Arellano University Civil Law Review II Case Digest

ARELLANO UNIVERSITY SCHOOL OF LAW
Taft Ave. Cor. Menlo St., Pasay City
CIVIL LAW REVIEW II

CASE DIGEST
(January 2018 – September2018)
TOPICS PAGE
No.
OBLIGATIONS
Prescription
1. Specified Contractors & Development, Inc., et al.,
petitioner 1
vs. Jose A. Pobocan, respondent.
G.R. No. 212472. January 11, 2018.
Ponente: TIJAM, J. (First Division).
Sources of Obligations
2. ASTRID A. VAN DE BRUG, MARTIN G. AGUILAR and GLENN 24-25

AGUILAR, petitioner
vs. PHILIPPINE NATIONAL BANK, respondent.
G.R. No. 207004. June 6, 2018.
Ponente: Caguioa, J. (Second Division).
Quasi-Contract
3. People of the Philippines, petitioner 5

vs. Yolando B. Panerio alias John "Yolly" Labor and Alex
(Jojo) F. Orteza,respondent.
G.R. No. 205440. January 15, 2018.
Ponente: MARTIRES, J.(Third Division).
Kinds As to Rights and Obligation of Parties
4. Rolando De Roca, petitioners 11

vs. Eduardo C. Dabuyan, et al., respondents.
G.R. No. 215281. March 5, 2018.
Ponente: DEL CASTILLO, J. (First Division).
5. MARIBELLE Z. NERI, petitioners 37

vs. RYAN ROY YU, respondents.
G.R. No. 230831. September 5, 2018.
Ponente: Peralta, J. (Third Division).
CONTRACTS
Void Contracts
6. RAYMOND A. SON, RAYMOND S. ANTIOLA, and WILFREDO 12-13

POLLARCO, petitioner
vs. UNIVERSITY OF SANTO TOMAS, respondent.
G.R. No. 211273. April 18, 2018.
Ponente: Del Castillo, J. (FirstDivision).
7. CONCHITA GLORIA and MARIA LOURDES GLORIA-PAYDUA 21

petitioner
vs. BUILDERS SAVINGS AND LOAN ASSOCIATION, INC.,
respondent.
G.R. No. 202324. June 4, 2018.
Ponente: Del Castillo, J. (First Division).
8. JOB ASIA MANAGEMENT SERVICES, petitioner 22

vs. SALVADOR B. BAUTISTA, respondent.
G.R. No. 205953. June 6, 2018.
Ponente: Jardeleza, J. (First Division).
Essential Elements
Consent
9. NORTHERN MINDANAO INDUSTRIAL PORT , petitioner 23

vs. ILIGAN CEMENT CORPORATION, respondent.
G.R. No. 215387. April 23, 2018.
10. PHILIPPINE NATIONAL BANK, petitioners 26

vs. ANTONIO BACANI, RODOLFO BACANI, respondents.
G.R. No. 194983. June 20, 2018.
Ponente: Reyes,Jr., J. (Second Division).
11. SALVADOR ALEJAGA, SR. [DECEASED], VICENTE A. ALEJAG

petitioners
vs. SPS. SATURNINO LIBARDO AND ANIANA
LIBARDO,respondents.
G.R. No. 239997. September 12, 2018.
Ponente: Peralta, J. (Second Division).
Cause
12. LOLITA ESPIRITU SANTO MENDOZA and SPS. GUTIERREZ, 27
petitioners
vs. SPS. RAMON, SR. and NATIVIDAD PALUGOD, respondent
G.R. No. 220517. June 20, 2018.
Mutuality of Contracts
13. SECURITY BANK CORPORATION, petitioners 29

vs. SPOUSES RODRIGO and ERLINDA MERCADO, responden
G.R. No. 192934. June 27, 2018.
Ponente: Jardeleza J. (First Division).
Reformation of Contracts
14. MAKATI TUSCANY CONDOMINIUM CORPORATION, petition 14

vs. MULTI-REALTY DEVELOPMENT CORPORATION, respond
G.R. No. 185530. April 18, 2018.
Ponente: Leonen, J. (Third Division).
CREDIT TRANSACTIONS
Guaranty
15. Ramon E. Reyes and Clara R. Pastor, petitioner 2

vs. Bancom Development Corp., respondent.
G.R. No. 190286. January 11, 2018.
Ponente: SERENO, C.J. (First Division).
Chattel & Real Estate Mortgage
16. BANCO DE ORO UNIBANK, INC., petitioner 19

vs. VTL REALTY, INC., respondent.
G.R. No. 193499. April 23, 2018.
Ponente: Reyes, Jr., J. (Second Division).
17. PHILIPPINE NATIONAL BANK, petitioners 34

vs. SPOUSES ANAY, AND SPOUSES LEE, respondents.
G.R. No. 197831. July 9, 2018.
Ponente: Tijam J. (First Division).
18. ALLIED BANKING CORPORATION, petitioners 38

vs. SPOUSES ARTEMIO M. VILLALUZ, respondents.
G.R. No. 202525. September 12, 2018.
Ponente: Tijam, J. (First Division).
Loans
19. CATALINA F. ISLA, ELIZABETH ISLA, and GILBERT F. ISLA, 32

petitioners
vs. GENEVIRA P. ESTORGA, respondents.
G.R. No. 233974. July 2, 2018.
Ponente: Perlas-Bernabe J. (Second Division).
TORTS & DAMAGES
Kinds of Damages
20. American Power Conversion Corporation, et al., petitione 3-4

vs. Jason Yu Lim, respondent.
G.R. No. 214291. January 11, 2018.
21. Allied Banking Corporation, now merged with Philippine 6

National Bank, petitioners
vs. Reynold Calumpang, respondents.
G.R. No. 219435. January 17, 2018.
Ponente: VELASCO, JR., J. (Third Division).
22. Eden Etino, petitioners 8

vs. People of the Philippines, respondents.
G.R. No. 206632. February 14, 2018.
23. TERESA GUTIERREZ YAMAUCHI, petitioner 15

vs. ROMEO F. SUÑIGA, respondent.
G.R. No.199513. April 18, 2018.
Ponente: Martires, J. (Third Division).
24. MANILA ELECTRIC COMPANY, petitioner 16

vs. NORDEC PHILIPPINES, respondent.
G.R. No. 196020. April 18, 2018.
Elements of Quasi-Delict
Concept of Negligence
25. VISITACION R. REBULTAN, CECILOU R. BAYONA, petitioner 33

vs. SPOUSES EDMUNDO DAGANTA, respondents.
G.R. No. 197908. July 4, 2018.
LEASE
26. Victoria N. Racelis, petitioners 7

vs. Spouses Germil Javier and Rebecca Javier, respondents.
G.R. No. 189609.January 29, 2018.
Ponente: LEONEN, J. (Third Division).
Contract of Carriage
27. FEDERAL EXPRESS CORPORATION, petitioners 30

vs. LUWALHATI R. ANTONINO AND ELIZA BETTINA RICASA
ANTONINO, respondents.
G.R. No. 199455. June 27, 2018.
SALES
Contract to Sell
28.Spouses Cipriano Pamplona and Bibiana Intac, petitioners 9

vs. Spouses Lilia I. Cueto and Vedasto Cueto, respondents.
G.R. No. 204735. February 19, 2018.
Ponente: Bersamin,J. (Third Division).
AGENCY
Rules applicable to an Agent
29. BELINA CANCIO and JEREMY PAMPOLINA, petitioner 22

vs. PERFORMANCE FOREIGN EXCHANGE CORPORATION,
respondent.
G.R. No. 182307. June 6, 2018.
Authority of an Agent
30. MARCELINO E. LOPEZ, FELIZA LOPEZ, ZOILO LOPEZ, 35
petitioners
vs. THE HON. COURT OF APPEALS and PRIMEX CORPORATI
respondents.
G.R. No. 163959. August 1, 2018.
Ponente: Bersamin, J. (Third Division).
PARTNERSHIP
31. ANICETO G. SALUDO, JR petitioners 36

vs. PHILIPPINE NATIONAL BANK,respondents.
G.R. No. 193138. August 20, 2018.
Civil Law
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Specified Contractors & Development, Inc., et al., petitioner

vs.
Jose A. Pobocan, respondent.
G.R. No. 212472. January 11, 2018.
Ponente: TIJAM, J. (First Division).
NATURE OF THE ACTION: Certiorari under Rule 45 urges this Court to reverse and set aside the
Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 99994, and to affirn instead the
Order of the Regional Trial Court 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., and Spouses
Architect Enrique, 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 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 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 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 Deeds of Sale over
the subject units in his favor, along with various other beriefits, in view of his impending retirement.
When respondent's demand was unheeded, he filed a Complaint 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.
The RTC dismissed the respondent's complaint. While the RTC disagreed with petitioners that
the action had already prescribed under Articles 1144 and 1145 of the New Civil Code, by reasoning that
the complaint is in the nature of a real action which prescribes after 30 years conformably with Article
1141, it nonetheless agreed that the alleged agreement should have been put into writing, and that such
written note, memorandum or agreement should have been attached as actionable documents to
respondent's complaint. On appeal, the CA reversed the RTC's Order.Aggrieved, petitioners sought
reconsideration of the CA decision, but were unsuccessful. Hence, the present petition.
ISSUE: Whether or not the respondent's cause of action had already prescribed.
RULING: Yes. 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.
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 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 a 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.
Civil Law
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Ramon E. Reyes and Clara R. Pastor, petitioner

vs.
Bancom Development Corp., respondent.
G.R. No. 190286. January 11, 2018.
Ponente: SERENO, C.J. (First Division).
NATURE OF THE ACTION: 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 in CA-G.R. CV No.
45959. The CA affirmed the ruling of the Regional Trial Court holding petitioners jointly and severally
liable to respondent Bancom as guarantors of certain loans obtained by Marbella Realty, Inc.
FACTS: This case originated from a Continuing Guaranty executed in favor of respondent Bancom by
Angel E. Reyes, Sr., Florencio Designated 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 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, 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. They also alleged that the foregoing instruments should
be interpreted in relation to earlier contracts pertaining to the development of a condominium project
known as Marbella II.
The Marbella II contracts were entered into by Bancom; the Reyes Group, as owners of the
parcel of land to be utilized for the condominium project along Roxas Boulevard; and Fereit Realty , a
sister company of Bancom, as the construction developer and project manager. This venture, however,
soon encountered financial difficulties. As a result, the Reyes Group was allegedly forced to enter into a
Memorandum of Agreement to take on part of the loans obtained by Fereit from Bancom for the
development of the project. Marbella, for its part, was supposedly compelled to assume Fereit's obligation
to cause the release of P2.8 million in receivables then assigned to State Financing; and subsequently to
obtain additional financing from Bancom in the same amount for that purpose.
ISSUE: Whether or not as guarantors of the loans of Marbella, are petitioners liable to Bancom.
RULING: On the merits of the claim, 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.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.
Civil Law Review 2
American Power Conversion Corporation, et al., petitioner

vs.
Jason Yu Lim, respondent.
G.R. No. 214291. January 11, 2018.
NATURE OF THE ACTION: Petition Review on Certiorari seeks to set aside the Decision of the
Court of Appeals in CA-G.R SP No. 110142 setting aside the Decision and Resolution of the
National Labor Relations Commission in NLRC LAC No. 10-002807-07 and reinstating the
Decision of the Labor Arbiter, as well as the CA's September 11, 2014 Resolution denying
petitioners' Motion for Reconsideration.
FACTS: On July 1, 1998, respondent Jason Yu Lim was hired to serve as the Country Manager of
American Power Conversion Philippine Sales Office, which was not registered with the SEC but whose
function then was to act as a liaison office for APCC. Since APCC Philippine Sales Office was
unregistered but doing business in the country, respondent was included in the list of employees and
payroll of APCP. American Power Conversion BV was established in the country and it acquired APCPI
and continued the latter's business.
Respondent was promoted as Regional Manager for APC North ASEAN, and reported directly to
Truong, Country General Manager for the entire APC ASEAN and officer of APCC. Truong was not
connected in any way with APCP BV. Troung was replaced by Kong. respondent and Shao supposedly
discovered irregularities committed by Kong, which they reported to Cunnold, General Manager for APC-
South and Kong's immediate superior.
Thereafter, Kong met with respondent, where he informed the latter of a supposed company
restructuring which rendered his position as Regional Manager for North ASEAN redundant. Respondent
was furnished by the Human Resource Manager of APCP BV with a Termination Letter.
Respondent filed a labor case against the petitioners for illegal dismissal and recovery of money
claims. Labor Arbiter rendered her Decision in favor of respondent thus was paid severance pay, but in a
written demand, he sought reinstatement, the payment of backwages and allowances/benefits, and
damages for his claimed malicious and illegal termination. In a written reply by APCC's counsel,
petitioners refused to accede.
ISSUE: Whether or not respondents are liable for all the claims of petitioner.
RULING: While APCC was respondent's employer, the redundancy program in issue that was used to
justify respondent's dismissal from work was implemented by employees of APC Japan and APCS, as
well as by employees of APCP BV.
APCC is respondent's true employer, APC Japan, APCS, APCP BV, Plumer, Kong, Hendy, and
del Ponso had no business coming into the picture; they are not connected with APCC whatsoever. They
had no authority to devise a redundancy scheme and represent APCC in their dealings with the DOLE.
Therefore, their supposed redundancy scheme, as against respondent, is ineffective; they had no power
to terminate the services of respondent, in the first place; the prerogative belonged to APCC.
However, this does not prevent respondent from recovering from all the petitioners. Since they all
benefited from his services - APCC was able to grow its business and conceal its sales operations and, by
its misrepresentations and assurances that it would register its operations, it successfully convinced
respondent to do its bidding; APCP BV enjoyed the immense goodwill of APCC for aiding the latter in its
elaborate cover-up and duping respondent, government, and the public into believing that it was
respondent's actual employer; and APCS utilized respondent as its workhorse even as he drew his salaries
from APCP BV -and knowingly aided and abetted each other in the commission of wrong, they should all
be held responsible, under the principle of quasi-contract, for respondent's money
Civil Law
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claims, including damages and attorney's fees. For all purposes beneficial to respondent, all the petitioners
should be considered as his employers since they all benefited from his industry and used him in their
elaborate scheme and to fulfill their aim -evading the regulatory processes of this country. And from a
labor standpoint, they are all guilty of violating the Labor Code as a result of their concerted acts of fraud
and misrepresentation upon the respondent, using him and placing him in a precarious position without
risk to themselves, and thus deliberately disregarding their fundamental obligation to afford protection to
labor and insure the safety of their employees. For this gross violation of the fundamental policy of the
Labor Code, petitioners must be held liable to pay backwages, damages, and attorney's fees.
Civil Law
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People of the Philippines, petitioner

