CIVIL LAW

PART II
SAL ES
I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE
A. DEFINITION
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125
2, 1994

December

A contract of sale is perfected when a person, called the seller, obligates

himself, for a price certain, to deliver and to transfer ownership of a thing or
right to another, called the buyer, over which the latter agrees.

B. CONTRACT OF OPTION NOT A CONTRACT OF SALE

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125
2, 1994

December

Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all. An accepted unilateral promise which specifies the thing to be sold and
the price to be paid, when coupled with a valuable consideration distinct and
separate from the price, is what may properly be termed a perfected contract of
option and not perfected contract of sale.
C. CONTRACT OF CONDITIONAL SALE
OLIVAREZ REALTY CORPORATION and DR. PABLO R. OLIVAREZ v BENJAMIN
CASTILLO, G.R No. 196251, July 9, 2014. J. LEONEN
In both contracts to sell and contracts of conditional sale, title to the property remains with
the seller until the buyer fully pays the purchase price. Both contracts are subject to the
positive suspensive condition of the buyers full payment of the pur chase price. In a
contract of conditional sale, the buyer automatically acquires title to the property upon full
payment of the purchase price. This transfer of title is by operation of law without any
further act having to be performed by the seller. In a contract to sell, transfer of title to the
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prospective buyer is not automatic. The prospective seller must convey title to the property
through a deed of conditional sale.
In this case, Castillo reserved his title to the property and undertook to execute a deed of
absolute sale upon Olivarez Realty Corporations full payment of the purchase price. Since
Castillo still has to execute a deed of absolute sale to Olivarez RealtyCorporation upon full
payment of the purchase price, the transfer of title is not automatic. The contract in this
case is a contract to sell.
Since Olivarez Realty Corporation illegally withheld payments of the purchase price,
Castillo is entitled to cancel his contract with petitioner corporation. However, we properly
characterize the parties contract as a contract to sell, not a contract of conditional sale.
In both contracts to sell and contracts of conditional sale, title to the property remains with
the seller until the buyer fully pays the purchase price. Both contracts are subject to the
positive suspensive condition of the buyers full payment of the purchase price.
In a contract of conditional sale, the buyer automatically acquires title to the property upon
full payment of the purchase price. This transfer of title is "by operation of law without any
further act having to be performed by the seller." In a contract to sell, transfer of title to the
prospective buyer is not automatic. The prospective seller must convey title to the property
[through] a deed of conditional sale."
The distinction is important to determine the applicable laws and remedies in case a party
does not fulfill his or her obligations under the contract. In contracts of conditional sale, our
laws on sales under the Civil Code of the Philippines apply. On the other hand, contracts to
sell are not governed by our law on sales but by the Civil Code provisions on conditional
obligations.
Specifically, Article 1191 of the Civil Code on the right to rescind reciprocal obligations
does not apply to contracts to sell. Failure to fully pay the purchase price in contracts to sell
is not the breach of contract under Article 1191. Failure to fully pay the purchase price is
"merely an event which prevents the [sellers] obligation to convey title from acquiring
binding force. This is because "there can be no rescission of an obligation that is still
nonexistent, the suspensive condition not having happened.
In this case, Castillo reserved his title to the property and undertook to execute a deed of
absolute sale upon Olivarez Realty Corporations full payment of the purchase price. Since
Castillo still has to execute a deed of absolute sale to Olivarez Realty Corporation upon full
payment of the purchase price, the transfer of title is not automatic. The contract in this
case is a contract to sell.
As this case involves a contract to sell, Article 1191 of the Civil Code of the Philippines does
not apply. The contract to sell is instead cancelled, and the parties shall stand as if the
obligation to sell never existed.

HELEN E. CABLING, assisted by her husband ARIEL CABLING v JOSELIN TAN

LUMAPAS, as represented by NORY ABELLANES, G.R No. 196950, June 18, 2014. J.
BRION
The courts obligation to issue an ex parte writ of possession in favor of the purchaser in an
extrajudicial foreclosure sale ceases to be ministerial when there is a third party in
possession of the property claiming a right adverse to that of the judgment
debtor/mortgagor. However, where the basis of the third persons possession is a
conditional contract of sale, such possessor may still be ousted by the ex parte issuance of a
writ of possession. The possession contemplated in Rule 39 Section 33 must be adverse in
that she must prove a right independent of and even superior to that of the judgment
debtor/mortgagor.
The execution of a contract of conditional sale does not immediately transfer title to the
property to be sold from seller to buyer. In such contract, ownership or title to the
property is retained by the seller until the fulfilment of a positive suspensive condition
which is normally the payment of the purchase price in the manner agreed upon.
SPOUSES JOSE C. ROQUE AND BEATRICE DELA CRUZ ROQUE, ET AL vs. MA. PAMELA
AGUADO, ET AL., G.R. No. 193787, April 7, 2014, J. Perlas- Bernabe
It is essential to distinguish between a contract to sell and a conditional contract of sale
specially in cases where the subject property is sold by the owner not to the party the seller
contracted with, but to a third person. In a contract to sell, there being no previous sale of
the property, a third person buying such property despite the fulfilment of the suspensive
condition such as the full payment of the purchase price, for instance, cannot be deemed a
buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the
property. There is no double sale in such case. Title to the property will transfer to the
buyer after registration because there is no defect in the owner -sellers title per se, but the
latter, of course, may be sued for damages by the intending buyer .
SPOUSES JOSE C. ROQUE AND BEATRIZ DELA CRUZ ROQUE ET AL. VS. MA. PAMELA P.
AGUADO, ET AL. G.R. No. 193787April 7, 2014, J. Perlas-Bernabe
Where the seller promises to execute a deed of absolute sale upon the completion by the
buyer of the payment of the purchase price, the contract is only a contract to sell even if
their agreement is denominated as a Deed of Conditional Sale, as in this cas e. This
treatment stems from the legal characterization of a contract to sell, that is, a bilateral
contract whereby the prospective seller, while expressly reserving the ownership of the
subject property despite delivery thereof to the prospective buyer, binds himself to sell the
subject property exclusively to the prospective buyer upon fulfilment of the condition
agreed upon, such as, the full payment of the purchase price. Elsewise stated, in a contract
to sell, ownership is retained by the vendor and is not to pass to the vendee until full
payment of the purchase price Spouses Roque have not paid the final installment of the
purchase price. As such, the condition which would have triggered the parties obligation to
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enter into and thereby perfect a contract of sale in order to effectively transfer the
ownership of the subject portion from the sellers to the buyers (Spouses Roque) cannot be
deemed to have been fulfilled. Consequently, the latter cannot validly claim ownership over
the subject portion even if they had made an initial payment and even took possession of
the same.
It is essential to distinguish between a contract to sell and a conditional contract of sale
specially in cases where the subject property is sold by the owner not to the party the seller
contracted with, but to a third person, as in the case at bench. In a contract to sell, there
being no previous sale of the property, a third person buying such property despite the
fulfilment of the suspensive condition such as the full payment of the purchase price, for
instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the
relief of reconveyance of the property. There is no double sale in such case. Title to the
property will transfer to the buyer after registration because there is no defect in the
owner-sellers title per se, but the latter, of course, may be sued for damages by the
intending buyer.
ART 1458
TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009
The Deed of Conditional Sale, as termed by the parties, states that "in case,
BUYER has complied with the terms and conditions of this contract, then the
SELLERS shall execute and deliver to the BUYER the appropriate Deed of
Absolute Sale". The very essence of a contract of sale is the transfer of
ownership in exchange for a price paid or promised, but where the seller
promises to execute a deed of absolute sale upon the completion by the buyer
of the payment of the price, the contract is only a contract to sell, even if it is
denominated as a Deed of Conditional Sale.
D. CONTRACT TO SELL
JUAN P. CABRERA vs. HENRY YSAAC, G.R. No. 166790, November 19, 2014, J. Leonen
Unless all the co-owners have agreed to partition their property, none of them may sell a
definite portion of the land. The co-owner may only sell his or her proportionate interest in
the co-ownership. A contract of sale which purports to sell a specific or definite portion of
unpartitioned land is null and void ab initio.
At best, the agreement between Juan and Henry is a contract to sell, not a contract of sale. A
contract to sell is a promise to sell an object, subject to suspensive conditions. Without the
fulfillment of these suspensive conditions, the sale does not operate to determine the
obligation of the seller to deliver the object.

A co-owner could enter into a contract to sell a definite portion of the property. Such
contract is still subject to the suspensive condition of the partition of the property, and that
the other co-owners agree that the part subject of the contract to sell vests in favor of the
co-owners buyer. Hence, the co-owners consent is an important factor for the sale to
ripen.
PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, M arch 17, 2000
Under the parties contract, the property will be transferred to petitioner only
upon the latter's "complete compliance of his obligation provided in the
contract" but because of petitioners failure to fully pay the purchase price, the
obligation of private respondents to convey title to the property did not arise.
Petitioner's reliance on Article 1592 of the Civil Code is misplaced because
what this provision contemplates is an absolute sale and not a contract to sell
as in the present case.
ART 1478
CRISTOBAL vs. SALVADOR, SR., G.R. NO. 139365, September 11, 2008
The Seller executed three separate contracts on the same property with three
different parties, wherein only the first two contracts contained a stipulation
that "if the Vendee fails to pay the Vendor the sums stated within the period
stipulated and after the grace period for each payment, this contract shall
automatically be null and void and of no effect without the necessity of any
demand, and the Vendor shall have the full and exclusive right to sell to any
person. The first two contracts were both mere contracts to sell and did not
transfer ownership to either of the buyers for failure to comply with the
condition of full payment of the purchase price, hence, vendor can still validly
convey the subject property to another buyer.
E. ELEMENTS OF A VALID CONTRACT OF SALE
PEALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001
Respondent insist that the second deed is a complete nullity because a) the
consideration stated in the deed was not paid; b)seller was not present when
the deed was notarized; c) seller did not surrender a copy of the title; d)real
estate taxes were not paid. The elements of a valid contract of sale are: (1)
consent or meeting of the minds; (2) determinate subject matter; and (3) price
certain in money or its equivalent which are present in the second Deed of Sale
hence there is already a perfected contract of sale.
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ART 1475
HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO. 135634 M ay 31,
2000
Respondent alleged that there was no contract of sale to speak of, while
petitioner as proof of the sale presented a receipt stating that Andres received
from Rodriguez a sum representing an advance payment for a residential lot
with the agreed price of 15php per square meter and that the payment of the
full consideration after the survey shall be due and payable in 5 years from the
execution of the formal deed of sale. All of the essential elements of a contract
of sale are present, i.e., that there was a meeting of the minds between the
parties, by virtue of which the late Andres undertook to transfer ownership of
and to deliver a determinate thing for a price certain in money.
II. PARTIES TO A CONTRACT OF SALE
A. SELLER
SKUNAC CORPORATION and ALFONSO F. ENRIQUEZ vs. ROBERTO S. SYLIANTENG and
CAESAR S. SYLIANTENG, G.R. No. 205879, April 23, 2014, J. Peralta
Indeed, not being an heir of Luis, Romeo never acquired any right whatsoever over the
subject lots even if he was able to subsequently obtain a title in his name. It is a well-settled
principle that no one can give what one does not have, nemo dat quod non habet. One can
sell only what one owns or is authorized to sell, and the buyer can acquire no more right
than what the seller can transfer legally.
ART 1459
HEIRS OF ARTURO
November 27, 2008

REYES

vs

SOCCO-BELTRAN,

G.R.

176474

It was unmistakably stated in the Contract to Sell and made clear to both
parties thereto that the vendor was not yet the owner of the subject property
and was merely expecting to inherit the same. The law specifically requires
that the vendor must have ownership of the property at the time of delivery
hence, there was no valid sale from which ownership of the subject property
could have been transferred.
DACLAG vs. M ACAHILIG et al., G.R. NO. 159578, February 18, 2009

Petitioners contend that the 10-year period for reconveyance is applicable if the
action is based on an implied or a constructive trust. However, since
respondents' action for reconveyance was based on fraud, the action must be
filed within four years from the discovery of the fraud. Respondent's action for
reconveyance was not e ven subject to prescription, since the deed of sale that
was executed in favor of petitioners was null and void because the selle r was
not the owner of the land, nor has the authority when she sold it to petitioners,
hence, being an absolute nullity, the deed is subject to attack anytime because
an action to declare the inexistence of a void contract does not prescribe.
ART 1505
NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997
Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP but DBP certified that the mortgagors' right of redemption
was not exercised within the period. Article 1505 of the Civil Code provides that
"where goods are sold by a person who is not the owner thereof, and who does
not sell them under authority or with consent of the owner, the buyer acquires
no better title to the goods than the seller had, unless the owner of the goods is
by his conduct precluded from denying the seller's authority to sell.", hence,
petitioners "sold" nothing, it follows that they can also "repurchase" nothing.
B. BUYER
ART 1491
DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998
The prohibition in Art. 1491 does not apply to the sale of a parcel of land,
acquired by a client to satisfy a judgment in his favor to his counsel as long as
the property was not the subject of the litigation.
ARCENIO vs. JUDGE PAGOROGON, A.M . NO. M TJ-89-270 July 5, 1993
OFFICE OF THE COURT ADM INISTRATOR vs. JUDGE PAGOROGON, A.M .
NO. M TJ-92-637 July 5, 1993
The respondent judge engaged the services of a mechanic to tow the jeep in
custodia legis and to place the jeep in good running condition, spending in the
process her own money and also registered the same in her brother's name.
The act of respondent judge is not unlike the prohibited acquisition by
purchase described in Article 1491 of the New Civil code and is in fact, even
worse when she did not acquire the said vehicle from it's owner but instead
whimsically spent for its repairs and automatically appropriated the jeep for
her own use and benefit.
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VALENCIA vs. ATTY. CABANTING, A.M . Nos. 1302, 1391 and 1543 April
26, 1991
Paulino alleged that the trial court failed to provide a workable solution
concerning his house and while the petition for certiorari was pending the trial
court issued an order of execution stating that "the decision in this case has
already become final and executory". While it is true that Atty. Cabanting
purchased the lot after finality of judgment, there was still a pending certiorari
proceeding, and a thing is said to be in litigation not on ly if there is some
contest or litigation over it in court, but also from the moment that it becomes
subject to the judicial action of the judge.
FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, G.R.
NO. L-68838 M arch 11, 1991
After the court declared with finality that the petitioners are the lawful owners,
they refused to comply when the respondent lawyer proceeded to implement
the contract of services between him and the petitioners by taking possession
and exercising rights of ownership over 40% of said properties which are the
subject of litigation. A contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491 (5) of the
Civil Code because the payment of said fee is not made during the pendency of
the litigation but only after judgment has been rendered in the case handled by
the lawyer.
MANANQUIL vs. ATTY. VILLEGAS, A.M . NO. 2430 August 30, 1990
Complainant alleges that for over a period of 20 years, respondent counsel
allowed lease contracts to be executed between his client and a partnership of
which respondent is one of the partners, covering parcels of land of the estate,
but respondent claims that he is only acting as an agent. Even if the
respondent signed merely as an agent, the lease contracts are covered by the
prohibition against any acquisition or lease by a lawyer of properties involved
in litigation in which he takes part.
BAUTISTA vs. ATTY. GONZALES, A.M . NO. 1625 February 12, 1990
The Solicitor General found that respondent counsel transferred to himself
one-half of the properties of his clients during the pendency of the case where
the properties were involved. Persons mentioned in Art. 1491 of the Civil Code
are prohibited from purchasing the property mentioned therein because of the
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existing fiduciary relationship with such property and rights, as well as with
the client.
ART 1492
IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY
OF GUAM OF ATTY. LEON G. MAQUERA, B.M . NO. 793. July 30, 2004
Maquera was suspended from the practice of law in Guam for misconduct, as
he acquired his clients property by exercising the right of redemption
previously assigned to him by the client in payment of his legal services, then
sold it and as a consequence obtained an unreasonably high fee for handling
his clients case. The prohibition extends to sales in legal redemption and such
prohibition is founded on public policy because, by virtue of his office, an
attorney may easily take advantage of the credulity and ignorance of his client
and unduly enrich himself at the expense of his client.
ART 1493
PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115,
FEBRUARY 19, 2008
The City of Cebu was no longer the owner of the lot when it ceded the same to
petitioner under the compromise agreement and at that time, the city merely
retained rights as an unpaid seller but had effectively transferred ownership of
the lot to Morales. A successor-in-interest could only acquire rights that its
predecessor had over the lo which include the right to seek rescission or
fulfillment of the terms of the contract and the right to damages in either case.
III. SUBJECT M ATTER
GENERAL MARIANO ALVAREZ SERVICES COOPERATIVE, INC. (GEMASCO), vs.
NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL MARIANO ALVAREZ WATER
DISTRICT (GMAWD), G.R. No. 175417/ GENERAL MARIANO ALVAREZ WATER
DISTRICT (GMAWD), Petitioner, v. AMINA CATANGAY, ELESITA MIRANDA, ROSITA
RICARTE, ROSA FETIZANAN, ABSALON AGA, ELPIDIO SARMIENTO, FRANCISCO
RICARDE, ROMEO CATACUTAN, RASALIO LORENZO, ARTEMIO RAFAEL, MYRN CEA,
AND NORMA ESTIL; NATIONAL HOUSING AUTHORITY (NHA) AND GENERAL
MARIANO ALVAREZ SERVICES COOPERATIVE, INC., REPRESENTED BY ERNESTO
FLORES, G.R. No. 198923, February 09, 2015, J. Peralta
Properties of public dominion, being for public use, are not subject to levy, encumbrance or
disposition through public or private sale. Any encumbrance, levy on execution or auction
sale of any property of public dominion is void for being contrary to public policy.
Otherwise, essential public services would stop if properties of public dominion would be
subject to encumbrances, foreclosures and auction sale. Since it is GEMASCO which is liable
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for the payment of the separation pay and backwages to its illegally dismissed employees,
any contemplated sale must be confined only to those properties absolutely owned by it
and the subject water tanks lent to it by the NHA must corollarily be excluded from the
same.
A. SALE OF AN EXPECTED THING
ART 1461
HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892
September 30, 1981
By the terms of the Deed of Sale itself, appellants declared themselves to be
owners of one-half (1,2) interest thereof and contend that the deed of
assignment of one-half (1,2) interest thereof executed by said Custodio in their
favor is strictly personal between them. Notwithstanding the lack of any title to
the said lot by appellants at the time of the execution of the deed of sale in
favor of appellee, the said sale may be valid as there can be a sale of an
expected thing.
B. SALE OF A MERE HOPE OR EXPECTANCY
JAVIER vs. COURT OF APPEALS, G.R. NO. L -48194 M arch 15, 1990
The efficacy of a deed of assignment is subject to the condition that the
application of private respondent for an additional area for forest concession be
approved by the Bureau of Forestry which was not obtained. The efficacy of
the sale of a mere hope or expectancy is deemed subject to the condition that
the thing will come into existence, which did not happen, hence the agreement
executed never became effective or enforceable.
C. BOUNDARIES OF THE SUBJECT MATTER
DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225, M arch 3,2010
The parties agreed on the purchase price of P40,000.00 for a predetermined
area of 4,000 sq m, more or less, but when the OCT was issued, the area was
declared to be 14,475 sq m, with an excess of 10,475 sq m. Petititiomer,
however, claims that respondents are, therefore, duty-bound to deliver the
whole area within the boundaries stated, without any corresponding increase
in the price. Article 1542 is not hard and fast and admits of an exception and
the use of more or less or similar words in designating quantity covers only a
reasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq m
cannot be considered a slight difference in quantity.
SEM IRA vs. COURT OF APPEALS, G.R. NO. 76031 M arch 2, 1994
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Private respondent sold Lot 4221 to his nephew by means of a "Kasulatan ng

Bilihan ng Lupa" which incorporated both the area and the definite boundaries
of the lot, the former transferred not merely the 822.5 square meters stated in
their document of sale but the entire area circumscribed within its boundaries.
If besides mentioning the boundaries, which is indispensable in every
conveyance of real estate, its area or number should be designated in the
contract, the vendor shall be bound to deliver all that is included within said
boundaries, even when it exceeds the area or number specified in the contract;
and, should he not be able to do so, he shall suffer a reduction in the price, in
proportion to what is lacking in the area or number, unless the contract is
rescinded because the vendee does not accede to the failure to deliver what has
been stipulated.
IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP
ART 1462
DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988
Respondent admits that she did not take physical possession of property but
argues that symbolic delivery was effected through the notarized deed of sale.
The thing is considered to be delivered when it is placed "in the hands and
possession of the vendee," and in order that this symbolic delivery may produce
the effect of tradition, it is necessary that the vendor shall have had such
control over the thing sold at the moment of the sale, but if there is no
impediment to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a
public instrument is sufficient.
ART 1495
CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
Petitioner insists that he was ready to pay the balance of the purchase price
but withheld payment because he required that the property be registered first
in his name before he would turn over the check to the private respondent.
The obligation of the seller is to transfer to the buyer ownership of the thing
sold, but in the sale of a real property, the seller is not obligated to transfer in
the name of the buyer a new certificate of title, but rather to transfer ownership
of the real property, because as between the seller and buyer, ownership is
transferred not by the issuance of a new certificate of title in the name of the
buyer but by the execution of the instrument of sale in a public docume nt.
ART 1496
VISAYAN SAWM ILL COMPANY, INC., vs. COURT OF APPEALS, G.R. NO.
83851. M arch 3, 1993.

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The seller gave access to the buyer to enter his premises, manifesting no
objection thereto but even sending people to start digging up the scrap iron.
The seller has placed the goods in the control and possession of the vendee and
such action or real delivery (traditio) transfered ownership.
ART 1497
MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS, G.R. NO. L 31189 M arch 31, 1987
Respondent discovered that a parcel of land she owns is being used by
Petitioner, Municipality of Victorias, as a cemetery for 29 years and when the
Mayor replied that Petitioner bought the land from her grandmother, she asked
to be shown the papers concerning the sale but petitioner refused to show the
same. Where there is no express provision that title shall not pass until
payment of the price, and the thing sold has been delivered, title passes from
the moment the thing sold is placed in the possession and control of the buyer.
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010
Petitioner sold three parcels of land to respondent which were mortgaged to a
bank, hence petitioner and respondent executed a notarized deed of absolute
sale with assumption of mortgage, but petitioner some time thereafter paid the
mortgage and sold the properties to another person. Settled is the rule that the
seller is obliged to transfer title over the properties and deliver the same to the
buyer, and as a rule, the execution of a notarized deed of sale is equivalent to
the delivery of a thing sold.
ART 1523
PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. M arch 22,
1993.
Petitioner argues that the sales contract does not include the contract of
carriage which is a different contract entered into by the carrier with the cargo
owners.
As worded, the sales contract is comprehensive enough to include claims for
damages arising from carriage and delivery of the goods. As a general rule, the
seller has the obligation to transmit the goods to the buyer, and concomitant
thereto, the contracting of a carrier to deliver the same. Art. 1523 of the Civil
Code provides:
"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized or
required to send the goods to the buyer, delivery of the goods to a carrier,
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whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases
provided for in article 1503, first, second and third paragraphs, or unless a
contrary intent appear.
"Unless otherwise authorized by the buyer, the seller must take such contract
with the carrier on behalf of the buyer as may be reasonable, having regard to
the nature of the goods and the other circumstances of the case. If the seller
omit so to do, and the goods are lost or damaged in course of transit, the buyer
may decline to treat the delivery to the carrier as a delivery to himself,, or may
hold the seller responsible in damages."
xxx xxx xxx
The disputed sales contact provides for conditions relative to the delivery of
goods, such as date of shipment, demurrage, weight as determined by the bill
of lading at load port.

ART 1477
BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004
Petitioner sold the subject property to respondents as evidenced by a notarized
Deed of Absolute Sale, but contends that the respondents have no right to
material possession of the property since the respondents have not paid the
property in full. Unless there is a stipulation to the contrary, when the sale is
made through a public instrument, the execution thereof is equivalent to the
delivery of the thing which is the object of the contract.
V. PRICE
A. G.R.OSS INADEQUACY OF THE PRICE
ART 1470
SPOUSES BUENAVENTURA et al vs. COURT OF APPEALS, G.R. NO.
126376. November 20, 2003
Petitioners assert that their respondent siblings did not actually pay the prices
stated in the Deeds of Sale to their respondent father and assuming that there
is consideration, the same is grossly inadequate as to invalidate the Deeds of
Sale. If there is a meeting of the minds of the parties as to the price, the
contract of sale is valid and gross inadequacy of price does not affect a contract
of sale, except if there is a defect in the consent, or that the parties really
intended a donation or some other contract.
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ART 1471
HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008
RTC considered that although the sales of the properties on the lot were
simulated, it can be assumed that the intention of Ho in such transaction was
to give and donate such properties to the respondent. The Court holds that the
reliance of the trial court on the provisions of Article 1471 of the Civil Code to
conclude that the simulated sales were a valid donation to the respondent is
misplaced because its finding was based on a mere assumption when the law
requires positive proof, which the respondent was unable to show.
B. FIXING OF THE PRICE
ART 1473
HYATT ELEVATORS
December 1, 2010

vs. CATHEDRAL HEIGHTS, G.R. NO. 173881

As revealed by the records, it was only Hyatt who determined the price, without
the acceptance or conformity of CHBCAI. The fixing of the price can never be
left to the decision of one of the contracting parties, but a price fixed by one of
the contracting parties, if accepted by the other, gives rise to a perfected sale.
C. W HEN AND W HERE TO PAY THE PRICE
CHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9, 2003
On the agreed date, Chua refused to pay the balance of the purchase price as
required by the contract to sell, the signed Deeds of Sale, and imposes another
condition. The vendee is bound to accept delivery and to pay the price of the
thing sold at the time and place stipulated in the contract.
D. INTEREST
ART 1589
FULE vs. COURT OF APPEALS, G.R. NO. 112212, M arch 2, 1998
While it is true that the amount of P40,000.00 forming part of the
consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not
a sufficient cause to invalidate the contract or bar the transfer of ownership
and possession of the things exchanged considering the fact that their contract
is silent as to when it becomes due and demandable.
Neither may such failure to pay the balance of the purchase price result in the
14

payment of interest thereon. Article 1589 of the Civil Code prescribes the
payment of interest by the vendee "for the period between the delivery of the
thing and the payment of the price" in the following cases:
(1) Should it have been so stipulated;
(2) Should the thing sold and delivered produce fruits or income;
(3) Should he be in default, from the time of judicial or extrajudicial demand for
the payment of the price.
E. SUSPENSION OF PAYMENT OF THE PRICE
ART 1590
CENTRAL BANK OF THE PHILIPPINES vs. SPOUSES ALFONSO, G.R. NO.
131074, M arch 27, 2000
Respondents aver that they are entitled to cancel the obligation altogether in
view of petitioner's failure to pay the purchase price when the same became
due, while Petitioner claims that the respondent failed to comply with their
contractual obligations hence it was entitled to withhold payment of the
purchase price. Should the vendee be disturbed in the possession or ownership
of the thing acquired, he may suspend the payment of the price until the
vendor has cause the disturbance or danger to cease. This is not, however, the
only justified cause for retention or withholding the payment of the agreed
price, but also, if the vendor fails to perform any essential obligation of the
contract.
ART 1592
SOLIVA vs. The INTESTATE ESTATE of M ARCELO M .VILLALBA, G.R. NO.
154017, December 8, 2003
While petitioner is now barred from recovering the subject property due to
laches, all is not lost for her since by respondent's own admission, a balance of
P1,250 of the total purchase price remains unpaid. In the sale of immovable
property, even though it may have been stipulated that upon failure to pay the
price at the time agreed upon the rescission of the contract shall take place,
the vendee may pay, even after the expiration of the period, as long as no
demand for rescission of the contract has been made upon him either judicially
or extrajudicially or by a notarial act.
VI. FORM ATION OF A CONTRACT OF SALE
A. STAGES TO THE CONTRACT OF SALE
15

SWEDISH M ATCH
October 20, 2004

vs.

COURT

OF

APPEALS,

G.R.

NO.

128120

Petitioners stress that respondent Litonjua made it clear in his letters that the
quoted prices were merely tentative and still subject to further negotiations
between him and the seller, hence, there was no meeting of the minds on the
essential terms and conditions of the sale because SMAB did not accept
respondents offer that consideration would be paid in Philippine pesos. In
general, contracts undergo three distinct stages, to wit: (1) Negotiation - begins
from the time the prospective contracting parties manifest their interest in the
contract and ends at the moment of agreement of the parties; (2) Perfection or
birth of the contract takes place when the parties aG.R.ee upon the essential
elements of the contract; and (3) Consummation occurs when the parties fulfill
or perform the terms agreed upon in the contract, culminating in the
extinguishment thereof.
B. ACCEPTED UNILATERAL PROMISE
ART 1479 (Read together with ART 1324)
TUAZON vs. DEL ROSARIO-SUAREZ, G.R. NO. 168325, December 8, 2010
The lessor made an offer to sell to the lessee the property at a fixed price within
a certain period, but the lessee failed to accept the offer or to purchase on time,
hence, the lessor sold the said property to her daughter. An accepted
unilateral promise can only have a binding effect if supported by a
consideration separate and distinct from the purchase price. Hence, the option
can still be withdrawn, even if accepted, if the same is not supported by any
consideration.
ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December
2, 1994
Both the trial court and CA found that defendants' offer to sell was never
accepted by the plaintiffs for the reason that the parties did not agree upon the
terms and conditions of the proposed sale, hence, there was no contract of sale
at all.
When the sale is not absolute but conditional, such as in a "Contract to Sell"
where invariably the ownership of the thing sold is retained until the fulfillment
of a positive suspensive condition (normally, the full payment of the purchase
price), the breach of the condition will prevent the obligation to convey title
from acquiring an obligatory force.
16

An imperfect promise (policitacion) is merely an offer and is not considered

binding commitments, thus, at any time prior to the perfection of the contract,
either negotiating party may stop the negotiation, and the offer, at this stage,
may be withdrawn; the withdrawal is effective immediately after its
manifestation, such as by its mailing and not necessarily when the offeree
learns of the withdrawal.
SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January 4, 1994
The court found the contract to be valid, but nonetheless ruled that the option
to buy is unenforceable because it lacked a consideration distinct from the
price and RCBC did not exercise its option within reasonable time. Article
1324 of the Civil Code provides that when an offeror has allowed the offeree a
certain period to accept, the offer maybe withdrawn at anytime before
acceptance by communicating such withdrawal, except when the option is
founded upon consideration, as something paid or promised; on the other
hand, Article 1479 of the Code provides that an accepted unilateral promise to
buy and sell a determinate thing for a price certain is binding upon the
promisor if the promise is supported by a consideration distinct from the price.
C. EARNEST M ONEY
In a potential sale transaction, the prior payment of earnest money even before the
property owner can agree to sell his property is irregular, and cannot be used to bind the
owner to the obligations of a seller under an otherwise perfected contract of sale; to cite a
well-worn clich, the carriage cannot be placed before the horse. Securitrons sending of
the February 4, 2005 letter to FORC which contains earnest money constitutes a mere
reiteration of its original offer which was already rejected previously. FORC can never be
made to push through a sale which they never agreed to in the first place. FIRST OPTIMA
REALTY CORPORATION vs. SECURITRON SECURITY SERVICES, INC., G.R. No. 199648,
January 28, 2015, J. Del Castillo
ART 1482
SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007
The lower court ruled that the receipt stating that the respondent made a
partial payment and that the execution and final deed of sale would be signed
upon payment of the balance, is a Contract of Sale and considered the partial
payment as earnest money, which prompted the respondent to demand specific
performance and damages when the herein petitioners cancelled the
transaction. Whenever earnest money is given in a contract of sale, it shall be
17

considered as part of the price and proof of the perfection of the contract, but
the earnest money given in a contract to sell will form part of the consideration
only if the sale is consummated upon full payment of the purchase price.
SAN M IGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES HUANG, G.R.
NO. 137290. July 31, 2000
The appellate court held that all the requisites of a perfected contract of sale
had been complied with upon acceptance of the petitioner of the earnest money
tendered by respondents. It is not the giving of earnest money, but the proof of
the concurrence of all the essential elements of the contract of sale which
establishes the existence of a perfected sale.
VII. TRANSFER OF OWNERSHIP
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATED BROKERAGEAND/OR
GERARDO TRINIDAD, G.R. No. 178169, January 12, 2015, J. Peralta
Under the Civil Code, the vendor is bound to transfer the ownership of and deliver, as well
as warrant the thing which is the object of the sale. The ownership of thing sold is
considered acquired by the vendee once it is delivered to him. Thus, ownership does not
pass by mere stipulation but only by delivery. In the Law on Sales, delivery may be either
actual or constructive, but both forms of delivery contemplate "THE ABSOLUTE GIVING UP
OF THE CONTROL AND CUSTODY OF THE PROPERTY ON THE PART OF THE VENDOR,
AND THE ASSUMPTION OF THE SAME BY THE VENDEE."
NFF INDUSTRIAL CORPORATION VS. G & L ASSOCIATES BROKERAGE AND/OR
GERARDO TRINIDAD, G.R. No. 178169. January 12, 2015, J. Peralta
The seller has actually delivered the bulk bags to buyer-company, although the same was
not delivered to the person named in the Purchase Order but to the representative of the
general manager of buyer-company. By allowing sellers employee to pass through the
guard-on-duty, who allowed the entry of delivery into the buyers premises which is the
designated delivery site, the buyer had effectively abandoned whatever infirmities may
have attended the delivery of the bulk bags. Therefore, there was a valid delivery on the
part of the seller which transferred ownership to the buyer and which would then give rise
to an obligation to pay on the part of the buyer for the value of the bulk bags.
A. DEED OF SALE
ART 1498
DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008
18

Respondents question the notarized deed of absolute sale presented by the

petitioner and refused to partition the property purportedly co-owned by them.
Ownership of the thing sold is acquired only from the time of delivery thereof,
either actual or constructive, and 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 be inferred.
LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002
It is not disputed that petitioner neither had, nor demanded, material
possession of the disputed lot as well as the transfer of title to his name
notwithstanding the alleged execution of a deed of absolute sale and it was the
respondents who have been in control and possession thereof in the concept of
owners. The execution of the deed of sale is only a presumptive, not conclusive
delivery which can be rebutted by evidence to the contrary, as when there is
failure on the part of the vendee to take material possession of the land subject
of the sale in the concept of a purchaser-owner.
SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK, INC. (now
UNION BANK OF THE PHILIPPINES) et al., G.R. NO. 132709,
September 4, 2001
Petitioners claims that, Ayala Corporation failed to "complete and perfect
ownership and title" to the subject property since it was never in actual
occupation, possession, control and enjoyment of said property due to the
presence of illegal occupants.
Notwithstanding the presence of illegal
occupants on the subject property, transfer of ownership by symbolic delivery
under Article 1498 can still be effected through the execution of the deed of
conveyance in a public document which is equivalent to the delivery of th e
property.
B. CONSTRUCTIVE DELIVERY
ART 1499
DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991
There is constructive delivery already upon the execution of the public
instrument pursuant to Article 1498 and upon the consent or agreement of the
parties when the thing sold cannot be immediately transferred to the
possession of the vendee. (Art. 1499)
19

DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988

Although denominated a "Deed of Conditional Sale," a sale is still absolute
where the contract is devoid of any proviso that title is reserved or the right to
unilaterally rescind is stipulated, e.g., until or unless the price is paid.
Ownership will then be transferred to the buyer upon actual or constructive
delivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ORION SAVINGS BANK VS. SHIGEKANE SUZUKI, G.R. No. 205487, November 12,
2014, J. Brion
Petitioner delivered the properties to respondent upon the execution of the
notarized deed and handed over to respondent the keys to the properties,
hence respondent took actual possession and exercised control over the
property before he made the second sale. Should there be no inscription,
ownership shall pertain to the person who in good faith was first in possession.
The petitioner asserts that it has a better right of ownership over the disputed property in
the case at bar by virtue of a Dacion En Pago. The Supreme Court ruled that the most
prominent index of simulation is the complete absence of an attempt on the part of the
vendee to assert his rights of ownership over the property in question. After the sale, the
vendee should have entered the land and occupied the premises.
ART 1544
DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010
VIII. RISK OF LOSS
ART 1504 (2)
AEROSPACE CHEM ICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129
September 23, 1999
The petitioner contends that rental expenses of storing sulfuric acid should be
at private respondent's account, as a seller, until ownership is transferred. The
general rule that before delivery, the risk of loss is borne by the seller who is
still the owner, is not applicable in this case because petitioner had incurred
delay in the performance of its obligation.
20

IX. DOCUMENTS OF TITLE

A. TORRENS TITLE
VDA. DE MELENCION vs COURT OF APPEALS, G.R. NO. 148846,
September 25, 2007
The subject property was under the operation of the Torrens System even
before the respective conveyances to AZNAR and Go Kim Chuan were made.
AZNAR knew of this, and admits this as fact. Yet, despite this knowledge,
AZNAR registered the sale in its favor under Act 3344 on the contention that at
the time of sale, there was no title on file.
The fact that the certificate of title over the registered land is lost does not
convert it into unregistered land. After all, a certificate of title is merely an
evidence of ownership or title over the particular property described therein. T
Act 3344 provides for the system of recording of transactions or claims over
unregistered real estate without prejudice to a third party with a better
right. But if the land is registered under the Land Registration Act (and
therefore has a Torrens Title), and it is sold and the sale is registered not
under the Land Registration Act but under Act 3344, as amended, such sale is
not considered registered, as the term is used under Art. 1544 of the New
Civil Code.
Although it is obvious that Go Kim Chuan registered the sale in his favor under
Act 496 while AZNAR did not, SC did not make an outright award of the
subject property to the petitioners solely on that basis. For the law is
clear: mere registration of title is not enough. Good faith must accompany the
registration.
Thus, to be able to enjoy priority status, the second purchaser must be
in good faith, i.e., he must have no knowledge of the previous alienation of the
property by the vendor to another. Notably, what is important for this purpose
is not whether the second buyer is a buyer in good faith, but whether he
registers the second sale in good faith, meaning, he does so without knowledge
of any defect in the title over the property sold.

B. FIRST TO REGISTER IN GOOD FAITH

DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September 21, 2007

21

Respondents caused the registration of the sale of the land in the Registry of
the Deeds. Petitioners, on the other hand, failed to cause the registration of the
sale to them. Where both parties claim to have purchased the same property,
the one who registered the sale in his favor, in good faith, has a preferred right
over the other who has not registered his title, even if the latter is in actual
possession of the immovable property.
SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August
17, 2007
Article 1544 of the Civil Code contemplates a case of double sales or multiple
sales by a single vendor. It cannot be invoked where the two different contracts
of sale are made by two different persons, one of them not being the owner of
the property sold.
Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21, 2004
Both petitioners Abrigo and respondent registered the sale of the property, but
petitioners registered their sale under Act 3344, while respondent registered
the transaction under the Torrens system.
Between two buyers of the same immovable property, the law gives ownership
priority to (1) the first registrant in good faith; (2) then, the first possessor in
good faith; and (3) finally, the buyer who in good faith presents the oldest title.
Since the property in dispute in the present case was already registered under
the Torrens system, petitioners registration of the sale under Act 3344 was not
effective for purposes of Article 1544 of the Civil Code.
SPOUSES OCCEA vs. M ORALES OBSIANA, G.R. NO. 156973, June 4,
2004
The general rule is that one who deals with property registered under the
Torrens system need not go beyond the same, but only has to rely on the title.
He is charged with notice only of such burdens and claims as are annotated on
the title.
However, this principle does not apply when the party has actual knowledge of
facts and circumstances that would impel a reasonably cautious man to make
such inquiry or when the purchaser has knowledge of a defect or the lack of
title in his vendor or of sufficient facts to induce a reasonably prudent man to
inquire into the status of the title of the property in litigation. One who falls
within the exception can neither be denominated an innocent purchaser for
22

value nor a purchaser in good faith.

ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES TOLENTINORIVERA, G.R. NO. 132677, October 20, 2000
Cortez filed a complaint-in-intervention claiming ownership over two parcels of
land by virtue of a sale in 1988, alleging that the lots were included in the fourhectare land covered by a Torrens Title of petitioner Isabela Colleges.
Even assuming that Cortez was not guilty of bad faith when he bought the land
in question, the fact remains that the Isabela Colleges was first in possession.
Petitioner has been in possession of the land since 1949. Between petitioner
and Cortez, therefore, the former had a better right for the latter only bought
the property in 1988 when it was already purchased by and titled under the
name of petitioner.
BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201. September 12,
2000
First buyer registered the sale under Act 3344, while second buyer registered
the sale under PD 1529. The governing principle is prius tempore, potior jure
(first in time, stronger in right). Knowledge by the first buyer of the second sale
cannot defeat the first buyers rights except when the second buyer first
registers in good faith the second sale, conversely, knowledge gained by the
second buyer of the first sale defeats his rights even if he is first to register,
since such knowledge taints his registration with bad faith.
BARICUATRO, JR.,
February 9, 2000

vs.

COURT

OF

APPEALS,

G.R.

NO.

105902

Amores was in good faith when he bought the disputed lots. When he
registered his title, however, he already had knowledge of the previous sale of
the disputed lots to petitioner. Such knowledge tainted his registration with
bad faith, and to merit protection under article 1544, the second buyer must
act in good faith from the time of the sale until the registration of the same
X. REM EDIES OF AN UNPAID SELLER
ART 1484 , 1485
PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE IMAGING,
INC., G.R. NO. 142618, July 12, 2007
23

Petitioner having recovered thru (replevin) the personal property sought to be

payable, leased on installments, still demanded the balance of the rent. In
choosing, through replevin, to deprive the respondent of possession of the
leased equipment, the petitioner waived its right to bring an action to recover
unpaid rentals on the said leased items.
ART 1486
BANK OF THE PHILIPPINE ISLANDS vs. VICENTE VICTOR C. SANCHEZ ET
AL./GENEROSO TULAGAN ET AL. vs. VICENTE VICTOR C. SANCHEZ ET AL./REYNALDO
V. MANIWANG vs. VICENTE VICTOR C. SANCHEZ and FELISA GARCIA YAP, G.R. No.
179518, G.R. No. 179835, G.R. No. 179954, November 19, 2014, J. Velasco Jr.
The failure of TSEI to pay the consideration for the sale of the subject property entitled the
Sanchezes to rescind the Agreement. And in view of the finding that the intervenors acted
in bad faith in purchasing the property, the subsequent transfer in their favor did not and
cannot bar rescission. Contrary to the contention of BPI, although the case was originally an
action for rescission, it became a direct attack on the title, certainly there is no indication
that when the Sanchezes filed their complaint with the RTC they already knew of the
existence of TCT 383697.
PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OF
APPEALS, G.R. NO. 112733 October 24, 1997
When petitioner failed to abide by its obligation to pay the installments in
accordance with the contract to sell, and provision in the contract
automatically took effect, which provides that "(I)f the buyer fails to pay the
installments due at the expiration of the grace period, the seller may cancel the
contract and any and all sums of money paid under this contract shall be
considered and become rentals on the property. A stipulation that the
installments or rents paid shall not be returned to the vendee or lessee shall be
valid insofar as the same may not be unconscionable under the circumstances.
GIL vs. HON. COURT OF APPEALS, G.R. NO. 127206, September 12, 2003
The consignation by the vendee of the purchase price of the property is
sufficient to defeat the right of the petitioners to demand for a rescission of the
said deed of absolute sale.
IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107, September 26,
2001
24

Petitioner contends that no rescission was effected simply by virtue of the letter
sent by respondent stating that he considered the contract of sale rescinded.
Petitioner asserts that a judicial or notarial act is necessary before one party
can unilaterally effect a rescission.
Respondent, on the other hand, contends that the right to rescind is vested by
law on the obligee and since petitioner did not oppose the inten t to rescind the
contract, petitioner in effect agreed to it and had the legal effect of a mutually
agreed rescission.
Article 1592 of the Civil Code is the applicable provision regarding the sale of
an immovable property.
Article 1592. In the sale of immovable property, even though it may have been
stipulated that upon failure to pay the price at the time agreed upon the
rescission of the contract shall of right take place, the vendee may pay, even
after the expiration of the period, as long as no demand for rescission of the
contract has been made upon him either judicially or by a notarial act. After the
demand, the court may not grant him a new term.
A judicial or notarial act is necessary before a valid rescission can take place,
whether or not automatic rescission has been stipulated. It is to be noted that
the law uses the phrase "even though" emphasizing that when no stipulation is
found on automatic rescission, the judicial or notarial requirement still applies.

XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE & SURETY CORPORATION vs. IAC, G.R. NO. L 69450, November 22, 1988
The ordinary meaning of execution is not limited to the signing or concluding of
a contract but includes as well the performance or implementation or
accomplishment of the terms and conditions of such contract.
XII. W ARRANTIES
A. EXPRESS WARRANTIES
ART 1502
INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES,
INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140, January 21, 1993
25

Respondent alleges that it cannot be held liable for the 47,000 plastic bags
which were not used for packing cement as originally intended invoking it's
right of return. Article 1502 of the Civil Code, has no application at all to this
case, since the provision in the Uniform Sales Act and the Uniform Commercial
Code from which Article 1502 was taken, clearly requires an express written
agreement to make a sales contract either a "sale or return" or a "sale on
approval", which is absent in this case.
Parol or extrinsic testimony could not be admitted for the purpose of showing
that an invoice or bill of sale that was complete in every aspect and purporting
to embody a sale without condition or restriction constituted a contract of sale
or return. If the purchaser desired to incorporate a stipulation securing to him
the right of return, he should have done so at the time the contract was made.
On the other hand, the buyer cannot accept part and reject the rest of the
goods since this falls outside the normal intent of the parties in the "on
approval" situation.
B. IMPLIED WARRANTIES
ART 1628
LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420
October 8, 2003
The vendor in good faith shall be responsible for the existence and legality of
the credit at the time of the sale, unless it should have been sold as doubtful;
but not for the solvency of the debtor, unless it has been so expressly
stipulated or unless the insolvency was prior to the sale and of common
knowledge.
ART 1546
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in declaring that he owned and had clean title to the vehicle at the
time the Deed of Absolute Sale, is giving an implied warranty of title which
prescribes six months after the delivery of the vehicle.
ART 1547
PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION, G.R. NO.
173454, October 6, 2008
MEGA PRIME REALTY AND HOLDINGS CORPORATION vs. PNB, G.R. NO.
173456, October 6, 2008
In a contract of sale, unless a contrary intention appears, there is an implied
warranty on the part of the seller that he has a right to sell the thing at the
26

time when the ownership is to pass, and that the buyer shall have a peaceful
possession of the thing and it shall be free from any hidden faults or defects, or
any charge or encumbrance not declared or known to the buyer.
ART 1548
ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008
The seller, in pledging that he will defend the same from all claims or any
claim whatsoe ver [and] will save the vendee from any suit by the government of
the Republic of the Philippines, is giving a warranty against e viction. A breach
of this warranty requires the concurrence of these four requisites:(1) The
purchaser has been deprived of the whole or part of the thing sold; (2) This
eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior
to the sale made by the vendor; and (4) The vendor has been summoned and
made co-defendant in the suit for eviction at the instance of the vendee.
ART 1561
DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001
Petitioner admitted that he inspected the premises three or four times before
signing the lease contract and during his inspection, he noticed the rotten
plywood on the ceiling which in his opinion was caused by leaking water or
"anay" (termites), yet he decided to go through with the lease agreement. The
lessor is responsible for warranty against hidden defects, but he is not
answerable for patent defects or those which are visible.
C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES
ART 1567
ENGINEERING & MACHINERY CORPORATION vs. COURT OF APPEALS,
G.R. NO. 52267, January 24, 1996
The original complaint is one for damages arising from breach of a written
contract - and not a suit to enforce warranties against hidden defects. The
remedy against violations of the warranty against hidden defects is either to
withdraw from the contract (redhibitory action) or to demand a proportionate
reduction of the price (accion quanti minoris), with damages in either case.
ART 1571
DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001

27

Respondent made the last delivery of the vinyl products to petitioners on

September 28, 1988 and the action to recover the purchase price of the goods
petitioners returned to the respondent was filed on July 24, 1989, more than
nine months from the date of last delivery. Actions arising from breach of
warranty against hidden defects shall be barred after six months from the
delivery of the thing sold.
XIII. BREACH OF CONTRACT
ART 1545
LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000
A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell unto
BUYER-LESSEE the property described within six (6) months from the
execution date hereof, or upon issuance by the Court of a new owner's
certificate of title and the execution of extrajudicial partition with sale of the
estate of Francisco Laforteza, whichever is earlier;...". Petitioner contends that
since the condition was not met, they no longer had an obligation to proceed
with the sale of the house and lot. The petitioners fail to distinguish between a
condition imposed upon the perfection of the contract and a condition imposed
on the performance of an obligation, failure to comply with the first condition
results in the failure of a contract, while the failure to comply with the second
condition only gives the other party the option either to refuse to proceed with
the sale or to waive the condition.
ART 1583
INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS, G.R. NO.
115117, June 8, 2000
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. 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, 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.
ART 1597
VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OF
APPEALS, G.R. NO. 83851. M arch 3, 1993.
28

The petitioner agreed to deliver the scrap iron only upon payment of the
purchase price by means of an irrevocable and unconditional letter of credit,
which the respondent failed to obtain, thus, there was no actual sale. Where
the goods have not been delivered to the buyer, and the buyer has repudiated
the contract of sale, or has manifested his inability to perform his obligations,
thereunder, or has committed a breach thereof, the seller may totally rescind
the contract of sale by giving notice of his election to do to the buyer.
XIV. EXTINGUSHMENT OF THE SALE
EAGLE RIDGE DEVELOPMENT CORPORATION, MARCELO N. NAVAL and CRISPIN I.
OBEN vs. CAMERON GRANVILLE 3 ASSET MANAGEMENT, INC., G.R. No. 204700,
November 24, 2014, J. Leonen
Cameron Grandville filed a motion for reconsideration for the April 10, 2013 decision of the
Supreme Court. It argues that the right of Eagle Ridge Development to extinguish the
obligation has already lapsed. However, the Court in resolving this case stated that under
the circumstances of this case, the 30-day period under Article 1634 within which Eagle
Ridge Developments could exercise their right to extinguish their debt should beg in to run
only from the time they were informed of the actual price paid by the assignee for the
transfer of their debt.
JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen
Sale of a portion of the property is considered an alteration of the thing owned in common.
Such disposition requires the unanimous consent of the other co -owners. However, the
rules also allow a co-owner to alienate his or her part in the co-ownership.
If the alienation precedes the partition, the co-owner cannot sell a definite portion of the
land without consent from his or her co-owners. He or she could only sell the undivided
interest of the co-owned property.
The undivided interestof a co-owner is also referred to as the "ideal or abstract quota" or
"proportionate share." On the other hand, the definite portion of the land refers to specific
metes and bounds of a co-owned property.
Prior to partition, a sale of a definite portion of common property requires the consent of
all co-owners because it operates to partition the land with respect to the co-owner selling
his or her share. The co-owner or seller is already marking which portion should redound
to his or her autonomous ownership upon future partition.
In this case, the object of the sales contract between petitioner and respondent was a
definite portion of a co-owned parcel of land. At the time of the alleged sale between
petitioner and respondent, the entire property was still held in common.
29

While the rules allow respondent to sell his undivided interest in the coownership, this was
not the object of the sale between him and petitioner.
There was no showing that respondent was authorized by his co -owners to sell the portion
of land occupied by Juan Cabrera, the Espiritu family, or the Borbe family. Without the
consent of his co-owners, respondent could not sell a definite portion of the co -owned
property.
Thus, unless all the co-owners have agreed to partition their property, none of them may
sell a definite portion of the land. The co-owner may only sell his or her proportionate
interest in the co-ownership. A contract of sale which purports to sell a specific or definite
portion of unpartitioned land is null and void ab initio.
The absence of a contract of sale means that there is no source of obligations for
respondent, as seller, orpetitioner, as buyer. Rescission is impossible because there is no
contract to rescind. The rule in Article 1592 that requires a judicial or notarial act to
formalize rescission of a contract of sale of an immovable property does not apply.
ROBERTO R. DAVID vs. EDUARDO C. DAVID, G.R. No. 162365, JANUARY 15, 2014, J.
Bersamin
Eduardo and his brother Edwin sold their properties to Roberto with the agreement that
they would be given the right to repurchase within three years from the execution of the
deed of sale. Eduardo paid the repurchase price to Roberto by depositing the proceeds of
the sale of the Baguio City lot in the latters account. The Supreme Court ruled such
payment was an effective exercise of the right to repurchase. In a sale with right to
repurchase, title and ownership of the property sold are immediately vested in the vendee,
subject to the resolutory condition of repurchase by the vendor within the stipulated
period. Accordingly, the ownership of the affected properties reverted to Eduardo once he
complied with the condition for the repurchase, thereby entitling him to the possession of
the other motor vehicle with trailer.
REDEMPTION
680 HOME APPLIANCES, INC. V THE HONORABLE COURT OF APPEALS, THE
HONORABLE MARYANNE. CORPUS-MAALAC, in her capacity as the PRESIDING
JUDGE OF THE REGIONAL TRIAL COURT OF MA.KATI CITY, BRANCH 141, ATTY.
ENGRACIO ESCASINAS, JR., in his capacity as THE EX-OFFICIO SHERIFF/CLERK OF
COURT VII, OFFICE OF THE CLERK OF COURT, REGIONAL TRIAL COURT, MA.KATI
CITY, FIRST SOVEREIGN ASSET MANAGEMENT (SPV-AMC), INC. and ALDANCO
MERLMAR, INC. G.R No. 206599, September 29, 2014. J. BRION
Upon the lapse of the redemption period without the debtor exercising his right of
redemption and the purchaser consolidates his title, it becomes unnecessary to require the
purchaser to assume actual possession thereof before the debtor may contest it. Possession
of the land becomes an absolute right of the purchaser, as this is merely an incident of his
30

ownership. In fact, the issuance of the writ of possession at this point becomes ministerial
for the court.
The debtor contesting the purchasers possession may no longer avail of the remedy under
Section 8 of Act No. 3135, but should pursue a separate action e.g., action for recovery of
ownership, for annulment of mortgage and/or annulment of foreclosure. FSAMIs
consolidation of ownership therefore makes the remedy under Section 8 of Act No. 3135
unavailable for 680 Home.
FE H. OKABE v ERNESTO A. SATURNINO, G.R No. 196040, August 26, 2014. J. PERALTA
If the purchaser is a third party who acquired the property after the redemption period, a
hearing must be conducted to determine whether possession over the subject property is
still with the mortgagor or is already in the possession of a third party holding the same
adversely to the defaulting debtor or mortgagor. If the property is in the possession of the
mortgagor, a writ of possession could thus be issued. Otherwise, the remedy of a writ of
possession is no longer available to such purchaser, but he can wrest possession over the
property through an ordinary action of ejectment.
GE MONEY BANK, INC. (FORMERLY KEPPEL BANK PHILIPPINES) vs. SPOUSES
VICTORINO M. DIZON AND ROSALINA L. DIZON, G.R. No. 184301, March 23, 2015, J.
Peralta
An insufficient sum was tendered by the Spouses Dizon during the redemption period.
Whether the total redemption price is PhP 251,849.77 as stated in the Petition for Review,
or PhP 232,904.60 as stated in the Banks Motion for Reconsideration of the CA Decision, or
PhP 428,019.16 as stated in its Appellants Brief, is immaterial. What cannot be denied is
that the amount of PhP 90,000.00 paid by the Spouses Dizon during the redemption period
is less than half of PhP 181,956.72 paid by the Bank at the extrajudicial foreclosure sale... If
only to prove their willingness and ability to pay, the Spouses Dizon could have tendered a
redemption price that they believe as the correct amount or consigned the same. Seventeen
long years passed since the filing of the complaint but they did not do either. Indeed, they
manifestly failed to show good faith.
The Spouses Dizons own evidence show that, after payment of PhP 90,000.00, the earliest
date they exerted a semblance of effort to re-acquire the subject property was on October
15, 1996. Apart from being way too late, the tender was not accompanied by the remaining
balance of the redemption price. The same is true with respect to their letter dated
February 27, 1998, wherein they were still making proposals to the Bank. The courts
intervention was resorted to only on April 3, 1998 after the redemption period expired on
October 18, 1994, making it too obvious that such recourse was merely a delayed
afterthought to recover a right already lost.
A. SALE W ITH PACTO DE RETRO
ART 1601
31

NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997
Petitioners contend that they could repurchase the property that they "sold" to
private respondents when they allowed the respondent to redeem the properties
for them from DBP. DBP, howe ver, certified that the petitioner-mortgagors'
right of redemption was not exercised within the period, hence DBP became the
absolute owner of said parcels of land when it entered into a Deed of
Conditional Sale involving the same parcels of land with Private Respondent as
vendee. One "repurchases" only what one has previously sold since the right to
repurchase presupposes a valid contract of sale between the same parties.
DIAM ANTE vs. HON. COURT OF APPEALS, G.R. NO. L -51824 February 7,
1992
A right to repurchase was granted subsequently in an instrument different
from the original document of sale which caused the cancellation of the permit
or lease by the Secretary of Fisheries. An agreement to repurchase becomes a
promise to sell when made after the sale, because when the sale is made
without such an agreement, the purchaser acquires the thing sold absolutely,
and if he afterwards grants the vendor the right to repurchase, it is a new
contract entered into by the purchaser, as absolute owner already of the object.
VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO. 83759 July 12,
1991
Respondents sold the lot to the petitioners under a Deed of Sale, On the same
day and along with the execution of the Deed of Sale, a separate instrument,
denominated as Right to Repurchase was executed by the parties, Later,
petitioners resisted the action for redemption. The transaction between the
petitioners and private respondents was not a sale with right to repurchase,
the second instrument is just an option to buy since it is not embodied in the
same document of sale but in a separate document, and since such option is
not supported by a consideration distinct from the price, said deed for right to
repurchase is not binding upon them.
ART 1603
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008
Where in a contract of sale with pacto de retro, the vendor remains in
possession, as a lessee or otherwise, the contract shall be presumed to be an
equitable mortgage because in a contract of sale with pacto de retro, the legal
title to the property is immediately transferred to the vendee, subject to the
32

vendors right to redeem and retention by the vendor of the possession of the
property is inconsistent with the vendees acquisition of the right of ownership
under a true sale.
ART 1606
ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002
The legal question to be resolved is "May the vendors in a sale judicially
declared as a pacto de retro exercise the right of repurchase under Article
1606, third paragraph, of the Civil Code, after they have taken the position that
the same was an equitable mortgage?" No, where the proofs established that
there could be no honest doubt as to the parties intention, that the transaction
was clearly and definitely a sale with pacto de retro, the vendor a retro is not
entitled to the benefit of the third paragraph of Article 1606.
AGAN vs. HEIRS OF SPS. NUEVA, G.R. NO. 155018, December 11, 2003
The lower court's dispositive position states: "Howe ver, the vendors can still
exercise the right to repurchase said property within thirty (30) days from
receipt of this decision pursuant to Article 1606 and 1607 of the New Civil
Code." Article 1606 grants the vendor a retro thirty (30) days from the time
final judgment was rendered, not from the defendants receipt of the judgment,
"final judgment must be construed to mean one that has become final and
executory.
ART 1607
Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, M arch 9, 2000
The lower court rationalized that petitioners failed to comply with the
provisions of Article 1607 of the Civil Code requiring a judicial order for the
consolidation of the ownership in the vendee a retro to be recorded in the
Registry of Property. A judicial order is necessary in order to determine the
true nature of the transaction and to prevent the interposition of buyers in
good faith while the determination is being made, however, notwithstanding
Article 1607, the recording in the Registry of Property of the consolidation of
ownership of the vendee is not a condition sine qua non to the transfer of
ownership for the method prescribed thereunder is merely for the purpose of
registering the consolidated title.
ART 1616
BPI FAM ILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974,
August 9, 2004
33

The respondents offer to redeem the foreclosed properties and the subsequent
consignation in court were made within the period of redemption, but the
amount consigned did not include the interest and was also way below the
amount paid by the highest bidder-purchaser of the properties during the
auction sale. The redemption price should either be fully offered in legal tender
or else validly consigned in court because only by such means can the auction
winner be assured that the offer to redeem is being made in good faith.
ART 1619
LEE CHUY REALTY CORPORATION vs.HON. COURT OF APPEALS, G.R. NO.
104114 December 4, 1995
Petitioner questions the ruling of the Court of Appeals which concluded that a
prior tender or offer of redemption is a prerequisite or precondition to the filing
of the action for legal redemption. To avail of the right of redemption what is
essential is to make an offer to redeem within the prescribed period. There is
actually no prescribed form for an offer to redeem to be properly effected. It can
either be through a formal tender with consignation, or by filing a complaint in
court coupled with consignation of the redemption price within the prescribed
period.

VILLANUEVA vs. HON. ALFREDO C. FLORENDO, G.R. NO. L -33158,

October 17, 1985
It is not disputed that co-ownership exists but the lower court disallowed
redemption because it considered the vendee, Vallangca, a co-heir, being
married to Concepcion Villanueva.
The term "third person" or "stranger in Art. 1620 refers to all persons who are
not heirs in succession, either by will or the law or any one who is not a coowner.
ART 1621
PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R. NO. 150060.
August 19, 2003
Article 1621 of the Civil Code expresses that the right of redemption it grants to
an adjoining owner of the property conveyed may be defeated if it can be shown
that the buyer or grantee does not own any other rural land.
34

ART 1622
G.R. NO. 134117. February 9, 2000
SEN PO EK MARKETING CORPORATION vs. MARTINEZ
Petitioner invokes its right of first refusal against private respondents, when
Teodora sold the property that petitioner has been leasing. Article 1622 of the
New Civil Code only deals with small urban lands that are bought for
speculation where only adjoining lot owners can exercise the right of pre emption or redemption. It does not apply to a lessee trying to buy the land that
it was leasing, especially when such right was never stipulated in any of the
several lease contracts.
ART 1623
JUAN P. CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. Leonen
If the alienation precedes the partition, the co-owner cannot sell a definite portion of the
land without consent from his or her co-owners. He or she could only sell the undivided
interest of the co-owned property.
In the case at bar, no contract of sale exist. The object of a valid sales contract must be
owned by the seller. If the seller is not the owner, the seller must be authorized by the
owner to sell the object. There was no showing that respondent was authorized by his coowners to sell the portion of land occupied by Juan Cabrera, the Espiritu family, or the
Borbe family. Without the consent of his co-owners, respondent could not sell a definite
portion of the co-owned property.
SPOUSES MICHELLE M. NOYNAY and NOEL S. NOYNAY vs.CITIHOMES BUILDER AND
DEVELOPMENT, INC., G.R. No. 204160, September 22, 2014, J. Mendoza
Well-established is the rule that the assignee is deemed subrogated to the rights as well as
to the obligations of the seller/assignor. By virtue of the deed of assignment, the assignee is
deemed subrogated to the rights and obligations of the assignor and is bound by exactly the
same conditions as those which bound the assignor. What can be inferred from here is the
effect on the status of the assignor relative to the relations established by a contract which
has been subsequently assigned; that is, the assignor becomes a complete stranger to all
the mattersthat have been conferred to the assignee.
SPOUSES CHIN KONG WONG CHOI AND ANA O. CHUA vs. UNITED COCONUT PLANTERS
BANK, G.R. No. 207747, March 11, 2015, J. Carpio
UCPB assigned accounts receivable to Primetown. Thereafter, Spouses filed a complaint
against the latter for refund for payment. The court ruled that the agreement conveys the
straightforward intention of Primetown to sell, assign, transfer, convey and set over to
35

UCPB the receivables, rights, titles, interests and participation over the units covered by the
contracts to sell. It explicitly excluded any and all liabilities and obligations, which
Primetown assumed under the contracts to sell. In every case, the obligations between
assignor and assignee will depend upon the judicial relation which is the basis of the
assignment. An assignment will be construed in accordance with the rules of construction
governing contracts generally, the primary object being always to ascertain and carry out
the intention of the parties. This intention is to be derived from a consideration of the
whole instrument, all parts of which should be given effect, and is to be sought in the words
and language employed.
CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007
Petitioners may redeem the subject property from respondents-spouses, but
they must do so within thirty days from notice in writing of the sale by their coowners vendors. In requiring written notice, Art. 1623 seeks to ensure that the
redemptioner is properly notified of (a) the sale and (b) the date of such notice,
as the date thereof becomes the reckoning point of the 30-day period of
redemption.
SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047, October 12, 2000
Co-owners with actual notice of the sale are not entitled to written notice. A
written notice is a formal requisite to make certain that the co-owners have
actual notice of the sale to enable them to exercise their right of redemption
within the limited period of thirty days. But where the co-owners had actual
notice of the sale at the time thereof and/or afterwards, a written notice of a
fact already known to them, would be superfluous. The statute does not
demand what is unnecessary.
FRANCISCO vs. BOISER, G.R. NO. 137677, M ay 31, 2000
Art. 1623 of the Civil Code is clear in requiring that the written notification
should come from the vendor or prospective vendor, not from any other person.
Since the vendor of an undivided interest is in the best position to know who
are his co-owners who under the law must be notified of the sale, and is in the
best position to confirm whether consent to the essential obligation of se lling
the property and transferring ownership thereof to the vendee has been given.
LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R. NO. 149040,
July 4, 2007

36

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

the owner of a credit (known as the assignor), by a legal cause - such as sale,
dation in payment or exchange or donation - and without need of the debtor's
consent, transfers that credit and its accessory rights to another (known as the
assignee), who acquires the power to enforce it, to the same extent as the
assignor could have enforced it against the debtor.
ART 1625
TEOCO, JR.,vs M ETROPOLITAN BANK AND TRUST COMPANY, G.R. NO.
162333, December 23, 2008
Would the exercise by the brothers Teoco of the right to redeem the properties
in question be precluded by the fact that the assignment of right of redemption
was not contained in a public document? NO, the phrase "effect as against
third person" in Article 1625 of the Civil Code is interpreted as to be damage or
prejudice to such third person, hence if the third person would not be
prejudiced then the assignment of right to redeem may not be in a public
instrument.
B. EQUITABLE MORTGAGE
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND
LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco
A transaction is deemed to be an equitable mortgage, not an absolute sale, when a party
have remained in possession of the subject property and exercised acts of ownership over
the lot even after the purported absolute sale and it could be gleaned from the intention of
the parties that the transaction is intended secure the payment of a debt.
SPOUSES FELIPE SOLITATIOS AND JULIA TORDA VS. SPOUSES GASTON JAQUE AND
LILIA JAQUE, G.R. No. 199852. November 12, 2014, J. Velasco
Where the alleged sellers have remained in possession of the subject property and
exercised acts of ownership over the lot even after its purported absolute sale, the real
intention of the parties was for the transaction to secure the payment of a debt or an
equitable mortgage and not a sale as provided under Article 1602 of the New Civil Code. If
the transaction had really been one of sale, as the alleged buyers claim, they should have
asserted their rights for the immediate delivery and possession of the lot instead of
allowing the alleged sellers to freely stay in the premises for almost seventeen (17) years
from the time of the purported sale until their filing of the complaint.
HEIRS OF REYNALDO DELA ROSA, Namely: TEOFISTA DELA ROSA, JOSEPHINE
SANTIAGO AND JOSEPH DELA ROSA v MARIO A. BA TONGBACAL, IRENEO
37

BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA

TONGBACAL, G.R No. 179205, July 30, 2014, J. PEREZ
Reynaldo, one of the co-owners of an undivided parcel of land, sold his share to the spouses
Batongbacal in a Contract to Sell. The spouses advanced 31k with the balance deliverable
after Reynaldo delivers a SPA authorizing him to alienate the property in behalf of his co owners. Later, Reynaldo refused to deliver the SPA and the lot, claiming that there was no
contract to sell, but an equitable mortgage.
An equitable mortgage is defined as one although lacking in some formality, or form or
words, or other requisites demanded by a statute, nevertheless reveals the intention of the
parties to charge real property as security for a debt, and contains nothing impossible or
contrary to law. For the presumption of an equitable mortgage to arise, two requisites must
concur: (1) that the parties entered into a contract denominated as a sale; and (2) the
intention was to secure an existing debt by way of mortgage.
In this case, Reynaldo failed to prove the second requisite. Nothing in the contract suggests,
even remotely, that the subject property was given to secure a monetary obligation.
BATONGBACAL, JOCELYN BA TONGBACAL, NESTOR BATONGBACAL AND LOURDES BA
TONGBACAL, G.R. No. 179205, July 30, 2014, J. Perez
The primary consideration in determining the true nature of a contract is the intention of
the parties. If the words of a contract appear to contravene the evident intention of the
parties, the latter shall prevail. Such intention is determined not only from the express
terms of their agreement, but also from the contemporaneous and subsequent acts of the
parties. Such that when the contract denominated as Resibo reveals that nothing therein
suggests, even remotely, that the subject property was given to secure a monetary
obligation but an intent to sell his share in the property, said contract is a contract of sale
and not an equitable mortgage.

ART 1602
HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO.
2010

158377, August 13,

The provisions of the Civil Code governing equitable mortgages disguised as

sale contracts, like the one herein, are primarily designed to curtail the evils
brought about by contracts of sale with right to repurchase, particularly the
circumvention of the usury law and pactum commissorium. Courts have taken
judicial notice of the well-known fact that contracts of sale with right to
repurchase have been frequently resorted to in order to conceal the true nature
of a contract, tha t is, a loan secured by a mortgage. It is a reality that grave
38

financial distress renders persons hard-pressed to meet even their basic needs
or to respond to an emergency, leaving no choice to them but to sign deeds of
absolute sale of property or deeds of sale with pacto de retro if only to obtain
the much-needed loan from unscrupulous money lenders. This reality precisely
explains why the pertinent provision of the Civil Code includes a peculiar rule
concerning the period of redemption, to wit:
Art. 1602. The contract shall be presumed to be an
equitable mortagage, in any of the following cases:
xxx
(3) When upon or after the expiration of the right to
repurchase another instrument extending the period of
redemption or granting a new period is executed;
VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January 28, 2008
The essential requisites of an equitable mortgage are: (1) the parties enter into
what appears to be a contract of sale, (2) but their intention is to secure an
existing debt by way of mortgage and the presence of even one of the
circumstances enumerated in Article 1602.
SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31, 2008
Respondent alleged that the transaction was an equitable mortgage because
after the sale of the property respondent remained therein, and the price
according to respondent was grossly inadequate. The presumption of equitable
mortgage created in Article 1602 of the Civil Code is not conclusive and may be
rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the Late EM IGDIO M ERCADO, G.R. NO.
155856, M ay 28, 2004
Petitioner argues that Mercados delay in registering the Deed of Absolute Sale
and transferring the land title shows that the real agreement was an equitable
mortgage. Delay in transferring title is not one of the instances enumerated by
law in which an equitable mortgage can be presumed.
CEBALLOS vs. Intestate Estate of the Late EM IGDIO M ERCADO, G.R. NO.
155856, M ay 28, 2004
39

Petitioners contend that the sale was only an equitable mortgage because (1)
the price was grossly inadequate, and (2) the vendors remained in possession
of the land and enjoyed its fruits. For the presumption of an equitable
mortgage to arise, one must first satisfy the requirement that the parties
entered into a contract denominated as a contract of sale, and that their
intention was to secure an existing debt by way of mortgage.
BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008
The purchase price stated in the deed was the amount of the indebtedness of
the respondent to petitioner but the deed purports to be a sale with right to
purchase. The rule is firmly settled that whenever it is clearly shown that a
deed of sale with pacto de retro, regular on its face, is given as security for a
loan, it must be regarded as an equitable mortgage.
ART 1604
DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008
The provisions of Article 1602 shall also apply to a contract purporting to be an
absolute sale, and in case of doubt, a contract purporting to be a sale with
right to repurchase shall be construed as an equitable mortgage in consonance
with the rule that the law favors the least transmission of property rights.
XV. The Subdivision and Condominium Buyers' Protective Decree (P.D.
957)
AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO,
AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO
CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA
ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO
PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR
ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes
In this case, the contract to sell between Rotairo and Ignacio & Company was entered into
in 1970, and the agreement was fully consummated with Rotairos completion of payments
and the execution of the Deed of Sale in his favor in 1979. Clearly, P.D. No. 957 (Sale of
Subdivision Lots and Condominiums) is applicable in this case.
It was error for the CA to rule that the retroactive application of P.D. No. 957 is warranted
only where the subdivision is mortgaged after buyers have purchased individual lots.
According to the CA, the purpose of Sec. 18 requiring notice of the mortgage to the buyers
is to give the buyer the option to pay the installments directly to the mortgagee; hence, if
the subdivision is mortgaged before the lots are sold, then there are no buyers to notify.
40

What the CA overlooked is that Sec. 21 requires the owner or developer of the subdivision
project to complete compliance with its obligations within two years from 1976. The two year compliance provides the developer the opportunity to comply with its obligation to
notify the buyers of the existence of the mortgage, and consequently, for the latter to
exercise their option to pay the installments directly to the mortgagee.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES
CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J.
Perez
The Spouses Rosario purchased a condominium unit from Fil-Estate. Fil-Estate failed to
comply with its obligations. The Supreme Court held that the Spouses are entitled to
rescission, pursuant to Section 23 of P.D. 957 which regulates the sale of subdivisions and
condominium lots. The Spouses Rosario may be reimbursed the total amount paid
including amortization interests but excluding delinquency interests, with interest thereon
at the legal rate.

EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404, January 22,

1996
Did the failure to develop a subdivision constitute legal justification for the
non-payment of amortizations by a buyer on installment under land purchase
agreements entered into prior to the enactment of P.D. 957, "The Subdivision
and Condominium Buyers' Protective Decree"?
P.D. 957 is undeniably applicable to the contracts in question, it follows that
Section 23 thereof had been properly invoked by private respondent when he
desisted from making further payment to petitioner due to petitioner's failure to
develop the subdivision project according to the approved plans and within the
time limit for complying with the same.
PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528, January 18, 1996
A buyer of a property at a foreclosure sale cannot disposses prior purchasers
on installment of individual lots therein, or compel them to pay again for the
lots which they previously bought from the defaulting mortgagor-subdivision
developer on the theory that P.D. 957, "The Subdivision and Condominium
Buyers' Protective Decree", is not applicable to the mortgage contract in
question, the same having been executed prior to the enactment of P.D. 957.
Moreover, the SC held that, P.D. 957 being applicable, Section 18 of said law
obliges petitioner Bank to accept the payment of the remaining unpaid
41

amortizations tendered by private respondents. Privity of contracts as a defense

does not apply in this case for the law explicitly grants to the buyer the option
to pay the installment payment for his lot or unit directly to the mortgagee
(petitioner), which is required to apply such payments to reduce the
corresponding portion of the mortgage indebtedness secured by the particular
lot or unit being paid for.
XVI. The Condominium Act (R.A. NO. 4726)
HULST vs. PR BUILDERS, INC., G.R. NO. 156364, September 25, 2008
Petitioner contends that the Contract to Sell between petitioner and respondent
involved a condominium unit and did not violate the Constitutional
proscription against ownership of land by aliens. The law expressly allows
foreigners to acquire condominium units and shares in condominium
corporations up to not more than 40% of the total and outstanding capital
stock of a Filipino-owned or controlled corporation, since under this set up, the
ownership of the land is legally separated from the unit itself.
CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs. ASSET RECOVERY
AND M ANAGEMENT CORPORATION, G.R. No. 149696, July 14, 2006
Section 20 of R.A. No. 4726, otherwise known as the Condominium Act,
provides:
Sec. 20. An assessment upon any condominium made in accordance with a
duly registered declaration of restrictions shall be an obligation of the owner
thereof at the time the assessment is made. The amount of any such
assessment plus any other charges thereon, such as interest, costs (including
attorney's fees) and penalties, as such may be provided for in the declaration of
restrictions, shall be and become a lien upon the condominium assessed when
the management body causes a notice of assessment to be registered with the
Register of Deeds of the city or province where such condominium project is
located. The notice shall state the amount of such assessment and such other
charges thereon as may be authorized by the declaration of restrictions, a
description of the condominium unit against which the same has been
assessed, and the name of the registered owner thereof. Such notice shall be
signed by an authorized representative of the management body or as
otherwise provided in the declaration of restrictions. Upon payment of said
assessment and charges or other satisfaction thereof, the management body
shall cause to be registered a release of the lien.
Such lien shall be superior to all other liens registered subsequent to the
42

registration of said notice of assessment except real property tax liens and
except that the declaration of restrictions may provide for the subordination
thereof to any other liens and encumbrances. Such liens may be enforced in
the same manner provided for by law for the judicial or extra-judicial
foreclosure of mortgage or real property. Unless otherwise provided for in the
declaration of restrictions, the management body shall have power to bid at
foreclosure sale. The condominium owner shall have the right of redemption as
in cases of judicial or extra-judicial foreclosure of mortgages.
Records do not show that petitioner had its notice of assessment registered
with the Registry of Deeds of Manila in order that the amount of such
assessment could be considered a lien upon Marual's two condominium units.
Clearly, pursuant to the above provisions, petitioner's claim can not be
considered superior to that of respondent. As mentioned earlier, the deed of
sale wherein Marual conveyed to respondent his two condominium units, was
registered in the Registry of Deeds of Manila.
CHATEAU DE BAIE CONDOMINIUM CORPORATION vs. SPOUSES MORENO,
G.R. NO. 186271, February 23, 2011
The petition sought to prohibit the scheduled extrajudicial sale for lack of a
special power to sell from the registered owner. Under RA 4726 (the
Condominium Act), when a unit owner fails to pay the association dues, the
condominium corporation can enforce a lien on the condominium unit by
selling the unit in an extrajudicial foreclosure sale, and a special authority
from the condominium owner before a condominium corporation can initiate a
foreclosure proceeding is not needed.
SUCCESSION
BERNARDINA P. BARTOLOME vs. SOCIAL SECURITY SYSTEM AND SCANMAR
MARITIME SERVICES, INC. G.R. No. 192531, November 12, 2014, J. Velaso, Jr.
At the time of the adoptive parents death, which was prior to the effectivity of the Family
Code, the governing provision is Art. 984 of the New Civil Code, which provides that in case
of the death of an adopted child, leaving no children or descendants, his parents and
relatives by consanguinity and not by adoption, shall be his legal heirs. The adoptive
parents death during the adopted childs minority resulted in the restoration of the
biological mothers parental authority over the adopted child. As a consequence thereof,
the biological mother shall be the adopted childs sole legal heir.
SPOUSES PERALTA v BERNARDINA ABALON, represented by MANSUETO ABALON.
G.R No. 183448, June 30, 2014. J. SERENO

43

Under Article 975 of the Civil Code, siblings Mansueto and Amelia Abalon, being niece and
nephew of a decedent who had no issue, are the legal heirs of Bernardina. As such, they
succeeded to her estate when she passed away. While the Court agreed with the CA that the
donation mortis causa in favor of the siblings was invalid in the absence of a will, the CA
erred in concluding that the heirs acquired the subject property through ordinary
acquisitive prescription. The subject parcel of land is a titled property; thus, acquisitive
prescription is not applicable. Upon the death of Bernardina, Mansueto and Amelia, being
her legal heirs, acquired the subject property by virtue of succession, and not by ordinary
acquisitive prescription.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs. ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
It is hornbook doctrine that successional rights are vested only at the time of death. Article
777 of the New Civil Code provides that "the rights to the succession are transmitted from
the moment of the death of the decedent. Thus, in this case, it is only upon the death of
Pedro Calalang on December 27, 1989 that his heirs acquired their respective inheritances,
entitling them to their pro indiviso shares to his whole estate. At the time of the sale of the
disputed property, the rights to the succession were not yet bestowed upon the heirs of
Pedro Calalang. And absent clear and convincing evidence that the sale was fraudulent or
not duly supported by valuable consideration (in effect an officious donation inter vivos),
the respondents have no right to question the sale of the disputed property on the ground
that their father deprived them of their respective shares. Well to remember, fraud must be
established by clear and convincing evidence .
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG v ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R No. 184148,
June 9, 2014. VILLARAMA, JR.
It is hornbook doctrine that successional rights are vested only at the time of death. Article
777 of the New Civil Code provides that "the rights to the succession are transmitted from
the moment of the death of the decedent. Thus, it is only upon the death of Pedro Calalang
on December 27, 1989 that his heirs acquired their respective inheritances, entitling them
to their pro indiviso shares to his whole estate. At the time of the sale of the disputed
property, the rights to the succession were not yet bestowed upon the heirs of Pedro
Calalang. And absent clear and convincing evidence that the sale was fraudulent or not duly
supported by valuable consideration (in effect an in officious donation inter vivos), the
heirs have no right to question the sale of the disputed property on the ground that their
father deprived them of their respective shares.
MA. ELENA R. DIVINAGRACIA AS ADMINISTRATIX OF THE ESTATE OF THE LATE
SANTIAGO C. DIVINAGRACIA VS. CORONACION PARILLA ET AL. G.R. No. 196750.
March 11, 2015, J. Perlas-Bernabe

44

The heirs whether in their own capacity or in representation of their direct ascendant
have vested rights over the subject land and, as such, should be impleaded as indispensable
parties in an action for partition thereof. In fine, the absence of the indispensable parties in
the complaint for judicial partition renders all subsequent actions of the RTC null and void
for want of authority to act.

Death & Presumptive Death & Death of M arriage;

Inheritance v. Succession, Patrimony; M oney Obligations
Transmission, Non-transmission; Presumptive Legitimes
Survivorship Agreement, Succession & Taxes; Aleatory Contract (Art.
2010, NCC)

Laws governing Form and content

In the matter of the Testate Estate of Edward Christensen, G.R. L -16749,
January 31, 1963
Whether or not, the intrinsic validity of the testamentary disposition should be
governed by Philippine Law, when the national law of the testator refers back to
the Philippine Law. Edward is domiciled in the Philippines hence, Philippine
court must apply its own laws which makes natural children legally
acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, M ar. 29, 1990 183 SCRA 755
A will has been defined as "a personal, solemn, revocable and free act by which
a capacitated person disposes of his property and rights and declares or
complies with duties to take effect after his death."
Cayatenao vs Leonidas, 129 SCRA 524
The law which governs Adoracion Campos will is the law of Pennsylvania, USA
which is the national law of the decedent. It is settled that as regards to the
intrinsic validity of the provisions of the wills as provided for by article 16 and
1039 of the New Civil Code, the national law of the decedent must apply.
Subjects and Object of Succession
Parish Priest of Victoria vs. Rigor, 89 SCRA 483

45

The issue in this case is whether or not a male relative referred in the will
should include those who are born after the testators death. To construe it as
referring to the nearest male relative at any time after his death would render
the provisions difficult to apply and create uncertainty as to the disposition of
the estate.

Opening of Succession
De Borja vs De Borja, G.R. No, L-28040, August 18, 1972
There is no legal bar to a successor to dispose his or her share immediately
after such death, even if the actual extent of such share is not determined until
the subsequent liquidation of the estate. The effect of such alienation is to be
deemed limited to what is ultimately adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in them even before
the judicial declaration of their being declared as heirs. When Fortunata died,
her claim or right to the parcel of land in litigation in civil case number 856
was not extinguished by her death but was transmitted to her heirs upon her
death.
Borromeo-Herrera vs Borromeo, 152 SCRA 171
The properties included in an existing inheritance cannot be the subject of a
contract. The heirs acquire a right to succession from the moment of death of
the decedent. In this case, the purported waiver of hereditary rights cannot be
considered effective.

Testamentary Succession
Form and Solemnities of Notarial Wills
Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012
It is an established rule that "[a] testament may not be disallowed just because
the attesting witnesses declare against its due execution; neither does it have
to be necessarily allowed just because all the attesting witnesses declare in
favor of its legalization; what is decisive is that the court is convinced by
evidence before it, not necessarily from the attesting witnesses, although they
must testify, that the will was or was not duly executed in the manner required
by law."
46

Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article 805
requires. In the absence of the required avowal by the witnesses themselves,
no attestation clause can be deemed embodied in the Acknowledgement of the
Deed of Donation Mortis Causa.

Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages used upon
which the will is written. The purpose of the law is to safeguard against
possible interpolation or omission of one or some of its pages and prevent any
increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify, among others, that
the witnesses are aware that the page they are signing forms part of the will.
On the other hand, the signatures to the attestation clause establish that the
witnesses are referring to the statements contained in the attestation clause
itself.
Lee v. Tambago, 544 SCRA 393
An acknowledgment is the act of one who has executed a deed in going before
some competent officer or court and declaring it to be his act or deed. It
involves an extra step undertaken whereby the signatory actually declares to
the notary public that the same is his or her own free act and deed. The
acknowledgment in a notarial will has a two-fold purpose: (1) to safeguard the
testators wishes long after his demise and (2) to assure that his estate is
administered in the manner that he intends it to be done.
Suroza vs. Honrado, 110 SCRA 388
In the opening paragraph of the will, it was stated that English was a language
"understood and known" to the testatrix but in its concluding paragraph, it was
stated that the will was read to the testatrix "and translated into Filipino
language". That could only mean that the will was written in a language not
known to the illiterate testatrix and, therefore, it is void because of the
mandatory provision of article 804 of the Civil Code that every will must be
executed in a language or dialect known to the testator.

