CASE NO.

1
S.M.: Mortgage; A. 2088
            DEVELOPMENT BANK OF THE PHILIPPINES vs. CA
GR # 118342, January 05, 1998

FACTS:          The complaint sought (1) the declaration of nullity of DBP’s appropriation

of CUBA’s rights, title and interests over a 44 hec. fishpond in Bolinao, Pangasinan for
violating A. 2088, NCC.  DBP and Caperal stressed that DBP merely exercised its
contractual right under the Assignment of Leasehold Rights, which, allegedly, was not a
contract of mortgage. CUBA asserted that said Assignment was a mortgage contract since
it was executed simultaneously with the promissory notes covering CUBA’s 3 separate
loans amounting to P335k with DBP.  In all these notes was the provision that : “ In the
event of foreclosure of the mortgage securing this note, I/We further bind myself/ourselves,
jointly and severally, to pay the deficiency, if any. HELD: The deeds of assignment
constantly referred to CUBA (assignor) as “borrower”; the assigned rights as mortgaged
properties; and the instrument itself, as mortgage contract; several conditions in their
contract showed clearly that a mortgage was intended. Also, the parties, in their Stipulation
of Facts during the pre trial, admitted that the assignment was by way of security for the
loan’s payment.  An assignment to guarantee an obligation is in effect a mortgage.
(People’s Bank & Trust Co. vs. Odom, 64P126).

CASE NO.2
SM:  Succession; determination of relationship under A.962, NCC
HEIRS OF PASCASIO URIARTE vs. CA
GR # 116775, January 22, 1998

FACTS: Justa acquired the 0.5 hec by inheritance from her parents, Juan Arnaldo and
Ursula Tubil, and 2.2 hec by purchase.  Estrada, Justa’s nephew, claimed to be the sole
surviving heir of Justa on the ground that she died intestate.  He further claimed that
Pascasio Uriarte who apparently worked the land as Justa’s tenant refused to give him his
share of the harvest.  Estrada claimed that Uriarte has no right to the entire land but could
only claim ½ of the 0.5 hec. Justa inherited from her parents.  While the partition case was
pending, Pascasio died and was replaced by petitioners-heirs. Allegedly, the petitioners
were not mere tenants but Justa’s heirs entitled to her entire land.
HELD: Estrada, as admitted by petitioners, is Justa’s nephew, his mother, Agatonica, being
Justa’s half sister.  He is thus Justa’s nearest relative and thus, the only one entitled to her
estate. Estrada is  a 3rd degree relative of Justa.  On the other hand, petitioners are the
children of Justa’s cousin.  They are thus 5th degree relatives of Justa.  Applying the
principle that the nearest excludes the farthest, then Estrada is the lawful heir of Justa.   The
fact that his mother is only a half-sister of Justa is of no moment. A nephew is considered a
collateral relative who may inherit if no descendant, ascendant, or spouse survives the
decedent.  That Estrada is only a half-blood is immaterial.  This alone does not disqualify
him from being his aunt’s heir. The determination of whether the relationship is of full or half
blood is important only to determine the extent of the share of the survivors.
           

CASE NO.3
SM:  Property; forest reserves are incapable of private appropriation and possession for as
long as the reservation subsists..
GORDULA vs. CA
GR # 127236, January 27, 1998

FACTS: Petitioner Gordula filed an application for a free patent over a land, which he had
been in possession since 1949, in January, 1973.  The Free patent was issued on January
01, 1974. The subject land in 1973 was still part of the Caliraya- Lumot River Forest reserve
and was no longer open to private ownership as it has been classified as public forest
reserve for the public good. Thereafter, on November 18, 1987, the REPUBLIC, thru the
NAPOCOR, filed an action for annulment of petitioner’s Free Patent, cancellation of titles
and The CA also held that the petitioners could not claim ownership by acquisitive
prescription since as of 1969; Gordula had been in possession of the property for only 25
years. The period of Gordula’s occupancy after 1969 should not be tacked to the period
from 1944 since by then the property was not susceptible of occupancy, disposition,
conveyance or alienation. HELD: Forest lands/reserves are incapable of private
appropriation and possession thereof however long can not convert them into private
properties. (Director of Lands vs. CA). This ruling is premised on the Regalian doctrine
enshrined in the ’35,’73 and ‘87Constitutions. Further, no public land can be acquired by
private persons without any grant, express or implied from the government; it is
indispensable that there be a showing of a title from the State. Gordula did not acquire title
to the said land prior to its reservation under Proc. # 573.  He filed his application 3 years
after said Proclamation was issued in 1969.  At that time, the land, as part of the Caliraya-
Lumot River Forest Reserve, was no longer open to private ownership as it has been
classified as “public forest reserve for public good.”

CASE NO.4
SM: A.121, Family Code; conjugal partnership
AYALA INVESTMENT & DEVELOPMENT CORP. vs. CA
GR # 118305, February 12, 1998

FACTS: Philippine Blooming Mills (PBM) obtained a P 50.3M loan from petitioner AIDC.  As
added security for the Pam’s credit line, respondent Alfredo Ching, EVP of PBM, executed 2
security agreements making himself jointly and severally answerable w/ PBM in its
indebtedness to AIDC.  PBM failed to pay the loan.  Thus, AIDC filed a case for sum of
money against PBM and Ching w/ the then CFI of Rizal which ruled in AIDC’s favor.  It
further issued a writ of execution and a notice of Sheriff Sale on 3 of the Ching’s conjugal
properties.  Consequently, the Chings filed an injunction case to enjoin the auction sale
alleging that petitioners can not enforce the judgment against the conjugal properties levied
since the loan did not redound to the benefit of the conjugal partnership.          HELD: The
SC agreed with the CA in ruling that Alfredo signed as a surety for the P50.3M loan
contracted on PBM’s behalf and AIDC failed to prove that his acting as surety redounded to
the benefit of the conjugal partnership .The loan procured from AIDC was for the
advancement and benefit of PBM and not for the Conjugal partnership’s benefit. Art. 121(3),
FC is emphatic that the payment of personal debts contracted by the husband/wife before or
during the marriage shall not be charged to the conjugal partnership except to the extent
that they redounded to the family’s benefit.  Here, the property also involves the family
home.  The loan is a corporate loan, not a personal one. Signing as surety is certainly not
an excuse of an industry/profession or an act of administration for the family’s benefit.

CASE NO. 5
SM: Wills and Succession; Collation
VIZCONDE vs. CA
GR # 118449, February 11, 1998

FACTS: Estrellita purchased form Rafael a 10,110 sq. m. lot located at Valenzuela, Bulacan
for P100k.  She sold the Valenzuela property for P3, 405, 612 and in June of the same year,
she bought a house and lot in BF Homes, Parañaque using a portion of the proceeds of the
sale of the Valenzuela lot. Estrellita and her 2 children, Carmela and Jennifer, were
killed.  Lauro was left as the sole heir but he entered into an extrajudicial settlement of his
wife’s estate with Rafael and Salud, her parents. This settlement provided 50% of the total
amount of the bank deposits of Estrellita and her daughters to Rafael while the other 50%
was given to Lauro.  The Parañaque property and the car were also given to Lauro with
Rafael and Salud waiving all their claims, rights, ownership and participation as heirs in the
said properties. Rafael died.  In the intestate proceeding the Valenzuela lot allegedly was
given by Rafael to Estrellita and that the heirs’ legitime should come from collation of all
properties distributed to his children by Rafael during his lifetime.  Ramon, Rafael’s son,
further claimed that the petitioner is one of Rafael’s children by right of representation as
Estrellita’s widower. HELD: Petitioner is Rafael’s son-in-law and not one of his compulsory
heirs.  With respect to Rafael’s estate, petitioner, who was not even shown to be a creditor
of Rafael, is considered a 3rd person.  As such, he may not be dragged into the intestate
estate proceeding. Secondly, the order of collation is premature since the proceeding is still
in its initiatory stage.  There is nothing to indicate that the legitime of any of Rafael’s heirs
has been impaired to warrant collation. Further, collation of the Parañaque property, bought
using the proceeds of the sale of the Valenzuela property which Rafael transferred to
Estrellita, has no statutory basis.  The Order of the probate court presupposes that the
Parañaque property was gratuitously conveyed by Rafael to Estrellita.  However, Estrellita
paid P900, 000 to Premier Homes, Inc. for said property. The collation is improper for
collation covers only properties gratuitously given by decedent during his lifetime to his
compulsory heirs which do not obtain to the transfer of the Parañaque realty.  Moreover,
Rafael already waived his right to said realty. Lastly, Estrellita died ahead of Rafael.  In fact,
it was Rafael who inherited from her an amount more than the value of the Valenzuela
lot.  Thus, even assuming that the latter property maybe collated, collation may not be
allowed as the value of the Valenzuela lot has long been returned to Rafael’s estate.

CASE NO. 6
SM: A.733, NCC; donations (kinds)
LAGAZO vs. CA
GR # 112796, March 05, 1998

FACTS:          Petitioner’s grandmother Catalina Jacob Vda. De Reyes was awarded a

60.10 sq.m.lot which is a portion of the Monserrat Estate.  Shortly before she left
for Canada, Jacob executed as SPA in favor of her son- in-law
Eduardo Español authorizing him to execute all documents necessary for the final
adjudication of her claims as awardee of the lot. Jacob revoked said authority in an
instrument executed in Canada.  Simultaneously, Jacob executed another SPA in
petitioner’s favor.  Thereafter, Jacob executed in Canada a Deed of Donation over Lot 8W
in petitioner’s favor.  The petitioner then checked with the register of Deeds and found out
that the property was in the delinquent list so he paid the remaining balance and declared
the lot in Jacob’s name. Subsequently, petitioner sent a demand letter to private respondent
asking him to
vacate Lot8W which the latter refused to do. HELD: The donation in the case at bar was
simple and not onerous as claimed by petitioner.  Even conceding that petitioner’s full
payment of the purchase price of the lot might have been a burden to him; such payment
was not however imposed by the donor as a condition for the donation.  In fact, the donor in
the deed did not have any intention to burden/ charge petitioner as the donee.  The words in
the deed are typical of a pure donation.  The payments made by petitioner were his
voluntary acts.  In simple donations, acceptance of the donation by the donee is
indispensable; its absence makes the donation null and void. 

