laundry
items each week, when, on April 30, 2012, they ceased dealer outlet operations on
account of lack of personnel; that respondent made written demands upon petitioners for
the payment of penalties imposed and provided for in the contract, but the latter failed to
pay; and, that petitioners’ violation constitutes breach of contract.

Issue: Is the complaint of the respondent, although denominated as one for breach of
contract which will give rise to either specific performance or rescission, is essentially one
for simple payment of damages?

Held: Respondent’s complaint denominated as one for “‘Breach of Contract &Damages”

is neither an action for specific performance nor a complaint for rescission of contract.
Breach of contract may give rise to an action for specific performance or rescission of
contract. It may also be the cause of action in a complaint for damages filed pursuant to
Art. 1170 of the Civil Code. In the specific performance and rescission of contract cases,
the subject matter is incapable of pecuniary estimation, hence jurisdiction belongs to the
Regional Trial Court (RTC). In the case for damages, however, the court that has
jurisdiction depends upon the total amount of the damages claimed.
The Court grants the Petition. The RTC was correct in categorizing Civil Case No. CEB-
39025 as an action for damages seeking to recover an amount below its jurisdictional
limit.
In ruling that respondent’s Complaint is incapable of pecuniary estimation and that the
RTC has jurisdiction, the CA comported itself with the following ratiocination:

A case for breach of contract [sic] is a cause of action either for specific performance or
rescission of contracts. An action for rescission of contract, as a counterpart of an action
for specific performance, is incapable of pecuniary estimation, and therefore falls under
the jurisdiction of the RTC.

Without, however, determining whether, from the four corners of the Complaint,
respondent actually intended to initiate an action for specific performance or an action for
rescission of contract. Specific performance is the remedy of requiring exact performance
of a contract in the specific form in which it was made, or according to the precise terms
agreed upon. It is the actual accomplishment of a contract by a party bound to fulfill it.”

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Rescission of contract under Article 1191 of the Civil Code, on the other hand, is a remedy
available to the oblige when the obligor cannot comply with what is incumbent upon him.
It is predicated on a breach of faith by the other party who violates the reciprocity between
them. Rescission may also refer to a remedy granted by law to the contracting parties
and sometimes even to third persons in order to secure reparation of damages caused
them by a valid contract; by means of restoration of things to their condition in which they
were prior to the celebration of the contract.

An analysis of the factual and material allegations in the Complaint shows that there is
nothing therein which would support a conclusion that respondent’s Complaint is one for
specific performance or rescission of contract. It should be recalled that the principal
obligation of petitioners under the Remarkable Laundry Dealership Contract is to act as
respondent’s dealer outlet. Respondent, however, neither asked the RTC to compel
petitioners to perform such obligation as contemplated in said contract nor sought the
rescission thereof. The Complaint’s body, heading, and relief are bereft of such allegation.
In fact, neither phrase appeared on or was used in the Complaint when, for purposes of
clarity, respondent’s counsels, who are presumed to be learned in law, could and should
have used any of those phrases to indicate the proper designation of the Complaint. To
the contrary, respondent’s counsels designated the Complaint as one for “Breach of
Contract & Damages,” which is a misnomer and inaccurate. This erroneous notion was
reiterated in respondent’s Memorandum wherein it was stated that “the main action is one
for a breach of contract.” There is no such thing as an “action for breach of contract.”
Rather, “breach of contract is a cause of action, but not the action or relief itself” Breach
of contract may be the cause of action in a complaint for specific performance or
rescission of contract, both of which are incapable of pecuniary estimation and, therefore,
cognizable by the RTC. However, as will be discussed below, breach of contract may
also be the cause of action in a complaint for damages.

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G.R. No. 212038. February 8, 2017.*

SPOUSES JESUS FERNANDO and ELIZABETH S. FERNANDO, petitioners, vs.

NORTHWEST AIRLINES, INC., respondent.

G.R. No. 212043. February 8, 2017.*

NORTHWEST AIRLINES, INC., petitioner, vs. SPOUSES JESUS FERNANDO and

ELIZABETH S. FERNANDO, respondents.

PERALTA, J.:

Facts:

This case is a consolidation of the petitions filed by Spouses Jesus Fernando and
Elizabeth S. Fernando vs Northwest Airlines; and Northwest Airlines vs Spouses Jesus
Fernando and Elizabeth S. Fernando, claiming that Northwest Airlines is liable for breach
of contract of carriage.

The Fernando’s are holders of Elite Platinum World Perks Card, the highest category
given to frequent flyers of the carrier and are known in the Philippines for being owners
of various businesses in the country. On December 20, 2001, Jesus Fernando was given
only a 12-day stay in the USA by the Immigration officer due to the fact that Northwest
Airline employee Linda Puntawongdaycha’s negligence and malfeasance. On the way
back to the Philippines, when the Fernando’s were about to board the plane, departure
office of Northwest Airlines Linda Tang, prevented them from boarding the plane
demanding for the presentation of their coupon tickets. This misunderstanding caused
the Fernandos miss the flight and was scheduled to the flight the following day. The
Fernandos claim for damages for the embarrassment, moral damages, and stress these
incidents have caused the family. Given the fact that the Fernandos are well-known
businesspeople in the Philippines, and that they are good customers of the airline,
Northwest Airlines should have given them “special treatment”. In the statement of
Northwest Airlines, the Linda Puntawongchayda and Linda Tang acted with due diligence
and did their best to perform their duty and assist the Fernandos in the best way they can,
claiming that the Fernando’s acted with malice in the filing of the case.

Issue:

Is the claim for damages of the Fernando’s valid? Did the employees of Northwest
Airlines- Linda Puntawongchayda and Linda Tang act in bad faith and malfeasance of
their function?

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Ruling:

The court ruled in favor of the Fernandos. The decision of the RTC and CA was affirmed
with modifications. It stated that the existence of a “contract of carriage” and a breach of
contract allows the aggrieved party a claim for moral damages. The Fernando’s only had
to prove the existence of a contact, in this case, the boarding passes. Considering the
Fernandos are frequent flyers of the airline, the latter should have been more corteous
and accommodating to the needs so that the delay and inconviniences have been
avoided. Moral damages, exemplary damages, attorney’s fees were awarded.

253