47

Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the testator if he is
blind or incapable of reading the will himself (as when he is illiterate), is to
make the provisions thereof known to him, so that he may be able to object if
they are not in accordance with his wishes. That the aim of the law is to insure
that the dispositions of the will are properly communicated to and understood
by the handicapped testator, thus making them truly reflective of his desire, is
evidenced by the requirement that the will should be read to the latter, not only
once but twice, by two different persons, and that the witnesses have to act
within the range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial compliance is
acceptable where the purpose of the law has been satisfied, the reason being
that the solemnities surrounding the execution of wills are intended to protect
the testator from all kinds of fraud and trickery but are never intended to be so
rigid and inflexible as to destroy the testamentary privilege.
In the case at bar, private respondent read the testator's will and codicil aloud
in the presence of the testator, his three instrumental witnesses, and the
notary public. Prior and subsequent thereto, the testator affirmed, upon being
asked, that the contents read corresponded with his instructions. Only then
did the signing and acknowledgement take place. There is no evidence, and
petitioner does not so allege, that the contents of the will and codicil were not
sufficiently made known and communicated to the testator. On the contrary,
with respect to the "Huling Habilin," the day of the execution was not the first
time that Brigido had affirmed the truth and authenticity of the contents of the
draft. The uncontradicted testimony of Atty. Rino is that Brigido Alvarado
already acknowledged that the will was drafted in accordance with his
expressed wishes even prior to 5 November 1977 when Atty. Rino went to the
testator's residence precisely for the purpose of securing his conformity to the
draft.
Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258
The subsequent signing and sealing by the notary of his certification that the
testament was duly acknowledged by the participants therein is no part of the
acknowledgment itself nor of the testamentary act. Hence their separate
execution out of the presence of the testatrix and her witnesses cannot be said
to violate the rule that testaments should be completed without interruption.
Cruz vs. Villasor NO.L-32213, 54 SCRA 31

48

The notary public before whom the will was acknowledged cannot be
considered as the third instrumental witness since he cannot acknowledge
before himself his having signed the will. This cannot be done because he
cannot split his personality into two so that one will appear before the other to
acknowledge his participation in the making of the will.
Caneda vs. CA, 222 SCRA 781
The rule on substantial compliance in Article 809 cannot be revoked or relied
on by respondents since it presupposes that the defects in the attestation
clause can be cured or supplied by the text of the will or a consideration of
matters apparent therefrom which would provide the data not expressed in the
attestation clause or from which it may necessarily be gleaned or clearly
inferred that the acts not stated in the omitted textual requirements were
actually complied within the execution of the will.
Lopez v. Lopez, 685 SCRA 209
The statement in the Acknowledgment portion of the subject last will and
testament that it "consists of 7 pages including the page on which the
ratification and acknowledgment are written" cannot be deemed substantial
compliance. The will actually consists of 8 pages including its acknowledgment
which discrepancy cannot be explained by mere examination of the will itself
but through the presentation of evidence aliunde.
Guerrero v. Bihis, 521 SCRA 394
The issue in this case whether the will acknowledged by the testatrix and the
instrumental witnesses before a notary public acting outside the place of his
commission satisfies the requirement under Article 806 of the Civil Code?
Outside the place of his commission, he is bereft of power to perform any
notarial act; he is not a notary public. Any notarial act outside the limits of his
jurisdiction has no force and effect.
Celada v. Abena, 556 SCRA 569
While it is true that the attestation clause is not a part of the will, error in the
number of pages of the will as stated in the attestation clause is not material to
invalidate the subject will. It must be noted that the subject instrument is
consecutively lettered with pages A, B, and C which is a sufficient safeguard
from the possibility of an omission of some of the pages.
Form and Solemnities of Holographic W ills
Rodelas vs. Aranza, 119 SCRA 16
The photostatic or xerox copy of a lost or destroyed holographic will may be
admitted because then the authenticity of the handwriting of the deceased can
be determined by the probate court.
49

Codoy vs. Calugay, 312 SCRA 333

The word shall connotes a mandatory order. We have ruled that shall in a
statute commonly denotes an imperative obligation and is inconsistent with the
idea of discretion and that the presumption is that the word shall, when used
in a statute is mandatory."
Ajero vs. CA, 236 SCRA 488
Thus, unless the unauthenticated alterations, cancellations or insertions were
made on the date of the holographic will or on testator's signature, their
presence does not invalidate the will itself. The lack of authentication will only
result in disallowance of such changes.
Kalaw vs. Relova, 132 SCRA 237
To state that the Will as first written should be given efficacy is to disregard the
seeming change of mind of the testatrix. But that change of mind can neither
be given effect because she failed to authenticate it in the manner required by
law by affixing her full signature.
Roxas vs. De Jesus, 134 SCRA 245
As a general rule, the "date" in a holographic Will should include the day,
month, and year of its execution. However, when as in the case at bar, there is
no appearance of fraud, bad faith, undue influence and pressure and the
authenticity of the Will is established and the only issue is whether or not the
date "FEB.,61" appearing on the holographic Will is a valid compliance with
Article 810 of the Civil Code, probate of the holographic Will should be allowed
under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170

The law does not specify a particular location where the date should be placed
in the will. The only requirements are that the date be in the will itself and
executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

Holographic wills being usually prepared by one who is not learned in the law,
as illustrated in the present case, should be construed more liberally than the
ones drawn by an expert, taking into account the circumstances surrounding
the execution of the instrument and the intention of the testator.
50

Palaganas v. Palaganas, 2011 640 SCRA 538

A foreign will can be given legal effects in our jurisdiction. But, reprobate or re authentication of a will already probated and allowed in a foreign country is
different from that probate where the will is presented for the first time before a
competent court.
Vda.De Perez vs. Tolete, 232 SCRA 722
What the law expressly prohibits is the making of joint wills either for the
testators reciprocal benefit or for the benefit of a third person (Civil Code of the
Philippines, Article 818). In the case at bench, the Cunanan spouses executed
separate wills. Since the two wills contain essentially the same provisions and
pertain to property which in all probability are conjugal in nature, practical
considerations dictate their joint probate.

Revocation of W ills and Testamentary Disposition

Modes of Revocation
Casiano vs CA 158 SCRA 451
Revocation under this condition to be effective must have complied with the
two requirements: the overt act as mentioned under the law; the intent to
revoke on the part of the testator. The document or paper burned by one of the
witnesses was not satisfactorily established to be the will at all, much less the
will of Adriana.

Adriana M aloto vs. CA, 158 SCRA 451

For one, the document or papers burned by Adriana's maid, Guadalupe, was
not satisfactorily established to be a will at all, much less the will of Adriana
Maloto. For another, the burning was not proven to have been done under the
express direction of Adriana. And then, the burning was not in her presence.

Gago vs. M amuyac NO. L-26317, 49 Phil 902

Where a will which cannot be found is shown to have been in the possession of
the testator, when last seen, the presumption is, in the absence of other
competent evidence, that the same was cancelled or destroyed. The same
presumption arises where it is shown that the testator had ready access to the
will and it cannot be found after his death. It will not be presumed that such
51

will has been destroyed by any other person without the knowledge or
authority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires that the
same must be effected through a will wherein the legal cause therefor shall be
specified. With regard to the reasons for the disinheritance that were stated by
Segundo in his document, the Court believes that the incidents, taken as a
whole, can be considered a form of maltreatment of Segundo by his son,
Alfredo, and that the matter presents a sufficient cause for the disinheritance
of a child or descendant under Article 919 of the Civil Code.

Doctrine of dependent relative revocation

Molo vs. M olo NO. L- 2538, 90 Phil 37
The failure of a new testamentary disposition upon whose validity the
revocation depends, is equivalent to the non-fulfillment of a suspensive
conditions, and hence prevents the revocation of the original will. But a mere
intent to make at some time a will in the place of that destroyed will not render
the destruction conditional.
Allowance of W ills
Requirements for probate
Gan vs Yap, 104 Phil. 509
The loss of the holographic will entail the loss of the only medium of proof; if
the ordinary will is lost, the subscribing witnesses are available to
authenticate. In case of holographic will if oral testimony were admissible only
one man could engineer the fraud this way.
Rodelas vs Aranza 119 SCRA 16
If the holographic will has been lost or destroyed and no other copy is available,
the will cannot be probated because the best and only evidence is the
handwriting of the testator. But a photostatic copy or Xerox copy of the
holographic will may be allowed because comparison can be made with the
standard writings of the testator.
Azaola vs Singson 109 Phil. 102
Since the authenticity of the will was not contested, the appellant is not
required to produce more than one witness. Even if the genuiness of the
52

holographic will were contested, article 811 cannot be interpreted as to require

the compulsory presentation of three witnesses to identify the handwriting of
the testator, under penalty of having denied the probate.
Codoy vs Calugay, 312 SCRA 333
We cannot eliminate the possibility that if the will is contested, the law requires
that three witnesses to declare that the will was in the handwriting of the
deceased. A visual examination of the holographic will convince us that the
strokes are different when compared with other documents written by the
testator.

Effect of allowance of W ills

Gallanosa vs Arcangel, 83 SCRA 676
After the finality of the allowance of a will, the issue as to the voluntariness of
its execution cannot be raised anymore. It is not only the 1939 probate
proceeding that can be interposed as res judicata with respect to private
respondents complaint.
Roberts vs Leonidas, 129 SCRA 33
It is anomalous that the estate of a person who died testate should be settled in
an intestate proceeding. Therefore, the intestate case should be consolidated
with the testate proceeding and the judge assigned to the testate proceeding
should hearing the two cases.
Nepomuceno vs CA, 139 SCRA 206
The general rule is that in probate proceedings, the courts area of inquiry is
limited to an examination and resolution of the extrinsic validity of the will.
Where practically considerations demand that the intrinsic validity of the will
be passed upon, even before it is probated, the court should meet the issue.

Legitime, Institution, Preterition

Aznar vs. Duncan, 17 SCRA 590
To constitute preterition, the omission must be total and complete, such that
nothing must be given to the compulsory heir.
Acain vs. IAC, 155 SCRA 100
Preterition annuls the institution of an heir and annulment throws open to
intestate succession the entire inheritance. The only provisions which do not
53

result in intestacy are the legacies and devises made in the will for they should
stand valid and respected, except insofar as the legitimes are concerned.
Nuguid vs. Nuguid, 17 SCRA 449
The will here does not explicitly disinherit the testatrix's parents, the forced
heirs. It simply omits their names altogether. Said will rather than be labeled
ineffective disinheritance is clearly one in which the said forced heirs suffer
from preterition.

Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508 SCRA 172
The mere mention of the name of one of the petitioners, Virginia, in the
document did not operate to institute her as the universal heir. Her name was
included plainly as a witness to the altercation between Segundo and his son,
Alfredo.

Legitime and Simulated Contracts; Spousal M arital Estrangement

Francisco vs. Francisco-Alfonso, 354 SCRA 112
Obviously, the sale was Gregorio's way to transfer the property to his
illegitimate daughters at the expense of his legitimate daughter. The sale was
executed to prevent respondent Alfonso from claiming her legitime and rightful
share in said property.
Capitle v. Elbambuena, 509 SCRA 444
Although estranged from Olar, respondent Fortunata remained his wife and
legal heir, mere estrangement not being a legal ground for the disqualification
of a surviving spouse as an heir of the deceased spouse.
Reserva Troncal Art. 891
Sienes vs. Esparcia, 1 SCRA 750
The sale made by Andrea Gutang in favor of appellees was, therefore, subject to
the condition that the vendees would definitely acquire ownership, by virtue of
the alienation, only if the vendor died without being survived by any person
entitled to the reservable property. Inasmuch much as when Andrea Gutang
died, Cipriana Yaeso was still alive, the conclusion becomes inescapable that
the previous sale made by the former in favor of appellants became of no legal
effect and the reservable property subject matter thereof passed in exclusive
ownership to Cipriana.
54

Gonzales vs. CFI, 104 SCRA 479

Mrs. Legarda could not convey in her holographic will to her sixteen
grandchildren the reservable properties which she had inherited from her
daughter Filomena because the reservable properties did not form part of her
estate (Cabardo vs. Villanueva, 44 Phil. 186, 191). The reservor cannot make a
disposition mortis causa of the reservable properties as long as the reservees
survived the reservor.

Vizconde v. CA, 286 SCRA 217

Estrellita, it should be stressed, died ahead of Rafael, in fact, it was Rafael who
inherited from Estrellita an amount more than the value of the Valenzuela
property. Hence, even assuming that the Valenzuela property may be collated
collation may not be allowed as the value of the Valenzuela property has long
been returned to the estate of Rafael.

Substitution of Heirs
Palacios vs Ramirez, 111 SCRA 704
The word degree means generation and the present code has obviously
followed this interpretation by providing that the substitution shall not go
beyond one degree from the heir originally instituted. The code thus clearly
indicates that the second heir must be related to and one generation from the
first heir.

Crisologo vs Singzon, 49 SCRA 491

In fideicommissary substitution clearly impose an obligation upon the first heir
to preserve and transmit to another the whole or part of the estate bequeathed
to him, upon his death or upon the happening of a particular event.
Legal or Intestate Succession
Rosales vs Rosales, 148 SCRA 69
The daughter-in-law is not an intestate heir of her spouses parents. There is
no provision in the civil code which states that a widow is an intestate heir of
her mother-in-law.
Delos Santos vs Dela Cruz, 37 SCRA 555
55

In an intestate succession, a grandniece of the deceased cannot participate in

the inheritance with the surviving nieces and nephews because the existence of
the latter excluded the more distant relatives. In the collateral line, the right of
representation does not go beyond the children of brothers and sisters.
Corpuz vs Corpuz, 85 SCRA 567
Since, Teodoro was an acknowledged natural child or was illegitimate and since
Juanita was the legitimate child of Tomas, himself was a legitimate child,
appellant Tomas has no cause of action to recovery of the supposed hereditary
share of his daughter, Juanita as a legal heir, in Yangcos estate .
Santillon vs M irandan, 14 SCRA 563
If there is only one legitimate child surviving with the spouse since they shall
equally, one-half of the estate goes to the child and the other half goes to the
surviving spouse. Although the law refers to children or descendants, the rule
in the statutory construction that the plural can be understood to include the
singular.
Bacayo vs Borromeo, 14 SCRA 986
A decedents uncle and aunt may not succeed intestate so long as nephews and
nieces of the decedent survive and are willing and qualified to succeed. In this
case, the nephews and nieces were not inheriting by right of representation
because they only do so if they concur with the brothers and sisters of the
decedent.
Provisions Common to Testate and Intestate Succession

SPOUSES DOMINADOR MARCOS and GLORIA MARCOS, vs. HEIRS OF ISIDRO BANGI
and GENOVEVA DICCION, represented by NOLITO SABIANO, G.R. No. 185745, October
15, 2014, J. Reyes.
Partition is the separation, division and assignment of a thing held in common among those
to whom it may belong. Every act which is intended to put an end to indivision among co heirs and legatees or devisees is deemed to be a partition. Partition may b e inferred from
circumstances sufficiently strong to support the presumption. Thus, after a long
possession in severalty, a deed of partition may be presumed. The evidence presented by
the parties indubitably show that, after the death of Alipio, his heirs Eusebio, Espedita
and Jose Bangi had orally partitioned his estate, including the subject property, which
was assigned to Eusebio. Accordingly, considering that Eusebio already owned the subject
property at the time he sold the one-third portion thereof.

56

THELMA M. ARANAS vs. TERESITA V. MERCAO, FELIMON V. MERCADO, CARMENCIA M.

STUERHLAND, RICHARD V. MERCADO, MA. TERESITA M. ANDERSON, AND FRANKLIN
L. MERCADO, G.R. No. 156407, JANUARY 15, 2014, J. Bersamin
The probate court is authorized to determine the issue of ownership of properties for
purposes of their inclusion or exclusion from the inventory to be submitted by the
administrator, but its determination shall only be provisional unless the interested parties
are all heirs of the decedent, or the question is one of collation or advancement, or the
parties consent the assumption of jurisdiction by the probate court and the rights of third
parties are not impaired. Its jurisdiction extends to matters incidental or to the settlement
and distribution of the estate, such as the determination of the status of each heir and
whether property included in the inventory is the conjugal or exclusive property of the
deceased spouse.
Legitime; Proximity & Representation; Art. 962;
Bagunu vs. Piedad, 347 SCRA 571
The rule on proximity is a concept that favors the relatives nearest in degree to
the decedent and excludes the more distant ones except when and to the
extent that the right of representation can apply. In the collateral line, the right
of representation may only take place in favor of the children of brothers or
sisters of the decedent when such children survive with their uncles or aunts.
Sayson vs. CA, 205 SCRA 321
The relationship created by the adoption is between only the adopting parents
and the adopted child and does not extend to the blood relatives of either party.
Corpus vs. Corpus, 85 SCRA 567
In default of natural ascendants, natural and legitimated children shall be
succeeded by their natural brothers and sisters in accordance with the rules
established for legitimate brothers and sisters." Hence, Teodoro R. Yangco's
half brothers on the Corpus side, who were legitimate, had no right to succeed
to his estate under the rules of intestacy.
Suntay v. Cojuangco-Suntay, 621 SCRA 142
Petitioners argument that the successional bar between the legitimate and
illegitimate relatives of a decedent does not apply in this instance where facts
indubitably demonstrate the contrary Emilio III, an illegitimate grandchild of
the decedent, was actually treated by the decedent and her husband as their
own son, reared from infancy, educated and trained in their businesses, and
eventually legally adopted by decedents husband, the original oppositor to
respondents petition for letters of administration.

57

Diaz vs. IAC, 150 SCRA 645

It is therefore clear from Article 992 of the New Civil Code that the phrase
"legitimate children and relatives of his father or mother" includes Simona
Pamuti Vda. de Santero as the word "relative" includes all the kindred of the
person spoken of. The record shows that from the commencement of this case
the only parties who claimed to be the legitimate heirs of the late Simona
Pamuti Vda. de Santero are Felisa Pamuti Jardin and the six minor natural or
illegitimate children of Pablo Santero.
Diaz vs. IAC, 182 SCRA 427
The term relatives, although used many times in the Code, is not defined by it.
In accordance therefore with the canons of statutory interpretation, it should
be understood to have a general and inclusive scope, inasmuch as the term is a
general one.
Heirs of Uriarte vs. CA, 284 SCRA 511
A nephew is considered a collateral relative who may inherit if no descendant,
ascendant, or spouse survive the decedent. That private respondent is only a
half-blood relative is immaterial.
Delos Santos vs Ferraris-Borromeo, 14 SCRA 986
Nephews and nieces alone do not inherit by right of representation unless
concurring with the brothers or sisters of the deceased which is provided in
article 975 when children of one or more brothers or sisters of the deceased
survive with their uncles and aunts but if they alone survive, they shall inherit
in equal portions.

P ARTNERSHIP
I. Contract of Partnership
LIM TONG LIM vs. PHILIPPINE FISHING GEAR INDUSTRIES, INC., G.R. NO.
136448, November 3, 1999
A partnership may be deemed to exist among parties who agree to borrow
money to pursue a business and to divide the profits or losses that may arise
therefrom, even if it is shown that they have not contributed any capital of their
own to a "common fund." Their contribution may be in the form of credit or
industry, not necessarily cash or fixed assets.

58

ROSARIO U. YULO vs. YANG CHIAO SENG, G.R. NO. L-12541, August 28,
1959
The following are the requisites of partnership: (1) two or more persons who
bind themselves to contribute money, property, or industry to a common fund;
(2) intention on the part of the partners to divide the profits among themselves.
(Art. 1767, Civil Code.).
HEIRS OF TAN ENG KEE vs .COURT OF APPEALS and BENGUET LUMBER
COMPANY
G.R. NO. 126881; October 3, 2000
In determining whether a partnership exists, these rules shall apply:
(1) Except as provided by Article 1825, persons who are not partners as to each
other are not partners as to third persons;
(2) Co-ownership or co-possession does not of itself establish a partnership,
whether such co-owners or co-possessors do or do not share any profits made
by the use of the property;
(3) The sharing of gross returns does not of itself establish a partnership,
whether or not the persons sharing them have a joint or common right or
interest in any property which the returns are derived;
(4) The receipt by a person of a share of the profits of a business is a prima
facie evidence that he is a partner in the business, but no such inference shall
be drawn if such profits were received in payment:
(a) As a debt by installment or otherwise;
(b) As wages of an employee or rent to a landlord;
(c) As an annuity to a widow or representative of a deceased partner;
(d) As interest on a loan, though the amount of payment vary with the profits of
the business;
(e) As the consideration for the sale of a goodwill of a business or other property
by installments or otherwise.
II. Rights and Obligations of Partnership
ALFREDO N. AGUILA, JR vs. COURT OF APPEALS and FELICIDAD S. VDA.
DE ABROGAR, G.R. NO. 127347, November 25, 1999
Under Art. 1768 of the Civil Code, a partnership has a juridical personality
separate and distinct from that of each of the partners. The partners cannot
be held liable for the obligations of the partnership unless it is shown that the
legal fiction of a different juridical personality is being used for fraudulent,
unfair, or illegal purposes, hence it is the partnership, not its officers or agents,
59

which should be impleaded in any litigation involving property registered in its

name, violation of this rule will result in the dismissal of the complaint.
Villareal vs. Ramirez, G.R. NO. 144214. July 14, 2003
Since it is the partnership, as a separate and distinct entity, that must refund
the shares of the partners, the amount to be refunded is necessarily limited to
its total resources. In other words, it can only pay out what it has in its coffers,
which consists of all its assets. However, before the partners can be paid their
shares, the creditors of the partnership must first be compensated. After all the
creditors have been paid, whatever is left of the partnership assets becomes
available for the payment of the partners shares.
Angeles vs. Secretary of Justice, G.R. NO. 142612, July 29, 2005
The Angeles spouses position that there is no partnership because of the lack
of a public instrument indicating the same and a lack of registration with the
Securities and Exchange Commission (SEC) holds no water for the following
reasons: first, the Angeles spouses contributed money to the partnership and
not immovable property; and second, mere failure to register the contract of
partnership with the SEC does not invalidate a contract that has the essential
requisites of a partnership. The purpose of registration of the contract of
partnership is to give notice to third parties. Failure to register the contract of
partnership does not affect the liability of the partnership and of the partners
to third persons. Neither does such failure to register affect the partnerships
juridical personality. A partnership may exist even if the partners do not use
the words partner or partnership.
Ortega vs. CA, G.R. NO. 109248, July 3, 1995
The right to choose with whom a person wishes to associate himself is the very
foundation and essence of that partnership. Its continued existence is, in turn,
dependent on the constancy of that mutual resolve, along with each partner's
capability to give it, and the absence of a cause for dissolution provided by the
law itself. Verily, any one of the partners may, at his sole pleasure, dictate a
dissolution of the partnership at will. He must, however, act in good faith, not
that the attendance of bad faith can prevent the dissolution of the
partnership but that it can result in a liability for damages. Among
partners, mutual agency arises and the doctrine of delectus personae allows
them to have the power, although not necessarily the right, to dissolve the
partnership. An unjustified dissolution by the partner can subject him to a
possible action for damages.
III. Rights and Obligations of Partners Among Themselves
60

Liwanag vs. CA, G.R. NO. 114398, October 24, 1997

Petitioner was charged with the crime of estafa and advances the theory that
the intention of the parties was to enter into a contract of partnership, wherein
Rosales (private complainant for Estafa) would contribute the funds while she
would buy and sell the cigarettes, and later divide the profits between
them But even assuming that a contract of partnership was indeed entered
into by and between the parties, SC ruled that when money or property have
been received by a partner for a specific purpose (such as that obtaining in the
instant case) and he later misappropriated it, such partner is guilty of estafa.
Moran, Jr. vs. CA, G.R. NO. L-59956, October 31, 1984
The rule is, when a partner who has undertaken to contribute a sum of money
fails to do so, he becomes a debtor of the partnership for whatever he may have
promised to contribute (Art. 1786, Civil Code) and for interests and damages
from the time he should have complied with his obligation (Art. 1788, Civil
Code). Thus in Uy v. Puzon (79 SCRA 598), which interpreted Art. 2200 of the
Civil Code of the Philippines, we allowed a total of P200,000.00 compensatory
damages in favor of the appellee because the appellant therein was remiss in
his obligations as a partner and as prime contractor of the construction
projects in question.
Tai Tong Chuache & Co. vs. Insurance Commission, G.R. NO. L-55397
February 29, 1988
Petitioner being a partnership may sue and be sued in its name or by its duly
authorized representative. Thus, Chua as the managing partner of the
partnership may execute all acts of administration including the right to sue
debtors of the partnership in case of their failure to pay their obligations when
it became due and demandable.
Catalan vs. Gatchalian, G.R. NO. L-11648, April 22, 1959
Catalan and Gatchalian as partners mortgaged two lots together with the
improvements thereon to secure a credit. Catalan redeemed the property and
he contends that title should be cancelled and a new one must be issued in his
name. Under Article 1807 of the NCC every partner becomes a trustee for his
co-partner with regard to any benefits or profits derived from his act as a
partner. Consequently, when Catalan redeemed the properties in question, he
became a trustee and held the same in trust for his co partner Gatchalian,
subject to his right to demand from the latter his contribution to the amount of
redemption.

61

Evangelista & Co. vs. Abad Santos, G.R. NO. L-31684 June 28, 1973
Respondent industrial partner has the right to demand for a formal accounting
and to receive her share in the net profit that may result from such an
accounting.
IV. Obligations of Partnership, Partners to Third Persons
ISLAND SALES, INC. vs. UNITED PIONEERS GENERAL CONSTRUCTION
COMPANY, G.R. NO. L-22493, July 31, 1975
Defendant company, a general partnership purchased from the plaintiff a
motor vehicle on an installment basis with the condition that failure to pay any
of said installments as they fall due would render the whole unpaid balance
immediately due and demandable. Having failed to receive the installment, the
plaintiff sued the defendant company for the unpaid balance with Benjamin C.
Daco, Daniel A. Guizona, Noel C. Sim, Romulo B. Lumauig, and Augusto
Palisoc were included as co-defendants in their capacity as general partners of
the defendant company. In this case, there were five (5) general partners when
the promissory note in question was executed for and in behalf of the
partnership. Since the liability of the partners is pro rata, the liability of the
appellant Benjamin C. Daco shall be limited to only one -fifth of the obligations
of the defendant company. The fact that the complaint against the defendant
Romulo B. Lumauig was dismissed, upon motion of the plaintiff, does not
unmake the said Lumauig as a general partner in the defendant company. In
so moving to dismiss the complaint, the plaintiff merely condoned Lumauig's
individual liability to the plaintiff.
ELMO MUASQUE vs. COURT OF APPEALS, G.R. NO. L -39780, November
11, 1985
There is a general presumption that each individual partner is an authorized
agent for the firm and that he has authority to bind the firm in carrying on the
partnership transactions. The presumption is sufficient to permit third persons
to hold the firm liable on transactions entered into by one of members of the
firm acting apparently in its behalf and within the scope of his authority.
ANTONIO C. GOQUIOLAY, ET AL. vs. WASHINGTON Z. SYCIP, ET AL, G.R.
NO. L-11840, December 10, 1963
Where the partnership business is to deal in merchandise and goods, i.e.,
movable property, the sale of its real property (immovables) is not within the
ordinary powers of a partner, because it is not in line with the normal business
of the firm. But where the express and avowed purpose of the partnership is to
buy and sell real estate (as in the present case), the immovables thus acquired
62

by the firm from part of its stock-in-trade, and the sale thereof is in pursuance
of partnership purposes, hence within the ordinary powers of the partner.
J. TIOSEJO INVESTMENT CORP. vs. Ang, G.R. NO. 174149, September 8,
2010
Petitioner cannot avoid liability by claiming that it was not in any way privy to
the Contracts to Sell executed by PPGI and respondents. As correctly argued
by the respondent, a joint venture is considered in this jurisdiction as a form of
partnership and is, accordingly, governed by the law of partnerships and under
Article 1824 of the Civil Code of the Philippines, all partners are solidarily liable
with the partnership for everything chargeable to the partnership, including
loss or injury caused to a third person or penalties incurred due to any
wrongful act or omission of any partner acting in the ordinary course of the
business of the partnership or with the authority of his co-partners.
V. Dissolution
PRIMELINK PROPERTIES AND DEVELOPMENT CORPORATION
LAZATIN-MAGAT, et.al, G.R. NO. 167379, June 27, 2006

vs.

On dissolution, the partnership is not terminated but continues until the

winding up of partnership affairs is completed. Winding up means the
administration of the assets of the partnership for the purpose of terminating
the business and discharging the obligations of the partnership.
MARJORIE TOCAO vs. COURT OF APPEALS, G.R. NO. 127405, October 4,
2000
An unjustified dissolution by a partner can subject him to action for damages
because by the mutual agency that arises in a partnership, the doctrine
of delectus personae allows the partners to have the power, although not
necessarily the right to dissolve the partnership.
VI. Limited Partnership
COMMISSIONER OF INTERNAL REVENUE vs. W ILLIAM J. SUTER, G.R. NO.
L-25532, February 28, 1969
A limited partnership, named "William J. Suter 'Morcoin' Co., Ltd.," was formed
on 30 September 1947 by herein respondent William J. Suter as the general
partner, and Julia Spirig and Gustav Carlson, as the limited partners. The
thesis that the limited partnership, William J. Suter "Morcoin" Co., Ltd., has
been dissolved by operation of law because of the marriage of the only general
partner, William J. Suter to the originally limited partner, Julia Spirig one year
63

after the partnership was organized is not tenable. The subsequent marriage of
the partners does not operate to dissolve it, such marriage not being one of the
causes provided for that purpose either by the Spanish Civil Code or the Code
of Commerce. The appellant's view, that by the marriage of both partners the
company became a single proprietorship, is equally erroneous. The capital
contributions of partners William J. Suter and Julia Spirig were separately
owned and contributed by them before their marriage; and after they were
joined in wedlock, such contributions remained their respective separate
property under the Spanish Civil Code.
AGENCY
ALVIN PATRIMONIO v NAPOLEON GUTIERREZ and OCTAVIO MARASIGAN III, G.R No.
187769, June 4, 2014. J. BRION
As a general rule, a contract of agency may be oral. However, it must be written when the
law requires a specific form, for example, in a sale of a piece of land or any interest therein
through an agent. Article 1878 paragraph 7 of the Civil Code expressly requires a special
power of authority before an agent can loan or borrow money in behalf of the principal, but
it does not state that the authority be in writing.
In this case, Alvin Patrimonios agent, Gutierrez, did not have any authority to borrow
money in Patrimonios behalf. Patrimonio did not execute any SPA in favor of Gutierrez, nor
was Gutierrez given any authority, whether verbally or in writing, to borrow money in his
behalf, nor was he aware of any such transaction. Patrimonios acts of pre-signing blank
checks and releasing them to Gutierrez does not establish that Patrimonio authorized
Gutierrez to fill them out and contract the loan in his behalf.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND
ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J.
Mendoza
Persons dealing with an agent must ascertain not only the fact of agency, but also the
nature and extent of the agents authority. A third person with whom the agent wishes to
contract on behalf of the principal may require the presentation of the power of attorney,
or the instructions as regards the agency. According to Article 1990 of the New Civil Code,
insofar as third persons are concerned, an act is deemed to have been performed within the
scope of the agent's authority, if such act is within the terms of the power of attorney, as
written. In this case, Spouses Rabaja did not recklessly enter into a contract to sell with the
agent. They required her presentation of the power of attorney before they transacted with
her principal. And when the agent presented the SPA to Spouses Rabaja, the latter had no
reason not to rely on it.
I.Definition of Agency

64

Country Bankers Insurance Corp.. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
In a contract of agency, a person, the agent, binds himself to re present
another, the principal, with the latters consent or authority. Thus, agency is
based on representation, where the agent acts for and in behalf of the principal
on matters within the scope of the authority conferred upon him. Such acts
have the same legal effect as if they were personally done by the principal. By
this legal fiction of representation, the actual or legal absence of the principal is
converted into his legal or juridical presence.
Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
It bears stressing that in an agent-principal relationship, the personality of the
principal is extended through the facility of the agent. In so doing, the agent, by
legal fiction, becomes the principal, authorized to perform all acts which the
latter would have him do. Such a relationship can only be effected with the
consent of the principal, which must not, in any way, be compelled by law or
by any court.

Eurotech Industrial Technologies, Inc. Cuizon, G.R. NO. 167552, April 23,
2007
In a contract of agency, a person binds himself to render some service or to do
something in representation or on behalf of another with the latters consent.
The underlying principle of the contract of agency is to accomplish results by
using the services of others to do a great variety of things like selling, buying,
manufacturing, and transporting. Its purpose is to extend the personality of
the principal or the party for whom another acts and from whom he or she
derives the authority to act. It is said that the basis of agency is representation,
that is, the agent acts for and on behalf of the principal on matters within the
scope of his authority and said acts have the same legal effect as if they were
personally executed by the principal. By this legal fiction, the actual or real
absence of the principal is converted into his legal or juridical presence qui
facit per alium facit per se. The elements of the contract of agency are: (1)
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
agent acts as a representative and not for himself; (4) the agent acts within the
scope of his authority.
II. Powers

65

III. Express vs. Implies Agency

Lintoja vs. Eternit Corp., G.R. NO. 144805, June 8, 2006
An agency may be expressed or implied from the act of the principal, from his
silence or lack of action, or his failure to repudiate the agency knowing that
another person is acting on his behalf without authority. Acceptance by the
agent may be expressed, or implied from his acts which carry out the agency,
or from his silence or inaction according to the circumstances. Agency may be
oral unless the law requires a specific form. However, to create or convey real
rights over immovable property, a special power of attorney is necessary. Thus,
when a sale of a piece of land or any portion thereof is through an agent, the
authority of the latter shall be in writing, otherwise, the sale shall be void.
IV. Agency by Estoppel
Naguiat vs. Court of Appeals, G.R. NO. 118375, October 3, 2003
The Court of Appeals recognized the existence of an agency by estoppels citing
Article 1873 of the Civil Code. Apparently, it considered that at the very least,
as a consequence of the interaction between Naguiat and Ruebenfeldt, Queao
got the impression that Ruebenfeldt was the agent of Naguiat, but Naguiat did
nothing to correct Queaos impression. In that situation, the rule is
clear. One who clothes another with apparent authority as his agent, and
holds him out to the public as such, cannot be permitted to deny the authority
of such person to act as his agent, to the prejudice of innocent third parties
dealing with such person in good faith, and in the honest belief that he is what
he appears to be. The Court of Appeals is correct in invoking the said rule on
agency by estoppel.

V. General vs. Special Agency

Siasat vs. Intermediate Appellate Court, G.R. NO. L-67889, October 10,
1985
A general agent is one authorized to do all acts pertaining to a business of a
certain kind or at a particular place, or all acts pertaining to a business of a
particular class or series. He has usually authority either expressly conferred
in general terms or in effect made general by the usages, customs or nature of
the business which he is authorized to transact. An agent, therefore, who is
empowered to transact all the business of his principal of a particular kind or
in a particular place, would, for this reason, be ordinarily deemed a general
agent. A special agent is one authorized to do some particular act or to act
66

upon some particular occasion, acts usually in accordance with specific

instructions or under limitations necessarily implied from the nature of the act
to be done
VI. Agency Couched in General Terms
Veloso vs. Court of Appeals, G.R. NO. 102737, August 21, 1996
There was no need to execute a separate and special power of attorney since
the general power of attorney had expressly authorized the agent or attorney in
fact the power to sell the subject property. The special power of attorney can
be included in the general power when it is specified therein the act or
transaction for which the special power is required. Whether the instrument be
denominated as general power of attorney or special power of attorney, what
matters is the extent of the power or powers contemplated upon the agent or
attorney in fact. If the power is couched in general terms, then such power
cannot go beyond acts of administration. However, where the power to sell is
specific, it not being merely implied, much less couched in general terms, there
cannot be any doubt that the attorney in fact may execute a valid sale. An
instrument may be captioned as special power of attorney but if the powers
granted are couched in general terms without mentioning any specific power to
sell or mortgage or to do other specific acts of strict dominion, then in that case
only acts of administration may be deemed conferred
VII. Agency Requiring Special Power of Attorney
ARDO C. CASTILLO, represented by LENNARD V. CASTILLO v SECURITY BANK
CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR.,
and TERESITA FLORESCASTILLO, G.R No. 196118, July 30, 2014. J. PERALTA
In this case, the validity of a mortgage was attacked on the ground that Leon (petitioner
Leonardos brother) was not authorized to contract it. Leon claims that the Community Tax
Certificate presented during the notarization of the SPA was obtained after the SPA had
been executed.
However, the defective notarization did not avoid the SPA. The defective notarization will
simply strip the document of its public character and reduce it to a private instrument, but
nonetheless, binding, provided its validity is established by preponderance of evidence.
Article 1358 of the Civil Code requires that the form of a contract that transmits or
extinguishes real rights over immovable property should be in a public document, yet the
failure to observe the proper form does not render the transaction invalid. The necessity of
a public document for said contracts is only for convenience; it is not essential for validity
or enforceability.

67

MACARIA ARGUELLES AND THE HEIRS OF THE DECEASED PETRONIO ARGUELLES VS.
MALARAYAT RURAL BANK INC. G.R. No. 200468 March 19, 2014, J. Villarama Jr.
The issue in this case is case is whether Malarayat Rural Bank is a mortgagee in good faith
who is entitled to protection on its mortgage lien.
In this case, Malarayat Rural Bank fell short of the required degree of diligence, prudence,
and care in approving the loan application of the spouses Guia. Respondent should have
diligently conducted an investigation of the land offered as collateral. Although the Report
of Inspection and Credit Investigation found at the dorsal portion of the Application for
Agricultural Loan proved that the respondent Malarayat Rural Bank inspected the land, the
respondent turned a blind eye to the finding therein that the "lot is planted [with]
sugarcane with annual yield (crops) in the amount of P15,000. They merely derived the
authority to mortgage the lot from the Special Power of Attorney allegedly executed by the
late Fermina M. Guia. Hence, it was incumbent upon the respondent Malarayat Rural Bank
to be more cautious in dealing with the spouses Guia, and inquire further regarding the
identity and possible adverse claim of those in actual possession of the property. Since the
subject land was not mortgaged by the owner thereof and since the respondent Malarayat
Rural Bank is not a mortgagee in good faith, said bank is not entitled to protection under
the law. The unregistered sale in favor of the spouses Arguelles must prevail over the
mortgage lien of respondent Malarayat Rural Bank.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND
ELIZABETH RABAJA AND ROSARIO GONZALES, G.R. No. 199990, February 04, 2015, J.
Mendoza
According to Article 1990 of the New Civil Code, insofar as third persons are concerned, an
act is deemed to have been performed within the scope of the agent's authority, if such act
is within the terms of the power of attorney, as written. In this case, Spouses Rabaja did not
recklessly enter into a contract to sell with Gonzales. They required her presentation of the
power of attorney before they transacted with her principal. And when Gonzales presented
the SPA to Spouses Rabaja, the latter had no reason not to rely on it.
Orbeta vs. Sendiong, G.R. NO. 155236, July 8, 2005
A special power of attorney simply refers to a clear mandate specifically
authorizing the performance of a specific power and of express acts subsumed
therein, and there is a specific authority given to Mae Sendiong to sign her
name in behalf of Paul Sendiong in contracts and agreements and to institute
suits in behalf of her father. Neither would the fact that the document is
captioned General Power of Attorney militate against its construction as
granting specific powers to the agent pertaining to the petition for annulment of
judgment she instituted in behalf of her father. As Justice Paras has noted, a
68

general power of attorney may include a special power if such special power is
mentioned or referred to in the general power.
Country Bankers Insurance Corp. vs. Keppel Cebu Shipyard, June 18,
2012, G.R. NO. 166044
Our law mandates an agent to act within the scope of his authority. The scope
of an agents authority is what appears in the written terms of the power of
attorney granted upon him. Under Article 1878(11) of the Civil Code, a special
power of attorney is necessary to obligate the principal as a guarantor or
surety.
Mercado vs. Allied Banking Corpporation, G.R. NO. 171460, July 24, 2007
Equally relevant is the rule that a power of attorney must be strictly construed
and pursued. The instrument will be held to grant only those powers which
are specified therein, and the agent may neither go beyond nor deviate from the
power of attorney. Where powers and duties are specified and defined in an
instrument, all such powers and duties are limited and are confined to those
which are specified and defined, and all other powers and duties are excluded.
This is but in accord with the disinclination of courts to enlarge the authority
G.R.anted beyond the powers expressly given and those which incidentally flow
or derive therefrom as being usual and reasonably necessary and proper for the
performance of such express powers.
Angeles vs. Philippines National Railways, G.R. NO. 150128, August 31,
2006
A power of attorney is only but an instrument in writing by which a person, as
principal, appoints another as his agent and confers upon him the authority to
perform certain specified acts on behalf of the principal. The written
authorization itself is the power of attorney, and this is clearly indicated by the
fact that it has also been called a letter of attorney. Its primary purpose is not
to define the authority of the agent as between himself and his principal but to
evidence the authority of the agent to third parties with whom the agent deals.
Except as may be required by statute, a power of attorney is valid although no
notary public intervened in its execution.
SHOPPERS PARADISE REALTY & DEVELOPMENT CORPORATION vs.
EFREN P. ROQUE, G.R. NO. 148775, January 13, 2004
Article 1878 of the Civil Code expresses that a special power of attorney is
necessary to lease any real property to another person for more than one year.
The lease of real property for more than one year is considered not merely an
69

act of administration but an act of strict dominion or of ownership. A special

power of attorney is thus necessary for its execution through an agent.
VIII. Agency by Operation of Law
IX. Rights and Obligations of Principal
VICTORIAS MILLING CO., INC. vs. COURT OF , G.R. NO. 117356, June 19,
2000
One factor which most clearly distinguishes agency from other legal concepts is
control; one person - the agent - agrees to act under the control or direction of
another - the principal. Indeed, the very word "agency" has come to connote
control by the principal. The control factor, more than any other, has caused
the courts to put contracts between principal and agent in a separate category.
X. Irrevocable Agency
Republic vs. Evangelista, G.R. NO. 156015, August 11, 2005
A contract of agency is generally revocable as it is a personal contract of
representation based on trust and confidence reposed by the principal on his
agent. As the power of the agent to act depends on the will and license of the
principal he represents, the power of the agent ceases when the will or
permission is withdrawn by the principal. Thus, generally, the agency may be
revoked by the principal at will. However, an exception to the revocability of a
contract of agency is when it is coupled with interest, i.e., if a bilateral contract
depends upon the agency. The reason for its irrevocability is because the
agency becomes part of another obligation or agreement. It is not solely the
rights of the principal but also that of the agent and third persons which are
affected. Hence, the law provides that in such cases, the agency cannot be
revoked at the sole will of the principal.
Lim vs. Saban, G.R. NO. 163720, December 16, 2004
Under Article 1927 of the Civil Code, an agency cannot be revoked if a bilateral
contract depends upon it, or if it is the means of fulfilling an obligation already
contracted, or if a partner is appointed manager of a partnership in the
contract of partnership and his removal from the management is
unjustifiable. Stated differently, an agency is deemed as one coupled with an
interest where it is established for the mutual benefit of the principal and of the
agent, or for the interest of the principal and of third persons, and it cannot be
revoked by the principal so long as the interest of the agent or of a third person
subsists. In an agency coupled with an interest, the agents interest must be
in the subject matter of the power conferred and not merely an interest in the
70

exercise of the power because it entitles him to compensation. When an agents

interest is confined to earning his agreed compensation, the agency is not one
coupled with an interest, since an agents interest in obtaining his
compensation as such agent is an ordinary incident of the agency relationship.
XI. M odes of Extinguishment
RAMON RALLOS, Administrator of the Estate of CONCEPCION RALLOS vs.
FELIX GO CHAN & SONS REALTY CORPORATION, G.R. NO. L-24332,
January 31, 1978
By reason of the very nature of the relationship between principal and agent,
agency is extinguished ipso jure upon the death of either principal or agent.
Although a revocation of a power of attorney to be effective must be
communicated to the parties concerned, yet a revocation by operation of law,
such as by death of the principal is, as a rule, instantaneously effective
inasmuch as "by legal fiction the agent's exercise of authority is regarded as an
execution of the principal's continuing will. With death, the principal's will
ceases or is the of authority is extinguished.
TRUST
ELIZA ZUNIGA-SANTOS,* represented by her Attorney-in Fact, NYMPHA Z. SALES v
MARIA DIVINA GRACIA SANTOS-GRAN** and REGISTER OF DEEDS OF MARIKINA
CITY, G.R No. 197380, October 8, 2014. J. PERLAS-BERNABE.
To determine when the prescriptive period commenced in an action for reconveyance, the
plaintiffs possession of the disputed property is material. If there is an actual need to
reconvey the property as when the plaintiff is not in possession, the action for
reconveyance based on implied trust prescribes in ten (10) years, the reference point being
the date of registration of the deed or the issuance of the title. On the other hand, if the real
owner of the property remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him and in such case, the
action for reconveyance would be in the nature of a suit for quieting of title which is
imprescriptible.
Having alleged the commission of fraud by Gran in the transfer and registration of the
subject properties in her name, there was, in effect, an implied trust created by operation of
law pursuant to Article 1456 of the Civil Code.
Here, the filing of the complaint was beyond the 10-year prescriptive period, warranting
the dismissal of the complaint.