CASE NO. 7
S: A.2176, NCC; Damages; quasi - delict for damages suffered by a 3 rd party.
FGU INSURANCE CO. vs. CA
GR # 118889, March 23, 1998

FACTS: 2 vehicles, both Mitsubishi Colt Lancers cruising northward along EDSA,
Mandaluyong City figured in a traffic accident. One car was owned by Lydia Soriano and
was driven by Benjamin Jacildone while the other was owned by respondent FILCAR
Transport Inc., and driven by Peter Dahl- Jensen as lessee. FGU, in view of its insurance
contract with Soriano, paid the latter P25, 382.20.  By way of subrogation, it sued Dahl-
Jensen and FILCAR as well as respondent Fortune Insurance Co. (FIC) as FILCAR’S
insure for quasi delict before the Makati City RTC.  Dahl- Jensen was dropped from the
complaint.  HELD: To sustain a claim based on quasi-delict, the following requisite must
concur: (a) damage suffered by the plaintiff; (b) fault/negligence of the defendant; and (c)
connection of cause and effect between the fault/negligence of the defendant and the
damage incurred by plaintiff. FGU failed to prove the existence of the 2 nd requisite, i.e.
FILCAR’s fault/negligence, because the only fault/negligence that was established was that
of Dahl-Jensen.  FILCAR being engaged in a rent- a-car business was only the owner of the
car.  As such, there was no vinculum juris between them as employer and employee which
would make FILCAR liable under Art.2180.  FILCAR can not in any way be responsible for
not being an employer of the latter.  Logically, FGU’s claim against FORTUNE can neither
prosper.

CASE NO. 8
SM:  Property; invalid transfer of land to an alien who later transfers the same to a FILCIT
 HALILI vs. CA
GR # 113539, MARCH 23, 1998

FACTS: Private respondents, both American Citizens, inherited real properties from Simeon
de Guzman, who died intestate, located in the Philippines.   His wife, Helen, executed a
deed of quit claim assigning, transferring and conveying to their son, David Rey, all her
rights, titles and interests in and over 6 parcels of land which the 2 of them inherited from
Simeon who himself was an AMCIT. David thereafter sold the land to private respondent
Emiliano Cataniag.  Petitioners, the adjoining lot’s owners, questioned the validity and
constitutionality of the 2 conveyances, i.e. from Helen to David and between David and
Emiliano.  They also claimed ownership thereto based on their right of legal redemption
under Art.1621, NCC. HELD:   The SC ruled that although Helen’s deed of quit claim -in
which she assigned, transferred and conveyed to David all her rights, titles, and interests
over the property she had inherited from her husband-collided with Sec.7, Art. XII of the 87
Constitution. Since the disputed land is now owned by Cataniag, a FILCIT, the prior invalid
transfer can no longer be assailed. The objective of the constitutional provision to keep our
land in Filipino hands has been served.      Non Filipinos can not acquire or hold
title to private lands or to lands of the public domain, except only by way of legal
succession.  However, if land is invalidly transferred to an alien who subsequently becomes
a citizen or transfers it to a citizen, the flaw in the original transaction is considered cured
and the title of the transferee is rendered valid.

           
CASE NO.9
SM:  Contracts; suretyship; Art. 2047, NCC
PALMARES vs. CA
GR # 126490, March 31, 1998

FACTS: Pursuant to a promissory note (PN), private respondent MB Lending Corp. (MB)

extended a loan to the spouses Azarraga together with petitioner amounting to P30k but
debtors were able to pay only P16, 300. Consequently, on the basis of petitioner’s solidary
liability under the PN, MB filed a complaint against petitioner as the lone party defendant to
the exclusion of the principal debtors, allegedly due to the latter’s insolvency. Petitioner
claimed that while she agreed to be liable on the note upon default of the principal debtor,
MB acted in bad faith in suing her alone without including the Azarragas when they were the
only ones who benefited from the loan’s proceeds. HELD: Petitioner expressly bound
herself to be jointly and severally liable with the principal maker of the note. The terms of the
contract are clear, explicit and unequivocal that petitioner’s liability is that of a surety. A
surety is an insurer of the debt, a suretyship is an undertaking that the debtor shall pay.   A
surety promises to pay the principal’s debt. If the principal will not pay, he binds himself to
perform if the principal does not, w/o regard to his ability to do so. In fine, a surety
undertakes directly for the payment and is so responsible at once if the principal debtor
makes default. It has not been shown, either in the contract or the pleadings that MB agreed
to proceed against petitioner only if and when the defaulting principal has become insolvent

CASE NO. 10
SM: Contracts; A. 1342, NCC
PBC vs. CA
GR # 109803, April 20, 1998

FACTS: Chee Puen, then the general manager of Global Inc., informed private respondent,
his estranged wife that their company a P300k loan for its operational expenses.  He
proposed that her paraphernal lot in Makati be used as collateral.  He assured her that the
loan would not exceed P300k and she was asked to sign 3 sets of blank forms of real estate
mortgage (REM) of PBC.  He wrote down in pencil the figure 300 under the space provided
for the amount to be loaned and respondent signed the blank mortgage forms due to Chee
Puen’s representations.  Chee Puen had the REM document later notarized by Atty.
Arzadon using a residence certificate bearing respondent’s forged signature.  Apparently,
Chee Puen applied for a P3M loan from PBC.  To secure the loan, he mortgaged
respondent’s paraphernal lot in Makati, using the blank REM forms signed by her.  He also
misrepresented himself as president and acting corporate secretary of Global, Inc. PBC did
not investigate Chee Puen’s authority to mortgage respondent’s property.            Private
respondent discovered that Chee Puen obtained a loan of P3M from
PBC. HELD: Respondent has not consented to collateralize Global, Inc’s P3M loan with her
paraphernal lot.  All facts show that she was misled by Chee Puen and thus, the REM
should be nullified. The established facts preclude the application of estoppel against the
respondent.  Respondent did not deliberately or intentionally lead the PBCtobelieve that she
was putting up her paraphernal realty to secure the P3M loan of Global.It was Chee Puen
who made the misrepresentation thus defrauding respondent herself. 
Further, PBC’s reliance in the REMs signed in blank by the respondent was
unreasonable.  As a banking institution, PBC was grossly negligent when (a) it took no step
to verify whether the respondent was really offering her paraphernal property as collateral;
(b) made no credit check on  respondent and Global, Inc.; and (c) conducted no
investigation on the authenticity of the “Secretary’s Certificate of Board Resolution.”The
business of a bank is affected with public interest and it should observe a higher standard of
diligence when dealing with the public.  Neither will it matter that PBC itself was misled by
Chee Puen, a 3rd person to the contract.  Under A.1342, NCC, the misrepresentation of a
3rd person will vitiate consent if it has resulted in substantial mistake and the same is mutual.

CASE NO.11
SM: Surety vs. Guaranty; A.2080, NCC does not apply where the liability is as a surety, not
as a guarantor.
E.ZOBEL, INC. vs. CA
GR# 113931, May 6, 1998

FACTS: Respondent Spouses Claveria, doing business under the name “ Agro Brokers”,
applied for a loan with respondent Consolidated Bank & Trust Corp. (now SOLID BANK)
amounting to P2.875M.  The loan was granted subject to the condition that respondent
spouses execute a chattel mortgage over the 3 vessels to be acquired and that a continuing
guarantee be executed by Ayala International Phils., Inc., now herein petitioner E.Zobel, Inc.
in SOLID BANK’s favor. The Claverias defaulted in the payment of the entire obligation
upon maturity.  Petitioner moved to dismiss the complaint asserting that its liability as
guarantor of the loan was extinguished pursuant to A.2080, NCC.  It argued that it has lost
its right to be subrogated to the first chattel mortgage in view of SOLIDBANK’s failure to
register the chattel mortgage with the appropriate government
agency.  SOLIDBANK meantime claimed that A.2080 is not applicable because petitioner is
not a guarantor but a surety.
HELD: In the contract executed by petitioner in SOLIDBANK’s favor, albeit denominated as
a “Continuing Guaranty”, is in fact a contract of surety.  The contract’s terms obligates
petitioner as “surety” to induce SOLIDBANK to extend credit to the Claverias. The contract
clearly disclose that petitioner assumed liability to SOLIDBANK, as a regular party the
undertaking and obligated itself as an original promissory.  It bound itself jointly and
severally to the obligation with the Claverias.  In fact, SOLIDBANK need not resort to all
other legal remedies or exhaust the Claverias’ properties before it can hold petitioner liable
for the obligation. Since the petitioner is a surety, A.2080, NCC is inapplicable.  Said article
applies where the liability is as a guaranty not as a surety.

CASE NO. 12
SM: Property; easement of right of way; compulsory easement; Arts. 649-650, NCC
CRISTOBAL vs. CA
GR# 125339, June 22, 1998

FACTS:  A portion of private respondents’ lot was being used as a passageway by

petitioners to and from Visayas Ave. The Paciones and the petitioners met and the latter
offered to pay for the use of a portion of Lot1 as a passageway but the Paciones rejected
said offer.  They then started enclosing Lot1 with a concrete fence.  Petitioners protested
alleging that their property was bounded on all sides by residential houses belonging to
different owners and had no adequate outlet and inlet to Visayas Ave. except thru the
Paciones’ property.  Petitioners filed an action for easement of right of way with a prayer for
TRO. The case was dismissed for lack of 1 essential requisite of a legal easement of right of
way was not proved, i.e., the absence of an alternative adequate way/outlet to a public
highway. HELD: To be entitled to a compulsory easement of right of way the preconditions
provided under Arts. 649-650, NCC must be established.  These are: (1) that the dominant
estate is surrounded by other immovable and has no adequate outlet to a public highway;
(2) that the proper indemnity has been paid; (3) that the isolation was not due to acts of the
proprietor of the dominant estate; (4) that the right of way claimed is at a point least
prejudicial to the servient estate and, in so far as consistent with this rule, where the
distance from the dominant estate to a public highway maybe shortest.  The burden of
proving the existence of these prerequisites lies on the owner of the dominant estate. In the
case at bar, the 1st element is palpably absent.  As previously found, an outlet already
exists-  the path  walk located at the left side of petitioner’s property  and which is connected
to a private road about 500 meters long.  This in turn leads to Ma. Elena St., finally, to
Visayas Ave. This outlet was held to be sufficient for the needs of the dominant estate,
hence, petitioners have adequate outlet to Visayas Ave. Further, no evidence was adduced
by petitioner to prove that the easement they seek to impose on private respondents’
property is to be established at a point least prejudicial to the servient estate.

