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ARELLANO UNIVERSITY

SCHOOL OF LAW
AY 2018-2019

CIVIL LAW REVIEW II


CASE DIGESTS COMPILATION
(JUNE 2017-SEPTEMBER 2018)

SUBMITTED TO:

ATTY. CRISOSTOMO URIBE


CIVIL LAW REVIEW II - PROFESSOR

BY:

ANWAR, AL-RAFFY N.
CLASS NO. 3
SUNDAY (8:00-12:00)
TABLE OF CONTENTS

PAGE
OBLIGATIONS AND CONTRACTS
I. Obligations
A. General Provisions
Prescription of actions
1. SPECIFIED CONTRACTORS & DEVELOPMENT, INC., AND
SPOUSES ARCHITECT ENRIQUE O. OLONAN AND CECILIA R. 1
OLONAN, Petitioners vs. JOSE A POBOCAN, Respondent.
January 11, 2018
2. FLOR MERCENE, Petitioner vs.
GOVERNMENT SERVICE INSURANCE SYSTEM, Respondent 3
January 10, 2018
3. HEIRS OF VICTOR AMISTOSO, namely: VENEZUELA A. DELA
CRUZ, FLORA A. TULIO, WILFREDO D. AMISTOSO, RUFINO D.
AMISTOSO, VICENTE D. AMISTOSO, MAXIMO D. AMISTOSO, and 5
ZENAIDA D. AMISTOSO, Petitioners, vs. ELMER T. VALLECER,
represented by EDGAR VALLECER, Respondent.
December 6, 2017
4. MAKILITO B. MAHINAY, Petitioner., vs.
DURA TIRE & RUBBER INDUSTRIES, INC., Respondent. 7
June 05, 2017
B. Sources of Obligations
Quasi-delicts
5. SPOUSES ED DANTE LATONIO AND MARY ANN LATONIO and the
minor ED CHRISTIAN LATONIO, Petitioners vs.MCGEORGE FOOD
INDUSTRIES INC., CEBU GOLDEN FOODS INDUSTRIES, INC., and 9
TYKE PHILIP LOMIBAO, Respondents.
December 6, 2017
6. VISAYAN ELECTRIC COMPANY, INC., Petitioner vs.
EMILIO G. ALFECHE, GILBERT ALFECHE, EMMANUEL
MANUGAS, AND M. LHUILLIER PAWNSHOP AND JEWELRY, 11
Respondents
November 29, 2017
According to Cause
Gratuitous or Lucrative
7. SPOUSES JUAN and ANTONINA CANO, ROLANDO CANO and
JOSEPHINE "JOSIE" CANO-AQUINO, Petitioners, vs. SPOUSES
ARTURO and EMERENCIANA CANO, Respondents.
GR NO. 188666 13
SPOUSES JUAN CANO and ANTONINA SORIANO-CANO,
Petitioners, vs. SPOUSES ARTURO CANO and EMERENCIANA
DACASIN, Respondents.
December 14, 2017
As to rights & obligations of multiple parties
Joint and Solidary obligation
8. RAMON E. REYES AND CLARA R. PASTOR, Petitioner vs.
BANCOM DEVELOPMENT CORP, Respondent. 15
January 11, 2018
9. UNITED COCONUT PLANTERS BANK, Petitioner vs.
SPOUSES WALTER UY AND LILY UY, Respondents. 17
January 10, 2018
Modes of Extinguishment of obligations
Condonation or remission of debt
10. H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC.,
HRV VILLARICA PAWNSHOP, INC., AND VILLARICA PAWNSHOP,
INC., Petitioners vs. SOCIAL SECURITY COMMISSION, SOCIAL 19
SECURITY SYSTEM, AMADOR M. MONTEIRO, SANTIAGO
DIONISIO R. AGDEPPA, MA. LUZ N. BARROS-MAGSINO,
MILAGROS N. CASUGA AND JOCELYN Q. GARCIA, Respondents.
January 24, 2018
Payment
11. BENJAMIN EVANGELISTA, Petitioner vs.
SCREENEX, INC., represented by ALEXANDER G, YU, Respondent 21
November 20, 2017
12. MARIANITO PADILLA and ALFREDO JAVALUYAS, Petitioners vs.
UNIVERSAL ROBINA CORPORATION, represented by its Senior Vice 23
President, JOHNSON ROBERT GO, Respondents.
December 14, 2017
II. Contracts
Elements of contracts
According to Purpose
13. ESMERALDO GATCHALIAN, DULY REPRESENTED
BY SAMUEL GATCHALIAN Petitioners, vs.
CESAR FLORES, JOSE LUIS ARANETA, CORAZON QUING, AND 25
CYNTHIA FLORES., Respondents.
January 19, 2018
Reformation of contracts
14. SPOUSES FIRMO S. ROSARIO AND AGNES ANNABELLE DEAN-
ROSARIO, Petitioners vs. PRISCILLA P. ALVAR, Respondent. 27
September 06, 2017
Rescissible Contracts
15. JOSEPH HARRY WALTER POOLE-BLUNDEN, Petitioner vs.
UNION BANK OF THE PHILIPPINES, Respondent 28
November 29, 2017
Void or inexistent contracts
16. BOSTON EQUITY RESOURCES, INC., and WILLIAM HERNANDEZ,
Petitioners vs. 30
EDGARDO D. DEL ROSARIO, Respondent
November 27, 2017
III. Sales
In General
Distinguished from other transactions
17. SPOUSES ROSALINO R. REYES, JR. and SYLVIA S. REYES,,
Petitioners vs.SPOUSES HERBERT BUN HONG G. CHUNG and 32
WIENNA T. CHUNG,, Respondents
September 13, 2017
18. REMEDIOS V. GEÑORGA, Petitioner vs.
HEIRS OF JULIAN MELITON, Represented by ROBERTO MELITON as
Attorney-in-Fact, IRENE MELITON, HENRY MELITON, ROBERTO 34
MELITON, HAIDE* MELITON, and MARIA FE MELITON ESPINOSA,
Respondents.
July 3, 2017
Extinguishment of Sale
Redemption (Conventional & Legal)
19. PARADIGM DEVELOPMENT CORPORATION
OF THE PHILIPPINES, Petitioner vs 36
BANK OF THE PHILIPPINE ISLANDS, Respondent.
June 7, 2017
IV. Lease
Kinds of Lease
Lease of right
20. HILLTOP MARKET FISH VENDORS ASSOCIATION, INC., Petitioner
vs. HON. BRAULIO YARANON, CITY MAYOR, BAGUIO CITY, HON.
GALO WEYGAN, CITY COUNCILOR AND CHAIRMAN ANTI-VICE 38
COORDINATING TASK FORCE AND THE CITY GOVERNMENT OF
BAGUIO, Respondent.
July 12, 2017
Termination of the lease
Implied new lease or tacita reconduccion
21. VICTORIA N. RACELIS, IN HER CAPACITY AS ADMINISTRATOR
Petitioner, vs.SPOUSES GERMIL JAVIER AND REBECCA JAVIER 40
Respondents.
January 29, 2018
Equity & Right of redemption
22. JOSE DIAZ, JR. (herein substituted by his legal heirs VERONICA
BOLAGOT-DIAZ and RIO ANGELA BOLAGOT-DIAZ) and ADELINA
D. McMULLEN, Petitioners vs.
SALVADOR VALENCIANO, JR., [deceased] substituted by MADELINE 42
A. VALENCIANO, RANIL A. VALENCIANO, ROSEMARIE V.
SERRANO, SHEILA V ALENCIANOMOLO and JOHN-LYN
VALENCIANO-V ARGAS, Respondent.
December 6, 2017
23. SPOUSES ELLIS R. MILES and CAROLINA RONQUILLO-MILES,
Petitioners vs. 44
BONNIE BAUTISTA LAO, Respondent
November 22, 2017
V. Torts and Damages
24. JOHN E.R. REYES and MERWIN JOSEPH REYES, Petitioners,
vs.ORICO DOCTOLERO, ROMEO A VILA, GRANDEUR SECURITY
AND SERVICES CORPORATION, and MAKATI CINEMA SQUARE, 46
Respondents.
August 2, 2017
Kinds of Damages
25. MARILOU PUNONGBAYAN-VISITACION, Petitioner vs.
PEOPLE OF THE PHILIPPINES AND CARMELITA P. 48
PUNONGBAYAN, Respondent.
January 10, 2018
26. THE CITY OF BACOLOD, HON. MAYOR EVELIO R. LEONARDIA,
ATTY. ALLAN L. ZAMORA AND ARCH. LEMUEL D. REYNALD, IN
THEIR PERSONAL CAPACITIES AND IN THEIR CAPACITIES AS
OFFICIALS OF THE CITY OF BACOLOD Petitioners, vs. 50
PHUTURE VISIONS CO. INC., Respondents.
January 17, 2018
27. ALLIED BANKING CORPORATION, now merged with PHILIPPINE
NATIONAL BANK, Petitioner vs. REYNALDO CALUMPANG, 52
Respondent.
January 17, 2018
28. ST. MARTIN POLYCLINIC INC., Petitioner vs. LWV CONSTRUCTION
CORPORATION, Respondent. 54
December 4, 2017
29. MARLON BACERRA y TABONES, Petitioner., vs.
PEOPLE OF THE PHILIPPINES, Respondent. 56
July 3, 2017
30. SANTOS-YLLANA REALTY CORPORATION, Petitioner vs.
SPOUSES RICARDO DEANG AND FLORENTINA DEANG, 57
Respondents.
June 21, 2017
SPECIFIED CONTRACTORS & DEVELOPMENT, INC., AND SPOUSES ARCHITECT
ENRIQUE O. OLONAN AND CECILIA R. OLONAN, Petitioners vs.
JOSE A POBOCAN, Respondent.
GR NO. 212472
January 11, 2018

PONENTE: Justice Tijam (FIRST DIVISION)

NATURE OF THE ACTION:

This Petition for Review on Certiorari under Rule 45 urges this Court to
reverse and set aside the November 27, 2013 Decision and April 28, 2014 Resolution of the
Court of Appeals (CA) in CA-G.R. CV No. 99994, and to affirm instead the June 4, 2012 Order
of the Regional Trial Court (RTC) of Quezon City, Branch 92, in Civil Case No. Q-11-70338.
The court a quo had granted the Motion to Dismiss of Specified Contractors & Development Inc.
(Specified Contractors), and Spouses Architect Enrique O. Olonan and Cecilia R. Olonan
(collectively referred to as petitioners), thereby dismissing the action for specific performance
filed by respondent Jose A. Pobocan. The dismissal of the case was subsequently set aside by the
CA in the assailed decision and resolution.

FACTS:

It is undisputed that respondent was in the employ of Specified Contractors until his
retirement sometime in March 2011. His last position was president of Specified Contractors and
its subsidiary, Starland Properties Inc., as well as executive assistant of its other subsidiaries and
affiliates. Architect Olonan allegedly agreed to give respondent one (1) unit for every building
Specified Contractors were able to construct as part of respondent's compensation package to
entice him to stay with the company. Two (2) of these projects that· Specified Contractors and
respondent were· able to build were the Xavierville Square Condominium in Quezon City and
the Sunrise 1-foliday Mansion Bldg. I in Alfonso, Cavite. Pursuant to the alleged oral agreement,
Specified Contractors supposedly ceded, assigned and transferred Unit 708 of Xavlerville Square
Condominium and Unit 208 of Sunrise Holiday Mansion Bldg. I (subject units) in favor of
respondent.

In a March 14, 2011 letter addressed to petitioner Architect Enrique Olonan as chairman
of Specified Contractors, respondent requested the execution of Deeds of Assignment or Deed of
Sale over the subject units in his favor, along with various other benefits, in view of his
impending retirement on March 19, 2011. When respondent's demand was unheeded, he filed a
Complaint on November 21, 2011 before the RTC of Quezon City praying that petitioners be
ordered to execute and deliver the appropriate deeds of conveyance and to pay moral and
exemplary damages, as well as attorney's fees. On January 17, 2012, petitioners, instead of filing
an answer, interposed a Motion to Dismiss denying the existence of the alleged oral agreement.
They argued that, even assuming arguendo that there was such an oral agreement, the alleged
contract is unenforceable for being in violation of the statute of frauds, nor was there any written
document, note or memorandum showing that the subject units have in fact been ceded, assigned
or transferred to respondent. Moreover, assuming again that said agreement existed, the cause of
action had long prescribed because the alleged agreements were supposedly entered into in 1994
and 1999 indicated in respondent's March 14, 2011 demand letter, supra, annexed to the
complaint.

ISSUE:

The sole issue of the case at bar is whether the respondent’s cause of action had already
prescribed.

RULING:

The petition is meritorious.

As the Court has ascertained that the present suit is essentially for specific performance -a
personal action -over which the court a quo had jurisdiction, it was therefore erroneous for it to
have treated the as a real action which prescribes after 30 years under Article 1141 of the New
1
Civil Code. In a personal action, the plaintiff seeks the recovery of personal property, the
enforcement of a contract, the recovery of damages. Real actions, on the other hand, are those
affecting title to or possession of real property, or interest therein. As personal action based upon
an oral contract, Article 1145 providing a prescriptive period of six years applies in this case
instead. The shorter period provided by law to institute an action based on an oral contract is due
to the frailty of human memory. Nothing prevented the parties from reducing the alleged oral
agreement into writing, stipulating the same in a contract of employment or partnership, or even
mentioning the same in an office memorandum early on.

The complaint for specific performance was instituted on November. 21, 2011, or 17
years from the oral agreement of 1994 and almost 12 years after the December 1, 1999 oral
agreement. Thus, the respondent's action upon an oral contract was filed beyond the six-year
period within which he should have instituted the same. Respondent argued that the prescriptive
period should not be counted from 1994 because the condominium units were not yet in
existence at that time, and that the obligation would have arisen after the units were completed
and ready for occupancy. Article 1347 of the New Civil Code is, however, clear that future things
may be the object of a contract. This is the reason why real estate developers engage in pre-
selling activities. But even if we were to entertain respondent's view, his right of action would
still be barred by the statute of limitations. Condominium Certificate of Title ( CCT) No. N-1834
732 for Unit 708 of Xavierville Square Condominium, copy of which was annexed to the
complaint, was issued on September 11, 1997 or more than 13 years before· respondent's March
14, 2011 demand letter. CCT No. CT-61333 for Unit 208 of Sunrise Holiday Mansion Building I;
also annexed to the complaint, was issued on March 12, 1996 or 14 years before respondent's
March 14, 2011 demand letter. Indubitably, in view of the instant suit for specific performance
being a personal action founded upon an oral contract which must be brought within six years
from the accrual of the right, prescription had already set in.

FLOR MERCENE, Petitioner vs.


GOVERNMENT SERVICE INSURANCE SYSTEM, Respondent.
2
GR NO. 192971
January 10, 2018

PONENTE: Justice Martires (THIRD DIVISION)

NATURE OF THE ACTION:

This petition for review on certiorari seeks to reverse and set aside the 29
April 2010 Decision and 20 July 2010 Resolution of the Court of Appeals (CA) in CA-G.R. CV
No. 86615 which reversed the 15 September 2005 Decision of the Regional Trial Court, Branch
220, Quezon City (RTC).

PONENTE: Justice Martires

FACTS:

On 19 January 1965, petitioner Floro Mercene (Mercene) obtained a loan from


respondent Government Service Insurance System (GSIS) in the amount of P29,500.00. As
security, a real estate mortgage was executed over Mercene's property in Quezon City, registered
under Transfer Certificate of Title No. 90535. The mortgage was registered and annotated on the
title on 24 March 1965. On 14 May 1968, Mercene contracted another loan with GSIS for the
amount of P14,500.00. The loan was likewise secured by a real estate mortgage on the same
parcel of land. The following day, the loan was registered and duly annotated on the title.

On 11 June 2004, Mercene opted to file a complaint for Quieting of Title against GSIS.
He alleged that: since 1968 until the time the complaint was filed, GSIS never exercised its rights
as a mortgagee; the real estate mortgage over his property constituted a cloud on the title; GSIS'
right to foreclose had prescribed. In its answer, GSIS assailed that the complaint failed to state a
cause of action and that prescription does not run against it because it is a government entity.

ISSUE:

The sole issue of the case is whether the Court of Appeals erred in ruling that the real estate
mortgages had yet to prescribe.

RULING:

The Petition has no merit.

GSIS raised the affirmative defense, among others, that the complaint failed to state a cause of
action. In tum, the CA ruled that Mercene' s complaint did not state a cause of action because the
maturity date of the loans, or the demand for the satisfaction of the obligation, was never alleged.
In order for cause of action to arise, the following elements must be present: (1) a right in favor
of the plaintiff by whatever means and under whatever law it arises or is created; (2) an
obligation on the part of the named defendant to respect or not to violate such right; and (3) an
act or omission on the part of such defendant violative of the right of the plaintiff or constituting
a breach of obligation of the defendant to the plaintiff.

In University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, et al., the Court clarified
that prescription runs in mortgage contract from the time the cause of action arose and not from
the time of its execution, to wit: The prescriptive period neither runs from the date of the
execution of a contract nor does the prescriptive period necessarily run on the date when the loan
becomes due and demandable. Prescriptive period runs from the date of demand, subject to
certain exceptions.

In Maybank Philippines, Inc. v. Spouses Tarrosa, the Court explained that the right to
foreclose prescribes after ten (10) years from the time a demand for payment is made, or when
then loan becomes due and demandable. An action to enforce a right arising from a mortgage
should be enforced within ten (10) years from the time the right of action accrues, i.e., when the
mortgagor defaults in the payment of his obligation to the mortgagee; otherwise, it will be barred
by prescription and the mortgagee will lose his rights under the mortgage.

3
It is only when demand to pay is unnecessary in case of the aforementioned
circumstances, or when required, such demand is made and subsequently refused that the
mortgagor can be considered in default and the mortgagee obtains the right to file an action to
collect the debt or foreclose the mortgage. Thus, applying the pronouncements of the Court
regarding prescription on the right to foreclose mortgages, the Court finds that the CA did not err
in concluding that Mercene's complaint failed to state a cause of action. It is undisputed that his
complaint merely stated the dates when the loan was contracted and when the mortgages were
annotated on the title of the lot used as a security. Conspicuously lacking were allegations
concerning: the maturity date of the loan contracted and whether demand was necessary under
the terms and conditions of the loan. As such, the RTC erred in ruling that GSIS' right to
foreclose had prescribed because the allegations in Mercene's complaint were insufficient. right
to foreclose mortgages is not reckoned from the date of execution of the contract. Rather,
prescription commences from the time the cause of action accrues; in other words, from the time
the obligation becomes due and demandable, or upon demand by the creditor/mortgagor, as the
case may be.

