2018

January 2018

Ramon Reyes v. Bancom Development Corp

G.R. No. 190286, January 25, 2018
Decided by the First Division
Ponente: Cj Sereno
Nature of Action: Petition for Review on Certiorari Under Rule 45
Guaranty

Facts:
Angel E.Reyes,Sr., Florencio Reyes, Jr., Rosario R. Du, Olivia Arevalo, and the
two petitioners herein, Ramon E, Reyes and Clara R. Pastor (“Reyes Group”) executed
a Continuing Guaranty in favor the respondent Bancom.

The Continuing Guaranty states that the the Reyes Group agreed to guarantee the
full and due payment of obligations incurred by Marbella under an Underwriting
Agreement with Bancom. These obligations included certain Promissory Notes ("PN")
issued by Marbella in favor of Bancom in May 1979.

Marbella defaulted on the payment of the PNs. Aggrieved, Bancom filed a

Complaint for Sum of Money with a prayer for damages before the RTC of Makati.

In their defense, Marbella and the Reyes Group argued that they had been forced
to execute the PNs and the Continuing Guaranty against their will. They also alleged that
the foregoing instruments should be interpreted in relation to earlier contracts pertaining
to the development of a condominium project known as "Marbella II".

Under the Marbella II, Reyes Group's land would be utilized for the building of a
condominium by the Bancom's sister company, Fereit Realty Development Corporation
("Feriet"). The Marbella II suffered financial difficulties; thus, the Reyes Group was
allegedly forced to enter into a Memorandum of Agreement to take on part of the loans
obtained by Fereit from Bancom for the development of the project.

RTC held Marbella and the Reyes Group solidarily liable to Bancom for the PNs.
CA denied the appeal citing the undisputed fact that Marbella and the Reyes Group failed
to comply with their obligations under the PNs and the Continuing Guaranty. The CA
rejected the assertion that noncompliance was justified by the
earlier agreements entered into by the parties.

Thereafter, the Reyes Group filed a Motion for Reconsideration. They reiterated
their argument that the Promissory Notes were not meant to be binding, given that the
funds released to Marbella by Bancom were not loans, but merely additional financing.

The CA denied the said Motion; hence, this instant Petition.

Issue: Whether the Reyes Group is liable to Bancom for (a) the payment of the loan
amounts indicated on the Promissory Notes issued by Marbella; and (b) attorney's fees
Held: WHEREFORE, the Petition for Review is hereby DENIED, and the Decision dated
25 June 2009 and the Resolution dated 9 November 2009 issued by the Court of Appeals
in CA-G.R. CV No. 45959 are AFFIRMED with MODIFICATION.

Ratio:
As guarantors of the loans of Marbella, the Reyes Group are liable to Bancom. The
obligations of Marbella and the Reyes Group under the PNs and the Continuing Guaranty,
respectively, are plain and unqualified. Under the PNs, Marbella promised to pay Bancom
the amounts stated on the maturity dates indicated. 50 The Reyes Group, on the other
hand, agreed to become liable if any of Marbella's guaranteed obligations were not duly
paid on the due date. There is absolutely no support for the assertion that these
agreements were not meant to be binding.

The Court rules that the award of P500,000 for attorney's fees in order, pursuant
to the stipulation in the Promissory Notes allowing the recovery thereof. Nevertheless, in
the interest of equity and considering that petitioners are already liable for penalties, we
deem it proper to modify the stipulated rate of interest to conform to the legal interest
rates under prevailing jurisprudence.

UNITED COCONUT PLANTERS BANK, Petitioner vs. SPOUSES WALTER UY AND

LILY UY,
G.R. No. 204039, January 10, 2018
Decided by the Third Division
Ponente: MARTIRES, J
Nature of Action: Petition for review on certiorari under Rule 45
Contracts/Credit Transactions; Assignment of Credit

Facts:
Prime Town Property Group, Inc. (PPGI) and E. Ganzon Inc. were the joint
developers of the Kiener Hills Mactan Condominium Project (Kiener Hills). In 1997,
spouses Walter and Lily Uy (respondents) entered into a Contract to Sell with PPGI for a
unit in Kiener Hills.

PPGI and petitioner United Coconut Planters Bank (UCPB) executed the following:
Memorandum of Agreement (MOA), and Sale of Receivables and Assignment of Rights
and Interests. By virtue of the said agreements, PPGI transferred the right to collect the
receivables of the buyers, which included respondents, of units in Kiener Hills. The parties
entered into the said agreement as PPGI's partial settlement of its loan with UCPB.

The Housing and Land Use Regulatory Board Regional Office (HLURB Regional
Office) received respondents' complaint for sum of money and damages against PPGI
and UCPB. They claimed that in spite of their full payment of the purchase price, PPGI
failed to complete the construction of their units in Kiener Hills.

HLURB Regional Office: found that respondents were entitled to a refund in view
of PPGI' s failure to complete the construction of their units. Nonetheless, it found that
UCPB cannot be solidarily liable with PPGI because only the accounts receivables were
conveyed to UCPB and not the entire condominium project.
 HLURB Board Div: found UCPB solidarily liable with PPGI because it stepped
into the latter's shoes insofar as Kiener Hills is concerned pursuant to the MOA between
them. It noted that UCPB was PPGI's successor-in-interest, such that the delay in the
completion of the condominium project could be attributable to it and subject it to liability.
The HLURB Board ruled that as PPGI's assignee, UCPB was bound to refund the
payments made, without prejudice to its right of action against PPGI.

Office of the President: affirmed the decision of the HLURB Board.

CA: affirmed with modification the OP decision. While the CA agreed that
respondents are entitled to a full refund of the payments they may have made, it ruled
that UCPB is not solidarily liable with PPGI, and as such cannot be held liable for the full
satisfaction of respondents' payments. It limited UCPB's liability to the amount
respondents have paid upon the former's assumption as the party entitled to receive
payments or on 23 April 1998 when the MOA and AIR Agreement were made between
UCPB and PPGI.

Issue:
whether, under the Agreement between Primetown and UCPB, UCPB assumed the
liabilities and obligations of Primetown under its contract to sell with Spouses Choi.

