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FIRST DIVISION

[ G.R. No. 113564, June 20, 2001 ]


INOCENCIA YU DINO AND HER HUSBAND DOING BUSINESS UNDER THE
TRADE NAME "CANDY CLAIRE FASHION GARMENTS", PETITIONERS, VS.
COURT OF APPEALS AND ROMAN SIO, DOING BUSINESS UNDER THE NAME
"UNIVERSAL TOY MASTER MANUFACTURING", RESPONDENTS.
D E C I S I O N*
PUNO, J.:
Though people say, "better late than never", the law frowns upon those who assert their rights past
the eleventh hour. For failing to timely institute their action, the petitioners are forever barred from
claiming a sum of money from the respondent.
This is a petition for review on certiorari to annul and set aside the amended decision of the
respondent court dated January 24, 1994 reversing its April 30, 1993 decision and dismissing the
plaintiff-petitioners' Complaint on the ground of prescription.
The following undisputed facts gave rise to the case at bar:
Petitioners spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are
engaged in the business of manufacturing and selling shirts.[1] Respondent Sio is part owner and
general manager of a manufacturing corporation doing business under the trade name "Universal
Toy Master Manufacturing."[2]
Petitioners and respondent Sio entered into a contract whereby the latter would manufacture for the
petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in
accordance with the sample approved by the petitioners. These frogs and mooseheads were to be
attached to the shirts petitioners would manufacture and sell.[3]
Respondent Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The
last delivery was made on September 28, 1988. Petitioner fully paid the agreed price.
[4]
Subsequently, petitioners returned to respondent 29,772 pieces of frogs and mooseheads for
failing to comply with the approved sample. [5] The return was made on different dates: the initial one
on December 12, 1988 consisting of 1,720 pieces,[6] the second on January 11, 1989, [7] and the last
on January 17, 1989.[8]
Petitioners then demanded from the respondent a refund of the purchase price of the returned goods
in the amount of P208,404.00. As respondent Sio refused to pay, [9] petitioners filed on July 24, 1989
an action for collection of a sum of money in the Regional Trial Court of Manila, Branch 38.
The trial court ruled in favor of the petitioners, viz:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Vicente and Inocencia Dino
and against defendant Toy Master Manufacturing, Inc. ordering the latter to pay the former:
1. The amount of Two Hundred Eight Thousand Four Hundred Four (P208,404.00) Pesos with legal

interest thereon from July 5, 1989, until fully paid; and


2. The amount of Twenty Thousand (P20,000.00) Pesos as attorney's fees and the costs of this suit.
The counterclaim on the other hand is hereby dismissed for lack of merit." [10]
Respondent Sio sought recourse in the Court of Appeals. In its April 30, 1993 decision, the
appellate court affirmed the trial court decision. Respondent then filed a Motion for Reconsideration
and a Supplemental Motion for Reconsideration alleging therein that the petitioners' action for
collection of sum of money based on a breach of warranty had already prescribed. On January 24,
1994, the respondent court reversed its decision and dismissed petitioners' Complaint for having
been filed beyond the prescriptive period. The amended decision read in part, viz:
"Even if there is failure to raise the affirmative defense of prescription in a motion to dismiss or in an
appropriate pleading (answer, amended or supplemental answer) and an amendment would no
longer be feasible, still prescription, if apparent on the face of the complaint may be favorably
considered (Spouses Matias B. Aznar, III, et al. vs. Hon. Juanito A. Bernad, etc., supra, G.R. 81190,
May 9, 1988). The rule in Gicano vs. Gegato (supra) was reiterated in Severo v. Court of Appeals,
(G.R. No. 84051, May 19, 1989).
WHEREFORE the Motion For Reconsideration is granted. The judgment of this Court is set aside
and judgment is hereby rendered REVERSING the judgment of the trial court and dismissing
plaintiff's complaint."[11]
Hence, this petition with the following assignment of errors:
I.
The respondent Court of Appeals seriously erred in dismissing the complaint of the Petitioners on
the ground that the action had prescribed.
II.
The respondent Court of Appeals seriously erred in holding that the defense of prescription would
still be considered despite the fact that it was not raised in the answer, if apparent on the face of the
complaint.
We first determine the nature of the action filed in the trial court to resolve the issue of prescription.
Petitioners claim that the Complaint they filed in the trial court on July 24, 1989 was one for the
collection of a sum of money. Respondent contends that it was an action for breach of warranty as
the sum of money petitioners sought to collect was actually a refund of the purchase price they paid
for the alleged defective goods they bought from the respondent.
We uphold the respondent's contention.
The following provisions of the New Civil Code are apropos:
"Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary
course of his business manufactures or procures for the general market, whether the same is on
hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the general market, it is a contract for a piece of
work."

"Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of
work for the employer, in consideration of a certain price or compensation. The contractor may
either employ only his labor or skill, or also furnish the material."
As this Court ruled in Engineering & Machinery Corporation v. Court of Appeals, et al.,[12] "a
contract for a piece of work, labor and materials may be distinguished from a contract of sale by the
inquiry as to whether the thing transferred is one not in existence and which would never have
existed but for the order of the person desiring it. In such case, the contract is one for a piece of
work, not a sale. On the other hand, if the thing subject of the contract would have existed and been
the subject of a sale to some other person even if the order had not been given then the contract is
one of sale."[13] The contract between the petitioners and respondent stipulated that respondent
would manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of
vinyl mooseheads according to the samples specified and approved by the petitioners. Respondent
Sio did not ordinarily manufacture these products, but only upon order of the petitioners and at the
price agreed upon.[14] Clearly, the contract executed by and between the petitioners and the
respondent was a contract for a piece of work. At any rate, whether the agreement between the
parties was one of a contract of sale or a piece of work, the provisions on warranty of title against
hidden defects in a contract of sale apply to the case at bar, viz:
"Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall
deliver the thing produced to the employer and transfer dominion over the thing. This contract shall
be governed by the following articles as well as by the pertinent provisions on warranty of title and
against hidden defects and the payment of price in a contract of sale."
"Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing
sold may have, should they render it unfit for the use for which it is intended, or should they diminish
its fitness for such use to such an extent that, had the vendee been aware thereof, he would not have
acquired it or would have given a lower price for it; but said vendor shall not be answerable for patent
defects or those which may be visible, or for those which are not visible if the vendee is an expert
who, by reason of his trade or profession, should have known them."
Petitioners aver that they discovered the defects in respondent's products when customers in their
(petitioners') shirt business came back to them complaining that the frog and moosehead figures
attached to the shirts they bought were torn. Petitioners allege that they did not readily see these
hidden defects upon their acceptance. A hidden defect is one which is unknown or could not have
been known to the vendee.[15] Petitioners then returned to the respondent 29,772 defective pieces of
vinyl products and demanded a refund of their purchase price in the amount of P208,404.00. Having
failed to collect this amount, they filed an action for collection of a sum of money.
Article 1567 provides for the remedies available to the vendee in case of hidden defects, viz:
"Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect
between withdrawing from the contract and demanding a proportionate reduction of the price, with
damages in either case."
By returning the 29,772 pieces of vinyl products to respondent and asking for a return of their
purchase price, petitioners were in effect "withdrawing from the contract" as provided in Art. 1567.
The prescriptive period for this kind of action is provided in Art. 1571 of the New Civil Code, viz:
"Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six
months from the delivery of the thing sold." (Emphasis supplied)
There is no dispute that respondent made the last delivery of the vinyl products to petitioners on

September 28, 1988. It is also settled that the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989, [16] more than nine months from the
date of last delivery. Petitioners having filed the action three months after the six-month period for
filing actions for breach of warranty against hidden defects stated in Art. 1571, [17]the appellate court
dismissed the action.
Petitioners fault the ruling on the ground that it was too late in the day for respondent to raise the
defense of prescription. The law then applicable to the case at bar, Rule 9, Sec. 2 of the Rules of
Court, provides:
"Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed
waived; except the failure to state a cause of action . . . "

Thus, they claim that since the respondent failed to raise the defense of prescription in a motion to
dismiss or in its answer, it is deemed waived and cannot be raised for the first time on appeal in a
motion for reconsideration of the appellate court's decision.
As a rule, the defense of prescription cannot be raised for the first time on appeal. Thus, we held
in Ramos v. Osorio,[18] viz:
"It is settled law in this jurisdiction that the defense of prescription is waivable, and that if it was not
raised as a defense in the trial court, it cannot be considered on appeal, the general rule being that
the appellate court is not authorized to consider and resolve any question not properly raised in the
lower court (Subido vs. Lacson, 55 O.G. 8281, 8285; Moran, Comments on the Rules of Court, Vol.
I, p. 784, 1947 Edition)."
However, this is not a hard and fast rule. In Gicano v. Gegato,[19] we held:
". . .(T)rial courts have authority and discretion to dimiss an action on the ground of prescription
when the parties' pleadings or other facts on record show it to be indeed time-barred; (Francisco v.
Robles, Feb, 15, 1954; Sison v. McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961;
Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC, Feb. 28, 1958; 32 SCRA 529; Sinaon v.
Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to dismiss (Sec. 1,f, Rule 16,
Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5, Rule
16), or even if the ground is alleged after judgment on the merits, as in a motion for
reconsideration (Ferrer v. Ericta, 84 SCRA 705); or even if the defense has not been asserted
at all, as where no statement thereof is found in the pleadings (Garcia v. Mathis, 100 SCRA
250; PNB v. Pacific Commission House, 27 SCRA 766; Chua Lamco v. Dioso, et al., 97 Phil.
821); or where a defendant has been declared in default (PNB v. Perez, 16 SCRA 270). What is
essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period
be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of
the plaintiff's complaint, or otherwise established by the evidence."(emphasis supplied)
In Aldovino, et al. v. Alunan, et al.,[20] the Court en banc reiterated the Garcia v. Mathis doctrine
cited in the Gicano case that when the plaintiff's own complaint shows clearly that the action has
prescribed, the action may be dismissed even if the defense of prescription was not invoked by the
defendant.
It is apparent in the records that respondent made the last delivery of vinyl products to the petitioners
on September 28, 1988. Petitioners admit this in their Memorandum submitted to the trial court and
reiterate it in their Petition for Review. [21] It is also apparent in the Complaint that petitioners instituted
their action on July 24, 1989. The issue for resolution is whether or not the respondent Court of

Appeals could dismiss the petitioners' action if the defense of prescription was raised for the first
time on appeal but is apparent in the records.
Following the Gicano doctrine that allows dismissal of an action on the ground of prescription even
after judgment on the merits, or even if the defense was not raised at all so long as the relevant
dates are clear on the record, we rule that the action filed by the petitioners has prescribed. The
dates of delivery and institution of the action are undisputed. There are no new issues of fact arising
in connection with the question of prescription, thus carving out the case at bar as an exception from
the general rule that prescription if not impleaded in the answer is deemed waived. [22]
Even if the defense of prescription was raised for the first time on appeal in respondent's
Supplemental Motion for Reconsideration of the appellate court's decision, this does not militate
against the due process right of the petitioners. On appeal, there was no new issue of fact that
arose in connection with the question of prescription, thus it cannot be said that petitioners were not
given the opportunity to present evidence in the trial court to meet a factual issue. Equally important,
petitioners had the opportunity to oppose the defense of prescription in their Opposition to the
Supplemental Motion for Reconsideration filed in the appellate court and in their Petition for Review
in this Court.
This Court's application of the Osorio and Gicano doctrines to the case at bar is confirmed and now
enshrined in Rule 9, Sec. 1 of the 1997 Rules of Civil Procedure, viz:
"Section 1. Defense and objections not pleaded. - Defenses and objections not pleaded whether in
a motion to dismiss or in the answer are deemed waived. However, when it appears from the
pleadings that the court has no jurisdiction over the subject matter, that there is another action
pending between the same parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim." (Emphasis supplied)
WHEREFORE, the petition is DENIED and the impugned decision of the Court of Appeals dated
January 24, 1994 isAFFIRMED. No costs.
SO ORDERED.

warranty against hidden defects: moles v iac

SECOND DIVISION
[ G.R. No. 96271, June 26, 1992 ]
NATIVIDAD VILLOSTAS, PETITIONER, VS. THE HON. COURT OF APPEALS,
SECOND DIVISION, THE HON. SALVADOR S. TENSUAN AS PRESIDING
JUDGE OF RTC, MAKATI, BRANCH 146 AND ELECTROLUX
MARKETING, INCORPORATED, RESPONDENTS.
DECISION
PARAS, J.:
This is a petition for review on certiorari seeking the annulment of the resolution [1] of the respondent
Court of Appeals, dated November 16, 1990, in CA-G.R. Sp. No. 23178 denying the petitioner's
appeal which in effect affirms the decision[2] of the Regional Trial Court in Civil Case No. 90-1420

sustaining the decision[3] of the Metropolitan Trial Court, Branch 64, Makati, Metro Manila, dated
November 15, 1989 ordering herein petitioner to pay private respondent, among others, the amount
of P14,540.00.
The established facts of the case are as follows:
Desiring to have safe drinking water at home, herein petitioner Villostas and her husband decided to
buy a water purifier. At about this time, private respondent's Eletrolux sales agents were making door
to door selling of its products in the subdivision where petitioner has her residence. Because private
respondent's sales agents had assured petitioner of the very special features of their brand of water
purifier, petitioner Villostas placed an order for one (1) unit of said water purifier. On September 13,
1986, an Electrolux Aqua Guard water purifier was delivered and installed at petitioner's residence
(Rollo, p. 38; 49). Consequently, petitioner signed the Sales Order (Annex "B", p. 31) and the
Contract of Sale with Reservation of Title (Annex "A", p. 31) in October 1986 (Rollo, p. 38, 22). A
warranty certificate, Exhibit "1", was issued by private respondent which provides that:
"ELECTROLUX MARKETING, INCORPORATED WARRANTS THIS QUALITY ELECTROLUX
PRODUCT TO PERFORM EFFICIENTLY FOR ONE FULL YEAR FROM DATE OF ORIGINAL
PURCHASE." (Rollo, p. 49)
The purchase of said unit was on installment basis under which petitioner would pay the amount of
P16,190.00 in 20 monthly installments of P635.00 a month.
After two (2) weeks, petitioner verbally complained for the first time about the impurities, dirtiness
and bad odor coming out of the unit (Rollo, p. 22). On October 21, 1986, private respondent
Electrolux sent its service technician to examine and test the water purifier. The water which came
out was dirty so the unit was shut off automatically (Ibid.). The technician changed the filter of the
unit on said date without charge with an instruction that the filter should be changed every 6 months
otherwise the unit will not last long as the water in the area was dirty (Ibid.).
After the filter was replaced, petitioner paid the amount of P1,650.00 on November 18, 1986 which
included the first amortization of P700.00 (Ibid.).
Petitioner complained for the second and third time when dirty water still came out of the water
purifier after the replacement of the filter. It was on the third complaint of petitioner Villostas when the
service technician gave advise that the filter should be changed every six (6) months costing about
P300.00 which was considered to be uneconomical by the former (Rollo, pp. 22-23).
On December 9, 1986, petitioner sent a letter to the private respondent's branch manager stating
therein her complaint that the actual performance of the carbon filter was only for a month instead of
the private respondent's claim that the replacement of such filter will be only once every six (6)
months. The petitioner, citing the above incident as uneconomical, decided to return the unit and
demand a refund for the amount paid (Rollo, p. 76). Electrolux's branch manager offered to change
the water purifier with another brand of any of its appliance of the unit in her favor. Petitioner did not
accept it as she was disappointed with the original unit which did not perform as warranted.
Consequently, petitioner did not pay any more the subsequent installments in the amount of
P14,540.00 exclusive of interests. (Rollo, p. 23, 120).
What transpired next was an exchange of demand letter and reply between petitioner and private
respondent.

Ultimately, respondent Electrolux Marketing, Inc. filed a complaint against petitioner Villostas with the
MTC of Makati for the recovery of the sum of P14,540.00 representing the unpaid balance of the
purchase price of one (1) Electrolux Water Purifier plus interest thereon at the rate of 42% per
annum in accordance with the Sales Contract with Reservation of Title (Rolo, pp. 28-30).
In her amended answer, petitioner Villostas asserted that by reason of private respondent's breach
of warranty she was availing of the remedy of rescission of the contract of sale and offered to return
the water purifier to the seller as in fact, it was already being offered for return as early as December
9, 1986, aside from claiming for the refund of her payments. Petitioner prayed that the contract of
sale be declared rescinded and the payments refunded to her together with the full grant of the
claims asserted in her counterclaims (Rollo, pp. 35-36).
After trial on the merits, the MTC of Makati rendered its decision, the dispositive portion of which
reads:
"WHEREFORE, judgment is hereby rendered ordering the defendant to pay plaintiff as follows:
1)

the amount of P14,540.00 representing the unpaid outstanding balance of the aforesaid unit,

plus interest thereon at the rate of P42% per annum until fully paid;
2)

the amount of P1,000.00 as attorney's fees and

3)

dismissing the counterclaim of defendant.

"SO ORDERED." (Rollo, pp. 38-44)


The petitioner, thereafter, filed a notice of appeal from the judgment of said lower court. The
Regional Trial Court of Makati rendered its judgment affirming the disputed decision (Rollo, pp. 2124).
A motion for reconsideration having been denied, petitioner elevated the case to the Court of
Appeals and was given an inextendible period of 15 days to file a petition for review. Anticipating that
she would fail to comply with the deadline, herein petitioner filed a second extension to file a petition
for review which, however, was denied.
Herein, petitioner comes to this Court via petition for review on certiorari.
Petitioner assigns the following errors:
I
WHETHER OR NOT THE PETITION MADE BY THE PETITIONER TO THE SUPREME COURT IS
PROPER AND RIPE FOR JUDICIAL REVIEW.
II
WHETHER OR NOT PETITIONER IS ENTITLED TO RESCIND THE CONTRACT IN VIOLATION
OF THE WARRANTY FOR HIDDEN DEFECT OF THE ARTICLE DELIVERED BY THE
RESPONDENT.
III

WHETHER OR NOT PETITIONER IS BOUND TO PAY RESPONDENT HER REMAINING


BALANCE OF P14,540.00 PLUS INTEREST THEREON PURSUANT TO THE CONTRACT OF
SALE.
IV
WHETHER OR NOT PETITIONER IS LIABLE TO PAY RESPONDENT ATTORNEY'S FEES
PURSUANT TO THE CONTRACT PLUS COSTS OF SUIT.
The main issue in the instant case is whether or not the petitioner is entitled to rescind the contract
on the basis of a violation of the warranty of the article delivered by the respondent.
Petitioner contends that the Regional Trial Court erred when it ruled that its claim for rescission had
prescribed inasmuch as she had formally notified the seller within a reasonable time, that is, 2
months and 26 days, from the delivery of water purifier on September 13, 1986 of her election to
rescind.
Private respondent counters that the petitioner is not entitled to rescission vis-a-vis alleged violation
of the warranty for hidden defects for the reason that rescission of contract sought by petitioner was
beyond the jurisdictional competence of the trial court. It adds that petitioner could no longer avail of
rescission because said legal recourse was time barred judging from delivery of the water purifier on
September 13, 1986 pursuant to Art. 1571 of the New Civil Code.
The petition is impressed with merit.
Anent the jurisdictional competence of the Metropolitan Trial Court to order rescission of contract,
suffice it to say that the action was initiated by herein private respondent Electrolux when it filed a
complaint for collection of a sum of money worth P14,540.00, against petitioner Villostas. Said
amount is indubitably within the jurisdiction of the Metropolitan Trial Court since it does not exceed
P20,000.00 exclusive of interest and costs but inclusive of damages of whatever (Maceda v. CA,
G.R. No. 83545, 176 SCRA 440 [1989]). Moreover, the jurisdiction of the court over the subject
matter is determined by the allegations of the complaint irrespective of whether or not the plaintiff is
entitled to recover upon all or some of the claims asserted therein (Caparros v. CA, G.R. No. 56803,
170 SCRA 758 [1989]). When the petitioner, therefore, raised rescission of contract in her answer,
the court is not divested of its jurisdiction over the case on account of defenses raised by the answer.
The court is then merely authorized to receive evidence thereon (Dela Cruz v. Bautista, G.R. No.
39692, 186 SCRA 517, [1990]). Clearly, the jurisdiction of the court cannot be made to depend upon
the defenses set up in the answer or upon the motion to dismiss. Otherwise, the question of
jurisdiction would depend almost entirely upon the defendant (Caparros v. CA, supra).
As regards the contention that the action for rescission is barred by prescription under Art. 1571 of
the Civil Code, the same is bereft of merit. It must be pointed out that at the time the Electrolux Aqua
Guard water purifier was delivered and installed at petitioner Villostas' residence, a Warranty
Certificate was issued by private respondent Electrolux which reads:
"ELECTROLUX MARKETING, INCORPORATED WARRANTS THIS QUALITY ELECTROLUX
PRODUCT TO PERFORM EFFICIENTLY FOR ONE FULL YEAR FROM DATE OF ORIGINAL
PURCHASE."

The foregoing is clearly an express warranty regarding the efficiency of the water purifier. On this
regard the court said that while it is true that Article 1571 of the Civil Code provides for a prescriptive
period of six months for a redhibitory action, a cursory reading of the ten preceding articles to which
it refers will reveal that said rule may be applied only in case of implied warranties. The present case
involves one with an express warranty. Consequently, the general rule on rescission of contract,
which is four years (Article 1389, Civil Coded) shall apply (Moles v. IAC, G.R. No. 73913, 169 SCRA
777 [1989]). Inasmuch as the instant case involves an express warranty, the filing of petitioner's
amended answer on September 30, 1988 is well within the four-year prescriptive period for
rescission of contract from September 13, 1986, which was the delivery date of the unit.
PREMISES CONSIDERED, the decision appealed from is REVERSED and SET ASIDE and the
complaint of private respondent is DISMISSED. The sale of the water purifier is hereby
RESCINDED.
SO ORDERED.

mcq in civil law with answers


(1)When does a declaration of absence of a missing person take effect?
(A) Immediately from the issuance of the declaration of absence.
(B) 3 months after the publication of the declaration of absence.
(C) 6 months after the publication of the declaration of absence.
(D) 15 days from the issuance of the declaration of absence.
(2) The authority that school administrators exercise over school children under their supervision,
instruction, or custody is called
(A) legal parental authority.
(B) substitute parental authority.
(C) ordinary parental authority.
(D) special parental authority.
(3) Can future inheritance be the subject of a contract of sale?
(A) No, since it will put the predecessor at the risk of harm from a tempted buyer, contrary to
public policy.
(B) Yes, since the death of the decedent is certain to occur.
(C) No, since the seller owns no inheritance while his predecessor lives.
(D) Yes, but on the condition that the amount of the inheritance can only be ascertained after
the obligations of the estate have been paid.
(4) Upon the proposal of a third person, a new debtor substituted the original debtor without the
latters consent. The creditor accepted the substitution. Later, however, the new debtor became

insolvent and defaulted in his obligation. What is the effect of the new debtors default upon the
original debtor?
(A) The original debtor is freed of liability since novation took place and this relieved him of
his obligation.
(B) The original debtor shall pay or perform the obligation with recourse to the new debtor.
(C) The original debtor remains liable since he gave no consent to the substitution.
(D) The original debtor shall pay or perform 50% of the obligation to avoid unjust enrichment
on his part.
(5) Lennie bought a business class ticket from Alta Airlines. As she checked in, the manager
downgraded her to economy on the ground that a Congressman had to be accommodated in the
business class. Lennie suffered the discomfort and embarrassment of the downgrade. She sued the
airlines for quasi-delict but Alta Airlines countered that, since her travel was governed by a contract
between them, no quasi-delict could arise. Is the airline correct?
(A) No, the breach of contract may in fact be tortious as when it is tainted as in this case with
arbitrariness, gross bad faith, and malice.
(B) No, denying Lennie the comfort and amenities of the business class as provided in the
ticket is a tortious act.
(C) Yes, since the facts show a breach of contract, not a quasi-delict.
(D) Yes, since quasi-delict presupposes the absence of a pre-existing contractual relation
between the parties.
(6) Which of the following is an indispensable requirement in an action for "quieting of title" involving
real property? The plaintiff must
(A) be in actual possession of the property.
(B) be the registered owner of the property.
(C) have legal or equitable title to the property.
(D) be the beneficial owner of the property.
(7) X and Y were to marry in 3 months. Meantime, to express his affection, X donated a house and
lot to Y, which donation X wrote in a letter to Y. Y wrote back, accepting the donation and took
possession of the property. Before the wedding, however, Y suddenly died of heart attack. Can Ys
heirs get the property?
(A) No, since the marriage did not take place.
(B) Yes, since all the requisites of a donation of an immovable are present.
(C) No, since the donation and its acceptance are not in a public instrument.
(D) Yes, since X freely donated the property to Y who became its owner.

(8) Rene and Lily got married after a brief courtship. After one month, Lily discovered that while
Rene presented himself as a macho man he was actually gay. He would not go to bed with her. He
kept obscene magazines of nude men and always sought the company of handsome boys. What
legal remedy does Lily have?
(A) She can file an action for annulment of marriage on ground of fraud.
(B) She can seek a declaration of nullity of the marriage based on Renes psychological
incapacity.
(C) She can go abroad and file for divorce in a country that can grant it.
(D) She has none since she had the opportunity to examine the goods and freely entered
into the marriage.
(9) Lucio executed a simple deed of donation of P50 million on time deposit with a bank in favor of A,
B, C, D, and E, without indicating the share of each donee. All the donees accepted the donation in
writing. A, one of the donees, died. Will B, C, D, and E get As share in the money?
(A) Yes, accretion will automatically apply to the joint-donees in equal shares.
(B) Yes, since the donors intention is to give the whole of P50 million to the jointdonees in
equal shares.
(C) No, A"s share will revert to the donor because accretion applies only if the joint-donees
are spouses.
(D) No, As share goes to his heirs since the donation did not provide for reversion to donor.
(10) Raul, Ester, and Rufus inherited a 10-hectare land from their father. Before the land could be
partitioned, however, Raul sold his hereditary right to Raffy, a stranger to the family, for P5 million. Do
Ester and Rufus have a remedy for keeping the land within their family?
(A) Yes, they may be subrogated to Raffys right by reimbursing to him within the required
time what he paid Raul.
(B) Yes, they may be subrogated to Raffys right provided they buy him out before he
registers the sale.
(C) No, they can be subrogated to Raffys right only with his conformity.
(D) No, since there was no impediment to Raul selling his inheritance to a stranger.
(11) When one exercises a right recognized by law, knowing that he thereby causes an injustice to
another, the latter is entitled to recover damages. This is known as the principle of
(A) res ipsa loquitur.
(B) damnum absque injuria.
(C) vicarious liability.
(D) abuse of rights.

(12) Which of the following is NOT a basis for rendering a disinheritance defective or imperfect?
(A) Its cause comes from the guilt of a spouse in a legal separation case, the innocentspouse having died.
(B) The truth of its cause is denied and not sufficiently proved by evidence.
(C) Its cause is not authorized by the law.
(D) Its cause is not specified.
(13) Manuel came to Manila and married Marianne. Unknown to Marianne, Manuel had been
previously convicted in Palawan of theft and served time for it. After Marianne learned of his previous
conviction, she stopped living with him. Can Marianne seek the annulment of the marriage based on
Manuels nondisclosure of his previous crime?
(A) No, since the assumption is that marriage forgives all past wrongs.
(B) Yes, since the non-disclosure of that crime is the equivalent of fraud, which is a ground
for annulment.
(C) No, in case of doubt, the law must be construed to preserve the institution of marriage.
(D) No, since Manuel already served the penalty for his crime.
(14) Arthur and Helen, both Filipinos, got married and had 2 children. Arthur later worked in Rome
where he acquired Italian citizenship. He got a divorce from Helen in Rome but, on returning to the
Philippines, he realized his mistake, asked forgiveness of his wife, and resumed living with her. They
had 2 more children. What is the status of their 4 children?
(A) The children born before the divorce are legitimate but those born after it are not since
Arthur got the divorce when he had ceased to be a Filipino.
(B) The divorce rendered illegitimate the children born before it since the marriage that begot
them had been nullified.
(C) The children born before and after the divorce are all legitimate since Philippine law does
not recognize divorce.
(D) All the children are legitimate since they were born of the same father and mother.
(15) Who can make a donation?
(A) All persons who can enter into contracts and dispose of their property.
(B) All persons who are of legal age and suffer from no civil interdiction.
(C) All persons who can make a last will and testament.
(D) All persons, whether natural or artificial, who own property.
(16) The liability of the partners, including industrial partners for partnership contracts entered into in
its name and for its account, when all partnership assets have been exhausted is

(A) Pro-rata.
(B) Joint.
(C) Solidary.
(D) Voluntary.
(17) When can a missing person who left someone to administer his property be declared an
absentee by the court? When he has been missing for
(A) 2 years from the receipt of the last news about him.
(B) 7 years from the receipt of the last news about him.
(C) 10 years from the receipt of the last news about him.
(D) 5 years from the receipt of the last news about him.
(18) Which of the following claims against the debtor enjoys preference over the others with respect
to his specific immovable property and real rights?
(A) Unpaid price of real property sold, upon the immovable property.
(B) Mortgage credits recorded in the registry of property, upon the mortgaged real estate.
(C) Taxes due, upon the land or building.
(D) Expenses for the preservation and improvement of property, when the law authorizes
reimbursement, upon the preserved or improved immovable.
(19) When bilateral contracts are vitiated with vices of consent, they are rendered
(A) rescissible.
(B) void.
(C) unenforceable.
(D) voidable.
(20) An agent, authorized by a special power of attorney to sell a land belonging to the principal
succeeded in selling the same to a buyer according to the instructions given the agent. The agent
executed the deed of absolute sale on behalf of his principal two days after the principal died, an
event that neither the agent nor the buyer knew at the time of the sale. What is the standing of the
sale?
(A) Voidable.
(B) Valid.
(C) Void.
(D) Unenforceable.

(21) Spouses A and B leased a piece of land belonging to B's parents for 25 years. The spouses
built their house on it worth P300,000.00. Subsequently, in a case that C filed against A and B, the
court found the latter liable to C for P200,000.00. When the sheriff was attaching their house for the
satisfaction of the judgment, A and B claimed that it was exempt from execution, being a family
home. Is this claim correct?
(A) Yes, because while Bs parents own the land, they agreed to have their daughter build
her family home on it.
(B) No, because there is no judicial declaration that it is a family home.
(C) No, since the land does not belong to A and B, it cannot qualify as a family home.
(D) Yes, because the A and Bs family actually lives in that house.
(22) Solomon sold his coconut plantation to Aragon, Inc. for P100 million, payable in installments of
P10 million per month with 6% interest per annum. Solomon married Lorna after 5 months and they
chose conjugal partnership of gains to govern their property relations. When they married, Aragon
had an unpaid balance of P50 million plus interest in Solomons favor. To whom will Aragons
monthly payments go after the marriage?
(A) The principal shall go to the conjugal partnership but the interests to Solomon.
(B) Both principal and interests shall go to Solomon since they are his exclusive properties.
(C) Both principal and interests shall go to the conjugal partnership since these become due
after the marriage.
(D) The principal shall go to Solomon but the interests to the conjugal partnership.
(23) X and Y, although not suffering from any impediment, cohabited as husband and wife without
the benefit of marriage. Following the birth of their child, the couple got married. A year after,
however, the court annulled the marriage and issued a decree of annulment. What is the present
status of the child?
(A) Legitimated.
(B) Illegitimate.
(C) Natural child.
(D) Legitimate.
(24) When A and B married, they chose conjugal partnership of gains to govern their property
relations. After 3 years, B succeeded in getting her marriage to A annulled on ground of the latters
psychological incapacity. What liquidation procedure will they follow in disposing of their assets?
(A) They will follow the rule governing the liquidation of a conjugal partnership of gains where
the party who acted in bad faith forfeits his share in the net profits.
(B) Since the marriage has been declared void, the rule for liquidation of absolute community
of property shall be followed.

(C) The liquidation of a co-ownership applies since the annulment brought their property
relation under the chapter on property regimes without marriage.
(D) The law on liquidation of partnerships applies.
(25) X and Y agreed verbally before their marriage (a) on the paternity of the illegitimate child of Y
and (b) on the economic regime that will govern X and Ys property relations. Is the verbal
agreement valid?
(A) No, because a marriage settlement to be valid should be in writing.
(B) Yes, since ante-nuptial agreements need not be in writing.
(C) No, because a marriage settlement cannot include an agreement on the paternity of an
illegitimate child.
(D) Yes, since even if it is not a valid marriage settlement, it is a valid verbal contract.
(26) Spouses X and Y have a minor daughter, Z, who needs support for her education. Both X and Y,
who are financially distressed, could not give the needed support to Z. As it happens, Zs other
relatives are financially capable of giving that support. From whom may Z first rightfully demand
support? From her
(A) grandfather.
(B) brother.
(C) uncle.
(D) first cousin.
(27) Fidel, a Filipino with fair complexion, married Gloria. Before the marriage, Gloria confessed to
Fidel that she was two-month pregnant with the child of a black African who had left the country for
good. When the child was born, Fidel could not accept it being too black in complexion. What is the
status of the child?
(A) Illegitimate, because Gloria confessed that the child is not Fidels.
(B) Illegitimate, because by the color of its skin, the child could not possibly be that of Fidel.
(C) Legitimate, because the child was born within a valid marriage.
(D) Legitimate, because Fidel agreed to treat the child as his own after Gloria told him who
the father was.
(28) The husbands acts of forcibly ejecting his wife without just cause from the conjugal dwelling and
refusing to take her back constitutes
(A) desertion.
(B) recrimination.
(C) constructive abandonment.

(D) de facto separation.


(29) In his will, the testator designated X as a legatee to receive P2 million for the purpose of buying
an ambulance that the residents of his Barangay can use. What kind of institution is this?
(A) a fideicomissary institution.
(B) a modal institution.
(C) a conditional institution.
(D) a collective institution.
(30) X insured himself for P5 million, designating Y, his wife, as his sole beneficiary. The designation
was irrevocable. A few years later, X had their marriage annulled in court on the ground that Y had
an existing prior marriage. X subsequently died, Is Y entitled to the insurance benefits?
(A) Yes, since the insurance was not dependent on the marriage.
(B) Yes, since her designation as beneficiary was irrevocable.
(C) No, Xs designation of Y is revoked by operation of law upon the annulment of their
marriage based on Ys fault.
(D) Yes, since without judicial revocation, Xs designation of Y remains valid and binding.
(31) May a spouse freely donate communal or conjugal property without the consent of the other?
(A) Absolutely not, since the spouses co-own such property.
(B) Yes, for properties that the family may spare, regardless of value.
(C) Yes, provided the donation is moderate and intended for charity or family rejoicing.
(D) Yes, in a donation mortis causa that the donor may still revoke in his lifetime.
(32) The decedent died intestate leaving an estate of P10 million. He left the following heirs: a)
Marlon, a legitimate child and b) Cecilia, the legal spouse. Divide the estate.
(A) Marlon gets 1/4 and Cecilia gets 3/4.
(B) Marlon gets 2/3 and Cecilia 1/3.
(C) Marlon gets 1/2 and Cecilia gets 1/2.
(D) Marlon gets 3/4 and Cecilia 1/4.
(33) Contracts take effect only between the parties or their assigns and heirs, except where the
rights and obligations arising from the contract are not transmissible by their nature, by stipulation, or
by provision of law. In the latter case, the assigns or the heirs are not bound by the contracts. This is
known as the principle of
(A) Relativity of contracts.
(B) Freedom to stipulate.

(C) Mutuality of contracts.


(D) Obligatory force of contracts.
(34) A buyer ordered 5,000 apples from the seller at P20 per apple. The seller delivered 6,000
apples. What are the rights and obligations of the buyer?
(A) He can accept all 6,000 apples and pay the seller at P20 per apple.
(B) He can accept all 6,000 apples and pay a lesser price for the 1,000 excess apples.
(C) He can keep the 6,000 apples without paying for the 1,000 excess since the seller
delivered them anyway.
(D) He can cancel the whole transaction since the seller violated the terms of their
agreement.
(35) Lino entered into a contract to sell with Ramon, undertaking to convey to the latter one of the
five lots he owns, without specifying which lot it was, for the price of P1 million. Later, the parties
could not agree which of five lots he owned Lino undertook to sell to Ramon. What is the standing of
the contract?
(A) Unenforceable.
(B) Voidable.
(C) Rescissible.
(D) Void.
(36) Knowing that the car had a hidden crack in the engine, X sold it to Y without informing the latter
about it. In any event, the deed of sale expressly stipulated that X was not liable for hidden defects.
Does Y have the right to demand from X a reimbursement of what he spent to repair the engine plus
damages?
(A) Yes. X is liable whether or not he was aware of the hidden defect.
(B) Yes, since the defect was not hidden; X knew of it but he acted in bad faith in not
disclosing the fact to Y.
(C) No, because Y is in estoppel, having changed engine without prior demand.
(D) No, because Y waived the warranty against hidden defects.
(37) Acme Cannery produced sardines in cans known as "Sards." Mylene bought a can of Sards
from a store, ate it, and suffered from poisoning caused by a noxious substance found in the
sardines. Mylene filed a case for damages against Acme. Which of the following defenses will hold?
(A) The expiry date of the "Sards" was clearly printed on its can, still the store sold and
Mylene bought it.
(B) Mylene must have detected the noxious substance in the sardines by smell, yet she still
ate it.

(C) Acme had no transaction with Mylene; she bought the "Sards" from a store, not directly
from Acme.
(D) Acme enjoys the presumption of safeness of its canning procedure and Mylene has not
overcome such presumption.
(38) Fernando executed a will, prohibiting his wife Marina from remarrying after his death, at the pain
of the legacy of P100 Million in her favor becoming a nullity. But a year after Fernandos death,
Marina was so overwhelmed with love that she married another man. Is she entitled to the legacy,
the amount of which is well within the capacity of the disposable free portion of Fernandos estate?
(A) Yes, since the prohibition against remarrying is absolute, it is deemed not written.
(B) Yes, because the prohibition is inhuman and oppressive and violates Marinas rights as a
free woman.
(C) No, because the nullity of the prohibition also nullifies the legacy.
(D) No, since such prohibition is authorized by law and is not repressive; she could remarry
but must give up the money.
(39) X, the owner, constituted a 10-year usufruct on his land as well as on the building standing on it
in Ys favor. After flood totally destroyed the building 5 years later, X told Y that an act of God
terminated the usufruct and that he should vacate the land. Is X, the owner of the land, correct?
(A) No, since the building was destroyed through no fault of Y.
(B) No, since Y still has the right to use the land and the materials left on it.
(C) Yes, since Y cannot use the land without the building.
(D) Yes, since the destruction of the building without the Xs fault terminated the usufruct.
(40) In gratitude, the grooms parents made a donation of a property in writing to the brides parents
shortly before their childrens wedding. The donation was accepted. What is the nature of the
donation?
(A) It is an ordinary donation since it was not given to the bride or groom.
(B) It is donation propter nuptias since it was given with the marriage in mind.
(C) It is an indirect donation propter nuptias since the bride would eventually inherit the
property from her parents.
(D) It is a remunatory donation.
(41) X and Y, both Filipinos, were married and resided in Spain although they intend to return to the
Philippines at some future time. They have not executed any marriage settlements. What law
governs their property relations?
(A) They may choose between Spanish law and Philippine law.
(B) Philippine law since they are both Filipinos.

(C) No regime of property relations will apply to them.


(D) Spanish law since they live in Spain.
(42) Birth determines personality. Death extinguishes it. Under what circumstances may the
personality of a deceased person continue to exist?
(A) In case of re-appearance of a missing person presumed dead.
(B) In protecting the works of a deceased under intellectual property laws.
(C) In case of declaration of presumptive death of a missing spouse.
(D) In the settlement of the estate of a deceased person.
(43) Six tenants sued X, the landowner, for willfully denying them water for their farms, which water
happened to flow from land under Xs control, his intention being to force them to leave his
properties. Is X liable for his act and why?
(A) No, because the tenants must be content with waiting for rainfall for their farms.
(B) No, since X owns both the land and the water.
(C) Yes, because the tenants farms have the natural right of access to water wherever it is
located.
(D) Yes, since X willfully caused injury to his tenants contrary to morals, good customs or
public policy.
(44) Illegitimate brothers and sisters, whether of full or half-blood, are bound to support each other,
EXCEPT when
(A) the brother or sister who needs support lives in another place.
(B) such brothers and sisters are not recognized by their father.
(C) the brother or sister in need stops schooling without valid reason.
(D) the need for support of a brother or sister, already of age, is due to the latter's fault.
(45) Virgilio owned a bare and simple swimming pool in his garden. MB, a 7-year old child,
surreptitiously entered the garden and merrily romped around the ledges of the pool. He accidentally
tripped, fell into the pool, and drowned. MBs parents sued Virgilio for damages arising from their
childs death, premised on the principle of "attractive nuisance". Is Virgilio liable for the death of MB?
(A) No, the child was 7 years old and knew the dangers that the pool offered.
(B) Yes, being an attractive nuisance, Virgilio had the duty to prevent children from coming
near it.
(C) No, since the pool was bare and had no enticing or alluring gadgets, floats, or devices in
it that would attract a 7-year old child.

(D) Yes, since Virgilio did not cover the swimming pool while not in use to prevent children
from falling into it.
(46) The term of a 5-year lease contract between X the lessor and Y the lessee, where rents were
paid from month to month, came to an end. Still, Y continued using the property with Xs consent. In
such a case, it is understood that they impliedly renewed the lease
(A) from month to month under the same conditions as to the rest.
(B) under the same terms and conditions as before.
(C) under the same terms except the rent which they or the court must fix.
(D) for only a year, with the rent raised by 10% pursuant to the rental control law.
(47) Rex, a philanthropist, donated a valuable lot to the municipality on the condition that it will build
a public school on such lot within 2 years from its acceptance of the donation. The municipality
properly accepted the donation but did not yet build the public school after 2 years. Can Rex revoke
the donation?
(A) Yes, since the donation is subject to a resolutory condition which was not fulfilled.
(B) No, but Rex is entitled to recover the value of the land from the municipality.
(C) No, the transfer of ownership has been completed.
(D) Yes, the donation is not deemed made until the suspensive condition has been fulfilled.
(48) Illegitimate children, those not recognized by their biological fathers, shall use the surname of
their
(A) biological father subject to no condition.
(B) mother or biological father, at the mothers discretion.
(C) mother.
(D) biological father unless he judicially opposes it.
(49) Asiong borrowed P1 million from a bank, secured by a mortgage on his land. Without his
consent, his friend Boyong paid the whole loan. Since Asiong benefited from the payment, can
Boyong compel the bank to subrogate him in its right as mortgagee of Asiong's land?
(A) No, but the bank can foreclose and pay Boyong back.
(B) No, since Boyong paid for Asiongs loan without his approval.
(C) Yes, since a change of creditor took place by novation with the banks consent.
(D) Yes, since it is but right that Boyong be able to get back his money and, if not, to
foreclose the mortgage in the manner of the bank.

(50) Congress passed a law imposing taxes on income earned out of a particular activity that was
not previously taxed. The law, however, taxed incomes already earned within the fiscal year when the
law took effect. Is the law valid?
(A) No, because laws are intended to be prospective, not retroactive.
(B) No, the law is arbitrary in that it taxes income that has already been spent.
(C) Yes, since tax laws are the lifeblood of the nation.
(D) Yes, tax laws are an exception; they can be given retroactive effect.
(51) Rudolf borrowed P1 million from Rodrigo and Fernando who acted as solidary creditors. When
the loan matured, Rodrigo wrote a letter to Rudolf, demanding payment of the loan directly to him.
Before Rudolf could comply, Fernando went to see him personally to collect and he paid him. Did
Rudolf make a valid payment?
(A) No, since Rudolf should have split the payment between Rodrigo and Fernando.
(B) No, since Rodrigo, the other solidary creditor, already made a prior demand for payment
from Rudolf.
(C) Yes, since the payment covers the whole obligation.
(D) Yes, since Fernando was a solidary creditor, payment to him extinguished the obligation.
(52) What happens to the property regimes that were subsisting under the New Civil Code when the
Family Code took effect?
(A) The original property regimes are immutable and remain effective.
(B) Those enjoying specific regimes under the New Civil Code may adopt the regime of
absolute community of property under the Family Code.
(C) Those that married under the New Civil Code but did not choose any of its regimes shall
now be governed by the regime of absolute community of property.
(D) They are superseded by the Family Code which has retroactive effect.
(53) The testator executed a will following the formalities required by the law on succession without
designating any heir. The only testamentary disposition in the will is the recognition of the testator's
illegitimate child with a popular actress. Is the will valid?
(A) Yes, since in recognizing his illegitimate child, the testator has made him his heir.
(B) No, because the non-designation of heirs defeats the purpose of a will.
(C) No, the will comes to life only when the proper heirs are instituted.
(D) Yes, the recognition of an illegitimate heir is an ample reason for a will.
(54) A left B, his wife, in the Philippines to work in Egypt but died in that country after a years
continuous stay. Two months after As death, B gave birth to a child, claiming it is As child. Who can
assail the legitimacy of the child?

(A) As other heirs apart from B.


(B) The State which has interest in the welfare of overseas contract workers.
(C) Any one who is outraged by Bs claim.
(D) No one since A died.
(55) QR and TS who had a marriage license requested a newly appointed Judge in Manila to marry
them on the beach of Boracay. Since the Judge maintained Boracay as his residence, he agreed.
The sponsors were all public officials. What is the status of the marriage.
(A) Valid, since the improper venue is merely an irregularity; all the elements of a valid
marriage are present.
(B) Void, because the couple did not get local permit for a beach wedding.
(C) Voidable, because the Judge acted beyond his territorial jurisdiction and is
administratively liable for the same.
(D) Void, because the Judge did not solemnize the marriage within the premises of his court.
(56) X and Y, Filipinos, got married in Los Angeles, USA, using a marriage license issued by the
Philippine consul in Los Angeles, acting as Civil Registrar. X and Y did not know that they were first
cousins because their mothers, who were sisters, were separated when they were quite young.
Since X did not want to continue with the relation when he heard of it, he left Y, came to the
Philippines and married Z. Can X be held liable for bigamy?
(A) No since Xs marriage to Y is void ab initio or did not exist.
(B) No since X acted in good faith, conscious that public policy did not approve of marriage
between first cousins.
(C) Yes since he married Z without first securing a judicial declaration of nullity of his
marriage to Y.
(D) Yes since his first marriage to Y in Los Angeles is valid.
(57) Allan bought Billys property through Carlos, an agent empowered with a special power of
attorney (SPA) to sell the same. When Allan was ready to pay as scheduled, Billy called, directing
Allan to pay directly to him. On learning of this, Carlos, Billy's agent, told Allan to pay through him as
his SPA provided and to protect his commission. Faced with two claimants, Allan consigned the
payment in court. Billy protested, contending that the consignation is ineffective since no tender of
payment was made to him. Is he correct?
(A) No, since consignation without tender of payment is allowed in the face of the conflicting
claims on the plaintiff.
(B) Yes, as owner of the property sold, Billy can demand payment directly to himself.
(C) Yes, since Allan made no announcement of the tender.
(D) Yes, a tender of payment is required for a valid consignation.

(58) X sold Y 100 sacks of rice that Y was to pick up from Xs rice mill on a particular date. Y did not,
however, appear on the agreed date to take delivery of the rice. After one week, X automatically
rescinded the sale without notarial notice to Y. Is the rescission valid?
(A) Yes, automatic rescission is allowed since, having the character of movables and
consumables, rice can easily deteriorate.
(B) No, the buyer is entitled to a customary 30-day extension of his obligation to take delivery
of the goods.
(C) No, since there was no express agreement regarding automatic rescission.
(D) No, the seller should first determine that Y was not justified in failing to appear.
(59) The wife filed a case of legal separation against her husband on the ground of sexual infidelity
without previously exerting earnest efforts to come to a compromise with him. The judge dismissed
the case for having been filed without complying with a condition precedent. Is the dismissal proper?
(A) No, efforts at a compromise will only deepen the wifes anguish.
(B) No, since legal separation like validity of marriage is not subject to compromise
agreement for purposes of filing.
(C) Yes, to avoid a family feud that is hurtful to everyone.
(D) Yes, since the dispute could have been settled with the parties agreeing to legal
separation.
(60) An Australian living in the Philippines acquired shares of stock worth P10 million in food
manufacturing companies. He died in Manila, leaving a legal wife and a child in Australia and a livein partner with whom he had two children in Manila. He also left a will, done according to Philippine
laws, leaving all his properties to his live-in partner and their children. What law will govern the
validity of the disposition in the will?
(A) Australia law since his legal wife and legitimate child are Australians and domiciled in
Australia.
(B) Australian law since the intrinsic validity of the provisions of a will is governed by the
decedents national law.
(C) Philippine law since the decedent died in Manila and he executed his will according to
such law.
(D) Philippine law since the decedents properties are in the Philippines.
(61) X bought a land from Y, paying him cash. Since they were friends, they did not execute any
document of sale. After 7 years, the heirs of X asked Y to execute a deed of absolute sale to
formalize the verbal sale to their father. Unwilling to do so, Xs heirs filed an action for specific
performance against Y. Will their action prosper?
(A) No, after more than 6 years, the action to enforce the verbal agreement has already
elapsed.

(B) No, since the sale cannot under the Statute of Frauds be enforced.
(C) Yes, since X bought the land and paid Y for it.
(D) Yes, after full payment, the action became imprescriptible.
(62) A court declared Ricardo, an old bachelor, an absentee and appointed Cicero administrator of
his property. After a year, it was discovered that Ricardo had died abroad. What is the effect of the
fact of his death on the administration of his property?
(A) With Ricardo no longer an absentee but a deceased person, Cicero will cease to be
administrator of his properties.
(B) The administration shall be given by the court having jurisdiction over the intestate
proceedings to a new administrator whom it will appoint.
(C) Cicero automatically becomes administrator of Ricardos estate until judicially relieved.
(D) Ciceros alienations of Ricardo's property will be set aside.
(63) Baldo, a rejected suitor, intimidated Judy into marrying him. While she wanted to question the
validity of their marriage two years after the intimidation ceased, Judy decided in the meantime to
freely cohabit with Baldo. After more than 5 years following their wedding, Judy wants to file a case
for annulment of marriage against Baldo on ground of lack of consent. Will her action prosper?
(A) Yes, the action for annulment is imprescriptible.
(B) No, since the marriage was merely voidable and Judy ratified it by freely cohabiting with
Baldo after the force and intimidation had ceased .
(C) No, since the action prescribed 5 years from the date of the celebration of the marriage.
(D) Yes, because the marriage was celebrated without Judy's consent freely given.
(64) Is the wife who leaves her husband without just cause entitled to support?
(A) No, because the wife must always be submissive and respectful to the husband.
(B) Yes. The marriage not having been dissolved, the husband continues to have an
obligation to support his wife.
(C) No, because in leaving the conjugal home without just cause, she forfeits her right to
support.
(D) Yes, since the right to receive support is not subject to any condition.
(65) In the order of intestate succession where the decedent is legitimate, who is the last intestate
heirs or heir who will inherit if all heirs in the higher level are disqualified or unable to inherit?
(A) Nephews and nieces.
(B) Brothers and sisters.
(C) State.

(D) Other collateral relatives up to the 5th degree of consanguinity.


(66) Roy and Carlos both undertook a contract to deliver to Sam in Manila a boat docked in Subic.
Before they could deliver it, however, the boat sank in a storm. The contract provides that fortuitous
event shall not exempt Roy and Carlos from their obligation. Owing to the loss of the motor boat,
such obligation is deemed converted into one of indemnity for damages. Is the liability of Roy and
Carlos joint or solidary?
(A) Neither solidary nor joint since they cannot waive the defense of fortuitous event to which
they are entitled.
(B) Solidary or joint upon the discretion of Sam.
(C) Solidary since Roy and Carlos failed to perform their obligation to deliver the motor boat.
(D) Joint since the conversion of their liability to one of indemnity for damages made it joint.
(67) Joanne married James, a person with no known relatives. Through James' hard work, he and
his wife Joane prospered. When James died, his estate alone amounted to P100 million. If, in his
will, James designates Joanne as his only heir, what will be the free portion of his estate.
(A) Joanne gets all; estate has no free portion left.
(B) Joanne gets 1/2; the other half is free portion.
(C) Joanne gets 1/3; the remaining 2/3 is free portion.
(D) Joanne gets 1/4; the remaining 3/4 is free portion.
(68) A warranty inherent in a contract of sale, whether or not mentioned in it, is known as the
(A) warranty on quality.
(B) warranty against hidden defects.
(C) warranty against eviction.
(D) warranty in merchantability.
(69) The doctrine of stare decisis prescribes adherence to precedents in order to promote the
stability of the law. But the doctrine can be abandoned
(A) When adherence to it would result in the Governments loss of its case.
(B) When the application of the doctrine would cause great prejudice to a foreign national.
(C) When necessary to promote the passage of a new law.
(D) When the precedent has ceased to be beneficial and useful.
(70) Ric and Josie, Filipinos, have been sweethearts for 5 years. While working in a European
country where the execution of joint wills are allowed, the two of them executed a joint holographic
will where they named each other as sole heir of the other in case either of them dies. Unfortunately,
Ric died a year later. Can Josie have the joint will successfully probated in the Philippines?

(A) Yes, in the highest interest of comity of nations and to honor the wishes of the deceased.
(B) No, since Philippine law prohibits the execution of joint wills and such law is binding on
Ric and Josie even abroad.
(C) Yes, since they executed their joint will out of mutual love and care, values that the
generally accepted principles of international law accepts.
(D) Yes, since it is valid in the country where it was executed, applying the principle of "lex
loci celebrationis."
(71) ML inherited from his father P5 million in legitime but he waived it in a public instrument in favor
of his sister QY who accepted the waiver in writing. But as it happened, ML borrowed P6 million from
PF before the waiver. PF objected to the waiver and filed an action for its rescission on the ground
that he had the right to MLs P5 million legitime as partial settlement of what ML owed him since ML
has proved to be insolvent. Does PF, as creditor, have the right to rescind the waiver?
(A) No, because the waiver in favor of his sister QY amounts to a donation and she already
accepted it.
(B) Yes, because the waiver is prejudicial to the interest of a third person whose interest is
recognized by law.
(C) No, PF must wait for ML to become solvent and, thereafter, sue him for the unpaid loan.
(D) Yes, because a legitime cannot be waived in favor of a specific heir; it must be divided
among all the other heirs.
(72) While engaged to be married, Arnold and Josephine agreed in a public instrument to adopt out
the economic regime of absolute community of property. Arnold acknowledged in the same
instrument that Josephines daughter Mary, is his illegitimate child. But Josephine died before the
marriage could take place. Does the marriage settlement have any significance?
(A) None, since the instrument containing the marriage settlement is essentially void for
containing an unrelated matter.
(B) Yes, insofar as Arnold acknowledged Mary as his illegitimate child.
(C) None, since the marriage did not take place.
(D) Yes, if they acquired properties while living together as husband and wife.
(73) Joseph, a 17-year old Filipino, married Jenny, a 21-year old American in Illinois, USA, where the
marriage was valid. Their parents gave full consent to the marriage of their children. After three
years, Joseph filed a petition in the USA to promptly divorce Jenny and this was granted. When
Joseph turned 25 years, he returned to the Philippines and married Leonora. What is the status of
this second marriage?
(A) Void, because he did not cause the judicial issuance of declaration of the nullity of his
first marriage to Jenny before marrying Leonora.

(B) Valid, because Joseph's marriage to Jenny is void, he being only 17 years of age when
he married her.
(C) Valid, because his marriage to Leonora has all the elements of a valid marriage.
(D) Void, because Joseph is still considered married to Jenny since the Philippines does not
recognize divorce.
(74) T died intestate, leaving an estate of P9,000,000. He left as heirs three legitimate children,
namely, A, B, and C. A has two children, D and E. Before he died, A irrevocably repudiated his
inheritance from T in a public instrument filed with the court. How much, if any, will D and E, as As
children, get from Ts estate?
(A) Each of D and E will get P1,500,000 by right of representation since their father
repudiated his inheritance.
(B) Each of D and E will get P2,225,000 because they will inherit from the estate equally with
B and C.
(C) D and E will get none because of the repudiation; "B" and "C" will get As share by right of
accretion.
(D) Each of D and E will get P2,000,000 because the law gives them some advantage due to
the demise of "A".
(75) No decree of legal separation can be issued
(A) unless the childrens welfare is attended to first.
(B) without prior efforts at reconciliation shown to be futile.
(C) unless the court first directs mediation of the parties.
(D) without prior investigation conducted by a public prosecutor.
(76) X, who was abroad, phoned his brother, Y, authorizing him to sell Xs parcel of land in Pasay. X
sent the title to Y by courier service. Acting for his brother, Y executed a notarized deed of absolute
sale of the land to Z after receiving payment. What is the status of the sale?
(A) Valid, since a notarized deed of absolute sale covered the transaction and full payment
was made.
(B) Void, since X should have authorized agent Y in writing to sell the land.
(C) Valid, since Y was truly his brother Xs agent and entrusted with the title needed to effect
the sale.
(D) Valid, since the buyer could file an action to compel X to execute a deed of sale.
(77) In a true pacto de retro sale, the title and ownership of the property sold are immediately vested
in the vendee a retro subject only to the resolutory condition of repurchase by the vendor a retro
within the stipulated period. This is known as

(A) equitable mortgage.


(B) conventional redemption.
(C) legal redemption.
(D) equity of redemption.
(78) A natural obligation under the New Civil Code of the Philippines is one which
(A) the obligor has a moral obligation to do, otherwise entitling the obligee to damages.
(B) refers to an obligation in writing to do or not to do.
(C) the obligee may enforce through the court if violated by the obligor.
(D) cannot be judicially enforced but authorizes the obligee to retain the obligors payment or
performance.
(79) The husband assumed sole administration of the familys mango plantation since his wife
worked abroad. Subsequently, without his wifes knowledge, the husband entered into an antichretic
transaction with a company, giving it possession and management of the plantation with power to
harvest and sell the fruits and to apply the proceeds to the payment of a loan he got. What is the
standing of the contract?
(A) It is void in the absence of the wifes consent.
(B) It is void absent an authorization from the court.
(C) The transaction is void and can neither be ratified by the wife nor authorized by the court.
(D) It is considered a continuing offer by the parties, perfected only upon the wifes
acceptance or the courts authorization.
(80) When the donor gives donations without reserving sufficient funds for his support or for the
support of his dependents, his donations are
(A) Rescissible, since it results in economic lesion of more than 25% of the value of his
properties.
(B) Voidable, since his consent to the donation is vitiated by mindless kindness.
(C) Void, since it amounts to wanton expenditure beyond his means.
(D) Reducible to the extent that the donations impaired the support due to himself and his
dependents.
(81) Anne owed Bessy P1 million due on October 1, 2011 but failed to pay her on due date. Bessy
sent a demand letter to Anne giving her 5 days from receipt within which to pay. Two days after
receipt of the letter, Anne personally offered to pay Bessy in manager's check but the latter refused
to accept the same. The 5 days lapsed. May Annes obligation be considered extinguished?
(A) Yes, since Bessys refusal of the managers check, which is presumed funded, amounts
to a satisfaction of the obligation.

(B) No, since tender of payment even in cash, if refused, will not discharge the obligation
without proper consignation in court.
(C) Yes, since Anne tendered payment of the full amount due.
(D) No, since a managers check is not considered legal tender in the Philippines.
(82) The residents of a subdivision have been using an open strip of land as passage to the highway
for over 30 years. The owner of that land decided, however, to close it in preparation for building his
house on it. The residents protested, claiming that they became owners of the land through
acquisitive prescription, having been in possession of the same in the concept of owners, publicly,
peacefully, and continuously for more than 30 years. Is this claim correct?
(A) No, the residents have not been in continuous possession of the land since they merely
passed through it in going to the highway.
(B) No, the owner did not abandon his right to the property; he merely tolerated his
neighbors use of it for passage.
(C) Yes, residents of the subdivision have become owners by acquisitive prescription.
(D) Yes, community ownership by prescription prevails over private claims.
(83) The owner of a thing cannot use it in a way that will injure the right of a third person. Thus, every
building or land is subject to the easement which prohibits its proprietor or possessor from
committing nuisance like noise, jarring, offensive odor, and smoke. This principle is known as
(A) Jus vindicandi.
(B) Sic utere tuo ut alienum non laedas.
(C) Jus dispondendi.
(D) Jus abutendi.
(84) Janice and Jennifer are sisters. Janice sued Jennifer and Laura, Jennifers business partner for
recovery of property with damages. The complaint did not allege that Janice exerted earnest efforts
to come to a compromise with the defendants and that such efforts failed. The judge dismissed the
complaint outright for failure to comply with a condition precedent. Is the dismissal in order?
(A) No, since Laura is a stranger to the sisters, Janice has no moral obligation to settle with
her.
(B) Yes, since court should promote amicable settlement among relatives.
(C) Yes, since members of the same family, as parties to the suit, are required to exert
earnest efforts to settle their disputes before coming to court.
(D) No, the family council, which would ordinarily mediate the dispute, has been eliminated
under the Family Code.

(85) X borrowed money from a bank, secured by a mortgage on the land of Y, his close friend. When
the loan matured, Y offered to pay the bank but it refused since Y was not the borrower. Is the banks
action correct?
(A) Yes, since X, the true borrower, did not give his consent to Ys offer to pay.
(B) No, since anybody can discharge Xs obligation to his benefit.
(C) No, since Y, the owner of the collateral, has an interest in the payment of the obligation.
(D) Yes, since it was X who has an obligation to the bank.
(86) The right of a mortgagor in a judicial foreclosure to redeem the mortgaged property after his
default in the performance of the conditions of the mortgage but before the sale of the mortgaged
property or confirmation of the sale by the court, is known as
(A) accion publiciana.
(B) equity of redemption.
(C) pacto de retro.
(D) right of redemption.
(87) When does the regime of conjugal partnership of gains begin to exist?
(A) At the moment the parties take and declare each other as husband and wife before
officiating officer.
(B) At the time the spouses acquire properties through joint efforts.
(C) On the date the future spouses executed their marriage settlements because this is the
starting point of their marital relationship.
(D) On the date agreed upon by the future spouses in their marriage settlements since their
agreement is the law between them.
(88) Josie, 18, married Dante, 25, without her parents knowledge and consent, and lived with him.
After a year, Josie returned to her parents home, complained of the unbearable battering she was
getting from Dante, and expressed a desire to have her marriage with him annulled. Who may bring
the action?
(A) Dante.
(B) Her parents.
(C) Josie herself.
(D) The State.
(89) X, a married man, cohabited with Y, an unmarried woman. Their relation bore them BB, a baby
boy. Subsequently, after X became a widower, he married Y. Was BB legitimated by that marriage?
(A) Yes, since his parents are now lawfully married.

(B) Yes, since he is an innocent party and the marriage rectified the wrong done him.
(C) No, since once illegitimate, a child shall always remain illegitimate.
(D) No, since his parents were not qualified to marry each other when he was conceived.
(90) The presence of a vice of consent vitiates the consent of a party in a contract and this renders
the contract
(A) Rescissible.
(B) Unenforceable.
(C) Voidable.
(D) Void.
(91) Can common-law spouses donate properties of substantial value to one another?
(A) No, they are only allowed to give moderate gifts to each other during family rejoicing.
(B) No, they cannot give anything of value to each other to prevent placing their legitimate
relatives at a disadvantage.
(C) Yes, unlike the case of legally married spouses, such donations are not prohibited.
(D) Yes, as long as they leave sufficient property for themselves and for their dependents.
(92) X owed Y P1.5 million. In his will, X gave Y legacy of P1 million but the will provided that this
legacy is to be set off against the P1.5 million X owed Y. After the set off, X still owed Y P500,000.
Can Y still collect this amount?
(A) Yes, because the designation of Y as legatee created a new and separate juridical
relationship between them, that of testator-legatee.
(B) It depends upon the discretion of the probate court if a claim is filed in the testate
proceedings.
(C) No, because the intention of the testator in giving the legacy is to abrogate his entire
obligation to Y.
(D) No, because X had no instruction in his will to deliver more than the legacy of P1 million
to Y.
(93) Josie owned a lot worth P5 million prior to her marriage to Rey. Subsequently, their conjugal
partnership spent P3 million for the construction of a house on the lot. The construction resulted in
an increase in the value of the house and lot to P9 million. Who owns the house and the lot?
(A) Josie and the conjugal partnership of gains will own both on a 50-50 basis.
(B) Josie will own both since the value of the house and the increase in the propertys value
is less than her lots value; but she is to reimburse conjugal partnership expenses.

(C) Josie still owns the lot, it being her exclusive property, but the house belongs to the
conjugal partnership.
(D) The house and lot shall both belong to the conjugal partnership, with Josie entitled to
reimbursement for the value of the lot.
(94) An action for reconveyance of a registered piece of land may be brought against the owner
appearing on the title based on a claim that the latter merely holds such title in trust for the plaintiff.
The action prescribes, however, within 10 years from the registration of the deed or the date of the
issuance of the certificate of title of the property as long as the trust had not been repudiated. What
is the exception to this 10-year prescriptive period?
(A) When the plaintiff had no notice of the deed or the issuance of the certificate of title.
(B) When the title holder concealed the matter from the plaintiff.
(C) When fortuitous circumstances prevented the plaintiff from filing the case sooner.
(D) When the plaintiff is in possession of the property.
(95) Conrad and Linda, both 20 years old, applied for a marriage license, making it appear that they
were over 25. They married without their parents knowledge before an unsuspecting judge. After the
couple has been in cohabitation for 6 years, Lindas parents filed an action to annul the marriage on
ground of lack of parental consent. Will the case prosper?
(A) No, since only the couple can question the validity of their marriage after they became 21
of age; their cohabitation also convalidated the marriage.
(B) No, since Lindas parents made no allegations that earnest efforts have been made to
come to a compromise with Conrad and Linda and which efforts failed.
(C) Yes, since the marriage is voidable, the couple being below 21 years of age when they
married.
(D) Yes, since Lindas parents never gave their consent to the marriage.
(96) Pepito executed a will that he and 3 attesting witnesses signed following the formalities of law,
except that the Notary Public failed to come. Two days later, the Notary Public notarized the will in his
law office where all signatories to the will acknowledged that the testator signed the will in the
presence of the witnesses and that the latter themselves signed the will in the presence of the
testator and of one another. Was the will validly notarized?
(A) No, since it was not notarized on the occasion when the signatories affixed their
signatures on the will.
(B) Yes, since the Notary Public has to be present only when the signatories acknowledged
the acts required of them in relation to the will.
(C) Yes, but the defect in the mere notarization of the will is not fatal to its execution.
(D) No, since the notary public did not require the signatories to sign their respective
attestations again.

(97) Venecio and Ester lived as common-law spouses since both have been married to other
persons from whom they had been separated in fact for several years. Hardworking and bright, each
earned incomes from their respective professions and enterprises. What is the nature of their
incomes?
(A) Conjugal since they earned the same while living as husband and wife.
(B) Separate since their property relations with their legal spouses are still subsisting.
(C) Co-ownership since they agreed to work for their mutual benefit.
(D) Communal since they earned the same as common-law spouses.
(98) What is the prescriptive period for filing an action for revocation of a donation based on acts of
ingratitude of the donee?
(A) 5 years from the perfection of the donation.
(B) 1 year from the perfection of the donation.
(C) 4 years from the perfection of the donation.
(D) Such action does not prescribe.
(99) Before Karen married Karl, she inherited P5 million from her deceased mother which amount
she brought into the marriage. She later used part of the money to buy a new Mercedes Benz in her
name, which Karen and her husband used as a family car. Is the car a conjugal or Karens exclusive
property?
(A) It is conjugal property since the spouses use it as a family car.
(B) It is Karens exclusive property since it is in her name.
(C) It is conjugal property having been bought during the marriage.
(D) It is Karens exclusive property since she bought it with her own money.
(100) Because of Xs gross negligence, Y suffered injuries that resulted in the abortion of the foetus
she carried. Y sued X for, among other damages, P1 million for the death of a family member. Is Y
entitled to indemnity for the death of the foetus she carried?
(A) Yes, since the foetus is already regarded as a child from conception, though unborn.
(B) No, since Xs would not have known that the accident would result in Ys abortion.
(C) No, since birth determines personality, the accident did not result in the death of a person.
(D) Yes, since the mother believed in her heart that she lost a ch

G.R. No. L-67888 October 8, 1985 IMELDA ONG, ET AL.,


petitioners, vs. ALFREDO ONG, ET AL., respondents.

Article 741 of
the Civil Code provides that the requirement of the
acceptance of the donation in favor of minor by
parents of legal representatives applies only to
onerous and conditional donations where the
donation may have to assume certain charges or
burdens (Article 726, Civil Code). The acceptance by a legal guardian of a simple or pure
Moreover, even granting that the Quitclaim deed in question is a donation,

donation does not seem to be necessary (Perez vs. Calingo, CA-40 O.G. 53). Thus, Supreme Court

that the donation


to an incapacitated donee does not need the
acceptance by the lawful representative if said
donation does not contain any condition. In simple
and pure donation, the formal acceptance is not
important for the donor requires no right to be
protected and the donee neither undertakes to do
anything nor assumes any obligation. The Quitclaim now in
ruled in Kapunan vs. Casilan and Court of Appeals, (109 Phil. 889)

question does not impose any condition.

G.R. No. 97477 May 8, 1992 RTC JUDGE CAMILO E. TAMIN,


Presiding Judge, Regional Trial Court, Branch 23, Molave,
Zamboanga del Sur and the MUNICIPALITY OF DUMINGAG,
ZAMBOANGA DEL SUR; represented by MAYOR DOMICIANO
E. REAL, petitioners, vs. COURT OF APPEALS, VICENTE
MEDINA and FORTUNATA ROSELLON, respondents

A public plaza is outside the commerce of man and


constructions thereon can be abated summarily by the
municipality. We ruled in the case of Villanueva
v. Castaeda, Jr. (154 SCRA 142 [1987]):
Exactly in point is Espiritu v. Municipal Council of
Pozorrubio, (102 Phil. 869-870) where the
Supreme Court declared:

There is absolutely no question that the


town plaza cannot be used for the
construction of market stalls, specially of
residences, and that such structures
constitute a nuisance subject to
abatement according to law. Town
plazas are properties of public dominion,
to be devoted to public use and to be
made available to the public in general.
They are outside the commerce of man
and cannot be disposed of or even
leased by the municipality to private
parties.
Applying this well-settled doctrine, we rule that
petitioners had no right in the first place to
occupy the disputed premises and cannot insist
in remaining there now on the strength of their
alleged lease contracts. They should have
realized and accepted this earlier, considering
that even before Civil Case No. 2040 was
decided, the municipal council of San Fernando
had already adopted Resolution No. 29, series of
1964, declaring this area as the parking place
and public plaza of the municipality.
It is the decision in Civil Case No. 2040 and the
said resolution of the municipal council of San
Fernando that respondent Macalino was seeking
to enforce when he ordered the demolition of the
stalls constructed in the disputed area. As officerin-charge of the office of the mayor, he had the
duty to clear the area and restore it to its
intended use as a parking place and public plaza

of the municipality of San Fernando, conformably


to the aforementioned orders from the court and
the council. It is, therefore, not correct to say that
he had acted without authority or taken the law
into his hands in issuing his order.
xxx xxx xxx
The Court observes that even without such
investigatiom and recommendation, the
respondent mayor was justified in ordering the
area cleared on the strength alone of its status as
a public plaza as declared by the judicial and
legislative authorities. . . .
G.R. No. 95279 July 25, 1991 ESTATE OF GREGORIA
FRANCISCO, herein represented by SILVESTRE F. TAN,
Administrator, petitioner, vs. HON. COURT OF APPEALS,
HON. SALVADOR A. MEMORACION, in his capacity as
Presiding Judge of the Regional Trial Court of Isabela, Basilan
Province, Branch 2, MUNICIPALITY OF ISABELA, Basilan
Province, herein represented by BENJAMIN VALENCIA, in his
capacity as Municipal Mayor, Isabela, Basilan Province,
ROGELIO L. IGOT, FELICISIMO PIOQUINTO, DANIEL
PADINAS, ANTONIO CABANGON, FELIX ROXAS, BENJAMIN
FERRER, GREGORIO TABADA, EFREN DELOS REYES,
FLORENCIO HUGO, JESUS FRANCISCO, ALFREDO TUBILAG,
PABLO ANDRES, respondents.
Violation of a municipal ordinance neither empowers the Municipal Mayor to avail of extra-judicial
remedies. On the contrary, the Local Government Code imposes upon him the duty "to cause to be
instituted judicial proceedings in connection with the violation of ordinances" (Local Government Code,
Sec. 141 [2] [t]).
Respondents can not seek cover under the general welfare clause authorizing the abatement of
nuisances without judicial proceedings. That tenet applies to a nuisance per se or one which affects the
immediate safety of persons and property and may be summarily abated under the undefined law of
necessity (Monteverde v. Generoso, 52 Phil. 123 [1982]). The storage of copra in the quonset building is
a legitimate business. By its nature, it can not be said to be injurious to rights of property, of health or of

comfort of the community. If it be a nuisance per accidens it may be so proven in a hearing conducted for
that purpose. It is not per se a nuisance warranting its summary abatement without judicial intervention.
The provincial governor, district engineer or district health officer is not authorized to
destroy private property consisting of dams and fishponds summarily and without any
judicial proceedings whatever under the pretense that such private property constitutes a
nuisance. A dam or a fishery constructed in navigable rivers is not a nuisance per se. A
dam or fishpond may be a nuisance per accidens where it endangers or impairs the
health or depreciates property by causing water to become stagnant. (Monteverde v.
Generoso, supra).
While the Sangguniang Bayan may provide for the abatement of a nuisance (Local Government Code,
Sec. 149 [ee]), it can not declare a particular thing as a nuisance per se and order its condemnation. The
nuisance can only be so adjudged by judicial determination.
[Municipal councils] do not have the power to find as a fact that a particular thing is a
nuisance when such thing is not a nuisance per se nor can they authorize the extra
judicial condemnation and destruction of that as a nuisance which, in its nature, situation
or use is not such. These things must be determined in the ordinary courts of law. In the
present case, . . . the ice factory of the plaintiff is not a nuisance per se. It is a legitimate
industry . . . . If it be in fact a nuisance due to the manner of its operation, that question
cannot be determined by a mere resolution of the board. The petitioner is entitled to a fair
and impartial heating before a judicial tribunal. (Iloilo Cold Storage v. Municipal Council,
24 Phil. 47 [1913]).
Petitioner was in lawful possession of the lot and quonset building by virtue of a permit from the Philippine
Ports Authority (Port of Zamboanga) when demolition was effected. It was not squatting on public land. Its
property was not of trifling value. It was entitled to an impartial hearing before a tribunal authorized to
decide whether the quonset building did constitute a nuisance in law. There was no compelling necessity
for precipitate action. It follows then that respondent public officials of the Municipality of Isabela, Basilan,
transcended their authority in abating summarily petitioner's quonset building. They had deprived
petitioner of its property without due process of law. The fact that petitioner filed a suit for prohibition and
was subsequently heard thereon will not cure the defect, as opined by the Court of Appeals, the
demolition having been a fait accompli prior to hearing and the authority to demolish without a judicial
order being a prejudicial issue.

G.R. No. L-18390 August 6, 1971 PEDRO J. VELASCO, plaintiffappellant, vs. MANILA ELECTRIC CO., WILLIAM SNYDER, its
President; JOHN COTTON and HERMENEGILDO B. REYES, its
Vice-Presidents; and ANASTACIO A. AGAN, City Engineer of
Quezon City, defendants-appellees.
The conclusion must be that, contrary to the finding of the trial court, the noise continuously emitted, day
and night, constitutes an actionable nuisance for which the appellant is entitled to relief, by requiring the
appellee company to adopt the necessary measures to deaden or reduce the sound at the plaintiff's
house, by replacing the interlink wire fence with a partition made of sound absorbent material, since the
relocation of the substation is manifestly impracticable and would be prejudicial to the customers of the
Electric Company who are being

G.R. No. 28491 September 29, 1928 TOMAS MONTEVERDE,


plaintiff-appellant, vs. SEBASTIAN T. GENEROSO, Provincial
Governor of Davao, ET AL., defendants-appellees
Nuisances are of two classes: Nuisances per se and per accidens. As to the first, since they affect
the immediate safety of persons and property, they may be summarily abated under the undefined

law of necessity. But if the nuisance be of the second class, even the municipal authorities, under
their power to declare and abate nuisances, would not have the right to compel the abatement of a
particular thing or act as a nuisance without reasonable notice to the person alleged to be
maintaining or doing the same of the time and place of hearing before a tribunal authorized to decide
whether such a thing or act does in law constitute a nuisance. Such in effect was the holding in Iloilo
Ice and Cold Storage Co. vs. Municipal Council of Iloilo ([1913], 24 Phil., 471), applied here, it is selfevident that a dam or a fishery constructed in a navigable stream is not a nuisance per se. Of
course, a dam or a fishpond may be found to be a nuisance where it endangers or impairs the health
or depreciates property by causing water to become stagnant. The public health may be conserved
but conserved only in a legal manner. Due process of law must be observed before the citizens'
property or personal rights or liberty can be interfered with. Conceding without deciding that article
24 of the Law of Waters is in force, we reiterate that it can only be made use of by conforming to the
provisions of the organic law.

G.R. No. L-3422 June 13, 1952 HIDALGO ENTERPRISES, INC.,


petitioner, vs. GUILLERMO BALANDAN, ANSELMA ANILA and
THE COURT OF APPEALS, respondents
The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as
well as natural, in the absence of some unusual condition or artificial feature other than the
mere water and its location.
There are numerous cases in which the attractive nuisance doctrine has not been held not to
be applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts,
drains, cesspools or sewer pools, . . . (65 C.J.S., p. 476 et seg. citing decisions of California,
Georgia, Idaho, Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma,
Pennsylvania, Tennessee, Texas, Nebraska, Wisconsin.)
In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris
Secundum was published in 1950, whereas its decision was promulgated on September 30, 1949.
The reason why a swimming pool or pond or reservoir of water is not considered an attractive
nuisance was lucidly explained by the Indiana Appellate Court as follows:
Nature has created streams, lakes and pools which attract children. Lurking in their waters is
always the danger of drowning. Against this danger children are early instructed so that they
are sufficiently presumed to know the danger; and if the owner of private property creates an
artificial pool on his own property, merely duplicating the work of nature without adding any
new danger, . . . (he) is not liable because of having created an "attractive nuisance."
Anderson vs. Reith-Riley Const. Co., N. E., 2nd, 184, 185; 112 Ind. App., 170.