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


TULIO, WILFREDO D. AMISTOSO, RUFINO D. AMISTOSO, VICENTE D.
AMISTOSO, MAXIMO D. AMISTOSO, and ZENAIDA D. AMISTOSO, Petitioners, vs.
ELMER T. VALLECER, represented by EDGAR VALLECER, Respondent.
GR NO. 227124
4
December 6, 2017

PONENTE: Justice Perlas-Bernabe (SECOND DIVISION)

NATURE OF THE ACTION:

Assailed in this petition for review on certiorari are the Decision dated
February 24, 2016 and the Resolution dated August 10, 2016 of the Court of Appeals (CA) in
CA-G.R. SP No. 06720, which upheld the Resolution dated May 28, 2014 and the Order dated
December 3, 2014 of the Regional Trial Court of Liloy, Zamboanga del Norte, Branch 28 (RTC)
in Civil Case No. L-298, denying the Motion to Hear and Resolve Affirmative Defenses filed by
petitioners Heirs of Victor Amistoso, namely: Venezuela A. Dela Cruz, Flora A. Tulio, Wilfredo
D. Amistoso, Rufino D. Amistoso, Vicente D. Amistoso, Maximo D. Amistoso, and Zenaida D.
Amistoso (petitioners) for their failure to substantiate their affirmative defenses of res judicata,
prescription, and laches.

FACTS:

Sometime in March 1996, respondent Elmer T. Vallecer (respondent), through his brother
Dr. Jose Benjy T. Vallecer (Benjy), filed a Complaint for recovery of possession and damages
against petitioners, docketed as Civil Case No. S-606, involving a 2,265-square meter parcel of
land, located in Labason, Zamboanga del Norte, described as Lot C-7-A and covered by Transfer
Certificate of Title No. T-442148 (TCT T-44214) and Tax Declaration No. 93-73299 under
respondent's name. He claimed that he purchased the property sometime in June 1990 after
confirming with the Department of Agrarian Reform (DAR) that the property was not tenanted.

Thereafter, or on July 18, 2012, respondent filed a Complaint for quieting of title,
ownership, possession, and damages with preliminary injunction against petitioners, docketed as
Civil Case No. L-298, subject of the present case. Asserting ownership over the property under
TCT No. T-44214 and tax declarations, and citing petitioners' unlawful possession and
occupation thereof despite repeated demands to vacate, respondent claimed that: petitioners' CL
T does not contain the technical description of the property which it purportedly covers; the
tenancy relationship from which petitioners anchor their possession pertains to the portion of the
adjacent land that belongs to Maria Kho Young with whom they admittedly have the tenancy
relationship; and the October 17, 2003 CA Decision involving Civil Case No. S-606, annotated
on his TCT No. T-44214, constitutes a cloud on his title. Thus, respondent prayed for the court
to: restrain and prohibit petitioners from continuing to usurp his real rights on the property as
owner thereof; prevent or prohibit them from dealing and negotiating the property with any
person for any purpose; prohibit or prevent them from obstructing and preventing the free
passage, possession, use, and appropriation of the property and its fruits; declare him as the
absolute owner of the property; and order petitioners to vacate the property and remove all
structures and improvements introduced thereon at their expense.

ISSUE:

To determine whether the action is one of accion reinvindicatoria and not accion
publiciana and also whether the action to quiet title is barred by res judicata.

RULING:

The petition lacks of merit.

It is apt to clarify that the CA erroneously classified Civil Case No. S-606 as an accion
reivindicatoria, or a suit which has for its object the recovery of possession of real property as
owner and that it involves recovery of ownership and possession based on the said ownership. As
plaintiff in Civil Case No. S-606, respondent never asked that he be declared the owner of the
land in question, but only prayed that he be allowed to recover possession thereof from
petitioners. As such, Civil Case No. S-606 should have instead, been properly classified as an
accion publiciana, or a plenary action to recover the right of possession of land. Hence, while
petitioners were acknowledged by the DAR as "deemed owners" of the land in Civil Case No. S-
606, such declaration was merely provisional as it was only for the purpose of determining
possession. In Gabriel, Jr. v. Crisologo, the Court thoroughly discussed the nature and purpose of
5
an accion publiciana: Also known as accion plenaria de posesion, accion publiciana is an
ordinary civil proceeding to determine the better right of possession of realty independently of
title. The objective of the plaintiffs in accion publiciana is to recover possession only, not
ownership. The adjudication of the issue of ownership, being provisional, is not a bar to an action
between the same parties involving title to the property. The adjudication, in short, is not
conclusive on the issue of ownership.

Clearly, the complaint in Civil Case No. L-298 is, as indicated herein, one for quieting of
title pursuant to Article 476 of the Civil Code. In Green Acres Holdings, Inc. v. Cabral, the Court
discussed: Quieting of title is a common law remedy for the removal of any cloud upon, doubt,
or uncertainty affecting title to real property. In such action, the competent court is tasked to
determine the respective rights of the complainant and the other claimants, not only to place
things in their proper places, and make the claimant, who has no rights to said immovable,
respect and not disturb the one so entitled, but also for the benefit of both, so that whoever has
the right will see every cloud of doubt over the property dissipated, and he can thereafter
fearlessly introduce any desired improvements, as well as use, and even abuse the propertv.

For an action to quiet title to prosper, two indispensable requisites must concur: (1) the
plaintiff or complainant has a legal or equitable title or interest in the real property subject of the
action; and (2) the deed, claim, encumbrance, or proceeding claimed to be casting a cloud on his
title must be shown to be in fact invalid or inoperative despite its prima facie appearance of
validity or legal efficacy. Based on the foregoing, it is clear that the causes of action in Civil
Case Nos. S-606 and L-298 are different from each other. And thus, the ruling in the former
would not operate as res judicata on the latter.

MAKILITO B. MAHINAY, Petitioner., vs.


DURA TIRE & RUBBER INDUSTRIES, INC., Respondent.
GR NO. 194152
June 05, 2017

PONENTE: Justice Leonen (SECOND DIVISION)

6
NATURE OF THE ACTION:

This resolves a Petition for Review on Certiorari directly filed before this
Court, assailing the Judgment on the Pleadings dated April 13, 2010 and Order dated September
2, 2010 rendered by Branch 20 of the Regional Trial Court of Cebu City in Civil Case No. CEB-
33639. The trial court dismissed the Complaint filed by Makilito B. Mahinay (Mahinay),
declaring that he already lost his right to redeem a parcel of land sold in an extrajudicial
foreclosure sale. The period to redeem a property sold in an extrajudicial foreclosure sale is not
extendible. A pending action to annul the foreclosure sale does not toll the running of the one (1)
year period of redemption under Act No. 3135.

FACTS:

The parcel of land, with an area of 3,616 square meters and located in Barrio Kiot, Cebu
City, was covered by Transfer Certificate of Title (TCT) No. 111078 under the name of A&A
Swiss International Commercial, Inc. (A&A Swiss). The property was mortgaged to Dura Tire
and Rubber Industries, Inc. On June 5, 1992, A&A Swiss sold the property to Mahinay for the
sum of P540,000.00. In the Deed of Absolute Sale, Mahinay acknowledged that the property had
been previously mortgaged by A&A Swiss to Dura Tire, holding himself liable for any claims
that Dura Tire may have against Move Overland.

On August 21, 1994, Mahinay wrote Dura Tire, requesting a statement of account of
Move Overland's credit purchases. For Move Overland's failure to pay its credit purchases, Dura
Tire applied for extrajudicial foreclosure of the property on January 6, 1995. Despite the protest,
Sheriff Romeo Laurel (Sheriff Laurel) proceeded with the sale and issued a Certificate of Sale in
favor of Dura Tire. The property was purchased at P950,000.00, and the Certificate of Sale was
registered on February 20, 1995. Mahinay, as "substitute mortgagor," was fully aware that the
property he purchased from A&A Swiss was previously mortgaged to Dura Tire to answer for
Move Overland's obligation. Considering that Move Overland failed to pay for its credit
purchases, Dura Tire had every right to foreclose the property.

ISSUE:

The sole issue for this Court's resolution is whether the one (1)-year period of redemption
was tolled when Mahinay filed his Complaint for annulment of foreclosure sale.

RULING:

This petition must be denied.

By force of law, specifically, Section 6 of Act No. 3135, Mahinay's right to redeem arose
when the mortgaged property was extrajudicially foreclosed and sold at public auction. There is
no dispute that Mahinay had a lien on the property subsequent to the mortgage. Consequently, he
had the right to buy it back from the purchaser at the sale, Dura Tire in this case, "from and at
any time within the term of one year from and after the date of the sale." Section 6 of Act No.
3135 provides:

Section 6. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or
judgment creditor of said debtor, or any person having a lien on the property subsequent
to the mortgage or deed of trust under which the property is sold, may redeem the same at
any time within the term of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four hundred and sixty-four to
four hundred and sixty-six, inclusive, of the Code of Civil Procedure, in so far as these
are not inconsistent with the provisions of this Act.

The "date of the sale" referred to in Section 6 is the date the certificate of sale is
registered with the Register of Deeds. This is because the sale of registered land does not '"take
effect as a conveyance, or bind the land' untit it is registered. The right of redemption being
statutory the mortgagor may compel the purchaser to sell back the property within the one (1 )-
year period under Act No. 3135. If the purchaser refuses to sell back the property, the mortgagor
may tender payment to the Sheriff who conducted the foreclosure sale. Here, Mahinay should
7
have tendered payment to Sheriff Laurel instead of insisting on directly paying Move Overland's
unpaid credit purchases to Dura Tire.

Since the period of redemption is fixed, it cannot be tolled or interrupted by the filing of
cases to annul the foreclosure sale or to enforce the right of redemption. "To rule otherwise
would constitute a dangerous precedent. Here, the Certificate of Sale in favor of Dura Tire was
registered on February 20, 1995. Mahinay, as the successor-in-interest of previous owner A&A
Swiss, had one (1) year from February 20, 1995, or on February 20, 1996, to exercise his right
of redemption and buy back the property from Dura Tire at the bid price of P950,000.00. With
Mahinay failing to redeem the property within the one (1)-year period of redemption, his right to
redeem had already lapsed. As discussed, the pendency of an action to annul the foreclosure sale
or to enforce the right to redeem does not toll the running of the period of redemption.

All told, the trial court correctly dismissed Mahinay's Complaint for judicial declaration
of right to redeem. To grant the Complaint would have extended the period of redemption for
Mahinay, in contravention of the fixed one (1)-year period provided in Act No. 3135.

SPOUSES ED DANTE LATONIO AND MARY ANN LATONIO and the minor ED
CHRISTIAN LATONIO, Petitioners vs.
MCGEORGE FOOD INDUSTRIES INC., CEBU GOLDEN FOODS INDUSTRIES, INC.,
and TYKE PHILIP LOMIBAO, Respondents.
GR NO. 206184
December 6, 2017

PONENTE: Justice Peralta (SECOND DIVISION)

NATURE OF THE ACTION:

8
Before this Court is a petition for review via Rule 45 of the Rules of Court
assailing the Decision dated September 28, 2012 and Resolution dated January 31, 2013 of the
Court of Appeals (CA), Cebu City in CA-G.R. CV No. 03079, which reversed and set aside the
Decision of the Regional Trial Court (RTC) Branch 22, Cebu City and denied the motion for
reconsideration, respectively.

FACTS:

On September 17, 2000, the petitioners, spouses Ed Dante (Ed) and/Mary Ann Latonio
(Mary Ann); accompanied their eight-month-old child Ed Christian to a birthday party at the
McDonald's Restaurant, Ayala Center, Cebu City. During the party and as part of the birthday
package, McDonald's presented two mascots - "Birdie" and "Grimace" - to entertain and dance
for the guests. Respondent Tyke Philip Lomibao (Lomibao ) was the person inside the "Birdie"
mascot suit. After the mascots danced, guests had their pictures taken with them. Intending to
have her child's photo taken with the mascots, Mary Ann placed Ed Christian on a chair in front
of the mascot "Birdie." The mascot positioned itself behind the child and extended its "wings" to
give a good pose for the camera.

As photos were about to be taken, Mary Ann released her hold of Ed Christian. Seconds
later, the child fell head first from the chair onto the floor. Several guests attended to Ed
Christian. Meanwhile, the employees of respondent McDonald's Cebu Golden Food6 (Cebu
Golden Food) assisted petitioners in giving first aid treatment to Ed Christian. Petitioners,
nevertheless, remained and continued with the party and left only after the party was over. For
some time, nothing was heard from petitioners. Nonetheless, a staff of Cebu Golden Food visited
the Latonios in their residence to follow up the results of the CT scan test. Thereafter, McGeorge
relayed the doctor's requirement to the Latonios who initially agreed to give McGeorge copies of
the x-ray and CT scan results. However, the Latonios had a change of heart and informed
McGeorge that they had decided against lending them the x-ray and CT scan
results and other related medical records. Instead, the Latonios sent a Letter to McGeorge
demanding for compensation in the amount of Fifteen Million Pesos (15,ooo,ooo.oo).

ISSUE:

The sole issue of whether the Court of Appeals erred in ruling that the proximate cause of
Ed Christian's fall was the negligence of petitioner Mary Ann Latonia.

RULING:

We find no merit on this instant petition.

In the instant case, there is no dispute that petitioners suffered damages because of Ed
Christian's fall. However, as to the issues on negligence and proximate cause, the Court of
Appeals and the trial court gave contradicting findings. As the action is predicated on negligence,
the relevant law is Article 2176 of the Civil Code, which states that:

Whoever by act or omission causes damage to another, there being


fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there was no pre-existing contractual relation between the
parties, is called quasi-delict and is governed by the provisions of this
chapter.

We agree with the appellate court that despite Mary Ann's insistence that she made sure
that her baby was safe and secured before she released her grasp on Ed Christian, her own
testimony revealed that she had, in fact, acted negligently and carelessly. Indeed, it is
irresponsible for a mother to entrust the safety, even momentarily, of her eight-month-old child to
a mascot, not to mention a bird mascot in thick leather suit that had no arms to hold the child and
whose diminished ability to see, hear, feel, and move freely was readily apparent. Moreover, by
merely tapping the mascot and saying ''papicture ta", Mary Ann Latonio cannot be said to have
"told, informed and instructed the mascot that she was letting the mascot hold the baby
momentarily." Releasing her grasp of the baby without waiting for any indication that the mascot
heard and understood her is just plain negligence on the part of Mary Ann. Clearly, based on the
foregoing, Mary Ann's negligence was the proximate cause of Ed Christian's fall which caused
9
him injury. Here, it is beyond dispute that the cause of Ed Christian's fall is traceable to the
negligent act of Mary Ann of leaving him in the "hands" of Lomibao who was wearing the Birdie
mascot suit. We noted that "hands" and "wings" were used interchangeably during the
testimonies of the witnesses, thus, causing confusion. However, it must be stressed that while
indeed Lomibao has hands of his own, at the time of the incident he was wearing the Birdie
mascot suit. Suffice it to say that the Birdie mascot suit have no hands but instead have wings.
Lomibao cannot possibly hold or grasp anything while wearing the thick Birdie mascot suit. In
fact, even if he wanted to ho!d Ed Christian or anything, he could not possibly do so because he
was wearing the Birdie mascot suit which do not even have hands or fingers to be able to hold or
grasp firmly.

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

VISAYAN ELECTRIC COMPANY, INC., Petitioner vs.


EMILIO G. ALFECHE, GILBERT ALFECHE, EMMANUEL MANUGAS, AND M.
LHUILLIER PAWNSHOP AND JEWELRY, Respondents
GR NO. 209910
November 29, 2017

PONENTE: Justice Leonen (THIRD DIVISION)

NATURE OF THE ACTION:

This resolves a Petition for Review on Certiorari under Rule 45 of the


1997 Rules of Civil Procedure praying that the assailed Court of Appeal October 25, 2012
Decision and October 8, 2013 Resolution in CA-G.R. CV No. 02583 be reversed and set aside.
10
FACTS:

An electric distribution company is a public utility presumed to have the necessary


expertise and resources to enable a safe and effective installation of its facilities. Absent an
indication of fault or negligence by other actors, it is exclusively liable for fires and other
damages caused by its haphazardly installed posts and wires. On the night of January 6, 1998, a
fire broke out at 11th Street, South Poblacion, San Fernando, Cebu, which burned down the
house and store of respondent Emilio and his son, respondent Gilbert (the Alfeches), and the
adjacent watch repair shop owned by respondent Manugas. It was alleged that the cause of the
fire was the constant abrasion of VECO' s electric wire with M. Lhuillier's signboard.

The next day, the Alfeches and Manugas reported the incident to the police and to the
Sangguniang Bayan of San Fernando. Upon Emilio, Gilbert, and Manugas' request for site
inspection, the Sangguniang Bayan of San Fernando eventually passed Resolution No. 12
requesting VECO to inspect the area and to repair faulty wires. The Alfeches and Manugas sent a
letter to the management of VECO asking for financial assistance, which VECO denied. VECO
asserted that the fire was due, not to its fault, but to that of M. Lhuillier.

ISSUE:

The sole issue of whether or not the Court of Appeals erred in ruling that petitioner
Visayan Electric Company Inc.'s negligence, rather than that of respondent M. Lhuillier
Pawnshop and Jewelry, was the proximate cause of the fire which razed the properties of
respondents Emilio Alfeche, Gilbert Alfeche, and Emmanuel Manugas.

RULING:

The petition is bereft of merit.

Thus, the Court of Appeals was correct in ruling that VECO's negligence was the
proximate cause of the injury suffered by respondents Emilio, Gilbert, and Manugas. All the
elements for liability for a quasidelict under Article 2176 of the Civil Code have been shown to
be attendant on VECO's part.

The elements of a quasi-delict are:


(1) the damages suffered by the plaintiff;
(2) the fault or negligence of the defendant or some other person for whose act he must
respond; and
(3) the connection of cause and effect between the fault or negligence and the damages
incurred.

On the first element, it is undisputed that the Alfeches and Manugas suffered damage
because of the fire. What has hitherto remained unresolved is which between VECO and M.
Lhuillier is liable to indemnify them. Fault is "a voluntary act or omission which causes damage
to the right of another giving rise to an obligation on the part of [another]." On the other hand,
"[n]egligence is the failure to observe for the protection of the interest of another person that
degree of care, precaution and vigilance which the circumstances justly demand.
Between VECO and M. Lhuillier, it is VECO which this Court finds to have been
negligent.

M. Lhuillier was not negligent in installing its signage. It installed its signage in 1995
well before the road-widening and drainage projects commenced and ahead of VECO's
relocation of its posts. Solon and Camuta both emphasized that the signage was installed free of
any obstacle. Other than VECO's evasive accusations, there is no proof to the contrary. It was
VECO that was negligent. It is apparent that it transferred its posts and wires without regard for
the hazards that the transfer entailed, particularly with respect to the installations which had
previously been distant from the wires and posts but which had since come into close proximity.