71

HEIRS OF VALENTIN BASBAS, ANSELMA B. ENDRINAL, GERTRUD ES BASBAS,

RUFINA BASBAS, CEFERINA B. CARTECIANO, ANACLETO BASBAS, ARSENIA
BASBAS, ANASTACIO BASBAS, BEDACIO BASBAS, TEODOCIA B. OCAMPO,
SEGUNDO C. BASBAS, MARIA B. RAMOS AND EUGENIO BASBAS IN
REPRESENTATION OF PEDRO BASBAS; HERINO T. BASBAS AND NESTOR T.
BASBAS IN REPRESENTATION OF LUCAS BASBAS; ADELAIDA B. FLORENTINO,
RODRIGO BASBAS, FELIX BASBAS, JR., TEODULO BASBAS, ANDRESITO
BASBAS, LARRY BASBAS AND JOEY BASBAS IN REPRESENTATION OF FELIX
BASBAS, SR., VICTOR BEATO, ALIPIO BEATO, EUTIQUIO BEATO, JULIANA B.
DIAZ, PABLO BEATO AND ALEJANDRO BEATO IN REPRESENTATION OF
REMIGIA B. BEATO, AS REPRESENTED BY RODRIGO BASBAS V RICARDO
BASBAS as represented by EUGENIO BASBAS, G.R No. 188773, Septembe r 10, 2014. J.
PEREZ
Based on the evidence on hand, defendants including herein respondent Ricardo acquired
the property in question through fraud and, therefore, an implied trust was created in favor
of petitioners under Article 1456 of the New Civil Code.
Since a constructive trust was created, [petitioners] have the right to recover the property
subject of this action. The fact that the decision of the RTC, Bian, Laguna
approving/granting the petition for the reconstitution of the title covering Lot No. 39 and
said decision has obtained its finality, is of no moment. It has been held: "the rule that
registration of real property under the Torrens System has the effect of constructive notice
to the whole world cannot be availed of when the purpose of the action is to compel a
trustee to convey the property registered in his name for the benefit of the cestui que trust.
In other words, the defense of prescription cannot be set up in an action to enforce a trust.
JOSE JUAN TONG, ET AL. vs. GO TIAT KUN, ET AL., G.R. No. 196023, April 21, 2014,
J.Reyes
The Court is in conformity with the finding of the trial court that an implied resulting trust
was created as provided under the first sentence of Article 1448which is sometimes
referred to as a purchase money resulting trust, the elements of which are: (a) an actual
payment of money, property or services, or an equivalent, constituting valuable
consideration; and (b) such consideration must be furnished by the alleged beneficiary of a
resulting trust. In this case, the petitioners have shown that the two elements are present.
Luis, Sr. was merely a trustee of Juan Tong and the petitioners in relation to the subject
property, and it was Juan Tong who provided the money for the purchase of Lot 998 but
the corresponding transfer certificate of title was placed in the name of Luis, Sr.
COM PROM ISE
DOA ADELA EXPORT INTERNATIONAL, INC., vs. TRADE AND INVESTMENT
DEVELOPMENT CORPORATION (TIDCORP), AND THE BANK OF THE PHILIPPINE
ISLANDS, G.R. No. 201931, February 11, 2015, J. Villarama
72

Petitioner did not sign the compromise agreement. The Supreme Court held that it is basic
in law that a compromise agreement, as a contract, is binding only upon the parties to the
compromise, and not upon non-parties. This is the doctrine of relativity of contracts. The
rule is based on Article 1311 (1) of the Civil Code which provides that contracts take effect
only between the parties, their assigns and heirs. The sound reason for the exclusion of
non-parties to an agreement is the absence of a vinculum or juridical tie which is the
efficient cause for the establishment of an obligation. Consistent with this principle, a
judgment based entirely on a compromise agreement is binding only on the parties to the
compromise the court approved, and not upon the parties who did not take part in the
compromise agreement and in the proceedings leading to its submission and approval by
the court.

I.Definition
Air Transportation Office v. Gopuco, Jr., G.R. NO. 158563. June 30, 2005
A compromise agreement, when not contrary to law, public order, public policy,
morals, or good customs, is a valid contract which is the law between the
parties. It is a contract perfected by mere consent, whereby the parties,
making reciprocal concessions, avoid litigation or put an end to one already
commenced. It has the force of law and is conclusive between the parties, and
courts will not relieve parties from obligations voluntarily assumed, simply
because their contracts turned out to be unwise
II.Void Compromise
SERCONSISION R. MENDOZA vs. AURORA MENDOZA FERMIN, G.R. No. 177235, July 7,
2014, J. Peralta

Fermin filed a case for Annulment of Deed of Absolute Sale, Transfer Certificate of Title and
Damages alleging that the signature of her father was forged. While the Court recognize
that the technical nature of the procedure in examining forged documents calls for
handwriting experts, resort to these experts is not mandatory or indispensable, because a
finding of forgery does not depend entirely on their testimonies. Judges must also exercise
independent judgment in determining the authenticity or genuineness of the signatures in
question, and not rely merely on the testimonies of handwriting experts.
Uy vs. Chua, G.R. NO. 183965, September 18, 2009

73

Like any other contract, a compromise agreement must comply with the
requisites in Article 1318 of the Civil Code, to wit: (a) consent of the
contracting parties; (b) object certain that is the subject matter of the contract;
and (c) cause of the obligation that is established. And, like any other contract,
the terms and conditions of a compromise agreement must not be contrary to
law, morals, good customs, public policy and public order. Any compromise
agreement that is contrary to law or public policy is null and void, and vests no
rights in and holds no obligation for any party. It produces no legal effect at
all.
Rivero vs. Court of Appeals, G.R. NO. 141273, M ay 17, 2005
Article 2035(1) of the New Civil Code provides that no compromise upon the
civil status of persons shall be valid. As such, paternity and filiation, or the
lack of the same, is a relationship that must be judicially established, and it is
for the court to determine its existence or absence. It cannot be left to the will
or agreement of the parties.
III.Effect
Philippine National Oil Company-Energy Development Corporation (PNOCEDC) v. Abella, G.R. NO. 153904, January 17, 2005
A compromise once approved by final orders of the court has the force of res
judicata between the parties and should not be disturbed except for vices of
consent or forgery. Hence, a decision on a compromise agreement is final and
executory. Such agreement has the force of law and is conclusive on the
parties. It transcends its identity as a mere contract binding only upon the
parties thereto, as it becomes a judgment that is subject to execution in
accordance with the Rules. Judges therefore have the ministerial and
mandatory duty to implement and enforce it. Hence, compromise agreements
duly approved by the courts are considered the decisions in the particular
cases they involve.

CREDIT TRANSAC TIO NS

CREDIT
I. LOAN

74

PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS,

ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SANTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
The contractual relationship between banks and their depositors is governed by the Civil
Code provisions on simple loan. Once a person makes a deposit of his or her money to the
bank, he or she is considered to have lent the bank that money. The bank becomes his or
her debtor, and he or she becomes the creditor of the bank, which is o bligated to pay him or
her on demand.
LAND BANK OF THE PHILIPPINES VS. EMMANUEL OATE G.R. No. 192371, J. Del
Castillo
Land Bank unilaterally offset the funds of the respondent without legal justification and
commit undocumented withdrawals from the said fund. The SC held that the same was
tantamount to a forbearance of money and considered it as an involuntary loan.
CONTRACT OF LOAN
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA
AND EDUAROSA REALTY DEVELOPMENT, INC., G.R. No. 195889, September 24, 2014,
J. Mendoza
The agreement between PNB and [Spouses Tajonera] was one of a loan. Under the law, a
loan requires the delivery of money or any other consumable object by one party to
another who acquires ownership thereof, on the condition that the same amount or quality
shall be paid. Loan is a reciprocal obligation, as it arises from the same cause where one
party is the creditor, and the other the debtor. The obligation of one party in a reciprocal
obligation is dependent upon the obligation of the other, and the performance should
ideally be simultaneous. This means that in a loan, the creditor should release the full loan
amount and the debtor repays it when it becomes due and demandable.

PNB, not having released the balance of the last loan proceeds in accordance with the 3rd
Amendment had no right to demand from [Spouses Tajoneras] compliance with their own
obligation under the loan. Indeed, if a party in a reciprocal contract like a loan does not
perform its obligation, the other party cannot be obliged to perform what is expected of
them while the other's obligation remains unfulfilled.
PHILIPPINE NATIONAL BANK vs. SPOUSES EDUARDO AND MA. ROSARIO TAJONERA
and EDUAROSA REALTY DEVELOPMENT, INC.G.R. No. 195889, September 24, 2014, J.
Mendoza
75

A loan requires the delivery of money or any other consumable object by one party to
another who acquires ownership thereof, on the condition that the same amount or quality
shall be paid. Loan is a reciprocal obligation, as it arises from the same cause where one
party is the creditor, and the other the debtor. The obligation of one party in a reciprocal
obligation is dependent upon the obligation of the other, and the performance should
ideally be simultaneous. This means that in a loan, the creditor should release the full loan
amount and the debtor repays it when it becomes due and demandable.

CHECKS
NEIL B. AGUILAR AND RUBEN CALIMBAS vs. LIGHTBRINGERS CREDIT
COOPERATIVE, G.R. No. 209605, January 12, 2015, J. Mendoza
The Court holds that there was indeed a contract of loan between the petitioners and
respondent. The signatures of the petitioners were present on both the PNB checks and the
cash disbursement vouchers. The checks were also made payable to the order of the
petitioners. The Court pointed out that a check functions more than a promissory note
since it not only contains an undertaking to pay an amount of money but is an "order
addressed to a bank and partakes of a representation that the drawer has funds on de posit
against which the check is drawn, sufficient to ensure payment upon its presentation to the
bank."
BONEVIE vs CA, G.R. NO. L-49101 October 24, 1983
Petitioner assails the validity of the mortgage between Lozano and PBCOM
arguing that on the day the deed was executed there was yet no principal
obligation to secure as the loan of P75,000.00 was not received by the Lozano
spouses, so that in the absence of a principal obligation, there is want of
consideration in the accessory contract, which consequently impairs its validity
and fatally affects its very existence. A contract of loan being a consensual
contract, said contract of loan was perfected at the same time the contract of
mortgage was executed, and the promissory note is only an evidence of
indebtedness and does not indicate lack of consideration of the mortgage at the
time of its execution.
SAURA IMPORT and EXPORT CO., INC. vs. DEVELOPMENT BANK OF THE
PHILIPPINES, G.R. NO. L-24968, April 27, 1972

76

The trial court rendered judgment for the plaintiff, ruling that there was a
perfected contract between the parties when the application of Saura, Inc. for a
loan was approved by resolution of the defendant, and the corresponding
mortgage was executed and registered and that the defendant was guilty of
breach thereof.
An accepted promise to deliver something, by way of commodatum or simple
loan is binding upon the parties, but the commodatum or simple loan itself
shall not be perferted until the delivery of the object of the contract.
FRANCISCO HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L -48349,
December 29, 1986
Pursuant to a contract, the defendant-appellee paid to the plaintfff-appellant
advance rentals for the first eight years, subtracting therefrom the amount of
the interest or discount for the first eight years, Plaintiff-appellant insists that
the lower court erred in the computation of the interest collected out of the
rentals paid for the first eight years; that such interest was excessive and
violative of the Usury Law.
The contract between the parties is one of lease and not of loan since the
provision for the payment of rentals in advance cannot be construed as a
repayment of a loan because there was no grant or forbearance of money as to
constitute an indebtedness on the part of the lessor, hence usury law will not
apply.
PNB vs. CA, G.R. NO. 75223, M arch 14, 1990
An escalation clause is a valid provision in the loan agreement provided that
(1) the increased rate imposed or charged does not exceed the ceiling fixed by
law or the Monetary Board; (2) the increase is made effective not earlier than
the effectivity of the law or regulation authorizing such an increase; and (3) the
remaining maturities of the loans are more than 730 days as of the effectivity of
the law or regulation authorizing such an increase.
ART 1249
SPOUSES TAGUMPAY N. ALBOS AND AIDA C. ALBOS vs. SPOUSES NESTOR M. EMBISAN
AND ILUMINADA A. EMBISAN, DEPUTY SHERIFF MARINO V. CACHERO, AND THE
REGISTER OF DEEDS OF QUEZON CITY, G.R. No. 210831, November 26, 2014, J.
Velasco Jr.
The compounding of interest should be in writing. Article 1956 of the New Civil Code,
which refers to monetary interest provides that No interest shall be due unless it has been
expressly stipulated in writing. As mandated by the foregoing provision, payment of
77

monetary interest shall be due only if: (1) there was an express stipulation for the payment
of interest; and (2) the agreement for such payment was reduced in writing.
The imposition of an unconscionable rate of interest on a money debt, even if knowingly
and voluntarily assumed, is immoral and unjust.
In the case at bar, it is undisputed that the parties have agreed for the loan to earn 5%
monthly interest, the stipulation to that effect put in writing. When the petitioners
defaulted, the period for payment was extended, carrying over the terms of the original
loan agreement, including the 5% simple interest. However, by the third extension of the
loan, respondent spouses decided to alter the agreement by changing the manner of
earning interest rate, compounding it beginning June 1986. This is apparent from the
Statement of Account prepared by the spouses Embisan themselves. Thus, Spouses
Embisan, having imposed, unilaterally at that, the compounded interest rate, had the
correlative duty of clarifying and reducing in writing how the said interest shall be earned.
Having failed to do so, the silence of the agreement on the manner of earning interest is a
valid argument for prohibiting them from charging interest at a compounded rate.

MCMP CONSTRUCTION CORP. VS. MONARK EQUIPMENT CORP. G.R. No. 201001.
November 10, 2014, J. Velaso Jr.
The interest rate of 24% per annum, penalty and collection charge of 3% or 36 % per
annum on rental fees provided by invoices for the lease of heavy equipment was found by
the court to be iniquitous, unconscionable and therefore void. Although C.B. Circular No.
905-82, which took effect on January 1, 1983, effectively removed the ceiling on interest
rates for both secured and unsecured loans, regardless o f maturity, nothing in the said
circular could possibly be read as granting carte blanche authority to lenders to raise
interest rates to levels which would either enslave their borrowers or lead to a
hemorrhaging of their assets. Therefore the rates may be validly reduced by the court.
SUN LIFE OF CANADA (PHILIPPINES), INC. vs. SANDRA TAN KIT and The Estate of the
Deceased NORBERTO TAN KIT, G.R. No. 183272, October 15, 2014, J. Del Castillo
Monetary interest refers to the compensation set by the parties for the use or forbearance
of money. No such interest shall be due unless it has been expressly stipulated in writing.
On the other hand, compensatory interest refers to the penalty or indemnity for damages
imposed by law or by the courts. This being the case and judging from the tenor of the CA,
there can be no other conclusion than that the interest imposed by the appellate -court is in
the nature of compensatory interest.
ROLANDO C. DE LA PAZ vs. L & J DEVELOPMENT COMPANY, G.R. No. 183360,
September 8, 2014, J. Del Castillo

78

When a person granted an unsecured loan without a maturity date in favor of a corporation
and its president and general manager (who is a lawyer) without reducing the loan
transaction in writing, the creditor cannot enforce payment of 6% monthly interest. The
payments of the debtor to the creditor must be considered as payment of the principal
amount of the loan because Article 1956 was not complied with. In addition, e ven if the
interest was in writing, it cannot be collected because it is unconscionable.
ANCHOR SAVINGS BANK vs. PINZMAN REALTY AND DEVELOPMENT CORPORATION,
MARYLIN MANALAC AND RENATO GONZALES, G.R. No. 192304, August 13, 2014, J.
Villarama Jr.
Foreclosure sale arising from a usurious mortgage cannot be given legal effect. This Court
has previously struck down a foreclosure sale where the amount declared as mortgage
indebtedness involved excessive, unreasonable, and unconscionable interest charges. In no
uncertain terms, this Court ruled that a mortgagor cannot be legally compelled to pay for a
grossly inflated loan. In the case at bar, the unlawful interest charge which led to the
amount demanded will result to the invalidity of the subsequent foreclosure sale.

ECE REALTY and DEVELOPMENT, INC. vs. HAYDYN HERNANDEZ, G.R. No. 212689,
August 6, 2014, J. Reyes
There is no doubt that ECE incurred in delay in delivering the subject condominium unit,
for which reason the trial court was justified in awarding interest to Hernandez from the
filing of his complaint. There being no stipulation as to interest, under Article 2209 the
imposable rate is six percent (6%) by way of damages. Section 1 of Resolution No. 796 of
the Monetary Board of the Bangko Sentral ng Pilipinas dated May 16, 2013 provides: "The
rate of interest for the loan or forbearance of any money, goods or credits and the rate
allowed in judgments, in the absence of an express contract as to such rate of interest, shall
be six percent (6%) per annum." Thus, the rate of interest to be imposed from finality of
judgments is now back at six percent (6%), the rate provided in Article 2209 of the Civil
Code.
CONRADO A. LIM vs. HMR PHILIPPINES, INC., TERESA SANTOS-CASTRO, HENRY
BUNAG AND NELSON CAMILLER, G.R. No. 201483, August 04, 2014, J. Mendoza
Lim argues that legal interest in accordance with the case of Eastern Shipping must also be
awarded. The rules on legal interest in Eastern Shipping have, however, been recently
modified by Nacar in accordance with Bangko Sentral ng Pilipinas Monetary Board (BSPMB) Circular No. 799, which became effective on July 1, 2013. Pertinently, it amended the
rate of legal interest in judgments from 12% to 6% per annum, with the qualification that
the new rate be applied prospectively. Thus, the 12% per annum legal interest in

79

judgments under Eastern Shipping shall apply only until June 30, 2013, and the new rate of
6% per annum shall be applied from July 1, 2013 onwards.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045,
July 2, 2014. J. DEL CASTILLO
Since the escalation clause was annulled for being violative of the mutuality principle, the
principal amount of the loan is subject to the original or stipulated rate of interest, and
upon maturity, the amount due shall be subject to legal interest at the rate of 12% per
annum.
ESTANISLAO AND AFRICA SINAMBAN VS. CHINA BANKING CORPORATION G.R. No.
193890. March 11, 2015, J. REYES
The subject three PNs bear interests ranging from 21% to 23% per annum, exclusive of
penalty of 1% on the overdue amount per month of delay, whereas in its complaint,
Chinabank prayed to recover only the legal rate of 12% on whatever judgment it could
obtain. Meanwhile, the Monetary Board of the Bangko Sentral ng Pilipinas in its Resolution
No. 796 dated May 16, 2013, and now embodied in Monetary Board Circular No. 799, has
effective July 1, 2013 reduced to 6%, from 12%, the legal rate of interest for the loan or
forbearance of any money, goods or credits and the rate allowed in judgments, in the
absence of stipulation. Since Chinabank demanded only the legal, not the stipulated,
interest rate on the deficiency and attorneys fees due, the defendants will solidarily pay
interest on their shares in the deficiency at the rate of 12% from November 18, 1998 to
June 30, 2013, and 6% from July 1, 2013 until fully paid.
ILEANA DR. MACALINAO vs BANK OF THE PHILIPPINE ISLANDS, G.R. NO.
175490, September 17, 2009
In its Complaint, respondent BPI originally imposed the interest and penalty
charges at the rate of 9.25% per month or 111% per annum which was
declared as unconscionable by the lower courts for being clearly excessive, and
was thus reduced to 2% per month or 24% per annum but which the CA
modified increased them to 3% per month or 36% per annum based on the
Terms and Conditions Governing the Issuance and Use of the BPI Credit Card,
which governs the transaction between petitioner Macalinao and respondent
BPI.
The courts may reduce the interest rate as reason and equity demand, for
stipulations demanding interest excessive, iniquitous, unconscionable and
exorbitant interest rates are void for being contrary to morals, if not against the
law.
COMMODATUM
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CATHOLIC VICAR APOSTOLIC

September 21, 1988

CHURCH

vs.

CA,

G.R.

L-80294-95,

When respondents allowed the free use of the property they became bailors in
commodatum and the petitioner the bailee. The bailees' failure to return the
subject matter of commodatum to the bailor did not mean adverse possession
on the part of the borrower. The bailee held in trust the property subject matter
of commodatum. Hence, an adverse claim could not ripen into title by way of
ordinary acquisitive prescription because of the absence of just title.
REPUBLIC OF THE PHILIPPINES vs BAGTAS, G.R. NO. L-17474, October
25, 1962
The appellant had been in possession of the bull even after the expiration of the
contract. He contends, however, that since the contract was commodatum the
appellee retained ownership or title to the bull. Hence, it should suffer its loss
due to force majeure.
A contract of commodatum is essentially gratuitous. If the breeding fee be
considered a compensation, then the contract would be a lease of the bull.
Under article 1671 of the Civil Code the lessee would be subject to the
responsibilities of a possessor in bad faith, because she had continued
possession of the bull after the expiry of the contract. And even if the contract
be commodatum, still the appellant is liable, because article 1942 of the Civil
Code provides that a bailee in a contract of commodatum
. . . is liable for loss of the things, even if it should be through a fortuitous
event:
(2) If he keeps it longer than the period stipulated . . .
(3) If the thing loaned has been delivered with appraisal of its value, unless
there is a stipulation exempting the bailee from responsibility in case of a
fortuitous event; xxx
REPUBLIC OF THE PHILIPPINES vs. CA, G.R. NO. L -46145 November 26,
1986
The disputed property is private land and this possession was interrupted on ly
by the occupation of the land by the U.S. Navy which eventually abandoned the
premises. The heirs of the late Baloy, are now in actual possession, and this
has been so since the abandonment by the U.S. Navy.
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The occupancy of the U.S. Navy partakes of the character of a commodatum,

and one's ownership of a thing may be lost by prescription by reason of
another's possession if such possession be under claim of ownership, not
where the possession is only intended to be transient, in which case the owner
is not divested of his title, although it cannot be exercised in the meantime.
MUTUUM
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. COURT OF APPEALS, G.R. NO. L -60907,
June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.
REPUBLIC OF THE PHILIPPINES vs. GRIJALDO, G.R. NO. L -20240,
December 31, 1965
The appellant maintains that because the loans were secured by a chattel
mortgage on the standing crops on a land owned by him and these crops were
lost or destroyed through enemy action his obligation to pay the loans was
thereby extinguished.
The chattel mortgage on the crops growing on appellant's land simply stood as
a security for the fulfillment of appellant's obligation, which is the payment of
the loan. The loss of the crops did not extinguish his obligation to pay, because
his obligation, as a simple loan or mutuum, was to pay a generic thing, the
amount of money with interest.
HERRERA vs. PETROPHIL CORPORATION, G.R. NO. L -48349 December
29, 1986
The difference between a discount and a loan or forbearance is that the former
does not have to be repaid. The loan or forbearance is subject to repayment
and is therefore governed by the laws on usury.
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BRIONES vs. CAMMAYO, G.R. NO. L-23559, October 4, 1971

In simple loan with stipulation of usurious interest, the prestation of the debtor
to pay the principal debt, which is the cause of the contract is not illegal. The
illegality lies only as to the prestation to pay the stipulated interest. Hence,
being separable, the latter only should be deemed void, since it is the only one
that is illegal.
II. DEPOSIT
INTEGRATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
OVERSEAS BANK OF MANILA vs. CA, G.R. NO. L -60907, June 28, 1989
OBM contends that it had agreed to pay interest only up to the dates of
maturity of the certificates of time deposit and that respondent Santos is not
entitled to interest after the maturity dates had expired, unless the contracts
are renewed. When respondent invested his money in time deposits with OBM
they entered into a contract of simple loan or mutuum, not a contract of
deposit.
BPI vs. CA, G.R. NO. L-66826 August 19, 1988
The document which embodies the contract states that the US$3,000.00 was
received by the bank for safekeeping. A deposit is constituted from the
moment a person receives a thing belonging to another, with the obligation of
safely keeping it and of returning the same, but if the safekeeping of the thing
delivered is not the principal purpose of the contract, there is no deposit but
some other contract.
BPI vs. CA, G.R. NO. 104612, M ay 10, 1994
Bank deposits are in the nature of irregular deposits; they are really loans
because they earn interest. The relationship then between a depositor and a
bank is one of creditor and debtor, and the deposit under the questioned
account was an ordinary bank deposit; hence, it was payable on demand of the
depositor.
SERRANO vs. CENTRAL BANK OF THE PHILIPPINES, G.R. NO. L -30511,
February 14, 1980
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All kinds of bank deposits, whether fixed, savings, or current are to be treated
as loans and are to be covered by the law on loans because it can use the
same. Failure of he respondent Bank to honor the time deposit is failure to pay
s obligation as a debtor and not a breach of trust arising from depositary's
failure to return the subject matter of the deposit
WAREHOUSE RECEIPT LAW
LUA KIAN vs. MANILA RAILROAD COMPANY, G.R. NO. L-23033, January
5, 1967
The legal relationship between an arrastre operator and the consignee is akin
to that of a depositor and warehouseman. As a custodian of the goods
discharged from the vessel, it was defendant arrastre operator's duty, like that
of any ordinary depositary, to take good care of the goods and to turn them
over to the party entitled to their possession. Under this particular set of
circumstances, said defendant should have withheld delivery because of the
discrepancy between the bill of lading and the markings and conducted its own
investigation, not unlike that under Section 18 of the Warehouse Receipts Law,
or called upon the parties, to interplead, such as in a case under Section 17 of
the same law, in order to determine the rightful owner of the goods.
TRUST RECEIPT
VINTOLA vs. INSULAR BANK OF ASIA AND AMERICA, G.R. NO. 73271,
May 29, 1987
A trust receipt is considered as a security transaction intended to aid in
financing importers and retail dealers who do not have sufficient funds or
resources to finance the importation or purchase of merchandise, and who may
not be able to acquire credit except through utilization, as collateral of the
merchandise imported or purchased.
III. GUARANTY AND SURETYSHIP
SURETY
OFFICE OF THE OMBUDSMAN, vs. AMALIO A. MALLARI, G.R. No. 183161, December
03, 2014, J. Mendoza
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Mallari was administratively charged due to the fact the he approved surety bond in favor
of ECOBEL without consideration of the policies by GSIS. The court finds substantial
evidence to prove Mallaris administrative liability. The Court notes that irregularities,
defects and infirmities attended the processing, approval, issuance, and the actual
drawdown of the US$10,000,000.00 ECOBEL bond in which Mallari actively participated. In
a letter, dated September 13, 2002, to the FFIB, Mr. Reynaldo R. Nograles, OIC-Office of the
President, Internal Audit Service, GSIS, attached a copy of the excerpts from the Final
Report on the GSIS Audit of Underwriting Departments. Said Audit Report found that: there
was non-adherence to existing policies/SOPs in the processing and release of the Ecobel
Land, Inc. guaranty payment bond, as well as non-adherence to GSIS GIGs business policy
statement on survey, inspection or assessment of risks/properties to be insured including
re-inspection and survey of insured properties.

CENTENNIAL GUARANTEE ASSURANCE CORPORATION vs. UNIVERSAL MOTORS

CORPORATION, RODRIGO T. JANEO, JR., GERARDO GELLE, NISSAN CAGAYAN DE ORO
DISTRIBUTORS, INC., JEFFERSON U. ROLIDA, and PETER YAP, G.R. No. 189358, October 8,
2014, J. Perlas-Bernabe.

Verily, in a contract of suretyship, one lends his credit by joining in the principal debtors
obligation so as to render himself directly and primarily responsible with him, and without
reference to the solvency of the principal. Thus, execution pending appeal against NSSC
means that the same course of action is warranted against its surety, CGAC. The same
reason stands for CGACs other principal, Orimaco, who was determined to have
permanently left the country with his family to evade execution of any judgment against
him.
PEOPLE'S TRANS-EAST ASIA INSURANCE CORPORATION, a.k.a. PEOPLE'S GENERAL
INSURANCE CORPORATIONvs. DOCTORS OF NEW MILLENNIUM HOLDINGS, INC., G.R.
No. 172404, August 13, 2014, J. Leonen
The liabilities of an insurer under the surety bond are not extinguished when the
modifications in the principal contract do not substantially or materially alter the
principal's obligations. The surety is jointly and severally liable with its principal when the
latter defaults from its obligations under the principal contract. On the basis of petitioners
own admissions, the principal contract of the suretyship is the signed agreement. The
surety, therefore, is presumed to have acquiesced to the terms and conditions embodied in
the principal contract when it issued its surety bond.
GILAT SATELLITE NETWORKS, LTD vs. UNITED COCONUT PLANTERS BANK GENERAL
INSURANCE CO., INC., G.R. No. 189563, April 7, 2014, CJ. Sereno
In suretyship, the oft-repeated rule is that a suretys liability is joint and solidary with that
of the principal debtor. This undertaking makes a surety agreement an ancillary contract,
85

as it presupposes the existence of a principal contract. Nevertheless, although the contract

of a surety is in essence secondary only to a valid principal obligation, its liability to the
creditor or "promise" of the principal is said to be direct, primary and absolute; in other
words, a surety is directly and equally bound with the principal. He becomes liable for the
debt and duty of the principal obligor, even without possessing a direct or personal interest
in the obligations constituted by the latter. Thus, a surety is not entitled to a separate notice
of default or to the benefit of excussion. It may in fact be sued separately or together with
the principal debtor.
After a thorough examination of the pieces of evidence presented by both parties, the RTC
found that Gilathad delivered all the goods to One Virtual and installed them. Despite these
compliances, One Virtual still failed to pay its obligation, triggering UCPBs liability to Gilat
as the formers surety. In other words, the failure of One Virtual, as the principal debtor, to
fulfill its monetary obligation to Gilat gave the latter an immediate right to pursue UCPB as
the surety.
YULIM INTERNATIONAL COMPANY LTD., JAMES YU, JONATHAN YU, and ALMERICK
TIENG LIM vs. INTERNATIONAL EXCHANGE BANK (now Union Bank of the
Philippines), G.R. No. 203133, February 18, 2015, J. Reyes
A surety is considered in law as being the same party as the debtor in relation to whatever
is adjudged touching the obligation of the latter, and their liabilities are interwoven as to be
inseparable. And it is well settled that when the obligor or obligors undertake to be
jointly and severally liable, it means that the obligation is solidary, as in this case.
TRADE AND INVESTMENT DEVELOPMENT CORPORATION OF THE PHILIPPINES
(Formerly PHILIPPINE EXPORT AND FOREIGN LOAN GUARANTEE
CORPORATION VS. ASIA PACES CORPORATION, PACES INDUSTRIAL
CORPORATION, NICOLAS
C.
BALDERRAMA,
SIDDCOR
INSURANCE
CORPORATION, G.R. No. 187403 February 12, 2014, J. Perlas-Bernabe
A surety is an insurer of the debt, whereas a guarantor is an insurer of the solvency of the
debtor. A suretyship is an undertaking that the debt shall be paid; a guaranty, an
undertaking that the debtor shall pay. Stated differently, a surety promises to pay the
principals debt if the principal will not pay, while a guarantor agrees that the creditor,
after proceeding against the principal, may proceed against the guarantor if the principal is
unable to pay. A surety binds himself to perform if the principal does no t, without regard to
his ability to do so. A guarantor, on the other hand, does not contract that the principal will
pay, but simply that he is able to do so. In other words, a surety undertakes directly for the
payment and is so responsible at once if the principal debtor makes default, while a
guarantor contracts to pay if, by the use of due diligence, the debt cannot be made out of
the principal debtor.

86

Article 2079 of the Civil Code provides that "[a]n extension granted to the debtor by the
creditor without the consent of the guarantor extinguishes the guaranty," equally applies to
both contracts of guaranty and suretyship.
STRONGHOLD INSURANCE COMPANY, INC., vs. SPOUSES RUNE AND LEA
STROEM, G.R. No. 204689, January 21, 2015, J. Leonen
It is settled that a suretys solidary obligation for the performance of the principal debtors
obligation is indirect and merely secondary. Nevertheless, the suretys liability to the
creditor or promisee of the principal is said to be direct, primary and absolute; in other
words, he is directly and equally bound with the principal. In enforcing a surety contract,
the complementary-contracts-construed-together doctrine finds application. According to
this principle, an accessory contract must be read in its entirety and together with the
principal agreement, as provided in Article 1374.

GUARANTY
HOME GUARANTY CORPORATION, vs. LA SAVOIE DEVELOPMENT CORPORATION, G.R.
No. 168616, January 28, 2015, J. Leonen
Home Guaranty Corporation is a guarantor of La Savoie. Subsequently, La Savoie was
placed under receivership. The Supreme Court held that placing La Savoie under
receivership brings into operation the rule against preference of creditors. Home Guaranty
Corporation must submit itself, like La Savoie's other creditors, to how La Savoie's Petition
for Rehabilitation shall be resolved. As a paying guarantor, Home Guaranty Corporation
was subrogated into the rights of La Savoie's creditors and now stands as the latter's own
creditor.
COMMONWEALTH INSURANCE CORPORATION vs. CA, G.R. NO. 130886.
January 29, 2004
Petitioners liability under the suretyship contract is different from its liability
under the law. There is no question that as a surety, petitioner should not be
made to pay more than its assumed obligation under the surety bonds.
However, it is clear from the above-cited jurisprudence that petitioners liability
for the payment of interest is not by reason of the suretyship agreement itself
but because of the delay in the payment of its obligation under the said
agreement.
THE M ANILA INSURANCE CO INC vs SPOUSES AMURAO, G.R. NO. 179628,
January 16, 2013
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Petitioner imputes error on the part of the CA in treating petitioner as a

solidary debtor instead of a solidary guarantor and argues that while a surety
is bound solidarily with the obligor, this does not make the surety a solidary
co-debtor. A suretys liability is joint and several and although the contract of
suretyship is secondary to the principal contract, the suretys liability to the
obligee is nevertheless direct, primary, and absolute.

THE IMPERIAL INSURANCE, INC. vs. DE LOS ANGELES, G.R. NO. L -28030,
January 18, 1982
Imperial Insurance, Inc. bound itself solidarily with the principal, the deceased
defendant Reyes. In accordance with Article 2059, par. 2 of the Civil Code of
the Philippines, excussion (previous exhaustion of the property of the debtor)
shall not take place "if he (the guarantor) has bound himself solidarily with the
debtor," hence the petitioner cannot escape liability on its counter-bonds.
MANILA SURETY & FIDELITY CO., INC. vs. ALMEDA, G.R. NO. L -27249
July 31, 1970
There is no question that under the bonds posted in favor of the NAMARCO in
this case, the surety company assumed to make immediate payment to said
firm of any due and unsettled accounts of the debtor-principal, even without
demand and notice of the debtor's non-payment, the surety, in fact, agreeing
that its liability to the creditor shall be direct, without benefit of exhaustion of
the debtor's properties, and to remain valid and continuous until the
guaranteed obligation is fully satisfied. In short, appellant secured to the
creditor not just the payment by the debtor-principal of his accounts, but the
payment itself of such accounts. Clearly, a contract of suretyship was thus
created, the appellant becoming the insurer, not merely of the debtor's solvency
or ability to pay, but of the debt itself. Under the Civil Code, with the debtor's
insolvency having been judicially recognized, herein appellant's resort to the
courts to be released from the undertaking thus assumed would have been
appropriate.
RCBC vs. ARRO, G.R. NO. L-49401, July 30, 1982
The surety agreement which was earlier signed by Enrique and private
respondent, is an accessory obligation, it being dependent upon a principal one
which, in this case is the loan obtained by Daicor as evidenced by a promissory
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note. By the terms, it can be clearly seen that the surety agreement was
executed to guarantee future debts which Daicor may incur with petitioner
since a guaranty may also be given as security for future debts, the amount of
which is not yet known; there can be no claim against the guarantor until the
debt is liquidated.
REPUBLIC OF THE PHILIPPINES vs. PAL-FOX LUMBER CO., INC., G.R. NO.
L-26473, February 29, 1972
On whether the surety's liability can exceed the amount of its bond, it is
enough to remark that while the guarantee was for the original amount of the
debt of Gabino Marquez, the amount of the judgment by the trial court in no
way violates the rights of the surety. If it (the guaranty) be simple or indefinite,
it shall comprise not only the principal obligation but also all its accessories,
including judicial costs, provided with respect to the latter, that the guarantor
shall only be liable for those costs incurred after he has been judicially
required to pay.
IV. PLEDGE AND REAL MORTGAGE
ROLANDO ROBLES, REPRESENTED BY ATTY. CLARA C. ESPIRITU vs. FERNANDO FIDEL
YAPCINCO, PATROCINIO B. YAPCINCO, MARIA CORAZON B. YAPCINCO, and MARIA
ASUNCION B. YAPCINCO-FRONDA, G.R. No. 169569, October 22, 2014, J. Bersamin
The effect of the failure of Apolinario Cruz, the predecessor-in-interest of Rolando Robles,
petitioner to this case, to obtain the judicial confirmation was only to prevent the title to
the property from being transferred to him. For sure, such failure did not give rise to any
right in favor of the mortgagor or the respondents as his successors-in-interest to take back
the property already validly sold through public auction. Nor did such failure invalidate the
foreclosure proceedings. To maintain otherwise would render nugatory the judicial
foreclosure and foreclosure sale, thus unduly disturbing judicial stability.
RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO
PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451,
July 30, 2014. PERLAS-j. BERNABE

In this case, the bank claims that it should be deemed a mortgagee in good faith for having
conducted exhaustive investigations on the history of the mortgagors title.
However, the Court found this argument untenable. first, the doctrine of mortgagee in good
faith applies only to lands registered under the Torrens system and not to unregistered
lands, as the properties in suit; and second, the principle is inapplicable to banking
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institutions which are behooved to exercise greater care and prudence before entering into
a mortgage contract.
RURAL BANK OF CABADBARAN, INC. vs. JORGITA A. MELECIO-YAP, LILIA MELECIO
PACIFICO (deceased, substituted by her only child ERILL*ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R. No. 178451,
July 30, 2014, J. Perlas-Bernabe
When a bank relied on a forged SPA, it has the burden to prove its authenticity and due
execution as when there is a defect in the notarization of a document, the clear and
convincing evidentiary standard normally attached to a duly-notarized document is
dispensed with, and the measure to test the validity of such document is preponderance of
evidence.
However, where a mortgage is not valid due to a forged SPA, the principal obligation which
it guarantees is not thereby rendered null and void. What is lost is merely the right to
foreclose the mortgage as a special remedy for satisfying or settling the indebtedness
which is the principal obligation. In case of nullity, the mortgage deed remains as evidence
or proof of a personal obligation of the debtor and the amount due to the creditor may be
enforced in an ordinary action.
The partial invalidity of the subject real estate mortgage brought about by the forged status
of the subject SPA would not, therefore, result into the partial invalidation of the loan
obligation principally entered into by the parties; thus, absent any cogent reason to hold
otherwise, the need for the recomputation of said loan obligation should be dispensed with.
LEONARDO C. CASTILLO, represented by LENNARD V. CASTILLO vs. SECURITY BANK
CORPORATION, JRC POULTRY FARMS or SPOUSES LEON C. CASTILLO, JR., and
TERESITA FLORESCASTILLO, G.R. No. 196118, July 30, 2014, J. Peralta
In a real estate mortgage, allegations of forgery, like all other allegations, must be proved
by clear, positive, and convincing evidence by the party alleging it. But even if there is
variation on the date of issuance of the Community Tax Certificate (CTC) as indicated on
the notarization of the alleged SPA and on the day it was actually secured, such defect in the
SPA does not automatically render it invalid. Defective notarization will simply strip the
document of its public character and reduce it to a private instrument, but nonetheless,
binding, provided its validity is established by preponderance of evidence.
The law requires that the form of a contract that transmits or extinguishes real rights over
immovable property should be in a public document, yet the failure to observe the proper
form does not render the transaction invalid. The necessity of a public document for said
contracts is only for convenience; it is not essential for validity or enforceability.
PHILIPPINE NATIONAL BANK vs. JOSE GARCIA and CHILDREN et al., G.R. No. 182839,
June 2, 2014, J. Brion

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The Amendment of Real Estate Mortgage constituted by Jose Sr. over the entire property
without his co-owners' consent is not necessarily void in its entirety. The right of the PNB
as mortgagee is limited though only to the portion which may be allotted to Jose Sr. in the
event of a division and liquidation of the subject property. Registration of a property alone
in the name of one spouse does not destroy its conjugal nature. What is material is the time
when the property was acquired.
METROPOLITAN FABRICS INC. ET AL. VS. PROSPERITY CREDIT RESOURCES ENC. ET AL. G.R.
No. 154390 March 17, 2014, J. Bersamin