Held:WHEREFORE, the 23 May 2012 Decision of the Court of Appeals m CA-G.R. SP

No. 118534 is AFFIRMED with MODIFICATION. Petitioner United Coconut Planters Bank
shall pay the amount of ₱157,757.82 to Spouses Walter and Lily Uy, with legal interest at
six percent (6%) per annum, without prejudice to any action which the parties may have
against Prime Town Property Group, Inc

Ratio:
UCPB only jointly liable to PPGI in
reimbursing unit owners of Kiener Hills.

An assignment of credit has been defined as an agreement by virtue of which the

owner of a credit, known as the assignor, by a legal cause - such as sale, dation in
payment or exchange or donation - and without need of the debtor's consent, transfers
that credit and its accessory rights to another, known as the assignee, who acquires the
power to enforce it to the same extent as the assignor could have enforced it against the
debtor. In every case, the obligations between assignor and assignee will depend upon
the judicial relation which is the basis of the assignment. An assignment will be construed
in accordance with the rules of construction governing contracts generally, the primary
object being always to ascertain and carry out the intention of the parties. This intention
is to be derived from a consideration of the whole instrument, all parts of which should be
given effect, and is to be sought in the words and language employed.

The Agreement between Primetown and UCPB conveys the straightforward

intention of Primetown to "sell, assign, transfer, convey and set over" to UCPB the
receivables, rights, titles, interests and participation over the units covered by the
contracts to sell. It explicitly excluded any and all liabilities and obligations, which
Primetown assumed under the contracts to sell. The intention to exclude Primetown's
liabilities and obligations is further shown by Primetown's subsequent letters to the
buyers, which stated that "this payment arrangement shall in no way cause any
amendment of the other terms and conditions, nor the cancellation of the Contract to Sell
you have executed with [Primetown]." x x x (emphasis and underlining supplied)

FEBRUARY 2018

SPOUSES CIPRIANO PAMPLONA AND BIBIANA INTAC, PETITIONERS, VS.

SPOUSES LILIA I. CUETO AND VEDASTO CUETO, RESPONDENTS.
G.R. No. 204735, February 19, 2018
Decided by the Third Division
Ponente: J. Bersamin
Nature of Action: Petition for Review on Certiorari Under Rule 45
Sales

Facts:

The respondents Sps. Lilia I. Cueto and Vedasto Cueto filed for specific
performance, conveyance, consignation and damages before the RTC, Batangas City
against the petitioners Sps. Cipriano Pamplona and Bibiana Intac.

It appears that in this case, there were conflicting claims between the parties
involving their transaction over a parcel of land and its improvements.The petitioners
insisted that the amounts paid by the respondents to them were in payment of the latter's
indebtedness for a previous loan. The respondents on the other hand claimed that they
had purchased the property on installment pursuant to an oral contract to sell with the
petitioners.

RTC: Ruled in favor of the Petitioners. It held that:

1. the respondents did not prove the existence of the partially executed contract to
sell involving the property;
2. neither documentary nor object evidence confirmed the supposed partially
executed contract to sell; and
3. the respondents accordingly failed to support their cause of action by
preponderance of evidence.

CA: Ruled in favor of the Respondents.It held that:

1. the respondents presented sufficient evidence to establish that petitioner
Bibiana and her sister, respondent Lilia, had entered into an oral contract to sell;
2. their oral contract, being partially executed by virtue of Lilia's partial payments
to Bibiana, removed the contract from the application of the Statute of Frauds;
3. the transfer of the property in favor of Redima, represented by the petitioners'
counsel, Atty. Dimayacyac, by virtue of the deed of transfer of rights, was null and
void for being violative of Article 1491 of the Civil Code.

Issue: Whether the CA is correct in ruling the above-stated- Yes

Held:WHEREFORE, the Court DENIES the petition for review on certiorari; AFFIRMS
the decision promulgated on December 3, 2012; and ORDERS the petitioners to pay the
cost of suit.SO ORDERED

Ratio:
The Court held that the existence of the partially executed contract to sell between
Bibiana and Lilia was sufficiently established. It is uncontested that Lilia sent money to
Bibiana. 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. Also,
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.

The petitioners have contended that the sums of money received from Lilia were
payments of the latter's obligations incurred in the past; that the admission by Roilan and
his wife that the petitioners owned the property negated the absence of the contract to
sell; and that the admission by Vedasto that the petitioners owned the property was an
admission against interest that likewise belied the contract to sell between Lilia and
Bibiana.

The Court found these contentions umeritorious because of the following reasons:

1. Bibiana failed to to prove her allegation in the answer that the money sent to her by
Lilia was in payment of past debts. Bibiana has theburden of proof pursunat to the
principle that each party must prove her affirmative allegations.

2. Roilan's and VEdasto's admissions were consistent with the existence of the oral
contract to sell between Lilia and Bibiana. Under the oral contract to sell, the ownership
had yet to pass to Lilia, and Bibiana retained ownership pending the full payment of the
purchase price agreed upon.

3. Roilan's failure 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. It is basic that the rights of a party cannot
be prejudiced by an act, declaration, or omission of another. Res inter alios acta alteri
nocere non debet. As an exception to the rule, the act or declaration made in the presence
and within the hearing or observation of a party who does or says nothing may be
admitted as evidence against a party who fails to refute or reject it. This is known as
"admission by silence" and is covered by Rule 130 of the Rules of Court.

In the context of the norms set by jurisprudence for the application of the rule on
admission by silence, Lilia could not be properly held to have admitted by her silence her
lack of interest in the property. On the contrary, the records reveal otherwise. Upon her
return to the country, she communicated with Bibiana on the terms of payment, and
immediately took steps to preserve her interest in the property by annotating the adverse
claim in the land records, and by commencing this suit against the petitioners. Such
affirmative acts definitively belied any claim of her being silent in the face of the assault
to her interest.