vs.
Yolando B. Panerio alias John "Yolly" Labor and Alex (Jojo) F. Orteza, respondent.
G.R. No. 205440. January 15, 2018.
Ponente: MARTIRES, J.(Third Division).
NATURE OF THE ACTION: On Appeal is the Decision of the Court of Appeals in CA-G.R. CR-H.C.
No. 00707-MIN, which affirmed with modification the Decision of the Regional Trial Court of Davao
City, Branch 12, in Criminal Case No. 22,247-91, finding accused-appellant Yolando B. Panerio alias
"Yolly" Panerioand accused Jojo F. Orteza guilty beyond reasonable doubt of the crime of Murder,
defined and penalized under Article 248 of the Revised Penal Code.
FACTS: That on or about February 18, 1991, in the City of Davao, Philippines, the said accused,
conspiring, confederating and helping one another did then and there willfully, unlawfully and
feloniously, with intent to kill and with treachery and evident premeditation, attack, assault and use
personal violence upon the person of ELESIO UNG by then and there stabbing him on the different parts
of his body with the use of a fan-knife (balisong) and ice pick, thereby inflicting upon the said Elesio Ung
mortal wounds which were the direct and immediate cause of his death thereafter. In its decision, RTC
found Panerio and Orteza guilty beyond reasonable doubt of the crime of murder. The trial court deemed
Orteza had waived his right to present evidence because he escaped detention.
The trial court likewise ruled that Panerio and Orteza conspired in killing Elesio. The dispositive
portion of the decision reads: WHEREFORE, premises considered, JUDGMENT is hereby rendered
finding Accused YOLANDO B. P ANERIO alias JOHN "Y olly" LABOR and ALEX (Jojo) F. ORTEZA
guilty of the crime of Murder defined and penalized under Art. 248 of the Revised Penal Code and hereby
sentences the said Accused to suffer the penalty of RECLUSION PERPETUA and to pay the heirs of
[Elesio] Ung jointly and severally the sum of Fifty Thousand (P.50,000.00) Pesos as civil indemnity and
Fifty Thousand (P.50,000.00) Pesos, as moral damages.
Aggrieved, Panerio appealed before the CA.
ISSUE: Whether or not there must be an award for exemplary damages.
RULING: In People v. Jugueta, the Court summarized the amounts of damages which may be awarded
for different crimes. In said case, the Court held that for the crime of homicide, the following amounts
may be awarded: (1) P50,000.00, as civil indemnity; and (2) PS0,000.00, as moral damages. Further, the
Court deems it proper to delete the awards of exemplary and temperate damages considering that no
aggravating circumstance attended the felony. Although exemplary damages, being corrective in nature,
may be awarded even if in the absence of aggravating circumstance, the Court sees no reason for such
award.
Civil Law Review 2
Allied Banking Corporation, now merged with Philippine National Bank, petitioners vs.
Reynold Calumpang, respondents.
G.R. No. 219435. January 17, 2018.
Ponente: VELASCO, JR., J. (Third Division).
NATURE OF THE ACTION: Petition for Review on Certiorari filed under Rule 45 of the Rules of
Court for the reversal and setting aside of the Decision and the Resolutionof the Court of Appeals Cebu
City in CA-G.R. CEB SP No. 02906, which affirmed the findings of the NLRC and of the Labor Arbiter,
declaring respondent to have been illegally dismissed by petitioner.
FACTS: Banking Corporation and Race Cleaners, Inc., 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.
On September 28, 2003, respondent Calumpang was hired as a janitor by RCI and was assigned
at the Bank's Tanjay City Branch. He was tasked to perform janitorial work and messengeriaVerrand
services. His job required him to be out of the Branch at times to run 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, 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. The Labor Arbiter ruled in favor of respondent.
ISSUE: Whether or not the CA erred in granting his monetary claims.
RULING: 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.
Civil Law Review 2
Victoria N. Racelis, petitioners

vs.
Spouses Germil Javier and Rebecca Javier, respondents.
G.R. No. 189609.January 29, 2018.
Ponente: LEONEN, J. (Third Division).
NATURE OF THE ACTION: Petition for Review, petitioner Racelis challenges the Court of Appeals
Decision and Resolution,which ordered her to reimburse the sum of P24,000.00 to respondents Spouses
Germil Javier.
FACTS: Before his death, the lateNacu, Sr. 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 Nifio Good Shepherd Tutorial Center.
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 Pl00,000.00, 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.
The Spouses Javier refused to vacate due to the ongoing operation of their tutorial business.Racelis filed
a complaint for ejectment against the Spouses Javier before the Metropolitan Trial Court in Marikina
City.
The Metropolitan Trial Court rendered a Decision dismissing the complaint. It ruled that the
Spouses Javier were entitled to suspend the payment of rent.
ISSUE: Whether or not respondents Spouses Germil and Rebecca Javier can their right to suspend the
payment of rent under Article 1658 of the Civil Code.
RULING: In this case, the disconnection of electrical service over the leased premises was not just an act
of physical disturbance but one that is meant to remove respondents from the leased premises and disturb
their legal possession as lessees. Ordinarily, this would have entitled respondents to invoke the right
accorded by Article 1658 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. 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.
A contract of lease is a "consensual, bilateral, onerous and contract by which the owner
temporarily grants the use of his property to another who undertakes to pay rent therefore "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 Ion lessors under Article 1654(3) of the Civil
Code. The failure to maintain the lessee in the peaceful and adequate enjoyment of the property leased
does not contemplate all acts of disturbance. Lessees may suspend the payment of rent under Article 1658
of the Code only if their legal possession is disrupted.
Civil Law
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Eden Etino, petitioners

vs.
People of the Philippines, respondents.
G.R. No. 206632. February 14, 2018.
NATURE OF THE ACTION: Review on Certiorari under Rule 45 of the Rules of Court, assailing
Decision and the Resolution of the Court of Appeals in CA-G.R. CR No. 00896. The CA affmned with
modification the Decision of the Regional Trial Court, Branch 29, Iloilo City, which found petitioner
guilty beyond reasonable doubt of the crime of frustrated homicide, in that the CA ordered petitioner to
pay the victim P25,000.00 as moral damages and Pl0,000.00 as temperate damages.
FACTS: That on or about the 5th day of November 2001, in the Municipality of Maasin, Province of
Iloilo, Philippines, rmd within the jurisdiction of this Honorable Court, the abovenamned accused, armed
with an unlicensed firearm of unknown caliber, With deliberate intent and decided purpose to kill, did
then and there willfully, unlawfully and feloniously attack, assault and shoot JESSIEREL LEYBLE with
said unlicensed firearm he was then provided at the time, hitting and inflicting upon the victim gunshot
wounds on the different parts of his body, thus performing all the acts of execution which would produce
the crime of homicide a consequence but which nevertheless did not produce it by reason of some cause
or causes independent of the will of the accused, that is, by the timely medical attendance rendered to the
said Jessierel Leyble which prevented his death. The RTC found petitioner guilty beyond reasonable
doubt of the crime of frustrated homicide.
ISSUE: What are the damages to be awarded on cases of physical injuries.
RULING: Article 2219 of the Civil Code provides that moral damages may be awarded in criminal cases
resulting in physical injuries, as in this case. Although the victim did not testify on the moral damages that
he suffored, his Medical Certificate76 constitutes sufficient basis to award moral damages, since
"ordinary human experience and common sense dictate that such wounds inflicted on [him] would
naturally cause physical suffering, fright, serious anxiety, moral shock, and similar injury." Thus, we
affirm the CA's award of moral damages in the amount of P25,000.00 in the victim's favor.
We also agree with the CA that the victim is entitled to temperate damages in the mnount of
Pl0,000.00, as it is clear from the records that the victim received medical treatment at the WVSUMC and
was, in fact, confined at the hospital for twenty days, although no documentary evidence was presented to
prove the cost thereof.
Civil Law Review 2
Spouses Cipriano Pamplona and Bibiana Intac, petitioners

vs.
Spouses Lilia I. Cueto and Vedasto
Cueto, respondents.
G.R. No. 204735. February 19, 2018.
Ponente: Bersamin,J. (Third Division).
NATURE OF THE ACTION: Under review is the decision promulgated whereby the Court of
Appeals reversed the decision issued by the Regional Trial Court, Branch 8, in Batangas City dismissing
the respondents' complaint in Civil Case No. 5120, and ordering the petitioners instead to execute a
deed of sale on the property in favor of the respondents upon release of the consigned amount.
FACTS: On 10 January 1989, plaintiff Lilia and defendants mutually agreed that the former would buy
and the latter would sell on installment, the aforementioned immovable including the house standing the
agreement was verbal considering that Lilia and defendants are sisters and brother-in-law, respectively,
and completely trusted each other; however, a notebook with the personal inscription of defendant
Bibiana was sent to Lilia at the latter's address in Italy, affirming their oral agreement and wherein the list
of all the remittances would be entered.
Defendants voluntarily transferred the peaceful possession of the subject property to Lilia and
from the date of the agreement, the latter had remitted to the former her monthly instalments through
registered mail. Lilia allowed her son Rolando Cueto to reside at the subject property as Lilia had to leave
for abroad due to her employment in Italy.
Lilia through her son, has religiously paid the annual realty taxes on the premises, including
electric and water bills. Defendants filed before the Municipal Trial Court in Batangas City, with
malicious intent and to the prejudice of plaintiffs' rights, a case for unlawful detainer, against plaintiff's
son Rolando and his wife Liza Cueto being indigent, spouses Rolando and Liza failed to defend
themselves resulting in a judgment by default and they were finally evicted.
Lilia learned of the eviction case when she returned home from Italy. She executed an Affidavit
of Adverse Claim registered the same with the land records of through Lilia's lawyer.
ISSUE: Whether or not there was sufficient evidence to show the existence of a partially executed
contract to sell.
RULING: The appeal lacks merit.
A careful review of the records calls for us to affirm the CA. In our view, the existence of the
partially executed contract to sell between Bibiana and Lilia was sufficiently established. It is uncontested
that Lilia sent money to Bibiana. The latter did not deny her receipt of the money. Moreover, the records
showed that the parties further agreed for Vedasto and Roilan to occupy the property during the period
when Lilia was remitting money to Bibiana; and that Lilia immediately took steps to protect her interests
in the property once the petitioners started to deny the existence of the oral contract to sell by annotating
her adverse claim on the petitioners' title and instituting this action against the latter. We concur with the
CA's holding that the respondents adduced enough evidence to establish the existence of the partially
executed contract to sell between Lilia and Bibiana. The petitioners have contended that the sums of
money received from Lilia were payments of the latter's obligations incurred in the past; that the
admission by Roilan and his wife that the petitioners owned the property negated the absence of the
contract to sell; and that the admission by V edasto that the petitioners owned the property was an
admission against interest that likewise belied the contract to sell between Lilia and Bibiana.
Civil Law Review 2
The admissions by Roilan and Vedasto of the petitioners' ownership of the property could not be
appreciated in favor of the petitioners. That Bibiana and Lilia had entered into a contract to sell instead
of a contract of sale must be well-noted. The distinctions between these kinds of contracts are settled.
The distinctions delineate why the admissions by Roilan and Vedasto were consistent with the
existence of the oral contract to sell between Lilia and Bibiana. Under the oral contract to sell, the
ownership had yet to pass to Lilia, and Bibiana retained ownership pending the full payment of the
purchase price agreed upon.
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Rolando De Roca, petitioners

vs.
Eduardo C. Dabuyan, et al., respondents.
G.R. No. 215281. March 5, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari seeks to set aside the Decision and
Resolution of the Court of Appeals dismissing the Petition for Certiorari in CA-G.R. SP No. 127974 and
denying herein petitioner's Motion for Reconsideration, respectively.
FACTS: Petitioner filed a complaint for illegal dismissal against "RAF Mansion Hotel Oki Management
and New Management and Victoriano Ewayan." Later, private respondents amended the complaint
included petitioner Rolando De Roca as [co]-respondent. Summons was sent through registered mail to
petitionerbut it was returned.
Thereafter, a conference was set but only complaints attended. Thus, another summons was
issued and personally served to petitioner by the bailiff of the NLRC as evidenced by the latter's return.
Despite service of summons, petitioner did not attend the subsequent hearings prompting the labor arbiter
to direct private respondents to submit their position paper.
ISSUE: Whether or not the Court of Appeals erred in affirming the findings of both the labor arbiter and
the NLRC and in concluding that they did not abuse their discretion and acted beyond their jurisdiction
when they asserted their authorities and found petitioner DE ROCA solidarily liable with
EWAYAN/OCEANIC TRAVEL AND TOUR AGENCY to private respondents, despite the patent lack of
employer-employee relationship between the petitioner and private respondents.
RULING: As correctly observed by petitioner, such belated attempt to implead him in the labor case
must be seen as an afterthought. Moreover, the fact that respondents recognize petitioner as embodying
the "new management" of RAF Mansion Hotel betrays an admission on their part that he had no hand in
the "old management" of the hotel under Ewayan, during which they were hired and maintained as hotel
employees -meaning that petitioner was never considered as Ewayan's partner and co-employer;
respondents merely viewing petitioner as the subsequent manager taking over from Ewayan, which
bolsters petitioner9 s allegation that Ewayan had absconded and left respondents without recourse other
than to implead him as the "new management" upon whom the obligation to settle the claims abandoned
by Ewayan now fell. "Contracts take effect only between the parties, their assigns and heirs, except in
case where the rights and obligations arising from the contract are not transmissible by their nature, or by
stipulation or by provision of law."
The contract of employment between respondents, on the one hand, and Oceanic and Ewayan on
the other is effective only between them; it does not extend to petitioner, who is not a party thereto. His
only role is as lessor of the premises which Oceanic leased to operate as a hotel; he cannot be deemed as
respondent's employer -not even under the pretext that he took over as the "new management" of the
hotel operated by Oceanic. There simply is no truth to such claim. Thus, to allow respondents to recover
their monetary claims from petitioner would necessarily result in their unjust enrichment.
Civil Law
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RAYMOND A. SON, RAYMOND S. ANTIOLA, and WILFREDO E. POLLARCO, petitioner