Contrary to their modified defense of absence of consent, the testimony adduced tended at
best to prove the vitiation of their consent through insidious words, machinations or
misrepresentations amounting to fraud, which showed that the contract of mortgage was
voidable. Where the consent was given through fraud, the contract was voidable, not void
ab initio. This is because a voidable or annullable contract is existent, valid and binding,
although it can be annulled due to want of capacity or because of the vitiated consent of
one of the parties.
ATTY. LEO N. CAUBANG vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
In an extrajudicial foreclosure of a real estate mortgage, failure to comply with the
publication requirement by the mortgagee brought by the failure of its lawyer to make an
effort to inquire as to whether the Oriental Daily Examiner was indeed a newspaper of
general circulation, as required by law, and as a result, the mortgagee became the sole
bidder, will invalidate the notice and render the sale voidable. The principal object of a
notice of sale in a foreclosure of mortgage is to notify the mortgagor and to inform the
public generally of the nature and condition of the property to be sold, and of the time,
place, and terms of the sale. These are given to secure bidders and prevent a sacrifice of
the property.
SPOUSES JOSE O. GATUSLAO AND ERMILA LEONILA LIMSIACO-GATUSLAO vs. LEO RAY
V. YANSON, G.R. No. 191540, January 21, 2015, J. Del Castillo
Yanson, as a transferee or successor-in-interest of PNB by virtue of the contract of sale
between them, is considered to have stepped into the shoes of PNB. As such, he is
necessarily entitled to avail of the provisions of Section 7 of Act No. 3135. Verily, one of the
rights that PNB acquired as purchaser of the subject properties at the public auction sale,
which it could validly convey by way of its subsequent sale of the same to respondent, is
the availment of a writ of possession. This can be deduced from the stipulation that the
vendee further agrees to undertake, at xxx his expense, the ejectment of any occupant of
the property. Accordingly, Yanson filed the contentious ex parte motion for a writ of
possession to eject Spouses Gatuslao therefrom and take possession of the subject
properties.
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Further, respondent may rightfully take possession of the subject properties through a wr it
of possession, even if he was not the actual buyer thereof at the public auction sale, in
consonance with the Courts ruling in Ermitao v. Paglas. The Court ruled that after the
expiration of the redemption period without redemption having been made by petitioner,
respondent became the owner thereof and consolidation of title becomes a right. Being
already then the owner, respondent became entitled to possession. Petitioner already lost
his possessory right over the property after the expiration of the said period.
DEVELOPMENT BANK OF THE PHILIPPINES vs. GUARINA AGRICULTURAL AND
REALTY DEVELOPMENT CORPORATION, G.R. No. 160758, JANUARY 15, 2014, J.
Bersamin
Guarina executed a real estate mortgage over several real properties in favor of DBP as
security for a loan. However, before the loan was due, DBP foreclosed upon the mortgage.
The Supreme Court held that foreclosure of a mortgage prior to the mortgagor's default on
the principal obligation is premature, and should be undone for being void and ineffec tual.
The mortgagee who has been meanwhile given possession of the mortgaged property by
virtue of a writ of possession issued to it as the purchaser at the foreclosure sale may be
required to restore the possession of the property to the mortgagor and to pay reasonable
rent for the use of the property during the intervening period.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L -45710 October
3, 1985
The fact that when Sulpicio M. Tolentino executed a real estate mortgage, no
consideration was then in existence, as there was no debt yet because Island
Savings Bank had not made any release on the loan, does not make the real
estate mortgage void for lack of consideration. It is not necessary that any
consideration should pass at the time of the execution of the contract of real
mortgage, it may either be a prior or subsequent matter, but when the
consideration is subsequent to the mortgage, the mortgage can take effect only
when the debt secured by it is created as a binding contract to pay.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
INTEG.R.ATED REALTY CORPORATION vs. PHILIPPINE NATIONAL BANK,
G.R. NO. L-60705, June 28, 1989
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OVERSEAS BANK OF MANILA vs.CA, G.R. NO. L -60907 June 28, 1989
The facts and circumstances leading to the execution of the deed of
assignment, has satisfied the requirements of a contract of pledge (1) that it be
constituted to secure the fulfillment of a principal obligation; (2) that the
pledgor be the absolute owner of the thing pledged; (3) that the persons
constituting the pledge have the free disposal of their property, and in the
absence thereof, that they be legally authorized for the purpose. The further
requirement that the thing pledged be placed in the possession of the creditor,
or of a third person by common agreement was complied with by the execution
of the deed of assignment in favor of PNB.
YULIONGSIU vs. PNB, G.R. NO. L-19227, February 17, 1968
The defendant bank as pledgee was therefore entitled to the actual possession
of the vessels, and while it is true that plaintiff continued operating the vessels
after the pledge contract was entered into, his possession was expressly made
"subject to the order of the pledgee." On the other hand, there is an authority
supporting the proposition that the pledgee can temporarily entrust the
physical possession of the chattels pledged to the pledgor without invalidating
the pledge. In such a case, the pledgor is regarded as holding the pledged
property merely as trustee for the pledgee.
MAKATI LEASING and FINANCE CORPORATION vs. WEAREVER TEXTILE
MILLS, INC., G.R. NO. L-58469, M ay 16, 1983
A house of strong materials may be considered as personal property for
purposes of executing a chattel mortgage thereon as long as the parties to the
contract so agree and no innocent third party will be prejudiced there by. There
is absolutely no reason why a machinery, which is movable in its nature and
becomes immobilized only by destination or purpose, may not be likewise
treated as such. This is really because one who has so agreed is estopped from
denying the existence of the chattel mortgage.
BUNDALIAN vs. CA, G.R. NO. L-55739, June 22, 1984
The contract also provides that "it is agreed that the vendor shall have the right
to possess, use, and build on, the property during the period of redemption."
When the vendee acknowledged the right of the vendor to retain possession of
the property the contract is one of loan guaranteed by mortgage, not a
conditional sale or an option to repurchase.
93

TIOSECO vs. CA, G.R. NO. L-66597, August 29, 1986

When the respondents chose to enforce their right of redemption thru a court
action they were well within their right as the action was filed within one year
from the registration of the foreclosure sale of the real estate. The law does not
even require any previous notice to the vendee, nor a meeting between him and
the redemptioner, much less a previous formal tender before any action is
begun in court to enforce the right of redemption.
PNB vs. CA, G.R. NO. L-60208, December 5, 1985
When the foreclosure proceedings are completed and the mortgaged property is
sold to the purchaser then all interest of the mortgagor are cut off from the
property Prior to the completion of the foreclosure, the mortgagor is liable for
the interests on the mortgage. However, after the foreclosure proceedings and
the execution of the corresponding certificate of sale of the property sold at
public auction in favor of the successful bidder, the redemptioner mortgagor
would be bound to pay only for the amount of the purchase price with interests
thereon at the rate of one per centum per month in addition up to the time of
redemption, together with the amount of any assessments or taxes which the
purchaser may have paid thereon after the purchase and interest on such last
named amount at the same rate.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
Where the indebtedness actually owing to the holder of the mortgage is less
than the sum named in the mortgage, the mortgage cannot be enforced for
more than the actual sum due.
RAMIREZ vs. CA, G.R. NO. L-38185, September 24, 1986
The antichretic creditor cannot ordinarily acquire by prescription the land
surrendered to him by the debtor. The petitioners are not possessors in the
concept of owner but mere holders placed in possession of the land by its
owners, thus, their possession cannot serve as a title for acquiring dominion.
OCAMPO vs. DOM ALANTA, G.R. NO. L-21011, August 30, 1967

94

A proceeding for judicial foreclosure of mortgage is an action quasi in rem. It is

based on a personal claim sought to be enforced against a specific property of a
person named party defendant. And, its purpose is to have the property seized
and sold by court order to the end that the proceeds thereof be applied to the
payment of plaintiff's claim.
CENTRAL BANK OF THE PHILIPPINES vs. CA, G.R. NO. L-45710, October
3, 1985
A pledge or mortgage is indivisible e ven though the debt may be divided among
the successors in interest of the debtor or creditor. Therefore, the debtor's heirs
who has paid a part of the debt can not ask for the proportionate
extinguishment of the pledge or mortgage as long as the debt is not completely
satisfied, neither can the creditor's heir who have received his share of the debt
return the pledge or cancel the mortgage, to the prejudice of other heirs who
have not been paid.
P ACTUM COM M ISSORIUM
PHILNICO INDUSTRIAL CORPORATION vs. PRIVATIZATION AND MANAGEMENT
OFFICE, G.R. No. 199420, August 27, 2014, J. Leonardo-De Castro
The SC disagreed with the findings of the CA that there is no pactum commissorium, on the
ground that since the ARDA and the Pledge Agreement are entirely separate and distinct
contract and that neither contract contains both elements of pactum commissoriu m: the
ARDA solely has the second element, while the Pledge Agreement only has the first
element, such provision cannot be considered as one of pactum commissorium.
Jurisprudence holds that the agreement of the parties may be embodied in only one
contract or in two or more separate writings. In case of the latter, the writings of the
parties should be read and interpreted together in such a way as to render their intention
effective.
In determining the existence of pactum commissorium, had focused more on the evident
intention of the parties, rather than the formal or written form.
Here, the ARDA and the Pledge Agreement herein, although executed in separate written
instruments, are integral to one another. It was the intention of the parties to enter into
and execute both contracts for a complete effectuation of their agreement.
EXTRA- JU DIC IAL FORECL OSURE

95

RURAL BANK OF CABADBARAN, INC v JORGITA A. MELECIO-YAP, LILIA MELECIO

PACIFICO (deceased, substituted by her only child ERILL* ISAAC M. PACIFICO, JR.),
REYNALDO A. MELECIO DELOSO, and SARAH MELECIO PALMA-GIL, G.R No. 178451,
July 30, 2014. J. PERLAS-BERNABE
Where a mortgage is not valid, the principal obligation which it guarantees is not thereby
rendered null and void. what is lost is merely the right to foreclose the mortgage as a
special remedy for satisfying or settling the indebtedness which is the principal obligation.
In case of nullity, the mortgage deed remains as evidence or proof of a personal obligation
of the debtor and the amount due to the creditor may be enforced in an ordinary action.
Based on the foregoing, the partial invalidity of the subject real estate mortgage brought
about by the forged status of the subject SPA would not, therefore, result into the partial
invalidation of the loan obligation principally entered into by RBCI and Spouses Mantala.
SPOUSES RODOLFO and MARCELINA GUEVARRA vs. THE COMMONER LENDING
CORPORATION, INC., G.R. No. 204672, J. Perlas-Bernabe
In an extra-judicial foreclosure of registered land acquired under a free patent, the
mortgagor may redeem the property within two (2) years from the date of foreclosure if
the land is mortgaged to a rural bank under Republic Act No. (RA) 720, as amended,
otherwise known as the Rural Banks Act, or within one (1) year from the registration of
the certificate of sale if the land is mortgaged to parties other than rural banks pursuant to
Act No. 3135. If the mortgagor fails to exercise such right, he or his heirs may still
repurchase the property within five (5) years from the expiration of the redemption period
pursuant to Section 119 of the Public Land Act. The RTC and CA both correctly ruled that
Spouses Guevarras right to repurchase the subject property had not yet expired when
Cadastral Case No. 122 was filed on September 8, 2005.
METROPOLITAN BANK AND TRUST COMPANY vs. S.F. NAGUIAT ENTERPRISES, INC.,
G.R. No. 178407, March 18, 2015, J. Leonen
The insolvency court has exclusive jurisdiction to deal with the property of the insolvent.
Consequently, after the mortgagor-debtor has been declared insolvent and the insolvency
court has acquired control of his estate, a mortgagee may not, without the permission of
the insolvency court, institute proceedings to enforce its lien.

ATTY. LEO N. CAUBANG, vs. JESUS G. CRISOLOGO AND NANETTE B. CRISOLOGO, G.R.
No. 174581, February 04, 2015, J. Peralta
Petitioner failed to have the notice of sale published in a newspaper of general circulation.
The Supreme Court held that the principal object of a notice of sale in a foreclosure of
mortgage is to inform the public generally of the nature and condition of the property to be
96

sold, and of the time, place, and terms of the sale. Notices are given to secure bidders and
prevent a sacrifice of the property. Therefore, statutory provisions governing publication
of notice of mortgage foreclosure sales must be strictly complied with and slight deviations
therefrom will invalidate the notice and render the sale, at the very least, voidable.
L EASE
OWEN PROSPER A. MACKAY vs. SPOUSES DANA CASWELL AND CERELINA CASWELL,
G.R. No. 183872, November 17, 2014, J. Del Castillo
Under Article 1715 of the Civil Code, if the work of a contractor has defects which destroy
or lessen its value or fitness for its ordinary or stipulated use, he may be required to
remove the defect or execute another work. If he fails to do so, he shall be liable for the
expenses by the employer for the correction of the work. In the case at bar, Mackay was
given the opportunity to rectify his work. Subsequent to Zameco IIs disapproval to supply
the spouses Caswell electricity for several reasons, credence must be given to the latters
claim that they looked for said Mackay to demand a rectification of the work, but said
Mackay and his group were nowhere to be found.
PRO-GUARD SECURITY SERVICES CORPORATION v TORMIL REALTY AND
DEVELOPMENT CORPORATION, G.R No. 176341, July 7, 2014. J. DEL CASTILLO
Tormil filed an unlawful detainer case against Torres-Pabalan. Meanwhile the building was
being leased to Pro-Guard. Tormil eventually prevailed in the ejectment case, and was
adjudged entitled to Pro-Guards payment of rent. The issue in this case is when the rentals
should be reckoned.
Tormil, as the victor in the unlawful detainer suit, is entitled to the fair rental value for the
use and occupation of the unit in the building. Such compensation should not be reckoned
from the time Pro-Guard began to occupy the same, but from the time of the demand to
vacate. from the moment Pro-Guard started to occupy the unit in March 1994 up to
November 15, 1998, the right of Pro-Guard to possess the premises was not challenged. It
was only after Tormil prevailed over Manuel in its ownership of the same that it terminated
Pro-Guards right to possess the unit it was occupying through a letter to vacate dated
November 16, 1998. Hence, it is only from that point that Tormil is considered to have
withdrawn its tolerance of Pro-Guards occupation.
NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING
CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno
New World and AMA entered into a lease agreement whereby New World agreed to lease
to AMA its commercial building located in Manila. AMA failed to pay its rentals citing
financial losses. AMA then preterminated the 8 year lease agreement and demanded the

97

refund of its security deposit and advance rentals. It also prayed that its liabilities be
reduced on account of its financial difficulties.
The Supreme Court ruled that in the sphere of personal and contractual relations governed
by laws, rules and regulations created to promote justice and fairness, equity is deserved,
not demanded. The application of equity necessitates a balancing of the equities involved in
a case, for [h]e who seeks equity must do equity, and he who comes into equity must come
with clean hands. Persons in dire straits are never justified in trampling on other persons
rights. Litigants shall be denied relief if their conduct has been inequitable, unfair and
dishonest as to the controversy in issue. The actions of AMA smack of bad faith.
MANUEL JUSAYAN,ALFREDO JUSAYAN, AND MICHAEL JUSAYANvs.JORGE SOMBILLA,
G.R. No. 163928, January 21, 2015, J. Bersamin
By virtue of Republic Act No. 3844, the sharing of the harvest in proportion to the
respective contributions of the landholder and tenant (share tenancy) was abolished.
Hence, to date, the only permissible system of agricultural tenancy is leasehold tenan cy, a
relationship wherein a fixed consideration is paid instead of proportionately sharing the
harvest as in share tenancy. Its elements are: (1) the object of the contract or the
relationship is an agricultural land that is leased or rented for the purpo se of agricultural
production; (2) the size of the landholding is such that it is susceptible of personal
cultivation by a single person with the assistance of the members of his immediate farm
household; (3) the tenant-lessee must actually and personally till, cultivate or operate the
land, solely or with the aid of labor from his immediate farm household; and (4) the
landlord-lessor, who is either the lawful owner or the legal possessor of the land, leases the
same to the tenant-lessee for a price certain or ascertainable either in an amount of money
or produce. In the case at bar, there is no doubt that a land with a total area of 7.9 hectares
were susceptible of cultivation by a single person with the help of the members of his
immediate farm household. Also, ones knowledge of and familiarity with the landholding,
its production and the instances when the landholding was struck by drought definitely
established that the lessee personally cultivated the land. Moreover, the fact that an
agricultural lessee has a regular employment does not render his ability to farm physically
impossible.
Pagurayan vs. Reyes, G.R. NO. 154577, July 23, 2008
A contract of lease is a consensual, bilateral, onerous and commutative
contract by which the owner temporarily grants the use of his property to
another who undertakes to pay the rent. Being a consensual contract, it is
perfected at the moment there is a meeting of the minds on the thing and the
cause and consideration which are to constitute the contract. Without the
agreement of both parties, no contract of lease can be said to have been created
or established. Nobody can force an owner to lease out his property if he is not
willing.
98

I. Lease of Things

CA-AG.R.O-INDUSTRIAL DEVELOPMENT CORP. vs. Court of Appeals, G.R.

NO. 90027, M arch 3, 1993
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. 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.
II. Lease of Work or Services
III. Lease of Rural and Urban Lands
IV. Rights and Obligations of Lessor and Lessee
V. Special Rules for Lease of Rural,Urban Lands
VI. Household Service (Exclude, for inclusion in Labor Law)
VII. Contract of Labor (Exclude, for inclusion in Labor Law)
VIII. Contract for Piece of Work (Exclude, for inclusion in Labor Law)

SOL UTIO IN DEBITI

CBK POWER COMPANY LIMITED VS. COMMISSIONER OF INTERNAL REVENUE, G.R.
Nos.198729-30, January 15, 2014, J. Sereno
The principle of Solutio Indebiti is not applicable in the case at bar. According to this
principle, if something is received when there is no right to demand it, and it was unduly
delivered through mistake, the obligation to return it arises. In that situation, a creditor debtor relationship is created under a quasi-contract, whereby the payer becomes the
creditor who then has the right to demand the return of payment made by mistake, and the
person who has no right to receive the payment becomes obligated to return it. The quasicontract of solutio indebiti is based on the ancient principle that no one shall enrich oneself
unjustly at the expense of another.
There is solutio indebiti when:
(1) Payment is made when there exists no binding relation between the payer, who has no
duty to pay, and the person who received the payment; and
(2) Payment is made through mistake, and not through liberality or some other cause.
Though the principle of solutio indebiti may be applicable to some instances of claims for a
refund, the elements thereof are wanting in this case. First, there exists a binding re lation
between petitioner and the CIR, the former being a taxpayer obligated to pay VAT. Second,
the payment of input tax was not made through mistake, since petitioner was legally
99

obligated to pay for that liability. The entitlement to a refund or credit of excess input tax is
solely based on the distinctive nature of the VAT system. At the time of payment of the
input VAT, the amount paid was correct and proper.
L AND TITL ES AN D DEEDS
Torrens System
MARIFLOR T. HORTIZUELA, represented by JOVIER TAGAUFA vs. GREGORIA TAGUFA,
ROBERTO TAGUFA and ROGELIO LUMABAN, G.R. No. 205867, February 23, 2015, J.
Mendoza
Petitioner assails the decision of the CA that the action for reconveyance filed by her was
not the proper remedy on the ground that it constitutes a collateral attack on the validity of
the subject certificate of title. The SC however ruled that it is not unmindful of the principle
of indefeasibility of a Torrens title and that a certificate of title shall not be subject to
collateral attack. Contrary to the pronouncements of the MCTC and the CA, however, the
complaint of petitioner was not a collateral attack on the title warranting dismissal. As a
matter of fact, an action for reconveyance is a recognized remedy, an action in personam,
available to a person whose property has been wrongfully registered under the Torrens
system in anothers name. In an action for reconveyance, the decree is not sought to be set
aside. It does not seek to set aside the decree but, respecting it as incontrovertible and no
longer open to review, seeks to transfer or reconvey the land from the registered owner to
the rightful owner.
IMELDA, LEONARDO, FIDELINO, AZUCENA, JOSEFINA, ANITA AND SISA, ALL
SURNAMED SYJUCO VS FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT
CORPORATION, .R. No. 148748. January 14, 2015, J. Leonardo-De Castro
Moreover, the rule on the incontrovertibility or indefeasibility of title has no application in
this case given the fact that the contending parties claim ownership over the subject land
based on their respective certificates of title thereon which originated from different
sources. Certainly, there cannot be two or even several certificates of title on the same
parcel of real property because "a land registration court has no jurisdiction to order the
registration of land already decreed in the name of another in an earlier land registration
case" and "a second decree for the same land would be null and void, since the principle
behind original registration is to register a parcel of land only once." The indefeasibility of a
title under the Torrens system could be claimed only if a previous valid title to the same
parcel of land does not exist. Where the issuance of the title was attended by fraud, the
same cannot vest in the titled owner any valid legal title to the land covered by it; and the
person in whose name the title was issued cannot transmit the same, for he has no true title
thereto. This ruling is a mere affirmation of the recognized principle that a certificate is not
conclusive evidence of title if it is shown that the same land had already been registered
and that an earlier certificate for the same land is in existence. ."
100

IMELDA SYJUCO, et.al vs. FELISA D. BONIFACIO and VSD REALTY & CORPORATION,
G.R. No. 148748, January 14, 2015, J. Leonardo-De Castro
The filing of an action to quiet title is imprescriptible if the disputed real property is in the
possession of the plaintiff. The rule on the incontrovertibility or indefeasibility of title has
no application in this case given the fact that the contending parties claim ownership over
the subject land based on their respective certificates of title thereon which originated
from different sources. The Syjucos' title, shows that it originated from OCT No. 994
registered on May 3, 1917 while Bonficacio's title shows that that it likewise originated
from OCT No. 994, but registered on April 19, 1917. This case affirmed the earlier finding
that there is only one OCT No. 994, the registration date of which had already been
decisively settled as 3 May 1917 and not 19 April 1917 and categorically concluded that
OCT No. 994 which reflects the date of 19 April 1917 as its registration date is null and
void.
UNGAY MALOBAGO MINES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892,
January 14, 2015, J. Peralta
The persons who can file the petition for reconstitution of a lost certificate are the
registered owner, his assigns or persons in interest in the property. In this case, Ungay
Malobago Mines, Inc. admitted that it was not the owner of the land on which the mining
patent was issued as the same was owned and registered in the name of Rapu Rapu
Minerals Inc., thus it has no legal capacity to institute a petition for reconstitution of a lost
certificate.
REPUBLIC OF THE PHILIPPINES vs. HEIRS OF SPOUSES DONATO SANCHEZ and JUANA
MENESES represented by RODOLFO S. AGUINALDO, G.R. No. 212388, December 10,
2014, J. Velasco, Jr.
Before a certificate of title which has been lost or destroyed may be reconstituted, it must
first be proved by the claimants that said certificate of title was still in force at the time it
was lost or destroyed, among others.

SPOUSES CARLOS J. SUNTAY and ROSARIO R. SUNTAY vs. KEYSER MERCANTILE INC.,
G.R. No. 208462, December 10, 2014, J. Mendoza
Every person dealing with a registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go beyond the
certificate to determine the condition of the property.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 194077,
December 03, 2014, J. Leonen
Spouses owned the subject property wherein petitioner Elena was allowed to stay. Upon
the spouses divorce, the property went to the wife. She sold it to the respondent See. The
101

Court held that See was a buyer in good faith. She went to the Register of Deeds to verify
the title and relied on the marriage settlement agreement. The Court found that she exerted
due diligence. An innocent purchaser for value refers to someone who buys the property of
another without notice that some other person has a right to or interest in it, and who pays
a full and fair price at the time of the purchase or before receiving any notice of another
persons claim.
HEIRS OF GREGORIO LOPEZ, REPRESENTED BY ROGELIA LOPEZ, ET AL., vs.
DEVELOPMENT BANK OF THE PHILIPPINES [NOW SUBSTITUTED BY PHILIPPINE
INVESTMENT TWO (SPV-AMC), INC.], G.R. No. 193551, November 19, 2014, J. Leonen
Marietta could acquire valid title over the whole property if she were an innocent
purchaser for value. An innocent purchaser for value purchases a property without any
notice of defect or irregularity as to the right or interest of the seller. He or she is without
notice that another person holds claim to the property being purchased. Marietta cannot
claim the protection to innocent purchasers for value because the circumstances do not
make this available to her. In this case, there was no certificate of title to rely on when she
purchased the property from Enrique. At the time of the sale, the property was still
unregistered. What was available was only a tax declaration issued under the name of
Heirs of Lopez.
AMADA COTONER -ZACARIAVS. SPOUSES ALFREDO REVILLA AND THE HEIRS OF
PAZ REVILLA, G.R. No. 190901, November 12, 2014, J. Leonen
Amada argues that the subsequent buyer of the disputed parcel of land is in good faith.
The court has held that the rule in land registration law that the issue of whether the
buyer of realty is in good or bad faith is relevant only where the subject of the sale is
registered land and the purchase was made from the registered owner whose title to
the land is clean.
ONOFRE ANDRES, SUBSTITUTED BY HIS HEIRS, NAMELY: FERDINAND, ROSALINA,
ERIBERTO, FROILAN, MA. CLEO FE, NELSON, GERMAN, GLORIA, ALEXANDER, MAY,
ABRAHAM, AND AFRICA, ALL SURNAMED ANDRES vs. PHILIPPINE NATIONAL BANK,
G.R. No. 173548, October 15, 2014, J. Leonen
A bank that accepts a mortgage based upon a title which appears valid on its face and after
exercising the requisite care, prudence, and diligence appropriate to the public interest
character of its business can be deemed a mortgagee in good faith. The subsequent
consolidation of title in its name after a valid foreclosure shall be respected
notwithstanding later proof showing that the title was based upon a void transaction. In
this case, PNB is considered as a mortgagee in good faith because it complied with the
standard operating practice expected from banks.

102

ELIZA ZUNIGA-SANTOS, represented by her Attorney-in Fact, NYMPHA Z. SALES vs. MARIA
DIVINA GRACIA SANTOS-GRAN and REGISTER OF DEEDS OF MARIKINA CITY, G.R. No. 197380,
October 8, 2014, J. Perlas-Bernabe

To determine when the prescriptive period commenced in an action for reconveyance, the
plaintiffs possession of the disputed property is material. If there is an actual need to
reconvey the property as when the plaintiff is not in possession, the action for
reconveyance based on implied trust prescribes in ten (10) years, the reference point being
the date of registration of the deed or the issuance of the title. On the other hand, if the real
owner of the property remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against him and in such case, the
action for reconveyance would be in the nature of a suit for quieting of title which is
imprescriptible.
In the case at bar, a reading of the allegations of the Amended Complaint failed to show that
Eliza remained in possession of the subject properties in dispute.
SPOUSES MARIO OCAMPO and CARMELITA F. OCAMPO vs. HEIRS OF BERNARDINO U.
DIONISIO, represented by ARTEMIO SJ. DIONISIO, G.R. No. 191101, October 1, 2014, J.
Reyes
Jurisprudence consistently holds that "prescription and laches cannot apply to registered
land covered by the Torrens system" because "under the Property Registration Decree, no
title to registered land in derogation to that of the registered owner shall be acquired by
prescription or adverse possession.
Mario claimed that they have been in possession of the said parcel of land since 1969 and
that cause of action of the Dionisios is already barred by laches. Jurisprudence consistently
holds that "prescription and laches cannot apply to registered land covered by the Torrens
system" because "under the Property Registration Decree, no title to registered land in
derogation to that of the registered owner shall be acquired by prescription or adverse
possession.
AMBROSIO ROTAIRO (SUBSTITUTED BY HIS SPOUSE MARIA RONSAYRO ROTAIRO,
AND HIS CHILDREN FELINA ROTAIRO, ERLINDA ROTAIRO CRUZ, EUDOSIA ROTAIRO
CRIZALDO, NIEVES ROTAIRO TUBIG, REMEDIOS ROTAIRO MACAHILIG, FELISA
ROTAIRO TORREVILLAS, AND CRISENCIO R. ROTAIRO, MARCIANA TIBAY, EUGENIO
PUNZALAN, AND VICENTE DEL ROSARIO vs. ROVIRA ALCANTARA AND VICTOR
ALCANTARA, G.R. No. 173632, September 29, 2014, J. Reyes
More than the charge of constructive knowledge, the surrounding circumstances of this
case show Roviras actual knowledge of the disposition of the subject property and
Rotairos possession thereof. It is undisputed that after the contract to sell was executed
Rotairo immediately secured a mayors permit for the construction of his residential house
on the property. Rotairo, and subsequently, his heirs, has been residing on the property
since then. Rovira, who lives only fifty (50) meters away from the subject property, in fact,
103

knew that there were structures built on the property. Rovira, however, claims that she
did not bother to inquire as to the legitimacy of the rights of the occupants, because she
was assured by the bank of its title to the property. But Rovira cannot rely solely on the
title and assurances of Pilipinas Bank; it was incumbent upon her to look beyond the title
and make necessary inquiries because the bank was not in possession of the property.
Where the vendor is not in possession of the property, the prospective vendees are
obligated to investigate the rights of one in possession. A purchaser cannot simply close
his eyes to facts which should put a reasonable man on guard, and thereafter claim that he
acted in good faith under the belief that there was no defect in the title of the vendor.
Hence, Rovira cannot claim a right better than that of Rotairo's as she is not a buyer in good
faith.
ENRIQUETA M. LOCSIN vs. BERNARDO HIZON, CARLOS HIZON, SPS. JOSE MANUEL
AND LOURDES GUEVARA, G.R. No. 204369, September 17, 2014, J. Velasco Jr.
A purchaser of property under the Torrens system cannot simply invoke that he is an
innocent purchaser for value when there are attending circumstances that raise suspicions.
In that case, he cannot merely rely on the title and must look beyond to ascertain the truth
as to the right of the seller to convey the property.
HEIRS OF SPOUSES JOAQUIN MANGUARDIA AND SUSANA MANALO, ET AL vs.
HEIRS OF SIMPLICIO VALLES AND MARTA VALLES, ET AL., G.R. No. 177616,
August 27, 2014, J. Del Castillo
The petitioners assail the decision of the CA affirming in toto the decision of the RTC
declaring that their predecessors-in-interest are not buyers in good faith and for value. In
denying the petition the SC ruled that the transfers of the properties in question did not go
far, but were limited to close family relatives by affinity and consanguinity. Good faith
among the parties to the series of conveyances is therefore hard if not impossible to
presume. Unfortunately for the petitioners, they did not provide any sufficient evidence
that would convince the courts that the proximity of relationships between/among the
vendors and vendees in the questioned sales was not used to perpetrate fraud. Thus there
is nothing to dispel the notion that apparent anomalies attended the transactions among
close relations.

It must be emphasized that "the burden of proving the status of a purchaser in good faith
and for value lies upon him who asserts that standing. In discharging the burden, it is not
enough to invoke the ordinary presumption of good faith that everyone is presumed to act
in good faith. The good faith that is here essential is integral with the very status that must
be proved. x x x Petitioners have failed to discharge that burden."

104

HECTOR L. UY vs. VIRGINIA G. FULE; HEIRS OF THE LATE AMADO A. GARCIA, HEIRS OF
THE LATE GLORIA GARCIA ENCARNACION; HEIRS OF THE LATE PABLO GARCIA; and
HEIRS OF THE LATE ELISA G. HEMEDES,G.R. No. 164961, June 30, 2014, J. Bersamin
The standard is that for one to be a purchaser in good faith in the eyes of the law, he should
buy the property of another without notice that some other person has a right to, or
interest in, such property, and should pay a full and fair price for the same at the time of
such purchase, or before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he receives the
property was the owner and could convey title to the property. Indeed, a purchaser cannot
close his eyes to facts that should put a reasonable man on his guard and still claim he acted
in good faith.
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA vs. HEIRS OF BERNARDINA
ABALON / HEIRS OF BERNARDINA ABALON vs. MARISSA ANDAL, LEONIL AND AL,
ARNEL AND AL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of
RESTITUTO RELLAMA, represented by his children ALEX, IMMANUEL, JULIUS and
SYLVIA, all surnamed RELLAMA, G.R. No. 183448 / G.R. No. 183464, June 30, 2014, CJ.
Sereno
The established rule is that a forged deed is generally null and cannot convey title, the
exception thereto, pursuant to Section 55 of the Land Registration Act, denotes the
registration of titles from the forger to the innocent purchaser for value. Thus, the
qualifying point here is that there must be a complete chain of registered titles. This means
that all the transfers starting from the original rightful owner to the innocent holder for
value and that includes the transfer to the forger must be duly registered, and the title
must be properly issued to the transferee.
NORA B. CALALANG-PARULAN and ELVIRA B. CALALANG vs.ROSARIO CALALANGGARCIA, LEONORA CALALANG-SABILE, and CARLITO S. CALALANG, G.R. No. 184148,
June 9, 2014, J. Villarama, Jr.
Further strong proofs that the properties in question are the paraphernal properties of a
spouse are the very Torrens Titles covering said properties.
The phrase Pedro Calalang, married to Elvira Berba Calalang merely describes the civil
status and identifies the spouse of the registered owner Pedro Calalang. Evidently, this
does not mean that the property is conjugal. As the sole and exclusive owner, Pedro
Calalang had the right to convey his property in favor of Nora B. Calalang-Parulan by
executing a Deed of Sale on February 17, 1984. A close perusal of the records of this case
would show that the records are bereft of any concrete proof to show that the subject
property indeed belonged to respondents maternal grandparents. The evidence
respondents adduced merely consisted of testimonial evidence such as the declaration of
Rosario Calalang-Garcia that they have been staying on the property as far as she can
remember and that the property was acquired by her parents through purchase from her
105

maternal grandparents. However, she was unable to produce any document to evidence the
said sale, nor was she able to present any documentary evidence such as the tax
declaration issued in the name of either of her parents.
REPUBLIC OF THE PHILIPPINES vs. FRANKLIN M. MILLADO, G.R. No. 194066, June 4,
2014, J. Villarama, Jr.
Where the authority to proceed is conferred by a statute and the manner of obtaining
jurisdiction is mandatory, the same must be strictly complied with, or the proceedings will
be void. For non-compliance with the actual notice requirement to all other persons who
may have interest in the property, in this case the registered owners and/or their heirs, in
accordance with Section 13 in relation to Section 12 of RA 26, the trial court did not acquire
jurisdiction over L.R.A. The proceedings therein were therefore a nullity and the Decision
was void.
VERGEL PAULINO AND CIREMIA PAULINOvs.COURT OF APPEALS AND REPUBLIC OF
THE PHILIPPINES, represented by the ADMINISTRATOR of the LAND REGISTRATION
AUTHORITY, G.R. No. 205065, June 4, 2014, J. Mendoza
In reconstitution proceedings, the Court has repeatedly ruled that before jurisdiction over
the case can be validly acquired, it is a condition sine quo non that the certificate of title has
not been issued to another person. If a certificate of title has not been lost but is in fact in
the possession of another person, the reconstituted title is void and the court rendering the
decision has not acquired jurisdiction over the petition for issuance of new title. In the case
at bench, the CA found that the RTC lacked jurisdiction to order the reconstitution of the
original copy of TCT No. 301617, there being no lost or destroyed title over the real
property, the respondent having duly proved that TCT No. 301617 was in the name of a
different owner, Florendo, and the technical description appearing on that TCT No. 301617
was similar to the technical description appearing in Lot 939, Piedad Estate covered by TCT
No. RT-55869 (42532) in the name of Antonino.
DOLORES CAMPOS vs. DOMINADOR ORTEGA, SR. AND JAMES SILOS, G.R. No. 171286,
June 02, 2014, J. Peralta
It cannot be argued that Dolores had already acquired a vested right over the subject
property when the NHA recognized her as the censused owner by assigning to her a tag
number TAG No. 77-0063. While it is true that NHA recognizes Dolores as the censused
owner of the structure built on the lot, the issuance of the tag number is not a guarantee for
lot allocation. The census, tagging, and Dolores petition, did not vest upon her a legal title
to the lot she was occupying, but a mere expectancy that the lot will be awarded to her. The
expectancy did not ripen into a legal title when the NHA, informed her that her petition for
the award of the lot was denied.

106

AZNAR BROTHERS REALTY COMPANY vs. SPOUSES JOSE AND MAGDALENA YBAEZ,
G.R. No. 161380, April 21, 2014, J. Bersamin
The settled rule is that a free patent issued over a private land is null and void, and
produces no legal effects whatsoever. Private ownership of land as when there is a prima
facie proof of ownership like a duly registered possessory information or a clear showing of
open, continuous, exclusive, and notorious possession, by present or previous occupants
is not affected by the issuance of a free patent over the same land, because the Public Land
Law applies only to lands of the public domain. Lot No. 18563, not being land of the public
domain as it was already owned by Aznar Brothers, was no longer subject to the free patent
issued to the Spouses Ybaez.
Grey Alba vs. De la Cruz, 17 SCRA 49
The Torren system generally refer to the system of registration of transactions
with interest in land whose declared object is, under governmental authority, to
establish and certify to the ownership of an absolute and indefeasible title to
realty, and to simplify its transfer.
Legarda vs. Saleeby, G.R. NO. 8936, Oct. 2, 1915
The real purpose of the Torrens system of registration is to quiet title to land; to
put a stop forever to any question of the legality of the title, except claims
which were noted at the time of registration, in the certificate, or which may
arise subsequent thereto.
Government of the Philippine Islands v. Abural, 39 Phil. 996
The Torrens system aims to decree land titles that shall be final, irrevocable,
and indisputable, and to relieve the land of the burden of known as well as
unknown claims.
Sta. Lucia

vs.

Pasig, G.R.NO.

166838,

June

15,

2011

While a certificate of title is conclusive as to its ownership and location, this

does not preclude the filing of an action for the very purpose of attacking the
statements therein. Mere reliance therefore on the face of the TCTs will not
suffice as they can only be conclusive e vidence of the subject properties'
locations if both the stated and described locations point to the same area.
Regalian Doctrine
REPUBLIC OF THE PHILIPPINES REPRESENTED BY AKLAN NATIONAL COLLEGE OF
FISHERIES (ANCF) AND DR. ELENITA R. ANDRADE, IN HER CAPACITY AS ANCF
SUPERINTENDENT VS. HEIRS OF MAXIMA LACHICA SIN, NAMELY: SALVACION L. SIN,
ROSARIO S. ENRIQUEZ, FRANCISCO L. SIN, MARIA S. YUCHINTAT, MANUEL L. SIN,
107

JAIME CARDINAL SIN, RAMON L. SIN, AND CEFERINA S. VITA G.R. No. 157485 March
26, 2014, J. Leonardo-De Castro
It is the respondent applicants which have the burden to identify a positive act of the
government, such as an official proclamation, declassifying inalienable public land into
disposable land for agricultural or other purposes. Since respondents failed to do so, the
alleged possession by them and by their predecessorsininterest is inconsequential and
could never ripen into ownership. Accordingly, respondents cannot be considered to
have private rights within the purview of Proclamation No. 2074 as to prevent the
application of said proclamation to the subject property.

REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by

RONNIE P. INOCENCIO, G.R. No. 199310 February 19, 2014, J. Reyes
That the subject properties are not part of the bed of Laguna Lake, however, does not
necessarily mean that they already form part of the alienable and disposable lands of the
public domain. It is still incumbent upon the respondent to prove, with well-nigh
incontrovertible evidence, that the subject properties are indeed part of the alienable and
disposable lands of the public domain.
REPUBLIC OF THE PHILIPPINES VS.
February 5, 2014, J. Reyes

EMMANUEL C. CORTEZ, G.R. No. 186639

Lands of the public domain that are patrimonial in character are susceptible to acquisitive
prescription and, accordingly, eligible for registration under Section 14(2) of P.D. No. 1529
but the period of acquisitive prescription would only begin to run from the time that the
State officially declares that the public dominion property is no longer intended for public
use, public service, or for the development of national wealth. The Court finds no evidence
of any official declaration from the state attesting to the patrimonial character of the
subject property. Cortez failed to prove that acquisitive prescription has begun to run
against the State, much less that he has acquired title to the subject property by virtue
thereof. It is of no moment that Cortez and his predecessors-in-interest have been in
possession of the subject property for 57 years at the time he applied for the registration of
title thereto. "[l]t is not the notorious, exclusive and uninterrupted possession and
occupation of an alienable and disposable public land for the mandated periods that
converts it to patrimonial. The indispensability of an official declaration that the property is
now held by the State in its private capacity or placed within the commerce of man for
prescription to have any effect against the State cannot be overemphasized.
REPUBLIC OF THE PHILIPPINES vs. SPS. JOSE CASTUERA AND PERLA CASTUERA, G.R.
No. 203384, January 14, 2015, J. Carpio

108

The applicant for land registration must prove that the DENR Secretary had approved the
land classification and released the land of the public domain as alienable and disposable,
and that the land subject of the application for registration falls within the approved area
per verification through survey by the PENRO or CENRO.
REMMAN ENTERPRISES, INC. vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 188494,
November 26, 2014, J. Reyes
It is not enough for the PENRO or CENRO to certify that a land is alienable and disposable.
The applicant for land registration must prove that the DENR Secretary had appro ved the
land classification and released the land of the public domain as alienable and disposable,
and that the land subject of the application for registration falls within the approved area
per verification through survey by the PENRO or CENRO. In addition, the applicant for land
registration must present a copy of the original classification approved by the DENR
Secretary and certified as a true copy by the legal custodian of the official records. Thus, the
property registration of a corporation merely relying on the CENRO Certification must be
dismissed for failure to prove that the land had been declared alienable and disposable.
DANILO ALMERO, TERESITA ALAGON, CELIA BULASO, LUDY RAMADA, REGINA
GEGREMOSA, ISIDRO LAZARTE, THELMA EMBARQUE, FELIPE LAZARTE, GUILERMA
LAZARTE, DULCESIMA BENIMELEvs. HEIRS OF MIGUEL PACQUING, as represented by
LINDA PACQUING FADRILAN, G.R. No. 199008, November 19, 2014, J. Brion
Thus, in order for the homestead grantees or their direct compulsory heirs to retain their
homestead, the following conditions must be satisfied: (a) they must still be the owners of
the original homestead at the time of the CARL's effectivity, and (b) they must continue to
cultivate the homestead land. In this case, Linda, as the direct compulsory heir of the
original homestead grantee, is no longer cultivating the homestead land. That parcels of
land are covered by homestead patents will not automatically exempt them from the
operation of land reform. It is the continued cultivation by the original grantees or their
direct compulsory heirs that shall exempt their lands from land reform coverage."
HOLY TRINITY REALTY & DEVELOPMENT CORPORATION, vs. VICTORIO DELA CRUZ,
LORENZO MANALAYSAY, RICARDO MARCELO, JR. and LEONCIO DE GUZMAN, G.R. No.
200454, October 22, 2014, J. Bersamin
Consequently, before land may be placed under the coverage of Republic Act No. 6657, two
requisites must be met, namely: (1) that the land must be devoted to agricultural activity;
and (2) that the land must not be classified as mineral, forest, residential, commercial or
industrial land. For land to be covered under Presidential Decree No. 27, it must be devoted
to rice or corn crops, and there must be a system of share-crop or lease-tenancy obtaining
therein. Unfortunately, the Dakila property did not meet these requirements.

109

CARMEN T. GAHOL, substituted by her heirs, RICARDO T. GAHOL, MARIA ESTER

GAHOL PEREZ, JOSE MARI T. GAHOL, LUISITO T. GAHOL and ALCREJ CORPORATION
vs. ESPERANZA COBARRUBIAS, G.R. No. 187144, September 17, 2014, J. Peralta
Petitioner Gahol applied for Townsite Sales Application with the DENR for the land
adjacent to her property. Respondent Cobarrubias filed a protest, stating that she and her
family are occupying said lot. The Court ruled that Gahols application must be rejected
because one of the requirements was that the applicant must not own any other lot but
Gahol is a registered owner of a residential lot. She also stated that there are no signs of
improvement or occupation in the said lot but it was in fact occupied by Cobarrubias. She is
disqualified due to the untruthful statements in her application.

KASAMAKA-CANLUBANG, INC., represented by PABLITO M. EGILDO vs. LAGUNA

ESTATE DEVELOPMENT CORPORATION, G.R. No. 200491, June 9, 2014, J. Peralta
The approval by city and municipal boards and councils of an application for subdivision
through an ordinance should already be understood to include approval of the
reclassification of the land, covered by said application, from agricultural to the inte nded
non-agricultural use. Otherwise, the approval of the subdivision application would serve no
practical effect; for as long as the property covered by the application remains classified as
agricultural, it could not be subdivided and developed for non-agricultural use.
REPUBLIC OF THE PHILIPPINES vs. CRISANTO S. RANESES, G.R. No. 189970, June 9, 2014, J.
Villarama, Jr.

The Regalian doctrine, embodied in Section 2, Article XII of the 1987 Constitution, provides
that all lands of the public domain belong to the State, which is the source of any asserted
right to ownership of land. All lands not appearing to be clearly within private ownership
are presumed to belong to the State. Unless public land is shown to have been reclassified
or alienated to a private person by the State, it remains part of the inalienable public
domain for land classification or reclassification cannot be assumed. It must be proved.
In this case, the records do not support the findings made by the RTC and the CA that the
subject properties are part of the alienable and disposable portion of the public domain. It
bears noting that in support of his claim that the subject properties are alienable and
disposable, Raneses merely presented the Conversion Subdivision Plan which was
prepared by Engr. Montallana with the annotation that the subject properties were "inside
alienable and disposable land area Proj. No. 27-B as per LC Map No. 2623 certified by the
Bureau of Forestry on January 3, 1968" and the Inter-Office Memorandum from the LLDA.
Raneses failed to hurdle this burden and his reliance on the said annotation and Inter Office Memorandum is clearly insufficient. Clearly, the pieces of evidence submitted by
Raneses before the RTC in this case hardly satisfy the aforementioned documenta ry
requirements.

110

REPUBLIC OF THE PHILIPPINES vs.