MARCH 2018
Intramuros Administration Vs. Offshore Construction Development Contract of
Lease
G.R. No. 196795. March 7, 2018
Decided by: Third Division
Ponente: Leonen J.
Nature of Action: Petition for Review on Certiorari Under Rule 45
Topics: Obligations and Contracts; Lease | (1) Action for Specific Performance, (2)
Principle of Unjust Enrichment, and (3) Supremacy of the Right of a Sublessor over its
Sublessee

Facts:

In 1998, Intramuros have the national government’s real properties (i.e., Baluarte
De San Andres; Baluarte De San Francisco De Dilao; Revellin De Recoletos) leased to
Offshore Construction. These were leased for five (5) years, from September 1, 1998 to
August 31, 2003 subject to lease renewals every five (5) years upon the parties' mutual
agreement.

The Intramuros and the Department of Tourism halted the Offshore Construction’s
projects of improvements because the latter did not comply with P.D. No. 1616 requiring
the 16th to 19th centuries' Philippine-Spanish architecture in the area. This prompted the
Offshore Construction to file a complaint with prayer for preliminary injunction and
temporary restraining order against Intramuros and the Department of Tourism before the
Manila RTC.

Eventually, the parties executed a Compromise Agreement in 1999 approved by

the RTC. This extended the Offshore Construction’s lease period. During the lease
period, the Offshore Construction failed to pay its utility bills and rental fees, despite
several demand letters. Because of this, Intramuros filed a Complaint for Ejectment
before the Manila Metropolitan Trial Court (“MTC”).

It appears, however, that two cases have been filed before- (1) Civil Case for
specific performance filed by the Offshore Construction against Intramuros, and (2)
Special Proceedings Case for interpleader against Offshore Construction and Intramuros
filed by 4H Intramuros, Inc. (4H Intramuros), which claimed to be a group of the Offshore
Construction's tenants.

Considering the foregoing, the Offshore Construction is contending that the said
Complaint for Ejectment must be dismissed because of forum-shopping.

As its defense, Intramuros avers that it did not commit forum shopping warranting
the dismissal of its complaint. It claims that while there were pending specific performance
and interpleader cases related to the ejectment case, Intramuros was not guilty of forum
shopping since it instituted neither action and did not seek a favorable ruling as a result
of an earlier adverse opinion in these cases.Intramuros points out that it was the Offshore
Construction and 4H Intramuros which filed the specific performance and interpleader
cases, respectively. In both cases, Intramuros was the defendant and did not seek
possession of Puerta de Isabel II as a relief in its answers to the complaints.

The MTC dismissed the Complaint for Ejectment where the issue of the case
stems from.

Issue:
Whether the specific performance case and the interpleader case constituted
forum shopping by Intramuros, the MTC erred in dismissing its Complaint for Ejectment-
No.

Held:
WHEREFORE, the Petition for Review on Certiorari is GRANTED. The April 14,
2011 Decision of Branch 173, Regional Trial Court, Manila in Civil Case No. 10-124740
is REVERSED AND SET ASIDE, and a new decision is hereby rendered ordering
respondent Offshore Construction and Development Company and any and all its
sublessees and successors-in-interest to vacate the leased premises immediately.
Branch 37, Regional Trial Court, Manila is DIRECTED to resolve Civil Case No. 08-
119138 with dispatch.

Ratio:

As regards the Specific Performance Case.

Intramuros cannot be faulted for raising the issue of unpaid rentals in the specific
performance case or for raising the same issue in the present ejectment case, since it
appears that the Offshore Construction's alleged failure to pay the rent led to the
nonrenewal of the Contracts of Lease. However, it must be emphasized that any recovery
made by petitioner of unpaid rentals in either its ejectment case or in the specific
performance case must bar recovery in the other, pursuant to the principle of unjust
enrichment.

As regards the Interpleader Case.

A judgment in the Complaint for Interpleader will not be res judicata against the
ejectment complaint. The plaintiff in the interpleader case, 4H Intramuros, allegedly
representing the tenants occupying Puerta de Isabel II are the Offshore Construction's
sublessees. A sublessee cannot invoke a superior right over that of the sublessor. A
judgment of eviction against respondent will affect its sublessees since the latter's right
of possession depends entirely on that of the former .A complaint for interpleader by
sublessees cannot bar the recovery by the rightful possessor of physical possession of
the leased premises.

Citystate Savings Bank Vs. Teresita Tobias and Shellidie Valdez

G.R. No. 227990. March 7, 2018
Decided by: Second Division
Ponente: Reyes, Jr. J.
Nature of Action: Petition for Review on Certiorari Under Rule 45
Topic: Guaranty | Contract of Guaranty

Facts:

In January 1997 and April 1997, Teresita Buenaventura (“Teresita”) executed 2

Promissory Notes (i.e., PN No. 232663; PN No. 232711) payable to Metropolitan Bank
and Trust Company (“MBTC”).

Despite demands, the PNs remained unpaid. Consequently, MBTC filed an action
against Teresita for recovery of said amounts, interest, penalty and attorney's fees before
the RTC,Makati City (Branch 61).

In the Answer, Teresita averred that in 1997, she received from her nephew, Rene
Imperial (“Rene”), three postdated checks drawn against MBTC, as partial payments for
the purchase of her properties. Teresita rediscounted the subject checks with MTBC, for
which she was required to execute the PNs to secure payment thereof; and that she is a
mere guarantor and cannot be compelled to pay unless and until appellee shall have
exhausted all the properties of Imperial.

Issue:
Whether the PNs are intended as mere guaranty to secure Rene's payment of the
rediscounted checks. Hence, being a mere guarantor, the action against Teresita under
the PNs is premature- NO

Held: WHEREFORE, the Court AFFIRMS the decision promulgated on April 23, 2004
with the MODIFICATION that the petitioner shall pay to the respondent: (1) the principal
sum of PI,500,000.00 under Promissory Note No. 232711, plus interest at the rate of
14.239% per annum commencing on August 3, 1998 until fully paid; (2) the principal sum
of PI,200,000.00 under Promissory Note No. 232663, plus interest at the rate of 17.532%
per annum commencing on August 3, 1998 until fully paid; (3) penalty interest on the
unpaid principal amounts at the rate of 18% per annum commencing on August 3, 1998
until fully paid; (4) legal interest of 6% per annum on the interests commencing from the
finality of this judgment until fully paid; (5) attorney's fees equivalent to 10% of the total
amount due to the respondent; and (6) costs of suit. SO ORDERED.