JOSE "PEPITO" TIMONER, petitioner, vs. THE PEOPLE OF THE


PHILIPPINES AND THE HONORABLE COURT OF APPEALS, IV
DIVISION, respondents.

G.R. No. L-62050 November 25, 1983


JOSE "PEPITO" TIMONER, petitioner,
vs.
THE PEOPLE OF THE PHILIPPINES AND THE HONORABLE COURT OF APPEALS, IV
DIVISION, respondents.

The barbershop occupied a portion of the sidewalk of the poblacion's main thoroughfare and had
been recommended for closure by the Municipal Health Officer. In fact, the Court of First Instance of
Camarines Norte, in its decision in Civil Case No. 2257, declared said barbershop as a
nuisance per-se. Thus: t.hqw
Under the facts of the case, as well as the law in point, there is no semblance of any
legality or right that exists in favor of the defendants to build a stall and conduct their
business in a sidewalk, especially in a highway where it does not only constitute a
menace to the health of the general public passing through the street and also of the
unsanitary condition that is bred therein as well as the unsightly and ugly structures
in the said place. Moreover, even if it is claimed and pretended that there was a
license, permit or toleration of the defendants' makeshift store and living quarters for
a number of years does not lend legality to an act which is a nuisance per se. Such
nuisance affects the community or neighborhood or any considerable number of
persons and the general public which posed a danger to the people in general
passing and using that place, for in addition, this is an annoyance to the public by the
invasion of its rights the fact that it is in a public place and annoying to all who
come within its sphere [Baltazar vs. Carolina Midland, Ry, Co., 54 S.C. 242, 32 SB
258, cited in 11 Tolentino's Civil Code of the Philippines, p. 375; Kapisanan Lingkod
ng Bayan, Inc. vs. Lacson, CA-G.R. No. 27260R, March 25, 1964; 61 O.G. 2487].
xxx xxx xxx
... IN VIEW OF THE FOREGOING, the Court hereby declares that the structures
subject of this complaint as well as those occupied by the impleaded defendants are
nuisances per se and therefore orders the defendants to demolish the stall and
vacate the premises immediately ...
But even without this judicial pronouncement, petitioner could not have been faulted for having
fenced off said barbershop. Paragraph 3, Article 699 of the Civil Code authorizes the abatement of a
public nuisance without judicial proceedings. t.hqw
ART. 699. The remedies against a public nuisance are:
[l] A prosecution under the Penal Code or any local ordinance; or
[2] A civil action; or
[3] Abatement, without judicial proceedings.
In the case at bar, petitioner, as mayor of the town, merely implemented the aforesaid
recommendation of the Municipal Health Officer. Having then acted in good faith in the
performance of his duty, petitioner incurred no criminal liability.

an action to quiet title to property in the possession of a plaintiff


is imprescriptible.
It is an established rule that an action to quiet title to property in the possession of a plaintiff
is imprescriptible.[10]Inasmuch as it is alleged in paragraph 3 of Frial's complaint, that Felipa Faja has
been in possession of the property since 1945 up to the present or for a period of 30 years, her
cause of action for reconveyance, which in effect seeks to quiet her title to the property, falls within
that rule. If at all, the period of prescription began to run against Felipa Fajaonly from the time she
was served with copy of the complaint in 1975 giving her notice that the property she was occupying
was titled in the name of Indalecio Frial. There is settled jurisprudence that one who is in actual
possession of a piece of land claiming to be owner thereof may wait until his possession is disturbed
or his title is attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity to ascertain
and determine the nature of the adverse claim of a third party and its effect on his own title, which
right can be claimed only by one who is in possession.[11] No better situation can be conceived at the
moment for Us to apply this rule on equity than that of herein petitioners whose mother, Felipa Faja,
was in possession of the litigated property for no less than 30 years and was suddenly confronted
with a claim that the land she had been occupying and cultivating all these years, was titled in the
name of a third person. We hold that in such a situation the right to quiet title to the property, to seek
its reconveyance and annul any certificate of title covering it, accrued only from the time the one in
possession was made aware of a claim adverse to his own, and it is only then that the statutory
period of prescription commences to run against such possessor.

FIRST DIVISION
[ G.R. No. L-45045, February 28, 1977 ]
FELIPA FAJA, SUBSTITUTED BY: NEMESIO GARDOSE, ANICIA GARDOSE
AND EUFROSINO GARDOSE, PETITIONERS, VS. HON. COURT OF
APPEALS, HON. TOMAS R. LEONIDAS, JUDGE OF THE COURT OF
FIRST INSTANCE OF CAPIZ, BRANCH III, AND LEVINE FRIAL,
RESPONDENTS.

An action for quieting of title is essentially a common law remedy


grounded on equity.
An action for quieting of title is essentially a common law remedy grounded on equity.

The

competent court is tasked to determine the respective rights of the complainant and other claimants,
not only to place things in their proper place, to make the one who has no rights to said immovable
respect and not disturb the other, but also for the benefit of both, so that he who has the right would
see every cloud of doubt over the property dissipated, and he could afterwards without fear introduce
the improvements he may desire, to use, and even to abuse the property as he deems best. But for
an action to quiet title to prosper, two indispensable requisites must concur, namely: (1) the plaintiff

or complainant has a legal or an equitable title to or interest in the real property subject of the action;
and (2) the deed, claim, encumbrance, or proceeding claimed to be casting cloud on his title must be
shown to be in fact invalid or inoperative despite its prima facie appearance of validity or legal
efficacy.[7]
Contrary to petitioners stand, the issue relating to the grant of rights, title or award by the NHA
determines whether the case for quieting of title may be maintained. If the petitioners are legitimate
successors to or beneficiaries of Iluminardo upon his death under the certificate of title, award, or
grant, or under the special law or specific terms of the NHA program/project then they possess the
requisite interest to maintain suit; if not, then Civil Case No. 2741-MN must necessarily be
dismissed.
From the evidence adduced below, it appears that the petitioners have failed to show their
qualifications or right to succeed Iluminardo in his rights under the NHA program/project. They failed
to present any title, award, grant, document or certification from the NHA or proper government
agency which would show that Iluminardo and Prescilla have become the registered
owners/beneficiaries/ awardees of Lots 18 and 19, or that petitioners are qualified successors or
beneficiaries under the Dagat-Dagatan program/project, taking over Iluminardos rights after his
death. They did not call to the witness stand competent witnesses from the NHA who can attest to
their rights as successors to or beneficiaries of Lots 18 and 19. They failed to present proof, at the
very least, of the specific law, provisions, or terms that govern the Tondo Dagat-Dagatan Foreshore
Development Project which would indicate a modicum of interest on their part. For this reason, their
rights

or

interest

in

the

property

could

not

be

established.

It was erroneous, however, for the CA to assume that Iluminardo and Prescilla may have violated the
conditions of the NHA grant under the Tondo Dagat-Dagatan Foreshore Development Project by
transferring their rights prior to the issuance of a title or certificate awarding Lots 18 and 19 to them.
In the absence of proof, a ruling to this effect is speculative. Instead, in resolving the case, the trial
court and the CA on appeal should have required proof that petitioners had, either: 1) a
certificate of title, award, or grant from the proper agency (NHA or otherwise) in the name of their
predecessor Iluminardo, or, in the absence thereof, 2) a right to succeed to Iluminardos rights to
Lots 18 and 19, not only as his heirs, but also as qualified legitimate successors/beneficiaries under
the Tondo Dagat-Dagatan Foreshore Development Project terms and conditions as taken over by the
NHA.[8] Petitioners should have shown, to the satisfaction of the courts, that under the NHA
program/project governing the grant of Lots 18 and 19, they are entitled and qualified to succeed or
substitute for Iluminardo in his rights upon his death. As earlier stated, this takes the form of
evidence apart from proof of heirship, of course of the specific law, regulation or terms covering
the program/project which allows for a substitution or succession of rights in case of death; the
certificate of title, award or grant itself; or the testimony of competent witnesses from the NHA.

DIONISIO MANANQUIL, LAUDENCIA MANANQUIL- VILLAMOR, ESTANISLAO


MANANQUIL, AND DIANITA MANANQUIL-RABINO, REPRESENTED BY

OTILLO RABINO, PETITIONERS, VS. ROBERTO MOICO,


RESPONDENT.**SECOND DIVISION[ G.R. No. 180076, November 21, 2012
]

Quieting of Title Not Proper Remedy For Settling Boundary


Dispute
First

Issue: Quieting of Title Not

Proper

Remedy

For

Settling

Boundary

Dispute

We agree with respondent Court. The facts presented unmistakably constitute a clear case of
boundary

dispute,

which

is

not

cognizable

in

special

civil

action

to

quiet title.

Quieting of title is a common law remedy for the removal of any cloud upon or doubt or uncertainty
with

respect

to titleto

real

property.[9]

The Civil Code authorizes the said remedy in the following language:
"Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is, in
truth and in fact, invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an

action

may

be

brought

to

remove

such

cloud

or

to

quiet

the title.

An action may also be brought to prevent a cloud from being cast upon a title to real property of any
interest therein."
In fine, to avail the remedy of quieting of title, a plaintiff must show that there is an instrument, record,
claim, encumbrance or proceeding which constitutes or casts a cloud, doubt, question or shadow
upon the owners title to or interest in real property. Thus, petitioners have wholly misapprehended
the import of the foregoing rule by claiming that respondent Court erred in holding that there was
"no xxx evidence of any muniment of title, proceeding, written contract, xxx", and that there were, as
a matter of fact, two such contracts, viz., (i) the Agreement of Partition executed by private
respondent and his brothers (including the petitioners father and predecessor-in-interest), in which
their respective shares in the inherited property were agreed upon, and (ii) the Deed of Sale
evidencing the redemption by petitioner Anastacia Vda. de Aviles of the subject property in a
foreclosure sale. However, these documents in no way constitute a cloud or cast a doubt upon
the title of petitioners. Rather, the uncertainty arises from the parties failure to situate and fix the
boundary between their respective properties.

THIRD DIVISION[ 95748, November 21, 1996 ]


ANASTACIA
VDA.
DE
AVILES,
ET
AL.,
PETITIONERS, VS. COURT OF APPEALS AND
CAMILO AVILES, RESPONDENTS.
EN BANC

G.R. No. L-3144


November 19, 1907
CARMEN AYALA DE ROXAS and PEDRO P. ROXAS, plaintiffs,
vs.
THE CITY OF MANILA and ROBERT G. DIECK, as city engineer, defendants.
Del-Pan, Ortigas and Fisher, for plaintiffs.
Modesto Reyes, for defendants.
ARELLANO, C.J.:
The defendants' demurred to the amended complaint having been overruled, an answer was
presented, and the trial of the case proceeded with.
Briefly, the subject of this action may be stated as follows:
1. That on the 15th of January, 1906, the plaintiff, as owner of the property situated on the Escolta,
district of Binondo, city of Manila, the eastern boundary of which adjoins the canal of San Jacinto or
Sibacon to the extent of 23.50 meters, the total area of the ground being 658.19 square meters,
applied to the city engineer, Robert G. Dieck, the defendant herein, for a license to construct a
terrace over "the strip of land 3 meters in width between the main wall of her house and the edge of
the said canal of Sibacon or San Jacinto, which strip of land belongs exclusively to her"; but the
defendant refused to grant the license or authorize the plaintiff to build the terrace.
2. That a similar petition was addressed to the Municipal Board of the city of Manila on the 30th of
said month and year, and it also was denied.
3. That, as the plaintiff has been informed, the sole reason wherefore the license was denied is
because "the said defendants pretend to compel the plaintiff to leave vacant and without any
construction whatever thereon the said strip of 3 meters in width which is a portion of the ground
belonging to her, in order to use the same as the wharf or public way so that the plaintiff will only be
able to use the said strip in the same manner and for the same purposes as the public in general,
thus losing the enjoyment, use, and exclusive possession of the said strip of the property which the
plaintiff and the former owners thereof have enjoyed quietly and peacefully during more than seventy
years."
4. That the strip in question was occupied by a two-storey building constructed more than seventy
years ago.
It appears from the evidence:
First. That the plaintiff's ownership of the whole ground and of the strip in question is beyond all
doubt, both by reason of her title thereto and the entry thereof in the registry of property, and by the
acknowledgment thereof made by the city itself when obtaining by means of condemnation
proceedings a portion of the same property adjoining the public road.
Second. That as a matter of fact, the license which the plaintiff, using her right of ownership,
requested for the construction of a terrace on the strip of 3 meters adjoining the canal of San Jacinto
or Sibacon, was denied; both parties agreeing that the denial was due to the intent to reserve the
said strip for the establishment of a public easement, although the opposing witnesses did not agree
as to the special easement intended to be established.
Third. That it was agreed between both parties that the strip above referred to had not been
expropriated in whole or in part by the municipality of Manila, and that neither had the latter offered
any compensation for the same to the owner thereof.
Fourth. That according to Engineer Dieck, a defendant, the purpose of the city was to use the said
strip of 3 meters as a place for discharging and landing goods, and as a place of shelter for
shipwrecked persons and for fishermen, and to devote it also, together with other strips along the
canal, by the gradual acquisition of land, to a towpath for craft passing through the canal; that a
building line has been established by the Municipal Board along the Sibacon Creek leaving a strip of
3 meters within which, according to ordinances, no constructions would be permitted; that such is the
purpose and the intent on which the existing ordinances are based. But John Tuther, the secretary of
the Municipal Board, declares that, when Ordinance No. 78 was under discussion, he does not recall
having heard any of the members of the board make reference to a towpath nor did he ever hear

anything said with reference to the purpose to which the strip of 3 meters mentioned in Ordinance
No. 78 was to be devoted, though he believes that, by thus leaving a strip of 3 meters, it would be
easier to prevent collisions; that it would facilitate navigation, and that it had never been the intention
of the Board to indemnify the owners of such strips of 3 meters by reason of the use which parties
landing thereon may make of the same.
Fifth. That, as stated in the brief of the defendants, "the intention of the Municipal Board, when
denying the permit asked for by the plaintiff, has never been to establish any way whatever along the
Sibacon Creek so that said plaintiff could, if she chose to, close her property with walls or the like
perpendicularly to said creek, that is, over the two lines perpendicular to said creek, provided she
does not close or build over the 3-meter space running along the creek," which space is subject, as
stated in the evidence submitted by the defendants, to the "easement of public use for the general
interest of navigation, flotation, fishing, and salvage," citing the Law of Waters and the Civil Code.
Sixth. And that the result is, according to No. 19 of the statement of facts of the complaint, "that the
plaintiff shall only be able to use said strip in the same manner and for the same purposes as the
general public, thus losing the enjoyment, use, and exclusive possession of said strip of the ground
which the plaintiff and the former owners of the same have enjoyed as such owners quietly and
peacefully during more than seventy years."
What the defendants have therefore done is to prevent the plaintiffs from continuing to enjoy, use,
and freely dispose of such strip of their ground, as they had been doing up to the time when they
applied for a license to construct a terrace over said strip, and the defendants prevented it with the
intention of establishing a public easement provided for in an ordinance of their own which they
consider is pursuant to the provisions of the Law of Waters and of the Civil Code in force.
In the decision entered by this court on the 5th of May, 1906, regarding the demurrer, the following
was set forth:
The easement of a zone for public use, authorized by article 73 of the Law of Waters of
1866, is developed in articles 160 and 161, inclusive, of said law; the general interest on
behalf of which the easement is supported is determined, for navigation, by articles 160 and
161; for flotation, by article 162; for salvage, by article 163; and for fishing, by article 164; in
all of them the owner of the riverside property supports the easement "upon being previously
indemnified for loss and damage." (Folio 41.)
Said zone for public use, the same as a towpath, is solely available for the purposes of
navigation, flotation, fishing, and salvage, being closed to any other use which be attempted;
therefore, it is erroneous to pretend that the right of the owner of the property bordering upon
the stream can be reduced to the level of the public right; on the contrary he should only be
called upon to bear those burdens which are in the general interest, but not without prior, or
subsequently indemnity. (Folio 43.)
If as affirmed in statement No. 4, and accepted by the defendants, the Sibacon Creek is a canal
let us grant that it is navigable, because it has been held by competent authority and that under
the name of a public wharf, which is the largest in area, it is desired to establish a towpath, which is
the smallest, it must be remembered that the law does not grant it along navigable canals (art. 157),
and, at all events, the establishment thereof must be preceded by the corresponding indemnity.
(Arts. 154 and 157.)
The matter at issue herein being the enforcement of the Law of Waters and of the Civil Code, it is not
out of place nor untimely, even now, to point out the administrative law which ought to have been
applied had this act of the city of Manila been carried out by the late ayuntamiento during the former
sovereignty; an administrative law which, owing to its having been so often repeated, is now raised to
the rank of an incontrovertible principle of law on the matter.
The powers of the administration do not extend to the establishment of new easements upon
private property but simply to preserve old ones, whenever a recent and easily proven
usurpation exists. (Decision of January 23, 1866.) lawphil.net

Ayuntamientos are not authorized to impose an easement upon private property; therefore,
any order thus given can not be held to have been issued in the exercise of their lawful
powers. (Decision of July 28, 1866.)
Administrative action for the recovery of a public easement which has been usurped by a
constructive work of private ownership can only be taken when such usurpation is of recent
date and easily proven.
When real rights are concerned an ayuntamiento may prosecute such actions as it may
consider itself entitled to, for the possession or ownership in accordance with law. (Decision
of October 26, 1866.)
This doctrine will be found far more vigorous at present upon reference to the principles of the law
now in force.
According to article 349 of the Civil Code, no one shall be deprived of his property, except by
competent authority and with sufficient cause of public utility, always after proper indemnity; if this
requisite has not been fulfilled the courts must protect, and eventually restore possession to the
injured party.
Under section 5 of the act of Congress of July 1, 1902, no legislation shall be enacted in the
Philippine Islands which shall deprive any person of life, liberty, or property without due process of
law; and the due process of law in order to deprive a person of his property is, according to the Code
of Civil Procedure, reserved to the judicial authority. The refusal to grant a license or the enactment
of an ordinance whereby a person may be deprived of property or rights, or an attempt thereat is
made, without previously indemnifying him therefor, is not, nor can it be, due process of
law.1awphil.net
And, considering that the easement intended to be established, whatever may be the object thereof,
is not merely a real right that will encumber the property, but is one tending to prevent the exclusive
use of one portion of the same, by expropriating it for a public use which, be it what it may, can not
be accomplished unless the owner of the property condemned or seized be previously and duly
indemnified, it is proper to protect the appellant by means of the remedy employed in such cases, as
it is the only adequate remedy when no other legal action can be resorted to, against an intent which
is nothing short of an arbitrary restriction imposed by the city by virtue of the coercive power with
which the same is invested. The question involved here is not the actual establishment of an
easement which might be objected to by an action in court, but a mere act of obstruction, a refusal
which is beyond the powers of the city of Manila, because it is not simply a measure in connection
with building regulations, but is an attempt to suppress, without due process of law, real rights which
are attached to the right of ownership.
When . . . any corporation, board, or person unlawfully neglects the performance of an act
which the law specially enjoins as a duty resulting from an office, trust, or station, or
unlawfully excludes the plaintiff from the use and enjoyment of a right or office to which he is
entitled and from which he is unlawfully precluded by such inferior tribunal, corporation,
board, or person, and the court, on trial, finds the allegations of the complaint to be true, it
may, if there is no other plain, speedy, and adequate remedy in the ordinary courts of law,
render a judgment granting a peremptory order against the defendant, commanding him,
immediately after the receipt of such order, or at some other specified time, to do the act
required to be done to protect the rights of the plaintiff. (Code of Civil Procedure, sec 222.)
Therefore, we hereby command the defendants, the city of Manila, and Robert G. Dieck, as city
engineer, or whomsoever may now be acting as such, to immediately issue a license in favor of the
plaintiff herein, Doa Carmen Ayala de Roxas, to construct the terrace as aforesaid in accordance
with the plan and specification as per Exhibit A, the said defendants to pay the costs of these
proceedings. So ordered.
G.R. No. L-46963 March 14, 1994
GLORIA A. FERRER, petitioner,
vs.
HON. ANTONIO BAUTISTA, MARIANO BALANAG, AND MAGDALENA DOMONDON, respondents.

Fortunato F.L. Viray, Jr. for petitioner.


Agaton D. Yaranon, Jr., for private respondent.
VITUG, J.:
This petition for review on certiorari seeks to reverse and set aside the order, dated 11 December 1976, of the Court of First Instance (now
Regional Trial Court) of La Union, Branch III, dismissing petitioner's complaint for Quieting of Title to Real Property, as well as its order of 03
May 1977, denying the motion for reconsideration.
Pursuant to this Court's Resolution, dated 19 August 1977 (p. 4, Rollo), petitioner was allowed to file the instant petition under Republic Act
No. 5440 considering that only questions of law had been raised.
On 03 August 1978, the Court dismissed the petition for lack of interest due to the failure of petitioner's counsel to submit the requisite
memorandum in support of the petition (p. 58,Rollo). In a Resolution, dated 28 September 1978 (p. 63, Rollo), however, the Court resolved to
reconsider the dismissal and to reinstate the petition.
Under controversy is a strip of land south of Lot 1980 of the Cadastral survey of Aringay, La Union. Petitioner claims its ownership by virtue
of accretion, she being the owner of Lot 1980 covered by TCT No. T-3280, which is immediately north of the land in question. On the other
hand, private respondents equally assert ownership over the property on account of long occupation and by virtue of Certificate of Title No.
P-168, in the name of respondent Magdalena Domondon, pursuant to Free Patent No. 309504 issued on 24 January 1966 (p. 29, Rollo).
On 23 March 1976, petitioner Gloria A. Ferrer filed a complaint with Branch III of the then Court of First Instance of La Union to "Quiet Title to
Real Property" against herein respondents Mariano Balanag and Magdalena Domondon. The case was denominated Civil Case No. A-514.
Prior to Civil Case No. A-514, petitioner had also filed with the Court of First Instance of La Union, Branch III, a complaint
for reivindicacion (Civil Case No. A-86), dated 25 November 1965, against private respondents. Herein respondent Judge, who also handled
the case, dismissed, on 10 February 1976, the complaint, without prejudice, on the ground that the court had no authority to cancel or annul
the decree and the title issued by the Director of Lands on the basis of a mere collateral attack (pp. 22-23, Rollo).
On 11 March 1976, private respondents also moved for the dismissal of Civil Case No. 514-A on the following grounds, to wit:
1) Gloria A. Ferrer's lack of personality to file and prosecute Civil Case No.
514-A;
2) Civil Case 514-A is barred by prior judgment;
3) Lack of sufficient averments to constitute a cause of action; and
4) Civil Case No. 514-A, is a collateral attack on the Free Patent Decree
No. 309504 and O.C. of Title No. F-168 (Annex "B," pp. 17-21). (p.
66, Rollo.)
On 07 December 1976, Judge Antonio G. Bautista issued an order
(pp. 23-24, Record on Appeal), dismissing petitioner's complaint, ratiocinating, thus
This has reference to the Motion to Dismiss filed by the defendants, through counsel. The plaintiff filed an Answer to the
Motion to Dismiss also through counsel.
The subject of the present action for Quieting of Title to Real Property, is covered by Free Patent No. 309504 and
Original Certificate of Title No. P-168, in the names of the defendants. However, the plaintiff alleged in her Complaint
that said Free Patent and Original Certificate of Title were secured through fraud, etc., on January 24, 1966, for which
reason, they are null and void. In view thereof, while the plaintiff filed the present action ostensibly to Quiet Title of her
alleged real property, it is in reality for the annulment or revocation of the Free Patent and Original Certificate of Title of
the defendants. The observation of the Court is clinched by prayer (a) of the plaintiff's complaint, i.e., "That Patent Title
No. 168 be declared revoked and cancelled as null and void from the Records of the Office of the Register of Deeds of
San Fernando, La Union, etc." Consequently, the present action is untenable because it constitute a collateral or
indirect attach on the Free Patent and Original Certificate of Title of the defendants. That is so, because it was held in
the case of Samonte, et al. vs. Sambelon, et al., L-12964, February 29, 1960, that like a decree, a Patent cannot be
attacked collaterally.
Furthermore, the plaintiff has no cause of action against the defendants because the Patent title issued in favor of the
Firmalos (defendants here) by the Director of Lands is by now already indefeasible due to the lapse of one year
following the entry of the decree of registration in the records of the register of deeds (Firmalos vs. Tutaan, No. L35408, October 27, 1973).
WHEREFORE, the Court is constrained to order dismissal of the plaintiff's complaint. There is no pronouncement as to
damages and costs. (p. 33, Rollo.)
Petitioner's motion for reconsideration was denied by the court in its order of 03 May 1977 (p. 38, Record on Appeal).
Hence this petition.
Petitioner submits the following assignment of errors on the part of respondent judge:
I. In not finding and declaring that Gloria A. Ferrer has legal personality to
prosecute Civil Case No. 514-A;
II. In not finding and declaring that Civil Case No. 514-A has stated
sufficient cause of action;
III. In not finding and declaring that petitioner Gloria A. Ferrer's title to the
land is beclouded by the contrary claim of the private respondents thereto;
and
IV. In outright dismissing Civil Case No. 514-A on the ground of collateral
attack on Free Patent Decree No. 309504 being an abuse of judicial
discretion and an excess of his jurisdiction. (p. 13, Rollo.)
The petition has merit.
Article 457 of the Civil Code, under which petitioner claims ownership over the dispute parcel of land, provides:
Art. 457. To the owners of lands adjoining the banks of rivers belong the accretion which they gradually receive from
the effects of the current of the waters.
Undoubtedly, plaintiff is the lawful owner of the accretion, she being the registered owner of Lot 1980 which adjoins the alluvial property.
Parenthetically, the same finding has also been made by the trial court in Civil Case No. A-86 (p. 29, Rollo).
Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is gradually received from the effects of the
current of waters (Art. 457, Civil Code; Tuason vs. Court of Appeals, 147 SCRA 37; Cureg vs. IAC, 177 SCRA 313). The rationale for the rule
is to provide some kind of compensation to owners of land continually exposed to the destructive force of water and subjected to various
easements (Agustin vs. IAC, 187 SCRA 218; Binalay vs. Manalo, 195 SCRA 374).
The Director of Lands has no authority to grant a free patent over land that has passed to private ownership and which has thereby ceased
to be public land. Any title thus issued or conveyed by him would be null and void (Tuason vs. Court of Appeals, 147 SCRA 37). The nullity
arises, not from fraud or deceit, but from the fact that the land is no longer under the jurisdiction of the Bureau of Lands, the latter's authority
being limited only to lands of public dominion and not those that are privately owned (Agne vs. Director of Lands, 181 SCRA 793).
Herein private respondents, therefore, acquired no right or title over the disputed land by virtue of the free patent since at the time it was
issued in 1966, it was already private property and not a part of the disposable land of the public domain.
Although, ordinarily, a title becomes incontrovertible one year after it is issued pursuant to a public grant, the rule does not apply when such
issuance is null and void. An action to declare the nullity of that void title does not prescribe (Agne vs. Director of Lands, supra); in fact, it is
susceptible to direct, as well as to collateral, attack (Estoesta, Sr. vs. Court of Appeals, 179 SCRA 203).
Private respondents contend that an action for reconveyance prescribes in ten years. The ten-year prescriptive period is applicable to an
action for reconveyance if, indeed, it is based on an implied or constructive trust. Article 1456 of the Civil Code, upon which a constructive
trust can be predicated, cannot be invoked, however, since the public grant and the title correspondingly issued to private respondents that
can create that juridical relationship is a patent nullity. Even assuming, nonetheless, that a constructive trust did arise, the running of the
prescriptive period is to be deemed interrupted when an action is filed in court (Art. 1155, Civil Code) or, obviously, when one is already there
pending.
Here, to recall, the Free Patent was issued on 24 January 1966 and OCT P-168 was transcribed in the Registration Book of La Union on 08
February 1966 (pp. 38-39, Rollo). At that time, Civil Case No. A-86 for reivindicacion between the parties was still pending in court. After Civil

Case No. A-86 was dismissed, without prejudice, on 10 February 1976 (p. 32,Rollo), petitioner, on 22 March 1976 (p. 1, Record on Appeal),
promptly filed Civil Case No. A-514 (now on appeal in this instance).
Neither can private respondents claim ownership of the disputed property by acquisitive prescription. Ownership and other real rights over
immovable property are acquired by ordinary prescription through possession of ten years if the adverse possession is with a just title and
the possession is in good faith. Ownership and other real rights over immovables also prescribe through uninterrupted adverse possession
thereof for thirty years, this time without need of title or of good faith. (See Art. 1134, Civil Code.)
Given the settings in this case at bench, the applicable period of acquisitive prescription, if at all, would be thirty years. Even assuming, then,
that private respondents were in adverse possession of the property from 1966 when the free patent was obtained, or even at the inception
of their alleged adverse possession in 1954 ("Comment on Petition for Review," p. 35, Rollo), that possession, for purposes of acquisitive
prescription, was deemed interrupted upon their receipt of summons (Art. 1123, Civil Code) in Civil Case No. A-86 pending since 1965, as
well as Civil Case No. A-514 filed in 1976 following the dismissal the month previous of Civil Case No. A-86. The prescriptive period of
prescription may not be held to commence anew during the pendency of said cases.
The instant petition has merely prayed that respondent court be directed to continue hearing Civil Case No. 514-A. We have repeatedly
ruled, however, that where the determinative facts are before this Court, and it is in a position to finally resolve the dispute, the expeditious
administration of justice will be subserved by the resolution of the case and thereby obviate the needless protracted proceedings consequent
to the remand of the case to the trial court (Heirs of Crisanta Almoradie, et al. vs. Court of Appeals, et al., G.R. No. 91385, January 4, 1994;
Lianga Bay Logging Co., et al. vs. Court of Appeals, 157 SCRA 357; Escudero vs. Dulay, 158, SCRA 69). Clearly, the records support the
finding that herein petitioner is the true owner of the land subject of the free patent issued to private respondents. The court then, in the
exercise of its equity jurisdiction. may, instead of remanding the case to the trial court, direct the owner to reconvey the disputed parcel to its
lawful owner (Limaza vs. IAC, 182 SCRA 855; Agne vs. Director of Lands, supra). Considering, moreover, the length of time that this case
has been pending between the parties, not counting petitioner's original action for reivindicacion in Civil Case No.
A-86 filed on 25 November 1956, an order from this Court requiring such reconveyance can certainly be just and warranted.
WHEREFORE, the questioned order of dismissal of the trial court in its Civil Case No. 514-A is REVERSED and SET ASIDE, and judgment
is hereby rendered DECLARING petitioner to be the owner of the disputed parcel of land and ORDERING private respondents to reconvey
the same to said petitioner. No costs.
SO ORDERED.

G.R. No. 82220 July 14, 1995


PABLITO MENESES and LORENZO MENESES, petitioners,
vs.
THE HONORABLE COURT OF APPEALS, EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING
(Carlos, Manuel and Paz, all surnamed Quisumbing), HEIRS OF FERNANDO QUISUMBING (Perla, Josefina, Napoleon, Honorato,
Remedios and Alfonso, all surnamed Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores
and Lilia, all surnamed Quisumbing) and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Luisa, Norberto, Jimmy, Ma.
Victoria, Elsa and Oscar, all surnamed Quisumbing), all represented by Atty. Galileo Brion, respondents.
G.R. No. 82251 July 14, 1995
CESAR ALMENDRAL, petitioner,
vs.
EDUARDO QUISUMBING, respondent.
G.R. No. 83059 July 14, 1995
EDUARDO QUISUMBING, NORBERTO QUISUMBING, HEIRS OF EMILIO QUISUMBING (Carlos, Manuel and Paz, all surnamed
Quisumbing), HEIRS OF FERNANDO QUISUMBING, (Perla, Josefina, Napoleon, Honorato, Remedios and Alfonso, all surnamed
Quisumbing), HEIRS OF MANUEL QUISUMBING, SR. (Petrona, Natividad, Manuel, Jr., Dolores and Lilia, all surnamed Quisumbing)
and HEIRS OF FRANCISCO QUISUMBING (Fe, Johnny, Ma. Victoria, Elsa and Oscar, all surnamed Quisumbing), petitioners,
vs.
HON. COURT OF APPEALS, PABLITO MENESES, LORENZO MENESES and BRAULIO C. DARUM, respondents.
QUIASON, J.:
For review in these consolidated petitions is the Decision dated August 31, 1987 of the Court of Appeals in CA-G.R. CV No. 07049 affirming
the Decision dated March 26, 1984 of the Regional Trial Court, Branch 37, Calamba, Laguna, in Civil Case No. 474-83-C which declared as
null and void the original certificates of title and free patents issued to Pablito Meneses over lots found by the court to be accretion lands
forming parts of the bigger accretion land owned by Ciriaca Arguelles Vda. de Quisumbing.
I
On March 1, 1977, Braulio C. Darum, then the District Land Officer of Los Baos, Laguna, issued to Pablito Meneses Free Patent No. (IV-5)
P-12807 and Original Certificate of Title No. P-1268 covering Lot 1585 with an area of 417 square meters, and Free Patent No (IV-5) 12808
and Original Certificate of Title No P-1269 for Lot 190 with an area of 515 square meters. Both lots are located in Los Baos, Laguna.
Pablito Meneses acquired said property from Silverio Bautista through a Deed of Waiver and Transfer of Rights executed on May 5, 1975 in
consideration of Bautista's "love and affection" for and "some monetary obligations" in favor of Pablito Meneses (Rollo, p. 45). After the
execution of said document, Pablito Meneses took possession of the land, introduced improvements thereon, declared the land as his own
for tax purposes and paid the corresponding realty taxes. In turn, Bautista acquired the 900-square-meter land from his aunt, Sergia
(Gliceria) M. Almeda. He had been occupying the land since 1956.
On the other hand, the Quisumbing family traces ownership of the land as far back as September 6, 1919 when their matriarch, Ciriaca
Arguelles Vda. de Quisumbing was issued Original Certificate of Title No. 989 covering a lot with an area of 859 square meters located in
Los Baos, Laguna with the Laguna de Bay as its northwestern boundary. The same parcel of land was registered on August 14, 1973 under
Transfer Certificate of Title No. T-33393 in the names of Ciriaca's heirs: Emilio, Manuel, Eduardo, Norberto, Perla, Josefina, Napoleon,
Honorato, Remedios and Alfonso, all surnamed Quisumbing.
In 1962, the Quisumbing instituted and accion publiciana in the then Court of First Instance of Bian, Laguna to recover possession over a
portion of the property from Dominga Villamor and Lorenzo Lanuzo docketed as Civil Case No. B-350. On January 3, 1966, the case was
decided in favor of the Quisumbings. On appeal, the Court of Appeals sustained the Quisumbings' right over the property.
In LRC Case No. B-327, the Quisumbings applied for registration and confirmation of title over an additional area of 2,387 square meters
which had gradually accrued to their property by the natural action of the waters of Laguna de Bay. In its Decision of September 28, 1978,
the Court of First Instance of Bian confirmed the Quisumbings' title thereto which, after it was duly surveyed, was identified as Psu-208327.
The additional area was divided into two lots in the survey plan approved by the Director of Lands on November 16, 1964. In ordering the
confirmation and registration of title on favor of the Quisumbings, the land registration court said:
. . . There is no doubt that the applicants' right to the property was bolstered by the unappealed decision of the Court of
Appeals in Civil Case No. B-350 of this Court when the properties applied for were classified as accretions made by the
waters of the Laguna Lake. . . . (G.R. No. 82229, Rollo, p. 20).
On April 17, 1979, the Quisumbings filed Civil Case No. 07049 before the Court of First Instance of Laguna, Branch VI, Calamba against
Lorenzo and Pablito Meneses, Braulio C. Darum and Cesar B. Almendral for nullification of the free patents and titles issued to Pablito
Meneses. They alleged that Lorenzo Menesis, then the Mayor of Los Baos, using his brother Pablito as a "tool and dummy," illegally
occupied their "private accretion land" an August 6, 1976, and, confederating with District Land Officer Darum and Land Inspector Cesar
Almendral, obtained free patents and original certificates of title to the land.
On March 26, 1984, the trial court rendered the decision finding that the lands registered by the Meneses brothers are accretion lands to
which the Quisumbings have a valid right as owners of the riparian land to which nature had gradually deposited the disputed lots. In so

holding, the trial court relied heavily on the decision of the Court of Appeals in Civil Case No. B-350, and quoted the following portions of the
appellate court's decision:
Plaintiffs-appellees are titled owners of a (sic) 859 square meters of land under TCT No. 25978 of the Laguna Land
Registry, the northwest boundary of which is the Laguna de Bay.
It is ascertained that the northwest portion of Quisumbing's lot is bounded by the Laguna de Bay. The nature of the
Laguna de Bay has long been settled in the case of Government of the Philippines v. Colegio de San Jose (55 Phil.
423) when it held that:
Laguna de Bay is a body of water formed in depression of the earth; it contains fresh water
coming from rivers and brooks and springs, and is connected with Manila Bay by the Pasig River.
According to the definition first quoted, Laguna de Bay is a lake.
Consequently, since Laguna de Bay is a lake, the authorities cited by the appellants referring to seashore would not
apply. The provision of the law on waters will govern in determining the natural bed or basin of the lake. And
accordingly, to Art. 84 of the Law of Waters of August 3, 1866:
Accretions deposited gradually upon land contiguous to creeks, streams, rivers and lakes by
accessions or sediments from the waters thereof, belong to the owners of such lands.
Since the title indicate(s) that the northwest portion of the property is bounded by Laguna de Bay, which is a lake, even
if the area where Lanuza's house and Villamor's house for that matter is located is not included within the title, it must
necessarily be an accretion upon appellees' land by accessions or sediments from the waters thereof which should
belong to the owner of the adjacent land. The authorities cited by the appellants treat of the ownership of accretions by
water of the sea under Title I. Lakewaters being terrestrial waters, their ownership is governed by Title II of the Law of
Waters. As held in the Colegio de San Jose case, the provisions of the Law of Waters regulating the ownership and use
of sea water are not applicable to the ownership and use of lakes which are governed by different provisions. As
pointed out by the lower court, no act of appropriation is necessary in order to acquire ownership of the alluvial
formation as the law does not require the same (Ignacio Grande, et al. vs. Hon. Court of Appeals, et al., G.R. No. L17652, June 30, 1962 citing Roxas vs. Tuazon, 9 Phil. 408; Cortez vs. City of Manila, 10 Phil. 567 and 3 Manresa, C.C.
pp. 321-326, pp. 4-5) (Records, pp. 80-84).
The trial court also found that the free patents issued to Pablito Meneses had been procured through fraud, deceit and bad faith, citing the
following facts as bases for its conclusion: (1) The Deed of Waiver and Transfer of Rights allegedly executed by Silverio Bautista in favor of
Pablito Meneses was a simulated contract for lack of consideration; (2) The said instrument was sworn to before Mayor Lorenzo Meneses
who had no authority to notarize deeds of conveyances; (3) Although the lots subject of the deed of conveyance were placed in his brother's
name, Mayor Meneses actually exercised rights of ownership thereto; (4) Land Inspector Cesar Almendral admitted having anomalously
prepared the documents to support the free patent applications of Pablito Meneses and, having personally filled up the blank forms, signed
them in the absence of the persons concerned; (5) Almendral kept the documents in his possession from 1979 to 1980 despite orders from
the Director of Lands to produce and surrender the same; (6) District Land Officer Braulio Darum approved the free patent applications and
issued the questioned titles without the required cadastral survey duly approved by the Director of Lands and despite the pendency of LRC
Case No. B-327 involving the contested lots; (7) Darum represented the Bureau of Lands in LRC Case No. B-327 without authority from the
Director of Lands and after he had withdrawn his appearance in said case, persisted in filing a motion to set aside the order for the issuance
of a decree in favor of the Quisumbings; (8) Darum and Almendral in bad faith, refused to produce the missing original records of the free
patent applications and their supporting documents; and (9) When Darum was not yet an oppositor in LRC Case No. B-327, he admitted in
his letter to the Land Registration Commission that the contested lots are portions of the land being claimed by the Quisumbings contrary to
his later representation in the joint answer to the petition that the subject lots are not portions of Lots 1 and 2, Psu-208327 owned by the
Quisumbings. Accordingly, the trial court disposed of the case as follows:
WHEREFORE, judgment is hereby rendered:
1. Declaring that the lands covered by Pablito Meneses' Original Certificate of Title No. P-1268/Free Patent No. 12807
(Exh. "J"), covering Lot No. 1585, consisting of 417 square meters and Original Certificate of Title No. P-1269/Free
Patent No. 12808 (Exh. "H"), covering Lot No. 190, consisting of 515 square meters, both located at Los Baos,
Laguna, as accretion lands forming parts of a bigger accretion land owned by plaintiffs as declared in a final judgment
(Exh. "A"), rendered by the Court of First Instance of Bian, Laguna, in LRC Case No. B-327, which bigger accretion
land is directly adjacent to or at the back of plaintiffs' riparian land, and consequently, declaring as null and void and
cancelled Original Certificate of Title No. P-1268/Free Patent No. 12807 and Original Certificate of Title No. P1269/Free Patent No. 12808;
2. Directing that the Register of Deeds of Laguna or his Deputy at Calamba, Laguna, to make the corresponding
entries of cancellation in his Registry of the above mentioned Original Certificate of Titles/Free Patents;
3. Directing defendants Lorenzo Meneses and Pablito Meneses and all persons acting in their behalves to vacate the
subject lands and surrender the possession thereof to the plaintiffs immediately; and
4. Directing the defendants to pay jointly and severally, the plaintiffs the sums of:
a) P20,000.00, plus P500.00 per month from January, 1977, until the subject property is
completely vacated, as actual and compensatory damages;
b) P350,000.00, as moral damages;
c) P70,000.00 as exemplary damages;
d) P40,000.00, as attorney's fees; and
e) the costs (Rollo, pp. 41-42).
Thereafter, the Quisumbings filed a motion for execution pending appeal which the trial court granted in its Order of September 7, 1984
subject to the posting by the Quisumbings of a bond in the amount of P500,000.00. The defendants unsuccessfully moved for the
reconsideration of said order.
The Quisumbings also filed before the Sandiganbayan a complaint against Pablito Meneses, Silverio Bautista, Pablo Silva, Virgilio Cruz and
Cesar Almendral for violation of paragraphs (e) and (j), Section 3 of Republic Act No. 3019, for conspiring in the approval and grant of the
free patents over portions of Lots 1 & 2 of Psu-208327 owned by the heirs of Ciriaca Arguelles Vda. de Quisumbing. In due course, the
Sandiganbayan rendered a decision finding the defendants guilty as charged. The case was elevated to this Court but on August 27, 1987,
the judgment of conviction was affirmed (Meneses v. People, 153 SCRA 303 [1987]).
Meanwhile, the Meneses brothers and Darum appealed the decision in Civil Case No. 07049 to the Court of Appeals. On August 31, 1987,
the Court of Appeals found the appeal to be without merit and affirmed in toto the lower court's decision.
The defendants-appellants filed two motions for the reconsideration of the appellate court's decision but it was denied in the Resolution of
February 23, 1988 which in pertinent part stated:
However, for humanitarian considerations, and considering the appeal of the defendants-appellants for a reduction of
the moral and exemplary damages, We favor the reduction of the moral damages from P350,000.00 to P50,000.00 and
the exemplary damages from P70,000.00 to P5,000.00. In all other respects, We find no justification for modifying the
dispositive portion of the decision of the lower court (G.R. No. 82220, Rollo, p. 67).
Pablito and Lorenzo Meneses filed the instant petition for review on certiorari, which was docketed as G.R. No. 82220. Cesar Almendral filed
a motion in G.R. No. 82251 for a 45-day extension within which to file a petition for review on certiorari. After this Court had granted them a
30-day extension, Almendral still failed to file any petition. The Quisumbings also filed a petition for review on certiorari, docketed as G.R. No.
83059, solely on the issue of the propriety of the reduction of the amount of damages in the Court of Appeals' Resolution of February 23,
1988. Upon motion of petitioners in G.R. No. 83059, the three petitions were consolidated in the Resolution of August 1, 1988.

Petitioners in G.R. No. 82220 retell the same errors they had raised before the Court of Appeals, contending in the main: (1) that the lands in
question were not accretion lands but lands of the public domain; (2) that no conspiracy to commit fraud, deceit and bad faith attended the
issuance of the free patent and titles to Pablito Meneses; and (3) that the Deed of Waiver and Transfer of Rights was founded on a valid
consideration.
As regards the issue of whether the lands in question are accretion lands, petitioners relied on the Decision of the Court of Appeals
in Republic of the Philippines v. Braga, CA-G.R. No. 55390-R, October 23, 1980, holding that the property involved therein was part of the
natural bed of the Laguna de Bay and therefore what had to be determined was whether said property was covered by water when the lake
was at its highest depth.
Petitioners' assigned errors in G.R. No. 82220 are evidently factual issues which have been thoroughly passed upon and settled both by the
trial court and the appellate court. Factual findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court
(Coca-Cola Bottlers Philippines, Inc. v. Court of Appeals, 229 SCRA 533 [1994]) and they carry even more weight when the Court of Appeals
affirms the factual findings of the trial court (Binalay v. Manalo, 195 SCRA 374 [1991]). The jurisdiction of this Court is thus limited to
reviewing errors of law unless there is a showing that the findings complained of are totally devoid of support in the record or that they are so
glaringly erroneous as to constitute serious abuse of discretion (BA Finance Corporation v. Court of Appeals, 229 SCRA 566 [1941]). We find
no such showing in this case.
Petitioners' protestations notwithstanding the final decision of the Court of Appeals in Civil Case No. B-350 has a bearing in the resolution of
this case for while the lots occupied by Villamor and Lanuzo may not be the very same lots petitioners are claiming here, the two cases refer
to the same accretion lands northwest of the original land owned by the Quisumbings.
In the same vein, the decision of the land registration court in LRC Case No. B-327 ordering the confirmation and registration of title in favor
of the Quisumbings over 2,387 square meters of accretion land is binding on petitioners in G.R. No. 82220. As correctly pointed out by the
Court of Appeals, said decision, being the result of a proceeding in rem, binds the whole world, more so because it became final and
executory upon the Bureau of Lands' failure to interpose an appeal.
Since petitioners in G.R. No. 82220 claim that "the foreshore land known as Lots 190 and 1585 are part of Laguna de Bay" and therefore the
Quisumbings "have no legal right to claim the same as accretion land," we quote the following pertinent portions of the decision in Republic
v. Court of Appeals, 131 SCRA 532 (1984) which, although the case deals with the registration of a reclaimed land along the Laguna de Bay,
is nonetheless enlightening:
Laguna de Bay is a lake. While the waters of a lake are also subject to the same gravitational forces that cause the
formation of tides in seas and oceans, this phenomenon is not a regular daily occurrence in the case of lakes. Thus,
the alternation of high tides and low tides, which is an ordinary occurrence, could hardly account for the rise in the
water level of the Laguna de Bay as observed four to five months a year during the rainy season. Rather, it is the rains
which bring about the inundation of a portion of the land in question. Since the rise in the water level which causes the
submersion of the land occurs during a shorter period (four to five months a year) than the level of the water at which
the land is completely dry, the latter should be considered as the "highest ordinary depth" of Laguna de Bay. Therefore,
the land sought to be registered is not part of the bed or basin of Laguna de Bay. Neither can it be considered as
foreshore land. The Brief for the Petitioner Director of Lands cites an accurate definition of a foreshore land, to wit:
. . . . that part of (the land) which is between high and low water and left dry by the flux and reflux
of the tides.
The strip of land that lies between the high and low water marks and that is alternately wet and
dry according to the flow of the tide.
As aptly found by the Court a quo, the submersion in water of a portion of the land in question is due to the rains
"falling directly on or flowing into Laguna de Bay from different sources." Since the inundation of a portion of the land is
not due to "flux and reflux of tides" it cannot be considered a foreshore land within the meaning of the authorities cited
by petitioner Director of Lands. The land sought to be registered not being part of the bed or basin of Laguna de Bay,
nor a foreshore land as claimed by the Director of Lands, it is not a public land and therefore capable of registration as
private property provided that the applicant proves that he has a registerable title (at pp. 538-539).
Accretion as a mode of acquiring property under Article 457 of the Civil Code requires the concurrence of these requisites: (1) that the
deposition of soil or sediment be gradual and imperceptible; (2) that it be the result of the action of the waters of the river (or sea); and (3)
that the land where accretion takes place is adjacent to the banks of rivers (or the sea coast). While the trial court mainly relied on the
findings in Civil Case No. B-350 that the lands in controversy are accretion lands and it has not determined on its own the presence of said
requisites, it is too late now for petitioners in G.R. No. 82220 to claim otherwise. Consequently, the lands held to be accretion lands could
only benefit the Quisumbings, who own the property adjacent to the lands in controversy (Cruz v. Court of Appeals, 216 SCRA 350 [1992]).
Petitioners in G.R. No. 82220 also assert that the principle of indefeasibility of title should favor them as the one-year period provided for by
law to impugn their title had elapsed. They also urged that, having been granted by the state, their title is superior to that of the Quisumbings.
We hold, however, that in the light of the fraud attending the issuance of the free patents and titles of Pablito Meneses, said assertions
crumble. Such fraud was confirmed by this Court in Meneses v. People, 153 SCRA 303 (1987) which held the petitioners therein liable for
violation of the Anti-Graft and Corrupt Practices Act in the issuance of the same free patents and titles.
Unlike the petition in G.R. No. 82220, the petition in G.R. No. 83059 (questioning the reduction of the damages awarded to the Quisumbings
by the Court of Appeals in the Resolution of February 23, 1988) is meritorious. The task of fixing the amount of damages is primarily with the
trial court (Air France v. Carrascoso, 18 SCRA 155 [1966]). While it is the appellate court's duty to review the same, a reduction of the award
of damages must pass the test of reasonableness. The Court of Appeals can only modify or change the amount awarded as damages when
they are palpably or scandalously and reasonably excessive (Philippine Airlines, Inc. v. Court of Appeals, 226 SCRA 423 [1993]; Prudenciano
v. Alliance Transport System, Inc., 148 SCRA 440 [1987]).
There is no justification for the radical reduction by the Court of Appeals of the damages awarded by the trial court. Its action was premise
merely on "humanitarian considerations" and the plea of the defendants-appellants. We may agree with the Court of Appeals in reducing the
award after scrutinizing its factual findings only if such findings are diametrically opposed to that of the trial court (Prudenciado v. Alliance
Transport System, Inc., supra). But as it is, the Court of Appeals affirmed point by point the factual findings if the lower court upon which the
award of damages had been based.
We, therefore, see no reason to modify the award of damages made by the trial court. Respondent Braulio C. Darum in G.R. No. 83059 must
also be solidarily liable for said damages in his capacity as a public officer. A public official is by law not immune from damages in his
personal capacity for acts done in bad faith which, being outside the scope of his authority, are no longer protected by the mantle of immunity
for official actions (Vidad v. RTC of Negros, Br. 42, 227 SCRA 271 [1993]).
WHEREFORE, the petition in G.R. No. 82220 is DENIED while the petition in G.R. No. 83059 is GRANTED. The Decision dated August 31,
1987 of the Court of Appeals is AFFIRMED while its Resolution of February 23, 1988 insofar as it reduces the amount of damages awarded
to the Quisumbing family is SET ASIDE. Costs against petitioners in G.R. No. 82220 and respondent Braulio Darum in G.R. No. 83059.
SO ORDERED.

G.R. No. L-15398


December 29, 1962
J. M. TUAZON & CO., INC., represented by its Managing Partner, Gregorio Araneta,
Inc., plaintiff-appellee,

vs.
TEODOSIO MACALINDONG, defendant-appellant.
Araneta and Araneta for plaintiff-appellee.
Leandro Sevilla and Ramon S. Aquino for defendant- appellant.
PAREDES, J.:
On September 9, 1958, plaintiff instituted Civil Case No. Q-3303 in the Court of First Instance of
Rizal, against Teodosio Macalindong, alleging therein that it is the registered owner of a parcel of
land, commonly known as the Sta. Mesa Heights Subdivision, located at Quezon City and Covered
by Transfer Certificate of Title No. 1267 (37686-Rizal) of the Registry of Deeds of Quezon City; that
on or about December 5, 1955, the defendant, thru force, strategy and stealth, unlawfully entered
into the possession of some 200 square meters, within said parcel of land, situated at Bo. North
Tatalon, Quezon City, and constructed his house thereon; and that because of this act it suffered and
will continue to suffer damages at the rate of P60.00 monthly, representing the fair rental value of the
portion occupied. Defendant answering, stated among others, that
. . . prior to 1955 and since time immemorial, he and his predecessors-in-interest have been
in open, adverse, public, continuous and actual possession of the lot in question in the
concept of owner and, by reason of such possession, he had made improvement thereon
valued at P9,000.00.
As a counterclaim, he asked an award of P25,000.00 for moral and exemplary damages and
P600.00 as attorney's fees.
Defendant presented documents tending to show that the portion in question was acquired by him on
June 28, 1954, thru purchase from Graciano M. Flores (Exh. 1), who in turn acquired the same from
Lucia T. Teotico on April 27, 1954 (Exh. 2). The latter bought the same from Agustin de Torres on
April 1, 1950 (Exh. 3), who allegedly derived his title from Telesforo Deudor, a party in the
Compromise Agreement, which formed the basis of the joint decisions in Civil Cases Nos. Q-135,
139, 174, 177 and 186, of same court.
The court a quo rendered judgment, the pertinent portions of which read
. . . In the first place, the Court takes judicial notice of the fact that this property has been
registered under the Torrens System, in the name of plaintiff since 1914, hence, the claim of
possession of defendant cannot defeat the efficacy of the title of the plaintiff; in the second
place, as testified to by the defendant himself when he was trying to declare the property in
question in the Office of the City Assessor he could not . . . so because he was told that there
was a question to that. In fine, the documents presented by the defendant cannot be
considered by the Court as to vest in him any rights over the property in question as against
the title of the plaintiff which has been issued since 1914. . . .
WHEREFORE, the Court renders judgment in favor of the plaintiff and against the defendant
by declaring the defendant to have no valid right of possession and title whatever in plaintiff's
premises; ordering him and all persons claiming under him to vacate the premises in
question and to remove his house and other construction therefrom; ordering him to pay the
plaintiff the sum of P30.00 a month from the date of usurpation in 1955 until the plaintiff is
restored to the possession of the same; and for him to pay the costs.
Defendant presented a Motion to Reconsider and/or to Set Aside Decision, alleging that the said
decision is contrary to the evidence and law. It was contended that while the plaintiff secured title
over the land, the portion in question, however, had been in the adverse, open, public and
continuous possession of the defendant's predecessor-in-interest, since 1893. Defendant
reproduced portions of the Compromise Agreement used in the Civil Cases earlier enumerated, to
show the possession of his predecessors-in-interest, to wit: lawphil.net
SECOND. That within the perimeter of said land is an area measuring fifty (50) quiones
over which the DEUDORS have claimed possessory rights by virtue of what purports to be
an abstract of an "informacion posesoria" covering the latter property, which recites that at
the time of issuance thereof in 1893, the Records of the Registry of Deeds of Manila (South

District) showed that said property was registered in the name of the old Telesforo Deudor,
predecessor-in-interest of the present Deudors who are parties hereto. . . .
THIRD. That said DEUDORS have been in possession of the land in question and claim
to be the owners thereof and during the period of possession have sold their possessory
rights to various third persons;
FOURTH. That in the middle of 1950, DEUDORS, under a mistaken impression of the
nature of their rights in said property, began the following suits against the OWNERS in the
Court of First Instance of Quezon City: . . . .
The motion for reconsideration having been denied February 21, 1959, defendant appealed directly
to this Court, claiming that the court a quo erred
(1) In not holding that plaintiff-appellee's Torrens Certificate of Title is Null and Void insofar as
the property controversy is concerned;
(2) In not holding the plaintiff-appellee's action has ready prescribed or is already barred by
laches;
(3) In not holding that defendant-appellant is a possess in good faith and is entitled to
retention until reimbursed the value of his improvements;
(4) In ordering defendant-appellant to pay rentals in the sum of P30 per month from 1955
until plaintiff-appellee is restored to the possession of the land in controversy; and
(5) In not dismissing the complaint.
The appellee's cause of action is based on its ownership of the subject land, evidenced by TCT No.
1267 of the Register of Deeds of Quezon City (Exhibit A), which was issued in appellee's name on
May 29, 1939 (Decree No. 17431 G.L.R.O. No. 7681), and was traceable O.C.T. No. 735 (Rizal,
issued on July 8, 1914). Appellant's defense is that he is the owner of the subject premises. His only
counter-claim is for attorney's fees a moral and exemplary damages, for appellee's supposedly
malicious and frivolous presentation of the complain Nullity of appellee's title and reconveyance were
never set up, either as defenses or as counter-claims. Neither prescription of appellee's claim or bar
of the action recovery due to laches was averred in appellant's defenses. Appellant cannot raise
them now for the first time on appeal. Verily the failure to raise the issue of prescription and laches,
amounts to a waiver of such defense (Sec. 10, Rule 9; Maxilim v. Tabotabo, 9 Phil. 39 Domingo v.
Osorio, 7 Phil. 405). Moreover, the right of the appellee to file an action to recover possession based
on its Torrens Title is imprescriptible and not barred under doctrine of laches (Art. 348, Civil Code;
Francisco et al. v. Cruz, et al., 43 O.G. 5105). On the contra the laws on prescription of actions and
on estoppel an laches presently operate against appellant. After many years of inaction - forty-four
years, from July 8, 1914 (issuance of O.C.T. No. 735, Rizal), or nineteen (19) years from May 29,
1939 (issuance of T.C.T. No. 1267), appellant should be completely barred from assailing the decree
of registration of the subject property (Tiburcio v. PHHC, G.R. NO. L-13429, Oct. 31, 1959; See also
J.M. Tuason & Co., Inc. v. Bolanos, L-4935, May 28, 1954, and J.M. Tuason & Co., Inc. v. Santiago,
G.R. No. L-5079, July 31, 1956, involving the same Decree).
We are in accord with appellant's contention that Act No. 496 is not intended to shield fraud and that
registration thereunder merely confirms title but does not vest any, when there is none, because
registration under the Torrens system is not a mode of acquiring ownership. We are not, however,
justified to apply these principle to the facts of the case and partially annul appellee's Torrens Title,
which, as stated above, is traceable to an original certificate of title issued way back in 1914, or over
44 years ago, and which is now incontrovertible and conclusive against the whole world (sec. 38, Act
496) To sustain an action for annulment of a Torrens Title, for being void ab initio, it must be shown
that the land Court which had issued the pertinent decree of registration, did not acquire jurisdiction
over the case; and to succeed is an action for reconveyance after the lapse of one year from the
decree of registration, actual fraud in securing the title must be proved (Bernardo v. Siojo, 58 Phil. 89
102). The pleadings filed by appellant before the trial court, alleged no such lack of jurisdiction and
no evidence whatsoever was adduced or attempted to be adduced on the question of jurisdiction of
the said land court and the record also fails to show fraudulent acts or and knowledge of others'

adverse rights by the original Tuason registrants in G.L.R.O. Rec. No. 7681, or that the latter knew of
Telesforo Deudor's or Agustin de Torres' sup posed right of ownership.
Appellant mentions an informacion posesoria, subject of Compromise Agreement dated March 16,
1953, between Deudor and Tuason & Co., Inc., allegedly issued in 1893 to Telesforo Deudor, who
sold a portion of his land to Agustin de Torres, who possessed it until it passed to Lucia T. Teotico, to
show that he had a previous title to the land, before the appellee had obtained a Torrens title in 1914.
In the first place, the compromise agreement had already been rescinded (Deudor et al. v. J.M.
Tuason & Co., Inc., L-13768, May 30, 1961). In the second place, the records do not indicate that
either Telesforo Deudor or Agustin de Torres was in possession of the subjected lot, at the time
appellee's predecessor-interest had obtained a Torrens Title thereto in 1914, or at any time before
World War II. And there is no finding of the trial court to this effect. On the contrary, it is a fact that in
December 1955, appellant entered a portion of 200 square meters of appellee's land, without the
consent and knowledge of appellee, and on September 9, 1958, appellee commenced the present
action for recovery of possession. To this finding of fact, the parties are bound, because the appeal,
according to appellant, would only raise questions of law. Moreover, if We were to give due weight to
the compromise agreement which by the way, was not presented in evidence in the case at bar, the
appellant will have to concede that "The Deudors had a wrong impression of the nature of their
rights" in the subject property, and perforce admit that Telesforo Deudor and Agustin de Torres had
no dominical title to the property in question.
Appellant claims that he should have been declared a builder in good faith, that he should have been
ordered to pay rentals; and that the complaint should have been dismissed. Again this question is
being raised for the first time on appeal. It was not alleged as a defense or counter-claim and the trial
court did not make any finding on this factual issue. From the documents submitted, however, it
appears that appellant was not a builder in good faith. From the initial certificate of title of appellee's
predecessors-in-interest issued on July 8, 1914, there is a presumptive knowledge by appellant of
appellees Torrens Title (which is a notice to the whole world) over the subject premises and
consequently appellant can not, in good conscience, say now that he believed his vendor (Flores),
his vendor's vendor (Teotico) and the latter's seller (De Torres) had rights of ownership over said lot
(Francisco, et al. v. Cruz, supra). Appellant, had likewise, a sufficient warning from the fact that the
lot, subject of his purchase, is described in his Exhibits 1, 2 and 3, to be a portion of
an unnumbered and, therefore, unapproved subdivision plan. Had he investigated before buying and
before building his house on the questioned lot, he would have been informed that the land is
registered under the Torrens system in the name of J.M. Tuason & Co., Inc. If he failed to make the
necessary inquiry, appellant is now bound conclusively to appellee's Torrens Title (Sec. 51, Act 496;
Emas v. Zuzuarregui, 35 Phil. 144). Moreover, when appellant was trying to declare the property, the
Office of the City Assessor told him he could not do so, because there was "a question to that".
Lastly, appellant's remedy in this regard, should have been directed against his predecessors-ininterest.
The decision appealed from, is therefore, affirmed, with costs against the defendant-appellant.
Bengzon, C.J., Padilla, Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera and Makalintal,
JJ., concur.
G.R. No. L-40411
August 7, 1935
DAVAO SAW MILL CO., INC., plaintiff-appellant,
vs.
APRONIANO G. CASTILLO and DAVAO LIGHT & POWER CO., INC., defendants-appellees.
Arsenio Suazo and Jose L. Palma Gil and Pablo Lorenzo and Delfin Joven for appellant.
J.W. Ferrier for appellees.
MALCOLM, J.:
The issue in this case, as announced in the opening sentence of the decision in the trial court and as
set forth by counsel for the parties on appeal, involves the determination of the nature of the
properties described in the complaint. The trial judge found that those properties were personal in

nature, and as a consequence absolved the defendants from the complaint, with costs against the
plaintiff.
The Davao Saw Mill Co., Inc., is the holder of a lumber concession from the Government of the
Philippine Islands. It has operated a sawmill in the sitio of Maa, barrio of Tigatu, municipality of
Davao, Province of Davao. However, the land upon which the business was conducted belonged to
another person. On the land the sawmill company erected a building which housed the machinery
used by it. Some of the implements thus used were clearly personal property, the conflict concerning
machines which were placed and mounted on foundations of cement. In the contract of lease
between the sawmill company and the owner of the land there appeared the following provision:
That on the expiration of the period agreed upon, all the improvements and buildings
introduced and erected by the party of the second part shall pass to the exclusive ownership
of the party of the first part without any obligation on its part to pay any amount for said
improvements and buildings; also, in the event the party of the second part should leave or
abandon the land leased before the time herein stipulated, the improvements and buildings
shall likewise pass to the ownership of the party of the first part as though the time agreed
upon had expired: Provided, however, That the machineries and accessories are not
included in the improvements which will pass to the party of the first part on the expiration or
abandonment of the land leased.
In another action, wherein the Davao Light & Power Co., Inc., was the plaintiff and the Davao, Saw,
Mill Co., Inc., was the defendant, a judgment was rendered in favor of the plaintiff in that action
against the defendant in that action; a writ of execution issued thereon, and the properties now in
question were levied upon as personalty by the sheriff. No third party claim was filed for such
properties at the time of the sales thereof as is borne out by the record made by the plaintiff herein.
Indeed the bidder, which was the plaintiff in that action, and the defendant herein having
consummated the sale, proceeded to take possession of the machinery and other properties
described in the corresponding certificates of sale executed in its favor by the sheriff of Davao.
As connecting up with the facts, it should further be explained that the Davao Saw Mill Co., Inc., has
on a number of occasions treated the machinery as personal property by executing chattel
mortgages in favor of third persons. One of such persons is the appellee by assignment from the
original mortgages.
Article 334, paragraphs 1 and 5, of the Civil Code, is in point. According to the Code, real property
consists of
1. Land, buildings, roads and constructions of all kinds adhering to the soil;
xxx
xxx
xxx
5. Machinery, liquid containers, instruments or implements intended by the owner of any
building or land for use in connection with any industry or trade being carried on therein and
which are expressly adapted to meet the requirements of such trade of industry.
Appellant emphasizes the first paragraph, and appellees the last mentioned paragraph. We entertain
no doubt that the trial judge and appellees are right in their appreciation of the legal doctrines flowing
from the facts.
In the first place, it must again be pointed out that the appellant should have registered its protest
before or at the time of the sale of this property. It must further be pointed out that while not
conclusive, the characterization of the property as chattels by the appellant is indicative of intention
and impresses upon the property the character determined by the parties. In this connection the
decision of this court in the case of Standard Oil Co. of New York vs. Jaramillo ( [1923], 44 Phil.,
630), whether obiter dicta or not, furnishes the key to such a situation.
It is, however not necessary to spend overly must time in the resolution of this appeal on side issues.
It is machinery which is involved; moreover, machinery not intended by the owner of any building or
land for use in connection therewith, but intended by a lessee for use in a building erected on the
land by the latter to be returned to the lessee on the expiration or abandonment of the lease.
A similar question arose in Puerto Rico, and on appeal being taken to the United States Supreme
Court, it was held that machinery which is movable in its nature only becomes immobilized when

placed in a plant by the owner of the property or plant, but not when so placed by a tenant, a
usufructuary, or any person having only a temporary right, unless such person acted as the agent of
the owner. In the opinion written by Chief Justice White, whose knowledge of the Civil Law is well
known, it was in part said:
To determine this question involves fixing the nature and character of the property from the
point of view of the rights of Valdes and its nature and character from the point of view of
Nevers & Callaghan as a judgment creditor of the Altagracia Company and the rights derived
by them from the execution levied on the machinery placed by the corporation in the plant.
Following the Code Napoleon, the Porto Rican Code treats as immovable (real) property, not
only land and buildings, but also attributes immovability in some cases to property of a
movable nature, that is, personal property, because of the destination to which it is applied.
"Things," says section 334 of the Porto Rican Code, "may be immovable either by their own
nature or by their destination or the object to which they are applicable." Numerous
illustrations are given in the fifth subdivision of section 335, which is as follows: "Machinery,
vessels, instruments or implements intended by the owner of the tenements for the industrial
or works that they may carry on in any building or upon any land and which tend directly to
meet the needs of the said industry or works." (See also Code Nap., articles 516, 518 et seq.
to and inclusive of article 534, recapitulating the things which, though in themselves movable,
may be immobilized.) So far as the subject-matter with which we are dealing machinery
placed in the plant it is plain, both under the provisions of the Porto Rican Law and of the
Code Napoleon, that machinery which is movable in its nature only becomes immobilized
when placed in a plant by the owner of the property or plant. Such result would not be
accomplished, therefore, by the placing of machinery in a plant by a tenant or a usufructuary
or any person having only a temporary right. (Demolombe, Tit. 9, No. 203; Aubry et Rau, Tit.
2, p. 12, Section 164; Laurent, Tit. 5, No. 447; and decisions quoted in Fuzier-Herman ed.
Code Napoleon under articles 522 et seq.) The distinction rests, as pointed out by
Demolombe, upon the fact that one only having a temporary right to the possession or
enjoyment of property is not presumed by the law to have applied movable property
belonging to him so as to deprive him of it by causing it by an act of immobilization to
become the property of another. It follows that abstractly speaking the machinery put by the
Altagracia Company in the plant belonging to Sanchez did not lose its character of movable
property and become immovable by destination. But in the concrete immobilization took
place because of the express provisions of the lease under which the Altagracia held, since
the lease in substance required the putting in of improved machinery, deprived the tenant of
any right to charge against the lessor the cost such machinery, and it was expressly
stipulated that the machinery so put in should become a part of the plant belonging to the
owner without compensation to the lessee. Under such conditions the tenant in putting in the
machinery was acting but as the agent of the owner in compliance with the obligations
resting upon him, and the immobilization of the machinery which resulted arose in legal effect
from the act of the owner in giving by contract a permanent destination to the machinery.
xxx
xxx
xxx
The machinery levied upon by Nevers & Callaghan, that is, that which was placed in the
plant by the Altagracia Company, being, as regards Nevers & Callaghan, movable property, it
follows that they had the right to levy on it under the execution upon the judgment in their
favor, and the exercise of that right did not in a legal sense conflict with the claim of Valdes,
since as to him the property was a part of the realty which, as the result of his obligations
under the lease, he could not, for the purpose of collecting his debt, proceed separately
against. (Valdes vs. Central Altagracia [192], 225 U.S., 58.)
Finding no reversible error in the record, the judgment appealed from will be affirmed, the costs of
this instance to be paid by the appellant.

Municipal trial court judges cannot notarize affidavits of


cohabitation of parties whose marriage they will
solemnize.
x xx
A marriage license is issued by the local civil registrar to parties who have all the qualifications and
none of the legaldisqualifications to contract marriage. [27] Before performing the marriage ceremony,
the
judge
must
personally
examine
the
marriage
license
presented. [28]
If the contracting parties have cohabited as husband and wife for at least five years and have
no legal impediment tomarry, they are exempt from the marriage license requirement. [29] Instead, the
parties must present an affidavit of cohabitation sworn to before any person authorized by law to
administer oaths.[30] The judge, as solemnizing officer, must personally examine the affidavit of
cohabitation as to the parties having lived together as husband and wife for at least five years and
the absence of any legal impediment to marry each other.[31] The judge must also execute a sworn
statement that he personally ascertained the parties qualifications to marry and found
no legal impediment to the marriage.[32] Article 34 of the Family Code of the Philippines provides:
Art. 34. No license shall be necessary for the marriage of a man and a woman who have lived
together as husband and wife for at least five years and without any legal impediment to marry each
other. The contracting parties shall state the foregoing facts in an affidavit before any person
authorized by law to administer oaths. The solemnizing officer shall also state under oath that he
ascertained the qualifications of the contracting parties and found no legal impediment to the
marriage.
Section 5 of the Guidelines on the Solemnization of Marriage by the Members of the Judiciary also
provides:
Sec. 5. Other duties of solemnizing officer before the solemnization of the marriage
in legal ratification of cohabitation. In the case of a marriage effecting legal ratification of
cohabitation, the solemnizing officer shall (a) personally interview the contracting parties to
determine their qualifications to marry; (b) personally examine the affidavit of the contracting parties
as to the fact of having lived together as husband and wife for at least five [5] years and the absence
of any legal impediments to marry each other; and (c) execute a sworn statement showing
compliance with (a) and (b) and that the solemnizing officer found no legal impediment to the
marriage.
Based on law and the Guidelines on the Solemnization of Marriage by the Members of the Judiciary,
the person who notarizes the contracting parties affidavit of cohabitation cannot be the judge who
will solemnize the parties marriage.
As a solemnizing officer, the judges only duty involving the affidavit of cohabitation is to examine
whether the parties have indeed lived together for at least five years without legal impediment
to marry. The Guidelines does not state that the judge can notarize the parties affidavit of
cohabitation.
Thus, affidavits of cohabitation are documents not connected with the judges official function and
duty to solemnize marriages. Notarizing affidavits of cohabitation is inconsistent with the duty to
examine the parties requirements for marriage. If the solemnizing officer notarized the affidavit of

cohabitation, he cannot objectively examine and review the affidavits statements before performing
the marriage ceremony. Should there be any irregularity or false statements in the affidavit of
cohabitation he notarized, he cannot be expected to admit that he solemnized the marriage despite
the irregularity or false allegation.

THIRD DIVISION
[ A.M. No. MTJ-14-1842 [Formerly OCA IPI No. 12-2491-MTJ],
February 24, 2014 ]
REX M. TUPAL, COMPLAINANT, VS. JUDGE REMEGIO V. ROJO, BRANCH 5,
MUNICIPAL TRIAL COURT IN CITIES (MTCC), BACOLOD CITY, NEGROS
OCCIDENTAL, RESPONDENT.

xxx
[63]

Since 1922 in Adong v. Cheong Seng Gee, Philippine courts have recognized foreign divorce
decrees between a Filipino and a foreign citizen if they are successfully proven under the rules of
[64]

evidence. Divorce involves the dissolution of a marriage, but the recognition of a foreign divorce
decree does not involve the extended procedure under A.M. No. 02-11-10-SC or the rules of
ordinary trial. While the Philippines does not have a divorce law, Philippine courts may, however,
recognize a foreign divorce decree under the second paragraph of Article 26 of the Family Code, to
capacitate a Filipino citizen to remarry when his or her foreign spouse obtained a divorce decree
abroad.

[65]

There is therefore no reason to disallow Fujiki to simply prove as a fact the Japanese Family Court
judgment nullifying the marriage between Marinay and Maekara on the ground of bigamy. While the
Philippines has no divorce law, the Japanese Family Court judgment is fully consistent with
Philippine public policy, as bigamous marriages are declared void from the beginning under Article
35(4) of the Family Code. Bigamy is a crime under Article 349 of the Revised Penal Code. Thus,
Fujiki can prove the existence of the Japanese Family Court judgment in accordance with Rule 132,
Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of Court.
xxx
Article 26 of the Family Code confers jurisdiction on Philippine courts to extend the effect of a foreign
divorce decree to a Filipino spouse without undergoing trial to determine the validity of the
dissolution of the marriage. The second paragraph of Article 26 of the Family Code provides that
[w]here a marriage between a Filipino citizen and a foreigner is validly celebrated and a divorce is
thereafter validly obtained abroad by the alien spouse capacitating him or her to remarry, the Filipino
[88]

spouse shall have capacity to remarry under Philippine law. In Republic v. Orbecido, this Court
recognized the legislative intent of the second paragraph of Article 26 which is to avoid the absurd
situation where the Filipino spouse remains married to the alien spouse who, after obtaining a
[89]

divorce, is no longer married to the Filipino spouse under the laws of his or her country. The
second paragraph of Article 26 of the Family Code only authorizes Philippine courts to adopt the
effects of a foreign divorce decree precisely because the Philippines does not allow divorce.
Philippine courts cannot try the case on the merits because it is tantamount to trying a case for
divorce.

The second paragraph of Article 26 is only a corrective measure to address the anomaly that results
from a marriage between a Filipino, whose laws do not allow divorce, and a foreign citizen, whose
laws allow divorce. The anomaly consists in the Filipino spouse being tied to the marriage while the
foreign spouse is free to marry under the laws of his or her country. The correction is made by
extending in the Philippines the effect of the foreign divorce decree, which is already effective in the
country where it was rendered. The second paragraph of Article 26 of the Family Code is based on
this Courts decision in Van Dorn v. Romillo

[90]

which declared that the Filipino spouse should not be

discriminated against in her own country if the ends of justice are to be served.

[91]

The principle in Article 26 of the Family Code applies in a marriage between a Filipino and a foreign
citizen who obtains a foreign judgment nullifying the marriage on the ground of bigamy. The Filipino
spouse may file a petition abroad to declare the marriage void on the ground of bigamy. The principle
in the second paragraph of Article 26 of the Family Code applies because the foreign spouse, after
the foreign judgment nullifying the marriage, is capacitated to remarry under the laws of his or her
country. If the foreign judgment is not recognized in the Philippines, the Filipino spouse will be
discriminatedthe foreign spouse can remarry while the Filipino spouse cannot remarry.
Under the second paragraph of Article 26 of the Family Code, Philippine courts are empowered to
correct a situation where the Filipino spouse is still tied to the marriage while the foreign spouse is
free to marry. Moreover, notwithstanding Article 26 of the Family Code, Philippine courts already
have jurisdiction to extend the effect of a foreign judgment in the Philippines to the extent that the
foreign judgment does not contravene domestic public policy. A critical difference between the case
of a foreign divorce decree and a foreign judgment nullifying a bigamous marriage is that bigamy, as
a ground for the nullity of marriage, is fully consistent with Philippine public policy as expressed in
Article 35(4) of the Family Code and Article 349 of the Revised Penal Code. The Filipino spouse has
the option to undergo full trial by filing a petition for declaration of nullity of marriage under A.M. No.
02-11-10-SC, but this is not the only remedy available to him or her. Philippine courts have
jurisdiction to recognize a foreign judgment nullifying a bigamous marriage, without prejudice to a
criminal prosecution for bigamy.

SECOND DIVISION
[ G.R. No. 196049, June 26, 2013 ]
MINORU FUJIKI, PETITIONER, VS. MARIA PAZ GALELA MARINAY,
SHINICHI MAEKARA, LOCAL CIVIL REGISTRAR OF QUEZON CITY,
AND THE ADMINISTRATOR AND CIVIL REGISTRAR GENERAL OF
THE NATIONAL STATISTICS OFFICE, RESPONDENTS.
Similarly, we are not impressed by the ratiocination of the Republic that as a marriage under a
license is not invalidated by the fact that the license was wrongfully obtained, so must a marriage not
be invalidated by a fabricated statement that the parties have cohabited for at least five years as
required by law. The contrast is flagrant. The former is with reference to an irregularity of the
marriage license, and not to the absence of one. Here, there is no marriage license at all.
Furthermore, the falsity of the allegation in the sworn affidavit relating to the period of Jose and
Felisa's cohabitation, which would have qualified their marriage as an exception to the requirement
for a marriage license, cannot be a mere irregularity, for it refers to a quintessential fact that the law

precisely required to be deposed and attested to by the parties under oath. If the essential matter in
the sworn affidavit is a lie, then it is but a mere scrap of paper, without force and effect. Hence, it is
as if there was no affidavit at all.

An action for nullity of marriage is imprescriptible


[ G.R. No. 175581, March 28, 2008 ]REPUBLIC OF THE PHILIPPINES,Petitioner,vs. JOSE A. DAYOT,
Respondent. FELISA TECSON-DAYOT, Petitioner,vs. JOSE A. DAYOT, Respondent.