vs.
UNIVERSITY OF SANTO TOMAS, respondent.
G.R. No. 211273. April 18, 2018.
Ponente: Del Castillo, J. (FirstDivision).
NATURE OF THE ACTION: This Petition for Review on Certiorari seeks to set aside the Decision of
the Court of Appeals in CA-G.R. SP No. 128666 setting aside the Decision and Decision and Resolution
of the NLRC in NLRC LAC Case No. 04-001131-11 and reinstating the Decision of the NLRC, as well
as the CA's Resolution denying petitioners' Motion for Reconsideration.
FACTS: Petitioners are full time professors of the UST Colleges of Fine Arts and Design and Philosophy,
and are members of the UST Faculty Union, with which UST at the time had a CBA. Petitioners did not
possess the required Master's degree, but were nonetheless hired by UST on the condition that they fulfill
the requirement within the prescribed period. Petitioners enrolled in the Master's program, but were
unable to finish the same. In spite of their failure to obtain the required Master's degree, they continued to
teach even beyond the period given for completion thereof.
Then CHED issued a Memorandum directing the strict implementation of the minimum qualification for
faculty members of undergraduate programs, particularly the Master's degree and licensure requirements.
Acting on the Memorandum, UST wrote the petitioners and other affected faculty members, informing
them of the university's decision to cease re-appointment of those who failed to complete their Master's
degrees and petitioners were subsequently terminated for their failure to obtain the required Master's
degree. Petitioners filed a labor case against the respondents for unfair labor practice, illegal dismissal,
and recovery of money claims.
Labor Arbiter Lustria rendered his Decision finding for petitioners and declaring respondents guilty of
illegal dismissal and unfair labor practice, as well as malice and bad faith in illegally dismissing the
former. Respondents appealed before the NLRC. NLRC dismissed the appeal for lack of merit and
affirming the Labor Arbiter's Decision. Respondents moved for reconsideration. Special Division of the
NLRC issued a new Decision setting aside the earlier Decision and dismissed petitioners' labor case.
In a Petition for Certiorari before the CA, respondents questioned the adverse NLRC dispositions and
prayed for dismissal of the labor case. But the CA denied. Hence, the instant Petition.
ISSUE: Whether or not the petitioners attained tenure through their CBA with UST.
RULING: No.
When the CBA was executed between the parties in 2006, they had no right to include therein the
provision relative to the acquisition of tenure by default, because it is contrary to, and thus violative of,
the 1992 Revised Manual of Regulations for Private Schools that was in effect at the time. As such, said
CBA provision is null and void, and can have no effect as between the parties. "A void contract is
equivalent to nothing; it produces no civil effect; and it does not create, modify or extinguish a juridical
relation." Under the Civil Code.Art. 1409. The following contracts are inexistent and void from the
beginning: (1) Those whose cause, object or purpose is contrary to law, morals, good customs, public
order or public policy;
xxx xxx xxx
From a strict legal viewpoint, the parties are both in violation of the law: respondents, for maintaining
professors without the mandated masteral degrees, and for petitioners, agreeing to be employed despite
knowledge of their lack of the necessary qualifications. Petitioners cannot therefore insist to be employed
by UST since they still do not possess the required master's degrees; the fact that UST continues to hire
and maintain professors without the necessary master's degrees is not a ground for claiming illegal
dismissal, or even reinstatement. As far as the law is concerned, respondents are in violation of the CHED
regulations for continuing the practice of hiring unqualified teaching personnel; but the law cannot come
to the aid of petitioners on this sole ground. As between the parties herein, they are in pari delicto.
Latin for 'in equal fault,' in pari delicto connotes that two or more people are at fault or are guilty of a
crime. Neither courts of law nor equity will interpose to grant relief to the parties, when an illegal
agreement has been made, and both parties stand in pari delicto. Under the pari delicto doctrine, the
parties to a controversy are equally culpable or guilty, they shall have no action against each other, and it
shall leave the parties where it finds them. This doctrine finds expression in the maxims "ex dolo malo
nonoritur actio" and "in pari delicto potior est conditio defendentis." xxx xxx xxx
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As a doctrine in civil law, the rule on pari delicto is principally governed by Articles 1411 and 1412 of the
Civil Code, which state that:
Article 1411. When the nullity proceeds from the illegality of the cause or object of the contract, and the
act constitutes a criminal offense, both parties being in pari delicto, they shall have no action against each
other, and both shall be prosecuted.
xxx xxx xxx
Article 1412. If the act in which the unlawful or forbidden cause consists does not constitute a criminal
offense, the following rules shall be observed:
xxx xxx xxx
1. When the fault is on the part of both contracting parties, neither may recover what he has given by
virtue of the contract, or demand the performance of the other's undertaking:
xxx xxx xxx. (Citations omitted)
It cannot be said either that by agreeing to the tenure by default provision in the CBA, respondents are
deemed to be in estoppel or have waived the application of the requirement under CHED Memorandum
Order No. 40-08. Such a waiver is precisely contrary to law. Moreover, a waiver would prejudice the
rights of the students and the public, who have a right to expect that UST is acting within the bounds of
the law, and provides quality education by hiring only qualified teaching personnel. Under Article 6 of the
Civil Code, "[r]ights may be waived, unless the waiver is contrary to law, public order, public policy,
morals, or good customs, or prejudicial to a third person with a right recognized by law." On the other
hand, there could be no acquiescence — amounting to estoppel — with respect to acts which constitute a
violation of law. "The doctrine of estoppel cannot operate to give effect to an act which is otherwise null
and void or ultra vires." "[N]o estoppel can be predicated on an illegal act."
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MAKATI TUSCANY CONDOMINIUM CORPORATION, petitioner

vs.
MULTI-REALTY DEVELOPMENT CORPORATION, respondent.
G.R. No. 185530. April 18, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari filed by Makati Tuscany assailing the
Amended Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 44696.
FACTS: Sometime In 1974, Multi-Realty Development Corporation (Multi-Realty) built Makati

Tuscany, a 26-storey condominium building located at the corner of Ayala Avenue and Fonda Street,
Makati City. In 1977, pursuant to Republic Act No. 4726, or the Condominium Act, Multi-Realty created
and incorporated Makati Tuscany Condominium Corporation (MATUSCO) to hold title over and manage
Makati Tuscany's common areas. That same year, Multi-Realty executed a Deed of Transfer of ownership
of Makati Tuscany's common areas to MATUSCO. Multi-Realty filed a complaint for damages and/or
reformation of instrument with prayer for temporary restraining order and/or preliminary injunction
against MATUSCO.
Multi-Realty claimed that its ownership over the 98 parking slots was mistakenly not reflected in the
Master Deed "since the documentation and the terms and conditions therein were all of first impression,"
considering that Makati Tuscany was one of the first condominium developments in the Philippines.
Regional Trial Court dismissed Multi-Realty's complaint. It noted that Multi-Realty itself prepared the
Master Deed and Deed of Transfer and that Multi-Realty was guilty of estoppel by deed.
Both parties appealed the Regional Trial Court Decision to the Court of Appeals. CA dismissed both
appeals on the ground of prescription. Multi-Realty moved for reconsideration, but its motion was denied
in the Court of Appeals Resolution. It then filed a petition for review before this Court.
ISSUE: Whether or not there is a need to reform the Master Deed and the Deed of Transfer.
RULING: No. Reformation of an instrument is a remedy in equity where a valid existing contract is
allowed by law to be revised to express the true intentions of the contracting parties. The rationale is that
it would be unjust to enforce a written instrument which does not truly reflect the real agreement of the
parties. In reforming an instrument, no new contract is created for the parties, rather, the reformed
instrument establishes the real agreement between the parties as intended, but for some reason, was not
embodied in the original instrument.
An action for reformation of an instrument finds its basis in Article 1359 of the Civil Code which
provides: Article 1359. When, there having been a meeting of the minds of the parties to a contract, their
true intention is not expressed in the instrument purporting to embody the agreement, by reason of
mistake, fraud, inequitable conduct or accident, one of the parties may ask for the reformation of the
instrument to the end that such true intention may be expressed.
If mistake, fraud, inequitable conduct, or accident has prevented a meeting of the minds of the parties, the
proper remedy is not reformation of the instrument but annulment of the contract.
The National Irrigation Administration v. Gamit stated that there must be a concurrence of the following
requisites for an action for reformation of instrument to prosper:
(1) there must have been a meeting of the minds of the parties to the contract; (2) the instrument does
not express the true intention of the parties; and (3) the failure of the instrument to express the
true intention of the parties is due to mistake, fraud, inequitable conduct or accident.
The burden of proof then rests upon the party asking for the reformation of the instrument to overturn the
presumption that a written instrument already sets out the true intentions of the contracting parties.
It is not disputed that the parties entered into a contract regarding the management of Makati Tuscany's
common areas. A Master Deed and a Deed of Transfer were executed to contain all the terms and
conditions on the individual ownership of Makati Tuscany's units and the co-ownership over the common
areas. The question to be resolved is whether the provisions in the Master Deed and Deed of Transfer over
the 98 parking slots, as part of the common areas, expressed the true intentions of the parties, and if not,
whether it was due to mistake, fraud, inequitable conduct, or accident.
Civil Law
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TERESA GUTIERREZ YAMAUCHI, petitioner

vs.
ROMEO F. SUÑIGA, respondent.
G.R. No.199513. April 18, 2018.
Ponente: Martires, J. (Third Division).
NATURE OF THE ACTION: Petition for review on certiorari appealing the Decision and Resolution
of the Court of Appeals in CA-G.R. CV No. 91381. Although the CA affirmed the Decision of the
Regional Trial Court, Branch 24 of Manila in Civil Case No. 02-105365, it (1) reduced the award for
actual damages, and (2) deleted the award for moral and exemplary damages, attorney's fees, and costs
of suit. The instant petition contests only the CA's reduction and deletion of the award of damages.
FACTS: Sometime in September 2000, Yamauchi consulted Suñiga, the husband of her cousin, regarding
the renovation of the subject house. After Yamauchi gave Suñiga a sketch of her intended renovations, the
latter apprised her of the estimated cost that it would entail. Yamauchi gave a partial payment in the
amount of P300,000.00 and another payment in the amount of P100,000.00. It appears that, by January
2001, the renovation stopped as Suñiga was also constructing his house.
Subsequently,Yamauchi requested Suñiga to advance the expenses and proposed and that she will pay him
later, but replied that he had no money. The renovation was thereafter suspended and in the interim,
Yamauchi consulted a certain Engr. Froilan Thomas, who told her that the amount stated on the Bill of
Materials could actually build a new house. Feeling shortchanged and deceived, Yamauchi through
counsel, sent a letter to Suñiga stating that due to the bloated amount of the cost of renovation and refusal
to complete the project, she was constrained to terminate their contract. She demanded the payment of
P400,000.00, plus 12% interest thereon.
In her complaint, Yamauchi alleged that she was seeking rescission of their contract. RTC rendered its
decision warranting rescission and payment of damages in favor of Yamauchi. Dissatisfied, Suñiga
appealed to the CA, which affirmed the RTC's ruling to rescind the contract between Yamauchi and
Suñiga under Article 1191 of the Civil Code. The CA held however, that the RTC erred in its award for
damages. Yamauchi filed a partial motion for reconsideration questioning the reduction and deletion of
the award for damages. Unmoved, the CA denied Yamauchi's motion saying that there were no new and
substantial issues raised therein; hence, the present petition before this Court.
ISSUE: Whether or not Yamauchi is entitled to damages.
RULING: Yes, in the instant case, we cannot ascertain the amount of loss suffered by Yamauchi. First,
there were indeed some renovation done that may have benefited Yamauchi and which we have to
consider and deduct the "added" value from the monetary award given her. Second, we do not have the
exact amount of loss on the Laguna Bel-Air house because Yamauchi did not present any evidence on the
values of the house before and after the incomplete renovation. Under Article 2199 of the Civil Code, one
is entitled to adequate compensation only for such pecuniary loss suffered as one has duly proved.
Nonetheless, in the absence of competent proof on the amount of actual damages suffered, a party is
entitled to temperate damages. The amount of loss of Yamauchi cannot be proved with certainty, but the
fact that there has been loss on her part was established. Thus, we find it proper to award temperate
damages in lieu of actual or compensatory damages. Such amount is usually left to the discretion of the
courts but the same should be reasonable, bearing in mind that temperate damages should be more than
nominal but less than compensatory. To our mind, and in view of the circumstances obtaining in this case,
an award of temperate damages equivalent to P500,000.00 is just and reasonable. This amount is in
consideration of the following: (1) Yamauchi has can no longer use the subject house unless she starts a
new renovation; (2) the amount she gave Suñiga, to some extent, was lost because she was never able to
use the house; and (3) the depreciation cost of the house due to being left exposed and unused.
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MANILA ELECTRIC COMPANY, petitioner

vs.
NORDEC PHILIPPINES, respondent.
G.R. No. 196020. April 18, 2018.
NATURE OF THE ACTION: These are two (2) Petitions for Review on Certiorari under Rule 45 of
the Rules of Court, both assailing the Decision and Resolution of Court of Appeals in CA-G.R. CV No.
85564. The Court of Appeals reversed and set aside the Decision of Branch 85, Regional Trial Court,
Quezon City in Civil Case No. Q-49651. It ordered Meralco to pay Nordec the amounts of P5,625.00,
representing overbilling for November 23, 1987; P200,000.00 as exemplary damages; P100,000.00 as
attorney's fees; and costs of suit.
FACTS: Meralco was contracted to supply electricity to Marvex Industrial Corporation (Marvex) under
an Agreement for Sale of Electric Energy, with Service Account No. 9396-3422-15. It installed metering
devices at Marvex's premises. On May 29, 1985, Meralco service inspectors inspected Marvex's electric
metering facilities and found that the main meter terminal and cover seals had been tampered with.
During a second inspection found that the metering devices were tampered with again. Subsequently,
Meralco assessed Marvex a differential billing in the total amount of P496,386.29. Meralco sent demand
letters and disconnected Marvex's electric service when it did not pay. Nordec, the new owner of Marvex,
sued Meralco for damages with prayer for preliminary mandatory injunction with Branch 85, Regional
Trial Court, Quezon City. The Regional Trial Court issued a writ of preliminary injunction directing
Meralco to restore Nordec's electric supply.
Meralco conducted another inspection of Nordec's premises in the presence of Nordec's president, Dr.
Malvar. The inspecting group observed that there were irregularities in Nordec's metering devices, as they
continued to register power consumption even though its entire power supply equipment was turned off.
Meralco offered to reimburse Nordec's excess bill of P5,625.10, but Nordec rejected this offer. Nordec
filed a second supplemental complaint that Meralco be declared guilty of tampering, and be made to
refund its excess bill of not less than P5,625.10. Regional Trial Court dismissed Nordec's original
complaint and second supplemental complaint. Nordec appealed to the Court of Appeals, which CA in its
Decision, reversed and set aside the RTC Decision. Hence, this petition.
ISSUE: Whether or not the Nordec Philippines is entitled to actual, temperate, moral or exemplary
damages, attorney's fees, and legal interest.
RULING: Yes. Here, the records are bereft of evidence that would show that Nordec's name or
reputation suffered due to the disconnection of its electric supply.
Moreover, contrary to Nordec's claim, it cannot be awarded temperate or moderate damages. Under
Article 2224 of the Civil Code:
Article 2224. Temperate or moderate damages, which are more than nominal but less than compensatory
damages, may be recovered when the court finds that some pecuniary loss has been suffered but its
amount cannot, from the nature of the case, be proved with certainty.
When the court finds that a party fails to prove the fact of pecuniary loss, and not just the amount of this
loss, then Article 2224 does not apply.
Here, the Court of Appeals found that Meralco's disconnection had a "domino effect" on Nordec's
business, but that Nordec did not offer actual proof of its losses. Nordec even admitted in its petition for
review that there was an "oversight" on its part in "adducing proof of the accurate amount of damages it
sustained" due to Meralco's acts. No pecuniary loss has been established in this case, apart from the claim
in Nordec's complaint that the "serious anxiety" of the disconnection had caused Nordec's president to
cancel business appointments, purchase orders, and fail to fulfill contractual obligations, among others.
In this instance, nominal damages may be awarded. In Philippine Telegraph & Telephone Corporation v.
Court of Appeals: Temperate or moderate damages may only be given if the "court finds that some
pecuniary loss has been suffered but that its amount cannot, from the nature of the case, be proved with
certainty." The factual findings of the appellate court that respondent has failed to establish such
pecuniary loss or, if proved, cannot from their nature be precisely quantified precludes the application of
the rule on temperate or moderate damages. The result comes down to only a possible award of nominal
damages. Nominal damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized and not for the purpose of indemnifying the
plaintiff for any loss suffered by him. The court may award nominal damages in every obligation arising
from any source enumerated in article 1157 of the Civil Code or, generally, in every case where property
right is invaded. (Citations omitted)
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Nominal damages are awarded to vindicate the violation of a right suffered by a party, in an amount
considered by the courts reasonable under the circumstances. Meralco's negligence in not providing
Nordec sufficient notice of disconnection of its electric supply, especially when there was an ongoing
dispute between them concerning the recomputation of the electricity bill to be paid, violated Nordec's
rights. Because of this, Nordec is entitled to nominal damages in the amount of P30,000.00.
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NORTHERN MINDANAO INDUSTRIAL PORT and SERVICES CORPORATION, petitioner

vs.
ILIGAN CEMENT CORPORATION, respondent.
G.R. No. 215387. April 23, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari Decision of the Court of Appeals in
CA-G.R. SP No. 03789-MIN, which set aside Order 3 of the Regional Trial Court of Iligan City, Branch
3 in Civil Case No. 7201, and the CA's Resolution denying herein petitioner's motion for
reconsideration.
FACTS: On On 27 June 2007, Iligan Cement Corporation invited NOMIPSCO to a pre-bidding