Ratio:
A contract of guaranty is one where a person, the guarantor, binds himself or
herself to another, the creditor, to fulfill the obligation of the principal debtor in case of
failure of the latter to do so. It cannot be presumed, but must be express and in writing to
be enforceable, especially as it is considered a special promise to answer for the debt,
default or miscarriage of another. In this case, the PNs were silent about the supposed
guaranty in favor of Rene. The PNs be must read literally especially that there were no
ambiguities in their language and meaning. In other words, Teresita could not validly insist
on the guaranty. In addition, the disclosure statements and the statements of loan release
undeniably identified her, as the borrower in the transactions. Under such established
circumstances, she was directly and personally liable for the obligations under the
promissory notes.
MANUEL L. BAUTISTA, SPOUSES ANGEL SAHAGUN and CARMELITA BAUTISTA,
and ANIANO L. BAUTISTA , Petitioners vs MARGARITO L. BAUTISTA, Respondent
Decided by: G.R. No. 202088, March 8, 2017
Ponente: PERALTA, J
Petition for Review under Rule 45
Agency, Trusts, and Partnerhsip; Implied Trust.

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 subject property.

The Bautista siblings - Margarito, Manuel L. Bautista (Margarito), 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.

Amelia V. Mendoza (Amelia) obtained a loan in the amount of P690,000.00 from

Florencia, and secured the same with a real estate mortgage over a 25,518-square-meter
parcel of land (subject property).

Two years after, Amelia allegedly sold the subject property to Margarito through a
Kasulatan ng Bilihang Tuluyan and, likewise, cancelled the loan through another
"Cancellation and Discharge of Mortgage.

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 over several properties against herein respondent Margarito, the
Spouses Marconi de Villa and Florencia Bautista, and the Spouses Senen Cabrera and
Ester Bautista. Petitioners averred that Margarito and the others refused to heed their
oral and written demands for the partition of the properties they co-owned, which included
the Sta. Monica property.

RTC-ruled in favor of the petitioners and declared that the Sta. Monica property
was commonly owned by the siblings. It also ordered that the property be partitioned
among all of them and that an accounting of its income be held.

CA- reversed the RTC ruling. The subject property under the name of Margarito
is declared exclusively owned by Margarito. Petitioners failed to establish that they are
coowners of the Sta. Monica property. It held that the TCT under Margarito's name was
an indefeasible and incontrovertible title to the property and has more probative weight
than the blank Kasulatan adduced by the petitioners. Consequently, petitioners' action for
partition and accounting cannot be acted upon because they failed to prove that they are
co-owners of the Sta. Monica property.

Issue:
Whether the subject property was exclusively owned by Margarito- No.Because there
was an implied trusts among the parties, the Bautista siblings.

Held: WHEREFORE, the petition is hereby GRANTED. The Decision dated March 6,
2012 and the Resolution dated May 25, 2012 of the Court of Appeals in CA-G.R. CV No.
93562 are REVERSED and SET ASIDE. Consequently, the Decision dated February 16,
2009 of the Regional Trial Court of San Pablo City, Branch 32, in Civil Case No. SP-
6064(04) is REINSTATED.

Ratio:
The title in the name of Margarito, although a certificate of title is the best proof of
ownership of a piece of land, the mere issuance of the same in the name of any person
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. The principle that a trustee who puts a certificate of registration in his name cannot
repudiate the trust by relying on the registration is one of the well-known limitations upon
a title.53

There is an implied trust when a property is sold and the legal estate is granted to
one party but the price is paid by another for the purpose of having the beneficial interest
of the property.This is sometimes referred to as a purchase money resulting trust, the
elements of which are: (a) an actual payment of money, property or services, or an
equivalent, constituting valuable consideration; and (b) such consideration must be
furnished by the alleged beneficiary of a resulting trust.

A trust, which derives its strength from the confidence one reposes on another
especially between families, does not lose that character simply because of what appears
in a legal document.56 From the foregoing, this Court finds that an implied resulting trust
existed among the parties. The pieces of evidence presented demonstrate their intention
to acquire the Sta. Monica property in the course of their business, just like the other
properties that were also the subjects of the partition case and the compromise
agreement they entered into. Although the Sta. Monica property was titled under the
name of Margarito, the surrounding circumstances as to its acquisition speak of the intent
that the equitable or beneficial ownership of the property should belong to the Bautista
siblings.

Jose T. Ong Bun Vs. Bank of the Philippine Islands

G.R. No. 212362. March 14, 2018
Decided by: Third Division
Ponente: Peralta J.
Nature of Action: Petition for Review on Certiorari Under Rule 45
Topics: Obligations and Contracts; Torts and Damages| (1) Payment as a mode of
extinguishing obligations; (2) Award of Moral Damages and Attorney’s Fees
Facts:
In 1989, Ma. Lourdes Ong (“Lourdes”) purchased three (3) silver custodian
certificates (CC) in the Sps. Ong's name (Lourdes and Jose) from the Far East Bank &
Trust Company ("FEBTC"). The CCs have the provisions: "This instrument is transferable
only in the books of the Custodian by the holder, or in the event of transfer, by the
transferee or buyer thereof in person or by a duly authorized attorney-in-fact upon
surrender of this instrument together with an acceptable deed of assignment. The Holder
hereof or transferee can withdraw at anytime during office hours his/her Silver Certificate
of Deposit herein held in custody. This instrument shall not be valid unless duly signed
by the authorized signatories of the Bank, and shall cease to have force and effect upon
payment under the terms hereof."

When Lourdes died, Jose discovered the CCs. At that time, FEBTC merged with
BPI after about eleven years since the said CCs were purchased. Jose proceeded to BPI
and demanded for the BPI’s payment of the CCs. The BPI refused to pay Jose’s claim
because his certificates were no longer outstanding in its records.