An action for nullity of marriage is imprescriptible.[56] Jose


and Felisa's marriage was celebrated sans a marriage
license. No other conclusion can be reached except that it
is voidab initio. In this case, the right to impugn a void
marriage does not prescribe, and may be raised any time.
Significance of the Certificate of Legal Capacity
Petitioner argues that the certificate of legal capacity required by Article 21 of the
Family Code was not submitted together with the application for a marriage license.
According to her, its absence is proof that respondent did not have legal capacity to
remarry.
We clarify. To repeat, the legal capacity to contract marriage is determined by the
national law of the party concerned. The certificate mentioned in Article 21 of the
Family Code would have been sufficient to establish the legalcapacity of respondent,
had he duly presented it in court. A duly authenticated and admitted certificate is
prima facie evidence of legal capacity to marry on the part of the alien applicant for
a marriage license.[50]
As it is, however, there is absolutely no evidence that proves
respondent's legal capacity to marry petitioner. A review of the records before this
Court shows that only the following exhibits were presented before the lower court:
(1) for petitioner: (a) Exhibit "A" - Complaint; [51] (b) Exhibit "B" - Certificate of
Marriage Between Rederick A. Recio (Filipino-Australian) and Grace J. Garcia
(Filipino) on January 12, 1994 in Cabanatuan City, Nueva Ecija; [52] (c) Exhibit "C"
-Certificate of Marriage Between Rederick A. Recio (Filipino) and Editha D. Samson
(Australian) on March 1, 1987 in Malabon, Metro Manila; [53] (d) Exhibit "D" - Office of
the City Registrar of Cabanatuan City Certification that no information of annulment
between Rederick A. Recio and Editha D. Samson was in its records; [54] and (e)
Exhibit "E" -Certificate of Australian Citizenship of Rederick A. Recio; [55] (2) for
respondent: (a) Exhibit "1" -- Amended Answer; [56](b) Exhibit "2" - Family Law Act
1975 Decree Nisi of Dissolution of Marriage in the Family Court of Australia; [57] (c)
Exhibit "3" - Certificate of Australian Citizenship of Rederick A. Recio; [58] (d) Exhibit
"4" - Decree Nisi of Dissolution of Marriage in the Family Court of

Australia Certificate;[59] and Exhibit "5" -- Statutory Declaration of


the Legal Separation Between Rederick A. Recio and Grace J. Garcia Recio since
October 22, 1995.[60]

GRACE J. GARCIA, A.K.A. GRACE J. GARCIA-RECIO, PETITIONER,VS.


REDERICK A. RECIO, RESPONDENT. THIRD DIVISION[ G.R. No. 138322,
October 02, 2001 ]
A divorce obtained abroad by an alien may be recognized in our jurisdiction,
provided such decree is valid according to the national law of the foreigner.
However, the divorce decree and the governing personal law of the alien
spouse who obtained the divorce must be proven. Our courts do not take
judicial notice of foreign laws and judgments; hence, like any other facts,
both the divorce decree and the national law of the alien must be alleged
and proven according to our law on evidence.

certificate of legal capacity to marry


In People v. Jansen,

[124]

this Court held that:

the solemnizing officer is not duty-bound to investigate whether or not a marriage license has been
duly and regularly issued by the local civil registrar. All the solemnizing officer needs to know is that
the license has been issued by the competent official, and it may be presumed from the issuance of
the license that said official has fulfilled the duty to ascertain whether the contracting parties had
fulfilled the requirements of law.
However, this Court also said in Sevilla v. Cardenas,[125] that the presumption of regularity of official
acts may be rebutted by affirmative evidence of irregularity or failure to perform a duty. The visible
superimpositions on the marriage licenses should have alerted the solemnizing judges to the
irregularity
of
the
issuance.
It follows also that although Article 21 of the Family Code requires the submission of
the certificate from the embassy of the foreign party to the local registrar for acquiring a marriage
license, the judges should have been more diligent in reviewing the parties documents and
qualifications. As noted by the OCA, the absence of the required certificates coupled with the
presence of mere affidavits should have aroused suspicion as to the regularity of the marriage
license
issuance.
The judges gross ignorance of the law is also evident when they solemnized marriages under Article
34 of the Family Code without the required qualifications and with the existence of legal impediments
such as minority of a party. Marriages of exceptional character such as those made under Article 34
are, doubtless, the exceptions to the rule on the indispensability of the formal requisite of a marriage
license.[126] Under the rules of statutory construction, exceptions as a general rule should be strictly
but reasonably construed. [127] The affidavits of cohabitation should not be issued and accepted pro
forma particularly in view of the settled rulings of the Court on this matter. The five-year period of
cohabitation should be one of a perfect union valid under the law but rendered imperfect only by the
absence of the marriage contract. [128] The parties should have been capacitated to marry each other

during

the

entire

period

and

not

only

at

the

time

of

the

marriage. [129]

To elaborate further on the gravity of the acts and omissions of the respondents, the Family Code
provides the requisites for a valid marriage:
Art.

3.

The

formal

requisites

of

marriage

are:

(1)
Authority
of
the
solemnizing
officer;
(2) A valid marriage license except in the cases provided for in Chapter 2 of this Title; and
(3) A marriage ceremony which takes place with the appearance of the contracting parties before the
solemnizing officer and their personal declaration that they take each other as husband and wife in
the
presence
of
not
less
than
two
witnesses
of legal age.
(53a,
55a)
Art. 4. The absence of any of the essential or formal requisites shall render the marriage void ab
initio,except
as
stated
in
Article
35
(2).
A defect in any of the essential requisites shall not affect the validity of the marriage but the party or
parties responsible for the irregularity shall be civilly, criminally and administratively liable. (n)
The absence of a marriage license will clearly render a marriage void ab initio.[130] The actions of the
judges have raised a very alarming issue regarding the validity of the marriages they solemnized
since they did not follow the proper procedure or check the required documents and qualifications.
In Aranes v. Judge Salvador Occiano, [131] the Court said that a marriage solemnized without a
marriage license is void and the subsequent issuance of the license cannot render valid or add even
an iota of validity to the marriage. It is the marriage license that gives the solemnizing officer the
authority to solemnize a marriage and the act of solemnizing the marriage without a license
constitutes
gross
ignorance
of
the
law.
As held by this Court in Navarro v. Domagtoy:
The judiciary should be composed of persons who, if not experts are at least proficient in the law
they are sworn to apply, more than the ordinary layman. They should be skilled and competent in
understanding and applying the law. It is imperative that they be conversant with
basic legal principles like the ones involved in the instant case. It is not too much to expect them to
know and apply the law intelligently.
xxx
WHEREFORE, the Court finds respondents:
Judge Anatalio S. Necessario, Presiding Judge, Municipal Trial Court in Cities, Branch 2,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
he be DISMISSED FROM THE SERVICE with forfeiture of his retirement benefits, except leave
credits, if any, and that he be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
2.
Judge Gil R. Acosta, Presiding Judge, Municipal Trial Court in Cities, Branch 3, Cebu
City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that he
be DISMISSED FROM THE SERVICEwith forfeiture of his retirement benefits, except leave credits, if
any, and that he be disqualified from reinstatement or appointment to any public office, including
government-owned or -controlled corporation;
1.

3.

4.

5.

6.

7.

8.

9.

Judge Rosabella M. Tormis, Presiding Judge, Municipal Trial Court in Cities, Branch 4,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
she would have been DISMISSED FROM THE SERVICE with forfeiture of her retirement benefits,
except leave credits, if any, and disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation, had she not been previously dismissed
from service in A.M. No. MTJ-12-1817 (Formerly A.M. No. 09-2-30-MTCC);
Judge Edgemelo C. Rosales, Presiding Judge, Municipal Trial Court in Cities, Branch 8,
Cebu City, GUILTY of gross inefficiency or neglect of duty and of gross ignorance of the law and that
he be DISMISSED FROM THE SERVICE with forfeiture of his retirement benefits, except leave
credits, if any, and that he be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
Helen Mongaya, Court Interpreter, Municipal Trial Court in Cities, Branch 4, Cebu
City, GUILTY of violating Section 2, Canon I of the Code of Conduct for Court Personnel and that
she be DISMISSED FROM THE SERVICEwith forfeiture of her retirement benefits, except leave
credits, if any, and that she be disqualified from reinstatement or appointment to any public office,
including government-owned or -controlled corporation;
Rhona F. Rodriguez, Administrative Officer I, Office of the Clerk of Court, Regional Trial
Court, Cebu City,GUILTY of gross misconduct for Section 2, Canon I of the Code of Conduct for
Court Personnel and for inducing Maricel Albater to falsify the application for marriage and that she
be DISMISSED FROM THE SERVICE with forfeiture of her retirement benefits, except leave credits,
if any, and that she be disqualified from reinstatement or appointment to any public office, including
government-owned or -controlled corporation;
Desiderio S. Aranas, Process Server, Municipal Trial Court in Cities, Branch 3, Cebu
City, GUILTY of conduct prejudicial to the best interest of the service and that he
be SUSPENDED without pay for a period of six (6) months with a warning that a similar offense shall
be dealt with more severely;
Rebecca Alesna, Court Interpreter, Municipal Trial Court in Cities, Branch 1, Cebu
City, GUILTY of conduct prejudicial to the best interest of the service and of violating Section 2(b),
Canon III of the Code of Conduct for Court Personnel and that she be SUSPENDED without pay for
a period of six (6) months with a warning that a similar offense shall be dealt with more severely;
Celeste Retuya, Clerk III, Municipal Trial Court in Cities, Branch 6, Cebu City, and Emma
Valencia, Stenographer III, Regional Trial Court, Branch 18, Cebu City, GUILTY of conduct
prejudicial to the best interest of the service and of violating Section 2(b), Canon III of the Code of
Conduct for Court Personnel and that they beADMONISHED with a warning that a similar offense
shall be dealt with more severely;
The complaints against Judge Geraldine Faith A. Econg, Presiding Judge, Regional Trial Court,
Branch 9, Cebu City; Corazon P. Retuya, Court Stenographer, Municipal Trial Court in Cities,
Branch 6, Cebu City; and Marilou Cabaez, Court Stenographer, Municipal Trial Court in Cities, are
DISMISSED for lack of merit.
The case against Judge Rosabella M. Tormis, including the sworn statements of Celerina Plaza and
Crisanto dela Cerna, should be REFERRED to the Office of the Bar Confidant for the purpose of
initiating disbarment proceedings against the judge.
The Honorable Mayors of Barili, Cebu and Liloan, Cebu, are to be furnished copies of the
Supplemental Report dated 14 August 2007 and are ADVISED to conduct an investigation with
respect to the statements of Filomena C. Lopez, Civil Registrar of Barili, Cebu, and Bonita I. Pilones,
Civil Registrar of Liloan, Cebu, regarding the processing of marriage licenses and to take the
necessary action as the findings of the investigation may warrant.
Let a copy of this Decision be included in the respondents files that are with the Office of the Bar

Confidant and distributed to all courts and to the Integrated Bar of the Philippines.
SO ORDERED.

EN BANC
[ A.M. No. MTJ-07-1691 [Formerly A.M. No. 07-7-04-SC], April 02, 2013 ]
OFFICE OF THE COURT ADMINISTRATOR, PETITIONER, VS. JUDGE ANATALIO S. NECESSARIO,
BRANCH 2; JUDGE GIL R. ACOSTA, BRANCH 3; JUDGE ROSABELLA M. TORMIS,
BRANCH 4; AND JUDGE EDGEMELO C. ROSALES, BRANCH 8; ALL OF MTCC-CEBU CITY;
CELESTE P. RETUYA, CLERK III, MTCC BRANCH 6, CEBU CITY; CORAZON P. RETUYA,
COURT STENOGRAPHER, MTCC, BRANCH 6, CEBU CITY; RHONA F. RODRIGUEZ,
ADMINISTRATIVE OFFICER I, OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL
COURT (RTC) CEBU CITY; EMMA D. VALENCIA, COURT STENOGRAPHER III, RTC,
BRANCH 18, CEBU CITY; MARILOU CABANEZ, COURT STENOGRAPHER, MTCC, BRANCH
4, CEBU CITY; DESIDERIO S. ARANAS, PROCESS SERVER, MTCC, BRANCH 3, CEBU
CITY; REBECCA ALESNA, COURT INTERPRETER, MTCC, BRANCH 1, CEBU CITY; AND
HELEN MONGGAYA, COURT STENOGRAPHER, MTCC, BRANCH 4, CEBU CITY.
RESPONDENTS.

not a prejudicial question

In the light of Article 40 of the Family Code, respondent,


without first having obtained the judicial declaration of
nullity of the first marriage, can not be said to have validly
entered into the second marriage. Per current
jurisprudence, a marriage though void still needs a judicial
declaration of such fact before any party can marry again;
otherwise the second marriage will also be void.19 The
reason is that, without a judicial declaration of its nullity,
the first marriage is presumed to be subsisting. In the case
at bar, respondent was for all legal intents and purposes
regarded as a married man at the time he contracted his
second marriage with petitioner.20 Against this legal
backdrop, any decision in the civil action for nullity would
not erase the fact that respondent entered into a second
marriage during the subsistence of a first marriage. Thus,

a decision in the civil case is not essential to the


determination of the criminal charge. It is, therefore, not a
prejudicial question. As stated above, respondent cannot
be permitted to use his own malfeasance to defeat the
criminal action against him.

G.R. No. 138509

July 31, 2000

IMELDA MARBELLA-BOBIS, petitioner,


vs.
ISAGANI D. BOBIS, respondent.

It is not enough that the respondent, alleged to be


psychologically incapacitated, had difficulty in complying
with his marital obligations, or was unwilling to perform
these obligations. Proof of a natal or supervening disabling
factor an adverse integral element in the respondents
personality structure that effectively incapacitated him from
complying with his essential marital obligations must be
shown. Mere difficulty, refusal or neglect in the
performance of marital obligations or ill will on the part of
the spouse is different from incapacity rooted in some
debilitating psychological condition or illness; irreconcilable
differences, sexual infidelity or perversion, emotional
immaturity and irresponsibility and the like, do not by
themselves warrant a finding of psychological incapacity
under Article 36, as the same may only be due to a
persons refusal or unwillingness to assume the essential
obligations of marriage.
The only fact established here, which Catalina even
admitted in her Answer, was her abandonment of the

conjugal home to live with another man. Yet, abandonment


was not one of the grounds for the nullity of marriage
under the Family Code. It did not also constitute
psychological incapacity, it being instead a ground for legal
separation under Article 55(10) of the Family Code. On the
other hand, her sexual infidelity was not a valid ground for
the nullity of marriage under Article 36 of the Family Code,
considering that there

should be a showing that


such marital infidelity was a manifestation
of a disordered personality that made her
completely unable to discharge the
essential obligations of marriage.33 Needless to
state, Eduardo did not adduce such evidence, rendering
even his claim of her infidelity bereft of factual and legal
basis.
G.R. No. 159594

November 12, 2012

REPUBLIC OF THE PHILIPPINES, Petitioner,


vs. THE HON. COURT OF APPEALS (NINTH DIVISION), AND EDUARDO C. DE QUINTOS,
.JR., Respondents.

ELEMENTS OF PSYCHOLOGICAL INCAPACITY


Article 36 of the Family Code governs psychological incapacity as a ground for declaration of nullity
of marriage. It provides that "a marriage contracted by any party who, at the time of the celebration,
was psychologically incapacitated to comply with the essential marital obligations of marriage, shall
likewise be void even if such incapacity becomes manifest only after its solemnization."
In interpreting this provision, we have repeatedly stressed that psychological incapacity
contemplates "downright incapacity or inability to take cognizance of and to assume the basic marital
obligations";21 not merely the refusal, neglect or difficulty, much less ill will, on the part of the errant
spouse.22

The plaintiff bears the burden of proving the

1. juridical antecedence (i.e., the existence at the time of the celebration of


marriage),

2. gravity and

3.incurability of the condition of the errant spouse.

23

distinction between a resulting trust and a constructive trust

resulting trust n. a trust implied by law (as determined by a court) that a person
who holds title or possession was intended by agreement (implied by the circumstances) with the
intended owner to hold the property for the intended owner. Thus, the holder is considered a trustee
of a resulting trust for the proper owner as beneficiary. Although a legal fiction, the resulting trust
forces the holder to honor the intention and prevents unjust enrichment. Example: Mahalia leaves
$100,000 with her friend, Albert, while she is on a trip to Europe, asking him "to buy the old Barsallo
place if it comes on the market." Albert buys the property, but has title put in his own name, which
the court will find is held in a resulting trust for Mahalia.

Distinguish a resulting trust from a constructive trust


A resulting trust differs from a

"constructive trust" which comes

about when someone comes into possession by accident, misunderstanding or dishonesty


of property belonging to another

What is a resulting trust? Give an example


Resulting Trust
An arrangement whereby one person holds property for the benefit of another, which is implied by a
court in certain cases where a person transfers property to another and gives him or her legal title to
it but does not intend him or her to have an equitable or beneficial interest in the property.
Since this beneficial interest is not given to anyone else, it is said to "result" to the person who
transferred the property.
A resulting trust arises when an express trust fails. A settlor, one who creates a trust, transfers his
property to a trustee, one appointed, or required by law, to execute a trust, to hold in trust for a
beneficiary, one who profits from the act of another. If, without the settlor's knowledge, the
beneficiary died before the trust was created, the express trust would fail for want of a beneficiary.
The trustee holds the property in resulting trust for the settlor.
When an express trust does not use or exhaust all the trust property, a resulting trust arises. For
example, the settlor transfers $200,000 in trust to pay the beneficiary during her lifetime $2,000 a
month from principal, trust property, as opposed to income generated by investment of the principal.
No other disposition is specified. The beneficiary dies after having received $20,000. The trustee
holds the unexpended funds in a resulting trust for the settlor.
A purchase money resulting trust arises when one person purchases and pays for property and the
name of another person is on the title. For example, a person purchases a farm for $100,000 and
directs the seller to make the deed out to a third person. Nothing further appears concerning the
purchaser's intention, and no relationship exists between the purchaser and the third person. In this

situation, a resulting trust is created. The purchaser's intention is inferred from the absence of
expressed intention that she intends the third person to have an interest in the farm. This occurs
because a person usually does not intend to dispose of property without receiving something in
return for it, unless she makes an express statement to the contrary, such as announcing an
intention to make a gift or loan. If the purchaser is the spouse or parent of the third person, which is
not the case here, it is presumed that a gift is intended. In this case, the third person holds a
purchase money resulting trust for the purchaser.
A purchase money resulting trust does not arise, however, if the person who pays the purchase price
manifests an intention that no resulting trust should arise. Purchase money resulting trusts have
been abolished or restricted in a number of states.
The resulting trust attempts to dispose of the property in the manner the person who transferred it
would have wanted if he had anticipated the situation. The court will order that the person with legal
title to the trust property hold it in a resulting trust for the person who transferred it. When a
charitable trusta trust designed for the benefit of a class or the public generallyfails, a resulting
trust will be invoked only if the doctrine of Cy Pres is deemed not to apply. This doctrine implements
the intention of a person as nearly as possible when giving the intent literal effect would be illegal or
impossible.

WHAT IS A CONSTRUCTIVE TRUST?


A constructive trust is an equitable remedy resembling a trust imposed by a court to benefit a
party that has been wrongfully deprived of its rights due to either a person obtaining or holding legal
right to property which they should not possess due to unjust enrichment or interference

In a constructive trust the defendant breaches a duty owed to the plaintiff. The most common such
breach is a breach of fiduciary duty. A controversial example is the case of Attorney-General for
Hong Kong v Reid,[3] in which a seniorprosecutor took bribes not to prosecute certain offenders. With
the bribe money, he purchased property in New Zealand. His employer, the Attorney-General, sought
a declaration that the property was held on constructive trust for it, on the basis of breach of fiduciary
duty. The Privy Council awarded a constructive trust. The case is different fromRegal
(Hastings) because there was no interference with a profit-making opportunity that properly belonged
to the prosecutor.
This area is highly controversial and may not represent the law in England because of the
previous Court of Appealcase of Lister v Stubbs[4] which held the opposite, partially because a trust
is a very strong remedy that gives proprietary rights to the claimant not enjoyed by the defendant's
other creditors. In the event of the defendant's insolvency, the trust assets are untouchable by the
general creditors. Supporters of Lister v Stubbs suggest that there is no good reason to put the
victim of wrongdoing ahead of other creditors of the estate. However, being a Privy Council decision
Reid's case did not overrule the decision in Lister v Stubbs, which is still good law in England and
Wales, but not in some of its former colonies, such as Australia. There is a tension in English law
between Lister and Reid which has been highlighted in the recent cases such as Sinclair
Investments (UK) Ltd v Versailles Trade Finance Ltd.[5]

Unjust enrichment
In Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [7] one bank paid another bank a
large sum of money by mistake (note that the recipient Bank did not do anything wrong - it just
received money not owed to it). Goulding J held that the money was held on (constructive) trust for
the first bank. The reasoning in this case has been doubted, and in Westdeutsche Landesbank
Girozentrale v Islington London Borough Council the House of Lords distanced itself from the idea
that unjust enrichment raises trusts in the claimant's favour. This remains an area of intense
controversy.
These type of trusts are called '"institutional" constructive trusts'. They arise the moment the relevant
conduct (breach of duty, unjust enrichment etc.) occurs. They can be contrasted with '"remedial"
constructive trusts', which arise on the date of judgment as a remedy awarded by the court to do
justice in the particular case.
An example is the Australian case Muschinski v Dodds.[8] A de facto couple lived in a house owned
by the man. They agreed to make improvements to the property by building a pottery shed for the
woman to do arts and crafts work in. The woman paid for part of this. They then broke up. The High
Court held that the man held the property on constructive trust for himself and the woman in the
proportions in which they had contributed to the improvements to the land. This trust did not arise the
moment the woman commenced improvements - that conduct did not involve a breach of duty or an
unjust enrichment etc. The trust arose at the date of judgment, to do justice in the case.
Remedial constructive trusts do not exist in England and Wales, and the High Court of Australia has
also distanced itself from Muschinski v Dodds in the later case of Bathurst City Council v PWC
Properties.[9]

Usefulness of constructive trusts


For example, if the defendant steals $100,000 from the plaintiff and uses that money to buy a house,
the court can trace the house back to the plaintiff's money and deem the house to be held in trust for
the plaintiff. The defendant must then convey title to the house to the plaintiff, even if rising property
values had appreciated the value of the house to $120,000 by the time the transaction occurred. If
the value of the house had instead depreciated to $80,000, the plaintiff could demand a remedy at
law (money damages equal to the amount stolen) instead of an equitable remedy.
The situation would be different if the defendant had mixed his own property with that of the plaintiff,
for example, adding $50,000 of his own money to the $100,000 stolen from the plaintiff and buying a
$150,000 house or using plaintiff's $100,000 to add a room to defendant's existing house. The
constructive trust would still be available but in proportion to the contributions, not wholly in the
claimant's favour. Alternatively, the claimant could elect for an equitable lien instead, which is like a
mortgage over the asset to secure repayment.
Because a constructive trust is an equitable device, the defendant can raise all of the available
equitable defenses against it, including unclean hands, laches, detrimental reliance, and undue
hardship.

sale of whole property made by a co-owner

Petitioners herein filed a case for recovery of property and


damages
against
the
defendant
and
herein
private respondent, Celestino Afable.
Rosalia Bailon and Gaudencio Bailon sold a portion of the
said land consisting of 16,283 square meters to Donato
Delgado. On May 13, 1949, Rosalia Bailon alone sold the
remainder of the land consisting of 32,566 square meters
to Ponciana V. Aresgado de Lanuza. On the same date,
Lanuza acquired from Delgado the 16,283 square meters
of land which the latter had earlier acquired from Rosalia
and gaudencio. On December 3, 1975, John Lanuza,
acting under a special power of attorney given by his wife,
Ponciana V. Aresgado de Lanuza, sold the two parcels of
land to Celestino Afable, Sr. In all these transfers, it was
stated in the deeds of sale that the land was not
registered.
Afable claimed that he had acquired the land in question
through prescription and contended that the petitioners
were guilty of laches.
Issue:

What is the effect of a sale by one or more co-owners of


the entire property held in common without the consent of
all the co-owners and of the appropriate remedy of the
aggrieved co-owners?
Held:

The Court has ruled that even if a co-owner sells the


whole property as his, the sale will affect only his own
share but not those of the other co-owners who did not
consent to the sale. The sale or other disposition affects
only what would correspond to his grantor in the partition

of the thing owned in common. Consequently, by virtue of


the sales made by Rosalia and Gaudencio Bailon which
are valid with respect to their proportionate shares, and
the subsequent transfers which culminated in the sale to
private respondent Celestino Afable thereby became a coowner of the disputed parcel of land as correctly held by
the lower court since the sales produced the effect of
substituting the buyers in the enjoyment thereof.
It may be deduced that since a co-owner is entitled to sell
his undivided share, a sale of the entire property by one
co-owner without the consent of the other co-owner is not
null and void. However, only the rights of the co-ownerseller are transferred, thereby making the buyer a coowner of the property.
The proper action in cases like this is not for the
nullification of the sale or for the recovery of possession of
the thing owned in common from the third person who
substituted the co-owner or co-owners who alienated their
shares, but the DIVISION of the common property as if
itcontinued to remain in the possession of the co-owners
who possessed and administered it.
The action to demand partition is imprescriptible or cannot
be barred by laches, absent a clear repudiation of the coownership by a co-owner clearly communicated to the
other co-owners.
COMMUNITIES CAGAYAN, INC., vs. SPOUSES ARSENIO
(Deceased) and ANGELES NANOL AND ANYBODY CLAIMING
RIGHTS UNDER THEM
COMMUNITIES
CAGAYAN,
INC.,
vs.
SPOUSES ARSENIO (Deceased) and ANGELES NANOL AND ANYBODY CLAIMING RIGHTS
UNDER THEM
Facts:
Sometime in 1994, respondent-spouses Arsenio and Angeles Nanol entered into a Contract to
Sell with petitioner Communities Cagayan, Inc., (CCI) whereby the latter agreed to sell to
respondent-spouses a house and Lots 17 and 19 located at Block 16, Camella Homes Subdivision,

Cagayan de Oro City, for the price of P368,000.00 (P368T). They obtained a loan from Capitol
Development Bank (CDB), using the property as collateral. To facilitate the loan, a simulated sale
over the property was executed by petitioner in favor of respondent-spouses. Accordingly, titles (TCT
Nos. 105202 and 105203) were transferred in the names of respondent-spouses and submitted to
CDB for loan processing. The bank collapsed and closed before it could release the loan.
On November 30, 1997, respondent-spouses entered into another Contract to Sell with
petitioner over the same property for the same price. This time, they availed of petitioners in-house
financing thus, undertaking to pay the loan over four years, from 1997 to 2001.

Respondent Arsenio demolished the original house and constructed a three-story house
allegedly valued at P3.5 million, more or less. (Respondent Arsenio died, leaving his wife, herein
respondent Angeles, to pay for the monthly amortizations.)
On September 10, 2003, petitioner sent respondent-spouses a notarized Notice of
Delinquency and Cancellation of Contract to Sell due to the latters failure to pay the monthly
amortizations. Petitioner filed before the Municipal Trial Court in Cities, an action for unlawful
detainer against respondent-spouses.
In her Answer, respondent Angeles averred that the Deed of Absolute Sale is valid.
Issues
1) Whether petitioner is obliged to refund to respondent-spouses all the monthly
installments paid; and
2) Whether petitioner is obliged to reimburse respondent-spouses the value of the new
house minus the cost of the original house.
Ruling
The petition is partly meritorious.
Respondent-spouses are entitled to the cash surrender value of the payments
on the property equivalent to 50% of the total payments made under the Maceda Law.
Respondent-spouses are entitled to reimbursement of the improvements
made on the property.
In view of the special circumstances obtaining in this case, we are constrained to rely on
the presumption of good faith on the part of the respondent-spouses which the petitioner failed
to rebut. Thus, respondent-spouses being presumed builders in good faith, we now rule on the
applicability of Article 448 of the Civil Code. Article 448 on builders in good faith does not apply
where there is a contractual relation between the parties, such as in the instant case. We went
over the records of this case and we note that the parties failed to attach a copy of the Contract
to Sell. As such, we are constrained to apply Article 448 of the Civil Code, which provides viz:
ART. 448. The owner of the land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the works, sowing or planting,
after payment of the indemnity provided for in Articles 546 and 548, or to oblige the one
who built or planted to pay the price of the land, and the one who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or
trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.

The rule that the choice under Article 448 of the Civil Code belongs to the owner of the
land is in accord with the principle of accession, i.e., that the accessory follows the principal and
not the other way around. Even as the option lies with the landowner, the grant to him,
nevertheless, is preclusive. The landowner cannot refuse to exercise either option and compel
instead the owner of the building to remove it from the land. The raison detre for this provision
has been enunciated thus: Where the builder, planter or sower has acted in good faith, a conflict
of rights arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the impracticability of
creating a state of forced co-ownership, the law has provided a just solution by giving the owner
of the land the option to acquire the improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse
to exercise either option. It is the owner of the land who is authorized to exercise the option,
because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing.
In conformity with the foregoing pronouncement, we hold that petitioner, as landowner, has
two options. It may appropriate the new house by reimbursing respondent Angeles the current
market value thereof minus the cost of the old house. Under this option, respondent Angeles would
have "a right of retention which negates the obligation to pay rent." In the alternative, petitioner may
sell the lots to respondent Angeles at a price equivalent to the current fair value thereof. However, if
the value of the lots is considerably more than the value of the improvement, respondent Angeles
cannot be compelled to purchase the lots. She can only be obliged to pay petitioner reasonable rent.

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO


VILLAFLORES, Respondent.
G.R. No. 185020

October 6, 2010 SECOND DIVISION

FILOMENA R. BENEDICTO, Petitioner, vs. ANTONIO VILLAFLORES, Respondent.

Facts
In 1980, Maria Villaflores (Maria) sold a portion of Lot 2-A to her nephew, respondent Antonio
Villaflores (Antonio). Antonio then took possession of the portion sold to him and constructed a
house thereon. Twelve (12) years later, or on August 15, 1992, Maria executed in favor of Antonio a
Kasulatan ng Bilihang Tuluyan covering the entire Lot 2-A. However, Antonio did not register the sale
or pay the real property taxes for the subject land.

On August 31, 1994, Maria sold the same Lot 2-A to Filomena, evidenced by a Kasulatan ng
Bilihang Tuluyan. Filomena registered the sale on September 6, 1994. Since then Filomena paid the
real property taxes for the subject parcel of land.

After trial, the RTC sustained Filomenas ownership who was the one who registered the sale in good
faith. It rejected Antonios allegation of bad faith on the part of Filomena because no sufficient evidence
was adduced to prove it. This finding was affirmed by the CA.

Issue

Whether Antonio is a possessor in good faith.

Ruling
The Court sustained the finding that Antonio is a builder in good faith.

Under Article 448, a landowner is given the option to either appropriate the improvement as his own upon
payment of the proper amount of indemnity, or sell the land to the possessor in good faith. Anent to this,
Article 546 provides that a builder in good faith is entitled to full reimbursement for all the necessary and
useful expenses incurred; it also gives him right of retention until full reimbursement is made. The
objective of Article 546 of the Civil Code is to administer justice between the parties involved. Guided by
this precept, it is therefore the current market value of the improvements which should be made the basis
of reimbursement.

However, in spite of its finding of good faith on the part of Antonio by the RTC it did not order the
reimbursement of the necessary and useful expenses he incurred. Hence, the CA correctly ordered the
remand of the case for further proceedings.

TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL


TUATIS VS. SPOUSES ELISEO AND VISMINDA ESCOL
G.R. No. 175399

October 27, 2009

FACTS:
Visminda Escol, the seller and Ophelia Tuatis, the buyer entered into a Deed of Sale by Installments, the
subject matter of which is a parcel of land in Sindangan. It provided that upon the failure of the buyer to
pay the remaining balance within the time stipulated, he shall return the land to the seller, and the seller
shall return all the amounts paid by the buyer. Tuatis took possession of the land and constructed a
residential building. Tuatis asserted that she paid Visminda the remaining balance of P3000 in the
presence of one Erik Selda and thereafter requested Visminda to sign the absolute deed of sale.
Visminda refused contending that the purchase price has not been fully paid. The RTC dismissed Tuatiss
complaint and also ruled that Tuatis constructed the building in bad faith for she had knowledge of the fact
that Visminda is still the absolute owner of the land and there was also bad faith on the part of Visminda
since she allowed the construction of the building without opposition on her part.The rights of the parties
must, therefore, be determined as if they both had acted in bad faith. Their rights in such cases are
governed by Article 448 of the Civil Code. The Court of Appeals dismissed the appeal by Tuatis which
resulted to the finality of the appealed decision. Visminda filed a writ of execution. Tuatis then moved that
the RTC issue an order allowing her to buy the subject property and maintained that she has the right to
choose between being indemnified for the value of her building or buying from Visminda the parcel of
land. During the pendency of the motion, the writ of execution was enforced. Tuatis filed with the CA a
petition for certiorari, prohibition and mandamus but the same was denied hence this petition.
ISSUE:
Whether or not Tuatis is entitled to exercise the options granted in Art. 448 of the Civil Code.
RULING:
No, Tuatis is not entitled to exercise the options granted in Article 448 of the Civil Code.

Article 448 provides that the owner of the land on which anything has been built, sown or planted in good
faith, shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of
the land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after proper
indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
According to the provision, the landowner can choose between appropriating the building by paying the
proper indemnity for the same, as provided for in Articles 546 and 548 of the Civil Code; or obliging the
builder to pay the price of the land, unless its value is considerably more than that of the structures, in
which case the builder in good faith shall pay reasonable rent.
Under the first option, Visminda may appropriate for herself the building on the subject property after
indemnifying Tuatis for the necessary and useful expenses the latter incurred for said building, as provided
in Article 546 of the Civil Code. Until Visminda appropriately indemnifies Tuatis for the building
constructed by the latter, Tuatis may retain possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige Tuatis
to pay the present or current fair value of the land.The P10,000.00 price of the subject property, as stated
in the Deed of Sale on Installment executed in November 1989, shall no longer apply, since Visminda will
be obliging Tuatis to pay for the price of the land in the exercise of Vismindas rights under Article 448 of
the Civil Code, and not under the said Deed. Tuatis obligation will then be statutory, and not contractual,
arising only when Visminda has chosen her option under Article 448 of the Civil Code
Still under the second option, if the present or current value of the land, the subject property herein, turns
out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to pay for the
subject property, but she must pay Visminda reasonable rent for the same. Visminda and Tuatis must
agree on the terms of the lease; otherwise, the court will fix the terms.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis demand that, since the value of the building she constructed
is considerably higher than the subject property, she may choose between buying the subject property
from Visminda and selling the building to Visminda for P502,073.00. Again, the choice of options is for
Visminda, not Tuatis, to make. And, depending on Vismindas choice, Tuatis rights as a builder under
Article 448 are limited to the following: (a) under the first option, a right to retain the building and subject
property until Visminda pays proper indemnity; and (b) under the second option, a right not to be obliged
to pay for the price of the subject property, if it is considerably higher than the value of the building, in
which case, she can only be obliged to pay reasonable rent for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in accord
with the principle of accession, i.e., that the accessory follows the principal and not the other way around.
Even as the option lies with the landowner, the grant to him, nevertheless, is preclusive. The landowner
cannot refuse to exercise either option and compel instead the owner of the building to remove it from the
land.
The raison detre for this provision has been enunciated thus: Where the builder, planter or sower has
acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to protect
the owner of the improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a just solution by giving
the owner of the land the option to acquire the improvements after payment of the proper indemnity, or to
oblige the builder or planter to pay for the land and the sower the proper rent. He cannot refuse to
exercise either option. It is the owner of the land who is authorized to exercise the option, because his
right is older, and because, by the principle of accession, he is entitled to the ownership of the accessory
thing.

Vismindas Motion for Issuance of Writ of Execution cannot be deemed as an expression of her choice to
recover possession of the subject property under the first option, since the options under Article 448 of the
Civil Code and their respective consequences were also not clearly presented to her by the 19 April 1999
Decision of the RTC. She must then be given the opportunity to make a choice between the options
available to her after being duly informed herein of her rights and obligations under both.

QUIZ IN CIVIL LAW REVIEW

1. Within what time should an action for reconveyance of registered land based on an implied
trust be filed? Why? (p. 545)

2. Give the concept of implied and constructive trusts. How do they arise?

3. Give an example of resulting trust? (535)

4. There was an action for reconveyance of a real property allegedly sold but without
consideration. IT WAS contended that the action has prescribed since 16 years have already
elapsed. Is the contention correct? Why? Will the action be barred by laches? Explain. (p. 521)

5. A bought a building together with the land upon which it is built from B. One of the conditions
is that upon the payment of of its value, B would assign his rights over the lease to which B
did not comply. A demanded he refund of this money and since B refused, he filed a suit for
collection of a sum of money. B filed a motion to dismiss on the ground that the contract if
unenforceable since it is only an oral one. Is the contention correct? Why?(p. 515)

6. X mortgaged his land and building to GSIS as security of the payment of his obligation. Since
he failed to pay his obligation, GSIS foreclosed the mortgage. Centertown Tower Inc. was the
highest bidder. Since the GSIS was not authorized to engage in the real estate business, it
organized a corporation known as Towers Inc. The Tenants Association sued the GSIS,
Centertown and Towers for the annulment of the title on the ground that it is void because it is
ulta vires. Will the action prosper? Why? (p. 509)

7. A is the owner of a house which is being verbally leased to B for five years. A orally promised
B that the lease would be renewed only to refuse it later. Can B go to court and enforce his right
that the contract be renewed after the expiration of the contract? Why?
(p. 514)

8. The widow, in her own behalf, and that of her children, as natural guardian, sold properties
belonging to her husband. After a sister of the husband obtained guardianship over the persons
and properties of the minors, an action to annul the sale together with a prayer that they be
allowed to redeem the properties of the minor was filed. The trial court rendered judgment in
favor of the plaintiffs. On appeal, if you were the ponente, how would you decide? Explain.

9. May a trustee acquire title over a property held in trust? State the general rule. In order that
he may acquire title by acquisitive prescription, what requisites must be present? ( 542)

10. Give examples of constructive trusts. (537)

CASE DIGESTS
Cortes v. Yu-Tibo
GR No. 911, March 12, 1903
Facts:
The house No.65 Calle Rosario, property of the wife of the plaintiff, has certain windows therein,
through which it receives light and air, said windows opening on the adjacent house, No. 63 of the
same street; that these windows have been in existence since the year 1843, and that the defendant,
the tenant of the said house No. 63, has commenced certain work with the view to raising the roof of
the house in such a manner that one-half of one of the windows in said house No. 65 has been
covered, thus depriving the building of a large part of the air and light formerly received through the
window. The court practically finds the preceding facts, and further finds that the plaintiff has not
proven that he has, by any formal act, prohibited the owner of house No. 63 from making
improvements of any kind therein at any time prior to the complaint.
The contention of the plaintiff is that by the constant and uninterrupted use of the windows during a
period of fifty-nine years he acquired by prescription an easement of light in favor of the house
No.65, and as a servitude upon house No.63, and, consequently, has acquired the right to restrain
the making of any improvements in the latter house which might in any manner be prejudicial to the
enjoyment of the easement. He contends that the easement of light is positive; and that therefore the
period of possession for the purposes of the acquisition of a prescriptive title is to begin from the date
on which the enjoyment of the same commenced, or, in other words, applying the doctrine to this
case, from the time that said windows were opened with the knowledge of the owner of the house
No.63, and without opposition on his part. However, the defendant contends that the easement is
negative, and that therefore the time for the prescriptive acquisition thereof must begin from the date
on which the owner of the dominant estate may have prohibited, by a formal act, the owner of the
servient estate from doing something which would be lawful but for the existence of the easement.
The court ruled that the easement of light is negative.
Issue:
Whether or not the easement of light in the case of windows opened in ones own wall is negative.
Held:
Yes. The Supreme Court said that the case involves windows opened in a wall belonging to the wife
of the plaintiff and it is of their opinion that the windows opened in ones own wall is of negative
character, and, as such, can not be acquired by prescription under Art.538 of the Civil Code, except

by counting the time of possession from the date on which the owner of the dominant estate may, by
a formal act, have prohibited the owner of the servient estate from doing something which it would be
lawful for him to do were it not for the easement. That, in consequence thereof, the plaintiff, not
having executed any formal act of opposition to the right of the owner of house No.63 Calle Rosario
(of which the defendant is tenant), to make therein improvements which might obstruct the light of
house No.65 of the same street, the property of the wife of the appellant, at any time prior to the
complaint, as found by the court below in the judgment assigned as error, he has not acquired, nor
could he acquire by prescription, such easement of light, no matter how long a time might have
elapsed since the windows were opened in the wall of the said house no.65, because the period
which the law demands for such prescriptive acquisition could not have commenced to run, the act
with which it must necessarily commence not having been performed.
When a person open windows in his own building he does nothing more than exercise an act of
ownership inherent in the right of property with no limitations other than those established by law. By
reason of the fact that such an act is performed wholly on a thing which is wholly the property of the
one opening the window, it does not in itself establish any easement, because the property is used
by its owner in the exercise of dominion, and not as the exercise of an easement. It is that the use if
the windows opened in a wall on ones own property, in the absence of some covenant or express
agreement to the contrary, is regarded as an act of mere tolerance on the part of the owner of the
abutting property and does not create any right to maintain the windows to the prejudice of the latter.
The mere toleration of such an act does not imply on the part of the abutting owner a waiver of his
right to freely build upon his land as high as he may see fit, nor does it avail the owner of the
windows for the effects of possession according to Art.1942 of the Civil Code, because it is a mere
possession at will. From all this it follows that the easement of light with respect to the openings
made in ones own edifice does not consist precisely in the fact of opening them or using them. The
easement really consists in prohibiting or restraining the adjacent owner from doing anything which
may tend to cut off or interrupt the light; in short, it is limited to the obligation of not impeding the light.
Saenz v. Hermanos

13 Phil. 667
Facts:
Plaintiff intends to build a house in his lot for business purposes and had already deposited some
lumber in the said lot. Defendants, on the other hand, have constructed a two-story house wherein
they use the ground floor for stores and the upper as dwelling. The house was erected at a distance
of 71 cm from the dividing line in the fround and 70 cm at the rear. Defendants have opened
three windows on the ground floor of their house, in the part that overlooks the lot of the plaintiff,
each window being 1 meter and 20 centimeters wide and 2 meters high; on the upper floor they have
opened 5 windows, each 2 meters and 11 centimeters high and 1 meter and 60 centimeters wide;
they have also constructed a balcony at the front part of the house above the ground floor,
opening directly upon the lot of the plaintiff, and another balcony at the rear part of the house, which
up to the present time opens directly upon the plaintiffs lot, although the defendants state that,
according to the plan, said part is to be closed with boards. All of said windows and balconies are at
a distance of less than one meter from the dividing line of the plaintiffs lot and that of the defendants,
and are looking directly over the same.
Plaintiff was claiming that defendant is prohibited from constructing his house and opening the
windows and balconies looking directly upon his property. However, the court ruled in favor of the
defendant.
Issue:

Whether or not defendant is entitled to the easement of light and view.


Held:
No. Defendant is not entitled to the easement of light and view which the windows and openings,
which he was made in the house in question, give him, and, because of the fact that he has
constructed his houses nearer than 2 meters to the dividing line between his property and the
property of the plaintiff, he is only entitled to the easement of light and view provided for in article
581. Article 581 provides for the character of the windows or openings in the walls of adjoining
property when it its constructed nearer the dividing line contrary to the requirement of 2 meters. In
the present case the defendant constructed his house so that the wall looking upon the property of
the plaintiff was less than 2 meters from the dividing line. Therefore he can only construct such
windows as are provided for in said article. It was the duty of the defendant to construct his house in
accordance with the provisions of the law. The plaintiff was not obliged to stand by for the purpose of
seeing that the defendant had not violated the law.
Juana Pichay v. Eulalo Querol
G.R. No. L-4452, October 1, 1908
Facts:
The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided one-third interest
in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment of a debt of P1,500
which she owed them. The defendants and appellants claim that their agreement gave plaintiff no
right of usufruct in the land, saying that it appears that she only asked for this right and it does not
appear that the defendants gave it to her. On the 10th of August, 1905, the owners of the twenty- five
parcels of land made a partition thereof among themselves, in which the plaintiff took no part, and in
this partition certain specific tracts of land were assigned to the defendants as the third to which they
were entitled by reason of the conveyance from the plaintiff to them. They have been in possession
of the tracts so assigned to them in partition since the date thereof, and are now in such possession,
and have refused to recognized in the plaintiff any right of usufruct therein.
Issue:
Whether or not the usufructuary is bound by the partition made by the owners of the undivided
property although he took no part therein.
Held:
The usufructuary shall be bound by the partition made by the owners of the undivided property
although he took no part in the partition but the naked owner to whom the part held in usufruct has
been alloted must respect the usufruct. The right of the usufructuary is not affected by
the division but is limited to the fruits of said part alloted to the co-owner.
Fabie v. Lichauco
G.R. No. L-3598, July 24, 1908
Facts:
Petitioner Miguel Fabie applied for the registration of his property in Manila free from any
encumbrances except the easement of right of way in favor of respondents Julita Lichauco and Hijos
de Roxas. In addition to the said right of way, respondents also claim that of light and view and
drainage. However, the claim was later reduce only to that of the light and view.

Lichauco cliamed that when Juan Bautista Coloma, the original owner of both estates, established
not only an easement of right of way but also that of light and view and that when both the properties
were alienated, the apparent signs were not removed. The apparent sign allegedly consists of a
gallery with windows through which light is admitted. It was supported on columns erected on the
ground belonging to the petitioner and the balcony on Lichaucos property is supported by uprights
erected on the land by petitioner. The parties admitted the existence of such gallery. The house was
now a frontage of 18 meters and 60 centimeters, of which 16 meters and 60 centimeters correspond
to the main part of the same, and 1 meter and 90 centimeters to the gallery in question. It results,
therefore, that at the present day, the house has nearly 2 meters more frontage than when it was
alienated by Coloma. Therefore, at the present day the house is erected partly on the land belonging
to the owner and partly, the gallery, over a lot belonging to another; that is, over that of the petitioner.
When it was sold in October, 1848, no portion of the house occupied the lot last mentioned, but the
entire building was erected over a lot belonging to the owner as set forth in the instrument of sale.
The lower court held that the right of way and drainage exist in favor of the respondents respective
properties. The claim as to the easement of light and view was dismissed by the court.
Issue:
Whether or not Respondents are entitled to the easement of light and view.
Held:
No. The burden is not on the petitioner to prove on what time the gallery in controversy was
constructed inasmuch as he limits himself to sustaining nad defending the freedom of his property,
denying the easement o flight and view of the respondent pretends to impose over it. A property is
assumed to be from all encumbrance unless the contrary is proved. Respondent who claims the said
easement is obliged to prove the aforementioned gallery, in which the apparent sign of the easement
is made to consist in the present case, existed at the time of ownership of her property and that of
the petitioner were separated. And inasmuch as this issue has not been proved, the claim of the
respondents as to the easements of the light and view which the petitioner does not admit, must of
necessity be dismissed.
Therefore, it does not appear from the agreement of the parties that the respondents has
balconies over the land of the petitioner; and as it is, since it has been positively shown that the said
balconies exceed the limit of the lot owned by the former, nor less that they invade the
atmospheric area of the lot belonging to the latter, it follows that, even in accordance with the theory
maintained by the respondents with which on account of its lack of basis, we consider it unnecessary
to deal herein as to its other aspect, the easement of view, which might result in such case from the
existence of the balconies alluded to, would be negative and not a positive one, because the erection
of the same would not constitute, according to their own statement, an invasion of the right of
another, but the lawful exercise of the right inherent to the dominion of the respondents to construct
within their own lot. And as said easement is negative, it cannot have prescribed in favor of the
property of the respondents in the absence of any act of opposition, according to the agreement, by
which they or their principals would have prohibited the petitioner or his principals to do any work
which obstruct the balconies in question, inasmuch as said act of opposition is what constitutes the
necessary and indispensable point of departure for computing the time required by law for the
prescription of negative easements. Thus, the judgment appealed from was affirmed in toto by the
Court.
Ferrer v. Bautista
231 SCRA 257
Facts:

Gloria Ferrer claims ownership a strip of land south of Lot 1980 of the Cadastral survey of Aringay,
La Union by virtue of accretion, she being the owner of Lot 1980 covered by TCT T-3280, which
is immediately north of the land in question. On the other hand, Balanag and Domondon equally
assert ownership over the property on account of long occupation and by virtue of Certificate of Title
P-168, in the name of Magdalena Domondon, pursuant to Free Patent 309504 issued on 24 January
1966.
On 23 March 1976, Ferrer filed a complaint with the CFI La Union to Quiet Title to Real Property
against Balanag and Domondon. On 07 December 1976, Judge Bautista issued an order dismissing
Ferrers complaint; because it constitutes a collateral or indirect attack on the Free Patent and
Original Certificate of Title. Ferrer filed a motion for reconsideration but was denied. Pursuant to the
SCs Resolution, Ferrer was allowed to file the petition for review on certiorari under RA 5440
considering that only questions of law had been raised. The Court dismissed the petition for lack of
interest due to the failure of Ferrers counsel to submit the requisite memorandum in support of the
petition. In a Resolution dated 28 September 1978, however, the Court resolved to reconsider the
dismissal and to reinstate the petition.
The Supreme Court reversed and set aside the questioned order of dismissal of the trial court, and
rendered judgment declaring Ferrer to be the owner of the disputed parcel of land and ordering
Balanag and Domondon to reconvey the same to Ferrer; without costs.
Issue:
Whether or not Ferrer the lawful owner of the questioned property.
Held:
Article 457 of the Civil Code provides that to the owners of lands adjoining the banks of rivers
belong the accretion which they gradually receive from the effects of the current of the waters.
Undoubtedly, Ferrer is the lawful owner of the accretion, she being the registered owner of Lot 1980
which adjoins the alluvial property.
Alluvion gives to the owners of lands adjoining the banks of rivers or streams any accretion which is
gradually received from the effects of the current of waters The rationale for the rule is to provide
some kind of compensation to owners of land continually exposed to the destructive force
of water and subjected to various easements
The Director of Lands has no authority to grant a free patent over land that has passed to private
ownership and which has thereby ceased to be public land. Any title thus issued or conveyed by him
would be null and void. The nullity arises, not from fraud or deceit, but from the fact that the land is
no longer under the jurisdiction of the Bureau of Lands, the latters authority being limited only to
lands of public dominion and not those that are privately owned. In the present case, Balanag and
Domondon acquired no right or title over the disputed land by virtue of the free patent since at the
time it was issued in 1966, it was already private property and not a part of the disposable land of the
public domain.
Preysler, Jr. v. Court of Appeals
G.R. No. 158141, July 11, 2006
Facts:
Private respondent Far East Enterprises, Inc., owns Tali Beach Subdivision. Petitioner Fausto
Preysler, Jr. and his wife owned lots therein and also two parcels of land adjacent to the subdivision.
These two parcels were bounded on the North and West by the China Sea and on the East and
South by the subdivision. To gain access to the two parcels petitioner has to pass through private

respondents subdivision. Petitioner offered P10,000 for the easement of right of way but private
respondent refused it for being grossly inadequate. Private respondent then barricaded the front gate
of petitioners property to prevent petitioner and his family from using the subdivision roads to access
said parcels.
The petitioner filed, with the Regional Trial Court a Complaint for Right of Way with prayer for
preliminary prohibitiveinjunction against private respondent. After due hearing, the trial court, in an
Order dated November 5, 1996, held that barricading the property to prevent the petitioner
from entering it deprived him of his ownership rights and caused irreparable damage and injuries.
Accordingly, the writ of preliminary injunction was issued on December 12, 1996.
On July 8, 1998, petitioner used the subdivision road to transport heavy equipment and construction
materials to develop his property. Consequently, private respondent moved to dissolve the writ
claiming that the petitioner violated its right to peaceful possession and occupation of Tali Beach
Subdivision when petitioner brought in heavy equipment and construction materials. Private
respondent maintained that the damages that may be caused to it far outweigh the alleged damages
sought to be prevented by the petitioner.
Issue:
Whether or not the appellate court exceeded its jurisdiction and authority in restricting or limiting a
passage over the Tali Beach Subdivision roads to ingress and egress of petitioner and members of
the latters household in violation of the law on legal easement of right of way.
Held:
Under Article 656 of the New Civil Code, if the right of way is indispensable for the construction,
repair, improvement, alteration or beautification of a building, a temporary easement is granted
after payment of indemnity for the damage caused to the servient estate. In our view, however,
indispensable in this instance is not to be construed literally. Great inconvenience is sufficient. In
the present case, the trial court found that irrespective of which route petitioner used in gaining
access to his property, he has to pass private respondents subdivision. Thus the Court agrees that
petitioner may be granted a temporary easement. This temporary easement in the original writ differs
from the permanent easement of right of way now being tried in the main case.
The law provides that temporary easement is allowed only after the payment of the proper indemnity.
As there are neither sufficient allegations nor established facts in the record to help this
Court determine the proper amount of indemnity, it is best to remand the case to the trial court for
such determination.
Additionally, the Court finds the installation of electric power lines a permanent easement not
covered by Article 656. Article 656 deals only with the temporary easement of passage. Neither casn
installation of electric power lines be subject to a preliminary injunction for it is not part of the status
quo. Besides, more damage would be done to both parties if the power lines are installed only to be
removed later upon a contrary judgment of the court in the main case.
Encarnacion v. Court of Appeals
195 SCRA 72
Facts:
Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to
the nationalhighway just crossed the servient estate at no particular point. However, in 1960 when
private respondentsconstructed a fence around the servient estate, a road path measuring 25

meters long and about a meter wide was constituted to provide access to the highway. One-half
meter width of the path was taken from the servient estate and the other one-half meter portion was
taken from another lot owned by Mamerto Magsino. No compensation was asked and non was given
for the portions constituting the pathway.
Petitioners plant nursery business through sheer hard work flourished and with that, it became more
and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the
highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep
which he could use for transporting his plants. However, that jeep could not pass through the road
path and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena Romero
Vda. de Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their property
to be added to the existing pathway so as to allow passage for his jeepney. To his utter
consternation, his request was turned down by the two widows and further attempts at negotiation
proved futile.
Issue:
Whether or not petitioner entitled to additional right of way?
Held:
Petitioner Tomas Encarnacion is hereby declared entitled to an additional easement of right of way of
twenty-five (25) meters long by one and one-half (1 1/2) meters wide over the servient estate or a
total area of 62.5 square meters after payment of the proper indemnity.
Art. 649. The owner, or any person who by virtue of a real right may cultivate or use any immovable,
which issurrounded by other immovables pertaining to other persons and without adequate outlet to
a public highway, is entitled to demand a right of way through the neighboring estates, after payment
of the proper indemnity.
Should this easement be established in such a manner that its use may be continuous for all the
needs of thedominant estate, establishing a permanent passage, the indemnity shall consist of the
value of the land occupied and the amount of the damage caused to the servient estate.

SAMPLE PROBLEMS WITH ANSWERS

1. What are the four requisites to be established by an owner of an estate for him to claim a
compulsory right of way?

By express provision of Articles 649 and 650 of the New Civil Code, the owner of an estate may claim a
compulsory right of way only after he has established the existence of four (4) requisites, namely, (1) the
estate is surrounded by other immovables and is without adequate outlet to a public highway; (2) after
payment of the proper indemnity; (3) the isolation was not due to the proprietor's own acts; and (4) 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 may be the shortest. [U1]

2. Petitioners herein filed a case for recovery of property and damages against the defendant
and herein private respondent, Celestino Afable.

Rosalia Bailon and Gaudencio Bailon sold a portion of the said land consisting of 16,283
square meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone sold the remainder
of the land consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza. On the
same date, Lanuza acquired from Delgado the 16,283 square meters of land which the latter
had earlier acquired from Rosalia and gaudencio. On December 3, 1975, John Lanuza, acting
under a special power of attorney given by his wife, Ponciana V. Aresgado de Lanuza, sold
the two parcels of land to Celestino Afable, Sr. In all these transfers, it was stated in the
deeds of sale that the land was not registered.
Afable claimed that he had acquired the land in question through prescription and contended
that the petitioners were guilty of laches.
Question:What is the effect of a sale by one or more co-owners of the entire property held in
common without the consent of all the co-owners and of the appropriate remedy of the
aggrieved co-owners?

Answer:Bailon-Casilao v. Court of Appeals


160 SCRA 739
Facts:
Petitioners herein filed a case for recovery of property and damages against the defendant and
herein privaterespondent, Celestino Afable.
Rosalia Bailon and Gaudencio Bailon sold a portion of the said land consisting of 16,283 square
meters to Donato Delgado. On May 13, 1949, Rosalia Bailon alone sold the remainder of the land
consisting of 32,566 square meters to Ponciana V. Aresgado de Lanuza. On the same date, Lanuza
acquired from Delgado the 16,283 square meters of land which the latter had earlier acquired from
Rosalia and gaudencio. On December 3, 1975, John Lanuza, acting under a special power of
attorney given by his wife, Ponciana V. Aresgado de Lanuza, sold the two parcels of land to
Celestino Afable, Sr. In all these transfers, it was stated in the deeds of sale that the land was not
registered.
Afable claimed that he had acquired the land in question through prescription and contended that the
petitioners were guilty of laches.
Issue:
What is the effect of a sale by one or more co-owners of the entire property held in common without
the consent of all the co-owners and of the appropriate remedy of the aggrieved co-owners?
Held:
The Court has ruled that even if a co-owner sells the whole property as his, the sale will affect only
his own share but not those of the other co-owners who did not consent to the sale. The sale or other
disposition affects only what would correspond to his grantor in the partition of the thing owned in
common. Consequently, by virtue of the sales made by Rosalia and Gaudencio Bailon which
are valid with respect to their proportionate shares, and the subsequent transfers which culminated
in the sale to private respondent Celestino Afable thereby became a co-owner of the disputed parcel
of land as correctly held by the lower court since the sales produced the effect of substituting the
buyers in the enjoyment thereof.

It may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner without the consent of the other co-owner is not null and void. However,
only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the
property.
The proper action in cases like this is not for the nullification of the sale or for the recovery of
possession of the thing owned in common from the third person who substituted the co-owner or coowners who alienated their shares, but the DIVISION of the common property as if it continued to
remain in the possession of the co-owners who possessed and administered it.
The action to demand partition is imprescriptible or cannot be barred by laches, absent a clear
repudiation of the co-ownership by a co-owner clearly communicated to the other co-owners.

3. The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided onethird interest in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment
of a debt of P1,500 which she owed them. The defendants and appellants claim that their
agreement gave plaintiff no right of usufruct in the land, saying that it appears that she only
asked for this right and it does not appear that the defendants gave it to her. On the 10th of
August, 1905, the owners of the twenty- five parcels of land made a partition thereof among
themselves, in which the plaintiff took no part, and in this partition certain specific tracts of
land were assigned to the defendants as the third to which they were entitled by reason of
the conveyance from the plaintiff to them. They have been in possession of the tracts so
assigned to them in partition since the date thereof, and are now in such possession, and
have refused to recognized in the plaintiff any right of usufruct therein.
QUESTION:Whether or not the usufructuary is bound by the partition made by the owners of
the undivided property although he took no part therein.

ANSWER:Juana

Pichay v. Eulalo QuerolG.R. No. L-4452, October 1, 1908

Facts:
The plaintiff, Juan Pichay, in April, 1905, conveyed to the defendants an undivided one-third interest
in twenty- five parcels of land situated in the Province of Ilocos Sur, as payment of a debt of P1,500
which she owed them. The defendants and appellants claim that their agreement gave plaintiff no
right of usufruct in the land, saying that it appears that she only asked for this right and it does not
appear that the defendants gave it to her. On the 10th of August, 1905, the owners of the twenty- five
parcels of land made a partition thereof among themselves, in which the plaintiff took no part, and in
this partition certain specific tracts of land were assigned to the defendants as the third to which they
were entitled by reason of the conveyance from the plaintiff to them. They have been in possession
of the tracts so assigned to them in partition since the date thereof, and are now in such possession,
and have refused to recognized in the plaintiff any right of usufruct therein.
Issue:
Whether or not the usufructuary is bound by the partition made by the owners of the undivided
property although he took no part therein.
Held:

The usufructuary shall be bound by the partition made by the owners of the undivided property
although he took no part in the partition but the naked owner to whom the part held in usufruct has
been alloted must respect the usufruct. The right of the usufructuary is not affected by
the division but is limited to the fruits of said part alloted to the co-owner.
4. Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on
March 5, 1921, and was afterwards duly admitted to probate. The pertinent clause of that will
provided that certain properties should be given in life usufruct to his son Jacinto del Saz
Orozco y Mortera, with the obligation on his part to preserve said properties in favor of the
other heirs who were declared the naked owners thereof. Among these properties were 5,714
shares of stock of the Benguet Consolidated Mining Company and 94 shares of stock of the
Manila Electric Company, according to the project of partition executed pursuant to said will
and duly approved by the court. On September 11, 1934, the Benguet Consolidated Mining
Company declared and distributed stock dividends out of its surplus profits, the plaintiff
receiving his proportionate portion of 11,428 shares. On November 17, 1939, said Mining
Company again declared stock dividends out of its surplus profits, of which the plaintiff
received 17,142 shares, making a total of 28,570 shares.
QUESTION:Whether the stock dividend is part of the capital which should be preserved in
favor of the owners or an income or fruits of the capital which should be given to and
enjoyed by the life usufructuary, the plaintiff herein, as his own exclusive property.

ANSWER:Jacinto Orozco v. Salvador Araneta


G.R. No. L-3691, November 21, 1951
Facts:
Eugenio del Saz Orozco died on February 7, 1922, leaving a will which he had executed on March 5,
1921, and was afterwards duly admitted to probate. The pertinent clause of that will provided that
certain properties should be given in life usufruct to his son Jacinto del Saz Orozco y Mortera, with
the obligation on his part to preserve said properties in favor of the other heirs who were declared
the naked owners thereof. Among these properties were 5,714 shares of stock of the Benguet
Consolidated Mining Company and 94 shares of stock of the Manila Electric Company, according to
the project of partition executed pursuant to said will and duly approved by the court. On September
11, 1934, the Benguet Consolidated Mining Company declared and distributed stock dividends out of
its surplus profits, the plaintiffreceiving his proportionate portion of 11,428 shares. On November 17,
1939, said Mining Company again declared stock dividends out of its surplus profits, of which the
plaintiff received 17,142 shares, making a total of 28,570 shares.
Issue:
Whether the stock dividend is part of the capital which should be preserved in favor of the owners or
an income or fruits of the capital which should be given to and enjoyed by the life usufructuary, the
plaintiff herein, as his ownexclusive property.
Held:
A dividend, whether in the form of cash or stock, is income and, consequently, should go to the
usufructuary, taking into consideration that a stock dividend as well as a cash dividend can be
declared only out of profits of the corporation, for if it were declared out of the capital it would be a
serious violation of the law. With regard to the sum of P3,428.40 which is alleged to have been

received by the plaintiff from the Benguet Consolidated Mining Company, as a result of the reduction
of its capital in January, 1926, it appears that it has not been proven that the plaintiff has received
said sum; on the contrary, it was denied by him as soon as he arrived in the Philippines from Spain.
There is no ground, therefore, for ordering the plaintiff to deliver such sum to the defendants. The
stock dividends amounting to 28,570 shares, above mentioned, belongs to Jacinto del Saz Orozco y
Mortera exclusively and in absolute ownership.
5. In her complaint the plaintiff alleges that she is a natural child of Juana Narag and the late
Jose Cecilio who, at the time of her concepcion, were both free to marry; that in a public
instrument entitled "donacionmortis-causa" executed of 26 July 1924 by the late Jose Cecilio
he acknowledge her to be his natural child and donated to her two parcels of land, one
agricultural and the other residential, together with the improvements thereon; that in the
agricultural land coconuts and palay valued P1,760 were harvested yearly, and from the
residential an annual rent of P360 was collected, or a total of P12,710 from 1950 to the filing
of the complaint; that subsequently the two parcels of land were declared in her name for tax
purposes; that upon the demise of Jose Cecilio of 10 February 1950 the defendants Salvador
and Antonio surnamed Cecilio, two legitimate children of the deceased, entered upon, took
possession of, and claimed ownership over, the parcels of land; and that since then they
refused and still refuse to deliver or return to her the two parcels of land. In addition to her
two prayers stated at the beginning of this opinion, the plaintiff prayed that jointly and
severally the defendants be ordered to pay her the sum of P12,710 representing the value of
the natural and civil fruits of the parcels of land. On 24 August 1956 the defendants filed an
answer setting up affirmative defenses and counterclaim for P5,000 as actual and moral
damages arising from the false and frivolous complaint of the plaintiff and praying for the
dismissal of the complaint. On 27 August, the plaintiff answered the counterclaim. Without
filing any formal motion to dismiss, on 13 September 1957 the defendants served notice on
the plaintiff that they would submit on 14 September 1957 at 8:30 o'clock in the morning, or
as soon as they may be heard, their prayer for the dismissal of her complaint. In an order
dated 16 September, the Court declared submitted the motion for the dismissal of the
complaint and granted each party ten days within which to file a memorandum. On 20
September, the plaintiff filed an objection to the motion for dismissal which may be
considered her memorandum. On 24 September the defendants filed their memorandum
followed on 25 September by a supplemental memorandum. On 13 November, the Court
entered an order dismissing the complaint, from which dismissal, as heretofore stated, the
7 3 plaintiff appealed.
The five errors assigned by the appellant claimed to have been committed by the trial court
narrow down to main issues, namely: (1) has the action of the plaintiff Dolores Narag to be
declared natural child of daughter of the late Jose Cecilio already prescribed? and (2) is the
donation mortis causa executed not in accordance with the formalities of a will invalid?
Resolve the two issues.
Answer:There is no doubt that the plaintiff's action to be declared natural child of the late
Jose Cecilio has already prescribed, because it was not brought during the lifetime of the
putative or presumed father. And her case does not fall within the exceptions provided for in
article 137 of the old Civil Code, now article 285 of the new Civil Code, which allows the filling
of such action even after the death of the alleged parents, to wit:
1. If the father or mother died during the minority of the child, in which case the latter may be
commence the action within the four years next following the attainment of its majority.
2. If, after the death of the father or mother, some document, before unknown, should be
discovered in which the child is expressly acknowledged.

In this case the action must be commenced within six months next following the discovery of
such document.1
When the presumed or putative father Jose Cecilio died on 10 February 1950, the plaintiff was
already far above the age of majority, it appearing in her baptismal certificate issued on 12
April 1953 by the parish priest of Saint John the Evangelist of Naga City that she was born on
5 January 1899. The document entitled "donacion mortis-causa" was known to, and in
possession of, the appellant since 26 July 1924, the date of its execution, because on that
date she signed the document. Counted from 26 July 1924 to the filing of the complaint on 6
August 1956, about 32 years had elapsed. It is, therefore, clear that whether under the
provisions of the old or of the new Civil Code the appellant's action fro acknowledgment as
natural child of the late Jose Cecilio is barred by the statute.
The donation of the two parcels of land is a donation mortis causa as admitted by the
appellant herself. Nevertheless, she contends that while article 620 of the old Civil Code, now
article 728 of the new, provides that donation mortis causa is governed by the rules
established for testamentary succession, yet such provision refers to property disposition as
governed by the law on succession and not to solemnities or formalities of a will to
substance, not to form. The contention cannot be accepted. In the case of Cario vs. Abaya,
70 Phil., 182, this Court had that donations mortis causa can only be made with the
formalities of a will. And as to the donation mortis causa in the present case appears not to
have the formal requisites of a will such as the attestation clause, the signatures of three
instrumental witnesses and that of the donor, which must appear on every page of the
document, the donation is invalid.
The contention that the complaint may not be dismissed upon the grounds pleaded as
affirmative defenses in the answer without any formal or separate motion to dismiss is
untenable, for the reason that section 5, Rule 8, allows such dismissal.
6. Guillermo Ceniza died intestate on July 11, 1951, leaving a parcel of land at Poblacion, Mandaue
City. Twenty years later on July 17, 1973 his children Benedicta, Guillermo, Jr., Victoria, Eduardo,
and Carlos executed an extrajudicial declaration of heirs and partition, adjudicating and dividing the
land among themselves as follows:
1. To Benedicta T. Cabahug, Lot A subject to a perpetual and grat[u]itous road right of way
1.50 m. wide along its NW. boundary in favor of Lots B, E, and D, of the subdivision;
2. To Eduardo Ceniza, Lot B subject to a perpetual and grat[u]itous road right of way 1.50 m.
wide along its SW. boundary in favor of Lots A, D & E of the subdivision;
3. To Carlos Ceniza, Lot C;
4. To Guillermo Ceniza Jr., Lot D subject to a perpetual and grat[u]itous road right of way 1.50
m. wide along its NE. boundary in favor of Lot B and E of the subdivision; and
5. To Victoria Ceniza, Lot E, subject to a perpetual and grat[u]itous road right of way 1.50 m.
wide along its SW. boundary in favor of Lot D of the subdivision.1
Lots A, B, and C were adjacent to a city street. But Lots D and E were not, they being interior lots. To
give these interior lots access to the street, the heirs established in their extrajudicial partition an
easement of right of way consisting of a 3-meter wide alley between Lots D and E that continued on
between Lots A and B and on to the street. The partition that embodied this easement of right of way
was annotated on the individual titles issued to the heirs.
Roughly, the lots including the easement of right of way would take the following configurations, 2 not
drawn here to accurate size and proportion but illustrative of their relative locations:

But, realizing that the partition resulted in an unequal division of the property, the heirs modified their
agreement by eliminating the easement of right of way along Lots A, D, and E, and in its place,
imposed a 3-meter wide alley, an easement of right of way, that ran exclusively along the southwest
boundary of Lot B from Lots D and E to the street.3Thus:

Victoria (now petitioner Victoria Salimbangon) later swapped lots with Benedicta with the result that
Victoria became the owner of Lot A, one of the three lots adjacent to the city street. Victoria and her
husband (the Salimbangons) constructed a residential house on this lot and built two garages on it.
One garage abutted the street while the other, located in the interior of Lot A, used the alley or
easement of right of way existing on Lot B to get to the street. Victoria had this alley cemented and
gated.
Subsequently, however, respondent spouses Santos and Erlinda Tan (the Tans) bought Lots B, C, D,
and E from all their owners. The Tans built improvements on Lot B that spilled into the easement
area. They also closed the gate that the Salimbangons built. Unable to use the old right of way, the
Salimbangons lodged a complaint with the City Engineer of Mandaue against the Tans. For their
part, the Tans filed an action with the Regional Trial Court (RTC) of Mandaue against the
Salimbangons in Civil Case MAN-3223 for the extinguishment of the easement on Lot B and
damages with application for preliminary injunction. 4 The Salimbangons filed their answer with
counterclaims.
After hearing or on February 9, 2001 the RTC rendered judgment, upholding the Salimbangons
easement of right of way over the alley on Lot B, the lot that belonged to the Tans. The court pointed
out that the easement in this case was established by agreement of the parties for the benefit of Lots

A, D, and E. Consequently, only by mutual agreement of the parties could such easement be
extinguished. The RTC declined, however, to award damages to the Salimbangons.
Both parties appealed to the Court of Appeals (CA) in CA-G.R. CV 73468. On July 27, 2007
the CA5 reversed the RTC decision, extinguished the easement of right of way established on the
alley in Lot B of the Tans, and denied the Salimbangons claim for damages. The court ruled that
based on the testimony of one of the previous owners, Eduardo Ceniza, the true intent of the parties
was to establish that easement of right of way for the benefit of the interior lots, namely, Lots D and
E. Consequently, when ownership of Lots B, D, and E was consolidated into the Tans, the easement
ceased to have any purpose and became extinct. The Salimbangons filed a motion for
reconsideration but the CA denied the same in its resolution of October 14, 2008. This prompted
them to file the present petition.
Questions Presented
Two questions are presented:
1. Whether or not the CA erred in admitting in evidence contrary to the parol evidence rule Eduardo
Cenizas testimony respecting the true intent of the heirs in establishing the easement of right of way
as against what they stated in their written agreement; and
2. Whether or not the CA erred in ruling that the easement of right of way established by the partition
agreement among the heirs for the benefit of Lot A has been extinguished.
Rule on the two questions:

Answer: SPS. MANUEL AND VICTORIA SALIMBANGON, Petitioners,


vs.SPS. SANTOS AND ERLINDA TAN, Respondents. G.R. No. 185240

January 20, 2010

7.Petitioner Tomas Encarnacion and private respondent Heirs of the late Aniceta Magsino Viuda de
Sagun are the owners of two adjacent estates situated in Buco, Talisay, Batangas. ** Petitioner owns
the dominant estate which has an area of 2,590 square meters and bounded on the North by
Eusebio de Sagun and Mamerto Magsino, on the south by Taal Lake, on the East by Felino
Matienzo and on the West by Pedro Matienzo. Private respondents co-own the 405-square-meter
servient estate which is bounded on the North by the National Highway (Laurel-Talisay Highway), on
the South by Tomas Encarnacion, on the East by Mamerto Magsino and on the West by Felipe de
Sagun. In other words, the servient estate stands between the dominant estate and the national
road.
Prior to 1960, when the servient estate was not yet enclosed with a concrete fence, persons going to
the national highway just crossed the servient estate at no particular point. However, in 1960 when
private respondents constructed a fence around the servient estate, a roadpath measuring 25
meters long and about a meter wide was constituted to provide access to the highway. One-half
meter width of the path was taken from the servient estate and the other one-half meter portion was
taken from another lot owned by Mamerto Magsino. No compensation was asked and non was given
for the portions constituting the pathway. 1
It was also about that time that petitioner started his plant nursery business on his land where he
also had his abode. He would use said pathway as passage to the highway for his family and for his
customers.
Petitioner's plant nursery business through sheer hard work flourished and with that, it became more
and more difficult for petitioner to haul the plants and garden soil to and from the nursery and the
highway with the use of pushcarts. In January, 1984, petitioner was able to buy an owner-type jeep
which he could use for transporting his plants. However, that jeep could not pass through the

roadpath and so he approached the servient estate owners (Aniceta Vda. de Sagun and Elena
Romero Vda. de Sagun) and requested that they sell to him one and one-half (1 1/2) meters of their
property to be added to the existing pathway so as to allow passage for his jeepney. To his utter
consternation, his request was turned down by the two widows and further attempts at negotiation
proved futile.
Petitioner then instituted an action before the Regional Trial Court of Batangas, Branch 6 (Tanauan)
to seek the issuance of a writ of easement of a right of way over an additional width of at least
two (2) meters over the De Saguns' 405-square-meter parcel of land. 2
During the trial, the attention of the lower court was called to the existence of another exit to the
highway, only eighty (80) meters away from the dominant estate. On December 2, 1985, the lower
court rendered judgment dismissing petitioner's complaint. It ruled:
It is clear, therefore, that plaintiff at present has two outlets to the highway: one, through the defendants'
land on a one meter wide passageway, which is bounded on both sides by concrete walls and second,
through the dried river bed eighty meters away. The plaintiff has an adequate outlet to the highway
through the dried river bed where his jeep could pass.
The reasons given for his claim that the one-meter passageway through defendants' land be widened to
two and one-half meters to allow the passage of his jeep, destroying in the process one of the concrete
fences and decreasing defendants' already small parcel to only about 332.5 square meters, just because
it is nearer to the highway by 25 meters compared to the second access of 80 meters or a difference of
only 65 meters and that passage through defendants' land is more convenient for his (plaintiffs) business
and family use are not among the conditions specified by Article 649 of the Civil Code to entitle the
plaintiff to a right of way for the passage of his jeep through defendant's land. 3

Question: If you were the Judge, will you grant an additional width of at least two meters?
Explain.
Answer:TOMAS ENCARNACION, petitioner,
vs.THE HONORABLE COURT OF APPEALS and THE INTESTATE ESTATE OF THE LATE
EUSEBIO DE SAGUN and THE HEIRS OF THE LATE ANICETA MAGSINO VIUDA DE
SAGUN,* respondents. G.R. No. 77628 March 11, 1991

7. In the deed of donation it was stated that the same was made in consideration of the services
rendered to the donor by the donee; that "title" to the donated properties would not pass to the
donee during the donor's lifetime, and that it would be only upon the donor's death that the donee
would become the "true owner" of the donated properties. However, there was the stipulation that
the donor bound herself to answer to the donee for the property donated and that she warranted that
nobody would disturb or question the donee's right.
(a) Is this a donation inter vivos or mortis causa? Explain. (b) Cite at least five distinctions between a
donation mortis causa and a donation inter vivos.

Answer.. In the Balaqui case, it was provided in the deed that the donation was made in
consideration of the services rendered to the donor by the donee; that "title" to the donated
properties would not pass to the donee during the donor's lifetime, and that it would be only upon the
donor's death that the donee would become the "true owner" of the donated properties. However,
there was the stipulation that the donor bound herself to answer to the donee for the property
donated and that she warranted that nobody would disturb or question the donee's right. [U2]

Notwithstanding the provision in the deed that it was only after the donor's death when the 'title' to
the donated properties would pass to the donee and when the donee would become the owner
thereof, it was held in the Balaqui case that the donation was inter vivos.
It was noted in that case that the donor, in making a warranty, implied that the title had already been
conveyed to the donee upon the execution of the deed and that the donor merely reserved to herself
the "possesion and usufruct" of the donated properties.
8. In that clause it is stated that, in consideration of the affection and esteem of the donors for the
donees and the valuable services rendered by the donees to the donors, the latter, by means of the
deed of donation, wholeheartedly transfer and unconditionally give to the donees the lots mentioned
and described in the early part of the deed, free from any kind of liens and debts:
Na dahil at alang-alang sa pagmamahal at masuyong pagtingin na taglay ng NAGKAKALOOB
(DONORS) sa Pinagkakalooban (DONEES) gayun din sa tapat at mahalagang paglilingkod noong mga
lumipas na panahon na ginawa ng huli sa una ang nabanggit na nagkakaloob sa pamagitan ng
kasulatang ito ng pagkakaloob (Donation) ay buong pusong inililipat at lubos na ibinibigay sa nasabing
pinagkakalooban ang lupang binabanggit at makikilala sa unahan nito, laya sa ano mang sagutin at
pagkakautang, katulad nito:
Xxx
(3) Gayun din samantalang kaming mag-asawang Gabino Diaz at Severa Mendoza ay buhay, patuloy
and aming pamamahala, karapatan, at pagkamayari sa mga nasabing pagaari na sinasaysay sa unahan
nito na pagaari namin; ngunit sakaling kami ay bawian ng buhay ng Panginoong Dios at mamatay na, ang
mga karapatan at pagkamayari ng bawa't pinagkalooban (Donatorios) sa bawa't pagaari nauukol sa
bawa't isa ay may lubos na kapangyarihan.

QUESTION: Gleaning from said tagalog provisions is there a donation inter vivos or mortis causa?
Explain.