conference for a two-year cargo handling contract. Apart from NOMIPSCO, RC Barreto Enterprises, MN
Seno Marketing, VIRLO Stevedoring and Oroport also joined the conference. ICC, through Camus,
required the participants to submit their respective technical proposals and commercial bids on or before 5
July 2007. NOMIPSCO thereafter submitted its proposal in which it offered the lowest bid of P1.788 per
a [sic] 40 kilogram bag. ICC awarded the cargo handling contract to Europort.
NOMIPSCO filed a Complaint for Damages ICC [alleging] that, as per information from an ICC
employee, its bid folder was marked as 'no bid submitted' that, further claimed tICC was guilty of bad
faith when it still invited NOMIPSCO to join the pre-bidding conference despite prior knowledge of its
status as an old contractor. RTC rendered an Order denying ICC's affirmation and special defenses —
complaint failed to state a cause of action and defective verification.
ICC filed a Motion for Reconsideration. Respondent ICC instituted an original Petition for Certiorari
before the CA, which was granted, declaring that NOMIPSCO has no legal right to impute to ICC an
abuse of its right or authority in the bidding selection or to impugn the validity of the cargo handling
contract executed between the latter and Europort. Petitioner sought to reconsider but to no avail. Hence,
the present Petition.
ISSUE: Whether or not the respondent had the right to reject bids, and to not be compelled to accept a
bidder's proposal and execute a contract in its favor.
RULING: Yes. On the claim that it became the policy of respondent to award the contract to a new
contractor, the Court finds nothing wrong with this. This is the prerogative of respondent, and petitioner
had no right to interfere in the exercise thereof. The CA is correct in saying that an advertisement to
possible bidders is simply an invitation to make proposals, and that an advertiser is not bound to accept
the lowest bidder unless the contrary appears; respondent had the right to reject bids, and it cannot be
compelled to accept a bidder's proposal and execute a contract in its favor. Indeed, under Article 1326 of
the Civil Code, "advertisements for bidders are simply invitations to make proposals, and the advertiser is
not bound to accept the highest or lowest bidder, unless the contrary appears." "[A]s the discretion to
accept or reject bids and award contracts is of such wide latitude, courts will not interfere, unless it is
apparent that such discretion it exercised arbitrarily, or used as a shield to a fraudulent award. The
exercise of that discretion is a policy decision that necessitates prior inquiry, investigation, comparison,
evaluation, and deliberation."
Article 1326 of the Civil Code, which specifically tackles offer and acceptance of bids, provides that
advertisements for bidders are simply invitations to make proposals, and that an advertiser is not bound to
accept the highest bidder unless the contrary appears. In the present case, Section 4.3 of the ASBR
explicitly states that APT reserves the right to reject any or all bids, including the highest bid.
Undoubtedly, APT has a legal right to reject the offer of Dong-A Consortium, notwithstanding that it
submitted the highest bid.
In Leoquinco v. The Postal Savings Bank and C & C Commercial Corporation v. Menor, we explained
that this right to reject bids signifies that the participants of the bidding process cannot compel the party
who called for bids to accept the hid or execute a deed of sale in the former's favor. x x x 21 (Citations
omitted)
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BANCO DE ORO UNIBANK, INC., petitioner

vs.
VTL REALTY, INC., respondent.
G.R. No. 193499. April 23, 2018.
Ponente: Reyes, Jr., J. (Second Division).
NATURE OF THE ACTION: Petition for Review on Certiorari Decision of the Court of Appeals in
CA-G.R. SP No. 03789-MIN, which set aside Order 3 of the Regional Trial Court of Iligan City, Branch
3 in Civil Case No. 7201, and the CA's Resolution denying herein petitioner's motion for
reconsideration.
FACTS: Bollozos was the registered owner of a parcel of land with a building situated at Barangay
Guizo, Mandaue City, and covered by TCT No. 12892. He mortgaged his property to petitioner BDO to
secure the loan of World's Arts & Crafts, Inc.
On August 12, 1994, Bollozos sold the property to VTL Realty and A Deed of Definite Sale with
Assumption of Mortgage was executed between the parties. However, BDO refused to accept VTL's
payment as it does not recognize VTL as the new owner of the property. For BDO, the loan obligation
that Bollozos and/or World's Arts and Crafts, Inc. contracted should be settled prior to any change in the
ownership of the mortgaged property. This led VTL to institute an action for specific performance with
damages against BDO with the RTC of Cebu City. In the course of the proceedings, the obligation
remained unpaid, prompting BDO to foreclose the real estate mortgage. A Certificate of Sale was issued
to BDO as the lone bidder at the auction sale. Upon the expiration of the redemption period with no
redemption being made, BDO consolidated ownership over the property.
RTC rendered a Decision directing BDO to furnish VTL with Bollozos and/or World's Arts and Crafts,
Inc.'s new Statement of Account plus the corresponding interests and penalty charges that have accrued
thereafter. By the same token, VTL was directed to assume and pay Bollozos' obligation to BDO upon
receipt of such Statement of Account. VTL appealed the RTC judgment to the CA, which affirmed the
same in a Decision . Thereafter, an Entry of Judgment was issued.
VTL filed a Motion to Order Defendant to Correct Statement of Account, praying that BDO be ordered to
compute interests and penalties due only up to April 28, 1995, which is the date of registration of the
Certificate of Sale. RTC granted VTL's motion based on its interpretation of DBP vs. Zaragoza. However,
upon BDO's motion for reconsideration, the RTC reversed its previous stance. VTL filed a motion for
reconsideration, which the RTC denied. Consequently, VTL lodged a petition for certiorari with the CA.
CA reversed the RTC Order. Hence, BDO's present recourse to the Court.
ISSUE: Whether or not the mortgagor is liable for interests from the date of the foreclosure to the date of
sale of the property.
RULING: Yes.
In the present case, there is no redemption price to speak of, since no right of redemption was exercised.
As the RTC found, VTL neither made a tender of payment nor did it deposit any amount, if only to stop
the running of interest and imposition of penalty charges. VTL also did not make an effort pending the
redemption period to redeem the property from BDO, who became the absolute owner thereof. What VTL
undoubtedly wants is to purchase the property from BDO, not to redeem it, since the period for
redemption has already lapsed. Clearly, PNB vs. CA, like DBP vs. Zaragoza, is inapplicable to VTL's
situation.
A closer look at DBP vs. Zaragoza reveals the issue is whether a mortgagor is liable for interests from the
date of the foreclosure to the date of sale of the property. This is so because it took a period of four years
for the Zaragozas' property to be sold in auction from the time it was extrajudicially foreclosed. This is
inapropos to the instant case, where VTL seeks to recover a property that BDO already owns.
In PNB vs. CA, the issue pertains to the redemption price which the mortgagor should pay to redeem the
foreclosed property. PNB contended that the redemptioner should be made to pay the interests and
charges specified in the mortgage, on top of the purchase price, computed from the time of the auction
sale up to the date the mortgaged property is redeemed. Citing DBP v. Zaragoza, the Court held that after
the auction sale, the redemptioner mortgagor is no longer bound to pay the interest agreed upon in the
contract of mortgage, consistent with the rules provided under Act No. 3135, as amended, which was then
the governing law for extrajudicial foreclosure of all real estate mortgages and which provides for the
computation of redemption price. Thus:
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Since the applicable law is Act 3135, the provisions of Section 30, Rule 39, Rules of Court shall be
determinative of the sole issue presented in this case. Section 6 of Act 3135, as amended by Act 4018,
provides:
xxx xxx xxx
Sec. 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 old, 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,
inclusive, of the Code of Civil Procedure, in so far as these are not inconsistent with the provision of this
Act.
Section hundred sixty-four to four hundred sixty-six inclusive, of the Code of Civil Procedure, became
Sections 29, 30, and 34 of Rule 39 of our Rules of Court. The same sections were reiterated in the
Revised Rules of Court in July 1964 (Co vs. PNB, supra).
Pursuant to Section 30 of Rule 39, the redemptioner, who is the private respondent herein, "may redeeem
the property from the purchaser at any time within twelve (12) months after the sale, on paying the
purchaser the amount of his purchase, with one per centum per month interest thereon in addition, up to
the time of redemption, together with the amount of any assessments or taxes which the purchaser may
have paid therein after purchase and interest on such last named amount at the same interest rate; . . ." xxx
xxx xxx
This would rightfully be so because, as stated in the case of DBP vs. Zaragosa, supra, when the
foreclosure proceedings are completed and the mortgaged property is sold to the purchaser then all
interest of the mortgagor are cut off from the property. Prior to the completion of the foreclosure, the
mortgagor is liable for the interests on the mortgage. However, after the foreclosure proceedings and the
execution of the corresponding certificate of sale of the property sold at public auction in favor of the
successful bidder, the redemptioner mortgagor would be bound to pay only for the amount of the purchase
price with interests thereon at the rate of one per centum per month in addition up to the time of
redemption, together with the amount of any assessments or taxes which the purchaser may have paid
thereon after the purchase and interest on such last named amount at the same rate. 27 (Emphasis ours)
Apart from the foregoing, it must be recalled that VTL did not appeal from the CA Decision dated May
26, 2004, which affirmed the RTC's disposition that the amount to be paid by VTL shall be based on the
Statement of Account dated August 12, 1994, plus the corresponding interests and penalty charges that
have accrued thereafter. The CA further explained therein that VTL has no right over the mortgaged
property since it did not settle the obligation it assumed, viz.:
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CONCHITA GLORIA and MARIA LOURDES GLORIA-PAYDUAN, petitioner

vs.
BUILDERS SAVINGS AND LOAN ASSOCIATION, INC., respondent.
G.R. No. 202324. June 4, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari assails the Decision and Resolution of
the Court of Appeals in CA-G.R. CV No. 82774, which respectively reversed the Order of the Quezon
City Regional Trial Court, Branch 224 (RTC) in Civil Case No. Q-93-16621 and denied herein
petitioners' Motion for Reconsideration.
FACTS: On December 7, 1993, Conchita and Lourdes filed before the RTC a Second Amended
Complaint against Builders Savings, Biag, and Lorenzo for "declaration of null and void real estate
mortgage, promissory note, cancellation of notation in the transfer certificate of title, and damages" with
prayer for injunctive relief. Petitioners claimed that Biag duped them into surrendering TCT 35814 to him
under the pretense that Biag would verify the title, instead Biag used the title to mortgage the Kamuning
property to respondent Builders Savings. Conchita was fraudulently made to sign the subject loan and
mortgage documents by Biag, who deceived Conchita into believing that it was actually Lourdes who
requested that these documents be signed.
The RTC dismissed petitioners' complaint for lack of merit. Petitioners moved to reconsider which was
granted declaring the real estate mortgage and the promissory note were null and void on the ground that
Conchita's signature was obtained through fraud, without her full knowledge of the import of her act.
Respondent interposed an appeal before the CA which was granted for it was found that Lourdes is a real
party in interest. Petitioners moved to reconsider, however the CA held its ground. Hence, the present
Petition.
ISSUE: Whether or not the real estate mortgage and the promissory note were null and void on the
ground that Conchita's signature was obtained through fraud.
RULING: Yes. The Court finds the trial court to be correct in granting petitioners' motion for
reconsideration and declaring the mortgage and promissory note as null and void. The evidence indicates
that these documents were indeed simulated; as far as petitioners were concerned, they merely entrusted
the title to the subject property to Biag for the purpose of reconstituting the same as he claimed that the
title on file with the Registrar of Deeds of Quezon City may have been lost by fire. Petitioners did not
intend for Biag to mortgage the subject property in 1991 to secure a loan; yet the latter, without
petitioners' knowledge and consent, proceeded to do just that, and in the process, he falsified the loan and
mortgage documents and the accompanying promissory note by securing Conchita's signatures thereon
through fraud and misrepresentation and taking advantage of her advanced age and naivete and forged
Juan's signature and made it appear that the latter was still alive at the time, when in truth and in fact, he
had passed away in 1987. A Certificate of Death issued by the Quezon City Local Civil Registrar and
marked as Exhibit "D" and admitted by the trial court proves this fact. Under the Civil Code,
Art. 1346. An absolutely simulated or fictitious contract is void. x x x
Art. 1409. The following contracts are inexistent and void from the beginning:
(1) x x x;
(2) Those which are absolutely simulated or fictitious;
As a consequence of Biag's fraud and forgery of the loan and mortgage documents, the same were
rendered null and void. This proceeds from the fact that Biag was not the owner of the subject property
and may not thus validly mortgage it, as well as the well-entrenched rule that a forged or fraudulent deed
is a nullity and conveys no title. "In a real estate mortgage contract, it is essential that the mortgagor be
the absolute owner of the property to be mortgaged; otherwise, the mortgage is void." And "when the
instrument presented for registration is forged, even if accompanied by the owner's duplicate certificate of
title, the registered owner does not thereby lose his title, and neither does the mortgagee acquire any right
or title to the property. In such a case, the mortgagee under the forged instrument is not a mortgagee
protected by law." Lastly, when "the person applying for the loan is other than the registered owner of the
real property being mortgaged[, it] should have already raised a red flag and x x x should have induced
the [mortgagee] to make inquiries into and confirm [the authority of the mortgagor]."
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BELINA CANCIO and JEREMY PAMPOLINA, petitioner

vs.
PERFORMANCE FOREIGN EXCHANGE CORPORATION, respondent.
G.R. No. 182307. June 6, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari assailing Decision and Resolution of
the Court of Appeals, which overturned the Regional Trial Court Decision. The Regional Trial Court
found Forex solidarily liable with broker Hipol for unauthorized trade transactions he made on Cancio
and Pampolina joint trading account. The Court of Appeals, however, absolved Performance Forex from
any liability.
FACTS: Sometime in 2000, Cancio and Pampolina accepted Hipol's invitation to open a joint account
with Performance Forex. Cancio and Pampolina deposited the required margin account deposit of
US$10,000.00 for trading. They likewise entered into an agreement for appointment of an agent Hipol,
would act as their commission agent and would deal on their behalf in the forex market. All parties agreed
that the trading would only be executed by Cancio and Pampolina, or, upon instructions to their agent,
Hipol. They stopped trading for more or less two (2) weeks, after which, however, Cancio again
instructed Hipol to execute trading currency orders. Cancio later found out that Hipol never executed her
orders. Hipol confessed to her that he made unauthorized transactions using their joint account from
which resulted in the loss of all their money, leaving a negative balance of US$35.72 in their Statement of
Account.
Performance Forex offered US$5,000.00 to settle the matter but Cancio and Pampolina rejected this offer.
Their demand letters to Hipol were also unheeded. Thus, they filed a Complaint for damages against
Performance Forex and Hipol before the Regional Trial Court of Mandaluyong City. RTC rendered its
Decision finding Performance Forex and Hipol solidarily liable to Cancio and Pampolina for damages.
Performance Forex appealed this Decision to the Court of Appeals. The CA found that Performance
Forex's non-disclosure of Hipol's prior unauthorized transactions with another client was irrelevant since
he was an independent broker who was not employed with Performance Forex.
Cancio and Pampolina moved for reconsideration but were denied by the Court of Appeals in its
Resolution. Hence, this Petition.
ISSUE: Whether or not the Performance Forex Exchange Corporation should be held solidarily liable
with petitioners Belina Cancio and Jeremy Pampolina's broker, Hipol, for damages due to the latter's
unauthorized transactions in the foreign currency exchange trading market.
RULING: No. Even if this Court were to liberally review the factual findings of the Court of Appeals,
the Petition would still be denied. A principal who gives broad and unbridled authorization to his or her
agent cannot later hold third persons who relied on that authorization liable for damages that may arise
from the agent's fraudulent acts.
Petitioners conferred trading authority to Hipol. Respondent was not obligated to question whether Hipol
exceeded that authority whenever he made purchase orders. Respondent was likewise not privy on how
petitioners instructed Hipol to carry out their orders. It did not assign Hipol to be petitioners' agent. Hipol
was the one who approached petitioners and offered to be their agent. Petitioners were highly educated
and were knowledgeable in playing in this foreign exchange trading. They would have been aware of the
extent of authority they granted to Hipol when they handed to him pre-signed blank purchase order forms.
Under Article 1900 of the Civil Code:
Article 1900. So far as third persons are concerned, an act is deemed to have been performed within the
scope of the agent's authority, if such act is within the terms of the power of attorney, as written, even if
the agent has in fact exceeded the limits of his authority according to an understanding between the
principal and the agent.
Before a claimant can be entitled to damages, "the claimant should satisfactorily show the existence of the
factual basis of damages and its causal connection to defendant's acts." The acts of petitioners' agent,
Hipol, were the direct cause of their injury. There is no reason to hold respondent liable for actual and
moral damages. Since the basis for moral damages has not been established, there would likewise be no
basis to recover exemplary damages and attorney's fees from respondent. If there was any fault, the fault
remains with petitioners' agent and him alone.
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JOB ASIA MANAGEMENT SERVICES, petitioner