CASE NO. 13
SM: Property; lease; PD #1517, Land Tenancy in Urban Reform Areas; requisites
CARREON vs. CA
GR# 112041, June 22, 1998

FACTS:  The Carreons became members of the Mataas na Lupa Tenants Assoc.

(MNLTA).            Unfortunately, fire razed the houses in the area including the Carreons’
house.  One of their children, Honorio, wanted to build a house in the lot and so the
Carreons asked the petitioners who constructed a temporary house to vacate but they
refused.  Separate complaints were then filed against them.            Meanwhile, the MNLTA
pursued its plan to acquire the estate after the promulgation of a Supreme Court decision
recognizing its right of first refusal or option to buy pursuant to the Constitution and
PD1517.  The MNLTA apparently have acquired the estate thru negotiation with the owners
thereof for a title thereafter, was issued to it. HELD: The SC ruled that petitioners are not
tenants pursuant to PD 1517.Tenant, under Sec.3 (f) of PD1517, refers to the rightful
occupant of land and its structures, but does not include those whose presence on the land
is merely tolerated and without the benefit of a contract; those who entered the land by
force/deceit; or those whose possession is under litigation. In the case at bar, records
showed that petitioners were originally room renters in the Carreons’ house.  When it was
razed to the ground, they asked the Carreon’s widower to allow them to construct temporary
quarters on the lot with the understanding that they will leave and vacate the same when
private respondents will need the lot upon demand.  Obviously, their stay in the premises
was merely an act of tolerance on the respondents’ part.  Their status as occupants of the
lot can not be classified as “tenants” within the purview of PD 1517.

CASE NO. 14
SM: Torts and Damages; fortuitous event
SOUTHEASTERN COLLEGE vs. CA
GR # 126389, July 10, 1998

FACTS: A powerful typhoon Saling hit Metro Manila.  Buffeted by very strong winds, the roof
of petitioner’s building was partly ripped off and blown away, landing on and destroying
portions of the roofing of the PR’s house.            The PR then filed a complaint for damages
based on culpa aquiliana alleging that the damage to their house rendered the same
uninhabited, forcing them to stay temporarily in others’ houses. Petitioner meantime raised
the defense that Saling was an act of God and thus, beyond human control such that
petitioner can not be answerable for the damages wrought thereby, absent any negligence
on its part. HELD: In order that a fortuitous event may exempt person from liability, it is
necessary that he be free from any previous negligence/misconduct by reason of which the
loss may have been occasioned by an act of God. When a person’s negligence concurs
with an act of God in producing damage or injury to another, such person is not exempt
from liability by showing that the immediate/proximate cause of the damage or injury was a
fortuitous event.  When the effect is found to be partly the result of the participation of man-
whether it be from active intervention, or neglect, or failure to act- the whole occurrence is
thus humanized, and removed from the rules applicable to acts of God. In the instant case,
other than the said ocular inspection, no litigation was conducted to determine the real
cause of the partial unroofing of petitioner’s school building.  They did not even show that
the plans, specifications and design of said school building were deficient and defective and
its construction basically flawed. Thus, petitioner has not been shown to be negligent or at
fault regarding the construction and maintenance of its school building in question and
 that Saling was the proximate cause of the damage suffered by PR’s house.  It isn’t enough
that the damage be capable of proof but must be actually proved with a reasonable degree
of certainty.

CASE NO. 15
SM: Property; quieting of title; A.549, NCC
QUEVADA vs. GLORIOSO
GR# 121270, August 27, 1998

FACTS:  Antonio Cerrudo acquired a property during his marriage to Pomposa Glorioso. He

applied for its registration in his name under the Torrens System thru a cadastral case. He
died intestate leaving his wife and son Pablo as heirs. After his death, the land was
registered in his own name. Thereafter, Pablo allegedly executed a public instrument ceding
½ of the property to his aunt Gregoria, his father’s only sibling.  Pablo died 3 years later
survived by his wife, children and his mother. 14 years later, his aunt Gregoria filed a
“Petition for Inscription” before the then CFI of Sariaya.  30 years later, Gregoria conveyed,
by Deed of Sale, to her children, herein petitioners, her undivided portion of the subject
land. When the petitioners tried to have the property subdivided, the Cerrudos refused.
HELD: Petition for inscription could not have settled Gregoria’s claim for ownership. This
proceeding, allowed under Sec.112 of the Land Registration Act, is inapplicable.  The
proceedings under Sec112 of said Act are inadequate to settle the issue of ownership over
the disputed portion.  Matters described in Sec.112 is non-controversial in nature.  They are
limited to issues so patently insubstantial as not to be genuine issues.  These proceedings
are summary in nature, contemplating corrections/ insertions of mistake which are only
clerical but certainly not controversial issues. Evidence show that there was really no
unanimity among the parties.  The issues raised in the petition for inscription should have
been threshed out in a more appropriate proceeding.      Further, the action instituted by
private respondents to question the proceedings in 1948 and to recover the portion of the
land in petitioners’ possession has not been barred by laches. It appears that the
possession by petitioners of the disputed portion of land was merely tolerated by the private
respondents who were compelled to file the action in the lower court when petitioners
sought to partition the whole
property. The lawful owners have a right to demand the return of their property any time as
long as the possession was unauthorized or merely tolerated, if at all. This right is forever
barred by laches (BISHOP vs. CA, 208 S 636).

CASE NO. 16
SM: Quasi delicts; liability of Employer under A.2180, NCC
NAPOCOR vs. CA
GR# 119121, August 14, 1998

FACTS: NPC’s 4 dump trucks left Marawi City for Iligan City when one of its trucks, RFT-9-
6-673, DRIVEN BY Ilumba figured in a head- on- collision with a Toyota Tamaraw.  The
incident resulted in the death of 3 persons riding in the Toyota, as well as physical injuries to
17 other passengers.  PHESCO claimed that it was not the dump trucks’ owner and that
they were owned by NPC.  IT further said that it was merely NPC’s contractor with the main
duty of supplying workers and technicians for the latter’s projects.  NPC, meantime, denied
such liability and countered that the driver of the dump truck was PHESCO’s
employee. HELD: PHESCO was engaged in ‘labor only’ contracting vis-à-vis NPC and as
such, it is considered merely as NPC’s agent. In such cases, an ER-EE relationship
between the principal employer and the employees of the ’labor-only’ contractor is created.
Accordingly, the principal employer is responsible to the employees of the “’labor only’
contractor as if such employees have been directly employed by the principal
employer.  Since PHESCO is only a ‘labor only’ contractor, the workers it supplied to NPC,
including the truck driver, should be considered as NPC’s employees.

CASE NO. 17
SM:  Donation
 SICAD vs. CA
GR# 125888, August 13, 1998

FACTS: Aurora Virto Vda.  De Montinola executed an instrument entitled “Deed of Donation

Inter Vivos” naming her grandchildren as donees.  The subject of the donation is Lot 3231 of
the Cadastral Survey of Panay in Montinola’s name.  The deed also contained the donees’
signatures in acknowledgment of their acceptance of the donation.  The same was
registered, and the donor’s title cancelled. Montinola however retained the owner’s duplicate
copy of the new title as well as the property itself, until she transferred the same to the
Sicads. She revoked the donation and filed a petition with the RTC in Roxas City for the
cancellation of the new title and the reinstatement of the donor’s title.  She alleged that her
donation was one mortis causa which had to comply with the formalities of a will and since it
had not, the donation was void.  The donees opposed and claimed that the donation was
inter vivos. HELD: A donation which purports to be one inter vivos but with holds from the
donee the right to dispose of the donated property during the donor’s lifetime is in truth one
mortis causa. In a donation mortis causa the right of disposition is not transferred to the
donee while the donor is still alive. In the case at bar, nothing of any consequence was
transferred by the deed of donation in question to Montinola’s grandchildren, the ostensible
donees.  They did not get possession of the property donated.  They did not acquire the
right to the fruits thereof, or any other right of dominion over the property.  More importantly,
they did not acquire the right to dispose of the property- this would accrue to them only after
10 years from   Montinola’s death.  Indeed, they never even laid hands on the certificate of
title to the same.  They were thus simply ‘paper owners’ of the donated property. 

CASE NO. 18
SM:  Family Code; Consent of natural parents in adoption.
CANG vs. CA
GR# 10538, September 25, 1998

FACTS: Petitioner and his wife Ana Marie were legally separated before he left for the U.S.
where he obtained a decree of divorce.  Their 2 children were left with Ana Marie who was
abroad often.  Hence, she decided to have her children adopted by her brother, Ronald,
herein private respondent.  Ana Marie freely gave her Affidavit of Consent and one of her
children, her son, consented to the adoption. The petition alleged that petitioner had not
only divorced Ana Marie but has already abandoned his family to live in the U.S. as an
illegal immigrant. The RTC of Cebu granted the petition for adoption.  Petitioner appealed
with the CA asserting that he has not abandoned his children as shown by the money he
sent them through various bank accounts.  He also pointed out that he never gave his
written consent to the adoption. HELD: In cases where the father opposes the adoption
primarily because his consent to it was not sought, the matter of whether he had abandoned
his child becomes a central issue.  Abandonment of a child by his parent imports any
conduct of the parent which evinces a settled purpose to forego all parental duties and
relinquish all parental claims to the child.  It means neglect/refusal to perform the natural
and legal obligations of care and support which parents owe their children. In the instant
case, records show that petitioner’s conduct did not manifest a settled purpose to forego all
parental duties and relinquish all parental claims over his children as to constitute
abandonment.  Though in the U.S., petitioner was not remiss in his natural and legal
obligations of love, care and support for his children.