Thereafter, Ong’s filed a complaint for collection of sum of money and damages
against BPI with the RTC. The RTC granted Ong’s prayer but on appeal, the CA reversed
the RTC’s decision. Hence, the petition for review filed before the SC.

Issue:
1. Whether the Silver Certificates of Deposits could be considered to have been paid
by the FEBTC - No
2. Whether Jose is entitled to receive Moral Damages from the FEBTC - No.
3. Whether Jose is entitled to receive Attorney’s Fees from the FEBTC - No.

Held: WHEREFORE, the Petition for Review on Certiorari under Rule 45 of the Rules of
Court, dated May 22, 2014, of petitioner Jose T. Ong Bun, is GRANTED. Consequently,
the Decision dated September 25, 2012 and Resolution dated March 19, 2014 of the
Court of Appeals in CA-G.R. CV No. 02715 are REVERSED and SET ASIDE, and the
Decision dated June 5, 2008 of the Regional Trial Court, Branch 33, Iloilo City is
AFFIRMED and REINSTATED, with the MODIFICATION that the award of moral
damages, exemplary damages and attorney's fees be OMITTED.

Ratio:
1. The said CCs are proof that Silver Certificates of Deposits are in the custody of a
custodian, FEBTC. Ong's possession of the same CCs proves an outstanding
deposit. What proves the Ong's deposits are the Silver Certificates Deposits that
have been admitted by the Trust Investments Group of the FEBTC to be in its
custody as clearly shown by the wordings used in the subject CCs.

Also, there was no evidence that the Sps. Ong withdrew the said Silver Certificates
of Deposit. When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been extinguished by
payment devolves upon the debtor who offers such defense to the claim of the
creditor. an obligation may be extinguished by payment. However, two requisites
must concur: (1) identity of the prestation, and (2) its integrity. And in this case, no
 acknowledgment nor proof of full payment was presented by the FEBTC but
merely a pronouncement that there are no longer pay outstanding Silver
Certificates of Deposits in its books of accounts. Thus, the Silver Certificates of
Deposits could not be considered to have been paid.

2. The person claiming moral damages must prove the existence of bad faith by clear
and convincing evidence for the law always presumes good faith. It is not enough
that one merely suffered sleepless nights, mental anguish, serious anxiety as the
result of the actuations of the other party.

In this case, it appears that BPI had an honest belief that before its merger with
FEBTC, the subject CCs were already paid and cleared from its books, hence,
belying any claim that it acted in any manner that would warrant the grant of moral
and exemplary damages to the petitioner.

3. The award of attorney's fees must also be omitted. An award of attorney's fees
under Article 220826 demands factual, legal, and equitable justification to avoid
speculation and conjecture surrounding the grant thereof. The award of attorney's
fees is an exception rather than the general rule; thus, there must be compelling
legal reason to bring the case within the exceptions provided under Article 2208 of
the Civil Code to justify the award.

In this case, the RTC merely justified the grant of attorney's fees on the reasoning
that petitioner was forced to litigate. Thus, the present case does not fall within the
exception provided under Article 2208 of the Civil Code.

Norma M. Diampoc Vs. Jessie Buenaventura and the Register of Deeds for the
City of Taguig
G.R. No. 200383. March 19, 2018
Decided by: First Divsion
Ponente:Del Castillo, J.
Nature of the Case: Petition for Review on Certiorari Under Rule 45
Topic: Sales

Facts:

The Petitioners, Norma M. Diampoc and her husband Wilbur L. Diampoc (the
Diampocs) filed a Complaint for annulment of deed of sale and recovery of duplicate
original copy of title, with damages, against respondent Jessie Buenaventura
(Buenaventura) and the Registry of Deeds, Province of Rizal.

The Diampocs argue that the deed of sale in question suffers from defects relative
to its notarization, making it ineffective or null and void. They claim that the deed was not
signed by the parties before the notary public; that they were induced to sign it without
being given the opportunity to read its contents -believing that the document they were
signing was a mere authorization to obtain a bank loan; that it was notarized in their
absence; that there was only one Community Tax Certificate used for the both of them;
and that Buenaventura failed to present the notary public as her witness.
Issue:
1. Whether the prima facie presumption of regularity of notarized documents and
upholding the validity of the notarized deed of sale could be validly made
notwithstanding the undisputed fact that there were irregularities in the execution
and notarization of the deed of sale- Yes.
2. Whether there was a valid deed of sale- Yes.

Held:
WHEREFORE, the Petition is DENlED. The February 21, 2011 Decision and May 6, 2011
Resolution of the Court of Appeals in CA-G.R. CV No. 92453 are AFFIRMED in toto.

Ratio:

The ruling on the presumption of regularity of

notarized document is not that crucial in
determining whether there was a valid deed of
sale.

It must be remembered, however, that "the absence of notarization of the deed of

sale would not invalidate the transaction evidenced therein"; it merely "reduces the
evidentiary value of a document to that of a private document, which requires proof of its
due execution and authenticity to be admissible as evidence. "A defective notarization
will strip the document of its public character and reduce it to a private instrument.
Consequently, when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard normally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance
of evidence.

There was a valid deed of sale.

The Diampocs’ admission that they failed to exercise prudence can only be fatal
to their cause. They are not unlettered people possessed with a modicum of intelligence;
they are educated property owners capable of securing themselves and their property
from unwarranted intrusion when required. They knew the wherewithal of property
ownership. Their failure to thus observe the care and circumspect expected of them
precludes the courts from lending a helping hand, and so they must bear the
consequences flowing from their own negligence.

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

G.R. No. 193499, April 23, 2018
Decided by: SECOND DIVISION
Ponente: J. Reyes Jr.
Nature of Action: Petition for Review on Certiorari Under Rule 45
Topic: Pledge/Mortgage
Facts:
Victor T. Bollozos ("Bollozos") was the registered owner of a land in Mandaue City
("subject property"). He mortgaged the subject property to the petitioner Banco de Oro
Unibank, Inc. ("BDO") for World's Arts and Crafts, Inc.("WACI")

In 1994, Bollozos sold the property to VTL Realty Corporation ("VTL"). This was
supported by a Deed of Definite Sale with Assumption of Mortgage.