vs.
SALVADOR B. BAUTISTA, respondent.
G.R. No. 205953. June 6, 2018.
NATURE OF THE ACTION: Petition for review on certiorari seeking the reversal of the Decision of
the Court of Appeals in CA-G.R. SP No. 116450 which annulled the Decision and Resolution issued by
the National Labor Relations Commission (NLRC) and reinstated the Decision rendered by the Labor
Arbiter, and the CA Resolution denying petitioner's motion for reconsideration of the assailed Decision.
FACTS: On September 26, 2008, Bautista was hired as a Project Manager for Shorncliffe in Papua New
Guinea through Job Asia Management Services, a single proprietorship owned by petitioner Gopio.
Bautista's contract stated that his employment shall be valid and effective for 31 months just nine months
after his deployment Bautista was served a notice of termination effective July 10, 2009 on the alleged
grounds of unsatisfactory performance and failure to meet the standards of the company. Bautista lodged
a complaint with the arbitration branch of the NLRC against Job Asia, Gopio, and Shorncliffe for illegal
dismissal and monetary claims. He claimed that he was terminated without just cause since there had been
no job evaluation conducted prior to Shorncliffe's decision to dismiss him from employment
Job Asia, Gopio, and Shorncliffe, for their part, argued that Bautista's employment was terminated
because he failed to meet Shorncliffe's standards. Labor Arbiter rendered his Decision finding Bautista to
have been illegally dismissed as the dismissal was not proven to be for a just cause and Shorncliffe failed
to observe due process. The Labor Arbiter rejected the argument that Bautista's employment was
terminated on the basis of Article 4.3 of the employment contract by giving him one-month salary in lieu
of one month's written notice.
Undaunted, Job Asia, Gopio, and Shorncliffe filed an appeal with the NLRC. NLRC issued its Decision
dismissing the complaint for illegal dismissal and monetary claims for lack of merit. Bautista filed a
motion for reconsideration of the NLRC Decision, but it was Hence, he filed a petition for certiorari with
the CA. CA rendered its Decision annulling and setting aside the NLRC Decision and reinstating that of
the Labor Arbiter. Thus, this petition.
ISSUE: Whether or not the provision on Bautista’s employment contract was illegal making his dismissal
under this likewise illegal.
RULING: Yes. The CA aptly observed that Article 4.3 deprives the employee of his right to due process
of law as it gives the employer the option to do away with the notice requirement provided that it grants
one-month salary to the employee in lieu thereof. It denies the employee of the right to be apprised of the
grounds for the termination of his employment without giving him an opportunity to defend himself and
refute the charges against him. Moreover, the term "other grounds" is all-encompassing. It makes the
employee susceptible to arbitrary dismissal. The employee may be terminated not only for just or
authorized causes but also for anything under the sun that may suit his employer. Thus, the employee is
left unprotected and at the mercy of his employer, subjected to the latter's whims.
We cannot sustain the validity of Article 4.3 of the employment contract as it contravenes the
constitutionally-protected right of every worker to security of tenure.
Indeed, while our Civil Code recognizes that parties may stipulate in their contracts such terms and
conditions as they may deem convenient, these terms and conditions must not be contrary to law, morals,
good customs, public order or policy. The employment contract between Shorncliffe and Bautista is
governed by Philippine labor laws. Hence, the stipulations, clauses, and terms and conditions of the
contract must not contravene our labor law provisions.
Time and again, we have held that a contract of employment is imbued with public interest. The parties
are not at liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other. Also, while a contract is the law between the parties,
the provisions of positive law that regulate such contracts are deemed included and shall limit and govern
the relations between the parties.
In sum, there being no showing of any clear, valid, and legal cause for the termination of Bautista's
employment and that he was not afforded due process, the law considers the matter a case of illegal
dismissal for which Bautista is entitled to indemnity. We uphold the Labor Arbiter's award of indemnity
equivalent to Bautista's salaries for the unexpired term of his employment contract, and damages.
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ASTRID A. VAN DE BRUG, MARTIN G. AGUILAR and GLENN G. AGUILAR, petitioner