           
CASE NO. 19
SM: A.2088, NCC; mortgage; pactum commissorium.
A. FRANCISCO REALTY &DEVELOMENT vs. CA
GR # 125055, October 30, 998

FACTS: AFRD granted a P7.5M loan to private respondents, spouses Javillonar covered by

a promissory note, a deed of mortgage over a lot (TCT 58748) with its improvements and an
undated deed of sale of the mortgaged property in AFRD’s favor as mortgagee. The
promissory note expressly provided that upon failure of the mortgagor to pay the interest
without prior arrangement with the mortgagee, full possession of the property will be
transferred and the deed of sale will be registered.  The owner’s duplicate of TCT 58748
was delivered to AFRD. The Javillonars allegedly failed to pay the interest and
consequently, AFRD registered the sale in its favor.  TCT 58748 was cancelled and a new
TCT was issued in AFRD’s name. Thereafter, the couple obtained an additional loan of
P2.5M from AFRD covered by a promissory note allowing AFRD to appropriate their
property covered by AFRD’s new title.  AFRD demanded possession of the mortgaged
property but the Javillonars refused to vacate. HELD: A.2088, NCC furnishes 2 elements for
pactum commissorium to exist: (1) that there should be a pledge/mortgage wherein
pledged/mortgaged by way of security for the payment of the principal obligation; and (2)
that there should be a stipulation for an automatic appropriation by the creditor of the thing
pledged/mortgaged in the event of non payment of the principal obligation within the
stipulated period (UY TONG vs. CA, 161 S 383).            Thus, in the case at bar, the
stipulations in the promissory notes providing that (1) upon failure of the couple to pay
interest, ownership of the property would be automatically transferred to petitioner and (2)
the deed  of sale in its favor would be registered, are substantially , a pactum
commissorium.The subject transaction being void, the registration of the deed of sale by
virtue of which AFRD was able to obtain TCT 85569 covering the subject lot, must also be
declared void.

CASE NO. 20
SM: A.749, NCC; Donation of real property
HEIRS OF SALUD DIZON SALAMAT vs. TAMAYO
GR # 110644, October 30, 1998

FACTS: Augusto Dizon died intestate on May 15.1942 leaving as heirs his 5 children:
Eduardo, Gaudencio, Salud, Valenta and Natividad.  Dizon left, among others, a parcel of
land with an area of 2,188 sq. meters covered by OCT 10384 located in Hagonoy, Bulacan.
Gaudencio sold his hereditary rights to his sister Salud for P4k. Petitioners filed an action for
compulsory judicial partition of real properties with the Malolos RTC. They alleged that
Natividad, herein respondent, refused to agree to the formal distribution of the
properties.  This was due to Natividad’s claim that her father donated the lot covered by
OCT 10384 in 1936 with the other heirs’ consent. HELD: The alleged donation was done
 orally and not executed in a public document.  Further, the document which was presented
by respondent in support of her claim was a mere private document of conformity which was
executed by her elder brother, Eduardo in 1956. Eduardo and Gaudencio however had
already ceded their hereditary rights to petitioner Salud Salamat even before 1950.
Nevertheless, assuming that Agustin really made the oral donation, respondent can not still
claim ownership over the property. The parties being heirs of Agustin are co-owners of the
properties.  A co-ownership is a form of trust, with each owner being a trustee for each other
and possession of a co- owner shall not be regarded as adverse to other co-owners but in
fact is beneficial to them.  Mere actual possession by one will not give rise to the inference
that possession was adverse because a co-owner is, after all entitled to possession of the
property. Lastly, respondent never made unequivocal acts of repudiation, thus, she can not
acquire ownership over said realty thru acquisitive prescription.

CASE NO. 21
SM: Persons and Family Relations; A. 148, NCC
FRANCISCO vs. CA
GR# 102330, November 25, 1998

FACTS: Petitioner is private respondent Eusebio Francisco’s legal wife by his 2 nd

marriage. The other private respondents are his children by his 1 st marriage.
Allegedly, the Francisco’s have acquired several properties since their marriage in February
1962. Eusebio administered these realties until he was invalidated by various diseases,
rendering him unfit to administer them.  Petitioner averred that his children convinced their
father to sign a general power of attorney which authorized one of his children, Conchita, to
administer the house and lot as well as the apartments. Consequently, petitioner filed a suit
for damages and for annulment of said General Power Attorney and thus, enjoining its
enforcement.  She also sought to be declared as the administratrix of all the properties. 
HELD: The party who invokes the presumption provided by A.160, NCC must first prove
that the property in question was acquired during the marriage. Proof of acquisition during
the coverture is a condition sine qua non for the operation of the presumption in favor of the
conjugal partnership. The party who asserts this presumption must first prove said time
element. The presumption refers only to the property acquired during the marriage and does
not operate when there is no showing as to when the property alleged to be conjugal was
acquired.  Further, this presumption in favor of conjugality is rebuttable, but only with strong,
clear and convincing evidence; there must be a strict proof of exclusive ownership of one of
the spouses. In the case at bar, petitioner failed to adduce ample evidence to show that the
properties which she claimed to be conjugal were acquired during her marriage to Eusebio.

CASE NO.22
SM: Contracts; Arts. 1385 &1482
GOLDENROD, INC. vs. CA
GR# 126812, November 124, 1998

FACTS: Petitioner and private respondent Baretto Realty (BR) entered into a contract to sell
for one of the lots sold by BR.  Petitioner gave BR earnest money for the said property. It
appeared that the same was intended to form part of the purchase price and absent any
express provision it shall not be forfeited in favor of BR in case petitioner fails to comply with
his obligation. Petitioner informed BR that it would no longer push thru with the sale.  It then
resorted to extrajudicial rescission of its agreement to which BR did not object.  In fact, BR
sold the subject realty a day after said letter of rescission was received by BR’s president.
Petitioner demanded the return of its earnest money but BR refused.  HELD: Under A.1482,
NCC, whenever earnest money is given in a contract of sale, it shall be considered as part
of the purchase price and as proof of he perfection of the contract.  Petitioner clearly stated
without any objection from BR that the earnest money was intended to form part of the
purchase price.  It was an advance payment which must be deducted from the total
price.  Thus, the parties could not have intended that the earnest money or advance
payment would be forfeited when the buyer should fail to pay the balance of the price,
especially in the absence of a clear and express agreement thereon.  Petitioner resorted to
extrajudicial rescission of its contract with BR which in turn did not object. If the party does
not oppose the declaration of rescission of the other party, specifying the grounds therefore,
and if it fails to reply or protest against it, its silence thereon suggests an admission of the
veracity and validity of the rescinding party’s claim.  By virtue of the extrajudicial rescission
of the contract to sell by petitioner without opposition from BR, which, in fact, sold the
property to other persons, BR, as the vendor, had the obligation to return the earnest money
of P1M. It would be most inequitable if respondent BR would be allowed to retain it and at
the same time appropriate the proceeds of the 2nd sale.

CASE NO. 23
SM:  Quasi delicts; Liability of employers under Arts.2180 & 2194, NCC
METRO MANILA TRANSIT CORP. vs. CA
GR# s 116617 & 126395, November 16, 1998

FACTS: Liza Rosalie Rosales died due to a vehicular accident involving petitioner MMTC’s
vehicle driven by Pedro Musa.  Her parents sued MMTC and Musa for damages.  According
to MMTC, it has exercised the diligence of a good father of a family with respect to the
selection of employees by presenting mainly testimonial evidence on its hiring procedure.
Thus, it should not be liable for damages. HELD: The evidence presented by MMTC to
show that it exercised the diligence of a good father of a family in the selection and
supervision of employees and thus avoid the vicarious liability for the negligent acts of its
employees is insufficient to overcome the presumption of negligence against it. MMTC is
thus primarily liable for damages arising from the negligence of its employee in view of
A.2180, NCC. It can recover from its employee but does not make the latter’s liability
subsidiary. They are solidarily liable. The liability of the registered owner of a public service
vehicle for damages arising from the tortious acts of its driver is primary, joint and direct with
the driver.

CASE NO. 24
SM:  Prescription; constructive trust; donation, A. 736, NCC
MARQUEZ ET AL vs. CA
 GR # 125715, December 29, 1998

FACTS: Rafael and Felicidad Marquez have 12 children. Rafael Sr. executed a “Deed of
Donation Inter Vivos” covering said lot as well as the house thereon to 3 of his children,
namely: (1) petitioner Rafael, Jr.; (2) Alfredo; and (3) Belen, both private respondents, to the
exclusion of his other children, herein petitioners.  TCT 33350 was cancelled and TCT
47572 was issued in private respondents’ names. From 1983 to 1991, the private
respondents were in actual possession of the land.  But when petitioners learned about the
existence of TCT 47572, they claimed that since they are also Rafael Sr.’s children, they are
entitled to their respective shares over the land in question.  The private respondents
however ignored the petitioners’ demands. Petitioners filed a complaint for “Reconveyance
and Partition with Damages” alleging that both the Affidavit of Adjudication and “Deed of
Donation Inter Vivos’ were fraudulent since the private respondents took advantage of their
father’s advanced age. The private respondents raised the defense of prescription since the
same should have been filed within 4 years from the date of discovery of the alleged fraud.
HELD: When Rafael Sr.. misrepresented in his unilateral affidavit that he was the only heir
of his wife when in fact, their children were still alive and managed to secure a transfer of
certificate of title under his name a constructive trust under A.1456 was
established.  Constructive trusts are created in equity in order to prevent unjust
enrichment.  They arise contrary to intention against one who, by fraud, duress or abuse of
confidence, obtains/holds the legal right to property which ought not, in equity and good
conscience, to hold. In this regard, it is settled that an action for reconveyance based on an
implied/constructive trust prescribes in 10 years from the issuance of the Torrens Title over
the property.  In the case at bar, the prescriptive period shall start to run when TCT # 33350
was issued, which was on June 16, 1982.  Thus, since the action for reconveyance was
filed on May 31, 1991, approximately 9 years later, it is evident that prescription has not yet
barred the action. Implied trusts are obligations created by law, thus, the prescriptive period
to enforce the same prescribes in 10 years.

           
CASE NO. 25
SM: Obligations and contracts; double sale
CHENG vs. GENATO
 GR# 129760, December 29, 1998

FACTS: Respondent Ramon Genato entered into a contract to sell with the other
respondents, spouses Da Jose.  The contract was in a public instrument and was duly
annotated at the back of the 2 Transfer of Certificate of Titles covering the said lots.  The
contract provided, among others, the partial down payment of P50k and the payment of the
remaining P950k after 30 days and only after verifying and confirming the truth and
authenticity of the documents.  Said 30 days was executed for another 30
days.          Pending the effectivity of said extension, and without notifying the Da Joses,
Genato executed an Affidavit to Annul the Contract to Sell but no annotation of the same
was made at the back of his titles.
Cheng and Genato thereafter entered into a contract of sale over the lands. Genato decided
to continue the contract he had with the Da Joses and sent back Cheng’s check but Cheng
demanded compliance with their agreement as it was already perfected.  Cheng further
executed as Affidavit of Adverse Claim which was annotated on the subject
TCTs.  Meanwhile, the Da Joses paid Genato the P950k balance. HELD: The Da Joses
were not in default since the 30 day extension period has not yet expired.  In addition, no
further condition was agreed upon when the Da Joses were granted the 30 days extension.
Even if they did default in their Contract to sell, the affidavit to annul is not even called
for.  With or with out it, their non-payment to complete the full down payment of the
purchase price ipso facto avoids their contract to sell, it being subjected to a suspensive
condition.  When a contract is subject to a suspensive condition, its birth/effectivity can take
place only if and when the event which constitutes the condition happens or is fulfilled.  If it
does not take place, the parties would stand as if the conditional obligation had never
existed.  Further, the act of a party of canceling a contract should be made known to the
other.  Since that was not made, the Da Joses contract was not rescinded properly.  Lastly,
the knowledge gained by Cheng of t heist transaction between the Da Joses and Genato
defeats his rights even if  he is first to register the 2nd transaction, since such knowledge
taints his prior registration with bad faith.