9. Distinguish a nuisance per se and a nuisance per accidens, with respect to its (a) nature
(b) manner of its abatement.

: nuisance per se and nuisance per accidens. The first is recognized as a nuisance under any
and all circumstances, because it constitutes a direct menace to public health or safety, and,
for that reason, may be abated summarily under the undefined law of necessity. The second
is that which depends upon certain conditions and circumstances, and its existence being a
question of fact, it cannot be abated without due hearing thereon in a tribunal authorized to
decide whether such a thing does in law constitute a nuisance

10. In the trial the following facts were admitted without contradiction:
(1) That house No. 65 Calle Rosario, this city, property of the wife of the plaintiff, has certain
windows therein, through which it receives light and air, said windows opening on the adjacent
house, No. 63 of the same street; (2) that these windows have been in the existence since the year
1843 and (3) that the defendant, the tenant of the said house No. 63, has commenced certain work
with the view to raising the roof of the house in such a manner that one-half of the windows in said
house No. 65 has been covered, thus depriving the building of a large part of the air and light

formerly received through the window. In its decision the court below practically finds the preceding
facts, and further finds that the plaintiff has not proven that he has, by any formal act, prohibited the
owner of house No. 63, from making improvements of any kind therein at any time prior to the
complaint.
The contention of the plaintiff is that by the constant and uninterrupted use of the windows referred to
above during a period of fifty-nine years he acquired from prescription an easement of light in favor
of the house No. 65, and as a servitude upon house No. 63, and, consequently, has acquired the
right to restrain the making of any improvements in the latter house which might in any manner be
prejudicial to the enjoyment of the said easement. He contends that the easement of light is positive;
and that therefore the period of possession for the purposes of the acquisition of a prescriptive title is
to begin from the date on which the enjoyment of the same commenced, or, in other words, applying
the doctrine to this case, from the time that said windows were opened with the knowledge of the
owner of the house No. 63, and without opposition on this part.
The defendant, on the contrary, contends that the easement is negative, and that therefore the time
for the prescriptive acquisition thereof must begin from the date on which the owner of the dominant
estate may have prohibited, by a formal act, the owner of the servient estate from doing something
which would be lawful but for the existence of the easement.
The court below in its decision held in the easement of light is negative, and this ruling has been
assigned by the plaintiff as error to be corrected by this court.
Question: Is the easement negative or positive? Explain.

Answer: As a result of the opinion above expressed, we hold:


1. That the easement of light which is the object of this litigation is of a negative character, and
therefore pertains to the class which can not be acquired by prescription as provided by article 538 of
the Civil Code, except by counting the time of possession from the date on which the owner of the
dominant estate has, in a formal manner, forbidden the owner of the servient estate to do an act
which would be lawful were it not for the easement.
2. That, in consequence thereof, the plaintiff, not having executed any formal act of opposition to the
right of the owner of the house No. 63 Calle Rosario (of which the defendant is tenant), to make
therein improvements which might obstruct the light of the house No. 65 of the same street, the
property of the wife of the appellant, at any time prior to the complaint, as found by the court below in
the judgment assigned as error, he has not acquired, nor could he acquire by prescription, such
easement of light, no matter how long a time have elapsed since the windows were opened in the
wall of the said house No. 65, because the period which the law demands for such prescriptive
acquisition could not have commenced to run, the act with which it must necessarily commence not
having been performed.
MAXIMO CORTES, plaintiff-appellant, vs.JOSE PALANCA YU-TIBO, defendant-appellant. G.R. No.
911
March 12, 1903

SAMPLE PROBLEMS

PROBLEM NO. 1.A

hectare of rice land in Cabatuan, Iloilo, is the subject of this


controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio
Chichirita for P30, reserving for himself the right to repurchase it within six years. The deed
of sale, written in the Ilongo dialect, is contained in a private instrument, the English
translation of which reads:

"I, Teodoro Husain, single, of legal age, native and resident of the Municipality of
Cabatuan, Province of Iloilo, Philippine Islands, because of the amount of Thirty Pesos
(P30.00), Philippine currency, that was paid to me by Serapio Chichirita, married to
Florentina Muyuela, of legal age, native and resident of this Municipality of Cabatuan,
Province of Iloilo, Philippine Islands, hereby declare that I am selling to the
aforementioned vendee Serapio Chichirita, his heirs, and the heirs of the latter, my one
parcel of rice land at Barrio Salacay of this Municipality of Cabatuan, and its descriptions
are as follows:
One parcel of rice land that has a seedling of one cavan of palay, legal measure,
bounded on the North, land of Juan Alcayaga, on the East, land of Agapito Suero, on the
South, land of Elias Gallar and on the West, land of Juan Mina. The said land was
inherited by me from my father who is now dead, Clemente Husain.
"I also declare that we have agreed that if the vendor shall have repaid to the
vendee the aforementioned amount of P30.00 within six years from this date, the vendee
or his heirs shall execute a document of repurchase in my favor, but if after the said term
that he cannot return the aforementioned amount, this document shall be considered
absolute and irrevocably consummated and in the meantime the vendee shall be the one
to make use of the aforementioned land in accordance with the Ley Hipotecaria.
"In truth whereof, I have signed this document at Cabatuan, 9th day of January, 1919.
(Sgd.) TEODORO HUSAIN
"Signed in the presence of:
"(Sgd.) TOMAS JILOCA

(Sgd.) EUSEBIO JOCANO"

Teodoro Husain did not redeem the land, although shortly after
the execution of the deed of sale, that is, on January 28, 1919, the
vendee a retro, Chichirita, transferred his right to Graciana Husain,
sister of the vendor a retro, in what purports to be a resale of the land.
The following annotation appears on the reverse side of the deed of
pacto de retro sale:
"NOTA: The amount stated above was received by me from
Graciana Husain and on my own voluntary will as redemption (gawad)
of the same land, and because of this, I am transferring my rights as
stated above to Graciana Husain in the presence of her husband
Manuel Catalan, and in truth whereof I have signed at Cabatuan, 28
January, 1919.
Thumb marked

Serapio Chichirita"
(English translation)
Graciana Husain subsequently transferred her rights to the land
to appellee Elias Gallar in exchange for one cow. The transaction is
recorded in a second note added on the reverse side of the deed of
sale. The note reads:
"OTRA NOTA:
"The undersigned Graciana Husain, with the consent end knowledge of her
husband Manuel Catalan, has agreed with Elias Gallar that all the rights that belongs to
her, or she, Graciana Husain, is transferring to the said Elias Gallar in accordance with
that stated in the original with the difference that this transfer is definite because it is
their agreement in exchange of one head of cow described in the Certificate of Large
Cattle existing in the Office or the Municipal Treasurer of this town. And in truth whereof,
Graciana Husain signed hereunder together with her husband Manuel Catalan.
Cabatuan, April 2, 1919.
"(Sgd.) MANUEL CATALAN

(Sgd.) GRACIANA HUSAIN"

(English translation)
Possession of the land, together with the owner's duplicate of
the certificate of title of Teodoro Husain, was delivered on the same
occasion to appellee who since then has been in possession of the
land.
Questions: (1) Teodoro Husain wants to recover ownership and
possession of the land, will his action be successful?(2) He alleges
that the sale based on private documents are not valid, is he correct
on this matter?

Answer: ELIAS GALLAR, plaintiff-appellee, vs. HERMENEGILDA


HUSAIN, ET AL., defendants. BONIFACIO HUSAIN, defendantappellant. EN BANC [G.R. No. L-20954. May 29, 1967.] Now, when
Teodoro Husain failed to redeem the land within the stipulated period,
i.e., January 9, 1925, its ownership became consolidated in the
appellee. True the successive sales are in a private instrument, but
they are valid just the same. 5 By the delivery of possession of the
land on April 2, 1919 the sale was consummated and title was
transferred to the appellee. Indeed, this action is not for specific
performance; all it seeks is to quiet title, 6 to remove the cloud cast
on appellee's ownership as a result of appellant's refusal to recognize
the sale made by the predecessor. And, as plaintiff-appellee is in
possession of the land, the action is imprescriptible. 7 Appellant's
argument that the action has prescribed would be correct if they were
in possession as the action to quiet title would then be an action for
recovery of real property which must be brought within the statutory
period of limitation governing such actions.

PROBLEM NO. 2 What is remission? What is its essential


characteristic? Distinguish it from dation in payment, novation, and
compromise?

ANSWER:As a mode of extinguishing an obligation, [55] condonation or remission of


debt[56] is defined as:an act of liberality, by virtue of which, without receiving
anyequivalent, the creditor renounces the enforcement of the obligation,which is
extinguished in its entirety or in that part or aspect of the same to which
the remission refers. It is an essential characteristicof remission that it be
gratuitous,
that
there
is
no
equivalent
received for the benefit given; once such equivalent exists, the nature of the act
changes. It may become dation in payment when the creditor receives a thing
different from that stipulated; or novation, when the object or principal conditions
of the obligation should be changed; or compromise, when the matter renounced is
in litigation or dispute and in exchange of some concession which the creditor
receives.[57]RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P. FERNANDEZ,
PETITIONER, VS. COURT OF TAX APPEALS AND COMMISSIONER OF INTERNAL
REVENUE, RESPONDENTS. [ G.R. No. 140944, April 30, 2008 ]

PROBLEM NO. 3. Sometime in April 1999, [petitioner] Religious of the Virgin Mary (RVM for
brevity), acting through its local unit and specifically through Sr. Fe Enhenco, local Superior of the St.
Marys Academy of Capiz and [respondents] met to discuss the sale of the latters property adjacent
to St. Marys Academy. Said property is denominated as Lot 159-B-2 and was still registered in the
name of [respondents] predecessor-in-interest, Manuel Laserna.
In May of 1999, [respondent] Josephine Orola went to Manila to see the Mother Superior
General of the RVM, in the person of Very Reverend Mother Ma. Clarita Balleque [VRM Balleque]
regarding the sale of the property subject of this instant case.
A contract to sell dated June 2, 1999 made out in the names of herein [petitioner] and
[respondents] as parties to the agreement was presented in evidence pegging the total consideration
of the property at P5,555,000.00 with 10% of the total consideration payable upon the execution of
the contract, and which was already signed by all the [respondents] and Sr. Ma. Fe Enhenco, R.V.M.
[Sr. Enhenco] as witness.
On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged receipt of
RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of P555,500.00 as 10% down
payment for Lot 159-B-2 from the RVM Congregation (St. Marys Academy of Cadiz [SMAC]) with
the conforme signed by Sister Fe Enginco (sic), Mother Superior, SMAC.
[Respondents] executed an extrajudicial settlement of the estate of Trinidad Andrada
Laserna dated June 21, 1999 adjudicating unto themselves, in pro indiviso shares, Lot 159-B-2, and
which paved the transfer of said lot into their names under Transfer Certificate of Title No. T-39194
with an entry date of August 13, 1999.
Thereafter, respondents, armed with an undated Deed of Absolute Sale which they had
signed, forthwith scheduled a meeting with VRM Balleque at the RVM Headquarters in Quezon City
to finalize the sale, specifically, to obtain payment of the remaining balance of the purchase price in

the amount of P4,999,500.00. However, VRM Balleque did not meet with respondents. Succeeding
attempts by respondents to schedule an appointment with VRM Balleque in order to conclude the
sale were likewise rebuffed.
In an exchange of correspondence between the parties respective counsels, RVM denied
respondents demand for payment because: (1) the purported Contract to Sell was merely signed by
Sr. Enhenco as witness, and not by VRM Balleque, head of the corporation sole; and (2) as
discussed by counsels in their phone conversations, RVM will only be in a financial position to pay
the balance of the purchase price in two years time. Thus, respondents filed with the RTC a
complaint with alternative causes of action of specific performance or rescission.
Q: (1) If you were the judge, will you grant rescission? (2) Or will you grant specific performance
instead? (3) Under the civil code, there are two provisions concerning rescission, one under Art.
1191 and 1381. Is there a distinction between the two rescissions? State if there is any? (RVM v.
Orola GR No. 169790 April 30, 2008)

PROBLEM NO. 4. On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso
Iringan, an undivided portion of Lot No. 992 of the Tuguegarao Cadastre, located at the Poblacion of
Tuguegarao and covered by Transfer Certificate of Title No. T-5790. The parties executed a Deed of
Sale on the same date with the purchase price of P295,000.00, payable as follows:
(a) P10,000.00 upon the execution of this instrument, and for this purpose, the vendor
acknowledges having received the said amount from the vendee as of this date;
(b) P140,000.00 on or before April 30, 1985;
(c) P145,000.00 on or before December 31, 1985.
When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985,
Palao sent a letter to Iringan stating that he considered the contract as rescinded and that he would
not accept any further payment considering that Iringan failed to comply with his obligation to pay the
full amount of the second installment.
On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, replied that they
were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the
following amounts:
(a) P50,000.00 cash received by you;
(b) P3,200.00 geodetic engineers fee;
(c) P500.00 attorneys fee;
(d) the current interest on P53,700.00.
In response, Palao sent a letter dated January 10, 1986, to Atty. Aquino, stating that he was
not amenable to the reimbursements claimed by Iringan.
On February 21, 1989, Iringan, now represented by a new counsel Atty. Carmelo Z.
Lasam, proposed that the P50,000 which he had already paid Palao be reimbursed or Palao could
sell to Iringan, an equivalent portion of the land.
Palao instead wrote Iringan that the latters standing obligation had reached P61,600,
representing payment of arrears for rentals from October 1985 up to March 1989. The parties failed
to arrive at an agreement.

On July 1, 1991, Palao filed a Complaint for Judicial Confirmation of Rescission of Contract
and Damages against Iringan and his wife.
In their Answer, the spouses alleged that the contract of sale was a consummated contract,
hence, the remedy of Palao was for collection of the balance of the purchase price and not
rescission. Besides, they said that they had always been ready and willing to comply with their
obligations in accordance with said contract.
QUESTIONS (1) Is recission proper under the circumstances? (2) IF you were the court will you
award damages?(3) In the case at bar what is the prescriptive period for rescission? (4) Rule on the
contention of the parties. (ALFONSO L. IRINGAN, petitioner, vs. HON. COURTOF APPEALS

and ANTONIO PALAO, represented by his Attorney-in-Fact, FELISA P. DELOS


SANTOS, respondents. SECOND DIVISION[G.R. No. 129107. September 26, 2001]

PROBLEM No. 5: Sometime in the first half of 1992, representatives from Pryce
Properties Corporation (PPC for brevity) made representations with the Philippine
Amusement and Gaming Corporation (PAGCOR) on the possibility of setting up a casino
in Pryce Plaza Hotel in Cagayan de Oro City. [A] series of negotiations followed.
PAGCOR representatives went to Cagayan de Oro City to determine the pulse of the
people whether the presence of a casino would be welcomed by the residents. Some
local government officials showed keen interest in the casino operation and expressed
the view that possible problems were surmountable. Their negotiations culminated with
PPCs counter-letter proposal dated October 14, 1992.
On November 11, 1992, the parties executed a Contract of Lease x x x involving
the ballroom of the Hotel for a period of three (3) years starting December 1, 1992 and
until November 30, 1995. On November 13, 1992, they executed an addendum to the
contract x x x which included a lease of an additional 1000 square meters of the hotel
grounds as living quarters and playground of the casino personnel. PAGCOR advertised
the start of their casino operations on December 18, 1992.
Way back in 1990, the Sangguniang Panlungsod of Cagayan de Oro City passed
Resolution No. 2295 x x x dated November 19, 1990 declaring as a matter of policy to
prohibit and/or not to allow the establishment of a gambling casino in Cagayan de Oro
City. Resolution No. 2673 x x x dated October 19, 1992 (or a month before the contract
of lease was executed) was subsequently passed reiterating with vigor and vehemence
the policy of the City under Resolution No. 2295, series of 1990, banning casinos in
Cagayan de Oro City. On December 7, 1992, the Sangguniang Panlungsod of Cagayan
de Oro City enacted Ordinance No. 3353 x x x prohibiting the issuance of business
permits and canceling existing business permits to any establishment for using, or
allowing to be used, its premises or any portion thereof for the operation of a casino.
In the afternoon of December 18, 1992 and just hours before the actual formal
opening of casino operations, a public rally in front of the hotel was staged by some
local officials, residents and religious leaders. Barricades were placed [which]
prevented some casino personnel and hotel guests from entering and exiting from the
Hotel. PAGCOR was constrained to suspend casino operations because of the rally. An
agreement between PPC and PAGCOR, on one hand, and representatives of the rallyists,
on the other, eventually ended the rally on the 20th of December, 1992.
On January 4, 1993, Ordinance No. 3375-93 x x x was passed by the
Sangguniang Panlungsod of Cagayan de Oro City, prohibiting the operation of casinos
and providing for penalty for violation thereof. On January 7, 1993, PPC filed a Petition
for Prohibition with Preliminary Injunction x x x against then public respondent Cagayan

de Oro City and/or Mayor Pablo P. Magtajas x x x before the Court of Appeals, docketed
as CA G.R. SP No. 29851 praying inter alia, for the declaration of unconstitutionality of
Ordinance No. 3353. PAGCOR intervened in said petition and further assailed Ordinance
No. 4475-93 as being violative of the non-impairment of contracts and equal protection
clauses. On March 31, 1993, the Court of Appeals promulgated its decision x x x, the
dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, Ordinance No. 3353 and Ordinance No. 337593 are hereby DECLARED UNCONSTITUTIONAL and VOID and the respondents and all
other persons acting under their authority and in their behalf are PERMANENTLY
ENJOINED from enforcing those ordinances.
SO ORDERED.
Aggrieved by the decision, then public respondents Cagayan de Oro City, et al.
elevated the case to the Supreme Court in G.R. No. 111097, where, in an En Banc
Decision dated July 20, 1994 x x x, the Supreme Court denied the petition and affirmed
the decision of the Court of Appeals.
In the meantime, PAGCOR resumed casino operations on July 15, 1993, against which,
however, another public rally was held. Casino operations continued for some time, but
were later on indefinitely suspended due to the incessant demonstrations. Per verbal
advice x x x from the Office of the President of the Philippines, PAGCOR decided to stop
its casino operations in Cagayan de Oro City. PAGCOR stopped its casino operations in
the hotel prior to September, 1993. In two Statements of Account dated September 1,
1993 x x x, PPC apprised PAGCOR of its outstanding account for the quarter September
1 to November 30, 1993. PPC sent PAGCOR another Letter dated September 3, 1993 x
x x as a follow-up to the parties earlier conference. PPC sent PAGCOR another Letter
dated September 15, 1993 x x x stating its Board of Directors decision to collect the full
rentals in case of pre-termination of the lease.
PAGCOR sent PPC a letter dated September 20, 1993 x x x [stating] that it was not
amenable to the payment of the full rentals citing as reasons unforeseen legal and other
circumstances which prevented it from complying with its obligations. PAGCOR further
stated that it had no other alternative but to pre-terminate the lease agreement due to
the relentless and vehement opposition to their casino operations. In a letter dated
October 12, 1993 x x x, PAGCOR asked PPC to refund the total of P1,437,582.25
representing the reimbursable rental deposits and expenses for the permanent
improvement of the Hotels parking lot. In a letter dated November 5, 1993 x x x,
PAGCOR formally demanded from PPC the payment of its claim for reimbursement.
On November 15, 1993 x x x, PPC filed a case for sum of money in the Regional
Trial Court of Manila docketed as Civil Case No. 93-68266. On November 19, 1993,
PAGCOR also filed a case for sum of money in the Regional Trial Court of Manila
docketed as Civil Case No. 93-68337.
In a letter dated November 25, 1993, PPC informed PAGCOR that it was terminating the
contract of lease due to PAGCORs continuing breach of the contract and further stated
that it was exercising its rights under the contract of lease pursuant to Article 20 (a) and
(c) thereof.
On February 2, 1994, PPC filed a supplemental complaint x x x in Civil Case No.
93-68266, which the trial court admitted in an Order dated February 11, 1994. In an
Order dated April 27, 1994, Civil Case No. 93-68377 was ordered consolidated with Civil
Case No. 93-68266. These cases were jointly tried by the court a quo. On August 17,
1995, the court a quo promulgated its decision. Both parties appealed.[5]

In its appeal, PPC faulted the trial court for the following reasons: 1) failure of the
court to award actual and moral damages; 2) the 50 percent reduction of the amount
PPC was claiming; and 3) the courts ruling that the 2 percent penalty was to be
imposed from the date of the promulgation of the Decision, not from the date stipulated
in the Contract.
On the other hand, PAGCOR criticized the trial court for the latters failure to rule
that the Contract of Lease had already been terminated as early as September 21,
1993, or at the latest, on October 14, 1993, when PPC received PAGCORs letter dated
October 12, 1993. The gaming corporation added that the trial court erred in 1) failing
to consider that PPC was entitled to avail itself of the provisions of Article XX only when
PPC was the party terminating the Contract; 2) not finding that there were valid,
justifiable and good reasons for terminating the Contract; and 3) dismissing the
Complaint of PAGCOR in Civil Case No. 93-68337 for lack of merit, and not finding PPC
liable for the reimbursement of PAGCORS cash deposits and of the value of
improvements.

QUESTIONS: (1) Rule on the contentions of the parties . (PRYCE CORPORATION (formerly
PRYCE PROPERTIES CORPORATION), petitioner, vs. PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondent. THIRD DIVISION
[G.R. No. 157480. May 6, 2005])

PROBLEM NO. 6. In a contract to sell on commission basis, which is actually a form of agency, it
there a need for the contract to be in writing?
( ROSA LIM, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents. FIRST DIVISION [G.R. No. 102784. February 28, 1996])
PROBLEM NO. 7. AS a general rule, what is the form of a contract in order that it will be of
obligatory force? What are the exceptions to the rule? What are the different kinds of formalities
which are prescribed by law for certain contracts? (p. 601 jurado).

PROBLEM NO. 8. C, husband of D, sold her paraphernal property in her name without her
consent. Was such sale valid, void, voidable, rescissible or unenforceable? Why? (p. 621JUrado)

PROBLEM NO. 9.The Board of Liquidators of the Postal Savings Bank authorized the sale
by public auction of a parcel of land it owned at Navotas. The Board expressly reserved the right to
reject any and all bids.The auction notice also contained such reservation. Leoquinco offered the
highest bid but this was rejected by the Board. He then sued the bank to compel it to execute and
deliver the deed of sale, with damages. Will the action prosper?
PROBLEM NO. 10.What is it that extinguishes the action to annul a voidalbe contract?

SAMPLE PROBLEMS

PROBLEM NO. 1.A

hectare of rice land in Cabatuan, Iloilo, is the subject of this


controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio
Chichirita for P30, reserving for himself the right to repurchase it within six years. The deed
of sale, written in the Ilongo dialect, is contained in a private instrument, the English
translation of which reads:

"I, Teodoro Husain, single, of legal age, native and resident of the Municipality of
Cabatuan, Province of Iloilo, Philippine Islands, because of the amount of Thirty Pesos
(P30.00), Philippine currency, that was paid to me by Serapio Chichirita, married to
Florentina Muyuela, of legal age, native and resident of this Municipality of Cabatuan,
Province of Iloilo, Philippine Islands, hereby declare that I am selling to the
aforementioned vendee Serapio Chichirita, his heirs, and the heirs of the latter, my one
parcel of rice land at Barrio Salacay of this Municipality of Cabatuan, and its descriptions
are as follows:
One parcel of rice land that has a seedling of one cavan of palay, legal measure,
bounded on the North, land of Juan Alcayaga, on the East, land of Agapito Suero, on the
South, land of Elias Gallar and on the West, land of Juan Mina. The said land was
inherited by me from my father who is now dead, Clemente Husain.
"I also declare that we have agreed that if the vendor shall have repaid to the
vendee the aforementioned amount of P30.00 within six years from this date, the vendee
or his heirs shall execute a document of repurchase in my favor, but if after the said term
that he cannot return the aforementioned amount, this document shall be considered
absolute and irrevocably consummated and in the meantime the vendee shall be the one
to make use of the aforementioned land in accordance with the Ley Hipotecaria.
"In truth whereof, I have signed this document at Cabatuan, 9th day of January, 1919.
(Sgd.) TEODORO HUSAIN
"Signed in the presence of:
"(Sgd.) TOMAS JILOCA

(Sgd.) EUSEBIO JOCANO"

Teodoro Husain did not redeem the land, although shortly after
the execution of the deed of sale, that is, on January 28, 1919, the
vendee a retro, Chichirita, transferred his right to Graciana Husain,
sister of the vendor a retro, in what purports to be a resale of the land.
The following annotation appears on the reverse side of the deed of
pacto de retro sale:
"NOTA: The amount stated above was received by me from
Graciana Husain and on my own voluntary will as redemption (gawad)
of the same land, and because of this, I am transferring my rights as
stated above to Graciana Husain in the presence of her husband
Manuel Catalan, and in truth whereof I have signed at Cabatuan, 28
January, 1919.
Thumb marked

Serapio Chichirita"
(English translation)
Graciana Husain subsequently transferred her rights to the land
to appellee Elias Gallar in exchange for one cow. The transaction is
recorded in a second note added on the reverse side of the deed of
sale. The note reads:
"OTRA NOTA:
"The undersigned Graciana Husain, with the consent end knowledge of her
husband Manuel Catalan, has agreed with Elias Gallar that all the rights that belongs to
her, or she, Graciana Husain, is transferring to the said Elias Gallar in accordance with
that stated in the original with the difference that this transfer is definite because it is
their agreement in exchange of one head of cow described in the Certificate of Large
Cattle existing in the Office or the Municipal Treasurer of this town. And in truth whereof,
Graciana Husain signed hereunder together with her husband Manuel Catalan.
Cabatuan, April 2, 1919.
"(Sgd.) MANUEL CATALAN

(Sgd.) GRACIANA HUSAIN"

(English translation)
Possession of the land, together with the owner's duplicate of
the certificate of title of Teodoro Husain, was delivered on the same
occasion to appellee who since then has been in possession of the
land.
Questions: (1) Teodoro Husain wants to recover ownership and
possession of the land, will his action be successful?(2) He alleges
that the sale based on private documents are not valid, is he correct
on this matter?

Answer: ELIAS GALLAR, plaintiff-appellee, vs. HERMENEGILDA


HUSAIN, ET AL., defendants. BONIFACIO HUSAIN, defendantappellant. EN BANC [G.R. No. L-20954. May 29, 1967.] Now, when
Teodoro Husain failed to redeem the land within the stipulated period,
i.e., January 9, 1925, its ownership became consolidated in the
appellee. True the successive sales are in a private instrument, but
they are valid just the same. 5 By the delivery of possession of the
land on April 2, 1919 the sale was consummated and title was
transferred to the appellee. Indeed, this action is not for specific
performance; all it seeks is to quiet title, 6 to remove the cloud cast
on appellee's ownership as a result of appellant's refusal to recognize
the sale made by the predecessor. And, as plaintiff-appellee is in
possession of the land, the action is imprescriptible. 7 Appellant's
argument that the action has prescribed would be correct if they were
in possession as the action to quiet title would then be an action for
recovery of real property which must be brought within the statutory
period of limitation governing such actions.

PROBLEM NO. 2 What is remission? What is its essential


characteristic? Distinguish it from dation in payment, novation, and
compromise?

ANSWER:As a mode of extinguishing an obligation, [55] condonation or remission of


debt[56] is defined as:an act of liberality, by virtue of which, without receiving
anyequivalent, the creditor renounces the enforcement of the obligation,which is
extinguished in its entirety or in that part or aspect of the same to which
the remission refers. It is an essential characteristicof remission that it be
gratuitous,
that
there
is
no
equivalent
received for the benefit given; once such equivalent exists, the nature of the act
changes. It may become dation in payment when the creditor receives a thing
different from that stipulated; or novation, when the object or principal conditions
of the obligation should be changed; or compromise, when the matter renounced is
in litigation or dispute and in exchange of some concession which the creditor
receives.[57]RAFAEL ARSENIO S. DIZON, IN HIS CAPACITY AS THE JUDICIAL
ADMINISTRATOR OF THE ESTATE OF THE DECEASED JOSE P. FERNANDEZ,
PETITIONER, VS. COURT OF TAX APPEALS AND COMMISSIONER OF INTERNAL
REVENUE, RESPONDENTS. [ G.R. No. 140944, April 30, 2008 ]

PROBLEM NO. 3. Sometime in April 1999, [petitioner] Religious of the Virgin Mary (RVM for
brevity), acting through its local unit and specifically through Sr. Fe Enhenco, local Superior of the St.
Marys Academy of Capiz and [respondents] met to discuss the sale of the latters property adjacent
to St. Marys Academy. Said property is denominated as Lot 159-B-2 and was still registered in the
name of [respondents] predecessor-in-interest, Manuel Laserna.
In May of 1999, [respondent] Josephine Orola went to Manila to see the Mother Superior
General of the RVM, in the person of Very Reverend Mother Ma. Clarita Balleque [VRM Balleque]
regarding the sale of the property subject of this instant case.
A contract to sell dated June 2, 1999 made out in the names of herein [petitioner] and
[respondents] as parties to the agreement was presented in evidence pegging the total consideration
of the property at P5,555,000.00 with 10% of the total consideration payable upon the execution of
the contract, and which was already signed by all the [respondents] and Sr. Ma. Fe Enhenco, R.V.M.
[Sr. Enhenco] as witness.
On June 7, 1999, [respondents] Josephine Orola and Antonio Orola acknowledged receipt of
RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of P555,500.00 as 10% down
payment for Lot 159-B-2 from the RVM Congregation (St. Marys Academy of Cadiz [SMAC]) with
the conforme signed by Sister Fe Enginco (sic), Mother Superior, SMAC.
[Respondents] executed an extrajudicial settlement of the estate of Trinidad Andrada
Laserna dated June 21, 1999 adjudicating unto themselves, in pro indiviso shares, Lot 159-B-2, and
which paved the transfer of said lot into their names under Transfer Certificate of Title No. T-39194
with an entry date of August 13, 1999.
Thereafter, respondents, armed with an undated Deed of Absolute Sale which they had
signed, forthwith scheduled a meeting with VRM Balleque at the RVM Headquarters in Quezon City
to finalize the sale, specifically, to obtain payment of the remaining balance of the purchase price in

the amount of P4,999,500.00. However, VRM Balleque did not meet with respondents. Succeeding
attempts by respondents to schedule an appointment with VRM Balleque in order to conclude the
sale were likewise rebuffed.
In an exchange of correspondence between the parties respective counsels, RVM denied
respondents demand for payment because: (1) the purported Contract to Sell was merely signed by
Sr. Enhenco as witness, and not by VRM Balleque, head of the corporation sole; and (2) as
discussed by counsels in their phone conversations, RVM will only be in a financial position to pay
the balance of the purchase price in two years time. Thus, respondents filed with the RTC a
complaint with alternative causes of action of specific performance or rescission.
Q: (1) If you were the judge, will you grant rescission? (2) Or will you grant specific performance
instead? (3) Under the civil code, there are two provisions concerning rescission, one under Art.
1191 and 1381. Is there a distinction between the two rescissions? State if there is any? (RVM v.
Orola GR No. 169790 April 30, 2008)

PROBLEM NO. 4. On March 22, 1985, private respondent Antonio Palao sold to petitioner Alfonso
Iringan, an undivided portion of Lot No. 992 of the Tuguegarao Cadastre, located at the Poblacion of
Tuguegarao and covered by Transfer Certificate of Title No. T-5790. The parties executed a Deed of
Sale on the same date with the purchase price of P295,000.00, payable as follows:
(a) P10,000.00 upon the execution of this instrument, and for this purpose, the vendor
acknowledges having received the said amount from the vendee as of this date;
(b) P140,000.00 on or before April 30, 1985;
(c) P145,000.00 on or before December 31, 1985.
When the second payment was due, Iringan paid only P40,000. Thus, on July 18, 1985,
Palao sent a letter to Iringan stating that he considered the contract as rescinded and that he would
not accept any further payment considering that Iringan failed to comply with his obligation to pay the
full amount of the second installment.
On August 20, 1985, Iringan through his counsel Atty. Hilarion L. Aquino, replied that they
were not opposing the revocation of the Deed of Sale but asked for the reimbursement of the
following amounts:
(a) P50,000.00 cash received by you;
(b) P3,200.00 geodetic engineers fee;
(c) P500.00 attorneys fee;
(d) the current interest on P53,700.00.
In response, Palao sent a letter dated January 10, 1986, to Atty. Aquino, stating that he was
not amenable to the reimbursements claimed by Iringan.
On February 21, 1989, Iringan, now represented by a new counsel Atty. Carmelo Z.
Lasam, proposed that the P50,000 which he had already paid Palao be reimbursed or Palao could
sell to Iringan, an equivalent portion of the land.
Palao instead wrote Iringan that the latters standing obligation had reached P61,600,
representing payment of arrears for rentals from October 1985 up to March 1989. The parties failed
to arrive at an agreement.

On July 1, 1991, Palao filed a Complaint for Judicial Confirmation of Rescission of Contract
and Damages against Iringan and his wife.
In their Answer, the spouses alleged that the contract of sale was a consummated contract,
hence, the remedy of Palao was for collection of the balance of the purchase price and not
rescission. Besides, they said that they had always been ready and willing to comply with their
obligations in accordance with said contract.
QUESTIONS (1) Is recission proper under the circumstances? (2) IF you were the court will you
award damages?(3) In the case at bar what is the prescriptive period for rescission? (4) Rule on the
contention of the parties. (ALFONSO L. IRINGAN, petitioner, vs. HON. COURTOF APPEALS

and ANTONIO PALAO, represented by his Attorney-in-Fact, FELISA P. DELOS


SANTOS, respondents. SECOND DIVISION[G.R. No. 129107. September 26, 2001]

PROBLEM No. 5: Sometime in the first half of 1992, representatives from Pryce
Properties Corporation (PPC for brevity) made representations with the Philippine
Amusement and Gaming Corporation (PAGCOR) on the possibility of setting up a casino
in Pryce Plaza Hotel in Cagayan de Oro City. [A] series of negotiations followed.
PAGCOR representatives went to Cagayan de Oro City to determine the pulse of the
people whether the presence of a casino would be welcomed by the residents. Some
local government officials showed keen interest in the casino operation and expressed
the view that possible problems were surmountable. Their negotiations culminated with
PPCs counter-letter proposal dated October 14, 1992.
On November 11, 1992, the parties executed a Contract of Lease x x x involving
the ballroom of the Hotel for a period of three (3) years starting December 1, 1992 and
until November 30, 1995. On November 13, 1992, they executed an addendum to the
contract x x x which included a lease of an additional 1000 square meters of the hotel
grounds as living quarters and playground of the casino personnel. PAGCOR advertised
the start of their casino operations on December 18, 1992.
Way back in 1990, the Sangguniang Panlungsod of Cagayan de Oro City passed
Resolution No. 2295 x x x dated November 19, 1990 declaring as a matter of policy to
prohibit and/or not to allow the establishment of a gambling casino in Cagayan de Oro
City. Resolution No. 2673 x x x dated October 19, 1992 (or a month before the contract
of lease was executed) was subsequently passed reiterating with vigor and vehemence
the policy of the City under Resolution No. 2295, series of 1990, banning casinos in
Cagayan de Oro City. On December 7, 1992, the Sangguniang Panlungsod of Cagayan
de Oro City enacted Ordinance No. 3353 x x x prohibiting the issuance of business
permits and canceling existing business permits to any establishment for using, or
allowing to be used, its premises or any portion thereof for the operation of a casino.
In the afternoon of December 18, 1992 and just hours before the actual formal
opening of casino operations, a public rally in front of the hotel was staged by some
local officials, residents and religious leaders. Barricades were placed [which]
prevented some casino personnel and hotel guests from entering and exiting from the
Hotel. PAGCOR was constrained to suspend casino operations because of the rally. An
agreement between PPC and PAGCOR, on one hand, and representatives of the rallyists,
on the other, eventually ended the rally on the 20th of December, 1992.
On January 4, 1993, Ordinance No. 3375-93 x x x was passed by the
Sangguniang Panlungsod of Cagayan de Oro City, prohibiting the operation of casinos
and providing for penalty for violation thereof. On January 7, 1993, PPC filed a Petition
for Prohibition with Preliminary Injunction x x x against then public respondent Cagayan

de Oro City and/or Mayor Pablo P. Magtajas x x x before the Court of Appeals, docketed
as CA G.R. SP No. 29851 praying inter alia, for the declaration of unconstitutionality of
Ordinance No. 3353. PAGCOR intervened in said petition and further assailed Ordinance
No. 4475-93 as being violative of the non-impairment of contracts and equal protection
clauses. On March 31, 1993, the Court of Appeals promulgated its decision x x x, the
dispositive portion of which reads:
IN VIEW OF ALL THE FOREGOING, Ordinance No. 3353 and Ordinance No. 337593 are hereby DECLARED UNCONSTITUTIONAL and VOID and the respondents and all
other persons acting under their authority and in their behalf are PERMANENTLY
ENJOINED from enforcing those ordinances.
SO ORDERED.
Aggrieved by the decision, then public respondents Cagayan de Oro City, et al.
elevated the case to the Supreme Court in G.R. No. 111097, where, in an En Banc
Decision dated July 20, 1994 x x x, the Supreme Court denied the petition and affirmed
the decision of the Court of Appeals.
In the meantime, PAGCOR resumed casino operations on July 15, 1993, against which,
however, another public rally was held. Casino operations continued for some time, but
were later on indefinitely suspended due to the incessant demonstrations. Per verbal
advice x x x from the Office of the President of the Philippines, PAGCOR decided to stop
its casino operations in Cagayan de Oro City. PAGCOR stopped its casino operations in
the hotel prior to September, 1993. In two Statements of Account dated September 1,
1993 x x x, PPC apprised PAGCOR of its outstanding account for the quarter September
1 to November 30, 1993. PPC sent PAGCOR another Letter dated September 3, 1993 x
x x as a follow-up to the parties earlier conference. PPC sent PAGCOR another Letter
dated September 15, 1993 x x x stating its Board of Directors decision to collect the full
rentals in case of pre-termination of the lease.
PAGCOR sent PPC a letter dated September 20, 1993 x x x [stating] that it was not
amenable to the payment of the full rentals citing as reasons unforeseen legal and other
circumstances which prevented it from complying with its obligations. PAGCOR further
stated that it had no other alternative but to pre-terminate the lease agreement due to
the relentless and vehement opposition to their casino operations. In a letter dated
October 12, 1993 x x x, PAGCOR asked PPC to refund the total of P1,437,582.25
representing the reimbursable rental deposits and expenses for the permanent
improvement of the Hotels parking lot. In a letter dated November 5, 1993 x x x,
PAGCOR formally demanded from PPC the payment of its claim for reimbursement.
On November 15, 1993 x x x, PPC filed a case for sum of money in the Regional
Trial Court of Manila docketed as Civil Case No. 93-68266. On November 19, 1993,
PAGCOR also filed a case for sum of money in the Regional Trial Court of Manila
docketed as Civil Case No. 93-68337.
In a letter dated November 25, 1993, PPC informed PAGCOR that it was terminating the
contract of lease due to PAGCORs continuing breach of the contract and further stated
that it was exercising its rights under the contract of lease pursuant to Article 20 (a) and
(c) thereof.
On February 2, 1994, PPC filed a supplemental complaint x x x in Civil Case No.
93-68266, which the trial court admitted in an Order dated February 11, 1994. In an
Order dated April 27, 1994, Civil Case No. 93-68377 was ordered consolidated with Civil
Case No. 93-68266. These cases were jointly tried by the court a quo. On August 17,
1995, the court a quo promulgated its decision. Both parties appealed.[5]

In its appeal, PPC faulted the trial court for the following reasons: 1) failure of the
court to award actual and moral damages; 2) the 50 percent reduction of the amount
PPC was claiming; and 3) the courts ruling that the 2 percent penalty was to be
imposed from the date of the promulgation of the Decision, not from the date stipulated
in the Contract.
On the other hand, PAGCOR criticized the trial court for the latters failure to rule
that the Contract of Lease had already been terminated as early as September 21,
1993, or at the latest, on October 14, 1993, when PPC received PAGCORs letter dated
October 12, 1993. The gaming corporation added that the trial court erred in 1) failing
to consider that PPC was entitled to avail itself of the provisions of Article XX only when
PPC was the party terminating the Contract; 2) not finding that there were valid,
justifiable and good reasons for terminating the Contract; and 3) dismissing the
Complaint of PAGCOR in Civil Case No. 93-68337 for lack of merit, and not finding PPC
liable for the reimbursement of PAGCORS cash deposits and of the value of
improvements.

QUESTIONS: (1) Rule on the contentions of the parties . (PRYCE CORPORATION (formerly
PRYCE PROPERTIES CORPORATION), petitioner, vs. PHILIPPINE AMUSEMENT AND
GAMING CORPORATION, respondent. THIRD DIVISION
[G.R. No. 157480. May 6, 2005])

PROBLEM NO. 6. In a contract to sell on commission basis, which is actually a form of agency, it
there a need for the contract to be in writing?
( ROSA LIM, petitioner, vs. COURT OF APPEALS and PEOPLE OF THE
PHILIPPINES, respondents. FIRST DIVISION [G.R. No. 102784. February 28, 1996])
PROBLEM NO. 7. AS a general rule, what is the form of a contract in order that it will be of
obligatory force? What are the exceptions to the rule? What are the different kinds of formalities
which are prescribed by law for certain contracts? (p. 601 jurado).

PROBLEM NO. 8. C, husband of D, sold her paraphernal property in her name without her
consent. Was such sale valid, void, voidable, rescissible or unenforceable? Why? (p. 621JUrado)

PROBLEM NO. 9.The Board of Liquidators of the Postal Savings Bank authorized the sale
by public auction of a parcel of land it owned at Navotas. The Board expressly reserved the right to
reject any and all bids.The auction notice also contained such reservation. Leoquinco offered the
highest bid but this was rejected by the Board. He then sued the bank to compel it to execute and
deliver the deed of sale, with damages. Will the action prosper?
PROBLEM NO. 10.What is it that extinguishes the action to annul a voidable contract?

SAMPLE PROBLEM

PROBLEM.On August 30, 1976, an action for collection of a sum of money was filed by
the Philippine National Bank (PNB, for brevity) against Fil-Eastern Wood Industries, Inc.
(Fil-Eastern, for short) in its capacity as principal debtor and against Cayetano Ferreria,
Pedro Atienza, Vicente O. Novales, Antonio R. Agra, and Napoleon M. Gamo in their
capacity as sureties.
In its complaint, plaintiff PNB alleged that on July 17, 1967 Fil-Eastern was granted a
loan in the amount of [t]wo [m]illion [f]ive [h]undred [t]housand [p]esos (P2,500,000.00)
with interest at twelve percent (12%) per annum. Drawings from said demand loan were
made on different dates as evidenced by several promissory notes and were credited to
the account of Fil-Eastern. To secure the payment of the said loan Fil-Eastern as
principal and sureties Ferreria, Atienza, Novales, Agra, and Gamo executed a Surety
Agreement whereby the sureties, jointly and severally with the principal, guaranteed and
warranted to PNB, its successors or assigns, prompt payment of subject obligation
including notes, drafts, bills of exchange, overdrafts and other obligations of every kind,
on which Fil-Eastern was indebted or may thereafter become indebted to PNB. It was
further alleged that as of May 31, 1976 the total indebtedness of Fil-Eastern and its
sureties on subject loan amounted to [f]ive [m]illion [t]wo [h]undred [n]inety-[s]even
[t]housand, [n]ine [h]undred [s]eventy-[s]ix [p]esos and [s]eventeen [c]entavos
(P5,297,976.17), excluding attorneys fees. Notwithstanding repeated demands, the
defendants refused and failed to pay their loans.
The defendants (herein sureties) filed separate answers (pp. 49, 68, 205, 208 and 231).
Collating these, We drew the following: All of them claimed that they only signed the
Surety Agreement with the understanding that the same was a mere formality required of
the officers of the corporation. They did not in any way or manner receive a single cent
from the proceeds of said loan and/or derive any profit therefrom. Neither did they
receive any consideration valuable or otherwise, from defendant Fil-Eastern. They
further claim that the loan in question was negotiated and approved under highly
irregular, anomalous and suspicious circumstances to the point that the Surety
Agreement executed thereafter is invalid, null and void and without force and effect. The
extension of time of payment of the loan in question released and discharged the
answering defendants from any liability under the Surety Agreement. The Surety
Agreement is null and void from the beginning due to a defect in the consent of the
defendants and that their liabilities under the Surety Agreement, if any, has been
extinguished by novation. The cause of action of the complainant is barred by laches
and estoppel in that the plaintiff with full knowledge of the deteriorating financial
condition of Fil-Eastern did not take steps to collect from said defendant corporation
while still solvent. They also maintained that if anyone is liable for the payment of said
loan, it is Felipe Ysmael, Jr. and not them or it is only Fil-Eastern and the controlling
officers who profited and made use of the proceeds of the loan. Defendant Agra likewise
said that he was made to sign the Surety Agreement and he did it because of the moral
influence and pressure exerted upon him by Felipe Ysmael, Jr. (their employer at the time
of signing), thereby arousing strong fears of losing a much needed employment to
support his family should he refuse to sign as Surety.
Rule on the allegations of the parties. (1) Has the collection suit prescribed? (2) Is
the principle of laches applicable in the case at bar?

ANSWER: ANTONIO R. AGRA, CAYETANO FERRERIA, NAPOLEON M. GAMO and


VICENTE O. NOVALES, petitioners, vs.PHILIPPINE NATIONAL BANK, respondent. THIRD
DIVISION [G.R. No. 133317. June 29, 1999] There are no absolute rules in the application
of equity, and each case must be examined in the light of its peculiar facts. In PNB v.
CA, there was a mistake, an inexcusable one, on the part of petitioner bank in making an

overpayment and repeating the same error fourteen days later. If the bank could not
immediately discover the mistake despite all its agents and employees, the beneficiary of
the amount could not be expected to do so. It is, thus, inequitable to allow PNB to collect
the amount, after such a long delay, from the beneficiary who had assumed, after all
those years, that the amount really belonged to it.
In the present case, there is no showing of any mistake or any inequity. The fact alone
that seven years had lapsed before PNB filed the collection suit does not mean that it
discovered the obligation of the sureties only then. There was a Surety Arrangement,
and the law says that the said contract can be enforced by action within ten years. The
bank and the sureties all knew that the action to enforce the contract did not have to be
filed immediately. In other words, the bank committed no mistake or inequitable conduct
that needed correction, and the sureties had no misconception about their liabilities
under the contract.
Clearly, petitioners have no recourse in equity, because they failed to show any inequity
on the part of PNB.
As pointed out by the Court of Appeals, petitioners failed to challenge their consent to
the Agreement within the prescriptive period. Article 1391 of the Civil Code provides that
the action to annul a contract vitiated by intimidation, violence or undue influence shall
be filed within four years from the cessation of such defects. In this case, Petitioners
Agra, Gamo and Novales resigned from Fil-Eastern in 1967, 1968 and 1969, respectively.
It was only in 1976, when PNB sought to enforce the contract, that they alleged a defect
in their consent. By their inaction, their alleged cause of action based on vitiated
consent had precribed. There was no question that petitioners, in their capacity as
sureties, were answerable for the obligations of Fil-Eastern to PNB.

PROBLEM: The instant controversy revolves around a parcel of land located at Tuburan Sur,
Danao City, originally owned by Hilarion Derecho. When Hilarion died long before World War
II, his eight children -- Leonardo, Apolinar, Andres, Honorata, Dolores, Gerardo, Agaton, and
Oliva -- became pro indiviso co-owners of the subject property by intestate succession.
Subsequently, Tax Declaration No. 00267[5] was issued under the name Heirs of Hilarion.
On July 16, 1921, five of the co-owners -- Leonardo, Apolinar, Andres, Honorata, and Dolores
-- sold the inherited property to Francisco Lacambra, subject to a five-year redemption
clause.[6] Notably, the three other Derecho heirs -- Gerardo, Agaton, and Oliva -- were not
parties to the pacto de retro sale.
Sometime in 1928, two years after the period for redemption expired, Dolores -together with her husband, Leandro Rigonan -- purchased[7] the land from Lacambra and
immediately occupied it.[8]
More than five decades passed without any controversy. On April 24, 1980, Leandro
Rigonan executed the assailed Affidavit of Adjudication in favor of his son, Teodoro Rigonan
(the deceased husband of Petitioner Delfina vda. de Rigonan).[9] Under this instrument,
Leandro declared himself to be the sole heir of Hilarion,[10] while Teodoro obtained the
cancellation of Tax Declaration No. 00267,[11] and acquired Tax Declaration No. 00667 in his
own name.[12]
During the same year, Teodoro mortgaged the subject property to the Rural Bank of
Compostela of Cebu. Dreading foreclosure, he settled his obligations with the bank[13] by

securing the aid of Spouses Valerio and Visminda Laude. On April 5, 1984, Teodoro executed
the assailed Deed of Absolute Sale of Unregistered Land in favor of Valerio Laude, [14] who
then obtained Tax Declaration No. 00726 under the latters name on May 10, 1984.[15]
On November 10, 1993, respondents -- as the alleged heirs of Hilarion and pro
indiviso owners of the subject realty -- brought an action before the Regional Trial Court
(RTC) of Danao City (Branch 25), first, to recover the property; and,second, to annul the Deed
of Sale in favor of Laude[16] and the Affidavit of Adjudication, whose validity and authenticity
they assailed on the ground of fraud. They likewise maintained that the subject property had
not been partitioned among the heirs; thus, it was still co-owned at the time it was conveyed
to Petitioner Laude.[17]
Petitioners did not deny the imputed fraud in the execution of the Affidavit of Adjudication.
They, however, averred that the document had no bearing on their claim of ownership, which
had long pertained to the Rigonan spouses following the 1928 conveyance from the absolute
owner, Lacambra.[18] They theorized that the co-ownership over the property endedwhen the
period for redemption lapsed without any action on the part of the co-owners.[19] Therefore,
the Rigonan spouses bought the property as legitimate vendees for value and in good faith,
not in the capacity of redeeming co-owners.[20]
Petitioners likewise argued that they and their predecessors-in-interest had continuously
owned and possessed the subject property for 72 years. Accordingly, acquisitive
prescription had allegedly set in, in their favor, when the case was filed in 1993.[21]
Lastly, petitioners maintained that they were entitled to the equitable defense of laches.
Respondents and their forebears were rebuked for not asserting their rights over the
property for the past 72 years. They supposedly did so only after finding that the land had
been developed, and that it had appreciated in value.[22]

Questions: (1) Who is the rightful owner of the property, the petitioners or respondents? (2)
Whether at the time of the purchase in 1928, co-ownership still subsisted among the heirs of
Hilarion Derecho
(3) Whether an implied trust was created
(4). Whether the action in the RTC was barred by prescription and laches

Answer: Owners who, for a long period of time, fail to assert their rights to unregistered real
property may be deprived of it through prescription. Although the present respondents
initially owned part of the subject property by virtue of succession, their inaction for several
decades bars them from recovering it from petitioners who have possessed it as owners
since 1928. The purpose of prescription is to protect the diligent and vigilant, not those who
sleep on their rights.DELFINA Vda. de RIGONAN , vs. ZOROASTER DERECHO R [G.R. No.
159571. July 15, 2005]

What are the four elements to be shown in order to


use laches as a defense?
It was held in Go Chi Gun v. Co Cho[75] that four elements had to be shown in order to use
laches as a defense:
(1) conduct on the part of the defendant, or of one under whom a claim is made, giving rise
to a situation for which a complaint is filed and a remedy sought;
(2) delay in asserting the rights of the complainant, who has knowledge or notice of the
defendants conduct and has been afforded an opportunity to institute a suit;
(3) lack of knowledge or notice on the part of the defendant that the complainant will assert
the right on which the latter has based the suit; and
(4) injury or prejudice to the defendant in the event that the complainant is granted a relief or
the suit is not deemed barred.

PROBLEM: The original owner of the property in dispute, Faustino Maningo, is the son-in-law
of the original defendant, Jose Deguilmo. The former is married to Quirina Deguilmo,
daughter of said defendant.
On September 21, 1948, Faustino Maningo sold by pacto de retro the subject property
to spouses Pedro and Teresa Villamor (Exhibit 1).
After the sale, Faustino and Quirina Maningo left for Mindanao. Sometime in January,
1950, Faustino returned to Cebu because the Villamor spouses needed money. However,
since Faustino had no money, he requested his father-in-law, Jose Deguilmo, to buy the land
from the Villamors. On January 10, 1950, the Villamor spouses allegedly sold the land in
dispute to defendant Jose Deguilmo in a private document of sale (Exhibit 2). Immediately
thereafter, Jose Deguilmo took possession of the property, introduced improvements and
paid taxes thereon.
Meantime, in 1953, Faustino Maningo abandoned his wife and lived with a concubine. His
wife and their children had to return to Cebu where they lived and were supported by Jose
Deguilmo. Faustino did not return to Cebu for more than twenty (20) years. A case for
concubinage was filed against him but it was somehow dismissed.
In 1973, Faustino Maningo returned to Cebu and allegedly tried to forcibly take possession of
the property from his father-in-law although he did not succeed. Nevertheless, Faustino
proceeded to execute a deed of sale in favor of plaintiff (now petitioner) Marcelino Kiamco.
The latter, a resident of Carmen, Cebu, allegedly knew, at the time of the sale, that defendant,
Jose Deguilmo, had already been in possession of the disputed property for more than
twenty (20) years. After the said sale, Marcelino Kiamco attempted to take possession of the
property but was not successful because of defendant's refusal to give up the land. He,
however, did not file yet any action for ejectment or unlawful detainer against the defendant.
Seven (7) months after the execution of the alleged sale, Marcelino Kiamco filed a complaint
for quieting of title and recovery of possession with damages against Jose Deguilmo before
the Regional Trial Court of Cebu.

The trial court ruled, among other things, that Faustino Maningo was still the owner of the
subject property on October 2, 1973, when he executed the deed of sale in favor of Marcelino
Kiamco; that the deed of sale executed by the Villamor spouses in favor of Jose Deguilmo is
null and void; and that Jose Deguilmo had not acquired the subject property by acquisitive
prescription.
Question: (1)Is the trial court correct?
(2) When did the New Civil Code take effect?
(3) Under the old code, what is the period of acquisitive prescription?

It is undisputed that after the Deed of Sale (Exh. 2) was executed on January 10, 1950,
Jose Deguilmo immediately took possession of the property in dispute in the concept of an
owner, exercised acts of dominion and introduced improvements thereon, and enjoyed the
fruits thereof, continuously, peacefully, and adversely for more than twenty years. It is
therefore, clear, that such adverse possession started on January 10, 1950, which is before
the effectivity of the New Civil Code (August 30, 1950). Pursuant to Art. 1116 of the New Civil
Code, which provides for transitional rules on prescription, and which reads: "Prescription
already running before the effectivity of this Code shall be governed by laws previously in
force; but if since the time this Code took effect the entire period herein required for
prescription should lapse, the present Code shall be applicable, even though by the former
laws a longer period might be required," the law to be applied is the Code of Civil Procedure
(Act 190). Inasmuch as here the prescription was already running before August 30, 1950, it
follows that only ten (10) years would be required, because under the Code of Civil
Procedure, regardless ofgood faith or bad faith, the period for acquiring land by prescription
was only ten (10) years (Sec. 41, Act 190, Code of Civil Procedure; Osorio vs. Tan Jongko, 51
O.G. 6221). It therefore follows necessarily that in 1960, Jose Deguilmo had already acquired
the subject property by acquisitive prescription. Thus, Marcelino Kiamco should have lost
the case, unless of course, the land was covered by a Torrens Certificate of Title. As found
by the respondent Court, the evidence shows that the land is not a titled property.
The period of ten (10) years must necessarily start from January, 1950, and not from August
1950, since here, the prescriptive period under the old law was shorter. Had the period under
the old law been longer, it is the shorter period under the New Civil Code that should apply,
but this time, the period should commence from the date of effectivity of the New Civil Code
August 30, 1950 in view of the clause "but if since the time this Code took effect ..."
With the facts obtaining in the present case, it is immaterial whether the property in dispute
was possessed by Jose Deguilmo in good or bad faith. His adverse possession for more
than twenty years is more than sufficient for purposes of acquisitive prescription under the
Code of Civil Procedure. Thus, even if the alleged Deed of Sale executed on January 10, 1950
(Exh. 2) was void ab initio, as claimed by petitioner (because Faustino Maningo could still
repurchase the property until 1951, thus the Villamor spouses were not yet the owners
thereof), what is important is that Jose Deguilmo immediately took possession of the
property and continuously and adversely possessed and enjoyed it for more than twenty
years. Besides, as correctly found by the respondent court, if Faustino claims that the Deed
of Sale of January 10, 1950 was not authentic and valid, why did he not disturb Jose
Deguilmo from 1950 until 1973; it is hardly the actuation of an owner for Faustino Maningo
to do what he did for the last 24 years, if as the Villamor spouses said Faustino Maningo had
already repurchased the property in 1949."
Jose Deguilmo (and now his heirs, the private respondents), no doubt, had already acquired
ownership of the subject property on the basis of acquisitive prescription. MARCELINO

KIAMCO, petitioner-movant, vs. THE HONORABLE COURT OF APPEALS, JUANA DEGUILMOGRAPE,


QUIRINA
DEGUILMO-MANINGO,
ANTONIA
DEGUILMO,
and
JUAN
DEGUILMO, respondents. SECOND DIVISION [G.R. No. 96865. July 3, 1992]

PROBLEM: On March 14, 1939, Pedro Tolentino,


claiming absolute ownership over Lot Nos. 572 and
579 of the Gattaran cadastre in Lapogan, Gattaran,
Cagayan, separately sold said lots to petitioners, the
spouses Bernardino Ramos and Rosalia Oli, in
consideration of the amount of eighty pesos (P80.00)
for each sale. The aforesaid conveyances were
allegedly evidenced by two documents both entitled
Escritura de Compra Venta and acknowledged
before a notary public.
Subsequently, however, petitioners instituted on
January 8, 1976 an action for reconveyance with
damages alleging that while they were in open,
public, adverse, peaceful and continuous possession
of the subject lots in good faith and with just title, for
not less than fifty (50) years, personally and through
their predecessors-in-interest, they were surprised to
discover in November 1975, that decrees of
registration covering Lot Nos. 572 and 579 were
already issued on January 7, 1940. They complained
further the subsequent issuance by the Register of
Deeds of Cagayan on March 11, 1941, Original
Certificates of Title Nos. 17811 and 17812 covering Lot
Nos. 572 and 579, respectively, in favor of Lucia
Bautista since the latter allegedly neither laid claim of
ownership nor took possession of them, either
personally or through another. Petitioners claimed
instead that they were the ones who acquired prior
ownership and possession over the lots to the
exclusion of the whole world. Thus, they concluded
that the original certificates of title as well as Transfer

Certificates of Title Nos. T-31698 and T-31699 obtained


by private respondent Rodolfo Bautista
who
adjudicated unto himself said lots on September 20,
1975, as sole heir of Lucia Bautista were null and
void. On the theory that they already acquired the
subject lots by acquisitive prescription, petitioners
demanded their return but private respondents
refused to do so, hence, compelling them to file a
complaint for reconveyance with damages.
On the other hand, herein private respondents,
the spouses Rodolfo Bautista and Felisa Lopez,
likewise claimed absolute ownership of the lots
covered by TCT Nos. T-31698 and T-31699. They
alleged that while the records of the Bureau of Lands
showed that during the cadastral survey in Gattaran in
1932, Pedro Tolentino was a claimant over lands in
the cadastre,the same was only with respect to Lot
No. 1399 which was eventually titled under his name
as OCT No. 16110. It just happened that Lot No. 1399
was adjacent to Lot No. 572, a portion of which was
occupied by petitioners upon the tolerance of the
original registrant Lucia Bautista.
By way of affirmative
defense, private
respondents maintained that the action for
reconveyance filed by petitioners was tantamount to a
reopening of the cadastral proceedings or a collateral
attack on the decrees of registration which cannot be
done without violating the rule on conclusiveness of
the decree of registration. Moreover, they argued that
since the lots were already under the operation of the
Torrens System, acquisitive prescription would no
longer be possible.
QUESTION: Who should be the rightful owner of the
property?
Section 38 of the Land Registration Act provides that a decree of registration duly
issued is subject to the right of any person deprived of land or of any estate or interest
therein by decree of registration obtained by fraud to file in the competent Court of First

Instance (now the Regional Trial Court) a petition for review within one year after entry of the
decree, provided no innocent purchaser for value has acquired an interest. The same law
provides that upon the expiration of the term of one year, every decree or certificate of title x
x x shall be imprescriptible.
Under the law, an action for reconveyance of real property resulting from fraud
prescribes in four (4) years from the discovery of the fraud. Discovery of the fraud must be
deemed to have taken place when Lucia Bautista was issued OCT Nos. 178111 and 17812
because registration of real property is considered a constructive notice to all persons and
it shall be counted from the time of such registering, filing or entering. An action based on
implied or constructive trust prescribes in ten (10) years. This means that petitioners should
have enforced the trust within ten (10) years from the time of its creation or upon the alleged
fraudulent registration of the property. But as it is, petitioners failed to avail of any of the
aforementioned remedies within the prescribed periods. With no remedy in view, their claims
should forever be foreclosed.
The Court, however, subscribes to petitioners argument that the courts a quo incorrectly
held that private respondents are third persons to whom ownership of the properties had
been transmitted. But this error alone may not save the day for petitioners. They have, in a
sense, slept on whatever rights they claimed to have over the properties and by the time they
were roused, the law had stepped in to bar their claims. On the other hand, private
respondents inattention to the property from the time of Lucia Bautistas death until private
respondent Rodolfo Bautistas retirement from the military should not be construed as an
abandonment thereof. Private respondents have in their favor the law that protects holders
of title under the Torrens System of land registration. As this Court so eloquently
pronounced in 1915:
Once a title is registered, the owner may rest secure, without the necessity of waiting in the
portals of the court, or sitting in the `mirador de su casa, to avoid the possibility of losing his
land. BERNARDINO RAMOS and ROSALIA OLI,petitioners, vs. COURT OF APPEALS,
RODOLFO BAUTISTA and FELISA LOPEZ, respondents. THIRD DIVISION [G.R. No. 111027.
February 3, 1999]

SAMPLE QUESTIONS IN CIVIL LAW

Is an action for partition prescriptible? Can it be


barred by laches? Is there an exception to this?
An action for
partition by its very nature is imprescriptible and
cannot be barred by laches x x x. The only exception to the rule on
the imprescriptibility of an action for partition is provided in a
case where the co-ownership of the properties sought to be partitioned
had been properly repudiated by a co-owner at which instance the

remedy available to the aggrieved heirs lies not in action for


partition but for reconveyance which is subject to the rules on
extinctive
prescription

PROBLEM: What is the prescriptive period for


reconveyance of registered property based on
constructive trust?
ANSWER: Ten years.
An action for reconveyance based on an implied or constructive trust must
perforce prescribe in ten years and not otherwise. A long line of decisions
of this Court, and of very recent vintage at that, illustrates this rule.
Undoubtedly, it is now well-settled that an action for reconveyance based on
an implied or constructive trust prescribes in ten years from the issuance of
the Torrens title over the property. The only discordant note, it seems, is
Balbin v. Medalla, which states that the prescriptive period for a
reconveyance action is four years. However, this variance can be explained
by the erroneous reliance on Gerona v. de Guzman. But in Gerona, the fraud
was discovered on June 25, 1948, hence Section 43(3) of Act No. 190 was
applied, the New Civil Code not coming into effect until August 30, 1950 as
mentioned earlier. It must be stressed, at this juncture, that Article 1144 and
Article 1456, are new provisions. They have no counterparts in the old Civil
Code or in the old Code of Civil Procedure, the latter being then resorted to
as legal basis of the four-year prescriptive period for an action for
reconveyance of title of real property acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of
Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal
and equitable remedies against the parties to such fraud without prejudice,
however, to the rights of any innocent holder of the decree of registration
on the original petition or application, x x x.
This provision should be read in conjunction with Article 1456 of the Civil Code,
which provides:
Article 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for
the benefit of the person from whom the property comes.
The law thereby creates the obligation of the trustee to reconvey the property
and the title thereto in favor of the true owner. Correlating Section 53,
paragraph 3 of Presidential Decree No. 1529 and Article 1456 of the Civil
Code with Article 1144 (2) of the Civil Code, supra, the prescriptive period
for the reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of title. In
the present case, therefore, inasmuch as Civil Case No. 10235 was filed on
June 4, 1975, it was well-within the prescriptive period of ten (10) years
from the date of the issuance of Original Certificate of Title No. 0-6836 on
September 17, 1970.

WHAT ACTIONS PRESCRIBE WITHIN TEN YEARS?


Article 1144.
The following actions must be brought within ten years from
the time the right of action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment;
PURITA SALVATIERRA, ELENITA SALVATIERRA NUNEZ, ANSELMO
SALVATIERRA,
JR.,
EMELITA
SALVATIERRA,
and
ROMEL
SALVATIERRA, petitioners, vs. THE HONORABLE COURT OF APPEALS
and SPS. LINO LONGALONG and PACIENCIA MARIANO, respondents.
FIRST DIVISION[G.R. No. 107797. August 26, 1996]

tuatis v. escol (2009)


G.R. No. 175399

October 27, 2009

OPHELIA L. TUATIS, Petitioner,


vs.
SPOUSES ELISEO ESCOL and VISMINDA ESCOL; HONORABLE COURT OF APPEALS, 22nd
DIVISION, CAGAYAN DE ORO CITY; REGIONAL TRIAL COURT, BRANCH 11, SINDANGAN,
ZAMBOANGA DEL NORTE; and THE SHERIFF OF RTC, BRANCH 11, SINDANGAN,
ZAMBOANGA DEL NORTE, Respondents.
DECISION
CHICO-NAZARIO, J.:
This Petition for Certiorari and Mandamus1 under Rule 65 of the Rules of Court seeks the annulment
of the following Resolutions of the Court of Appeals in CA-G.R. SP No. 00737-MIN: (a)
Resolution2 dated 10 February 2006 dismissing the Petition for Certiorari, Prohibition and Mandamus
with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction
of herein petitioner Ophelia L. Tuatis (Tuatis); (b) Resolution 3 dated 25 July 2006 denying Tuatis
Motion for Reconsideration of the Resolution dated 10 February 2006; and (c) Resolution 4 dated 9
October 2006 denying Tuatis Motion for Leave to File a Second Motion for Reconsideration. The
instant Petition further prays for the annulment of the Order 5 dated 26 September 2005 of the
Regional Trial Court (RTC) of Sindangan, Zamboanga del Norte, Branch 11, in Civil Case No. S-618,
ordering the Sheriff to immediately serve the Writ of Execution issued on 7 March 2002.
The dispute arose from the following factual and procedural antecedents:
On 18 June 1996, Tuatis filed a Complaint for Specific Performance with Damages 6 against herein
respondent Visminda Escol (Visminda) before the RTC, docketed as Civil Case No. S-618.
Tuatis alleged in her Complaint that sometime in November 1989, Visminda, as seller, and Tuatis, as
buyer, entered into a Deed of Sale of a Part of a Registered Land by Installment 7 (Deed of Sale by
Installment). The subject matter of said Deed was a piece of real property situated in Poblacion,
Sindangan, Zamboanga del Norte and more particularly described as "[a] part of a registered land
being known as Lot No. 251, Pls-66 covered under OCT [Original Certificate of Title] No. P-5421; x x
x with an area of THREE HUNDRED (300) square meters, more or less" (subject property).
The significant portions of the Deed of Sale by Installment stated:

That for and in consideration of the sum of TEN THOUSAND PESOS (P10,000.00), Philippine
currency, the SELLER [Visminda8] hereby SELLS to the BUYER [Tuatis], the above-described parcel
of land under the following terms and conditions:
1. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of THREE
THOUSAND PESOS (P3,000.00), as downpayment;
2. That the BUYER [Tuatis] shall pay to the SELLER [Visminda] the amount of FOUR
THOUSAND PESOS (P4,000.00), on or before December 31, 1989;
3. That the remaining balance of THREE THOUSAND PESOS (P3,000.00) shall be paid by
the BUYER [Tuatis] to the SELLER [Visminda] on or before January 31, 1990;
4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three
months from the period stipulated above, then the BUYER [Tuatis] shall return the land
subject of this contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise
return all the amount paid by the BUYER [Tuatis]. 9
Tuatis claimed that of the entire purchase price of P10,000.00, she had paid Visminda P3,000.00 as
downpayment. The exact date of said payment was not, however, specified. Subsequently, Tuatis
paid P3,000.00 as installment on 19 December 1989, and another P1,000.00 installment on 17
February 1990. Tuatis averred that she paid Visminda the remaining P3,000.00 on 27 February 1990
in the presence of Eric Selda (Eric), a clerk in the law office of one Atty. Alanixon Selda. In support of
this averment, Tuatis attached to her Complaint a certification 10 executed by Eric on 27 May 1996.
In the meantime, Tuatis already took possession of the subject property and constructed a
residential building thereon.
In 1996, Tuatis requested Visminda to sign a prepared absolute deed of sale covering the subject
property, but the latter refused, contending that the purchase price had not yet been fully paid. The
parties tried to amicably settle the case before the Lupon Barangay, to no avail. 11
Tuatis contended that Visminda failed and refused to sign the absolute deed of sale without any valid
reason. Thus, Tuatis prayed that the RTC order Visminda to do all acts for the consummation of the
contract sale, sign the absolute deed of sale and pay damages, as well as attorneys fees.
In her Answer,12 Visminda countered that, except for the P3,000.00 downpayment and P1,000.00
installment paid by Tuatis on 19 December 1989 and 17 February 1990, 13 respectively, Tuatis made
no other payment to Visminda. Despite repeated verbal demands, Tuatis failed to comply with the
conditions that she and Visminda agreed upon in the Deed of Sale by Installment for the payment of
the balance of the purchase price for the subject property. Visminda asked that the RTC dismiss
Tuatis Complaint, or in the alternative, order Tuatis to return the subject property to Visminda after
Vismindas reimbursement of the P4,000.00 she had received from Tuatis.
After trial, the RTC rendered a Decision14 on 29 April 1999 in Civil Case No. S-618 in Vismindas
favor. The RTC concluded:
Under the facts and circumstances, the evidence for [Tuatis] has not established by satisfactory proof
as to (sic) her compliance with the terms and conditions setforth (sic) in [the Deed of Sale by
Installment] x x x.

xxxx
In contracts to sell, where ownership is retained by the seller and is not to pass until the full payment,
such payment, as we said, is a positive suspensive condition, the failure of which is not a breach,
casual or serious, but simply an event that prevented the obligation of the vendor to convey title from
acquiring binding force x x x.
xxxx
As the contract x x x is clear and unmistakable and the terms employed therein have not been shown
to belie or otherwise fail to express the true intention of the parties, and that the deed has not been
assailed on the ground of mutual mistake which would require its reformation, [the] same should be
given its full force and effect.
EVIDENCE (sic) at hand points of no full payment of the price, hence No. 4 of the stipulation
applies[,] which provides:
"That failure (sic) of the Buyer [Tuatis] to pay the remaining balance within the period of three months
from the period stipulated above, then the Buyer [Tuatis] shall return the land subject of this Contract
to the Seller [Visminda] and the Seller [Visminda] [shall] likewise return all the (sic) amount paid by
the Buyer [Tuatis]."
This stipulation is the law between the [Buyer] and [Seller], and should be complied with in good faith
x x x.
[Tuatis] constructed the building x x x in bad faith for, (sic) she had knowledge of the fact that the
Seller [Visminda] is still the absolute owner of the subject land. There was bad faith also on the part
of [Visminda] in accordance with the express provisions of Article 454 [of the New Civil Code] 15 since
[she] allowed [Tuatis] to construct the building x x x without any opposition on [her] part and so
occupy it. The rights of the parties must, therefore, be determined as if they both had acted in bad
faith. Their rights in such cases are governed by Article 448 of the New Civil Code of the
Philippines.16
The RTC decreed the dismissal of Tuatis Complaint for lack of merit, the return by Tuatis of physical
possession of the subject property to Visminda, and the return by Visminda of the P4,000.00 she
received from Tuatis.
Tuatis filed an appeal with the Court of Appeals, docketed as CA-G.R. CV No. 65037. In a
Resolution17 dated 29 August 2000, however, the appellate court dismissed the appeal for failure of
Tuatis to serve and file her appellants brief within the second extended period for the same. An
Entry of Judgment18 was made in CA-G.R. CV No. 65037 on 29 September 2000, as a result of
which, the appealed RTC Decision dated 29 April 1999 in Civil Case No. S-618 became final and
executory.
Visminda filed a Motion for Issuance of a Writ of Execution 19 before the RTC on 14 January 2002.
The RTC granted Vismindas Motion in a Resolution dated 21 February 2002, and issued the Writ of
Execution20 on 7 March 2002.
Tuatis thereafter filed before the RTC on 22 April 2002 a Motion to Exercise Right under Article 448
of the Civil Code of the Philippines.21 Tuatis moved that the RTC issue an order allowing her to buy

the subject property from Visminda. While Tuatis indeed had the obligation to pay the price of the
subject property, she opined that such should not be imposed if the value of the said property was
considerably more than the value of the building constructed thereon by Tuatis. Tuatis alleged that
the building she constructed was valued at P502,073.00,22 but the market value of the entire piece of
land measuring 4.0144 hectares, of which the subject property measuring 300 square meters formed
a part, was only about P27,000.00.23 Tuatis maintained that she then had the right to choose
between being indemnified for the value of her residential building or buying from Visminda the
parcel of land subject of the case. Tuatis stated that she was opting to exercise the second option.
On 20 December 2004, Visminda deposited the amount of P4,000.00 to the office of the Clerk of
Court of the RTC, pursuant to the Decision of the trial court dated 29 April 1999. 24
In the intervening time, the Writ of Execution issued on 7 March 2002 was yet to be served or
implemented by the Sheriff. This prompted Visminda to write a letter to the Office of the Court
Administrator (OCA) to complain about the said delay. The OCA endorsed the letter to the RTC.
On 26 September 2005, the RTC issued an Order25 directing the Sheriff to immediately serve or
enforce the Writ of Execution previously issued in Civil Case No. S-618, and to make a report and/or
return on the action taken thereon within a period of fifteen (15) days from receipt of the order.
On 10 October 2005, Tuatis filed before the RTC a Motion for Reconsideration 26 of the Order dated
26 September 2005, praying that the same be set aside in view of the pendency of her previous
Motion to Exercise Right under Article 448 of the Civil Code of the Philippines. However, before the
RTC could rule upon Tuatis Motion for Reconsideration, the Sheriff enforced the Writ of Execution on
27 October 2005 and submitted his Return to the RTC on 2 November 2005, reporting that the
subject writ was fully satisfied.
Tuatis immediately filed with the Court of Appeals a Petition for Certiorari, Prohibition
and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction,27 which was docketed as CA-G.R. No. 00737-MIN. Tuatis sought in said
Petition the annulment of the RTC Order dated 26 September 2005, as well as the issuance of an
order commanding the RTC and the Sheriff to desist from undertaking any further proceedings in
Civil Case No. S-618, and an order directing the RTC to determine the rights of the parties under
Article 448 of the Civil Code.
In a Resolution28 dated 10 February 2006, the Court of Appeals dismissed outright Tuatis Petition for
failure to completely pay the required docket fees, to attach a certified true or authenticated copy of
the assailed RTC Order dated 26 September 2005, and to indicate the place of issue of her
counsels IBP and PTR Official Receipts.
Tuatis filed a Motion for Reconsideration 29 of the Resolution dated 10 February 2006, but said Motion
was denied by the appellate court in another Resolution dated 25 July 2006 on the ground that
Tuatis had not taken any action to rectify the infirmities of her Petition.
Tuatis subsequently filed a Motion for Leave to File a Second Motion for Reconsideration, 30 but it was
similarly denied by the Court of Appeals in a Resolution dated 9 October 2006, as Section 2, Rule
5231 of the Rules of Court proscribes the filing of a second motion for reconsideration.