VECO is a public utility tasked with distributing electricity to consumers. It is its duty to
ensure that its posts are properly and safely installed. As the holder of a public franchise, it is to
be presumed that it has the necessary resources and expertise to enable a safe and effective
11
installation of its facilities. By installing its posts and wires haphazardly, without regard to how
its wires could come in contact with a previously installed signage, VECO failed to act in
keeping with the diligence required of it. 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."

VECO' s negligence was the proximate cause of the damage suffered by the Alfeches and
Manugas. It is settled that the confluence of proximity, abrasion, and short-circuiting led to the
fire. The first of these-proximity arose because of VECO's relocation of posts and wires.
Installed in such a manner that its wires constantly touched M. Lhuillier's signage, this "led to the
failure of the insulation thereby causing a short circuit which eventually led to the breaking and
burning of the wire." It was this burning wire that fell on the Alfeches' residence's roof and
burned down their house and store, as well as Manugas' adjacent shop. VECO would have this
Court sustain a flimsy excuse for evading liability. Attempting to break the all too apparent
causal connection between its negligence and the injury suffered by the plaintiffs, it would insist
on absurdities that strain common sense and vainly attempt to discredit even its own witness.
This Court finds no merit in VECO's pretenses and sustains the Court of Appeals decision.

SPOUSES JUAN and ANTONINA CANO, ROLANDO CANO and JOSEPHINE "JOSIE"
CANO-AQUINO, Petitioners, vs. SPOUSES ARTURO and EMERENCIANA CANO,
Respondents.
GR NO. 188666

SPOUSES JUAN CANO and ANTONINA SORIANO-CANO, Petitioners, vs. SPOUSES


ARTURO CANO and EMERENCIANA DACASIN, Respondents.
GR NO. 190750
December 14, 2017

PONENTE: Chief Justice Sereno (FIRST DIVISION)

NATURE OF THE ACTION:

These consolidated Petitions for Review involve a dispute over possession


and ownership of a parcel of land located in the Barrio of Palaming, City of San Carlos,
Pangasinan. Petitioners Juan and Antonina Cano anchor their claim upon a donation propter
12
nuptias allegedly made by Feliza Baun in their favor in 1962. Respondents Arturo and
Emerenciana Cano, on the other hand, claim that they purchased the land from Feliza in 1982
and caused the annotation of the Deed of Absolute Sale on the Original Certificate of Title (OCT)
No. 62276 covering the property.

The Petition in G.R. No. 188666 assails the Decision and the Resolution of the Fourth
Division of the Court of Appeals (CA) in CA-G.R. SP No. 104200, which affirmed the Regional
Trial Court (RTC) Resolution ordering petitioners to vacate the property and surrender
possession thereof to respondents. Meanwhile, the Petition in G.R. No. 190750 questions the CA
Decision and the Resolution, which affirmed the RTC Decision confirming respondents'
ownership of the property. The factual background and the proceedings held in each case will be
discussed in turn.

FACTS:

On 16 November 1999, respondents filed a Complaint for Ejectment with Prayer for
Injunction against petitioners on the basis of a Deed of Absolute Sale executed in the former's
favor by Feliza, the registered owner of the property. Immediately after the sale, respondents
allegedly (1) took possession of the land; (2) employed a relative to act as caretaker thereof; and
(3) received the fruit of the mango trees planted thereon. Respondents also asserted that they
benevolently allowed petitioners to take actual possession of the property after the sale because
the parties were all blood relatives. This peaceful arrangement continued until 3 October 1999,
the day petitioners allegedly harassed and threw stones at the individuals hired by respondents to
spray the mango trees with chemical fruit inducers. This act of ingratitude supposedly prompted
respondents to send petitioners a demand letter to vacate the property.Because the demand to
vacate went unheeded, respondents filed an ejectment complaint before the Municipal Trial
Court in Cities (MTCC) of San Carlos City, Pangasinan..

Petitioners denied the allegations in the Complaint. They claimed ownership of the
property on the basis of ( l) a donation propter nuptias20 executed in their favor by Feliza on 30
May 1962; and (2) their continuous possession of the land since they were born, or for more than
63 years at the time of the filing of the suit for ejectment. They also asserted that the Deed of
Absolute Sale cited by respondents was a falsified instrument.The dispute in G.R. No. 190750
stemmed from a Complaint for Quieting of Title, Declaration of Nullity of Document,
Ownership and Damages filed by petitioners with the RTC of San Carlos City, Pangasinan. The
suit was instituted while the ejectment case in G.R. No. 188666 was pending. The two Petitions
involved identical parties litigating over the same propE:rty, the two cases were consolidated by
the Court in a Resolution dated 17 March 2010. Petitioners were thereafter ordered to file a
consolidated reply to the Comments filed in both petitions.

ISSUE:
The petitioner sole argument is whether the CA erred in nullifying the donation propter
nuptias executed by Feliza in favor of petitioners because of the absence of an express
acceptance by the donee.

RULING:

We deny the petition.

Disposing of preliminary matter, we clarify our position with respect to the


pronouncement of the CA in G.R. No. 190750 that the donation propter nuptias executed in favor
of petitioners was invalid. When applied to a donation of an immovable property, the law further
requires that the donation be made in a public document and that the acceptance thereof be made
in the same deed or in a separate public instrument; in cases where the acceptance is made in a
separate instrument, it is mandated that the donor be notified thereof in an authentic form, to be
noted in both instruments. The acceptance of the donation by the donee is indispensable. Where
the deed of donation fails to show the acceptance, or where the formal notice of the acceptance,
made in a separate instrument, is either not given to the donor or else not noted in the deed of
donation and in the separate acceptance, the donation is null and void.

The records of both the cases for ejectment and the quieting of title are bereft of evidence
of respondents' participation in or actual knowledge of the deed. In fact, petitioners never made
13
that assertion in any of their submissions before the courts. Instead, they focused on their claim
that respondents were aware of the former's possession of the property. In the absence of proof
that respondents participated in the transaction, or had knowledge of petitioners' interest over the
land at the time the property was purchased in 1982, this Court must rule that they are not bound
by the unregistered donation. Hence, the conveyance had no effect as to respondents. The
acquisition of the property by respondents must likewise be respected because they were
innocent purchasers for value. They had every right to rely on OCT No. 62276 insofar as it
indicated that (1) one-fourth of the property was owned by Feliza; and (2) the land was subject
only to the encumbrances annotated on the title, which did not include the donation propter
nuptias in favor of petitioners.

RAMON E. REYES AND CLARA R. PASTOR, Petitioner vs.


BANCOM DEVELOPMENT CORP, Respondent.
GR NO. 190286
January 11, 2018

PONENTE: Chief Justice Sereno (FIRST DIVISION)

NATURE OF THE ACTION:

Before this Court is a Petition for Review on Certiorari filed by Ramon E.


Reyes and Clara R. Pastor seeking to reverse the Decision and the Resolution of the Court of
Appeals (CA) in CA-G.R. CV No. 45959. The CA affirmed the ruling of the Regional Trial
Court (RTC) holding petitioners jointly and severally liable to respondent Bancom Development
Corporation (Bancom) as guarantors of certain loans obtained by Marbella Realty, Inc.
(Marbella).

FACTS:

14
The dispute in this case originated from a Continuing Guaranty executed in favor of
respondent Bancom by Angel E. Reyes, Sr., Florencio Reyes, Jr., Rosario R. Du, Olivia Arevalo,
and the two petitioners herein, Ramos E, Reyes and Clara R. Pastor (the Reyes Group). In the
instrument, the Reyes Group agreed to guarantee the full and due payment of obligations
incurred by Marbella under an Underwriting Agreement with Bancom. These obligations
included certain Promissory Notes issued by Marbella in favor of Bancom on 24 May 1979 for
the aggregate amount of P2,828,140.32. It appears from the records that Marbella was unable to
pay back the notes at the time of their maturity. Consequently, it issued a set of replacement
Promissory Notes on 22 August 1979, this time for the increased amount of P2,901,466.48. It
again defaulted on the payment of this second set of notes, leading to the execution of a third set
for the total amount of P3,002,333.84, and finally a fourth set for the same amount.

Because of Marbella's continued failure to pay back the loan despite repeated demands,
Bancom filed a Complaint for Sum of Money with a prayer for damages before the RTC of
Makati on 7 July 1981. The case, which sought payment of the total sum of P4,300,247.35, was
instituted against (a) Marbella as principal debtor; and (b) the individuals comprising the Reyes
Group as guarantors of the loan. In their defense, Marbella and the Reyes Group argued that they
had been forced to execute the Promissory Notes and the Continuing Guaranty against their will.
The above developments were cited by Marbella and the Reyes group in support of the allegation
that Bancom took advantage of their resultant financial distress. To bolster its claim that the
promissory notes were issued in connection with Fereit's obligations, Marbella, together with the
Reyes Group, also presented a document entitled Amendment of Memorandum of
Agreement. In this instrument, Fereit undertook to reimburse Marbella for the P2. 8 million the
latter had paid, and for all penalties, fees, and charges incurred to obtain additional financing.

ISSUE:

The sole issue is whether the CA correctly ruled that petitioners are solidarily liable to
Bancom for payment of the loan amounts indicated on the Promissory notes issued by Marbella
and Attorney’s fees.

RULING:

We deny the petition.

As guarantors of the loans of Marbella, petitioners are liable to Bancom. We affirm the
finding of the CA on the liability of petitioners. Having executed a Continuing Guaranty
in favor of Bancom, petitioners are solidarily liable with Marbella for the payment of the
amounts indicated on the Promissory Notes. As the appellate court observed, petitioners
did not challenge the genuineness and due execution of the promissory notes. Neither did
they deny their nonpayment of Marbella's loans or the fact that these obligations were
covered by the guaranty. Their sole defense was that the promissory notes in question
were not binding, because the funds released to Marbella by Bancom were not loans but
merely additional financing. This financial accommodation was supposedly meant to
allow Marbella to rectify the failure of Fereit to cause the release of receivables assigned
to another entity. In support of their allegations, petitioners cite certain provisions of the
Memorandum of Agreement dated 16 August 1977 and its Amendment, We reject these
contention.

The obligations of Marbella and the Reyes Group under the Promissory Notes and the
Continuing Guaranty, respectively, are plain and unqualified. Under the notes, Marbella
promised to pay Bancom the amounts stated on the maturity dates indicated. The Reyes Group,
on the other hand, agreed to become liable if any of Marbella's guaranteed obligations were not
duly paid on the due date. There is absolutely no support for the assertion that these agreements
were not meant to be binding. As to petitioners, the Continuing Guaranty evidently binds them to
pay Bancom the amounts indicated on the original set of Promissory Notes, as well as any and all
instruments issued upon the renewal, extension, amendment or novation thereof. The Court notes
that the final set of Promissory Notes issued by Marbella in this case reflect the total amount of
P3,002,333.84. The CA and the RTC thus ordered the payment of P4,300,247.35, which
represents the principal amount and all interest and penalty charges as of 19 May 1981, or the
date of demand. We also find the award of P500,000 for attorney's fees in order, pursuant to the
stipulation in the Promissory Notes allowing the recovery thereof. Nevertheless, in the interest of
15
equity and considering that petitioners are already liable for penalties, we deem it proper to
modify the stipulated rate of interest to conform to the legal interest rates under prevailing
jurisprudence.

UNITED COCONUT PLANTERS BANK, Petitioner vs.


SPOUSES WALTER UY AND LILY UY, Respondents.
GR NO. 204039
January 10, 2018

PONENTE: Justice Martires (THIRD DIVISION)

NATURE OF THE ACTION:

This Petition for review on certiorari seeks to reverse and set aside the 23
May 2012 Decision and the 18 October 2012 Resolution of the Court of Appeals (CA) in CA-
G.R. SP No. 118534 which affirmed with modification the 24 March 2010 Decision of the Office
of the President (OP).

FACTS:

Prime Town Property Group, Inc., (PPGI) and E. Ganzon Inc., were the joint developers
of the Kiener Hills Mactan Condominium Project (Kiener Hills). In 1997, spouses Walter and
Lily Uy (respondents) entered into a Contract to Sell with PPGI for a unit in Kiener Hills. The
total contract price amounted to P1,151,718.75 payable according to the following terms: (a)

16
Pl00,000.00 as down payment; and (b) the balance paid in 40 monthly installments at P26,297 .
97 from 16 January 1997 to 16 April 2000. On 23 April 1998, PPGI and petitioner United
Coconut Planters Bank (UCPB) executed the following: Memorandum of Agreement (MOA),
and Sale of Receivables and Assignment of Rights and Interests. By virtue of the said
agreements, PPGI transferred the right to collect the receivables of the buyers, which included
respondents, of units in Kiener Hills. The parties entered into the said agreement as PPGI' s
partial settlement of its Pl,814,500,000.00 loan with UCPB.

On 17 April 2006, the Housing and Land Use Regulatory Board Regional Office
(HLURB Regional Office) received respondents' complaint for sum of money and damages
against PPGI and UCPB. They claimed that in spite of their full payment of the purchase price,
PPGI failed to complete the construction of their units in Kiener Hills. HLURB Regional Office
found that respondents were entitled to a refund in view of PPGI' s failure to complete the
construction of their units. Nonetheless, it found that UCPB cannot be solidarily liable with PPGI
because only the accounts receivables were conveyed to UCPB and not the entire condominium
project. HLURB Board reversed and set aside the HLURB Regional Office decision. It agreed
that the proceedings against PPGI should be suspended on account of its corporate rehabilitation.
Nevertheless, the HLURB Board found UCPB solidarily liable with PPGI because it stepped into
the latter's shoes insofar as Kiener Hills is concerned pursuant to the MOA between them. It
noted that UCPB was PPGI's successor-in-interest, such that the delay in the completion of the
condominium project could be attributable to it and subject it to liability.

ISSUE:

The sole issue is whether the honorable Court of Appeals grievously erred in ruling that
UCPB is jointly liable to the respondents for the amount the respondents did not pay the bank
and which UCPB did not receive.

RULING:

The Petition is meritorious.

UCPB only jointly liable to PPGI in reimbursing unit-owners of Kiener Hills. The Court
still finds that the CA did not err in ruling that UCPB was only jointly, and not solidarily liable to
PPGI against respondents. An assignment of credit has been defined as an agreement by virtue of
which the owner of a credit, known as the assignor, by a legal cause such as sale, dation in
payment or exchange or donation and without need of the debtor's consent, transfers that credit
and its accessory rights to another, known as the assignee, who acquires the power to enforce it
to the same extent as the assignor could have enforced it against the debtor. In every case, the
obligations between assignor and assignee will depend upon the judicial relation which is the
basis of the assignment. An assignment will be construed in accordance with the rules of
construction governing contracts generally, the primary object being always to ascertain and
carry out the intention of the parties. This intention is to be derived from a consideration of the
whole instrument, all parts of which should be given effect, and is to be sought in the words and
language employed.

In the present case, the Agreement between Primetown and UCPB provided that
Primetown, in consideration of "assigned, transferred, conveyed and set over unto UCPB all
Accounts Receivables accruing from Primetown's Kiener together with the assignment of all its
rights, titles, interests and participation over the units covered by or arising from the Contracts to
Sell from which the Accounts Receivables have arisen." The Agreement further stipulated that
this sale/assignment is limited to the Receivables accruing to Primetown from the buyers of the
condominium units in Kiener and the corresponding Assignment of Rights and Interests arising
from the pertinent Contract to Sell. Considering that UCPB is a• mere assignee of the rights and
receivables under the Agreement, UCPB did not assume the obligations and liabilities of
Primetown. The terms of the MOA and Deed of Sale/Assignment between PPGI and UCPB
unequivocally show that the parties intended an assignment of PPG l's credit in favor of UCPB.
The CA was therefore correct in ruling that the agreement between PPGI and UCPB was an
assignment of credit. UCPB was not subrogated into PPGl's place as developer under the
Contract to Sell.

17
H. VILLARICA PAWNSHOP, INC., HL VILLARICA PAWNSHOP, INC., HRV
VILLARICA PAWNSHOP, INC., AND VILLARICA PAWNSHOP, INC., Petitioners vs.
SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, AMADOR M.
MONTEIRO, SANTIAGO DIONISIO R. AGDEPPA, MA. LUZ N. BARROS-MAGSINO,
MILAGROS N. CASUGA AND JOCELYN Q. GARCIA, Respondents.
GR NO. 228087
January 24, 2018

PONENTE: Justice Gesmundo (THIRD DIVISION)

NATURE OF THE ACTION:

This is a petition for review on certiorari under Rule 45 of the Rules of


Court filed by petitioners H. Villarica Pawnshop, Inc., HL Villarica Pawnshop, Inc., HRV
Villarica Pawnshop, Inc. and Villarica Pawnshop, Inc., (petitioners) seeking to. reverse and set
aside the Decision dated February 26, 2016 and Resolution dated November 2, 2016, of the
Court of Appeals (CA) in CA-G.R. SP No. 140916, which affirmed the Resolution dated
November 6, 2013, and Order dated January 21, 2015, of the Social Security Commission (SSC)
denying petitioners' claim for refund.

FACTS:

18
Condonation statutes – being an act of liberality on the part of the State are strictly
construed against the applicants unless the laws themselves clearly states a contrary rule of
interpretation. Petitioners are private corporations engaged in the pawnshop business and are
compulsorily registered with the Social Security System (SSS) under Republic Act (R.A.) No.
8282,5 otherwise known as the Social Security Law of 1997. In 2009, petitioners paid their
delinquent contributions and accrued penalties with the different branches of the SSS.

On January 7, 2010, Congress enacted R.A. No. 9903, otherwise known as the Social
Security Condonation Law of 2009, which took effect on February 1, 2010. The said law offered
delinquent employers the opportunity to settle, without penalty, their accountabilities or overdue
contributions within six (6) months from the date of its effectivity. Consequently, petitioners thru
its President and General Manager Atty. Henry P. Villarica, sent separate Letters, all dated July
26, 2010, to the different branches of the SSS seeking reimbursement of the accrued penalties,
which they have paid in 2009. Invoking Section 4 of R.A. No. 9903 and Section 2 (f) of the SSC
Circular No. 2010-004 or the Implementing Rules and Regulations of R.A. No. 9903 (IRR),
petitioners claimed that the benefits of the condonation program extend to all employers who
have settled their arrears or unpaid contributions even prior to the effectivity of the law. In a
Letter dated August 16, 2010, the SSS -San Francisco Del Monte Branch denied petitioner
Villarica Pawnshop, Inc. request for refund amounting to P3,l 19,400.15 stating that there was no
provision under R.A. No. 9903 allowing reimbursement of penalties paid before its effectivity.