CASE NO. 26
SM: Succession; A.777, NCC
 DELA MERCED ET AL vs. DELA MERCED
GR # 126707, February 25, 1999

FACTS: Evarista dela Merced died intestate and was survived by 3 sets of heirs: (1)
Francisco dela Merced, her legitimate brother; (2) Teresita Rupisan her niece from her
sister Rosa who died in 1943; and (3) the legitimate children of Eugenia, her other sister
who died in 1965.  Evarista left 5 parcels of land situated in Orambo, Pasig City. A year
later, Francisco died and was survived by his wife and their 3 children. Thereafter, the 3
sets of heirs of Evarista executed an extrajudicial settlement on her properties, each set
with a share of 1/3 pro-indiviso.  Joselito, Francisco’s illegitimate son, filed a petition for
annulment of the settlement alleging that he was fraudulently omitted from the said
settlement by petitioners who were fully aware of his relationship to the late Francisco.
Claiming succession rights, Joselito prayed that he be included as one of the beneficiaries
to share in the1/3 pro-indiviso share in Evarista’s estate corresponding to Francisco’s
heirs. HELD: The case at bar is one where an illegitimate child inherits from his father the
latter’s share in or portion of what the latter already inherited from his deceased sister
Evarista. Article 777, NCC governs.  Thus, an illegitimate child, as an heir of his late father,
has a right to the undivided share of his father from the estate of his father’s sister who had
predeceased him.  Since Evarista died ahead of Francisco, the latter inherited a portion of
the former’s estate as one of her heirs. Subsequently, when Francisco died, his heirs
namely: his wife; legitimate children; and Joselito, an illegitimate son, inherited Francisco’s
share in Evarista’s estate. Joselito does not claim to be Evarista’s heir by right of
representation but participates in his own right, as an heir of Francisco, in the latter’s share
in Evarista’s estate. 

CASE NO. 27
SM: Sales; A.1484 (1)
ELISCO TOOL MFG CORP vs. CA
GR # 109966, May31, 1999
FACTS: Private respondent Rolando Lantan entered into an agreement with his employer,
herein petitioner, leasing unto the former a Colt lancer fro a period of 5 years.  The contract
also provided that at the end of the 5 year period, Lantan may exercise the option to
purchase price of the car and he should just pay the remaining balance.  Said option is
limited to the employee.  It also provided that upon Lantan’s failure to pay 3 accumulated
monthly rentals, the petitioner will have the option to lease said vehicle to another. Lantan
also has to return the car in case he resigns or is dismissed.  He was laid off after petitioner
ceased operations in 1981.  At that time, he has paid P61, 070.94. Petitioner then filed a
replevin case against Lantan and his wife, alleging that they have failed to pay the monthly
rentals despite repeated demands.  HELD: Although the agreement provides for the
payment by Lantan of monthly rentals”, the 5 th paragraph thereof gives them the option to
purchase the motor vehicle at the end of the 5th year or upon payment of the 60 th monthly
rental when “all monthly rentals shall be applied to the payment of the full purchase price of
the car.” Clearly, the transaction is a lease in name only.  The so-called monthly rentals are
in truth monthly amortizations on the car’s price.  Being a contract of sale on installment,
A.1484 &1485 apply.  As such, the case should be considered as one for specific
performance pursuant to A.1484 (1). The prayer for a writ of replevin is only for the purpose
of ensuring specific performance by private respondents.  However, the private respondents
could no longer be held liable for the payment of interest on unpaid monthly rentals since it
was entered into in pursuance of a car plan adopted by petitioner for the benefit of its
deserving employees.  Further, private respondents’ default in payment was due to the
cessation of operations of petitioner’s sister company. Elizalde Steel Company. That
petitioner accepted payments from Lantan more than 2 years after the latter’s employment
have been terminated constitutes a waiver of petitioner’s right to collect interest upon
delayed payment. What private respondents paid should be considered the payment in full.

CASE NO.28
SM: Property; Action for reconveyance in an implied/ constructive trust
MANANGAN vs. DELOS REYES
GR# 115794, June 10, 1999
FACTS: Respondents were co owners of 3 parcels of land located in Mabaliguen, San
Narciso, Zambales.  Petitioner meantime, was their tenant and had been sharing the
harvest of the land with repondents’ mother, Macaria Villanueva, during her lifetime.
Macaria sold the realty to petitioner’s father, Victoriano , for P1k as shown by a duly
notarized deed of sale signed by Macaria and respondents except Inocencio Delos
Reyes.  The said land was registered after cadastral proceedings, in the names of Macaria,
Cirito and Francisco Delos Reyes on June 21, 1937. HELD: Petitioner’s right of action to
recover ownership of the land has prescribed and is barred by laches.  The remedy of the
land owner whose property has been wrongfully /erroneously registered in another’s name
is to bring an action in the ordinary courts for reconveyance.  An action for reconveyance
based on an implied/ constructive trust prescribes in 10 years from the issuance of the
Torrens Tile over the property. Petitioner slept on his right for 38 years counted from the
time the OCT was issued on January 21, 1937, until he filed his amended answer to
respondents’ complaint on March 14, 1975, asking for reconveyance of the lots.  His right to
bring such action was barred by laches as he took no step towards that direction reasonably
after the title to the property was issued under the Torrens System.

CASE NO. 29
SM: Obligation and contracts; Rescission, A.1191, NCC
ONG vs. CA
GR# 97347, July 06, 1999

FACTS: Petitioner Jaime Ong and respondent spouses Miguel and Alejandra Robles
executed an “Agreement of Purchase and Sale” on 2 lots for P2M. Ong paid the Robles
couple the initial payment of P103, 499.91 as agreed upon, by depositing it with the
UPCB.  Ong took possession of the property will all the improvements thereon.  He further
deposited the remaining payment with the BPI in accordance with their stipulation that Ong
pay the respondents’ loan with BPI. Ong issued 4 post dated Metro Bank checks to answer
fro his P1.4M balance but they were dishonored for insufficient funds. Ong failed to replace
the checks and out of the P496, 500 BPI loan, he only paid P393, 679.60.  Respondents
then sold 3 of their rice mill’s transformers found in the subject lots and Ong gave them the
authority to operate the mill while retaining possession of the lots. Respondents demanded
Ong the return of their properties. Ong ignored the same.  HELD: A careful reading of the
parties’ contract shows that it is a contract to sell whereby ownership is by agreement,
reserved in the vendor and is not to pass to the vendee till full payment of the purchase
price. In a contract to sell, payment of the purchase price is a positive suspensive condition,
the failure of which is not a breach, causal or serious, but a situation that prevents the
obligation of the vendor to convey title from acquiring an obligatory force.     In the instant
case, the respondents bound themselves to deliver a deed of absolute sale and a clean title
upon full payment by Ong of the P2M.  Ong’s failure to complete payment rendered the
contract to sell ineffective and without force and effect.  The breach contemplated in A.1191,
NCC is the obligor’s failure to comply with an obligation already extant, not a failure of a
condition to render binding that obligation.  Hence, the agreement of the parties herein
maybe set aside, but not because of a breach on Ong’s part to pay in full. Rather, his failure
brought a situation which prevented the obligation of respondents to convey title from
acquiring an obligatory force.

CASE NO. 30
SM: Wills and Succession; Holographic will; A.811, NCC
CODOY vs. CALUGAY
GR# 123486, August 12, 1999

FACTS: Matilde Seño Vda. De Ramonal executed a holographic will. Herein respondents,

devisees and legatees of said will filed with the RTC of Misamis Oriental a petition for
probate of said will.Petitioners opposed the petition alleging that the holographic will was a
forgery and that the same was even illegible.  They argued that the repeated dates
incorporated or appearing on the will after every disposition is out of the ordinary. The CA
held that the testimonies presented by respondents prove the authenticity of the will and the
handwriting and signature therein and allowed the will’s probate. HELD: The word “shall” in
a statute commonly denotes an imperative obligation and is inconsistent with the idea of
discretion and that the presumption is that the word “shall” when used in a statute is
mandatory.  However, in the case at bar, the goal to achieve is to give effect to the wishes
of the deceased and the evil to be prevented is the possibility that unscrupulous individuals
who for their benefit will employ means to defeat the wishes of the testator. Not all the
witnesses presented by the respondents testified explicitly that they were familiar with the
testator’s handwriting.  Further, the will was found not in the decedent’s personal belongings
but with one of the respondents who kept it even before the decedent’s death.  There was
even no opportunity for an expert to compare the signature and the handwriting of the
deceased with other documents signed and executed by her during her lifetime.  A
comparison of the strokes and signature of  the decedent in the will with the other
documents written by her prior to said will showed that there is uncertainty that the
holographic will is in the deceased’s handwriting.