The BDO refused to accept VTL's payment. It did not recognize VTL as the new
owner of the subject property. For BDO, the loan obligation that Bollozos and/or WACI
contracted should be settled prior to any change in the ownership of the mortgaged
property.

Aggrieved, the VTL filed an action for specific performance with damages against
BDO with the RTC, Cebu City.In the course of the proceedings, the obligation remained
unpaid, prompting BDO to foreclose the real estate mortgage. The redemption period
expired and no redemption was made. Thus, the BDO consolidated ownership over the
property.

RTC and CA: Both ruled in favor of the VTL. Both directed 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 (computation must include the penalties
and interests); and directed VTL to pay Bollozos' obligation to BDO upon receipt of such
Statement of Account.

The VTL filed a Motion to Order Defendant to Correct Statement of Account

("subject motion"). Citing the case of the Development Bank of the Philippines vs.
Zaragoza, 174 Phil. 153 [1978], ("DBP vs. Zaragoza") as VTL's legal basis, the VTL said
that the interests and penalties due must only be up to April 28, 1995. The said date is
the registration date of the Certificate of Sale.

RTC- granted the subject motion.It agreed with the VTL's interpretation on the case
of DBP v. Zaragoza.
CA- reversed the RTC ruling.Per the CA's construal of DBP vs. Zaragoza, the
counting of interest must stop once the foreclosure proceedings have been completed by
the execution, acknowledgment, and recording of the Certificate of Sale in favor of the
purchaser.

Issue: Whether interest may be properly charged to the mortgagor after the completion
of the foreclosure sale- No.

Held: WHEREFORE, the petition is GRANTED. The Court of Appeals' Decision dated
May 31, 2010 and the Resolution dated August 18, 2010 in CA-G.R. SP. No. 04309 are
hereby REVERSED and SET ASIDE. The Orders dated January 8, 2009 and June 3,
2009 of the Regional Trial Court, Branch 58, Cebu City in Civil Case No. CEB-16554 are
hereby REINSTATED

Ratio:
 In PNB vs. CA 224 Phil. 499 (1985), the Court cited DBP v. Zaragoza. In PNB vs.
CA, the Court held that after the auction sale, the redemptioner mortgagor is no longer
bound to pay the interest agreed upon in the contract of mortgage, consistent with the
rules provided under Act No. 3135, as amended, which was then the governing law for
extrajudicial foreclosure of all real estate mortgages and which provides for the
computation of redemption price.

In the present case, there is no redemption price to speak of, since no right of
redemption was exercised. As the RTC found, VTL neither made a tender of payment nor
did it deposit any amount, if only to stop the running of interest and imposition of penalty
charges. VTL also did not make an effort pending the redemption period to redeem the
property from BDO, who became the absolute owner thereof. What VTL undoubtedly
wants is to purchase the property from BDO, not to redeem it, since the period for
redemption has already lapsed. Clearly, PNB vs. CA, like DBP vs. Zaragoza, is
inapplicable to VTL's situation.

it must be recalled that VTL did not appeal from the final and executory CA
Decision which affirmed the RTC's disposition that the amount to be paid by VTL shall be
based on the Statement of Account dated August 12, 1994, plus the corresponding
interests and penalty charges that have accrued thereafter. The CA further explained
therein that VTL has no right over the mortgaged property since it did not settle the
obligation it assumed.

JUNE 2018

Security Corporation Vs. Sps. Rodrigo and Erlinda Mercado/Sps. Rodrigo and
Erlinda Mercado Vs. Security Bank and Trust Company,
G.R. No. 192934, June 27, 2018
Decided by the First Division
Ponente: Jardeleza, J.
Nature of the Case: Petition for Review on Certiorari Under Rule 45

Facts:

The Security Bank Corporation (SBC) granted spouses Mercado a revolving credit
line in the amount of Pl,000,000.00. The credit line has an Addendum that shows that the
Sps. Mercado undertake to pay the SBC interest on outstanding availments based on
annual rate computed and billed monthly by SBC on the basis of its prevailing monthly
rate. It is understood that the annual rate shall in no case exceed the total monthly
prevailing rate as computed by SBC. The Sps. Mercado hereby give their continuing
consent without need of additional confirmation to the interests stipulated as computed
by SBC.
 To secure the credit line, the Sps. Mercado executed a Real Estate Mortgage in
favor of SBC on July 3, 1996 over their properties in Batangas (i.e., Batangas City; San
Juan; Lipa).

The Sps. Mercado defaulted in their payment under the revolving credit line
agreement.The SBC filed a petition for extrajudicial foreclosure pursuant to Act No. 3135.

The foreclosure sale of the parcel of land in Lipa City, Batangas was held wherein
Security Bank was adjudged as the winning bidder.

In 2000, the Sps. Mercado offered to redeem the foreclosed properties for Pl
0,000,000.00. However, Security Bank allegedly refused the offer and made a counter-
offer in the amount of Pl 5,000,000.00. Thus, the Sps. Mercado filed a complaint for
annulment of foreclosure sale, damages, injunction, specific performance, and
accounting with application for temporary restraining order and/or preliminary injunction.

The RTC declared the foreclosure sales void (except the land in Lipa) because
"the act of making only one corrective publication xx x is a fatal omission committed by
the· mortgagee bank"; the notice of sale: itself is also defective because the act of making
only one corrective publication is fatal; and the parcel of land in San Jose, Batangas and
the three parcels of land in Batangas City should not be lumped together in a single
foreclosure sale. Not only does it make the redemption onerous, it further violates
Sections 1 and 5, Act No. 3135 which do not envision and permit a single of more than
one real estate mortgage separately constituted.

The CA affirmed the RTC Decision with modifications. It agreed that the error in
the property’s technical description rendered the·notice of foreclosure sale defective. SB's
subsequent single publication of an erratum will not cure the defective notice; it is as if no
valid publication of the notice of the foreclosure sale was made.