ISSUE:

The main issue in this case is whether the petitioner is entitled to claim for refund, despite
that prior the effectivity of the said RA No. 9903 otherwise known as Social Security
Condonation Law, the said accrued penalties have already been paid and still covers them on the
application of condonation.

RULING:

The petition is bereft of merit.

Under R.A. No. 9903 and its IRR, an employer who is delinquent or has not remitted all
contributions due and payable to the SSS may avail of the condonation program provided that
the delinquent employer will remit the full amount of the unpaid contributions or would submit a
proposal to pay the delinquent contributions in installment within the six ( 6)-month period set
by law. Accordingly, R.A. No. 9903 covers those employers who (1) have existing delinquent
contributions and/or (2) have accrued penalties at the time of its effectivity.

Evidently, there is nothing in R.A. No. 9903, particularly Section 4 thereof, that benefits
an employer who has settled their delinquent contributions and/or their accrued penalties prior to
the effectivity of the law. Once an employer pays all his delinquent contributions and accrued
penalties before the effectivity of R.A. No. 9903, it cannot avail of the condonation program
because there is no existing obligation anymore. It is the clear intent of the law to limit the
benefit of the condonation program to the delinquent employers. A plain reading of Section 4 of
R.A. No. 9903 shows that it does not give employers who have already settled their delinquent
contributions as well as their corresponding penalties the right to a refund of the penalties paid.
What was waived here was the amount of accrued penalties that have not been paid prior to the
law's effectivity it does not include those that have already been settled.

Here, R.A. No. 9903 does not provide that, prior to its effectivity, penalties already paid
are deemed condoned or waived. Even ifthere is doubt as to the import of the term "accrued
penalties," condonation laws-especially those relating to social security funds-are construed
strictly against the applicants. Significantly, petitioners have already paid not only their
delinquent contributions but also their corresponding penalties before the enactment and
effectivity of R.A. No. 9903. Because of this observation, petitioners cannot anymore be
considered as "delinquent" under the purview of R.A. No. 9903 and are not within the class of
"delinquent employers."80 Simply put, they are not similarly situated with other employers who
are delinquent at the time of the law's effectivity. Accordingly, Congress may treat petitioners
differently from all other employers who may have been delinquent. Settling the contributions in
arrears within the availment period only entitles delinquent employers to a remission of their
corresponding accrued and outstanding penalties-not a refund of the penalties which have
19
already been paid. There is nothing in R.A. No. 9903 which explicitly imposes or even implicitly
recognizes a positive or natural obligation on the part of the SSS to return the penalties which
have already been settled before its effectivity. It is absurd to revive obligations that have already
been extinguished by payment or performance just to be re-extinguished by condonation or
remission so that it may create a resulting obligation on the basis of solutio indebiti.

BENJAMIN EVANGELISTA, Petitioner vs.


SCREENEX, INC., represented by ALEXANDER G, YU, Respondent
GR NO. 211564
November 20, 2017

PONENTE: Chief Justice Sereno (FIRST DIVISION)

NATURE OF THE ACTION:

This is a Petition for Review on Certiorari seeking to set aside the


Decision and Resolution rendered by the Court of Appeals (CA) Manila, Fifth Division, in CA-
G.R. SP No. 110680.

FACTS:

Sometime in 1991, [Evangelista] obtained a loan from respondent Screenex, Inc. which
issued two (2) checks to [Evangelista]. The first check was UCPB Check No. 275345 for
₱l,000,000 and the other one is China Banking Corporation Check No. BDO 8159110 for
₱500,000. There were also vouchers of Screenex that were signed by the accused evidencing that
he received the 2 checks in acceptance of the loan granted to him.

As security for the payment of the loan, [Evangelista] gave two (2) open-dated checks:
UCPB Check Nos. 616656 and 616657, both pay to the order of Screenex, Inc. From the time the
checks were issued by [Evangelista], they were held in safe keeping together with the other
20
documents and papers of the company by Philip Gotuaco, Sr., father-in-law of respondent
Alexander Yu, until the former's death on 19 November 2004. Before the checks were deposited,
there was a personal demand from the family for [Evangelista] to settle the loan and likewise a
demand letter sent by the family lawyer.

ISSUE:

The only issue to be resolved in this petition is whether the CA committed a reversible
error in holding that petitioner is still liable for the total amount of ₱l.5 million indicated in the
two checks.

RULING:

The petition is granted.

It is a settled rule that the creditor's possession of the evidence of debt is proof that the
debt has not been discharged by payment. It is likewise an established tenet that a negotiable
instrument is only a substitute for money and not money, and the delivery of such an instrument
does not, by itself, operate as payment. Thus, in BPI v. Spouses Royeca, we ruled that despite the
lapse of three years from the time the checks were issued, the obligation still subsisted and was
merely suspended until the payment by commercial document could actually be realized.
However, payment is deemed effected and the obligation for which the check was given as
conditional payment is treated discharged, if a period of 10 years or more has elapsed from the
date indicated on the check until the date of encashment or presentment for payment. The failure
to encash the checks within a reasonable time after issue, or more than 10 years in this instance,
not only results in the checks becoming stale but also in the obligation to pay being deemed
fulfilled by operation of law.

Art. 1249 of the Civil Code specifically provides that checks should be presented for
payment within a reasonable period after their issuance, to wit:
Art. 1249. The payment of debts in money shall be made in the currency stipulated, and if it is
not possible to deliver such currency, then in the currency which is legal tender in the
Philippines. The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been cashed, or
when through the fault of the creditor they have been impaired. In the meantime, the action
derived from the original obligation shall be held in the abeyance.
Granting that petitioner had never encashed the check, his failure to do so for more than ten (10)
years undoubtedly resulted in the impairment of the check through his unreasonable and
unexplained delay.

While it is true that the delivery of a check produces the effect of payment only when it is
cashed, pursuant to Art. 1249 of the Civil Code, the rule is otherwise if the debtor is prejudiced
by the creditor's unreasonable delay in presentment. The acceptance of a check implies an
undertaking of due diligence in presenting it for payment, and if he from whom it is received
sustains loss by want of such diligence, it will be held to operate as actual payment of the debt or
obligation for which it was given. It has, likewise, been held that if no presentment is made at all,
the drawer cannot be held liable irrespective of loss or injury unless presentment is otherwise
excused. This is in harmony with Article 1249 of the Civil Code under which payment by way of
check or other negotiable instrument is conditioned on its being cashed, except when through the
fault of the creditor, the instrument is impaired. The payee of a check would be a creditor under
this provision and if its no-payment is caused by his negligence, payment will be deemed
effected and the obligation for which the check was given as conditional payment will be
discharged.

Similarly in this case, we find that the delivery of the checks, despite the subsequent
failure to encash them within a period of 10 years or more, had the effect of payment. Petitioner
is considered discharged from his obligation to pay and can no longer be pronounced civilly
liable for the amounts indicated thereon.

21
MARIANITO PADILLA and ALFREDO JAVALUYAS, Petitioners vs. UNIVERSAL
ROBINA CORPORATION, represented by its Senior Vice President, JOHNSON ROBERT
GO, Respondents.
GR NO. 214805
December 14, 2017

PONENTE: Justice Del Castillo (FIRST DIVISION)

NATURE OF THE ACTION:

This petition for review on Certiorari assails the April 22, 2014 Decision
of the Court of Appeals (CA) in CA-G.R CV No. 93260 reversing and setting aside the
December 13, 2008 Decision of the Regional Trial Court (RTC) of Gapan City, Branch 36, in
Civil Case No. 1495 for damages and injunction with preliminary injunction. The trial court
declared the obligations of petitioners Marianito Padilla (Padilla) and Alfredo Javaluyaq
(Javaluyas) to respondent Universal Robina Corporation (URC) extinguished, ordered the release
of the real estate mortgages executed by petitioners in favor of URC, and made permanent the
Writ of Preliminary Injunction enjoining the extrajudicial foreclosure of petitioners' mortgaged
properties.

FACTS:

This case stemmed from a complaint for damages filed by several poultry farmers,
namely Eduardo Pineda, Simplicio Ortiz Luis, Jose Bantigue, Azucena Vergara, Eduardo
Guingon and herein petitioners (complainants) against URC on May 26, 1995 before the RTC of
Gapan city, Branch 36. For various years, URC, a corporation engaged in the manufacture and
sale of various agro-industrial products, sold/supplied on credit day-old chicks and poultry feeds
to complainants who, in tum, provided the labor, poultry houses, electricity and water facilities to
care and grow these chicks until they are ready for harvest after 50 days, more or less. URC had
22
the option of buying from complainants the full-grown broiler chickens that met the target
harvest weight at an agreed price per kilo. Liquidation was made within 15 days after the harvest
by setting off the price of the full grown broiler chickens with the amount of purchases made by
complainants on credit. Thus, if the purchases on credit were greater than the value of the
chickens harvested, complainants paid the balance to URC, but if it were otherwise,
complainants received their respective paybacks or earnings.

Documents entitled Continuing Credit Accommodation with Real Estate Mortgage


(CCAREM) were executed by the parties whereby URC agreed to extend a continuous credit
accommodation in favor of each complainant, for the latter's purchases of day-old chicks, poultry
feeds, and other agricultural products from the former, while each complainant put up a real
estate mortgage. The business relationship between URC and complainants continued for years
and the CCAREMS were renewed yearly. However, sometime in the year 1993, complainants
informed URC of the stunting or slow growth and high mortality rate of the chickens. They
claimed that URC supplied them with low quality feeds with high aflatoxin content and class B
or junior day-old chicks.

ISSUE:

The threshold issue is whether or not there is sufficient evidence to establish URC's fault
or negligence for the defective/stunted growth of the broiler chickens as would extinguish
petitioners' obligation under the CCAREM.

RULING:

The petition is unmeritorious.

At the outset, it must be stated that the CCAREMs executed and signed by the parties
govern their rights and obligations considering that the validity of its provisions was not assailed
by petitioners, Paragraph 5 of the CCAREM provides that:

In case the thing purchased should be lost, damaged or destroyed without the fault of the
COMP ANY-MORTGAGEE, or by reason of fortuitous events or force majeure -like
death of day-old chicks or chickens by reason of any sickness, disease, "peste or NCD,"
theft, robbery, typhoon, fire, flood and others -the risk ofloss shall be borne by the
MORTGAGOR and/or PRINCIPAL and their liability to pay their obligation to COMP
ANY-MORTGAGEE is not extinguished. The MORTGAGOR and/or PRINCIPAL are
still obligated to pay the day-old chicks, poultry feeds and other products purchased from
the COMPANY-MORTGAGEE.

Based on the foregoing, URC is accountable only if the loss, damage, or destruction of
the broiler chickens was due to its fault, otherwise, petitioners should bear the loss and their
obligation to pay the day-old chicks and poultry feeds purchased from URC is not extinguished.
"[I]t is basic rule in civil cases that the party making the allegations has the burden of proving
them by a preponderance of evidence. The parties must rely on the strength of their own
evidence and not upon the weakness of the defense offered by their opponent." The Court finds
that petitioners failed to prove by preponderance of evidence their claims against URC as to
extinguish their obligation under the contract. It bears stressing that both the RTC and the CA
found no evidence of fault or negligence on the part of URC. The CA affirmed the finding of the
trial court that there was no basis to the allegation that the stunted growth of the broiler chickens
was caused by the purported low-quality poultry feeds supplied by URC. Suffice it to say that
factual findings of the trial court, when adopted by the CA, are binding and conclusive on this
Court.45 Besides, this Court has already ruled that the finding of negligence is a question of fact
which it cannot look into as the Court is not a trier of facts. In this case, URC maintains that it is
unlikely that it supplied its customers with defective poultry feeds because if it were, it would
not have passed quality control. In fine, petitioners failed to prove by preponderance of evidence
the fault or negligence of URC. For this reason, petitioners can be held liable for their unsettled
obligations under the CCAREMs they executed in favor of URC.

23
ESMERALDO GATCHALIAN, DULY REPRESENTED
BY SAMUEL GATCHALIAN Petitioners, vs.
CESAR FLORES, JOSE LUIS ARANETA, CORAZON QUING, AND CYNTHIA
FLORES., Respondents.
GR NO. 225176
January 19, 2018

PONENTE: Justice Tijam (FIRST DIVISION)

NATURE OF THE ACTION:

Before us is a Petition for Review on Certiorari under Rule 45 of the Rules


of Court filed by Esmeraldo Gatchalian, represented herein by Samuel C. Gatchalian (petitioner)
assailing the Amended Decision dated October 23, 2015 and Resolution dated June 15, 2016 of
the Court of Appeals (CA) in CA-G.R. SP No. 126530, which affirmed the Decision dated June
8, 2012 of the Regional Trial Court (RTC), Branch 196 of Parañaque City in Civil Case No. 12-
0050, dismissing the complaint for ejectment filed by petitioners against Cesar Flores, Jose Paolo
Araneta, Corazon Quing and Cynthia Flores (collectively as respondents), which was originally
filed in the Metropolitan Trial Court (Me TC), Branch 77 of Parañaque City, in Civil Case No.
2011-49.

FACTS:

Petitioner is one of the co-owners of a parcel of land (Road Lot 23) covered by Transfer
Certificate of Title No. 79180 located at Brgy. Vitalez, Parafiaque City. Road Lot 23 is registered
under the name of petitioner's parents, spouses Sixto Gatchalian and Liceria Gatchalian. On June
2, 2011, petitioner filed a Complaint for Ejectment with Damages against respondents Cesar
Flores, Jose Paolo Araneta (sic), Corazon Quing and Cynthia Flores (respondents) with the
Metropolitan Trial Court (MeTC) of Parañaque City, Branch 77 and docketed as Civil Case No.
2011-49.

The survey conducted on the property established that the lot of Segundo Mendoza
encroached a portion of Road Lot 23 which the Gatchalian's had tolerated. But after several
24
years, the lot of Segundo Mendoza was sold and 'subdivided among the new owners including
herein respondents. When the latter demonstrated acts of gross ingratitude to the Gatchalian
family, petitioner and his family were constrained to withdraw their tolerated possession, use and
occupation of the portion of Road Lot 23. Verbal and written demands to vacate were then served
upon them but remained unheeded. Their dispute reached the Lupong Tagapamayapa but all in
vain. Hence, the filing of the ejectment case against the respondents. For their part, respondents
denied that they usurped the property of petitioner. In fact, it was the Gatchalians who have
encroached on Road Lot 23 when they put up a fence in their (respondents) property. They
insisted that Road Lot 23 is a public road and is now known as "Don Juan Street Cat-Mendoza".
In the subdivision plan of the GAT Mendoza Housing area, Road Lot 23 is constituted as a right
of way. Respondents believed that petitioner has no cause of action against them and has no
authority to file the instant case because it is the City Government of Parañaque which has the
right to do so.

ISSUE:

Considering the arguments presented above, to determine whether the CA erred in


denying the application filed by herein petitioner for ejectment suit against respondents.

RULING:

The Petition is granted.

At the outset, petitioner filed before the MeTC an action for ejectment against the
respondents. It is settled that in ejectment proceedings, the only issue for the Court's resolution
is, who between the parties is entitled to the physical or material possession of the subject
property. Issues as to ownership are not involved, except only for the purpose of determining the
issue of possession. In the instant case, petitioner asserts that he is entitled to the possession of
the road lot being one of the co-owners of the same since it is registered under the name of
petitioner's parents. While respondents do not claim ownership of the subject lot, they argued
that the road lot is now public property because of Ordinance No. 88-04, series of 1988
constituting it as "Don Juan St. Gat-:-Mendoza". As such, petitioner cannot evict respondents.

It is undisputed that the road lot is registered under the name of petitioner's parents. Even
the respondents did not dispute this fact. It is also undisputed that the municipal government has
not undertaken any expropriation proceedings to acquire the subject property neither did the
petitioner donate or sell the same to the municipal government. Therefore, absent any
expropriation proceedings and without any evidence that the petitioner donated or sold the
subject property to the municipal government, the same is still private property. Since the local
government of Parañaque has not purchased nor undertaken any expropriation proceedings,
neither did the petitioner and his siblings donate the subject property, the latter is still a private
property and Ordinance No. 88-04 did not convert the same to public property. A torrens title is
irrevocable and its validity can only be challenged in a direct proceeding. The person who has a
torrens title over a land is entitled to possession thereof. As such, petitioner can file an ejectment
case against herein respondents who encroached upon a portion of petitioner's property.

25
SPOUSES FIRMO S. ROSARIO AND AGNES ANNABELLE DEAN-ROSARIO,
Petitioners vs. PRISCILLA P. ALVAR, Respondent.
GR NO. 212731
September 06, 2017

PONENTE: Justice Del Castillo (FIRST DIVISION)

NATURE OF THE ACTION:

This petition for review on Certiorari under Rule 45 of the Rules of Court
assails the May 27, 2014 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 98928.

FACTS:

On separate dates of 1989, petitioner Agnes Annabelle Dean-Rosario (Agnes) borrowed


from respondent Priscilla Alvar (Priscilla) a total of P600,000.00, secured by real estate
mortgages over two parcels ofland covered Transfer Certificates of Title Nos. 167438 (residence
of petitioner spouses Agnes and Firmo Rosario) and 167439 (a five-door rental apartment). On
March 16, 1992 and July 17, 1992, Agnes executed two Deeds of Absolute Sale over the two lots
in favor of Priscilla's daughter, Evangeline Arceo (Evangeline), for the amount of P900,000.00
each. Evangeline later sold the lots to Priscilla also for the price of P900,000.00 each.

On April 27, 1994, Priscilla sent a demand letter to petitioner spouses Rosario asking
them to vacate Lot 1. This prompted petitioner spouses Rosario to file before the Regional Trial
Court (RTC) of Makati City a Complaint for Declaration of Nullity of Contract of Sale and
Mortgage, Cancellation of Transfer Certificates of Title and Issuance of new TCTs with
Damages, docketed as Civil Case No. 94-1797, against Priscilla. The cases were consolidated
and on April 4, 2003, the RTC rendered a Decision granting Priscilla's complaint for recovery of
possession while denying petitioner spouses Rosario's complaint for declaration of nullity of
contract of sale.

ISSUE:

The only issue left in this case is to determine whether a reformation of the contract is
required before the subject lots may be foreclosed.

26
RULING:

The petition lacks merit.

We rule in the negative. Reformation of an instrument is a remedy in equity where a


written instrument already executed is allowed by law to be reformed or construed to express or
conform to the real intention of the parties. The rationale of the doctrine is that it would be unjust
and inequitable to allow the enforcement of a written instrument that does not express or reflect
the real intention of the parties.
In the November 15, 2006 Decision, the CA denied petitioner spouses' Complaint for
declaration of nullity of contract of sale on the ground that what was required was the
reformation of the instruments, pursuant to Article 1365 of the Civil Code. In ruling that the
Deeds of Absolute Sale were actually mortgages, the CA, in effect, had reformed the instruments
based on the true intention of the parties. Thus, the filing of a separate complaint for reformation
of instrument is no longer necessary because it would only be redundant and a waste of time.