vs.
PHILIPPINE NATIONAL BANK, respondent.
G.R. No. 207004. June 6, 2018.
NATURE OF THE ACTION: Petition for review under Rule 45 of the Rules of Court assailing the
Decision of the Court of Appeals in CA-G.R. CV No. 00708, which granted the appeal of the respondent
Philippine National Bank and reversed the Decision of the Regional Trial Court, 6th Judicial Region,
Branch 58, San Carlos City, Negros Occidental (RTC) in Civil Case No. RTC-725 in favor of the
petitioners. Likewise, the Resolution of the CA denying the petitioners' motion for reconsideration, is
being assailed.
FACTS: The late spouses Aguilar used to be borrowing clients of PNB, Victoria Branch. The late spouses
Aguilar's sugar crop loans, which were obtained sometime between the late 1970's and the early 1980's,
were secured by real estate mortgage over four registered parcels of land, namely: residential Lot No. 3,
Block 13, situated in Sagay, Negros Occidental and agricultural Lots 3588 and 3749 all situated at
Escalante, Negros Occidental. However, for failure of the late spouses Aguilar to pay their obligations
with, the mortgage was foreclosed in 1985 and subsequently, ownership of the subject four pieces of
property was consolidated under the name of PNB.
With the enactment of RA 7202 the late Aguilar wrote PNB on asking for a reconsideration of their
account based on the Sugar Restitution Law the Aguilars claimed that they complied with the stated
requirements, and that subsequently, inasmuch as the subject agricultural lots were already conveyed
voluntarily by PNB to DAR, they were advised by PNB to follow-up the payment for these pieces of
realty with the LBP in order to apply the proceeds of the sale to the account of the late spouses Aguilar.
they were assured by PNB that if the proceeds from LBP would exceed the obligations of the late spouses
Aguilar, the excess amount would be returned to [the Aguilars, including the subject residential property.
For its part, PNB emphasized that whatever rights the Aguilars have under RA 7202 were already
forfeited when they failed to comply with the requirements.The RTC justified the reconveyance or
restitution of the residential lot in Sagay City to the Aguilars by crediting in their favor the proceeds of the
Voluntary Offer to Sell to the DAR of the two agricultural lots, and found PNB guilty of malice and bad
faith in not pursuing its duty in helping the Aguilars avail of the benefits of RA 7202. Aggrieved by the
RTC Decision, PNB appealed to the CA. The CA granted the appeal and reversed the RTC Decision. The
Aguilars filed a Motion for Reconsideration which was denied by the CA. Hence this petition.
ISSUE: Whether or not the PNB have an obligation to accord the Aguilars the same treatment as it
accorded the spouses Pfleider regarding the crediting of the VOS or CARP proceeds of their respective
agricultural lots against their respective sugar crop loans covered by RA 7202.
RULING: No. The sources of obligations under Article 1157 of the Civil Code are: (1) law; (2) contracts;
(3) quasi-contracts; (4) acts or omissions punished by law; and (5) quasi-delicts. Immediately, sources (2),
(3) and (4) are inapplicable in this case. The Aguilars are not privies to the Compromise Agreement
between PNB and the spouses Pfleider. Regarding law, as PNB's source of obligation, the CA correctly
ruled that the Aguilars are not entitled to restitution under RA 7202. Thus, RA 7202 cannot be invoked as
the statutory basis to compel PNB to treat the Aguilars similarly with the spouses Pfleider.
Aside from Chapter 2, Quasi-Delicts, of Title XVII. — Extra-Contractual Obligations, Book IV of the
Civil Code, it is recognized that quasi-delict may arise under Chapter 2, Human Relations of the
Preliminary Title of the Civil Code.
In the landmark case of Velayo v. Shell Company of the Philippine Islands, Ltd., 75 the Court ruled, in
effect, that the undue preference made by an insolvent debtor corporation in transferring its C-54 plane in
favor of a creditor corporation, which was its sister company, depriving its other creditors of the
opportunity to recover said plane, was in violation of Article 19 in relation to Article 21 of the Civil Code,
and observed that: x x x Chapter 2 of the PRELIMINARY TITLE of the Civil Code, dealing on Human
Relations, provides the following:
"Art. 19. Any person must, in the exercise of his rights and in the [performance] of his duties, act with
justice, give everyone his due, and observe honesty and good faith."
It may be said that this article only contains a mere [declaration] of principles and while such statement
may be x x x essentially correct, yet We find that such declaration is implemented by Article 21 and
[sequence] of the same Chapter which prescribe the following:
"Art. 21. Any [person] who wilfully causes loss or injury to another in a manner that is contrary to morals,
good customs or public policy shall compensate the latter for the damage."
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To make PNB liable under the principle of abuse of rights, the Aguilars have the burden to prove the
requisites enumerated above. They claim that they are similarly circumstanced as the spouses Pfleider and
there was no reason for PNB to treat them differently.
Given the foregoing explanation by PNB, it was incumbent upon the Aguilars, to make PNB liable for
damages based on the principle of abuse of rights, to prove that PNB acted in bad faith and that its sole
intent was to prejudice or injure them. The Aguilars, however, failed in this regard.
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PHILIPPINE NATIONAL BANK, petitioners
vs.
ANTONIO BACANI, RODOLFO BACANI, ROSALIA VDA. DE BAYAUA, JOSE BAYAUA and
JOVITA VDA. DE BAYAUA, respondents.
G.R. No. 194983. June 20, 2018.
Ponente: Reyes,Jr., J. (Second Division).
NATURE OF THE ACTION: Petition for review on certiorari filed under Rule 45 of the Rules of
Court, seeking to reverse and set aside the Decision and Resolution of the Court of Appeals in CA-G.R.
CV No. 82923. In these issuances, the CA affirmed the trial court's decision, which held that petitioner
Philippine National Bank fraudulently sold the subject property to the prejudice of Antonio, Rodolfo,
Rosalia, Jose and Jovita. This resulted in the nullification of the sale and the buyer's certificate of title
over the subject property.
FACTS: On July 16, 1980, the subject property was used to secure the Php80,000.00 loan that Spouses
Bacani obtained from PNB. When the Spouses Bacani failed to pay their loan, PNB extrajudicially
foreclosed the subject property on September 9, 1986. It was awarded to PNB as the highest bidder, who
had a bid amount of Php148,960.74. Spouses Bacani failed to redeem the property. PNB issued SEL
Circular No. 8-7/89, revising its policy on the disposition of acquired assets. the Spouses Bacani initiated
negotiations with PNB regarding the re-acquisition of their property. Their intention to buy back the
subject property was manifested at the earliest through a written offer. PNB later informed the Spouses
Bacani in its letter dated December 10, 1992 that the request for repurchase was refused and instead, the
subject property would be sold in a public auction. respondents filed a complaint for the annulment of the
sale alleging that PNB schemed to prevent the Spouses Bacani from buying back the subject property.
The RTC ruled in favor of the respondents, and found that PNB acted in bad faith by failing to give
preference to the Spouses Bacani's offer to purchase the subject property. PNB appealed to the CA,
following the denial of its motion, PNB appealed to this Court by filing a petition for review on certiorari
under Rule 45 of the Rules of Court.
ISSUE: Whether or not the PNB and Renato committed fraud in the disposition of the subject property
RULING: No.
There was no showing that PNB assured the sale of the subject property to the Spouses Bacani during the
auction. As a matter of fact, the Spouses Bacani did not even attend the scheduled auction sale to make an
offer on the subject property.
The publication of the Invitation to Bid, which included the subject property, was not a binding obligation
on the part of PNB. Article 1326 of the Civil Code clearly provides that:ART. 1326. Advertisements for
bidders are simply invitations to make proposals, and the advertiser is not bound to accept the highest or
lowest bidder, unless the contrary appears. (Emphases Ours)
Thus, the fact that the Invitation to Bid was published cannot bind PNB to any offer from any party. PNB
merely notified interested parties to submit their proposals for the purchase of the subject property, which
PNB may either accept or reject as the absolute owner thereof. In the same manner, the published bidding
schedule was not an offer from the PNB, notice and acceptance of which would compel the bank to sell
the subject property to such party.
There being no guarantee that the highest or lowest bid was entitled to purchase the property, the Spouses
Bacani cannot rely on the publication of the Invitation to Bid to support their claim of fraud.
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LOLITA ESPIRITU SANTO MENDOZA and SPS. ALEXANDER and ELIZABETH GUTIERREZ,
petitioners
vs.
SPS. RAMON, SR. and NATIVIDAD PALUGOD, respondents.
G.R. No. 220517. June 20, 2018.
NATURE OF THE ACTION: Before the Court is a Petition for review on certiorari under Rule 45 of
the Rules of Court assailing the Decision of the Court of Appeals in CA-G.R. CV No. 102904, denying
the appeal of petitioners for lack of merit, and the CA Resolution denying petitioners' motion for
reconsideration. The CA Decision affirmed the Decision in favor of respondents and Order denying
petitioners' motion for reconsideration, of the Regional Trial Court of Bacoor, Cavite, Branch 19 in Civil
Case No. BCV 2004-217.
FACTS: Petitioner Lolita and Jasminia were close friends. Lolita was a businesswoman engaged in
selling commodities and houses and lots, while Jasminia was then working as a Supervisor in the PLDT.
In 1991, Lolita and Jasminia bought the subject lot [with an area of 120 sq. m.] on installment for one (1)
year until they decided to pay the balance in full. 1995, Jasminia became afflicted with breast cancer.
Sometime in 1996, Lolita and Jasminia constructed a residential house on the subject lot. Although Lolita
has no receipts, she shared in the cost of the construction of the house from her income in the catering
business and selling of various productsJasminia executed a Deed of Absolute Sale in favor of Lolita, who
eventually mortgaged the subject property to Elizabeth Gutierrez as a security for a loan in the amount of
Php800,000.00.
Respondents, upon learning from the Office of the Registry of Deeds that Jasminia's certificate of title
has been cancelled, executed an Affidavit of Adverse Claim of their right and interest over the property as
the only compulsory and legitimate heirs of Jasminia. However, Lolita, knowing fully well of the
impending suit, made it appear that she mortgaged the property to Spouses Gutierrez as a security for a
loan amounting to Php800,000.00.
Thus, filed a complaint for Declaration of Nullity of the Deed of Absolute Sale and the Deed of Real
Estate Mortgage with the RTC of Bacoor, Cavite.
The RTC declared that there can be no contract unless the following concur: (a) consent; (2) object
certain; and (3) cause of the obligation.Petitioners filed a motion for reconsideration, but the RTC, denied
the same for lack of merit. Aggrieved, petitioners interposed an appeal. Hence, this petition.
ISSUE: Whether or not the Deed of Sale is void for being simulated having no monetary consideration.
RULING: No.
As correctly pointed out by petitioner Lolita, the DAS is itself the proof that the sale of the property is
supported by sufficient consideration. This is anchored on the disputable presumption of consideration
inherent in every contract. Thus, Article 1354 of the Civil Code provides: "Although the cause is not
stated in the contract, it is presumed that it exists and is lawful, unless the debtor proves the contrary."
This disputable presumption is reiterated in the Rules of Court (Rules). Section 3, Rule 131 of the Rules
provides: SEC. 3. Disputable presumptions. — The following presumptions are satisfactory if
uncontradicted, but may be contradicted and overcome by other evidence:
xxx xxx xxx
(r) That there was a sufficient consideration for a contract[.]
In Mangahas v. Brobio, the Court explained how the presumption of sufficient consideration can be
overcome, to wit:A contract is presumed to be supported by cause or consideration. The presumption that
a contract has sufficient consideration cannot be overthrown by a mere assertion that it has no
consideration. To overcome the presumption, the alleged lack of consideration must be shown by
preponderance of evidence. The burden to prove lack of consideration rests upon whoever alleges it,
which, in the present case, is respondent.
Guided by the above provisions of the Civil Code and the Rules as well as jurisprudence, petitioners stand
to benefit from the disputable presumption of consideration with the presentation of the DAS. Indeed,
they can rely on the DAS as proof that it has consideration — "FOR AND IN CONSIDERATION of the
sum of FOUR HUNDRED THOUSAND PESOS (P400,000.00) Philippine Currency,receipt of which is
hereby acknowledged and confessed."
With the presumption in favor of petitioner Lolita who is the vendee, it became incumbent upon
respondents to present preponderant evidence to prove lack of consideration. Respondents' mere assertion
that the DAS has no consideration is inadequate.
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Following Rivera v. CA quoted above, as neither party was able to make out a case, neither side having
established his/her cause of action, the Court can only leave them where they are and it has no choice
but to dismiss the complaint, as the lower courts should have done.
Consequently, the DAS executed by Jasminia in favor of petitioner Lolita over the subject property is
valid, the presumption that it has sufficient consideration not having been rebutted. The same holds
true regarding the Real Estate Mortgage between petitioner Lolita and petitioners spouses Alexander
and Elizabeth Gutierrez.
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SECURITY BANK CORPORATION, petitioners
vs.
SPOUSES RODRIGO and ERLINDA MERCADO, respondents.
G.R. No. 192934. June 27, 2018.
Ponente: Jardeleza J. (First Division).
NATURE OF THE ACTION: Consolidated petitions seeking to nullify the Court of Appeals' Decision
and Resolution in CA-G.R. CV No. 90031. The CA modified the Decision, as amended by the
Amendatory Order of Branch 84, Regional Trial Court Batangas City in the consolidated cases of Civil
Case No. 5808 and LRC Case No. N-1685. The RTC nullified the extrajudicial foreclosure sales over
petitioners-spouses Mercado's properties, and the interest rates imposed by petitioner Security Bank
Corporation.
FACTS: On September 13, 1996, Security Bank granted spouses Mercado a revolving credit line in the
amount of P1,000,000.00. The terms and conditions of the revolving credit line agreement included the
stipulations that Security Bank can decide that interest rate based on the prevailing rate.
To secure the credit line, the spouses Mercado executed a Real Estate Mortgage in favor of Security Bank
over their properties to secure an additional amount of P7,000,000.00 under the same revolving credit
agreement. Subsequently, they defaulted in their payment. Security Bank a petition for extrajudicial
foreclosure pursuant to Act No. 3135, respective notices of the foreclosure sales of the properties were
published in newspapers of general circulation once a week for three consecutive weeks as required by
Act No. 3135, as amended. However, the publication of the notices of the foreclosure of the properties in
Batangas City and San Jose, Batangas contained errors with respect to their technical description.
Security Bank caused the publication of an erratum which was published only once, and did not correct
the lack of indication of location in both cases.
The spouses Mercado filed a complaint for annulment of foreclosure sale. The RTC declared the
foreclosure sales void because "[t]he act of making only one corrective publication x x x is a fatal
omission committed by the mortgagee bank." It also ruled that the stipulation as to the interest rate on the
availments under the revolving credit line agreement "where the fixing of the interest rate is the sole
prerogative of the creditor/mortgagee, belongs to the class of potestative condition which is null and void
under [Article] 1308 of the New Civil [C]ode." Security Bank moved for reconsideration of the RTC's
Decision. The CA, on appeal, affirmed with modifications the RTC Amended Decision. Hence, these
consolidated petitions.
ISSUE: Whether or not the provisions on interest rate in the revolving credit line agreement and its
addendum are void for being violative of the principle of mutuality of contracts.
RULING: Yes. The principle of mutuality of contracts is found in Article 1308 of the New Civil Code,
which states that contracts must bind both contracting parties, and its validity or compliance cannot be left
to the will of one of them. The binding effect of any agreement between parties to a contract is premised
on two settled principles: (1) that any obligation arising from contract has the force of law between the
parties; and (2) that there must be mutuality between the parties based on their essential equality. As such,
any contract which appears to be heavily weighted in favor of one of the parties so as to lead to an
unconscionable result is void. Likewise, any stipulation regarding the validity or compliance of the
contract that is potestative or is left solely to the will of one of the parties is invalid. This holds true not
only as to the original terms of the contract but also to its modifications. Consequently, any change in a
contract must be made with the consent of the contracting parties, and must be mutually agreed upon.
Otherwise, it has no binding effect.
Stipulations as to the payment of interest are subject to the principle of mutuality of contracts. As a
principal condition and an important component in contracts of loan, interest rates are only allowed if
agreed upon by express stipulation of the parties, and only when reduced into writing. Any change to it
must be mutually agreed upon, or it produces no binding effect
Besides violating P.D. 116, the unilateral action of the PNB in increasing the interest rate on the private
respondent's loan, violated the mutuality of contracts ordained in Article 1308 of the Civil Code:
"ART. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to
the will of one of them."
In order that obligations arising from contracts may have the force of law between the parties, there must
be mutuality between the parties based on their essential equality. A contract containing a condition which
makes its fulfillment dependent exclusively upon the uncontrolled will of one of the contracting parties, is
void (Garcia vs. Rita Legarda, Inc., 21 SCRA 555).
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FEDERAL EXPRESS CORPORATION, petitioners
vs.
LUWALHATI R. ANTONINO AND ELIZA BETTINA RICASA ANTONINO, respondents.
G.R. No. 199455. June 27, 2018.
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 Appeals Decision and Resolution in CA-
G.R. CV No. 91216 be reversed and set aside and that Luwalhati and Antonino be held liable on Federal
Express Corporation's counterclaim.
FACTS: Eliza was the owner of Unit 22-A in Allegro Condominium, located at 62 West 62nd St., New
York, United States. monthly common charges on the Unit became due. These charges were for the period
of July 2003 to November 2003, and were for a total amount of US$9,742.81.
Luwalhati and Eliza were in the Philippines. As the monthly common charges on the Unit had become
due, they decided to send several Citibank checks to Sison, who was based in New York. Citibank checks
allegedly amounting to US$17,726.18 for the payment of monthly charges and US$11,619.35 for the
payment of real estate taxes were sent by Luwalhati through FedEx with Account No. x2546-4948-1 and
Tracking No. 8442 4588 4268. The package was addressed to Sison who was tasked to deliver the checks
payable to Maxwell-Kates, Inc. and to the New York County Department of Finance. Sison allegedly did
not receive the package, resulting in the non-payment of Luwalhati and Eliza's obligations and the
foreclosure of the Unit.
Upon learning that the checks were sent on December 15, 2003, Sison contacted FedEx on February 9,
2004 to inquire about the non-delivery. She was informed that the package was delivered to her neighbor
but there was no signed receipt.
Luwalhati and Eliza, through their counsel, sent a demand letter to FedEx for payment of damages due to
the non-delivery of the package, but FedEx refused to heed their demand. Hence, they filed their
Complaint for damages.
ISSUE: Whether or not petitioner Federal Express Corporation may be held liable for damages on
account of its failure to deliver the checks shipped by respondents Luwalhati R. Antonino and Eliza
Bettina Ricasa Antonino to the consignee Veronica Sison.
RULING:
A provision in a contract of carriage requiring the filing of a formal claim within a specified period is a
valid stipulation. Jurisprudence maintains that compliance with this provision is a legitimate condition
precedent to an action for damages arising from loss of the shipment:
More particularly, where the contract of shipment contains a reasonable requirement of giving notice of
loss of or injury to the goods, the giving of such notice is a condition precedent to the action for loss or
injury or the right to enforce the carrier's liability. Such requirement is not an empty formalism. The
fundamental reason or purpose of such a stipulation is not to relieve the carrier from just liability, but
reasonably to inform it that the shipment has been damaged and that it is charged with liability therefor,
and to give it an opportunity to examine the nature and extent of the injury. This protects the carrier by
affording it an opportunity to make an investigation of a claim while the matter is fresh and easily
investigated so as to safeguard itself from false and fraudulent claims.
In appraising respondents' compliance with the first condition, this Court is guided by settled standards in
jurisprudence.
In Philippine Airlines, Inc. v. Court of Appeals, Philippine Airlines alleged that shipper Gilda Mejia
(Mejia) failed to file a formal claim within the period stated in the Air Waybill. This Court ruled that there
was substantial compliance with the period because of the zealous efforts demonstrated by Mejia in
following up her claim. These efforts coupled with Philippine Airlines' "tossing around the claim and
leaving it unresolved for an indefinite period of time" led this Court to deem the requisite period satisfied.
This is pursuant to Article 1186 of the New Civil Code which provides that "[t]he condition shall be
deemed fulfilled when the obligor voluntarily prevents its fulfillment":
The Civil Code mandates common carriers to observe extraordinary diligence in caring for the goods they
are transporting:
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Article 1733. Common carriers, from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the
passengers transported by them, according to all the circumstances of each case.
"Extraordinary diligence is that extreme measure of care and caution which persons of unusual prudence
and circumspection use for securing and preserving their own property or rights." Consistent with the
mandate of extraordinary diligence, the Civil Code stipulates that in case of loss or damage to goods,
common carriers are presumed to be negligent or at fault, except in the following instances:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the containers;
(5) Order or act of competent public authority.
In all other cases, common carriers must prove that they exercised extraordinary diligence in the
performance of their duties, if they are to be absolved of liability.
The responsibility of common carriers to exercise extraordinary diligence lasts from the time the goods
are unconditionally placed in their possession until they are delivered "to the consignee, or to the person
who has a right to receive them." Thus, part of the extraordinary responsibility of common carriers is the
duty to ensure that shipments are received by none but "the person who has a right to receive them."
Common carriers must ascertain the identity of the recipient. Failing to deliver shipment to the designated
recipient amounts to a failure to deliver. The shipment shall then be considered lost, and liability for this
loss ensues.
Petitioner is unable to prove that it exercised extraordinary diligence in ensuring delivery of the package
to its designated consignee. It claims to have made a delivery but it even admits that it was not to the
designated consignee. It asserts instead that it was authorized to release the package without the signature
of the designated recipient and that the neighbor of the consignee, one identified only as "LGAA 385507,"
received it.
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CATALINA F. ISLA, ELIZABETH ISLA, and GILBERT F. ISLA, petitioners
vs.
GENEVIRA P. ESTORGA, respondents.
G.R. No. 233974. July 2, 2018.
Ponente: Perlas-Bernabe J. (Second Division).
NATURE OF THE ACTION: Petition for review on certiorari filed by petitioners assailing the Decision
and the Resolution of the Court of Appeals in CA-G.R. CV No. 101743, which affirmed with
modification the Decision the Regional Trial Court of Pasay City, Branch 112 in Civil Case No. 07-0014,
directing petitioners to pay respondent
FACTS: On December 6, 2004, petitioners obtained a loan in the amount of P100,000.00 from
respondent, payable anytime from six (6) months to one (1) year and subject to interest at the rate of ten
percent (10%) per month, payable on or before the end of each month. As security, a real estate mortgage
5was constituted over a parcel of land located in Pasay City, covered by TCT No. 132673 and registered
under the name of Edilberto, who is married to Catalin. When petitioners failed to pay the said loan,
respondent sought assistance from the barangay, and consequently, a Kasulatan ng Pautang was executed.
Petitioners, however, failed to comply with its terms, prompting respondent to send a demand letter,
petitioners failed to comply with the demand, causing respondent to file a Petition for Judicial
Foreclosure against them before the RTC.
For their part, petitioners maintained that the subject mortgage was not a real estate mortgage but a mere
loan, and that the stipulated interest of ten percent (10%) per month was exorbitant and grossly
unconscionable.They also insisted that since petitioners were not the absolute owners of the subject
property — as the same was allegedly owned by Edilberto — they could not have validly constituted the
subject mortgage thereon.
ISSUE: Whether or not the CA erred in awarding twelve percent (12%) interest on the principal
obligation until full payment.
RULING: No.
In this case, petitioners and respondent entered into a loan obligation and clearly stipulated for the
payment of monetary interest. However, the stipulated interest of ten percent (10%) per month was found
to be unconscionable, and thus, the courts a quo struck down the same and pegged a new monetary
interest of twelve percent (12%) per annum, which was the prevailing legal rate of interest for loans and
forbearances of money at the time the loan was contracted on December 6, 2004.
Case law states that there are two (2) types of interest, namely, monetary interest and compensatory
interest. Monetary interest is the compensation fixed by the parties for the use or forbearance of money.
On the other hand, compensatory interest is that imposed by law or by the courts as penalty or indemnity
for damages. Accordingly, the right to recover interest arises only either by virtue of a contract (monetary
interest) or as damages for delay or failure to pay the principal loan on which the interest is demanded
(compensatory interest).
Anent monetary interest, the parties are free to stipulate their preferred rate. However, courts are allowed
to equitably temper interest rates that are found to be excessive, iniquitous, unconscionable, and/or
exorbitant,such as stipulated interest rates of three percent (3%) per month or higher.In such instances, it
is well to clarify that only the unconscionable interest rate is nullified and deemed not written in the
contract; whereas the parties' agreement on the payment of interest on the principal loan obligation
subsists. It is as if the parties failed to specify the interest rate to be imposed on the principal amount, in
which case the legal rate of interest prevailing at the time the agreement was entered into is applied by the
Court. This is because, according to jurisprudence, the legal rate of interest is the presumptive reasonable
compensation for borrowed money.
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VISITACION R. REBULTAN, CECILOU R. BAYONA, CECILIO REBULTAN, JR., and VILNA R.
LABRADOR, petitioners
vs.
SPOUSES EDMUNDO DAGANTA and MARVELYN P. DAGANTA, and WILLIE VILORIA,
respondents.
G.R. No. 197908. July 4, 2018.
NATURE OF THE ACTION: This is a petition for review on certiorari seeking to nullify the Decision
and Resolution of the Court of Appeals in CA-G.R. CV No. 92218 (collectively, Assailed Decision). The
CA reversed the Decision of Branch 70 of the Regional Trial Court of Iba, Zambales in Civil Case No.
RTC-1668-I, a case for damages.
FACTS: On May 3, 1999, at about 6:30 in the morning, along the National Highway in Barangay
Mabanglit, Cabangan, Zambales, Rebultan, Sr. Rebultan, Sr. and his driver, Lomotos were on board a Kia
Ceres, on their way to report for work in the DENR in Masinloc, Zambales when they figured in a
vehicular accident with an Isuzu-powered passenger jeepney driven by Viloria The Kia Ceres was
traveling northbound to Iba, Zambales, while the jeepney was traveling southbound to Cabangan,
Zambales. The powerful impact resulted in serious physical injuries to Rebultan, Sr. and Lomotos, as well
as physical damage to both vehicles. Rebultan, Sr., who was 60 years old at that time, later died from his
injuries. Heirs of Rebultan, Sr. filed a complaint for damages against Viloria, and Spouses Daganta as the
owners of the jeepney. Petitioners prayed for compensation for the loss of life and earning capacity of
Rebultan, Sr., actual and moral damages, attorney's and appearance fees, as well as other just and
equitable reliefs.
RTC issued its Decision finding Viloria negligent in driving the jeepney which led to the death of
Rebultan, Sr. Spouses Daganta were found vicariously liable as the employers of Viloria. Together, they
were held solidarily liable to pay the heirs of Rebultan, Sr. The RTC concluded that Viloria's continuous
driving even when turning left going to a street is the proximate cause of the accident. It dismissed the
third-party complaint against Lomotos. Respondents appealed the Decision before the CA but only as to
the finding of negligence on the part of Viloria. They no longer appealed the dismissal of the third-party
complaint.
CA reversed the RTC ruling and dismissed the complaint. It ruled that it was Lomotos (not Viloria) who
was negligent. The CA likewise denied the petitioners' motion for reconsideration. Hence, this petition.
ISSUE: Whether or not Viloria was negligent in driving the jeepney at the time of the collision.
RULING: Yes. We find, however, that Viloria's negligence contributed to the accident.
All motorists are expected to exercise reasonable caution in operating his vehicle. This duty is found in
Section 48 of R.A. No. 4136: Sec. 48. Reckless Driving. — No person shall operate a motor vehicle on
any highway recklessly or without reasonable caution considering the width, traffic, grades, crossing,
curvatures, visibility and other conditions of the highway and the conditions of the atmosphere and
weather, or so as to endanger the property or the safety or rights of any person or so as to cause excessive
or unreasonable damage to the highway.
Records support the claim that Viloria, while driving the jeepney, was also committing a traffic violation.
As found by the RTC, Viloria's admission that he did not look to his right and continuously drove, despite
being required by law to give way, confirms that he is negligent in making a turn. He further admitted
that he did not bother to look at the south to see if there were other vehicles. In fact, his penchant for
disregarding traffic rules is shown by how he approached the intersection. Just a short distance from
approaching the intersection, he was reported to have overtaken a mini-bus as evidenced by the Traffic
Accident Report No. 99002.
It is apparent to this Court that the accident would have been avoided had Viloria, the jeepney driver,
carefully approached and made a left turn in the intersection, with due regard to the right of way accorded
in favor of Lomotos or anyone coming from the latter's direction. Regardless of whether Lomotos was
overspeeding, Viloria ought to have exercised the prudence of a diligent driver in making a turn at a
danger zone. This omission on his part constituted negligence.
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PHILIPPINE NATIONAL BANK, petitioners
vs.
SPOUSES ANGEL AND BUENVENIDA ANAY, AND SPOUSES FRANCISCO AND DOLORES LEE,
respondents.
G.R. No. 197831. July 9, 2018.
NATURE OF THE ACTION: Petition for Review on Certiorari under Rule 45 of the Rules of Court,
petitioner Philippine National Bank (PNB) seeks to modify the Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 01140-MIN which affirmed the Decision of the Regional Trial Court (RTC),
Branch 23, Cagayan de Oro City. The CA affirmed the RTC which ordered, among others, the
cancellation of PNB's title insofar as it covered the property of respondents Spouses Angel and
Buenvenida Anay (Spouses Anay). While PNB no longer disputes the exclusion of the property of the
Spouses Anay from the foreclosed properties, it nevertheless seeks that respondents Spouses Francisco
and Dolores Lee (Spouses Lee), as debtors-mortgagors, be ordered to restitute to PNB the value of the
excluded property.
FACTS: The Spouses Lee obtained a loan from PNB initially in the amount of P400,000.00 but which
was later on increased to P7,500,000.00 under a Revolving Credit Line. To cover the increased credit
accommodation, the Spouses Lee offered additional securities which included a parcel of land registered
in the name of the Spouses Anay. For this purpose, the Spouses Anay executed a Special Power of
Attorney (SPA) in favor of the Spouses Lee, authorizing the latter to use the subject property as security
for the loan.
The Spouses Lee failed to pay their loan obligations. Consequently, PNB initiated extrajudicial
foreclosure proceedings against the mortgaged properties, including that of the Spouses Anay. PNB
emerged as the highest bidder in the auction sale and a Sheriff's Certificate of Sale was thereafter issued.
When the redemption period expired without the Spouses Lee or the Spouses Anay having exercised the
right of redemption, PNB consolidated its title over the foreclosed properties.The Spouses Anay filed a
Complaint against the Spouses Lee and PNB for annulment of the SPA, foreclosure proceedings and the
Sheriff's Certificate of Sale on the ground of vitiated consent. RTC reached the conclusion that the
Spouses Anay's consent to the SPA were vitiated, if not totally absent. PNB's appeal before the CA was
denied. Hence, this petition.
ISSUE: Whether or not the Spouses Lee should be made liable for damages and restitution to PNB for
having acted in bad faith.
RULING: No.
Settled is the fact that the Spouses Anay's consent to the SPA was vitiated. This, as much, was not
contested by PNB. Nevertheless, PNB seeks protection as mortgagee in good faith as it allegedly had no
hand in the fraud or bad faith perpetrated by the Spouses Lee in securing the SPA.
The doctrine of a mortgagee in good faith finds similar basis on the rule that persons dealing with
property covered by a Torrens Certificates of Title, either as buyers or as mortgagees, are not required to
go beyond what appears on the face of the title. This doctrine, however, does not apply in the instant case.
It having been established that the SPA was secured through vitiated consent and there being no
ratification on the part of the Spouses Anay, the SPA is, consequently void. As such, the SPA cannot be
the basis of a valid mortgage contract, nor of the subsequent foreclosure and consolidation of title in favor
of PNB.
Finally, We find no reason to depart from the CA's denial of PNB's claim for restitution and damages
against the Spouses Lee. The CA is correct in holding that this issue was never raised before the RTC and
as such, the Spouses Lee could not have been afforded the opportunity to rebut PNB's claims. Further, as
aptly observed by the CA, PNB itself failed to file the necessary cross-claim against the Spouses Lee, as
such, PNB cannot belatedly complain on appeal.
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MARCELINO E. LOPEZ, FELIZA LOPEZ, ZOILO LOPEZ, LEONARDO LOPEZ, and SERGIO F.
ANGELES, petitioners
vs.
THE HON. COURT OF APPEALS and PRIMEX CORPORATION, respondents.
G.R. No. 163959. August 1, 2018.
Ponente: Bersamin, J. (Third Division).
NATURE OF THE ACTION: Urgent Motion to Recall or Reconsider the March 7, 2012 Resolution
Giving Effect to the so-called "Compromise Agreement" submitted by Atty. Sergio Angeles and Primex
President Ang and to Cite Them in Contempt of Court filed by the heirs of deceased Marcelino E. Lopez,
one of the original petitioners herein, in order to oppose and object to the Compromise Agreement on the
ground that Atty. Sergio Angeles, a counsel of the petitioners and also a petitioner himself, had entered
into the same without valid authority.
FACTS: On 12 September 1989, as vendee, entered into a Deed of Conditional Sale relative to a portion
of land particularly designated as Lot 15 of subdivision plan, PSD-328610, with the herein defendants-
appellees as vendors. However, instead of delivering a valid title to PRIMEX, the defendants-appellees
delivered to the former Transfer Certificate of Title [TCT] No. 196256of the Register of Deeds of Rizal.
Consequently, PRIMEX refused to accept delivery of [TCT] No. 196256 as a valid and sufficient
compliance with the terms of the DCS which would warrant the release of another P2,000,000.00 in
accordance with the schedule of payments stipulated by the parties in their written covenant. Hence,
PRIMEX's a complaint for specific performance and preliminary injunction.
ISSUE: Whether or not Atty. Angeles no longer had the authority to enter into and submit the
Compromise Agreement because the special power of attorney in his favor had ceased to have force and
effect upon the death of Marcelino Lopez.
RULING: Yes.
Terminated upon the death of Marcelino Lopez.
By the contract of agency, a person binds himself to render some service or to do something in
representation or on behalf of another with the consent or authority of the latter. For a contract of agency
to exist, therefore, the following requisites must concur, namely: (1) there must be consent coming from
persons or entities having the juridical capacity and capacity to act to enter into such contract; (2) there
must exist an object in the form of services to be undertaken by the agent in favor of the principal; and (3)
there must be a cause or consideration for the agency.
One of the modes of extinguishing a contract of agency is by the death of either the principal or the agent.
In Rallos v. Felix Go Chan & Sons Realty Corporation, the Court declared that because death of the
principal extinguished the agency, it should follow a fortiori that any act of the agent after the death of his
principal should be held void ab initio unless the act fell under the exceptions established under Article
1930 and Article 1931 of the Civil Code. The exceptions should be strictly construed. In other words, the
general rule is that the death of the principal or, by analogy, the agent extinguishes the contract of agency,
unless any of the circumstances provided for under Article 1930 or Article 1931 obtains; in which case,
notwithstanding the death of either principal or agent, the contract of agency continues to exist.
The want of authority in favor of Atty. Angeles was aggravated by the fact that he did not disclose the
death of the late Marcelino Lopez to the Court. His omission reflected the height of unprofessionalism on
his part, for it engendered the suspicion that he thereby tried to pass off the Compromise Agreement as
genuine and valid despite his authority under the special power of attorney having terminated for all legal
purposes.
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ANICETO G. SALUDO, JR petitioners
vs.
PHILIPPINE NATIONAL BANK,respondents.
G.R. No. 193138. August 20, 2018.
NATURE OF THE ACTION: Petition for review on certiorari assailing the Decision and Resolution
issued by the Court of Appeals in CA-G.R. SP No. 98898. The CA affirmed with modification the
Omnibus Order issued by Branch 58 of the Regional Trial Court of Makati City in Civil Case No. 06-678,
and ruled that respondent PNB counterclaims against Saludo and the SAFA Law Office should be
reinstated in its answer.
FACTS: On June 11, 1998, SAFA Law Office entered into a Contract of Lease with PNB, whereby the
latter agreed to lease 632 square meters of the second floor of the PNB Financial Center Building in
Quezon City for a period of three years and for a monthly rental fee of P189,600.00. The rental fee is
subject to a yearly escalation rate of 10%. SAFA Law Office vacated the leased premises. PNB sent a
demand letter requiring the firm to pay its rental arrears in the total amount of P10,951,948.32. In
response, SAFA Law Office sent a letter proposing a settlement by providing a range of suggested
computations of its outstanding rental obligations, with deductions for the value of improvements it
introduced in the premises, professional fees due from Macroasia Corporation, PNB, however, declined
the settlement proposal stating that it was not amenable to the settlement's terms.
PNB then made a final demand for SAFA Law Office to pay its outstanding rental obligations in the
amount of P25,587,838.09. Saludo, in his capacity as managing partner of SAFA Law Office, filed an
amended complaint for accounting and/or recomputation of unpaid rentals and damages against PNB in
relation to the Contract of Lease. PNB filed a motion to include an indispensable party as plaintiff, SAFA
Law Office as principal plaintiff. PNB argued that the lessee in the Contract of Lease is not Saludo but
SAFA Law Office, and that Saludo merely signed the Contract of Lease as the managing partner of the
law firm. The RTC issued an Omnibus Order denying PNB's motion to include an indispensable party as
plaintiff and granting Saludo's motion to dismiss counterclaims. Hence this petition.
ISSUE: Whether or not SAFA Law Office is a juridical entity and the real party-in-interest in the suit
filed with the RTC by Saludo against PNB. Hence, it should be joined as plaintiff in that case.
RULING: Yes.
Contrary to Saludo's submission, SAFA Law Office is a partnership and not a single proprietorship.
Article 1767 of the Civil Code provides that by a contract of partnership, two or more persons bind themselves to
contribute money, property, or industry to a common fund, with the intention of dividing the profits among
themselves. Two or more persons may also form a partnership for the exercise of a profession. Under Article 1771, a
partnership may be constituted in any form, except where immovable property or real rights are contributed thereto,
in which case a public instrument shall be necessary. Article 1784, on the other hand, provides that a partnership
begins from the moment of the execution of the contract, unless it is otherwise stipulated.
The law, in its wisdom, recognized the possibility that partners in a partnership may decide to place a limit on their
individual accountability. Consequently, to protect third persons dealing with the partnership, the law provides a
rule, embodied in Article 1816 of the Civil Code, which states:
Art. 1816. All partners, including industrial ones, shall be liable pro rata with all their property and after all the
partnership assets have been exhausted, for the contracts which may be entered into in the name and for the account
of the partnership, under its signature and by a person authorized to act for the partnership. However, any partner
may enter into a separate obligation to perform a partnership contract.
The foregoing provision does not prevent partners from agreeing to limit their liability, but such agreement may only
be valid as among them. Thus, Article 1817 of the Civil Code provides:
Art. 1817. Any stipulation against the liability laid down in the preceding article shall be void, except as among the
partners.
The MOU is an agreement forged under the foregoing provision. Consequently, the sole liability being undertaken
by Saludo serves to bind only the parties to the MOU, but never third persons like PNB.
Considering that the MOU is sanctioned by the law on partnership, it cannot change the nature of a duly-constituted
partnership. Hence, we cannot sustain Saludo's position that SAFA Law Office is a sole proprietorship.
Civil Law
Review 2
MARIBELLE Z. NERI, petitioners
vs.
RYAN ROY YU, respondents.
G.R. No. 230831. September 5, 2018.
Ponente: Peralta, J. (Third Division).
NATURE OF THE ACTION: Petition for Review on Certiorari under Rule 45 of the Rules of Court, of
petitioner Maribelle Z. Neri that seeks to reverse and set aside the Decision and the Resolution dated of
the Court of Appeals in CA-G.R. CV No. 03495-MIN holding petitioner and Bridgette Insoy jointly liable
to respondent Ryan Roy Yu for the amount of P1,200,000.00.
FACTS: On March 12, 2009, filed a Complaint before the Regional Trial Court for "Sum of Money,
Damages, Attorney's Fees, Etc." against one Bridgette "Gigi" Insoy (Insoy) and petitioner. Respondent
alleged that he and his friends, Matalam and Steven Lao went on a leisure trip to Cebu City. Matalam
planned to check out a Toyota Prado sports utility vehicle that he intended to buy from petitioner.
Petitioner convinced respondent and Lao to consider buying Toyota vehicles from her, saying they can get
a big discount if they buy from her as a group, because it would be considered a bulk purchase. Petitioner
assured respondent that her transaction is legitimate and aboveboard, and that she can immediately cause
the delivery of the vehicle within a week after her receipt of the payment.
Respondent alleged that he transferred the amount of P1.2 Million from his Account in Equitable PCI
Bank to petitioner's Account in said bank. Thereafter, respondent went to see and inform petitioner of the
fund transfer and after the bank's confirmation of the same, she issued respondent a receipt
acknowledging payment for a Toyota Super Grandia. However, a week after, petitioner told respondent
that the delivery of his vehicle will be delayed without giving any reason and she asked for a week's
extension. After several extensions and despite repeated demands, no vehicle was delivered to respondent
and petitioner started avoiding him and ignoring his calls. Thus, respondent filed a complaint with the
RTC.
ISSUE: Whether or not Maribelle Z. Neri and Bridgette Insoy can be held jointly liable to Ryan Yu for
the amount of Php1,200,000.00.
RULING: Yes.
The CA did not err in ruling that petitioner is engaged in the business of selling cars and that respondent's
group directly transacted with her for the purchase of their vehicle, thus, petitioner is jointly liable with
Insoy to respondent for the amount of P1,200,000.00. Neri denied that she is engaged in selling Toyota
vehicles and that Yu's group directly transacted with her in the purchase of their Toyota vehicles, insisting
that such transaction was purely between the latter and Insoy. Neri contradicts her claim in her own
testimony.
It is clear from the foregoing testimonies that Yu's group, of whom only Lao is known to Neri, directly
went to her and transacted directly with her for the purchase of their respective Toyota vehicles, and she
was the one who ordered these vehicles for them online. Add this to the undisputed fact that Neri received
their payments in her bank account and issued an acknowledgment receipt without qualification that such
acknowledgment of payment was only for Insoy. The conclusion becomes inescapable that Neri
transacted as a seller, not as a mere conduit or middleman or agent.
It is apparent that the participation of Neri here cannot be discounted as merely accommodating Yu
because in the first place Yu had no intention to buy the subject vehicle when he visited Cebu. It was
through the sales talk of Neri plus the discount that she gave to YU and his group that Yu was enticed to
purchase the subject vehicle. In this regard, how can Neri offer such discounts if she were not the seller?
The testimonies of Yu's witnesses point to Neri as representing herself as a seller. Yu and Hsipin Liu never
spoke to Insoy. In fact, when the two Avanzas ordered by Hsipin Liu (known as Steven Lao) were
not delivered a week after payments were made to them, Hsipin Liu talked to Neri regarding the status of
the vehicles purchased. Neri did not reveal the cause of the delay and merely requested for an extension
of another week. Neri gave assurance that she paid for the units which Lao ordered.
Civil Law
Review 2
ALLIED BANKING CORPORATION, petitioners
vs.
SPOUSES ARTEMIO M. VILLALUZ, respondents.
G.R. No. 202525. September 12, 2018.
Ponente: Tijam, J. (First Division).
NATURE OF THE ACTION: This appeal assails the decision promulgated whereby the Court of
Appeals affirmed the judgment rendered in Civil Case No. 35-3102 by the Regional Trial Court (RTC),
Branch 35, in Santiago City, Isabela.
FACTS: In 1996, Remegio A. Roque, Jr., a nephew of Fe Paulina Roque-Villaluz, made respondents
Spouses Villaluz agree to his proposed joint loan application that included them signing a form for a real
estate mortgage (REM). A month later, he told them that the lending bank had disapproved the loan
application. Trusting in his word, they did not ask him to return the signed but unfilled form for the REM,
and their owner's duplicate copy of Transfer Certificate of Title (TCT) No. T-63434 of the Registry of
Deeds of the Province of Isabela. In 2002, the Spouses Villaluz received a notice of extrajudicial
foreclosure of the property covered by TCT No. T-63434 from the petitioner, and learned for the first time
that the loan had been in fact processed and granted, and the proceeds thereof released to Remegio, Jr.,
who ultimately did not pay back the loan. Thus, they instituted this action in the RTC to seek the
declaration of nullity of the REM, and pray for the issuance of a writ of preliminary injunction. RTC
rendered judgment nullifying the REM. The petitioner appealed, but the CA affirmed the petitioner
moved for reconsideration, but the CA denied its motion. Hence, this appeal.
ISSUE: Whether or not there was no consent to the REM by the Spouses Villaluz.
RULING: Yes. The consent of the parties to the REM was primarily evidenced by their signatures
thereon; and that such consent, when coupled with their act of delivering the owner's duplicate copy of
their TCT to the petitioner as the mortgagee for the purpose of the annotation of the REM, affirmed their
participation in the transaction. Indeed, even if they signed the form for the REM in blank, they
voluntarily extended the freedom to Remegio, Jr. as the person to whom the signed blank document was
given to fill in the details. Once signed, the form for the REM came under the assumption that it had been
read, understood and agreed to by the persons affixing their signatures thereon. The contents of the
document became binding thereafter, especially upon its notarization, for a notarized document is
executed to lend truth to the statements contained therein and to certify to the authenticity of the
signatures. This is the reason why a notarized document enjoys the presumption of regularity which can
be overturned only by clear and convincing evidence to the contrary. The evidence to overthrow such
presumption of regularity must be clear, convincing and more than merely preponderant.
The notable discrepancy in the REM annexed to the petition is a matter that should be decisive in
ascertaining the merits of the dispute herein. The first two pages of the REM annexed to the petition do
not bear the signatures of the mortgagors and their instrumental witnesses as stated in the notarial
acknowledgment. The first page bears only the signatures of the mortgagors but the second page carries
only the signatures of the witnesses. Worth underscoring is that the requirement for the signatures of the
parties and of their witnesses to appear on each and every page of the notarially acknowledged document
safeguards that each and every page thereof was validated by them in the presence of the witnesses. The
requirement is designed to avoid the falsification of the agreement after the parties duly executed it.
Although every notarized document, being a public document, has in its favor the presumption of
regularity, and evidence to contradict the presumption must be clear and convincing, the REM annexed to
the petition was likely altered in a manner that actually rendered it null and void. As a consequence, the
presumption of regularity cannot be drawn, and the lower courts' uniform conclusion about the
nullity of the REM itself becomes unavoidably warranted.
Civil Law
Review 2
SALVADOR ALEJAGA, SR. [DECEASED], VICENTE A. ALEJAGA, petitioners
vs.
SPS. SATURNINO LIBARDO AND ANIANA LIBARDO,respondents.
G.R. No. 239997. September 12, 2018.
Ponente: Peralta, J. (Second Division).
NATURE OF THE ACTION: Petition for Review on Certiorari under Rule 45 of the Rules of Court
assailing the August 31, 2016 Decision and the May 9, 2018 Resolution of the Court of Appeals in CA-
G.R. CV No. 04396.
FACTS: Sometime in 1966, respondents spouses Libardo bought a house that was erected on a segment
of Lot No. 2878-F. In 1994, the spouses Libardo purchased the land on which the house was built. To
formalize the agreement, Saturnino and Salvador executed a notarized document captioned as "SALE OF
A PORTION OF REGISTERED LAND" covering a 140-square meter portion of the lot. Salvador and his
heirs, the other petitioners in this case, wrote the spouses Libardo, asking them to vacate the property.
However, the request went unheeded
In view of the spouses Libardo's refusal to vacate the land, the petitioners filed a complaint for ownership,
possession, annulment of documents, and damages before the Regional Trial Court (RTC) of Mambusao,
Capiz. They alleged that they were the lawful owners of Lot No. 2878-F, as evidenced by TCT No.
16751, and that the spouses Libardo illegally occupied a portion of the property. The petitioners therefore
prayed that the ownership and possession of the subject portion be restored to them.
The spouses Libardo offered in evidence the document captioned "SALE OF A PORTION OF
REGISTERED LAND," Tax Declaration (TD) No. 1275, and TD No. 08002-0691 in Saturnino's name
covering a portion of Lot No. 2878-F. Saturnino took the witness stand to testify that he had resided on
the disputed portion of the lot since 1966, and that he had purchased the same from Salvador in 1994 in
the belief that the land sold to him was the segment he had been occupying. RTC dismissed the case. The
trial court held that the petitioners failed to prove their case by a preponderance of evidence. According to
the RTC, the evidence established that the petitioners' predecessors-in-interest had conveyed title over the
disputed portion of Lot No. 2878-F to the spouses Libardo even though the deed of sale failed to
accurately reflect the portion actually sold. Therefore, the petitioners failed to prove a valid claim of
ownership over the property.
ISSUE: Whether or not annulment of contract is the proper remedy.
RULING: No. according to the petitioners, the contract between Saturnino and Salvador is void because
of an apparent mistake that prevented a meeting of their minds. Citing a Commissioner's Report and a
Sketch Plan, the petitioners maintain that since a 12.5% portion of the disputed property encroached on an
adjacent provincial road, Salvador never consented to selling the 140-square meter lot to the spouses
Libardo. The petitioners additionally averred that Salvador could not have intended to sell a portion of the
provincial road to the spouses Libardo because, then, the object of the contract would be beyond the
commerce of man. Thus, to the petitioners, the deed entitled "SALE OF A PORTION OF REGISTERED
LAND" is void ab initio.
The argument deserves scant consideration.