CASE NO. 31
SM: Contracts; A.1603, NCC; equitable mortgage
CHING SEN BEN vs. CA
GR # 124355, September 21, 1999

FACTS: Petitioner constructed a house on his Marikina lot (TCT 128394) and agreed to
transfer the same to Vicente for P150, 000 to be paid by Vicente from the proceeds of his
housing loan from the SSS which granted him a P119, 400 loans.  Ching then executed a
Deed of Absolute Sale over said realty in Vicente’s favor.  Ching informed Vicente that he
has a P43k balance on the house and lot. Vicente failed to pay the said amount. Thereafter,
they executed a Deed of Sale with Assumption of Mortgage and With Right to Repurchase
whereby Vicente conveyed the property to Ching. It provided that Ching will assume all the
duties and obligations of Vicente imposed upon by the latter in the deed of mortgage he
executed in SSS’s favor, as if Ching was the original mortgagor in the mortgaged deed.
However, Vicente retained possession of the property. Ching paid in full to the SSS
Vicente’s account.  SSS then issued a release of REM annotated on TCT 146078 under
Vicente’s name.  Ching demanded that Vicente execute a Deed of Absolute Sale over the
property.  Vicente ignored it. HELD: The deed of sale with assumption of mortgage and right
to repurchase is actually an equitable mortgage. The purported consideration for the sale
with right to repurchasing the amount of P60, 242.86 is unusually inadequate compared to
the purchase price of P150k when Vicente bought it from Ching 6 months before the
execution of the deed.  Not only did Vicente retained possession of the property but he also
retained ownership thereof which led Ching to file the consolidation case.The real intention
of the parties was to secure the payment by Vicente of the balance of the purchase price
and the transfer fees of P43k.  The stipulation in the Deed of sale with right to repurchase
that absolute title shall be vested in the vendee in case the vendor failed to redeem the
property on the specified date is void for being a pactum commissorium.  Further, that Ching
assumed the mortgage obligation of Vicente to the SSS does not detract from the real
nature of the agreement as a contract of mortgage to secure the debt’s payment.

           
CASE NO. 32
SM: Donation; inofficious donation; A. 1144, NCC cf. A.771, NCC
IMPERIAL vs. CA
GR# 112483, October 08, 1999

FACTS: Leoncio Imperial sold his 32,827 sq. meters parcel of land for P1.00 to his
acknowledged son who then acquired title over the land and proceeded to subdivide it into
several lots. 2 years after the donation, Leoncio filed a complaint for annulment of the Deed
of Absolute Sale with the then CFI of Albay alleging that he was deceived by petitioner into
signing the said document. The dispute was however resolved through a Compromise
Agreement. Leoncio died leaving petitioner and an adopted son, Victor as heirs. Victor
thereafter died single and survived only by his natural father, Ricardo Villalon. When
Ricardo died, his 2 children filed a complaint with the RTC of Legazpi City for annulment of
the donation. Petitioner moved for its dismissal on the ground of res judicata, by virtue of the
Compromise Agreement rendered by the CFI of Albay. HELD: Since the action is one for
reduction of an inofficious donation the 30 year prescriptive period is inapplicable. A claim
for legitime does not amount to a claim of title.  Since the donation in the case at bar, the
reduction of which hinges upon the allegation of impairment of legitime, is not controlled by
a particular prescriptive period the ordinary rules of prescription apply. Under A.1144, NCC,
actions upon an obligation created by law must be brought within 10 years from the time the
right of action accrues.  Thus, the 10 year prescriptive period applies to the obligation to
reduce inofficious donations required under A. 771, NCC, to the extent that they impair the
compulsory heirs’ legitime. The 10 year period accrues upon the donor-decedent’s death. It
took private respondents 24 years since Leoncio’s death to initiate the case. The action
thus, has long prescribed.  Further, the private respondents are also guilty of estoppel by
laches.

           
CASE NO. 33
SM: Sales; double sale; A.1544,NCC
CAVILES vs. BAUTISTA
GR# 102648, November 24, 1999

FACTS: Respondent spouses purchased the subject property on October 18, 19982 from
Renato Plata, petitioners’ judgment debtor in Civil Case # 82-12668. Plata’s TCT was
cancelled and TCT 57006 was issued in respondents’ names. They relied on Plata’s
duplicate certificate of title, free from the notice of attachment.  However, the notice of
attachment was entered on the primary entry book of the Pasay City Register of Deeds
which failed to annotate the notice of attachment on the original copy of title.  Thus, when
the respondents verified the OCT with the Registry of Deeds, they found the same
unblemished by any liens/ encumbrances.  HELD: In involuntary registration such as an
attachment, levy on execution, lis pendens and the like entry thereof in the day book or
entry book is a sufficient notice to al persons of such adverse claim.  Petitioners’ lien of
attachment was properly recorded when it was entered in the primary entry book of the
Registry of Deeds on October 06, 1982. When the subject property was sold on execution
to the petitioners said sale retroacted to the date of inscription of petitioners’ notice of
attachment on October 06, 1982. The earlier registration of the petitioners’ levy on
preliminary attachment gave them superiority and preference in rights over the attached
property as against respondents. This is in accordance to A. 1544, NCC. Thus, the
execution sale in favor of the petitioners was antecedent and superior to the sale of the
same property to the Bautista couple on October 10, 1982.

CASE NO. 34
SM: Partnership; A. 1767, NCC
LIM TONG LIM vs. PFGI
GR # 136448, November 03, 1999

FACTS: Antonio Chua and Peter Yao, on behalf of Ocean Quest Fishing Corporation,
entered into a contract worth Philippine Fishing Gear Industries (PFGI) fro the purchase of
fishing nets of various sizes from the latter.  Chua and Yao claimed that they were engaged
in a business venture with petitioner Lim albeit the non participation of the latter in the
parties’ agreement. The buyers failed to pay for the fishing nets and the floats. A collection
suit was brought against the 3 in their capacities as general partners, allegedly because
OQFC was a non-existent corporation as shown by a certification from the SEC. The court
held the 3 as general partners based on a Compromise Agreement executed by Chua, Yao
and Lim in another case brought by Chua and Yao against Lim, among others.   It ruled that
though the Compromise Agreement was silent as to the nature of their obligations, their joint
liability could be presumed from the equal distribution of the profit and loss of their
business. HELD: The 3 had decided to engage in a fishing business which they started by
buying boats worth P3.35M financed by a loan secured from Jesus Lim, petitioner’s
brother.  In their Compromise Agreement, they subsequently revealed their intention to pay
the loan with the proceeds of the sale of the boats and to divide equally among them the
excess or loss.  These boats, the purchase and the repair of which were financed with
borrowed money, fell under the term “common fund” under A.1767, NCC. That the parties
agreed that any loss/profit from the sale and operation of the boats would be divided equally
among them also shows that they had indeed formed a partnership. Further, the nets and
floats, both essential to fishing, were obviously acquired in furtherance of their
business.  Clearly, Lim benefited from the use of the nets found inside F/B Lourdes, an
asset of the partnership. Under the law, an estoppel by corporation, those action on behalf
of a corporation and those benefited by it, knowing it to be without a valid existence, are
held liable as general partners. Undoubtedly, the 3 decided to form a corporation which, for
unknown reasons, was never legally formed.  Nonetheless, their liabilities as contracting
parties in representation of it survive.

           
CASE NO. 35
SM: Torts; A.2180 (5), NCC
CASTILEX INDUSTRIAL CO.  vs.  VASQUEZ, JR.
GR# 132266, December 21, 1999

FACTS: Jose Benjamin Abad was a Production Manager of petitioner.  Abad was given a

car owned by petitioner since he sometimes does overtime work at the petitioner’s office.
While leaving a restaurant after work, he figured in a vehicular accident which led to the
death of Vasquez, a side walk vendor and respondents’ son. Thereafter respondents and
Cebu Doctor’s Hospital sued Abad and petitioner for damages. HELD: The mere fact that
Abad was using a service vehicle at the time of the accident is not itself sufficient to charge
petitioner with liability for the negligent operation of said car unless it appears that Abad was
operating the vehicle within the course/ scope of his employment. The facts surrounding the
case showed that Abad was engaged in affairs of his own or was carrying out a personal
purpose not in line with his duties at the time the accident occurred.  2:00 am was way
beyond Abad’s normal working hours as well as his overtime work.  His being at a place
known as a “haven for prostitutes, pimp and drug pushers and addicts”, had no connection
to petitioner’s business,; neither had it any relation to his duties as petitioner’s
manager.  Rather, using his service car for personal purposes is a form of fringe benefit or
one of the perks attached to his position.

             
CASE NO. 36
SM: A.36, Family Code; psychological incapacity
HERNANDEZ vs. CA
GR# 126010, December 8, 1999

FACTS: Petitioner Lucita Estrella Hernandez and private respondent Mario Hernandez were
married and have 3 children. Petitioner filed before the Tagaytay City RTC a petition for
annulment of their marriage on the ground of psychological incapacity of Mario. Allegedly,
from the time of their marriage up to the time of filing of the suit, Mario failed to perform his
obligation to support the family and contribute to the management of the household,
devoting most of his time engaging in drinking sprees with his friends. Further, Mario, after
they got married, cohabited with another woman with whom he sired an illegitimate child
while having different affairs leading to petitioner having STD. Despite petitioner’s
allegations, the RTC dismissed the petition ruling that her grounds were not those
mentioned in A.55 of the Family Code.  It held that fraud must exist at the time of
celebration of the marriage. HELD: Psychological incapacity should refer to no less than a
mental (not physical) incapacity that causes a party to be truly incognitive of the basic
marital covenants that concomitantly must be assumed and discharged by the parties to the
marriage. The law confines psychological incapacity to the most serious cases of
personality disorders clearly demonstrative of an utter insensitivity/ inability to give meaning
and significance to the marriage. This psychological condition must exist at the time the
marriage is celebrated. If drug addiction, habitual alcoholism, lesbianism or homosexuality
should occur only during the marriage, they become mere grounds for legal separation
under A.55, FC.

CASE NO. 37
SM: Contracts; equitable mortgage; A.16029 (6) in relation to A.1604, NCC
AGUIRRE vs. CA
GR# 131520, Jaunuary 28, 2000

FACTS: Petitioner and private respondent Teofista Tupas entered into a Deed of Absolute
Sale covering a 3,230 sq. meters parcel of land located in Boracay Island. Consequently,
petitioner took possession and occupied the land. Claiming to have been disturbed in the
possession of he said land, petitioner filed a complaint for Quieting of Title and/or Recovery
of Possession with Damages against the Tupas couple.  The other private respondents
came as intervenors, being co-owners with their sister Teofista of the subject
land. HELD: The contract at bar is an equitable mortgage under A.1602 (6). First, the Tupas
couple built 2 cottages on the subject land as well as operated a sari-sari store and grew
banana plants on the same, such that almost 1/2of the area had been occupied by
them.  Despite this bold possession, petitioner admits that no demand to vacate the land
was ever made upon the Tupases.  Neither was rent ever collected from them for their
occupancy of the land.  Their possession remained undisturbed for years till the 1984
case.            The private respondents had continued paying tax on the subject land even
after the supposed sale took place.  Further, Teofista executed a Sworn Statement on June
21, 1973, more than a year after the April 30, 1972 transaction.  This Statement was
executed in compliance with PD#76 requiring all land owners during the martial Law period
to submit statements of their assets and their corresponding values. Included as asset in
Teofista’s Statement is the subject land.