Besides, in the November 15, 2006 Decision, the CA already declared that absent any
proof that petitioner spouses Rosario had fully paid their obligation, respondent may seek the
foreclosure of the subject lots. In view of the foregoing, we find no error on the part of the CA in
ruling that a separate action for reformation of instrument is no longer necessary as the
declaration in the November 15, 2006 Decision that the parties' intention was to execute an
equitable mortgage is sufficient reformation of such instrument.

JOSEPH HARRY WALTER POOLE-BLUNDEN, Petitioner vs.


UNION BANK OF THE PHILIPPINES, Respondent
GR NO. 205838
November 29, 2017

PONENTE: Justice Leonen (THIRD DIVISION)

NATURE OF THE ACTION:

This resolves a Petition for Review on Certiorari under Rule 45 of the


1997 Rules of Civil Procedure praying that the assailed November 15, 2012 Decision and
February 12, 2013 Resolution of the Court of Appeals in CA-G.R. CV No. 95369 be reversed
and set aside and that judgment be rendered annulling or rescinding the Contract to Sell between
petitioner Joseph Harry Walter Poole-Blunden (Poole-Blunden) and respondent Union Bank of
the Philippines (UnionBank).

FACTS:

Sometime in March 2001, Poole-Blunden came across an advertisement placed by Union


Bank in the Manila Bulletin. The ad was for the public auction of certain properties. One of these
properties was a condominium unit, identified as Unit 2-C of T-Tower Condominium (the
"Unit"), located at 5040 P. Burgos corner Calderon Streets, Makati City. UnionBank had
acquired the property through foreclosure proceedings "after the developer defaulted in the
payment of its loan from [UnionBank]. In late 2003, Poole-Blunden decided to construct two (2)
additional bedrooms in the Unit.

Upon examining it, he noticed apparent problems in its dimensions. He took rough
measurements of the Unit, which indicated that its floor area was just about 70 square meters, not
95 square meters, as advertised by UnionBank. Poole-Blunden's dissatisfaction with
UnionBank's answer prompted him to file his Complaint for Rescission of Contract and
Damages with the Regional Trial Court, Makati City.

ISSUE:

The sole issue of whether or not respondent Union Bank of the Philippines committed
such a degree of fraud as would entitle petitioner Joseph Harry Walter Poole-Blunden to the
voiding of the Contract to Sell the condominium unit.
27
RULING:

The petition is with merit.

For there to be a valid contract, all the three (3) elements of consent, subject matter, and
price must be present.Consent wrongfully obtained is defective. The party to a contract whose
consent was vitiated is entitled to have the contract rescinded. Accordingly, Article 1390 of the
Civil Code stipulates that a contract is voidable or annullable even if there is no damage to the
contracting parties where "consent is vitiated by mistake, violence, intimidation, undue influence
or fraud." Under Article 1338 of the Civil Code "[t]here is fraud when, through insidious words
or machinations of one of the contracting parties, the other is induced to enter into a contract
which, without them, he would not have agreed to." However, not all instances of fraud enable
the voiding of contracts. Article 1344 clarifies that in order to make a contract voidable, the fraud
"should be serious and should not have been employed by both contracting parties.

The fraud must be "the determining cause of the contract, or must have caused the
consent to be given." Petitioner's contention on how crucial the dimensions and area of the Unit
are to his decision to proceed with the purchase is well-taken. The significance of space and
dimensions to any buyer of real property is plain to see. This is particularly significant to buyers
of condominium units in urban areas, and even more so in central business districts, where the
scarcity of space drives vertical construction and propels property values. It would be immensely
guileless of this Court to fail to appreciate how the advertised area of the Unit was material or
even indispensable to petitioner's consent. As petitioner emphasized, he opted to register for and
participate in the auction for the Unit only after determining that its advertised area was spacious
enough for his residential needs. He seeks judicial relief to have the entirety of his purchase
annulled, his consent having been fraudulently obtained. By filing an action under Article 1390
of the Civil Code, petitioner declared that his consent to the entire subject matter of the contract
was vitiated. What suffices as relief is the complete annulment of the sale, not the partial
reimbursement. The high degree of diligence required of banks equally holds true in their dealing
with mortgaged real properties, and subsequently acquired through foreclosure, such as the Unit
purchased by petitioner. In the same way that banks are "presumed to be familiar with the rules
on land registration," given that they are in the business of extending loans secured by real estate
mortgage, banks are also expected to exercise the highest degree of diligence. This is especially
true when investigating real properties offered as security, since they are aware that such
property may be passed on to an innocent purchaser in the event of foreclosure. Indeed, "the
ascertainment of the status or condition of a property offered to it as security for a loan must be a
standard and indispensable part of a bank's operations".

The Regional Trial Court and the Court of Appeals gravely erred in finding that causal
fraud is not attendant in this case. Quite the contrary, it is evident that respondent orchestrated a
situation rife for defrauding buyers of the advertised unit. Therefore, the assailed Decision and
Resolution must be reversed, the Contract to Sell between petitioner and respondent be annulled,
and petitioner be refunded all the amounts he paid to respondent in respect of the purchase of the
Unit. Under Article 2232, in relation to Article 2229 of the Civil Code, "[i]n contracts and quasi-
contracts, the court may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive, or malevolent manner," "by way of example or correction for
the public good." By awarding exemplary damages to petitioner, this case shall serve as an
example and warning to banks to observe the requisite care and diligence in all of their affairs.
Consistent with Article 2208 of the Civil Code, respondent is equally liable to petitioner for
attorney's fees and the costs of litigation.

28
BOSTON EQUITY RESOURCES, INC., and WILLIAM HERNANDEZ, Petitioners vs.
EDGARDO D. DEL ROSARIO, Respondent
GR NO. 193228
November 27, 2017

PONENTE: Justice Bersamin (THIRD DIVISION)

NATURE OF THE ACTION:

Petitioner Boston Equity Resources, Inc. (Boston Equity), the mortgagee


who was also the highest bidder of the assets under mortgage, hereby seeks the review and
reversal of the adverse decision promulgated on April 28, 2010, whereby the Court of Appeals
(CA) annulled the real estate mortgage (REM), its amendment and the foreclosure proceedings
taken pursuant to the REM.

FACTS:

The two-bidder rule is not applicable during the public auction of the mortgaged assets
foreclosed pursuant to Act No. 3135. But the mortgage itself and the extrajudicial foreclosure
thereof should nonetheless be nullified for lack of the written consent to the mortgage of
conjugal assets by the spouse of the mortgagor. Plaintiff-appellant Edgardo Del Rosario was
married to herein plaintiff-intervenor-appellant Rosie Gonzales Del Rosario on March 9, 1968
and their marriage has been blessed with three children, herein plaintiffs-intervenors-appellants,
Christina, Peter and Paul, all surnamed Del Rosario. Defendant-appellee Boston Equity
Resources, Inc., is a private corporation duly registered and operating under the laws of the
Philippines with defendant-appellee William Hernandez as its president.

On April 12, 1999, Del Rosario and Boston entered into a Real Estate Mortgage whereby
the former, representing himself as single, mortgaged six (6) parcels of land located at 300
Kanlaon St., Sta Mesa Heights, Quezon City to the latter for Seventeen Million Pesos
(Phpl7,000,000.00) at an interest rate of 4 per centum (4%) monthly within a period of six (6)
months. Said parcels of land registered under the name of Del Rosario has a total land area of
four thousand five hundred thirty three.

ISSUE:
The sole issue in this case is whether the Court of Appeals erred in ruling that the
mortgage executed by Edgardo is null and void because of the alleged lack of consent of Rosie,
wife of Edgardo in the mortgage contract and its amendment.

29
RULING:

The petition is denied.

The respondents posit, however, that the documentary evidence belatedly submitted by
the petitioners to prove the supposed consent of Rosie to the REM and its amendment was
inadmissible for lack of proper authentication; that the petitioners' insistence that Rosie had
known of the REM and its amendment was a factual matter that went beyond the purview of the
Court's review in this appeal; that the petitioners thereby changed their theory for the first time in
this appeal; and that the REM and its amendment were null and void for lack of the written
consent of Rosie as the mortgagor's spouse.
We uphold the respondents' position.

The submission by the petitioners regarding Rosie's having consented to the REM and its
amendment by virtue of her signature thereon as an instrumental witness was not among the
issues framed and joined by the parties during the trial in the RTC. For the petitioners to make
the submission only now is impermissible. Questions raised on appeal must be within the issues
the parties framed at the start; hence, issues not raised before the trial court cannot be raised for
the first time on appeal. The Court will not deal with and resolve issues not properly raised and
ventilated in the lower courts. To allow such new issues on appeal contravenes the basic rule of
fair play and justice, and is violative of the adverse party's constitutional right to due process.
Verily, points of law, theories, issues, and arguments not brought to the attention of the trial court
are barred by estoppels, and cannot be considered by a reviewing court.

As a consequence, the findings of the CA on the lack of Rosie's written consent to the
REM and its amendment stand unrefuted.1âwphi1 Such findings warrant the nullification not
only of the REM and its amendment, but also of all the proceedings taken to foreclose the REM.
Such invalidity applied to the entire mortgage, even to the portion corresponding to the share of
Edgardo in the conjugal estate. Article 124 of the Family Code clearly so provides:

Art. 124. The administration and enjoyment of the conjugal partnership shall belong to
both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to
recourse to the court by the wife for proper remedy, which must be availed of within five years
from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of the
court or the written consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may be perfected
as a binding contract upon the acceptance by the other spouse or authorization by the court
before the offer is withdrawn by either or both offerors. The petitioners' assertion that the
mortgaged properties could be made liable for the obligation contracted solely by Eduardo on the
basis that the proceeds of the loan had redounded to the benefit of the family is also unwarranted.
The mortgage was but an accessory agreement, and was distinct from the principal contract of
loan.

30
SPOUSES ROSALINO R. REYES, JR. and SYLVIA S. REYES,, Petitioners vs.
SPOUSES HERBERT BUN HONG G. CHUNG and WIENNA T. CHUNG,, Respondents
GR NO. 228112
September 13, 2017

PONENTE: Justice Velasco Jr. (THIRD DIVISION)

NATURE OF THE ACTION:

Sought to be set aside in this Petition for Review on Certiorari is the


November 7, 2016 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 102760. The
assailed decision dismissed the appeal filed by the petitioners and upheld the September 20, 2013
Decision of the Regional Trial Court of Quezon City, Branch 226 (RTC-Br. 226) in LRC Case
No. Q- 13-02781, which granted the respondents' "Ex Parte Petition for the Issuance of Writ of
Possession under Act No. 3135," as well as the January 20, 2014 and April 28, 2014 Resolutions
of the same court.

FACTS:

Spouses Rosalino Jr. an Sylvia Reyes obtained from export and Industry Bank Inc.
(EIBI), formerly Urban Bank, Inc., a loan secured by a Deed of Real Estate Mortgage on a
1,2020.60 square-meter lot at No. 59 Maranaw St., La Vista , Pansol , Quezon City (subject
property). The subject property was registered in petitioners' name under Transfer Certificate of
Title (TCT) No, RT-98958 (281043). When the petitioners defaulted in the payment of their loan
obligation, the subject property was extrajudicially foreclosed and sold at public auction, with
EIBI as the highest bidder. The corresponding Certificate of Sale was then issued and registered
with the Registry of Deeds.

After the petitioners' failure to redeem the subject property within the one-year
redemption period, the title thereto was consolidated in EIBI' s name. The certificate of title in
the petitioners' names was accordingly cancelled and a new certificate of title was issued to EIBI.
Later, EIBI sold the subject property to LNC (SPV-AMC) Corporation (LNC). Thus, the
certificate of title in the name of EIBI was likewise cancelled and a new one in the name of LNC
was issued.

ISSUE:

The sole issue is whether the respondent lawfully acquired the property in extrajudicial
foreclosure sale for failure of the petitioner to redeem the property within the reglementary
period.

RULING:
31
The petition is bereft of merit.

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

Possession being an essential right of the owner with which he is able to exercise the
other attendant rights of ownership, after consolidation of title, the purchaser in a foreclosure sale
may demand possession as a matter of right. Thus, Section 7 of Act No. 3135, as amended,
imposes upon the RTC a ministerial duty to issue a writ of possession to the new owner upon a
mere ex parte motion.

Section 7 of Act No. 3135, as amended, provides:

Section 7. In any sale made under the provisions of this Act, the purchaser may petition
the Court of First Instance of the province or place where the property or any part thereof is
situated, to give him possession thereof during the redemption period, furnishing bond in an
amount equivalent to the use of the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without violating the mortgage or without
complying with the requirements of this Act. Such petition shall be made under oath and filed in
form of an ex parte motion in the registration or cadastral proceedings if the property is
registered, or in special proceedings in the case of property registered under the Mortgage Law
or under section one hundred and ninety-four of the Administrative Code, or of any other real
property encumbered with a mortgage duly registered in the office of any register of deeds in
accordance with any existing law, and in each case the clerk of the court shall, upon the filing of
such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen
of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight
hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of
possession issue, addressed to the sheriff of the province in which the property is situated, who
shall execute said order immediately.

In the case under consideration, the original right to file a Petition for Issuance of Writ of
Possession belonged to EIBI, being the mortgagee purchaser at the extrajudicial foreclosure sale.
But, instead of seeking the issuance of a writ of possession, it sold the subject property to LNC,
which, in tum, sold the same to the respondents. As such, by the sale, the respondents became the
new owners of the subject property and were vested with all the rights and interests of their
predecessors EIBI and LNC, including the right to the possession of the property. Undoubtedly,
the respondents can apply for the issuance of a writ of possession even though they were not the
purchasers at the foreclosure proceedings. Lastly, the issue on whether or not the issuance of the
writ of possession is proper and regular has been rendered moot and academic as petitioners
voluntarily relinquish possession of the subject premises.

32
REMEDIOS V. GEÑORGA, Petitioner vs.
HEIRS OF JULIAN MELITON, Represented by ROBERTO MELITON as Attorney-in-
Fact, IRENE MELITON, HENRY MELITON, ROBERTO MELITON, HAIDE*
MELITON, and MARIA FE MELITON ESPINOSA, Respondents
GR NO. 224515
July 3, 2017

PONENTE: Justice Perlas-Bernabe (FIRST DIVISION)

NATURE OF THE ACTION:

Before the Court is a Petition for Review on certiorari assailing the


Decision dated October 7, 2015 and the Resolution dated April 12, 2016 of the Court of Appeals
(CA) in CA-G.R. CV No. 103591, which affirmed the Decision dated July 28, 2014 of the
Regional Trial Court (RTC) of Naga City, Branch 24 (court a quo) in Civil Case No. 2013-0036,
directing petitioner and/or the Register of Deeds of Naga City (RD-Naga) to deliver or surrender
possession of the owner's duplicate copy of Transfer Certificate of Title (TCT) No. 8027 to
respondents.

FACTS:

Julian Meliton (Julian), Isabel Meliton, and respondents Irene, Henry, Roberto, Haide, all
surnamed Meliton, and Ma. Fe Meliton Espinosa (Ma. Fe; respondents) are the registered owners
of a 227,270-square meter parcel of land, identified as Lot No. 1095-C located in Concepcion
Pequeña, Naga City, covered by TCT No. 80275 (subject land). Julian owns 8/14 portion of the
land, while the rest of the co-owners own 1114 each.7 During his lifetime, Julian sold portions of
the subject land to various persons, among others, to petitioner Remedios V. Geñorga's
(petitioner) husband, Gaspar Geñorga, who took possession and introduced improvements on the
portions respectively sold to them.

However, Julian failed to surrender the owner's duplicate copy of TCT No. 8027 to
enable the buyers, including petitioner's husband, to register their respective deeds of sale, which
eventually led to the filing of a Petition10 for the surrender of the owner's duplicate copy of TCT
No. 8027 and/or annulment thereof, and the issuance of new titles pursuant to Section 107 of
Presidential Decree No. (PD) 152911 before Branch 23 of the RTC of Naga City, docketed as
Civil Case No. RTC '96-3526. In a Decision dated July 17, 1998, the RTC of Naga City decided
in favor of the buyers. Accordingly, it ordered the administratrix of the estate of Julian, Ma. Fe,
or any of Julian's heirs or any person holding the owner's duplicate of TCT No. 8027 (holder) to
surrender possession thereof to the RD-Naga; and the RD-Naga to enter on the said title the
buyers' respective deeds of sale, and to issue the corresponding certificates of title after
compliance with the requirements of the law.13 It further held that should the holder fail or
refuse to comply with the court's directive: (a) TCT No. 8027 shall be declared null and void;
and (b) the RD-Naga shall issue a new certificate of title in lieu thereof, enter the deeds of sale,
and issue certificates of title in favor of the buyers.
33
ISSUE:

The essential issue is whether there is valid partition or termination of the co-ownership.

RULING:

The petition lack of merit.

Preliminarily, it is well to point out that the subject land was an undivided co-owned
property when Julian sold different portions thereof to various persons. However, a perusal of the
pertinent deeds of absolute sale reveals that definite portions of the subject land were eventually
sold, and the buyers took possession and introduced improvements thereon, declared the same in
their names, and paid the realty taxes thereon, all without any objection from respondents who
never disputed the sales in favor of the buyers. Consequently, the Court finds that there is, in this
case, a partial factual partition or termination of the co-ownership, which entitles the buyers to
the segregation of their respective portions, and the issuance of new certificates of title in their
names upon compliance with the requirements of law.

Section 58. Procedure Where Conveyance Involves Portion of Land. - If a deed or


conveyance is for a part only of the land described in a certificate of title, the Register of Deeds
shall not enter any transfer certificate to the grantee until a plan of such land showing all the
portions or lots into which it has been subdivided and the corresponding technical descriptions
shall have been verified and approved pursuant to Section 50 of this Decree. Meanwhile, such
deed may only be annotated by way of memorandum upon the grantor's certificate of title,
original and duplicate, said memorandum to serve as a notice to third persons of the fact that
certain unsegregated portion of the land described therein has been conveyed, and every
certificate with such memorandum shall be effectual for the purpose of showing the grantee's
title to the portion conveyed to him, pending the actual issuance of the corresponding certificate
in his name.

Moreover, it bears to stress that the function of a Register of Deeds with reference to the
registration of deeds is only ministerial in nature. Thus, the RD-Naga cannot be expected to
retain possession of the subject owner's duplicate title longer than what is reasonable to perform
its duty. In the absence of a verified and approved subdivision plan and technical description
duly submitted for registration on TCT No. 8027, it must return the same to the presenter, in this
case, petitioner who, as aforesaid, failed to establish a better right to the possession of the said
owner's duplicate title as against respondents.