185092, June 4, 2014, J. Mendoza

CORAZON C. SESE and FE C. SESE, G.R. No.

The burden of proof in overcoming the presumption of State ownership of the lands of the
public domain is on the person applying for registration or claiming ownership, who must
prove that the land is alienable or disposable. To overcome this presumption,
incontrovertible evidence must be established that the land is alienable or disposable.
There must be an existence of a positive act of the government such as a presidential
proclamation or an executive order; an administrative action; investigation reports of
Bureau of Lands investigators; or a legislative act or a statute. The applicant may also
secure a certification from the government that the land claimed to have been possessed
for the required number of years is alienable and disposable. In this case, petitioners cite a
surveyor geodetic engineers notation indicating that the survey was inside alienable and
disposable land. Such notation does not constitute a positive government act validly
changing the classification of the land. A mere surveyor has no authority to reclassify lands
of the public domain. By relying solely on the said surveyors assertion, petitioners have
not sufficiently proven that the land in question has been declared alienable."
REPUBLIC OF THE PHILIPPINES vs. FRANCISCA, GERONIMO AND CRISPIN, ALL
SURNAMED SANTOS, G.R. No. 191516, June 4, 2014, J. Peralta
Petitioner Republic assails the decision of the CA affirming in toto the decision of the trial
court holding that the respondents was able to prove that the subject lots had been
classified as alienable and disposable. Ruling in favor of Republic, the SC ruled that the
evidence required to establish that land subject of an application for registration is
alienable and disposable are: (1) CENRO or PENRO Certification; and (2) a copy of the
original classification approved by the DENR Secretary and certified as a true copy by the
legal custodian of the official records. In the present case, the foregoing documents had not
been submitted in evidence. There is no copy of the original classification approved by the
DENR Secretary. As ruled by this Court, a mere certification issued by the Forest Utilization
& Law Enforcement Division of the DENR is not enough. Republic is then correct that
evidence on record is not sufficient to prove that subject lots had been declared alienable
and disposable lands.
Republic vs. Santos, G.R.NO. 180027, July

18,

2012

Jura Regalia simply means that the State is the original proprietor of all lands
and, as such, is the general source of all private titles. Thus, pursuant to this
principle, all claims of private title to land, save those acquired from native
title, must be traced from some grant, whether express or implied, from the
State. Absent a clear showing that land had been let into private ownership
through the States imprimatur, such land is presumed to belong to the State.

111

Yu Chang vs. Republic, G.R.NO. 171726, Feb. 23, 2011

The fact that the area within which the subject parcels of land are located is
being used for residential and commercial purposes does not serve to convert
the subject parcels of land into agricultural land. It is fundamental that before
any land may be declassified from the forest group and converted into alienable
or disposable land for agricultural or other purposes, there must be a positive
act from the government.
Republic vs. East Silverlane, G.R. No. 186961, Feb.

20,

2012

It is primordial that the status of the property as patrimonial be first

established. Furthermore, the period of possession preceding the
classification of the property as patrimonial cannot be considered in
determining the completion of the prescriptive period.
Citizenship Requirement
Krivenko vs. Register of Deeds 79 Phil 461
Aliens mat not acquire private or public agricultural lands.
Ong Ching Po v. Court of Appeals G.R. NO. 113472, Dec. 20, 1994, 239
SCRA 341.
The capacity to acquire private land is made dependent upon the capacity to
acquire or hold lands of the public domain. Private land may be transferred or
only to individuals or entities qualified to acquire lands of the public domain.
Halili vs. Court of Appeals, 287 SCRA 465
A natural-born citizen of the Philippines who has lost his citizenship may be a
transferee of private lands, subject to limitations provided by law.

Director of Lands vs. Intermediate Appellate Court and Acme, 146 SCRA
509
The time to determine whether a person acquiring land is qualified is the time
the right to own it is acquired and not the time to register ownership.

112

Original Registration
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No. 200894,
November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or imperfect title
under Section 14(1) of Presidential Decree No. 1529 must prove the following
requisites:(1) that the subject land forms part of the disposable and alienable lands of the
public domain, and (2) that the applicant has been in open, continuous, exclusive and
notorious possession and occupation of the same under a bona fide claim of ownership
since June 12, 1945, or earlier. Concomitantly, the burden to prove these requisites rests on
the applicant. With regard to the first requisite, it is undisputed that the land subject of
registration is part of the alienable and disposable lands of the public domain. The trial
court found the Department of Environment and Natural Resources report sufficient to
prove the existence of the first requisite. The Court of Appeals decision was silent on this
matter. Respondent Republic failed to make objections on the issue as well. Thus, we do not
see any reason to deviate from the findings of the lower courts.
RODOLFO V. FRANCISCO vs. EMILIANA M. ROJAS, and the legitimate heirs of JOSE A.
ROJAS, namely: JOSE FERDINAND M. ROJAS II, ROLANDO M. ROJAS, JOSE M. ROJAS, JR.,
CARMELITA ROJAS-JOSE, VICTOR M.ROJAS, and LOURDES M. ROJAS, all represented
by JOSEFERDINAND M. ROJAS II, G.R. No. 167120, April 23, 2014, J. Peralta
A land registration court has no jurisdiction to order the registration of land already
decreed in the name of another in an earlier land registration case. After the promulgation
of the Guido, it can no longer be said that an original registration proceeding is proper,
since Guido held that certificate of title are genuine and authentic. What the land
registration court should have done was to dismiss the application for registration upon
learning that the same property was already covered by a valid title.
REPUBLIC OF THE PHILIPPINES VS. EMETERIA G. LUALHATI, G.R. No. 183511,
March 25, 2015, J. Peralta
Emeteria G. Lualhati filed with the RTC of Antipolo City an application for original
registration covering Lots 1 and 2 situated in C-5 C-6 Pasong Palanas, Sitio Sapinit, San
Juan, Antipolo, Rizal. To support her contention that the lands subject of her application is
alienable and disposable, Lualhati submitted certifications from the DENR-CENRO, Region
IV, Antipolo City, stating that no public land application or land patent covering the subject
lots is pending nor are the lots embraced by any administrative title. It has been repeatedly
ruled that certifications issued by the CENRO, or specialists of the DENR, as well as Survey
Plans prepared by the DENR containing annotations that the subject lots are alienable, do
not constitute incontrovertible evidence to overcome the presumption that the property
sought to be registered belongs to the inalienable public domain. Rather, this Court
stressed the importance of proving alienability by presenting a copy of the original
113

classification of the land approved by the DENR Secretary and certified as true copy by the
legal custodian of the official records.
Moreover, as petitioner Republic aptly points out, Lualhati failed to provide any other
proof of acts of dominion over the subject land other than the fact that she, together with
her husband and children, planted fruit-bearing trees and constructed their home thereon
considering the vastness of the same. A mere casual cultivation of portions of the land by
the claimant, and the raising thereon of cattle, do not constitute possession under claim of
ownership. In that sense, possession is not exclusive and notorious as to give rise to a
presumptive grant from the State.
REPUBLIC OF THE PHILIPPINES vs. SPOUSES DANTE and LOLITA BENIGNO, G.R. No.
205492, March 11, 2015, J. Del Castillo
The State is not estopped from the acts of the Clerk of Court in land registration cases.
Illegal acts of government agents do not bind the State. Assuming that it is, the respondents
did not prove that the land sought to be registered is an alienable and disposable land. All
applications for original registration under the Property Registration Decr ee must include
both (1) a CENRO or PENRO certification and (2) a certified true copy of the original
classification made by the DENR Secretary.
SURVIVING HEIRS OF ALFREDO R. BAUTISTA, namely: EPIFANIA G. BAUTISTA and
ZOEY G. BAUTISTA vs. FRANCISCO LINDO and WELHILMINA LINDO; and HEIRS OF
FILIPINA DAQUIGAN, IMELDA DAQUIGAN and CORSINO DAQUIGAN, REBECCA
QUIAMCO and ANDRES QUIAMCO, ROMULO LORICA and DELIA LORCIA, GEORGE
CAJES and LAURA CAJES, MELIDA BANEZ AND FRANCISCO BANEZ, MELANIE
GOFREDO, GERVACIO CAJES and ISABEL CAJES, EGMEDIO SEGOVIA and VERGINIA
SEGOVIA, ELSA N. SAM, PEDRO M. SAM, and LINA SAM, SANTIAGO MENDEZ and MINA
MENDEZ, HELEN M. BURTON and LEONARDO BURTON, JOSE JACINTO and
BIENVENIDA JACINTO, IMELDA DAQUIGAN, LEO MATIGA and ALICIA MATIGA,
FLORENCIO ACEDO JR., and LYLA VALERIO, G.R. No. 208232, March 10, 2014, J.
Velasco Jr.
Alfredo Bautista was awarded a free-patent land, which he subdivided and subsequently
sold to several vendees. He tried to repurchase the said lands three years later. The
Supreme Court held that while the deeds of sale do not explicitly contain the stipulation
that the sale is subject to repurchase by the applicant within a period of five (5) years from
the date of conveyance pursuant to Sec. 119 of CA 141, still, such legal provision is deemed
integrated and made part of the deed of sale as prescribed by law. It is basic that the law is
deemed written into every contract. Although a contract is the law between the parties, the
provisions of positive law which regulate contracts are deemed written therein and shall
limit and govern the relations between the parties. Thus, it is a binding prestation in favor
of Bautista which he may seek to enforce.

114

RAFAEL VALES, CECILIA VALES-VASQUEZ, and YASMIN VALES-JACINTO, vs. MA. LUZ
CHORESCA GALINATO, ERNESTO CHORESCA, TEOFILO AMADO, LORNA PARIAN
MEDIANERO, REBECCA PORCAL, and VIVENCIO ORDOYO, G.R. No. 180134, March 5,
2014, J. Perlas-Bernabe
DAR Memorandum provides that tenants should (a) have actual knowledge of unregistered
transfers of ownership of lands covered by Torrens Certificate of Titles prior to October 21,
1972, (b) have recognized the persons of the new owners, and (c) have been paying
rentals/amortization to such new owners in order to validate the transfer and bind the
tenants to the same. In the case at bar, it is undisputed that the subject sale was not
registered or even annotated on the certificates of title covering the subject lands.
SPOUSES MARIO AND JULIA CAMPOS, vs. REPUBLIC OF THE PHILIPPINES,G.R. No.
184371, March 5, 2014, J. Brion
Persons applying for registration of title under Section 14(1) of Presidential Decree No.
1529 must prove: (1) that the land sought to be registered forms part of the disposable and
alienable lands of the public domain, and (2) that they have been in open, continuous,
exclusive and notorious possession and occupation of the same under a bona fide claim of
ownership since June 12, 1945, or earlier. It is emphasized that since the effectivity of P.D.
No. 1073 on January 25, 1977, a mere showing of possession and occupation for thirty (30)
years or more is no longer sufficient.
SPS. ANTONIO FORTUNA AND ERLINDA FORTUNA, vs. REPUBLIC OF THE
PHILIPPINES,G.R. No. 173423, March 05, 2014, J. Brion
Mere notations appearing in survey plans are inadequate proof of the covered properties
alienable and disposable character. These notations, at the very least, only establish that
the land subject of the application for registration falls within the approved alienable and
disposable area per verification through survey by the proper government office. The
applicant, however, must also present a copy of the original classification of the land into
alienable and disposable land, as declared by the DENR Secretary or as proclaimed by the
President.
THE HON. SECRETARY OF THE DEPARTMENT OF AGRARIAN REFORM VS. NEMESIO
DUMAGPI, REPRESENTED BY VICENTE DUMAGPI, G.R. No. 195412, February 04,
2015, J. Reyes
The respondent claims that he is the owner of the disputed parcel of land by virtue of
his open, exclusive, notorious and continuous possession of the land for more than 30
years. The Supreme Court ruled that adverse possession can only ripen into ownership
when the land adversely owned is classified as an agricultural land. If the disputed land
is non-agricultural, adverse possession cannot ripen into ownership.

115

REPUBLIC OF THE PHILIPPINES vs. CECILIA GRACE L. ROASA, married to GREG

AMBROSE ROASA, as herein represented by her Attorneys-in-Fact, BERNARDO M.
NICOLAS, JR. and ALVIN B. ACAYEN, G.R. No. 176022, February 2, 2015, J. Peralta

An applicant for original registration of title based on a claim of exclusive and continuous
possession or occupation must show the existence of the following: (1) Open, continuous,
exclusive and notorious possession, by themselves or through their predecessors -ininterest, of land; (2) The land possessed or occupied must have been declared alienable and
disposable agricultural land of public domain; (3) The possession or occupation was under
a bona fide claim of ownership; (4) Possession dates back to June 12, 1945 or earlier.
Therefore, what is important in computing the period of possession is that the land has
already been declared alienable and disposable at the time of the application for
registration. Upon satisfaction of this requirement, the computation of the period may
include the period of adverse possession prior to the declaration that land is alie nable and
disposable.
In the present case, there is no dispute that the subject lot has been declared alienable and
disposable on March 15, 1982. This is more than eighteen (18) years before Roasa's
application for registration, which was filed on December 15, 2000. Moreover, the
unchallenged testimonies of two of Roasa's witnesses established that the latter and her
predecessors-in-interest had been in adverse, open, continuous, and notorious possession
in the concept of an owner even before June 12, 1945.
LUZVIMINDA APRAN CANLAS vs. REPUBLIC OF THE PHILIPPINES, G.R. No.
200894. November 10, 2014, J. Leonen
An applicant for land registration or judicial confirmation of incomplete or imperfect title
under Section 14(1) of Presidential Decree No. 1529 must prove the following
requisites:"(1) that the subject land forms part of the disposable and alienable lands of the
public domain, and (2) that [the applicant has] been in open, continuous, exclusive and
notorious possession and occupation of the same under a bona fide claim of ownership
since June 12, 1945, or earlier." Concomitantly, the burden to prove these requisites rests
on the applicant.
The two requisites were complied with in this case. With regard to the first requisite, the
land subject of registration is part of the alienable and disposable lands of the public
domain by virtue of Department of Environment and Natural Resources report. With
regard to the second requisite, applicant acquired the property by inheritance from
Honorio and Gregorio S. Apran and she and her predecessors-in-interest have been in its
continuous possession of the alienable and disposable parcel of land of the public domain
under a bona fide claim of ownership since 1900.

116

SAINT MARY CRUSADE TO ALLEVIATE POVERTY OF BRETHREN FOUNDATION, INC.

VS. HON. TEODORO T. RIEL, ACTING PRESIDING JUDGE, REGIONAL TRIAL COURT,
NATIONAL CAPITAL JUDICIAL REGION, BRANCH 85, QUEZON CITY, UNIVERSITY OF
THE PHILIPPINES, G.R. No. 176508. January 12, 2015, J. Bersamin
The petition for judicial reconstitution of Original Certificate of Title was validly dismissed
for failure of the petitioner to present the duplicate or certified copy of Original Certificate
of Title .Thereby, it disobeyed Section 2 and Section 3 of Republic Act No. 26, the provisions
that expressly listed the acceptable bases for judicial reconstitution of an existing Torrens
title.
REPUBLIC OF THE PHILIPPINES VS. SPOUSES JOSE CASTURA AND CASTUERA G.R. No.
203384. January 14, 2015, J. CARPIO
The advance plan and the CENRO certification are insufficient proofs of the alienable and
disposable character of the property. The applicants for registration of title must present a
certified true copy of the Department of Environment and Natural Resources Secretarys
declaration or classification of the land as alienable and disposable.
UNGAY MALOBAGO MINES INC. VS. REPUBLIC OF THE PHILIPPINES, G.R. No. 187892.
January 14, 2015, J. PERALTA
Persons who can file the petition for reconstitution of a lost certificate are the registered
owner, his assigns or persons in interest in the property. In this case, petitioner admitted
that it was not the owner of the land on which the mining patent was issued as the same
was owned and registered in the name of Rapu Rapu Minerals Inc. Thus, not having an
interest on the land amounting to a title to the same, petitioner is not possessed of a legal
personality to institute a petition for judicial reconstitution of the alleged lost Original
Certificate of Title.

IMELDA LEONARDO, FIDELINO AZUCENA, JOSEFINA, ANITA AND SISA ALL SURNAMED
SYJUCO VS. FELISA D. BONIFACIO AND VSD REALTY & DEVELOPMENT CORPORATION,
G.R. No. 148748. January 14, 2015, J. LEONARDO-DE CASTRO
SC found untenable the contention that the action instituted by petitioners is a prohibited
collateral attack on the certificate of title of respondents over the subject land.
To determine whether an attack on a certificate of title is direct or indirect, the relevance of
the object of the action instituted and the relief sought therein must be examined.
When is an action an attack on a title? It is when the object of the action or proceeding is to
nullify the title, and thus challenge the judgment pursuant to which the title was decreed.
The attack is direct when the object of an action or proceeding is to annul or set aside such
judgment, or enjoin its enforcement. On the other hand, the attack is indirect or collateral
117

when, in an action to obtain a different relief, an attack on the judgment is nevertheless

made as an incident thereof.
The instituted action in this case is clearly a direct attack on a certificate of title to real
property. In their complaint for quieting of title, petitioners specifically pray for the
declaration of nullity and/or cancellation of respondents TCTs. The relief sought by
petitioners is certainly feasible since the objective of an action to quiet title, as provided
under Article 476 of the Civil Code of the Philippines, is precisely to quiet, remove,
invalidate, annul, and/or nullify 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.
REPUBLIC OF THE PHILIPPINES VS. EMMANUEL C. CORTEZ, G.R. No. 186639
February 5, 2014, J. Reyes
A survey plan does not constitute incontrovertible evidence to overcome the presumption
that the subject property remains part of the inalienable public domain. Cortez failed to
present a certification from the proper government agency as to the classification of the
subject property. Cortez likewise failed to present any evidence showing that the DENR
Secretary had indeed classified the subject property as alienable and disposable.
REPUBLIC OF THE PHILIPPINES vs. REMMAN ENTERPRISES, INC., represented by RONNIE P.
INOCENCIO, G.R. No. 199310 February 19, 2014, J. REYES

To prove that the subject property forms part of the alienable and disposable lands of the
public domain, the respondent presented two certifications issued by Senior Forest
Management Specialist of the DENR attesting that Lots form part of the alienable and
disposable lands of the public domain "under Project No. 27-B of Taguig, Metro Manila as
per LC Map 2623, approved on January 3, 1968." However, the said certifications are
insufficient to prove that the subject properties are alienable and disposable. The
certification issued by the proper government agency that a parcel of land is alienable and
disposable, applicants for land registration must prove that the DENR Secretary had
approved the land classification and released the land of public domain as alienable and
disposable. They must present a copy of the original classification approved by the DENR
Secretary and certified as true copy by the legal custodian of the records.
With regard to possession, although it was testified that the respondent and its
predecessors-in-interest cultivated the subject properties, by planting different crops
thereon, his testimony is bereft of any specificity as to the nature of such cultivation as to
warrant the conclusion that they have been indeed in possession and occupation of the
subject properties in the manner required by law. There was no showing as to the number
of crops that are planted in the subject properties or to the volume of the produce
harvested from the crops supposedly planted thereon.

118

Further, assuming ex gratia argumenti that the respondent and its predecessors-in-interest
have indeed planted crops on the subject properties, it does not necessarily follow that the
subject properties have been possessed and occupied by them in the manner contemp lated
by law. The supposed planting of crops in the subject properties may only have amounted
to mere casual cultivation, which is not the possession and occupation required by law.
REPUBLIC OF THE PHILIPPINES VS. ZURBARAN REALTY & DEVELOPMENT CORP. G.R.
No. 164408, March 24, 2014, J. BERSAMIN
Registration under Section 14(1) of P.D. No. 1529 is based on possession and occupation of
the alienable and disposable land of the public domain since June 12, 1945 or earlier,
without regard to whether the land was susceptible to private ownership at that time. The
applicant needs only to show that the land had already been declared alienable and
disposable at any time prior to the filing of the application for registration.
On the other hand, an application under Section 14(2) of P.D. No. 1529 is based on
acquisitive prescription and must comply with the law on prescription as provided by the
Civil Code. In that regard, only the patrimonial property of the State may be acquired by
prescription pursuant to the Civil Code. For acquisitive prescription to set in, therefore, the
land being possessed and occupied must already be classified or declared as patrimonial
property of the State. Otherwise, no length of possession would vest any right in the
possessor if the property has remained land of the public dominion. Malabanan stresses
that even if the land is later converted to patrimonial property of the State, possession of it
prior to such conversion will not be counted to meet the requisites of acquisitive
prescription. Thus, registration under Section 14(2) of P.D. No. 1529 requires that the land
had already been converted to patrimonial property of the State at the onset of the period
of possession required by the law on prescription.
An application for registration based on Section 14(2) of P.D. No. 1529 must, therefore,
establish the following requisites, to wit: (a) the land is an alienable and disposable, and
patrimonial property of the public domain; (b) the applicant and its predecessors -ininterest have been in possession of the land for at least 10 years, in good faith and with just
title, or for at least 30 years, regardless of good faith or just title; and (c) the land had
already been converted to or declared as patrimonial property of the State at the begin ning
of the said 10-year or 30-year period of possession.
Republic vs. Gomez, G.R.NO. 189021, Feb. 22, 2012
The applicant for land registration must prove that the DENR Secretary had
approved the land classification and released the land of the public domain as
alienable and disposable, and that the land subject of the application for
registration falls within the approved area per verification through survey by
the PENRO or CENRO. In addition, the applicant for land registration must
present a copy of the original classification approved by the DENR Secretary
and certified as a true copy by the legal custodian of the official records.
119

Republic vs. Vega, 639 SCRA 541

While Cayetano failed to submit any certification which would formally attest to
the alienable and disposable character of the land applied for, the Certification
by DENR Regional Technical Director Celso V. Loriega, Jr., as annotated on the
subdivision plan submitted in evidence by Paulita, constitutes substantial
compliance with the legal requirement. It clearly indicates that Lot 249 had
been verified as belonging to the alienable and disposable area as early as July
18, 1925.
Ong vs. Republic, 548 SCRA 160
Actual possession of a land consists in the manifestation of acts of dominion
over it of such a nature as a party would naturally exercise over his own
property.
Republic vs. Espinosa, 677 SCRA 92
There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription. It is only when such
alienable and disposable lands are expressly declared by the State to be no
longer intended for public service or for the development of the national wealth
that the period of acquisitive prescription can begin to run. Such declaration
shall be in the form of a law duly enacted by Congress or a Presidential
Proclamation in cases where the President is duly authorized by law.
Thus, granting that Isabel and, later, Espinosa posse ssed and occupied the
property for an aggregate period of thirty (30) years, this does not operate to
divest the State of its ownership. The property, albeit allegedly alienable and
disposable, is not patrimonial. As the property is not held by the State in its
private capacity, acquisition of title thereto necessitates observance of the
provisions of Section 48(b) of the PLA in relation to Section 14(1) of P.D. No.
1529 or possession and occupation since June 12, 1945. For prescription to
run against the State, there must be proof that there was an official declaration
that the subject property is no longer earmarked for public service or the
development of national wealth. Moreover, such official declaration should have
been issued at least ten (10) or thirty (30) years, as the case may be, prior to
the filing of the application for registration. The period of possession and
occupation prior to the conversion of the property to private or patrimonial
120

shall not be considered in determining completion of the prescriptive period.

Indeed, while a piece of land is still reserved for public service or the
development of national wealth, even if the same is alienable and disposable,
possession and occupation no matter how lengthy will not ripen to ownership
or give rise to any title that would defeat that of the States if such did not
commence on June 12, 1945 or earlier.
At any rate, the notation on the survey plan does not constitute
incontrovertible evidence that would overcome the presumption that the
property belongs to the inalienable public domain.
Tan vs. Republic April

16,

2012

Possession is open when it is patent, visible, apparent, notorious and

not clandestine. It is continuous when uninterrupted, unbroken and
not intermittent or occasional; exclusive when the adverse possessor
can show exclusive dominion over the land and an appropriation of it to
his own use and benefit; and notorious when it is so conspicuous that it
is generally known and talked of by the public or the people in the
neighborhood.
Rep. vs.

M etro Index

Realty, G.R. No. 198585, July 2, 2012

The mere planting of a sign or symbol of possession cannot justify a Magellan like claim of dominion over an immense tract of territory. Possession as a
means of acquiring ownership, while it may be constructive, is not a mere
fiction.
Roman Catholic Apostolic Administrator
Registration Commission, 102 Phil. 596.

of

Davao,

Inc.

vs.

Land

A corporation sole, which consists of one person only, is vested with the right
to purchase and hold real estate and to register the same in trust for the
faithful or members of the religious society or church for which the corporation
was organized.
Subsequent Registration
Lucena vs. CA, G.R. NO. L-77468, August 25, 1999
It is a well-settled rule that 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.
His mere refusal to believe that such defect exists, or his willful closing of his
121

eyes to the possibility of the existence of a defect in his vendor's title, will not
make him an innocent purchaser for value, if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defect
as would have led to its discovery had he acted with that measure of
precaution which may reasonably be required of a prudent man in a like
situation.
Heirs of Brusas vs. CA, G.R. No. 126875, August 26, 1999
In the instant case, the litigated property is still registered in the name of Ines
Brusas, so that insofar as procedure is concerned, petitioners were correct in
availing of the remedy of reconveyance. However, an action for reconveyance
presupposes the existence of a defrauded party who is the lawful owner of the
disputed property.
Philippine National Bank vs. Court of Appeals, 98 SCRA 207
A person dealing with registered land is not required to go behind the register
to determine the condition of the property. He is only charged with notice of the
burdens on the property which are noted on the face of the register or the
certificate of title. To require him to do more is to defeat one of the primary
objects of the Torrens system.
Potenciano vs. Dineros, G.R. No. L-7614, M ay 31, 1955
The judgment creditor may not, as purchaser at the auction sale, invoke the
protection accorded by law to purchasers in good faith, because at the time of
the auction he already had notice, thru the third party claim filed by
Potenciano, that the property had already been acquired by the latter from the
judgment debtor.

Guaranteed Homes Inc vs. Valdez, G.R. No. 171531, Jan. 30, 2009
Every conveyance, mortgage, lease, lien, attachment, order, judgment,
instrument or entry affecting registered land shall, if registered, filled or
entered in the office of the Register of Deeds of the province or city where the
land to which it relates lies, be constructive notice to all persons from the time
of such registering filing or entering.
Fudot vs. Cattleya Land Inc., G.R. No. 171008 , Sept. 13, 2007
The registration of a void deed, for instance, is not an impediment to a
declaration by the courts of its invalidity.

122

Cusi vs. Domingo, G.R.NO. 195825, Feb. 27, 2013

As the purchasers of the property, they also came under the clear obligation to
purchase the property not only in good faith but also for value. A purchaser in
good faith is one who buys the property of another without notice that some
other person has a right to, or interest in, such property and pays full and fair
price for the same.

Non-Registrable Properties
Malabanan vs. Republic, 587 SCRA 172
Only when the property has become patrimonial can the prescriptive period for
the acquisition of property of the public domain begin to run.
Alvarez vs. PICOP Resources, Inc., 606 SCRA 444
Forest lands cannot be alienated in favor of petitioner private persons or
entities.
Republic vs. Fabio, G.R. No. 159589, Dec. 23, 2008
The usual proviso requiring the reservation to be subject to private rights
simply means that persons claiming rights over the reserved land are not
precluded from proving their claims.
Almagro vs. Kwan, 634 SCRA 250
To qualify as foreshore land, it must be shown that the land lies between the
high and low water marks and is alternately wet and dry according to the flow
of the tide. The land's proximity to the waters alone does not automatically
make it a foreshore land.
Republic vs. Espinosa G.R.NO. 171514, July 18, 2012
The notation made by a surveyor-geodetic engineer that the property surveyed
is alienable and disposable is not the positive government act that would
remove the property from the inalienable domain. Neither it is the evidence
accepted as sufficient to controvert the presumption that the property is
inalienable.
Chavez v. Public Estates Authority and AM ARI Coastal Development
Corporation, G.R. No. 133250, July 9, 2002
123

Foreshore and submerged areas irrefutably belonged to the public domain and
were inalienable unless reclaimed, classified as alienable lands open to
disposition and further declared no longer needed for public service. The fact
that alienable lands of the public domain were transferred to the PEA (now
PRA) and issued land patents or certificates of title in PEAs name did not
automatically make such lands private.
Republic vs. Paraaque G.R.NO. 191109, July 18, 2012
The subject reclaimed lands are still part of the public domain, owned
by the State and, therefore, exempt from payment of real estate taxes.
Here, the subject lands are reclaimed lands, specifically portions of the
foreshore and offshore areas of Manila Bay. As such, these lands
remain public lands and form part of the public domain.
Dealings with Unregistered Land
Heirs of Tanyag

vs.

Gabriel, 669

SCRA

284

It is continuous when uninterrupted, unbroken and not intermittent

or occasional. It is exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own
use and benefit. It is notorious when it is so conspicuous that it is
generally known and talked of by the public or the people in the
neighborhood.
The party who asserts ownership by adverse possession must prove
the presence of the essential elements of acquisitive prescription.
Tan vs. Republic,
2012

G.R. No. 193443

G.R. No. 193443, April 16,

There must be an express declaration by the State that the public dominion
property is no longer intended for public service or the development of the
national wealth or that the property has been converted into patrimonial.
Without such express declaration, the property, even if classified as alienable
or disposable, remains property of the public dominion, pursuant to Article
420(2), and thus incapable of acquisition by prescription.
For one to invoke the provisions of Section 14(2) and set up acquisitive
prescription against the State, it is primordial that the status of the property as
patrimonial be first established. Furthermore, the period of possession
preceding the classification of the property as patrimonial cannot be considered
in determining the completion of the prescriptive period.
124

Tan vs. Republic,

2012

G.R. No. 193443

G.R. No. 193443, April 16,

Possession is open when it is patent, visible, apparent, notorious and not

clandestine. It is continuous when uninterrupted, unbroken and not
intermittent or occasional; exclusive when the adverse possessor can show
exclusive dominion over the land and an appropriation of it to his own use and
benefit; and notorious when it is so conspicuous that it is generally known and
talked of by the public or the people in the neighborhood. The party who
asserts ownership by adverse possession must prove the presence of the
essential elements of acquisitive prescription.
Tax declarations per se do not qualify as competent evidence of actual
possession for purposes of prescription.
A claim of ownership will not proper on the basis of tax declarations if
unaccompanied by proof of actual possession.
Valiao v. Republic, 661 SCRA 299
The burden of proof in overcoming the presumption of State ownership of the
lands of the public domain is on the person applying for registration (or
claiming ownership), who must prove that the land subject of the application is
alienable or disposable. It is settled that the applicant must present proof of
specific acts of ownership to substantiate the claim and cannot just offer
general statements which are mere conclusions of law than factual evidence of
possession.
DUTY OF THE BUYER/BUYER IN GOOD FAITH
THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI,* MELENCIA** S.
MAXIMO, ALBERTO A. SARILI, IMELDA S. HIDALGO, all herein represented by CELSO
A. SARILI vs. PEDRO F. LAGROSA, represented in this act by his Attorney-in-Fact
LOURDES LABIOS MOJICA, G.R. No. 193517, January 15, 2014, J. Perlas-Bernabe
A higher degree of prudence is required from one who buys from a person who is not the
registered owner, although the land object of the transaction is registered. The buyer also
has the duty to ascertain the identity of the person with whom he is dealing with and the
latters legal authority to convey the property.

The strength of the buyers inquiry on the sellers capacity or legal authority to sell depends
on the proof of capacity of the seller. If the proof of capacity consists of a special power of
125

attorney duly notarized, mere inspection of the face of such public document already
constitutes sufficient inquiry. If no such special power of attorney is provided or there is
one but there appears to be flaws in its notarial acknowledgment, mere inspection of the
document will not do; the buyer must show that his investigation went beyond the
document and into the circumstances of its execution.

In the present case, it is undisputed that Spouses Sarili purchased the subject property
from Ramos on the strength of the latters ostensible authority to sell under the subject
SPA. The said document, however, readily indicates flaws in its notarial acknowledgment
since the respondents community tax certificate (CTC) number was not indicated thereon.
Despite this irregularity, however, Spouses Sarili failed to show that they conducted an
investigation beyond the subject SPA and into the circumstances of its execution as
required by prevailing jurisprudence. Hence, Spouses Sarili cannot be considered as
innocent purchasers for value.
FLORENTINO W. LEONG AND ELENA LEONG, ET AL. vs. EDNA C. SEE, G.R. No. 19407 7,
December 03, 2014, J. Leonen
An innocent purchaser for value refers to someone who buys the property of another
without notice that some other person has a right to or interest in it, and who pays a full
and fair price at the time of the purchase or before receiving any notice of ano ther persons
claim. One claiming to be an innocent purchaser for value has the burden of proving such
status. Respondent exerted due diligence when she ascertained the authenticity of the
documents attached to the deed of sale such as the marital settlement agreement with
Florentinos waiver of interest over the property. She did not rely solely on the title. She
even went to the Registry of Deeds to verify the authenticity of the title. The Supreme Court
upheld the ruling of the lower courts which considered the inquiries made by respondent
to be acts of an innocent purchaser in good faith and for value.
KRYSTLE REALTY DEVELOPMENT CORPORATION, rep. by CHAIRMAN OF THE
BOARD, WILLIAM C. CU vs. DOMINGO ALIBIN, as substituted by his heirs, G.R. No.
196117/G.R. No. 196129, August 13, 2014, J. Perlas-Bernabe
One is considered a buyer in bad faith not only when he purchases real estate with
knowledge of a defect or lack of title in his seller but also when he has knowledge of facts
which should have alerted him to conduct further inquiry or investigation, as Krystle Realty
in this case. Further, as one asserting the status of a buyer in good faith and for value, it had
the burden of proving such status, which goes beyond a mere invocation of the ordinary
presumption of good faith.
The agreement of the parties to submit the determination of the genuineness of Domingos
signature to a handwriting expert of the NBI does not, authorize the RTC to accept the
findings of such expert. The opinion of a handwriting expert, therefore, does not

126

mandatorily bind the court, the expert's function being to place before the court data upon
which it can form its own opinion.
RAUL SABERON, JOAN F. SABERON and JACQUELINE SABERON vs. OSCAR
VENTANILLA, JR., and CARMEN GLORIA D. VENTANILLA, G.R. No. 192669, April 21,
2014, J. Mendoza
While a third party may not be considered as innocent purchaser for value, he can still
rightfully claim for actual and compensatory damages, considering that he did not join the
other defendants in their efforts to frustrate plaintiffs rights over the disputed properties
and who might well be an unwilling victim of the fraudulent scheme employed by the other
defendants.
Nonetheless, even if when no bad faith can be ascribed to the parties alike, an equal footing
of the parties necessarily tilts in favor of the superiority of the notice of levy and the
constructive notice against the whole world which the original party to the contract of sale
had produced and which effectively bound third persons. Thus, the latter has two options
available: 1) they may exercise the right to appropriate after payment of indemnity
representing the value of the improvements introduced and the necessary and useful
expenses defrayed on the subject lots; or 2) they may forego payment of the said indemnity
and instead, oblige the Saberons to pay the price of the land.
ALFARO VS. DUMALAGAN, G.R. No.186622, January 22, 2014, J. Perez
A purchaser in good faith is one who buys the property of another without notice that some
other person has a right to, or an interest in such property, and pays a full and fair price for
the same at the time of such purchase, or before he has notice of some other persons claim
or interest in the property. The petitioners are not such purchaser.
Petitioners had prior knowledge of the previous sales by installment of portions of the
property to several purchasers. Moreover, petitioners had prior knowledge of responden ts
possession over the subject property. Hence, the rule on double sale is inapplicable in the
case at bar. As correctly held by the appellate court, petitioners prior registration of the
subject property, with prior knowledge of respondents claim of ownership and possession,
cannot confer ownership or better right over the subject property.
SPOUSES BERNADETTE and RODULFO VILLABAR VS.ANGELITO L. OPININ, G.R. N.O
17604, January 15, 2014. J. del Castillo
Bad faith cannot be presumed. It is a question of fact that must be proven by clear and
convincing evidence. The burden of proving bad faith rests on the one alleging it. Spouses
Vilbar failed to adduce the necessary evidence. Furthermore, the Court recognizes the
settled rule that levy on attachment, duly registered, takes preference over a prior
unregistered sale. This result is a necessary consequence of the fact that the properties
involved were duly covered by the Torrens system which works under the fundamental
127

principle that registration is the operative act which gives validity to the transfer or creates
a lien upon the land.

JUST COMPENSATION
LAND BANK OF THE PHILIPPINES vs. JAIME K. IBARRA, ANTONIO K. IBARRA, JR., LUZ
IBARRA VDA. DE JIMENEZ, LEANDRO K IBARRA, and CYNTHIA IBARRAGUERRERO, G.R. No. 182472. November 24, 2014, J. Peralta
The petitioners lands were subjected to the coverage of the agrarian reform program. The
petitioner then filed a complaint for just compensation of the said land. The issue in the
case is what will be the basis of valuation of the property taken for Just Compensation.
The Supreme Court held that the seizure of landholdings or properties covered by PD No.
27 did not take place on October 21, 1972, but upon the payment of just
compensation. Indeed, acquisition of property under the Operation Land Transfer Program
under PD No. 27 does not necessarily mean that the computation of just compensation
thereof must likewise be governed by the same law. In determining the applicable formula,
the date of the payment of just compensation must be taken into consideration for such
payment marks the completion of the agrarian reform process. If the agrarian reform
process is still incomplete as when just compensation is not settled prior to the passage of
RA No. 6657, it should be computed in accordance with said law despite the fact that the
property was acquired under PD No. 27. Clearly, by law and jurisprudence, R.A. No. 6657,
upon its effectivity, became the primary law in agrarian reform covering all then pending
and uncompleted processes, with P.D. No. 27 and E.O. No. 228 being only suppletory to the
said law.
It is, therefore, on equitable considerations that the retroactive application of RA No. 6657
is based for it would be highly inequitable on the part of the landowners to compute just
compensation using the values not at the time of the payment but at the time of the taking
in 1972, considering that the government and the farmer-beneficiaries have already
benefitted from the land.
CANCELLATION OF TITLE
ROSARIO BANGUIS-TAMBUYAT vs. WENIFREDA BALCOM-TAMBUYAT, G.R. No.
202805, March 23, 2015, J. Del Castillo
Under Sec. 108 of PD 1529, the proceeding for the erasure, alteration, or amendment of a
certificate of title may be resorted to in seven instances: (1) when registered interests of
any description, whether vested, contingent, expectant, or inchoate, have terminated and
ceased; (2) when new interests have arisen or been created which do not appear upon the
certificate; (3) when any error, omission or mistake was made in entering a certificate or
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any memorandum thereon or on any duplicate certificate; (4) when the name of any person
on the certificate has been changed; (5) when the registered owner has been married, or,
registered as married, the marriage has been terminated and no right or interest of heirs or
creditors will thereby be affected; (6) when a corporation, which owned registered land
and has been dissolved, has not conveyed the same within three years after its dissolution;
and (7) when there is reasonable ground for the amendment or alteration of title. The
present case falls under (3) and (7), where the Registrar of Deeds of Bulacan committed an
error in issuing TCT T-145321 in the name of Adriano M. Tambuyat married to Rosario E.
Banguis when, in truth and in fact, respondent Wenifreda and not Banguis is Adrianos
lawful spouse.
ACTION FOR RECONVEYANCE
HEIRS OF FRANCISCO I. NARVASA, SR., ANDHEIRS OF PETRA IMBORNAL AND
PEDRO FERRER,REPRESENTED BY THEIR ATTORNEY -IN-FACT, MRS. REMEDIOS B.
NARVASA-REGACHO vs. EMILIANA, VICTORIANO, FELIPE, MATEO, RAYMUNDO,
MARIA,AND EDUARDO, ALL SURNAMED IMBORNAL, G.R. No. 182908, August 06,
2014, J. Perlas Bernabe
An action for reconveyance based on an implied trust prescribes in ten (10) years,
reckoned from the date of registration of the deed or the date of issuance of the certificate
of title over the property, if the plaintiff is not in possession. Hence, when a complaint for
reconveyance is filed beyond the 10-year reglementary period, such cause of action is
barred by prescription.
HEIRS OF TELESFORO JULAO, namely, ANITA VDA. DE ENRIQUEZ, SONIA J.
TOLENTINO and RODERICK JULAO v SPOUSES ALEJANDRO and MORENITA DE JESUS,
G.R No. 176020, September 29, 2014. DEL CASTILLO.
In an action to recover, the property must be identified. Article 434 of the Civil Code states
that "[i]n an action to recover, the property must be identified, and the plaintiff must rely
on the strength of his title and not on the weakness of the defendant's claim." The plaintiff,
therefore, is duty-bound to clearly identify the land sought to be recovered, in accordance
with the title on which he anchors his right of ownership. It bears stressing that the failure
of the plaintiff to establish the identity of the property claimed is fatal to his case. In this
case, petitioners failed to identify the property they seek to recover as they failed to
describe the location, the area, as well as the boundaries thereof. No survey plan was
presented by petitioners to prove that respondent spouses actually encroached upon the
70-square meter portion of petitioners' property.
TORTS AN D DAM AGES
THE TORTFEASOR

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RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND ADVERTISING

CORPORATION* AND TRANSWORLD MEDIA ADS, INC.,G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe
Pursuant to Article 2194, joint tortfeasors are solidarily liable. They are each liable as
principals, to the same extent and in the same manner as if they had performed the
wrongful act themselves. When a construction of a billboards lower structure without the
proper foundation by the first contractor, and that of the second contractors finishing its
upper structure and just merely assuming that the first would reinforce the weak
foundation are the two successive acts which were the direct and proximate cause of the
damages sustained by the company who hired their services. Worse, both contractors were
fully aware that the foundation for the billboard was weak; yet, neither of them took any
positive step to reinforce the same. They merely relied on each others word that repairs
would be done to such foundation, but none was done at all.
Ylarde vs. Aquino, 163 SCRA 697
Teacher Edgardo Aquino, after bringing his pupils to an excavation site dug by
them, left them all by themselves, and one of the pupils fell into the pit. A
teacher acted with fault and gross negligence because a teacher who stands in
loco parentis to his pupils would have made sure that the children are
protected from all harm in his company.
Cogeo-Cubao Operators and Drivers Association vs. Court of Appeals, G.R.
NO. 100727, M arch 18, 1992
Cogeo-Cubao Operators and Drivers Association, a group of drivers, took over
all jeepneys of a transportation company, Lungsod Corporation, as well as the
operation of the service in the companys route without authority from the
Public Service Commission. The act was in violation of Article 21 of the Civil
Code [Any person who willfully causes loss or injury to another in a manner
that is contrary to morals, good customs or public policy shall compensate the
latter for damages] because the constitutional right of the drivers to redress
their grievances with the company should not undermine public peace and
order nor should it violate the legal rights of other persons.
PROXIMATE CAUSE
F.F. Cruz and Co. vs. Court of Appeals, 164 SCRA 731
A fire that broke out in the furniture shop of the petitioner spread to an
adjacent house because of the shop owners failure to construct a firewall as
required by a city ordinance. The doctrine of res ipsa loquitur, which is applied
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by the Court in this case, may be stated as follows: Where the thing which
caused the injury complained of is shown to be under the management of the
defendant or his servants and the accident is such as in the ordinary course of
things does not happen if those who have its management or control use
proper care, it affords reasonable evidence, in the absence of explanation by
the defendant, that the accident arose from want of care.
Phoenix Construction, Inc. vs. Dionisio, 148 SCRA 353
The driver of a dump truck parked it improperly at night near his residence
and it was bumped by the driver of a car, who suffered damages. The
proximate cause of the accident was the improper parking of the dump truck.
Africa vs. Caltex, 16 SCRA 448
A fire broke out at a gasoline station while gasoline was being hosed from a
tank truck into the underground storage, right at the opening of the receiving
tank where the nozzle of the hose was inserted, as a result of which several
houses were burned. Under the principle of res ipsa loquitor, the employees
negligence was the proximate cause of the fire which in the ordinary course of
things does not happen.
Gabeto vs. Araneta, 42 Phil. 232
Araneta stopped a calesa with passengers aboard on the street and seized the
rein of the horses bridle, by reason of which the driver brought the carromata
to the adjacent curb and alighted to fix the bridle, and while the driver was
engaged at the horses head, the horse moved forward bringing down a police
telephone box, and because of the noise caused thereby, the horse was
frightened and it ran away and one of the passengers jumped and was killed.
Araneta's act in stopping the horse was held as not the proximate cause of the
accident because the bridle was old, and the leather of which it was made was
probably so weak as to be easily broken.
Gregorio vs. Go, 102 Phil. 556
Go ordered his cargador, who had only a students permit to drive his truck,
but a policeman who boarded the truck took the wheel, and while driving the
truck, it hit and ran over a pedestrian. There was no direct and proximate
casual connection between the defendants negligence and the death because
the proximate immediate and direct cause of the death was the negligence of
the policeman.