Article 1318 of the New Civil Code enumerates the essential requisites of a valid contract, thus:
Art. 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
Consent is an essential requisite of contracts. It pertains to the meeting of the offer and the acceptance
upon the thing and the cause that constitute the contract.
Let it be recalled that the spouses Libardo remained in undisturbed possession of the disputed portion of
Lot No. 2878-F for 35 years. They bought a house built thereon in 1966, and later, in order to acquire
ownership over the land and secure their rights to the residence, they purchased a 140-square meter
segment of the lot from Salvador. It was only in July 2001 when the petitioners asked them to vacate the
land.
Taking this into consideration, it defies reason to conclude that the minds of Salvador and Saturnino never
met. Surely, Salvador knew that since the spouses Libardo already owned a house built on Lot No. 2878-
F, what they intended to purchase was that particular portion of the lot on which their house stood.
Moreover, from the facts, it would be absurd to deduce that Salvador intended to convey a stretch of
provincial road to them. Clearly, therefore, it was a mere afterthought on the part of the petitioners to
contend that there was a mistake as to the object of the contract in this case.
Civil Law
Review 2
Moreover, for the sake of emphasis, the Court reiterates the CA's ruling that the spouses Libardo should not be
prejudiced by a slight and insignificant mistake in the delineation of the boundaries of the property they purchased.
In this regard, the CA ruled that the petitioners availed of the wrong remedy. Since the minds of Saturnino and
Salvador met as to the subject of the sale, the contract was held to be valid, and therefore the petitioners improperly
resorted to annulment of contract. However, the appellate court stated that because the deed failed to reflect the
parties' true intent, the petitioners should have filed an action for reformation of instrument instead.
Reformation of an instrument is a remedy by which a written instrument is made or construed so as to express or
conform to the real intention of the parties. Such action presupposes a valid, existing contract, in which there had
been a meeting of the minds of the parties; however, the document, which embodies the agreement, fails to reflect
their true intent.
In Multi-Ventures Capital and Management Corporation v. Stalwart Management Services Corporation, the Court
enumerated the requisites of an action for reformation of instrument, thus:
In order that an action for reformation of instrument may prosper, the following requisites must concur: (1) there
must have been a meeting of the minds of the parties to the contract; (2) the instrument does not express the true
intention of the parties; and (3) the failure of the instrument to express the true intention of the parties is due to
mistake, fraud, inequitable conduct or accident.