Moreover, another point of contention was considering the interest rates in the
Addendum. The RTC rendered the said interest rates void for violating Article 1308, New
Civil Code (because rates are the sole prerogative of the creditor/mortgagee- SBC); Bank
Circular No. 1191 (because rates are not based on the mutual agreement between
borrower- Sps. Mercado and the bank-SBC); and Article 1956,Civil Code (because the
interest rate was not expressly stipulated in writing [even in the Addendum]). The CA, did
not agree with these RTC’s findings.

Issue:
1. Whether 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- YES.
2. Whether the interest rates in the Credit Line Agreement, as set by its Addendum
is void- YES.

Held:
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.

Among the requisites is a valid notice of sale. Section 3,Act No. 3135 as amended,
requires that when the value of the property reaches a threshold, the notice of sale must
be published once a week for at least three consecutive weeks in a newspaper of general
circulation. Publication of the notice is required "to give the x x x foreclosure sale a
reasonably wide publicity such that those interested might attend the public sale."

Also, the failure to advertise a foreclosure sale in compliance with statutory

requirements constitutes a Jurisdictional defect which invalidates the sale. This
jurisdictional requirement may not be waived by.the parties; to allow them to do so would
convert the required public sale into a ·private sale. Thus, the statutory ·provisions
governing publication ·of notice· of mortgage foreclosure must be. strictly complied and
that even slight deviations therefrom will invalidate the notice and render the sale at least
voidable.

The interest rate provisions in the parties'

agreement violate the principle of mutuality of
contracts.

The principle of mutuality of contracts is 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. As such, 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.

To be more specific, as a principal condition and an important component in

contracts of loan, interest rates are only allowed if agreed upon by express stipulation of
the parties, and only when reduced into writing. Any change to it must be mutually agreed
upon, or it produces no binding effect.

In this case, the method of fixing interest rates is based solely on the will of the
bank. The method is one-sided and arbitrary. It is worded in such a way that the borrower
shall agree to whatever interest rate the bank fixes. Hence, the element of consent from
or agreement by the borrower is completely lacking, making the interest rates violative of
the principle of mutuality of contracts.

Lily S. Villamil substituted by her heirs Rudy E. Villamil, et al. Vs. Spouses Junito
Erguiza and Mila Erguiza,
G.R. No. 195999, June 20, 2018
Decided by Third Division
Ponente: J. Martires
Nature of the Case: Petition for Review on Certiorari Under Rule 45
Topic: Sales
Facts:

Lily Villamil (“Lily”) filed a Complaint for recovery of possession and damages
against respondent-spouses Juanito and Mila Erguiza (“Sps. Erguiza”) before the
Municipal Trial Court in Cities (MTCC) of Dagupan City. The case stems from a contract
that purportedly made Lily a “seller” and the Sps. Erguiza the “buyers”. The contract has
the ff characteristics: First, Lily and her siblings who were then co-owners merely
promised to sell the subject property, thus, signifying their intention to reserve ownership.
Second, the execution of a deed of absolute sale was made dependent upon the proper
court's approval of the sale of the shares of the minor owners. Third, the agreement
between the parties was not embodied in a deed of sale; Fourth, Lily retained possession
of the certificate of title of the lot. This is an additional indication that the agreement did
not transfer to the Sps. Erguiza, either by actual or constructive delivery, ownership of the
property. Finally, respondent Juanito admitted during trial that they have not finalized the
sale in 1972 because there were minor owners.

Both the MTCC and RTC, ruled in favor of Lily. They opined that the condition with
respect to judicial approval of the sale had become irrelevant when ownership over the
subject property was consolidated in Lily’s favor in 1973; thus, at that time, Sps. Erguiza
were bound to comply with their undertaking to pay the balance of the purchase price
which they failed to do.

The CA reversed the RTC ruling. It declared that the agreement between the
parties was a contract to sell because the vendors reserved ownership and it was subject
to a suspensive condition, i.e., submission of the sellers of lacking documents or court
approval of the sale of the shares of the minor owners. It opined that Sps. Erguiza's
passive and complacent position in not asserting from the sellers what was incumbent
under the subject agreement should not be taken against the former. It stressed that the
obligation to secure the necessary documents or approval of the court for the minor
children to be represented in the Deed of Absolute Sale, was incumbent upon the sellers.

Issue:
1. Is the “Deed of Absolute Sale” in this case, a Contract a Contract to Sell or
“Contract of Sale”- Contract to Sell.
2. Does the Principle of Constructive Fulfillment apply in this case? - No.

Held:

The “Deed of Absolute Sale” in this case is a

Contract to Sell because the ownership was
not transferred to the purported buyers, Sps.
Erguiza until the condition set therein was
complied with.

A Contract to Sell may not be considered as a Contract of Sale because the

element, meeting of the minds, is lacking. In a contract to sell, the prospective seller
explicity reserves the transfer of title to the prospective buyer, meaning, the prospective
seller does not as yet agree or consent to transfer ownership of the property subject of
the contract to sell until the happening of an event, which for present purposes we shall
take as the full payment of the purchase price. What the seller agrees or obliges himself
to do is to fulfill his promise to sell the subject property when the entire amount of the
purchase price is delivered to him. In other words the full payment of the purchase price
partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to
sell from arising and thus, ownership is retained by the prospective seller without further
remedies by the prospective buyer.

Upon the fulfillment of the suspensive condition (i.e., the full payment of the
purchase price), the prospective seller's obligation to sell the subject property by entering
into a contract of sale with the prospective buyer becomes demandable as provided in
Article 1479,Civil Code.

In this case, the parties entered into an agreement with a condition, viz: “That
because there is still lacking document or that court approval of the sale of the shares of
the minor-owners of parts of this land, the final deed of absolute sale he made and
executed upon issuance by the competent court; that the balance of P2,500.00 will also
be given in this stage of execution of this document xxx”. With this condition, it is clear
that the contract involved is a Contract to Sell and not a Contract of Sale.

Lily prevented the fulfillment of the suspensive

condition; thus, there is a constructive
fulfillment of a suspensive condition.