Hence, Tuatis filed the instant Petition, principally arguing that Article 448 of the Civil Code must be
applied to the situation between her and Visminda.
According to Tuatis, grave abuse of discretion, amounting to lack or excess of their jurisdiction, was
committed by the RTC in issuing the Order dated 26 September 2005, and by the Sheriff in enforcing
the Writ of Execution on 27 October 2005. Tuatis insists that the Motion for Reconsideration of the
Order dated 26 September 2005 that she filed on 10 October 2005 legally prevented the execution of
the RTC Decision dated 29 April 1999, since the rights of the parties to the case had yet to be
determined pursuant to Article 448 of the Civil Code.32 Tuatis reiterates that the building she
constructed is valued at P502,073.00, per assessment of the Municipal Assessor of Sindangan,
Zamboanga del Norte; while the entire piece of land, which includes the subject property, has a
market value of only about P27,000.00, based on Tax Declaration No. 12464 issued in the year
2000.33 Such being the case, Tuatis posits that she is entitled to buy the land at a price to be
determined by the Court or, alternatively, she is willing to sell her house to Visminda in the amount
of P502,073.00.
In addition, Tuatis attributes grave abuse of discretion amounting to lack or excess of jurisdiction on
the part of the Court of Appeals for dismissing outright her Petition for Certiorari, Prohibition
and Mandamus with Prayer for the Issuance of a Temporary Restraining Order and/or Writ of
Preliminary Injunction, and subsequently denying her Motion for Reconsideration and Motion for
Leave to File a Second Motion for Reconsideration.
The Court grants the present Petition but for reasons other than those proffered by Tuatis.
Procedural deficiencies of Tuatis Petition before the Court of Appeals
It is true that Tuatis committed several procedural faux pas that would have, ordinarily, warranted the
dismissal of her Petition in CA-G.R. No. 00737-MIN before the Court of Appeals.
In its Resolution dated 10 February 2006, the Court of Appeals dismissed outright the Petition
for Certiorari, Prohibition and Mandamus with Prayer for the Issuance of a Temporary Restraining
Order and/or Writ of Preliminary Injunction filed by Tuatis for failure to comply with the following
requirements for such a petition: (a) to completely pay the required docket fees, (b) to attach a
certified true or authenticated copy of the assailed RTC Order dated 26 September 2005, and (c) to
indicate the place of issue of her counsels IBP and PTR Official Receipts.
Section 3, Rule 46 of the Rules of Court lays down the requirements for original cases filed before
the Court of Appeals and the effect of non-compliance therewith, relevant portions of which are
reproduced below:
SEC. 3. Contents and filing of petition; effect of non-compliance with requirements. x x x.
xxxx
It shall be filed in seven (7) clearly legible copies together with proof of service thereof on the
respondent with the original copy intended for the court indicated as such by the petitioner, and shall
be accompanied by a clearly legible duplicate original or certified true copy of the judgment,
order, resolution, or ruling subject thereof, such material portions of the record as are referred to
therein, and other documents relevant or pertinent thereto. The certification shall be accomplished
by the proper clerk of court or by his duly authorized representative, or by the proper officer of the

court, tribunal, agency or office involved or by his duly authorized representative. The other requisite
number of copies of the petition shall be accompanied by clearly legible plain copies of all
documents attached to the original.
xxxx
The petitioner shall pay the corresponding docket and other lawful fees to the clerk of court
and deposit the amount of P500.00 for costs at the time of the filing of the petition.
The failure of the petitioner to comply with any of the foregoing requirements shall be sufficient
ground for the dismissal of the petition. (Emphases ours.)
The sound reason behind the policy of the Court in requiring the attachment to the petition
for certiorari, prohibition,mandamus, or quo warranto of a clearly legible duplicate original or certified
true copy of the assailed judgment or order, is to ensure that the said copy submitted for review is a
faithful reproduction of the original, so that the reviewing court would have a definitive basis in its
determination of whether the court, body, or tribunal which rendered the assailed judgment or order
committed grave abuse of discretion.34 Also, the Court has consistently held that payment of docket
fees within the prescribed period is jurisdictional and is necessary for the perfection of an appeal. 35
Indeed, the last paragraph of Section 3, Rule 46 states that non-compliance with any of the
requirements stated therein shall constitute sufficient ground for the dismissal of the petition.
However, the Court, in several cases,36 also declared that said provision must not be taken to mean
that the petition shall be automatically dismissed in every instance of non-compliance. The power
conferred upon the Court of Appeals to dismiss an appeal, or even an original action, as in this case,
is discretionary and not merely ministerial. With that affirmation comes the caution that such
discretion must be a sound one, to be exercised in accordance with the tenets of justice and fair play,
having in mind the circumstances obtaining in each case. 37
It must be borne in mind that the rules of procedure are intended to promote, rather than frustrate,
the ends of justice, and while the swift unclogging of court dockets is a laudable objective, it,
nevertheless, must not be met at the expense of substantial justice. Technical and procedural rules
are intended to help secure, not suppress, the cause of justice; and a deviation from the rigid
enforcement of the rules may be allowed to attain that prime objective for, after all, the dispensation
of justice is the core reason for the existence of courts. 38
Hence, technicalities must be avoided. The law abhors technicalities that impede the cause of
justice. The court's primary duty is to render or dispense justice. A litigation is not a game of
technicalities. Lawsuits, unlike duels, are not to be won by a rapier's thrust. Technicality, when it
deserts its proper office as an aid to justice and becomes its great hindrance and chief enemy,
deserves scant consideration from courts. Litigations must be decided on their merits and not on
technicality. Every party-litigant must be afforded the amplest opportunity for the proper and just
determination of his cause, free from the unacceptable plea of technicalities. Thus, dismissal of
appeals purely on technical grounds is frowned upon where the policy of the court is to encourage
hearings of appeals on their merits and the rules of procedure ought not to be applied in a very rigid,
technical sense; rules of procedure are used only to help secure, not override, substantial justice. It
is a far better and more prudent course of action for the court to excuse a technical lapse and afford
the parties a review of the case on appeal to attain the ends of justice rather than dispose of the

case on technicality and cause a grave injustice to the parties, giving a false impression of speedy
disposal of cases while actually resulting in more delay, if not a miscarriage, of justice. 39
In this case, the Court finds that the Court of Appeals committed grave abuse of discretion in
focusing on the procedural deficiencies of Tuatis Petition and completely turning a blind eye to the
merits of the same. The peculiar circumstances of the present case and the interest of substantial
justice justify the setting aside, pro hac vice, of the procedural defects of Tuatis Petition in CA-G.R.
No. 00737-MIN.
Perusal of the RTC Decision dated 29 April 1999
The RTC, in the body of its Decision dated 29 April 1999 in Civil Case No. S-618, found that Tuatis
breached the conditions stipulated in the Deed of Sale by Installment between her and Visminda; but
since both Tuatis and Visminda were guilty of bad faith, "[t]heir rights in such cases are governed by
Article 448 of the New Civil Code of the Philippines." 40
Article 448 of the Civil Code, referred to by the RTC, provides:
ART. 448. The owner of the land on which anything has been built, sown or planted in good faith,
shall have the right to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or trees. In such
case, he shall pay reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof. (Emphases supplied.)
According to the aforequoted provision, the landowner can choose between appropriating the
building by paying the proper indemnity for the same, as provided for in Articles 546 41 and 54842 of
the Civil Code; or obliging the builder to pay the price of the land, unless its value is considerably
more than that of the structures, in which case the builder in good faith shall pay reasonable rent. 43
The Court notes, however, that the RTC, in the dispositive portion of its 29 April 1999 Decision,
which exactly reads
WHEREFORE, premises studiedly considered, judgment is hereby rendered as follows:
(1) DISMISSING the Complaint for lack of merit;
(2) ORDERING [Tuatis] to return the physical possession of the land in question to
[Visminda]; and,
(3) ORDERING [Visminda] to return the P4,000.00 she received as evidenced by Exhibit "B"
and Exhibit "C" 44 to [Tuatis].45
utterly failed to make an adjudication on the rights of Tuatis and Visminda under Article 448 of the
Civil Code. It would seem that the decretal part of said RTC judgment was limited to implementing
the following paragraph in the Deed of Sale by Installment:
4. That failure of the BUYER [Tuatis] to pay the remaining balance within the period of three months
from the period stipulated above, then the BUYER [Tuatis] shall return the land subject of this

contract to the SELLER [Visminda] and the SELLER [Visminda] [shall] likewise return all the amount
paid by the BUYER [Tuatis].46
without considering the effects of Article 448 of the Civil Code.
It was this apparent incompleteness of the fallo of the RTC Decision dated 29 April 1999 that resulted
in the present controversy, and that this Court is compelled to address for a just and complete
settlement of the rights of the parties herein.
Finality of the RTC Decision dated 19 April 1999
The Court has not lost sight of the fact that the RTC Decision dated 29 April 1999 in Civil Case No.
S-618 already became final and executory in view of the dismissal by the appellate court of Tuatis
appeal in CA-G.R. CV No. 650307 and the entry of judgment made on 29 September 2000.
Nothing is more settled in law than that when a final judgment is executory, it thereby becomes
immutable and unalterable. The judgment may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or law, and
regardless of whether the modification is attempted to be made by the court rendering it or by the
highest Court of the land. The doctrine is founded on considerations of public policy and sound
practice that, at the risk of occasional errors, judgments must become final at some definite point in
time. The only recognized exceptions are the corrections of clerical errors or the making of the socalled nunc pro tunc entries, in which case there is no prejudice to any party, and, of course, where
the judgment is void.47
Equally well-settled is the rule that the operative part in every decision is the dispositive portion or
the fallo, and where there is conflict between the fallo and the body of the decision, the fallo controls.
This rule rests on the theory that thefallo is the final order, while the opinion in the body is merely a
statement, ordering nothing.48
Jurisprudence also provides, however, that where there is an ambiguity caused by an omission or a
mistake in the dispositive portion of the decision, the Court may clarify such an ambiguity by an
amendment even after the judgment has become final. In doing so, the Court may resort to the
pleadings filed by the parties and the findings of fact and the conclusions of law expressed in the text
or body of the decision.49 Therefore, even after the RTC Decision dated 29 April 1999 had already
become final and executory, this Court cannot be precluded from making the necessary amendment
thereof, so that the fallo will conform to the body of the said decision.
If the Court does not act upon the instant Petition, Tuatis loses ownership over the building she
constructed, and in which she has been residing, allegedly worth P502,073.00, without any
recompense therefor whatsoever; while Visminda, by returning Tuatis previous payments
totaling P4,000.00, not just recovers the subject property, but gains the entire building without paying
indemnity for the same. Hence, the decision of the Court to give due course to the Petition at bar,
despite the finality of the RTC Decision dated 29 April 1999, should not be viewed as a denigration of
the doctrine of immutability of final judgments, but a recognition of the equally sacrosanct doctrine
that a person should not be allowed to profit or enrich himself inequitably at another's expense.
Furthermore, the Court emphasizes that it is not even changing or reversing any of the findings of
fact and law of the RTC in its Decision dated 29 April 1999. This Court is still bound by said RTC

judgment insofar as it found that Tuatis failed to fully pay for the price of the subject property; but
since both Tuatis and Visminda were in bad faith, Article 448 of the Civil Code would govern their
rights. The Court herein is simply clarifying or completing the obviously deficient decretal portion of
the decision, so that said portion could effectively order the implementation of the actual ruling of the
RTC, as clearly laid down in the rationale of the same decision.
Applying Article 448 and other related provisions of the Civil Code
Taking into consideration the provisions of the Deed of Sale by Installment and Article 448 of the
Civil Code, Visminda has the following options:
Under the first option, Visminda may appropriate for herself the building on the subject property after
indemnifying Tuatis for the necessary50 and useful expenses51 the latter incurred for said building, as
provided in Article 546 of the Civil Code.
It is worthy to mention that in Pecson v. Court of Appeals, 52 the Court pronounced that the amount to
be refunded to the builder under Article 546 of the Civil Code should be the current market value of
the improvement, thus:
The objective of Article 546 of the Civil Code is to administer justice between the parties involved. In
this regard, this Court had long ago stated in Rivera vs. Roman Catholic Archbishop of Manila [40
Phil. 717 (1920)] that the said provision was formulated in trying to adjust the rights of the owner and
possessor in good faith of a piece of land, to administer complete justice to both of them in such a
way as neither one nor the other may enrich himself of that which does not belong to him. Guided by
this precept, it is therefore the current market value of the improvements which should be made the
basis of reimbursement. A contrary ruling would unjustly enrich the private respondents who would
otherwise be allowed to acquire a highly valued income-yielding four-unit apartment building for a
measly amount. Consequently, the parties should therefore be allowed to adduce evidence on the
present market value of the apartment building upon which the trial court should base its finding as
to the amount of reimbursement to be paid by the landowner. (Emphasis ours.)
Until Visminda appropriately indemnifies Tuatis for the building constructed by the latter, Tuatis may
retain possession of the building and the subject property.
Under the second option, Visminda may choose not to appropriate the building and, instead, oblige
Tuatis to pay the present or current fair value of the land. 53 The P10,000.00 price of the subject
property, as stated in the Deed of Sale on Installment executed in November 1989, shall no longer
apply, since Visminda will be obliging Tuatis to pay for the price of the land in the exercise of
Vismindas rights under Article 448 of the Civil Code, and not under the said Deed. Tuatis obligation
will then be statutory, and not contractual, arising only when Visminda has chosen her option under
Article 448 of the Civil Code.1avvphi1
Still under the second option, if the present or current value of the land, the subject property herein,
turns out to be considerably more than that of the building built thereon, Tuatis cannot be obliged to
pay for the subject property, but she must pay Visminda reasonable rent for the same. Visminda and
Tuatis must agree on the terms of the lease; otherwise, the court will fix the terms.
Necessarily, the RTC should conduct additional proceedings before ordering the execution of the
judgment in Civil Case No. S-618. Initially, the RTC should determine which of the aforementioned

options Visminda will choose. Subsequently, the RTC should ascertain: (a) under the first option, the
amount of indemnification Visminda must pay Tuatis; or (b) under the second option, the value of the
subject property vis--vis that of the building, and depending thereon, the price of, or the reasonable
rent for, the subject property, which Tuatis must pay Visminda.
The Court highlights that the options under Article 448 are available to Visminda, as the owner of the
subject property. There is no basis for Tuatis demand that, since the value of the building she
constructed is considerably higher than the subject property, she may choose between buying the
subject property from Visminda and selling the building to Visminda for P502,073.00. Again, the
choice of options is for Visminda, not Tuatis, to make. And, depending on Vismindas choice, Tuatis
rights as a builder under Article 448 are limited to the following: (a) under the first option, a right to
retain the building and subject property until Visminda pays proper indemnity; and (b) under the
second option, a right not to be obliged to pay for the price of the subject property, if it is considerably
higher than the value of the building, in which case, she can only be obliged to pay reasonable rent
for the same.
The rule that the choice under Article 448 of the Civil Code belongs to the owner of the land is in
accord with the principle of accession, i.e., that the accessory follows the principal and not the other
way around. Even as the option lies with the landowner, the grant to him, nevertheless, is
preclusive.54 The landowner cannot refuse to exercise either option and compel instead the owner of
the building to remove it from the land.55
The raison detre for this provision has been enunciated thus: Where the builder, planter or sower
has acted in good faith, a conflict of rights arises between the owners, and it becomes necessary to
protect the owner of the improvements without causing injustice to the owner of the land. In view of
the impracticability of creating a state of forced co-ownership, the law has provided a just solution by
giving the owner of the land the option to acquire the improvements after payment of the proper
indemnity, or to oblige the builder or planter to pay for the land and the sower the proper rent. He
cannot refuse to exercise either option. It is the owner of the land who is authorized to exercise the
option, because his right is older, and because, by the principle of accession, he is entitled to the
ownership of the accessory thing. 56
Vismindas Motion for Issuance of Writ of Execution cannot be deemed as an expression of her
choice to recover possession of the subject property under the first option, since the options under
Article 448 of the Civil Code and their respective consequences were also not clearly presented to
her by the 19 April 1999 Decision of the RTC. She must then be given the opportunity to make a
choice between the options available to her after being duly informed herein of her rights and
obligations under both.
As a final note, the directives given by the Court to the trial court in Depra v. Dumlao 57 may prove
useful as guidelines to the RTC herein in ensuring that the additional proceedings for the final
settlement of the rights of the parties under Article 448 of the Civil Code shall be conducted as
thoroughly and promptly as possible.
WHEREFORE, premises considered, the Court:
(1) GRANTS the instant Petition;

(2) ANNULS AND SETS ASIDE (a) the Resolution dated 21 February 2002 of the Regional
Trial Court of Sindangan, Zamboanga del Norte, Branch 11, ordering the issuance of a writ
for the execution of the Decision dated 19 April 1999 of the said trial court in Civil Case No.
S-618; (b) the Writ of Execution issued on 7 March 2002; and (c) the actions undertaken by
the Sheriff to enforce the said Writ of Execution;
(3) DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch 11, to
conduct further proceedings to determine with deliberate dispatch: (a) the facts essential to
the proper application of Article 448 of the Civil Code, and (b) respondent Visminda Escols
choice of option under the same provision; and
(4) Further DIRECTS the Regional Trial Court of Sindangan, Zamboanga del Norte, Branch
11, to undertake the implementation of respondent Visminda Escols choice of option under
Article 448 of the Civil Code, as soon as possible.
No costs.
SO ORDERED.

MIDTERM EXAMINATION IN CIVIL LAW REVIEW

1. A Chinese citizen, who is domiciled in Argentina, is on his way to Manila. The boat
where he is riding, is docking for five days in Japan. In Japan can he make a will? IF so,
what countrys formalities should he observe?
2. Tony made a will making Antonia his heir. Tony later learned that Antonia was dead,
so he revokes his first will and made another one instituting Berto as heir. If A turns out
to be still alive, who inherits?
3. On September 24, 1977, petitioner donated unto respondent a parcel of land at
Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its
name under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which
also bears the acceptance of the donee recites the considerations therefor and the
conditions thereto attached, to wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee
shall not use the land except for the purpose as provided above in paragraph 1
hereof, nor sell or dispose the land for any reason whatsoever, nor convey any portion
of the same except in lease for commercial use as provided above in paragraph 3
hereof, otherwise the said land with all real improvements thereon shall revert in trust
to the Donor for prompt disposition in favor of some other charitable organization that
Donor may deem best suited to the care of the aged.xxx

Thereafter, or sometime in 1980, the donee, for purposes of generating funds to


build the perimeter fence on the donated property and the construction of a nucleus
building for the aged and the infirm, leased a portion of the donated property to one
Martin Gomez who planted said portion with sugar cane. There is no dispute that the
lease agreement was entered into by the donee without the prior written consent of the
donor, as required in the deed of donation. The lease to Gomez ended in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and
the donee ordered to return and/or reconvey the property donated reason of said
violation of the attached condition? What law shall govern the said matter? Explain.

4. According to purpose or cause, state the four (4) kinds of donation and explain each.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,


Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private
respondents are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd
floor of Syvel's Department Store, Makati City. CRISELDA was signing her credit card
slip at the payment and verification counter when she felt a sudden gust of wind
and heard a loud thud. She looked behind her. She then beheld her daughter
ZHIENETH on the floor, her young body pinned by the bulk of the store's giftwrapping counter/structure. ZHIENETH was crying and screaming for help.
Although shocked, CRISELDA was quick to ask the assistance of the people around
in lifting the counter and retrieving ZHIENETH from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth?
(b) What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a
parcel of land containing 888 square meters, with the buildings and improvements
thereon, situated in the poblacion of Romblon. He subdivided the lot into three and
then sold each portion to different persons. One portion was purchased by Guillermo
Tengtio who subsequently sold it to Vicente Uy Veza. Another portion, with the
house of strong materials thereon, was sold in 1927 to Tan Yanon, respondent
herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with thecamarin and small building thereon, after
passing through several hands, was finally acquired by Juan Gargantos, petitioner
herein.
On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the oldcamarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his house,

unless such building is erected at a distance of not less than three meters from the
boundary line between the lots of plaintiff and defendant, and to enjoin the members of
the Municipal Council of Romblon from issuing the corresponding building permit to
defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7.
(a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already
repaired, unknown to Mr. X, the latter sold the piano to Mr. Z, who paid P30k. Mr. Y left
the place and took away the said money. What kind of possession has Mr. Y, and what
criminal case shall he be made liable of?
(b) Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua
so that the same can be deposited in his account. Miss Chua however took the money
and misappropriated the same. What kind of possession has Miss Chua, and what crime
shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana


Vda. De Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna
(represented by the then Municipal Mayor Crisostomo P. Manalang) entered into a
lease contract whereby the Municipality allowed the use and enjoyment of property
comprising of a lot and a store located at the corner of Coronado and E. Fernandez
Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents mother for a
period of twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a
firewall on her rented property which must be at least as high as the store; and in
case of modification of the public market, she or her heir/s would be given
preferential rights.
Visitacion took over the store when her mother died sometime in 1984.From
then on up to January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
Visitacions request for inspection on 15 May 1986, District Engineer Marcelino B.
Gorospe (Engineer Gorospe) of the then Ministry of Public Works and
Highways,Regional Office No. IV-A, found that the store of Visitacion remained intact
and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October
1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador
directing her to demolish her store within five (5) days from notice. Attached to the
letter were copies of Sangguniang Bayan Resolution No. 156 dated 30 August 1993
and a Memorandum issued by Asst. Provincial Prosecutor Marianito Sasondoncillo of
Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a
letter to Visitacion ordering her to vacate the portion of the public market she was

occupying within 15 days from her receipt of the letter; else, a court action will be
filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued
Resolution No. 183 authorizing Mayor Comendador to demolish the store being
occupied by Visitacion using legal means
On 15 October 1993, Mayor Comendador relying on the strength of
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the demolition of the
store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer,
estimated the cost of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor
Comendador liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of
Visitacion as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various
parcels of real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in
Mandaue City, Cebu, which lot allegedly belonged originally to Claudio Ermac. Upon the
latter's death, the said Lot No. 666 was inherited and partitioned by his children,
namely, Esteban, Pedro and Balbina. Siblings Pedro and Balbina requested their brother
Esteban to have their title over the property registered. Esteban, however, was unable
to do so, and the task of registration fell to his son, Clemente. Clemente applied
for registration of the title, but did so in his own name, and did not include his father's
brother and sister, nor his cousins. Despite having registered the lot in his name,
Clemente did not disturb or claim ownership over those portions occupied by his uncle,
aunt and cousins even up to the time of his death. Among the occupants of Lot No. 666
are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot
No. 666 now occupied by them by right of succession as direct descendants of the
original owner, Claudio Ermac. [Respondents] Luisa Del Castillo and Estaneslao Dionson
allegedly derived their title by purchase from the children of Claudio Ermac.
[Respondent] Vicente Dionson, on the other hand, bought his land from the heirs of
Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived their
ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and
possession had been peaceful and undisturbed, until recently when the [petitioners]heirs of Clemente Ermac filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the
[respondents'] ownership over their respective parcels of land, prompting them to file
this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the
[respondents], and claimed that the [respondents] have no cause of action against
them. It is essentially claimed that it was Clemente Ermac and not his grandfather
Claudio Ermac who is the original claimant of dominion over Lot No. 666. During his
lifetime, Clemente Ermac was in actual, peaceful, adverse and continuous possession in
the concept of an owner of the entire Lot No. 666. With the help of his children, he
cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death,

[petitioners] inherited Lot No. 666, and they constructed their residential houses
thereon. [Petitioners] claim that [respondents'] recent occupation of some portions of
Lot No. 666 was only tolerated by Clemente Ermac and the [petitioners]. [Petitioners] in
fact had never surrendered ownership or possession of the property to the
[respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original
owner of the lot in question was Claudio Ermac, and therefore, the property was
inherited upon his death by his children Esteban, Balbina and Pedro. All the heirs of
Claudio Ermac, therefore, should share in the ownership over Lot No. 666, by right of
succession. The ruling [was] supported by the admissions of Irene[a] Seno, witness for
the [petitioners] and daughter of Clemente Ermac, establishing facts which show that
[petitioners] and their predecessor Clemente did not own the entire property, but that
the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot. Since the
entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of
the [respondents], are being held in trust by the [petitioners] in favor of their actual
occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was
used by the court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac
[and] Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat
the title over the property in the names of petitioner's predecessors-in-interest
[Spouses] Clemente Ermac and Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of
Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746


Epifanio delos Santos Avenue (EDSA), Quezon City with an area of 375 square
meters and covered by Transfer Certificate of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904,
entitled "An Ordinance Requiring the Construction of Arcades, for Commercial
Buildings to be Constructed in Zones Designated as Business Zones in the Zoning
Plan of Quezon City, and Providing Penalties in Violation Thereof."
An arcade is defined as any portion of a building above the first floor
projecting over the sidewalk beyond the first storey wall used as protection for
pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an
arcade with a width of 4.50 meters and height of 5.00 meters along EDSA, from the
north side of Santolan Road to one lot after Liberty Avenue, and from one lot before
Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?

(b) Gancayco did not construct an arcade; will you consider his building a
nuisance for not complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square meters.
The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a
10,000-square-meter portion of their property in favor of the Ministry of Education and
Culture (now the Department of Education, Culture and Sports [DECS]).
The deed provided, among others: xxx That for and in consideration of the
benefits that may be derived from the use of the above described property which is
intended for school purposes, the said DONORS do by these presents TRANSFER AND
CONVEY by way of DONATION unto the DONEE, its successors and assigns, the above
property to become effective upon the signing of this document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT)
No. T-143337 covering the portion identified as Lot 8858-A was issued in the name of
the Ministry of Education and Culture, represented by Laurencio C. Ramel, the
Superintendent of Schools of Isabela. However, the property was not used for school
purposes and remained idle. Sometime in 1988, the DECS, through its Secretary, started
construction of the Rizal National High School building on a parcel of land it acquired
from Alejandro Feliciano. The school site was about 2 kilometers away from the land
donated by the spouses Dulay. In a letter to the DECS Secretary dated August 19, 1994,
the spouses Dulay requested that the property be returned to them considering that the
land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition
imposed in the Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of Donation
barred already by prescription and laches?

1.When one exercises a right recognized by law, knowing that he thereby


causes an injustice to another, the latter is entitled to recover damages. This
is known as the principle of
A. res ipsa loquitur.
B. damnum absque injuria.
C. vicarious liability.
D. abuse of rights.
2.The liability of the partners, including industrial partners for partnership
contracts entered into in its name and for its account, when all partnership
assets have been exhausted is
A. Pro-rata.
B. Joint.
C. Solidary.
D. Voluntary.
3. When can a missing person who left someone to administer his property be
declared an absentee by the court? When he has been missing for
A. 2 years from the receipt of the last news about him.
B. 7 years from the receipt of the last news about him.
C. 10 years from the receipt of the last news about him.

D. 5 years from the receipt of the last news about him.


4.An agent, authorized by a special power of attorney to sell a land belonging
to the principal succeeded in selling the same to a buyer according to the
instructions given the agent. The agent executed the deed of absolute sale on
behalf of his principal two days after the principal died, an event that neither
the agent nor the buyer knew at the time of the sale. What is the standing of
the sale?
A.Voidable.
B. Valid.
C. Void.
D. Unenforceable.
5.Spouses A and B leased a piece of land belonging to B's parents for 25
years. The spouses built their house on it worth P300,000.00. Subsequently,
in a case that C filed against A and B, the court found the latter liable to C for
P200,000.00. When the sheriff was attaching their house for the satisfaction
of the judgment, A and B claimed that it was exempt from execution, being a
family home. Is this claim correct?
A. Yes, because while Bs parents own the land, they agreed to have their
daughter build her family home on it.
B. No, because there is no judicial declaration that it is a family home.
C. No, since the land does not belong to A and B, it cannot qualify as a family
home.
D. Yes, because the A and Bs family actually lives in that house.
6.Contracts take effect only between the parties or their assigns and heirs,
except where the rights and obligations arising from the contract are not
transmissible by their nature, by stipulation, or by provision of law. In the
latter
case, the assigns or the heirs are not bound by the contracts. This is known as
the principle of
A. Relativity of contracts.
B. Freedom to stipulate.
C. Mutuality of contracts.
D. Obligatory force of contracts
7.X and Y, both Filipinos, were married and resided in Spain although they
intend to return to the Philippines at some future time. They have not
executed any marriage settlements. What law governs their property
relations?
A. They may choose between Spanish law and Philippine law.
B. Philippine law since they are both Filipinos.
C. No regime of property relations will apply to them.
D. Spanish law since they live in Spain.
8.Virgilio owned a bare and simple swimming pool in his garden. MB, a 7-year
old child, surreptitiously entered the garden and merrily romped around the
ledges of the pool. He accidentally tripped, fell into the pool, and drowned.
MBs parents sued Virgilio for damages arising from their childs death,
premised on the principle of attractive nuisance. Is Virgilio liable for the
death of MB?
A. No, the child was 7 years old and knew the dangers that the pool offered.
B. Yes, being an attractive nuisance, Virgilio had the duty to prevent children
from coming near it.
C. No, since the pool was bare and had no enticing or alluring gadgets, floats,
or devices in it that would attract a 7-year old child.
D. Yes, since Virgilio did not cover the swimming pool while not in use to
prevent children from falling into it.
9.X and Y, Filipinos, got married in Los Angeles, USA, using a marriage license
issued by the Philippine consul in Los Angeles, acting as Civil Registrar. X and
Y did not know that they were first cousins because their mothers, who were
sisters, were separated when they were quite young. Since X did not want to
continue with the relation when he heard of it, he left Y, came to the
Philippines and married Z. Can X be held liable for bigamy?

A. No since Xs marriage to Y is void ab initio or did not exist.


B. No since X acted in good faith, conscious that public policy did not approve
of marriage between first cousins.
C. Yes since he married Z without first securing a judicial declaration of nullity
of his marriage to Y.
D. Yes since his first marriage to Y in Los Angeles is valid.
10.An Australian living in the Philippines acquired shares of stock worth P10
million in food manufacturing companies. He died in Manila, leaving a legal
wife and a child in Australia and a live-in partner with whom he had two
children in Manila. He also left a will, done according to Philippine laws,
leaving all his
properties to his live-in partner and their children. What law will govern the
validity of the disposition in the will?
A. Australia law since his legal wife and legitimate child are Australians and
domiciled in Australia.
B. Australian law since the intrinsic validity of the provisions of a will is
governed by the decedents national law.
C. Philippine law since the decedent died in Manila and he executed his will
according to such law.
D. Philippine law since the decedents properties are in the Philippines.
11.X bought a land from Y, paying him cash. Since they were friends, they did
not execute any document of sale. After 7 years, the heirs of X asked Y to
execute a deed of absolute sale to formalize the verbal sale to their father.
Unwilling to do so, Xs heirs filed an action for specific performance against Y.
Will their action prosper?
A. No, after more than 6 years, the action to enforce the verbal agreement
has already elapsed.
B. No, since the sale cannot under the Statute of Frauds be enforced.
C. Yes, since X bought the land and paid Y for it.
D. Yes, after full payment, the action became imprescriptible.
12.A warranty inherent in a contract of sale, whether or not mentioned in it, is
known as the
A. warranty on quality.
B. warranty against hidden defects.
C. warranty against eviction.
D. warranty in merchantability.
13.X, who was abroad, phoned his brother, Y, authorizing him to sell Xs parcel
of land in Pasay. X sent the title to Y by courier service. Acting for his brother,
Y executed a notarized deed of absolute sale of the land to Z after receiving
payment. What is the status of the sale?
A. Valid, since a notarized deed of absolute sale covered the transaction and
full payment was made.
B. Void, since X should have authorized agent Y in writing to sell the land.
C. Valid, since Y was truly his brother Xs agent and entrusted with the title
needed to effect the sale.
D. Valid, since the buyer could file an action to compel X to execute a deed of
sale.
14.In a true pacto de retro sale, the title and ownership of the property sold
are immediately vested in the vendee a retro subject only to the resolutory
condition of repurchase by the vendor a retro within the stipulated period.
This is known as
A. equitable mortgage.
B. conventional redemption.
C. legal redemption.
D. equity of redemption.
15.Anne owed Bessy P1 million due on October 1, 2011 but failed to pay her
on due date. Bessy sent a demand letter to Anne giving her 5 days from
receipt within which to pay. Two days after receipt of the letter, Anne

personally offered to pay Bessy in manager's check but the latter refused to
accept the same. The 5 days lapsed. May Annes obligation be considered
extinguished?
A. Yes, since Bessys refusal of the managers check, which is presumed
funded, amounts to a satisfaction of the obligation.
B. No, since tender of payment even in cash, if refused, will not discharge the
obligation without proper consignation in court.
C. Yes, since Anne tendered payment of the full amount due.
D. No, since a managers check is not considered legal tender in the
Philippines.
16.The residents of a subdivision have been using an open strip of land as
passage to the highway for over 30 years. The owner of that land decided,
however, to close it in preparation for building his house on it. The residents
protested, claiming that they became owners of the land through acquisitive
prescription, having been in possession of the same in the concept of
owners,publicly, peacefully, and continuously for more than 30 years. Is this
claim correct?
A. No, the residents have not been in continuous possession of the land since
they merely passed through it in going to the highway.
B. No, the owner did not abandon his right to the property; he merely
tolerated his neighbors use of it for passage.
C. Yes, residents of the subdivision have become owners by acquisitive
prescription.
D. Yes, community ownership by prescription prevails over private claims.
17.Janice and Jennifer are sisters. Janice sued Jennifer and Laura, Jennifers
business partner for recovery of property with damages. The complaint did
not allege that Janice exerted earnest efforts to come to a compromise with
the defendants and that such efforts failed. The judge dismissed the
complaint outright for failure to comply with a condition precedent. Is the
dismissal in order?
A. No, since Laura is a stranger to the sisters, Janice has no moral obligation
to settle with her.
B. Yes, since court should promote amicable settlement among relatives.
C. Yes, since members of the same family, as parties to the suit, are required
to exert earnest efforts to settle their disputes before coming to court.
D. No, the family council, which would ordinarily mediate the dispute, has
been eliminated under the Family Code.
18.Because of Xs gross negligence, Y suffered injuries that resulted in the
abortion of the foetus she carried. Y sued X for, among other damages, P1
million for the death of a family member. Is Y entitled to indemnity for the
death
of the foetus she carried?
A. Yes, since the foetus is already regarded as a child from conception,
though unborn.
B. No, since Xs would not have known that the accident would result in Ys
abortion.
C. No, since birth determines personality, the accident did not result in the
death of a person.
D. Yes, since the mother believed in her heart that she lost a child.
19. Which phrase most accurately completes the statement - If at the time the
contract of sale is perfected, the thing which is the object of the contract has
been entirely lost:
a) the buyer bears the risk of loss.
b) the contract shall be without any effect.
c) the seller bears the risk of loss.
d) the buyer may withdraw from the contract
20. Any disposition made upon the condition that the heir shall make some
provision in his will in favor of the testator or of any other person shall be
void. Here, both the condition and the disposition are void. What principle is
being referred to?

a) reserva troncal
b) preterition
c) fideicommissary
d) disposicion captatoria
21.It is the omission in the testator's will of one; some or all of the
compulsory heirs in direct line, whether living at the time of execution of the
will or born after the death of the testator. What principle isbeing referred to?
a) reserva troncal
b) preterition
c) fideicommissary
d) disposicion captatoria
22.An obligation which is based on equity and natural law is known as:
a) pure
b) quasi-contract
c) civil
d) natural
23.The borrower in a contract of loan or mutuum must pay interest to the
lender.
a) If there is an agreement in writing to that effect.
b) As a matter of course.
c) If the amount borrowed is very large.
d) If the lender so demands at the maturity date
24.The following are solemn contracts (Contracts which must appear in
writing), except:
a) Donations of real estate or of movables if the value exceeds P5,000.00.
b) Stipulation to pay interest in loans.
c) Sale of land through an agent (authority must be in writing)
d) Construction contract of a building.
25.It is a principle which holds that contracts must be binding to both parties
and its validity and effectivity can never be left to the will of one of the
parties.
a) Obligatory force of contracts
b) Mutuality of contracts
c) Autonomy of contracts
d) Relativity of contracts

exam

1. State if the probate court has the power to determine :(a) the due execution of a
holographic will (b) whether the testator is of sound mind (c) whether the last will is freely
executed (d) whether the solemnities and formalities are observed (e) whether the property in
question is part of the estate of the decedent or not.

ANSWER: Petitioner should realize that the allowance of her husbands will is conclusive only as to
its due execution.[11] The authority of the probate court is limited to ascertaining whether the testator,
being of sound mind, freely executed the will in accordance with the formalities prescribed by law.

Thus, petitioners claim of title to the properties forming part of her husbands estate should be
settled in an ordinary action before the regular courts.
[12]

2. If a decedent is an inhabitant of the Philippines at the time of his death, what court shall
have jurisdiction of the probate of his will? If he is an inhabitant of a foreign country, will
your answer be the same?

ANSWER: If the decedent is an inhabitant of the Philippines at the time of his death, whether a
citizen or an alien, his will shall be proved, or letters of administration granted, and his estate
settled, in the Court of First Instance (now Regional Trial Court) in the province in which he
resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First
Instance (now Regional Trial Court) of any province in which he had estate.

3. On September 24, 1977, petitioner donated unto respondent a parcel of land at


Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its name
under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which also bears the
acceptance of the donee recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee shall not use
the land except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land
for any reason whatsoever, nor convey any portion of the same except in lease for commercial use
as provided above in paragraph 3 hereof, otherwise the said land with all real improvements thereon
shall revert in trust to the Donor for prompt disposition in favor of some other charitable organization
that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the
perimeter fence on the donated property and the construction of a nucleus building for the aged and
the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion
with sugar cane. There is no dispute that the lease agreement was entered into by the donee without
the prior written consent of the donor, as required in the deed ofdonation. The lease to Gomez ended
in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and the donee
ordered to return and/or reconvey the property donated reason of said violation of the attached
condition?

4. According to purpose or cause, state the four (4) kinds of donation and explain each.
Answer: Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation
is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other
hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the
donee for past services, which services do not amount to a demandable debt. A conditional or

modal donation is one where the donation is made in consideration of future services or where the
donor imposes certain conditions, limitations or charges upon the donee, the value of which is
inferior than that of the donation given. Finally, an onerous donation is that which imposes upon the
donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable
consideration, the cost of which is equal to or more than the thing donated.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,


Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private respondents
are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of
Syvel's Department Store, Makati City. CRISELDA was signing her credit card slip at the
payment and verification counter when she felt a sudden gust of wind and heard a loud
thud. She looked behind her. She then beheld her daughter ZHIENETH on the floor, her
young body pinned by the bulk of thestore's gift-wrapping counter/structure.
ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and retrieving ZHIENETH
from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth? (b)
What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to Vicente Uy
Veza. Another portion, with the house of strong materials thereon, was sold in 1927 to Tan Yanon,
respondent herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with the camarin and small building thereon, after passing through
several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the old camarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his
house, unless such building is erected at a distance of not less than three meters
from the boundary line between the lots of plaintiff and defendant, and to enjoin the
members of the Municipal Council of Romblon from issuing the corresponding
building permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7. (a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already repaired, unknown to
Mr. X, the latter sold the piano to Mr. Z, who paid 30k. Mr. Y left the place and took away the said
money. What kind of possession has Mr. Y, and what criminal case shall he be made liable of? (b)
Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua so that the same
can be deposited in his account. Miss Chua however took the money and misappropriated the
same. What kind of possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De


Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then
Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store located at the corner of
Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents
mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998, extendible
for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a firewall on her
rented property which must be at least as high as the store; and in case of modification of the public
market, she or her heir/s would be given preferential rights.
Visitacion took over the store when her mother died sometime in 1984.From then on up to
January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for
inspection on 15 May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then
Ministry of Public Works and Highways,Regional Office No. IV-A, found that the store of Visitacion
remained intact and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October 1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador directing her to
demolish her store within five (5) days from notice. Attached to the letter were copies of Sangguniang
Bayan Resolution No. 156 dated 30 August 1993 and a Memorandum issued by Asst. Provincial
Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to
Visitacion ordering her to vacate the portion of the public market she was occupying within 15 days
from her receipt of the letter; else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No.
183 authorizing Mayor Comendador to demolish the store being occupied by Visitacion using legal
means
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan
Resolution Nos. 183 and 156 authorized the demolition of the store with Asilo and Angeles
supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost
of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor Comendador
liable for damages in the case at bar?

(2) What principle of law is applicable in this case?


(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of Visitacion
as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various parcels of
real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in Mandaue City, Cebu,
which lot allegedly belonged originally to Claudio Ermac. Upon the latter's death, the said Lot No.
666 was inherited and partitioned by his children, namely, Esteban, Pedro and Balbina. Siblings
Pedro and Balbina requested their brother Esteban to have their title over the property registered.
Esteban, however, was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name, and did not include his
father's brother and sister, nor his cousins. Despite having registered the lot in his name, Clemente
did not disturb or claim ownership over those portions occupied by his uncle, aunt and cousins even
up to the time of his death. Among the occupants of Lot No. 666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot No. 666 now
occupied by them by right of succession as direct descendants of the original owner, Claudio Ermac.
[Respondents] Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by purchase
from the children of Claudio Ermac. [Respondent] Vicente Dionson, on the other hand, bought his
land from the heirs of Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and possession
had been peaceful and undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac
filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the [respondents'] ownership
over their respective parcels of land, prompting them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the [respondents], and
claimed that the [respondents] have no cause of action against them. It is essentially claimed that it
was Clemente Ermac and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in actual, peaceful, adverse
and continuous possession in the concept of an owner of the entire Lot No. 666. With the help of his
children, he cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death, [petitioners]
inherited Lot No. 666, and they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only tolerated by Clemente
Ermac and the [petitioners]. [Petitioners] in fact had never surrendered ownership or possession of
the property to the [respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original owner of the lot in
question was Claudio Ermac, and therefore, the property was inherited upon his death by his
children Esteban, Balbina and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was] supported by the
admissions of Irene[a] Seno, witness for the [petitioners] and daughter of Clemente Ermac,
establishing facts which show that [petitioners] and their predecessor Clemente did not own the

entire property, but that the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot.
Since the entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of the
[respondents], are being held in trust by the [petitioners] in favor of their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was used by the
court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac [and]
Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat the title over
the property in the names of petitioner's predecessors-in-interest [Spouses] Clemente Ermac and
Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746 Epifanio delos Santos
Avenue (EDSA), Quezon City with an area of 375 square meters and covered by Transfer Certificate
of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled "An
Ordinance Requiring the Construction of Arcades, for Commercial Buildings to be Constructed in
Zones Designated as Business Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor projecting over the
sidewalk beyond the first storey wall used as protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an arcade with a width
of 4.50 meters and height of 5.00 meters along EDSA, from the north side of Santolan Road to one
lot after Liberty Avenue, and from one lot before Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade, will you consider his building a nuisance for not
complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square
meters. The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a 10,000-squaremeter portion of their property in favor of the Ministry of Education and Culture (now the Department
of Education, Culture and Sports [DECS]).

The deed provided, among others:That for and in consideration of the benefits that may be
derived from the use of the above described property which is intended for school purposes, the said
DONORS do by these presents TRANSFER AND CONVEY by way of DONATION unto the DONEE,
its successors and assigns, the above property to become effective upon the signing of this
document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT) No. T143337 covering the portion identified as Lot 8858-A was issued in the name of the Ministry of
Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and remained idle. Sometime in
1988, the DECS, through its Secretary, started construction of the Rizal National High School
building on a parcel of land it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to the DECS Secretary dated
August 19, 1994, the spouses Dulay requested that the property be returned to them considering
that the land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition imposed in the
Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of Donation barred already
by prescription and laches?

Hermojina Estores vs Spouses Arturo and Laura Sapangan,


G.R. No. 175139, dated April 18, 2012,
Interest may be imposed even in the absence of stipulation in the contract.
We sustain the ruling of both the RTC and the CA that it is proper to impose interest notwithstanding
the absence of stipulation in the contract. Article 2210 of the Civil Code expressly provides that
"[i]nterest may, in the discretion of the court, be allowed upon damages awarded for breach of
contract." In this case, there is no question that petitioner is legally obligated to return the P3.5
million because of her failure to fulfill the obligation under the Conditional Deed of Sale, despite
demand. She has in fact admitted that the conditions were not fulfilled and that she was willing to
return the full amount of P3.5 million but has not actually done so. Petitioner enjoyed the use of the
money from the time it was given to her30 until now. Thus, she is already in default of her obligation
from the date of demand, i.e., on September 27, 2000.
The interest at the rate of 12% is applicable in the instant case.
Anent the interest rate, the general rule is that the applicable rate of interest "shall be computed in
accordance with the stipulation of the parties."31 Absent any stipulation, the applicable rate of interest
shall be 12% per annum "when the obligation arises out of a loan or a forbearance of money, goods
or credits. In other cases, it shall be six percent (6%)."32 In this case, the parties did not stipulate as
to the applicable rate of interest. The only question remaining therefore is whether the 6% as
provided under Article 2209 of the Civil Code, or 12% under Central Bank Circular No. 416, is due.
The contract involved in this case is admittedly not a loan but a Conditional Deed of Sale. However,
the contract provides that the seller (petitioner) must return the payment made by the buyer

(respondent-spouses) if the conditions are not fulfilled. There is no question that they have in fact,
not been fulfilled as the seller (petitioner) has admitted this. Notwithstanding demand by the buyer
(respondent-spouses), the seller (petitioner) has failed to return the money and
should be considered in default from the time that demand was made on September 27, 2000.
Even if the transaction involved a Conditional Deed of Sale, can the stipulation governing the return
of the money be considered as a forbearance of money which required payment of interest at the
rate of 12%? We believe so.
In Crismina Garments, Inc. v. Court of Appeals,33 "forbearance" was defined as a "contractual
obligation of lender or creditor to refrain during a given period of time, from requiring the borrower or
debtor to repay a loan or debt then due and payable." This definition describes a loan where a debtor
is given a period within which to pay a loan or debt. In such case, "forbearance of money, goods or
credits" will have no distinct definition from a loan. We believe however, that the phrase "forbearance
of money, goods or credits" is meant to have a separate meaning from a loan, otherwise there would
have been no need to add that phrase as a loan is already sufficiently defined in the Civil
Code.34Forbearance of money, goods or credits should therefore refer to arrangements other than
loan agreements, where a person acquiesces to the temporary use of his money, goods or credits
pending happening of certain events or fulfillment of certain conditions. In this case, the respondentspouses parted with their money even before the conditions were fulfilled. They have therefore
allowed or granted forbearance to the seller (petitioner) to use their money pending fulfillment of the
conditions. They were deprived of the use of their money for the period pending fulfillment of the
conditions and when those conditions were breached, they are entitled not only to the return of the
principal amount paid, but also to compensation for the use of their money. And the compensation
for the use of their money, absent any stipulation, should be the same rate of legal interest applicable
to a loan since the use or deprivation of funds is similar to a loan.
Petitioners unwarranted withholding of the money which rightfully pertains to respondent-spouses
amounts to forbearance of money which can be considered as an involuntary loan. Thus, the
applicable rate of interest is 12% per annum. In Eastern Shipping Lines, Inc. v. Court of
Appeals,35cited in Crismina Garments, Inc. v. Court of Appeals,36the Court suggested the following
guidelines:
I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for damages. The provisions
under Title XVIII on Damages of the Civil Code govern in determining the measure of
recoverable damages.
II. With regard particularly to an award of interest in the concept of actual and compensatory
damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:
1. When the obligation is breached, and it consists in the payment of a sum of
money, i.e., a loan or forbearance of money, the interest due should be that which
may have been stipulated in writing. Furthermore, the interest due shall itself earn
legal interest from the time it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 12% per annum to be computed from default, i.e., from
judicial or extrajudicial demand under and subject to the provisions of Article 1169 of
the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached,
an interest on the amount of damages awarded may be imposed at the discretion of
the court at the rate of 6% per annum. No interest, however, shall be adjudged on
unliquidated claims or damages except when or until the demand can be established
with reasonable certainty. Accordingly, where the demand is established with

reasonable certainty, the interest shall begin to run from the time the claim is made
judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be
so reasonably established at the time the demand is made, the interest shall begin to
run only from the date the judgment of the court is made (at which time the
quantification of damages may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall, in any case, be on the
amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and
executory, the rate of legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such finality until its satisfaction,
this interim period being deemed to be by then an equivalent to a forbearance of
credit.37
Eastern Shipping Lines, Inc. v. Court of Appeals 38and its predecessor case, Reformina v.
Tongol39 both involved torts cases and hence, there was no forbearance of money, goods, or credits.
Further, the amount claimed (i.e., damages) could not be established with reasonable certainty at the
time the claim was made. Hence, we arrived at a different ruling in those cases.
Since the date of demand which is September 27, 2000 was satisfactorily established during trial,
then the interest rate of 12% should be reckoned from said date of demand until the principal amount
and the interest thereon is fully satisfied.1wphi1
The award of attorneys fees is warranted.
Under Article 2208 of the Civil Code, attorneys fees may be recovered:
xxxx
(2) When the defendants act or omission has compelled the plaintiff to litigate with third
persons or to incur expenses to protect his interest;
xxxx
(11) In any other case where the court deems it just and equitable that attorneys fees and
expenses of litigation should be recovered.
In all cases, the attorneys fees and expenses of litigation must be reasonable.
Considering the circumstances of the instant case, we find respondent-spouses entitled to recover
attorneys fees. There is no doubt that they were forced to litigate to protect their interest, i.e., to
recover their money. However, we find the amount of P50,000.00 more appropriate in line with the
policy enunciated in Article 2208 of the Civil Code that the award of attorneys fees must always be
reasonable.
WHEREFORE, the Petition for Review is DENIED. The May 12, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 83123 is AFFIRMED with MODIFICATIONS that the rate of interest shall
be twelve percent (12%) per annum, computed from September 27, 2000 until fully satisfied. The
award of attorneys fees is further reduced to P50,000.00.

sales problems

1.

A contract of sale of real property, without consideration, and executed by a person of low
intelligence is (a) void (b) voidable (c) rescissible (d) valid because there is consent and sale is
consensual.

2.

Which of the following is NOT a characteristic of a contract of sale? (a) onerous (b) bilateral (c)
cumulative (d) nominate.

3.

When the object of the contract of sale is delivered and the price is paid, the contract is said to be
(a) generated (b) negotiated (c) perfected (d) consummated.

4.

Which is a natural element of sale ? (a) consent or meeting of the minds (b) price certain in money
(c) determinate subject matter (d) warranty against hidden defects.

5.

If during the 5-year period when a homestead cannot be sold, it is promised to be sold (in a
compromise agreement), this promise is (a) valid when the sale is actually made after the 5-year
period (b) void even if the sale is actually made after the 5-year period (c) valid if the sale is
approved by the Secretary of Agriculture (d) voidable when consent is finally given.

6.

Nemo dat quod none habet literally means (a) one cannot sell what he does not possess (b) no
one can dispose what he cannot own (c) no one can give more than what he has (d) no one can
sell what he does not own.

7.

Maria owes me P200,000. If I accept Marias offer to take her car as payment, what contract is
generated? (a) a contract of sale because it is as if she sold her car to me for P200,000 (b) a
contract of barter or exchange (c) dacion en pago (d) a contract of cession since she ceded the car
to me in payment of her obligation.

8.

Which of the following is considered as illicit per accidens? (a) sale of human flesh (b) sale of land
to a balikbayan (c) sale of shabu (d) sale of illegal lottery tickets.

9.

A mortgaged his land to B, but sold the land to C. Which of the following is true or valid? (a) A
cannot sell the property since it is still mortgaged (b) A, being the owner, can sell the land to C, who
after delivery became the owner, subject to Bs right of redemption (c) the land sold is always
subject to Bs right to foreclose the mortgage upon the non-payment of the mortgage credit
(d) the sale here is voidable.

10. Which of the following is NOT correct under the Maceda law? (a) in case where less than 2 years of
installments were paid, the seller shall give the buyer the grace period of not less than 60 days (b)
the buyer shall have the right to sell his rights or assign the same to another person (c) the buyer
shall have the right to pay in advance any installment (d) the law gives the buyer if he has already
paid at least two installments.
PART II. (10% each)Essay Type. Answer the following problems. Always explain your answer. A
mere yes or no answer earns no points.

1. A parcel of land measuring 81,524 square meters (Subject Land) in Barrio Culis,
Mabiga, Hermosa, Bataan is the subject of controversy in this case. The registered
owners of the Subject Land were petitioner spouses, Godofredo Alfredo
(Godofredo) and Carmen Limon Alfredo (Carmen). The Subject Land is covered
by Original Certificate of Title No. 284 (OCT No. 284) issued to Godofredo and
Carmen under Homestead Patent No. V-69196.

On 7 March 1994, the private respondents, spouses Armando Borras


(Armando) and Adelia Lobaton Borras (Adelia), filed a complaint for specific
performance against Godofredo and Carmen before the Regional Trial Court of
Bataan, Branch 4. The case was docketed as Civil Case No. DH-256-94.
Armando and Adelia alleged in their complaint that Godofredo and Carmen
mortgaged the Subject Land for P7,000.00 with the Development Bank of the
Philippines (DBP). To pay the debt, Carmen and Godofredo sold the Subject Land
to Armando and Adelia for P15,000.00, the buyers to pay the DBP loan and its
accumulated interest, and the balance to be paid in cash to the sellers.
Armando and Adelia gave Godofredo and Carmen the money to pay the loan
to DBP which signed the release of mortgage and returned the owners duplicate
copy of OCT No. 284 to Godofredo and Carmen. Armando and Adelia subsequently
paid the balance of the purchase price of the Subject Land for which Carmen issued
a receipt dated 11 March 1970. Godofredo and Carmen then delivered to Adelia the
owners duplicate copy of OCT No. 284, with the document of cancellation of
mortgage, official receipts of realty tax payments, and tax declaration in the name
of Godofredo. Godofredo and Carmen introduced Armando and Adelia, as the new
owners of the Subject Land, to the Natanawans, the old tenants of the Subject
Land. Armando and Adelia then took possession of the Subject Land.
In January 1994, Armando and Adelia learned that hired persons had entered
the Subject Land and were cutting trees under instructions of allegedly new owners
of the Subject Land. Subsequently, Armando and Adelia discovered that Godofredo
and Carmen had re-sold portions of the Subject Land to several persons.
On 8 February 1994, Armando and Adelia filed an adverse claim with the
Register of Deeds of Bataan. Armando and Adelia discovered that Godofredo and
Carmen had secured an owners duplicate copy of OCT No. 284 after filing a petition
in court for the issuance of a new copy. Godofredo and Carmen claimed in their
petition that they lost their owners duplicate copy. Armando and Adelia wrote
Godofredo and Carmen complaining about their acts, but the latter did not reply.
Thus, Armando and Adelia filed a complaint for specific performance.
On 28 March 1994, Armando and Adelia amended their complaint to include
the following persons as additional defendants: the spouses Arnulfo Savellano and
Editha B. Savellano, Danton D. Matawaran, the spouses Delfin F. Espiritu, Jr. and
Estela S. Espiritu, and Elizabeth Tuazon (Subsequent Buyers). The Subsequent
Buyers, who are also petitioners in this case, purchased from Godofredo and
Carmen the subdivided portions of the Subject Land. The Register of Deeds of
Bataan issued to the Subsequent Buyers transfer certificates of title to the lots they
purchased.
In their answer, Godofredo and Carmen and the Subsequent
Buyers (collectively petitioners) argued that the action is unenforceable
under the Statute of Frauds. Petitioners pointed out that there is no written
instrument evidencing the alleged contract of sale over the Subject Land in favor of
Armando and Adelia. Petitioners objected to whatever parole evidence Armando
and Adelia introduced or offered on the alleged sale unless the same was in writing
and subscribed by Godofredo. Petitioners asserted that the Subsequent Buyers
were buyers in good faith and for value. As counterclaim, petitioners sought
payment of attorneys fees and incidental expenses.
Questions:

(1) Is there a perfected contract of sale between the spouses Armando and
Adelia and the Spouses Godofredo and Carmen ? Explain.
(2) Whether the alleged sale of the Subject Land in favor of Armando and Adelia is valid
and enforceable, where (a) it was orally entered into and not in writing; (b) Carmen did not
obtain the consent and authority of her husband, Godofredo, who was the sole owner of the
Subject Land in whose name the title thereto (OCT No. 284) was issued; and (c) it was entered
into during the 25-year prohibitive period for alienating the Subject Land without the approval of
the Secretary of Agriculture and Natural Resources.
(3)Whether the action to enforce the alleged oral contract of sale brought after 24 years
from its alleged perfection had been barred by prescription and by laches.
(4)Whether the deeds of absolute sale and the transfer certificates of title over the
portions of the Subject Land issued to the Subsequent Buyers, innocent purchasers in good
faith and for value whose individual titles to their respective lots are absolute and indefeasible,
are valid.

Answer: (1) All the characteristics and elements of sale being present, thus the
contract is perfected. (2) (a) enforceable, because the Statute of Frauds does not apply
here, it being that the contract is already executed or consummated (b) valid, since the
sale was entered before Aug. 3, 1988 (c) still enforceable, the consent of the Sec. is not
really applicable in the case at bar. (3) Not barred by prescription or laches. Laches is a
remedy in equity which is not applicable here, and the action has not prescribed yet (4)
The indefeasibility of title as a principle applies only when there is no fraud involved.
(REFER to: Alfredo v. Borras (2003) below

2. What is the effect if at the time the contract of sale is perfected the object
of the contract has been entirely lost? If part of it is only lost, what are the
rights of the vendee?

Art. 1493. If at the time the contract of sale is perfected, the thing which
is the object of the contract has been entirely lost, the contract shall be
without any effect.
But if the thing should have been lost in part only, the vendee may choose
between withdrawing from the contract and demanding the remaining
part, paying its price in proportion to the total sum agreed upon. (1460a)

3.When is ownership of the thing sold transferred to the vendee? Can there
be other stipulations possible?

Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it
is delivered to him in any of the ways specified in Articles 1497 to 1501, or in any other
manner signifying an agreement that the possession is transferred from the vendor to
the vendee.

4.Art. 1465. Things subject to a resolutory condition may be the object of the
contract of sale. Give at least two examples of things which are subject to a
resolutory condition.
ANSWER: PACTO DE RETRO SALE; RESERVA TRUNCAL

5. Generally, when is the thing sold understood as delivered? What if the


object of the sale is (a) movable and (b) immovable?

Art. 1497. The thing sold shall be understood as delivered, when it is


placed in the control and possession of the vendee. (1462a)
Art. 1498. When the sale is made through a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is
the object of the contract, if from the deed the contrary does not appear
or cannot clearly be inferred.
With regard to movable property, its delivery may also be made by the
delivery of the keys of the place or depository where it is stored or kept.
(1463a)
Art. 1499. The delivery of movable property may likewise be made by the
mere consent or agreement of the contracting parties, if the thing sold
cannot be transferred to the possession of the vendee at the time of the
sale, or if the latter already had it in his possession for any other reason.
(1463a)
Art. 1500. There may also be tradition constitutum possessorium. (n)
Art. 1501. With respect to incorporeal property, the provisions of the first
paragraph of article 1498 shall govern. In any other case wherein said
provisions are not applicable, the placing of the titles of ownership in the
possession of the vendee or the use by the vendee of his rights, with the
vendor's consent, shall be understood as a delivery. (1464)

1.(a) What do you understand by the hypothecary nature of maritime law?


(b) What is the general rule concerning said principle? (c) What are the
exceptions to the rule?
Answer: The real and hypothecary nature of maritime law simply means that the liability of the
carrier in connection with losses related to maritime contracts is confined to the vessel, which is
hypothecated for such obligations or which stands as the guaranty for their settlement. It has its
origin by reason of the conditions and risks attending maritime trade in its earliest years when
such trade was replete with innumerable and unknown hazards since vessels had to go through
largely uncharted waters to ply their trade. It was designed to offset such adverse conditions and
to encourage people and entities to venture into maritime commerce despite the risks and the
prohibitive cost of shipbuilding. Thus, the liability of the vessel owner and agent arising from the
operation of such vessel were confined to the vessel itself, its equipment, freight, and insurance,
if any, which limitation served to induce capitalists into effectively wagering their resources
against the consideration of the large profits attainable in the trade.x x xNonetheless, there are
exceptional circumstances wherein the ship agent could still be held answerable despite the
abandonment of the vessel, as where the loss or injury was due to the fault of the
shipowner and the captain . The international rule is to the effect that the right of
abandonment of vessels, as a legal limitation of a shipowner's liability, does not apply to cases
where the injury or average was occasioned by the shipowner's own fault. [38] Likewise, the
shipowner may be held liable for injuries to passengers notwithstanding the exclusively real
and hypothecary nature of maritime law if fault can be attributed to the shipowner x x x As a
general rule, a ship owner's liability is merely co-extensive with his interest in the

except

vessel,
where actual fault is attributable to the shipowner. Thus, as an
exception to the limited liability doctrine, a shipowner or ship agent may be held liable
for damages when the sinking of the vessel is attributable to the actual fault

or negligence of the shipowner

or its

failure to ensure the

seaworthiness of the vessel. X x x The limited liability rule, however, is


not without exceptions, namely:
(1) where the injury or death to a passenger is due either to the fault of the shipowner,
or to the concurring negligence of the shipowner and the captain (Manila Steamship
Co., Inc. vs. Abdulhaman, supra);
(2) where the vessel is insured; and
(3) in workmen's compensation claims (Abueg vs. San Diego, supra). In this case,
there is nothing in the records to show that the loss of the cargo was due to the fault of
the private respondents as shipowners, or to their concurrent negligence with the
captain of the vessel.

2. Petitioner is a duly licensed copra dealer based at Puerta Galera,


Oriental Mindoro, while private respondents are the owners of the vessel,
"M/V Luzviminda I," a common carrier engaged in coastwise trade from the
different ports of Oriental Mindoro to the Port of Manila.
In October 1977, petitioner loaded 1,000 sacks of copra, valued at
P101,227.40, on board the vessel "M/V Luzviminda I" for shipment from
Puerta Galera, Oriental Mindoro, to Manila. Said cargo, however, did not
reach Manila because somewhere between Cape Santiago and Calatagan,
Batangas, the vessel capsized and sank with all its cargo.
On 30 March 1979, petitioner instituted before the then Court of First
Instance of Oriental Mindoro, a Complaint for damages based on breach of
contract of carriage against private respondents (Civil Case No. R-3205).

In their Answer, private respondents averred that even assuming that


the alleged cargo was truly loaded aboard their vessel, their liability had
been extinguished by reason of the total loss of said vessel.
Question: Who is correct on this matter: the petitioner or respondent?
Explain your answer.
Answer: In sum, it will have to be held that since the ship agents or shipowner's
liability is merely co-extensive with his interest in the vessel such that a total loss thereof
results in its extinction. (Yangco vs. Laserna, supra), and none of the exceptions to the
rule on limited liability being present, the liability of private respondents for the loss of
the cargo of copra must be deemed to have been extinguished. There is no showing
that the vessel was insured in this case. (CHUA YEK HONG, PETITIONER, VS.
INTERMEDIATE APPELLATE COURT, MARIANO GUNO, AND DOMINADOR OLIT,
RESPONDENTS. SECOND DIVISION[ G.R. No. 74811, September 30, 1988 ])

3. On July 18, 1990, petitioner entrusted for repair his Nissan pick-up car 1988
model to private respondent - which is engaged in the sale, distribution and repair
of motor vehicles. Private respondent undertook to return the vehicle on July 21,
1990 fully serviced and supplied in accordance with the job contract. After
petitioner paid in full the repair bill in the amount ofP1,397.00,[3] private
respondent issued to him a gate pass for the release of the vehicle on said date.
But came July 21, 1990, the latter could not use the vehicle as its battery was
weak and was not yet replaced. Left with no option, petitioner himself bought a
new battery nearby and delivered it to private respondent for installation on the
same day. However, the battery was not installed and the delivery of the car was
rescheduled to July 24, 1990 or three (3) days later. When petitioner sought to
reclaim his car in the afternoon of July 24, 1990, he was told that it was
carnapped earlier that morning while being road-tested by private respondents
employee along Pedro Gil and Perez Streets in Paco, Manila. Private respondent
said that the incident was reported to the police. Having failed to recover his car
and its accessories or the value thereof, petitioner filed a suit for damages
against private respondent anchoring his claim on the latters alleged negligence.
For its part, private respondent contended that it has no liability because the car
was lost as a result of a fortuitous event - the carnapping.
Questions: (a) Is carnapping a fortuitous event? (b) Can the repair shop be made
liable for the value of the car and pay damages? (c) What do you understand by
the assumption of risk? (d) Is this principle applicable in the case at bar?
Answer: It is a not a defense for a repair shop of motor vehicles to escape liability simply
because the damage or loss of a thing lawfully placed in its possession was due to carnapping.
Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was
unlawfully and forcefully taken from anothers rightful possession, as in cases of carnapping,
does not automatically give rise to a fortuitous event. To be considered as such, carnapping
entails more than the mere forceful taking of anothers property. It must be proved and
established that the event was an act of God or was done solely by third parties and that neither
the claimant nor the person alleged to be negligent has any participation. [9] In accordance with
the Rules of evidence, the burden of proving that the loss was due to a fortuitous event rests on
him who invokes it[10]- which in this case is the private respondent. However, other than the
police report of the alleged carnapping incident, no other evidence was presented by private
respondent to the effect that the incident was not due to its fault. A police report of an alleged
crime, to which only private respondent is privy, does not suffice to established the carnapping.
Neither does it prove that there was no fault on the part of private respondent notwithstanding
the parties agreement at the pre-trial that the car was carnapped. Carnapping does not
foreclose the possibility of fault or negligence on the part of private respondent.
Even assuming arguendo that carnapping was duly established as a fortuitous event,
still private respondent cannot escape liability. Article 1165[11] of the New Civil Code makes an
obligor who is guilty of delay responsible even for a fortuitous event until he has effected the
delivery. In this case, private respondent was already in delay as it was supposed to deliver
petitioners car three (3) days before it was lost. Petitioners agreement to the rescheduled

delivery does not defeat his claim as private respondent had already breached its obligation.
Moreover, such accession cannot be construed as waiver of petitioners right to hold private
respondent liable because the car was unusable and thus, petitioner had no option but to leave
it.
Assuming further that there was no delay, still working against private respondent is the
legal presumption under Article 1265 that its possession of the thing at the time it was lost was
due to its fault.[12] This presumption is reasonable since he who has the custody and care of the
thing can easily explain the circumstances of the loss. The vehicle owner has no duty to show
that the repair shop was at fault. All that petitioner needs to prove, as claimant, is the simple fact
that private respondent was in possession of the vehicle at the time it was lost. In this case,
private respondents possession at the time of the loss is undisputed. Consequently, the burden
shifts to the possessor who needs to present controverting evidence sufficient enough to
overcome that presumption. Moreover, the exempting circumstances - earthquake, flood, storm
or other natural calamity - when the presumption of fault is not applicable [13]do not concur in this
case. Accordingly, having failed to rebut the presumption and since the case does not fall under
the exceptions, private respondent is answerable for the loss.
It must likewise be emphasized that pursuant to Articles 1174 and 1262 of the New Civil
Code, liability attaches even if the loss was due to a fortuitous event if the nature of the
obligation requires the assumption of risk.[14] Carnapping is a normal business risk for those
engaged in the repair of motor vehicles. For just as the owner is exposed to that risk so is the
repair shop since the car was entrusted to it. That is why, repair shops are required to first
register with the Department of Trade and Industry (DTI) [15] and to secure an insurance policy for
the shop covering the property entrusted by its customer for repair, service or maintenance as
a pre-requisite for such registration/accreditation. [16] Violation of this statutory duty constitutes
negligence per se.[17] Having taken custody of the vehicle, private respondent is obliged not only
to repair the vehicle but must also provide the customer with some form of security for his
property over which he loses immediate control. An owner who cannot exercise the seven
(7)juses or attributes of ownership the right to possess, to use and enjoy, to abuse or
consume, to accessories, to dispose or alienate, to recover or vindicate and to the fruits -[18] is a
crippled owner. Failure of the repair shop to provide security to a motor vehicle owner would
leave the latter at the mercy of the former. Moreover, on the assumption that private
respondents repair business is duly registered, it presupposes that its shop is covered by
insurance from which it may recover the loss. If private respondent can recover from its insurer,
then it would be unjustly enriched if it will not compensate petitioner to whom no fault can be
attributed. Otherwise, if the shop is not registered, then the presumption of negligence applies.

4. State the formula for computing the net earning capacity.


Answer: Net Earning Capacity = life expectancy* x (gross annual income - reasonable
living expenses),[53]
*
Life expectancy = 2/3 (80 - age of the deceased)

5. In case a passenger dies by reason of the negligence of the driver what


are the four possible damages that may be recovered by the heirs of the
victim?
Answer: ART. 2206. The amount of damages for death caused by a crime or quasidelict shall be at least three thousand pesos ( now fifty thousand pesos), even though there may
have been mitigating circumstances. In addition:(1) The defendant shall be liable for the loss

of the earning capacity of the deceased, and the indemnity shall be paid
to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the
court, unless the deceased on account of permanent physical disability not caused by the
defendant, had no earning capacity at the time of his death;(2) If the deceased was obliged to
give support according to the provisions of article 291, the recipient who is not an heir called to
the decedents inheritance by the law of testate or intestate succession, may demand support

from the person causing the death, for a period not exceeding five years, the
exact duration to be fixed by the court;(3) The spouse, legitimate and illegitimate descendants

and ascendants of the deceased may demand moral


reason of the death of the deceased.

damages for mental anguish by

6. What do you mean by the doctrine of last clear chance? When is it not
applicable? What is its effect to a liability?
Answer: The doctrine of last clear chance applies to a situation where the plaintiff was guilty of
prior or antecedent negligence, but the defendant who had the last fair chance to avoid the
impending harm and failed to do so is made liable for all the consequences of the accident,
notwithstanding the prior negligence of the plaintiff.[39]However, the doctrine does not apply
where the party charged is required to act instantaneously, and the injury cannot be
avoided by the application of all means at hand after the peril is or should have been discovered.
[40]

7. Petitioner-spouses Samuel and Chinita Parilla and their co-petitioner-son


Deodato Parilla, as dealers[4] of Pilipinas Shell Petroleum Corporation (Pilipinas
Shell), have been in possession of a parcel of land (the property) located at the
poblacion of Bantay, Ilocos Sur which was leased to it by respondent Dr.
Prospero Pilar under a 10-year Lease Agreement [5] entered into in 1990.When the
lease contract between Pilipinas Shell and respondent expired in 2000,
petitioners remained in possession of the property on which they built
improvements consisting of a billiard hall and a restaurant, maintained a sarisari store managed by Leonardo Dagdag, Josefina Dagdag and Edwin Pugal, and
allowed Flor Pelayo, Freddie Bringas and Edwin Pugal to use a portion thereof as
parking lot.[6]Despite demands to vacate, petitioners [7] and the other
occupants[8] remained in the property.Hence, respondent who has been residing
in the United States,[9]through his attorney-in-fact Marivic Paz Padre, filed on
February 4, 2002 a complaint for ejectment before the Bantay MTC with prayer for
the issuance of a writ of preliminary injunction with damages [10] against
petitioners and the other occupants of the property.After trial, the MTC, by
Decision of February 3, 2003, ordered herein petitioners and their co-defendants
and all persons claiming rights under them to vacate the property and to pay the
plaintiff-herein respondent the amount of P50,000.00 as reasonable compensation
for the use of the property and P10,000.00 as attorney's fees and to pay the cost
of
suit.
And
it
ordered
theplaintiffherein respondent to reimburse defendants Samuel Parilla, Chinita Parilla and
Deodato Parilla the amount of Two Million Pesos (P2,000,000.00) representing the
value of the improvements introduced on the property.
QUESTION: Is the decision for reimbursement correct? In you opinion,
what should be the correct ruling on the matter? What principle of law is
applicable? Explain.

Answer: Petitioners' claim for reimbursement of the alleged entire value of the
improvements does not thus lie under Article 1678. Not even for one-half of such alleged value,
there being no substantial evidence, e.g., receipts or other documentary evidence detailing costs
of construction. Besides, by petitioners' admission, of the structures they originally built the
billiard hall, restaurant, sari-sari store and a parking lot, only the "bodega-like" sari-saristore
and the parking lot now exist.[27]
At all events, under Article 1678, it is the lessor who is given the option, upon termination of the
lease contract, either to appropriate the useful improvements by paying one-half of their value at
that time, or to allow the lessee to remove the improvements. This option solely belongs to the
lessor as the law is explicit that "[s]hould the lessor refuse to reimburse said amount, the lessee
may remove the improvements, even though the principal thing may suffer damage thereby." It
appears that the lessor has opted not to reimburse.

8. What is the effect if the lessor refuses to pay the lessee one-half of the value of the
useful improvements introduced to a land leased?
Answer:The refusal of the lessor to pay the lessee one-half of the val
ue of the usefulimprovements gives rise to the right of removal.
9. Sometime in 1956, Francisca Cardente, for and on behalf of her grandson, petitioner Ignacio
Cardente, who was then a minor, and now married to his co-petitioner, purchased from Isidro
Palanay one hectare of land. The property purchased is a part of a 9.2656-hectare parcel of land
covered by Original Certificate of Title (O.C.T., for short) No. P-1380 in Palanay's name. Immediately
after the purchase, the Cardentes took possession of the land and planted various crops and trees
thereon. They have been in continuous possession ever since, adverse to the whole world.
Unfortunately, however, the private document evidencing the sale of the one-hectare lot to petitioner
Ignacio Cardente was lost and never found despite diligent efforts exerted to locate the same.
Some four years later, on August 18, 1960, Isidro Palanay sold the entire property covered by
O.C.T. No. P-1380, including the one-hectare portion already sold to Cardente, this time to the
private respondents, Ruperto Rubin and his wife. The deed of sale was registered and a new title,
Transfer Certificate of Title (T.C.T., for short) No. 1173, was issued in favor of the Rubin spouses.
Notwithstanding the second sale, or because of it, Isidro Palanay, with the written conforme of his
wife, Josepha de Palanay, on December 9, 1972, executed a public document in favor of petitioner
Ignacio Cardente confirming the sale to him (Cardente) in 1956 of the one hectare portion. The
deed of confirmation likewise states that the subsequent vendee, respondent Ruperto Rubin, was
informed by Palanay of the first sale of the one-hectare portion to Cardente.
By virtue of having the property titled in the name of Ruperto Rubin, he now claims that he is
the owner of the whole property in question. Question: (a) Is the claim of Rubin correct? (b) Is this a
case of double sale? (c) In case it is, what principle of law will you apply regarding double sale?
Explain.
Answer: Admittedly, this case involves a double sale. While the private respondents allegedly bought
from Isidro Palanay on August 18, 1960 the entire property comprising 9.2656 hectares and covered
by O.C.T. No. P-1380, the petitioners, on the other hand, lay claim to one hectare thereof which they
undeniably purchased from the same vendor earlier, in 1956. The conflict, therefore, falls under, and
can be resolved by, Article 1544 of the Civil Code which sets the rules on double sales.

ART. 1544. If the same thing should have been sold to different
vendees, the ownership shall be transferred to the person who
may have first taken possession thereof in good faith, if it should
be movable property.
Should it be immovable property, the ownership shall belong
to the person acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to
the person who in good faith was first in the possession;
and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith.
It is undisputed that the private respondents, the second vendees, registered the sale in their favor
whereas the petitioners, the first buyers, did not. But mere registration of the sale is not enough.
Good faith must concur with the registration. Bad faith renders the registration nothing but an
exercise in futility. The law and jurisprudence are very clear on this score.

The heart of the problem is whether or not the private respondents acted in good faith when they
registered the deed of sale dated August 18, 1960 more than six months later, on March 7, 1961.
Inextricably, the inquiry must be directed on the knowledge, or lack of it, of the previous sale of the
one-hectare portion on the part of the second buyers at the time of registration. The trial court found
that the second vendees had such knowledge.
It is true that good faith is always presumed while bad faith must be proven by the party alleging it. In
this case, however, viewed in the light of the circumstances obtaining, we have no doubt that the
private respondents' presumed good faith has been sufficiently overcome and their bad faith amply
established.
The "Confirmation Of A Deed Of Absolute Sale Of A Portion Of A Registered Agricultural Land"
executed by the late Ignacio Palanay on December 9, 1972 and which was exhibited in the trial court
below, admitted the sale of the one hectare portion to the petitioners sometime in 1956. The same
deed likewise explicitly stated that the "fact of the previous sale, was well known and acknowledged
by Mr. Ruperto Rubin (the private respondent)." These recitals were further buttressed by
Concepcion Salubo, a daughter of Isidro Palanay, who testified that she knew of the previoussale of
the one-hectare portion to petitioner Ignacio Cardente and that private respondent Ruperto Rubin
was properly informed of the said sale. On this regard, no ill-motive had been attributed to the vendor
Isidro Palanay and to his daughter Concepcion Salubo for testifying the way they did -- against the
private respondents. They were disinterested persons who stood to gain nothing except, perhaps,
the satisfaction of setting the record straight, or, in the words of the seller, "for the purpose of giving
efficacy to the Deed of Sale I made to Ignacio Cardente which was made in a private document x x
x."
Further, the notorious and continuous possession and full enjoyment by petitioners of the disputed
one-hectare property long (four years) before the private respondents purchased the same from
Palanay bolsters the petitioners' position. That possession would have been enough to arouse the
suspicion of the private respondents as to the ownership of the entire area which they were about to
purchase. Their failure to inquire and to investigate the basis of the petitioners' actual occupation of
the land forming a substantial part of what they were buying militates against their posited lack of
knowledge of the first sale. "A purchaser cannot close his eyes to facts which should put a
reasonable man upon his guard and then claim that he acted in good faith under the belief that there
was no defect in the title of the vendor." We have warned time and again that a buyer of real property
which is in the possession of persons other than the seller must be wary and should investigate the
rights of those in possession. Otherwise, without such inquiry, the buyer can hardly be regarded as
a buyer in good faith.
The private respondents' avowals that they had never known of the prior sale until the issues were
joined at the trial court, for, before that, they merely tolerated the continued presence of the original
occupants, Francisca and Eugenia Cardente, and Ignacio, in the premises, out of simple pity for the
two old women, is too pat to be believed. For if these were so, the reason why the private
respondents' continued to tolerate the occupation by the petitioners of the contested property even
after the demise of the two old women escapes us. Rubin's allegation that this was because they
were still in good terms with the petitioners is too lame an excuse to deserve even a scant
consideration. The private respondents' total lack of action against the actual occupants of a good
portion of the land described in their torrens title can only be construed as acceptance on their part
of the existence of the prior sale and their resignation to the fact that they did not own the onehectare portion occupied by the petitioners. Present these facts, the foisted ignorance of the
respondents as to the first sale is an empty pretense. Their seventeen years of inaction and silence
eloquently depict a realization of lack of right.

10.The factual antecedents of the case are summarized by the Court of Appeals in this wise:
On June 13, 1990, CMC Trading A.G. shipped on board the MN Anangel Sky at Hamburg,
Germany 242 coils of various Prime Cold Rolled Steel sheets for transportation to Manila
consigned to the Philippine Steel Trading Corporation. On July 28, 1990, MN Anangel Sky
arrived at the port of Manila and, within the subsequent days, discharged the subject cargo. Four

(4) coils were found to be in bad order B.O. Tally sheet No. 154974. Finding the four (4) coils in
their damaged state to be unfit for the intended purpose, the consignee Philippine Steel Trading
Corporation
declared
the
same
as
total
loss.
Despite receipt of a formal demand, defendants-appellees refused to submit to the consignees
claim. Consequently, plaintiff-appellant paid the consignee five hundred six thousand eighty six
& 50/100 pesos (P506,086.50), and was subrogated to the latters rights and causes of action
against defendants-appellees. Subsequently, plaintiff-appellant instituted this complaint for
recovery of the amount paid by them, to the consignee as insured.
Impugning the propriety of the suit against them, defendants-appellees imputed that the damage
and/or loss was due to pre-shipment damage, to the inherent nature, vice or defect of the goods,
or to perils, danger and accidents of the sea, or to insufficiency of packing thereof, or to the act
or omission of the shipper of the goods or their representatives. In addition thereto, defendantsappellees argued that their liability, if there be any, should not exceed the limitations of liability
provided for in the bill of lading and other pertinent laws. Finally, defendants-appellees averred
that, in any event, they exercised due diligence and foresight required by law to prevent any
damage/loss to said shipment.
Question: Is the argument of the defendants-appellees correct? Explain your answer.