As a final point, it must, however, be clarified that the above-pronounced delivery or


surrender is without prejudice to the rights of the concerned buyers who would be able to
subsequently complete the necessary registration requirements and thereupon, duly request the
surrender of the subject owner's duplicate title anew to the RD-Naga.

34
PARADIGM DEVELOPMENT CORPORATION OF THE PHILIPPINES, Petitioner vs.
BANK OF THE PHILIPPINE ISLANDS, Respondent
GR NO. 191174
June 7, 2017

PONENTE: Justice Reyes (THIRD DIVISION)

NATURE OF THE ACTION:

This is a Petition for Review on Certiorari filed under Rule 45 of the Rules
of Court assailing the Decision dated November 25, 2009 and Resolution dated February 2, 2010
of the Court of Appeals (CA) in CA-G.R. CV No. 89755, which granted respondent Bank of the
Philippine Islands' (BPI) appeal and accordingly dismissed the complaint filed by petitioner
Paradigm Development Corporation of the Philippines (PDCP).

FACTS:

In February 1996, Sengkon Trading (Sengkon), a sole proprietorship owned by Anita Go,
obtained a loan from Far East Bank and Trust Company (FEBTC) under a credit facility
denominated as Omnibus Line in the amount of PlOO Million on several sub-facilities with their
particular sub-limits denominated as follows: (i) Discounting Line for P20 Million; (ii) Letter of
Credit/Trust Receipt (LC-TR) Line for P60 Million; and (iii) Bills Purchased Line for PS
Million. This was embodied in the document denominated as "Agreement for Renewal of
Omnibus Line."
On April 19, 1996, FEBTC again granted Sengkon another credit facility, denominated as
Credit Line, in the amount of ₱60 Million as contained in the "Agreement for Credit Line." Two
real estate mortgage (REM) contracts were executed by PDCP President Anthony L. Go (Go) to
partially secure Sengkon's obligations under this Credit Line. One REM, acknowledged on April
22, 1996, was constituted over Transfer Certificate of Title (TCT) No. RT-55259 (354583) and
secured the amount of P8 Million. The other REM, acknowledged on December 19, 1997, was
constituted over TCT Nos. RT-58281, RT-54993 (348989) and RT-55260 (352956) and secured
the amount of ₱42,400,000.00. In a letter dated September 18, 1997, FEB TC informed Sengkon
regarding the renewal, increase and conversion of its ₱l00 Million Omnibus Line to ₱l50 Million
LC-TR Line and P20 Million Discounting Line, the renewal of the ₱60 Million Credit Line and
P8 Million Bills Purchased Line. Eventually, Sengkon defaulted in the payment of its loan
obligations. Thus, in a letter dated September 8, 1999, FEBTC demanded payment from PDCP
of alleged Credit Line and Trust Receipt availments with a principal balance of ₱244,277, 199 .
68 plus interest and other charges which Sengkon failed to pay. PDCP responded by requesting
for segregation of Sengkon's obligations under the Credit Line and for the pertinent statement of
account and supporting documents.

ISSUE:

The pivotal issue is whether the deed of assumption amounts to novation.

RULING:
35
The petition is meritorious.

The Court likewise agrees with the CA that no novation took place in the present case.
Novation is a mode of extinguishing an obligation by changing its objects or principal
obligations, by substituting a new debtor in place of the old one, or by subrogating a third person
to the rights of the creditor. Article 1293 of the Civil Code defines novation as "consists in
substituting a new debtor in the place of the original one, [which] may be made even without the
knowledge or against the will of the latter, but not without the consent of the creditor." However,
while the consent of the creditor need not be expressed but may be inferred from the creditor's
clear and unmistakable acts, to change the person of the debtor, the former debtor must be
expressly released from the obligation, and the third person or new debtor must assume the
former's place in the contractual relation.

Thus, in Ajax Marketing and Development Corporation v. CA, the Court had already
ruled that:

The well-settled rule is that novation is never presumed. Novation will not be allowed
unless it is clearly shown by express agreement, or by acts of equal import. Thus, to effect an
objective novation it is imperative that the new obligation expressly declare that the old
obligation is thereby extinguished, or that the new obligation be on every point incompatible
with the new one. In the same vein, to effect a subjective novation by a change in the person of
the debtor it is necessary that the old debtor be released expressly from the obligation, and the
third person or new debtor assumes his place in the relation. There is no novation without such
release as the third person who has assumed the debtor's obligation becomes merely a co-debtor
or surety. (Emphasis ours)

In the present case, PDCP failed to prove by preponderance of evidence that Sengkon
was already expressly released from the obligation and that STI assumed the former's obligation.
Again, as correctly pointed out by the CA, the Deed of Assumption of Line/Loan with Mortgage
(Deed of Assumption) which was supposed to embody STI's assumption of all the obligations of
Sengkon under the line, including but not necessarily limited to the repayment of all the
outstanding availments thereon, as well as all applicable interests and other charges, was not
signed by the parties.

Contrary to PDCP's claim, the CA's rejection of its claim of novation is not based on the
absence of the mortgagor's conformity to the Deed of Assumption. The CA's rejection is based
on the fact that the non-execution of the Deed of Assumption by Sengkon, STI and FEBTC
rendered the existence of novation doubtful because of lack of clear proof that Sengkon is being
expressly released from its obligation; that STI was already assuming Sengkon's former place in
the contractual relation; and that FEBTC is giving its conformity to this arrangement. While
FEBTC indeed approved Sengkon's request for the "change in account name" from Sengkon to
STI, such mere change in account name alone does not meet the required degree of certainty to
establish novation absent any other circumstance to bolster said conclusion.

36
HILLTOP MARKET FISH VENDORS ASSOCIATION, INC., Petitioner vs.
HON. BRAULIO YARANON, CITY MAYOR, BAGUIO CITY, HON. GALO WEYGAN,
CITY COUNCILOR AND CHAIRMAN ANTI-VICE COORDINATING TASK FORCE
AND THE CITY GOVERNMENT OF BAGUIO, Respondent.
GR NO. 188057
July 12, 2017

PONENTE: Justice Carpio (SECOND DIVISION)

NATURE OF THE ACTION:

This petition for review assails the Decision dated 27 November 2008 and
the Resolution dated 15 May 2009 of the Court of Appeals (CA) affirming the Decision dated 28
September 2006 of the Regional Trial Court of Baguio City, Branch 3 (RTC) in Civil Case No.
5994-R.

FACTS:

On 22 June 1974, petitioner Hilltop Market Fish Vendors' Association, Inc. (Hilltop),
represented by its president Gerardo Rillera (Rillera), and respondent City of Baguio, represented
by its then Mayor Luis Lardizabal, entered into a Contract of Lease over a lot owned by the City
of Baguio, with an area of 568.80 square meters and located at the Hilltop Market, Baguio City.

The contract provided that the period of lease is 25 years, renewable for the same period
at the option of both parties, and the annual lease rental is P25,000, with the first payment
commencing upon the issuance by the City Engineer's Office of the Certificate of full occupancy
(Certificate) of the building to be constructed by Hilltop on the lot. Sometime in 1975, Hilltop
constructed the building, thereafter known as the Rillera building, on the lot. Even though the
City Engineer's Office did not issue a Certificate, Hilltop's members occupied the Rillera
building and conducted business in it. On 16 October 1980, the City Council of Baguio, through
its then Mayor Ernesto Bueno, issued Resolution No. 74-806 rescinding the contract of lease
with Hilltop, for its continued failure to comply with its obligation to complete the Rillera
building that the Rillera building failed to comply with the minimum sanitary standards.
Subsequently, the City Engineer's Office issued its finding that the two upper floors of the Rillera
building were unsafe for occupancy.

ISSUE:

The pivotal issue is to determine whether the Court of Appeals erred in finding that the
contract of lease entered into by the parties was already perfected contrary to evidence and to
law.

RULING:

We deny the petition.

In a contract of lease, one of the parties binds himself to give to another the enjoyment or
use of a thing for a price certain, and for a period which may be definite or indefinite. Being a

37
consensual contract, a lease is perfected at the moment there is a meeting of the minds upon the
thing and the cause or consideration which are to constitute the contract. Thereafter, the lessor is
obliged to deliver the thing which is the object of the contract in such a condition as to render it
fit for the use intended, and the lessee is obliged to use the thing leased as a diligent father of a
family, devoting it to the use stipulated or that which may be inferred from the nature of the thing
leased.

In a contract of lease, the cause or essential purpose is the use and enjoyment of the thing.
The thing or subject matter of the contract in this case was clearly identified and agreed upon as
the lot where the building would be constructed by Hilltop. The consideration were the annual
lease rental and the ownership of the building upon the termination of the lease period.
Considering that Hilltop and the City of Baguio agreed upon the essential elements of the
contract, the contract of lease had been perfected. From the moment that the contract is perfected,
the parties are bound to fulfill what they have expressly stipulated. Thus, the City of Baguio gave
the use and enjoyment of its lot to Hilltop. Both the RTC and the CA found that upon the
execution of the contract on 22 June 1974, Hilltop took possession of the lot and constructed the
Rillera building on it. Thereafter, Hilltop's members occupied the Rillera building and conducted
business in it up to the present. The findings of fact of the RTC and the CA are final and
conclusive and cannot be reviewed on appeal by this Court

Since Hilltop exercised its right as lessee based on the contract of lease and the law, it has
no basis in claiming that the contract of lease did not commence. Contrary to Hilltop's
contention, the issuance of the Certificate was not a suspensive condition which determines the
perfection of the contract or its effectivity. The contract of lease specifically provides that: the
annual lease rental shall be P25,000 payable within the first 30 days of each and every year; the
first payment to commence immediately upon issuance by the City Engineer's Office of the
Certificate of full occupancy of the entire building to be constructed thereon.

Hilltop is also estopped from claiming that the contract of lease did not commence since
it based its occupancy of the Rillera building on the contract of lease. In its petition, Hilltop
alleged that "an examination of the provisions of the contract of lease would show that the terms
and conditions for the possession and occupation of the building before the issuance of the
occupancy permit by respondents has, likewise, been contemplated by the parties. Undeniably,
Hilltop failed to comply with its obligations under the contract of lease. It failed to complete the
requirements for the issuance of the Certificate and maintain the sanitation of the Rillera
building. The City Engineer's Office did not issue the Certificate because of the fault of Hilltop.
The party at fault, Hilltop, cannot use the non-issuance of the Certificate to its advantage because
the non-issuance was due to its fault. In short, Hilltop cannot claim that the 25-year lease period
has not yet commenced because of the non-issuance of the Certificate, since Hilltop itself was
responsible for the non-issuance of the Certificate. Since the contract of lease already
commenced, Hilltop has been occupying the Rillera building even after the termination of the
lease period. In a reciprocal contract like a lease, the period must be deemed to have been agreed
upon for the benefit of both parties.

38
VICTORIA N. RACELIS, IN HER CAPACITY AS ADMINISTRATOR Petitioner, vs.
SPOUSES GERMIL JAVIER AND REBECCA JAVIER Respondents.
GR NO. 189609
January 29, 2018

PONENTE: Justice Leonen (THIRD DIVISION)

NATURE OF THE ACTION:

Through this Petition for Review, Petitioner Victoria N. Racelis (Racelis)


challenges the Court of Appeals January 13, 2009 Decision and September 17, 2009 Resolution,
which ordered her to reimburse the sum of P24,000.00 to respondents Spouses Germil Javier and
Rebecca Javier (the Spouses Javier).

FACTS:

Before his death, the late Pedro Nacu, Sr. (Nacu) appointed his daughter, Racelis, to
administer his properties, among which was a residential house and lot located in Marikina City.
Nacu requested his heirs to sell this property first. Acting on this request, Racelis immediately
advertised it for sale. In August 2001, the Spouses Javier offered to purchase the Marikina
property. However, they could not afford to pay the price of P3,500,000.00. They offered instead
to lease the property while they raise enough money. Racelis hesitated at first but she eventually
agreed. The parties agreed on a month-to-month lease and rent of Pl0,000.00 per month. This
was later increased to Pl1,000.00. The Spouses Javier used the property as their residence and as
the site of their tutorial school, the Niño Good Shepherd Tutorial Center.

On July 26, 2002, the Spouses Javier tendered the sum of P65,000.00 representing "initial
payment or goodwill money they tendered small sums of money to complete the promised Pl
00,000.00, but by the end of 2003, they only delivered a total of P78,000.00. Meanwhile, they
continued to lease.the property. They consistently paid rent but started to fall behind by February
2004. Realizing that the Spouses Javier had no genuine intention of purchasing the property,
Racelis wrote to inform them that her family had decided to terminate the lease agreement and
to offer the property to other interested buyers. In the same letter, Racelis demanded that they
vacate the property by May 30, 2004. The Spouses Javier refused to vacate due to the ongoing
operation of their tutorial business. They wrote Racelis on March 16, 2004, informing her of
their inability to purchase the property at P3,500,000.00 because "Mrs. Rebecca Javier's plan for
overseas employment did not materialize”. Disagreeing on the application of the P78,000.00,
Racelis and the Spouses Javier brought the matter to the barangay for conciliation.Unfortunately,
the parties failed to reach a settlement.During the proceedings, Racelis demanded the Spouses
Javier to vacate the premises by the end of April 30, 2004. However, the Spouses Javier refused
to give up possession of the property and even refused to pay rent for the succeeding months.

ISSUE/S:

1. Is whether the respondents Spouses Germil and Rebecca Javier can invoke their right
to suspend the payment of rent under Article 1658 of the Civil Code;
2. Is whether the amount of P78,000.00 as initial payment can be used to offset Spouses
Germil and Rebecca Javier's accrued rent.

RULING:
39
1. No. 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 rent therefor.

The Civil Code allows a lessee to postpone the payment of rent if the lessor fails to either
(1) "make the necessary repairs" on the property or (2) "maintain the lessee in peaceful
and adequate enjoymeht of the property leased." This provision implements the
obligation imposed on lessors under Article 1654(3) of the Civil Code.

However, this rule will not apply in the present case because the lease had already
expired when petitioner requested for the temporary disconnection of electrical service.
Petitioner demanded respondents to vacate the premises by May 30, 2004. Instead of
surrendering the premises to petitioner, respondents unlawfully withheld possession of the
property. Respondents continued to stay in the premises until they moved to their new residence
on September 26, 2004. At that point, petitioner was no longer obligated to maintain respondents
in the "peaceful and adequate enjoyment of the lease for the entire duration of the contract."
Therefore, respondents cannot use the disconnection of electrical service as justification to
suspend the payment of rent. Assuming that respondents were entitled to invoke their right under
Article 1658 of the Civil Code, this does exonerate them from their obligation under Article 1657
of the Civil Code "to pay the price of the lease according to the terms stipulated." Lessees who
exercise their right under Article 1658 of the Civil Code are not freed from the obligations
imposed by law or contract.

2. No. Respondents' argument is unmeritorious. The P78,000.00 initial payment


cannot be characterized as advanced rent. First, records show that respondents
continued to pay monthly rent until February 2004 despite having delivered
the P78,000.00 to petitioner on separate dates in 2003. Second, as observed by
the Metropolitan Trial Court, respondents indicated in the receipt that the
P78,000.00 was initial payment or goodwill money.

Both the Metropolitan Trial Court and the Regional Trial Court rejected respondents'
assertion that the P78,000.00 was advanced rent and characterized it as earnest money. Under
Article 1482 of the Civil Code, whenever earnest money is given in a contract of sale, it shall be
considered as "proof of the perfection of the contract."However, this is a disputable presumption.
Based on the evidence on record, petitioner and respondents executed a contract to sell, not a
contract of sale. Petitioner reserved ownership of the property and deferred the execution of a
deed of sale until receipt of the full purchase price. The contract's cancellation entitles petitioner
to retain the earnest money given by respondents. There is no unjust enrichment on the part of
the seller should the initial payment be deemed forfeited. After all, the owner could have found
other offers or a better deal. Therefore, respondents' unpaid rent amounting to P84,000.00 cannot
be offset by the earnest money.

40
JOSE DIAZ, JR. (herein substituted by his legal heirs VERONICA BOLAGOT-DIAZ and
RIO ANGELA BOLAGOT-DIAZ) and ADELINA D. McMULLEN, Petitioners vs.
SALVADOR VALENCIANO, JR., [deceased] substituted by MADELINE A.
VALENCIANO, RANIL A. VALENCIANO, ROSEMARIE V. SERRANO, SHEILA V
ALENCIANOMOLO and JOHN-LYN VALENCIANO-V ARGAS, Respondent.
GR NO. 209376
December 6, 2017

PONENTE: Justice Peralta (SECOND DIVISION)

NATURE OF THE ACTION:

This is a Petition for Review on Certiorari of the Court of Appeals


Decision1 dated April 30, 2013, which reversed and set aside the Decision2 dated July 9, 2010 of
the Regional Trial Court of Legazpi City, and reinstated the Decision3 dated January 5, 2010 of
the Municipal Trial Court in the Cities (MTCC), dismissing the complaint for unlawful detainer
on the ground of res judicata.

FACTS:

On June 2, 1992, a complaint for unlawful detainer was filed by petitioners Jose Diaz, Jr.
and his sister Adelina D. McMullen against Salvador Valenciano Sr., the father of respondent
Salvador Valenciano Jr. In their complaint docketed as Civil Case No. 3931, petitioners alleged
that they are the lawful and registered owners of a parcel of land (Lot No. 163-A) located at
Rosario St., Old Albay, Legazpi City, and covered by Transfer Certificate of Title (TCT) No.
20126. On the other hand, Salvador Jr. countered that his father, Salvador Valenciano Sr., and the
rest of his family have been in open, peaceful and actual possession of the same property since
1958 when petitioner Diaz mortgaged it to Salvador Sr.

On July 30, 1992, petitioners and Salvador Sr. entered into a Compromise Agreement
where they agreed to amicably settle the civil case provided that: (a) Salvador Sr. will vacate and
surrender the property to petitioner Diaz within a period of one-and-a-half years or on January
31, 1994; and (b) Diaz shall pay to Salvador Sr. the sum of Pl,600.00 on or before January 31,
1993. On August 10, 1992, the MTCC issued a Resolution approving the Agreement. For failure
of Salvador Sr. and his family to vacate the subject property in accordance with the Compromise
Agreement, Diaz filed on February 1, 1994 an Ex-Parte Motion for Execution. On June 1, 2009,
petitioners filed against Salvador Jr. a Complaint4 for unlawful detainer which was docketed as
Civil Case No. 5570. Petitioners claimed to be the lawful and registered owners of the property
covered by TCT No. 20126, and subject of the previous case for unlawful detainer docketed as
Civil Case No. 3931. Attached to their complaint was a certified copy of TCT No. 20126, Tax
Declaration No. 01300117, and a Certification from the Office of the Treasurer of the City of
Legaspi stating that realty taxes for the subject property are declared in the name of Jose and
Adelina Diaz for 2008 and previous years.