Article 1186, Civil Code refers to the constructive fulfillment of a suspensive

condition, whose application calls for two requisites, namely: (a) the intent of the obligor
to prevent the fulfillment of the condition, and (b) the actual prevention of the fulfillment.
Mere intention of the debtor to prevent the happening of the condition, or to place
ineffective obstacles to its compliance, without actually preventing the fulfillment, is
insufficient.

Here, there is no doubt that Lily prevented the fulfillment of the suspensive
condition because of the ff. circumstances- (1) Lily admitted that they did not file any
petition to seek approval of the court as regards the sale of the shares of the minor
owners; (2) the other co-owners sold their shares to Lily such that she was able to
consolidate the title in her name. Consequently, it was incumbent upon the sellers to enter
into a contract with the Sps. Erguiza for the purchase of the subject property.

RAFAEL ALMEDA, EMERLINA ALMEDA-LIRIO, ALODIA ALMEDA-TAN, LETICIA

ALMEDA-MAGNO, NORMA ALMEDA-MATIAS AND PUBLIO TIBI, Petitioners, v.
HEIRS OF PONCIANO ALMEDA IN SUBSTITUTION OF ORIGINAL DEFENDANT
PONCIANO ALMEDA, INTESTATE ESTATE OF SPOUSES PONCIANO AND
EUFEMIA PEREZ-ALMEDA AND THE REGISTER OF DEEDS OF TAGAYTAY CITY,
Respondent.
CESAR SANTOS, ROSANA SANTOS, NORMAN SANTOS AND FERDINAND
SANTOS, Unwilling Plaintiffs/Petitioners.
G.R. No. 194189, September 14, 2017
FIRST DIVISION
J. Tijam

Facts:
Spouses Venancio Almeda (Venancio) and Leonila Laurel-Almeda (Leonila) were
the parents of nine children: Ponciano L. Almeda (Ponciano), Rafael, Emerlina, Alodia,
Leticia, Norma, Benjamin Almeda and Severina Almeda-Santos (Severina) and
Rosalina Almeda-Tibi (Rosalina), Publio's deceased wife.

The land that the children inherited from their parents, Venancio and Leonila,
were sold.

Sometime after, the petitioners filed a Complaint for Nullity of Contracts, Partition
of Properties and Reconveyance of Titles with Damages against against Ponciano and
his wife Eufemia Perez Almeda (Eufemia) and the Register of Deeds of Tagaytay City,
with Severina's surviving spouse, Cesar Santos and children, Rosana, Norman and
Ferdinand, as unwilling plaintiffs. The petitioners claimed that Ponciano, taking
advantage of his being the eldest child and his close relationship with their parents,
caused the simulation and forgery of the following documents.

RTC & CA: Both dismissed the Petitioner's Complaint.Both held that the the
questioned documents supporting the sale were notarized and executed in the
presence of two instrumental witnesses. Thus, the documents enjoy the presumption of
regularity. The petitioners, however, failed to overcome this presumption by clear and
convincing evidence. It stressed that petitioners failed to present any proof of simulation
or forgery of the subject documents.

The CA further stressed that mere variance in the genuine and disputed
signatures is not proof of forgery.

Issue: Should the ruling for the Complaint for Nullity of Contracts, Partition of Properties
and Reconveyance of Titles with Damages filed by the petitiioners be in favor of the
petitioners? No.

Held: WHEREFORE, the petition is DENIED. The Decision dated May 25, 2010 and
Resolution dated October 13, 2010 of the Court of Appeals in CA-G.R. CV No. 86953
are AFFIRMED. SO ORDERED.

Ratio:
1. Factual findings of the RTC, as affirmed by the CA, deserve a high degree of.
respect.
2. The Notarized documents enjoy the presumption of regularity.Forgery is also not
presumed. An a1legation of forgery must be proved by clear, positive and
convincing evidence, and the burden of proof lies on the party alleging forgery.

In this case, the petitioners failed to overcome the presumption of due execution.
The Petitioners' testimonies before the RTC were inconsistent as to the fact that
the vendors' signatures were indeed affixed on the questioned documents albeit
the forgery that took place. The Court's visual comparison of the questioned and
admittedly genuine signatures also reveal prominent similarities.To the Court, the
 apparent dissimilarities in the signatures therein are overshadowed by the striking
similarities and, therefore, fail to overcome the presumption of validity in favor of a
notarized document.
3. The law presumes that every person is fully competent to enter into a contract until
satisfactory proof to the contrary is presented. The party claiming absence of
capacity to contract has the burden of proof and discharging this burden requires
that clear and convincing evidence be adduced.

In this case, the presumption of competence was not adequately refuted

Petitioners have not satisfactorily shown that their parents' mental faculties were
impaired as to deprive them of reason or hinder them from freely exercising their
own will or from comprehending the provisions of the sale in favor of
Ponciano.Petitioners assert that their parents were "uliyanin" or forgetful, of
advanced age and "at times" sickly during the time of the execution of the 1978
Deed in favor of Ponciano. Mere forgetfulness, however, without evidence that the
same has removed from a person the ability to intelligently and firmly protect his
property rights, will not by itself incapacitate a person from entering into contracts.

4. The Court also noted that the lack or inadequacy of consideration was not
established.Simulation has been defined as the declaration of a fictitious will, made
deliberately by mutual agreement of the parties, in order to produce the
appearances of a juridical act which does not exist or is different from that which
was really executed, for the purpose of deceiving third persons. Accordingly,
simulation exists when: (a) there is an outward declaration of will different from the
will of the parties; (b) the false appearance was intended by mutual agreement of
the parties; and (c) their purpose is to deceive third persons.

None of the foregoing requisites have been shown to exist in this case.

5. It is well-settled that issues not raised in the court a quo cannot be raised for the
first time on appeal in the Supreme Court without violating the basic rules of fair
play, justice and due process."97 Due process dictates that when a party who
adopts a certain theory upon which the case is tried and decided by the lower court,
he should not be allowed to change his theory on appeal.

In this case, the alleged defects in the notarization were raised only before this
Court. Thus, Thus, the Court held that it could bend backwards to examine the
issue belatedly raised by petitioners at this late stage in the proceedings