CASE NO. 38
SM:  Contracts; void contract; A.1412 (2)
CAVITE DEVELOPMENT BANK vs. SPOUSES LIM
GR# 131679, February 01, 2000

FACTS: Rodolfo Guansing obtained a P90k loan from CDB and mortgaged a lot covered by
TCT#300809 registered in his name. Guansing defaulted in his payment and thus, CDB
foreclosed the mortgage which was sold to CDB in the foreclosure sale that
ensued.  Guansing failed to redeem his lot and CDB eventually consolidated title to the
property in its name evidenced by TCT# 355588.Private respondent Lolita Lim offered to
buy the lot from CDB. The offer provided 10% option money and the balance payable in
cash. Lim discovered that the subject property was originally registered in the name of
Perfecto Guansing, Rodolfo’s father. Apparently, Rodolfo succeeded in having the lot
registered in his name under the title he mortgaged to CDB and from which CDB’s title was
derived.  However, Perfecto instituted a case for the cancellation of Rodolfo’s title which
was granted and the decision became final and executory. HELD: In the instant case, the
P30k, although denominated in the offer to purchase as “option money”, is actually in the
nature of earnest money or down payment when considered with the other terms of the
offer. An option contract is a contract separate from and preparatory to a contract of sale
which, if perfected, does not result in the perfection or consummation of the sale.  Only
when the option is exercised may a sale be perfected.  Here however, after the payment of
the 10% option money, the offer to purchase provides for the payment only of the balance of
the purchase price.  This is the result of paying earnest money under A.1482, NCC. Clearly,
the parties entered into a contract of sale, perfected and partially executed by the partial
payment of the purchase sale. But due to the legal obstacle of the annulment of Rodolfo’s
title from which CDB derived its own title, the contract between it and Lim can not be
enforced and is void by reasons of public policy.  Since CDB can not be considered a
mortgagee in good faith due to its negligence for failing to conduct an exhaustive
investigation, it is liable to return the P30k, plus damages as provided by A.1412 (2), NCC.

CASE NO. 39
SM: Human relations; abuse of rights under A.19, NCC
UNIVERSITY OF THE EAST vs. JADER
GR # 132344, February 17, 2000

FACTS:  Respondent is a 4th year law student of UE. UE released a tentative list of

graduating students with his name on it.  He however had to take a removal examination for
one of his subjects but the results were not released immediately.    Jader nevertheless
attended the graduation rights and immediately enrolled in the bar review classes as his
preparation for the bar exams.  He however he failed the removal exam and is not a
graduate eligible to take the 1988Bar Exams. Aggrieved, Jader sued UE for damages since
he was not able to take the 1988 Bar Exams due to UE’s negligence.  UE argued that it
never led respondent to believe he completed the requirements for an LL.B. degree when
his name was included in the tentative list of graduating students.  HELD: When a student is
enrolled in any educational/learning institution a contract of education is entered into
between said institution and the student.  The professors, teachers/instructors hired by the
schools are considered merely as agents and administrators tasked to perform the school’s
commitment under the contract. It is thus the contractual obligation of the school to timely
inform, and furnish sufficient notice and information to each and every student as to whether
s/he had already complied with all the requirements for the conferment of a degree or
whether they would be included among those who will graduate.  Prior or subsequent to the
graduation ceremony, the school has the obligation to promptly inform the student of any
problem involving the latter’s grades and performance and most importantly, of the
procedures for remedying the same. UE, in belatedly informing Jader of the results of his
removal exam, particularly at a time when he had already commenced preparing for the bar
exams, can not be said to have acted in good faith. Educational institutions are duty- bound
to inform the students of their academic status and not wait for the latter to inquire from the
former.  Articles 19 & 20, NCC provides for good dealings between the persons and
contracting parties.

CASE NO. 40
SM: Obligation and contracts; rescissible contracts; A.1381(3), NCC
CHINA BANKING CORPORATION (CBC) vs. CA
GR# 129644, March 3, 2000

FACTS: Alfonso Roxas Chua obtained a loan from MetroBank which he secured by

mortgaging his conjugal share in a property covered by TCT #410603. Alfonso failed to pay
and consequently MetroBank foreclosed the realty.  In 1988, during the period of exercising
his right to redeem said realty, Alfonso sold his right of redemption to his son, Paulino who
redeemed the property and caused the annotation thereof at the back of the title.  This
preceded the annotation of the levy of execution in CBC’s favor by 2 years and the
certificate of sale also in CBC’s favor by more than 3 years. CBC is Alfonso’s creditor which
obtained judgment against him and Pacific Multi Agro Industrial Co. on November 07, 1985,
2 years before Alfonso sold his right to redeem to Paulino. Consequently, CBC sued
Paulino alleging that the transaction between him and his father was fraudulent and was
meant to defraud the latter’s creditors such as CBC.
HELD: Since the judgment of the trial court in CBC’s favor against Alfonso was rendered as
early as 1985, there is a presumption that the ’88 sale of his property, in this case, the right
of redemption, is fraudulent under A.1387, NCC. The fact that Paulino redeemed the
property and caused its annotation on the TCT ahead of CBC is of no moment since a
fraudulent transaction , such as Alfonso’s and Paulino’s , is not overcome by the mere fact
that the deeds of sale were in the nature of public instruments. This presumption is
strengthened by the fact that the conveyance has virtually left Alfonso’s other creditors with
no other property to attach. The mere fact that the conveyance was founded on valuable
consideration as in the case at bar, does not necessarily negates the presumption of fraud
under A.1387, NCC. There has to be a valuable consideration and the transaction must
have been made bona fide.   In the instant case, the presumption of fraudulent conveyance
has not been overcome.

CASE NO. 41
SM: Damages; Willful Misconduct
TAN vs. NORTHWEST AIRLINES
GR# 135802, March 3, 2000

FACTS: Tan sued NORTHWEST for damages for breach of contract of air carriage when
the latter failed to deliver Tan’s baggage on the date of her arrival.
The RTC of Makati City found NORTHWEST liable for damages. In its appeal to the CA,
NORTHWEST alleged that it was not guilty of willful misconduct and as such, no damages
should be granted to Tan. HELD: NORTHWEST was not guilty of willful misconduct. For
willful misconduct to exist there must be showing that the acts complained of were impelled
by an intention to violate the law or were in persistent disregard of one’s rights.  It must be
evidenced by a flagrantly/shamefully wrong or improper conduct. There was nothing in the
respondent’s conduct which showed that they were motivated by malice or bad faith in
loading her baggage in another plane. Due to weight and balance restrictions, as a safety
measure, respondent had to transport the baggage on a different  flight, but with the same
expected date and time of arrival in the Philippines.          Admittedly, NORTHWEST failed
to deliver Tan’s luggage on time but there was no showing of malice in such failure. By its
concern for safety, respondent had to ship the baggage in another flight with the same date
of arrival. Thus, it did not act in bad faith.         Where in breaching the contract of carriage,
defendant airline is not shown to have acted fraudulently or in bad faith, liability for damages
is limited to the natural and probable consequences of the breach of obligation which the
parties had foreseen.  In that case, such liability does not include moral and exemplary
damages.
CASE NO. 42
SM: Persons and Family Relations; A. 83, NCC; bigamous marriages
CALISTERIO vs. CALISTERIO
GR#136467, April 6, 2000

FACTS: Teodorico Calisterio died intestate leaving parcels of land worth P604, 750. He was
survived by his wife, herein respondent Marietta Calisterio. Marietta was previously married
to James Williams Bounds on January 13, 1946 in Caloocan City. Bounds disappeared
without a trace and subsequently, the Calisterio couple was married 11 years later without
Marietta having priorly secured a court declaration that James was presumptively dead.
Petitioner Antonia Armas, Teodorico’s sister, filed with the RTC of Quezon City a petition
claiming that she is the sole surviving heir of Teodorico since his marriage to Marietta was
allegedly bigamous and thus, null and void. Marietta opposed the petition stating that by
virtue of Bound’s disappearance, her 1 st marriage had been dissolved. HELD: When the
couple was married in 1958, the law in force was the New Civil Code and not the Family
Code which only took effect on August 3, 1988. Thus, A.83, NCC applies. In case whereby
the 1st spouse had been absent for 7 consecutive years at the time of the 2nd marriage, the
spouse present so contracting the later marriage must have done so in good faith. Further,
a judicial declaration of absence of the absentee spouse is not necessary as long as the
prescribed period of time has been met. In the instant case, Marietta’s 1 st husband has been
absent or has disappeared for more than 11 years before she entered into a 2 nd marriage in
1958 with the decedent. This 2nd marriage having been contracted during the regime of the
Civil Code should thus be deemed valid notwithstanding the absence of a judicial
declaration of presumptive death of James Bounds.

CASE NO. 43
SM: A.148, Family Code
TUMLOS vs. SPOUSES MARIO FERNANDEZ
GR# 137650, April 12, 2000
FACTS: Petitioner and Mario Fernandez cohabitated for sometime as husband and wife and
eventually stayed in the subject property. Thereafter, petitioner was sued for an ejectment
case by Mario and his legal wife, Lourdes. Petitioner alleged that she is legally married to
Mario and presented a Contract to Sell which showed her claim.  Thus, she asserted that
she is the co-owner of the property pursuant to A. 144, NCC. HELD: A. 144, NCC applies
only to a relationship between a man and a woman who are both not incapacitated to marry
each other, or to one in which the marriage of the parties is void form the beginning. It does
not apply to a cohabitation that amounts to adultery or concubinage, for it would be absurd
to create a co-ownership where there exists a prior conjugal partnership/ absolute
community between the man and his lawful wife. Evidence showed that Mario was
incapacitated to marry petitioner for he is legally married to Lourdes. The petitioner thus
cohabitated with Mario in a state of concubinage and as such, A.144, NCC is inapplicable.
What governs petitioner and Mario’s relationship is A.148, of the Family. In the case at bar,
petitioner failed to show any vested right over the subject property. Under A.148, FC, only
the properties acquired by both parties thru their actual joint contribution of money, property
or industry shall be owned by them in common in proportion to their respective
contributions. Actual contribution is required to be proven, otherwise, there will be no co-
ownership and no presumption of equal shares.