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Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA

353
Dionisio's negligence was only contributory, that the "immediate and proximate
cause" of the injury remained the truck driver's "lack of due care" and that
consequently respondent Dionisio may recover damages though such damages
are subject to mitigation by the courts (Article 2179, Civil Code of the
Philippines).
Phoenix Construction, Inc. vs. Intermediate Appellate Court, 148 SCRA
353
Petitioners sought the application of the doctrine of "last clear chance".
The Supreme Court said that the common law rule of contributory negligence
prevented any recovery at all by a plaintiff who was also negligent, even if the
plaintiff's negligence was relatively minor as compared with the wrongful act or
omission of the defendant. The common law notion of last clear chance
permitted courts to grant recovery to a plaintiff who had also been negligent
provided that the defendant had the last clear chance to avoid the casualty and
failed to do so. Accordingly, it is difficult to see what role, if any, the common
law last clear chance doctrine has to play in a jurisdiction where the common
law concept of contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code
of the Philippines.
Is there perhaps a general concept of "last clear chance" that may be extracted
from its common law matrix and utilized as a general rule in negligence cases
in a civil law jurisdiction like ours? We do not believe so. Under Article 2179,
the task of a court, in technical terms, is to determine whose negligence the
plaintiff's or the defendant's was the legal or proximate cause of the injury.
That task is not simply or even primarily an exercise in chronology or physics,
as the petitioners seem to imply by the use of terms like "last" or "intervening"
or "immediate." The relative location in the continuum of time of the plaintiff's
and the defendant's negligent acts or omissions, is only one of the relevant
factors that may be taken into account. Of more fundamental importance are
the nature of the negligent act or omission of each party and the character and
gravity of the risks created by such act or omission for the rest of the
community. The petitioners urge that the truck driver (and therefore his
employer) should be absolved from responsibility for his own prior negligence
because the unfortunate plaintiff failed to act with that increased diligence
which had become necessary to avoid the peril precisely cre ated by the truck
driver's own wrongful act or omission. To accept this proposition is to come too
close to wiping out the fundamental principle of law that a man must respond
for the forseeable consequences of his own negligent act or omission. Our law
on quasi-delicts seeks to reduce the risks and burdens of living in society and
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to allocate them among the members of society. To accept the petitioners' proposition must tend to weaken the very bonds of society.
Philippine Bank of Commerce vs. Court of Appeals, 269 SCRA 695
Respondent entrusted companys cash for deposit to his secretary who
defrauded the company by depositing the money, not to the companys
account, but to her husband who maintained similar account with the bank,
made possible because the duplicate slip was not compulsory required by the
bank in accepting the deposits. Under the doctrine of last clear chance, an
antecedent negligence of a person does not preclude the recovery of damages
for the supervening negligence of, or bar a defense against liability sought by
another, if the latter, who had the last fair chance, could have avoided, the
impending harm by the exercise of due diligence. Here, assuming that the
respondent company was negligent in entrusting cash to a dishonest employee,
thus providing the latter with the opportunity to defraud the company, as
advanced by the petitioner, yet it cannot be denied that the petitioner bank,
thru its teller, had the last clear opportunity to avert the injury incurred by its
client, simply by faithfully observing their self-imposed validation procedure.
Pantranco North Express, Inc. vs. Baesa, 179 SCRA 384
The driver of a Pantranco bus encroached into the lane of an incoming jeepney
and failed to return the bus immediately to its own lane upon seeing the
jeepney coming from the opposite direction, resulting to the death of eight
passengers of the jeep. The doctrine of last clear chance does not take into
operation here because it applies only in 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.
Cebu Shipyard and Engineering W orks, Inc. vs. W illiam Lines, Inc., 306
SCRA 762
The passenger ship of William Lines, Inc. caught fire and sank while in the
custody of Cebu Shipyard and Engineering Works to which it was brought for
annual repair. The doctrine of res ipsa loquitor applies here because the fire
that occurred and consumed MV Manila City would not have happened in the
ordinary course of things if reasonable care and diligence had been exercised
by Cebu Shipyard.
Radio Communications of the Phils., Inc. [RCP I] vs. Court of Appeals, 143
SCRA 657
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Defamatory words were inserted in the telegram sent by respondent Timan,

which were not noticed and were included by the RCPI in the teleG.R.am when
delivered. Since negligence may be hard to substantiate in some cases, we may
apply the doctrine of RES IPSA LOQUITUR (the thing speaks for itself), by
considering the presence of facts or circumstances surrounding the injury.
LEGAL INJURY
Custodio vs. Court of Appeals, 253 SCRA 483
Custodio filed a case for damages because his tenants cancelled their contract
of lease due to adobe fences constructed by adjoining lot owners which
restricted passage from and to his apartment. To warrant the recovery of
damages, there must be both a right of action for a legal wrong inflicted by the
defendant, and damage resulting to the plaintiff therefrom as a wrong without
damage, or damage without wrong, does not constitute a cause of action, since
damages are merely part of the remedy allowed for the injury caused by a
breach or wrong.
Metropolitan Bank and Trust Company vs. Tan Chuan Leong, 42 SCRA
352
Although B&I Trading had knowledge of the simulated sale between Tan Chuan
Leong and his son and had entered into the contract of mortgage pursuant to a
design to defraud Leongs creditors, no damage or prejudice appears to have
been suffered by the petitioner thereby. Absent damage or prejudice, no right of
action arises in favor of the petitioner because wrongful violation of a legal right
is not a sufficient element of a cause of action unless it has resulted in an
injury causing loss or damages.
INTENTIONAL TORTS
Yu vs. Court of Appeals, 217 SCRA 328
House of Mayfair, a foreign manufacturer of wall covering products, with which
Yu has had an exclusive distributorship aageement was duped into believing
that the goods ordered through the FNF Trading were to be shipped to Nigeria
only, but the goods were actually sent to and sold in the Philippines. A ploy of
this character is akin to the scenario of a third person who induces a party to
renege on or violate his undertaking under a contract, thereby entitling the
other contracting party to relief therefrom.

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Valenzuela vs. Court of Appeals, G.R. NO. 83122, October 19, 1990
Valenzuela did not receive his full commission which amounted to P1.6 Million
from the P4.4 Million insurance coverage of the Delta Motors he obtained for
Philippine American General Insurance (Philamgen) because the Philamgen
terminated their agency agreement after Valenzuela refused to share his
commission with the company. Philamgen was found to have acted with bad
faith and with abuse of right in terminating the agency under the principle that
every person must in the exercise of his rights and in the performance of his
duties act with justice, give everyone his due, and observe honesty and good
faith (Art. 19, Civil Code), and every person who, contrary to law, willfully or
negligently causes damages to another, shall indemnify the latter for the same.
NEGLIGENCE
DR. FILOTEO A. ALANO vs, ZENAIDA MAGUD-LOGMAO, G.R. No. 175540, April 7, 2014, J.
Peralta

It also clearly stated that permission or authorization to retrieve and remove the internal
organs of the deceased was being given ONLY IF the provisions of the applicable law had
been complied with. Such instructions reveal that Dr. Alano acted prudently by directing
his subordinates to exhaust all reasonable means of locating the relatives of the deceased.
He could not have made his directives any clearer. He even specifically mentioned that
permission is only being granted IF the Department of Surgery has complied with all the
requirements of the law. Verily, Dr. Alano could not have been faulted for having full
confidence in the ability of the doctors in the Department of Surgery to comprehend the
instructions, obeying all his directives, and acting only in accordance with the requirements
of the law.
DAVAO HOLIDAY TRANSPORT SERVICES CORPORATION vs. SPOUSES EULOGIO AND
CARMELITA EMPHASIS, G.R. No. 211424, November 26, 2014, J. Reyes
Contending that it exercised extraordinary diligence in the selection and supervision of its
drivers, petitioner argues that it should be absolved from any liability for damages caused
by its employee. The SC ruled that when an employee causes damage due to his own
negligence while performing his own duties, there arises the juris tantum presumption that
his employer is negligent, rebuttable only by proof of observance of the diligence of a good
father of a family. Failure however of petitioner to establish the modes and measures it
adopted to ensure the proper selection and supervision of its employees, petitioner
therefore should be held liable for the damages cause by its employee.

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CAGAYAN ELECTRIC COOPERATIVE, INC. REPRESENTED BY ITS GENERAL MANAGER

AND CHIEF EXECUTIVE OFFICER, GABRIEL A. TORDESILLAS vs. ALAN RAPANAN AND
MARY GINE TANGONAN, G.R. No. 199886, December 3, 2014, J. Villarama Jr.
1 died and 2 suffered injury due to mishap along the highway. The respondents contended
that the cause of death and injuries was due to live tension wire of Cagayan Electric
Cooperative Inc. The court ruled there was no negligence on the part of Cagayan Electric
Cooperative Inc. Thus, there is no negligence on the part of petitioner that was allegedly the
proximate cause of Camilos death and Rapanans injuries. From the testimonies of
petitioners employees and the excerpt from the police blotter, this Court can reasonably
conclude that, at the time of that fatal mishap, said wires were quietly sitting on the
shoulder of the road, far enough from the concrete portion so as not to pose a ny threat to
passing motor vehicles and even pedestrians. Hence, if the victims of the mishap were
strangled by said wires, it can only mean that either the motorcycle careened towards the
shoulder or even more likely, since the police found the motorcycle not on the shoulder but
still on the road, that the three passengers were thrown off from the motorcycle to the
shoulder of the road and caught up with the wires.
PHILIPPINE NATIONAL BANK vs. CARMELITA S. SANTOS, REYME L. SANTOS,
ET.AL/LINA B. AGUILAR vs. CARMELITA SANTOS, REYME L. SATNTOS, ET.AL, G.R. No.
208293/G.R. No. 208295, December 10, 2014, J. Leonen
PNB failed to release to respondents their deposits as they released it to someone else. The
Supreme Court ruled that PNB, being a bank, should have exercised a degree of diligence
higher than that of a good father of a family. However, their actions and inactions
constitute gross negligence. Thus, the award for moral damages was in order. PNB and
Aguilars gross negligence deprived Angel C. Santos heirs what is rightfully theirs.
Respondents also testified that they experienced anger and embarrassment when
petitioners PNB and Aguilar refused to release Angel C. Santos deposit.
Exemplary damages should also be awarded. The law allows the grant of exemplary
damages by way of example for the public good. The public relies on the banks sworn
profession of diligence and meticulousness in giving irreproachable service, which must be
maintained at all times by the banking sector.
RUKS KONSULT AND CONSTRUCTION vs. ADWORLD SIGN AND ADVERTISING
CORPORATION* AND TRANSWORLD MEDIA ADS, INC., G.R. No. 204866, January 21,
2015, J. Perlas-Bernabe
The petitioners were found negligent by both the RTC and the Court of Appeals and
ordered to pay jointly and severally for damages. The petitioners allege that they are not
negligent. The Supreme Court ruled that as the omission to do something which a
reasonable man, guided by those considerations which ordinarily regulate the conduct of
human affairs, would do, or the doing of something which a prudent and reasonable man
would not do. It is the failure to observe for the protection of the interest of another person
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that degree of care, precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury. CA correctly affirmed the RTCs finding that
Transworld and Ruks are guilty of negligence.
R TRANSPORT CORPORATIONvs. LUISITO G. YU, G.R. No. 174161, February 18, 2015,
J. Peralta
Negligence has been defined as "the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury. Verily, foreseeability is the
fundamental test of negligence. It is the omission to do something which a reasonable man,
guided by those considerations which ordinarily regulate the conduct of human affairs,
would do, or the doing of something which a prudent and reasonable man would not do.
The records show that driver Gimena was clearly running at a reckless speed. He did not
take the necessary precaution and instead, drove on and bumped the deceased despite
being aware that he was traversing a commercial center where pedestrians were crossing
the street. Gimena should have observed due diligence of a reasonably prudent man by
slackening his speed and proceeding cautiously while passing the area.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD.,
AND INTER-ASIA MARINE TRANSPORT, INC. vs. ASIAN TERMINALS, INC., G.R.
No. 195661, March 11, 2015, J. Reyes
ATI suffered damage due to the fault of petitioners negligence. However, petitioners
contended that they should not be held liable for there was no negligence on their part. The
court ruled that Negligence, on the other hand, is defined as the failure to observe that
degree of care, precaution and vigilance that the circumstances justly demand, whereby
another suffers injury. In the case under consideration, the parties do not dispute the facts
of damage upon ATIs unloader, and of such damage being the consequence of someones
negligence. However, the petitioners deny liability claiming that it was not established with
reasonable certainty whose negligence had caused the co-mingling of the metal bars with
the soybean meal cargo. The Court, on this matter, agrees with the CAs disquisition that
the petitioners should be held jointly and severally liable to ATI. ATI cannot be faulted for
its lack of direct access to evidence determinative as to who among the shipowner, Samsun,
ContiQuincyBunge and Inter-Asia should assume liability. The CA had exhaustively
discussed why the doctrine of res ipsa loquitur applies.
EASTERN SHIPPING LINES, INC., Petitioner, v. BPI/MS INSURANCE CORP., & MITSUI
SUMITOMO INSURANCE CO., LTD. G.R. No. 182864. January 12, 2015, J. PEREZ
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, loss, or
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destruction of the goods happened, the transporter shall be held responsible. From the
foregoing, the fault is attributable to ESLI. While no longer an issue, it may be nonetheless
state that ATI was correctly absolved of liability for the damage.
BJDC CONSTRUCTION, REPRESENTED BY ITS MANAGER/PROPRIETOR JANET S. DELA CRUZ
vs. NENA E. LANUZO, CLAUDETTE E. LANUZO, JANET E. LANUZO, JOAN BERNABE E. LANUZO,
AND RYAN JOSE E. LANUZO, G.R. No. 161151 March 24, 2014, J. BERSAMIN

This case involves a claim for damages arising from the death of a motorcycle rider in a
night time accident due to the supposed negligence of a construction company then
undertaking reblocking work on a national highway. The plaintiffs insisted that the
accident happened because the construction company did not provide adequate lighting on
the site, but the latter countered that the fatal accident was caused by the negligence of the
motorcycle rider himself. In order that a party may be held liable for damages for any
injury brought about by the negligence of another, the claimant must prove that the
negligence was the immediate and proximate cause of the injury. Proximate cause is
defined as that cause, which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury and without which the result would not
have occurred.
The company has shown the installation of the necessary warning signs and lights in the
project site. In that context, the fatal accident was not caused by any instrumentality within
the exclusive control of the company. In contrast, Balbino had the exclusive control of how
he operated and managed his motorcycle. The records disclose that he himself did not take
the necessary precautions. As Zamora declared, Balbino overtook another motorcycle rider
at a fast speed, and in the process could not avoid hitting a barricade at the site, caus ing
him to be thrown off his motorcycle onto the newly cemented road. SPO1 Corporals
investigation report corroborated Zamoras declaration. It was shown that the proximate
and immediate cause of the death of Balbino was his own negligence. Hence, the heirs could
not recover damages.
VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014.
J. BRION
Paragraph 5, Article 2180 of the Civil Code holds the employer vicariously liable for
damages caused by his employees within the scope of their assigned tasks. In this case,
Josefa seeks to avoid the application of this provision by denying that Bautista was his
employee at the time of the incident.
Josefa cannot evade his responsibility by mere denial of his employment relations with
Bautista in the absence of proof that his truck was used without authorization or that it was
stolen when the accident occurred. In quasi-delict cases, the registered owner of a motor
vehicle is the employer of its driver in contemplation of law. The registered owner of any
vehicle, even if not used for public service, would primarily be responsible to the public or
to third persons for injuries caused while the vehicle was being driven on highways or
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streets. The purpose of motor vehicle registration is precisely to identify the owner so that
if any injury is caused by the vehicle, responsibility can be imputed to the registered owner.
INDOPHIL TEXTILE MILLS, INC v ENGR. SALVADOR ADVIENTO, G.R No. 171212,
August 4, 2012. PERALTA.
Engr. Adviento was hired by Indophil Textile Mills to maintain its thread-manufacturing
facilities. Later he was diagnosed with Chronic Poly Sinusitis. Engr. Adviento filed a case for
damages based on quasi-delict with the RTC, alleging that he contracted such occupational
disease by reason of the gross negligence of petitioner to provide him with a safe, healthy
and workable environment. Indophil moved to dismiss, arguing that jurisdiction is with the
Labor Arbiter.
True, the maintenance of a safe and healthy workplace is ordinarily a subject of labor cases.
However, Advientos claim for damages is specifically grounded on petitioners gross
negligence to provide a safe, healthy and workable environment for its employees a case
of quasi-delict.
Clearly, injury and damages were allegedly suffered by respondent, an element of quasidelict. Secondly, the previous contract of employment between petitioner and respondent
cannot be used to counter the element of "no pre-existing contractual relation" since
petitioners alleged gross negligence in maintaining a hazardous work environment cannot
be considered a mere breach of such contract of employment, but falls squarely within the
elements of quasi-delict under Article 2176 of the Civil Code since the negligence is direct,
substantive and independent.
NEDLLOYD LIJNEN B.V. ROTTERDAM and THE EAST ASIATIC CO., LTD. vs. GLOW LAKS
ENTERPRISES, LTD, G.R. No. 156330 , November 19, 2014, J. PEREZ
The respondent loaded to the vessel owned by the petitioner who is common carrier. By an
unfortunate turn of events, however, unauthorized persons managed to forge the covering
bills of lading and on the basis of the falsified documents, the ports authority releas ed the
goods.
In this case, there is no dispute that the custody of the goods was never turned over to the
consignee or his agents but was lost into the hands of unauthorized persons who secured
possession thereof on the strength of falsified documents. The loss or the misdelivery of the
goods in the instant case gave rise to the presumption that the common carrier is at fault or
negligent.
A common carrier is presumed to have been negligent if it fails to prove that it exercised
extraordinary vigilance over the goods it transported. When the goods shipped are either
lost or arrived in damaged condition, a presumption arises against the carrier of its failure
to observe that diligence, and there need not be an express finding of negligence to hold it
liable. To overcome the presumption of negligence, the common carrier must establish by
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adequate proof that it exercised extraordinary diligence over the goods. It must do more
than merely show that some other party could be responsible for the damage. In the
present case, petitioners failed to prove that they did exercise the degree of diligence
required by law over the goods they transported.
Sanitary Steam Laundry, Inc. vs. Court of Appeals, 300 SCRA 20
The driver was in violation of the Land Transportation and Traffic Code when
its vehicle got involved in an accident that killed three persons. For the driver
to be found negligent petitioner must show that the violation of the statute was
the proximate or legal cause of the injury or that it substantially contribute d
thereto because such negligence, consisting in whole or in part, of violation of
law, like any other negligence is without legal consequence unless it is a
contributing cause of the injury.
Mckee vs. Intermediate Appellate Court, 211 SCRA 517
A head-on-collision took place between a cargo truck driver and a car driver
Jose Koh, which resulted in the death of Jose Koh and two others because the
Koh avoided hitting two boys who suddenly darted across the lane. Under the
Emergency Rule, Koh was not negligent because his entry into the lane of the
truck was necessary in order to avoid what was, in his mind at that time, a
greater peril of death or injury to the two boys. Under this rule, a person who,
without fault or negligence on his part, is suddenly placed in an emergency or
unexpected danger and compelled to act instantly and instinctively with no
time for reflection and exercise of the required precaution, is not guilty of
negligence and, therefore, exempt from liability, if he did not make the wisest
choice of the available courses of conduct to avoid injury which a reasonably
prudent person would have made under normal circumstances.
Del Rosario vs. M anila Electric Co., 57 Phil. 478
An overhead wire of Meralco conducting electricity parted and one of the
charged ends fell to the ground, and a nine (9) year old school child touched
the wire and was electrocuted. It is doubtful whether contributory negligence
can properly be imputed to the deceased, owing to his immature years and the
natural curiosity which a child would feel to do something out of the ordinary,
and the mere fact that the deceased ignored the caution of a companion of the
age of 8 years does not, in our opinion, alter the case.

Astudillo vs. M anila Electric Co., 55 Phil. 327

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A young man by the name of Juan Diaz Astudillo met his death through
electrocution, when he placed his right hand on a wire connected with an
electric light pole owned by Meralco. Meralco was negligent in so placing the
pole and wires as to be within the proximity of a place frequented by many
persons, with the possibility of coming in contact with a highly charged and
defectively insulated wire.
Bernardo vs. Legaspi, 29 Phil. 12
Two automobiles, going in opposite directions, collide on turning a street
corner, and it appears from the evidence that the drivers were equally negligent
and contributed equally to the collision. Under the doctrine of contributory
negligence, neither can recover from the other for the damages suffered.
Negros Navigation Co., Inc. vs. Court of Appeals, 281 SCRA 534
The ship captain of MT Tacloban City, an oil tanker owned by PNOC, was
playing mah-jong when it collided off the Tablan Strait in Mindoro, with M,V
Don Juan owned by petitioner NENACO. The owner of the ship was found
equally negligent with the ship captain because of tolerating the playing of
mahjong by the ship captain and other crew members while on board the ship
and failing to keep the ship seaworthy.
Philippine Long Distance Telephone Co., Inc. vs. Court of Appeals, 178
SCRA 94
The jeepney of the respondents fell into an open excavation when the jeep
swerved from the inside lane of the street, respondents being aware of the
presence of said excavation. The negligence of respondent Antonio Esteban was
not only contributory to his injuries and those of his wife but goes to the very
cause of the occurrence of the accident, as one of its determining factors, and
thereby precludes their right to recover damages.
GROSS M ISCONDUCT
DR. IDOL L. BONDOC vs. MARILOU R. MANTALA, G.R. No. 203080, November 12, 2014,
J. Villarma, Jr.
A physician is guilty of gross misconduct when he chose to conduct a normal delivery and
deliberately left her patient to a midwife and two inexperienced assistants despite knowing
that the patient was under prolonged painful labor and about to give birth to a macrosomic
baby by vaginal delivery which resulted to a stillborn baby and the loss of her reproductive
capacity. A physician should be dedicated to provide competent medical care with f ull
professional skill in accordance with the current standards of care, compassion,
independence and respect for human dignity.
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NOEL CASUMPANG, RUBY SANGA-MIRANDA AND SAN JUAN DE DIOS HOSPITAL, vs.
NELSON CORTEJO, G.R. No. 171127/DRA. RUBY SANGA-MIRANDA, v. NELSON
CORTEJO, G.R. No. 171217/SAN JUAN DE DIOS HOSPITAL, vs. NELSON CORTEJO, G.R.
No. 171228, March 11, 2015, J. Brion
Dr. Casumpang and Dr. Miranda are accused of negligence leading to the death of a young
boy. The SC held that, to successfully pursue a medical malpractice suit, the plaintiff (in this
case, the deceased patient's heir) must prove that the doctor either failed to do what a
reasonably prudent doctor would have done, or did what a reasonably prudent doctor
would not have done; and the act or omission had caused injury to the patient. The
patient's heir/s bears the burden of proving his/her cause of action. The elements of
medical negligence are: (1) duty; (2) breach; (3) injury; and (4) proximate causation. Given
these elements, only Dr. Casumpang, attending physician, was found to be negligent for
having failed to promptly detect dengue fever and undertake the proper medical
management needed for this disease.

THE CONJUGAL PARTNERSHIP OF THE SPOUSES VICENTE VADAVEDO AND BENITA

ARCOYCADAVEDO(both deceased), substituted by their heirs, namely: HERMINIA,
PASTORA, Heirs of FRUCTUOSA, Heirs of RAQUEL, EVANGELINE, VICENTE JR., and
ARMANO, all surnamed CADAVEDO vs. VICTORINO (VIC) T. LACAYA, married to Rosa
Legados, G.R. No. 173188, January 15, 2014, J. Brion

Atty. Lacaya claims he had an arrangement with his client that he would be awarded one
half of the property acquired by his client if they obtained favorable judgment.
Article 1491 (5) of the Civil Code forbids lawyers from acquiring, by purchase or
assignment, the property that has been the subject of litigation in which they have taken
part by virtue of their profession. The same proscription is provided under Rule 10 of the
Canons of Professional Ethics.
A thing is in litigation if there is a contest or litigation over it in court or when it is subject
of the judicial action. Following this definition, SC held that the subject lot was still in
litigation when Atty. Lacaya acquired the disputed one-half portion. We note in this regard
the following established facts:(1)on September 21, 1981, Atty. Lacaya filed a motion for
the issuance of a writ of execution in Civil Case No. 1721; (2) on September 23, 1981, the
spouses Ames filed Civil Case No. 3352 against the spouses Cadavedo; (3)on October 16,
1981, the RTC granted the motion filed for the issuance of a writ of execution in Civil Case
No. 1721 and the spouses Cadavedo took possession of the subject lot on October 24, 1981;
(4) soon after, the subject lot was surveyed and subdivided into two equal portions, and
Atty. Lacaya took possession of one of the subdivided portions; and (5) on May 13, 1982,
Vicente and Atty. Lacaya executed the compromise agreement.

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From these timelines, whether by virtue of the alleged oral contingent fee agr eement or an
agreement subsequently entered into, Atty. Lacaya acquired the disputed one -half portion
(which was after October 24, 1981) while Civil Case No. 3352 and the motion for the
issuance of a writ of execution in Civil Case No. 1721 were already pending before the
lower courts. Similarly, the compromise agreement, including the subsequent judicial
approval, was effected during the pendency of Civil Case No. 3352. In all of these, the
relationship of a lawyer and a client still existed between Atty. Lacaya and the spouses
Cadavedo.
Thus, whether we consider these them to be prohibited and void by reason of public policy.
Under Article 1409 of the Civil Code, contracts which are contrary to public policy and
those expressly prohibited or declared void by law are considered in existent and void
from the beginning.
While contingent fee agreements are indeed recognized in this jurisdiction as a valid
exception to the prohibitions under Article 1491(5) of the Civil Code, this recognition does
not apply to the present case. A contingent fee contract is an agreement in writing where
the fee, often a fixed percentage of what may be recovered in the action, is made to depend
upon the success of the litigation. The payment of the contingent fee is not made durin g the
pendency of the litigation involving the clients property but only after the judgment has
been rendered in the case handled by the lawyer.
In the present case, we reiterate that the transfer or assignment of the disputed one -half
portion to Atty. Lacaya took place while the subject lot was still under litigation and the
lawyer-client relationship still existed between him and the spouses Cadavedo. Thus, the
general prohibition provided under Article 1491 of the Civil Code, rather than the
exception provided in jurisprudence, applies.
The compromise agreement entered into between Vicente and Atty. Lacaya in Civil Case No.
215 (ejectment case) was intended to ratify and confirm Atty. Lacayas acquisition and
possession of the disputed one-half portion which were made in violation of Article 1491
(5) of the Civil Code. As earlier discussed, such acquisition is void; the compromise
agreement, which had for its object a void transaction, should be void.
A contract whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy is in existent and void from the beginning. It can never be ratified nor
the action or defense for the declaration of the in existence of the contract prescribe; and
any contract directly resulting from such illegal contract is likewise void and in existent.
Consequently, the compromise agreement did not supersede the written contingent fee
agreement providing for attorneys fee of P2,000.00.
SC fixed the attorneys fees on a quantum meruit basis.The doctrine of quantum meruit is a
device to prevent undue enrichment based on the equitable postulate that it is unjust for a
person to retain benefit without paying for it.

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SPECIAL LIABILITY IN PARTICULAR ACTIVITIES

Doctors
PEDRITO DELA TORRE vs. DR. ARTURO IMBUIDO, DRA. NORMA IMBUIDO in their capacity as
owners and operators of DIVINE SPIRIT GENERAL HOSPITAL and/or DR. NESTOR PASAMBA,
G.R. No. 192973, September 29, 2014, J. Reyes

Medical malpractice or, more appropriately, medical negligence, is that type of claim which
a victim has available to him or her to redress a wrong committed by a medical
professional which has caused bodily harm. In order to successfully pursue such a claim, a
patient, or his or her family as in this case, "must prove that a health care provider, in most
cases a physician, either failed to do something which a reasonably prudent health care
provider would have done, or that he or she did something that a reasonably prudent
provider would not have done; and that failure or action caused injury to the patient.
As the Court held in Spouses Flores v. Spouses Pineda, et al. ,the critical and clinching factor
in a medical negligence case is proof of the causal connection between the negligence and
the injuries. The claimant must prove not only the injury but also the defendant's fault, and
that such fault caused the injury. A verdict in a malpractice action cannot be based on
speculation or conjecture. Causation must be proven within a reasonable medical
probability based upon competent expert testimony, which the Court finds absent in the
case at bar. As regards the respondents' counterclaim, the CA's award of P48,515.58 is
sustained.
Ramos vs. Court of Appeals, 321 SCRA 584
At the time of her admission, patient Erlinda Ramos was neurologically sound
but during the administration of anesthesia and prior to the performance of a
gall bladder operation, she suffered irreparable damage to her brain and was
diaganosed to be suffering from diffuse cerebral parenchymal damage. The
damage sustained by Erlinda Erlinda in her brain prior to a scheduled gall
bladder operation presents a case for the application of res ipsa loquitur in
medical malpractice as it was found out that brain damage does not normally
occur in the process of gall bladder operations, and does not happen in the
absence of negligence of someone in the administration of anesthesia and in
the use of endotracheal tube.
Batiquin vs. Court of Appeals, 258 SCRA 334
A piece of rubber glove was left in the abdomen of a patient after a caesarean
section operation. The doctrine of res ipsa loquitor applies because aside from
the caesarean section, private respondent Villegas underwent no other
operation which could have caused the offending piece of rubber to appear in
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her uterus, it stands to reason that such could only have been a by-product of
the caesarean section performed by Dr. Batiquin.
Lawyers
Roque vs. Gunigundo, 89 SCRA 178
Atty. Gunigundo was charged by his client Roque with G.R.oss negligence in
not seasonably filing their motion for reconsideration and in not perfecting an
appeal from the trial courts order of dismissal. Atty. Gunigundo's filing of
motions for extension on the last day and sending them by registered mail
(thus giving the court insufficient time to act before the extension sought had
expired) and his omission to verify whether his second motion for extension
was granted are indicative of lack of competence, diligence and fidelity in the
dispatch of his clients business.
Adarne vs. Aldaba, 83 SCRA 734
Adarne was declared in default for failure to appear in the hearing because his
one of his lawyers honestly believed that he had appeared for the complainant
only for a special purpose and that the complainant had agreed to contact his
attorney of record to handle his case after the hearing of October 23, 1964, so
that he did nothing more about it. An attorney is not bound to exercise
extraordinary diligence, but only a reasonable degree of care and skill having
reference to the character of the business he undertakes to do.
STRICT LIABILITY
Vestil vs. Intermediate Appellate Court, 179 SCRA 47
Theness, a three-year old child, was killed after she was bitten by a dog while
she was playing with the child of Purita Vestil in the house of Vicente Miranda,
the late father of Purita. Spouses Vestils contention that they cannot be
faulted as they are not the owner of the house where the child was bitten
cannot be accepted because under the Article 2183 of the Civil Code the
possessor of animal is liable even if the animal should escape or be lost and
so be removed from his control.
Amadora vs. Court of Appeals, 160 SCRA 315
Amadora was shot dead by his classmate Daffon inside the school auditorium,
when the classes had formally ended. As long as it can be shown that the
student is in the school premises in pursuance of a legitimate student
objective, in the exercise of a legitimate student right, and even in the
enjoyment of a legitimate student privilege, the responsibility of the school
authorities over the student continues.
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Caedo vs. Yu Khe Thai, 26 SCRA 410

Yu was inside his car when his driver bumped a carretela in front and at the
same time hit another car coming from the opposite direct. Under [Article
2184], if the causative factor was the drivers negligence, the owner of the
vehicle who was present is likewise held liable if he could have prevented the
mishap by the exercise of due diligence.
ART 2176 , 2177
ANDAMO vs. IAC, G.R. NO. 74761November 6, 1990
Clearly, from petitioner's complaint, the waterpaths and contrivances built by
respondent corporation are alleged to have inundated the land of petitioners.
All the elements of a quasi-delict or culpa aquiliana are present, to wit: (a)
damages suffered by the plaintiff, (b) fault or negligence of the defendant, or
some other person for whose acts he must respond; and (c) the connection of
cause and effect between the fault or negligence of the defendant and the
damages incurred by the plaintiff.
PONCE vs. LEGASPI, G.R. NO. 79184 M ay 6, 1992
The present case stemmed from the filing before the Supreme Court OF a
complaint for disbarment against respondent by petitioner which was
dismissed. Respondent thereafter filed a complaint for damages against the
petitioner. The adverse result of an action does not per se make the action
wrongful and subject the actor to make payment of damages for the law could
not have meant to impose a penalty on the right to because one who exercises
his rights does no injury, and if damage results from a person's exe rcising his
legal rights, it is damnum absque injuria.
EXTRAORDINARY DILIGENCE
EASTERN SHIPPING LINES INC., vs. BPI/MS INSURANCE CORP. and MITSUI SUM TOMO
INSURANCE CO. LTD., G.R. No. 193986
January 15, 2014, J. Villarama, Jr.
It bears stressing unto petitioner that common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods transported by them. Subject to certain exceptions enumerated
under Article 1734 of the Civil Code, common carriers are responsible for the loss,
destruction, or deterioration of the goods. The extraordinary responsibility of the common
carrier lasts from the time the goods are unconditionally placed in the possession of, and
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received by the carrier for transportation until the same are delivered, actually or
constructively, by the carrier to the consignee, or to the person who has a right to receive
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. That is, unless they prove that they exercised
extraordinary diligence in transporting the goods. In order to avoid responsibility for any
loss or damage, therefore, they have the burden of proving that they observed such high
level of diligence. In this case, petitioner failed to hurdle such burden.
RES IPSA LOQUITUR
VICENTE JOSEFA vs. MANILA ELECTRICCOMPANY, G.R. No. 182705, July 18, 2014,
J.Brion
For the doctrine of res ipsa loquitur to apply, the complainant must show that: (1) the
accident is of such character as to warrant an inference that it would not have happened
except for the defendants negligence (2) the accident must have been caused by an agency
or instrumentality within the exclusive management or control of the person charged with
the negligence complained of and (3) the accident must not have been due to any
voluntary action or contribution on the part of the person injured. The present case
satisfies all the elements of res ipsa loquitur.
UNKNOWN OWNER OF THE VESSEL M/V CHINA JOY, SAMSUN SHIPPING LTD., AND
INTER-ASIA MARINE TRANSPORT, INC. v. ASIAN TERMINALS, INC, G.R. No. 195661.
March 11, 2015, J. REYES
The three requisites to the application of the doctrine of res ipsa loquitur are found to be
attendant in the case at bar. First, the co-mingling of the two foreign metal objects with the
soybean meal cargo and the consequent damage to ATIs unloader is an accident which
ordinarily does not occur in the absence of someones negligence. Second, the foreign metal
objects were found in the vessels Hold No. 2, which is within the exclusive control of the
petitioners. Third, records do not show that ATIs negligence had in any way contributed to
the damage caused to its unloader. All 3 requisites of res ipsa loquitur being present, the
presumption or inference arises that defendants negligence was the proximate cause of
the damage to ATIs unloader. The burden of evidence shifted to defendants to prove
otherwise. The defendants failed to do so.
INTERNATIONAL CONTAINER TERMINAL SERVICES INC. VS. CELESTE M. CHUA, G.R.
No. 195031March 26, 2014, J. PEREZ
The container van loaded with the personal effects of respondent Chua arrived at North
Harbor, Manila and was unloaded in the depot belonging to petitioner for safekeeping
pending the customs inspection. The container van was stripped and partially inspected by
custom authorities. Further inspection thereof was scheduled on May 8, 1997. However, on
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the date scheduled, petitioners depot was gutted by fire and respondents container van
was burned.
Under the circumstances of this case, petitioner is liable to respondent for damages on
account of the loss of the contents of her container van. Petitioner itself admitted during
the pretrial of this case that respondents container van caught fire while stored within its
premises. Absent any justifiable explanation on the part of petitioner on the cause of the
fire as would absolve it from liability, the presumption that there was negligence on its part
comes into play. The situation in this case, therefore, calls for the application of the
doctrine of res ipsa loquitur.
The doctrine is based on the theory that the defendant either knows the cause of the
accident or has the best opportunity of ascertaining it and the plaintiff, having no
knowledge thereof, is compelled to allege negligence in general terms. In such instance, the
plaintiff relies on proof of the happening of the accident alone to establish negligence. The
principle, furthermore, provides a means by which a plaintiff can hold liable a defendant
who, if innocent, should be able to prove that he exercised due care to prevent the acc ident
complained of from happening. It is, consequently, the defendants responsibility to show
that there was no negligence on his part. The doctrine, however, can be invoked when and
only when, under the circumstances involved, direct evidence is absent and not readily
available. Here, there was no evidence as to how or why the fire in the container yard of
petitioner started; hence, it was up to petitioner to satisfactorily prove that it exercised the
diligence required to prevent the fire from happening. This it failed to do. Thus, the trial
court and the Court of Appeals acted appropriately in applying the principle of res ipsa
loquitur to the case at bar.
VICENTE JOSEFA v MANILA ELECTRIC COMPANY, G.R No. 182705, July 18, 2014. J.
BRION
Res ipsa loquitor is the doctrine which postulates that, as a matter of common knowledge
and experience and in the absence of some explanation by the defendant who is charged
with negligence, the very nature of occurrences may justify an inference of negligence on
the part of the person who controls the instrumentality causing the injury.
In this case, the driver Bautista is presumed to be negligent in driving the truck under the
res ipsa loquitor doctrine. The present case satisfies all the elements of res ipsa loquitur. It
is very unusual and extraordinary for the truck to hit an electricity post, an immovable and
stationary object, unless Bautista, who had the exclusive management and control of the
truck, acted with fault or negligence.

DAM AGES

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NEW WORLD DEVELOPERS AND MANAGEMENT INC. vs. AMA COMPUTER LEARNING
CENTER INC., G.R. Nos. 187930 & 188250, February 23, 2015, C.J. Sereno
Pretermination is effectively the breach of a contract, that was originally intended to cover
an agreed upon period of time. A definite period assures the lessor a steady income for the
duration. A pretermination would suddenly cut short what would otherwise have been a
longer profitable relationship. Along the way, the lessor is bound to incur losses until it is
able to find a new lessee, and it is this loss of income that is sought to be compensated by
the payment of liquidated damages. Also proper is an award of exemplary damages since
pursuant to Article 2234, petitioner was able to prove he was entitled moral, temperate or
compensatory damages were it not for the stipulation of liquidated damages.
MERALCO vs. RAM OY, G.R. NO. 158911, M arch 4, 2008
In the present case, MERALCO wilfully caused injury to Leoncio Ramoy by
withholding from him and his tenants the supply of electricity to which they
were entitled under the Service Contract. MERALCO's failure to exercise
utmost care and diligence in the performance of its obligation to its customer,
is tantamount to bad faith hence is entitled to moral damages.
MINDANAO TERM INAL AND BROKERAGE SERVICE, INC. vs. PHOENIX
ASSURANCE COMPANY OF NEW YORK,MCGEE & CO., INC., G.R. NO.
162467, M ay 8, 2009
The Court ruled that Mindanao Terminal had duly exercised the required
degree of diligence in loading and stowing the cargoes, which is the ordinary
diligence of a good father of a family. There is no basis for the award of
attorneys fees in favor of petitioner since none of the circumstances
enumerated in Article 2208 of the Civil Code exists because the present case is
clearly not an unfounded civil action against the plaintiff as there is no
showing that it was instituted for the mere purpose of vexation or injury.
AIR FRANCE vs.CARRASCOSO, G.R. NO. L-21438, September 28, 1966
Plaintiff was forced out of his seat in the first class compartment of the plane
belonging to the defendant Air France while at Bangkok, and was transferred to
the tourist class without his consent and against his will. The contract of air
carriage, therefore, generates a relation attended with a public duty, and
neglect or malfeasance of the carrier's employees, naturally, could give ground
for an action for damages.