Answer: Well-settled is the rule that common carriers, from the nature of their
business and for reasons of public policy, are bound to observe extraordinary diligence and
vigilance with respect to the safety of the goods and the passengers they transport.
[13]
Thus, common carriers are required to render service with the greatest skill and foresight and
to use all reason[a]ble means to ascertain the nature and characteristics of the goods tendered
for shipment, and to exercise due care in the handling and stowage, including such methods as
their nature requires.[14]The extraordinary responsibility lasts from the time the goods are
unconditionally placed in the possession of and received for transportation by the carrier until
they are delivered, actually or constructively, to the consignee or to the person who has a right to
receive them.[15]
This strict requirement is justified by the fact that, without a hand or a voice in the preparation of
such contract, the riding public enters into a contract of transportation with common carriers.
[16]
Even if it wants to, it cannot submit its own stipulations for their approval.[17] Hence, it merely
adheres to the agreement prepared by them.
Owing to this high degree of diligence required of them, common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got lost
or destroyed.[18] That is, unless they prove that they exercised extraordinary diligence in
transporting the goods.[19] In order to avoid responsibility for any loss or damage, therefore, they
have the burden of proving that they observed such diligence.[20]
However, the presumption of fault or negligence will not arise[21] if the loss is due to any of the
following causes:

(1) flood, storm, earthquake, lightning, or other natural disaster or


calamity;
(2) an act of the public enemy in war, whether international or
civil;
(3) an act or omission of the shipper or owner of the goods; (4)
the character of the goods or defects in the packing or the
container; or
(5) an order or act of competent public authority.[22] This is a closed list.
If the cause of destruction, loss or deterioration is other than the enumerated circumstances, then
the carrier is liable therefor.[23]

Corollary to the foregoing, mere proof of delivery of the goods in good order to
a common carrier and of their arrival in bad order at their destination constitutes a prima facie
case of fault or negligence against the carrier. If no adequate explanation is given as to how the
deterioration, the loss or the destruction of the goods happened, the transporter shall be held
responsible.[24]

xxx
A bill of lading serves two functions. First, it is a receipt for the goods shipped.
Second, it is a contract by which three parties -- namely, the shipper, the carrier, and the
consignee -- undertake specific responsibilities and assume stipulated obligations.[56] In a
nutshell, the acceptance of the bill of lading by the shipper and the consignee, with full
knowledge of its contents, gives rise to the presumption that it constituted a perfected and
binding contract.[57]
[55]

Further, a stipulation in the bill of lading limiting to a certain sum the common carriers liability
for loss or destruction of a cargo -- unless the shipper or owner declares a greater value[58] -- is
sanctioned by law.[59] There are, however, two conditions to be satisfied: (1) the contract is
reasonable and just under the circumstances, and (2) it has been fairly and freely agreed upon by
the parties.[60] The rationale for, this rule is to bind the shippers by their agreement to the value
(maximum valuation) of their goods.[61]
It is to be noted, however, that the Civil Code does not limit the liability of the common carrier to
a fixed amount per package.[62] In all matters not regulated by the Civil Code, the right and the
obligations of common carriers shall be governed by the Code of Commerce and special laws.
[63]
Thus, the COGSA, which is suppletory to the provisions of the Civil Code, supplements the
latter by establishing a statutory provision limiting the carriers liability in the absence of a
shippers declaration of a higher value in the bill of lading.[64] The provisions on limited liability
are as much a part of the bill of lading as though physically in it and as though placed there by
agreement of the parties.[65]
In the case before us, there was no stipulation in the Bill of Lading[66] limiting the carriers
liability. Neither did the shipper declare a higher valuation of the goods to be shipped. This fact
notwithstanding, the insertion of the words L/C No. 90/02447 cannot be the basis for
petitioners liability.
First, a notation in the Bill of Lading which indicated the amount of the Letter of Credit obtained
by the shipper for the importation of steel sheets did not effect a declaration of the value of the
goods as required by the bill.[67] That notation was made only for the convenience of the shipper
and the bank processing the Letter of Credit.[68]
Second, in Keng Hua Paper Products v. Court of Appeals,[69] we held that a bill of lading was
separate from the Other Letter of Credit arrangements. We ruled thus:
(T)he contract of carriage, as stipulated in the bill of lading in the present case, must be
treated independently of the contract of sale between the seller and the buyer, and the contract of
issuance of a letter of credit between the amount of goods described in the commercial invoice in
the contract of sale and the amount allowed in the letter of credit will not affect the validity and
enforceability of the contract of carriage as embodied in the bill of lading. As the bank cannot be
expected to look beyond the documents presented to it by the seller pursuant to the letter of
credit, neither can the carrier be expected to go beyond the representations of the shipper in the
bill of lading and to verify their accuracy vis--vis the commercial invoice and the letter of
credit. Thus, the discrepancy between the amount of goods indicated in the invoice and the
amount in the bill of lading cannot negate petitioners obligation to private respondent arising
from the contract of transportation.[70]
In the light of the foregoing, petitioners liability should be computed based on US$500
per package and not on the per metric ton price declared in the Letter of Credit. [71] In Eastern
Shipping Lines, Inc. v. Intermediate Appellate Court[72] we explained the meaning of package:

When what would ordinarily be considered packages are shipped in a container supplied
by the carrier and the number of such units is disclosed in the shipping documents, each of those
units and not the container constitutes the package referred to in the liability limitation
provision of Carriage of Goods by Sea Act.
Considering, therefore, the ruling in Eastern Shipping Lines and the fact that the Bill of
Lading clearly disclosed the contents of the containers, the number of units, as well as the nature
of the steel sheets, the four damaged coils should be considered as the shipping unit subject to
the US$500 limitation.(BELGIAN OVERSEAS CHARTERING AND SHIPPING N.V. AND
JARDINE DAVIES TRANSPORT SERVICES, INC., PETITIONERS, VS. PHILIPPINE FIRST
INSURANCE CO., INC., RESPONDENT THIRD DIVISION[ G.R. No. 143133, June 05, 2002 ]

problems in civil law

1. State if the probate court has the power to determine :(a) the due execution of a
holographic will (b) whether the testator is of sound mind (c) whether the last will is freely
executed (d) whether the solemnities and formalities are observed (e) whether the property in
question is part of the estate of the decedent or not.

ANSWER: Petitioner should realize that the allowance of her husbands will is conclusive only as to
its due execution.[11] The authority of the probate court is limited to ascertaining whether the testator,
being of sound mind, freely executed the will in accordance with the formalities prescribed by law.
[12]
Thus, petitioners claim of title to the properties forming part of her husbands estate should be
settled in an ordinary action before the regular courts.

2. If a decedent is an inhabitant of the Philippines at the time of his death, what court shall
have jurisdiction of the probate of his will? If he is an inhabitant of a foreign country, will
your answer be the same?

ANSWER: If the decedent is an inhabitant of the Philippines at the time of his death, whether a
citizen or an alien, his will shall be proved, or letters of administration granted, and his estate
settled, in the Court of First Instance (now Regional Trial Court) in the province in which he
resides at the time of his death, and if he is an inhabitant of a foreign country, the Court of First
Instance (now Regional Trial Court) of any province in which he had estate.

3. On September 24, 1977, petitioner donated unto respondent a parcel of land at


Canlubang, Calamba, Laguna with an area of 41,117 square meters and registered in its name
under Transfer Certificate of Title (TCT) No. T-82803. The deed of donation which also bears the

acceptance of the donee recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor, the Donee shall not use
the land except for the purpose as provided above in paragraph 1 hereof, nor sell or dispose the land
for any reason whatsoever, nor convey any portion of the same except in lease for commercial use
as provided above in paragraph 3 hereof, otherwise the said land with all real improvements thereon
shall revert in trust to the Donor for prompt disposition in favor of some other charitable organization
that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of generating funds to build the
perimeter fence on the donated property and the construction of a nucleus building for the aged and
the infirm, leased a portion of the donated property to one Martin Gomez who planted said portion
with sugar cane. There is no dispute that the lease agreement was entered into by the donee without
the prior written consent of the donor, as required in the deed ofdonation. The lease to Gomez ended
in 1985.
Question: Will the subject deed of donation be adjudged revoked and void and the donee
ordered to return and/or reconvey the property donated reason of said violation of the attached
condition?

4. According to purpose or cause, state the four (4) kinds of donation and explain each.
Answer: Donations, according to its purpose or cause, may be categorized as: (1) pure or simple; (2)
remuneratory or compensatory; (3) conditional or modal; and (4) onerous. A pure or simple donation
is one where the underlying cause is plain gratuity. This is donation in its truest form. On the other
hand, a remuneratory or compensatory donation is one made for the purpose of rewarding the
donee for past services, which services do not amount to a demandable debt. A conditional or
modal donation is one where the donation is made in consideration of future services or where the
donor imposes certain conditions, limitations or charges upon the donee, the value of which is
inferior than that of the donation given. Finally, an onerous donation is that which imposes upon the
donee a reciprocal obligation or, to be more precise, this is the kind of donation made for a valuable
consideration, the cost of which is equal to or more than the thing donated.

5. Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store,


Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's
branch manager, operations manager, and supervisor, respectively. Private respondents
are spouses and the parents of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of
Syvel's Department Store, Makati City. CRISELDA was signing her credit card slip at the
payment and verification counter when she felt a sudden gust of wind and heard a loud
thud. She looked behind her. She then beheld her daughter ZHIENETH on the floor, her
young body pinned by the bulk of thestore's gift-wrapping counter/structure.
ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and retrieving ZHIENETH
from the floor.
Eventually, Zhieneth died.

Questions: (a) Is Jarco Marketing Corporation liable for the death of Zhieneth? (b)
What principle of law is applicable in deciding this matter? Explain your answer.

6. The record discloses that the late Francisco Sanz was the former owner of a parcel of land
containing 888 square meters, with the buildings and improvements thereon, situated in
the poblacion of Romblon. He subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who subsequently sold it to Vicente Uy
Veza. Another portion, with the house of strong materials thereon, was sold in 1927 to Tan Yanon,
respondent herein. This house has on its northeastern side, doors and windows overlooking the
third-portion, which, together with the camarin and small building thereon, after passing through
several hands, was finally acquired by Juan Gargantos, petitioner herein.

On April 23, 1955, Gargantos applied to the Municipal Mayor of Romblon for a
permit to demolish the roofing of the old camarin. The permit having been granted,
Gargantos tore down the roof of the camarin. On May 11,1955, Gargantos asked the
Municipal Council of Romblon for another permit, this time in order to construct a
combined residential house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon filed against
Gargantos an action to restrain him from constructing a building that would prevent
plaintiff from receiving light and enjoying the view through the windows of his
house, unless such building is erected at a distance of not less than three meters
from the boundary line between the lots of plaintiff and defendant, and to enjoin the
members of the Municipal Council of Romblon from issuing the corresponding
building permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon acquire the
easement of light and view against the property of Gargantos? Explain.

7. (a) Mr. X delivered his piano for repair to Mr. Y. When the piano was already repaired, unknown to
Mr. X, the latter sold the piano to Mr. Z, who paid 30k. Mr. Y left the place and took away the said
money. What kind of possession has Mr. Y, and what criminal case shall he be made liable of? (b)
Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k to Miss Chua so that the same
can be deposited in his account. Miss Chua however took the money and misappropriated the
same. What kind of possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother Marciana Vda. De


Coronado (Vda. De Coronado) and the Municipality of Nagcarlan, Laguna (represented by the then
Municipal Mayor Crisostomo P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store located at the corner of
Coronado and E. Fernandez Sts. at Poblacion, Nagcarlan, Laguna, in favor of the respondents
mother for a period of twenty (20) years beginning on 15 March 1978 until 15 March 1998, extendible
for another 20 years.
The lease contract provided that the late Vda. De Coronado could build a firewall on her
rented property which must be at least as high as the store; and in case of modification of the public
market, she or her heir/s would be given preferential rights.

Visitacion took over the store when her mother died sometime in 1984.From then on up to
January 1993, Visitacion secured the yearly Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon Visitacions request for
inspection on 15 May 1986, District Engineer Marcelino B. Gorospe (Engineer Gorospe) of the then
Ministry of Public Works and Highways,Regional Office No. IV-A, found that the store of Visitacion
remained intact and stood strong. This finding of Engineer Gorospe was contested by the
Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15 October 1993.
On 1 September 1993, Visitacion received a letter from Mayor Comendador directing her to
demolish her store within five (5) days from notice. Attached to the letter were copies of Sangguniang
Bayan Resolution No. 156 dated 30 August 1993 and a Memorandum issued by Asst. Provincial
Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser sent a letter to
Visitacion ordering her to vacate the portion of the public market she was occupying within 15 days
from her receipt of the letter; else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna issued Resolution No.
183 authorizing Mayor Comendador to demolish the store being occupied by Visitacion using legal
means
On 15 October 1993, Mayor Comendador relying on the strength of Sangguniang Bayan
Resolution Nos. 183 and 156 authorized the demolition of the store with Asilo and Angeles
supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil engineer, estimated the cost
of the demolished property as amounting to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or (b) Mayor Comendador
liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the structure of Visitacion
as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners of the various parcels of
real property that form part of Lot No. 666, (plan II-5121 Amd.2) situated in Mandaue City, Cebu,
which lot allegedly belonged originally to Claudio Ermac. Upon the latter's death, the said Lot No.
666 was inherited and partitioned by his children, namely, Esteban, Pedro and Balbina. Siblings
Pedro and Balbina requested their brother Esteban to have their title over the property registered.
Esteban, however, was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name, and did not include his
father's brother and sister, nor his cousins. Despite having registered the lot in his name, Clemente
did not disturb or claim ownership over those portions occupied by his uncle, aunt and cousins even
up to the time of his death. Among the occupants of Lot No. 666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the portions of Lot No. 666 now
occupied by them by right of succession as direct descendants of the original owner, Claudio Ermac.

[Respondents] Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by purchase
from the children of Claudio Ermac. [Respondent] Vicente Dionson, on the other hand, bought his
land from the heirs of Pedro Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon. [respondents'] ownership and possession
had been peaceful and undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac
filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the [respondents'] ownership
over their respective parcels of land, prompting them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of the [respondents], and
claimed that the [respondents] have no cause of action against them. It is essentially claimed that it
was Clemente Ermac and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in actual, peaceful, adverse
and continuous possession in the concept of an owner of the entire Lot No. 666. With the help of his
children, he cultivated the said lot, and planted corn, peanuts, cassava and fruit products. Clemente
also effected the registration of the subject lot in his name. Upon Clemente's death, [petitioners]
inherited Lot No. 666, and they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only tolerated by Clemente
Ermac and the [petitioners]. [Petitioners] in fact had never surrendered ownership or possession of
the property to the [respondents]. [Petitioners] also set up the defense of prescription and laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the original owner of the lot in
question was Claudio Ermac, and therefore, the property was inherited upon his death by his
children Esteban, Balbina and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was] supported by the
admissions of Irene[a] Seno, witness for the [petitioners] and daughter of Clemente Ermac,
establishing facts which show that [petitioners] and their predecessor Clemente did not own the
entire property, but that the other heirs of Claudio Ermac are entitled to two-thirds (2/3) of the lot.
Since the entire lot is now registered in the name of Clemente Ermac, the shares belonging to the
other heirs of Claudio Ermac, some of which have already been purchased by some of the
[respondents], are being held in trust by the [petitioners] in favor of their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of law was used by the
court in adjudicating the rights of the parties? Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses] Clemente Ermac [and]
Anunciacion Suyco is indefeasible and incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are sufficient to defeat the title over
the property in the names of petitioner's predecessors-in-interest [Spouses] Clemente Ermac and
Anunciacion Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at 746 Epifanio delos Santos
Avenue (EDSA), Quezon City with an area of 375 square meters and covered by Transfer Certificate
of Title (TCT) No. RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No. 2904, entitled "An
Ordinance Requiring the Construction of Arcades, for Commercial Buildings to be Constructed in
Zones Designated as Business Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor projecting over the
sidewalk beyond the first storey wall used as protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to construct an arcade with a width
of 4.50 meters and height of 5.00 meters along EDSA, from the north side of Santolan Road to one
lot after Liberty Avenue, and from one lot before Central Boulevard to the Botocan transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade, will you consider his building a nuisance for not
complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the owners of a
parcel of land located in Rizal, Santiago, Isabela, with an area of 29,002 square
meters. The lot was covered by Original Certificate of Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation over a 10,000-squaremeter portion of their property in favor of the Ministry of Education and Culture (now the Department
of Education, Culture and Sports [DECS]).
The deed provided, among others:That for and in consideration of the benefits that may be
derived from the use of the above described property which is intended for school purposes, the said
DONORS do by these presents TRANSFER AND CONVEY by way of DONATION unto the DONEE,
its successors and assigns, the above property to become effective upon the signing of this
document.
The property was subdivided. On April 13, 1983, Transfer Certificate of Title (TCT) No. T143337 covering the portion identified as Lot 8858-A was issued in the name of the Ministry of
Education and Culture, represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and remained idle. Sometime in
1988, the DECS, through its Secretary, started construction of the Rizal National High School
building on a parcel of land it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to the DECS Secretary dated
August 19, 1994, the spouses Dulay requested that the property be returned to them considering
that the land was never used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the condition imposed in the
Deed of Donation?
(b) Shall the deed of donation be revoked?

(c) Is the respondents right to have the revocation of the Deed of Donation barred already
by prescription and laches?

problems in civil law

1. A Chinese citizen, who is domiciled in Argentina, is on his way to Manila.


The boat where he is riding, is docking for five days in Japan. In Japan can
he make a will? IF so, what countrys formalities should he observe?

2. Tony made a will making Antonia his heir. Tony later learned that
Antonia was dead, so he revokes his first will and made another one
instituting Berto as heir. If A turns out to be still alive, who inherits?

3. On September 24, 1977, petitioner donated unto respondent a parcel of


land at Canlubang, Calamba, Laguna with an area of 41,117 square meters
and registered in its name under Transfer Certificate of Title (TCT) No. T82803. The deed of donation which also bears the acceptance of the donee
recites the considerations therefor and the conditions thereto attached, to
wit:
xxxExcept with prior written consent of the Donor or its successor,
the Donee shall not use the land except for the purpose as provided above
in paragraph 1 hereof, nor sell or dispose the land for any reason
whatsoever, nor convey any portion of the same except in lease for
commercial use as provided above in paragraph 3 hereof, otherwise the
said land with all real improvements thereon shall revert in trust to the
Donor for prompt disposition in favor of some other charitable
organization that Donor may deem best suited to the care of the aged.xxx
Thereafter, or sometime in 1980, the donee, for purposes of
generating funds to build the perimeter fence on the donated property
and the construction of a nucleus building for the aged and the infirm,
leased a portion of the donated property to one Martin Gomez who
planted said portion with sugar cane. There is no dispute that the lease
agreement was entered into by the donee without the prior written
consent of the donor, as required in the deed of donation. The lease to
Gomez ended in 1985.
Question: Will the subject deed of donation be adjudged revoked
and void and the donee ordered to return and/or reconvey the property
donated reason of said violation of the attached condition? What law shall
govern the said matter? Explain.

4. According to purpose or cause, state the four (4) kinds of donation and
explain each.
5. Petitioner Jarco Marketing Corporation is the owner of Syvel's
Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and
Elisa Panelo are the store's branch manager, operations manager, and
supervisor, respectively. Private respondents are spouses and the parents
of Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the
2nd floor of Syvel's Department Store, Makati City. CRISELDA was signing
her credit card slip at the payment and verification counter when she felt
a sudden gust of wind and heard a loud thud. She looked behind her. She
then beheld her daughter ZHIENETH on the floor, her young body pinned
by the bulk of thestore's gift-wrapping counter/structure. ZHIENETH was
crying and screaming for help. Although shocked, CRISELDA was quick to
ask the assistance of the people around in lifting the counter and
retrieving ZHIENETH from the floor.
Eventually, Zhieneth died.
Questions: (a) Is Jarco Marketing Corporation liable for the death of
Zhieneth? (b) What principle of law is applicable in deciding this matter?
Explain your answer.

6. The record discloses that the late Francisco Sanz was the former
owner of a parcel of land containing 888 square meters, with the buildings
and improvements thereon, situated in the poblacion of Romblon. He
subdivided the lot into three and then sold each portion to different
persons. One portion was purchased by Guillermo Tengtio who
subsequently sold it to Vicente Uy Veza. Another portion, with the house
of strong materials thereon, was sold in 1927 to Tan Yanon, respondent
herein. This house has on its northeastern side, doors and windows
overlooking the third-portion, which, together with the camarin and small
building thereon, after passing through several hands, was finally
acquired by Juan Gargantos, petitioner herein.
On April 23, 1955, Gargantos applied to the Municipal Mayor of
Romblon for a permit to demolish the roofing of the oldcamarin. The
permit having been granted, Gargantos tore down the roof of the camarin.
On May 11,1955, Gargantos asked the Municipal Council of Romblon for
another permit, this time in order to construct a combined residential
house and warehouse on his lot .
Tan Yanon opposed approval of this application.
Because both the provincial fiscal and district engineer of Romblon
recommended granting of the building permit to Gargantos, Tan Yanon
filed against Gargantos an action to restrain him from constructing a
building that would prevent plaintiff from receiving light and enjoying the
view through the windows of his house, unless such building is erected at
a distance of not less than three meters from the boundary line between

the lots of plaintiff and defendant, and to enjoin the members of the
Municipal Council of Romblon from issuing the corresponding building
permit to defendants.
Question: Based on the above facts, did the property of Tan Yanon
acquire the easement of light and view against the property of Gargantos?
Explain.

7.
(a) Mr. X delivered his piano for repair to Mr. Y. When the piano
was already repaired, unknown to Mr. X, the latter sold the piano to Mr. Z,
who paid P30k. Mr. Y left the place and took away the said money. What
kind of possession has Mr. Y, and what criminal case shall he be made
liable of?
(b) Miss Chua is a bank teller. Mr. Te is a depositor who handed P50k
to Miss Chua so that the same can be deposited in his account. Miss Chua
however took the money and misappropriated the same. What kind of
possession has Miss Chua, and what crime shall she be made liable of?

8. On 15 March 1978, Private Respondent Visitacions late mother


Marciana Vda. De Coronado (Vda. De Coronado) and the Municipality of
Nagcarlan, Laguna (represented by the then Municipal Mayor Crisostomo
P. Manalang) entered into a lease contract whereby the Municipality
allowed the use and enjoyment of property comprising of a lot and a store
located at the corner of Coronado and E. Fernandez Sts. at Poblacion,
Nagcarlan, Laguna, in favor of the respondents mother for a period of
twenty (20) years beginning on 15 March 1978 until 15 March 1998,
extendible for another 20 years.
The lease contract provided that the late Vda. De Coronado could
build a firewall on her rented property which must be at least as high as
the store; and in case of modification of the public market, she or her
heir/s would be given preferential rights.
Visitacion took over the store when her mother died sometime in
1984.From then on up to January 1993, Visitacion secured the yearly
Mayors permits.
Sometime in 1986, a fire razed the public market of Nagcarlan. Upon
Visitacions request for inspection on 15 May 1986, District Engineer
Marcelino B. Gorospe (Engineer Gorospe) of the then Ministry of Public
Works and Highways,Regional Office No. IV-A, found that the store of
Visitacion remained intact and stood strong. This finding of Engineer
Gorospe was contested by the Municipality of Nagcarlan.
The store of Visitacion continued to operate after the fire until 15
October 1993.
On 1 September 1993, Visitacion received a letter from Mayor
Comendador directing her to demolish her store within five (5) days from
notice. Attached to the letter were copies of Sangguniang Bayan

Resolution No. 156 dated 30 August 1993 and a Memorandum issued by


Asst. Provincial Prosecutor Marianito Sasondoncillo of Laguna.
On 15 September 1993, Asst. Provincial Prosecutor Florencio Buyser
sent a letter to Visitacion ordering her to vacate the portion of the public
market she was occupying within 15 days from her receipt of the letter;
else, a court action will be filed against her.
On 11 October 1993, the Sangguniang Bayan of Nagcarlan, Laguna
issued Resolution No. 183 authorizing Mayor Comendador to demolish the
store being occupied by Visitacion using legal means
On 15 October 1993, Mayor Comendador relying on the strength of
Sangguniang Bayan Resolution Nos. 183 and 156 authorized the
demolition of the store with Asilo and Angeles supervising the work.
Engineer Winston Cabrega (Engineer Cabrega), a licensed civil
engineer, estimated the cost of the demolished property as amounting
to P437,900.00.
Questions: (1) Will you make the (a) municipality of Nagcarlan and/or
(b) Mayor Comendador liable for damages in the case at bar?
(2) What principle of law is applicable in this case?
(3) Does the Sanggunian of Nagcarlan have the power to declare the
structure of Visitacion as a nuisance per se? Explain.

9. In their Complaint, [respondents] claim that they are the owners


of the various parcels of real property that form part of Lot No. 666, (plan
II-5121 Amd.2) situated in Mandaue City, Cebu, which lot allegedly
belonged originally to Claudio Ermac. Upon the latter's death, the said Lot
No. 666 was inherited and partitioned by his children, namely, Esteban,
Pedro and Balbina. Siblings Pedro and Balbina requested their brother
Esteban to have their title over the property registered. Esteban, however,
was unable to do so, and the task of registration fell to his son, Clemente.
Clemente applied for registration of the title, but did so in his own name,
and did not include his father's brother and sister, nor his cousins. Despite
having registered the lot in his name, Clemente did not disturb or
claim ownership over those portions occupied by his uncle, aunt and
cousins even up to the time of his death. Among the occupants of Lot No.
666 are the [respondents] in this case.
[Respondents]-heirs of Vicente Ermac claim ownership over the
portions of Lot No. 666 now occupied by them by right of succession as
direct descendants of the original owner, Claudio Ermac. [Respondents]
Luisa Del Castillo and Estaneslao Dionson allegedly derived their title by
purchase from the children of Claudio Ermac. [Respondent] Vicente
Dionson, on the other hand, bought his land from the heirs of Pedro
Ermac, while [Respondents] Emigdio Bustillo and Liza Parajele derived
their ownership from the Heirs of Balbina Ermac-Dabon.
[respondents'] ownership and possession had been peaceful and

undisturbed, until recently when the [petitioners]-heirs of Clemente Ermac


filed an action for ejectment against them.
The filing of the said ejectment caused a cloud of doubt upon the
[respondents'] ownership over their respective parcels of land, prompting
them to file this action for quieting of title."
[Petitioners], on the other hand, denied the material allegations of
the [respondents], and claimed that the [respondents] have no cause of
action against them. It is essentially claimed that it was Clemente Ermac
and not his grandfather Claudio Ermac who is the original claimant of
dominion over Lot No. 666. During his lifetime, Clemente Ermac was in
actual, peaceful, adverse and continuous possession in the concept of an
owner of the entire Lot No. 666. With the help of his children, he
cultivated the said lot, and planted corn, peanuts, cassava and fruit
products. Clemente also effected the registration of the subject lot in his
name. Upon Clemente's death, [petitioners] inherited Lot No. 666, and
they constructed their residential houses thereon. [Petitioners] claim that
[respondents'] recent occupation of some portions of Lot No. 666 was only
tolerated by Clemente Ermac and the [petitioners]. [Petitioners] in fact
had never surrendered ownership or possession of the property to the
[respondents]. [Petitioners] also set up the defense of prescription and
laches.
"After trial, the lower [court] rendered its [D]ecision, finding that the
original owner of the lot in question was Claudio Ermac, and therefore, the
property was inherited upon his death by his children Esteban, Balbina
and Pedro. All the heirs of Claudio Ermac, therefore, should share in
the ownership over Lot No. 666, by right of succession. The ruling [was]
supported by the admissions of Irene[a] Seno, witness for the
[petitioners] and daughter of Clemente Ermac, establishing facts which
show that [petitioners] and their predecessor Clemente did not own the
entire property, but that the other heirs of Claudio Ermac are entitled to
two-thirds (2/3) of the lot. Since the entire lot is now registered in the
name of Clemente Ermac, the shares belonging to the other heirs of
Claudio Ermac, some of which have already been purchased by some of
the [respondents], are being held in trust by the [petitioners] in favor of
their actual occupants.
Questions:
(1) Is the decision of the Court correct?
(2) On the basis of your reading of the Ermac case, what principle of
law was used by the court in adjudicating the rights of the parties?
Explain.
(3) Decide :
(a) Whether or not O.C.T. No. RO-752 issued in the names of [Spouses]
Clemente Ermac [and] Anunciacion Suyco is indefeasible and
incontrovertible under the Torrens System
(b) Whether or not the alleged tax declarations and tax receipts are
sufficient to defeat the title over the property in the names of petitioner's

predecessors-in-interest [Spouses] Clemente Ermac and Anunciacion


Suyco
(c) Whether or not laches ha[s] set in on the claims by the respondents on
portions of Lot No. 666

9. In the early 1950s, Gancayco bought a parcel of land located at


746 Epifanio delos Santos Avenue (EDSA), Quezon City with an area of 375
square meters and covered by Transfer Certificate of Title (TCT) No.
RT114558.
On 27 March 1956, the Quezon City Council issued Ordinance No.
2904, entitled "An Ordinance Requiring the Construction of Arcades, for
Commercial Buildings to be Constructed in Zones Designated as Business
Zones in the Zoning Plan of Quezon City, and Providing Penalties in
Violation Thereof."
An arcade is defined as any portion of a building above the first floor
projecting over the sidewalk beyond the first storey wall used as
protection for pedestrians against rain or sun.
Ordinance No. 2904 required the relevant property owner to
construct an arcade with a width of 4.50 meters and height of 5.00 meters
along EDSA, from the north side of Santolan Road to one lot after Liberty
Avenue, and from one lot before Central Boulevard to the Botocan
transmission line.
Questions: (a) Is the ordinance constitutional?
(b) Gancayco did not construct an arcade; will you consider his
building a nuisance for not complying with the ordinance?

10. The spouses Rufino Dulay, Sr. and Ignacia Vicente were the
owners of a parcel of land located in Rizal, Santiago, Isabela, with an area
of 29,002 square meters. The lot was covered by Original Certificate of
Title No. P-6776.
On August 3, 1981, the spouses Dulay executed a deed of donation
over a 10,000-square-meter portion of their property in favor of the
Ministry of Education and Culture (now the Department of Education,
Culture and Sports [DECS]).
The deed provided, among others: xxx That for and in consideration
of the benefits that may be derived from the use of the above described
property which is intended for school purposes, the said DONORS do by
these presents TRANSFER AND CONVEY by way of DONATION unto the
DONEE, its successors and assigns, the above property to become
effective upon the signing of this document.
The property was subdivided. On April 13, 1983, Transfer Certificate
of Title (TCT) No. T-143337 covering the portion identified as Lot 8858-A
was issued in the name of the Ministry of Education and Culture,
represented by Laurencio C. Ramel, the Superintendent of Schools of
Isabela. However, the property was not used for school purposes and

remained idle. Sometime in 1988, the DECS, through its Secretary, started
construction of the Rizal National High School building on a parcel of land
it acquired from Alejandro Feliciano. The school site was about 2
kilometers away from the land donated by the spouses Dulay. In a letter to
the DECS Secretary dated August 19, 1994, the spouses Dulay requested
that the property be returned to them considering that the land was never
used since 1981, or a period of more than 13 years.
Questions: (a) Did the Department of Education comply with the
condition imposed in the Deed of Donation?
(b) Shall the deed of donation be revoked?
(c) Is the respondents right to have the revocation of the Deed of
Donation barred already by prescription and laches?

mcq in civil law

1.(A) Dation in payment (B) Barter (C) Exchange (D) Commodatum (E)
Antichresis ---whereby property is alienated to the creditor in
satisfaction of a debt in money, shall be governed by the law of
sales.
2.Payment shall be made to (a) the person in whose favor the
obligation has been constituted (b) his successor in interest (c)
any person authorized to receive it (d) any of the above(e) all of the
above
3. Payment made by a (a) surety (b) guarantor (c) third person (d)
all of the above (e) none of the above ----who does not intend to be
reimbursed by the debtor is deemed to be a donation, which requires
the debtor's consent.
4 When the obligee accepts the performance, knowing its incompleteness
or irregularity, and without expressing any protest or objection, the
obligation is deemed (a) extinguished (b) fully complied with (c)
completed (d) satisfied (e) complete without prejudice to damages as
the case may be.
5 Which of the following is incorrect? (a) no title to registered land
in derogation of that of the registered owner shall be acquired by
prescription or adverse possession (b) Neither can prescription be
allowed against the hereditary successors of the registered owner,
because they merely step into the shoes of the decedent and are merely
the continuation of the personality of their predecessor in interest
(c) the disputed land covered by a certificate of title cannot be
acquired by prescription regardless of petitioner's good faith (d)
Laches is based upon equity and the public policy of discouraging

stale claims (e) Article 1145 of the New Civil Code provides that
real actions over immovable propertiesprescribe after thirty years

6. Which of the following is not correct? (a) Actions for the


annulment of contracts prescribe in four years (b) If the ground for
annulment is vitiation of consent by intimidation, the four-year
period starts from the time such defect ceases (c) The running of this
prescriptive period cannot be interrupted by an extrajudicial demand
made by the party whose consent was vitiated.(d) a complaint may be
dismissed when the facts showing the lapse of the prescriptive period
are apparent from the records (e) none of the above.
7. Which of the following is correct? (a) In actions for reconveyance
of property predicated on the fact that the conveyance complained of
was null and void ab initio, a claim of prescription of action would
be unavailing (b) The action or defense for the declaration of the
inexistence of a contract does not prescribe (c) Equity, which has
been aptly described as justice outside legality, can be applied
against a statutory law (d) Laches is a doctrine in equity and our
courts are basically courts of law and not courts of equity (d) laches
cannot be set up to resist the enforcement of an imprescriptible legal
right
8.Which of the following is a complete statement? (A) The power to
rescind obligations is implied in reciprocal ones (B) The injured
party may choose between the fulfillment and the rescission of the
obligation (c) The right to rescind a contract arises once the other
party defaults in the performance of his obligation (d) Those obliged
to deliver or to do something incur in delay from the time the obligee
judicially demands from them the fulfillment of their obligation (e)
When the obligation or the law expressly so declares demand shall not
be necessary in order that delay may exist.
9.Which of the following is INCORRECT? (A) In reciprocal obligations,
as in a contract of sale, the general rule is that the fulfillment of
the parties respective obligations should be simultaneous (B) No
demand is generally necessary because, once a party fulfills his
obligation and the other party does not fulfill his, the latter
automatically incurs in delay.(C) when different dates for performance
of the obligations are fixed, the default for each obligation must be
determined by the rules given in the first paragraph of Art. 1169,
that is, the other party would incur in delay only from the moment the
other party demands fulfillment of the formers obligation (D) even in
reciprocal obligations, if the period for the fulfillment of the
obligation is fixed, demand upon the obligee is no longer necessary
before the obligor can be considered in default and before a cause of
action for rescission will accrue.(E)
From the moment one of the
parties fulfills his obligation, delay by the other begins.

10. Which of the following is not CORRECT? (A) in the absence of a


stipulation to the contrary, the power to rescind must be invoked
judicially (B) The power to rescind can be exercised solely on a
party's own judgment that the other has committed a breach of the

obligation (C) as there is nothing in the contract of lease empowering


the defendants to rescind it without resort to the courts, the
defendants' action in unilaterally terminating the contract is
unjustified. (D) the right to resolve reciprocal obligations, in case
one of the obligors shall fail to comply with that which is incumbent
upon him, is deemed to be implied (E) Rescission will be ordered only
where the breach complained of is substantial as to defeat the object
of the parties in entering into the agreement
11. A was supposed to pay B P1,000,000 on Dec. 31, 2005. But believing
that the obligation was due and demandable already on Dec. 31, 2004, A
paid B the P1,000,000 on said date. How much may A recover from B, say
on June 30, 2005? (a) P1,000,000 only (b) P1,000,000 plus 1% per
annum (c) P1,000,000 plus interest of 6% per annum
(d) he cannot
recover any amount (e) P1,600,000
12. Suppose in the preceding problem, A had paid prematurely the whole
amount knowing fully well of the existence of the term, how much can A
recover? (a) P1,000,000 only
(b) P1,000,000 plus 1% per annum (c)
P1,000,000 plus interest of 6% per annum (d) he cannot recover any
amount (e) P1,600,000

13. On March 1, A sold to B a particular automobile. It was agreed


that payment and delivery were to be made on March 31, but on March
15, A delivered the car and B paid for said car. Pending the arrival
of March 31, should B return the car plus damages and should A return
the price plus interest? (a) There should be no returning (b) It can
be returned (c) there can be returning because by their actions both
parties implicitly agreed changing the date (d) there can be returning
because the problem deals with two unilateral obligations (e) both c &
d
14. A borrowed money from B and pledged a medal with diamonds as
security. It was agreed that A was to pay the money loaned with
interest at the end of one year. Before the expiration of the one-year
period, is A allowed to pay his debt and recover the medal pledged?
(a) No, unless B consents (b) Yes, it is right to do so (c) No,
because B would be deprived unnecessarily of his right to use the
medal (d) Yes, because the principal obligation is already paid (e)
No, the consent of B must first be obtained because the one-year
period was established for their benefit.
15.A sold B some properties during the Japanese occupation. A received
war notes as payment. After liberation, A sought to recover the
properties on ground that the money paid to him was worthless. Is A
correct? (a) Yes, A is correct because there was no payment at all (b)
A is wrong, because he willingly sold the properties (c) A is not
correct, because he was compelled to receive such notes (d) A is not
correct because A willingly sold said properties and benefited with
the use of the purchase money (e) A is not correct and he must suffer
the worthlessness of the notes.
16. Legal tender means (a) valid payment (b) currency stipulated (c)
that which a debtor may compel a creditor to accept in payment (d)
notes and coins (e) money used during the transaction.

17. Which of the following statements is CORRECT about judicial costs?


(a) the civil code governs costs (b) the rules of court is the
reference for costs (c) the state is not exempt from payment of costs
(d) none of the above (e) all of the above.

18.Which of the following applies to DATION IN PAYMENT? (A)


giving of the price may generally end the obligation of the buyer
there is no pre-existing credit (c) the cause or consideration is
price (d) there is greater freedom in the determination of
price(e) there is a pre-existing credit which extinguishes
obligation.

the
(b)
the
the
the

19. The proceeding by which a debtors creditor is subjected to the


payment of his own debt to another is known as (a) dation in payment
(B) sale (c) garnishment (d) interpleader (e) injunction.
20.Is payment to a person incapacitated to manage or administer his
property valid ? (a) no, because the law says so (b) yes if he kept
the thing delivered to him (c) no, even if the payment benefited him
(d) yes, if he is benefited (e) both b and d.
21. A owes B P 1,000,000. When A paid B, the latter was already
insane. However, the money was never spent, and A is still in the
bankbook of B. Is the obligation extinguished? (a) no, because the
payment was Invalid (b) No, because B was incapacitated to administer
his property (c) Yes, because B has kept the money (d) both a & c
(E) yes, because the payment was valid.

22. Suppose in the preceding problem, a swindler had asked B for


P1,000,000 in exchange for a ring worth P500,000, does As payment to
B remain valid? (a) yes, but up to P500,000 only (b) yes, up to
P1,000,000 because he actually received it.(c) yes, the whole amount
since he benefited to the same (d) Yes, As payment is valid only
insofar as the payment has benefited him, (e) both a & d.
23. A borrowed P1 million from B. The loan was secured by a mortgage
of As land in favor of B. Without the knowledge of A, C paid B the
sum of P1m for As debt. A benefited to the amount of P1M. Which of
the following statements is correct? (a) C can claim reimbursement fro
A inasmuch as C paid As debt (b) C can recover the whole amount of
P1M inasmuch as he benefited up to that amount (c) If A cannot pay, C
cannot foreclose the mortgage on As land because there was really no
subrogation (d) none of the above (e) all of the above.
24. A owes B the sum of P1M. C is the guarantor of A. A was able to
pay B the sum of P400,000. D thinking that A still owed B P1M paid P1M
to be against the will of A. Which of the following is not
correct? (a) D cannot recover from A. (B) D may recover from A (C) D
can recover only P600,000 because this is the only amount which

benefited A. (D) If A cannot pay, D cannot ordinarily proceed against


the guarantor C because D, having paid against the will of A, is not
entitled to subrogation (E) both D and C.
25. Plaintiff, a seller in Japan sold to defendant-buyer some coal.
While delivery was being made, the Philippine Congress imposed a
specific tax of P10/metric ton of coal. So that the coal could enter
Manila, the plaintiff-seller paid this tax. When defendant was asked
for reimbursement, defendant refused to pay. Which of the statements
below is CORRECT? (A) the buyer shall pay the tax. (b) the seller
shall pay the tax (c) the seller shall pay the tax pursuant to the
revenue system (d) the seller shall pay the tax since he merely paid
in behalf of the buyer (e) although the Act provides that the seller
may pay the tax, as is practiced under our revenue system, still the
ultimate liability should fall upon the buyer.
26. A promises to deliver to B 100 bottles of wine on a certain day
when a banquet will be held. The contract states that failure of a to
do so on that day will result in forfeiture of P100,000. On that day,
A was able to deliver only 90 bottles of wine. Which of the following
is correct? (a) B can forfeit the P100,000 since there was no complete
delivery (b) B need not pay the 100 bottles of wine since there was a
violation of the agreement (c) B must pay the 90 bottles since he was
benefited (d) there was an irregular performance of As obligation,
hence he must be liable for damages (e) B need not pay for the 90
bottles because A is even liable still for damages for failure to
deliver the 100 bottles.
27. A was obliged under a contract a contract with B, not to sell
shares of stock for one year. A penal clause was provided. But A sold
shares of stock within the period specified but damages were not
proved by B to have been suffered by him. May A recover the penalty?
(a) Yes, B may recover the penalty because the contract has a
suspensive condition and it is voluntarily agreed (b) No. B may not
recover the penalty because at any rate there was no damage done
anyway (c) No, B cannot recover because the prohibition to sell his
own shares is contrary to law (d) Yes, B may recover the penalty
because the damage is
not a relevant issue (e) No, B cannot recover
the penalty because he has to prove the damage due to the breach.

28. A, B and C solidarily owe X P3M. X remitted Cs share. A,


therefore paid later only P2M. Can A recover reimbursement? (a) Yes,
but only from B and not from C (B) Yes, from both B and C (C) No, he
cannot from anyone at all (d) Yes, but only from C (E) Yes, but only
from B because Cs share was remitted and the remission was previous
to the payment.
29. Which of the following is a modification of an obligation? (a)
compensation (b) novation(c) confusion (d) remission (e) merger
30. Which of the following is best described as waiver?
compensation (b) novation (c) confusion (d) remission (e)merger

(a)

31. A and B are solitary debtors of X and Y, solidary creditors to the


amount of P400,000. But X owes A P400,000 on account of a different
obligation. Here we have what we call a ------ (a) compensation (b)
novation (c) confusion (d) remission (e)merger

32. A and B
the payment
P800,000, A
compensation

are solidarily liable to X and Y, solidary creditors, for


of P800,000. A and X agreed that instead of paying
will just paint Xs house. What happens here is -----(a)
(b) novation (c) confusion (d) remission (e)merger

33. A and B are solidary debtors of X and Y, solidary creditors to the


amount of P4M. X tells A that he was waiving the whole obligation.
What happens here is an example of ---------(a) compensation (b)
novation (c) confusion (d) remission (e)merger

34.In 2004, A, B, and C bound themselves in solidum to give X p300,000


subject to the following stipulations: A to pay in 2005, B, if he
passes the bar, and C in 2007. In 2005, how much can X demand from A?
(A) p300,000 (B) p100,000 (C) p200,000 (D) X has a right to P300,000
MINUS Bs share (e) X can collect but minus Cs share.
35.Two people borrowed money and signed a promissory note promising to
pay juntos o separademente. What is the nature of their liability?
(a) joint (b) solidary (c) joint and solidary (d) pro rata (e)
proportionate
36.Which of the following is
an alternative obligation? (a) an
insurance contract which stipulates that if the house is damaged B may
either pay for the damage or rebuild the house(b) D is obliged to
give C, at Ds option, either Object 1 or object 2 or object 3. (c)D
promised to give C his diamond ring but it was stipulated that D could
give his Toyota car as substitute (d)if the principal obligation is
void, there is no necessity of giving the substitute (e) the right to
choose is given only to the debtor.

37. Which of the following describes facultative obligation? (a)


Various things are due but the giving of one is sufficient (b) if one
of the prestations is illegal, the others may be valid and the
obligation remains (c) if the principal obligation is void, there is
no necessity of giving the substitute(d) none of the above (e) all of
the above.
38.In which situation can the Court fix the period? (a) when my means
permit me to do so (b) as soon as possible (c) in partial payment (d)
none of the above (e) all of the above.
39. IN which of the situation can a period be inferred? (a) a contract
to build a house (b) conditional donation (c) payment of a
subscription of shares of stocks (d) none of the above(e) all of the
above.

40.IN which of the following instances where the law imposes solidary
liability? (a) obligations arising from tort (b) obligations arising
from quasi-contracts (c) obligations of devisees and legatees (d) all
of the above (e) only a & b.
41. The defendants
X and Y, as partners in the management of a
bakery, owed plaintiff
Z the amount of P40,000. The trial court
ordered each defendant liable for the whole amount (in solidum). Which
of the following is correct? (a) the presumption is that they jointly
liable(b) X and Y is liable only for P20,000 (c) Each is liable for
the whole amount (d) the liability is solidary (e) both c and d.

42. To guaranty the obligation incurred by Felix Lafuente, a group of


men, executed a bond in favor of the Oriental Commercial Company,
where they promised to answer individually and collectively for the
total amount. Which is best correct? (a) they are sureties and they
are jointly liable (b) they are not sureties and therefore they are
only solidarily liable (c) they are jointly liable and everyone is
responsible for the whole amount (d) they are solidarily liable and
everyone is individually responsible for the full payment of the
obligation (e) they are jointly and severally liable.
43. Which obligation is demandable at once? (a)
pure (c) resolutory (d) suspensive (e) facultative

conditional (b)

44. Which of the following best describes a resolutory condition? (a)


demandable at once (b) happening of the event gives rise to the
obligation (c) not demandable at once (d) happening of the event
extinguishes the obligation (e) both C and B.
45. If the obligation depends upon the sole will of the debtor, then
(a) one can go to court and ask the court to fix the period (b) the
obligation is void (c) only voidable (d) the obligation is deemed to
be one with a period (e) contract is valid.
46. The contract provides: that the term or period of this contract
shall be as long as the party of the first part has need for the
electric light posts of the party of the second part. Which statement
is best correct? (a) the contract contains a potestative condition
hence the whole contract is void (b) the contract is valid, subject
to court action (c) the contract depends upon the sole will of the
debtor, in which case, the conditional obligation is void (d) it is
valid because the conditions imposed are casual conditions as it
depends upon a third person (e) the contract is subject to mixed
conditions hence void.
47 Within what period should the action to fix the period be filed?
(a) 4 years (b) 8 years(c) 10 years (d) 1 year only (e) none of the
above.
48. If the contract does not provide for a period, can the creditor
demand its fulfillment? (a) no, because the period has to be fixed
first (b) No, because the obligation is void (c) Yes, because after
all, it is still a valid obligation (d) No, because an action for the
court to fix the period has yet to be filed (e) yes, because the
parties may agree on the period themselves.

49. Which does not belong to the group? (a) compensation (b) novation
(c) confusion or merger (d) loss of thing due (e) fulfillment of
suspensive condition.
50. X owes Y P10,000. Because the obligation was due and demandable,
X delivered a parcel of land to Y who agreed to receive the land.
Prior to the delivery, however, X mortgaged the land to Z. Which
statement below is at best correct? (a) there is a dacion en pago
hence the obligation is extinguished (b) The obligation is not
extinguished since dacion en pago is invalid here (c) the dacion is
valid since it was with the consent of the creditor (d) the debtor is
not declared insolvent hence the dacion is valid (e) dation is invalid
because the encumbrance (mortgage) is prejudicial to the creditor

ANTONIA TORRES assisted by her husband, ANGELO TORRES;


and EMETERIA BARING, petitioners, vs. COURT OF APPEALS
and MANUEL TORRES,
THIRD DIVISION

G.R. No. 134559 December 9, 1999


ANTONIA TORRES assisted by her husband, ANGELO TORRES; and EMETERIA
BARING, petitioners,
vs.
COURT OF APPEALS and MANUEL TORRES, respondents.

PANGANIBAN, J.:
Courts may not extricate parties from the necessary consequences of their acts. That the terms of a
contract turn out to be financially disadvantageous to them will not relieve them of their obligations
therein. The lack of an inventory of real property will not ipso facto release the contracting partners
from their respective obligations to each other arising from acts executed in accordance with their
agreement.
The Case
The Petition for Review on Certiorari before us assails the March 5, 1998 Decision 1 of the Court of
Appeals 2 (CA) in CA-GR CV No. 42378 and its June 25, 1998 Resolution denying reconsideration.
The assailed Decision affirmed the ruling of the Regional Trial Court (RTC) of Cebu City in Civil Case
No. R-21208, which disposed as follows:
WHEREFORE, for all the foregoing considerations, the Court, finding for the defendant
and against the plaintiffs, orders the dismissal of the plaintiffs complaint. The
counterclaims of the defendant are likewise ordered dismissed. No pronouncement as to
costs. 3

The Facts
Sisters Antonia Torres and Emeteria Baring, herein petitioners, entered into a "joint venture
agreement" with Respondent Manuel Torres for the development of a parcel of land into a
subdivision. Pursuant to the contract, they executed a Deed of Sale covering the said parcel of land
in favor of respondent, who then had it registered in his name. By mortgaging the property,
respondent obtained from Equitable Bank a loan of P40,000 which, under the Joint Venture

Agreement, was to be used for the development of the subdivision. 4 All three of them also agreed to
share the proceeds from the sale of the subdivided lots.
The project did not push through, and the land was subsequently foreclosed by the bank.
According to petitioners, the project failed because of "respondent's lack of funds or means and
skills." They add that respondent used the loan not for the development of the subdivision, but in
furtherance of his own company, Universal Umbrella Company.
On the other hand, respondent alleged that he used the loan to implement the Agreement. With the
said amount, he was able to effect the survey and the subdivision of the lots. He secured the Lapu
Lapu City Council's approval of the subdivision project which he advertised in a local newspaper. He
also caused the construction of roads, curbs and gutters. Likewise, he entered into a contract with
an engineering firm for the building of sixty low-cost housing units and actually even set up a model
house on one of the subdivision lots. He did all of these for a total expense of P85,000.
Respondent claimed that the subdivision project failed, however, because petitioners and their
relatives had separately caused the annotations of adverse claims on the title to the land, which
eventually scared away prospective buyers. Despite his requests, petitioners refused to cause the
clearing of the claims, thereby forcing him to give up on the project. 5
Subsequently, petitioners filed a criminal case for estafa against respondent and his wife, who were
however acquitted. Thereafter, they filed the present civil case which, upon respondent's motion,
was later dismissed by the trial court in an Order dated September 6, 1982. On appeal, however, the
appellate court remanded the case for further proceedings. Thereafter, the RTC issued its assailed
Decision, which, as earlier stated, was affirmed by the CA.
Hence, this Petition. 6
Ruling of the Court of Appeals
In affirming the trial court, the Court of Appeals held that petitioners and respondent had formed a
partnership for the development of the subdivision. Thus, they must bear the loss suffered by the
partnership in the same proportion as their share in the profits stipulated in the contract. Disagreeing
with the trial court's pronouncement that losses as well as profits in a joint venture should be
distributed equally, 7 the CA invoked Article 1797 of the Civil Code which provides:
Art. 1797 The losses and profits shall be distributed in conformity with the agreement.
If only the share of each partner in the profits has been agreed upon, the share of each in
the losses shall be in the same proportion.

The CA elucidated further:


In the absence of stipulation, the share of each partner in the profits and losses shall be
in proportion to what he may have contributed, but the industrial partner shall not be
liable for the losses. As for the profits, the industrial partner shall receive such share as
may be just and equitable under the circumstances. If besides his services he has
contributed capital, he shall also receive a share in the profits in proportion to his capital.

The Issue
Petitioners impute to the Court of Appeals the following error:
. . . [The] Court of Appeals erred in concluding that the transaction
. . . between the petitioners and respondent was that of a joint venture/partnership,
ignoring outright the provision of Article 1769, and other related provisions of the Civil
Code of the Philippines. 8

The Court's Ruling


The Petition is bereft of merit.

Main Issue:
Existence of a Partnership
Petitioners deny having formed a partnership with respondent. They contend that the Joint Venture
Agreement and the earlier Deed of Sale, both of which were the bases of the appellate court's
finding of a partnership, were void.
In the same breath, however, they assert that under those very same contracts, respondent is liable
for his failure to implement the project. Because the agreement entitled them to receive 60 percent
of the proceeds from the sale of the subdivision lots, they pray that respondent pay them damages
equivalent to 60 percent of the value of the property. 9
The pertinent portions of the Joint Venture Agreement read as follows:
KNOW ALL MEN BY THESE PRESENTS:
This AGREEMENT, is made and entered into at Cebu City, Philippines, this 5th day of
March, 1969, by and between MR. MANUEL R. TORRES, . . . the FIRST PARTY,
likewise, MRS. ANTONIA B. TORRES, and MISS EMETERIA BARING, . . . the SECOND
PARTY:

WITNESSETH:
That, whereas, the SECOND PARTY, voluntarily offered the FIRST PARTY, this property
located at Lapu-Lapu City, Island of Mactan, under Lot No. 1368 covering TCT No. T0184 with a total area of 17,009 square meters, to be sub-divided by the FIRST PARTY;
Whereas, the FIRST PARTY had given the SECOND PARTY, the sum of: TWENTY
THOUSAND (P20,000.00) Pesos, Philippine Currency upon the execution of this contract
for the property entrusted by the SECOND PARTY, for sub-division projects and
development purposes;
NOW THEREFORE, for and in consideration of the above covenants and promises
herein contained the respective parties hereto do hereby stipulate and agree as follows:
ONE: That the SECOND PARTY signed an absolute Deed of Sale . . . dated March 5,
1969, in the amount of TWENTY FIVE THOUSAND FIVE HUNDRED THIRTEEN &
FIFTY CTVS. (P25,513.50) Philippine Currency, for 1,700 square meters at ONE [PESO]
& FIFTY CTVS. (P1.50) Philippine Currency, in favor of the FIRST PARTY, but the
SECOND PARTY did not actually receive the payment.
SECOND: That the SECOND PARTY, had received from the FIRST PARTY, the
necessary amount of TWENTY THOUSAND (P20,000.00) pesos, Philippine currency, for
their personal obligations and this particular amount will serve as an advance payment
from the FIRST PARTY for the property mentioned to be sub-divided and to be deducted
from the sales.
THIRD: That the FIRST PARTY, will not collect from the SECOND PARTY, the interest
and the principal amount involving the amount of TWENTY THOUSAND (P20,000.00)
Pesos, Philippine Currency, until the sub-division project is terminated and ready for sale
to any interested parties, and the amount of TWENTY THOUSAND (P20,000.00) pesos,
Philippine currency, will be deducted accordingly.
FOURTH: That all general expense[s] and all cost[s] involved in the sub-division project
should be paid by the FIRST PARTY, exclusively and all the expenses will not be
deducted from the sales after the development of the sub-division project.
FIFTH: That the sales of the sub-divided lots will be divided into SIXTY PERCENTUM
60% for the SECOND PARTY and FORTY PERCENTUM 40% for the FIRST PARTY, and
additional profits or whatever income deriving from the sales will be divided equally
according to the . . . percentage [agreed upon] by both parties.

SIXTH: That the intended sub-division project of the property involved will start the work
and all improvements upon the adjacent lots will be negotiated in both parties['] favor and
all sales shall [be] decided by both parties.
SEVENTH: That the SECOND PARTIES, should be given an option to get back the
property mentioned provided the amount of TWENTY THOUSAND (P20,000.00) Pesos,
Philippine Currency, borrowed by the SECOND PARTY, will be paid in full to the FIRST
PARTY, including all necessary improvements spent by the FIRST PARTY, and-the
FIRST PARTY will be given a grace period to turnover the property mentioned above.
That this AGREEMENT shall be binding and obligatory to the parties who executed same
freely and voluntarily for the uses and purposes therein stated. 10

A reading of the terms embodied in the Agreement indubitably shows the existence of a partnership
pursuant to Article 1767 of the Civil Code, which provides:
Art. 1767. By the contract of partnership two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing
the profits among themselves.

Under the above-quoted Agreement, petitioners would contribute property to the partnership in the
form of land which was to be developed into a subdivision; while respondent would give, in addition
to his industry, the amount needed for general expenses and other costs. Furthermore, the income
from the said project would be divided according to the stipulated percentage. Clearly, the contract
manifested the intention of the parties to form a partnership. 11
It should be stressed that the parties implemented the contract. Thus, petitioners transferred the title
to the land to facilitate its use in the name of the respondent. On the other hand, respondent caused
the subject land to be mortgaged, the proceeds of which were used for the survey and the
subdivision of the land. As noted earlier, he developed the roads, the curbs and the gutters of the
subdivision and entered into a contract to construct low-cost housing units on the property.
Respondent's actions clearly belie petitioners' contention that he made no contribution to the
partnership. Under Article 1767 of the Civil Code, a partner may contribute not only money or
property, but also industry.
Petitioners Bound by
Terms of Contract
Under Article 1315 of the Civil Code, contracts bind the parties not only to what has been expressly
stipulated, but also to all necessary consequences thereof, as follows:
Art. 1315. Contracts are perfected by mere consent, and 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, may be in keeping with good faith,
usage and law.

It is undisputed that petitioners are educated and are thus presumed to have understood the terms
of the contract they voluntarily signed. If it was not in consonance with their expectations, they
should have objected to it and insisted on the provisions they wanted.
Courts are not authorized to extricate parties from the necessary consequences of their acts, and
the fact that the contractual stipulations may turn out to be financially disadvantageous will not
relieve parties thereto of their obligations. They cannot now disavow the relationship formed from
such agreement due to their supposed misunderstanding of its terms.
Alleged Nullity of the
Partnership Agreement

Petitioners argue that the Joint Venture Agreement is void under Article 1773 of the Civil Code,
which provides:
Art. 1773. A contract of partnership is void, whenever immovable property is contributed
thereto, if an inventory of said property is not made, signed by the parties, and attached
to the public instrument.

They contend that since the parties did not make, sign or attach to the public instrument an inventory
of the real property contributed, the partnership is void.
We clarify. First, Article 1773 was intended primarily to protect third persons. Thus, the eminent
Arturo M. Tolentino states that under the aforecited provision which is a complement of Article
1771, 12 "The execution of a public instrument would be useless if there is no inventory of the
property contributed, because without its designation and description, they cannot be subject to
inscription in the Registry of Property, and their contribution cannot prejudice third persons. This will
result in fraud to those who contract with the partnership in the belief [in] the efficacy of the guaranty
in which the immovables may consist. Thus, the contract is declared void by the law when no such
inventory is made." The case at bar does not involve third parties who may be prejudiced.
Second, petitioners themselves invoke the allegedly void contract as basis for their claim that
respondent should pay them 60 percent of the value of the property. 13 They cannot in one breath
deny the contract and in another recognize it, depending on what momentarily suits their purpose.
Parties cannot adopt inconsistent positions in regard to a contract and courts will not tolerate, much
less approve, such practice.
In short, the alleged nullity of the partnership will not prevent courts from considering the Joint
Venture Agreement an ordinary contract from which the parties' rights and obligations to each other
may be inferred and enforced.
Partnership Agreement Not the Result
of an Earlier Illegal Contract
Petitioners also contend that the Joint Venture Agreement is void under Article 1422 14 of the Civil
Code, because it is the direct result of an earlier illegal contract, which was for the sale of the land
without valid consideration.
This argument is puerile. The Joint Venture Agreement clearly states that the consideration for the
sale was the expectation of profits from the subdivision project. Its first stipulation states that
petitioners did not actually receive payment for the parcel of land sold to respondent. Consideration,
more properly denominated as cause, can take different forms, such as the prestation or promise of
a thing or service by another. 15
In this case, the cause of the contract of sale consisted not in the stated peso value of the land, but
in the expectation of profits from the subdivision project, for which the land was intended to be used.
As explained by the trial court, "the land was in effect given to the partnership as [petitioner's]
participation therein. . . . There was therefore a consideration for the sale, the [petitioners] acting in
the expectation that, should the venture come into fruition, they [would] get sixty percent of the net
profits."
Liability of the Parties
Claiming that rerpondent was solely responsible for the failure of the subdivision project, petitioners
maintain that he should be made to pay damages equivalent to 60 percent of the value of the
property, which was their share in the profits under the Joint Venture Agreement.
We are not persuaded. True, the Court of Appeals held that petitioners' acts were not the cause of
the failure of the project. 16 But it also ruled that neither was respondent responsible therefor. 17 In
imputing the blame solely to him, petitioners failed to give any reason why we should disregard the
factual findings of the appellate court relieving him of fault. Verily, factual issues cannot be resolved

in a petition for review under Rule 45, as in this case. Petitioners have not alleged, not to say shown,
that their Petition constitutes one of the exceptions to this doctrine. 18 Accordingly, we find no
reversible error in the CA's ruling that petitioners are not entitled to damages.
WHEREFORE, the Perition is hereby DENIED and the challenged Decision AFFIRMED. Costs
against petitioners.
SO ORDERED

OBLIGATORINESS * CONSENSUALITY OF CONTRACTS


More than anything else, the parties, by a solemn document freely and voluntarily agreed upon by
them, agreed to be bound by the report of the commission and approved by the trial court. The
agreement is a contract between the parties. It has the force of law between them and should be
complied with in good faith. Article 1159 and 1315 of the Civil Code explicitly provides:

Art. 1159. Obligations arising from contracts have


the force of law between the contracting parties
and should be complied with in good faith.
Art. 1315. Contracts are perfected by mere
consent, and 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,
may be in keeping with good faith, usage and law.
Furthermore, during the hearing on 22 November 1996, petitioner did not interpose a serious
objection.11 It is therefore too late for petitioner to question the valuation now without violating the
principle of equitable estoppel. Estoppel in pais arises when one, by his acts, representations or
admissions, or by his own silence when he ought to speak out, intentionally or through culpable
negligence, induces another to believe certain facts to exist and such other rightfully relies and acts
on such belief, so that he will be prejudiced if the former is permitted to deny the existence of such
facts.12 Records show that petitioner consented to conform with the valuation recommended by the
commissioners. It cannot detract from its agreement now and assail correctness of the
commissioners' assessment.1wphi1.nt
Finally, while Section 4, Rule 67 of the Rules of Court provides that just compensation shall be
determined at the time of the filing of the complaint for expropriation, 13 such law cannot prevail over
R.A. 7160, which is a substantive law. 14

AUTONOMY OF CONTRACTS

ART. 1306. The contracting parties may establish such


stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public
policy.
The subordinate position of the individual employee vis-a-vis management renders him especially
vulnerable to its blandishments and importunings, and even intimidations, that may result in his
improvidently if reluctantly signing over benefits to which he is clearly entitled. Recognizing this
danger, we have consistently held that quitclaims of the workers' benefits win not estop them from
asserting them just the same on the ground that public policy prohibits such waivers.

That the employee has signed a satisfaction receipt does not result in a waiver; the law
does not consider as valid any agreement to receive less compensation than what a
worker is entitled to recover. A deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled. 8
Release and quitclaim is inequitable and incongruous to the declared public policy of the
State to afford protection to labor and to assure the rights of workers to security of tenure.

MUTUALITY OF CONTRACTS

MUTUALITY OF CONTRACTS
In Philippine National Bank v. Court of Appeals, et al., 196
SCRA 536, 544-545 (1991) we held
. . . The unilateral action of the PNB in increasing
the interest rate on the private respondent's loan
violated the mutuality of contracts ordained in
Article 1308 of the Civil Code:
Art. 1308. The contract must bind both
contracting parties; its validity or
compliance cannot be left to the will of
one of them.
In order that obligations arising from contracts
may have the force or law between the parties,
there must be mutuality between the parties

based on their essential equality. A contract


containing a condition which makes its fulfillment
dependent exclusively upon the uncontrolled will
of one of the contracting parties, is void . . . .
Hence, even assuming that
the . . . loan agreement between the PNB and the
private respondent gave the PNB a license
(although in fact there was none) to increase the
interest rate at will during the term of the loan,
that license would have been null and void for
being violative of the principle of mutuality
essential in contracts. It would have invested the
loan agreement with the character of a contract
of adhesion, where the parties do not bargain on
equal footing, the weaker party's (the debtor)
participation being reduced to the alternative "to
take it or leave it" . . . . Such a contract is a
veritable trap for the weaker party whom the
courts of justice must protect against abuse and
imposition. (Citation omitted.)
RELATIVITY OF CONTRACTS
Art. 1311 of the Civil Code provides, as follows

Art. 1311. Contracts take effect only between the


parties, their assigns and heirs, except in case
where the rights and obligations arising from the
contract are not transmissible by their nature, or
by stipulation or by provision of law. The heir is
not liable beyond the value of the property he
received from the decedent.
xxx

xxx

xxx

The general rule, therefore, is that heirs are bound by contracts entered into by their predecessorsin-interest except when the rights and obligations arising therefrom are not transmissible by (1) their
nature, (2) stipulation or (3) provision of law.
In the case at bar, there is neither contractual stipulation nor legal provision making the rights and
obligations under the contract intransmissible. More importantly, the nature of the rights and
obligations therein are, by their nature, transmissible.
The nature of intransmissible rights as explained by Arturo Tolentino, an eminent civilist, is as
follows:

Among contracts which are intransmissible are those which are purely personal, either by
provision of law, such as in cases of partnerships and agency, or by the very nature of the
obligations arising therefrom, such as those requiring special personal qualifications of the
obligor. It may also be stated that contracts for the payment of money debts are not
transmitted to the heirs of a party, but constitute a charge against his estate. Thus, where the
client in a contract for professional services of a lawyer died, leaving minor heirs, and the
lawyer, instead of presenting his claim for professional services under the contract to the
probate court, substituted the minors as parties for his client, it was held that the contract
could not be enforced against the minors; the lawyer was limited to a recovery on the basis
of quantum meruit.9

In American jurisprudence, "(W)here acts stipulated in a contract require the exercise of special
knowledge, genius, skill, taste, ability, experience, judgment, discretion, integrity, or other personal
qualification of one or both parties, the agreement is of a personal nature, and terminates on the
death of the party who is required to render such service."

10

It has also been held that a good measure for determining whether a contract terminates upon the
death of one of the parties is whether it is of such a character that it may be performed by the
promissor's personal representative. Contracts to perform personal acts which cannot be as well
performed by others are discharged by the death of the promissor. Conversely, where the service or
act is of such a character that it may as well be performed by another, or where the contract, by its
terms, shows that performance by others was contemplated, death does not terminate the contract
or excuse nonperformance.

11

In the case at bar, there is no personal act required from the late Encarnacion Bartolome. Rather, the
obligation of Encarnacion in the contract to deliver possession of the subject property to petitioner
upon the exercise by the latter of its option to lease the same may very well be performed by her heir
Victor.
As early as 1903, it was held that "(H)e who contracts does so for himself and his heirs."

12

In 1952, it

was ruled that if the predecessor was duty-bound to reconvey land to another, and at his death the
reconveyance had not been made, the heirs can be compelled to execute the proper deed for
reconveyance. This was grounded upon the principle that heirs cannot escape the legal

consequence of a transaction entered into by their predecessor-in-interest because they have


inherited the property subject to the liability affecting their common ancestor.

13

It is futile for Victor to insist that he is not a party to the contract because of the clear provision of
Article 1311 of the Civil Code. Indeed, being an heir of Encarnacion, there is privity of interest
between him and his deceased mother. He only succeeds to what rights his mother had and what is
valid and binding against her is also valid and binding as against him.
from Paraaque Kings Enterprises vs. Court of Appeals,

15

14

This is clear

where this Court rejected a similar

defense

With respect to the contention of respondent Raymundo that he is not privy to the lease
contract, not being the lessor nor the lessee referred to therein, he could thus not have
violated its provisions, but he is nevertheless a proper party. Clearly, he stepped into the
shoes of the owner-lessor of the land as, by virtue of his purchase, he assumed all the
obligations of the lessor under the lease contract. Moreover, he received benefits in the form
of rental payments. Furthermore, the complaint, as well as the petition, prayed for the
annulment of the sale of the properties to him. Both pleadings also alleged collusion between
him and respondent Santos which defeated the exercise by petitioner of its right of first
refusal.
In order then to accord complete relief to petitioner, respondent Raymundo was a necessary,
if not indispensable, party to the case. A favorable judgment for the petitioner will necessarily
affect the rights of respondent Raymundo as the buyer of the property over which petitioner
would like to assert its right of first option to buy.

In the case at bar, the subject matter of the contract is likewise a lease, which is a property right. The
death of a party does not excuse nonperformance of a contract which involves a property right, and
the rights and obligations thereunder pass to the personal representatives of the deceased. Similarly,
nonperformance is not excused by the death of the party when the other party has a property
interest in the subject matter of the contract. 16
Under both Article 1311 of the Civil Code and jurisprudence, therefore, Victor is bound by the subject
Contract of Lease with Option to Buy.
That being resolved, we now rule on the issue of whether petitioner had complied with its obligations
under the contract and with the requisites to exercise its option. The payment by petitioner of the
reservation fees during the two-year period within which it had the option to lease or purchase the
property is not disputed. In fact, the payment of such reservation fees, except those for February and
March, 1990 were admitted by Victor. 17 This is clear from the transcripts, to wit

ATTY. MOJADO:

One request, Your Honor. The last payment which was allegedly made in January 1990 just
indicate in that stipulation that it was issued November of 1989 and postdated January 1990
and then we will admit all.
COURT:
All reservation fee?
ATTY. MOJADO:
Yes, Your Honor.
COURT:
All as part of the lease?
ATTY. MOJADO:
Reservation fee, Your Honor. There was no payment with respect to payment of rentals.

18

Petitioner also paid the P15,000.00 monthly rental fee on the subject property by depositing the
same in China Bank Savings Account No. 1-04-02558-I-1, in the name of Victor as the sole heir of
Encarnacion Bartolome, 19 for the months of March to July 30, 1990, or a total of five (5) months,
despite the refusal of Victor to turn over the subject property.

20

Likewise, petitioner complied with its duty to inform the other party of its intention to exercise its
option to lease through its letter dated Match 12, 1990,

21

well within the two-year period for it to

exercise its option. Considering that at that time Encarnacion Bartolome had already passed away, it
was legitimate for petitioner to have addressed its letter to her heir.1wphi1
It appears, therefore, that the exercise by petitioner of its option to lease the subject property was
made in accordance with the contractual provisions. Concomitantly, private respondent Victor
Bartolome has the obligation to surrender possession of and lease the premises to petitioner for a
period of six (6) years, pursuant to the Contract of Lease with Option to Buy.
Coming now to the issue of tenancy, we find that this is not for this Court to pass upon in the present
petition. We note that the Motion to Intervene and to Dismiss of the alleged tenant, Andres Lanozo,
was denied by the lower court and that such denial was never made the subject of an appeal. As the
lower court stated in its Order, the alleged right of the tenant may well be ventilated in another
proceeding in due time.
WHEREFORE, in view of the foregoing, the instant Petition for Review is GRANTED. The Decision
of the Court of Appeals in CA-G.R. CV No. 40849 and that of the Regional Trial Court of Valenzuela
in Civil Case No. 3337-V-90 are both SET ASIDE and a new one rendered ordering private
respondent Victor Bartolome to:

(a) surrender and deliver possession of that parcel of land covered by Transfer Certificate of
Title No. V-14249 by way of lease to petitioner and to perform all obligations of his
predecessor-in-interest, Encarnacion Bartolome, under the subject Contract of Lease with
Option to Buy;

(b) surrender and deliver his copy of Transfer Certificate of Title No. V-14249 to respondent
Register of Deeds for registration and annotation thereon of the subject Contract of Lease
with Option to Buy;
(c) pay costs of suit.

Respondent Register of Deeds is, accordingly, ordered to register and annotate the subject Contract
of Lease with Option to Buy at the back of Transfer Certificate of Title No. V-14249 upon submission
by petitioner of a copy thereof to his office.
SO ORDERED.

reciprocal obligations
In our view, the crucial issues for resolution in this case are as follows:

(1) Whether or not private respondent violated the order agreement, and;
(2) Whether or not private respondent is liable for petitioner's breach of contract with
Philacor.

Petitioner's contention lacks factual and legal basis, hence, bereft of merit.
Petitioner contends, firstly, that private respondent violated the order agreement when the latter failed
to deliver the balance of the printing paper on the dates agreed upon.
The transaction between the parties is a contract of sale whereby private respondent (seller)
obligates itself to deliver printing paper to petitioner (buyer) which, in turn, binds itself to pay therefor
a sum of money or its equivalent (price).6Both parties concede that the order agreement gives rise to
a reciprocal obligations7 such that the obligation of one is dependent upon the obligation of the

Reciprocal obligations are to be performed


simultaneously, so that the performance of one is
conditioned upon the simultaneous fulfillment of the
other.8Thus, private respondent undertakes to deliver printing paper of various quantities subject
other.

to petitioner's corresponding obligation to pay, on a maximum 90-day credit, for these materials. Note
that in the contract, petitioner is not even required to make any deposit, down payment or advance
payment, hence, the undertaking of private respondent to deliver the materials is conditional upon
payment by petitioner within the prescribed period. Clearly, petitioner did not fulfill its side of the
contract as its last payment in August 1981 could cover only materials covered by delivery invoices
dated September and October 1980.
There is no dispute that the agreement provides for the delivery of printing paper on different dates
and a separate price has been agreed upon for each delivery. It is also admitted that it is the
standard practice of the parties that the materials be paid within a minimum period of thirty (30) days
and a maximum of ninety (90) days from each delivery. 9Accordingly, the private respondent's

suspension of its deliveries to petitioner whenever the latter failed to pay on time, as in this case, is
legally justified under the second paragraph of Article 1583 of the Civil Code which provides that:

When there is a contract of sale of goods to be delivered by stated installments, which are to
be separately paid for, and the seller makes defective deliveries in respect of one or more
installments, or the buyer neglects or refuses without just cause to take delivery of or pay for
one or more installments, it depends in each case on the terms of the contract and the
circumstances of the case, whether the breach of contract is so material as to justify the
injured party in refusing to proceed further and suing for damages for breach of the entire
contract, or whether the breach is severable, giving rise to a claim for compensation but not
to a right to treat the whole contract as broken. (Emphasis supplied)

In this case, as found a quo petitioner's evidence failed to establish that it had paid for the printing
paper covered by the delivery invoices on time. Consequently, private respondent has the right to
cease making further delivery, hence the private respondent did not violate the order agreement. On
the contrary, it was petitioner which breached the agreement as it failed to pay on time the materials
delivered by private respondent. Respondent appellate court correctly ruled that private respondent
did not violate the order agreement.
On the second assigned error, petitioner contends that private respondent should be held liable for
petitioner's breach of contract with Philacor. This claim is manifestly devoid of merit.
As correctly held by the appellate court, private respondent cannot be held liable under the contracts
entered into by petitioner with Philacor. Private respondent is not a party to said agreements.

It is

also not a contract pour autrui. Aforesaid contracts could not affect third
persons like private respondent because of the basic civil law principle of relativity of contracts which
provides that contracts can only bind the parties who entered into it, and it cannot favor or prejudice
a third person, 10 even if he is aware of such contract and has acted with knowledge thereof. 11
Indeed, the order agreement entered into by petitioner and private respondent has not been shown
as having a direct bearing on the contracts of petitioner with Philacor. As pointed out by private
respondent and not refuted by petitioner, the paper specified in the order agreement between
petitioner and private respondent are markedly different from the paper involved in the contracts of
petitioner with Philacor. 12 Furthermore, the demand made by Philacor upon petitioner for the latter to
comply with its printing contract is dated February 15, 1984, which is clearly made long after private
respondent had filed its complaint on August 14, 1981. This demand relates to contracts with
Philacor dated April 12, 1983 and May 13, 1983, which were entered into by petitioner after private
respondent filed the instant case.lawphi1
To recapitulate, private respondent did not violate the order agreement it had with petitioner.
Likewise, private respondent could not be held liable for petitioner's breach of contract with Philacor.
It follows that there is no basis to hold private respondent liable for damages. Accordingly, the
appellate court did not err in deleting the damages awarded by the trial court to petitioner.
The rule on compensatory damages is well established. True, indemnification for damages
comprehends not only the loss suffered, that is to say actual damages (damnum emergens), but also
profits which the obligee failed to obtain, referred to as compensatory damages (lucrum cessans).
However, to justify a grant of actual or compensatory damages, it is necessary to prove with a
reasonable degree of certainty, premised upon competent proof and on the best evidence obtainable

by the injured party, the actual amount of loss. 13 In the case at bar, the trial court erroneously
concluded that petitioner could have sold books to Philacor at the quoted selling price of
P1,850,750.55 and by deducting the production cost of P1,060,426.20, petitioner could have earned
profit of P790,324.30. Admittedly, the evidence relied upon by the trial court in arriving at the amount
are mere estimates prepared by petitioner. 14 Said evidence is highly speculative and manifestly
hypothetical. It could not provide sufficient legal and factual basis for the award of P790,324.30 as
compensatory damages representing petitioner's self-serving claim of unrealized profit.
Further, the deletion of the award of moral damages is proper, since private respondent could not be
held liable for breach of contract. Moral damages may be awarded when in a breach of contract the
defendant acted in bad faith, or was guilty of gross negligence amounting to bad faith, or in wanton
disregard of his contractual obligation. 15 Finally, since the award of moral damages is eliminated, so
must the award for attorney's fees be also deleted. 16
WHEREFORE, the instant petition is DENIED. The decision of the Court of Appeals is AFFIRMED.
Costs against petitioner.

G.R. No. 115117

June 8, 2000

INTEGRATED PACKAGING CORP., petitioner,


vs. COURT OF APPEALS and FIL-ANCHOR PAPER CO., INC., respondents.

CONTRACTS

Stages in the life of a contract:

1.

Preparation/Generation

2.

Perfection/Birth

3.

Consummation/Death

Characteristics of Contracts: (ROMA)

1. Relativity (Art. 1311)


2. Obligatoriness & Consensuality (Art. 1315)
3. Mutuality (Art. 1308)
4. Autonomy (Art. 1306)

Stipulation pour Autrui - stipulation in favor of a 3rd party.

Requisites:
1. The stipulation must be part, not whole of the contract;
2. the contracting parties must have clearly and deliberately conferred a favor upon a 3 rd person;
3. the 3rd person must have communicate his acceptance;
4. neither of the contracting parties bears the legal representation of the 3rd party.

General Rule: Contracts (except real contracts) are perfected from the moment there is a
manifestation of concurrence between the offer and the acceptance regarding the object and the
cause.
Except: Acceptance by letter or telegram which does not bind the offerror except from the time it
came to his knowledge.

Theories applied to perfection of contracts:


1.

Manifestation theory - the contract is perfected from the moment the acceptance is declared or
made;

2.

Expedition theory - the contract is perfected from the moment the offeree transmits the notification
of acceptance to the offerror;

3.

Reception theory - the contract is perfected from the moment that the notification of acceptance is in
the hands of the offerror;

4.

Cognition theory - the contract is perfected from the moment the acceptance comes to the
knowledge of the offerror. This is the theory adopted in the Philippines.