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ARELLANO UNIVERSITY SCHOOL OF LAW

Taft Ave. Cor. Menlo St., Pasay City

CIVIL LAW REVIEW II

2. ASTRID A. VAN DE BRUG, MARTIN G. AGUILAR and GLENN 24-25

3. People of the Philippines, petitioner 5

Kinds As to Rights and Obligation of Parties

4. Rolando De Roca, petitioners 11

5. MARIBELLE Z. NERI, petitioners 37

6. RAYMOND A. SON, RAYMOND S. ANTIOLA, and WILFREDO 12-13

7. CONCHITA GLORIA and MARIA LOURDES GLORIA-PAYDUA 21

8. JOB ASIA MANAGEMENT SERVICES, petitioner 22

9. NORTHERN MINDANAO INDUSTRIAL PORT , petitioner 23

10. PHILIPPINE NATIONAL BANK, petitioners 26

11. SALVADOR ALEJAGA, SR. [DECEASED], VICENTE A. ALEJAG

13. SECURITY BANK CORPORATION, petitioners 29

14. MAKATI TUSCANY CONDOMINIUM CORPORATION, petition 14

15. Ramon E. Reyes and Clara R. Pastor, petitioner 2

Chattel & Real Estate Mortgage

16. BANCO DE ORO UNIBANK, INC., petitioner 19

17. PHILIPPINE NATIONAL BANK, petitioners 34

18. ALLIED BANKING CORPORATION, petitioners 38

19. CATALINA F. ISLA, ELIZABETH ISLA, and GILBERT F. ISLA, 32

TORTS & DAMAGES

20. American Power Conversion Corporation, et al., petitione 3-4

21. Allied Banking Corporation, now merged with Philippine 6

22. Eden Etino, petitioners 8

23. TERESA GUTIERREZ YAMAUCHI, petitioner 15

24. MANILA ELECTRIC COMPANY, petitioner 16

25. VISITACION R. REBULTAN, CECILOU R. BAYONA, petitioner 33

26. Victoria N. Racelis, petitioners 7

27. FEDERAL EXPRESS CORPORATION, petitioners 30

28.Spouses Cipriano Pamplona and Bibiana Intac, petitioners 9

Rules applicable to an Agent

29. BELINA CANCIO and JEREMY PAMPOLINA, petitioner 22

31. ANICETO G. SALUDO, JR petitioners 36

Specified Contractors & Development, Inc., et al., petitioner

Ramon E. Reyes and Clara R. Pastor, petitioner

American Power Conversion Corporation, et al., petitioner

People of the Philippines, petitioner

Aggrieved, Panerio appealed before the CA.

ISSUE: Whether or not there must be an award for exemplary damages.

ISSUE: Whether or not the CA erred in granting his monetary claims.

Victoria N. Racelis, petitioners

Eden Etino, petitioners

ISSUE: What are the damages to be awarded on cases of physical injuries.

Spouses Cipriano Pamplona and Bibiana Intac, petitioners

RULING: The appeal lacks merit.

Rolando De Roca, petitioners

RAYMOND A. SON, RAYMOND S. ANTIOLA, and WILFREDO E. POLLARCO, petitioner

MAKATI TUSCANY CONDOMINIUM CORPORATION, petitioner

FACTS: Sometime In 1974, Multi-Realty Development Corporation (Multi-Realty) built Makati

TERESA GUTIERREZ YAMAUCHI, petitioner

ISSUE: Whether or not Yamauchi is entitled to damages.

MANILA ELECTRIC COMPANY, petitioner

NORTHERN MINDANAO INDUSTRIAL PORT and SERVICES CORPORATION, petitioner

FACTS: On On 27 June 2007, Iligan Cement Corporation invited NOMIPSCO to a pre-bidding

BANCO DE ORO UNIBANK, INC., petitioner

CONCHITA GLORIA and MARIA LOURDES GLORIA-PAYDUAN, petitioner

BELINA CANCIO and JEREMY PAMPOLINA, petitioner

JOB ASIA MANAGEMENT SERVICES, petitioner

ASTRID A. VAN DE BRUG, MARTIN G. AGUILAR and GLENN G. AGUILAR, petitioner

(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;