149

BAYANI vs. PANAY ELECTRIC CO., INC., G.R. NO. 139680, April 12, 2000
The requisites for an action for damages based on malicious prosecution are:
(1) the fact of the prosecution and the further fact that the defendant was
himself the prosecutor, and that the action was finally terminated with an
acquittal;
(2) that in bringing the action, the prosecutor acted without probable cause;
and
(3) the prosecutor was actuated or impelled by legal malice.
WASSMER vs VELEZ, G.R. NO. L-20089, December 26, 1964
Two days before the wedding, defendant, who was then 28 years old, simply left
a note for plaintiff stating: "Will have to postpone wedding My mother
opposes it ... ", then enplaned to his home city in Mindanao, and never
returned and was never heard from again. This is not a case of mere breach of
promise to marry but unjustifiably contrary to good customs for which
defendant must be held answerable in damages in accordance with Article 21
aforesaid and per express provision of Article 2219 (10) of the New Civil Code,
moral damages are recoverable in the cases mentioned in Article 21 of said
Code.
SANTOS VENTURA HOCORMA FOUNDATION, INC. vs. ERNESTO V.
SANTOS and RIVERLAND, INC., G.R. NO. 153004, November 5, 2004
The demand letter sent to the petitioner on October 28, 1992, was in
accordance with an extra-judicial demand contemplated by law. When the
debtor knows the amount and period when he is to pay, interest as damages is
generally allowed as a matter of right.
EXEMPLARY DAM AGES
METROPOLITAN BANK AND TRUST COMPANY vs. ANA GRACE ROSALES AND YO YUK
TO, G.R. No. 183204, JANUARY 13, 2014, J. del Castillo
As to the award of exemplary damages, Article 2229 of the Civil Code provides that
exemplary damages may be imposed by way of example or correction for the public good,
in addition to the moral, temperate, liquidated or compensatory damages. They are
awarded only if the guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. The bank acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner when it refused to release the deposits of respondents without any
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legal basis. The banking industry is impressed with public interest. As such, the highest
degree of diligence is expected, and high standards of integrity and performance are even
required of it. It must therefore treat the accounts of its depositors with meticulous care
and always to have in mind the fiduciary nature of its relationship with them.
SEVEN BROTHERS SHIPPING CORPORATION vs. DMC-CONSTRUCTION RESOURCES,
INC., G.R. No. 193914. November 26, 2014, C.J. Sereno
Petitioner questions the decision of the CA awarding respondent nominal damages after
having ruled that the actual damages awarded by the RTC was unfounded. Petitioner
argues that nominal damages are only awarded to vindicate a right that has been violated
and not to indemnify a party for any loss suffered by the latter. The SC r uled that what
should have been awarded was temperate and not nominal damages. Temperate or
moderate damages may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be provided with
certainty. Considering that it has been established that respondent suffered a loss, even if
the amount thereof cannot be proven with certainty, the Court ruled that what should have
been awarded was temperate damages.
PEOPLE OF THE PHILIPPINES vs. SHIRLEY A. CASIO, G.R. No. 211465, December 3,
2014, J. Leonen
The payment of P500,000 as moral damages and P100,000 as exemplary damages for the
crime of Trafficking in Persons as a Prostitute finds basis in Article 2219 of the Civil Code,
which provides that Moral and Exemplary Damages may be awarded in cases of seduction,
abduction, rape, or other lascivious acts. The criminal case of Trafficking in Persons as a
Prostitute is an analogous case to the crimes of seduction, abduction, rape, or other
lascivious acts. To be trafficked as a prostitute without ones consent and to be sexually
violated four to five times a day by different strangers is horrendous and atrocious. There
is no doubt that Lolita experienced physical suffering, mental anguish, fright, ser ious
anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation
when she was trafficked as a prostitute in Malaysia. Since the crime of Trafficking in
Persons was aggravated, being committed by a syndicate, the award of exemplary damages
is likewise justified.
TELEFAST COMMUNICATIONS vs. CASTRO, G.R. NO. 73867, February 29,
1988
Petitioner and private respondent entered into a contract whereby, for a fee,
petitioner undertook to send said private respondent's message overseas by
teleG.R.am but which petitioner did not do, despite performance by said private
respondent of her obligation by paying the required charges. The award of
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exemplary damages by the trial court is likewise justified and, therefore,

sustained as a warning to all teleG.R.am companies to observe due diligence in
transmitting the messages of their customers.
BANK OF THE PHILIPPINE ISLANDS vs.COURT OF APPEALS, G.R. NO.
136202, January 25, 2007
Upon the prompting of Templonuevo and with full knowledge of th e brewing
dispute between Salazar and Templonuevo, petitioner debited the account held
in the name of the sole proprietorship of Salazar without even serving due
notice upon her. The award of exemplary damages is justified when the acts
of the bank are attended by malice, bad faith or gross negligence and the award
of reasonable attorneys fees is proper where exemplary damages are awarded
because depositors are compelled to litigate to protect their interest.
ACTUAL or COMPENSATORY DAMAGES
S.V. MORE PHARMA CORPORATION AND ALBERTO SANTILLAN VS. DRUGMAKERS
LABORATORIES INC. AND ELIEZER DEL MUNDO G.R. Nos. 200408/200416. November
12, 2014, J. PERLAS-BERNABE
It was an error to award actual damages for supposed loss of profits based on the
erroneous sales projection. The amount of loss warranting the grant of actual or
compensatory damages must be proved with a reasonable degree of certainty, based on
competent proof and the best evidence obtainable by the injured party. Nevertheless,
considering that injured party palpably suffered some form of pecuniary loss resulting
from the breach of contract it was proper to, instead, award in their favor temperate
damages.
ALEJANDRO C. ALMENDRAS JR. VS. ALEXIS C. ALMENDRAS G.R. No. 179491. January
14, 2015, J. SERENO
In awarding damages in libel cases, the court is given ample discretion to determine the
amount, depending upon the facts of the particular case. Article 2219 of the Civil Code
expressly authorizes the recovery of moral damages in cases of libel, slander or any other
form of defamation. However, "while no proof of pecuniary loss is necessary in order that
moral damages may be awarded, it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages and its causal connection
to defendants acts." Considering that respondent sufficiently justified his claim for
damages (he testified that he was "embarrassed by the said letters and ashamed to show
his face in government offices"), the Court found that he was entitled to moral and
exemplary damages.

152

LITO CORPUZ vs. PEOPLE OF THE PHILIPPINES, G.R. No. 180016 April 29, 2014, J.
PERALTA
In our jurisdiction, civil indemnity is awarded to the offended party as a kind of monetary
restitution or compensation to the victim for the damage or infraction that was done to the
latter by the accused, which in a sense only covers the civil aspect. Precisely, it is civil
indemnity. Thus, in a crime where a person dies, in addition to the penalty of imprisonment
imposed to the offender, the accused is also ordered to pay the victim a sum of money as
restitution. Clearly, this award of civil indemnity due to the death of the victim could not be
contemplated as akin to the value of a thing that is unlawfully taken which is the basis in
the imposition of the proper penalty in certain crimes. Thus, the reasoning in increasing the
value of civil indemnity awarded in some offense cannot be the same reasoning that would
sustain the adoption of the suggested ratio. Also, it is apparent from Article 2206 that the
law only imposes a minimum amount for awards of civil indemnity, which is P3,000.00.
The law did not provide for a ceiling. Thus, although the minimum amount for the award
cannot be changed, increasing the amount awarded as civil indemnity can be validly
modified and increased when the present circumstance warrants it. Corollarily, moral
damages under Article 2220of the Civil Code also does not fix the amount of damages that
can be awarded. It is discretionary upon the court, depending on the mental anguish or the
suffering of the private offended party. The amount of moral damages can, in relation to
civil indemnity, be adjusted so long as it does not exceed the award of civil indemnity.
SNOW MOUNTAIN DAIRY CORPORATION vs. GMA VETERANS FORCE, INC., G.R. No.
192446, November 19, 2014, J. Peralta
Actual or compensatory damages are those awarded in satisfaction of, or in recompense
for, loss or injury sustained. The burden is to establish one's case by a preponderance of
evidence which means that the evidence, as a whole, adduced by one side, is sup erior to
that of the other. Actual damages are not presumed. In this case, GMA Veterans had not
shown that the security guards were not assigned to another employer, and that it was
compelled to pay the guards despite the pre-termination of the security agreement to be
entitled to the amount of PI6,014.00 per month. Indeed, no evidence was presented by
GMA Veterans establishing the actual amount of loss suffered by reason of the pre termination. It is elementary that to recover damages, there must be pleading and proof of
actual damages suffered. Temperate damages may be allowed in cases where from the
nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is
convinced that the aggrieved party suffered some pecuniary loss. The SC also take into
consideration that GMA Veterans certainly spent for the security guard's training, firearms
with ammunitions, uniforms and other necessary things before their deployment to Snow
Mountain. Hence, the SC find it just and proper to award temperate damages in the amount
of P200,000.00 in lieu of actual damages.

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LOADSTAR SHIPPINGCOMPANY, INCORPORATED and LOADSTARINTERNATIONAL

SHIPPINGCOMPANY, INCORPORATED vs. MALAYAN INSURANCE COMPANY,
INCORPORATED, G.R. No. 185565, November 26, 2014, J. Reyes
Actual damages are not presumed. The claimant must prove the actual amount of loss with
a reasonable degree of certainty premised upon competent proof and on the best evidence
obtainable. Thus, an insurer of copper concentrates which were contaminated by seawater
while at sea, who, along with the consignee, arbitrarily fixed the salvage value of the cargo,
and who failed to refute expert testimony from the common carrier as regards the lack of
any adverse effect of seawater on copper concentrates, then actual damages are not
proven.
ART 2203
VELASCO vs.MERALCO, G.R. NO. L-18390, August 6, 1971
It is undisputed that a sound unceasingly emanates from the substation of
MERALCO and whether this sound constitutes an actionable nuisance or not is
the principal issue in this case and appellant asked that he be declared entitled
to recover compensatory, moral and other damages. Article 2203 clearly
obligates the injured party to undertake measures that will alleviate and not
aggravate his condition after the infliction of the injury, and places upon him
the burden of explaining why he could not do so.
MORAL DAMAGES
ARCO PULP AND PAPER CO. v DAN T. LIM, G.R No. 206806, June 25, 2014. J. LEONEN
Moral damages are not recoverable on the mere breach of contract. Article 2220 requires
that the breach be done fraudulently or in bad faith. To recover moral damages in an action
for breach of contract, the breach must be palpably wanton, reckless and malicious, in bad
faith, oppressive, or abusive. Hence, the person claiming bad faith must prove its existence
by clear and convincing evidence for the law always presumes good faith. When the party
to a contracts actions clearly show "a dishonest purpose o r some moral obliquity and
conscious doing of a wrong, a breach of known duty through some motive or interest or ill
will that partakes of the nature of fraud, moral damages may be awarded. Here, the Court
justified the award since the debtor issued a bouncing check in partial payment of its
obligation, presumably with the knowledge that it was being drawn against a closed
account. Worse, it attempted to shift their obligations to a third person without the consent
of the creditor.

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WPM INTERNATIONAL TRADING, INC. and WARLITO P. MANLAPAZ v FE CORAZON

LABAYEN, G.R No. 182770, September 17, 2014. J. BRION
On the award of moral damages, the Court found the award in order in view of WPM's
unjustified refusal to pay a just debt. Such cold refusal to pay a just debt amounts to a
breach of contract in bad faith, as contemplated by Article 2220.
Under Article 2220 of the New Civil Code, moral damages may be awarded in cases of a
breach of contract where the defendant acted fraudulently or in bad faith or was guilty of
gross negligence amounting to bad faith.
FIL-ESTATE PROPERTIES, INC. AND FIL-ESTATE NETWORK, INC., vs. SPOUSES
CONRADO AND MARIA VICTORIA RONQUILLO, G.R. No. 185798, JANUARY 13, 2014, J.
Perez
In order that moral damages may be awarded in breach of contract cases, the defendant
must have acted in bad faith, must be found guilty of gross negligence amounting to bad
faith, or must have acted in wanton disregard of contractual obligations. Petitioners acted
in bad faith when they breached their contract, when they failed to address respondents
grievances and when they adamantly refused to refund respondents' payment.
SPOUSES ROLANDO AND HERMINIA SALVADOR vs. SPOUSES ROGELIO AND
ELIZABETH RABAJA AND ROSARIO GONZALES,G.R. No. 199990, February 04, 2015, J.
Mendoza
The award of damages to Spouses Rabaja cannot be sustained by this Court. The filing alone
of a civil action should not be a ground for an award of moral damages in the same way that
a clearly unfounded civil action is not among the grounds for moral damages. Article 2220
of the New Civil Code provides that to award moral damages in a breach of contract, the
defendant must act fraudulently or in bad faith. In this case, Spouses Rabaja failed to
sufficiently show that Spouses Salvador acted in a fraudulent manner or with bad faith
when it breached the contract of sale. Thus, the award of moral damages cannot be
warranted.
NANCY S. MONTINOLA v PHILIPPINE AIRLINES. G.R No. 198656, September 8, 2014.
LEONEN
Illegally suspended employees, similar to illegally dismissed employees, are entitled to
moral damages when their suspension was attended by bad faith or fraud, oppressive to
labor, or done in a manner contrary to morals, good customs, or public policy.
In this case, a PAL employee was suspended for one year. In upholding the award of moral
damages, the Court said that PALs act was contrary to morals, good customs, and public
policy. PAL was willing to deprive Montinola of the wages she would have earned during

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her year of suspension even if there was no substantial evidence that she was involved in
the pilferage.
BPI EXPRESS CARD CORPORATION vs. MA. ANTONIA R. ARMOVIT, G.R. No. 163654,
October 8, 2014, J. Bersamin
The relationship between the credit card issuer and the credit card holder is a contractual
one that is governed by the terms and conditions found in the card membership agreement.
Such terms and conditions constitute the law between the parties. In case of their breach,
moral damages may be recovered where the defendant is shown to have acted fraudulently
or in bad faith. Malice or bad faith implies a conscious and intentional design to do a
wrongful act for a dishonest purpose or moral obliquity. However, a conscious or
intentional design need not always be present because negligence may occasionally be so
gross as to amount to malice or bad faith. Hence, bad faith in the context of Article 2220 of
the Civil Code includes gross negligence. Nowhere in the terms and conditions requires the
defendant to submit new application form in order to reactivate her credit card. Indeed,
BPI Express Credit did not observe the prudence expected of banks whose business was
imbued with public interest, hence, defendant is entitled to damages.
JOSE ESPINELI a.k.a. DANILO ESPINELI vs. PEOPLE OF THE PHILIPPINES, G.R. No.
179535, June 9, 2014, J. Del Castillo
Moral damages are mandatory without need of allegation and proof other than the death of
the victim, owing to the fact of the commission of murder or homicide, such as when the
victim was gunned down in front of his house. If medical and funeral expenses were
substantiated, actual damages may be awarded. However, damages for loss of earning
capacity may not be awarded absent documentary evidence except where the victim was
either self-employed or a daily wage worker earning less than the minimum wage under
current labor laws. The testimony of the wife of the victim, a Senior Desk Coordinator of a
radio station, as to the latters monthly salary without any documentary evidence will not
suffice to substantiate the claim.
BPI vs CA, G.R. NO. 136202, January 25, 2007
The bank froze and later unilaterally debited an amount from the account of
A.A. Salazar Construction and Engineering Services without informing her that
it had already done so, which caused plaintiff-appellee great damage and
prejudice particularly when she had already issued checks drawn against the
said account and as can be expected, the said checks bounced, thereby
causing private respondent Salazar undue embarrassment and inflicting
damage to her standing in the business community.

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A depositor has the right to recover reasonable moral damages even if the
banks negligence may not have been attended with malice and bad faith, if the
former suffered mental anguish, serious anxiety, embarrassment and
humiliation.
VILLA REY TRANSIT, INC., vs. THE COURT OF APPEALS, G.R. NO. L25499 February 18, 1970
The trial court and the Court of Appeals, both found that the accident and the
death of Policronio had been due to the negligence of the bus driver, for whom
petitioner was liable under its contract of carriage with the deceased but the
only issue raised in this appeal is the amount of damages recoverable by
private respondents herein. The determination of the indemnity to be awarded
to the heirs of a deceased person has therefore no fixed basis and much is left
to the discretion of the court considering the moral and material damages
involved, and so it has been said that "(t)here can be no exact or uniform rule
for measuring the value of a human life and the measure of damages cannot be
arrived at by precise mathematical calculation, but the amount recoverable
depends on the particular facts and circumstances of each case.
PEOPLE vs. EBAROLA, G.R. NO. L-69666, January 23, 1992
Appellant had been convicted of homicide and the trial court awarded the
amount of P100,000.00 to the heirs of Manahan as indemnity for death. The
indemnity for death must be reduced to P50,000.00 conformably with
prevailing jurisprudence on the matter and aside from the ordinary indemnity
for death appellant is obliged: (1) to compensate the heirs for the latter's loss of
earning capacity; (2) to give support in the form of expenses for education to
dependents of the deceased and (3) to pay the heirs for moral damages for the
mental anguish suffered by them.
COJUANGCO vs. COURT OF APPEALS, G.R. NO. 119398. July 2, 1999
To hold public officers personally liable for moral and exemplary damages and
for attorneys fees for acts done in the performance of official functions, the
plaintiff must prove that these officers exhibited acts characterized by evident
bad faith, malice, or gross negligence, but even if their acts had not been so
tainted, public officers may still be held liable for nominal damages if they had
violated the plaintiffs constitutional rights.
TEMPERATE DAMAGES

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S.V. MORE PHARMA CORPORATION and ALBERTO A. SANTILLANA vs. DRUGMAKERS LABO
RA TORIES, INC. and ELIEZER DEL MUNDO; S.V. MORE PHARMA CORPORATION and ALBERTO
A. SANTILLANA vs. DRUGMAKERS LABO RA TORIES, INC. and ELIEZER DEL MUNDO, G.R. No.
200408; G.R. No. 200416, November 12, 2014, J. Perlas- Bernabe
The existence of contractual breach in this case revolves around the exclusive status of Drugmakers
as the manufacturer of the subject pharmaceutical products. In particular, the Contract
Manufacturing Agreement states that Drugmakers, being the exclusive manufacturer of the subject
pharmaceutical products, had to first give its written consent before S.V. More could contract the
services of another manufacturer. The agreements notwithstanding, S.V More, through the CMPP
and absent the prior written consent of Drugmakers, contracted the services of Hizon Laboratories
to manufacture some of the pharmaceutical products covered by the said contracts. Considering
that Drugmakers palpably suffered some form of pecuniary loss resulting from S.V. Mores breach of
contract, the Court deems it proper to, instead, award in their favor the sum of P100,000.00 in the
form of temperate damages. This course of action is hinged on Article 2224 of the Civil Code.

PLENO vs. COURT OF APPEALS, G.R. NO. L -56505, M ay 9, 1988

Temperate damages are included within the context of compensatory damages
and in arriving at a reasonable level of temperate damages to be awarded, trial
courts are guided by our ruling that: There are cases where from the nature of
the case, definite proof of pecuniary loss cannot be offered, although the court
is convinced that there has been such loss.
NOM INAL DAMAGES
ONE NETWORK RURAL BANK, INC., vs. DANILO G. BARIC, G.R. No. 193684, March 5,
2014, J. Castillo
Palado was the registered owner of real property with a building containing commercial
spaces for lease who eventually transferred his title to Network Bank. Baric was a lessee
therein, operating a barber shop on one of the commercial spaces. Baric demanded nominal
damages against Network Bank after having been evicted from the building. The Supreme
Court held he was not entitled to nominal damages. Under Article 2221 of the Civil Code,
nominal damages may be awarded to a plaintiff whose right has been violated or invaded
by the defendant, for the purpose of vindicating or recognizing that right, not for
indemnifying the plaintiff for any loss suffered. Nominal damages are not for
indemnification of loss suffered but for the vindication or recognition of a right violated or
invaded. Network Bank did not violate any of Baric's rights; it was merely a purchaser or
transferee of the property. If any, it was Palado who violated Barics rights.

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LIBCAP MARKETING v BAQUIAL, G.R No. 192011, June 30, 2014. DEL CASTILLO
Unpaid overtime pay should not be included in the computation for the award of nominal
damages. The Court did not agree with the CAs finding that since respondent rendered
overtime work for four years without receiving any overtime pay, she is entitled to
P100,000.00 nominal damages. Nominal damages are awarded for the purpose of
vindicating or recognizing a right and not for indemnifying a loss. Hence, the CA should
have limited the justification of the award of nominal damages to petitioners violation o f
respondents right to due process in effecting her termination. It should not have
considered the claimed unpaid overtime pay.
AREOLA vs. COURT OF APPEALS, G.R. NO. 95641 September 22, 1994
Nominal damages are "recoverable where a legal right is technically violated
and must be vindicated against an invasion that has produced no actual
present loss of any kind, or where there has been a breach of contract and no
substantial injury or actual damages whatsoe ver have been or can be shown.
ATTORNEYS FEES

WILLAWARE PRODUCTS CORPORATION vs. JESICHRIS MANUFACTURING

CORPORATION, G.R. No. 195549, September 3, 2014, J. Peralta
This is a case where the plaintiff in a case of unfair competition under the Civil Code fails to
satisfactorily prove that it had lost income. Since the award of Two Million Pesos
(P2,000,000.00) in actual damages had been deleted and in its place Two Hundred
Thousand Pesos (P200,000.00) in nominal damages is awarded, the attorney's fees should
concomitantly be modified and lowered to Fifty Thousand Pesos (P50,000.00).
RICARDO A. DALUSONG vs. EAGLE CLARC SHIPPING PHILIPPINES, INC., et al., G.R. No.
204233, September 3, 2014, Acting C.J. Carpio
Attorneys fees is not available when the defendant employer is not guilty of bad faith.
Thus, when the company-designated physician gave the seafarer a final, permanent partial
disability grading beyond the 120-day period but before the 240 day maximum, then the
latter is not entitled to permanent disability benefits. The employer is not in ba d faith in
refusing to give the seafarer full disability benefits; thus the award of attorneys fees in
favor of the seafarer is unwarranted.
AUGUSTO M. AQUINO, vs. HON. ISMAEL P. CASABAR, as Presiding Judge Regional Trial
Court-Guimba, Nueva Ecija, Branch 33 and MA. ALA F. DOMINGO and MARGARITA
IRENE F. DOMINGO, substituting Heirs of the deceased ANGEL T. DOMINGO, G.R. No.
191470, January 26, 2015, J. Peralta

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The award that the court may grant to a successful party by way of attorneys fee is an
indemnity for damages sustained by him in prosecuting or defending his cause in court. It
may be decreed in favor of the party, not his lawyer, in any of the instances authorized by
law. On the other hand, the attorneys fee which a client pays his counsel refers to the
compensation for the latters services. The losing party against whom damages by way of
attorneys fees may be assessed is not bound by, nor is his liability dependent upon, the fee
arrangement of the prevailing party with his lawyer. The amount stipulated in such fee
arrangement may, however, be taken into account by the court in fixing the amount of
counsel fees as an element of damages. The fee as an item of damages belongs to the party
litigant and not to his lawyer. It forms part of his judgment recoveries against the losing
party. The client and his lawyer may, however, agree that whatever attorneys fee as an
element of damages the court may award shall pertain to the lawyer as his compensation
or as part thereof.
ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January
14, 2015, C.J. Sereno
The award of attorney's fees is not proper because respondent failed to justify satisfactorily
his claim, and both the trial and appellate courts failed to explicitly state in their respective
decisions the rationale for the award. It is an accepted doctrine that the award thereof as an
item of damages is the exception rather than the rule, and counsel's fees are not to be
awarded every time a party wins a suit. The power of the court to award attorney's fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification,
without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the
decision, and not only in the decretal portion thereof, the legal reason for the award of
attorney's fees. The same is true for the award of litigation expenses because respondent
failed to satisfactorily justify his claim.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC. G.R. No. 204702. January 14,
2015, CARPIO
The trial court awarded attorney's fees to petitioner as it "deemed it just and reasonable"
to do so, using the amount provided by petitioner on the witness stand. Undoubtedly,
attorney's fees may be awarded if the trial court "deems it just and equitable." Such ground,
however, must be fully elaborated in the body of the ruling. Its mere invocation, without
more, negate the nature of attorney's fees as a form of actual damages.
JUAN CABRERA VS. HENRY YSAAC, G.R. No. 166790. November 19, 2014, J. LEONEN
Petitioner is not entitled to attorney's fees and the costs of litigation since he did not have a
clear right over the property in question. The Court of Appeals awarded attorney's fees and
litigation costs on the erroneous premise that the contract between petitioner and
respondent was perfected. Without a valid contract that stipulates his rights, petitioner
risked litigation in order to determine if he has rights, and not to protect rights that he
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currently has. Hence, the award of attorney's fees and litigation costs was not properly
justified.
BANK OF THE PHILIPPINE ISLANDS VS, AMADOR DOMINGO (DECEASED)
SUBSTITUTED BU HIS CHILDREN, JOANN MOYA, ET AL. G.R. No. 169407. March 25,
2015, J. LEONARDO-DE CASTRO
It is basic that the claim for actual, moral and punitive damages as well as exemplary
damages and attorneys fees must each be independently identified and justified.
ALEJANDRO C. ALMENDRAS, JR. vs. ALEXIS C. ALMENDRAS, G.R. No. 179491, January
14, 2015, C.J. Sereno

In awarding damages in libel cases, the court is given ample discretion to determine the
amount, depending upon the facts of the particular case. Article 2219 of the Civil Code
expressly authorizes the recovery of moral damages in cases of libel, slander or any other
form of defamation. However, while no proof of pecuniary loss is necessary in order that
moral damages may be awarded, x x x it is nevertheless essential that the claimant should
satisfactorily show the existence of the factual basis of damages and its causal connection
to defendants acts. Considering that respondent sufficiently justified his claim for
damages (i.e. he testified that he was embarrassed by the said letters [and] ashamed to
show his face in [sic] government offices), the Court finds him entitled to moral and
exemplary damages. However, the Court equitably reduce the amounts awarded because
even though the letters were libellous, respondent has not suffered such grave or
substantial damage to his reputation to warrant receiving P5,000,000 as moral damages
and P100,000.00 as exemplary damages.
As to the award of attorneys fees, it is an accepted doctrine that the award thereof as an
item of damages is the exception rather than the rule, and counsels fees are not to be
awarded every time a party wins a suit. The power of the court to award attorneys fees
under Article 2208 of the Civil Code demands factual, legal and equitable justification,
without which the award is a conclusion without a premise, its basis being improperly left
to speculation and conjecture. In all events, the court must explicitly state in the text of the
decision, and not only in the decretal portion thereof, the legal reason for the award of
attorneys fees.
RICARDO C. HONRADO vs. GMA NETWORK FILMS, INC., G.R. No. 204702, January 14,
2015, J. Carpio
In a licensing contract, the essence of which is the transfer by the licensor, Honrado to the
licensee, GMA Films, for a fee, of the exclusive right to telecast the films listed in the
Agreement. Stipulations for payment of commission to the licensor is incongruous to the
nature of such contracts unless the licensor merely acted as agent of the film owners.
Nowhere in the Agreement, however, did the parties stipulate that Honrado signed the
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contract in such capacity. Being a stranger to such arrangements, they are not entitled to
complain of any breach by Honrado of his contracts with the film owners than the film
owners are for any breach by a stranger of its Agreement with aforementioned. The trial
court awarded attorneys fees to Honrado as it deemed it just and reasonable to do so,
using the amount provided by Honrado on the witness stand (P100,000). Undoubtedly,
attorneys fees may be awarded if the trial court deems it just and equitable. Such ground,
however, must be fully elaborated in the body of the ruling. Its mere invocation, without
more, negates the nature of attorneys fees as a form of actual damages.

INTEREST/COMPUTATION

REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC

WORKS AND HIGHWAYS vs. ARLENE R. SORIANO, G.R. No. 211666, February 25, 2015,
J. Peralta
Effectively, therefore, the debt incurred by the government on account of the taking of the
property subject of an expropriation constitutes a forbearance which runs contrary to the
trial courts opinion that the same is in the nature of indemnity for damages calling for the
application of Article 2209 of the Civil Code. Nevertheless, in line with the recent circular of
the Monetary Board of the BSP-MB No. 799, Series of 2013, effective July 1, 2013, the
prevailing rate of interest for loans or forbearance of money is six percent (6%) per annum,
in the absence of an express contract as to such rate of interest.
The records of this case reveal that DPWH did not delay in its payment of just
compensation as it had deposited the pertinent amount in full due to respondent on
January 24, 2011, or four (4) months before the taking thereof, which was when the RTC
ordered the issuance of a Writ of Possession and a Writ of Expropriation on May 27, 2011.
The amount deposited was deemed by the trial court to be just, fair, and equitable, taking
into account the well-established factors in assessing the value of land, such as its size,
condition, location, tax declaration, and zonal valuation as determined by the BIR.
Considering, therefore, the prompt payment by the DPWH of the full amount of just
compensation as determined by the RTC, the Court finds that the imposition of interest
thereon is unjustified and should be deleted.
FAJ CONSTRUCTION & DEVELOPMENT CORPORATION vs. SUSAN M. SAULOG, G.R. No.
200759, March 25, 2015, J. Del Castillo
FAJ Construction was found guilty of violating the construction agreement for its defective
and incomplete work, delay, and for unjustified abandonment of the project. Susan argued
that the issue of whether the trial and appellate courts correctly decided the amount of
damages is a factual issue which is beyond the jurisdiction of this Court. The Supreme
Court held that it is not a trier of facts and does not normally undertake the reexamination of the evidence presented by the contending parties during trial.

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PEOPLE OF THE PHILIPPINES vs. BENJAMIN CASAS Y VINTULAN, G.R. No. 212565,
February 25, 2015, J. Perlas-Bernabe
The formula for the computation of loss of earning capacity is as follows:
Net earning capacity = Life Expectancy x [Gross Annual Income - Living Expenses (50% of
gross annual income)], where life expectancy = 2/3 (80 - the age of the deceased).
CIVIL LIABILITY

ANTONIO M. GARCIA vs. FERRO CHEMICALS, INC.,G.R. No. 172505, October 01, 2014, J.
Leonen
Ferro Chemicals, Inc. joined the public prosecutor in filing the petition for certiorari before
this court. Ramon Garcia, President of Ferro Chemicals, Inc., signed the verification and
certification of non-forum shopping of the petition for certiorari. When the civil action for
the recovery of civil liability ex delicto is instituted with the criminal action, whether by
choice of private complainant (i.e., no reservation is made or no prior filing of a separate
civil action) or as required by the law or rules, the case will be prosecuted under the
direction and control of the public prosecutor. The civil action cannot proceed
independently of the criminal case.
OTHER LAWS EXCLUDED FROM THE SYLLABUS

EUFROCINA NIEVES vs. ERNESTO DULDULAO and FELIPE PAJARILLO, G.R. No.
190276, April 2, 2014, J. Perlas-Bernabe
Agricultural lessees, being entitled to security of tenure, may be ejected from their
landholding only on the grounds provided by law. These grounds the existence of which
is to be proven by the agricultural lessor in a particular case are enumerated in Section
36 of Republic Act No. (RA) 3844, otherwise known as the Agricultural Land Reform
Code. In this case, it was established that the agricultural lessees willfully and deliberately
failed to pay the lease rentals when they fell due, which is one o f the grounds for
dispossession of their landholding as provided in said provision of law.
CHARLES BUMAGAT, et al. vs. REGALADO ARRIBAY, G.R. No. 194818, June 9, 2014, J.
Del Castillo
A case involving agricultural land does not immediately qualify it as an agrarian dispute.
The mere fact that the land is agricultural does not ipso facto make the possessor an
agricultural lessee or tenant; there are conditions or requisites before he can qualify as an
agricultural lessee or tenant, and the subject matter being agricultural land constitutes
simply one condition. In order to qualify as an agrarian dispute, there must likewise exist a
tenancy relation between the parties. Thus, when farmer-beneficiaries of PD 27 who are
registered owners of agricultural lands filed a complaint for forcible entry against a person
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whose claim of ownership over the same parcels of land emanates from a donation by the
heirs of the original owner, it is a civil case within the jurisdiction of the ordinary courts, as
all the elements for an agrarian dispute are not present.
MARIANO JOSE, FELICISIMO JOSE, DECEASED, SUBSTITUTED BY HIS CHILDREN
MARIANO JOSE, CAMILO JOSE, TIBURCIA JOSE, FERMINA JOSE, AND VICTORIA JOSE vs.
ERNESTO M. NOVIDA, RODOLFO PALAYPAY, JR., ALEX M. BELARMINO, RODRIGO
LIBED, LEONARDO L. LIBED, BERNARDO B. BELARMINO, BENJAMIN G. ACOSTA,
MODESTO A. ORLANDA, WARLITO B. MEJIA, MAMERTO B. BELARMINO, MARCELO O.
DELFIN AND HEIRS OF LUCINO A. ESTEBAN, REPRESENTED BY CRESENCIA M. VDA.
ESTEBAN, G.R. No. 177374, July 2, 2014, J. Del Castillo
In Heirs of Lazaro Gallardo vs. Soliman, the DARAB has exclusive jurisdiction over cases
involving the cancellation of registered EPs; the DAR Secretary, on the other hand, has
exclusive jurisdiction over the issuance, recall or cancellation of EPs or Certificates of Land
Ownership Awards that are not yet registered with the Register of Deeds.
Thus, since certificates of title have been issued in the respective names of the respondents
as early as in 1990, the DAR Region I Director had no jurisdiction to cancel their titles; the
same is true with respect to the DAR Secretary. Thus, their respective January 30, 1991 and
August 22, 1995 Orders are null and void; consequently, respondents EPs and titles
subsists, contrary to petitioners claim that they have been cancelled. Void judgments or
orders have no legal and binding effect, force or efficacy for any purpose; in contemplation
of law, they are nonexistent.
LAND BANK OF THE PHILIPPINES vs. JOSE T. LAJOM, represented by PORFIRIO
RODRIGUEZ et al., G.R. No. 184982 & 185048, August 20, 2014, J. Perlas-Bernabe
Properties of the Lajoms were taken due to the Agrarian Reform Program. Just
compensation was partially given. The Lajoms contested the computation of just
compensation due to an alleged error in the applicable law. The Court ruled that the date of
taking of the subject land for purposes of computing just compensation should be reckoned
from the issuance dates of the emancipation patents. An emancipation patent constitutes
the conclusive authority for the issuance of a Transfer Certificate of Title in the n ame of the
grantee. It is from the issuance of an emancipation patent that the grantee can acquire the
vested right of ownership in the landholding, subject to the payment of just compensation
to the landowner.
RENATO L. DELFINO, SR. (Deceased), Represented by his Heirs, namely: GRACIA
DELFINO, GREGORIO A. DELFINO; MA. ISABEL A. DELFINO, RENATO A. DELFINO, JR.,
MA. REGINA DELFINO ROSELLA, MA. GRACIA A. DELFINO, MARIANO A. DELFINO, MA.
LUISA DELFINO GREGORIO and REV. FR. GABRIELA. DELFINO vs. AVELINO K. ANASAO
and ANGEL K. ANASAO (Deceased and represented by his sole heir, SIXTO C.
ANASAO), G.R. No. 197486, September 10, 2014, J. Villarama, Jr.

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The right to choose the area to be retained, which shall be compact or contiguous, shall
pertain to the landowner; Provided, however, That in case the area selected for retention
by the landowner is tenanted, the tenant shall have the option to choose whether to remain
therein or be a beneficiary in the same or another agricultural land with similar or
comparable features. In case the tenant chooses to remain in the retained area, he shall be
considered a leaseholder and shall lose his right to be a beneficiary under this Act. In case
the tenant chooses to be a beneficiary in another agricultural land, he loses his right as a
leaseholder to the land retained by the landowner. The tenant must exercise this option
within a period of one (1) year from the time the landowner manifests his choice of the
area for retention.
AUTOMAT REALTY AND DEVELOPMENT CORPORATION, LITO CECILIA AND LEONOR
LIM vs. SPOUSES MARCIANO DELA CRUZ, SR. AND OFELIA DELA CRUZ, G.R. No.
192026, October 01, 2014, J. Leonen
When Automat asked the spouses to vacate the premises, the spouses refused to vacate
unless they were paid compensation. They claimed they were agricultural tenants [who]
enjoyed security of tenure under the law. The Court ruled that tenancy relationship cannot
be presumed. The allegation of its existence must be proven by evidence, and working on
anothers landholding raises no presumption of an agricultural tenancy. Consequently, the
landowners consent to an agricultural tenancy relationship must be shown.
REMIGIO D. ESPIRITU and NOEL AGUSTIN vs. LUTGARDA TORRES DEL ROSARIO
represented by SYLVIA R. ASPERILLA, G.R. No. 204964, October 15, 2014, J. Leonen
Lands classified as non-agricultural in zoning ordinances approved by the Housing and
Land Use Regulatory Board or its predecessors prior to June 15, 1998 are outside the
coverage of the compulsory acquisition program of the Comprehensive Agrarian Reform
Law. However, there has to be substantial evidence to prove that lands sought to be
exempted fall within the non-agricultural classification. In this case del Rosario failed to
prove with substantial evidence that the subject property is industrial property and as such
is not sufficient to rebut the findings of both the Department of Agrarian Reform and the
Office of the President.
SPOUSES JAIME SEBASTIAN AND EVANGELINE SEBASTIANvs.BPI FAMILY BANK, INC.,
CARMELITA ITAPO AND BENJAMIN HAO, G.R. No. 160107, October 22, 2014, J.
Bersamin
It bears emphasizing that Republic Act No. 6552 aimed to protect buyers of real estate on
installment payments, not borrowers or mortgagors who obtained a housing loan to pay
the costs of their purchase of real estate and used the real estate as security for their loan.
The "financing of real estate in installment payments" referred to in Section 3, should be
construed only as a mode of payment vis--vis the seller of the real estate, and excluded the
concept of bank financing that was a type of loan. Accordingly, Sections 3, 4 and 5, supra,
must be read as to grant certain rights only to defaulting buyers of real estate on
installment, which rights are properly demandable only against the seller of real estate
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The Sps. Sebastians insistence would have been correct if the monthly amortizations being
paid to BPI Family arose from a sale or financing of real estate. In their case, however, the
monthly amortizations represented the installment payments of a housing loan that BPI
Family had extended to them as an employees benefit. The monthly amortizations they
were liable for was derived from a loan transaction, not a sale transaction, thereby giving
rise to a lender-borrower relationship between BPI Family and the petitioners.
MONCAYO INTEGRATED SMALL-SCALE MINERS ASSOCIATION, INC. (MISSMA) vs.
SOUTHEAST MINDANAO GOLD MINING CORP. (SMGMC), BALITE INTEGRATED
SMALL-SCALE MINING CORP., (BISSMICO) ET AL., G.R. No. 149638 (consolidated),
December 10, 2014, J. Leonen
The issue in these two consolidated cases involves the tightly contested Diwalwal Gold
Rush Area (DGRA) in Mt. Diwata, Mindanao, specifically, the 729-hectare portion excluded
from SMGMCs Mineral Production Sharing Agreement application (MPSA No. 128), and
declared as Peoples Small Scale Mining Area. SMGMC was the assignee of the original
holder of a permit to explore (EP 133) covering 4,941 hectares of DGRA. Due to
supervening events, [the Court] declares the petitions moot and academic.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo
While a tenancy relationship cannot be extinguished by the sale, alienation, or transfer of
the legal possession of the landholding, the same may nevertheless be terminated due to
circumstances more advantageous to the tenant and his/her family. The tenants having
received an adequate consideration of P1.1 million, it can be reasonably concluded that the
tenancy relationship between the previous owners and the spouses Andal had already been
severed.
IRENE D. OFILADA, vs. SPOUSES RUBEN ANDAL AND MIRAFLOR ANDAL, G.R. No.
192270, January 26, 2015, J. del Castillo
The fact alone of working on anothers landholding does not raise a presumption of the
existence of agricultural tenancy. For tenancy to be proven, all indispensable elements
must be established, the absence of one or more requisites will not make the alleged tenant
a de facto one. These are: 1) the parties are the landowner and the tenant; 2) the subject is
agricultural land; 3) there is consent by the landowner; 4) the purpose is agricultural
production; 5) there is personal cultivation; and 6) there is sharing of the harvests.
RICARDO V. QUINTOS vs. DEPARTMENT OF AGRARIAN REFORM ADJUDICATION
BOARD AND KANLURANG MINDORO FARMER'S COOPERATIVE, INC, G.R. No. 185838
February 10, 2014, J. PERLAS-BERNABE
GCFI contracted substantial loans with the PNB DBP which were secured by several real
estate mortgages over GCFI properties. In 1981, Romualdez abandoned the management of
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the GCFI properties, after which DBP took over. Sometime during the same year, certain
people started to plant palay on the subject property, eventually covering the riceland.
After the EDSA revolution, the possession and management of the GCFI properties were
returned to GCFI. However, in July 1987, the properties were sequestered by the PCGG
albeit, eventually cleared. In the meantime, PNB and DBP transferred their financial claims
against GCFI to the Asset Privatization Trust (APT). KAMIFCI members were allegedly
installed as tenants by APT, the "legal possessor" of the land. However there was no
showing that APT was authorized by the propertys landowner, GCFI, to install tenants
thereon. Thus, since the consent of the standing landowner, GCFI, had not been secured by
APT in this case, it had no authority to enter into any tenancy agreement with the KAMIFCI
members. The right to hire a tenant is basically a personal right of a landowner, except as
may be provided by law. Hence, the consent of the landowner should be secured prior to
the installation of tenants.
DEPARTMENT OF AGRARIAN REFORM, now represented by OIC-SEC. NASSER
PANGANDAMAN vs .TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION,ET
AL./ GRACE B. FUA, ET AL. VS. TRINIDAD VALLEY REALTY & DEVELOPMENT
CORPORATION ET AL/ TRINIDAD VALLEY REALTY & DEVELOPMENT CORPORATION
ET AL. VS. REPUBLIC OF THE PHILIPPINES, ET AL. G.R. No. 1733866 174162 February
11, 2014, J. VILLARAMA JR.
Under Republic Act No. 6657, the Comprehensive Agrarian Reform Law, the Special
Agrarian Courts shall have original and exclusive jurisdiction over all petitions for the
determination of just compensation to landowners, and the prosecution of all criminal
offenses. The case at bar deals with acts of the DAR and the application, implementation,
enforcement, or interpretation of RA 6657 - issues which do not involve the "special
jurisdiction" of the RTC acting as a Special Agrarian Court. Hence, when the court a quo
heard and decided the instant case, it did so without jurisdiction. Decisions, orders, awards
or rulings of the DAR may be brought to the CA by certiorari and not with the RTC through
an ordinary action for cancellation of title.
FRANCLER P. ONDE v THE OFFICE OF THE LOCAL CIVIL REGISTRATION OF LAS PIAS
CITY, G.R No. 197174, September 10, 2014. J. VILLARAMA
Francler Onde filed a petition for correction of entries in his birth certificate with the RTC,
impleading the LCR of Las Pinas City. The RTC held that a correction on his birth certificate
that his parents were married on December 23, 1983 in Bicol to "not married" is a
substantial correction affecting his legitimacy that requires adversarial proceedings.

The Supreme Court agreed. Said correction is substantial as it will affect his legitimacy and
convert him from a legitimate child to an illegitimate one. Corrections of entries in the civil
register including those on citizenship, legitimacy of paternity or filiation, or legitimacy of
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marriage, involve substantial alterations. Substantial errors in a civil registry may be

corrected and the true facts established provided the parties aggrieved by the error avail
themselves of the appropriate adversary proceedings.
SPOUSES EDUARDO and LYDIA SILOS v PHILIPPINE NATIONAL BANK, G.R No. 181045,
July 2, 2014. J. DEL CASTILLO
One of the promissory notes issued by PNB to the spouses Silos contained a penalty clause
where upon default, a penalty charge of 24% per annum based on the defaulted principal
amount shall be imposed. PNB claims this penalty charge should be covered by the real
estate mortgage along with the principal.
The Court ruled that the penalty may not be included as part of the secured amount. An
examination of the mortgage agreements reveals that nowhere is it stated that penalties
are to be included in the secured amount. Having the attributes of a contract of adhesion as
the principal credit documents, we must construe the mortgage contracts strictly, and
against the party who drafted it.
BIGNA Y EX-IM PHILIPPINES, INC. vs. UNION BANK OF THE PIDLIPPINES/UNION
BANK OF THE PIDLIPPINES vs. BIGNAY EX-IM PHILIPPINES, INC., G.R. No. 171590
171598 February 12, 2014, J. DEL CASTILLO
Eviction shall take place whenever by a final judgment based on a right prior to the sale or
an act imputable to the vendor, the vendee is deprived of the whole or of a part of the thing
purchased. In case eviction occurs, the vendee shall have the right to demand of the vendor,
among others, the return of the value which the thing sold had at the time of the eviction,
be it greater or less than the price of the sale; the expenses of the contract, if the vendee has
paid them; and the damages and interests, and ornamental expenses, if the sale was made
in bad faith.
REX M. TUPAL VS. JUDGE REMEGIO V. ROJO ETC., M. No. MTJ-14-1842 February 24,
2014, J. LEONEN
Municipal trial court judges cannot notarize affidavits of cohabitation of parties whose
marriage they will solemnize.

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