Persons incapacitated to give consent:


1.

Unemancipated minors;

Except:

Contracts for necessaries;

Contracts by guardians or legal representatives;

Contracts where the minor is estopped to urge minority through his own misrepresentation;

Contracts of deposit with the Postal Savings Bank provided that the minor is over 7 years of age.

2.

Insane or demented persons unless the contract was entered into during a lucid interval;

3.

Deaf-mutes who do not know how to write.

The following may not acquire by purchase, even by public or judicial auction, in person
of though the mediation of another:

1. the guardian, with respect to the property of his ward;


2. agents, with respect to the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
3. executor or administrator, the property of the estate under administration;
4. public officers and employees, with respect to the properties of the government, its political
subdivisions, GOCCs, that are entrusted to them;
5. judges, justices, prosecuting atty.s, clerks of courts, etc., the property in custogia legis; and
6. any other person specially disqualified by law.

Simulation of a contract

Kinds of simulation:

1.

Absolute - no real transaction is intended;


Effect: simulated contract is

2.

inexistent.

Relative - the real transaction is hidden;


Effect: the apparent contract is void, but the hidden contract is valid if it is lawful and has the
necessary requisites.
: as to third persons without notice - the apparent contract is valid on the principle of
estoppel.

Effect of:
Absence of cause the contract confers
no right and
produces no legal
effect
Failure of cause

does not render the


contract void

Illegality of cause the contract is null


and void
Falsity of cause

the contract is void


unless the parties
can show that there
is another cause
which is true and

lawful
Lesion

does not invalidate


the contract unless:
there is fraud,
mistake or undue
influence
when the parties
intended a donation
or some other
contract.

Form of Contracts

Rules:

1. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the
essential requisites for their validity are present.
2. Contracts must be in a certain form when the law requires that a contract be in some form to be:

valid;

enforceable;

for the convenience of the parties.

3. The parties may compel each other to reduce the verbal agreements to writing except:

Solemn contracts such as the following:

a. Donations of real estate or of movables if exceeding Ps 5,000;


b. Transfer of large cattle
c. Stipulation to pay interest in loans
d. Sale of land through an agent (authority must be in writing)
e. Partnership to which immovables are contributed
f.

Stipulation limiting carriers liability to less than extra-ordinary diligence

g. Contracts of antichresis
h. Sale of vessels

Note: in such case, if the contract

is not in writing it is VOID

Real contracts that require delivery for perfection.

In contracts under the Statute of Frauds where the party sued makes a timely objection to the
absence of a written memorandum.

Reformation of instruments:

Requisites:

1.
2.
3.

Meeting of the minds to the contract;


The true intention is not expressed in the instrument by reason of mistake, accident, relative
simulation, fraud, inequitable conduct (MARFI).
Clear and convincing proof of MARFI.

Cases when there can be no reformation:

1.

Simple, unconditional donations inter vivos;

2.

Wills;

3.

When the agreement is void.

Classes of Defective Contracts: (RUVI)

1.

Rescissible

2.

Unenforceable

3.

Voidable

4.

Void or Inexistent

COMPARATIVE TABLE OF DEFECTIVE CONTRACTS:

VOID
1.

defect is caused by

VOIDABLE
defect is caused by

RESCISSIBLE
defect is caused by

UNENFORCE-ABLE
defect is caused by

lack of essential
vice of consent
elements or illegality
2.

not cured by
prescription

3.

cannot be ratified

4.

not binding

injury/ damage either lack of form, authority,


to one of the parties of or capacity of both
to a 3rdperson
parties

cured by prescription not cured by


prescription
need not be ratified
can be ratified
cured by prescription binding unless
rescinded
can be ratified

binding until annulled

binding unless the


defect is raised
against enforcement.

RESCISSIBLE CONTRACTS

Contracts which may be rescinded:

1.

those entered into by guardians where the ward suffers lesion of more than of the value of the
things which are objects thereof;

2.

those agreed upon in representation of absentees, if the latter suffer lesion by more than of the
value of the things which are subject thereof;

3.

those undertaken in fraud of creditors when


the latter cannot in any manner claim what are due them;

4.

those which refer to things under litigation if they have been entered into by the defendant without
the knowledge and approval of the litigants and the court;

5.

all other contracts especially declared by law to be subject to rescission;

6.

payments made in a state of insolvency on account of obligations not yet enforceable;

Circumstances denominated as badges of fraud:

1.

consideration of the conveyance is inadequate or fictitious;

2.

transfer was made by a debtor after a suit has been begun and while it is pending against him;

3.

sale upon credit by an insolvent debtor;

4.

transfer of all his property by a debtor when he is financially embarrassed or insolvent;

5. transfer is made between father and son, where there are present some or any of the above
circumstances;
6. failure of the vendee to take exclusive possession of the property;

Distinctions:

RESCISSION

RESOLUTION
(Art. 1191)

1. Action by the
Action only by the
contracting parties injured party;
even by a 3rd party;
2. based on
lesion/fraud of
creditors;

based on nonfulfillment of the


obligation;

3. courts cannot grant


courts may grant
periods for
periods
compliance

VOIDABLE CONTRACTS

Causes of extinction of action to annul:


1.

Prescription

the action must be commenced within 4 years from:

the time the incapacity ends;

the time the violence, intimidation or undue influence ends;

the time the mistake or fraud is discovered.


2. Ratification

Requisites:

a. there must be knowledge of the reason which renders the contract voidable;
b. such reason must have ceased;
c. the injured party must have executed an act which expressly or impliedly conveys an intention to
waive his right.
3. By loss of the thing which is the object of the contract through fraud or fault of the person who is
entitled to annul the contract.
UNENFORCEABLE CONTRACTS

Kinds of unenforceable contracts:


1. those entered into in the name of another by one without or acting in excess of authority;
2. those where both parties are incapable of giving consent;
3. those which do not comply with the Statute of Frauds.

Agreements within the scope of the Statute of Frauds:


1. Agreements not to be performed within one year from the making thereof;
2. Promise to answer for the debt, default or miscarriage of another;
3. Agreement in consideration of marriage other than a mutual promise to marry;
4. Agreement for the sale of goods, etc. at a price not less than Ps500.00
5. Contracts of lease for a period longer than one year;
6. Agreements for the sale of real property or interest therein;
7. Representation as to the credit of a 3rd person.

Modes of Ratification:
1. For contracts infringing the Statute of Frauds:

expressly

impliedly - by failure to object to the presentation of oral evidence to prove the contract, or by the
acceptance of benefits under the contract.

2. If both parties are incapacitated, ratification by their parents or guardians shall validate the contract
retroactively.

VOID OR INEXISTENT CONTRACTS

The following contracts are void:

1.

Those whose cause, object or purpose is contrary to law, morals good customs, public order or
public policy;

2.

Those whose object is outside the commerce of men;

3.

Those which contemplate an impossible service;

4.
5.

Those where the intention of the parties relative to the principal object of the contract cannot be
ascertained;
Those expressly prohibited or declared void by law;

The following contracts are inexistent:

1.

Those which are absolutely simulated or fictitious;

2.

Those whose cause or object did not exist at the time of the transaction.

CONTRACTS

Art 1305

ELEMENTS OF A CONTRACT

1.

Essential Elements
1.Consent
2.Subject Matter
3.Cause or Consideration

2.

Natural Elements- presumed to exist, unless the contrary is stipulated

Ex. Warrants against eviction and against hidden defects

3.

Accidental Elements existence of such is dependent on the agreement of the parties.

Classification of Contracts
1.
1.
2.
3.

According to perfection or formation


Consensual
Real-perfected by delivery
Formal or Solemn

2.
1.
2.
3.

According to cause of equivalence of the value of prestations:


Onerous
Gratuitous or Lucrative
Remunerative

3.
1.
2.
3.

According to Importance or dependence of one upon another


Principal can stand alone
Accessory depends upon the existence of another contract
Preparatory here, the parties do not consider the contract as an end by itself, but
as a means thru which future transaction or contracts may be made
Ex. Agency, partnership

4.
1.
2.

According to the parties obligated


Unilateral
Bilateral

5.
1.
2.

According to their Name or Designation


Nominate
Innominate

6.
1.
2.

According to the risk of fulfillment


Commutative
Alienatory

7.
1.
2.

According to the time of performance or fulfillment


Executed- one completed at the time the contract is entered into
Executory one where the prestations are to be complied with at some future time

8.
1.
2.
3.

According to subject matter


Contracts involving things
Contracts involving rights or credit
Contracts involving services

9.
1.
2.

According to obligations imposed and required by law


Ordinary
Institutional-like contract of marriage

10.
1.
2.

According to the evidence required for its proof


Those requiring merely oral or parol evidence
Those requiring written proof

11.
1.
2.

According to the number of persons actually and physically entering into the contracts
Ordinary two parties are represented by different persons
Auto Contracts where only one person represents two opposite parties, but in
different capacities

12.
1.
2.

According to the number of persons who participated in the drafting of the contract
Ordinary
Contract of Adherence

13.
1.
2.

According to the nature of the contract


Personal
Impersonal

STAGES OF A CONTRACT
1.
2.
3.

Preparation
Perfection
Consummation (or death or termination)

Basic Principles or Characteristics of a Contract


1.
2.
3.
4.
5.

Freedom to stipulate
Obligatory force and compliance in good faith
Perfection by mere consent
Both parties are mutually bound
Relativity

Art 1306 Freedom or autonomy of contract

Art 1307

Four Kinds of Innominate Contracts


1.
2.
3.
4.

Du ut des (I give that you may give)


Do ut facias (I give that you may do)
Facio ut des (I do that you may give)
Facio ut facias (I do that you may do)
Art 1308-1310

MUTUALITY OF CONTRACTS

The validity or fulfillment of a contract cannot be left to the will of one of the contracting
parties.

The validity or fulfillment may be left to the will of a third person.


The validity or fulfillment may be left to chance.
Art 1311

This principle stresses the Principle of Relativity.

Contracts are generally effective only between the parties, their assigns and their heirs.

Exceptions:
1.
2.
3.
4.
5.

Where the obligation arising from the contract are not transmissible by their nature, by
stipulation, or by provision of law.
Where there is stipulation pour atrui (a stipulation in favor of a third party)
Where a third person induces another to violate his contract
Where, in some cases, third persons may be adversely affected by a contract where they did
not participate.
Where the law authorizes the creditor to sue on a contract entered into by his debtor.
Art 1312

A real right binds the property over which it is exercised.


Exception to the general rule that a contract binds only the parties.

Art 1313

Right of defrauded creditor.

Art 1314
Requisites before a third person in this article can be held for damages

1.
2.
3.

Existence of a valid contract


Knowledge on the part of the third person of the existence of the contract
Interference by the third person without legal justification or excuse
Art 1315-1316

Perfection of contracts

Art 1317

Requisites for a Person to Contract in the Name of Another


a.

2.
3.

He must be duly authorized (expressly or impliedly)

Or he must have by law a right to represent him


Or the contract must be subsequently ratified
Art 1318

Requisites of Contracts
1.
2.
3.

Consent (Art 1319-46)


Object (Art 1347-1349)
Cause (Art 1350-55)
Art 1319

Definition of Consent
-Art 1319,first paragraph

Requisite of Consent
1.
2.
3.
4.

There must be two or more parties


The parties must be capable or incapacitated
There must be no vitiation of consent
There must be no conflict between what was expressly declared and what was really
intended
5.
The intent must be declared properly

Requisites for the meeting of minds


1.
2.

An offer that must be certain


And an acceptance must be unqualified and absolute

Concurrence of offer and acceptance (Art 1319-26)

Legal capacity of contracting parties (Art 1327-29)


Characteristics of Consent (Art 1330-46)
Art 1320

Forms of Acceptance

Art 1322
Acceptance of an Offer made thru an agent

Art 1323

Other instances when the offer becomes ineffective


a.

When the offeree expressly or impliedly rejects the offer

b.

When the offer is accepted with qualification or condition

c.

When before acceptance is communicated, the subject matter becomes illegal or impossible

d.

e.

When the period of time given to the offeree within which he must signify his acceptance has
already lapsed
When the offer is rejected in due tome

Art 1324

Option Contract
Option- it is a contract granting a person the privilege to buy or not to buy certain objects at anytime
within the agreed period at a fixed price

Perfection of Option
When there is a meeting of minds on the option

Art 1325-1326
If the advertisement contains all the specific particular needed in a contract, it is a definite
offer.
If important details are left out, the advertisement is not a definite offer, but a mere
invitation to make an offer.

Art 1327 in relation to Art 1329


Who cannot give consent.

Art 1328
Voidable contracts by reason of incapacity

Art 1330
This article enumerates causes or vices of consent.

Art 1331 in relation to Art 1333


Mistake
It is a false belief about something.

Requisites for mistake to vitiate consent


1.
2.
3.
4.
5.

Object of the contract


The condition which principally proved or induced one of the parties
Identify or qualifications, but only if such was the principal cause of the contract.
The error must be excusable
The error must be a mistake of fact

Kinds of Mistake
1.
1.
2.
3.
4.

Mistake as to the object


Mistake as the identity of the thing
Mistake as to the substance of the thing
Mistake as to the conditions of the thing
Mistake as to the quantity of the thing

2.
1.

Mistake as to person
Mistake must be either with regards to the identify or with regard to the qualification
of one of the contracting parties
2.
Such identity or qualification must have been the principal consideration for the
celebration of the contract

Art 1332
Burden of proof in case of mistake

Art 1333
Effect of knowledge of risk

Art 1334

Mistake of Law
Is that which arises from an ignorance of some provision of law, or from an erroneous
interpretation of its meaning, or from an erroneous conclusion as to the legal effect of the
agreement, on the part of one of the parties.

Requisites:
1.
2.
3.

There must be mutual error


The error must refer to the legal effect of the agreement
The real purpose of the parties is frustrated

Art 1335-1336
Violation refer to physical coercion
Intimidation refers to moral coercion

Requisites for violence to vitiate consent


1.
2.

Employment of serious or irresistible force


It must have been the reason why the contract was entered into

Requisites for intimidation to vitiate consent


1.
2.
3.

Reasonable and well-grounded fear


Of an imminent and grave evil
Upon his person, property, or upon the person of property of his spouse, descendents or
ascendants
4.
It must have been the reason why the contract was entered into
5.
The threat must be an unjust act, an actionable wrong

Art 1337
Requisites for undue influence to vitiate consent

1.
2.
3.

Improper advantage
Power over the will of another
Deprivation of the latters will of a reasonable freedom of choice

Art 1338-1341
Kinds of Fraud
1.
1.

Fraud in the celebration of the contract


Dolo Causante or causal fraud (Art 1338)

2.

Dolo Incidente of incidental fraud

2.

Fraud in the performance of the obligations stipulated in the contract

Requisites of Dolo Causante


1.
2.

The fraud must be material and serious


The fraud must have been employed by one of the contracting parties, because if
both committed fraud, the contract would remain valid
3.
There must be a deliberate intent to deceive to induce
4.
The other party must have relied on the untrue statement, and must himself not be
guilty of negligence in ascertaining the truth

Art 1342-1344
Speaks about misrepresentation

Art 1345-1346
Simulation

Simulation of a Contract defined


It is the process of intentionally deceiving others by producing the appearance of a contract that
really does not exist (absolute simulation)
Or which is different from the true agreement relative simulation.

Kinds
a.

Absolute; Effect; the contract is void

b.

Relative; Effect; the parties are bound to the real or true agreement except-

a.

If the contract should prejudice third persons

b.

Or if the purpose is contrary to law, morals, public order, policy or good customs

Requisites
a.

An outward declaration of will difference from the will of the parties

b.

The false appearance must have been intended by mutual agreement

c.

The purpose is to deceive third persons

Art 1347-1349
Objects (Subject Matter) of a contract
-

A thing or a service

Requisites
1.
2.
3.
4.
5.

The thing or service must be within the commerce of man


Must be transmissible
Must not be contrary to law, morals, good customs, public order, or public policy
Must not be impossible
Must be determinate as to its kind or determinate without the need of a new contract or
agreement

CAUSE OF CONTRACTS
Art 1350
Cause defined
-It is the essential and impelling reason why a party assumes an obligation

Art 1351
Motive is the purely personal or private reason which a party has in entering into a contract

Motive vs. Cause


Motive
1.
2.
3.

May vary although he enters into the same kind of contract


May be unknown to the other
The presence of motive

Cause
1.
2.
3.

Always the same


Always known
Cannot cure the absence of cause

Art 1352-1355
Requisites for cause
1.
2.
3.

It must be present
It must be true
It must be lawful
CHAPTER 3

FORM OF CONTRACTS

Art 1356
Meaning of form of contracts
-Refers to the manner in which a contract is executed or manifested

Rules regarding from of contracts (Art 1356)


Art 1357-1358
Principles regarding formalities for the efficacy of a contract

1.

2.
3.

4.
5.

Art 1357 and Art 1358 do not require the execution of a contract either in a public or private
instrument in order to validate enforce it but only to ensure its efficacy, so after its existence has
been admitted, the party bound may be compelled to execute the necessary document
Even where the contract has not been reduced to the required form, it is still valid and
binding as far as the parties are concerned
From the moment one of the contracting parties invokes the provisions of Art 1357 and
1358by means of a proper action, the effect is to place the existence of the contract in issue, which
must be resolved by the ordinary rules of evidence
Art 1357 does not require that the action to compel the execution of the necessary document
must precede the action upon the contract
However, although the provisions of Art 1357 in connection with those of Art 1358, do not
operate against the validity of the contract nor the validity of the acts voluntarily performed by the
parties for the fulfillment thereof, yet from the moments when any of the contracting parties invokes
said provisions, it is evident that under them the execution of the required document must precede
the determination of the other obligations derived from the contract

CHAPTER 4

REFORMATION OF INSTRUMENT

Reformation is that remedy by means of which a written instrument is amended or rectified so as


to express or conform to the real agreement or intention of the parties when by reason of mistake,
fraud, or inequitable contract, or accident the instrument fails to express such agreement or
intention.

Requisites for reformation


1.
2.
3.

There is a meeting of minds of the parties to the contract


The written instrument does not express the true agreement or intention of the parties
The failure to express the true intentions is due to mistake, fraud, inequitable conduct or
accident

4.

The facts upon which relief by way of reformation of the instrument is sought are put in issue
by the pleadings
5.
There is clear and convincing evidence of the mistake, fraud, inequitable conduct, or
accident

Reformation vs. Annulment


In reformation, there has been a meeting of the minds of the parties, hence, a contract
exists while in annulment, there has been none, the consent of one of the parties being vitiated by
mistake, etc.

Art 1360-69

Art 1360
Rule in case of conflict

Art 1366
Instances when reformation is not allowed

CHAPTER 5

INTERPRETATION OF A CONTRACT

Art 1370
Definition of interpretation of contract
-Is the determination of the meaning of the terms or words used by the parties in their
contract

Art 1371-79 (provisions)

Kinds of defective contracts


1.
2.
3.
4.

Rescissible (Art 1380-89)


Voidable (Art 1390-1402)
Unenforceable (Art 1403-1408)
Void or Inexistent (Art 1409-1422)

Art 1381 in relation to Art 1382


Meaning of rescissible contracts

-Those validly agreed upon because all the essential elements exists but in some cases
established by law, the remedy of rescission is granted in the interest of equity

Requisites of rescission
1.
2.
3.
4.
5.

The contracts must be validly agreed upon


There must be lesion or pecuniary prejudice to one of the parties or to a third person
The rescission must be based upon a case especially provided by law
There must be no other legal remedy to obtain reparation of the damages
The party asking for rescission must be able to return what he is obliged to restore by reason
of the contract
6.
The object of the contract must not legally
7.
The object of the contract must not legally be in the possession of third persons who did not
act in bad faith
8.
The period for filing the action of rescission must have not prescribed

Meaning of Rescission
-Remedy granted by law to the contracting parties and sometimes even to third persons in
order to secure reparation of damages caused by them by a valid contract, by means of the
restoration of things to their condition in which they were prior to the celebration of the said contract.

Art 1385
Effects of rescission

Art 1324

Prescription

VOIDABLE CONTRACTS

Definition
-Are those which possess all the essential requisites of a valid contract but one of the
parties is incapable of giving consent, or consent is vitiated by mistake, violence, intimidation, undue
influence, or fraud

Characteristics
1.

Their defect consist in the vitiation of consent of one of the contracting parties

2.
3.

They are binding until they are annulled by competent court


They are susceptible of convalidation by ratification or by prescription

Voidable vs. Rescissible Contracts

Voidable
1.
2.
3.
4.
5.

Defect is intrinsic
Contract is voidable even if there is no damage or prejudice
Annulability of the contract is based on law
Susceptible of ratification
The causes of annulment
The causes of rescission

Rescissible
1.
2.
3.
4.
5.

Defect is extrinsic
Contract is not rescissible id there is no damage or prejudice
Rescissibility of the contract is based on equity
Not susceptible of ratification
Are different form
Art 1390

Voidable contracts

Art 1391
Prescription

Art 1392-96

Concept of Ratification
-By virtue of which efficacy is given to a contract which suffers from a vice of curable nullity

Requisites for ratification


1.
2.
3.
4.

The contract should be tainted with a vice which is susceptible of being cured
The confirmation should be effected by the person who is entitled to do so under the law
It should be effected with knowledge of the vice or defect of the contract
The cause of the nullity or defect should have already disappeared

Art 1397 in relation to Art 1391


-Who and when may an action for annulment of contract be instituted
Art 1398-99

Effects of annulment

Art 1400-02
- Effect pf failure to make restitution
-Where loss is due to fault of plaintiff
-Where loss is due to fault of defendant
-Where loss is due to fortuitous event

CHAPTER 8
UNENFORCEABLE CONTRACTS

Meaning of unenforceable contracts


-Those that san not be enforced in court or sued upon by reason of defects provided by
law until and unless they are ratified according to law.

Kinds:
1.
2.
3.

Those entered into in the name of another by one without or acting in excess of authority
Those that do not comply with the statute of fraud
Those where both parties are incapacitated of giving consent

Unauthorized contracts
-Those entered into in the name of another person by one who has been given no
authority or legal representation on who has acted beyond his powers.

Characteristics of Unenforceable Contracts


1.
2.
3.

They can not be enforced by a proper action in court


They are susceptible of ratification
They can not be assailed by third persons

Unenforceable vs. Rescissible

1.

An unenforceable contract cannot be enforced by a proper action in court, while a rescissible


contract can be enforced, unless it is rescinded
2.
The causes for the unenforceable character of the former are different from the causes fro
the rescissible character of the latter
3.
The former is susceptible of ratification, while the latter is not
4.
The former cannot be assailed by third persons, while the latter may be assailed by third
persons who are prejudiced

Unenforceable vs. Voidable


1.

An unenforceable contract cannot be enforced by a proper action in court, while a voidable


contract can be enforced, unless it is annulled
2.
The causes for the unenforceable character of the former are different from the causes for
the voidable character of the latter

STATUTE OF FRAUDS

Purpose
-Not only to prevent fraud but also to guard against the mistakes of honest men by
requiring that certain agreement specified must be in writing.

Application
1.
2.
3.
4.
5.
6.
7.
8.

Not applicable in actions which are neither for damages because of a violation of a contract,
nor for the specific performance thereof
Applicable only to executory contracts and not to contracts which are totally or partially
performed
Not applicable where the contract is admittedly expressly, or impliedly by the failure to deny
specifically its existence, no further evidence thereof being required in such case.
Applicable only to the agreements enumerated therein
Not applicable where a writing does not express the true agreement of the parties
It does not declare the contracts infringing it are void but merely unenforceable
The defense of the statute of frauds may be waived
The defense of the statute of frauds is personal to the parties and cannot be enforced by
strangers to the contract

Effect of Non-Compliance
-The contract or agreement is unenforceable by action

Ratification of Unenforceable Contracts


Either by: a. the failure of object to the presentation of oral existence to prove the same
3.

The acceptance of benefits under them

Art 1404-1408 (provisions)

CHAPTER 9

VOID OR INEXISTENT CONTRACTS

Void Contracts
-Those, which of certain defects generally produce no effect at all

Inexistent Contracts
-Refer to agreements which lack one or some or all the elements or do not comply with the
formalities which are essential for the existence of a contract

Characteristics of a Void or Inexistent Contracts


1.
2.
3.
4.
5.

Generally, it produces no effect


It cannot be ratified
The right to set up the defense of legality cannot be waived
The action or defense for the declaration of its inexistence does not prescribe
The defense of illegality is not available to third persons whose interests are not directly
affected
6.
It cannot give rise to a valid contract

Art 1410
-Imprescriptibility of void or inexistent contract

Art 1411-1412
Where both parties are in pari delicto
1.
2.
3.

The parties shall have no action against each other


Both shall be prosecuted
The things or the price of the contract, as the effects of the crime shall be confiscated in
favor of the government

Where only one party is guilty


-The rule in paragraph 1 of Art 1411 applies only to the guilty party or the more guilty party
Exceptions to the principle of pari delicto
Art 1413-1419

HT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA


PAYAM, petitioners, vs. THE COURT OF APPEALS and
MAURICE McLOUGHLIN
SECOND DIVISION
G.R. No. 126780

February 17, 2005

YHT REALTY CORPORATION, ERLINDA LAINEZ and ANICIA PAYAM, petitioners,


vs.
THE COURT OF APPEALS and MAURICE McLOUGHLIN, respondents.
DECISION
TINGA, J.:
The primary question of interest before this Court is the only legal issue in the case: It is whether a
hotel may evade liability for the loss of items left with it for safekeeping by its guests, by having these
guests execute written waivers holding the establishment or its employees free from blame for such
loss in light of Article 2003 of the Civil Code which voids such waivers.
Before this Court is a Rule 45 petition for review of the Decision1 dated 19 October 1995 of the Court
of Appeals which affirmed the Decision2 dated 16 December 1991 of the Regional Trial Court (RTC),
Branch 13, of Manila, finding YHT Realty Corporation, Brunhilda Mata-Tan (Tan), Erlinda Lainez
(Lainez) and Anicia Payam (Payam) jointly and solidarily liable for damages in an action filed by
Maurice McLoughlin (McLoughlin) for the loss of his American and Australian dollars deposited in the
safety deposit box of Tropicana Copacabana Apartment Hotel, owned and operated by YHT Realty
Corporation.
The factual backdrop of the case follow.
Private respondent McLoughlin, an Australian businessman-philanthropist, used to stay at Sheraton
Hotel during his trips to the Philippines prior to 1984 when he met Tan. Tan befriended McLoughlin
by showing him around, introducing him to important people, accompanying him in visiting
impoverished street children and assisting him in buying gifts for the children and in distributing the
same to charitable institutions for poor children. Tan convinced McLoughlin to transfer from Sheraton
Hotel to Tropicana where Lainez, Payam and Danilo Lopez were employed. Lopez served as
manager of the hotel while Lainez and Payam had custody of the keys for the safety deposit boxes of
Tropicana. Tan took care of McLoughlin's booking at the Tropicana where he started staying during
his trips to the Philippines from December 1984 to September 1987. 3
On 30 October 1987, McLoughlin arrived from Australia and registered with Tropicana. He rented a
safety deposit box as it was his practice to rent a safety deposit box every time he registered at
Tropicana in previous trips. As a tourist, McLoughlin was aware of the procedure observed by
Tropicana relative to its safety deposit boxes. The safety deposit box could only be opened through
the use of two keys, one of which is given to the registered guest, and the other remaining in the
possession of the management of the hotel. When a registered guest wished to open his safety

deposit box, he alone could personally request the management who then would assign one of its
employees to accompany the guest and assist him in opening the safety deposit box with the two
keys.4
McLoughlin allegedly placed the following in his safety deposit box: Fifteen Thousand US Dollars
(US$15,000.00) which he placed in two envelopes, one envelope containing Ten Thousand US
Dollars (US$10,000.00) and the other envelope Five Thousand US Dollars (US$5,000.00); Ten
Thousand Australian Dollars (AUS$10,000.00) which he also placed in another envelope; two (2)
other envelopes containing letters and credit cards; two (2) bankbooks; and a checkbook, arranged
side by side inside the safety deposit box.5
On 12 December 1987, before leaving for a brief trip to Hongkong, McLoughlin opened his safety
deposit box with his key and with the key of the management and took therefrom the envelope
containing Five Thousand US Dollars (US$5,000.00), the envelope containing Ten Thousand
Australian Dollars (AUS$10,000.00), his passports and his credit cards. 6 McLoughlin left the other
items in the box as he did not check out of his room at the Tropicana during his short visit to
Hongkong. When he arrived in Hongkong, he opened the envelope which contained Five Thousand
US Dollars (US$5,000.00) and discovered upon counting that only Three Thousand US Dollars
(US$3,000.00) were enclosed therein.7 Since he had no idea whether somebody else had tampered
with his safety deposit box, he thought that it was just a result of bad accounting since he did not
spend anything from that envelope.8
After returning to Manila, he checked out of Tropicana on 18 December 1987 and left for Australia.
When he arrived in Australia, he discovered that the envelope with Ten Thousand US Dollars
(US$10,000.00) was short of Five Thousand US Dollars (US$5,000). He also noticed that the jewelry
which he bought in Hongkong and stored in the safety deposit box upon his return to Tropicana was
likewise missing, except for a diamond bracelet.9
When McLoughlin came back to the Philippines on 4 April 1988, he asked Lainez if some money
and/or jewelry which he had lost were found and returned to her or to the management. However,
Lainez told him that no one in the hotel found such things and none were turned over to the
management. He again registered at Tropicana and rented a safety deposit box. He placed therein
one (1) envelope containing Fifteen Thousand US Dollars (US$15,000.00), another envelope
containing Ten Thousand Australian Dollars (AUS$10,000.00) and other envelopes containing his
traveling papers/documents. On 16 April 1988, McLoughlin requested Lainez and Payam to open his
safety deposit box. He noticed that in the envelope containing Fifteen Thousand US Dollars
(US$15,000.00), Two Thousand US Dollars (US$2,000.00) were missing and in the envelope
previously containing Ten Thousand Australian Dollars (AUS$10,000.00), Four Thousand Five
Hundred Australian Dollars (AUS$4,500.00) were missing. 10
When McLoughlin discovered the loss, he immediately confronted Lainez and Payam who admitted
that Tan opened the safety deposit box with the key assigned to him. 11 McLoughlin went up to his
room where Tan was staying and confronted her. Tan admitted that she had stolen McLoughlin's key
and was able to open the safety deposit box with the assistance of Lopez, Payam and
Lainez.12 Lopez also told McLoughlin that Tan stole the key assigned to McLoughlin while the latter
was asleep.13

McLoughlin requested the management for an investigation of the incident. Lopez got in touch with
Tan and arranged for a meeting with the police and McLoughlin. When the police did not arrive,
Lopez and Tan went to the room of McLoughlin at Tropicana and thereat, Lopez wrote on a piece of
paper a promissory note dated 21 April 1988. The promissory note reads as follows:
I promise to pay Mr. Maurice McLoughlin the amount of AUS$4,000.00 and US$2,000.00 or its
equivalent in Philippine currency on or before May 5, 1988. 14
Lopez requested Tan to sign the promissory note which the latter did and Lopez also signed as a
witness. Despite the execution of promissory note by Tan, McLoughlin insisted that it must be the
hotel who must assume responsibility for the loss he suffered. However, Lopez refused to accept the
responsibility relying on the conditions for renting the safety deposit box entitled "Undertaking For the
Use Of Safety Deposit Box,"15 specifically paragraphs (2) and (4) thereof, to wit:
2. To release and hold free and blameless TROPICANA APARTMENT HOTEL from any liability
arising from any loss in the contents and/or use of the said deposit box for any cause whatsoever,
including but not limited to the presentation or use thereof by any other person should the key be
lost;
...
4. To return the key and execute the RELEASE in favor of TROPICANA APARTMENT HOTEL upon
giving up the use of the box.16
On 17 May 1988, McLoughlin went back to Australia and he consulted his lawyers as to the validity
of the abovementioned stipulations. They opined that the stipulations are void for being violative of
universal hotel practices and customs. His lawyers prepared a letter dated 30 May 1988 which was
signed by McLoughlin and sent to President Corazon Aquino. 17 The Office of the President referred
the letter to the Department of Justice (DOJ) which forwarded the same to the Western Police District
(WPD).18
After receiving a copy of the indorsement in Australia, McLoughlin came to the Philippines and
registered again as a hotel guest of Tropicana. McLoughlin went to Malacaang to follow up on his
letter but he was instructed to go to the DOJ. The DOJ directed him to proceed to the WPD for
documentation. But McLoughlin went back to Australia as he had an urgent business matter to
attend to.
For several times, McLoughlin left for Australia to attend to his business and came back to the
Philippines to follow up on his letter to the President but he failed to obtain any concrete assistance. 19
McLoughlin left again for Australia and upon his return to the Philippines on 25 August 1989 to
pursue his claims against petitioners, the WPD conducted an investigation which resulted in the
preparation of an affidavit which was forwarded to the Manila City Fiscal's Office. Said affidavit
became the basis of preliminary investigation. However, McLoughlin left again for Australia without
receiving the notice of the hearing on 24 November 1989. Thus, the case at the Fiscal's Office was
dismissed for failure to prosecute. Mcloughlin requested the reinstatement of the criminal charge for
theft. In the meantime, McLoughlin and his lawyers wrote letters of demand to those having
responsibility to pay the damage. Then he left again for Australia.

Upon his return on 22 October 1990, he registered at the Echelon Towers at Malate, Manila.
Meetings were held between McLoughlin and his lawyer which resulted to the filing of a complaint for
damages on 3 December 1990 against YHT Realty Corporation, Lopez, Lainez, Payam and Tan
(defendants) for the loss of McLoughlin's money which was discovered on 16 April 1988. After filing
the complaint, McLoughlin left again for Australia to attend to an urgent business matter. Tan and
Lopez, however, were not served with summons, and trial proceeded with only Lainez, Payam and
YHT Realty Corporation as defendants.
After defendants had filed their Pre-Trial Brief admitting that they had previously allowed and assisted
Tan to open the safety deposit box, McLoughlin filed an Amended/Supplemental Complaint20 dated
10 June 1991 which included another incident of loss of money and jewelry in the safety deposit box
rented by McLoughlin in the same hotel which took place prior to 16 April 1988. 21 The trial court
admitted the Amended/Supplemental Complaint.
During the trial of the case, McLoughlin had been in and out of the country to attend to urgent
business in Australia, and while staying in the Philippines to attend the hearing, he incurred
expenses for hotel bills, airfare and other transportation expenses, long distance calls to Australia,
Meralco power expenses, and expenses for food and maintenance, among others. 22
After trial, the RTC of Manila rendered judgment in favor of McLoughlin, the dispositive portion of
which reads:
WHEREFORE, above premises considered, judgment is hereby rendered by this Court in favor of
plaintiff and against the defendants, to wit:
1. Ordering defendants, jointly and severally, to pay plaintiff the sum of US$11,400.00 or its
equivalent in Philippine Currency of P342,000.00, more or less, and the sum of
AUS$4,500.00 or its equivalent in Philippine Currency of P99,000.00, or a total
of P441,000.00, more or less, with 12% interest from April 16 1988 until said amount has
been paid to plaintiff (Item 1, Exhibit CC);
2. Ordering defendants, jointly and severally to pay plaintiff the sum of P3,674,238.00 as
actual and consequential damages arising from the loss of his Australian and American
dollars and jewelries complained against and in prosecuting his claim and rights
administratively and judicially (Items II, III, IV, V, VI, VII, VIII, and IX, Exh. "CC");
3. Ordering defendants, jointly and severally, to pay plaintiff the sum of P500,000.00 as moral
damages (Item X, Exh. "CC");
4. Ordering defendants, jointly and severally, to pay plaintiff the sum of P350,000.00 as
exemplary damages (Item XI, Exh. "CC");
5. And ordering defendants, jointly and severally, to pay litigation expenses in the sum
of P200,000.00 (Item XII, Exh. "CC");
6. Ordering defendants, jointly and severally, to pay plaintiff the sum of P200,000.00 as
attorney's fees, and a fee of P3,000.00 for every appearance; and
7. Plus costs of suit.

SO ORDERED.23
The trial court found that McLoughlin's allegations as to the fact of loss and as to the amount of
money he lost were sufficiently shown by his direct and straightforward manner of testifying in court
and found him to be credible and worthy of belief as it was established that McLoughlin's money,
kept in Tropicana's safety deposit box, was taken by Tan without McLoughlin's consent. The taking
was effected through the use of the master key which was in the possession of the management.
Payam and Lainez allowed Tan to use the master key without authority from McLoughlin. The trial
court added that if McLoughlin had not lost his dollars, he would not have gone through the trouble
and personal inconvenience of seeking aid and assistance from the Office of the President, DOJ,
police authorities and the City Fiscal's Office in his desire to recover his losses from the hotel
management and Tan.24
As regards the loss of Seven Thousand US Dollars (US$7,000.00) and jewelry worth approximately
One Thousand Two Hundred US Dollars (US$1,200.00) which allegedly occurred during his stay at
Tropicana previous to 4 April 1988, no claim was made by McLoughlin for such losses in his
complaint dated 21 November 1990 because he was not sure how they were lost and who the
responsible persons were. But considering the admission of the defendants in their pre-trial brief that
on three previous occasions they allowed Tan to open the box, the trial court opined that it was
logical and reasonable to presume that his personal assets consisting of Seven Thousand US
Dollars (US$7,000.00) and jewelry were taken by Tan from the safety deposit box without
McLoughlin's consent through the cooperation of Payam and Lainez. 25
The trial court also found that defendants acted with gross negligence in the performance and
exercise of their duties and obligations as innkeepers and were therefore liable to answer for the
losses incurred by McLoughlin.26
Moreover, the trial court ruled that paragraphs (2) and (4) of the "Undertaking For The Use Of Safety
Deposit Box" are not valid for being contrary to the express mandate of Article 2003 of the New Civil
Code and against public policy.27Thus, there being fraud or wanton conduct on the part of
defendants, they should be responsible for all damages which may be attributed to the nonperformance of their contractual obligations.28
The Court of Appeals affirmed the disquisitions made by the lower court except as to the amount of
damages awarded. The decretal text of the appellate court's decision reads:
THE FOREGOING CONSIDERED, the appealed Decision is hereby AFFIRMED but modified as
follows:
The appellants are directed jointly and severally to pay the plaintiff/appellee the following amounts:
1) P153,200.00 representing the peso equivalent of US$2,000.00 and AUS$4,500.00;
2) P308,880.80, representing the peso value for the air fares from Sidney [sic] to Manila and
back for a total of eleven (11) trips;
3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Apartment
Hotel;
4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;

5) One-half of P179,863.20 or P89,931.60 for the taxi xxx transportation from the residence
to Sidney [sic] Airport and from MIA to the hotel here in Manila, for the eleven (11) trips;
6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses;
7) One-half of P356,400.00 or P178,000.00 representing expenses for food and
maintenance;
8) P50,000.00 for moral damages;
9) P10,000.00 as exemplary damages; and
10) P200,000 representing attorney's fees.
With costs.
SO ORDERED.29
Unperturbed, YHT Realty Corporation, Lainez and Payam went to this Court in this appeal
by certiorari.
Petitioners submit for resolution by this Court the following issues: (a) whether the appellate court's
conclusion on the alleged prior existence and subsequent loss of the subject money and jewelry is
supported by the evidence on record; (b) whether the finding of gross negligence on the part of
petitioners in the performance of their duties as innkeepers is supported by the evidence on record;
(c) whether the "Undertaking For The Use of Safety Deposit Box" admittedly executed by private
respondent is null and void; and (d) whether the damages awarded to private respondent, as well as
the amounts thereof, are proper under the circumstances.30
The petition is devoid of merit.
It is worthy of note that the thrust of Rule 45 is the resolution only of questions of law and any
peripheral factual question addressed to this Court is beyond the bounds of this mode of review.
Petitioners point out that the evidence on record is insufficient to prove the fact of prior existence of
the dollars and the jewelry which had been lost while deposited in the safety deposit boxes of
Tropicana, the basis of the trial court and the appellate court being the sole testimony of McLoughlin
as to the contents thereof. Likewise, petitioners dispute the finding of gross negligence on their part
as not supported by the evidence on record.
We are not persuaded.l^vvphi1.net We adhere to the findings of the trial court as affirmed by the
appellate court that the fact of loss was established by the credible testimony in open court by
McLoughlin. Such findings are factual and therefore beyond the ambit of the present
petition.1awphi1.nt
The trial court had the occasion to observe the demeanor of McLoughlin while testifying which
reflected the veracity of the facts testified to by him. On this score, we give full credence to the
appreciation of testimonial evidence by the trial court especially if what is at issue is the credibility of
the witness. The oft-repeated principle is that where the credibility of a witness is an issue, the
established rule is that great respect is accorded to the evaluation of the credibility of witnesses by
the trial court.31 The trial court is in the best position to assess the credibility of witnesses and their

testimonies because of its unique opportunity to observe the witnesses firsthand and note their
demeanor, conduct and attitude under grilling examination. 32
We are also not impressed by petitioners' argument that the finding of gross negligence by the lower
court as affirmed by the appellate court is not supported by evidence. The evidence reveals that two
keys are required to open the safety deposit boxes of Tropicana. One key is assigned to the guest
while the other remains in the possession of the management. If the guest desires to open his safety
deposit box, he must request the management for the other key to open the same. In other words,
the guest alone cannot open the safety deposit box without the assistance of the management or its
employees. With more reason that access to the safety deposit box should be denied if the one
requesting for the opening of the safety deposit box is a stranger. Thus, in case of loss of any item
deposited in the safety deposit box, it is inevitable to conclude that the management had at least a
hand in the consummation of the taking, unless the reason for the loss is force majeure.
Noteworthy is the fact that Payam and Lainez, who were employees of Tropicana, had custody of the
master key of the management when the loss took place. In fact, they even admitted that they
assisted Tan on three separate occasions in opening McLoughlin's safety deposit box. 33 This only
proves that Tropicana had prior knowledge that a person aside from the registered guest had access
to the safety deposit box. Yet the management failed to notify McLoughlin of the incident and waited
for him to discover the taking before it disclosed the matter to him. Therefore, Tropicana should be
held responsible for the damage suffered by McLoughlin by reason of the negligence of its
employees.
The management should have guarded against the occurrence of this incident considering that
Payam admitted in open court that she assisted Tan three times in opening the safety deposit box of
McLoughlin at around 6:30 A.M. to 7:30 A.M. while the latter was still asleep. 34 In light of the
circumstances surrounding this case, it is undeniable that without the acquiescence of the
employees of Tropicana to the opening of the safety deposit box, the loss of McLoughlin's money
could and should have been avoided.
The management contends, however, that McLoughlin, by his act, made its employees believe that
Tan was his spouse for she was always with him most of the time. The evidence on record, however,
is bereft of any showing that McLoughlin introduced Tan to the management as his wife. Such an
inference from the act of McLoughlin will not exculpate the petitioners from liability in the absence of
any showing that he made the management believe that Tan was his wife or was duly authorized to
have access to the safety deposit box. Mere close companionship and intimacy are not enough to
warrant such conclusion considering that what is involved in the instant case is the very safety of
McLoughlin's deposit. If only petitioners exercised due diligence in taking care of McLoughlin's safety
deposit box, they should have confronted him as to his relationship with Tan considering that the
latter had been observed opening McLoughlin's safety deposit box a number of times at the early
hours of the morning. Tan's acts should have prompted the management to investigate her
relationship with McLoughlin. Then, petitioners would have exercised due diligence required of them.
Failure to do so warrants the conclusion that the management had been remiss in complying with the
obligations imposed upon hotel-keepers under the law.
Under Article 1170 of the New Civil Code, those who, in the performance of their obligations, are
guilty of negligence, are liable for damages. As to who shall bear the burden of paying damages,
Article 2180, paragraph (4) of the same Code provides that the owners and managers of an

establishment or enterprise are likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the occasion of their functions. Also,
this Court has ruled that if an employee is found negligent, it is presumed that the employer was
negligent in selecting and/or supervising him for it is hard for the victim to prove the negligence of
such employer.35 Thus, given the fact that the loss of McLoughlin's money was consummated
through the negligence of Tropicana's employees in allowing Tan to open the safety deposit box
without the guest's consent, both the assisting employees and YHT Realty Corporation itself, as
owner and operator of Tropicana, should be held solidarily liable pursuant to Article 2193. 36
The issue of whether the "Undertaking For The Use of Safety Deposit Box" executed by McLoughlin
is tainted with nullity presents a legal question appropriate for resolution in this petition. Notably, both
the trial court and the appellate court found the same to be null and void. We find no reason to
reverse their common conclusion. Article 2003 is controlling, thus:
Art. 2003. The hotel-keeper cannot free himself from responsibility by posting notices to the effect
that he is not liable for the articles brought by the guest. Any stipulation between the hotel-keeper
and the guest whereby the responsibility of the former as set forth in Articles 1998 to 2001 37 is
suppressed or diminished shall be void.
Article 2003 was incorporated in the New Civil Code as an expression of public policy precisely to
apply to situations such as that presented in this case. The hotel business like the common carrier's
business is imbued with public interest. Catering to the public, hotelkeepers are bound to provide not
only lodging for hotel guests and security to their persons and belongings. The twin duty constitutes
the essence of the business. The law in turn does not allow such duty to the public to be negated or
diluted by any contrary stipulation in so-called "undertakings" that ordinarily appear in prepared
forms imposed by hotel keepers on guests for their signature.
In an early case,38 the Court of Appeals through its then Presiding Justice (later Associate Justice of
the Court) Jose P. Bengzon, ruled that to hold hotelkeepers or innkeeper liable for the effects of their
guests, it is not necessary that they be actually delivered to the innkeepers or their employees. It is
enough that such effects are within the hotel or inn. 39With greater reason should the liability of the
hotelkeeper be enforced when the missing items are taken without the guest's knowledge and
consent from a safety deposit box provided by the hotel itself, as in this case.
Paragraphs (2) and (4) of the "undertaking" manifestly contravene Article 2003 of the New Civil Code
for they allow Tropicana to be released from liability arising from any loss in the contents and/or use
of the safety deposit box forany cause whatsoever.40 Evidently, the undertaking was intended to bar
any claim against Tropicana for any loss of the contents of the safety deposit box whether or not
negligence was incurred by Tropicana or its employees. The New Civil Code is explicit that the
responsibility of the hotel-keeper shall extend to loss of, or injury to, the personal property of the
guests even if caused by servants or employees of the keepers of hotels or inns as well as by
strangers, except as it may proceed from any force majeure.41 It is the loss through force
majeure that may spare the hotel-keeper from liability. In the case at bar, there is no showing that the
act of the thief or robber was done with the use of arms or through an irresistible force to qualify the
same as force majeure.42
Petitioners likewise anchor their defense on Article 2002 43 which exempts the hotel-keeper from
liability if the loss is due to the acts of his guest, his family, or visitors. Even a cursory reading of the

provision would lead us to reject petitioners' contention. The justification they raise would render
nugatory the public interest sought to be protected by the provision. What if the negligence of the
employer or its employees facilitated the consummation of a crime committed by the registered
guest's relatives or visitor? Should the law exculpate the hotel from liability since the loss was due to
the act of the visitor of the registered guest of the hotel? Hence, this provision presupposes that the
hotel-keeper is not guilty of concurrent negligence or has not contributed in any degree to the
occurrence of the loss. A depositary is not responsible for the loss of goods by theft, unless his
actionable negligence contributes to the loss.44
In the case at bar, the responsibility of securing the safety deposit box was shared not only by the
guest himself but also by the management since two keys are necessary to open the safety deposit
box. Without the assistance of hotel employees, the loss would not have

Thus, Tropicana was guilty of concurrent


negligencein allowing Tan, who was not the registered
guest, to open the safety deposit box of McLoughlin,
even assuming that the latter was also guilty of
negligence in allowing another person to use his key.
To rule otherwise would result in undermining the
safety of the safety deposit boxes in hotels for the
management will be given imprimatur to allow any
person, under the pretense of being a family member
or a visitor of the guest, to have access to the safety
deposit box without fear of any liability that will attach
thereafter in case such person turns out to be a
complete stranger. This will allow the hotel to evade
responsibility for any liability incurred by its
employees in conspiracy with the guest's relatives
and visitors.
occurred.

Petitioners contend that McLoughlin's case was mounted on the theory of contract, but the trial court
and the appellate court upheld the grant of the claims of the latter on the basis of tort. 45 There is
nothing anomalous in how the lower courts decided the controversy for this Court has pronounced a
jurisprudential rule that tort liability can exist even if there are already contractual relations. The act
that breaks the contract may also be tort.46
As to damages awarded to McLoughlin, we see no reason to modify the amounts awarded by the
appellate court for the same were based on facts and law. It is within the province of lower courts to
settle factual issues such as the proper amount of damages awarded and such finding is binding
upon this Court especially if sufficiently proven by evidence and not unconscionable or excessive.
Thus, the appellate court correctly awarded McLoughlin Two Thousand US Dollars (US$2,000.00)
and Four Thousand Five Hundred Australian dollars (AUS$4,500.00) or their peso equivalent at the

time of payment,47 being the amounts duly proven by evidence.48 The alleged loss that took place
prior to 16 April 1988 was not considered since the amounts alleged to have been taken were not
sufficiently established by evidence. The appellate court also correctly awarded the sum
of P308,880.80, representing the peso value for the air fares from Sydney to Manila and back for a
total of eleven (11) trips;49 one-half of P336,207.05 orP168,103.52 representing payment to
Tropicana;50 one-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;51 onehalf of P179,863.20 or P89,931.60 for the taxi or transportation expenses from McLoughlin's
residence to Sydney Airport and from MIA to the hotel here in Manila, for the eleven (11) trips; 52 onehalf of P7,801.94 or P3,900.97 representing Meralco power expenses;53 one-half of P356,400.00
or P178,000.00 representing expenses for food and maintenance. 54
The amount of P50,000.00 for moral damages is reasonable. Although trial courts are given
discretion to determine the amount of moral damages, the appellate court may modify or change the
amount awarded when it is palpably and scandalously excessive.l^vvphi1.net Moral damages are not
intended to enrich a complainant at the expense of a defendant.l^vvphi1.net They are awarded only
to enable the injured party to obtain means, diversion or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of defendants' culpable action. 55
The awards of P10,000.00 as exemplary damages and P200,000.00 representing attorney's fees are
likewise sustained.
WHEREFORE, foregoing premises considered, the Decision of the Court of Appeals dated 19
October 1995 is hereby AFFIRMED. Petitioners are directed, jointly and severally, to pay private
respondent the following amounts:
(1) US$2,000.00 and AUS$4,500.00 or their peso equivalent at the time of payment;
(2) P308,880.80, representing the peso value for the air fares from Sydney to Manila and
back for a total of eleven (11) trips;
(3) One-half of P336,207.05 or P168,103.52 representing payment to Tropicana Copacabana
Apartment Hotel;
(4) One-half of P152,683.57 or P76,341.785 representing payment to Echelon Tower;
(5) One-half of P179,863.20 or P89,931.60 for the taxi or transportation expense from
McLoughlin's residence to Sydney Airport and from MIA to the hotel here in Manila, for the
eleven (11) trips;
(6) One-half of P7,801.94 or P3,900.97 representing Meralco power expenses;
(7) One-half of P356,400.00 or P178,200.00 representing expenses for food and
maintenance;
(8) P50,000.00 for moral damages;
(9) P10,000.00 as exemplary damages; and
(10) P200,000 representing attorney's fees.
With costs.
SO ORDERED.

CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner, vs.


THE HONORABLE COURT OF APPEALS and SECURITY
BANK AND TRUST COMPANY, respondents.
G.R. No. 90027 March 3, 1993
CA AGRO-INDUSTRIAL DEVELOPMENT CORP., petitioner,
vs.
THE HONORABLE COURT OF APPEALS and SECURITY BANK AND TRUST
COMPANY, respondents.
Dolorfino & Dominguez Law Offices for petitioner.
Danilo B. Banares for private respondent.

DAVIDE, JR., J.:

Is the contractual relation between a commercial bank and


another party in a contract of rent of a safety deposit box
with respect to its contents placed by the latter one of
bailor and bailee or one of lessor and lessee?
This is the crux of the present controversy.
On 3 July 1979, petitioner (through its President, Sergio Aguirre) and the spouses Ramon and Paula
Pugao entered into an agreement whereby the former purchased from the latter two (2) parcels of
land for a consideration of P350,625.00. Of this amount, P75,725.00 was paid as downpayment
while the balance was covered by three (3) postdated checks. Among the terms and conditions of
the agreement embodied in a Memorandum of True and Actual Agreement of Sale of Land were that
the titles to the lots shall be transferred to the petitioner upon full payment of the purchase price and
that the owner's copies of the certificates of titles thereto, Transfer Certificates of Title (TCT) Nos.
284655 and 292434, shall be deposited in a safety deposit box of any bank. The same could be
withdrawn only upon the joint signatures of a representative of the petitioner and the Pugaos upon
full payment of the purchase price. Petitioner, through Sergio Aguirre, and the Pugaos then rented
Safety Deposit Box No. 1448 of private respondent Security Bank and Trust Company, a domestic
banking corporation hereinafter referred to as the respondent Bank. For this purpose, both signed a
contract of lease (Exhibit "2") which contains, inter alia, the following conditions:
13. The bank is not a depositary of the contents of the safe and it has neither the
possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly
provided, and it assumes absolutely no liability in connection therewith. 1

After the execution of the contract, two (2) renter's keys were given to the renters one to Aguirre
(for the petitioner) and the other to the Pugaos. A guard key remained in the possession of the
respondent Bank. The safety deposit box has two (2) keyholes, one for the guard key and the other
for the renter's key, and can be opened only with the use of both keys. Petitioner claims that the
certificates of title were placed inside the said box.
Thereafter, a certain Mrs. Margarita Ramos offered to buy from the petitioner the two (2) lots at a
price of P225.00 per square meter which, as petitioner alleged in its complaint, translates to a profit
of P100.00 per square meter or a total of P280,500.00 for the entire property. Mrs. Ramos
demanded the execution of a deed of sale which necessarily entailed the production of the
certificates of title. In view thereof, Aguirre, accompanied by the Pugaos, then proceeded to the
respondent Bank on 4 October 1979 to open the safety deposit box and get the certificates of title.

However, when opened in the presence of the Bank's representative, the box yielded no such
certificates. Because of the delay in the reconstitution of the title, Mrs. Ramos withdrew her earlier
offer to purchase the lots; as a consequence thereof, the petitioner allegedly failed to realize the
expected profit of P280,500.00. Hence, the latter filed on 1 September 1980 a complaint 2 for
damages against the respondent Bank with the Court of First Instance (now Regional Trial Court) of
Pasig, Metro Manila which docketed the same as Civil Case No. 38382.
In its Answer with Counterclaim, 3 respondent Bank alleged that the petitioner has no cause of action
because of paragraphs 13 and 14 of the contract of lease (Exhibit "2"); corollarily, loss of any of the
items or articles contained in the box could not give rise to an action against it. It then interposed a
counterclaim for exemplary damages as well as attorney's fees in the amount of P20,000.00.
Petitioner subsequently filed an answer to the counterclaim. 4
In due course, the trial court, now designated as Branch 161 of the Regional Trial Court (RTC) of
Pasig, Metro Manila, rendered a decision 5 adverse to the petitioner on 8 December 1986, the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered dismissing plaintiff's
complaint.
On defendant's counterclaim, judgment is hereby rendered ordering plaintiff to pay
defendant the amount of FIVE THOUSAND (P5,000.00) PESOS as attorney's fees.
With costs against plaintiff. 6

The unfavorable verdict is based on the trial court's conclusion that under paragraphs 13 and 14 of
the contract of lease, the Bank has no liability for the loss of the certificates of title. The court
declared that the said provisions are binding on the parties.
Its motion for reconsideration 7 having been denied, petitioner appealed from the adverse decision to
the respondent Court of Appeals which docketed the appeal as CA-G.R. CV No. 15150. Petitioner
urged the respondent Court to reverse the challenged decision because the trial court erred in (a)
absolving the respondent Bank from liability from the loss, (b) not declaring as null and void, for
being contrary to law, public order and public policy, the provisions in the contract for lease of the
safety deposit box absolving the Bank from any liability for loss, (c) not concluding that in this
jurisdiction, as well as under American jurisprudence, the liability of the Bank is settled and (d)
awarding attorney's fees to the Bank and denying the petitioner's prayer for nominal and exemplary
damages and attorney's fees. 8
In its Decision promulgated on 4 July 1989, 9 respondent Court affirmed the appealed decision
principally on the theory that the contract (Exhibit "2") executed by the petitioner and respondent
Bank is in the nature of a contract of lease by virtue of which the petitioner and its co-renter were
given control over the safety deposit box and its contents while the Bank retained no right to open
the said box because it had neither the possession nor control over it and its contents. As such, the
contract is governed by Article 1643 of the Civil Code 10 which provides:
Art. 1643. In the lease of things, one of the parties binds himself to give to another the
enjoyment or use of a thing for a price certain, and for a period which may be definite or
indefinite. However, no lease for more than ninety-nine years shall be valid.

It invoked Tolentino vs. Gonzales 11 which held that the owner of the property loses his
control over the property leased during the period of the contract and Article 1975 of the
Civil Code which provides:
Art. 1975. The depositary holding certificates, bonds, securities or instruments which earn
interest shall be bound to collect the latter when it becomes due, and to take such steps
as may be necessary in order that the securities may preserve their value and the rights
corresponding to them according to law.
The above provision shall not apply to contracts for the rent of safety deposit boxes.

and then concluded that "[c]learly, the defendant-appellee is not under any duty to maintain
the contents of the box. The stipulation absolving the defendant-appellee from liability is in
accordance with the nature of the contract of lease and cannot be regarded as contrary to
law, public order and public policy." 12 The appellate court was quick to add, however, that
under the contract of lease of the safety deposit box, respondent Bank is not completely free
from liability as it may still be made answerable in case unauthorized persons enter into the
vault area or when the rented box is forced open. Thus, as expressly provided for in
stipulation number 8 of the contract in question:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any
rented safe and beyond this, the Bank will not be responsible for the contents of any safe
rented from it. 13

Its motion for reconsideration 14 having been denied in the respondent Court's Resolution of 28
August 1989, 15petitioner took this recourse under Rule 45 of the Rules of Court and urges Us to
review and set aside the respondent Court's ruling. Petitioner avers that both the respondent Court
and the trial court (a) did not properly and legally apply the correct law in this case, (b) acted with
grave abuse of discretion or in excess of jurisdiction amounting to lack thereof and (c) set a
precedent that is contrary to, or is a departure from precedents adhered to and affirmed by decisions
of this Court and precepts in American jurisprudence adopted in the Philippines. It reiterates the
arguments it had raised in its motion to reconsider the trial court's decision, the brief submitted to the
respondent Court and the motion to reconsider the latter's decision. In a nutshell, petitioner
maintains that regardless of nomenclature, the contract for the rent of the safety deposit box (Exhibit
"2") is actually a contract of deposit governed by Title XII, Book IV of the Civil Code of the
Philippines. 16 Accordingly, it is claimed that the respondent Bank is liable for the loss of the
certificates of title pursuant to Article 1972 of the said Code which provides:
Art. 1972. The depositary is obliged to keep the thing safely and to return it, when
required, to the depositor, or to his heirs and successors, or to the person who may have
been designated in the contract. His responsibility, with regard to the safekeeping and the
loss of the thing, shall be governed by the provisions of Title I of this Book.
If the deposit is gratuitous, this fact shall be taken into account in determining the degree
of care that the depositary must observe.

Petitioner then quotes a passage from American Jurisprudence


expound on the prevailing rule in the United States, to wit:

17

which is supposed to

The prevailing rule appears to be that where a safe-deposit company leases a safedeposit box or safe and the lessee takes possession of the box or safe and places
therein his securities or other valuables, the relation of bailee and bail or is created
between the parties to the transaction as to such securities or other valuables; the fact
that the
safe-deposit company does not know, and that it is not expected that it shall know, the
character or description of the property which is deposited in such safe-deposit box or
safe does not change that relation. That access to the contents of the safe-deposit box
can be had only by the use of a key retained by the lessee ( whether it is the sole key or
one to be used in connection with one retained by the lessor) does not operate to alter
the foregoing rule. The argument that there is not, in such a case, a delivery of exclusive
possession and control to the deposit company, and that therefore the situation is entirely
different from that of ordinary bailment, has been generally rejected by the courts, usually
on the ground that as possession must be either in the depositor or in the company, it
should reasonably be considered as in the latter rather than in the former, since the
company is, by the nature of the contract, given absolute control of access to the
property, and the depositor cannot gain access thereto without the consent and active
participation of the company. . . . (citations omitted).

and a segment from Words and Phrases 18 which states that a contract for the rental of a
bank safety deposit box in consideration of a fixed amount at stated periods is a bailment for
hire.

Petitioner further argues that conditions 13 and 14 of the questioned contract are contrary to law and
public policy and should be declared null and void. In support thereof, it cites Article 1306 of the Civil
Code which provides that parties to a contract may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy.
After the respondent Bank filed its comment, this Court gave due course to the petition and required
the parties to simultaneously submit their respective Memoranda.
The petition is partly meritorious.

We agree with the petitioner's contention that the contract


for the rent of the safety deposit box is not an ordinary
contract of lease as defined in Article 1643 of the Civil
Code. However,We do not fully subscribe to its view that
the same is a contract of deposit that is to be strictly
governed by the provisions in the Civil Code on
deposit; 19 the contract in the case at bar is a

special

kind of deposit. It cannot be characterized as an


ordinary contract of lease under Article 1643 because the
full and absolute possession and control of the safety
deposit box was not given to the joint renters the
petitioner and the Pugaos. The guard key of the box
remained with the respondent Bank; without this key,
neither of the renters could open the box. On the other
hand, the respondent Bank could not likewise open the
box without the renter's key. In this case, the said key had
a duplicate which was made so that both renters could
have access to the box.
Hence, the authorities cited by the respondent Court 20 on this point do not apply. Neither could
Article 1975, also relied upon by the respondent Court, be invoked as an argument against the
deposit theory. Obviously, the first paragraph of such provision cannot apply to a depositary of
certificates, bonds, securities or instruments which earn interest if such documents are kept in a
rented safety deposit box. It is clear that the depositary cannot open the box without the renter being
present.
We observe, however, that the deposit theory itself does not altogether find unanimous support even
in American jurisprudence. We agree with the petitioner that under the latter, the prevailing rule is
that the relation between a bank renting out safe-deposit boxes and its customer with respect to the

bail or and bailee, the bailment being for hire and mutual

contents of the box is that of a


benefit. 21 This is just the prevailing view because:

There is, however, some support for the view that the relationship in question might be
more properly characterized as that of landlord and tenant, or lessor and lessee. It has
also been suggested that it should be characterized as that of licensor and licensee. The
relation between a bank, safe-deposit company, or storage company, and the renter of a
safe-deposit box therein, is often described as contractual, express or implied, oral or
written, in whole or in part. But there is apparently no jurisdiction in which any rule other
than that applicable to bailments governs questions of the liability and rights of the parties
in respect of loss of the contents of safe-deposit boxes. 22 (citations omitted)

In the context of our laws which authorize banking institutions to rent out safety deposit boxes, it is
clear that in this jurisdiction, the prevailing rule in the United States has been adopted. Section 72 of
the General Banking Act 23pertinently provides:
Sec. 72. In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the following
services:
(a) Receive in custody funds, documents, and valuable objects, and rent
safety deposit boxes for the safeguarding of such effects.
xxx xxx xxx
The banks shall perform the services permitted under subsections (a), (b) and (c) of this
section as depositories or as agents. . . . 24 (emphasis supplied)

Note that the primary function is still found within the parameters of a contract of deposit, i.e., the
receiving in custody of funds, documents and other valuable objects for safekeeping. The renting out
of the safety deposit boxes is not independent from, but related to or in conjunction with, this
principal function. A contract of deposit may be entered into orally or in writing 25 and, pursuant to
Article 1306 of the Civil Code, the parties thereto may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order or public policy. The depositary's responsibility for the safekeeping of the
objects deposited in the case at bar is governed by Title I, Book IV of the Civil Code. Accordingly, the
depositary would be liable if, in performing its obligation, it is found guilty of fraud, negligence, delay
or contravention of the tenor of the agreement. 26 In the absence of any stipulation prescribing the
degree of diligence required, that of a good father of a family is to be observed. 27 Hence, any
stipulation exempting the depositary from any liability arising from the loss of the thing deposited on
account of fraud, negligence or delay would be void for being contrary to law and public policy. In the
instant case, petitioner maintains that conditions 13 and 14 of the questioned contract of lease of the
safety deposit box, which read:
13. The bank is not a depositary of the contents of the safe and it has neither the
possession nor control of the same.
14. The bank has no interest whatsoever in said contents, except herein expressly
provided, and it assumes absolutely no liability in connection therewith. 28

are void as they are contrary to law and public policy. We find Ourselves in agreement with
this proposition for indeed, said provisions are inconsistent with the respondent Bank's
responsibility as a depositary under Section 72(a) of the General Banking Act. Both exempt
the latter from any liability except as contemplated in condition 8 thereof which limits its duty
to exercise reasonable diligence only with respect to who shall be admitted to any rented
safe, to wit:
8. The Bank shall use due diligence that no unauthorized person shall be admitted to any
rented safe and beyond this, the Bank will not be responsible for the contents of any safe
rented from it. 29

Furthermore, condition 13 stands on a wrong premise and is contrary to the actual practice
of the Bank. It is not correct to assert that the Bank has neither the possession nor control of
the contents of the box since in fact, the safety deposit box itself is located in its premises

and is under its absolute control; moreover, the respondent Bank keeps the guard key to the
said box. As stated earlier, renters cannot open their respective boxes unless the Bank
cooperates by presenting and using this guard key. Clearly then, to the extent above stated,
the foregoing conditions in the contract in question are void and ineffective. It has been said:
With respect to property deposited in a safe-deposit box by a customer of a safe-deposit
company, the parties, since the relation is a contractual one, may by special contract
define their respective duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or public policy. It must clearly
appear that there actually was such a special contract, however, in order to vary the
ordinary obligations implied by law from the relationship of the parties; liability of the
deposit company will not be enlarged or restricted by words of doubtful meaning. The
company, in renting
safe-deposit boxes, cannot exempt itself from liability for loss of the contents by its own
fraud or negligence or that of its agents or servants, and if a provision of the contract may
be construed as an attempt to do so, it will be held ineffective for the purpose. Although it
has been held that the lessor of a safe-deposit box cannot limit its liability for loss of the
contents thereof through its own negligence, the view has been taken that such a lessor
may limits its liability to some extent by agreement or stipulation. 30 (citations omitted)

Thus, we reach the same conclusion which the Court of Appeals arrived at, that is, that the petition
should be dismissed, but on grounds quite different from those relied upon by the Court of Appeals.
In the instant case, the respondent Bank's exoneration cannot, contrary to the holding of the Court of
Appeals, be based on or proceed from a characterization of the impugned contract as a contract of
lease, but rather on the fact that no competent proof was presented to show that respondent Bank
was aware of the agreement between the petitioner and the Pugaos to the effect that the certificates
of title were withdrawable from the safety deposit box only upon both parties' joint signatures, and
that no evidence was submitted to reveal that the loss of the certificates of title was due to the fraud
or negligence of the respondent Bank. This in turn flows from this Court's determination that the
contract involved was one of deposit. Since both the petitioner and the Pugaos agreed that each
should have one (1) renter's key, it was obvious that either of them could ask the Bank for access to
the safety deposit box and, with the use of such key and the Bank's own guard key, could open the
said box, without the other renter being present.
Since, however, the petitioner cannot be blamed for the filing of the complaint and no bad faith on its
part had been established, the trial court erred in condemning the petitioner to pay the respondent
Bank attorney's fees. To this extent, the Decision (dispositive portion) of public respondent Court of
Appeals must be modified.
WHEREFORE, the Petition for Review is partially GRANTED by deleting the award for attorney's
fees from the 4 July 1989 Decision of the respondent Court of Appeals in CA-G.R. CV No. 15150. As
modified, and subject to the pronouncement We made above on the nature of the relationship
between the parties in a contract of lease of safety deposit boxes, the dispositive portion of the said
Decision is hereby AFFIRMED and the instant Petition for Review is otherwise DENIED for lack of
merit.
No pronouncement as to costs.
SO ORDERED.
Feliciano, Bidin, Romero and Melo, JJ., concur.
Gutierrez, Jr., J., is on leave.

LUZAN SIA, petitioner, vs. COURT OF APPEALS

G.R. No. 102970 May 13, 1993

LUZAN SIA, petitioner,


vs.
COURT OF APPEALS and SECURITY BANK and TRUST
COMPANY, respondents.
Asuncion Law Offices for petitioner.
Cauton, Banares, Carpio & Associates for private
respondent.
DAVIDE, JR., J.:
The Decision of public respondent Court of Appeals in
CA-G.R. CV No. 26737, promulgated on 21 August
1991, 1 reversing and setting aside the Decision, dated
19 February 1990, 2 of Branch 47 of the Regional Trial
Court (RTC) of Manila in Civil Case No. 87-42601,
entitled "LUZAN SIA vs. SECURITY BANK and TRUST
CO.," is challenged in this petition for review
on certiorari under Rule 45 of the Rules Court.
Civil Case No. 87-42601 is an action for damages
arising out of the destruction or loss of the stamp
collection of the plaintiff (petitioner herein) contained
in Safety Deposit Box No. 54 which had been rented
from the defendant pursuant to a contract
denominated as a Lease Agreement. 3 Judgment
therein was rendered in favor of the dispositive
portion of which reads:
WHEREFORE, premises considered,
judgment is hereby rendered in favor of the
plaintiff and against the defendant, Security
Bank & Trust Company, ordering the
defendant bank to pay the plaintiff the sum of

a) Twenty Thousand Pesos (P20,000.00),


Philippine Currency, as actual damages;
b) One Hundred Thousand Pesos
(P100,000.00), Philippine Currency, as moral
damages; and
c) Five Thousand Pesos (P5,000.00),
Philippine Currency, as attorney's fees and
legal expenses.
The counterclaim set up by the defendant are
hereby dismissed for lack of merit.
No costs.
SO ORDERED. 4
The antecedent facts of the present controversy are
summarized by the public respondent in its
challenged decision as follows:
The plaintiff rented on March 22, 1985 the Safety Deposit Box No. 54 of the
defendant bank at its Binondo Branch located at the Fookien Times Building, Soler
St., Binondo, Manila wherein he placed his collection of stamps. The said safety
deposit box leased by the plaintiff was at the bottom or at the lowest level of the
safety deposit boxes of the defendant bank at its aforesaid Binondo Branch.
During the floods that took place in 1985 and 1986, floodwater entered into the
defendant bank's premises, seeped into the safety deposit box leased by the plaintiff
and caused, according to the plaintiff, damage to his stamps collection. The
defendant bank rejected the plaintiff's claim for compensation for his damaged
stamps collection, so, the plaintiff instituted an action for damages against the
defendant bank.
The defendant bank denied liability for the damaged stamps collection of the plaintiff
on the basis of the "Rules and Regulations Governing the Lease of Safe Deposit
Boxes" (Exhs. "A-1", "1-A"), particularly paragraphs 9 and 13, which reads (sic):
"9. The liability of the Bank by reason of the lease, is limited to the exercise of the
diligence to prevent the opening of the safe by any person other than the Renter, his
authorized agent or legal representative;
xxx xxx xxx

"13. The Bank is not a depository of the contents of the safe and it has neither the
possession nor the control of the same. The Bank has no interest whatsoever in said
contents, except as herein provided, and it assumes absolutely no liability in
connection therewith."
The defendant bank also contended that its contract with the plaintiff over safety
deposit box No. 54 was one of lease and not of deposit and, therefore, governed by
the lease agreement (Exhs. "A", "L") which should be the applicable law; that the
destruction of the plaintiff's stamps collection was due to a calamity beyond obligation
on its part to notify the plaintiff about the floodwaters that inundated its premises at
Binondo branch which allegedly seeped into the safety deposit box leased to the
plaintiff.
The trial court then directed that an ocular inspection on (sic) the contents of the
safety deposit box be conducted, which was done on December 8, 1988 by its clerk
of court in the presence of the parties and their counsels. A report thereon was then
submitted on December 12, 1988 (Records, p. 98-A) and confirmed in open court by
both parties thru counsel during the hearing on the same date (Ibid., p. 102) stating:
"That the Safety Box Deposit No. 54 was opened by both plaintiff
Luzan Sia and the Acting Branch Manager Jimmy B. Ynion in the
presence of the undersigned, plaintiff's and defendant's counsel. Said
Safety Box when opened contains two albums of different sizes and
thickness, length and width and a tin box with printed word 'Tai Ping
Shiang Roast Pork in pieces with Chinese designs and character."

Condition of the above-stated Items


"Both albums are wet, moldy and badly damaged.
1. The first album measures 10 1/8 inches in
length, 8 inches in width and 3/4 in thick. The
leaves of the album are attached to every page
and cannot be lifted without destroying it, hence
the stamps contained therein are no longer
visible.
2. The second album measure 12 1/2 inches in
length, 9 3/4 in width 1 inch thick. Some of its
pages can still be lifted. The stamps therein can

still be distinguished but beyond restoration.


Others have lost its original form.
3. The tin box is rusty inside. It contains an album
with several pieces of papers stuck up to the
cover of the box. The condition of the album is
the second abovementioned album." 5
The SECURITY BANK AND TRUST COMPANY,
hereinafter referred to as SBTC, appealed the trial
court's decision to the public respondent Court of
Appeals. The appeal was docketed as CA-G.R. CV No.
26737.
In urging the public respondent to reverse the
decision of the trial court, SBTC contended that the
latter erred in (a) holding that the lease agreement is a
contract of adhesion; (b) finding that the defendant
had failed to exercise the required diligence expected
of a bank in maintaining the safety deposit box; (c)
awarding to the plaintiff actual damages in the amount
of P20,000.00, moral damages in the amount of
P100,000.00 and attorney's fees and legal expenses in
the amount of P5,000.00; and (d) dismissing the
counterclaim.
On 21 August 1991, the respondent promulgated its
decision the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby REVERSED and instead the
appellee's complaint is hereby DISMISSED. The appellant bank's counterclaim is
likewise DISMISSED. No costs. 6

In reversing the trial court's decision and absolving


SBTC from liability, the public respondent found and
ruled that:

a) the fine print in the "Lease Agreement " (Exhibits


"A" and "1" ) constitutes the terms and conditions of
the contract of lease which the appellee (now
petitioner) had voluntarily and knowingly executed
with SBTC;
b) the contract entered into by the parties regarding
Safe Deposit Box No. 54 was not a contract of deposit
wherein the bank became a depositary of the subject
stamp collection; hence, as contended by SBTC, the
provisions of Book IV, Title XII of the Civil Code on
deposits do not apply;
c) The following provisions of the questioned lease
agreement of the safety deposit box limiting SBTC's
liability:
9. The liability of the bank by reason of the lease, is limited to the exercise of the
diligence to prevent the opening of the Safe by any person other than the Renter, his
authorized agent or legal representative.
xxx xxx xxx
13. The bank is not a depository of the contents of the Safe and it has neither the
possession nor the control of the same. The Bank has no interest whatsoever in said
contents, except as herein provided, and it assumes absolutely no liability in
connection therewith.

are valid since said stipulations are not contrary to


law, morals, good customs, public order or public
policy; and
d) there is no concrete evidence to show that SBTC
failed to exercise the required diligence in maintaining
the safety deposit box; what was proven was that the
floods of 1985 and 1986, which were beyond the
control of SBTC, caused the damage to the stamp
collection; said floods were fortuitous events which
SBTC should not be held liable for since it was not

shown to have participated in the aggravation of the


damage to the stamp collection; on the contrary, it
offered its services to secure the assistance of an
expert in order to save most of the stamps, but the
appellee refused; appellee must then bear the lose
under the principle of "res perit domino."
Unsuccessful in his bid to have the above decision
reconsidered by the public respondent, 7petitioner filed the
instant petition wherein he contends that:
I
IT WAS A GRAVE ERROR OR AN ABUSE OF
DISCRETION ON THE PART OF THE
RESPONDENT COURT WHEN IT RULED THAT
RESPONDENT SBTC DID NOT FAIL TO
EXERCISE THE REQUIRED DILIGENCE IN
MAINTAINING THE SAFETY DEPOSIT BOX OF
THE PETITIONER CONSIDERING THAT
SUBSTANTIAL EVIDENCE EXIST (sic)
PROVING THE CONTRARY.
II
THE RESPONDENT COURT SERIOUSLY
ERRED IN EXCULPATING PRIVATE
RESPONDENT FROM ANY LIABILITY
WHATSOEVER BY REASON OF THE
PROVISIONS OF PARAGRAPHS 9 AND 13 OF
THE AGREEMENT (EXHS. "A" AND "A-1").

III
THE RESPONDENT COURT SERIOUSLY
ERRED IN NOT UPHOLDING THE AWARDS OF
THE TRIAL COURT FOR ACTUAL AND MORAL
DAMAGES, INCLUDING ATTORNEY'S FEES
AND LEGAL EXPENSES, IN FAVOR OF THE
PETITIONER. 8
We subsequently gave due course the petition and
required both parties to submit their respective
memoranda, which they complied with. 9
Petitioner insists that the trial court correctly ruled
that SBTC had failed "to exercise the required
diligence expected of a bank maintaining such safety
deposit box . . . in the light of the environmental
circumstance of said safety deposit box after the
floods of 1985 and 1986." He argues that such a
conclusion is supported by the evidence on record, to
wit: SBTC was fully cognizant of the exact location of
the safety deposit box in question; it knew that the
premises were inundated by floodwaters in 1985 and
1986 and considering that the bank is guarded twentyfour (24) hours a day , it is safe to conclude that it was
also aware of the inundation of the premises where
the safety deposit box was located; despite such
knowledge, however, it never bothered to inform the
petitioner of the flooding or take any appropriate
measures to insure the safety and good maintenance
of the safety deposit box in question.