CASE NO. 44
SM: Property; Easement, A. 637, NCC in relation to A.50 of the Water Code; damages
REMMAN ENTERPRISES INC. vs. CA
 GR#125018, April 06, 2000

FACTS:          Petitioner Corporation and Crispin E. Lat are adjoining landowners.  Lat’s

land is agricultural and planted mostly with fruit trees.  REMMAN’s land is devoted to its
piggery business and is 1 ½ meters higher in elevation than that of Lat. REMMAN’s waste
disposal lagoon was already overflowing and inundating ¼ of Lat’s plantation. Almost 1
hectare of Lat’s plantation was already inundated with water containing pig manure, as a
result of which the trees growing on the flooded portion started to wither and die. Lat alleged
that the acidity of the soil in his plantation increased because of the overflow of the water
heavy with manure from REMMAN’s piggery farm.  REMMAN raised the defense that he
adopted measures to contain the waste water coming from its piggery to prevent any
damage to the adjoining estates. HELD: The ocular inspection showed that the waste water
containing pig manure was indeed continuously flowing from REMMAN‘s piggery farm to
Lat’s plantation. Such overflow went on for a year destroying several fruit trees on Lat’s
plantation. Art. 637, NCC and Art. 50, Water Code impose a natural easement upon the
lower estate to receive the waters which naturally and without the intervention of man
descend from higher states.  However, where the waters which flow from a higher state are
those which are artificially collected in man-made lagoons, any damage occasioned thereby
entitles the owner of the lower or servient state to compensation. REMMAN was negligent in
its maintenance of level waste water in its lagoons.  As such, even assuming that the heavy
rains constituted as an act of God, by reason of their negligence, the fortuitous event
became humanized and thus, petitioner is liable for the ensuing damages.

CASE NO. 45
SM: Contracts; Lease, A.1196, NCC
BUSE vs. CA
GR # 136913, May 12, 2000

FACTS: Petitioner leased from private respondents their 56 sq. meter lot in Manila for the
purpose of turning it into a commercial establishment.  Their contract provides, among
others, that the period for the lease shall be 15 years effective June 01, 1979, subject to
renewal for another 10 years. Private respondents reminded petitioner the expiration of the
contract on June 01, 1994 and demanded payment of the rentals in arrears.  Consequently,
petitioner refused to pay the increased rental of P1k as early as 1991. The respondents
meanwhile refused to accept the P400 monthly rental of petitioners.
HELD: The contract between the parties did not indicate specifically who may exercise the
option to renew, neither was it stated that the option was given for the petitioner’s benefit.
Pursuant to A.1196, NCC, the period of the lease contract is deemed to have been set for
the benefit of both parties.  Renewal of the contract maybe had only upon their mutual
agreement or at the will of them both.  Since the respondents were not amenable to a
renewal, they can not be compelled to execute a new contract when the old contract
terminated on June 01, 1994. It is the owner-lessor’s prerogative to terminate the lease at
its expiration.  The continuance, effectivity and fulfillment of a contract of lease can not be
made to depend exclusively upon the free ad uncontrolled choice of the lessee between
continuing payment  the payment of the rentals or not, completely depriving the owner of
any say in the matter.  Mutuality does not obtain in such a contract of lease and no equality
exists between the lessor and the lessee since the life of the contract would be dictated
solely by the lessee.

CASE NO. 46
SM:  Sales, Legal redemption, A.1523, NCC
FRANCISCO vs. BOISER
GR # 137677, May 31, 2000

FACTS: Petitioner Adalia Francisco and 3 of her sisters were co-owners of 4 parcels of

registered lands on which stands the Ten Commandments Building @ 689 Rizal Avenue
Extension, Caloocan City.  They sold 1/5 of their undivided share in said realty to their
mother, Adela Blas, for P10k, thus making the latter a co-owner of said property to the
extent of the share sold. Unknown to her children-co-owners, Blas sold her 1/5 share for
P10k to respondent, another sister of petitioner.  Thereafter, petitioner received summons
from respondent demanding her share in the rentals being collected by petitioner from the
building’s tenants.  Petitioner then informed respondent she was exercising her right of
redemption as a co-owner of said property and thus, she deposited the P10k as redemption
price with the Clerk of Court. The case was however dismissed. Petitioner filed her own
case alleging that the 30-day period for redemption under A.1623; NCC had not begun to
run against her since Blas never informed her and the other owners of the sale to the
respondent.  It was only on August 5, 1992, after she received summons, did she learn of
said sale.  Respondent said that petitioner already knew of the sale, the deed of which was
attached, as early as May 30, 1992 when she wrote a demand letter.
 HELD: Art.1623, NCC is clear in requiring that the written notification should come from the
vendor/prospective vendor, not from any other person. The vendor of an undivided interest
is in the best position to know who his co-owners are, who, under the law, must be notified
of the sale.  By not immediately notifying the co-owner, a vendor can delay or even
effectively prevent the meaningful exercise of the right of redemption.    In the case at bar,
the sale took place in 1986 but it was kept secret till 1992 when vendee, private respondent,
needed to notify t petitioner about the sale to demand 1/5 rentals from the property sold.
However, to prevent injustice, the SC held that the receipt by petitioner of summons on
August 05, 1992 constitutes actual knowledge on the basis of which petitioner may now
exercise her right of redemption within 30 days from finality of the SC’s decision.

           
CASE NO. 47
SM: Contracts; mortgage; property; possession in bad faith
ISAGUIRRE vs. DE LARA
GR# 138053, May 31, 2000

FACTS: In a previously decided case between the same parties, the SC affirmed
respondent’s title over the subject property. It also affirmed the validity of the OCT in
respondent’s name while at the same time nullifying the original certificate of title in
petitioner’s name.         As a consequence, the trial court issued a writ of possession against
petitioner. The latter refused to vacate alleging that he was a builder in good faith and is
entitled to reimbursement for the improvements he introduced on the property.  He further
argued that the prior decision of the SC did not direct his immediate ouster from the
property and its delivery to respondent. HELD: Since respondent has been declared the
sole owner of the subject lot she has the right to enjoy it.  Corollary, respondent also has the
right to exclude from the possession of her property any other person to whom she has not
transmitted such property. Generally, in a mortgage, the mortgagor retains possession of
the mortgaged property since title to the property does not pass to the mortgagee. However,
though a mortgagee does not have possession of the property, there is no impairment of his
security since the mortgage directly and immediately subjects the property upon which it is
imposed, whoever the possessor maybe, to the fulfillment of the obligation for whose
security it was constituted. Regardless of its possessor, the mortgaged property may still be
sold, with the prescribed formalities in the event of the debtor’s default in the payment of his
loan obligation. Thus the writ of possession in respondent’s favor is correct as it was but a
necessary consequence of the SC’s earlier ruling. Possession is an essential attribute of
ownership; thus, it would be redundant for respondent to go back to court simply to
establish her right to possess the property. Petitioner is indeed a builder on bad faith since it
was clear that petitioner knew from the beginning that there really was no sale and that he
only held the property as security for the payment of the loan.

CASE NO.49
SM: Arts. 1733 and 1755, NCC; damages
CALALAS vs. CA
GR# 122039, May 31, 2000

FACTS: Private respondent Sunga filed an action for breach of contract of carriage against
petitioner. Sunga suffered from injuries when the jeepney owned by petitioner where she
was riding on collided with a truck driven by Verena and owned by Salva. In fact, in another
case against the 2, the negligence of Verena was ruled to be the accident’s proximate
cause. HELD: A breach of contract/ culpa contractual is premised upon the negligence in
the performance of a contractual obligation. The action can be prosecuted merely by
proving the existence of the contract and the fact that the obligor, the common carrier in this
case, failed to transport his passenger safely to his destination. It is immaterial that the
proximate cause of the collision between the jeepney and the truck was the truck driver’s
negligence.  The doctrine of proximate cause is applicable only in actions for quasi-delict,
not in actions involving breach of contract. Where there is a pre-existing contractual relation
between the parties, it is the parties themselves who create the obligation, and the function
of the law is merely to regulate the relation created. In contracts of carriage, the carriers are
presumed negligent in cases of death or injury to passengers. In the case at bar, the
petitioner has to prove that he had observed extraordinary diligence in the care of his
passengers. This it failed to do. Its jeepney was not properly parked; the driver took in more
passengers than the allowed seating capacity of the jeepney- both violations of the
provisions of the Land Transportation and Traffic Code.

CASE NO. 50
SM: Obligations; when is a contract perfected
JARDINE DAVIES INC. vs. CA
GR#s 128066 & 128069, June 19, 2000

FACTS:          Purefoods Corporation (PC) decided to install 2 1500kw generators in its food

processing plant in Marikina City due to the 1992 power crisis.3 bidders submitted bid
proposals and gave bid bonds equivalent to 5% of their respective bids as required. Far
East Mill Supply Corporation (FEMSCO) won the contract and immediately submitted the
required performance bond amounting to P1, 841,187.90 and contractor’s all-risk insurance
policy totaling P6, 137,293 with PC acknowledged in a letter.  It also made arrangements
with its principal and started purchasing the necessary materials. PC meanwhile returned
FEMSCO’s Bidder’s Bond of P1M as requested. However, PC unilaterally cancelled the
award allegedly due to significant factors. FEMSCO protested the act and before the matter
could be resolved, PC already awarded the project and entered into a contract with Jardine
Nell, a division of Jardine Davies, Inc (JDI), which was not one of the original
bidders.  HELD: Contracts are perfected by mere consent, upon the acceptance by the
offeree of the offer made by the offeror. From that moment, the parties are bound not only to
the fulfillment of what has been expressly stipulated but also to all the consequences which,
according to their nature, maybe in keeping with good faith, usage and law.  For a contract
to arise, the acceptance must be made known to the offeror. Accordingly, the acceptance
can be withdrawn/ revoked before it is made known to the offeror.  PC started the process
on entering into the contract by conducting bidding. The bid proposals/quotations submitted
by the bidders which included FEMSCO are the offers and PC’s reply the acceptance /
rejection of the same.  The December 12, 1992 letter of PC to FEMSCO constituted
acceptance of FEMSCO’s offer notwithstanding the conditions contained in the contract.
The conditions were imposed on the performance of the obligation rather than on the
perfection of the contract. They were prescriptions on how the obligation was to be
performed and implemented, not conditions imposed on the perfection of the contract. PC’s
cancellation of its contract with FEMSCO presupposes that the contract has been
perfected. Here, the SC awarded moral damages to FEMSCO after it sufficiently showed
that its reputation has been tarnished (cf HANIL and ABS-CBN cases).