ISSUE:

The core issue to be resolved is whether petitioners' subsequent unlawful detainer case
against Salvador Jr. involving the same property is barred by res judicata and estoppel by laches
due to a previous unlawful detainer case they had filed against his father, which was subject of a
judicially-approved Compromise Agreement that was never executed by mere tolerance of
petitioners.

41
RULING:

The Petition is meritorious.

Under Article 1144 (3), in relation to Article 115231 of the New Civil Code and Section
6, Rule 3932 of the Rules of Court, once a judgment becomes final and executory, the prevailing
party may have it executed as a matter of right by mere motion within five ( 5) years from the
date of entry of judgment. If such party fails to have the decision enforced by a motion after the
lapse of 5 years, the same judgment is reduced to a right of action which must be enforced by the
institution of a petition in a regular court within ten (10) years from the time the judgment
becomes final; otherwise, the judgment can no longer be executed, for being barred by !aches.
Verily, the said provisions on enforcement and revival of judgment do not apply to the filing of a
subsequent action which is based on a different cause of action.

In Limpan Investment Corporation v. Sy, the Court held that although the first action of
the owner for the ejectment of the tenant was dismissed by the court under a judgment that
became final and executory, such dismissal does not preclude the owner from making a new
demand upon the tenant to vacate should the latter again fail to pay the rents due. This is because
the second demand for the payment of the rents and for the surrender of the possession of the
leased premises and the refusal of the tenant to vacate constitutes a new cause of action. Thus,
the action on the first case could not serve as a bar to the second action for ejectment.

Significantly, as the registered owners, petitioners' right to eject any person illegally
occupying their property cannot be barred by laches. In Labrador v. Pobre, 35 the Court held
that: As a registered owner, petitioner has a right to eject any person illegally occupying his
property. This right is imprescriptible and can never be barred by laches. In Bishop v. Court of
Appeals, we held, thus: As registered owners of the lots in question, the private respondents have
a right to eject any person illegally occupying their property. This right is imprescriptible. Even if
it be supposed that they were aware of the petitioners' occupation of the property, and regardless
of the length of that possession, the lawful owners have a right to demand the return of their
property at any time as long as the possession was unauthorized or merely tolerated, if at all. This
right is never barred by laches. The Court holds that petitioners have proven by preponderant
evidence better right to ownership and po.ssession of the subject property, and that Salvador Jr.'s
occupation is by mere tolerance of petitioners. On a final note, the adjudication of ownership in
an ejectment case may be necessary to decide the question of material possession, but such
determination is merely provisional, as it will not bar or prejudice an action between the same
parties involving title to the property, if and when such action is brought seasonably before the
proper forum.

42
SPOUSES ELLIS R. MILES and CAROLINA RONQUILLO-MILES, Petitioners vs.
BONNIE BAUTISTA LAO, Respondent
GR NO. 209544
November 22, 2017

PONENTE: Justice Tijam (FIRST DIVISION)

NATURE OF THE ACTION:

This resolves the Petition for Review on Certiorari under Rule 45 asasiling
the Decision dated May 24, 2013 and Resolution dated September 30, 2013 of the Court of
Appeals (CA) in CA-G.R. CV No. 95973.

FACTS:

Petitioners claimed that on March 28, 1983, they became registered owners in fee simple
of a parcel of land in Makati City, covered by Transfer Certificate of Title (TCT) No. 120427
(subject property). They averred that before they left for the United States, they entrusted the
duplicate of the TCT of the subject property to their niece, defendant Rodora Jimenez (Rodora)
so that she may offer it to interested buyers. They claimed that no written Special Power of
Attorney (SPA) to sell the property was given to Rodora.

They alleged that Rodora and spouses Ocampo conspired and made it appear, through a
falsified Deed of Donation dated April 21, 1998, that petitioners were donating the subject
property to spouses Ocampo. As a result, TCT No. 120427 was cancelled and a new one, TCT
No. 212314 was issued in the name of spouses Ocampo.

ISSUE:

The only issue for our resolution is whether or not the CA erred in ruling that respondent
is a mortgagee in good faith.

RULING:

The petition is without merit.

There is indeed a situation where, despite the fact that the mortgagor is not the owner of
the mortgaged property, his title being fraudulent, the mortgage contract and any foreclosure sale
arising therefrom are given effect by reason of public policy. This is the doctrine of "the
mortgagee in good faith" based on the rule that buyers or mortgagees dealing with property
covered by a Torrens Certificate of Title are not required to go beyond what appears on the face
of the title.

Indeed, a mortgagee has a right to rely in good faith on the certificate of title of the
mortgagor of the property given as security, and in the absence of any sign that might arouse
suspicion, the mortgagee has no obligation to undertake further investigation. This doctrine
presupposes, however, that the mortgagor, who is not the rightful owner of the property, has
already succeeded in obtaining Torrens title over the property in his name and that, after
obtaining the said title, he succeeds in mortgaging the property to another who relies on what
appears on the title.

The doctrine protecting mortgagees and innocent purchasers in good faith emanates from
the social interest embedded in the legal concept granting indefeasibility of titles. The burden of
discovery of invalid transactions relating to the property covered by a title appearing regular on
43
its face is shifted from the third party relying on the title to the co-owners or the predecessors of
the title holder. Between the third party and the co-owners, it will be the latter that will be more
intimately knowledgeable about the status of the property and its history. The costs of discovery
of the basis of invalidity, thus, are better borne by them because it would naturally be lower. A
reverse presumption will only increase costs for the economy, delay transactions, and, thus,
achieve a less optimal welfare level for the entire society.

In cases where the mortgagee does not directly deal with the registered owner of real
property, the law requires that a higher degree of prudence be exercised by the mortgagee. In this
case, the title of the property under the name of spouses Ocampo was already registered as early
as May 6, 1998, while the real estate mortgage was executed December 16, 1998. Hence, it is
clear that respondent had every right to rely on the TCT presented to her insofar as the
mortgagors' right of ownership over the subject property is concerned.

Petitioners and the RTC however claims that respondent is in bad faith considering that
she did not directly deal with the mortgagors, and dealt with them only through respondent's
agent, Carlos Talay. We find otherwise. Petitioners' line of argument is non-sequitur and is
simply insufficient to controvert respondent's good faith as mortgagee.

In this case, respondent's decision to deal with the mortgagors through a middleman, does
not equate to bad faith. At the outset, it bears to stress that the spouses Ocampo were already the
registered owners of the property at the time they entered into a mortgage contract with
respondent. Hence, respondent was justified in relying on the contents of TCT No. 212314 and is
under no legal" obligation to further investigate. Likewise, there is nothing in the records, and
neither did petitioners point to anything in the title which would arouse suspicions as to the
spouses Ocampo's defective title to the subject property.

Neither is respondent's act of filing a foreclosure suit instead of a criminal case against
spouses Ocampo indicative of her bad faith. In Sps. Yap and Guevarra v. First e-Bank Corp., this
Court already recognized that if the debtor fails (or unjustly refuses) to pay his debt when it falls
due and the debt is secured by a mortgage and by a check, the creditor has three options against
the debtor and the exercise of one will bar the exercise of the others. The remedies include
foreclosure and filing of a criminal case for violation of BP 22 (Bouncing Checks Law). Verily,
when respondent opted to foreclose, he merely exercised a privilege granted to him by law as a
secured creditor. Hence, without sufficient justification, We cannot impute bad faith on
respondent by her exercise of such right.

44
JOHN E.R. REYES and MERWIN JOSEPH REYES, Petitioners, vs.
ORICO DOCTOLERO, ROMEO A VILA, GRANDEUR SECURITY AND SERVICES
CORPORATION, and MAKATI CINEMA SQUARE, Respondents.
GR NO. 185597
August 2, 2017

PONENTE: Justice Jardeleza (THIRD DIVISION)

NATURE OF THE ACTION:

This is a Petition for review on Certiorari under Rule 45 of the Rules of


Court challenging the decision dated July 25, 2008 and the Resolution dated December 5, 2008
of the Court of Appeals.

FACTS:

The case arose from an altercation between respondent Orico Doctolero, a security guard
of respondent Grandeur Security and Services Corporation (Grandeur) and Petitioners John E.R
Reyes (John) and Mervin Joseph Reyes (Mervin) in the Parking area of respondent Makati
Cinema Square (MCS). Based on the initial report conducted by Investigator Cosme Giron.
While Doctolero was on duty at the ramp of the exit driveway of MCS's basement parking, John
took over the lane and insisted entry through the basement parking's exit driveway. Knowing that
this is against traffic rules, Doctolero stopped John, prompting the latter to alight from his
vehicle and confront Doctolero. With his wife unable to pacify him, John punched and kicked
Doctolero, hitting the latter on his left face and stomach. Doctolero tried to step back to avoid his
aggressor but John persisted, causing Doctolero draw his service firearm and fire a warning shot.
John ignored this and continued his attack. He caught up with Doctolero and wrestled with him
to get the firearm. This caused the gun to fire off and hit John's leg. Mervin then ran after
Doctolero but was shot on the stomach by security guard Avila.

Petitioners filed with the Regional Trial Court of Makati a complaint for damages against
the respondents Doctolero and Avila and their employer Grandeur, charging the latter with
negligence in the selection and supervision of its employees. They likewise impleaded MCS on
the ground that it was negligent in getting Grandeurs services. In their complaint, Petitioners
prayed that respondent be ordered jointly and severally, to pay them actual, moral and exemplary
damages and attorney's fees and litigation costs.

ISSUE:

The sole issue for the consideration of this Court is whether Grandeur and MCS may be
held vicariously liable for the damages caused by respondents Doctolero and Avila to petitioners
John and Mervin Reyes.

RULING:

We deny the petition. MCS is not liable to petitioners.

As a general rule, one is responsible for his own act or omission. Under Article 2176
Whoever by act or omission causes damage to another, there being fault or negligence is obliged
to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties is called quasi delict and is governed by the provisions of this
chapter.

The law, however, provides for exceptions when it makes certain persons liable for the
act or omission of another. One exception is an employer who is made vicariously liable for the
tort committed by his employee under paragraph 5 of Article 2180. Here, although the employer
is not the actual tortfeasor, the law makes him vicariously liable on the basis of the civil law
principle of pater familias for failure to exercise due care and vigilance over the acts of one's
45
subordinates to prevent damage to another. This employer-employee relationship cannot be
presumed but must be sufficiently proven by the plaintiff The plaintiff must also show that the
employee was acting within the scope of his assigned task when the tort complained of was
committed. It is only then that the defendant, as employer, may find it necessary to interpose the
defense of due diligence in the selection and supervision of employees.

Similarly, we find no employer-employee relationship between MCS and respondent


guards. The guards were merely assigned by Grandeur to secure MCS' premises pursuant to their
Contract of Guard Services. Thus, MCS cannot be held vicariously liable for damages caused by
these guards' acts or omissions. Neither can it be said that a principal-agency relationship existed
between MCS and Grandeur. Section 8 of the Contract for Guard Services between them
explicitly states:

LIABILITY TO GUARDS AND THIRD PARTIES

The SECURITY COMPANY is NOT an agent or employees (sic) of the CLIENT and the
guards to be assigned by the SECURITY COMPANY to the CLIENT are in no sense employees
of the latter as they arc for all intents and purposes under contract with the SECURITY
COMPANY. Accordingly, the CLIENT shall not be responsible for any and all claims for
personal injury or death that arises of or in the course of the performance of guard duties. To
rebut the presumption of negligence, Grandeur must prove two things: first, that it had exercised
due diligence in the selection of respondents Doctolero and Avila, and second, that after hiring
Doctolero and Avila, Grandeur had exercised due diligence in supervising them.

Here, both the R TC and the CA found that Grandeur was able to sufficiently prove,
through testimonial and documentary evidence, that it had exercised the diligence of a good
father of a family in the selection and hiring of its security guards. As testified to by its HRD
head Ungui, and corroborated by documentary evidence including clearances from various
government agencies, certificates, and favorable test results in medical and psychiatric
examinations, Grandeur's selection and hiring procedure. Considering all the evidence borne by
the records, we find that Grandeur has sufficiently exercised the diligence of a good father of a
family in the selection and supervision of its employees. Hence, having successfully overcome
the legal presumption of negligence, it is relieved of liability from the negligent acts of its
employees, respondents Doctolero and Avila.

46
MARILOU PUNONGBAYAN-VISITACION, Petitioner vs.
PEOPLE OF THE PHILIPPINES AND CARMELITA P. PUNONGBAYAN, Respondent.
GR NO. 194214
January 10, 2018

PONENTE: Justice Martires (THIRD DIVISION)

NATURE OF THE ACTION:

This petition for review on certiorari seeks to reverse and set aside the 30
January 2009 Decision and 18 October 2010 Resolution of the Court of Appeals (CA) in CA-
G.R. SP No. 77040 which affirmed the 12 May 2003 Judgment of the Regional Trial Court,
Branch 5, Iligan City (RTC).

FACTS:

Petitioner Marilou Punongbayan-Visitacion was the corporate secretary and assistant


treasurer of St. Peter's College of Iligan City. On 26 July 1999, acting on the advice of her
counsel, she wrote a letter to private respondent Carmelita P. Punongbayan:

You KNOWINGLY COMMITTED ACTS OF FALSIFICATION when you


misrepresented to the bank that your signature is essentially required in disbursements
above P5,000.00. Your inordinate desire to poke into the school's finances could be the
by-product of an erroneous advice from some defrocked members of the committee.
Otherwise, there would have been need to calibrate amounts in the checks vis-a-vis the
signatories thereto.

Insulted, Punongbayan filed a Complaint for Libel against Visitacion. On 25 October


1999, the Office of the City Prosecutor of Iligan City issued a resolution approving the filing of a
case for libel against Visitacion. The RTC convicted Visitacion of libel. The trial court
disregarded Visitacion's defense of good faith finding that her act of writing the disputed letter
was motivated by hostility or malice.

ISSUE:

The sole issue is whether the Court of Appeals acted contrary to law when it, in effect,
affirmed the Court a quo imposition of moral damages upon petitioner in the excessive amount
of P3,000,000.00.

RULING:

The petition is with merit.


Moral damages is the amount awarded to a person to have suffered physical suffering,
mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock,
social humiliation, and similar injury. It is given to ease the victim's grief and suffering, and
should reasonably approximate the extent of the hurt caused and the gravity of the wrong done.

The RTC found Punongbayan entitled to moral damages because Visitacion's libelous act
caused her to suffer ridicule, sleepless nights, and moral damage. In Tulfo v. People, the Court
explained that moral damages can be recovered in cases of libel or slander, viz:

It was the articles of Tulfo that caused injury to Atty. So, and for that Atty. So deserves
the award of moral damages. Justification for the award of moral damages is found in
Art. 2219 (7) of the Civil Code, which states that moral damages may be recovered in
cases of libel, slander, or any other form of defamation.

Moral damages can be awarded even in the absence of actual or compensatory damages.
The fact that no actual or compensatory damage was proven before the trial court does not
adversely affect the offended party's right to recover moral damages. For moral damages to be
awarded, proof of pecuniary loss is unnecessary but the factual basis of damages and its causal
47
connection to the defendant's acts must be satisfactorily established. In short, the complainant's
injury should have been due to the actions of the offending party.

Here, the evidence on record justify the award of moral damages to Punongbayan. She
was a high-ranking officer of an educational institution whom Visitacion accused of criminal or
improper conduct. Such accusations were not made known only to the victim but also to other
persons such as her staff and employees of a bank the school had transactions with. Thus,
Punongbayan's reputation was besmirched and she was humiliated before her subordinates and
other people. Clearly, her reputation was tarnished after being accused of unsavory and
questionable behavior, primarily attributable to Visitacion's act of circulating the letter imputing
wrongdoing of Punongbayan.

While there is no hard-and-fast rule in determining what would be a fair and reasonable
amount of moral damages, the same should not be palpably and scandalously excessive. Moral
damages are not intended to impose a penalty to the wrongdoer, neither to enrich the claimant at
the expense of the defendant. With this in mind, the Court finds the award of P3,000,000.00 as
moral damages to be unwarranted. Such exorbitant amount is contrary to the essence of moral
damages, Thus, to conform with the present circumstances, the moral damages awarded should
be equitably reduced to P500,000.00.

THE CITY OF BACOLOD, HON. MAYOR EVELIO R. LEONARDIA, ATTY. ALLAN L.


ZAMORA AND ARCH. LEMUEL D. REYNALD, IN THEIR PERSONAL CAPACITIES
48
AND IN THEIR CAPACITIES AS OFFICIALS OF THE CITY OF
BACOLOD Petitioners, vs.
PHUTURE VISIONS CO. INC., Respondents.
GR NO. 190289
January 17, 2018

PONENTE: Justice Velasco Jr. (THIRD DIVISION)

NATURE OF THE ACTION:

Before the Court is a Petition for Review on Certiorari under Rule 45 of


the Rules of Court of the decision dated February 27, 2009 and the resolution dated October 27,
2009 of the Court of Appeals in CA- GR SP No. 03322. The assailed rulings reversed the
dismissal of respondent’s Petition for Mandamus and Damages with Prayer of Issuance of a
Temporary Mandator Order and/or Writ of Preliminary Mandatory Injunction (Petition for
Mandamus and Damages) by the Regional Trial Court of Bacolod City, Branch 49.

FACTS:

Phuture was incorporated in 2004. In May 2005, its Articles of Incorporation (AOI) was
amended to, among others, include the operation of lotto betting stations and/or other gaming
outlets as one of its secondary purposes. Eventually, it applied with the Philippine Amusement
and Gaming Corporation (P AGCOR) for an authority to operate bingo games at the SM City
Bacolod Mall (SM Bacolod), as well as with SM Prime Holdings (SM Prime) for the lease of a
space in the said building. Phuture was issued a provisional Grant of Authority (GOA) on
December 5, 2006 by P AGCOR, subject to compliance with certain requirements, and received
an Award Notice from SM Prime on January 10, 2007.

Thereafter, Phuture processed, completed and submitted to the Permits and Licensing
Division of the City Mayor of Bacolod City its Application for Permit to Engage in Business,
Trade or Occupation to operate bingo games at SM Bacolod and paid the fees therefor. It was
then issued a claim slip for its permit on February 19, 2007, which was to be claimed on March
16, 2007. Phuture commenced bingo operations at SM Bacolod on March 2, 2007, prior to the
issuance of the actual hard copy of the mayor's permit. However, at around 6:10 a.m. of March 3,
2007, respondent learned that its bingo outlet was padlocked by agents of the Office of the City
Legal Officer and that a copy of a Closure Order dated March 2, 2007 was posted at the entrance
of the bingo outlet. Phuture claimed that the closure of its bingo outlet at SM Bacolod is tainted
with malice and bad faith and that petitioners did not have the legal authority to shut down said
bingo operations, especially since PAGCOR itself had already issued a provisional GOA in its
favor. On March 7, 2007, the RTC conducted a summary hearing to determine the sufficiency of
the form and substance of the application for the issuance of a temporary mandatory order and/or
preliminary mandatory injunction to remove the padlock installed at respondent's place of
business at SM Bacolod and allow it to conduct unhampered bingo operations.