SBTC does not squarely dispute these facts; rather, it relies on the rule that findings of facts of the
Court of Appeals, when supported by substantial exidence, are not reviewable on appeal
by certiorari. 10

The foregoing rule is, of course, subject to certain


exceptions such as when there exists a disparity
between the factual findings and conclusions of the
Court of Appeals and the trial court. 11 Such a disparity
obtains in the present case.
As We see it, SBTC's theory, which was upheld by the
public respondent, is that the "Lease Agreement "
covering Safe Deposit Box No. 54 (Exhibit "A and "1")
is just that a contract of lease and not a contract
of deposit, and that paragraphs 9 and 13 thereof,
which expressly limit the bank's liability as follows:
9. The liability of the bank by reason of the lease,
is limited to the exercise of the diligence to
prevent the opening of the Safe by any person
other than the Renter, his autliorized agent or
legal representative;
xxx xxx xxx
13. The bank is not a depository of the contents
of the Safe and it has neither the possession nor
the control of the same. The Bank has no interest
whatsoever said contents, except as herein
provided, and it assumes absolutely no liability in
connection therewith. 12
are valid and binding upon the parties. In the
challenged decision, the public respondent further

avers that even without such a limitation of liability,


SBTC should still be absolved from any responsibility
for the damage sustained by the petitioner as it
appears that such damage was occasioned by a
fortuitous event and that the respondent bank was
free from any participation in the aggravation of the
injury.
We cannot accept this theory and ratiocination.
Consequently, this Court finds the petition to be
impressed with merit.
In the recent case CA Agro-Industrial Development
Corp. vs. Court of Appeals, 13 this Court explicitly
rejected the contention that a contract for the use of a
safety deposit box is a contract of lease governed by
Title VII, Book IV of the Civil Code. Nor did We fully
subscribe to the view that it is a contract of deposit to
be strictly governed by the Civil Code provision on
deposit; 1 it is, as We declared, a special kind of deposit. The
prevailing rule in American jurisprudence that the
relation between a bank renting out safe deposit boxes
and its customer with respect to the contents of the box is
4

that of a bailor and bailee, the bailment for hire and


mutual benefit 15 has been adopted in this jurisdiction, thus:
In the context of our laws which authorize banking institutions to rent out safety
deposit boxes, it is clear that in this jurisdiction, the prevailing rule in the United
States has been adopted. Section 72 of the General Banking Act [R.A. 337, as
amended] pertinently provides:
"Sec. 72. In addition to the operations specifically authorized elsewhere in this Act,
banking institutions other than building and loan associations may perform the
following services:
(a) Receive in custody funds, documents, and valuable objects, and
rent safety deposit boxes for the safequarding of such effects.
xxx xxx xxx

The banks shall perform the services permitted


under subsections (a), (b) and (c) of this section
as depositories or as agents. . . ."(emphasis supplied)
Note that the primary function is still found within the parameters of a contract
of deposit, i.e., the receiving in custody of funds, documents and other valuable
objects for safekeeping. The renting out of the safety deposit boxes is not
independent from, but related to or in conjunction with, this principal function. A
contract of deposit may be entered into orally or in writing (Art. 1969, Civil Code] and,
pursuant to Article 1306 of the Civil Code, the parties thereto may establish such
stipulations, clauses, terms and conditions as they may deem convenient, provided
they are not contrary to law, morals, good customs, public order or public policy. The
depositary's responsibility for the safekeeping of the objects deposited in the case at
bar is governed by Title I, Book IV of the Civil Code. Accordingly, the depositary
would be liable if, in performing its obligation, it is found guilty of fraud, negligence,
delay or contravention of the tenor of the agreement [Art. 1170, id.]. In the absence of
any stipulation prescribing the degree of diligence required, that of a good father of a
family is to be observed [Art. 1173, id.]. Hence, any stipulation exempting the
depositary from any liability arising from the loss of the thing deposited on account of
fraud, negligence or delay would be void for being contrary to law and public policy.
In the instant case, petitioner maintains that conditions 13 and l4 of the questioned
contract of lease of the safety deposit box, which read:
"13. The bank is a depositary of the contents of the safe and it has neither the
possession nor control of the same.
"14. The bank has no interest whatsoever in said contents, except as herein
expressly provided, and it assumes absolutely no liability in connection therewith."
are void as they are contrary to law and public policy. We find Ourselves in
agreement with this proposition for indeed, said provisions are inconsistent with the
respondent Bank's responsibility as a depositary under Section 72 (a) of the General
Banking Act. Both exempt the latter from any liability except as contemplated in
condition 8 thereof which limits its duty to exercise reasonable diligence only with
respect to who shall be admitted to any rented safe, to wit:
"8. The Bank shall use due diligence that no unauthorized person
shall be admitted to any rented safe and beyond this, the Bank will
not be responsible for the contents of any safe rented from it."
Furthermore condition 13 stands on a wrong premise and is contrary to the actual
practice of the Bank. It is not correct to assert that the Bank has neither the
possession nor control of the contents of the box since in fact, the safety deposit box
itself is located in its premises and is under its absolute control; moreover, the
respondent Bank keeps the guard key to the said box. As stated earlier, renters
cannot open their respective boxes unless the Bank cooperates by presenting and

using this guard key. Clearly then, to the extent above stated, the foregoing
conditions in the contract in question are void and ineffective. It has been said:
"With respect to property deposited in a safe-deposit box by a
customer of a safe-deposit company, the parties, since the relation is
a contractual one, may by special contract define their respective
duties or provide for increasing or limiting the liability of the deposit
company, provided such contract is not in violation of law or public
policy. It must clearly appear that there actually was such a special
contract, however, in order to vary the ordinary obligations implied by
law from the relationship of the parties; liability of the deposit
company will not be enlarged or restricted by words of doubtful
meaning. The company, in renting safe-deposit boxes, cannot exempt
itself from liability for loss of the contents by its own fraud or
negligence or that, of its agents or servants, and if a provision of the
contract may be construed as an attempt to do so, it will be held
ineffective for the purpose. Although it has been held that the lessor
of a safe-deposit box cannot limit its liability for loss of the contents
thereof through its own negligence, the view has been taken that
such a lessor may limit its liability to some extent by agreement or
stipulation ."[10 AM JUR 2d., 466]. (citations omitted) 16

It must be noted that conditions No. 13 and No. 14 in


the Contract of Lease of Safety Deposit Box in CA
Agro-Industrial Development Corp. are strikingly
similar to condition No. 13 in the instant case. On the
other hand, both condition No. 8 in CA Agro-Industrial
Development Corp. and condition No. 9 in the present
case limit the scope of the exercise of due diligence
by the banks involved to merely seeing to it that only
the renter, his authorized agent or his legal
representative should open or have access to the
safety deposit box. In short, in all other situations, it
would seem that SBTC is not bound to exercise
diligence of any kind at all. Assayed in the light of Our
aforementioned pronouncements in CA Agrolndustrial Development Corp., it is not at all difficult to
conclude that both conditions No. 9 and No. 13 of the
"Lease Agreement" covering the safety deposit box in
question (Exhibits "A" and "1") must be stricken down

for being contrary to law and public policy as they are


meant to exempt SBTC from any liability for damage,
loss or destruction of the contents of the safety
deposit box which may arise from its own or its
agents' fraud, negligence or delay. Accordingly, SBTC
cannot take refuge under the said conditions.
Public respondent further postulates that SBTC
cannot be held responsible for the destruction or loss
of the stamp collection because the flooding was a
fortuitous event and there was no showing of SBTC's
participation in the aggravation of the loss or injury. It
states:
Article 1174 of the Civil Code provides:
"Except in cases expressly specified by
the law, or when it is otherwise declared
by stipulation, or when the nature of the
obligation requires the assumption of
risk, no person shall be responsible for
those events which could not be
foreseen, or which, though foreseen,
were inevitable.'
In its dissertation of the phrase "caso
fortuito" the Enciclopedia Jurisdicada
Espaola 17 says: "In a legal sense and,
consequently, also in relation to contracts,
a "caso fortuito" prevents (sic) 18 the following
essential characteristics: (1) the cause of the

unforeseen ands unexpected occurrence, or of


the failure of the debtor to comply with his
obligation, must be independent of the human
will; (2) it must be impossible to foresee the event
which constitutes the "caso fortuito," or if it can be
foreseen, it must be impossible to avoid; (3) the
occurrence must be such as to render it
impossible for one debtor to fulfill his obligation in
a normal manner; and (4) the obligor must be
free from any participation in the aggravation of
the injury resulting to the creditor." (cited in
Servando vs. Phil., Steam Navigation
Co., supra).19
Here, the unforeseen or unexpected inundating
floods were independent of the will of the
appellant bank and the latter was not shown to
have participated in aggravating damage (sic) to
the stamps collection of the appellee. In fact, the
appellant bank offered its services to secure the
assistance of an expert to save most of the then
good stamps but the appelle refused and let (sic)
these recoverable stamps inside the safety
deposit box until they were ruined. 20
Both the law and authority cited are clear enough and
require no further elucidation. Unfortunately, however,
the public respondent failed to consider that in the

instant case, as correctly held by the trial court, SBTC


was guilty of negligence. The facts constituting
negligence are enumerated in the petition and have
been summarized in this ponencia. SBTC's
negligence aggravated the injury or damage to the
stamp collection. SBTC was aware of the floods of
1985 and 1986; it also knew that the floodwaters
inundated the room where Safe Deposit Box No. 54
was located. In view thereof, it should have lost no
time in notifying the petitioner in order that the box
could have been opened to retrieve the stamps, thus
saving the same from further deterioration and loss. In
this respect, it failed to exercise the reasonable care
and prudence expected of a good father of a family,
thereby becoming a party to the aggravation of the
injury or loss. Accordingly, the aforementioned fourth
characteristic of a fortuitous event is absent Article
1170 of the Civil Code, which reads:
Those who in the performance of their obligation are guilty of fraud, negligence, or
delay, and those who in any manner contravene the tenor thereof, are liable for
damages,

thus comes to the succor of the petitioner. The


destruction or loss of the stamp collection which was,
in the language of the trial court, the "product of 27
years of patience and diligence" 21 caused the
petitioner pecuniary loss; hence, he must be
compensated therefor.
We cannot, however, place Our imprimatur on the trial
court's award of moral damages. Since the
relationship between the petitioner and SBTC is based
on a contract, either of them may be held liable for
moral damages for breach thereof only if said party

had acted fraudulently or in bad faith. 22 There is here


no proof of fraud or bad faith on the part of SBTC.
WHEREFORE, the instant petition is hereby
GRANTED. The challenged Decision and Resolution of
the public respondent Court of Appeals of 21 August
1991 and 21 November 1991, respectively, in CA-G.R.
CV No. 26737, are hereby SET ASIDE and the Decision
of 19 February 1990 of Branch 47 of the Regional Trial
Court of Manila in Civil Case No. 87-42601 is hereby
REINSTATED in full, except as to the award of moral
damages which is hereby set aside.
Costs against the private respondent.
SO ORDERED.
MERCEDES MORALIDAD, Petitioner, vs. SPS. DIOSDADO
PERNES and ARLENE PERNES, Respondents
SECOND DIVISION
G.R. No. 152809 August 3, 2006
MERCEDES MORALIDAD, Petitioner,
vs.
SPS. DIOSDADO PERNES and ARLENE PERNES, Respondents.
DECISION
GARCIA, J.:
Under consideration is this petition for review on certiorari under Rule 45 of the Rules of Court to
nullify and set aside the following issuances of the Court of Appeals (CA) in CA-G.R. SP No. 61610,
to wit:
1. Decision dated September 27, 2001, 1 affirming an earlier decision of the Regional Trial Court
(RTC) of Davao City which reversed that of the Municipal Trial Court in Cities (MTCC), Davao City,
Branch 1, in an action for unlawful detainer thereat commenced by the petitioner against the herein
respondents; and
2. Resolution dated February 28, 2002, 2 denying petitioners motion for reconsideration.
At the heart of this controversy is a parcel of land located in Davao City and registered in the name of
petitioner Mercedes Moralidad under Transfer Certificate of Title (TCT) No. T-123125 of the Registry
of Deeds of Davao City.

In her younger days, petitioner taught in Davao City, Quezon City and Manila. While teaching in
Manila, she had the good fortune of furthering her studies at the University of Pennsylvania, U.S.A.
While schooling, she was offered to teach at the Philadelphia Catholic Archdiocese, which she did
for seven (7) years. Thereafter, she worked at the Mental Health Department of said University for
the next seventeen (17) years.
During those years, she would come home to the Philippines to spend her two-month summer
vacation in her hometown in Davao City. Being single, she would usually stay in Mandug, Davao City,
in the house of her niece, respondent Arlene Pernes, a daughter of her younger sister, Rosario.
Back in the U.S.A. sometime in 1986, she received news from Arlene that Mandug at the outskirts of
Davao City was infested by NPA rebels and many women and children were victims of crossfire
between government troops and the insurgents. Shocked and saddened about this development,
she immediately sent money to Araceli, Arlenes older sister, with instructions to look for a lot in
Davao City where Arlene and her family could transfer and settle down. This was why she bought the
parcel of land covered by TCT No. T-123125.
Petitioner acquired the lot property initially for the purpose of letting Arlene move from Mandug to
Davao City proper but later she wanted the property to be also available to any of her kins wishing to
live and settle in Davao City. Petitioner made known this intention in a document she executed on
July 21, 1986. 3 The document reads:
I, MERCEDES VIA MORALIDAD, of legal age, single, having been born on the 29th day of
January, 1923, now actually residing at 8021 Lindbergh Boulevard, Philadelphia, Pennsylvania,
U.S.A., wishes to convey my honest intention regarding my properties situated at Palm Village
Subdivision, Bajada, Davao City, 9501, and hereby declare:
1. That it is my desire that Mr. and Mrs. Diosdado M. Pernes may build their house therein and stay
as long as they like;
2. That anybody of my kins who wishes to stay on the aforementioned real property should maintain
an atmosphere of cooperation, live in harmony and must avoid bickering with one another;
3. That anyone of my kins may enjoy the privilege to stay therein and may avail the use thereof.
Provided, however, that the same is not inimical to the purpose thereof;
4. That anyone of my kins who cannot conform with the wishes of the undersigned may exercise the
freedom to look for his own;
5. That any proceeds or income derived from the aforementioned properties shall be allotted to my
nearest kins who have less in life in greater percentage and lesser percentage to those who are
better of in standing.
xxx xxx xxx
Following her retirement in 1993, petitioner came back to the Philippines to stay with the
respondents on the house they build on the subject property. In the course of time, their relations
turned sour because members of the Pernes family were impervious to her suggestions and
attempts to change certain practices concerning matters of health and sanitation within their
compound. For instance, Arlenes eldest son, Myco Pernes, then a fourth year veterinary medicine

student, would answer petitioner back with clenched fist and at one time hurled profanities when she
corrected him. Later, Arlene herself followed suit. Petitioner brought the matter to the local barangay
lupon where she lodged a complaint for slander, harassment, threat and defamation against the
Pernes Family. Deciding for petitioner, the lupon apparently ordered the Pernes family to vacate
petitioners property but not after they are reimbursed for the value of the house they built thereon.
Unfortunately, the parties could not agree on the amount, thus prolonging the impasse between
them.
Other ugly incidents interspersed with violent confrontations meanwhile transpired, with the petitioner
narrating that, at one occasion in July 1998, she sustained cuts and wounds when Arlene pulled her
hair, hit her on the face, neck and back, while her husband Diosdado held her, twisting her arms in
the process.
Relations having deteriorated from worse to worst, petitioner, on July 29, 1998, lodged a formal
complaint before the Regional Office of the Ombudsman for Mindanao, charging the respondent
spouses, who were both government employees, with conduct unbecoming of public servants. This
administrative case, however, did not prosper.
Then, on August 3, 1998, petitioner filed with the MTCC of Davao City an unlawful detainer suit
against the respondent spouses. Petitioner alleged that she is the registered owner of the land on
which the respondents built their house; that through her counsel, she sent the respondent spouses
a letter demanding them to vacate the premises and to pay rentals therefor, which the respondents
refused to heed.
In their defense, the respondents alleged having entered the property in question, building their
house thereon and maintaining the same as their residence with petitioners full knowledge and
express consent. To prove their point, they invited attention to her written declaration of July 21,
1986, supra, wherein she expressly signified her desire for the spouses to build their house on her
property and stay thereat for as long as they like.
The MTCC, resolving the ejectment suit in petitioners favor, declared that the respondent spouses,
although builders in good faith vis--vis the house they built on her property, cannot invoke their
bona fides as a valid excuse for not complying with the demand to vacate. To the MTCC,
respondents continued possession of the premises turned unlawful upon their receipt of the demand
to vacate, such possession being merely at petitioners tolerance, and sans any rental. Accordingly,
in its decision dated November 17, 1999, 4 the MTCC rendered judgment for the petitioner, as plaintiff
therein, to wit:
WHEREFORE, judgment is hereby rendered in favor of herein plaintiff and against the defendants,
as follows:
a) Directing the defendants, their agents and other persons acting on their behalf to vacate the
premises and to yield peaceful possession thereof to plaintiff;
b) Ordering defendants to pay P2,000.00 a month from the filing of this complaint until they vacate
premises;
c) Sentencing defendants to pay the sum of P120,000.00 5 as attorneys fees and to pay the cost of
suit.

Defendants counterclaim are hereby dismissed except with respect to the claim for reimbursement of
necessary and useful expenses which should be litigated in an ordinary civil actions. (sic)
Dissatisfied, the respondent spouses appealed to the RTC of Davao City.
In the meantime, petitioner filed a Motion for Execution Pending Appeal. The motion was initially
granted by the RTC in its Order of February 29, 2000, but the Order was later withdrawn and vacated
by its subsequent Order dated May 9, 2000 6 on the ground that immediate execution of the
appealed decision was not the prudent course of action to take, considering that the house the
respondents constructed on the subject property might even be more valuable than the land site.
Eventually, in a decision 7 dated September 30, 2000, the RTC reversed that of the MTCC, holding
that respondents possession of the property in question was not, as ruled by the latter court, by
mere tolerance of the petitioner but rather by her express consent. It further ruled that Article 1678 of
the Civil Code on reimbursement of improvements introduced is inapplicable since said provision
contemplates of a lessor-lessee arrangement, which was not the factual milieu obtaining in the case.
Instead, the RTC ruled that what governed the parties relationship are Articles 448 and 546 of the
Civil Code, explaining thus:
Since the defendants-appellees [respondents] are admittedly possessors of the property by
permission from plaintiff [petitioner], and builders in good faith, they have the right to retain
possession of the property subject of this case until they have been reimbursed the cost of the
improvements they have introduced on the property.
Indeed, this is a substantive right given to the defendants by law, and this right is superior to the
procedural right to [sic] plaintiff to immediately ask for their removal by a writ of execution by virtue of
a decision which as we have shown is erroneous, and therefore invalid. (Words in brackets supplied),
and accordingly dismissed petitioners appeal, as follows:
WHEREFORE, in view of the foregoing, the Decision appealed from is REVERSED and declared
invalid. Consequently, the motion for execution pending appeal is likewise denied.
Counter-claims of moral and exemplary damages claimed by defendants are likewise dismissed.
However, attorneys fees in the amount of fifteen thousand pesos is hereby awarded in favor of
defendants-appellants, and against plaintiffs.
SO ORDERED. 8
Therefrom, petitioner went to the CA in CA-G.R. SP No. 61610.
On September 27, 2001, the CA, while conceding the applicability of Articles 448 and 546 of the Civil
Code to the case, ruled that it is still premature to apply the same considering that the issue of
whether respondents right to possess a portion of petitioners land had already expired or was
already terminated was not yet resolved. To the CA, the unlawful detainer suit presupposes the
cessation of respondents right to possess. The CA further ruled that what governs the rights of the
parties is the law on usufruct but petitioner failed to establish that respondents right to possess had
already ceased. On this premise, the CA concluded that the ejectment suit instituted by the petitioner
was premature. The appellate court thus affirmed the appealed RTC decision, disposing:

WHEREFORE, premises considered, the instant petition for review is hereby denied for lack of merit.
Accordingly, the petitioners complaint for Unlawful Detainer is DISMISSED.
SO ORDERED.
With the CAs denial of her motion for reconsideration in its Resolution of February 28, 2002,
petitioner is now before this Court raising the following issues:
I. WHETHER OR NOT THE COURT OF APPEALS ERRED IN DISMISSING THE UNLAWFUL
DETAINER CASE FOR BEING PREMATURE WHICH DECISION IS NOT IN ACCORDANCE WITH
LAW AND JURISPRUDENCE.
II. WHETHER OR NOT THE COURT OF APPEALS ERRED IN APPLYING ARTICLES 448 AND 546
AND THE PROVISIONS OF THE CODE ON USUFRUCT INSTEAD OF ARTICLE 1678 OF THE
CIVIL CODE.
The Court rules for the petitioner.

The Court is inclined to agree with the CA that what was


constituted between the parties herein is one
of usufruct over a piece of land, with the petitioner being
the owner of the property upon whom the naked title
thereto remained and the respondents being two (2)
among other unnamed usufructuaries who were simply
referred to as petitioners kin. The Court, however, cannot go along with the
CAs holding that the action for unlawful detainer must be dismissed on ground of prematurity.
Usufruct is defined under Article 562 of the Civil Code in the following wise:
ART. 562. Usufruct gives a right to enjoy the property of another with the obligation of preserving its
form and substance, unless the title constituting it or the law otherwise provides.
Usufruct, in essence, is nothing else but simply allowing one to enjoy anothers property. 9 It is also
defined as the right to enjoy the property of another temporarily, including both the jus utendi and the
jus fruendi, 10 with the owner retaining the jus disponendi or the power to alienate the same.

11

It is undisputed that petitioner, in a document dated July 21, 1986, supra, made known her intention
to give respondents and her other kins the right to use and to enjoy the fruits of her property. There
can also be no quibbling about the respondents being given the right "to build their own house" on
the property and to stay thereat "as long as they like." Paragraph #5 of the same document earmarks
"proceeds or income derived from the aforementioned properties" for the petitioners "nearest kins
who have less in life in greater percentage and lesser percentage to those who are better of (sic) in
standing." The established facts undoubtedly gave respondents not only the right to use the property
but also granted them, among the petitioners other kins, the right to enjoy the fruits thereof. We have
no quarrel, therefore, with the CAs ruling that usufruct was constituted between petitioner and
respondents. It is thus pointless to discuss why there was no lease contract between the parties.

However, determinative of the outcome of the ejectment case is the resolution of the next issue, i.e.,
whether the existing usufruct may be deemed to have been extinguished or terminated. If the
question is resolved in the affirmative, then the respondents right to possession, proceeding as it did
from their right of usufruct, likewise ceased. In that case, petitioners action for ejectment in the
unlawful detainer case could proceed and should prosper.
The CA disposed of this issue in this wise:
xxx Section 1, Rule 70 of the 1997 Rules of Civil Procedure, as amended, provides xxx
xxx xxx xxx
From the foregoing provision, it becomes apparent that for an action for unlawful detainer to prosper,
the plaintiff [petitioner] needs to prove that defendants [respondents] right to possess already
expired and terminated. Now, has respondents right to possess the subject portion of petitioners
property expired or terminated? Let us therefore examine respondents basis for occupying the
same.
It is undisputed that petitioner expressly authorized respondents o occupy portion of her property on
which their house may be built. Thus "it is my desire that Mr. and Mrs. Diosdado M. Pernes may
build their house therein and stay as long as they like." From this statement, it seems that petitioner
had given the respondents the usufructuary rights over the portion that may be occupied by the
house that the latter would build, the duration of which being dependent on how long respondents
would like to occupy the property. While petitioner had already demanded from the respondents the
surrender of the premises, this Court is of the opinion that the usufructuary rights of respondents had
not been terminated by the said demand considering the clear statement of petitioner that she is
allowing respondents to occupy portion of her land as long as the latter want to. Considering that
respondents still want to occupy the premises, petitioner clearly cannot eject respondents.

12

We disagree with the CAs conclusion of law on the matter. The term or period of the usufruct
originally specified provides only one of the bases for the right of a usufructuary to hold and retain
possession of the thing given in usufruct. There are other modes or instances whereby the usufruct
shall be considered terminated or extinguished. For sure, the Civil Code enumerates such other
modes of extinguishment:
ART. 603. Usufruct is extinguished:
(1) By the death of the usufructuary, unless a contrary intention clearly appears;
(2) By expiration of the period for which it was constituted, or by the fulfillment of any resolutory
condition provided in the title creating the usufruct;
(3) By merger of the usufruct and ownership in the same person;
(4) By renunciation of the usufructuary;
(5) By the total loss of the thing in usufruct;
(6) By the termination of the right of the person constituting the usufruct;
(7) By prescription. (Emphasis supplied.)

The document executed by the petitioner dated July 21, 1986 constitutes the title creating, and sets
forth the conditions of, the usufruct. Paragraph #3 thereof states "[T]hat anyone of my kins may enjoy
the privilege to stay therein and may avail the use thereof. Provided, however, that the same is not
inimical to the purpose thereof" (Emphasis supplied). What may be inimical to the purpose
constituting the usufruct may be gleaned from the preceding paragraph wherein petitioner made it
abundantly clear "that anybody of my kins who wishes to stay on the aforementioned property should
maintain an atmosphere of cooperation, live in harmony and must avoid bickering with one another."
That the maintenance of a peaceful and harmonious relations between and among kin constitutes an
indispensable condition for the continuance of the usufruct is clearly deduced from the succeeding
Paragraph #4 where petitioner stated "[T]hat anyone of my kins who cannot conform with the wishes
of the undersigned may exercise the freedom to look for his own." In fine, the occurrence of any of
the following: the loss of the atmosphere of cooperation, the bickering or the cessation of
harmonious relationship between/among kin constitutes a resolutory condition which, by express
wish of the petitioner, extinguishes the usufruct.
From the pleadings submitted by the parties, it is indubitable that there were indeed facts and
circumstances whereby the subject usufruct may be deemed terminated or extinguished by the
occurrence of the resolutory conditions provided for in the title creating the usufruct, namely, the
document adverted to which the petitioner executed on July 21, 1986.
As aptly pointed out by the petitioner in her Memorandum, respondents own evidence before the
MTCC indicated that the relations between the parties "have deteriorated to almost an irretrievable
level." 13 There is no doubt then that what impelled petitioner to file complaints before the local
barangay lupon, the Office of the Ombudsman for Mindanao, and this instant complaint for unlawful
detainer before the MTCC is that she could not live peacefully and harmoniously with the Pernes
family and vice versa.
Thus, the Court rules that the continuing animosity between the petitioner and the Pernes family and
the violence and humiliation she was made to endure, despite her advanced age and frail condition,
are enough factual bases to consider the usufruct as having been terminated.
To reiterate, the relationship between the petitioner and respondents respecting the property in
question is one of owner and usufructuary. Accordingly, respondents claim for reimbursement of the
improvements they introduced on the property during the effectivity of the usufruct should be
governed by applicable statutory provisions and principles on usufruct. In this regard, we cite with
approval what Justice Edgardo Paras wrote on the matter:
If the builder is a usufructuary, his rights will be governed by Arts. 579 and 580. In case like this, the
terms of the contract and the pertinent provisions of law should govern (3 Manresa 215-216; se also
Montinola vs. Bantug, 71 Phil. 449). 14 (Emphasis ours.)
By express provision of law, respondents, as usufructuary, do not have the right to reimbursement for
the improvements they may have introduced on the property. We quote Articles 579 and 580 of the
Civil Code:
Art. 579. The usufructuary may make on the property held in usufruct such useful improvements or
expenses for mere pleasure as he may deem proper, provided he does not alter its form or

substance; but he shall have no right to be indemnified therefor. He may, however, remove such
improvements, should it be possible to do so without damage to the property. (Emphasis supplied.)
Art. 580. The usufructuary may set off the improvements he may have made on the property against
any damage to the same.

Given the foregoing perspective, respondents will


have to be ordered to vacate the premises without any
right of reimbursement. If the rule on reimbursement
or indemnity were otherwise, then the usufructuary
might, as an author pointed out, improve the owner
out of his property. 15 The respondents may, however,
remove or destroy the improvements they may have
introduced thereon without damaging the petitioners
property.
Out of the generosity of her heart, the petitioner has allowed the respondent spouses to use and
enjoy the fruits of her property for quite a long period of time. They opted, however, to repay a noble
gesture with unkindness. At the end of the day, therefore, they really cannot begrudge their aunt for
putting an end to their right of usufruct. The disposition herein arrived is not only legal and called for
by the law and facts of the case. It is also right.
WHEREFORE, the petition is GRANTED. The assailed Decision and Resolution of the CA are
REVERSED and SET ASIDE. Accordingly, the decision of the MTCC is REINSTATED with
MODIFICATION that all of respondents counterclaims are dismissed, including their claims for
reimbursement of useful and necessary expenses.
No pronouncement as to costs.
SO ORDERED.

COLITO T. PAJUYO, petitioner, vs. COURT OF APPEALS and


EDDIE GUEVARRA
FIRST DIVISION
G.R. No. 146364

June 3, 2004

COLITO T. PAJUYO, petitioner,


vs.
COURT OF APPEALS and EDDIE GUEVARRA, respondents.
DECISION
CARPIO, J.:
The Case

Before us is a petition for review 1 of the 21 June 2000 Decision2 and 14 December 2000 Resolution
of the Court of Appeals in CA-G.R. SP No. 43129. The Court of Appeals set aside the 11 November
1996 decision3 of the Regional Trial Court of Quezon City, Branch 81,4 affirming the 15 December
1995 decision5 of the Metropolitan Trial Court of Quezon City, Branch 31.6
The Antecedents
In June 1979, petitioner Colito T. Pajuyo ("Pajuyo") paid P400 to a certain Pedro Perez for the rights
over a 250-square meter lot in Barrio Payatas, Quezon City. Pajuyo then constructed a house made
of light materials on the lot. Pajuyo and his family lived in the house from 1979 to 7 December 1985.
On 8 December 1985, Pajuyo and private respondent Eddie Guevarra ("Guevarra") executed
a Kasunduan or agreement. Pajuyo, as owner of the house, allowed Guevarra to live in the house for
free provided Guevarra would maintain the cleanliness and orderliness of the house. Guevarra
promised that he would voluntarily vacate the premises on Pajuyos demand.
In September 1994, Pajuyo informed Guevarra of his need of the house and demanded that
Guevarra vacate the house. Guevarra refused.
Pajuyo filed an ejectment case against Guevarra with the Metropolitan Trial Court of Quezon City,
Branch 31 ("MTC").
In his Answer, Guevarra claimed that Pajuyo had no valid title or right of possession over the lot
where the house stands because the lot is within the 150 hectares set aside by Proclamation No.
137 for socialized housing. Guevarra pointed out that from December 1985 to September 1994,
Pajuyo did not show up or communicate with him. Guevarra insisted that neither he nor Pajuyo has
valid title to the lot.
On 15 December 1995, the MTC rendered its decision in favor of Pajuyo. The dispositive portion of
the MTC decision reads:
WHEREFORE, premises considered, judgment is hereby rendered for the plaintiff and
against defendant, ordering the latter to:
A) vacate the house and lot occupied by the defendant or any other person or
persons claiming any right under him;
B) pay unto plaintiff the sum of THREE HUNDRED PESOS (P300.00) monthly as
reasonable compensation for the use of the premises starting from the last demand;
C) pay plaintiff the sum of P3,000.00 as and by way of attorneys fees; and
D) pay the cost of suit.
SO ORDERED.7
Aggrieved, Guevarra appealed to the Regional Trial Court of Quezon City, Branch 81 ("RTC").
On 11 November 1996, the RTC affirmed the MTC decision. The dispositive portion of the RTC
decision reads:

WHEREFORE, premises considered, the Court finds no reversible error in the decision
appealed from, being in accord with the law and evidence presented, and the same is hereby
affirmed en toto.
SO ORDERED.8
Guevarra received the RTC decision on 29 November 1996. Guevarra had only until 14 December
1996 to file his appeal with the Court of Appeals. Instead of filing his appeal with the Court of
Appeals, Guevarra filed with the Supreme Court a "Motion for Extension of Time to File Appeal by
Certiorari Based on Rule 42" ("motion for extension"). Guevarra theorized that his appeal raised pure
questions of law. The Receiving Clerk of the Supreme Court received the motion for extension on 13
December 1996 or one day before the right to appeal expired.
On 3 January 1997, Guevarra filed his petition for review with the Supreme Court.
On 8 January 1997, the First Division of the Supreme Court issued a Resolution 9 referring the motion
for extension to the Court of Appeals which has concurrent jurisdiction over the case. The case
presented no special and important matter for the Supreme Court to take cognizance of at the first
instance.
On 28 January 1997, the Thirteenth Division of the Court of Appeals issued a Resolution 10 granting
the motion for extension conditioned on the timeliness of the filing of the motion.
On 27 February 1997, the Court of Appeals ordered Pajuyo to comment on Guevaras petition for
review. On 11 April 1997, Pajuyo filed his Comment.
On 21 June 2000, the Court of Appeals issued its decision reversing the RTC decision. The
dispositive portion of the decision reads:
WHEREFORE, premises considered, the assailed Decision of the court a quo in Civil Case
No. Q-96-26943 isREVERSED and SET ASIDE; and it is hereby declared that the ejectment
case filed against defendant-appellant is without factual and legal basis.
SO ORDERED.11
Pajuyo filed a motion for reconsideration of the decision. Pajuyo pointed out that the Court of
Appeals should have dismissed outright Guevarras petition for review because it was filed out of
time. Moreover, it was Guevarras counsel and not Guevarra who signed the certification against
forum-shopping.
On 14 December 2000, the Court of Appeals issued a resolution denying Pajuyos motion for
reconsideration. The dispositive portion of the resolution reads:
WHEREFORE, for lack of merit, the motion for reconsideration is hereby DENIED. No costs.
SO ORDERED.12
The Ruling of the MTC
The MTC ruled that the subject of the agreement between Pajuyo and Guevarra is the house and not
the lot. Pajuyo is the owner of the house, and he allowed Guevarra to use the house only by

tolerance. Thus, Guevarras refusal to vacate the house on Pajuyos demand made Guevarras
continued possession of the house illegal.
The Ruling of the RTC
The RTC upheld the Kasunduan, which established the landlord and tenant relationship between
Pajuyo and Guevarra. The terms of the Kasunduan bound Guevarra to return possession of the
house on demand.
The RTC rejected Guevarras claim of a better right under Proclamation No. 137, the Revised
National Government Center Housing Project Code of Policies and other pertinent laws. In an
ejectment suit, the RTC has no power to decide Guevarras rights under these laws. The RTC
declared that in an ejectment case, the only issue for resolution is material or physical possession,
not ownership.
The Ruling of the Court of Appeals
The Court of Appeals declared that Pajuyo and Guevarra are squatters. Pajuyo and Guevarra
illegally occupied the contested lot which the government owned.
Perez, the person from whom Pajuyo acquired his rights, was also a squatter. Perez had no right or
title over the lot because it is public land. The assignment of rights between Perez and Pajuyo, and
the Kasunduan between Pajuyo and Guevarra, did not have any legal effect. Pajuyo and Guevarra
are in pari delicto or in equal fault. The court will leave them where they are.
The Court of Appeals reversed the MTC and RTC rulings, which held that the Kasunduan between
Pajuyo and Guevarra created a legal tie akin to that of a landlord and tenant relationship. The Court
of Appeals ruled that theKasunduan is not a lease contract but a commodatum because the
agreement is not for a price certain.
Since Pajuyo admitted that he resurfaced only in 1994 to claim the property, the appellate court held
that Guevarra has a better right over the property under Proclamation No. 137. President Corazon C.
Aquino ("President Aquino") issued Proclamation No. 137 on 7 September 1987. At that time,
Guevarra was in physical possession of the property. Under Article VI of the Code of Policies
Beneficiary Selection and Disposition of Homelots and Structures in the National Housing Project
("the Code"), the actual occupant or caretaker of the lot shall have first priority as beneficiary of the
project. The Court of Appeals concluded that Guevarra is first in the hierarchy of priority.
In denying Pajuyos motion for reconsideration, the appellate court debunked Pajuyos claim that
Guevarra filed his motion for extension beyond the period to appeal.
The Court of Appeals pointed out that Guevarras motion for extension filed before the Supreme
Court was stamped "13 December 1996 at 4:09 PM" by the Supreme Courts Receiving Clerk. The
Court of Appeals concluded that the motion for extension bore a date, contrary to Pajuyos claim that
the motion for extension was undated. Guevarra filed the motion for extension on time on 13
December 1996 since he filed the motion one day before the expiration of the reglementary period
on 14 December 1996. Thus, the motion for extension properly complied with the condition imposed
by the Court of Appeals in its 28 January 1997 Resolution. The Court of Appeals explained that the
thirty-day extension to file the petition for review was deemed granted because of such compliance.

The Court of Appeals rejected Pajuyos argument that the appellate court should have dismissed the
petition for review because it was Guevarras counsel and not Guevarra who signed the certification
against forum-shopping. The Court of Appeals pointed out that Pajuyo did not raise this issue in his
Comment. The Court of Appeals held that Pajuyo could not now seek the dismissal of the case after
he had extensively argued on the merits of the case. This technicality, the appellate court opined,
was clearly an afterthought.
The Issues
Pajuyo raises the following issues for resolution:
WHETHER THE COURT OF APPEALS ERRED OR ABUSED ITS AUTHORITY AND
DISCRETION TANTAMOUNT TO LACK OF JURISDICTION:
1) in GRANTING, instead of denying, Private Respondents Motion for an Extension
of thirty days to file petition for review at the time when there was no more period to
extend as the decision of the Regional Trial Court had already become final and
executory.
2) in giving due course, instead of dismissing, private respondents Petition for
Review even though the certification against forum-shopping was signed only by
counsel instead of by petitioner himself.
3) in ruling that the Kasunduan voluntarily entered into by the parties was in fact
a commodatum, instead of a Contract of Lease as found by the Metropolitan Trial
Court and in holding that "the ejectment case filed against defendant-appellant is
without legal and factual basis".
4) in reversing and setting aside the Decision of the Regional Trial Court in Civil Case
No. Q-96-26943 and in holding that the parties are in pari delicto being both
squatters, therefore, illegal occupants of the contested parcel of land.
5) in deciding the unlawful detainer case based on the so-called Code of Policies of
the National Government Center Housing Project instead of deciding the same under
the Kasunduan voluntarily executed by the parties, the terms and conditions of which
are the laws between themselves.13
The Ruling of the Court
The procedural issues Pajuyo is raising are baseless. However, we find merit in the substantive
issues Pajuyo is submitting for resolution.
Procedural Issues
Pajuyo insists that the Court of Appeals should have dismissed outright Guevarras petition for review
because the RTC decision had already become final and executory when the appellate court acted
on Guevarras motion for extension to file the petition. Pajuyo points out that Guevarra had only one
day before the expiry of his period to appeal the RTC decision. Instead of filing the petition for review
with the Court of Appeals, Guevarra filed with this Court an undated motion for extension of 30 days
to file a petition for review. This Court merely referred the motion to the Court of Appeals. Pajuyo

believes that the filing of the motion for extension with this Court did not toll the running of the period
to perfect the appeal. Hence, when the Court of Appeals received the motion, the period to appeal
had already expired.
We are not persuaded.
Decisions of the regional trial courts in the exercise of their appellate jurisdiction are appealable to
the Court of Appeals by petition for review in cases involving questions of fact or mixed questions of
fact and law.14 Decisions of the regional trial courts involving pure questions of law are appealable
directly to this Court by petition for review. 15 These modes of appeal are now embodied in Section 2,
Rule 41 of the 1997 Rules of Civil Procedure.
Guevarra believed that his appeal of the RTC decision involved only questions of law. Guevarra thus
filed his motion for extension to file petition for review before this Court on 14 December 1996. On 3
January 1997, Guevarra then filed his petition for review with this Court. A perusal of Guevarras
petition for review gives the impression that the issues he raised were pure questions of law. There is
a question of law when the doubt or difference is on what the law is on a certain state of
facts.16 There is a question of fact when the doubt or difference is on the truth or falsity of the facts
alleged.17
In his petition for review before this Court, Guevarra no longer disputed the facts. Guevarras petition
for review raised these questions: (1) Do ejectment cases pertain only to possession of a structure,
and not the lot on which the structure stands? (2) Does a suit by a squatter against a fellow squatter
constitute a valid case for ejectment? (3) Should a Presidential Proclamation governing the lot on
which a squatters structure stands be considered in an ejectment suit filed by the owner of the
structure?
These questions call for the evaluation of the rights of the parties under the law on ejectment and the
Presidential Proclamation. At first glance, the questions Guevarra raised appeared purely legal.
However, some factual questions still have to be resolved because they have a bearing on the legal
questions raised in the petition for review. These factual matters refer to the metes and bounds of the
disputed property and the application of Guevarra as beneficiary of Proclamation No. 137.
The Court of Appeals has the power to grant an extension of time to file a petition for review.
In Lacsamana v. Second Special Cases Division of the Intermediate Appellate Court,18 we
declared that the Court of Appeals could grant extension of time in appeals by petition for review.
In Liboro v. Court of Appeals,19 we clarified that the prohibition against granting an extension of
time applies only in a case where ordinary appeal is perfected by a mere notice of appeal. The
prohibition does not apply in a petition for review where the pleading needs verification. A petition for
review, unlike an ordinary appeal, requires preparation and research to present a persuasive
position.20The drafting of the petition for review entails more time and effort than filing a notice of
appeal.21 Hence, the Court of Appeals may allow an extension of time to file a petition for review.
In the more recent case of Commissioner of Internal Revenue v. Court of Appeals,22 we held
that Liborosclarification of Lacsamana is consistent with the Revised Internal Rules of the Court of
Appeals and Supreme Court Circular No. 1-91. They all allow an extension of time for filing petitions
for review with the Court of Appeals. The extension, however, should be limited to only fifteen days
save in exceptionally meritorious cases where the Court of Appeals may grant a longer period.

A judgment becomes "final and executory" by operation of law. Finality of judgment becomes a fact
on the lapse of the reglementary period to appeal if no appeal is perfected. 23 The RTC decision could
not have gained finality because the Court of Appeals granted the 30-day extension to Guevarra.
The Court of Appeals did not commit grave abuse of discretion when it approved Guevarras motion
for extension. The Court of Appeals gave due course to the motion for extension because it complied
with the condition set by the appellate court in its resolution dated 28 January 1997. The resolution
stated that the Court of Appeals would only give due course to the motion for extension if filed on
time. The motion for extension met this condition.
The material dates to consider in determining the timeliness of the filing of the motion for extension
are (1) the date of receipt of the judgment or final order or resolution subject of the petition, and (2)
the date of filing of the motion for extension. 24 It is the date of the filing of the motion or pleading, and
not the date of execution, that determines the timeliness of the filing of that motion or pleading. Thus,
even if the motion for extension bears no date, the date of filing stamped on it is the reckoning point
for determining the timeliness of its filing.
Guevarra had until 14 December 1996 to file an appeal from the RTC decision. Guevarra filed his
motion for extension before this Court on 13 December 1996, the date stamped by this Courts
Receiving Clerk on the motion for extension. Clearly, Guevarra filed the motion for extension exactly
one day before the lapse of the reglementary period to appeal.
Assuming that the Court of Appeals should have dismissed Guevarras appeal on technical grounds,
Pajuyo did not ask the appellate court to deny the motion for extension and dismiss the petition for
review at the earliest opportunity. Instead, Pajuyo vigorously discussed the merits of the case. It was
only when the Court of Appeals ruled in Guevarras favor that Pajuyo raised the procedural issues
against Guevarras petition for review.
A party who, after voluntarily submitting a dispute for resolution, receives an adverse decision on the
merits, is estopped from attacking the jurisdiction of the court. 25 Estoppel sets in not because the
judgment of the court is a valid and conclusive adjudication, but because the practice of attacking the
courts jurisdiction after voluntarily submitting to it is against public policy. 26
In his Comment before the Court of Appeals, Pajuyo also failed to discuss Guevarras failure to sign
the certification against forum shopping. Instead, Pajuyo harped on Guevarras counsel signing the
verification, claiming that the counsels verification is insufficient since it is based only on "mere
information."
A partys failure to sign the certification against forum shopping is different from the partys failure to
sign personally the verification. The certificate of non-forum shopping must be signed by the party,
and not by counsel.27 The certification of counsel renders the petition defective. 28
On the other hand, the requirement on verification of a pleading is a formal and not a jurisdictional
requisite.29 It is intended simply to secure an assurance that what are alleged in the pleading are true
and correct and not the product of the imagination or a matter of speculation, and that the pleading is
filed in good faith.30 The party need not sign the verification. A partys representative, lawyer or any
person who personally knows the truth of the facts alleged in the pleading may sign the verification. 31

We agree with the Court of Appeals that the issue on the certificate against forum shopping was
merely an afterthought. Pajuyo did not call the Court of Appeals attention to this defect at the early
stage of the proceedings. Pajuyo raised this procedural issue too late in the proceedings.
Absence of Title over the Disputed Property will not Divest the Courts of Jurisdiction to
Resolve the Issue of Possession
Settled is the rule that the defendants claim of ownership of the disputed property will not divest the
inferior court of its jurisdiction over the ejectment case.32 Even if the pleadings raise the issue of
ownership, the court may pass on such issue to determine only the question of possession,
especially if the ownership is inseparably linked with the possession. 33 The adjudication on the issue
of ownership is only provisional and will not bar an action between the same parties involving title to
the land.34 This doctrine is a necessary consequence of the nature of the two summary actions of
ejectment, forcible entry and unlawful detainer, where the only issue for adjudication is the physical
or material possession over the real property.35
In this case, what Guevarra raised before the courts was that he and Pajuyo are not the owners of
the contested property and that they are mere squatters. Will the defense that the parties to the
ejectment case are not the owners of the disputed lot allow the courts to renounce their jurisdiction
over the case? The Court of Appeals believed so and held that it would just leave the parties where
they are since they are in pari delicto.
We do not agree with the Court of Appeals.
Ownership or the right to possess arising from ownership is not at issue in an action for recovery of
possession. The parties cannot present evidence to prove ownership or right to legal possession
except to prove the nature of the possession when necessary to resolve the issue of physical
possession.36 The same is true when the defendant asserts the absence of title over the property.
The absence of title over the contested lot is not a ground for the courts to withhold relief from the
parties in an ejectment case.
The only question that the courts must resolve in ejectment proceedings is - who is entitled to the
physical possession of the premises, that is, to the possession de facto and not to the possession de
jure.37 It does not even matter if a partys title to the property is questionable, 38 or when both parties
intruded into public land and their applications to own the land have yet to be approved by the proper
government agency.39 Regardless of the actual condition of the title to the property, the party in
peaceable quiet possession shall not be thrown out by a strong hand, violence or terror. 40 Neither is
the unlawful withholding of property allowed. Courts will always uphold respect for prior possession.
Thus, a party who can prove prior possession can recover such possession even against the owner
himself.41Whatever may be the character of his possession, if he has in his favor prior possession in
time, he has the security that entitles him to remain on the property until a person with a better right
lawfully ejects him.42 To repeat, the only issue that the court has to settle in an ejectment suit is the
right to physical possession.
In Pitargue v. Sorilla,43 the government owned the land in dispute. The government did not
authorize either the plaintiff or the defendant in the case of forcible entry case to occupy the land.
The plaintiff had prior possession and had already introduced improvements on the public land. The
plaintiff had a pending application for the land with the Bureau of Lands when the defendant ousted

him from possession. The plaintiff filed the action of forcible entry against the defendant. The
government was not a party in the case of forcible entry.
The defendant questioned the jurisdiction of the courts to settle the issue of possession because
while the application of the plaintiff was still pending, title remained with the government, and the
Bureau of Public Lands had jurisdiction over the case. We disagreed with the defendant. We ruled
that courts have jurisdiction to entertain ejectment suits even before the resolution of the application.
The plaintiff, by priority of his application and of his entry, acquired prior physical possession over the
public land applied for as against other private claimants. That prior physical possession enjoys legal
protection against other private claimants because only a court can take away such physical
possession in an ejectment case.
While the Court did not brand the plaintiff and the defendant in Pitargue44 as squatters, strictly
speaking, their entry into the disputed land was illegal. Both the plaintiff and defendant entered the
public land without the owners permission. Title to the land remained with the government because
it had not awarded to anyone ownership of the contested public land. Both the plaintiff and the
defendant were in effect squatting on government property. Yet, we upheld the courts jurisdiction to
resolve the issue of possession even if the plaintiff and the defendant in the ejectment case did not
have any title over the contested land.
Courts must not abdicate their jurisdiction to resolve the issue of physical possession because of the
public need to preserve the basic policy behind the summary actions of forcible entry and unlawful
detainer. The underlying philosophy behind ejectment suits is to prevent breach of the peace and
criminal disorder and to compel the party out of possession to respect and resort to the law alone to
obtain what he claims is his.45 The party deprived of possession must not take the law into his own
hands.46 Ejectment proceedings are summary in nature so the authorities can settle speedily actions
to recover possession because of the overriding need to quell social disturbances. 47
We further explained in Pitargue the greater interest that is at stake in actions for recovery of
possession. We made the following pronouncements in Pitargue:
The question that is before this Court is: Are courts without jurisdiction to take cognizance of
possessory actions involving these public lands before final award is made by the Lands
Department, and before title is given any of the conflicting claimants? It is one of utmost
importance, as there are public lands everywhere and there are thousands of settlers,
especially in newly opened regions. It also involves a matter of policy, as it requires the
determination of the respective authorities and functions of two coordinate branches of the
Government in connection with public land conflicts.
Our problem is made simple by the fact that under the Civil Code, either in the old, which
was in force in this country before the American occupation, or in the new, we have a
possessory action, the aim and purpose of which is the recovery of the physical possession
of real property, irrespective of the question as to who has the title thereto. Under the
Spanish Civil Code we had the accion interdictal, a summary proceeding which could be
brought within one year from dispossession (Roman Catholic Bishop of Cebu vs. Mangaron,
6 Phil. 286, 291); and as early as October 1, 1901, upon the enactment of the Code of Civil
Procedure (Act No. 190 of the Philippine Commission) we implanted the common law action
of forcible entry (section 80 of Act No. 190), the object of which has been stated by this Court

to be "to prevent breaches of the peace and criminal disorder which would ensue from
the withdrawal of the remedy, and the reasonable hope such withdrawal would create
that some advantage must accrue to those persons who, believing themselves
entitled to the possession of property, resort to force to gain possession rather than
to some appropriate action in the court to assert their claims." (Supia and Batioco vs.
Quintero and Ayala, 59 Phil. 312, 314.) So before the enactment of the first Public Land Act
(Act No. 926) the action of forcible entry was already available in the courts of the country.
So the question to be resolved is, Did the Legislature intend, when it vested the power and
authority to alienate and dispose of the public lands in the Lands Department, to exclude the
courts from entertaining the possessory action of forcible entry between rival claimants or
occupants of any land before award thereof to any of the parties? Did Congress intend that
the lands applied for, or all public lands for that matter, be removed from the jurisdiction of the
judicial Branch of the Government, so that any troubles arising therefrom, or any breaches of
the peace or disorders caused by rival claimants, could be inquired into only by the Lands
Department to the exclusion of the courts? The answer to this question seems to us evident.
The Lands Department does not have the means to police public lands; neither does it have
the means to prevent disorders arising therefrom, or contain breaches of the peace among
settlers; or to pass promptly upon conflicts of possession. Then its power is clearly limited
to disposition and alienation, and while it may decide conflicts of possession in order
to make proper award, the settlement of conflicts of possession which is recognized
in the court herein has another ultimate purpose, i.e., the protection of actual
possessors and occupants with a view to the prevention of breaches of the peace.
The power to dispose and alienate could not have been intended to include the power
to prevent or settle disorders or breaches of the peace among rival settlers or
claimants prior to the final award. As to this, therefore, the corresponding branches of the
Government must continue to exercise power and jurisdiction within the limits of their
respective functions. The vesting of the Lands Department with authority to administer,
dispose, and alienate public lands, therefore, must not be understood as depriving the
other branches of the Government of the exercise of the respective functions or
powers thereon, such as the authority to stop disorders and quell breaches of the
peace by the police, the authority on the part of the courts to take jurisdiction over
possessory actions arising therefrom not involving, directly or indirectly, alienation
and disposition.
Our attention has been called to a principle enunciated in American courts to the effect that
courts have no jurisdiction to determine the rights of claimants to public lands, and that until
the disposition of the land has passed from the control of the Federal Government, the courts
will not interfere with the administration of matters concerning the same. (50 C. J. 10931094.) We have no quarrel with this principle. The determination of the respective rights of
rival claimants to public lands is different from the determination of who has the actual
physical possession or occupation with a view to protecting the same and preventing
disorder and breaches of the peace. A judgment of the court ordering restitution of the
possession of a parcel of land to the actual occupant, who has been deprived thereof by
another through the use of force or in any other illegal manner, can never be "prejudicial
interference" with the disposition or alienation of public lands. On the other hand, if courts
were deprived of jurisdiction of cases involving conflicts of possession, that threat of

judicial action against breaches of the peace committed on public lands would be
eliminated, and a state of lawlessness would probably be produced between
applicants, occupants or squatters, where force or might, not right or justice, would
rule.
It must be borne in mind that the action that would be used to solve conflicts of possession
between rivals or conflicting applicants or claimants would be no other than that of forcible
entry. This action, both in England and the United States and in our jurisdiction, is a
summary and expeditious remedy whereby one in peaceful and quiet possession may
recover the possession of which he has been deprived by a stronger hand, by violence or
terror; its ultimate object being to prevent breach of the peace and criminal disorder. (Supia
and Batioco vs. Quintero and Ayala, 59 Phil. 312, 314.) The basis of the remedy is mere
possession as a fact, of physical possession, not a legal possession. (Mediran vs.
Villanueva, 37 Phil. 752.) The title or right to possession is never in issue in an action of
forcible entry; as a matter of fact, evidence thereof is expressly banned, except to prove the
nature of the possession. (Second 4, Rule 72, Rules of Court.) With this nature of the action
in mind, by no stretch of the imagination can conclusion be arrived at that the use of the
remedy in the courts of justice would constitute an interference with the alienation,
disposition, and control of public lands. To limit ourselves to the case at bar can it be
pretended at all that its result would in any way interfere with the manner of the alienation or
disposition of the land contested? On the contrary, it would facilitate adjudication, for the
question of priority of possession having been decided in a final manner by the courts, said
question need no longer waste the time of the land officers making the adjudication or award.
(Emphasis ours)
The Principle of Pari Delicto is not Applicable to Ejectment Cases
The Court of Appeals erroneously applied the principle of pari delicto to this case.
Articles 1411 and 1412 of the Civil Code48 embody the principle of pari delicto. We explained the
principle of pari delicto in these words:
The rule of pari delicto is expressed in the maxims ex dolo malo non eritur actio and in pari
delicto potior est conditio defedentis. The law will not aid either party to an illegal agreement.
It leaves the parties where it finds them.49
The application of the pari delicto principle is not absolute, as there are exceptions to its application.
One of these exceptions is where the application of the pari delicto rule would violate wellestablished public policy.50
In Drilon v. Gaurana,51 we reiterated the basic policy behind the summary actions of forcible entry
and unlawful detainer. We held that:
It must be stated that the purpose of an action of forcible entry and detainer is that,
regardless of the actual condition of the title to the property, the party in peaceable quiet
possession shall not be turned out by strong hand, violence or terror. In affording this remedy
of restitution the object of the statute is to prevent breaches of the peace and criminal
disorder which would ensue from the withdrawal of the remedy, and the reasonable hope
such withdrawal would create that some advantage must accrue to those persons who,

believing themselves entitled to the possession of property, resort to force to gain possession
rather than to some appropriate action in the courts to assert their claims. This is the
philosophy at the foundation of all these actions of forcible entry and detainer which are
designed to compel the party out of possession to respect and resort to the law alone to
obtain what he claims is his.52
Clearly, the application of the principle of pari delicto to a case of ejectment between squatters is
fraught with danger. To shut out relief to squatters on the ground of pari delicto would openly invite
mayhem and lawlessness. A squatter would oust another squatter from possession of the lot that the
latter had illegally occupied, emboldened by the knowledge that the courts would leave them where
they are. Nothing would then stand in the way of the ousted squatter from re-claiming his prior
possession at all cost.
Petty warfare over possession of properties is precisely what ejectment cases or actions for recovery
of possession seek to prevent.53 Even the owner who has title over the disputed property cannot take
the law into his own hands to regain possession of his property. The owner must go to court.
Courts must resolve the issue of possession even if the parties to the ejectment suit are squatters.
The determination of priority and superiority of possession is a serious and urgent matter that cannot
be left to the squatters to decide. To do so would make squatters receive better treatment under the
law. The law restrains property owners from taking the law into their own hands. However, the
principle of pari delicto as applied by the Court of Appeals would give squatters free rein to
dispossess fellow squatters or violently retake possession of properties usurped from them. Courts
should not leave squatters to their own devices in cases involving recovery of possession.
Possession is the only Issue for Resolution in an Ejectment Case
The case for review before the Court of Appeals was a simple case of ejectment. The Court of
Appeals refused to rule on the issue of physical possession. Nevertheless, the appellate court held
that the pivotal issue in this case is who between Pajuyo and Guevarra has the "priority right as
beneficiary of the contested land under Proclamation No. 137." 54 According to the Court of Appeals,
Guevarra enjoys preferential right under Proclamation No. 137 because Article VI of the Code
declares that the actual occupant or caretaker is the one qualified to apply for socialized housing.
The ruling of the Court of Appeals has no factual and legal basis.
First. Guevarra did not present evidence to show that the contested lot is part of a relocation site
under Proclamation No. 137. Proclamation No. 137 laid down the metes and bounds of the land that
it declared open for disposition to bona fide residents.
The records do not show that the contested lot is within the land specified by Proclamation No. 137.
Guevarra had the burden to prove that the disputed lot is within the coverage of Proclamation No.
137. He failed to do so.
Second. The Court of Appeals should not have given credence to Guevarras unsubstantiated claim
that he is the beneficiary of Proclamation No. 137. Guevarra merely alleged that in the survey the
project administrator conducted, he and not Pajuyo appeared as the actual occupant of the lot.
There is no proof that Guevarra actually availed of the benefits of Proclamation No. 137. Pajuyo
allowed Guevarra to occupy the disputed property in 1985. President Aquino signed Proclamation

No. 137 into law on 11 March 1986. Pajuyo made his earliest demand for Guevarra to vacate the
property in September 1994.
During the time that Guevarra temporarily held the property up to the time that Proclamation No. 137
allegedly segregated the disputed lot, Guevarra never applied as beneficiary of Proclamation No.
137. Even when Guevarra already knew that Pajuyo was reclaiming possession of the property,
Guevarra did not take any step to comply with the requirements of Proclamation No. 137.
Third. Even assuming that the disputed lot is within the coverage of Proclamation No. 137 and
Guevarra has a pending application over the lot, courts should still assume jurisdiction and resolve
the issue of possession. However, the jurisdiction of the courts would be limited to the issue of
physical possession only.
In Pitargue,55 we ruled that courts have jurisdiction over possessory actions involving public land to
determine the issue of physical possession. The determination of the respective rights of rival
claimants to public land is, however, distinct from the determination of who has the actual physical
possession or who has a better right of physical possession. 56 The administrative disposition and
alienation of public lands should be threshed out in the proper government agency. 57
The Court of Appeals determination of Pajuyo and Guevarras rights under Proclamation No. 137
was premature. Pajuyo and Guevarra were at most merely potential beneficiaries of the law. Courts
should not preempt the decision of the administrative agency mandated by law to determine the
qualifications of applicants for the acquisition of public lands. Instead, courts should expeditiously
resolve the issue of physical possession in ejectment cases to prevent disorder and breaches of
peace.58
Pajuyo is Entitled to Physical Possession of the Disputed Property
Guevarra does not dispute Pajuyos prior possession of the lot and ownership of the house built on it.
Guevarra expressly admitted the existence and due execution of the Kasunduan.
The Kasunduan reads:
Ako, si COL[I]TO PAJUYO, may-ari ng bahay at lote sa Bo. Payatas, Quezon City, ay nagbibigay
pahintulot kay G. Eddie Guevarra, na pansamantalang manirahan sa nasabing bahay at lote ng
"walang bayad." Kaugnay nito, kailangang panatilihin nila ang kalinisan at kaayusan ng bahay at lote.
Sa sandaling kailangan na namin ang bahay at lote, silay kusang aalis ng walang reklamo.
Based on the Kasunduan, Pajuyo permitted Guevarra to reside in the house and lot free of rent, but
Guevarra was under obligation to maintain the premises in good condition. Guevarra promised to
vacate the premises on Pajuyos demand but Guevarra broke his promise and refused to heed
Pajuyos demand to vacate.
These facts make out a case for unlawful detainer. Unlawful detainer involves the withholding by a
person from another of the possession of real property to which the latter is entitled after the
expiration or termination of the formers right to hold possession under a contract, express or
implied.59
Where the plaintiff allows the defendant to use his property by tolerance without any contract, the
defendant is necessarily bound by an implied promise that he will vacate on demand, failing which,

an action for unlawful detainer will lie.60 The defendants refusal to comply with the demand makes
his continued possession of the property unlawful. 61 The status of the defendant in such a case is
similar to that of a lessee or tenant whose term of lease has expired but whose occupancy continues
by tolerance of the owner.62
This principle should apply with greater force in cases where a contract embodies the permission or
tolerance to use the property. The Kasunduan expressly articulated Pajuyos forbearance. Pajuyo did
not require Guevarra to pay any rent but only to maintain the house and lot in good condition.
Guevarra expressly vowed in the Kasunduan that he would vacate the property on demand.
Guevarras refusal to comply with Pajuyos demand to vacate made Guevarras continued
possession of the property unlawful.
We do not subscribe to the Court of Appeals theory that the Kasunduan is one of commodatum.
In a contract of commodatum, one of the parties delivers to another something not consumable so
that the latter may use the same for a certain time and return it. 63 An essential feature
of commodatum is that it is gratuitous. Another feature of commodatum is that the use of the thing
belonging to another is for a certain period.64 Thus, the bailor cannot demand the return of the thing
loaned until after expiration of the period stipulated, or after accomplishment of the use for which
the commodatum is constituted.65 If the bailor should have urgent need of the thing, he may demand
its return for temporary use.66 If the use of the thing is merely tolerated by the bailor, he can demand
the return of the thing at will, in which case the contractual relation is called a precarium. 67 Under the
Civil Code, precarium is a kind of commodatum.68
The Kasunduan reveals that the accommodation accorded by Pajuyo to Guevarra was not
essentially gratuitous. While the Kasunduan did not require Guevarra to pay rent, it obligated him to

Theimposition of this obligation


makes the Kasunduan a contract different from
acommodatum. The effects of the Kasunduan are also
different from that of acommodatum. Case law on
ejectment has treated relationship based on tolerance
as one that is akin to a landlord-tenant relationship
where the withdrawal of permission would result in
the termination of the lease.69 The tenants withholding
of the property would then be unlawful. This is settled
jurisprudence.
maintain the property in good condition.

Even assuming that the relationship between Pajuyo


and Guevarra is one ofcommodatum, Guevarra as
bailee would still have the duty to turn over
possession of the property to Pajuyo, the bailor. The
obligation to deliver or to return the thing received

attaches to contracts for safekeeping, or contracts of


commission, administration and
commodatum.70 These contracts certainly involve the
obligation to deliver or return the thing received.71
Guevarra turned his back on the Kasunduan on the sole ground that like him, Pajuyo is also a
squatter. Squatters, Guevarra pointed out, cannot enter into a contract involving the land they illegally
occupy. Guevarra insists that the contract is void.
Guevarra should know that there must be honor even between squatters. Guevarra freely entered
into theKasunduan. Guevarra cannot now impugn the Kasunduan after he had benefited from it.
The Kasunduan binds Guevarra.
The Kasunduan is not void for purposes of determining who between Pajuyo and Guevarra has a
right to physical possession of the contested property. The Kasunduan is the undeniable evidence of
Guevarras recognition of Pajuyos better right of physical possession. Guevarra is clearly a
possessor in bad faith. The absence of a contract would not yield a different result, as there would
still be an implied promise to vacate.
Guevarra contends that there is "a pernicious evil that is sought to be avoided, and that is allowing
an absentee squatter who (sic) makes (sic) a profit out of his illegal act."72 Guevarra bases his
argument on the preferential right given to the actual occupant or caretaker under Proclamation No.
137 on socialized housing.
We are not convinced.
Pajuyo did not profit from his arrangement with Guevarra because Guevarra stayed in the property
without paying any rent. There is also no proof that Pajuyo is a professional squatter who rents out
usurped properties to other squatters. Moreover, it is for the proper government agency to decide
who between Pajuyo and Guevarra qualifies for socialized housing. The only issue that we are
addressing is physical possession.
Prior possession is not always a condition sine qua non in ejectment.73 This is one of the distinctions
between forcible entry and unlawful detainer.74 In forcible entry, the plaintiff is deprived of physical
possession of his land or building by means of force, intimidation, threat, strategy or stealth. Thus, he
must allege and prove prior possession.75 But in unlawful detainer, the defendant unlawfully
withholds possession after the expiration or termination of his right to possess under any contract,
express or implied. In such a case, prior physical possession is not required. 76
Pajuyos withdrawal of his permission to Guevarra terminated the Kasunduan. Guevarras transient
right to possess the property ended as well. Moreover, it was Pajuyo who was in actual possession
of the property because Guevarra had to seek Pajuyos permission to temporarily hold the property
and Guevarra had to follow the conditions set by Pajuyo in the Kasunduan. Control over the property
still rested with Pajuyo and this is evidence of actual possession.
Pajuyos absence did not affect his actual possession of the disputed property. Possession in the
eyes of the law does not mean that a man has to have his feet on every square meter of the ground
before he is deemed in possession.77One may acquire possession not only by physical occupation,

but also by the fact that a thing is subject to the action of ones will. 78 Actual or physical occupation is
not always necessary.79
Ruling on Possession Does not Bind Title to the Land in Dispute
We are aware of our pronouncement in cases where we declared that "squatters and intruders who
clandestinely enter into titled government property cannot, by such act, acquire any legal right to said
property."80 We made this declaration because the person who had title or who had the right to legal
possession over the disputed property was a party in the ejectment suit and that party instituted the
case against squatters or usurpers.
In this case, the owner of the land, which is the government, is not a party to the ejectment case.
This case is between squatters. Had the government participated in this case, the courts could have
evicted the contending squatters, Pajuyo and Guevarra.
Since the party that has title or a better right over the property is not impleaded in this case, we
cannot evict on our own the parties. Such a ruling would discourage squatters from seeking the aid
of the courts in settling the issue of physical possession. Stripping both the plaintiff and the
defendant of possession just because they are squatters would have the same dangerous
implications as the application of the principle of pari delicto. Squatters would then rather settle the
issue of physical possession among themselves than seek relief from the courts if the plaintiff and
defendant in the ejectment case would both stand to lose possession of the disputed property. This
would subvert the policy underlying actions for recovery of possession.
Since Pajuyo has in his favor priority in time in holding the property, he is entitled to remain on the
property until a person who has title or a better right lawfully ejects him. Guevarra is certainly not that
person. The ruling in this case, however, does not preclude Pajuyo and Guevarra from introducing
evidence and presenting arguments before the proper administrative agency to establish any right to
which they may be entitled under the law. 81
In no way should our ruling in this case be interpreted to condone squatting. The ruling on the issue
of physical possession does not affect title to the property nor constitute a binding and conclusive
adjudication on the merits on the issue of ownership. 82 The owner can still go to court to recover
lawfully the property from the person who holds the property without legal title. Our ruling here does
not diminish the power of government agencies, including local governments, to condemn, abate,
remove or demolish illegal or unauthorized structures in accordance with existing laws.
Attorneys Fees and Rentals
The MTC and RTC failed to justify the award of P3,000 attorneys fees to Pajuyo. Attorneys fees as
part of damages are awarded only in the instances enumerated in Article 2208 of the Civil
Code.83 Thus, the award of attorneys fees is the exception rather than the rule. 84 Attorneys fees are
not awarded every time a party prevails in a suit because of the policy that no premium should be
placed on the right to litigate.85 We therefore delete the attorneys fees awarded to Pajuyo.
We sustain the P300 monthly rentals the MTC and RTC assessed against Guevarra. Guevarra did
not dispute this factual finding of the two courts. We find the amount reasonable compensation to
Pajuyo. The P300 monthly rental is counted from the last demand to vacate, which was on 16
February 1995.

WHEREFORE, we GRANT the petition. The Decision dated 21 June 2000 and Resolution dated 14
December 2000 of the Court of Appeals in CA-G.R. SP No. 43129 are SET ASIDE. The Decision
dated 11 November 1996 of the Regional Trial Court of Quezon City, Branch 81 in Civil Case No. Q96-26943, affirming the Decision dated 15 December 1995 of the Metropolitan Trial Court of Quezon
City, Branch 31 in Civil Case No. 12432, is REINSTATEDwith MODIFICATION. The award of
attorneys fees is deleted. No costs.
SO ORDERED.

RAMON RALLOS, Administrator of the Estate of CONCEPCION


RALLOS, petitioner, vs. FELIX GO CHAN & SONS REALTY
CORPORATION and COURT OF APPEALS,
G.R. No. L-24332 January 31, 1978
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS, petitioner,
vs.
FELIX GO CHAN & SONS REALTY CORPORATION and COURT OF APPEALS, respondents.
Seno, Mendoza & Associates for petitioner.
Ramon Duterte for private respondent.
MUOZ PALMA, J.:
This is a case of an attorney-in-fact, Simeon Rallos, who after of his death of his principal,
Concepcion Rallos, sold the latter's undivided share in a parcel of land pursuant to a power of
attorney which the principal had executed in favor. The administrator of the estate of the went to
court to have the sale declared uneanforceable and to recover the disposed share. The trial court
granted the relief prayed for, but upon appeal the Court of Appeals uphold the validity of the sale and
the complaint.
Hence, this Petition for Review on certiorari.
The following facts are not disputed. Concepcion and Gerundia both surnamed Rallos were sisters
and registered co-owners of a parcel of land known as Lot No. 5983 of the Cadastral Survey of Cebu
covered by Transfer Certificate of Title No. 11116 of the Registry of Cebu. On April 21, 1954, the
sisters executed a special power of attorney in favor of their brother, Simeon Rallos, authorizing him
to sell for and in their behalf lot 5983. On March 3, 1955, Concepcion Rallos died. On September 12,
1955, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia in lot 5983
to Felix Go Chan & Sons Realty Corporation for the sum of P10,686.90. The deed of sale was
registered in the Registry of Deeds of Cebu, TCT No. 11118 was cancelled, and a new transfer
certificate of Title No. 12989 was issued in the named of the vendee.
On May 18, 1956 Ramon Rallos as administrator of the Intestate Estate of Concepcion Rallos filed a
complaint docketed as Civil Case No. R-4530 of the Court of First Instance of Cebu, praying (1) that
the sale of the undivided share of the deceased Concepcion Rallos in lot 5983 be d unenforceable,
and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of
Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of
the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that
plaintiff be indemnified by way of attorney's fees and payment of costs of suit. Named party
defendants were Felix Go Chan & Sons Realty Corporation, Simeon Rallos, and the Register of
Deeds of Cebu, but subsequently, the latter was dropped from the complaint. The complaint was
amended twice; defendant Corporation's Answer contained a crossclaim against its co-defendant,
Simon Rallos while the latter filed third-party complaint against his sister, Gerundia Rallos While the
case was pending in the trial court, both Simon and his sister Gerundia died and they were
substituted by the respective administrators of their estates.
After trial the court a quo rendered judgment with the following dispositive portion:

A. On Plaintiffs Complaint
(1) Declaring the deed of sale, Exh. "C", null and void insofar as the onehalf pro-indiviso share of Concepcion Rallos in the property in question,
Lot 5983 of the Cadastral Survey of Cebu is concerned;
(2) Ordering the Register of Deeds of Cebu City to cancel Transfer
Certificate of Title No. 12989 covering Lot 5983 and to issue in lieu
thereof another in the names of FELIX GO CHAN & SONS REALTY
CORPORATION and the Estate of Concepcion Rallos in the proportion
of one-half (1/2) share each pro-indiviso;
(3) Ordering Felix Go Chan & Sons Realty Corporation to deliver the
possession of an undivided one-half (1/2) share of Lot 5983 to the herein
plaintiff;
(4) Sentencing the defendant Juan T. Borromeo, administrator of the
Estate of Simeon Rallos, to pay to plaintiff in concept of reasonable
attorney's fees the sum of P1,000.00; and
(5) Ordering both defendants to pay the costs jointly and severally.
B. On GO CHANTS Cross-Claim:
(1) Sentencing the co-defendant Juan T. Borromeo, administrator of the
Estate of Simeon Rallos, to pay to defendant Felix Co Chan & Sons
Realty Corporation the sum of P5,343.45, representing the price of onehalf (1/2) share of lot 5983;
(2) Ordering co-defendant Juan T. Borromeo, administrator of the Estate
of Simeon Rallos, to pay in concept of reasonable attorney's fees to Felix
Go Chan & Sons Realty Corporation the sum of P500.00.
C. On Third-Party Complaint of defendant Juan T. Borromeo administrator of Estate of
Simeon Rallos, against Josefina Rallos special administratrix of the Estate of Gerundia
Rallos:
(1) Dismissing the third-party complaint without prejudice to filing either a complaint
against the regular administrator of the Estate of Gerundia Rallos or a claim in the
Intestate-Estate of Cerundia Rallos, covering the same subject-matter of the third-party
complaint, at bar. (pp. 98-100, Record on Appeal)

Felix Go Chan & Sons Realty Corporation appealed in due time to the Court of Appeals from the
foregoing judgment insofar as it set aside the sale of the one-half (1/2) share of Concepcion Rallos.
The appellate tribunal, as adverted to earlier, resolved the appeal on November 20, 1964 in favor of
the appellant corporation sustaining the sale in question. 1 The appellee administrator, Ramon
Rallos, moved for a reconsider of the decision but the same was denied in a resolution of March 4,
1965. 2
What is the legal effect of an act performed by an agent after the death of his principal? Applied
more particularly to the instant case, We have the query. is the sale of the undivided share of
Concepcion Rallos in lot 5983 valid although it was executed by the agent after the death of his
principal? What is the law in this jurisdiction as to the effect of the death of the principal on the
authority of the agent to act for and in behalf of the latter? Is the fact of knowledge of the death of the
principal a material factor in determining the legal effect of an act performed after such death?
Before proceedings to the issues, We shall briefly restate certain principles of law relevant to the
matter tinder consideration.
1. It is a basic axiom in civil law embodied in our Civil Code that no one may contract in the name of
another without being authorized by the latter, or unless he has by law a right to represent him. 3 A
contract entered into in the name of another by one who has no authority or the legal representation

or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or
impliedly, by the person on whose behalf it has been executed, before it is revoked by the other
contracting party. 4 Article 1403 (1) of the same Code also provides:
ART. 1403. The following contracts are unenforceable, unless they are justified:
(1) Those entered into in the name of another person by one who hi - been given no
authority or legal representation or who has acted beyond his powers; ...

Out of the above given principles, sprung the creation and acceptance of the relationship of
agency whereby one party, caged the principal (mandante), authorizes another, called the agent
(mandatario), to act for and in his behalf in transactions with third persons. The essential elements of
agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2)
the object is the execution of a juridical act in relation to a third person; (3) the agents acts as a
representative and not for himself, and (4) the agent acts within the scope of his authority. 5
Agency is basically personal representative, and derivative in nature. The authority of the agent to
act emanates from the powers granted to him by his principal; his act is the act of the principal if
done within the scope of the authority.Qui facit per alium facit se. "He who acts through another acts
himself". 6
2. There are various ways of extinguishing agency, 7 but her We are concerned only with one cause
death of the principal Paragraph 3 of Art. 1919 of the Civil Code which was taken from Art. 1709
of the Spanish Civil Code provides:
ART. 1919. Agency is extinguished.
xxx xxx xxx
3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent; ...
(Emphasis supplied)

By reason of the very nature of the relationship between Principal and agent, agency is extinguished
by the death of the principal or the agent. This is the law in this jurisdiction. 8
Manresa commenting on Art. 1709 of the Spanish Civil Code explains that the rationale for the law is
found in thejuridical basis of agency which is representation Them being an in. integration of the
personality of the principal integration that of the agent it is not possible for the representation to
continue to exist once the death of either is establish. Pothier agrees with Manresa that by reason of
the nature of agency, death is a necessary cause for its extinction. Laurent says that the juridical tie
between the principal and the agent is severed ipso jure upon the death of either without necessity
for the heirs of the fact to notify the agent of the fact of death of the former. 9
The same rule prevails at common law the death of the principal effects instantaneous and
absolute revocation of the authority of the agent unless the Power be coupled with an
interest. 10 This is the prevalent rule in American Jurisprudence where it is well-settled that a power
without an interest confer. red upon an agent is dissolved by the principal's death, and any attempted
execution of the power afterward is not binding on the heirs or representatives of the deceased. 11
3. Is the general rule provided for in Article 1919 that the death of the principal or of the agent
extinguishes the agency, subject to any exception, and if so, is the instant case within that
exception? That is the determinative point in issue in this litigation. It is the contention of respondent
corporation which was sustained by respondent court that notwithstanding the death of the principal
Concepcion Rallos the act of the attorney-in-fact, Simeon Rallos in selling the former's sham in the
property is valid and enforceable inasmuch as the corporation acted in good faith in buying the
property in question.
Articles 1930 and 1931 of the Civil Code provide the exceptions to the general rule afore-mentioned.

ART. 1930. The agency shall remain in full force and effect even after the death of the
principal, if it has been constituted in the common interest of the latter and of the agent,
or in the interest of a third person who has accepted the stipulation in his favor.
ART. 1931. Anything done by the agent, without knowledge of the death of the principal or
of any other cause which extinguishes the agency, is valid and shall be fully effective with
respect to third persons who may have contracted with him in good. faith.

Article 1930 is not involved because admittedly the special power of attorney executed in favor of
Simeon Rallos was not coupled with an interest.
Article 1931 is the applicable law. Under this provision, an act done by the agent after the death of
his principal is valid and effective only under two conditions, viz: (1) that the agent acted without
knowledge of the death of the principal and (2) that the third person who contracted with the agent
himself acted in good faith. Good faith here means that the third person was not aware of the death
of the principal at the time he contracted with said agent. These two requisites must concur the
absence of one will render the act of the agent invalid and unenforceable.
In the instant case, it cannot be questioned that the agent, Simeon Rallos, knew of the death of his
principal at the time he sold the latter's share in Lot No. 5983 to respondent corporation. The
knowledge of the death is clearly to be inferred from the pleadings filed by Simon Rallos before the
trial court. 12 That Simeon Rallos knew of the death of his sister Concepcion is also a finding of fact
of the court a quo 13 and of respondent appellate court when the latter stated that Simon Rallos 'must
have known of the death of his sister, and yet he proceeded with the sale of the lot in the name of
both his sisters Concepcion and Gerundia Rallos without informing appellant (the realty corporation)
of the death of the former. 14
On the basis of the established knowledge of Simon Rallos concerning the death of his principal
Concepcion Rallos,Article 1931 of the Civil Code is inapplicable. The law expressly requires for its
application lack of knowledge on the part of the agent of the death of his principal; it is not enough
that the third person acted in good faith. Thus in Buason & Reyes v. Panuyas, the