ISSUE:

Stripped of the verbiage, the sole issue in this case is whether petitioners can be made
liable to pay respondent damages.

RULING:

The petition is meritorious. Petitioners are not liable for damages.

As to the primary issue of whether petitioners are liable to respondent for damages,
respondent Phuture alleged that petitioners are guilty of surreptitiously padlocking its SM bingo
outlet in a "patently arbitrary, whimsical, capricious, oppressive, irregular, immoral and
shamelessly politically motivated" manner and with clear discrimination since the majority
owners of the company are the sons of petitioner Mayor Leonardia's political rival, then
Congressman Monico Puentevella.37 Such contention is clearly but non sequitur, grounded as it
is in pure conjecture. Sticking closely to the facts, it is best to recapitulate that while the CA
ruled that respondent was not given due notice and hearing as to the closure of its business
establishment at SM Bacolod, it nevertheless remanded the issue of the award of damages to the
49
trial court for further proceedings. Such action would only be an exercise in futility, as the trial
court had already ruled in its September 6, 2007 Decision that respondent Phuture had no right
and/or authority to operate bingo games at SM Bacolod because it did not have a Business
Permit and has not paid assessment for bingo operation. Thus, it held that petitioners acted
lawfully in stopping respondent's bingo operation on March 2, 2007 and closing its establishment
for lack of any business permit. In order that the law will give redress for an act causing damage,
there must be damnum et injuria that act must be not only hurtful, but wrongful.

In order that a plaintiff may maintain an action for the injuries of which he complains, he
must establish that such injuries resulted from a breach of duty which the defendant owed to the
plaintiff - a concurrence of injury to the plaintiff and legal responsibility by the person causing
it. The underlying basis for the award of tort damages is the premise that an individual was
injured in contemplation of law. Thus, there must first be the breach of some duty and the
imposition of liability for that breach before damages may be awarded; it is not sufficient to state
that there should be tort liability merely because the plaintiff suffered some pain and suffering.
Considering that respondent had no legal right to operate the bingo operations at the outset, then
it is not entitled to the damages which it is demanding from petitioners.

ALLIED BANKING CORPORATION, now merged with PHILIPPINE NATIONAL


BANK, Petitioner vs. REYNALDO CALUMPANG, Respondent.
GR NO. 219435
January 17, 2018

50
PONENTE: Justice Velasco Jr. (THIRD DIVISION)

NATURE OF THE ACTION:

Before the Court is a Petition for Review on Certiorari filed under Rule 45
of the Rules of Court for the reversal and setting aside of the Decision dated September 12, 2014
and the Resolution dated June 9, 2015 of the Court of Appeals (CA) -Cebu City in CA-G.R. CEB
SP No. 02906, which affirmed the findings of the National Labor Relations Commission (NLRC)
and of the Labor Arbiter, declaring respondent to have been illegally dismissed by petitioner.

FACTS:

Petitioner Allied Banking Corporation ("Bank") and Race Cleaners, Inc. ("RCI"), a
corporation engaged in the business of janitorial and manpower services, had entered into a
Service Agreement whereby the latter provided the former with messengerial, janitorial,
communication, and maintenance services and the personnel therefor. On September 28, 2003,
respondent Reynold Calumpang was hired as a janitor by RCI and was assigned at the Bank's
Tanjay City Branch ("the Branch"). He was tasked to perform janitorial work and
messengerial/errand services. His job required him to be out of the Branch at times to nm errands
such as delivering statements and checks for clearing, mailing letters, among others.

Petitioner, however, observed that whenever respondent went out on errands, it takes a
long time for him to return to the Branch. It was eventually discovered that during these times,
respondent was also plying his pedicab and ferrying passengers. Petitioner also found out
through several clients of the Branch who informed the Bank Manager, Mr. Oscar Infante, that
respondent had been borrowing money from them. Because of these acts, Mr. Infante informed
respondent that his services would no longer be required at the Branch. Disgruntled, respondent
thereafter filed a complaint for illegal dismissal and underpayment of wages against petitioner
before the NLRC.

ISSUE:

The principal issue of the case is whether the respondent calumpang had been illegally
dismissed by the petitioner ABC and entitled to receive backwages and separation pay.

RULING:

The petition is partly meritorious.

Considering that there were valid and substantive grounds to terminate respondent's
employment, the award of backwages and separation pay is deleted. However, petitioner's
violation of respondent's right to statutory procedural due process warrants the payment of
indemnity in the form of nominal damages.

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, and not for
indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right.

In fixing the amount of nominal damages whose determination is addressed to our sound
discretion, the Court should take into account several factors surrounding the case, such as: (1)
the employer's financial, medical, and/or moral assistance to the sick employee; (2) the flexibility
and leeway that the employer allowed the sick employee in performing his duties while attending
to his medical needs; (3) the employer's grant of other termination benefits in favor of the
employee; and ( 4) whether there was a bona fide attempt on the part of the employer to comply
with the twin-notice requirement as opposed to giving no notice at all.

Based on the factual considerations of the present case, We deem it appropriate to award
nominal damages in the amount of Thirty Thousand Pesos (P30,000) in favor of respondent as a
result of petitioner's act of violating his right to procedural due process.

51
ST. MARTIN POLYCLINIC INC., Petitioner vs. LWV CONSTRUCTION
CORPORATION, Respondent.
GR NO. 217426
December 4, 2017

PONENTE: Justice Perlas-Bernabe (SECOND DIVISION)

NATURE OF THE ACTION:

52
Assailed in this petition for review on certiorari are the Decision dated
July 11, 2014 and the Resolution dated February 27, 2015 of the Court of Appeals (CA) in CA-
G.R. SP No. 125451, which affirmed with modification the Decision 4 dated December 15, 2011
and the Order dated May 25, 2012 of the Regional Trial Court of Mandaluyong City, Branch 211
(RTC) in SCA Case No. MC11-879 (Civil Case No. 21881), and thereby ordered herein
petitioner St. Martin Polyclinic, Inc. (petitioner) to pay respondent LWV Construction
Corporation (respondent) temperate damages in the amount of P50,000.00.

FACTS:

Respondent is engaged in the business of recruiting Filipino workers for deployment to


Saudi Arabia. On the other hand, petitioner is an accredited member of the Gulf Cooperative
Council Approved Medical Centers Association (GAMCA) and as such, authorized to conduct
medical examinations of prospective applicants for overseas employment. On January 10, 2008,
respondent referred prospective applicant Jonathan V. Raguindin (Raguindin) to petitioner for a
pre-deployment medical examination in accordance with the instructions from GAMCA. After
undergoing the required examinations, petitioner cleared Raguindin and found him "fit for
employment," as evidenced by a Medical Report 8 dated January 11, 2008 (Medical Report).

Based on the foregoing, respondent deployed Raguindin to Saudi Arabia, allegedly


incurring expenses in the amount of P84,373.41. 10 Unfortunately, when Raguindin underwent
another medical examination with the General Care Dispensary of Saudi Arabia (General Care
Dispensary) on March 24, 2008, he purportedly tested positive for HCV or the hepatitis C virus.
The Ministry of Health of the Kingdom of Saudi Arabia (Ministry of Health) required a re-
examination of Raguindin, which the General Care Dispensary conducted on April 28, 2008. 11
However, the results of the re-examination remained the same, i.e., Raguindin was positive for
HCV, which results were reflected in a Certification 12 dated April 28, 2008 (Certification). An
undated HCV Confirmatory Test Report 13 likewise conducted by the Ministry of Health
affirmed such finding, thereby leading to Raguindin's repatriation to the Philippines. Claiming
that petitioner was reckless in issuing its Medical Report stating that Raguindin is "fit for
employment" when a subsequent finding in Saudi Arabia revealed that he was positive for HCV,
respondent filed a complaint 15 for sum of money and damages against petitioner before the
Metropolitan Trial Court of Mandaluyong City, Branch 60 (MeTC).

ISSUE:
The essential issue advanced for the Court's resolution is whether or not petitioner was
negligent in issuing the Medical Report declaring Raguindin "fit for employment" and hence,
should be held liable for damages.

RULING:

The petition is granted.

In this case, the courts a quo erroneously anchored their respective rulings on the
provisions of Articles 19, 20, and 21 of the Civil Code. This is because respondent did not
proffer (nor have these courts mentioned) any law as basis for which damages may be recovered
due to petitioner's alleged negligent act. In its amended complaint, respondent mainly avers that
had petitioner not issue a "fit for employment" Medical Report to Raguindin, respondent would
not have processed his documents, deployed him to Saudi Arabia, and later on -in view of the
subsequent findings that Raguindin was positive for HCV and hence, unfit to work -suffered
actual damages in the amount of P84,373.41.52 Thus, as the claimed negligent act of petitioner
was not premised on the breach of any law, and not to mention the incontestable fact that no pre-
existing contractual relation was averred to exist between the parties, Article 2176 -instead of
Articles 19, 20 and 21 of the Civil Code should govern.

Negligence is 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. Therefore, if the plaintiff alleged in his
complaint that he was damaged because of the negligent acts of the defendant, he has the burden
of proving such negligence. It is even presumed that a person takes ordinary care of his concerns.
The quantum of proof required is preponderance of evidence.

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The records of this case show that the pieces of evidence mainly relied upon by
respondent to establish petitioner's negligence are: (a) the Certification61 dated April 28, 2008;
and (b) the HCV Confirmatory Test Report.62 However, these issuances only indicate the results
of the General Care Dispensary and Ministry of Health's own medical examination of Raguindin
finding him to be positive for HCV. Notably, the examination conducted by the General Care
Dispensary, which was later affirmed by the Ministry of Health, was conducted only on March
24, 2008, or at least two (2) months after petitioner issued its Medical Report on January 11,
2008. In this regard, it was therefore incumbent upon respondent to show that there was already
negligence at the time the Medical Report was issued. In fact, there is a reasonable possibility
that Raguindin became exposed to the HCV only after his medical examination with petitioner
on January 11, 2008. At any rate, the fact that Raguindin tested positive for HCV could not have
been properly established since the courts a quo, in the first place, erred in admitting and giving
probative weight to the Certification of the General Care Dispensary, which was written in an
unofficial language. Rule 132 of Rules of Court, Section 33: Documents written in an unofficial
language shall not be admitted as evidence, unless accompanied with a translation into English
or Filipino. Moreover, the due execution and authenticity of the said certification were not
proven in accordance with Section 20, Rule 132 of the Rules of Court. All told, there being no
negligence proven by respondent through credible and admissible evidence, petitioner cannot be
held liable for damages under Article 2176 of the Civil Code as above-discussed.

MARLON BACERRA y TABONES, Petitioner., vs.


PEOPLE OF THE PHILIPPINES, Respondent.
GR NO. 204544
July 3, 2017

PONENTE: Justice Leonen (SECOND DIVISION)

NATURE OF THE ACTION:

This resolves the Petition for Review assailing the Decision dated

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August 30, 2012 and the Resolution dated October 22, 2012 of the Court of Appeals in CA-G.R.
CR No. 32923, which upheld the conviction of Marlon Bacerra y Tabones (Bacerra) for the
crime of simple arson punished under Section 1 of Presidential Decree No. 1613.

FACTS:

Alfredo and his family were sound asleep in their home on November 15, 2005. At about
1 :00 a.m., he was roused from sleep by the sound of stones hitting his house. Alfredo went to the
living room and peered through the jalousie window. The terrace light allowed him to recognize
his neighbor and co-worker, Bacerra. Bacerra threw stones at Alfredo's house while saying,
"Vulva of your mother." Just as he was about to leave, Bacerra exclaimed, "[V]ulva of your
mother, Old Fred, I'll bum you now." Bacerra then left. Alfredo's son, Edgar, also witnessed the
incident through a window in his room.

Troubled by Bacerra's threat, Alfredo waited for him to return. Alfredo sat down beside
the window. At around 4:00a.m., he heard dogs barking outside. Alfredo looked out the window
and saw Bacerra walking towards their nipa hut, which was located around 10 meters from their
House. Bacerra paced in front of the nipa hut and shook it. Moments later, Alfredo saw the nipa
hut burning. Alfredo sought help from his neighbors to smother the fire. Edgar contacted the
authorities for assistance but it was too late. The nipa hut and its contents were completely
destroyed. The local authorities conducted an investigation on the incident.

ISSUE:

The pivotal issue in this case is to determine whether the petitioner bacerra is liable to
pay temperate damages herein respondent amounting to P50,000.00 was properly to be awarded
because the burning of private complainant’s nipa hut brought some pecuniary loss.

RULING:

The petition is bereft of merit.

Under Article 2224 of the Civil Code, temperate damages may be awarded when there is
a finding that "some pecuniary loss has been suffered but its amount [cannot], from the nature of
the case, be proved with certainty." The amount of temperate damages to be awarded in each
case is discretionary upon the courts as long as it is "reasonable under the circumstances.
Private complainant clearly suffered some pecuniary loss as a result of the burning of his
nipa hut. However, private complainant failed to substantiate the actual damages that he suffered.
Nevertheless, he is entitled to be indemnified for his loss. The award of temperate damages
amounting to P50,000.00 is proper and reasonable under the circumstances.

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SANTOS-YLLANA REALTY CORPORATION, Petitioner vs.
SPOUSES RICARDO DEANG AND FLORENTINA DEANG, Respondents.
GR NO. 190043
June 21, 2017

PONENTE: Justice Velasco Jr. (THIRD DIVISION)

NATURE OF THE ACTION:

This petition for eview under Rule 45 of the Rules of Court seeks to
reverse and set aside the June 17, 2009 Decision and October 13, 2009 Resolution of the Court
of Appeals (CA) in CA-G.R. CV No. 65768 entitled "Sps. Ricardo Deang and Florentina Deang
v. Santos-Yllana Realty Corp., et. al.," which affirmed, with modification, the September 16,
1999 Decision of the Regional Trial Court (RTC) of Manila, Branch 44 in Civil Case No. 98-
90087, finding petitioner Santos-Yllana Realty Corporation liable for damages to the respondents
spouses Ricardo Deang and Florentina Deang.

FACTS:

Respondent Florentina, doing business under the name and style of "Rommel Dry
Goods," is a former lessee of Stall No. H-6 at Santos-Yllana Shopping Center, which is located
on Miranda Street, Angeles City, Pampanga, and owned and operated by petitioner since 1975.
Due to Florentina's failure to pay her rents and other charges due on the rented stall, petitioner
filed a Complaint for Ejectment with Damages against respondents before the Metropolitan Trial
Court (MTC) of Angeles City on August 11, 1997. On October 16, 1997, the MTC rendered a
Decision based on a Compromise Agreement that the parties executed. On January 16, 1998,
petitioner filed a Motion for Execution of the October 16, 1997 Decision due to Florentina' s
failure to comply with the terms of the Compromise Agreement. Respondents objected, alleging
that the amount due to petitioner had already been paid in full.

Aggrieved by the implementation of the Writ of Execution, respondents filed a Complaint


for Damages with Prayer for Injunctive Relief against petitioner and Sheriffs Sicat and Pangan
before the Manila R TC, Branch 44, alleging that the Writ of Execution was illegally
implemented. They claim to have suffered damages as a result of the illegal closure of their stall
since important documents, checks, money, and bank books, among others, were locked inside
the stall and could not be retrieved, thereby preventing them from operating their business, and
causing their business to suffer and their goodwill to be tarnished. Respondents, thus, prayed that
judgment be rendered ordering petitioner to pay them P500,000 as actual damages, P250,000 as
moral damages, P250,000 as exemplary damages, and Pl00,000 as attorney's fees, plus P3,000
per appearance fee per hearing.

ISSUE:

Succinctly, the sole issue for the resolution of this Court is whether or not the CA erred in
sustaining the moral and exemplary damages awarded, including attorney's fees, despite its
finding that petitioner had no participation in the implementation of the Writ of Execution.

RULING:

The petition is meritorious. The joint and solidary liability of petitioner has no factual and
legal basis. We have, in Philippine Agila Satellite Inc. v. Usec. Trinidad-Lichauco, elucidated that
"a civil complaint for damages necessarily alleges that the defendant committed a wrongful act
or omission that would serve as basis for the award of damages." As such, it was incumbent upon
respondents to overcome the aforestated presumption and to prove that petitioner abused its
rights and willfully intended to inflict damage upon them before they can claim damages from
the former. Otherwise, having the sole prerogative to move to execute the judgment, the
disputable presumption that petitioner is innocent of wrongdoing against respondents prevails.

A reading of the RTC's judgment shows that it was not conclusively proved that petitioner
committed bad faith or connived with the sheriffs in the implementation of the Writ.

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Moral damages are awarded to enable the injured party to obtain means, diversions, or
amusements that will serve to alleviate the moral suffering he has undergone, by reason of the
defendant's culpable action. For a claim for moral damages to prosper, the claimant must prove
that: (1) first, there must be an injury, whether physical, mental or psychological, clearly
sustained by the claimant; (2) second, there must be culpable act or omission factually
established; (3) third, the wrongful act or omission of the defendant is the proximate cause of the
injury sustained by the claimant; and ( 4) fourth, the award of damages is predicated on any of
the cases stated in Article 2219 of the Civil Code.

As discussed, the culpable act or omission on the part of petitioner that resulted in injury
to respondents was not factually established. The Court likewise cannot affirm petitioner's
liability for exemplary damages, attorney's fees, and cost of suit. The award of exemplary
damages is proper only if respondents showed their entitlement to moral, temperate or
compensatory damages; yet, similar to the moral damages claimed, respondents were not able to
establish their entitlement. Anent the liability of petitioners for attorney's fees and cost of suit,
the same must similarly be deleted in light of the reversal of judgment as to them.

Regrettably, the execution of the MTC judgment was tainted with irregularities that
resulted in damage to respondents. Nevertheless, under the principle of damnum absque injuria,
the legitimate exercise of a person's rights, even if it causes loss to another, does not
automatically result in an actionable injury. Petitioner must not bear the brunt of the sheriffs'
misconduct in the absence of evidence that the latter acted upon its instructions to ignore the
rules of procedure in implementing the Writ. Anent the liability of Sheriffs Sicat and Pangan to
respondents, records do not disclose if the former questioned the Decision of the CA before this
Court. As such, the judgment against them stands.

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